The property-casualty sector for Canada, while stable, continues to suffer through a soft market, as prices and profits continue to fall, according to A.M. Best.

Strong capitalization and profitability have provided "the ingredients for continued softening in the market," Best said in a recent special report.

According to the report, 2007 net income for Canada's p-c sector was about C$4.6 billion (U.S. $4.3 billion), down 3.5 percent from 2006.

Return on equity dropped from 17.1 percent in 2006 to 15 percent in 2007, and net underwriting income dropped 18.1 percent to C$2.3 billion (U.S. $2.2 billion) in 2007. The combined ratio climbed from 91.5 in 2006 to 93.2.

The 2007 net investment income rose 12.6 percent, but Best noted that growth was slower than in 2006.

For auto insurers, Best said the 2007 net loss ratio went to 70.8 from 67.5 in 2006.

Personal property net loss ratio, Best said, "held relatively steady" at 66.7 in 2007, compared to 66.4 in 2006. Commercial property net loss ratio increased 4.1 points to 56.2.

According to Best, the Canadian p-c sector was adversely affected by severe summer and winter storms in 2007, "and harsh weather continued into the first half of 2008, affecting property and automobile claims."

Special Reports /

A.M. Best: Canadian P-C Sector Profits Fall

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