Briefly: “Scotia debuts new insurance brand” and more of Monday’s news

Among the products offered, Scotia is highlighting the ScotiaLife Term 1 policy, which offers group coverage from $50,000 to $1 million.

“Scotiabank has made insurance a strategic priority,” said Cummings. “What you are seeing with today’s launch and what you will see more of in the future is the investment the bank is making to build on our already solid insurance business. We are confident that we have what it takes to successfully compete in this market and we are excited at the opportunities ahead of us.”

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Roughly half will hold the line on RRSP contributions

One in three Canadians is planning to reduce their RRSP contribution this year, according to a survey conducted by Angus Reid on behalf of ING Direct. Just over half of those surveyed (55%) said they were not changing their contribution level.

The survey also found that mutual funds remained the most popular investment choice within an RRSP, with 88% saying they held funds. There was a massive fall-off in the use of other products, with GICs ranking second with 23% uptake, followed by direct equity investment (21%).

Seventy-five per cent of those surveyed said they currently have a financial planner or investment advisor.

Ontarians were the least likely to consult a financial advisor, according to the poll, with 67% saying they might, in light of the current downturn, compared to 80% nationally.

In terms of loyalty to their advisor, Atlantic Canadians were the most likely to keep the one they had, at 88%, compared to 77% of Westerners, who were the most likely to switch to a new advisor.

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BetaPro to offer four new ETFs

BetaPro Management has announced the filing of a preliminary prospectus for four new Horizons BetaPro ETFs unleveraged inverse exposure to four of Canada’s most important equity sub-indices.

The ETFs will provide daily investment results, before fees and expenses, that correspond to 100% the inverse of the daily performance of the S&P/TSX 60, S&P/TSX Capped Financials Index, S&P/TSX Capped Energy Index and the S&P/TSX Global Gold Index.

“Our four new single inverse ETFs will offer 100% of the opposite daily performance of Canadian benchmarks,” said Howard Atkinson, president of BetaPro. “Expanding our BetaPro family to 32 ETFs will increase the number of investment solutions available to investors.”

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Jovian proposes share consolidation

Jovian Capital Corp. is seeking shareholder approval for a share consolidation, at a ratio of up to 20 to one. A special shareholder meeting will be held on March 5, 2009, to vote on the transaction.

“Management and the board believe that a consolidation is in the best interests of Jovian and its shareholders,” said Philip Armstrong, CEO of Jovian. “It should lead to a more manageable share count, help to cement Jovian’s visibility as a strong financial services company, and support our efforts to raise the investment community’s awareness of Jovian and its portfolio companies.”

That portfolio includes ETF provider BetaPro, along with asset manager Leon Frazer, and advisory firms T.E. Wealth and MGI Wealth.

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Spike in insolvencies a warning to pension trustees

Sharp increases in the number of U.K. corporate insolvencies emphasize the need for pension fund trustees to assess companies’ ability to meet their long-term pension commitments, according to Watson Wyatt.

Figures from the Insolvency Service reveal that 4,607 companies were liquidated in the fourth quarter of 2008, a 12% increase from the previous quarter and a 52% increase from the year prior. There were 2,428 other corporate insolvencies (administrations, receiverships and company voluntary arrangements) in the fourth quarter of 2008, up 68% from the previous quarter and a 220% increase compared with the fourth quarter of 2007.

“Trustees cannot afford to think of insolvency as something that only happens to other people’s employers,” says Sean Weaver, a senior consultant with Watson Wyatt. “While some sectors are more obviously under pressure, hardly anyone is immune and a proud corporate history cannot be relied upon to keep the creditors at bay. They need to be especially alert where the sponsor is highly geared, particularly if it needs to refinance its debts soon or is in danger of breaching bank-lending agreements.”

Weaver explains the dilemma faced by trustees when the same concerns about the plan sponsor’s financial health that make them want to hold more assets in the fund often mean that demanding too much cash too soon could push the company over the edge.

“This looks like a Catch-22 situation, but trustees can make benefits more secure without making a big dent in company cash flows,” says Weaver. “We’re seeing more trustees look at negotiating a claim on company assets that can be enforced if the sponsor becomes insolvent. Parent company guarantees are also being examined, but their usefulness depends on the parent being better placed to support the scheme.”

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Caisse lost $38 billion in 2008: La Presse

Declining stocks and writedowns related to asset-backed commercial paper (ABCP) resulted in a record $38 billion loss for the Caisse de dépôt et placement du Québec last year, reports La Presse.

The figures are not final and will be clarified upon release of the pension fund manager’s results toward the end of the month.

According to La Presse, the Caisse took a $4 billion writedown on its $12.6 billion ABCP holdings, while stock and bond investments lost $26 billion and foreign-exchange holdings yielded a loss of $5 billion.

(02/09/09)