Asia division drives double-digit insurance growth as insurer returns $1.2B to shareholders amid market volatility
Manulife Financial Corporation's Global Wealth and Asset Management division swung to $4.4 billion in net outflows during the first quarter, reversing the $500 million of net inflows it generated a year earlier, as large model redemptions and rising retirement plan withdrawals weighed on the business.
Retirement posted net outflows of $2.8 billion, up slightly from $2.6 billion in the prior-year period, driven by higher member withdrawals reflecting stronger account balances from market growth and elevated retirement plan redemptions in the US.
Retail outflows reached $5.8 billion, a sharp reversal from $500 million of net inflows a year earlier, partly driven by a handful of outsized model redemptions through third-party intermediaries in North America.
Institutional asset management provided a partial offset, attracting $4.2 billion of net inflows — up from $2.6 billion a year ago — supported by the Manulife | Comvest business and money market mandates in mainland China. The segment's core EBITDA margin nonetheless improved to 29% from 28.4% a year earlier.
The wealth and asset management pressure came despite an otherwise solid quarter for the Toronto-based insurer. Core earnings reached $1.8 billion for the three months ended March 31, up 8% from a year earlier on a constant exchange rate basis, and net income attributable to shareholders climbed to $1.1 billion from $485 million in Q1 2025. Book value per common share rose to $26.30 — a record high under IFRS 17.
"We delivered a solid first quarter, executing our strategy and demonstrating the strength of our diversified portfolio,” said CEO Phil Witherington. “We generated double-digit growth in core EPS, and new business momentum continued to build, driving double-digit growth in new business CSM across all three insurance segments, despite macroeconomic uncertainty."
Asia stands out
Asia was the standout performer, with core earnings surging 22% to US$598 million and new business value rising 15%. Annualized premium equivalent sales grew 11%, fueled by demand across Hong Kong, Japan, and Singapore.
New business contractual service margin grew 16% enterprise-wide, with every insurance segment posting double-digit gains. APE sales and new business value each grew 7%.
The company's LICAT ratio stood at 136% as of March 31, and its financial leverage ratio improved to 22.5% from 23.9% a year ago. Core earnings per share rose 11% to $1.06.
In Canada, core earnings slipped 6% to $352 million, as higher long-term disability claims and elevated expenses weighed on the group insurance business. The U.S. segment reported core earnings of US$241 million, down 4%, as tighter investment spreads offset a 29% jump in APE sales and 19% growth in new business CSM.
On the deal front, Manulife closed the acquisition of PT Schroder Investment Management Indonesia during the quarter, adding approximately $3.5 billion in assets under management and cementing its position as the country's largest asset manager.
The company also announced a strategic partnership with Legal & General to expand its distribution reach and product capabilities across European institutional and retail channels.
Artificial intelligence continued to feature prominently across the business. Manulife said its developers have lifted productivity by roughly 30% through AI-assisted tools, a new AI-powered sales platform in U.S. retail drove an approximately 40% increase in meaningful advisor interactions, and expanded use of generative AI in underwriting has automated nearly half of all preliminary assessments — cutting average turnaround times from days to minutes.
