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Reducing risk to its earnings

Major financial services company Manulife Financial Corp. says it made “significant progress” during the fourth quarter in its goal of tamping down the risk in its portfolios by reducing exposure to equity markets thanks to healthier stock markets.

Major financial services company Manulife Financial Corp. says it made “significant progress” during the fourth quarter in its goal of tamping down the risk in its portfolios by reducing exposure to equity markets thanks to healthier stock markets.

The Toronto-based insurer has come under fire from shareholders after struggling with losses, primarily due to a combination of lower equity markets and historically low interest rates that resulted in big non-cash charges against the company’s reserve require­ments.

In its third quarter, Manulife booked a three-month loss of $947 million, which was lower than analysts had ex­pected. Its second-quarter loss was $2.4 billion.

Manulife said yesterday it has now taken a number of steps to re­duce the risk to its earnings.

Among the mea­s­- ures, it shorted about $5 billion worth of equity futures contracts, beefed up its dynamic variable annuity hed­ging program by about $800 million and sold off $200 million worth of equities that had been used to back insurance liabilities.

 
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