Business insurance

CO-OPERATORS GENERAL INSURANCE COMPANY REPORTS THIRD QUARTER 2022 RESULTS

This quarterly earnings press release should be read in conjunction with our unaudited third quarter 2022 condensed consolidated interim financial statements and our 2021 MD&A and Annual Report which are available on SEDAR at www.sedar.com. Unless otherwise indicated, all amounts are expressed in Canadian dollars.

GUELPH, ON, November 4, 2022 /CNW/ – Co-operators General Insurance Company (Co-operators General) today released its consolidated financial results for the three months ended September 30, 2022. Consolidated net income was $92.9 million compared to the net result of $86.8 million for the same quarter in 2021. This resulted in earnings per common share of $3.42 for the quarter, compared to earnings per share of $3.20 at the same time last year.

“Hurricane Fiona had a devastating impact on our customers and we are working diligently to support them. Affordability of insurance and access to adequate protection will continue to be an issue as the impacts of climate change are increasing in frequency and severity. As this gap widens, we need to focus on prevention as well as protection,” said Rob Wesseling, CEO of The Co-operators. “Even with the increase in insured losses and the negative impact of rising interest rates on our investment portfolio, we are confident that our strong capital position and the resilience of our cooperative will allow us to continue working towards our long-term vision of investing in resilient and sustainable communities and ensuring the financial security of Canadians.”

THE CO-OPERATORS GENERAL’S THIRD QUARTER FINANCIAL HIGHLIGHTS

(in millions of dollars except for earnings per share and ratios)


3rd trimester

3rd trimester

2022

2021


2022

2021

YTD

YTD

Key financial data





Direct Written Premium (DWP)

1,184.0

1,109.0

3,301.5

3,076.4

Net Earned Premium (NEP)

1018.7

974.7

2,954.7

2,824.3

Net revenue

92.9

86.8

265.7

469.4

Total assets1

8,863.7

9,008.5

8,863.7

9,008.5

Equity1

2,224.2

2,394.8

2,224.2

2,394.8






Key indicators of success





DWP Growth

6.8%

3.0%

7.3%

5.3%

NEP growth

4.5%

5.7%

4.6%

7.3%

Technical result – excluding market yield adjustment (MYA)

21.3

61.1

136.5

396.5

Earnings per common share

$3.42

$3.20

$9.66

$17.32

Return on equity

17.6%

16.1%

16.4%

30.5%

Combined ratio – excluding MYA

97.9%

93.7%

95.5%

86.0%

Minimum Capital Test (MCT)1

238%

239%

238%

239%

1Balance sheet data and MCT results for 2021 are as of December 31




THIRD QUARTER REVIEW

The third quarter of the year saw the DWP increase by 6.8% or $75.0 million compared to the same quarter of 2021 due to higher policies in force in the auto and commercial lines of business, combined with higher average premiums in the commercial, housing and agricultural lines of business. DWP travel also rebounded following the easing of pandemic restrictions around the world. NEP increased during the third quarter by 4.5% or $44.0 million compared to the comparative quarter, which was mainly attributable to the commercial and residential business lines combined with the rebound in the travel business line.

Net undiscounted claims and adjustment expenses increased by $70.5 million compared to the same quarter of 2021 leading to a deterioration of our loss ratio excluding MYA by 4.3 percentage points to 64.8%. The increase in net undiscounted claims and adjustment expenses is primarily due to increases due to Hurricane Fiona which swept through the Atlantic provinces on September 24, 2022. Our expense ratio of 33.1% remained relatively stable compared to the third quarter of 2021, as the increase in strategic initiative expenses and personnel costs were offset by an increase in net earned premiums. As a result, our combined ratio excluding MYA increased to 97.9% during the quarter, an increase of 4.2 percentage points compared to the same period last year due to the impact of Hurricane Fiona .

During the third quarter, a rise in interest rates had a significant impact on our results and financial position. The discount rate used to value our claims liabilities increased during the quarter, resulting in a favorable MYA of $20.3 million. The increase in the discount rate was greater than the increase in the comparative quarter and therefore there was a favorable increase in the MYA of $18.0 million.

Net investment income and capital gains $79.5 million were observed in the third quarter. The raise of $30.9 million compared to the third quarter of 2021 was mainly due to realized gains on common shares and higher interest income. Higher unrealized losses on preferred shares and unfavorable foreign exchange partially offset the gain. Net investment income to date of $139.7 million was partially offset by $76.6 million net investment losses leading to total net investment income and gains of $63.1 million.

Our balance sheet, liquidity and capital positions remain strong and allow us to continue to serve and meet the needs of our customers while supporting our strategic focus areas. Our investment portfolio is made up of high-quality and well-diversified assets. The credit quality of our portfolio remains high with 97.2% of our portfolio considered investment grade and 84.9% rated A or better. Our equity portfolio is made up of 84.6% Canadian equities.

CAPITAL CITY

The capital position of Co-operators General remains strong, as the minimum capital test for Co-operators General was 238% at September 30, 2022well above the minimum internal and regulatory requirements.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This document may contain forward-looking statements and information, including statements regarding the business, objectives, strategies, financial condition and performance of The Co–operators General. These statements can generally be identified by the use of forward-looking words such as “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “plans”, “could”, “should”, “could”, “trend”, “predict”, “likely”, “potential” or “continue” or their negative and similar variations. These statements are not guarantees of future performance and involve known and unknown risks, 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 pandemic -19.on our investments, operations and claims adversely affecting the results of our operations and our financial condition.While we believe that the expectations reflected in the forward-looking statements and information are reasonable, there can be no assurance that such expectations will turn out to be correct. Accordingly, we do not guarantee that the actual results obtained will be identical in whole or in part to those indicated in the forward-looking statements and information. For more information, please see our 2022 Third Quarter MD&A or 2021 Annual Report.

ABOUT US

The Co-operators General is one of Canada’s leading multi-product insurance companies and part of
The Co-operators Group Limited (The Co-operators). The Co-operators is Canada’s leading financial services cooperative, providing personalized insurance and investment products, services and advice to help Canadians build financial strength and security. The company has more than $61.5 billion in assets under administration. The Co-operators has been providing trusted advice to Canadians for 76 years. The organization is well known for its community involvement and commitment to sustainability. By reaching carbon neutral in 2020, the organization has committed to net zero emissions in its operations and investments by 2040 and 2050, respectively. The Co-operators is also named one of the Top 50 Corporate Citizens by Corporate Knights in Canada. For more information, please visit: cooperators.ca.

The Co-operators General Class E Preferred Shares, Series C trade under the symbol CCS.PR.C on the Toronto Stock Exchange (TSX). Further information can be found at cooperators.ca.

For more information:
Investor Relations
Lesley ChristodoulouVice President, Corporate Finance Services
Phone: 1-888-767-3909 Ext: 302493
E-mail: [email protected]

Media Relations
E-mail: [email protected]

SOURCE The Co-operators Group Limited