Boston, MA -- (SBWIRE) -- 06/02/2014 -- The recently published results of the leading players, in both of the main segments, highlight the key trends that are likely to continue through the forecast period. In Canada's non-life segment, the largest companies are extremely disciplined in terms of the risks that they underwrite and enjoy pricing power in most lines. In challenging market places, such as the auto insurance sub-sector in Ontario, they are curtailing costs in order to boost profitability. However, it is not obvious that there is a catalyst for a rise in non-life penetration (premiums per capita).

For most of the non-life companies, growth in premiums will be pedestrian most of the time: the process of consolidation will continue. In the life segment, the leading companies are growing income and profits from organised savings, if not actually from the provision of traditional insurance products. They are also looking at the very substantial opportunities in the United States, (South) East Asia and elsewhere in the world. Thanks in part to competition from wealth management products (e.g. mutual funds) which the leading insurers are themselves heavily involved, and from Canada's generous social security system, growth in premiums is also likely to be slow. In both segments, the leading players benefit from economies of scale and have access to the capital that they need.

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For all the advantages, and a regulatory regime that is rightly well-regarded, there are constraints on the players in Canada's world class insurance sector. Notwithstanding that we expect that prices and rates in the non-life segment will remain firm, we do not see a catalyst for growth in non-life penetration, which is already at a fairly high level by international standards.

Further, and in contrast to the United States, there is no obvious reason why the insurers should benefit from the general growth in healthcare spending through the forecast period. In the life segment, the majors continue to face competition for their offerings from savings plans and mutual funds that do not have a life insurance element. Plus, thanks to Canada's general social security system, many of the risks that are covered by life insurance companies in other countries are handled by the government. Unsurprisingly, the major life companies have for a long time developed the ability to originate non-insurance wealth management solutions. The three largest have also expanded aggressively outside Canada - and particularly in the United States and parts of the Asia-Pacific.

Recent Developments

- The latest results confirm that single digit premium growth continues in the non-life segment in local currency terms.
- Most of the major non-life companies have been able to lift prices and
- Profitability conditions have improved in the traditionally very challenging Ontario auto insurance market.

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