Yahoo Finance Manulife CEO eyes growth despite economic uncertainty, market volatility
One positive of rising interest rates is Manulife will earn a higher rate of return from client deposits
The head of Canada's largest insurance company has his sights set on growth despite a myriad of challenges facing the global economy and the insurance market this year, including an economic slowdown, market volatility stemming from higher interest rates and an ageing population.
"There's a whole heap of uncertainty associated with whether [central banks] will be able to contain inflation, how much they'll need to raise rates to get inflation to come down to their target levels, and whether that will result in a slowdown in GDP, as well as an increase in unemployment," Roy Gori, the chief executive officer of Manulife Financial (MFC.TO) (MFC), told Yahoo Finance Canada in a phone interview.
"So I expect that, certainly for a large part of 2023, for there to continue to be uncertainty and volatility in equity markets and interest rates," he said.
One positive aspect of higher interest rates though is Manulife will earn a higher rate of return from client deposits that are invested, he adds.
It's still unclear whether or not the Bank of Canada is done hiking its benchmark interest rate. Governor Tiff Macklem has said the central bank is on pause, as long as the economy unfolds as it expects, but market data now show the odds of yet another rate hike in the summer are increasing.
Gori says the company's large presence in Asia will help mitigate slower GDP growth in North America.
Manulife reported core earnings in the fourth quarter that beat analyst estimates, thanks to strength in its Canadian business, offsetting weakness in its Asian operations as that market continues to recover from tough COVID-related restrictions.
Historically though, Asia, and its expanding middle class, has been a massive source of earnings growth for Canadian life insurance companies.
"We look at the big mega trends that are shaping the world. The first is the growth of the middle class in Asia. There are about two billion people in the middle class in Asia today, and that's forecast to grow to 3.5 billion by 2030. Sixty per cent of the world's middle class will be in Asia. That trend is very significant," Gori said.
"Given our presence and business in Asia, that's something that we will gain advantage from."
The other demographic trend he's watching is the global ageing population, which will drive both a greater need for retirement savings and related wealth management products, as well as an increase in life insurance payouts.
"We're in an uncertain environment that poses challenges for our industry and others, but it equally presents opportunities, and given our global presence, we actually feel quite optimistic about the opportunities that will come with that," Gori said.
Michelle Zadikian is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @m_zadikian.
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