Grant Thornton LLP wants to remind Canadian taxpayers and businesses that now is the time to employ end-of-year tax planning strategies that can help reduce the overall tax burden.

On the fourth day of tax tips, sell money-losing investments to offset capital gains. If you are an investor with a capital gain this year (or any of the last three years), you might want to talk to your investment advisor about selling investments with accrued losses before the end of the year. There’s one caveat – you can’t sell to your spouse and realize the loss. However, you can sell or gift the investments to a child or other family member. Also, if your spouse has realized a gain and you have a loss, there are ways to transfer the loss to the spouse with the gain. However, if you do sell, make sure the transaction settles before December 31 – many transactions take a couple of days to complete.

Other days of tax tips:

Day 1: Switching year-end bonuses into dividends

Day 2: Maximizing the small business deduction

Day 3: Accelerating your business expenses into this year’s higher tax rates

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The Insurance Corporation of British Columbia (ICBC) has reported net income of $52 million in the third quarter of 2001, down from $331 million the previous year.

Higher claims costs, especially bodily injury claims costs, had an impact, the insurer said.

“We have seen increasing pressure, in particular, from bodily injury costs,” said Jon Schubert, ICBC’s president and CEO. “This year, bodily injury costs will be approximately $1.7 billion – $350 million more than five years ago. This increase in costs is not sustainable without a rate increase.”  Generally, claims costs rose to $2.47 billion, an increase of 200 million from the same period in 2010.

ICBC also saw its investment income fall. “While ICBC’s investment returns continue to perform well against the markets, the income of $341 million for the first nine months of 2011 was down by $38 million over the same period last year,” the insurer said.

“In previous years, our investment income has been strong enough to help keep our rates down but this is no longer the case and we cannot rely on this income to the same extent as we have in previous years,” said Schubert.

In addition to the constraints of rising bodily injury costs and falling investment income, ICBC’s premium income was flat at $2.83 billion for the first nine months of both 2010 and 2011.

“We’ve worked very hard to keep auto insurance rates as low as possible and we’ve had some successes,” said Schubert. “We have not increased our rates since 2007 and there have been a number of rate decreases during that time. However, we face a different reality today but we remain committed to providing our customers with the best coverage at the lowest possible price.”

ICBC will provide details on changes to its insurance rates when it files an application with the BCUC in the next few days. While ICBC will be filing for an increase to its basic insurance rates, it will also drop its optional rates in 2012. The impact of these rate changes on the majority of customers – those who purchase their full personal vehicle insurance coverage with ICBC – will be an average increase of less than $30 a year.

ICBC says it remains well-capitalized and a rate increase is needed to ensure capitalization level targets are maintained.

“We believe we have done a good job of managing our operating costs, which have increased by approximately the rate of inflation since 2002,” said Schubert. “We will continue to look for any additional steps we can take to manage our operating costs without undermining our high level of service to our customers.”

ICBC’s Statement of Operations for the nine months ending September 30, 2011 can be found here.   (PDF)

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Despite incurring $31.3 million in losses due to weather-related catastrophic events, The Economical Insurance Group announced a consolidated net income of $1.4 million for the third quarter of 2011. The P&C insurer also recognized $23.2 million in investment impairments as a result of the exceptional market volatility and fall in equity markets at the end of the third quarter.  Net income in the same quarter a year ago was $11.5 million.

The company’s combined ratio in the third quarter was 102.0%, bringing the year-to-date combined ratio to 99.8%, a significant improvement from 104.4% in 2010.

“Economical registered a resilient performance this quarter, sustaining underwriting profitability and recording growth in policy volumes while absorbing significant investment impairment charges and weather-related losses stemming mostly from the Goderich-area tornado,” said President and CEO Karen Gavan. “Adjusting for these weather-related losses, the company’s underwriting results continue to be very strong.”

Economical’s total mutual policyholders’ equity was $1,260.5 million at September 30^th, a 4.8% increase in the first nine months of 2011.

Commenting on Economical’s planned demutualization, Gavan said: “In addition to solid operating performance, we are encouraged by the Department of Finance’s clear and sustained commitment to providing a regulatory framework for demutualization. We anticipate draft regulations may be developed by year’s end, and that there may be a concluding round of public comment prior to the regulations being finalized.”

The Economical Insurance Group Consolidated Highlights*

($ in millions, except as otherwise noted)

*Note:  All amounts reflect Economical’s implementation of International Financial Reporting Standards effective January 1, 2010. Claims ratio, combined ratio and underwriting income (loss) exclude the impact of discounting.

Economical continued to be affected by weather-related catastrophic losses during the third quarter, totaling $31.3 million, compared to $7.7 million during the same quarter in 2010. These catastrophic losses, which were primarily related to Alberta wind and hail storms in July and the tornado in Goderich and Hurricane Irene in August, amounted to a 7.8 percentage point increase in the third quarter combined ratio. Excluding weather-related catastrophic losses the third quarter combined ratio was 94.2% compared to 100.2% in 2010.

Economical’s personal auto business generated an underwriting profit of $27.9 million for the third quarter, compared to an underwriting loss of $19.6 million a year ago. These improved results continue to reflect management actions taken to improve profitability in this business including the implementation of the company’s new Ontario auto product, ongoing proactive broker management, continued vigilance to expose fraudulent claims activity, as well as the Ontario government’s auto insurance reforms. Personal property business produced an underwriting loss of $11.1 million compared to an underwriting profit of $7.3 million for the same quarter a year ago. This result was heavily affected by $11.6 million of weather-related losses incurred in the quarter stemming from the Alberta storms, the tornado in Goderich and Hurricane Irene.  Overall, the combined ratio for the personal lines business improved to 93.2% during the quarter.

Commercial auto recorded a third quarter underwriting loss of $4.5 million compared to an underwriting loss of $1.8 million a year ago. For the year to date commercial auto remains profitable with an underwriting profit of $0.9 million, compared to an underwriting loss of $7.4 million in 2010. The commercial property business recorded an underwriting loss of $20.1 million, compared to an underwriting loss of $1.0 million for the same quarter a year ago. As with the personal property business, this result was heavily affected by $17.3 million in weather-related losses stemming from the Alberta storms, the tornado in Goderich and Hurricane Irene. Overall, the combined ratio for the commercial lines business was 116.1% during the quarter, including 14.8 percentage points related to weather-related catastrophic events.

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The weakened economy may deter some Canadians from making charitable donations as the holiday season approaches, but it isn’t stopping the wealthiest from digging even deeper to help those in need.

The founder of Canadian IT giant CGI is among those who is sharing his good fortune by donating millions more to charity this year.

Serge Godin is donating more than $14 million to a foundation he created 12 years ago by handing over 2.2 per cent of the stock options he holds in his Montreal-based company.

“We’ve been very fortunate here in creating this company and I thought it was normal to try and give back to the community in which we are living,” he said in an interview.

While many company stocks have taken a beating since the 2008 recession, CGI’s shares have gained about 66 per cent, providing Godin more opportunity to give.

Since creating Fondation Jeunesse-Vie in 2000, the 61-year-old has donated about $25 million to the charity that help youth struggling with drugs and mental illness. He plans to give up to about $5 million a year for the rest of his life.

Donations have historically been in cash. But upon the advice of tax specialist Serge Bilodeau – father of Olympic ski moguls champion Alexandre – he’s begun handing over shares of his publicly traded company in order to reduce his tax burden and funnel more to the charity.

“It’s a good idea, because the amount for donors is the same, but more money is available to give to people in need.”

While cash is still king for most charitable donations, many Canadians are giving stock, art, land, life insurance and other assets.

Some estimates suggest Canadians have made more than $1 billion worth of non-cash donations since the federal government changed the tax laws in the 2006 budget to eliminate capital gains taxes on securities donations.

The United Way of Toronto says it received $26 million in securities from nearly 500 donors in the first year after the change. That amount has stabilized at $10 million, or about 10 per cent of the $110 million worth of donations it received last year.

“The tax benefits are certainly having a very big benefit on local charitable organizations,” says Julia Gorman, vice-president resource development.

Giving publicly traded securities, including shares, bonds and mutual funds, to a registered charity allows donors to reduce their taxable income to help offset other taxes on capital gains.

Any excess can be carried forward for five years.

Donating securities-in-kind can save donors up to about $1,800 for each $10,000 donation, depending on factors such as the original cost of the security.

Anyone can donate securities, but the typical donor of securities is someone with big capital gains after selling a business created over decades of work, says Marvi Ricker, managing director of philanthropic services at BMO Harris Private Banking.

They feel grateful and want to share their good fortune. Like Godin, many create foundations to involve their families in giving.

She suggests donors large and small plan their giving by involving a financial adviser to maximize the tax benefits of the gift.

As the gap between rich and poor grows, the wealthy have more available to share and people like U.S. billionaires Bill Gates and Warren Buffet are encouraging them to give more, she said.

“Talking to my clients, a lot of people have been saying exactly what Buffett has said, namely that he wants to leave his children only so much.”

Both billionaires give away millions each year and have vowed to distribute the vast majority of their considerable fortunes.

While the type of donation may have changed, a recent survey sponsored by BMO found that 71 per cent of Canadians planned to same or more to charities next year.

That appears to be good news for charities that have taken a hit over the past few years as economic turbulence has reduced donations.

Statistics-Canada said donations dropped five per cent in 2008, the largest decline in 40 years. They fell another three per cent in 2009.

The number of Canadians donating is declining but those who give are giving higher amounts, said Gorman.

The average gift received from the United Way jumped to $505 in 2010 from $448 two years earlier.

“They do realize it’s the most vulnerable individuals and families in our communities that will suffer the most from lost employment and decreasing government support of some of the important programs.”

Ricker said there could be a little softening of donations from the general public this year, but among those with much to give, there’s no falling off.

As the key holiday donation period gets underway, charities are anxiously watching the public mood.

“We, like any other charity out there, are a little worried about what may or may not happen, but based on the history of people giving to the Salvation Army, we’re cautiously optimistic that people will come through,” said Andrew Burditt, national director of marketing and communications.

The large charity hopes to collect more than $19 million again this year from its annual kettle campaign, which began Tuesday.

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RSA has reported £6.1 billion in net written premiums – amounting to an 11% increase – and international net written premiums of £2,992 million – up 13% in the third quarter of 2011.

The insurer said growth has been driven in particular by strong performances in Canada and Ireland.

“Canada has delivered excellent growth, with premiums of £1,108m up by 20% (19% at constant exchange) driven by rate increases, strong retention and the benefit of the acquisition of GCAN which contributed 10 points of the overall growth (10 points at constant exchange),” the company said in its Q3 release. “ In Personal, premiums of £763m were up by 9% (9% at constant exchange) with good performances from both Personal Intermediated, up by 8% (7% at constant exchange) and Johnson, our direct brand, which grew by 11% (10% at constant exchange). In Commercial lines, net written premiums of £345m increased by 51% (50% at constant exchange) driven by GCAN, which contributed 41 points of the growth (41 points at constant exchange) and strong performances in SME and Risk Solutions.”

“Since the half year, we have seen a continuation of the high frequency of catastrophe events experienced in the first six months with adverse weather in Denmark and more recently, in Ireland and Thailand expected to impact the Group by around £60m,” the company wrote. “Despite these events, we continue to benefit from our strong and diversified portfolio, focus on underwriting discipline, prudent reinsurance programme and high quality, low risk investment strategy. As it stands today and assuming normal levels of weather losses in the remainder of the year, we continue to expect to deliver for the full year 2011 a COR of better than 95%, investment income of between £560m and £570m and total gains of around £120m.”

“These are strong results in challenging market conditions,” said Simon Lee, Group CEO of RSA. “We have continued to build momentum and drive growth across the business while maintaining a strong financial position. Premiums have grown by 11% reflecting targeted organic initiatives, rate and the benefits of our 2010 deals.

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Intact Financial Corporation has reported that it earned a net operating income of $111 million in the third-quarter of 2011, up $21 million from the same quarter in 2010. Intact Financial said the increase was driven by improved underwriting performance in personal auto insurance.

“Our underwriting performance continued to be strong this quarter as personal auto results improved significantly,” said Charles Brindamour, Chief Executive Officer of Intact Financial Corporation. “We are increasingly optimistic that the initiatives adopted by the Ontario government in curbing the inflation of medical costs will be effective over time and will result in a more stable environment for consumers.”

The company’s combined ratio improved by 2.4 percentage points year-over-year to 94.2%, despite elevated catastrophe losses due to Tropical Storm Irene and a number of wind and hailstorms. Direct premiums written increased 2% over the same quarter a year ago to reach $1,226 million. Net income was $101 million, or $0.87per share, compared to $109 million, or $0.96 per share, for the same period last year. The decrease reflects $29 million of integration-related costs recorded in the quarter.

“For the second consecutive quarter, severe weather conditions brought greater volatility to our results. In the quarter, Tropical Storm Irene and a number of wind and hailstorms impacted our performance. Despite the unpredictable weather patterns that continue to challenge personal property, we remain committed to making this a profitable business,” said Brindamour.

Net operating income for the first nine months was $308 million compared to $322 million last year, despite a $107 million increase in catastrophe losses. Net income decreased by 3% to $381 million from a year earlier. Net operating income per share and earnings per share were $2.75 and $3.41 respectively. The combined ratio remained relatively unchanged compared to last year at 95.2% for the first nine months of the year. Direct premiums written for the same period were $3,523 million, up 2% year-over-year. The book value per share increased by 13% to $28.97.

“With the closing of the AXA Canada transaction behind us, the integration is well under way as our new team is now in place and ready to deliver on our strategic initiatives and as AXA policies renew on our systems. With our combined skills, energy and talent, I am confident that we will accelerate our efforts towards building a world-class P&C insurance company,” Brindamour added.

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Fairfax Financial Holdings Ltd. has announced net earnings of $973.9 million in the third quarter of 2011 ($46.73 per diluted share) compared to net earnings of $388.1 million ($18.44 per diluted share) in the same quarter of 2010. Fairfax said the increase in net earnings arose primarily from net gains on investments of $1,588.0 million compared to net gains on investments of $316.4 million in the third quarter of last year.

“Our results have always been lumpy and our third quarter earnings are a case in point,” said Prem Watsa, Chairman and Chief Executive Officer of Fairfax. “We earned almost a billion dollars in spite of significant catastrophe activity in the quarter because of almost $1.6 billion in net gains on our investment portfolio. Our book value per share increased by 9.7% in the nine months to approximately $403 per share after adjusting for the $10 per share dividend paid in the first quarter. Excluding acquisitions, our consolidated net premiums written in the third quarter grew by 16% (21% including acquisitions). We continue to be very concerned about the economic outlook for the next few years and have maintained our equity hedges. The company continues to be soundly financed with cash and marketable securities at the holding company level in excess of $1 billion.”

Highlights in the third quarter included the following:

• The combined ratio of the company’s insurance and reinsurance operations on a consolidated basis was 107.5% in the third quarter of 2011, producing an underwriting loss of $105.3 million, compared to a combined ratio and underwriting loss of 101.1% and $13.3 million, respectively, in the third quarter of 2010. Underwriting results in the third quarter of 2011 were negatively affected by $171.7 million of pre-tax catastrophe losses (net of reinsurance and reinstatement premiums), primarily related to Hurricane Irene, the Denmark floods and development on Japanese earthquake losses, which increased the combined ratio by 12.3 points.
• Net premiums written by the company’s insurance and reinsurance operations in the third quarter of 2011 increased 21.4% (15.6% excluding acquisitions) to $1,430.3 million from $1,178.1 million in the third quarter of 2010.
• Operating income of the company’s insurance and reinsurance operations in the third quarter of 2011 decreased to $39.1 million from $132.9 million in the third quarter of 2010, primarily as a result of the higher combined ratio in the third quarter of 2011.
• Consolidated interest and dividend income of $169.6 million in the third quarter of 2011 decreased 10.6% from $189.8 million in the third quarter of 2010. The year-over-year decrease was attributable to the lower yields due to increased investment expenses incurred in connection with the company’s equity hedges on a larger average investment portfolio which resulted primarily from the acquisitions of First Mercury, General Fidelity and Pacific Insurance. Interest income as reported is unadjusted for the positive tax effect of the company’s significant holdings of tax-advantaged debt securities (holdings of $4,850.2 million at September 30, 2011 compared to $4,790.8 million at September 30, 2010).

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Co-operators General Insurance Company reported it consolidated net income was $6.2 million in the third quarter of 2011, compared to a net loss of $8.9 million for the same quarter in 2010. This resulted in earnings per common share of $0.14 for the quarter compared to $(0.61) in the same period last year.

Co-operators General said for the first nine months of the year, net income is $58.4 million, which is an increase of $38.6 million from the same period last year, resulting in earnings per common share of $2.31 (2010 - $0.40).

“Hail, wind and rain storms in Ontario and western Canada negatively affected our results, but were offset by much-improved claims results in the Ontario auto insurance market. At this point, we are cautiously optimistic that Ontario auto reforms introduced last year are having a positive impact,” said Kathy Bardswick, President and CEO of The Co-operators.

“The major correction in the stock markets in the third quarter related to the debt crisis in Europe and uncertainty surrounding the U.S. budget contributed to our net investment losses of $10.1 million during that time.”

CO-OPERATORS GENERAL’S THIRD QUARTER FINANCIAL HIGHLIGHTS

($ in millions, except for earnings per share and ratios)

¹Growth metrics for 2010 are based on Canadian GAAP values as comparisons do not exist

²2010 MCT is as at December 31

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Manulife Financial Corp. could lose more than $800 million in the third-quarter, according calculations by one analyst, who revised his outlook for Canadian insurers after another industry giant warned it faces major losses due to market volatility.

Many analysts were rethinking their estimates for the industry’s third-quarter earnings Tuesday following Sun Life Financial’s announcement a day earlier that it will lose $621 million in the quarter ended Sept. 30 from volatile markets and other factors.

The company cited “substantial declines” in equity markets, lower interest rates and the impact of an annual refinement of the company’s methods and assumptions for the red ink. Its shares fell nine per cent Monday.

Barclays Capital analyst John Aiken said the announcement highlights the difficulty that investors face in trying to determine potential earnings of Canadian insurers.

That’s because insurers are very sensitive to interest rate and stock market volatility, and have taken hits in recent quarters as economic uncertainty lingers.

“Sun Life’s third quarter pre-announcement caught us by surprise. As such, we have taken the opportunity to make a tactical retreat and increase the conservativeness of our estimates for the Canadian life and health insurers’ third quarter earnings,” he said.

Manulife, the most sensitive to volatile markets among its peers, could lose 46 cents per share said Aiken, who had earlier expected a 23 cent per share loss. Given the insurance giant has about 1.8 billion shares outstanding, that loss amounts to $825 million.

Michael Goldberg, an analyst at Desjardins Securities predicts an even bigger loss for Manulife – 65 cents per share or $1.17 billion – with about $932 million coming from weak equity markets and $358 million from lower interest rates.

Manulife, which reports its earnings on Nov. 3, declined to comment.

But Canada’s largest insurance company warned in August that it could book up to a $700-million charge in the coming quarter following a reassessment of its U.S. insurance operations.

If global stock markets do not rebound from recent plunges, it could take another charge of up to $500 million or more, the company said.

Goldberg also revised his forecast for Sun Life this quarter to a loss of $1 per share, down from an earlier projection of a 10 cent per share profit. It also reduced its forecast for the company’s fourth quarter to 15 cents per share, down from 70 per share.

“We maintain our Buy-Average Risk rating but expect the stock to go sideways until uncertainties related to financial market sensitivities and its dividend become clearer,” he wrote in a note to clients.

Aiken also projected a third-quarter loss of $1 per share for Sun Life, down from an earlier estimate of a 33 cent per share profit.

Darko Mihelic of Cormark Securities revised his prediction for Sun Life’s third-quarter earnings per share to a loss of $1.07, significantly lower than his earlier call of a four cent per share profit.

He expects Manulife to book a 64 cent per share loss during the quarter.

Even if Manulife is forced to take an earnings hit because of slumping markets, the impact could be milder than expected. The company said it moved quickly to hedge between 60 and 66 per cent of its business against exposure to volatile stock markets and fluctuating interest rates.

It had originally aimed to complete that goal by the end of next year.

“Management’s strategy of aggressively hedging in the past has resulted in significant improvement Y/Y (year to year) to market sensitivities,” Mihelic said.

“We believe this quarter’s market weakness supports management strategy. However, we believe the intra-quarter volatility likely means MFC has not been able to pursue its dynamic hedging strategy as actively and therefore we suspect sensitivity has in fact increased.”

Aiken, who also lowered estimates for Great-West Lifeco Inc. by six per cent to a two cent per share profit, said he doesn’t expect relief for insurers any time soon.

“With the ongoing uncertainty surrounding the macro environment, volatile equity markets and historically low interest rates anticipated for several years, we do not anticipate any near-term relief for the insurers,” he said.

Despite the analysts’ hesitations, stock in the Canadian insurers rebounded on the Toronto Stock Exchange.

Shares in Manulife moved up 3.5 per cent or 43 cents to close at $12.77, while Sun Life shares were up 1.7 per cent or 41 cents at $24.48 and Great-West shares moved 16 cents higher to close at $21.66. (Figures accurate as of end of trading on October 18, 2011.)

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Sun Life Financial Inc., Canada’s third largest insurer, said it expects to report a loss of $621 million for the quarter, about $572 million of which related to operations costs alone.

The insurer said the losses are related to “substantial declines in both equity markets and interest rate levels”, which particularly impacted the individual life and variable annuity businesses in SLF U.S.

“The third quarter was a period of exceptional market volatility,” said a statement from the company.  “North American equity markets dropped by 12% – 14%, while yields on fixed income securities fell amid economic uncertainty in the European Union and U.S. monetary policy actions aimed at lowering interest rates on long-term treasuries. In the U.S., treasury rates reached historic lows, with 30-year yields down 146 basis points to 2.91%. Under the Canadian insurance accounting model, the future impact of September 30, 2011, market conditions is reflected in our current period results.”

The company noted that Sun Life Assurance Company of Canada remains well capitalized, with a Minimum Continuing Capital and Surplus Requirements (MCCSR) ratio that is estimated to be approximately 210% as at September 30, 2011.

Sun Life will release its full third quarter 2011 financial results on Wednesday, November 2, 2011, after markets close.

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Manitoba Public Insurance has completed its first six months of fiscal 2011/12 in a “stable financial position.”

For the six months ended August 31, 2011, Manitoba’s public auto insurer reported a net income of $34.2 million – a decrease from $69.3 million earned during the same period in 2010.

“Compared to last year, bodily injury claims incurred, excluding the prior year reduction in the provision of unpaid claims decreased by $4.7 million,” said Donald Palmer, vice president of finance and chief financial officer. Injury claims costs are within expectations.

In addition, physical damage claims has risen by $13.8 million – a rise attributed to several early season hail storms.  “Weather patterns have demonstrated that hail will continue to be a common occurrence in Manitoba, “ said Palmer.

“However, the hail year came unusually early and was very severe in some parts of the province.  Hail claims costs increased by $11.3 million due to the severity of storms.”

Earlier this year Manitoba Public Insurance submitted to the Public Utilities Board a rate application which called for an overall Basic Autopac rate decrease of 6.8 percent.  If approved by the PUB, this will be the 13^th year out of the last 14 in which Manitoba Public Insurance has held the line, or decreased, auto insurance premiums.  The new Basic Autopac rates take effect March 1, 2012.

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Recruiter Steven Cardwell received far fewer phone calls in September than just a few months earlier from financial services firms looking to hire.

“We had two jobs filled last month,” Cardwell said Friday after Statistics Canada reported a record number of financial services jobs vanished in September.

About 35,300 jobs were cut from the Canada’s financial services sector last month, suggesting recent economic and stock market turmoil could be taking its toll on the industry.

“I think a lot of companies right now, especially financial, they know what’s going on worldwide,  the debt situation, and they’re sitting tight,” Cardwell said.

Bank of Montreal economist Robert Kavcic said the number of lost jobs in finance, insurance, real estate and leasing last month was a record.

“The why is the mystery,” he said.

“What we’re seeing in the sector profit-wise, it doesn’t really jive with a sustained downturn in the sector, not yet.”

Kavcic cautioned against reading too much into the monthly numbers, which can fluctuate wildly, adding that many of those jobs could be recovered in the October figures.

Still, the financial sector losses stands in stark contrast to an otherwise promising report that showed the economy added 61,000 new jobs in September, taking the unemployment rate to the lowest level since December 2008 at 7.1 per cent.

The vast majority of jobs lost in the sector- some 29,000 -were in Ontario and the losses were balanced evenly between the finance, insurance and real estate sectors, he said. The losses could have a big impact on the unemployment rate in Toronto, the hub for many of Canada’s banks and insurers.

The financial sector makes up about six per cent of the Canadian job market.

Jobs in that sector have fallen 1.4 per cent compared to a year ago, according to Statistics Canada. Prior to last month, the sector was up 3.5 per cent year over year.

“We were seeing pretty strong growth in the past year and then all of a sudden, bang _ it’s all gone,”Kavcic said.

Fears about another global recession escalated in August and September as it became increasingly clear that Greece is likely to default on its debts, which could leave a number of European lenders on the hook.

The crisis has rocked stock markets around the world. The Toronto Stock Exchange lost 12 per cent of its value in the third-quarter alone, with banking stocks being particularly hard hit as investors grew concerned about whether Canadian banks are exposed to European debt.

A decline in a company’s stock can signal that its prospects for growth have stalled and it may start looking for ways to cut costs. That can lead to layofffs.

Michael Burt, an economist at the Conference Board of Canada, said that when investors pull out of stocks, demand drops for personal wealth managers, loan officers and other financial workers.

Financial institutions have made productivity gains since making job cuts during the recession, meaning they’ve increased growth without additional hiring.

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The Maple Group, the consortium of financial companies and pension funds looking to take control of the Toronto Stock Exchange, has extended its takeover offer another month.

Maple said Thursday it has extended the bid to Oct. 31 and will continue to seek the required regulatory approvals for the deal.

The company and the stock exchange operator have also been in talks since late summer in the hopes of making the offer a friendly deal, but no details have emerged on the scope of the discussions.

The Maple offer, which values the TMX Group at roughly $3.8 billion, had been set to expire Friday.

TMX owns the Toronto Stock Exchange and the junior TSX Venture market as well as the Montreal Stock Exchange, which trades in the growing futures and derivatives market.

Besides other financial businesses, TMX also owns NGX, the Calgary-based market which trades and clears physical crude oil, natural gas and electricity contracts.

A friendly merger between TMX and the London Stock Exchange was called off earlier this year because there was not enough TMX shareholder support in the face of the richer Maple bid.

Maple is seeking a minimum of 70 per cent and a maximum of 80 per cent of the shares of TMX with its offer of $50 per share.

Approval by Canada’s Competition Bureau is a key regulatory hurdle to the deal.

As part of its bid, Maple plans to buy all of Alpha Trading, an alternative trading system owned by the major players in the Canadian securities industry including the big banks, and CDS Inc., a clearing and depository firm, and add them to TMX Group to create a bigger Canadian-based exchange.

Some critics have said that would create a virtual monopoly that could lead to higher fees and create enforcement and transparency issues.

The investors in Maple: the Alberta Investment Management Corp., Caisse de depot et placement du Quebec, Canada Pension Plan Investment Board, CIBC World Markets, Desjardins Financial, Dundee Capital Markets, Fonds de solidarite des travailleurs du Quebec, GMP Capital, National Bank Financial, Ontario Teachers’ Pension Plan, Scotia Capital, TD Securities and Manulife

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The Federal Housing Finance Agency failed to adequately oversee settlements between mortgage giants Fannie Mae and Freddie Mac and Bank of America, a government watchdog said September 27, 2011.

Fannie and Freddie have purchased millions of dollars’ worth of mortgages from banks, including Bank of America. The deals require that lenders repurchase mortgages that do not meet strict underwriting requirements, such as the likelihood a borrower will repay the mortgage amount.

But during the housing boom, lending standards were relaxed. Incomes and assets weren’t properly checked. High-interest loans, some with low “teaser” rates, were doled out to risky borrowers.

FHFA did not properly check the settlement deals between Freddie and lenders who sold substandard mortgages to the mortgage buyer, the housing agency’s inspector general said in the report. The test case was applied to all the settlements between Fannie and Freddie and lenders, according to the report.

Two settlements between the mortgage companies and Bank of America totalled $2.87 billion. But FHFA soon suspended all settlements after questions were raised. In June, it concluded that Fannie and Freddie’s process for reviewing mortgages was “unsatisfactory.”

In March 2010, a senior examiner at FHFA raised “serious concerns” about Freddie’s process for reviewing the Bank of America mortgages, which could potentially cost the government “billions of dollars,” the report said. It did not specify how much money it failed to collect.

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Insurance claims from major global catastrophes led to Lloyd’s of London’s biggest-ever half year loss. The insurer announced an interim loss before tax of £697 million (USD $1,122 million) for the six-month period ending June 30, 2011 (£628m profit, June 2010).

The figure reflects an unprecedented level of natural catastrophes in recent months including devastating floods in New Zealand and Australia, the earthquake in Japan and tornadoes in the US.

“2011 has already been one of the most challenging years on record for the insurance industry with major natural catastrophes devastating communities in Australia, New Zealand, Japan and the US. Lloyd’s ability to pay billions in claims to help these communities rebuild is unquestioned and the fact that we have managed to do so without any call on our central capital reserves is testament to the market’s exposure management,” said Lloyd’s Chairman, Lord Levene.

The insurer said despite incurring USD $10.8 billion in losses in the first half of the year, it entered the second half of the year with $92 billion in net assets.

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The Economical Insurance Group reported continued significant financial improvements in its consolidated financial results for the three months and six months ended June 30, 2011.

The Group reported consolidated net income of $23.2 million for the second quarter of 2011 compared to a net loss of $3.6 million in the same quarter a year ago. The Group posted a second consecutive quarter of underwriting profits with a combined ratio of 99.6%.

“Economical delivered a strong performance this quarter, maintaining the momentum achieved in 2010 and in the first three months of 2011,” said President and CEO Karen Gavan, in a statement. “With our policy volume now stabilized and improved underwriting performance reflecting strategic actions taken in previous quarters, Economical is well positioned to achieve sustained, profitable growth moving forward.  Our underwriting results are particularly satisfying considering the significant weather-related catastrophes that affected the industry during the quarter.”

Economical said it suffered $26.2 million in losses from weather-related catastrophes.

The Group’s total mutual policyholders’ equity was $1,270.0 million at June 30^th, a 4.9% increase in the first six months of 2011.

“As well as making operating gains we continued to make progress on our planned demutualization at an accelerated pace, including the submission of The Group’s response to the Department of Finance on the demutualization regulation consultations early in the third quarter,” Gavan said.

The Economical Insurance Group Consolidated Highlights

($ in millions, except as otherwise noted)

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Kingsway Financial Services Inc. announced its financial results for the second quarter and six months ended June 30, 2011. All amounts are in U.S. dollars unless indicated otherwise.

The company reported a second quarter net loss of $4.9 million ($23.3 million year to date) or loss of $0.09 ($0.45 year to date) per share diluted. The book value has decreased from $2.78 per share at December 31, 2010 to $2.40 per share at June 30, 2011.  The company also carries a valuation allowance, in the amount of $4.70 per share at June 30, 2011, against the deferred tax asset primarily related to its loss carryforwards.

In April 2011, the company entered into a definitive agreement to purchase a minority stake in a newly formed holding company that, subject to regulatory approval, will own a majority of Walshire Assurance Company (“Walshire”), the sole shareholder of Lincoln General Insurance Company. In addition, the Company and the Pennsylvania Insurance Department (“DOI”) have been in settlement discussions to resolve the litigation in conjunction with the proposed Walshire transaction, whereby, upon approval and subsequent closing of this transaction, the appeal filed by DOI would be withdrawn and the litigation involving Kingsway, DOI and the charities would be discontinued.

Kingsway reported the following financial highlights for the second quarter:

• Net loss of $9.0 million was recorded in the Underwriting segment for the second quarter ($17.4 million year to date).
• Net loss of $0.3 million was recorded in the Agency and Non-underwriting segment for the second quarter (net income of $0.7 million year to date).
• Net income of $4.4 million was recorded in the Corporate and Other segment for the second quarter (net loss of $5.3 million year to date).
• Included in the Corporate and Other segment net income for the second quarter (net loss year to date) above is an unrealized gain on fair value of debt of $11.2 million ($8.6 million year to date).
• The Company recognized no loss on disposal of discontinued operations for the second quarter (after-tax loss of $1.3 million year to date).

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Property and casualty insurer RSA Canada reported its half-year results for 2011 with growth of 20 percent over prior year and a combined operating ratio (COR) of 92.1 %.

The RSA Group saw net written premiums rise by 10 percent to £4.2bn (9 percent at constant exchange) while the underwriting result is up 51 percent to 206m, a first half record for the Group. The COR was 93.2 % and the operating result of £467m is up by 22 %, another first half record for the Group.

In Canada, RSA reported net written premiums of $1,103 million, up 20 percent from $917 million last year and an $85 million underwriting profit, up 20 percent, $14 million ahead of prior year.  The solid underwriting profit includes the impact of large and weather-related losses, in particular, wildfires in Slave Lake Alberta and severe storms in Ontario.

“RSA delivered a strong performance in the first half despite persistently challenging market conditions and the continuing trend of heavy weather. The results are underpinned by solid organic growth in our Personal and Commercial lines and positive rate activity. With market consolidation, improving trends in Ontario auto due to reforms, and a sophisticated underwriting approach we’re well-poised to continue delivering on our overall strategy into the next half of 2011,” said Rowan Saunders, President and CEO.

In Personal Lines, including Johnson Inc., premiums were up 9 percent to $731 million with an underwriting profit of $44 million and a COR of 94.1 % despite the impact of severe weather. The results were achieved due to strong growth in Ontario and Pacific regions, new business in Personal Specialty Insurance and rate increases.

In Commercial Lines, premiums were up 53 percent to $371 million with an underwriting profit of $41 million and a COR of 86.6 %. This result includes a strong contribution from GCAN and is also supported by organic growth and new business wins across Small Medium Enterprise, Mid-Market and Large Commercial & Specialty.

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Great-West Lifeco Inc. has reported net earnings of $526 million for the three months ended June 30, 2011, compared to $455 million in the second quarter of 2010.  On a per common share basis, this represents $0.553 per common share for the three months ended June 30, 2011, compared to $0.480 per common share for the same period in 2010.

For the six months ended June 30, 2011, net earnings attributable to common shareholders were $941 million, compared to $883 million a year ago.  This represents $0.991 per common share for the six months ended June 30, 2011, compared to $0.932 per common share for the same period in 2010.

Consolidated assets under administration at June 30, 2011 were $497 billion, up $10 billion from December 31, 2010.

Great-West reported the following highlights from the second quarter of 2011:

• Sales in Canada of individual insurance products were up 13% overall in quarter compared to 2010, driven by strong Participating Life insurance sales which were up 18%.  Group insurance sales in Canada were up 26% overall in quarter compared to 2010, driven by strong non-refund sales which were up 23%.
• In June and July 2011, the Company’s credit ratings were affirmed with stable outlook by A.M. Best, DBRS, Fitch and Moody’s.  Credit ratings have been stable since the acquisition of Canada Life in 2003, with the exception of the Fitch downgrade from AA+ to AA in December 2010.  The Company’s ratings remain among the highest for a stock company in the insurance industry which is particularly noteworthy in the recent credit environment.
• Return on common shareholders’ equity was 17% based on operating earnings.
• The Company declared a quarterly common dividend of $0.3075 per common share payable September 30, 2011, unchanged from the previous quarter.
• The Company’s capital position remains very strong.  Lifeco’s Canadian operating subsidiary, The Great-West Life Assurance Company, reported a Minimum Continuing Capital and Surplus Requirements (MCCSR) ratio of 200% at June 30, 2011.

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