Ahead of his retirement, Manulife CFO Stephen Roder debated strengths and weakness of Canada’s largest life insurer
With his retirement looming, Manulife Chief Financial Officer Stephen Roder took part in a frank discussion on the future of the company at the CIBC Eastern Institutional Investor Conference last week. In conversation with CIBC analyst Paul Holden, Roder outlined some of the challenges facing the institution, as it repositions its various business lines.
In particular, the North American life segment was an area the CFO felt could certainly improve.
“First of all, you've got the North American insurance businesses,” he said. “And so, that would be Canadian-U.S. individual life insurance businesses which are fine, but we need to make them more profitable. So, a lot of that is about expenses, to be truthful. And so, we're going at expenses in the Canadian business in a big way.”
A veteran of the Asian market with KPMG, AIA and Peak Reinsurance, Roder joined Manulife in 2012. In the five years since, Asia has become a vital part of the firm’s overall business, and there are many areas still prime for growth.
“In the case of something like Cambodia, it's a sort of greenfield start-up,” he said. “It's a great business. It will get there in its own good time. But we need to fix up Malaysia and we need to fix up Thailand, but we have a focus on that.”
Closer to home, Roder believes John Hancock’s wealth business is performing well, but life insurance remains a real challenge. It’s a major reason the company has saw fit to diversify its operations so much over the past decade, with greater focus on wealth products, as well as expansion into the Asian market. Despite this, he believes the firm is moving in the right direction when it comes to making the life segment more profitable.
“The US life business … it's very competitive,” he said. “There are many, many players. Some of those players have mutuals. They're very happy with a 7% ROE. Unfortunately, our investors don't share that view, so that makes it really tough.”
In order to provide the returns shareholders expect, the Manulife leadership, led by new CEO Roy Gori, has committed to large-scale digitalization. The wheels are already in motion in this respect, as Roder outlined at the CIBC conference.
“We have been putting a lot of focus on the Vitality product,” he said. “So if you're not familiar with this, essentially a policyholder chooses a vitality format of a product, and that means they wear a mobile device, a Fitbit or whatever, and they basically trade data with us for benefits. And that may sound insignificant, but it absolutely changes the relationship between the customer and the insurer.
He added: “This is a whole different game. So, it's actually quite exciting, 30% to 40% of new policyholders in the US are opting for the Vitality format. And people say, well, what if I don't want to share my data with you? Well, that's fine. You buy a traditional product.”
Stephen Roder
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In particular, the North American life segment was an area the CFO felt could certainly improve.
“First of all, you've got the North American insurance businesses,” he said. “And so, that would be Canadian-U.S. individual life insurance businesses which are fine, but we need to make them more profitable. So, a lot of that is about expenses, to be truthful. And so, we're going at expenses in the Canadian business in a big way.”
A veteran of the Asian market with KPMG, AIA and Peak Reinsurance, Roder joined Manulife in 2012. In the five years since, Asia has become a vital part of the firm’s overall business, and there are many areas still prime for growth.
“In the case of something like Cambodia, it's a sort of greenfield start-up,” he said. “It's a great business. It will get there in its own good time. But we need to fix up Malaysia and we need to fix up Thailand, but we have a focus on that.”
Closer to home, Roder believes John Hancock’s wealth business is performing well, but life insurance remains a real challenge. It’s a major reason the company has saw fit to diversify its operations so much over the past decade, with greater focus on wealth products, as well as expansion into the Asian market. Despite this, he believes the firm is moving in the right direction when it comes to making the life segment more profitable.
“The US life business … it's very competitive,” he said. “There are many, many players. Some of those players have mutuals. They're very happy with a 7% ROE. Unfortunately, our investors don't share that view, so that makes it really tough.”
In order to provide the returns shareholders expect, the Manulife leadership, led by new CEO Roy Gori, has committed to large-scale digitalization. The wheels are already in motion in this respect, as Roder outlined at the CIBC conference.
“We have been putting a lot of focus on the Vitality product,” he said. “So if you're not familiar with this, essentially a policyholder chooses a vitality format of a product, and that means they wear a mobile device, a Fitbit or whatever, and they basically trade data with us for benefits. And that may sound insignificant, but it absolutely changes the relationship between the customer and the insurer.
He added: “This is a whole different game. So, it's actually quite exciting, 30% to 40% of new policyholders in the US are opting for the Vitality format. And people say, well, what if I don't want to share my data with you? Well, that's fine. You buy a traditional product.”
Stephen Roder
Related stories:
Manulife hit by potential $5 million law suit by TTC
Manulife’s leadership team undergoes revamp
