The Canadian property and casualty insurance industry achieved a dismal 3.8% return on equity for the last four consecutive quarters through to the end of March 2001, according to the latest preliminary financial figures released by the Insurance Bureau of Canada (IBC). The industry’s taxed income for the first quarter of this year fell by 95% to $22 million against its position at the end of the first quarter of 2000. Nearly half of the insurers filing results with the IBC reported an after-tax income loss for the first quarter of this year, notes the bureau’s chief economist Paul Kovacs. "Weak underwriting results and waning investment results were to blame for the severity of the decline." Canadian insurers saw an 18% rise in claim costs over the past four quarters, with most of the damage arising from the Ontario, Alberta and Atlantic provinces’ auto markets, which on their own, boosted claim expenses by 30%. Only Quebec and British Columbia showed marginal underwriting improvement in certain lines during the reporting period, Kovacs says. The industry’s underwriting loss for the first quarter of 2001 skyrocketed to $612 million from a loss of $284 million reported for the same period the year prior. Claims continued to exceed premium growth, resulting in the latest devastation seen in the bottom-line numbers of insurers, Kovacs observes. Claims for the latest reporting period rose by 17.6% while earned premiums notched up a more conservative 6.1% growth rate. The loss ratio for the first quarter of this year climbed to 81.5% from last year’s first quarter ratio of 73.5%, which boosted the combined ratio for the latest reporting period to 112.6%. "loss ratios in both auto and personal property markets continued to rise in all regions except Quebec. The Atlantic auto market is particularly unsettling, as the loss ratio has risen to over 100%," Kovacs adds. The investment side of the business was unable to balance the negative impact of underwriting on insurers’ bottom-lines, Kovacs says, with realized gains over the latest reporting period having fallen by 63.8% year-on-year. This saw the industry’s investment earnings for the latest quarter drop by $178 million compared with the same period the year prior. However, not all is "doom and gloom" Kovacs notes, the industry has risen premium levels, notably in the auto lines, while the expense ratio is currently at its lowest in 15 years. But, while the industry’s financial security remains strong, "nobody’s making any money," he adds.