Mr. Rob Wesseling reports

CO-OPERATORS GENERAL INSURANCE COMPANY REPORTS FIRST QUARTER 2023 RESULTS

Co-operators General Insurance Company today released consolidated financial results for the three months ended March 31, 2023. The consolidated net income was $23.2-million compared with net income of $72.2-million for the same quarter in 2022. This resulted in earnings per common share of 82 cents for the quarter, compared with earnings per common share of $2.60 in the same period last year.

"We had a challenging start to the year with increasing costs per claim and unfavourable claims development across our core lines of business," said Rob Wesseling, chief executive officer of Co-operators. "Despite this, our balance sheet and strong capital position enable us to invest in a climate-resilient, sustainable society, while continuing to provide financial security for Canadians and our communities long into the future."

First quarter review

The first quarter of the year saw DWP increase by 10.1 per cent or $91.5-million compared with the same quarter of 2022. There was an increase in DWP across all lines of business and all regions. For the auto and commercial lines of business DWP growth was attributable to both policy growth and increases in average premiums. In the home and farm lines of business higher average premiums were the main driver of the increase. DWP continued to increase in the travel and other line of business as the comparative quarter was still impacted by pandemic restrictions.

Net undiscounted claims and adjustments expenses increased by $103.0-million compared with the same quarter of 2022 resulting in a deterioration of the company's loss ratio excluding discounting and risk adjustment of 6.4 percentage points to 67.9 per cent. The increase in claims and related expense was primarily attributable to increases in current accident year claims and unfavourable claims runoff of prior-year claims in auto, home and commercial, particularly in Ontario. The company's expense ratio of 35.4 per cent rose 3.1 percentage points compared with the first quarter of 2022, as increases in the advisor transition commission expense, increased strategic spending and increased staffing costs all contributed to the deterioration from the comparative period. Consequently, the company's combined ratio excluding discounting and risk adjustment increased to 103.3 per cent in the quarter, an increase of 9.5 percentage points compared with the same period last year.

The discount rate curve used to measure the company's claims liabilities decreased in the quarter resulting in an unfavourable impact of discounting and risk adjustment of $41.7-million. The decrease in the discount rate curve in the current period contrasts with a large increase in the discount rate curve in the comparative period, resulting in an overall unfavourable change from the impact of discounting and risk adjustment of $112.8-million. Consequently, the company's combined ratio including the impact of discounting and risk adjustment increased to 107.4 per cent which is a 21.0-percentage-point deterioration from the prior period.

Net investment income and gains was $103.3-million for the quarter, an increase of $140.8-million compared with the total net losses of $37.5-million in the comparative quarter. The increase was primarily driven by gains on the company's equity portfolio, unrealized gains on its bond portfolio and higher interest income.

The company's balance sheet, liquidity and capital positions remain strong and enable it to continue to serve and meet the needs of its clients while also supporting its strategic areas of focus. The company's investment portfolio comprises high-quality and well-diversified assets. The credit quality of the company's portfolio remains high with 96.1 per cent of the company's portfolio considered investment grade and 82.1 per cent rated A or higher. The company's equity portfolio is 84.2 per cent weighted to Canadian stocks.

Capital

Co-operators General's capital position remains strong, as the minimum capital test for Co-operators General was 256 per cent at March 31, 2023, well above internal and regulatory minimum requirements.

About Co-operators General Insurance Company

Co-operators General is a leading Canadian multiproduct insurance company and is part of The Co-operators Group Ltd. Co-operators is a leading Canadian financial services co-operative, offering multiline insurance and investment products, services, and personalized advice to help Canadians build their financial strength and security. Co-operators has more than $58.2-billion in assets under administration. Co-operators has been providing trusted guidance to Canadians for the past 78 years.

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