A Globe & Mail story highlights a Manulife Financial Press Release that states:
On a separate matter unrelated to prior announcements made today by Manulife Financial Corporation, the Company stated that it received an enforcement notice from staff of the Ontario Securities Commission (OSC) this week relating to its disclosure before March 2009 of risks related to its variable annuity guarantee and segregated funds business. The OSC notice indicates that it is the preliminary conclusion of OSC staff that the Company failed to meet its continuous disclosure obligations related to its exposure to market price risk in its segregated funds and variable annuity guaranteed products. The Company has the opportunity to respond to the notice before OSC staff makes a decision whether to commence proceedings, and the Company intends to cooperate with OSC staff. The Company believes that its disclosure satisfied applicable disclosure requirements.
The prior announcements that the company is so anxious to emphasize are separate and unrelated are retirement of the CFO and Capital Update; the Capital Update trumpets MCCSR but makes no reference to the degree of double leverage inherent in the MFC holdco / insurance sub. structure. They never do, of course, but it is something that preferred shareholders in the holdco (MFC.PR.A, MFC.PR.B, MFC.PR.C, MFC.PR.D & MFC.PR.E) should bear firmly in mind at all times.
With respect to double-leverage, it is of interest to note that Manulife issued $1-billion of 5-Year MTNs at 4.896%, closing 2009-6-2, with the pricing supplement stating:
Approximately $730 million of the net proceeds to MFC from the sale of the Notes will be applied to reduce amounts outstanding under the Credit Facility and the balance of the net proceeds will be utilized for general corporate purposes of MFC.
There are – quite properly – no announcements regarding the enforcement notice regarding disclosure on the OSC website.
The MFC preferreds were last mentioned on PrefBlog when downgraded to A- [Negative Outlook] by Fitch.
[…] Perkins of the Globe passes on some speculation regarding the MFC/OSC Disclosure Kerfuffle: The Ontario Securities Commission (OSC) appears to be examining whether Manulife properly […]
[…] If they knew – and they must have – that the subsidiary was going to instantaneously deflate, this should have been disclosed. It seems to me that MFC has not been sufficiently intimidated by the OSC investigation into their disclosure practices. […]