Insurance company ING Canada Inc. today reported its second-quarter profit dipped to $194.3 million from a year-earlier $206 million as higher weather-related payouts and other costs offset strong investment results.

For the quarter ended June 30, earnings amounted to $1.56 a diluted share, up from $1.54 as a result of a share buyback completed earlier this year.

“The growth in direct premiums written remained strong during the quarter despite overall rate reductions, and amounted to $1.2 billion, a 3.7% increase excluding industry pools,” the company said in a release.

“The strong performance of our investment activities, which resulted in higher interest and dividend income and increased gains on the sale of invested assets, softened the impact of a reduced contribution of our underwriting activities to our overall profitability,” commented CEO Claude Dussault.

Underwriting income declined with an increase in the severity of property losses and higher damages resulting from seasonal storm activities in some regions.

Over the next 12 months, the company top-line growth and underwriting ratios for the property and casualty insurance industry “will trend back towards historical levels. The cost containment measures in automobile insurance adopted over the years will continue to be a key performance driver,” it said.

“While automobile claims frequency continues to remain low, increases in frequency or severity of claims may lead to rate increases. Commercial insurance markets remain competitive and prices continue to soften. Furthermore, non-residential construction costs increases are also exerting pressure on commercial insurance underwriting margins.”

ING Canada is the largest provider of property and casualty insurance in the country, offering automobile, property and liability insurance to individuals and businesses.