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Shares of insurance giants Manulife Financial Corp. and Sun Life Financial Inc. fell in trading Thursday after fourth-quarter profits failed to meet analysts’ expectations.
Manulife reported a profit of $868 million, or diluted earnings per share of 51 cents. That compares with a year-earlier loss of $1.87 billion, or $1.24 a share. Net income for the year was $1.4 billion, or 82 cents a share, up from $517 million, or 32 cents, in 2008.
"We have improved margins, balanced our product portfolio, announced three attractive acquisitions and continued to demonstrate good investment results in the face of challenging market conditions," chief executive Donald Guloien said in a statement. "We have a strong capital base and our equity exposure has reduced through additional hedging, product mix adjustments and with the benefit of equity market increases."
Manulife announced a quarterly dividend of 13 cents on the common shares.
Its shares closed at $19.16, down 34 cents. Sun Life closed at $30.40, down 96 cents.
An analyst survey by Bloomberg News showed Manulife was expected to earn 64 cents a share before one-time items. Sun Life was expected to earn 66 cents a share.
Sun Life reported a net income of $296 million, or earnings per diluted share of 52 cents, during the three months ending Dec. 31, 2009, up from $129 million, or 23 cents a share, during the same period in 2008. Sun Life will maintain its quarterly dividend at 36 cents per common share.
"While these results were an improvement to the same period a year ago and to the previous quarter our net income was impacted by continued weakness in credit markets, in particular the United States commercial mortgage sector," Donald Stewart, chief executive officer, said during a conference call Thursday.
The company reported an annual net income of $534 million in 2009, down from $785 million for 2008.
Sun Life has been trying to boost the visibility of its brand in the U.S., and three weeks before last Sunday's Super Bowl it purchased the right to rename the Miami Dolphins' home field. It’s now known as Sun Life Stadium.
Revenues for the fourth quarter were reported at $5 billion, up $287 million from the same period in 2008. Total revenue for the year was $27.6 billion, up $12 billion from the same 12 months in 2008.
U.S. markets continue to be fragile and "capital guidelines for financial services companies are also under review, although the precise impact on life insurers will not be known for some time," said Stewart.
When asked if Sun Life would be able to maintain the dividend, Stewart said "absent any major shifts," he expects to, but will analyze it each quarter. "I wouldn’t want anyone to have the impression that our horizon is 90 days ..... we make the decision quarter-by-quarter because it is the prudent thing to do in these economic conditions."
Source: Toronto Star February 2010
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