CANADA’S Manulife Financial reported better-than-expected quarterly profit on Wednesday, powered by a 40-percent rise in earnings from Asia, a region the insurer is betting on for growth.
The Asia business, which includes operations in 12 markets and over a 100 bank partnerships, is among the biggest income generators for the insurer.
Manulife held its investor conferences in Hong Kong and Jakarta in June to assure investors of its focus on Asia, a market it has been operating in since 1897.
At the June conference, it pushed back its target for half of its earnings to be generated in the segment to 2027 from 2025 due to the pandemic.
As a part of its transformation toward a higher return and lower risk business, Manulife said it expects higher return on equity than previously recorded by 2027 and expects to generate more than CA$22 billion of cash in the same time period.
“The move to low risk and higher returns, in part means things like reinsuring more of our business … on top of that we’ve been growing in the asset management business, that’s a great high return businesses,” Chief Financial Officer Colin Simpson said in an interview.
The company boosted sales in Japan and Hong Kong. In Canada, sales growth was led by group insurance for large clients.
“That’s the benefit of having a diversified Asian portfolio … this quarter, really it was Japan stealing the limelight,” Simpson said, noting annual premium-equivalent (APE) sales in Japan rose 93 percent.
APE sales rose 17 percent in the quarter, powered by a 61-percent jump in Manulife’s Canada business and a 7-percent increase in its Asia unit. APE is a key sales metric used by life insurance companies.
Core earnings rose to CA$1.74 billion ($1.26 billion), or 91 Canadian cents per share, in the three months ended June 30, from CA$1.64 billion, or 83 Canadian cents per share, a year earlier.
Analysts were expecting 88 Canadian cents per share, according to LSEG data.
Manulife shares have jumped 13.4 percent this year, compared with a 5.8-percent fall for smaller peer Sun Life, which is slated to report results next week. Toronto’s main index has gained 4.9 percent.
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