Manulife has shattered its records.
The insurer reported net income attributable to shareholders of $2.6 billion in the second quarter of 2021 for all of its operations. The corresponding figure for Q2 2020 was $727 million.
Up by a staggering 264 per cent or $1.9 billion, this quarterly net income is the highest Manulife posted since at least 2014.
Net income by segment
Four of Manulife’s five segments advanced.
Canada was one of them: The insurer reported record shareholder net income of $783 million in the second quarter of 2021, up from $142 million in Q2 2020.
This increase of 451.4 per cent or $641 million factors in “items excluded from core earnings, which amounted to a net gain of $465 million in 2Q21 compared with a net charge of $200 million in 2Q20 and a decrease in core earnings.”
In the U.S., Manulife reported net income of $793 million in the second quarter of 2021, versus a net loss attributed to shareholders of $1.6 billion in Q2 2020, for an increase of $2.4 billion.
In Asia, Manulife reported net income of $633 million, up 67.9 per cent or $256 million.
In its Global Wealth and Asset Management segment, Manulife reported net income of $356 million, up 49.6 per cent or $118 million.
Its Corporate and Other segment posted net income of $81 million, down 94.8 per cent or $1.5 billion.
The increase in net income attributable to Manulife shareholders “was driven by growth in core earnings” along with “larger gains from the direct impact of equity markets and interest rates” and “gains from investment-related experience compared with losses in the prior year quarter,” the insurer explains.
Manulife reported investment-related experience profits of $739 million in the second quarter of 2021, compared with losses of $916 million in Q2 2020.
The $1.7 billion increase reflects “higher-than-expected returns (including fair value changes) on alternative long-duration assets," plus the “favourable impact of fixed income reinvestment activities and favourable credit experience.”
Income from core business
Manulife's core earnings also rose to a record $1.7 billion in the second quarter of 2021, up from $1.6 billion in Q2 2020.
This increase of 7.7 per cent or $121 million is explained by “higher new business gains across all insurance segments, higher net fee income from higher average asset under management administration in Global Wealth and Asset Management, which benefitted from favourable market impacts and net inflows.”
The insurer also mentioned “the recognition of core investment gains in the quarter (compared with nil core investment gains in the prior year quarter) and in-force business growth in Asia and Canada.”
However, the result was “partially offset by modestly unfavorable net policyholder experience, compared with net favourable COVID-19 impacts in 2Q20, and lower net gains on seed money investments in new segregated and mutual funds during the period.”
Looking at the figures in closer detail, core earnings increased:
- By 7.6 per cent or $37 million for the Asia segment, to $526 million;
- 49.6 per cent or $118 million for the Global Wealth and Asset Management segment, to $356 million;
- And 12.7 per cent or $14 million for Corporate and Other, which reported a core loss of $96 million in Q2 2021, compared with $110 million in Q2 2020.
Core earnings also declined:
- By 20.6 per cent or $124 million in the United States, to $478 million.
- And by 7 per cent or $24 million in Canada, to $318 million.
What’s more, core investment gains added $100 million to core earnings in the second quarter of 2021, compared with zero in Q2 2020.
Manulife's insurance premiums and deposits were $13.1 billion in the second quarter of 2021, up from $10.5 billion in Q2 2020. This represents an increase of 24.1 per cent or $2.5 billion.
In Canada alone, insurance premiums and deposits were $4.2 billion in the second quarter of 2021, versus $3.4 billion in Q2 2020. This represents an increase of 25.4 per cent or $857 million.
In closer detail:
- Individual Insurance: Insurance premiums and deposits increased by 7.7 per cent or $74 million to $1 billion.
- Group insurance: Premiums and deposits grew by 24.1 per cent or $469 million to $2.4 billion.
- Annuities: Premiums and deposits soared by 65.7 per cent or $314 million to $792 million.
Insurance premiums and deposits in Asia also climbed 33 per cent or $1.7 billion to $6.9 billion. In contrast, premiums and deposits In the U.S. edged downward by 1.3 per cent or $26 million to $1.9 billion.