After eight years at the helm of Manulife Financial Corp., chief executive officer Donald Guloien will retire at the end of September, making way for Asia division head Roy Gori to lead Canada's largest insurance company as it continues to fight through low interest rates and other industry headwinds.
Mr. Guloien, a 36-year company veteran, has steered Manulife through the long tail of the Great Recession. When he took the top job in May, 2009, he inherited a company in crisis. Its share price had collapsed from highs of over $40 to lows that reached nearly $10 – he controversially slashed its dividend in half mere months into the job – and he spent nearly a decade trying to steady and expand the insurer.
Mr. Gori plans to continue on the path his predecessor has set while deepening Manulife's focus on simplifying and digitizing its products and processes. Much like Mr. Guloien, he faces a long list of challenges. Similar to other insurers, Manulife is grappling with low interest rates, which make it harder to fund its liabilities. Their consumers are increasingly demanding simpler, tech-friendly products, too, while shareholders remain frustrated over the company's share price, which has never recovered to pre-crisis highs.
Manulife shares closed at $23.69 on Thursday, up 15 cents.
Following a long career in Asia and Australia with Citibank, Mr. Gori was named president and CEO of Manulife Asia in 2015. He was announced as Manulife's next president last March; his appointment as incoming chief executive was announced Thursday morning. He will move to Canada from Hong Kong in June , and become CEO in October.
Mr. Guloien has battled through much while leading Manulife. Insurance companies invest customers' premiums in order to pay claims later; the long-lasting low-interest-rate environment has made that a struggle. Volatile equity markets and the oil downturn during Mr. Guloien's term only made it worse. Regulatory and technological changes knocked a few dents into the industry's armour, too.
"When I took over, it was in the midst of the financial crisis – financial institutions all over the world were in some degree of turmoil," the retiring CEO said in a phone interview. "We were able to stabilize the company and grow it quite nicely."
He highlighted a few numbers to make his case, including Manulife's $1-trillion in assets under management and administration, and it's $4-billion in adjusted "core" earnings – a metric that excepts accounting volatility and other items. (Manulife suggests it's a strong reflection of business performance, though its effectiveness has raised the ire of some analysts and investors.)
Asked whether Manulife shares could some day return to their pre-crisis highs near $40, the outgoing CEO said "I don't think you can compare, quite honestly – with us or any other company in the financial-services industry – prior to 2007 and '08. It was a massive reset. it was called the global financial crisis for a reason."
Barclays Capital Canada Inc. analyst John Aiken said that while Mr. Guloien leaving the company was "disappointing," Mr. Gori is a "strong replacement" who likely won't make any material changes to the business or its strategy in the short term. Analyst Tom MacKinnon of BMO Nesbitt Burns said he liked the choice of successor and his "tremendous track record" with Manulife in Asia.
Mr. Guloien said that the biggest regret of his term was that "roughly half" of Manulife's cash flow is still tied up in products including variable annuities and certain life-insurance products that the company stopped selling in 2009, which have been a drag on its earnings and return on equity. "It's going to continue to be a challenge for Roy and the leadership team, but it's less of a challenge than it ever was," he said.
Mr. Gori said he sees his long-time turf of Asia as a huge growth opportunity for the insurer going forward, though he has his eyes largely focused on modernizing and digitizing customer experiences. "When you think about insurance, you typically think paper-based, manual, complex, and painful," he said. " … Our challenge is to use analytics and data to take a lot of pain out of the process and create much more value for customers."
March's announcement of Mr. Gori as incoming president was "definitely" part of a succession plan, Mr. Guloien said. The former Asia-division head was among several names that had been bandied about to lead the company, including chief operating officer Linda Mantia, who joined from Royal Bank of Canada last year, and Craig Bromley, leader of its U.S. division.
Alongside Mr. Gori's appointment, Manulife announced Mr. Bromley's departure from the company, which Mr. Guloien said was part of "an overall organizational change."
With files from Jacqueline Nelson
Josh O’Kane