Canadian Underwriter

Co-operators General Insurance Company net income $128.8 million in 2016 Q4, up from $103.3 million in 2015 Q4

February 16, 2017   by Canadian Underwriter

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The consolidated net income for Co-operators General Insurance Company increased for the fourth quarter of 2016 over the same quarter in 2015, but net income for 2016 decreased from 2015.

The Co-operators has posted net income of $128.8 million for the three months ended Dec. 31, 2016, just shy of a 25% hike over the $103.3 million in the fourth quarter of 2015, notes a company statement issued late Wednesday.

Year-to-date, however, net income was down approximately 10.5% to $145.3 million in 2016 compared to $162.3 million in 2015.

With regard to premiums, results were up for both the quarter and the full-year.

Specifically, direct written premium (DWP) amounted to $639.1 million in the fourth quarter of 2016 compared to $614.9 million in the same period of 2015, representing a 3.9% increase.

“Growth was experienced primarily in the auto line of business across all regions and the home line of business in all regions, except the West,” the statement notes.

For 2016 as a whole, DWP was again up by 5.6% to $2,577.2 million compared to $2,435.9 million in 2015.

“Improved results are primarily from sustained policy and vehicle growth, in addition to rate increases within the home and farm lines of business,” The Co-operators reports.

“The impact of the devastating Fort McMurray wildfire was $90.3 million before tax, net of reinsurance and inclusive of reinsurance reinstatement premiums,” the insurer adds.

Rob Wesseling, President and CEO of The Co-operators

Rob Wesseling, President and CEO of The Co-operators

The catastrophic event represents a significant hit to the bottom line, but “the organization is performing well and our fundamentals remain strong,” emphasizes Rob Wesseling (pictured right), president and CEO of Co-operators General Insurance Company.

With regard to net earned premium (NEP), this also improved. NEP increased 4.6% to $620.6 million in 2016 Q4 compared to $593.1 million in 2015 Q4.

For the full year, NEP amounted to $2,400.4 million in 2016, up 4.5% from $2,297.0 million in 2015.

The increase was as a result of growth seen in all of our geographic regions and all core lines of business, the company reports.

Related: The Co-operators General Insurance Company reports net income of $16.3 million in 2016 Q3 compared to loss in 2015 Q3

“Additional ceded premium of $20.1 million was recorded against NEP during the year, mainly in the home and commercial lines of business, to reinstate our catastrophe coverage after the wildfire in Fort McMurray,” the statement adds.

Excluding Fort McMurray, Wesseling points out, “our underwriting performance improved compared to the year prior. Our investment performance improved markedly in 2016 and we are pleased with our continued premium and client growth in our core lines of business throughout the country.”

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

The Co-operators’  minimum capital test (MCT) rose to 227% from 225% for both 2016 compared to 2015 and for the fourth quarter of 2016 compared to the prior-year quarter.

A year-end MCT of 227% is “well above the internal and regulatory minimum requirements,” the insurer points out. The increase is thanks to “year-to-date net income results, partially offset by an increase in unpaid claims and adjustment expenses.”

Still, Canada’s worst-ever natural disaster serves “as yet another reminder of the need to strengthen the resilience of our communities against natural disasters, and we are committed to continuing to make a positive contribution and being part of the solution,” Wesseling emphasizes.

Other financial results for Co-operators General Insurance Company include the following:

  • earnings per common share was $5.84 for 2016 Q4 compared to $4.69 for the prior-year period, while for the full year, earnings per common share was $6.33 in 2016 compared to $7.17 in 2015;
  • net investment income and gains for 2016 Q4 was $52.5 million compared to $85.7 million in 2015 Q4 – primarily the result of lower realized common share and bond gains and lower unrealized preferred share gains;
  • the loss ratio, excluding market yield adjustment (MYA), for 2016 Q4 improved to 51.2% from 58.7% in 2015 Q4 (the company saw a decrease in the severity of current accident year claims and more favourable claims development primarily in the auto line of business); and
  • combined ratio, excluding MYA for 2016 Q4, was 86.2% compared to 92.1% in the 2015 Q4.

“Excluding the MYA, the combined ratio deteriorated to 101.0% from 97.3% in 2015, largely a result of the catastrophic wildfire,” reports Co-operators General Insurance Company. But excluding the impacts of Fort McMurray, the combined ratio was 97.3%.