Manulife Financial (MFC.TO)

Great West Life (GWO-T), Sun Life (SLF-T) or Manulife (MFC-T)? He has quite a bit of exposure to life insurance right now through Manulife and Sun Life, and they both look very attractive. Interest rates are likely going to work their way slowly higher over the next several years. He would also consider Prudential Financial (PRU-N), which looks very attractive. The rate structure in the US is probably more bullish for the insurance companies, than the rate structure in Canada.

Great West Life (GWO-T), Sun Life (SLF-T) or Manulife (MFC-T)? This depends on quality and size, but if you are thinking of just keeping it very safe, Manulife and Sun Life would be the 2 he would zoom in on. The biggest difference between the 2 is their global exposure. This one generates about 30% of its revenue in Asia, which he likes. Asia is becoming wealthier and older very quickly, and this one is well positioned to sell products and services. They’ve also done some key acquisitions which gave them a long list of instant clients. They’ve also transitioned from being an insurance heavy business to more on the wealth management side.

This has been so cheap for so long. It is still cheap and still has great growth, and is still going higher. Doesn’t see why this couldn’t be a $30 name in 12 months.

This has enjoyed a huge rally post the US election, with interest rates showing a steepening yield curve. A good company that, given the right environment can perform well. It will probably take a breather given the run they’ve had. If we get stronger growth, more inflation and higher interest rates, there is a lot more to go. If not, it might be a little ahead of itself.

Canada’s largest life insurance company. They are in Canada, the States and Asia. Rates going higher is an advantage to them. It trades at about 1.1 times book value. The 10% return on equity is not priced properly into the stock. (Analysts’ Target: $24.03)

(Market Call Minute.)

We are going into an environment where lifecos start to look attractive again. You are getting into yield spreads that are okay, better equity markets, better economies. Generally, insurance company environments have improved. Has never been a super fan of this company, because in the past there have been a lot of situations where they have come out with earnings and some surprises. Because of this, he has always favoured Sun Life (SLF-T). However, this company has now come out with some really, really good earnings with no bad surprises. However, the stock reacted in about 3 days and went straight up. He thinks it is now fully discounting the good news and is fully priced. Looking a little pricey at these levels.

This is definitely a beneficiary if bond yields go up. They’ve had some lovely earnings. This is basically a global company that happens to be headquartered in Canada. It will be a beneficiary of rising interest rates. Dividend yield of 3.13%. (Analysts’ price target is $24.03.)

Sun Life (SLF-T) or Manulife (MFC-T)? He decided to get into insurance, because rising rates are beneficial to the insurance business. It is very difficult for them to make money when rates fall, but will be a lot easier as rates go up. Feels there is a better multiple expansion on this one.

One of their key assets is their Asian franchise. The growth numbers in Asia are doing quite well for them. Trading at 11X earnings with a nice dividend yield of over 3%, and close to 1.1X Book. The recent run up in the last little while is because of the yield curve steepening. You have to come to terms with the issue if rates going to stay this high and continue to go up over the next several years? Expects you will get a chance to buy this as he expects it to pull back a little.

All insurance companies are benefiting in a huge way from the steepening yield curve. They have all suffered from this very flat yield curve, so this is a huge boon to them, because they all have huge bond portfolios. This company has done a phenomenal job in the Asian/Pacific region. They have used their free cash flow and profits in Canada, to build up a huge presence out there, which has been very successful for them. This and Sun Life (SLF-T) are the 2 best ways to do this in Canada.

The strength in capital markets getting better and a higher rate environment bodes well for these. Let them digest the moves before getting in. He prefers this one over SLF-T.

This is the 1^st time he has selected a Top Pick, which he just sold. Likes this long-term, but it took off and the RSI is up. He likes the name and would buy it back if it just dropped a couple of dollars lower, which it will when things calm down. Interest rates are moving higher and equity markets are steadying, but more importantly they have really done well with their organic growth and have made a very good series of successful acquisitions. They are in the very fast growing part of the world in terms of the insurance market. Over 40% of their revenues are coming from Asia. Trading very cheaply at about 11X forward earnings. Dividend yield of 3.22%. (Analysts’ price target is $23.76.)

This is looking at core earnings of something close to $2 a share by next year. If the interest rate curve normalizes a little, it is a benefit to lifecos. At the same time, they have improved their core operations. They have better growth internationally compared to Sun Life (SLC-T).

(Or MFC-N in the US.) This gets business from 3 different geographic sectors. Canada represents about a 3^rd of their profits, Asia represents about a 3^rd, and the US represents the other 3^rd. This does mainly life insurance sales in all 3 areas. They have tremendous growth in Asia. The company has tremendous free cash flow yield of over 20%. With interest rates going up, they should be able to deploy their free cash flow at higher rates. Dividend yield of 3.54%. (Analysts’ price target is $23.76.)