The Co-operators reports 4% increase in Auto line, from $264.5 million in Q2 2014 to $275 million for the second quarter of 2015

Guelph, Ont.-based Co-operators General Insurance Company has reported that its Auto line of business remained the largest contributor to its net earned premium (NEP), increasing about $10.5 million in the second quarter of 2015, from $264.5 million in Q2 2014 to $275 million for the three months ending June 30.

The Home line went from $143.1 million in Q2 2014 to $153.4 million in Q2 2015, while Commercial went from $104.3 million in the second quarter of 2014 to $103.5 million in the current quarter, The Co-operators said on Thursday. [click image below to enlarge]

The company also reported slight increases in net income and combined ratio for the second quarter of 2015. Consolidated net income for the three months ending June 30 was $58.2 million, compared to $58.1 million for the same quarter in 2014. The combined ratio (excluding market yield adjustment) was 94%, compared to 93.9% in Q2 2014.

For year-to-date, net income increased to $80.3 million from $68.7 million during the same period in 2014. The YTD combined ratio was 96.1%, compared to 98.7% during the same period in 2014.

“We continue to achieve good premium and client growth and our balance sheet remains strong,” said Kathy Bardswick, president and CEO of The Co-operators, in a statement. “Our loss ratios improved overall, resulting in strong net income.”

“In the second quarter, we experienced improvements in our loss ratio compared to the same period last year as a result of improvements in our auto and home lines of business,” The Co-operators noted in its Management’s Discussion and Analysis (MD&A). “This was partially offset by the deterioration of our Commercial and Farm loss ratios.”

The Auto loss ratio improved by 1.8 percentage points, from 62.6% in Q2 2014 to 60.8% in Q2 2015, “as reduced claims severity and favourable claims development more than offset the increase in large losses,” the MD&A said. YTD improved from 71.6% in 2014 to 68.1% this year.

More favourable claims development paired with rate increases resulted in a 4.1 percentage point improvement in the Home loss ratio, from 66% to 61.9% for the current quarter. YTD improved from 62.8% in 2014 to 56.4% in 2015.

The Commercial loss ratio deteriorated by 6.7 percentage points – from 56.7% to 63.4% – driven by large fire losses experienced in multiple regions, The Co-operators said. YTD increased from 58% in 2014 to 62.7% in 2015. [click image below to enlarge]

Increases in both frequency and severity of large losses led to a 2.9 point deterioration in the loss ratio of the Farm line of business, The Co-operators reported, from 61.1% in Q2 2014 to 64% in Q2 2015. For YTD, the loss ratio improved from 63.3% in 2014 to 59.4% this year.

Breaking down the loss ratio by geographic region, Quebec took the biggest hit, with four large commercial property losses during the second quarter of 2015 leading to a 31.8 percentage point deterioration, from 72.5% in Q2 2014 to 104.3 in Q2 2015. “Given the size of our NEP in Quebec, fluctuations in claims severity for a relatively few number of claims have a significant effect on the loss ratio,” the MD&A said. YTD was up 25.2 percentage points from 70.7% in 2014 to 95.9% in 2015.

The Western region’s loss ratio deteriorated by 4.6 percentage points compared to the second quarter of prior year (from 58.9% to 63.5%), driven by an increase in accident year claims related to a number of large losses. YTD changed 1.6 points from 58.4% to 60% this year.

The Ontario region’s loss ratio improved by 9.2 points (from 60.1% to 50.9%), driven by favourable claims development mainly in the auto and home lines of business. YTD also improved 10.8 points from 68.7% in 2014 to 57.9%, the MD&A noted.

The Atlantic loss ratio deteriorated by 5.9 percentage points mainly due to an increase in frequency and severity of home claims as compared to the second quarter of prior year (from 79.3% in Q2 2014 to 85.2% in Q2 2015). YTD was 65.7% in 2014 to 63.2% in 2015.