Manulife profit lags estimates as Asia lockdowns hurt sale

MANULIFE Financial took a hit from a new round of Covid-19 lockdowns in Asia that weighed on its business in the first quarter.

Core earnings in Asia fell 5.8 per cent to C$537 million (S$575 million), the Toronto-based insurer said Wednesday (May 11). Overall adjusted profit missed analysts' estimates.

Chief executive officer Roy Gori said in an interview that the unprecedented wave of infections - with daily case counts hitting as high as 77,000 in Hong Kong - hurt demand for its products even as the company offered digital options to reach customers amid heightened restrictions.

"Consumers aren't necessarily thinking about buying insurance when you see case counts that high and when you see quarantine rules as significant as they are," Gori said. "So while we have the technology to be able to continue to sell and connect with our customers, from a customer-sentiment perspective, that was certainly a headwind for us."

That headwind may be temporary, Gori said. Case counts in Hong Kong are back down around 300 a day, and with restrictions lifting in Asia, Manulife is "starting to see momentum come back", he said.

Manulife, known in the US for selling insurance through its John Hancock unit, has set a goal of expanding the Asian insurance and wealth businesses to half of company earnings by 2025.

Manulife saw stronger performances from its other businesses, with core earnings rising in Canada, as well as in its global wealth and asset-management unit. Net inflows in asset management were C$6.9 billion in the quarter, compared with C$1.4 billion a year earlier.

The firm said it saw higher-than-expected returns on its alternative long-duration assets in the quarter, driven by gains in private equity and real estate. That helped performance during a period when inflation and the prospect of higher interest rates weighed on global equity markets.

The alternatives portfolio "allows us to have some differentiation and some hedging to the different movements in markets", Gori said.

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Shares of Manulife fell 1.3 per cent to C$24.35 Tuesday in regular Toronto trading. The stock is up 1 per cent this year, compared with a 6.5 per cent drop for the S&P/TSX Composite Index.

Also in the results:

• Net income attributed to shareholders more than tripled to C$2.97 billion, or C$1.50 a share.
• Excluding some items, profit was 77 cents a share. Analysts estimated 83 cents, on average.
• Core earnings in Canada rose 19 per cent to C$314 million. BLOOMBERG