So who was the real winner of the Donald Trump election victory? Of course, the Republicans who now have a dominant position of power…perhaps the media who are guaranteed another four years of notable soundbites… oh and of course, Canadian insurers…
Yes, you read that correctly – one of the biggest winners from the Trump victory were insurers north of the border of where the election took place.
The likes of Sun Life Financial and Manulife Financial have both struggled with the weight of low interest rates in recent years – but now those results have been transformed.
Both recently announced strong third quarter results (see Sun Life’s results
and Manulife’s results
) – but it was the new President-elect’s arrival – and a subsequent leap in interest rates – that saw insurers’ shares surge to their highest levels this year.
According to a report in The Globe and Mail
, Manulife’s stocks rocketed by 9%, with the company also seeing its profits increase from $622 million to $1.1 billion year on year. Meanwhile, shares in Sun Life rose by 10% on the back of a 35% rise in profit; and Great-West Lifeco, which had seen its shares plummet one week earlier, enjoyed a 3.3% lift.
All of the insurers mentioned, of course, have significant operations in the USA too – and insurers on their own home turf also enjoyed a surge thanks to promises of an economic boost, with the likes of Prudential and MetLife also enjoying significant gains.
The lengthy period of low interest rates has placed extensive pressure on insurers – and any shift would offer them a welcome boost after a period in which they have had to adjust investment strategies, introduce hedges and, in many cases, reprice products. Even with those measures in place, few have been able to trade above pre-recession levels.
Speaking to The Globe and Mail
, Donald Guloien, chief executive officer of Manulife, pointed to more than just the Trump-factor influencing rates – highlighting that they have been rising since early September, with employment figures seen as a key indicator.
Meanwhile, Dean Connor, CEO of Sun Life, suggested it was too early to predict what Trump would do – but that the company would not be affected by changes to Obamacare because healthcare does not have a large impact on its business.
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