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Manulife seeks dismissal of court case after insurance rule change
[TORONTO] Canadian insurer Manulife Financial Corp said on Tuesday it would ask a court in Saskatchewan to dismiss claims made against it by a hedge fund after the province changed its rules to limit how much an investor can put into certain life insurance policies.
Manulife has been fighting the case, brought by Mosten Investment LP two years ago, in which the hedge fund claimed the right to put unlimited funds into an old policy known as universal life insurance, which pays out 4.5 per cent a year on excess funds.
Shares in Manulife have fallen by 14 per cent since research firm Muddy Waters said on Oct 4 it had taken a short position on the stock, citing the court case, which Manulife's own expert has said in court could be financially damaging to Manulife, if it lost the case and was forced to pay out on unlimited investments on the policy in question and similar ones.
In the last few days, Saskatchewan said it would limit the amount of money investors could put into universal life insurance policies. Manulife said it believes the new regulations will more quickly resolve the case in its favor.
"With respect to any possible remaining ancillary matters in the litigation, Manulife continues to believe that it will prevail and that those matters are insignificant in any event," the company said.
Shares in Manulife were up 5.3 percent to C$20.92 in early trading in Toronto, still down 10 per cent from its level before Muddy Waters disclosed that it had taken a short position.