Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Manulife Financial Corp (MFC, Financial) reported strong growth in Asia with APE sales increasing by 50%, driven by high demand in markets like Hong Kong, Singapore, and Mainland China.
- The company maintained a robust balance sheet with a LICAT ratio of 137% and a leverage ratio of 23.9%, indicating strong financial resilience.
- Global WAM continued to deliver positive net flows of $0.5 billion despite market volatility, showcasing the resilience of its diversified business model.
- Core EPS increased by 3%, supported by share buybacks and strong performance in Asia and Global WAM businesses.
- Manulife Financial Corp (MFC) successfully executed de-risking strategies, including reinsurance transactions, reducing its book value sensitivity to interest rate and equity market movements.
Negative Points
- The company faced a $35 million pretax charge in its P&C reinsurance business due to the California wildfires.
- A $46 million pretax ECL charge was recorded, driven by updates to reflect the deteriorating economic environment, impacting core earnings growth.
- The U.S. segment experienced a 25% decrease in core earnings due to unfavorable net claims experience, lower investment spreads, and increased ECL provisions.
- Manulife Financial Corp (MFC) reported a non-core charge of $781 million from realized losses, mostly from fixed income asset disposals related to its LTC reinsurance transaction.
- The ALDA portfolio experienced negative returns, particularly in real estate and private equity, disrupting the trend of sequential improvement in ALDA experience.
Q & A Highlights
Q: Can you provide insights into the strong sales performance in Asia and the outlook for the rest of the year?
A: Philip Witherington, President & CEO-Manulife Asia, highlighted strong demand for savings solutions across Hong Kong, Singapore, and China, with significant growth in Japan due to a successful new product launch. While macroeconomic uncertainty could impact consumer sentiment, the current sales run rate is promising, and the outlook remains cautiously optimistic.
Q: How are Japan's sales linked to U.S. dollar-denominated products, and what are the drivers for Hong Kong's strong sales?
A: Philip Witherington explained that about 80% of Japan's business is U.S. dollar-denominated, driven by diversification and yield differentials. In Hong Kong, strong demand is seen across all channels, with growth driven by savings solutions and new critical illness protection products. The growth rate is expected to normalize as the year progresses.
Q: What is the outlook for achieving the 15% earnings growth target in Asia, considering the current economic environment?
A: Philip Witherington noted that while first-quarter growth was 7%, normalizing for certain factors would show an 11% year-on-year increase. The contractual service margin (CSM) growth supports continued earnings growth, and the current run rate is expected to sustain business-as-usual growth.
Q: Are there any challenges with the product mix in Asia, particularly regarding margins?
A: Philip Witherington acknowledged strong demand for savings solutions but emphasized that these products are still profitable. The company is also focusing on health and protection needs, with new product launches expected to drive demand. Roy Gori added that the diverse product and channel mix supports margin improvement.
Q: What is the company's stance on share buybacks during periods of market stress?
A: Philip Witherington, incoming CEO, stated that Manulife is in a strong capital position, allowing for consistent share buybacks. The company prioritizes investing in the business but remains committed to buybacks as part of capital deployment, with decisions based on internal and external factors.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
