TD’s 3Q earnings hammered by insurance losses

TD’s 3Q earnings hammered by insurance losses

TD’s 3Q earnings hammered by insurance losses

TD Bank Group’s third-quarter earnings, and those in its combined wealth and insurance segment, took a hit from weather related losses in the insurance segment and at group level were down 13% year on-year at $1.6 billion.

"Our third quarter results reflect very strong performances in our Canadian banking, wealth and US banking businesses” said Ed Clark, group president and chief executive. “[But these were] offset by losses previously announced in our insurance business as a result of a combination of severe weather-related impacts and increased general insurance claims."

TD’s Wealth and Insurance segment delivered net income of $7 million for the quarter, compared to $360 million in the third quarter last year. While wealth management and TD Ameritrade performed strongly, gains from wealth were offset by losses in the insurance business. On July 30, TD pre-announced a third quarter expected net loss in its insurance business as a result of charges of approximately $418 million after tax.

TD Ameritrade contributed $69 million in earnings to the segment, an increase of 23% compared to the third quarter last year, the bank said. TD said its wealth business had a strong third quarter, driven by asset growth and higher trading volumes. The bank said it expects continued strong performance for the remainder of the year.

TD Insurance posted a third quarter loss of $243 million after tax, the result of charges of approximately $418 million after tax, from a combination of severe weather-related impacts and increased general insurance claims.

Wealth and insurance revenue is derived from direct investing, advice-based businesses, asset management services, life and health insurance, and property and casualty insurance. Revenue for the quarter was $590 million, a decrease of $419 million, or 42%, compared to a year earlier.

In the wealth business, revenue increased mainly from higher fee-based revenue from asset growth, the addition of U.S. asset manager Epoch Holding Corp, acquired in late 2012, and improved trading volumes.

Assets under administration (AUA) of $279 billion as at July 31, an increase of $30 billion, or 12%,year over year. Assets under management (AUM) of $246 billion as at July 31, were up $42 billion, or 21%, from a year earlier.

The increase in AUA was mainly driven by net new client assets and an increase in the market value of assets. The increase in AUM was driven by the addition of $29 billion of Epoch AUM, net new client assets, and an increase in the market value of assets.