Co-operators General Insurance Company Reports Third Quarter 2020 Results

This quarterly earnings news release should be read in conjunction with our third quarter 2020 unaudited condensed consolidated interim financial statements and Management's Discussion and Analysis (MD&A) as well as our 2019 Annual Report which are available on SEDAR at www.sedar.com. Unless otherwise noted, all amounts are expressed in Canadian dollars.

GUELPH, ON, Oct. 28, 2020 /CNW/ - Co-operators General Insurance Company (Co-operators General) today released consolidated financial results for the three months ended September 30, 2020. The consolidated net income was $152.3 million compared to net income of $12.4 million for the same quarter in 2019. This resulted in earnings per common share of $5.67 for the quarter, compared to earnings per share of $0.42 in the same period last year.

"Favourable investment returns coupled with a reduction in claims events led to a significant increase in our net income compared to the third quarter of 2019," said Rob Wesseling, President and CEO of The Co-operators Group Limited. "From this position of financial strength, we can better ensure the financial security of Canadians over the long term, while continuing to invest in resilient, sustainable communities."

CO-OPERATORS GENERAL'S THIRD QUARTER FINANCIAL HIGHLIGHTS

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

	3rd quarter 2020	3rd quarter 2019	2020 YTD	2019 YTD
Key financial data
Direct written premium (DWP)	1,076.3	999.7	2,921.8	2,807.1
Net earned premium (NEP)	922.2	840.6	2,631.6	2,408.3
Net income	152.3	12.4	151.3	113.4
Total assets^1	8,112.0	7,488.0	8,112.0	7,488.0
Shareholders' equity^1	2,024.0	1,847.3	2,024.0	1,847.3
Key success indicators
DWP growth	7.7%	10.0%	4.1%	14.6%
NEP growth	9.7%	12.0%	9.3%	13.3%
Underwriting income (loss) - excluding market yield adjustment (MYA)	77.9	(24.7)	93.9	(21.3)
Earnings per common share	$5.67	$0.42	$5.44	$4.21
Return on equity	39.7%	3.1%	11.7%	9.6%
Combined ratio - excluding MYA	91.6%	103.0%	96.5%	100.9%
Minimum Capital Test (MCT)^1	232%	209%	232%	209%
^1Balance sheet data and MCT results for 2019 are as at December 31

THIRD QUARTER REVIEW

In the third quarter, DWP increased by 7.7% or $76.6 million to $1,076.3 million compared to the same quarter of 2019. The increase in DWP was attributable to targeted rate adjustments across all lines of business, and to a lesser extent, an increase in policies in force in the auto line of business. NEP increased during the third quarter by 9.7% or $81.6 million compared to the same quarter last year.

Undiscounted net claims and adjustment expenses decreased by $27.0 million compared to the same quarter of 2019. This led to an improvement in our loss ratio by 9.2 percentage points, to 61.6%, and was primarily the result of NEP growth in the period coupled with fewer major events as well as lower current accident year claims in the auto and home lines of business, and was partially offset by unfavourable prior year claims development in the auto line of business. Our expense ratio improved by 2.2 percentage points to 30.0% and was driven by premium growth outpacing operating expenditures. Consequently, our combined ratio excluding MYA decreased to 91.6% in the quarter, a decrease of 11.4 percentage points compared to the same period last year. The MYA resulted in a $22.5 million unfavourable impact on net income before taxes, resulting from a decrease in the discount rate used to measure our claims liabilities.

Accommodative fiscal and monetary policies in Canada and the US have continued to sustain the capital markets after their correction in March, resulting in an appreciation of our invested asset portfolio. Net investment income and gains of $146.0 million was recognized in the third quarter, primarily driven by realized gains in our common share portfolio and an appreciation in the valuations of our preferred share portfolio.

Our balance sheet, liquidity and capital positions remain strong and enable us to continue to serve and meet the needs of our clients while also supporting our strategic areas of focus. Our investment portfolio is comprised of high quality and well diversified assets. The credit quality of our portfolio remains high with 97.3% of our portfolio considered investment grade and 85.7% rated A or higher. Our equity portfolio is 84.0% weighted to Canadian stocks.

CAPITAL

Co-operators General's capital position remains strong, as the Minimum Capital Test for Co-operators General was 232% at September 30, 2020, well above internal and regulatory minimum requirements. We continue to closely monitor capital levels in response to the changing economic environment as it relates to the COVID-19 pandemic.

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, including the impact of the COVID-19 pandemic on our investments, operations and claims negatively affecting the results of our operations and financial position. 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 2020 MD&A or our 2019 Annual Report.

ABOUT CO-OPERATORS GENERAL INSURANCE COMPANY

With assets of more than $8.1 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 its commitment to sustainability. The Co-operators is ranked as one of the Corporate Knights' Best 50 Corporate Citizens in Canada and is listed among the Best Employers in Canada by Kincentric (formerly AON). For more information, visit www.cooperators.ca.

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 Group Limited

Karen Higgins, Executive Vice-President, Finance and Chief Financial Officer, Telephone: [phone]