Manulife Financial Corporation, also known as MFC, has delivered a staggering fourth-quarter 2023 performance, with core earnings reaching 68 cents per share. This figure has managed to outshine the Zacks Consensus Estimate by a significant 7.9%. The bottom line revealed a solid surge of 4.6% from the previous year – a true testament to its impressive growth trajectory.

The robust results can be attributed to a multitude of factors. A significant rise in average AUMA (Assets Under Management and Administration) and fee spreads, along with growth in Hong Kong, contributed to the upsurge. Additionally, higher yields, enhanced insurance experience, and increased sales across the Asia, Canada, and U.S. segments played a crucial role in bolstering the company’s performance.

Notably, New Business Value (NBV) in the reported quarter saw a whopping 59.5% increase year over year, reaching $463 million (C$630 million). Furthermore, the Annualized Premium Equivalent (APE) sales witnessed a substantial 22% surge from the previous year, amounting to a staggering $1.1 billion (C$1.5 billion), mainly driven by stellar sales in the Asia, Canada, and U.S. segments.

The Financial Landscape

The wealth and asset management sector showcased a resilient performance, with assets under management and administration reaching an impressive $600 billion (C$817 billion), representing a substantial 4.2% increase year over year. Additionally, the Wealth and Asset Management business, which had previously experienced net outflows of $8.4 billion, managed to overturn the tide, recording net outflows of a minimal $0.9 billion (C$1.3 billion) in the reported quarter.

The core return on equity, seen as a vital metric, exhibited a commendable 230 basis points expansion year over year, culminating in a robust 16.4%.

Manulife’s Life Insurance Capital Adequacy Test (LICAT) ratio stood at an impressive 137% as of Dec 31, 2023, showcasing strong financial standing and risk resilience.

Segmental Triumph

The Global Wealth and Asset Management division saw its core earnings surge to $259 million (C$ 353 million) – a notable 31.5% increase year over year. This growth was primarily driven by higher average AUMA and fee spreads, benefiting from favorable market impacts.

Reflecting on the Asia division, the company achieved a substantial 14% year-over-year increase in core earnings, totaling $414 million. This remarkable performance was driven by higher net insurance results, reflecting the net impact of updates to actuarial methods and assumptions, along with higher interest rates and business growth. Furthermore, in Asia, NBV showed a commendable 5% rise year over year.

Manulife Financial’s Canada division saw its core earnings remain stable at $258 million (C$352 million) year over year, with NBV experiencing an impressive 60% year-over-year increase in Canada.

The U.S. division reported core earnings of $349 million, marking a substantial 16% increase year over year, primarily attributed to the net impact of higher yields and improved insurance experience. The NBV in the U.S. division surged a remarkable 74% year over year.

Milestones Galore

In a landmark move, Manulife Financial entered into an agreement with Global Atlantic to reinsure four in-force blocks of legacy and low return on equity (ROE) business, including $6 billion of long-term care (LTC) insurance contract net liabilities. This transformative transaction is poised to reshape its portfolio by reducing risk, improving ROE, strengthening capital, building high-return businesses, and delivering lasting value to shareholders.

Looking toward the future, the company is all set to seal this monumental transaction by the end of this month.

Moreover, in the Global Wealth and Asset Management arena, Manulife Financial inked a game-changing agreement to acquire multi-sector alternative credit manager CQS. This acquisition is set to provide Manulife Investment Management and CQS clients with enhanced access to combined global investment solutions, promising a bright future for all stakeholders involved.

Manulife Financial also forged a significant partnership with League, a prominent healthcare technology provider, to offer group benefits to members, providing a more personalized and integrated digital healthcare experience. This move underscores the company’s commitment to creating meaningful connections between benefits and healthcare options for its members – a testament to its customer-centric approach.

Conclusion

From a wide lens, Manulife Financial’s exceptional performance in the fourth quarter of 2023 is an inspiring chapter in its ongoing success story. The company’s unwavering perseverance and strategic initiatives have paved the way for unprecedented growth, setting a compelling precedent for the financial landscape.

With a Zacks Rank #3 (Hold) for Manulife Financial, investors are poised to witness the company’s dynamic evolution, replete with intriguing developments and significant milestones on the horizon.

Industry Insights

Reflecting on the performance of other industry players, notable life insurers such as Lincoln National Corporation, Brighthouse Financial Inc., and Sun Life Financial Inc. have reported their respective fourth-quarter performances.

The insights gleaned from these industry counterparts serve as vital benchmarks for investors, offering a comprehensive outlook on the financial playing field and providing valuable context to Manulife Financial’s extraordinary accomplishments in the fourth quarter of 2023.