Manulife announces Normal Course Issuer Bid

Rhea-AI Summary

Manulife Financial Corporation (MFC) has received approval for a normal course issuer bid to repurchase up to 50 million common shares, aiming to maintain healthy regulatory capital ratios and enhance shareholder value. The bid allows purchases on the TSX, NYSE, and alternative trading systems in Canada and the US, with repurchases subject to compliance with securities laws. Manulife may also acquire shares through private agreements and derivative-based programs, not exceeding 50 million shares in total.

Insights

Financial Analyst

An NCIB is a corporate finance strategy that allows a company to repurchase its shares from the open market, an indication that the company believes its shares are undervalued or that it seeks to return capital to shareholders. In the case of Manulife Financial Corporation, the authorization to buy back up to 50 million shares, representing 2.8% of its outstanding shares, could potentially lead to an increase in the stock's value due to the reduction in supply. This might be perceived positively by investors as it often leads to an increase in earnings per share (EPS), assuming net income remains constant.

However, the market's reaction to such announcements can vary. Share buybacks can be funded through existing cash reserves, debt, or future cash flows. If the market perceives that the company is not investing in growth or that the repurchase is financed through substantial debt, the reaction could be less favorable. The timing and volume of the share repurchases, as well as the company's ability to maintain healthy regulatory capital ratios while executing the buyback, will be key factors to watch.

Market Research Analyst

Manulife's decision to engage in an NCIB and the establishment of an automatic share repurchase plan suggests a strategic approach to managing market perceptions and regulatory constraints. The repurchase plan is structured to allow for buying shares even during internal trading blackout periods, which could help in stabilizing the stock price or providing liquidity in the market. However, it is essential to consider how such repurchases align with the company's long-term strategic goals and whether they provide a better return on investment compared to alternative uses of capital, such as acquisitions or research and development.

Furthermore, the market's interpretation of such buybacks could be influenced by the overall sentiment towards the financial sector and the company's performance metrics relative to its peers. The impact on diluted EPS and core EPS is also a critical factor, particularly if the repurchase is intended to offset the effects of dilutive transactions such as the mentioned reinsurance transaction.

Legal Expert

Manulife's NCIB is subject to regulatory compliance, including adherence to Canadian securities laws and U.S. federal securities laws. The potential for private purchases of shares outside the open market at a discount introduces complexity to the process, as these transactions must comply with issuer bid exemption orders. Additionally, the use of derivative-based programs and other methods of share acquisition requires careful navigation of securities laws to avoid regulatory infractions.

The company's ability to execute the NCIB without legal complications will depend on its adherence to the regulatory framework, which includes restrictions on the volume of shares purchased daily and the requirement for transactions to occur at market prices or permissible discounts. Investors should be aware that regulatory scrutiny of share buybacks has been increasing and any missteps could result in legal challenges or penalties.

C$ unless otherwise stated                             TSX/NYSE/PSE: MFC     SEHK: 945

TORONTO, Feb. 20, 2024 /PRNewswire/ - Manulife Financial Corporation ("Manulife") announced today that it has received approval from the Toronto Stock Exchange ("TSX") for its previously announced normal course issuer bid ("NCIB") permitting the purchase for cancellation of up to 50 million of its common shares, representing approximately 2.8% of Manulife's issued and outstanding common shares. As at February 12, 2024 Manulife had 1,806,733,528 common shares issued and outstanding. The Office of the Superintendent of Financial Institutions Canada previously approved the NCIB. Under the NCIB, Manulife may purchase up to 1,521,140 of its common shares on the TSX during any trading day, which represents 25% of the average daily trading volume of 6,084,560 common shares on the TSX for the six months ended January 31, 2024, subject to TSX rules permitting block purchases. Purchases under the NCIB may commence through the TSX on February 23, 2024 and continue until February 22, 2025, when the NCIB expires, or such earlier date as Manulife completes its purchases.

Having an NCIB in place will provide Manulife with the flexibility to purchase common shares as part of its capital management strategy which is designed to maintain healthy regulatory capital ratios while balancing the objective of generating shareholder value.  In addition, Manulife intends to repurchase shares in order to mitigate the impact on diluted Earnings Per Share and core Earnings Per Share from a previously announced reinsurance transaction that is expected to close by the end of February 2024.

Purchases under the NCIB may be made through the facilities of the TSX, the New York Stock Exchange, and alternative trading systems in Canada and the United States at market prices prevailing at the time of purchase or such other price as may be permitted. All common shares acquired by Manulife under the NCIB will be cancelled. Repurchases will be subject to compliance with applicable Canadian securities laws and United States federal securities laws.

In addition, Manulife may undertake repurchases of its common shares outside of Canada and the United States in compliance with applicable laws. Subject to regulatory approval, Manulife may also acquire common shares directly from other holders by way of private agreement pursuant to issuer bid exemption orders issued by applicable securities regulatory authorities. Any private purchase made under an exemption order issued by a securities regulatory authority will generally be at a discount to the prevailing market price. Manulife may also enter into derivative-based programs in support of its repurchase activities, including the writing of put options and forward purchase agreements, accelerated share repurchase transactions, other equity contracts or use other methods of acquiring shares, in each case subject to regulatory approval and on such terms and at such times as shall be permitted by applicable securities laws. The total number of common shares repurchased under the NCIB and all other potential arrangements will not exceed 50 million common shares.

Manulife has entered into an automatic share repurchase plan under which its designated broker will repurchase Manulife's common shares pursuant to the NCIB. The actual number of common shares purchased under the automatic plan, the timing of such purchases and the price at which common shares are purchased will depend upon future market conditions. The automatic plan, which was pre-cleared by the TSX, provides for the potential repurchase of common shares at any time, including when Manulife ordinarily would not be active in the market due to its own internal trading blackout periods, insider trading rules, or otherwise.

Caution regarding forward-looking statements

This document contains forward-looking statements within the meaning of the "safe harbour" provisions of Canadian provincial securities laws and the U.S. Private Securities Litigation Reform Act of 1995 with respect to possible future purchases by Manulife of its common shares. Although we believe that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. Important factors that could cause actual common share repurchases to differ materially from expectations include but are not limited to the fact that the amount and timing of any future common share repurchases will depend on the earnings, cash requirements and financial condition of Manulife, market conditions, capital requirements (including under LICAT capital standards), common share issuance requirements, applicable law and regulations (including Canadian and U.S. securities laws and Canadian insurance company regulations), and other factors deemed relevant by Manulife, and may be subject to regulatory approval or conditions.

Additional information about material risk factors that could cause actual results to differ materially from expectations may be found in our most recent annual and interim reports and elsewhere in our filings with Canadian and U.S. securities regulators.

The forward-looking statements in this document are, unless otherwise indicated, stated as of the date hereof. We do not undertake to update any forward-looking statements, except as required by law.

About Manulife

Manulife Financial Corporation is a leading international financial services provider, helping people make their decisions easier and lives better. With our global headquarters in Toronto, Canada, we provide financial advice and insurance, operating as Manulife across Canada, Asia, and Europe, and primarily as John Hancock in the United States. Through Manulife Investment Management, the global brand for our Global Wealth and Asset Management segment, we serve individuals, institutions, and retirement plan members worldwide. At the end of 2023, we had more than 38,000 employees, over 98,000 agents, and thousands of distribution partners, serving over 35 million customers. We trade as 'MFC' on the Toronto, New York, and the Philippine stock exchanges, and under '945' in Hong Kong. 

Not all offerings are available in all jurisdictions. For additional information, please visit manulife.com.

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SOURCE Manulife Financial Corporation

FAQ

What is the purpose of Manulife's normal course issuer bid (NCIB)?

Manulife's NCIB aims to repurchase up to 50 million common shares to maintain healthy regulatory capital ratios and enhance shareholder value.

Where can Manulife repurchase its common shares under the NCIB?

Manulife can repurchase its common shares on the TSX, NYSE, and alternative trading systems in Canada and the US.

What are the conditions for repurchases under the NCIB?

Repurchases under the NCIB are subject to compliance with applicable Canadian and US securities laws.

How many common shares can Manulife repurchase under the NCIB?

Manulife can repurchase up to 50 million common shares under the NCIB.

Can Manulife acquire shares through private agreements?

Yes, subject to regulatory approval, Manulife may acquire common shares directly from other holders through private agreements.