“Canada’s property/casualty insurance sector is stable, but strong capitalization and profitability provide the ingredients for continued softening in the market,” indicates a new report from A.M. Best on the country’s insurance industry.
Best also noted that “pricing is down across major commercial lines, returns are diminishing, and profits are expected to continue falling until rates recover.
“Net income for 2007 was about C$4.6 billion [US$4.31 billion], down 3.5 percent from 2006. The operating ratio was 83.1, up from 82.3, while return on equity was 15.0 percent, down from 17.1 percent.”
Best added that, “numerous and severe summer and winter storms marked 2007, and harsh weather continued into the first half of 2008, affecting property and automobile claims. Net underwriting income in 2007 was C$2.3 billion [US$2.16 billion], down 18.1 percent from 2006, and the combined ratio increased to 93.2 from 91.5. Auto insurers’ 2007 net loss ratio increased to 70.8 from 67.5.”
However, Best also indicated that the “personal property net loss ratio held relatively steady at 66.7 in 2007, compared to 66.4 the year before. Commercial property insurers’ net loss ratio jumped 4.1 points to 56.2. Net investment income was up 12.6 percent in 2007, but growth was slower than in 2006.”
Best said it “projects further declines in profits through 2008 amid challenging underwriting and investment conditions.”
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Source: A.M. Best – www.ambest.com