Manulife’s Q2 net income halved as insurer struggles with impacts of COVID 19

By Tara Deschamps

THE CANADIAN PRESS

TORONTO _ Manulife Financial Inc.’s chief executive says COVID-19 had a  “significant” impact on the company’s second-quarter performance, but he’s confident it will bounce back.

Roy Gori told analysts Thursday that the pandemic negatively impacted sales and investments generated lower-than-expected returns as several countries the Toronto-based insurer operates in shut down to stop the spread of the novel coronavirus.

“The coronavirus continues to disrupt economies and capital markets worldwide,” Gori said in pre-taped remarks that opened the company’s quarterly call.

“Our operating conditions during the quarter were understandably effected.”

His remarks come a day after Manulife said COVID-19 hampered the company’s second quarter to the point where its net income dropped to half of what it was during the same period last year.

The insurer said its net income attributable to shareholders for the period ended June 30 was $727 million, just under half of the $1.47 billion it earned in the second quarter of 2019.

Manulife’s diluted earnings per common share reached 35 cents for the period, a fall from 73 cents a year ago but more than the eight cents per share analysts had expected.

The quarter, however, had some upsides.

Gori said he was pleased with Manulife’s efforts to launch a chatbot, offer e-applications for life insurance and begin non-face-to-face processes for sales in Asia amid the pandemic.

He also shared that the company had extended premium grace periods on several insurance products, launched a credit card deferral program and mortgage payment deferrals of up to six months.

How the pandemic will continue to impact Manulife and the economy, however, is a question mark, he said.

“It is still way too early to declare what the long-term consequences of COVID are and there are still way too many unknowns,” he said.

“I expect there is going to be a lot of uncertainty and volatility until we see an at-scale deployment of a vaccine and even then there are questions around how effective that vaccine will be.”

Manulife’s shares gains 84 cents or nearly 4.5 per cent at $19.67 in morning trading on the Toronto Stock Exchange.

This report by The Canadian Press was first published Aug. 6, 2020.

Companies in this story: (TSX:MFC)

August News: Enjoy your long weekend, we’ll be back on Tuesday

August News: Enjoy your long weekend, we’ll be back on Tuesday

Monday’s a holiday for most of us in Canada, as we enjoy the second long weekend of the summer!

We hope everyone is enjoying the beautiful summer weather while remaining safe and healthy!

The ILScorp offices will be closed Monday, 3 as we take some time to enjoy the long weekend. We’ll be back Tuesday morning, ready to take your calls, answer your questions and register you for online insurance programs. You can reach us from 8 a.m. – 5  p.m. Pacific Time.

You can also register for our insurance training programs online, anytime, at ILScorp.com

Have a great long weekend, everyone!

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Vacation properties see spike in demand as people look for safe getaways

Vacation properties see spike in demand as people look for safe getaways

By Audrey Carleton

THE CANADIAN PRESS

Like many realtors working Canada’s recreational markets, David Jurek says he’s seen properties move unusually quickly since the start of COVID-19.

The RE/MAX real estate agent in 100 Mile House, B.C. recently listed a $140,000 home in an off-the-grid region where he’s had difficulty in the past:  “The last and only sale that we had there took about three years to sell,” Jurek says.  “I listed this property thinking, ‘okay, well, this year maybe we’ll get more action.”’

But shortly after listing, Jurek started receiving daily inquiries on the house. Before long, he had three offers on it.

“Some of the stuff that normally would sit, that wasn’t as choice of a property necessarily in the past is now selling very quickly,” Jurek says.

He attributes the quick heat-up in the B.C. recreational property market to COVID-19 lockdown orders, part of a growing trend in which Canadians are looking to vacation property in search of space, an alternative place from which to work remotely or a driveable vacation destination while travel is not an option.

“People who maybe weren’t in the second home and recreational market 1/8before 3/8 are now saying, ‘Hey, we need to do that. If we can make it happen let’s make it happen,”’ Jurek says.

He’s seen month-over-month sales increase by an estimated 30 per cent in his region since the start of the pandemic. And while demand has risen across the market, he says prices have yet to climb to match, so those looking to buy should explore their options quickly.

The same has occurred in the greater Vancouver region, home to the Sunshine Coast and Whistler, according to Colette Gerber, realtor at Sutton West Coast Realty and chair of the Real Estate Board of Greater Vancouver. “Last month we saw a 21 per cent increase in sales,” Gerber says. “So, yes, it looks like vacation homes are now becoming a hot commodity.”

The Muskoka region and other parts of Ontario’s cottage country have seen similar upticks in demand, according to David Reid, sales representative at Enjoy Muskoka Realty in Gravenhurst, Ontario, and former president of the Ontario Real Estate Association. “One of the big drivers really is high speed internet,” he says. “You’ve got such great quality internet now and the paradigms have changed.”

Not every cottage comes with strong cell or web service, of course, and for many this is a non-starter. Those unfamiliar with the area in which they’re shopping should look for a realtor who knows the region well, all three agents suggest.

While this rule typically goes without saying, it’s especially important when searching for lakefront, rural, and two- or three-season properties, which come with their own quirks. In B.C., for example, it’s important to understand the underground system from which a property sources its water, Gerber says. “You need local knowledge to know what the ramifications are, how to deal with a well, how to deal with septic fields,” she says.

And in lake country, buyers should understand the permitting rules and nuances of the specific piece of water they’re looking at. A good realtor with hyper-local knowledge can help with this.

“We do have a lot of waterfront, but it can be very different from one lake to the next,” Jurek says of 100 Mile House. “Are you wanting to buy that second property and be able to waterski or are you just wanting to be able to fish? What lake you back on to 1/8determines 3/8 what you can expect that you can do there.”

Recreational properties also come with their own specific maintenance requirements. While year-round homes have owners’ constant attention, summer spots need an extra set of eyes (and hands, in the event of snowfall) during colder months.

Reid suggests finding a helpful neighbour or enlisting the services of a local road maintenance or cottage sitter program, like Muskoka Cottage Sitters, which typically comes with fees of a few hundred dollars per month but offers owners peace of mind and protection from accidents.

In addition to maintenance fees, prospective buyers should budget for repairs and winter-proofing expenses such as replacing windows, adding insulation, and updating utilities  which can run in the thousands depending on what a home needs. Ensuring that a house is protected from winter weather will “keep insurance happy,” Jurek says. “If you don’t follow the proper procedures and you have a problem, you don’t want to be denied the claim.”

While the costs of owning vacation property go far beyond a home’s sale price, first-time buyers shouldn’t be intimidated. Go into the process with eyes wide open, do your research, spend a few days in the area, and ask your realtor as many questions as possible. The more you know about a home, the better.

“The best way to find a vacation home is start driving,” Gerber says.  “Go to these areas. Look around.”

 

Sun Life becomes minority owner of Montreal based telemedicine business Dialogue

MONTREAL _ Dialogue Technologies Inc. says it has formed a partnership with Sun Life Financial Inc. that will see the insurance provider become a minority owner of the telemedicine business.

Montreal-based Dialogue says the commercial partnership involves a $32.7-million equity investment and gives Sun Life rights to acquire additional equity later.

The announcement is part of a $43-million round of financing from Dialogue’s existing backers Caisse de depot et placement du Quebec, Portag3 Ventures, White Star Capital, HV Holtzbrinck Ventures, First Ascent Ventures and Walter Ventures.

Dialogue provides virtual access to medical care in Canada and connects users directly to health-care professionals across the globe at any time of day.

The company says the COVID-19 pandemic and physical distancing measures have triggered a sharp increase in usage of its virtual care services.

The deal comes after Sun Life rolled out access in April to Lumino Health Virtual Care, a platform powered by Dialogue that allows users to connect with medical professionals digitally.

 

Aviva insurance faces class action lawsuit from hotels denied COVID coverage

By Ross Marowits

THE CANADIAN PRESS

TORONTO _ Canadian hotels are the latest group to launch a class-action lawsuit resulting from COVID-19 after they were denied insurance coverage for business income lost because of the pandemic.

In a statement of claim, Lerners LLP alleged that Aviva Insurance Company of Canada was in breach of contract when it denied the hotels’ loss of business income coverage after the federal and provincial governments declared states of emergency, restricting their business due to the outbreak of novel coronavirus.

It is seeking $150,000,000 including loss of business income and the accountants’ fees. Each hotel has up to $500,000 of coverage.

“We are still quantifying the specific loss for the representative plaintiff and putative class members, but the losses are expected to be significant,” said a Lerners spokeswoman.

The claim said hotels paid premiums for loss of business income insurance with the expectation that Aviva would act in good faith.

However, the insurance company notified hotel customers that the coverage applies only to outbreaks that occurred  “at or within the applicable area of the insured premises”.

“We know these are challenging times for everyone. And like many, the hospitality industry has been severely impacted by the COVID-19 pandemic,” Aviva said in a statement.

“Unfortunately in this instance there is no coverage for provincial wide shutdown orders as a result of a worldwide pandemic. As this matter is in litigation, it wouldn’t be appropriate for us to comment further.”

The lawsuit was filed on behalf of Roshan Holdings Inc., which owns and operates two hotels, a Home 2 by Hilton located in Milton, Ont., and a Hampton Inn located in Peterborough, Ont.

The Ontario government declared a provincial state of emergency on March 17 to help contain the spread of the pandemic. Other provinces ordered the mandatory closure of all places of non-essential business.

“Although the hotels were not completely closed, their operations were significantly restricted,” said the claim.  “The hotels could not offer food and beverage service, and all of the amenities including the pool and gym were mandated to close under the Closure Orders due to COVID-19.”

No one rented rooms as Canadians were told to stay home and international borders were closed to tourists.

The class action, which could involve hundreds of hotels, needs to be approved by a judge.

Multiple class-action lawsuits have been filed in Canada against insurance companies, airlines, a meat-packaging company, retirement homes, Correctional Service Canada and others resulting from COVID-19.

 

Mortgage defaults after COVID 19 could look different than 2008, says economist

TORONTO _ A Bank of Canada economist says the current economic recovery could be different than the recovery from the financial crisis of 2008.

Bank of Canada Director of Financial Stability Mikael Khan said that while the employment rate has fallen due to the pandemic, house prices are recovering and keeping homeowners from filing for insolvency.

Khan said breaks from mortgage payments have bought home owners some time to get back to work amid the COVID-19 pandemic and economic downturn.

“The fact that these deferrals have been available is really, really important,” said Khan.  “Ultimately what matters most when it comes to defaults is people having a job, having their incomes. What the deferrals are doing is they’re essentially buying time for that process to unfold.”

Khan, who spoke at the Move Smartly Toronto Real Estate Summit on Monday, has been studying mortgage defaults. He compared the COVID-19 pandemic to a natural disaster, such as the 2016 wildfires in Fort McMurray, Alta., which also involved a mortgage deferral recovery plan.

Bank of Canada research found that while the wildfires caused a bigger spike in employment insurance filings than the 2008 recession, the EI trend reversed much faster after the fires than in 2008.

The 2008 conditions set off a lengthy recession due to “an underlying fragility in the global financial system,” the research suggested. But the wildfires, like the COVID-19 pandemic, were a sudden shock.

“One thing that’s always very important when you’re facing a large negative shock is the initial conditions,” said Khan.

“In Fort McMurray, when the wildfires hit, that’s an area that had already been struggling for some time with the decline in oil prices that had occurred about a year or so prior, so financial stress was quite high . . . Now, at the national level, what we’ve been concerned about for many, many years is the high level of household debt. That’s the number one pre-existing condition that was there when the pandemic struck.”

While there are some parallels, the rebuilding process from a pandemic remains more uncertain compared to a wildfire, the research said. Khan cited increased savings rates as an example of a fundamental shift with potential to affect how quickly the economy recovers from COVID-19.

Over the past few months, some have warned that it could lead to a deferral cliff once benefits such as Canada Emergency Response Benefit and mortgage deferrals _ run out.

“When it comes to bumpiness in the recovery . . . . this question that has been in the background of most of our discussions is, `To what extent will we see defaults or insolvencies?”’ said Khan. “I think it’s reasonable to expect some sort of increase. What we’d be concerned about, there, is a very large-scale increase.”

Khan said that when a mortgage is in default, it can be caused by a  “dual trigger” of both unemployment and a large decline in house prices. Home prices in many areas have recovered since the start of the pandemic, Khan said. The job market’s recovery will be key to determining the impact of mortgage deferrals, said Bank of Canada research cited by Khan.

Softening population growth from immigration could start to weaken house prices in the future. But for now, Khan said, it wouldn’t make sense for homeowners with healthy home equity to file for insolvency.

“Even in cases where a homeowner simply can’t make their mortgage payments anymore  as long as they have equity in their homes and the housing market is relatively stable _ there’s always the option to simply sell without kind of resorting to those sorts of measures,” said Khan.

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