Manulife Financial Bears Watching

[Excerpted from Bill Cara's Daily Report]

Fitch Ratings affirms “AA” on Manulife Financial (MFC), but drops the outlook to negative. Manulife is a Canadian life insurer that, under strong management, a solid balance sheet and rapid growth, became a Cara 100 company. But 2008 has proved a challenge to many of the best quality companies in the world, including this one.

Like Citigroup (C), Manulife shares have been dumped in the market. Over 4 weeks, C is down -28.3% and MFC down -22.6%, and over 13 weeks (i.e., quarter year), C dropped -58.3% and MFC -52.1%. The MFC bears watching.

In an outstanding piece of business writing by the Globe & Mail’s Tara Perkins, Manulife’s soon-to-retire long-time CEO Dominic D’Alessandro acknowledged the company’s dire straits. The quality of the writing and of the CEO she interviewed, and the explanation of what happened, are such that all traders ought to read this article.