Slide 1: First Quarter 2016 Financial & Operating Results
First Quarter 2016 Financial & Operating Results May 5, 2016
Slide 2: Caution regarding forward-looking statements
Caution regarding forward-looking statements From time to time, MFC makes written and/or oral forward-looking statements, including in this presentation. In addition, our representatives may make forward-looking statements orally to analysts, investors, the media and others. All such statements are
Slide 3: Conference Call Participants
Conference Call Participants Donald Guloien,, Warren Thomson,,, President & Chief Executive Officer. SEVP & Chief Investment Officer... Steve Roder, Scott Hartz,,, SEVP & Chief Financial Officer. EVP, General Account Investments... Paul Rooney,,, Kai Sotorp,,, SEVP & Chief Operating Officer... EVP,
Slide 4: CEO's remarks
CEO’s remarks Donald Guloien,,, President & Chief Executive Officer... 4
Slide 5: 1Q16 highlights
1Q16 highlights Strong operating performance from our operations around the world: Insurance sales up 14% vs. 1Q15 New business value up 70% vs. 1Q15 Wealth and asset management net flows of $1.7 billion, and gross flows up 15% vs. 1Q15 Core earnings of $905 million, up 14% vs. 1Q15 Net in
Slide 6: Performance and strategic highlights
Performance and strategic highlights Asia Division Delivered record annualized premium equivalent sales and new business value Maintained solid gross flows in our wealth and asset management businesses despite challenging market conditions Successfully launched the DBS partnership in four mark
Slide 7: CFO's remarks
CFO’s remarks Steve Roder,,, SEVP & Chief Financial Officer... 7
Slide 8: 1Q16 financial summary
1Q16 financial summary Summary Metrics (C$ millions, unless noted) 1Q15 1Q16 Change Net Income Attributed to Shareholders 723 1,045 ▲ 45% Core Earnings 797 905 ▲ 14% Profitability Diluted core earnings per share $0.39 $0.44 ▲ 13% Core return on equity (annualized) 9.3% 9.3% n/c Return on equity (ann
Slide 9: Strong growth in core earnings driven by Asia and Canada
Strong growth in core earnings driven by Asia and Canada Core Earnings (C$ millions) 1Q16 core earnings of $905 million, up 14% vs. 1Q15: 902 870 859 905 + Higher sales and improved product margins in Asia 797 + Changes in foreign currency rates - Higher expected macro hedging costs 1Q15 2Q15 3Q15 4
Slide 10: Market-related gains more than offset depressed oil and gas prices
Market-related gains more than offset depressed oil and gas prices Earnings reconciliation for the first quarter of 2016 In C$ millions except on a per share amount Pre-tax Post-tax Per Share Core earnings1 $1,053 $905 $0.44 Investment-related experience outside of core earnings (470) (340) (0.17) C
Slide 11: Expected profit growth and improvement in the impact of new business
Expected profit growth and improvement in the impact of new business Source of Earnings1 (C$ millions) Expected Profit on In-Force increased 5%2 primarily 1Q15 1Q16 due to lower variable annuity DAC amortization and a number of smaller positive items including normal Expected Profit on In-Force 1,
Slide 12: Strong Insurance sales growth continues to be driven by success in Asia
Strong Insurance sales growth continues to be driven by success in Asia Insurance Sales U.S. (C$ millions) Canada Asia +14% 1,027 954 170 167 803 779 771 1Q16 insurance sales of $954 million, up 14% vs. 146 165 303 155 1Q15: 144 + Record sales in Asia, up 36%, driven by double digit 142 growth in mo
Slide 13: 25th consecutive quarter of positive net flows in Wealth and Asset Management
25th consecutive quarter of positive net flows in our Wealth and Asset Management businesses Wealth & Asset Management Net flows (C$ billions) 14.5 Institutional U.S. 1Q16 Wealth & Asset Management (WAM) net flows Canada of $1.7 billion, down $4.9 billion vs. 1Q15: 8.4 8.7 Asia 4.5 + Strong gross fl
Slide 14: Strong growth in wealth accumulation products in Japan and Singapore
Strong growth in wealth accumulation products in Japan and Singapore Other Wealth sales Canada (C$ millions) Asia +29% 2,384 2,109 1,845 944 1,767 1,773 868 1Q16 Other Wealth sales of $2.4 billion, up 29% 781 vs. 1Q15: 923 1,037 + Asia sales up 76%, driven by new product launches and expanded distri
Slide 15: Strong growth in new business value driven by higher volumes and improved margins in Asia
Strong growth in new business value driven by higher volumes and improved margins in Asia New Business Value (NBV)1 U.S. (C$ millions) Canada Asia +70% 296 1Q16 New Business Value of $287 million, up 70% 287 287 17 vs. 1Q15: 19 35 + Volumes and product margins in Japan and Asia Other 50 47 + Improve
Slide 16: Reported $904 billion in assets under management and administration
Reported $904 billion in assets under management and administration Assets under management and administration (C$ billions) Other Wealth Wealth & Asset Management 1Q16 Assets under management and Insurance1 administration (AUMA) of $904 billion, up 55 904 $83 billion from 1Q15: 30 6 + Recent acquis
Slide 17: Strengthened capital position and expanded funding sources with U.S. debt issuance
Strengthened capital position and expanded funding sources with U.S. debt issuance MLI’s MCCSR Ratio1 (%) MLI ended 1Q16 with an MCCSR ratio of 233%, up from 223% in 4Q15 + Senior debt issuance of US$1.75 billion 245 236 226 223 233 + Preferred share issuance of $425 million - Initial payment under
Slide 18: Embedded Value growth reflects new business written at solid margins
Embedded Value growth reflects new business written at solid margins and the benefit of currency Embedded Value1 (C$ billions) 0.8 6.5 (1.3) 1.0 3.4 (1.7) (2.5) 2.2 47.8 39.4 42.9 Embedded Interest on New Current Period Other EV before Impact of Other Currency Shareholder Embedded Value Embedded Bus
Slide 19: Operating performance by division/Wealth & Asset Management
Operating performance by division/Wealth & Asset Management Asia Division Canadian Division U.S. Division (John Hancock) Wealth & Asset Management 19
Slide 20: Asia: Achieved record APE sales, solid gross flows and significant growth in core earnings
Asia: Achieved record APE sales, solid gross flows and significant growth in core earnings Core Earnings APE Sales1 WAM gross flows (US$ millions) (US$ millions) (US$ billions) +48% Asia Other Asia Other +19% -5% Japan Japan 590 Hong Kong 2.7 Hong Kong 2.5 217 397 2.0 119 1.9 270 225 264 205 0.2 0.0
Slide 21: Canada: Generated strong core earnings growth and solid momentum in retail insurance sales
Canada: Generated strong core earnings growth and solid momentum in retail insurance sales Core Earnings Insurance Sales WAM gross flows (C$ millions) (C$ millions) (C$ billions) -28% Retail Group Retirement +30% -5% Institutional Mutual Funds 214 4.4 4.2 37 155 1.9 1.9 41 338 261 177 114 2.5 2.3 1Q
Slide 22: U.S.: Delivered strong growth in Wealth and Asset Management gross flows
U.S.: Delivered strong growth in Wealth and Asset Management gross flows Core Earnings Insurance Sales WAM gross flows (US$ millions) (US$ millions) (US$ billions) -6% +4% JH LTC +31% JH Retirement Plan Services JH Life JH Investment 122 12.7 117 11 17 9.7 5.6 3.6 302 283 106 105 7.1 6.1 1Q15 1Q16 1
Slide 23: Asset Management businesses showed resilience in face of challenging market conditions
Asset Management businesses showed resilience in face of challenging market conditions WAM Core Earnings WAM AUMA WAM net flows (C$ millions) (C$ billions) (C$ billions) -5% 22% Institutional Advisory 6.6 Pensions 29 69 Mutual funds 1.6 (4) 0.9 488 148 140 394 4.2 1.7 0.6 0.2 0.9 AUMA Net Inv. Acq.
Slide 24: Summary
Summary In 1Q16, Manulife: Delivered strong core earnings growth Reported net income over $1 billion Achieved solid double digit growth in insurance sales and gross flows Generated strong growth in new business value Delivered positive net inflows in all of our divisions despite challengin
Slide 25: Question & Answer session
25 Question & Answer session MM Manulife / fre Hancock.
Slide 26: Appendix
Appendix Core Earnings Change Invested Asset Mix & Credit Experience Earnings Sensitivities & Equity Exposure by Market 26
Slide 27: Core earnings reconciliation by division
Core earnings reconciliation by division Core Earnings (C$ millions) 15 (34) 77 (42) 92 905 797 1Q15 core Asia Canadian U.S. Corporate Expected macro 1Q16 core earnings Division 1 Division Division 1 & Other hedging costs earnings Asia Division core earnings increased reflecting improved new busin
Slide 28: Core earnings reconciliation by business line
Core earnings reconciliation by business line Core Earnings (C$ millions) 54 (67) (8) 129 905 797 1Q15 core earnings Insurance Wealth & Asset Other Corporate & 1Q16 core earnings Management Wealth 1 Other (Ex. MAM) Insurance core earnings increased due to strong sales in Asia and the strengthening
Slide 29: Diversified high quality asset mix avoids risk concentrations
Diversified high quality asset mix avoids risk concentrations Total Invested Assets (C$308 billion, Carrying values as of March 31, 2016) Fixed Income & Other1 Fixed Income & Other Alternative Long-Duration Assets (ALDA) 85% of the total portfolio Public Equities Total debt securities and privat
Slide 30: Oil and Gas Exposure
Oil and Gas Exposure Oil & Gas Fixed Income Exposure (Market values as of March 31, 2016) C$ Billions % B/CCC 1% AAA/AA Refining 0.9 8% BB 5% 7% Midstream 5.1 40% Major/Integrated 2.1 16% A Offshore Drilling 0.2 1% 29% Exploration/Production 3.2 25% Oilfield Services 0.7 6% BBB 58% Other 0.5 4% Tota
Slide 31: Credit experience impacted by downgrades in the oil & gas sector
Credit experience impacted by downgrades in the oil & gas sector Net Credit Experience (C$ millions) 13 10 6 4 (15) 1Q15 2Q15 3Q15 4Q15 1Q16 Impact on Earnings (C$ millions, post-tax) 1Q15 2Q15 3Q15 4Q15 1Q16 Credit (impairments) / recoveries $(7) $(3) $0 $(21) $(25) Credit (downgrades) / upgrades (
Slide 32: Interest rate related sensitivities remain well within our risk appetite limits
Interest rate related sensitivities remain well within our risk appetite limits Potential Impact1 of an immediate parallel change in “all rates”: 4Q15 1Q16 (C$ millions) -50 bps +50 bps -50 bps +50 bps Excluding change in market value of AFS bonds held in surplus $ (100) $ 100 $- $- From fair value
Slide 33: Equity exposure by market
Equity exposure by market Potential impact on net income attributed to shareholders arising from a 10% decline in public equity returns1,2 (C$ millions) 4Q15 1Q16 S&P (60) (100) TSX (20) (20) TOPIX (40) (50) EAFE (Europe, Australasia & Asia ex. Japan)3 (140) (130) Net income impact assuming full hed
Slide 34: Note to users - Performance and Non-GAAP Measures
Note to users - 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 for Canadian securities law purposes if it is presented other than in accordance
Slide 35: Thank you
Thank you Investor Relations contacts Robert Veloso, MBA, CFA Daniel Kenigsberg, MBA, CFA David Rancourt, M.Sc., CFA Vice President Assistant Vice President Assistant Vice President robert_veloso@manulife.com daniel_kenigsberg@manulife.com david_rancourt@manulife.com (416) 852-8982 (416) 852-7208 (4