At Canadian Dividend Stock, we made a decision to separate the Canadian financial sectors into more pieces (Canadian Banks, Canadian Insurance companies, and soon, Canadian Investing companies). The reason why we have decided to segment this sector in 3 is because Canadian’s financial sectors worth more than 25% of the Canadian stock market. In addition to this, financials play a huge part in Canadian dividend stocks as they are the biggest preferred shares issuers.
Canadian financial industry is on each country’s radar since the economic crash in 2008. Our economic system and diversified financial sector (banks, trust and loan companies, credit unions and caisses populaires, insurance firms, securities dealers and exchanges, mutual fund companies and distributors, finance and leasing firms, as well as pension fund managers and independent financial advisors, insurance agents and brokers) has been proven to be the safest in the world. While some insurance companies went into some difficulties due to the credit default swap, Canadian problems are nothing to compare to USA insurance companies’ financial issues.
The insurance sector is similar to the Canadian banks environment as they are not that many players involved. They are more competition as some major US players participate one a smaller scale in Canada.
In order to become stronger and more diversified, most Canadian insurance companies now offers banking services (such as Solutions Banking for Power Corp (POW) and its affiliated companies (IGM, GWO and London Life or Manulife Bank from Manulife MFC). They also offer investment services specialized in mutual funds and segregated funds (through life insurance policies). Finally, Canadian insurance companies have developed tax expertise in order to offer highly specialized products and strategies including insurance products.
The major obstacle to face for Canadian insurance companies is definitely the actuarial calculations. Since 2008, interest rate predictions along with less liquid asset valuation have changed greatly. This could influence companies’ profitability if they don’t react quickly.
At Canadian Dividend Stock, we look at the following insurance companies (click on the company name to read the stock analysis):