Manulife profit beats on growth in Asia, wealth management

MANULIFE Financial posted first-quarter profit that beat analysts’ estimates, boosted by continued strength in its Asia operations and wealth management business.

Core earnings increased 16 per cent from a year earlier to C$1.8 billion (S$1.8 billion), or 94 Canadian cents a share, the Toronto-based life insurer and asset manager said on Wednesday (May 8). That beat the 91-Canadian-cent average estimate of analysts in a Bloomberg survey.

“Global wealth and asset management saw strong net inflows,” chief financial officer Colin Simpson said. “Our capital position remains robust.”

In Asia, core earnings increased 39 per cent from a year earlier, and they rose 25 per cent in global wealth and asset management.

Manulife recently offloaded some of its less-profitable assets by striking two large reinsurance deals, both of which have now closed. These transactions are allowing the company to reduce risk, release capital and return money to shareholders through buybacks. But they also cut into reported earnings, as Manulife no longer books the revenue from the reinsured policies.

Net income attributable to shareholders was C$866 million, down 38 per cent from a year earlier. Reported earnings in the quarter totalled 45 Canadian cents a share, down from 73 cents.

As part of the first of the recent reinsurance deals, Manulife is selling C$1.7 billion of alternative long-duration assets. It has already disposed C$1.3 billion of that total, primarily private equity stakes, Simpson said.

“We have sold at pretty much our carrying value,” he said, noting that while there was concern in the market about private equity valuations, “the fact that we are able to sell for carrying value validates our valuation methodology”.

Simpson said Manulife has not looked to sell commercial real estate assets, where valuations have generally taken a beating.

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The value of the insurer’s investments in office properties at the end of Q1 declined 10.5 per cent from a year earlier to C$4.8 billion.

Manulife will host an investor conference call as well as its annual shareholders meeting on Thursday. BLOOMBERG