February 12, 2020 / 10:21 PM / 5 days ago

Manulife quarterly profit misses estimates, while Sun Life beats

(Reuters) - Canada’s biggest life insurers reported increases in core quarterly profit on Wednesday as gains in earnings from wealth and asset management helped offset slower growth elsewhere.

Manulife Financial Corp (MFC.TO) missed estimates as earnings from Canada fell 5.6%, while Sun Life Financial (SLF.TO) beat expectations despite only posting 2% increase in profit from its Asian business, its traditional growth driver.

Both companies said it was too soon to gauge the impact of the coronavirus outbreak in China. Manulife’s chief executive, Roy Gori, told Reuters it was too early to make any changes to the insurer’s business, while Sun Life Chief Financial Officer Kevin Strain said the company has taken steps to speed up processing of claims related to the outbreak.

Asia has been the growth engine for Canadian life insurers, with the region’s expanding middle class helping them diversify away from the more mature and intensely competitive market at home. Insurers are also increasingly relying on asset management for a relatively steady source of earnings with low costs.

Manulife, Canada’s biggest insurer, posted 16% growth in earnings excluding one-off items from its global wealth and asset management business in the quarter from a year ago.

While it reported declines in new business in Japan, 33% growth in Hong Kong and elsewhere in Asia mitigated the impact, CFO Phil Witherington said in an interview. That helped the region post a 6.7% increase in core earnings.

Underlying earnings from Sun Life’s Asia business grew 2%, in part due to some issues with its China joint venture, Strain said, without elaborating. Sun Life has a 25% stake in a joint venture with China Everbright (601818.SS). Its asset management earnings rose 24% from a year ago.

Manulife earned C$1.48 billion ($1.13 billion), excluding one-off items, in the fourth quarter, from C$1.34 billion, a year earlier.

Manulife also said it had freed up C$5.1 billion of capital, achieving its planned goal three years early. The cost of doing so was less than C$200 million on an annualized basis, Gori said.

On a per share basis, Manulife posted core earnings of 73 Canadian cents, missing estimates of 75 Canadian cents, according to IBES data from Refinitiv.

Sun Life’s underlying income rose to C$792 million, or C$1.34 per share, in the fourth quarter, from C$718 million, or C$1.19 per share, a year earlier.

Analysts on average had expected a profit of C$1.30 per share.

Manulife shares have gained 27% over the past year, while Sun Life has added 41%. That compares with a 14% increase in the Toronto stock benchmark. .GSPTSE

Reporting by Abhishek Manikandan in Bengaluru and Nichola Saminather in Toronto; Editing by Shailesh Kuber and Leslie Adler

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