Insurable Interest Canadian Insurance Blog

Staff | April 17, 2020 The federal government is halting solvency special payments for federally regulated defined benefit pension plans until the end of 2020. The moratorium on payments under the Pension Benefits Standards Act is aimed at ensuring that employers have financial resources to continue their operations and pension plans, as well as to protect plan members, said the federal finance ministry in a press release. “By providing this temporary relief to federally regulated pension plan sponsors, we are helping to support plan sponsors so that they are able to continue to protect the retirement security of workers and retirees,” said Minister of Finance Bill Morneau in the release. Read: Pension industry urging feds for relief from coronavirus fallout The government said it will continue consulting with stakeholders on potential relief for plan sponsors from their 2021 funding obligations, if necessary. Solvency funding relief during the coronavirus pandemic was among the proposals suggested to the Ministry of Finance by the Canadian Labour Congress and the Public Service Alliance of Canada. The CLC also called for the federal government to provide interest-free loans to multi-employer pension plans, registered federally or in other jurisdictions, for up to 12 months of pension payments, which would be repayable within five years. It...

Staff | April 17, 2020 The Caisse de dépôt et placement du Québec is making a number of personnel changes as part of its response to the economic challenges. “At the beginning of the year, it was clear that the challenges of the next decade would be very different from the last decade’s challenges,” said Charles Emond, president and chief executive officer of the Caisse, in a press release. “Since then, in only a few weeks, the world as we know it has transformed. It’s even more important to have increased agility in our decision-making processes and closer coordination in all aspects of strategy and managing our assets. “With these appointments and changes to our structure, we can fully leverage the talent of our people. Regrouping our teams within strong business units will increase our efficiency and ability to seize more opportunities.” Read: Quebec government appoints Charles Émond new head of Caisse Macky Tall is head of its new real assets and private equity business unit. In the new position, he’ll oversee the organization’s international private equity, infrastructure and financing solutions teams. Tall is also taking on the chairmanship of the board of directors of Ivanhoé Cambridge, the Caisse’s real estate subsidiary, where Nathalie Palladitcheff will remain...

Staff | April 17, 2020 The Investment Management Corp. of Ontario is taking on the Provincial Judges’ Pension Plan as its latest client. The pension plan is joining with $420 million in assets under management. With the Treasury Board of Canada Secretariat as its plan sponsor, the plan pays out about $44.3 million in annual pension payments to nearly 300 beneficiaries. “I am pleased to welcome the Provincial Judges’ Pension Plan as our new client,” said Bert Clark, president and chief executive officer at the IMCO, in a press release. “As the only investment management organization purpose-built to serve Ontario’s broader public sector, we are closely aligned with our clients’ interests. Read: Building blocks of the Investment Management Corp. of Ontario “Our professional investors, sophisticated risk management systems and cost-recovery model enables clients to meet their long-term financial obligations in an increasingly challenging investment climate.” In 2017, the IMCO began managing about $60 billion in assets on behalf of the Ontario Pension Board and the Workplace Safety and Insurance Board. And, with a mandate to provide investment management services to broader public sector institutions, it now manages $70.3 billion of assets on behalf of its clients. In Ontario’s broader public sector, 90 potential...

Whether they realize it or not, many plan sponsors have been following this philosophy in their communications strategies, as they consider the ways in which they share information with their plan members rather than relying solely on the content of that messaging. Indeed, pension communications were once made up of a hefty and unreadable pile of pages; but delivery methods have evolved significantly. These days, it’s more common for plan sponsors to send out personalized emails, connect with members via online apps, share retirement calculators or host in-person workshops and seminars. All of these mediums broaden out the ways in which employees can learn about their savings plans. Read full coverage from the 2020 DC Plan Summit In February, during the 2020 Defined Contribution Plan Summit’s opening keynote session, conference delegates heard about different types of communications. Since some people interpret things symbolically while others do so literally — these are two very distinct ways of learning — why would plan sponsors use a single medium to communicate to all of their employees? The session set the stage for an informative two days that revisited the theme of communication as it ties into plan member engagement. Three plan sponsor case...

Benefits Canada | April 17, 2020 Globally, many pension funds are divesting from carbon and fossil fuels, while others are staying the course and focusing on financial value and their fiduciary duties Simon Archer, partner at Goldblatt Partners LLP and co-director of Osgoode Hall Law School’s Centre for Comparative Research in Law and Political Economy: Political posturing aside, no one seriously disputes the science behind climate change and the threat it poses to societies, economies and, of course, the value of carbon assets held by institutional investors. The key question today is how to get “there” from “here.” When the topic was discussed four years ago, the University of Toronto and the University of British Columbia each decided not to divest from carbon assets, choosing instead to take an engagement approach. At the same time, Swedish giant AP4 and others pursued divestment. Read: Considerations for institutional investors around divestment Today, UBC has committed to divestment and a new campaign is underway at U of T. Around the globe, more than 1,100 institutions have committed to some degree of carbon asset divestment, including university endowments, philanthropic foundations and, notably, pension funds from Australia, France, Denmark, Germany, Norway, the Netherlands, Sweden, the U.K. and the...

The aerospace firm and regional airline, with headquarters in St. John’s, Nfld., provides no-limit tuition subsidies for staff who want to grow within their current roles or set themselves up for other positions in the company. “Education and development is really important to our employees and to us as an employer,” says Laura Cashin, the company’s director of human resources policy and programs. The program has been in place for years and is central to PAL’s focus on internal movement, which makes unique sense for the company. It’s a part of the PAL Group of Companies, which has businesses around the world, so employees have the opportunity to move and develop their career within the group. Read: Canadian employers investing more in employee training: survey “All of our jobs are posted internally and we see a lot of employees keeping an eye out and finding the opportunities that suit them,” says Cashin. “We are a connected group of companies that do similar things . . . and we wanted to point that out to employees and make it known that we’ll support you as you want to grow and change your career here. We are in many provinces across Canada and...

The slow and steady rise in spending among Canada’s private drug plans continued in 2019 as increased use of both traditional and specialty medications outweighed positive steps by Canada’s public health system. In its latest Prescription Drug Trend report, Express Scripts Canada revealed that private drug plan spending in the country underwent a 1% year-on-year uptick in 2019. Traditional drug spending inched up 0.1% year over year, while specialty drug spending rose by 2.8%. Even though specialty drugs figured into just 2% of claims in 2019, they accounted for two thirds of the overall increase in spending among private drug plans. While Ontario’s OHIP+ program and pan-Canadian Pharmaceutical Alliance (pCPA) price negotiations lifted some of the burden of traditional drug spending off private plans’ shoulders, it was negated by a broad uptake of higher-cost drugs and supplies for common diseases such as diabetes. “Utilization will continue to increase for certain diabetes medications like the SGLT-2 inhibitors as other benefits for patients with diabetes are established,” Express Scripts said, adding that expanded use of monitoring technology also played a role. And even as some provinces rolled out programs to allow the use of biosimilars, specialty drug spending among private plans was...

The COVID-19 global pandemic is affecting business in different ways and the insurance industry is no different. Mutual insurance companies have different challenges that come with being a policyholder-owned structure. Mutual of Omaha CEO James T. Blackledge apprised customers this week on the state of the company. “Since 1909, Mutual of Omaha has successfully navigated many challenging environments, guided by our mission to help our customers protect what they care about and achieve their financial goals,” he wrote. As a mutual company, Blackledge said Mutual of Omaha is uniquely positioned “to focus solely on the long-term needs of our customers, not the short-term demands of the stock market.” Mutual of Omaha finished 2019 with more than $50 billion in assets, and its $3.1 billion in statutory surplus “represents added security and protection for our customers,” Blackledge said. The company’s financial strength has been acknowledged with strong ratings of Mutual of Omaha and its insurance affiliates by leading ratings services over many years, he added. “As the COVID-19 pandemic continues to evolve, I’d like to share a few of the specific ways we’re responding to protect our customers and maintain our financial strength and stability,” Blackledge wrote: • We are taking...

An extended COVID-19 pandemic crisis leading to a global economic recession is going to hurt insurers’ financial health. How bad insurers will be hurt is something to monitor. A new assessment of insurers’ financial strength ratings by DBRS Morningstar finds that capitalization will be the first area of impact. Insurers are going to lose the flexibility that comes with a strong capital cushion, the report concluded. Looking forward, there will be greater pressure to restore the capitalization building block, as well as an insurers’ ability to remedy any significant deterioration within a reasonable time, said Hema Singh, vice president from the DBRS Morningstar Global Financial Institutions team. “Companies with low levels of capital buffers and significant exposure to equity market volatility through their asset portfolio or product portfolios offerings could see their solvency position deteriorate quickly during the coronavirus pandemic,” she said. Smaller insurers, in particular, could fit this profile, Singh told InsuranceNewsNet. “I think if things go really bad, really quickly, the smaller insurers will suffer,” she said. Still, other negative factors such as low interest rates, are nothing new for insurers. Rates have been low almost continuously since the 2008-09 collapse of the economy. Insurers are smarter and...

Business Wire Advertisement The negative impact to insurance companies’ capital and surplus as a result of sharp equity market declines could top the surplus losses experienced in the 2008-2009 financial crisis, according to a new AM Best special report. The Best’s Special Report, titled “Hit to Surplus from Equity Exposures Expected,” states that the 20% decline in the Dow Jones since the end of 2019 is hurting U.S. insurers’ balance sheets. At the height of the financial crisis last decade, the stock market dropped 50%, which led to the property/casualty industry reporting $55 billion in unrealized losses on unaffiliated stock investments in 2008, while the life/annuity segment reported more than $23 billion and the health segment nearly $4 billion. These losses contributed to capital and surplus declines of 11.9% for property/casualty insurers, 5.6% for life/annuity writers and 7.8% for health insurers. Significant unrealized losses and their adverse effects on capital because of the COVID-19-led downturn and economic fallout may well be on the horizon for U.S. insurers. Currently, the property/casualty segment has the highest exposure to unaffiliated common stock, at almost 18% of invested assets in 2018, versus 12% in 2009. The health segment’s exposure now is approximately 9%, while...