Source: The Canadian Press

By David Friend


TORONTO — Returned strength in equity markets helped insurance and wealth management giant Manulife Financial Corp. (TSX:MFC) post a first-quarter profit of $1.15 billion, reversing a year-earlier loss of $1.07 billion.

Canada’s largest insurance company said its earnings amounted to 64 cents per share, compared with a loss of 67 cents per share a year ago

Total revenue rose to $9.17 billion from $8 billion. Adjusted earnings from operations had been earlier forecast between $700 million and $800 million for each quarter in 2010, and Manulife reported the figure for the most recent quarter ahead of that range at $742 million.

Chief executive Donald Guloien said he was pleased with the quarter which was driven by strength in Canada and Asia, a recovery in the U.S. economy, and the company’s strong investment results relative to overall market conditions.

The company said its earnings benefited from stock market increases, which raised the value of its investment portfolio, and the positive impact of its bond trading and other investments.

“While we’re keeping our eye on the long game — and I don’t like to focus too much on any single quarter — it was pleasing to report our sales and new business embedded value results for the first quarter,” Guloien told analysts on a conference call.

Manulife said its variable annuity business — which sells plans that guarantee a minimum return similar to private pensions and was ravaged during the financial crisis — gained $328 million on stronger equity markets.

During the economic downturn Manulife faced a higher level of stock exposure compared to typical publicly traded companies partly because it deals with variable annuity guaranteed products.

That means the company must still pay out guaranteed benefits to its customers even if volatlie markets reduce the value of the investments it has made to cover its annuity liabilities.

The firm has been working to reduce the risk of that variable annuity division by pulling back sales of those products, logging a drop of 39% in the quarter over the same time last year.

Insurance sales increased 20% overall with strong growth in Hong Kong, Japan, Taiwan and China on improving global economic conditions.

Premiums and deposits for the insurance businesses increased 7% to $5.2 billion.

Total funds under management at the end of the quarter were $446 billion, up $7 billion from the end of 2009.

Looking ahead, Guloien was optimistic about the direction of Manulife.

“Our team is focused on the long term, to execute on a range of initiatives which will grow both our top and bottom line,” he said on the quarterly conference call.

“Our attitude is, if we focus on the right long-term strategies to build earnings and ROE (return on equity), the quarters will fall into place.”

Meanwhile, Manulife also said its chief operating officer John DesPrez will leave the company.

On Wednesday, competitor Sun Life Financial Inc. (TSX:SLF) reported a first-quarter profit of $409 million, turning around a loss of $213 million a year ago.

Meanwhile, second-ranked Great-West Lifeco Inc. (TSX:GWO) said Thursday its first-quarter earnings rose to $461 million from a year-ago $343 million.

Shares in Manulife gained 58 cents or 3.3% to close at $18.25 in Thursday trading on the Toronto Stock Exchange.