Toronto-based Manulife Financial Corp. and Sun Life Financial Corp. say anti-government protests in Hong Kong have not had a large impact on their businesses there.
The Canadian insurers made the comments after they both reported that they benefited from strong growth in Asia in the third-quarter.
President of Sun Life Asia Claude Accum said Thursday that the demonstrations in Hong Kong have resulted in a slowdown of mainland Chinese visitors travelling to the city.
“When they see the demonstrations on TV, they’re reluctant to come to Hong Kong to do their medicals and buy insurance,” he said on a call with analysts discussing Sun Life’s latest quarterly earnings. “The impact on our business actually has been quite modest.”
Protests in Hong Kong began in June against a now-abandoned extradition bill that would have allowed suspects to be sent for trials in mainland China, but the movement has since grown into calls for greater democracy and police accountability.
Manulife Asia chief executive Anil Wadhwani said during its earnings call on Thursday that the Toronto-based insurer was “keeping a close watch on the challenging Hong Kong situation.”
“It’s not unreasonable to expect that it could cause some headwinds as we look into the future quarters,” he told analysts. “But again we feel confident about our Hong Kong franchise, and we continue to invest in what has been a flagship franchise in Asia.”
On Wednesday, Sun Life reported adjusted profits for the quarter ended Sept. 30 of $809 million, up 11% from the previous-quarter, helped by 25% growth in Asia. Manulife reported net income attributable to shareholders of $723 million, down sharply from a year earlier but better than analysts expected, fuelled by double-digit growth in Asia.
Manulife’s Asia segment, where it operates in several markets including Japan, Vietnam and the Philippines, is “showing no signs of duress,” said National Bank of Canada Financial Markets analyst Gabriel Dechaine.
“We believe investors were concerned about potential disruption to MFC’s high-growth Asia segment due to political issues in Hong Kong (which represents 47% of segment earnings),” he said in a note to clients. “At a segment level, we saw a 12% increase in profits driven by 10% expected profit growth and experience gains.”
Meanwhile, Sun Life’s Asia segment rebounded from the previous quarter, said Canaccord Genuity Capital Markets analyst Scott Chan.
“Individual insurance sales rose 49% over the prior year, with strong growth in most local markets and International. Wealth sales were higher 33% YoY, driven by the Philippines (money market sales) and Hong Kong (pension business),” he said in a note to clients.
Accum said its business has been “quite resilient” despite the dip in mainland Chinese visitors because two-thirds of its sales in Hong Kong go through agencies, and the vast majority of that business comes from locals.
“We think we’ll see some short-term slowdown, but we’re not seeing any long-term diminuation to our growth prospects in Hong Kong,” said Accum, who is retiring from his role at the end of the year.
Manulife also cited some recent tax incentives announced by the Hong Kong government aimed at encouraging individuals to save more for their retirement and healthcare as beneficial.
The insurer’s chief financial officer Philip Witherington told analysts that this has been a “favourable development for us and the industry” resulting in a 55% increase in sales volume of related products.
“Certainly, we’ve seen very strong initial impact. Once that initial impact is complete, we may see a diminishing ongoing amount of sales… Over the course of the coming year, we may see it subside somewhat.”