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Canadian Life Insurance Industry: An Analysis
RocSearch Ltd, Aug 2006, Pages: 33
1. Introduction
1.1 Industry Definition
1.2 Industry Segments
The Canadian Life Insurance Industry includes the following three sectors:
Direct individual life, health and medical insurance
Direct general property and casualty insurance
Direct private automobile insurance
2. Market Dynamics
2.1 Market Overview
The consolidation in the Canadian life insurance market, due to the demutualization of life insurers in 1999, has led to a near-oligopoly with the top three players holding 90% of the market share (in terms of assets) in 2005.
2.2 Trend
Rising Life Insurance Claims
Low New Application Activity
2.3 Key Drivers
Higher Life Expectancy
Increase in Distribution Channels
2.4 Major Issues and Implications
Shortage of Insurance Distributors
Declining Savings Rate
3. PEST Analysis
3.1. Political Factors
Bancassurance Ban Hurting Consumer Interest
Amended Bank Act Facilitating Strategic Alliances
OSFI Regulates Capital Adequacy
Proposal to Increase Transparency in Disclosing Incomes
3.2. Economic Factors
Growing Economy Increases Insurance Investments
3.3. Social Factors
Lower-Income Citizens Under Served
Increasing Dependency Ratio Driving Premiums
3.4. Technological Factors
Improving Web Solutions to Attract Brokers
CSIO-driven Automation Standards for Broker Distribution Channel
4. Michael Porters Five Forces Analysis
4.1 Buyers’/Customers’ Power
Consolidation among Insurance Brokers
Restrictions on Bancassurance Reduces Information Availability
4.2 Suppliers Power
Reinsurers Losing Business
Actuaries Being Poached by Consulting Firms
4.3 Rivalry among Competitors
Few Players Ruling the Market
Mergers Changing the Face of Competition
4.4 Threat of New Entrants
Regulations Might Allow Entry of Banks
4.5 Threat of Substitutes
Products such as Annuities and Retirement Plans
5. Competitive Landscape
The section provides detailed profiles on Manulife Financial Corp, Sun Life Financial Inc (SLF) and Great-West Lifeco Inc
5.1 Competitive Positioning
Comparison of the companies has been done on the basis of key business segments, product range, geographical presence and distribution channels
5.2 Competition Strategies
It lists the strategies followed by Manulife Financial, SLF and Great-West Lifeco
5.3 Financial Analysis
5.3.1 Income Statement Analysis
An income statement analysis is based on revenues, operating margins, net premiums earned and net income
5.3.2 Balance sheet Analysis
Comparative analysis of liquidity ratios and performance ratios of the three competing companies
5.4Stock Performance
Comparison of stock market performance of Manulife Financial, SLF, Great-West Lifeco and S&P TSX Financials Index
6. Industry Outlook
The proposal of opening up of insurance distribution services through banks is expected to increase the competition in the life insurance business and provide a boost to merger and acquisition activities between banks and insurers
Appendix I: Conferences and Annual Meetings
86th Annual IBAO Conference
Insurance Brokers Association of Ontario
Insurance Claims Technology Forum: Transforming Claims Processing
KPMGs 15th Annual Insurance Issues Conference
'Risky Business'
Atlantic Conference of Insurance Brokers
Appendix II: Industry Associations and Organizations
The Canadian Life and Health Insurance Association (CLHIA)
The Insurance Brokers Association of Ontario (IBAO)
Canadian Insurance Accountants Association
Tables
Tab 4.1 Acquisitions (1996-2004)
Tab 5.1 Top Ten Life insurance Companies by Revenue (2005)
Tab 5.2 Top Ten Life Insurance Companies by Total Assets (2005)
Tab 5.3 Competitive Positioning
Tab 5.5 QBE Objectives
Figures
Fig 2.1 Direct Life Premiums Written (2004-2005)
Fig 2.2 Life Insurance benefit Payments (2001-2005)
Fig 2.3 Canadian Life Insurance Application Activity (Jun2005-Jun2006)
Fig 2.4 Canadian Life Expectancy (2000-2005)
Fig 2.5 Households Savings rate (2000-2005)
Fig 4.1 Market Share of Top Three Firms (2005)
Fig 5.1 Revenue (2003-2005)
Fig 5.2 Operating Margin (2003-2005)
Fig 5.3 Net Premiums Earned (2004-2005)
Fig 5.4 Net income (2004-2005)
Fig 5.5 Return on Assets (2004-2005)
Fig 5.6 Return on Capital (2004-2005)
Fig 5.7 Return on Common Equity (2004-2005)
Fig 5.8 Stock Performance (Aug2005-Jul2006)
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