Canadian P&C industry sees 30% drop in profit in first half of ’08

The Canadian property and casualty industry reported a profit of Cdn$1.4 billion in the first half of 2008, a 30% drop year-over-year, Swiss Re reports in its Canadian P&C Quarterly.
During the first half of 2008, the industry’s return on equity (ROE) fell more than 4 points to 9.1%.
Swiss Re said cyclical softening and increased claims led to a deterioration of the combined ratio from 93.1% in the first half of 2007 to 99.4% in the first half of 2008.
Direct premiums written growth slowed to 2.6% year-over-year from 3.7% in 2007. Premiums for personal property showed strong growth of 7.3% during the first six months of 2008, compared to 3.6% in the previous period.
“This was driven by higher policy limits and rising construction costs while premium rates were down,” Swiss Re said.
Commercial property on the other hand was essentially flat, while premiums for other liability declined by 3.1% during the first half of 2008. “Overall premium growth is expected to slow to around 2% for 2008 due to the current soft market conditions.”
The industry-wide loss ratio deteriorated to 60.6% from 63.5% in the first six months of 2007, with overall claims incurred increasing by 13% during the first half of 2008.
“Loss ratios deteriorated for most of the business lines, but more sharply in personal accident and commercial property.”