Co-operators is reacting to Ontario mandated chops to its auto insurance premiums, arguing those demands simply cannot be "actuarially justified."
“The Ontario auto insurance market continues to be a challenge as the minority government deals with political pressure to reduce costs and lower premiums for consumers,” The Co-operators General Insurance Company stated during its Q1 2014 results. “As a result, Co-operators General and COSECO (Insurance Company) face further mandated rate decreases effective July 1, of 5.3 per cent and 3.6 per cent respectively. This, despite the fact that Co-operators General had previously reduced premiums by 12 per cent since 2012. This cannot be sustained or actuarially justified.”
The Guelph, Ont.-based carrier pointed to company-wide auto claims ratio that increased 10.6 points year over year; while reporting an underwriting loss of $33 million, a 19.6 per cent increase in net earned premiums from Quebec, a 14.7 per cent increase in commercial premiums and an 81 per cent year-over-year drop in net income for its financial results ending March 31.
"Winter weather related claims across Canada and more unfavourable claims development,” The Co-operators stated in its management discussion and analysis posted to the System for Electronic Document Analysis and Retrieval website, “mainly in Ontario and Atlantic contributed to the loss ratio deterioration of 4.8 percentage points in the home lines of business.”
The commercial line of business loss ratio increased 6.1 percentage points as a result of winter weather related claims and a commercial property fire loss, which offset lower accident year claims in the Atlantic region compared to the first quarter of 2013. (continued.)
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OTHER FIRST QUARTER NUMBERS
The combined ratio for the quarter, excluding the market yield adjustment, was 103.7 per cent, compared to 95.4 per cent in Q1 2013.
In its Management’s Discussion and Analysis (MD&A), The Co-operators recorded net earned premiums of $525.596 million in the latest quarter, up 5.1 per cent from $500.06 million in Q1 2013. Net income was $10.589 million in the most recent quarter, down 81 per cent from $58.108 million in Q1 2013. Claims and adjustment expenses were $382.9 million in Q1 2014, up 23.9 per cent from $308.9 million in Q1 2013.
Investment income dropped 4 per cent year over year, from $29.7 million in the first three months of 2013 to $28.5 million in Q1 2014.
Net claims and adjustment expenses were $382.9 million in the most recent quarter, up 23.3 per cent from $308.1 million in Q1 2013.
The Co-operators General Insurance — which is owned by Guelph, Ont.-based The Co-operators Group Ltd. — includes subsidiaries Sovereign General Insurance Company, COSECO Insurance Company, L'Équitable, Compagnie d'assurances Générale and 8383146 Canada Inc.
