The second quarter and first half of the year proved profitable for four major companies, according to Morningstar DBRS. Authors of the note attributes the positive results to prudent underwriting gains and strong investment income.
In a commentary titled H1 2025 Results Show Canadian P&C Insurers Balancing Strong Premium Growth and Catastrophe Costs, released on September 1, the credit rating agency reports on Intact Financial Corporation, Fairfax Financial Holdings, Trisura Group, and Definity Financial Corporation.
The agency also highlights the role of timely premium rate actions and new business generation for growth in revenue.
The four insurers reported robust returns on equity (ROE) over the first two quarters of 2025, despite challenges such as geopolitical risks, market volatility, and catastrophe losses.
Intact’s ROE held steady at approximately 14 per cent over the past four quarters. The other three insurers posted more variable results—particularly Definity—but all four exceeded the 10 per cent mark, with Fairfax and Trisura surpassing 15 per cent.
“There might be some headwinds for P&C insurers in H2 2025, as underwriting profitability may be affected by natural catastrophe losses caused by the wildfires in Western Canada and other parts of the country,” said Victor Adesanya, Vice President Global Insurance & Pension Ratings.
“Although wildfires have been mainly reported in remote areas with low popula/on concentra/on so far, P&C insurers could be affected if they were to spread to densely populated urban areas. Natural catastrophe events occurring outside of Canada could also have an effect on the results of Fairfax and Intact in H2 2025 because they are more globally diversified”, Adesanya adds.
Combined ratios
All four insurers reported combined ratios under 95 per cent and solid revenue growth for Q2 2025. For the second year in a row, Trisura posted the best 12-month combined ratio among the group like it did in 2024.
"However, we note that auto insurance premium rates are provincially regulated, which could affect the pace of future automobile insurance rate increases – a major part of written premiums for Definity and Intact".
Definity’s combined ratio deteriorated in the first half of 2025 compared to the same period in 2024, due to its exposure to multiple weather-related large losses. Fairfax, with a more diversified portfolio, also saw a higher combined ratio due to wildfire losses in California in January 2025.
Definity, however, saw stronger premium growth in its commercial lines business, driven by strong premium retention, princing actions, and a focus on small to medium-size businesses, which face less competition. Intact, by contrast, experienced some pressure from competitors in the large commercial accounts segment.
Wildfires
Morningstar DBRS warns that insurers are likely to face mounting challenges in the second half of the year, as wildfires continue to threaten communities across Western and Atlantic Canada.
According to data from the Canadian Interagency Forest Fire Centre, as of September 1, 2025, 651 wildfires were still burning. Since the start of the year, Canada has experienced 5,033 fires, with over 8.3 million hectares burned. Just five days earlier, on August 28, the agency reported 570 active fires and a total burned area of 7.9 million hectares, underscoring the rapid deterioration of the situation.
Analysts point out that Fairfax and Intact may be more exposed to these risks due to their globally diversified portfolios.
Morningstar DBRS also reviewed investment income across the four insurers. In the high-interest-rate environment that began in 2023, Canadian P&C insurers benefited by replacing maturing investments into higher-yielding fixed income securities. Although interest rates have declined since then, all four companies reported positive interest and dividend income for Q2 2025.
As in 2024, Fairfax stood out for its strong investment performance. The company owns several insurers worldwide, including its largest Canadian operation, Northbridge Financial Corporation.
Outlook and credit ratings
The agency maintained the credit ratings for three of the four insurers through the second half of 2024. Outlooks for Intact and Fairfax remain stable, while Trisura’s outlook was upgraded from stable to positive.
“This trend change reflects Trisura’s notable growth and strong financial performance in recent years, underpinned by the expansion of its product offerings in the Canadian and U.S. markets,” the agency writes.
Definity’s credit rating was affirmed in the first half of 2025, with its outlook also revised from stable to positive. “The trend change recognizes Definity’s steady organic premium growth, consistent underwriting, and improving organic profitability, as well as its improved risk profile, reflecting an increase in investments in highly rated fixed-income assets and a reduction in exposure to equities,” Morningstar DBRS concludes.
