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Intact profit falls, but still beats estimates

A water bomber drops its load on a wildfire northeast of Edmonton in May. Intact's results were hurt by claims related to such fires.

Ian Jackson/The Canadian Press/Ian Jackson/The Canadian Press

Intact Financial said Thursday its second-quarter profit fell 13 per cent owing to claims related to wildfires in Western Canada, but the result topped analysts' expectations and helped support the insurer's share prices during an otherwise weak day for the markets.

Toronto-based Intact, which agreed in May to buy the Canadian arm of AXA Group for $2.6-billion, said profit was $123-million, or $1.12 a share, down from $141-million, or $1.22, in the quarter ended June 30.

On an operating basis, Intact earned 87 cents a share, handily beating analyst estimates of a profit of 73 cents.

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The company's shares were down 17 cents at $54.98 on the Toronto Stock Exchange at midday, versus a 3.2-per-cent drop for the benchmark S&P/TSX composite index .

"The earnings beat was driven by stronger-than-expected underwriting income," Scotia Capital analyst Phil Hardie said in a note.

Profit was hit by $92-million in losses owing to a series of wildfires in Alberta, as well as unusually severe rain and wind storms in Central Canada, Intact said.

The company said the catastrophic losses were partly offset by a strong performance by its auto insurance portfolio.

Intact, the former Canadian insurance arm of Dutch financial group ING, sells insurance under the Belair Direct and Grey Power banners.

Direct premiums written rose 3 per cent to $1.35-billion in the quarter, while underwriting income fell by 50 per cent to $33-million, given the impact of the wildfires and storms.

The company said in May the purchase of AXA Canada, the country's sixth-largest home, auto and business insurer, will increase Intact's direct premiums in Canada by $2-billion to more than $6.5-billion.

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The deal is expected to close this fall.

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