WRAPUP 1-Canadian insurers hit by market downturn
* Manulife Q1 share loss C$0.67 vs EPS C$0.57 last year
* Sun Life Q1 share loss C$0.38 vs EPS C$0.93 last year
* Declines in equity markets drive down results
* Shares sink in mid-morning trade
TORONTO, May 7 (Reuters) - Two of Canada's largest insurers reported weaker-than-expected quarterly results on Thursday as ailing global markets, credit impairments and the need to shore up reserves took a toll.
Manulife Financial Corp (MFC.TO), Canada's largest insurer, posted a first-quarter loss of C$1.07 billion ($916 million), or 67 Canadian cents a share, compared with a profit of C$869 million, or 57 Canadian cents a share, a year earlier.
Analysts, on average, had expected a loss of 37 Canadian cents before exceptions, according to Reuters Estimates.
Canada's third-largest insurer, Sun Life Financial Inc (SLF.TO) (SLF.N), kicked off the day by reporting a quarterly loss, hurt by an increase in reserves due to a decline in equity markets.
Sun Life posted a first-quarter net loss of C$213 million, or 38 Canadian cents a share, compared with a profit of C$533 million, or 93 Canadian cents a share, a year ago. Analysts had expected a loss of 19 Canadian cents a share.
The disappointing results sent both stocks lower in early Toronto trade. Manulife shares were down 2.5 percent at C$22.18, while Sun Life traded 3 percent lower at C$29.07. The S&P/TSX financial index of banks, insurance companies and asset managers was down 1.1 percent overall.
"This was obviously a difficult quarter, reflecting the impact of the global economy on equity markets, other asset values and sales," said Donald Guloien, Manulife's incoming chief executive. "Our global franchises remain strong, our capital position is near the high end of its historical range, and we enjoy high credit ratings."
Craig Fehr, an analyst at Edward Jones, said Sun Life's results reflected the very difficult start to the first quarter, when equity markets had not yet rebounded.
Fehr said writedowns on credit losses and reserve rebuilding would be a trend across the insurance sector, which makes big investments and needs to hold large reserves against insurance liabilities on the books.
"A lot of this quarter stems from the reserve additions that they had for their credit impairments and the equity market declines and I think that's going to be the theme we see throughout the day as the rest of the lifecos report," Fehr said.
CREDIT, MARKET LOSSES Continued...
