Manulife Financial Corp (MFC)

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Manulife Financial (MFC)

Q1 2013 Earnings Call

May 02, 2013 2:00 pm ET


Anique Asher

Donald A. Guloien - Chief Executive Officer, President and Director

Stephen Bernard Roder - Chief Financial Officer and Senior Executive Vice President

Robert Allen Cook - Senior Executive Vice President and General Manager of Asia

Rahim Badrudin Hassanali Hirji - Chief Risk Officer and Executive Vice President

Cindy L. Forbes - Executive Vice President, Chief Actuary and Chairman of Capital Committee

Craig Richard Bromley - Executive Vice President of Japan Operations and General Manager of Japan Operations


Tom MacKinnon - BMO Capital Markets Canada

Mario Mendonca - Canaccord Genuity, Research Division

Robert Sedran - CIBC World Markets Inc., Research Division

Michael Goldberg - Desjardins Securities Inc., Research Division

Joanne A. Smith - Scotiabank Global Banking and Markets, Research Division

John Aiken - Barclays Capital, Research Division

Doug Young - TD Securities Equity Research

Gabriel Dechaine - Crédit Suisse AG, Research Division

Steve Theriault - BofA Merrill Lynch, Research Division

Darko Mihelic - Cormark Securities Inc., Research Division



Please be advised that this conference call is being recorded. Good afternoon, and welcome to the Manulife Financial First Quarter 2013 Financial Results Conference Call for Thursday, May 2, 2013. Your host for today will be Ms. Anique Asher. Please ago ahead, Ms. Asher.

Anique Asher

Thank you, and good afternoon. Welcome to Manulife's conference call to discuss our first quarter 2013 financial and operating results. Today's call will reference our earnings announcement, statistical package and webcast slides, which are available in the Investor Relations section of our website at

As in prior quarters, our executives will be making some introductory comments. We will then follow with a question-and-answer session. Available to answer questions about their businesses are the heads of our U.S., Canada, Asia, Investments and General Account Investments.

Today's speakers may make forward-looking statements within the meaning of securities legislation. Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied. For additional information about the material factors or assumptions applied and about the important factors that may cause actual results to differ, please consult the slide presentation for this conference call and webcast available on our website, as well as the securities filings referred to in the slide entitled, Caution Regarding Forward-Looking Statements. [Operator Instructions]

With that, I would like to turn the call over to Donald Guloien, our President and Chief Executive Officer. Donald?

Donald A. Guloien

Thank you, Anique. Good afternoon, everyone, and thank you for joining us today. I'm joined on the call by our CFO, Steve Roder, as well as other members of our management team, including our Asia General Manager, Bob Cook; Canadian GM, Marianne Harrison; our U.S. General Manager, Craig Bromley; our Chief Operating Officer, Paul Rooney; our Chief Investment officer, Warren Thomson; our Executive Vice President, General Account Investments, Scott Hartz; Chief Actuary, Cindy Forbes, Chief Risk Officer, Rahim Hirji; and our Treasurer, Steve Moore.

I'd like to start the call today with some highlights of the progress that we've made on our growth strategies during the first quarter. We continue to develop our Asian opportunity to the fullest. In the first quarter, we achieved record wealth sales in Asia for more than double the first quarter of 2012. We are driven by strong contributions from all of our territories and, in particular, a continued success of recently launched funds in Japan and China, as well as continued momentum in the Mandatory Provident Fund business in Hong Kong.

Insurance sales in Asia, however, have declined. This was expected because of tax and product changes in Japan and Taiwan, which dramatically pushed up sales in the same quarter in 2012. The decline was also based on pricing actions in some markets to protect margins in light of dramatically lower interest rates. We also continue to grow our wealth and asset management business globally. We had record Mutual Fund sales in Asia and in the United States, along with strong pension sales in the United States and in Hong Kong.

Our balanced Canadian franchise continue to steady progress. In the first quarter, we more than doubled Mutual Fund sales, outpacing industry growth. We saw solid growth in Manulife Bank's lending assets, a slight slowdown in the mortgage market. We maintained leading positions in our group businesses. We did, however, report a decline in insurance sales in Canada. The decline was due to 2 reasons: One, the normal variability in the large case group inputs business relative to last year; and two, pricing actions taken to protect our margins in the low-interest rate environment.

As these pricing actions have not yet been instituted by our competitors, we expect to give up some market share initially.

In the United States, we continue to grow our higher ROE, lower risk businesses. We achieved record sales, net flows and assets under management in our Mutual Fund business. We delivered strong 401(k) sales, as well as solid growth. In John Hancock Life, our newly-launched products contributed to the sales success. And on a positive note, some of our competitors have recently followed our lead on pricing and product repositioning actions, which may result in improvement in our overall market positions in the United States.

This morning, we announced our first quarter 2013 financial results. Let me share some of the highlights. We reported net income of $540 million, which was driven by strong core earnings of $619 million, an increase of $65 million over the fourth quarter. On the top line, we recorded wealth sales, $12.4 billion, up 43% over the first quarter of 2012. Strong wealth sales contributed to another consecutive quarter of record funds under management, which as you know, drives future fee income.

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