Manulife Profit Rises 20% on North American Money Management

Feb 13, 2014 2:46 pm ET

(Updates with Great-West results in final paragraph.)

Feb. 13 (Bloomberg) -- Manulife Financial Corp., Canada’s largest life insurer, said fourth-quarter profit rose 20 percent as asset-management revenue increased in Canada and the U.S.

Net income climbed to C$1.3 billion ($1.2 billion), or 68 cents a share, from C$1.08 billion, or 57 cents, a year earlier, the Toronto-based firm said today in a statement. Profit excluding some items was 35 cents a share, missing the 37-cent average estimate of 10 analysts surveyed by Bloomberg.

Canadian insurers including Manulife are focusing on money management and other less capital-intensive businesses as they seek to cut risks and increase fee revenue. Fitch Ratings lifted Manulife’s outlook to stable from negative last month, citing the insurer’s efforts to limit losses from market fluctuations.

“Wealth sales were simply outstanding,” Chief Executive Officer Donald Guloien, 56, said in the statement. “Insurance sales were slightly lower than what we would have liked, but with better margins.”

Asset-management sales rose 15 percent to C$12 billion as Canada and the U.S. led gains. In Canada, sales of wealth products rallied 24 percent to C$3.1 billion, while revenue from the U.S. unit rose 22 percent to $7.1 billion.

The insurer reached record assets under management for the 21st consecutive quarter, hitting C$599 billion as its Boston- based John Hancock investment unit’s sales jumped 49 percent.

Broker Network

Manulife continued to tweak its product mix, reducing those with guaranteed features and variable annuities to expand its broker network and focus on fund performance. The firm last year bought a broker-dealer and investment adviser firm from Symetra Financial Corp. as it expands in the U.S.

In Asia, Manulife’s results dipped as insurance sales declined 11 percent to C$311 million and money-management profit slipped 22 percent to C$1.6 billion. The benefits provider added C$350 million from the sale of its Taiwan insurance business.

The company’s regulatory capital ratio was up 19 percentage points from last quarter to 248 percent. It may “begin to trigger questions about capital deployment” and “the potential for an eventual increase to the dividend,” John Aiken, an analyst at Barclays Plc in Toronto, said in a note to clients after the results were posted.

Manulife slipped 0.3 percent to C$20.84 at 2:01 p.m. in Toronto. The shares climbed 37 percent in the past year through yesterday, outpacing the 12 percent advance of the 46-company Standard & Poor’s/TSX Financials Index.

Sun Life Financial Inc., the third-largest Canadian life insurer, advanced 2.7 percent to C$38.53. Toronto-based Sun Life yesterday reported profit that beat analysts’ estimates amid higher domestic sales.

Great-West Lifeco Inc.’s fourth-quarter profit more than doubled to C$717 million, or 72 cents a share, from C$351 million, or 37 cents, a year earlier, the Winnipeg, Manitoba- based insurer said.

--Editors: Steven Crabill, Jacqueline Thorpe