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Q2 combined ratio improves 13.3 points to 101% for The Co-operators


July 28, 2017   by Canadian Underwriter


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Co-operators General Insurance Company reported Thursday an underwriting loss of $6.6 million in the three months ending June 30, while direct premiums written were $768.7 million, up 6.4% from $722.6 million in Q2 2016.

During the second quarter of 2016, Guelph, Ont.-based The Co-operators reported an underwriting loss of $82.3 million, after the wildfire affecting Fort McMurray, Alberta gave rise to the most expensive natural catastrophe in Canadian history.

“Excluding the impacts of this catastrophic event, our underwriting results deteriorated by $30.0 million,” from Q2 2016 to the most recent quarter, The Co-operators said in a release. “This was driven by an increase in the frequency of current accident year claims across all lines of business, primarily the result of multiple storms in the West and Ontario, and an increase in severity of home accident year claims, partially offset by continued policy growth across all lines of business.”

The Co-operators General Insurance Company is 100% owned by Co-operators Financial Services Limited, which in turn is owned 100% by The Co-operators Group Limited.

Net income for The Co-operators General – which includes The Sovereign General Insurance Company, COSECO Insurance Company (COSECO), L’Équitable, Compagnie d’assurances Générale (L’Equitable) and others – was $29.1 million in the latest quarter, compared to a net loss of $39.1 million in Q2 2016.

Its “capital position remains strong, as the Minimum Capital Test for Co-operators General was 223% at June 30, 2017, well above the internal and regulatory minimum requirements,” The Co-operators said in a press release.

The insurer’s loss ratio, including market yield adjustment, was 67% in the most recent quarter, a 16.4-point improvement over 83.4% in Q2 2016.

The loss ratio excluding MYA was 67.8% in the second quarter of this year, a 13.2-point improvement over 81% in Q2 2016.

The Co-operators reported its combined ratio of 101% in Q2 2017, a 13.3-point improvement over 114.3% in Q2 2016.

Of net earned premiums of $628.7 million in Q2 2017, $179.3 million was from home, an 18% increase from $151.9 million in the same period in 2016, which “is partially a result” of premiums paid in 2016 to reinstate its catastrophe reinsurance coverage after the Alberta wildfire.

“Excluding the reinsurance reinstatement premiums included in 2016, the home line of business remained our largest contributor to NEP growth.”

In the latest quarter, The Co-operators reported net earned premiums of $299.5 million from auto, $110.3 million from commercial, $31.2 million from farm and $8.4 million from other lines.

Net investment income and gains were $35.4 million in the latest quarter, down 3.1% from $38.1 million in Q2 2016.

The Q2 2017 loss ratio, excluding MYA, was 66.8% in auto, 62.7% in commercial, 77.9% in farm and 72% in home.

Excluding the impact the Alberta wildfire in 2016, the loss ratio in home deteriorated by 13.5 points from Q2 2016 to the most recent quarter, The Co-operators reported.

“This was primarily a result of multiple storms in the West and Ontario, compared to less severe weather in the same period of the prior year, combined with an increase in the severity of current accident year claims.”