Co-operators General Insurance Company Reports 2012 Fourth Quarter and Year End Results
Feb 14, 2013
GUELPH, ON, Feb. 14, 2013 /CNW/ - Co-operators General Insurance Company ("Co-operators General") today announced its consolidated financial results for the three months and year ended December 31, 2012. For the fourth quarter, Co-operators General reported consolidated net income of $114.2 million, compared to $91.9 million for the same quarter in 2011. Earnings per common share was $5.36 for the fourth quarter compared to $4.28 for the same period last year.
Net income for the year amounted to $257.7 million, compared to $150.3 million in 2011, resulting in earnings per common share of $11.84 compared to $6.59 in 2011.
"We were pleased with the strong financial performance in 2012. This capped off a year in which our organization proudly joined the rest of the world in celebrating the International Year of Co-operatives and reinforced our ongoing commitment to those values that provide a competitive advantage for us," said Kathy Bardswick, President and CEO of The Co-operators. "Fourth quarter results were positively impacted by the sale of L'Union Canadienne. In addition, we experienced strong policy growth, and Net Earned Premium increased in all core lines of business and in all regions of the country."
CO-OPERATORS GENERAL'S FOURTH QUARTER FINANCIAL HIGHLIGHTS
|(in millions of Canadian dollars except ROE, EPS and ratios)|
||4th quarter||4th quarter||2012||2011|
|Key financial data|
|Direct written premium (DWP)1||518.7||504.7||2,106.6||2,050.0|
|Net earned premium (NEP)1||517.7||495.2||2,016.4||1,925.1|
|Key success indicators|
|Direct written premium (DWP)1||2.8%||0.8%||2.8%||0.7%|
|Net earned premium (NEP)1||4.5%||4.2%||4.7%||3.3%|
|Earnings per share (EPS)||$5.36||$4.28||$11.84||$6.59|
|Annualized return on equity (ROE)||33.5%||27.3%||19.1%||11.4%|
|Combined ratio - excluding MYA||94.1%||83.1%||95.2%||96.8%|
|Combined ratio - including MYA||93.9%||84.9%||96.4%||97.8%|
|Minimum Capital Test (MCT)||260%||259%||260%||259%|
1Balances exclude L'Union Canadienne for all periods presented.
FOURTH QUARTER REVIEW
Fourth quarter DWP increased to $518.7 million, compared to $504.7 million in the fourth quarter of 2011. This increase relates to higher average premium across certain product lines and more vehicles in force in Ontario and the West.
The combined ratio, excluding the market yield adjustment (MYA) for the quarter was 94.1%, which increased from 83.1% during the comparable period last year. Loss ratio deterioration is attributed to the combination of higher incurred but not reported reserves and lower favourable claims development compared to 2011. Even
though we have experienced favourable claims in both quarters, the reserves released in the fourth quarter of 2011 were greater.
Net investment income and gains increased by $14.9 million versus the fourth quarter of 2011. Net investment income and gains was positively impacted by $5.4 million less impairment losses compared to the same period in the prior year and realized gains were $4.6 million higher. Net investment income and gains was also positively impacted by changes in valuation of embedded derivatives in our preferred share portfolio.
On October 1, 2012, we closed the sale of L'Union Canadienne, Compagnie d'assurances (L'Union Canadienne) for cash consideration of $150.0 million. Our net income includes $34.0 million relating to the gain on sale of L'Union Canadienne, after closing adjustments and tax.
The Company's investment portfolio composition is conservative and the assets are high quality and well diversified. The credit quality of our bond portfolio remains high with 92.5% rated A or higher. Our equity portfolio is 83.1% weighted to Canadian stocks, with a further weighting to large financial institutions. Commercial mortgages make up 9.3% of our total invested assets, and are of high quality, with no mortgages in arrears over 60 days.
DWP increased 2.8% to $2,106.6 million, compared to $2,050.0 million in 2011. Improved results are primarily driven by policy and client growth which offset rate decreases in certain lines of business.
NEP has increased by $91.3 million or 4.7% to $2,016.4 million. The increase is seen in all of our core lines of business and across all regions of the country.
Net investment income and gains increased to $205.8 million from $157.1 million in 2011 as a result of the low interest rate environment and improvements in the equity markets. We realized net gains of $65.2 million on sale opportunities from our bond and stock portfolios. Impairment losses decreased by $23.5 million from 2011.
Excluding the MYA, the combined ratio improved to 95.2% from 96.8% in 2011 due to NEP improvements which offset increased net claims and adjustment expenses. Net claims and adjustment expenses have increased 2.7% from last year, which is mainly the result of increased incurred but not reported reserves and lower favourable claims development compared to 2011. Partially offsetting these increases are decreased current accident year claims across our core lines of business.
Our total assets have decreased $390.1 million from 2011, which is mainly the result of claims settlement and dividends paid on preferred and common shares in 2012.
The Company's capital position remains strong, as the Minimum Capital Test (MCT) for Co-operators General was 260% at December 31, 2012, well above the regulatory minimum requirement of 150%. The MCT has increased from 259% at December 31, 2011 due to higher earnings offset by dividends paid on preferred and common shares and MCT calculation changes effective January 1, 2012.
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.
ABOUT CO-OPERATORS GENERAL INSURANCE COMPANY
With assets of more than $4.9 billion, Co-operators General is a leading Canadian-owned multi-product insurance company. Co-operators General is part of The Co-operators Group Limited, 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
For further information:
P. Bruce West
Executive Vice-President, Finance and Chief Financial Officer
Telephone: (519) 767-3036 Fax: (519) 824-0599