Co-operators General Insurance Company reports first quarter 2008 net income of $10.5 million
May 5, 2008
GUELPH, ON, May 5 /CNW/ - Co-operators General Insurance Company ("Co-operators General") today announced its consolidated financial results for the three months ended March 31, 2008. For the first quarter, Co-operators General reported consolidated net income of $10.5 million, compared to $8.2 million for the same quarter in 2007. The increase over 2007 was due to improved core underwriting results and higher investment returns which were partially offset by the impact of lower interest rates and regulatory changes on our claims reserves. Earnings per common share were $0.46 for the first quarter compared to $0.34 for the same period last year. "Lower interest rates had a negative short-term impact on our results, as did changes in the Alberta auto regulatory situation related to minor injury claims," commented Kathy Bardswick, president and CEO of Co-operators General. "However, the company's performance during the first quarter demonstrated its continued underlying strength." Co-operators General's First Quarter Financial Highlights ($ in millions, except for earnings per share) 1st quarter 1st quarter 2008 2007 Gross written premium $ 440.4 $ 423.1 Net earned premium $ 484.2 $ 462.4 Net investment income and realized gains $ 58.6 $ 45.0 Net income $ 10.5 $ 8.2 Earnings per common share $ 0.46 $ 0.34 Return on equity (annualized) 3.6% 2.6% Gross written premium growth 4.1% -1.3% Loss ratio 76.9% 74.4% Expense ratio 32.4% 33.1% Combined ratio 109.3% 107.5% Minimum Capital Test 255% 236% ------------------------------------------------------------------------- First Quarter Review -------------------- Gross written premium in the first quarter increased 4.1% to $440.4 million, compared to $423.1 million in the first quarter of 2007. Growth in personal automobile and home lines of business, primarily in the Western and Ontario regions, was partly offset by declines in the commercial line of business and the Quebec region. Net earned premium growth for the quarter was 4.7% above the previous year and was largely attributable to the automobile and home lines of business, predominately in the Western and Ontario regions. This was partially offset by declines seen in the commercial line of business due to continued softening of the market. Net earned premium also increased as a result of our decision to retain a greater portion of our underwriting risk by reducing our use of reinsurance, in light of our strong capital position. First quarter net investment income from interest, dividends and real estate rose to $34.7 million in 2008, up from $32.6 million in 2007 due to a shift to higher yielding corporate bonds and a larger invested asset base. Net realized gains of $23.9 million were achieved in the quarter, up $11.5 million from the same quarter in 2007 as we took advantage of market volatility to crystallize additional gains, and began divesting real estate holdings. The credit quality of our portfolio remains high with 96.9% of our bonds rated A or higher. We did not have any credit losses or write-downs on our invested assets during the quarter. We do not hold any non-bank asset backed commercial paper in our investment portfolio. The loss ratio for the quarter was 76.9%, up from 74.4% during the comparable period last year due to the impact of lower interest rates on our claims reserves and regulatory changes in Alberta. The combined ratio of claims and operating expenses for the quarter was 109.2%, compared to 107.5% for the first quarter of 2007, due to the higher loss ratio. Excluding the impact of lower interest rates and regulatory changes in Alberta, our loss ratio was 72.6% and our combined ratio was 105.0%. Capital ------- Co-operators General's capital position remains very strong, as the Minimum Capital Test for Co-operators General Insurance Company was 255% at March 31, 2008, well above the regulatory minimum requirement of 150% and an increase over the 2007 year end level of 249%. Subsequent to the end of the quarter, Co-operators General repaid subordinated debt to its parent company totalling $30 million, and declared and paid a dividend of $60.0 million to its parent company. If these transactions had taken place prior to the end of the quarter, our MCT ratio would have been 241%. About The Co-operators: With assets of more than $4.6 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 42 Canadian co-operatives, credit union centrals and like-minded organizations that focus on insurance and investment products. Co-operators General preference shares are listed on the Toronto Stock Exchange under the trading symbol CCS.PR.C.
For further information: P. Bruce West, Senior Vice-President and Chief Financial Officer, Telephone: (519) 767-3036, Fax: (519) 824-0599