Mr. Rob Wesseling reports

CO-OPERATORS GENERAL INSURANCE COMPANY REPORTS THIRD QUARTER 2023 RESULTS

Co-operators General Insurance Company has released consolidated financial results for the three months ended Sept. 30, 2023. The consolidated net loss after tax was $200,000 compared with net income of $73.9-million for the same quarter in 2022. This resulted in losses per common share of five cents for the quarter, compared with earnings per common share of $2.71 in the same period last year.

"The insurance industry experienced significant challenges in 2023 related to increasing claims inflation, volatility in the markets and the unprecedented rise in vehicle thefts. We see that reflected in our financial results with an underwriting loss of $44.5-million in the third quarter," said Rob Wesseling, president and chief executive officer of Co-operators. "While the net loss we experienced in Q3 is disappointing, our balance sheet remains strong, and we continue to achieve strong premium growth. From this position of capital strength, we will continue to invest in long-term solutions that provide financial security for Canadians."

Third quarter review

In the third quarter, direct written premium increased by 10.6 per cent to $1,314.7-million compared with 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 14.6 per cent. Similarly, DWP also increased across all regions with Ontario region being the major contributor with an increase of 11.2 per cent. For the auto, commercial and farm lines of business DWP growth was a combination of policy growth, increases in average premiums and higher retention. In the home line of business, higher average premiums were the main driver of the increase in DWP. DWP continued to increase in the travel and other lines of business compared with third quarter of 2022.

Co-operators reported an underwriting loss of $44.5-million for the third quarter of 2023, a decline of $80.5-million from the underwriting income of $36.0-million in the same quarter of 2022. The result was from the increase in net undiscounted claims and adjustment expenses by $165.1-million, which outweighed the growth in net insurance revenue of $77.7-million.

The increase in net undiscounted claims and adjustment expenses was primarily driven by increases in current accident year claims and unfavourable claim development in auto and commercial, particularly in Ontario and the West. The improvements in acquisition and other expenses by $9.8-million were primarily due to lower data processing expenses and overall reduction in various expenses in this quarter compared with the same quarter in previous year.

The combined ratio excluding discounting and risk adjustment increased by 7.6 percentage points from the comparative quarter; however, the ratio including discounting and risk adjustment increased by 7.9 percentage points. The change in the net impact of discounting and risk adjustment in the current quarter of $33.5-million was minimal compared with the comparative period of $33.8-million.

Net investment and insurance finance loss totalled $13.5-million for the quarter, a decrease of $53.4-million compared with the same quarter in the prior year. The decrease was an unfavourable combination of increases in both net investment losses and net finance expenses from insurance contracts. Net investment income and gains were $5.8-million for the quarter, a decrease of $19.4-million compared with the net investment income and gains of $25.2-million in the comparative quarter. The unfavourable decrease in investment income and gains is attributable to unfavourable movements on its common share portfolio and higher realized and unrealized losses on bonds, partially offset by higher net investment income.

Its 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. Its investment portfolio is composed of high-quality and well-diversified assets. Its investment in bonds is diversified both geographically and by sector, with a large portion invested in Canadian government debt instruments. The equity portfolio makes up $915.4-million or 15.1 per cent of its total invested assets, and consists largely of publicly traded common and preferred stocks diversified by industry sector and issuer. Its equity portfolio is 83.1 per cent weighted to Canadian stocks.

Capital

Co-operators' capital position remains strong, as the minimum capital test for Co-operators was 227 per cent as at Sept. 30, 2023, well above internal and regulatory minimum requirements.

About Co-operators General Insurance Company

Co-operators is a leading Canadian multiproduct insurance company and is part of The Co-operators Group Ltd. Co-operators is a leading Canadian financial service co-operative, offering multiline insurance and investment products, services, and personalized advice to help Canadians build their financial strength and security. The company has more than $58-billion in assets under administration. Co-operators has been providing trusted guidance to Canadians for the past 78 years. The organization is 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.

Co-operators' Class E and Series C preference shares trade under ticker symbol CCS.PR.C on the Toronto Stock Exchange.

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