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Asian growth gives Manulife big first-quarter profit boost

Manulife Financial Corp., Canada’s largest life insurer, has reported a 45-per-cent gain in first-quarter profit after benefiting from interest-rate movements and record insurance sales in Asia. Net income was $1.05-billion, up from $723-million in the year-ago period, the Toronto-based company said in a statement Thursday. Profit excluding some items was 44 cents a share, above the 43-cent average of 13 analysts surveyed by Bloomberg.

The company recorded a $474-million markets gain, which was driven by the significant narrowing of swap spreads in Canada, gains on the sales of certain bonds and changes in the yield curve, according to spokesman Sean Pasternak. Like other life insurers, Manulife holds debt to back long-term liabilities and relies on the fixed-income market.

Market-related gains “more than offset depressed oil and gas prices in the quarter, serving as a useful reminder that markets will fluctuate both in our favour and against us,” chief executive officer Donald Guloien said.

The results are a reversal from recent quarters, when Manulife profit was hampered by energy investments suffering from an oil price that has been halved in the past two years. The insurer’s profit slid 62 per cent in the fourth quarter, when it said it may not meet a 2016 target due to investment losses tied to oil and gas and low long-term bond yields.

Profit from the sale of insurance products across the insurer’s three regions rallied, jumping 35 per cent to $249-million in Asia, as Singapore and Hong Kong record sales boosted total Asia insurance revenue by 36 per cent. During the quarter, Manulife began distributing products via its bancassurance partnership with DBS Group Holdings Ltd. in Singapore, Hong Kong, Indonesia and mainland China. In Canada, profit from insurance rose 52 per cent to $172-million, and was up 3 per cent to $183-million in the United States.

Asset management net flows slid 76 per cent to $1.7-billion from the prior year as redemptions increased and amid “challenging market conditions” in Asia and Canada. Core earnings in the insurer’s wealth management operations fell 10 per cent to $38-million in Asia, and 6 per cent to $64-million in the United States. In Canada, profit from the unit rose 30 per cent to $39-million.

The company’s stock rose 0.4 per cent to $18.07 at market close in Toronto Wednesday. The shares are down 13 per cent this year.

News Source: http://www.theglobeandmail.com/report-on-business/manulife-posts-45-per-cent-rise-in-profit/article29883130/