Manulife mulls buybacks after disappointing quarter
By Matt Scuffham
TORONTO (Reuters) - Manulife Financial Corp (MFC.TO: Quote), Canada's biggest life insurer, said it could buy back shares after reporting lower-than-expected quarterly earnings and warning of a future C$500 million ($380 million) charge.
Manulife blamed its disappointing second-quarter earnings on a sharp decline in interest rates as well as market volatility that Chief Financial Officer Steve Roder said was due in part to Britain's vote to leave the European Union.
"It was a very volatile quarter," Roder said in an interview on Thursday. "We hope it's not representative of the year as a whole, and we're heavily focused on improving in the second half."
Manulife shares ended down 5.4 percent, or 97 Canadian cents, at C$16.95 in trading in Toronto. The shares have fallen by 18 percent since the start of the year and Manulife is currently trading at 0.87 times the value of its assets, well below that of rivals, according to Thomson Reuters I/B/E/S.
Chief Executive Donald Guloien said the company was considering buying back shares given its low valuation.
"We're giving consideration and discussing that with our board of directors. We've always preferred to invest in the business, but when the stock price gets as low as it is, stock buybacks could make sense," he told investors.
The company said an annual review of its actuarial methods could result in a charge of up to C$500 million, although some analysts had expected a higher figure.
Roder said Manulife was focusing on markets that continue to provide healthy margins. Like other Canadian insurance companies, it is expanding rapidly in Asia, selling products to the region's burgeoning middle class. Continued...