Money working for people
Copyright © 1996-2008, Fédération des caisses Desjardins du Québec. All rights reserved.
Centre des congrès de Québec, March 29, 2008
(Actual speech may differ from this text)
Mr. D'Amours and Madam president-elect,
Madam Chair of the Board and Chairs of the boards of directors of the subsidiaries,
Presidents, officers and representatives of the caisses and other Desjardins Group entities,
Last fall, when I was told that I would be the last person to speak this afternoon during the information period reserved for the subsidiaries, I wondered how I was going to get your attention, and keep it, at the end of these two long days. But then, while leafing through our third quarter financial report on my desk, I told myself that if our year-end results confirm the trend of the first nine months, I would have plenty to keep you interested.
So, it's with the deepest satisfaction that I speak to you today about the performance of your life and health insurance company in 2007. Desjardins Financial Security has had an extraordinary year. We are ending the second year of our 2006-2008 strategic plan with results that confirm our financial strength and our accelerated and sustained growth across Canada. I will take the next few minutes to deliver the year's highlights and then speak to you about our plans for the future.
In terms of business development:
Our profitability was affected, however, by the difficult subprime mortgage situation on the world markets. This situation caused a liquidity crisis on the non-bank Asset-Backed Commercial Paper market, otherwise known as the ABCP market. Our Company held close to $200 million in commercial paper. As at December 31, 2007, the value of these securities was lowered to $161 million, which reduced our after-tax income by $18 million.
However, assets under management and administration totalled $22.6 billion, for a 13% improvement.
Desjardins Financial Security's excellent performance is the end-result of the commitment and dedication of thousands of people. Our performance really is a collective success story!
I would like to thank all of our Desjardins Group partners for their confidence and support.
I would like to extend a special thank you to Mr. D'Amours for his remarkable contribution as the leader of Desjardins Group for the past eight years.
Your special qualities enabled you to ensure the continuity of Desjardins Group while adhering to its cooperative values and to contribute to its expansion.
Mr. D'Amours, on behalf of Desjardins Financial Security and its staff, I would like to extend our very best wishes for your health, happiness and future endeavours as you begin this new phase of your life! I would also like to thank you for the confidence you have shown me personally by allowing me to take the helm of Desjardins Financial Security.
I would also like to thank Ms. Sylvie St-Pierre Babin, Chair of the Desjardins Financial Security Board of Directors, and her fellow directors. Their vast experience and excellent counsel provide added value that strengthens our ability to take action for the benefit of our clients, insured, shareholders and Desjardins caisses.
Thank you also to our caisse partners for their exceptional contribution, which helped us to mutually reach our business objectives.
Last but not least, I would like to express my gratitude to my colleagues on the Senior Management Team, our employees and distribution partners. They go out of their way every day to satisfy our clients, caisse members, and partners.
I would like to take this opportunity to extend my sincere congratulations to Ms. Monique Leroux, the new president of Desjardins Group and to welcome her to Desjardins Financial Security as Chief Executive Officer. I would like to assure her of our fullest cooperation in helping her reach the objectives of our financial group.
I would now like to go over our results by business line:
In group and business insurance, we continued to make major advances, recording twice the growth of our competitors. Sales totalled $237 million and administered premiums amounted to $1.5 billion. Sales outside Quebec alone totalled $180 million. This represents 16% growth. The major group contracts we signed outside Quebec, mainly in the public and parapublic sector, were a big contributor to these results.
We signed an insurance partnership worth $85 million with the Ontario Hospital Association, which represents some 70,000 health network workers.
We also have the group insurance contracts for the 11,000 members of the Newfoundland and Labrador Teachers' Association and some 10,000 employees of Métro and its affiliated companies in Ontario, to name just a few.
In terms of the group insurance products we offer through financial institutions, mainly the Desjardins caisses, our overall Loan Insurance enrolment rates are up, signalling a reversal of the downward trend of recent years. The total volume of insured credit and the volume of premiums are up for both Loan Life and Loan Disability Insurance.
In individual insurance, sales totalled $42 million and premiums were up $18 million to stand at $392 million. I would also like to point out that individual insurance sales outside Quebec grew by a remarkable 42%.
Sales by our Desjardins caisse-dedicated financial security advisors increased by 6.5% and premiums by 21%. As a matter of fact, in 2007, we reached an important milestone with 100,000 in-force contracts. This means that 175,000 people are now covered by life or health insurance that they purchased from their caisse. This business model, which we call AssurFinance for Individuals, remains unique in Canada. In Quebec, this gives us a clear advantage that we must optimize to keep and grow our member business within Desjardins Group.
In individual insurance, we also reinforced our distribution capacity by opening four financial centres in Nova Scotia, Ontario and British Columbia.
In the area of products sold directly, such as Travel Insurance, we recorded growth of 7.4%. And judging by the early results from a partnership agreement we signed with a major national retailer, the development of our direct insurance distribution capacity across Canada looks very promising.
In the area of savings, we have posted very good results once again. Sales totalled $1.1 billion, which represents an increase of 4.5%.
In this sector, we launched the TRACE Lifecycle Environment, an innovative solution created for the benefit of group retirement savings plan sponsors.
We also introduced HELIOS, our new Guaranteed Investment Funds contract, which is one of the most innovative products on the individual retirement savings market. The product is now available in the caisses, where the response has been very positive. In 2007, combined MILLENNIA and HELIOS product sales grew by 32.4%.
Our subsidiary Sigma Assistel signed several new service agreements in 2007. The number of Canadians who now have access to Sigma's telephone assistance services has grown from 3.5 million to 5 million. This is an exceptional increase.
I will end my review of the Company's financial results here. For additional information, I invite you to view our corporate CD-Rom, which is available at the exit. It includes, among other things, our Financial Report and our Social Responsibility Report.
So, as you have just seen, Desjardins Financial Security has had another excellent year. We have made a great deal of progress, in particular by strengthening our presence outside Quebec. While these success stories are very satisfying, there is still much to do. We are not going to rest on our laurels… quite the opposite! Now that we have the momentum, we'll be able to go a whole lot further and faster. So, for us, now is the right time to invest in fast-tracking our growth. To ensure our organization's survival, consolidate our position and become a true major leaguer, alongside the Big Three Canadian life and health insurers that dominate the market, we must and will invest more in the coming months and years.
With this goal in mind, starting this year we will be maximizing each business line's strengths to implement this accelerated growth strategy, which will lay the groundwork for our next strategic plan. This plan is aiming for an additional $1 billion in sales by 2011.
To achieve this objective, we will be working on several fronts at once:
Yes, it's an ambitious plan but it's also a necessary one. To join the ranks of the Big Three, we have to move faster than they do. That's why we have decided to take "giant" steps. History is full of success stories involving companies and individuals who set ambitious objectives and did what they had to do to achieve them.
I invite you now to see where we are going next.
(VIDEO - 6 min.)
Based on what we have just seen and heard, we know that we can count on the support and commitment of thousands of engaged employees and partners to achieve our growth plan, which in the end will benefit our ultimate shareholders, the Desjardins caisses.
Having said this, even if our development efforts are primarily targeted at markets outside Quebec, we have no intention of slowing down the pace of growth in Quebec. Far from it! We are going to continue to work hard to improve our service offer. To do that, we will maintain the close ties we have with the caisses and Desjardins Business Centres. Desjardins Financial Security will remain an attentive and supportive partner, determined to help you reach your objectives. We want to continue to participate in your success and growth for the benefit of caisse members.
Thank you once again for your exceptional contribution to the achievement of our objectives.
Thank you for your confidence.
Enjoy the rest of your afternoon.
Money working for people
Copyright © 1996-2008, Fédération des caisses Desjardins du Québec. All rights reserved.