(November 24 – 16:05 ET) – Canada’s property and casualty insurance industry remains well capitalized with a low risk of insolvency according to the latest issue of Perspective: A Quarterly Analysis of the Financial Performance of Canada’s P&C Insurance Industry.

“Although the country’s P&C insurers face the year end with disappointing financial results, the industry’s capital/premium ratio has steadily increased over the past three or four decades,” said Paul Kovacs, an author of the report, and senior vice president of policy development and chief economist for the Insurance Bureau of Canada. “The ratio is now the strongest on record.”

According to the report, the industry showed some improvement in terms of overall earnings for the first nine months of 2000. The industry’s return on equity rose to 7.6% which represents an increase of more than one per cent over the same period last year. Net income for the first nine months reached a level equivalent to that achieved in 1998 and 1999.

Net profit rose to $261 million in the third quarter of 2000, which represents an increase of $22 million over last year. This increase is the result of strong investment gains, which were more than three times higher than the same quarter last year. Underwriting losses however, increased by $288 million over last year.

“It’s encouraging that in many markets revenues are increasing at the fastest pace in several years, but claims costs are often growing even faster,” said Kovacs. An increase of more than 10% in claims pushed the third quarter loss ratios almost four points higher than the third quarter last year.
-IE Staff