Despite a challenging year, credit fundamentals remain stable for Canadian property and casualty insurers says Standard & Poor’s in a report released Monday.
S&P notes that the Canadian P&C industry saw some notable lows and highs during the year, including unusually large catastrophe losses from wildfires in Slave Lake, Alta., and improved performance in the Ontario auto segment, thanks to provincial reforms.
Canadian P&C insurers expected Ontario auto reforms and higher pricing in personal lines to lift industry underwriting results going into 2011, but high catastrophe activity, relative softness in commercial lines pricing, and low interest rates offset the results, Standard & Poor’s notes in the report.
As a result, it says that industry net performance seems to be tracking pretty much at the same level as last year, and the final results for 2011 may not be much different from 2010.
“In spite of that, we believe industry performance has probably hit bottom and results could improve in 2012,” said Standard & Poor’s credit analyst Hardeep Manku in the report.
Standard & Poor’s says it views the credit fundamentals of the overall Canadian P&C industry as stable and expects minimal changes to ratings. “However, we believe P&C insurers will need to focus on underwriting profitability, since economic and industry-specific concerns, such as low investment yields and pricing adequacy, are likely to continue in the new year,” Manku added.