Manulife says "extreme concerns" not warranted

Enlarge Photo
(Reuters)

TORONTO (Reuters) - Concerns about the capital position at Manulife Financial Corp are "grossly exaggerated," and Canada's largest insurer is not looking at issuing shares or cutting its dividend, its chief executive told a conference call on Tuesday.

The call, on the heels of a company press release the previous day, was meant to respond to "some pretty extreme concerns" in the marketplace that Manulife might have to undertake a dilutive share issue, CEO Dominic D'Alessandro told analysts before markets opened.

"That's clearly not the case," D'Alessandro said. "We wanted to show you that.

Simon Curtis, the company's chief actuary, said Manulife's balance sheet and earnings were well positioned to cover existing exposures, even if poor market conditions persist.

Manulife has a diversified business, with units that are not sensitive to equities markets driving core earnings, Curtis noted.

In a detailed press release on Monday, when Canadian markets were closed for the Thanksgiving holiday, the company outlined expected charges of C$250 million in the third quarter and gave other details about its current position.

Manulife said the charges stemmed from credit losses from the global financial crisis -- primarily holdings of Lehman Brothers and a few other "troubled credits" -- and the C$250 million figure included about C$50 million for strengthening reserves after downgrades of some of its investments.

In trading before the market opened, Manulife shares were up 7.1 percent at US$27.60 from Monday's New York Stock Exchange close of US$25.78.

The stock had jumped 9.5 percent in New York on Monday as government efforts to pump funds into banks triggered a rally on Wall Street.

($1=$1.14 Canadian)

(Reporting by Lynne Olver; Editing by Lisa Von Ahn)