Ontario, Canada (CU)_ Manulife Financial Corporation has increased the percentage of core revenue which it plans to earn from its rapidly-growing businesses, along with asset management and its Asia operations, where it intends to benefit from the continent’s rapid wealth creation. During the company’s investor day, the chief government officer Roy Gori said that Canada’s largest life insurance company’s aim is to draw 75 percent of the core earnings from its high-potential companies by 2025.
According to the company’s unique goal, these models, which also include behavioural-linked insurance and group benefits, should account for two-thirds of profits by 2022. They accounted for 60% of core earnings in Manulife’s most recent quarterly results. According to Gori, most of the predicted growth will come from Asia, which is expected to account for half of core revenue by 2025, from approximately 41% as of 2020. Gori said, “The low penetration charges on the insurance coverage aspect, and the rising center class clearly imply that we’re going to see many extra folks in embracing insurance coverage as a key manner by which they consider their monetary safety”.
Delivering his speech at Manulife’s Investor Day, Gori stated that if insurance coverage penetration rates, which is the ratio of whole insurance premiums to gross home product, increase to 3% particularly in the Philippines, Indonesia, Vietnam, and China, it could result in an additional US$1 billion (RM4.15 billion) in annual premium-equivalent gross sales. In 2020, total Asian APE gross sales were $2.9 billion.
According to Gori, the gap between the amount of life insurance coverage people seek and have is expected to widen by 55 percent in Asia by 2030, resulting in a potential pool of US$350 billion in yearly premiums. He said that wealth and asset management have a super alternative, considering the rapid growth of web family wealth in Asia, and the fact that a much higher percentage of it is held in money than in North America.
Gori said, “All of those targets don’t incorporate any M&A. If there are alternatives to transact, we’d completely contemplate them. But that’s not our space of focus.” He added that increasing the dividend will be the top priority for Manulife’s additional capital of C$23 billion (RM77 billion). In addition, the company plans to reduce the contribution of its long-term care and variable annuities businesses to less than 15% of core earnings, which is down from 25% in 2020.
