This quarterly earnings news release should be read in conjunction with our second quarter 2018 unaudited condensed consolidated interim financial statements and Management's Discussion and Analysis (MD&A) as well as our 2017 Annual Report which are available on SEDAR at www.sedar.com. Unless otherwise noted, all amounts are expressed in Canadian dollars. 

GUELPH, ON, July 26, 2018 /CNW/ - Co-operators General Insurance Company (Co-operators General) today released consolidated financial results for the three months ended June 30, 2018. The consolidated net loss was $4.0 million compared to net income of $29.1 million for the same quarter in 2017. This resulted in an earnings (loss) per common share of ($0.35) for the quarter compared to $1.18 in the same period last year.

"Our financial results were negatively impacted this quarter, largely due to underwriting losses driven by severe weather events across Canada, including the May windstorm in Ontario," said Rob Wesseling, president and CEO of The Co-operators. "Despite this, our capital position remains strong and the re-alignment of CUMIS General simplifies our structure and operations. Our continued strength amidst volatility in the world around us is bolstered by solid client growth and net earned premium across all product lines."

 

Second quarter review

On June 28, 2018, we closed the previously announced acquisition of CUMIS General Insurance Company (CUMIS General), which took effect on April 1, 2018. CUMIS General's results of operations and balance sheet are therefore included in our consolidated results from that date forward. CUMIS General was previously a subsidiary of a company under common control.

In the second quarter, DWP increased by 22.5% or $173.0 million to $941.7 million. The second quarter results of CUMIS General contributed 11.1% or $85.0 million to the overall increase. Excluding the impact of CUMIS General, DWP improved by 11.4% or $88.0 million. This was attributable to both rate adjustments and growth in policy and vehicle counts, most notably in Ontario. NEP increased during the second quarter by 14.1% or $88.7 million compared to the same quarter last year. The second quarter results of CUMIS General contributed 5.8% or $36.3 million to the overall increase. Excluding the impact of CUMIS General, NEP grew by 8.3% or $52.4 million. The increase in NEP during the quarter is seen throughout all geographic regions and core product lines. The results of CUMIS General were also driven by the trends described above.

Our combined ratio, excluding the market yield adjustment for the quarter, was 107.8% compared to 101.0% for the same period last year. We experienced a challenging second quarter with undiscounted net claims and adjustment expenses increasing by 27.4% from the second quarter of 2017, bringing the loss ratio to 75.7%. Claims costs increased compared to the same period of the prior year as a result of the inclusion of CUMIS General's current quarter results and an increase in the frequency of current accident year claims in Ontario, resulting from a significant windstorm, paired with an increase in severity of current accident year property claims in the West.

Partially offsetting the deterioration in the loss ratio is the improvement in our expense ratio. A decrease in the expense ratio of 1.1 percentage points to 32.1% was driven by NEP growth which outpaced increases in spend compared to the same period in the prior year.  

Net investment income and gains increased by $6.9 million versus the second quarter of 2017 driven by higher realized gains and dividend income resulting from portfolio rebalancing and yield enhancing initiatives.

Co-operators General's investment portfolio is comprised of high quality and well diversified assets. The credit quality of the bond portfolio remains high with 85.7% rated A or higher and 96.3% considered investment grade. The equity portfolio is 80.9% weighted in Canadian stocks.

Capital

Co-operators General's capital position remains strong, as the Minimum Capital Test for Co-operators General was 207% at June 30, 2018, well above the internal and regulatory minimum requirements. 

CAUTION REGARDING 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 second quarter 2018 MD&A or our 2017 Annual Report.

SHAREHOLDER AND INVESTOR INFORMATION

About Co-operators General Insurance Company

With assets of more than $6.4 billion, Co-operators General is a leading Canadian multi-product insurance company. Co-operators General is part of The Co-operators Group Limited, a Canadian 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 commitment to sustainability, and is listed among the Best Employers in Canada by Aon Hewitt and Corporate Knights' Best 50 Corporate Citizens 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