Executive summary on Canadian insurers that maintain strong solvency ratios

Many of Canada’s large life and property-casualty (P&C) insurers report capital ratios comfortably above regulatory minimums — for example, Sun Life and Manulife report LICAT ratios well above OSFI’s supervisory target, Great-West/Canada Life sits comfortably above minimums, and major P&C carriers such as Co-operators and Intact report strong MCT/regulated capital positions. But “strong” depends on insurer type (life vs P&C), the capital test used (LICAT for life; MCT for P&C), business mix (guarantee/annuity exposure, reinsurance, international operations), and recent market movements. Below I explain how solvency is measured in Canada, show the latest publicly reported figures for major carriers, point out what to watch for, and give a practical checklist for interpreting those numbers. All figures and regulatory context below are cited to the insurer reports, OSFI guidance and rating-agency commentary listed after each section.

1. Why solvency ratios matter — and which ratios Canada uses

Insurers promise to pay future claims and benefits. Regulators therefore require insurers to hold capital buffers so policyholders can be protected through stresses (market shocks, underwriting losses, catastrophe events, longevity risk, etc.). Canada uses different risk-based capital frameworks depending on the type of insurer:

• Life insurers (including most large “life & health” companies): the Life Insurance Capital Adequacy Test (LICAT). LICAT compares an insurer’s qualifying available capital to the regulatory required capital under a risk-sensitive formula. OSFI issues LICAT guidance; the framework focuses on policyholder protection and wind-up risks and produces a Total Ratio (Total Available Capital / Total Required Capital). OSFI publishes supervisory thresholds and periodically updates the LICAT rules.

• Property & Casualty insurers (P&C): the Minimum Capital Test (MCT). The MCT calculates capital available divided by minimum capital required for P&C risks (reserve, premium, catastrophe, operational, etc.). Like LICAT, it is a ratio expressed as a percentage. OSFI’s MCT guideline sets the calculation and supervisory expectations.

Short practical rules:

• A LICAT or MCT of 100% is typically the regulator’s supervisory target (but OSFI also communicates a supervisory minimum — often 90% — below which regulatory action is likely). Insurers generally operate well above 100% to provide a cushion and to support ratings and capital returns.

2. The big picture in 2024–2025 (regulatory changes and why numbers moved)

Two contextual points that affect how you read reported capital ratios:

1. LICAT 2025 and MCT updates. OSFI updated LICAT guidance (the 2025 LICAT guideline effective Jan 1, 2025) and has continued refinements to the MCT. Changes can affect measured required capital and thus an insurer’s published ratio even if its economic risk hasn’t changed. Analysts therefore compare trends and read management discussion for one-off adjustments.

2. Market and product mix effects. Interest-rate moves, spread widening/tightening, equity markets, and demand for guaranteed products affect life insurer capital (for example, low rates increase the capital required for certain guarantees). P&C insurers’ MCTs are also influenced by catastrophe events and reinsurance costs. Rating agencies and management commentary give essential colour on these drivers.

3. Which life insurers currently report the strongest LICAT ratios?

Below are the major life insurance groups in Canada with recent reported LICAT numbers (figures are latest publicly disclosed quarters/annuals through 2025). Note: LICAT ratios are not directly comparable to other jurisdictions’ measures (e.g., Solvency II) but are the relevant regulatory yardstick in Canada.

Sun Life Financial

• Reported LICAT: ~154% (Sun Life Financial Inc., LICAT reported at period-end Q3-2025: 154% for the holding company; Sun Life Assurance ~138%).
• Why it matters: Sun Life’s LICAT in 2024–2025 has been consistently high and Sun Life highlights strong capital generation and liquidity. A LICAT around 150% is considered a strong buffer relative to OSFI supervisory levels.

Manulife Financial

• Reported LICAT: ~137–138% (Manulife disclosed a LICAT of 138% in Q3-2025 and around 137% in earlier quarters).
• Why it matters: Manulife reports stable LICAT in the high-130s with financial leverage metrics disclosed alongside (financial leverage in the low-20s percent). Rating agencies have described Manulife’s capitalization as robust in 2025.

Great-West Lifeco / Canada Life

• Reported LICAT: ~130% (Canada Life consolidated LICAT at March 31, 2025 was reported at ~130% in Lifeco commentary; other filings cite mid-130s at various points in 2024–2025).
• Why it matters: Great-West Lifeco/Canada Life operate comfortably above OSFI supervisory targets; their published commentary notes excess liquidity at holding company level which supports the group.

Other life players (high-level)

• iA Financial Group (Industrial Alliance): iA and other domestic life carriers generally publish LICAT or comparable metrics — most large life insurers in Canada reported LICAT ratios above supervisory targets in 2024–2025, though exact levels vary by quarter and by entity. Check each company’s quarterly MD&A for the precise figure and commentary on drivers. OSFI guidance and the industry’s reporting templates help with comparability.

Interpretation: LICAT ratios in the 130–155% range for Canada’s largest life insurers during 2024–2025 indicate a comfortable capital buffer above OSFI’s supervisory levels (100% target; supervisory minimum ~90%). However, life insurers with significant guaranteed product books (segregated funds, annuities) should be watched more closely because guarantee exposures can move required capital materially.

4. Which property & casualty (P&C) insurers show strong capital positions?

P&C insurers report MCT levels (or other local capital metrics). Many Canadian P&C carriers maintain MCTs well in excess of regulatory minimums.

Co-operators (Co-operators General)

• Reported MCT: ~242% (Co-operators reported a Minimum Capital Test for Co-operators General of 242% as at September 30, 2025; earlier reporting showed 216%/228% in prior periods). This places the Co-operators well above regulatory minimums and their own internal targets.

Intact Financial Corporation

• Capital commentary: Intact consistently describes a strong regulatory capital position and discloses adjusted leverage and capital-management metrics in its quarterly reporting; Intact’s holding-company and operating-subsidiary capital cushions have been characterised by rating agencies as robust through 2025, and Intact reported solid operating results in 2025 with healthy combined ratios — indicators that support capital accumulation. Exact consolidated MCT-style percentages are discussed in Intact’s MD&A and investor materials.

Aviva Canada / Aviva plc

• Group solvency: Aviva is a UK group whose Canadian operations are a part of the group. Aviva reports group Solvency II cover ratios (for the group) rather than MCT for the global group; Aviva group’s solvency metrics remained strong in 2025 and its Canadian operations are backed by a robust parent cover ratio. For Canadian operations, local capital reporting and rating commentary are useful.

Other P&C carriers

• Larger domestic P&C players (Economical, RSA Canada historically, Desjardins Insurance P&C, Travelers Canada, etc.) also reported MCTs or strong capital positions in recent filings — these vary by quarter and are sensitive to catastrophic loss experience and reinsurance costs. Desjardins Group/insurance segments published strong surplus and capital commentary in their 2025 releases.

Interpretation: MCTs north of 200%–240% (as seen at some mutual/cooperative P&C carriers) are a strong cushion and provide management flexibility; however, P&C insurers are exposed to catastrophe losses (weather, wildfire, flood) which can quickly pressure capital if losses are large relative to reinsurance protection.

5. How rating agencies and markets view Canadian insurers’ capital

Rating agencies (Fitch, DBRS Morningstar, S&P, Moody’s) look beyond headline LICAT/MCT percentages to consider:

• Trend and volatility of the ratio (is it growing or shrinking?)
• Quality of capital (availability at operating companies vs holding company)
• Leverage and holding-company debt
• Earnings and capital generation (ability to self-fund)
• Risk profile and product mix (guarantee exposures, run-off of legacy blocks)

Examples of recent agency commentary:

• Fitch described Manulife’s capitalization as strong (LICAT in the high-130s) and noted a manageable leverage profile.
• Fitch and other agencies referenced Sun Life’s high LICAT and strong capital generation in 2025 reports.

Takeaway: Agencies treat LICAT / MCT as starting points. A high ratio helps ratings, but agencies also check earnings quality, liquidity, and contingency planning.

6. Practical, insurer-by-insurer snapshot (concise)

The following snapshots are summary highlights drawn from insurers’ latest public reporting (2024–2025 quarters). Always confirm the precise figure in the insurer’s latest quarterly/annual MD&A because ratios can move quarter-to-quarter.

• Sun Life Financial Inc. — LICAT ~154% (Q3-2025 reported). Strong capital generation and one of the larger cushions among Canadian life groups.
• Manulife Financial Corporation — LICAT ~137–138% (Q3-2025). Robust capitalization with leverage disclosed around low-20s percent. Rating agencies describe it as well-capitalized.
• Great-West Lifeco / Canada Life — consolidated Canada Life LICAT ~130% (March 2025 reporting). Company commentary points to capital and liquidity at holding company that can support operating subsidiaries.
• iA Financial Group (Industrial Alliance) — publishes LICAT-style metrics (many domestic life carriers show LICATs above supervisory targets in 2024–2025); check iA’s MD&A for entity-specific numbers.
• Co-operators (Co-operators General) — MCT ~242% (reported Sept 30, 2025). A strong buffer for P&C operations.
• Intact Financial Corporation — management and agencies describe a strong capital position with solid capital generation and healthy combined ratios in 2025; specifics are given in Intact’s quarterly MD&A and investor presentations.
• Aviva (Canadian operations as part of Aviva plc) — group Solvency II ratios remain strong, supporting operations globally; check local Aviva Canada disclosures for P&C-specific capital.

7. Common caveats and deeper issues to watch

When someone says an insurer “maintains strong solvency ratios,” dig into these details — because headline ratios alone can mislead.

1. Different tests, different risks. LICAT focuses on life-insurance risks (guarantees, longevity), while MCT focuses on P&C risks (reserving, catastrophe). You cannot compare a LICAT of 140% to an MCT of 180% directly; they are measuring different exposures.
2. Holding-company vs operating-company capital. Some insurers report strong consolidated ratios but the operating subsidiary that issues policies may have a lower buffer. Also, support from a parent or holding-company liquidity (debt availability, cash) matters. Great-West Lifeco explicitly noted holding-company liquidity when discussing Canada Life’s LICAT.
3. Quality of capital items. Regulators distinguish Tier 1/available capital vs other items. Some items counted in “capital available” are subject to future restrictions or require regulatory approval to recognize — analysts test for endurance under stress.
4. Market/interest-rate sensitivity. For life insurers, rising or falling interest rates change the present value of liabilities and the market value of assets, which can materially affect LICAT. OSFI’s 2025 LICAT guideline updates and the industry’s 2025 reporting guidance reflect this.
5. One-off adjustments / model changes. Regulatory guideline changes — e.g., LICAT 2025 or MCT 2026 revisions — can change required capital formulas. Management often discloses the impact of guideline changes separately — treat such impacts as accounting/regulatory changes rather than an underlying change in economic risk.

8. How to evaluate “strong” — a checklist for investors, policyholders and advisers

When you evaluate an insurer’s solvency, run through this practical checklist:

1. Which test is reported? LICAT (life) or MCT (P&C)? Understand the framework.
2. Headline ratio and trend: Is the ratio rising, stable or falling across the last 4–8 quarters? One quarter is noise.
3. Management commentary: Do they explain drivers (investment gains, reserve movements, divestitures, reinsurance, capital actions)?
4. Quality of capital: How much is available at the operating company vs holding company? Is there any reliance on parent support?
5. Earnings & cash flow: Is the insurer generating capital internally (earnings) or relying on capital markets (debt, equity) to stay above targets?
6. Product risk: Does the insurer sell long-dated guarantees or complex annuities? These require more capital and are more vulnerable to rate shifts.
7. Reinsurance and catastrophe protections: For P&C insurers, what reinsurance and catastrophe protections are in place? How much does management retain?
8. Ratings & stress tests: What do major rating agencies say? Have there been downgrades or negative outlooks?

If the answer to most of the checklist items is positive (ratios comfortably above targets, improving trend, good earnings, high quality capital), you’re probably looking at a genuinely strong capital position.

9. Examples of how to use this data (two practical scenarios)

A. You’re a policyholder worried about safety of guarantees

• Focus on LICAT and the insurer’s commentary about segregated-fund guarantees or annuity blocks. Large LICAT buffers (130%+) are reassuring but read whether the insurer is increasing required capital due to guarantees or shrinking the guarantee books. Also check ratings. Sun Life and Manulife reported high LICATs and discuss guarantee exposure in MD&A.

B. You’re a broker choosing a P&C carrier for a commercial account

• Look at MCT, reinsurance structure, combined ratio history and catastrophe exposure. A P&C carrier with an MCT > 200% (and consistent combined ratios below ~95%) shows both reserve discipline and capital cushion — Co-operators and Intact reported strong capital and sound underwriting in 2025 commentary.

10. Final assessment — who today maintains strong solvency ratios in Canada?

Based on the most recent public filings and regulator/agency commentary through 2025:

• Sun Life Financial — strong LICAT (~154% Q3-2025) with positive capital generation.
• Manulife Financial — robust LICAT (~137–138% Q3-2025) and conservative leverage targets.
• Great-West Lifeco / Canada Life — Canada Life consolidated LICAT ~130% (March/June 2025 filings), comfortably above regulatory minimums; Lifeco discusses additional holding-company liquidity.
• Co-operators (P&C) — very strong MCT (~242% as at Sept-30-2025 reported).
• Intact (P&C) — consistent messaging of strong regulatory capital and healthy underwriting performance (strong combined ratios), per 2025 MD&A and rating commentary.

Honourable mentions / watchlist: Desjardins (group/insurance segments) and other major Canadian insurers report solid surplus/earnings and are monitored for regional exposures. Always verify the specific subsidiary entity and the quarter.

13. Conclusion — short, practical verdict on strong solvency ratios in Canada

Many major Canadian insurers do maintain strong solvency ratios as of recent 2024–2025 reporting: Sun Life and Manulife show strong LICAT cushions (mid-130s to mid-150s), Great-West/Canada Life sits solidly above supervisory levels, and major P&C carriers such as Co-operators and Intact report strong MCT/regulatory capital and healthy underwriting results. But solvency is multi-dimensional — to judge whether an insurer’s capital is “strong” for your specific need (policy safety, investment counterparty, reinsurance partner), you must consider the specific test (LICAT vs MCT), trend, capital quality, holding-company support and product mix. Always read the insurer’s most recent quarterly MD&A and the regulators’ guidance notes when making a decision.