Manulife: 2016 In Review
Manulife’s (NYSE:MFC) stock has soared 22% in the last year on account of solid financial results in the first and third quarter. In the first nine months of 2016, Manulife’s revenues increased 136% year-over-year (y-o-y) to $43.5 billion driven by growth in earned premiums as well as investment gains across geographies, especially the United States.
The company reported investment income of about $21 billion in the first three quarters of 2016 compared to less than $6 billion in the same period of 2015, driven by gains on invested assets supporting insurance and investment contract liabilities. Net income for the company grew 47% to $2.9 billion or $1.40 a share in the nine-month period ending September 2016.
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Asia Operations Drive Earnings Growth
Asia operations continue to drive earnings growth for Manulife. In the first three quarters of 2016, the company reported core earnings growth of 23% y-o-y to $1.1 billion for its Asia operations driven by strong Annualized Premium Equivalent (APE) sales and New Business Value (NBV) sales, which grew 43% and 46% respectively, partially offset by lower favorable policyholder experience and the impact of declining interest rates.
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 first three quarters of 2016, Manulife’s core earnings in the region increased 1% y-o-y to U.S. $1.1 billion 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 7% to U.S. $305 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 but increased 10% for the first three quarters combined, owing to robust growth in pension gross flows.
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