Overall profit gains despite challenges in some key sectors
Manulife Financial Corp. has beaten analysts’ expectations for profit growth, driven by strong performance in its global wealth and asset management business, and its Asia operations.
The Canadian firm’s first quarter results show that core earnings increased 16% year-over-year to $1.8 billion, or 94 cents a share. A Bloomberg survey found that the average expected by analysts was 91 cents.
The firm’s global wealth and asset management business posted a 25% rise in core earnings to $357 million, while net inflows were up from $4.4 billion in the first quarter of 2023 to $6.7 billion in Q1, 2024.
“We had a strong start to 2024 with record levels of new business CSM and new business value, reflecting 52% and 34% growth, respectively,” said CFO Colin Simpson. “Global WAM saw strong net inflows of $6.7 billion, and our capital position remains robust with a LICAT ratio of 138%. Looking ahead, we remain committed to further improving ROE through disciplined capital allocation and continued business performance improvements.”
Among the highlights for the WAM unit were the closing of a $1.0 billion institutional fund - Manulife Capital Partners VII. The fund will invest in U.S. middle market companies across multiple industries, focusing on growth and high-yield opportunities.
The WAM unit’s retirement net inflows of $3.2 billion were up from $1.2 billion a year earlier, reflecting higher new retirement plan sales across the firm’s three geographies. Retail net inflows of $1.7 billion increased from $0.8 billion, driven by increased demand for investment products amid equity market recovery and improved investor sentiment.
Institutional Asset Management net inflows of $1.8billion were down though compared with $2.5 billion a year earlier as higher fixed income mandates sales and lower money market redemptions were more than offset by higher redemptions in fixed income and equity mandates.
Strong momentum
Overall, the firm focused on optimizing its portfolio including by reinsuring some underperforming assets including two large insurance blocks.
“After a milestone year for Manulife, we continued to show strong momentum in 1Q24 by delivering superior results, including 20% core EPS growth, an increase of 11% in adjusted book value per common share, and record level APE sales with double-digit growth across each of our insurance segments,” said Roy Gori, president & CEO. “We again demonstrated a disciplined focus on execution by closing the largest ever LTC reinsurance transaction in the first quarter and entering the largest ever universal life reinsurance agreement in Canada. I’m excited by our momentum in the first quarter and by the opportunities ahead of us to continue generating shareholder value.”
