While Canada’s property/casualty industry produced favorable results in 2014 that were somewhat volatile, ongoing performance pressures in the market are evident. These pressures, along with the need for scale and long-term strategic positioning, continue to drive consolidation in Canada’s property/casualty sector, according to A.M. Best.
A new Best’s Special Report, titled “Active M&A Market for Canadian P/C Insurers Expected to Continue,” notes that market consolidation has been a hallmark for this market over the past several years. Gaining access to additional distribution channels has also driven insurers and brokers alike to strategically align resources. In 2014, Canada’s top 10 P/C writers, as ranked by A.M. Best, generated 66.2% of the market’s direct premium, compared with 56% in 2007.
Canada’s P/C industry continues to post solid, if unspectacular, results with the industry’s capital base expanding annually due to consistent underwriting profitability. While 2014 got off to a rough weather start, there were far fewer weather-related catastrophes for P/C insurers to manage. As a result of the improved property performance, the overall combined ratio was several points better than break even at approximately 97.5%, an improvement of approximately 1.6 points from the prior year.
Yet given the overall market dynamics, ongoing weather volatility, competitive market pressures and low interest rate environment, additional consolidation within the Canadian P/C market remains highly likely, showing no signs of slowing.
OLDWICK, N.J.--(BUSINESS WIRE)
