TORONTO (Reuters) - Manulife Financial (MFC.TO) profit unexpectedly rose 22 percent in the first quarter on market-related gains and insurance sales, and the company said it had hired a new chief financial officer to replace the soon-to-depart Michael Bell.
Canada’s largest insurer earned C$1.2 billion ($1.21 billion), or 66 Canadian cents a share, in the quarter. Analysts had expected it to earn 36 Canadian cents a share, according to Thomson Reuters I/B/E/S.
The result marked a reversal from losses in the second half of 2011, and was up from the company’s 2011 first-quarter profit of C$985 million, or 54 Canadian cents a share.
“It was a big beat, obviously,” said National Bank Financial analyst Peter Routledge.
Still, the company said it could take a charge of C$700-C$800 million in the second quarter, to reflect the impact of lower bond yields on the company’s long-term investment expectations.
Routledge had expected a charge, but not such a steep one.
“We were at C$550 million heading into the quarter, so they’re going to take a bigger charge than we thought,” he said.
Volatile stock and bond markets have led to wild swings in Canadian insurers’ results over the past three years, as they must make regular reserve adjustments to reflect the impact of markets on their portfolios to cover future policy obligations.
Manulife has hedged much of its market exposure and exited higher-risk businesses over the last two years.
The company said the direct impact of equity and bond market movements during the quarter was a gain of C$75 million.
Insurance sales grew 35 percent year-over-year, improving in its Canadian and Asian divisions, but falling slightly at Manulife’s U.S. John Hancock unit.
Wealth management sales decreased by eight percent.
Manulife also said it had hired former AIA Group executive Steve Roder as chief financial officer, replacing Michael Bell, who said in February that he would step down.
Bell’s unexpected announcement had pressured the company’s share price, adding to uncertainty as the company repositioned its business. Bell had said he would stay with the company until a replacement was found.
Roder has spent much of the past two decades working in Asia, where Manulife has focused its growth aspirations.
“Steve significantly adds to our body of Asian experience here in the Toronto head office,” Manulife CEO Donald Guloien said in a statement.
Shares of Manulife, the first Canadian life insurer to report first-quarter results, closed at C$13.34 on Wednesday.
($1 = 0.9890 Canadian dollars)
Editing by Maureen Bavdek and Bernadette Baum