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A.M. Best Company's Insurance Market Briefing Canada

A.M. Best Company's Insurance Market Briefing Canada. Stephen Irwin, Vice President Richard McMillan, Managing Senior Financial Analyst September 8, 2010. Current Ratings. * Rating under review. Look Back-Review. What we said last year: Low interest rates Stock market volatility

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A.M. Best Company's Insurance Market Briefing Canada

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  1. A.M. Best Company'sInsurance Market BriefingCanada Stephen Irwin, Vice President Richard McMillan, Managing Senior Financial Analyst September 8, 2010

  2. Current Ratings * Rating under review

  3. Look Back-Review • What we said last year: • Low interest rates • Stock market volatility • Global recovery in question-unemployment still high • Canadian currency improving, depending on the day

  4. Source: Trading Economics

  5. Stock Market Volatility

  6. Source: Trading Economics

  7. Currency Risk

  8. What has transpired? • Capital has rebounded • Capital markets receptive • Debt & other capital raising • Lower investment losses • Net income-better in 2009 • Focus on expense control continues • Deployment of liquidity yields better returns • Surrender activity still within assumptions • Product de-risking

  9. Outlook Revised to Stable • Outlook is stable, but remains cautious • Rating outlook reflects likelihood of negative rating actions easing • Does not preclude negative rating actions

  10. Areas of Concern • Economic weakness returns/Global recovery • Interest rate/equity markets • Product risk • Regulatory/accounting risk • International operations

  11. Market Perspective • Still the Big Three • 2010 sales up for the most part • Expect capital targets to be higher

  12. IFRS • It’s almost here! • January 1, 2011opening balance sheet • Phase I-more limited impact • Phase II-more to come • New valuationmethodology • Reaction and options

  13. Regulatory Capital • OSFI continue to refine capital model • Living benefit guarantees • Guideline A-4

  14. Product Viewpoint • Individual products • Capital requirements • Group products • Competition remains aggressive • Wealth Management and Retirement products • De-risking

  15. Life Reinsurance • Three major players • But, looking for counterparty diversification • Individual life re demand robust

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