Manulife Posts Strong Q4 Earnings On Robust Asia Performance, Investment Gains
Manulife (NYSE:MFC) reported robust earnings for the fourth quarter on the back of continued strong performance in Asia and better investment gains. The company reported investment related gains of $180 million in the last quarter compared to zero in Q4 2015, driving up total core earnings and investment gains by 50% year-over-year (y-o-y) to about $1.3 billion. However, net income for the company declined 74% to $63 million, or 1 cent per share, in the three-month period ending December 2016.
Asia Operations Drive Earnings Growth
Asia operations continue to drive earnings growth for Manulife. In the fourth quarter, the company reported core earnings growth of 16% y-o-y to $388 million for its Asia operations driven by strong Annualized Premium Equivalent (APE) sales and New Business Value (NBV) sales, partially offset by lower favorable policyholder experience and the impact of declining interest rates.
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With the exception of Japan and Thailand, where the company faced headwinds due to pricing competition and declining interest rates, there was double-digit growth in all other Asian markets.
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 fourth quarter, Manulife’s core earnings in the region increased 42% y-o-y to U.S. $471 million, driven by a $52 million release of tax provisions as a result of closing certain tax years, improved policyholder experience and lower amortization of deferred acquisition costs on in-force variable annuity business.
JH Life sales declined 6% to U.S. $112 million owing to lower sales of products with guarantee features, which the company has purposely de-emphasized in its product portfolio. Overall, the company’s gross flows declined 9% y-o-y in the fourth quarter owing lower mutual fund gross flows.
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