Manulife Financial Corporation · TSX:MFC
Manulife Financial — Investor Day (June 2024)
29 slides from Manulife Financial's investor day presentation, Jun 26, 2024
Slide 1: Transformed Foundation; Unique Platform for Growth
Transformed Foundation; Unique Platform for Growth Investor Day 2024: U.S. Brooks Tingle President & CEO, John Hancock June 26, 2024
Slide 2: Transformation of the U.S. segment
Transformation of the U.S. segment 2
Slide 3: Looking back: Top takeaways
Looking back: • Strong contributor to Manulife remittances, core earnings, and profitable growth Top takeaways • Core ROE1 increase of 8% to 16% through management actions from 2017 to 2023 • Dramatically improved the profitability of new business through strategic choices • Behavioural insurance is
Slide 4: Operating in the most attractive and highest growth segments of the market
Operating in the most John Hancock’s U.S. life insurance market1 diversified portfolio (2017-2023 CAGR by product) attractive and highest (2023, % of APE sales) growth segments of the market Total 3% Small JH Strong JH Accumulation Presence Presence Variable Universal Life Accumulation-oriented prod
Slide 5: Solid contributor to Manulife remittances, core earnings, and profitable growth
Solid contributor to New business value2 (US$ millions) Core earnings3 (US$ millions) APE sales2 (US$ millions) Manulife remittances, core earnings, and +20% +15% profitable growth 153 416 1,304 362 1,087 Reliable and consistent delivery of remittances: $9B Cumulative remittances1 2017 - 2023 (36) 2
Slide 6: Strong return on equity growth driven by management actions
Strong return on equity growth driven by management actions Core ROE1 (%) Completed a series of inorganic transactions to +8 pps free up capital 16 Executed several expense reduction initiatives to dramatically improve operating efficiency Strengthened the profitability of new 8 business to enable d
Slide 7: Excellent track record of improving the financial profile of legacy businesses
Excellent track record of improving the financial profile of legacy businesses Notable activity Reinsurance of NY payout Annuity Guaranteed Reinsurance of annuities & two universal Reinsurance Minimum Withdrawal Reinsurance of Reinsurance of LTC & payout annuities life blocks of U.S. BOLI Benefit of
Slide 8: Disciplined cost management dramatically improved expense efficiency
Disciplined cost Core expenses1 Inforce operations cost per inforce (US$ millions) policy2 management (US$ millions) Expense efficiency ratio1 dramatically improved Core expenses 61 -21% 48 expense efficiency 34.6% Peers’ median John Hancock 32.5% Targeted Actions Sales support cost per new • Operat
Slide 9: Transformed new business to be significantly more profitable than peers
Transformed new business to be significantly more profitable than peers New business value Lifetime return on capital (“LROC”) Capital payback year (“CPY”) (US$ millions) (%) (Years) NBV Margin (NBV / APE) +15 pps -12 years >20 >15 NBV 37% 27% 22% 24% 153 20% 119 126 10% 9% Industry 93 average1 77 5
Slide 10: Behavioural insurance rewards customers for longevity-boosting activities
Behavioural insurance rewards customers for longevity-boosting activities John Hancock’s Vitality Program Physical Activity Premium savings1 Platinum –and– Nutrition 10,000 pts Rewards Preventive Care Smoking Cessation Gold 7,000 pts Early Mental Health Detection & Premium Preventative Meditation &
Slide 11: Behavioural insurance is the engine driving our competitive edge
Behavioural insurance is the engine driving our competitive edge Near-term: Incremental sales1 Long-term: Improved mortality2 Customers take steps to live longer, healthier, better lives • 89% of buyers prefer JH Vitality over • Positive selection and healthier traditional life Insurance persistency
Slide 12: Looking back: Summary
Looking back: • Strong return on equity growth driven by management actions Summary • Excellent track record of improving the financial profile of legacy businesses • Disciplined cost management dramatically improved expense efficiency • Transformed new business to be significantly more profitable t
Slide 13: Further legacy transformation & drive profitable growth
Further legacy transformation & drive profitable growth 13
Slide 14: Looking ahead: Top takeaways
Looking ahead: • Further improve core ROE with continued Top takeaways focus on growth and transformation • Persistent focus on both organic and inorganic actions for inforce businesses • Creating a fully digital customer experience • Well-positioned for profitable growth with innovative capabilitie
Slide 15: Continued focus on growth and transformation to further improve core ROE
Continued focus on growth and transformation to further improve core ROE Continue active Core ROE1 management of legacy (%) +0.10-0.40 blocks, including (pps) organic LTC Legacy and inforce improvement to actions complement inorganic 17 activities 16 +0.05-0.25 Create a fully digital (pps) Digital,
Slide 16: Persistent focus on both organic and inorganic actions
Legacy & inforce Persistent focus on both organic and inorganic actions • Leverage advanced analytics to eliminate claims fraud, waste and abuse • Actively manage persistency through targeted conservation efforts • Expand buyouts and exchange programs • Develop LTC preferred provider networks • Leve
Slide 17: Create a fully digital customer experience
Digital, customer leadership Create a fully digital Straight-through- Digital sales Digital servicing Customers processing adoption adoption digitally active customer (%) (%) (%) (%) experience +17 pps +52 pps Invest in digital capabilities to win as the competitive landscape evolves +39 pps 80 81 E
Slide 18: Demand is expected to increase for our target segments
Profitable growth Demand is expected to increase for our target segments Over 100 million US$84 trillion of assets to Anticipated U.S. tax reform is Americans with unmet be transferred from the Baby expected to increase demand life insurance needs1 Boomer generation2 for estate planning products3 18
Slide 19: Well positioned with winning, innovative capabilities
Profitable growth Well positioned with winning, innovative capabilities Brand and financial strength New business value Marry the best of 160+ year history with the leading- 5-10% (US$ millions) edge of innovation Annual sales growth vs. 1-3% typical industry growth1 +36% Highly differentiated produ
Slide 20: Ecosystem of partners enables unmatched value proposition
Profitable growth Ecosystem of partners enables unmatched value proposition Behavioural insurance enabled a unique ecosystem of Exciting new partnerships underway to further enhance partners that are part of our competitive edge: our differentiated value proposition: Vitality Rewards for healthy cho
Slide 21: Looking ahead: Summary
Looking ahead: • Strong contributor to Manulife remittances, core earnings, and profitable growth Summary • Achieved core ROE improvement through management actions • Dramatically improved the profitability of new business • Persistent focus on both organic and inorganic actions for our inforce busi
Slide 22: Manulife: Raising the Bar
‘'' Manulife Raising the Bar
Slide 23: Appendix
Appendix • Footnotes • Caution regarding forward-looking statements • Non-GAAP and other financial measures 23
Slide 24: Footnotes
Footnotes Slide Footnote All 2017–2022 financials are under IFRS 4 methodology and exclude International High Net Worth, unless otherwise noted. 3 1 U.S. core return on common shareholders’ equity (“core ROE”) is a non-GAAP financial ratio (2017 and 2023 Manulife ROE are 5.0% and 11.9%, respectively
Slide 25: Footnotes
Footnotes Slide Footnote 1 89% preferred and 70% more likely to buy metrics from Nationwide survey conducted by Qualtrics on behalf of John Hancock. Interviews were completed in July 2017 among 1,052 U.S. adults ages 25 and above. The data were weighted by gender and income to accurately represent t
Slide 26: Caution regarding forward-looking statements
Caution regarding forward-looking statements and actual results may differ materially from those expressed or implied in such statements. Important factors and adequacy of reinsurance; legal and regulatory proceedings, including tax audits, tax litigation or similar proceedings; our ability that cou
Slide 27: Non-GAAP and other financial measures
Non-GAAP and other financial measures US Manulife prepares its Consolidated Financial Statements in accordance Core ROE for operating segments with International Financial Reporting Standards (“IFRS”) as issued by Core ROE for Manulife’s operating segments is a non-GAAP ratio which the International
Slide 28: Reconciliation: U.S. core earnings
Reconciliation: U.S. core earnings 2017 ($ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting Global Corporate Asia Canada U.S. Total period, unless otherwise stated) WAM and Other Core earnings (post-tax) 1,453 1,209 1,609 816 (522) 4,565 CER adjustm
Slide 29: Reconciliation: U.S. expenses
Reconciliation: U.S. expenses (C$ millions, and based on actual foreign exchange rates in effect in the (C$ millions, and based on actual foreign exchange rates in effect in the 2022 2017 2023 2022 applicable reporting period, unless otherwise stated) applicable reporting period, unless otherwise st