Co-operators General Insurance Company Reports Second Quarter 2011 Results
Jul 28, 2011
This quarterly earnings news release should be read in conjunction with our Second Quarter 2011 condensed consolidated financial statements and Management's Discussion and Analysis (MD&A) as well as our 2010 Annual Report which are available on SEDAR at www.sedar.com. Unless otherwise noted, all amounts are expressed in Canadian dollars. Effective January 1, 2011, we adopted International Financial Reporting Standards (IFRS); as such, all financial data is presented under this accounting framework, including comparative amounts for 2010 which have been restated according to the transitional provisions of IFRS. For a complete discussion of our transition to IFRS, refer to our First Quarter 2011 consolidated financial statements and MD&A.
GUELPH, ON, July 28, 2011 /CNW/ - Co-operators General Insurance Company (Co-operators General) today released consolidated financial results for the three months ended June 30, 2011. Consolidated net income was $26.4 million compared to a net loss of $(2.6) million for the same quarter in 2010. This resulted in earnings per common share of $1.06 for the quarter compared to $(0.38) in the same period last year.
For the first six months of the year, net income has increased by $23.4 million compared to last year to $52.2 million, resulting in earnings per common share of $2.17 (2010 - $1.01)
"The wildfires that devastated the community of Slave Lake resulted in some 800 claims. We are very proud of our dedicated team who were among the first on the ground to serve impacted clients and to date have settled 62% of claims," said Kathy Bardswick, President and CEO of The Co-operators.
"After-tax losses from the Slave Lake event totaled approximately $31 million net of reinsurance. The cost of this tragedy and storm losses in the second quarter were partially offset by improving claims experience in Ontario auto insurance, and net investment gains and income which increased by $24.8 million to $45.1 million compared to the same quarter last year. For the second quarter, we achieved an annualized return on equity of 8.2 per cent, and our capital position remains very strong."
CO-OPERATORS GENERAL'S SECOND QUARTER FINANCIAL HIGHLIGHTS
($ in millions, except for earnings per share and ratios)
|Key financial data||2nd quarter 2011||2nd quarter 2010||YTD 2011||YTD 2010|
|Gross written premium (GWP)||666.6||658.7||1,146.3||1,120.9|
|Net earned premium (NEP)||536.4||529.0||1,065.5||1,039.5|
|Net income (loss)||26.4||(2.6)||52.2||28.8|
|Key success indicators|
|Earnings per share||$1.06||($0.38)||$2.17||$1.01|
|Annualized return on average equity||8.2%||(0.8%)||8.2%||4.7%|
|Combined ratio - excluding MYA||100.5%||102.2%||101.9%||101.2%|
|Minimum Capital Test (MCT)2||240%||242%||240%||242%|
1Growth metrics for 2010 are based on Canadian GAAP values as comparisons
do not exist
22010 MCT is as at December 31
Second quarter review
Second quarter GWP increased by 1.2% to $666.6 million, compared to $658.7 million in the second quarter of 2010. Increases were related to growth in vehicle and commercial policy counts, offset by downward pricing pressures in the competitive commercial insurance environment.
Net investment income, which is comprised of interest and dividends less investment expenses, increased by $1.1 million to $33.4 million versus the prior year. Lower impairment losses have contributed to increased net investment gains of $11.7 million versus a loss of $(11.9) million in the second quarter of 2010. This brings total net investment gains and income to $45.1 million, an increase of over 121%. On a year-to-year basis, net investment gains and income increased to $92.7 million compared to $66.6 million in 2010.
The combined ratio, excluding the market yield adjustment (MYA) for the quarter was 100.5%, which is a decrease from 102.2% during the comparable period last year. Undiscounted net claims and adjustment expenses decreased by 0.6% from 2010 bringing our second quarter loss ratio to 66.8%. Favourable claims development in the Ontario auto line of business has been a primary driver of the decrease where the loss ratio has declined by 29.1 percentage points from the second quarter of 2010. This is offset by claims losses associated with the wildfires in Slave Lake, Alberta. After tax losses associated with this event are approximately $31.0 million. The expense ratio has decreased by 0.4 percentage points compared to the second quarter of 2010.
The Company's portfolio composition is conservative and is comprised of high quality and well diversified assets. The credit quality of the portfolio remains high with 91.7% of bonds rated A or higher. The equity portfolio is 84.7% weighted to Canadian stocks.
The Company's capital position remains strong, as the Minimum Capital
Test (MCT) for Co-operators General Insurance Company was 240% at June
30, 2011, well above the regulatory minimum requirement of 150%.
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" 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. For further information,
refer to our Second Quarter 2011 MD&A or our 2010 Annual Report.
SHAREHOLDER AND INVESTOR INFORMATION
About Co-operators General Insurance Company
Co-operators General Insurance Company is a part of The Co-operators Group Limited (CGL), a Canadian-owned co-operative with more than $41 billion in assets under administration. Through its group of companies CGL offers home, auto, life, group, travel, commercial and farm insurance, as well as investment products. CGL is well known for its community involvement and its commitment to sustainability and is ranked #1 among the 50 Best Corporate Citizens in Canada by Corporate Knights. It is also listed among the 50 Best Employers in Canada.
Co-operators General preference shares are listed on the Toronto Stock Exchange under the trading symbols CCS.PR.C. and CCS.PR.D. For more information visit www.cooperators.ca.
For further information:
P. Bruce West
Executive Vice-President, Finance and Chief Financial Officer
Telephone: (519) 767-3036