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File photo of one of the Manulife offices.

Glenn Lowson/The Globe and Mail

Manulife Financial Corp.'s journey through the end of 2014 was bumpy, but executives say the company is preparing to make strategic changes that will better position it for long-term growth.

The Toronto-based insurer said Thursday that its net profit fell to $640-million in the fourth quarter, down from $1.3-billion a year earlier.

The country's largest life-insurance companies were all met with difficult conditions in the latter part of last year as oil prices fell and low interest rates persisted. But in the case of Manulife, several company-specific factors, such as higher expenses and claims, had a bigger impact on results.

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Donald Guloien, chief executive of Manulife, said the low interest-rate environment and other market conditions would be headwinds in the coming year. But he stressed that what keeps him up at night is ensuring Manulife is "relevant, and right on top of the game, and one of the major disruptors in 2016 and beyond."

In that vein, Mr. Guloien offered a preview of the company's plans in a conference call with analysts after the results. Those plans include offering simpler products and appealing more to customers through avenues such as social media, as well as expanding Manulife's global wealth and asset management businesses beyond the 12 countries where it sells insurance, possibly through acquisition. Manulife also plans to better integrate its international operations to allow skilled employees to work across many regions.

Life insurers have been keeping an eye on how technology and culture are changing the ways customers seek insurance. Manulife uses advisers as its primary channel to sell insurance products, but Mr. Guloien has said in the past that selling policies directly to customers is an increasingly common method of distribution and he is watching how this evolves.

For all of 2014, Manulife's profit climbed to $3.5-billion, up from $3.1-billion in 2013, which exceeded company targets.

Manulife's core earnings were $713-million in the quarter, or 36 cents a share, up from $685-million, or 35 cents, a year earlier. Core earnings are watched by the market because they separate Manulife's underlying business from the direct impact of interest rates and unsteady equity markets, as well as some other material and one-time items. Still, the profit missed analysts' expectations for 41 cents a share.

The miss in the quarterly core earnings was influenced by policy-holder experience in the U.S. and Canada, which means an increase in the size or frequency of claims compared to what the company expected. But these numbers fluctuate from quarter to quarter and don't indicate a long-term problem with estimates, said Steve Roder, chief financial officer at Manulife.

The insurer's investment division also addressed its energy exposure, as oil prices have fallen fast and the outlook is uncertain. The sharp decline led the company to an investment-related experience loss of $353-million, said Warren Thomson, chief investment officer at Manulife.

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"We view this period of volatility and depressed asset valuation as an opportune time to acquire additional oil and gas properties, while ensuring that we maintain our rigorous risk management practices and a diversified investment portfolio," Mr. Thomson said in a statement. Manulife owns an energy production subsidiary called NAL Resources Management Ltd., on top of other investments.

The fact that net income was not hit harder by the energy slump and interest rates is a testament to the company's strategy of hedging investments, said Mr. Roder. The company re-evaluated its hedging strategies after the financial crisis, when market declines ate into the company's available capital. "Had we had this quarter four years ago, you would have seen a very different bottom line," Mr. Roder said.

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