CO-OPERATORS GENERAL INSURANCE COMPANY REPORTS SECOND QUARTER 2022 RESULTS

This quarterly earnings news release should be read in conjunction with our second quarter 2022 unaudited condensed consolidated interim financial statements and Management's Discussion and Analysis (MD&A) as well as our 2021 Annual Report which are available on SEDAR at www.sedar.com. Unless otherwise noted, all amounts are expressed in Canadian dollars.

GUELPH, ON, July 28, 2022 /CNW/ - Co-operators General Insurance Company (Co-operators General) today released consolidated financial results for the three months ended June 30, 2022. The consolidated net income was $40.6 million compared to net income of $184.9 million for the same quarter in 2021. This resulted in earnings per common share of $1.40 for the quarter, compared to earnings per share of $6.76 in the same period last year.

"Relative to 2021, our financial performance saw an overall decline this quarter, driven by a range of fluctuating economic factors including pressures in financial markets and rising interest rates, as well as insured losses from the widespread windstorm in Ontario and Quebec," said Rob Wesseling, CEO of Co-operators. "Despite this, our balance sheet and capital position remain strong, and we continue to effectively navigate challenges to provide financial security for Canadians and our communities. From this position, and through our ongoing efforts to invest in more resilient, sustainable communities, we are confident in our ability to continue meeting the needs of our members and clients long into the future."

CO-OPERATORS GENERAL'S SECOND QUARTER FINANCIAL HIGHLIGHTS 
($ in millions except for earnings per share and ratios)

	2nd quarter	2nd quarter	2022	2021
	2022	2021	YTD	YTD
Key financial data
Direct written premium (DWP)	1,211.5	1,126.9	2,117.5	1,967.4
Net earned premium (NEP)	974.4	937.6	1,935.9	1,849.6
Net income	40.6	184.9	172.8	382.6
Total assets^1	8,657.2	9,008.5	8,657.2	9,008.5
Shareholders' equity^1	2,186.0	2,394.8	2,186.0	2,394.8
Key success indicators
DWP growth	7.5 %	10.9 %	7.6 %	6.6 %
NEP growth	3.9 %	12.0 %	4.7 %	8.2 %
Underwriting income - excluding market yield adjustment (MYA)	31.5	170.6	115.1	335.4
Earnings per common share	$1.40	$6.76	$6.24	$14.12
Return on equity	7.7 %	39.0 %	16.7 %	40.2 %
Combined ratio - excluding MYA	96.8 %	81.8 %	94.0 %	81.8 %
Minimum Capital Test (MCT)^1	219 %	239 %	219 %	239 %
^1Balance sheet data and MCT results for 2021 are as at December 31

SECOND QUARTER REVIEW

The second quarter of the year saw DWP increase by 7.5% or $84.6 million compared to the same quarter of 2021 due to a large increase in policies in force in the commercial, and farm lines of business, combined with higher average premiums in the commercial, home, and farm lines of business in all regions. NEP increased during the second quarter by 3.9% or $36.8 million compared to the same quarter last year, which was primarily attributable to the commercial line of business and a rebounding in the travel line of business as pandemic restrictions eased worldwide.

Undiscounted net claims and adjustment expenses increased by $160.3 million compared to the same quarter of 2021, while our loss ratio excluding MYA deteriorated by 14.6 percentage points to 63.1%. The increase in undiscounted net claims and adjustment expense is primarily attributable to higher unfavourable claims development and current accident year claims in the auto and home lines of business, in addition to increases due to the major wind storm event in the quarter. Our expense ratio of 33.7% slightly increased by 0.4 percentage points compared to the second quarter of 2021, driven by increased strategic initiative spend and staffing costs. Consequently, our combined ratio excluding MYA increased to 96.8% in the quarter, an increase of 15.0 percentage points compared to the same period last year.

During the second quarter, a rapid rise in interest rates significantly impacted our results and financial position. The discount rate used to measure our claims liabilities increased in the quarter resulting in a favourable MYA of $52.2 million. The increase in discount rate contrasted with a decrease in the discount rate in the comparative quarter; as a result, the favourable MYA is $58.3 million higher than the same quarter of last year.

Total net losses of $36.3 million were recognized on investments in the second quarter. The losses were primarily driven by unrealized losses on preferred shares and realized bond losses. Lower common share gains and unfavourable foreign exchange rates also negatively impacted the losses.

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 composed of high quality and well diversified assets. The credit quality of our portfolio remains high with 97.1% of our portfolio considered investment grade and 84.4% rated A or higher. Our equity portfolio is 83.6% weighted to Canadian stocks.

CAPITAL

Co-operators General's capital position remains strong, as the Minimum Capital Test for Co-operators General was 219% at June 30, 2022, well above 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, 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 2022 MD&A or our 2021 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. Co-operators is well known for its community involvement and its commitment to sustainability. Achieving carbon neutral equivalency in 2020,

Co-operators General is committed to net-zero emissions in its operations and investments by 2040, and 2050, respectively. Co-operators is also ranked as a Corporate Knights' Best 50 Corporate Citizens in Canada and is listed among the Best Employers in Canada by Kincentric. For more information, please 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.

FOR FURTHER INFORMATION PLEASE CONTACT:

Investor Relations 
Lesley Christodoulou 
Vice-President, Corporate Finance Services 
Telephone: [phone] Ext: 302493 
Email: [email protected] 

Media Relations
Email: [email protected]

SOURCE The Co-operators Group Limited