Canadian life insurers' CRE exposure to crimp earnings in 2024: Morningstar

iA Financial

21/03/2024 15:10

** Recent commercial real estate (CRE) market challenges and
declining property valuations have hurt the earnings of Big 4
Canadian life insurance companies and will remain an issue in
2024, Morningstar said in a note on Thursday
    ** CRE exposures for Manulife  MFC.TO , Great-West Lifeco
Inc  GWO.TO , Sun Life  SLF.TO  and iA  IAG.TO  consist
primarily of commercial mortgages and investment properties
accounting for between 7% and 18% of invested assets
    ** Concerns about outsized CRE exposures were re-ignited
earlier this year after mid-sized U.S. lender New York Community
Bancorp  NYCB.N  flagged a surprise loss and built
higher-than-expected provisions due to losses tied to CRE loans 
    ** Remote work since the pandemic and rapid rise in interest
rates has led to a dampening in demand for office space in North
America and, in turn, decline in real estate asset valuations
    ** This year may bring further CRE deterioration even though
CRE-related writedowns in 2023 were easily absorbed by the Big
4, related earnings impact will be manageable as long as the
core insurance business segments continue to perform well -
Morningstar

 (Reporting by Mehnaz Yasmin)