TORONTO (Reuters) - Manulife Financial Corp’s chief executive said on Thursday the company was “highly confident” of winning a case brought against it by hedge fund Mosten Investment LP, which says it has the right to put unlimited funds into universal life policies.
The latest hearing in the case, which an expert witness for Manulife warned could be financially damaging for the company if the verdict goes against it, is taking place this week in the province of Saskatchewan.
“I’m not going to speculate on what the judge is going to say, but we’re highly confident about the position that we have and that we’re ultimately going to prevail in this matter,” Manulife CEO Roy Gori said on a conference call.
In the case, brought by Mosten two years ago, the hedge fund claimed the right to put unlimited funds into an old Manulife policy known as universal life insurance, which is attached to a side account that pays out at least 4 percent a year on excess funds.
If the side accounts are used as investment vehicles, insurers could potentially be exposed to unlimited liability and become insolvent, according to an affidavit filed with the court by a partner with management consultants, Oliver Wyman, which was hired by Manulife to provide evidence.
The Saskatchewan court is currently considering a request by Manulife that the case be dismissed following changes to regulations introduced by the province last October.
“We’re not sure when a decision will be rendered but we remain confident in our position,” Gori said.
Reporting by Matt Scuffham; editing by Jonathan Oatis and Bernadette Baum