Combined ratio improves 2.9 points for Canadian P&C insurers: MSA

For the first nine months of 2015, underwriting income was nearly triple that of the same period in 2014, in the Canadian property & casualty insurance industry, MSA Research Inc. suggested in a recent report.

Net premiums earned increased less than 2% as commercial insurance providers play a “dangerous game” of looser terms and softening prices, Toronto-based MSA stated in its Q3-2015 Canadian P&C and Life/Health/Fraternal Results, released Nov. 26.

Underwriting income for the Canadian P&C industry increased 190.2%, for the first nine months of the year, from $488 million in 2014 to $1.417 billion this year.

MSA says those results include data on almost every insurer in Canada. The industry results at nine months omit “some major” writers regulated by Quebec’s Autorité des marchés financiers (AMF) because those writers only file semi annually.

The combined ratio for the industry improved 2.9 points, from 98.43% in the first nine months of 2014 to 95.53% during the same period this year.

The loss ratio dropped from 68.36% in the first nine months of 2014 to 64.93% during the same period this year.

The P&C insurance industry in Canada “appears on track to make another underwriting profit at year-end,” MSA suggested in the report. “This largely thanks to the mercifully light cat year which spared primary writers and reinsurers.”

For the first nine months, direct premiums written increased 5.1%, from $34.63 billion in 2014 to $36.42 billion this year.

For the same period, net premiums written increased 1.1%, from $32.25 billion in 2014 to $32.6 billion this year.

Premiums assumed increased 2.2%, from $5.525 billion in 2014 to $5.648 billion this year. Premiums ceded increased 19.7%, from $7.91 billion in 2014 to $9.468 billion this year.

Net premiums earned increased 1.8%, from $31.14 billion in the first nine months of 2014 to $31.7 billion this year.

“Some growth is apparent – on the personal lines side it is thanks to higher property rates but commercial players are busy fighting over market shares in a dangerous game amid softening pricing and looser terms which are already coming home to roost for some,” MSA noted.

“Investment income continues to drift down thanks to the grinding effect of the prolonged low interest rate environment.”

Net investment income was $2.92 billion in the first nine months of 2015, down 7.8% from $3.17 billion during the same period of 2014, MSA reported.