By Thomas | Published February 15, 2011
The Toronto-based insurance company Manulife Financial Corporation has reported a positive turnaround in profitability in the fourth quarter of 2010. Earnings totaled close to US$1.8 billion, helped by sales in the burgeoning Asian region which showed a 56 percent increase in overall activity.
While action taken to stem earlier losses in 2010 improved performance in its key markets in the USA and Canada contributed to the production of the positive results, the strategic steps taken by Manulife to expand its operations in Asia were the key driver in the return to profitability in the fourth quarter of 2010.
Manulife’s Chief Executive Officer Mr. Guloien said: “We had strong growth in Asia, diversification in Canada and continued progress in the strategic repositioning in the U.S. We are proud of our continuing expansion and growing sales levels across Asia as a whole.”
Asia is emerging as the key target market for business growth as multi-national insurers look for long term expansion. This is linked to the exceptional growth in the economies of Asian nation’s off-setting the more difficult trading conditions in western hemisphere countries blighted by the implementation of austerity measures.
Manulife’s growth in the fourth quarter in 2010 is primarily down to a global strategy adopted by the insurer in 2009 which focused on driving up insurance sales especially in the buoyant Asian insurance market and growing distribution channels in emerging markets with the creation of a wider range of diversified saving and insurance products.
Manulife’s report on earnings achieved in the fourth quarter of 2010 highlights how much of a pivotal market Asia has become to global insurers seeking to generate written premium growth. While Manulife’s main domestic markets in North American have been basically static since the 2007-2008 global financial crisis, the Asian insurance markets have been a feature of the insurer’s profitable business in recent years, with the markets in China, Indonesia, Vietnam, Malaysia and the Philippines achieving double digit growth.
Speaking on Manulife Asian operations, Robert Cook, Executive Vice President and General Manager said: “Achieving insurance sales of US$1 billion was an important milestone for Manulife Asia. I am very pleased with these 2010 results, and I am also proud of the steps we took last year to invest for the future. These initiatives, aimed at building our distribution capacity in both agency and bank channels, are expected to pay off in continued growth of our businesses in the years ahead.”
Manulife’s Asian Division achieved fourth quarter insurance sales totaling US$307 million representing a 56 percent increase in quarterly year-on-year earnings. A significant 43 percent growth was achieved in fourth quarter 2010 Asian insurance sales, with the Japanese market achieving insurance sales totaling US$563 million – an increase of 72 percent compared to quarter four of 2009. Manulife’s strong growth in the Japanese insurance sector was down to robust sales of its new whole life products and an increase in sales of term life insurance products distributed through Manulife’s well established Japanese sales channels.
Manulife’s Hong Kong business reported insurance sales growth of 23 percent over the 12 month period in 2010 reflecting an increase in marketing efforts and growth in the agency distribution network.
In other Asian operations, Manulife’s insurance sales jumped by 22 percent in the fourth quarter 2010 compared with activity in the same period in 2009. The Canadian based insurer reported record growth in insurance sales in China, Indonesia and Vietnam.
The Chinese, Indonesian and Vietnamese insurance sectors have all become essential markets for insurers looking to expand global operations with new premium business being predominately driven by the improvement in wealth and rise in middle class demographics. Overall, Manulife’s insurance sales in China, Indonesia, the Philippines, Malaysia and Vietnam grew by 15 percent in quarter four 2010 compared to the equivalent period in 2009. Manulife has increased the number of contracted agents in these countries in order to ensure maximum exposure in the flourishing Asian insurance and wealth generation industries. In other Asian markets, Taiwanese sales grew by 53 percent over the yearly period in 2010, driven by successful sales in the whole life business. However, the loss of a distribution partnership in the developed Singaporean insurance market, meant Manulife experienced a steep decline in sales in this segment of the Asian business.
Manulife – one of North America’s largest insurers – targeted the Asian insurance market as a key strategic development in order to expand and generate improvements in profitability, which proved successful as demonstrated by the results in the latest report on earnings. This sector of business will clearly be a focus for activity in 2011 in order to turn the page on 2010’s overall loss of US$ 395 million, which stemmed from poor results in the first half of the year, and develop it into a platform of sustained profitability.
However, competition within the Asian insurance markets has become more intense recently, with European and American multinational insurers gaining access to the region through acquisitions, partnerships or self-started new businesses. These developments are initiating the provision of innovative insurance and wealth generation products in order to achieve market penetration.
As far as Manulife is concerned, in addition to targeting the Asian markets, it has repositioned activities in its significant USA and Canadian operations to meet the changing market conditions in these countries with positive results being manifest in the later part of 2010.
Insurance Company Mentioned:
Manulife (International) Limited is a member of the Manulife Financial group of companies. Manulife Financial is a leading Canadian-based financial services group serving millions of customers in 22 countries and territories worldwide. Operating as Manulife Financial in Canada and Asia, and primarily through John Hancock in the United States, the Company offers clients a diverse range of financial protection products and wealth management services through its extensive network of employees, agents and distribution partners.
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