Manulife Reaches $13 By Going East… Far East

Manulife (NYSE:MFC) has plans to double its insurance agents in Asia over the next five years to about 100,000 as it targets rising middle class income groups in the region. ^[1] The company saw record sales in Asia during the first quarter of 2012 (See Manulife Delivers In Asia Yet Again) and recently launched a family-centric advertising campaign in the region, focusing on social media platforms such as Facebook (NASDAQ:FB). Manulife has already established a strong base of operations in Asia, with over 115 years of experience in this geography.

See our full analysis of Manulife here

Far East Not So Far Anymore

Asian insurance and wealth management is a major component of Manulife’s operations and accounts for 26% of our price estimate. The company expects its business in this region to grow faster than in traditionally strong markets such as North America, as Asia witnesses a period of economic growth. Asia is expected to account for 85% of the world’s middle class in the next five years, and the company plans to expand aggressively to capitalize on the region’s growth. We expect the Asian life and health insurance premium market to continue to grow over the next few years.

Others’ Loss is Manulife’s Gain

Manulife has earmarked India and Korea as the areas for growth as these regions still remain under-penetrated in the company’s strategy to expand in Asia. Regulatory problems with licenses in Korea pose a minor hindrance as Manulife seeks to enter the market through acquisitions of established insurance firms such as ING.  Manulife is a prime suitor for ING’s Asian operations as competitors Prudential Financial (NYSE:PRU) and MetLife (NYSE:MET) have pulled out of the bidding process. ^[2]

The deal, should it go through, will help Manulife establish a foothold in South East Asia. We expect the company’s investments and innovations in the region to pay off with an increase in the company’s share of Asia life and health insurance market through the Trefis forecast period.

We have a price estimate of $13.15 for Manulife’s stock, about 25% above the current market price.

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

1. Manulife Doubling Asia Agents as Region’s Profit Swells, Bloomberg, Jun 11^th, 2012 [↩]
2. Manulife Said in Second Round of ING Asia Insurance Bidding, Bloomberg, 31^st May, 2012 [↩]