Manulife Financial Corp. is reporting higher third-quarter profit on Tuesday. The insurer said net income was $395 million, or 85¢ a share, for the quarter ended September 30, up from $324 million, or 69¢ a share, a year ago.

Revenues for the quarter were $3.98 billion, down from $4.24 billion,

The company says strong business growth, lower expenses, and better equity markets contributed to the 21% year-over-year increase in earnings.

Third-quarter return on equity rose to 17.9% from 15.2% from the same period last year, while total premiums and deposits were $7.41 billion, up from $7.09 billion.

However, it adds that currency exchange rates, particularly the depreciation of the U.S. dollar and Japanese yen, had a dampening impact on results in the quarter.

“We are very proud that Manulife has once again produced record quarterly results,” said Dominic D’Alessandro, president and CEO of Manulife Financial. “Our recently announced intention to merge with John Hancock provides a tremendous opportunity to build on our already strong base.”

Manulife announced last month it would buy U.S. insurer John Hancock Financial Services Inc. for about US$11 billion in stock.

The deal, expected to close in the second quarter of 2004, would make Manulife the second-largest insurer in North America and No. 5 in the world.