A.M. Best Special Report: The Song Remains the Same, With Only a Few Sour Notes

Business Wire, Sept 10, 2007

OLDWICK, N.J. -- A strong economy, buoyant equity markets and scant credit woes add up to a reassuring stability for Canada's life insurance market. Major life insurers enjoy solid balance sheets and, at times, double-digit growth in earnings. An ongoing focus on enterprise risk management reinforces these trends.

* The "big three" life insurers - Sun Life Financial, ManuLife Financial and the Great-West Lifeco group--generated approximately two-thirds of the industry's 2006 net premiums written.

* Canadian life insurers recorded 7% growth in premium income in 2006 over 2005 and about 16% growth over the past five years.

* Flexible premium universal life, traditional whole life and term life (excluding term to 100) and group insurance premium drove growth.

* Opportunities may arise in health insurance as Canada faces potential shortcomings in its public health system, with a potential role for U.S. type private policies with copayments.

* The dominance of the big three life companies poses a challenge to smaller players that lack scale and broad distribution, but regulatory flexibility helps them to bring needed products quickly to niche markets.

* Global operations are increasingly important to the three largest Canadian life insurers, with greater portions of revenue and earnings generated by business produced outside of Canada.

* Canada's robust investment environment has spurred interest in mutual fund and segregated funds products as retirement vehicles.

* All rated Canadian life insurers currently have "Secure" ratings; A.M. Best expects them to maintain strong capitalization and solid earnings.

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Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.