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Manulife's (MFC) Q1 Earnings and Premium Sales Decline Y/Y

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Manulife Financial Corporation (MFC - Free Report) delivered first-quarter 2020 core earnings of $0.8 billion (C$1.02 billion), down 34% year over year. This downside can be attributed to unfavorable impact of markets on seed money investments in new segregated funds and mutual funds, the absence of core investment gains in the quarter, lower new business volumes in Japan and unfavorable policyholder experience in North America, including unfavorable travel claims related to COVID-19.

New business value in the reported quarter was $0.4 billion (C$0.5 billion), down 11% year over year due to lower sales in Asia.

Annualized premium equivalent (APE) sales decreased 9% year over year to $1.2 billion (C$1.6 billion) on lower sales in Asia and United States.

As of Mar 31, 2020, Manulife Financial’s financial leverage ratio deteriorated 210 basis points (bps) to 23% from the level on Dec 31, 2019.

As of Mar 31, 2020, wealth and asset management assets under management and administration were $450.7 billion (C$636.2 billion), down 2.9% year over year.

Core return on equity, measuring the company’s profitability, was 8.2%.

The Office of the Superintendent of Financial Institutions' new Life Insurance Capital Adequacy Test (LICAT) regulatory capital regime came into effect in Canada on Jan 1, 2018, replacing the Minimum Continuing Capital and Surplus framework. LICAT ratio was 155% as of Mar 31, 2020, down from 140% as of Dec 31, 2019.

Manulife Financial Corp Price, Consensus and EPS Surprise

Segmental Performance

Global Wealth and Asset Management division’s core earnings came in at $188.6 million (C$253 million), up 7.3% year over year.

Asia division’s core earnings totaled $366 million (C$491 million), down 5.6% year over year. APE sales declined 18.9% to $0.8 billion (C$1.1 billion).

Manulife Financial’s core earnings in Canada division were $176.7 million (C$237 million), down 16.3% year over year. Annualized premium equivalent sales of $280.3 million (C$376 million) increased 44.1% year over year.

The U.S. division reported core earnings of $310.1 million (C$416 million), down 12.2% year over year. Annualized premium equivalents sales of $105.1 million (C$141 million) decreased 1.4% year over year.

Dividend Update

The board of directors declared a dividend of 28 cents per share to be paid out on and after Jun 19, 2020 to its shareholders as of May 19.

Zacks Rank and Performance of Other Insurers

Manulife Financial currently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other players from the insurance industry that have reported first-quarter earnings so far, the bottom line of Brown & Brown, Inc. (BRO - Free Report) beat the Zacks Consensus Estimate while that of RLI Corp. (RLI - Free Report) and Travelers Companies (TRV - Free Report) missed the same.

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