Net income down at the Co-operators after year of severe weather, Ontario auto challenges

The Co-operators General Insurance Company has reported decline in its net income for the last quarter of 2013 and the full year, after facing losses from several severe weather events, including December’s ice storm in Ontario and Quebec.

For the fourth quarter, the Guelph, Ont.-based company reported a consolidated net income of $74.6 million, down from $115.8 million in the last quarter of 2012.

For the full year, net income was $88.9 million, down from $259 million in 2012.

“We continued to experience customer growth in all core lines of business and in all regions in the fourth quarter and our underlying financial strength remains strong,” Kathy Bardswick, president and CEO of the Co-operators commented in a press release on the earnings.

“This was accomplished despite the challenges of  December’s ice storm in Ontario and Quebec,” she noted.

“2013 will be remembered for its devastating natural disasters. After consideration of reinsurance, our losses related to the heavy rains and flooding in southern Alberta and the Greater Toronto area totalled $126.6 million. We are very proud of our employees’ and advisors’ hard work and professionalism as they helped clients through the recovery process.”

Fourth quarter direct written premiums increased to $542.6 million, compared to $518.7 million in the last quarter of 2012. The company attributed that growth to its auto and home lines of business in both the Ontario and Western regions.

Direct written premiums for the year totaled roughly $2.2 billion, up from $2.1 billion in 2012. Net earned premium for 2013 was $2.07 billion, up from $2.07 billion the previous year.

Excluding the market yield adjustment, the combined ratio for the year deteriorated to 104.1% from 95.1% in 2012 driven by the storms and flooding in Alberta and Toronto, the late December ice storm in Ontario and several summer hail storms in the West.

“We continue to be challenged by ongoing issues in the Ontario auto insurance marketplace,” Bardswick also noted.

“2013 marked a second consecutive year that The Co-operators reduced auto insurance premiums, bringing the total to 12%.  Despite efforts to combat fraud and duplication within the system, costs continue to rise.  We will work with the government and the industry to identify further measures that help to reduce those costs, enabling us to deliver an efficient product that provides consumers with appropriate protection that is accessible and affordable.”