Insurance heavyweights post positive Q1 earnings

Both Manulife and Great-West Life experienced solid gains in the first quarter of 2018, but have resisted any pressure to increase dividend payouts.

Reporting yesterday, Great-West Life announced Q1 2018 net earnings of $731 million – a 24% increase on the first quarter of 2017 ($591 million).

Without restructuring costs, GWL’s net earnings in Q1 2017 amounted to $619 million, which means the firm still recorded 18% growth year-over-year for Q1 2018. 

“Great-West Lifeco delivered strong first quarter results reflecting healthy sales growth and disciplined expense management”, said Paul Mahon, president and CEO, Great-West Lifeco. “The company maintained its strong capital position after transitioning to the new regulatory capital regime in Canada and continued to advance its growth agenda with tuck-in acquisitions and investments in technology and innovation across the organization.”

Manulife’s growth was similarly robust, with net income attributed to shareholders of $1,372 million, compared to $1,350 million for Q1 2017, while core earnings stood at $1,303 million for the quarter, an increase of $202 million or 22% compared with 1Q17

“We delivered strong core earnings and net income in the first quarter, and continue to make significant strides in transforming our business to be more customer centric,” said president & CEO Roy Gori.  “The numerous initiatives we have completed in Canada have led to strong, double-digit improvements in net promoter scores in just six months. We also took several strategically important actions on our North American legacy businesses which address both profitability and capital, and demonstrate clearly that we are executing on our priorities.”

This marks the first quarter under the new Life Insurance Capital Adequacy Test or LICAT framework, and both firms performed strongly under the new criteria. Manulife reported a LICAT capital ratio of 129%, while Great-West topped that with a score of 130%.

Manulife’s management attributed the positive results in large part to growth in its Asian and global wealth and asset management businesses, as well as lower US taxes and improved policyholder experience in Canada.

Great-West also pointed to its enhanced geographical performance, but with special mention for Canada, where it saw close to $137 million in pre-tax annualized expense reductions.

Both firms elected to maintain their current dividend, with Manulife announcing a quarterly dividend of 22 cents per common share, and Great-West staying pat with its $0.3890 per share payout.