Nov 1, 2010
GUELPH, ON, Nov. 1 /CNW/ - Co-operators General Insurance Company ("Co-operators General") today announced its consolidated financial results for the three months ended September 30, 2010. For the third quarter, Co-operators General reported a consolidated net loss of $11.5 million, compared to a net loss of $16.1 million for the same quarter in 2009. Earnings per common share were ($0.74) for the third quarter compared to ($1.01) for the same period last year. On a year-to-date basis, net income was $26.8 million (2009 - loss of $8.7 million) and earnings per common share were $0.75 compared to ($0.85) in 2009. 2010 third quarter results were impacted by deterioration of the auto loss ratio in the Greater Toronto Area, as well as significant storm losses, specifically in Alberta and Newfoundland. Also impacting results was a market yield adjustment that increased claims expense by $6.1 million (2009 - $15.6 million) caused by lower yields on the Company's bond and mortgage portfolios.
"We continued to face a very challenging auto insurance market in the Greater Toronto Area during the third quarter. In addition, our results were impacted by severe storms, particularly hail storms in Western Canada and Hurricane Igor in Newfoundland and Labrador," said Kathy Bardswick, President and CEO of Co-operators General Insurance Company. "We are well positioned for the future, as our capital position remains very strong and the benefits of recent expansion of our agency force in British Columbia and Quebec are being realized."
<< CO-OPERATORS GENERAL'S THIRD QUARTER FINANCIAL HIGHLIGHTS ($ in millions, except for earnings per share and ratios) 3rd 3rd quarter quarter YTD YTD 2010 2009 2010 2009 Key financial data Gross written premium (GWP) 612.8 601.9 1,723.4 1,693.4 Net earned premium (NEP) 534.1 518.9 1,563.4 1,513.6 Net income (loss) (11.5) (16.1) 26.8 (8.7) Total assets 5,298 5,109 5,298 5,109 Shareholder's equity 1,335 1,194 1,335 1,194 Earnings (loss) per common share ($0.74) ($1.01) $0.75 ($0.85) Key success indicators GWP growth 1.8% 2.1% 1.8% 3.0% NEP growth 2.9% 3.3% 3.3% 2.4% Annualized return on average equity (3.8%) (5.6%) 3.0% (1.0%) Combined ratio - excluding MYA 112.2% 110.2% 104.9% 108.0% - including MYA 113.4% 113.2% 106.2% 109.3% >>
Third quarter review
Gross written premium (GWP) in the third quarter increased by 1.8% to $612.8 million, compared to $601.9 million in the third quarter of 2009. GWP gains were achieved in all regions of the country. The expansion of our distribution lines through acquisitions in British Columbia and through the opening of additional agency offices in Quebec have contributed to this growth.
Net earned premium (NEP) has increased by 2.9% or $15.2 million compared to last year. The increase is seen in all of our core lines of business and across all areas of the country, and is driven by strong retention and rate and inflation increases in premiums.
Net investment income, which is comprised of interest, dividends and other income less investment expenses, decreased $2.9 million versus the prior year. In the second quarter, we re-balanced our portfolio towards shorter term, lower yielding bonds in anticipation of a mid-year increase in interest rates, and this has contributed to the decline. Net investment gains increased by $14.3 million in 2010 compared to the same period in 2009. Gains were achieved by the re-balancing of the bond portfolio and by the increase in the value of our collateralized debt obligation holdings.
The Company's invested asset portfolio composition is conservative and the assets are high quality and well diversified. The credit quality of our bond portfolio remains high with 94.5% rated A or higher, with a large portion invested in Canadian government debt instruments. Our equity portfolio is 83.8% weighted to Canadian stocks.
The combined ratio for the quarter was 113.4%, up from 113.2% during the comparable period last year. The loss ratio declined 0.8 percentage points; however it was impacted by the effect of the market yield adjustment (MYA) recognized in the quarter. Adjusting for the impact of the MYA, the loss ratio is 80.3%, compared to 79.3% in the third quarter of 2009. The third quarter loss ratio was negatively impacted by high accident benefit costs in the Greater Toronto Area (GTA) and significant losses attributed to severe weather, specifically hail storms and flooding in Western Canada and Hurricane Igor in Newfoundland.
Excluding poor auto results in the GTA, the auto line of business has performed well in all other parts of the country. Pricing and segmentation initiatives implemented in 2009 improved the performance of the home line of business. These initiatives have led to a significant reduction in the number of claims and improved profitability.
The expense ratio increased 1.0 percentage points due in part to increased salary and other staff compensation costs as well as an increase in our provision for agent transition commissions.
The Company's capital position remains strong as the Minimum Capital Test for Co-operators General Insurance Company was 230% at September 30, 2010 compared to 231% at December 31, 2009. This is well above our internal minimum requirement of 175%.
About Co-operators General Insurance Company
With assets of over $5.2 billion, Co-operators General is a leading Canadian-owned multi-product insurance company. Co-operators General Insurance Company is part of The Co-operators Group, a national group of companies owned by 47 Canadian co-operatives, credit union centrals and like-minded organizations. Co-operators General preference shares are listed on the Toronto Stock Exchange under the trading symbols CCS.PR.C. and CCS.PR.D. Further information can be found at www.cooperators.ca.
For further information: P. Bruce West, Executive Vice-President, Finance and Chief Financial Officer, Telephone: (519) 767-3036, Fax: (519) 824-0599