TEXT-S&P revises Co-operators Group outlook to positive

Overview
-- The combined operating performance of CFSL's operating entities, CGIC
and CLIC, has improved.
-- We view the capital adequacy for the consolidated Co-operators group
as very strong.
-- We are affirming the financial strength and issuer credit ratings on
CGIC and CLIC and the counterparty credit rating on CFSL.
-- We revised the outlook on all these ratings to positive from stable.

Rating Action
On Oct. 17, 2012, Standard & Poor's Rating Services affirmed its 'BBB+'
long-term financial strength and issuer credit ratings on the operating
companies of the Co-operators Group, Co-operators General Insurance Co. (CGIC)
and Co-operators Life Insurance Co. (CLIC). We also affirmed our 'BBB-'
long-term counterparty credit rating on their immediate holding company
Co-operators Financial Services Ltd. (CFSL). We revised the outlooks on all
ratings to positive from stable.

Rationale
The positive outlooks reflect our view that the continued and improved capital
strength at the consolidated Co-operators group is very strong. The
significantly improved operating performance at CGIC in the past two years
partially benefited from the Ontario Auto Reform that capped escalating
accident benefit claims, and was offset somewhat by the weakening operating
performance at CLIC. CGIC had underwriting losses in 2008-2010 driven by many
claims from the Ontario auto sector. In 2011 CGIC generated underwriting
profits, and continued to do so in the first six months of 2012.

The ratings are also based on the company's strong competitive position as the
fifth-largest property/casualty insurance company in Canada and its
well-established multichannel distribution. Offsetting these strengths are its
concentration in the highly regulated Ontario auto sector and expense ratios
higher than peers'.

Outlook
We expect the group to maintain very strong capitalization, CGIC to continue
its profitability and be in line with the Canadian personal-lines industry,
and CLIC to return to profitability. We expect growth in gross written
premiums at CGIC to be in the 2%-4% range in 2012 and 2013, combined ratios to
be near 99% barring significant catastrophe losses, and return on revenue to
be near 8%. We expect CLIC's operating performance to be marginal in 2012, but
improve in 2013 to an after-tax return on equity of 4%-5%. We expect CFSL's
debt plus preferred-to-total capital ratio to remain less than 35% and its
EBIT fixed-charge coverage to be near or more than 3.5x. In the next 12
months, if the company meets these expectations and we believe this
performance level is sustainable, we could raise the ratings by one notch.
Alternatively, we could lower the ratings if the company significantly
underperforms (five or more combined ratio points) the Canadian personal lines
industry or experiences significant deterioration in its capital strength,
reflecting a low 'A' level of consolidated capital adequacy.

Related Criteria And Research
Interactive Ratings Methodology, April 22, 2009

Ratings List
Ratings Affirmed

Co-operators Financial Services Ltd.
Senior Unsecured BBB-

Co-operators General Insurance Co.
Preferred Stock BBB-
Preferred Stock P-2(Low)

Ratings Affirmed; Outlook Action
To From
Co-operators Financial Services Ltd.
Counterparty Credit Rating BBB-/Positive/-- BBB-/Stable/--

Co-operators General Insurance Co.
Counterparty Credit Rating
Local Currency BBB+/Positive/-- BBB+/Stable/--

Co-operators General Insurance Co.
Co-operators Life Insurance Co.
Financial Strength Rating
Local Currency BBB+/Positive/-- BBB+/Stable/--

Co-operators Life Insurance Co.
Counterparty Credit Rating BBB+/Positive/-- BBB+/Stable/--

Complete ratings information is available to subscribers of RatingsDirect on
the Global Credit Portal at www.globalcreditportal.com. All ratings affected
by this rating action can be found on Standard & Poor's public Web site at
www.standardandpoors.com. Use the Ratings search box located in the left
column.