06.08.2015, 14:25
Manulife reports 2Q15 core earnings of $902 million, strong top line growth and $883 billion in assets under management and administration
OREANDA-NEWS. Manulife Financial Corporation (“MFC”)
today
announced net income attributed to
shareholders of \\$
600
million
for
the
second
quarter
of 2015
(“2Q15”), fully diluted earnings per
common share of \\$0.29
and return on common shareholders’ equity (“ROE”) of 6.4%, compared with
\\$943 million, \\$0.49, and 13.1%, respectively, for the corresponding period in 2014.
The decline in net
income
attributed to
shareholders
was primarily related to the direct impact of changes in interest
rates.
In 2Q15, MFC generated core earnings
1
of \\$902 million, fully diluted core earnings per common
share
1
of \\$0.44 and core return on common shareholders’ equity (“Core ROE”)
1
of 9.8%, compared
with \\$701 million, \\$0.36, and 9.6%, respectively, for the corresponding period in 2014.
Donald Guloien, President and Chief Executive Officer, stated, “ We continued to deliver robust growth in wealth management and life insurance , our core earnings grew 2 9 % to \\$902 million , and our assets under management and administration reached \\$883 billion. C ore earnings were higher than our expectations , but net income , as a result of changes in interest rates, was lower than expected. ”
“In terms of strategic developments, w e became the first foreign invested life insurance company in mainland China to be granted a licen c e to sell mutual fund products through its agency force , and we also acquired an innovative software provider that uses behavioural finance and artificial intelligence to help advisors and customers make financial decisions ,” added Mr. Guloien.
Steve Roder, Chief Financial Officer, said, “ Our strong core earnings demonstra te our continued execution on the key driv ers of earnings growth: increasing scale in our wealth and asset management businesses, generating strong insurance growth in Asia, and delivering on our E fficiency & E ffectiveness initiative.”
“We generated solid investment results this quarter and are back in positive territory for the year so far, reflecting our high quality portfolio and disciplin ed approach to extending credit . We also maintained a high degree of financial flexibility, with strong capital levels and improved financial leverage , " added Mr. Roder .
Highlights for the Second Quarter of 2015:
• Reported net income attribut ed to shareholders of \\$ 600 million, down \\$ 343 million from the second quarter of 2014 (“ 2 Q14”). In 2Q15, net income attributed to shareholders included core earnings of \\$902 million and net charges excluded from core earnings of \\$302 million , primarily due to the steepening of the interest rate yield curve as well as integration costs related to our recent acquisitions , partially offset by favourable investment - related experience.
• Delivered core earnings of \\$902 million, up \\$201 million from 2Q14. The increase included \\$3 7 million related to our recent acquisitions , as well as higher fee income on higher asset levels in our wealth and asset management businesses, strong insurance sales in Asia and the strengthening of the U.S. dollar. H igher than average realized gains on available - for - sale equities and a number of s maller items also positively impacted core earnings this quarter.
• Generated s olid investment - related experience of \\$128 million. The investment - related experience gains were driven by fixed income re deployment and favourable credit experience, partially of fset by fair value losses on oil and gas holdings . In 2Q15 , we included \\$51 million of favourable investment - related experience in core earnings, reflecting our net year - to - date favourable investment - related experience (1Q15 – charge of \\$77 million; 2Q15 – gain of \\$128 million).
• Achieved insurance sales 2 of \\$77 1 million, an increase of 27 % 3 compared with 2 Q14. All three divisions contributed to the year - over - year growth in insurance sales. Asia insurance sales increased 36%, driven by continued expansion and diversification of our distribution channels and a series of successful product launches. Canadian insurance sales increased 28% driven by large - case Group Benefits sales and strong R etail I nsurance sales . U.S. insurance sales increased 2%.
• Generated net wealth flows 2 of \\$14.5 billion in our wealth and asset management businesses , more than double 2Q14 levels . Dri ving the strong net flows were robust g ross flows 2 of \\$34.9 billion , up 74% 3 from 2Q14 (up 61% excluding recently acquired businesses). Asia achieved gross flows more than double 2Q14 levels, driven by successful fund launches in mainland China and a succe ssful pension marketing campaign in Hong Kong. Canadian gross flows increased 64%, driven by strong mutual fund deposits, large - case group retirement activity and the recent acquisition of the Canadian - based operations of Standard Life plc (“ Standard Life ”) . U.S. gross flows increased 11%, driven by the inclusion of New York Life’s retirement business and the second highest quarterly gross flows at John Hancock Investments. Manulife Asset Management (“MAM”) achieved record gross flows of \\$11 .0 billion, mor e than tripl e prior year levels mainly due to a significant fixed income mandate from a Canadian institutional client.
• Delivered O ther W ealth sales of \\$1. 8 billion in 2Q15 , double prior year levels ( up 59 % excluding recent acquisitions ) . Other Wealth sales in Asia more than doubled driven by expanded distribution of the recently launched single premium wealth accumulation produc t in Japan, while Canada benefited from the inclusion of Standard Life’s segregated fund business.
• Achieved assets under management and administration 4 of \\$88 3 billion at June 30, 2015. The record assets under management and administration was driven by the inclusion of group pension assets under administration acquired from New York Life. Wealth and a sset management AUMA increased \\$18 9 billion over the prior year to a record \\$47 5 billion , including contributions of \\$ 109 billion from recent acquisitions.
• Reported a Minimum Continuing Capital and Surplus Requirements (“MCCSR”) ratio of 236 % for The Man ufacturers Life Insurance Company (“MLI”) as at June 30, 2015, down 9 point s from 245% as at March 31, 2015 . The decline reflect s net financing activities 5 and a four point reduction due to the closing of the acquisition of New York Life ’s R etirement P lan S ervice s business , a portion of which will reverse with the July 1, 2015 completion of the related reinsurance agreement. MFC’s financial leverage ratio was 26.2 % as at June 30, 2015 compared with 26.6% as at March 31, 2015.
• Generated New Business Value 6 o f \\$22 7 million in 2Q15, up 3 4 % from 2Q14. The growth in new business value largely reflects volume growth and increased margins in Asia.
• Continued to make substantial progress on our Efficiency and Effectiveness (“E&E”) initiative , with 55 % of the projects now completed . We estimate net pre - tax savings of \\$300 million for 2015 and remain on track to achieve \\$400 million in 2016 7 . We continue to invest in strategic initiatives outside of E&E to sustain our long - term earnings growth.
Donald Guloien, President and Chief Executive Officer, stated, “ We continued to deliver robust growth in wealth management and life insurance , our core earnings grew 2 9 % to \\$902 million , and our assets under management and administration reached \\$883 billion. C ore earnings were higher than our expectations , but net income , as a result of changes in interest rates, was lower than expected. ”
“In terms of strategic developments, w e became the first foreign invested life insurance company in mainland China to be granted a licen c e to sell mutual fund products through its agency force , and we also acquired an innovative software provider that uses behavioural finance and artificial intelligence to help advisors and customers make financial decisions ,” added Mr. Guloien.
Steve Roder, Chief Financial Officer, said, “ Our strong core earnings demonstra te our continued execution on the key driv ers of earnings growth: increasing scale in our wealth and asset management businesses, generating strong insurance growth in Asia, and delivering on our E fficiency & E ffectiveness initiative.”
“We generated solid investment results this quarter and are back in positive territory for the year so far, reflecting our high quality portfolio and disciplin ed approach to extending credit . We also maintained a high degree of financial flexibility, with strong capital levels and improved financial leverage , " added Mr. Roder .
Highlights for the Second Quarter of 2015:
• Reported net income attribut ed to shareholders of \\$ 600 million, down \\$ 343 million from the second quarter of 2014 (“ 2 Q14”). In 2Q15, net income attributed to shareholders included core earnings of \\$902 million and net charges excluded from core earnings of \\$302 million , primarily due to the steepening of the interest rate yield curve as well as integration costs related to our recent acquisitions , partially offset by favourable investment - related experience.
• Delivered core earnings of \\$902 million, up \\$201 million from 2Q14. The increase included \\$3 7 million related to our recent acquisitions , as well as higher fee income on higher asset levels in our wealth and asset management businesses, strong insurance sales in Asia and the strengthening of the U.S. dollar. H igher than average realized gains on available - for - sale equities and a number of s maller items also positively impacted core earnings this quarter.
• Generated s olid investment - related experience of \\$128 million. The investment - related experience gains were driven by fixed income re deployment and favourable credit experience, partially of fset by fair value losses on oil and gas holdings . In 2Q15 , we included \\$51 million of favourable investment - related experience in core earnings, reflecting our net year - to - date favourable investment - related experience (1Q15 – charge of \\$77 million; 2Q15 – gain of \\$128 million).
• Achieved insurance sales 2 of \\$77 1 million, an increase of 27 % 3 compared with 2 Q14. All three divisions contributed to the year - over - year growth in insurance sales. Asia insurance sales increased 36%, driven by continued expansion and diversification of our distribution channels and a series of successful product launches. Canadian insurance sales increased 28% driven by large - case Group Benefits sales and strong R etail I nsurance sales . U.S. insurance sales increased 2%.
• Generated net wealth flows 2 of \\$14.5 billion in our wealth and asset management businesses , more than double 2Q14 levels . Dri ving the strong net flows were robust g ross flows 2 of \\$34.9 billion , up 74% 3 from 2Q14 (up 61% excluding recently acquired businesses). Asia achieved gross flows more than double 2Q14 levels, driven by successful fund launches in mainland China and a succe ssful pension marketing campaign in Hong Kong. Canadian gross flows increased 64%, driven by strong mutual fund deposits, large - case group retirement activity and the recent acquisition of the Canadian - based operations of Standard Life plc (“ Standard Life ”) . U.S. gross flows increased 11%, driven by the inclusion of New York Life’s retirement business and the second highest quarterly gross flows at John Hancock Investments. Manulife Asset Management (“MAM”) achieved record gross flows of \\$11 .0 billion, mor e than tripl e prior year levels mainly due to a significant fixed income mandate from a Canadian institutional client.
• Delivered O ther W ealth sales of \\$1. 8 billion in 2Q15 , double prior year levels ( up 59 % excluding recent acquisitions ) . Other Wealth sales in Asia more than doubled driven by expanded distribution of the recently launched single premium wealth accumulation produc t in Japan, while Canada benefited from the inclusion of Standard Life’s segregated fund business.
• Achieved assets under management and administration 4 of \\$88 3 billion at June 30, 2015. The record assets under management and administration was driven by the inclusion of group pension assets under administration acquired from New York Life. Wealth and a sset management AUMA increased \\$18 9 billion over the prior year to a record \\$47 5 billion , including contributions of \\$ 109 billion from recent acquisitions.
• Reported a Minimum Continuing Capital and Surplus Requirements (“MCCSR”) ratio of 236 % for The Man ufacturers Life Insurance Company (“MLI”) as at June 30, 2015, down 9 point s from 245% as at March 31, 2015 . The decline reflect s net financing activities 5 and a four point reduction due to the closing of the acquisition of New York Life ’s R etirement P lan S ervice s business , a portion of which will reverse with the July 1, 2015 completion of the related reinsurance agreement. MFC’s financial leverage ratio was 26.2 % as at June 30, 2015 compared with 26.6% as at March 31, 2015.
• Generated New Business Value 6 o f \\$22 7 million in 2Q15, up 3 4 % from 2Q14. The growth in new business value largely reflects volume growth and increased margins in Asia.
• Continued to make substantial progress on our Efficiency and Effectiveness (“E&E”) initiative , with 55 % of the projects now completed . We estimate net pre - tax savings of \\$300 million for 2015 and remain on track to achieve \\$400 million in 2016 7 . We continue to invest in strategic initiatives outside of E&E to sustain our long - term earnings growth.
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