Confederation Life Insurance (Found by John A Macdonald)
• It was a top ranked insurance company in Canada, since its aggressive
expansion in worldwide.
• Government of Canada passed legislation by permitting mutualization of any
life insurance company.
(i.e., the acquisition of the company from the shareholders by the
• Took over by J. Craig Davidson then changed to Pat Burns. Hired Bill Douglas
to in charge of corporate development.
• Burns challenged the management and he said the business must develop
into a well-rounded financial service firm.
• He launched a new strategy by buying a trust company, turning it into a
bank, and then folding the bank back into the insurance company.
• Consumer demand for a high interest on guaranteed income certificates.
In order to gain sufficient fund, Confed. start invest money into real estate.
• Canadian securities dealer and brokerage houses were opened up to anyone.
The banks were the biggest buyers.
• The bank began buying insurance companies, but was restricted from
competing with the life insurance companies.
• Confed. continued its expansion by investing money on brokerage, acquired
more capital of purchasing buildings and shopping malls and develop new
product such as annuities. Staff↑, expand office locations.
• Office of the Superintendent of Financial Institutions (OSFI)
- appointed by Michael Mackenzie to keep an eye to all the financial sectors.
• The regulators found that Confed. Life real estate exposure had reached
73.8% of assets. Far more than others.
• Confed. Trust continued to lend money to itself and provide loan with
borrower in which the law states that no one company should account for
more than 1% of loans. But no one listen to the problem. • Recession occurred. Unemployment↑, mortgage holders miss