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Jackie Lentz Senior Financial Analyst
Joel Silverthorn Senior Financial Analyst
Canadian Property & Casualty Insurance Market Briefing
A.M. Best Company’s
24 September 2015
Disclaimer
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Canadian P&C Insurance Market Briefing 24 September 2015 2
Canadian P&C Industry
OUTLOOK: STABLE Solid risk-adjusted capitalization Underwriting and operating
profitability recorded in 2014 Consolidation continues
Canadian P&C Insurance Market Briefing 24 September 2015 3
Canadian P&C Industry A.M. Best Rating Trends
Canadian P&C Insurance Market Briefing 24 September 2015 4
All ratings are in the category of “Good”, “Excellent”, or “Superior” based on the A.M. Best Financial Strength Rating Scale
No rating downgrades for several years Although the pace has slowed, movement
among rating categories continues Not anticipating significant number of
rating changes
Canadian P&C Industry
Interactive Rating Distribution
Canadian P&C Insurance Market Briefing 24 September 2015 5
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2009 2010 2011 2012 2013 2014 June 30,2015*
Fair Good Excellent Superior
Source: A.M. Best data & research*Through June 30, 2015. All other years, as of year end.
Canada Property/Casualty – Interactive Ratings Distribution(2009-2015*)
Rating Changes (Excluding CABS) Ranked by Net Premiums Written
Canadian P&C Insurance Market Briefing 24 September 2015 6
Rank Rating Change 1Best’s Issuer Credit Rating 2 Previous ICR
Best’s Financial Strength Rating 2
Previous FSR
Rating Change Effective Date
Net Premiums Written
(C$ Millions)As of December 31, 2014 AMB# Company Name
1 NEW 85739 Dominion of Canada General Insurance a nr A NR 5/23/2014 1,177,363 2 + 66533 Industriale All iance Pacific General Insurance Corp a+ a A A 2/27/2014 158,835 3 + 86417 Travelers Insurance Company CA aa+ aa A++ A+ 5/23/2014 158,121 4 + 66542 Millennium Insurance Corp a a- A A- 9/12/2014 123,184 5 + 85760 ACE INA Insurance 3 aa+ aa A++ A+ 4/11/2014 110,064
As of June 30, 20151 + 85725 Chubb Insurance Company of Canada 3 aaa aa+ A++ A++ 4/16/2015 617,085
* Rating Changes-Canada Property/Casualty excludes Canadian branches.1 (+) Rating upgrades; (-) Rating downgrades; (NEW) Initial Rating2 For Best’s Rating criteria and definitions visit www.ambest.com3 Chubb Insurance Company of Canada and ACE INA Insurance were placed under review with negative implications effective 7/2/2015 following the 7/1/2015 announcement ofthe acquisition of The Chubb Corporation by ACE Limited.
Canadian P&C Market Share
(all lines)
Canadian P&C Insurance Market Briefing 24 September 2015 7
Rank Group / CompanyDPW (C$B) % Rank Group / Company
DPW (C$B) %
1 Intact Group * 7.6 15.5% 1 ING Canada Group 4.1 10.9%2 Desjardins Group** 4.0 8.2% 2 Aviva Canada Group 3.2 8.4%3 Aviva Group 4.0 8.1% 3 Co-operators Group 2.1 5.6%4 Meloche Monnex Group/TD Bank 3.0 6.2% 4 Economical Group 1.9 5.0%5 RSA Group 3.0 6.2% 5 Meloche Monnex Group/TD Bank 1.9 5.0%6 Wawanesa Mutual Insurance Company 2.6 5.3% 6 Fairfax Canada Group 1.6 4.3%7 Co-operators Group 2.4 4.9% 7 AXA Canada Group 1.6 4.2%8 Lloyds Underwriters CAB 2.2 4.5% 8 Royal & Sun Group 1.6 4.2%9 Economical Group 2.0 4.0% 9 Wawanesa Mutual Insurance Company 1.6 4.2%
10 Travelers Group 1.6 3.2% 10 State Farm Canada Group 1.5 4.1%Total 32.2 66.2% Total 21.0 56.0%
Source: A.M. Best Research * Includes Canadian Direct Insurance Company** Includes State Farm Canada
Top 102014 vs 2007
2014 2007
Risk Adjusted Capitalization
Best Capital Adequacy Ratio (BCAR)
Canadian P&C Insurance Market Briefing 24 September 2015 8
224.0 223.0
216.9
228.6225.8
222.5
160
170
180
190
200
210
220
230
240
250
2009 2010 2011 2012 2013 2014
Excludes Lloyd's CAB and ICBCSource: A.M. Best data & research
Weighted Averages
Canadian P&C
Combined Ratios
Canadian P&C Insurance Market Briefing 24 September 2015 9
100.799.1
96.2
99.898.5
95.6
85.0
90.0
95.0
100.0
105.0
2010 2011 2012 2013 2014 2Q 15
Excludes Lloyd's CAB & ICBCSource: A.M. Best data & research
Canadian P&C
Operating Ratios
Canadian P&C Insurance Market Briefing 24 September 2015 10
91.6 91.8
88.6
95.2
90.389.0
75.0
80.0
85.0
90.0
95.0
100.0
2010 2011 2012 2013 2014 2Q 15
Excludes Lloyd's CAB & ICBCSource: A.M. Best data & research
Canadian P&C
Net Investment Income vs. Net Investment Yield
Canadian P&C Insurance Market Briefing 24 September 2015 11
2.0
2.5
3.0
3.5
4.0
4.5
5.0
2.0
2.2
2.4
2.6
2.8
3.0
3.2
3.4
3.6
2010 2011 2012 2013 2014
Net Investment Income ($C Billions)Net Investment Yield
*Excludes Lloyds CAB & ICBCSource: A.M. Best data & research
Net I
nves
tmen
t Inc
ome
(C$
Billio
ns)
Net Investment Yield (%)
Canadian P&C
Automobile Net Loss Ratio Trend
Canadian P&C Insurance Market Briefing 24 September 2015 12
61.3
69.0
82.5 88.677.4
73.5
83.1
137.6
143.3
74.3
50.4
67.0
82.3
105.0
40
60
80
100
120
140
160
2009 2010 2011 2012 2013 2014 2Q 2015
Loss
Ratio
(%)
Auto - LiabilityAuto - Personal Accident
*Excludes Lloyd's CAB and ICBCSource: A.M. Best data & research
Canadian P&C Catastrophe Losses
(1991 – 2014)
Canadian P&C Insurance Market Briefing 24 September 2015 13
Year Date Location Event Loss + LAECurrent dollars
1999 February Quebec, Ontario, New Brunswick Ice storm 1,574 2,1212013 June Alberta Heavy rains/Flooding 1,740 1,7742013 July Toronto Heavy rains/Flooding 940 9582011 May 14-17 Slave Lake AB Fire 742 7752005 August Ontario Wind/Rainstorm 625 7312010 July 12-13 Calgary and Southern Alberta Wind/Thunderstorm 530 5702012 August Calgary Flooding/Hail/Wind 552 5681991 Sept. 7 Calgary Hail 343 5192009 July 24-28 Ontario Heavy rains 376 4112005 June 6-8 & June 17-19 Alberta Flooding 300 351
Source: A.M. Best research
Insured losses (C$ Million)
Canadian P&C Property
Net Loss Ratios
Canadian P&C Insurance Market Briefing 24 September 2015 14
66.2
62.1
70.5 68.7
78.5
66.4
64.5
75.9
63.968.0
59.9
71.7
63.8
50.0
45
50
55
60
65
70
75
80
85
2009 2010 2011 2012 2013 2014 2Q 2015
Commercial
Personal
Source: A.M. Best data & research
Canadian P&C
Key Future Issues
Canadian P&C Insurance Market Briefing 24 September 2015 15
Consolidations / M&A activity Demutualization Ontario Auto Rate Reductions Cyber Risk ORSA International Capital Standards
Jackie Lentz Senior Financial Analyst
Joel Silverthorn Senior Financial Analyst
Thank You
A.M. Best Company
24 September 2015
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