Manulife offers clients options for Portus refund

Date: Thursday, March 31, 2005

TORONTO, March 31 (Reuters) - Manulife Financial Corp. (MFC.TO: Quote, Profile, Research) said on Thursday it will offer its clients three options for the return of 100 percent of their principal invested in Portus Alternative Asset Management.
The offer makes good on a pledge Manulife made to those that the insurer had referred to the troubled hedge fund. Manulife said clients may choose to exchange their Portus investment for either a principal-protected note referenced to a portfolio of mutual funds managed by Manulife, a Manulife Guaranteed Investment Certificate, or for a cash payment equal to all of their principal invested with the hedge fund.
Portus has been under investigation by Canadian regulators for months. Its operations have been frozen and that has left its 26,000 clients wondering how much of their funds were likely to be recovered.
Based on information that Manulife has analyzed, it believes Portus's clients would likely receive less than 100 percent of their investments if the firm were liquidated in the next several months. Manulife, Canada's biggest insurer, said in a letter to clients that the offers were presented not in response to any legal obligation, but because "it's the right thing to do." "We hope that these options provide our clients with peace of mind, despite the fact that the investigation into Portus and resulting legal actions are far from complete," Dominic D'Alessandro, Manulife's president and chief executive, said in a statement.
Manulife and its mutual fund dealer, Manulife Securities International Ltd., are facing a class action suit from disgruntled investors for allegedly failing to conduct due diligence on the safety of Portus. The insurer has been accused of sending C$240 million ($198 million) worth of client investments to Portus, and reaping referral fees of more than C$10 million in addition to trailing fees from the class members' capital invested with the fund.
Manulife said it continues to work on its own review and maintains it was misled by Portus. Investors will receive a formal refund offer before the end of April. The offer will not expire until July 15.
Manulife shares were up 32 Canadian cents at C$57.59 on the Toronto Stock Exchange at midday on Thursday.