Manulife Financial Corporation, Q1 2009 Earnings Call, May-07-2009 - SEHK:945

SEHK:945

** Summary of Executives' Speeches**

Donald A. Guloien (President and Chief Executive Officer)

• Opening Remarks:
  • Reported a net loss of $1,068,000,000 in Q1 2009, primarily driven by declines in equity markets, particularly in the U.S., and to a lesser extent by fair value adjustments and credit impairments.
  • Emphasized the company's focus on balancing business mix, reducing risk, and strengthening capital levels.
  • Highlighted the importance of considering pessimistic scenarios in capital planning.
  • Discussed the leadership transition from Dominic to himself, emphasizing continuity in core values and an ambitious, risk-managed approach.
  • Outlined plans to diversify product offerings, expand geographic reach, and build the Manulife brand.
• Closing Remarks:
  • Summarized the impact of continued equity market declines on reported earnings.
  • Noted the company's strong capital levels and access to capital markets.
  • Emphasized the well-positioned investment portfolio and the company's global franchise strength.
  • Acknowledged the potential for new expansion and diversification opportunities.

Peter Rubenovitch (Executive)

• Financial Results:
  • Detailed the Q1 2009 loss of $1,068,000,000, attributing $1.4 billion to equity market declines and $193 million to credit downgrades and impairments.
  • Explained that the cash provided by operating activities was $2.5 billion, indicating the non-cash nature of the accounting charges.
  • Provided a breakdown of the impact of equity markets, real estate valuations, and credit-related charges on earnings.
• Segregated Fund Guarantees:
  • Presented a cash flow graph for segregated fund guarantees, showing expected and conservative scenarios.
  • Discussed the actuarial liability and capital in relation to these guarantees, noting the increase in risk to $30 billion.
  • Highlighted the successful implementation of new methods for valuing segregated fund guarantees.
• Capital Position:
  • Reported a MCCSR ratio of 228%, up from 198% in Q1 2008 but down from 234 in the previous quarter.
  • Discussed the impact of a 10% equity market correction on the MCCSR ratio and earnings.
• Investment Portfolio:
  • Expanded disclosures on investment holdings, including private placements, alternative investments, and unrealized losses.
  • Emphasized the high quality and diversified nature of the investment portfolio.
  • Provided details on fixed-income securities, securitized assets, and mortgage portfolio.

John D. DesPrez III (Chief Operating Officer)

• Risk Management and Growth:
  • Focused on rebalancing the product portfolio to diversify income and risk positions.
  • Outlined strategies to reduce equity exposure, including hedging new and in-force business, changing product features, and ensuring profitability after hedging costs.
  • Discussed the progress on hedging new business in the U.S., Canada, and Japan.
  • Highlighted changes in fund offerings and product features to improve hedge effectiveness and reduce risk.
• Growth Opportunities:
  • Conducted a strategic review of business mix, focusing on accelerating growth in core businesses, moving into adjacent markets, and exploring new geographies.
  • Emphasized the company's core values and competencies in pursuing organic and strategic growth.

List of Key Points

1. Donald A. Guloien:

   • Reported a net loss of $1,068,000,000 in Q1 2009.
   • Focus on balancing business mix, reducing risk, and strengthening capital levels.
   • Continuity in core values and an ambitious, risk-managed approach.
   • Plans to diversify product offerings, expand geographic reach, and build the Manulife brand.

2. Peter Rubenovitch:

   • Detailed the Q1 2009 loss of $1,068,000,000, with $1.4 billion attributed to equity market declines and $193 million to credit downgrades and impairments.
   • Cash provided by operating activities was $2.5 billion.
   • Presented a cash flow graph for segregated fund guarantees.
   • Reported a MCCSR ratio of 228%, up from 198% in Q1 2008.
   • Expanded disclosures on investment holdings, emphasizing the high quality and diversified nature of the portfolio.

3. John D. DesPrez III:

   • Focused on rebalancing the product portfolio to diversify income and risk positions.

   • Strategies to reduce equity exposure, including hedging new and in-force business, changing product features, and ensuring profitability after hedging costs.

   • Conducted a strategic review of business mix, focusing on accelerating growth in core businesses, moving into adjacent markets, and exploring new geographies.