Co-operators General Insurance Company Reports Third Quarter 2015 Results

This quarterly earnings news release should be read in conjunction with our Third Quarter 2015 unaudited condensed consolidated interim financial statements and Management's Discussion and Analysis (MD&A) as well as our 2014 Annual Report which are available on SEDAR at www.sedar.com. Unless otherwise noted, all amounts are expressed in Canadian dollars. 

GUELPH, ON, Oct. 29, 2015 /CNW/ - Co-operators General Insurance Company (Co-operators General) today released consolidated financial results for the three months ended September 30, 2015. The consolidated net loss was $21.4 million compared to a net loss of $10.8 million for the same quarter in 2014. This resulted in a loss per share of $1.07 for the quarter compared to a loss of $0.57 in the same period last year.

"Our underwriting results improved relative to the same quarter of 2014, and our capital position remains strong. However, our results were impacted by weakness in the Canadian equity markets. We are pleased with the continued premium growth we have achieved in all lines of business across all regions of the country," said Kathy Bardswick, President and CEO of The Co-operators.

CO-OPERATORS GENERAL'S THIRD QUARTER FINANCIAL HIGHLIGHTS

($ in millions, except for earnings per share and ratios)


3rd quarter

3rd quarter

2015

2014


2015

2014

YTD

YTD

Key financial data





Direct written premium (DWP)

650.9

610.1

1,820.9

1,737.5

Net earned premium (NEP)

586.0

559.0

1,703.9

1,629.5

Net income (loss)

(21.4)

(10.8)

58.9

57.8

Total assets1

5,430.8

5,293.6

5,430.8

5,293.6

Shareholders' equity1

1,504.3

1,491.6

1,504.3

1,491.6











Key success indicators





DWP growth

6.7%

2.7%

4.8%

5.0%

NEP growth

4.8%

5.7%

4.6%

6.2%

Earnings (loss) per share

($1.07)

($0.57)

$2.48

$2.28

Return on equity

(6.2%)

(3.4%)

5.9%

6.2%

Combined ratio - excluding market yield adjustment

104.0%

109.2%

98.7%

102.4%

Minimum Capital Test (MCT)1

226%

228%

226%

228%

1Balance sheet data and MCT results for 2014 are as at December 31




Third quarter review

DWP improvements during the third quarter were attributable to policy and vehicle count growth in the home and auto lines of business paired with higher average home and auto premiums. In the third quarter, DWP has increased by 6.7% or $40.8 million to $650.9 million. NEP increased during the third quarter by 4.8% or $27.0 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 104.0% compared to 109.2% for the same period last year. Undiscounted net claims and adjustment expenses have decreased by 3.3% from the third quarter of 2014, bringing the loss ratio to 72.5%. The decrease in undiscounted net claims and adjustment expenses was driven by fewer major events compared to a Western hail catastrophe included in the prior year, partially offset by an increase in the frequency and severity of current year auto claims and less favorable claims development.  An increase in staff compensation costs as well as costs associated with information technology systems initiatives led to the increase in the expense ratio of 0.9 percentage points, to 31.5%, as compared to 30.6% for the same period in 2014.

Net investment income and gains decreased by $46.3 million versus the third quarter of 2014 due to higher preferred share, impairment and foreign exchange losses. In the third quarter of 2015, the change in fair value of preferred share investments led to a $23.5 million loss as compared a $2.0 million loss during the same period in 2014. Weakness in the energy and materials sector led $14.2 million in impairment losses booked in the third quarter of 2015 as compared to $3.8 million in the same period in 2014, while weakness in the Canadian dollar versus the U.S. dollar led to a $10.0 million increase in foreign exchange losses realized on foreign exchange forward contracts.

Our investment portfolio is comprised of high quality and well diversified assets. The credit quality of our portfolio remains high with 98.5% of our portfolio considered investment grade and 87.4% rated A or higher. Our equity portfolio is 72.6% weighted in Canadian stocks.

Capital

The Company's capital position remains strong, as the Minimum Capital Test (MCT) for Co-operators General was 226% at September 30, 2015, well above the internal and regulatory minimum requirements. 

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 Third Quarter 2015 MD&A or our 2014 Annual Report.

SHAREHOLDER AND INVESTOR INFORMATION

About Co-operators General Insurance Company

With assets of more than $5.4 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, wealth management as well as investment management 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

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