Manulife profit beats estimates on strong gains from Asia, wealth management

financialpost.com:

Manulife Financial Corp. posted first-quarter profit that beat analysts’ estimates, boosted by continued strength in its Asia operations and wealth-management business.

Core earnings increased 16 per cent from a year earlier to $1.8 billion, or 94 cents a share, the Toronto-based life insurer and asset manager said Wednesday in a statement. That beat the 91-cent average estimate of analysts in a Bloomberg survey.

“Global wealth and asset management saw strong net inflows,” chief financial officer Colin Simpson said in the statement. “Our capital position remains robust.”

In Asia, core earnings increased 39 per cent from a year earlier, and they rose 25 per cent in global wealth and asset management.

Manulife recently offloaded some of its less-profitable assets by striking two large reinsurance deals, both of which have now closed. These transactions are allowing the company to reduce risk, release capital and return money to shareholders through buybacks. But they also cut into reported earnings as Manulife no longer books the revenue from the reinsured policies.

The reinsurance strategy “does not appear to have unduly weighed on core profitability,” Jefferies Financial analyst John Aiken wrote in a report to clients Wednesday. “We anticipate that the quarter will be met with some measure of relief from investors and should be supportive to MFC’s valuation.”

Net income attributable to shareholders was $866 million, down 38 per cent from a year earlier. Reported earnings in the quarter totalled 45 cents a share, down from 73 cents.

As part of the first of the recent reinsurance deals, Manulife is selling $1.7 billion of alternative long-duration assets. It has already disposed $1.3 billion of that total, primarily