Back to the future

Manulife’s new CEO Donald Guloien has a management style that’s rare. During a recession when most business leaders are trying to squelch pessimism, Guloien is busy promoting something: prudence.
“I think at this stage of the cycle, prudence and conservatism is called for,” Guloien told Bloomberg’s Sean B. Pasternak in an interview. “The prudence our grandmothers had, the prudence farmers have in the Midwest; a little more of that needs to be applied in the executive suite.”
That’s why Guloien cut the Manulife dividend, reduced sales of variable annuities (VAs) and hiked hedging on VAs already sold.
Praise followed. “Don’s most important characteristic for me is that he just seems to be blunt and a straight shooter,” said Mario Mendonca, an analyst at Genuity Capital Markets. “He doesn’t seem to want to sugarcoat anything.”
But wait a minute, couldn’t Mendonca’s comments apply equally to Guloien’s aggressive predecessor, Dominic D’Alessandro, who oversaw fast-paced sales of variable annuities in the U.S. and Canada?
“Variable annuities became too big a part of Manulife’s portfolio, from both a marketing perspective and a risk perspective,” said Guloien. “We’re trying to dial back the risk.”
If backgrounds matter, D’Alessandro knows as much about prudence as Guloien. Raised by his widowed mother in a working-class Montreal neighbourhood, D’Alessandro’s boyhood clothing came from the Salvation Army.
But the tenor of the times changed during D’Alessandro’s final days at the helm. D’Alessandro might not have cut the dividend, but he raised billions in capital and had begun hedging.
Guloien has upped the ante. With familial roots in Saskatchewan, he knows whereof he speaks about the Midwest. After 28 years with Manulife, he also knows the company, although his moves since taking over in May must have surprised many.
They certainly surprised me. I interviewed him twice, once before he was picked to become CEO, and once after. At no time then, nor in his speech to the annual shareholders meeting, did he hint at the restraints to come.
We know now. Grandmothers are in. Long may they reign.

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