(Bloomberg) — Manulife Financial Corp., Canada’s largest insurer, posted earnings that met analysts’ expectations as gains in insurance and asset management were tempered by rising interest rates.
The Toronto-based company said second-quarter net income declined 36 percent to CAD $600 million (USD $455 million), or 29 cents a share, according to a statement Thursday. Profit excluding some items was 44 cents a share, matching the average estimate of 13 analysts surveyed by Bloomberg.
“We continued to deliver robust growth in wealth management and life insurance,” Chief Executive Officer Donald Guloien said in the statement. “Net income, as a result of changes in interest rates, was lower than expected.”
Net income slipped as the company took a CAD $362 million hit as its accounting assumptions were negatively impacted by a steepening yield curve, mainly in the U.S. The value of instruments in Manulife’s interest-rate swap program changes with swings in interest rates, according to Chief Financial Officer Steve Roder.
Higher interest rates tend to benefit insurers over time as they push up bond returns and the assets used to meet policy guarantees, while lower rates squeeze those returns.
Core earnings, which strips out the impact of interest rates, rallied 29 percent to C$902 million, according to financial documents.