Manulife Earnings Preview: Asian Markets Again The Main Event

Manulife (NYSE:MFC) is scheduled to announce its first quarter results on Thursday, May 3, and we expect strong results from the Canadian-based financial services group supported by solid performance in the Asian markets. The company has reported consistently strong earnings in the past few years, and we expect this trend to continue. Manulife provides wealth management products and services in 22 countries globally as well as reinsurance services including life retrocession and property and casualty reinsurance. Manulife’s main competitors in the life insurance segment are AIG (NYSE:AIG), MetLife (NYSE:MET), Hartford Financial (NYSE:HIG) and Prudential Financial (NYSE:PRU).

See our full analysis of Manulife here

Increased Penetration in Asian Markets

The company has had presence in the Asian market for over 100 years, and has plans to expand aggressively in this geography, which coincides with a period of economic boom witnessed by the region. Emerging markets such as India are experiencing a period of prosperity, which encourages people to invest in life and health insurance products. Manulife is in collaboration with Kotak Mahindra, as the two seek to promote wealth management offerings in the Indian market.

The company is also expanding its sales force and distribution network in Asia, with its agent manpower growing by 21% last year (See Manulife’s Asian Focused Growth Plans on Track). The Asian operations in insurance and wealth management account for 26% of our price estimate for Manulife’s stock.

Boost in Sales of Retirement Products

The number of people approaching retirement age in the U.S. is rapidly increasing and is expected to grow from 42 million to 65 million by 2025. This provides strong potential sales of annuities, pension plans and other retirement products for insurance companies. Manulife’s premiums from annuities have declined in the recent years due to an unfavorable interest rate environment, but we expect a gradual increase as the generation of baby boomers in the U.S. approaches retirement age. U.S. retirement solutions account for 17% of our price estimate for Manulife.

Recovering Markets in Canada

Manulife has built a strong reputation in Canada as one of the leading insurance companies, but its operations in this region were affected by the economic downturn. However, with a critically acclaimed and widely successful advertisement and marketing campaign in this region, Manulife seeks to regain some of its lost market share. Revenues generated from Canadian operations, which account for 15% of our price estimate, are expected to increase as the country continues with its economic recovery.

We have a price estimate of $13.15 on Manulife’s stock, in-line with the current market price.

Understand how a company’s projects impact its stock price on Trefis