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Manulife (MFC) Q4 Earnings Flat Y/Y, Asia Business Strong
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Manulife Financial Corporation (MFC - Free Report) delivered fourth-quarter 2020 core earnings of $1.2 billion (C$1.5 billion), flat with the prior-year quarter.
Favorable impact of in-force business growth in Asia and the U.S., higher average AUMA in Global Wealth and Asset Management, favorable experience in P&C Reinsurance business and lower general expenses were offset by lower investment income in Corporate and Other.
New business value (NBV) in the reported quarter was $375 million (C$489 million), down 7% year over year due to lower business in Asia and the United States, partially offset by higher sales in Canada.
Annualized premium equivalent (APE) sales decreased 5% year over year to $1.1 billion (C$1.4 billion), attributable to lower sales in Canada and U.S. segments, partially offset by higher sales in Aisa.
Expense efficiency ratio improved 150 basis points (bps) to 52.7%.
As of Dec 31, 2020, Manulife Financial’s financial leverage ratio deteriorated 150 bps year over year to 26.6%.
Wealth and asset management assets under management and administration were $753.6 billion, up 10.6% year over year. Wealth and Asset Management business generated net outflow of $2.8 billion, down 42.9%, attributable to net outflows in the United States.
Core return on equity, measuring the company’s profitability, contracted 220 bps year over year to 10.9% in 2020.
Life Insurance Capital Adequacy Test (LICAT) ratio was 149% as of Dec 31, 2020, up from 140% as of Dec 31, 2019.
Book value per share excluding AOCI increased 9% to $21.74 as on Dec 31, 2020.
Manulife achieved medium-term target of delivering cumulative reduction in pre-tax annual general expenses of $1 billion and is on track to achieve target expense efficiency ratio of less than 50% by 2022.
Manulife Financial Corp Price, Consensus and EPS Surprise
Global Wealth and Asset Management division’s core earnings came in at $233 million (C$304 million), up 14.7% year over year.
Asia division’s core earnings totaled $438 million (C$571 million), up 15.6% year over year. NBV declined 5% due to lower sales volumes in Hong Kong and less favorable product mix in Japan, partially offset by higher sales and more favorable product mix in Asia Other. APE sales increased 2% as growth in sales in Japan from COLI and higher Asia Other sales from Vietnam and Singapore were partially offset by lower sales in Hong Kon, due to the tightening of COVID-19 containment measures.
Manulife Financial’s Canada division core earnings of $242 million (C$316 million) were up 9.7% year over year. NBV increased 10% driven by higher margins across all business lines, partially offset by lower volumes in small and mid-size group insurance and individual insurance. APE sales decreased 10% primarily due to lower small and mid-size group insurance and individual insurance sales due to the adverse impact of COVID-19, partially offset by higher sales in lower risk segregated funds.
The U.S. division reported core earnings of $368 million (C$479 million), down 2% year over year. NBV dropped 26%, primarily due to lower international universal life sales volumes.. APE sales decreased 28%, as international universal life sales were unfavorably impacted by COVID-19 and domestic universal life sales decreased compared with a strong prior year quarter, which benefited from higher sales in advance of anticipated regulatory changes.
Loss at Corporate and Other were $150 million (C$196 million), reflecting a deterioration of 23.3% year over year.
Fourth-quarter earnings of Reinsurance Group of America (RGA - Free Report) beat the Zacks Consensus Estimate while that of Lincoln Financial (LNC - Free Report) and Primerica (PRI - Free Report) missed the same.
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Manulife (MFC) Q4 Earnings Flat Y/Y, Asia Business Strong
Manulife Financial Corporation (MFC - Free Report) delivered fourth-quarter 2020 core earnings of $1.2 billion (C$1.5 billion), flat with the prior-year quarter.
Favorable impact of in-force business growth in Asia and the U.S., higher average AUMA in Global Wealth and Asset Management, favorable experience in P&C Reinsurance business and lower general expenses were offset by lower investment income in Corporate and Other.
New business value (NBV) in the reported quarter was $375 million (C$489 million), down 7% year over year due to lower business in Asia and the United States, partially offset by higher sales in Canada.
Annualized premium equivalent (APE) sales decreased 5% year over year to $1.1 billion (C$1.4 billion), attributable to lower sales in Canada and U.S. segments, partially offset by higher sales in Aisa.
Expense efficiency ratio improved 150 basis points (bps) to 52.7%.
As of Dec 31, 2020, Manulife Financial’s financial leverage ratio deteriorated 150 bps year over year to 26.6%.
Wealth and asset management assets under management and administration were $753.6 billion, up 10.6% year over year. Wealth and Asset Management business generated net outflow of $2.8 billion, down 42.9%, attributable to net outflows in the United States.
Core return on equity, measuring the company’s profitability, contracted 220 bps year over year to 10.9% in 2020.
Life Insurance Capital Adequacy Test (LICAT) ratio was 149% as of Dec 31, 2020, up from 140% as of Dec 31, 2019.
Book value per share excluding AOCI increased 9% to $21.74 as on Dec 31, 2020.
Manulife achieved medium-term target of delivering cumulative reduction in pre-tax annual general expenses of $1 billion and is on track to achieve target expense efficiency ratio of less than 50% by 2022.
Manulife Financial Corp Price, Consensus and EPS Surprise
Manulife Financial Corp price-consensus-eps-surprise-chart | Manulife Financial Corp Quote
Segmental Performance
Global Wealth and Asset Management division’s core earnings came in at $233 million (C$304 million), up 14.7% year over year.
Asia division’s core earnings totaled $438 million (C$571 million), up 15.6% year over year. NBV declined 5% due to lower sales volumes in Hong Kong and less favorable product mix in Japan, partially offset by higher sales and more favorable product mix in Asia Other. APE sales increased 2% as growth in sales in Japan from COLI and higher Asia Other sales from Vietnam and Singapore were partially offset by lower sales in Hong Kon, due to the tightening of COVID-19 containment measures.
Manulife Financial’s Canada division core earnings of $242 million (C$316 million) were up 9.7% year over year. NBV increased 10% driven by higher margins across all business lines, partially offset by lower volumes in small and mid-size group insurance and individual insurance. APE sales decreased 10% primarily due to lower small and mid-size group insurance and individual insurance sales due to the adverse impact of COVID-19, partially offset by higher sales in lower risk segregated funds.
The U.S. division reported core earnings of $368 million (C$479 million), down 2% year over year. NBV dropped 26%, primarily due to lower international universal life sales volumes.. APE sales decreased 28%, as international universal life sales were unfavorably impacted by COVID-19 and domestic universal life sales decreased compared with a strong prior year quarter, which benefited from higher sales in advance of anticipated regulatory changes.
Loss at Corporate and Other were $150 million (C$196 million), reflecting a deterioration of 23.3% year over year.
Zacks Rank
Manulife Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Life Insurers
Fourth-quarter earnings of Reinsurance Group of America (RGA - Free Report) beat the Zacks Consensus Estimate while that of Lincoln Financial (LNC - Free Report) and Primerica (PRI - Free Report) missed the same.
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.
Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
Click here to download this report FREE >>