(Bloomberg) — Manulife Financial Corp. posted a 43 percent decline in third-quarter profit as Canada’s largest insurer said its oil and gas investments hurt results.
Net income was C$622 million ($470 million), or 30 cents a share, down from C$1.1 billion, or 57 cents, a year earlier, the Toronto-based firm said Thursday in a statement. Profit excluding some items was 43 cents a share, missing the 45-cent average estimate of 14 analysts surveyed by Bloomberg.
The shares fell 2.3 percent to C$21.66 at 11:52 a.m. in Toronto and have lost 2.4 percent this year.
“We delivered strong operating results in the third quarter,” Chief Executive Officer Donald Guloien, 58, said in the statement. “Net income was negatively impacted by investment experience, principally oil and gas valuation changes, as well as the charges associated with our annual actuarial review.”
The insurer took a C$220 million charge in the quarter for its oil and gas investments as prices slid, compared with gains of C$370 million a year earlier. Earnings from insurance and wealth management rose 12 percent and 82 percent respectively over the prior year, helped by record insurance sales in Asia and several acquisitions, including Standard Chartered Plc’s Hong Kong pension business.
The company has lost C$626 million this year on energy assets, offset by C$457 million in gains from other assets including real estate. Manulife has C$13.4 billion in energy debt securities and private placement debt, up 15 percent from C$11.7 billion last year.
The bet on oil will pay off, according to company executives.
“We like to think at some stage prices will increase and then the benefit of that will flow straight back through the income statement,” Steve Roder, chief financial officer at the Toronto-based firm, said by phone Thursday after the results were out. He said energy prices are currently undervalued.