Home / Insurance Tips / Manulife Financial Corp profit slides 62% as energy investments take a hit: ‘A disappointing year’

Manulife Financial Corp profit slides 62% as energy investments take a hit: ‘A disappointing year’

Oil and gas investment losses hurt Manulife Financial's fourth quarter profit.

TORONTO – Energy exposure hit the bottom line of Manulife Financial Corp. in the fourth quarter, causing the shares to slip by as much as 12 percent in Thursday trading despite a nine percent hike in the dividend.

Quarterly net earnings missed analyst estimates and included a $361 million charge on “investment-related experience” – with the majority of that because of gas and oil holdings.

“For the third amount of time in 2015, Manulife incurred significant investment losses associated with its energy investments,” Barclays Capital analyst John Aiken wrote inside a note to clients.

“The ongoing uncertainty in oil and the broader macro outlook has management concerned,” he wrote, adding that leader Don Guloien and the management team are “backing away” from a $4 billion core earnings target for 2016.

Guloien told analysts on the conference call that “this was a disappointing year in terms of net income, largely because of sharp mark-to-market declines in oil and gas prices, diminishing an otherwise great year.”

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However, he established that confidence within the insurance giant’s capital levels and earnings growth momentum, besides the investment-related issues, caused Manulife to boost its quarterly dividend to 18.5 cents from 17 cents.

Guloien noted that insurance sales were up 24 percent in fiscal 2015, with Asia adding to an even larger increase in new business value.

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