Canadian Insurer Manulife's Profit Misses Expectations
04 August 2016 - 10:50PM
Dow Jones News
Manulife Financial Corp. on Thursday reported a 17% increase in
second-quarter net earnings, but results fell short of analyst and
company expectations as lower interest rates and market volatility
weighed on the insurer.
Canada's largest insurance company by assets also warned that it
could book a charge this year of up to 500 million Canadian dollars
($383 million) related to its annual review of actuarial methods
and assumptions.
Toronto-based Manulife said it earned C$704 million, or 34
Canadian cents a share, in its latest quarter. That is up from a
profit of C$600 million, or 29 Canadian cents a year earlier.
It said core earnings, which exclude one-time items, fell to 40
Canadian cents a share from 44 Canadian cents a year earlier,
missing the Thomson Reuters mean estimate for earnings of 46
Canadian cents a share.
"While both core earnings and net income this quarter were
disappointing, having been impacted by the sharp decline in
interest rates and heightened market volatility, I am pleased with
how resilient our underlying businesses remained," Chief Executive
Donald Guloien said in a release.
The surprise U.K. decision to leave the European Union sent
Canadian and U.S. government bond yields lower, creating headwinds
for life insurance companies which are sensitive to interest-rate
shifts as a result of investing customers' premiums in bonds.
Manulife said its minimum continuing capital and surplus
requirements ratio, a key measure of capital strength, was 236% at
the end of June.
The company said it is in the early stages of completing its
annual third-quarter assumptions review and said preliminary
indications suggest it could results in an after-tax charge of up
to C$500 million.
Canadian insurers Manulife and smaller rival Sun Life Financial
Inc. generally offer assumption-review guidance alongside
second-quarter results, according to Desjardins Capital Markets.
Ahead of the latest results, Desjardins had guided for a smaller
C$200 million charge for Manulife.
Sun Life, Canada's third-largest insurance company by assets, is
due to report second-quarter results on Aug. 10.
Write to Judy McKinnon at judy.mckinnon@wsj.com
(END) Dow Jones Newswires
August 04, 2016 08:35 ET (12:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Sun Life Financial (NYSE:SLF)
Historical Stock Chart
From Apr 2024 to May 2024
Sun Life Financial (NYSE:SLF)
Historical Stock Chart
From May 2023 to May 2024