Manulife Financial Corporation

Good morning and welcome to the Manulife Financial Second Quarter 2023 Financial Results Conference Call. Your host for today will be Mr. Hong Ko. Please go ahead, Mr. Ko.

Thank you. Welcome to Manulife's Earnings Conference Call to discuss our second quarter and year-to-date 2023 financial operating results. Our earnings materials, including the webcast slide for today's call, are available on the Invest Relations section of our website at manulife.com. Turning to slide four. We will begin today's presentation with an overview of our second quarter results and strategic update by Roy Corey, our President and Chief Executive Officer. Following Roy's remarks, Colin Simpson, our Chief Financial Officer, will discuss the company's financial and operating results. After the prepared remarks, we'll move to the live Q&A portion of the call. We ask each participant to adhere to a limit of two questions, including follow-up questions. 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. notes that certain material factors or assumptions applied in making forward-looking statements and actual results may differ materially from what is stated. I would also refer you to slide 38 for a note on a non-gap and other financial measures used in this presentation, which includes an explanation of our use of transitional results for 2022 comparison. With that, I'd like to turn the call over to Roy Gorey, our President and Chief Executive Officer.

Roy. Thanks, Hong, and thank you everyone for joining us today. Yesterday, we announced our second quarter 2023 financial results. In our second quarterly reporting under IFRS 17, we delivered strong operating results, including core earnings of $1.6 billion, net income of $1 billion, strong growth in EPS and core EPS, and core ROE of 15.5%. I'm encouraged by the strong top line momentum that we're building across our new business metrics. with double-digit growth in AP sales, MBV, and new business CSM compared with 2022. We also generated global WAM net inflows of $2.2 billion. AP sales increased by 12% from the prior year quarter, led by Asia, where AP sales increased 26% year-on-year, as we capitalized on the post-pandemic recovery in the region. The strong sales supported a 10% increase in MBV and a 15% increase in our new business CSM. The increase in new business CSM was in line with our medium-term target. The strong growth in new business CSM, particularly in Asia, gives us confidence in the future growth of our insurance service results. Turning to slide seven. Our strong core earnings of $1.6 billion were up 4% from the prior year quarter, as growth across our insurance and corporate segments was partially offset by a decline in global WAM. Our continued capital deployment through share buybacks contributed to our core EPS growing 6% from the prior year quarter. Net income of $1 billion was impacted by lower than expected returns on our older portfolio. While some of the older classes are facing headwinds, we continue to generate overall positive return from the portfolio. We also delivered strong core ROE of 15.5%, which is in line with our medium term target of 15% plus. Turning to slide eight. We continue to maintain a strong capital position supported by a LICAT ratio of 136% and a leverage ratio of 25.8%. We also reported adjusted book value per share of $29.42, a 5% increase from the prior year quarter over a period that had sizable interest rate movements and during which we returned significant capital to shareholders. While this amount was modestly down from the first quarter, the majority of the decline was attributed to the currency translation of foreign operations, which does not reflect the fundamental performance of our business. This graph is a great illustration of the strength and stability of our adjusted book value under IFRS 17. Turning to slide nine. Overall, we have a very attractive business mix, including exposure to the emerging middle class in Asia, and the developed North American economies, as well as a scaled global asset manager. And the three megatrends that underpin our business remain unchanged. A growing middle class in Asia, an aging population, and digitization of the consumer. We are strongly positioned to capitalize on these opportunities and the momentum that we generated in the quarter is an illustration of our growth potential. In Asia, the team is capturing the opportunity as the region continues to recover from the pandemic. I'm really excited that Phil Witherington, formerly our CFO, returned to Asia in July to lead the business. Phil has a deep appreciation of our Asia franchise, having previously served as Manulife Asia's interim CEO, as well as its CFO. In the short time that he's been there, we are seeing strong momentum building in our Asia businesses in the third quarter. Our top line metrics bode well for the future earnings growth of the segment. I'm confident that Phil will lead our team and double down on our growth ambitions in the region, and he's here on the call with us today. I would also like to thank Damian Green, who's transitioned to the position of Chair of Manulife Financial Asia for his leadership. In Global WAM, we delivered strong net inflows of $6.6 billion in the first half of 2023. supported by a unique business profile, which is diversified by geography and business line. We've maintained strong sales rankings in many of our key markets, including the number one spot in Canada and Hong Kong retirement, and number two in the US mid-case retirement market. Core earnings were down from the prior year period, due in part to higher investments as we strive to continue building new business. However, I'm encouraged to see us building momentum. with our core earnings improving 12% and core EBITDA margin improving by 2.2 percentage points from the first quarter. As part of delivering value to shareholders, we're committed to helping our customers live longer, healthier, better lives. And we're executing against our ESG strategy and commitments. In Hong Kong, we launched enhanced healthcare coverage to better address the growing demand for health and protection services. In Canada, we further expanded our behavioral insurance program, making Manulife Vitality available on new Manulife PAR individual insurance policies. And currently, our own timberland and agriculture properties already remove more carbon from the atmosphere than our operations emit. We strengthened our commitment to reducing emissions by disclosing science-based targets, including an increased ambition to reduce absolute scope one and two emissions 40% by 2035. This is all part of our commitment to helping make decisions easier and lives better, which will drive value for shareholders. And finally, since we resumed our share buyback program in 2022, our strong capital position has enabled us to return over $6.6 billion of capital to shareholders through dividends and share buybacks, including more than $440 million of share buybacks during the second quarter. As of the end of June, we still had capacity to purchase approximately 30 million common shares under our current NCIB program. Overall, it was a very encouraging quarter with strong top line momentum, and our strong sales performance leaves me optimistic for the future. With that, I'm happy to turn it over to Colin Simpson, who has succeeded Phil as our Group Chief Financial Officer. Colin brings a wealth of experience within the insurance industry, You'll get to know Colin very well as we intensify our focus to generate value for our shareholders and customers. With that, I'll hand it over to Colin.