Canadian P&C underwriting profits shrink in 2009 Q2: OSFI figures

Federally regulated Canadian property and casualty insurers reported a decline in 2009 Q2 profits — sliding from a net income of Cdn$1.42 billion in 2008 Q2 to a profit of Cdn$1.07 billion during the same period this year.
Recent figures posted by Canada’s federal solvency regulator, the Office of the Superintendent of Financial Institutions (OSFI), show Canadian P&C insurers’ net investment income declined from Cdn$1.72 billion in 2008 Q2 to Cdn$1.322 billion in 2009 Q2.
Underwriting income similarly took a hit in 2009 Q2. Last year, in 2008 Q2, both Canadian and foreign-based property and casualty insurers reported a total underwriting profit of Cdn$137.96 million. That dipped down to Cdn$125.8 million in the second quarter of this year.
The one relative constant, OSFI figures show, is net premiums written, which were roughly the same this year as they were last year. Overall, the industry reported writing Cdn$15.98 billion in net premium in 2009 Q2, slightly more than the Cdn$15.6 billion it wrote during the same period last year.
OSFI’s figures show a slight discrepancy in the underwriting fortunes of Canadian and foreign-based P&C (re)insurers.
For example, whereas Canadian P&C insurers reported writing slightly more net premium in 2009 Q2 (Cdn$12.44 billion) than they did in 2008 Q2 (Cdn$12 billion), their underwriting profits nevertheless dwindled from Cdn$116.97 million in 2008 Q2 to only Cdn$49.2 million in 2009 Q2.
The inverse happened to foreign-based (re)insurers. They wrote marginally less if not the same amount of premium (Cdn$3.6 billion in 2008 Q2 versus Cdn$3.54 billion in 2009 Q2), and yet their underwriting income ballooned from Cdn$20.99 million in 2008 Q2 up to Cdn$76.6.
OSFI figures point to the continuing problems in the auto lines. In the personal accident automobile category, Canadian P&C insurers reported to OSFI a claims ratio of 112.5%. For foreign insurers, their claims ratio in the same category swelled up to 156% in 2009 Q2.