A recent report from AM Best reveals that Canada’s insurance sector demonstrated resilience in 2022, with both property/casualty (P/C) and life/annuity (L/A) segments maintaining their stability despite ongoing challenges.
In the P/C sector, insurers reported a net income of CAD 6.6 billion in 2022, marking the fourth consecutive year of underwriting profitability, except for the exceptional CAD 8.3 billion in 2021.
However, equity growth in this segment was constrained due to rising interest rates affecting fixed-income investments.
Supply chain imbalances, economic inflation, global political uncertainty, climate risks, escalating reinsurance costs, and cyber threats persist as key industry challenges.
Despite a notable increase in the loss ratio for personal property lines, mainly due to heightened catastrophe activity, it remained below the 10-year average.
Rosemarie Mirabella, director at AM Best, noted this significant uptick in losses but highlighted the segment’s overall stability.
In contrast, Canada’s L/A sector showcased robust performance in 2022, thanks to favourable earnings and underwriting.
Rising interest rates and positive mortality trends played a pivotal role, despite increased expenses associated with inflation and valuation adjustments in commercial real estate and alternative investment portfolios.
Growth was particularly strong in fixed-rate annuities, participating whole life, accident, and sickness lines of business, supported by favourable economic conditions and a commitment to enhancing customer experience through innovation.
Michael Adams, associate director at AM Best, pointed out that record sales were observed in whole life and fixed-rate annuity product lines in both Canada and the United States, and mortality results continued to improve, reflecting a decline from pandemic-related highs.
AM Best’s report maintains a stable outlook for both Canada’s P/C and L/A segments, highlighting the industry’s resilience in navigating an array of challenges in 2022.
