2008 Q4 drags down Canadian P&C industry results

The Canadian property and casualty industry’s underwriting income took a huge hit in 2008, dropping from an underwriting profit of Cdn$1.35 billion in 2007 to an underwriting loss of Cdn$752 million in 2008 (a 155.9% decrease), MSA Research Inc. reports.Putting the loss in perspective, as of the end of 2008 Q3, the industry reported an underwriting profit of Cdn$271.1 million. But by the end of 2008, the underwriting loss for the year stood at Cdn$752 million, suggesting that in just one quarter, 2008 Q4, the industry saw Cdn$1.02 billion of underwriting income evaporate.The industry’s net income sunk 62.7% year-over-year, dropping from Cdn$3.72 billion in 2007 to Cdn$1.39 billion in 2008.Also of great concern in 2008 was a 9.58% decline in ROE, which dropped from 14.93% in 2007 to 5.35% in 2008.Ontario auto continues to worsen. The direct loss ratio for Ontario’s auto lines hit 84.5% in 2008, up substantially from its 2007 level of 78.56%.Alberta auto’s direct loss ratio also grew substantially, from 63.03% in 2007 to 73.85% in 2008.The industry’s net investment income dropped 35.3% in 2008. MSA Research’s preliminary figures show the industry’s net income before tax plummeted from Cdn$5.4 billion in 2008 to Cdn$1.81 billion in 2007. MSA’s preliminary, year-end 2008 property and casualty results incorporate data for 128 Canadian insurers, as filed with MSA through Mar. 10, 2009. The population of companies represents more than 92% of Canadian primary writers when measured on a premium volume basis.