The insurance and wealth management company said Thursday the profit amounted to 12 cents per diluted share compared with a loss of $281 million or 17 cents per share a year earlier.
"Our second quarter net income is not as strong as we would have liked, due to the impact of a number of market-related items," president and chief executive Donald Guloien said in a statement.
"Having said that, it is a significant improvement over the prior year, volatility is being constrained, core earnings are strong, and our outlook is positive."
Manulife reported what it called core earnings, which strip out a number of one-time charges, of $609 million or 31 cents per share, up from $599 million or 30 cents per share a year ago.
Analysts had been looking 34 cents per share of core earnings, according to estimates compiled by Thomson Reuters.
"We expect a mildly negative reaction to Manulife’s results, based on our initial look at the results," RBC Capital Markets analyst Andre-Philippe Hardy wrote in a note to clients.
However Hardy noted that it wasn't entirely bad news.
"Many of the items that drove the results on a 'core' and reported basis to be below our expectations are not expected to recur (and some of the negative items are likely to reverse in upcoming quarters, according to the company), which in our view will temper the market’s reaction to the softer-than-expected results," he wrote.
Insurance sales at Manulife totalled $929 million for the quarter, down three per cent from just over $1 billion a year ago. The company attributed the drop to lower sales in Asia where it saw a boost last year due to sales ahead of tax changes.
Meanwhile, wealth sales, which included mutual funds and investment advice, grew to $13.7 billion compared with $8.5 billion a year ago as wealth management sales in Asia doubled.
Shares in Manulife have gained roughly a third from the start of the year, outpacing the S&P/TSX composite index which is about where it started the calendar.
The insurance companies have been hit hard in recent years, hit by low interest rates and volatile stock markets.
However, interest rates appear headed higher, a move that will benefit insurance companies who invest much of their money to be able to pay policyholders.
Chief financial officer Steve Roder said if rates head higher it will help the company even more.
"Interest rates rising is good news for us," Roder said.
"That normally means you have a better economic climate, it means you have to carry less capital, it means margins should be improving."
Manulife has set a target of $4 billion in annual core earnings by 2016.
Roder said Manulife has invested heavily in its wealth management business over the past several years and that is expected to pay dividends as it now has the scale it needs.
"Some aspects of wealth are a scale game and we expect to see as we add more and more funds under management, there will be significant benefits to the bottom line," he said.
On the insurance side, Roder said the company also stands to benefit as some of its business starts to mature.
Manulife is one of Canada's largest insurance companies with operations in Canada, the United States and Asia.
Last month, the company announced its subsidiary, Manulife (International) Ltd. agreed to sell its life insurance business in Taiwan to CTBC Life Insurance Co., Ltd., a subsidiary of CTBC Financial Holding Co., Ltd.
The company's John Hancock Financial also signed a deal in June to acquire Symetra Investment Services from Symetra Financial Corp. for an undisclosed price.