Manulife (NYSE:MFC) reported a profit of Canadian Dollar C$ 1.1 billion for the fourth quarter of 2012, as insurance sales increased by 49% and wealth management product sales increased by 31% over the fourth quarter of 2011. Insurance sales were particularly high in the company’s home country, Canada, where it reported a 132% increase in sales driven by the high popularity of its group benefits and affinity markets products, both of which achieved record sales. Asian insurance sales increased by 20% over the prior year whereas sales in the U.S. increased by 13%.
We have a price estimate of $13 for Manulife’s stock, in line with the current market price.
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Nearly 40% of Manulife’s insurance sales originated in Asia, which saw record sales in Indonesia and an improvement in the sales of the increasing term product in Japan. However, a number of non-recurring expenses led to a 13% year-on-year decline in core earnings. Wealth sales in the geography more than doubled compared to the fourth quarter of 2011, with sales in Indonesia up 300%. Japan sales more than quadrupled with the successful launch of the strategic income fund, Hong Kong also reported high sales with the introduction of the employee choice arrangement.
Manulife reported record sales in both insurance and wealth management products for the calendar year. We expect further growth in the coming years, please read our articles, A Look At Manulife’s Asian Strategy – ASEAN, India And Korea and A Look At Manulife’s Asian Strategy – China and Japan for more details on Manulife’s position in Asia.
Regaining Ground At Home
Manulife reported a 64% year-on-year increase in core earnings from Canada as quarterly insurance sales doubled over the prior year. Sales were helped by the group benefits product, which saw a 270% increase in sales and set an industry record. Wealth product sales for the quarter declined by 4% due to actions taken on the company’s part to cut back on equity linked variable annuities. Sales for mutual funds and group retirement solutions were strong through the fourth quarter, and assets under management reached a new high, breaching the $20 billion mark by the end of the year.
Annual insurance sales were also more than double the level achieved in 2011, but wealth sales were down 7%. Manulife has lost some ground in Canada in the last few years, but we expect it to consolidate in the coming years.
More Than Just A Patriot
Manulife operates in the U.S. under the name John Hancock Financial Services. The country accounts for more than 40% of the net premium revenues. John Hancock quarterly life insurance sales increased by 18% over the prior year levels due to new products being launched in the fourth quarter, taking total insurance sales to $173 million, up 13% from the fourth quarter of 2011. Wealth sales increased by 31% compared to the fourth quarter of 2011, with record mutual fund sales of $3.7 billion and retirement plan services sales of $2 billion. Annuity sales declined by 78% as the company cut back on variable annuities to reduce exposure to equity markets.
Please refer to our article A Look At Manulife’s U.S. Business for more details on the U.S. business.