GUELPH - Co-operators General Insurance Company today announced its consolidated financial results for the three months ended March 31, 2009. For the first quarter, Co-operators General reported a consolidated net loss of ($6.4) million, compared to net income of $5.9 million for the same quarter in 2008. Earnings per common share were $(0.38) for the first quarter compared to $0.23 for the same period last year.

"The impact of the downturn in the capital markets and increased claims costs contributed to the loss we experienced in the first quarter," commented Kathy Bardswick, President and CEO of The Co-operators. "Despite a challenging environment, our fundamentals are solid, our capital position is strong, and we continue to make progress toward our strategic objectives."

Co-operators General's First Quarter Financial Highlights ($ in millions, except for earnings per share)

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1st quarter 1st quarter
2009 2008
(restated)
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Gross written premium $ 466.0 $ 440.4
Net earned premium $ 492.6 $ 484.2
Net investment income and net realized
investment gains $ 40.9 $ 51.7
Net income (loss) $ (6.4) $ 5.9
Earnings per common share $ (0.38) $ 0.23
Return on equity (annualized) (2.3)% 2.1%

Gross written premium growth 5.8% 4.1%
Loss ratio 76.5% 76.9%
Expense ratio 34.0% 32.3%
Combined ratio 110.5% 109.2%
Minimum Capital Test 200% 255%
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First Quarter Review

Gross written premium in the first quarter increased 5.8% to $466.0 million, compared to $440.4 million in the first quarter of 2008. Growth was achieved in all product lines with Western Canada leading the regional growth, making up $12.6 of the $25.6 million increase. Gross written premium was up 9.5% in the Quebec region, reflecting the impact of strengthened broker relationships in the current year.

Net earned premium growth for the quarter was 1.7% above the previous year. Growth was predominately from Western Canada and Ontario regions, which was partially offset by declines seen in the Quebec region relating to fewer policies written in the prior two years resulting from the consolidation in the insurance brokerage industry.

First quarter net investment income from interest, dividends and real estate rose to $34.7 million in 2009, up from $34.5 million in 2008. Net investment gains of $6.2 million were achieved in the quarter, down from $17.3 million in the same period in 2008 where we had taken advantage of market opportunities that existed at the time. During the quarter we recognized other than temporary impairments of $0.9 million related to a preferred share investment which was deemed to be other than temporarily impaired due to the continuing weakness of the U.S. financial sector. The credit quality of our portfolio remains high with 96.6% of our bonds rated A or higher. Our equity portfolio is 82.8% weighted to Canadian stocks.

The combined ratio of claims and operating expenses for the quarter was 110.5%, compared to 109.2% for the first quarter of 2008. The first quarter loss ratio was down on auto, commercial and farm product lines. Home results were unfavourably impacted by replacement and clean up costs as well as major event losses relating to weather. The Quebec region experienced a 6 percentage point improvement in the loss ratio as milder weather conditions favourably impacted frequency and severity of claims.

Capital

Despite overall market impacts to our investment portfolio, Co-operators General's capital position remains strong, as the Minimum Capital Test for Co-operators General Insurance Company was 200% at March 31, 2009, well above the regulatory minimum requirement of 150%.