3 Reliable Insurance Stocks to Buy This Summer

The Excerpreted article was written by Ryan Vanzo | The Motley Fool

Insurance companies make for some of the most reliable stocks on the market. Their business models necessitate this stability.

Insurance companies traditionally make money through premiums, but many are increasingly writing them at breakeven prices. Where’s the profit, then?

Insurance companies get to keep your premiums until they have to pay out claims. This money is called “float.” By investing the float, insurance companies can make a small profit until it needs to return the money to policyholders.

As insurance companies need to constantly service policy claims, they’re typically not investing a huge chunk of the float into risky assets like stocks. Instead, most portfolios are invested in low-risk securities like government and corporate debt.

By investing in an insurance company, you’re essentially betting on a company that can invest “free” money into low-risk assets. It’s now understandable why insurance stocks are so stable.

Want to get in on the action? Here are three top-ranked picks for your portfolio.

Growth plus income

What greater way to begin this list than with Great-West Lifeco Inc (TSX:GWO), which has a fortress-like business?

Since 1995, shares have risen more than 1,000%. It’s also paid a steadily rising dividend along the way. The dividend payout now results in a 5.5% annual yield.

With five subsidiaries targeting regional opportunities in North America, Europe, and Asia, the company has never been more diversified. It has investment-grade ratings from every credit agency and recently bumped the quarterly dividend from $0.389 per share to $0.413. The payout ratio is still under 60%, so there’s plenty of cushion.

A $2 billion share buyback program should allow the company to return capital to shareholders in a tax-efficient manner.

If a bear market hits, expect this stock to easily outperform the market.

Even more diversification

Sun Life Financial Inc (TSX:SLF)(NYSE:SLF) is one of the largest life insurance companies in the world. Given that it was founded in the 1800s, it’s also one of the oldest.

With a 4% dividend and a valuation of just 8 times forward earnings, now looks like the ideal time to pile into this slow-but-steady stock.

On nearly any metric, the company is growing. Over the last four years, earnings have grown by 13% annually while the dividend has grown by 7% per year. Return on equity recently popped to 14.2%.

Management has been incentivized to ensure that this growth remains on track. In the next few years, the company is targeting annual EPS growth of 8% to 10% while maintaining a payout ratio of 40% to 50%.

Due to its diversification, Sun Life is better positioned than most insurers to avoid a share price collapse in the face of recession. Just one-third of profits come from Canada, with the rest split between Asia, the U.S., and the U.K.

Plus, only 3% of the company’s portfolio is invested in equities, making its float one of the most reliable on this list.

Bigger isn’t better

With a market cap of $5.6 billion, Industrial Alliance Insurance (TSX:IAG) is by far the smallest stock on this list. The dividend is also smaller at just 3.4%.

Don’t stop reading, though—there’s real value here.

If you invested $10,000 in 2000, you nest egg would now be worth more than $70,000. That’s a better return than the larger peers on this list. Sometimes smaller really is better, as it allows a company to grow faster for longer without hitting structural limitations due to size.

Since 2004, book value has increased by 9.7% per year. The stock has largely followed suit, but not always in perfect tandem.

Today, shares trade at around book value. Buying at this valuation has consistently produced market-beating returns for investors.

At 1.1 times book, this is your opportunity to buy this long-term winner on the cheap.

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Source: The Motley Fool

Tenant insurance can make all the difference

NEWS PROVIDED BY

Insurance Bureau of Canada

With moving day fast approaching, Insurance Bureau of Canada (IBC) would like to point out that 37% of tenants are not insured, even though home insurance could make all the difference in case of loss.

Average premium for tenants: $281 in 2017
According to the data collected by IBC from its members, it costs tenants less than $1 a day, or $281 on average per year, to insure their belongings. However, the average claim paid out by insurers in 2017 was $5,542.

IBC notes that home insurance covers policyholders’:

  • Belongings (furniture, clothing, electronic equipment, etc.) based on an amount determined by the insured
  • Civil liability for damages they may unintentionally cause someone else
  • Additional living expenses for lodging and food payable by a tenant following a covered loss

“Every year, we hear sad stories of families that have lost everything. We’d like to make tenants aware of the importance of protecting their property by having insurance. Contrary to popular belief, the building owner’s insurance doesn’t cover the tenant’s property. So it makes even more sense to look into getting and shopping around for tenant insurance,” notes Line Crevier, Supervisor, Technical Affairs, at Insurance Bureau of Canada.

Property inventory: a key stage
The Personal Property Inventory is IBC’s most popular brochure. A revised and user-friendly PDF version has just been published to help users list all of their belongings. This comes in handy when purchasing a policy that includes an insurance amount that covers one’s belongings. In addition, this stage could facilitate the claims process in case of loss.

“You’d be surprised to learn just how much more you own than you think! That’s why we’re encouraging everyone to make an inventory of their belongings. It’s a key stage when purchasing coverage that meets one’s needs”, added Ms. Crevier.

The Personal Property Inventory is available at Infoassurance.ca.

Making moving easier
As July 1 approaches, IBC has some tips to share:

  • Home insurance covers the tenant’s property at his two addresses for a period of 30 days
  • Each co-tenant or spouse who has been living with the tenant for less than one year needs to be added to the home insurance policy
  • It’s important to inform one’s home and auto insurer of the new address as premiums vary from city to city, or neighbourhood to neighbourhood.

About IBC
Insurance Bureau of Canada, which groups the majority Canada’s P&C insurers, offers various services to consumers in order to inform and assist them when purchasing car or home insurance, or making a claim. For all other information, we invite you to contact our Insurance Information Centre at 1-877-288-4321, or visit our web site at www.infoinsurance.ca.

SOURCE Insurance Bureau of Canada

http://www.ibc.ca/

Will cover commercially viable sales contracts of canola seed, oil and meal

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$100,000 Non-Pecuniary Assessment for Central Neuropathic Pain With Poor Prognosis

Reasons for judgment were published today by the BC Supreme Court, Nanaimo Registry, assessing damages for central neuropathic pain caused by a vehicle collision.

In today’s case (Laliberte v. Jarma) the Plaintiff was involved in a 2015 vehicle collision.  She was a passenger in a vehicle driven by the Defendant that lost control “went through a fence and over a bump and landed in a field”.  Liability was admitted.

The collision caused various soft tissue injuries resulting in central neuropathic pain.  The prognosis was for symptoms to continue.  These were largely controlled with medication.  In assessing non-pecuniary damages at $100,000 Madam Justice Russell provided the following reasons:

[28]         The parties agree that the plaintiff suffered soft tissue injuries to her lower back, and was diagnosed with CNP. The parties also agree that the plaintiff’s prognosis for this injury is ongoing chronic pain. The plaintiff continues to suffer symptoms daily, although they are now at a tolerable level when the plaintiff is on medication.

[29]          The plaintiff described her pain at trial as “more of an irritation”. She testified that the medication she takes, Topiramate, reduces her pain by 80-90%. However, if she runs out of Topiramate, her serious symptoms immediately resume and she runs the risk of being bedridden with pain.

[30]         The plaintiff’s position is that she will require medication for her symptoms long term and possibly for the rest of her life, and that she faces the possibility of aggravating her injury by engaging in moderate or heavy physical activities regardless of how effective the medication may be.

[31]         The plaintiff’s evidence was that she had suffered some episodes of depression and anxiety as a teen, and had taken some medication for this but had discontinued use prior to the accident. After the accident, the plaintiff was referred to a counsellor by her family physician but did not attend any such counselling sessions or seek any other help concerning her psychological symptoms.

[32]         The plaintiff had no prior history of low back pain. She described suffering low back pain starting the day after the accident. I note that the plaintiff went into labour three days after the accident. Her mother had to help her into the shower and off the toilet, and she could not climb stairs without significant pain. Prior to the accident, the plaintiff enjoyed longboarding, drawing and art, and played basketball in high school. The plaintiff testified that her level of activity has increased since the date of the accident and she is now at a similar level than she was pre-accident, although she engages at a less intense level…

[48]         The plaintiff’s young age, the potentially lifelong duration of her injury and its impact on her physical ability, the severity of her pain before she went on medication, the emotional suffering caused by her aggravated depression, the impact her pain and depression had on her ability to raise and bond with her newborn son in the crucial months immediately following his birth (as well as the increased pain during the birth itself), and the strain her injuries put on her relationship with her parents, all stand in favour of a higher award.

[49]         I consider the loss of her ability to cradle her baby in her arms and to breastfeed without pain to be serious losses.

[50]         Should she wish to have more children, she faces a difficult choice:  to go off her medication for the duration of the pregnancy and suffer serious pain, or to deny herself the opportunity to bear more children. As a corollary of this issue, she must not allow herself to become pregnant again without carefully considering the consequences.

[51]         On the other hand, the plaintiff’s ongoing injury is not a disabling injury because its effects can be managed through the use of medication, the injury is limited to her lower back, and the injury has not caused a substantially material loss or impairment of her life or lifestyle as compared with her level of activity, recreational pursuits and social inclinations before the accident.

[52]         I also find that her injuries have not necessarily caused any marked impairment of her mental abilities  so long as she is on medication controlling her chronic pain, her academic performance does not stand to be affected. These factors favour a more limited award…

[56]         Having regard to the Stapley factors, and the relevant cases cited by the parties, I award the plaintiff $100,000 in non-pecuniary damages.

bc injury law, Central Neuropathic Pain, CNP, Laliberte v. Jarma, Madam Justice Russell

Brokers say it’s important to check before you get in the business

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