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Manulife would be 'very happy' to boost stake in China life-insurance venture: CFO

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05/14/2020 | 11:56am EDT

Manulife Financial Corp would be "very happy" to increase its stake in its Chinese joint venture with Sinochem, the chief financial officer of Canada's biggest life insurer said on Thursday.

Manulife has a 51% interest in the venture, which it entered into with the Chinese state-owned company in 1996.

While acquisitions are lower on Manulife's list of priorities, "if there's an opportunity to increase the extent of our ownership (in the Sinochem joint venture), we would be happy to do that," CFO Phil Witherington said at the online Barclays Americas Select Conference.

"It's not something that's a necessity, but a nice to have," he said. "It's a nice way to potentially deploy capital."

In China, where the novel coronavirus emerged earlier than elsewhere in the world, about 80% of Manulife's workforce is back in offices following lockdowns to curb the virus' spread, while in Hong Kong, about half have returned, Witherington said.

Asia has been the growth engine for Canadian life insurers over several quarters, with the region's expanding middle class helping them diversify away from the more mature and competitive market at home.

Last week, the Toronto-based insurer reported a decline in first-quarter profit, hit by equity market disruptions due to the coronavirus pandemic and lower sales in Japan, although the company did see growth in new business elsewhere in Asia.

Witherington said the insurer also benefitted from lower interest rates, which widened the spreads between risk-free rates and yields on its corporate bond holdings, and from currency movements.

But "I wouldn't bank all of those benefits," Witherington said. "As markets normalize, assuming the external environment and macro conditions improve, I would expect to give some of those, or possibly all of those, benefits back."

Separately, Manulife said in a statement it had invested C$1.2 billion ($851.79 million)in renewable energy and energy efficient projects in 2019. Manulife invests in energy companies in its alternative long-duration assets portfolio, and through corporate bonds in its fixed income portfolio.

Manulife shares were trading 2.7% lower at C$15.81 in morning trading, compared with a 1.2% drop in the Toronto stock benchmark.

(Reporting By Nichola Saminather; Editing by Bernadette Baum)

Stocks mentioned in the article
ChangeLast1st jan.
BARCLAYS PLC 5.18% 117.76 Delayed Quote.-34.45%
BYD COMPANY LIMITED 3.62% 77.3 End-of-day quote.98.97%
CHINA LIFE INSURANCE CO., LTD. -1.33% 22.2 End-of-day quote.-13.28%
CHINA LIFE INSURANCE COMPANY LIMITED -6.70% 19.5 End-of-day quote.-9.93%
EQUITY GROUP HOLDINGS PLC 1.11% 31.85 End-of-day quote.-40.47%
FIRST FINANCIAL CORPORATION 3.69% 33.45 Delayed Quote.-26.84%
LETS HOLDINGS GROUP CO., LTD. -1.85% 11.64 End-of-day quote.92.72%
LINE CORPORATION -0.54% 5500 End-of-day quote.2.80%
LOOK HOLDINGS INCORPORATED -2.42% 685 End-of-day quote.-45.29%
MANULIFE FINANCIAL CORPORATION 2.29% 18.34 Delayed Quote.-30.42%
NICE CORPORATION -3.38% 828 End-of-day quote.-36.31%
SINOCHEM INTERNATIONAL CORPORATION 0.18% 5.7 End-of-day quote.7.55%
THE NEW HOME COMPANY INC. 2.16% 3.31 Delayed Quote.-28.97%
WORLD CO., LTD. -5.40% 1420 End-of-day quote.-47.23%
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