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between $350 and $400 billion.4 The long-term commitment of funds to such projects is important to the economy because it allows businesses and governments to engage in large projects that take many years to complete or to become profitable. Without committed longterm funding, there would be a risk that short-term funding might not be "rolled over", which would mean that many of these projects would simply not be viable. Clearly, there is a need for long-term, stable funding to help renew Canada's infrastructure. The Canadian life and health insurance industry is well placed to invest in infrastructure assets. Currently, the life and health insurance industry holds almost $6 billion in infrastructure investments. While this is currently a relatively small amount in the context of their overall investments, the industry has a strong desire to invest more in infrastructure and supports recent initiatives by government to increase the number and breadth of infrastructure investments, including public-private partnerships (P3s), that are available in the Canadian market. 5 P3s are an attractive approach to infrastructure development for governments. They have a proven track record of delivering maximum value for taxpayers as they generally provide on-time, on-budget projects and effective infrastructure. 5. Role of Public Policy in Long-term Investing Underpinning insurers' appetite and ability to invest in long-term assets is the overall public policy environment that they operate within. There are many regulatory and economic factors that impact insurers' ability to invest long-term. It is important that policy choices in all of these areas be made in an informed way that reflects the unique characteristics of the insurance business model as a means to ensure a strong and sustained demand for long-term investment in Canada. Macroeconomic Policies The macroeconomic policies of governments and central banks can have a major influence on insurers' investments. While a very low interest rate environment, such as we have now, has been important to support the economy through the down cycle, it presents significant challenges for Canada's longer-term investors such as life insurers. For instance, sustained low interest rates cause investment managers to reconsider their asset allocation and asset-liability strategies to compensate for the low underlying yields. They will sometimes push into relatively 4 PWC. Building Canada's Infrastructure. http://www.pwc.com/ca/en/infrastructure-project-finance/financingthe-future.jhtml 5 Based on a CLHIA survey of member companies. 9

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