This quarterly earnings news release should be read in conjunction with our third quarter 2019 unaudited condensed consolidated interim financial statements and Management's Discussion and Analysis (MD&A) as well as our 2018 Annual Report which are available on SEDAR at www.sedar.com. Unless otherwise noted, all amounts are expressed in Canadian dollars.
GUELPH, ON, Oct. 25, 2019 /CNW/ - Co-operators General Insurance Company (Co-operators General) today released consolidated financial results for the three months ended September 30, 2019. The consolidated net income was $12.4 million compared to net income of $12.9 million for the same quarter in 2018. This resulted in an earnings per common share of $0.42 for the quarter compared to $0.48 in the same period last year.
"Our net income in the current period is comparable to the same quarter of 2018 and is supported by profitable premium growth and strong investment performance," said Rob Wesseling, President and CEO of The Co-operators. "We continue to focus on the sustainable growth of all our portfolios while diligently managing our claims costs."
CO-OPERATORS GENERAL'S THIRD QUARTER FINANCIAL HIGHLIGHTS
($ in millions except for earnings per share and ratios) |
||||
3rd quarter |
3rd quarter |
2019 |
2018 |
|
2019 |
2018 |
YTD |
YTD |
|
Key financial data |
||||
Direct written premium (DWP) |
999.7 |
909.1 |
2,807.1 |
2,450.5 |
Net earned premium (NEP) |
840.6 |
750.6 |
2,408.3 |
2,126.1 |
Net income (loss) |
12.4 |
12.9 |
113.4 |
(18.9) |
Total assets1 |
7,275.6 |
6,698.7 |
7,275.6 |
6,698.7 |
Shareholders' equity1 |
1,834.2 |
1,649.9 |
1,834.2 |
1,649.9 |
Key success indicators |
||||
DWP growth |
10.0% |
21.8% |
14.6% |
19.2% |
NEP growth |
12.0% |
14.4% |
13.3% |
12.2% |
Earnings (loss) per common share |
$0.42 |
$0.48 |
$4.21 |
($1.08) |
Return on equity |
3.1% |
3.5% |
9.6% |
(1.7%) |
Combined ratio - excluding market yield adjustment (MYA) |
103.0% |
104.1% |
100.9% |
106.4% |
Minimum Capital Test (MCT)1 |
218% |
208% |
218% |
208% |
1Balance sheet data and MCT results for 2018 are as at December 31 |
||||
THIRD QUARTER REVIEW
In the third quarter, DWP increased by 10.0% or $90.6 million to $999.7 million compared to the same quarter of 2018. The increase in DWP was primarily attributable to rate adjustments and policy growth across the auto and home lines of business, particularly in Ontario. NEP increased during the third quarter by 12.0% or $90.0 million compared to the same quarter last year.
Undiscounted net claims and adjustment expenses have increased by $43.5 million or 7.9% from the third quarter of 2018. The primary driver of the increase was higher frequency and severity of accident year claims, particularly in our auto line of business. In addition, significant weather events toward the end of the quarter led to an increase in claims activity.
Despite increases in claims and adjustment expenses, premium growth outpaced claims resulting in an improvement in the loss ratio from 73.4% in the third quarter of 2018 to 70.8% in the current quarter. The expense ratio increased by 1.5 percentage points to 32.2% driven by an increase in general expenses from staffing costs in the current quarter coupled with the timing of project spend. Consequently, our combined ratio excluding MYA decreased to 103.0% in the current quarter, compared to 104.1% in the same quarter of 2018.
Net investment income and gains increased by $7.3 million compared to the same quarter last year as a result of higher investment income and realized gains on our bond portfolio. The MYA had a $7.9 million unfavourable impact on net income before tax as a result of a decrease in the discount rate.
Co-operators General's investment portfolio is comprised of high quality and well diversified assets. The credit quality of our portfolio remains high with 96.4% of our portfolio considered investment grade and 85.8% rated A or higher. Our equity portfolio is 87.5% weighted to Canadian stocks.
CAPITAL
Co-operators General's capital position remains strong, as the Minimum Capital Test for Co-operators General was 218% at September 30, 2019, 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. 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 2019 MD&A or our 2018 Annual Report.
ABOUT CO-OPERATORS GENERAL INSURANCE COMPANY
With assets of more than $7.2 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 Aon Hewitt. 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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