Insurance is frequently associated with safety, but does this hold true for the stock market as well? Again, the answer can be both yes and no. Yes, in the sense that it is a steady industry with very little downward fluctuation in stock prices. And no, if you account for the profitability of this sector, as most people believe, “safe” equates to “lesser returns in the stock market.”
Insurance firms provide things that most of us require while also taking on many of the dangers we don’t want. Unfortunately, insurance providers are often thought of as large, uninteresting financial corporations, but they can turn out to be profitable, but only if you know where to invest.
6 Canadian Insurance Stocks You Should Invest In
For Canadian investors looking to get ahead of the competition, six insurance stocks have the most promising growth potential.
Manulife Financial Corporation (TSX:MFC)
Manulife offers life insurance and asset management products and services to individuals and organizations in Canada, the United States, and Asia. In addition, it provides financial advice and insurance from its worldwide headquarters in Toronto, Canada. Manulife operates under the name Manulife in Canada, Asia, and Europe, while largely as John Hancock in the United States. It has served customers for over 155 years in Canada, Asia, and the USA.
Manulife held approximately CAD 1.4 trillion in assets under management or administration on December 31, 2021, while it paid out CAD$31.8 billion in the past 12 months. Manulife Investment Management issued new criteria for ensuring effective and efficient carbon emissions reductions for forestry and agriculture on April 6, 2022. Manulife Investment Management’s timberland purchase screening for existing carbon initiatives and prospective carbon project development prospects currently incorporates the new criteria.
Trading at a share price of $26.83 as of April 13, 2022 (10:52 PM), it is the biggest of the Canadian insurance companies. The company pays quarterly dividends of 0.33 CAD per share, promising a dividend yield of 4.92%.
Sun Life Financial Inc. (TSX:SLF)
Sun Life Financial, Great-West Lifeco, and Manulife are Canada’s Big Three life insurance companies. Sun Life operates in Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China, Australia, Singapore, Vietnam, Malaysia, and Bermuda. Where individual and institutional customers benefit from Sun Life’s asset management, wealth management, insurance, and health solutions. MFS Investment Management, a Boston-based asset management firm, is also owned by the company. Asset management operations account for nearly a third of Sun Life’s profit. Sun Life had $1.44 trillion in assets under administration as of December 31, 2021.
PT Sun Life Financial Indonesia, a subsidiary of Sun Life Financial Inc., and PT Bank CIMB Niaga Tbk have stated that their existing partnership in Indonesia will be strengthened. Customers of CIMB Niaga can now get insurance from Sun Life Indonesia through electronic and out-of-branch channels. Sun Life Indonesia will supply insurance solutions to CIMB Niaga clients via all platforms for a period of 15 years beginning in January 2025 under this new agreement. It also seeks to extend the connection for six (6) years until 2039.
Trading at $69.54 as of April 13, 2022 (11:14 PM), this insurance business holds immense growth potential and is leading the insurance industry with a market capitalization of 40,754,291,473.
Great-West Lifeco Inc. (TSX:GWO)
Great-West operates in the United States and Europe, with Canada accounting for little under half of the company’s profit and revenue. Great-West is one of Canada’s top three insurance companies with more than 28,000 workers, 215,000 advisory connections, and thousands of distribution partners, collectively serving over 33 million client relationships. It offers both personal and collective insurance in Canada. In addition, Putnam Investments and Empower Retirement, a defined-contribution recordkeeping firm, are both operated by Great-West in the United States. In Europe, Great-West principally serves the United Kingdom, Ireland, and Germany with life insurance, annuities, and reinsurance.
Great-West acquired Personal Capital and MassMutual’s recordkeeping business in 2020. In addition, Great-West Lifeco announced a $200,000 donation to the Canadian Red Cross Ukraine Humanitarian Crisis Appeal on February 28, 2022, to address humanitarian needs in Ukraine and the surrounding region.
Trading at $36.76 as of April 13, 2022 (11:29 PM), it stands on the list of companies having high payout and earnings ratios. The trading ratio of 525,221 combined with a P/E ratio of 11.00 and an EPS of 3.37 is a testament to this stock’s profitability.
Intact Financial Corporation (TSX:IFC)
Intact Financial Corporation is a property and casualty insurance business based in Canada that offers contracted premiums. Through a community of dealers and a wholly-owned subsidiary, BrokerLink, the company delivers insurance under the Intact Insurance brand and directly to consumers through Belairdirect. The personal automotive segment accounts for the majority of the company’s direct premiums. Intact Investment Management, a subsidiary of Intact, administers the company’s investments directly. Fixed-income securities account for the great majority of these assets. Its asset mix is geared toward earning interest and dividends.
On March 15, 2022, Intact revealed that it had completed its initially declared purchased deal proposition of Non-Cumulative Class A Shares, Series 11 insured by a syndicate of underwriters led by TD Securities Inc., and including BMO Capital Markets, CIBC Capital Markets, National Bank Financial, RBC Capital Markets, and Scotiabank, with total gross proceeds of $150 million.
Trading at $182.90 as of April 14, 2022 (3:06 AM), Intact is a household name in the Canadian insurance sector. The trading volume of 253,803 and a large market cap speak for this company’s success. It also pays a relatively high quarterly dividend of 1.00 CAD per share.
Power Corporation (TSX:POW)
Power Corp. of Canada, founded in 1925, is a diverse holding corporation with assets in the financial sector, telecommunications, and other industries through its ownership stake in Power Financial. It operates in North America, Europe, and Asia with more than 33700 employees. Great-West Life (an insurance giant), IGM Financial (Canada’s largest non-banking asset manager), and Pargesa are all owned by Power Financial (a holding company with interests in European companies). Power Financial’s remaining shares were purchased by Power Corp. in February 2020.
The Corporation reported record-high net and adjusted total revenue of $2,917 million and $3,230 million, respectively, for the fiscal year 2021, culminating in record-high net earnings per share of $4.31 and adjusted net earnings per share of $4.77.
Trading at $38.57 as of April 14, 2022 (5:04 AM), the company has a top-tier market cap of 26,090,860,557 in the Canadian insurance industry. Furthermore, the EPS of 4.31 and a dynamic trading volume of 2,000,689 prove its stability and profitability.
Fairfax Financial Holdings Limited (TSX:FFH)
Fairfax Financial is a holding company that engages in property and liability insurance and reinsurance, and related investment management through its subsidiaries. It has a workforce of more than 38,040. Fairfax Financial Holdings Limited announced on February 16, 2022, that it had acquired an aggregate of 5,416,000 subordinate voting shares of Fairfax India Holdings Corporation, constituting 4.93 percent of Fairfax India’s issued and outstanding Subordinate Voting Shares, from two existing shareholders at a price of US$12.00 (approximately C$15.29) per Subordinate Voting Share for an aggregate purchase price of about US$64.9 million through its subsidiaries.
Fairfax Financial Holdings Limited’s net earnings for the fiscal year 2021 were $3,401.1 million ($122.25 net earnings per diluted share after preferred share dividends), up from $218.4 million ($6.29 net earnings per diluted share after preferred share dividends) in the fiscal year 2020. In addition, the book value per basic share on December 31, 2021, was $630.60, up from $478.33 on December 31, 2020 (a 34.2 percent rise after accounting for the $10 per common share dividend paid in the Q1 of 2021).
Trading at $696.31 as of April 14, 2022 (5:21 AM), Fairfax is among the market leaders in terms of market cap, holding a total market of 17,398,120,033. In addition, the company pays an annual dividend of 10.00 USD per share, promising a dividend yield of 1.825%.
Why You Should Invest in Insurance Stocks in Canada
Traditionally, the business model of insurance companies was based on mutual corporations. Meaning the company was owned by policyholders and operated only for the benefit of policyholders. Companies on the stock market, on the other hand, are owned by shareholders and aim to maximize shareholder returns. Many insurance companies have altered their business models due to demutualization and are now listed on the stock exchange (they are publicly traded). As a result, investment opportunities in this area have become available.
Insurance stocks are a must-have for investors looking for stability and long-term gains. Because the insurance industry not only pays out big dividends and has a sustainable revenue stream, it also functions across a wide range of economic conditions, including booms, crashes, and everything in between.
The Bottom Line
The insurance industry has emerged as a major investment opportunity in recent years. These stocks provide high dividends and are akin to mutual funds in terms of safety. Moreover, analysts predict that this industry will develop steadily for many years, making now a good time to invest.
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Invest in Insurance Companies Canada
Carlile came to Canada as the North American Life Assurance Company agent. Manulife Financial Corporation was founded on June 23, 1887, as Manufacturers Life Insurance Company by a law passed by Parliament under the leadership of Canadian Prime Minister John A. MacDonald and Governor Alexander Campbell of Ontario, despite conflicts of interest at a time when public persons worked in the private sector not uncommonly. In 1901, the company merged with Temperance General Life Assurances Company , a Toronto-based Canadian life insurer that offered preferential rates to alcohol abstainers.
It offers a wide range of products, including life, disability and health insurance products, pension accounts, wealth, savings and income products, employer-sponsored defined benefit plans, reinsurance products, asset management services, etc. Sun Life Financial is a leading provider of insurance and wealth solutions with a core business in Canada and holds an industry-leading market share in the United States. Financial companies with activities in insurance, wealth management, and other financial products and their subsidiaries.
The company’s insurance subsidiaries include Canada Life Assurance Company, London Life and Great-West Life. Other insurance companies listed on Power Corporation of Canada offer life, disability and health insurance, reinsurance products, annuities, annuities, securities, mortgage products, asset management services and other financial products. In addition, the company operates under the banner of Insurance BrokerLink, OneBeacon and BelairDirect.
Personal and Commercial provides personal banking services, mortgage loans, home and credit payments solutions, consumer credit, insurance and investment products and business solutions. Sun Life Financial is a leading financial services firm specializing in insurance, wealth and asset management solutions and customized health programs.
Great-West Lifeco Financial Services is a financial services company that offers life and health insurance, pension and investment services, asset management and reinsurance services. Great-West, Lifeco is a holding company active in the life, health and asset management (investment, retirement and savings) and reinsurance business in Canada, the United States and Europe. Greater West Lifeco, Inc. is a financial services company in Canada based on a holding company and six subsidiaries and services customers in North America, Europe and Asia.
The Manulife Financial Corporation (also known as Financiere Manuvie) (Québec) is a multinational Canadian insurance and financial services company based in Toronto, Ontario. It is a holding company of Manufacturers Life Insurance Company (MLI), a Canadian life insurance company.
Manulife Financial Corporation is based on global institutional asset management (AUM), the world’s biggest insurance company in Canada and the 28th largest fund manager globally. As of March 2018, Manulife had $11 billion under management assets, making it one of the largest life insurance companies in the world.
The company is a leading provider of insurance coverage, reinsurance and investment management services to its customers. Sagen MI Canada Inc. and its subsidiaries, the Sagen Mortgage Insurance Company of Canada, are Canada’s largest private mortgage insurers. Before you can invest in insurance stocks, you need a broker account.
In recent years, the insurance world has merged brokerage firms with banks and other financial institutions to offer its customers a wide range of services. As a result, there are many pure insurance stocks on many insurance markets, but you need to know more about the individual offerings of the companies in which you invest. In addition, there are various options for investors interested in insurance ETFs, such as Invesco (KBW), property and casualty ETF, Broad Insurance ETF (covering health, life and property insurance) and SPDR S & P Insurance ETF.
The popularity of the companies can be measured by the fact that one in five Canadian customers has an intact product or service from a financial company.
Here are Canada’s top five insurance companies based on their annual revenue for 2019. These include premiums for insurance charged to policyholders, returns from investing these premiums in other insurance products and embedded investment products such as mutual funds.
The public documents of Manulife Financial Corporation (” Manufacturers Life Insurance Company”) are filed with the Canadian securities administrator and include annual reports, annual financial statements, quarterly shareholder reports, interim financial statements and annual information forms, and meeting announcements, newsletters, materials and press releases. The Company is a member of the Principal Financial Group (r) of Des Moines, IA 50392. Sun Life generates revenue from fees provided by insurance management, occupational pension plans and so-called administrative services contracts (ASO).
The largest motor insurance provider in the US operates at a low cost, and its profitability and growth are higher than those of its competitors. Seifert said many big life insurance companies trade at significant discounts on most multiples, making a case for Brighthouse Financial and its pension-driven business difficult. As a holding company for insurance companies that invests its money in stocks and bonds, it exited asset management and insurance last year without any problems.
This week, insurance stocks outperformed the broader market as investors gave Canadian life insurers a boost in their earnings reports. Investors, however, were less enthusiastic about shares in US life insurers, which reported gains this week. Still, I’m optimistic about Canada’s top stocks in the insurance and financial services sectors over the long term.