Co-operators General Insurance Company Reports Third Quarter 2015 Results
Guelph - Co-operators General Insurance Company (Co-operators General) released consolidated financial results for the three months ended September 30, 2015. The consolidated net loss was $21.4 million compared to a net loss of $10.8 million for the same quarter in 2014. This resulted in a loss per share of $1.07 for the quarter compared to a loss of $0.57 in the same period last year.
"Our underwriting results improved relative to the same quarter of 2014, and our capital position remains strong. However, our results were impacted by weakness in the Canadian equity markets. We are pleased with the continued premium growth we have achieved in all lines of business across all regions of the country," said Kathy Bardswick, President and CEO of The Co-operators.
Third quarter review
DWP improvements during the third quarter were attributable to policy and vehicle count growth in the home and auto lines of business paired with higher average home and auto premiums. In the third quarter, DWP has increased by 6.7% or $40.8 million to $650.9 million. NEP increased during the third quarter by 4.8% or $27.0 million compared to the same period last year. The increase in NEP is seen in all geographic regions and all product lines.
The combined ratio, excluding the market yield adjustment for the quarter, was 104.0% compared to 109.2% for the same period last year. Undiscounted net claims and adjustment expenses have decreased by 3.3% from the third quarter of 2014, bringing the loss ratio to 72.5%. The decrease in undiscounted net claims and adjustment expenses was driven by fewer major events compared to a Western hail catastrophe included in the prior year, partially offset by an increase in the frequency and severity of current year auto claims and less favorable claims development. An increase in staff compensation costs as well as costs associated with information technology systems initiatives led to the increase in the expense ratio of 0.9 percentage points, to 31.5%, as compared to 30.6% for the same period in 2014.
Net investment income and gains decreased by $46.3 million versus the third quarter of 2014 due to higher preferred share, impairment and foreign exchange losses. In the third quarter of 2015, the change in fair value of preferred share investments led to a $23.5 million loss as compared a $2.0 million loss during the same period in 2014. Weakness in the energy and materials sector led $14.2 million in impairment losses booked in the third quarter of 2015 as compared to $3.8 million in the same period in 2014, while weakness in the Canadian dollar versus the U.S. dollar led to a $10.0 million increase in foreign exchange losses realized on foreign exchange forward contracts.
Our investment portfolio is comprised of high quality and well diversified assets. The credit quality of our portfolio remains high with 98.5% of our portfolio considered investment grade and 87.4% rated A or higher. Our equity portfolio is 72.6% weighted in Canadian stocks.
The Company's capital position remains strong, as the Minimum Capital Test (MCT) for Co-operators General was 226% at September 30, 2015, well above the internal and regulatory minimum requirements.