Life insurance giants ready for downturn

by Paul Lucas01 Apr 2016
An economic downturn has taken its toll on many companies across Canada – but two of the largest life insurers in the country say they are ready for more of the worst.

According to a report by the Canadian Press, executives at both Sun Life Financial and Manulife Financial were asked during a conference this week about the economic conditions and even the possibility of interest rates turning negative as they have done in Japan.

However, Stephen Roder, the chief financial officer of Manulife, says the company is prepared because it has been making moves away from interest rate sensitive products.

“Today we sell a lot of product that really has no interest rate sensitivity, so we’re far less exposed in terms of new business today than we would have been five years ago,” he said.

In addition, Roder commented that the company’s experiences in Japan had left it well prepared for similar challenges in Canada just in case they occur here too. He pointed out how the company had moved away from products exposed to interest rate risk and had actually enjoyed growth in the country.

Meanwhile, Colm Freyne, the chief financial officer of Sun Life, spoke along the same lines in that he believes his company is also well-prepared.

In particular, he highlighted that there are actually several opportunities that emerge with low rates and described the impact as “not insurmountable”.

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