During the passed financial crisis, insurance companies were stricken as hard as securities traders or investment banks. The lack of funding and credit droughts forced everyone to save wherever possible.
Banks had the option to change their lending practices, mutual funds could change their strategies, but insurers can hardly alter the conditions of long-term contracts. That is why the most straightforward-yet-difficult way to save cash and money in general was for the insurers to curb their dividend payments to shareholders. Most insurance companies in the U.S. indeed decreased their pay-our per share in 2009 as we explained. In 2010, however, it looks like the trend has reversed and insurance companies are starting to recover. That is to say U.S. insurance companies. Read on to learn more about why this is the case and how it reflects on Canadian insurers.
Despite 2009, over 60% of United States insurance companies in fact boosted their dividend payout for the opening 2Q of 2010 as the environment stabilized themselves overall. Even more companies are probable to enhance their payout ratios for the second half of 2010, Bloomberg analysts say. Even more stir is raised by the bids and announcements of mergers and acquisitions. Bloomberg also mentions that players in this business keep an eye their peers so that they are able to protect their competitiveness. That is the reason for their homogenous behaviour.
So how about Canadian insurance companies? When it comes to Canadian bankers, they are outperforming the rest of the planet these days â those in the insurance industry are suffering subsided demand for new, first-time policies. On September 8th, the 2010 Insurance Market Briefing took place in Toronto, Ontario. There, professionals from the field concluded that year 2010 has so far been an encouraging year for the industry, in particular when contrasted to the earlier period of turmoil. It did not bring about growth, but it still helped the sector achieve some steadiness in the business environment. That allowed the insurers to take a deep breath after two years of struggle.
Nonetheless, the regulations are only beginning to transform. Considering the upcoming regulatory changes devised by the OSFI, the IAS Board and others, no insurer is going to lower its liquidity ratios by releasing supplemental dividends to their shareholders before the final character of all the regulatory implications has been confirmed. Because of that, it seems that investors in Canadian insurance companies will need more patience.
I have been delivering news about the Canadian insurance market throughout my presence here â check out my other articles on InfoBarrel.com.