Insurance monitoring

Quarterly updates on the Life & Health and Property & Casualty insurance markets in the US and Canada, and special focus papers on associated themes.



Canadian Life & Health Quarterly

Life insurers in Canada enjoyed a relatively positive 1H18, with moderate growth in net income and a 10.7% annualized ROE. Although new premium growth at home continued to lag, including in the individual segment, and net investment income (including realized gains) added little, global net premium income and fee income both saw a rate of advance in mid-single digits. Together with a slight improvement in the benefits ratio and a benign period in terms of changes to actuarial liabilities, net income amounted to CAD 6.2 bn, up 4.9% yoy. Furthermore, the industry's balance sheet remained strong under the new capital regime effective as of January 1, 2018.

Canadian Property & Casualty Quarterly

The Canadian P&C industry's operating performance was weak in 1H18. Although premium growth accelerated strongly on a direct basis, elevated weather losses drove up the net loss ratio to 71.1%, and resulted in a sizable underwriting loss. Furthermore, the net investment result fell sharply yoy. In all, net income after tax declined to CAD 530 million, from CAD 1.5 billion a year ago. The ensuing low 2.6% industry ROE was the same as the 2H16 result, a period which included Canada's largest cat loss – the Fort McMurray wildfire.


US Property & Casualty Quarterly

The US P&C industry's performance improved significantly in 1Q18 compared to a year ago. Net income more than doubled, to USD 16.6 billion, from USD 7.6 billion in 1Q17, as premium growth outpaced loss and expense ratio growth, a nearly 50% increase in realized capital gains boosted investment returns, and a large retroactive reinsurance contract in 1Q17 between AIG and National Indemnity that led to a USD 5.6 billion loss reported in "other income" was not repeated. Meanwhile, surplus growth was weighed upon by a jump in statutory dividends and large unrealized capital losses concentrated at two carriers. All in, the industry's ROE of 8.8% was the best in almost three years


US Life Quarterly

Direct premiums for the life and health industry increased modestly in 2017. Despite a challenging environment both on the regulatory front and on the demand side, life insurers have maintained a relatively stable profitability in 2017 by cutting expenses and through a lower tax burden (due to lower corporate tax rates). The short-term market outlook remains challenging as regulatory scrutiny continues to increase while the industry is undergoing a transition phase with major restructuring, divestures and exits from certain business lines.



Underwriting the US infrastructure gap

US infrastructure investment has long fallen behind what’s needed to maintain a state of good repair for existing assets, let alone power the economy of the 21st century. Over the next decade, the investment gap amounts to more than USD 2.1 trillion.