Dodging the Meltdown: Finance and Insurance in Nova Scotia

Halifax’s 2005 economic strategy “Strategies for Success” predicted that the finance and insurance sector would be a key growth driver in the second half of the decade. This prediction has proven startlingly accurate. Good thing too, because this stable and vital sector has been a big factor in keeping us out of recession.

The Canadian finance and insurance sector is the best run in the world.  Canada was the only industrialized nation that didn’t have to prop up its banks with significant cash injections this year.  The well-managed Canadian insurance sector continues its successful drive to world prominence.  Finance and insurance companies created more than 13,000 jobs in the second quarter of 2009 in Canada compared to the same three month period last year.  This occurred even though national employment in all industries declined by 340,000.

This national strength is trickling down to Nova Scotia where many new high wage finance and insurance jobs have appeared in recent years.  This growth has come from a continued expansion of deep rooted Canadian firms and a sprinkling of new international investment; all taking advantage of high quality labour and nation leading increases in productivity.  The heavy concentration of this sector in Halifax has been a big factor in keeping our economy growing even as the rest of Canada slipped into recession. 

Halifax has always been a significant financial centre in Canada. Many of Canada’s biggest finance and insurance companies have roots here.  Even today we have the second highest concentration of big bank employment and the highest concentration of insurance jobs in Canada relative to our size.  Over 50% of all insurance firms with operations in the Maritime Provinces are located in Halifax and all but one of the region’s investment dealers are based in Halifax. At the time of the last census, in 2006, there were some 14,000 people employed in the finance, insurance and real estate (FIRE) sector in Nova Scotia’s Hub city. Deep roots of firms like Scotiabank, Royal Bank, Manulife, and others serve us well in tough times.

This regional concentration makes Greater Halifax’s finance and insurance cluster one of the more impressive in Canada.  The same value proposition and high productivity that has kept domestic operations strong is now attracting a new wave of international investment in finance and insurance.

This new wave of investment began in 2005 with Flagstone Reinsurance Holdings Limited, and this year
Flagstone expanded its commitment to Nova Scotia and is expected to add 80 new jobs in the next few years. United Kingdom based Admiral Insurance brought 400 jobs to Nova Scotia in last year.  New York based Citco is the largest new financial services player in Nova Scotia with over 600 jobs announced for its hedge fund and IT operations. 

While the world financial crisis has slowed the job ramp in Halifax for a few of the new players, Halifax is now on the international map and growth in inward investment seems secure.  The high productivity and competitive cost value proposition that drew them here has become even more important to these firms in tough economic times.  Some domestic firms continue to expand their footprint in Nova Scotia for the same reason.

The finance and insurance industry is as much a part of Halifax as the bedrock, and just as stable.  As Nova Scotia and Halifax look to renewal of their economic strategies, finance and insurance will likely have a prominent role.

Fred Morley is the Executive Vice President and Chief Economist at the Greater Halifax Partnership