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Quarterly Report
Manulife Financial Corporation reports record annual and quarterly results
TORONTO - Manulife Financial Corporation reported record shareholders' net income of $4,302 million for 2007, an increase of eight per cent over the full year 2006. Fully diluted earnings per share were $2.78, an increase of 11 per cent compared to the $2.51 reported a year ago. Return on common shareholders' equity(1) was a record 18.4 per cent for 2007, up from 16.8 per cent in 2006.
"I am very pleased that virtually all of our businesses achieved record
sales levels for the quarter and for the full year," said Mr. Dominic
D'Alessandro President and Chief Executive Officer. "This positive sales
momentum together with our exceptional asset quality and strong capital
position will allow us to deal with the unsettled markets that are likely to
continue to prevail for some months yet."
Fourth quarter 2007 shareholders' earnings were a record $1,144 million,
an increase of 4 per cent from one year ago. Fully diluted earnings per share
were $0.75, an increase of seven per cent over the fourth quarter of last
year. Earnings year over year were negatively impacted by $163 million due to
the strengthening of the Canadian dollar. On a constant currency basis, growth
in shareholders' earnings and earnings per share would have been 19 per cent
and 23 per cent, respectively. Fourth quarter return on common shareholders'
equity(1) was a Company record of 20.5 per cent, a rise of 250 basis points
over last year.
"Despite weak equity markets and unfavourable interest rate movements, we
benefited from having a diversified investment portfolio, leaving overall
investment experience favourable for the quarter" noted Peter Rubenovitch,
Senior Executive Vice President and Chief Financial Officer. "Strong sales and
good expense management also contributed to the quarter's growth in earnings
and ROE."
Fourth quarter sales were very strong across the Company, with insurance
sales of $642 million, up 15 per cent over last year, and wealth management
sales of $11.5 billion, up 24 per cent. Record sales levels were achieved in
many of our businesses this quarter; some of the notable sales results were:
<<
- John Hancock Variable Annuity sales of US$2.8 billion, up 27 per cent
- John Hancock Life sales of US$316 million, up 54 per cent
- Canada Individual Life sales of $65 million, up 18 per cent
- Canada Individual Wealth Management sales of $2.5 billion,
up 39 per cent
- Hong Kong Wealth Management sales of US$511 million, up 106 per cent
- Other Asia Territories Wealth Management sales of US$554 million, up
104 per cent
>>
New Business Embedded Value reached record levels for both the fourth
quarter and full year, driven by strong sales and asset growth across the
Company. Fourth quarter New Business Embedded Value was $659 million, up
38 per cent compared to a year ago, and full year results were $2,189 million,
up 18 per cent over 2006.
Premiums and deposits amounted to $69.4 billion for 2007, a record level
for the Company. Fourth quarter premiums and deposits rose to $17.4 billion,
an increase of 10 per cent over last year due to continued strong sales and
growth in recurring premiums and deposits. On a constant currency basis,
growth in premiums and deposits for the quarter and full year would have been
23 per cent and 12 per cent, respectively.
Total funds under management as at December 31, 2007 were $396.3 billion,
a decrease of four per cent versus last year due to currency movements.
Excluding the negative impact of currency movements over the year, growth in
funds under management would have been eight per cent.
<<
(1) Return on common shareholders' equity is calculated excluding
Accumulated Other Comprehensive Income on available-for-sale
securities and cash flow hedges.
OPERATING HIGHLIGHTS
United States
- John Hancock Variable Annuities sales were US$2.8 billion in the
fourth quarter, an increase of 27 per cent over last year, which
capped a record year of sales totaling US$10.8 billion, an increase
of 18 per cent. Strong sales resulted in record net flows of US$4.8
billion for the year. In addition to the announcement in November of
the distribution partnership established with Edward Jones, other
initiatives were announced in the quarter, including the following
key items:
- A new optional guaranteed withdrawal benefit rider called
"Principal Returns" was introduced, having two distinct features:
it provides an 8% withdrawal rate for clients seeking "income
now," and offers an accumulation benefit feature for those seeking
principal protection while investing in the markets. The new rider
complements the popular lifetime withdrawal benefits which were
designed with the "income later" client in mind.
- Two new fund-of-funds options were added to the Venture Variable
Annuities investment platform. Both funds primarily invest in
underlying American Funds portfolios, one of the most well-known
and widely respected names in the investment business.
- John Hancock Life achieved record sales for both the quarter and full
year, with sales up across all major distribution channels and
product categories. Full year sales were very strong, up 15% over
2006, when the business was ranked No.1 in the industry. Continued
product innovation contributed to the business achieving the No.1
ranking in overall life insurance sales in the U.S. in the most
recently reported third quarter(2).
- John Hancock Long Term Care had record sales for the full year 2007
of US$197 million, up 24 per cent from 2006, with strong sales in
both Retail and Group segments.
(2) Based on LIMRA, for overall life insurance sales for stand-alone
third quarter 2007.
Canada
- Record sales in Individual Wealth Management (IWM) for both the
quarter and full year reflected the success of IncomePlus, the
guaranteed mimimum withdrawal benefit product introduced to the
Canadian market by Manulife late in 2006. In the fourth quarter,
IWM launched the second generation of IncomePlus, now providing a
lifetime guarantee, which drove the over 40 per cent increase in
quarterly sales of segregated fund products as compared to a year
ago. Cash flow into IncomePlus, including new sales and transfers
from other products, approached $3 billion in 2007.
- Manulife Bank surpassed $10 billion in assets this quarter, up 26 per
cent from a year ago. Fourth quarter loan volumes of $928 million
exceeded prior year by 45 per cent, driven by sales of Manulife One.
- Group Savings & Retirement Solutions' premiums and deposits surpassed
$3 billion for the year, driven by record sales, including several
large cases as well as one of the largest defined contribution
pension plans in Canada.
- Fourth quarter and full year sales in Individual Life rose 18 per
cent and 15 per cent respectively from a year ago. These record
results reflected the favourable impact of a more competitive product
portfolio and sustained improvements in service.
Asia and Japan
- Strong variable annuity sales and continued good persistency in Japan
resulted in record net flows of US$2.6 billion for the year. The new
generation product continues to be adopted by existing distribution
channels, with five additional financial institutions beginning to
offer the product in the fourth quarter.
- In Hong Kong, total wealth management sales for the quarter were more
than double the results of the same period last year. Individual
Wealth Management and Pension businesses combined to set new fourth
quarter and full year sales records, largely driven by strong sales
of investment-linked insurance products as well as reflecting an
overwhelming response to new product launches.
- Other Asia Territories achieved record wealth management sales for
both the quarter and full year. New product introductions and
expanded distribution reach contributed to the sales growth across
almost all territories.
- Manulife Financial continued to expand its operations in China and in
the fourth quarter received five additional licenses; bringing the
total number of licenses up to 28, among the most of any foreign life
insurance company in China.
- During the fourth quarter, Craig Bromley was appointed President and
Chief Executive Officer of Manulife Japan. His predecessor, Geoff
Crickmay, retired after 37 years of service to Manulife Financial.
Corporate
- The Manufacturers Life Insurance Company (MLI), a subsidiary of
Manulife Financial, completed the previously announced redemption of
all its outstanding 6.10% Non-Cumulative Class A Preferred Shares,
Series 6. The redemption is part of Manulife Financial's ongoing
management of its capital.
- In a separate news release, the Company also announced today that the
Board of Directors approved a quarterly shareholders' dividend of
$0.24 per share on the common shares of the Company, payable on and
after March 19, 2008 to shareholders of record at the close of
business on February 27, 2008.
Awards
- Manulife Financial received a number of awards in the quarter,
including the following:
- In Asia, Manulife was awarded the "Life Insurance Company of the
Year" title and in Hong Kong, Manulife International Limited (MIL)
ranked fourth in the Greater China region in the "Top Companies
for Leaders" survey by FORTUNE magazine. Both awards reward
corporate and development leadership as well as commitment to
professionalism, excellent customer service, and innovation.
- John Hancock Retirement Plan Services (JHRPS) won thirteen awards
for communications excellence from the League of American
Communications Professionals (LACP). Nine of JHRPS' awards were
honours for "Top 100 Communications Materials of 2007", the best
showing by a financial services company.
- John Hancock Annuities won three "Best in Show" and "Awards of
Excellence" for the venture variable annuity sales kit; the "It's
About Time" marketing campaign; and for the advisor, public and
JH Signature(TM) web sites from the Insurance & Financial
Communication Association (IFCA).
- Manulife Financial's Canadian Individual Wealth Management
Operations, which serves Manulife Investments and Manulife
Securities International businesses, has been recognized for
excellence in leadership, people, customer service and processes
with a Level Three Certification under the National Quality
Institute Progressive Excellence Program (NQI PEP(R)).
- Manulife has won several awards for IncomePlus including "Best New
Initiative Award" and the "Canadian Investment Marketing Award" at
this year's Canadian Investment Awards for pioneering and
enhancing Canada's first guaranteed minimum withdrawal benefit
(GMWB) product. In addition, two of the five "Best in Show" awards
that Manulife's Canadian Division received from the Insurance &
Financial Communication Association ("IFCA") were related to
IncomePlus.
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