Sitting in his Toronto office on Bloor Street, overlooking the treetops of the Rosedale ravine, Dominic D'Alessandro picked up the phone and, one by one, placed direct calls to the chief executives of each of the nation's biggest banks.
It was a Friday in late October, and the chief executive of Manulife Financial Corp. needed help. North America's biggest life insurer was recalculating its capital ratios every day, and plunging stock markets were dragging them down. Mr. D'Alessandro realized his company - the one he had personally turned into a global giant - would soon be forced to sock away billions of dollars to shore itself up. He couldn't get by without the big banks that he had so often criticized.
In the previous few days, Mr. D'Alessandro had been working another angle, trying to persuade Julie Dickson, who heads the country's banking and insurance regulator, to change the rules that were requiring Manulife to set aside massive amounts of money for every downtick in the stock market.
Mr. D'Alessandro laid out his case for her. The capital rules are too onerous, he said. They oblige Manulife to build a huge financial cushion, enough to carry it through a catastrophic event and a scenario where markets don't recover for a decade. But that cushion was straining the company's finances, he argued. It didn't make sense. If stock markets recovered, the cushion would become unnecessary.
For someone like Mr. D'Alessandro, who is known for calling the shots rather than dodging them, it was an unusual position. This is the same man who graduated from high school at age 14, ran a bank by age 41, and was the architect of a dramatic ascension that had made him a living legend in Canadian financial circles. The company's funds under management have more than tripled since 1999, when Mr. D'Alessandro took the firm public, to $385.3-billion, and it now has more than 24,000 employees serving customers in 19 countries and territories.
"Of course I would have preferred a little less adventure and a little less challenge in my final months with the company. Of course," he says, referring to his planned retirement next spring.
"I don't think I'm alone in saying I didn't foresee an event of this severity. I love it when people say 'why didn't your forecast it? Aren't you paid to know these things?' Well, I know a lot of things, but I didn't know that."
The fall of 2008 is now littered with stories of how American and European financial giants were brought to their knees. Canadian politicians crowed about how safe Bay Street seemed by comparison. But for a few tense weeks in October, the dramatic turns inside Manulife showed how vulnerable Canada's most trusted institutions are to the turns of a global market.
As Mr. D'Alessandro made those calls to bank CEOs - and his company's stock plunged from near $35 at Thanksgiving to $24 around Halloween - he was pushing to make sure Manulife was not one of the victims. But he was also on a personal mission - to preserve his own legacy and reputation, with the clock ticking as his 14 years at the helm wind down to an early retirement in May. The plan wasn't just to guide his company through the credit storm, but to put it in a position of strength, to be one of the players expanding while others reeled. Otherwise he risked going out under a cloud.
Blame variable annuities
The rapid collapse of Manulife's good fortunes is easily predictable with hindsight.
The company's beginnings date back to 1887, when an Act of Parliament incorporated The Manufacturers Life Insurance Company and the country's first prime minister, Sir John A. Macdonald, was elected president.
Mr. D'Alessandro took the helm 107 years later. The son of Italian immigrants, he arrived in the country at the age of three and would go on to build a career as a master of the takeover, beginning at Laurentian Bank and later at Manulife. In 2000, six years after Mr. D'Alessandro took over, the firm became the first Canadian life insurer to earn more than $1-billion in one year.
But it wasn't until the $15-billion merger with U.S. life insurer John Hancock Financial Services Inc. in 2004 that Mr. D'Alessandro really succeeded in muscling Manulife onto the global map. That deal made it the fifth-largest life insurer in the world, and raised expectations that Mr. D'Alessandro would deliver a financial performance to take on the biggest and the best.
"At the start of this year, they were one of the, if not the, strongest life insurers globally," says Peter Routledge, vice-president and senior credit officer at Moody's Investors Service.