Manulife Financial Corporation (NYSE: MFC) saw its U.S.-listed shares decline approximately 6% on Thursday, as investors reacted to first-quarter core earnings that fell short of consensus estimates, despite a robust performance from the company’s Asian operations. The Toronto-based insurer reported core earnings of C$1.84 billion, an 8% increase on a constant-currency basis, but core earnings per share landed 2.5% below the Zacks consensus forecast.
Net income attributable to shareholders more than doubled to C$1.15 billion, compared with C$485 million in the same period last year. However, the headline growth masked underlying weaknesses in the company’s Canadian and U.S. segments, as well as significant net outflows in its Global Wealth and Asset Management (Global WAM) division.
“Another strong quarter,” said Chief Executive Phil Witherington, highlighting the uptick in both core earnings and new business value. However, the market’s focus shifted to the lagging performance in Canada and the United States. Core earnings in Canada fell 6% to C$352 million, with annualized premium equivalent sales—a measure of new insurance business—dropping 15%. In the U.S., core earnings edged down 4% to US$241 million, which Zacks attributed to slimmer investment spreads.
Asia remained the standout performer, with core earnings climbing 22% to US$598 million, driven by stronger sales and improved new business across major markets. The region continues to be a key growth engine for Manulife, but investors are questioning whether this momentum can translate into more consistent group-wide earnings.
The Global WAM division posted net outflows of C$4.4 billion, a sharp reversal from the C$500 million in net inflows recorded a year earlier. Despite the outflows, core earnings in the segment ticked up 2% to C$448 million, supported by higher margins and asset data. The outflow figure stood in stark contrast to these positive metrics, raising concerns about the division’s ability to retain client assets.
Manulife reported a 16% jump in new business contractual service margin (CSM), bringing the total to C$1.02 billion. For insurers, CSM is a key indicator of future profit potential, representing expected earnings from in-force policies. The company also posted a 16.5% core return on equity and a 136% LICAT ratio, a key measure of capital adequacy for Canadian life insurers.
Chief Financial Officer Colin Simpson highlighted Manulife’s “resilience” in what he described as a choppy quarter for markets. Shareholder returns totaled C$1.2 billion, split between dividends and share repurchases. The board declared a quarterly common dividend of C$0.485 per share, payable on or after June 19 to shareholders of record as of May 29.
Looking ahead, the company faces several risks. If U.S. investment spreads remain tight, Canadian disability claims persist at current levels, or wealth-management outflows fail to reverse, Asia’s segment could be left to shoulder a disproportionate share of the burden in meeting management’s return targets. On the earnings call, Witherington reiterated the company’s commitment to achieving an 18%-plus core ROE target by the end of 2027. He also noted that acquisitions would face a “high bar,” with the primary focus remaining on organic growth.
Traders in U.S. rate markets are not pricing in a near-term pivot from the Federal Reserve. According to Polymarket’s Fed dashboard, the odds of policy staying unchanged at the June 17 meeting stood at 98%, with only a 1% chance of a 25-basis-point rate cut. This backdrop may continue to weigh on Manulife’s investment-sensitive segments.
Manulife’s stock has gained roughly 9.6% year-to-date, trailing its smaller rival Sun Life, which has climbed 13.2% and reported stronger quarterly profits last week. The mixed first-quarter update, while not outright weak, left investors wanting more clarity on the earnings trajectory rather than just the size of the numbers.