Based on yesterday’s stock prices, Manulife boasts a market value of $51.4 billion, compared AIG’s $50.5 billion. While Manulife has declined 11 percent this year, it’s no comparison to AIG’s 68 percent plummet. AIG reached it lowest price since 1995, making int the year’s worst performer in the Dow Jones Industrial Average.
Said Ian Nakamoto, research director at MacDougall, MacDougall and MacTier Inc. in Toronto, which manages about $4.5 billion including Manulife shares,“We've never had a financial institution in Canada, to my knowledge, being the largest market cap.”
AIG has seen a $97.4 billion loss in market value in 2008 as bad bets on U.S. subprime mortgages led to more than $18 billion in total net losses in the past three quarters. In contrast, Manulife has avoided debt writedowns. AIG sold swaps to protect investors from losses in fixed- income holdings. The contracts issued by its financial products unit guaranteed $441 billion of assets as of June 30, including $57.8 billion in securities tied to subprime mortgages.
In contrast, Manulife has climbed 72 percent over the past five years. The insurer has also been helped by Canadian currency, which has gained approximately 34 percent over the past five years against the U.S. dollar. That gain increases the company's value in U.S.-dollar terms.
AIG hired Robert Willumstad as chief executive officer in June, replacing Martin Sullivan after record losses. Willumstad is conducting a review of AIG's businesses to improve performance and consider possible asset sales. A turnaround plan will be announced Sept. 25, he said. AIG has units that originate, insure and invest in mortgages. Willumstad recently said he "would not consider any major acquisitions at this time."
In contrast, Manulife is seeking to be an acquirer, bringing insurers, banks or money managers into the fold, said CEO Dominic D'Alessandro. D'Alessandro, at the helm of Manulife for more than 15 years, orchestrated the largest takeover by a Canadian finance firm with the $13.9 billion purchase of Boston-based John Hancock Financial Services Inc. in 2004.
Said D'Allessandro, "In troubled times, opportunities arise. We haven't been hurt by many of the problems and we're extraordinarily liquid.”
The acquisition of Hancock doubled the size of Manulife's U.S. operations, making it the largest seller of group long-term insurance products at the time. U.S. insurance and asset- management earnings accounted for about 40 percent of Manulife's profit at the end of the first quarter.
Manulife competes with AIG in selling life insurance and annuities in the U.S. and overseas. AIG was ranked first by U.S. life insurance premiums in 2006 with $44.8 billion, while Manulife's John Hancock was No. 5 with $27.1 billion, according to the National Association of Insurance Commissioners. John Hancock was the third-largest underwriter of U.S. group annuities in 2006, while AIG was No. 6.