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Manulife Earnings Up Y/Y on Higher Fee Income; Ups Dividend

Zacks Equity Research

Manulife Financial Corp. (MFC) reported second-quarter 2014 core earnings of $764.1 million (C$701 million), up 15.1% year over year. The improvement was driven by higher fee income on increased asset under management, lower hedging costs and a favorable U.S. currency impact.

Net income for Manulife Financial in the quarter amounted to approximately $1,027.9 million (C$943 million) up more than 3.6 times year over year. Net income benefited from strong investment-related experience.

During the quarter, Manulife Financial's total insurance sales were $630.0 million (C$587 million), down 38% year over year. The decline was attributable to lower sales in Canada Group Benefits.

Wealth sales came in at $14.5 billion (C$13.3 billion), down 7% year over year.

Asia Division's core earnings were $212 million, down 3.6% year over year.  Premiums and deposits were $3.8 billion, down 21% year over year. Insurance sales increased 26% year over year, primarily led by 68% sales growth in Japan. Wealth sales, however, decreased 33% year over year, due to sales decline in Japan.  

The company’s Canadian Division’s core earnings of $252.9 million (C$232 million) in the reported quarter increased 3% year over year. The improvement was driven by in-force business growth, including higher fee income from growing wealth management businesses. Premiums and deposits in the quarter were $5.6 billion (C$5.1 billion), down 10% year over year.

The U.S. Division reported core earnings of $302 million, down 11% year over year. Premiums and deposits were $11.9 billion, up 4% year over year. The increase was driven by record sales in mutual funds, which was to some extent dampened by lower life insurance premiums.

Manulife Financial's Minimum Continuing Capital and Surplus Requirements ratio was 243% as of Jun 30, 2014, down 12% sequentially.  
The company's financial leverage ratio improved to 28.2% from 30.8% in the previous quarter due to repayment of debt.

Funds under management at Manulife Financial reached an all-time record high of $679.7 billion (C$637 billion) as of Jun 30, 2014 up 11% year over year. The increase was led by growth in the company’s Asset Management businesses, customer cash net inflows in all the divisions and equity market growth over the period.

During the quarter Manulife Financial increased its quarterly dividend payment by 19%

Manulife Financial presently carries a Zacks Rank #3 (Hold).

Other Insurance Stocks to Consider

Other life insurance stocks like Prudential Financial Inc. (PRU), Protective Life Corp. (PL) and Lincoln National Corporation (LNC) reported favorable second-quarter earnings, beating the Zacks Consensus Estimate by 14 cents, 11 cents and 10 cents, respectively.

Read the Full Research Report on LNC
Read the Full Research Report on PRU
Read the Full Research Report on MFC
Read the Full Research Report on PL

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