Desjardins General Insurance Group reports third quarter results

• Net income of $12.1 million and a combined ratio excluding market yield adjustment of 88.4%
• An increase in direct premiums written of 8.0%
• Return on equity of 1.0% mostly due to high auto insurance losses, mainly in Ontario, and to major weather events

LÉVIS, QC, Nov. 14, 2016 /CNW Telbec/ - For the quarter ended September 30, 2016, Desjardins General Insurance Group (DGIG), a Desjardins Group subsidiary specializing in property and casualty insurance, reported a net income of $12.1 million compared to a net loss of $32.0 million for the corresponding quarter in 2015. Return on equity (ROE) was 1.0%, mostly due to continued high auto insurance losses, mainly in Ontario, and to hail and heavy rain in Western Canada and Ontario. The ROE for the quarter exceeded the -8.6% recorded for the same period in 2015, which was negatively impacted by the decline in financial markets.

The combined ratio excluding market yield adjustment (MYA) was 88.4% in the quarter, down 4.4 pts from 92.8% in the same period last year. However, the combined ratio performance was partially offset by amounts owed to State Farm in connection with the acquisition of its Canadian operations and arising from a favorable development of the claim reserves transferred to DGIG on January 1^st, 2015. Direct premiums written were $1,148.5 million, an increase of 8.0% due to the conversion of State Farm Canada policies from 6 to 12 month terms and to organic growth.

Nine month results
For the first nine months of the year, net income was $91.9 million, down from $226.5 million in the corresponding period last year, which benefited from a one-time gain and other non-recurring items related to the purchase of State Farm's Canadian operations. Return on equity was 5.3%, with a combined ratio excluding MYA of 96.4%. Direct premiums written were $3,488.3 million, an increase of 12.3%, which reflects both, the transition of State Farm auto policies from 6 to 12 month terms and organic growth.

"Our results this quarter were impacted by higher auto physical damage losses across the country, largely due to price inflation in auto parts as a result of weakness in the Canadian dollar. In addition, the continuing high cost of accident benefits in Ontario remains a concern, despite the government's recent reforms," said Denis Dubois, co-chair of DGIG.

"While we recognize the Ontario reforms were a step in the right direction, they don't fully address the key underlying cost issues. More fundamental changes are needed to ensure a sustainable auto insurance product that would provide better price stability to the benefit of consumers and the industry," noted Mr. Dubois.

Consolidated Financial Results as at September 30, 2016
(In millions of dollars, unless otherwise indicated)
	Q3 2016	Q3 2015	YTD 2016	YTD 2015
Direct premiums written	1,148.5	1,063.5	3,488.3	3,105.2
Underwriting income excluding MYA	81.3	42.5	70.9	233.7
Investment income (excluding G/L on matched bonds)	50.7	(37.8)	170.6	73.9
Net income	12.1	(32.0)	91.9	226.5
Return on equity	1.0%	-8.6%	5.3%	15.6%
Combined ratio excluding MYA	88.4%	92.8%	96.4%	89.6%

About Desjardins General Insurance Group
A subsidiary of Desjardins Group, Desjardins General Insurance Group (DGIG) is Canada's third largest provider of property and casualty insurance. The company distributes insurance under the Desjardins Insurance, The Personal, and State Farm Canada brands. DGIG is also a leader in Canada in white label distribution.

Caution concerning forward-looking statements
Certain statements made in this press release may be forward-looking. By their very nature, forward-looking statements involve assumptions, uncertainties and inherent risks, both general and specific. It is therefore possible that, due to many factors, these predictions, forecasts or other forward-looking statements as well as Desjardins Group's objectives and priorities may not materialize or may prove to be inaccurate and that actual results differ materially. Various factors beyond Desjardins Group's control could influence the accuracy of the forward-looking statements in this press release. Although Desjardins Group believes that the expectations expressed in these forward-looking statements are reasonable, it can give no assurance or guarantee that these expectations will prove to be correct. Desjardins Group cautions readers against placing undue reliance on forward-looking statements when making decisions. Desjardins Group does not undertake to update any written or verbal forward-looking statements that could be made from time to time by or on behalf of Desjardins Group, except as required under applicable securities laws.

SOURCE Desjardins General Insurance

(media inquiries only): Valérie Lamarre, Public Relations, Desjardins Group, 514-281-7275 or 1-866-866-7000, ext. 5557275, [email protected]