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(October 23, 2008) The Canadian Life and Health Insurance Association has joined its counterparts from around the world in calling for greater regulatory co-operation, at a meeting of the International Association of Insurance Supervisors (IAIS) in Budapest, Hungary.

“Insurance associations around the world wanted to make a clear statement to regulators about the need for a common approach to the regulation of insurance companies,” said Frank Swedlove, president of the CLHIA. “This is the first time that insurance associations have come together in such numbers to take a common position.”

Regulation of the industry should focus on a set of key principles, with policyholder protection at the core.

A joint statement issued by the meeting participants urges supervisory authorities to “strengthen their ability to co-operate in identifying emerging problems,” with risk-based regulation supervision as a common goal.

The meeting was attended by 15 associations from North America, Europe, Asia, Australia and South Africa, representing the majority of the world’s insurance business.

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BoC warns of global recession

(October 23, 2008) The Bank of Canada has repeated its assertion that the U.S. is currently in a recession, and has warned that the overall global economy is heading for “a mild recession,” in its latest Monetary Policy Report (MPR).

The Bank had issued this warning on Tuesday as part of its decision to cut interest rates by 25 basis points. At that time, the Bank also revised its outlook for the Canadian economy, with real GDP growth limited to just 0.6% in both 2008 and 2009. The economy is expected to recover in 2010, with growth of 3.4%, but the Bank left itself some wiggle room on this projection.

“Uncertainty around the Bank’s base-case projection for growth and inflation in Canada is much greater than normal, given the unsettled conditions in global financial markets and the rapid deceleration of global growth,” the Bank said in today’s MPR.

As the global economy slows, demand for commodities has eased. While that is bad news for Canada’s extraction and export industries, it has lessened the threat of inflation. The Bank pointed out in the MPR that it has slashed its trend-setting interest rates by 75 basis points in the month of October.

“These actions provide timely and significant support to the Canadian economy. The cumulative reduction in the Bank’s policy rate since the beginning of December 2007 is now 225 basis points,” the MPR states. “In line with the new outlook, some further monetary stimulus will likely be required to achieve the 2% inflation target over the medium term.”

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Desjardins enhances Helios program

(October 23, 2008) Desjardins Financial Security has announced three new features to its Helios Guaranteed Investment Funds Contract, aimed at easing investors’ concerns that they will outlive their savings.

Effective December 1, the Helios program will offer a guaranteed lifetime withdrawal benefit (GLWB), which will provide an income stream, based on the age at which the first withdrawal is made. Withdrawals can start as early as age 45.

Helios contracts that include the GLWB or a guaranteed minimum withdrawal benefit (GMWB) are eligible for a 7% bonus to be added to the total amount used in calculating the income stream. This bonus is available every year for the first 10 years of the contract, providing no withdrawals are made in that time.

The GLWB and GMWB Protected Values are reset every year in which the markets perform well.

“We know that Canadians tend not to take a lot of interest in their investments until they start getting closer to retirement,” says Claude Paré, Senior Director, Product Development and Marketing, Individual Savings, at Desjardins Financial Security. “We also know that the ten years prior to retirement are the riskiest in terms of savings.”

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Scotia Capital tops in securities lending

(October 23, 2008) Scotia Capital has been ranked number one in the world for its securities lending team, as rated by ISF Magazine’s 2008 Equity Lending Survey.

“This is the first time that we have appeared in these rankings and it is a tribute to the support that all levels of senior management have given to the securities lending team over the last five years,” said Jim Buckley, managing director and head of global equity finance, Scotia Capital.

The same securities lending team was ranked second best in North America, as a borrower. The results are based on peer evaluation, with survey participants asked to rate their counterparties.

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B.C. Economic Update

(October 23, 2008) The premier of British Columbia has rolled out his vision for steering the province through “the worst crisis in over 75 years,” at a press conference late Wednesday afternoon.

As part of the plan, Gordon Campbell said his government would provide unlimited deposit insurance on deposits in B.C. credit unions, and cut personal income taxes by 5%, retroactive to January 1, 2008.

The province will also offer a new pension plan for private sector employees who do not currently have access to one.

Campbell also said he would trim government spending where possible, to avoid slipping into a budget deficit.

(10/23/08)