(Corrects size of initial share issue to 8 million; corrects conversion frequency to every five years)

* Offers preferred shares at C$25 each

* Proceeds to reduce debt, general corporate purposes

* Latest in string of issues by Canadian financial firms

TORONTO, May 25 (Reuters) - Manulife Financial Corp (MFC.TO: Quote, Profile, Research), Canada's largest insurance company, said on Monday it will issue as much as C$250 million ($223 million) of preferred shares to reduce debt and strengthen its balance sheet.

The move comes about two months after Manulife said it would issue C$600 million in medium-term notes and three months after it launched a C$450 million preferred share issue.

Manulife said it will issue 8 million series 1 preferred shares at C$25 each to raise C$200 million.

Underwriters, led by Scotia Capital Inc and RBC Dominion Securities, have the option of buying up to an additional 2 million of the shares for C$50 million more in gross proceeds, the company said.

The shares pay a noncumulative quarterly fixed dividend yielding 5.6 percent annually until Sept. 19, 2014. They can be converted into rate reset series 2 preferred shares on Sept. 19 2014 and every five years after that.