Canada Insurance Report Q4 2012

Published : August 2012
No. of Pages : 71

Price:

Although the details vary from quarter to quarter, newsflow from Canada’s insurance sector continues, in
mid-2012, to highlight its strength and dynamism. In both the non-life and the life segment, the main
players have scale, access to capital (even if they are mutuals), financial strength, well recognised brands,
and clearly enunciated strategies for growth. In each case, business is developing as a result of at least one
of the following factors: increased numbers of policies and policy-holders; firming prices; changes to
distribution arrangements; product innovation; acquisition of rival businesses in Canada, and expansion in
markets overseas in ways that exploit the competitive advantage of the company in question. As has been
the case for a while, a major challenge comes from pervasive low interest rates and, for some companies,
the general volatility of equity markets.
The comments of the major life companies in relation to their operations through the first three months of
the year highlight how demand for long-term savings products continues to grow. In part because of the
general shift from defined benefit to defined contribution solutions, in part because of the greying of the
population and in part because of the opportunities seen by the distributors of the products, each one of
the major players in the segment is reporting good growth in at least part of its business. In many cases,
particular lines are (not) growing because of active decisions to focus on areas that are particularly
Canada Insurance Report Q4 2012
© Business Monitor International Ltd Page 6
profitable. Virtually all the players are benefiting from not being ‘pure’ Canadian life insurance
companies, in that they have (very) substantial operations outside the country and/or see life insurance as
a part of a much wider offering of financial services solutions.
A number of positive trends are also evident in the non-life segment. For instance, the reforms
implemented by the Ontario government to limit inflation in claims costs are beginning to bear fruit, with
many of the non-life companies that write auto-related business in the province reporting an improvement
in profitability. Catastrophe related claims through Q112 have been far lower than in the previous
corresponding period, thanks to the mildness of the 2011-12 winter. To the extent that non-life companies
have been exposed to increased reinsurance costs (with rates rising markedly for earthquake cover in
British Columbia, for instance), the non-life companies have generally had sufficient pricing power that
they have been able to pass these on to their customers. Our projections for the development of premiums
during 2012 as a whole are consistent with the companies’ own reports, which point to the non-life
segment growing by around 5%. Particular companies continue to realise benefits from past acquisitions:
Intact Financial Corporation’s purchase of AXA Canada in mid-2011 is the most obvious example of
this.

Executive Summary . 5
Table: Total Premiums, 2008-2016 5
Key Insights And Key Risks . 5
SWOT Analysis 7
Canada Insurance Industry SWOT 7
Canada Political SWOT . 8
Canada Economic SWOT 8
Life Sector . 9
Developed States Life Sector Overview . 9
Table: Developed States Life Premiums, 2008-2016 (US$mn) . 9
Canada Life Sector Update 10
Table: Breakdown Of Life Premiums, 2010 (CADmn) . 11
Life Insurance Industry Forecast Scenario 12
Table: Total Life Premiums, 2008-2016 12
Growth Drivers And Risk Management Projections . 13
Population 13
Table: Insurance Key Drivers, Demographics, 2008-2016 . 13
Non-Life Sector . 15
Developed States Non-Life Sector Overview . 15
Table: Developed States Non-Life Premiums, 2008-2016 (US$mn) 15
Canada Non-Life Sector Update . 17
Table: Breakdown Of Non-Life Premiums, 2010 (CADmn) 17
Non-Life Insurance Industry Forecast Scenario 18
Table: Total Non-Life Premiums, 2008-2016 19
Growth Drivers And Risk Management Projections . 19
Macroeconomic Outlook . 19
Table: Canada Long-Term Macroeconomic Forecasts, 2014-2021 22
Political Stability Outlook . 22
Table: Developed States Security Risk Ratings (scores out of 100, with 100 the best) . 24
Table: Sustainability Of Public Health Expenditure And Pharmaceutical Approval Indicators . 25
Epidemiology . 26
Table: Insurance Key Drivers, Disability-Adjusted Life Years, 2008-2016. 27
Motor 28
Insurance Risk/Reward Ratings 30
Table: Canada’s Insurance Risk/Reward Rating . 30
Table: Developed States Insurance Risk/Reward Ratings . 31
Competitive Landscape 32
Major Players In Canada’s Insurance Sector . 33
Life Insurance Companies 33
Non-Life Insurance Companies . 34
Company Profiles 38
Desjardins Financial Security/Desjardins General Insurance 38
Economical Insurance . 40
Fairfax Financial Holdings 42
Great-West Lifeco Inc 46
Intact Financial Corporation . 49
Manulife Financial . 51
Canada Insurance Report Q4 2012
© Business Monitor International Ltd Page 4
RBC Insurance . 53
RSA 55
Standard Life . 57
Sun Life Financial . 59
Wawanesa Insurance . 61
BMI Methodology . 63
Insurance Risk/Reward Ratings 64
Table: Insurance Risk/Reward Indicators And Rationale . 65
Table: Weighting Of Indicators. 66
Demographic Data 67
Table: Canada’s Population By Age Group, 1990-2020 (‘000) 68
Table: Canada’s Population By Age Group, 1990-2020 (% of total) 69
Table: Canada’s Key Population Ratios, 1990-2020 . 70
Table: Canada’s Rural And Urban Population, 1990-2020 70Table: Total Premiums
Table: Developed States Life Premiums (US$mn)
Table: Breakdown Of Life Premiums (CADmn)
Table: Total Life Premiums
Table: Insurance Key Drivers Demographics
Table: Developed States NonLife Premiums (US$mn)
Table: Breakdown Of NonLife Premiums (CADmn)
Table: Total NonLife Premiums
Table: Canada LongTerm Macroeconomic Forecasts
Table: Developed States Security Risk Ratings (scores out of with the best)
Table: Sustainability Of Public Health Expenditure And Pharmaceutical Approval Indicators
Table: Insurance Key Drivers DisabilityAdjusted Life Years
Table: Canada’s Insurance Risk/Reward Rating
Table: Developed States Insurance Risk/Reward Ratings
Table: Insurance Risk/Reward Indicators And Rationale
Table: Weighting Of Indicators
Table: Canada’s Population By Age Group (‘)
Table: Canada’s Population By Age Group (% of total)
Table: Canada’s Key Population Ratios
Table: Canada’s Rural And Urban Population

Canada Insurance Report Q4 2012

Published By: Business Monitor International

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