Insurance Industry News and Information

Canadian Non-Life Insurance Market Poised for 2017 Profit Recovery

share on Facebook LinkedIn Share on Google+Google+ Twitter

Fitch Ratings Report: Canadian Non-Life Insurance Market Update

New York, NY (Jan. 30, 2017) – The Canadian non-life insurance industry is likely to return to an underwriting profit in 2017, according to Fitch Ratings' new report on the Canadian non-life insurance market. This follows the Fort McMurray, Alberta wildfire in May 2016 with estimated insured losses of CAD 3.8 billion that represents the largest natural catastrophe loss in Canada's history.

Following a significant improvement in 2015 underwriting performance, the market in aggregate will shift to an underwriting loss in 2016. The full-year 2016 industry combined ratio may approximate 102% compared with 96.5% in 2015. Net profits are anticipated to dip by 60% in 2016. The catastrophe losses of 2016 had a negligible effect on insurers' capital strength, as reinsurers bore a significant portion of the losses.

"Non-life Canadian insurers are expected to see an underwriting profit in 2017 as pricing fundamentals remain steady; however, in the medium-term economic uncertainty could dampen insurer revenue and earnings expansion," said Jim Auden, managing director, Fitch Ratings.

While the Alberta wildfire was the largest loss event in Canada's history, looking ahead the single largest insurance modeled risk for Canada continues to be an earthquake, particularly one affecting British Columbia, and to a lesser extent the Ontario/Quebec region.

Compared with the U.S. non-life insurance market, Canada historically posts better and less volatile underwriting results due to differing competitive dynamics, less severe catastrophe experience and less underwriting exposure to longer-tail casualty business.

The Canadian insurance regulatory environment is a key factor in overall market stability, with prudent capital standards and an evolving oversight emphasis on sound corporate governance and enterprise risk management practices.

Following a few years of significant acquisitions in the sector, Fitch expects continued consolidation in Canadian non-life insurance. Potential future transactions may emanate from strategic shifts within foreign-owned insurers and Canadian financial institutions that own insurers. In addition, the investment required to keep pace with technology advances in data analytics and more sophisticated modeling techniques could marginalize smaller players and fuel market consolidation.

The report "Canadian Non-Life Insurance Market Update" is available from www.fitchratings.com.

Disclaimer

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTPS://WWW.FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch's factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch's ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed.

The information in this report is provided "as is" without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers.

Source: Fitch Ratings


Featured Providers

Specialized Providers

Below are links to featured insurance products and services that are specialized or difficult to categorize.

News and Articles

More general insurance industry news and information.





Reader Comments

No comments have been posted.




Add a comment:
Your name:
Your email:
To prevent spam, please enter the day of the week: