Canadian Investment Review

Solvency Ratios Dip in Q2

Written by Caroline Cakebread on Thursday, July 6th, 2017 at 10:38 am

Low SignSolvency ratios at Canadian defined benefit (DB) plans fell in the second quarter, dragged down by Canadian equities as the Bank of Canada signalled an end to accommodative monetary policy. Aon’s latest quarterly median solvency survey shows plans grappling with weak performance across asset classes, despite posting an overall return of 1.6% (versus 3.2% in the previous quarter). The median solvency ratio as of June 30, 2017 was 94.8%, down from 96.7% as of April 1, 2017.

The sell-off in bonds sparked by the Bank of Canada’s news also lowered returns for plans, although Aon noted that rising yields should support solvency positions going forward.

Funded ratios also dipped: almost 37% of plans were fully funded as of June 30, down from 39% of plans as of April 1

More insights from the Aon report include:

 

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