Manulife Financial Corporation reported net income attributable to common shareholders of $1.7 billion for the fourth quarter of 2023. For the full year, earnings reached $5.1 billion.

In the same quarter of 2022, Manulife reported net income of $915 million, adjusted for IFRS 17. Transitional net income as of Dec. 31, 2022 was $3.5 billion. The loss attributable to shareholders was $1.9 billion in 2022, as adjusted. 

Canada  

In Canada, net income attributable to shareholders amounted to $1.2 billion in 2023, compared with a loss of $503 million reported on Dec. 31, 2022 on an adjusted basis.

Net income attributable to shareholders was $365 million in the fourth quarter of 2023, compared with a loss of $73 million in the same quarter of 2022, on an adjusted basis. 

United States  

In the United States, net income attributable to shareholders amounted to $639 million for the full year 2023, whereas the company reported a loss of $2.3 billion for the full year 2022 on an adjusted basis.

Net income attributable to shareholders was $198 million in the fourth quarter of 2023, compared with a loss of $44 million in the same quarter of 2022.

Asia  

In Asia, net income attributable to shareholders was $1.3 billion for the full year 2023, compared with earnings of $683 million reported in 2022 on an adjusted basis.

Net income attributable to shareholders was $615 million in the fourth quarter of 2023, compared with $315 million in the same quarter of 2022 on an adjusted basis. 

Global Wealth and Asset Management  

For the Global Wealth & Asset Management segment, net income attributable to shareholders amounted to $1.3 billion for the full year 2023, compared with earnings of $1.1 billion reported in 2022 on an adjusted basis. The improvement in earnings was $176 million or 16 per cent.

For the same segment, net income attributable to shareholders was $365 million in the fourth quarter of 2023, compared with $401 million in the same quarter of 2022 on an adjusted basis.

The Corporate and Other segment posted net income attributable to shareholders of $628 million for the full year 2023, compared with a loss of $918 million in 2022 on an adjusted basis.

For the same segment, net income attributable to shareholders was $116 million in the fourth quarter of 2023, compared with a net loss of $316 million in the same quarter of 2022 on an adjusted basis.

Income from core operations reached $1.8 billion in the fourth quarter of 2023, an increase of $230 million compared with the same quarter of 2022 on an adjusted basis. 

Sales  

For the full year 2023, sales of annualized premium equivalents (APE) totalled $6.4 billion, up $787 million or 12 per cent on a full-year 2022 adjusted basis.

APE sales were $1.6 billion in the fourth quarter of 2023, an increase of $262 million or 20 per cent compared to the same quarter of 2022.

Comparing 2023 sales with adjusted 2022 figures, APE sales rose by 18 per cent in Asia, the insurer's largest market, and by 12 per cent in Canada, but fell by 6 per cent in the United States.

Manulife's insurance sales in 2023 totaled $5.75 billion. This represents an increase of 17 per cent compared with sales for the whole of 2022. 

Discussion with analysts  

A discussion between financial analysts and the management team took place on Feb. 15. President and CEO Roy Gori highlighted the record volume of APE sales in 2023.

For his part, Colin Simpson, Senior Vice President, Finance, added that APE sales climbed 44 per cent in Canada in the fourth quarter of 2023, compared with the same period in 2022, mainly thanks to affinity group sales.

Part of the discussion focused on the solvency ratio and financial reserves in connection with the application of IFRS 17. Gori pointed out that the company has already carried out share buybacks totalling $5.5 billion since 2018.

Despite this, the company has $22 billion more than the amounts required by regulatory authorities to meet its obligations. It is, therefore, likely that new transactions will arise from this excess capital, acknowledges Gori, even if the company is relying first and foremost on organic growth.

The recalibration of insurance risks in line with IFRS 17 was also discussed. The overall profitability of the portfolio remains unchanged, but the new accounting standard changes the point at which this profit is included in the contractual services margin (CSM). 

Darko Mihelic, analyst at RBC Capital Markets, pointed out to senior management that, when it comes to investing in commercial real estate, insurers often claim that they are patient investors and are in it for the long haul. Manulife, however, has reduced the size of its portfolio in this segment.

According to Scott Hartz, Chief Investment Officer, rising interest rates and the vacancy rate for office buildings in North America are weighing on the value of the portfolio. In the long term, however, he believes that profitability is still there.

He acknowledges that 10 years ago, commercial real estate in North America accounted for 40 per cent of all alternative long-duration assets (ALDA), and that this proportion will fall to just 10 per cent by the end of 2023. Office property remains a problematic sector due to the continuing impact of telecommuting.

Hartz also said that the growing implementation of artificial intelligence (AI) in business will have an impact on the need for office space in professional services firms. It's a riskier segment of the overall real estate market, he said.

Roy Gori said that the diversification of the real estate portfolio – 38 per cent in the USA, 32 per cent in Canada and 26 per cent in Asia - enables the company to minimize the impact of cyclical problems.