Canada's Manulife reports decline in 4th-quarter earnings

TORONTO (Reuters) - Manulife Financial Corp MFC.TO on Wednesday reported a decline in fourth-quarter earnings, due in part to higher investment gains boosting earnings in the same period a year earlier.

FILE PHOTO: The Manulife Financial Corporation logo appears at the company's Annual General Meeting in Toronto May 1, 2014. REUTERS/Fred Thornhill/File Photo

Canada’s biggest insurer said earnings per share, excluding one-off items, were 59 Canadian cents in the final quarter of 2017, compared with 63 Canadian cents in the same period the previous year.

Analysts on average expected earnings of 58 Canadian cents per share, according to Thomson Reuters I/B/E/S data.

Core earnings for the quarter were C$1.2 billion ($955 million), compared with C$1.3 billion the year before.

The insurer had investment gains of C$180 million in the fourth quarter of 2016 compared with C$100 million in the most recent quarter. The earnings decline also reflected the previous year benefiting from a release of funds that had been set aside to cover uncertain tax positions.

Canadian insurance companies are expanding rapidly in Asia, selling products to the growing middle class. The strategy is helping the firms drive growth and diversify from domestic markets where competition is intense.

Manulife has made the high-growth Asia market a priority in recent years and, last year, appointed Roy Gori, previously head of its Asian unit, as its new chief executive.

The company has benefited from a partnership with Singapore’s DBS Group, agreed in 2015, in which Manulife sells its products through the lender’s Asian branch network.

Total insurance sales fell by 3 percent during the period to C$1 billion. Sales in Asia increased 7 percent, driven by strong growth in Singapore and Vietnam. Insurance sales in Canada fell by 31 percent.

The company generated net flows of C$3.7 billion in its wealth and asset management businesses, down from C$6.1 billion the year before, mainly due to lower net flows in institutional asset management which Manulife said the previous year benefited from three large mandates in Canada and Japan.

Manulife reported a net loss of C$1.6 billion, compared with net income of C$63 million a year ago. That included charges of C$2.8 billion related to U.S. tax changes and the sale of some private market assets, previously announced in December.

Manulife said in December the U.S. tax changes would boost profit by C$250 million a year from 2018.

The company announced a quarterly dividend of 22 Canadian cents, up 7 percent on the previous quarter.

Reporting by Matt Scuffham; Editing by Leslie Adler and Matthew Lewis