Desjardins posts surplus of $2.33 billion, increases member dividend

The Desjardins Group generated a record net surplus, before dividends, of $2.33 billion in 2018 and said it will return $253 million to its members in dividends, the highest level in six years.

The 8.14-per-cent increase in profits was achieved by the cooperative despite a marked decline in surpluses in its Property and Casualty Insurance segment.

“We made the decision, considering the very good results, to return more money to our members,” Guy Cormier, the president and CEO of Desjardins, said Wednesday during a conference call, adding that it’s a signal that things are going well for the financial cooperative.

The dividend payed to members is up 25 per cent from 2017.

The financial cooperative added 50,000 net new members last year, the largest increase in 10 years.

Excluding non-recurring items, the surplus before dividends rose 15.8 per cent to reach $2.2 billion.

Operating income rose 7.2 per cent to $16.56 billion

Despite the increases, Desjardins could raise auto insurance premiums. Its Property and Casualty Insurance segment reported a surplus of $173 million, down from $446 million in 2017, which included a non-recurring gain of $241 million from the sale of a subsidiary.

Cormier said the division was affected by an increase in claims because of the floods in Quebec last spring as well as an increase in claims by drivers.

“The whole industry is under pressure,” Cormier said. “Some of our competitors are losing money. I’m satisfied that we were able to generate $173 million.”

Desjardins said it has seen an increase in the number of accidents, notably because of distracted driving, and the cost of claims has been rising because vehicle repairs are becoming more and more expensive.

In Ontario, the cooperative could increase premiums of about seven to eight per cent. In Quebec, the situation could be different because of no-fault insurance.

“Can we expect that car insurance premiums will continue to rise in Quebec and in Ontario? The answer is definitely yes,” Cormier said.

Desjardins ended its year with a net surplus, before dividends, of $578 million during the fourth quarter, an increase of 34.7 per cent year over year.

Desjardins attributed this performance to an increase in net interest income in the personal and business services segment, which was partially offset by higher claims in the property and casualty insurance segment. 

For the three-month period that ended on Dec. 31, operating revenue was $4.16 billion, compared with $3.73 billion during the fourth quarter of 2017.

from Montreal Gazette https://montrealgazette.com/business/desjardins-posts-surplus-of-2-33-billion-increases-member-dividend
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