Canada Insurance Report Q4 2011
Includes 3 FREE quarterly updates
Over the last two years, a recurrent theme in BMI’s reports on Canada’s insurance sector has been its strength in global terms. In late 2011, this strength remains evident. The sector is of sufficient size that many players can achieve economies of scale, even if they focus on particular geographic areas or product niches. The sector is completely open to foreign competition, with the result that it has access to capital and world class products. By most metrics, the sector has remained resilient in the face of the volatility in the financial markets and the recession in the US following the global financial crisis in late 2008. Despite a complex regulatory structure that involves institutions at the federal and the provincial levels, the standard of oversight is extremely good.
The results published by the major listed life insurance companies, such as Great-West Lifeco, Manulife and Sun Life Financial, highlight these strengths. All three are large multinationals with substantial operations in the US and other parts of the world. All have also grown their Canadian businesses through the development of new products. Taking a longer view, the Canadian life segment is remarkable for the steady growth in life density. This appears to be the result of the leading companies responding to the needs of their customers in the face of steady competition from the insurance arms of Canada’s major banks and large foreign players. Each of these majors are achieving double-digit growth in particular lines. This suggests that the life insurers continue to anticipate – and supply – new and improved savings If the life segment can be considered as a part of the broader market for organised savings that still demonstrably has scope for growth, the non-life segment should be seen as a marketplace with limited potential for organic expansion. Including accident and sickness insurance in the non-life segment, which we do for the sake of consistency with BMI’s reports on the insurance sectors of other countries, non-life penetration has remained remarkably constant at about 3.5% of GDP for years. This suggests there is a substantial element of non-discretionary use of non-life insurance in Canada. However, it also indicates that non-life penetration is unlikely to rise. Unlike the life segment, the non-life segment is fragmented.
However, it is becoming less so. Intact Financial’s acquisition of AXA Canada, announced at the end of May 2011, will produce group that has a 16% market share and is about twice the size of the nearest competitor, Aviva Canada. The Economical continues to move towards demutualisation, recognising that easier access to global capital markets could well be an advantage. The destruction of about a third of the town of Slave Lake, Alberta, as a result of a forest fire in May 2011 was the second most costly insured disaster in Canada’s history. The trade association and insurers were on the ground within hours to help customers, assess damage and pay claims.
Over the last two years, a recurrent theme in BMI’s reports on Canada’s insurance sector has been its strength in global terms. In late 2011, this strength remains evident. The sector is of sufficient size that many players can achieve economies of scale, even if they focus on particular geographic areas or product niches. The sector is completely open to foreign competition, with the result that it has access to capital and world class products. By most metrics, the sector has remained resilient in the face of the volatility in the financial markets and the recession in the US following the global financial crisis in late 2008. Despite a complex regulatory structure that involves institutions at the federal and the provincial levels, the standard of oversight is extremely good.
The results published by the major listed life insurance companies, such as Great-West Lifeco, Manulife and Sun Life Financial, highlight these strengths. All three are large multinationals with substantial operations in the US and other parts of the world. All have also grown their Canadian businesses through the development of new products. Taking a longer view, the Canadian life segment is remarkable for the steady growth in life density. This appears to be the result of the leading companies responding to the needs of their customers in the face of steady competition from the insurance arms of Canada’s major banks and large foreign players. Each of these majors are achieving double-digit growth in particular lines. This suggests that the life insurers continue to anticipate – and supply – new and improved savings If the life segment can be considered as a part of the broader market for organised savings that still demonstrably has scope for growth, the non-life segment should be seen as a marketplace with limited potential for organic expansion. Including accident and sickness insurance in the non-life segment, which we do for the sake of consistency with BMI’s reports on the insurance sectors of other countries, non-life penetration has remained remarkably constant at about 3.5% of GDP for years. This suggests there is a substantial element of non-discretionary use of non-life insurance in Canada. However, it also indicates that non-life penetration is unlikely to rise. Unlike the life segment, the non-life segment is fragmented.
However, it is becoming less so. Intact Financial’s acquisition of AXA Canada, announced at the end of May 2011, will produce group that has a 16% market share and is about twice the size of the nearest competitor, Aviva Canada. The Economical continues to move towards demutualisation, recognising that easier access to global capital markets could well be an advantage. The destruction of about a third of the town of Slave Lake, Alberta, as a result of a forest fire in May 2011 was the second most costly insured disaster in Canada’s history. The trade association and insurers were on the ground within hours to help customers, assess damage and pay claims.
Contents
Executive SummaryTable: Total Premiums, 2008-2015
Key Insights And Key Risks
SWOT Analysis
Canada Insurance Industry SWOT
Canada Political SWOT
Canada Economic SWOT
Life Sector
Developed States Life Sector Overview
Table: Developed States Life Premiums, 2008-2015 (US$mn)
Canada Life Sector Update
Table: Breakdown Of Life Premiums, 2010 (CADmn)
Life Insurance Industry Forecast Scenario
Table: Life Premiums, 2008-2015
Growth Drivers And Risk Management Projections
Population
Table: Insurance Sector Key Drivers – Demographics, 2008-2015
Non-Life Sector
Developed States Non-Life Sector Overview
Table: Developed States Non-Life Premiums, 2008-2015 (US$mn)
Canada Non-Life Sector Update
Table: Breakdown Of Non-Life Premiums, 2010 (CADmn)
Non-Life Insurance Industry Forecast Scenario
Table: Non-Life Premiums, 2008-2015
Growth Drivers And Risk Management Projections
Macroeconomic Outlook
Table: GDP Contribution To Growth, 2008-2015
Political Stability Outlook
Table: Developed States Security Risk Ratings
Healthcare
Epidemiology
Table: Insurance Sector Key Drivers – Disability-Adjusted Life Years, 2008-2015
Motor
Table: Insurance Sector Key Drivers – Autos, 2008-2015
Insurance Risk/Reward Ratings
Table: Canada’s Insurance Risk/Reward Ratings
Table: Developed States Insurance Risk/Reward Ratings
Competitive Landscape
Competitive Landscape Analysis
Major Players In Canada’s Insurance Sector
Life Insurance Companies
Non-Life Insurance Companies
Company Profiles
Local Company Profiles
Canada Life
CIBC Life
Desjardins
The Economical Insurance Group
Intact Financial Corporation
Fairfax Financial Holdings
London Life
RBC Life
Scotia Life
Wawanesa
Regional Company Profiles
Aviva
Chartis
Manulife
Royal & Sun Alliance
Standard Life Canada
State Farm
Sun Life
BMI Methodology
Insurance Risk/Reward Ratings
Table: Insurance Risk/Reward Indicators And Rationale
Table: Weighting Of Indicators Skip to top