CO-OPERATORS GENERAL INSURANCE COMPANY REPORTS FIRST QUARTER 2022 RESULTS
May 6, 2022
This quarterly earnings news release should be read in conjunction with our first quarter 2022 unaudited condensed consolidated interim financial statements and Management's Discussion and Analysis (MD&A) as well as our 2021 Annual Report which are available on SEDAR at www.sedar.com. Unless otherwise noted, all amounts are expressed in Canadian dollars.
GUELPH, ON, May 6, 2022 /CNW/ - Co-operators General Insurance Company (Co-operators General) today released consolidated financial results for the three months ended March 31, 2022. The consolidated net income was $132.2 million compared to net income of $197.8 million for the same quarter in 2021. This resulted in earnings per common share of $4.84 for the quarter, compared to earnings per share of $7.36 in the same period last year.
"Despite ongoing global and market uncertainty, coupled with increased claims activity this quarter, our continued financial stability is a testament to the resilience of our co-operative, and our ability to protect the financial security of our clients, members and communities," says Rob Wesseling, CEO of Co-operators. "Our capital position will enable us to meet the needs of the people we serve, not just in the short-term, but long into the future."
CO-OPERATORS GENERAL'S FIRST QUARTER FINANCIAL HIGHLIGHTS
($ in millions except for earnings per share and ratios)
Key financial data
Direct written premium (DWP)
Net earned premium (NEP)
Key success indicators
Underwriting income - excluding market yield adjustment (MYA)
Earnings per common share
Return on equity
Combined ratio - excluding MYA
Minimum Capital Test (MCT)1
1Balance sheet data and MCT results for 2021 are as at December 31
The first quarter of the year saw DWP increase by 7.8% or $65.4 million compared to the same quarter of 2021 due to an increase in policies in force in the travel line of business, combined with higher average premiums in the commercial and home lines of business in all regions. NEP increased during the first quarter by 5.4% or $49.5 million compared to the same quarter last year, which was primarily attributable to the commercial and home lines of business.
Undiscounted net claims and adjustment expenses increased by $103.3 million compared to the same quarter of 2021, while our loss ratio excluding MYA deteriorated by 8.2 percentage points to 58.8%. The increase in undiscounted net claims and adjustment expense is primarily attributable to higher unfavourable claims development and current accident year claims in the auto and home line of business, and was offset by lower claims activity in the farm line of business. Our expense ratio of 32.5% increased 1.2 percentage points compared to the first quarter of 2021, driven by increased strategic initiative spend and staffing costs. Consequently, our combined ratio excluding MYA increased to 91.3% in the quarter, an increase of 9.4 percentage points compared to the same period last year.
During the first quarter, a rapid rise in interest rates significantly impacted our results and financial position. The discount rate used to measure our claims liabilities increased in the quarter resulting in a favourable MYA of $71.0 million. The increase in discount rate was greater than the increase in the comparative quarter, as a result, the favourable MYA is $38.3 million higher than the same quarter of last year.
Net investment income and gains of $19.9 million was recognized in the quarter, a decrease of $44.6 million compared to the same quarter of the prior year. The decrease was primarily driven by unrealized losses on our preferred share portfolio, compared to unrealized gains in the same quarter of the prior year.
Our balance sheet, liquidity and capital positions remain strong and enable us to continue to serve and meet the needs of our clients while also supporting our strategic areas of focus. Our investment portfolio is comprised of high quality and well diversified assets. The credit quality of our portfolio remains high with 97.0% of our bond portfolio considered investment grade and 83.9% rated A or higher. Our equity portfolio is 83.4% weighted to Canadian stocks.
Co-operators General's capital position remains strong, as the Minimum Capital Test for Co-operators General was 228% at March 31, 2022, well above 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 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, including the impact of the COVID-19 pandemic on our investments, operations and claims negatively affecting the results of our operations and financial position. 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 2022 MD&A or our 2021 Annual Report.
ABOUT CO-OPERATORS GENERAL INSURANCE COMPANY
With assets of more than $8.6 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. Co-operators is well known for its community involvement and its commitment to sustainability. Achieving carbon neutral equivalency in 2020, Co-operators General is committed to net-zero emissions in its operations and investments by 2040, and 2050, respectively. Co-operators is also ranked as a Corporate Knights' Best 50 Corporate Citizens in Canada and is listed among the Best Employers in Canada by Kincentric. For more information, please 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.
Vice-President, Corporate Finance Services
1-888-767-3909 Ext: 302493
SOURCE The Co-operators Group Limited