Thursday, May 7, 2009

Manulie's failed foray into phony fixed income derivatives facilitated by Flaherty, costs it over $1 billion




Short story:

Flaherty killed income trusts at the behest of the Life Companies like Manulie, so they could pump more fee rich junk food investments down the throats of Canadians starving for income. Dominic is driven by stock option greed and the capital gains treatment of this form of income from employment and chose NOT to hedge these risks. Manulife blows up and losses $1 billion.

This was a direct manifestation of government policy and inaction by the Opposition parties and the lack of foresight by policy makers. I made this point about Manulife and their Income Plus from the very outset, as did many others whose expertise was never consulted. Apart from tax leakage the other false claims against income trusts was that they were Ponzi schemes.

Thank to Bernie Madoff, we all know what a real Ponzi scheme looks like.

If not a Ponzi scheme of sorts, why is Manulife announcing a dividend? They LOST over 1 Billion this Q, Almost 2 Billion last Q !
Is this some sort of Ponzi scheme? Paying out money they didn't earn?

Manulife Financial Corporation reports quarterly results

Equity market declines continue to detract from core business results

TSX/NYSE/PSE: MFC; SEHK: 0945


TORONTO, May 7 /CNW/ - Manulife Financial Corporation ("MFC") today
reported a shareholders' net loss of $1,068 million for the first quarter
ended March 31, 2009, compared to net income of $869 million in the first
quarter of 2008. Fully diluted loss per share was $0.67 compared to earnings
per share of $0.57 in 2008. The Manufacturers Life Insurance Company ("MLI")
reported an MCCSR ratio of 228 per cent as at March 31, 2009, up from 198 per
cent last year.
"This was obviously a difficult quarter, reflecting the impact of the
global economy on equity markets, other asset values and sales," said Donald
A. Guloien, Manulife's incoming President and Chief Executive Officer. "Our
global franchises remain strong, our capital position is near the high end of
its historical range, and we enjoy high credit ratings."
"In the past six months, Manulife has proven it can successfully access
the capital markets through common equity and preferred share issuance, bank
loans and public debt," said Mr. Guloien. "We have earned the right to these
alternatives as a result of our enviable financial condition and strong
ratings. But as we look forward, knowing that there is risk of further turmoil
in capital markets, our focus is going to be on balancing our business mix,
reducing risk, and strengthening our capital levels."
The quarter's net loss was primarily driven by continued declines across
all equity markets, particularly in the U.S. Reserve strengthening for
segregated fund guarantees resulted in an accounting charge of $1,146 million
and credit impairments were $121 million. Also affecting earnings this quarter
were fair value adjustments of $277 million primarily for declines in
commercial real estate values, $255 million of equity related charges and $72
million related to credit downgrades. Earnings for the quarter, excluding
these items, totaled $803 million and cash provided by operating activities of
$2.5 billion reflected the non-cash nature of these charges.
"Actuarial practices require us to value our assets and liabilities at
the quarter end mark, despite the very long-term nature of these holdings and
obligations. Given the current environment, this creates significant
volatility in our reported results which detracts from our strong core
business results," noted Peter Rubenovitch, Senior Executive Vice President
and Chief Financial Officer. "Despite these non-cash charges, our investment
portfolio remains well positioned for this challenging credit cycle and our
capital levels remain above our targeted levels."
In light of continued equity market volatility and sensitivity, the
Company conducted a strategic review of its segregated fund product portfolio
and started implementing changes to its product offerings in the quarter. In
the U.S., fees were increased, deferral bonuses were reduced, additional
features were withdrawn, and equity exposure was reduced in several key funds.
In Canada, the hedging program for new segregated fund business was
successfully implemented at the end of March, and $1.5 billion of in-force
business was hedged. New business in North America is now hedged on an ongoing
basis.
"Going forward, the Company will focus on rebalancing its product
portfolio to diversify its sources of income and its risk positions. One of my
first initiatives in my new capacity will be an analysis of growth
opportunities for our Company," said John DesPrez, newly appointed Chief
Operating Officer.
Premiums and deposits were $19.3 billion in the quarter, a decrease of 16
per cent on a constant currency basis. Increased premiums arising from higher
sales of fixed wealth products and in-force insurance business growth were
more than offset by the decline in variable wealth product deposits in light
of continued market volatility.
Total funds under management as at March 31, 2009 were $405.3 billion, an
increase of one per cent over the prior year. The increases from currency
movements of $57.4 billion and net policyholder cash flows of $21.8 billion
were offset by market value declines.

4 comments:

Anonymous said...

Christ!

How much would Dominic have been paid if MFC had actually MADE money!!??!!

He's worth every penny you know

CAITI said...

Pennies indeed!

Anonymous said...

I know a little bit about the other side of the story and what you are talking about does not even connect to each other...


in other words this is all propaganda drivel.

The 1 billion charge is to honor the guarnatee on the seg funds.


As the assets improve in value less of that 1 billion wiil be needed to honor the guarantees.

There is no connection to your income trust problems.

Life insurance is a Federally regulated industry and promises made in writing are kept.

Todd Ouellette/The rant said...

Apparently anonymous,is unsure of their statment if the can,t even leave their name,Phony fixed income derivatives is just one of the many names for MFC to hide under in the battle of pointing fingers,I only wish they could see the finger I,m pointing with.
T.O./The Rant