Insurable Interest Canadian Insurance Blog

American International Group has ruled out breaking up its Life & Retirement business and selling them “in pieces,” incoming top executive Peter Zaffino said today. The plan is to sell 19.9% of the life/retirement business, either through an initial public offering or a private sale. AIG “will not consider” selling more than that, said Zaffino, who will become CEO on March 1 and remain president of AIG. “We believe that the life retirement business itself really is well integrated,” said CEO Brian Duperreault, who will become executive chairman in March. “There’s a synergy around them that produces greater value then separating.” AIG announced the separation plans and CEO shuffle last week, in advance of this morning’s third-quarter earnings call. The AIG stock price is up about 10% to $34.29 since the separation was announced. AIG reported $281 million in profit, a 57% decline from the $648 million profit in 3Q 2019. Adjusted pretax profit in its Life & Retirement unit increased 51% to $975 million compared with the prior-year quarter. Advertisement The strong numbers from Life & Retirement reflected “strong equity market performance, favorable short-term impacts from lower interest rates and tighter spreads, and lower general operating expenses,” AIG said....

Melissa Dunne | November 6, 2020 Whether Joe Biden or Donald Trump ultimately wins the White House, the stock market is already a clear winner this week. While there were fears that a longer than usual wait to determine the winner of the U.S. presidential race would lead to wild market volatility, that didn’t come to pass. But signs were there over the past few months that the bull market was going to keep galloping forward despite stark political divisions in the U.S. “In hindsight — obviously, I don’t work for Hindsight Capital — but in hindsight every market, and risk markets in general, were going to go up no matter what,” says Robert Almeida, investment officer and global investment strategist at MFS Investment Management.  Read: U.S. markets betting on Biden, investors preparing for energy sector impacts “What happened to volatility in the latter part of Wednesday and Thursday? I think that this feels and looks like a late-cycle dynamic where the level of investor demand is outweighing the level of investment supply — and the reaction function to that is materially higher prices until there aren’t.” A delayed result to the election was always likely since the coronavirus pandemic meant a much higher mail-in voting...

Staff | November 6, 2020 In its 2020 budget on Thursday, the Ontario government said it plans to permanently extend the employer health tax payroll exemption from $490,000 to $1 million. The change is expected to save Ontario employers about $360 million in 2021/22 as they endure the economic impact of the coronavirus pandemic. “When the COVID-19 outbreak struck Ontario, the government acted quickly to help private sector employers with their 2020 payroll taxes by more than doubling the EHT payroll exemption,” stated the budget. “With this additional relief, about 90 per cent of Ontario private sector employers are exempt from paying EHT this year.” Read: Ontario establishes tax deferrals, special payments to support employers, workers In light of economic uncertainty arising from the pandemic, the government is also reviewing the ability of the pension benefits guarantee fund to protect pension benefits. In the event that an eligible defined benefit pension plan is unable to provide the promised benefits, the fund guarantees the first $1,500 per month per member. The budget noted the outcome of this review will be reported in the 2021 budget. The government will also look at consolidating two smaller agency pension plans into the Public Service Pension Plan, a...

Assuris – an independent, not-for-profit, industry-funded compensation organization that protects life insurance policyholders – has announced the appointment of Paul Petrelli as its next president and CEO. Petrelli is slated to join the organization on January 24, 2021. He will replace the incumbent president and CEO Gordon Dunning, who will retire at the end of this year after almost three decades of service at Assuris. “Mr. Petrelli brings a deep knowledge of the life insurance industry and a strong understanding of the regulatory framework at the Federal and Provincial levels,” said Dan Thornton, chair of the board at Assuris. Petrelli will bring with him more than 20 years of experience in the industry, which includes a wide variety of senior leadership roles he has held at Sun Life. Most recently, he was given responsibility over the company’s global M&A, securities, technology and intellectual property legal teams, corporate secretarial and legal operations. He has also been Sun Life’s global head of Compliance, CFO of its Canadian business, and head of Investor Relations. After obtaining his B.A. (Honours) from the University of Toronto in 1991, he received his LL.B. from the University of Windsor School of Law in 1995, then admitted as...

Staff | November 5, 2020 As the coronavirus pandemic drags on, LinkedIn Corp. and its parent company Microsoft Corp. are removing the asterisk around what the 21st century workplace will look like post-pandemic. Microsoft has introduced guidance for employees on its new flexible working policy in preparation for the future of work after the current crisis is over. The new policy will also apply to LinkedIn staff, with the company recently announcing its employees will continue to work remotely until at least July 2021. Read: Twitter to allow employees to work from home ‘forever’ “We have provided guidance to employees to make informed decisions around scenarios that could include changes to their work site, work location and/or work hours once offices are open without any COVID-19 restrictions,” said Kathleen Hogan, the company’s executive vice-president and chief people officer, in a press release. “Our step-by-step guidance includes considerations like office space, salary and benefits, local law, personal taxes, expenses and more.” Under the new policy, working remotely part of the time (less than 50 per cent) will be considered standard and employees’ work hours and location will now be flexible. Changes to when and where employees work will still ultimately be subject to management approval and must align with team goals. Hogan noted these guidelines...

Staff | November 5, 2020 The Canada Pension Plan Investment Board is allocating an additional £300 million of equity to investments in the U.K.’s logistics sector. The investment is taking place via the Goodman U.K. partnership, which was established in 2015, with Goodman Group and APG Asset Management each allocating the same amount. The CPPIB has entered similar partnerships with Goodman in North America and China. The additional commitment will be used to expand the portfolio of sustainable logistics and industrial properties along key arterial routes, as well as last-mile locations, particularly around Greater London, noted a press release. Read: CPP fund ended 2015 up nearly $10 billion in assets “Structural changes in the retail market and logistics supply chain, together with an acceleration of online consumerism, are driving strong demand for quality logistics space to service major population centres in the U.K.,” said Tom Jackson, managing director and head of U.K. real estate at the CPPIB, in the release. “We are delighted to be expanding our successful partnership with Goodman and APG to capitalize on the supportive sector fundamentals and increase our exposure to this asset class, ultimately delivering long-term value for CPP contributors and beneficiaries.” In other investment news, the Public...

Lincoln Financial expects “to bottom out” in life and annuity sales during the fourth quarter, but the carrier plans to bounce back in 2021 with eight new products, said CEO Dennis Glass. Glass spoke today during a conference call with analysts to review third-quarter earnings. He did not elaborate on the new product lineup. Lincoln was among the first insurers to bite the bullet and undergo repricing of products, he said, a total of 86 different pricing actions across its product suite. “Sales were down as we reduced benefits on VAs [variable annuities] with living benefits, and we continued to de-emphasize fixed annuity sales,” Glass explained. “We expect similar sales trends to persist in fourth quarter. As we look to 2021, we are leveraging product innovation to create additional consumer value propositions spanning already broad product portfolio within the life insurance business.” Lincoln’s annuities segment reported a 16% increased in year-over-year operating income to $196 million. Revenues of $1.04 billion were up 0.8% year over year. But total annuity deposits fell 27% to $2.5 billion from the third quarter 2019. ‘More Upside’ It was a similar story with life insurance, where repricing cut into revenue, Glass said. The life insurance...

New SMA guest blog by Megan Bock Zarnoch, Founder, Boundless Consulting Group Boston, MA (Oct. 20, 2020) – We recently conducted an industry survey, and 80% of industry executives expect underwriting to be significantly different in the next five years. 94% expect it to be significantly different by the end of the next decade. Essentially, we all agree that it’s changing. The question then becomes, what will different look and feel like? And how ready are we? I was encouraged by the answers we got to that very question. Certainly, industry leaders are aware of the drivers of change and demands that must be satisfied – data, efficiency, profitability, automation. However, words emerged that evoke a different feeling for the underwriting organization of the future – dynamic, creative, innovative, intuitive, and evolved. This paints a picture of change – both the “look” and the “feel” that we can all get excited about. Deb Smallwood and I believe that the key to effective transformation – bringing those words to life – is to embrace them through an intentional framework of both strategic planning and change readiness. When we think about 2030, the next years are full of open possibilities. There will...

Canadian insurance industry’s only data-driven index to provide insight into premium renewal rate change within some of the most placed commercial lines of business Mississauga, ON (Oct. 30, 2020) – Applied Systems is pleased to announce Applied Commercial Index™, the Canadian insurance industry’s commercial lines premium rate index. Released on a quarterly basis, Applied Rating Index measures average premium rates for the most placed commercial lines of business. The rate insights will provide insurers a data-backed reference point to determine competitive rates and enable brokerages to deliver guidance on expected premium rates during renewals and when evaluating new policies. Applied Commercial Index is a data-driven report of current conditions and trends for premium renewal rate change within some of the most commonly placed commercial lines business in the Canadian market. Analyzing almost 22,000 data transactions per quarter, the Applied Commercial Index premium renewal rate change measures the premium difference year over year for various lines of business. All data used in the preceding analysis has been anonymized and aggregated, removing all potential identifying characteristics. Q3 results showed an increase in premium renewal rate change average across nearly all major commercial lines categories, including Real Estate Property; Business & Professional Services;...

Chubb Cyber Index enhanced with new functionality and business insights to help organizations analyze and assess cyber exposures and reduce risk: Chubb’s proprietary tool now provides ransomware risk assessments, industry and size-specific total incident costs and an interactive chatbot, among other enhancements Whitehouse Station, NJ (Oct. 29, 2020) – Chubb has enhanced its proprietary Chubb Cyber IndexSM with robust capabilities to help organizations of all sizes and industries analyze their cyber exposures to reduce risk. With a fresh look to the user-friendly interface, users are now able to access industry and revenue size-specific total incident costs, peer purchasing insights, ransomware risk assessments, trends, and year-over-year risk information. In addition, the updated tool provides users with the ability to receive answers to questions with its new chatbot, Clara the Coder. For each industry group, the Chubb Cyber Index populates relevant and downloadable risk reports and includes a library of whitepapers, videos, and other research materials. Taken together, these updates provide users with a quantifiable and detailed means of immediately identifying cyber exposures that can impact their operations. “Since first launching in 2018, this award-winning tool has given commercial clients access to the latest data on current and historical cyber threats. By...