Canadian life insurer, Manulife Financial Corp. (MFC) reported fourth-quarter 2013 core earnings of $653 million (C$685 million), up 16.8% year over year. The improvement was driven by better fee income driven by wealth management businesses, increase in new business margins in North American insurance businesses, lower hedging costs and net modestly favorable currency impacts. However, higher legal and variable compensation accruals were partial offsets.
Net income for Manulife in the fourth quarter amounted to approximately $1.2 billion (C$1.3 billion) compared with a net income of $1.1 million (C$1.08 million) in the quarter last year.
For full year 2013, Manulife reported core earnings of $2.5 million (C$2.6 billion), up 18.2% year over year. Net earnings totaled $3.0 billion (C$3.1 billion), up 67% year over year.
During the quarter under review, Manulife’s total insurance sales were $588 million (C$617 million), down 32% year over year. The decline was attributable to lower sales in Asia and Canada.
Wealth sales for the fourth quarter came in at $11.6 billion (C$12.2 billion), up 15% year over year. The improvement stemmed from strong sales in Canadian and U.S. wealth sales.
For wealth products, premiums and deposits in fourth quarter totaled $14.7 billion (C$15.4 billion), decreasing 11% year over year.
Insurance premiums and deposits were $5.9 billion (C$6.2 billion) in the fourth quarter, reflecting a decrease of 7% year over year.
Manulife strengthened its Minimum Continuing Capital and Surplus Requirements ratio to 248%, up 19% over the prior quarter.
Funds under management reached an all-time record of $600 billion (C$599 billion) as of Dec 31, 2013, rising 8% year over year driven by strong asset management business and favorable equity markets. The uprise was partially offset by the mark-to-market impact of the increase in interest rates on fixed income investments.
Cash and short-term securities at 2013 end totaled $12.74 billion (CS$13.6 billion) compared with $13.4 billion (C$13.4 billion) at 2012-end.
Manulife has been performing favorably over the past several quarters. The company is aggressively developing its business in Asia, which remains a key to its long-term growth.
Manulife also boasts a solid position in the global market. It has effectively reduced exposure to potential equity markets as well as interest rate risks over time. The company has also revised product focus on less capital-intensive lines of business while maintaining adequate regulatory risk-adjusted capitalization.
In addition, Manulife has successfully maintained a significant scale in core business lines and has witnessed strong growth in its assets under management.
Manulife presently carries a Zacks Rank #3 (Hold).
Performances of Other Life Insurers
Protective Life Corp. (PL) reported fourth-quarter 2013 net operating earnings of $1.43 per share, 31 cents ahead of the Zacks Consensus Estimate. Earnings also surged 46% year over year.
Lincoln National Corp. (LNC) reported fourth-quarter 2013 operating earnings of $1.40 per share. The results noticeably outpaced the Zacks Consensus Estimate of $1.28 and breezed past the prior-year quarter figure of $1.10 per share.
Genworth Financial Inc. (GNW) reported fourth-quarter 2013 net operating income of 38 cents per share. The results were nearly 27% higher than the Zacks Consensus Estimate and 15% above the year-ago level.
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