Co-operators General Insurance Company Reports Third Quarter 2011 Results
Oct 27, 2011
This quarterly earnings news release should be read in conjunction with our Third 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, Oct. 27, 2011 /CNW/ - Co-operators General Insurance Company (Co-operators General) today released consolidated financial results for the three months ended September 30, 2011. Consolidated net income was $6.2 million compared to a net loss of $(8.9) million for the same quarter in 2010. This resulted in earnings per common share of $0.14 for the quarter compared to $(0.61) in the same period last year.
For the first nine months of the year, net income is $58.4 million, which is an increase of $38.6 million from the same period last year, resulting in earnings per common share of $2.31 (2010 - $0.40).
"Hail, wind and rain storms in Ontario and western Canada negatively affected our results, but were offset by much-improved claims results in the Ontario auto insurance market. At this point, we are cautiously optimistic that Ontario auto reforms introduced last year are having a positive impact," said Kathy Bardswick, President and CEO of The Co-operators.
"The major correction in the stock markets in the third quarter related to the debt crisis in Europe and uncertainty surrounding the U.S. budget contributed to our net investment losses of $10.1 million during that time."
CO-OPERATORS GENERAL'S THIRD QUARTER FINANCIAL HIGHLIGHTS
($ in millions, except for earnings per share and ratios)
|Key financial data|
|Direct written premium (DWP)||611.2||612.4||1,745.2||1,737.9|
|Net earned premium (NEP)||564.7||539.4||1,630.2||1,578.9|
|Net income (loss)||6.2||(8.9)||58.4||19.8|
|Key success indicators|
|Earnings per share||$0.14||($0.61)||$2.31||$0.40|
|Annualized return on average equity||1.9%||(2.9%)||6.1%||2.2%|
|Combined ratio - excluding MYA||101.0%||111.7%||101.6%||104.8%|
|Minimum Capital Test (MCT)2||242%||242%||242%||242%|
1Growth metrics for 2010 are based on Canadian GAAP values as comparisons do not exist
22010 MCT is as at December 31
Third quarter review
Third quarter DWP decreased by 0.2% to $611.2 million, compared to $612.4 million in the third quarter of 2010. DWP remained relatively consistent compared to 2010 with the decrease related to downward pricing pressures in the competitive commercial insurance environment, offset by growth in vehicle and commercial policy counts.
Net investment income, which is comprised of interest and dividends less investment expenses, increased by $1.0 million to $34.0 million versus the prior year. A significant correction to major stock markets in the quarter led to higher impairment losses, which have contributed to net investment losses of $10.1 million versus a gain of $23.3 million in the third quarter of 2010. This brings total net investment gains and income to $23.9 million, a decrease of over 57.5%. On a year-to-date basis, net investment gains and income are $116.5 million compared to $122.9 million in 2010.
The combined ratio, excluding the market yield adjustment (MYA) for the quarter was 101.0%, which is a decrease from 111.7% during the comparable period last year. Undiscounted net claims and adjustment expenses decreased by 9.5% from 2010 bringing our third quarter loss ratio to 68.6%, excluding MYA. Favourable claims development in the Ontario auto line of business was a primary driver of the decrease where the loss ratio has declined by 28.6 percentage points from the third quarter of 2010. This is offset by claims losses associated with the significant storm losses in the quarter. The expense ratio has increased by 0.1 percentage points compared to the third 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 84.9% weighted to Canadian stocks.
The Company's capital position remains strong, as the Minimum Capital Test (MCT) for Co-operators General Insurance Company was 242% at September 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 Third 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