Insurable Interest Canadian Insurance Blog

Like many aspects of the insurance industry, mergers-and-acquisitions activity is not at all where analysts expected coming into 2020 — thank COVID-19 for that. But M&A will continue robustly, analysts predict. In fact, it will help shape how the industry recovers from the pandemic and reinvents itself. “Most industries, including insurance, will need to reinvent themselves in order to thrive, and M&A activities are expected to have a strong influence in shaping the ‘next normal’ environment,” Deloitte said in its recent mid-year M&A report. Prior to the pandemic, Deloitte had predicted insurers would pursue M&A activity in large numbers over the next two years. “COVID-19 has forced many insurance carriers to hit pause on new M&A activities and focus on preserving capital,” the Deloitte report concluded. Advertisement Meanwhile, the property/casualty insurance price hardening in the U.S. commercial insurance sector should help carriers plot longer-term stability as the pandemic continues, Deloitte said. During the first six months of 2020, there were 249 insurance M&A transactions versus 324 in the 2019 period, a decrease of more than 20%, Deloitte reported. ‘An Optimal Time’ Those price increases create what “may be an optimal time for carriers to reevaluate their product and service portfolio...

FaithLife Financial Signs a Long-term Contract Placing Breathe Life at the Center of Its Digital Transformation Montreal, QC (Oct. 20, 2020) – Breathe Life, the enterprise SaaS platform provider for the life insurance industry, is pleased to announce that FaithLife Financial has signed a long-term deal establishing the Breathe Life platform as its core distribution platform for financial-services products. A Canadian insurance and investment organization, FaithLife Financial selected the Breathe Life enterprise distribution platform to enhance and future-proof digital distribution of its products and services. FaithLife Financial conducted a comprehensive competitive analysis of insurance technology companies, including head-to-head feature comparisons, before tapping Breathe Life as its digital distribution engine. Understanding that consumer buying habits have changed dramatically, FaithLife Financial is undertaking this digital-transformation initiative to ensure its producers have the modern, digital tools needed to effectively serve consumers today and into the future. “Ensuring and increasing our growth opportunity required a strategic review of our organizations’ distribution processes and enabling technologies,” said Glenn Hymers, President & CEO of FaithLife Financial. “We realized that we needed to empower our advisors and brokers with a modern experience, including new digital tools to more effectively and efficiently serve customers. Breathe Life emerged from...

Staff | October 20, 2020 Canada’s retirement income system scored ninth place for the second year in a row, securing a “B” rating in spite of uncertainty in the markets as a result of the coronavirus pandemic. The annual global pension index by Mercer and the CFA Institute noted the pandemic’s effects on the global pension fund markets aren’t only widespread but long term, impacting industries, interest rates, investment returns and community confidence. “In the wake of the financial pressures brought on by the pandemic, supporting financial security in retirement and providing guidance to modernize the pension landscape becomes an even greater challenge,” said Michael Thom, managing director of CFA Societies Canada, in a press release. Read: Canada’s retirement system ranked 9th in the world Indeed, the long-term ramifications of the pandemic will result in changes to the ways in which governments provide adequate and sustainable retirement systems. As the level of government debt increases in many countries, it will restrict their ability to support older populations, including in the provision of pensions, said the report. “Given the widespread effects of COVID-19, retirement planning is more important now than ever before,” Teresa Palandra, partner and wealth business leader at Mercer Canada, said the release. “Our workforce...

Staff | October 20, 2020 This Mental Health Awareness Month, the federal government unveiled a series of initiatives to support the well-being of Canadian workers. The Ministry of Labour is partnering with the Canadian Centre for Occupational Health and Safety and the Mental Health Commission of Canada to provide workers with access to detailed and credible information on mental health and wellness. The initiatives include free e-courses by the CCOHS and a resources hub hosted by the MHCC. In addition to online training courses, the CCOHS portal includes features such as podcasts on a range of mental-health topics. Read: Mindful Employer Canada launches new workplace mental-health program “. . . Our government recognizes the mental health and well-being of Canadian workers must be prioritized,” said Filomena Tassi, minister of labour, in a press release. “We are working together with unions, workers, employers and experts to create psychologically healthy and safe workplaces.” The federal government has prioritized mental health over the last few years and more so now that workers are experiencing disruption to their everyday routines with the shift to working from home and social distancing. “As we continue to address and respond to the impacts of the pandemic, we are working with our partners and stakeholders to...

The insurance industry will be watching closely in the coming months as a class-action lawsuit over an indexed universal life policy plays out in a California courtroom. The lawsuit was filed Aug. 6 in Orange County Superior Courts by plaintiffs Hong Li and Tailong Liu. Defendants are listed as Tiffany Xu, Sky Vision Insurance Agency and Pacific Life Insurance Co. The plaintiffs claim they were misled about the costs of an IUL policy and how it works. The case has broad implications for the industry and the controversial Actuarial Guideline 49 put forth by the National Association of Insurance Commissioners, said Kevin Kimmerling, senior vice president and assistant general counsel for Global Atlantic Financial Group. He discussed the case last week at the American Council of Life Insurers’ 2020 Annual Conference, conducted virtually. “The plaintiffs claim that the insurer created a product with a feature in it that is called a ‘performance factor’ that is designed to be within the letter, perhaps, of AG 49 while also aggressively illustrating a profit,” Kimmerling explained. “Why that matters is that the allegations in the complaint are that the agent and the company didn’t really explain what that performance factor was and how...

Staff | October 20, 2020 While the overall financial state of Ontario’s defined benefit pension plans improved in 2019, the Financial Services Regulatory Authority of Ontario continues to monitor fluctuations caused by the ongoing coronavirus pandemic. In the FSRA’s new report, it projected the estimated going-concern and solvency funding positions of the province’s DB plans to a common year-end date. The estimated median going-concern funded ratio at Dec. 31, 2019 reached 115 per cent, compared to 105 per cent in 2018. On a solvency basis, the FSRA found the median projected solvency ratio was 98 per cent as at Dec. 31, 2019, compared to 94 per cent as at Dec. 31, 2018. Read: Ontario releases more details on funding cushion in new DB framework Following the establishment of a new funding framework for DB pension plans on May 1, 2018, the FSRA said 759 plans (about 62 per cent) have transitioned to this new model, which required the funding of a provision for adverse deviations. The number of plans identified as closed and open for purposes of determining the PfAD were 584 and 175, respectively, with a median PfAD of 9.9 per cent for all of these plans. The report also said there was a...

Charlotte Observer (NC) Greg Lindberg Try as he might to extend his freedom, Durham businessman and convicted felon Greg Lindberg is scheduled become a federal inmate today. U.S. District Judge Max Cogburn denied a second motion Monday to delay Lindberg’s report date. In court documents, Lindberg’s attorneys said his partner is pregnant with his child and due to deliver the baby “on or around December 4.” Lindberg, the billionaire at the center of one of North Carolina’s worst political-corruption scandals, has been ordered to report to FPC-Montgomery, a minimum-security prison camp in Montgomery, Ala., to begin an 87-month bribery sentence. His lawyers previously argued unsuccessfully that Lindberg should avoid serving time until a COVID-19 vaccine is found, citing health concerns. The 50-year-old father of four, one of the state’s largest political donors, was convicted in March in Charlotte of trying to bribe state Insurance Commissioner Mike Causey. According to testimony during the trial, Lindberg promised Causey up to $2 million in campaign donations if the office-holder removed a staff member who was regulating one of Lindberg’s companies. Advertisement In August, Cogburn sentenced Lindberg to more than seven years in prison. Prosecutors asked for double that time, saying that Lindberg and...

Daily Pilot (Costa Mesa, CA) Oct. 20–Just under 300 employees from Pacific Life Insurance Co. were laid off last week in light of the ongoing coronavirus pandemic and low interest rates. “We are constantly evaluating our business to ensure Pacific Life has the right structure to accomplish its goals and best serve the long- term interests of our clients, ” a statement from the company stated. “As we work toward transformational goals designed to deliver sustained value to our organization and those we serve, the coronavirus pandemic, the current sustained low interest rate environment and our strategy to improve operational efficiency have created a need to readjust internal resources, ” it said. Affected employees are being offered a severance package and job placement support. About 7 % of the company ‘s total workforce were let go, Page said. Most of the layoffs were immediate and happened last week, but a small portion will occur in the fourth quarter of this year and in the first quarter of 2021. Company spokesperson Jesse Page said the action largely affects employees in Orange County but will also affect employees in other parts of the country. Advertisement The Newport Beach- based insurance company also...

Yaelle Gang | October 19, 2020 Over the last 40 years, the demographics of pension plan membership have changed drastically, said Michael Augustine, managing director and head of asset-liability management at TD Asset Management, during a webinar hosted by the investment manager earlier this month. “Forty years ago, when rates were a lot higher, pension plan demographics were quite different. For every one retired member in a pension plan receiving benefits, there were eight active members making contributions. Pension plans were in full accumulation mode and [they were] cash flow rich and the focus was clearly on growth. Then, over the next 20 years, something happened.” Read: Shifting demographics key catalyst to changing pension plan design In the 2000s, the ratio of retirees to active members changed to 3:1, then 2:1 in the 2010s and 1:1 in the 2020s. As such, pension plans are reaching an inflection point where benefits paid out are much richer than the investment being generated, making them cash-flow negative. The situation is a perfect storm with low interest rates, a greater requirement for cash flows and a need for asset growth to close funded status deficits, noted Augustine. He pointed to demographic-focused investing as a solution. “DFI begins with an...

Toronto, ON (Oct. 19, 2020) — Insurance has entered the decade in which it will face its biggest challenges ever. This year, the global spread of COVID-19 brought about dramatic changes, intensifying the industry’s digital transformation and accelerating a transition to enable Work From Home (WFH) amid the need for social distancing. Having seen what could be done, leaders now have a better sense of the possible. But the excitement is no longer about just leveraging technology – better and further – to improve all aspects of the business. It is about using the same leadership techniques to reinvent the whole business of insurance across the traditional insurance players, customers and providers and beyond to other industries for entirely new relationships. Insurance-Canada.ca is pleased to announce the launch of the World Insurance Forum to bring together perspectives about the changes that are already underway, with an eye on the business and technology landscape ahead. As a special introduction to this series, the first two virtual sessions of the WIF are being offered with our compliments: How Will InsurTech Shape The Future?Tuesday, November 17, at 11:00am (ET) Mark Dowds, Managing Director, Anthemis Ruth Foxe Blader, Partner, Anthemis Transforming Commercial Underwriting Through...