Co-operators General Insurance combined ratio including MYA improves three points to 100.2% in 2014

Co-operators General Insurance Company said Thursday it experienced “fewer large losses” in 2014 than in 2013, with a combined ratio including market yield adjustment improving to 100.2% in 2014, from 103.2% in 2013.

Guelph, Ont.-based Co-operators General – which is owned by The Co-operators Group Ltd. – released Thursday its financial results for 2014.

In the final quarter, direct premiums written increased 4.7%, from $542.6 million in 2013 to $568.2 million last year.

“Growth was primarily in the auto and home lines of business in both the Ontario and Western regions,” The Co-operators said of its Q4 results in a press release.

In the most recent quarter, The Co-operators reported a combined ratio, excluding market yield adjustment (MYA), of 89.7%, down 4.3 points from 94% in Q4 2013.

MYA “is the impact of changes in the discount provision on claims liabilities. It includes the impact of changes in the discount rate used to discount claims liabilities based on the change in the market based yield of the underlying assets, the company said in its annual report for 2013. MYA “also includes adjustments made to the provisions for adverse deviation (PFADs) and other discounting assumptions.”

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Including MYA, the combined ratio was 90.4% in Q4 2014, down 3.2 points from 93.6% in Q4 2013.

“We experienced fewer large losses in 2014, whereas the same quarter of the prior year was impacted by the late December ice storm in Ontario and commercial fire losses,” the insurer said of its Q4 results.

The company was alluding to an ice storm shortly before the end of 2013. At the time, Environment Canada reported about 30 mm of freezing rain Dec. 21-22 at Toronto-Pearson airport, which caused tree branches to fall throughout the city, bringing down wires. At the height of the storm, Toronto Hydro reported about 300,000 of its 726,000 customers were affected, with insurers reporting claims arising from frozen pipes, fridge and freezer losses as well as structures and vehicles damaged by falling trees and branches.

For the full year of 2014, Co-operators reported a 5% increase in direct written premiums, from $2.12 billion in 2013 to $2.31 billion in 2014. Net income was up 54.8%, from $88.9 million in 2013 to $137.6 million in 2014.

The combined ratio excluding MYA improved by 5 points, from 104.1% in 2013 to 99.1% in 2014, “largely due to the impacts the Alberta and Toronto catastrophes and the late December ice storm had on the prior year.”

“Absent these impacts, we actually experienced higher accident year claims. Our net claims and adjustment expenses increased $24.0 million or 1.6% compared to 2013.”

In 2013, the floods in June in southern Alberta were estimated at the time to have caused $1.7 billion in insured losses while a rain storm July 8 was estimated at the time to have caused $850 million in insured losses – to the entire industry.

In 2013, Co-operators reported its underwriting loss of $66.8 million “was driven by the catastrophic heavy rains and flooding in both Alberta and Toronto.”

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Co-operators General writes commercial and personal insurance through agents in Canada.

The company also owns Sovereign General Insurance Company – which writes commercial, marine and special risk through brokers – and COSECO Insurance Company (COSECO), which writes home and auto through employer, association and affinity groups.