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 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 first 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, May 11, 2023 /CNW/ - Co-operators General
Insurance Company (Co-operators General) today released
consolidated financial results for the three months ended
March 31, 2023. The consolidated net
income was $23.2 million compared to
net income of $72.2 million for the
same quarter in 2022. This resulted in earnings per common share of
$0.82 for the quarter, compared to
earnings per common share of $2.60 in
the same period last year.
"We had a challenging start to the year with increasing costs
per claim and unfavourable claims development across our core lines
of business," said Rob Wesseling,
CEO of Co-operators. "Despite this, our balance sheet and strong
capital position enable us to invest in a climate-resilient,
sustainable society, while continuing to provide financial security
for Canadians and our communities long into the future."
CO-OPERATORS GENERAL'S FIRST QUARTER FINANCIAL
HIGHLIGHTS
($ in millions except for earnings per common share and
ratios)
|
1st
Quarter
|
1st Quarter
|
|
2023
|
2022
(Restated)
|
Key financial
data
|
|
|
Direct written premium
(DWP)
|
994.1
|
902.6
|
Net insurance
revenue
|
1,017.6
|
956.9
|
Net income
|
23.2
|
72.2
|
Total
assets1
|
7,145.5
|
7,134.9
|
Shareholders'
equity1
|
2,664.2
|
2,601.8
|
|
|
|
Key success
indicators
|
|
|
DWP
growth2
|
10.1 %
|
7.8 %
|
Net insurance revenue
growth2
|
6.3 %
|
N/A
|
Underwriting result -
excluding discounting and risk adjustment
|
(34.0)
|
59.5
|
Earnings per common
share
|
$0.82
|
$2.60
|
Return on
equity
|
3.6 %
|
11.9 %
|
Combined ratio -
excluding discounting and risk adjustment
|
103.3 %
|
93.8 %
|
Minimum Capital Test
(MCT)1
|
256 %
|
251 %
|
1Balance
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
|
FIRST QUARTER REVIEW
The first quarter of the year saw DWP increase by 10.1% or
$91.5 million compared to the same
quarter of 2022. There was an increase in DWP across all lines of
business and all regions. For the auto and commercial lines of
business DWP growth was attributable to both policy growth and
increases in average premiums. In the home and farm lines of
business higher average premiums were the main driver of the
increase. DWP continued to increase in the travel and other line of
business as the comparative quarter was still impacted by pandemic
restrictions.
Net undiscounted claims and adjustments expenses increased by
$103.0 million compared to the same
quarter of 2022 resulting in a deterioration of our loss ratio
excluding discounting and risk adjustment of 6.4 percentage points
to 67.9%. The increase in claims and related expense was primarily
attributable to increases in current accident year claims and
unfavourable claims runoff of prior year claims in auto, home and
commercial, particularly in Ontario. Our expense ratio of 35.4% rose 3.1
percentage points compared to the first quarter of 2022, as
increases in the advisor transition commission expense, increased
strategic spending and increased staffing costs all contributed to
the deterioration from the comparative period. Consequently, our
combined ratio excluding discounting and risk adjustment increased
to 103.3% in the quarter, an increase of 9.5 percentage points
compared to the same period last year.
The discount rate curve used to measure our claims liabilities
decreased in the quarter resulting in an unfavourable impact of
discounting and risk adjustment of $41.7
million. The decrease in the discount rate curve in the
current period contrasts with a large increase in the discount rate
curve in the comparative period, resulting in an overall
unfavourable change from the impact of discounting and risk
adjustment of $112.8 million.
Consequently, our combined ratio including the impact of
discounting and risk adjustment increased to 107.4% which is a 21.0
percentage point deterioration from the prior period.
Net investment income and gains was $103.3 million for the quarter, an increase of
$140.8 million compared to the total
net losses of $37.5 million in the
comparative quarter. The increase was primarily driven by gains on
our equity portfolio, unrealized gains on our bond portfolio, and
higher interest income.
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 96.1% of our portfolio considered investment grade and
82.1% rated A or higher. Our equity portfolio is 84.2% weighted to
Canadian stocks.
CAPITAL
Co-operators General's capital position remains strong, as the
Minimum Capital Test for Co-operators General was 256% at
March 31, 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 first 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
$58 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, Corporate Finance Services
Telephone: 1-888-767-3909 Ext: 302493
Email: lesley_christodoulou@cooperators.ca
Media Relations
Email: media@cooperators.ca
SOURCE The Co-operators Group Limited