Mr. Rob Wesseling reports

CO-OPERATORS GENERAL INSURANCE COMPANY REPORTS SECOND QUARTER 2023 RESULTS

Co-operators General Insurance Company has released consolidated financial results for the three months ended June 30, 2023. The consolidated net income after tax was $29.9-million compared with a net loss of $51.5-million for the same quarter in 2022. This resulted in earnings per common share of 94 cents for the quarter, compared with a loss per common share of $2.04 in the same period last year.

"We continue to execute well against our corporate growth strategy with strong policy growth across most of our lines of business. However, profitability was negatively impacted this quarter by higher claims," said Rob Wesseling, President and CEO of Co-operators. "We also experienced favourable investment returns, which helps ensure our overall capital position remains strong and we can continue to invest in long-term solutions that provide financial security for Canadians."

SECOND QUARTER REVIEW

In the second quarter, DWP increased by 9.9 per cent to $1,321.4 million compared to the same quarter of 2022. There was an increase in DWP across all lines of business with the auto line of business being the major contributor with an increase of 10.7 per cent. Similarly, DWP also increased across all regions with the Ontario region being the major contributor with an increase of 9.7 per cent. For the auto, commercial and home lines of business DWP growth was a result of both policy growth and increases in average premiums. In the farm line of business higher average premiums was the main driver of the increase in DWP. DWP continued to increase in the travel and other lines of business compared with the second quarter of 2022.

Co-operators General reported an underwriting loss of $59.9 million for the second quarter of 2023, a decline of $107.5 million from the underwriting income of $47.6 million in the same quarter of 2022. The decrease was from a combination of net undiscounted claims and adjustment expenses which increased by $158.6 million while acquisition and other operating expenses rose by $25.4 million which outweighed the growth in net insurance revenue of $76.5 million.

The increase in net undiscounted claims and adjustment expenses was primarily driven by increases in current accident year claims and unfavourable claims development in auto, home and commercial, particularly in Ontario and the West. The increase in other expenses is driven by higher general expenses. Accordingly, our combined ratio excluding discounting and risk adjustment increased by 10.6 percentage points from the comparative quarter. Our combined ratio including discounting and risk adjustment increased by 10.6 percentage points over the comparative period as the change in the net impact of discounting and risk adjustment was minimal over this quarter of $56.6 million compared with the same period of the prior year of $51.6 million.

Net investment income and insurance finance result totalled $66.1 million for the quarter, an increase of $216.1 million compared to the same quarter in the prior year. The increase is a combination of stronger investment gains and net income from insurance and reinsurance contracts. Net investment income and gains were $39.9 million for the quarter, an increase of $216.9 million compared to the total net losses of $177.0 million in the comparative quarter. The favourable increase in net investment income and gains were attributed to realized gains on common equities, reduction of unrealized losses in bonds and common equities as well as stronger interest income on bonds due to the higher reinvestment yields on our bond portfolio.

Our balance sheet, liquidity and capital positions remain strong and enable us to continue to serve and meet the needs of our clients while also supporting our strategic areas of focus. Our investment portfolio is comprised of high quality and well diversified assets. Our investment in bonds is diversified both geographically and by sector, with a large portion invested in Canadian government debt instruments. The credit quality of our portfolio remains high with 80.9 per cent rated A or higher and 95.5 per cent of our bonds are considered investment grade. Our equity portfolio is 84.7 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 234 per cent as at June 30, 2023, well above internal and regulatory minimum requirements.

ABOUT US

Co-operators General is a leading Canadian multi-product insurance company and is part of The Co-operators Group Limited (Co-operators). Co-operators is a leading Canadian financial services co-operative, offering multi-line insurance and investment products, services, and personalized advice to help Canadians build their financial strength and security. The company has more than $59 billion in assets under administration. Co-operators has been providing trusted guidance to Canadians for the past 78 years. The organization is well known for its community involvement and its commitment to sustainability. Achieving carbon neutral equivalency in 2020, the organization is committed to net-zero emissions in its operations and investments by 2040, and 2050, respectively. Co-operators is also ranked as a Corporate Knights' Best 50 Corporate Citizen in Canada.

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