Top three insurers post strong Q3 results on higher sales, market conditions

TORONTO – Canada’s three top insurance companies have reported strong third-quarter earnings, boosted by higher sales and good investment performance.

Manulife Financial Corp.’s (TSX:MFC) earnings topped $1 billion and reversed a year-ago loss of $211 million, results which chief executive Donald Guloien attributed in part to rising sales.

“We achieved solid growth in our wealth businesses … (and) while insurance sales increased modestly from last year, we have much improved margins and are seeing (good) signs in the initial sales of some of the new products that have been recently launched,” Guloien said during a conference call with analysts.

“Our growth strategies continue to generate positive results and we are making measurable progress toward our longer-term financial goals.”

The company said it generated core earnings of $704 million in the quarter, up from $570 in the quarter last year, a period that included a charge of $1 billion related to its annual review of actuarial methods and assumptions.

The company saw increases in its wealth and asset management businesses, with wealth sales up 34 per cent to $11.3 billion, while insurance sales were up four per cent, as stronger sales of group benefits in Canada offset declines in Asia, which were down four per cent on weakness in Japan.

Fully diluted earnings per common share were 54 cents, compared with a loss of 13 cents per share last year, despite a net charge of $252 million in the quarter as a result of its latest review of actuarial methods and assumptions.

Manulife results beat expectations, coming in “modestly above consensus,” according to John Aiken, an analyst with Barclays Capital Inc.

“Manulife’s earnings look solid and have several positives, which should support its valuation, but incremental tailwinds from an improving market environment may be necessary to serve as a catalyst for the next leg up,” Aiken said in a note to clients.

The results came a day after rival Sun Life Financial Inc. (TSX:SLF) reported a loss of $520 million in its latest quarter, compared with a year-earlier profit of $383 million as it wrote down and closed the sale of its U.S. annuity business.

The overall loss figure included a $674-million charge on the sale of the U.S. annuity business and another $230 million due to assumption changes and management actions related to the deal.

Excluding one-time items, the insurer would have posted an operating net profit from continuing operations of $422 million or 69 cents per diluted share for the quarter, compared with $459 million or 77 cents per share a year ago. The average analyst estimate compiled by Thomson Reuters had been for an adjusted profit of 64 cents per share.

The U.S. annuity transaction “has significantly reduced risk, it’s made our financials more transparent and it is enabling us to focus our energy and our capital on … growth,” Sun Life chief executive Dean Connor said during a conference call with analysts Thursday.

Michael Goldberg, an analyst with Desjardins Securities, called the Sun Life results “muted,” despite strong wealth sales and positive market movements.

“Positive contributions from interest rates and equity market movements, along with actuarial assumption changes driven by changes in capital market movements, were the primary reasons for the earnings beat,” he said in a note to clients, pointing to the adjusted earnings of 69 cents per share.

“We see these results as being neutral to Sun’s stock price in the current market environment.”

Great-West Lifeco Inc. (TSX:GWO), meanwhile, said on Thursday it earned $523 million, or 53 cents per share, for the quarter ended Sept. 30 as it closed its acquisition of Irish Life Group Ltd. That was up from $518 million, or 55 cents per share, a year ago.

Total premiums and deposits were $19.7 billion for the quarter, up from $15.5 billion a year ago, including $2.6 billion from Irish Life.

Excluding acquisition and restructuring costs associated with the Irish Life acquisition, the insurer said it earned $583 million or 59 cents per share for the quarter.

On the Toronto Stock Exchange, Manulife shares closed up 51 cents at $19.22 after hitting a new 52-week high of $19.34, while Sun Life rose 84 cents to $36.27 after hitting a new 52 week high of $36.46, and Great-West Life closed down 17 cents at $32.20.