Manulife Raises Dividend While Delaying a Profitability Target

Manulife Financial Corp. raised its dividend for the second time in less than a year, opting to return more funds to shareholders even as it missed earnings estimates and delayed meeting a profitability target.

Canada’s largest life insurer boosted its dividend 10 percent to 17 cents, according to a statement Thursday. Net income in the first quarter fell 12 percent to C$723 million ($599 million), while profit excluding some items was 39 cents a share, missing the average 42-cent estimate of 13 analysts surveyed by Bloomberg.

While wealth sales in Asia and Canada rallied, a strong U.S. currency eroded some returns and the company’s energy investments lagged. Manulife said it likely won’t meet its 13 percent core return on equity target by 2016 as planned because it recently deployed capital for three major acquisitions, including Standard Life Plc’s Canadian business. Return on equity on that basis was 9.3 percent for the first quarter.

“I’m not giving up on the ROE target -- it will just take us longer to get there,” Chief Financial Officer Steve Roder said by phone. “There’s still some uncertainty in the macro picture and it’s better for us to retain a certain level of capital.”

Manulife took a C$77 million charge on investments in the quarter on an actuarial change and lower commodity prices that hit its oil and gas investments.

Asian Sales

The company’s shares rose 0.3 percent to C$22.57 at 10:13 a.m. in Toronto trading.

Roder said Manulife is still set to meet another target, its core profit goal, which will ultimately benefit from the company’s acquisition strategy.

In Asia, wealth sales jumped 97 percent in the quarter over last year to $2.8 billion, a record, with higher mutual fund demand in Japan, Hong Kong, and Indonesia. Asset management revenue in Canada rose 25 percent from the prior year to C$3.5 billion.

The Toronto-based life insurer had raised its dividend in the second quarter, making it the first major Canadian life insurer to lift its payout following the financial crisis.

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