CEO says Manulife ‘not banking’ on rate hike
TORONTO Recent interest rate hikes in North America are perceived as positive for the life insurance sector, but they aren’t prompting a change in strategy at Manulife Financial Inc., according to Roy Gori, the new chief executive at Canada’s largest insurer.
“We obviously benefit from a more positive outlook as it relates to interest rates, but we’re not banking on that,” Gori, who took over as CEO from Don Guloien in October, told the Financial Post on Thursday.
“There’s still a lot of uncertainty in terms of global growth and inflation and, as a result, interest rates are still significantly low, certainly lower than they have been historically. And we’re working on the assumption that that will continue.”
In September, the U.S. Federal Reserve signalled plans to raise short-term interest rates one more time this year.
The Bank of Canada left rates unchanged last month after two increases to the overnight rate this year.
Manulife turned in betterthan-expected results for the third quarter, which was reported late Wednesday.
Despite a brutal hurricane season, the insurer reported core earnings of 53 cents per share, ahead of analyst estimates of 50 cents, according to John Aiken, an analyst at Barclays Capital.
In a note to clients, he said Manulife was also able to address concerns that growth in the key market of Asia had paused. “Asia had a solid quarter, with core earnings up 11 per cent from a year ago,” Aiken wrote. “This was coupled with strong sequential growth in insurance and wealth management products in addition to a healthy increase in the value of new business.”
Gori’s rapid ascent in Manulife began in Asia in 2015. He was hired to run the operations in China, Hong Kong, Indonesia, Japan, Macau, Malaysia, the Philippines, Singapore, Taiwan, Thailand, Vietnam and Cambodia.
Before joining the Canadian firm, he worked in consumer and retail banking at Citigroup.
Gori noted that Manulife added to a growing list of bank partnerships in the third quarter with a new arrangement in Asia. A three-year partnership with Mekong Housing Bank in Vietnam will allow Manulife Vietnam to sell life insurance to Mekong Housing Bank’s clients in Ho Chi Minh City and Hanoi.