December 22, 2017

Dec 23 04:12 2017 Print This Article

Manulife has announced a 2.9-billion hit for 17Q4. Management must be distraught that such an important development had to be announced after the market closed for the Christmas holiday – with no time to publish a press release on their website, darn it! It only made it to Newswire – so I’ll help them out by passing along the word:

Manulife Financial Corp. is preparing to take two charges worth $2.9-billion in its fourth quarter as U.S. tax reforms and a new investment strategy reshapes the business.

The Toronto-based insurer said Friday evening that it would move to sell some private market assets, resulting in a one-time $1-billion hit to profits as the company aims to put capital toward investments that can offer higher returns.

At the same time, Manulife said that U.S. President Donald Trump’s overhaul of the U.S. tax code would result in a second $1.9-billion charge as a result of some accounting changes, but that the move would be beneficial to the company’s business south of the border over time. Both charges will be included in Manulife’s fourth-quarter results, which are set to be released on Feb. 7.…Over the next year and a half, Manulife plans to sell some of its alternative assets, which are long-term holdings in sectors such as timberland, farmland, infrastructure and energy. Many of these assets are located in the U.S.…As the alternative assets are sold, about $2-billion in regulatory capital will be freed up at Manulife. But the move will also mean that the company’s core earnings, a metric that strips out some accounting volatility, will be reduced by up to $60-million per year after tax until Manulife is able to put about $1-billion in capital to work in businesses that yield higher returns.

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PrefBlog is presented as a public service by Hymas Investment Management Inc., Manager / Trustee of Malachite Aggressive Preferred Fundand publisher of PrefLetter, a monthly newsletter directed towards long term buy-and-hold retail investors. James Hymas, president of Hymas Investment Management Inc, with years of experience designing quantitative investment technology and applying this technology to conservative portfolios, seeks to provide institutions and retail investors with the information and advice necessary to produce top quartile returns in the preferred share market without the assumption of excess risk.

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