Manulife’s Q2 net income halved as insurer struggles with impacts of COVID 19

By Tara Deschamps

THE CANADIAN PRESS

TORONTO _ Manulife Financial Inc.’s chief executive says COVID-19 had a  “significant” impact on the company’s second-quarter performance, but he’s confident it will bounce back.

Roy Gori told analysts Thursday that the pandemic negatively impacted sales and investments generated lower-than-expected returns as several countries the Toronto-based insurer operates in shut down to stop the spread of the novel coronavirus.

“The coronavirus continues to disrupt economies and capital markets worldwide,” Gori said in pre-taped remarks that opened the company’s quarterly call.

“Our operating conditions during the quarter were understandably effected.”

His remarks come a day after Manulife said COVID-19 hampered the company’s second quarter to the point where its net income dropped to half of what it was during the same period last year.

The insurer said its net income attributable to shareholders for the period ended June 30 was $727 million, just under half of the $1.47 billion it earned in the second quarter of 2019.

Manulife’s diluted earnings per common share reached 35 cents for the period, a fall from 73 cents a year ago but more than the eight cents per share analysts had expected.

The quarter, however, had some upsides.

Gori said he was pleased with Manulife’s efforts to launch a chatbot, offer e-applications for life insurance and begin non-face-to-face processes for sales in Asia amid the pandemic.

He also shared that the company had extended premium grace periods on several insurance products, launched a credit card deferral program and mortgage payment deferrals of up to six months.

How the pandemic will continue to impact Manulife and the economy, however, is a question mark, he said.

“It is still way too early to declare what the long-term consequences of COVID are and there are still way too many unknowns,” he said.

“I expect there is going to be a lot of uncertainty and volatility until we see an at-scale deployment of a vaccine and even then there are questions around how effective that vaccine will be.”

Manulife’s shares gains 84 cents or nearly 4.5 per cent at $19.67 in morning trading on the Toronto Stock Exchange.

This report by The Canadian Press was first published Aug. 6, 2020.

Companies in this story: (TSX:MFC)

Millennial Money: Smart moves when cash is tighter than time

Millennial Money: Smart moves when cash is tighter than time

By Gregory Karp Of Nerdwallet

THE ASSOCIATED PRESS

Lots of people have more time than money nowadays. If you’re one _ maybe you’re taking a staycation or you freed up commuting hours by working from home _ optimize that extra time by making smart financial moves that won’t cost a dime.

“If you have time but no money, it’s time to become the best version of yourself,” says Ryan J. Marshall, a financial adviser in Wyckoff, New Jersey. “What separates successful people from people who struggle financially is often how they spend the time they are given each day.”

From the quick-and-simple to the more-involved, here are ideas to create your personalized money to-do list when you have more available hours than dollars.

SET GOALS

This is the obligatory recommendation to develop a household budget, perhaps using the 50/30/20 method to divvy up needs, wants, and savings or debt repayment. But creating a budget should be about liberation, not deprivation _ about finding money to spend on things you care about and cutting ruthlessly on things you don’t.

_ More free money moves: Calculate your current net worth (all you own minus all you owe); calculate a nest egg amount for retirement.

ASSESS SPENDING

Recurring expenses are the black hole of regretful spending. Examine your credit and debit card statements to identify subscriptions and re-justify them. When a recurring expense makes the cut, try to get a better price _ we’re looking at you, cable, internet and cellphone bills.

One big potential payoff? Compare auto insurance premiums by yourself or with help. “It can be a pretty painless process, by just forwarding your current insurance to a broker and having them shop it with multiple carriers,” says Autumn K. Campbell, a certified financial planner in Tulsa, Oklahoma. Some brokers work on commission only and don’t charge a fee.

_ More free money moves: Plan a “spending fast” (no spending for a number of days); learn about online cash-back shopping portals; decide on an allowance for children (you don’t have to begin until you have the cash).

PLAN DEBT PAYMENT

Develop a plan for paying down debt. Two popular strategies: Pay extra toward debt with the highest interest rate (debt avalanche) or pay extra toward the smallest debts to wipe them out quickly and get a sense of accomplishment (debt snowball).

_ More free money moves: Refinance your mortgage; refinance your student loan; transfer debt to a lower rate.

DEEPEN MONEY SMARTS

Money knowledge is the gift that gushes benefits over your lifetime.

Money advice online is abundant, but don’t forget about at-home digital access at your unsung public library. Beginners can check out the book “Personal Finance for Dummies.” Or you can consult Consumer Reports to get better products for the money you spend.

And while not everyone enjoys investing topics, you should have a basic understanding. “There are countless wonderful free resources such as Morningstar’s free investment classroom and Vanguard’s free articles hosted on their website,” says Avani Ramnani, a financial adviser in New York City.

_ More free money moves: Spend one hour every Sunday night researching an unfamiliar money topic.

MONITOR CREDIT

Your creditworthiness matters to your financial life, far beyond qualifying for a new loan. People with better credit live easier and less expensively. At minimum, learn about the main factors that affect your credit: payment history, credit utilization, credit history length and credit mix.

_ More free money moves: Check your credit reports at AnnualCreditReport.com; check your credit scores (numbers that summarize your credit reports, available many places online); initiate a credit freeze if you’re worried about credit identity theft.

RECONSIDER HOUSING AND CARS

Where you live and what you drive steer your money life more than most money decisions. Think critically about how your mortgage or rent, along with the cost of your vehicles, fit your financial life.

New cars lose value like they drove off a cliff, while used ones can be bargains. That’s why you can buy a 2014 Mercedes-Benz E-Class sedan for the same price as a new Kia Forte. If your mortgage or rent is more than 28% of your gross monthly income, it’s time to ask hard questions about where you choose to live.

_ More free money moves: Renegotiate rent; create a next-car account and plan to fund it; consider moving/downsizing.

AUTOMATE EVERYTHING

After you make a good money decision, put it on autopilot. That way, you won’t forget to stash away money or pay bills. And ultimately, you’ll have more time and money.

_____________________________________

This column was provided to The Associated Press by the personal finance website NerdWallet. Gregory Karp is a writer at NerdWallet.

RELATED LINKS:

NerdWallet: What factors affect your credit scores? https://bit.ly/nerdwallet-credit-scores

 

More Canadians are worrying about the economy and over half are cutting discretionary spending

 TORONTO, June 29, 2020 /CNW/ – COVID-19’s impact on the economy is causing many Canadians to worry about the future: 79 per cent of respondents in CIBC’s Financial Priorities Poll say they are concerned about continued recessionary times next year, compared to 55 per cent who said they feared an economic downturn in a December 2019 survey.

Economic worries may be a factor in why many Canadians are adjusting their financial habits.

Many respondents (63 per cent) say they have significantly cut down on discretionary spending and more than half (55 per cent) agree they need to get a better handle on their finances this year.

“It’s understandable that Canadians are worried about the economy and are feeling uncertain about the impact on their ambitions, but this is a time when good financial advice conversations are most valuable, including assessing your overall situation, looking at opportunities to improve cash flow, and adjusting your financial plan if necessary,” said Laura Dottori-Attanasio, Group Head, Retail and Business Banking, CIBC. “It’s a positive sign that many Canadians are taking a responsible approach to the situation by making changes to their spending and working to limit unnecessary debt. Good cash flow management now can help you through the current situation, and over the longer term free up funds to divert towards savings or other goals.”

The survey also found that 46 per cent of Canadians say the economic impact of the pandemic has adversely affected their finances and a similar number (47 per cent) feel it will take more than a year to get their personal finances back on track. Canadians are prioritizing building an emergency fund in 2020, citing this as a top goal for the remainder of the year, followed by steering clear of adding on debt. Of the 22 per cent of respondents who’ve had to borrow more in the past 12 months, the number one reason was for day-to-day items (38 per cent) followed by a loss of income (28 per cent).

“The impact of the pandemic will be felt by Canadians for some time. While we have a long way to go to get back to a normal economy, taking charge of your finances now with a savings and debt management plan is an important step towards putting your personal finances back on track,” added Ms. Dottori-Attanasio.

The survey also found:

  • Top financial goals for the remainder of 2020 are: generally saving as much as possible (37 per cent), and avoiding taking on more debt (36 per cent)
  • Close to three-fourths of Canadians (74 per cent) say the uncertainty of the current environment makes it difficult to plan ahead, and over half (54 per cent) are generally worried about their financial future
  • The number of people who say they’ve taken on more debt is lower (22 per cent) than in December 2019 (28 per cent). Among those who have taken on more debt, 38 per cent say they did so to cover day-to-day expenses or due to loss of income (28 per cent) and job loss (18 per cent, +9 per cent from December 2019)
  • Regionally, the poll found differences in how Canadians are tightening their wallets. Residents in the Prairies say they are cutting discretionary spending the most, led by 76 per cent of those in Saskatchewan and Manitoba, and 69 per cent of Albertans, compared to the national average of 63 per cent
  • At 58 per cent, taking on more debt to pay for day-to-day items was the highest in British Columbia, 20 per cent higher than the national average of 38 per cent

Disclaimer

From June 8th to June 9th 2020 an online survey of 1,517 randomly selected Canadian adults who are Maru Voice Canada panelists was executed by Maru/Blue. For comparison purposes, a probability sample of this size has an estimated margin of error (which measures sampling variability) of +/- 2.5%, 19 times out of 20. The results have been weighted by education, age, gender and region (and in Quebec, language) to match the population, according to Census data. This is to ensure the sample is representative of the entire adult population of Canada. Discrepancies in or between totals are due to rounding.

About CIBC

CIBC is a leading Canadian-based global financial institution with 10 million personal banking, business, public sector and institutional clients. Across Personal and Business Banking, Commercial Banking and Wealth Management, and Capital Markets businesses, CIBC offers a full range of advice, solutions and services through its leading digital banking network, and locations across Canada, in the United States and around the world. Ongoing news releases and more information about CIBC can be found at www.cibc.com/en/about-cibc/media-centre.html.

SOURCE CIBC

www.cibc.com

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Desmarais brothers to step down as CEOs in overhaul of Power Corp

Massive reorganization at one of the country’s largest financial services firms

By David Scanlan | Bloomberg.com

Billionaires Andre Desmarais and Paul Desmarais Jr. are stepping down as co-chief executive officers of Power Corp. of Canada as part of a massive reorganization at one of the country’s largest financial services firms.

The Desmarais brothers, sons of the family who runs the Montreal-based firm, will stay on as chairman and deputy chairman. Jeffrey Orr, current CEO of the Power Financial Corp. unit, takes the top job at a new entity combining the two main units of the insurance and asset management company.

“The reorganization is a natural step that reflects our evolution from a diversified holding company into one that is primarily focused on financial services,” Andre Desmarais, 63, said in a statement Friday.

Shares of Power Corp. surged as much as 7.5 per cent, heartened also by a 10 per cent increase in the dividend, while Power Financial was up as much as 9.4 per cent. Both were the biggest intraday increases in a decade and handing the brothers an immediate payoff. The family was worth $8.38 billion in 2018, putting them seventh among Canada’s wealthiest families according to Canadian Business magazine.

By combing the two companies, Power Corp. says it will simplify its corporate structure, eliminating the dual-holding format and reducing costs. That may help unlock shareholder value. Neither Power Financial nor Power Corp. have regained their pre-2008 financial crisis highs, unlike the country’s big banks.

Power Corp. also said the new structure should allow the company to focus on financial services, where it faces relentless pressure on fees from ETFs and robo advisers, and from declining interest rates for its life insurance business. Power businesses include insurer Great-West Lifeco Inc. and money manager IGM Financial Inc.

“Canadian banks have been able to take advantage of their booming individual, or retail, businesses in Canada to substantially grow their earnings and balance sheets,” Paul Desmarais Jr., 65, said in a May 2018 speech. “By contrast, during the same 10-year period, the individual businesses of the three major Canadian life insurance companies – including our subsidiary Great-West Lifeco – have more or less stagnated.”

PAUL’S SON

As part of the reorganization, Power Financial shareholders will receive 1.05 Power Corp. subordinate voting shares, or $33.50, and some cash for each share they own. That’s little more than the $32.77 Power Financial last traded at. Power Financial is currently controlled by Power Corp.

“There’s change but it’s evolutionary change and it’s continuity,” Orr told analysts on a conference call. “It’s just part of an ongoing strategy that we’ve been pursuing to create shareholders value.”

The shake-up makes no mention of Paul Desmarais III, 37, son of Paul Jr. and a senior vice president of Power Corp. who oversees the company’s startup strategy, which includes majority-owned robo adviser Wealthsimple Inc. He is also the executive chairman of Sagard Holdings, a subsidiary of Power Corp. which has invested in public and private equity since its founding in 2005 and has moved into private credit last year.

The Desmarais family will continue to control the company through its Pansolo Holding Inc.

With assistance from Sandrine Rastello, Paula Sambo and Doug Alexander

Bloomberg.com

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