During the most recent crisis, the insurance sector was struck just as strongly as mutual funds and investment banks. The majority of insurance companies were forced to trim down their dividends in 2009. In 2010, it turns out that the trend has reversed – at least in the U.S.
Despite the situation in 2009, most U.S. insurers in fact enlarged their ROI for the first six months of this year as the environment grew more stable in general. Even more corporations are awaited to augment their dividends with the final statements, according to Bloomberg analyses. More media attention is drawn by the merger bids and announcements. Bloomberg also mentions that players in the insurance business keep track of the moves of their counterparts so that they can stay on par with them and preserve their advantage. And this is the reason for their often homogenous behaviour.
How did this affect companies in Canada? When it comes to Canadian banking houses, they are almost certainly in the best shape on the globe these days – insurers are still facing lower demand for new, first time insurance policies.
During the 2010 Insurance Market Briefing in Toronto, Ontario, professionals from the domain resolved that 2010 has been a satisfactory year for the business, particularly weighed against the preceding period of instability. It did not exactly bring about an expansion, but it still allowed for some steadiness in the business ecosystem. That allowed the insurers to take a deep breath after a couple of years of great efforts.
However, the legal environment is only beginning to change. In the light of the impending regulatory adjustments plotted by the Office of the Superintendent of Financial Institutions, the International Accounting Standards Board (IASB) and others, no insurer is purposefully going to decrease its cash holdings by paying out unnecessary dividends sooner than the definitive magnitude of the legal burden has been determined. Thus, it is safe to predict that Canadian investors in insurance companies will not see a significant betterment for a little longer still.
I have been bringing you news on Canadian insurers the whole year – check our some of my other articles.