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Manulife CEO Roy Gori is photographed in Toronto on Sept. 27, 2017.Christopher Katsarov/The Globe and Mail

Manulife Financial Corp.’s Roy Gori has subjected the 131-year-old insurer to a steady stream of changes since he took over as chief executive officer nine months ago. On Wednesday, he set out to convince investors that these efforts are adding up to the “transformation” he has promised.

Flanked by his leadership team at an investor conference, Mr. Gori said Canada’s largest insurer by market capitalization is ready for a new chapter in its history. But to show stakeholders how it will turn the page, top executives largely set aside the usual cheerleading of Manulife’s fast-growing money management and Asian operations. Instead, presentations focused on plans to tackle increased competitive pressures, shone a spotlight on unloved old business lines and explained why a new round of cost-cutting will have a greater impact than a similar-sounding effort several years ago.

Manulife is on a mission to future-proof its business against digital upstarts and also boost returns for shareholders who have not always been rewarded for their loyalty in the decade since the financial crisis. That’s when a series of business decisions resulted in warnings from regulators, a dramatic dividend cut and a stock price collapse from which the company has never fully recovered.

“We have been clear in recent years about the importance of growing our high-potential businesses – in particular Asia and global wealth and asset management – to deliver improvements in total shareholder returns. However, we now recognize that addressing our legacy businesses and improving our efficiency are also important drivers in unlocking value,” said chief financial officer Phil Witherington, who, like Mr. Gori, has spent much of his career in Asia.

Mr. Witherington said the “valuation overhang” on the company’s stock is largely caused by less profitable business lines, such as U.S. long-term-care insurance, some variable annuities and segregated funds and other products that are no longer sold, which represent 50 per cent of capital and 40 per cent of earnings.

Manulife has a goal of releasing $5-billion in capital, or about 20 per cent of the equity allocated toward legacy businesses, by 2022 through measures such as reinsurance, sales and managing expenses.

“Our legacy businesses do not generate a sufficient return for our capital – and quite frankly, and quite honestly, this hasn’t been a strong focus for us historically. And as a result we’re trading at a discount to our peers,” Mr. Gori said.

He added that the opacity surrounding what these problem businesses are and what Manulife plans to do about them have contributed to the discount, as has its inability to show the market it is making progress in improving them. Manulife aimed to solve these issues with its presentation.

But change also comes at a price. Efforts announced last week in Canada and the United States to reduce headcount and office space are expected to result in a restructuring charge of $250-million, before tax, in the second quarter of 2018, the company said. When the process is completed in late 2019, the company expects to get annual run-rate savings of $300-million from its move.

Manulife plans to save or avoid another $700-million in costs for a total of $1-billion by 2022. Mr. Witherington said the company will look to reduce expenses in ways such as paying less to external service providers, processing more claims and consumer requests digitally, and putting a greater internal focus on finding incremental cost savings.

Some analysts praised the company for its transparency and extensive disclosures in notes to clients after the presentations.

Gabriel Dechaine, an analyst with National Bank Financial, said in a note ahead of the investor day that many investors would recall the company’s previous cost-reduction plans called Efficiency and Effectiveness (E&E) from its 2012 investor day and some may have been disappointed by the outcome of those efforts. After the event, however, he said the company had developed “an ambitious, but necessary, cost reduction strategy.”

Mr. Gori addressed this idea on Wednesday by saying that compensation of executives and other senior leaders is now tied to cost goals. “People have often asked ‘what’s the difference between what you’re focusing on now and E&E?’” he said. “For me, the biggest difference is that E&E was viewed as a project with a start and end date. This is a culture. … This is a new way of operating.”

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