What’s this? A business baron who actually likes taxes? Dominic D’Alessandro breaks the mould.
At a recent family dinner, Dominic D’Alessandro got into a heated discussion with his two sons. They were talking about taxes, and D’Alessandro senior, one of Canada’s most prominent business leaders, was taking the unlikely position that taxes are a good thing. Canadian society is very generous, he lectured his sons, who are both grown. It allows citizens to realize their full potential. He was speaking from experience—he likes to tell people he’s been favoured with “God knows how many” opportunities. “If it’s not people like myself who are going to pay the tax,” D’Alessandro asks, recalling the dinner conversation, “then who is?”
People like D’Alessandro are, of course, the very wealthy, the privileged few who live in the leafiest neighbourhoods and belong to the country’s most exclusive clubs. He qualifies easily. For a brief moment, he was Canadas top-paid banker. It was in 1993, his last year as head of Laurentian Bank—one of Canadas smallest domestic banks—and he made $3.5 million. The following year, he became chief executive of Manulife Financial Corp., one of the country’s largest insurance companies—and he’s been the highestpaid CEO of a life insurance company in Canada ever since. Last year, he received a compensation package worth $20.8 million, a sum well above all of Canada’s toppaid bankers. D’Alessandro lives in an elegant home, complete with his personal art collection, in Toronto’s upper-crust Rosedale neighbourhood and owns another on the shores of Lake St-Louis on the West Island of Montreal.
Yet, unlike many of his peers, D Alessandro was not born to the class. In 1950, he emigrated with his parents to Canada from Molise in central Italy and settled in Montreal. Three years later, when D’Alessandro was 6, his father was suddenly killed in an „« accident at a construction site, leaving his 1 mother, still not conversant in French or I English, to care for her three sons and a I daughter. She took in boarders, and her 2 eldest boy, Nicholas, left school early to
work and support the family. They lived in Little Burgundy, a rough-and-tumble community of twoand three-storey brick, cold-water walk-ups. D’Alessandro is impressive not simply because he’s made his riches—and a name for himself—in business, but because he’s done it in the business of financial services, a field dominated by WASPy private-school establishment types. He’s powerful, he’s widely respected and as soon as the merger dance among the country’s banks and insurance companies begins in earnest—which could be as early as next month—he, and Manulife, will be very much in the midst of the swirl.
At 54, D’Alessandro is a short, compact man with a gritty and passionate edge that, like his views on taxes, sets him apart from the corporate crowd. “You meet very few like him with that depth of fervour and love of the country,” says Tom Kierans, a friend and a Manulife board member. D’Alessandro says his political bias, which he describes as left of centre, is a product of his environment. “My background was such that I was more sympathetic to the underclass, or the underdog, than you would expect today,” he says with a chuckle, recalling what he was like during his university days. “It was during the Vietnam War,” he says. “I had long hair and I did the pot thing and the protests. It wasn’t unusual—everyone did it. You know, I wasn’t an establishment guy at all.”
But he was always good with numbers. Today, D’Alessandro has a reputation for stellar business acumen, and even those who don’t like him—and there are a fair number—have a grudging respect for his lightning-quick study of business situations. Like a master chess player, he sees earlier than most where the best business moves are, says William Blundell, chairman of Manulife’s board from 1994 to 1998 and a member of the search committee that hired D’Alessandro. “He has a level of passion and intensity that you like to see in a CEO,” Blundell says. He is an art collector, a voracious reader and an occasional golfer. Aside from those interests and his family (he and Pearl, his wife of 34 years, also have a daughter, now in university), he is devoted to his work.
His drive and forcefulness come with a price: they make him a difficult man to work for, say those who know. Asked to describe D’Alessandro’s management style, Blundell laughs lightly. “Improving,” he says. D’Alessandro is now more willing to “not intervene,” Blundell says, politely referring to the CEO’s controlling nature. A former employee adds: “He always set the bar very high. Once you’d cleared it, he’d raise it even higher.” D’Alessandro admits he’s very demanding. “I don’t apologize for it. I’m no more demanding of people who work with me than I am of myself.”
Consolidation in the financial services industry will likely start with the insurance companies. Right now, there’s a moratorium on takeovers of publicly traded insurers. Finance Minister Paul Martin put it in place as part of his overhaul of financial services legislation to give these businesses—most of which had recently transformed into public companies from mutually owned ones—a bit of breathing room. On Jan. 1, the moratorium will be lifted for the mid-sized companies—making them prime takeover targets. Attention is focused on Canada Life Financial Corp. and Clarica Life Insurance Co. Among the potential buyers are the larger Canadian life insurance companies, namely Manulife, its closest competitor, Toronto-based Sun Life Linancial Services of Canada Inc., and Winnipeg-based Great-West Lifeco Inc., which is controlled by Power Corp., the multi-tentacled Montreal conglomerate. The major Canadian banks and foreign financial giants are also on the list.
No one can predict the final outcome, especially since Sept. 11 turned much of the business world upside down. But for months now, bankers and insurance executives have all been swapping “what-if” scenarios in a quiet, behind-the-scenes courting ritual. D’Alessandro included. “This is a wonderful company—we would be an attractive partner for many financial institutions,” he says, not one for false modesty. Manulife, he adds, has been approached by “everybody.” D’Alessandro hasn’t been sitting idly by. Early on, Manulife snuggled up to Canada Life, quietly buying a piece of its
smaller competitor. It holds 7.9 per cent of Canada Life shares, a stake worth $560 million today. The investment is risky, says analyst Colin Devine of Salomon Smith Barney, because it put a major piece of Manulife’s capital into one pot. “It was just a gamble, to be honest,” Devine says. Others see the move as brilliant. If Manulife ends up the buyer of Canada Life, it will have acquired a good-sized portion of the company at a probable discount. If a competitor takes over Canada Life, it will have to buy out Manulife at a premium. D’Alessandro calls the stake an investment opportunity. “We knew that if we had a stake, it would position us to make a decision,” he says. “It would just allow us to be a player if we wanted to be a player. We didn’t see a downside.”
No visible business downside, perhaps, but D’Alessandro may have ruffled some important political feathers. Sources say the finance minister was none too pleased to learn of the investment through the news media. Since the two merger attempts by four of the five major Canadian banks, the subject of consolidation has been touchy in Ottawa. Martin was furious when the Bank of MontrealRoyal Bank of Canada merger announcement took him by surprise in 1998. Lately, he and his deputy minister Kevin Lynch have made it their mission to warn everyone in the business to sit on their hands and do nothing without first talking to them. According to one insider, they’re not even saying it politely. Consolidation isn’t a goal Martin is prepared to trumpet these days, given the tepid response it gets from the public— especially when he’s conducting an undeclared leadership campaign.
D’Alessandro is undaunted. “There’s going to be, I believe, a restructuring. Certainly in the insurance industry, first, and possibly followed by the banking industry,” he states. D’Alessandro, who has solid connections to both Martin and Jean Chrétien, understands the politics would be murky if Manulife were to propose tying the knot with one of the major banks (one bruited scenario involves a merger between Manulife and the Bank of Nova Scotia). As a matter of policy, Martin says he won’t allow a merger between one of the large insurance companies and one of the large banks, on grounds it would hamper domestic competition. D’Alessandro sees that as a temporary stance—and one that won’t interfere with his ambitions for Manulife. The company, already a force on the international stage, could eventually compete with the world’s largest and most powerful insurance behemoths, D’Alessandro says. Before that, he’ll have to conquer Canada. “In a few years’ time, governments will be less sensitive to the issue of whether or not the insurance industry should be co-mingled with the banks,” he predicts. “In due course, they will allow a big insurance company and a big bank to come together.”
D’Alessandro has been laying the groundwork to make that happen, arguably his entire career. While in his 30s, he was the youngest-ever executive vicepresident at Royal Bank. WTen a call came in 1988 pitching the top job at Montreal-based Laurentian, D’Alessandro jumped at the chance, even though it was a smaller institution and even though Royal, Canada’s largest bank, considered him a possible future CEO. Things move slowly at a big bank, including careers, and D’Alessandro has been in a hurry his whole life. (He finished high school at 14, having skipped two grades.) In 1993, Laurentian was taken over by Quebec’s Desjardins Group—and D’Alessandro, who speaks fluent French, English and Italian, decided to cash in his options and flee the nationalistic politics of the bank’s new owners. Besides, he’d been called by headhunters for Manulife’s top post.
He has been at Manulife’s helm for almost eight years now—a period marked by immense upheaval for insurers. Within months of D’Alessandro’s arrival in Toronto to take the post, $ 19-billion Confederation Life Insurance Co. collapsed, sending shock waves through the industry. That failure, and others, triggered a string of takeovers, including Manulife picking up some Confed holdings. Then came the demutualization process. To make themselves both more attractive to potential buyers and more agile in an environment of consolidation, five of Canada’s largest life companies, owned by policyholders, transformed themselves into shareholder-owned entities. Manulife was second out of the gate after Clarica, raising $2.5 billion in 1999— then a record-sized IPO in Canada. Almost overnight, a new class of equities—
rivalling bank stocks—was added to the marketplace, with a combined value now of $52 billion. Analysts see further consolidation in Canada as the means for the insurers to bulk up before seeking a greater footing in the coveted U.S. market.
D’Alessandro has led Manulife through its transformation from a sleepy, paternalistic mutual life company to a dynamic stock play. He’s pushed its growth in Asia, particularly in Japan and China. Today, roughly a quarter of Manulife’s business is in Canada, about half is U.S.-based, and the rest comes from around the world. Under D’Alessandro, the company’s return on equity—a ratio used by financial firms to measure efficiency—more than doubled and Manulife became the first insurer in Canada to break the billiondollar-profit mark: $1.08 billion last year. Like most other insurance companies, Manulife took a financial hit with the terrorist attacks in the U.S.—it booked a $ 150-million charge related directly to the disaster (unsentimentally terming it an “unfavourable mortality experience in the United States”). The slowing economy has also taken a toll, and its third-quarter profits were down 21 per cent. “The business environment has been difficult,” D’Alessandro says. “People are less confident than they were.” Still, D’Alessandro is “reasonably positive” the economy, and the insurance industry, will emerge from the current slowdown sometime next year.
Although he is caught up in his world of mega-deals, D’Alessandro hasn’t forgotten the “difficult times” his family endured in the 1950s after his father died. His mother remarried and left Little Burgundy when he was in his teens. She’s now 85 and, according to D’Alessandro, “amazing,” though still not very fluent in English or French. She lives upstairs from his sister in a Montreal duplex. His brother Nicholas is a Montreal taxi driver. D’Alessandro suspects his own sons— golf pro Anthony, 31, and budding financial analyst Michael, 27—argue with him over taxes just to get his goat. “I don’t know if they do it for effect, but they take positions that I don’t agree with on a whole range of issues,” he says. Then again, he knows that just like their father, his privileged kids are a product of their environment. E3
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