Mixed 3Q for Manulife - Analyst Blog

By Zacks | November 12, 2012 AAA

Canadian life insurer Manulife Financial Corp. (MFC) reported third-quarter 2012 operating earnings of $558.3 million (C$556 million). The company's results exceeded the income of $596 million (C$583 million) reported in the prior-year quarter.

During the quarter under review, Manulife's Insurance sales declined 8% year over year due to the non-recurrence of a U.S. event in the prior year. The company delivered record insurance sales in South East Asia driven by record sales in Indonesia, as well as solid sales in Affinity in Canada and John Hancock Life in the U.S.

In the quarter, Manulife witnessed a 4% increase in wealth sales on a year-over-year basis and once again posted record funds under management ("FUM") of $515 billion, despite the challenging macroeconomic environment.

Total funds under management as of September 30, 2012, came in at $523.0 billion (C$514.6 billion) in the reported quarter, up 2.7% year over year.

Assets managed by Manulife Asset Management climbed 10% year over year to $231.2 billion (C$227.5 billion) on September 30, 2012.  

The Manufacturers Life Insurance Company's consolidated regulatory capital ratio or Minimum Continuing Capital and Surplus Requirements ("MCCSR") was reported at 204% as of September 30, 2012, reflecting a decline from 213% as of June 30, 2012. The MCCSR ratio was lower than the previous quarter largely due to the net loss in the quarter under review and an increase in required capital for asset and segregated fund guarantee risks.

Results for the nine months ended 2012 shows that Manulife has achieved a lot through its long-term strategic initiatives such as developing its Asian footprint, growing Asset and wealth management business in the U.S., Canada and Asia, working hard toward building its Canadian market share, and focusing more on higher returns and low-risk U.S. businesses.

Manulife's peer, Sun Life Financial Inc. (SLF) reported operating earnings of $406.7 million (C$405 million), up from $375.2 million (C$379 million) in the previous quarter.  

Manulife currently retains a Zacks # 3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term 'Neutral' recommendation on the shares.

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