Co-operators sees consolidated net income jump to $58.1 million in Q2 from loss last year

Growth and increased net earned premium in core lines of business helped Co-operators General Insurance Company’s consolidated income move from a net loss of $5.9 million the second quarter of 2013 to net income of $58.1 million in the same period this year.

“In the quarter, we experienced tremendous growth and increased net earned premium in our core lines of business in all regions of the country,” Kathy Bardswick, president and CEO of The Co-operators, said in statement issued Thursday by the Canadian-owned, multi-product insurance company that is part of The Co-operators Group Limited.

Year to date, net income for the first two quarters of 2014 is $68.7 million compared to $52.2 million for the same quarter in 2013, the statement noted.

Comparing results for the second quarter of 2014 and the same period in 2013, direct written premium (DWP) was $654.5 million, up 6.9% from $612.5 million (improvements are attributable to vehicle and policy count growth in the auto, home and commercial lines of business paired with home portfolio rate and inflation adjustments), and net earned premium (NEP) was $544.8 million, up 7.7% from $505.9 million.

Overall, the company’s claims costs decreased in Q2 of 2014 compared to Q2 last year “which was marked by the devastating storms and flooding in southern Alberta,” Bardswick reported.

Co-operators General reports that key success indicators for the quarter ended June 30, 2014 include the following: DWP growth of 6.9% in Q2 of 2014 compared to 4.3% in Q2 2013; NEP growth of 7.7% compared to 1.5%; earning per common share of $2.48 compared to a loss per share of $0.56; combined ratio (excluding market yield adjustment) of 93.9 compared to 112.8%; and minimum capital test of 229% compared to 234%, well above the internal and regulatory minimum requirements.

Noting that the company has reduced auto insurance rates in Ontario by 16.6% since 2012, Bardswick added “we are hopeful that as a result of the majority mandate in Ontario, the new government will refocus its attention on meaningful cost-saving measures to support the reduction in auto insurance rates for consumers. This would include new minor injury protocols, a clear and workable catastrophic impairment definition and a serious examination of other domestic and international models of auto insurance product delivery.”

With regard to the weather, “undiscounted net claims and adjustment expenses have decreased by 16.3% from the second quarter of 2013, bringing the loss ratio to 61.8%. Claims results improved as the second quarter loss ratio for 2013 was characterized by the catastrophic Alberta floods,” the statement noted.

“Excluding the impact of that event, claims costs increased over the same period of 2013 primarily due to an increase in weather-related claims, mainly in the Western and Atlantic regions. The expense ratio decreased 1.2 percentage points to 32.1%, compared to 33.3% for the same period in 2013,” it added.

“Extreme weather is the new reality. We will remain vigilant and work collaboratively to engage stakeholders to encourage action to adapt and build more resilient communities,” Bardswick added.