The Financial Post reports in its Thursday, June 4, edition that Manulife Financial says an environment of lower interest rates for longer is proving to be a challenge as it did not expect the "significant" drop in long-term rates.
A Reuters dispatch to the Post reports that chief executive officer Roy Gori says: "A new era of lower rates for longer is a new headwind we'll have to grapple with. When we did our planning for 2020 and 2021, we never really anticipated the significant drop in the longer end of the curve as much as we've actually seen."
Global insurance companies are seeing plunging yields slam investment returns, while COVID-19 has boosted some payout expenses.
Manulife last month reported a 40-per-cent drop in first quarter profit.
The decline in rates has required Manulife to respond by changing pricing and products and increasing efficiency, in part through increased technology adoption.
Mr. Gori says Manulife has done more to advance digitization in the past five months than in the previous five years, and more than 90 per cent of products can now be sold digitally.
He says Manulife's operations outside North America, particularly in Asia, have helped cushion some of the impact of low rates.
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