George LougheryGreat West LifecoGWO.TOBUYMar 15, 2005

Technically, this one looks very strong. Hitting new highs, 200-day MA continues to move higher. Insurance gives you stable earnings and relatively cheap valuations. Yield is 3.5%, he expects dividend to move higher. A sturdy name, probably a better entry to be had.

He owns no insurance names right now, as the space rocketed up.

It is a very solid company and has reliably increased its dividend rate. There are pauses in price trends right now which makes it a buying opportunity. It is interest rate sensitive and pays a dividend of a little over 4%. He doesn't think that if interest rates go up they won't be super high.
Buy 6  Hold 6  Sell 0

All the financials have come off slightly, especially in the insurance space. 

MFC has come down right to its 200-day MA, so you could argue it's got a bit more upside. High-quality name. Beta is double that of GWO, but no greater than the TSX itself. Scale is better than GWO. This one looks more attractive. Yield is 4.3%.

GWO has a lower beta, so it hasn't moved as much as MFC. Good quality assets, very steady earnings growth. Yield is 4.3%.

Look at this name instead of the parent POW. The multiple's a bit lower, dividend yield's a bit higher. Very reasonable growth.

Doesn't own any lifecos, but not a bad time to be thinking about them. Good-sized US business. Yield is close to 4%. Company intends to grow dividend by high single digits, so that gives you good line of sight to a rate of return of high single digits or low doubles. 

Banks have re-rated meaningfully higher, and banks and lifecos usually trade around the same level. Won't be long before people realized there's value to be had in lifecos. No quarrels with buying.

The ideal asset in the mix of POW holdings is GWO. Not a buy today because of valuation, trading north of 12x PE. A bit rich given its growth profile. Valuations in the life insurance space have come up dramatically. He usually looks to buy around 10x PE.

Unique growth profile in mature markets, doing really well in US and Europe. Typically owns it as an income name, but among those names it has one of the best growth profiles (though weaker if you compared it to an actual growth name).

Are totally different from MFC and SLF which have businesses in China and India. GWO instead has business in Europe where they can buy attractive companies. Is an income stock. Trades at only 11x PE, with strong growth. A core holding. Pays a dividend around 5%.

His favourite in the space. Nice yield. Growing in mature markets in Europe, generates reasonable returns. Very disciplined. Reasonable valuation.

Growing very decisively. Done extremely well. A good way to get exposure to this is via POW.

Likes its acquisition strategy, as it feeds into the growth profile.

He owns POW instead, but you could own this one as well.

An insurer, holding long-term assets that are not exposed much to market volatility. Their dividend grows 8% annually, not paying almost 5%. Gives you income and safety. Lots of cash flow.

He owns both this and Manulife. Rates going up have helped a lot. They are working on improving the U.S. side which wasn't going well. The Canadian side is doing well.

Really likes it for income. Very disciplined and methodical acquisitions. Global platform:  Canada, US, and Europe. Recent earnings growth was from US side, and this will likely continue due to demand and to weak CAD. Above his buy price, so just wait a bit. Yield is 4.7%.

All the insurance names, both in Canada and the US, continue to work. If interest rates do, in fact, go higher, that will only be beneficial for lifecos and other insurers. The chart looks fantastic. Good run, so there is some weakening in the intermediate term.

If a long-term holding, best thing you can do is sit on your hands and do nothing except participate in the DRIP program. Especially if he's right on the broader call of rates being 8-10% in the secular bear market of 2030-40, should be a big tailwind for insurers.