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Email this2:31 pm
December 12, 2009
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I thought I'd like the following recent Bank Act, Trust and Loan Companies Act and CDIC member changes were given final approval by the regulator, the Office of the Superintendent of Financial Institutions and the Minister of Industry, according to this Canada Gazette article.
Note: Some changes occurred Jan. 1st and some occurred around Jan. 21st or Jan. 27th, but there is a often a lag between the date approval is granted and the date it is "gazetted" (i.e., published on the Government of Canada website).
HSBC Bank Canada had applied in October for a letters patent of amalgamation to be issued to formally merge various subsidiaries of its former HSBC Finance (the consumer finance business) division. Under the Trust and Loan Companies Act, Household Trust Company (which held mostly line of credits under the HSBC Finance brand) was dissolved by way of an amalgamation of its remaining assets/liabilities/business interests and continuing under HSBC Trust Company (Canada). Under the Canada Business Corporations Act, HSBC Financial Corporation, which served as the intermediate holding company of all of the consumer finance business subsidiaries and direct subsidiary of HSBC Bank Canada, and HSBC Finance Corporation, which served as the operating company of various consumer finance loans, were dissolved by way of the Canada Business Corporations Act and/or Trust/Loan Companies Act, as applicable. Approval of all of the above was granted Jan. 27th, effective Jan. 1st, which is relatively quick turnaround time for OSFI. So, as of Jan. 1st, the dissolved companies ceased to exist as CDIC member institutions. Additionally, Household's institution number #630 will likely continue to be routed to HSBC Trust Company (Canada)'s for generally 12 months and then be removed from issuance.
The remaining former HSBC consumer finance business subsidiaries are HSBC Retail Services Ltd., whose sole asset, according to their website, is their run-off PowerSports equipment consumer finance portfolio having sold off the private-label credit business in August 2013 (including The Brick Card) to TD Retail Card Services, and HSBC Finance Mortgages Inc., whose sole asset is again their run-off "subprime" mortgage portfolio that was sold through HSBC Finance offices. The rest of the assets/liabilities, also in run-off, will be transferred to HSBC Bank Canada and HSBC Trust Company (Canada).
Similarly, in the same release, OSFI also granted a letters patent of amalgamation to Intact Insurance Company to formally dissolve and amalgamate various AXA Canada subsidiaries into itself and continue the policies of its acquired AXA Canada under Intact Insurance Company. Intact Financial, formerly known as ING Canada Inc, already the dominant #1 property & casualty insurer in Canada, is quickly becoming a potential monopoly player. We shall see how things play out! 
Also, of note, foreign exchange specialist Jameson Bank, having only recently won its bank charter approval a couple years ago, has applied to the Ministers of Finance and Industry for a "certificate of continuance" to essentially dissolve Jameson Bank under the Bank Act and continue it as a regular Canadian corporation under the Canada Business Corporations Act. They obviously felt the extra Bank Act scrutiny, capital requirements and so forth wasn't worth it, so once approval is granted, it should be renamed Jameson Corporation. It will quickly lose its membership in the Canadian Payments Association, including transits and institution numbers (#354), however. Once approval is granted, I'd recommend removing the "Jameson Bank" sub-forum from here (if there is one) and moving the topics therein under "General financial discussion".
Finally, Industrial Alliance Insurance and Financial Services Inc. has assumed all of the insurance policies and other existing and potential obligations of National Life. and National Life Insurance Company has applied for voluntary dissolution and liquidation under the Insurance Companies Act. Once completed, its insurer, Assuris, will remove it from its website.
Cheers,
Doug
3:08 pm
February 22, 2013
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Doug:
Interesting stuff.
I had home and car insurance with AXA Pacific, which, I was told, became Intact Insurance a year or more ago. Then I was told it became Trafalgar Insurance.
last night I was completing a survey and was offered a list of insurance companies for one of the questions. I couldn't find Trafalgar and so did a search on the page and found "Grey Power (formerly Trafalgar Insurance)".
When I signed up with AXA Pacific I was told it was not the same organization as AXA.
Too confusing for words. I just want to know I will be paid should bad things happen.
In 1975 I insured my home and cars with Abstainers Insurance. In 1995 they were part of Maplex General Insurance and the guy(s) who ran them managed to run the company into the ground. I had 6 months left on a car policy and one or two months on a house policy. The premiums were paid yearly. The company was wound up in an orderly fashion but there was no money for the prepaid policy holders. I now pay all insurance policies monthly.
Greg
11:41 am
December 12, 2009
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Interesting story about Maplex property & casualty insurance, Greg, and how it may be more advantageous to pay insurance policies monthly (versus annually). Not sure how it works in Ontario, but in B.C., those that choose to pay monthly do pay a slight premium (usually anywhere from 2% to 10% more) on monthly premium payments/financing versus annual payments. ICBC, the provincial monopoly auto insurer, is bad for that. Still, if it "saves your bacon" in the form of lost prepaid premiums in the event of the underwriter's wind up, that's something to think about. I am somewhat surprised there was no fund available, wouldn't Assuris pay you out in this case or do they only guarantee life insurance and annuities?
As for AXA, I believe they were the parent company of AXA Pacific, the Canadian subsidiary, from my understanding. So, while "technically" not the same company, the person who told you that was relying on legal company names and a bit disingenuous by stating that since AXA Group ultimately owned them in Canada. You're right, though, that Intact Financial did acquire AXA Pacific (and related Canadian entities) more than a year ago (late 2012 or early 2013) and it's possible they initially operated them under the Trafalgar brand. I suspect what may have happened is, when Intact Financial (previously ING Canada) had acquired Trafalgar's Canadian operations, they had a time-limited (though, multi-year) agreement to use the Trafalgar name in Canada. Now that that is likely up, they've decided to operate everything under either the Intact Insurance, Grey Power or belairdirect brand names (now that they're practically so well known, they've become de-facto "household" names - no pun intended!) and so consolidating the legal subsidiaries made sense. It's also possible they may still own the Trafalgar name, but opted to phase it out (it's nowhere on their website). I like to see companies consolidate things under less brand names and legal entities - makes for less financial reporting and less complex corporate structures! It makes me wonder when, or even whether, Aviva Canada will consolidate its myriad legal entities (which collectively operate as "Aviva Canada" but still maintain their separate legal entity names underneath) such as Scottish&York, Pilot Insurance, and Elite Insurance, among others, under the Aviva legal entity. Same goes for RSA Group, which operates the Canadian Northern Shield Insurance Co. under the RSA brand. 
Update: Regarding AXA Pacific, I think it was the latter. They decided to merge the AXA Pacific brand (which they likely couldn't keep forever, given former parent AXA still exists outside Canada). Reason being: Trafalgar Insurance Company of Canada still exists as the legal entity name for the products underwritten exclusively by Grey Power. Regarding belairdirect, its products are underwritten by The Nordic Insurance Company. Both Nordic and Trafalgar are wholly-owned by Intact Financial, so one wonders if it might make sense to merge Nordic/Trafalgar together into one underwriting entity, either Intact Insurance, or since these are their "direct-to-consumer" brands that bypass the broker, perhaps an Intact Direct Insurance entity?
Cheers,
Doug
9:47 pm
February 22, 2013
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Doug:
At the time there was no fund to backstop a failed insurance company. The first link in my original posting makes reference to what was added after this failure if I recall.
In Ontario some insurers charge a handling fee for monthly payment, some don't. Some don't if you pre-authorize a bank withdrawal but do if you want to use a credit card. It really seems to depend on the insurer.
A number of years ago I was researching car insurance. Some companies rated the vehicle on its daytime parking location and others rated it on it night time parking location. So, you can see where living and working locations could affect premiums. Made no sense to me. Now, I drive just about 16000 k per year (8000 of which is to Florida and back) and the car is at home during the day and the night.
Insurance rating is weird. A few years ago my car policy was something like $4000 per year -- but with a two car dismount, a new car discount, a loyalty discount, a claims free discount, a snow tire discount, a retiree discount, a low mileage discount and probably others I can't think of right now, my premium dropped to $800. Now they have a clause that reads "WHEN DETERMINING THE PRICE FOR YOUR INSURANCE COVERAGE, WE CONSIDER ALL THE INDIVIDUAL CHARACTERISTICS AND EXPERIENCE. MANY OF THE DISCOUNTS YOU WERE ACCUSTOMED TO SEEING ARE NOW BUILT RIGHT INTO YOUR PREMIUM"
Greg
12:58 pm
December 12, 2009
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Wow, $4000 is sure expensive for car insurance! I don't drive, so I can't say as much specifically. Anecdotally, I can reference my parents' average premium (which includes mandatory basic third-party liability, extended third party liability to $2 million, extra underuninsured motorist protection, collision, and comprehensive protections, as well as required annual vehicle licensing tabs as well as optional Roadside Plus) and I think it averages between $875 and $975 per year and that's with the monthly financing premium paid. I know monthly premiums, if through ICBC, are debited directly by ICBC on a monthly basis (with that monthly financing premium built into the total annualized cost, divided by 12 months and lump-sum upfront cost). Not sure how it works if auto insurance is financed privately but I think there's two direct withdrawals, one from ICBC and the other for the optional coverages which would either be through that insurer directly or the broker.
For house insurance policies, though, I haven't seen too many house insurers that let you pay monthly directly through them. Your broker pays the annual fee, as I understand it, and they pass that on to you. If you finance it monthly, the broker is the one that does the monthly payment financing, not the insurer. So, if an insurer went bankrupt, since the premiums are always essentially paid annually, would the broker be liable for the insurance or would they have to provide a notice of cancellation of insurance and refund prepaid premiums (if paid annually)? Interesting stuff!
Cheers,
Doug
3:14 pm
March 7, 2013
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Wow, GS, I want to know what insurance company you use to get all those discounts!! The multi-car discount, claims-free discount, etc.. that my insurer provides are miniscule. Very little difference to the total premium.
Doug, I actually pay my home insurance premiums monthly. Same with auto insurance, property taxes, life and disability insurance. Almost anything I can pay monthly, I pay monthly. I like to know where I'm at month to month, and equalize expenses as much as possible. Income taxes I pay quarterly on the current year, with a top up at tax time if needed, but that's due to my personal taxation situation.
Good question about what would happen to one's prepaid annual premiums and claims if an insurer went bankrupt...
BTW, do you guys make RRSP contributions monthly, or once a year? TFSA contributions? I've done it both ways at different times.
4:48 pm
December 23, 2011
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Deb. I lived on Calgary 2000 to 2005. We used Canada Direct for both home and car insurance. We first dealt with RBC for car and house insurance and they were a big huge nightmare to deal with and without going into detail we switched over to Canada Direct and the rates were much lower. My wife made a lot of calls to determine the better rates. In BC, BCAA used to have great rates for multiple vehicles but that ended with the advent of ICBC .... have you tried AMA?
In our first years of making a family, one time only, I paid for our annual bills twice in one year. The second set of payments were invested for use the next years and all bills were paid annually in full. So there after I always budgeted for some increase in insurances, taxes etc and has worked out well over the past 40 years. I used to use the payroll option to buy CSB's and in later years GIC's for the "second" years expenses. Keep in mind that often you pay more for monthly payments vs annual.
I only used to do RRSP annually and now the same for TFSA. But my daughter is the investment field and she says there is no longer the big end of February rush as more folks are doing RRSP contributions monthly which makes sense if your budget can afford it. But, please make sure you take your income tax refund dollars that came from your RRSP contributions and reinvest them into RRSP as well, from my hindsight that is free money that you will get a huge return on!
9:25 pm
February 22, 2013
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Deb said
Wow, GS, I want to know what insurance company you use to get all those discounts!! The multi-car discount, claims-free discount, etc.. that my insurer provides are miniscule. Very little difference to the total premium.
Deb:
As I understood it the insurance industry has a price for those who have really bad records. That is the starting point for most of us. Then they start layering discounts to get to "the real price".
Are you aware of Kanetix ? I use them to sift through the myriad of choices. I don't believe they offer their services in BC, SK or MB.
Deb said
BTW, do you guys make RRSP contributions monthly, or once a year? TFSA contributions? I've done it both ways at different times.
Earlier in my working life I used to make my RSP contribution on virtually the last day of eligibility (i.e 60 days into the next year). Once we had the house paid for and had other investments we were able to make single contributions on virtually the first day of the year. I also used the larger over-contribution initially and then limited it to the current, I believe, $2000 over-contribution limit.
TFSA's - have been fortunate to be able to keep them topped up and do so early in January.
When we had a mortgage I did everything I could to pay it down early. With the last mortgage, which was really quite small, I was tracking finances (virtually to the penny) in Quicken. Every second week I used Quicken to let me know how much "free cash" we had and I used every bit of that "free cash" less what I considered needed for working capital till next pay day. I trotted it over to the bank and paid down the mortgage. Some times it was less than $100, some times considerably more.
Mrs GS suggested I was nuts to be worrying amount paying down small amounts. I had a printed amortization schedule that showed me how many days/weeks/months I was cutting off the tail end and how much interest I was saving with my little amounts.
Every little bit helps. That is a fact and you can likely Google it. 
Greg
11:06 pm
March 7, 2013
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Kanaka and GS:
Thanks for the Canada Direct and Kanetix leads. My current home and auto policies are with an agency that has an arrangement with my professional organization. Supposedly subsidized, but it doesn't hurt to look around. One expensive kid still remaining on my policy, so eventually these rates will come down...
Greg, I did exactly the same thing as you with my mortgage, and I think it is a wise thing to do. The last renewal, I got a fully open mortgage with the ability to pay down any amount, any time. I put every bit of extra cash into paying down the mortgage, which all came right off the principal, saving thousands in interest and paying off the mortgage in no time.
I would generally advise anyone just starting out to go with the highest payments and shortest amortization period you can afford. The interest savings over the long run are huge compared to a long drawn out mortgage. Mind you these days with the interest rates so low you would probably want to compare the mortgage interest savings with the investment interest you could get by investing the extra monthly funds.
5:08 am
February 22, 2013
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Deb said
[snip]
Mind you these days with the interest rates so low you would probably want to compare the mortgage interest savings with the investment interest you could get by investing the extra monthly funds.
Deb:
You would do the comparison but you would almost always be better retiring debt first.
The banks/mortgage companies are using YOUR invested funds at, say, 1.9% to lend them to YOU at say, 2.9%. Like all my employers they make their money on the spread. Unless the debt interest is lower than the GUARANTEED investment interest/income, one is always better retiring debt first.
I financed Mrs GS's most recent car in 2009 at 0.00%. That made sense. I learned early when I was looking at cars and the price was something like $4000 off OR 1.9% interest. I wanted both, but could only choose one.
Greg
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