Manulife’s third quarter net income grows to $1.6 billion

By The IJ Staff | November 08 2018 01:30PM

Photo: Freepik

Manulife has announced net income attributed to shareholders of $1.6 billion for the third quarter of 2018. This is a 42 per cent increase over the third quarter of 2017 when the company reported net income of $1.1 billion. Return on common shareholders' equity was 15.1 per cent.

The company says the increase in net income “primarily reflects an increase of $454 million in core earnings which was driven by business growth, improved claims experience and the non-recurrence of two items which netted to a $130 million charge in 3Q17.”

Year-to-date profit

For the first nine months of the year, Manulife reported net income attributed to shareholders of $4.2 billion and ROE of 13.9 per cent. This compares with $3.7 billion net income and 12.3 per cent ROE for the same period of 2017.

"We delivered another quarter of strong core earnings and net income, both of which achieved double-digit growth over last year. We also made solid progress improving the capital efficiency of our legacy businesses and recently announced three transactions that are expected to release over $1 billion of capital," said Manulife President & Chief Executive Officer Roy Gori.

Business transformation

Gori also highlighted Manulife’s technology-driven business transformation. “We launched an integrated goals-based investment solution, the first-ever to use advanced analytics and dynamic liability-driven investment to help Canadian retail customers plan for retirement with greater confidence. In Canada, we marked our one-millionth transaction processed using robotics."

Phil Witherington, Chief Financial Officer, stated, "Asia New Business Value has grown by 29 per cent compared with 3Q17, we've delivered another quarter of positive net flows in Wealth and Asset Management and our expense efficiency initiatives are dropping to the bottom line with expenses growing at half the historic rate."

Manulife’s Board approved a 14 per cent increase in the company’s dividend. In terms of financial strength, the company reported a LICAT ratio of 134 per cent.

Reinsurance agreements

During the third quarter, Manulife reinsured its legacy U.S. individual pay-out annuities business and the mortality and lapse risk on a portion of its Canadian legacy universal life policies. Additionally, in the fourth quarter of 2018, the company reinsured its legacy U.S. group pay-out annuities business (the portion related to the New York business will close separately, subject to regulatory approval).

“In aggregate, these reinsurance agreements are expected to release over $1 billion in capital …This represents significant progress towards our target of releasing $5 billion in capital from our legacy businesses by 2022,” stated the company.