Manulife (MFC) Q1 Earnings Lag Estimates, Asia Business Soft

Manulife Financial Corporation MFC delivered first-quarter 2022 core earnings of 61 cents per share, which missed the Zacks Consensus Estimate by 7.6%. The bottom line declined 4.7% year over year.

Core earnings of $1.5 billion (C$1.7 billion) decreased 4% from the prior-year quarter. The downside was due to lower new business gains in Asia, the unfavorable impact of markets on seed money investments in new segregated and mutual funds and lower in-force earnings in U.S. Annuities, primarily due to the variable annuity reinsurance transaction. These were limited by experience gains, in-force business growth in Canada and Asia, a higher yield on fixed income investments and lower cost of external debt in Corporate and Other, and higher new business gains in Canada and the United States.

Manulife Financial Corp Price, Consensus and EPS Surprise

Manulife Financial Corp Price, Consensus and EPS Surprise

Manulife Financial Corp price-consensus-eps-surprise-chart | Manulife Financial Corp Quote

New business value (NBV) in the reported quarter was $457 million (C$513 million), down 14% year over year due to lower business in Asia,

Annualized premium equivalent (APE) sales were $1.4 billion (C$1.6 billion), down 9% year over year due to lower sales in Asia.

The expense efficiency ratio deteriorated 150 basis points (bps) to 50%.

As of Mar 31, 2022, Manulife Financial’s financial leverage ratio improved 310 bps year over year to 26.4%.

Wealth and asset management assets under management and administration were $647 billion (C$808 billion), up 5.7% year over year. The Wealth and Asset Management business generated a net inflow of $6.2 billion (C$6.9 billion), nearly five-times year over year.

Core return on equity, measuring the company’s profitability, contracted 190 bps year over year to 11.8% in the first quarter of 2022.

Life Insurance Capital Adequacy Test (LICAT) ratio was 140% as of Mar 31, 2022, up from 137% as of Mar 31, 2021.

Book value per share excluding AOCI increased 15.7% to $24.12 as of Mar 31, 2022.

Segmental Performance

Global Wealth and Asset Management division’s core earnings came in at $479 million (C$324 million), up 3.8% year over year.

Asia division’s core earnings totaled $434 million (C$537 million), down 5.7% year over year. In Asia, NBV decreased 28% to $391 million, reflecting lower sales volumes in Hong Kong and several markets in Asia Other due to the impact of COVID-19, lower corporate-owned life insurance ("COLI") product sales in Japan, and unfavorable product mix related to lower critical illness sales in mainland China. APE sales decreased 17% due to continued adverse impacts of COVID-19 in Hong Kong and several markets in Asia Other and lower sales in Japan.

Manulife Financial’s Canada division core earnings of $280 million (C$314 million) were up 18.9% year over year. NBV increased 33% year over year, driven by higher margins across all business lines. APE sales increased 2%, primarily driven by increased customer demand for its lower risk segregated fund products and higher mid-size group insurance sales, partially offset by variability in the large-case group insurance market.

The U.S. division reported core earnings of $433 million (C$486 million), down 3% year over year. NBV increased 57% year over year, driven by higher sales volumes and interest rates, and a favorable product mix. APE sales increased 32%, driven by the company’s differentiated domestic product offerings, which include the John Hancock Vitality feature and higher customer demand for insurance protection in the current COVID-19 environment of greater consumer interest in improving baseline health, and strong international sales.

Loss at Corporate and Other was $186 million (C$209 million), increasing 77% year over year.

Zacks Rank

Manulife currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Some Other Life Insurers

Voya Financial, Inc. VOYA reported first-quarter 2022 adjusted operating earnings of $1.47 per share, which surpassed the Zacks Consensus Estimate by 8.1%. The bottom line increased 42.7% year over year. Total revenues amounted to $1.5 billion against ($2 billion) in the year-ago quarter.

Voya Financial's net investment income declined 11.7% year over year to $630 million. Meanwhile, fee income of $433 million decreased 5.4% year over year. Premiums totaled $613 million versus ($5 billion) in the year-ago quarter. Total expenses were $1.4 billion versus a benefit of $3 million in the year-ago quarter.

Lincoln National Corporation LNC reported first-quarter 2022 adjusted earnings of $1.66 per share, which missed the Zacks Consensus Estimate of $1.97. Also, the bottom line declined from the prior-year figure of $1.82 per share.

Lincoln National's adjusted operating revenues decreased to $4,718 million for the first quarter from $4,762 million a year ago. Also, it missed the consensus mark of $4,768 million.

Reinsurance Group of America, Incorporated RGA reported first-quarter 2022 adjusted operating earnings of 47 cents per share against the Zacks Consensus Estimate of a loss of 61 cents. In the year-ago quarter, RGA had reported a loss of $1.24 per share. Net premiums of $3.1 billion rose 8.3% year over year.

Investment income, net of related expenses, decreased 0.2% from the prior-year quarter to $810 million. The average investment yield was down 38 basis points to 5.29%. Total benefits and expenses at Reinsurance Group increased 1.4% year over year to $3.9 billion.

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