Toronto, ON (Jan. 14, 2014) – Canada needs increased private domestic investment into longer-term projects, such as infrastructure and renewable energy projects, if it is to remain competitive in the global economy. The Canadian Life and Health Insurance Association has released a report, The important role of Canada’s life and health insurers as long-term institutional investors, outlining the leadership role that the life and health insurance industry plays in this regard.
“It is extremely important that governments continue to focus on the long game and seek every opportunity to collaborate with the industries that can support and bring innovative approaches to Canada’s long-term objectives,” noted Frank Swedlove, President of the Canadian Life and Health Insurance Association. With almost 90 per cent, or $540 billion of its Canadian assets held in long-term investments, life and health insurers are one of the largest long-term institutional investors in Canada.
Long-term investment is critical to economic stability and growth. The Canadian life and health insurance industry’s business model results in strong demand for long-term investments such as government and corporate bonds, infrastructure and green energy. In 2012, the industry’s holdings of government and corporate bonds in Canada accounted for about 40 per cent of their long-term investments. Moreover, about 50 per cent of bond holdings had terms of 10 years or more. The life and health insurance industry is also a significant investor in mutual funds (almost $140 billion), equities (almost $93 billion), mortgages (about $42 billion) and real estate ($18.5 billion).
The report notes that the industry also plays an important counter-cyclical role in stabilizing the economy during periods of economic stress. Its underlying business model results in a stable demand for long-term assets over the entire business cycle. This helps to temper the swings in the market as was evidenced by the industry role in providing stability during the 2008 financial crisis.
Established in 1894, the CLHIA is a voluntary association whose member companies account for 99 per cent of Canada’s life and health insurance business. The industry provides a wide range of financial security products such as life insurance, annuities (including RRSPs, RRIFs and pensions) and supplementary health insurance to almost 27 million Canadians. It also holds close to $615 billion of assets in Canada and employs about 142,600 Canadians. Visit www.clhia.ca for more information.