Co-operators General Insurance Company Reports 2014 Fourth Quarter and Year End Results

GUELPH, ON, Feb. 19, 2015 /CNW/ - Co-operators General Insurance Company ("Co-operators General") today announced its consolidated financial results for the three months and year ended December 31, 2014. For the fourth quarter, Co-operators General reported consolidated net income of $79.7 million, compared to $74.6 million for the same quarter in 2013. Earnings per common share was $3.78 for the fourth quarter, compared to $3.40 for the same period last year. Direct written premium was $568.2 million in the quarter, an increase of $25.6 million as compared to $542.6 million in the fourth quarter last year.

Net income for the year amounted to $137.6 million, compared to $88.9 million in 2013, resulting in earnings per common share of $6.04 compared to $3.51 in 2013. Direct written premium increased 5.0% over 2013, from $2,196.6 million in the prior year to $2,305.7 million.

"The premium growth we experienced in the fourth quarter was largely driven by increases in client counts in our home and auto lines of business in Ontario, Quebec and the Western provinces," said Kathy Bardswick, President and CEO of The Co-operators. "The performance of our property lines in Alberta are improving and overall we're pleased with our results for 2014, particularly the growth of clients in all regions."

"We look forward to building upon our successes, guided by a new strategic plan that will help us to integrate the competitive advantage derived from our commitment to co-operative principles and our leadership in sustainability."

CO-OPERATORS GENERAL FOURTH QUARTER FINANCIAL HIGHLIGHTS


(in millions of Canadian dollars except ROE, EPS and ratios)  


4th quarter
2014

4th quarter
2013

2014
YTD

2013
YTD

Key financial data





Direct written premium

568.2

542.6

2,305.7

2,196.6

Net earned premium

560.2

537.1

2,189.6

2,071.9

Net income

79.7

74.6

137.6

88.9

Total assets

5,293.6

5,031.5

5,293.6

5,031.5

Shareholders' equity

1,491.6

1,382.1

1,491.6

1,382.1






Key success indicators





Direct written premium (DWP) growth

4.7%

4.6%

5.0%

4.3%

Net earned premium (NEP) growth

4.3%

3.7%

5.7%

2.8%

Earnings per share (EPS)

$3.78

$3.40

$6.04

$3.51

Annualized return on equity (ROE)

27.2%

23.2%

10.6%

6.9%

Combined ratio (excluding MYA)

89.7%

94.0%

99.1%

104.1%

Combined ratio (including MYA)

90.4%

93.6%

100.2%

103.2%

Minimum Capital Test (MCT)

228%

234%

228%

234%

FOURTH QUARTER REVIEW

Fourth quarter DWP increased to $568.2 million, compared to $542.6 million in the fourth quarter of 2013. Growth was primarily in the auto and home lines of business in both the Ontario and Western regions.

The combined ratio, excluding the market yield adjustment (MYA) for the quarter, was 89.7% compared to 94.0% in the fourth quarter of 2013. The fourth quarter loss ratio, excluding MYA, improved to 56.6% from 63.7%. We experienced fewer large losses in 2014, whereas the same quarter of the prior year was impacted by the late December ice storm in Ontario and commercial fire losses.

Net investment income and gains for the fourth quarter of 2014 were $46.8 million compared to $57.9 million for the same period of 2013. The $11.1 million decline in net investment income and gains in the current quarter was primarily the result of lower fund distributions received from our equity portfolios. Net investment gains reflect net realized gains of $17.9 million compared to $15.8 million in the same period of 2013.

The Company's investment portfolio composition is conservative and the assets are high quality and well diversified. The credit quality of our bond portfolio remains high with 98.8% of our bonds considered investment grade and 89.6% rated A or higher. Our equity portfolio is 75.4% weighted to Canadian stocks, with a further weighting to large financial institutions. Commercial mortgages make up 10.8% of our total invested assets.

ANNUAL REVIEW

DWP increased 5.0% to $2,305.7 million, compared to $2,196.6 million in 2013. Improved results are primarily from policy and client growth although there have also been rate and inflation increases in certain lines of business.

NEP has increased by $117.7 million or 5.7% to $2,189.6 million as a result of growth seen in all of our geographic regions and all core lines of business.

Net investment income and gains increased to $181.4 million from $154.8 million in 2013 resulting from declining interest rates having a positive impact on our bond and preferred share portfolios. We also realized net gains of $68.3 million compared to $37.3 million in 2013 by capitalizing on sale opportunities in equity markets during the year.

Excluding the MYA, the combined ratio improved to 99.1% from 104.1% in 2013, largely due to the impacts the Alberta and Toronto catastrophes and the late December ice storm had on the prior year. Absent these impacts, we actually experienced higher accident year claims. Our net claims and adjustment expenses increased $24.0 million or 1.6% compared to 2013.

CAPITAL

The Company's capital position remains strong, as the Minimum Capital Test (MCT) for Co-operators General was 228% at December 31, 2014, well above the internal and regulatory minimum requirements. The decrease in our MCT from 234% at December 31, 2013 resulted from the redemption of our Class E, Series D preference shares in the second quarter of the year, increases to unpaid claims and unearned premiums and changes in our investment mix.

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 risks, 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.

ABOUT CO-OPERATORS GENERAL INSURANCE COMPANY

With assets of more than $5.2 billion, Co-operators General is a leading Canadian-owned multi-product insurance company. Co-operators General is part of The Co-operators Group Limited, a Canadian-owned 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 its commitment to sustainability, and is listed among the 50 Best Employers 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

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

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