Manulife Financial Corp. suffered a loss of $1.07 billion in the first quarter ended March 31, down from profit of $869 million in the same quarter last year, the company announced on Thursday.

The company attributed the loss to charges of $1.4 billion for the continued declines in global equity markets, unrealized losses of $277 million on its alternative asset classes and credit related impairments and downgrades totaling $193 million.

“This was obviously a difficult quarter, reflecting the impact of the global economy on equity markets, other asset values and sales,” said Donald A. Guloien, Manulife’s incoming president and CEO.

Premiums and deposits were $19.3 billion in the quarter, a decrease of 16% on a constant currency basis.

Insurance sales for the quarter were down 11% from prior year levels, reflecting the industry wide impact of unsettled markets, Manulife said. Wealth sales for the quarter were down 17% from prior year levels, as strong growth in fixed products in the U.S. and Canada was more than offset by declines in variable products across all geographies.

The Canadian division recorded a loss of $88 million for the first quarter compared to earnings of $254 million reported a year earlier. The loss was driven by the impact of equity market deterioration on segregated fund guarantee reserves and unfavourable investment results, the company said.

Canadian funds under management decreased by 2%, or $2 billion, to $83.8 billion as at March 31, 2009.

Manulife’s U.S. insurance division recorded a loss of US$74 million for the quarter, compared with earnings of US$208 million reported a year earlier. The change was primarily driven by unfavourable investment results.

Its U.S. wealth management business recorded a loss of US$505 million for the first quarter of 2009, compared with earnings of US$148 million reported a year earlier.

Shareholders’ net income in the first quarter of 2008 was $869 million and included losses related to equity markets of $265 million, as well as strong investment gains.

Total funds under management as at March 31, 2009 were $405.3 billion, up from $400.1 billion at March 31 last year. Manulife said increases of $57.4 billion due to currency and $21.8 billion from positive policyholder cash flows were almost entirely offset by the market value declines.

“Going forward, the company will focus on rebalancing its product portfolio to diversify its sources of income and its risk positions,” said John DesPrez, newly appointed chief operating officer. “One of my first initiatives in my new capacity will be an analysis of growth opportunities for our company.”

IE