Manulife Q3 Earnings Improve on Higher Premium, Deposits - Analyst Blog

Manulife Financial Corp. (MFC) reported third-quarter 2014 core earnings of $693.9 million (C$755 million), up 7.2% year over year. The improvement was driven by improved policyholder experience, the impact of higher sales and favorable business mix on new business strain, and higher fee income. 

 

Net income for Manulife in the quarter amounted to approximately $1,011 million (C$1100 million) up 6.4% year over year. Net income benefited from investment-related gains.

 

Manulife's total insurance sales were $606.6 million (C$660 million), up 7% year over year. 

 

Wealth sales came in at $10.8 billion (C$11.7 billion), unchanged year over year.

 

Total premium and deposits were $20.31 billion (C$22.1 billion), up 7.8% year over year.

 

Asia Division's core earnings were $251 million, up 7.7% year over year.  Premiums and deposits were $4.3 billion, up 39% year over year. Insurance sales increased 46% year over year, primarily led by 83% sales growth in Japan. Wealth sales, however, decreased 14% year over year, due to less favorable sentiment in several Asian markets.  

 

The company's Canadian division's core earnings of $223.3 million (C$243 million) decreased 9.3% year over year. Premiums and deposits  were $4.7 billion (C$5.1 billion), up 3.5% year over year.

 

The U.S. Division reported core earnings of $314 million, down 9.8% year over year. Premiums and deposits were $10.4 billion, down 5.7% year over year. The decrease was due to lower sales of mutual funds, lower annuity deposits and lower life insurance premiums consistent with dampened sales partially offset by higher sales of 401(k) plans.

 

Manulife Minimum Continuing Capital and Surplus Requirements ratio was 248% as of Sep 30, 2014, up from 229% as of Sep 30, 2013.

 

The company's financial leverage ratio improved to 27.1% from 28.2% in the previous quarter due to strong third-quarter earnings and the favorable impact of a stronger U.S. dollar. 

 

Manulife generated the 24th consecutive quarter of record funds under management of $594.2 billion (C$663 billion) as of Sep 30, 2014, up 15.3% year over year. The increase was driven by solid net flows in the company's asset management and group retirement businesses.

 

During the quarter, the company announced that it will acquire Standard Life Overseas Holding. The acquisition will deepen its existence in the Canadian market and enable it to beef up its already solid businesses – wealth and asset management.

 

Manulife will use the vast network, long presence and deep understanding of Standard Life in the Quebec market. Manulife is attracted to the region because of Montreal, which is considered as the international financial hub. 

 

Manulife Financial presently carries a Zacks Rank #4 (Sell).

 

Performance of Other Insurance Stocks 

 

Other life insurance players like Protective Life Corp. (PL) MetLife Inc.'s (MET) and  Lincoln National Corp. (LNC) favorable third-quarter earnings, increasing 36%, 19.4.% and 16.4% year over year, respectively.