Investment Q&A

Q: IAG stock has recently taken more of a hit than I believe can be explained by interest rate sensitivity alone. There was news last week of a potential liability for IAG and MFC re predecessor companies and investments in "side accounts". Why then has IAG stock been hit so much harder than MFC? I hold SLF as well and it remains solid. Unfortunately I hold IAG, MFC and SLF in a ratio of 2:2:1 with the total of all three making up about 7% of total investment portfolio. Would you recommend any adjustments here?

Q: Hi, could I have your opinion on the statements below as they pertain to MFC. Should I be worried?
Thanks

Market Chatter: Side Accounts Could Bring Two of Canada's Life Insurance Giants To Their Knees; IAG and Manulife Cited
23 Feb 2018 10:12 ET

10:12 AM EST, 02/23/2018 (MT Newswires) -- In an era of higher interest rates in the late 1990s, two predecessor companies of Industrial Alliance Insurance and Financial Services Inc. (IAG.TO) and Manulife Financial Corp. (MFC.TO) issued life insurance policies that allowed holders to invest in side accounts that guaranteed rates of up to 5% and 4%, respectively, George Lewis has written in a Special Report published on the Financial Post's website.

According to Lewis, "these side accounts did not contain an explicit limit on the size of investment, which means in today's low-rate environment they are potentially lucrative for their holders and a significant liability for the companies that wrote them."

He added: "At least three limited partnerships purchased such policies several years ago in Saskatchewan, one of only four Canadian provinces that permit the purchase of insurance policies from their original holders. These investors are in court in Saskatoon to force the insurers to accept their money."

Q: I own these companies in a DRIP plan and would like to buy a few more. Would you rate the best Canadian DRIPS stocks please
Thanks for all your hard work
Sue

Q: Over the last little while I purchased the above securities because of a rising rate environment. All have performed as expected except ECN.pr.A. Is there any particular reason for this. Would it be wise to average down . I’m still thinking that with rising interest rates their will be more demand for their services. What about the margin will this increase, decrease or stay the same ?

Q: Good Day Please rate in order for dividend safety, dividend growth and stock growth. I have no life insurers in my portfolio. Looking for an 8 year hold

Q: Banks-increase in interest rates, no increase in savings rates, spread widening.
Insurance Co’s-increase in yield on long term bonds,thus spreads widening.
What is your opinion on owning the above securities. I currently own all except FLI. Thinking of buyingFLI to diversify into insurance Co’s. Thank you for your help

Q: Just reduced short term position in OR with a 30 % annualized profit. Used money to take a position in MFC at 26.88 having second thoughts after today’s news on mfc. How will this right down affect the price or is it already price in ? This. Is my only position in insurance. Your thoughts.

Q: Hi,
I live in Ontario and we have private medical benefits through my husbands employer that cover 80% (to a limit) of our medication costs. I recently refilled my son's asthma inhalers. The government covered the entire cost and our private coverage (which we pay a portion for) now pays nothing. The government / tax payer now pays the entire amount and private insurance now pays nothing even when the customer has coverage. Do you think this will have a significant impact on any health insurance share prices/earnings? If so what companies would benefit the most by having a large client base in Ontario?
Thanks,
Kerri

Q: Hello,
I am quite new to the investing world and just looking to get much more involved. I currently have some mutual funds through a balanced portfolio in a TFSA that I have discussed with my financial planner. I have a TFSA open through Manulife and RBC. I am looking and hoping to get into some index funds and passive investing as well. Looking to just get average returns with low fees. Any suggestions on the best way to start this and go about this on my own? Recommendations on which ones I should start with through the TFSA accounts I have? I seen some through RBC, but just find it tough to get answers from financial advisors as I always feel pushed toward active investments (which I am open to down the road as well).

Thanks from a early and trying to learn investor,

Matt

Q: In light of the Globe's vague yet suggestive article yesterday, https://www.theglobeandmail.com//report-on-business/streetwise/manulifes-us-arm-swept-up-in-ges-95-billion-insurance-writedown/article37628227/, how would you interpret this to impact manulife's overall business? The article implies that many insurers are ill prepared for the degree long term claims with this aging population. I recognize this is regarding the John Hancock business in the US and I am interested in your take on how this might impact the stock overall? Is it time to switch to Sunlife? Any of your well thought out advice is much appreciated.

Q: Hi,
I am a big believer in the benefits of holding shares of solid companies with DRIP and SPP plans. As such, for part of our investment portfolio, we currently hold BNS, BMO, FTS, and SU in these direct registered plans. I would like to add other companies to these, with a 10-15 year holding period. Looking for your thoughts on the following that offer both DRIP and SPP plans.
CAE- Seem financially solid and long term returns have been good
ALA/EMA- Does it make sense to add one of these since I hold FTS already? If so which would you recommend?
ENB/TRP- Best option for security and rising dividends in a rising rate environment?
T/BCE- Best choice for growth and dividends?
IAG/SLF/MFC- Over the long term, (I think my screener went back to 2000), IAG has dramatically outperformed in share price appreciation, but dividend is lower. Your choice here?
Deduct credits as required.
Kind Regards

Q: I am looking for dividend income that's less interest sensitive then reits and utilities do you have a few suggestions thanks Barry

Q: Hi,

I've owned 15% in CDN banks for the last couple years and they're dong well. Do you expect banks or lifeco's will do better in the next couple years?
Can you pick your top two choices of the the insurance cos and banks for the next couple years?

Q: Hi Team,

I hold MFC in my kids RESP. It's up over 75% since I bought it many years ago. It represents 50% of the portfolio now, (enb, fts and bce are the other stocks). I want to switch some things around and add a bit of growth, but with the interest rates rising should I leave it alone ... or do you think a lot of those potential gains from rising rates have already happened?

What would a couple growth ideas be for a 10 year horizon in an RESP?

Thanks!

Q: Which do you prefer for future growth. SLF or MFC.

Q: Thoughts on their 22 Dec announcement of charges and Trump taxes. Call me paranoid, but the timing was suspicious. Is it likely the time to jump ship?

Q: what is your opinion of manulife's announcement on Dec 22?

Q: Looking to purchase some individual rate reset preferred shares. Looking for relatively early reset dates. Would you be comfortable with: BCE.PR.Q, MFC.PR.J, RY.PR.H, TRP.PR.G ?
Regards,
Robert

Q: I am a little overweight in Canadian financials and worry about the new stress testing the banks will use for determining eligibility for mortgages next year.
Would it make any sense to take a little off the table and buy one of the life co's given expected rising interest rates and if so which of the above three?
Thanks
Jeff

Q: Good morning. I would like to add an insurance company to my income portfolio. I'm having trouble deciding between SLF and MFC. Your insights would be appreciated.

Thanks, John