Manulife saw an overall downturn.
The insurer reported net income attributed to shareholders of $783 million ($M) in the first quarter of 2021, across all its operations. By comparison, net income was $1.3 billion in the first quarter of 2020.
This result reflects a decrease of 39.6 per cent or $513 million.
“While the overall impact of higher interest rates is positive over the long term for our Company, higher risk-free rates and a steepening yield curve within North America impacted net income in the quarter,” said Manulife President and Chief Executive Officer Roy Gori.
This decrease was partially offset by higher core earnings and improved investment-related experience.
The insurer thus reported investment-related experience outside of core earnings of $77 million, versus losses of $608 million in Q1 2020, equal to an increase of $685 million.
Breaking down Manulife's reported net income for the first quarter of 2021, out of five segments, two segments posted positive results, one sank deeper into the red, one faltered but remained above zero, and one advanced yet remained below zero.
Loss in Canada, plunge in the USA
Canada is the segment that improved yet remained in the red. For this segment, Manulife reported a net loss attributed to shareholders of $19 million, compared with $866 million in the first quarter of 2020.
This upswing of 97.8 per cent or $847 million was due to improved domestic core earnings. It also reflects the fact that Manulife recorded a net charge of $283 million in the first quarter of 2021, versus $1.1 billion in Q1 2020.
The U.S. segment declined but keeping its head above water: It posted net income of $96 million, down 94.8 per cent or $1.8 billion from the first quarter of 2020.
Corporate and Other reported a net loss of $563 million, compared with $35 million in Q1 2020, for an increase of $528 million.
Manulife's other two segments have progressed and are in positive territory:
- Asia: Net income up 907.4 per cent or $862 million compared with Q1 2020, at $957 million
- Global Wealth and Asset Management: Net income up 24.8 per cent or $62 million, at $312 million
Increase in core earnings
Manulife's core earnings were $1.6 billion in the first quarter of 2021, up from $1 billion in Q1 2020. The corresponding increase was 58.5 per cent or $601 million, “driven by the favourable impact of markets on seed money investments in new segregated and mutual funds, higher new business gains in Asia and the U.S., and the recognition of core investment gains in the quarter,” the insurer said.
“Further contributing to the increase was favourable net policyholder experience, higher fee income from higher average asset under management and administration in Global Wealth and Asset Management, and inforce business growth across all operating segments,” Manulife explains.
All of Manulife's segments performed better than last year.
For Canada alone, core earnings were $264 million, compared with $237 million in Q1 2020. The increase of 11.4 per cent or $27 million was driven by two items:
- Improved policyholder experience, “including the non-recurrence of the 1Q20 COVID-19 related travel claims experience.” This non-recurrence was partially offset by “unfavourable policyholder experience in retail insurance” in Q1 2021;
- Higher in-force earnings.
Despite these factors, earnings were “partially offset by $24 million of lower investment income on allocated capital.”
Income from core businesses also increased:
- By 20.4 per cent or $85 million for the United States segment, to $501 million
- By 16.1 per cent or $79 million for the Asia segment, to $570 million
- By 24.8 per cent or $62 million for the Global Wealth and Asset Management segment, to $312 million, and
- By 67.8 per cent or $248 million for Corporate and Other, which reported a loss from core operations of $118 million, versus a loss of $366 million in the first quarter of 2020.
Core earnings also increased due to core investment income, which was $100 million in the first quarter of 2021, compared with zero in Q1 2020. This represents an increase of 100 per cent or $100 million.
Annuities drive Canadian premiums and deposits
Manulife's insurance premiums and deposits were $13.5 billion in the first quarter of 2021, up from $12.4 billion in Q1 2020. The corresponding increase is 9.1 per cent or $1.1 billion.
In Canada alone, insurance premiums and deposits were $4.3 billion in the first quarter of 2021, versus $4 billion in the first quarter of 2020. This represents an increase of 7.1 per cent or $286 million.
- Individual Insurance: Insurance premiums and deposits increased 1.4 per cent or $13 million over the first quarter of 2020, to $962 million
- Group insurance: Climbed by 2.6 per cent or $60 million, to $2.4 billion
- Annuities: Surged by 27.5 per cent or $213 million to $988 million. This is the best result for this segment since at least 2018.
Insurance premiums and deposits also increased in Asia by 18.5 per cent or $1.1 billion, to reach $7.3 billion. In the U.S., premiums and deposits were down 14.3 per cent or $306 million to $1.8 billion.