Manulife CEO Scorns Fund’s Claims as ‘Commercially Absurd’
(Bloomberg) -- Manulife Financial Corp. Chief Executive Officer Roy Gori said a hedge fund’s claim that the firm should be compelled to take unlimited deposits is “commercially absurd.”
Gori used a portion of Manulife’s third-quarter earnings conference call Thursday to address a lawsuit by Mosten Investment LP. The Saskatchewan-based hedge fund sued Manulife two years ago, claiming it should be able to make unlimited deposits into a 1997 life insurance policy with guaranteed rates of at least 4 percent. The lawsuit prompted Muddy Waters to short Manulife’s stock.
Mosten is trying to use the policy “to invest sizable sums that have no connection to the insurance coverage,” Gori said on the call. “We believe strongly that this claim is commercially absurd, because it’s contrary to the purpose of these insurance policies and is inconsistent with the regulatory constraint on insurance companies, which prohibit them from engaging in deposit-taking activities.”
Manulife got help from insurance regulators in Saskatchewan last month, with the Canadian province publishing regulations limiting the amount of premiums a life insurer may receive or accept for deposit in life policies.
“We believe this should accelerate the resolution of the principal litigation matters in our favor,” Gori said. “We remain highly confident that we will ultimately prevail in this matter and that it will not have any material impact in our business operations or our ability to meet obligations to our customers, our employees, vendors and other stakeholders.”
Ronald L. Miller, a lawyer at McDougall Gauley LLP who represents Mosten, didn’t immediately respond to an email seeking comment.
Manulife on Wednesday reported core earnings for the third quarter of C$1.54 billion ($1.18 billion), or 75 cents a share, beating the 67-cent average estimate of 13 analysts in a Bloomberg survey. Results were helped by gains in Manulife’s global wealth and asset management division, the company’s Asia unit and its U.S. business, which benefited from tax reform.
Shares of Manulife jumped as much as 7 percent to C$22.94 in Toronto trading Thursday morning, their biggest intraday gain in two years. The stock is down 13 percent this year.
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