Manulife ‘highly confident’ ahead of hedge fund case verdict: CEO

TORONTO _ The chief executive of Manulife Financial Corp. says the insurer is  “highly confident” it will prevail in its legal battle with hedge fund Mosten Investment LP over insurance contracts.

Roy Gori told a conference call discussing its latest quarterly results today that he’s not sure when a decision will be rendered in the case brought against Manulife’s life insurance subsidiary, but the company is “prepared to see this through.”

The trial involving one of Manulife’s insurance contracts purchased by Mosten wrapped up last year.

Mosten has argued that under the terms of the universal life insurance policy, it can deposit an unlimited amount of money and receive an annualized guaranteed return of at least four per cent with one-month liquidity.

Prominent short-seller Muddy Waters has said if the court sides with Mosten, the hedge fund could sell an unlimited amount of partnership interests backed by Manulife and  “financially cripple” the insurer.

Manulife has argued that issuers of universal life policies never intended to have them function as deposit or securities contracts, and it disagrees with the short-seller’s conclusions.

Bus crash survivor to get insurance payment ahead of legal battle

Laurie Fagan, CBC news

Derek Nicholson’s client Gwen Lambert suffered serious leg injuries in last month’s fatal OC Transpo crash at Westboro station. He says she’s relieved the city’s insurance company will give her an interim payment before her lawsuit is dealt with. 

An Ottawa woman suing the City of Ottawa after her legs were crushed in last month’s fatal double-decker bus crash is set to get a significant payout from the city’s insurance company.

Gwen Lambert was one of 23 people injured Jan. 11 when her OC Transpo bus slammed into a Transitway shelter at Westboro station.

Three people also died in the crash.

“Her condition is still very challenging, and my understanding is that she may not be able to walk for about a year. But it’s still not clear,” said her lawyer, Derek Nicholson.

Nicholson’s firm, Beament Herbert Nicholson LLP, has filed a negligence lawsuit for more than $6 million against the city, OC Transpo, the bus driver and the province of Ontario.

That amount is the “upper limit,” Nicholson said, that would compensate Lambert — who is still in hospital and is facing multiple surgeries, followed by lengthy rehabilitation — for her potential lost income, future health care costs, and pain and suffering.

Nicholson would not say how much Lambert would receive in the interim from the city’s insurance company, other than it was “tens of thousands of dollars.”

Lambert was riding this double-decker city bus when it struck the transit shelter at Westboro station on Jan. 11. She was one of 23 people injured in the crash. (Justin Tang/The Canadian Press)

Nicholson said he’d forged a strong relationship with the lawyer for the city’s insurance company after representing survivors of a 2013 collision between an OC Transpo bus and a Via Rail train in their own lawsuit.

The company’s lawyer “volunteered” the possibility of an advance payment, said Nicholson — an unusual offer in insurance industry negotiations.

“I don’t think liability is being seriously contested,” he said. “Obviously they haven’t admitted it yet, but the advance is a credit to what my client will be entitled to eventually.”

‘Immediate assistance’

The city declined an interview Wednesday about the payment.

However, deputy solicitor David White said in an email that interim payments were being covered by the insurer to “provide immediate assistance to those seriously injured and their families,” rather than forcing them to first wait for the litigation process to wrap up.

For now, only Lambert is receiving a payment, White said. The city’s insurer was “reaching out to other seriously injured plaintiffs through their legal counsel,” he added.

Nicholson said he was encouraged by the gesture, since one client he represented following the 2013 crash waited three years to receive money.

He said Lambert was “grateful” to have received the payment, making it “one less thing” she had to be concerned about.

“It’s an unfortunate accident, and I think the city wants to help people,” he said.

“It’s a pretty terrifying time. I know my client is stuck in a hospital still, and worrying about money isn’t something you want on top of that.”

Source: CBC News

David Assman has cheeky response after being denied personalized licence plate

MELVILLE, Sask. _ A Saskatchewan man has come up with a cheeky response to the province rejecting his request for a personalized licence plate.

David Assman, pronounced Oss-man, wanted to put his last name on his licence plate.

Saskatchewan Government Insurance (SGI) said no because it could be considered offensive when seen out of context.

Assman says in a Facebook post that he appealed the decision but was again rejected.

In response, he added a large “ASSMAN” decal to the back of his truck that’s designed to look like a licence plate.

The move has gotten a lot of response on social media including from the SGI twitter account.

“All’s well that ends well,” said ?SGItweets.

IBAC Welcomes the Wawanesa Mutual Insurance

Toronto, February 13, 2019 – The Insurance Brokers Association of Canada (IBAC) is pleased to announce that the Wawanesa Mutual Insurance Company has become a Full Partner for 2019.

Wawanesa’s sponsorship will support IBAC’s Broker Identity Program (BIP), a nationaladvertising campaign that raises awareness of the significant value that insurance brokers provide for their clients – choice, advice and advocacy. With a redesigned logo and our new “Before the Quote” platform, the BIP campaign is reinvigorating the brand and highlighting the value of the broker distribution system.

As an IBAC Full Partner, Wawanesa provides sponsorship funding and in-kind services to support a wide range of IBAC advocacy and public education initiatives focused on promoting the significant value of insurance brokers in protecting Canadian consumers, communities and organizations. Wawanesa Mutual today is the largest P&C insurer in Canada that exclusively distributes insurance products through the broker channel.

In addition, their investment will contribute to important IBAC initiatives including IBAC’stechnology leadership, professional development of the broker workforce, and our strong and effective federal advocacy to maintain the separation of banking and insurance, which protects consumers and promotes a fair and competitive marketplace.

“We believe independent brokers are in the best position to deliver advice and advocacy to ourmutual customers,” says Carol Jardine, President, Canadian P&C Operations, WawanesaMutual. “And being 100% broker-distributed, we can now truly say we’re ‘all in’ on the Canadianbroker channel. Our Full Partnership with IBAC is exciting for us, as it will offer us even more leverage to invest in – and support – the success of brokers.”

IBAC Chief Executive Officer Peter Braid added: “I am very pleased to welcome Wawanesa to the IBAC family as a Full Partner. As previous sponsors of IBAC’s activities with the WorldFederation of Insurance Intermediaries (WFII), Wawanesa has shown strong support for our organization. Now as a Full Partner, their increased investment further demonstrates their unwavering belief in the broker channel and their commitment to ensuring that consumers are well served.”

About The Wawanesa Mutual Insurance Company:

The Wawanesa Mutual Insurance Company, founded in 1896, is the largest Canadian Property and Casualty Mutual insurer with $3 billion in annual revenue and assets of more than $9 billion. Wawanesa Mutual, with executive offices in Winnipeg, is the parent company of Wawanesa General, which offers property and casualty insurance in California and Oregon; Wawanesa Life, which provides life insurance products and services throughout Canada; and Western Financial Group, which distributes personal and business insurance across Western Canada. With over

5,000 employees, Wawanesa proudly serves over two million policyholders through regional offices and service offices in Canada and the United States. Wawanesa actively gives back to organizations that strengthen communities where it operates, donating well above internationally recognized benchmarks for excellence in corporate philanthropy. Learn more atwww.wawanesa.com

About IBAC:

Founded in 1921, the Insurance Brokers Association of Canada is the national voice of over 38,000 property and casualty insurance brokers, advocating for the interests of both insurance brokers and consumers to the Government of Canada. The Broker Identity Program (BIP) was launched in 1988 to promote the value and professionalism of the insurance broker to consumers, insurers and governments.

IBAC

Insurance claim costs are rising because severe weather is making flooding worse

Craig Stewart

Opinion: IBC fully stands by our insured loss numbers and their attribution to escalating severe weather events driven by climate change

Since 2009, insurers have paid out an average of over $1 billion per year in claims, in contrast to the $400 million annually averaged through the 1990s. In 2018, insured losses from severe weather events across Canada totalled $1.9 billion, the fourth-highest amount of losses on record. Insured losses, on average, are caused by flooding more than any other single peril. Flooding can be caused by extreme rainfall, by rivers and lakes overflowing their banks due to sudden snowmelt and due to storm surges caused by coastal storms.

Terence Corcoran’s recent article discusses a complaint made by Rob Muir, a licensed professional engineer, which Muir lodged successfully with the Ombudsman for Radio Canada, Guy Gendron. Muir disputed comments by Blair Feltmate, Head of the Intact Centre on Climate Adaptation, who cited Insurance Bureau of Canada’s (IBC’s) contention that increases in the frequency and intensity of severe weather are the source of these rising insurance claims costs. Gendron, in reaching his findings relied on a single published source that studied historical incidences of severe rainfall between 1953 and 2012.

Gendron’s conclusions were erroneous for several reasons. First, the time series used by Gendron ends in 2012 while IBC’s numbers and Feltmate’s public comments primarily reference increases that started in 2009 and have risen through 2018.

Secondly, Gendron only references flooding that has arisen from extreme rainfall whereas insurance losses accrue from a range of different types of flooding events.

Finally, IBC’s numbers actually understate the growing risk, as the Canadian insurance industry did not start insuring the single greatest peril for residences — overland flooding — until late 2015. Those residential losses had been entirely borne by Canadian governments and homeowners until that date. Even without residential overland flood losses, insurers experienced escalating water claims from commercial policies, automobile policies and sewer back-up coverage.

Finally, our stated numbers only capture catastrophic events that total over $25 million and not the host of smaller events that occur regularly across Canada. Based on these errors IBC is requesting that the CBC review Gendron’s decision. IBC fully stands by our insured loss numbers and their attribution to escalating severe weather events driven by climate change.

The IBC-sponsored report, Combatting Canada’s Rising Floods Costs: Natural infrastructure is an underutilized option, was recently featured at a special event hosted by the Ontario Society of Professional Engineers (OSPE). It provides a framework for making decisions about the return on investment of green infrastructure deployed as a climate-adaptation measure. IBC, along with a number of OSPE members, spoke to ways in which both green and grey (or engineered) infrastructure are vital elements to a whole-of-society approach to climate change.

Fundamentally, we as a nation need to prepare for the impacts of severe weather. By focusing on adapting to climate change we can work together constructively to keep Canadians out of harm’s way.

Craig Stewart is vice-president of federal affairs at the Insurance Bureau of Canada.

Federal government insured Suncor’s Middle East misadventures

The excerpted article was written by  | The Globe and Mail

The federal government paid Calgary-based Suncor Energy as much as $600-million to compensate for Middle East oil and gas assets and income lost since the Arab Spring in 2011.

On Wednesday Suncor disclosed in its quarterly financial results that it had received $300-million in “risk mitigation” payments relating to its Libyan operations. This followed a separate $300-million payment linked to its Syrian enterprise in 2012. Suncor declined to answer questions about the payments.

Suncor reported a profit of $3.3-billion on revenue of $38.98-billion for the 12 months ended Dec. 31, 2018. With an enterprise value of $76-billion at the end of last year and daily production capacity of about 830,000 barrels, Suncor by any measure ranks among Canada’s largest energy companies.

Export Development Canada (EDC), the national export credit agency, has long offered political risk insurance. That insurance protects EDC’s customers against the dangers of doing business in high-risk emerging markets, such as expropriation, political violence and the inability to transfer or convert local currency. The insurance cushioned the blow for Suncor, which wrote off assets worth billions of dollars from its former Middle East operations.

Political risk insurance is a niche product, and Suncor’s claims are massive by both Canadian and international standards. The U.S. Overseas Private Investment Corp., one of the world’s largest political risk insurers, has paid out 300 settlements since it was established by president Richard Nixon in 1971; the combined value of those claims was only US$977.4-million.

Although a handful of commercial insurers have offered the product, the Crown corporation is known for taking risks the private sector would never entertain. In the years leading up to 2011, EDC charged a premium of around 1 per cent or slightly less for this insurance. EDC has typically earned around $10-million to $20-million in premiums annually from selling political risk insurance; at that rate, it would take decades to cover Suncor’s claims.

EDC underwrote Suncor’s insurance policy in 2006 at a time when Petro-Canada (which merged with Suncor in 2009) produced crude oil in Libya and was pursuing a new natural gas development in Syria, having just sold a portfolio of mature assets there. Petro-Canada began developing the Ebla natural gas project in Syria in the late 2000s, where it saw “significant upside potential.” Meanwhile, it also established itself as one of Libya’s larger oil producers through Harouge Oil Operations, a joint venture with that country’s national oil company.

The company pumped hundreds of millions of dollars in capital spending into the two countries. But it knew its overseas assets were threatened by unrest, economic and legal sanctions and war, and purchased political risk insurance from EDC and commercial insurers to mitigate those perils.

EDC, meanwhile, wanted to encourage more Canadian foreign direct investment. One way to accomplish that was by offering increased volumes of political risk insurance to Canadian companies interested in doing business in volatile emerging markets. In 2006 EDC broadened its political risk insurance program to cover a wider variety of investments. That year it underwrote $4.8-billion in political risk insurance, substantially beating its own target.

Canadians had little way of knowing about Suncor’s insurance policy. Although EDC disclosed most of its financing transactions since 2001, it reveals political risk insurance policies only when the beneficiaries were lenders such as banks. In 2006 it disclosed political insurance policies in Mauritania, Jamaica and Mexico, but none in the Middle East. EDC declined to answer most of The Globe’s questions about the Suncor policy. “We are obligated to respect the confidentiality of our policy holders and their policies with us,” it said in a statement.

EDC continued expanding its insurance business in the Middle East and Africa throughout the late 2000s, and by the dawn of the Arab Spring, 37 per cent of its political risk insurance portfolio resided in that region – by far its largest regional exposure.

The timing proved unfortunate.

Things soured quickly in February, 2011, when what began as anti-government rallies in Benghazi grew into an armed uprising against the government of Moammar Gadhafi. Meanwhile, pro-democracy protests in March, 2011, in southern Syria also mushroomed into widespread unrest throughout the country, prompting a crackdown by President Bashar al-Assad and, ultimately, civil war.

Responding to international sanctions, Suncor suspended operations in both countries. In Syria the suspension proved indefinite, and the company filed a claim to EDC in 2011. The following year, Suncor reported receiving $300-million in “risk mitigation” payments relating to its Syrian operations, without identifying the source. Meanwhile, EDC disclosed a $300-million claim without identifying the customer. “EDC had the largest political risk insurance claim charge in its history as a result of the turmoil in North Africa and the Middle East,” Pierre Gignac, EDC’s then-chief risk officer, mentioned in a 2013 commentary.

Another was coming.

Suncor’s withdrawal from Libya unfolded in a less straightforward manner. After Mr. Gadhafi was removed from power and murdered in 2011, Suncor was optimistic it could continue doing business under the new government. It resumed production later that year. But beginning in July, 2013, Suncor found its Libyan oil shut in again, a situation that worsened after export terminals it relied on were closed. The result was the same: As unrest escalated, Suncor concluded it could no longer operate in Libya, either.

Suncor received its second $300-million payment earlier this year. The company noted it might have to repay some of that sum “dependent on the future performance and cash flows from Suncor’s Libyan assets.” But as of press time, Suncor said continuing political risk continues to impede its production in Libya. As the latest payment has yet to appear in EDC’s financial statements, it’s not clear the Crown corporation paid the full balance.

In the years following Suncor’s monster Syrian claim, EDC disclosed additional political risk insurance exposures across the Middle East, including $300-million of liability in each of Tunisia, Qatar, Algeria and Yemen. EDC continues to offer this type of insurance, but in 2017 its total exposure fell below $1-billion for the first time in years, and its Middle Eastern liability had fallen to 10 per cent of its total portfolio.

EDC says it is self-funding. However, as a Crown corporation, its benefits from the federal government’s triple-A credit rating.

EDC declined to discuss whether it had changed its underwriting or risk management practices as a result of Suncor’s claims.

Jim Carr, the Minister of International Trade Diversification, bears primary responsibility for supervising the Crown corporation. In a statement, his office said: “In these cases, the political risk insurance was purchased under the previous government and these payments were simply following the contracts signed under those agreements.

“We will continue to work with the agency and their new CEO to ensure that they uphold the values of openness and transparency that Canadians expect. ” (Former long-time Bombardier executive Mairead Lavery was appointed EDC’s new president and CEO on Feb. 5, replacing Benoit Daignault, who held the post five years beginning in 2014. She is the first female to hold the position.)

In addition to Suncor, other Canadian companies have historically also experienced significant losses while operating abroad – often because of expropriation.

Robert Wisner, a lawyer with McMillan LLP in Toronto who specializes in international arbitrations, said disputes between companies and governments involving political risks are increasingly resolved under international investment treaties. “In that field there have been billion-dollar awards, including for Canadian companies,” he said. Prominent Canadian examples include Canadian mining companies operating in Venezuela such as Crystallex International Corp., Rusoro Mining Corp. and Gold Reserve Inc. that lost properties through expropriation in Venezuela.

“Obviously the billion-dollar cases are at the very high end,” he added, “but there have been other cases where awards have been paid out for hundreds of millions of dollars.”

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