Net income up, loss ratios down for Canadian insurance firms for first six months

DAILY NEWS Oct 10, 2012 2:49 PM

2012-10-10

Financial results for the Canadian property and casualty insurance sector improved year-over-year during the first six months of 2012, according to industry experts.

Net income for the industry increased 57.5% (to $2.100 billion during the first six months of 2012 from $1.333 billion during the same period in 2011), according to a table published by MSA Research Inc. in its MSA Quarterly Output report Q2-2012.

Toronto-based MSA’s results for the industry excluded government insurers, Lloyd’s and Genworth. 

According to MSA, the net loss ratios decreased in three categories of insurers. The net loss ratio for personal and multi-line writers (excluding the Insurance Corporation of British Columbia, Manitoba Public Insurance and the Society of American Foresters) dropped from 70.28% during the first six months of 2011 to 60.63% during the same period this year.

The net loss ratio for commercial lines writers (excluding Lloyd’s) was 57.22% in the first six months of 2012, compared to 60.44% during the same period in 2011.

The net loss ratio for reinsurers was 62.67% during the first half of this year, down from 72.93% during the first six months of 2011.

“Commercial lines writers continued to exhibit impressive bottom line numbers despite continued erosion in top line revenue,” Baker wrote in the MSA quarterly outlook. “The soft commercial market lives on.”

Statistics from the Insurance Bureau of Canada show mid-year financial results for the Canadian industry have improved. Loss ratios decreased year-over-year to 62.4% this year, from 68.4% in the first six months of 2011, according to an article written by Gregor Robinson, IBC’s senior vice-president and chief economist, scheduled for publication this month in Canadian Underwriter.

According to a graph published with the article, national direct loss ratios decreased year-over-year in four of five categories (personal property, commercial property, auto and personal property-auto). The national direct loss ratio increased (to 56% during the first half of this year from 52% in the first half of 2011) in the commercial liability category.

MSA’s numbers show that underwriting income in the category of commercial lines writers (excluding Lloyd’s) increased 57.4% year over year for the first six months, from $231.9 million to $365.1 million, while net income rose 37.5%, from $377.059 million to $518.487 million. Across the industry as a whole (excluding Lloyd’s and Genworth), net claims and adjusted expenses dropped 5.3%, from $12.758 billion in 2011 to $12.078 billion this year.

“Headwinds still linger,” Baker wrote, “Among them, the overhang of tends of thousands of claims awaiting dispute resolution” with the Financial Services Commission of Ontario.