Key Takeaways From Manulife’s Q3 Earnings
Manulife (NYSE: MFC) reported robust earnings for the third quarter despite heavy losses from hurricanes Harvey, Irma, and Maria, among others. The company’s core earnings grew by 9% year-over-year in the quarter, driven by strong earnings from Asia and Canada operations and partially offset by catastrophe losses. The third quarter included a provision of $240 million for the estimated financial impact on Manulife’s P&C business due to the aforementioned hurricanes. Manulife managed to offset these declines through strong growth in its Asia and Canada operations. The earnings were also helped by strong growth in Manulife’s wealth management business in the United States.
Asia and Canada Operations Drive Earnings Growth
The core earnings for Manulife’s Asia business grew by 9% in the third quarter. Manulife’s Asia core earnings were driven by growth in company’s new business volumes and strong growth in wealth and asset management gross flows. There was double-digit growth in all Asian markets, including Japan and Hong Kong, which had been facing headwinds last year. We expect the strong growth in Manulife’s Asia businesses to continue for at least another couple of quarters due to the company’s expansion in Asia Pacific markets.
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Manulife’s Canada operations also had a strong quarter, with its core earnings increasing by nearly 32%. The increase in Manulife’s Canada core earnings in the third quarter was driven by higher fee income from wealth management, higher asset levels and the release of provisions for uncertain tax positions in the third quarter of 2016.
Wealth Management In The U.S. Showed Growth But Was Offset By P&C Losses
Operating under the John Hancock brand in the U.S., Manulife holds about 3% of the life insurance market in the country in terms of premiums earned. In the third quarter, Manulife’s core earnings in the region increased by nearly 18% y-o-y to $355 million. The increase in the core earnings was driven by higher wealth and asset management earnings, higher tax benefits and lower amortization of deferred acquisition costs in the quarter. Manulife’s earnings in the third quarter were negatively impacted by the losses in P&C division caused by numerous hurricanes in the quarter including hurricane Harvey, Irma, and Maria. The total losses due to these hurricanes in the quarter amounted to nearly $240 million in the quarter.
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