Revenue rises but Q1 industry result is flat

June 19, 2023 — THE CANADIAN p&c industry’s total insurance revenue soared almost 20% in the first quarter this year compared to the same period in 2022, data released this month by MSA Research shows.

CEO Joel Baker said the increase reflects the severe hardening of the reinsurance market for year-end renewals along with continued rate increases in personal and commercial lines which are aimed at outpacing inflation.

‘Total insurance revenue’ is a new term in reporting under the new IFRS-17 accounting standard, which took effect Jan. 1. It is similar to the ‘gross earned premiums’ figure included in past returns.

‘Insurance service expenses’ — another new category which includes claims and underwriting expenses and other items — rose more than 25% over the same period last year.

Mr. Baker said that led to a nearly flat ‘insurance service result’ — a new indicator of performance with IFRS-17 that shows revenues minus insurance service expenses. He said the insurance service result did not keep pace with inflation.

“The figure for Q1-2023 was up 3.5% nominally but down in real terms.”

Meanwhile, the composite Canadian p&c net investment result rebounded by almost $1bn, resulting in a big boost in the industry’s overall first-quarter net income which rose to $2.3bn this year from $819,000 in Q1-2022.

On a sector-by-sector basis, overall underwriting results improved for reinsurers and commercial writers but weakened for personal lines and multi-line insurers, Mr. Baker said.

MSA’s first-quarter data does not include figures from government insurers or those regulated in Quebec, which are only required to file their results semi-annually.

The summarized industry data, previously presented as a ‘statement of income,’ is now known as a ‘statement of profit or loss.’ The results for Q1-2023 are the first under the new IFRS-17 accounting standard and are not directly comparable to data released last year under the previous system, IFRS-4.

(For more coverage of first-quarter results and other Canadian p&c industry news and trends, please choose the ‘Subscribe’ tab on our main page or email for more information).