www.ecao.org 18 SURETY RESULTS Canadian Surety Results 2018 (1) Figures sourced from the Office of the Superintendent of Financial Institutions. (2) Adjusted to exclude premium of related U.S. domiciled company. Direct Premiums Written (1) Direct Loss Ratio (1) 2017 ~$620 million CAD ~9% 2018 ~$630 million CAD ~107% Surety Company Direct Premiums Written (1) (C$’000) Direct Loss Ratio (1) Intact Insurance Company $112,139 13.30% Aviva Insurance Company of Canada $103,475 21.87% The Guarantee Co. of North America ~$87,000 (2) -1.79% Travelers Insurance Company of Canada $85,155 89.14% Trisura Guarantee Insurance Company $49,783 7.16% Zurich Insurance Company Ltd $34,905 1350.00% Liberty Mutual Insurance Company $29,821 20.95% Chubb Insurance Company of Canada $28,215 -22.67% Western Surety Company $27,776 10.52% Echelon Insurance $23,218 53.94% Total Industry Results Individual Company Results Figures reflect total premiums written inside and outside of Canada for all domestic sureties and Canadian branches of foreign firms. CANADIAN SURETY RESULTS 2 CANADIAN SURET DETERIORATING While individual co varied in 2018, the industry in Canada worst year ever in 2 significant Carillion Bondfield insolvenc large part of the ind losses, evidenced p Travelers’ and Zuric That said, even afte those, the industry’ increased by over 5 prior year. DRIVERS OF CLAI Claims experience w driven by the 2 larg failures, where a my were at play, includ inadequate capitaliz financing complexiti inadequate pricing, contractual risk miti both cases, an abun appears to have hu contractors, suppor argument that “con starve to death, the gluttony”. WHAT DOES THI YOUR BOND FAC The loss trend seem continuing, with an frequency, and a nu losses unfolding in result, the outlook industry is the mos been in 20 years. W will this have on su underwriting appeti general ? How can your company agai of a possibly harde market ? Reach out Questions about how this will affect your business? Contact Petrela Winter and Associates to assess your exposure and mitigate your risk (1) Figures sourced from the Office of the Superintendent of Financial Institutions. (2) Adjusted to exclude premium of related U.S. domiciled company. Direct Premiums Written (1) Direct Loss Ratio (1) 2017 ~$620 million CAD ~9% 2018 ~$630 million CAD ~107% Surety Company Direct Premiums Written (1) (C$’000) Direct Loss Ratio (1) Intact Insurance Company $112,139 13.30% Aviva Insurance Company of Canada $103,475 21.87% The Guarantee Co. of North America ~$87,000 (2) -1.79% Travelers Insurance Company of Canada $85,155 89.14% Trisura Guarantee Insurance Company $49,783 7.16% Zurich Insurance Company Ltd $34,905 1350.00% Liberty Mutual Insurance Company $29,821 20.95% Chubb Insurance Company of Canada $28,215 -22.67% Western Surety Company $27,776 10.52% Echelon Insurance $23,218 53.94% Total Industry Results Individual Company Results Figures reflect total premiums written inside and outside of Canada for all domestic sureties and Canadian branches of foreign firms. CANADIAN SURETY RESULTS 2018 Navacord and Navacord logo are Trademarks of Nav CANADIAN SURETY DETERIORATING IN 2018 While individual company results varied in 2018, the overall industry in Canada suffered its worst year ever in 2018. The significant Carillion and Bondfield insolvencies made up a large part of the industry’s 2018 losses, evidenced principally in Travelers’ and Zurich’s results. That said, even after removing those, the industry’s loss ratio increased by over 50% from the prior year. DRIVERS OF CLAIMS Claims experience was largely driven by the 2 large contractor failures, where a myriad of issues were at play, including inadequate capitalization, financing complexities (AFP), inadequate pricing, and poor contractual risk mitigation. In both cases, an abundant backlog appears to have hurt the contractors, supporting the argument that “contractors don’t starve to death, they die from gluttony”. WHAT DOES THIS MEAN FO YOUR BOND FACILITY? The loss trend seems to be continuing, with an increase in frequency, and a number of new losses unfolding in 2019. As a result, the outlook for the industry is the most volatile it's been in 20 years. What impact will this have on surety underwriting appetite in general ? How can you insulate your company against the effect of a possibly hardening surety market ? Reach out to the pros at Petrela Winter-that’s what we are here for. Local Touch. National Strength.TM Questions about how this will affect your business? Contact Petrela Winter and Associates to assess your exposure and mitigate your risk 416.488.2522 www.petrela.com The modernization provisions of Ontario’s new Construction Act (the “Act”) took effect on July 1, 2018. Included in this extensive over- haul of the province’s existing construction lien legislation were amendments to defin- itions under the Act, amendments in relation to lien, holdback, trust rules and procedures. The modernization provisions also included new requirements in relation to mandatory surety bonds on public projects. 2018 proved the worst year on record in Canada for the bonding business as a whole, with combined losses from construction com- pany defaults and insolvencies approaching $700 million. Surety results for 2018 posted below and provided by affiliate partner and surety bond specialists Petrela, Winter & Asso- ciates, provide some insight as to the losses and current trends in the industry.