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 has hired a new chief financial officer to replace 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.
However, some analysts said the core results - when looking past the impact of markets and other items - were merely in line with, or slightly below expectations.
“The headline earnings may garner some support... However, we believe that (the stock‘s) upside is likely limited by a notional miss against consensus,” Barclays Capital analyst John Aiken said in note.
Manulife’s shares were up 1 percent, or 13 Canadian cents, at C$13.47 at mid morning on Thursday.
The company said it could take a charge of C$700 million-C$800 million in the second quarter to reflect the impact of lower bond yields on the company’s long-term investment expectations, a higher charge than some had expected.
“We were at C$550 million heading into the quarter, so they’re going to take a bigger charge than we thought,” said Peter Routledge, an analyst at National Bank Financial.
Manulife also said it could take a C$250 million-C$300 million charge from new actuarial standards related to guaranteed variable annuities and segregated funds.
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 market activity on the portfolios they have set up 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, rising to C$541 million when factoring in the impact of markets on Manulife’s own investments and on its variable annuity hedges.
Insurance sales rose 35 percent year-over-year, improving in the company’s Canadian and Asian divisions, but falling slightly at Manulife’s U.S. John Hancock unit.
Wealth management sales decreased by 8 percent.
Manulife also said it had hired former AIA Group executive Steve Roder as chief financial officer, replacing Michael Bell, who said in February he would step down.
Bell’s unexpected announcement had pressured the company’s share price, adding to uncertainty as Manulife repositioned its business. Bell said he would stay with the company until a replacement was found.
Roder has spent much of the past two decades working in Asia, on which Manulife has focused its growth aspirations.
“In our opinion, this underscores the importance of the Asian operations to Manulife’s longer term growth, but will also perpetuate speculation that it will once again become acquisitive in the region,” Aiken said.
Reporting By Cameron French; Editing by Peter Galloway