) provided a financial update and earnings guidance for
third-quarter 2013. Among others, the company expects to report a
third-quarter net loss in its insurance business.
Toronto-Dominion is scheduled to declare its third-quarter 2013
results on Aug 29, 2013. The company has projected third-quarter
after tax net loss in the range of $240-$290 million in its
Wealth and Insurance segment. Owing to this, the company is
expected to bear an impact of about $418 million (after tax) or
45 cents per share on its overall earnings.
Moreover, excluding the above mentioned impact, Toronto-Dominion
expects third-quarter 2013 earnings in the insurance business to
range from $130-$180 million (after tax).
The expenses anticipated to be borne by the Wealth and Insurance
segment are related to the adverse weather conditions experienced
in southern Alberta on Jun 20, 2013 and the Greater Toronto Area
(GTA) on Jul 8, 2013 that resulted in mass evacuation as well as
severe damage to home and automobiles. This would result in a
pre-tax impact of about $170 million after reinsurance or after
tax impact of $125 million due to insurance claims.
Additionally, due to the Alberta flood in the third quarter of
2013, the bank would consider a pre-tax provision of up to $125
million or $93 million (after tax). This would reflect loan
losses incurred by the company in the real estate secured lending
Moreover, in the past few years, TD Insurance experienced
uncertainty related to automobile insurance reforms. An increase
in the number of third-party bodily injury claims in 2012 forced
the company to increase its fourth-quarter 2012 insurance
Further, the data from this year's claims development has
forced TD Insurance to include an additional pre-tax provision of
about $395 million and after-tax provision of about $292 million
to increase reserves for claims for its General Insurance
BANCO FRANC-ADR (BFR): Free Stock Analysis
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TORONTO DOM BNK (TD): Free Stock Analysis
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Given the continuous rise in litigation charges mainly in urban
areas including Toronto and fraudulent claims related to accident
benefit claims in Ontario, TD Insurance continues to re-assess
and raise the projected loss rates for prior claim years while
determining claim reserves.
Moreover, Toronto-Dominion expects a moderate decrease in
insurance earnings in the near term compared with the 2012
Although, Toronto-Dominion expects to incur losses in
third-quarter 2013, the acquisition activities are expected to
positively impact its financials in the long run. Further, the
company's consistent capital deployment activities are expected
to boost investors' confidence. However, the persistently low
interest rate environment, slow economic recovery and stringent
regulatory requirements remain concerns.
Toronto-Dominion currently carries a Zacks Rank #3 (Hold). Some
banks that are worth a look include
BBVA Banco Franc
Sumitomo Mitsui Financial Group Inc
) with a Zacks Rank #1 (Strong Buy) and
The Bank of Nova Scotia
) with a Zacks Rank #2 (Buy).