China’s recent move to deregulate investment restrictions will cause insurers to spend $97 billion on overseas properties before 2019, but they’re already on a buying spree for US insurance companies and brokerages.
While Anbang Insurance Group Ltd recently purchased an office tower in downtown Toronto, Asian insurers have largely stayed clear of Canadian insurance buys.
The lack of interest in Canuck P&C has some industry vets feeling slighted. After all, does it reflect a lack of opportunity for growth in this relatively mature market?
But the interest in Canadian real estate over insurance companies and brokerages is understandable, says one leading broker.
“If you’re looking for double-digit returns,” offers Thom Young, CEO, Lundgren & Young Insurance Ltd., “with the return to profitability in the marketplace, a few billion dollars in wise investments could probably triple your money in just a few years
In addition, although the investors may be overlooking the P&C industry, Young believes the industry remains as robust and lucrative as ever.
“I don’t think whatever the Chinese are doing is indicative of a decline in the (Canadian) marketplace,” he said.
Young says that a number of trends back his optimistic view, such as the fact that the consolidations that occurred ten years ago will soon be freed of non-compete clauses, and the move to go public at the biggest mutual company in Canada could “drag a whole bunch of capital away.”
Also, he believes that North America has finally recovered from the collapse in capital markets that occurred after the 2008 recession.
“I see nothing but good things for the marketplace,” Young said. “As the economy continues to improve and developments get going, cities may see an increase of 20%, which will result in a 20% increase in the marketplace for things like car insurance, homeowners’ insurance and group and health benefits.”