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ADMS 1010 (246)
Lecture

Confederation Life Insurance.doc

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Department
Administrative Studies
Course
ADMS 1010
Professor
Rebecca Jubis
Semester
Winter

Description
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 policyholders.) • 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. Issues: • 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
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