The Globe and Mail reports in its Saturday edition that Canaccord Genuity analyst Scott Chan, previewing first quarter earnings season for Canadian insurance companies, now projects a 19-per-cent decline in core earnings per share from the fourth quarter of 2019. The Globe's David Leeder writes that as a result, Mr. Chan dropped his full-year 2020 and 2021 EPS forecast by about 18 per cent and 16 per cent. He says in a note: "We made a number of adjustments to our model amidst COVID-19 that mainly reflects: (1) AUM/AUA declines mainly reflecting equity markets; (2) lower net flows and insurance sales forecast (impacting NBV); (3) further interest rate decreases (e.g. impact on strain, earnings on surplus); (4) credit (e.g. Oil & gas, UK property); (5) investment experience; and (6) removal of dividend growth and NCIB programs. A lower [Canadian dollar] in Q1 provides a modest offset. On the positive side, we estimate LICAT ratios benefiting quarter-over-quarter; particularly for [Manulife Financial] which remains our top pick in the sector." Accordingly, with an unchanged "buy" rating, Mr. Chan cut his share target for Manulife Financial to $24 from $33. Analysts on average target the shares at $24.20.
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