A new market segment report from AM Best, Canadian Life/Annuity: Steady Growth Brings Steady Results, notes that Canada’s life and annuity business performed well in 2024, thanks to record high new annualized premium growth in the mortality business. “Assets under management and fee-based business have helped support revenue growth,” they add.
The ratings agency says its outlook for the industry is stable, thanks to prudent regulatory capital levels, financial flexibility that supports steady growth, favourable earnings and underwriting, diversified lines of business and a diversified geographical footprint.
Ongoing economic uncertainty
Challenges for the industry include ongoing uncertainty about domestic and global economies, the potential for further interest rate cuts and concerns about insurers’ exposure to alternative and private credit investments.
“Total Canadian life insurance new annualized premium was at a record high of $204-billion in 2024,” an increase of eight per cent when compared to 2023’s figures, they write. The number was driven mainly by whole life premiums, which grew 11 per cent, accounting for 69 per cent of the premium market share, they add. “Participating whole life products remain the highest selling and represent 90 per cent of the new premium sold.”
Group insurance in the lead
Group life insurance continued to be the leading line of business by revenue, with just over $33-billion, followed closely by individual life insurance at just over $29-billion, they add. “Total equity in 2024 for the industry grew seven per cent to $140-million, supported by net income growth.”
AM Best says it believes Canadian insurers are well equipped to navigate changing conditions over the near term, while focusing on steady growth and capital preservation. “Canadian L/A insurers remain in a solid position, with strong balance sheets marked by high levels of regulatory capital, deployable excess capital and good financial flexibility with decreasing leverage metrics. In addition, L/A insurers continue to focus on enterprise risk management programs to focus on emerging risks in a changing environment,” they write.
“Regardless of potential and current challenges, AM Best believes that Canadian L/A carriers are well prepared from both a risk-adjusted capitalization and enterprise risk management perspective.”
