Co-operators reports net loss of $10.8 million in Q3; action on severe weather urged

The Co-operators General Insurance Company has reported its loss ratio improved in in the third quarter of the year – aided by premium and policy growth – but weather-related events continue to be an issue for all regions of the country and the situation demands response.

“We must heed the call of the Federal Commissioner of the Environment and Sustainable Development that climate change is affecting all regions of Canada and that action needs to be taken on both the mitigation and adaptation fronts,” Kathy Bardswick, president and CEO of the Co-operators, sid in a statement Thursday announcing the company’s third quarter results.

“The government’s plan to work collaboratively with the provinces, territories and municipalities to build safer and more resilient communities, as outlined in the 2014 Federal Budget, needs to be acted on urgently to better protect Canadians and their homes,” Bardswick noted in the statement from the Canadian-owned multi-product insurance company. 

Although the loss ratio for the Co-operators improved in the third quarter of 2014 – undisclosed net claims and adjustment expenses have increased by 2.4% from the third quarter of 2013, bringing the loss ratio to 78.6% – the impact of weather-related events continued to be felt. “Extreme weather events continued to occur in 2014, with flooding in Manitoba and Saskatchewan; flooding in Burlington, Ontario; the Airdrie, Alberta hail storm; and rain and high winds in Nova Scotia, PEI and Newfoundland,” Bardswick said.

“Major events, including a Western hail catastrophe and other current accident year claims were greater than the same quarter of prior year, despite the impact of the Toronto floods on the third quarter of 2013,” the statement added.

Overall, the Co-operators General Insurance Company’s financial results for the third quarter of 2014 show the consolidated net loss was $10.8 million compared to a net loss of $37.9 million for the same quarter in 2013. Year to date, net income is $57.8 million compared to $14.3 million.

Comparing Q3 with the same period of 2013, the statement notes the following:

• direct written premium (DWP) was $610.1 million compared to $594.3 million (up 2.7% or $15.8 million);
• net earned premium (NEP) was $559.0 million compared to $528.8 million (up 5.7% or $30.2 million);
• total assets were $5,250.7 million compared to 5,031.5 million;
• net investment income and gains increased by $13.7 million, attributable to realized gains that were $20.4 million higher; 
• the minimum capital test was 219% (well above the internal and regulatory minimum requirements) compared to 234% (for all of 2013);
• higher information technology costs in the prior year drove the improvement in the expense ratio of 2.6 percentage points to 30.6% compared to 33.2%; and
• the combined ratio (excluding market yield adjustment) was 109.2% compared to 114.3%.

Looking at DWP for the three months ended Sept. 30, 2014, the Co-operators reports that improvements are attributable to vehicle and policy count growth in the auto and home lines of business, paired with home portfolio rate adjustments. With regard to NEP, the increase is seen in all geographic regions and the company’s core product lines.