Canadian insurers hit hard by ailing markets
By Ka Yan Ng and Jeffrey Hodgson
TORONTO (Reuters) - Canada's three largest insurers reported weaker quarterly results on Thursday after taking hits from ailing capital markets, writedowns and the need to shore up reserves.
Manulife Financial Corp, Canada's largest insurer, posted its first quarterly loss ever, which came in deeper than the company had anticipated.
The country's No. 2 player, Great West Lifeco also reported a steep quarterly loss as it took more than C$1.4 billion ($1.1 billion) in charges related to its Boston-based Putnam money management unit.
Sun Life Financial Inc reported a nearly 77 percent drop in quarterly profit on damage from deteriorating capital markets. It would have posted a loss if not for a one-time gain from an asset sale.
Manulife closed down 6 percent and Great-West fell almost 2 percent on the Toronto Stock Exchange. Sun Life closed up 0.65 percent after spending much of the session lower.
"They're a product of their environment right now. They're heavily invested in equity markets and they're heavily invested in the credit markets, and both of those markets are pretty abysmal," said Craig Fehr, financial services equity analyst Edward Jones.
"Just think about the three months that Q4 spanned -- they were three pretty bad months in the market in general and ... insurance companies, particularly the Canadian lifecos, are going to trade almost as derivatives of the equity markets."
Manulife pointed to more than 20 percent drops in stocks listed on the Toronto Stock Exchange, the S&P 500, Hang Seng and Nikkei 225 during the fourth quarter when the global financial crisis intensified, putting enormous pressure on its results. Continued...