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Co-operators General Insurance Company reports 2011 fourth quarter and year end results

Feb 16, 2012

GUELPH, ON, Feb. 16, 2012 /CNW/ - Co-operators General Insurance Company ("Co-operators General") today announced its consolidated financial results for the three months and year ended December 31, 2011. For the fourth quarter, Co-operators General reported a consolidated net income of $91.9 million, compared to $52.8 million for the same quarter in 2010. Earnings per common share was $4.28 for the fourth quarter compared to $2.37 for the same period last year.

Net income for the year amounted to $150.3 million, compared to $72.7 million in 2010, resulting in earnings per common share of $6.59 compared to $2.77 in 2010.

"Significant improvements year over year can be attributed to favourable claims experience in the Ontario automobile insurance portfolio and positive net investment income, despite the volatility of the market. This was offset partially by continuing underwriting losses due to the increased frequency and severity of major events like Slave Lake and the summer storms in Western Canada." said Kathy Bardswick, President and Chief Executive Officer of The Co-operators. "We are pleased that we increased net earned premium in all regions of the country, lowered our combined ratio and remained well capitalized in spite of the volatile investment environment."


(in millions of dollars except ROE, EPS and ratios)
  4th quarter 4th quarter 2011 2010
  2011 2010 YTD YTD
Key financial data  
Direct written premium (DWP) 570.3 568.3 2,331.0 2,321.8
Net earned premium (NEP) 564.2 540.8 2,194.4 2,119.7
Net income 91.9 52.8 150.3 72.7
Total assets  5,292.8 5,135.1 5,292.8 5,135.1
Shareholders' equity  1,524.2 1,386.2 1,524.2 1,386.2
Key success indicators 
Direct written premium (DWP)1 0.4% 2.4% 0.4% 4.5%
Net earned premium (NEP)1 4.3% 3.2% 3.5% 4.0%
Earnings per share (EPS) $4.28 $2.37 $6.59 $2.77
Annualized return on equity (ROE) 27.3% 17.1% 11.4% 5.9%
Combined ratio - excluding MYA  86.1% 98.0% 97.7% 103.0%
Combined ratio - including MYA  87.8% 96.0% 98.7% 103.4%
Minimum Capital Test (MCT) 259% 244% 259% 244%
1Growth metrics for 2010 are based on Canadian GAAP values as comparisons do not exist


Fourth quarter DWP increased slightly to $570.3 million, compared to $568.3 million in the fourth quarter of 2010. This increase relates to strong retention in the home and auto lines of business as well as rate increases, policy growth and increased participation in the risk sharing pool.

We have experienced significant improvements from prior year as a result of favourable claims development mainly due to Ontario auto. The combined ratio, excluding the market yield adjustment (MYA) for the quarter was 86.1%, which is a significant decrease from 98.0% during the comparable period last year. This was largely driven by loss ratio improvements that are attributed to favourable claims development and a reduced amount of accident year claims in home and major event losses. We also benefited from benign weather conditions in the fourth quarter of 2011 and 2010. The fourth quarter is typically a strong quarter characterized by claims closing activities that generate reserve releases.

Net investment gains and income increased by $51.5 million versus the fourth quarter of 2010. The downward pressure on the equity markets was the driver of the impairment losses of $5.8 million greater compared to the same quarter in 2010. However, the decrease in interest rates had a positive impact on growing the net realized gains from prior year as we took advantage of opportunities in the bond market. Net investment gains and income was also positively impacted by movements in the valuations of the embedded derivative in our preferred share portfolio.

The Company's portfolio composition is conservative and the assets are high quality and well diversified.  The credit quality of our bond portfolio remains high with 92.1% rated A or higher. Our equity portfolio is 84.5% weighted to Canadian stocks, with a further weighting to large financial institutions. Commercial mortgages make up 8.0% of our total invested assets, and are of high quality, with 0.3% in arrears over 60 days.


DWP increased 0.4% to $2,331.0 million, compared to $2,321.8 million in 2010. Improved results are primarily driven by average premium growth and inflation which outpaced policy losses in most of our core products. In addition, we increased our participation in the Ontario risk sharing pools which had a positive impact on our DWP.

NEP has increased by $74.7 million or 3.5% to $2,194.4 million. The increase is seen in all of our core lines of business except auto and across all areas of the country driven by strong retention and rate and inflation increases in premium.

Net investment income increased to $137.0 million from $132.6 million in 2010. The markets experienced the debt crisis in Europe, the uncertainty around the U.S. budget and debt ceiling resolution and worries of slower growth in Asian economies which all contributed to a significant correction to major stock markets during the year. Interest and dividend income improved $5.8 million from prior year as a result of increased interest and dividend income on our fixed income investments. Global stock markets decline during the year, including the TSX total return drop of 8.7%, contributed to equity impairment losses of $29.6 million and predominantly impacted holdings in the technology and financial services sectors. However, the decreases in interest rates had a positive impact on growing the net realized gains by $12.4 million from the prior year as we took advantage of sale opportunities in the bond market.

Excluding the MYA, the combined ratio shows a favourable variance, 97.7% from 103.0% in 2010.  Net claims and adjustment expenses (excluding MYA) have decreased 5.2% from last year. This can mainly be attributed to positive claims developments for Ontario auto, decreased accident year claims and the positive impacts in the home line of business from pricing and segmentation initiatives. Offsetting this was an increased frequency and severity of claims and major events, including the Slave Lake catastrophe.

The expense ratio has increased by 0.5 percentage points due to an increase in agent compensation costs, lower offsetting ceded commissions and higher staff compensation expenses.


The Company's capital position remains strong, as the Minimum Capital Test (MCT) for Co-operators General Insurance Company was 259% at December 31, 2011, well above the regulatory minimum requirement of 150%. The MCT has increased from 244% at December 31, 2010 driven by the higher earnings and increases in invested asset market values compared to last year.


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 2011 Annual Report.


With assets of over $5.2 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 45 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




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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