Despite a $11.7 million decline in after-tax income for the financial year ended December 1998, the Co-operators General Insurance Company says it is encouraged by the 7.4% marketshare it notched up during the year.
After-tax income for the year amounted to $55.1 million compared with $66.8 million for the 1997 financial year. This marks the first decline in income for a company which has disclosed steady annual profit increases since 1993. Co-operators chief financial officer Peter Crawford attributes the decline in earnings to the 1998 ice storm, which snowballed claims related costs to an extra $20 million. “That was the major difference between exceeding or trailing last year’s net income,” he says.
Subtract the ice storm costs and Co-operators would have posted an increase in profits for the fifth straight year, Crawford comments. Factoring into the end of year numbers were fourth quarter figures – down to $14.9 million in net income compared to 1997’s $22.6 million – attributable to lower investment returns and a $3.6 million dollar disposition cost for discontinuing operations of subsidiary Security Life Insurance Company.
Despite the declining earnings, the company still increased its market share posting a 7.4% increase in gross written premiums, up to $1.333 million in 1998 from 1997’s $1.241 million. Full year investment income remained steady at $185 million, an increase of approximately 1.5% over 1997. Earnings a share declined with the lower net profit with fourth quarter earnings per share clocking in at 50c compared with 1997’s fourth quarter posting of 95c a share. Full year earnings a share were $2.27 compared with $2.87 a share earned for the twelve month period ending December 31, 1997.
Co-operators president Terry Squire is pleased with the results despite the faltering net income. “We continued to increase our market share throughout the year and, despite the unusually high claims costs resulting from the ice storm, Co-operators General produced satisfactory operating results and strengthened its financial position.”