A new commentary from Morningstar DBRS notes that Canadian insurers’ debt issuance grew to $8.6-billion in 2024, more than doubling the amount issued in 2023. Issuance remained below record levels reached in 2020 and 2021.

“The decrease in interest rates coupled with early debt redemptions in 2024 contributed to the growth in debt issuance, with seven of our rated insurance issuers tapping the market during the year. A similar high debt issuance level is unlikely to be repeated in 2025,” the firm’s researchers write in the note, Canadian Insurers’ Debt Issuance Doubled in 2024 but Expected to Normalize in 2025. “In 2025 we expect Canadian insurers’ debt issuances to normalize in the $4-billion to $6-billion range.”’ This, they add, is largely conditional on insurers’ plans regarding acquisitions and refinancing.

Most active debt issuer 

In 2024, Fairfax Financial Holdings Limited was the most active debt issuer, issuing $3.5-billion. Manulife Financial Corporation followed with issuances totaling $3.1-billion. The report notes that Great-West Lifeco Ltd. was absent from the debt issuance markets after issuing more than $6-billion between 2020 and 2022. “Other major issuers broadly maintained their level of issuance activity from past years.” 

Some Canadian insurers, meanwhile, undertook early bond redemptions in 2024, using new debt issuance proceeds. “Fairfax, Manulife, and Sun Life Financial Inc. redeemed bonds worth $3.5-billion, $1.2-billion and $750-million, respectively,” they add.

Record levels set during the early years of the pandemic are unlikely to be reached in the coming year, they say, absent an ultra-low interest rate environment, combined with a significant increase in merger and acquisition activity.