Canadian Insurers' Debt Issuance Doubled in 2024 but Expected to Normalize in 2025

This commentary discusses Canadian insurance companies' debt issuance in 2024.

Key highlights include the following:
-- Canadian insurers' debt issuance grew to $8.6 billion in 2024, double the issuance volume in 2023.
-- For debt issued by Canadian insurers in 2024, the weighted-average issuance coupon and tenor were 5.284% and 17 years, respectively. Low issuance of limited recourse capital notes drove down both the average tenor and coupon, reflecting their subordination in the capital structure.
-- In 2025, we expect Canadian insurers' debt issuances to normalize in the $4 billion to $6 billion range.

"A similar high debt issuance level is unlikely to be repeated in 2025 because 2024 benefitted from the issuance backlog during the period of high interest rates in 2022-23," said Ranuj Kumar, Vice President at Morningstar DBRS. "We expect debt issuances to normalize in 2025, conditional on acquisition plans and refinancing needs along with a stable interest rate environment."