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Manulife Financial Corp. (MFC), Canada’s largest insurer, said profit surged 22 percent, topping analysts’ estimates, on increased insurance sales and higher gains from annuities as markets rallied.
Net income climbed to C$1.21 billion ($1.23 billion), or 62 cents a share, from C$985 million, or 53 cents, a year earlier, the Toronto-based insurer said today in a statement. It was the highest profit since the fourth quarter of 2010.
Manulife said insurance sales climbed on increases in Asia and Canada, while a rebound in equity markets led to gains from annuities and higher funds under management. The company posted C$541 million in gains from stocks, interest rates and hedges on variable annuities. The insurer had a record C$512 billion in fund assets in the quarter.
“Our first quarter reflects strong markets, positive hedging results, 35 percent higher insurance sales and stronger underlying earnings,” Chief Executive Officer Donald Guloien said in the statement.
Excluding some items, Manulife earned 66 cents a share. That topped the 35-cent-a-share average estimate of 15 analysts surveyed by Bloomberg News.
Guloien, 55, has said Manulife plans to have 60 percent of its underlying earnings sensitivity to equity markets offset by hedges by the end of this year, and 75 percent by the end of 2014. In the first quarter, Manulife said 66 percent to 74 percent of that sensitivity was offset by hedges.
The Nasdaq Composite Index surged 19 percent in the quarter, while Canada’s benchmark Standard & Poor’s/TSX Composite Index climbed 3.7 percent.
Manulife said second-quarter results may be lowered by as much as C$800 million because of changes to fixed-income reinvestment rates. The insurer may also have costs of C$250 million to C$300 million because of changes to actuarial parameters.
Separately, Manulife named Steve Roder as chief financial officer, replacing Michael Bell, who said in February he was leaving the company. Roder was CFO of AIA Group Ltd. until 2010 and has been in Asia for about 20 years.
“This underscores the importance of the Asian operations to Manulife’s longer-term growth, but will also perpetuate speculation that it will once again become acquisitive in the region,” John Aiken, an analyst at Barclays Capital, wrote today in a note to clients.
Manulife fell 2.7 percent to C$12.98 at 4:01 p.m. in Toronto. The shares have surged 20 percent this year, compared with a 19 percent increase on the six-member S&P/TSX Life & Health Insurance Index. (STLIFE)
Great-West Lifeco Inc. (GWO), Canada’s second-largest insurer, said today that first-quarter net income rose 8.7 percent to C$451 million, or 47 cents, up from C$415 million, or 44 cents, a year earlier.
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