MFC Q1 Earnings Beat on Solid Segment Results
Manulife Financial Corporation MFC delivered first-quarter 2021 core earnings of 64 cents per share, which beat the Zacks Consensus Estimate by 8.5%. The bottom line improved 36.4% year over year.
Core earnings of $1.3 billion (C$1.6 billion) jumped 67% year over year. The increase was driven by favorable impact of markets on seed money investments in new segregated and mutual funds, higher new business gains in Asia and the United States, recognition of core investment gains, favorable net policyholder experience, higher fee income from higher average AUMA in Global WAM, and in-force business growth across all operating segments.
New business value (NBV) in the reported quarter was $476 million (C$599 million), up 32% year over year, driven by higher business in Asia and the United States.
Annualized premium equivalent (APE) sales increased 14% year over year to $1.4 billion (C$1.8 billion), attributable to higher sales in Asia and U.S. segments, partially offset by lower sales in Canada.
Expense efficiency ratio improved 1150 basis points (bps) to 48.5.
As of Dec 31, 2020, Manulife Financial’s financial leverage ratio deteriorated 650 bps year over year to 29.5.
Wealth and asset management assets under management and administration were $605.8 billion (C$764.1 billion), up 10.6% year over year. Wealth and Asset Management business generated net inflow of $1.1 billion (C$1.4 billion), down 56%, attributable to net outflows in Asia.
Core return on equity, measuring the company’s profitability, expanded 550 bps year over year to 13.7% in the reported quarter.
Life Insurance Capital Adequacy Test (LICAT) ratio was 137% as of Mar 31, 2021, down from 149% as of Dec 31, 2019.
Book value per share excluding AOCI increased 7.6% to $21.84 as on Mar 31, 2021.
Segmental Performance
Global Wealth and Asset Management division’s core earnings came in at $233 million (C$312 million), up 24.8% year over year.
Asia division’s core earnings totaled $450 million (C$570 million), up 16.1% year over year. NBV increased 39% driven by higher sales volumes and product management actions in Hong Kong and higher sales volumes and favourable product mix in Asia Other, partially offset by lower sales volumes and unfavorable product mix in Japan. APE sales increased 22% driven by growth in Hong Kong and Asia Other, partially offset by lower sales in Japan.
Manulife Financial’s Canada division core earnings of $208 million (C$264 million) were up 11.4% year over year. NBV remained flat year over year as a more favorable product mix offset the impact of lower APE sales in Individual Insurance. APE sales decreased 6%, attributable to the non-recurrence of large affinity markets sale in the year-ago quarter, partially offset by higher sales of lower risk segregated fund products.
The U.S. division reported core earnings of $395 million (C$501 million), up 20.4% year over year. NBV increased 30% year over year, primarily driven by higher sales volumes and more favorable product mix. APE sales increased 13%, driven by domestic indexed universal life products and recently launched international savings product.
Loss at Corporate and Other were $93 million (C$118 million), reflecting an improvement of 67.8% year over year.
Zacks Rank
Manulife Financial currently carries a Zacks Rank #3 (Hold).