This quarterly earnings news release should be read in conjunction with our first 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, April 28, 2020 /CNW/ - Co-operators General Insurance Company (Co-operators General) today released consolidated financial results for the three months ended March 31, 2020. The consolidated net loss was $48.9 million compared to net income of $21.8 million for the same quarter in 2019. This resulted in a loss per common share of $1.88 for the quarter, compared to earnings per share of $0.84 in the same period last year.
"During this challenging time, significant turmoil in the global capital markets has negatively impacted the value of our invested assets, resulting in large investment losses for our company this period," says Rob Wesseling, President and CEO of The Co-operators Group Limited. "These losses were offset to some degree by significantly improved underwriting performance. This is not only a difficult time for our organization, but for all Canadians. With our strong capital position, we continue to focus on finding ways to support Canadians and their communities, to enable their financial security and peace of mind today and in the future."
CO-OPERATORS GENERAL'S FIRST QUARTER FINANCIAL HIGHLIGHTS
($ in millions except for earnings per share and ratios) |
||
1st quarter |
1st quarter |
|
2020 |
2019 |
|
Key financial data |
||
Direct written premium (DWP) |
829.2 |
757.6 |
Net earned premium (NEP) |
872.5 |
763.0 |
Net income (loss) |
(48.9) |
21.8 |
Total assets1 |
7,167.8 |
7,488.0 |
Shareholders' equity1 |
1,749.4 |
1,847.3 |
Key success indicators |
||
DWP growth |
9.5% |
26.3% |
NEP growth |
14.4% |
15.9% |
Underwriting income (loss) - excluding market yield adjustment (MYA) |
49.8 |
(33.4) |
Earnings (loss) per common share |
($1.88) |
$0.84 |
Return on equity |
(11.3%) |
5.7% |
Combined ratio - excluding MYA |
94.3% |
104.4% |
Minimum Capital Test (MCT)1 |
204% |
209% |
1Balance sheet data and MCT results for 2019 are as at December 31 |
||
FIRST QUARTER REVIEW
In the first quarter, DWP increased by 9.5% or $71.6 million to $829.2 million compared to the same quarter of 2019. The increase in DWP was attributable to higher average premiums across all lines of business with the exception of our travel and other line of business. NEP increased during the first quarter by 14.4% or $109.5 million compared to the same quarter last year.
Despite increased travel interruption claims resulting from the COVID-19 pandemic, undiscounted net claims and adjustment expenses remained consistent with the comparative quarter of 2019.
Our strategy of sustainable premium growth, coupled with an improved claims experience in the quarter, has led to an improvement in the loss ratio, excluding MYA, by 8.7 percentage points to 63.2% from 71.9% in the first quarter of 2019. The expense ratio decreased by 1.4 percentage points to 31.1% from 32.5% as a result of premium growth outpacing operating expenditures. Consequently, our combined ratio excluding MYA, improved to 94.3% in the first quarter, compared to 104.4% in the same quarter of 2019. The MYA had a $14.8 million unfavourable impact on the net loss before taxes as a result of a decrease in the discount rate.
Economic disruption and uncertainty as a result of measures implemented by governments worldwide to contain the COVID-19 pandemic have led to a decline in our invested asset portfolio. A $100.3 million net investment loss was recorded in the first quarter of 2020 as a result of negative changes in the fair value of our preferred share and bond portfolios, while a further $17.7 million impairment loss was recognized in our equity portfolio.
Despite the decline in our invested asset portfolio, our balance sheet, liquidity and capital positions remain strong and continue to serve and meet the needs of our clients while also supporting our strategic areas of focus. Our investment portfolio continues to be comprised of high quality and well diversified assets. The credit quality of our portfolio remains high with 97.0% of our portfolio considered investment grade and 87.1% rated A or higher. Our equity portfolio is 86.0% weighted to Canadian stocks.
CAPITAL
Co-operators General's capital position remains strong, as the Minimum Capital Test for Co-operators General was 204% at March 31, 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 first quarter 2020 MD&A or our 2019 Annual Report.
ABOUT CO-OPERATORS GENERAL INSURANCE COMPANY
With assets of more than $7.1 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 ranked as #1 among Corporate Knights' Best 50 Corporate Citizens in Canada and lists among the Best Employers in Canada by Kincentric. 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
Karen Higgins, Executive Vice-President, Finance and Chief Financial Officer, Telephone: (519) 840-3167
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