|
| FOR IMMEDIATE RELEASE | TSX/NYSE/PSE: MFC; SEHK: 0945 |
| February 9, 2006 |  Printer Friendly Version |
Manulife Financial Corporation reports record annual and quarterly results
2005 shareholders’ net income of $3.3 billion up 29 per cent over 2004
Strong sales help drive record Q4 earnings of $908 million or $1.14 per share
Toronto – Manulife Financial Corporation today reported 2005 shareholders’ net income of $3,294 million, an increase of 29 per cent over 2004. Earnings per share were $4.11, 13 per cent higher than the $3.65 reported a year ago. Premiums and deposits increased 22 per cent over last year to a record $61.5 billion driven by strong organic growth and four additional months of contribution from John Hancock.
“We are very pleased to report record top and bottom line results for the company in 2005,” said Dominic D’Alessandro, President and Chief Executive Officer of Manulife Financial. “This continues our exceptional track record of strong earnings growth with an average annual growth rate of more than 20 per cent over the past decade. And with the successful integration of John Hancock now behind us, we look forward to building on the strengths of our combined operations.”
Manulife Financial reported record fourth quarter results with shareholders’ net income of $908 million, up 20 per cent, and basic earnings per share of $1.14, up 23 per cent over the same period a year ago. Return on common shareholders’ equity for the fourth quarter was 15.5 per cent, an improvement of 253 basis points over the 13 per cent return reported for the fourth quarter of 2004. Other records set in the fourth quarter include:
- Record variable annuity sales in the United States and Japan;
- U.S. Individual Insurance sales of US$229 million, an increase of 60 per cent over last year;
- Premiums and deposits of $16.3 billion, 14 per cent higher than the fourth quarter of 2004; and
- Funds under management of $372.3 billion, seven per cent higher than December 31, 2004. On a constant currency basis, funds under management would have been $384.1 billion or 10.6 per cent higher than last year.
“The increase in fourth quarter earnings reflects continued growth from in-force earnings, strong sales growth and favourable investment experience that was offset to some extent by increased claims and the negative impact of currency movements,” noted Peter Rubenovitch, Senior Executive Vice President and Chief Financial Officer.
The fourth quarter results included certain atypical items that were largely offsetting. Integration expenses and a charge in the Reinsurance Division primarily related to Hurricane Wilma were offset by a reserve release resulting from a move to a less risky asset profile in Japan and a benefit resulting from the fourth quarter review of actuarial methods and assumptions.
OPERATING HIGHLIGHTS
- Manulife Financial Corporation’s Board of Directors approved the establishment of dividend reinvestment and share purchase plans that allow shareholders to automatically reinvest their dividends in common shares of the Company. Arrangements to implement these plans are being finalized and further details will be communicated shortly.
- John Hancock Mutual Funds continued to expand its fund line-up to retail mutual fund investors with the introduction of five asset allocation fund-of funds called “Lifestyle Portfolios.” The company brings extensive experience in this area having managed lifestyle assets for 401(k) plan participants and variable annuity contract holders since 1996. John Hancock is currently the third largest provider of lifestyle products in the United States with more than US$15 billion of assets in this segment.
- John Hancock Retirement Plan Services (“RPS”) was named ‘Best in Class’ in seven service categories in PLANSPONSOR magazine’s annual survey of plan sponsors. Published in the magazine’s November issue, John Hancock earned top honours in categories ranging from communication and education to statements and forms. This marks the fifth consecutive year that RPS has been awarded top ratings in participant services.
- Manulife-Sinochem continued to expand its operations in China with the start of operations in the cities of Nanjing, Hangzhou, and Zhongshan. Also, new licenses were received for Shenzhen and Chengdu. The company is now authorized to operate in twelve cities in China, the most of any foreign insurer in mainland China. As the Official Life Insurance Partner of the 2008 Olympic games in Beijing, Manulife-Sinochem expects to build additional brand awareness.
- Manulife Japan launched “Manustep” a universal life insurance product that provides a balanced combination of insurance coverage and retirement funds, and allows customers to tailor their desired policy combinations. In addition, this quarter, four banking subsidiaries of the Mitsubishi UFJ Financial Group began selling a new variable annuity product developed with Manulife Japan through approximately 660 branches and sub-branches throughout Japan.
- In January 2006, Manulife Financial Corporation completed a preferred share offering of 12 million, 4.5% non-cumulative Class A Shares, Series 3 at a price of $25 per share for gross proceeds of $300 million.
QUARTERLY FINANCIAL PERFORMANCE
Financial Highlights
(unaudited)
 | Quarterly Results | Year Ended |
| 4Q05 | 3Q05 | 4Q04 | 2005 | 2004 |
| Shareholders’ Net Income (C$ millions) | 908 | 746 | 756 | 3,294 | 2,550 |
| Basic Earnings per Common Share (C$) | 1.14 | 0.93 | 0.93 | 4.11 | 3.65 |
Return on Common Shareholders’ Equity
 (%, annualized) | 15.5 | 12.7 | 13.0 | 14.1 | 13.7 |
| Premiums & Deposits (C$ millions) | 16,280 | 15,777 | 14,288 | 61,467 | 50,444 |
| Funds under Management (C$ billions) | 372.3 | 359.6 | 347.4 | | |
Net Income
Manulife Financial Corporation reported shareholders’ net income of $908 million for the quarter ended December 31, 2005, an increase of 20 per cent from $756 million in 2004. The increase in net income was driven primarily by a 19 per cent growth in segregated fund assets as a result of strong variable annuity sales in the U.S. and Japan, and improvements in margins in Long Term Care and Hong Kong. Also contributing to earnings were $52 million related to a release in reserves resulting from a move to a less risky asset profile in the Japan Daihyaku block and $49 million from the fourth quarter review of changes in actuarial methods and assumptions. Partially offsetting these increases were property and casualty reinsurance losses of $83 million, primarily related to Hurricane Wilma, and a $42 million impact of the stronger Canadian dollar.
For the year ended December 31, 2005, shareholders’ net income was $3,294 million, an increase of 29 per cent from the $2,550 million reported in 2004.
Diluted Earnings per Share and Return on Common Shareholders’ Equity
Fourth quarter diluted earnings per share were $1.13 compared to $0.92 in 2004. For the three months ended December 31, 2005, return on common shareholders’ equity was 15.5 per cent compared to 13.0 per cent for the same period in 2004.
Diluted earnings per share for the year increased by 12 per cent to $4.07 and return on common shareholders’ equity was 14.1 per cent compared to 13.7 per cent in 2004.
Premiums and Deposits
Premiums and deposits increased by 14 per cent to $16.3 billion in the fourth quarter of 2005 from $14.3 billion in 2004, primarily driven by increased variable annuity sales in the U.S. and Japan. These increases were partially offset by the $0.7 billion impact of the strengthening Canadian dollar.
Funds under Management
Funds under management increased by $24.9 billion to $372.3 billion as at December 31, 2005 from $347.4 billion as at December 31, 2004. General fund assets declined by $1.9 billion, primarily due to the impact of the strengthening Canadian dollar and scheduled maturities of institutional annuities in Guaranteed and Structured Financial Products. Segregated fund assets increased by 19 per cent to $139.7 billion from $117.6 billion in 2004 reflecting net sales of $16.9 billion and market value appreciation, partially offset by a $4.8 billion impact of the strengthening Canadian dollar.
Capital
Total capital was $28.4 billion as at December 31, 2005 compared to $28.1 billion a year ago. Net income for 2005 of $3.3 billion and the addition of $350 million of preferred shares issued on February 10, 2005 were largely offset by shareholder dividends of $940 million, the repurchase of 21 million common shares for $1.2 billion, a reduction in long-term debt of $491 million and a negative impact of the strengthening Canadian dollar.
Quarterly Dividends
The Board of Directors approved a quarterly shareholders’ dividend of $0.35 per share on the common shares of the Company, an increase of $0.05 per share, payable on and after March 20, 2006 to shareholders of record at the close of business on February 21, 2006. A dividend of $0.25625 per share was also declared on the Non-cumulative Class A Shares Series 1 of the Company, payable on and after March 19, 2006 to shareholders of record at the close of business on February 21, 2006. A dividend of $0.29063 per share was also declared on the Non-cumulative Class A Shares Series 2 of the Company, payable on and after March 19, 2006 to shareholders of record at the close of business on February 21, 2006. A dividend of $0.23438 per share was also declared on the Non-cumulative Class A Shares Series 3 of the Company, payable on and after March 19, 2006 to shareholders of record at the close of business on February 21, 2006. A dividend of $0.38125 per share was also declared on the Non-cumulative Class A Shares Series 6 of The Manufacturers Life Insurance Company, payable on and after March 31, 2006 to shareholders of record at the close of business on March 15, 2006.
Normal Course Issuer Bid
Under its current normal course issuer bid, which commenced on November 9, 2005, Manulife Financial has purchased a total of 721,000 common shares at an average price of $67.45 per share. Under the previous normal course issuer bid, which commenced on November 9, 2004, Manulife Financial purchased 26,048,500 common shares for a total price of $1.5 billion.
The Company continues to believe that from time to time, the market price of its common shares may not adequately reflect the value of its business and its future business prospects. Accordingly, the common shares may at such times represent an attractive investment and an appropriate and desirable use of available funds.
QUARTERLY PERFORMANCE BY DIVISION
U.S. Protection
| Canadian dollars | Quarterly Results | Year Ended |
| 4Q05 | 3Q05 | 4Q04 | 2005 | 2004 |
| Shareholders’ Net Income (millions) | 178 | 144 | 149 | 614 | 467 |
| Premiums & Deposits (millions) | 1,762 | 1,680 | 1,820 | 6,666 | 5,816 |
| Funds under Management (billions) | 57.9 | 56.5 | 57.1 | | |
| U.S. dollars | Quarterly Results | Year Ended |
| 4Q05 | 3Q05 | 4Q04 | 2005 | 2004 |
| Shareholders’ Net Income (millions) | 152 | 119 | 122 | 508 | 361 |
| Premiums & Deposits (millions) | 1,501 | 1,399 | 1,492 | 5,510 | 4,501 |
| Funds under Management (billions) | 49.6 | 48.6 | 47.4 | | |
- U.S. Protection’s 2005 fourth quarter shareholders’ net income of $178 million increased by 19 per cent from the $149 million reported in the fourth quarter of 2004. Earnings in Long Term Care rose as a result of in-force business growth, improvements in new business margins, increased sales and more favourable claims and investments experience. Earnings in the Individual Insurance business were consistent with prior year as increased sales and in-force business growth were offset by lower mortality gains compared to the strong experience in 2004. The stronger Canadian dollar negatively impacted earnings. Full year 2005 shareholder earnings were $614 million, up 31 per cent over 2004.
- Premiums and deposits of $1.8 billion for the quarter were consistent with the fourth quarter of 2004. Growth in premiums and deposits occurred in Long-Term Care resulting from in-force growth and improved sales, and in Universal Life premiums in the Individual Insurance business. Offsetting the increase was the negative impact of the stronger Canadian dollar and lower Variable Universal Life premiums and deposits.
- Funds under management of $57.9 billion were above the $57.1 billion reported in 2004. The increase from in-force business growth and improved equity markets was largely offset by the negative impact of the stronger Canadian dollar and a large surrender in the Closed Individual Insurance Participating block during the third quarter of 2005.
U.S. Wealth Management
| Canadian dollars | Quarterly Results | Year Ended |
| 4Q05 | 3Q05 | 4Q04 | 2005 | 2004 |
| Shareholders’ Net Income (millions) | 151 | 163 | 116 | 585 | 397 |
| Premiums & Deposits (millions) | 7,508 | 7,772 | 6,237 | 28,433 | 23,091 |
| Funds under Management (billions) | 142.1 | 136.0 | 129.0 | | |
| U.S. dollars | Quarterly Results | Year Ended |
| 4Q05 | 3Q05 | 4Q04 | 2005 | 2004 |
| Shareholders’ Net Income (millions) | 129 | 136 | 94 | 484 | 306 |
| Premiums & Deposits (millions) | 6,401 | 6,470 | 5,113 | 23,519 | 17,789 |
| Funds under Management (billions) | 121.9 | 117.1 | 107.2 | | |
- U.S. Wealth Management’s net income for the fourth quarter of 2005 was $151 million, a 30 per cent increase over the $116 million reported in the prior year quarter. The earnings growth in the fourth quarter was principally due to increased fee income on higher asset levels. Record high sales levels in variable annuities and in Retirement Pension Services (“RPS”) helped to boost the asset levels in the fourth quarter as revenues outpaced the increases in expenses due to economies of scale. Partially offsetting these increases were a less favourable impact of market appreciation on segregated fund reserves and the strengthening Canadian dollar. Full year net income was $585 million compared to $397 million in 2004.
- Premiums and deposits for the quarter of $7.5 billion were considerably higher than the $6.2 billion reported in the fourth quarter of 2004, mainly as a result of higher segregated fund deposits in the variable annuity and RPS businesses. Annuities’ premiums and deposits increased by 59 per cent, reflecting continued strong market acceptance of the variable annuity Principal Plus For Life withdrawal benefit introduced in May 2005. Premiums and deposits in RPS grew by six per cent, driven by the impact of higher recurring deposits from the growing block of in-force participants. Deposits in John Hancock Mutual Funds of $1.5 billion were primarily from sales of retail mutual funds, and were consistent with the fourth quarter of 2004.
- Funds under management of $142.1 billion were ten per cent higher compared to $129.0 billion reported in 2004. On a U.S. dollar basis, segregated funds under management grew by 22 per cent from strong variable annuity and RPS net policyholder cash flows and the favourable influence of improved equity markets during the year.
Guaranteed and Structured Financial Products
| Canadian dollars | Quarterly Results | Year Ended |
| 4Q05 | 3Q05 | 4Q04 | 2005 | 2004 |
| Shareholders’ Net Income (millions) | 65 | 36 | 82 | 283 | 212 |
| Premiums & Deposits (millions) | 516 | 519 | 526 | 1,960 | 1,641 |
| Funds under Management (billions) | 36.5 | 36.4 | 40.3 | | |
| U.S. dollars | Quarterly Results | Year Ended |
| 4Q05 | 3Q05 | 4Q04 | 2005 | 2004 |
| Shareholders’ Net Income (millions) | 55 | 30 | 67 | 232 | 165 |
| Premiums & Deposits (millions) | 439 | 432 | 432 | 1,619 | 1,270 |
| Funds under Management (billions) | 31.3 | 31.3 | 33.5 | | |
- Guaranteed and Structured Financial Products operates as part of U.S. Wealth Management, however, for financial reporting it is a separate segment. Net income for the fourth quarter of 2005 was $65 million compared to the prior year quarter of $82 million. The decrease in earnings was a result of less favourable claims and investment experience compared to the fourth quarter of 2004. Full year net income was $283 million compared to $212 million for the eight month period from acquisition to December 31, 2004.
- Premiums and deposits of $516 million were below the prior year quarter by two per cent, driven by the discontinued sales of brokered certificates of deposits in 2005. Funds under management of $36.5 billion were down nine per cent from the prior year period, as scheduled maturities have exceeded new sales volume in the past 12 months. Also contributing to the decrease was the impact of the weakened U.S. dollar.
Canadian Division
| Canadian dollars | Quarterly Results | Year Ended |
| 4Q05 | 3Q05 | 4Q04 | 2005 | 2004 |
| Shareholders’ Net Income (millions) | 199 | 235 | 175 | 809 | 614 |
| Premiums & Deposits (millions) | 3,339 | 3,347 | 3,212 | 13,532 | 11,058 |
| Funds under Management (billions) | 69.0 | 66.7 | 60.6 | | |
- Canadian Division shareholders’ net income for the fourth quarter of $199 million increased by 14 per cent from the $175 million reported in the fourth quarter of 2004. Driving the increase was in-force growth in Group Benefits, higher fee based assets in Individual Wealth Management and an increase in both volume and spreads on bank lending products. The beneficial impact on segregated fund guarantee reserves from higher equity markets and expense efficiencies resulting from the merger of Maritime Life and Manulife also contributed to increased earnings. Improved claims experience in the Affinity and Group Benefits businesses were partially offset by unfavourable lapse experience in Individual Insurance. Full year net income was $809 million compared to $614 million in 2004.
- Premiums and deposits for the quarter were $3.3 billion, up four per cent from the $3.2 billion reported for the same period last year. This increase was primarily driven by growth in Individual Wealth Management segregated fund deposits and by new sales in Group Savings and Retirement Solutions. Partially offsetting the increase was lower premiums from fixed interest products due to a consumer preference for equity-based investments in the current low interest rate environment.
- Funds under management as at December 31, 2005, were $69.0 billion, an increase of $8.4 billion or 14 per cent over 2004. The increase in funds under management was primarily from positive net policyholder cash flows and investment returns in segregated and mutual funds. Also, continued sales success in lending products by Manulife Bank and new and renewal premiums from Individual Life and Group Benefits increased general fund assets.
Asia and Japan Division
| Canadian dollars | Quarterly Results | Year Ended |
| 4Q05 | 3Q05 | 4Q04 | 2005 | 2004 |
| Shareholders’ Net Income (millions) | 228 | 213 | 120 | 732 | 489 |
| Premiums & Deposits (millions) | 2,354 | 2,058 | 2,230 | 9,105 | 7,741 |
| Funds under Management (billions) | 31.7 | 30.0 | 28.1 | | |
| U.S. dollars | Quarterly Results | Year Ended |
| 4Q05 | 3Q05 | 4Q04 | 2005 | 2004 |
| Shareholders’ Net Income (millions) | 195 | 177 | 99 | 608 | 377 |
| Premiums & Deposits (millions) | 2,006 | 1,712 | 1,826 | 7,522 | 5,982 |
| Funds under Management (billions) | 27.2 | 25.9 | 23.4 | | |
- The Asia and Japan Division’s shareholders’ net income of $228 million in the fourth quarter of 2005 was $108 million higher than for the same period last year. This increase was driven by growth in Japan’s variable annuity block and Hong Kong’s Individual business and a $52 million release in reserves resulting from a move to a less risky asset profile in the Daihyaku block of business. Partially offsetting this increase was the impact of the stronger Canadian dollar. The fourth quarter of 2004 included a charge of $11 million related to the Tsunami. Full year 2005 shareholders’ net income was $732 million, an increase of 50 per cent over 2004.
- Premiums and deposits in the fourth quarter were $2.4 billion, an increase of six per cent compared to the same quarter in 2004. Premium growth was driven by variable annuity sales in Japan and the insurance businesses in Hong Kong and Singapore. Lower mutual fund deposits in Indonesia, as a result of the market turmoil earlier in the year, largely offset this growth.
- Funds under management increased by $3.6 billion to $31.7 billion as at December 31, 2005 compared to $28.1 billion as at December 31, 2004. This growth was fueled by variable annuity sales in Japan, combined with increased business volumes in pension and wealth management products in Hong Kong, including sales of newly launched products in the second half of the year. The growth also reflects the impact of equity market value appreciation. The increase in funds under management was partially offset by redemptions of mutual funds in Indonesia, consistent with the experience across the industry as interest rates spiked mid-year, and the impact of the stronger Canadian dollar.
Reinsurance Division
| Canadian dollars | Quarterly Results | Year Ended |
| 4Q05 | 3Q05 | 4Q04 | 2005 | 2004 |
| Shareholders’ Net Income (loss) (millions) | (29) | (151) | 65 | (108) | 230 |
| Premiums (millions) | 249 | 401 | 263 | 1,217 | 982 |
| U.S. dollars | Quarterly Results | Year Ended |
| 4Q05 | 3Q05 | 4Q04 | 2005 | 2004 |
| Shareholders’ Net Income (loss) (millions) | (24) | (127) | 53 | (92) | 177 |
| Premiums (millions) | 212 | 334 | 215 | 1,005 | 756 |
- Reinsurance Division reported a net loss of $29 million in the fourth quarter of 2005, a decrease of $94 million from the net income of $65 million reported in the fourth quarter of 2004. The loss in the quarter was primarily attributable to Property and Casualty reinsurance losses related to Hurricane Wilma. Also contributing to the decrease from 2004 was unfavourable Life Reinsurance claims experience compared to very favourable experience in the fourth quarter of last year. Full year net loss was $108 million compared to net income of $230 million in 2004.
- Premiums of $249 million were $14 million or five per cent lower than in the fourth quarter of 2004. The decrease was primarily a result of lower premiums in the International Group Program line partially offset by increases in the other businesses. On a U.S. dollar basis, total Reinsurance Division premiums reported in the quarter are consistent with those in the fourth quarter of 2004.
Corporate and Other
| Canadian dollars | Quarterly Results | Year Ended |
| 4Q05 | 3Q05 | 4Q04 | 2005 | 2004 |
| Shareholders’ Net Income (millions) | 116 | 106 | 49 | 379 | 141 |
- Corporate and Other is comprised of the Investment Division’s external asset management business, earnings on excess capital, the transfer of credit risk from operating divisions, integration expenses, changes in actuarial methods and assumptions and other non-operating events. This segment also includes the John Hancock Accident and Health operations, which are primarily contracts in dispute.
- Corporate and Other reported fourth quarter net income of $116 million, an increase of $67 million from the fourth quarter of 2004. This earnings growth was largely driven by changes in actuarial methods and assumptions of $49 million compared to $8 million in 2004, favourable claims experience in the John Hancock Accident and Health operations and lower integration expenses. Full year net income was $379 million compared to $141 million in 2004.
About Manulife Financial
Manulife Financial is a leading Canadian-based financial services group serving millions of customers in 19 countries and territories worldwide. Operating as Manulife Financial in Canada and Asia, and primarily through John Hancock in the United States, the Company 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$372 billion (US$319 billion) as at December 31, 2005.
Manulife Financial Corporation trades as ‘MFC’ on the TSX, NYSE and PSE, and under ‘0945’ on the SEHK. Manulife Financial can be found on the Internet at www.manulife.com.
– 30 –
Attachments:
Financial Highlights
Consolidated Statements of Operations
Consolidated Balance Sheets
Divisional Information
Notes:
Manulife Financial Corporation will host a Fourth Quarter Earnings Results Conference Call at 2:00 p.m. ET February 9, 2006. For local and international locations, please call (416) 695-5261 and toll free in North America please call (877) 888-3855. Please call in ten minutes before the call starts. You will be required to provide your name and organization to the operator. A playback of this call will be available at 5:00 p.m. ET February 9, 2006 until midnight ET, February 16, 2006 by calling (416) 641-2135 (passcode #5045).
The conference call will also be webcast through Manulife Financial’s website at 2:00 p.m. ET February 9, 2006. You may access the webcast at: www.manulife.com/quarterlyreports. An archived version of the webcast will be available later on the website at the same URL as above.
The Fourth Quarter 2005 Financial Statements and Statistical Information Package are also available on the Manulife website at: www.manulife.com/quarterlyreports. Each of these documents may be downloaded before the webcast begins.
Caution regarding Forward-Looking Statements
This document contains forward-looking statements within the meaning of the “safe harbour” provisions of Canadian provincial securities laws and the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to, among other things, our objectives, goals, strategies, intentions, plans, beliefs, expectations and estimates, and can generally be identified by the use of words such as “may,” “will,” “could,” “should,” “would,” “suspect,” “outlook,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “plan,” “forecast,” “objective” and "continue" (or the negative thereof) and words and expressions of similar import. Although we believe that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. Important factors that could cause actual results to differ materially from these expectations include, among other things: general economic conditions worldwide; market factors, including global capital market activity; interest rate and currency value fluctuations; business competition; changes in government regulations or in tax laws; technological changes; changes in consumer demand for the our products and services; our ability to increase revenue from the expansion and development of distribution channel capacity; our ability to complete strategic acquisitions and to integrate acquisitions successfully; catastrophic events; political conditions and developments; international conflicts; and our success in anticipating and managing the foregoing factors. Additional information about these factors and about the material factors or assumptions underlying such forward-looking statements may be found in the body of this document as well as under “Risk Management” in the Management’s Discussion and Analysis in our most recent Annual Report. We do not undertake to update any forward-looking statements.
|
