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Manulife says will prioritize organic growth, dividend hikes for C$29 billion excess capital

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Nichola Saminather
·2 min read
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By Nichola Saminather

TORONTO (Reuters) - Canada's top insurer Manulife Financial Corp will prioritize organic growth, dividend increases and share buybacks over acquisitions for its C$29 billion ($22.9 billion) of excess capital, its chief executive said on Thursday.

"We don't need M&A to deliver on our medium-term goals of 10% to 12% core earnings per share growth," CEO Roy Gori said on an analyst call after reporting higher-than-expected fourth-quarter earnings on Wednesday.

"When we do deploy capital, for any M&A, we will do that opportunistically ... when we've got a high degree of confidence that we can execute against that agenda," he added.

Gori, in an interview on Wednesday, said the company expects Asia to account for half of its core earnings from both insurance and wealth and asset management by 2025, up from 41% in 2020.

Smaller rival Sun Life Financial Inc also beat earnings estimates on Wednesday, helped by strong wealth management growth.

The chief executives of both companies said they are optimistic about 2021, thanks to the deployment of coronavirus vaccines and the reopening of economies from prolonged lockdowns in many markets, after a challenging 2020 from which they managed to emerge relatively unscathed.

The two companies paid out a total of C$590 million in coronavirus-related death claims in 2020.

Sun Life executives told analysts on Thursday it was reducing its real estate footprint in Canada and the United States and expects to take a C$40 to C$60 million charge in the first quarter as a result.

Shares of Manulife rose 2.1% to C$25.12 in morning trading in Toronto, while Sun Life shares were up 1.2% at C$62.50. Both were on track for their highest close in nearly a year. The Toronto stock benchmark was down 0.15%.

($1 = 1.2666 Canadian dollars)

(Reporting By Nichola Saminather; Editing by Bill Berkrot)