IFC and SLF are similar in size ($27B and $30B, respectively), however, IFC operates in the P&C industry which is a higher-growth and generally more profitable industry than life insurance. Over the past 10 years, IFC has a total return of 280%, whereas SLF has returned 183%. On a price-basis, IFC has grown its shares at an 11.5% 10-year CAGR, whereas SLF has grown at a 6.8% 10-year CAGR.
Recently, SLF has been falling in price alongside IFC (albeit at a smaller rate) and this is in line with the broader insurance industry. We do not believe that IFC's recent strategic move is the cause of the sell-off, but rather, IFC has had a nice run since its latest earnings report and is now consolidating a bit. IFC has decided to sell the UK direct personal lines operations (RSA's assets). This move allows RSA to focus on becoming a leading UK commercial and specialty lines player, which we feel is a smart strategic move. Commercial and specialty lines is a more profitable line of business, and we feel IFC has made the right move.
IFC is the leading P&C insurer in Canada, and we believe that the short-term weakness will not be sustained forever, and while we continue to like SLF, over the long-term we expect it will outperform SLF on a total return basis.