Along with fretting about credit and stock markets exposure, shareholders in Canada's life insurers need to be wary of dividend cuts.
The performance of the big four insurers is being undermined by losses on holdings, and these blue chip companies aren't the profit machines that they were for most of the last decade.
In a preview of what's coming in first quarter financial results, BMO Nesbitt Burns analyst John Reucassel said: "The prospect of losses in the first quarter of 2009 (after losses in late 2008) may raise concerns about dividends. We believe that the chances of a dividend reduction in 2009 are 50/50."
"Sustainable dividends are strictly correlated to sustainable earnings, but the events over the last 12-18 months have led to some murkiness of sustainable earnings - a situation that should become clearer over the next few quarters," said Mr. Reucassel.
Volatile markets make trying to predict insurance company earnings on a quarter-to-quarter basis a bit of a mug's game, and Mr. Reucassel said that for the industry, results for the first three months of the year will be "messy."
His take on the companies is that Great-West will face credit concerns, in part due to holdings in U.K. banks.
Sun Life Financial is expected to lose 15 cents a share, "significantly less than the loss reported last quarter; driven by continued credit impairment, equity markets and spread widening," predicted Mr. Reucassel. Stock market volatility will translate into a 35 cent a share loss at Manulife Financial. Industrial Alliance is expected to post "the cleanest quarter in the group."