Manulife, Great-West profits rise, but disappoint

Thu May 3, 2012 2:14pm EDT
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By Cameron French

TORONTO (Reuters) - Canada's top two life insurers - Manulife Financial Corp (MFC.TO: Quote) and Great-West Lifeco Inc (GWO.TO: Quote) - reported stronger first-quarter results on Thursday, but analysts and investors weren't impressed as they looked ahead to what could be a gloomy second quarter.

Shares of Manulife, the country's biggest insurer, initially rose 1 percent after the company reported a bigger than expected 22 percent rise in quarterly net profit.

But the enthusiasm quickly evaporated as a second look revealed that the company's core results - taking out the impact of strong markets and other one-time items - were much weaker than the headline numbers. Analysts also noted that recent declines in stock prices and bond yields look set to weigh on the insurers' second quarter results.

"As you parse through the data, the earnings were nowhere near as strong as the reported results would have you believe," said John Aiken, an analyst at Barclays Capital in Toronto.

Manulife earned C$1.2 billion ($1.21 billion), or 66 Canadian cents a share, in the first quarter, a reversal from losses in the second half of 2011, and up from the company's 2011 first-quarter profit of C$985 million, or 54 Canadian cents a share.

Just after midday, the company's shares were down 4.4 percent at C$12.75.

Shares of No. 2 insurer Great-West were down a more modest 1.6 percent at C$24.42 after the 9 percent rise in profit that it reported fell short of estimates.

Winnipeg, Manitoba-based Great-West, which is 72 percent-owned by Canadian holding company Power Financial Corp (PWF.TO: Quote), earned C$451 million, or 47.5 Canadian cents a share, in the first quarter. Analysts had expected a profit of 51 Canadian cents a share, according to Thomson Reuters I/B/E/S.   Continued...