Manulife Financial Corporation · TSX:MFC
Manulife Financial — Q2 2005 Earnings Presentation
26 slides from Manulife Financial's earnings presentation, Aug 4, 2005
Slide 1: Second Quarter 2005 Financial & Operating Results
Second Quarter 2005 Financial & Operating Results August 4, 2005
Slide 2: Legal Disclaimer
Legal Disclaimer Forward-Looking Statements This presentation may contain forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Investors are cautioned that all forward-looking statements involve risk and uncertainties and actual results may differ mater
Slide 3: CEO's Remarks
CEO’s Remarks Dominic D’Alessandro President & Chief Executive Officer
Slide 4: Q2 Financial Highlights
Q2 Financial Highlights (C$ millions, except per share data) 1Q05 2Q05 Change Shareholders’ Earnings $801 $839 5% Earnings per Share $0.99 $1.05 6% Return on Equity 14.1% 14.3% 20 bps 4
Slide 5: Q2 Operating Highlights
Q2 Operating Highlights • Record variable annuity sales in the U.S. • Record 2nd quarter U.S. Individual Insurance sales • Fund extension agreement at JH Mutual Funds • Continued expansion into China • New bancassurance agreement diversifies distribution in Hong Kong • John Hancock integration remai
Slide 6: CFO's Remarks
CFO’s Remarks Peter Rubenovitch Senior Executive Vice President & Chief Financial Officer
Slide 7: Second Quarter Earnings: Consistent Growth
Second Quarter Earnings Consistent Growth Reported Shareholders’ Earnings (C$ millions, except per share data) • QoQ earnings growth driven by: $839 + Improved investment and credit $801 $756 $713 experience $656 + Favourable claims experience + Lower expenses Offset by: - Lower Reinsurance earnings
Slide 8: Q2 Unusual Items
Q2 Unusual Items (C$ millions) 2Q05 Purchase Equation Adjustment ($26) Integration Costs ($28) Alignment of Investment Policies $47 Total Net Income Impact ($7) 8
Slide 9: Purchase Balance Sheet
Purchase Balance Sheet At Close Adjustments Reclassification Final ASSETS Invested assets $106,647 ($189) $323 $106,781 Intangible assets 2,041 2,041 Goodwill 7,441 407 7,848 Other assets 4,542 (36) (395) 4,111 Total assets acquired 120,671 182 (72) 120,781 LIABILITIES Policy related liabilities 95,
Slide 10: ROE Performance: Consistent Improvement
ROE Performance Consistent Improvement 14.1% 14.3% 13.0% 12.0% + Continued improvement in ROE + ROE increased 230 basis points since 3Q04 + YTD ROE of 14.2% exceeds initial projection of 13.2% for full year 2005 + Significant room for buybacks remain 3Q04 4Q04 1Q05 2Q05 Shareholders’ $23,383 $22,951
Slide 11: Investments: Improving Asset Quality
Investments Improving Asset Quality Bonds rated BBB and below + Continued improvement in asset quality + Bonds rated BBB and below further reduced in 2Q05 + Recently announced transactions expand timber AUM and diversify invested assets 2Q04 3Q04 4Q04 1Q05 2Q05 BBB and below $44,682 $41,692 $39,436
Slide 12: U.S. Protection Shareholders' Net Income
U.S. Protection Shareholders’ Net Income US$ Millions $140 + Individual Insurance earnings up $120 30% over previous quarter $100 + Strong investment results and $80 positive impact of equity markets $60 + Favourable impact from new business due to improved $40 margins and expense efficiencies from
Slide 13: U.S. Protection Sales
U.S. Protection Sales US$ Millions $175 • Individual Insurance sales up $150 37% over previous quarter resulting in record second $125 quarter for combined entity $100 • LTC sales down marginally, $75 however retail sales showed some positive momentum $50 $25 $0 2Q04 3Q04 4Q04 1Q05 2Q05 LTC $22 $31
Slide 14: U.S. Wealth Management Shareholders' Net Income
U.S. Wealth Management Shareholders’ Net Income US$ Millions $125 + Earnings of US$108 million $100 + Annuities earnings level versus Q1 as higher VA fee income was $75 offset by unfavourable investment results in fixed annuities $50 - John Hancock Retirement Plan $25 Services lower due to less favo
Slide 15: U.S. Wealth Management Net Sales
U.S. Wealth Management Net Sales US$ Millions $2,400 $2,000 + Strong net sales in JHRPS contributed to 24% growth in $1,600 segment’s FUM over 2Q04 $1,200 + Variable annuities consistently $800 generating strong net sales $400 - Net sales of fixed annuities $0 negative in low interest rate ($400) en
Slide 16: Guaranteed & Structured Financial Products
Guaranteed & Structured Financial Products Shareholders’ Net Income $91 + Exceptional results, up 63% over previous quarter $67 + Favourable investment results on $56 hybrid assets and other $56 investment related gains $42 + Despite modest sales in low interest rate environment, asset levels remain
Slide 17: Canada Shareholders' Net Income
Canada Shareholders’ Net Income C$ Millions $200 + Consistent growth continues with $150 record earnings of $191 million + Investment gains across all $100 segments - Improved claims experience $50 offset by less favourable lapse experience in Individual Insurance $0 2Q04 3Q04 4Q04 1Q05 2Q05 Group $
Slide 18: Canada Sales
Canada Sales Individual Insurance • Individual Insurance launched product changes in June for LifeWise, UL and Renewable Term products 2Q04 3Q04 4Q04 1Q05 2Q05 Ind. Ins. $61 $63 $63 $59 $57 Group Businesses • Group Benefits sales up 30% over previous quarter • Group Pension up 30% relative to 1Q05 d
Slide 19: Canada Net Sales
Canada Net Sales Individual Wealth Management C$ Millions $550 + Strong mutual fund net sales $450 contributing to 36% YoY growth in FUM $350 + Segregated funds consistently $250 positive $150 + Net sales of GICs cumulatively $50 positive over the last five quarters ($50) 2Q04 3Q04 4Q04 1Q05 2Q05 Mu
Slide 20: Asia and Japan Shareholders' Net Income
Asia and Japan Shareholders’ Net Income US$ Millions $140 • 2Q05 earnings up 15% over last $120 year $100 • Hong Kong earnings increased $80 due to higher fee income and $60 improved investment experience $40 • Japan down from 1Q05 which $20 benefited from recognition of net $0 tax asset and strong
Slide 21: Asia and Japan Sales
Asia and Japan Sales Insurance • Hong Kong up 11% QoQ due in part to new bancassurance channel added in May • Other Asia up 16% 2Q04 3Q04 4Q04 1Q05 2Q05 • Japan sales up modestly on Japan $31 $28 $32 $31 $31 local currency basis, continued Other Asia $25 $35 $31 $25 $29 challenges in agent recruitme
Slide 22: Reinsurance Shareholders' Net Income
Reinsurance Shareholders’ Net Income $53 $49 $47 - Lower Q2 earnings primarily due to unusual claims on Manulife $35 Accident block + Life Retro sales almost 4x the $24 volume of previous quarter + Strong Life sales contributed to 7% QoQ growth in in-force face amount 2Q04 3Q04 4Q04 1Q05 2Q05 Premiu
Slide 23: Source of Earnings
Source of Earnings Source of Earnings 2Q04 3Q04 4Q04 1Q05 2Q05 Expected profit on inforce $506 $627 $638 $637 $650 Impact of new business (75) (110) (93) (95) (80) Experience gains 234 197 198 175 243 Mgt actions and changes in assumptions (45) (27) (67) (61) 17 Seg fund guarantees 57 41 51 27 40 Ea
Slide 24: USGAAP vs. CGAAP
USGAAP vs. CGAAP 2Q04 3Q04 4Q04 1Q05 2Q05 CGAAP Net Income $656 $713 $756 $801 $839 Investment income (90) (37) 225 168 126 DAC and VOBA offsets to inv't income (8) (48) (44) (14) (31) Seg fund guarantees (66) (51) (49) 51 72 Other actuarial related items 43 50 (6) 38 53 Total pre-tax earnings im pa
Slide 25: In Conclusion
In Conclusion • Consistent and solid growth of shareholders’ earnings and EPS • Improvement in ROE • Strong sales results overall, reflecting strength of diversified channels • Continued deployment of excess capital 25
Slide 26: Question and Answer Session
Question and Answer Session 26