Record catastrophe losses caused the Canadian property and casualty insurance industry to see a decline in underwriting profit for 2013 to $284 million, compared with $1.9 billion in 2012, according to a quarterly briefing from Swiss Re’s Economic Research and Consulting division.
Net income (after tax) fell by nearly 30%, and return on equity deteriorated to 7.7%, a decline of 3.5 points, the firm says in its May 9 briefing.
Elevated catastrophe losses increased the industry’s combined ratio by nearly 5 points year over year to 99.8%, it says.
“Alberta floods caused the biggest loss on sigma records in Canada, with an estimated $5 billion in economic losses and an estimated $2 billion in insured losses,” the briefing says.
“Combined with damage from thunderstorms and flash floods in Toronto in July and an Ontario ice storm in December, 2013 insured losses from natural catastrophes reached a new record for the country.”
Direct premiums written grew 3.7% year over year in 2013, compared with 3.1% growth in 2012. That was driven largely by the 5.7& growth for property lines, Swiss Re noted. Auto premiums were slower growing at 2.2%, compared with 2.9% in the prior year and 5.1% in 2011, and approved rates in Ontario auto declined by almost 4% in the last quarter of the year.
“Combined with the declines in prior quarters, Ontario auto rates declined by almost 5% in 2013,” Swiss Re’s briefing notes, adding that further decreases are likely, as the industry works
to meet the provincial government’s target for rate reductions.