Property and casualty insurers (with their short-duration portfolios) immediately start benefiting in such an environment. To understand this large divergence, we should note that property and casualty insurers often invest in more liquid short-term debt instruments while life insurers often invest in higher yield long-term debt instruments.Īll insurers suffered during financial repression between 20, when rates were kept artificially low by central banks. Insurers have underperformed the Canadian market except for Intact Financial and iA Financial. Morningstar Canada index represents the top 97% of Canadian stocks by market capitalization and, thus, is a suitable barometer for the Canadian stock market. In the table at the top of this page, we can compare the medium-term return of Canadian insurance stocks with the Morningstar Canada GR CAD index. This point can be seen in the fact that Warren Buffet and later Prem Watsa have used an insurance company as the backbone of their portfolios. Traditionally, insurance stocks are considered desirable investments over the long term.
