Canadian Insurance Dividend Stocks – Life Insurance or Casualty Insurance?

Canadian Insurance Stocks

The Canadian insurance sector has been interesting to watch during these past years with our low-interest rate climate. Not all insurance stocks have benefited from the market growth but is it time to get back in? Some of them offer a juicy dividend to wait.

Being that many are cash cows with relatively low debt, I would consider the dividend safe and with interest rate increases coming our way, we should see some higher profits from the insurance industry in due time. Overall, I have found the industry to be disappointing for growth but it could be a proxy to income at these levels.

Below is a list of insurance stocks for the Canadian stock market for your consideration.

Best Canadian Insurance Stocks

1. Intact Financial

IFC - Intact FinancialIntact Financial Corporation is the largest provider of property and casualty insurance in Canada and a leading provider of specialty insurance in North America. The company’s popularity can be gauged from the fact that about one in every five Canadians is a customer of Intact Financial products and services. The company enjoys a 17% share in the P&C insurance market in Canada. In terms of business segments, personal and auto accounts for nearly 40% of DPW (direct premium written), followed by personal property (20%), commercial lines Canada (25%) and commercial lines USA (15%). About 85% of the company’s revenue is derived from Canada and the remaining 15% is from the U.S. The company operates through Intact insurance, BrokerLink, OneBeacon and Belairdirect banners. Its large coast-to-coast presence and cross-border services help serve customers better. Intact Financial offers a comprehensive range of insurance products and caters to the financial needs of a wide range of clients ranging from personal, business, public sector to institutional clients.

Investment Data

2. Genworth MI Canada Inc.

MIC - GenworthGenworth is the largest private residential mortgage insurer in Canada providing mortgage default insurance to Canadian residential mortgage lenders. The company offers both transactional and portfolio mortgage insurance. Genworth is known for delivering value at every stage of the mortgage process. The company operates through its subsidiary, Genworth Financial Mortgage Insurance Company Canada (Genworth Canada). With more than two decades of experience, Genworth has developed deep relations with lenders, brokers, realtors, etc. and has built a broad underwriting and distribution platform across Canada. Genworth provides tailored mortgage insurance products which help customers buy homes with a minimum 5% down payment. The company has helped more than 1.5 million families buy their own homes. Genworth has a strong capital position with a track record of annual dividend increases and share buybacks. Superior customer service, a robust risk management framework and innovative processing technology form a deep moat around Genworth’s business.

Investment Data

2. Sun-Life Financials

Sun Life Financial is a leading financial services company specializing in insurance, wealth and asset management solutions, and customized health programs. It is a leader in insurance and wealth solutions in its core Canadian market and holds an industry leading market share in US Group Benefits. The company caters to the financial needs of millions of customers, small businesses, and public and private sector companies worldwide. Canada is Sun Life’s largest market accounting for more than 30% of its income. The company also has operations in 26 other countries, like the USA (16% of income), Asia (17%) and the UK (5%). Sun Life operates through a large network of advisors, 3rd-party partners and other distributors. The company operates balanced and diversified businesses like asset management and individual insurance, which are its largest businesses constituting 29% and 28% respectively of 2018 net income, followed by group insurance (20%), wealth (12%) and run-off (12%).

Investment Data

3.

POW - Power CorporationPower Corporation is a diversified international management company engaging in financial services, asset management, and renewable energy businesses. The company has a presence in North America, Europe, and Asia and caters to more than 30 million customers worldwide. Power Corporation has a diversified business model and operates through its subsidiaries like Power Financial, Power Energy, Sagard Funds, China Asset Management, and Square Victoria Communications Group.

Its principal asset is its controlling interest in Power Financial. Power Corporation manages businesses and investments capable of generating sustainable and stable earnings growth. Founded in 1925, today Power Corporation owns some of the strongest financial service brands in North America and Europe. Over the years, the company has shifted from third party investing to building its own strategic investment platforms, which leverages its unique long term relationships with partners.

Investment Data

4. Great-West Lifeco

GWO - Great West LifeGreat-West Lifeco is a financial services company providing life and health insurance, retirement and investment services, asset management and reinsurance businesses. In addition to providing traditional insurance products, the company also provides certain products on a fee-for-service basis such as segregated funds and mutual funds. Great-West Lifeco is a member of the Power Financial Corporation group of companies. It has over $1.3 trillion in total assets under administration as of December 2017.

Great-West Lifeco operates through Great-West Life, London Life, Canada Life, Irish Life, Great-West Financial and Putnam Investments in Canada, the United States and Europe. In the U.S., Great-West Financial is a leading provider of employer-sponsored retirement savings plans in the public and corporate sectors. With a rich heritage in the financial service industry, Great West Lifeco has evolved through a strong focus on meeting the changing needs of its customers.

Investment Data

5. iA Financial Corporation

Industrial Alliance is a leading insurance and wealth management company in Canada. The company manages more than $180 billion in assets and over 4 million client accounts. It also has a presence in the U.S. Industrial Alliance offers a broad range of savings, retirement, group benefits, defined contribution, defined benefit plans, insured annuities, etc. to its vast base of clients consisting of individuals, companies, and organizations. It also distributes creditor insurance products, car loan financing, and property & casualty products through a Canada wide distribution network. Industrial Alliance operates through individual insurance (15% of 2018 revenues), individual wealth management (40%), group insurance (18%), group savings and retirement (18%), U.S. operations (5%) and other (4%) divisions. The company deploys an extensive distribution network, With more than a century old existence, Industrial Alliance has developed the necessary expertise and portfolio of products and solutions to cater to the diverse financial needs of its clients. The company is targeting to grow its EPS by at least 10% annually till 2022.

Investment Data

Sector Classifications

Sector classification is driven by a set of standards across North America, stock market and indexes. There is a specific company classification referred to as NAICS (North American Industry Classification System) managing a set of classifications. Statistic Canada is also a partner with defining the NAICS with company counts for different classifications.

While the company classification is critical to understand the evolution of industries, it is by far too detailed to manage for investors and all companies can be grouped under a sector. The best visual tree I could find is under Wikipedia's Global Industry Classification Standard.

SectorsIndustries
Basic MaterialChemicals, Construction Materials, Containers & Packaging, Metals & Mining, Paper & Forest Products
Communication ServicesDiversified Telecommunication Services, Wireless Telecommunication Services
Consumer CyclicalAuto Components, Automobiles, Household Durables, Leisure Products, Textiles, Apparel & Luxury Goods, Hotels, Restaurants & Leisure, Diversified Consumer Services, Media, Distributors, Internet & Direct Marketing Retail, Multiline Retail, Specialty Retail
US Consumer Defensive SectorFood & Staples Retailing, Beverages, Food Products, Tobacco, Household Products, Personal Products
Canadian EnergyEnergy Equipment & Services, Oil, Gas & Consumable Fuels
Financial ServicesBanks, Thrifts & Mortgage Finance, Diversified Financial Services, Consumer Finance, Capital Markets, Mortgage Real Estate Investment Trusts (REITs), Insurance
US HealthcareHealth Care Equipment & Supplies, Health Care Providers & Services, Health Care Technology, Biotechnology, Pharmaceuticals, Life Sciences Tools & Services
US Industrial SectorAerospace & Defense, Building Products, Construction & Engineering, Electrical Equipment, Industrial Conglomerates, Machinery, Trading Companies & Distributors, Commercial Services & Supplies, Professional Services, Air Freight & Logistics, Airlines, Marine, Road & Rail, Transportation Infrastructure
Canadian Real EstateEquity Real Estate Investment Trusts (REITs), Real Estate Management & Development
US TechnologiesInternet Software & Services, IT Services, Software, Communications Equipment, Technology Hardware, Storage & Peripherals, Electronic Equipment, Instruments & Components, Semiconductors & Semiconductor Equipment
UtilitiesElectric Utilities, Gas Utilities, Multi-Utilities, Water Utilities, Independent Power and Renewable Electricity Producers

DISCLOSURE: Please note that I may have a position in one or many of the holdings listed. For a complete list of my holdings, please see my Dividend Portfolio.

DISCLAIMER: Please note that this blog post represents my opinion and not an advice/recommendation. I am not a financial adviser, I am not qualified to give financial advice. Before you buy any stocks/funds consult with a qualified financial planner. Make your investment decisions at your own risk – see my full disclaimer for more details.
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