MANULIFE(MFC) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Manulife reported record core earnings exceeding $7 billion for the first time, representing a 10 percentage point increase from 2023 [7][8] - Core EPS grew by 11%, with a potential growth of 14% excluding the impact of global minimum taxes, surpassing the medium-term target of 10% to 12% [21][40] - The core ROE expanded to 16.4%, indicating progress towards the 2027 target of over 18% [22][55] - Adjusted book value per share increased by 15% to$ 37.02, despite returning over $6 billion to shareholders [52] Business Line Data and Key Metrics Changes - APE sales increased by 42% year-over-year, with Asia leading the growth [35] - New business CSM and new business value in Asia grew by 32% and 31% respectively [35] - Global WAM achieved a 34% increase in core earnings, supported by higher average third-party AUMA exceeding$ 1 trillion [44] - The Canadian segment saw a 4% increase in APE sales, driven by higher participating life insurance and segregated fund sales [46] Market Data and Key Metrics Changes - Asia segment APE sales surged by 63%, with significant contributions from Hong Kong [43] - Global WAM maintained positive net inflows of $1.2 billion, marking the fifth consecutive quarter of over 20% growth in pre-tax core earnings [38][44] - The US segment experienced a 7% increase in APE sales, although core earnings decreased by 16% due to lower investment spreads [47] Company Strategy and Development Direction - The company aims to become the most digital customer-centric organization in the industry, with significant investments in digital capabilities [11][14] - A new buyback program was announced to repurchase up to 3% of outstanding common shares, reflecting a commitment to returning capital to shareholders [18][50] - The focus remains on sustaining growth in Asia and Global WAM while maintaining market leadership in Canada [30][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating macroeconomic volatility and geopolitical uncertainty, supported by a strong balance sheet [26][23] - The company anticipates continued strong momentum in Asia and Global WAM, with a commitment to investing in these high-potential businesses [30][32] - Management highlighted the importance of disciplined expense management, achieving an efficiency ratio of 44.8% [15][55] Other Important Information - The company executed several milestone transactions, including the largest-ever LTC reinsurance transaction, which is expected to unlock significant shareholder value [10][18] - Record remittances of$ 7 billion were generated in 2024, benefiting from capital optimization initiatives [49][50] Q&A Session Summary Question: What drove the improvement in the drag? - The improvement was primarily due to better performance in private equity and infrastructure, with expectations for broad improvement across the portfolio [60][61] Question: What is the outlook for the Asia segment? - The Asia segment is expected to maintain mid-teens growth, with the majority of growth coming from normal business activities rather than methodology changes [69][72] Question: Can you discuss the margins in Global WAM? - Global WAM has seen strong margins due to disciplined expense management and access to higher-margin geographies, with expectations for continued growth [88][90] Question: What is the exposure to California wildfires? - The exposure is limited to about $90 million, with expectations that actual losses will be less than half of that amount [96] Question: What are the drivers of earnings on surplus? - The increase in earnings on surplus was driven by favorable currency impacts and fund rebalancing, with expectations for stability going forward [105][107] Question: Why did Manulife not take a write-down in Vietnam? - Manulife's strong in-force portfolio and protective measures in bank assurance partnerships contributed to the decision not to take a write-down [114][115]