# CDN Insurance CO's. MFC GWO SLF



## Banalanal (Mar 28, 2011)

Unfortunately I own all three. If I were to do it again, I would own none or just SLF. I would like to know if anyone can assess the likelihood of any of these companies cutting their dividend. Their debt/equity is low in an absolute sense but is there further analysis when analyzing insurance companies based on their policy coverage? 

If the likelihood of cutting their dividend is high, I may sell at a loss. If it's not very likely I will hold on long term, or at least until I recoup my capital losses via dividends. I know the low interest rates are hurting their margins.


----------



## PMREdmonton (Apr 6, 2009)

They will resist cutting dividends because they know that will cause their stock value to tank (see MFC).

They are in a tough environment but it will probably only last about 2-3 more years (re: interest rate environment) and they should become profitable again eventually.

I know some people say it is very hard to evaluate insurance companies and thus prefer to buy the banks.

If you want safety from an insurer, consider FFH (Fairfax financial) which has prepared for a disaster in equities with their hedging or Berkshire Hathaway which has multiple income streams and the brilliance of Buffet/Munger assessing the markets for them and writing really good bets with their excess income supply (see the warrants from BAC and the reasonable deal they got on their preferreds).


----------



## PMREdmonton (Apr 6, 2009)

BTW it's not just the Canadian insurers that have got whacked. Lots of other high quality insurers have been hit too (see Aflac, AIG, ING).


----------



## Banalanal (Mar 28, 2011)

Those are thoughtful remarks and make me feel better about the situation. I own FFH and it sure has been a performer.


----------



## dubmac (Jan 9, 2011)

I hold both SLF & MFC primarily becuase I want a diversified portfolio - they haven't done much but lose $ recently. As interest rates go up, so should the stock. I often get insights on their performance and future prospects from stockchase.ca at the Opinions page. I drip these stocks - lower prices translates to purchasing more units when the price is lower.


----------



## Homerhomer (Oct 18, 2010)

PMREdmonton said:


> They will resist cutting dividends because they know that will cause their stock value to tank (see MFC).
> 
> They are in a tough environment but it will probably only last about 2-3 more years (re: interest rate environment) and they should become profitable again eventually.
> 
> ).


I agree, dividends are pretty safe, however since the low interest rate environment will last at least 2-3 year invsting in insurance companies may mean dead money for at least a year and quite possibly there will be better buying opportunities within the next 2 years. If the market recovers the inurance may recover less since we all know the low interest environment is here to stay, if the markets tank the insurers will probably tank just a bad.


----------



## PMREdmonton (Apr 6, 2009)

Homerhomer said:


> I agree, dividends are pretty safe, however since the low interest rate environment will last at least 2-3 year invsting in insurance companies may mean dead money for at least a year and quite possibly there will be better buying opportunities within the next 2 years. If the market recovers the inurance may recover less since we all know the low interest environment is here to stay,* if the markets tank the insurers will probably tank just a bad*.


The thing is that not many companies hold up during a big bear market - most things will drop - some things drop more. Strong consumer staple stocks, healthcare and utilities hold up better. Mining stocks, consumer cyclicals, technology, financial, industrials, energy, basic materials tend to get hammered.

The sad thing about Canada is that most of our stock market is made up of companies that tank during recessions.


----------

