Manulife Financial Corporation

Good morning and welcome to the Manulife Financial first quarter 2021 financial results conference call. Your host for today will be Ms. Adrienne O'Neill. Please go ahead, Ms. O'Neill.

Thank you and good morning. Welcome to Manulife's earnings conference call to discuss our first quarter 2021 results. We are conducting this call virtually. The earnings release, financial statements and related MD&A, embedded value report, statistical information package, and webcast slides for today's call are available on the investor relations section of our website at manulife.com. Turning to slide two, I want to remind you that we're hosting an investor day on June 29th, where we will share an update on the company's strategy and with an emphasis on accelerating growth in our Asia and global WAM businesses, as well as executing on our digital strategy. To ensure a smooth viewing experience, please register in advance by clicking the link on slide two or through the investor relations section of our website. Turning to slide five, we will begin today's presentation with an overview of our first quarter highlights, and an update on our strategic priorities by Roy Gorey, our President and Chief Executive Officer. Following Roy's remarks, Phil Witherington, our Chief Financial Officer, will discuss the company's financial and operating results, and then Steve Finch, our Chief Actuary, will discuss embedded value. After the prepared remarks, which were recorded in advance to ensure optimal sound quality, we will move to the live question and answer portion of the call. We ask each participant to adhere to a limit of two questions. If you have additional questions, please re-queue and we'll do our best to respond to all questions. Before we start, please refer to slide 3 for a caution on forward-looking statements and slide 31 for a note on the use of non-GAAP financial measures in this presentation. Note that certain material factors or assumptions are applied in making forward-looking statements and actual results may differ materially from what is stated. With that, I'd like to turn the call over to Roy Gorey, our President and Chief Executive Officer. Roy.

Thanks, Adrienne. Good morning, everyone, and thank you for joining us today. Turning to slide seven. Yesterday, we announced our financial results for the first quarter of 2021. We're off to a strong start, with double-digit growth across a number of our key operating metrics compared with the prior year quarter. We delivered record core earnings of $1.6 billion, a 67% increase from the prior year, with double-digit growth across all our operating segments. We reported net income of $783 million, reflecting the immediate impact of a steepening yield curve and higher risk-free rates. It's worth noting that a higher interest rate environment is beneficial to manualized business in the long term. New business value increased 32%, with double-digit growth in Asia and the US. In our global WAM business, our core EBITDA margin increased 340 basis points as we continued to build scale and benefited from growth in higher margin markets. And our core ROE increased by 5.5 percentage points to 13.7%. Finally, we reported embedded value of $61.1 billion, or $31.49 per share, as of December 31, 2020. It's worth noting that embedded value only reflects a portion of the value of our businesses, as it attributes no value to future new business and only tangible book value to our growing global WAM businesses, as well as our T&C reinsurance operations and Manulife Bank. Turning to slide eight and the progress that we've made executing on our five priorities. Our commitment to optimize manualized legacy portfolio remains, and we continue to seek opportunities to reduce risk and unlock value. In the first quarter, we freed up $65 million of capital through the ongoing success of our variable annuity buyout program in the US. Expense efficiency is deeply embedded in our culture. and I'm pleased to see that reflected in our first quarter expense efficiency ratio of 48.5%. While there's still work to do in order to consistently achieve a ratio of less than 50%, we're on the right track. Our third priority is to accelerate growth in our highest potential businesses, and we aspire to have these businesses generate two-thirds of the total company core earnings by 2022. Growth in our highest potential businesses has outpaced other areas for the last few years, and we're on track to achieve our target by next year. Our highest potential businesses accounted for 60% of total company core earnings in the first quarter of 2021, with Asia and Global WAN delivering exceptional results. In fact, the combined contribution from our Asia and Global WAN businesses to Manulife's core earnings was 54% in the first quarter of 2021. Sustainability is a priority for Manulife. And our global WAM business expanded its ESG offerings with the launch of our Sustainable Asia Bond Fund in Europe and our Global Climate Pool Fund in Canada. Our first climate change-themed fund developed in alignment with the principles of the Paris Agreement on Climate Change. Our fourth priority is about our customers and how we're using technology to attract, engage, and retain customers by delivering an outstanding experience. We've continued to make progress on our digital journey across all our operating segments to better engage with our customers. In Canada, we completed the migration of our group benefit clients to one administration system and launched a new advisor portal across our businesses to improve the advisor experience. In the US, we piloted a new portal for distributors to submit forms and client information for our international products and streamlined our US life insurance customer onboarding process reducing the account opening time by as much as 80%. Through our Vitality offering, we announced programs to reward customers in North America who received the COVID-19 vaccine. In Vietnam, we launched a digital sales platform that enables customers to purchase health insurance online. And in Global WAM, we launched a money market fund with OVO, Indonesia's leading digital payments platform and its strategic partner, Bareksa. Indonesia's first online mutual fund marketplace. The result combines digital money and online investment to reach a younger generation of investor in a growing and important market for us. Our final priority is around building a high performing team and culture. Our target is to achieve top quartile employee engagement compared to global financial services and insurance peers by 2022. And we're proud to achieve this ranking in 2020. We continue to invest in our team, and in April, we launched the Pursuit Learning Hub with LinkedIn Learning. This hub is a world-class online resource with courses taught by internationally respected subject matter experts. This unified learning and development platform provides our team with the opportunity to learn new skills, capabilities, and ways of working, which will enable us to further accelerate our digital, customer-obsessed culture. To conclude, We have the right strategy and continue to demonstrate great progress against it. We delivered strong results to start the year, despite ongoing headwinds, and remain committed to our medium-term financial targets, including our dividend payout ratio. I'm optimistic for the future and confident that Manulife is well positioned to outperform as the global economy transitions to recovery. Thank you. And I'll hand over to Phil Witherington, who will review the highlights of our financial results. Phil.