Manulife narrows loss but delays C$4 billion profit target

Thu Nov 8, 2012 6:33pm EST
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By Cameron French

(Reuters) - Manulife Financial Corp (MFC.TO: Quote) on Thursday reported a narrower loss in the third quarter due to improved financial markets-related results but said it has delayed its profit goal of C$4 billion by a year to 2016, citing macro-economic conditions.

The loss, which came amid stronger-than-expected results at Canadian insurance rivals Sun Life Financial (SLF.TO: Quote) and Great-West Lifeco, (GWO.TO: Quote) put additional pressure on Manulife's already struggling shares.

Canada's largest insurer and also owner of U.S. insurer John Hancock, Manulife warned last quarter that it was rethinking its goal of C$4 billion in net profit by 2015.

The company now projects to hit the C$4 billion level by 2016 and says it is a goal for "core" profit, rather than net profit. It admits net profit could be lower than the core earnings, which exclude the direct impact of financial markets as well as certain other items.

The shift is just the latest setback for a company that has endured sharp quarterly losses over the past four years, due to the impact of weak stock markets and low bond yields.

"It's a long road traveled (for Manulife) that seems to be getting longer with the push back of the core earnings target," said Gavin Graham, president of Graham Investment Strategy.

Under Canadian accounting rules, life insurers must mark-to-market their huge investment portfolios each quarter to make sure they can cover long-term policy obligations. If they cannot, they must take reserves to make up the shortfall.

Manulife Chief Executive Donald Guloien has worked to reduce the company's exposure to markets and said on Thursday the company had achieved its equity and interest rate hedging targets two years ahead of 2014 goals.   Continued...

Manulife Financial CEO Don Guloien arrives at their annual general meeting of shareholders in Toronto, in this May 3, 2012, file photo. REUTERS/Mark Blinch/Files