Manulife Financial Corp.’s profit climbed in the fourth quarter as the insurer got a boost from investments, and the sale of its Taiwan insurance business.
Manulife’s net profit reached $1.3-billion, or 68 cents per share, in the quarter, up from $1.1-billion or 57 cents per share in the same period in 2012.
The insurer’s core earnings were $685-million in the quarter, or 35 cents per share, up from $554-million, or 28 cents per share, a year earlier. Core earnings separate Manulife’s underlying business from the direct impact of interest rates and unsteady equity markets, as well as some other material and one-time items. Analysts had been expecting 38 cents per share.
“Insurance sales were slightly lower than what we would have liked, but with better margins; wealth sales were simply outstanding, driving assets under management to the twenty-first consecutive quarter of growth, to $599-billion,” said Donald Guloien, chief executive officer, in a statement.
Manulife also reported earnings for all of 2013, reaching $3.1-billion in net profit, and $2.6-billion in core profit in the year. The insurer has an ambitious goal to reach $4-billion in core earnings by the year 2016.
The company’s recent results were helped by investment-related gains of $265-million in the fourth quarter, which came in part from moving government securities into higher yielding assets. The company’s earnings were increased by $350-million after selling its insurance business in Taiwan.
Insurance sales fell by 32 per cent in the final quarter of the year to $617-million. In the fourth quarter, insurance sales in Asia, the United States and Canada all declined compared with a year earlier.
Manulife executives expect future insurance sales in Asia will be strong, however. “We had record insurance sales this year in Hong Kong, the Philippines, Indonesia and Vietnam, so we were very pleased with our progress in these different territories,” said Steve Roder, chief financial officer at Manulife, in an interview.
Manulife’s sales of wealth management products were up by 15 per cent in the quarter to $12.2-billion, with strong mutual fund sales in Canada and the U.S. making up for a decline in Asia.
For the full year, Manulife’s wealth management businesses generated higher fee income, and sales of investment products rose by 37 per cent from 2012, to hit a company record of $49.7-billion in 2013.
Wider profit margins in the North American insurance businesses also contributed to profits in 2013, even as insurance sales of $2.8-billion in the year were down 13 per cent from 2012.
Manulife’s capital levels also improved. The insurer’s Minimum Continuing Capital and Surplus Requirements Ratio (MCCSR), a key measure of capital, reached 248 per cent at the end of the year, up 19 points over the third quarter and 37 over 2012’s ratio. But Mr. Roder said the ratio is volatile and the company isn’t ready to take action on any capital return initiatives.