This quarterly earnings press release should be read in conjunction with our unaudited interim condensed consolidated financial statements for the first quarter of 2022 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, May 6, 2022 /CNW/ – Co-operators General Insurance Company (Co-operators General) today released its consolidated financial results for the three months ended March 31, 2022. Consolidated net income was $132.2 million compared to the net result of $197.8 million for the same quarter in 2021. This resulted in earnings per common share of $4.84 for the quarter, compared to earnings per share of $7.36 at the same time last year.
“Despite continued global and market uncertainty coupled with increased claims this quarter, our continued financial stability is a testament to the resilience of our cooperative and our ability to protect the financial security of our customers, members and communities,” says Rob Wesseling, CEO of The Co-operators. “Our capital will enable us to meet the needs of the people we serve, not just in the short term, but in the long term.”
THE CO-OPERATORS GENERAL’S FIRST QUARTER FINANCIAL HIGHLIGHTS
|
(in millions of dollars except for earnings per share and ratios) |
||
|
1st trimester |
1st trimester |
|
|
2022 |
2021 |
|
|
Key financial data |
||
|
Direct Written Premium (DWP) |
906.0 |
840.6 |
|
Net Earned Premium (NEP) |
961.5 |
912.0 |
|
Net revenue |
132.2 |
197.8 |
|
Total assets1 |
8,625.8 |
9,008.5 |
|
Equity1 |
2,319.1 |
2,394.8 |
|
Key indicators of success |
||
|
DWP Growth |
7.8% |
1.4% |
|
NEP growth |
5.4% |
4.5% |
|
Technical result – excluding market yield adjustment (MYA) |
83.6 |
164.9 |
|
Earnings per common share |
$4.84 |
$7.36 |
|
Return on equity |
27.2% |
46.1% |
|
Combined ratio – excluding MYA |
91.3% |
81.9% |
|
Minimum Capital Test (MCT)1 |
228% |
239% |
|
1Balance sheet data and MCT results for 2021 are as of December 31 |
FIRST QUARTER REVIEW
The first quarter of the year saw the DWP increase by 7.8% or $65.4 million compared to the same quarter of 2021 due to an increase in policies in force in the travel line of business, combined with higher average premiums in the commercial and residential lines of business in all regions. NEP increased in the first quarter by 5.4% or $49.5 million compared to the same quarter last year, which was mainly attributable to the commercial and residential sectors.
Net undiscounted claims and adjustment expenses increased by $103.3 million compared to the same quarter of 2021, while our loss ratio excluding MYA deteriorated by 8.2 percentage points to 58.8%. The increase in net undiscounted claims and adjustment expenses was primarily due to higher adverse claims development and current accident year claims in the auto and home lines of business, and was offset by a drop in claims in the agricultural business sector. Our expense ratio of 32.5% increased by 1.2 percentage points compared to the first quarter of 2021, due to increased spending on strategic initiatives and personnel costs. As a result, our combined ratio excluding MYA increased to 91.3% during the quarter, an increase of 9.4 percentage points compared to the same period last year.
During the first quarter, a rapid 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 $71.0 million. The increase in the discount rate was greater than the increase in the comparative quarter, therefore, the favorable MYA is $38.3 million higher than the same quarter last year.
Net investment income and capital gains $19.9 million was recognized during the quarter, a decrease of $44.6 million compared to the same quarter of the previous year. The decrease is mainly due to unrealized losses on our preferred share portfolio, compared to unrealized gains in the same quarter last year.
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 97.0% of our bond portfolio considered investment grade and 83.9% rated A or better. Our equity portfolio is 83.4% Canadian equities.
CAPITAL CITY
The capital position of Co-operators General remains strong, as the minimum capital test for Co-operators General was 228% at March 31, 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 true. 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 First Quarter MD&A or 2021 Annual Report.
ABOUT THE CO-OPERATORS GENERAL INSURANCE COMPANY
With assets of over $8.6 billion, The Co-operators General is a Canadian leader in multi-product insurance. 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 well known for its community involvement and commitment to sustainability. By achieving carbon neutral equivalency in 2020, The Co-operators General 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 and is one of the best employers in Canada by Kincentric. For more information, please visit www.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). More information can be found at www.cooperators.ca.
FOR MORE INFORMATION, PLEASE CONTACT:
Investor Relations
Lesley Christodoulou
Vice President, Corporate Finance Services
1-888-767-3909 Ext: 302493
lesley_christodoulou@cooperators.ca
Media Relations
media@cooperators.ca
SOURCE The Co-operators Group Limited
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