Manulife chief exec stepping down in '09
TORONTO - Dominic D'Alessandro, the high-profile CEO of Manulife Financial Corp. (TSX:MFC) plans to retire following the annual meeting next year after 14 years as chief executive of Canada's largest insurance company.
The announcement came Thursday at the annual meeting and after Manulife reported a 12 per cent decline in first-quarter profit to $869 million from $986 million as sliding stock markets took an estimated $265-million bite out of company's earnings.
D'Alessandro, 62, is one of Canada's highest regarded CEOs and has won awards from various groups and the financial press for his executive performance at Manulife, especially after he orchestrated a major acquisition in the United States that transformed the company into a financial services giant.
Manulife chairman Arthur Sawchuk stated that the board has "been very focused on the critical issue of CEO succession" and expects to announce a replacement by the end of this year.
Manulife shares fell 4.7 per cent after the news release, which coincided with this year's annual meeting in Toronto.
D'Alessandro has promoted mergers of big financial companies to create Canadian-based multinationals that can compete with the world's largest companies.
He oversaw the multibillion-dollar takeover of John Hancock Insurance Services of Boston a few years ago, a deal that made the company a leading financial services provider in the United States.
Other expansions have made Manulife one of the most international of Canada's financial companies, with millions of customers in 19 countries, including Canada, the United States, Asia and elsewhere and about C$400 billion in assets under management.
In 2007, the company had $35.5 billion in annual revenues, a profit of $4.3 billion and about 22,000 employees.
In its financial report, the Toronto-based financial services company said its earnings in the first quarter were 57 cents per share, down from 63 cents per share in the prior-year period. Manulife pegged the effects of market volatility on its earnings at about 18 cents per share.
"Except for the decline in equity markets, our quarter was highly satisfactory," D'Alessandro stated.
"Strong sales levels, particularly in our insurance segments, contributed to an impressive increase in new business embedded value. This reflects positively on the current performance of our insurance and wealth management businesses, and positions us well for future earnings growth."
He told analysts in a conference call that the company's medium-term goal of growing earnings per share by 15 per cent annually, on average over a three- to five-year period, despite the slow start to 2008.
"We're not prepared to throw in the towel on this year," D'Alessandro. "You know, our revenue levels remain strong, if the equity markets behave. It bears watching. We certainly haven't given up on the year at all."
Manulife's total revenue fell to $7.97 billion from a year-before $8.63 billion as premiums and deposits slid five per cent to $17.8 billion. Total funds under management moved up two per cent to $400.1 billion at quarter-end.
"Worldwide equity markets were the most severe in 21 quarters with significant declines in the U.S., Asia and Japan," said chief financial officer Peter Rubenovitch.
"Actuarial practices require us to assume that these declines are permanent and, accordingly, an after-tax (non-cash) charge of $265 million was recorded in the quarter."
Manulife's return on shareholders' equity dropped to 15.1 per cent on an annualized basis, versus 16.1 per cent in the prior-year period.
Shares in Manulife were down $1.81 to $37.06 in Thursday trading on the TSX, with a 52-week high and low of $44.23 and $33.77.
One analyst said he was surprised that Manulife's quarterly dividend was unchanged at 24 cents per share.
D'Alessandro said the company decided to forgo an increase because of the volatility of the financial services environment.
"You know the situation changes almost daily but at the time we had a review of this and a discussion we felt that given the uncertainties in the marketplace - I mean, people are reporting tens of billions of dollars of losses every day - that maybe we should just defer a decision on the dividend until the next opportunity."
He said that the company's not concerned about its own operations but acknowledged that its net earnings were hurt in the past quarter by new accounting rules that require Manulife to do a market valuation of its stock holdings each quarter.
"If we struck the number today, we'd probably recover more than $150-million of that. So that would be a $400-million swing (in a month) just because of market movements."
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