Co-operators General Insurance Company Reports Second Quarter 2017 Results

GUELPH, ON, July 27, 2017

GUELPH, ON, July 27, 2017 /CNW/ - Co-operators General Insurance Company (Co-operators General) today released consolidated financial results for the three months ended June 30, 2017. The consolidated net income was $29.1 million compared to a net loss of $39.1 million for the same quarter in 2016. This resulted in an earnings (loss) per common share of $1.18 for the quarter compared to ($2.00) in the same period last year.

"One year after the unprecedented impacts of the Fort McMurray wildfire, our financial results reflect stability maintained through the diversification of our lines of business," says Rob Wesseling, president and CEO of The Co-operators. "Excluding the impact of last year's catastrophic events, heightened storm activity in the West and Ontario contributed to an increase in our claims costs, which was partially offset by steady growth in all lines of business across Canada."

CO-OPERATORS GENERAL'S SECOND QUARTER FINANCIAL HIGHLIGHTS
($ in millions, except for earnings per share and ratios)
	2nd quarter	2nd quarter ARIVA.DE Börsen-Geflüster Kurse CO-OPERATORS GEN INS, CL E PRF -   0,00%	2017	2016
	2017	2016	YTD	YTD
Key financial data
Direct written premium (DWP)	768.7	722.6	1,308.9	1,242.1
Net earned premium (NEP)	628.7	576.5	1,238.0	1,164.9
Net income (loss)	29.1	(39.1)	63.6	0.3
Total assets1	5,828.6	5,854.5	5,828.6	5,854.5
Shareholders' equity1	1,555.3	1,578.9	1,555.3	1,578.9
Key success indicators
DWP growth	6.4%	6.1%	5.4%	4.8%
NEP growth	9.1%	1.6%	6.3%	4.6%
Earnings (loss) per common share	$1.18	($2.00)	$2.73	($0.21)
Return on equity	8.4%	(11.2%)	9.1%	0.0%
Combined ratio – excluding market yield adjustment2	101.0%	114.3%	101.7%	104.8%
Minimum Capital Test (MCT)1	223%	227%	223%	227%

Second quarter review

DWP improvements during the second quarter were attributable to growth in policy and vehicle counts in all lines of business. In the second quarter, DWP increased by 6.4% or $46.1 million to $768.7 million. NEP increased during the second quarter by 9.1% or $52.2 million compared to the same period last year. The increase in NEP is seen in all geographic regions and all product lines.

The combined ratio, excluding the market yield adjustment for the quarter, was 101.0% compared to 114.3% for the same period last year. Undiscounted net claims and adjustment expenses have decreased by 8.6% from the second quarter of 2016, bringing the loss ratio to 67.0%. The impact of the catastrophic Fort McMurray wildfire in the second quarter of 2016 drove the decrease in undiscounted net claims and adjustment expenses. Excluding this event, claims costs increased compared to the same period of the prior year by $41.9 million. The increase was driven primarily by an increase in the frequency of current accident year claims across all lines of business, largely the result of multiple storms in the West and Ontario. This was combined with continued premium growth across all lines, an increase in severity of claims in the home line of business, and partially offset by a decrease of severity in the auto line of business.

The expense ratio remained relatively flat decreasing by 0.1 percentage points, to 33.2%, as compared to the same period in 2016. Reinstatement premiums included in 2016 as a result of the Fort McMurray wildfire impacted this ratio and excluding this impact, the expense ratio increased by 1.1 percentage points. This was the result of an increase in premium tax rates during 2016 and higher spend on information technology system initiatives.

Net investment income and gains decreased by $3.1 million versus the second quarter of 2016 as a result of a decrease in equity and bond gains, offset by an increase in foreign exchange contracts gains. In the second quarter of 2017, realized common share gains were $8.0 million lower than during the comparative quarter. The decrease in common share gains was partially offset by a $6.5 million increase in foreign exchange contract gains.

Our investment portfolio composition is conservative and is comprised of high quality and well diversified assets. The credit quality of our portfolio remains high with 97.7% of our portfolio considered investment grade and 81.2% rated A or higher. Our equity portfolio is 78.8% weighted in Canadian stocks.

Capital

The Company's capital position remains strong, as the Minimum Capital Test for Co-operators General was 223% at June 30, 2017, well above the internal and regulatory minimum requirements. 

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

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. These statements generally can be identified by the use of forward-looking words such as "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "plan", "would", "should", "could", "trend", "predict", "likely", "potential" 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 2017 MD&A or our 2016 Annual Report.

SHAREHOLDER AND INVESTOR INFORMATION

About Co-operators General Insurance Company

With assets of more than $5.8 billion, Co-operators General is a leading Canadian multi-product insurance company. Co-operators General is part of The Co-operators Group Limited, a Canadian co-operative. Through its group of companies it offers home, auto, life, group, travel, commercial and farm insurance, as well as investment products. The Co-operators is well known for its community involvement and commitment to sustainability, and is listed among the Best Employers in Canada by Aon Hewitt and Corporate Knights' Best 50 Corporate Citizens in Canada.

Co-operators General Class E, Series C Preference Shares trade under ticker symbol CCS.PR.C on the Toronto Stock Exchange (TSX). Further information can be found at www.cooperators.ca.

SOURCE The Co-operators