Roy Gori sits in the front lobby of Manulife headquarters in Toronto, on March 7, 2023.Christopher Katsarov/The Globe and Mail
Manulife Financial Corp. MFC-T CEO Roy Gori says his decision to leave while the share price is at a record high is “perfect timing,” as he prepares to take on more philanthropic work and invest in health and wellness startups.
On Monday, Mr. Gori surprised the industry with the news that he is retiring on May 8, when Manulife’s head of Asia Phil Witherington, 47, will take on the role of chief executive officer and join Manulife’s board. Mr. Gori will remain with the company until Aug. 31 to serve as an adviser and support the CEO transition.
During an interview with The Globe and Mail on Thursday, the 55-year-old Mr. Gori addressed the questions around his departure, quoting the famous Indian cricketer Vijay Merchant who said “retire when they ask you why, not why not.”
Mr. Gori said the company’s strong business momentum – that has seen Manulife’s share price fully restored since the financial crisis – was just one of three ingredients that he required when considering his retirement.
The other two, he says, were hitting certain financial targets that he put in place several years ago, and having a strong leadership team – and successor – that could take the business to “new heights.”
“I do think that many CEOs perhaps stay too long, and to their own detriment, the detriment of the legacy and the company as well,” Mr. Gori said. “But I’m proud to say that I believe that we have all three ingredients in place and that it was the perfect time for me to hand the baton over.”
When Mr. Gori was handed the baton in 2017, he penned a long list of targets. Among them were to boost the return on equity (ROE) to 15 per cent from 11 per cent, reduce the long-term care and variable-annuities operations to 15 per cent from 25 per cent of the business, free up $5-billion of capital, and have consistent earnings per share growth of 10 per cent to 12 per cent.
Today, the company’s ROE is 16.6 per cent while the long-term-care and variable-annuities divisions account for 11 per cent of the business. More than $11-billion worth of capital has been freed up and growth in core earnings per share for the first nine months of 2024 is 12 per cent higher than the prior period.
“I can proudly say that we are a very different company than we were in 2017, we’ve transformed the organization completely,” Mr. Gori said.
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Manulife shares have posted a total return of 154.9 per cent, including dividends, since Mr. Gori’s first day on Oct. 1, 2017, according to S&P Global Market Intelligence. Much of that growth has occurred over the last year of Mr. Gori’s leadership. Manulife’s stock is up more than 56 per cent, year-to-date, more than twice rival Sun Life Financial Inc.’s 25 per cent, as of Thursday.
But there is more room for growth, says Mr. Gori, pointing to Manulife’s reinsurance deals that could be an area for future opportunity.
Over the past year, Manulife has signed three separate reinsurance deals to help spread the cost of risk on its books, freeing up about $2.8-billion in total capital for shareholders. The most recent deal was announced on Wednesday with Reinsurance Group of America to reinsure $5.4-billion of lower-return assets, including a $2.4-billion block of Manulife’s long-term-care business.
“I think that the outgoing CEO should always leave more opportunity for an incoming CEO,“ Mr. Gori added.
Another target that Mr. Gori has remained committed to throughout his seven-year tenure is to boost digital capabilities to provide clients with quicker, simpler products. Since 2018, he has spent more than $1-billion in digital initiatives – specifically in generative AI.
“Being stuck in the dark ages wasn’t going to be how we would define success,” Mr. Gori said.
During the pandemic, Mr. Gori – like many of his competitors – saw a sharp acceleration in the adoption of digital capabilities, including a major jump in the number of claims being submitted digitally without any human intervention. In the first eight months of the pandemic, the company advanced its digital agenda more than it did over the prior eight years.
Under Mr. Gori’s leadership, Manulife has also boosted earnings in its Asian operations – a division of the business he first oversaw in Hong Kong at the start of his career with the company in 2015.
Mr. Gori set a bold target of having Asia account for 50 per cent of Manulife’s revenue by 2027. The Asia region currently accounts for 44 per cent of earnings, as of Sept. 30.
“That is up from the low 30s it accounted for many years back,” Mr. Gori said. “Today, there are two billion people in the middle class in Asia, with a forecast to grow to three-plus billion. That’s fuelling GDP growth, and insurance penetration in most markets in Asia is a fraction of what we see in North America.”
A native Australian who moved to Canada when he took the CEO position in 2017, Mr. Gori also quashed rumours that he is returning to his home country, along with his wife, Sarah, and their three children. He plans to remain in Toronto, and has applied for Canadian citizenship.
However, he says he won’t be spending his retirement days lying on a beach with a book, but already has a “heavy agenda” ahead. Along with Sarah, he wants to dive deeper into his philanthropy work – particularly in helping the homeless community.
But he is also looking to invest in startup companies that focus on health and longevity, as well as mentor the founders of those companies – some of which are launching unique health trackers or indicators around ailments such as dementia and Alzheimer’s.
“When you think about health and longevity, a large part of the system is geared toward not creating good health outcomes, but reacting to bad health outcomes,” he added.
“But I feel passionately that there’s an opportunity to be more pro-active in driving quality health in society.”