[TORONTO] Canada's biggest life insurer, Manulife Financial Corp, posted second-quarter results which were below market expectations and warned of a charge of up to C$500 million (S$513 million) in the third quarter.
The company on Thursday reported core earnings of C$833 million, or 40 Canadian cents a share, compared with C$902 million, or 44 Canadian cents a share, a year earlier.
Analysts on average had expected earnings of 46 Canadian cents a share, according to Thomson Reuters I/B/E/S. "Based on the miss against expectations, we would expect relative weakness in Manulife's stock today," said Barclays analyst John Aiken. "Manulife continues to struggle to lift its earnings in the low interest rate environment and the sales and new business value generated in Asia will take some time to filter down to the bottom line," he added.
Manulife said it delivered strong double-digit growth in sales and new business in Asia and positive net flows across its wealth and asset management businesses. "While both core earnings and net income this quarter were disappointing, having been impacted by the sharp decline in interest rates and heightened market volatility, I am pleased with how resilient our underlying businesses remained," Chief Executive Donald Guloien said in a statement.
Like other Canadian insurance companies, Manulife is expanding rapidly in Asia, selling products to the region's burgeoning middle class.
Manulife said it is conducting an annual review of its actuarial methods and assumptions, which could result in a post-tax charge to shareholders of up to C$500 million in the current quarter. Some analysts had expected a higher figure.
The company announced a dividend of 18.5 Canadian cents a share for the second quarter, unchanged from the first quarter, disappointing some investors who had hoped for an increase.
Manulife said it had cost savings of C$450 million in the first half of this year, already surpassing its 2016 target of C$400 million.