Manulife Financial Corporation: Stock study guide

Shareowner, Mar/Apr 2003

Manulife (TSX, NYSE:MFC) operates principally in Canada and the U.S., although significant revenues originate in 13 other countries including the U.K., Ireland and Asia. Some 8.5 million people from around the world do business with the company.

Manulife's focus for growing its insurance business is new product offerings developed through internal initiatives or through acquisitions. In Canada, new strategic alliances have expanded distribution channels; and, acquisitions of Commercial Union and Zurich Canada have also added new products like group life and health, critical illness and long-term care insurance. A 'hostile' offer has recently been made for Canada Life.

Wealth management is the company's second most important activity and accounts for some $150 billion in assets under management.

Acquisitions and joint ventures are driving growth in Japan, China and other Asian countries where Manulife operates with an exclusive sales force. Weakening economies in Asia are restraining growth.

Recently, Manulife launched a 'hostile' takeover bid for Canada Life.

Great-West (TSX:GWO) sells life and health insurance, financial services and reinsurance products primarily in Canada and the United States.

In Canada, over 9 million individuals, families and businesses use the company's financial services and benefit plans. Products are sold through a network of in-house security advisors (e.g. Great-West, Investors Group, Freedom 55(TM)); brokers; and, marketing agreements with financial institutions. Similar marketing channels are used to sell in the U.S., where more than S million customers use the company's managed health care, life and disability insurance, and, pension plans.

Growth is generated internally and through new products, distribution channels and acquisitions. Great-West was the first insurer in Canada to offer Internet-based group benefits services (1966) and continues to expand this functionality as part of its growth strategy. Recently, this Internet service has been extended to individuals and families without access to an employer-sponsored plan.

Great-West is a member of the Power Financial Group of companies.

Recently, Great-West launched a 'friendly' takeover bid for Canada Life.

Sun Life Financial (TSX, NYSE, PSE:SLF) operates in two principal business segments: "wealth management" and "protection".

Wealth management (mutual funds, investment management, annuities, trust and banking) represents some 54% of revenues. Over 75% of these revenues are derived from U.S. operations, 15% from Canada with the balance principally from the U.K. and the Philippines. Protection (life and health insurance) represents 44% of revenues. About 40% of theses revenues are from the U.S. and 35% from Canada.

Earnings from protection are considered relatively stable while those from wealth management are expected to capture growth from the aging population of baby boomers in North America.

New product development, organic growth and acquisitions are principal drivers of growth. Recent acquisitions include Clarica Life in Canada and Keyport Life in the United States.

In the longer term, Sun Life Financial looks for significant growth from sales to the emerging middle class in Asia. For example, mutual funds and life insurance are now sold through its partner in India - the second largest population in the world and only the 20th largest life insurance market. Other partnerships include China.

American International (NYSE:AIG) is the largest insurance company in the world with over US $175 billion in capital. It is also the largest underwriter of commercial and industrial insurance in the U.S. and the second largest life insurance organization. The company has a business relationship with over 15 million consumers in the United States. AIG also operates in some 130 foreign countries including Japan, China and India.

The terrorist attacks on September 11th 2001 generated sizeable claims from policy owners and wiped out an estimated $50 billion in industry capital. Subsequently, AIG introduced a number of new products designed to meet the new needs by airlines and others for more and better coverage against terrorism, violence and sabotage. In addition, more life and general insurance is being sold with firmer pricing following September 11th.

AIG grows through internal expansion and acquisitions both at home and around the world. In 2001 the company acquired American General Corporation for almost $23 billion in AIG stock.

AFLAC (NYSE:AFL) is a leading provider of supplemental health and life insurance in the two largest insurance markets in the world; namely, the U.S. and Japan. AFLAC is the world's largest underwriter of supplemental cancer insurance.

Some 75% of revenues and earnings are attributed to operations in Japan where the company insures about one in every four Japanese workers. The relatively weak economic performance in Japan and the weakening U.S. dollar have slowed recent revenue growth while earnings growth has remained steady.