Changes at Manulife more than cosmetic as insurance giant looks to simplify

It may seem cosmetic: a new logo with three vertical green lines that is appearing next to the company’s name on the façade of Manulife Financial Corp.’s major offices, including its Toronto headquarters. But Gretchen Garrigues, the company’s global chief marketing officer, says it is an outward reflection of more than a year of work behind the scenes to jump-start the 131-year-old insurance giant’s shift to a more streamlined, tech-driven operation.

Manulife is acting on research it undertook that revealed customers across several business lines, from insurance to group benefits to wealth management, found dealing with Manulife complex. Garrigues, who is also an executive vice-president at Manulife, said they also learned that simplified branding and language could increase “purchase intent” from customers by up to 25 per cent.

“Consumers and customers were feeling this level of unbelievable complexity in our industry, which was driving inertia,” she said, adding that it is a priority at Manulife to reduce jargon and make communications more conversational. In addition, like other financial services companies, Manulife is adopting new technology to automate paper-heavy processes and give customers more convenient ways to do business when and where they want.

In one application of this rollout, Manulife used robotic automation to process a million transactions this year in Canada.

Garrigues, who joined Manulife two years ago and sits on the company’s executive committee, said a physical manifestation of the need for change hangs in her office. It is a chart she made that shows around 1,500 different logos and trademarks attached to the company’s products and services across Canada, the United States and Asia.

“It’s crazy,” she said. “When you think about that fractured kind of way people were thinking about us and talking about us, it makes it hard for people to understand what Manulife stands for.”

Gretchen Garrigues, global chief marketing officer at Manulife.

It was even a challenge internally, she said, where the streamlined and simplified branding and products had to be rolled out to the more than 30,000 employees at Manulife’s global operations.

“We’re … one company around the world. The look and feel that you’re going to see is the same around the world,” she said.

“We really want it to stand for the core values on which we were founded 130 years ago, which is really about putting the customer first.”

Today’s technology and machine data-gathering make it easier to see what a client might want, and Garrigues said Manulife is moving away from historically “siloed” and product-centric marketing to focus on how clients want to deal with the company.

“That’s exactly what’s informing these journeys — what do we already know about you, so that … we can bring to you the right experience in the right technology,” she said. “We don’t need to ask you those questions, we’re going to authenticate it based on your past behaviour.”

Canadian banks have long been open to capitalizing on customer relationships by selling more than one product or service to gain a bigger “share of wallet,” something that has not been widely echoed by the insurance industry.

“There is certainly an opportunity if people want to have multiple products (but) I would say it’s not something that we are really giving targets on,” Garrigues said. “I think it’s more about if we have the right product, we would certainly offer it to a customer, but it’s not right now something that we’re looking to push people from one product to the next.”

As with other companies moving towards a more tech-driven model, Manulife’s transition from paper to digital has caused it to shed jobs, with the latest voluntary exit and attrition program announced in June aimed at eliminating 700 positions, or two per cent of Manulife’s global workforce, by the end of 2019. However, the company said it would also recruit and train “top digital talent” as it continues to reorient the business.

Manulife stands to benefit from foreign ownership relaxation in China: CEO

If China relaxes foreign ownership limits on financial firms as anticipated, Manulife Financial Corp. is keen to take controlling stakes in operations there, said Don Guloien, chief executive of the Toronto-based insurer, which already has joint ventures in insurance and wealth management.

Reports that China is considering loosening restrictions on foreign control of financial firms first emerged late last year, with fresh reports last week that the government is considering removing a 50 per cent cap on foreign ownership of insurance companies.

“That would be a very welcome development for us,” Guloien said Monday following a luncheon speech in Toronto. He said current partnership structures are working well for the Toronto-based firm and there is no rush to change them.

“We would love to be able to buy it if and when — and only if and when — our partners want to sell it,” Guloien said.

Manulife formed a joint venture insurance operation in China with Sinochem in 2002. On the wealth management side, Manulife owns a 49 per cent of China-based fund manager Manulife-TEDA.

Guloien said other opportunities might open up as China is looking at creating other vehicles to allow foreign-owned companies to work in sectors including investment and pension management.

He said Manulife’s focus in Asia is likely to be on building existing investments and establishing new ventures, rather than pursuing large acquisitions.

“We tend to be very disciplined,” Guloien said. “I see most of our opportunities in Asia… to be that of organic growth.”

Manulife does about one-third of its business in each of Canada, the United States, and Asia.

We tend to be very disciplined. I see most of our opportunities in Asia… to be that of organic growth

The insurer issued a statement Monday addressing an administrative penalty paid to FINTRAC, which monitors financial transactions to detect and prevent money laundering in Canada. The payment resulted from “administrative lapses in reporting” at Manulife Bank, a domestic financial services operation.

FINTRAC disclosed in April of 2016 that a $1.15 million penalty had been paid by a bank, but the bank was not identified.

“Manulife did not enable or facilitate money laundering,” the company said Monday, shortly after a CBC report identified Manulife Bank as the one that had paid the FINTRAC penalty. The statement said one violation involved a customer whose activities had already been reported to law enforcement and FINTRAC by Manulife.

“There is no evidence to suggest that the administrative reporting violations were connected to any financial misconduct,” Manulife said in the statement, adding that the administrative errors were “remedied in the first half of 2014.”

After his speech, Guloien told media the errors were the result of a single misinterpretation on Manulife’s part that led to continued administrative reporting violations.

“I think what happened in this case is there are two interpretations someone could take about the (FINTRAC) guidelines. We took an interpretation that was clearly wrong, or certainly not the one FINTRAC wanted us to hold, and it was repeated a number of times, which led to this large number,” he said. “But again these are strictly administrative errors. There’s no suggestion whatsoever of financial misconduct.”

Manulife snags Royal Bank executive as new chief operating officer

Manulife has reached into Canada’s largest bank for its next chief operating officer.

Linda Mantia, who was executive vice-president of digital, payments and cards at Royal Bank of Canada is joining the insurance giant on Oct. 3.

Paul Rooney, Manulife’s current COO, is leaving the insurance company but will remain through the end of December “to ensure a smooth transition.”

At Royal Bank, Mantia oversaw the mobile and online platforms, and her experience with technology was a draw for Manulife.

“Linda is a collaborative, innovative and transformative leader, with deep roots in digital disruption and a passion for delivering exceptional customer experiences,” said Donald Guloien, Manulife’s chief executive.

“The proven track record of success she has built throughout her career is not only directly relevant to the COO role, but also aligns closely to our customer-centric strategy.”

She will join Manulife as a member of the executive committee and global leadership team, leading more than 7,000 people around the world.

In a statement, Manulife said Mantia will provide leadership to many of Manulife’s essential group functions “ranging from strategy creation to execution.”

Before joining RBC, Mantia worked at global management consulting firm McKinsey & Co., and prior to that, she practiced corporate securities law at Davies Ward Phillips & Vineberg LLP.  

Manulife lab and Moneris expected to join fintech hub at MaRS

The day after Bank of Nova Scotia upped its investment in Atlanta-based Kabbage and allow its Canadian and Mexican customers to obtain small business loans, the Toronto-based MaRS discovery district is expected to announce two more financial institutions have joined its fintech hub.

Manulife’s Lab of Forward Thinking and Moneris, the country’s largest credit and debit card processor, are expected to be added to the MaRS C Suite, as the hub is known. Before this, CIBC, which late last year teamed up with Thinking Capital, an online provider of loans to small business, was the sole member at C Suite. The suite acts as a bridge between corporate leaders and entrepreneurs.

The two firms joined because of their belief that collaboration accelerates the rate of innovation and is a better model than each firm working with its own developers and designers.

CIBC, which has had a partnership with MaRS for more than a year, claims its work at MaRs has led to two Canadian banking sector firsts: the CIBC Apple Watch app and Hello Home Mortgage app. That successful experience led CIBC to become the C Suite’s founding sponsor.

Postmedia Network, which owns the National Post, has a revenue sharing agreement with Mogo, a fintech company.

Lifecos’ focus on international growth means higher risk

Canada’s life insurers are betting big on international growth but many of those foreign markets come with risk attached, says Moody’s Investors Service.

Developing regions like Asia may offer opportunities for rapid expansion but some countries have “less stable operating environments,” according to the rating agency.

As a result, exposure to jurisdictions outside North America “typically dilute[s] the strong credit profiles of [the lifecos’] domestic operations… Therefore, outsized earnings growth outside of Canada is credit negative.”

Canada’s biggest life insurer, Manulife Financial Corp., boasts the largest international exposure, with 33% of core earnings last year coming from its Asia division.

Great-West Lifeco, the second biggest player has most of its international focus on Europe, with most of the earnings coming from the United Kingdom and the Isle of Man. According to Moody’s, “planned growth” is mostly related to the company’s recent acquisition of Irish Life.

“While [the Irish Life deal] has strategic benefits and is being financed by equity, this transaction will marginally weaken Great-West’s overall credit profile owing to Irish Life’s relatively weak profile and the attendant sovereign and economic risks,” Moody’s said.

For its part, Sunlife Financial Inc. is facing less of a risk due to its limited international expansion, with only 8% of operating income from Asia in 2012.

“Even if Sun Life reaches its objective of $250-million in operating net income from Asia in 2015 and other operations stay static, the international contribution would be less than 15%, and therefore represents less of a dilution threat.”

Sun Life is Canada’s third largest life insurer.