Personal and commercial markets continue to operate in a dichotomy: MSA

Personal lines in Canada are showing signs of “robust” premium growth, while commercial writers continue to plod along in a sluggish, no-growth environment, reported Joel Baker, president and CEO of MSA Research Inc.
In the MSA/Baron Outlook Report: Q2 2011, Baker described the ongoing dichotomy between personal and commercial writers in the Canadian market.
Personal lines writers reported a slight decrease in overall combined ratio from 100.33% in the first six months of 2010 to 100.24% in the same period of 2011. Similarily, the net loss ratio for these writers decreased from 70.43% to 70.28%.
Net premiums written in the first half of 2011 for personal writers increased 9.3% to $15.2 billion.
In commercial lines, excluding Lloyd’s, writers saw net premiums written grow a meagre 3.4% to $3.6 billion.
Baker says investment income also highlights the gulf between the two lines. Personal lines writers grew their investment income 9.2% (to $1.25 billion) in the first half of 2011, whereas commercial writers saw theirs decrease 52.4% from 2010 H1 to 2011 H1 (to $296 million). Baker attributed much of the loss to investment losses at the Northbridge Group of Companies (Fairfax).
Commercial lines writers also saw their net income drop 38.6% to $395 million in the first six months of 2011. Personal lines writers saw a modest increase of 2.1% to $909 million in 2011 H1 when compared to the same period of 2010.
Ontario personal auto did not show any improvement in 2011 Q2, with a direct loss ratio of 80.2% at six months, compared to 80.1% for 2011 Q1.
“This is much better than the 94.3% posed at six-months 2010 and the horrendous 99.5 direct loss ratio at year-end,” Baker wrote. “It is far from profitable, but indeed a step in the right direction.”