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MANULIFE(MFC) - 2023 Q3 - Earnings Call Transcript
MFCMANULIFE(MFC)2023-11-09 19:32
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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].−Netincomewaslowerthancoreearningsduetoachallenginginvestmentenvironment,butgainsinothercomprehensiveincomeoffsetsomeoftheadverseresults[19][10].BusinessLineDataandKeyMetricsChanges−APEsalesinCanadagrewby5130.67 [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 5.8billion[39][50].MarketDataandKeyMetricsChanges−TheU.S.segmentfacedlowerAPEsalesduetoahigh−rateenvironmentimpactingaccumulationinsuranceproducts,particularlyforaffluentcustomers[35][91].−Thecompanynotedthatretailnetoutflowsreflectedlowerdemandasinvestorsfavoredshort−termcashandmoneymarketinstrumentsamidmarketvolatility[51].CompanyStrategyandDevelopmentDirection−Thecompanyisfocusedonprofitablegrowthwhileenhancingcustomerneedsandreturningcapitaltoshareholders,withastrongemphasisondigitaltransformationandtechnologyadoption[11][25].−AunifiedonboardingplatformwaslaunchedinBermuda,HongKong,andSingaporetoenhancethehighnetworthbusiness[24].−Thecompanyplanstocontinuebuildingonitsdigitalplatformandacceleratetheadoptionofnewtechnologies,includinggenerativeAI[27][28].Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceinthecompany′sabilitytonavigatetheuncertainmacroeconomicenvironment,highlightingopportunitiesarisingfromhigherinterestratesandrecoveryinAsia[16][40].−Themanagementacknowledgedchallengesinthemarketbutemphasizedtheimportanceofincreasingcustomerengagementandsalestodrivefuturegrowth[64][100].OtherImportantInformation−Thecompanyhasreturnedapproximately5.8 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].