February 12, 2009 / 3:36 PM / 9 years ago

UPDATE 1-Manulife hit by higher reserves, reports loss

* Q4 EPS loss of C$1.24 vs year-earlier profit C$0.75

* Negative return on equity of 28.6 percent

* Shares sink 5 percent (Adds details)

TORONTO, Feb 12 (Reuters) - Manulife Financial Corp (MFC.TO), Canada’s largest insurer, reported a big quarterly loss on Thursday, hit by a jump in reserves and plummeting global stock markets.

The company said it lost C$1.87 billion ($1.5 billion), or C$1.24 a share, in the fourth quarter ended Dec. 31, compared with a profit of C$1.14 billion, or 75 Canadian cents a share, in the same period last year.

Analysts, on average, had expected a loss of 95 Canadian cents before exceptions, according to Reuters Estimates.

Shares of Manulife fell 4.9 percent to C$18.42 on the Toronto Stock Exchange on Thursday morning.

“Our results have been negatively impacted by the downturn in global equity markets, particularly in the fourth quarter,” said Dominic D‘Alessandro, Manulife’s president and chief executive.

The insurer had warned in December that it expected to report a fourth quarter loss of around C$1.5 billion because of the effects of lower stock markets on investments and other revenue.

Manulife said the sharp decline in global equity markets had led it to increase its balance sheet reserves to cover investment guarantees linked to some of its products to C$5.783 billion at the end of 2008 from C$526 million at the end of 2007.

If equity markets recover, some of these reserves may flow into net income, Manulife said.

Manulife, which also has operations in the United States and Asia, said revenue rose to C$11.65 billion from C$10.28 billion a year earlier.

The company reported an annualized negative return on equity of 28.6 percent in the quarter, compared with a positive return on equity of 20.5 percent the year before.

$1=$1.25 Canadian Reporting by Ka Yan Ng; Editing by Peter Galloway

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