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Co-operators General Insurance Company reports fourth quarter 2007 profit of $60.8 million

Feb 19, 2008

    GUELPH, ON, Feb. 19 /CNW/ - Co-operators General Insurance Company
("CGIC") today announced its consolidated financial results for the three
months and year ended December 31, 2007. For the fourth quarter, CGIC reported
consolidated net income of $60.8 million, compared to $18.5 million for the
same quarter in 2006. The improvement was due to favourable automobile claims
development, higher investment returns and tax recoveries. Earnings per common
share were $2.88 for the fourth quarter compared to $0.78 for the same period
last year.
    Net income for the year amounted to $148.2 million, compared to
$118.1 million for the same period last year, resulting in earnings per common
share of $6.95 in 2007 compared to $5.46 in 2006. Excellent claims development
experience and higher realized investment gains contributed to the increase in
the results.
    "We are very pleased with our fourth quarter results, which included both
strong underwriting and investment returns," commented Kathy Bardswick,
president and CEO of The Co-operators. "Our claims development this quarter
was exceptionally favourable, contributing to a combined ratio better than our
target range, which further enhanced our strong capital position."

                     Fourth Quarter Financial Highlights
               ($ in millions, except for earnings per share)

                             4th quarter  4th quarter    YTD         YTD
                                  2007        2006       2007        2006
                                  ----        ----       ----        ----

    Gross written premium     $   523.1   $   518.7   $ 2,116.7   $ 2,099.3
    Net earned premium        $   485.6   $   474.0   $ 1,908.3   $ 1,855.9
    Net investment income
     and realized gains       $    58.5   $    39.7   $   181.5   $   188.6
    Net income                $    60.8   $    18.5   $   148.2   $   118.1
    Earnings per common
     share                    $    2.88   $    0.78   $    6.95   $    5.46
    Return on equity
     (annualized)                  23.2%        7.4%       13.5%       12.0%

    Gross written premium
     growth                         0.8%        6.7%        0.9%        5.2%
    Loss ratio                     61.7%       68.3%       66.5%       68.8%
    Expense ratio                  31.9%       30.7%       31.8%       31.0%
    Combined ratio                 93.6%       99.0%       98.3%       99.8%
    Minimum Capital Test            249%        245%        249%        245%

    Fourth Quarter Review
    Gross written premium in the fourth quarter increased 0.8% to
$523.1 million, compared to $518.7 million in the fourth quarter of 2006
primarily due to growth in policy count and insured values in the auto and
home lines of business which was partially offset by lower commercial premium
    Net earned premium growth for the quarter was 2.4% above the previous
year due to growth in home and auto policies in western Canada. In the Quebec
market, two year policies sold in 2006 continue to generate premium revenue
despite lower sales in 2007.
    Fourth quarter net investment income from interest, dividends and real
estate rose to $42.4 million in 2007, up from $36.6 million in 2006 due to
higher dividends and a larger invested asset base. Net realized gains of
$16.1 million were achieved in the quarter, up $13.0 million from the same
quarter in 2006 reflecting greater stock sales activity in 2007. Our invested
asset portfolio has no exposure to U.S. sub prime mortgages.
    The loss ratio for the quarter was 61.7%, down from 68.3% during the
comparable period last year due to favourable claims development especially in
the automobile line of business. The combined ratio of claims and operating
expenses for the quarter was 93.6%, compared to 99.0% for the fourth quarter
of 2006, due to the lower loss ratio.

    Year to Date Review
    Gross written premium for 2007 increased 0.9 per cent. Modest growth in
certain areas was offset by declines due to business lost as a result of
changes to our underwriting policies and fewer two year term policies sold in
Quebec during 2007.
    Net earned premium increased $52.3 million or 2.8 per cent over 2006
following the pattern of gross written premium but not subject to the timing
issues related to the two year policies sold in 2006.
    2007 net investment income from interest, dividends and real estate
increased to $142.3 million from $130.2 million in 2006 due to higher
dividends and a larger invested asset base. Net realized gains of
$39.2 million were below the 2006 level of $58.3 million which resulted from
strategic sales to crystallize stock gains.
    The year-to-date combined ratio improved to 98.3% from 99.8% in 2006, in
spite of the high claims levels in the first quarter of 2007 and increased
storm losses over 2006.

    CGIC's capital position remains very strong, as the Minimum Capital Test
was 249% at December 31, 2007, well above the regulatory minimum requirement
of 150% and an increase over the 2006 year end level of 245%.
    In the fourth quarter, a special dividend on common shares totalling
$20 million was declared by our Board of Directors and paid to our parent
company Co-operators Financial Services Limited. In 2006, a special dividend
on common shares totalling $10 million was declared by the Board and paid in
the third quarter.
    With assets of more than $4.6 billion, Co-operators General Insurance
Company is a leading Canadian-owned multi-product insurance company. CGIC is
part of The Co-operators Group, a national group of companies owned by 40
Canadian co-operative organizations that focuses on insurance and investment
products. CGIC preference shares are listed on the Toronto Stock Exchange
under the trading symbol CCS.PR.C.

For further information: Bruce West, Senior Vice-President and Chief
Financial Officer, Telephone: (519) 767-3036, Fax: (519) 824-0599

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