Manulife Financial Corporation · TSX:MFC
Manulife Financial — Investor Presentation (May 2022)
16 slides from Manulife Financial's investor presentation, May 12, 2022
Slide 1: Impacts of IFRS 17 adoption on Manulife's financial reporting and targets
Impacts of IFRS 17 adoption on Manulife’s financial reporting and targets May 12, 2022 The information in this presentation, including estimates and illustrations, are for informational purposes only and may change depending on the final issuance of regulatory and industry guidance relating to IFRS
Slide 2: Caution regarding forward-looking statements
Caution regarding forward-looking statements From time to time, Manulife makes written and/or oral forward-looking statements, including in this presentation. In addition, channels; unforeseen liabilities or asset impairments arising from acquisitions and dispositions of businesses; the realization
Slide 3: IFRS 17 Update
IFRS 17 Update • IFRS 17 is the new insurance contract accounting standard that will be effective January 1, 2023. Our Global Wealth and Asset Management business is minimally impacted. • IFRS 17 does not impact the fundamental economics of our business, financial strength, claims paying ability, or
Slide 4: Key implications of IFRS 17 on Manulife's financial results and KPIs
Key implications of IFRS 17 on Manulife’s financial results and KPIs 1. A CSM will be established on in-force business at transition, which will represent unearned profits. The CSM will be treated as available capital under LICAT1. The transition impact of the standards is expected to lead to a decr
Slide 5: 1. Balance Sheet at transition
1. Balance Sheet at transition At transition, insurance liabilities will increase primarily due to establishing the CSM • Under IFRS 4, new business gains are recognized immediately in Illustrative example of balance sheet impact2 income. Under IFRS 17, new business gains are recorded as CSM and rec
Slide 6: 2. CSM Growth resulting in future growth in earnings
2. CSM Growth Profitable new business will drive growth in the CSM, resulting in future growth in earnings • The CSM represents expected future profits and will be Illustrative example of CSM movement1 treated as available capital under LICAT. It is expected to increase over time driven by growing a
Slide 7: 3. Core earnings impacts
3. Core earnings impacts Upon transition, new business gains will be recorded in the CSM and recognized over the life of the contract • Under IFRS 17, new business gains will be recorded in the CSM and Illustrative example of income statement impact1 earnings for certain investment-related activitie
Slide 8: 4/5. Net income and LICAT stability
stability 4/5. Net income and LICAT IFRS 17 improves the stability of net income and LICAT Improved Decreased ≈ Similar IFRS 41 Impact on stability2: IFRS 17 Current period net income Net income LICAT Net income & LICAT Capital treatment New business gains ≈ Recognized in CSM and capital initially a
Slide 9: 6. KPI summary
6. KPI summary Confirming medium-term financial and operating targets IFRS 4 IFRS 17 Core EPS growth 10-12% Core ROE (REVISED) 13%+ 15%+ • Core ROE target will increase to 15%+ Leverage ratio (adjusted for CSM) 25% Financial Targets1 driven by the expected changes to (medium-term) core earnings and
Slide 10: Core earnings definition will isolate market impacts
Similar to today, core Drivers of Earnings Analysis1 earnings definition will Risk adjustment release isolate market impacts to CSM amortization Insurance experience gains / losses better represent long- Other2 Core net insurance service result term earnings generation ALDA & public equity long-term
Slide 11: Analysis of CSM movement will be a key component of assessing value generation
Analysis of CSM movement will be a key component of assessing value generation CSM beginning of period2 Impact of new insurance business CSM amortization • A growing CSM balance will lead to growth of future earnings Interest accretion • Organic CSM growth will exclude market impacts and certain Ins
Slide 12: Our financial performance will be evident through core earnings and CSM growth
Our financial performance will be evident through core earnings and Core earnings Derived largely from in- CSM growth force business Together, these metrics are representative of CSM value generation Growth derived largely from new sales activities 12
Slide 13: Appendix
Appendix • KPI definitions • CSM Growth 13
Slide 14: Appendix: KPI definitions
Appendix: KPI definitions1 Definition Core EPS growth Year over Year core EPS growth Core earnings − Preferred dividends − Other equity distributions Profitability Core ROE Average common shareholders′ equity Core general expenses Expense efficiency ratio Core general expenses + Pre−tax core earning
Slide 15: CSM growth will be a key component of assessing value generation for a high growth business
CSM growth will be a key component of assessing value generation for a high growth business (illustrative example1) Assumptions: No growth Co. - Net Income High growth Co. - Net Income • Both companies have large and identical in-force business and CSM balance at transition No growth Co. - CSM Growt
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