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Mid-sized insurers gain market share

By Alain Thériault | October 18 2007 04:00PM

The Canadian life insurance market is known for being controlled by a select few players. Their grip, strengthened year after year through mergers, finally began to loosen last year as mid-sized players gained some ground.

At yearend 2006, the wave of concentration in the Canadian life insurance market began to recede a little. Having reached 87.1% in 2005 following several years of growth, the market share of the ten largest lifecos in the Canadian market dipped to 86.3% in 2006.

This decrease may seem slight, but the top ten’s share has not been this low since 2003.

A determining factor in the reversal: four players’ in the top ten lost market share, including leader Great-West Group, whose market share fell from 26.5% to 24.5% between 2005 and 2006, giving the insurer the largest setback in its class. As the premiums of this mega insurer slipped from $9.646 billion in 2005 to $9.240 billion in 2006, the ripple affect was inescapable.Although more modest, the shrinkage in the market shares of Manulife Financial and Standard Life Canada added to the trend (see table of top ten life insurers in Canada).

Meanwhile, several mid-sized and smaller players increased their Canadian market share in 2006.

These include intermediate players AIG Life of Canada, Co-operators Life, La Capitale and Equitable Life.

Among the smallest insurers, Assumption Life stood out by more than doubling its market share in Canada, from 0.2% to 0.5% between 2005 and 2006.

Primerica Life Canada, AXA Assurances, Unity Life, Assurant Solutions (American Bankers) and State Farm also bolstered their Canadian market share, albeit less spectacularly.

Shares are relatively stable in Canada, a market considered mature by life insurance observers in Canada and abroad. Premiums grew vigorously in 2006.

Of the top ten, Industrial Alliance posted the strongest growth, growing its premiums from $2.06 billion to $2.53 billion between 2005 and 2006, for growth of 23.0%. Empire Life was also supercharged: its premiums soared from $585.1 million to $650.2 million between 2005 and 2006, for growth of 11%.

SSQ Life, Sun Life Financial, RBC Insurance and Desjardins Financial Security also prospered, with premium growth of 9.4%, 7.8%, 7.2% and 6.2% respectively, between 2005 and 2006.

Of all the insurers in the industry, the undisputed growth champion was Assumption Life. Its premiums ballooned from $80.5 million to $182.5 million between 2005 and 2006, equal to staggering growth of 126.6%.

AXA Assurances and Assurant Solutions also stood out. AXA’s premiums increased from $91.6 million to $123.1 million between 2005 and 2006, for growth of 34.5%. Assurant, known for its credit insurance subsidiaries, propelled its premiums from $222.4 million to $291.9 million between 2005 and 2006, equal to growth of 31.3%.

Other players that thrived between 2005 and 2006 include Co-operators Life, Unity Life, AIG Life and State Farm, with premium growth of 15.9%, 13.1%, 10.2% and 10.0% respectively.

Setbacks

Some players in the top ten had a less exciting year. At Great-West Group, premiums shrank by 4.2%. The group was hobbled by London Life, whose premiums decreased by over 30.2% ($2.924 billion in 2005 versus $2.040 billion in 2006). In contrast, Canada Life and Great-West Life posted premium growth of 12.8% and 3.2% between 2005 and 2006.

Standard Life sustained the sharpest loss in premiums, at 13.7%. Between 2005 and 2006, premiums plunged from $1.81 billion to $1.56 billion.

Very few small players saw their Canadian premiums slip between 2005 and 2006. Premiums at Blue Cross were down 5.0% and UL Mutual reported a 3.9% dip during this period.

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