CLASS REVIEW Canadian direct market vs. Lloyd's Canada. December 2013

Transcription

1 CLASS REVIEW 2012 Canadian direct market vs. Lloyd's Canada December

2 Key Contacts Filip Wuebbeler, International Markets, Market Intelligence Telephone: Chris Brown, International Markets, Market Intelligence Telephone: Disclaimer This document is confidential and provided by Lloyd's to Lloyd's managing agents subject to the conditions that the document is used for internal purposes only and that it is not made available to any third party without the expressed written consent of Lloyd's. This document contains third party proprietary material and any unauthorised disclosure by a Lloyd's managing agent may cause Lloyd's to be in breach of its obligations as an authorised licensee of such material. This document is intended for general information purposes only. Whilst all care has been taken to ensure the accuracy of the information Lloyd's does not accept any responsibility for any errors or omissions. Lloyd's does not accept any responsibility or liability for any loss to any person acting or refraining from action as a result of, but not limited, any statement, fact, figure, expression of opinion or belief contained in this document.

3 Market Intelligence A WEALTH OF MARKET INTELLIGENCE Market Intelligence Compare Countries Country Profiles Market Presentations Country Roundups Class Review FREE DOWNLOAD AT CONTACT OUR COUNTRY MANAGER Sean Murphy President, Lloyd's Canada Attorney In Fact in Canada, Lloyd's Underwriters Royal Bank Plaza South Tower 200 Bay Street, Suite 2930 PO Box 51 Toronto, Ontario M5J 2J

4 Contents Class Review Canadian Direct Market vs. Lloyd's 1. About the Report 05 Introduction 06 Introduction 08 Methodology Overview of the Canadian Market 13 Class of Business Breakdown 14 Premium Trends 15 Incurred Loss Ratio Trends 16 Competitor Ranking 17 Commentary Canadian Major Class of Business Benchmarking Analysis 19 Liability 20 Commercial Property 24 Aircraft 28 Marine 32 Accident & Sickness 36 Personal Property 40 Auto 44 Boiler & Machinery 48 Fidelity 52 Credit 56 Credit Protection 59 Legal 62 Mortgage 64 Hail 68 Surety 71 Title 74 Other 77 4

5 About 1 The report IN THIS SECTION 1. Foreword 2. Introduction 3. Methodology 5

6 Foreword Canada Class Review Strategic Vision for Canada The Canadian insurance market is mature and continues to experience strong competition. There is a new focus by many multiline competitors to increase investment in commercial lines to offset uncertainties in the automobile insurance sector exacerbated by the disruptive impact of government interference. As a result of these market pressures Lloyd s underwriters can expect growth in-line with the performance of the Canadian economy, forecasted at 2.3% in Lloyd s Canada s focus remains to vigilantly protect Lloyd s Underwriters trading rights and commercial activity with few impediments and associated regulatory costs. In addition, manage the operational structure of the Montreal office to maximize efficiencies and to adapt quickly to business and regulatory needs. In addition to these core activities, we will also be improving the quantity and quality of our market intelligence of; the insurance market, Canadian economic conditions and commercial opportunities in Canada. To help supplement these activities, we intend on working more closely with coverholders and OMCs in Canada to spur on Lloyd s business promotion work. Sean Murphy President/Attorney In Fact In Canada 6

7 Executive Summary Canada Class Review The Canadian Insurance market is a mature market and one that reflects the sophistication and diversity of Canada s economy; ranked 11 th in the world, $1.4 Trillion dollar GDP - and a population of 35 million. The Canadian economy is predominantly weighted in; the service industry sector - 69%, split between retail, financial services and real estate, followed by industry - 29% and agriculture at 2%. The purpose of this Canadian Class Review is to provide the market with data and other information which will enable underwriters to understand where opportunities are available to build on this existing strong relationship. The Lloyd s brand remains very strong in Canada with a 79% spontaneous awareness score. Lloyd s ability to provide underwriting expertise, stability and insurance capacity were noted as some of the strengths of the Lloyd s Market in Canada. The insurance market in Canada is very competitive with approximately 112 companies comprised of local domestic companies, branches of foreign global and US insurers and insurance arms of large Canadian banks. The size of the insurance market is approximately $44 billion in direct written premium and $1.7 billion in Reinsurance. Roughly 2/3 of the business is distributed through the independent broker channel. The market is dominated by automobile [motor] roughly 51%, and property 31%. The premium split by province is as follows; Ontario 47.9%, Quebec 16.7%, Alberta 16.3% and British Columbia 8%. Canadian direct loss ratio was 65% in 2012, 68%

8 Executive summary Canada Class Review Lloyd s underwriters business in Canada is largely split among the 4 main provinces: ONTARIO % distribution (116 Coverholders, 86 OMCs) - Percentage of Lloyd s Canadian premium: 33% BRITISH COLUMBIA - 22% distribution (91 Coverholders, 22 OMCs) - Percentage of Lloyd s Canadian premium: 22% QUEBEC - 19% distribution (61 Coverholders, 51 OMCs) - Percentage of Lloyd s Canadian premium: 15% ALBERTA - 11% distribution (31 Coverholders, 35 OMCs) - Percentage of Lloyd s Canadian premium: 16% Lloyd s holds a significant market share in; Commercial Property, Aircraft, Liability, Marine, Total Direct Premium. Direct business in 2012 was $1.75 billion and $338 million reinsurance with a direct loss ratio 51% 2012 (62% 2011) The regulatory environment in Canada is shared between the federal regulator, Office of the Superintendent of Financial Institutions [OSFI], whose primary mandate is solvency and the 13 Provincial regulators whose responsibility is market conduct. Lloyd s holds both Federal and Provincial licenses and is licensed to transact the majority of insurance classes in Canada, other than life insurance products. The significant regulatory issues in Canada which will affect Lloyd s are: The new earthquake capitalization test New risk factors for the current minimum Capital test The introduction of a new ORSA guideline Changes to guidelines relating to risk management 8

9 Introduction Class Review 2012 Canada vs. Lloyd s Class Review is a Market Intelligence product that, for the first time, offers benchmarking analysis comparing Lloyd s business with its competitors in key territories, broken down by class of business. This product has been developed in response to market feedback by the Market Intelligence team in a joint effort with Lloyd s managing agents. To whom is Class Review targeted? 1. Managing agents and corporation staff; 2. Brokers; 3. Coverholders. There are two versions of this report, one for managing agents (password protected) and one summary version for brokers and coverholders (publicly available). What can I find in this Class Review? 1. An overview of the Canada market, including three-year premium and loss ratio trends as well as market shares 2. An analysis of the Canada major classes of business, including the aforementioned business metrics 3. An analysis of the Canada detailed classes of business, including the aformentioned business metrics 4. An analysis of Lloyd s Canada business broken down by major class, with three years of premium data and incurred loss ratios* on both calendar year and year of account bases. What are the main benefits of Canada Class Review? 1. Compares Lloyd's performance by business class with the local Canadian market ; 2. Insights on relevant business information: premiums, market shares and incurred loss ratios*; 3. Option to download underlying data in a clear, easy to use Excel format* 4. Data reviewed by market practitioners. *Lloyd s incurred loss ratios and underlying data are only available for managing agents 9

10 Introduction Supplementary Information In addition to the report, managing agents have access to the Excel spreadsheets that contain the raw data used to build the report. The spreadsheets are structured in a user friendly format, with a dashboard on the contents sheet, which contains an icon for each class of business, enabling users to reach the data by simply clicking on the icon. From the chosen class of business, managing agents can navigate simply between the charts and data. The Read Me section on each tab brings users to the methodology containing data definitions. There are two spreadsheets: 1. Lloyd s data 2. Market data The spreadsheets are available for download at: 10

11 Methodology Canadian Direct Commercial Premiums & Claims Classes of business are based on the P&C-2 classes reported to the Office of the Superintendent of Financial Institutions Canada (OSFI). The Direct Written Premiums in this report are gross of reinsurance ceded and net of reinsurance assumed and return premiums on a calendar year basis. Direct Claims are the direct claims incurred net of reinsurance assumed and gross of reinsurance ceded including adjustment expenses on a calendar year basis. Incurred Losses on a calendar year basis may contain claims reported from previous years, but paid in the calendar under current analysis. However, when providing data over a five-year period, incurred loss ratio trends should be observable. Incurred Loss Ratios are calculated by dividing the Direct Incurred Losses by the Direct Written Premiums. Incurred Loss Ratio = Calendar Year Direct Incurred Losses (Paid Claims + Incurred Claims + Reserves + IBNRs Reserve Adjustments) Direct Written Premiums ON A CALENDAR YEAR BASIS 11

12 Methodology Lloyd s Canada Premiums & Claims The Lloyd s premium and claims data is sourced from Xchanging. Lloyd s business in Canada is analysed using Gross Signed Premiums (GSP) and incurred claims on a country of origin basis. (see appendix for detailed explanation of country of origin) The Gross Signed Premiums used in this report are gross of reinsurance and acquisition costs (brokerage and commission) and represent the cash flow that has been processed by Xchanging during the calendar year. Incurred claims include paid claims and outstanding claims, which is an estimate of the amount of reserves needed to pay the claims, including indemnity and fees & expenses. Incurred claims on a calendar year basis are calculated as follows: losses incurred during the period plus outstanding losses at the end of the period less outstanding losses at the beginning of the period. Incurred claims on a year of account basis are calculated as follows: losses incurred during the period plus outstanding losses at the end of the period. The Incurred Loss Ratios arecalculatedonayear of account basis over a four year development period by dividing the incurred losses (as calculated above) by the sum of premiums during the period. The Incurred Loss Ratios do not include Incurred But Not Reported (IBNR) losses. Incurred Loss Ratio = Calendar Year Incurred Losses (Paid Claims + outstanding claims at the end of period outstanding claims at the beginning of the period) Gross Signed Premium Incurred Loss Ratio = Year of Account Incurred Losses (Sum of Paid Claims + outstanding claims at the end of period) Sum of Gross Signed Premium for the period ON A CALENDAR YEAR & YEAR OF ACCOUNT BASIS 12

13 Overview 2 of the Canadian Market IN THIS SECTION 1. Class of Business Breakdown 2. Premium Trends 3. Loss Ratio Trends 4. Competitor Ranking 13

14 OVERVIEW Class of Business Breakdown 2012 Canada Direct Market Premiums (Using OSFI Classes of Business) Personal Property 18% Liability 10% Accident and Sickness 2% Auto 51% 2012 Canada Total CAD 49.9bn Non-Auto and Personal Property 31% Commercial Property 13% 2012 Lloyd s Canada Direct Premiums (Using OSFI Classes of Business) 2012 Canada Total CAD 15.7bn (excluding Auto and Personal Property) Other 0% Legal 0% Hail 0% Mortgage 1% Surety 1% Boiler 1% Marine 1% Title Aircraft 0% 0% Credit Protection 0% Fidelity Credit 0% 0% Commercial Property 34% Liability 47% 2012 Lloyd s Total CAD 1.7bn Personal Property 6% Marine 4% Legal 0% Accident and Sickness 3% Aircraft 2% Boiler 2% Auto 1% Fidelity 1% 14

15 OVERVIEW Premium Trends Canada Direct Premiums (Direct written premiums reported on a calendar year basis) 60,000 50,000 40,000 30,000 20,000 10,000 42,795 43,773 43,890 46,398 48,588 49, Lloyd s Canada Direct Premiums (Direct signed premiums reported on a calendar year basis) 2, Direct Premium 42,795 43,773 43,890 46,398 48,588 49,886 Direct Growth % 2.3% 0.3% 5.7% 4.7% 2.7% 1,750 1,500 1,250 1, ,292 1,422 1,497 1,661 1,874 1,746 Direct Premium 1,292 1,422 1,497 1,661 1,874 1,746 Direct Growth % 10.1% 5.3% 10.9% 12.8% -6.8%

16 OVERVIEW Incurred Loss Ratio (ILR) Trends (Calendar Year) Canada Direct Market ILRs (ILRs reported on a calendar year basis.) 100% 80% 60% 62% 68% 69% 68% 68% 65% 40% 20% 0% Loss Ratio 62% 68% 69% 68% 68% 65%

17 OVERVIEW Competitor Ranking 2012 Canadian Direct Market Players (Direct premiums reported on a calendar year basis) Canada Total Rank Company Name Direct Premium CA$ m Direct Loss Ratio % Market Share% Intact Insurance Company 7, % 14% 1 Insurance Corporation of British 3, % 8% 2 Columbia Aviva Canada Group 3, % 7% 3 RSA Canada Group 2, % 6% 4 2, % 5% 5 TD Assurance Wawanesa Mutual Insurance 2, % 5% 6 Company Co-operators General Insurance 2, % 4% 7 Company Desjardins General Insurance 1, % 4% 8 Group, Inc. State Farm Group 1, % 4% 9 Economical Insurance Group 1, % 4%

18 Overview Commentary Premium Trends Commentary The premium volumes outlined and the ranking of the top insurers in Canada can be somewhat misleading since the slide does not compare apples to apples. Most of the top ten insurers in Canada have books of business that are heavily dependent on personal lines business to support their large infrastructure. Once the personal auto and property business is stripped out from their overall writings, Lloyd s ranking raises to second. Even though our focus is not on personal lines business. We need to maintain a watchful eye on the behaviour of the large personal lines insurers as premium and loss pressure mount in those classes. It should be noted that outside pressure by the Ontario insurance regulator to force a 15% reduction in auto premiums (Ontario represents 35% of the Canadian auto market) will have the knock-on effect of additional competition in the SME space, as those markets scramble to offset the reduction in their premium base. Paid Claims Ratio Claim losses in Canada over the last few years have been dominated with the increase in frequency and severity in property, we ve seen large losses emanate out of Alberta with hail damage, large fire loss (Slave Lake), Hamilton water damage, and recent Calgary flood and the Toronto flood. These pressures will force many of the large personal lines insurers to find new approaches, possibly acquisitions, possibly a shift in underwriting philosophy and/or entry into new business classes to mitigate the pressures being experienced in their personal lines portfolios. 18

19 3 Canada and Lloyd s class of business analysis IN THIS SECTION 1. Liability 2. Commercial Property 3. Aircraft 4. Marine 5. Accident & Sickness 6. Personal Property 7. Auto 8. Boiler & Machinery 9. Fidelity 10. Credit 11. Credit Protection 12. Legal 13. Mortgage 14. Hail 15. Surety 16. Title 17. Other 19

20 liability Commentary Premium Trends Commentary Premium totals for both Canada and Lloyd s are down from 2011, but Lloyd s experienced a 3.2% decrease compared to only 0.2% for the whole market.. Despite the decrease Lloyd s is still the top player in this class of business with 16% market share and liability is Lloyd s largest class of business in Canada. Organic growth will continue to be a challenge given the headwinds Canada is experiencing with economic growth and the strong competitive landscape in the Canadian insurance market. Any substantive growth will be realized through acquisition opportunities. The outlook for rates and claims experience to remain stable. The Canadian market has proven to be profitable over the last few years but continues to respond to challenges on the investment income. Ontario accounts for 36% of the total premium, followed by British Columbia at 18.6%. Paid Claims Ratio Lloyd s slightly less profitable than the total Canadian market with a 58% incurred loss ratio compared to 56% for the market and has not experienced the fluctuation witnessed by the rest of the Canadian market 20

21 Liability Major Class of Business Analysis Canada Direct Premiums (Direct written premiums reported on a calendar year basis) 6,000 5,000 4,000 3,000 2,000 1,000 4,994 4,973 4,911 5,044 5,207 5,161 0 Direct Premium 4,994 4,973 4,911 5,044 5,207 5,161 Direct Growth % -0.4% -1.2% 2.7% 3.2% -0.9% Lloyd s Canada Direct Premiums (Direct signed premiums reported on a calendar year basis) 1, Direct Premium Direct Growth % 13.5% 7.9% 7.7% 18.2% -3.2%

22 Liability Incurred Loss Ratio (ILR) Trends (Calendar Year) Canada Direct Market ILRs (ILRs reported on a calendar year basis.) 100% 80% 60% 40% 20% 56% 59% 62% 60% 62% 56% 0% Loss Ratio 56% 59% 62% 60% 62% 56%

23 liability Competitor Ranking 2012 Canadian Direct Market Players (Direct premiums reported on a calendar year basis) Liability Rank Company Name Direct Premium CA$ m Direct Loss Ratio % Market Share% 1 Lloyd's Underwriters % 16% 2 Intact Insurance Company % 9% Aviva Insurance Company of % 7% Canada Chartis Insurance Company of % 7% Canada 5 Zurich Insurance Company Ltd % 6% Royal & Sun Alliance Insurance % 5% Company of Canada Chubb Insurance Company of % 4% Canada Co-operators General Insurance % 4% Company Northbridge General Insurance % 3% Corporation Economical Mutual Insurance % 3% Company * AXA was acquired by Intact in September

24 Commercial property Commentary Premium Trends Commentary Lloyd s premiums have decreased by 6.1% in contrast to the total Canadian premiums which grew by 3.1% Despite this, Lloyd s has 2 nd largest market share at 9%, behind Intact insurance company. Property insurance rates are stable, with some slight increases. Capacity is not an issue in most of Canada. The experience is slightly different in areas of British Columbia (BC) as a result of earthquake aggregates. Many insurers in BC with large earthquake exposures have been shedding those exposures or reengineering their book to obtain greater rate and/or raising deductibles. 26% of Lloyd s commercial property book is written in BC, followed by Alberta at 22%, Ontario at 20% and Quebec at 15%. Paid Claims Ratio Lloyd s business was more profitable than the Canada total with a 50% incurred loss ratio compared to 61%. CAT losses were much higher in 2011 and the incurred loss ratios have improved in 2012 Super storm Sandy hit Canada, but caused far less damage there than in the US. Canada experienced very little other CAT damage in The same cannot be said for 2013 with flood losses in Calgary and Toronto with an estimated insurable loss of between $2bn - $3.75bn and just short of $1bn respectfully. Lloyd s was not as severely impacted to the same degree as our competitors. Prior to 2013 a hailstorm in Calgary, Alberta was the largest natural disaster in 2012 costing CAD $520m. Severe weather is becoming an increasing risk in Canada. A series of heavy storms and tornadoes in Quebec and Ontario in May 2012 also cost insurers CAD $245m. 24

25 Commercial Property Major Class of Business Analysis Canada Direct Premiums (Direct written premiums reported on a calendar year basis) 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, Lloyd s Canada Direct Premiums (Direct signed premiums reported on a calendar year basis) ,483 5,604 5,626 Direct Premium 5,483 5,604 5,626 5,959 6,263 6,456 Direct Growth % 2.2% 0.4% 5.9% 5.1% 3.1% , ,263 6, Direct Premium Direct Growth % 8.2% -3.2% 19.7% 14.2% -6.1%

26 Commercial Property Incurred Loss Ratio (ILR) Trends (Calendar Year) Canada Direct Market ILRs (ILRs reported on a calendar year basis.) 100% 80% 60% 48% 62% 63% 53% 67% 61% 40% 20% 0% Loss Ratio 48% 62% 63% 53% 67% 61%

27 Commercial Property Competitor Ranking 2012 Canadian Direct Market Players (Direct premiums reported on a calendar year basis) Commercial Property Rank Company Name Direct Premium CA$ m Direct Loss Ratio % Market Share% 1 Intact Insurance Company % 13% 2 Lloyd's Underwriters % 9% Aviva Insurance Company of % 8% Canada Royal & Sun Alliance Insurance % 7% Company of Canada 5 Zurich Insurance Company Ltd % 6% Chartis Insurance Company of % 6% Canada Co-operators General Insurance % 5% Company Economical Mutual Insurance % 5% Company Factory Mutual Insurance % 4% Company Wawanesa Mutual Insurance % 4% Company (The) * AXA was acquired by Intact in September

28 aircraft Commentary Premium Trends Commentary There was a huge decrease of 59.5% in premiums for Lloyds in the Aircraft sector. This is much larger than the Canadian total which only fell by 18.2%. Premiums have been falling in the Aircraft sector for the Canadian total and Lloyd s Canada since Premiums continue to decrease year on year as the number of losses each year has decreased, creating downward pressure on pricing. Lloyd s is the 2 nd largest player in the Aircraft sector. Premiums continue to decrease year on year as the number of losses each year has decreased, creating downward pressure on pricing. Paid Claims Ratio Lloyd s Canada had a slightly less profitable year than the whole market with a 45% incurred loss ratio compared to 43%, but has generally had similar loss ratios to the market since was an exceptionally low year for claims in Canadian aviation making aviation insurance extremely profitable. (The number of incidents last year was 39, compared to 70 on average, while total insurable fatalities were 318, compared to a long term average of 597) 28

29 aircraft Major Class of Business Analysis Canada Direct Premiums (Direct written premiums reported on a calendar year basis) Direct Premium Direct Growth % 8.4% 6.0% -9.1% -4.6% -18.2% Lloyd s Canada Direct Premiums (Direct signed premiums reported on a calendar year basis) Direct Premium Direct Growth % -1.3% 18.7% -11.4% -7.3% -59.5%

30 aircraft Incurred Loss Ratio (ILR) Trends (Calendar Year) Canada Direct Market ILRs (ILRs reported on a calendar year basis.) 100% 80% 72% 60% 46% 52% 43% 57% 43% 40% 20% 0% Loss Ratio 46% 72% 52% 43% 57% 43%

31 Aircraft Competitor Ranking 2012 Canadian Direct Market Players (Direct premiums reported on a calendar year basis) Aircraft Rank Company Name Direct Premium CA$ m Direct Loss Ratio % Market Share% Allianz Global Risks US Insurance % 21% Company 2 Lloyd's Underwriters % 18% 3 Westport Insurance Corporation % 17% 4 Temple Insurance Company (The) % 14% Northbridge General Insurance % 7% Corporation National Liability & Fire Insurance % 7% Company 7 XL Insurance Company Limited % 5% Chartis Insurance Company of % 4% Canada Mitsui Sumitomo Insurance % 3% Company, Limited 10 AXA Insurance Inc % 3% 31

32 marine Commentary Premium Trends Commentary There has been a big increase in premiums in 2012 but this is only due to a drop in premiums in The Canadian total marine market has been gradually increasing in size each year. Lloyd s is the top player in this class of business with a 16% market share Paid Claims Ratio Lloyd s ILRs have been very volatile, varying significantly from year to year. This contrasts from the Canadian total marine ILRs which have remained stable every year. CargoNet and the National Equipment Register (NER) were launched in Canada in 2012 to help combat cargo and equipment theft. This aims to reduce losses across the entire marine supply chain and help the bottom lines of insurers and policyholders which have been hit particularly hard. 32

33 Marine Major Class of Business Analysis Canada Direct Premiums (Direct written premiums reported on a calendar year basis) Direct Premium Direct Growth % 0.7% 3.4% 9.8% 0.8% 11.6% Lloyd s Canada Direct Premiums (Direct signed premiums reported on a calendar year basis) Direct Premium Direct Growth % -7.8% 4.4% 23.5% -44.5% 59.3%

34 Marine Incurred Loss Ratio (ILR) Trends (Calendar Year) Canada Direct Market ILRs (ILRs reported on a calendar year basis.) 100% 80% 60% 40% 41% 47% 50% 45% 53% 44% 20% 0% Loss Ratio 41% 47% 50% 45% 53% 44%

35 Marine Competitor Ranking 2012 Canadian Direct Market Players (Direct premiums reported on a calendar year basis) Marine Rank Company Name Direct Premium CA$ m Direct Loss Ratio % Market Share% 1 Lloyd's Underwriters % 16% Royal & Sun Alliance Insurance % 13% Company of Canada 3 Continental Casualty Company % 10% Northbridge General Insurance % 8% Corporation 5 Elite Insurance Company % 8% 6 AXA Insurance Inc % 7% Sunderland Marine Mutual % 6% Insurance Company Limited St. Paul Fire and Marine Insurance % 4% Company Allianz Global Risks US Insurance % 4% Company Shipowners' Mutual Protection and % 4% Indemnity Association * AXA was acquired by Intact in September

36 Accident & Sickness Commentary Premium Trends Commentary This is a less significant class of business for Lloyd s in Canada as it is only the 6 th largest player with a 5% market share. There has been a significant decrease in premiums (-30.8%) after premiums peaked in The Canadian total market continues to grow gradually. As a part of the total Canadian Property and Casualty market, Accident and Sickness does not make up 2% because the majority of this class of business is sold by life and health insurers. Paid Claims Ratio Lloyd s Accident & Sickness business has been more profitable than that of the total Canadian market for the last 2 years. The 2012 incurred loss ratio was 42% compared to 51% for the total market. Loss ratios for the whole Canadian market are extremely stable having been approximately 51 or 52% for the past 5 years. 36

37 Accident & Sickness Major Class of Business Analysis Canada Direct Premiums (Direct written premiums reported on a calendar year basis) 1,500 1,250 1, ,054 1,063 1,092 1,098 0 Direct Premium ,054 1,063 1,092 1,098 Direct Growth % 4.0% 9.9% 0.8% 2.7% 0.5% Lloyd s Canada Direct Premiums (Direct signed premiums reported on a calendar year basis) Direct Premium Direct Growth % 17.7% 25.1% -12.5% 37.5% -30.8%

38 Accident & Sickness Incurred Loss Ratio (ILR) Trends (Calendar Year) Canada Direct Market ILRs (ILRs reported on a calendar year basis.) 100% 80% 60% 40% 20% 43% 51% 52% 52% 52% 51% 0% Loss Ratio 43% 51% 52% 52% 52% 51%

39 Accident & Sickness Competitor Ranking 2012 Canadian Direct Market Players (Direct premiums reported on a calendar year basis) Accident & Sickness Rank Company Name Direct Premium CA$ m Direct Loss Ratio % Market Share% 1 Green Shield Canada % 34% RBC Insurance Company of % 18% Canada American Bankers Insurance % 13% Company of Florida Royal & Sun Alliance Insurance % 10% Company of Canada Chartis Insurance Company of % 9% Canada 6 Lloyd's Underwriters % 5% Allianz Global Risks US Insurance % 4% Company 8 Triton Insurance Company % 3% 9 CAA Insurance Company (Ontario) % 1% Chubb Insurance Company of % 1% Canada 39

40 Personal property Commentary Premium Trends Commentary Personal lines dominate the Canadian insurance market with personal property making up 18% of the market in Lloyd s is not a big player in personal property and is not in the top 10 players for this class of business. The bulk of Lloyd s premium (63%) is concentrated in BC with the remainder of the premium mostly split between Ontario and Quebec. However, Lloyd s Canadian personal property business has been growing each year and now makes up 6% of Lloyd s total Canadian premiums. Paid Claims Ratio For the last 3 years Lloyd s has been more profitable than the Canadian total market for Personal Property with lower ILRs. The main peril impacting the property loss ratios in Canada over the last several years has been water damage. 40

41 Personal Property Major Class of Business Analysis Canada Direct Premiums (Direct written premiums reported on a calendar year basis) 10,000 8,000 6,000 6,275 6,736 7,293 7,981 8,542 8,953 4,000 2,000 0 Direct Premium 6,275 6,736 7,293 7,981 8,542 8,953 Direct Growth % 7.3% 8.3% 9.4% 7.0% 4.8% Lloyd s Canada Direct Premiums (Direct signed premiums reported on a calendar year basis) Direct Premium Direct Growth % 35.1% 2.4% 22.5% 3.6% 2.2%

42 Personal Property Incurred Loss Ratio (ILR) Trends (Calendar Year) Canada Direct Market ILRs (ILRs reported on a calendar year basis.) 100% 80% 60% 62% 70% 71% 60% 67% 57% 40% 20% 0% Loss Ratio 62% 70% 71% 60% 67% 57%

43 Personal Property Competitor Ranking 2012 Canadian Direct Market Players (Direct premiums reported on a calendar year basis) Personal Property Rank Company Name Direct Premium CA$ m Direct Loss Ratio % Market Share% 1 Intact Insurance Company 1, % 14% Security National Insurance % 8% Company Wawanesa Mutual Insurance % 8% Company (The) Co-operators General Insurance % 6% Company State Farm Fire and Casualty % 5% Company Aviva Insurance Company of % 5% Canada Economical Mutual Insurance % 4% Company 8 Desjardins General Insurance Inc % 4% Dominion of Canada General % 3% Insurance Company (The) Allstate Insurance Company of % 3% Canada * AXA was acquired by Intact in September

44 auto Commentary Premium Trends Commentary This is by far the largest class of business in Canada making up 51% of the market, with personal lines dominating the Canadian insurance market. Lloyd s premiums have grown since 2011 but still only make up a tiny part of the Canadian total. Paid Claims Ratio Lloyd s ILRs have been extremely volatile varying greatly each year, whereas the Canadian market total ILRs have remained stable. 44

45 Auto Major Class of Business Analysis Canada Direct Premiums (Direct written premiums reported on a calendar year basis) 30,000 25,000 20,000 21,992 22,551 22,411 23,427 24,496 25,271 15,000 10,000 5,000 0 Direct Premium 21,992 22,551 22,411 23,427 24,496 25,271 Direct Growth % 2.5% -0.6% 4.5% 4.6% 3.2% Lloyd s Canada Direct Premiums (Direct signed premiums reported on a calendar year basis) Direct Premium Direct Growth % 2.5% -1.7% -0.6% 20.6% 32.3%

46 auto Incurred Loss Ratio (ILR) Trends (Calendar Year) Canada Direct Market ILRs (ILRs reported on a calendar year basis.) 100% 80% 73% 76% 76% 81% 76% 74% 60% 40% 20% 0% Loss Ratio 73% 76% 76% 81% 76% 74%

47 auto Competitor Ranking 2012 Canadian Direct Market Players (Direct premiums reported on a calendar year basis) Auto Rank Company Name Direct Premium CA$ m Direct Loss Ratio % Market Share% Insurance Corporation of British 1 3, % 16% Columbia 2 Intact Insurance Company 2, % 11% Security National Insurance 3 1, % 8% Company Wawanesa Mutual Insurance 4 1, % 6% Company (The) State Farm Mutual Automobile 5 1, % 5% Insurance Company Aviva Insurance Company of 6 1, % 5% Canada Co-operators General Insurance % 4% Company Economical Mutual Insurance % 4% Company Allstate Insurance Company of % 3% Canada 10 Saskatchewan Auto Fund % 3% * AXA was acquired by Intact in September

48 Boiler & machinery Commentary Premium Trends Commentary Total premiums for the Canadian market and the Lloyd s market are down from 2011, Lloyd s have declined by a smaller amount, (10.3%) compared to (13.8%) for the total Canadian market. Lloyd s is now the 5 th largest player in the Boiler & Machinery class of business with a 7% market share. Paid Claims Ratio Boiler & Machinery ILRs have varied each year for the Lloyd s and the Canadian total, however Lloyd s have been particularly volatile. 48

49 Boiler & machinery Major Class of Business Analysis Canada Direct Premiums (Direct written premiums reported on a calendar year basis) Direct Premium Direct Growth % 2.7% 1.9% 10.7% -10.2% -13.8% Lloyd s Canada Direct Premiums (Direct signed premiums reported on a calendar year basis) Direct Premium Direct Growth % -26.7% 31.6% 61.9% 64.3% -10.3%

50 Boiler & machinery Incurred Loss Ratio (ILR) Trends (Calendar Year) Canada Direct Market ILRs (ILRs reported on a calendar year basis.) 100% 80% 60% 58% 50% 40% 27% 33% 33% 34% 20% 0% Loss Ratio 27% 58% 33% 33% 50% 34%

51 Boiler & machinery Competitor Ranking 2012 Canadian Direct Market Players (Direct premiums reported on a calendar year basis) Boiler & Machinery Rank Company Name Direct Premium CA$ m Direct Loss Ratio % Market Share% Factory Mutual Insurance % 17% Company Royal & Sun Alliance Insurance % 16% Company of Canada 3 Intact Insurance Company % 10% Aviva Insurance Company of % 7% Canada 5 Lloyd's Underwriters % 7% Boiler Inspection and Insurance Co % 7% of Canada (The) 7 Zurich Insurance Company Ltd % 7% Travelers Insurance Company of % 4% Canada Economical Mutual Insurance % 3% Company Chartis Insurance Company of % 3% Canada * AXA was acquired by Intact in September

52 Fidelity Commentary Premium Trends Commentary For Fidelity the Canadian total and Lloyd s totals both peaked in 2010 and have since been decreasing gradually. Lloyd s is the 3 rd largest player in this class of business with 11% market share. Paid Claims Ratio ILRs are volatile for Fidelity but Lloyd s has been less profitable than the Canadian total for the last 3 years. 52

53 fidelity Major Class of Business Analysis Canada Direct Premiums (Direct written premiums reported on a calendar year basis) Direct Premium Direct Growth % -4.5% 3.9% 5.9% -2.6% -7.0% Lloyd s Canada Direct Premiums (Direct signed premiums reported on a calendar year basis) Direct Premium Direct Growth % -1.4% 17.0% 12.3% -9.6% -3.6%

54 fidelity Incurred Loss Ratio (ILR) Trends (Calendar Year) Canada Direct Market ILRs (ILRs reported on a calendar year basis.) 100% 80% 60% 58% 55% 40% 40% 39% 33% 20% 13% 0% Loss Ratio 40% 58% 55% 39% 13% 33%

55 fidelity Competitor Ranking 2012 Canadian Direct Market Players (Direct premiums reported on a calendar year basis) Fidelity Rank Company Name Direct Premium CA$ m Direct Loss Ratio % Market Share% Chubb Insurance Company of % 18% Canada Guarantee Company of North % 15% America (The) 3 Lloyd's Underwriters % 11% Chartis Insurance Company of % 11% Canada Travelers Insurance Company of % 9% Canada 6 Liberty Mutual Insurance Company % 6% CUMIS General Insurance % 5% Company Royal & Sun Alliance Insurance % 4% Company of Canada 9 Desjardins General Insurance Inc % 2% Trisura Guarantee Insurance % 2% Company 55

56 Credit Major Class of Business Analysis Canada Direct Premiums (Direct written premiums reported on a calendar year basis) Direct Premium Direct Growth % 3.1% -3.4% -4.9% 19.9% -7.3% Lloyd s currently does not write this Class of Business 56

57 credit Incurred Loss Ratio (ILR) Trends (Calendar Year) Canada Direct Market ILRs (ILRs reported on a calendar year basis.) 100% 90% 80% 60% 46% 47% 40% 20% 24% 26% 22% 0% Loss Ratio 46% 90% 47% 24% 26% 22% Lloyd s currently does not write this Class of Business 57

58 Credit Competitor Ranking 2012 Canadian Direct Market Players (Direct premiums reported on a calendar year basis) Credit Rank Company Name Direct Premium CA$ m Direct Loss Ratio % Market Share% Euler Hermes North America % 44% Insurance Company Compagnie Française d'assurance % 33% pour le Commerce Extérieur 3 Atradius Credit Insurance N.V % 13% Chartis Insurance Company of % 9% Canada Guarantee Company of North % 2% America (The) Echelon General Insurance % 0% Company 58

59 Credit protection Major Class of Business Analysis Canada Direct Premiums (Direct written premiums reported on a calendar year basis) Direct Premium Direct Growth % 3.7% 14.3% -1.8% -15.1% -3.7% Lloyd s currently does not write this Class of Business 59

60 Credit protection Incurred Loss Ratio (ILR) Trends (Calendar Year) Canada Direct Market ILRs (ILRs reported on a calendar year basis.) 100% 80% 60% 40% 20% 19% 3% 4% 11% 8% 7% 0% Loss Ratio 3% 4% 19% 11% 8% 7% Lloyd s currently does not write this Class of Business 60

61 Credit protection Competitor Ranking 2012 Canadian Direct Market Players (Direct premiums reported on a calendar year basis) Credit Protection Rank Company Name Direct Premium CA$ m Direct Loss Ratio % Market Share% American Bankers Insurance % 87% Company of Florida 2 Arch Insurance Company % 7% Legacy General Insurance % 5% Company 4 Millennium Insurance Corporation 0.5 5% 0% 61

62 Legal Major Class of Business Analysis Canada Direct Premiums (Direct written premiums reported on a calendar year basis) Direct Premium Direct Growth % 94.1% -39.9% -14.2% 12.4% 13.6% Lloyd s currently does not write this Class of Business 62

63 legal Incurred Loss Ratio (ILR) Trends (Calendar Year) Canada Direct Market ILRs (ILRs reported on a calendar year basis.) 250% 236% 200% 150% 100% 50% 32% 31% 60% 56% 68% 0% Loss Ratio 32% 31% 60% 236% 56% 68% Lloyd s currently does not write this Class of Business 63

64 legal Competitor Ranking 2012 Canadian Direct Market Players (Direct premiums reported on a calendar year basis) Legal Rank Company Name Direct Premium CA$ m Direct Loss Ratio % Market Share% Capitale assurances générales inc % 42% (La) 2 Intact Insurance Company % 26% DAS Legal Protection Insurance % 16% Company Limited 4 Novex Insurance Company % 6% Echelon General Insurance % 4% Company 6 Lloyd's Underwriters % 2% Trafalgar Insurance Company of % 2% Canada 8 AXA Insurance Inc % 1% 9 Belair Insurance Company Inc % 1% * AXA was acquired by Intact in September

65 mortgage Major Class of Business Analysis Canada Direct Premiums (Direct written premiums reported on a calendar year basis) 1,200 1,058 1, Direct Premium 1, Direct Growth % -24.9% -51.6% 55.2% 7.6% 9.5% Lloyd s currently does not write this Class of Business 65

66 mortgage Incurred Loss Ratio (ILR) Trends (Calendar Year) Canada Direct Market ILRs (ILRs reported on a calendar year basis.) 100% 80% 83% 60% 40% 20% 8% 21% 40% 42% 32% 0% Loss Ratio 8% 21% 83% 40% 42% 32% Lloyd s currently does not write this Class of Business 66

67 mortgage Competitor Ranking 2012 Canadian Direct Market Players (Direct premiums reported on a calendar year basis) Mortgage Rank Company Name Direct Premium CA$ m Direct Loss Ratio % Market Share% Genworth Financial Mortgage % 80% Insurance Company Canada Canada Guaranty Mortgage % 18% Insurance Company 3 FCT Insurance Company Ltd % 2% 67

68 Hail Major Class of Business Analysis Canada Direct Premiums (Direct written premiums reported on a calendar year basis) Direct Premium Direct Growth % -20.8% -16.2% -24.7% 576.9% 23.0% Lloyd s currently does not write this Class of Business 68

69 hail Incurred Loss Ratio (ILR) Trends (Calendar Year) Canada Direct Market ILRs (ILRs reported on a calendar year basis.) 120% 112% 109% 100% 80% 60% 58% 64% 71% 40% 20% 22% 0% Loss Ratio 112% 109% 22% 58% 64% 71% Lloyd s currently does not write this Class of Business 69

70 hail Competitor Ranking 2012 Canadian Direct Market Players (Direct premiums reported on a calendar year basis) Hail Rank Company Name Direct Premium CA$ m Direct Loss Ratio % Market Share% Co-operative Hail Insurance % 73% Company Limited 2 ACE INA Insurance % 15% Northbridge General Insurance % 11% Corporation 4 Intact Insurance Company 0.2 3% 0% North Waterloo Farmers Mutual % 0% Insurance Company (The) * AXA was acquired by Intact in September

71 surety Major Class of Business Analysis Canada Direct Premiums (Direct written premiums reported on a calendar year basis) Direct Premium Direct Growth % 17.6% 4.9% 10.2% 7.8% -5.0% Lloyd s currently does not write this Class of Business 71

72 surety Incurred Loss Ratio (ILR) Trends (Calendar Year) Canada Direct Market ILRs (ILRs reported on a calendar year basis.) 100% 80% 60% 40% 20% 9% 12% 11% 27% 17% 29% 0% Loss Ratio 9% 12% 11% 27% 17% 29% Lloyd s currently does not write this Class of Business 72

73 surety Competitor Ranking 2012 Canadian Direct Market Players (Direct premiums reported on a calendar year basis) Surety Rank Company Name Direct Premium CA$ m Direct Loss Ratio % Market Share% Guarantee Company of North % 20% America (The) Travelers Insurance Company of % 13% Canada 3 Intact Insurance Company % 13% Aviva Insurance Company of % 12% Canada 5 Zurich Insurance Company Ltd % 6% Trisura Guarantee Insurance % 5% Company 7 Jevco Insurance Company % 5% 8 Western Surety Company % 4% 9 AXA Insurance Inc % 3% Capitale assurances générales inc % 2% (La) * AXA was acquired by Intact in September

74 title Major Class of Business Analysis Canada Direct Premiums (Direct written premiums reported on a calendar year basis) Direct Premium Direct Growth % -12.8% -8.7% 13.1% 3.1% 3.0% Lloyd s currently does not write this Class of Business 74

75 title Incurred Loss Ratio (ILR) Trends (Calendar Year) Canada Direct Market ILRs (ILRs reported on a calendar year basis.) 100% 80% 60% 40% 29% 35% 37% 26% 25% 22% 20% 0% Loss Ratio 29% 35% 37% 26% 25% 22% Lloyd s currently does not write this Class of Business 75

76 Title Competitor Ranking 2012 Canadian Direct Commercial Market Premiums (Direct premiums reported on a calendar year basis) Title Rank Company Name Direct Premium CA$ m Direct Loss Ratio % Market Share% 1 FCT Insurance Company Ltd % 39% 2 Stewart Title Guaranty Company % 37% 3 Chicago Title Insurance Company % 11% First American Title Insurance % 10% Company Lawyers' Professional Indemnity % 2% Company 76

77 other Major Class of Business Analysis Canada Direct Premiums (Direct written premiums reported on a calendar year basis) Direct Premium Direct Growth % 139.4% -43.3% -58.6% 36.0% -47.6% Lloyd s currently does not write this Class of Business 77

78 other Incurred Loss Ratio (ILR) Trends (Calendar Year) Canada Direct Market ILRs (ILRs reported on a calendar year basis.) 100% 80% 60% 59% 40% 20% 0% 6% 0% 20% 25% -20% -31% -40% Loss Ratio 59% 6% -31% 0% 20% 25% Lloyd s currently does not write this Class of Business 78

79 other Competitor Ranking 2012 Canadian Direct Market Players (Direct premiums reported on a calendar year basis) Other Rank Company Name Direct Premium CA$ m Direct Loss Ratio % Market Share% 1 Virginia Surety Company Inc % 53% 2 Zurich Insurance Company Ltd % 41% 3 CorePointe Insurance Company % 5% 79

80 Market Intelligence A WEALTH OF MARKET INTELLIGENCE Market Intelligence Compare Countries Country Profiles Market Presentations Country Roundups Class Review FREE DOWNLOAD AT: WE ARE HERE TO HELP YOU Market Intelligence FILIP WUEBBELER Market Intelligence Lloyd's One Lime Street, London EC3M 7HA Direct +44 (0) filip.wuebbeler@lloyds.com Events & Market Development: EDWARD PENNOCK International Market Operations Lloyd's One Lime Street, London EC3M 7HA Direct +44 (0) edward.pennock@lloyds.com

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