TORONTO -- Manulife Financial Corp saw the number of agents in its China and Vietnam businesses drop in the second quarter to the lowest since the fourth quarter of 2019, due to increased regulation and lingering pandemic challenges, contributing to a decline in sales in the key region.
The number of agents in Manulife's "Asia Other" segment, which consists of mainland China, Singapore, Vietnam and other emerging markets, fell to 99,567 in the three months ended June 30, from 114,309 in the previous quarter.
These markets accounted for 87% of all agents in Asia.
Talent shortages that have hit most sectors globally have been exacerbated in some markets in Asia - where Manulife, Canada's biggest life insurer, aims to derive half of all core earnings from by 2025 - by local factors including more stringent regulations.
Manulife Asia Chief Executive Damien Green attributed the decline to economic headwinds due to the pandemic, a push to boost the professionalism of agents, and the introduction of new product and sales practice regulations in China.
"We've seen people return to their home provinces to support their families during recent waves of the pandemic," Green added. "But we expect that recruitment will normalize as markets recover."
Canadian rival Sun Life Financial, which also has significant Asian operations, does not disclose agent numbers. Local media have reported that insurers in Asia and Hong Kong were tapping laid off workers in the education, aviation and hospitality sectors for talent to shore up falling sales due to an agent shortage.
On Wednesday, Manulife posted second-quarter core profit that fell to 78 Canadian cents, from 83 cents a year earlier. The decline was driven by largely expected weakness in its global wealth and asset management business, due to equity market declines as well as lower Asia sales.
Despite the challenges, Manulife is confident of meeting its medium-term core earnings growth target of 15% for Asia, Green said. The company has also said it aims to obtain half of its core earnings from Asia by 2025.
Manulife shares fell 1.1% to C$23.93 in morning trading in Toronto, compared with a 0.7% gain in the benchmark Canadian stock index.
"Profitability remains below management's medium-term target," Edward Jones analyst James Shanahan wrote in a note. "Progress relative to (management's) goals would go a long way toward strengthening investor perceptions and driving stronger performance."