Mr. Donald Guloien reports
MANULIFE FINANCIAL REPORTS 2012 NET INCOME OF $1.7 BILLION, CORE EARNINGS OF $2.2 BILLION, A STRONG REGULATORY CAPITAL RATIO OF 211 PER CENT, AND RECORD INSURANCE AND WEALTH SALES
Manulife Financial Corp. had net income attributed to shareholders of
$1,057-million for the fourth quarter ended Dec. 31, 2012,
accompanied by strong growth in insurance and wealth sales. Fully
diluted earnings per common share was 56 cents and return on
common shareholders' equity was 18.2 per cent for the fourth
quarter ended Dec. 31, 2012. For the full year, Manulife reported
net income attributed to shareholders of $1,736-million, diluted EPS of
88 cents and ROE of 7.1 per cent.
Substantive progress made on Manulife's strategic priorities in the fourth
quarter of 2012:
- Developing Manulife's Asian opportunity to the fullest -- achieved record wealth sales(1, 2), more than double last year. Total insurance sales increased 20 per
cent compared with fourth quarter 2011, with record insurance sales in
Indonesia driven by robust growth in both the agency and bank channels,
and double-digit insurance sales growth in Hong Kong driven by agency
growth. The company also enhanced Manulife's distribution network with additional
partners in Japan;
- Growing Manulife's wealth and asset management businesses in Asia, Canada and
the United States -- Manulife Asset Management had record institutional sales, the company launched
the Strategic Income Fund in Japan, contributing to record(2) wealth sales in Asia; the company achieved record mutual fund sales and assets
under management in Canada; and also generated record mutual fund and
401(k) sales and assets under management in the United States, all contributing
to record funds under management(1) for the company as a whole;
- Continuing to build Manulife's balanced Canadian franchise -- maintained leading market positions in group businesses with strong
sales growth in both Group Benefits and Group Retirement Solutions(3); record lending assets for Manulife Bank; and completed the acquisition
of Benesure Canada in early January, 2013;
- Continuing to grow higher ROE, lower-risk U.S. businesses -- double-digit sales growth in life insurance over the fourth quarter of
2011; two additional state approvals for long-term care in-force
repricing; recorded $1.2-billion of positive net flows in mutual
funds; and added new mutual funds to platforms at key firms.
Highlights for the fourth quarter of 2012(4):
- Reported net income attributed to shareholders of $1,057-million;
- Delivered core earnings(1) of $537-million, slightly below the third quarter of 2012 due to the impact of increased acquisition costs on higher wealth sales,
higher insurance sales expenses and systems costs in Asia, and
increased macro hedging costs;
- Generated strong insurance sales growth(5) of 49 per cent to $929-million;
- Delivered a 31-per-cent increase in wealth sales to $10.4-billion;
- Strengthened MLI's MCCSR ratio by seven points over prior quarter;
- Achieved record funds under management(1) of $532-billion;
- Generated strong investment gains of $368-million, despite the fact that the impact of equity markets and interest rates
was almost neutral;
-
Increased new business embedded value(1) by 71 per cent to $245-million;
- Reported net income in accordance with U.S. generally accepted accounting principles(1) of $237-million.
In the fourth quarter of 2012 Manulife generated $537-million of core
earnings. Fully diluted core earnings per common share(6) was 28 cents and core return on common shareholders' equity(6) was 9.0 per cent. For the full year, Manulife reported core earnings of
$2,187-million, core EPS of $1.12 and core ROE of 9.1 per cent.
Donald Guloien, president and chief executive officer, stated: "We made
significant progress towards our strategic priorities in 2012 -- we
ended 2012 with record(7) annual sales in both our insurance and wealth businesses: Manulife
Asset Management added significant new institutional mandates; our Asian franchise delivered strong growth by expanding our distribution
networks, including growing our bancassurance partnerships; and we
generated another all-time record funds under management.
"Since 2010, we have enjoyed a positive progression in earnings and
improved our annual net income by $1.6-billion over 2011. We believe
that Manulife is well positioned to continue to deliver disciplined and
sustainable growth to meet our objectives of $4-billion in core
earnings and 13 per-cent-core ROE by 2016," added Mr. Guloien.
Steve Roder, chief financial officer, stated: "We generated strong
financial results for the fourth quarter -- we substantially increased
sales in both our insurance and wealth businesses and generated $1.1-billion of net income for the period. As a result of our robust sales,
we significantly increased our new business embedded value. In
addition, our investment division continued to deliver solid investment
gains. We ended the quarter with a strengthened capital position of 211
per cent, a seven-point improvement over the third quarter.
"We are pleased with the strong income we generated this quarter,
however investment gains, and to a lesser extent tax items, were
significant contributors that cannot be counted on in the future. It is
as a result of this variability that we introduced the core earnings
metric. Core earnings, which this quarter were lower than net income,
helps analysts and investors assess our underlying earnings capacity,"
added Mr. Roder.
Highlights for the fourth quarter of 2012 and full year 2012:
- Reported net income attributed to shareholders of $1,057-million for the
fourth quarter of 2012 and $1,736-million for the full year 2012:
- Fourth-quarter earnings included strong investment gains of $368-million
and $264-million of tax-related gains that were considered material and
exceptional in nature. The company released $182-million of provisions related
to prior-year uncertain tax positions on one item and the company reported a
net release of $82-million related to interest on a tax contingency for
leasing transactions;
- Delivered core earnings of $537-million for the fourth quarter of 2012,
marginally below the third quarter of 2012, and delivered core earnings
of $2,187-million for the full year 2012:
- Compared with fourth quarter 2011, core earnings increased by $164-million. The increase was driven by a combination of increased fee
income on funds under management and the significant improvement in new
business margins as a result of pricing actions and improvement in
business mix which was partially offset by a number of items in the
fourth quarter 2012 that netted to a small negative;
-
Compared with third quarter 2012, core earnings declined by $19-million,
due to impact of increased acquisition costs on higher wealth sales,
higher insurance sales expenses and systems costs in Asia, and
increased macro hedging costs;
-
Full-year core earnings increased by $18-million compared with 2011. The
increase included a number of offsetting items. Improved new business
margins, increased fee income, higher scheduled release of variable
annuity guarantee margins and the non-recurrence of material property
and casualty reinsurance claims were mostly offset by additional macro
equity hedging costs and amortization of unrealized pension losses, in
addition to higher business development and project related expenses;
- Generated strong insurance sales growth of 49 per cent over the fourth
quarter of 2011 and delivered record insurance sales for 2012:
- Insurance sales were $929-million in the fourth quarter of 2012, an
increase of 49 per cent compared with fourth quarter of 2011 driven by
strong single premium sales in Group Benefits; a 20-per-cent increase
in Asia insurance sales; and an improvement of 13 per cent in U.S.
sales, mainly driven by successful new product offerings with
favourable risk characteristics;
-
Record insurance sales exceeded $3.3-billion for 2012, an increase of 33
per cent compared with 2011;
- Delivered a 31-per-cent increase in wealth sales over the fourth quarter
of 2011 and record(8) wealth sales for 2012:
- Wealth sales of $10.4-billion in the fourth quarter of 2012 reflected
record sales in Asia, which were more than double those in the fourth
quarter of 2011; record mutual fund sales and increased sales in Group
Retirement Solutions in Canada, which were more than offset by the
decline in annuity sales and lower new loan volumes; and record
quarters for both mutual funds and 401(k) businesses in the U.S.;
-
Record(8) wealth sales were almost $36-billion for full year 2012, an increase of
four per cent compared with 2011, despite restrictions placed on
annuity sales by the company;
- Strengthened the Manufacturers Life Insurance Company's minimum
continuing capital and surplus requirements ratio by seven
points over Sept. 30, 2012, to 211 per cent:
- The improvement in MLI's capital position from the end of the third
quarter of 2012 reflects the contribution from fourth-quarter earnings,
reinsurance of a portion of the Japanese life business and a $200-million preferred share issuance during the quarter;
- Further to the 2013 MCCSR guideline, MLI's MCCSR ratio is estimated to
increase by approximately four points on a pro forma basis to 215 per
cent as of Jan. 1, 2013. The increase is attributable to revisions
to lapse risk required capital rules;
- Achieved record funds under management of $532-billion as at Dec. 31, 2012;
- Continued to generate strong investment gains of $368-million during the
quarter, $50-million of which is included in core earnings. Fixed-income and
alternative long-duration asset investing along with excellent credit
accounted for the vast majority of Manulife's investment gains for both the
quarter and the full year;
- Reported embedded value(9) of $38.0-billion as at Dec. 31, 2012, representing an increase of $1.9-billion over
that reported at Dec. 31, 2011. Increases in embedded value were
driven by normal operating activities including the impact of new
business, offset by shareholder dividends and depreciating foreign
currencies relative to the Canadian dollar;
- Generated new business embedded value(9) of $245-million in the fourth quarter of 2012, an increase of 71 per cent over the fourth quarter of 2011;
- Received two additional state approvals on long-term care price increases on in-force retail business during the quarter bringing
Manulife's total to 43 states;
- Reduced equity market sensitivities during the quarter by adding $250-million of equity future notional
value to the macro hedging program and adding approximately $700-million of in-force guarantee value to the dynamic hedging program. A
further $250-million of macro hedges were added in January, 2013, due to
favourable market conditions;
- Reported net income in accordance with U.S. generally accepted accounting principles for the fourth quarter
of $237-million, or $820-million lower than Manulife's results under the Canadian version of
international financial reporting standards(10), and total equity in accordance with U.S. GAAP was $16-billion higher
than under IFRS. The primary driver of the quarter's lower U.S. GAAP
earnings compared with IFRS earnings relates to variable annuity
accounting differences. For the full year 2012, net income attributed
to shareholders in accordance with U.S. GAAP was $2,557-million versus
$1,736-million under IFRS.
Sales and business growth
Asia division
Robert Cook, senior executive vice-president and general manager, Asia
division, stated: "I am very pleased with our full-year 2012 results --
the Asia division achieved record(11) sales for both insurance and wealth (excluding variable annuities)
products. In addition, our fourth-quarter wealth sales were over $2-billion, a new record(11), and evidence that our product diversification strategy is succeeding.
We continue to successfully build a diverse, multichannel distribution
platform across the region. In 2012, we secured and deepened
strategically important distribution agreements with key bank partners
in Japan and Indonesia; achieved strong growth in our professional
agency force in several key markets; and successfully expanded our
presence in the managing general agent channel into the retail market
in Japan. We also became the first foreign-owned life insurer to
commence operations in Cambodia, and we expanded our broad geographic
footprint in China with our 50th city licence."
Asia division's fourth-quarter insurance sales were $362-million (U.S.), an
increase of 20 per cent compared with the same quarter of 2011. Full-year insurance sales of $1.4-billion (U.S.) were 16 per cent higher than
2011.
- Indonesia reported record quarterly insurance sales of $34-million (U.S.), a
51-per-cent increase compared with fourth quarter 2011, driven by
strong growth in both Manulife's agency and bank channels. The strong full-year growth of 46 per cent was driven by an expanded bancassurance
channel which grew 140 per cent compared with 2011.
-
Japan insurance sales for the fourth quarter of $188-million (U.S.) were 36
per cent higher than fourth quarter 2011. Strong sales of Manulife's increasing term product in advance of price increases were partially
offset by lower cancer product sales which were impacted by tax changes
implemented in the first half of the year. Full-year sales reached a
record level of $767-million (U.S.), 11 per cent higher than record sales in
2011, a result of strong cancer product sales in the first half of the
year and increasing term sales in the second half of 2012.
- Hong Kong fourth-quarter insurance sales of $65-million (U.S.) were 14 per
cent higher than fourth quarter 2011. Full-year sales reached a record
$257-million (U.S.), up 23 per cent over 2011. Sales growth over 2011 was
primarily driven by expanded agency distribution, as well as continued
strong sales throughout 2012 of Manulife's participating life product,
including a run-up of sales prior to price increases in the second
quarter of 2012.
-
Asia other insurance sales (excludes Hong Kong, Japan and Indonesia) for
the fourth quarter were $75-million (U.S.), or 9 per cent below the same
period in 2011, while full-year sales of $302-million (U.S.) were 15 per
cent higher than 2011. The decline relative to the fourth quarter 2011
was due to product changes in Taiwan. The full-year sales growth over
the prior year was driven primarily by expanded agency distribution.
Asia division's fourth-quarter wealth sales were $2.1-billion (U.S.), more
than double sales in the fourth quarter of 2011. On a full-year basis,
wealth sales of $5.7-billion (U.S.) increased 36 per cent over 2011.
- Japan fourth-quarter wealth sales of $694-million (U.S.) were three times the
same period a year ago, and on a full-year basis, sales of $1.7-billion
were more than double those of the prior year. Growth was fuelled by
the successful launch of the Strategic Income Fund, which reported
sales of over $550-million (U.S.) in the fourth quarter, and continued
strong sales of the Australian-dollar-denominated fixed-annuity
product.
- Indonesia achieved record wealth sales of $449-million (U.S.) in the fourth
quarter, four times higher than fourth quarter 2011, and full-year 2012
sales surpassed the $1-billion (U.S.) milestone. Strong performance was
recorded in all product lines, with mutual fund sales seven times
higher than in 2011 and unit linked sales through Manulife's bank partners up
157 per cent.
- Hong Kong fourth-quarter wealth sales of $321-million (U.S.) were 74 per cent
higher than the same period a year ago and included a successful start
in capturing transfer cases following the November launch of the
Mandatory Provident Fund's new employee choice arrangement. Full-year
results of $792-million (U.S.) were down 15 per cent from 2011, primarily as
a result of a change in client preferences for bond funds over equity
funds in 2012.
- Asia other wealth sales (excludes Hong Kong, Japan and Indonesia) for
the fourth quarter were $668-million (U.S.), 78 per cent higher than the
same period a year ago, and full year sales of $2.2-billion (U.S.) were up
13 per cent over 2011. Strong mutual fund sales in Taiwan as well as
unit linked sales in the Philippines were the key contributors to the
growth.
Asia division continues to execute on Manulife's longer-term growth strategy by
expanding agency and bank channel distribution capacity.
- Contracted agents ended the year at 53,700, a 7-per-cent increase
from the end of 2011 with significant growth in Hong Kong, Indonesia,
the Philippines and China.
- Bank channel total insurance and wealth sales, on an annualized premium
equivalent basis, were $159-million (U.S.) in the fourth quarter. This
increase of 73 per cent compared with the same period in 2011 was
attributed to the expanded distribution in Indonesia, particularly Manulife's exclusive agreement with Bank Danamon. In Japan, sales of mutual funds
through the bank channel picked up considerably as a result of the
successful launch of the Strategic Income Fund.
Canadian division
"In 2012, we continued to successfully build our diversified Canadian
franchise," said Marianne Harrison, senior executive vice-president and
general manager, Canadian division. "We achieved record full-year sales
in several business lines, namely: Group Benefits, Manulife Mutual
Funds and Affinity Markets, and Group Retirement Solutions once again
led the defined contribution market in sales(12). We continued to drive our desired shift in product mix, reducing the
proportion of insurance and variable annuity sales with guaranteed
features. We expanded our distribution reach: welcoming new advisers,
extending existing relationships and enhancing support to our
distribution partners. On Jan. 4, 2013, we completed our
acquisition of Benesure Canada Inc., strategically positioning us as
the leading provider of mortgage creditor insurance through mortgage
brokers in Canada."
Group Benefits and Group Retirement Solutions both led the
Canadian industry in sales in 2012(12). Group Benefits' full-year sales exceeded $1-billion, an industry
record, benefiting from strong single premium sales and good growth
across diverse market segments. Fourth-quarter Group Benefits sales of
$333-million were more than three times higher than the fourth quarter
of 2011. GRS's full-year sales of $1.1-billion increased 17 per cent
from 2011 levels, while fourth-quarter sales of $223-million were 45
per cent higher than the fourth quarter of 2011. Successful cross-selling efforts contributed to the strong sales growth in both group
businesses.
Individual Wealth Management's fourth-quarter sales of $2.3-billion
increased 9 per cent from third quarter 2012 levels, reflecting
record quarterly deposits in Manulife Mutual Funds. Sales were
8 per cent below the fourth quarter of 2011, and full-year sales
were 7 per cent below 2011 levels, reflecting Manulife's actions to
moderate variable annuity sales in the current macroeconomic
environment.
- Record quarterly MMF sales of $738-million in the fourth quarter of 2012
increased 61 per cent from the third quarter of 2012 and were more than
twice fourth-quarter 2011 levels, driving full-year sales to a record
$2.1-billion. This strong momentum reflects Manulife's expanded distribution
reach, continued strong performance in balanced and fixed-income fund
categories, and success of a number of funds launched in 2012.
Year over year, MMF was the fastest-growing mutual fund franchise of
the top-10 fund companies in Canada(13). Record MMF assets under management of over $20-billion at
Dec. 31, 2012, increased 17 per cent over Dec. 31, 2011, while
the industry grew 10 per cent according to IFIC(13).
- Manulife Bank had record assets of over $21-billion at Dec. 31, 2012, 7 per cent higher than at the end of 2011, driven by strong
client retention and stable new lending volumes of $4.6-billion in
2012, modestly below 2011 levels. New lending volumes of $1.1-billion
for the fourth quarter were consistent with third-quarter 2012 levels
and 10 per cent below the same period last year, reflecting the impact
of the current regulatory and competitive environment.
- Sales of variable annuity products of $379-million in the fourth quarter
and $2-billion for the year were significantly below the comparative
2011 levels, reflecting the anticipated impact of product changes
throughout the year. Fixed-rate product sales also continued at lower
levels, reflecting the continued low-interest-rate environment.
Individual insurance sales in 2012 continued to align with Manulife's strategy
to reduce new business risk, with a significantly lower proportion of
sales with guaranteed long-duration features compared with 2011. Manulife
has led the industry with changes to guaranteed long-duration products,
the anticipated impact of which was reflected in the year-over-year
sales result. Fourth-quarter sales of recurring premium products of
$58-million were 22 per cent lower than the fourth quarter of 2011;
full-year sales declined by 8 per cent from 2011 levels. Fourth-quarter single premium sales of $82-million were modestly ahead of
fourth quarter 2011 levels. Record full-year single premium product
sales increased 16 per cent from 2011 levels, driven by continued
expansion in travel insurance.
U.S. division
Craig Bromley, senior executive vice-president and general manager, U.S.
division, reported: "We are extremely pleased with our full-year
results, as record fourth-quarter and full-year sales in retirement
plan services and mutual funds contributed to record funds under
management in both businesses. We are entering 2013 with strong
momentum and sales potential in these businesses. In addition, fourth-quarter insurance sales increased 13 per cent over the fourth quarter
of 2011, and included an increase in sales of products with reduced
risk and higher return potential."
Wealth management full-year sales were $20.2-billion (U.S.), an increase of
3 per cent compared with the prior year. The sales increases of 28
per cent in John Hancock Retirement Plan Services and 8 per cent in John Hancock Mutual Funds were partially
offset by lower annuity product sales. Sales in the fourth quarter of
2012 were $5.9-billion (U.S.), an increase of 31 per cent compared with the
fourth quarter of 2011.
- JH RPS sales of $2.0-billion (U.S.) in the fourth quarter of 2012 were a
record quarterly result and represented an increase of 44 per cent
compared with the fourth quarter 2011. JH RPS capitalized on the high
plan turnover in the market including the exit of a key competitor. For
the full year, JH RPS achieved record sales of $6.0-billion (U.S.), an
increase of 28 per cent over 2011. Together with favourable equity
markets this helped drive funds under management to a record $72-billion (U.S.) as of Dec. 31, 2012, a 14-per-cent increase from Dec. 31, 2011. In addition, JH RPS's TotalCare product, a full-service
group annuity launched in the third quarter of 2012, has started to
gain traction in the 401(k) market.
- JH Funds achieved record quarterly sales of $3.7-billion (U.S.) in the fourth
quarter of 2012, a 54-per-cent increase from fourth quarter 2011 and
record full-year sales of $13-billion (U.S.) with increases across all
channels. These results propelled funds under management as of Dec. 31, 2012, to a record $42-billion (U.S.), a 24-per-cent increase from
Dec. 31, 2011. A strong product line and success in adding Manulife's funds to strategic partner recommended lists, as well as a focused
sales and marketing campaign, helped to drive these results. As of
Dec. 31, 2012, JH Funds offered 23 four- or five-star Morningstar(14) rated equity and fixed income mutual funds.
- The John Hancock lifestyle and target date portfolios offered through
Manulife's mutual fund, 401(k), variable annuity and variable life products
had assets under management of $80.0-billion (U.S.) as of Dec. 31, 2012,
a 13-per-cent increase over Dec. 31, 2011. As of Dec. 31, 2012,
John Hancock was the fourth-largest manager of assets in the U.S. for
lifestyle and target date funds offered through retail mutual funds and
variable insurance products(15).
Insurance sales in the U.S. for the fourth quarter of 2012 increased 13
per cent compared with the same period in the prior year, mainly driven
by successful new product offerings with favourable risk
characteristics. Full-year sales were 4 per cent lower than 2011. Manulife continued to execute on strategies to reduce risk and increase margins.
- John Hancock Life fourth-quarter 2012 sales of $163-million (U.S.) were up 18 per cent over fourth quarter 2011. Newly launched
products continued to contribute to the sales success, with Protection
UL sales of $65-million (U.S.) and Indexed UL sales of $15-million (U.S.). Full-year sales of $543-million (U.S.) outpaced the prior year by 12 per cent, and
the business successfully executed its transition to lower-risk
products.
- John Hancock Long-Term Care sales of $10-million (U.S.) in the
fourth quarter declined 33 per cent compared with the same period in
2011, reflecting the impact of price increases. Manulife's new product,
launched in 43 states as of December, 2012, offers an innovative
alternative to traditional inflation options and is gaining traction in
the market. Full-year sales of $56-million (U.S.) were 61 per cent lower
than 2011 due to the non-recurrence of the 2011 Federal Long Term Care
plan open enrolment period and the price increases referred to above.
Investment division
Warren Thomson, senior executive vice-president and chief investment
officer, said: "For the general fund, we continued to deliver strong
investment gains driven by credit experience which reflects the
strength of our underwriting, the positive impact of fixed-income
trading which included the redeployment of treasuries into spread
products, and the purchase of alternative long-duration assets. The
alternative long-duration assets originated during 2012 further
diversified our portfolio and continue to enhance our risk-adjusted
returns. The acquisitions were across various asset classes including
real estate, timberland, private equities and infrastructure. We
continue to focus our acquisitions on high-quality, good relative-value
assets.
"Manulife Asset Management experienced significant growth in 2012 across
its global franchise, with assets under management increasing by 12 per
cent to $237.6-billion," said Mr. Thomson. "Our strong investment
performance is yielding tangible results across many asset classes. We
successfully launched several new products which have enabled us to
meet our retail clients' needs, and we have been awarded new
institutional mandates in North America and Asia which have contributed
to significant growth in institutional AUM. In the fourth quarter we
were awarded a substantial institutional fixed income investment
mandate."
Assets managed by Manulife Asset Management increased by $26.2-billion
to $237.6-billion as at Dec. 31, 2012, from $211.4-billion as at
Dec. 31, 2011. At Dec. 31, 2012, Manulife Asset Management had
a total of 65 four- and five-star Morningstar-rated funds, an increase
of seven funds from Dec. 31, 2011. A broad array of investment
awards were garnered in 2012 in recognition of Manulife's strong investment
performance that is being driven by its continuing investment in
portfolio management talent across the company's global platform.
Corporate items
In a separate news release today, the company announced that the board
of directors approved a quarterly shareholders' dividend of 13 cents per
share on the common shares of the company, payable on and after March
19, 2013, to shareholders of record at the close of business on Feb. 20, 2013.
The board of directors approved that in respect of the company's March
19, 2013, common share dividend payment date, the company will issue
common shares in connection with the reinvestment of dividends and
optional cash purchases pursuant to the company's Canadian dividend
reinvestment and share purchase plan and its U.S. dividend reinvestment
and share purchase plan.
Awards and recognition
In New York, Manulife Financial was recognized by leading U.S. governance and
compliance publication, Corporate Secretary, as having the Best Overall
Corporate Governance in the International category at the annual
Corporate Governance Awards.
In Canada, the Women's Executive Network named Dr. Gail Cook-Bennett, board chairman,
and Lynda Sullivan, group chief accounting officer, among its 2012
Canada's Most Powerful Women: Top 100 award winners. Dr. Cook-Bennett was also recognized by Women of Influence Inc. as a 2012
Canadian Diversity Champion.
In Hong Kong, Manulife (International) Ltd. was designated Hong Kong's "Company
For Financial Planning Excellence of the Year" in the insurance
category at the South China Morning Post/Institute of Financial
Planners Hong Kong Financial Planner Awards 2012 for the
sixth consecutive year.
In Thailand, Manulife Asset Management (Thailand) Co. Ltd. earned "Outstanding
Asset Management Company Award" at the Stock Exchange of Thailand
Awards 2012.
In Asia, five Manulife Asset Management fixed-income fund managers (two based
in Hong Kong, two in the Philippines and one in Indonesia), were named
among the "most astute investors in Asian currency bonds" in the
Asset's Benchmark research survey for 2012.
Manulife Financial will host a fourth-quarter earnings
results conference call at 2 p.m. ET on Feb. 7, 2013. For local
and international locations, please call 416-340-2216 and toll-free in
North America please call 1-866-898-9626. Please call in 10 minutes
before the call starts. You will be required to provide your name and
organization to the operator. A playback of this call will be
available by 6 p.m. ET on Feb. 7, 2013, until Feb. 21, 2013,
by calling 905-694-9451 or 1-800-408-3053 (passcode: 6718073 then the pound sign).
The conference call will also be webcast through Manulife Financial's
website at 2 p.m. ET on Feb. 7, 2013. An archived version of the webcast will be available at 4:30 p.m. ET.
The fourth-quarter 2012 statistical information package is also
available on the Manulife Financial website. The document may be downloaded before the webcast begins.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(in millions of dollars, except per share amounts)
For the three months ended For the years ended
Dec. 31, Dec. 31,
2012 2011 2012 2011
Revenue
Net premium income(1) $ 5,012 $ 4,540 $ 10,734 $ 17,504
Investment income
Investment income 2,095 2,034 8,792 10,367
Realized/unrealized gains (losses) on assets supporting
insurance and investment contract liabilities(2) (1,600) 1,360 3,050 15,870
Other revenue 1,690 1,765 7,356 7,242
----------- ---------- ---------- ---------
Total revenue 7,197 9,699 29,932 50,983
----------- ---------- ---------- ---------
Contract benefits and expenses
To contractholders and beneficiaries
Death, disability and other claims 2,282 2,224 9,527 9,213
Maturity and surrender benefits 1,472 1,375 5,058 5,403
Annuity payments 838 802 3,244 3,164
Policyholder dividends and experience rating refunds 257 302 1,092 1,080
Net transfers from segregated funds (185) (130) (718) (299)
Change in insurance contract liabilities(2) 39 4,364 13,442 27,934
Change in investment contract liabilities 26 35 87 64
Ceded benefits and expenses (1,526) (1,325) (5,924) (4,918)
Change in reinsurance assets(1) 154 (1,486) (8,065) (1,852)
----------- ---------- ---------- ---------
Net benefits and claims 3,357 6,161 17,743 39,789
----------- ---------- ---------- ---------
General expenses 1,277 1,134 4,531 4,061
Investment expenses 297 273 1,091 1,001
Commissions 1,012 987 3,932 3,813
Interest expense(3) 119 288 967 1,249
Net premium taxes 78 72 299 257
Goodwill impairment - 665 200 665
----------- ---------- ---------- ---------
Total contract benefits and expenses 6,140 9,580 28,763 50,835
----------- ---------- ---------- ---------
Income before income taxes 1,057 119 1,169 148
Income tax recovery (expense) 22 (174) 523 97
----------- ---------- ---------- ---------
Net income (loss) $ 1,079 $ (55) $ 1,692 $ 245
=========== ========== ========== =========
Less: net income attributed to non-controlling interest in subsidiaries 2 14 59 27
Net income (loss) attributed to participating policyholders 20 - (103) 89
----------- ---------- ---------- ---------
Net income (loss) attributed to shareholders 1,057 (69) 1,736 129
Preferred share dividends (29) (21) (112) (85)
----------- ---------- ---------- ---------
Common shareholders' net income (loss) 1,028 (90) 1,624 44
Basic earnings (loss) per common share $ 0.56 $ (0.05) $ 0.90 $ 0.02
Diluted earnings (loss) per common share 0.56 (0.05) 0.88 0.02
Notes:
1. On June 29, 2012, and Sept. 25, 2012, the company entered into coinsurance agreements to reinsure 89 per cent of its
book value fixed deferred annuity business. Under the terms of the agreements, the company will maintain responsibility
for servicing of the policies and some of the assets and has retained the remaining exposure. The premiums ceded
relating to FDA coinsurance were $2-miliion and $7,229-million for Q4 2012 and full year 2012, respectively.
2. The volatility in realized/unrealized gains on assets supporting insurance and investment contract liabilities
relates primarily to the impact of interest rates changes on bond and fixed-income derivative positions as well as
interest rate swaps supporting the dynamic hedge program. These items are mostly offset by changes in the measurement of
Manulife's policy obligations. For fixed-income assets supporting insurance and investment contracts, equities
supporting pass through products and derivatives related to variable annuity hedging programs, the impact of realized/
unrealized gains on the assets is largely offset in the change in insurance and investment contract liabilities.
3. Q4 2012 includes the release of interest provision related to tax contigency.
Notes:
- This item is a non-GAAP measure.
- Wealth sales were a record excluding sales of variable annuities.
- Based on quarterly LIMRA industry sales report as at Sept. 30, 2012.
- Unless otherwise indicated, comparatives refer to the three-month period ended Dec. 31, 2012, versus the three-month period ended Dec. 31, 2011.
- Sales, premiums and deposits and funds under management growth (decline) rates are quoted on a constant currency basis. Constant currency is a non-GAAP measure.
- This item is a non-GAAP measure.
- Wealth sales were a record excluding sales of variable annuities.
- Wealth sales were a record excluding sales of variable annuities.
- This item is a non-GAAP measure.
- The Canadian version of IFRS uses IFRS as issued by the International Accounting Standards Board. However because IFRS does not have an insurance contract measurement standard, Manulife continues to use the Canadian Asset Liability Method (CALM).
- Wealth sales were a record excluding sales of variable annuities.
- Based on quarterly LIMRA industry sales report as at Sept. 30, 2012.
- Based on reporting from the Investment Funds Institute of Canada (IFIC) as at Dec. 31, 2012.
- For each fund with at least a three-year history, Morningstar calculates a Morningstar rating based on a Morningstar risk-adjusted return that accounts for variation in a fund's monthly performance (including effects of sales charges, loads and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10 per cent of funds in each category, the next 22.5 per cent, 35 per cent, 22.5 per cent and bottom 10 per cent receive five, four, three, two or one, respectively. The overall Morningstar rating for a fund is derived from a weighted average of the performance associated with its three-, five- and 10-year (if applicable) Morningstar rating metrics. Past performance is no guarantee of future results. The overall rating includes the effects of sales charges, loads and redemption fees, while the load-waived does not. Load-waived rating for Class A shares should only be considered by investors who are not subject to a front-end sales charge.
- Source: Strategic Insight. Includes lifestyle and life cycle (target date) mutual fund assets and fund-of-funds variable insurance product assets (variable annuity and variable life).
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