Scotia Capital's Analyst Meeting with Manulife CEO

• In our opinion, the lunch did a good job of clearing the air. Guloien mentioned to us in our subsequent meeting he was amazed that a sell-side only meeting held June 25 "produced" everything from a dividend cut to an equity raise when nothing suggesting anything of the sort was ever mentioned (in our opinion, broad market dissemination of a message is a much better way to go).

• What he did say in our meeting yesterday is that nothing has essentially changed over the last couple of months in terms of the company's capital plan, even though the market has rebounded. Priorities remain to build capital through, in order of preference, preferreds, innovative tier 1, medium term notes, reinsurance, and lastly dividend cuts/common equity. In effect, everything is on the table, just as it was a couple of months ago. They're looking at more debt/prefs/innovatives, and with a debt+prefs+innovatives/total capital ratio of 27%, vs. SLF at 29% and GWO at 41%, they still have ample room, possibly another $1.5B to reach 30%. Housing the recent $1B in innovative Tier 1 at the holdco provides lots of flexibility as well.

• With respect to all this dividend talk, Guloien said essentially said nothing has changed. It's a Board decision, it remains the last item in the pecking order in the capital plan, he's very cognisant of investor sentiment (acknowledging though that lifecos are different than banks), and it's not his job to say it will never happen. The payout ratio is a function of "core earnings" (which will be elaborated on when the company reports Q2/09 Aug 6) over the long run and he has suggested growing into the target payout ratio could be a more likely scenario. The target payout ratio is 25%-35%, our 2010 estimate puts them at 38%, and consensus puts them at 41%, which is lower than consensus for SLF of 44% (above their 30%-40% target) and consensus for GWO of 50% (above their 30%-40% target).

• Unlike other CEOs Guloien is very open. He's blatantly honest and will explain both sides of any idea freely and openly with the Street. His style will likely take a bit of getting used to.

• MFC sees plenty of acquisition opportunities down the road and believes that these volatile markets will separate the strong from the weak.

• At 7x 2010E EPS, we believe MFC is good value for an excellent franchise.

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Financial Post, David Pett, 3 July 2009

Manulife Financial Corp. was one of the biggest gainers on markets over the past three months, but thanks to a late June slump, the life insurance giant still remains one of the better buying opportunities heading into the third quarter, says Desjardins Securities analyst Michael Goldberg.

"We believe that the recent decline in Manulife's stock price has been an overreaction by investors, Mr. Goldberg said in a note to clients.

For the second quarter, Manulife shares were up 42%, compared to 19% for the broader TSX benchmark. However, since June 19, the stock has dropped 14%.

The sell off followed news that the OSC is investigating the company's disclosure to investors regarding its segregated funds and annuity business, but Mr. Goldberg believes the real culprit behind the drop was a Manulife statement saying it may need to strengthen its reserves .

"As we have said in the past, we expect any reserve strengthening next quarter to be minimal on a net basis and any expectation of a net reserve release following the buildup of those reserves at a cost of $7-billlion over the past few quarters, would be naive," he said.

He said Manulife is now trading at 7.6x his projected 2010 EPS forecast of $2.80, which compares favourably to his $26.50 price target based on 9.5x 2010 EPS.

READ MORE - Scotia Capital's Analyst Meeting with Manulife CEO

Health Insurance Companies Easing Burden of High COBRA Costs

Senate Health Committee Chairman, Senator Kemp Hannon, announced a part of the recently adopted a new budget, which enables health insurance companies to carry individuals under their parent's policy to age 25, instead of age 19 for those who do not go to college and 23 for those who do.

The part of the bill, announced at a University Student Center during a June 1 press conference, will be a relief to many parents and young people facing extremely high COBRA costs when their child reaches the age of ineligibility under their plan, but is either still in school or searching for employment. The legislation also assists those young 20-somethings who are bearing the brunt of their own health insurance costs by enabling them to obtain health insurance coverage through their parents.

"We have to be realistic," Senator Hannon said. "With double and triple majors and five-year master's programs, many of our young people are not graduating college when they are 21 anymore. Burdening them and their families with COBRA costs is unfair."

READ MORE - Health Insurance Companies Easing Burden of High COBRA Costs

Health records on internet

Privacy groups are sounding alarms as the nation's largest insurance companies finalize plans to allow millions more customers to post their health records on the Internet.

Insurers like Aetna Inc. say Web-based tools help patients and physicians keep track of medical information while potentially holding down spiraling medical costs.

About 100 million insurance customers in the U.S. have access to Web-based tools, but companies don't have an estimate of how widely they are used. Insurers hope to at least double the technology's reach by the end of next year.

Aetna chief executive Ronald Williams says the change is as revolutionary to health care as the introduction of the ATM card was to banking in the 1980s.

But privacy advocates say there's no guarantee the records will be safe from hackers. Some worry patients may refuse to disclose some illnesses to their doctors to keep documents out of databases.

"As a former nurse, I know that back in the 1980s, patients who were alcoholics did not want to have paper records," said Sue Blevins, president of the Institute for Health Freedom "They just didn't want people to know & That could affect the quality of their care."

Aetna, which offers personal health records to its customers, says security procedures include a member login and an online registration Web site with secure sign-ons. In addition, customers can restrict elements of their records from being shared among health practitioners.
Aetna said personal health records are protected by the same security technology that is used for online banking.

Personal health records, which are available through insurers Aetna, Blue Cross Blue Shield and others, are intended to help doctors and patients track medications and treatments.

The technology allows doctors to record test results, immunizations, prescriptions and other medical information into an online database that can be accessed by patients, the insurer and other physicians if needed. Patients can also add details about over-the-counter medications, plans of care, family health histories and other information.

READ MORE - Health records on internet

The Preemptive Strike Doctrine: A Necessary Evil

If an individual, or the United States as a sovereign nation is aware of a building danger to security or safety, is the optimal plan to wait until it is a clear and present danger before dealing with it? Common sense would seem to dictate that the line separating danger and imminent danger is extremely fine, and that waiting is in no way consistent with the premise of either personal or national security.

As an individual you would work the problem through the system to try and contain it. As a nation facing entities and regimes that seek to inflict as much damage and destruction as possible on innocent men, women and children, the solution is more complex. And yes, this solution may in fact require the use of military force to take that threat out.

The Preemptive Strike Doctrine was put in place by the Bush administration in 2002 with the expressed purpose of giving the United States the right to protect, not only our citizens, but our allies around the world from the ever increasing threats that exist. It stated that the United States had the right to deal with a building threat to security in addition to a threat that presented a "clear and present danger" Unfortunately for all involved, because it was implemented by President Bush, it is a pariah that President Obama wants to eradicate.

Obviously, Iran is the textbook case for the fine line that we have to walk. There is a quickly building danger posed to world security by the Iranian nuclear program. Our "allies" in the fight to end or contain this threat, Russia and China, are not true allies. In fact, China and Russia have their own agendas, which will prevent them from taking any real action against this regime. China has a need for the Iranian oil to fuel its 6% plus economic growth. Russia has economic ties to Iran and is in fact helping them in building its’ nuclear infrastructure and missile defense system. This very missile defense system will make dealing with the nukes problem, when it does become a clear and present danger, that much more difficult to deal with. Is waiting for this point in the best interest of United States national security?

The Obama Doctrine

This apparent method of the Obama administration for dealing with threats to the United States and our friends around the world has become clear. Ominously clear. It is the idea of diplomacy first and second, with the implementation of sanctions and deal making together with our supposed allies to gain the help needed to deal with the problem third. The fallacy of this plan?

You cannot enter into substantive and valid negotiations with when the other party to those negotiations is a rogue regime with the stated goal of destroying our allies and the U.S. You cannot implement economic sanctions against a government who does not have the vested interests of its' own population at heart. Additionally, when your partners in imposing the sanctions will most likely not abide by them, this method of containing the threat will fail. China and Russia have clearly stated that they do not favor sanctions at this time.

At the same time, through the Obama Doctrine premise of appeasement, the United States has portrayed itself as the polar opposite of Bush. Weak and willing to give up most anything to achieve our goals in ways that will make them unachievable. We gave up missile defense in Poland and Czechoslovakia to appease the Russians with the understanding that they would back sanctions, and they did not.

Our allies in this fight against global threats, as well as Iran and North Korea, do not respect weakness, but they will take full advantage of it. For the Russians under acting leader Putin, they will get whatever they can from the United States, and in return most likely never come through on their side of the bargain. For Iran, they will play the game and dance the dance, stringing us along while continuing on the way to a nuclear capability.

What the Obama Doctrine does not seem to account for is that rhetoric, flowery speech and empty threats do not scare anyone. Anyone, except for those around the world who see it for what it is: “Clear and present danger" to the United States itself. In the end, those nations who live under a daily threat to security will be forced to take matters into their own hands, act unilaterally, and pay a price to ensure national security.

What the Obama Doctrine needs to account for is that in the world today, the emphasis has to be on a pragmatic approach to events, and not an approach designed to simply be "not George Bush." While the far left may endorse that, the rest of us will pay the price.

READ MORE - The Preemptive Strike Doctrine: A Necessary Evil