Insurable Interest Canadian Insurance Blog

Kelsey Rolfe | June 8, 2020 The City of Toronto has launched a social debenture framework to fund investments in affordable housing, transit and other basic infrastructure, access to essential services and other projects that benefit marginalized and vulnerable Torontonians. The city, which is waiting for more favourable market conditions to issue its first social bond, is the first municipality in Canada to launch such an offering. Environmental, social and governance research firm Sustainalytics issued a second-party opinion that found the framework “credible and impactful” and said it aligns with the International Capital Market Association’s 2018 social bond principles. While Toronto also has a green bond framework, it’s intentionally keeping its social bond framework separate. Read: Challenges for institutional investors around green bonds “In some instances there are some entities that have combined social and green bonds and put them under the umbrella of sustainability,” says Heather Taylor, the city’s chief financial officer. “We kept them separate because some investors prefer separate mandates and we wanted to open ourselves up to a new sector of investors who’re not only looking for return on investment in terms of interest, but the social benefits as well. . . . We think there are a lot of motivated investors...

Manulife and John Hancock, its U.S. subsidiary, have declared Friday, June 19 as a “Thank You Day” off for their more than 35,000 employees as a token of appreciation for their hard work in serving customers to help people make decisions easier and improve their lives. “I am so proud and grateful for the commitment our people have shown – it’s taken energy and incredible stamina,” Manulife CEO Roy Gori said in a statement. While the process of reopening has begun across many communities, Gori noted that it will probably take time for things to revert to what has been considered “normal” before. “So, we will all need to continue to take care of ourselves and practice healthy habits, which include unplugging and taking time to unwind,” he said. “We’ll be getting that done together, as a global team, on Friday, June 19th this year.” The company also announced that it will provide five additional personal days next year for each employee, which it says are meant to support well-being by encouraging regular time off and let workers take meaningful vacations that they may have been unable to do given the present circumstances. Aside from the added time off, Manulife...

Staff | June 5, 2020 Canadian employment numbers rose by 290,000 in May, or a 1.8 per cent increase on the previous month, as provinces started to reopen their economies, according to new data from Statistics Canada. The number of people who reported working less than half their usual hours in May dropped by 292,000 or 8.6 per cent. Combined, the agency said the figures represented a 10.6 per cent recovery of the coronavirus-related employment losses recorded in the past two months. Quebec accounted for nearly 80 per cent of the month’s employment gains, at 231,000. Ontario was the only province to record continued falling unemployment, with an additional 65,000 job losses during the month. Read: Ontario amending employment standards to make temporary layoffs part of new emergency leave Of the job gains from April to May, 219,000 or 75 per cent were in full-time work. Compared to February, full-time employment was down 11.1 per cent in May, while part-time work was down by 27.6 per cent. However, the unemployment rate hit 13.7 per cent in May, which was the highest recorded rate since 1976, when comparable data became available. In February, the unemployment rate sat at 5.6 per cent, increasing to 7.8 per cent in...

New SMA Blog by Mark Breading, Partner, Strategy Meets Action — In the real estate market, it is often said that the three most important factors are location, location, and location. A similar argument could be made for insurance property underwriting. Of course, the attributes of the property itself are important – and there is a lot of buzz in the industry about creating comprehensive property attributes. In order for insurers to calculate the probabilities of various risks and repair/replacement costs, it is essential to have data on many specific characteristics of the property, such as square feet/meters, exterior and interior building materials, roof shape, foundation type and size, the presence of pools or fences, and many other features. However, these data points must be associated with the correct address before any adequate analysis can be conducted. This is where geocoding comes into play. Geocoding provides a set of coordinates for each address, with the goal of allowing the insurer to understand the location of each building that is being insured and its proximity to various peril zones. Geocoding solutions have long been used by insurers for underwriting and risk assessment. Over time, new approaches and technologies have enabled increasing...

George Nichols III, president and CEO of American College of Financial Services George Nichols knows that when he does his four- to five-mile walk every day, he is not the president of The American College of Financial Services. He is not the former top-level executive of New York Life. He is not the former Kentucky insurance commissioner. He is a threatening black man. People who know Nichols would likely see him as the affable 60-year-old man and capable leader he is. But Nichols knows that is not what many other white people see. “At my age and at my level of success, I still have to calculate how I make sure I’m not perceived as a threat when I walk into an environment where I may be the only black,” Nichols said. His is the only black family in his upscale neighborhood, so he knows the drill when he goes for his walk. He strides briskly, doesn’t look at anybody’s house too intently, greets everybody and wears bright colors so the neighbors can recognize him. But that does not mean every police officer driving through the neighborhood recognizes him. Like a month or so ago during his walk when Nichols...

A state regulator task force took another step Thursday toward agreement on rule changes designed to rein in index universal life insurance illustrations. In another “straw poll” vote, Life Actuarial Task Force members buried the in-force issue by voting 13-3 to affirm that any changes will only apply to new policies. Illinois, New York and California regulators voted against. The task force is considering language proposed by the American Council of Life Insurers to shore up Actuarial Guideline 49 and bring IUL illustrations more in line with actual returns. Members are racing the clock to present a proposal for adoption by its parent A Committee during the committee’s July 10 call. The vote followed a spirited debate during which Birny Birnbaum, executive director of the Center for Economic Justice, repeatedly pressed regulators on the logic of illustration changes that exclude existing policies. “We don’t understand why you would go to the trouble of saying ‘We want to fix the problems of AG 49,’ but to the consumers who have already purchased the product, they shouldn’t get the benefits,” Birnbaum said. Industry representatives claim it would confuse consumers to receive new illustrations that might be drastically different. The background: AG 49 was...

Staff | June 5, 2020 The Local Authorities Pension Plan is reporting a $3.4-billion loss in an “exceedingly difficult” first quarter, reducing the size of the fund by 6.5 per cent. The LAPP reported $47.2 billion in assets as of March 31, down from $50.6 billion at the beginning of the year. However, it said the impact on the fund would have been worse if it hadn’t directed its investment manager, the Alberta Investment Management Corp., to implement a downside protection strategy. The AIMCo sustained a 10.2 per cent loss, or about $5.1 billion during the quarter, but the LAPP said the strategy reversed about four per cent of the AIMCo’s losses, saving almost $1.9 billion. Read: AIMCo earns 10.6% return for 2019, underperforms benchmark “Putting LAPP’s strategy aside, the remaining $3.4-billion loss is still significant and sets LAPP Corp. back in its goal to further de-risk the plan,” said Chris Brown, chief executive officer of the organization, in a press release. “We will continue to work with AIMCo to achieve LAPP’s goals and we are considering all available options for attaining better alignment with AIMCo on its approach to taking risk in investing LAPP’s assets. The upcoming review of our investment management agreement required by legislation provides a...

Staff | June 5, 2020 While some defined contribution pension plan members may push their retirement plans back because of market turmoil caused by the coronavirus, others won’t be willing to do so. Those soon-to-be retirees will have to take other measures to ensure they can retire, which will likely include diversifying their potential sources of retirement income, according to a new report by data analytics and consulting firm GlobalData. “With the value of pensions being especially vulnerable to volatility in capital markets, pension holders in these age groups may now have to push back their retirement plans to offset the losses that have occurred due to COVID-19,” said Daniel Pearce, senior insurance analyst at GlobalData, in a press release. Read: Could coronavirus delay DC plan members’ expected retirements? “However, other individuals in these age groups may not be willing to continue working and, as a result, look towards other assets as means to fund their retirement, such as income from rental property or equity release on mortgages.” Both rental income and mortgage equity are relatively insulated from market volatility, contributing to their potential popularity, noted the report. “The insurance industry should prepare for individuals to look for a more diverse portfolio of assets...

Ownership of life insurance might have declined in the U.S. over the past decade, but shifts in consumer demand and preferences could create an opportunity for the industry to turn that trend around. In its 2020 Insurance Barometer Study conducted with Life Happens, LIMRA found that U.S. life insurance ownership declined by 9 percentage points to just 54%. According to researchers, that stemmed from a decrease in employer-paid group life insurance benefits, which went from 32% in 2011 to 27% in 2020. However, the study also found that plans to purchase life insurance are at an all-time high as 36% of Americans surveyed said they intend to do so in the next 12 months. Alison Salka, Ph.D., senior vice president and head of LIMRA research, said that the COVID-19 pandemic may boost purchase intent by increasing the perceived need for life insurance. Increasing acceptance of social media was another prominent theme in the poll. Nearly half of consumers polled said they have turned to social media – most notably Facebook and YouTube – for information on financial topics, companies, or advisors. The use of both Facebook and Youtube for financial topics has doubled just in the period from 2019 to...

Staff | June 4, 2020 The Investment Management Corp. of Ontario is adding €250 million to its previous investments in euNetworks Group Ltd., a European bandwidth infrastructure company. The cash injection is set to fund the company’s further organic growth, mergers and acquisitions and general corporate purposes. The company operates deep fibre networks in 17 cities in Europe. “We seek to invest in world-class infrastructure businesses globally and are excited to be supporting one with our investment in euNetworks as they continue growth of their European platform,” said Tim Formuziewich, managing director and global head of the IMCO’s infrastructure program, in a press release. Read: Ontario Teachers’ investing in SpaceX, CPPIB in British entertainment company “We see bandwidth demand growth being extremely differentiated to other value drivers of infrastructure assets that offers diversification to our clients’ portfolios. That growth profile combined with euNetworks’ leading position in the European bandwidth infrastructure market and track record of successful capital deployment presented a strong investment opportunity for IMCO.” Read the full article at BenefitsCanada.com