Insurers report good first-half results, but wildfires remain top of mind

Four Canadian publicly traded property and casualty (P&C) insurance companies reported strong net earnings for the first half of 2025, driven by strong underwriting performance and investment returns, ratings agency Morningstar DBRS reports.

But the ratings agency adds Canadian P&C insurers are waiting for the proverbial shoe to drop during the second half of the year, with the primary risk being wildfires entering urban areas.

“There might be some headwinds for P&C insurers in H2 2025, as underwriting profitability may be affected by natural catastrophe losses caused by the wildfires in Western Canada and other parts of the country,” Morningstar DBRS cautions.

“Although wildfires have been mainly reported in remote areas with low population concentration so far, P&C insurers could be affected if they were to spread to densely populated urban areas.”

Morningstar DBRS’s report focuses solely on the first-half results of four publicly traded Canadian P&C insurers — Intact, Fairfax, Definity, and Trisura.  

The report shows the return on equity reported by these insurers in the first half were all in the range of about 12% to 20%. Definity reported a 2025 Q2 ROE of about 12%, Intact about 14%, Trisura just above 15%, and Fairfax close to 20%.

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All four companies benefited from top-line growth, “driven by timely premium rate actions as well as new business generation,” Morningstar DBRS reported.

One caveat: auto insurance premiums are provincially regulated, which could affect the pace of future automobile rate increases, “a major part of written premiums for Definity and Intact,” the ratings agency states.

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Plus, natural catastrophe events occurring outside of Canada could have a disproportionate effect on the results of Fairfax and Intact in the second half of 2025, because they are more globally diversified, Morningstar DBRS cautioned.

For example, Fairfax reported an increase in its combined ratio in the first half of 2025 “mainly as a result of losses from the California wildfires,” the ratings agency notes.

California wildfires in January destroyed more than 16,000 structures, causing estimated insured damage of between $25.2 billion to $39.4 billion, according to a white paper by the U.S.-based data analytics and consulting firm Milliman.

Fairfax reported its discounted combined ratio of 83.9% in the first half of 2024 had increased to 85.5% in the first half of 2025.

Meanwhile, Intact reported its Canadian catastrophe loss ratio increased from 0.8% in 2024 H1 to 2.6% in 2025 H1, mainly driven by flood events.

Canada is going through a prolonged period of wildfire activity in 2025.

As of Sept. 2, 2025, the Canadian Interagency Forest Fire Centre (CIFFC) reported 651 active fires, of which 149 were burning out of control. So far in 2025, 8.3-million hectares have burned during this wildfire season.

“This makes this year the second worst year on record in terms of area burned,” Morningstar DBRS reports.

So far in Canada, there have been four wildfire catastrophes, meaning events that have caused more than $30 million in insured damage. A wildfire in Flin Flon, Man. was one of the four, Catastrophe Indices and Quantification (CatIQ) told Canadian Underwriter earlier.

Editor’s Note: This article has been updated to show that Intact’s Cat loss ratio for the first half of the year went from 0.8% in 2024 HI to 2.6% H1. Previous numbers cited were for personal property results. CU apologizes for the error and any confusion it may have caused.

David Gambrill

David has twice served as Canadian Underwriter’s senior editor, both from 2005 to 2012, and again from 2017 to the present.