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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