No need now for more economic ‘insurance’: Stephen Poloz

Jeffrey Hodgson, Reuters

Bank of Canada Governor Stephen Poloz, who has described a shock January interest rate cut as “insurance”, said in an interview he didn’t see the need for more insurance now, the Wall Street Journal reported on its website on Sunday.

“We’ve got the right monetary policy,” Poloz told the newspaper. “It gets us home.”

He also said the Bank of Canada would only consider further rate cuts if the economy underperformed the central bank’s outlook.

Poloz made similar comments on Friday to journalists on the sidelines of the spring meetings of the International Monetary Fund and World Bank in Washington.

The Bank of Canada held interest rates steady on Wednesday and suggested that no further cuts are imminent due to the bank’s expectation that the economy will rebound later this year from the first quarter’s zero growth.

Poloz also said in the Wall Street Journal interview that he thought the trajectory of U.S. growth was quite good after the first quarter was hit by bad weather and a port strike. He added that Canadian companies were seeing increased demand from the United States for capital equipment.

“Machinery equipment, building materials, they have really been moving for us,” he said. “Companies can see they’re getting the orders. The phones are ringing.”

Canadian Association of Mutual Insurance Companies (CAMIC) – Media statement

The Federal Government has proposed demutualization rules for property and casualty insurers: What does this mean for policyholders, especially those holding policies issued by Economical Insurance?

OTTAWA, March 24, 2015 /CNW/ – Ottawa has unveiled a set of draft regulations under which federally regulated property & casualty mutual insurance companies will be able to convert to stock companies owned by their shareholders. The process is called demutualization. These rules were developed following a request by Economical Insurance (Economical Mutual), which in December 2010 announced its intention to demutualize.

There is a lot of money at stake and CAMIC believes that the company’s policyholders need to pay close attention to ensure a just and fair result.

CAMIC and its member companies across Canada are opposed to the use of corporate equity in this fashion. We believe the equity earned by many generations of insureds belongs to the community and should be preserved.

Formed in 1871, Economical has grown significantly over the years, and it now has a surplus exceeding $1.5 billion. As a mutual insurer, that value belongs to policyholders. Economical has hundreds of thousands of policies outstanding but only a small fraction — less than 1000 — are mutual policies, entitling holders to voting rights. Economical proposed that only this group be entitled to share in financial benefits from demutualization. If one does the math, that would mean each mutual policyholder could get, on average, in excess of $1million. The regular policyholder would get nothing.

CAMIC believes this outcome would be unfair because it fails to recognize the contribution of all policyholders, both past and present, who contributed to the success of the company.

“Like other mutual insurance companies, Economical has grown significantly over the last 140+ years with the contribution of all its policyholders,” said Normand Lafrenière, president of CAMIC. “You don’t take that value and just give it to a small group that represents less than one per cent of all current policyholders. That would be very unfair to say the least”.

Fortunately, the draft demutualization regulations proposed by Ottawa set the stage for some sharing of benefits between the mutual and the regular (non-mutual) policyholders. However, the rules don’t specify if the regular policyholder will get anywhere near what the mutual policyholder will get.

Individuals who own policies with Economical Insurance should contact their broker or the company to find out if they have a mutual policy. If the answer is no, was there a discussion with the client with respect to obtaining a mutual policy?

Regular (non-mutual) policyholders should also contact their Member of Parliament and ask why the federal government refuses to require that all policyholders be treated equally.

CAMIC is the voice of the mutual property and casualty insurance industry in Canada. Mutual insurers were formed 100-175 years ago by communities to provide insurance in areas where it was not available at a fair price.

SOURCE Canadian Association of Mutual Insurance Companies (CAMIC)

For further information: Normand Lafrenière, president of the Canadian Association of Mutual Insurance Companies, at 613-789-6851 or nlafreniere@camic.ca 

Calgary taxi companies join national PR battle as Uber extends reach

Associated Cab and Checker Yellow Cabs are part of the Canadian Taxicab Companies group, which has started a website called Taxi Truths.

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The group says its goal is to educate Canadians about the differences between regulated taxi companies and ride-sharing services like U.S.-based Uber, which has begun expanding to Canadian cities including Montreal, Ottawa and Toronto.

Kurt Enders, president of Checker Yellow Cabs, said the campaign is not specifically aimed atUber.

“It’s aimed at all unregulated operators that want to enter the marketplace,” he said.

UberX uses a smartphone app to connect passengers with drivers in privately owned vehicles. In other cities where the service has launched, Uber has not sought taxi licences for drivers.

“If they want to come in, we’ve been operating under a regulated industry. I guess the question is … why won’t they come in and follow the same rules and regulations that we currently follow today?” Enders said.

The insurance industry has also raised concerns about ride-sharing companies having adequate insurance to protect drivers and the public in the event of a collision.

Last week Vancouver’s taxi industry filed a lawsuit against Uber and is seeking an injunction to prevent it from starting up in that city.

Source: CBC News

Manulife raises dividend for first time in five years, profits more than triple

TORONTO – Manulife Financial Corp. (TSX:MFC) is raising its dividend for the first time in five years after it more than tripled profits in the second quarter.

The insurance company reported that net income attributed to shareholders increased to $943 million, or 49 cents per share, as the growth of its insurance operations in Asia continued to escalate and its North American mutual fund business improved. A year ago, the insurance company reported net income of $259 million or 12 cents per share.

Excluding certain items, Manulife earned 36 cents per share versus 31 cents per share year over year. Analysts on average were expecting earnings of 40 cents per share, according to Thomson Reuters.

Donald Guloien, the company’s president and chief executive, said Manulife’s performance is improving at a good pace, built on momentum from its Asia business, particularly Japan.

“Our wealth results were strong, driven by the success of our North American mutual fund businesses and improved momentum in Asia,” he said in a statement.  “Most notably, we generated strong sales growth in Japan and in other parts of Asia, but insurance sales in Canada were lower than what we would have liked.”

The earnings improvement also led Manulife to raise its quarterly dividend by 19 per cent, or 2.5 cents, to 15.5 cents per common share.

This is the first dividend increase for the company since August 2009 when it halved its dividend payout to 13 cents per share a move it said would save $800 million a year. At that time, Manulife had seen its results erode on stock market weakness.

“We are delivering on our earnings plan, volatility is being contained, and the outlook for earnings growth is positive. We have improved our leverage ratio and have a strong capital position,” said Guloien.

“Happily, we are also seeing more certainty around capital rules and other regulatory matters, here in Canada, the U.S. and globally, and sooner than we expected. All of these factors made us feel confident proceeding with a dividend increase.”

Barclays analyst John Aiken said the dividend increase may help investors forget that core earnings came in below analyst expectations.

“We believe that this is a distinct positive and may come somewhat of a surprise to the market. However, despite the vote of confidence by the Board on Manulife’s outlook, core earnings did come in below expectations,” he wrote in a note.

Toronto-based Manulife provides products and services including individual and group life and health insurance, pension products, mutual funds and other banking products. It has operations in Asia, Canada and the U.S., where it owns insurer John Hancock.

CP3

 

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