Wall Street expects a year-over-year increase in earnings on lower revenues when Manulife Financial (MFC) reports results for the quarter ended March 2024. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on May 8. O ...

C$ unless otherwise stated                                         TSX/NYSE/PSE: MFC     SEHK: 945 TORONTO, April 25, 2024 /PRNewswire/ - Manulife Financial Corporation ("Manulife") today announced that it does not intend to exercise its right to redeem all or any of its currently outstanding 8,000,000 Non-cumulative Rate Reset Class 1 Shares Series 15 (the "Series 15 Preferred Shares") (TSX: MFC.PR.L) on June 19, 2024. As a result, subject to certain conditions described in the prospectus supplement dated ...

C$ unless otherwise stated                                            TSX/NYSE/PSE: MFC     SEHK: 945 TORONTO, April 24, 2024 /PRNewswire/ - Manulife Financial Corporation will release its first quarter 2024 financial results after markets close on Wednesday, May 8, 2024, which will be made available at manulife.com/en/investors/results-and-reports. A live webcast and conference call are scheduled for Thursday, May 9, 2024, at 8:00 a.m. (ET) where members of Manulife's executive leadership team will discuss ...

Financial Performance Highlights - Manulife's APE sales increased by 12% to $64 billion in 2023[37] - New business value grew by 10% to $23 billion[37] - Core EPS increased by 17% to $347[37] - Core ROE expanded to 159% achieving the medium-term target of 15%+[114] Business Segment Performance - Asia's APE sales increased by 11% to $731 million in 4Q23[173] - Global Wealth and Asset Management (WAM) average AUMA increased by 5% to $817 billion in 4Q23[176] - Global WAM net flows were positive at $45 billion in 2023[37] Capital Management - Manulife's LICAT ratio increased by 6 percentage points to 137%[37] - The company expects to release $12 billion of capital in 2024 from the LTC reinsurance deal[134] Strategic Initiatives - Manulife is focused on growing its high-return businesses and improving ROE[153] - The company is reducing risk by transacting on a LTC block representing 14% of total LTC insurance contract net liabilities[152]

Financial Performance - The net income attributable to shareholders for 2023 was CAD 5.1 billion, an increase of CAD 1.6 billion compared to CAD 3.5 billion in 2022, with Q4 2023 net income at CAD 1.7 billion, up CAD 0.4 billion from CAD 1.3 billion in Q4 2022[2]. - Core earnings for 2023 reached CAD 6.7 billion, a 13% increase from CAD 5.8 billion in 2022, with Q4 2023 core earnings at CAD 1.8 billion, up 15% from CAD 1.5 billion in Q4 2022[2]. - The core earnings per share for 2023 was CAD 3.47, a 17% increase from CAD 2.90 in 2022, while Q4 2023 core earnings per share was CAD 0.92, up 20% from CAD 0.77 in Q4 2022[2]. - The return on common shareholders' equity for 2023 was 11.9%, with a core return on equity of 15.9%[2]. - The company reported a total revenue of CAD 6,452 million for Q2 2023, with a significant contribution from the Asia segment[30]. - The total core earnings for the year 2023 reached CAD 6.684 billion, up from CAD 5.801 billion in 2022, reflecting a growth of approximately 15%[25]. - The company reported a significant increase in transitional income attributable to shareholders, amounting to CAD 3,498 million, compared to a loss of CAD 1,933 million in the previous year[32]. - The overall annual performance for 2023 showed core earnings of CAD 7,103 million, up from CAD 6,516 million in 2022[48]. Shareholder Returns - The company announced a 9.6% increase in common stock dividends[1]. - The company completed a share buyback program totaling CAD 1.6 billion, representing 3.4% of the outstanding common shares[2]. - The adjusted book value per share was CAD 1,321, reflecting the company's commitment to shareholder value[30]. Business Growth and New Initiatives - A significant reinsurance agreement was reached with Global Atlantic involving CAD 6 billion in long-term care insurance contracts, expected to close by the end of February 2024[2]. - New business value for Q4 2023 was CAD 630 million, a 20% increase from CAD 524 million in Q4 2022[5]. - The company acquired CQS, a London-based alternative credit management firm, to enhance its global investment offerings[9]. - The company launched several new products targeting institutional investors, contributing to the increase in net inflows in the institutional asset management sector[17]. - The company plans to expand its market presence through strategic acquisitions and new product launches in the upcoming quarters[27]. Market Performance and Sales - APE sales in the U.S. for the second quarter were CAD 141 million, a 34% increase year-over-year[7]. - In Canada, APE sales grew by 44% year-over-year in Q4 2023, primarily due to large group insurance sales and increased fixed annuity sales[16]. - In the U.S., APE sales increased by 34% compared to Q4 2022, reflecting a rebound in affluent customer demand, with new business value and CSM growing by 74% and 102% respectively[17]. - The net inflow for institutional asset management business increased to CAD 21 billion in Q4 2023, compared to CAD 9 billion in Q4 2022, driven by a rebound in real estate, private equity, and credit projects[18]. Risk Factors and Strategic Considerations - The company highlighted significant risk factors that could lead to actual performance differing greatly from expectations, including economic conditions, market volatility, and credit spreads[55]. - The ongoing impact of the COVID-19 pandemic, including potential government actions in response to variants, was noted as a critical factor affecting future performance[55]. - The management discussed the need for effective hedging strategies to mitigate unforeseen consequences[55]. - The company acknowledged the importance of accurate forecasting related to morbidity, mortality, and policyholder behavior[55]. Operational Efficiency - The core EBITDA margin improved to 25.7%, reflecting a 210 basis points increase year-over-year[7]. - The company experienced a net loss of CAD 1,164 million in core earnings, highlighting challenges in market conditions[30]. - The company is focusing on strategic adjustments to enhance core earnings and manage tax implications effectively moving forward[34].

IFRS 17 Adoption and Impact - The company adopted IFRS 17 'Insurance Contracts' on January 1, 2023, with an effective date of January 1, 2022, impacting the measurement of insurance contract liabilities, including the transition Contractual Service Margin (CSM)[36][42] - The transition to IFRS 17 required significant auditor judgment due to the complexity of models and key assumptions, including discount rates and risk adjustments[42] - The company applied the Full Retrospective Approach to most contracts issued on or after January 1, 2021, and the Fair Value Approach for contracts issued prior to this date[42] - The audit of insurance contract liabilities included testing the methodology and calculations, as well as assessing the adequacy of disclosures[42] - The company's net insurance service result includes insurance revenue representing the change in the Liability for Remaining Coverage (LRC) relating to insurance services, expected claims, changes in risk adjustment, and release of Contractual Service Margin (CSM)[174] - Insurance contract liabilities were recorded at $482 billion as of December 31, 2023, with $355 billion measured under the variable fee approach (VFA) and the general measurement model (GMM)[42] - The company derecognizes insurance contracts when the rights and obligations are extinguished or the contract is modified, resulting in a change in the measurement model or applicable standard[170] Financial Instruments and Fair Value Measurements - The company changed its method of accounting for the classification and measurement of financial instruments due to the adoption of IFRS 9 'Financial Instruments'[37] - Fair value measurements are categorized into three levels: Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (significant non-market observable inputs)[72][74][75] - Invested assets recorded at $87.6 billion, with derivative assets and liabilities at $0.6 billion and $2.7 billion respectively, classified as Level 3 in fair value hierarchy[43] - Real estate investments are classified as Level 3 for fair value disclosure, with fair value determined using external appraisals and valuation techniques like discounted cash flows and comparable sales analysis[97][98] - Mortgages are classified as Level 3 for fair value purposes due to the lack of market observability of significant valuation inputs[92] - The fair value of embedded derivative liabilities increased from $395 million in 2022 to $487 million in 2023, reflecting credit and interest rate risks in insurance and investment contracts[337] - The fair value of long-term debt was $5,525 million in 2023, slightly down from $5,587 million in 2022, determined using Level 2 valuation techniques[580] Insurance Contract Liabilities and Reinsurance - Insurance contract liabilities increased to $367.996 billion in 2023, up from $354.849 billion in 2022[53] - Insurance contract liabilities as of December 31, 2023, totaled $1,110,645 million, with $1,074,764 million due over 5 years[408] - Reinsurance contract held liabilities as of December 31, 2023, amounted to $8,448 million, with $6,097 million due over 5 years[408] - Net reinsurance contract held assets decreased from $43,480 million in 2022 to $39,820 million in 2023[358] - Reinsurance assets totaled $40,249 million in 2023, down from $44,053 million in 2022, with 91% ceded to reinsurers rated A- or above in both years[572] - The company entered into a reinsurance agreement with Global Atlantic Financial Group on December 11, 2023, covering U.S. LTC, structured settlements, and Japan whole life legacy blocks[450] Income Tax and Financial Performance - Income tax expenses (recoveries) on unrealized foreign exchange gains (losses) on translation of foreign operations at ($1) million for 2023[57] - Income tax expenses (recoveries) on unrealized foreign exchange gains (losses) on net investment hedges at $13 million for 2023[57] - Income tax expenses (recoveries) on insurance/reinsurance finance income (expenses) at ($1,853) million for 2023[57] - Income tax expenses (recoveries) on unrealized gains (losses) on fair value through OCI investments at $1,863 million for 2023[57] - Income tax expenses (recoveries) on reclassification of net realized gains (losses) on fair value through OCI investments at ($8) million for 2023[57] - Total income tax expenses (recoveries) at ($6) million for 2023[57] - Tax rates for Japan, Canada, and U.S. jurisdictions were 28.0%, 27.8%, and 21.0% respectively in 2023[352] Financial Statements and Audits - The company's consolidated financial statements for 2023 and 2022 were audited and found to present fairly in accordance with International Financial Reporting Standards (IFRS)[34] - The company's internal control over financial reporting as of December 31, 2023, was audited and received an unqualified opinion[35] - The company's financial reporting process is overseen by those charged with governance, ensuring compliance with ethical requirements and independence[27][30] - The company's financial statements are prepared using IFRS, requiring significant management judgment and estimates, particularly in measuring insurance and investment contract liabilities, assessing asset impairment, and determining fair values of certain assets[66] Investment and Asset Management - Total invested assets grew to $417.210 billion in 2023, compared to $400.142 billion in 2022[53] - The company's invested assets, predominantly debt instruments, are measured at Fair Value through Other Comprehensive Income (FVOCI), reflecting the time value of money in income or expenses and financial risk changes in OCI[180] - Private equity investments are accounted for using the equity method or classified as FVTPL, with fair value determined using various valuation techniques[100] - Total investment return for the year ended December 31, 2023 was $29.426 billion, with $26.158 billion from insurance contracts and $3.268 billion from non-insurance[380] - The company's dynamic hedging program assumes equity hedges offset 95% of the hedged variable annuity liability movement due to market changes[499] - The company's macro equity risk hedging program aims to maintain earnings sensitivity to public equity market movements within Board-approved risk appetite limits[476] Credit Risk and Expected Credit Losses (ECL) - Expected credit loss (ECL) impairment allowances are measured using probability-weighted macroeconomic scenarios, considering past events, current conditions, and future economic outlooks[102] - The company's ECL calculations include probability of default (PD) and loss given default (LGD), based on internal credit experience and contractual cash flow expectations[105] - The company measures Expected Credit Losses (ECL) using a three-stage approach, with Stage 1 and 2 exposures generating ECLs for each individual exposure, while Stage 3 ECLs are assessed individually or collectively based on the nature of the instrument and impairment[108] - The company uses four probability-weighted macroeconomic scenarios to estimate ECLs, with economic forward-looking inputs varying by market and projected at the country, province, or more granular level[110] - Stage 1 financial instruments recognize 12-month ECLs, representing the portion of lifetime ECLs resulting from default events within 12 months of the reporting date, while Stage 2 and 3 financial instruments recognize full lifetime ECLs[115] Goodwill and Intangible Assets - The company's goodwill represents the difference between the fair value of purchase consideration of an acquired business and its proportionate share of the net identifiable assets acquired, initially recorded at cost and subsequently measured at cost less any accumulated impairment[113] - Intangible assets with indefinite useful lives, such as the John Hancock brand name and certain investment management contracts, are not amortized but are subject to an annual impairment test[118] - Goodwill decreased from $6,014 million to $5,919 million in 2023 due to foreign exchange rate changes[340] - Indefinite life intangible assets decreased from $1,861 million to $1,825 million in 2023, primarily due to foreign exchange rate impacts[340] - Finite life intangible assets increased by $312 million in 2023, driven by software additions of $274 million[340] - Total goodwill and intangible assets decreased from $10,519 million to $10,310 million in 2023, impacted by foreign exchange rate changes[340] - Asia WAM goodwill decreased from $450 million to $438 million in 2023 due to foreign exchange rate changes[346] - U.S. WAM goodwill decreased from $1,286 million to $1,250 million in 2023, primarily due to foreign exchange rate impacts[346] Capital Management and Risk - The company's capital management framework sets internal targets above regulatory requirements, considering factors such as regulatory expectations, stress testing results, and risk assessments[618] - The company's foreign exchange risk management strategy aims to match the currency of assets with liabilities, with no material unmatched currency exposure as at December 31, 2023[526] - The company's credit risk exposure includes $3,437 in debt securities past due less than 90 days and $257 past due 90 days or greater as at December 31, 2022[537] - 95% of debt securities and private placements are rated as investment grade BBB or higher as of December 31, 2023, compared to 96% in 2022[563] - Government debt securities accounted for 38% of total debt securities in 2023, up from 36% in 2022[563] - The largest single issuer exposure in the equity portfolio remained at 2% of the total portfolio in both 2023 and 2022[563] - Income-producing commercial office properties decreased to 37% of real estate in 2023 from 41% in 2022, with a value of $4,829 million compared to $5,486 million in 2022[563] - The largest concentration of mortgages and real estate in Ontario, Canada increased to 29% in 2023 from 27% in 2022, with a value of $19,003 million compared to $18,343 million in 2022[563] Derivatives and Hedging - The company uses derivatives, non-derivative financial instruments, and reinsurance contracts to mitigate financial risk arising from direct participation contracts applying the Variable Fee Approach (VFA) measurement model[147] - Changes in value of hedged items due to benchmark interest rate changes recognized at ($53) million for the year ended December 31, 2023[43] - Changes in value of hedged items due to foreign currency denominated debt instruments recognized at $742 million for the year ended December 31, 2023[43] - The Company's dynamic hedging program assumes equity hedges offset 95% of the hedged variable annuity liability movement due to market changes[499] - The Company was over-collateralized on OTC derivative assets, OTC derivative liabilities, securities lending, and reverse repurchase agreements by $424, $1,420, $20, and $nil respectively (2022 – $507, $1,528, $63, and $nil)[557] Financial Position and Performance - Total assets increased to $875.574 billion in 2023, up from $833.689 billion in 2022[53] - Net income for 2023 was $5.607 billion, a significant improvement from a net loss of $1.979 billion in 2022[56] - Total comprehensive income for 2023 was $5.005 billion, slightly down from $5.797 billion in 2022[56] - Shareholders' and other equity holders' retained earnings increased to $4.819 billion in 2023, up from $3.947 billion in 2022[59] - Common shares repurchased amounted to $745 million in 2023, compared to $838 million in 2022[59] - Total liabilities, excluding those for account of segregated fund holders, increased to $449.303 billion in 2023, up from $436.901 billion in 2022[53] - Total equity grew to $48.727 billion in 2023, from $48.226 billion in 2022[59] Segregated Funds and Investment Contracts - Segregated funds net assets rose to $377.544 billion in 2023, from $348.562 billion in 2022[53] - Investment contract liabilities held at amortized cost increased from $2,452 million to $9,281 million due to reclassification from insurance contract liabilities under IFRS 4[229] - Total in-scope financial liabilities increased from $69,821 million to $78,125 million, driven by classification and measurement changes[229] - Investment contract liabilities as of December 31, 2023, stood at $264,150 million, with $263,401 million for account of segregated fund holders[456] - Policy deposits for investment contract liabilities increased by $3,365 million in 2023, contributing to a year-end balance of $11,067 million[460] - The fair value of investment contract liabilities in Asia decreased from $607 million in 2022 to $438 million in 2023[458] Real Estate and Rental Income - Rental income from investment properties increased from $825 million in 2022 to $840 million in 2023, while direct operating expenses rose from $458 million to $473 million, resulting in a net total of $367 million for both years[262] - The Company's investment property was valued at $11,417 million as of December 31, 2022, with no specific maturity terms[292] - Income-producing commercial office properties decreased to 37% of real estate in 2023 from 41% in 2022, with a value of $4,829 million compared to $5,486 million in 2022[563] Global Minimum Tax (GMT) and Tax Compliance - The Company's exposure to the Global Minimum Tax (GMT) is not expected to impact operations in jurisdictions like Ireland, Japan, Luxembourg, Netherlands, the UK, and Vietnam, as no current tax expense or recovery related to GMT is disclosed[235] - The Company applied a temporary mandatory exception from recognizing deferred tax assets and liabilities related to the GMT, as per amendments to IAS 12[239] Actuarial Methods and Assumptions - The 2023 review of actuarial methods and assumptions resulted in a $3,197 million decrease in pre-tax fulfilment cash flows, increasing pre-tax net income attributed to shareholders by $171 million[413] - Changes in actuarial methods and assumptions in Asia led to a $2,513 million decrease in pre-tax fulfilment cash flows, increasing pre-tax net income attributed to shareholders by $107 million[433] - The U.S. long-term care triennial review increased pre-tax fulfilment cash flows by $118 million in 2022[439] - The company secured $2.5 billion in premium increase approvals as of September 30, 2022, aligning with pre-tax fulfilment cash flow assumptions[442] Counterparty and Collateral Management - The percentage of the Company's derivative exposure with counterparties rated AA- or higher was 33% (2022 – 36%)[551] - The largest single counterparty exposure was $1,357 (2022 – $1,582), with net exposure after master netting agreements and collateral held at $nil (2022 – $nil)[551] - The Company had loaned securities with a market value of $626 (2022 – $723) as at December 31, 2023[543] - The Company's total single name CDS notional amount was $131 (2022 – $159) with a fair value of $3 (2022 – $4)[547] - The fair value of collateral held as security was $22,264 million in 2023, down from $25,247 million in 2022, reducing net exposure to $17,984 million from $22,465 million[572] Long-Term Debt and Interest - Interest paid on long-term debt increased to $231 million in 2023 from $204 million in 2022[578] - The fair value of long-term debt was $5,525 million in 2023, slightly down from $5,587 million in 2022, determined using Level 2 valuation techniques[580] Insurance Finance and Reinsurance Finance - Insurance finance (income) expenses for 2022 were $68,833 million[362] - Insurance finance (income) expenses for 2023 were $24,306 million[364] - Reinsurance finance income (expenses) from reinsurance contracts held for the year ended December 31, 2023 was a gain of $505 million, including a $120 million loss from foreign exchange movements[380] - Total insurance finance income (expenses) from insurance contracts issued for the year ended December 31, 2023 was a loss of $25.993 billion, including a $952 million loss from foreign exchange movements[380] Opening and Closing Balances - Opening insurance contract liabilities for account of segregated fund holders were $130,836 million as of January 1, 2022[362] - Net closing balance for insurance contracts was $464,392 million as of December 31, 2022[362] - Net opening balance for insurance contracts as of January 1, 2023 was $464,392 million[364] - Net closing balance for insurance contracts as of December 31, 2023 was $481,994 million[364] - Closing insurance contract liabilities for account of segregated fund holders were $114,143 million as of December 31, 2023[364] - Opening reinsurance contract held assets as of January 1, 2022 were $45.699 billion, with net opening balance of $50.750 billion[368] - Net closing balance for reinsurance contracts as of December 31, 2022 was $43.480 billion, with closing assets of $45.871 billion and liabilities of $2.391 billion[368] - Opening reinsurance contract held assets as of January 1, 2023 were $39.656 billion, with net opening balance of $43.480 billion[370] - Net closing balance for reinsurance contracts as of December 31, 2023 was $39.820 billion, with closing assets of $42.355 billion and liabilities of $2.790 billion[370] New Business and Reinsurance Contracts - New business reinsurance contracts in Asia as of December 31, 2023 had estimated present value of cash outflows of $916 million and inflows of $815 million[377] Investment Returns and Insurance Revenue - Total investment return for the year ended December 31, 2023 was $29.426 billion, with $26.158 billion from insurance contracts and $3.268 billion from non-insurance[380

3 4 Note: All growth figures are year-over-year and compared with 3Q22 transitional measures where applicable. See "Caution regarding forward-looking statements" above. All footnotes are on slide 37. Driving growth while focusing on customer needs and shareholder returns • Asia's strong operating and new business results driven by return of mainland Chinese visitor (MCV) customer demand • Partnership with League to offer our Canada group benefits members more integrated and personalized digital healthcare e ...

Financial Data and Key Metrics Changes - The company reported a 35% increase in core EPS for Q3 2023, with core ROE at 16.8%, exceeding the medium-term target of over 15% for the second consecutive quarter [5][40]. - The adjusted book value per share increased by 4% year-on-year, reaching $30.67 [19][14]. - Net income was lower than core earnings due to a challenging investment environment, but gains in other comprehensive income offset some of the adverse results [19][10]. Business Line Data and Key Metrics Changes - APE sales in Canada grew by 51% year-on-year, driven by a significant affinity market sale, resulting in a 72% increase in new business value [23][38]. - In Asia, APE sales increased by 20%, with new business CSM growth of 16% year-on-year, reflecting a recovery in demand from Mainland Chinese customers [11][47]. - The Global Wealth and Asset Management (WAM) segment experienced net outflows of $800 million due to a large pension plan redemption, but year-to-date net inflows were $5.8 billion [39][50]. Market Data and Key Metrics Changes - The U.S. segment faced lower APE sales due to a high-rate environment impacting accumulation insurance products, particularly for affluent customers [35][91]. - The company noted that retail net outflows reflected lower demand as investors favored short-term cash and money market instruments amid market volatility [51]. Company Strategy and Development Direction - The company is focused on profitable growth while enhancing customer needs and returning capital to shareholders, with a strong emphasis on digital transformation and technology adoption [11][25]. - A unified onboarding platform was launched in Bermuda, Hong Kong, and Singapore to enhance the high net worth business [24]. - The company plans to continue building on its digital platform and accelerate the adoption of new technologies, including generative AI [27][28]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the uncertain macroeconomic environment, highlighting opportunities arising from higher interest rates and recovery in Asia [16][40]. - The management acknowledged challenges in the market but emphasized the importance of increasing customer engagement and sales to drive future growth [64][100]. Other Important Information - The company has returned approximately $7.7 billion to shareholders through dividends and share buybacks since resuming its buyback program in 2022, with an average annual dividend growth of 10% since 2017 [15][67]. - The company maintains a strong capital position with a LICAT ratio of 137% and $22 billion of capital above the supervisory target ratio [53][14]. Q&A Session Summary Question: What drove the strong performance fees in the WAM business? - The performance fee of $23 million post-tax was primarily from the timber business, contributing positively to the results [57]. Question: What is the outlook for new business CSM growth? - New business CSM growth was 16% year-on-year, with 80% of this growth coming from Asia, indicating good momentum [60]. Question: What are the challenges in the Vietnam market? - The Vietnam market is experiencing challenges reflected in lower new business volumes and persistency, which is impacting overall performance [74]. Question: How is the company addressing the lapse rates in the U.S.? - The company expects lapse rates to trend back to pre-pandemic levels, with ongoing monitoring and adjustments to assumptions as necessary [93]. Question: What is the outlook for ALDA performance? - The company remains confident in achieving long-term returns despite recent underperformance, attributing it to rising cap rates and market conditions [115][120].

Financial Performance - Net income attributable to shareholders for Q3 2023 reached CAD 1 billion, an increase of CAD 200 million compared to Q3 2022 transitional net income and CAD 500 million compared to Q3 2022 net income [2]. - Core earnings for Q3 2023 were CAD 1.743 billion, representing a 28% increase from Q3 2022 [2]. - Core earnings per share for Q3 2023 were CAD 0.92, a 35% increase from CAD 0.68 in Q3 2022 [2]. - The company reported a total core earnings of CAD 4,911 million year-to-date in 2023, an increase from CAD 4,258 million in the same period of 2022 [20]. - The net income attributable to shareholders for Q3 2023 increased by CAD 500 million compared to Q3 2022, driven by core earnings growth and a one-time tax-related gain of CAD 290 million [6]. - The total net income attributable to shareholders for the year-to-date 2023 was CAD 3,444 million, a significant increase from a loss of CAD 2,848 million in the same period of 2022 [44]. - The company reported a net loss attributable to shareholders of CAD 214 million in Q3 2023, compared to a loss of CAD 430 million in Q2 2023 [32]. Sales and Business Growth - APE sales for Q3 2023 amounted to CAD 1.657 billion, a 21% increase from CAD 1.347 billion in Q3 2022 [4]. - New business value for Q3 2023 was CAD 600 million, up 15% from CAD 515 million in Q3 2022 [4]. - The company reported a 33% year-over-year growth in core earnings driven by the Asia region, with new business CSM increasing by 16% [2]. - Annualized premium equivalent (APE) sales amounted to CAD 1.7 billion, reflecting a 21% increase year-over-year, with strong performance in Asia, particularly a 57% increase in Hong Kong [9]. - New business value (NBV) recorded CAD 600 million, a 15% increase from Q3 2022, with a 72% growth in Canada, while the U.S. saw a 29% decline [10]. Shareholder Returns and Equity - The company repurchased nearly CAD 1.3 billion of common shares since the beginning of the year to enhance shareholder returns [2]. - The company achieved a shareholder equity core return rate of 16.8% for Q3 2023, up from 12.7% in the previous year [3]. - Total equity attributable to shareholders increased to $40,747 million in Q3 2023, compared to $39,047 million in Q2 2023, marking a 4.4% rise [35]. Market and Regional Performance - The Asian market contributed CAD 522 million to core earnings in Q3 2023, a 35% increase from CAD 387 million in Q3 2022 [20]. - The Canadian market's core earnings were CAD 408 million in Q3 2023, up from CAD 391 million in Q3 2022, marking a 4.4% increase [20]. - The U.S. market reported core earnings of CAD 442 million in Q3 2023, compared to CAD 437 million in Q3 2022, showing a 1.1% increase [20]. - The global wealth and asset management segment experienced a net outflow of CAD 800 million in Q3 2023, compared to a net inflow of CAD 3 billion in Q3 2022 [12]. - Institutional asset management recorded a net inflow of CAD 2.8 billion in Q3 2023, a significant increase from CAD 600 million in Q3 2022 [12]. Strategic Initiatives and Product Development - The company plans to continue focusing on market expansion and new product development as part of its strategic initiatives moving forward [22]. - In Q3 2023, the company launched an integrated high-end account platform in Bermuda, Hong Kong, and Singapore, simplifying new business applications and compliance processes for high-end markets [15]. - The company expanded its personalized medicine program in Canada to all group insurance extended medical plans, enhancing accessibility for more clients [15]. - A new product named "Excellence Protection Indexed Universal Life" was introduced in the U.S., allowing employees to purchase personal coverage through a simplified electronic process [15]. Operational Efficiency and Technology - The company reported a 31% increase in calls completed without human interaction due to improved interactive voice response technology, enhancing the digital customer experience [16]. - In Asia, the automation of claims processing in Hong Kong has nearly doubled the number of directly processed claims compared to Q3 2022 [16]. - The "Goodbye Paper" initiative in Canada led to a 165% increase in the adoption rate of electronic applications among retirement business clients [16]. Risk Factors and Future Outlook - The company emphasizes that forward-looking statements involve risks and uncertainties that may cause actual results to differ significantly from those anticipated [46]. - The company highlighted significant risk factors that could lead to actual performance differing greatly from expectations, including economic conditions, market volatility, and credit spreads [47]. - The ongoing impact of the COVID-19 pandemic, including potential government actions in response to variants, was noted as a critical factor affecting future performance [48]. - The company acknowledged the importance of attracting and retaining key personnel to drive operational success [48].

[Financial and Operational Highlights](index=2&type=section&id=Financial%20and%20Operational%20Highlights) [Results at a Glance](index=2&type=section&id=Results%20at%20a%20Glance) Manulife reported strong third-quarter 2023 results, characterized by double-digit growth in core earnings, APE sales, and new business value. Net income attributed to shareholders reached $1,013 million, a significant increase from the previous year. Core earnings rose to $1,743 million, up 28% on a constant currency basis, driven by strong performance in Asia and resilient results in Global Wealth and Asset Management (Global WAM). The company maintained a solid capital position with a LICAT ratio of 137% Q3 2023 Key Financial Metrics | Metric | 3Q23 | 3Q22 | Change (Constant Exchange Rate) | | :--- | :--- | :--- | :--- | | Net Income attributed to shareholders | $1,013M | $491M | 87% | | Core Earnings | $1,743M | $1,339M | 28% | | Core EPS | $0.92 | $0.68 | 35% | | Core ROE | 16.8% | 12.7% | 4.1 pps | | APE sales | $1,657M | $1,347M | 21% | | NBV | $600M | $515M | 15% | | LICAT ratio | 137% | 136% | 1.0 pps | - The strong operating results were supported by a **33% increase** in core earnings from Asia and resilient performance in Global WAM, which saw positive net flows of **$5.8 billion** over the past three quarters[2](index=2&type=chunk) - The company continued to enhance shareholder returns through capital deployment, repurchasing nearly **$1.3 billion** of its common shares since the start of the year[2](index=2&type=chunk) [Strategic Highlights](index=5&type=section&id=Strategic%20Highlights) Manulife advanced its strategic priorities by enhancing customer experience and accelerating digital initiatives. Key developments include launching a unified high net worth platform in Asia, expanding a Personalized Medicine program in Canada, and forming a new distribution relationship with JPMorgan Chase & Co. in the U.S. The company also focused on digital acceleration through partnerships like the one with League in Canada and by automating claims handling in Hong Kong, which significantly improved operational efficiency - Launched a unified high net worth onboarding platform across Bermuda, Hong Kong, and Singapore to streamline processes for international brokers and customers[23](index=23&type=chunk) - Expanded the Personalized Medicine program to all Group Benefits extended healthcare plans in Canada, enabling customized treatment plans for better health outcomes[23](index=23&type=chunk) - In the U.S., a new distribution relationship was launched with JPMorgan Chase & Co. to sell Manulife's suite of products, including the John Hancock Vitality program, through its network of over 6,900 advisors[25](index=25&type=chunk) - Announced a strategic partnership with healthcare technology provider League in Canada to offer more integrated digital healthcare experiences for Group Benefits members[26](index=26&type=chunk) - Automated the claims-handling process in Hong Kong, leveraging data to enhance the auto-adjudication engine, which resulted in a **nearly twofold increase** in straight-through processed claims compared to 3Q22[27](index=27&type=chunk) [Total Company Performance](index=8&type=section&id=A.%20TOTAL%20COMPANY%20PERFORMANCE) [Implementation of IFRS 17 and IFRS 9](index=8&type=section&id=A1%20Implementation%20of%20IFRS%2017%20and%20IFRS%209) Effective January 1, 2023, Manulife adopted IFRS 17 (Insurance Contracts) and IFRS 9 (Financial Instruments) retrospectively. To aid comparability, 2022 results have been restated. However, as IFRS 9's hedge accounting and expected credit loss (ECL) principles are applied prospectively from 2023, the company has also presented non-GAAP "transitional" 2022 results that simulate the application of these principles for better year-over-year comparison - Manulife adopted IFRS 17 and IFRS 9 effective January 1, 2023, with retrospective application to 2022 results[34](index=34&type=chunk) - Due to the prospective application of IFRS 9 hedge accounting and ECL principles, non-GAAP "transitional" measures for 2022 have been introduced for comparability. These will only be reported in 2023 MD&As[36](index=36&type=chunk)[37](index=37&type=chunk) [Profitability](index=9&type=section&id=A2%20Profitability) In Q3 2023, net income attributed to shareholders was $1,013 million, a significant increase from $491 million in Q3 2022. Core earnings grew 28% on a constant currency basis to $1,743 million, driven by the non-recurrence of a large provision in the P&C Reinsurance business, higher investment earnings from rising interest rates, and improved insurance experience. The company's expenditure efficiency ratio improved by 2.7 percentage points to 50.9% compared to Q3 2022 Quarterly Profitability Comparison | Metric | 3Q23 | 3Q22 | Change | | :--- | :--- | :--- | :--- | | Net income attributed to shareholders | $1,013M | $491M | +$522M | | Core earnings | $1,743M | $1,339M | +$404M | | Diluted EPS ($) | $0.52 | $0.23 | +$0.29 | | Core EPS ($) | $0.92 | $0.68 | +$0.24 | | Core ROE | 16.8% | 12.7% | +4.1 pps | - The increase in Q3 2023 core earnings was primarily driven by the non-recurrence of a **$256 million** provision for Hurricane Ian in Q3 2022, higher expected investment earnings, and improved insurance experience in the U.S. and Canada[44](index=44&type=chunk) - Items excluded from core earnings resulted in a net charge of **$730 million** in Q3 2023, mainly due to market experience losses on alternative long-duration assets (ALDA), public equity, and derivatives[41](index=41&type=chunk)[42](index=42&type=chunk)[54](index=54&type=chunk) - The expenditure efficiency ratio improved to **50.9%** in Q3 2023 from **53.6%** in Q3 2022, driven by a **25% increase** in pre-tax core earnings that outpaced a **12% rise** in core expenditures[61](index=61&type=chunk) [Business Performance](index=14&type=section&id=A3%20Business%20performance) Business performance in Q3 2023 was strong, with Annualized Premium Equivalent (APE) sales increasing 21% to $1.7 billion, driven by robust growth in Asia, particularly Hong Kong. New Business Value (NBV) rose 15% to $600 million. The Contractual Service Margin (CSM) stood at $17.4 billion. However, Global Wealth and Asset Management (Global WAM) experienced net outflows of $0.8 billion, a reversal from the $3.0 billion net inflows in Q3 2022, primarily due to a large pension plan redemption in the U.S. Q3 2023 Business Performance Metrics | Metric | 3Q23 | 3Q22 | Change (Constant Exchange Rate) | | :--- | :--- | :--- | :--- | | Total APE sales | $1,657M | $1,347M | 21% | | Total new business value (NBV) | $600M | $515M | 15% | | Total new business CSM | $507M | $470M | 6% | | Global WAM net flows | ($0.8B) | $3.0B | nm | - APE sales growth was led by Asia, which increased **20%**, fueled by a **57%** surge in Hong Kong sales due to demand from mainland Chinese visitors. Canada APE sales grew **51%**, while U.S. APE sales decreased **31%**[71](index=71&type=chunk) - Global WAM net outflows of **$0.8 billion** were driven by a **$3.4 billion** outflow in Retirement from a large U.S. pension plan redemption. This was partially offset by **$2.8 billion** of net inflows in Institutional Asset Management[78](index=78&type=chunk) - The Contractual Service Margin (CSM) net of NCI was **$17,369 million** as of September 30, 2023, an increase of **$86 million** from year-end 2022[77](index=77&type=chunk) [Financial Strength](index=16&type=section&id=A4%20Financial%20strength) Manulife maintained a robust financial position in Q3 2023. The Life Insurance Capital Adequacy Test (LICAT) ratio for its main subsidiary, MLI, increased to 137%. The financial leverage ratio improved to 25.2%, down from 25.8% at the end of Q2 2023. Both book value per common share and adjusted book value per common share saw increases, rising to $22.42 and $30.67 respectively Financial Strength Indicators | Metric | As at Sep 30, 2023 | As at Jun 30, 2023 | As at Sep 30, 2022 | | :--- | :--- | :--- | :--- | | MLI's LICAT ratio | 137% | 136% | 136% | | Financial leverage ratio | 25.2% | 25.8% | 25.8% | | Book value per common share ($) | $22.42 | $21.30 | $21.78 | | Adjusted book value per common share ($) | $30.67 | $29.42 | $29.49 | - The MLI LICAT ratio increased by **one percentage point** from Q2 2023 to **137%**, reflecting the impact of core earnings and market movements, partly offset by dividends and share buybacks[82](index=82&type=chunk) - The financial leverage ratio decreased by **0.6 percentage points** from Q2 2023, driven by an increase in total equity from AOCI gains, retained earnings growth, and the impact of a weaker Canadian dollar[84](index=84&type=chunk) [Assets Under Management and Administration (AUMA)](index=17&type=section&id=A5%20Assets%20under%20management%20and%20administration%20(AUMA)) As of September 30, 2023, Manulife's total Assets Under Management and Administration (AUMA) reached $1.3 trillion. This represents a 2% increase compared to December 31, 2022, primarily driven by favorable market impacts and net inflows during the year - Total AUMA was **$1.3 trillion** as at September 30, 2023, up **2%** from December 31, 2022[89](index=89&type=chunk) - The increase in AUMA was mainly due to the favourable impact of markets and net inflows[89](index=89&type=chunk) [Impact of Foreign Currency Exchange Rates](index=17&type=section&id=A6%20Impact%20of%20foreign%20currency%20exchange%20rates) Changes in foreign currency exchange rates had a positive effect on Manulife's earnings in the third quarter and year-to-date 2023. A weaker Canadian dollar, particularly against the U.S. dollar, increased core earnings by $29 million for the quarter and $136 million for the nine months ended September 30, 2023, compared to the same periods in 2022 - A weaker Canadian dollar relative to the U.S. dollar increased Q3 2023 core earnings by **$29 million** compared to Q3 2022[90](index=90&type=chunk) - Year-to-date, the favorable currency impact on core earnings was **$136 million** compared to the same period in 2022[90](index=90&type=chunk) [Performance by Segment](index=19&type=section&id=B.%20PERFORMANCE%20BY%20SEGMENT) [Asia](index=19&type=section&id=B1%20Asia) The Asia segment delivered strong growth in Q3 2023, with core earnings increasing 33% to US$390 million, driven by higher investment income and business growth. APE sales grew 20% to US$835 million, led by a 57% surge in Hong Kong due to returning mainland Chinese visitor demand. New Business Value (NBV) increased 7% to US$310 million, reflecting higher sales volumes partially offset by a shift in business mix Asia Segment Performance (US$) | Metric | 3Q23 | 3Q22 | Change | | :--- | :--- | :--- | :--- | | Core Earnings | $390M | $296M | 33% | | APE sales | $835M | $699M | 20% | | New business value (NBV) | $310M | $291M | 7% | | New business CSM | $300M | $261M | 16% | - Hong Kong APE sales increased **57%** to **US$209 million**, driven by strong growth in broker and bancassurance channels following the border reopening with mainland China[108](index=108&type=chunk) - Japan APE sales decreased **6%** to **US$67 million** due to lower sales of corporate-owned life insurance products[108](index=108&type=chunk) - Asia Other APE sales grew **14%** to **US$559 million**, with strong performance in mainland China and the International High Net Worth business, partially offset by lower sales in Vietnam[109](index=109&type=chunk) [Canada](index=22&type=section&id=B2%20Canada) The Canada segment reported a 4% increase in core earnings to $408 million in Q3 2023, reflecting favorable insurance experience and business growth, particularly in Group Insurance. APE sales saw a significant 51% increase to $431 million, primarily driven by a large affinity markets sale. Manulife Bank's average net lending assets grew 1% compared to year-end 2022 Canada Segment Performance (C$) | Metric | 3Q23 | 3Q22 | Change | | :--- | :--- | :--- | :--- | | Core Earnings | $408M | $391M | 4% | | APE sales | $431M | $285M | 51% | | Manulife Bank avg. net lending assets | $25.1B | $24.6B | 2% | - Core earnings growth was driven by more favourable insurance experience, business growth in Group Insurance, and higher expected investment earnings[116](index=116&type=chunk) - Individual insurance APE sales surged **145%** to **$250 million**, mainly due to a large affinity markets sale[123](index=123&type=chunk) - Annuities APE sales decreased **8%** to **$46 million**, primarily due to lower sales of segregated fund products[123](index=123&type=chunk) [U.S.](index=24&type=section&id=B3%20U.S.) The U.S. segment's core earnings decreased slightly by 2% to US$329 million in Q3 2023, as an increased provision for expected credit losses and lower CSM amortization offset higher investment earnings and improved insurance experience. APE sales declined 31% to US$79 million, impacted by higher short-term interest rates affecting demand for accumulation insurance products U.S. Segment Performance (US$) | Metric | 3Q23 | 3Q22 | Change | | :--- | :--- | :--- | :--- | | Core Earnings | $329M | $335M | (2)% | | APE sales | $79M | $115M | (31)% | - Core earnings were impacted by a higher ECL provision, primarily for electric utility bonds and private placements, and lower CSM amortization[130](index=130&type=chunk) - The decline in APE sales was attributed to the adverse impact of higher short-term interest rates on accumulation insurance products, particularly for affluent customers[132](index=132&type=chunk) - Products featuring the John Hancock Vitality PLUS feature constituted **71%** of total U.S. sales in Q3 2023[132](index=132&type=chunk) [Global Wealth and Asset Management](index=26&type=section&id=B4%20Global%20Wealth%20and%20Asset%20Management) The Global Wealth and Asset Management (Global WAM) segment reported stable core earnings of $361 million in Q3 2023, in line with the prior year. Higher net fee income and performance fees were offset by increased performance-related costs, leading to a **200 basis point** decline in the core EBITDA margin to 26.9%. The segment experienced net outflows of $0.8 billion, a sharp contrast to the $3.0 billion of net inflows in Q3 2022, driven entirely by a large-case pension plan redemption in the U.S. Retirement business Global WAM Segment Performance (C$) | Metric | 3Q23 | 3Q22 | Change | | :--- | :--- | :--- | :--- | | Core Earnings | $361M | $354M | 0% | | Gross flows | $34.3B | $32.0B | 5% | | Net flows | ($0.8B) | $3.0B | nm | | Core EBITDA margin | 26.9% | 28.9% | (200) bps | - Net outflows in Retirement were **$3.4 billion**, driven by a single large-case pension plan redemption in the U.S.[147](index=147&type=chunk)[151](index=151&type=chunk) - Retail net outflows were **$0.2 billion** as investors favored short-term cash instruments, though this was partially offset by the launch of a Global Semiconductors strategy in Japan[147](index=147&type=chunk)[151](index=151&type=chunk) - Institutional Asset Management saw strong net inflows of **$2.8 billion**, up from **$0.6 billion** in Q3 2022, driven by fixed income, equity, and agriculture mandates[147](index=147&type=chunk)[151](index=151&type=chunk) [Corporate and Other](index=29&type=section&id=B5%20Corporate%20and%20Other) The Corporate and Other segment reported core earnings of $10 million in Q3 2023, a significant improvement from a core loss of $230 million in Q3 2022. This $240 million increase was primarily due to the non-recurrence of a $256 million charge in the P&C Reinsurance business related to Hurricane Ian in the prior year, coupled with higher yields on debt instruments Corporate and Other Performance (C$) | Metric | 3Q23 | 3Q22 | Change | | :--- | :--- | :--- | :--- | | Net income (loss) attributed to shareholders | $249M | ($482M) | +$731M | | Core earnings (loss) | $10M | ($230M) | +$240M | - The improvement in core earnings was mainly driven by the non-recurrence of a **$256 million** charge for Hurricane Ian in Q3 2022[156](index=156&type=chunk) - Higher yields on debt instruments, net of higher debt financing costs, also contributed to the positive result. This was partially offset by increased performance-related costs and technology investments[156](index=156&type=chunk) [Risk Management and Risk Factors Update](index=30&type=section&id=C.%20RISK%20MANAGEMENT%20AND%20RISK%20FACTORS%20UPDATE) [Variable Annuity and Segregated Fund Guarantees](index=30&type=section&id=C1%20Variable%20annuity%20and%20segregated%20fund%20guarantees) Manulife's exposure to variable annuity and segregated fund guarantees is managed through dynamic and macro hedging strategies. As of September 30, 2023, the total amount at risk, net of reinsurance, was $3.5 billion, a decrease from $3.8 billion at year-end 2022. This amount represents the excess of guarantee values over fund values for policies where guarantees are in-the-money Variable Annuity and Segregated Fund Guarantees, Net of Reinsurance | ($ millions) | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Guarantee value | $39,969 | $42,254 | | Fund value | $44,533 | $46,323 | | Amount at risk | $3,467 | $3,829 | - The company mitigates a portion of the risks from its retained variable annuity and segregated fund guarantee business through a combination of dynamic and macro hedging strategies[160](index=160&type=chunk) [Publicly Traded Equity Performance Risk](index=31&type=section&id=C3%20Publicly%20traded%20equity%20performance%20risk) Manulife has net exposure to equity risk, which it manages through dynamic and macro hedging programs. The company provides sensitivity analysis on the potential impact of equity market movements. As of September 30, 2023, a 10% decline in public equity markets is estimated to have a negative impact of $400 million on net income attributed to shareholders, after hedging and reinsurance Potential Impact on Net Income from Public Equity Changes (Sep 30, 2023) | Equity Market Change | Net Potential Impact on Net Income ($ millions) | | :--- | :--- | | -30% | $(1,310) | | -20% | $(840) | | -10% | $(400) | | +10% | $390 | | +20% | $790 | | +30% | $1,170 | - The company's hedging strategies are not designed to completely offset sensitivity to all risks associated with guarantees. The macro hedging strategy is designed to mitigate public equity risk from unhedged exposures[167](index=167&type=chunk) [Interest Rate and Spread Risk Sensitivities](index=33&type=section&id=C4%20Interest%20rate%20and%20spread%20risk%20sensitivities%20and%20exposure%20measures) Manulife's net income is sensitive to changes in interest rates. As of September 30, 2023, a **50 basis point** parallel increase in interest rates is estimated to result in a **$100 million** charge to net income, while a **50 basis point** decline would result in a **$100 million** benefit. Changes in corporate and swap spreads also impact earnings and capital, with a **50 basis point** increase in corporate spreads estimated to improve the MLI LICAT ratio by **2 percentage points** Potential Impact of Interest Rate and Spread Changes (Sep 30, 2023) | Scenario | Impact on Net Income ($M) | Impact on OCI ($M) | Impact on MLI's LICAT ratio (pps) | | :--- | :--- | :--- | :--- | | Interest rates +50bp | $(100) | $400 | 1 | | Interest rates -50bp | $100 | $(400) | (1) | | Corporate spreads +50bp | – | $200 | 2 | | Corporate spreads -50bp | – | $(200) | (3) | - The probability of a LICAT scenario switch that could materially impact the LICAT ratio is considered low at the current level of interest rates[204](index=204&type=chunk) [Alternative Long-Duration Asset (ALDA) Performance Risk](index=36&type=section&id=C5%20Alternative%20long-duration%20asset%20performance%20risk) The company has exposure to alternative long-duration assets (ALDA), including commercial real estate, timber, farmland, infrastructure, and private equities. A 10% change in the market value of these assets would have a significant impact on earnings. As of September 30, 2023, a 10% decline in ALDA market values is estimated to result in a $2.5 billion negative impact on net income attributed to shareholders Potential Impact of ALDA Market Value Changes (Sep 30, 2023) | ALDA Market Value Change | Impact on Net Income ($ millions) | Impact on MLI's LICAT ratio (pps) | | :--- | :--- | :--- | | -10% | $(2,500) | (3) | | +10% | $2,500 | 3 | [Risk Factors – Strategic Risk from Changes in Tax Laws](index=37&type=section&id=C8%20Risk%20factors%20%E2%80%93%20strategic%20risk%20from%20changes%20in%20tax%20laws) Manulife is monitoring potential strategic risks from changes in tax laws. The OECD/G20's two-pillar solution, particularly the Pillar Two global minimum tax rate of 15%, is expected to be implemented by December 31, 2023, and would apply to the company's 2024 fiscal year. If enacted, this is expected to increase the company's effective tax rate. Additionally, Canada's 2023 Budget proposes to deny tax deductions on dividends from certain shares, which would also increase tax expenses on investment income starting in 2024 - The OECD/G20 Pillar Two global minimum tax, targeted for implementation by year-end 2023, is expected to increase Manulife's effective tax rate starting in fiscal year 2024[220](index=220&type=chunk) - Proposed changes in Canada's 2023 Budget to deny deductions for dividends on mark-to-market shares held by financial institutions would increase tax expense on investment income from 2024[221](index=221&type=chunk) [Critical Actuarial and Accounting Policies](index=38&type=section&id=D.%20CRITICAL%20ACTUARIAL%20AND%20ACCOUNTING%20POLICIES) [Actuarial Methods and Assumptions](index=38&type=section&id=D2%20Actuarial%20methods%20and%20assumptions) The 2023 annual review of actuarial methods and assumptions resulted in a net favorable impact, decreasing pre-tax fulfilment cash flows by $347 million. This led to a $27 million increase in pre-tax net income attributed to shareholders. Key updates included a review of Canada variable annuity products, mortality and morbidity updates in the U.S. and Asia, and changes to lapse assumptions for Canadian universal life products. The 2022 review, for comparison, had resulted in an increase in pre-tax fulfilment cash flows of $192 million, largely influenced by a triennial review of U.S. long-term care Impact of 2023 Changes in Actuarial Methods and Assumptions | Area of Update | Impact on Pre-tax Fulfilment Cash Flows ($M) | | :--- | :--- | | Canada variable annuity product review | $(133) | | Mortality and morbidity updates | $265 | | Lapse and policyholder behaviour updates | $98 | | Methodology and other updates | $(577) | | **Total Impact** | **$(347)** | - The 2023 review resulted in a **$27 million** increase in pre-tax net income attributed to shareholders, a **$116 million** increase in CSM, and a **$146 million** increase in pre-tax other comprehensive income[225](index=225&type=chunk) - The 2022 review included a comprehensive U.S. long-term care (LTC) experience study, which increased pre-tax fulfilment cash flows by **$118 million**[243](index=243&type=chunk)[245](index=245&type=chunk) [Sensitivity of Earnings to Changes in Assumptions](index=43&type=section&id=D3%20Sensitivity%20of%20earnings%20to%20changes%20in%20assumptions) Manulife's earnings and capital are sensitive to changes in non-economic and certain economic assumptions. A 5% adverse change in future morbidity rates is estimated to have the largest impact, with a potential negative effect of $3.6 billion on net income attributed to shareholders. Changes in mortality and policy termination rates also have material, though smaller, impacts. Among economic assumptions, a **10 basis point** reduction in the ultimate spot rate would negatively impact CSM and OCI by $300 million each Sensitivity to Changes in Non-Economic Assumptions (Net of Reinsurance) | Assumption Change | Impact on CSM net of NCI ($M) | Impact on Net Income ($M) | | :--- | :--- | :--- | | 2% adverse change in mortality | $(600) / (500) | $0 / $0 | | 5% adverse change in morbidity | $(1,000) | $(3,600) | | 10% adverse change in policy termination | $(400) / (1,200) | $(100) / (100) | Sensitivity to Changes in Economic Assumptions | Assumption Change | Impact on CSM net of NCI ($M) | Impact on Net Income ($M) | | :--- | :--- | :--- | | 10 bp reduction in ultimate spot rate | $(300) | $0 | | 50 bp increase in non-fixed income return volatility | $(100) | $0 | [Other Information](index=44&type=section&id=E.%20OTHER) [Non-GAAP and Other Financial Measures](index=45&type=section&id=E3%20Non-GAAP%20and%20other%20financial%20measures) This section provides detailed definitions and reconciliations for the non-GAAP and other financial measures used by Manulife to evaluate performance, such as core earnings, core EPS, core ROE, APE sales, and NBV. Core earnings is a key metric that excludes market-related volatility and other specific items to better reflect the underlying long-term earnings capacity of the business. The report includes extensive tables reconciling core earnings to net income for each segment and for various periods, including adjustments for constant exchange rates and the transition to IFRS 9 - Core earnings is a non-GAAP measure used to focus on the company's operating performance by excluding market-related gains/losses, changes in actuarial methods, and other items not reflective of underlying earnings capacity[279](index=279&type=chunk) - To aid comparability following the adoption of IFRS 9, "transitional" non-GAAP measures are presented for 2022 comparative periods, which include the effects of IFRS 9 hedge accounting and ECL principles[290](index=290&type=chunk)[291](index=291&type=chunk) - The report provides detailed reconciliations of core earnings to net income attributed to shareholders for the total company and by segment (Asia, Canada, U.S., Global WAM, Corporate & Other) for Q3 2023, prior quarters, and year-to-date periods[293](index=293&type=chunk)[309](index=309&type=chunk)[313](index=313&type=chunk) [Revenue](index=99&type=section&id=E6%20Revenue) Total revenue for Q3 2023 was $9.3 billion, a slight decrease from $9.5 billion in Q3 2022. The decline was primarily due to lower net investment income, which was partially offset by an increase in insurance revenue. On a year-to-date basis, total revenue was $35.0 billion in 2023, a significant increase from $20.4 billion in the same period of 2022 Revenue by Segment (in millions) | Segment | 3Q23 | 3Q22 | | :--- | :--- | :--- | | Asia | $1,547 | $1,872 | | Canada | $2,643 | $3,599 | | U.S. | $3,478 | $2,854 | | Global Wealth and Asset Management | $1,382 | $1,270 | | Corporate and Other | $272 | $(49) | | **Total Revenue** | **$9,322** | **$9,546** | - The decrease in quarterly revenue was driven by lower net investment income, particularly in the Asia and Canada segments, due to net realized and unrealized losses on derivatives and bonds[480](index=480&type=chunk)[482](index=482&type=chunk) [Financial Statements and Notes](index=101&type=section&id=Financial%20Statements%20and%20Notes) [Consolidated Financial Statements](index=101&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements present Manulife's financial position as of September 30, 2023, and its performance for the three and nine months then ended. Total assets stood at $835.9 billion, with total equity of $49.0 billion. For the nine-month period, the company generated net income of $3.8 billion and cash flow from operations of $14.3 billion. These statements reflect the adoption of IFRS 17 and IFRS 9, with comparative 2022 figures restated accordingly Key Financial Statement Figures (as at Sep 30, 2023) | Item | Amount (in billions) | | :--- | :--- | | Total Assets | $835.9 | | Total Liabilities | $786.8 | | Total Equity | $49.0 | | **For the nine months ended Sep 30, 2023** | | | Total Revenue | $34.0 | | Net Income | $3.8 | | Cash from Operating Activities | $14.3 | [Condensed Notes to Interim Consolidated Financial Statements](index=106&type=section&id=Condensed%20Notes%20to%20Interim%20Consolidated%20Financial%20Statements) The notes provide detailed information supplementing the consolidated financial statements, prepared under IAS 34. Key notes cover the significant accounting policy changes due to the adoption of IFRS 17 and IFRS 9, detailed breakdowns of invested assets, derivative instruments, insurance contract liabilities, and segment reporting. Note 5 details the annual review of actuarial methods and assumptions, which resulted in a net favorable impact on 2023 earnings. Note 7 provides extensive disclosures on risk management, including credit risk exposures and sensitivities - Note 2 details the adoption of IFRS 17 and IFRS 9, which materially changed the recognition, measurement, and presentation of insurance contracts and financial instruments. The impact of adopting IFRS 9's ECL impairment methodology resulted in a net reduction to retained earnings of **$409 million** on January 1, 2023[500](index=500&type=chunk)[513](index=513&type=chunk) - Note 5 outlines the 2023 annual review of actuarial methods and assumptions, which resulted in a net decrease in pre-tax fulfilment cash flows of **$347 million** and an increase in pre-tax net income attributed to shareholders of **$27 million**[653](index=653&type=chunk) - Note 10 provides details on the Normal Course Issuer Bid (NCIB), under which the company purchased **49.5 million** common shares for **$1,262 million** during the nine months ended September 30, 2023[740](index=740&type=chunk)[741](index=741&type=chunk)