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Manulife Financial (MFC) Q3 Earnings Beat, Asia Business Strong
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Manulife Financial Corporation (MFC - Free Report) delivered third-quarter 2023 core earnings of 69 cents per share, which beat the Zacks Consensus Estimate by 15%. The bottom line improved 35.3% year over year.
Core earnings of $1.3 billion (C$1.7 billion) increased 28% year over year. The improvement was driven by the absence of a provision in the property and casualty Reinsurance business related to Hurricane Ian in the year-ago quarter. The favorable impact of rising interest rates on expected investment earnings and earnings on surplus assets net of a higher cost of debt financing added to the upside. This apart, better insurance experience in the U.S. and Canada favored quarterly results. The insurer also noted that business growth contributed to the increase in expected earnings on investments and insurance contracts.
New business value (“NBV”) in the reported quarter was $447 million (C$600 million), up 15% year over year, attributable to higher sales volumes in Asia.
New business contractual service margin (“CSM”) of $378 million (C$507 million) rose 6% year over year.
Manulife Financial Corp Price, Consensus and EPS Surprise
Annualized premium equivalent (“APE”) sales increased 21% year over year to $1.3 billion (C$1.7 billion), attributable to higher sales in Asia.
Wealth and asset management assets under management and administration were $602 billion (C$813 billion), up 4% year over year. The Wealth and Asset Management business generated net outflows of $0.6 billion (C$0.8 billion) against an inflow of C$3 billion in the year-ago quarter. This was attributable to outflows in Retirement as well as Retail.
Core return on equity, measuring the company’s profitability, expanded 410 basis points year over year to 16.8%.
Life Insurance Capital Adequacy Test ratio was 137% as of Sep 30, 2023, up from 131% as of Dec 31, 2022.
Adjusted book value per common share was $30.67, up 4% year over year.
Segmental Performance
Global Wealth and Asset Management’s core earnings came in at $269 million (C$361 million), down 2% year over year.
Asia division’s core earnings totaled $291 million (C$390 million), up 33% year over year. NBV increased 7% year over year, driven by higher sales volumes.
APE sales increased by 20%, driven by growth in Hong Kong and Asia Other. New business CSM increased 16% year over year, driven by higher sales volumes.
Manulife Financial’s Canada division core earnings of $304 million (C$408 million) were up 4% year over year. NBV increased 72%, driven by higher sales volumes in Individual Insurance and higher margins in Group Insurance.
APE sales jumped 51%, driven by a large affinity market sale. New business CSM increased by 16%, driven by product mix in Individual Insurance.
The U.S. division reported core earnings of $245 million (C$329 million), down 2% year over year. NBV decreased 29% due to lower sales volumes and product mix, partially offset by pricing actions and higher interest rates.
APE sales decreased by 31% due to the adverse impact of higher short-term interest rates on accumulation insurance products, particularly for our affluent customers. New business CSM decreased by 39% due to lower sales volumes.
Zacks Rank
Manulife Financial currently carries a Zacks Rank #4 (Sell).
Voya Financial (VOYA - Free Report) reported third-quarter 2023 adjusted operating earnings of $2.07 per share, missing the Zacks Consensus Estimate by about 1%. The bottom line decreased 10% year over year, attributable to lower net underwriting results, partially offset by higher fee income. Adjusted operating revenues amounted to $281 billion, which decreased 21.1% year over year. The top line missed the Zacks Consensus Estimate by 16.4%.
Net investment income increased 4.8% year over year to $547 million. Meanwhile, fee income of $489 million increased 9.9% year over year. Premiums totaled $682 million, up 12.5% from the year-ago quarter. As of Sep 30, 2023, VOYA’s assets under management, assets under administration and advisement totaled $770.3 million.
Lincoln National Corporation (LNC - Free Report) reported third-quarter 2023 adjusted earnings of 23 cents per share, which missed the Zacks Consensus Estimate by 86.9%. However, the bottom line significantly improved from a loss of $11.49 a year ago. Adjusted operating revenues grew 5.7% year over year to $4.7 billion. The top line missed the consensus mark by 1.6%.
The Annuities segment recorded an operating income of $248 million, which decreased 9.8% year over year and missed the estimate by 9%. The metric suffered from increased expenses. Operating income in the Retirement Plan Services segment came in at $43 million, which fell 9% year over year and missed our estimate of $47.1 million due to an elevated expense level. The Life Insurance segment reported an operating income of $173 million in the quarter under review, improving 92% year over year, as the year-ago income included massive unfavorable items. The Group Protection segment recorded an operating income of $68 million in the quarter under review, which rose from $12 million a year ago but remained lower than our estimate. This significant jump can be attributed to better disability underwriting results.
American Equity Investment Life Holding Company (AEL - Free Report) reported third-quarter 2023 adjusted net earnings of $2.45 per share, which beat the Zacks Consensus Estimate by 45.8%. The bottom line rebounded from the year-ago loss of 10 cents per share. Operating total revenues were $694.3 million, up 1.4% year over year due to higher annuity product charges and other revenues.
Premiums and other considerations decreased 6.4% year over year to $2.6 million. The figure was lower than our estimate of $3.2 million. Net investment income fell 3.8% on a year-over-year basis to $586.6 million. The metric was higher than our estimate of $549.7 million. The investment spread was 2.73%, which remains unchanged from the year-ago quarter.
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Manulife Financial (MFC) Q3 Earnings Beat, Asia Business Strong
Manulife Financial Corporation (MFC - Free Report) delivered third-quarter 2023 core earnings of 69 cents per share, which beat the Zacks Consensus Estimate by 15%. The bottom line improved 35.3% year over year.
Core earnings of $1.3 billion (C$1.7 billion) increased 28% year over year. The improvement was driven by the absence of a provision in the property and casualty Reinsurance business related to Hurricane Ian in the year-ago quarter. The favorable impact of rising interest rates on expected investment earnings and earnings on surplus assets net of a higher cost of debt financing added to the upside. This apart, better insurance experience in the U.S. and Canada favored quarterly results. The insurer also noted that business growth contributed to the increase in expected earnings on investments and insurance contracts.
New business value (“NBV”) in the reported quarter was $447 million (C$600 million), up 15% year over year, attributable to higher sales volumes in Asia.
New business contractual service margin (“CSM”) of $378 million (C$507 million) rose 6% year over year.
Manulife Financial Corp Price, Consensus and EPS Surprise
Manulife Financial Corp price-consensus-eps-surprise-chart | Manulife Financial Corp Quote
Annualized premium equivalent (“APE”) sales increased 21% year over year to $1.3 billion (C$1.7 billion), attributable to higher sales in Asia.
Wealth and asset management assets under management and administration were $602 billion (C$813 billion), up 4% year over year. The Wealth and Asset Management business generated net outflows of $0.6 billion (C$0.8 billion) against an inflow of C$3 billion in the year-ago quarter. This was attributable to outflows in Retirement as well as Retail.
Core return on equity, measuring the company’s profitability, expanded 410 basis points year over year to 16.8%.
Life Insurance Capital Adequacy Test ratio was 137% as of Sep 30, 2023, up from 131% as of Dec 31, 2022.
Adjusted book value per common share was $30.67, up 4% year over year.
Segmental Performance
Global Wealth and Asset Management’s core earnings came in at $269 million (C$361 million), down 2% year over year.
Asia division’s core earnings totaled $291 million (C$390 million), up 33% year over year. NBV increased 7% year over year, driven by higher sales volumes.
APE sales increased by 20%, driven by growth in Hong Kong and Asia Other. New business CSM increased 16% year over year, driven by higher sales volumes.
Manulife Financial’s Canada division core earnings of $304 million (C$408 million) were up 4% year over year. NBV increased 72%, driven by higher sales volumes in Individual Insurance and higher margins in Group Insurance.
APE sales jumped 51%, driven by a large affinity market sale. New business CSM increased by 16%, driven by product mix in Individual Insurance.
The U.S. division reported core earnings of $245 million (C$329 million), down 2% year over year. NBV decreased 29% due to lower sales volumes and product mix, partially offset by pricing actions and higher interest rates.
APE sales decreased by 31% due to the adverse impact of higher short-term interest rates on accumulation insurance products, particularly for our affluent customers. New business CSM decreased by 39% due to lower sales volumes.
Zacks Rank
Manulife Financial currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Life Insurers
Voya Financial (VOYA - Free Report) reported third-quarter 2023 adjusted operating earnings of $2.07 per share, missing the Zacks Consensus Estimate by about 1%. The bottom line decreased 10% year over year, attributable to lower net underwriting results, partially offset by higher fee income. Adjusted operating revenues amounted to $281 billion, which decreased 21.1% year over year. The top line missed the Zacks Consensus Estimate by 16.4%.
Net investment income increased 4.8% year over year to $547 million. Meanwhile, fee income of $489 million increased 9.9% year over year. Premiums totaled $682 million, up 12.5% from the year-ago quarter. As of Sep 30, 2023, VOYA’s assets under management, assets under administration and advisement totaled $770.3 million.
Lincoln National Corporation (LNC - Free Report) reported third-quarter 2023 adjusted earnings of 23 cents per share, which missed the Zacks Consensus Estimate by 86.9%. However, the bottom line significantly improved from a loss of $11.49 a year ago. Adjusted operating revenues grew 5.7% year over year to $4.7 billion. The top line missed the consensus mark by 1.6%.
The Annuities segment recorded an operating income of $248 million, which decreased 9.8% year over year and missed the estimate by 9%. The metric suffered from increased expenses. Operating income in the Retirement Plan Services segment came in at $43 million, which fell 9% year over year and missed our estimate of $47.1 million due to an elevated expense level. The Life Insurance segment reported an operating income of $173 million in the quarter under review, improving 92% year over year, as the year-ago income included massive unfavorable items. The Group Protection segment recorded an operating income of $68 million in the quarter under review, which rose from $12 million a year ago but remained lower than our estimate. This significant jump can be attributed to better disability underwriting results.
American Equity Investment Life Holding Company (AEL - Free Report) reported third-quarter 2023 adjusted net earnings of $2.45 per share, which beat the Zacks Consensus Estimate by 45.8%. The bottom line rebounded from the year-ago loss of 10 cents per share. Operating total revenues were $694.3 million, up 1.4% year over year due to higher annuity product charges and other revenues.
Premiums and other considerations decreased 6.4% year over year to $2.6 million. The figure was lower than our estimate of $3.2 million. Net investment income fell 3.8% on a year-over-year basis to $586.6 million. The metric was higher than our estimate of $549.7 million. The investment spread was 2.73%, which remains unchanged from the year-ago quarter.