Manulife reports weaker fourth-quarter profit, stock falls

Thu Feb 12, 2015 11:41am EST
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By Jeffrey Hodgson

TORONTO (Reuters) - Canadian insurer Manulife Financial Corp (MFC.TO: Quote) reported a weaker-than-expected fourth-quarter profit on Thursday, hurt by a jump in some types of claims, and warned macroeconomic factors like low interest rates would produce "headwinds" in 2015.

The insurer reported common shareholders' net income fell to C$612 million ($487.11 million), or 33 Canadian cents a share, in the quarter ended Dec. 31, from C$1.26 billion, or 68 Canadian cents a share, a year earlier.

Canada's largest life insurer said its core earnings were 36 Canadian cents per common share. Analysts on average had expected Manulife to earn 41 Canadian cents a share. Manulife shares fell 4 percent to C$20.95 in Toronto following the results.

"Core earnings, due to a variety of experience factors, were below our plan. Also, the macro environment, including low interest rates, produces headwinds for 2015," Chief Executive Donald Guloien said in a statement.

The experience factors, as they're referred to in the insurance industry, consisted mainly of increased claims, particularly dental claims in Canada and long-term care claims in the United States, said Steve Roder, Manulife's chief financial officer.

"We have to examine these fluctuations and understand whether it means that we have to reconsider basic assumptions. But as of now, we have no indication that it has any implications for 2015," he told Reuters.

Roder said Manulife, which hiked its dividend last August, had a solid solvency position. He said further hikes would be decided by the board, but that "we would like to think that was the first step of many."

On the prospect of stock buybacks, Roder noted previous comments by Guloien that this was not a top priority for deploying excess capital because of the potential returns available from investing in organic growth and well-priced acquisitions.   Continued...

President and Chief Executive Officer of Manulife Financial Corporation Donald Guloien speaks to shareholders at the company's Annual General Meeting in Toronto May 1, 2014. REUTERS/Fred Thornhill