This quarterly earnings news release should be read in conjunction with our second quarter 2021 unaudited condensed consolidated interim financial statements and Management's Discussion and Analysis (MD&A) as well as our 2020 Annual Report which are available on SEDAR at www.sedar.com. Unless otherwise noted, all amounts are expressed in Canadian dollars.
GUELPH, ON, July 29, 2021 /CNW/ - Co-operators General Insurance Company (Co-operators General) today released consolidated financial results for the three months ended June 30, 2021. The consolidated net income was $184.9 million compared to net income of $47.9 million for the same quarter in 2020. This resulted in earnings per common share of $6.76 for the quarter, compared to earnings per share of $1.65 in the same period last year.
"In the second quarter of 2021, our financial performance was strong, driven by fewer extreme weather events, a continued trend of improved underwriting and a positive performance in our investment portfolio," said Rob Wesseling, President and CEO of The Co-operators Group Ltd. "This position of strength helps ensure our clients' financial security amidst increasing climate risk and enables us to continue investing in long-term solutions for community resilience."
CO-OPERATORS GENERAL'S SECOND QUARTER FINANCIAL HIGHLIGHTS
($ in millions except for earnings per share and ratios)
2nd quarter 2021 |
2nd quarter 2020 |
2021 YTD |
2020 YTD |
|
Key financial data |
||||
Direct written premium (DWP) |
1,126.9 |
1,016.3 |
1,967.4 |
1,845.5 |
Net earned premium (NEP) |
937.6 |
836.9 |
1,849.6 |
1,709.4 |
Net income (loss) |
184.9 |
47.9 |
382.6 |
(1.0) |
Total assets1 |
8,646.4 |
8,261.6 |
8,646.4 |
8,261.6 |
Shareholders' equity1 |
2,465.7 |
2,118.0 |
2,465.7 |
2,118.0 |
Key success indicators |
||||
DWP growth |
10.9% |
(3.2%) |
6.6% |
2.1% |
NEP growth |
12.0% |
4.0% |
8.2% |
9.0% |
Underwriting income (loss) - excluding market yield adjustment (MYA) |
170.6 |
(33.6) |
335.4 |
16.1 |
Earnings (loss) per common share |
$6.76 |
$1.65 |
$14.12 |
($0.24) |
Return on equity |
39.0% |
12.1% |
40.2% |
(0.1%) |
Combined ratio - excluding MYA |
81.8% |
104.0% |
81.8% |
99.0% |
Minimum Capital Test (MCT)1 |
258% |
232% |
258% |
232% |
1Balance sheet data and MCT results for 2020 are as at December 31 |
||||
SECOND QUARTER REVIEW
The second quarter of the year saw DWP increase by 10.9% or $110.6 million compared to the same quarter of 2020 due to higher average premiums, an increase in policies in force in the auto and commercial lines of business in all regions, and from the Reduced Driving Refund lowering DWP in the comparative quarter. NEP increased during the second quarter by 12.0% or $100.7 million compared to the same quarter last year, which was primarily attributable to the auto and home lines of business.
Undiscounted net claims and adjustment expenses decreased by $143.7 million compared to the same quarter of 2020, and consequently our loss ratio improved by 23.0 percentage points to 48.5%. This improvement was primarily due to lower major events claims in the current quarter, whereas the comparative quarter was negatively impacted by two catastrophic events in Alberta. Our expense ratio of 33.3% increased 0.8 percentage points compared to the second quarter of 2020, as operating expenses outpaced premium growth. Consequently, our combined ratio excluding MYA decreased to 81.8% in the quarter, a decrease of 22.2 percentage points compared to the same period last year. The discount rate used to measure our claims liabilities decreased in the quarter, resulting in a less unfavourable MYA of $6.1 million, compared to $36.5 million from the same quarter of last year due to rising rates.
During the second quarter, economic recovery and vaccine rollouts, supported by accommodative fiscal and monetary policies, have resulted in continued gains in equity markets while rising interest rates from the prior period of last year drove lower bond valuations. Net investment income and gains of $80.4 million were recognized in the second quarter and was primarily driven by realized gains in our common share portfolio, interest income on bonds, and unrealized gains on 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 96.8% of our portfolio considered investment grade and 85.6% rated A or higher. Our equity portfolio is 85.1% weighted to Canadian stocks.
CAPITAL
Co-operators General's capital position remains strong, as the Minimum Capital Test for Co-operators General was 258% at June 30, 2021, 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 second quarter 2021 MD&A or our 2020 Annual Report.
ABOUT CO-OPERATORS GENERAL INSURANCE COMPANY
With assets of more than $8.6 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: (519) 840-3167
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