Sifting through the opposing rulings on the legality of the subsidies on the federal health insurance exchange.
ARTHUR SAWCHUK, CHAIRMAN, MANULIFE FINANCIAL CORPORATION: The hour
has arrived. Good morning, ladies and gentlemen, and welcome to the
Ninth Annual Meeting of Manulife Financial Corporation, and the 121st
Annual Meeting of the Manufacturers Life Insurance Company. My name
is Arthur Sawchuk, and I am Chairman of both Manulife Financial
Corporation and Manufacturers Life, and I will ask as Chairman of
today's joint meeting.
Before I get started, just in the event of any problem with the fire
alarm or anything like that, I remind you that there's an exit
through there, and there are a couple of exit doors there. There's
also that exit door at the back. Should anything occur, please make
an orderly exit through all of them as quickly as possible.
Now this will be the 10th and the last annual meeting of Manulife
that I will chair. It's been an enormous pleasure to have served the
corporation, the shareholders and the policyholders. I've been
blessed in having what I consider the best Board of Directors and
management team to work with. It's been exciting to see the Company
come such a long way in those ten years.
When I reflect on my contribution, I take the most pride in leading
the Company to have among the very best of governance practices.
Among those practices, is Board succession, which is always
thoughtful, orderly, and done well in advance. For example, you will
recall that we added two new Directors last year in anticipation of
the retirement of two Directors this year. We did this so that the
new Directors would get to know the Company and it's business before
the retiring ones left the Board and the experience walked out the
I would now like to introduce the members of our Board of Directors
who are present here today. I would ask them to please stand when I
call their name; John Cassaday, Lino Celeste, Thomas d'Aquino,
Richard DeWolfe, Robert Dineen Jr., Pierre Ducros, Thomas Kierans,
Lorna Marsden, Hugh Sloan Jr., Gordon Thiessen. The two new Directors
that we added last year who now have a year of experience; Scott Hand
and Luther Helms.
Next is Allister Graham. Allister? This will be Allister's last
annual meeting, having reached the mandatory retirement age, even
though he doesn't look it. Allister is special in many ways. First,
he helped bring us North American Life in 1996, where he was a
Director, that's how he got on our Board. Secondly, he's been a great
counselor to me personally, and to many others as well.
He has that special, nice way of getting things done. He will always
be remembered by me as Gentlemen Al, and the Board would like to
thank Allister for his numerous years as service as a member of the
Board. Al, you will be missed on the Board, but never lost to us as a
On the platform with me, starting from my immediate left is Angela
Shaffer, Vice President and Corporate Secretary; J-P Bisnaire, Senior
Executive Vice President, Business Development and General Counsel;
Dominic D'Alessandro, President and Chief Executive Office and Board
member; Peter Rubenovitch, Senior Executive Vice President and Chief
Financial Officer; and Gail Cook-Bennett, Vice Chair.
A year ago, anticipating my retirement as Chairman in 2008, that is
this year, we started the process for finding orderly succession,
successor. After a very thorough review of candidates, the Board
chose Gail Cook-Bennett to be the Vice Chair of the Board. Assuming
that we both get elected as Directors today, Gail will become the
Chair of the Board in October, upon completion of her term as the
Chair of the Canada Pension Plan Investment Board.
We also have with us a special guest today, as we always do, our
Stars of Excellence. Every year at this time, we honor the Stars of
Excellence as a distinguished group of employees and of field
associates from around the world for their leadership, their
commitment, and their contribution to the success of your company.
Reflecting the global nature of our business, these employees and
field associates come from 11 different countries and territories.
As I call out the region that you represent, I ask that you please
stand so we may acknowledge you, and for some of you, your very
first, of course, visit to Canada. Please stay standing until all the
regions have been called. The regions represented by our Stars of
Excellence are Belgium, there he is; China, Hong Kong, Indonesia,
Japan, the Philippines, you are supposed to all stay standing;
Singapore, Malaysia, Taiwan, United States, Canada. Now those who sat
down earlier, stand up.
Let's give our Stars of Excellence a warm -- . I would like to say a
warm Canadian welcome and a thank you. Thank you.
I now call this Annual Meeting of Shareholders of Manulife Financial
Corporation and Annual Meeting of Policyholders and the Shareholders
of Manufacturers Life Insurance Company to order. This meeting will
be conducted in accordance with the rules of procedure set out in the
agenda card, which has been provided to you. Angela Shaffer will act
as Secretary of the meeting, [Karen Garrod] of CIBC Mellon Trust
Company, and Lynore LeConche of BNY Mellon Shareowners Services will
act as scrutineers for Manulife Financial Corporation.
Karen Garrod and [Joyce Whitelaw] of CIBC Mellon Trust Company will
act as scrutineers for Manufacturers Life. I confirm that the notice
of this meeting was given in accordance with the Insurance Companies
Act, that the quorum requirements for the joint meeting have been
complied with, and therefore the meeting is properly convened.
We will be conducting the voting for the election of Directors, the
appointment of auditors, and the shareholders proposals by ballot in
the spirit that every vote counts. In order to not to delay
proceedings, certain individuals, who are either shareholders or
policyholders have agreed to move and second the motions at this
Now ballots were handed out at the registration desk prior to the
meeting. If you are a shareholder or a policyholder and have not
already voted by proxy, or if you are a proxy holder who did not
receive a ballot upon registration, please raise your hand and the
scrutineers will provide you with the required ballots.
Please mark an X in the appropriate box to vote for, to vote against,
or to withhold a vote. The ballot requires that you print your name
in the place indicated and sign the ballot. This is for verification
and identification purposes. The scrutineers will collect the ballots
twice, once following the election of Directors, and the appointment
of auditors of both Manulife Financial and Manufacturers Life. At
once following the vote on the shareholder proposals.
On behalf of the speakers that follow, I wish to caution you that
their presentations and responses to questions may contain
forward-looking statements within the meaning of the Safe Harbor
provisions of applicable Canadian and U.S. Securities Laws. Certain
material factors or assumptions are applied in making forward looking
statements and actual results may differ materially from those
expressed or implied in these statements.
For additional information about the material factors or assumptions
applied in making these statements and about the material factors
that may cause actual results to differ materially from expectations,
please consult the "caution regarding forward-looking
statements" in the slide presentation for this meeting available
on our website, as well as the information in our annual information
form and the management's discussion and analysis referred to in that
The first item on our agenda is the election of Directors of Manulife
Financial Corporation. The number of Directors to be elected today as
determined by the Board is 15. Information regarding the nominees is
set out in the proxy circular. I now declare the meeting open for
nominations for the election of Directors. Edwina Stoate, a
shareholder has agreed to move this motion.
EDWINA STOATE, INVESTOR RELATIONS, MANULIFE FINANCIAL CORPORATION:
Mr. Chairman, I am pleased to nominate John Cassaday, Lino Celeste,
Gail Cook-Bennett, Dominic D'Alessandro, Thomas d'Aquino, Richard
DeWolfe, Robert Dineen, Pierre Ducros, Scott Hand, Luther Helms,
Thomas Kierans, Lorna Marsden, Arthur Sawchuk, Hugh Sloan and Gordon
Thiessen as Directors of Manulife Financial Corporation to hold
office until the close of the next annual meeting of the shareholders
of Manulife Financial Corporation or until their successors are
elected or appointed.
ARTHUR SAWCHUK: Thank you, Miss Stoate. Are there any other nominees?
As there are no further nominations, I declare the nominations
closed. We will now proceed with the voting for the election of
Directors of Manulife Financial. Please mark your ballot, which is
the green ballot number one. Hopefully, it's done. Voting is now
closed for the election of Directors of Manulife Financial
The next item on our agenda is the election of Directors of
Manufacturers Life. Manufacturers Life has both participating
policyholders and one shareholder; Manulife Financial Corporation.
The number of Directors to be elected today as determined by the
Board is 15, six of them Policyholder Directors and nine Shareholder
Directors. Information regarding nominees is set out in the report to
I now declare the meeting open for nominations for the election of
Policyholders Directors. [John Clark], a policyholder, has agreed to
move this motion.
JOHN CLARK, POLICYHOLDER: Mr. Chairman, I am pleased to nominate
Thomas d'Aquino, Richard DeWolfe, Thomas Kierans, Arthur Sawchuk,
Hugh Sloan, Gordon Thiessen as Policyholders Directors of the
Manufacturers Life Insurance Company to hold office until the close
of the next annual meeting of the policyholders and the shareholder
of the Manufacturer Life Insurance Company or until their successors
are elected or appointed.
ARTHUR SAWCHUK: Thank you, Mr. Clark. Are there any other nominees?
As there are no further nominations, I declare the nominations
closed. We'll now proceed with the voting for the Policyholder
Directors of Manufacturers Life. Please mark your ballot, which now
is the yellow ballot number one.
The voting is now closed for the election of Policyholder Directors
of the Manufacturers Life Insurance Company. All of the common shares
of Manufacturers Life are owned by Manulife Financial. The
shareholder of Manufacturer Life has by written resolution in
accordance with the Insurance Companies Act elected the shareholder's
Directors, and therefore I declare that John Cassaday, Lino Celeste,
Gail Cook-Bennett, Dominic D Alessandro, Robert Dineen, Pierre
Ducros, Scott Hand and Luther Helms and Lorna Marsden have been
elected to serve as the Shareholder Directors of the Manufacturers
Life Insurance Company to hold office until the close of the next
annual meeting of policyholders and the shareholder of the
Manufacturers Life Insurance Company or until their successors are
elected or appointed.
Next on the agenda is the appointment of auditors for the Manulife
Financial and Manufacturers Life. Irene Bailey, a shareholder and
policyholder, has agreed to bring this motion.
IRENE BAILEY, SHAREHOLDER: Mr. Chairman, I move for Ernst and Young
LLP, Chartered Accountants, the appointed Auditors for Manulife
Financial Corporation and the Manufacturers Life Insurance Company
until the close of the next annual meeting.
ARTHUR SAWCHUK: Thank you, Miss Bailey. [Peter Marlatt], a
shareholder and policyholder has agreed to second this motion.
PETER MARLATT, SHAREHOLDER: Mr. Chairman, I second that motion.
ARTHUR SAWCHUK: Thank you, Mr. Marlatt. We will now proceed with the
voting for the appointment of the Auditors for Manulife Financial and
Manufacturers Life. Please mark your ballots, this time green ballot
number two is for the shareholders of Manulife Financial and yellow
ballot number two is for policyholders of Manufacturers Life.
The voting is now closed for the appointment of Auditors of Manulife
Financial and Manufacturers Life. The scrutineers will now collect
the ballots for the election of the Directors and the appointment of
Auditors. Please raise your hand if you have a ballot that you wish
the scrutineers to collect, and I think most of that's done.
The next item on the agenda is the tabling of the 2007 Consolidated
Financial statements of each of Manulife Financial and Manufacturers
Life, and the Reports of the Auditor and the Actuary thereon.
Shareholders receive the 2007 Consolidated Financial Statements of
Manulife Financial in accordance with the Insurance Companies Act and
applicable securities legislation. Policyholders received the 2007
Consolidated Financial Statements of Manufacturers Life in accordance
with the Insurance Companies Act.
The next item on the agenda is to consider the nine shareholder
proposals submitted by the Mouvement d'education et de defense des
actionnaires, otherwise abbreviated MEDAC. The proposals and the
Board's response to these proposals are set out in schedule C of the
proxy circular. You will be using the green ballot number three to
vote on all of the Shareholder Proposals.
Mr. [Norman Carron] is the representative form MEDAC who will present
the proposals. As Mr. Carron will present the proposals in French, we
will have provided the English translation on the screen for your
convenience. Mr. Carron, please present the motion for Shareholder
proposal number one.
NORMAN CARRON, REPRESENTATIVE, MEDAC: Thank you, Mr. Chairman. I'm
here. And I'm very glad to be here with you this morning to present
our nine proposals. Why nine? Because it's the ninth anniversary of
our little organization, but it won't be a tradition.
So the first proposal said that (spoken in French) I will give the
explanation or the reason why we present this proposal. It takes it's
inspiration from the French legislation adopted in July 1994
authorizing corporations to compensate shareholders for their loyalty
currently in force with major French corporations like [Erika] or
[Lafarge]. I'll take my breath.
This provision encourages small shareholder to keep their shares,
give them a greater feeling of belonging, and give preference to
long-term policies. But, as we know, the Insurance Corporation Act
doesn't permit actually to proceed and implement this proposal. We
suggest in the long run to the Board and the management of Manulife
to support us eventually with the request at the political level to
permit this sort of benefit.
ARTHUR SAWCHUK: Okay, thank you. We will now proceed with the vote on
that shareholder proposal number one. Please mark your ballot with
respect to that one. We'll wait a minute and then go to number two.
Proceed Mr. Carron.
NORMAN CARRON: (spoken in French). I think I will read it in English.
It will be easier for me. It's proposed that shareholder voting right
be granted after shares have been held for a minimum of period of one
year. The logic -- it takes also this inspiration from a
recombination put forward by the Institute of Governance of Private
and Public Organization. This organization is partially financed by
the Jarislowsky Foundation.
Stating the practice of granting all the privileges of corporate
citizenship upon purchase of a share can give unique influence and
power to transit shareholders determined to create short-term value
for themselves by all possible means and some studies conclude that
corporate managers could sacrifice long-term economic value to hit
the target of the smooth short-term earnings. Again, as the law
doesn't permit to implement this proposal, we suggest, like the
first, to support ourselves in the next future.
ARTHUR SAWCHUK: Vote on number two.
UNIDENTIFIED SPEAKER: Mr. Chairman?
ARTHUR SAWCHUK: Yes.
UNIDENTIFIED SPEAKER: Shareholders entitled to speak before we vote?
ARTHUR SAWCHUK: I guess we have a simple proposal here to simply vote
up and down on, the notice has been given, people have considered it,
I think it would be unfair to have that influence in any of the votes
because the other shareholders are not here to listen to it.
UNIDENTIFIED SPEAKER: That's fine. I'll speak during the question
ARTHUR SAWCHUK: Thank you. Vote on Proposal number two. Mr. Carron,
would you proceed to number three?
NORMAN CARRON: Okay. Proposal three. We propose that Manulife
Financials by-law provide in the event of a merger or acquisition
that an amount equal to double the compensatory bonuses and benefits
paid to the Executive and Director be paid into the Employee Pension
Recently, even if we are aware that it's not probably the case for
the Company here, that any change of Manufacturer Life Control is a
highly united even, we maintain this proposal because we need to
protect shareholders that are avoiding possible conflict of interest
among senior managers and executives where they can fill their pocket
by dealing and selling company control. The recent case of BCE and
Alcan seems so tragic. This is unfair that employees are not
benefited in financial transaction of merger or acquisition even
though they devote years and years and often decay while building the
business and creating value for the shareholder.
ARTHUR SAWCHUK: Thank you. That is proposal number three. Would you
please vote on that now? Proceed to number four, Monsieur.
NORMAN CARRON: Proposal four; It's a long-term proposal. We propose
this year that there be as many women as men on Manufacturer Life
Board of Director within three years of the adoption of this
proposal. We are convinced that an increase in female presence on
Board of Directors will bring added value to the way it's operated.
This conviction is ground on survey results showing that more you
have woman on Boards, more attractive are the rates of returns. I'm
not saying it, I read it --
ARTHUR SAWCHUK: I think we know what you mean.
NORMAN CARRON: The Capital Assistance Institute in 1904. Also a study
conduct by the Conference Board of Canada promotes clearly that the
presence of woman change the way Boards operate, raising different
kinds of issues during the meeting, asking novel questions,
discussing broader aspect contributing to good government. For
Manulife, the actual result, I think it's two on fifteen, quite far
from how we suggest target for the next three years.
We hope that the presence of a woman in the role of Chair will
contribute eventually to accelerate the process of change in the
future. And as I said in other meetings, don't wait legislation, I
think it's Norway, will establish for the public company a ratio of
40%, by law. So, the change will have to come from the inside and in
the shareholder's meeting. Thank you.
ARTHUR SAWCHUK: Okay. If you'll vote on proposal number four.
Proceed, Mr. Carron on number five.
NORMAN CARRON: Number five. We have that the annual report and the
management proxy circular disclose a new ration, the equity ratio
between the total compensation of Manulife Financial higher state
executive, which include annual salary bonuses, gratuities payment
and all other form of compensation and the average employee
compensation. The reason why; during the last years, and it's really
a fact, data compiled for example, the Globe and Mail in 2006, the
average compensation for the officer of Canada major corporation was
116 times the average compensation of Canada worker.
We know also that this executive compensation has no evident
relationship between the corporations market performance according
with the study conducted by the Teachers Pension Fund in May last
year. It is imperative for [internet] cohesion and social stability
in our country, in our institutions that this ratio be known and
eventually reduced as much as possible.
We recognize that the Manulife's programs are based on the pay for
performance philosophy and the long-term performance and we
appreciate the presentation of the decreasing ratio compensation
versus net income which is presented on page 32 in your circular. We
do appreciate this new type of information. Thank you.
ARTHUR SAWCHUK: Now would you proceed to vote on number five. I think
by now, they know how to vote, Mr. Carron, so why don't we go right
to number six.
NORMAN CARRON: Well, in the same philosophy, we propose that the
remuneration policy of the Company, five highest senior executives
and the Board of Directors fees receive prior approval by the
shareholders. This is the standard say on pay and it's a trend which
suggests -- I will recall you the requirements set up by the [OECD]
principal of governments four years ago, shareholders should be able
to make their view known on the remuneration policy for Board members
and key executives. The equity component of compensations came for
Board members and employee should be subject to shareholder approval.
Last year in April in a historical vote at the house of
representatives, a new law passed that imposed a consultative vote on
remuneration policies. Let's not forget the result of votes obtained
on say on pay resolution of this sort of some annual meetings like
[Angersol Ran], Blockbuster, Motorola, [APO], City Group, over 50%
did vote for this kind of policy. More recently here in Canada, two,
a few months ago, a proposal of the consultative vote, I think it's a
group in Vancouver, maybe [Caston] obtained more than 40% support at
the annual meeting of the largest bank of Canada.
ARTHUR SAWCHUK: Okay, thank you. Proceed to vote on number six. And
we move to number seven, Mr. Carron.
NORMAN CARRON: Seven. It's proposed that Manulife Financial govern
the exercising of option allocated to the senior executives and
Directors of our corporations by stipulating that such options may
not be exercised by interested parties until the end of their term of
Since mid-1990's, North America corporations have moved towards the
increasing use of stock option plans in the compensation of senior
executive and director. This practice has resulted in excessive and
unwarranted compensation levels that are not justified by the
performance of a great majority of companies and the stock market
returns offered to the shareholders.
This extensive use of stock options in the compensation plan is the
primary source of fraud where management with the complicity of
auditors, I don't have to cite any example here, but we know
everybody knows them, across legal and ethical boundaries and
information trafficking about the corporate actual financial status.
We agree with the Canadian Council of Chief Executives who conduct a
study in September 2002 that it is frustrating for investors when
senior executives are rewarded handsomely for past performance that
prove to be short-lived.
ARTHUR SAWCHUK: Thank you. Vote on proposal number seven. And could
you proceed then, number eight.
NORMAN CARRON: This is a very actual proposal. Given the strong
concerns expressed recently by numerous observers and regulators
regarding the effects of hedge funds and subprime mortgage loans on
the stability of the financial system, it is proposed that while the
bank and other financial companies make public information concerning
it's involvement, direct or indirect, in these type of activities.
Mr. Chairman, last year, our group sound the alarm by asking for a
disclosure of involvement in hedge funds. This proposal received a
strong support in annual meetings, exceeding 10% level. In accordance
with the law and giving the most recent activity of this issue, we
submit again this proposal.
Born of a concern of transparency, shareholders must be informed of
such investment so that they can assess their investment in the
corporation in the light of risks they are incurring and in light of
highly speculative management philosophies espoused by their
executives and member of the Board of Directors. We do appreciate
that Manulife has appropriate controls in place to manage it's
investment risks and we don't expect to experience any credit losses
relating to subprime mortgage backed securities.
ARTHUR SAWCHUK: Thank you. Vote on number eight, and now we'll move
to number nine.
NORMAN CARRON: And the last.
ARTHUR SAWCHUK: The last one.
NORMAN CARRON: Oh, I think I have a ten. It is proposed that Manulife
Financial amend it's bylaw in order to implement a cumulative voting
mechanisms for electing members of the Board of Directors. This is a
whole proposal, and in some place we reach our objective. Under this
[niche of] selection, shareholders are entitled to as many votes as
the number of share they hold multiplied by the number of Directors
to be elected.
These votes can then be exercised in favor of one single candidate or
all candidates as the shareholder wishes. The cumulative vote is a
provision of Canadian legislation to give preference to the wish of
minority shareholders in the process of electing a corporation
director. A cumulative vote is a mean to ensuring that minority
shareholder play their role to the fullest.
This proposal doesn't bring judgment to bear on the openness of
management or the Board of Directors on shareholders concerns, but to
essentially affirm the principle that the members of the Board must
represent both majority and minority shareholders. Thank you, Mr.
ARTHUR SAWCHUK: Thank you, Mr. Carron.
NORMAN CARRON: And have a nice meeting.
ARTHUR SAWCHUK: And thank you for your nice thoughtful way of
presenting your package. Would you proceed to vote on number nine?
Hopefully that will be done quickly and I can declare the voting on
the nine now closed and the scrutineers I would ask them to pick up,
collect, the ballots for voting on the shareholder proposals.
Now, while we are waiting for the results of all the ballots, I think
we will move on to the next item of business. At this point, I would
like to introduce the President and the Chief Executive Officer,
Dominic D'Alessandro. Dominic will deliver the President's address. I
would ask you to, of course, recognize you hold your questions until
the question and answer period at the end of his presentation, and
we'll give you a chance to ask those at that time. Dominic?
DOMINIC D'ALESSANDRO, PRESIDENT & CEO, MANULIFE FINANCIAL
CORPORATION: Well, good morning, ladies and gentlemen. I would like
to add my welcome to those and Mr. Sawchuk's. It is a pleasure to see
you here again today. I always look forward to this event and for the
opportunity to greet so many friends and fellow shareholders.
As our chairman mentioned, it is at this time of year that we
celebrate the achievements of a special group of Manulife people, our
Stars of Excellence, who came from all over our various operations
around the world. Last night we held in their honor a gala that was
attended by our business leaders. It was a wonderful evening. I can't
tell you how proud and enthusiastic everyone is and how good we feel
about our achievements and about our prospects going forward.
We had a very strong year in 2007 as revenues reached record levels.
Assets remained at an extraordinarily high quality and operating
costs were kept under good control. In 2007, shareholders earnings
amounted to $4.3 billion, a new record for us. Fully diluted earnings
per share were $2.78, an increase of 11% over 2006.
Return on shareholders equity increased to a record 18.4%
substantially exceeding our target of 16%. These results were fueled
by record sales in virtually every line of business across the
Company. New business embedded value a measure of future
profitability of the business written during the year was also up
very sharply to $2.2 billion, an increase of 18% over the prior year.
This strong performance was achieved in spite of the adverse affect
of the weakening U.S. dollar, which reduced earnings by $227 million,
and I want to emphasize without any relaxation of our very
disciplined reserving practices.
The diversified nature of our company, combined with a prudent risk
management framework enabled Manulife to successfully weather a
number of significant challenges, which apart from currency included
volatile equity markets, adverse interest rate movements and the much
publicized subprime crisis, about which I will say more later in my
In 2007, dividends paid to common shareholders totaled $1.3 billion
and on a per share basis increased 21% over the prior year. We also
repurchased more than 56 million common shares last year at an
aggregate cost of $2.2 billion. In total, $3.5 billion of capital was
returned to common shareholders or more than 80% of our net income.
I'd like to say a few words about each of our operating divisions
beginning with Canada. Our Canadian division enjoyed yet another
extremely successful year as both our wealth management business and
insurance business reported record sales. Net income from the
Canadian division was $1.1 billion, an increase of 12% over 2006.
The focus on innovation and distribution excellence which are
features of all of Manulife's businesses everywhere in the world was
again very much in evidence in Canada. A particular success was the
launch of [Income Plus] an investment product that provides
predictable, sustainable income for life and which was expected to
appeal to the very large baby boomer generation segment of the
Acceptance of this product has been exceptional. The sales of more
than $3 billion last year, this guaranteed minimum withdrawal benefit
product was the first of it's kind in the Canadian marketplace and
has been recognized with a number of industry awards. Another
highlight was the acquisition in late August of Berkshire TWC
Financial Group which effectively doubles the size of our Canadian
advisor base, and which we expect will allow us to grow our mutual
fund and other savings businesses here.
Also encouraging is the performance of Manulife Bank which continued
to attract a large number of new clients to it's innovative Manulife
One Mortgage Account and it's competitive deposit offerings. The
banks surpassed a milestone of $10 billion of assets during the year,
and it expects to continue to grow at a good pace.
The group pensions businesses also performed well with new sales
increasing by 120% over the prior year. The group benefits business
also enjoyed a banner year, highlighted by the largest sale in
Manulife's history and the largest in the industry in the last ten
years. Group Benefits is now the leading provider in Canada and has a
market share of more than 23%.
Finally, in Canada, our very important individual life insurance
business achieved record results in 2007, a sales increase by 15%.
I'm very pleased at how this business has focused so successfully on
service and operational excellence to drive it's strong results. In
the United States, for most of our business operates under the John
Hancock name, our exceptional distribution capability and strong
product focus continue to drive impressive results.
Our U.S. division contributed almost $1.9 billion to consolidated
earnings in 2007. In 2006, we reported that our U.S. Life business
emerged as the leading provider of individual life insurance in the
U.S. marketplace. Through the launch of ten new products and ongoing
service enhancements, this business has maintained it's number one
market share position and once again produced record sales in 2007,
up 15% over the prior year.
Similarly, our long-term care business also had record sales with
success in the large group market propelling this unit to a 24%
increase over 2006. U.S. wealth management also experienced a strong
year despite challenging equity markets. Perhaps most notable was the
performance of valuable annuities, which reported sales of $10.8
billion, an impressive 18% increase over the previous year. These
robust results reflect the popularity of our recently enhanced
guaranteed minimum withdrawal benefit product.
Our U.S. Group Pension business remains a strong performer with sales
exceeding $5 billion for the first time. Amid 2007, U.S. Group
pensions also surpassed $50 billion in funds under management,
underscoring our continued leadership in this segment of the market.
U.S. fixed products continue to make an important contribution to our
earnings, however, the continuing low interest rate environment makes
it difficult to generate an acceptable level of profitability on new
fixed-rate business. And accordingly, because of scheduled
maturities, we expect that our funds under management in this segment
which stood at $38 billion at the end of 2007 will continue to
decline modestly in the periods ahead.
We are pleased with the position of our U.S. division and are
particularly encouraged by the success it is having in expanding it's
already formidable distribution capabilities. A number of new
third-party distribution agreements were concluded during the year,
including the very promising Edward Jones agreement which went live
early in 2008. As well, John Hancock Financial Network already a
strong distribution channel is growing it's agent base for the first
time in several years.
Moving to Asia and Japan, our Asia and Japan division is well
diversified by product offering, geography and increasingly by
distribution channel. We have operations across ten countries and
territories and in many markets we enjoy a leading position. In 2007,
each of our operating units performed well, and altogether the Asia
and Japan division produced record earnings last year of $858
million, up by 17% from the $734 million in the prior year.
Our distribution capability in the region was noticeably expanded
during the year as our professionally trained agency force grew by
15% to 28,000, and a number of new distribution agreements with local
financial institutions were established. As well, we continue to
leverage our valuable annuity expertise in Hong Kong, Singapore and
Taiwan, introducing the first guaranteed minimum withdrawal benefit
products in each of these markets.
Because of time constraints, I can't go into a detailed review of
each of our operations in the region. However, I would mention that
our important operation in Hong Kong, where we do business with more
than 1.4 million customers, continues to do very well and is rapidly
growing an important savings business to compliment it's large life
In Japan, we continue to enjoy success with our valuable annuity
offerings and have added a number of new distribution partners for
this attractive product. In China, we continue to move quickly to
establish a broad footprint in that important market. During 2007, we
received a number of new licenses and now have operations in 30
cities, up from 17 a year ago. It is gratifying that our company's
leadership and professionalism in Asia is being acknowledged.
Manulife was named the life insurance company of the year by the Asia
review awards and was ranked fourth by Fortune magazine in the their
greater China survey of top companies for leaders. Looking briefly at
reinsurance, our reinsurance division remains the leader in the life
retrocession provider in North America and continues to provide
property catastrophe and aviation coverage on a selective basis to
As well, this division offers international employment benefit
management services to multi-national corporations. The division had
a good year in 2007 and was nicely profitable with earnings of $263
million. Particularly pleasing was that for the second consecutive
year, there were no significant claims from the property and casualty
Investments. As I noted previously, I am happy to report that our
company's long-standing philosophy of financial discipline and
rigorous risk management ensure that we have avoided the problems
arising from subprime loans, third party asset backed commercial
paper, monoline insurance and other exposures that have afflicted so
many other financial services companies.
Using a disciplined approach to building our asset base and it's
blend of asset types, we have managed to keep our portfolio well
diversified and of exceptionally high quality. Our investment
division experienced another excellent year producing healthy returns
across all assets, generated $10.3 billion of investment income and
performing well against industry benchmarks.
On an exchange-neutral basis, assets managed for external clients
increased by 11%, driven by growth in retail and institutional
mandates. Alternate asset classes performed exceptionally well in
2007 with notable strength in real estate, agriculture and timber.
Since the time of the John Hancock merger, our bond stock quality has
steadily improved. Credit provisions were well below plan again this
year and the Company's general account maintained a very strong
credit quality with 96% of it's bond portfolio at investment grade or
Now looking at the first quarter of 2008, earlier this morning we
announced that our earnings for the first quarter of 2008 were $869
million, which is down from the $986 million reported in the first
quarter of last year. The decrease in earnings is largely
attributable to the sharp decline in equity markets that occurred in
the U.S., in Hong Kong and in Japan since the beginning of 2008.
These markets have declined by 10% in the U.S. and 18% in both Japan
and Hong Kong.
Our actuarial practices require us to assume that these declines are
permanent and adjust our reserves for future benefits accordingly. In
the quarter, an after-tax charge of $265 million was recorded. Now I
want to clarify that this is a non-cash charge, which in the absence
of further market declines will not recur in future quarters.
Should the markets recover, the reserve adjustment will be reversed.
All other aspects of the business remain highly satisfactory. Sales
continued their positive momentum from last year and we're up nicely
in the quarter while our operating costs and investment returns
generally were at expected levels.
I will be reviewing the details of our first quarter results with
investments analysts later this afternoon and invite any of you who
are interested to join the call. Looking forward, notwithstanding
that we've gotten off to a somewhat soft first quarter, I remain
optimistic of our prospects. While the coming quarters may well bring
additional market volatility and uncertainty, I believe they also
provide important opportunities which Manulife is well positioned to
take advantage of.
And despite widespread concern about a continued downturn in the U.S.
economy, our company's operations in Asia with it's robust markets
offer countervailing opportunities. And again, I want to mention that
our diverse asset portfolio and very, very stable funding base and
strong liquidity position are all such that we can expect to do well
no matter what and how turbulent the financial markets may get.
Going forward, we will continue to take full advantage of important
demographic shifts, such as the aging baby boomer generation and the
extended life spans. These trends require creative, sophisticated
products that can respond to the needs of the population whose health
and longevity concerns are intersecting with a desire for wealth
Manulife has shown that it can provide product leadership in this new
era. We intend to grow our businesses in both mature and emerging
markets backed by the finest distribution network and suite of
customer tailored offerings in the industry. This is a recipe for
success that has served us very well.
It is also worth remembering that Manulife remains one of only two
publicly traded life insurance companies in the world, whose
insurance subsidiaries hold Standard [Mays] highest triple A rating.
In 2007, we are also upgraded by Moody's investor services to a
double A1 rating, which is further validation of the quality of our
financial and risk management processes.
Undoubtedly, our robust financial position will stand us in good
stead. I'm also very pleased that once again, Manulife rated first
overall in the Globe and Mails annual survey of corporate governance.
We have led this survey in four of the last six years. These ratings
too recognize our stability and discipline, both integral to our work
today and in the future.
I'd like now to comment on the extraordinary difficulties that
currently exist in the financial markets around the world. I will
admit that I am stunned at the extent of the problems and at the
damage that has been done, not just to many of the largest and most
sophisticated financial institutions in the world, but also to
millions of investors and homeowners.
The losses of nearly $300 billion reported to date are simply
staggering, and if the latest forecasts are to be believed there are
significantly more losses yet to come. I've done a lot of reading
about the subject to try to get an understanding of how this
situation could have gotten as bad as it is. Every day there are new
revelations about what went wrong. Not all of what happened is easy
Until five or six years ago, subprime lending was a small and
relatively unimportant of the U.S. lending market. However, because
of low interest rates and the steady price appreciation of
residential real estate, more Americans than ever wanted to become
homeowners. Mortgage lending exploded, facilitated by ridiculously
loose lending standards, and the growth and demand for securitized
Securitized subprime mortgages rose from roughly $60 billion per year
in the late 90's to over $200 billion in 2003, and an even more
phenomenal $450 billion in each of 2005 and 2006. In hindsight, it is
obvious that there was a lethal self-reinforcing cycle of lending and
price gains taking place. To meet the mortgage demands, investment
banks and others developed an ever-more exotic array of financial
instruments and funding vehicles.
Everyone got in on the act, rating agencies used would prove to be
less than robust models as the basis for assigning investment grade
risks through the subprime borrowings. Monoline insurers for a small
fee provided credit guarantees, which made the loans even more
With the high ratings and the monoline guarantees in place, the
subprime assets were purchased by investors from around the world,
including as has been well publicized many small and far-flung
European banks. As well, some of the banks distributing these
products chose to create special investment vehicles to hold the
Under the rules, moving the assets into conduits allowed the banks to
upfront a large portion of the future income, while concurrently
reducing the amount of capital they needed to hold. The SIBs and
Congress had very, very little capital, and made extensive use of
money market and other short-term deposits to fund those assets.
At the end of the process, the world's financial system had, in
addition to the credit risk inherit ant in the subprime loans been
infected with unprecedented level of leverage and liquidity risk. Of
course, everyone along the way collected fees; the mortgage brokers,
the appraisers, the packagers, the bankers, the distributors, the
rating agencies, the monolines and the man on the street was able to
own a home.
It was a win, win, win, win. Until, that is, housing prices stopped
rising and actually started to decline across the entire country, a
development that none of the sophisticated financial models upon
which everything rested had anticipated. As housing prices began to
decline, the ultimate lenders to the subprime borrowers couldn't be
repaid and the perfect storm was unleashed leading to the enormous
losses referred to earlier.
Now, on a positive note, I'm pleased that although not completely
immune, the situation in Canada is a far less troubled one. Largely
because our mortgage lending practices are far more disciplined and
because the securitization process was not as aggressively developed
as in the United States. To their great credit, the authorities
around the world are acting boldly and decisively to contain the
Central banks are providing liquidity to the markets on a massive
scale. The unprecedented intervention in the Bear Stearns affair was
both timely and necessary. The banking system is rapidly deleveraging
as institutions are successfully replenishing deleted capital levels
and problem assets are being written off at a rapid pace. So, while
much remains to be done and many sectors of the markets remain
stressed, I am hopeful that the worst is behind us.
As a result of the global financial crisis, we can expect that a
number of far-reaching and profound changes will be made to the
regulations governing how our financial institutions operate.
Already, there are many lessons that can be learned from the sad
experience. Here are a few that I think are particularly important
and which I hope will shape the actions of policy makers going
Policy makers ought to rid themselves, once and for all, of the
attitude that the market is always right. It is this attitude which
events have shown to be naive and dangerous, which more than anything
else, is at the heart of the current crisis.
It should be obvious, that sound regulation is necessary if markets
are to operate properly that such regulations should be harmonized
and consistent across geographies and markets goes without saying.
The challenge, of course, will be to keep regulation intelligent. We
don't need another Sarbanes 404 for example, but we do need rules of
As a matter of some urgency, policy makers should carefully examine
the operations of hedge funds and the derivatives markets in order to
assess the extent to which they might pose systemic risk. Based on
what has been reported about their size, complexity and use of
leverage, it would appear that they do. And if so, than these
activities ought to be subjected to the same regulatory oversight as
would apply to more traditional financial pursuits.
Questions could also usefully be asked as to whether or not recent
innovations in the financial markets are proceeding in a reckless and
uncontrolled manner. Again, it is now obvious that there are many of
the innovative instruments at the center of the current crisis that
are fiendishly complex, not properly understood by anyone and
certainly not well controlled by any of the risk management systems
in effect as what we think of as the world's largest and most
sophisticated financial institutions.
I, for one, do not believe that a slowdown in the pace of innovation
to allow for a more comprehensive assessment of risk would be a bad
thing. It is also my opinion that we desperately need to move to a
principal based system of financial reporting. Rules-based systems
will always be gamed by the clever.
However, I question whether the wholesale adoption of fair-value
accounting as currently imposed by the standard setter is a step in
the right direction. Time will show, I think, that this global
financial crisis was greatly exacerbated by the accounting practices
requiring that assets be written down to reflect current pricing
levels regardless of the highly unsettled conditions that prevail.
Increasingly accounting practices are being mandated, which give rise
to an exponential increase in the volatility of reported results, a
volatility that most often has little to do with the operating
fundamentals of the business. The many adverse consequences of
adopting reporting standards that greatly exaggerate performance,
either positively or negatively seem to be of no concern to the rule
For those organizations who have the intention and demonstrative
capacity to hold assets for the long-term or to maturity, fair value
is a useful measure, useful as supplementary disclosure. It is much
less meaningful when periodic changes in fair values are co-mingled
with operating results. Whatever happened to the going concern
principal? Now, I suggest would be a good time to pause and reexamine
if the move to fair value accounting does in fact produce improved
financial reporting model we all hope for.
Now these are some suggestions, I'm sure they will not find favor
with everyone, but I felt it necessary to put them forward anyway. As
I said, there will be profound and far-reaching changes that will be
enacting as a result of the subprime crisis and I look forward to
participating in the debate.
Ladies and gentlemen, before I conclude today I want to acknowledge
the contribution of two individuals who've been instrumental in
helping our company develop into the industry leader we are today.
The first is Mr. Allister Graham, who has been a Director since 1996
when he joined the Board following our merger with North American
Allister contributed greatly in helping us to affect a smooth
integration at that time. And in particular, his council was useful
to me when following the merger we had to make important decisions
about a number of North American Life's activities, which were new to
I'm so glad I listened then to his many, many subsequent
interventions over the years. On behalf of my management team,
Allister, thank you very much for your support and steady confidence
that you've always shown to us. We appreciate it.
The second departure that will take place later this year is that of
our Chairman, Arthur Sawchuk. I can't tell you how grateful I am to
have had Arthur to council me on so, so many issues over the past ten
years. He's provided leadership to me and to my entire management
team and I can say to the entire Board of Directors.
It is Arthur that is most responsible for the wide recognition that
Manulife has received for the quality of it's governance practices
that we are all so proud of, and it is Arthur who so skillfully, so
skillfully managed my moods and helped me deal with all of the many,
many stresses that are an inevitable part of running a large company.
Allister, would you please stand? Ladies and gentlemen, could you
give Allister and Arthur a big round of applause?
As has been announced, Arthur will be succeeded as Chair by Dr. Gail
Cook-Bennett later this year. Gail knows our company very, very well
having joined as a Director now just out of college. She's been a
Director for 30 years and we look forward to working with her. Ladies
and gentlemen, there is one more final announcement I'd like to make
At our next annual meeting in 2009, I will be stepping down as
President and CEO of our fine company, a position that I will have
held for more than 15 exciting and eventful years. The Board and I
have been actively working on the succession process for a few years
now and it is anticipated that the CEO designate will be selected by
Now, needless to say, it's been the greatest and privilege and honor
of my life to have been given the opportunity to lead this great
company for so many years and to work with so many exceptional men
and women in building what is surely, surely the finest life
insurance company in the world.
I want to briefly acknowledge everyone's support today and I expect
that there will be other opportunities to express my appreciation
more fulsomely in the coming year. I want to conclude my address by
thanking the thousands of employees, agents and business partners
around the world for their commitment and confidence in our company.
They are the reason why we've performed so well for so long and why
we are optimistic for our future.
Thank you, ladies and gentlemen.
ARTHUR SAWCHUK: I now have the reports of the scrutineers on the
election of Directors of Manulife Financial Corporation. All director
nominees received at least 84% of the vote cast in favor of them.
Therefore, all 15 director nominees were elected as Directors of
Manulife Financial Corporation. On the election of policyholders
Directors of Manufacturers Life, all policyholder director nominees
received at least 95% of the votes cast, therefore, all six
policyholder Directors were elected as policyholders Directors of
On the appointment of auditors, Ernst and Young received 99% of the
votes cast in favor. Therefore, I declare Ernst and Young LLP
appointed as the auditors of Manulife Financial and Manufacturers
All of the shareholders proposals received at least 11% for and Mr.
Carron, if I might comment, much of the proposals have, in my
opinion, have some good and solid intent. The differences may very
well be in the way that we implement them. You know, that reminded me
we used to have an elderly gentlemen, I think he was a retired
employee, he used to stand over here and ask a question of me in my
And the question at that time, for example, was how come there are no
women sitting at this table? And I would just to like to comment that
when I step down next year, there will be 40% women at this table.
So, you think progress, but slightly different pace than perhaps
you'd intended. At any rate, the scrutineers report in final form,
will be recorded in the minutes of this meeting and will be posted on
our website shortly after the meeting.
Now this concludes the official business of this meeting and I
declare this meeting terminated. But we would now like to open the
floor to your questions about the Company's business. Now when you
make your comments or ask a question, I ask that you give your name
and state whether you are a shareholder, a policyholder or a proxy
Please direct your questions to me as the Chairman. In the interest
of giving others the opportunity to ask questions, please keep your
comments to not more than three minutes and ask only one question
each time you are recognized. We have a microphone I think right on
this aisle and one over there and I'll probably alternate between
them to be sure we do that.
So, we're open for questions.
ARTHUR SAWCHUK: Can I take him because he was up first? Thank you.
BILL DAVIS, SHAREHOLDER: Mr. Chairman, my name's [Bill Davis], I'm a
shareholder and a proxy holder. I want to say at the very beginning,
I think you're ruling out a voter a question from a shareholder
during the proposals may be in order, but it's certainly not common
practice at a lot of other shareholder meetings I've attended. I was
a little surprised at that, and I may be wrong, but I find it not
Anyway, the question that I had, I wanted to say in regard to
Shareholder Proposals one and two, that I found the argumentation of
the, however, of those proposals quite persuasive and I was
personally inclined to vote for them.
And then I look at the response from the corporation and it says we
can't do this because it's against the law. Now, hiding behind
legality is okay I guess, but I would like to think that the
Corporation gave a little bit of thought to; Does the law make sense?
Because the proposal had some value in it, and the gentlemen who
presented it suggested that the Corporation might take a look at how
we can work around the law or change the law or take some steps to
implement something that makes good common sense. So my dilemma as a
shareholder was, I couldn't vote against the proposal and yet I felt
uneasy voting for something that would be illegal. So I abstained.
Now, my question is that there is no particular instruction in the
proxy circular, how does one abstain? And I got into this at one of
the bank meetings and talked with the corporate secretary afterward
and I find that it can be done, but it's not clear. So there may be
other shareholders who would have abstained who were faced with that
same dilemma didn't know what to do. And maybe what I did wasn't
So I would like to thought given to that and I want to say if you
hold American U.S. stocks, you will find on shareholder proposals,
the option of abstention is right there, you just pick the box. So, I
don't see why we can't have that made more simple for a shareholder
facing that kind of a quandary and maybe the corporate secretary will
want to comment to that. I think it's a legitimate question and maybe
one that the corporations need to look at together.
ARTHUR SAWCHUK: Let me just make one quick comment before I turn it
over to the secretary and legal counsel perhaps. We do have a
struggle with the balloting question and there's -- we'll always
weigh the issue of how to keep it simple rather than complicated. The
minute we start to get it complicated we get complaints about
complexity from shareholders, so life is never an easy solution. But,
was somebody from secretary and legal add some comments?
UNIDENTIFIED SPEAKER: You raise good questions, in terms of the
legality unfortunately the law is what the law is in terms of this
area. Dividends are required to be paid to shareholders equally for
example and unless you start to get into a dual-class structure, it's
-- which would be inappropriate for this company, we just can't go
along with the terms of either of the proposals.
On a second issue with respect to abstention, there's always the
opportunity not to vote, and that in my view is deemed to be an
abstention. The issue in the States is somewhat different because the
law there and the way proxies are set up actually does have a section
for abstention, but that's something that we can look at in the
future as to whether or not we can provide an additional box.
BILL DAVIS: I'd appreciate that.
ARTHUR SAWCHUK: Yes, quite, quite. A lot of Mr. Carron's things, in a
sense I had a feeling that they're almost an appeal to the regulatory
bodies than they are to an individual corporation, while we may sort
of sympathize with you, it's out of our hands. I think that's what we
said. Thank you. Next question.
NICHOL MCNICHOL, SHAREHOLDER: Mr. Chairman, my name is [Nichol
McNichol], I'm a shareholder. I would like to first to congratulate
the management and the Board for steering the Company through very
difficult waters in difficult times. But I'm interested in just what
direction is being given to the business in India, because I didn't
hear anything about India, and that's obviously a very important part
of the world that we didn't seem to talk much about today.
ARTHUR SAWCHUK: Well, I'm going to let Dominic answer that one.
DOMINIC D'ALESSANDRO: Yes. No, thanks, it's a good question. We think
about India all the time and it's very, very simple. Our issue is
that our resources in terms of management are fully engaged in
rapidly developing our already substantial operations in Asia as you
may remember, China, Vietnam, Malaysia, Thailand, Japan.
These are new initiatives over the last handful of years and so we've
got a lot of talent committed to developing those markets. The other
reason for our hesitancy or to move quicker to go into India is the
fact that under the regulation of the country of India you cannot own
more than 26% of an investee life insurance financial institution and
our experience we have a few joint ventures only too were we own 50%,
but we find ourselves doing 100% of the work.
And so, we were very reluctant to go into a situation where we would
own 26% and probably still have to do 100% of the work. So, we expect
as India has been saying that it would that it would liberalize it's
investment parameters so as to allow greater participation and
greater ownership and when they do, we'll reexamine our posture.
ARTHUR SAWCHUK: Thank you. Yes?
RON CROW, POLICYHOLDER: Good afternoon, Mr. Chairman, Mr.
D'Alessandro, Board of Directors, Shareholders and Policyholders of
Manulife Financial. I bid you good day. My name is [Ron Crow], I am a
policyholder of Manulife and I do have a comment to make for the
Board and for the president. There has been much mention today of
regulatory oversight, including Manulife's award for outstanding
As the CEO and Board of Directors of Manulife, the duty lies to them
that the Company conducts itself in good faith and in accordance with
good corporate governance and accordance with those obligations
imposed upon it by both provincial and federal statute, including the
Insurance Companies Act and the Office of the Superintendent of
Since it's demutualization by the federal government 1999, Manulife
Financial has made use of two part settlement contracts at mandatory
mediation which program is coincidentally enacted by the provincial
legislatures also in 1999.
After allowing for the demutualization of Canadian Insurance
companies, it was noted that prior to that time, that is prior to
1999, Manulife Financial sole responsibility was to it's
policyholders, specifically to affect and insure the fair and timely
settlement of bona fide claims.
For after all, it's from these policyholders whose rightful
expectation to the fair and timely settlement of claims is the basis
for their being policyholders of Manulife and from whom Manulife
received an excess of $11,000 million in premiums paid in fiscal
2006. It is from these premiums paid in good faith by it's
policyholders that Manulife Financial has been able to expand and
consolidate it's global, corporate investment portfolio.
Every company listed on the [TSC], including Manulife has an
obligation to full, true and timely disclosure of all relevant and
material facts which are or could reasonably seem to be influential
on the market value of it's securities. In particular, so that all
investors are privy to the same facts, so that no officer or director
can knowingly and improperly benefit from such knowledge, in order to
maintain the integrity, truth and transparency; not only as to the
securities of Manulife, but to the securities markets as a whole.
Disclosures required to vending material concern pursuant to national
policy instrument and P51-201, in addition to the statutory
requirements for disclosure under section 75 of the Ontario's
Securities Act, the regulations there under, as well as under the
Ontario's Securities Commission in accordance with policy 7-1. Such
disclosure includes the litigation which may significantly impact
Manulife's value share price.
Manulife Financial has a duty to disclose any relevant or material
litigation irrespective if whether it is before the courts or is
already been decided on the grounds that it poses a risk to Company
moving forward in respect to it's potential quantum liability and
loss of public good faith and confidence in the Company.
Presently, Manulife trades at a significant excess to it's peer group
of priced above value, being approximately 2.5 times. It is
conceivable should the allegations in respect of the effort mentioned
action be proved in court that Manulife did be forced into
dissolution, and it's policy and business lines forcibly liquidated
at close to half of it's present book value, that would be US$16 to
US$17 per share. Presumably, your management and it's Board has
incorrectly judged the action to not be material, but both they and
the Manulife's share price will be held to account.
There's presently a $5 billion civil suit against Manulife [et al]
presently before the Canadian courts which involves substantive and
particularized core allegations that have a non-zero probability of
resulting in substantial cost to and penalties imposed on the
ARTHUR SAWCHUK: Mr. Crow, could I ask are you getting close to asking
RON CROW: Yes, sir. One-and-half paragraphs.
ARTHUR SAWCHUK: How many?
RON CROW: 1.5 paragraphs.
ARTHUR SAWCHUK: Is that really going to add anything in question?
RON CROW: Yes, sir it will. While it's Chief Executive Officer and
Board of Directors as named defendants are aware of this matter, they
have failed or refused to disclose this fact to other shareholders
whose holdings in the Company may be materially affected by the
Manulife has a duty to disclose any relevant or material litigation
irrespective of whether it's now before the courts or has already
been decided. On the grounds that pose a risk to the Company moving
forward in respect to it's potential quantum liability and loss of
public good faith and confidence in the Company.
In closing, based on the significance of the quantum of the suit, and
the demonstrative provability of it's core allegations by way of
direct evidence, and the Company's admission of the truth of the
court documents involved, namely a minutes of settlement and full and
final release, why is Manulife refused or failed in it's duty to
disclose this matter to it's shareholders at large or in good faith
taken necessary steps to affect a reasonable resolution to this
matter? And why does Manulife continue to make use of two-part
settlement contracts at mediation?
ARTHUR SAWCHUK: I don't understand the question well enough to answer
it. Would somebody in staff do that?
UNIDENTIFIED SPEAKER: Well, I guess in respect to the question of why
don't we make disclosure, we disclose all -- I think you read
correctly that the regulations require that we make disclosure of
material litigation. Our judgment that the litigation in question
here is not material, obviously, or we would have disclosed it. We
come to that conclusion not capriciously but with the best legal
advice that we can avail ourselves of and best securities
practitioners and a concurrence of others who are familiar with
matters like this.
With regard to the two-part form. I don't know what that means, maybe
I should, but I just don't know.
RON CROW: It's an important form in that pursuant to mandatory
mediation, under rule 24.1 of the Ontario Rules of Civil Procedure,
any time there's a claim for long-term disability benefits, the
insurance company, Manulife, attends to which [school] the mandatory
mediation along with the claimant. Manulife, at mediation, is not
required to provide to the claimant the contract in it's entirety.
Manulife uses two-part settlement contracts.
In my case, the minutes of settlement, and as a standard practice of
full and final relief. In my case, the material terms of the
settlement agreement as expressed by Manulife in the minutes of
settlement were fundamentally and materially altered unilaterally by
Manulife subsequent to the mediation. It's my prejudice and it's my
sole [in-exclusive] prejudice.
I have now gone through this, in all honesty, for three years.
Everyone is aware of this case, the case records have been sealed by
the court. The Ontario Superior Court has taken actions to kill the
case and to kill my right to trial and that's at the behest of
Manulife. That is improper, it is incorrect --
ARTHUR SAWCHUK: I'm very sympathetic and sorry for your problems. But
I think that the audience ought to understand that we are -- this
matter is being reviewed and being litigated in front of the courts,
and I really don't know that I should add anything to the discussion
today. I think you've made your point and we accept that you've got a
difference of opinion and a point of view on this matter which is
very important to you.
RON CROW: Thank you for the time and in closing I would just simply
state the matter is now dead in Ontario Superior Court, it is
proceeding in the Federal Court of Appeal, and the reason it's taken
so long is because Manulife, through it's own endeavors or of a
different sort, has had the full and uncompromising complicity of the
Canadian courts in this matter, which will be addressed to the public
at large and exposed to the widest possible scrutiny. Thank you.
ARTHUR SAWCHUK: Thank you, Mr. Crow, you've had a good chance to make
your point. Next? I take it there are no more. Well, folks. Thank you
for another wonderful year, and I can't say I'll see you next year.
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