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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: I would like to increase my exposure in a life insurance company. I currently own Sun Life (3%) in a well balanced portfolio which includes US exposure and I am wondering if I should buy more SLF or go south of the border and pick up some AIG. My thinking is that interest rates are set to rise in the US, which is usually good for lifecos while Canadian rates are still lagging.

I realize that some of the interest rate increase is already priced into AIG as it has done will for the past year. But is seems to me that as much as things are "priced in" there is still a reaction when the event itself finally occurs and there will be a lag to earnings until the higher rates actually hit the bottom line.

Do you feel AIG presents a better long term upside or should I stick with SLF?

Thanks for the insight.

Paul F.
Read Answer Asked by Paul on August 17, 2015
Q: I am looking for a few income picks to add to my portfolio. However I am concerned about the eventual hike in interest rates and a certain amount of capital flight from income stocks that would ensue. Would you agree that financials generally and insurance companies in particular would do well in a rising rate environment? Any more specific thoughts are appreciated. Thanks again for your great service.
Read Answer Asked by Alex on May 11, 2015
Q: hello 5i:
on 2 March, Gary asked the following question:
Question: I am looking to add some of the names that you cover. In your opinion - which 5-10 names offer the best potential for price appreciation over the medium to long term.

As a counter, could I ask for your 5-10 best VALUE picks, that would include stocks with secure dividends for the medium to long term.
thanks
Paul L
Read Answer Asked by Paul on March 09, 2015
Q: Hi Team

can you help me understand the ebb and flow of the market sectors.

the one that intrigues me lately is the insurance and financials

1. in the insurance sector there seems to be a year to date downturn for SLF, yet not for GWO OR IFC. WHY is this, is there any real "science" / economic "fundamentals" to this?

2. as for the big 6 in banks, they seem to move in the same general direction yet by slightly bigger swings for some, i.e. CM and CWB, is there any rationale behind this ?

Read Answer Asked by Ernest on February 27, 2015
Q: My question is about the net interest rate impact on both of these insurers, specifically whether the positive benefits associated with higher interest rates offset the negative benefits of higher interest rates. I know the positive benefits of higher interest rates on insurers are widely accepted (via contract liabilities), however, considering that both of these firms hold billions in debt securities (the bulk of general fund), isn't their likely to be a negative impact on the balance sheet and possibly net income? Perhaps the net income impact of higher rates is more than the downside of decreasing debt security value?
Read Answer Asked by David on December 23, 2014
Q: I recently took profits SLF to offset losses for tax purposes. I was looking to get back in when I heard an analyst on BNN, who liked both SLF and MFC, but thought SLF was a bit pricey compared to MFC. SLF's PE is 13.8 while MFC's is 9.8. SLF has a higher dividend but also has a higher payout ratio suggesting MFC might have more room to grow its dividend. For income investors, which do you like better? Best wishes for the holiday season.
Read Answer Asked by Ken on December 22, 2014
Q: Ryan's report on SLF and MFC was very interesting and is a great explanation for why you prefer SLF. I got the impression that in the less likely event of equity markets moving more than 10% along with a 100BP move in interest rates, that MFC would do better than SLF. Is this correct (and why) and if so, can you estimate the probability of this scenario happening ? Also want to say that the addition of the name along with the stock symbol as the identifier for each question, is a helpful addition-thank you.
Read Answer Asked by Alexandra on October 23, 2014
Q: Hello Peter
I an quite concerned that Ebola will sweep around much of the world eventually no matter how hard we fight it and that being the case Ebola may be a disaster for life insurance companies having to prematurely pay out on life policies. Should we sell our Sun Life SLF and Great West GWO [currently almost a break-even for us if we do]?
Thanks....... Paul K
Read Answer Asked by Paul on October 15, 2014
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