Manulife beats earnings estimates as sales climb in Asia and in global asset management

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Canada’s largest insurer reported better-than-expected earnings as the reopening of Hong Kong’s border pushed insurance and wealth sales beyond prepandemic levels.

Manulife Financial Corp. MFC-T reported a 4-per-cent increase in core earnings of $1.6-billion, or 83 cents a share, for the second quarter of 2023. Core earnings is an adjusted profit figure used by Manulife. That is up from $1.5-billion, or 76 cents a share, a year earlier.

The profit came from “double-digit sales” in several areas of the company, chief executive Roy Gori said in an interview, particularly in Asia where sales have surged after the reopening of the Hong Kong border with mainland China.

“Asia has really been leading the charge for us in sales,” Mr. Gori said. “We feel really great about our overall sales results, but particularly pleased to see our Asia business really start to see more positive momentum after feeling the effects of the pandemic a bit later than most of the world.”

Manulife is the second Canadian insurer to reap the benefits of Asia’s economic recovery. Sun Life Financial reported on Tuesday a 14-per-cent jump in adjusted earnings – largely driven by stronger insurance sales in Asia.

Last month, Manulife appointed former chief financial officer Phil Witherington as president and CEO of its Asian business, which accounts for about 35 per cent of its overall profits. (Colin Simpson took on the role of chief financial officer on July 1.)

Now, six months since mainland China visitors have been allowed to re-enter into Hong Kong, the region has started to bounce back, Mr Gori said, with certain areas exceeding their prepandemic sales. Manulife Asia reported second-quarter annual premium equivalent sales – an annualized sales metric used by the company – of $1.18-billion, a 26-per-cent jump from the first quarter.

“In Hong Kong, our sales were double what they were the year prior,” Mr. Gori said. “Part of that was because of the reopening of the border with China, but even if you take out the cross-border sales, Hong Kong sales were up quite considerably and that is very encouraging.”

Similar growth has occurred in Singapore, he added, while sales in mainland China and Indonesia has seen higher “double-digit growth.”

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During a call with analysts, Mr. Witherington said the recovery was not just a bounce back because of pent-up demand, but a sign of future growth to come out of the region.

“In China, we hear about the potential stalls to the recovery, but our second quarter was the strongest second quarter on record in China and I think that does demonstrate the robust emergence from the pandemic,” he added. Those sales will continue to rise, he added, as the insurer captures a greater share of mainland Chinese visitor sales.

Manulife’s global wealth and asset-management business also reported positive numbers, with sales of $2.2-billion in the second quarter, up from $1.7-billion in the prior year. Mr. Simpson told analysts that the positive sales were mainly because of “lower mutual-fund redemption rates” among retail investors, a factor that many Canadian fund managers continue to struggle with in current market conditions.

The global division currently manages about $819-billion in assets, a 1-per-cent increase from the same quarter last year, driven by the acquisition of full ownership interest in Manulife Fund Management in mainland China.

As well, Mr. Gori said the company will remain active in buying back company shares. So far this year, Manulife has bought back about 33 million shares, or 1.8 per cent of its common shares outstanding. Since 2022, the insurer has purchased more than 112 million shares – or $2.7-billion.

Freeing up more than $5-billion in capital three years ahead of schedule in 2020 was a key contributor to Manulife’s ability to withstand prolonged lockdowns in Asia. That capital reserve now exceeds $9-billion and has allowed the company to be fairly nimble in buying back common shares, Mr. Gori added.