Manulife Financial Corporation · TSX:MFC

Manulife Financial — BMO Capital Markets Fixed Income Insurance Conference (June 2013)

33 slides from Manulife Financial's conference presentation, Jun 13, 2013

  1. Slide 1: Strong credit profile to strengthen further

    Strong credit profile to strengthen further Steven Moore Senior Vice President and Treasurer June 13, 2013 BMO Capital Markets Fixed Income Insurance Conference

  2. Slide 2: Caution regarding forward-looking statements

    Caution regarding forward-looking statements This presentation contains forward-looking statements within the meaning of 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 presenta

  3. Slide 3: Key takeaways

    Key takeaways Manulife is a leading global life insurance company with:  Well balanced geographic, product and earnings forward- profile with significant earnings growth potential thinking  Significantly de-risked business model poised to reap rewards trustworthy  Financial strength underpinned b

  4. Slide 4: Agenda

    Agenda forward- thinking Focus on disciplined growth Strong and strengthening credit profile trustworthy reliable strong 4

  5. Slide 5: Our financial objectives

    Our financial objectives Core Core Long-Term Earnings ROE Leverage Ratio $4 billion 13% 25% in 2016 in 2016 Pursuing our growth strategies How will we get Investments we have been making for growth there? Driving Efficiencies & Effectiveness Note: See “Caution regarding forward-looking statements” a

  6. Slide 6: Pursuing our four growth strategies – Strategy #1: Asia

    Pursuing our four growth strategies to generate earnings growth – Strategy #1: Asia Develop our Asian Build a premier, top-tier pan-Asian life insurance franchise opportunity to the that is well positioned to satisfy the protection/retirement fullest needs of the fast growing customer base in the re

  7. Slide 7: Asia is an enormous opportunity for Manulife

    Asia is an enormous opportunity for Manulife Asia Strategy Asia Insurance Sales1 (US$ millions) +147%  Diversify and expand distribution capabilities:  Double the professional agency force 1,440 1,244  Continue to build our network of bank partners 1,036 582 685  Expand the independent and MGA c

  8. Slide 8: Manulife's Asian roots span more than a century

    Manulife’s Asian roots span more than a century MANULIFE 115 years and 12 territories1 OPERATIONS Client-facing operations  2nd largest insurance market in the world  High growth opportunities for nimble players Japan Japan  115 years of operations China  Diversified business in an excellent mar

  9. Slide 9: Pursuing our four growth strategies – Strategy #2: Asset Management

    Pursuing our four growth strategies to generate earnings growth – Strategy #2: Asset Management Build a premier, top-tier pan-Asian life insurance franchise that is Develop our Asian well positioned to satisfy the protection/retirement needs of the fast opportunity to the fullest growing customer ba

  10. Slide 10: Grow wealth & asset management to enhance earnings and risk mix

    Grow wealth & asset management to enhance earnings and risk mix Wealth & Asset Total Funds under Management1 (C$ billions) Management Strategy Other Mutual Funds Segregated Funds General Account Funds 532 477 500 440 31 30 36 405 31 49 60 30 48 33 26 194 206 188 197 161  Leverage asset allocation s

  11. Slide 11: Improving investment performance

    Improving investment performance 4 & 5-Star Morningstar Funds1 68 14 March 31, 2013 Region 5-Star Funds 4-Star Funds U.S. 5 21 28 5-Star 4 54 Canada 3 14 4-Star 24 Asia 6 19 2008 31 Mar 2013 1 See “Notes to Users – Morningstar Ratings” below. Source: Morningstar as at March 31, 2013. 11

  12. Slide 12: Pursuing our four growth strategies – Strategy #3: Canada

    Pursuing our four growth strategies to generate earnings growth – Strategy #3: Canada Build a premier, top-tier pan-Asian life insurance franchise that is Develop our Asian well positioned to satisfy the protection/retirement needs of the fast opportunity to the fullest growing customer base in the

  13. Slide 13: Stable & balanced provider of financial services

    Stable & balanced provider of financial services Canada Strategy Manulife Mutual Fund Retail Deposits1 (C$ millions) +299%  Build broad-based company: 1,996 2,057  Expand the breadth of solutions offered and the 1,379 customer reach of our broad-based, diversified financial services company in Can

  14. Slide 14: Canadian Division serves 1 in 5 Canadians

    Canadian Division serves 1 in 5 Canadians Manulife Investments ~1 million in-force contracts Individual Insurance ~1.5 million in-force policies Group Benefits ~3 million in-force certificates Group Retirement Solutions > 900,000 in-force certificates Affinity Markets > 1 million in-force certificat

  15. Slide 15: Pursuing our four growth strategies – Strategy #4: U.S.

    Pursuing our four growth strategies to generate earnings growth – Strategy #4: U.S. Build a premier, top-tier pan-Asian life insurance franchise that is Develop our Asian well positioned to satisfy the protection/retirement needs of the fast opportunity to the fullest growing customer base in the re

  16. Slide 16: Continuing to build our leading U.S. franchise

    Continuing to build our leading U.S. franchise U.S. Strategy JH Life Insurance Sales Mix (%) 2010 2012 6%  Grow wealth businesses: 45%  Grow high ROE, low risk mutual fund and 401(k) 55% businesses  Drive profitable mutual fund assets under management 94% ■ Other Life Insurance Products ■ Guarant

  17. Slide 17: Iconic John Hancock brand is a strategic enabler

    Iconic John Hancock brand is a strategic enabler Strength, Stability & Innovation  Established 1862  Brand attributes:  89% awareness among U.S.  Human and real consumers  Empathetic and have customer’s best  One of the 100 Most Powerful Brands interests at heart of the 20th Century (New York

  18. Slide 18: Significant investments in all regions since 2008

    Significant investments in all regions since 2008 Acquisitions / New Market Expanding Existing Lift-Outs: Opportunities: Businesses: Cambodia Agency expansion in Asia Institutional asset Asia Manulife-TEDA management in South Korea Office build-outs in China Expanded bancassurance Health Insurance P

  19. Slide 19: Driving Efficiency & Effectiveness to accelerate earnings growth

    Driving Efficiency & Effectiveness to accelerate earnings growth Organizational Design The Efficiency & Effectiveness (E&E) Initiative: Investments  Supports core earnings & core ROE Canada objectives Asia U.S.  Leverages scale and global reach  Enhances our competitive positioning Operations  E

  20. Slide 20: Agenda

    Agenda Agenda forward- thinking Focus on disciplined growth Strong and strengthening credit profile trustworthy reliable strong 20

  21. Slide 21: Well diversified earnings by geography & product

    Well diversified earnings by geography & product 2012 Core Earnings1 By Division 2012 Core Earnings By Business (Excludes Corporate & Other Division) (Excludes Corporate & Other, with the exception of Reinsurance) 38% 33% 45% 55% 29% ■ Asia Division ■ Canadian Division ■ U.S. Division ■ Wealth Manag

  22. Slide 22: Diversified high quality asset mix avoids risk concentrations

    Diversified high quality asset mix avoids risk concentrations Total Invested Assets (C$231 billion, Carrying values as of March 31, 2013) Fixed Income & Other Alternative Long-Duration Assets (ALDA) Diversified, high quality portfolio: Public Equities  86% of the total portfolio is Fixed Income, of

  23. Slide 23: Achieved risk reduction objectives 2 years ahead of schedule

    Achieved risk reduction objectives 2 years ahead of schedule Interest Rate Sensitivity1 Equity Market Sensitivity1 (C$ billions) (% of underlying sensitivity) Net unhedged 2014 goal: Offset by hedging programs < $1.1 billion 13% 87% hedged 0.9 2014 goal: 0.6 0.6 >75% hedged 0.4 0.3 87% 1Q12 2Q12 3Q1

  24. Slide 24: Hedging greatly reduced the volatility of earnings

    Hedging greatly reduced the volatility of earnings Potential Impact on Net Income Due to Changes in Interest Rate & Equity Markets (C$ billions) Interest Rates: +100bps 4 Interest Rates -100bps Equity Markets +10% 3 Equity Markets - 10% 2 1 $7.3 0 $1.4 billion billion -1 -2 -3 -4 2Q10 3Q10 4Q10 1Q11

  25. Slide 25: Hedging also greatly reduced capital ratio volatility

    Hedging also greatly reduced capital ratio volatility Potential Impact on MCCSR ratio Due to Changes in Interest Rate & Equity Markets (% points) Interest Rates: +100bps 40 Interest Rates -100bps Equity Markets +10% 30 Equity Markets - 10% 20 10 36% 0 75% -10 -20 -30 -40 -50 2Q10 3Q10 4Q10 1Q11 2Q11

  26. Slide 26: Policyholders well protected by significant buffer over best estimate reserves

    Policyholders well protected by significant buffer over best estimate reserves Select Balance Sheet Items1 (C$ billions) 206 22  The $48 billion Provision for Adverse 70 48 Deviations (PfAD) and Segregated Fund additional margins represents a 35% margin over best estimate reserves  MFC equity capi

  27. Slide 27: MLI's strong MCCSR ratio at 217%

    MLI’s strong MCCSR ratio at 217% Minimum Continuing Capital and Surplus Requirements (MCCSR) Ratio (MLI)1 (%) Strong capital position coupled with significantly reduced market sensitivities allow the company to withstand meaningful market shocks2 and remain 225 213 211 217 above 200% MCCSR ratio: 20

  28. Slide 28: Financial leverage ratio expected to trend down

    Financial leverage ratio expected to trend down Financial leverage (%) 32.9% 32.7% 32.7% 30.5% 25.2% 25.0% 22.8% 2008 2009 2010 2011(1) 2012 (1) 1Q13 (1,2) 0.0% Long Term  Long-term objective for financial leverage ratio of 25%  Expect to achieve historical leverage level through organic growth of

  29. Slide 29: Assuming $4 billion core earnings, pro-forma coverage ratio rises to ~9x

    Assuming $4 billion core earnings, pro-forma coverage ratio rises to ~9x Pro-forma Earnings Coverage (Assuming $4 billion in Core Earnings and Fixed Charges as at 1Q13) Simple pro-forma, based on Actual public information C$ millions 7,000 10.0x ~9.0x 6,000 8.0x 5,000 4,000 5.9x 6.0x 5.4x 3,000 4.0x

  30. Slide 30: Liquidity continues to remain strong

    Liquidity continues to remain strong (C$ millions) 1Q121 2Q121 3Q121 4Q121 1Q13 Cash and Short-term Securities 12,293 12,990 10,287 13,480 12,130 Government Bonds 53,774 57,803 58,116 56,731 57,315 Total Liquid Assets 66,067 70,793 68,403 70,211 69,445 - As a % of Invested Assets 29.6% 31.2% 30.5% 3

  31. Slide 31: Key takeaways

    Key takeaways Manulife is a leading global life insurance company with:  Well balanced geographic, product and earnings forward- profile with significant earnings growth potential thinking  Significantly de-risked business model poised to reap rewards trustworthy  Financial strength underpinned b

  32. Slide 32: Questions & Answers

    forward- Questions thinking & trustworthy Answers reliable strong 32

  33. Slide 33: Note to users

    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 wi

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