Manulife Financial – Wealth Management Boosts Fourth Quarter Earnings

Manulife registered a $350 million gain from the divestment of its Taiwan-based insurance operations.

Manulife Financial Corp. (TSE:MFC, Mkt cap 39.01B, P/E 13.08, Div/yield 0.13/2.46, EPS 1.61, Shares 1.85B) has reported a 20% rise in its fourth-quarter profit, helped by continuing growth in its wealth management business and a solid gain from the sale of its Taiwan insurance division.

The country’s largest insurer said its net income attributable to shareholders reached $1.3 billion in the quarter to 31 December, or $0.68 per share, increasing from $1.08 billion, or $0.57 per share, the previous year. Excluding certain items Manulife’s profit stood at $0.35 per share, falling below the mean estimate for earnings of $0.37 per share among ten analysts polled by Bloomberg.

For the whole of 2013 the insurer reported net earnings of $3.1 billion, an increase of 73% over 2012.

Manulife $350 million gain from sale of Taiwan-based insurance operations in December

Manulife registered a $350 million gain from the divestment of its Taiwan-based insurance operations in December.

The Toronto-based firm enjoyed wealth sales of $12 billion in the last quarter of 2013, up 15% on the year. The increase was led by Manulife’s Canadian and US divisions, which reported revenue growth of 24% and 22%, respectively. Insurance sales, however, suffered a steep decline of 32% to $617 million in the fourth quarter. The company’s chief executive, Donald Guloien, commented that wealth sales were “simply outstanding,” while insurance sales were “slightly lower” than anticipated, but generated better margins.

Manulife also registered a $350 million gain from the divestment of its Taiwan-based insurance operations in December. The company said that as a whole it continued to gain momentum in Asia, witnessing a 20% increase in insurance sales in the October-December period, led by record quarterly results in Hong Kong and Indonesia and double-digit improvement in Japan, as well as expansion of its Malaysian wealth management business.

Over the last few years, Manulife has made significant strides de-risking their balance sheet and realigning their product mix towards more profitable insurance instruments.  As the recovery gains momentum, we expect to to see greater operating efficiency reflected in higher profits.  The stock has appreciated considerably but still represents good value to long-term investors.

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