Manulife Financial Corp., Canada’s largest life insurer, reported a 45 percent gain in first-quarter profit after benefiting from interest-rate movements and record insurance sales in Asia.
Net income was C$1.05 billion ($820 million), up from C$723 million in the year-ago period, the Toronto-based company said in a statement Thursday. Profit excluding some items was 44 cents a share, above the 43-cent average of 13 analysts surveyed by Bloomberg.
The company recorded a C$474 million markets gain, which was driven by the significant narrowing of swap spreads in Canada, gains on the sales of certain bonds, and changes in the yield curve, according to spokesman Sean B. Pasternak. Like other life insurers, Manulife holds debt to back long-term liabilities and relies on the fixed-income market.
The results are a reversal from recent quarters, when Manulife’s profit was hampered by energy investments suffering from an oil price that halved in the last two years. The insurer’s profit slid 62 percent in the fourth quarter, when it said it may not meet a 2016 earnings target due to investment losses tied to oil and gas and low long-term bond yields.
Asian Insurance
Profit from the sale of insurance products across the insurer’s three regions rallied, jumping 35 percent to C$249 million in Asia, as Singapore and Hong Kong sales boosted total Asia insurance sales by 36 percent to a record. During the quarter, Manulife began distributing products via its bancassurance partnership with DBS Group Holdings Ltd. in Singapore, Hong Kong, Indonesia, and mainland China. In Canada, profit from insurance rose 52 percent to C$172 million, and was up 3 percent to C$183 million in the U.S.
Asset management net flows slid 76 percent to C$1.7 billion from the prior year as redemptions increased and amid “challenging market conditions” in Asia and Canada. Core earnings in the insurer’s wealth management operations fell 10 percent to C$38 million in Asia, and 6 percent to C$64 million in the U.S. In Canada, profit from the unit rose 30 percent to C$39 million.
The company’s stock rose 0.4 percent to C$18.07 at market close in Toronto Wednesday. The shares are down 13 percent this year.
Source: Bloomberg