Tuesday, October 03, 2006

Manulife Targets 15% Yearly Profit Growth

Bloomberg, Patricia Cheng, 3 October 2006

Manulife Financial Corp. said it expects profit to grow 15 percent a year, driven mainly by Asia, the fastest-growing region for Canada's biggest insurer.

"Our growth is sustainable because we are in a bunch of economies that are growing themselves very quickly and in these countries we are expanding," said Chief Executive Officer Dominic D'Alessandro in an interview in Hong Kong yesterday. The Toronto-based company is targeting a 16 percent return on equity a year, he said.

D'Alessandro, 59, seeks to raise earnings by expanding in Asia, where its profit surged 51 percent in the second quarter. Rising income of the region's 3.7 billion people is helping Manulife and rivals sell more protection and investment products. Total premiums in Asia excluding Japan went up 16 percent last year, exceeding the 3.6 percent gain in North America, according to data from Swiss Reinsurance Co.

Manulife is introducing new products in Japan and Hong Kong such as variable annuities, which give policyholders periodic payments, as retirement needs increase, D'Alessandro said. The company will also broaden its sales channels by linking up with more banks and brokers, he said.

In China, the insurer's 51 percent-owned venture is awaiting regulatory approval to open four to five more branches, D'Alessandro said. Manulife-Sinochem Life Insurance Co. sells policies in 17 cities including Beijing and Shanghai.

Profit from Asia was C$199 million ($177 million) in the second quarter, increasing more than three times as fast as the 14 percent for the group overall. The region represented 21 percent of Manulife's total profit in the three months ended June 30, up from 16 percent a year earlier.

D'Alessandro also said Manulife has no plans to enter the European market because it's already well served by domestic insurers.

"We feel the opportunities available to us in Asia are very attractive. We don't want to get distracted and take our focus away," he said. "Down the road, if some terrific opportunity presents itself to acquire some business, we would look at it. But it's not our top priority."

The company, which had C$370 billion of assets under management as of June 30, a year ago exited all investments in hedge funds, totaling "many millions of dollars," D'Alessandro said.

"The hedge-fund space was very crowded," he said. "Our managers felt we could better manage the money ourselves."

Of its alternative assets, Manulife prefers infrastructure, energy, wind power, timber, oil and gas, real estate and private finance, D'Alessandro said.