Water Real Climate Change Issue
A lot of people think the issue is climate change and carbon, says Toby Messier, CEO of Aquantix. It is a technology company that leverages AI and satellite and geographic data to predict water, climate change, and other material corporate risks and their financial impacts to institutional investors. He told the Reuters ‘Breakingviews Predictions 2020’ session that the real issue is water ‒ melting ice caps, flooding, drought, dryness, and water quality. And the focus has to shift to this repercussion of rising global temperatures. Canada is not ready for it, he said, because no-one is looking at it. Barb Zvan, chief risk and strategy officer for the Ontario Teachers’ Pension Plan, said the transition to a low carbon society is hampered by a lack of data. While there are loads of people to talk to about it and a lot of creativity around solutions, the scale is lacking to make these mainstream. Another impediment is that climate change seems far away so people have difficulty assessing the risk. Compounded with confusion around fiduciary duty and how to incorporate climate change risk into this, she said a strong signal is needed that this is something that needs attention. However, managers can cope with a lack of data and information, said Margaret Eve Childe, director of ESG research and integration at Manulife Investment Management. While she would prefer more data, the lack of data or quality of data should not hold the industry back. Struggling with data doesn’t mean managers can’t look at the physical and transition risks and identify the opportunities. And while a lot of work is needed to improve data, it “doesn’t mean we should stop looking at this,” she said.
Orphan And Cancer Medicines Account For Sizeable Share Of Landscape
Coupled with high treatment costs, specialty orphan and cancer medicines now account for a sizeable share of the new drug landscape, says PMPRB’s ‘Meds Entry Watch’ report. It shows a continued rise in the number of new specialized treatments entering international markets. The number of new medicines that were approved annually in recent years is higher than the longer term average. Although fewer new medicines were authorized for market in Canada than in the U.S. and Europe in 2017, those that were approved for sale here accounted for close to 90 per cent of all new medicine sales across the OECD by the end of 2018, which suggests that the higher-impact new medicines are available to Canadian patients. The increasingly high cost of new medicines poses access and affordability challenges and is the driving force behind a host of recent and pending reforms in pricing and reimbursement policy, both domestically and internationally. In Canada, the PMPRB protects consumers by regulating the ceiling prices of patented medicines sold here and keeps them informed on trends in the pharmaceutical market through its reporting function.
Infrastructure Spending Starts Too Late To End Recessions
Infrastructure spending is not an effective policy for stimulating the economy during a recession, says the Fraser Institute. “Infrastructure projects have very long timelines and by the time shovels hit the ground on a new bridge, highway, or subway tunnel, the recession is usually over and the economic recovery has already begun,” says Finn Poschmann, resident scholar at the Fraser Institute and author of ‘Fiscal Policy and Recessions: The Role of Public Infrastructure Spending.’ When the next recession hits, it’s likely that both the federal and provincial governments will consider infrastructure spending to stimulate the economy as successive governments have done in the past. It’s important, however, to recognize the practical limitations of such spending to combat recessions. First, the government must write and pass stimulus legislation. Then it must work with the provinces and municipalities to identify projects which require permit and zoning approvals. And, depending on the size of the infrastructure project, it may also require an environmental assessment before contractors are selected and materials sourced. Crucially, by the time actual construction starts, the recession will be over and the economic recovery will likely be underway. This means the infrastructure meant to stimulate the economy will now compete with private sector investment and potentially slow the recovery.
Supremex Purchases Buy-In Annuity
Supremex Inc., a North American manufacturer and marketer of envelopes and paper-based packaging solutions, has purchased a C$46 million group annuity buy-in with RBC Life Insurance Company to transfer longevity and investment risks related to the pensioners and deferred vested members of its largest defined benefit plan. The transaction covers 361 pensioners, beneficiaries, and deferred vested members. A similar transaction of nearly C$7 million was performed in June 2018 for a smaller group of pensioners in another defined benefit pension plan of the company. As a group annuity buy-in it does not require additional company funding nor does it have any impact on its 2019 financial results.
Partnerships Combines Traditional Benefits With PPN
ClaimSecure has formed a strategic partnership with Rexall Drugstores and Sobeys Inc. to develop a comprehensive national health program that combines traditional health benefits with a pharmacy closed preferred provider network (PPN) solution. This offering pools the expertise of claims management, mail, retail pharmacy, specialty drug delivery, and patient counselling capabilities under a single program, managed through a single point of contact. The program is available in both administrative services only (ASO) and fully insured funding models and is accessible through ClaimSecure’s network of insurer, third-party administrator, and broker partners.
Fixed Income ESG Indexes Launched
MSCI has launched fixed income ESG (environment, social, and governance) and factor indexes. The fixed income factor indexes leverage research backed by four decades of factor data such as carry, quality, value, size, and low risk. The fixed income ESG universal and ESG leaders indexes are designed to help benchmark ESG investment performance, as well as manage, measure, and report on ESG mandates.
Ramirez Joins Mitchell Sandham
Cristina Ramirez is a partner and vice-president, group retirement services, at Mitchell Sandham Inc. Most recently, she was a group consultant for RBC Group Advantage, a position she assumed in 2018 after leaving Penmore Benefits where she was director of business development, retirement.
‘All Stars’ Showcased In Saskatchewan
‘All-Stars 2020: Showcasing the Best’ is the theme of the ‘10th Annual CPBI Saskatchewan Regional Conference.’ The conference sessions include keynote presentations that will explore leadership and retirement, along with breakout sessions for pension and benefits topics. Featured speakers include Bruce Sellery, a financial journalist and author of ‘Moolala,’ and Hal Johnson and Joanne McLeod, healthy living experts and hosts of ‘BodyBreak.’ It takes place April 21 to 23 in Regina, SK. For information, visit Saskatchewan 10th
Climate Change Central To BlackRock Decisions
BlackRock will make climate change central to its investment decisions, says Laurence Fink, its founder and CEO. In his annual letter to CEOs, he says he believes we are “on the edge of a fundamental reshaping of finance” because of a warming planet. Climate change has become the top issue raised by clients, he says, and it will affect everything from municipal bonds to long-term mortgages for homes. The firm is taking immediate action, exiting investments in coal used to generate power and it will begin asking clients to disclose their climate-related risks. “Because capital markets pull future risk forward, we will see changes in capital allocation more quickly than we see changes to the climate itself,” Fink says. “In the near future ‒ and sooner than most anticipate ‒ there will be a significant reallocation of capital.” He says over time, companies and countries that do not respond to stakeholders and address sustainability risks will encounter growing skepticism from the markets and, in turn, a higher cost of capital. “Companies and countries that champion transparency and demonstrate their responsiveness to stakeholders, by contrast, will attract investment more effectively, including higher-quality, more patient capital.”
CDIPC Makes High Cost Drugs Affordable
The catastrophic expense of high cost drugs have been made affordable for a record number of Canadians, their employers, and life and health insurance companies through the industry’s drug cost sharing mechanism. The Canadian Drug Insurance Pooling Corporation (CDIPC) says that between 2012 and 2018, its 23-member health insurance companies and EP3 cost-sharing framework provided to employers has helped over 45,500 Canadians and their 24,000 employers to afford high cost specialty drugs. This includes over 23,000 Canadians whose treatment required drugs cost in excess of $10,000 per year in 2018. Growing by three to five per cent annually, Canadians in need of high cost drugs now represent over 39 per cent of the total drug claims paid being for by CDIPC’s member insurance companies. “At a time when national pharmacare is being debated as a way to ensure Canadians have access to high cost drugs, the industry’s drug cost sharing mechanism is very much contributing to maintaining the viability and affordability of drug insurance plans for many Canadian employers,” says Dan Berty, CDIPC’s executive director. “This means employees and their family members needing high cost drugs will usually find the drugs covered through their employer’s drug insurance plan. Without the industry’s EP3 cost sharing framework, this would be a much darker picture for many employers and, sadly, their employees.”
ESG Linked To Performance
A link exists between a company’s ESG performance and its financial performance, says a study from ISS ESG, the responsible investment arm of Institutional Shareholder Services. Firms with high or favourable ISS ESG corporate ratings tend to be more profitable through an economic value-added lens. “While one can argue that the relationship between ESG and financial performance is perhaps due to the fact that more profitable firms have the resources to invest in areas that positively influence ESG, it could also be that profitability rises as a result of a company better managing its material ESG risks, or it could be a little bit of both,” the study says. “If it is a little bit of both, then this means that good-ESG initiatives drive up financial performance, which then provides the monetary resources to invest to be an even better ESG firm, which then drives up performance again, and so on. Investors may choose not to invest in a firm that has poor ESG, “thereby limiting its access to capital and raising its cost of capital,” the study says. “Firms that get in trouble on the environment may be distracted by the regulatory headache (higher costs) and customers may avoid the firm (lowering revenue). If one does not treat employees right, this could lower morale, increase turnover and therefore lower productivity.”
Book On Friedman Available
The Fraser Institute is making the book ‘Essential Milton Friedman’ accessible to the general public. A new book about Milton Friedman, one of the most influential economists of the 20th century, it spotlights his extraordinary contributions to economic theory, measurement and policy, and his unique ability to make these concepts. “Friedman revolutionized the way economists think about so many issues including consumption, money, and unemployment and he developed and taught new ways of interpreting data that have been widely emulated to this day,” says Steven Landsburg, the book’s author and a professor of economics at the University of Rochester. His influence extended beyond economists. In the 20th century, he was the world’s foremost advocate for economic and personal freedom. Through his writings and media appearances, he educated millions about how markets work (and how governments often fail). At www.essentialfriedman.org, the complete book and individual chapters can be downloaded for free.
Teladoc Acquires Telehealth Solution
Teladoc Health, Inc. has entered into a definitive agreement to acquire InTouch Health, a provider of enterprise telehealth solutions for hospitals and health systems. This acquisition positions Teladoc Health as a partner of choice for health systems seeking a single solution for their entire virtual care strategy. The company covers the full range of acuity from critical to chronic to everyday care through a single solution across all sites of care worldwide. Virtual care will increasingly be adopted to improve patient outcomes as the need for care is expected to increase, driven by aging populations and the increasing prevalence of chronic diseases.
Waite Joins Manitoba Blue Cross
Program Offers Pension Certificate
In partnership with the HRPA, the Canadian Pension and Benefits Institute will offer a certificate program in pensions this spring. The ‘HRPA Canadian Pension Certificate Program’ will provide tips on best practices in plan administration and governance and strategies to reduce risk and liability in plan administration. It takes place April 2 to 4 in Toronto. For information, visit http://www.cpbi-icra.ca/Events/Details/Ontario/2020/04-15-CPBI-Ontario-Canadian-Pension-Certificate
Active/Passive Debate Becoming Redundant
The long-running debate over active versus passive funds is destined to become redundant as new approaches that combine both styles of investing continue to emerge, says Cerulli Associates. “An investment model ‒ structured around service provision and its high level of value rather than sales of yet another active equity fund ‒ looks set to provide an alternative to active management fees,” says Justina Deveikyte, associate director, European institutional research at Cerulli Associates. In the institutional market, the trend was evident in the search by National Employment Savings Trust (NEST) for private credit managers. Only external managers able to offer innovative fund structures had a chance of securing a mandate from the UK defined contribution workplace pension scheme. Investors typically access private markets via closed-end funds with a limited life. Yet, NEST wanted evergreen, scalable fund structures in one of the unique features of the mandates that involved creating the right structure to balance the liquidity and legal needs of DC savers. Active management has been chipped away at by demand for strategies that offer similar exposures but without the fees, such as smart beta and ‘active’ exchange-traded funds (ETFs). The latter, now established in fixed income, allow investors to tap products with, for example, higher or lower allocations to certain issuers to access the market in a “smarter” way, deviating from the benchmark, but still within a rules-based, systematic approach. It is a passive-active combination that will increasingly manifest in equity strategies, says Cerulli.
Climate Change Innovation Emerging Trend
ESG themes are long-term, but some can emerge with sudden force, says MSCI. Its report, ’20 ESG Trends To Watch’ says five trends will unfold in 2020 to catapult ESG investing into the new decade. The first is climate change innovators will start spotting the sleeping giants. Solving the climate crisis is likely to take innovative technology, scalable deployment, and a bit of luck. Many envision climate saviours coming in the form of plucky startups. But alternative data is hinting instead at big, established players, biding their time and quietly assembling an arsenal of climate solutions. In 2020, investors will turbocharge their use of alternative data to spot the companies plotting to take a lead in pushing society toward a carbon-free economy. As well, ESG banks have stepped away from some gun makers and investors have been keen to channel money toward green energy projects. But for the average, middle-of-the-road company, ESG has mostly been tossed to the corporate social responsibility office or used to prettify annual reports. In 2020, it says ESG storms the CFO’s office, elbowing its way onto the bottom line as financiers get creative with ways to bind ESG criteria to their terms of capital, introducing a plethora of corporate borrowers into the wide world of ESG. Other trends include re-valuing real estate. Just as real estate investors and managers begin to grapple with what climate change might do to their assets physically, now they may also have to contend with accelerating regulation. To green the property portfolio, they will move from a nice-to-have reputation booster to an imperative in the face of a looming ‘brown discount’ if real estate investors don’t kickstart their journey to zero carbon.
Headband Measures Mindfulness
Morneau Shepell and Interaxon, the maker of the Muse meditation headband, have partnered to test Muse technology in workplace well-being programming. Employers are recognizing the potential benefits of mindfulness and meditation in improving workplace productivity and reducing costs. The Muse headband is a research grade electroencephalography (EEG) device that provides visual and auditory feedback on brain activity. It is the first such device meant for ongoing, at home, personal use. The feedback is used to shape the mental behaviours that define effective meditation, which is an intentional clearing and calming of the mind, and mindfulness, which is the ability to focus on a single thing in a calm state. “In today’s society, meditation and mindfulness are becoming essential skills and we have seen evidence that they are effective in helping to support many key components of well-being, including reducing stress and improving sleep,” says Paula Allen, senior vice president, research, analytics and innovation, at Morneau Shepell.
Vertex One Fund Acquisition Completed
Picton Mahoney Asset Management has completed its previously announced acquisition of the investment fund management contracts of four hedge funds and alternative mutual funds from Vertex One Asset Management Inc. The acquisition increases Picton Mahoney’s total assets under management by $400 million.
Richardson Joins George & Bell
Michelle Richardson (CFA) is a consultant with George & Bell. Prior to joining the firm, she worked for eight years for a global consultant. She started as a pension administrator, then worked in the investment consulting department as an analyst and was promoted twice to the position of investment consultant. She was also a member of the firm’s Canadian defined contribution committee.
Portfolio Managers Share Insights
CFA Society Toronto’s ‘Annual Equity Symposium’ brings together a series of portfolio managers who will share unique insights into their investment process, market outlooks, and top investment ideas. It takes place February 5 in Toronto, ON. For information, visit Equity Symposium
DC Moving To Pension Plans
Defined contribution plans will start looking more like pension plans as they borrow concepts such as funded ratios and create lineups with real estate, hedge funds, and private equity, says Russell Investments. In a blog post, it says by 2025, plan sponsors will as a matter of best practice conduct periodic retirement readiness studies of their plans “to better understand the collective ‘funded status’ of their participants.” They also anticipate that by 2025 more plan sponsors will use managed accounts as the qualified default investment alternative in their plans, with annual cash flow potentially surpassing the level of assets directed at target-date funds. They also foresee plan sponsors adding a retirement tier to their lineups with both guaranteed and non-guaranteed investment options. In addition, it sees more plan sponsors incorporating alternative strategies ‒ such as real estate, hedge funds, and private equity ‒ into their lineups, “similar to the approach used by large, well-run pension plan portfolios.” Broadening the investment lineup to include alternatives strategies may be accomplished in “a white-label structure for the core investment menu or in custom target-date funds.”
‘S’ Offers Returns As Well
Bonnie-Lyn de Bartok, founder and CEO of the S Factor Co., believes there is no shortage of information about the ‘S’ ‒ social ‒ in the use of ESG (environment, social, and governance) factors in investment decision-making. Speaking on ‘The ‘S’ in ESG’ at the ‘MMF Symposium 2020,’ she said while ESG is a huge trend in the market, the social factor is overlooked because traditionally it is dismissed because of a lack on information to measure social factors. However, she said anything can be measured in terms of economic and social impact. While governance is having an impact and driving returns and climate change is drawing more interest in the environmental aspect, the social return is flat and there is a huge gap because everything needed to value information on the social side is unstructured. However, there are number of things companies are doing on the social which can be measured. These range from the treatment of indigenous people, health and safety records, labour law violations, and the number of accidents or incidents they are involved. She said anyone who looked at BP prior to the 2019 in the Gulf of Mexico would have seen that another incident was bound to happen. Companies which spend on social elements see outstanding outperformance, she said, which validates management styles which factor in social elements.
Fresh Opportunities For Investors Ahead
The new decade offers investors exciting opportunities in emerging market bonds, healthcare, and inflation, says Terence Moll, head of investment strategy at Seven Investment Management (7IM). Despite a slowing world economy, he believes there are fresh opportunities for investors during the so-called ‘20s.’ “Every decade deserves a name. Some of us remember the Swinging ’60s, the ’90s ushered in political change across the world, and the Noughties sounded deliciously saucy (although it ended with the global financial crisis), he says. “But the decade just ending has been a no-name era. The ‘Teens’ label was taken and ‘Tweenies’ never caught on, so the world spent 10 whole years with no identity, just a grey association with slow growth, populism, and melting glaciers. “While investors face similar challenges in 2020 as they did in 2019, there are ample opportunities out there for those willing to look for them.” Themes investors should consider in the coming decade include emerging market bonds. The main sources of global growth, in terms of both people and economics, are emerging markets. One of their advantages is that they can gain from a less developed starting point, by borrowing advanced technology from abroad and leapfrogging costly stages of economic development. With the whole world steadily getting older, particularly in major economies such as Japan, more will be spent on healthcare. And while central bankers don’t anticipate much in the way of higher inflation in the near future, there is tolerance for some increases and this creates opportunities for investors. Moll says “central bankers are saying that they will tolerate inflation above their targets for a while to balance out the lows of the past few years.”
ESG Area Of Innovation
ESG (environment, social, and governance) is truly an area of innovation for markets always looking for a competitive edge. Speaking at the ‘MMF Symposium 2020’ on ‘Investment Product Innovation: The Role of ESG,’ Aaron Bennett, director and senior research analyst, North American equities, at Jarislowsky Fraser, said broadly speaking, ESG is about non-financial elements and which is most material depends on each investor. In fact, it likely dates back to Quakers in 1800s as it was important to them that their investments were aligned with their values. Today, there is a conflict between wanting to do the right thing, but also wanting enough money to retire. One challenge is there is no standard framework for measuring ESG. He called this data “inherently dirty” and difficult to analyze. This means the data must be scrubbed and quantified. Still there is emerging evidence that it can be used for alpha generation as better companies will do things better and have better performance.
Plan Consolidates With OMERS
OMERS has consolidated the Metropolitan Toronto Pension Plan (Metro Plan). The Metro Plan is one of the pension plans managed by the city of Toronto. This is the fourth plan managed by the city of Toronto to do so. Throughout 2019, the Corporation of the City of York Employee Pension Plan, the Toronto Civic Employees’ Pension Plan, and the Metropolitan Toronto Police Benefit Fund were consolidated into OMERS.
Machine Learning Use Growing
Machine learning is being used for a number of applications in finance today, says Marcos López de Prado, founder and CIO at True Positive Technologies. He told the ‘Ten Financial Applications for Machine Learning’ session at the ‘MMF Symposium 2020’ that machine learning is an algorithm which learns patterns in high dimensional spaces without being specifically directed. Ten years ago, no-one could have predicted where machine learning would be today. These machine learning algorithms can even predict things that have never been seen before ‒ so-called “black swans” ‒ because extreme examples of phenomena happen all the time unseen by humans and algorithms can detect these activities. Another current application is price prediction. Algorithms can model six or seven of the widely accepted factors to see their relationships to predict future prices. Hedging to mitigate risk is another application. Traditionally, hedging uses derivatives and requires very complex math. Yet with machine learning, this can be done in minutes. Other uses today include portfolio construction/risk analysis, outlier detection, beta sizing/alpha capture, credit ratings/analyst recommendations, sentiment analysis/recommendation systems, execution, and detection of false strategies.
Accompass Becomes Gallagher
Accompass is now operating as Arthur J. Gallagher & Co. There will be no changes to the team, the ways that it services its clients, or the level of insights about their benefits and health, investment and retirement, and broad-based and executive compensation programs. Gallagher acquired Accompass in 2018.
Quarry Joins Equitable
Boyle Speaks At Forecast
Ryan James Boyle, vice-president and senior economist with Northern Trust Bank, is the featured speaker at the ‘2020 CPBI Atlantic Economic Forecast.’ He will share his outlook on growth prospects and risks for markets around the world. It takes place February 19 in Halifax, NS, and February 20 in Fredericton, NB. Information on the Halifax session is at Halifax Forecast while details of the Fredericton session can be found at Fredericton Forecast
APP Pros And Cons Need To Be Weighed
In weighing the pros and cons of a separate Alberta Pension Plan (APP), Albertans need to look beyond the short-term financial ‘windfall’ of a lower base contribution rate than the Canada Pension Plan’s (CPP) current 9.9 per cent of pay. They should also consider the material risks and costs of creating and managing a separate APP, as well as the very real longer-term underwriting and investment policy risks they would be subjecting young and future Albertans to, says Keith Ambachtsheer, president on KPA Advisory. In a discussion paper on the proposed APP, he says calculations by the Fraser Institute and the CD Howe Institute show that a separate APP could provide the same base benefits as those of the CPP at a contribution rate materially lower than the current CPP contribution rate. On top of that, a proportion of the $400 billion CPP reserve fund would be shifted to the APP to partially cover the accrued payment obligations the APP would be taking over from the CPP. On the face of it, to quote Alberta Premier Jason Kenney, this indeed sounds like an idea worth serious consideration, he says. A base APP could operate with a sustainable contribution rate below the CPP’s 9.9 per cent because the three million Alberta members of the CPP are materially younger than the other 17 million members. That means relatively more CPP contributors and relatively fewer retirees drawing CPP pensions in Alberta. A base APP could be sustainable with a contribution rate in the six to eight per cent range. However, this kind of static gap analysis cannot tell the whole story, says Ambachtsheer, as it does not address an important question about the future. Net migration of younger workers into Alberta’s oil and gas industry over the course of the last 25 years was an important contributor to Alberta’s demographic make-up today, and hence (combined with higher wages) to its current net CPP contributor status. Recent events (climate change-related policies in Canada and around the world, weakening oil and gas demand and prices, oil and gas transportation constraints, Alberta budget cuts) have conspired to reverse that worker inflow into an outflow and increase Alberta’s unemployment rate at the same time. He asked what the implications would be on the sustainability of an APP if these recent reversals became a multi-decade trend. As well, the country-wide CPP contributor base offers important diversification benefits to Alberta CPP participants. The history of the Quebec Pension Plan (QPP) is a case in point. While at its 1966 inception the QPP had a younger membership than the CPP, this is no longer the case. As a result, while both plans started out with a 3.6 per cent contribution rate, the base QPP contribution rate today is 10.8 per cent of pay versus the CPP 9.9 per cent. Migration sensitivity analysis suggests an APP could eventually find itself in the same situation as the QPP and dropping the APP’s starting contribution rate below the base CPP’s 9.9 per cent rate would expose APP members to underwriting risk in the form of potential benefit reductions, higher contribution rates, or some combination of the two sometime in the decades ahead.
Experience As Consumers Comes To Work
Plan members are bringing their experiences as consumers to work and expecting their employers to respond with faster, friendlier, and simpler processes and tools, says a ‘Telus Health Benefits Hub.’ This ‘consumerization of everything’ is one of the key trends that will continue and accelerate. For example, employee self-service (ESS) will need to catch up with the likes of Amazon in terms of speed and ease of use, which could be a bit bumpy since research shows that 43 per cent of U.S. organizations that offer ESS, still use paper for their benefits enrolment and onboarding. Automating these steps, though, will be table stakes in 2020 as employees look to an intuitive and holistic experience across the board, including how they access claims history, reimbursement status, and coverage information. More apps will be doing more stuff as almost one in four Canadian smartphone users have at least one health app installed. Of these, 64 per cent track their physical activity and 41 per cent keep tabs on what they’re eating. Increasingly, there will be more proprietary mobile apps that form part of the HBM ecosystem to enable efficient submission, processing, and claims adjudication. And while privacy will continue to be a key concern, AI will be put to work in synthesizing large amounts of health, behaviour, and workforce data into actionable insights for benefits providers and advisors. For example, data may indicate the need for program changes to reduce absenteeism or drug costs. Automation will also be the focus of ongoing cost efficiency efforts in the industry. Certainly it will continue to improve the speed and quality of claims processing and machine learning will be used more extensively to reduce administration costs.
Two Move Plans To CAAT
Catholic Charities of the Archdiocese of Toronto and FP Canadian Newspapers LP have joined the $10.8 billion Colleges of Applied Arts and Technology Pension Plan (CAAT). With the move, the two companies, which combined have 785 employees and pension plan participants, have merged their defined benefit plan liabilities and assets into CAAT plan pending approval from the Financial Services Regulatory Authority of Ontario. FP Canadian Newspapers’ has $55 million in defined benefit plan assets and Catholic Charities has $35 million in DB plan assets. CAAT can accept new members from public, private, and not-for-profit sectors in Canada under Ontario regulations that allow single-employer pension funds of all kinds to be merged with a multi-employer plan such as CAAT. Participants pay into its DBplus plan at fixed contribution rates, with their respective employers matching dollar for dollar.
Joint Venture Strengthens Benefits Business
SC Insurance and RRJ Benefits Inc. have come together to form a new venture to strengthen and grow the benefits and life business between the two companies. Clients will have access to the SC Hub, a digital administration tool to manage their benefit plans on a paperless platform, as well as AI driven solutions to simplify the life insurance application and underwriting process. SC Insurance was originally founded in 1979 as Steven Cohen Insurance Agency Inc. RRJ has been providing property and casualty insurance solutions to clients across Ontario for over 110 years. In 2012, RRJ Benefits was introduced, providing life insurance and group benefits solutions.
Hedge Fund Returns To Drop
Top hedge fund trends this year will include higher assets and a reduction in returns, says Agecroft Partners. It says an improvement in sentiment towards the industry means hedge fund industry assets could reach new all-time high in 2020. As net redemptions from hedge funds decline, it forecasts industry assets to grow by three per cent over the next 12 months stemming primarily from hedge fund performance. However, declining fees will cause overall revenue to decline. As well, as the new year begins with historically low interest rates and equity markets near peak levels, investors anticipate beta and carried interest to contribute less to fund performance over the next few years thereby reducing the overall expected returns from hedge funds. It also says most public pension funds have an actuarial rate of return assumption around 7.5 per cent, so with interest rates and credit spreads near historic lows, they will look to hedge funds to enhance returns by, for example, allocating part of their fixed income allocation to hedge fund strategies like distressed debit, specialty financing, structured credit, and relative value fixed income. With the yield on the aggregate bond index in the mid-two per cent range, the bar is low for hedge funds to add value on a risk-adjusted return basis.
Ontario Teachers’ Sells Minority Interest
The Ontario Teachers’ Pension Plan (Ontario Teachers’) has sold a minority interest of its indirect stake in Brussels Airport to TCorp and GPIF through a StepStone managed vehicle. Ontario Teachers’ remains the largest individual shareholder in the airport. Ontario Teachers’ has holdings in five European freehold airports: Copenhagen Airport, Brussels Airport, Bristol Airport, Birmingham Airport, and London City Airport. It has been an investor in Brussels Airport since 2011.
Poirier Leads Global Wellbeing
Workshops Focus On ESG
CFA Society Toronto’s ‘Sustainable Investing Symposium’ features a collection of workshops that focus on a different topics within the realm of ESG (environmental, social, and governance) investing. It takes place January 31 in Toronto, ON. For information, visit Sustainable Investing