View this article online: https://www.insurancejournal.com/news/international/2007/09/19/83577.htm
A.M. Best has just released a study of the Canadian insurance market, which found that the country’s P/C insurers enjoyed “another solid year,” from profitable underwriting aided by investment income and capital gains.
Best warned, however, that, despite its generally stable outlook on Canadian insurers’ ratings, “there’s no room for complacency,” as abundant margins are “setting insurers up for a soft market cycle.”
Best’s findings are summarized as follows:
— The outlook for the market reflects stronger capitalization; stricter underwriting standards; improved expense management; below average claims frequency; and stronger investment markets.
— Improved underwriting has driven the industry’s success in recent years, with 2006 net underwriting income of nearly C$2.8 billion [US$ 2.76 billion] on about C$30.8 billion [US$30.4 billion] of net premiums earned – a modest underwriting ratio of 91.5.
— Invested assets have grown for most companies, while interest rates have improved and equity markets have strengthened, whetting management’s appetite to boost returns further by adding more premium.
— Despite underwriting gains for the industry in 2006, the automobile line’s net loss ratio deteriorated to 67.6 in 2006 from 64.5 in 2005.
— Larger companies are pursuing market share, while regulators maintain pressure on auto insurance pricing in the next 12 to 18 months.
— Milder weather patterns reduced the net loss ratio in personal property by 3.1 points to 65.2 in 2006.
— Assumed and net premiums written for registered reinsurers in Canada fell for the fourth straight year, probably due to freezes and rollbacks in auto rates, combined with higher net property retentions.
— Accident year reserve development has been favorable, and in 2006, reserve releases yielded nearly C$1 billion of pretax net income.
BestWeek subscribers can download a PDF copy of the report at no additional cost from the rating agency’s web site at: www.bestweek.com
Non-subscribers can download a PDF copy of the full special report (12 pages) for $55 or a combination of the PDF copy plus the spreadsheet file of the report data for $140 from the web site, or through best’s customer service at (908) 439-2200, ext. 5742.
Source A.M. Best – www.ambest.com.