Toronto Floods Cause Big Impact on Insurance industry
TD Bank says it expects to book as much as $125 million in losses in its insurance business related to the recent floods in Alberta and Toronto.
The bank said it is going to take a pre-tax loss of $418 million "from a combination of severe weather-related impact and increased general insurance claims" in its insurance business in the current quarter, which has seen abnormally high flood levels in two of Canada's largest cities.
In a release, the bank singled out flooding in Calgary and Toronto for $125 million of that, "reflecting claims for evacuation and home and automobile damage."
'1-time' weather impact
Without those losses, the insurance segment was on track to post a profit of between $130 and $180 million for the quarter, the bank said.
"While we expect all of the banks to report some impact from this summer's severe weather, TD has the largest exposure to the auto insurance market and so we see more limited impact, if any, to the rest of the group," CIBC analyst Robert Sedran said of TD's announcement.
"While not a positive development, this should not weigh too heavily on TD’s shares," Barclays analyst John Aiken said. "By definition, the impact of the weather-related charges is one-time in nature and should not have any bearing on the outlook for TD."
Insurance makes up a small part of TD's overall business, but the bank is the latest in a slew of Canadian insurers to cite the floods as having a negative impact on their bottom line.
Last week, Co-operators General Insurance Company dropped to a second-quarter loss of $5.9 million, mostly on costs from the floods in Alberta. The company said it lost around $77 million before taxes as a result of the Alberta floods, even after collecting reinsurance.
Intact Financial Corp., which is Canada's largest publicly traded property and casualty insurance company, expects to book about $257 million in costs over the second and third quarters as a result of catastrophic losses.
Intact's estimate includes costs associated with the Alberta flooding in June at the end of the company's second quarter and from flooding in Toronto and the Lac-Megantic train disaster in Quebec in July during the early part of its third quarter.