Co-operators General Insurance Company reports second quarter 2008 net income of $40.6 million



    GUELPH, ON, Aug. 5 /CNW/ - Co-operators General Insurance Company
("Co-operators General") today announced its consolidated financial results
for the six months ended June 30, 2008. For the second quarter, Co-operators
General reported consolidated net income of $40.6 million, compared to $48.9
million for the same quarter in 2007. Earnings per common share were $1.88 for
the second quarter compared to $2.29 for the same period last year.
    "The Company's underwriting results were challenged by higher claims in
both the home and auto lines, higher expenses related to strategic investments
and earned premium that was lower than planned," commented Kathy Bardswick,
president and CEO of Co-operators General. "However, strong equity and bond
gains as well as the strategic divestment of real estate assets positively
impacted our second quarter results."

    
         Co-operators General's Second Quarter Financial Highlights
               ($ in millions, except for earnings per share)

    -------------------------------------------------------------------------
                              2nd quarter  2nd quarter     YTD         YTD
                                  2008         2007        2008        2007
    -------------------------------------------------------------------------
    Gross written premium      $  614.9    $  598.6    $ 1055.2    $ 1021.7
    Net earned premium         $  492.3    $  472.4    $  976.5    $  934.8
    Net investment income
     and realized gains        $   68.3    $   39.0    $  126.9    $   84.1
    Net income                 $   40.6    $   48.9    $   51.1    $   57.1
    Earnings per common share  $   1.88    $   2.29    $   2.34    $   2.63
    Return on equity
     (annualized)                  14.1%       18.3%        8.9%       10.7%

    Gross written premium
     growth                         2.7%       (0.7%)       3.3%       (0.9%)
    Loss ratio                     70.0%       61.8%       73.4%       68.0%
    Expense ratio                  32.6%       30.7%       32.5%       31.9%
    Combined ratio                102.6%       92.5%      105.9%       99.9%
    Minimum Capital Test            231%        239%        231%        239%
    -------------------------------------------------------------------------
    

    Second Quarter Review
    ---------------------

    Gross written premium in the second quarter increased 2.7% to
$614.9 million, compared to $598.6 million in the second quarter of 2007.
Growth in personal automobile and home lines of business occurred primarily in
Western Canada and Quebec through rate increases, insured value increases,
strong client retention and the impact of two year policies in Quebec. These
were partly offset by price reductions in the commercial line of business due
to the continuing soft market.
    Net earned premium growth for the quarter was 4.2% above the previous
year and was largely attributable to the automobile and home lines of
business, predominately in Western Canada and Ontario. Consistent with our
year-to-date results net earned premium also increased as a result of our
decision to retain a greater portion of our underwriting risk by reducing our
use of reinsurance, in light of our strong capital position.
    Second quarter net investment income from interest, dividends and real
estate rose to $34.1 million in 2008, up from $33.3 million in 2007. Net
realized gains of $34.2 million were achieved in the quarter, up $28.5 million
from the same quarter in 2007 as we took advantage of market volatility to
crystallize additional gains, and continued divesting real estate holdings.
Subsequent to the period ended June 30th, 2008, the Company has finalized two
separate agreements to sell six of its office buildings in the real estate
portfolio. We have entered into 15 year lease agreements for five of these
office properties.
    The credit quality of our portfolio remains high with 96.3% of our bonds
rated A or higher. We did not have any credit losses or write-downs on our
invested assets during the quarter. We do not hold any non-bank asset backed
commercial paper in our investment portfolio.
    The loss ratio for the quarter was 70.0%, up from 61.8% during the
comparable period last year due to less favourable claims development in
Ontario auto and weather related events in Quebec and Ontario. This was
partially offset by the impact of an increase in the discount rate used to
discount claims liabilities. The combined ratio of claims and operating
expenses for the quarter was 102.6%, compared to 92.5% for the second quarter
of 2007.
    Our capital position remains very strong, as the Minimum Capital Test for
Co-operators General Insurance Company was 231% at June 30, 2008, well above
the regulatory minimum requirement of 150%.
    During the quarter, Co-operators General repaid subordinated debt to its
parent company totalling $30 million, and declared and paid a common share
dividend of $60.0 million to its parent company. Dividends declared on
preferred shares were $4.2 million, compared to $4.4 million in the same
quarter last year.

    About Co-operators General Insurance Company:

    With assets of more than $4.6 billion, Co-operators General is a leading
Canadian-owned multi-product insurance company. Co-operators General Insurance
Company is part of The Co-operators Group, a national group of companies owned
by 41 Canadian co-operatives, credit unions and like-minded organizations. The
Co-operators group of companies provide insurance and investment products.
Co-operators General preference shares are listed on the Toronto Stock
Exchange under the trading symbol CCS.PR.C.





For further information:

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


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