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Remember 2020 Q1? The good news financial story eclipsed by COVID


June 12, 2020   by David Gambrill


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Canada’s federally regulated P&C insurers appeared to be turning the corner financially in 2020 Q1 before the pandemic hit and the bottom fell out of the national economy, data from Canada’s federal solvency regulator suggest.

Overall, the industry turned a net profit of $381.7 million in the first quarter of this year, up substantially from the $80.7 million profit it turned the same time last year.

And while the industry suffered its second straight first-quarter underwriting loss in as many years, it cut its underwriting losses in half over the previous year. Financial data from the Office of the Superintendent of Financial Institutions (OSFI) show a P&C industry underwriting loss of $401.9 million in 2020 Q1, as opposed to an $873.8-million underwriting loss during 2019 Q1.

The industry was able to cut its underwriting losses largely without the help of net investment income, which plunged from $1.04 billion in 2019 Q1 to just $210.6 million in the first quarter of this year.

One leading factor in the 2020 first-quarter recovery was an improved financial performance in personal auto lines, where Canadian P&C insurers were able to boost their net premiums earned by almost $1.3 billion over the same period last year. The industry shaved its claims ratio in this class of business down from 86.8% in 2019 Q1 down to 81.5% in this year’s first quarter.

Another standout was the industry’s much-improved claims ratio in personal property lines. While the industry took in only $163.8 million in additional net premiums earned in personal property, the claims ratio in this class of business fell substantially — from 58% in last year’s first quarter to just 48.1% this year.

The liability class of business saw a substantial increase of net incurred claims during the first quarter this year, OSFI data shows. Canadian P&C insurers in this line of business saw their claims payouts jump from $6.9 billion in 2019 Q1 to almost $8.8 billion during the same period this year. The claims ratio in the liability class increased sharply from 64% during last year’s first quarter to 87.3% in 2020 Q1.

Commercial property also saw an uptick in its claims ratio, although not as dramatically as in liability lines. Commercial writers took in an additional $228.5 million in net earned premium during the first quarter of this year, while seeing claims incurred increase by $237.5 million. The claims ratio in this class inched up from 75.9% in last year’s first quarter to 79.5% this year.

Overall, the Canadian P&C industry took in an additional $2.4 billion in net premiums earned in all lines of business during 2020 Q1, compared to what it earned during the same time last year. The industry’s overall claims ratio for all lines of business remained relatively stable—moving from 72.% in 2019 Q1 to 73.1% 2020 Q1.

And all the while the Canadian P&C industry improved its net income by 373% in 2020 Q1 with almost no help from investment income.


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