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Manulife shares were down 3.89 per cent Friday morning at $21.96.

Toronto-based Manulife is one of the biggest life insurers in the world and operates in the U.S. as John Hancock. The lawsuit also involves a Bank of Montreal operation and iA Financial Group. Bank of Montreal declined to comment while a spokesman for iA Financial Group said it wouldn’t comment while the matter was still in litigation. Lawyers representing Mosten didn’t immediately respond to a request for comment.

Manulife said it believes that Mosten’s position is “legally unfounded.”

“We firmly believe that the consumers purchasing universal life policies, and the insurers issuing these policies, never intended to have the policies function as deposit or securities contracts,” Manulife said in the statement. “We have a sound, highly rated global franchise. We expect we will prevail with respect to this matter and that it will not affect our business operations or our ability to meet obligations to our customers, vendors and other key stakeholders.”

Manulife dropped as much as 4.1 per cent after Block’s comments to the lowest since 2016. The shares were down 2.9 per cent at 1:18 p.m. in Toronto.

90’s Headaches

The Mosten case isn’t the first time policies written in the 1990s have come back to bite insurers. Products such as universal life insurance and long-term care policies sold decades ago were built under the assumption that interest rates would be higher. As those rates fell after the financial crisis, some companies, including Aegon NV’s Transamerica, boosted the cost of their products, prompting lawsuits from policyholders.