Manulife announced its 2020 and fourth quarter of 2020 ("4Q20") results. For 2020, Manulife reported a net income of $5.9 billion, core earnings of $5.5 billion, APE sales of $5.6 billion, and strong Global WAM net inflows of $8.9 billion
Key highlights include:
- Net income attributed to shareholders of $5.9 billion in 2020, up $0.3 billion from 2019, and $1.8 billion in 4Q20, up $0.6 billion from the fourth quarter of 2019 (“4Q19”)
- Core earnings of $5.5 billion in 2020, down $0.5 billion from 2019, and $1.5 billion in 4Q20, in line with 4Q19
- Strong LICAT ratio of 149%
- Core ROE of 10.9% in 2020 and 11.6% in 4Q20, and ROE of 11.6% in 2020 and 14.1% in 4Q20
- NBV of $1.8 billion in 2020, down 13%3 from 2019, and $489 million in 4Q20, down 7% from 4Q19
- APE sales of $5.6 billion in 2020, down 8% from 2019, and $1.4 billion in 4Q20, down 5% from 4Q19
- Global WAM net inflows of $8.9 billion in 2020 compared with net outflows of $0.9 billion in 2019 and net inflows of $2.8 billion in 4Q20 compared with net inflows of $4.9 billion in 4Q19
As of December 31, 2020, delivered a cumulative reduction in pre-tax annual general expenses of $1.0 billion, achieving our medium-term target two years ahead of schedule
Manulife President & Chief Executive Officer Roy Gori said, "2020 was an incredibly challenging year in so many ways. Countless people were affected by illness and loss, as well as isolation from loved ones, putting stress on their physical and mental health, and creating anxiety for their financial well-being. We want to thank all of the front-line workers globally for their incredible efforts through this unprecedented time.”
“I want to also take this opportunity to thank every colleague, along with our agents and business partners for all they have done to make decisions easier and lives better for our customers over the past year. As the year ahead presents continued challenges, I am enormously grateful for their passion for serving our customers’ evolving needs while most are persevering through the personal and professional challenges of doing so while working from home,” Mr. Gori continued.
2020 Business highlights
Manulife Financial Corporation ("Manulife") completed an agreement to reinsure their legacy U.S. Bank-Owned Life Insurance business, experienced continued success from their Annuity Guaranteed Minimum Withdrawal Benefit offer program, and recognised impacts from the sale of alternative long-duration assets enabled by reinsurance of individual and group payout annuity policies. In total, portfolio optimisation initiatives generated additional capital benefits of $780 million.
In Asia, Manulife increased the number of insurance agents by 21% to over 115,000, announced an exclusive bancassurance partnership with VietinBank and reached an early extension of the bancassurance agreement with PT Bank Danamon Indonesia to 2036. In addition, in 4Q20 Manulife received approval from the China Banking and Insurance Regulatory Commission to begin preparation work to establish a new branch in the Shaanxi Province.
Profitabilty
Manulife reported net income attributed to shareholders of $5.9 billion in 2020, up $0.3 billion from 2019, and $1.8 billion in 4Q20, up $0.6 billion from 4Q19.
The $0.3 billion increase in net income attributed to shareholders was primarily due to gains from the direct impact of interest rates in 2020, including gains from the sale of available-for-sale bonds held in Corporate and Other, (compared with losses in 2019, including a $0.5 billion charge related to updated Ultimate Reinvestment Rate assumptions issued by the Canadian Actuarial Standards Board), partially offset by losses on investment-related experience (compared with gains in 2019, including $400 million of core investment gains1) and losses from the direct impact of equity markets and variable annuity guarantee liabilities (compared with gains in 2019).
The $0.6 billion increase in net income attributed to shareholders in 4Q20 compared with the prior year quarter was primarily driven by higher investment-related experience gains, gains from reinsurance transactions compared with losses in 4Q19, and a lower charge from the direct impact of markets.
Business Performance
Manulife reported new business value (“NBV”) of $1.8 billion in 2020, a decrease of 13% compared with 2019, and $489 million in 4Q20, a decrease of 7% compared with 4Q19.
NBV was $1.8 billion in 2020, a decrease of 13% compared with 2019. In Asia, NBV of $1.4 billion was down 14%, driven by lower sales volumes in Hong Kong and Japan and a decline in market interest rates in Hong Kong and Asia Other, partially offset by favourable product mix in Asia Other.
NBV was $489 million in 4Q20, a decrease of 7% compared with 4Q19. In Asia, NBV of $368 million was down 5% due to lower sales volumes in Hong Kong and less favourable product mix in Japan, partially offset by higher sales and more favourable product mix in Asia Other.
Manulife reported annualized premium equivalent (“APE”) sales of $5.6 billion in 2020, a decrease of 8% compared with 2019, and $1.4 billion in 4Q20, a decrease of 5% compared with 4Q19
APE sales were $5.6 billion in 2020, a decrease of 8% compared with 2019. In Asia, APE sales decreased 11% primarily as a result of lower Japan APE sales, which decreased 30% due to accelerated sales of corporate-owned life insurance (“COLI”) products in the first quarter of 2019 in advance of a change in tax regulations and the adverse impact of COVID-19. Hong Kong APE sales decreased 10% driven by the adverse impact of COVID-19 containment measures, and lower sales to mainland Chinese visitors. Asia Other APE sales in 2020 were in line with 2019, as growth in mainland China and Vietnam was offset by the adverse impact of COVID-19 in other markets.
APE sales were $1.4 billion in 4Q20, a decrease of 5% compared with 4Q19. In Asia, APE sales increased 2% as growth in sales in Japan from COLI and higher Asia Other sales from Vietnam and Singapore, were partially offset by lower sales in Hong Kong, due to the tightening of COVID-19 containment measures.
Manulife reported Global Wealth and Asset Management net inflows of $8.9 billion in 2020, compared with 2019 net outflows of $0.9 billion, and net inflows of $2.8 billion in 4Q20 compared with net inflows of $4.9 billion in 4Q19.
Net inflows were $8.9 billion in 2020, compared with net outflows of $0.9 billion in 2019. In Asia, net inflows were $3.9 billion in 2020 compared with net inflows of $4.8 billion in 2019, reflecting lower retail net flows mainly in mainland China and Hong Kong, partially offset by higher net flows in Indonesia Retail and Hong Kong Retirement.
Net inflows were $2.8 billion in 4Q20 compared with net inflows of $4.9 billion in 4Q19. Net inflows in Asia were $2.2 billion in 4Q20 compared with net inflows of $0.2 billion in 4Q19, driven by lower redemptions in Institutional Asset Management and higher gross flows of retail money market funds in Indonesia.
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