Archive for April, 2009

As my new book heads for bookstore shelves across Canada, I’m happy to report that the subject likes the work. “I think it reads like a good story. You were fair to everybody,” Manulife CEO Dominic D’Alessandro told me by phone after reading the book. “Events were faithfully described.”

As an author, you want to get things right, particularly when writing about business, where misinformation can send stock prices plummeting and poor research can destroy professional reputations.

When I dropped off an early copy of the book last week, D’Alessandro was his usual effervescent self during our twenty-minute conversation. Topics ranged all the way from his favorite bete noire, fair value accounting, to his plans for the summer. He’d hoped to spend some time in his native Italy but that now looks like it won’t happen. The new condo he and his wife are buying will soon be available and they will be focused on getting it ready for move-in.

The rest of his personal planning has not changed: He has no intention of running anything else but he will become a director of three companies. Announcements of the company names await his departure from Manulife where he has been CEO for fifteen years.

“I’ve worked all my life,” said D’Alessandro, who is 62. “I’m looking forward to not working.” The last few months, with falling share price and the controversy around his compensation, have been no fun. He’ll take some time off, maybe even improve his golf game. “It’s going to be so good,” he said, then quickly added, “That’s a joke,” an indication he’s not quite ready to totally quit the world of work just yet.

Welcome to my refreshed site, featuring my new book on Manulife. Yesterday’s excellent cover story in the ROB Magazine on Julie Dickson, head of the Office of the Superintendent of Financial Institutions (OSFI) poked fun at Ms. Dickson’s role versus her profile. The story, Nobody’s Saviour, also featured some detail on what writer Tara Perkins called the “lifeline” Dickson threw to Manulife last fall.

Indeed, OSFI did relax the capital rules a bit, thereby giving Manulife a $2.3 billion boost, but the response was nowhere near what Manulife CEO Dominic D’Alessandro sought. Nor was the relief anything like Dickson could have carried out without in any way weakening the system.

“This could have been solved with the stroke of a pen. The number of technical solutions to this are legion. But we dealt with a particularly entrenched regulator who was unwilling to make compromises that would have made life a little easier for us,” D’Alessandro told me during one of my many interviews with him for the book.

For reasons OSFI has not explained, the regulator treated pension funds far differently than insurance companies. “Our problem is not credit exposure to any of the instruments that are causing everybody else problems. Our problem is that we’ve sold people pension plans. The value of equities collapsed 50 percent in the space of two months. There’s a gap between the assets you gave us to manage for you and their value today. That’s where the problem lies. The reserving that has to be done with respect to that shortfall is astronomical. If it was a sponsored pension plan like IBM or DuPont with a funding deficit, we would have to set aside $660 million dollars. We have to set aside $11 billion,” said D’Alessandro.

Nor did the Globe story mention the role of the CICA, which represents 74,000 chartered accountants in Canada. The organization is still wrestling with the rules it made, six months after the crisis, and has a meeting scheduled later this month to see if changes should be invoked.

No lifelines there. Manulife share price sank as low as $9 before climbing back over $20 yesterday.

For all the talk about how much better the regulation of the Canadian financial services system is compared with what’s happened in other countries, was most of the benefit due to OSFI’s and CICA’s good management? Or just good luck?

While we were in Florence I also canvassed book stores to see if they would be interested in selling Fantasy in Florence. I took with me a small number of sample copies and contacted three bookstores. After several meetings in each instance, I found that all three stores (BM Bookshop, Anglo-American and Edison) were keen to carry the book. The first two are English-language stores, the third is an Italian language store in Piazza della Repubblica with a large English-language section. If I’d had 75-100 books with me, I could have distributed all of them immediately because each store was willing to take 25-30 books.

In the course of my meetings I learned a great deal about the Italian book selling system. While the stores were willing to accept for sale books that had in effect already been imported by me, it would be difficult for me to ship direct from Canada. As in Canada, books are sold in Italy on a consignment basis. Apparently the Italian customs bureaucracy would make it almost impossible for an individual to ship a product that may be returned because of the two-way paperwork involved. In all cases, the booksellers recommended using a U.S. distributor, specifically Baker & Taylor, with Ingram a second choice.

In advance of my trip, I was in contact with Nicoletta Barbarito, a trade official at the Canadian embassy in Rome, about the possibility of finding an Italian distributor. She told me that it would be very difficult for me as an individual to find a national distributor in Italy. Distributors represent publishing houses, not individual authors, under exclusive contracts. It was Ms. Barbarito who suggested canvassing book stores directly. Now that three stores in Florence have shown enthusiasm, I believe that other retailers in Tuscany (e.g. Siena, Lucca, Pisa, Arezzo, Cortona and Montepulciano) might also be interested.

While I am continuing to pursue this possibility, I’m also looking forward to my newest book, now being shipped to bookstores across Canada. It’s called Manulife: How Dominic D’Alessandro built a global giant and fought to save it. I’ll be talking more about this exciting new book in the days ahead, but first, this site will undergo some changes to feature my latest work that has a publication date of May 5.

Meanwhile, Fantasy in Florence will always remain close to our hearts.

We’ve just returned from ten days in Florence where each day was better than the last. We visited all of our favourite haunts: Donatello’s David at the Bargello, Mary Magdalene at the Museo dell Opera, Gozzoli’s frescoes, the Central Market, Gilli for prosecco and cappuccino, the list goes on and on. We went for lunch at Il Cavaliere, a fourteenth-century castle thirty minutes south of Florence near Mercatale. The castle has been converted into a grand hotel with views of vineyards, olive groves and newly awakening wisteria vines tumbling over stone walls.

We watched the Easter Sunday exploding cart ceremony at the Duomo from the terrace of our former apartment at Via Roma 3. We attended vespers at San Minato al Monte and spoke with Nicholas, one of the Benedictine monks we met while living there.

We enjoyed revisiting some former favorite restaurants but noticed that some of them have become too touristy: Osteria Belle Donne, for example. In its place, we recommend Pepo on Via Rossina, near the central market, for perfectly cooked pasta at lunch. Ristorante Leo, near Santa Croce, still serves the best ravioli and sea bass. Another new name, so hot it’s on no lists, is Pantarei, near Piazza Liberta but it’s a 10-minute cab ride away from the central historic area.

Most of all, we enjoyed seeing old friends again. One magical morning as we walked along the Arno to Piazza Santo Spirito to meet Kerima Arnautovic of Luisa Via Roma, we spotted Paolo Bruscoli, our book-binding friend, in his skiff on the river. Next minute, around the corner on his bicycle came Peter Porcal, resident art historian and another good friend. Only in Florence is such serendipity possible!