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Insurance industry

Manulife Financial Reports 88.4% Increase in First-Quarter Profit

Strategic Insights

— 2 min read

Manulife Financial Corp. reported a significant surge in first-quarter profit, driven primarily by the acquisition of U.S.-based John Hancock Financial Services Inc. in April 2004. The Canadian life insurance giant's net income soared to C$801 million, or 99 cents a share, from C$425 million, or 92 cents a share, in the same quarter last year. Although results were partially offset by the cost to cover guarantees made to clients who were referred to a hedge fund that later shut down, the integration of John Hancock's operations is expected to be largely completed by year-end.

Key Takeaways:

  • Manulife Financial's first-quarter profit jumped 88.4%, reaching C$801 million, or 99 cents a share, compared to C$425 million, or 92 cents a share, in the same quarter last year.
  • The acquisition of U.S.-based John Hancock Financial Services Inc. in April 2004 was a significant contributor to the increase in profits, accounting for a "significant" portion of the increase.
  • Partially offsetting the increase was the cost to cover guarantees made to clients referred to Portus Alternative Asset Management Inc., as well as the impact of a strengthening Canadian dollar.
  • Manulife Securities' clients who were referred to Portus have been offered three alternatives to recoup all of their principal invested, including exchanging Portus investments for principal-protected notes, guaranteed investment certificates, or cash payments equal to 100% of their principal invested.
  • Manulife's first-quarter total revenue jumped to C$7.6 billion from C$4.1 billion, and the company reported record levels of premiums and deposits, reaching C$14.8 billion.
  • Funds under management were C$350.3 billion as of March 31, 2005, up from C$163.2 billion a year earlier.
  • Dominic D'Alessandro, Manulife's president and chief executive officer, stated that the company is focused on realizing the full benefits of the merger with John Hancock.

Statistics:

  • 88.4%: Increase in Manulife Financial's first-quarter profit
  • C$801 million: Manulife Financial's net income in the first quarter
  • 99 cents: Earnings per share in the first quarter
  • 92 cents: Earnings per share in the same quarter last year
  • 9%: Decline in the U.S. protection segment's net income
  • C$135 million: Net income for Manulife's U.S. protection segment
  • C$14.8 billion: Total premiums and deposits in the first quarter
  • C$350.3 billion: Funds under management as of March 31, 2005
  • C$163.2 billion: Funds under management a year earlier
  • US$46.41: Manulife's stock price on the New York Stock Exchange on May 6
  • 0.64%: Decline in Manulife's stock price on May 6

Sources:

  • A. M. Best via COMTEX (2005)
  • The Globe and Mail (May 2, 2005)
  • Manulife Financial Corp. (press release)
  • Bear Stearns (research note)
  • COMTEX (http://www.comtexnews.com)

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