Today was a monumental day in Canada for the Life Insurance Industry. A company that has been providing Life Insurance to Canadians since 1833, Standard Life Insurance, has announced it will no longer do so!

This is no surprise to our Life Insurance Landscape, as we have seen over the last few years, long term bond rates dropping and dropping and dropping. This is the fundamental investment tool behind the future obligations of the Insurance Company. If a 40 year old man was to take out a life insurance policy, and the company and their underwriters believed the man had a 30 year life expectancy, then the Insurance Company would purchase a long term bond to cover their future obligations.

The problem now, is that there are no good long term bonds with any decent rate of return, because of our low interest rate environment.

Low interest rates are good for short term (1-5 year) consumers, but kill long term investors & investments such as government bonds, municipal bonds and GIC's.

We have seen the incremental cost increases over the last 2 years from all the major Insurance companies, to try and offset these low bond rate environments, but it seems Standard Life has been the first company to dismiss the rate increases and get out of the business all together.

This does not mean the Standard Life is going out of business, it merely means they do not see the Life Insurance business as being profitable for them going forward, and will focus their efforts on more profitable lines such as Investments and Pensions.

In fact with all the new accounting and reserve provisions having to be made by Insurance and Investment companies in our new world of finance after the Global Meltdown of 2008, you will see more than a hand full of companies going the route of Standard Life Insurance past this point.

We continue to try and find value for our clients in these troubled economic times, even though we were one of the few countries who were able to pass through this financial crisis as one of the most stable economies in the world.

Steffen deGraaf