Manulife Financial Corporation

Good morning and welcome to the Manulife Financial first quarter 2022 financial results conference call. Your host for today will be Mr. Hung Koh. Please go ahead, Mr. Koh.

Thank you. Welcome to Manulife's earnings conference call to discuss our first quarter 2022 financial and operating results. Our quarterly earnings material, including the webcast slides for today's call, are available on the investor relations section of our website at manulife.com. Turning to slide four. We will begin today's presentation with an overview of our first quarter highlights and an update on our strategic priorities by Roy Corey, our President and Chief Executive Officer. Following Roy's remarks, Phil Ruffington, our Chief Financial Officer, will discuss the company's financial and operating results and provide an update on the key implications of IFR 17 on manualized financial results and key performance indicators. After the prepared remarks, 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, including follow-ups. If you have additional questions, please re-queue, and we will do our best to respond to everyone. Before we start, please refer to slide two for a caution on forward-looking statements and slide 39 for a note on the non-GAAP and other financial measures used 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, Hung. Thank you, everyone, for joining us today. Yesterday, we announced our first quarter 2022 financial results. Our diversified footprint, operational resilience, and proven digital capabilities enabled us to deliver solid results in the first quarter, despite a challenging operating environment caused by the resurgence of COVID-19 and global market volatility. You'll see on slide six, we delivered solid core earnings of $1.6 billion, a modest 4% decrease from the prior year quarter, as we continue to benefit from the diversity of our businesses. And we also reported net income of $3 billion, an increase of $2.2 billion over the prior year quarter. reflecting strong investment-related experience and a gain from the closing of the U.S. variable annuity reinsurance transaction. We achieved new business value of $513 million. The resurgence of COVID-19 and tighter containment measures impacted many of our markets in Asia and lowered NBV. This was partially offset by double-digit growth in both Canada and the U.S. exemplifying the benefit of our business diversification. While the rapid and unprecedented resurgence of COVID-19 disrupted new business activities in multiple markets in Asia, our diversified, digitally enabled, and well-established distribution channels delivered double-digit growth in AP sales and MVV relative to the average levels during the first wave of the pandemic in the first and second quarters of 2020. And Global WAM had another quarter of strong net inflows, generating $6.9 billion with positive contributions across all geographies and business lines. Finally, we reported embedded value of $64.8 billion, or $33.35 per share, as of December 31, 2021, an increase of $3.7 billion, or 7.3% from the prior year. We believe that embedded value is an important valuation metric. Additional information on our embedded value can be found in the appendix and our 2021 embedded value report. Turning to slide seven, we are laser focused on delivering on our strategic priorities. Our highest potential businesses accounted for 63% of total company core earnings in the first quarter of 2022. In Asia, we successfully commenced offering insurance solutions to Vietten Bank's 14 million customers as part of our exclusive 16-year bank insurance partnership in Vietnam. And in our global WAN business, we announced the launch of the Real Asset Investment Strategy in Canada, which provides investors access to a mix of global private and public real asset investments. combining the benefits of broad private asset exposures with the liquidity benefits of allocating to public markets. We continue to execute on our ambition to be the most digital customer-centric global company in our industry. In Asia, more than 10% of AP sales resulted from leads generated using advanced analytics to identify additional needs from existing customers. We launched an enhanced Manulife Vitality mobile app experience in Canada for our individual insurance business, giving the app a new look and feel with easier navigation to further drive member engagement. In the US, we enhanced our e-app by implementing automated background checks, which reduced onboarding cycles from three weeks to five days and reduced costs and call center volumes. In our global WAM retirement business, we enabled registration directly through the mobile app in Canada, resulting in approximately 50,000 Canadian customers using our mobile application by the end of the quarter. We've made tremendous progress on our digital journey, as evidenced by the 20-point improvement in our Net Promoter Score from plus one in 2017 to plus 21 in 2021. In recent months, our service levels were impacted by temporary workforce capacity constraints. And at the end of the first quarter, the rolling four-quarter average NPS was tracking below our 2022 target of plus 31. We're taking actions to boost the average NPS in 2022. We are committed to continuing to execute on our strategy to attract, engage, and retain customers by delivering an outstanding experience for every interaction. We remain on track to achieve our 2025 supplemental goal of plus 37. In line with our semi-annual reporting of MPS, we will provide a more fulsome update with our second quarter 2022 results. Turning to slide eight, we continued to drive progress on our expense efficiency portfolio optimization and high performing team priorities during the quarter. We achieved an expense efficiency ratio of 50% despite a modest decrease in core earnings as we continued to proactively manage costs amid the challenging environment. Of note, we closed the variable annuity reinsurance transaction in the US with a deal multiple of 11.8 times and released $2.4 billion of capital. And we've commenced share buybacks to deliver shareholder value and neutralize the impact of the transaction on core EPS. Turning to slide nine. During the first quarter, we witnessed a rapid and unprecedented resurgence of COVID-19 in Asia. The spike in daily new confirmed cases significantly exceeded prior waves for many of our markets. This resulted in tighter containment measures, notably in Hong Kong, mainland China, and Vietnam. These containment measures has challenged the broader economy and the insurance industry as a whole. We are encouraged to see recent signs of stronger customer demand returning as case counts are declining. For example, in Hong Kong, we saw confirmed cases decrease from the peak of 77,000 daily to 300 daily as of May 1st. And containment measures have begun to relax in late April. Turning to slide 10. Despite the ongoing prevalence of COVID-19, we have demonstrated a strong track record in managing the challenges over the past two years. A clear example is our Hong Kong business, where we've gained market share and increased our ranking by one spot to number five on insurance and retained our number one market position in MPS in 2021. We have delivered 19 consecutive quarters of year-over-year growth in core earnings. We've also scaled and digitized our distribution force, growing agency headcount by 7% and increasing our EPOS active agent adoption to over 80%. Our MVV margin improved three percentage points this quarter compared to the prior year, as we focused on increasing health and protection mix and scaling our move platform to help more customers become healthier. Since the outbreak of COVID-19 in 2020, We've delivered resilient results due to the investments that we've made into our talent, digital, and distribution channels. As markets across Asia navigate the challenges of the pandemic, we continue to be well positioned to serve our customers' needs. The strong demand that we've witnessed in North America and ongoing attractive megatrends in Asia give us optimism about the opportunity as those markets recover from the pandemic. Turning to slide 11. We delivered solid results in the first quarter of 2022, and I'm very proud of the performance of our business during the quarter, despite a challenging operating environment caused by the resurgence of COVID-19 and global market volatility. We closed the transaction to reinsure over 75% of our U.S. variable annuity business with a deal multiple of 11.8 times and released $2.4 billion of capital. We remain committed to generating shareholder value as we commenced share buybacks to neutralize the impact of the transaction on core EPS. Our solid foundation, global presence, diverse business, and continued strong execution uniquely positions us to succeed and deliver on our growth targets. Thank you. And I'll hand over to Phil Witherington, who will review the highlights of our financial results and provide an update on IFRS 17.