The Globe and Mail - 11.03.2020

WEDNESDAY,MARCH11,2020 | THEGLOBEANDMAILO B5

As well, the Public Health Agen-
cy of Canada is recommending
that Canadians avoid all cruise-
ship travel because of the CO-
VID-19 outbreak.
Manulife Financial Corp. and
TuGo were the first Canadian in-
surers to make changes to their
travel cancellation policies in re-
lation to the outbreak. The
changes were made for Manulife
policies purchased on or after
March 4, and TuGo policies on or
after March 5.
With the COVID-19 outbreak
reaching more than 117 countries
and more than 118,000 con-
firmed cases globally, both com-
panies identified the virus as a
“known event” and updated
their regular policies to exclude
claims going forward for CO-
VID-19 for all travel destinations.
People who have booked travel –
or are looking to book – may still
be covered depending on their
package.
Will McAleer, executive direc-
tor at the Travel Health Insur-
ance Association of Canada, says
Canadians should shop around
as products in the travel industry
vary.
“There are many insurers who
have not made adjustments to
their cancellation policies and
will continue to cover countries
that currently do not have an ad-
visory warning yet, but will allow
that destination to be covered
should an advisory go up in the
future,” he said in an interview.
Higher-priced policies – such
as “cancel for any reason” pack-
ages – provide coverage for any
type of trip cancellation, includ-
ing the virus outbreak, although
Mr. McAleer says these policies
typically may only refund 50 per
cent to 75 per cent of costs.
For travellers who declined

cancellation insurance at the time of booking, credit card companies may be able to help. Additional travel insurance can be purchased using your credit card after a purchase has been made. As well, certain premium credit cards, usually those that charge an annual fee, already come with built-in travel insur-

ance benefits such as emergency medical coverage and trip cancellation. For example, the TD Aeroplan Visa Infinite Card provides trip cancellation for cardholders through TD travel insurance – which has made no changes to its insurance policy because of the outbreak to date.

The card covers up to $1,500 for every insured person to a maximum of $5,000 if you need to cancel your travel plans before you leave because of a “covered cause.” Causes include travel ad- visories – as long as a card holder booked their trip to a country before a government of Canada travel advisory was issued. If the

customer books the trip after the advisory is issued, then they would not be eligible for cancellation coverage. Travellers should also note that a refund from a credit card could limit how much you eventually re- ceive from a claim submitted through a travel insurance company.

Insurance:CompaniesidentifyCOVID-19’swide-reachingoutbreakasa‘knownevent’

FROMB1

Airlines have relaxed their change and cancellation policies, waiving or reducing the charges for fliers wary of contracting COVID-19 while travelling. There are time limits on free changes to flights, however, and travellers should be aware that cancelling a flight without insurance will not trigger a refund. WestJet Airlines Ltd. and Porter Airlines customers who booked between March 5 or 6, respectively, and March 31 can change their flights without paying an extra fee, as long as they do so more than 14 days before the date of departure. Travellers who paid WestJet’s basic fare and booked their March trip before March 3 can change or cancel their flight for fees that range from $110 to $118 for all destinations except Europe and for $250 to $295 for European cities. Until this month, WestJet’s basic fares were ineligible for changes or cancellations. Air Canada has waived the change fee for tickets bought between March 4 and March 31, provided the switch is made two weeks ahead and the new trip takes place within 12 months. Travellers who want to cancel

their trip will not get a refund; rather, the fare difference will be credited toward their next flight, and a cancellation fee will be added. In light of the federal government’s warning to avoid non-

essential travel to Italy, Air Transat is cancelling the change fees for customers flying to Rome, Venice or Lamezia between now and June 30. The waiver applies only to seats bought before March 3 (Venice)

or March 10 (Rome or Lamezia). Leisure carrier Sunwing Air- lines Inc. is not waiving cancellation fees. It sells cancellation insurance for $49 for people 74 and under and $79 for people 75 and older.ERIC ATKINS

CANADIANAIRLINESEASEPOLICIESAROUNDCHANGING,CANCELLINGFLIGHTSINFACEOFVIRUS

AirCanada,aplaneofwhichisseenlandingatToronto’sPearsonairportonTuesday,haswaivedthe changefeeforticketsboughtbetweenMarch4andMarch31.J.P. MOCZULSKI/THE GLOBE AND MAIL

REPORTONBUSINESS|

The scheme allowed companies to exceed their production limits as long as crude was shipped out by rail. As a result, Cenovus estimates a 6-per-cent drop in its 2020 oil sands production, now hitting between 350,000 and 400,000 barrels a day (b/d). Ovintiv didn’t provide any detail on what its capital cuts might look like, nor did it return requests for comment. While companies wrestle with capital plans, they are keeping their eye on an unsteady global energy situation as Saudi Arabia and Russia raise the stakes in a production standoff that has caught Canada in its crossfire. The spat began after OPEC+ countries gathered to address the fall in crude demand because of the coronavirus, but they couldn’t reach a deal. Saudi Arabia announced Tues- day it will raise its crude supply to a record high in April as it ap- peared to reject Russian over- tures for new talks. The clash of the two oil titans sparked the 25- per-cent slump in crude prices on Monday, triggering panic sell- ing and heavy losses on Wall Street’s main stock indexes, already hit badly by the coronavirus outbreak. Amin Nasser, chief executive of Saudi Aramco, said the oil giant would increase supply to 12.3 million b/d next month for customers inside the kingdom and abroad. That’s 300,000 b/d above its maximum production capac- ity, indicating Aramco may also free up crude from storage. “It is frustrating, because we have done so much in Alber- ta to turn the economy around, to get our sector healthy, to get Albertans back to work, and these are events completely out of our control,” Ms. Savage said.

With a report from Reuters

CENOVUS (CVE) CLOSE: $4.25, UP 43¢ OVINTIV (OVV) CLOSE: $4.07, UP 67¢

Producers

FROMB1

Cenovus estimates a 6-per-cent drop in its 2020 oil sands production, now hitting between 350,000 and 400,000 barrels a day.

The first is that, among the
world’s largest producers, Saudi
Arabia alone has the ability to
raise production substantially, as
it’s doing now. The implication?
What it loses in price it can make
up, or largely make up, in sheer
volume. If prices fall, say, 15 per
cent, but the number of barrels
the Saudis sell rises by a similar
amount, the country’s revenue
stream remains more or less in-
tact.
The second is that Saudi Ara-
bia, with a bit more than US$500-
billion in foreign-exchange re-
serves and the proven ability to
raise debt in the bond market, is
equipped with ample financial
buffers. Its debt-to-GDP ratio of
just 25 per cent gives it a lot of
room to borrow.
The third is that Crown Prince
Mohammad Bin Salman, the
kingdom’s effective ruler, is run-
ning on ego and pride and won’t
allow Russian President Vladimir
Putin to humiliate him. The 34-
year-old prince, known as MBS,
blames Mr. Putin for blowing up
the Russia-Saudi oil alliance,
which sought to prop up prices
through production cuts.
MBS now wants revenge. This
is a grudge match and the best
way to punish Mr. Putin is to
knock the price down to the
point where he sues for peace.
I am taking the opposite view:
Russia will inflict more damage

on Saudi Arabia than the other way around. First, Russia has ample financial buffers, too. Whether it’s companies or countries, the strongest balance sheet usually wins. Russia’s international re- serves are about US$80-billion greater than Saudi Arabia’s and its debt-to-GDP ratio, at a mere 15 per cent, gives it even more financial flexibility than Saudi Ara- bia. Russia’s ability to balance its budget at low oil prices is substantially greater than Saudi Ara- bia’s. Chris Weafer, investment strategist and chief executive of Moscow’s Macro-Advisory, says Russia needs US$38 a barrel to clear its budget (others estimates are lower). Saudi Arabia needs at least double that price. Remember, the 15,000 members of the extended royal Saudi family have expen- sive tastes. MBS owns a US$500- million yacht and is thought to have been the buyer of the US$450-million Leonard da Vinci painting,Salvator Mundi. You get the idea. Mr. Putin and his buddy, Igor Sechin, the boss of Rosneft, Rus- sia’s biggest oil company, are also forceful operators who don’t shy away from a good fight. But for them, the fight isn’t just with Saudi Arabia and its mighty Sau- di Aramco oil company; it’s with the Americans, specifically with their shale oil and shale gas pro-

ducers, which have propelled the United States into the energy su- per league in recent years. The duo’s goal now is to use low prices to cut the market share of the weakest producers and drive them out of business. Their motivation is doubly rein- forced by their desire to get even with U.S. President Donald Trump, who used sanctions to prevent the completion of the Nord Stream 2 pipeline that would deliver Siberian gas to Ger- many, and to damage Rosneft’s Venezuelan business. Both Russia and Saudi Arabia are taking big gambles that will hurt both of them before a victor is declared. Neither is an easy foe, nor is the U.S. shale industry. In 2014, the Saudi-dominated Orga- nization of Petroleum Exporting Countries used a price war to try to snuff out the U.S. shale companies. It didn’t quite work. The U.S. shale business recovered and is pumping more than ever. Vene- zuela, an OPEC member, col- lapsed. Can Russia win where the Saudis failed? Doubtful. Still, Russia seems to have more financial staying power than Saudi Arabia in this grubby oil war and insists it can endure prices at US$30 a barrel or less for several years. Perhaps. But don’t rule out the possibility that neither side will swerve. A head-on crash should not be ruled out in this global game of chicken.

Reguly:BothRussiaandSaudiArabia

willbehurtbeforeavictorisdeclared

FROMB1

U.S. fund management giant Ha-
milton Lane Advisors LLC has
pulled out of one of the federal
government’s signature innova-
tion funding programs, less than
two years after Ottawa pledged
close to $80-million to the com-
pany to invest in the Canadian
technology sector.
“Hamilton Lane is withdraw-
ing its participation effective im-
mediately,” a spokesman for the
private fund manager told The
Globe and Mail.
As a result, the Trudeau gov-
ernment’s venture-capital cata-
lyst initiative (VCCI) program,
which is supposed to pump $1.4-
billion into the Canadian innova-
tion sector, has fallen $275-mil-
lion short.
Ryan Nearing, a spokesman
for International Trade Minister
Mary Ng, whose department
oversees the program, said de-
spite “an internal decision by Ha-
milton Lane” to drop out, the

government was “encouraged” that it will maintain an office in Canada and still invest here. The news surfaced days after the federal innovation, science and economic development department revealed it spent $1-billion less than planned in the past fiscal year, largely because of a delay in spending for innovation programs. The VCCI program followed a successful venture-capital action plan (VCAP) launched in 2013 by Stephen Harper’s Conservative government at a time when the venture-capital industry was struggling to raise money in the wake of the 2008 recession. Under VCAP,the government pledged $340-million, alongside $100-million from Ontario and Quebec, to four private-sector “funds-of-funds” managers on condition they raise $2 from private investors for every $1 from government. The four managers, which in turn backed venture funds that directly backed startups, raised $1.4-billion from private and

public sources, fuelling what is now a flourishing domestic technology sector. Last year, venture- capital firms invested $7.3-billion in Canadian technology companies, according to market data firm Refinitiv, second only to 2000 levels, adjusting for infla- tion.

The industry lobbied for a se- quel, which came with some strings attached. While Ottawa still gave incentives to private investors by agreeing to be repaid only after they got their full capital back, plus 7 per cent, it insist- ed the winning managers raise $2.50 for every $1 Ottawa com- mitted. The government also pushed recipients to enhance diversity and increase the participation of

women across the male-dominated venture capital sector. Another change was choosing five winners – Hamilton Lane, plus incumbents Teralys Capital of Montreal, Toronto’s Northleaf Capital Partners and Kensington Capital Partners, and Boston- based HarbourVest Partners LLC

to split a pie that had previous-
ly been divided four ways under
VCAP.
The government announced
the winners in June, 2018, giving
them until year’s end to hit the
“first close,” and one more year
to reach final targets.
With funding from both Otta-
wa and Quebec, Teralys met its
$400-million target first, in De-
cember, 2018. Northleaf, Kensing-
ton and HarbourVest followed in
2019, raising $300-million, $150-
million and $300-million, respec-
tively.
But Hamilton Lane was de-
layed. It didn’t announce its Can-
adian staff until last spring – led
by Michael Woollatt, former chief
executive of the Canadian Ven-
ture Capital and Private Equity

Association – and only got ap- proval from the Ontario Securi- ties Commission to raise funds in May. By then, the other funds were late into the fundraising process, leaving Hamilton Lane, an un- proven entity in Canada, way be- hind. Thegovernment extended its deadline to June 30, but the U.S. fund manager still found it difficult to raise funds, the company’s spokesman said. Mr. Nearing said thegovernment hasn’t decided yet how to allocate the unused funds. Indus- try sources, who were granted anonymity because they were not authorized to speak on the matter, said it was too late for the four other winners to take on additional money. One suggested the government should create a fund for life sciences venture-capital firms, which have struggled to raise domestic funding outside Quebec. Another suggestedthe government create a new program to spur additional investments in innovation.

U.S.investmentgiantpullsoutofOttawa’sinnovationfundingprogram

SEANSILCOFF
TECHNOLOGYREPORTER

As a result, the Trudeau government’s venture-capital catalyst initiative program ... has fallen $275-million short.

The Globe and Mail - 11.03.2020

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