Co-operators General Insurance Company Reports 2015 Fourth Quarter and Year End Results

GUELPH, ON, Feb. 18, 2016 /CNW/ - Co-operators General Insurance Company ("Co-operators General") today announced its consolidated financial results for the three months and year ended December 31, 2015. For the fourth quarter, Co-operators General reported consolidated net income of $103.3 million, compared to $79.7 million for the same quarter in 2014. Earnings per common share was $4.69 for the fourth quarter, compared to $3.78 for the same period last year. Direct written premium was $614.9 million in the quarter, an increase of $46.7 million as compared to $568.2 million in the fourth quarter last year.

Net income for the year amounted to $162.3 million, compared to $137.6 million in 2014, resulting in earnings per common share of $7.17 compared to $6.04 in 2014. Direct written premium increased 5.6% over 2014, from $2,305.7 million in the prior year to $2,435.9 million.

"Our fundamentals are solid and we are pleased with the premium growth we continue to achieve across all regions of the country, largely driven by policy and client growth. Overall, our financial performance for the year remained strong with net income of $162.3 million. However, weakness in the equity markets, as well as the volatility of the Canadian dollar and Bank of Canada interest rate cuts significantly impacted our results," said Kathy Bardswick, president and CEO of The Co-operators.

"While weather events in Canada were less severe in 2015, we remain concerned about climate change and the rising costs of increasingly destructive weather patterns. During the year, we were proud to be the first Canadian insurance company to introduce overland flood insurance to homeowners, and remain committed to working with a variety of stakeholders to make our communities more resilient in the years ahead."

CO-OPERATORS GENERAL FOURTH QUARTER FINANCIAL HIGHLIGHTS
(in millions of Canadian dollars except ROE, EPS and ratios)
	4th quarter 2015		4th quarter 2014		2015 YTD		2014 YTD
Key financial data
Direct written premium	614.9		568.2		2,435.9		2,305.7
Net earned premium	593.1		560.2		2,297.0		2,189.6
Net income	103.3		79.7		162.3		137.6
Total assets	5,303.2		5,293.6		5,303.2		5,293,6
Shareholders' equity	1,458.6		1,491.6		1,458.6		1,491.6
Key success indicators
Direct written premium (DWP) growth	8.2%		4.7%		5.6%		5.0%
Net earned premium (NEP) growth	5.9%		4.3%		4.9%		5.7%
Earnings per share (EPS)		$4.69		$3.78		$7.17		$6.04
Annualized return on equity (ROE)	35.0%		27.2%		12.3%		10.6%
Combined ratio - excluding market yield adjustment	92.1%		89.7%		97.1%		99.1%
Combined ratio - including market yield adjustment	92.2%		90.4%		97.4%		100.2%
Minimum Capital Test (MCT)	225%		228%		225%		228%

FOURTH QUARTER REVIEW 

Fourth quarter DWP increased to $614.9 million, compared to $568.2 million in the fourth quarter of 2014. Growth was primarily in the auto and home lines of business in both the Ontario and Western regions, as well as new business growth in the specialty commercial line of business.

The combined ratio, excluding the market yield adjustment (MYA) for the quarter, was 92.1% compared to 89.7% in the fourth quarter of 2014. The fourth quarter loss ratio, excluding MYA, deteriorated to 58.7% from 56.6%. We experienced increased large losses in 2015 within our auto, commercial and farm lines of business compared to the same quarter of the prior year.

Net investment income and gains for the fourth quarter of 2015 were $85.7 million compared to $46.8 million for the same period of 2014. The $38.9 million increase in net investment income and gains in the current quarter was primarily the result of higher realized common share gains and a positive change in the fair value of our preferred share holdings. Net investment gains reflect net realized gains of $41.2 million compared to $17.9 million in the same period of 2014.

The Company's investment portfolio is comprised of high quality and well diversified assets. The credit quality of our bond portfolio remains high with 98.3% of our bonds considered investment grade and 84.8% rated A or higher. Our equity portfolio is 73.3% weighted in Canadian stocks.

ANNUAL REVIEW

DWP increased 5.6% to $2,435.9 million, compared to $2,305.7 million in 2014. Improved results are primarily from sustained policy and vehicle growth, in addition to rate increases in certain lines of business.

NEP has increased by $107.4 million or 4.9% to $2,297.0 million as a result of growth seen in all of our geographic regions and all core lines of business.

Net investment income and gains decreased to $144.8 million from $181.4 million in 2014 resulting from weaker equity markets combined with greater volatility in the Canadian dollar. We also realized net gains of $87.3 million compared to $68.3 million in 2014 by capitalizing on sale opportunities in equity and fixed income markets during the year.

Excluding the MYA, the combined ratio improved to 97.1% from 99.1% in 2014, largely due to policy growth, which more than offset the related increase in claims, and more favourable claims development, partially offset by higher accident year claims. Our net claims and adjustment expenses increased $2.7 million or 0.2% compared to 2014.

CAPITAL

The Company's capital position remains strong, as the Minimum Capital Test for Co-operators General was 225% at December 31, 2015, well above the internal and regulatory minimum requirements. The decrease in our MCT from 228% at December 31, 2014 resulted from the declaration of $169.5 million in common share dividends, partially offset by the positive impact of our year-to-date net income results.

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 $5.3 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

P. Bruce West, Executive Vice-President, Finance and Chief Financial Officer, Telephone: [phone] Fax: [phone]