A.M. Best Special Report: Canadian Property/Casualty Insurers Prosper, But Prolonged Soft Market May Lie Ahead



    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.

    BestWeek subscribers can download a PDF copy of all full special reports
at no additional cost or a combination of the PDF copies plus all related
spreadsheet files of the report data at no additional cost from our Web site
at www.bestweek.com.

    Nonsubscribers can download a PDF copy of the full special report (12
pages) for $55 or a combination of the PDF copy plus the spreadsheet file of
the report data for $140 from our Web site at www.bestweek.com. Call customer
service for more information, (908) 439-2200, ext. 5742.

    Founded in 1899, A.M. Best Company is a global full-service credit rating
organization dedicated to serving the financial and health care service
industries, including insurance companies, banks, hospitals and health care
system providers. For more information, visit www.ambest.com.




For further information:

For further information: A.M. Best Analysts Charles Huber, 908-439-2200,
ext. 5122 charles.huber@ambest.com or Joseph Burtone, 908-439-2200, ext. 5125
joseph.burtone@ambest.com or Public Relations Jim Peavy, 908-439-2200, ext.
5644 james.peavy@ambest.com or Rachelle Morrow, 908-439-2200, ext. 5378
rachelle.morrow@ambest.com

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