Critical Illness Insurance Kicks In Where Others Leave Off

You might have seen the news about Sarah Burke, the professional snowboarder who succumbed to her injuries in January. Questions were raised about whether Burke had adequate insurance coverage when her business manager requested donations to cover medical expenses.

Regardless of the Health insurance coverage limits, it is clear that a Critical Illness (CI) policy could have provided a lump-sum cash benefit that would have helped to cover at least some of her expenses. After the accident, Burke fell into a coma, one of the many conditions that trigger a CI payout.

In 2008, a Canadian runner suffered a heart attack while participating in the Berlin Marathon. He survived and incurred hefty medical expenses. Again, the additional benefits provided by a CI policy would have gone a long toward paying for his medical expenses.

Health insurance coverage can be exhausted rapidly by these and other critical illnesses and occurrences. Consider the multitude of Health insurance variables: In network care vs. out of network, required referrals to specialists from PCPs, etc. — particularly when these events occur out of state or country.

Anyone can be involved in an accident or suffer an injury during a snow outing, while working out, or during any number of other recreational physical activities. Consider the peace of mind that a CI policy could offer.

ONCAP II Hits Home Run With Sale of Canadian Securities Institute

Canadian Securities Institute Global Education Inc. was recently sold by one of Onex’s private equity funds to Moody’s Analytics for $155 million Cdn.

ONCAP paid $25 million for a 91% stake in the company which was spun off by the securities industry back in 2006. Onex’s share of the company was 40%.

When the sale was made back in 2006, the multiple that ONCAP paid was somewhat frothy. However, closing regional offices, converting all exams to mutiple choice for quick computerized marking, coupled with 200% fee increases to take an industry exam made CSI extremely profitable on what can be considered a monopoly as an education content provider in the securities industry in Canada.

As an industry participant, one can only hope that Moody’s will keep fees reasonable as educational requirements keep increasing and double digit course fee increases seem to be the norm.

Your comments are always appreciated.

The Week Ahead – June 8, 2009

The economic calendar and earnings announcements in Canada are relatively slow. Housing starts in Canada come out on Monday with the consensus targeted at 130,300.

On Monday, there are no announcements while Saputo (SAP) and Major Drilling Group International (MDI) report Tuesday. Viterra (VT) announces results on Wednesday.

MDS, Transcontinental, Transat, and North West Co. all report on Thursday.

To view all consensus estimates and economic reporting, you can click on the following link here. US earnings can be found by going to www.earnings.com .

To get our daily commentary with podcast updates and analyst rating changes, you can visit our site here or even subscribe to get on our email list.

Have a great week.

The Week Ahead Ahead – May 29

Overshadowing all economic reports and earnings will be the anticipated pre-packaged bankruptcy of GM. Up until now, the market has held up pretty well as it has built the expectation of bankruptcy into the equation.

Next week is relatively light for earnings announcements on the Canadian front. Bombardier (BBD.B) reports on Wednesday with an eps estimate of .103.  Reitmans reports on June 3rd as well with a target of 0.123 per share.

Canadian Western Bank reports on Thursday June 4th with an estimate of .309 per share.  For a complete list of US earnings, you can click on the following link HERE

For a complete listing of economic data being reported in Canada and the US next week, you can click on the following link Here

Have a Great Weekend. Your comments are always greatly appreciated

Claymore Launches Gold Bullion Trust

With governments around the world providing a record amount of economic stimulus, many believe that gold will increase in value significantly as it has historically provided a hedge against inflation.

One problem that gold investors outside the US have is that the US dollar usually drops against other currencies when gold rises. This can offset the gain entirely frustrating some that made the right call only to see the currency loss come into play.

Claymore will hedge their position into Canadian dollars allowing investors to take full advantage of the upside on gold bullion while protecting their investment from currency fluctuations.

Another interesting feature to the offering is that a full warrant exercisable at the issue price will be available to those participating in the new issue allowing investors to magnify their gains should gold rise over the next six months.

The trust will convert to an ETF (Exchange Traded Fund) after six months in the event that the units daily weighted average trading price is a 2%  or more discount to the net asset value. 

Viewing of the preliminary prospectus can be viewed here and closing is scheduled for mid May. Your thoughts and comments are always appreciated.

Can The TSX Breakout Tomorrow

The TSX is up approximately 10% this week as financials have rallied off of their lows as the major banks and brokerage firms in the US are indicating that they should have positive results for the first quarter of 2009.

Retail sales in the US were stronger than forecast and strength in crude oil has lead to higher prices for oil stocks. The next question for alot of investors is whether we have hit bottom?

Some investors swear by something called “Technical Analysis” where charts are looked at to determine whether to buy in or sell out of an underlying investment.

I took a look at a chart that shows the 50 day moving average of the TSX. Over the last 6 months, the TSX has briefly touched the average before heading lower. I have attached the chart that you can see by clicking here.

When the “Green Line” breaks above the “Blue Line” on the chart, the market is trading above the 50 day moving average.

Traders will be looking closely at the charts tomorrow as we are trading at the moving average now and a slight breakout to the upside could lead to alot more cash going into the market.

What are your thoughts? Did we hit the bottom of this market cycle? Your comments are greatly appreciated.

Some Positives on US Housing

US Housing starts dropped to their lowest level ever at an annualized rate of 466,000 which would indicate higher levels of unemployment in the construction trade. The doom and gloom of this number has been broadcast over and over in the media although I don’t believe anyone was surprised by the figure.

So what are the positives? National Bank of Canada put out an economic report focusing on the US housing market showing some positive signals indicating a turnaround may happen sooner rather than later.

Housing deflation has persisted for 30 months and average housing prices are down more than 25%. Without getting too technical, housing affordability has come back to long-term equilibrium levels allowing Americans to consider getting back into the market.

Mortgage rates are dropping and sales have been consistent for several months at 4 million units. There are currently 10 million renters in the US earning more than $50,000 per year which is above the income required to qualify for a conventional mortgage. If just 5% of these renters decide to buy, this will have a huge impact on inventory levels.

After peaking at 11 months worth of inventory for sale, inventories have dropped to 8.7 months. Six months worth of inventory is considered equilibrium. Mortgage applications were up 45% this week compared to last. While many of these applications were refinances taking place at lower rates which is also a positive, applications for purchase were up almost 10%.

The US housing market created this mess and it will be the market that leads us out of it.

What are your thoughts? Do you think we are around the corner to a stabilized housing market or are there many months and years of declines ahead of us?