US tax reform hit earnings for both Manulife and Great-West life in the final quarter of 2017.
Canada’s largest life insurer, Manulife, announced a 4Q net loss attributed to shareholders of $1,606 million and a reduction in core earnings to $1,205 million, compared to 1,287 million in 4Q16.
Looking at 2017 as a whole, net income attributed to shareholders of $2,104 million represented an $825 million decrease compared to 2016. The firm attributed this to a $2.8 billion post-tax charge related to corporate tax reform in the US, as well as changes to its legacy businesses.
More positive was core earnings of $4,565 million in 2017, a $544 million increase on 2016, as new president and CEO Roy Gori addressed.
"We achieved strong operating results in 2017,” he said. “Core earnings increased 14% to $4.6 billion, we delivered continued positive net flows, and solid top-line growth in Asia. While net income was impacted by portfolio asset mix changes and US tax reform, these items will benefit us going forward."
It was a similar story for Great-West Life, where the firm’s US exposure meant a net charge of $216 million as net earnings attributable to common shareholders fell to $392 million for the fourth quarter, compared to $676 million in 4Q16. The Winnipeg-based firm also had to contend with a further net charge of $122 million from the disposal of an equity investment, as well as restructuring costs of $4 million. Excluding these charges, Great-West saw net earnings increase by 5% year-over-year, driven in large part by strong performance in its Canadian business.
"The company's operating performance was solid in the fourth quarter, reflecting strong top-line results and controlled expense growth," said Paul Mahon, president and CEO, Great-West Lifeco. "Strategic actions taken in the quarter and throughout the year, including transformation initiatives in Canada and tuck-in acquisitions and investments across our geographies, set the stage for stronger future earnings growth."
While Manulife and Great-West experienced an underwhelming end to 2017, both companies are confident of a turnaround this year, and duly increased dividends payouts – Manulife announced a quarterly dividend of $0.22, up 7% on 3Q17, while Great-West increased its dividend by 6% on the previous quarter to $0.38.
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