The sharp drop in the value of Canadian equities led ING Canada Inc. to record a net loss for the fourth quarter, the property and casualty insurer said Monday.

ING Canada said the net loss the quarter ended Dec. 31, 2008 was $64.1 million, or 53¢ a share, compared to a gain of $95.8 million, or 77¢ a share a year earlier.

The insurer said the decline reflects the impairment of $185.8 million, or $1.06 per share, of common equities as a result of the deep and prolonged drop in value of Canadian common equities.

Net operating income for the quarter was $75.1 million, or 63¢ a share down from $116.4 million, or 93¢ a share recorded in the same quarter of last year.

The overall combined ratio for the quarter was 98.9%, up 5.7 percentage points from the same quarter of the previous year.

Net income for the year 2008 was $128.2 million down 74.8% from the previous year while net operating income declined by 21.1% to $360.7 million. The overall combined ratio for the year was 97.1%.

ING Canada said the financial position of the company is strong with $427.5 million in excess capital, a minimum capital test ratio of 205%, up 5.1 percentage points from the end of the previous quarter, no debt and an untapped $150 million unsecured committed credit facility.


“Our operating performance in 2008 was healthy with a net operating income of $361 million. Our business insurance continued to perform extremely well in the current pricing environment. However, the severe storms that prevailed during the year impacted the results of our home insurance portfolio. Current accident year results in auto insurance were relatively stable,” said Charles Brindamour, president and CEO, in a release.

“Given the deep and prolonged decline of the Canadian stock market and the level of uncertainty about its recovery, we took a significant impairment on our common equity portfolio. We also continued to reduce the impact of the volatility of the capital markets on our balance sheet. Our financial position is strong with significant excess capital and no debt, which allows us to pursue our growth strategy and to capitalize on the acquisition opportunities that may arise as a result of the current market conditions,” he added.

Separately, ING Canada’s parent company, global bank and insurer ING Group NV said Monday it will book a large fourth-quarter loss, cut 7,000 jobs and change its CEO.

It also said the Dutch government will assume the risk for most of 27.7 billion euros (US$35.8 billion) in troubled U.S. mortgage-backed securities ING owns.

In a statement published Monday, the company estimated it will post loss of 3.3 billion euros when it reports earnings on Feb. 18.


ING said in the fourth quarter “market conditions deteriorated sharply, making it the worst quarter for equity and credit markets in over half a century.”

It suffered 2 billion euros in impairments and losses on stocks, bonds and real estate.

The job cuts represent five per cent of the company’s total workforce.

The company said CEO Michel Tilmant’s abrupt departure should be seen “in light of the extraordinary developments over the past few months.”

The company nominated its own supervisory board chairman, Jan Hommen, as Tilmant’s replacement, pending approval at the company’s annual meeting on April 27.

IE