Manulife Posts Solid Q3 Earnings On Robust Asia Performance, Investment Gains
Manulife (NYSE:MFC) reported robust earnings for the third quarter on the back of continued strong performance in Asia and better investment gains. The company reported investment related gains of $297 million ($17 million + $280 million) in the quarter compared to a charge of $220 million in Q3 2015, driving up total core earnings and investment gains by 82% year-over-year (y-o-y) to about $1.3 billion. Net income for the company grew 80% to $1.1 billion or 55 cents a share in the three-month period ending September 2016. This led to the company’s stock price jumping about 10% post-announcement. [All figures in Canadian $; 1 CAD= o.74 USD]
Asia Operations Drive Earnings Growth
Asia operations continue to drive earnings growth for Manulife. In the third quarter, the company reported core earnings growth of 17% y-o-y to $294 million for its Asia operations driven by strong Annualized Premium Equivalent (APE) sales and New Business Value (NBV) sales, which grew 28% and 18% respectively, partially offset by lower favorable policyholder experience and the impact of declining interest rates.
- Manulife Financial Stock Has A 40% Upside
- Is Manulife Financial Stock Oversold At $14?
- Manulife’s Revenues Very Likely Jumped 2x In 2019, But There’s More Here Than Meets The Eye
- Is Manulife’s Volatile Investment Income A Cause For Concern?
- Can Prudential’s International Premiums Contribute 30% To Its Top Line By 2021?
- Will Manulife’s Q4 Core Earnings Again Beat Street Estimates?
With the exception of Japan, where the company faced headwinds due to pricing competition and declining interest rates, growth was seen in all the other Asian markets. The company’s bancassurance partnership with DBS yielded positive results in Singapore, the Philippines and Vietnam, where the company’s annualized premium sales almost doubled to $265 million.
U.S. Operations Show Mix Results
Operating under the John Hancock brand in the U.S., Manulife holds about 3% of the life insurance market in the country in terms of premiums earned. [1] In the third quarter, Manulife’s core earnings in the region increased 6% y-o-y to U.S. $302 million driven by favorable impact of changes in actuarial methods and a decline in certain costs, partially offset by the impact of lower John Hancock (JH) insurance sales and lower tax benefits.
JH Life sales declined 11% to U.S. $102 million owing to lower sales of products with guarantee features which the company has purposely de-emphasized in their product portfolio. Overall, the company’s gross flows declined 2% y-o-y in the third quarter owing to a 23% decline in mutual fund gross flows, partially offset by a 30% increase in pension gross flows.
View Interactive Institutional Research (Powered by Trefis):
Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap
Notes: