August 5, 2010 / 1:21 PM / 7 years ago

CORRECTED - UPDATE 1-Manulife Financial posts loss on weak markets

(Corrects bullet and the second paragraph to show results were for the second quarter, not the first)

* Q2 loss C$1.36/shr vs year-earlier profit C$1.09/shr

* Weaker stocks, low bond yields force reserve increases

TORONTO, Aug 5 (Reuters) - Manulife Financial Corp (MFC.TO), Canada’s largest life insurer, posted a steep quarterly loss due to sharp declines in equity markets and bond yields.

The company, which a year ago cut its dividend in half in a campaign to rebuild capital levels, posted a loss of C$2.4 billion ($2.4 billion), or C$1.36 a share, for the fiscal second quarter ended June 30.

That compared with net income of C$1.8 billion, or C$1.09 a share, in the year-earlier period.

The Toronto-based company, which operates under the John Hancock banner in the United States, said the decline of global stock markets during the quarter stripped C$1.7 billion from its bottom line, while lower interest rates led to a C$1.5 billion profit hit.

The weaker stock prices and bond yields -- which hurt the potential return on the assets its holds -- forced the company to increase reserves to cover off potential payments to policyholders. ($1=$1.01 Canadian) (Reporting by Cameron French; editing by John Wallace)

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