Manulife Financial Corporation · TSX:MFC
Manulife Financial — Investor Day (June 2024)
37 slides from Manulife Financial's investor day presentation, Jun 25, 2024
Slide 1: Raising the Bar
Raising the Bar Investor Day 2024: CEO Presentation Roy Gori President and CEO June 25, 2024
Slide 2: Agenda
Agenda 1 | Looking back Our transformation journey 2 | Looking ahead Raising the bar 2
Slide 3: Executive summary
Executive • Transformed into a low-risk and high summary return company • Demonstrated execution with strong track record • Uniquely positioned to capture mega trends and grow our business • Raising the bar on our financial targets • Creating compelling investment opportunities 3
Slide 4: Our transformation journey
Our transformation journey 4
Slide 5: Looking back: Top takeaways
Looking back: • Clear and consistent strategy Top takeaways • Delivered superior financial results • Improved returns and outperformed peers • Strategically transformed Manulife • De-risked the firm and reduced volatility • Generated substantial cash 5
Slide 6: Clear and consistent strategy
Clear and consistent strategy “The most digital, customer-centric global company in our industry” Customers Team Shareholders Community Improve NPS by 36 points Engage our team – achieve Deliver top quartile returns Deliver on our Impact and delight customers top quartile engagement Agenda 6
Slide 7: Delivered superior financial results
Delivered superior financial results Core ROE1 Core EPS1 Expense efficiency ratio1 Adjusted book value1 (C$) (C$ per common share) CSM balance per common share Book value per common share +4.6 pps +8% CAGR -9.9 pps +9% CAGR 15.9% 3.5 55.4% 32.19 45.5% 9.83 11.3% 2.2 18.93 22.36 2017 2023 2017 2023 2
Slide 8: Performance versus peers
Performance versus peers Asia Peer 2017-2023 Manulife Peer Average6 Average7 Core ROE1 +4.6 pps +1.0 pps -3.9 pps Core EPS2 7.8% 3.9% -0.4% Dividend growth3 10.1% 5.9% 1.9% Current cash flow yield (Dividends + buybacks)4,5 8.1% 6.8% 4.4% 8 Note: Peer data sourced from company websites, where applica
Slide 9: Strong track record of execution
Strong track record of execution 2017 2023 1Q24 Current target Portfolio Core earnings contribution 24% 12% 12% <15% by 2025 optimization from LTC & VA Expense Expense efficiency ratio1 55.4% 45.5% 45.1% <50% in 2022+ efficiency Core earnings from highest 54% 60% 67% 75% by 2025 Accelerate potential
Slide 10: Notable transactions
Released capital and reduced risk $11B Notable transactions Reinsurance of Reinsurance of U.S. Reinsurance of Canadian payout variable annuities to Canadian universal life annuities risks to Venerable to RGA PartnerRe Reinsurance of U.S. Reinsurance of LTC, Reinsurance of payout annuities to structu
Slide 11: Significantly de-risked the firm
Significantly de-risked the firm Interest rates Equity markets Potential impact on total comprehensive income from an Potential impact on total comprehensive income from a 10% immediate parallel 50 bps decline in interest rates, as a decline in public equity returns, as a percentage of book value pe
Slide 12: A proven compounding cash generation engine
A proven compounding cash generation engine Organic investments drive Generated $27 billion of Returned $21 billion2 of compound book value growth remittances capital to shareholders Remittances from operations Dividend per share • Over 25% new business profitability on organic investments (C$ billi
Slide 13: Outpaced peers
Outpaced peers Total shareholder return (“TSR”) MFC-TSX (%, as of May 31, 2024) Proxy peers average1 1-year 47.7 Period Quartile 27.0 1-Year 1st 3-Year 2nd 3-year 45.9 5-Year 1st 34.1 100.3 5-year 75.2 13 Note: Data sourced from Bloomberg. All footnotes are on slide 30.
Slide 14: Looking back: Summary
Looking back: • Clear strategy Summary • Superior execution • Outpaced peers • A cash and growth engine 14
Slide 15: Raising the bar
Raising the bar 15
Slide 16: Looking ahead: Top takeaways
Looking ahead: • Raising the bar on financial targets Top takeaways • Uniquely positioned to continue delivering strong results and outperforming peers • A global player at scale that is poised to capture key megatrends • Enviable markets and business exposure enable organic investment • Complementa
Slide 17: Raising the bar on our 2027 targets
Raising the bar on our 2027 targets Core ROE1 Cumulative remittances (C$ billions) 18%+ $22.0+ 16% $18.4 11% 2017A 2023A 2027 2020-2023A 2024-2027 17 Note: See “Caution regarding forward-looking statements” below. All footnotes are on slide 30, including the nearest comparable GAAP financial measure
Slide 18: A unique profile of high return, cash generation, and growth
A unique profile of high return, cash generation, and growth Core ROE Remittances Core EPS growth 18%+ By 2027 $22B+ 10-12% 2024 - 2027 ~14% - ~4% Peer average1, 2023 Peer average1, CAGR 2017-2023 18 Note: See “Caution regarding forward-looking statements” below. Peer data sourced from company websi
Slide 19: Continued focus on delivering against our medium-term financial targets
Continued focus on delivering against our medium-term financial targets Medium-term target New business CSM growth 15% CSM balance growth 8-10% Core EPS growth 10-12% Expense efficiency ratio <45% (▼5 pps) Leverage ratio 25% Core dividend payout ratio 35-45% 19 Note: See “Caution regarding forward-l
Slide 20: Compelling global megatrends
Compelling global megatrends Rapid and sustained economic Proportion of elderly population is Evolving digital consumer expansion in Asia growing preferences Asia’s share of global middle class Global percentage of population 65 years or (Population in billions)1 over2 Asia Pacific All other regions
Slide 21: Well-positioned international footprint
Well-positioned international footprint Pan-Asia life insurer AUMA1 TOP 3 1.4T Exclusive Employees bancassurance partnerships 10 38K Customers Behavioural insurance customers2 35M 2M+ 21 Note: All footnotes are on slide 31, including the nearest comparable GAAP financial measures, where applicable.
Slide 22: Clear pathway to deliver against our strategic priorities
Clear pathway to deliver against our strategic priorities • Pursue additional LTC transactions Portfolio • Low ROE divestitures to expand market multiples optimization • Organic inforce actions to reduce risk and improve ROE • Digitalize and automate workflows and enhance STP Expense • World class p
Slide 23: Accelerating growth through our businesses
Accelerating growth through our businesses Asia Global WAM • Grow agency and Expanding global • Leverage direct and affiliated Significant protection bancassurance channels wealth and AUM with channels to scale business gaps, rising middle • Improve health and increasing demand • Scale alternative c
Slide 24: Digital, customer leadership is central to our mission
Digital, customer leadership is central to our mission Driving automation and straight- Improving the customer Investing in technology to through processing experience further our transformation (STP) (NPS) +17 pps 85% 88% +22 37 $1B Committed technology and digital 23 investments, 2023-2025 68% 1 3
Slide 25: Talent and culture is our true differentiator
Talent and culture is our true differentiator Value based culture Get it done together Diversity and inclusion World’s Best Gender Top Quartile Employers Equality Index Top quartile in employee Fourth consecutive year Fifth consecutive year named to engagement amongst global F&I recognized as one of
Slide 26: Executing on our Impact Agenda
Executing on our Driving inclusive economic Impact Agenda opportunity Building a better business to Increase in racially and better the world. 30% ethnically diverse representation at the Director+ level in North America by 2025 Empowering health and Accelerating a sustainable well-being future 82%
Slide 27: Looking ahead: Summary
Looking ahead: • Raising the bar on performance Summary • Uniquely poised to capture megatrends • Strong capital allocation and expense discipline • A cash and growth engine • Confidence in the opportunity ahead 27
Slide 28: Manulife: Raising the Bar
‘'’ Manulife Raising the Bar
Slide 29: Appendix
Appendix • Footnotes • Caution regarding forward-looking statements • Non-GAAP and other financial measures 29
Slide 30: Footnotes
Footnotes Slide Footnote 1 Core return on common shareholders’ equity (“core ROE”) (2017 and 2023 ROE are 5.0% and 11.9%, respectively), diluted core earnings per common share (“core EPS”) 7 (2017 and 2023 EPS are C$0.98/sh and C$2.61/sh, respectively), expense efficiency ratio and adjusted book val
Slide 31: Footnotes
Footnotes Slide Footnote 1 Brookings, The Unprecedented Expansion of the global middle class. (February 2017). 2 World Population Prospects 2022, UN DESA. 20 3 Zipdo, Essential Financial Services Digital Marketing Statistics (June 2023). 4 McKinsey, The Value of Getting Personalization Right (2021).
Slide 32: Caution regarding forward-looking statements
Caution regarding Certain material factors or assumptions are applied in making forward-looking statements and actual results may differ materially counterparties to meet their obligations; the availability, affordability and adequacy of reinsurance; legal and regulatory proceedings, from those expr
Slide 33: Non-GAAP and other financial measures
Non-GAAP and other Other specified financial measures include current cash flow yield. financial measures For more information on the non-GAAP and other financial measures in this document, please see “Implementation of IFRS 17 and IFRS 9” and “Non-GAAP and other financial measures” of the 2023 MD&A
Slide 34: Reconciliation: Core earnings, CER basis
Reconciliation: Core earnings, CER basis 2017 ($ 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 35: 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 36: 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 37: 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