Manulife Global Malaysia Shut Down

Manulife Global is set to shut down its technology services department based in Malaysia, with about 300 staff to be laid off in stages, according to people familiar with the matter.

Manulife Technology & Services Sdn Bhd (MTS) is part of the insurer’s global shared service company that provides software development and quality assurance services to fellow Manulife companies operating in 22 countries within the group.

The company has been operating in Malaysia since February 2005.

The ultimate holding company of MTS is The Manufacturers Life Insurance Company, of which the ultimate holding company is Manulife Century Holdings (Netherlands) BV, which is also the largest shareholder of Bursa Malaysia-listed Manulife Holdings Bhd, with a 59.5% stake.It is understood that the retrenchment exercise is part of Manulife Global’s restructuring process and is not related to Manulife Malaysia.

Manulife Financial Corp, which is incorporated in Canada, is the ultimate holding company of Manulife Century Holdings. Manulife Financial Corp is listed on the Toronto Stock Exchange.

At the time of writing, Manulife had yet to respond to queries from The Edge Financial Daily on the status of the tech services unit.

Besides the technology and services team based in Malaysia, Manulife Global also has the IT and security operations business based in Manila, the Philippines.

A human resources manager from one of the largest insurance companies in Malaysia, who requested anonymity, shared that retrenchment had yet to be an issue in the industry locally, mainly due to the resilient nature of the business.

He, however, said what may be a concern is that a lot of these global shared services are shifting to other emerging countries in Asia that are viewed as a better alternative due to a lower cost structure.

“An increase in cost in the country in the past one to two years is a concern. The banking sector has seen one round of lay-offs not long ago, with a focus on automation. We have not heard much about retrenchment since then, but if this trend continues, it should be a concern for us,” he commented.

Another head of research who covers the financial and insurance industry said the retrenchment exercise is unlikely due to any weakness in the insurance business in the country, as growth remains intact despite a slowing economy.

In its latest financial results in the third quarter of the financial year ended Sept 30, 2016, Manulife saw a net profit of RM12.6 million, a decline of 20.8% from the corresponding period a year ago, despite a growth of 39.2% in revenue to RM266.3 million during the same period.

The insurance and fund management company fell by 4.37% to close at RM3.06 yesterday, with only 1,000 shares traded. At this level, Manulife is trading at a trailing price-earnings ratio of 24.3 times, with a market capitalisation of RM619.3 million.