Manulife Financial Corp.'s office tower in Toronto, Feb. 11, 2020.Cole Burston/The Canadian Press
Manulife‘s departing chief executive officer says its diversification will help it navigate the global economic turmoil, with sales in Asia climbing in the first quarter even as U.S profits dropped and the company faced a $43-million loss from the California wildfires.
Roy Gori told analysts on his last day before retirement that while Manulife Financial Corp. MFC-T “won’t be immune” to the potential macroeconomic headwinds brought on by the trade tensions, the company is in a “position of strength” because of the work done during his tenure.
“Our robust balance sheet is a significant source of strength which, coupled with our business and geographic diversity, positions us well to navigate and capitalize on opportunities through times of change,” he said during a call Thursday. “Manulife is certainly a very different company today than during the global financial crisis.”
The company reported a slight increase in its first-quarter “core earnings” of $1.76-billion or 99 cents a share, compared with $1.71-billion or 91 cents a share in the first quarter of 2024. Core earnings is an adjusted profit figure the company uses.
However, the company’s net income for the quarter was $485-million, down more than 40 per cent from $866-million the previous year.
Chief financial officer Colin Simpson said in an interview that the company’s underlying business growth remains resilient, and is “anchored” by its strategic priorities.
“We are well-positioned to navigate the current economic conditions and capitalize on growth opportunities,” Mr. Simpson said.
Manulife’s operations in Asia reported a surge in sales – up nearly 50 per cent for the quarter – as the demand for savings and retirement products ramp up for the region, which is set to represent 60 per cent of the world’s middle class.
Asia reported $435-million in net income for the quarter – significantly up from $270-million in the first quarter of 2024.
Mr. Simpson said Hong Kong continues to see a combination of strong domestic sales as well as sales from people coming to visit from mainland China.
During the quarter, Manulife renewed its bancassurance partnership in the Philippines with China Banking Corp., extending an exclusive partnership for another 15 years, and has also started to see a resurgence in the Japanese market, which had gone through a period of depressed sales owing to a change in tax regulations for corporate-owned life insurance products.
Manulife’s current head of Asia and next CEO, Phil Witherington, told analysts that the company’s Asia region – which covers 10 countries – has not seen any notable change in consumer behavior owing to tariffs.
However, the possibility remains on his radar, he said, as the current economic environment can lead clients to rethink the amount of money they allocate toward savings and retirement accounts.
“We are operating in an environment of some macroeconomic uncertainty,” Mr. Witherington said in Thursday’s call. “And while that doesn’t have a direct impact on us, what I would draw your attention to is that an uncertain external environment can impact consumer sentiment and cause them to defer some decisions, particularly long-term financial product commitments.”
Some of that market uncertainty has trickled into Manulife’s U.S. business, which saw a 25-per-cent drop in core earnings from a year earlier.
The U.S. business – which accounts for about 23 per cent of Manulife’s total profits – reported core earnings of $251-million for the first quarter, down from $335-million for the same period last year.
The insurer’s earnings per share growth was also dampened by a $43-million provision for the California wildfires in its property and casualty reinsurance business.
However, Mr. Gori said the insurance industry as a whole has been “somewhat more immune” to the impact of current uncertainty, as insurance products typically fall under a client’s “needs not wants,” placing insurers in a better position during the current trade war situation.
“Trade wars aren’t going to be good for GDP inflation or unemployment,” he said. “We haven’t seen it yet impact sentiment, though it could.”
However, he added that it’s not clear how market uncertainty will transpire in the coming quarters, “so I think it’s important to be cautious there.”