How Important Is Asia For Manulife’s Growth?

Asia contributed about 23% of Manulife’s (NYSE:MFC) earned premiums in the first three quarters last year, but its contribution to the company’s core earnings was a solid 40%. Going forward, we expect the Asia Insurance and Wealth Management division to contribute about 22% to Manulife’s top line over the next five years, similar to its share currently.

Asian operations continue to drive earnings growth for Manulife and are critical for its future growth as well. Japan, Hong Kong and Indonesia are the three major markets for Manulife in the Asian market, although others such as mainland China are growing fast.

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. This was mostly 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.

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.

Gross flows in the Wealth and Asset Management business were almost flat y-o-y at around $9.5 billion in the first three quarters of 2016 as a 50% decline in gross flows in Japan was offset by strong mutual fund sales in mainland China and renewed positive market sentiment in Indonesia.

View Interactive Institutional Research (Powered by Trefis):

Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap
More Trefis Research