Tuesday, December 1, 2009

Manulife gets some adult supervision

How’s this for a public policy outcome? Manulife’s former CEO was a registered lobbyist, which means he devoted more that 20% of his working time lobbying Ottawa for policies that favour him and his company. Manulife successfully lobbied the Harper government to kill income trusts, as income trusts were making it difficult for Manulife to sell life annuities and enter the business of selling other retirement investment products. Manulife doesn’t like competition so they turn to the government to kill their competition for them. Flaherty kills income trust with no public consultation and no proof of his policy justification of tax leakage. That very week of October 31, 2006, Manulife launches a new derivative/synthetic investment vehicle called Income Plus. Income Plus provides the prospect of market based returns with a guaranteed downside return.

Direct investments in the Canadian economy (income trusts) are destroyed in favour of synthetic investment products (income Plus) for the sole purpose of creating fee streams for life insurance companies? In the aftermath of the Harper legislated outlawing of income trusts, Manulife sells a truck load of Income Plus, in the belief it will create a massive fee stream. One problem, Manulife got greedy and failed to hedge these guarantees it had offered investors that were susceptible to market downturns. Here, we have insurance companies not insuring their risks. Talk about a house of cards, wherein these new lines of businesses (like Income Plus) introduce collateral risks to their old lines of business (life insurance) and all policy holders are worse off. What kind of short sighted policy making is that?

How imprudent is that? On the part of Manulife? On the part of Ottawa? The income trust policy made the sale of billions of Income Plus possible, which nearly bankrupted Manulife in the process.

I am pleased to read in today’s appointment notices that Manulife has got some new adult supervision as a result of their recent near-death experience, with the appointment of two new directors with risk management and regulatory capital experience.

When can the same be said about Ottawa getting some adult supervision? When will Canadians be provided with Harper’s proof of tax leakage, or is that evidence taking the same blacked out form of “accountability” as the evidence that supports Richard Colvin’s allegations that Afghan detainees were tortured? Meanwhile the point is rather moot, since we already know that tax leakage is a manufactured claim that lacks in any credibility whatsover. Just ask BMO Capital Markets or PricewaterhouseCoopers. Making Harper’s income trust policy and the $35 billion in losses it sustained into nothing short of a fraud for a tax policy.

John R. V. Palmer appointed to Manulife Board of Directors

Toronto - Manulife Financial Corporation and The Manufacturers Life Insurance Company announced today that John R.V. Palmer has been appointed to their Boards of Directors, effective November 4, 2009.

Mr. Palmer brings extensive financial institution experience to Manulife’s Board, including seven years as Superintendent of Financial Institutions of Canada. Mr. Palmer was the Deputy Managing Director of the Monetary Authority of Singapore and has advised other regulators including the Australian Prudential Regulation Authority. He is a chartered accountant and previously was Canadian Managing Partner and Deputy Chairman of KPMG LLP (Canada). Mr. Palmer holds a Bachelor of Arts from the University of British Columbia.

Linda Bammann appointed to Manulife Board of Directors

Toronto - Manulife Financial Corporation and The Manufacturers Life Insurance Company announced today that Linda Bammann has been appointed to their Boards of Directors effective August 5, 2009.

Ms. Bammann joins Manulife’s Board bringing sound experience from her senior executive risk management positions with several large U.S. banks, including JPMorgan Chase and Bank One. She earned her Bachelor of Science from Stanford University and her Master of Arts from the University of Michigan.

1 comment:

Dr Mike said...

It still amazes me to this day that Flaherty & his cronies got away with the trust tax & came out unscathed.

There was no accountability required whatsoever.

There was no consultation except with the big CEOs who had the most to gain from the trust demise.

There was absolutely no consideration given the fallout to the investor.

Tax Fairness , give me a freaking break.

Fairness for the big "cheeseheads" , the little guy be damned.

Nothing ever changes as big money speaks while the rest of us poor sots continue to whimper.

Dr Mike Popovich