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Manulife profit soars as equity, bond investments pay off

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(Bloomberg) – Manulife Financial Corp., Canada’s largest life insurer, rose the most since February after reporting profit that almost doubled in the third quarter, benefiting from gains in its life insurance business and reaping the rewards of investments.

Manulife rose 7.9 percent to C$21.65 at 9:42 a.m. in Toronto, the most intraday since February and to the highest since December last year. Profit excluding some items in the three-month period was 49 cents a share, above the 45-cent average estimate of 14 analysts surveyed by Bloomberg. Net income increased 80 percent from the prior-year period to C$1.1 billion ($820 million), or 55 cents a share, The Toronto-based insurer said in a statement Thursday.

Chief Executive Officer Donald Guloien said that “favorable markets and excellent returns from our investment portfolio” lifted profit. He added the firm is focused on “aggressively” growing the businesses that provide the highest returns in a “difficult macroeconomic environment.”

Manulife posted gains in its fixed income and equity portfolios, and increased life insurance sales across two of three operating regions. Investments rebounded from the prior year when profit slid amid a decline in oil prices that eroded the value of energy bets.

Insurance sales rose 20 percent to C$1 billion in the third quarter amid record sales in most of its Asia markets and a 27 percent gain in transactions in Canada. Sales in the U.S. dipped 13 percent amid heated competition in guaranteed-income products, something Manulife has moved away from. Core profit in the unit increased 14 percent, helped by gains across Asia, Canada, and U.S. regions.

The company reported investment-related gains of C$297 million from its fixed income portfolio, alternative long-term assets and favorable credit. That compares with a C$220 million charge in the prior-year period related to energy investments.

Core earnings in the company’s asset management unit dipped 5 percent as a slide in Canada and the U.S. offset gains in Asia. The Toronto-based company kept its dividend at 18.5 cents a share.

The company’s review of its actuarial assumptions resulted in a C$455 million charge. The annual review determines whether Manulife had losses or gains from the investing assumptions it made at the start of the year.

Sun Life, the country’s third-largest life insurer, also rose as much as 6.8 percent to C$49.52, the most intraday since April 2012. The insurer reported third quarter profit Wednesday after market close that rose 53 percent and beat analyst estimates amid increased asset management and insurance sales. The company also raised its dividend 4 percent.