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Co-operators General Insurance Company reports 2009 fourth quarter and yearend results

Feb 18, 2010

GUELPH, ON, Feb. 18 /CNW/ - Co-operators General Insurance Company ("Co-operators General") today announced its consolidated financial results for the three months and year ended December 31, 2009. For the fourth quarter, Co-operators General reported a consolidated net income of $82.6 million, compared to a net loss of $14.3 million for the same quarter in 2008. Earnings (loss) per common share was $3.86 for the fourth quarter compared to ($0.87) for the same period last year.

Net income for the year amounted to $74.0 million, compared to $52.8 million in 2008, resulting in earnings per common share of $3.02 compared to $2.21 in 2008.

"Our results were positively impacted by favourable weather conditions and claims development in the fourth quarter and the positive Supreme Court of Canada decision on the Alberta minor injury cap legislation. We continue to face challenges with the home insurance product due to the impact of rising severity of losses and replacement and clean up costs, as well as continuing losses in the Greater Toronto Area on auto accident benefit claims," said Kathy Bardswick, President and CEO of The Co-operators. "We experienced premium growth across all product lines and regions despite the very challenging economic environment. Our capital levels remain strong providing us with a solid foundation for the future."


    ($ in millions, except for earnings per share and ratios)

                          4th quarter  4th quarter          YTD          YTD
                                 2009         2008         2009         2008

    Gross written premium       564.2        539.1      2,257.6      2,183.7
    Net earned premium          524.2        501.4      2,037.8      1,980.2
    Net investment income        42.1         34.2        164.6        194.0
     and investment gains
    Net income (loss)(1)         82.6        (14.3)        74.0         52.8
    Earnings (loss) per
     common share                3.86        (0.87)        3.02         2.21
    Return on equity
     (annualized)(1)             28.5%        (5.6%)        6.5%         4.8%

    Gross written
     premium growth               4.7%         3.1%         3.4%         3.2%
    Loss ratio                   51.4%        76.1%        70.5%        73.6%
    Expense ratio(1)             33.7%        34.1%        32.6%        32.8%
    Combined ratio(1)            85.1%       110.2%       103.1%       106.4%
    Minimum Capital Test(1)       230%         199%         230%         199%
    (1) Restated for the quarter and year ended December 31, 2008


Fourth quarter review


Gross written premium in the fourth quarter increased 4.7% to $564.2 million, compared to $539.1 million in the fourth quarter of 2008 primarily as a result of rate and inflation increases in the auto and home portfolios, and policy count growth in the commercial portfolio.

Net investment income, which is comprised of interest, dividends and other income less investment expenses, was down $4.6 million versus the prior year, due to the impact of declining reinvestment yields on bonds. Net investment gains increased by $12.5 million in 2009 from the same period in 2008 when the fair values of our held-for-trading invested assets were driven lower by the turmoil in the capital markets.

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 95.7% rated A or higher. Our equity portfolio is 83.7% weighted to Canadian stocks, with a further weighting to large financial institutions. We have no mortgages in arrears.

The combined ratio for the quarter was 85.1%, down from 110.2% during the comparable period last year due to favourable claims development, the decision by the Supreme Court of Canada to deny Leave to Appeal regarding the Alberta minor injury cap, and favourable weather across Canada during the quarter.


Year-to-date review


Gross written premium increased 3.4% to $2,257.6 million, compared to $2,183.7 million in 2008. Growth was experienced across all lines of business and across all regions with the most significant dollar increases coming from Western Canada and Ontario. Western Canada growth is from all product lines, while Ontario growth mainly relates to auto and the home portfolio.

Net investment income from interest, dividends and real estate decreased to $143.3 million from $145.5 million in 2008. Net investment gains of $21.3 million represent a decrease from the 2008 level of $48.5 million. The decrease is due to other than temporary impairment losses of $25.1 million, offset by a fair value increase on held-for-trading investments. Also, in 2008 we realized gains with the disposal of a majority of our real estate portfolio.

The year-to-date combined ratio declined to 103.1% from 106.4% in 2008 with improvements across all of our core product lines, except for home. Positively impacting the loss ratio was the impact of favourable claims development as well as the final decision on the Alberta minor injury challenge. Negatively impacting the loss ratio is the impact of lower interest rates used to discount claims liabilities, poor results in the auto product line in the Greater Toronto Area, and increased severe storm activity in the summer months. The expense ratio has decreased by 0.2 percentage points compared with 2008 as investments in our claims handling and other software systems were offset by cost savings initiatives implemented across the organization.




The Company's capital position remains strong, as the Minimum Capital Test for Co-operators General Insurance Company was 230% at December 31, 2009, well above the regulatory minimum requirement of 150%. MCT was favourably impacted by the increase in market values on invested assets in the year, as well as the $115.0 million issuance of our Class E preference shares, Series D in the second quarter. Dividends declared during the year were $53.5 million, compared to $100.4 million in 2008.


About Co-operators General Insurance Company


With assets of over $5.1 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 Ltd., a national group of companies owned by 47 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, Senior Vice-President and Chief Financial Officer, Telephone: (519) 767-3036, Fax: (519) 824-0599


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