Co-operators General Insurance Company Reports 2019 Fourth Quarter and Year End Results
Feb 13, 2020
GUELPH, ON, Feb. 13, 2020 /CNW/ - Co-operators General Insurance Company ("Co-operators General") today announced its consolidated financial results for the three months and year ended December 31, 2019. For the fourth quarter, Co-operators General reported consolidated net income of $60.7 million, compared to a net loss of $18.2 million for the same quarter in 2018. Earnings per common share was $2.30 for the fourth quarter, compared to a loss per share of $0.81 for the same period last year. Direct written premium was $945.3 million in the quarter, an increase of $99.9 million as compared to $845.4 million in the fourth quarter of last year.
Net income for the year amounted to $174.0 million, compared to a net loss of $37.1 million in 2018. As a result, the loss per share of $2.03 in the prior year improved to earnings per share of $6.40 in the current year. Direct written premium increased by 13.9% to $3,752.4 million, compared to $3,295.9 million in 2018.
"Our increased focus on profitability and sustainable growth led to strong financial results in 2019 that were significantly supported by premium growth, investment gains and fewer than expected extreme weather events" said Rob Wesseling, President and CEO of The Co-operators. "We remain committed to enabling the financial security of the members, clients and communities that we serve."
CO-OPERATORS GENERAL FOURTH QUARTER FINANCIAL HIGHLIGHTS
(in millions of Canadian dollars except ROE, EPS and ratios)
Key financial data
Direct written premium (DWP)
Net earned premium (NEP)
Net income (loss)
Key success indicators
Earnings (loss) per common share (EPS)
Return on equity (ROE)
Combined ratio - excluding market yield adjustment
Combined ratio - including market yield adjustment
Minimum Capital Test (MCT)
1Amounts presented include the results of operations and balance sheet of CUMIS General Insurance Company (CUMIS General) from the date of acquisition, April 1, 2018
FOURTH QUARTER REVIEW
Fourth quarter DWP increased by 11.8% to $945.3 million, compared to $845.4 million in the fourth quarter of 2018. The increase was attributable to higher average premiums and sustained policy growth across all our core products and in all geographic regions, particularly in Ontario for the auto line of business.
Our combined ratio, excluding the market yield adjustment (MYA), for the quarter improved by 4.9 percentage points to 97.3% compared to 102.2% in the fourth quarter of 2018. Our fourth quarter loss ratio, excluding MYA, improved by 5.5 percentage points to 64.5% from 70.0%, the result of premium growth outpacing increases in claims and adjustment expenses. Undiscounted net claims and adjustment expenses increased compared to the same period of the prior year as a result of an increase in the frequency and severity of current year accident claims concentrated within our auto line of business in Ontario.
Our investments saw strong performance in the quarter as we recognized net investment income of $74.7 million compared to a net investment loss of $15.5 million recognized in the same period of the prior year. The favourable change was largely driven by unrealized preferred share and realized net foreign exchange gains.
The Company's investment portfolio is comprised of high quality and well diversified assets. The credit quality of our bond portfolio remains high with 96.4% of our bonds considered investment grade and 86.2% rated A or higher. Our equity portfolio is 86.4% weighted in Canadian stocks.
DWP for the year increased by 13.9% to $3,752.4 million, compared to $3,295.9 million in 2018. The increase was driven by higher average premiums across all lines of business and geographical regions and to a lesser extent, increases in policies and vehicles in force in Ontario.
NEP increased by $387.8 million or 13.4% to $3,274.7 million as a result of growth seen across all our geographic regions and all core lines of business.
Excluding the MYA, the combined ratio improved by 4.1 percentage points from 105.2% in 2018 to 101.1% in 2019, largely the result of premium growth coupled with fewer major event losses. Other operating expenses increased over the prior year by $145.9 million resulting in an increase to the expense ratio by 0.7 percentage points. Increases in other expenditures were primarily due to higher commissions and advisor compensation in line with premium growth in the year.
Net investment income increased by $38.6 million as compared to the prior year as a result of higher dividend distributions from pooled fund and limited partnership investments as well as higher interest income returns from rising short-term interest rates. Equity markets rebounded after a weak 2018 with favourable changes in the fair value of our investment portfolio leading to net investment income of $102.5 million, an increase of $166.8 million over 2018.
The Company's capital position remains strong, as the Minimum Capital Test for Co-operators General was 209% at December 31, 2019, 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. 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 risks, 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.
ABOUT CO-OPERATORS GENERAL INSURANCE COMPANY
With assets of more than $7.4 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 ranked as #1 among Corporate Knights' Best 50 Corporate Citizens in Canada and lists among the Best Employers in Canada by Kincentric. For more information, visit www.cooperators.ca.
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: Karen Higgins, Executive Vice-President, Finance and Chief Financial Officer, Telephone: (519) 840-3167