Why Co-operators posted an underwriting loss in 2023

Co-operators General Insurance Company reported an annual underwriting loss of $184 million in 2023.  

This figure, which excludes discounting and risk adjustment, accounts for “a decline of $356.2 million from the underwriting gain of $171.3 million in the same period of 2022.” 

Discounted estimates are an actuary’s estimate of the present value of an unpaid claim. 

“The increase in net undiscounted claims and adjustment expenses during the year was primarily driven by increases in current accident year claims and unfavourable claims development in auto, home and commercial lines of business, particularly in the Ontario region,” The company published in a release. 

“Also contributing to the increase in claims was higher major event activity in the home line of business, particularly in the West region.” 

Co-operators does not specifically identify which major claims events contributed to its elevated claims counts, but Western Canada saw catastrophes ranging from floods, record-breaking wildfires and more over the past fiscal year.  

Industry-wide, these NatCat claims events hit insurers’ bottom lines hard in 2023—it was the fourth-worst year on record for NatCat losses. For example, another insurer, Intact, projected its own Cat losses due to wildfires in 2023 Q3 alone to be around Cdn$570 million. 

Co-operators’ fourth quarter results alone show an underwriting loss of $46.3 million (excluding discounting and risk adjustment). This declined $74.2 million from the underwriting income of $27.9 million in the same quarter of 2022. 

“The unfavourable change is driven by higher current accident year claims, unfavourable claims development and reserve strengthening,” the company wrote of its 2023 Q4 results. 

Its year-end combined ratio sits at 104.4%, compared to 95.6% the year prior. 

However, Co-operators president and CEO Rob Wesseling said premium growth remains strong. 

“Continued negative trends in increased claims and inflation have led to an underwriting loss in the year which has been mitigated by strong premium growth,” he said in a release. 

The company is still reporting growth across its core lines of business and all regions in 2023. 

The insurer earned $4.8 million in direct premiums written over the full year—an increase from $4.4 million the year previous. This accounts for an 11% increase. 

Feature image by iStock.com/Dilok Klaisataporn