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Manulife Financial Eyes Growth Despite Low Interest Rates


Trades from $3

On Oct 5, 2016, we issued an updated research report on Manulife Financial Corporation (MFC - Analyst Report) .

Manulife Financial’s impressive inorganic growth story is supported by its prudent acquisitions.
The life insurer remains focused on improving earnings in the second half of the year. In fact, it aims a minimum of C$4 billion in core earnings in 2016.

Manulife Financial’s deep reach in the Asian market and a growing asset management business are expected to drive long-term earnings growth. It also holds a significant market share in Canada. Notably, the Standard Life Overseas Holdings takeover further solidified its foothold in the region.

Further, Manulife Financial has been making efforts to ramp up its growth profile through distribution agreement and partnerships, which in turn will pave way for long-term growth.

Also, the company enhanced its investment research efficiency by forming an alliance between its Lab of Forward Thinking (“LOFT”) and indico data solutions as part of its strategy to leverage world-class products. The collaboration will enable Manulife Financial to speed up business adoption of innovative technologies such as Artificial Intelligence (AI), blockchain and virtual reality.

Notably, the Zacks Consensus Estimate has been witnessing upward revisions for both 2016 and 2017, over the last 60 days. Over the same time period, estimates increased 2.2% and 3.2% for 2016 and 2017, respectively.

However, core earnings in the company’s U.S. division have been declining, primarily due to unfavorable policyholder experience. Given the exposure to a low interest rate environment and stiff competition, the company expects earnings from this division to remain under pressure in the future.

Moreover, volatile global equity markets and low bond yields have largely affected the company’s capital position.

Currently, Manulife Financial carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks from the same space are Health Insurance Innovations, Inc. (HIIQ - Snapshot Report) , Genworth Financial, Inc. (GNW - Analyst Report) and Primerica, Inc. (PRI - Snapshot Report) .

Health Insurance Innovations, a life insurer, saw the Zacks Consensus Estimate increasing 48.8% and 10.9% for 2016 and 2017, respectively, over the last 60 days. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Genworth Financial, another life insurer, witnessed its Zacks Consensus Estimate increasing 2.4% and 5.9% for 2016 and 2017, respectively, over the last 60 days. The company holds a Zacks Rank #2 (Buy).

Primerica, a life insurer, saw its Zacks Consensus Estimate increasing 4% and 2% for 2016 and 2017, respectively, over the last 60 days. The insurer has a Zacks Rank #2.

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