Desjardins Insurance announces changes to its leadership team

Press Release:

Gregory Chrispin, Senior Executive Vice-President of Wealth Management and Life and Health Insurance, is pleased to announce the following appointments.

André Langlois has been named Senior Executive Vice-President, Life and Health Insurance.

André will head up operations for Desjardins Insurance and all of its business lines, including: individual insurance, group and business insurance, group retirement savings and creditor and direct insurance. He will be responsible for managing the group savings firm Desjardins Financial Security Investments (DFSI) and the SFL and Desjardins Financial Security Independent Network (DFSIN) distribution networks. André has extensive knowledge of the life and health insurance sector, acquired over nearly 30 years with Desjardins Group.

Michael Rogers has been named Vice-President, Sales and Distribution.

In this national role, Michael will be responsible for individual insurance business development. He will also manage the SFL and DFSIN distribution networks and the group savings firm Desjardins Financial Security Investments, which has more than $14 billion in assets. Michael will be rolling out a renewed service offer for our distribution partners to contribute to their performance and strengthen their presence across the country. Relying on the expertise of 4,800 people and more than 10,000 distribution partners, Desjardins Insurance provides peace of mind to more than 5 million Canadians. With assets of $100.3 billion, the company is the fifth largest life and health insurance company in Canada.

Source:

John Bordignon
Media Relations – State Farm Canada

www.statefarm.ca

5 Reasons Canada’s Housing Market Won’t Crash

Jason Phillips | Motley Fool

Much has been made over the past decade of Canada’s rising household debt, which is now at levels similar to those in the United States prior to the 2008-09 Financial Crisis.

With housing prices in Toronto up more than 30% over the past 12 months, and Vancouver prices having been inflated for several years, many are wondering: now that the Bank of Canada has raised interest rates twice in the last three months, will it be enough to topple the Canadian housing market?

There are five very important reasons why investors should not expect a housing correction in the Canadian market to be of nearly the same magnitude as the one experienced in the United States 10 years ago.

Reason #1: The United States incentivizes home ownership

In the U.S., federal policy actively encourages home ownership, whereas in Canada, policies are designed to encourage access to housing, but they do not explicitly favour home ownership over renting or leasing a property.

It seems then only natural to suggest that creating incentives for home ownership (like, for example, allowing mortgage interest to be tax deductible in the U.S.) would be more likely to create an environment ripe for a housing bubble.

Reason #2: Canada’s housing market is directly backed by the Federal government

In the U.S., Fannie Mae and Freddie Mac are responsible for providing guarantees on mortgage-backed securities and providing overall stability to the housing system.

At the time of the Financial Crisis, Fannie Mae and Freddie Mac were privately owned, with the “implicit” backing of the Federal government. Yet, when push came to shove, investors learned the hard way the difference between an implicit guarantee and direct backing.

By comparison, the Canadian equivalent responsible for providing insurance and stability, is the Canada Mortgage and Housing Corporation (CMHC) — a Crown corporation directly owned by the Canadian Federal government.

Reason #3: Canada does not allow non-recourse mortgages

In Canada, mortgages are typically “full-recourse” loans, meaning the borrower continues to be responsible for repaying the loan in the event of a foreclosure, which effectively incentivizes the borrower to do everything in their power to avoid foreclosing and losing the property.

Meanwhile, many U.S. states employ “non-recourse” mortgages, which, in the event of a foreclosure, allow the borrower to walk away from their homes, leaving the lender with no-recourse besides taking over ownership of the property.

It’s easy to see how non-recourse mortgages can exacerbate the problem of homeowners defaulting on their payments.

Reason #4: Canada has tighter restrictions on mortgage insurance

Canadian legislation prohibits lenders from issuing mortgages without loan insurance if the loan is greater than 80% of the value of the property.

Insurance which is purchased from the CMHC covers the entire amount of the loan for the entire life of the mortgage.

In the U.S., it is a little different; while many lenders will require insurance, they are not legally obligated to do so.

Moreover, in the U.S., loan insurance is “partial,” often covering 20-30% of the loan amount and is cancelled as soon as the value of the loan falls below 78% of the purchase price.

Reason #5: The relative absence of a subprime market in Canada

Sub-prime mortgages are made to riskier borrowers, such as those with a weaker credit history or less stable income.

In the U.S., before the housing crisis, the sub-prime mortgage market peaked at 23.5% of all mortgage originations.

By contrast, in Canada today, the sub-prime mortgage market, which includes Home Capital Group Inc. (TSX:HCG), accounts for less than 5% of originations, making the market significantly less risky.

Conclusion

Regardless of how you look at it, rising interest rates are not a good omen for the future of Canada’s housing market. And while delinquencies today are well below historical averages, that may actually be confirming evidence that a bubble is present.

Current and prospective homeowners should approach the market with caution. Those warning that the “sky is falling” and that the environment is similar to the situation in the U.S. 10 years ago, ought to think a bit more Foolishly.

RBC first bank in Canada to enable bill payments using Siri

Who doesn’t wish they had an assistant to pay their bills? Thanks to an update to the RBC Mobile app, Royal Bank of Canada (“RBC”) personal banking clients are now the first in Canada who can ask Siri to pay their bills on iPhone and iPad.

Image of the final bill payment screen when paying a bill using Siri on iPhone. ILSTV.com

RBC also launched seamless Interac e-Transfer® payments within iMessage, which means clients can send a transfer without leaving their iMessage window. Building on its market leading, free person-to-person (P2P) money transfer services for chequing account clients launched last year, and money transfers with Siri earlier this year, RBC continues to develop simple and innovative ways for clients to make payments and bank with their mobile devices.

“By offering bill payments through Siri and P2P transfers through iMessage, we’re providing more convenient solutions to support our client’s payment needs,” said Sean Amato-Gauci, executive vice-president, Cards, Payments and Banking, RBC. “Our clients are avid users of Interac e-Transfer payments, and embraced our launch of money transfers using Siri earlier this year. By giving clients the ability to seamlessly and conveniently bank using voice commands, we’re delivering simple and innovative solutions.”

 

Using Siri to pay your bills with the RBC Mobile app

Paying your bills using Siri is simple. Once you give the voice command, Siri will confirm the name from your payee list and the RBC Mobile app automatically debits your account and sends the payment. The payment is secure and protected by TouchID.

Sending an Interac e-Transfer payment is just as simple. Clients simply type the amount of money they’d like to send to their contact in the iMessage window, and authenticate the transfer using TouchID.

These payment solutions are the latest enhancements from the RBC innovation labs, which test new ideas by partnering with academia, fintechs and RBC clients to make banking easier. The RBC labs are actively working on a range of client solutions that will be coming to market this year.

“We’re one of the leading voices on artificial intelligence in Canada, and our integration of Siri into bill payments and P2P transfers are an example of how our clients are already benefitting from these advancements in AI,” said Amato-Gauci. “We’re committed to providing clients with exceptional experiences when, how and where it’s most convenient for them, including exploring ways to integrate into social networks and digital platforms that are essential to their everyday lives.”

The RBC Mobile app was recently awarded the Highest in Customer Satisfaction Among Canadian Mobile Banking Apps by the J.D. Power inaugural 2017 Canadian Banking Mobile App Satisfaction Study. RBC has seen an increase of more than 20 per cent in active mobile users over the past year, a clear indication that more Canadians are using the RBC Mobile app to bank whenever and wherever they want.

The RBC Mobile app is available for free download from the App Store on iPhone and iPad or at www.AppStore.com. For more information about the RBC Mobile app, please visit www.rbcroyalbank.com/mobile/.

About RBC
Royal Bank of Canada is Canada’s largest bank, and one of the largest banks in the world, based on market capitalization. We are one of North America’s leading diversified financial services companies, and provide personal and commercial banking, wealth management, insurance, investor services and capital markets products and services on a global basis. We have approximately 80,000 full- and part-time employees who serve more than 16 million personal, business, public sector and institutional clients through offices in Canada, the U.S. and 35 other countries. For more information, please visit rbc.com.

RBC helps communities prosper, supporting a broad range of community initiatives through donations, community investments and employee volunteer activities. For more information please see: http://www.rbc.com/community-sustainability/.

SOURCE RBC Royal Bank

For further information: Heather Colquhoun, RBC Communications, 437-994-5044, heather.colquhoun@rbc.com; Sarah Hall Turnbull, Blue Sky Communications, 416-458-3878, sturnbull@blueskycommunications.com

Looking at Canada’s Insurance Sector

Looking at Canada’s Insurance Sector

Excerpted article was written by Ryan Goldsman

Over the past six months, shares of a number of Canadian insurance companies have moved either sideways or fallen slightly. While insurance companies have offered investors fantastic long-term rates of return, it is essential for new investors to consider the next decade to have proper expectations.

Considering the current low interest rate environment, the challenges over the past decade have been significant for companies that take in float and invest the capital while waiting to pay it back out in the form of claims. Insurance companies may be the biggest benefactors from rising rates (from the Bank of Canada) or rising risk-free rates of return through government t-bills.

Over the past six months, the insurance company that held up the best is Manulife Financial Corp. (TSX:MFC)(NYSE:MFC). It has been flat (from a price perspective), and investors still received the quarterly dividend of $0.21 over that time. At a current price near $24.50, the dividend yield offered to new investors is approximately 3.4%. As of the most recent financial statements (March 31, 2017), the tangible book value amounts to $21.82 per share.

The second-biggest insurance company by market capitalization is Great-West Lifeco Inc .(TSX:GWO). Over the past six months, it has lost 3% while paying a quarterly dividend which yields 4.25% on an annual basis. While the company currently trades at a trailing 13 times earnings with a tangible book value of $16.49 per share, the current share price of almost $35 may not be the best option available to investors.

Next up is Sun Life Financial Inc. (TSX:SLF)(NYSE:SLF). At almost $46 per share, it offers investors a dividend yield of approximately 3.75% and trades at 11.2 times trailing earnings. The tangible book value per share is $27.59 per share as of March 31, 2017. Over the past six months, shares have lost close to 11% while still paying quarterly dividends.

Last up is the much smaller Industrial Alliance Insur. & Fin. Ser.  (TSX:IAG). At $53.50 per share, it is the cheapest at a trailing price-to-earnings multiple of 10 times. The dividend yield, however, is only a little more than 2.5%, while the tangible book value is a solid $42.83 per share. Over the past six months, the price change has been close to negative 2%, but the dividends have been paid every quarter.

While the Canadian insurance industry offers investors a many different choices, it is important for investors to line themselves up with the right insurance company. While shares in the smaller Industrial Alliance Insur. & Fin. Ser. may offer higher potential for capital appreciation, the shares of Great-West Lifeco Inc. will probably be the least volatile while providing the most lucrative dividend at 4.25%.

Going forward, investors will need to ask themselves which insurance company they would like to invest in.

Source: The Motley Fool

Where to Invest With Increasing Interest Rates

South of the border, the chair of the Federal Reserve, Janet Yellen, is primed to announce a hike in interest rates in the coming weeks. Although this move may already be largely priced in to the equity markets, Canadian investors still need to stop and take a serious look at their investment holdings.

Although a small interest rate increase is by no means a disastrous event for investors, the reality is, what were otherwise fantastic returns may diminish to adequate returns. Higher interest rates translate to higher interest costs and lower net profit. Investors need to reset expectations in the years to come.

Many asset classes will decline in value if interest rates rise, so investors need to ask the question: “Where do I invest to benefit from rising interest rates?”

Obviously, long term bonds, REITs, and utility companies are not going to be anywhere the top of the list. Instead, the list will be topped by banks and insurance companies. In Canada, we have three large insurance companies that dominate the marketplace. Let’s look at each insurance company.

Manulife Financial Corp. (TSX:MFC)(NYSE:MFC)

Currently, Manulife is Canada’s biggest insurance company. Investors taking a new position will be offered a dividend yield of almost 3.5% and are picking up shares at a premium to tangible book value of 50% with a trailing price-to-earnings (P/E) ratio of 17 times.

Great-West Lifeco Inc. (TSX:GWO)

While the shares of Canada’s second-largest insurer are much less volatile, the dividend yield is approximately 4%, and shares trade at more than double the tangible book value. Although the trailing P/E is less than 14, shares are not necessarily a fantastic deal depending on what metric is used to evaluate the security.

Sun Life Financial Inc. (TSX:SLF)(NYSE:SLF)

Shares of Sun Life offer new investors a dividend yield of just under 3.5% and trade at a premium to tangible book value in the amount of 82%. The trailing P/E ratio is currently 12.3 times.

While investors may be looking for somewhere to hide in the face of rising interest rates, the truth is that many other investors have already found their way into Canada’s insurance companies and big banks. Although valuations may not seem very attractive at current levels, the importance for investors is to understand what rising rates mean for the companies they are investing in.

As insurance companies invest the premiums received (this is called the float) into short-term, very low risk investments, the increase in interest rates will greatly benefit these companies over time.

Looking at all three Canadian insurers, investors should note the volatility and dividend yield of each stock. While low payout ratios translate to more money reinvested into the company, the truth is, growth is only good if it is profitable. Sometimes boring is better!

Six “pro” strategies for today’s highly uncertain market

Motley Fool Canada’s $250,000-real-money-portfolio service, Motley Fool Pro, is currently closed to new members. But lead advisor Jim Gilles is doing something special for investors who are worried about the market and where it will head in 2017.

He’s revealing the six strategies he uses in Pro to help members guardrail their portfolios and make money in up, down, and sideways markets.

Nearly half of Canadians lack a financial plan, putting their goals at risk

A new CIBC (TSX:CM) (NYSE: CM) poll finds that nearly half (46 per cent) of Canadians do not have a financial plan in place to reach their goals, despite many feeling concerned about their retirement years.

“While most of us have a fairly good sense of our financial goals, so many Canadians do not have a clear road map in place to achieve what they want today – and tomorrow,” says Sarah Widmeyer, Managing Director and Head of Wealth Strategies, CIBC. “Whether the goal is to eliminate debt, save more, or retire early, you can achieve success with a financial plan.”

Key poll findings include:

  • 54 per cent of Canadians surveyed have a financial plan, with
    • 64 per cent of them having a long-term plan that identifies their savings goals and the steps to achieve them;
    • And 36 per cent who describe it as only a budget they review regularly, a short-term plan or ‘other’.
  • 46 per cent of Canadians surveyed do not have a financial plan
    • with 42 per cent of them saying they ‘have a pretty good idea’ and don’t need to write it down.
  • When thinking about retirement, just over half (51 per cent) are most worried about increasing health care costs, 45 per cent are concerned about how to manage unexpected expenses, and 43 per cent worry that they won’t have enough money to live the life they want.

‘Life gets in the way’

According to previous CIBC polls, ‘paying down debt’ has been the top financial priority for Canadians for seven straight years, indicating few people are making headway on their goals.

“We all aim to have a sufficient nest egg for retirement and money to handle the unexpected, but everyday life has a tendency of getting in the way,” says Ms. Widmeyer. “By setting out a clear path to your goals, a financial plan can help you stay on track. It also gives you the confidence to manage surprises, so that setbacks don’t put your retirement dreams and other goals at risk.”

The poll finds that having a financial plan in place makes Canadians feel more confident in their ability to manage unexpected changes in their finances. Additionally, those who have a financial advisor (61 per cent) also feel better able to manage setbacks. The poll surveyed Canadians with household incomes above $100,000.

A financial plan and a budget are not the same: But both are important

The poll findings show that even among those who do have a financial plan, more than a third (36 per cent) appear to be confused about how it differs from a budget, pointing to a limited understanding of the full value and purpose of a financial plan.

“While budgeting and financial planning go hand-in-hand, a budget alone is insufficient in crafting the life you want in the future,” says Ms. Widmeyer. She adds that confusing a budget with a financial plan may leave Canadians ill-prepared.

Ms. Widmeyer describes a financial plan as a clear, written report detailing an individual’s personal goals, financial needs and priorities in areas such as income and expenses, taxes, mortgage planning, education needs, retirement, estate planning, and insurance. A financial plan also incorporates assumptions like inflation, the time to a goal and expected rates of return, which many may miss on their own, she adds.

“There are many things to consider depending on your life stage, income and lifestyle expectations,” says Ms. Widmeyer. “Is it better to pay down debt or save? Are you saving enough? Could you possibly retire earlier than you thought? These are some of the questions a financial plan can help you answer and where the real value of a plan lies.”

Tips to get started

For those who are unsure of where to start, Ms. Widmeyer offers these tips:

  1. Identify your short-term and long-term goals
  2. Take a detailed look at your budget
  3. Create a plan setting measurable and time-based goals
  4. Review your progress annually

“Now is the perfect time to speak to a financial advisor who can help you identify and prioritize your goals and set a plan to achieve them,” adds Widmeyer. “The keys to success are to have a plan in place, review your progress annually, and then make any changes as needed. This will keep you on track to achieve what’s important to you.”

A plan for ages

  • In your 20’s and 30’s – When you’re starting out, it’s important to manage debt effectively and keep an eye on savings. Taking advantage of the Home Buyer’s Plan can help you build a down payment for your first home, while saving through a TFSA could save your RRSP contribution room for years when you’re likely to earn a higher income. Read Paul and Andrea’s story.
  • In your 40’s and 50’s – For the sandwich generation, it’s all about balance. Competing priorities pull you in different directions, and can make it difficult to stay on track. Look for ways to maximize savings through Registered Education Savings Plans, and be sure to balance your portfolio to fit the right time horizon, risk tolerance and accurately forecast future cash flow. Read Xue and Mei-Lien’s story.
  • In your 60’s and beyond – For those at or nearing retirement, it’s important to understand your new income needs, lifestyle and plan for any unexpected health costs in order to set a clear course for the years ahead. Knowing the right time and amount to withdraw from Registered Retirement Income Funds to reduce tax liabilities and continue saving for later years, while discussing your estate can help protect your wealth and minimize taxes. Read Andrew and Jennifer’s story.

KEY POLL FINDINGS:

Percentage of Canadians surveyed with a financial plan detailing out financial decisions and activities for their household:

Yes,    

54%

No

46%

Top reasons Canadians surveyed without a financial plan feel they do not need one:

I have a pretty good idea of what I need to do and don’t need to write it down

42%

My situation is pretty simple and I don’t see the need for one

26%

Canadians’ surveyed top three most important goals for having a financial plan:

Saving for retirement

53%

Eliminating credit card or line of credit debt

38%

Paying off  their mortgage sooner

38%

Top retirement concerns among Canadians surveyed:

Increased health care costs

51%

Managing unexpected costs (e.g. health-related expenses, long-term care)

45%

Not having enough money to live the life I want

43%

Confidence of those with or without a financial plan in their ability to manage an unexpected life event or scenario:

Have a
financial
plan

Do not
have a financial
plan

Have a
financial
advisor

Do not
have a
financial
advisor

Someone in the household losing their job suddenly

70%

58%

69%

57%

A family illness or disability that left me or a family member unable to work for a few months

77%

72%

78%

68%

Medical expenses not covered by my insurance provider

77%

71%

78%

67%

A sudden, unexpected financial emergency (e.g. urgent home renovation, car repairs)

88%

80%

87%

80%

Divorce

51%

48%

52%

46%

Growing family

57%

59%

60%

55%

Financial Plan Poll Disclaimer:
From January 5 to 9, 2017, an online survey was conducted among 1,007 Canadian adults with a household income greater than $100,000 who are Angus Reid Forum panelists. For comparison purposes, a probability sample of this size has a margin of error of +/- 3%, 19 times out of 20.

About CIBC
CIBC is a leading Canadian-based global financial institution with 11 million personal banking and business clients. Through our three major business units – Retail and Business Banking, Wealth Management and Capital Markets – CIBC offers a full range of products and services through its comprehensive electronic banking network, branches and offices across Canada with offices in the United States and around the world. Ongoing news releases and more information about CIBC can be found at www.cibc.com/ca/media-centre/ or by following on Twitter @CIBC, Facebook (www.facebook.com/CIBC) and Instagram @CIBCNow.

SOURCE CIBC – Consumer Research and Advice

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