Monday, March 7, 2011

(No.140) Graceless ingratitude & financial executives

In a recent column on the website ["Sun Life's Canadian jewel", No. 138, Feb.22, 2010] I referred to the importance to Sun Life Financial's profit total from its world wide operations of its business in Canada and the comparative insignificance of its extensive Asian operations [$92 million in 2010, 1.5% of Sun's total].

Manulife, Sun's leading rival among Canadian life insurance companies, also has extensive Asian operations about which it has long been bullish but, in my view, less than forthcoming over the years in terms of disclosing operational and revenue details and breakdowns.

Manulife is now musing publicly about expanding its Asian operations into South Korea and India (the latter being a country in which Sun Life has been active in the past decade via Birla Sun Life). Manulife predicts its Asian proift "may climb" to $1.5 billion from what it says was $623 million in 2010.

I am sceptical about the reported volume of Asian profit per se for Manulife (as indeed I have long been about the actual divisional breakdown of Manu's operations in various regions of the world). I wonder about Manu's reported Asian profit numbers and about whether the appropriate costs and pricing assumptions were or were not fully reflected in arriving at the 2010 profit figure for Asia.

In Sun Life's case its comparatively modest Asian profit numbers convey a reality: that its Asian operations are icing but they are a long way from being a cake. What about Manulife's Asian profit numbers?

[See also column No. 132 on the website: "Sun Life and Manulife: returns & departures", Jan. 15, 2010]


The Feb.2011 issue of The Insurance & Investment Journal had two extensive and interesting articles by freelance writer Rosemary McCracken about the life insurance industry's reaction to the (Toronto) Globe and Mail's series whose principal focus was the managing general agency (MGA) distribution system for life insurance.

I had written about The Globe's criticisms of the MGA system on [ see "The Globe looks at insurance distribution", column No.131, Jan. 10, 2010] and Ms. McCracken quoted from it in both her articles. She talked to a variety of industry people and did a fine job of covering a range of industry reaction to the Globe's critique. Her articles are well worth reading.


2. [the website of the MGAs' trade association]


During the past two years plus of I have railed in numerous columns at the greed, incompetence and stupidity of certain senior executives in the financial services business, especially in the U.S., whose actions led the U.S. and other western economies to the edge of financial disaster.

This leads me to the Canadian writer Rick Salutin. He is one of the best columnists writing in any of the Canadian, American and British newspapers I have read over the years. He very often writes columns that prompt me to think in a different way about an issue or a topic. That is a talent not found often enough among today's columnists.

After many years of Salutin writing a Friday column for the Globe and Mail, that newspaper foolishly let him go -- perhaps as part of its 'redesign' to make the paper more appealing to those who prefer the appearance of USA Today and similar publications. Fortunately for me and many other readers Salutin is now writing a Friday column for Canada's largest circulation newspaper the Toronto Star.

In a recent column [The Star, March 4, 2010] about " the labour resurgence" his comments exemplified why I enjoy reading his columns. They also resonated with me because of my years in the financial services business.

Salutin referred to the "moral intensity" to be seen in "the widespread rage against the arrogant, greedy behaviour of big business and especially finance: the banksters and hedge fundies who demanded deregulation, peddled their useless monetary 'devices' that brought on the apocalypse, then demanded a bailout, then more bailouts, while continuing to gobble bonuses and call for cutbacks in underfunded basics like education to pay for their own bailouts."

"It's revolting," he continued. "It's not even their original sins that elict disgust, it's their subsequent graceless ingratitude."

I could not aspire to say it so well.


Alastair Rickard