The Co-operators reports net loss of $39.1 million in 2016 Q2 for Co-operators General Insurance Company

Co-operators General Insurance Company, part of The Co-operators Group, took a hit from the devastating Fort McMurray wildfire, reporting a consolidated net loss of $39.1 million for 2016 Q2 compared to a net income of $58.2 million for 2015 Q2.

The impact of the wildfire was before-tax losses of $104.0 million, net of reinsurance and inclusive of ceded reinstatement premium, notes a statement Thursday from the multi-product insurance company, which has assets of more than $5.8 billion.

“This resulted in an earnings (loss) per common share of ($2.00) for the quarter compared to $2.57 in the same period last year,” The Co-operators reports.

“With the aid of geo-mapping and satellite imagery, a best estimate of the net impact was developed within the first few weeks of the event occurring. Based on current information, which includes visits to the impacted areas, this estimate is not expected to vary significantly in the coming quarters,” the statement explains.

Related: Fort McMurray wildfire to cost The Co-operators an estimated $70 million to $90 million

For the first half of 2016, The Co-operators saw net income of $300,000 compared to $80.3 million for the same period of 2015.

On the premiums front, direct written premium (DWP) for the three months ended June 30, 2016 amounted to $722.6 million compared to $681.0 million in the prior-year quarter.

“DWP improvements during the second quarter were attributable to policy and vehicle count growth in all lines of business paired with higher average home and farm premiums,” the insurer notes.

The financial results show that for the first half of the year, DWP amounted to $1,242.1 million compared to $1,170.0 million for the first half of 2015.

With regard to net earned premium (NEP), these amounted to $576.5 million for 2016 Q2 compared to $567.4 million for 2015 Q2. As for 2016 H1, NEP was $1,164.9 million compared to $1,117.9 million in 2015 H1.

For the second quarter of 2016, “the increase in NEP is seen in the auto line of business and all geographic regions, except the West,” the results show.

“Ceded premium of $23.4 million was recorded against NEP in the second quarter, mainly in the home and commercial lines of business, to reinstate our catastrophe coverage after the wildfires in Fort McMurray,” the statement adds.

“An increase in the severity of current accident year claims and unfavourable runoff within the auto line of business was partially offset by expenses which grew at a slower pace than earned premium,” The Co-operators explains.

The company saw a combined ratio – excluding the market yield adjustment for 2016 Q2 – of 114.0% compared to 94.0% for the same period of 2015.

Again, the Fort McMurray event had an impact. “Excluding the impacts of Fort McMurray, the combined ratio increased was 95.8% compared to a combined ratio of 94.0% in the second quarter of 2015,” the figures show.

Kathy Bardswick, president and CEO of The Co-operators

“The financial impact of the wildfire in Fort McMurray was very significant,” reports Kathy Bardswick, president and CEO of The Co-operators.

Pointing out that “thoughts are with all who have been so significantly affected by this devastating event,” Bardswick says, “once again, we are clearly reminded of the need for more proactive efforts to strengthen the resilience of Canadian communities. Governments, industry and homeowners all have important roles to play in building safer, more secure communities.”

Other financial results for 2016 Q2 include the following:

• expense ratio improved 1.0 percentage points, to 31.7%, as compared to the same period in 2015, driven by lower information technology costs in the current year;
• net investment income and gains increased by $5.8 million compared to the second quarter of 2015 as a result of an increase in preferred and common share gains, although this was partially offset by lower bond gains and declining yields in the bond portfolio; and
• capital position remains strong, as the Minimum Capital Test for the company was 214% at June 30, well above internal and regulatory minimum requirements.

Related: The Co-operators’ net income increases in fourth quarter, full-year 2015; keeping eye on the weather