This quarterly earnings news release should be read in conjunction with our Second Quarter 2012 consolidated financial statements and Management's Discussion and Analysis (MD&A) as well as our 2011 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, 2012 /CNW/ - Co-operators General Insurance Company (Co-operators General) today released consolidated financial results for the three months ended June 30, 2012.  Consolidated net income was $64.4 million compared to $26.4 million for the same quarter in 2011. This resulted in earnings per common share of $2.91 for the quarter compared to $1.06 in the same period last year.

For the first six months of the year, net income is $130.9 million, which is an increase of $78.7 million from the same period last year, resulting in earnings per common share of $6.03.

"Earnings in the second quarter were positively impacted by fewer weather-related claims in Western Canada and by favourable claims experience in the Ontario auto insurance market," said Kathy Bardswick, President and CEO of The Co-operators. "We are confident the auto insurance reforms introduced by the Ontario government in September 2010 are having a lasting impact on costs related to accident benefits. The changes are benefiting drivers in the province, as evidenced by the rate reductions we have implemented in certain territories."

Second quarter review

Second quarter DWP has increased by 1.9% or $11.2 million to $587.4 million compared to the same quarter last year. DWP increased as a result of client growth, which offset rate decreases in certain lines of business.

Net investment gains and income decreased by $1.4 million versus the second quarter of prior year. This is attributable to less realized and unrealized gains, which fully offset the lower impairment losses over the same period last year.

The combined ratio, excluding the market yield adjustment (MYA) for the quarter was 89.2%, which is an improvement from 100.8% during the comparable period last year. Undiscounted net claims and adjustment expenses have decreased by 12.3% from the second quarter 2011, bringing the loss ratio to 56.0%, excluding MYA for the second quarter.  This is the outcome of favourable claims development and fewer major events. The expense ratio has increased by 0.1 percentage point caused by increased general expenses and net commissions and agent compensation costs which offset net earned premium growth.

Our portfolio composition is conservative and is comprised of high quality and well diversified assets.  The credit quality of our portfolio remains high with 92.4% of our bonds rated A or higher.  Our equity portfolio is 82.7% weighted to Canadian stocks.

On June 6, 2012, Co-operators General announced that it has agreed to sell its wholly owned subsidiary, L'Union Canadienne, a Quebec-based intermediated property and casualty insurer, for $150 million to RSA Canada. The sale allows Co-operators General to focus on the growth of its direct distribution business in the Quebec market. The transaction is subject to regulatory approvals and other standard closing adjustments and conditions. It is expected that the transaction will close at the beginning of the fourth quarter of 2012. We anticipate that the sale will have a positive impact on our consolidated capital level. Co-operators General intends to use the proceeds for general corporate purposes. For discussion on L'Union Canadienne refer to the second quarter 2012 MD&A, Discontinued Operations section.

Capital

The Company's capital position remains strong, as the Minimum Capital Test (MCT) for Co-operators General Insurance Company was 285% at June 30, 2012, well above the regulatory minimum requirement of 150%.

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 Insurance Company. 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 2012 MD&A or our 2011 Annual Report.

SHAREHOLDER AND INVESTOR INFORMATION

About Co-operators General Insurance Company

With assets of more than $5.3 billion, Co-operators General is a leading Canadian-owned multi-product insurance company.  Co-operators General is part of The Co-operators Group Ltd. (CGL), a Canadian-owned 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 its commitment to sustainability and is listed among the 50 Best Employers in Canada.

Co-operators General Class E, Series C Preference Shares trade under ticker symbol CCS.PR.C and the Class E Series D Preference Shares trade under ticker symbol CCS.PR.D. Both series of shares trade on the Toronto Stock Exchange (TSX). Further information can be found at www.cooperators.ca. 

SOURCE: The Co-operators