Biggest insurers will soon control more of the market: A.M. Best

Canada’s Top 5 property and casualty insurers control nearly half the market, with the largest increasing their market share further, an A.M. Best Company analyst said Wednesday.

About two-thirds of direct premiums written, in Canadian P&C insurance, are controlled by the Top 10 carriers, said Gordon McLean, senior financial analyst with Oldwick, N.J.-based A.M. Best.

The remaining carriers compete for one-third of the premiums, “in what we view as a fragmented market for those not having the significant volume of the Top 10 carriers,” McLean said during Emerging from the Shadow of COVID-19, an annual conference A.M. Best normally holds every September in Toronto.

This is the second year A.M. Best has held its annual Canadian market briefing virtually, due to restrictions on gatherings during the COVID-19 pandemic. This year’s A.M. Best Canada briefing wraps up Thursday.

On Wednesday, McLean presented a slide showing that Intact, Desjardins, Aviva, Lloyd’s Underwriters and Wawanesa had market share in 2020 of 14.3%, 8%, 7.8%, 5.6% and 5.5%, respectively. The bottom five, in order, were The Co-operators, Toronto-Dominion/Security National, RSA, Economical and Northbridge.

The Top 5 control 41% while the Top 3 control 30% of direct premiums written, said McLean.

A.M. Best was counting RSA Canada separately because the acquisition by RSA PLC did not close until June of 2021. RSA has been bought by Intact Financial Corp. and Tryg A/S. As a result, Intact has essentially taken over all former RSA operations outside of Scandinavia.

In the Canadian P&C market, the 2021 rankings will be “slightly more top-heavy” when considering impact of Intact acquiring RSA, McLean said Sept. 15.

A.M. Best’s rankings are slightly different from those of the 2021 Canadian Underwriter Statistical Guide (powered by MSA Research) because Canadian Underwriter ranks total business by net premiums written rather than by direct premiums written.

“Following years of consolidations, we have reached a point in the marketplace where the largest companies in the marketplace continue to increase market share,” said McLean.

Intact and Tryg initially announced their three-day deal to acquire RSA in November, 2020. At that time, Intact said its direct premiums written from about $12 billion to $20 billion a year.

In 2014, Desjardins bought the Canadian operations of State Farm.

As a result of the 2021 deal, Intact now owns what used to be RSA’s operations in Canada, as well as in Britain, Ireland, and the Middle East. Tryg now owns what used to be RSA’s operations in Sweden and Norway. Codan DK, the former RSA operation in Denmark, is split 50-50 between Tryg and Intact. They have agreed to sell Codan to Danish financial services firm Alm.Brand A/S Group for about Cdn$2.52 billion. That deal has yet to close.

“Intact has stated a desire to move beyond Canada while remaining strong, entrenching within the country,” McLean said Wednesday. “We saw that a couple of years ago when they acquired OneBeacon, with an explicit intent to expand into the U.S. market. There are obviously synergies there with the U.S. and Canada as well as some macro factors that might be encouraging Canadian insurer to drop down into the US, looking at other foreign investments.”

Intact closed its US$1.7-billion acquisition of Minnesota-based commercial specialty insurer OneBeacon Insurance Group Ltd. in 2017. OneBeacon – whose coverages include technology, marine, public entities and entertainment – is now known as Intact Insurance Group USA LLC.

Until 2017, OneBeacon was publicly-traded with most of its shares held by White Mountains Insurance Group Ltd. of Bermuda.

In 2019, Intact acquired The Guarantee Company of North America from Cambridge, Ont.-based Princeton Holdings. In 2011 and 2012, respectively, Intact bought AXA Canada and Jevco.