Apr 24, 2014
This quarterly earnings news release should be read in conjunction with our First Quarter 2014 consolidated 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, April 24, 2014 /CNW/ - Co-operators General Insurance Company (Co-operators General) today released consolidated financial results for the three months ended March 31, 2014. The consolidated net income was $10.6 million compared to $58.1 million for the same quarter in 2013. This resulted in earnings per common share of $0.35 for the quarter compared to $2.69 in the same period last year.
"Severe winter weather increased the number of claims, contributing to a $47.5 million reduction in net income compared to the same period last year, when we experienced milder conditions," said Kathy Bardswick, President and Chief Executive Officer of The Co-operators. "A decline in interest rates further contributed to the challenging quarter. However, we were pleased with the solid policy growth achieved, the increased revenue from core lines of business in all regions, and the growth of our capital base since the end of 2013.
The Ontario auto insurance market continues to be a challenge as the minority government deals with political pressure to reduce costs and lower premiums for consumers. As a result, Co-operators General and COSECO face further mandated rate decreases effective July 1, 2014 of 5.3% and 3.6% respectively. This, despite the fact that Co-operators General had previously reduced premiums by 12% since 2012. This cannot be sustained or actuarially justified. The government has the opportunity to take advantage of the Superintendent's Three Year Review to seriously consider significant modifications to the current auto insurance regime including a close examination of programs in other jurisdictions.
As part of our efforts to further reduce costs to consumers, we were pleased to launch our usage-based insurance offering, the en-route Auto ProgramTM, in Ontario this April. And we're excited about the potential to match premiums to actual driving behaviour while allowing our clients to save up to 25% on their premiums."
CO-OPERATORS GENERAL'S FIRST QUARTER FINANCIAL HIGHLIGHTS
($ in millions, except for earnings per share and ratios)
|1st quarter||1st quarter|
|Key financial data|
|Direct written premium (DWP)||472.9||447.2|
|Net earned premium (NEP)||525.6||500.1|
|Key success indicators|
|Earnings per share||$0.35||$2.69|
|Annualized return on average equity||3.3%||17.5%|
|Combined ratio - excluding MYA||103.7%||95.4%|
|Minimum Capital Test (MCT)1||242%||234%|
|1Balance sheet data and MCT results for 2013 are as at December 31|
First quarter review
DWP improvements are attributable to policy count growth in the auto, commercial and home lines of business as well as home portfolio rate and inflation adjustments. DWP in the first quarter has increased by 5.7% or $25.7 million to $472.9 million. NEP increased during the first quarter by 5.1% or $25.5 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 103.7% compared to 95.4% for the same period last year. Undiscounted net claims and adjustment expenses have increased by 20.0% from the first quarter 2013, bringing the loss ratio to 69.7%, excluding MYA. Results were negatively impacted by increased winter weather related claims and more unfavourable claims development. The expense ratio decreased 0.4 percentage points to 34.0%, compared to 34.4% for the same period in 2013.
Net investment income and gains decreased by $2.2 million versus the first quarter of 2013. Investment income decreased because of a shift from bonds to equities. Net investment gains in the first quarter were down relative to the same period in 2013 largely because less gains were realized.
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 100% of our portfolio considered investment grade and 93.5% rated A or higher. Our equity portfolio is 78.9% weighted in Canadian Stocks.
The Company's capital position remains strong, as the Minimum Capital Test (MCT) for Co-operators General Insurance Company was 242% at March 31, 2014, well above the internal and regulatory minimum requirements.
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 Insurance Company. 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 First Quarter 2014 MD&A or our 2013 Annual Report.
SHAREHOLDER AND INVESTOR INFORMATION
About Co-operators General Insurance Company
With assets of more than $5.0 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 and the Class E Series D Preference Shares trade under ticker symbol CCS.PR.D. Both series of shares trade 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