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Manulife First of Biggest Canada Insurers to Boost Payout

Manulife Financial Corp. became the first of Canada’s big three life insurers to resume dividend increases since the financial crisis as its second-quarter profit more than tripled on U.S. wealth-management fees.

Net income climbed to C$943 million ($863 million), or 49 cents a share, from C$259 million, or 12 cents, a year earlier, the Toronto-based company said today in a statement. Profit excluding some items was 36 cents a share, missing the 40-cent average estimate of 14 analysts surveyed by Bloomberg.

“Our wealth results were strong, driven by the success of our North American mutual fund businesses and improved momentum in Asia,” Chief Executive Officer Donald Guloien, 57, said in the statement. “Happily, we are also seeing more certainty around capital rules and other regulatory matters, here in Canada, the U.S. and globally, and sooner than we expected.”

Manulife, Canada’s largest life insurer, is managing more money for clients like pension funds to boost fee income, while moving away from more capital-intensive businesses. That helped the company lift its dividend 19 percent to 15.5 cents a share, its first increase since the financial crisis sapped stock returns and fee income in 2008.

U.S. wealth-management sales rose 7 percent to $7.9 billion in the second quarter as the firm’s Boston-based John Hancock unit profited. Manulife received C$6 billion of new capital in the quarter, pushing assets under management to a record high.

Asian Insurance

Insurance sales in Asia rallied 26 percent to $304 million as Japanese corporate products boosted growth.

Manulife last raised its dividend in the second quarter of 2008 to 26 cents a share. It cut that in half a year later to preserve capital following six quarters of losses, the only one of the three big life insurers in the country to reduce its payout after the financial crisis.

In the last quarter, Guloien said the company was unlikely to increase its dividend this year, and would consider it in 2015.

Manulife’s two closest rivals maintained their dividends at the same frozen levels as six years ago in the most recent quarter. Great-West Lifeco Inc. raised its payout to 31 cents from 29 cents in the second quarter of 2008 and hasn’t upped it since. Sun Life Financial Inc. pushed its dividend to 36 cents from 34 cents in February 2008, where it has stayed.

Great-West, Canada’s second-largest life insurer, yesterday reported an 18 percent increase in second-quarter profit as premiums jumped 33 percent. Profit excluding some items at the Winnipeg, Manitoba-based company was 62 cents a share, matching the average estimate from 11 analysts surveyed by Bloomberg.

Toronto-based Sun Life posted a 13 percent gain in second-quarter operating profit as sales of asset-management products expanded.

Manulife’s stock rose 0.1 percent to C$21.98 in Toronto yesterday. It’s rallied 4.8 percent this year, the second-best performer on the Standard & Poor’s/TSX Composite Life and Health Insurance Index.

(Manulife has a conference call scheduled for 2 p.m. EST today. Call 1-416-340-8530 for details.)

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