TSX ETF Investor Centre
Canadian Lifecos – Well-Positioned for Higher Rates
Canadian life insurance companies (“lifecos”) have significant exposure to various macroeconomic factors including interest rates, equity markets and corporate credit. Interest rates typically have the biggest impact on the sector as lifeco reserves and earnings have historically had a high degree of economic sensitivity to changes in interest rates. This is the result of a duration mismatch between a lifeco’s insurance liabilities and its invested assets. Most life insurance products result in a long duration liability for the insurer that writes the policy. This occurs since buyers of life insurance policies are often in their early 40s and are therefore expected to live for several decades. A lifeco’s invested assets, on the other hand, typically have a shorter duration profile. This mismatch means that lifecos are generally helped by rising interest rates and hurt by declining interest rates.
U.S. Financials: Why They Remain Attractive (Especially the Mid-Caps)
In this insight, we review six reasons why U.S. financials stocks remain attractive, and why the mid-caps could be set to resume their long history of material outperformance vs. the large-caps.
Canadian Banks: Catalyst #2 (Reserve Releases) Approaching
In this Insight, Hamilton ETFs explains why they believe reserve releases of between $6 and $8 billion for the Canadian banks are coming in 2021, which could have a material impact on share prices.
Canadian Banks: Are Analysts Underestimating the Recovery (Again)?
In this insight on the Canadian banks, Hamilton ETFs discusses the historical tendency of analysts to underestimate the strength of the earnings recovery during credit cycles. Specifically, Hamilton ETFs explores the implications to current and forward P/E multiples, and whether Canadian bank shares are even cheaper than they appear.