As a result of new accounting standards for insurance
contracts (IFRS 17) and financial instruments (IFRS 9) being
applied for the first time in the current fiscal period, 2023
results have been presented under the new standards and 2022
results have been restated where possible. This quarterly earnings
news release should be read in conjunction with our second quarter
2023 unaudited condensed consolidated interim financial statements
and management's discussion and analysis (MD&A), which include
more information on the new accounting standards and the resulting
changes, as well as our 2022 Annual Report which are all available
on SEDAR at www.sedar.com. Unless otherwise noted, all amounts are
expressed in Canadian dollars.
GUELPH,
ON, Aug. 3, 2023 /CNW/ - Co-operators
General Insurance Company (Co-operators General) today released
consolidated financial results for the three months ended
June 30, 2023. The consolidated net
income after tax was $29.9 million
compared to a net loss of $51.5
million for the same quarter in 2022. This resulted in
earnings per common share of $0.94
for the quarter, compared to a loss per common share of
$2.04 in the same period last
year.
"We continue to execute well against our corporate growth
strategy with strong policy growth across most of our lines of
business. However, profitability was negatively impacted this
quarter by higher claims," said Rob
Wesseling, President and CEO of Co-operators. "We also
experienced favourable investment returns, which helps ensure our
overall capital position remains strong and we can continue to
invest in long-term solutions that provide financial security for
Canadians."
CO-OPERATORS GENERAL'S SECOND QUARTER FINANCIAL
HIGHLIGHTS
($ in millions except for earnings (loss) per common share and
ratios)
|
2nd Quarter
|
2nd Quarter
|
|
YTD
|
YTD
|
|
2023
|
2022
(Restated)
|
|
2023
|
2022
(Restated)
|
Key financial data
|
|
|
|
|
|
Direct written premium
(DWP)
|
1,321.4
|
1,202.0
|
|
2,315.5
|
2,104.6
|
Net insurance
revenue
|
1,045.4
|
968.9
|
|
2,063.0
|
1,925.8
|
Net income
|
29.9
|
(51.5)
|
|
53.1
|
20.6
|
Total
assets1
|
7,118.6
|
7,137.5
|
|
7,118.6
|
7,137.5
|
Shareholders'
equity1
|
2,482.7
|
2,586.9
|
|
2,482.7
|
2,586.9
|
|
|
|
|
|
|
Key success indicators
|
|
|
|
|
|
DWP
growth2
|
9.9 %
|
7.5 %
|
|
10.0 %
|
7.6 %
|
Net insurance revenue
growth2
|
7.9 %
|
N/A
|
|
7.1 %
|
N/A
|
Underwriting result -
excluding discounting and risk adjustment
|
(59.9)
|
47.6
|
|
(94.0)
|
107.1
|
Earnings per common
share
|
$0.94
|
($2.04)
|
|
$1.76
|
$0.56
|
Return on
equity
|
4.7 %
|
(8.2 %)
|
|
4.2 %
|
1.7 %
|
Combined ratio -
excluding discounting and risk adjustment
|
105.7 %
|
95.1 %
|
|
104.6 %
|
94.4 %
|
Minimum Capital Test
(MCT)1,2
|
234 %
|
251 %
|
|
234 %
|
251 %
|
1 Balance
sheet data and MCT results for 2022 are as at December
31
|
2
Comparative period ratios have not been restated or are not
available due to the transition to IFRS 17 on January 1,
2023
|
SECOND QUARTER REVIEW
In the second quarter, DWP increased by 9.9% to $1,321.4 million compared to the same quarter of
2022. There was an increase in DWP across all lines of business
with the auto line of business being the major contributor with an
increase of 10.7%. Similarly, DWP also increased across all regions
with the Ontario region being the
major contributor with an increase of 9.7%. For the auto,
commercial and home lines of business DWP growth was a result of
both policy growth and increases in average premiums. In the farm
line of business higher average premiums was the main driver of the
increase in DWP. DWP continued to increase in the travel and other
lines of business compared with the second quarter of 2022.
Co-operators General reported an underwriting loss of
$59.9 million for the second quarter
of 2023, a decline of $107.5 million
from the underwriting income of $47.6
million in the same quarter of 2022. The decrease was from a
combination of net undiscounted claims and adjustment expenses
which increased by $158.6 million
while acquisition and other operating expenses rose by $25.4 million which outweighed the growth in net
insurance revenue of $76.5
million.
The increase in net undiscounted claims and adjustment expenses
was primarily driven by increases in current accident year claims
and unfavourable claims development in auto, home and commercial,
particularly in Ontario and the
West. The increase in other expenses is driven by higher general
expenses. Accordingly, our combined ratio excluding discounting and
risk adjustment increased by 10.6 percentage points from the
comparative quarter. Our combined ratio including discounting and
risk adjustment increased by 10.6 percentage points over the
comparative period as the change in the net impact of discounting
and risk adjustment was minimal over this quarter of $56.6 million compared with the same period of
the prior year of $51.6 million.
Net investment income and insurance finance result totalled
$66.1 million for the quarter, an
increase of $216.1 million compared
to the same quarter in the prior year. The increase is a
combination of stronger investment gains and net income from
insurance and reinsurance contracts. Net investment income and
gains were $39.9 million for the
quarter, an increase of $216.9
million compared to the total net losses of $177.0 million in the comparative quarter. The
favourable increase in net investment income and gains were
attributed to realized gains on common equities, reduction of
unrealized losses in bonds and common equities as well as stronger
interest income on bonds due to the higher reinvestment yields on
our bond 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. Our investment in bonds is diversified both
geographically and by sector, with a large portion invested in
Canadian government debt instruments. The credit quality of our
portfolio remains high with 80.9% rated A or higher and 95.5% of
our bonds are considered investment grade. Our equity portfolio is
84.7% weighted to Canadian stocks.
CAPITAL
Co-operators General's capital position remains strong, as the
Minimum Capital Test for Co-operators General was 234% as at
June 30, 2023, 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 second quarter 2023 MD&A or our 2022
Annual Report.
ABOUT US
Co-operators General is a leading Canadian multi-product
insurance company and is part of The Co-operators Group Limited
(Co-operators). Co-operators is a leading Canadian financial
services co-operative, offering multi-line insurance and investment
products, services, and personalized advice to help Canadians build
their financial strength and security. The company has more than
$59 billion in assets under
administration. Co-operators has been providing trusted guidance to
Canadians for the past 78 years. The organization is well known for
its community involvement and its commitment to sustainability.
Achieving carbon neutral equivalency in 2020, the organization 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 Citizen in Canada. 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, Finance, Accounting, Reporting and Chief
Accountant
Telephone: 1-888-767-3909 Ext: 302493
Email: lesley_christodoulou@cooperators.ca
Media Relations
Email: media@cooperators.ca
SOURCE The Co-operators Group Limited