Bloomberg News

Manulife Delays Profit Goal as Loss Narrows

November 08, 2012

Manulife Financial Corp. (MFC), Canada’s largest insurer, delayed its objective of reaching C$4 billion ($4 billion) in annual profit, citing “significant headwinds” in the economy.

The owner of Boston-based John Hancock Financial expects to have C$4 billion in so-called core earnings by 2016 after previously stating a net income target of C$4 billion in 2015, the company said today as it reported a narrower third-quarter loss. The Toronto-based insurer said in August that the worsening economy would make it hard to reach the 2015 target.

“It’s a reasonable guesstimate on our part,” Chief Executive Officer Donald Guloien said today in a telephone interview. “It’s got some ambition in it, but it’s not a worst- case scenario.”

The third-quarter loss shrank to C$227 million, or 14 cents a share, from C$1.28 billion, or 73 cents, a year earlier. Manulife posted investment gains as Canada’s benchmark Standard & Poor’s/TSX Composite Index advanced 5.7 percent and the S&P 500 Index rose 2.4 percent during the period. Insurers benefit from increased investment income when equities rise.

Manulife fell 1.5 percent to C$11.82 in 4 p.m. trading on the Toronto Stock Exchange. It has risen 8.9 percent this year.

Hedging Targets

Guloien has lowered Manulife’s sensitivity to equity markets and interest rates. He said today that Manulife’s hedging targets have been achieved two years before a 2014 goal.

Including a C$1 billion charge to reflect changes in the company’s assumptions to calculate benefits and other one-time items, the loss was 14 cents a share. That beat the 30 cent a share loss estimate of nine analysts surveyed by Bloomberg News.

Earnings from Canada dropped 12 percent to C$229 million as wealth-management sales declined. U.S. earnings increased 11 percent to C$288 million and profit from Asia climbed 4.5 percent to C$230 million.

Sun Life Financial Inc. (SLF), Canada’s third-largest insurer, reported yesterday third-quarter profit of C$383 million, or 64 cents a share, compared with a year-earlier loss of C$621 million, or C$1.07. Results topped analyst expectations, bolstered by fees from its MFS mutual fund unit in the U.S.

“There’s a number of things coming through, but overall I’d say the strategy is working,” Sun Life CEO Dean Connor said today in a telephone interview. “In the third quarter, what stands out is the progress that MFS is making.”

Sun Life rose 3.8 percent to C$25.29 in Toronto, the biggest gain in about two months.

Great-West Lifeco Inc. (GWO), the second-largest insurer, reported today that third-quarter profit climbed 14 percent to C$520 million, or 55 cents a share. It rose 0.4 percent to C$22.91.

To contact the reporter on this story: Sean B. Pasternak in Toronto at spasternak@bloomberg.net

To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net; David Scheer at dscheer@bloomberg.net


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