Desjardins Financial Security (DFS) today reported a lower profit for the second quarter.

DFS, the Desjardins Group subsidiary specializing in life and health insurance and retirement savings, says net income for the quarter ended June 30, was $59.3 million compared to $68.4 million in the same period in 2007.

For first six months of 2008, net income stood at $95.6 million. The share of net income payable to its Desjardins caisse shareholders totalled $90 million. Return on shareholder equity was 24.2%. Assets under management and administration stood at $22.1 billion.

DFS says the restructuring of investments held in asset-backed commercial paper (ABCP) that started last April has permitted the company to maintain provisions at levels relatively comparable to those of March 31, 2008, and to contain losses in the last quarter, unlike the previous three consecutive quarters.

Nonetheless, the deterioration in net income due to the ABCP situation during the first half of 2008 stood at $12.2 million, DFS says.

While ABCP costs cut into DFS profit during the second quarter, revenues rose.

Insurance sales totalled $57.8 million versus $51.1 million for the first quarter of the year. In Quebec, gross insurance premiums rose by $25.6 million or 6.1% over 2007. In the other provinces, gross insurance premiums increased to $30.5 million or 16.8%, a substantial increase compared to the second quarter of 2007.

DFS said investment product sales were especially good in the second quarter of 2008, totalling $49.9 million for an increase of $14.8 million over the same period last year.

As of June 30, the volume of gross premiums in group insurance from groups, businesses and plans sold in financial institutions, including the Desjardins caisses, stood at $1,062.7 million, for an increase of $114.5 million or 12.1% over the same period last year. Sales totalled $88.2 million.

In individual insurance, sales recorded by the financial security advisors at the Desjardins caisses, the financial centre network of SFL Partner of Desjardins Financial Security and Desjardins Financial Security Independent Network totalled $20.7 million, which is comparable to June 2007. Gross premiums were $239.7 million, for a $9.3 million improvement over last year.

Savings sales totalled $526.4 million and group retirement savings sales reached $67.3 million. As of June 30, individual savings sales amounted to $167 million for a $24.5 million increase over the first six months of 2007. Mutual fund sales stood at $292.1 million.