The Asian life insurance and wealth management business is Manulife’s (NYSE:MFC) largest source of value, accounting for about 26% of our stock price estimate. Manulife has been operating in Asia for over 100 years and has built a robust distribution network that includes exclusive agents, independent agents, banks, financial advisers and other alternative channels. This has helped Manulife achieve a 13% growth in sales in 2011 compared to the previous year. Manulife competes with AIG (NYSE:AIG), MetLife (NYSE:MET), Hartford Financial (NYSE:HIG) and Prudential Financial (NYSE:PRU) in the life insurance segment.
Manulife is still expanding its distribution network and sales force in Asia. Its agent manpower grew by 21% in 2011 over 2010, and it posted record sales in Indonesia, the Philippines and Vietnam while Singapore saw solid growth as well. Manulife Philippines posted a 44% increase in insurance sales in 2011 to $33 million as the company opened new branches and launched new products.
The expansion of its agent force has also enabled the company to open five new branches in the Philippines, increasing the number of branch offices to 22 nationwide in 2011. The launch of new insurance products addressing consumers’ specific financial needs like financial protection, education and savings has also boosted sales growth. ((Manulife reported 44% rise in sales in 2011, Business Inquirer, March 8, 2012))
Manulife is laying the foundation necessary for sustainable business growth toward becoming a leading multi-channel, multi-product life insurance company in Asia. We estimate Manulife’s share of Asian life and health insurance market to grow to over 1.1% in the coming years from 0.8% in 2011.
We have a price estimate of $13.15 on Manulife’s stock, about 5% above the current market price.