canadian property & casualty insurance market briefing€¦ · canadian property & casualty...

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

© AM Best Company (AMB) and/or its licensors and affiliates. All rights reserved. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY COPYRIGHT LAW AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT AMB’s PRIOR WRITTEN CONSENT. All information contained herein is obtained by AMB from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. Under no circumstances shall AMB have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of AMB or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if AMB is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The credit ratings, financial reporting analysis, projections, and other observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities, insurance policies, contracts or any other financial obligations, nor does it address the suitability of any particular financial obligation for a specific purpose or purchaser. Credit risk is the risk that an entity may not meet its contractual, financial obligations as they come due. Credit ratings do not address any other risk, including but not limited to, liquidity risk, market value risk or price volatility of rated securities. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY AMB IN ANY FORM OR MANNER WHATSOEVER. Each credit rating or other opinion must be weighed solely as one factor in any investment or purchasing decision made by or on behalf of any user of the information contained herein, and each such user must accordingly make its own study and evaluation of each security or other financial obligation and of each issuer and guarantor of, and each provider of credit support for, each security or other financial obligation that it may consider purchasing, holding or selling.

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 Industry A.M. Best Rating Trends


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


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


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)


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)


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


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


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


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


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)


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


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


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

canadian property & casualty insurance market briefing€¦ · canadian property & casualty...

Documents