Thursday, May 04, 2006

Manulife & Great West Q1 2006 Earnings

Bloomberg, 4 May 2006

Manulife Financial Corp. and Great- West Lifeco Inc., Canada's largest and third-largest insurers, said first-quarter profit rose after a stock rally increased mutual fund sales.

Manulife's net income climbed for an 18th straight quarter to a record C$956 million ($863.5 million), or C$1.19 a share, from C$801 million, or 98 cents a share, a year earlier, the Toronto-based insurer said today. Great-West's profit rose 6.4 percent to C$446 million, missing analysts' estimates.

Manulife, which owns Boston-based John Hancock Financial Services, said earnings from U.S. asset management climbed 25 percent to C$255 million, contributing more to profit than any other business unit. A 5 percent gain in the Standard & Poor's 500 stock index this year also lifted segregated fund sales for Winnipeg, Manitoba-based Great-West.

``The U.S. equity markets are doing very well right now,'' said Ian Nakamoto, director of research at MacDougall, MacDougall & Mactier Inc. in Toronto, which manages about $3.25 billion in assets, including Manulife shares. ``I would expect the mutual fund side of the business to do well for the balance of the year.''

Manulife shares fell C$1.87, or 2.6 percent, to C$70.35 in 4:10 p.m. trading on the Toronto Stock Exchange, the biggest decline in 18 months. Manulife is the second-biggest Canadian company by market value, trailing Royal Bank of Canada. Great- West shares fell 57 cents, or 2 percent, to C$28.58, as most financial shares fell on concern the central bank will raise interest rates further to stem inflation.

U.S. Expansion

Manulife Chief Executive Officer Dominic D'Alessandro, 59, led Manulife's $13.9 billion takeover of John Hancock in 2004 to expand earnings outside of Canada. About 70 percent of Manulife's revenue came from outside its home country last year.

Profit from U.S. insurance climbed 17 percent to C$158 million, while earnings at Manulife's Canadian businesses rose 29 percent to C$238 million. Profit from Asia and Japan climbed 1.9 percent to C$162 million.

Merrill Lynch & Co. analyst Andre-Philippe Hardy expected Manulife to earn C$1.18 a share, matching the average estimate of eight analysts polled by Thomson Financial, which declined to say how it compiled its estimates.

Manulife said overall premiums and deposits rose 20 percent to C$17.94 billion. Return on equity was 16.3 percent, from 14.1 percent a year ago.

Rising Dollar

D'Alessandro said on a conference call with investors today that a rising Canadian dollar, as well as Manulife's share price, gives the company ``the wherewithal to consummate important transactions.'' He didn't elaborate.

The company has more than C$3 billion in cash that could be used for acquisitions, Manulife said on the call today.

Great-West said net income climbed to 50 cents a share, from C$419 million, or 47 cents, a year earlier. Steve Cawley, an analyst at TD Newcrest, was expecting per-share profit of 52 cents for Great-West.

An increase in fund sales helped counter a decline in life insurance premiums and a surging Canadian dollar, which reduced profit by about C$23 million.

Profit from the Canadian unit rose 10 percent to C$204 million, from C$186 million. U.S. earnings fell 7 percent to C$134 million, and profit in Europe was 10 percent higher at C$111 million. Total premiums and deposits were unchanged at C$9.19 billion.

Dividend Growth

Great-West's dividend growth ``will probably slow, but not dramatically'' this year, Chief Executive Officer Raymond McFeetors said on a conference call today. He didn't elaborate.

D'Alessandro told Manulife shareholders at the annual meeting today he opposes proposals made last year by Canadian banks such as Royal Bank and Toronto-Dominion Bank to allow them to use customer information to sell insurance. Banks face restrictions on insurance sales, and can't sell policies in branches.

``The situation is fraught with hazard,'' D'Alessandro told reporters in Toronto following the meeting. ``I have yet to see any great advantage,'' to changing the rules.

He said he supports the idea of bank and insurance mergers, which are barred by the federal government. D'Alessandro also called for a single securities regulator in Canada.

Manulife will split its stock two-for-one as of June 2, for shareholders of record on May 25.
Reuters, Frank Pingue, 4 May 2006

Manulife Financial Corp. wants to keep growing in regions where it has already established a presence, but would also like to plant its feet in India and Korea, the chief executive of the world's No. 5 life insurer said on Thursday.

Two years after acquiring John Hancock in a blockbuster deal that ranks as one of the industry's biggest, Chief Executive Dominic D'Alessandro said the company remains well positioned to take advantage of acquisition opportunities that may surface.

"We like all of the regions where we are, and we think that we have an ideal platform for growth in all the exciting markets in the world," D'Alessandro, told reporters after the company's annual meeting in Toronto.

"We'd like to continue to grow in the U.S. and to grow in Asia where we already have a presence in 10 countries there now. But we would also like to be in India some day and we'd like to go to Korea."

D'Alessandro also said Manulife, which has more than C$3 billion ($2.7 billion) in excess capital, would likely stay out of Europe, given the the many large financial institutions already there, and Latin America. Rival Sun Life Financial is already active in India.

Manulife, which operates in Canada and Asia through Manulife Financial and in the United States primarily through John Hancock, also said the quicker-than-expected integration of John Hancock has built its confidence for whatever move it makes next.

"Every time you do anything in life where it works out well it emboldens you to do others, so we feel confident in our ability to do business combinations as I think we're familiar with the issues," said D'Alessandro.

Manulife's chief executive also repeated that mergers between Canadian financial institutions should be allowed, something the government has not permitted since it blocked two merger proposals in 1998.

"I would recommend that mergers within the industry whether bank with bank, bank with insurer, or insurer with insurer, be allowed," D'Alessandro told the annual meeting.

"As it now stands it is highly unlikely that the aspirations of the ten or so large institutions that make up the bulk of our financial services industry can be satisfied by domestic demand alone."

Manulife reported an 18.6 percent jump in first-quarter profit, due to growth in its wealth management business, and declared a stock dividend, which will have the same effect as a two-for-one stock split of its common shares.

Its net income for the quarter to March 31 was C$949 million ($855 million), or C$1.19 a share, up from C$800 million, or 98 Canadian cents a share, in the same period last year.

The profit just topped analysts' expectations for a profit of C$1.18 per share, according to Reuters Estimates.

Revenue rose 8.6 percent to C$8.2 billion from C$7.5 billion.

Total premiums and deposits rose 20 percent to C$17.9 billion from C$14.9 billion last year, while funds under management rose to C$385.6 billion from C$349.9 billion last year.

Return on equity rose to 16.3 percent on an annualized basis from 14.1 percent in the year-ago quarter.

Manulife shares fell 97 Canadian cents, or 1.3 percent to C$71.25 on the Toronto Stock Exchange, its lowest close since early February.