6 September 2018 13:30
With low interest rates and a regulatory environment complex, the rating agency A.M. Best has given to the canadian industry of life insurance a note stable, but prudent.
“The concerns remain the low interest rates and how long insurers can maintain good margins in this environment, explained Edward Kohlberg, an associate director at A.M. Best, at a conference held in Toronto yesterday.
Mr. Kohlberg has stated that the low level of interest rates had prompted some canadian insurers to exit the annuities, and to turn to mutual funds, which are less intensive in regulatory capital.
However, Mr. Kohlberg said that all of the 29 companies rated by A.M. Best in Canada are in the categories of excellent or superior, with the exception of one company, which has a limited product range.
The perspectives are contrary to those in the United States, which A.M. Best gives negative outlooks for 2016.
A distribution network is aging
In addition to the situation of notation, Anthony McSwieney, financial analyst senior at A.M. Best, said the industry faces several challenges, including the management of capital, the distribution network is aging and regulatory changes.
There is also the challenge of limited prospects of organic growth in Canada, because the industry is considered mature. She took advantage, however, of the continuing increase in participating insurance, which was the only activity to grow by 2017.
Property and casualty insurers continue to face risks of major natural disasters, as well as cyber-security, in developing technologies such as the blockchain and the cannabis. Despite this, A.M. Best maintains its stable outlook on the property & CASUALTY insurance in Canada.