OREANDA-NEWS. Intact Financial Corporation (TSX: IFC) today reported net operating income for the quarter ended June 30, 2015 of $210 million, up $4 million compared to the corresponding quarter of last year. On a per share basis, net operating income increased to $1.56. The success of our profitability initiatives supported by firmer market conditions and favourable prior year claims development led to improved underwriting results, despite the prolonged winter conditions in Atlantic Canada. Overall, the combined ratio of 91.6% was 1.3 percentage points better than the same quarter last year. Net income of $199 million declined this quarter as improved net operating income was offset by lower capital market returns and a higher effective tax rate than a year ago. Direct premiums written grew 6% on an underlying basis to $2.3 billion. The operating ROE for the last 12 months was 16.8%, while maintaining $564 million in excess capital at quarter end, following the all-cash acquisition of CDI in early May.

Net operating income for the first six months of the year was $396 million, up 18% from the same period last year. On a per share basis, net operating income increased 19% to $2.93. Net income was $377 million compared to $375 million the year before and earnings per share increased 1% to $2.79. The combined ratio improved by 2.5 percentage points to 92.5%. Direct premiums written for the first six months of the year increased 7% to reach $3.9 billion.

CEO's Comments

"Our business continues to yield good results," said Charles Brindamour, Chief Executive Officer of Intact Financial Corporation. "We experienced organic growth across all regions and all lines of business. The investments in our brands, digital strategies and new product offerings supported by favourable market conditions are paying off. The recent acquisition of CDI also had a positive impact on our business. We remain in a strong financial position to pursue disciplined growth."

Dividend

The Board of Directors declared a quarterly dividend of 53 cents per share on the Company's outstanding common shares. The Board also declared a quarterly dividend of 26.25 cents per share on the Company's Class A Series 1 and Class A Series 3 preferred shares. The dividends are payable on September 30, 2015 to shareholders of record on September 15, 2015.

Current Outlook

The Company expects that industry premiums will grow at a low single-digit rate. In personal property, the current hard market conditions should continue as the magnitude of catastrophe losses in recent years weighs on industry results. The Company expects that future rate reductions in Ontario auto will be commensurate with government cost reduction measures. In commercial lines, continued low interest rates and limited underwriting profitability at the industry level have translated into firmer conditions. Overall, the industry's ROE is expected to trend back toward its long-term average of 10% in 2015.

IFC is well-positioned to continue outperforming the P&C insurance industry due to its pricing and underwriting discipline, claims management capabilities, prudent investment and capital management practices and strong financial position. Given these attributes, the Company believes that it will outperform the industry's ROE by at least 500 basis points over the next 12 months.