C$ unless otherwise
stated
TSX/NYSE/PSE:
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This earnings news
release for Manulife Financial Corporation ("Manulife" or the
"Company") should be read in conjunction with the Company's Second
Quarter 2021 Report to Shareholders, including our unaudited
interim Consolidated Financial Statements for the three and six
months ended June 30, 2021, prepared in accordance with
International Financial Reporting Standards ("IFRS") as issued by
the International Accounting Standards Board ("IASB"), which are
available on our website at
www.manulife.com/en/investors/results-and-reports. Additional
information relating to the Company is available on the SEDAR
website at http://www.sedar.com and on the U.S. Securities and
Exchange Commission's ("SEC") website at
http://www.sec.gov.
|
TORONTO, Aug. 4, 2021 /CNW/ - Today, Manulife announced
its second quarter of 2021 ("2Q21") results. Key highlights
include:
- Net income attributed to shareholders of $2.6 billion in 2Q21, up $1.9 billion from the second quarter of 2020
("2Q20")
- Core earnings1 of $1.7
billion in 2Q21, up 18% on a constant exchange rate
basis2 from 2Q20
- Core ROE1 of 13.9% and ROE of 22.2% in 2Q21
- NBV1 of $550 million
in 2Q21, up 57% from 2Q20
- APE sales1 of $1.4
billion in 2Q21, up 30% from 2Q20
- Global Wealth and Asset Management ("Global WAM") net
inflows1 of $8.6 billion
in 2Q21, compared with net inflows of $5.1
billion in 2Q20
- Strong LICAT ratio3 of 137%
- Expense efficiency ratio1 of 46.8%, compared with
our target of consistently achieving less than 50%
"Our strong momentum continued in the second quarter, as we
delivered record core earnings of $1.7
billion, up 18% from the prior year quarter, driven by
double-digit growth in our highest potential businesses and net
income of $2.6 billion. NBV increased
57% year-over-year, with strong contributions from all geographies
and core EBITDA margin1 increased 4 percentage points
year-over-year, contributing to core earnings growth of 62% in
Global WAM. Our results this quarter showcase the strength of our
Asia and Global WAM businesses which underpin the next phase of our
strategy," said Manulife President & Chief Executive Officer
Roy Gori.
"We have also continued to make strides in our ambition to
become the most digital, customer-centric, global company in our
industry, launching digital enhancements across a number of our
businesses and making it easier for customers to do business with
us in the current environment. Our NPS4 score of
+19, an 18 point improvement from the 2017 baseline5, is
reflective of our success in this area," added Mr. Gori.
"While economic recovery is underway, challenges remain and it is
uneven across markets. Manulife is well positioned to serve our
customers' needs throughout the recovery and I am optimistic about
the tremendous opportunity ahead."
"Strong customer demand combined with favourable market
sentiment during the quarter contributed to double-digit APE sales
growth across all segments and an increase in net flows and assets
under management and administration in our Global WAM business,"
said Phil Witherington, Chief
Financial Officer.
"Expense discipline remains one of our top priorities, and at
46.8%, our expense efficiency ratio for the quarter remained below
50% and improved by 2 percentage points year-over-year. We
will continue to invest in our digital capabilities to both improve
customer experience and deliver on our efficiency target," added
Mr. Witherington.
_______________________
|
1
|
Core earnings, core
return on common shareholders' equity ("core ROE"), new business
value ("NBV"), annualized premium equivalent ("APE") sales, net
flows, expense efficiency ratio and core EBITDA margin are non-GAAP
measures. See "Performance and non-GAAP Measures" below and in our
Second Quarter 2021 Management's Discussion and Analysis ("2Q21
MD&A") for additional information.
|
2
|
All percentage growth
/ declines in financial metrics in this news release are reported
on a constant exchange rate basis. Constant exchange rate basis
excludes the impact of currency fluctuations and is a non-GAAP
measure. See "Performance and non-GAAP measures" below and in our
2Q21 MD&A for additional information.
|
3
|
Life Insurance
Capital Adequacy Test ("LICAT") ratio of The Manufacturers Life
Insurance Company ("MLI").
|
4
|
Relationship Net
Promotor Score.
|
5
|
In 2021, we adjusted
the weightings in our relationship NPS methodology to more closely
align with our focus on our highest potential businesses. This
adjustment had no impact on the 2017 NPS baseline of +1 and would
have modestly increased the score in 2018, 2019, and
2020.
|
BUSINESS HIGHLIGHTS:
In Asia, we continued to invest in the recruitment, training and
education of our agents and announced a three-year partnership with
LIMRA, a leading global trade association for the financial
services industry, in order to further recruit best-in-class agents
across Asia. This partnership complements our newly launched
Manulife Business Academy, which will provide a region-wide unified
learning and development platform for our growing number of agents.
In Canada, we launched the
Manulife Vitality HealthyMind reward program to help
our individual insurance customers improve their mental and
emotional wellbeing. In the U.S., we released US$125 million of capital through our Annuity
Guaranteed Minimum Withdrawal Benefit offer program. Global WAM's
managed assets under management and administration
("AUMA")1 totaled more than $1 trillion, reflecting our track record of
positive net flows and strong investment performance2,
as well as growth in assets managed on behalf of the company's
other segments. Further, our Global WAM business secured an
Alternative Investment Fund Managers ("AIFM") license to offer
on-shore private market funds in our key European markets,
positioning us to drive the expansion and offering of our private
market investment capabilities within Europe.
In addition, we continued to make progress on our digital
journey in 2Q21. In Asia, we entered into a new digital
collaboration with Rewardz, a rewards aggregator and management
solution, to further incentivize customers in our MOVE program to
be physically active. In Canada, we became the first Canadian
company to use artificial intelligence in underwriting mortgage
creditor insurance. In the U.S., we integrated our underwriting
decision engine with iPipeline, a leading provider of no code / low
code content-based digital solutions for the life insurance and
financial services industry, to accelerate the life insurance
application process. This new approach will dramatically reduce the
life insurance sales cycle and offers a less intrusive way to
collect medical history data with required signatures. In our
Global WAM business, we launched a new retirement mobile app for
all U.S. plan members. The new app gives members the ability to
enroll in their plan, view account details, make changes to their
account, and use additional financial tools that provide them with
guidance on their retirement saving strategies and financial
priorities.
________________________
|
1
|
Global WAM managed
assets under management and administration includes assets managed
by Global WAM for the Company's other segments of $235 billion as
at June 30, 2021. Assets under management and administration
("AUMA") is a non-GAAP measure. See "Performance and non-GAAP
measures" below and in our 2Q21 MD&A for additional
information.
|
2
|
Investment
performance for the 3- and 5- year period ending June 30, 2021
reflects 74% and 79%, respectively, of assets outperforming their
peers or their respective index, and is based on assets under
management of $606 billion. The $606 billion represents Global WAM
managed AUMA excluding 3rd party products, liability-driven
invested assets, Private Markets strategies, and passive
strategies, as well as certain assets managed on behalf of the
Company's other segments and select Retirement assets in
Canada.
|
FINANCIAL HIGHLIGHTS:
|
Quarterly
Results
|
YTD
Results
|
($ millions, unless
otherwise stated)
|
|
2Q21
|
|
2Q20
|
|
2021
|
|
2020
|
Profitability:
|
|
|
|
|
|
|
|
|
Net income attributed
to shareholders
|
$
|
2,646
|
$
|
727
|
$
|
3,429
|
$
|
2,023
|
Core
earnings(1)
|
$
|
1,682
|
$
|
1,561
|
$
|
3,311
|
$
|
2,589
|
Diluted earnings per
common share ($)
|
$
|
1.33
|
$
|
0.35
|
$
|
1.71
|
$
|
1.00
|
Diluted core earnings
per common share ($)(1)
|
$
|
0.83
|
$
|
0.78
|
$
|
1.65
|
$
|
1.29
|
Return on common
shareholders' equity ("ROE")
|
|
22.2%
|
|
5.5%
|
|
14.3%
|
|
7.9%
|
Core
ROE(1)
|
|
13.9%
|
|
12.2%
|
|
13.8%
|
|
10.2%
|
Expense efficiency
ratio(1)
|
|
46.8%
|
|
48.9%
|
|
47.7%
|
|
53.9%
|
Performance:
|
|
|
|
|
|
|
|
|
Asia new business
value
|
$
|
399
|
$
|
298
|
$
|
876
|
$
|
654
|
Canada new
business value
|
$
|
76
|
$
|
46
|
$
|
154
|
$
|
123
|
U.S. new business
value
|
$
|
75
|
$
|
40
|
$
|
119
|
$
|
76
|
Total new business
value(1)
|
$
|
550
|
$
|
384
|
$
|
1,149
|
$
|
853
|
Asia APE
sales
|
$
|
950
|
$
|
784
|
$
|
2,230
|
$
|
1,868
|
Canada APE
sales
|
$
|
274
|
$
|
238
|
$
|
629
|
$
|
614
|
U.S. APE
sales
|
$
|
191
|
$
|
154
|
$
|
341
|
$
|
295
|
Total APE
sales(1)
|
$
|
1,415
|
$
|
1,176
|
$
|
3,200
|
$
|
2,777
|
Global Wealth and Asset
Management net flows ($ billions)(1)
|
$
|
8.6
|
$
|
5.1
|
$
|
10.0
|
$
|
8.3
|
Global Wealth and Asset
Management gross flows ($ billions)(1)
|
$
|
33.7
|
$
|
33.1
|
$
|
73.4
|
$
|
71.2
|
Global Wealth and Asset
Management assets under management and administration ($
billions)(1)
|
$
|
798.5
|
$
|
696.9
|
$
|
798.5
|
$
|
696.9
|
Financial
Strength:
|
|
|
|
|
|
|
|
|
MLI's LICAT
ratio
|
|
137%
|
|
155%
|
|
137%
|
|
155%
|
Financial leverage
ratio
|
|
25.9%
|
|
26.0%
|
|
25.9%
|
|
26.0%
|
Book value per common
share ($)
|
$
|
24.76
|
$
|
25.14
|
$
|
24.76
|
$
|
25.14
|
Book value per common
share excluding AOCI ($)
|
$
|
22.89
|
$
|
20.36
|
$
|
22.89
|
$
|
20.36
|
(1)
|
This item is a
non-GAAP measure. See "Performance and non-GAAP measures" below and
in our 2Q21 MD&A for additional information.
|
PROFITABILITY:
Reported net income attributed to shareholders of
$2.6 billion in 2Q21, up $1.9 billion from 2Q20
The increase in net income attributable to shareholders in 2Q21
was driven by growth in core earnings, gains from
investment-related experience compared with losses in the prior
year quarter, and larger gains from the direct impact of equity
markets and interest rates. Investment-related experience gains
reflected higher-than-expected returns (including fair value
changes) on alternative long-duration assets, primarily due to fair
value gains on private equity investments, the favourable
impact of fixed income reinvestment activities and favourable
credit experience.
Delivered core earnings of $1.7
billion in 2Q21, an increase of 18% compared with
2Q20
The increase in core earnings in 2Q21 compared with 2Q20 was
driven by higher new business gains across all insurance segments,
higher net fee income from higher average AUMA1 in
Global WAM, which benefitted from favourable market impacts and net
inflows, the recognition of core investment gains1 in
the quarter (compared with nil core investment gains in the prior
year quarter) and in-force business growth in Asia and Canada, partially offset by modestly
unfavorable net policyholder experience, compared with net
favourable COVID-19 impacts in 2Q20, and lower net gains on seed
money investments in new segregated and mutual funds during the
period.
___________________________
|
1
|
Average assets under
management and administration ("average AUMA") and core investment
gains are non-GAAP measures. See "Performance and non-GAAP
measures" below and in our 2Q21 MD&A for additional
information.
|
BUSINESS PERFORMANCE:
New business value ("NBV") of $550
million in 2Q21, an increase of 57% compared with
2Q20
In Asia, NBV increased 48% to $399
million driven by higher sales volumes in Asia Other1, favourable interest
rates, higher sales volumes and product management actions in
Hong Kong and expense management
actions and favourable product mix in Japan due to a shift away from lower margin
corporate-owned life insurance ("COLI") products. In
Canada, NBV of $76 million was up 65% from 2Q20, primarily due
to the impact of higher sales volumes and more favourable margins.
In the U.S., NBV of $75 million was
up 110% from 2Q20, primarily driven by higher sales volumes and
favourable margins.
Annualized premium equivalent ("APE") sales of $1.4 billion in 2Q21, an increase of 30% compared
with 2Q20
In Asia, APE sales increased 34% driven by growth in
Asia Other and Hong Kong, partially offset by lower sales in
Japan. While COVID-19 impacts on
sales have moderated, there continued to be varying degrees of
adverse impacts on select markets across the region. Asia Other APE
sales increased 66%, driven by higher sales with double-digit
growth in both bancassurance and agency channels. In Hong
Kong, APE sales increased 7% reflecting continued strong domestic
demand and emerging demand from mainland Chinese visitors. In
Japan, APE sales declined 4% as a
result of lower COLI product sales. In Canada, APE sales increased 15%, primarily
driven by higher sales of lower risk segregated fund
products, higher retail insurance sales and higher small and
mid-size group insurance sales, partially offset by the
non-recurrence of a large affinity markets sale in the prior year
period and lower large case group insurance sales. In the
U.S., APE sales increased 40%, due to higher customer demand across
all product lines. APE sales of products with the John Hancock
Vitality PLUS feature in 2Q21 increased 27% compared with 2Q20, as
the feature continues to be a differentiator in the market.
Reported Global Wealth and Asset Management net inflows of
$8.6 billion in 2Q21, compared with
2Q20 net inflows of $5.1
billion
Net inflows in Retail were $7.3
billion in 2Q21 compared with net outflows of $1.0 billion in 2Q20, driven by double-digit
growth in gross flows2 across all geographies, and
lower mutual fund redemptions in the U.S. Net inflows in
Institutional Asset Management were $1.9
billion in 2Q21 compared with net inflows of $6.5 billion in 2Q20, driven by Canada, from the non-recurrence of a
$6.9 billion sale in 2Q20, partially
offset by a $1.0 billion sale to an
existing client in the current quarter. Net outflows in
Retirement were $0.6 billion in 2Q21
compared with net outflows of $0.3
billion in 2Q20, reflecting higher member withdrawals
partially offset by growth in new plan sales and member
contributions.
___________________________
|
1
|
Asia Other excludes
Japan and Hong Kong.
|
2
|
Gross flows is a non-
GAAP measures. See "Performance and non-GAAP measures" below and in
our 2Q21 MD&A for additional information.
|
QUARTERLY EARNINGS RESULTS CONFERENCE
CALL
Manulife Financial Corporation will host a Second Quarter 2021
Earnings Results Conference Call at 8:00
a.m. ET on August 5, 2021. For
local and international locations, please call 416-340-2217 or toll
free, North America 1-800-806-5484
(Passcode: 1763311#). Please call in 15 minutes before the call
starts. You will be required to provide your name and organization
to the operator. A replay of this call will be available by
11:00 a.m. ET on August 5, 2021 through November 6, 2021 by calling 905-694-9451 or
1-800-408-3053 (Passcode: 7143880#).
The conference call will also be webcast through Manulife's
website at 8:00 a.m. ET on
August 5, 2021. You may access the
webcast at: manulife.com/en/investors/results-and-reports. An
archived version of the webcast will be available on the website
following the call at the same URL as above.
The Second Quarter 2021 Statistical Information Package is also
available on the Manulife website
at: www.manulife.com/en/investors/results-and-reports.
EARNINGS:
The following table reconciles core earnings to net income
attributed to shareholders:
|
Quarterly
Results
|
YTD
Results
|
($
millions)
|
|
2Q21
|
|
1Q21
|
|
2Q20
|
|
2021
|
|
2020
|
Core
earnings(1)
|
|
|
|
|
|
|
|
|
|
|
Global Wealth and
Asset Management
|
$
|
356
|
$
|
312
|
$
|
238
|
$
|
668
|
$
|
488
|
Asia
|
|
526
|
|
570
|
|
489
|
|
1,096
|
|
980
|
Canada
|
|
318
|
|
264
|
|
342
|
|
582
|
|
579
|
U.S.
|
|
478
|
|
501
|
|
602
|
|
979
|
|
1,018
|
Corporate and Other
(excluding core investment gains)
|
|
(96)
|
|
(118)
|
|
(110)
|
|
(214)
|
|
(476)
|
Core investment
gains(1)
|
|
100
|
|
100
|
|
-
|
|
200
|
|
-
|
Total core
earnings
|
$
|
1,682
|
$
|
1,629
|
$
|
1,561
|
$
|
3,311
|
$
|
2,589
|
Items excluded
from core earnings:
Investment-related
experience outside of core earnings
|
|
739
|
|
77
|
|
(916)
|
|
816
|
|
(1,524)
|
Direct impact of equity
markets and interest rates and variable annuity guarantee
liabilities
|
|
217
|
|
(835)
|
|
73
|
|
(618)
|
|
865
|
Reinsurance
transactions
|
|
8
|
|
8
|
|
9
|
|
16
|
|
21
|
Restructuring
charge
|
|
-
|
|
(115)
|
|
-
|
|
(115)
|
|
-
|
Tax-related items and
other
|
|
-
|
|
19
|
|
-
|
|
19
|
|
72
|
Net income
attributed to shareholders
|
$
|
2,646
|
$
|
783
|
$
|
727
|
$
|
3,429
|
$
|
2,023
|
(1)
|
This item is a
non-GAAP measure. See "Performance and non-GAAP Measures" below and
in our 2Q21 MD&A for additional information.
|
PERFORMANCE AND NON-GAAP MEASURES:
We use a number of non-GAAP financial measures to measure
overall performance and to assess each of our businesses. A
financial measure is considered a non-GAAP measure if it is
presented other than in accordance with generally accepted
accounting principles used for the Company's audited financial
statements. Non-GAAP measures referenced in this news release
include: core earnings; core ROE; diluted core earnings per common
share; core investment gains; core EBITDA margin; expense
efficiency ratio; APE sales; new business value; gross flows; net
flows; assets under management and administration; average assets
under management and administration ("average AUMA"); and constant
exchange rate basis (measures that are reported on a constant
exchange rate basis include percentage growth/decline in core
earnings, APE sales, new business value, and gross flows). Non-GAAP
financial measures are not defined terms under GAAP and, therefore,
are unlikely to be comparable to similar terms used by other
issuers. Therefore, they should not be considered in isolation or
as a substitute for any other financial information prepared in
accordance with GAAP. For more information on non-GAAP financial
measures, including those referred to above, see "Performance and
non-GAAP Measures" in our Second Quarter 2021 MD&A and 2020
MD&A.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS:
From time to time, Manulife makes written and/or oral
forward-looking statements, including in this document. In
addition, our representatives may make forward-looking statements
orally to analysts, investors, the media and others. All such
statements are made pursuant to the "safe harbour" provisions of
Canadian provincial securities laws and the U.S. Private Securities
Litigation Reform Act of 1995.
The forward-looking statements in this document include, but are
not limited to, statements with respect to our objectives,
goals, strategies, intentions, plans, beliefs, expectations and
estimates, and can generally be identified by the use of words such
as "may", "will", "could", "should", "would", "likely", "outlook",
"expect", "intend", "estimate", "believe", "plan", "objective",
"aim", "continue", and "goal" (or the negative thereof) and words
and expressions of similar import, and include statements
concerning possible or assumed future results. Although we believe
that the expectations reflected in such forward-looking statements
are reasonable, such statements involve risks and uncertainties,
and undue reliance should not be placed on such statements and they
should not be interpreted as confirming market or analysts'
expectations in any way.
Certain material factors or assumptions are applied in making
forward-looking statements and actual results may differ materially
from those expressed or implied in such statements.
Important factors that could cause actual results to differ
materially from expectations include but are not limited to:
general business and economic conditions (including but not limited
to the performance, volatility and correlation of equity markets,
interest rates, credit and swap spreads, currency rates, investment
losses and defaults, market liquidity and creditworthiness of
guarantors, reinsurers and counterparties); the severity, duration
and spread of the COVID-19 outbreak, as well as actions that have
been or may be taken by governmental authorities to contain
COVID-19 or to treat its impact; changes in laws and regulations;
changes in accounting standards applicable in any of the
territories in which we operate; changes in regulatory capital
requirements; our ability to execute strategic plans and changes to
strategic plans; downgrades in our financial strength or credit
ratings; our ability to maintain our reputation; impairments of
goodwill or intangible assets or the establishment of provisions
against future tax assets; the accuracy of estimates relating to
morbidity, mortality and policyholder behaviour; the accuracy of
other estimates used in applying accounting policies, actuarial
methods and embedded value methods; our ability to implement
effective hedging strategies and unforeseen consequences arising
from such strategies; our ability to source appropriate assets to
back our long-dated liabilities; level of competition and
consolidation; our ability to market and distribute products
through current and future distribution channels; unforeseen
liabilities or asset impairments arising from acquisitions and
dispositions of businesses; the realization of losses arising from
the sale of investments classified as available-for-sale; our
liquidity, including the availability of financing to satisfy
existing financial liabilities on expected maturity dates when
required; obligations to pledge additional collateral; the
availability of letters of credit to provide capital management
flexibility; accuracy of information received from counterparties
and the ability of counterparties to meet their obligations; the
availability, affordability and adequacy of reinsurance; legal and
regulatory proceedings, including tax audits, tax litigation or
similar proceedings; our ability to adapt products and services to
the changing market; our ability to attract and retain key
executives, employees and agents; the appropriate use and
interpretation of complex models or deficiencies in models used;
political, legal, operational and other risks associated with our
non-North American operations; acquisitions and our ability to
complete acquisitions including the availability of equity and debt
financing for this purpose; the disruption of or changes to key
elements of the Company's or public infrastructure systems;
environmental concerns; our ability to protect our intellectual
property and exposure to claims of infringement; and our inability
to withdraw cash from subsidiaries.
Additional information about material risk factors that could
cause actual results to differ materially from expectations and
about material factors or assumptions applied in making
forward-looking statements may be found under "Risk Factors and
Risk Management" and "Critical Actuarial and Accounting Policies"
in the Management's Discussion and Analysis in our most recent
annual report, under "Risk Management and Risk Factors Update" and
"Critical Actuarial and Accounting Policies" in the Management's
Discussion and Analysis in our most recent interim report, in the
"Risk Management" note to the consolidated financial statements in
our most recent annual and interim reports as well as elsewhere in
our filings with Canadian and U.S. securities regulators.
The forward-looking statements in this document are, unless
otherwise indicated, stated as of the date hereof and are presented
for the purpose of assisting investors and others in understanding
our financial position and results of operations, our future
operations, as well as our objectives and strategic priorities, and
may not be appropriate for other purposes. We do not undertake to
update any forward-looking statements, except as required by
law.
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SOURCE Manulife Financial Corporation