During a large market decline, the last thing you want to see is a letter from the government. It is never good news for the recipient. Either you are being drafted, they want more money from you or you are under investigation. In the case of Manulife Financial Corp. (MFC), Canada's largest insurance company, it was the latter.
On Friday June 19th after the market closed, it was reported that MFC received an enforcement notice from the Ontario Securities Commission (OSC) relating to its disclosure before March 2009 of risks related to its variable annuity guarantee and segregated funds business. The preliminary conclusion of OSC staff is that the Company failed to meet its continuous disclosure obligations related to its exposure to market price risk in its segregated funds and variable annuity guaranteed products. MFC will have the opportunity to respond to the notice before OSC staff makes a final decision about proceeding. The Company believes that its disclosure satisfied applicable disclosure requirements.
Like most insurance companies, MFC has struggled as a result of the declining equity markets. The Company has reported huge losses in excess of one billion Canadian dollars over the last two quarters. Much of which can be attributed to increasing reserves to cover long-term segregated fund and annuity guarantees. Segregated funds are popular investments similar to mutual funds but contain insurance contracts that limit risk for the investors.
MFC's U.S. ADR was down over 14% yesterday - the first full day of trading after the announcement. Other insurance companies shared the pain as shown below:
As with all sympathy declines, some are not warranted based on the circumstances. It could be a good time to invest in certain select insurance stocks.
Full Disclosure: Long AFL, MFC. See a list of all my income holdings here.
Related Articles:
Manulife Financial Corp. (MFC) Being Investigated
Posted by D4L | Sunday, June 28, 2009 | commentary | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
~
Popular Posts Last 30 Days
-
As a relatively new blogger, the one thing that has stood out in my mind is the number of Canadian bloggers in the areas that I am most inte...
-
GameStop (NYSE:GME) lost about 40% of its market value over the past three years, as rising digital downloads and declining mall traffic thr...
-
In a capitalistic society, opportunities to generate (mostly) passive income are all around us. Dividend growth investing is one of the most...
-
These elite income producers have rallied this year. Their brilliance at producing passive income seems to have caught the market's eye ...
-
Investors buy dividend stocks for a few reasons. For one, they provide income via dividends that act as a bonus on top of capital appreciati...
-
Buying dividend stocks can be tricky. Oftentimes, stocks that pay exorbitantly high dividends have underlying financial problems, and their ...
-
If you are looking for reliable dividends, these three Dividend Kings should be right up your alley. Dividends are paid at the discretion of...
-
While optimism in the broader market remains robust – particularly for hyped-up sectors like technology – investors may still want to consid...
-
A strong dividend investing strategy may be to focus on high-quality names that score well on several dividend-related metrics. In other wor...
-
Since the market highs in July, stocks have been under considerable pressure. Indeed, 10-year Treasury yields are at the highest level since...
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.