OLDWICK, N.J., September 18 /CNW/ - There's no room for complacency as
Canadian property/casualty insurers enjoy another solid year. Profitable
underwriting, growth in investment income and capital gains have boosted
pretax net income, as A.M. Best Co.'s rating outlook for Canada's
property/casualty market is stable. But abundant margin in the industry is
setting insurers up for a soft market cycle.
-- A.M. Best's outlook for the market reflects stronger capitalization;
stricter underwriting standards; improved expense management; below average
claims frequency; and stronger investment markets.
-- Improved underwriting has driven the industry's success in recent
years, with 2006 net underwriting income of nearly C$2.8 billion on about
C$30.8 billion of net premiums earned - a modest underwriting ratio of 91.5.
-- Invested assets have grown for most companies, while interest rates
have improved and equity markets have strengthened, whetting management's
appetite to boost returns further by adding more premium.
-- Despite underwriting gains for the industry in 2006, the automobile
line's net loss ratio deteriorated to 67.6 in 2006 from 64.5 in 2005.
-- Larger companies are pursuing market share, while regulators maintain
pressure on auto insurance pricing in the next 12 to 18 months.
-- Milder weather patterns reduced the net loss ratio in personal
property by 3.1 points to 65.2 in 2006.
-- Assumed and net premiums written for registered reinsurers in Canada
fell for the fourth straight year, probably due to freezes and rollbacks in
auto rates, combined with higher net property retentions.
-- Accident year reserve development has been favorable, and in 2006,
reserve releases yielded nearly C$1 billion of pretax net income.
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Founded in 1899, A.M. Best Company is a global full-service credit rating
organization dedicated to serving the financial and health care service
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system providers. For more information, visit www.ambest.com.
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