All figures as of August 2026. I own Intact Financial. This is analysis, not personalized advice. This article was created with the transcript of the video below with the assistance of AI.
Of all the tier rankings I’ve done, the banks, the pipelines, the utilities, this was the hardest one. Canadian insurance stocks are quietly some of the best compounders on the TSX, and the gap between the best and worst of them is much smaller than in other sectors.
This ranking is a bit unique. Six companies, but two very different businesses: four life insurers (Manulife, Sun Life, Great-West Lifeco, iA Financial) and two property and casualty insurers (Intact, Definity). Comparing a life insurer to a home-and-auto insurer head to head would punish good companies for playing a different sport. So this time it’s two per tier: one life insurer and one P&C insurer.
Insurance 101: how these companies actually make money
Skip this at your peril, because the rankings only make sense once you understand the machine.
Life versus P&C. Life insurers sell decades-long policies and book the profit slowly over the life of the contract. P&C insurers (home, auto, business) sell one-year policies and profit when premiums beat claims. Same sector, completely different economics.
A P&C insurer is a casino in reverse. The insurer collects your premiums betting you won’t crash. You pay them betting you might. Nobody wants the accident; you’re just making sure it doesn’t cost you everything. Run the table well, and the house wins slowly, every single year.
The three profit engines. Insurers make money three ways: underwriting profit (premiums minus claims), investment income on the float (the pile of premiums they hold before paying claims), and fees from running funds and retirement plans. The best insurers stack all three.
The numbers that matter:
- Combined ratio (P&C): claims plus expenses divided by premiums. Collect $100, pay out $92, that’s a 92% ratio. Under 100% means underwriting profit; low 90s is premier.
- Return on equity: the single most important profitability number for an insurer. A great one compounds shareholder capital at high-teens rates, year after year.
- CSM (life only): when a life insurer sells a 25-year policy, it’s not allowed to book the profit up front. The profit goes into a jar and gets released a spoonful at a time, for decades. A one-year car policy has no jar.
- One warning: don’t compare life P/Es to P&C P/Es. P&C names structurally trade at higher multiples. Compare within lanes, or the numbers will mislead you.
Now, the board.
C tier: iA Financial (IAG): the quiet compounder
Here’s the plot twist nobody expects: the smallest, least-known life insurer on this list has the best long-term returns of the group. iA Financial has quietly beaten Manulife, Sun Life and Great-West over the long haul.
The business is the most Canadian of the bunch, and it has a clever niche: iA sells extended warranties through car dealerships, and on about 75% of those policies the dealer keeps the risk. iA just collects a high-margin fee for running the machine. Fees without the insurance risk.
So why C tier? Heavy Canadian concentration, a soft year for the dealer channel as auto sales slump, and no real edge over Manulife or Great-West in the segments that matter most. A high-quality company, no doubt, and if market activity stays hot the wealth side keeps working. But in a two-per-tier format against this field, C is where it lands.
B tier: Great-West Lifeco (GWO) and Definity (DFY)
Great-West Lifeco was the one I was genuinely torn on. If this were strictly a business-quality ranking, it’s S tier all day. The crown jewel is Empower, one of America’s largest retirement platforms with over $2 trillion in assets, growing 22% a year on high-margin fees. It’s a fee-collecting machine wearing an insurer’s coat.
Two things hold it back. First, that fee-based business is cyclical: markets have been hot for five years, and in a bear market the inflows and the multiple both compress, exactly when the main growth engine stalls. Second, the fine print: 66% of Great-West is owned by Power Corporation. Majority control by another public company is part of why it trades the way it does.
Definity is the higher-risk, higher-reward pick of the whole list. The big swing: $3.3 billion for Travelers Canada, closed January 2026, boosting premiums about 35% and guiding ROE from 12.5% to the mid-teens. If you want the insurer with the highest growth ceiling on this board, this is it.
But it’s priced for perfection, and here’s the whole argument in one line: Intact is a better company at a cheaper relative price. A stock that trades at a higher valuation, grows at a similar pace, and is less profitable than its direct rival can’t rank above it. B tier, with real upside if the integration goes well.
A tier: Manulife (MFC): the Asia engine
Canada’s biggest insurer is increasingly an Asian business: Asia is the fastest-growing segment and the biggest slice of profits, with sales up 21% at a record pace. The thesis writes itself: Manulife is selling life and health insurance to the fastest-growing middle class on Earth, most of whom are underinsured today.
The scar tissue is real, though. In the 1990s, Manulife’s US arm (John Hancock) priced long-term care policies and guessed wrong: people lived longer, and stayed in care longer, than the actuaries assumed. They’re now paying other insurers to take those policies off their hands. The drag shrinks every year, but it’s not gone, and it’s why I’d argue the total policy book isn’t as high quality as the best on this list.
And after a monster run, up roughly 50% in a year, a lot of the good news is priced in. Top-quality company, absolutely zero question, but between the book quality and the run-up, A tier rather than S.
S tier: Sun Life (SLF) and Intact (IFC)
Sun Life is, in my view, the best life insurance company in the country. It’s the most balanced of the big three: the first life insurer on this list where Canada is the biggest profit engine, alongside a strong US benefits arm and a growing Asia business. The US dental business has been the recent headache and it hasn’t had the best returns of the group lately, but on the quality of the book, the balance of the profit mix, and the consistency, it earns the life-insurance crown.
Intact Financial is the one I own, and I believe it’s the best property and casualty insurer in North America, hands down. The scale is absurd: the largest home, auto and business insurer in Canada, roughly 30% of the market, about 2.5 times larger than the next four Canadian P&C insurers combined. Scale is the pricing power.
The machine works like this: run a premier combined ratio (94.9 last quarter), invest the float, and use the profits to keep buying smaller insurers. It has raised its dividend for 22 straight years, every year since the 2004 IPO, at a double-digit growth rate. Very few companies on Earth manage that. And right now it’s sitting on roughly $6 billion of deployable capital with leverage paid down; when Intact’s leverage drops, a big deal usually follows.
Risks? Catastrophe losses are the structural one: more wildfires, more floods, and P&C earnings are lumpy by nature. A 30 to 40% earnings drop in a quarter can be pure catastrophe timing, not decay. Judge these companies over years, not quarters.
The bottom line
| Tier | Life insurer | P&C insurer |
|---|---|---|
| S | Sun Life (SLF) | Intact Financial (IFC) |
| A | Manulife (MFC) | |
| B | Great-West Lifeco (GWO) | Definity (DFY) |
| C | iA Financial (IAG) |
A note on the lower tiers, because I get this comment a lot: a company landing low on this board is not a bad company. Think of it as a reservation inside the industry. Out of six names I’d happily discuss owning, someone has to be sixth.
The questions I get most:
Life or P&C? Personally, I’d rather own the P&C insurers. One-year policies reprice fast when conditions change, the profit shows up now instead of dripping out of a jar for decades, and the best operators compound relentlessly. That said, I’d have no objection to anyone buying any of these six.
Why is Intact worth a premium? Scale, pricing power, a 22-year dividend growth streak, and a management team with a genius-level acquisition track record. You pay up for the best house on the street.
What’s the biggest risk to the sector? For P&C: catastrophe losses and the possibility of governments capping premiums while claims climb. For life: a hard equity bear market, which hits the fee businesses and the CSM assumptions at the same time.
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