Change at Top of North America's Largest Insurer
Manulife's New CEO Guloien Inherits Speed Bumps in Meteoric Rise
May 7, 2009
When Donald Guloien took over in May, 2009 as President and CEO of Manulife Financial, North America's largest life insurer, he stepped into the middle of a major hiccup in the company’s decade of remarkable growth.
Under the often-inspired leadership of former CEO Dominic D'Alessandro, Manulife was transformed from a plodding regional Canadian mutual insurance company into a global multi-dimensional financial services powerhouse.
As of 2008, Manulife had revenue of more than $34 billion and assets under management of $376 billion, with 45,000 employees and agents operating in 19 countries and territories.
Impressive History
Manulife has a long and distinguished history. Not many companies can boast that its first president was also the very first prime minister of Canada, Sir John A. Macdonald.
That appointment was the precursor of ‘outside the box’ behavior that D’Alessandro brought to the helm of Manulife when he was appointed CEO in 1994. During D’Alessandro’s watch, Manulife revenues grew from just over $400 million in 1994 to more than $34 billion in 2008.
He also presided over the demutualization of the company, converting it from a mutual life insurance to an investor-owned, publicly-traded stock company, now with more than 1.6 billion shares issued, offering a diverse range of life, health and asset insurance, as well as a growing portfolio of financial services products.
In the 15 years until he retired on May 7, 2009, D’Alessandro presided over the acquisition of numerous regional and national insurance companies around the world, while also growing sales by enhancing the company’s influence and reach by substantially expanding its employees and agents.
One of D’Alessandro’s crowning achievements was the purchase in 2004 of the venerable United States insurer, John Hancock Insurance, founded in 1862, making Manulife the largest life insurance company in North America. With that, and a long and impressive list of achievements, Manulife appeared positioned to weather any economic storm. Then came the 2008 crash.
Growth Stalls
As a result of the global economic meltdown, Manulife experienced a financially bruising 2008, culminating in a fourth quarter loss of $1.87 billion. While the company did complete the year with a modest profit of $790 million, that compares with a profit of almost $5.86 billion for 2007 and $5.3 billion for 2006. This means that in three years, Manulife’s profit has dropped by more than 46 percent.
The company experienced a further loss in the first quarter of 2008 of almost $1.1 billion. This compared with a profit in the same quarter the previous year of almost $870 million. Manulife said in its first quarter announcement the loss was due to further deterioration across all equity markets, particularly in the U.S.
So how does the company intend to turn things around?
New Strategies
First, despite the company’s woes, it still has produced compound annual returns of 11 percent to stockholders during the 10 years since the company’s Initial Public Offering in 1999.
Second, the new President and CEO, Gordon Guloien, told the company’s annual meeting in May of a five-year plan that includes capitalizing on expected industry consolidations. Guloien told stockholders Manulife has the financial resources to pick up quality assets from distressed companies, and evidently is on the hunt.
Third, he told the annual meeting Manulife will further diversify its product offerings to reduce risk, diversity opportunities and fully benefit from the economic recovery he believes is on its way.
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Sources: Globe and Mail; globeinvestor,com; Financial Post; www.stockhouse.com; Manulife Financial websites
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