C$ unless otherwise stated TSX/NYSE/PSE: MFC SEHK: 945 TORONTO, Sept. 26, 2024 /PRNewswire/ - Manulife Financial Corporation ("MFC") today announced its intention to redeem at par on November 21, 2024 all of its outstanding 500 million Singapore dollars principal amount of 3.00% Subordinated Notes (the "Notes") due November 21, 2029. The Notes are redeemable at MFC's option, in whole but not in part, on November 21, 2024 and thereafter on each interest payment date at a redemption price per Note equal to pa ...

Shares of Manulife Financial Corporation (MFC) closed at $28.87 on Thursday, near its 52-week high of $28.89. A strong-performing Asia business, expanding Wealth and Asset Management business and a solid capital position are driving the stock price higher. The company is one of the three dominant life insurers within its domestic Canadian market and possesses rapidly growing operations in the United States and several Asian countries. Earnings grew 4.9% in the last five years, better than the industry avera ...

H97 ng are gawrav Warren Buffett has said in the past that he is against using leverage to buy stocks. While that is good advice, what often gets ignored is that his insurance company, GEICO, a subsidiary of Berkshire Hathaway (BRK.A)(BRK.B), enabled him to get a head start over simply using only 'owned' cash to invest. That's because insurance companies carry a float, which is basically the unpaid premiums on policies, and so long as thresholds are met, it can be invested to generate extra earnings for the ...

It has been about a month since the last earnings report for Manulife Financial (MFC) . Shares have added about 11.4% in that time frame, outperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is Manulife due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts. Manulife Q2 Earnings Beat Estimates, NBV ...

Core Insights - Manulife Financial Corporation (MFC) has seen a 19% increase in its stock price year to date, outperforming the industry, finance sector, and S&P 500 [1] - The company is a leading life insurer in Canada with growing operations in the U.S. and Asia, and has a history of positive earnings surprises [2] - Manulife's return on equity (ROE) stands at 16.2%, above the industry average of 15.5%, with a target ROE of 18% by 2027 [2] Business Performance - The Asia business is a significant earnings contributor, expected to account for 50% of overall earnings by 2027, driven by strong volume growth and favorable demographics [3] - Manulife is focusing on high ROE and growth segments in North America and sees Europe as a key growth area, with long-term investments planned [4] Earnings and Growth Strategy - The highest potential businesses, including operations in Asia and Global Wealth and Asset Management, currently contribute two-thirds of core earnings, with a goal to increase this to 75% [5] - The company is implementing digitalization and automation strategies to improve efficiency, targeting an expense efficiency ratio of less than 45% [5] Financial Health - Manulife is enhancing its balance sheet by improving liquidity and targeting a leverage ratio of 25%, with free cash flow conversion exceeding 100% in recent quarters [6] - The company has increased dividends at a six-year CAGR of 10% and aims for a dividend payout ratio of 35-45% in the medium term [6] Earnings Estimates - The Zacks Consensus Estimate for MFC's earnings per share (EPS) is $2.72 for 2024 and $2.86 for 2025, indicating year-over-year growth of 5.8% and 5.2% respectively [7] - The long-term earnings growth rate is projected at 10%, with expected core EPS growth of 10-12% in the medium term [7]

Core Viewpoint - Manulife Financial Corporation has experienced significant share price growth, with a 23% increase year-to-date and 41% over the past year, driven by sustainable return on equity (ROE) improvements in the Canadian Lifeco sector [2][16] - The company is well-positioned to capitalize on growth opportunities in Asia and wealth management, with a long-term bullish outlook [2][16] Company Overview - Manulife operates globally, with a strong presence in Asia and the United States, serving 35 million customers and managing assets of $1.5 trillion [3] - The company has diversified its offerings beyond insurance to include financial advisory, wealth management, and institutional solutions [3] Q2 '24 Results - In Q2 '24, Manulife reported earnings per share (EPS) of $0.91, a 9% increase year-over-year, surpassing estimates [4] - Core EPS was slightly above consensus at $0.87, aided by a lower effective tax rate in wealth management [4] Performance by Region - Asia's earnings increased by 34% year-over-year, driven by higher claims experience and investment income [6] - In Hong Kong, sales rose by 15%, although competition impacted market share [6] - Wealth and Asset Management core earnings grew by 25% year-over-year, supported by increased assets under management (AUM) [7] Return on Equity (ROE) and Growth - Manulife's ROE for Q2 '24 was 15.7%, with management raising the long-term target to over 18% [8][10] - The company reported a 17% increase in annualized premiums and a 23% growth in new business value [10] Shareholder Returns - Manulife has repurchased 31 million shares for $1.1 billion and increased its buyback plan to $3 billion, reflecting confidence in financial health [12] - The average price target from analysts is $38.57, indicating an 8% upside potential from the current share price, alongside a 4.5% dividend yield [13] Investment Thesis - The company's expanding ROEs and attractive valuation make it a compelling choice for income-oriented investors [15][16] - Despite challenges in the U.S. market, the focus on capital management and strong performance in Asia positions Manulife favorably for future growth [16]

Manulife Financial Corporation (MFC) delivered second-quarter 2024 core earnings of 66 cents per share, which beat the Zacks Consensus Estimate by 3.1%. The bottom line improved 6.4% year over year. Core earnings of $1.3 billion (C$1.7 billion) increased 8.3% year over year. The improvement was driven by continued business growth momentum and updates to actuarial methods and assumptions in the second half of 2023, higher fee income from favorable market impacts and positive net flows, a favorable tax true-u ...

Financial Performance - Core EPS increased by 9% to C$0.91 in 2Q24, or 12% excluding GMT impact[19] - Adjusted book value per common share grew by 15% to C$33.96, reflecting 11% growth in book value per common share and 26% growth in CSM balance per common share[12, 20] - Core earnings increased 6% to C$1737 million in 2Q24, driven by strong business growth in Asia and Canada, improved insurance experience, and favorable impact of actuarial updates[23, 26] - Global WAM net flows were C$0.1 billion[12] Business Growth - APE sales increased by 17% to C$1907 million in 2Q24[12, 16] - New business value increased by 23% to C$723 million in 2Q24[12, 16] - New business CSM increased by 6% to C$628 million in 2Q24[12, 16] - Asia core earnings grew by 40% to US$472 million[13, 28] Capital Management - MLI's LICAT ratio was 139%[12] - Financial leverage ratio was 24.6%[12] Strategic Targets - The company has updated its 2027 targets, including a core ROE of 18%+[9] - Cumulative remittances target for 2024-2027 is C$22 billion+[10]

Core Earnings and Net Income - Core earnings for Q2 2024 reached CAD 1.737 billion, a 6% increase year-over-year at constant exchange rates[2] - Net income attributed to shareholders was CAD 1.042 billion, similar to Q2 2023 levels[2] - Core earnings per share (EPS) rose to CAD 0.91, a 9% increase compared to Q2 2023[2] - Core earnings for Q2 2024 were CAD 1.737 billion, with Asia contributing CAD 647 million, Canada CAD 402 million, the US CAD 415 million, and Global Wealth and Asset Management CAD 399 million[19] - Core earnings for the first half of 2024 totaled CAD 3.491 billion, compared to CAD 3.168 billion in the same period of 2023[19] - Core profit (after tax) for Q2 2024 was $1.737 billion, with Asia contributing $647 million, Canada $402 million, and the US $415 million[22] - Core profit (before tax) for Q2 2024 was $2.057 billion, with Asia contributing $711 million, Canada $509 million, and the US $510 million[22] - Core profit (after tax) at constant exchange rates for Q2 2024 was $1.737 billion, with Asia contributing $647 million, Canada $402 million, and the US $415 million[23] - Core profit (before tax) at constant exchange rates for Q2 2024 was $2.057 billion, with Asia contributing $711 million, Canada $509 million, and the US $510 million[23] - Core profit (after tax) in USD for Asia and US operations in Q2 2024 was $472 million and $303 million respectively[23] - Core profit after tax for Q1 2024 in Asia was $657 million, while in Canada it was $364 million, and in the US it was $452 million[26] - Total core profit after tax for Q1 2024 across all regions was $1,754 million[26] - Core profit after tax on a constant currency basis for Q1 2024 was $1,765 million, with adjustments of $11 million due to currency fluctuations[27] - Core profit after tax for Q2 2023 in Asia was $473 million, while in Canada it was $374 million, and in the US it was $458 million[29] - Total core profit after tax for Q2 2023 across all regions was $1,637 million[29] - Core profit after tax on a constant currency basis for Q2 2023 was $1,639 million, with adjustments of $2 million due to currency fluctuations[30] - Core profit after tax for the Asia and US business segments in Q1 2024 was $488 million and $335 million respectively, when converted to USD[27] - Core profit after tax for the Asia and US business segments in Q2 2023 was $353 million and $341 million respectively, when converted to USD[30] - Core profit after tax on a constant currency basis for the Asia and US business segments in Q2 2023 was $337 million and $341 million respectively, when converted to USD[30] - Core earnings for Asia in 2024 YTD reached $1,304 million, while Canada and the US reported $766 million and $867 million respectively[31] - Global Wealth and Asset Management contributed $756 million to core earnings in 2024 YTD[31] - Total core earnings for the overall business in 2024 YTD stood at $3,491 million[31] - Core earnings before tax for the overall business in 2024 YTD amounted to $4,097 million[31] - Core earnings for Asia in 2023 YTD were $962 million, with Canada and the US reporting $727 million and $843 million respectively[34] - Global Wealth and Asset Management contributed $607 million to core earnings in 2023 YTD[34] - Total core earnings for the overall business in 2023 YTD were $3,168 million[34] - Core earnings before tax for the overall business in 2023 YTD amounted to $3,745 million[34] - Core earnings at constant exchange rates for 2024 YTD were $3,502 million, with Asia and the US contributing $1,305 million and $874 million respectively[32] - Core earnings before tax at constant exchange rates for 2024 YTD were $4,109 million[32] - Core earnings after tax at fixed exchange rates for 2023 year-to-date totaled $3,162 million, with Asia contributing $936 million and the US contributing $857 million[35] - Core earnings after tax for Q2 2024 were $1,737 million, with a slight decrease from Q1 2024's $1,754 million[38] - Core earnings attributable to common shareholders for Q2 2024 were $1,638 million, reflecting a decrease from Q1 2024's $1,699 million[38] - Core earnings after tax for the US business segment in 2023 year-to-date were $626 million at fixed exchange rates[35] - Core earnings after tax for the Asia business segment in 2023 year-to-date were $683 million at fixed exchange rates[35] - Core earnings before tax at fixed exchange rates for 2023 year-to-date were $3,736 million, with Asia contributing $1,071 million and the US contributing $1,055 million[35] - Core earnings attributable to common shareholders for 2023 full year were $6,381 million, with a slight adjustment for fixed exchange rates bringing it to $6,387 million[38] Business Growth and Sales Performance - Annualized Premium Equivalent (APE) sales grew by 17% year-over-year, reaching CAD 1.907 billion[2] - New Business Value (NBV) increased by 23% year-over-year to CAD 723 million[2] - Asia region core earnings grew by 40% year-over-year to USD 472 million[5] - Canada APE sales surged by 61% year-over-year to CAD 520 million[5] - Asia business core earnings grew 40% in Q2 2024, attributed to sustained business momentum and updates to actuarial methods and assumptions in H2 2023[10] - Canada group insurance business core earnings grew 7% in Q2 2024, driven by strong growth and favorable net insurance experience[10] - Global Wealth and Asset Management business recorded net inflows of CAD 100 million in Q2 2024, reflecting strength in institutional business, offset by outflows in retirement business[13] - New business CSM in Hong Kong for Q2 2024 reached $200 million, showing a 19% increase compared to Q1 2024 ($168 million)[43] - Asia (excluding Hong Kong and Japan) contributed $463 million to new business CSM in 2024 YTD, a 25.8% increase from the same period in 2023 ($368 million)[43] - Total new business CSM for 2024 YTD reached $1.286 billion, a 24.4% increase compared to 2023 YTD ($1.034 billion)[43] - Japan's new business CSM for 2024 YTD was $138 million, a significant 150.9% increase from 2023 YTD ($55 million)[43] - The US market contributed $171 million to new business CSM in 2024 YTD, a decrease of 13.6% compared to 2023 YTD ($198 million)[43] - Canada's new business CSM for 2024 YTD was $146 million, a 41.7% increase from 2023 YTD ($103 million)[43] - Total new business CSM on a constant exchange rate basis for 2024 YTD was $1.291 billion, a 25.3% increase from 2023 YTD ($1.030 billion)[43] - Asia (excluding Hong Kong and Japan) accounted for 36% of total new business CSM in 2024 YTD ($463 million out of $1.286 billion)[43] - The global premium business segment contributed $231 million to total new business CSM in 2023, representing 10.7% of the total ($2.167 billion)[43] - Vietnam's new business CSM for 2023 was $87 million, a 91.3% increase from 2022 ($45.5 million, calculated from 2023 total and 2022 YTD)[43] Global Wealth and Asset Management - Global Wealth and Asset Management net inflows were CAD 100 million, significantly lower than CAD 2.2 billion in Q2 2023[2] - Global Wealth and Asset Management core EBITDA margin improved to 26.3%, up 170 basis points year-over-year[6] - Total assets under management and administration reached CAD 933.1 billion, a 13% increase year-over-year[6] - Global Wealth and Asset Management core earnings increased 23% in Q2 2024 due to higher fee income from favorable market impacts, positive net inflows, and favorable tax adjustments[10] - Global Wealth and Asset Management core EBITDA reached $513 million in Q2 2024, compared to $477 million in Q1 2024[49] - Core earnings for Global Wealth and Asset Management grew to $399 million in Q2 2024, up from $357 million in Q1 2024[49] - Core EBITDA for Global Wealth and Asset Management at constant exchange rates was $995 million year-to-date in 2024, up from $822 million in the same period of 2023[49] - Core EBITDA for Q2 2024 was $513 million, up from $477 million in Q1 2024 and $424 million in Q2 2023[50] - Core revenue for Q2 2024 reached $1.948 billion, compared to $1.873 billion in Q1 2024 and $1.722 billion in Q2 2023[50] - Core EBITDA margin for Q2 2024 was 26.3%, up from 25.5% in Q1 2024 and 24.6% in Q2 2023[50] - Global Wealth and Asset Management core revenue for Q2 2024 was $1.948 billion, compared to $1.873 billion in Q1 2024 and $1.722 billion in Q2 2023[50] - Total investment income for Q2 2024 was $4.825 billion, up from $4.789 billion in Q1 2024 and $5.085 billion in Q2 2023[50] - Global Wealth and Asset Management investment income for Q2 2024 was $138 million, compared to $140 million in Q1 2024 and $75 million in Q2 2023[50] - Year-to-date core EBITDA for 2024 was $990 million, up from $817 million in the same period in 2023[50] - Year-to-date core revenue for 2024 was $3.821 billion, compared to $3.478 billion in the same period in 2023[50] Regional Performance - Asia region core earnings grew by 40% year-over-year to USD 472 million[5] - Canada APE sales surged by 61% year-over-year to CAD 520 million[5] - Asia business core earnings grew 40% in Q2 2024, attributed to sustained business momentum and updates to actuarial methods and assumptions in H2 2023[10] - Canada group insurance business core earnings grew 7% in Q2 2024, driven by strong growth and favorable net insurance experience[10] - US core earnings decreased 11% in Q2 2024 due to unfavorable net insurance experience and the impact of the long-term care reinsurance transaction announced in December 2023[10] - Asia's net income attributable to shareholders increased to $582 million in Q2 2024, up from $363 million in Q1 2024[46] - US operations reported a net income of $135 million in Q2 2024, recovering from a loss of $108 million in Q1 2024[46] - Canada's net income attributable to shareholders decreased to $79 million in Q2 2024 from $273 million in Q1 2024[46] - Asia's net income attributable to shareholders in USD terms was $424 million in Q2 2024, compared to $270 million in Q1 2024[46] - Total net income attributable to shareholders reached $1,042 million in Q2 2024, up from $866 million in Q1 2024[46] Contractual Service Margin (CSM) - Contractual Service Margin (CSM) balance increased to CAD 20.758 billion as of June 30, 2024, up by CAD 318 million from December 31, 2023[14] - Natural CSM movement contributed CAD 453 million to the increase in the first half of 2024, driven by new business and interest accretion, partially offset by core earnings amortization and unfavorable insurance experience[14] - Non-natural CSM movement decreased by CAD 135 million, primarily due to reinsurance transactions, partially offset by favorable foreign exchange and equity market impacts[14] - Post-tax CSM, excluding non-controlling interests, stood at CAD 18.290 billion as of June 30, 2024[14] - Contractual Service Margin (CSM) as of June 30, 2024, was $21,760 million, slightly down from $22,075 million at the end of 2023[41] - Post-tax CSM as of June 30, 2024, was $19,184 million, compared to $19,425 million at the end of 2023[41] Market Experience and Losses - Market experience losses for Q2 2024 were CAD 665 million, contributing to a total loss of CAD 1.444 billion for the first half of 2024[19] - Market experience losses for Q2 2024 were $665 million, with Asia contributing $(58) million, Canada $(364) million, and the US $(280) million[22] - Market experience losses for Q2 2024 were $9 million, compared to gains of $8 million in Q1 2024 and $7 million in Q2 2023[50] Strategic Initiatives and Partnerships - Manulife completed the acquisition of UK-based multi-sector alternative credit management company CQS, rebranded as Manulife | CQS Investment Management, and launched the John Hancock Multi Asset Credit Fund in the US retail market[7] - Manulife announced a strategic partnership with Annexus in the US to expand its indexed account product portfolio and broaden the market for its indexed universal life insurance products[7] - Manulife deployed generative AI in Asia, launching an innovative AI-powered agent sales tool in Singapore and piloting the Manulife MPF Smart Advisor platform in Hong Kong[8] - Manulife enhanced its mobile app for group insurance members in Canada by adding mental health features and instant support services through a partnership with TELUS Health[8] Financial Metrics and Ratios - Shareholders' core return on equity (annualized) for Q2 2024 was 15.7%, down from 16.7% in Q1 2024[39] - Adjusted book value rose to $60,595 million as of June 30, 2024, up from $60,137 million at the end of Q1 2024[47] - The company's LICAT ratio as of June 30, 2024, was disclosed in accordance with OSFI's guidelines[14] Forward-Looking Statements and Risk Management - Manulife's second quarter 2023 results are discussed, focusing on financial performance and future outlook[55] - The report includes updates on risk management and key actuarial and accounting policies[55] - Forward-looking statements are provided to help investors understand the company's financial condition and future operations[55] - The company does not commit to updating forward-looking statements unless required by law[55]

[Executive Summary & Highlights](index=2&type=section&id=Executive%20Summary%20%26%20Highlights) Manulife Financial Corporation reported strong second-quarter 2024 results, demonstrating positive momentum in core earnings, new business, and book value growth Key Highlights for 2Q24 (YoY Change) | Metric | Value | Change from 2Q23 (Constant Exchange Rate) | | :-------------------------------- | :------------------ | :--------------------------------------- | | Core earnings | $1.7 billion | Up 6% | | Net income attributed to shareholders | $1.0 billion | In-line | | Core EPS | $0.91 | Up 9% | | Core EPS (excluding GMT) | $0.94 | Up 12% | | Core ROE | 15.7% | - | | LICAT ratio | 139% | - | | APE sales | - | Up 17% | | New business value (NBV) | - | Up 23% | | Global WAM net inflows | $0.1 billion | Down from $2.2 billion | | Common shares bought back | 31 million ($1.1 billion) | - | | Planned capital return (NCIB) | >$3 billion | - | - Manulife completed the acquisition of CQS, a U.K.-based multi-sector alternative credit manager, and co-branded it as Manulife | CQS Investment Management[6](index=6&type=chunk)[17](index=17&type=chunk) - The company launched an innovative Generative AI agent sales tool in Singapore, piloted a Manulife Mandatory Provident Fund (MPF) Robo-Advisor in Hong Kong, and deployed a Generative AI knowledge management chatbot in the U.S. Annuities contact center[19](index=19&type=chunk)[20](index=20&type=chunk)[22](index=22&type=chunk) - Manulife became the first U.S. life insurer to offer discounted and prioritized access to Prenuvo (whole body MRI scan) to eligible John Hancock Vitality members for early disease detection[23](index=23&type=chunk) Contractual Service Margin (CSM) Net of NCI | Metric | June 30, 2024 (CAD millions) | December 31, 2023 (CAD millions) | Change | | :----- | :--------------------------- | :------------------------------- | :----- | | CSM | $20,758 | $20,440 | $318 | [A. TOTAL COMPANY PERFORMANCE](index=7&type=section&id=A.%20TOTAL%20COMPANY%20PERFORMANCE) This section provides an overview of Manulife's overall financial and operational performance for the second quarter and year-to-date 2024 [A1 Profitability](index=8&type=section&id=A1%20Profitability) Manulife's 2Q24 net income was stable YoY, while core earnings grew robustly, driven by Global WAM and insurance business expansion Quarterly Profitability (2Q24 vs 2Q23) | Metric | 2Q24 (CAD millions) | 2Q23 (CAD millions) | Change | | :-------------------------------- | :------------------ | :------------------ | :----- | | Net income attributed to shareholders | $1,042 | $1,025 | 1.7% | | Core earnings | $1,737 | $1,637 | 6.1% | | Diluted EPS | $0.52 | $0.50 | 4.0% | | Diluted Core EPS | $0.91 | $0.83 | 9.6% | | ROE | 9.0% | 9.3% | -0.3 pps | | Core ROE | 15.7% | 15.5% | 0.2 pps | | Expense efficiency ratio | 45.4% | 45.1% | 0.3 pps | | General expenses | $1,225 | $1,022 | 19.9% | | Core expenses | $1,713 | $1,598 | 7.2% | Year-to-Date Profitability (2024 vs 2023) | Metric | YTD 2024 (CAD millions) | YTD 2023 (CAD millions) | Change | | :-------------------------------- | :---------------------- | :---------------------- | :----- | | Net income attributed to shareholders | $1,908 | $2,431 | -21.5% | | Core earnings | $3,491 | $3,168 | 10.2% | | Diluted EPS | $0.97 | $1.23 | -21.1% | | Diluted Core EPS | $1.85 | $1.63 | 13.5% | | ROE | 8.5% | 11.4% | -2.9 pps | | Core ROE | 16.2% | 15.2% | 1.0 pps | | Expense efficiency ratio | 45.3% | 46.1% | -0.8 pps | | General expenses | $2,327 | $2,108 | 10.4% | | Core expenses | $3,386 | $3,203 | 5.7% | - Net income in 2Q24 was impacted by a **$239 million net loss** from the RGA Reinsurance Transaction and a charge related to the adoption of the Global Minimum Tax Act[44](index=44&type=chunk) - The increase in core earnings was driven by higher core earnings in Global Wealth and Asset Management (Global WAM), growth in the insurance business, updates to actuarial methods and assumptions, and a tax true-up in Global WAM[45](index=45&type=chunk)[51](index=51&type=chunk) - Manulife updated its medium-term target for the expense efficiency ratio from less than 50% to **less than 45%**[61](index=61&type=chunk) [A2 Business performance](index=12&type=section&id=A2%20Business%20performance) Manulife achieved record-level APE sales and New Business Value in 2Q24, reflecting strong growth across its diversified insurance portfolio Quarterly New Business Performance (2Q24 vs 2Q23) | Metric (CAD millions) | 2Q24 | 2Q23 | Change (Constant Exchange Rate) | | :-------------------- | :--- | :--- | :------------------------------ | | Total APE sales | $1,907 | $1,633 | 17% | | Total NBV | $723 | $585 | 23% | | Total New business CSM | $628 | $592 | 6% | Year-to-Date New Business Performance (2024 vs 2023) | Metric (CAD millions) | YTD 2024 | YTD 2023 | Change (Constant Exchange Rate) | | :-------------------- | :------- | :------- | :------------------------------ | | Total APE sales | $3,790 | $3,233 | 19% | | Total NBV | $1,392 | $1,094 | 28% | | Total New business CSM | $1,286 | $1,034 | 25% | - Asia's APE sales grew **7%**, New business CSM grew **10%**, and NBV grew **19%** in 2Q24, driven by higher sales volumes in Japan and Hong Kong[72](index=72&type=chunk) - Canada's APE sales increased **61%** and NBV increased **50%** in 2Q24, driven by higher sales volumes in all business units, led by a large-case Group Insurance sale[72](index=72&type=chunk) - Global WAM net inflows were **$0.1 billion** in 2Q24, a decrease from $2.2 billion in 2Q23, mainly reflecting strength in the Institutional business offset by outflows in the Retirement business[31](index=31&type=chunk)[74](index=74&type=chunk) [A3 Financial strength](index=14&type=section&id=A3%20Financial%20strength) Manulife maintained a strong capital position in 2Q24, with an improved LICAT ratio and growth in book value per common share Capital Ratios (2Q24 vs 1Q24) | Metric | 2Q24 | 1Q24 | Change | | :---------------------- | :--- | :--- | :----- | | MLI's LICAT ratio | 139% | 138% | 1 pps | | MFC's LICAT ratio | 127% | 126% | 1 pps | | Financial leverage ratio | 24.6% | 24.3% | 0.3 pps | Book Value per Common Share (June 30, 2024 vs Dec 31, 2023) | Metric | June 30, 2024 | Dec 31, 2023 | Change | | :-------------------------- | :------------ | :----------- | :----- | | Book value per common share | $23.71 | $22.36 | 6% | | Adjusted BV per common share | $33.96 | $32.19 | 5% | - MFC's consolidated capital was **$77.6 billion** as at June 30, 2024, an increase of $3.7 billion compared with $73.9 billion as at December 31, 2023[82](index=82&type=chunk) - The number of common shares outstanding was **1,785 million** as at June 30, 2024, a net decrease of 21 million common shares from 1,806 million as at December 31, 2023, primarily driven by common share buybacks[84](index=84&type=chunk) [A4 Assets under management and administration ("AUMA")](index=15&type=section&id=A4%20Assets%20under%20management%20and%20administration%20(%22AUMA%22)) Total AUMA increased by 4% in 2Q24 compared to year-end 2023, driven by favorable equity markets and net inflows - AUMA as at June 30, 2024 was **$1.5 trillion**, an increase of 4% compared with December 31, 2023, primarily due to the favourable impact of equity markets and net inflows[89](index=89&type=chunk) - Total invested assets **decreased 2%** on an actual exchange rate basis, primarily due to the transfer of invested assets related to the GA and RGA Reinsurance Transactions[89](index=89&type=chunk) - Segregated funds net assets **increased 8%** on an actual exchange rate basis, primarily due to the impact of equity markets[89](index=89&type=chunk) [A5 Impact of foreign currency exchange rates](index=15&type=section&id=A5%20Impact%20of%20foreign%20currency%20exchange%20rates) Foreign currency exchange rate changes had a minor positive impact on 2Q24 core earnings but a negative impact on year-to-date core earnings - Changes in foreign currency exchange rates increased core earnings by **$2 million** in 2Q24, primarily due to a weaker Canadian dollar compared with the U.S. dollar[90](index=90&type=chunk) - Changes in foreign currency exchange rates decreased year-to-date core earnings by **$24 million** in 2024 compared with the same period of 2023 primarily due to a stronger Canadian dollar compared with the Japanese yen[90](index=90&type=chunk) [A6 Business highlights](index=15&type=section&id=A6%20Business%20highlights) Manulife expanded customer reach through strategic partnerships and advanced its digital transformation by deploying Generative AI tools - Manulife completed the acquisition of CQS, a U.K.-based multi-sector alternative credit manager, and launched the John Hancock Multi Asset Credit Fund in U.S. Retail[91](index=91&type=chunk) - A strategic partnership with Annexus was announced in the U.S. to expand indexed account offerings and reach a wider market with the Protection Indexed Universal Life solution[92](index=92&type=chunk) - Generative AI tools were deployed across various segments: an agent sales tool in Singapore, a MPF Robo-Advisor in Hong Kong Retirement, and a knowledge management chatbot in the U.S. Annuities contact center[93](index=93&type=chunk)[94](index=94&type=chunk)[97](index=97&type=chunk) - Manulife became the first U.S. life insurer to offer discounted and prioritized access to Prenuvo (whole body MRI scan) to eligible John Hancock Vitality members[98](index=98&type=chunk) [A7 Strategic priorities](index=16&type=section&id=A7%20Strategic%20priorities) Manulife updated its financial targets, aiming for higher returns and lower risk, while reconfirming its five strategic priorities New Financial Targets (by 2027) | Metric | Target | | :---------------------- | :------- | | Core ROE | 18%+ | | Cumulative remittances (2024-2027) | $22 billion+ | | Expense efficiency ratio | <45% | Reconfirmed Medium-Term Financial Targets | Metric | Target | | :-------------------------------- | :------- | | Core EPS growth | 10% to 12% | | New business CSM growth | 15% | | CSM balance growth | 8% to 10% | | Financial leverage ratio | 25% | | Core common share dividend payout ratio | 35% to 45% | - Manulife reconfirmed its five strategic priorities, including achieving **75% of core earnings** from highest potential businesses by 2025 and **50% of core earnings** from the Asia region by 2027[102](index=102&type=chunk)[105](index=105&type=chunk) [B. PERFORMANCE BY SEGMENT](index=17&type=section&id=B.%20PERFORMANCE%20BY%20SEGMENT) This section details the financial and operational performance of Manulife's key segments, highlighting segment-specific drivers of profitability and sales [B1 Asia](index=17&type=section&id=B1%20Asia) The Asia segment delivered strong profitability and new business growth in 2Q24, with core earnings up 40% and APE sales up 7% YoY Asia Segment Profitability (2Q24 vs 2Q23, US$ millions) | Metric | 2Q24 | 2Q23 | Change | | :-------------------------------- | :--- | :--- | :----- | | Net income attributed to shareholders | $424 | $96 | 289% | | Core earnings | $472 | $353 | 40% | Asia Segment Business Performance (2Q24 vs 2Q23, US$ millions) | Metric | 2Q24 | 2Q23 | Change | | :-------------------- | :--- | :--- | :----- | | APE sales | $920 | $879 | 7% | | NBV | $370 | $315 | 19% | | New business CSM | $349 | $323 | 10% | | NBV margin | 43.7% | 40.3% | 3.4 pps | - Core earnings increased due to higher expected earnings on insurance contracts, favorable claims experience, higher expected investment income, and the net impact of updates to actuarial methods and assumptions[110](index=110&type=chunk) - Hong Kong APE sales increased **15%** and NBV increased **23%** in 2Q24, reflecting higher sales in agency and bancassurance channels[114](index=114&type=chunk) - Japan APE sales increased **93%** and NBV increased **176%** in 2Q24, driven by higher sales in other wealth products due to strong market performance[114](index=114&type=chunk) - The Asia segment enhanced agent-customer interactions through a Generative AI agent sales tool in Singapore and expanded its presence in Macau by doubling client-servicing capacity[118](index=118&type=chunk) [B2 Canada](index=20&type=section&id=B2%20Canada) The Canada segment's core earnings grew 7% in 2Q24, driven by business growth, though net income decreased due to items excluded from core earnings Canada Segment Profitability (2Q24 vs 2Q23, CAD millions) | Metric | 2Q24 | 2Q23 | Change | | :-------------------------------- | :--- | :--- | :----- | | Net income attributed to shareholders | $79 | $227 | -65% | | Core earnings | $402 | $374 | 7% | Canada Segment Business Performance (2Q24 vs 2Q23, CAD millions) | Metric | 2Q24 | 2Q23 | Change | | :-------------------- | :--- | :--- | :----- | | APE sales | $520 | $322 | 61% | | NBV | $159 | $106 | 50% | | New business CSM | $76 | $57 | 33% | - Core earnings increased due to business growth in Group Insurance and affinity markets, and favorable retail claims experience in Individual Insurance, partially offset by lower investment spreads[121](index=121&type=chunk) - Group Insurance APE sales increased **103%** in 2Q24, driven by higher sales across all markets, led by a large-case sale[126](index=126&type=chunk) - Manulife Bank average net lending assets were **$25.7 billion** as at June 30, 2024, up $0.5 billion or 2% compared with December 31, 2023[127](index=127&type=chunk) - The Manulife mobile app for group benefits members was enhanced with mental health features and live support, and the 2023 Wellness Report was released[130](index=130&type=chunk) [B3 U.S.](index=21&type=section&id=B3%20U.S.) The U.S. segment experienced a decrease in net income and core earnings in 2Q24, primarily due to unfavorable net insurance experience U.S. Segment Profitability (2Q24 vs 2Q23, US$ millions) | Metric | 2Q24 | 2Q23 | Change | | :-------------------------------- | :--- | :--- | :----- | | Net income attributed to shareholders | $98 | $136 | -28% | | Core earnings | $303 | $341 | -11% | U.S. Segment Business Performance (2Q24 vs 2Q23, US$ millions) | Metric | 2Q24 | 2Q23 | Change | | :-------------------- | :--- | :--- | :----- | | APE sales | $93 | $97 | -4% | | NBV | $41 | $40 | 3% | | New business CSM | $54 | $77 | -30% | - Core earnings decreased due to more unfavorable net insurance experience, primarily reflecting unfavorable claims in long-term care and unfavorable claims and lapse experience in life[132](index=132&type=chunk) - APE sales of products with the John Hancock Vitality PLUS feature represented **81%** of overall U.S. sales in 2Q24, up from 75% in 2Q23[134](index=134&type=chunk) - The U.S. segment announced a strategic partnership with Annexus to expand indexed account offerings and became the first U.S. life insurer to offer discounted access to Prenuvo whole body MRI scans[137](index=137&type=chunk)[142](index=142&type=chunk) [B4 Global Wealth and Asset Management](index=23&type=section&id=B4%20Global%20Wealth%20and%20Asset%20Management) Global WAM achieved strong core earnings growth of 23% in 2Q24, driven by higher net fee income and disciplined expense management Global WAM Profitability (2Q24 vs 2Q23, CAD millions) | Metric | 2Q24 | 2Q23 | Change | | :-------------------------------- | :--- | :--- | :----- | | Net income attributed to shareholders | $350 | $317 | 9% | | Core earnings | $399 | $320 | 23% | | Core EBITDA | $513 | $424 | 20% | | Core EBITDA margin | 26.3% | 24.6% | 170 bps | Global WAM Business Performance (2Q24 vs 2Q23, CAD millions) | Metric | 2Q24 | 2Q23 | Change | | :-------------------------------- | :--- | :--- | :----- | | Gross flows | $41,442 | $35,152 | 17% | | Net flows | $82 | $2,187 | -96% | | Average AUMA | $933.1 billion | $814.9 billion | 13% | - Core earnings increased due to higher net fee income from higher average AUMA (favorable market impacts and net inflows), a favorable tax true-up in Asia, and disciplined expense management[141](index=141&type=chunk) - Retirement net outflows were **$1.3 billion** in 2Q24 compared with net inflows of $0.7 billion in 2Q23, driven by higher member withdrawals and a large-case retirement plan redemption in the U.S[148](index=148&type=chunk) - Institutional Asset Management net inflows were **$1.4 billion** in 2Q24, with net inflows from CQS partially offset by higher redemptions in fixed income mandates and lower sales in alternative mandates[148](index=148&type=chunk) - Global WAM AUMA increased to **$943.9 billion** as of June 30, 2024, up 9% from December 31, 2023, driven by favorable equity markets, $19 billion of assets from the CQS acquisition, and year-to-date net inflows[146](index=146&type=chunk) [B5 Corporate and Other](index=25&type=section&id=B5%20Corporate%20and%20Other) The Corporate and Other segment reported a net loss in 2Q24, primarily due to a charge related to the adoption of the Global Minimum Tax Act Corporate and Other Segment Profitability (2Q24 vs 2Q23, CAD millions) | Metric | 2Q24 | 2Q23 | Change | | :-------------------------------- | :--- | :--- | :----- | | Net income (loss) attributed to shareholders | $(104) | $168 | -161.9% | | Core earnings (loss) | $(126) | $12 | -1150% | - The segment recorded an **$88 million charge** related to the adoption of the Global Minimum Tax Act in 2Q24, which was enacted in Canada and is retroactive to January 1, 2024[152](index=152&type=chunk) - The decline in core earnings was primarily related to the GMT charge, higher interest on allocated capital to operating segments, higher core expenses due to workforce-related costs, and lower gains from updates to provisions for estimated losses in the P&C Reinsurance business[154](index=154&type=chunk) [C. RISK MANAGEMENT AND RISK FACTORS UPDATE](index=25&type=section&id=C.%20RISK%20MANAGEMENT%20AND%20RISK%20FACTORS%20UPDATE) This section updates Manulife's risk management practices and factors, focusing on sensitivities to market and strategic risks [C1 Variable annuity and segregated fund guarantees](index=26&type=section&id=C1%20Variable%20annuity%20and%20segregated%20fund%20guarantees) Manulife's net amount at risk for variable annuity and segregated fund guarantees decreased from year-end 2023 to June 30, 2024 Variable Annuity and Segregated Fund Guarantees, Net of Reinsurance (CAD millions) | Guarantee Type | June 30, 2024 | December 31, 2023 | Change | | :----------------------------- | :------------ | :---------------- | :----- | | Guaranteed minimum income benefit | $956 | $1,156 | -$200 | | Guaranteed minimum withdrawal benefit | $3,660 | $4,093 | -$433 | | Guaranteed minimum accumulation benefit | $88 | $116 | -$28 | | Total, net of reinsurance | $1,993 | $2,463 | -$470 | - The Company seeks to mitigate a portion of the risks embedded in its retained variable annuity and segregated fund guarantee business through **dynamic and macro hedging strategies**[159](index=159&type=chunk) [C2 Caution related to sensitivities](index=26&type=section&id=C2%20Caution%20related%20to%20sensitivities) The provided sensitivities are directional estimates based on internal models and should be viewed with caution as actual results may differ significantly - Sensitivities are directional estimates of underlying sensitivities for respective factors based on assumptions outlined, and **actual results can differ significantly**[164](index=164&type=chunk) - Risk exposures measure the impact of changing one factor at a time, assuming all other factors remain unchanged[164](index=164&type=chunk) - Differences can arise from interactions among factors, changes in liabilities from updates to non-economic assumptions, changes in business mix, effective tax rates, other market factors, and general limitations of internal models[164](index=164&type=chunk) [C3 Publicly traded equity performance risk sensitivities and exposure measures](index=27&type=section&id=C3%20Publicly%20traded%20equity%20performance%20risk%20sensitivities%20and%20exposure%20measures) A 10% decline in public equity markets could result in a net potential impact of -$380 million on net income after hedging and reinsurance Net Potential Impact on Net Income Attributed to Shareholders (after hedging and reinsurance, CAD millions) | Equity Market Change | -30% | -20% | -10% | +10% | +20% | +30% | | :------------------- | :------ | :------ | :------ | :----- | :----- | :----- | | As at June 30, 2024 | $(1,130) | $(750) | $(380) | $370 | $740 | $1,110 | Net Potential Impact on Contractual Service Margin (pre-tax, CAD millions) | Equity Market Change | -30% | -20% | -10% | +10% | +20% | +30% | | :------------------- | :------ | :------ | :------ | :----- | :----- | :----- | | As at June 30, 2024 | $(1,880) | $(1,220) | $(600) | $580 | $1,160 | $1,720 | MLI's LICAT Ratio Impact (change in percentage points) | Equity Market Change | -30% | -20% | -10% | +10% | +20% | +30% | | :------------------- | :--- | :--- | :--- | :--- | :--- | :--- | | As at June 30, 2024 | (3) | (1) | (1) | 1 | 2 | 2 | - The dynamic hedging program is assumed to offset **95%** of the dynamically hedged variable annuity liability movement that occurs as a result of market changes[170](index=170&type=chunk) [C4 Interest rate and spread risk sensitivities and exposure measures](index=29&type=section&id=C4%20Interest%20rate%20and%20spread%20risk%20sensitivities%20and%20exposure%20measures) Manulife's net income is sensitive to parallel shifts in interest rates, with a 50 basis point change impacting it by $100 million Potential Impacts on Net Income Attributed to Shareholders (CAD millions, post-tax, June 30, 2024) | Scenario | -50bp | +50bp | | :---------------- | :---- | :---- | | Interest rates | $100 | $(100) | | Corporate spreads | $100 | $(100) | | Swap spreads | $100 | $(100) | MLI's LICAT Ratio Impact (change in percentage points, June 30, 2024) | Scenario | -50bp | +50bp | | :---------------- | :---- | :---- | | Interest rates | – | – | | Corporate spreads | (3) | 3 | | Swap spreads | – | – | - The disclosed interest rate sensitivities assume no hedge accounting ineffectiveness, as hedge accounting programs are optimized for parallel movements in interest rates[185](index=185&type=chunk) - The probability of a LICAT scenario switch that could materially impact the LICAT ratio is low with the current level of interest rates in 2Q24[203](index=203&type=chunk) [C5 Alternative long-duration asset performance risk sensitivities and exposure measures](index=32&type=section&id=C5%20Alternative%20long-duration%20asset%20performance%20risk%20sensitivities%20and%20exposure%20measures) A 10% change in the market values of Alternative Long-Duration Assets could impact net income by $2.4 billion Potential Immediate Impacts from 10% Change in ALDA Market Values (June 30, 2024, CAD millions, post-tax) | Metric | -10% | +10% | | :-------------------------------------- | :-------- | :-------- | | Net income attributed to shareholders | $(2,400) | $2,400 | | Total comprehensive income attributed to shareholders | $(2,600) | $2,600 | MLI's LICAT Ratio Impact from ALDA Market Values (change in percentage points, June 30, 2024) | ALDA Market Change | -10% | +10% | | :----------------- | :--- | :--- | | MLI's LICAT ratio | (2) | 1 | - ALDA includes investments in commercial real estate, private equity, infrastructure, timber and agriculture, and energy[206](index=206&type=chunk) [C6 Strategic and product risk factors update](index=32&type=section&id=C6%20Strategic%20and%20product%20risk%20factors%20update) Strategic risk updates include potential impacts from the new Global Minimum Tax Act, which is expected to increase the effective tax rate - Canada enacted the Global Minimum Tax Act on June 20, 2024, retroactive to fiscal periods commencing on or after December 31, 2023, which is expected to increase the effective tax rate by approximately **2 to 3 percentage points**[216](index=216&type=chunk) - Year-to-date GMT expense of **$88 million** was recorded in 2Q24, primarily arising from operations in Hong Kong and China[216](index=216&type=chunk)[413](index=413&type=chunk) - The company is actively disputing rate increase requests from some reinsurers to protect its contractual rights, and thus far, these disputes have not had a material adverse effect on results[214](index=214&type=chunk) [D. CRITICAL ACTUARIAL AND ACCOUNTING POLICIES](index=33&type=section&id=D.%20CRITICAL%20ACTUARIAL%20AND%20ACCOUNTING%20POLICIES) This section outlines Manulife's critical actuarial and accounting policies and sensitivities to changes in key economic assumptions [D1 Critical actuarial and accounting policies](index=34&type=section&id=D1%20Critical%20actuarial%20and%20accounting%20policies) Manulife's material accounting policies are consistent with its 2023 Annual Consolidated Financial Statements - Material accounting policies are consistent with the Company's 2023 Annual Consolidated Financial Statements[217](index=217&type=chunk) - Critical actuarial policies relate to the determination of insurance and investment contract liabilities[217](index=217&type=chunk) - Critical accounting policies cover assessment of control for consolidation, estimation of fair value of invested assets, evaluation of impairments, accounting for derivatives, determination of pension obligations, accounting for income taxes, and valuation/impairment of goodwill and intangible assets[217](index=217&type=chunk) [D2 Sensitivity to changes in assumptions](index=34&type=section&id=D2%20Sensitivity%20to%20changes%20in%20assumptions) The company provides sensitivities to changes in certain economic risk variables on CSM, net income, and comprehensive income Potential Impact on CSM net of NCI (CAD millions, post-tax, June 30, 2024) | Financial Assumption | Impact | | :---------------------------------------------------- | :----- | | 10 basis point reduction in ultimate spot rate | $(200) | | 50 basis point increase in non-fixed income return volatility | $(100) | - The analysis is based on a simultaneous change in assumptions across all business units and holds all other assumptions constant[219](index=219&type=chunk) - Actual results can differ materially from these estimates due to the interaction among factors, actual experience differing from assumptions, changes in business mix, effective tax rates, and general limitations of internal models[219](index=219&type=chunk) [D3 Accounting and reporting changes](index=34&type=section&id=D3%20Accounting%20and%20reporting%20changes) Future accounting and reporting changes are detailed in note 2 of the unaudited Interim Consolidated Financial Statements - For future accounting and reporting changes arising during the quarter, refer to note 2 of the unaudited Interim Consolidated Financial Statements for the three and six months ended June 30, 2024[222](index=222&type=chunk) [E. OTHER](index=35&type=section&id=E.%20OTHER) This section provides supplementary information including outstanding common shares, legal proceedings, and non-GAAP financial measures [E1 Outstanding common shares – selected information](index=35&type=section&id=E1%20Outstanding%20common%20shares%20%E2%80%93%20selected%20information) As of July 31, 2024, Manulife Financial Corporation had 1,778,242,782 common shares outstanding - As at July 31, 2024, MFC had **1,778,242,782 common shares outstanding**[224](index=224&type=chunk) [E2 Legal and regulatory proceedings](index=35&type=section&id=E2%20Legal%20and%20regulatory%20proceedings) Information on legal and regulatory proceedings can be found in note 13 of the unaudited Interim Consolidated Financial Statements - Information on legal and regulatory proceedings can be found in note 13 of our unaudited Interim Consolidated Financial Statements for the three and six months ended June 30, 2024[225](index=225&type=chunk) [E3 Non-GAAP and other financial measures](index=35&type=section&id=E3%20Non-GAAP%20and%20other%20financial%20measures) This section defines and reconciles various non-GAAP and other financial measures used by Manulife to evaluate performance - Non-GAAP financial measures include core earnings (loss), core EBITDA, post-tax contractual service margin (CSM), adjusted book value, and constant exchange rate (CER) basis measures[227](index=227&type=chunk) - Non-GAAP ratios include core return on shareholders' equity (ROE), diluted core earnings per common share (EPS), financial leverage ratio, expense efficiency ratio, and core EBITDA margin[228](index=228&type=chunk) - Core earnings reflect the underlying earnings capacity of the business by excluding market-related gains or losses, changes in actuarial methods and assumptions, and other material but non-recurring items[233](index=233&type=chunk) Core Earnings Available to Common Shareholders (2Q24 vs 2Q23, CAD millions) | Metric | 2Q24 | 2Q23 | | :----------------------------------- | :--- | :--- | | Core earnings | $1,737 | $1,637 | | Less: Preferred share dividends and other equity distributions | $99 | $98 | | Core earnings available to common shareholders | $1,638 | $1,539 | Global WAM Core EBITDA and Margin (2Q24 vs 2Q23, CAD millions) | Metric | 2Q24 | 2Q23 | Change | | :---------------- | :--- | :--- | :----- | | Core EBITDA | $513 | $424 | 20% | | Core EBITDA margin | 26.3% | 24.6% | 170 bps | [E4 Caution regarding forward-looking statements](index=84&type=section&id=E4%20Caution%20regarding%20forward-looking%20statements) This section advises caution regarding forward-looking statements, which involve risks and uncertainties that could cause actual results to differ materially - Forward-looking statements involve risks and uncertainties, and **undue reliance should not be placed on such statements**[377](index=377&type=chunk) - Actual results can differ significantly from estimates due to factors including general business and economic conditions, changes in laws and regulations, changes in accounting standards, and the accuracy of estimates relating to morbidity, mortality, and policyholder behaviour[378](index=378&type=chunk) - The forward-looking statements are stated as of the date of the document and are not updated, except as required by law[381](index=381&type=chunk) [E5 Quarterly financial information](index=85&type=section&id=E5%20Quarterly%20financial%20information) This section provides summary financial information for the eight most recently completed quarters Quarterly Financial Summary (2Q24, CAD millions) | Metric | 2Q24 | | :-------------------------------------- | :------ | | Total revenue | $12,876 | | Net income (loss) attributed to shareholders | $1,042 | | Diluted earnings (loss) per common share | $0.52 | | Total assets (in billions) | $915 | | Dividends per common share | $0.400 | - 2022 quarterly information has been restated using IFRS 17 and IFRS 9, which were adopted on January 1, 2023[382](index=382&type=chunk) [E6 Revenue](index=86&type=section&id=E6%20Revenue) Total revenue for 2Q24 increased compared to 2Q23, driven by higher insurance and other revenue Total Revenue (2Q24 vs 2Q23, CAD millions) | Metric | 2Q24 | 2Q23 | Change | | :------------ | :------ | :------ | :----- | | Total revenue | $12,876 | $12,090 | 6.5% | Revenue Components (2Q24 vs 2Q23, CAD millions) | Metric | 2Q24 | 2Q23 | | :------------------ | :------ | :------ | | Insurance revenue | $6,515 | $5,580 | | Net investment income | $4,512 | $4,819 | | Other revenue | $1,849 | $1,691 | - The increase in 2Q24 revenue reflected higher insurance revenue in the U.S., Canada, and Asia, and higher other revenue in Global WAM[385](index=385&type=chunk) [E7 Other](index=86&type=section&id=E7%20Other) No material changes were made to internal control over financial reporting during 2Q24 - No changes were made in internal control over financial reporting during the three months ended June 30, 2024, that have materially affected or are reasonably likely to materially affect internal control over financial reporting[387](index=387&type=chunk) - MFC's Audit Committee reviewed the MD&A and the unaudited interim financial report, and MFC's Board of Directors approved the MD&A prior to its release[387](index=387&type=chunk) [Consolidated Financial Statements](index=87&type=section&id=Consolidated%20Financial%20Statements) This section presents the unaudited interim consolidated financial statements for the periods ended June 30, 2024, and comparative periods [Consolidated Statements of Financial Position](index=87&type=section&id=Consolidated%20Statements%20of%20Financial%20Position) As of June 30, 2024, total assets were $915,273 million and total equity was $50,756 million Key Financial Position Data (June 30, 2024 vs Dec 31, 2023, CAD millions) | Metric | June 30, 2024 | Dec 31, 2023 | Change | | :---------------------- | :------------ | :----------- | :----- | | Total assets | $915,273 | $875,574 | 4.5% | | Total invested assets | $410,619 | $417,210 | -1.6% | | Segregated funds net assets | $406,106 | $377,544 | 7.6% | | Total liabilities | $864,517 | $826,847 | 4.6% | | Total equity | $50,756 | $48,727 | 4.2% | [Consolidated Statements of Income](index=88&type=section&id=Consolidated%20Statements%20of%20Income) For the three months ended June 30, 2024, net income attributed to shareholders was $1,042 million, a slight increase from 2Q23 Key Income Data (3 months ended June 30, 2024 vs 2023, CAD millions) | Metric | 2024 | 2023 | Change | | :-------------------------------------- | :------ | :------ | :----- | | Total insurance service result | $1,037 | $887 | 16.9% | | Total investment result | $513 | $597 | -14.1% | | Other revenue | $1,849 | $1,691 | 9.3% | | Net income (loss) before income taxes | $1,384 | $1,436 | -3.7% | | Net income (loss) attributed to shareholders | $1,042 | $1,025 | 1.7% | | Diluted earnings per common share | $0.52 | $0.50 | 4.0% | Key Income Data (6 months ended June 30, 2024 vs 2023, CAD millions) | Metric | 2024 | 2023 | Change | | :-------------------------------------- | :------ | :------ | :----- | | Total insurance service result | $2,015 | $1,736 | 16.1% | | Total investment result | $861 | $1,567 | -45.1% | | Other revenue | $3,657 | $3,382 | 8.1% | | Net income (loss) before income taxes | $2,636 | $3,155 | -16.4% | | Net income (loss) attributed to shareholders | $1,908 | $2,431 | -21.5% | | Diluted earnings per common share | $0.97 | $1.23 | -21.1% | [Consolidated Statements of Comprehensive Income](index=89&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) For the three months ended June 30, 2024, total comprehensive income was $2,294 million, a significant improvement from a loss in 2Q23 Total Comprehensive Income (3 months ended June 30, 2024 vs 2023, CAD millions) | Metric | 2024 | 2023 | Change | | :-------------------------------------- | :------ | :------ | :----- | | Net income (loss) | $1,132 | $1,171 | -3.3% | | Other comprehensive income (loss) ("OCI"), net of tax | $1,162 | $(1,557) | 174.8% | | Total comprehensive income (loss), net of tax | $2,294 | $(386) | 694.3% | - Key drivers of OCI in 2Q24 included **$391 million in foreign exchange gains** on translation of foreign operations and **$3,381 million in insurance finance income** (expenses), partially offset by $(2,143) million in unrealized gains (losses) on fair value through OCI investments[392](index=392&type=chunk) [Consolidated Statements of Changes in Equity](index=90&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity) For the six months ended June 30, 2024, total equity increased to $50,756 million, driven by net income and positive AOCI changes Total Equity (June 30, 2024 vs 2023, CAD millions) | Metric | 2024 | 2023 | Change | | :----------- | :------ | :------ | :----- | | Total equity | $50,756 | $47,156 | 7.6% | - During the six months ended June 30, 2024, the company repurchased **25 million common shares** for cancellation for $840 million[395](index=395&type=chunk)[545](index=545&type=chunk) - Common share dividends for the six months ended June 30, 2024, amounted to **$1,440 million**[395](index=395&type=chunk) [Consolidated Statements of Cash Flows](index=91&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2024, cash provided by operating activities increased to $11,849 million from $8,749 million in 2023 Cash Flow Summary (6 months ended June 30, 2024 vs 2023, CAD millions) | Activity | 2024 | 2023 | Change | | :------------------------ | :-------- | :-------- | :----- | | Operating activities | $11,849 | $8,749 | 35.4% | | Investing activities | $(10,033) | $(3,980) | -152.1% | | Financing activities | $(580) | $(2,371) | 75.5% | | Increase (decrease) during the period | $1,236 | $2,398 | -48.4% | | Balance, end of period | $21,461 | $20,658 | 3.9% | - Cash provided by operating activities increased primarily due to an increase in insurance contract net liabilities and changes in policy related and operating receivables and payables[397](index=397&type=chunk) - Investing activities resulted in a net cash outflow of **$10,033 million**, driven by purchases and mortgage advances of $67,008 million[397](index=397&type=chunk) [CONDENSED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS](index=92&type=section&id=CONDENSED%20NOTES%20TO%20INTERIM%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed notes to the interim consolidated financial statements, covering accounting policies, assets, liabilities, and risk management [Note 1 Nature of Operations and Material Accounting Policy Information](index=92&type=section&id=Note%201%20Nature%20of%20Operations%20and%20Material%20Accounting%20Policy%20Information) Manulife Financial Corporation is a leading financial services group operating in Asia, Canada, and the U.S - Manulife Financial Corporation (MFC) is a leading financial services group with principal operations in Asia, Canada and the United States, offering financial protection and wealth management products and services[399](index=399&type=chunk) - These Interim Consolidated Financial Statements have been prepared in accordance with International Accounting Standard (IAS) 34 'Interim Financial Reporting', consistent with the Company's 2023 Annual Consolidated Financial Statements[400](index=400&type=chunk) - The Interim Consolidated Financial Statements as at and for the three and six months ended June 30, 2024 were authorized for issue by MFC's Board of Directors on August 7, 2024[402](index=402&type=chunk) [Note 2 Accounting and Reporting Changes](index=92&type=section&id=Note%202%20Accounting%20and%20Reporting%20Changes) Manulife is assessing the impact of upcoming accounting changes and has applied a temporary exception for deferred taxes related to the Global Minimum Tax Act - Manulife is assessing the impact of future accounting and reporting changes, including Annual Improvements to IFRS Accounting Standards – Volume 11 (effective Jan 1, 2026), Amendments to the Classification and Measurement of Financial Instruments (effective Jan 1, 2026), and IFRS 18 "Presentation and Disclosure in the Financial Statements" (effective Jan 1, 2027)[404](index=404&type=chunk)[406](index=406&type=chunk)[407](index=407&type=chunk) - Canada enacted the Global Minimum Tax Act on June 20, 2024, retroactive to fiscal periods commencing on or after December 31, 2023[412](index=412&type=chunk) - The Company expects to pay GMT of **$88 million** for the six months ended June 30, 2024, primarily arising from its operations in Hong Kong and China, and generally expects it to increase the effective tax rate by approximately **2 to 3 percentage points**[216](index=216&type=chunk)[413](index=413&type=chunk) - A temporary mandatory exception in IAS 12 from recognizing and disclosing deferred tax assets and liabilities related to GMT has been applied[410](index=410&type=chunk) [Note 3 Invested Assets and Investment Income](index=95&type=section&id=Note%203%20Invested%20Assets%20and%20Investment%20Income) This note details the carrying values, fair values, and fair value hierarchy of Manulife's invested assets Total Invested Assets by Fair Value Hierarchy (June 30, 2024, CAD millions) | Level | Fair Value | | :------ | :--------- | | Level 1 | $405,499 | | Level 2 | $281,248 | | Level 3 | $89,515 | Investment Income (6 months ended June 30, 2024 vs 2023, CAD millions) | Metric | 2024 | 2023 | Change | | :------------------ | :------ | :------ | :----- | | Interest income | $6,861 | $6,149 | 11.6% | | Dividends, rental income and other income | $1,400 | $1,386 | 1.0% | | Net investment income (loss) | $9,005 | $9,972 | -9.6% | - Alternative long-duration assets (ALDA) include investments in infrastructure ($16,446 million), private equity ($16,371 million), timber and agriculture ($5,858 million), and energy ($1,809 million) as of June 30, 2024[423](index=423&type=chunk) Total Invested Assets by Remaining Term to Maturity (June 30, 2024, CAD millions) | Term to Maturity | Total Invested Assets | | :------------------- | :-------------------- | | Less than 1 year | $37,239 | | 1 to 3 years | $35,215 | | 3 to 5 years | $33,519 | | 5 to 10 years | $63,295 | | Over 10 years | $145,155 | | With no specific maturity | $96,196 | [Note 4 Derivative and Hedging Instruments](index=104&type=section&id=Note%204%20Derivative%20and%20Hedging%20Instruments) Manulife uses derivatives to manage exposures to interest rates, foreign exchange, commodity prices, and equity markets Fair Value of Derivatives (June 30, 2024 vs Dec 31, 2023, CAD millions) | Metric | June 30, 2024 | Dec 31, 2023 | | :-------------- | :------------ | :----------- | | Notional amount | $463,917 | $440,077 | | Fair value assets | $8,727 | $8,546 | | Fair value liabilities | $14,232 | $11,687 | - The total notional amount includes **$79 billion** of derivative instruments which reference rates impacted by the interest rate benchmark reform, with a significant majority to CDOR, which converted to CORRA as at July 1, 2024[458](index=458&type=chunk) - Certain insurance contracts contain embedded derivatives, such as reinsurance contracts related to guaranteed minimum income benefits and contracts containing certain credit and interest rate features, which are measured separately at FVTPL[462](index=462&type=chunk) [Note 5 Insurance and Reinsurance Contract Assets and Liabilities](index=107&type=section&id=Note%205%20Insurance%20and%20Reinsurance%20Contract%20Assets%20and%20Liabilities) This note details the movements in carrying amounts of insurance and reinsurance contracts, including CSM - The net closing balance of insurance contracts was **$490,289 million** as of June 30, 2024[467](index=467&type=chunk) - The net closing balance of reinsurance contracts held was **$55,315 million** as of June 30, 2024[471](index=471&type=chunk) Insurance Revenue Components (3 months ended June 30, 2024, CAD millions) | Component | Amount | | :-------------------------------------- | :----- | | Expected incurred claims and other insurance service result | $3,509 | | Change in risk adjustment for non-financial risk expired | $366 | | CSM recognized for services provided | $642 | | Recovery of insurance acquisition cash flows | $313 | | Contracts under PAA | $1,685 | | Total insurance revenue | $6,515 | Ultimate Spot Rates for Discounting Liability Cash Flows (June 30, 2024) | Currency | Liquidity Category | Ultimate Year | | :------- | :----------------- | :------------ | | CAD | Illiquid | 4.40% | | USD | Illiquid | 5.00% | | JPY | Somewhat liquid | 1.60% | | HKD | Illiquid | 3.80% | - The company closed two significant reinsurance transactions: one with Global Atlantic Financial Group (Feb 22, 2024) and another with RGA Life Reinsurance Company of Canada (Apr 2, 2024), transferring substantial invested assets and reinsuring insurance/investment contract liabilities[479](index=479&type=chunk)[480](index=480&type=chunk)[481](index=481&type=chunk)[482](index=482&type=chunk) [Note 6 Investment Contract Assets and Liabilities](index=111&type=section&id=Note%206%20Investment%20Contract%20Assets%20and%20Liabilities) Investment contract liabilities totaled $13,031 million as of June 30, 2024, measured at fair value or amortized cost Investment Contract Liabilities (June 30, 2024, CAD millions) | Measurement Method | Gross of Reinsurance | Reinsurance Financial Assets | Net | | :----------------- | :------------------- | :--------------------------- | :-- | | Fair value | $717 | $658 | $59 | | Amortized cost | $12,314 | $1,034 | $11,280 | [Note 7 Risk Management](index=111&type=section&id=Note%207%20Risk%20Management) This note outlines Manulife's credit risk management policies, exposure limits, and collateral requirements - Manulife manages credit risk through defined credit evaluation and adjudication processes, delegated credit approval authorities, and established exposure limits by borrower, corporate connection, credit rating, industry, and geographic region[489](index=489&type=chunk) Allowance for Credit Losses (June 30, 2024 vs Dec 31, 2023, CAD millions) | Metric | June 30, 2024 | Dec 31, 2023 | | :---------------------- | :------------ | :----------- | | Probability-weighted ECLs | $888 | $929 | | Baseline ECL | $670 | $659 | - As at June 30, 2024, the Company had loaned securities with a market value of **$1,312 million**, engaged in reverse repurchase transactions of **$914 million**, and repurchase transactions of **$436 million**[501](index=501&type=chunk)[502](index=502&type=chunk) - The Company limits credit risk from derivative counterparties by using investment grade counterparties, with **33%** of derivative exposure with counterparties rated AA- or higher as of June 30, 2024[508](index=508&type=chunk) [Note 8 Long-Term Debt](index=118&type=section&id=Note%208%20Long-Term%20Debt) As of June 30, 2024, the total carrying value of long-term debt was $6,304 million Long-Term Debt (June 30, 2024 vs Dec 31, 2023, CAD millions) | Metric | June 30, 2024 | Dec 31, 2023 | | :------------ | :------------ | :----------- | | Carrying value | $6,304 | $6,071 | | Fair value | $5,365 | $5,525 | - U.S. dollar senior notes have been designated as hedges of the Company's net investment in its U.S. operations to reduce earnings volatility[520](index=520&type=chunk) [Note 9 Capital Instruments](index=119&type=section&id=Note%209%20Capital%20Instruments) As of June 30, 2024, the total carrying value of capital instruments was $7,714 million Capital Instruments (June 30, 2024 vs Dec 31, 2023, CAD millions) | Metric | June 30, 2024 | Dec 31, 2023 | | :------------ | :------------ | :----------- | | Carrying value | $7,714 | $6,667 | | Fair value | $7,580 | $6,483 | - MFC issued 4.275% Subordinated notes (S$500 million) on June 19, 2024, and 5.054% Subordinated debentures ($1,100 million) on February 23, 2024[525](index=525&type=chunk)[526](index=526&type=chunk) - Capital instruments of **$647 million** had an interest rate referencing CDOR and transitioned to CORRA on July 1, 2024[523](index=523&type=chunk) [Note 10 Equity Capital and Earnings Per Share](index=120&type=section&id=Note%2010%20Equity%20Capital%20and%20Earnings%20Per%20Share) The company repurchased 25 million common shares for cancellation during the first six months of 2024 under its Normal Course Issuer Bid Preferred Shares and Other Equity Instruments (June 30, 2024, CAD millions) | Instrument Type | Net Amount | | :-------------- | :--------- | | Preferred shares | $3,093 | | Limited recourse capital notes | $3,561 | | Total | $6,660 | - As at June 30, 2024, there were **1,785 million common shares outstanding**[542](index=542&type=chunk) - The Normal Course Issuer Bid (NCIB) was amended on May 7, 2024, to increase the number of common shares that may be repurchased for cancellation from up to 50 million to **up to 90 million shares**[544](index=544&type=chunk) - During the six months ended June 30, 2024, the Company purchased for cancellation **25 million common shares for $840 million**[545](index=545&type=chunk) [Note 11 Revenue from Service Contracts](index=121&type=section&id=Note%2011%20Revenue%20from%20Service%20Contracts) Manulife generates revenue from various service contracts, including investment management, transaction processing, and administration - The Company provides investment management services, transaction processing and administrative services, and distribution and related services[548](index=548&type=chunk) - Revenue from service contracts is generally recognized over time as the customer simultaneously receives and consumes the benefits of the services rendered[550](index=550&type=chunk) Total Other Revenue from Service Contracts (3 months ended June 30, 2024, CAD millions) | Service Line | Amount | | :------------------------------------------ | :----- | | Investment management and other related fees | $751 | | Transaction processing, administration, and service fees | $779 | | Distribution fees and other | $231 | | Total included in other revenue | $1,761 | [Note 12 Employee Future Benefits](index=123&type=section&id=Note%2012%20Employee%20Future%20Benefits) Manulife maintains defined contribution and defined benefit pension plans, and other post-employment plans Net Benefit Cost Reported in Earnings (3 months ended June 30, 2024, CAD millions) | Plan Type | Amount | | :----------------- | :----- | | Pension plans | $38 | | Retiree welfare plans | $0 | Remeasurement (gain) loss recorded in AOCI, net of tax (3 months ended June 30, 2024, CAD millions) | Plan Type | Amount | | :----------------- | :----- | | Pension plans | $(29) | | Retiree welfare plans | $(5) | [Note 13 Commitments and Contingencies](index=124&type=section&id=Note%2013%20Commitments%20and%20Contingencies) Manulife is regularly involved in legal actions, including class actions related to Performance Universal Life policies - Litigation with respect to 100% of the filed lawsuits concerning Performance Universal Life (Perf UL) policy Cost of Insurance (COI) increases has been resolved, representing **84% of the total face amount** of policies in the COI-increase block[561](index=561&type=chunk) - An unrelated putative class action was initiated in September 2023 regarding COI rates charged to universal life policy owners after the implementation of the Tax Cuts and Jobs Act of 2018[562](index=562&type=chunk) - MFC has guaranteed the payment of amounts on the **$650 million subordinated debentures** due on December 15, 2041, issued by Manulife Finance (Delaware), L.P. (MFLP)[563](index=563&type=chunk) [Note 14 Segment and Geographic Reporting](index=126&type=section&id=Note%2014%20Segment%20and%20Geographic%20Reporting) This note outlines Manulife's reporting segments and provides a detailed breakdown of financial results by segment and geography - Manulife's reporting segments are Asia, Canada, U.S., Global Wealth and Asset Management (Global WAM), and Corporate and Other[569](index=569&type=chunk) - Global WAM provides investment advice and solutions to retirement, retail, and institutional clients[570](index=570&type=chunk)[571](index=571&type=chunk) Net Income (Loss) Attributed to Shareholders by Segment (3 months ended June 30, 2024, CAD millions) | Segment | Amount | | :---------------- | :----- | | Asia | $582 | | Canada | $79 | | U.S. | $135 | | Global WAM | $350 | | Corporate and Other | $(104) | | Total | $1,042 | Total Assets by Segment (6 months ended June 30, 2024, CAD millions) | Segment | Amount | | :---------------- | :----- | | Asia | $188,217 | | Canada | $153,629 | | U.S. | $251,973 | | Global WAM | $282,890 | | Corporate and Other | $38,564 | | Total | $915,273 | [Note 15 Segregated Funds](index=132&type=section&id=Note%2015%20Segregated%20Funds) Manulife's exposure to loss from segregated funds is limited to the value of guarantees associated with certain variable life and annuity products - The Company's exposure to loss from segregated fund products is limited to the value of guarantees associated with certain variable life and annuity products[582](index=582&type=chunk) - As at June 30, 2024, these guarantees are recorded within the Company's insurance contract liabilities and amount to **$1,823 million**, of which $563 million are reinsured[583](index=583&type=chunk) [Note 16 Information Provided in Connection with Investments in Deferred Annuity Contracts and Signature Notes Issued or Assumed by John Hancock Life Insurance Company (U.S.A.)](index=132&type=section&id=Note%2016%20Information%20Provided%20in%20Connection%20with%20Investments%20in%20Deferred%20Annuity%20Contracts%20and%20Signature%20Notes%20Issued%20or%20Assumed%20by%20John%20Hancock%20Life%20Insurance%20Company%20(U.S.A.)) This note provides condensed consolidated financial information for John Hancock Life Insurance Company (U.S.A.) to comply with SEC regulations - Condensed consolidated financial information for John Hancock Life Insurance Company (U.S.A.) (JHUSA) is provided in compliance with Regulation S-X and Rule 12h-5 of the United States Securities and Exchange Commission[584](index=584&type=chunk) - These financial statements relate to MFC's guarantee of certain securities to be issued by its subsidiaries[584](index=584&type=chunk) JHUSA Key Financial Data (June 30, 2024, CAD millions) | Metric | Amount | | :-------------------------------------- | :----- | | Total assets | $375,988 | | Net income (loss) attributed to shareholders (3 months) | $356 | | Cash provided by (used in) operating activities (6 months) | $3,453 | [Note 17 Comparatives](index=137&type=section&id=Note%2017%20Comparatives) Certain comparative amounts in the financial statements have been reclassified to conform to the current period's presentation - Certain comparative amounts have been reclassified to conform to the current period's presentation[593](index=593&type=chunk) [SHAREHOLDER INFORMATION](index=138&type=section&id=SHAREHOLDER%20INFORMATION) This section provides contact information, financial strength ratings, and common stock trading data - Manulife's Head Office is located at 200 Bloor Street East, Toronto, ON Canada M4W 1E5[594](index=594&type=chunk) - Transfer Agents are located in Canada (TSX Trust Company), the United States (Equiniti Trust Company, LLC), Hong Kong (Tricor Investor Services Limited), and the Philippines (RCBC Trust Company)[595](index=595&type=chunk)[596](index=596&type=chunk) The Manufacturers Life Insurance Company's Financial Strength Ratings (as at June 30, 2024) | Rating Agency | MLI Rating | Rank (out of 21 or 22 ratings) | | :-------------- | :--------- | :----------------------------- | | S&P | AA- | 4th | | Moody's | A1 | 5th | | Fitch | AA | 3rd | | Morningstar DBRS | AA | 3rd | | AM Best | A+ (Superior) | 2nd | Common Stock Trading Data (April 1 – June 30, 2024) | Exchange | High (Currency) | Low (Currency) | Close (Currency) | Average Daily Volume (000) | | :---------- | :-------------- | :------------- | :--------------- | :------------------------- | | Canada | $36.52 CAD | $31.44 CAD | $36.43 CAD | 8,886 | | U.S. | $26.69 USD | $22.78 USD | $26.62 USD | 2,667 | | Hong Kong | $206.60 HKD | $177.00 HKD | $205.80 HKD | 18 | | Philippines | P1,600 PHP | P1,150 PHP | P1,445 PHP | 0.4 | - Shareholders can consent to receive documents electronically, including the Annual Report, Proxy Circular, Notice of Annual Meeting, and Shareholder Reports, via the company's website[602](index=602&type=chunk)