Co-operators General Insurance Co. Friday reported lower second-quarter income, as the P&C insurer booked sharply lower investment gains.

For the second quarter ended June 30, Co-operators consolidated net income was $13.9 million, compared to $39 million for the same quarter in 2008. Earnings per common share were 54¢ for the second quarter compared to $1.80 for the same period last year.

“Our successful $115.0 million preferred share offering in the quarter, in combination with improved equity markets, helped to strengthen our capital position,” said Kathy Bardswick, president and CEO of The Co-operators.

The firm’s Minimum Capital Test was 223% at June 30, well above the regulatory minimum requirement of 150%.

“The company experienced positive premium growth, and the underlying loss ratios improved during the second quarter,” Bardswick added.

Gross written premium in the second quarter increased 1.7% to $625.5 million, compared to $614.9 million in the second quarter of 2008. “Growth was achieved in all product lines with Western Canada leading the regional growth, making up $5.4 million of the $10.6 million increase,” the company said.

Net earned premium growth for the quarter was 2.0% over the previous year, with growth in the Western, Atlantic and Ontario regions.

Second quarter net investment income from interest, dividends and real estate rose to $36.1 million in 2009, up from $34.2 million in 2008.

Net investment gains of $3.3 million were achieved in the quarter, down from $31.8 million in the same period in 2008 when the company recorded gains on the sale of a portion of its real estate portfolio.

Also during the quarter, the company recognized other than temporary impairment losses of $5.4 million related to foreign equity investments.

“The credit quality of our portfolio remains high with 95.5% of our bonds rated A or higher. Our equity portfolio is 83.6% weighted to Canadian stocks,” the company said.

The combined ratio of claims and operating expenses for the quarter was 104%, compared to 102.6% for the second quarter of 2008.

The loss ratio for the second quarter of 2009 increased to 72.1% from 70% in the second quarter of 2008.

“The second quarter loss ratio increased on auto, particularly in the Greater Toronto Area (GTA) for accident benefit claims,” the company said.

IE