ING Canada Inc. is raising its dividend after a 13.7% increase in fourth-quarter profit.

The P&C insurer, 70% owned by ING Groep NV, said today it earned $196.9 million or $1.47 per share in the final three months of 2005, up from a year-earlier profit of $173.1 million, $1.29 per share.

Revenue increased 10.6% to $1.1 billion from $1 billion.

Full-year net income was $781.8 million or $5.85 per share, up 25.2% from $624.2 million or $4.66 per share in 2004, “driven by continued strength in underwriting profit and investment results,” as annual revenue rose to $4.4 billion from $3.8 billion following the acquisition of Allianz Canada.

The coming year’s industry returns from automobile insurance “are expected to continue to exceed historical levels,” ING Canada stated.

“Provincial reforms implemented over the last two years have stabilized claims costs while restoring availability and affordability. The sustainability of these cost containment measures and any further rate reductions will be key drivers of performance.”

The company added that automobile claims frequency remains low “and we believe it will either increase in 2006 or lead to additional premium reductions.”

In commercial insurance lines, premiums are softening “but are still yielding returns above historical levels.”

ING Canada declared a quarterly dividend of 25¢ per share, up from 16.5¢.

“Despite increases in the severity of both personal property and commercial insurance claims, reductions in automobile insurance premiums and a softer pricing environment in commercial insurance, we continued to have strong underwriting results,” said Claude Dussault, president and CEO, in a release.