Manulife Financial Corporation · TSX:MFC
Manulife Financial — Investor Day (June 2024)
32 slides from Manulife Financial's investor day presentation, Jun 25, 2024
Slide 1: Raising the Bar: Investor Day 2024 CFO Presentation
Raising the Bar Investor Day 2024: CFO Presentation Colin Simpson CFO June 25, 2024
Slide 2: Looking back: Top takeaways
Looking back: • Improved returns and delivered Top takeaways superior earnings growth • Strengthened our foundation and capital position • Reshaped portfolio to low risk and high ROE • Built a culture of expense efficiency • Global footprint creates cost and revenue synergies • Unique profile of ear
Slide 3: Delivered superior financial results
Delivered superior financial results 2017 2023 Change Core EPS1 2.22 3.47 ▲ 8% CAGR (C$) Core ROE1 11.3 15.9 ▲ 4.6 pps (%) Expense efficiency ratio1 55.4 45.5 ▼ 9.9 pps (%) Adjusted book value1,2 18.93 32.19 ▲ 9% CAGR (C$ per common share) 3 Note: All footnotes are on slide 24, including the nearest
Slide 4: Achieved significant milestones, strengthening our foundation
Achieved significant milestones, strengthening our foundation Global technology optimization Reinsurance transactions Adoption of IFRS 17 and IFRS 9 • Completed the standardization • Closed the largest-ever LTC • Projected to improve the stability and modernization of operations, reinsurance transac
Slide 5: Built a culture of expense efficiency
Built a culture of expense efficiency Improved expense efficiency1… …supported by higher productivity Total FTE4 Core earnings5 -9.9 pps 55.4% +2% CAGR +7% CAGR 45.5% 40,000 6,684 35,000 4,565 2017 2023 2017 2023 2017 2023 General expense growth improvement: 9% CAGR2 (2011-2016) to 3% CAGR3 (2017-20
Slide 6: $12 billion increase in capital flexibility
$12 billion increase in capital flexibility Capital over supervisory Financial leverage ratio2 target and LICAT ratio1 Supervisory target ratio Upper internal operating (C$ billions) target ratio + 6B capital + 6B capital 129% 137% 30% 24% 100% ~120% 22 16 Excess capital over Excess capital over sup
Slide 7: Diversified high-quality asset mix is a competitive advantage
Diversified high-quality asset mix is a competitive advantage Total invested assets High-quality and diverse asset mix (carrying values as of December 31, 2023) • 96% of bonds are investment grade; 71% rated A or Fixed income & other higher Public equities Alternative Long-Duration Assets (“ALDA”) •
Slide 8: Attractive cash generation profile
Attractive cash generation profile Generated $27 billion of remittances since 2017 Returned $21 billion of capital to shareholders since (C$ billions) 2017 (C$ billions) +162% Total dividend 5.5 Share buyback 4.9 4.4 4.3 3.3 2.0 1.9 1.6 2.5 2.1 2.3 1.3 2.3 0.3 1.6 0.5 2.5 2.7 2.9 1.8 2.0 2.2 2017 20
Slide 9: Global presence provides unique synergies and efficiencies
Global presence Revenue synergies provides unique • Cross-selling products >$800M through agency force synergies and • Leveraging distribution efficiencies relationships ~$500M • Commercializing private Annual core earnings impact market capabilities • Contribution from strategies established throug
Slide 10: Unique profile: growth and cash generation
Unique profile: growth and cash generation Core EPS growth outpaced peers Returning significant capital to shareholders 2017-2023 core EPS CAGR1 Capital returned to shareholders (common share dividends and buybacks) in 2023 as a percentage of December 31, 2023 market capitalization4 9.3% 7.8% 8.1% 6
Slide 11: Looking back: Summary
Looking back: • Focused strategy and prioritization Summary • Demonstrated strong execution capabilities • An efficient driver of growth • Unique growth and cash generation profile 11
Slide 12: Looking ahead: Top takeaways
Looking ahead: • Raising the bar on our performance Top takeaways • Clear roadmap to deliver on financial targets • Strong remittances supported by robust capital generation • Substantial growth prospects across our attractive portfolio • Value generation from organic and inorganic optimization acti
Slide 13: Raising the bar on the value we deliver for shareholders
Raising the bar on the value we deliver for shareholders Previous targets 2027 targets Core ROE 15%+ 18%+ Cumulative remittances1 n/a $22B+ Medium-term targets New business CSM growth 15% 15% CSM balance growth 8-10% 8-10% Core EPS growth 10-12% 10-12% Expense efficiency ratio <50% <45% Financial le
Slide 14: Path to 18%+ ROE by 2027
Path to 18%+ ROE by 2027 Core ROE 18%+ 0.2% 0.3% 0.7% 1.0% 15.9% 15%+ Previous core 2023 core ROE1 Asia Global WAM Canada U.S. Updated Incremental low ROE medium- ROE target ROE divestitures term target 2023 core ROE1 16% 25% 14% 16% 2027 core ROE 21% 28% 16% 17% 14 Note: See “Caution regarding forw
Slide 15: Momentum to reach our growth targets
Momentum to reach our growth targets 2023 reported 2023 illustrative 1Q24 reported Target 8% 9% 20% 10 – 12% Core EPS growth1 2017-2023 CAGR 2017-2023 CAGR YoY Medium-term Core earnings from highest 60% 62% 67% 75% by 2025 potential businesses2 Core earnings from Asia 37% 39% 44% 50% by 2027 (Insura
Slide 16: Strong remittances funded by robust organic capital generation
Strong remittances funded by robust organic capital generation Strong historical remittances Expected cumulative remittances (C$ billions, 2020-2023) (C$ billions, 2024-2027) 24 18 22 17 Normalized Management Net market Actual Cumulative New business Capital Total remittances actions1 impacts remitt
Slide 17: Capital deployment efforts focus on key priorities
Capital deployment efforts focus on key priorities 1 2 3 Organic growth Dividend growth Share buybacks / M&A Deploy capital to continue to grow Delivering steady, sustainable Tactical buybacks based on our our priority businesses dividend increases capital position Accretive M&A transactions that me
Slide 18: Portfolio is diverse with substantial growth prospects
Portfolio is diverse with substantial growth prospects Large opportunities in our …with unprecedented …opportunities to …and expanding retirement markets… growth rates… increase penetration… gaps Market size by region and type1 GDP growth rate, 2023-2029 Life premiums as a % of GDP in Retirement gap
Slide 19: Attractive opportunities across businesses for deploying capital
Attractive opportunities across businesses for deploying capital LROC by segment Capital payback by segment New business lifetime return on capital New business capital payback year (“CPY”) • Enhanced mix towards higher (“LROC”)1 Reported on a local capital basis, including margin and/or less capita
Slide 20: Creating value through inforce management actions
Creating value through inforce management actions Inforce organic • Managing adjustable product features • Improving persistency by enhancing the customer experience Releasing capital • Renegotiating/recapturing existing reinsurance agreements • Offering product exchanges and buyouts to meet custome
Slide 21: Looking ahead: Summary
Looking ahead: • Raising the bar on financial targets Summary • Path to 18%+ ROE is clear and achievable • A high return, growth and cash generator • Committed to driving TSR 21
Slide 22: 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 1 Diluted core earnings per common share (“core EPS”) (2017 and 2023 EPS are C$0.98/sh and C$2.61/sh, respectively), core return on common shareholders’ equity (“core ROE”) (2017 and 2023 ROE are 5.0% and 11.9%, respectively), expense efficiency ratio and adjusted book value
Slide 25: Footnotes
Footnotes Slide Footnote 1 “2023 reported” represents CAGR between 2017 core EPS (IFRS 4) and 2023 core EPS (IFRS 17/9). The “2023 illustrative” column represents CAGR between 2017 core EPS (IFRS 4) and 2023 core EPS (as defined on the slide). 1Q24 reported represents year-over-year core EPS growth
Slide 26: Caution regarding forward-looking statements
Caution regarding Certain material factors or assumptions are applied in making forward-looking statements and actual results may differ materially counterparties to meet their obligations; the availability, affordability and adequacy of reinsurance; legal and regulatory proceedings, from those expr
Slide 27: Non-GAAP and other financial measures
Non-GAAP and other Other specified financial measures include current cash flow yield; and average common shareholders’ allocated equity. financial measures Core ROE for operating segments Core ROE for Manulife’s operating segments is a non-GAAP ratio which measures profitability of those segments a
Slide 28: Reconciliation: Core earnings, CER basis
Reconciliation: Core earnings, CER basis 2017 ($ millions, post-tax and based on actual foreign exchange rates in effect in the applicable Corporate Asia Canada U.S. Global WAM Total reporting period, unless otherwise stated) and Other Core earnings (post-tax) 1,453 1,209 1,609 816 (522) 4,565 CER a
Slide 29: Reconciliation: Core ROE
Reconciliation: Core ROE ($ millions, unless otherwise stated) 2017 Core earnings 4,565 Less: Preferred share dividends 159 Core earnings available to common shareholders 4,406 Average common shareholders’ equity (see below) 38,919 Core ROE (%) 11.3% Average common shareholders’ equity Total shareho
Slide 30: Reconciliation: Core EPS
Reconciliation: Core EPS ($ millions, post-tax and based on actual foreign exchange rates in effect in the 2017 applicable reporting period, unless otherwise stated) Core earnings 4,565 Less: Preferred share dividends 159 Core earnings available to common shareholders 4,406 CER adjustment1 (11) Core
Slide 31: Reconciliation: Core earnings from Asia
Reconciliation: Core earnings from Asia ($ millions and post-tax, unless otherwise stated) 1Q24 Core earnings of Asia region1 764 Core earnings - all other businesses 990 Core earnings 1,754 Items excluded from core earnings (888) Net income (loss) attributed to shareholders 866 Asia region core ear
Slide 32: Reconciliation: General expenses
Reconciliation: General expenses ($ millions, and based on actual foreign exchange rates in effect in the applicable reporting period, 2017 2016 2011 unless otherwise stated) General expenses - financial statements 7,233 6,995 4,039 Less: General expenses included in items excluded from core earning