Industry posts better-than-expected results

Relatively benign weather and reserve releases helped Canada’s p&c industry post better-than-expected overall results for 2016 despite the historic Fort McMurray wildfire disaster.
“The fourth quarter was essentially a saviour for the industry on an underwriting basis with the industry as whole coming in at a combined ratio of about 85%,” MSA Research ceo Joel Baker said. “This caused the annual industry combined ratio to come in at about 99% despite Fort McMurray.”
Year-end results released by the analyst last week shows the ratio rose roughly 4.5 points over 2015, when underwriting results had returned to the levels of the pre-major-flood years.
The insurers’ combined underwriting result was down 81% compared to the year before and net income fell by roughly 54%.
But overall, the industry’s income statement was fairly positive and direct written premiums and net written premiums were up 3.37% and 3.81%, respectively.
Combined net claims and adjustment expenses were up 9.27% on a year-over-year basis. And the industry managed to post an overall net income of $2.4bn.
“Nevertheless, the good news is not evenly distributed as can be seen from the company by company results,” Mr. Baker said.
“There was higher than usual variability between the carriers even within segments.
“The factors causing this include whether the companies were heavily exposed to Fort McMurray and how their reinsurance played out. Some were substantially banged up and others were extremely well shielded by catastrophe reinsurance.”
The worst hit on the bottom line  was Lloyd’s, which posted a net loss of $498m for the year. Alberta Motor Association recorded a net loss of $58.3m, Zurich Insurance Co. was $37.9m in the red, Allianz Global Risks lost  $29.6m and RSA Insurance and Economical Mutual reported losses of $23.8m and $20.3m, respectively.
MSA’s initial industry tally does not include the Insurance Corp. of B.C., Manitoba Public Insurance or the Saskatchewan Auto Fund.
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