After several consecutive quarters of negative underwriting results, Co-operators General Insurance Company reported net income of $95.7 million for Q2 2024. This marks a significant improvement from the $29.9 million reported during the same period in 2023, representing a 320 per cent increase.
“Our continued focus on disciplined growth and an improved claims experience during the second quarter resulted in an underwriting gain,” said Rob Wesseling, President and CEO of Co-operators.
The insurer had experienced five consecutive quarters of negative technical results, spanning all of 2023 and the first quarter of 2024, due to a high loss ratio.
For Q2 2024, underwriting income, also known as the technical insurance result, amounted to $75 million, a sharp turnaround from the $60 million net underwriting loss reported in the same quarter of 2023.
Combined ratio
In terms of loss experience, the combined ratio stood at 93.8 per cent in Q2 2024, excluding discounting and risk adjustment. This is a substantial improvement from the 105.7 per cent reported in Q2 2023, a difference of 11.9 points.
The loss ratio, again excluding discounting and risk adjustment, was 64.8 per cent in the last quarter, compared to 74.1 per cent in 2023, showing an improvement of 9.3 points.
In auto insurance, the loss ratio remained high at 78.7 per cent in Q2 2024, but this is a slight improvement of 0.4 points from the 79.1 per cent reported in the same period in 2023.
After the first six months of 2024, auto insurance accounted for 46 per cent of Co-operators' property and casualty premium volume, up from 43 per cent the previous year.
For the company's second-largest segment, home insurance (which represents 27 per cent of premium volume), the loss ratio improved significantly to 58.9 per cent in Q2 2024, a 22.1-point improvement from 81 per cent a year earlier. The decrease in major losses across all regions and a reduction in claims in Ontario, where the average premium also increased, contributed to this improvement.
In commercial insurance, the loss ratio also improved by 16.8 points year-over-year, reaching 43.5 per cent in Q2 2024. The growth in premiums and overall decline in claims are cited as the main reasons for the improved ratio in this line of business. The number of claims decreased in Ontario and the Atlantic provinces, while in the West, there were fewer major losses and a more favorable than expected development of claims from the previous year.
Premiums
Direct written premiums (DWP) reached $1.5 billion in Q2 2024, compared to $1.3 billion a year earlier, reflecting an increase of $195 million or 15 per cent year-over-year.
Co-operators noted strong growth across all lines of business, particularly in auto insurance, where the volume increased by 23 per cent year-over-year. The increase was notable across all regions, especially in Ontario, where premium volume rose by 17.3 per cent, according to Co-operators' management report.
After the first six months of 2024, the Ontario market represented 51 per cent of the insurer's direct written premiums, compared to 34 per cent for the Western region, 9 per cent for the Atlantic region, and 6 per cent for Quebec.
“Growth in both DWP and net insurance income (NIR) was a result of increases in average premiums and growth in vehicles and policies in force primarily due to new business as well as higher retention,” the company stated.
Investment income
In the previous quarter, ended March 31, the company managed to generate a profit thanks to strong investment results, a trend that continued in Q2 2024.
Net investment income reached $63.9 million, up from $40 million a year earlier, representing a 60 per cent increase over 12 months.
“The increase was primarily driven by unrealized gains on bonds and limited partnerships, and higher interest and dividend income. The favourable movements were partially offset by net losses on common shares,” Co-operators stated.
