Co-operators General Insurance Company Reports Third Quarter 2016 Results

This quarterly earnings news release should be read in conjunction with our Third quarter 2016 unaudited condensed consolidated interim financial statements and Management's Discussion and Analysis (MD&A) as well as our 2015 Annual Report which are available on SEDAR at www.sedar.com. Unless otherwise noted, all amounts are expressed in Canadian dollars. 

GUELPH, ON, Oct. 27, 2016 /CNW/ - Co-operators General Insurance Company (Co-operators General) today released consolidated financial results for the three months ended September 30, 2016. The consolidated net income was $16.3 million compared to a net loss of $21.4 million for the same quarter in 2015. This resulted in an earnings (loss) per common share of $0.71 for the quarter compared to ($1.07) in the same period last year.

During the quarter, there were no material changes to the Company's estimated net losses for the Fort McMurray wildfires.

"Guided by our corporate strategy, our staff and advisors across the country are dedicated to putting clients at the centre of our decision-making and solution delivery. Their efforts are producing results, as we continue to achieve growth in all lines of business across the country," said Kathy Bardswick, President and CEO of The Co-operators. "Our performance continues to be very strong, although our results reflect the impact of an increase in the severity of claims as well as significant unfavourable auto claims development during the third quarter. Offsetting our underwriting results was an improvement in our investment performance."

CO-OPERATORS GENERAL'S THIRD QUARTER FINANCIAL HIGHLIGHTS

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







3rd quarter

3rd quarter

2016

2015


2016

2015

YTD

YTD

Key financial data





Direct written premium (DWP)

691.0

650.9

1,933.1

1,820.9

Net earned premium (NEP)

614.8

586.0

1,779.7

1,703.9

Net income (loss)

16.3

(21.4)

16.6

58.9

Total assets1 

5,929.4

5,303.2

5,929.4

5,303.2

Shareholders' equity1 

1,503.0

1,458.6

1,503.0

1,458.6






Key success indicators





DWP growth

6.2%

6.7%

6.2%

4.8%

NEP growth

4.9%

4.8%

4.4%

4.6%

Earnings (loss) per common share

0.71$

(1.07$)

0.49$

2.48$

Return on equity

5.1%

(6.2%)

1.7%

5.9%

Combined ratio - excluding market yield adjustment

109.0%

104.0%

106.0%

98.7%

Minimum Capital Test (MCT)1

213%

225%

213%

225%

1 Balance sheet data and MCT results for 2015 are as at December 31



Third quarter review
DWP improvements during the third quarter were attributable to policy and vehicle count growth in all lines of business paired with higher average home and farm premiums. In the third quarter, DWP increased by 6.2% or $40.1 million to $691.0 million. NEP increased during the third quarter by 4.9% or $28.8 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 109.0% compared to 104.0% for the same period last year. Undiscounted net claims and adjustment expenses have increased by 11.6% from the third quarter of 2015, bringing the loss ratio to 77.2%. The increase was driven by the severity of current accident year claims across all lines of business, except farm, combined with higher unfavourable claims development within the auto line of business. The expense ratio increased by 0.3 percentage points, to 31.8%, as compared to the same period in 2015, driven by an increase in distribution staffing levels.

Net investment income and gains increased by $90.0 million versus the third quarter of 2015. In the third quarter of 2016, unrealized preferred share gains were $28.1 million higher than the same period in 2015, combined with realized common share and bond gains that were $29.9 million and $5.3 million higher, respectively.  Impairment losses and favourable currency movements also supported improved results.

The Company's investment portfolio is comprised of high quality and well diversified assets. The credit quality of the bond portfolio remains high with 86.4% rated A or higher and 98.4% are considered investment grade. The equity portfolio is 75.6% weighted in Canadian stocks.

Capital
The Company's capital position remains strong, as the Minimum Capital Test for Co-operators General was 213% at September 30, 2016, 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 Third quarter 2016 MD&A or our 2015 Annual Report.

SHAREHOLDER AND INVESTOR INFORMATION
About Co-operators General Insurance Company
With assets of more than $5.9 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, 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 Best Employers in Canada by Aon Hewitt.

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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