MSA/Baron Outlook Report

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Leon Murphy
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Alberta in the wake of the Wittmann decision A Survey of Reinsurance Fighting over a shrinking pie Broker

1 MSA/Baron Outlook Report I n this issue... First Quarter A Wake-Up Call Q Released July, 2008 Alberta Auto - What A Mess! Alberta in the wake of the Wittmann decision A Survey of Reinsurance Fighting over a shrinking pie Broker Market Snapshot A perfect storm S&P Rating Roundup First Quarter Company Results Comparative financial results through March 31, 2008 M S A R e s e a r c h I n c. Baron Insurance Services Inc.

WHERE INDUSTRY LEADERS MEET O c t o b e r 1-3, 2 0 0 8 - H i l t o n L a c - L e a m y, G a t i n e a u - O t t a w a, Q u e b e c The NICC is Canada s pre-eminent insurance conference attended by

What brokers are saying about the NICC: "The National Insurance Conference of Canada is an important and informative forum for all industry professionals to attend.

Brokers, in particular, will benefit from a refreshed perspective on the regulatory and industry currents that drive our business, while enjoying ample opportunity to interact with many of the

It provides an unparalleled opportunity to define the big picture of what is going on in our industry, domestically and globally.

"As a broker, I found the 2007 NICC conference in Montreal both informative and educational.

2 WHERE INDUSTRY LEADERS MEET O c t o b e r 1-3, H i l t o n L a c - L e a m y, G a t i n e a u - O t t a w a, Q u e b e c The NICC is Canada s pre-eminent insurance conference attended by senior executives of insurers, brokers, reinsurers, risk managers, regulators and industry associations. What brokers are saying about the NICC: "The National Insurance Conference of Canada is an important and informative forum for all industry professionals to attend. The Conference s renewal in 2007 was thought-provoking and impressive, while the ambitious line-up for 2008 promises to be even more remarkable and challenging. Brokers, in particular, will benefit from a refreshed perspective on the regulatory and industry currents that drive our business, while enjoying ample opportunity to interact with many of the individuals who directly impact our Canadian insurance industry." "The NICC offers a most unique milieu of industry players and thinkers from across Canada and internationally. It provides an unparalleled opportunity to define the big picture of what is going on in our industry, domestically and globally. As a broker, the presentations better prepared me to supply deeper knowledge-based advice to our clients." Randy Bushey, AIIC General Manager Knox Insurance Brokers Ltd. "As a broker, I found the 2007 NICC conference in Montreal both informative and educational. It provided quality topics combined with high profile dynamic presenters that opened the door into many facets of the industry today. In this ever changing industry, as brokers, we must explore all avenues of our business; NICC provided that over the three days. I was also very impressed with the networking opportunities that were available and was able to establish some key contacts. I think brokers will benefit from attending this year's conference in Gatineau - Ottawa." Brenda Rose, BA, AIIC Chris Floyd, CIP Past President, Toronto Insurance Conference President OTIP/RAEO Insurance Brokers Inc. Brokers and risk managers save $225 off the registration price registering online at Contact Laura Viau at laura.viau@msaresearch.com for a discount coupon code. PLATINUM SPONSORS GOLD SPONSORS SILVER SPONSORS NICC sessions are accredited by RIBO. Please visit for details

3 Introduction We are delighted to release the first quarter 2008 MSA/Baron Outlook Report covering the Canadian P&C industry. Our mission of providing Canada s insurance professionals with unwavering, unbiased analysis of this dynamic industry remains steadfast. We welcome your comments and feedback regarding any aspect of these reports. You are invited to send your messages to msabaron@msaresearch.com, or contact any of the undersigned directly. In this issue, you will find: An analysis of first quarter results. A report on Alberta auto in the wake of the Wittmann ruling removing the minor injury cap. A review of the Canadian reinsurance sector and its fortunes. A snapshot of the brokered market. Standard and Poor s Rating Roundup. Summarized first quarter 2008 financial results for the majority of Canadian insurers. For detailed company results, please see MSA s 2008 Researcher Software. The MSA/Baron Outlook Report is produced and authored jointly by MSA Research Inc., Canada s leading provider of insurance analytics and Baron Insurance Services Inc., a well-respected actuarial and consulting firm. Our Readers This report is subscribed to by approximately 1,000 industry professionals including most Canadian insurance/reinsurance executives, commercial brokers, regulators, associations, auditors, analysts & TPA s. 1,650 IBAO and IBABC broker principals courtesy of Gore Mutual Insurance Company. 600 IBAA broker principals courtesy of Peace Hills General Insurance Company and 200 risk managers including ORIMS members and others courtesy of Integro Insurance Brokers. Subscription information can be found on the outside back cover. Sincerely, Ron Miller, Barb Addie, Joel Baker, Ph.D., F.C.A.S, F.C.I.A., B.Math., F.C.A.S., F.C.I.A., M.Sc., CIP, President and CEO, Principal, Principal, MSA Research Inc. and Baron Insurance Services Inc. Baron Insurance Services Inc. The National Insurance Conference of Canada ron@baronactuaries.com barb@baronactuaries.com joel.baker@msaresearch.com The MSA/Baron Outlook Report is produced quarterly jointly by MSA Research Inc. and Baron Insurance Services Inc. For subscription information or pricing, call or visit by MSA Research Inc. and Baron Insurance Services Inc. All rights reserved. No part of this report shall be reproduced or redistributed without prior written consent of the copyright holders. Information contained in this report is deemed to be trustworthy. However MSA Research Inc. and Baron Insurance Services Inc. do not guarantee its accuracy. No representations or warranties are provided as to the completeness or accuracy of the information presented here. If you are aware of any errors or inaccuracies you are encouraged to notify any of the contributors so that problems can be rectified. Printed in Canada ISSN MSA Research Inc. and Baron Insurance Services Inc. 1

The 2008 MSA Market Share Report The MSA Market Share Report provides valuable market share and ranking information for every line of business in every province over a five year period.

5 The 2008 MSA Market Share Report The MSA Market Share Report provides valuable market share and ranking information for every line of business in every province over a five year period. The report is produced on a consolidated group basis. New in 2008 Key Features: Market shares and rankings over five years for every line of business in every province. Companies ranked on a consolidated group basis. Up down arrows quickly identify changes in rankings from prior year. MSA industry benchmark categories are also ranked. Primary Uses: Easily identify your market positions and those of your competitors. Quickly analyze potential markets. Review top players and their performance in any market segment. Order Your Copy Today! Five Year market shares and rankings for every line of business in every province. Cumulative market shares allow you to see how concentrated the market is. Premium volumes and direct loss ratios displayed for easy reference. Rankings and market shares for three industry benchmark categories: Company size Distribution and Ownership Type Companies ranked on a consolidated group basis. Up/Down arrows indicate ranking changes from prior year. Cumulative Alberta - Liabil ity Rank Market Share Market Direct Premiums Written Direct Loss Ratios Share MSA Industry Benchmarks Large Insurers or Groups (Ex Top Five) , , Top Five Groups , , Small Insurers or Groups ,380 72, Mid Sized Insurers or Groups ,759 64, Broker Writers , , Agency and Direct Writers ,550 46, European Owned Companies , , US Owned Companies , , Canadian Owned Companies , , Other Foreign Owned Companies ,912 40, Insurers/Groups Lloyd's Underwriters ,296 59, (40.2) AIG Canada Insurance Group ,020 67, Chubb Canada Group ,134 50, ING Canada Insurance Group ,686 50, Northbridge Financial Group ,976 45, Co-operators General Insurance Group ,459 42, AXA Canada Group ,272 34, Aviva Canada Group ,608 30,433 (2.6) 21.8 Travelers Group ,174 21, ACE INA Insurance ,285 20, Continental Casualty Company ,442 19, Liberty Mutual Group ,693 20, (16.8) GCAN Insurance Company ,247 18, Munich Re Canada ,304 13, Economical Insurance G up (The) ,772 12, Dominio nada General Insurance Company (The) ,186 14,975 (46.4) urance Company Limited ,806 9, Royal & Sun Alliance Canada Group ,319 11, Wawanesa Mutual Insurance Company (The) ,749 6, XL Reinsurance America Inc ,700 7, State Farm Group ,673 4, American Bankers Insurance Company of Florida ,141 8, Employers Reinsurance Corporation ,676 3, Swiss Re Canada Group , Hartford Fire Insurance Company ,256 2, Great American Insurance Company ,888 2, Winterthur Group ,456 4,919 (48.4) 22.8 Saskatchewan Mutual Insurance Company ,139 1, Kingsway Canada Group ,933 2, Allianz Global Risks US Insurance Company , (255.6) Ecclesiastical Insurance Office plc , To find out more, please call our office to arrange a free on-site or web-based demonstration. (416)

6 2008 Price List MSA Researcher P&C Software Each license includes one copy of the MSA Report and one copy of the MSA Benchmark Report. First License C$2998 each Additional license C$1999 Corporate Site License - Includes: Ten copies of The MSA Report, Ten copies of the MSA Benchmark Report, Two copies of the MSA Market Share Report, Fifteen subscriptions to the quarterly MSA/Baron Outlook Reports. C$8998 Historical Site License $Call MSA Report First Copy C$499 Additional Copies C$199 MSA Benchmark Report First Copy C$299 Additional Copies C$199 MSA Market Share Report C$599 Annual subscription to the quarterly MSA/Baron Outlook Report Canadian insurers and groups with over $1billion in NPW Fifteen Copies C$1000 Canadian insurers and groups with $500 million-$1b in NPW Five Copies C$500 To order, please complete the form below and return it to: MSA Research Inc. via mail, courier or ICS. Alternatively you can fax it to: Items Quantity (CAD) Recognized educational institutions, deduct 25%. SUBTOTAL Canadian orders add 5% GST (Reg #R ) Ontario orders add 8% PST Quebec orders add 7.5% QST to post GST total. NS/NB/NFLD add 13% HST (Reg #R ) British Columbia orders add 7% PST Outside Canada add S+H (CAD) $75 TOTAL Please place me on standing order. All others (1st copy) C$250 Additional copies (same location) C$125 ea. Need more than fifteen copies? Call us for pricing. MSA Researcher Life/Health/Fraternal Software Ten years of data + quarterly updates Licenses (each) C $1999 Corporate Site License C $5999 Historical Site License $Call Name Company Address City Postal/Zip Code Payment Method (Check One) Title Phone Fax Prov/State Country Yes, I am on ICS Cheque or money order Cheques must be payable to MSA Research Inc. All non-canadian or non-us cheques must be drawn on a Canadian bank. Alternatively, payment should be made by credit-card or wire transfer. Visa Mastercard Amex Number: Expiration Date: Name on Card: Signature: Address of card holder: Bill me (subject to credit approval). 133 Richmond St. W., Suite 401, Toronto, ON, Canada M5H 2L3. T , F , info@msaresearch.com, web: msaresearch.com. MSA Research Inc. is on ICS. Definitive insurance information for intelligent business decisions.

MSA/Baron Outlook Report

MSA/Baron Outlook Report In this issue... A Review of the Industry at Six Months Treading Water Q2- Released October Bank Holdup Flaherty s Move Credit Where Credit is Due Credit Scoring in Personal Lines