Seeking Alpha

Canadian lifecos not yet ready for boosted capital returns

  • Canadian life insurance company investors shouldn't yet get their hopes up for dividend hikes or share buybacks, says CIBC's Robert Sedran. "Restoring leverage ratios closer to pre-crisis levels is – and should be – the first priority,” he tells clients.
  • Payout ratios in the years ahead of the financial crisis ranged from about 20%-40% and - even with no dividend hikes - they'll be higher next year.
  • Sedran, however, remains a fan of the sector, seeing improved earnings growth and continued healing in balance sheets moving forward.
  • Manulife (MFC) is rated a Sector Outperform, while Sun Life (SLF), Industrial Alliance (IDLLF.PK), and Great-West (GWLIF.PK) are rated Sector Perform.
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