• Core Earnings: Exceeded $7 billion for the first time, a 10% increase from 2023.
• Net Inflows: $13.3 billion generated by Global WAM business.
• Capital Release: Expected $2.8 billion from reinsurance transactions.
• Efficiency Ratio: Achieved 44.8%, in line with medium-term target of below 45%.
• Core ROE: Expanded to 16.4% for the full year.
• Book Value Growth: 15% increase in both adjusted book value and book value per share.
• LICAT Ratio: Strong at 137%.
• Leverage Ratio: 23.7%, below the 25% medium-term target.
• Dividend Increase: 10% increase in common share dividend approved.
• Share Buyback Program: New program to repurchase up to 3% of outstanding common shares.
• APE Sales Growth: Increased 42% year-over-year.
• Core EPS Growth: 11% growth, 14% excluding global minimum taxes impact.
• Cash Remittances: Record $7 billion generated in 2024.
• Core Earnings Growth in Asia: 16% increase driven by business growth momentum.
• Global WAM Core Earnings Growth: 34% increase supported by higher average third-party AUMA.

• Warning! GuruFocus has detected 7 Warning Sign with MFC.

Release Date: February 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Manulife Financial Corp (NYSE:MFC) achieved record core earnings exceeding $7 billion for the first time in 2024, marking a 10% increase from 2023.
• The company executed significant reinsurance transactions, including the largest ever LTC reinsurance deal with Global Atlantic and a Canadian Universal Life reinsurance transaction with RGA, unlocking $2.8 billion in capital.
• Manulife Financial Corp (NYSE:MFC) reported strong growth in Asia and Global WAM, contributing to 70% of core earnings, with record APE sales and new business value.
• The company launched 27 generative AI use cases into production, generating over $600 million in benefits from digital initiatives, more than 3.5 times the level achieved in 2023.
• Manulife Financial Corp (NYSE:MFC) announced a 10% increase in its common share dividend and a new buyback program to repurchase up to 3% of outstanding common shares, reflecting strong capital return to shareholders.

Negative Points

• The impact of global minimum taxes (GMT) resulted in a $57 million charge for the quarter, dampening core earnings growth by approximately 3 percentage points.
• Manulife Financial Corp (NYSE:MFC) reported a $113 million charge due to lower-than-expected public equity returns and a $97 million charge from lower returns on commercial real estate investments.
• The company faced challenges in its US segment, with core earnings decreasing by 16% due to lower investment spreads and earnings foregone from reinsurance transactions.
• Manulife Financial Corp (NYSE:MFC) experienced a restructuring charge of $52 million, primarily in Global WAM, related to severance costs.
• The company's LICAT ratio is expected to decrease by approximately 1 percentage point due to changes in guidelines effective January 1, 2025.

Q & A Highlights

Q: What drove the improvement in non-core losses for the quarter, and what is the outlook for office real estate? A: Trevor Kreel, Chief Investment Officer, explained that the improvement was mainly due to better performance in private equity and infrastructure, despite flat returns in real estate. He expects continued improvement across the portfolio but anticipates office real estate to underperform for a period, depending on the economic environment.

Q: Can you discuss the outlook for the Asia segment, considering the actuarial assumption review and global minimum tax impacts? A: Phil Witherington, President and CEO of Manulife Asia, noted that 2024 was strong for Asia, with broad-based growth. He expects mid-teens core earnings growth to continue, normalizing for global minimum tax impacts. The growth is driven by higher CSM build from sales, disciplined expense management, and improved policyholder experience.

Q: What are the expectations for margins in the Global Wealth and Asset Management (G-WAM) business? A: Paul Lorentz, President and CEO of Manulife Investment Management, highlighted strong momentum in G-WAM, with disciplined expense management and diversified revenue streams. He expects continued strong topline growth and positive net flows, supported by a diversified franchise and disciplined expense management.

Q: How is Manulife addressing potential impacts from the California wildfires and future hurricane seasons? A: Marc Costantini, Global Head of Inforce Management, stated that Manulife's exposure to the California wildfires is limited to USD 90 million, with expected losses below half of that. The company has adjusted underwriting to mitigate future hurricane impacts, maintaining a strong portfolio with a focus on high return on capital.

Q: What is the outlook for remittances and the impact of reinsurance transactions? A: Colin Simpson, Chief Financial Officer, reported $7 billion in remittances for 2024, including $750 million from reinsurance transactions. He expects 60% to 70% of core earnings to convert to remittances, driven by strong cash generation and capital optimization initiatives.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.