RBC reports increase in insurance revenue

The Royal Bank of Canada released Friday its financial results for the three months ending July 31, reporting net earned premiums in insurance — including home, auto, travel and life and group benefits — of $923 million, down 1.9% from $941 million during the same period in 2013.

RBC did not break out its property and casualty insurance results separately. The bank has restated its results from prior to Nov. 1, 2013 (the start of its fiscal year) because RBC is using new accounting standards.

In Canada, RBC writes home, auto, travel, life and group benefits. Its international insurance includes reinsurance for life, health, accident and annuities.

RBC reported policyholder benefits and claims of $925 million in Q3 2014, compared $154 million in Q3 2013.

Total revenue in insurance was $1.383 billion in the latest quarter, up from $561 million in Q3 2013. Investment income from insurance was $381 million in the three months ending July 31, compared to an investment loss of $439 million in the third quarter of last year.

RBC’s insurance policyholder benefits, claims and acquisition expense (PBCAE) was $1.009 billion in the latest quarter, compared to $263 million in Q3 2013. RBC attributed the increase “mainly due to the change in fair value of investments backing” of its policyholder liabilities, “which was largely offset in Insurance revenue.”

RBC added this factor “was partially offset by favourable actuarial adjustments reflecting management actions and assumption changes, and lower net claims costs in both Canadian and International Insurance as the prior year included net claims of $14 million ($10 million after-tax) related to severe weather conditions in Alberta and Ontario.”

The June, 2013 floods in southern Alberta and the July 8, 2013 rain storm in the Toronto area rank first and third respectively, in the most expensive natural disasters in Canadian history, when measured by insured losses.

RBC reported Q3 revenue in Canadian insurance of $871 million in 2014, up from $24 million in 2013. That increase was “mainly due to the change in fair value of investments backing our policyholder liabilities resulting from the decrease in long-term interest rate, largely offset in PBCAE,” RBC reported.

For the entire bank, RBC reported net income of $2.378 billion on revenues of $8.977 billion in the latest quarter.