"Canada Insurance Report Q1 2011" is now available at Fast Market Research

New Financial Services research report from Business Monitor International is now available from Fast Market Research
 
Dec. 13, 2010 - PRLog -- As in previous quarters, what stands out is the strength and scale of the Canadian insurance sector. The life segment is dominated by three players - Great-West Lifeco (including its subsidiaries London Life and Canada Life), Manulife Financial and Sun Life Financial. All three rank among the 10 largest life insurance companies worldwide in terms of stock market capitalisation. All three have expanded beyond insurance into wealth management and other financial services. All three (but particularly Manulife and Sun Life) have expanded into the US. Manulife and Sun Life are unusual in world terms in that they also own cross-border businesses in the Asia Pacific region. All three would rank as very large insurers in any country.

In short, the processes of demutualisation and concentration over the last decade or so have produced life companies that have the ability to secure funding from global markets in order to undertake large scale deals. Manulife's 2004 acquisition of US major John Hancock remains a key landmark. In contrast, the non-life segment consists mainly of mutuals and cooperatives that have not needed to raise capital from global markets. The Economical Insurance Group, The Co-operators Insurance & Financial Services, Desjardins Group and Wawanesa Mutual are all obvious examples. The non-life segment, which includes four state-owned monopoly automobile insurance companies (with differing mandates) is fragmented in that no single player appears to have a double-digit market share. This is despite the fact that many of the mutuals - and, indeed, some of the subsidiaries of multinationals such as Aviva and RSA - have in the past expanded by way of acquisition and/or operate through multiple brands. One consequence of the fragmentation and lingering mutualisation of the Canadian non-life segment is that the Canadian property and casualty insurers have had less desire and need than the life companies to seek challenges and opportunities in other countries.

Even a cursory examination of corporate websites shows that across both major segments (with health insurance in Canada provided by life companies) there is a huge variety of strategies. There are different prices, different product lines, different distribution channels (with most companies relying on several), different attitudes to the provision of financial services beyond and above insurance, and different priorities vis-a-vis stakeholders. Even the major banking groups have taken different approaches to insurance. TD Financial Group is a large player in the non-life segment through Meloche-Monnex, and its subsidiaries and affiliates. In the life segment, RBC Life and BMO Life are significant in terms of absolute premiums written, but a fraction of the size of each of the three largest life firms.

A key factor in the strength of the Canadian insurance sector - and indeed the commercial banking sector - has been the regulatory environment. OSFI is concerned primarily with the banks' and insurers' capital adequacy. The absence of problems in the wake of the global financial crisis suggests that it has performed its function effectively. Indeed, Canada's financial institutions are among the best capitalised of any developed country. Some of the credit should also go to the provincial and territory regulators, of which the Financial Services Commission of Ontario (FSCO) and L'Autorite des marches financiers (AMF) of Quebec are the two most important. The provincial and territory regulators are also concerned with solvency and capitalisation. However, they also oversee the dealings between the various financial institutions and their customers.

We suggest that in a global context there are two challenges for the Canadian insurance sector. One is that, being mature and competitive, it is unlikely to achieve rapid growth through our forecast period - this is in spite of its advantages and a generally favourable outlook for the Canadian economy. Although both non-life and life insurance is open to foreign companies, we note that many of the deals that have taken place in recent years have involved sales of Canadian operations by foreign groups who have decided that those businesses are not central to their overall strategies. The second is that, as investors, the Canadian insurers are now so large in a global context that it would be difficult for them to emerge unscathed from any new financial crisis. However, as noted above, Canadian insurers have handled the global financial crisis and its aftermath well.

We are looking for total premiums in 2010 of CAD88,375mn. This includes non-life premiums of CAD55,652mn and life premiums of CAD32,753mn. (our figures include Accident & Sickness insurance in the non-life segment). In 2015, the corresponding figures should be CAD114,298mn, CAD73,966mn and CAD40,332mn. In terms of the key drivers that underpin our forecasts, we are looking for non-life penetration to rise from 3.41% of GDP to 3.46% in 2015 and for life density to increase from US$902 per capita to US$1,002. BMI's Insurance Business Environment Rating for Canada is 79.3.

For more information or to purchase this report, go to:
-  http://www.fastmr.com/prod/100676_canada_insurance_report...

About Business Monitor International

Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets.  BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports.  Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports.  View more research from Business Monitor International at http://www.fastmr.com/catalog/publishers.aspx?pubid=1010

About Fast Market Research

Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.

For more information about these or related research reports, please visit our website at http://www.fastmr.com or call us at 1.800.844.8156.

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Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.
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