Canadian Property & Casualty Quarterly
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Despite a modest sequential improvement in 3Q, the Canadian P&C industry's performance remained weak in 9M18, with an annualized ROE of just 3.6%. The pace of direct premium growth continued to exceed year-ago levels (+6.9% yoy vs 2.8% yoy in 9M17), but slowed compared to the peak seen in 6M18. Meanwhile, claims growth continued at a double digit clip yoy across most business lines, except auto and marine. Even in the absence of major catastrophes, cat losses neared CAD 1.9 bn ytd due to a number of severe weather events. Underwriting results were in the red, with the combined ratio at 101.5%. Furthermore, the net investment yield was down 80 bps yoy to 2.6%, on account of significantly fewer realized capital gains. In all, net income after tax declined to CAD 1.1 billion, from CAD 1.9 billion a year ago. Available capital was at 255% of required minimum capital, the lowest reading under the new MCT calculation introduced in 2015.