It is a leading Canadian-based financial services group serving millions of customers in 19 countries and territories worldwide (12th top insurance co rank by Fortune). Operating in Canada, Asia and the United States, MFC offers clients a diverse range of financial protection products and wealth management services through its extensive network of employees, agents and distribution partners. Funds under management by Manulife Financial and its subsidiaries were Cdn$405.3 billion (US$321.7 billion) as at March 31, 2009.
1q09 results (vs 4q08)
1. Revenue down 31.3% to $8.0B
- Premium income down 0.71% to $7.0B;
- Investment income up 2.9% to 1.8B;
- Fee income down 2.3% to $1.3B;
- Realized gain/loss down to -$2.1B from +$1.5B;
- AUM sales down 8.5% to $10.6B;
- Deposit down 1.6% to $12.3B;
- Sales switch from equity product to fixed income product;
- New business embedded value down 36.2% to $0.5B based on lower sales & lower profitbility assumption;
2. EPS up to -$0.67 from -$1.24 (net loss of $1.07B)
- Net income excluded special adjustment is $476M, better than Bilibala's expectation;
- Special adjustment include the following: a) $1,146M reserve increase on seg fund guarantees benefits; b) $121M credit impairment; c) $277M down in real estate values;
- Maturity, surrender & annuity payment down 12.9% to $3.5B; but up 33% compare to 1q08;
- Based on source of earning, actual return on new business in line with internal plan and better than 4q08 & 1q08 which is good. Experience losses are just timing different due to market movement, I will expect MFC turn back to gains in 2q09;
- Enter all new seg fund business in USA & Canada now enter into a hedging program. It will lower the market risk at the same time narrow down the investment spread (new business embedded value);
- Enter new reinsurance agreement to tranfer out certain risks of Canada business. Again, it reduce new business embedded value;
3. Balance Sheet
- Book value per share down 4.07% to $15.81, if exclude special adjustment book value should be up 2% or $16.78 which in line with my expectation;
- MCCSR down 2.56% to 228%, looks ok;
- MFC try to promote the dividend reinvestment program, it is good to see MFC like to improve capital without issue new shares (if possible)
- Cash & short term up 57% (vs 1q08), good for capital requirement but bad for generate earning;
- Invested assets up 1.9%, looks health in terms of the credit rating of the bond & mortgage holdings;
- Seg fund amount at risk is $30.2B, it will reduce to $22.8B based on Apr 30, 09 market closed data. The huge maturity season will only start at year 8 to 10 (around 2018), should not be a concern;
Risk
- US dollar down will have negative impact to MFC's bottom line & equity value;
- Huge market fluctuation will increase MFC's market volatility assumption which hurts earning;
- Low interest rate in long run will hurt MFC's investment spread;
- Intense competition and market saturation in the North American insurance market (pressure on pricing, limited growth and higher commission paid);
Bilibala with Manulife
- My group health plan is under Manulife;
Comments
No comments:
Post a Comment