Company Reports

Manulife provides a variety of financial-services products including life insurance, annuities, and investment management, mainly in the US, Canada, and Asia. Its investment management business has achieved adequate scale and is a source of stable earnings and durable cash flows.

No-moat-rated Manulife Financial reported a decent set of numbers in the fourth quarter as growth and profitability remain on track. The company reported core earnings of CAD 1.77 billion or CAD 0.92 per share versus CAD 1.54 billion or CAD 0.77 per share in the fourth quarter of the previous year. The fourth-quarter results equated to an annualized core return on equity of 16.4%, which is higher than the company's long-term target of 15%. Higher interest rates have been a tailwind for the company, resulting in higher recurring investment earnings. The company announced an increase of 9.6% to its quarterly common shareholders' dividend, resulting in a dividend of CAD 0.40 per share that represents a 5.2% dividend yield as per the current stock price. The adjusted book value of the company stood at CAD 32.2 per share, up 9% compared with the fourth quarter of the previous year. We are maintaining our CAD 29 fair value estimate for Manulife after incorporating the fourth-quarter results.

No-moat-rated Manulife Financial reported strong results in the third quarter as growth momentum continued in Asia and underwriting profitability remained solid. The company reported core earnings of CAD 1.74 billion or CAD 0.92 per share in the third quarter versus CAD 1.34 billion or CAD 0.68 per share in the third quarter of the previous year. The third-quarter results equated to an annualized core return on equity of 16.8%, which is higher than the company’s long-term target of 15%. Higher interest rates have been a tailwind for the company, resulting in higher expected investment earnings. The company paid a quarterly dividend of CAD 0.365 per share in the third quarter of 2023, which represents a 5.7% dividend yield as per the current stock price. The adjusted book value of the company stood at CAD 30.7 in the third quarter, up 4% compared with the third quarter of the previous year. We are maintaining our CAD 29 fair value estimate for Manulife after incorporating the third-quarter results.

Manulife Financial provides a variety of financial-services products including life insurance, annuities, and investment management, mainly in the U.S., Canada, and Asia. Its investment management business has achieved adequate scale and is a source of stable earnings and durable cash flows.

No-moat-rated Manulife Financial reported a good set of numbers with solid growth in the Asian business. The company reported core earnings of CAD 1.64 billion or CAD 0.83 per share in the second quarter versus CAD 1.53 billion or CAD 0.76 per share in the second quarter of the previous year on a constant currency basis. The second-quarter results equated to an annualized core return on equity of 15.5%. The company paid a quarterly dividend of CAD 0.365 per share in the second quarter of 2023, which represents a 5.5% dividend yield as per the current stock price. The adjusted book value stood at CAD 29.42 in the second quarter, up 5% compared with the prior-year quarter. We are maintaining our CAD 29 fair value estimate for Manulife after incorporating the second-quarter results.

No-moat-rated Manulife Financial reported a decent set of numbers to start the year and transitioned to IFRS 17 financial reporting standard. The company reported core earnings of CAD 1.53 billion or CAD 0.79 per share in the first quarter versus CAD 1.44 billion or CAD 0.69 per share in the first quarter of the previous year. The first-quarter results equated to an annualized core return on equity of 14.8%. The company paid a quarterly dividend of CAD 0.365 per share starting from the first quarter of 2023, which represents a 5.5% dividend yield as per the current stock price. The adjusted book value of the company stood at CAD 30.04 in the first quarter, up 9% compared with CAD 27.53 in the previous year. We are maintaining our CAD 29 fair value estimate for Manulife after incorporating the first-quarter results.

Manulife Financial provides a variety of financial services products, including life insurance, annuities, and investment management products mainly in the U.S., Canada, and Asia. The investment management business of the company has achieved adequate scale and is a source of stable earnings and maintained cash flows.

No-moat-rated Manulife Financial ended the year with middling results, reporting core earnings of CAD 1,746 million or CAD 0.88 per share for the fourth quarter, up 2% compared with CAD 1,708 million or CAD 0.84 per share in the year-ago quarter. The fourth-quarter results equated to an annualized core return on equity of 13.2%. The company also increased its quarterly dividend to CAD 0.365 per share, up 11% from CAD 0.33. The shares are currently trading at a forward dividend yield of around 5.6%. We are maintaining our CAD 27.50 fair value estimate after incorporating fourth-quarter results.

We are relaunching Manulife Financial with a fair value estimate of CAD 27.50 per share after taking a fresh look at it. Our fair value estimate implies that Manulife is slightly undervalued at the current prices. Manulife provides a variety of financial services products, including life insurance, annuities, and investment management products mainly in the U.S., Canada, and Asia. The investment management business of the company has achieved adequate scale and is a source of stable earnings and sustained cash flows. We assign a no-moat rating, a stable moat trend, and a standard capital allocation rating to the company.

Manulife provides a variety of financial services products, including life insurance, annuities, and investment management products mainly in the U.S., Canada, and Asia. The investment management business of the company has achieved adequate scale and is a source of stable earnings and maintained cash flows.

Manulife had a soft third quarter. Core earnings per share were CAD 0.67, down from CAD 0.76 in the year-ago period and below the FactSet consensus estimate of CAD 0.78. Due to Hurricane Ian, Manulife took an elevated charge for its reinsurance business, something similar to what we saw at peer Great-West. We will maintain our no-moat rating and CAD 27 fair value estimate for Manulife.

No-moat Manulife reported a core earnings per share decline of 6% to CAD 0.78 per share in the second quarter, though this finished CAD 0.02 above the FactSet consensus. Insurance results were mixed, while the firm’s wealth and asset management unit saw the impact of lower asset levels and lackluster flows. As we tweak our model, we are reducing our fair value estimate to CAD 27 from CAD 28 to account for asset-based headwinds. We are also reducing the Morningstar Uncertainty Rating to Medium from High on Manulife as we believe a Medium rating more accurately reflects the risk of holding Manulife’s shares.

Manulife, along with Sun Life and Great-West Life, are the Big Three Canadian life insurers. While Manulife has attempted to reposition itself from the global financial crisis, it is still arguably the worst positioned of the three as it generally has the lowest returns on equity. Not only does Manulife pay out the highest percentage of benefits to premiums, but the firm’s asset-management operations don’t generate the pretax margins that Sun Life’s does, while Great-West has a larger retirement record-keeping business via Empower. Returns on equity over the past five years have averaged around 10%, a touch below our estimated cost of equity of 11%.

Manulife, along with Sun Life and Great West Life, are the Big Three Canadian life insurers. While Manulife has attempted to reposition itself from the global financial crisis, it is still arguably the worst positioned of the three as it generally has the lowest returns on equity. Not only does Manulife pay out the highest percentage of benefits to premiums, but the firm’s asset-management operations don’t generate the pretax margins that Sun Life’s does, while Great-West has a larger retirement record-keeping business via Empower. Returns on equity over the past five years have averaged around 10%, a touch below our estimated cost of equity of 11%.

No-moat Manulife Financial reported a challenging start to 2022. Core earnings per share of CAD 0.77 fell below the consensus estimate of CAD 0.82. While rising interest rates are positive, Manulife has greater exposure to Asia compared with its peers, and the Asian market is seeing more COVID-19-related headwinds. In addition, the market downturn will weigh on the firm’s asset-based revenue in its wealth and asset management segment. As a result, we anticipate reducing our fair value estimate in a range of 5%-15%.

Manulife, along with Sun Life and Great West Life, are the Big Three Canadian life insurers. While Manulife has attempted to reposition itself from the global financial crisis, it is still arguably the worst positioned of the three as it generally has the lowest returns on equity. Not only does Manulife pay out the highest percentage of benefits to premiums, but the firm’s asset-management operations don’t generate the pretax margins that Sun Life’s does, while Great-West has a larger retirement record-keeping business via Empower. Returns on equity over the past five years have averaged 10%, a touch below our estimated cost of equity of 11%.

No-moat-rated Manulife reported decent fourth-quarter financial results. Core EPS of CAD 0.84 came in a touch above the FactSet consensus of CAD 0.82. Core earnings grew thanks to increases in the wealth- and asset-management unit, lower corporate expenses, and higher core investment gains. Overall, there was little that would alter our long-term view of the firm, and we will maintain our fair value estimate of CAD 28 per share.

Manulife, along with Sun Life and Great West Life, are the Big Three Canadian life insurers. While Manulife has attempted to reposition itself from the global financial crisis, it is still arguably the worst positioned of the three as it generally has the lowest returns on equity. Not only does Manulife pay out the highest percentage of benefits to premiums, but the firm’s asset-management operations don’t generate the pretax margins that Sun Life’s does, while Great-West has a larger retirement record-keeping business via Empower. Returns on equity over the past five years have averaged 10%, a touch below our estimated cost of equity of 11%. And interest rates at historic lows are going to continue to be a headwind for Manulife.

No-moat-rated Manulife’s third-quarter results were a tad shy of expectations, with core earnings of CAD 0.76 coming in CAD 0.03 below FactSet consensus. Core earnings grew 10%, with the global wealth and asset management the largest contributor to growth. Given market appreciation, we’d expect this unit to perform well. Canada earnings were also strong, with the U.S. and Asia lacking. The firm’s core return on equity during the quarter was 12.0%, an improvement from 11.4% in the year-ago period. Overall, there was little in the firm’s earnings release that would alter our long-term view of the firm, and we will maintain our fair value estimate of CAD 26.

Manulife second quarter was mostly consistent with expectations. Core earnings per share of CAD 0.83 were a touch about the FactSet consensus estimate of CAD 0.79. Core earnings grew 18% with most of the growth driven by the firm’s wealth and asset management, or WAM, business. Given the amount of market appreciation, WAM faced easy comps, in our view. Overall, there was little in the firm’s release of financial results that would alter our long-term view of the firm and we will maintain our no-moat rating and CAD 26 fair value estimate on the firm’s shares.