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Co-operators General Insurance Company reports first quarter 2010 net incomeof $31.8 million

May 3, 2010
7:00am

GUELPH, ON, May 3 /CNW/ - Co-operators General Insurance Company ("Co-operators General") today announced its consolidated financial results for the three months ended March 31, 2010. For the first quarter, Co-operators General reported a consolidated net income of $31.8 million, compared to a net loss of $6.4 million for the same quarter in 2009. Earnings (loss) per common share was $1.41 for the first quarter compared to ($0.38) for the same period last year.

"Thanks in part to mild winter weather throughout the country and an improved investment environment, we have started 2010 with a much better three months than we experienced at the start of last year. Net claims and adjustment expenses were down 8.9 per cent compared to the first quarter of 2009, and we achieved $8.4 million more in net investment gains, primarily by taking advantage of opportunities in the bond market," said Kathy Bardswick, President and CEO of The Co-operators. "We are also pleased to see our underwriting initiatives and our cost saving measures making a positive impact on our results."

 

    Co-operators General's First Quarter Financial Highlights
    ($ in millions, except for earnings per share and ratios)

    -------------------------------------------------------------------------
                                                    1st quarter  1st quarter
                                                        2010         2009
    -------------------------------------------------------------------------

    Gross written premium (GWP)                           457.3       466.0
    Net earned premium (NEP)                              505.6       492.6
    Net investment income and investment gains             47.2        40.9
    Net income (loss)                                      31.8        (6.4)

    Earnings (loss) per common share                      $1.41      ($0.38)
    GWP growth                                            (1.9%)       5.8%
    NEP growth                                             2.6%        1.7%
    Return on equity (annualized)                         10.5%       (2.4%)
    Combined ratio                                       100.5%      110.5%
    -------------------------------------------------------------------------

 

First quarter review

 

Gross written premium (GWP) in the first quarter decreased by 1.9% to $457.3 million, compared to $466.0 million in the first quarter of 2009. Excluding the impact of the cancellation of a co-insurance agreement with a related party, GWP has increased by $7.6 million or 1.6% from 2009. Net earned premium (NEP) was not affected by this transaction.

NEP has increased by 2.6% or $13.0 million compared to last year. Increases were seen across all of our core product lines and across all areas of the country driven by strong retention and rate and inflation increases in premiums. The increase is also related to the expanded agency distribution system in British Columbia and new agency office openings in Quebec.

Net investment income, which is comprised of interest, dividends and other income less investment expenses, decreased $2.1 million versus the prior year. Investment in shorter term, lower yielding bonds in anticipation of a mid-year increase in interest rates, and a corresponding decrease in bond market values contributed to the decrease as we strategically rebalanced our portfolio. Net investment gains increased by $8.4 million in 2010 from the same period in 2009. Gains were achieved by the re-balancing of the bond portfolio and by taking advantage of favourable sale opportunities in the bond and equity markets.

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 96.8% rated A or higher. Our equity portfolio is 83.6% weighted to Canadian stocks, with a further weighting to large financial institutions.

The combined ratio for the quarter was 100.5%, down from 110.5% during the comparable period last year. The loss ratio declined 8.6 percentage points, showing a significant improvement from historical first quarter trends. The loss ratio was impacted by favourable winter weather conditions resulting in fewer claims, lower average claims costs as well as fewer large losses. The loss ratio in our auto line of business has improved in the first quarter despite significant loss development in the Greater Toronto Area. The expense ratio declined 1.4 percentage points as cost savings initiatives that were put in place in 2009 have begun to have a positive impact on general expenses in 2010.

 

Capital

 

The Company's capital position remains strong, as the Minimum Capital Test for Co-operators General Insurance Company was 237% at March 31, 2010 compared to 230% at December 31, 2009, which is well above our internal minimum requirement of 175%.

 

About Co-operators General Insurance Company

 

With assets of over $4.9 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

 


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