Manulife Financial Corporation, Q3 2024 Earnings Call, Nov 07, 2024 - SEHK:945

SEHK:945

Hung Ko, Vice President of Group Investor Relations, welcomed participants to Manulife Financial's third quarter 2024 financial results conference call. He provided an overview of the agenda, noting that Roy Gori, President and CEO, would discuss the third quarter and year-to-date 2024 results and a strategic update. Colin Simpson, CFO, would then delve into the financial and operating results in more detail. After their presentations, the call would open to a Q&A session.

**- Roy Gori, President and CEO, highlighted strong third quarter 2024 financial results, driven by record APE sales, new business CSM, and new business value.

• Significant growth in Asia, with record APE sales, new business CSM, and new business value, and strong contributions from North America.

• Global WAM delivered over $5 billion in net flows, with positive contributions from each business line and geography.

• Core earnings grew 4%, with 17% growth in Asia and 37% growth in Global WAM. Excluding GMT, core earnings growth would have been 7%.

• Core EPS grew 7% year-over-year, or 11% adjusted for GMT.

• Strong core ROE of 16.6%, indicating progress toward the 18%-plus goal.

• Maintained a strong balance sheet with a LICAT ratio of 137% and leverage ratio of 23.5%.

• Digital initiatives, including GenAI, are scaling up with 11 use cases in production and more planned, leading to improved customer experience and operational efficiency.

• Relationship NPS score reached an all-time high of 25, and STP exceeded the 2025 target of 88%.

• Manulife is well positioned to capitalize on global megatrends and deliver strong, sustainable growth.**

**- Colin L. Simpson highlighted strong APE sales, new business CSM, and new business value in the third quarter, with a 40% increase in APE sales from the prior year, driven by growth in Asia.

• Core earnings grew 4% year-over-year, with 17% growth in Asia and 37% growth in Global WAM. Excluding the impact of global minimum taxes (GMT), core earnings growth would have been 7%.

• Core EPS grew 7% year-over-year, or 11% if adjusted for GMT.

• Net income was higher than core earnings, with noncore items driving a modest net positive impact.

• Adjusted book value per share grew 14% from the prior year to $34.97, even after returning nearly $5 billion of capital to shareholders.

• The Asia segment saw a 64% increase in APE sales, driven by growth across most markets, especially Hong Kong.

• Global WAM delivered record core earnings with 37% growth, supported by higher average AUMA and favorable tax benefits.

• Canada's APE sales decreased 20% from the prior year but grew 27% excluding a large affinity market sale.

• The U.S. segment saw a rebound in demand for accumulation insurance products, driving up APE sales and new business metrics.

• The LICAT ratio remained strong at 137%, and the financial leverage ratio was 23.5%, providing ample financial flexibility.

• Manulife accelerated share buybacks, returning close to $1.7 billion of capital to shareholders.

• The company is on track to meet its 2027 and medium-term targets, with a core ROE of 16.3% and an expense efficiency ratio of 45%.**

Trevor Kreel, Chief Investment Officer, addressed the strong ALDA performance in Q3, noting it was the best over the last 9 quarters, despite being slightly below target. The main driver of the loss was real estate, reflecting flat performance for the asset class. Infrastructure and private equity performed better than in Q2. Trevor expects continued improvement in the overall portfolio and private equity, aiming to return to long-term assumptions by mid-2025. He remains confident in the long-term performance of the strategy and portfolio.