Manulife Q2 Earnings Up Y/Y on Higher Premiums, Deposits

Manulife Financial Corp. MFC reported second-quarter 2015 core earnings of $733.4 million (C$902 million), up 28.7% year over year. The improvement was driven by increased fee income from higher asset levels in wealth management businesses. Also, strong sales in Asia and the strengthening of the U.S. dollar assisted bottom-line growth.

Wealth sales came in at $1.5 billion (C$1.8 billion) which grew more than double year over year.

Insurance sales were $626.9 million (C$771 million) up 27% year over year.

Net income came in at $487.8 million (C$600 million) compared with $766.7 million (C$943) million. Interest rates changes led to the downside.

The Asia division's core earnings were $244 million(C$300 million), up 29.8% year over year. The increase was driven by higher new business gains, increased volumes, more favorable product mix, more favorable policyholder experience, higher fee income on higher assets under management and stable insurance in-force growth. Premiums and deposits were $7.6 billion, up 52.5% year over year.

The company’s Canadian division’s core earnings of $247.2 million (C$304 million) increased 31% year over year. Premiums and deposits were $5.8 billion (C$7.2 billion), up 41% year over year. The increase came on the back of in-force business growth and higher fee income from wealth management business and the favorable impact of reinsurance treaty recaptures. These positives were, however offset by unfavorable policyholder experience and the impact of lower interest rates on new business margins.

The U.S. Division reported core earnings of $327 million (C$402 million), up 22.2% year over year. Premiums and deposits rose 10% year over year to $13.1 billion due to additional deposits for 401k plans arising from the acquired business.

Manulife Minimum Continuing Capital and Surplus Requirements ratio was 236% as of Jun 30, 2015 down from 245% as of Mar 31, 2014.

The Global Wealth and Asset Management achieved assets under management and administration of $714.6 billion (C$883 billion) as on Jun 30, 2015, up 39% year over year.

The new business value came in at $184.6 million (C$227 million), up 34% year over year, on volume growth and increased margins in Asia.

Return on equity, which measures the company’s profitability, decreased 670 basis point year over year to 6.4%.

The company approved a dividend of 17 cents per share, payable on and after Sep 21 to shareholders on record, as of Aug 18, 2015.

On Apr 8, the company inked a 15-year agreement with DBS, thereby covering Singapore, Hong Kong, mainland China and Indonesia markets.This agreement, which will be effective from Jan 2016, is expected to be accretive to core earnings per share in 2017.

On Apr 14, Manulife completed the acquisition of New York Life's Retirement Plan Services business, which resulted in intangibles and goodwill worth $620 million.

Manulife Financial presently carries a Zacks Rank #4 (Sell).

The bottom line at StanCorp Financial Group Inc. SFG and American Equity Investment Life Holding Co. AEL surpassed their respective Zacks Consensus Estimate, while Genworth Financial, Inc.’s GNW earnings missed the same in the second quarter.

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