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Portus charges could be in works for Manulife first quarter

Investors are waiting to see whether Manulife Financial Corp. will absorb a handful of one-time charges when the insurer reports first-quarter financial results at its annual meeting on Thursday.

Manulife, the country's second-largest company, has already said it will set aside between $40-million and $50-million in provisions to cover the fallout from its entanglement with Portus Alternative Asset Management Inc., the defunct hedge fund that is the subject of multiple regulatory probes.

Independent agents of brokerage subsidiary Manulife Securities International Ltd. referred about $235-million worth of customer investments to Portus before the firm shuttered its operations last month. There are still concerns about whether all of the investors' money in Portus is safe, prompting Manulife chief executive officer Dominic D'Alessandro to guarantee his customers they will regain all of the principal they pumped into the hedge fund's products.

Mario Mendonca, an analyst with Genuity Capital Markets, is forecasting Manulife will take $60-million worth of pretax credit charges this quarter, including some provisions to cover its potential exposure to the ailing airline industry.

There are also questions as to whether the insurer will put aside any cash relating to continuing regulatory probes of the industry in the United States. Sun Life Financial Inc. took an undisclosed charge last week to fund a possible settlement with the Securities and Exchange Commission over its investigation of market timing and revenue-sharing arrangements in the insurance business. U.S. insurer Hartford Financial Services Group Inc. took a similar $66-million (U.S.) reserve on Friday for the SEC probe. Manulife has not been accused of any wrongdoing, and it is not clear whether the insurer is part of the U.S. regulator's probe.

Investors will also be looking for a positive message from management on the state of integration with John Hancock Financial Services Inc., the Boston insurer Manulife acquired last year .

On average, analysts polled by Thomson First Call are expecting Manulife to post cash share profit of $1 (Canadian) for the first quarter of 2005.

© 2007 The Globe and Mail. All rights reserved.

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