Nonetheless, the asset allocations of Canada’s life and annuity insurers have not changed much over the past several years, the report said.
From 2017 to 2021, bond allocations remained at about 65%, ranging from 64.7% in 2019 and 2021 to 65.2% in 2018.
However, junk bonds rose to their highest level in five years in 2021: 2.2% of the bond allocation, up from 1.5% in 2017. As a percentage of equity, the allocation rose to 9.7% in 2021 from 6.7% in 2017. The change occurred primarily because of credit downgrades, A.M. Best said, adding these allocations are “appropriate for a well-diversified portfolio.”
Life insurers “are well positioned to manage any credit impairments, which thus far have been minimal,” the report said.
As for life insurers’ asset management divisions, A.M. Best said that mutual fund deposits have “increased substantially” over past two years, rising to $19.0 billion in 2021 from $13.6 billion in 2018. Canada’s life insurers have “gravitated to these less capital-intensive and more fee-driven retirement products in recent years, partly because of the low interest rate environment,” the report said.
Recent interest rate volatility, rising inflation and the slowing global economy all mean investors can expect volatility in life insurers’ earnings, the report said.
Moreover, life insurers continue to face “headwinds” arising from the pandemic — in particular, uncertainty over long Covid-19 and potential Covid-19 variants, A.M. Best warned.
Because of Covid-19, life insurers have experienced “some spikes” in mortality over the past year, as well as in disability claims arising from mental health, said Michael Adams, associate director with A.M. Best. As a result, some carriers are starting to raise life insurance premiums, he said, and clients applying for or renewing policies could be asked whether they have had Covid-19 and whether they are vaccinated.
The pandemic also encouraged lifecos to try to become “digital leaders,” A.M. Best said, adding that many lifecos that adopted mobile apps early generally outperformed their industry peers.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
