News Releases

Co-operators General Insurance Company reports third quarter 2014 results

Oct 30, 2014
4:05pm

This quarterly earnings news release should be read in conjunction with our Third Quarter 2014 unaudited condensed consolidated interim financial statements and Management's Discussion and Analysis (MD&A) as well as our 2013 Annual Report which are available on SEDAR at www.sedar.com. Unless otherwise noted, all amounts are expressed in Canadian dollars. 

GUELPH, ON, Oct. 30, 2014 /CNW/ - Co-operators General Insurance Company (Co-operators General) today released consolidated financial results for the three months ended September 30, 2014. The consolidated net loss was $10.8 million compared to a net loss of $37.9 million for the same quarter in 2013. This resulted in a loss per share of $0.57 for the quarter compared to a loss per share of $2.02 in the same period last year.

"Extreme weather events continued to occur in 2014, with flooding in Manitoba and Saskatchewan; flooding in Burlington, Ontario; the Airdrie, Alberta hail storm; and rain and high winds in Nova Scotia, PEI and Newfoundland," said Kathy Bardswick, President and CEO of The Co-operators.

"We must heed the call of the Federal Commissioner of The Environment and Sustainable Development that climate change is affecting all regions of Canada and that action needs to be taken on both the mitigation and adaptation fronts. The government's plan to work collaboratively with the provinces, territories and municipalities to build safer and more resilient communities, as outlined in the 2014 Federal Budget, needs to be acted on urgently to better protect Canadians and their homes.

While we certainly felt the impact of weather-related events this quarter, our loss ratio improved, helped by premium and policy growth."


CO-OPERATORS GENERAL'S THIRD QUARTER FINANCIAL HIGHLIGHTS

($ in millions, except for earnings per share and ratios)







3rd quarter

2014

3rd quarter

2013

2014

YTD

2013

YTD

Key financial data





Direct written premium (DWP)

610.1

594.3

1,737.5

1,654.1

Net earned premium (NEP)

559.0

528.8

1,629.5

1,534.7

Net income (loss)

(10.8)

(37.9)

57.8

14.3

Total assets1

5,250.7

5,031.5

5,250.7

5,031.5

Shareholders' equity1

1,407.6

1,382.1

1,407.6

1,382.1






Key success indicators





DWP growth

2.7%

5.9%

5.0%

4.2%

NEP growth

5.7%

3.3%

6.2%

2.4%

Earnings (loss) per share

($0.57)

($2.02)

$2.28

$0.11

Annualized return on average equity

(3.4%)

(11.5%)

6.2%

1.5%

Combined ratio - excluding MYA

109.2%

114.3%

102.3%

107.7%

Minimum Capital Test (MCT) 1

219%

234%

219%

234%

1Balance sheet data and MCT results for 2013 are as at December 31

 

Third quarter review
DWP improvements are attributable to vehicle and policy count growth in the auto and home lines of business, paired with home portfolio rate adjustments. DWP in the third quarter has increased by 2.7% or $15.8 million to $610.1 million. NEP increased during the third quarter by 5.7% or $30.2 million compared to the same period last year. The increase in NEP is seen in all geographic regions and our core product lines.  

The combined ratio, excluding the market yield adjustment (MYA) for the quarter, was 109.2% compared to 114.3% for the same period last year. Undiscounted net claims and adjustment expenses have increased by 2.4% from the third quarter of 2013, bringing the loss ratio to 78.6%. Major events, including a Western hail catastrophe and other current accident year claims were greater than the same quarter of prior year, despite the impact of the Toronto floods on the third quarter of 2013. Higher information technology costs in the prior year drove the improvement in the expense ratio of 2.6 percentage points to 30.6%, as compared to 33.2% for the same period in 2013.

Net investment income and gains increased by $13.7 million versus the third quarter of 2013. The increase in investment income and gains is attributable to realized gains which were $20.4 million higher in third quarter of 2014 than the prior year period. During the quarter we capitalized on sales opportunities in both fixed income and equity markets. The decline in interest rates in 2014 has strengthened bond valuations which led to realized gains on bonds as we turned over the portfolio. During the third quarter of 2013 a rise in interest rates led to realized bond losses.   

Our investment portfolio composition is conservative and is comprised of high quality and well diversified assets. The credit quality of our portfolio remains high with 99.2% of our portfolio considered investment grade and 91.7% rated A or higher. Our equity portfolio is 77.3% weighted in Canadian stocks.

Capital
The Company's capital position remains strong, as the Minimum Capital Test (MCT) for Co-operators General was 219% at September 30, 2014, well above the internal and regulatory minimum requirements. 

FORWARD-LOOKING STATEMENTS
This document may contain forward-looking statements and forward-looking information, including statements regarding the operations, objectives, strategies, financial situation and performance of Co-operators General. These statements generally can be identified by the use of forward-looking words such as "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "plan", "would", "should", "could", "trend", "predict", "likely", "potential" or "continue" or the negative thereof and similar variations. These statements are not guarantees of future performance and involve known and unknown risk, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in the forward-looking statements or information. Although we believe that the expectations reflected in the forward-looking statements and information are reasonable, there can be no assurance that such expectations will prove to be correct.  Consequently, we make no representation that actual results achieved will be the same in whole or in part as those set out in the forward-looking statements and information. For further information, refer to our Third Quarter 2014 MD&A or our 2013 Annual Report.

SHAREHOLDER AND INVESTOR INFORMATION
About Co-operators General Insurance Company
With assets of more than $5.2 billion, Co-operators General is a leading Canadian-owned multi-product insurance company.  Co-operators General is part of The Co-operators Group Limited, a Canadian-owned co-operative. Through its group of companies it offers home, auto, life, group, travel, commercial and farm insurance, as well as investment products. The Co-operators is well known for its community involvement and its commitment to sustainability, and is listed among the 50 Best Employers in Canada.

Co-operators General Class E, Series C Preference Shares trade under ticker symbol CCS.PR.C on the Toronto Stock Exchange (TSX). Further information can be found at www.cooperators.ca.

SOURCE The Co-operators

For further information: P. Bruce West, Executive Vice-President, Finance and Chief Financial Officer, Telephone: (519) 767-3036


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