Full faith and credit

The question I get asked the most (after what’s Dominic D’Alessandro really like) is this: Is Manulife safe? The answer is a resounding yes. All life insurance policies, annuities, and other products are hale and hearty. No policy holder or client needs to worry. The fact that Manulife this week raised $350 million in a preferred share issue (announced at $250 million and increased because of demand) is further proof that investors have confidence in the company. The preferred issue pays 5.6 per cent, a nice rate when GICs are in the 2 per cent range.

Manulife’s dilemma was never financial, it was accounting. Regulators demanded the company put up an additional $11 billion in capital because 250,000 out of 20 million clients had variable annuities. It was a crazy demand at the time and one that caused Manulife’s share price to fall from $40 to $9. Share price is now back to the $23 range.

I’m wise enough not to predict where share price will go for Manulife or any other company, but as for Manulife’s corporate health … there is not now and never was a problem.

UPDATE: Manulife followed up this week with a massive $1 billion debt issue, another sign of good health. The five-year notes were priced to pay interest of 4.896 per cent.