Strong H1 2024 Results for Canada's P&C Insurers Underpinned by Underwriting and Investment Income

We provide an overview and outlook for Canadian property and casualty (P&C) insurance companies by highlighting the performance of four Canadian publicly traded P&C insurance companies (Intact Financial Corporation, Fairfax Financial Holdings, Definity Financial Corporation, and Trisura Group Ltd) during H1 2024.

Key highlights include:
-- Q2 2024 earnings reflect the favourable insurance pricing environment and financial market conditions, as well as low natural catastrophe losses in Canada.

-- Our rated P&C companies in Canada reported solid underwriting profitability with combined ratios below 95% and strong top-line growth in Q2 2024, especially in the Canadian Personal insurance businesses.

-- The sustained high-interest-rate environment continues to benefit the insurers with maturing investments that are being replaced with higher-yielding securities, while maintaining a conservative portfolio mix.

-- The Companies remain well capitalized with regulatory capital ratios well above regulatory and internal targets as at June 30, 2024.

"Looking ahead, we expect the favorable pricing environment to remain; however, natural catastrophe losses may start to affect earnings. We believe the recent wildfires and flooding in Canada will remain as earning events and not invade capital for the Companies given their strong earnings in H1 2024," said Victor Adesanya, Vice President, Global Insurance & Pensions Ratings. "We expect premium rates to continue increasing in the short to medium term because of inflation, higher reinsurance costs, and catastrophic insured losses."