Manulife reveals probe by OSC
Manulife Financial Corp. revealed yesterday that it is under investigation by the Ontario Securities Commission over what it told investors about the risks of its guaranteed fund business.
The insurance company said it received an enforcement notice from the stock market regulator this week in connection with its public statements prior to March 2009.
The 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," Manulife said in a release.
Canada’s largest life insurance company now has the chance to respond before the regulator makes a decision whether to commence proceedings.
Manulife said it intends to co-operate with the commission quality business cards. "The company believes that its disclosure satisfied applicable disclosure requirements," the release said.
Neither Manulife nor the OSC would provide more details.
Segregated funds are popular but complex investments. They are similar to mutual funds but offer various guarantees to protect capital. Some investors have complained they were not properly informed of the risk, particularly in a steep stock market decline.
Manulife was hit hard by the slump in global markets. Forced to beef up reserves to pay for fund guarantees, it took an accounting charge of $1.15 billion last month.
The company reported back-to-back losses of more than $1 billion in its past two quarters.