Oct. 13 (Bloomberg) -- Manulife Financial Corp., North America's largest insurer by market value, said credit losses will reduce third-quarter earnings about C$250 million ($215 million), including C$50 million for bolstering reserves.

Gross unrealized losses on fixed-income securities expanded to about C$6 billion, which represents about 3.6 percent of total invested assets of C$165 billion, Toronto-based Manulife said in a statement today.

Manulife had largely escaped debt writedowns tied to the global credit crunch prior to the third quarter. Last month, the insurer said it expected writedowns because of investments in American International Group Inc., Lehman Brothers Holdings Inc. and Washington Mutual Inc. Lehman and WaMu collapsed and AIG accepted a government takeover to avoid bankruptcy.

Manulife, whose stock fell 30 percent last week on investor concerns about writedowns and credit quality, said its balance sheet is still ``high quality'' and the insurer doesn't plan to sell common shares to raise capital. The company is scheduled to report third-quarter results Nov. 6.

Risk tied to securities lending has been ``insignificant'' and the practice has been reduced as markets swooned, the company said. Securities loaned out now total less than C$1.5 billion. Cash and short-term assets stand at more than C$11 billion, equal to 7 percent of invested assets, Manulife said.

Scotia Capital analyst Tom MacKinnon predicted last month that Manulife would have a writedown of C$298 million for the costs, compared with about C$414 million for domestic competitor Sun Life Financial Inc.

Trading on the Toronto Stock Exchange was closed today. In composite trading on the New York Stock Exchange today, Manulife rose $2.44, or 10.5 percent to $25.78 at 4:03 p.m.

(Manulife scheduled a conference at 8 a.m. Toronto time tomorrow. To listen, dial +1-416-641-6110 or +1-866-226-1798 at least 10 minutes before the call begins.)

To contact the reporter on this story: Sean B. Pasternak at spasternak@bloomberg.net.

Last Updated: October 13, 2008 16:04 EDT