TORONTO - Manulife Financial Corp. (TSX:MFC) says growth from its insurance operations in Asia helped deliver a profit increase of more than 50 per cent in the first quarter.
The insurance company said Thursday that net profit rose to $818 million, or 42 cents per share, compared with $540 million, or 28 cents per share, in the same quarter last year. The results were helped by lower costs, a stronger U.S. dollar and higher fee income, it said.
Core earnings, excluding such things as one-time items, were up at $719 million, or 37 cents per share, which was two cents lower than analyst expected, according to a Thomson Reuters survey.
Manulife reported that overall insurance sales dropped 15.3 per cent to $537 million, reflecting lower group benefits sales in Canada.
In Asia, sales grew 23 per cent to US$258 million with Japan and Indonesia being the biggest growers, both up more than 50 per cent.
"In the first quarter we saw improved momentum in insured sales with a very significant increase in Japan and double-digit sales growth in most of the other territories in Asia," president and chief executive Donald Guloien said in a conference call.
"This was largely the result of new product launches and increased marketing efforts in the region as well as the growth or distribution capability."
But the results we weaker in North America, where modifications of its price model, designed to improve margins, actually negatively affected overall insurance sales.
In the Canadian division, insurance sales dropped 45 per cent to $134 million, which Marianne Harrison, general manager of Canadian operations, said was primarily because of prices that were higher than its competitors.
"We had done some, probably four or five, increases over the last couple of years and the more recent one I would say at the beginning of last year," she said.
"We didn't see the competition follow, so the change that we made in the third quarter of last year brought us in line with competition."
Price pressures were also a focus at John Hancock, the company's U.S. insurance division, where sales dropped 24 per cent to US$108 million from a year earlier, mainly because of decisions to increase prices last year, Guloien said.
"We expect recently introduced product enhancements and more competitive prices to improve sales," he added.
In Manulife's wealth-management business, which offers investment products and services like mutual funds, sales were $13.8 billion in the quarter, up five per cent from the same quarter in 2013.
Manulife said it had $635 billion funds under management.
The company's shares closed up 16 cents at $20.74 Thursday on the Toronto Stock Exchange.
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