Two companies that have done quite well during the last year or so have been Manulife Financial (TSX:MFC) and Great-West Lifeco (TSX:GWO). The insurance and asset managers continued to climb higher on the back of high interest rates. However, they also saw an increase in the need for insurance and managing assets during downturns.
But which is the better buy? Let’s get into it.
Financial performance
First let’s get into the most recent financial performance of each company. Manulife reported strong financial results for the first quarter of 2024, with core earnings of $1.8 billion, representing a 16% increase from the same period in 2023. The company’s core earnings per share (EPS) rose by 20%, and its core return on equity (ROE) reached 16.7%, up from 14.8% the previous year.
However, net income attributed to shareholders fell to $0.9 billion, a 38% decline, primarily due to the impact of a significant long-term-care reinsurance transaction. Excluding this transaction, net income would have increased to $1.6 billion. Additionally, Manulife’s book value per common share increased by 5%, and its adjusted book value per common share saw an 11% rise.
Meanwhile, Great-West Lifeco reported record base earnings of $1.012 billion for the first quarter of 2024, a 23% increase from the previous year. Net earnings from continuing operations were $1.031 billion, up 68% year over year. The company’s base EPS increased to $1.09, and its ROE from continuing operations was 14.6%, with a base ROE of 17.2%. Great-West Lifeco’s book value per share also grew by 6%. Notably, the company’s Empower segment achieved its highest quarterly base earnings and exceeded US$1.6 trillion in assets under administration.
Growth potential
That’s great for the past, but what about the future? Manulife stock has demonstrated a disciplined focus on execution and strategic growth. The company closed a significant long-term-care reinsurance transaction with Global Atlantic, releasing substantial capital for shareholder returns. Additionally, Manulife entered the largest universal life reinsurance agreement in Canada, further optimizing its portfolio.
The company has made substantial strides in digital leadership, enhancing customer experience and distribution capabilities. Notable initiatives include the M-Pro digital tool in Asia and the artificial intelligence-powered sales enablement tool JHINI in the United States. Manulife also partnered with the Indonesia Investment Authority sovereign wealth fund to raise and manage funds for investment, showcasing its global expansion efforts.
For GWO stock, it has also been focused on strategic actions to reposition and strengthen its portfolio. The company completed the integration of Prudential and achieved cost synergies, contributing to its record base earnings. In Canada, Great-West Lifeco enhanced its information technology operations and integrated Investment Planning Counsel and Value Partners, leading to significant net asset flows.
Furthermore, the company’s Capital and Risk Solutions segment continues to expand its international presence, focusing on core markets and product expansion. Additionally, the sale of Putnam Investments has allowed Great-West Lifeco to build strategic partnerships with leading asset managers, supporting its growth in retirement, group benefits, and personal wealth management.
So, which is it?
Both MFC stock and GWO stock have demonstrated strong financial performance and strategic growth initiatives. However, Great-West Lifeco appears to have a slight edge in terms of earnings growth and strategic execution. The company’s record base earnings, substantial contributions from all segments, and successful integration of acquisitions indicate a robust growth trajectory.
However, Manulife’s solid core earnings growth, substantial new business value, and strategic reinsurance transactions highlight its potential for long-term value generation. The company’s global expansion and digital initiatives also position it well for future growth.
Ultimately, the decision between Manulife and Great-West Lifeco may come down to specific investor preferences regarding growth potential, risk tolerance, and strategic alignment. And with MFC stock holding a 4.47% and GWO stock a 5.68% dividend yield, you can’t really go wrong.
