First Quarter
2024
Financial & Operating Results
May 9, 2024
Caution regarding forward-looking statements
From time to time, Manulife makes written and/or oral forward-looking statements, including in this presentation. In addition, our representatives may make forward-looking statements orally to analysts, investors, the media and others. All such statements are made pursuant to the "safe harbour" provisions of Canadian provincial securities laws and the U.S. Private Securities Litigation Reform Act of 1995.
The forward-looking statements in this document include, but are not limited to, statements with respect to the capital release associated with certain reinsurance transactions, possible share buybacks under our normal course issuer bid, the Company's strategic priorities and targets for its highest potential businesses, net promoter score, straight-through- processing, ongoing expense efficiency, portfolio optimization, employee engagement, expected long-term returns on alternative long-duration assets (ALDA), its medium-term financial and operating targets and also relate to, among other things, our objectives, goals, strategies, intentions, plans, beliefs, expectations and estimates, and can generally be identified by the use of words such as "may", "will", "could", "should", "would", "likely", "suspect", "outlook", "expect", "intend", "estimate", "anticipate", "believe", "plan", "forecast", "objective", "seek", "aim", "continue", "goal", "restore", "embark" and "endeavour" (or the negative thereof) and words and expressions of similar import, and include statements concerning possible or assumed future results. 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 and they should not be interpreted as confirming market or analysts' expectations in any way.
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 results to differ materially from expectations include but are not limited to: general business and economic conditions (including but not limited to the performance, volatility and correlation of equity markets, interest rates, credit and swap spreads, inflation rates, currency rates, investment losses and defaults, market liquidity and creditworthiness of guarantors, reinsurers and counterparties); the ongoing prevalence of COVID-19, including any variants, as well as actions that have been, or may be taken by governmental authorities in response to COVID-19, including the impact of any variants; changes in laws and regulations; changes in accounting standards applicable in any of the territories in which we operate; changes in regulatory capital requirements; our ability to obtain premium rate increases on in-force policies; our ability to execute strategic plans and changes to strategic plans; downgrades in our financial strength or credit ratings; our ability to maintain our reputation; impairments of goodwill or intangible assets or the establishment of provisions against future tax assets; the amount of contractual service margin recognized for service provided; the accuracy of estimates relating to morbidity, mortality and policyholder behaviour; the accuracy of other estimates used in applying accounting policies, actuarial methods and embedded value methods; our ability to implement effective hedging strategies and unforeseen consequences arising from such strategies; our ability to source appropriate assets to back our long-dated liabilities; level of competition and
consolidation; our ability to market and distribute products through current and future distribution channels; unforeseen liabilities or asset impairments arising from acquisitions and dispositions of businesses; the realization of losses arising from the sale of investments classified as fair value through other comprehensive income; our liquidity, including the availability of financing to satisfy existing financial liabilities on expected maturity dates when required; obligations to pledge additional collateral; the availability of letters of credit to provide capital management flexibility; accuracy of information received from counterparties and the ability of counterparties to meet their obligations; the availability, affordability and adequacy of reinsurance; legal and regulatory proceedings, including tax audits, tax litigation or similar proceedings; our ability to adapt products and services to the changing market; our ability to attract and retain key executives, employees and agents; the appropriate use and interpretation of complex models or deficiencies in models used; political, legal, operational and other risks associated with our non-North American operations; geopolitical uncertainty, including international conflicts, acquisitions or divestitures, and our ability to complete transactions; environmental concerns, including climate change; our ability to protect our intellectual property and exposure to claims of infringement; and our inability to withdraw cash from subsidiaries; 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; and the timing to close the reinsurance transactions described in this document
Additional information about material risk factors that could cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements may be found in our in our 2023 Management's Discussion and Analysis under "Risk Management and Risk Factors" and "Critical Actuarial and Accounting Policies", and in the "Risk Management" note to the Consolidated Financial Statements 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 presentation are, unless otherwise indicated, stated as of the date hereof and are presented for the purpose of assisting investors and others in understanding our financial position and results of operations, our future operations, as well as our objectives and strategic priorities, and may not be appropriate for other purposes. We do not undertake to update any forward-looking statements, except as required by law.
2
Conference call participants
Roy Gori, | Paul Lorentz |
President & Chief Executive Officer. | President & CEO, Global Wealth and Asset Management |
Marc Costantini | Colin Simpson |
Global Head of Inforce Management | Chief Financial Officer |
Steve Finch | Brooks Tingle |
Chief Actuary | President & CEO, John Hancock |
Scott Hartz | Halina von dem Hagen |
Chief Investment Officer | Chief Risk Officer |
Naveed Irshad | Phil Witherington |
President & CEO, Manulife Canada | President & CEO, Manulife Asia |
3
Agenda
Overview and strategic update
Roy Gori, President & Chief Executive Officer
Financial and operating results
Colin Simpson, Chief Financial Officer
Question & Answer session
4
Overview and strategic update
Roy Gori
President & Chief Executive Officer
5
Delivered superior results in 1Q24
Growth
APE sales1
▲21%
New business CSM1,2
▲52%
New business value1
▲34%
Global WAM net flows
$6.7B
Profitability
Core EPS1
▲20%
EPS excl. GA Reinsurance
Transaction1EPS1
▲21% ▼38%
Core ROE3
16.7%
ROE excl. GA Reinsurance
Transaction3ROE
15.5% 8.0%
Balance Sheet
Adjusted book value per share
▲11%
Book value per share
▲5%
Financial leverage ratio3
24.3%
MLI's LICAT ratio4
138%
6 Note: See "Caution regarding forward-looking statements" above. All changes reflect 1Q24 results compared with 1Q23 results. All footnotes are on slide 39.
Executed the largest Universal Life reinsurance deal in Canada
Attractive deal multiples | Milestone reinsurance transaction3 |
16.2x
1.0x
Earnings multiple1
Book value multiple2
- Reinsuring $5.6 billion of reserves4 of low ROE Canadian Universal Life block
- Full risk transfer with RGA5, a highly-rated global reinsurer
- Reducing $0.6 billion of ALDA
Delivers significant value for shareholders
Capital release | | Accretive: 0.14pps to core ROE6 and $0.01 to core EPS6, as well as 0.16pps to ROE6 and |
$0.02 to EPS6, with attractive deal multiples | ||
$0.8B | ||
| Released capital to be returned to shareholders via share buybacks | |
Note: See "Caution regarding forward-looking statements" above. All data as of December 31, 2023, unless otherwise noted. All figures and estimates based on exchange rate of US$1.00 to C$1.3186. We expect to recognize in net income $0.3 billion of
7 unrealized losses on assets currently recorded in OCI, with no associated impact to book value or LICAT capital, in 2Q24 results. This is up from $0.1 billion estimated at the time of the announcement due to market movements from December 31, 2023 to March 31, 2024. All footnotes are on slide 39.
Focused on driving ROE expansion
Growing new business value
34%
1Q24 new business value growth1
Returning cash to shareholders
$4.1 billion
Growing core earnings
16%
1Q24 core earnings growth1
Deploying capital to our highest potential
businesses
CQS
Increasing contribution from high return businesses
67%
1Q24 core earnings contribution from highest potential businesses, up from 60% in 1Q23
Share buybacks
$2 billion
Cumulative capital returned to | Closed bolt-on acquisition of the |
shareholders via common share | London-basedmulti-sector alternative |
dividends and buybacks since 1Q23 | credit manager on April 3, 2024 |
Expected capital release from recent reinsurance transactions2
8 Note: See "Caution regarding forward-looking statements" above. All footnotes are on slide 39.
Financial and operating results
Colin Simpson
Chief Financial Officer
9
New business momentum continued
APE Sales1 | New business value1 | ||||||||
(C$ millions) | U.S. | Canada | Asia | (C$ millions) | U.S. | Canada | Asia | ||
Growth
+21%
1,883
+34%
1,600
293
134
450
152
509
45
669
157 | 49 |
92
1,173
1,281
372
463 |
1Q231Q24
1Q231Q24
New business CSM1,2 | Global WAM net flows | |||||||
(C$ millions) | U.S. | Canada | Asia | (C$ billions) | Retirement | Retail | Institutional |
+52%
658
97
442 | 70 | |
6.7 | |
4.4 | 3.2 |
95
46
301
491
1.2 | |
0.8 | 1.7 |
2.5 | 1.8 |
1Q231Q24
1Q23 | 1Q24 |
10 All footnotes are on slide 39.
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Manulife Financial Corporation published this content on 08 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 May 2024 21:43:50 UTC.