TITLE
"An Examination of Property & Casualty Insurer Solvency in Canada," Anne E. Kleffner and Ryan B. Lee, Spring 2009, Volume 32, pp 52-77.

ABSTRACT
This paper provides both a qualitative and empirical analysis of insolvency
experience in the Canadian property and casualty insurance industry. First, we
provide a qualitative analysis of the differences between Canada and the U.S. that may
help to explain the lower incidence of insolvency experience in Canada. These include
differences in regulation and monitoring, such as the presence of a federal regulator
and higher capital requirements, and differences in the environment, such as lower
legal liability risk and less exposure to catastrophic risk. Second, we use logistic
regression methodology and variables commonly used in U.S. studies of insurer
insolvency prediction to test whether such models are able to predict insolvency for
Canadian insurers. We include variables that attempt to capture some of the important
differences between the Canadian and U.S. markets. The results suggest that only the
profitability measure, return on assets, is found to be a statistically significant predictor
of insolvency, and that result holds only one year prior to insolvency. This relationship
is consistent with many previous studies on U.S. property and casualty insurer
insolvency. [Key words: property and casualty insurance, regulation, insolvency]