With one year to go as chief executive officer of Manulife Financial Corp., Dominic D'Alessandro says he has no burning desire to do a final takeover, but he is still kicking himself over one deal he couldn't pull off.
The 61-year-old announced yesterday that he will step down as CEO at the company's annual meeting next year. That will be part of a new era for Manulife, whose chairman, Arthur Sawchuk, is scheduled to be replaced by Gail Cook-Bennett, the first woman to head the board in the company's 121-year history.
A new CEO will be named later this year, and there are a few obvious candidates: John DesPrez, who runs the North American businesses; Donald Guloien, the chief investment officer; and Peter Rubenovitch, the chief financial officer.
Mr. D'Alessandro, who has been at the helm for almost 15 years, wants to remain involved in the business world - maybe as a director at other companies - to keep stimulated, while also doing some pro bono work and concentrating on his golf score, he said. He's leaving to spend time with his wife, Pearl, and "decompress" from a 12-hour-a-day schedule.
He's got one big regret about a transaction that ultimately did not take place, but he refuses to talk about it. "I think it would've been a wonderful thing for everybody, but I wasn't able to make it happen," he told reporters after the company's annual meeting in Toronto.
He declined to elaborate, or say whether the transaction he was referring to was his desire, more than five years ago, to merge with Canadian Imperial Bank of Commerce.
Looking ahead, the CEO said he doesn't feel pressure to pull off one final big acquisition just for the sake of doing another deal, although he would look at any opportunity.
And, like a number of top-ranking financial executives, he admits to being "stunned" by the extent of the current financial crisis.
Manulife's first-quarter earnings disappointed analysts as the company took a $265-million charge because of weak stock markets in the U.S. and Asia. Manulife is increasingly exposed to equity markets through its growing variable annuity business, and because the company stopped using reinsurance to offset its exposure a few years ago. It has been working on an internal hedging program recently.
Mark-to-market accounting rules have compounded the issue by introducing a level of volatility that didn't exist in financial reporting a few years ago, Mr. D'Alessandro said. Rules require companies to change the value of their investments on their income statement each quarter, even if there's no plan to sell them.
If equity markets hadn't dropped, it would have been "a blowout quarter," he said.
But investors drove Manulife's stock down nearly 5 per cent yesterday, and were also disappointed that the insurer decided to conserve cash by not raising its dividend. Mr. D'Alessandro suggested that was due to the fear of the unknown as the financial crisis continues to play out.
"At the time we had a review of this and a discussion it was felt that given the uncertainties in the marketplace - I mean people are reporting tens of billions of losses every day - that maybe we should just defer decision on the dividend," he told analysts on a conference call. "Our concern is not so much what we have on our books or what we know about, but it's what we don't know about. If there were to be some unravelling of some kind, where would it stop?"
Manulife has not given up on its mid-term target of 15-per-cent profit growth, he added. "We're not prepared to throw in the towel on this year." Based on where stock markets are at the moment, the firm could already recover roughly half the charge it took in the first quarter, executives suggested.
Mr. D'Alessandro used the annual meeting to offer advice to policy makers and regulators coping with the financial crisis. But the outspoken CEO suggested he has no desire to step into their shoes once he retires. "I offer these thoughts to be provoking and to discuss," he said during an interview with Business News Network.
His name has become synonymous with the company he runs, and he can rattle off a series of accomplishments ranging from the insurer's groundbreaking push into Vietnam to the transformational 2003 takeover of Boston-based John Hancock Financial Services. But Mr. D'Alessandro played down the importance of his exit yesterday.
"They replace even the Pope," he said. "Life goes on."
Manulife (MFC)
Close: $36.90, down $1.97
Manulife Financial Corp.
| Q1 | 2008 | 2007 |
| Profit | $869-million | $986-million |
| EPS | 57¢ | 63¢ |
| Revenue | $7.98-billion | $8.63-billion |
Source: company
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