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Co-operators General Insurance Company reports 2009 second quarter results

Jul 31, 2009

    GUELPH, ON, July 31 /CNW/ - Co-operators General Insurance Company
("Co-operators General") today announced its consolidated financial results
for the three months ended June 30, 2009. For the second quarter, Co-operators
General reported consolidated net income of $13.9 million, compared to $39.0
million for the same quarter in 2008. Earnings per common share were $0.54 for
the second quarter compared to $1.80 for the same period last year. On a
year-to-date basis, net income was $7.5 million (2008 - $44.9 million) and
earnings per common share were $0.16 (2008 - $2.03)
    "Our successful $115.0 million preferred share offering in the quarter,
in combination with improved equity markets, helped to strengthen our capital
position," said Kathy Bardswick, President and CEO of The Co-operators. "The
company experienced positive premium growth, and the underlying loss ratios
improved during the second quarter."

         Co-operators General's Second Quarter Financial Highlights
               ($ in millions, except for earnings per share)

                          2nd quarter  2nd quarter          YTD          YTD
                                 2009         2008         2009         2008

    Gross written premium  $    625.5   $    614.9   $   1091.5   $   1055.2
    Net earned premium     $    502.1   $    492.3   $    994.7   $    976.5
    Net investment income
     and net investment
     gains(1)              $     39.4   $     66.0   $     80.2   $    117.7
    Net income(1)          $     13.9   $     39.0   $      7.5   $     44.9
    Earnings per common
     share(1)              $     0.54   $     1.80   $     0.16   $     2.03
    Return on equity
     (annualized)(1)             4.9%        13.7%         1.3%         7.9%

    Gross written premium
     growth                      1.7%         2.7%         3.4%         3.3%
    Loss ratio                  72.1%        70.0%        74.3%        73.4%
    Expense ratio               31.9%        32.6%        33.0%        32.5%
    Combined ratio             104.0%       102.6%       107.3%       105.9%
    Minimum Capital Test         223%         231%         223%         231%
    (1) Restated for the three and six months ended June 30, 2008

    Second Quarter Review

    Gross written premium in the second quarter increased 1.7% to $625.5
million, compared to $614.9 million in the second quarter of 2008. Growth was
achieved in all product lines with Western Canada leading the regional growth,
making up $5.4 million of the $10.6 million increase.
    Net earned premium growth for the quarter was 2.0% over the previous
year. Growth was seen in the Western, Atlantic and Ontario regions, while the
Quebec region remained consistent with the prior year.
    Second quarter net investment income from interest, dividends and real
estate rose to $36.1 million in 2009, up from $34.2 million in 2008. Net
investment gains of $3.3 million were achieved in the quarter, down from $31.8
million in the same period in 2008 where we had taken advantage of market
opportunities that existed at the time and recorded gains on sale of a portion
of our real estate portfolio. During the quarter we recognized other than
temporary impairment losses of $5.4 million (2008 - $nil) related to foreign
equity investments. The credit quality of our portfolio remains high with
95.5% of our bonds rated A or higher. Our equity portfolio is 83.6% weighted
to Canadian stocks.
    The combined ratio of claims and operating expenses for the quarter was
104.0%, compared to 102.6% for the second quarter of 2008. Our loss ratio for
the second quarter of 2009 increased to 72.1% from 70.0% in the second quarter
of 2008; however, removing the impact of claims discounting produces an
adjusted loss ratio of 72.0% in the second quarter versus 74.0% in 2008. The
second quarter loss ratio has increased on auto, particularly in the Greater
Toronto Area (GTA) for accident benefit claims. Home results in the quarter
showed an improvement over 2008 despite increased severity relating to large
loss fires. Our Quebec region experienced a 21.5 percentage point improvement
in the loss ratio versus the same quarter last year as milder weather
conditions favourably impacted frequency and severity of claims.


    Despite overall market impact on our investment portfolio, Co-operators
General's capital position remains strong, as the Minimum Capital Test was
223% at June 30, 2009, well above the regulatory minimum requirement of 150%.
    During the quarter, Co-operators General issued 4,600,000 Class E, Series
D preference shares for gross proceeds of $115.0 million.

    About Co-operators General Insurance Company:

    With assets of approximately $4.9 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 46 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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