2016 Annual report

Mr. Stéphane Rochon's Report

Message from the President and Chief Executive Officer

Deep roots and a passion for innovation

This year was marked by numerous business developments and technological innovation accomplishments.

Stéphane Rochon

Humania Assurance continued to challenge conventional approaches with a successful shift toward web-based services.

With its innovative strategic plan for 2016, Humania Assurance once again stood out as an industry pioneer. True to its mission and values, the company continued to shake up the status quo with a successful shift toward web-based services. Several years ago, the company launched its Insurance Without Medical Exam (IWME), tapping into a market segment all too often ignored and giving people the option to purchase a life, disability or critical illness insurance policy online and with the help of a financial security advisor. Committed to continuously innovating and improving its offering, this year, Humania Assurance launched HuGO, which transformed traditional means of policy underwriting. What once used to take several weeks can now be accomplished in a matter of minutes.

The company demonstrates its commitment to the advisor network.

With the launch of the Aurrea Signature firm in fall 2016, the company made a clear statement about its commitment to, support for and confidence in the independent advisor network. Aurrea Signature works alongside partner firms to help them continue to grow while maintaining their independence.

Business Development

Individual Insurance

The individual insurance sector continued to grow this year along with the number of online transactions. More than 88% of life applications received in 2016 were submitted via our online platforms. Overall, 40% of our sales are currently made online with the help of independent financial security advisors.

The company continues to make advancements outside of Quebec. More than 480 new financial security advisors in these regions signed distribution contracts with us this year. More than 43% of the company’s individual insurance sales were made outside of Quebec.

Of notes are, the company’s commitment and contribution to its business community. In 2016, more than 230 training sessions were offered to the distribution network across Canada, both online and in the classroom.

Online products such as HuGO and IWME showed strong growth, particularly outside of Quebec.

Group Insurance

In 2016, group insurance sector results were generally satisfactory, despite a highly competitive environment and the goals set to remain profitable. We decided to focus on groups with higher return potential in the coming years. Consequently, the portfolio renewal rate was lower than projected.

Humania Assurance’s current goal is to continue making progress while maintaining portfolio profitability rather than counting on aggressive sales growth. In 2016, in force life, long-term disability and critical illness insurance premiums made up 48% of the portfolio. These plans tend to yield higher profit margins and provide greater stability than the more traditional health, drug and dental plans.

Our presence outside of Quebec will definitely be a contributing factor to our promising future. We have signed a number of distribution agreements across Canada to significantly increase our sales and distribution activities outside of Quebec.

Over 50% of travel insurance sales throughout the country are made outside of Quebec market.

Travel Insurance

Travel insurance sales in 2016 were stable compared to last year. More than 50% of sales throughout Canada were made outside of Quebec market. This is evidence that our partner Tour+Med was successful in its efforts in 2016 to secure its position as a leading travel insurance provider in Canada. A hallmark of our 2016 activities was our concentration on client experience for financial security advisors and insureds alike. Similarly, we focused on developing our products and the underwriting process. These factors come with strong added value and give us an edge with our clients.


The company constantly strives to optimize its processes, increase efficiency and cut costs. To do this, we have stayed the course in our efforts to enhance our reinsurance management and automation processes.

Additionally, this year we became members of Canadian Life Insurance EDI Standards (CLIEDIS), thereby standardizing our electronic communication channels for some of our products with various business partners.

Human Resources

Our employees are the key to our success and their well-being remains of utmost importance to the company. The results of our employees satisfaction survey this year were, once again, very positive. The survey revealed that our employees’ level of engagement remains high and is a gauge of their sustained involvement and will to contribute to the company’s growth.

Financial Analysis


In 2016, the company’s gross revenues grew to $157.2 million, up 3% from 2015. This includes premium, distribution and investment revenues, but not revenues generated by the change in fair value of certain investments.

Earnings before taxes grew 25% over the last year.

The company posted earnings before taxes of $6.3 million this year, up 25% from 2015. After taxes, the company posted net earnings of $4.6 million.

In 2016, the company saw a 6.7% return on equity. With current interest rates at an historical low and our current strategy to invest in technological innovation and our Canada-wide distribution network, we are satisfied with these results.


Gross revenues for premiums have been steadily climbing for the past 10 years, reaching $133.6 million in 2016, a 2% increase over 2015. This year’s modest growth can largely be attributed to the company’s decision not to renew group insurance agreements with certain groups who were not meeting its profitability standards. Net revenues rose to $128.3 million in 2016, up 3% from 2015.

With the economic environment pushing long-term bond rates to historical lows, our preferred share, infrastructure and real estate diversification strategy put into place in recent years served us well in 2016. This enabled us to grow returns and improve our matching, all in a bond market unfavourable to long-term investments.

Growth in gross revenue

Graphic - Growth in gross revenue

(excluding the market value change of investments tied to actuarial liabilities)

Variation in assets

Graphic - Variation in assets


The company’s expenses totalled $121.9 million this year. Benefits paid amounted to $64 million, down 3% from 2015. This decrease can be primarily attributed to a lower-than-expected claims ratio for individual insurance.

The company’s general expenses this year totalled $35.1 million, an increase over 2015 primarily due to factors related to the consolidation of our subsidiaries. By excluding this factor, the increase in our general expenses matches our initial forecast.

A significant portion of the company’s investments in 2016 was for developing an innovative platform on which to market our HuGO product. These major investments in technological innovation are part of the company’s strategic vision to generate growth in the coming years.

Balance Sheet

The company’s assets as at December 31, 2016, totalled $535 million, up $21 million from last year. Our liabilities totalled $460 million, 88% of which were derived from actuarial liabilities.

The company’s equity increased by 7% and totalled $74.5 millions as at December 31, 2016.

Investment distribution

Graphic - Investment distribution



To preserve our technological advantage, we will focus on making a series of improvements to HuGO in the coming years. This plan involves remaining receptive to all constructive feedback we receive from our distribution network. While the artificial intelligence that powers our web-based platform is highly effective, we will continue analyzing and improving it to further streamline and accelerate the underwriting process.

We will seize the opportunities offered by debt insurance growth, such as in the mortgage market, by adding optional disability coverage to our IWME product. This addition will round out our offering geared toward the distribution network while facilitating access to the mortgage insurance market, which generates little interest among current insurers.

Pan-Canadian Market

Without losing sight of our position in Quebec, a Canada-wide vision of the market remains at the core of our growth strategy. We are building on our recent accomplishments to expand our offering to all Canadian provinces. In the coming years, we aim to maximize our strategy through targeted marketing initiatives and optimized product marketing. These measures will expand our distribution network and presence and raise our profile throughout the country.

We now enjoy greater access than ever to the outside of Quebec market, thanks to the key assets we have leveraged in recent years: our human capital, technological development and ability to adapt. These three factors provide a framework for our expansion outside of Quebec.

Capital Adequacy Requirements for Insurance of Persons

Starting January 2018, all health and life insurance providers must be compliant with the new Capital Adequacy Requirements for Life and Health Insurance (CARLI). We have been analyzing these new requirements for the past few months to determine what impact they will have. In 2017, the company will work diligently to prepare for new challenges and adapt to the new regulatory framework. These changes have substantial implications for us and we will make every effort to be ready when they come into force.

A high level of employee engagement.


During my first few months in this position, I had the honour of meeting all of Humania Assurance’s employees. I would especially like to thank them for their support and open-mindedness. It is exciting for me and for the entire management team to see just how committed our employees are. We could not successfully carry out our mission without their dedication and participation. Innovation, teamwork, empathy, skill and integrity are all common values upheld by our employees every day.

I am incredibly proud to be a part of this great team that creates change through innovation. This is a team that wants to challenge the industry’s status quo by placing the needs of our members and all Canadians at the forefront of our insurance strategies.

I would also like to mention the commitment and contribution Mr. Richard Gagnon has made to Humania Assurance’s prosperity. His remarkable work as President and CEO deserves recognition.

Lastly, I would like to thank the Board of Directors and the management team for their support and extraordinary commitment.

We make a great team. Let us be the agents of our success.