Manulife Financial says fears of capital troubles 'grossly exaggerated'

By The Canadian Press

TORONTO - The chief executive of Manulife Financial Corp. (TSX: MFC.TO) says recent worries about its capital position are grossly exaggerated, and that the firm has no plans to cut its dividend.

Manulife president and CEO Dominic D'Alessandro says Canada's largest insurance company still has substantial capitalization, even with the recent market falloff.

On Monday, Manulife said it expects to take a $250-million hit on its third-quarter earnings because of credit losses linked to the worldwide financial crisis.

The charge includes $50 million from an increase in its reserves for losses as a result of credit downgrades on bonds and other investments it holds.

D'Alessandro also says he expects third-quarter sales of its financial savings products to drop 20 to 30 per cent during as market volatility leaves investors cautious.