Canadian P&C industry sees underwriting income erode on a quarter-by-quarter basis: Statistics Canada data

The Canadian property and casualty insurance industry has seen a reversal of fortune in its quarterly underwriting income, which plummeted from a profit of $592 million in 2009 Q4 to an underwriting loss of $308 million in 2010 Q4, according to quarterly data from Statistics Canada.
Statistics Canada reported the data in its 2010 Q4 Quarterly Financial Statistics for Enterprises, released on Feb. 23.
The $308-million underwriting loss in 2010 Q4 was a slight improvement over the $315-million underwriting loss the industry posted in 2010 Q3.
But the deterioration of the industry’s underwriting income from quarter to quarter is evident. Prior to the underwriting losses in the last two quarters of 2010, Statistics Canada data show the industry posted a quarterly underwriting profit of $592 million in 2009 Q4, a $389-million underwriting profit in 2010 Q1, and a $60-million profit in 2010 Q2.
Over the same period, Canadian P&C insurers increased their net premiums written. The industry wrote $9.03 billion in net premiums written in 2010 Q4, up from the $8.2 billion the industry wrote in 2009 Q4.
But claims costs have increased as well. Insurance claims costs incurred by the Canadian P&C industry amounted to $6.47 billion in 2010 Q4, up significantly from the $5.28 billion they incurred in 2009 Q4, according to Statistics Canada data.
Overall, the industry reported a net profit of $353 million in 2010 Q4, down from a net profit of $1.156 billion recorded in 2009 Q4.
Return on equity (ROE) in 2010 Q4 (6.5%) was also down appreciably from the industry’s 2009 Q4 ROE of 16.1%.