Manulife Financial Corp., and members of its pensions and benefits plans, have nothing to fear if there’s another financial crisis, CEO Don Guloien told an industry conference on Thursday.
There has been ongoing concern about Manulife’s exposure to unpredictable equity markets, but the insurance company has taken steps to hedge its portfolio of guaranteed variable annuity products and is now 51% protected.
“The thing we have to be concerned about is a 30% movement or 40% movement in equity prices and that hedge provides substantial protection,” Guloien said
Manulife will still notice the impact of small market dips, but it’s no longer exposed to the risk of a double-dip recession.
The company, and other life insurers, sold guaranteed investment products, causing major problems during the financial crisis.
The low interest rate environment and the rising cost of its long-term care insurance in the United States has also hurt the company.
“I don’t mind being up front about our challenges,” Guloien said. “We have them.”
Meanwhile, Manulife’s Asian business is thriving.
Sales of life insurance and wealth management products are growing in the double digits in Hong Kong, Japan and China, and accounts for as much as 30% of Manulife’s revenue.
