OLDWICK, N.J.--(BUSINESS WIRE)-- Canada's insurance markets were not able to fully escape the brunt of the global financial crisis in 2008. Capitalization declined for the property/casualty (P/C) industry partly due to weaker investment results and underwriting losses. Life insurers opted to preserve or rebuild capital to maintain their financial strength while "de-risking" their product portfolios.

• Storm losses and higher incurred claims drove the P/C industry to a net underwriting loss of about C$238.0 million in 2008, while the combined ratio deteriorated to 101.1, up from 93.2.
• Auto insurers' 2008 net loss ratio rose to 76.9 from 70.8, mostly driven by rising medical cost inflation and increased claims severity in Ontario auto's personal accident business line.
• The personal property net loss ratio deteriorated to 75.8 from 66.7 as loss activity increased with summer and winter storms.
• A.M. Best Co. anticipates continued challenges for the P/C industry, especially in Ontario auto, personal property and overall investment results. However, the industry should remain profitable and well capitalized overall.

• Premium growth for Canadian life insurers was a modest 3% in 2008, reflecting the market's maturity and the impact of the global economic slowdown.
• Canadian life companies may face earnings pressure from guarantees offered on segregated fund products that may not have been priced relative to their risk.
• Investors favored the safety of fixed annuity products, driving a nearly 122% increase in 2008 for individual annuity premiums.

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To learn more about the state of the Canadian insurance market, please come to A.M. Best's 2009 Insurance Market Briefing - Canada on September 10 from 9:00 a.m. to 12:00 p.m. at the Sheraton Centre Toronto Hotel in Toronto. Visit http://www.ambest.com/conferences/imb.html to register. Space is limited.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.

A.M. Best Co.

Analysts:

Charles Huber"”P/C, 908-439-2200, ext. 5122

charles.huber@ambest.com

or

Richard McMillan"”L/H, 908-439-2200, ext. 5615

richard.mcmillian@ambest.com

or

Public Relations:

Jim Peavy, 908-439-2200, ext. 5644

james.peavy@ambest.com

or

Rachelle Morrow, 908-439-2200, ext. 5378

rachelle.morrow@ambest.com



Source: A.M. Best Co.