C$ unless otherwise
stated
TSX/NYSE/PSE: MFC SEHK: 945
This earnings news
release for Manulife Financial Corporation ("Manulife" or the
"Company") should be read in conjunction with the Company's First
Quarter 2021 Report to Shareholders, including our unaudited
interim Consolidated Financial Statements for the three months
ended March 31, 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, May 5, 2021 /CNW/ - Today, Manulife
announced its first quarter of 2021 ("1Q21") results. Key
highlights include:
- Net income attributed to shareholders of $783 million in 1Q21, down $513 million from the first quarter of 2020
("1Q20")
- Core earnings1 of $1.6
billion in 1Q21, up 67%2 from 1Q20
- Core ROE1 of 13.7% and ROE of 6.4% in 1Q21
- NBV1 of $599 million
in 1Q21, up 32% from 1Q20
- APE sales1 of $1.8
billion in 1Q21, up 14% from 1Q20
- Global Wealth and Asset Management ("Global WAM") net
inflows1 of $1.4 billion
in 1Q21, compared with net inflows of $3.2
billion in 1Q20
- Strong LICAT ratio3 of 137%
- Expense efficiency ratio1 of 48.5%, compared with
our target of consistently achieving less than 50%
- Embedded value1 of $61.1
billion or $31.49 per share,
as of December 31, 2020, up
$1.70 per share from 2019
"We delivered very strong operating results in the first quarter
of 2021, driven by double-digit growth in core earnings across all
of our operating segments. While the overall impact of higher
interest rates is positive over the long term for our Company,
higher risk-free rates and a steepening yield curve within
North America impacted net income
in the quarter," said Manulife President & Chief Executive
Officer Roy Gori.
"Despite ongoing challenges presented by the pandemic, the
global strength and diversity of our business continues to shine
through. We are progressing on our digital transformation with
auto-underwriting at 72%,
straight-through-processing4 at 81% and eClaims at
92%. We delivered 14% growth in APE sales, driven by a very strong
result in Asia and continued
demand for our innovative Vitality solution in the U.S. And, we
generated net inflows of $1.4 billion
in our Global Wealth and Asset Management business, supported by
strength in our Retail and Retirement businesses. I am optimistic
for the future and confident that Manulife is well positioned to
continue to serve our customers well throughout the recovery," Mr.
Gori noted.
|
|
|
|
|
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 embedded value are non-GAAP
measures. See "Performance and Non-GAAP Measures" below and in our
First Quarter 2021 Management's Discussion and Analysis ("1Q21
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
1Q21 MD&A for additional information.
|
3
|
Life Insurance
Capital Adequacy Test ("LICAT") ratio of The Manufacturers Life
Insurance Company ("MLI").
|
4
|
Straight-through-processing includes money
movement.
|
Phil Witherington, Chief
Financial Officer, said, "Our insurance business delivered
excellent new business results, with double-digit growth in new
business value in Asia and the
U.S., reflecting a return of strong customer demand. In addition,
we saw a notable uptick in our NBV margin in the quarter as we
continue to benefit from our scale in Asia."
"Our expense efficiency ratio improved to 48.5% in the quarter,
favourable to our 50% target. We remain steadfast in our commitment
to expense discipline and are making solid progress towards
achieving a ratio of 50% or less," added Mr. Witherington.
BUSINESS HIGHLIGHTS:
We continued to make progress on
our digital journey in 1Q21, through a variety of initiatives. In
Canada, we completed the migration
of our Group Benefits clients to one administration system, and
launched a new Advisor Portal across our businesses to improve
advisors' experiences with us. In the U.S., we piloted a new portal
for distributors to submit forms and client information for our
international products. In Asia, our Global WAM business launched a
money market fund with OVO (PT Visionet Internasional),
Indonesia's leading digital
payments platform, and its strategic partner Bareksa (PT Bareksa
Portak Investasi), Indonesia's
first online mutual fund marketplace. The result combines digital
money and online investment to reach a younger generation of
investors in a growing and important market for us. Further in
April, we launched a new digital sales platform in Vietnam that allows our customers to
seamlessly purchase health insurance online.
Additionally in Canada, our
Group Benefits business introduced Personalized Medicine, which
combines access to advanced pharmacogenetics and pharmacist
assistance to help members find the most effective medication for
their condition. In North America,
we expanded our John Hancock Vitality and Manulife Vitality
programs to reward customers who received their COVID-19 vaccine.
In our Global WAM business, we expanded our environmental, social,
and governance ("ESG") offerings with the launch of two ESG
thematic investment strategies, Sustainable Asia Bond and Global
Climate.
FINANCIAL HIGHLIGHTS:
|
Quarterly
Results
|
($ millions, unless
otherwise stated)
|
1Q21
|
1Q20
|
Profitability:
|
|
|
|
|
Net income attributed
to shareholders
|
$
|
783
|
$
|
1,296
|
Core
earnings(1)
|
$
|
1,629
|
$
|
1,028
|
Diluted earnings per
common share ($)
|
$
|
0.38
|
$
|
0.64
|
Diluted core earnings
per common share ($)(1)
|
$
|
0.82
|
$
|
0.51
|
Return on common
shareholders' equity ("ROE")
|
|
6.4%
|
|
10.4%
|
Core
ROE(1)
|
|
13.7%
|
|
8.2%
|
Expense efficiency
ratio(1)
|
|
48.5%
|
|
60.0%
|
Performance:
|
|
|
|
|
Asia new business
value
|
$
|
477
|
$
|
356
|
Canada new
business value
|
$
|
78
|
$
|
77
|
U.S. new business
value
|
$
|
44
|
$
|
36
|
Total new business
value(1)
|
$
|
599
|
$
|
469
|
Asia APE
sales
|
$
|
1,280
|
$
|
1,084
|
Canada APE
sales
|
$
|
355
|
$
|
376
|
U.S. APE
sales
|
$
|
150
|
$
|
141
|
Total APE
sales(1)
|
$
|
1,785
|
$
|
1,601
|
Global Wealth and Asset
Management net flows ($ billions)(1)
|
$
|
1.4
|
$
|
3.2
|
Global Wealth and Asset
Management gross flows ($ billions)(1)
|
$
|
39.7
|
$
|
38.2
|
Global Wealth and Asset
Management assets under management and administration ($
billions)(1)
|
$
|
764.1
|
$
|
636.2
|
Financial
Strength:
|
|
|
|
|
MLI's LICAT
ratio
|
|
137%
|
|
155%
|
Financial leverage
ratio
|
|
29.5%
|
|
23.0%
|
Book value per common
share ($)
|
$
|
23.40
|
$
|
26.53
|
Book value per common
share excluding AOCI ($)
|
$
|
21.84
|
$
|
20.29
|
(1)
|
This item is a
non-GAAP measure. See "Performance and non-GAAP Measures" below and
in our 1Q21 MD&A for additional information.
|
PROFITABILITY:
Reported net income attributed to shareholders of
$783 million in 1Q21, down
$513 million from 1Q20
The decrease reflects losses in 1Q21 from the direct impact of
markets driven by the steepening of the yield curve in North America (compared with net gains in 1Q20
related to spreads partially offset by losses related to equity
markets), partially offset by higher core earnings and improved
investment-related experience (gain in 1Q21 compared with losses in
1Q20). Investment-related experience in 1Q21 reflected
higher-than-expected returns (including fair value changes) on
alternative long-duration assets primarily due to fair value gains
on private equity investments partially offset by
lower-than-assumed returns on real estate, the favourable impact of
fixed income reinvestment activities and favourable credit
experience.
Delivered core earnings of $1.6
billion in 1Q21, an increase of 67% compared with
1Q20
The increase in core earnings in 1Q21 compared with
1Q20 was driven by the favourable impact of markets on seed money
investments in new segregated and mutual funds (compared to losses
in the prior year quarter), higher new business gains in
Asia and the U.S., and the
recognition of core investment gains1 in the
quarter (compared with nil core investment gains in the prior year
quarter). Further contributing to the increase was favourable net
policyholder experience, higher fee income from higher average
AUMA1 in Global WAM, and in-force business growth across
all operating segments.
____________________________
|
1
|
Core investment gains
and average assets under management and administration ("average
AUMA") are non-GAAP measures. See "Performance and non-GAAP
measures" below and in our 1Q21 MD&A for additional
information.
|
BUSINESS PERFORMANCE:
New business value ("NBV") of $599
million in 1Q21, an increase of 32% compared with
1Q20
In Asia, NBV increased 39% to $477 million driven by higher sales volumes and
product management actions in Hong
Kong and higher sales volumes and favourable product mix in
Asia Other1, partially
offset by lower sales volumes and unfavourable product mix in
Japan from a shift to lower margin
corporate-owned life insurance ("COLI") products. In Canada, NBV of $78
million was consistent with the prior year quarter, as a
more favourable product mix offset the impact of lower APE sales in
Individual Insurance. In the U.S., NBV of $44 million was up 30% primarily driven by higher
sales volumes and more favourable product mix.
Annualized premium equivalent ("APE") sales of $1.8 billion in 1Q21, an increase of 14% compared
with 1Q20
In Asia, APE sales increased 22% driven by growth
in Hong Kong and Asia Other, partially offset by lower sales in
Japan. In Hong Kong, APE sales increased 10% driven by
strong growth in our bank channel. Asia Other APE sales increased
35%, driven by higher sales in Singapore, mainland China, Vietnam and Indonesia and included double-digit growth in
both bancassurance and agency channels. In Japan, APE sales declined 2% driven by the
adverse impact of COVID-19, partially offset by an increase in COLI
sales. In Canada, APE sales
decreased 6%, primarily driven by the non-recurrence of a large
affinity markets sale in 1Q20, partially offset by higher sales of
lower risk segregated fund products. In the U.S., APE sales
increased 13%, driven by our domestic indexed universal life
products and recently launched international savings product. Sales
of products with the John Hancock Vitality PLUS feature in 1Q21
increased 20% compared with 1Q20 as the feature continues to be a
key differentiator.
Reported Global Wealth and Asset Management net inflows of
$1.4 billion in 1Q21, compared with
1Q20 net inflows of $3.2
billion
Net outflows in Asia were $7.4
billion in 1Q21 compared with net inflows of $0.6 billion in 1Q20, reflecting a $9.4 billion redemption in Institutional Asset
Management, partially offset by higher gross flows2
across all business lines. Net inflows in Canada were $4.5
billion in 1Q21 compared with net inflows of $2.8 billion in 1Q20, mainly driven by higher net
inflows across our Retail product line-up partially offset by the
non-recurrence of large equity mandate sales in Institutional Asset
Management in 1Q20. In the U.S., 1Q21 net inflows were $4.2 billion compared with net outflows of
$0.2 billion in 1Q20, driven by
higher Retail net flows from strong intermediary sales and lower
mutual fund redemptions, as well as lower redemptions in
Institutional Asset Management, partially offset by lower net
inflows in Retirement.
___________________________
|
1
|
Asia Other excludes
Japan and Hong Kong
|
2
|
This item is a
non-GAAP measure. See "Performance and non-GAAP measures" below and
in our 1Q21 MD&A for additional information.
|
QUARTERLY EARNINGS RESULTS CONFERENCE
CALL
Manulife Financial Corporation will host a
First Quarter 2021 Earnings Results Conference Call at 8:00 a.m. ET on May 6,
2021. For local and international locations, please call
416-340-2217 or toll free, North
America 1-800-806-5484 (Passcode: 7783211#). Please call in
15 minutes before the call starts. You will be required to provide
your name and organization to the operator. A replay of this call
will be available by 11:00 a.m. ET on
May 6, 2021 through August 6, 2021 by calling 905-694-9451 or
1-800-408-3053 (Passcode: 2407413#).
The conference call will also be webcast through Manulife's
website at 8:00 a.m. ET on
May 6, 2021. You may access the
webcast at: manulife.com/en/investors/results-and-reports. An
archived version of the webcast will be available on the website
following the call at the same URL as above.
The First Quarter 2021 Statistical Information Package is also
available on the Manulife website
at: www.manulife.com/en/investors/results-and-reports.
EARNINGS:
The following table reconciles core earnings to net income
attributed to shareholders:
|
Quarterly
Results
|
($ millions)
|
1Q21
|
4Q20
|
1Q20
|
Core
earnings(1)
|
|
|
|
Global Wealth and
Asset Management
|
$
|
312
|
$
|
304
|
$
|
250
|
Asia
|
|
570
|
|
571
|
|
491
|
Canada
|
|
264
|
|
316
|
|
237
|
U.S.
|
|
501
|
|
479
|
|
416
|
Corporate and Other
(excluding core investment gains)
|
|
(118)
|
|
(196)
|
|
(366)
|
Core investment
gains(1)
|
|
100
|
|
-
|
|
-
|
Total core
earnings
|
$
|
1,629
|
$
|
1,474
|
$
|
1,028
|
Items excluded
from core earnings:
Investment-related
experience outside of core earnings
|
|
77
|
|
585
|
|
(608)
|
Direct impact of equity
markets and interest rates and variable annuity guarantee
liabilities
|
|
(835)
|
|
(323)
|
|
792
|
Reinsurance
transactions
|
|
8
|
|
44
|
|
12
|
Restructuring
charge
|
|
(115)
|
|
-
|
|
-
|
Tax-related items and
other
|
|
19
|
|
-
|
|
72
|
Net income
attributed to shareholders
|
|
$
783
|
|
$
1,780
|
$
|
1,296
|
(1)
|
This item is a
non-GAAP measure. See "Performance and Non-GAAP Measures" below and
in our 1Q21 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 general
expenses; expense efficiency ratio; APE sales; new business value;
embedded 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, core general expenses, 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
First 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", "anticipate", "believe", "plan",
"forecast", "objective", "seek", "aim", "continue", "goal", and
"restore" (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.
SOURCE Manulife Financial Corporation