Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Tom MacKinnon - Scotia Capital
Tom MacKinnon - Scotia Capital
With respect to the dividend end, is there any way we can measure the effectiveness, how we can see any increase in value as a result of this dividend cut, should we see stronger ratings, stronger sales, possible acquisitions down the road, how can we measure the effectively the increase in value as a result of the dividend cut. Or how would you say that we should be able to, we should measure that.
Donald Guloien
I think you’d be able to measure it after a period of time, not on a prospective basis because it depends what happens. If equity markets or the economy takes a nosedive we will provide a cushion of safety for our policy holders and for our shareholders that makes it unnecessary to raise diluted equity in very adverse circumstances.
Hopefully, it depends on when it occurred and how soon and so on and the depth of it. But that would be the protective, defensive element. On the positive side it gives us the fuel to fund our growth both on an organic basis and a strategic basis if opportunities were to come to market that we would find attractive we would intend to pursue those.
Your comment on rating agencies, the rating agencies have a fair degree of concern about the insurance industry and we obviously believe that retaining capital and the firm is going to be positively regarded by the rating agencies. So I think in summary it depends on what happens but I think the worst case, if Manulife ends up 24, 36 months from now with a very nice cushion of capital that enables us to do strategic endeavors, worse things could happen.
Tom MacKinnon - Scotia Capital
Is there any way we would know when this fortress would be built, can you give us any sort of, is it an MCCSR percentage or any other benchmark we might be able to determine when the fortress building is complete.
Michael Bell
At this point I wouldn’t pin it on a specific number, again the idea here is to strengthen it further from where we were certainly at June 30 levels but remember here the goal is to have enough financial flexibility to deal with a bunch of potentially negative scenarios out there. Again not every single conceivable scenario but a bunch of negative scenarios out there without being forced in a corner and needing to raise common equity under adverse circumstances.
- To read the full transcript on Seeking Alpha, click here »
