Q1 2025 Manulife Financial Corp Earnings Call

May 8, 2025

Please go ahead Sir.

Thank you welcome to minimize earnings conference call to discuss our first quarter 2020 financial and operating results our earnings materials, including the webcast slides for today's call are available on the Investor Relations section of our website at Manulife Dot com before we start please refer to slide two for a caution on forward looking statements and slide 34, where note our non-GAAP and other financial measures used in this.

Presentation. Please note that certain material factors or assumptions applied in making forward looking statements and actual results may differ materially from what is stated.

Turning to slide four we'll be in today's presentation with worry Gorey, our president and Chief Executive Officer, who will provide a highlight of our first quarter 'twenty 'twenty, our results and strategic update.

Speaker Change: Following ROI constantly <unk>, our chief financial Officer will discuss the company's financial and operating results in more detail before we hand, it over back over to Jerry for closing remarks.

The prepared remarks, we will move to the live Q&A portion of the call.

Speaker Change: Before I pass over to Roy I would like to take this opportunity to announce that this will be his last earnings call with us as CEO I would like to thank him for his leadership and transforming manulife during his tenure.

Roy: With that let me turn the call over to Roy.

Speaker Change: Yeah.

Roy: Thanks, Sean and thank you everyone for joining us today.

Roy: Yesterday, we announced our first quarter 2025 financial results.

Roy: We delivered strong first quarter results and maintain the momentum that we built through 2024.

Roy: We generated strong growth across our top line metrics for each of our insurance segments.

Roy: Of note Asia sales increased 50%.

Roy: Reflecting strong customer demand and continued execution in the region.

Roy: Global Whim once again generated positive net flows which is a solid result, given the increased market volatility.

Roy: Core EPS increased 3%, reflecting the continued momentum in our Asia and global Wham businesses as well as the impact of share buybacks.

Roy: So you'll see our first quarter results include a charge in our P&C reinsurance business related to the California, wildfires as well as a higher ECL provision reflecting market conditions in the first quarter.

Roy: After normalizing for these two items, our core EPS would have increased 9%.

Roy: Despite the increasingly volatile operating environment I'm proud of our results, which are a function of our disciplined execution and a testament to the strength of the Manulife franchise and our team.

Roy: I know this is top of mind for many of you and while we won't be immune to the potential macroeconomic headwinds brought on by the trade tensions I'm going to spend a few moments reinforcing the work that we've done with the transformation of Manulife to put us in a position of strength.

Roy: First as expected our results almost stable under Ias 17, and during the quarter. We continued to steadily grow our book value, while returning capital to shareholders in.

Roy: In addition, our balance sheet remains robust supported by a strong light cat ratio of 137% and a leverage ratio of 23, 9%, which is well below our 25% medium term target.

Roy: Our robust balance sheet is a significant source of strength.

Roy: Coupled with our business and geographic diversity positions us well to navigate and capitalize on opportunities through times of change.

Roy: Moving to slide seven.

Roy: Manulife is certainly a very different company today than during the global financial crisis.

Roy: We have taken meaningful actions to derisk, our business, including implementing hedging strategies and executing multiple reinsurance transactions.

Roy: Together with the implementation of <unk> 17, we've significantly reduced our book value sensitivity to interest rate and equity market movements, which is now similar to our Canadian peers.

Roy: On slide eight our portfolio transformation towards higher return and lower risk has been supported by a recent milestone LTC transactions and Canadian Universal life transaction.

Roy: We also reinsured the majority of our U S variable annuity book several years ago.

Roy: These transactions have been instrumental in reducing risk both on the asset and liability sides and.

Roy: And have improved our return profile Olof securing attractive terms.

Roy: The right half of this slide further demonstrates one way that we've improved our risk profile for shareholders.

Roy: Over the past eight years, we've reduced the proportion of total older with direct shareholder exposure by 24 percentage points.

Roy: And it now only represents 7% of our total invested assets.

Roy: This reflects the benefits of reducing holdup as part of our reinsurance transactions as well as transforming our product portfolio.

Roy: Looking forward, we would expect this trend to continue with a growing proportion of our older backing participating or pass through business.

Roy: We're experiences shared or pass through to policyholders.

Roy: As you can see on slide nine.

Roy: Is this a vacation is another key source of strength.

Roy: First as a fundamental need economic uncertainty could actually spur demand for protection products in the future.

Roy: Second it's important to remember that most of our products and services are sold within each market.

Roy: So we don't expect any direct impact to our products or services from tariffs.

Roy: While we could see second order impacts such as lower market returns elevated unemployment or slowing growth these would be industry wide impacts and not specific to manulife.

Roy: Moments like this highlight the importance of our transformation journey and the benefits of the diversification of our franchise, which we've strengthened over the past decade.

Roy: We've made significant progress growing Asia and global win to have our highest potential businesses.

Roy: This is consistent with our strategy, but as you can see our Canada and U S businesses are material contributors to total company earnings and remain attractive businesses with large in force books.

Several years ago.

These transactions have been instrumental in reducing risk both on the asset and liability sides.

And have improved our return profile overall securing attractive terms.

Roy: Within Asia, we've made tremendous progress growing a diverse set of markets, including Hong Kong, Singapore mainland, China International High net worth and several emerging markets.

The right half of this slide further demonstrates one way we've improved our risk profile for shareholders.

Over the past eight years, we've reduced the proportion of total older with direct shareholder exposure by 24 percentage points.

Roy: The Mega trends in the region, including growth of the Middle class large protection gaps and aging populations, which are important drivers of demand for our business will persist despite current macroeconomic or geopolitical headwinds.

And it now only represents 7% about total invested assets.

This reflects the benefits of reducing holdup as part of our reinsurance transactions.

Roy: On global win we're also diversified by geography. Additionally.

It's a pretty young portfolio.

About reinsurance transactions as well as transforming our product portfolio.

Bookings.

Roy: Additionally, we're not over indexed to any particular business line.

Yes.

I'll continue with a growing proportion or older basket.

Looking forward, we would expect this trend to continue with a growing proportion of our older backing participating or pass through business.

Roy: Which is an asset during market volatility for example, our retirement business includes administration fees, which are less driven by markets and AUM.

Oxford.

Oh sure.

Great.

Posture.

Yeah.

We're experiences shared or pass through to policyholders.

Alright.

Right.

Roy: Our broad business diversification provides a resilient earnings profile that is less exposed to the equity market performance.

How does this vacation is another key.

As you can see on slide nine.

Right.

Is this a vacation is another key source of strength.

Understood.

I don't like uncertainty could actually.

First as a fundamental need economic uncertainty could actually spur demand for protection products in the future.

Roy: Onto slide 10.

In the future.

Which dives deeper into Asia.

Okay.

Roy: The segment has been focused on execution and has delivered strong growth.

Alright.

The sold within each market we.

Second it's important to remember that most of our products and services are sold within each market.

We don't expect.

Roy: We've grown from the sixth largest Pan Asian life insurer in 2014 to top three today.

Yeah.

From tariffs.

So we don't expect any direct impact to our products or services from tariffs.

Well, let's see.

Roy: And we are outperforming our peers as you can see from the growth in NPV and this has continued in the first quarter.

Such as neuro market returns.

While we could see second order impacts such as lower market returns elevated unemployment or slowing growth these would be industry wide impacts and not specific to manulife.

We're still in growth.

Why do you not.

Roy: This success is being supported by productivity gains as well as improving the customer experience, where our net promoter score improved from negative two in 2017 to positive 57 today.

To be.

Yes.

Our transformation journey and the benefits.

Moments like.

Roy: Menu life's substantial digital transformation has been a key contributor to both outcomes.

Roy: With that I'll hand, it over to Colin to review the highlights of our first quarter financial results Colin.

Colin: Thanks, Rory coming off a strong 2020 full we maintained our momentum into the first quarter and while the macroeconomic environment has become more challenging I'm encouraged by the strong set of results we've delivered.

<unk> diverse set of markets, including Hong Kong, Singapore, mainland, China International High net worth and several emerging markets.

Colin: Let's begin on slide 12, we delivered strong growth of over 30% and record results across AP sales, new business, CSM and new business value.

The Mega trends in the region, including growth of the Middle class large protection gaps and aging populations, which are important drivers of demand for our business will persist despite current macroeconomic or geopolitical headwinds.

Colin: <unk> sales increased 37% from the prior year with contributions from all our segments in particular tremendous growth of 50% in Asia.

Colin: This supported our significant growth and value metrics with 36% growth in new business value and 31% growth in new business CSM with the latter contributing to a strong 11% annualized organic CSM growth.

On global win we're also diversified by geography. Additionally.

Additionally, we're not over indexed to any particular business line.

Which is an asset during market volatility for example, our retirement business includes administration fees, which are less driven by markets and AUM.

Colin: This strong topline momentum, particularly in Asia, where we continue to execute will drive earnings for many years to come including through higher CSM amortization.

Our broad business diversification provides a resilient earnings profile that is less exposed to the equity market performance.

Colin: Global one continuing to deliver positive net flows of half a billion dollars. Despite the challenging market environment, demonstrating the resilience of our diversified business with strength in our institutional business offset by outflows in our retirement business.

Onto slide 10.

Which dives deeper into Asia.

The segment has been focused on execution and has delivered strong growth.

We've grown from the sixth largest Pan Asian life insurer in 2014 to top three today.

And we are outperforming our peers as you can see from the growth in MPV.

Colin: Our core earnings results on slide 13, I'd like to highlight some of the key drivers of our earnings relative to the prior year.

This has continued in the first quarter.

This success has been supported by productivity gains as well as improving the customer experience.

Colin: Our insurance businesses continued to grow contributing to higher insurance service results improved overall insurance experience across all insurance segments. Also supported this increase but this was partially offset by a P&C reinsurance charge of $35 million pretax related to the California.

Our on net promoter score improved from negative two in 2017 to positive 57 today.

Menu life's substantial digital transformation has been a key contributor to both outcomes.

With that I'll hand, it over to Colin to review the highlights of our first quarter financial results Colin.

Colin: Wildfires, which is reported in our corporate segment.

Colin: Our net investment result was impacted by lower investment spreads and a net charge in the expected credit loss or ECL provision, which compares with an ECL released in the prior year when the credit environment was fairly benign.

Colin: Thanks, Roy coming off a strong 2020 full we maintained our momentum into the first quarter and while the macroeconomic environment has become more challenging I'm encouraged by the strong set of results we've delivered.

Colin: While our actual credit experience was immaterial the $46 million pre tax dollars ECL charge was driven by updates to our ECL model to reflect the deteriorating economic environment through the first quarter and is still within our guidance of $30 million to $50 million the impact of the P&C reinsurance.

Let's begin on slide 12, we delivered strong growth of over 30% and record results across AP sales, new business, CSM and new business value.

Colin: <unk> sales increased 37% from the prior year with contributions from all our segments in particular tremendous growth of 50% in Asia.

Colin: Charging high E C L moderates at Alcoa earnings growth by five percentage points.

This supported our significant growth and value metrics with 36% growth in new business value and 31% growth in new business CSM with the latter contributing to a strong 11% annualized organic CSM growth.

Colin: You will note that global Wham remained the second largest contributor to core earnings and once again generated strong growth achieving over 20% growth in pretax core earnings for the six consecutive quarter I would also highlight that the three reinsurance transactions with RGA and global Atlantic over the past year reduce core earnings.

Colin: This strong topline momentum, particularly in Asia, where we continue to execute well drive earnings for many years to come including through higher CSM amortization.

Colin: By $12 million across multiple lines of the Doa.

Colin: Global one continued to deliver positive net flows of half a billion dollars. Despite the challenging market environment, demonstrating the resilience of our diversified business with strength in our institutional business offset by outflows in our retirement business.

Colin: Onto slide 14 core EPS increased 3% as the modest decline in core earnings was more than offset by the impact of share buybacks during.

Colin: During the quarter, we reported a non core charge of $781 million from realized losses, mostly from fixed income asset disposals related to LTC reinsurance transaction with RGA, which closed at the beginning of January this impact was largely offset in OCI, resulting in a neutral impact on book value and capital.

Colin: Our core earnings results on slide 13, I'd like to highlight some of the key drivers of our earnings relative to the prior year.

Colin: We also took a $208 million charge during the quarter as public equity returns were lower than expected and we reported a charge of $275 million in the older portfolio, mainly due to lower than expected return on commercial real estate and private equity investments.

Colin: Wildfires, which is reported in our corporate segment.

Colin: While this disrupted the recent trend of sequential improvements in all the experience we remain confident that we will return to our long term return assumptions.

Colin: The impact of the current challenging macroeconomic environment on our performance. However doesn't mean that all expected normalization will likely be delayed in the near term.

Colin: Moving on to the segment view of results, we will start with Asia on slide 15.

Colin: The segment continued to generate very strong growth in new business metrics with record level results.

Colin: Charge and high ECL moderates at Alcoa earnings growth by five percentage points.

Colin: Sales increased strongly by 50% from the prior year, primarily driven by growth in Hong Kong, which delivered growth across all channels in Japan, as well as mainland China and Singapore within Asia other.

Colin: You will note that global Wham remained the second largest contributor to core earnings and once again generated strong growth achieving over 20% growth in pretax core earnings for the sixth consecutive quarter. I would also highlight that the three reinsurance transactions with RGA and global Atlantic over the past year reduce core earnings.

Colin: The overall increase in sales contributed to robust growth in new business, CSM, and new business value of 38% and 43% respectively.

Colin: By $12 million across multiple lines of the Doa.

Colin: We also generated record core earnings in Asia, This quarter with a solid 7% growth year on year, reflecting continued business growth momentum, partially offset by an increase in the ECL provision and the impact of foregone earnings from the global Atlantic reinsurance transaction that closed in early 2024.

Colin: Onto slide 14 core EPS increased 3% as the modest decline in core earnings was more than offset by the impact of share buybacks during.

Colin: During the quarter, we reported a non core charge of $781 million from realized losses, mostly from fixed income asset disposals related to our LTC reinsurance transaction with RGA, which closed at the beginning of January this impact was largely offset in OCI, resulting in a neutral impact on book value and capital.

Colin: In addition, we generated strong sequential growth of 8% in core earnings and delivered another quarter of favorable insurance experience in both core earnings and CSM.

Colin: Moving to one of our other high potential businesses global one on slide 16.

Colin: We also took a $208 million charge during the quarter as public equity returns were lower than expected and.

Colin: <unk> had another strong quarter with 24% growth in core earnings. This was again supported by higher average third party M. A higher performance fees and our ongoing focus on expense management.

Colin: And we reported a charge of $275 million in the older portfolio, mainly due to lower than expected return on commercial real estate and private equity investments.

Colin: We delivered positive net flows for the quarter of half a billion dollars driven by inflows from our institutional business. So these were largely offset by net outflows from our retirement business due to pension plan redemptions and member withdrawals in North America.

Colin: While this disrupted the recent trend of sequential improvements in all the experience we remain confident that we will return to our long term return assumptions.

Colin: The impact of the current challenging macroeconomic environment on our performance. However, it does mean that our expected normalization will likely be delayed in the near term.

Colin: We again generated positive operating leverage with our core EBITDA margin of 28, 4%, which expanded 290 basis points from the prior year.

Colin: Moving onto the segment view of results, we will start with Asia on slide 15.

Colin: Next we come to Canada on Slide 17, where we delivered strong new business results during the quarter.

Colin: Our Asia segment continued to generate very strong growth in new business metrics with record level results.

Colin: <unk> sales increased 9% from a year earlier with contributions from all business lines, which supported the double digit growth in new business, CSM and new business value.

Colin: Core earnings increased by 3%, thanks to another quarter of favorable overall insurance experience and continued group insurance business growth, but this was partially offset by an increase in the ECL provision as well as lower Manulife Bank earnings with the latter impacted by a reduction in net interest margin. Following the bank of Canada's recent <unk>.

Colin: The overall increase in sales contributed to robust growth in new business, CSM, and new business value of 38% and 43% respectively.

Colin: Triste rate cuts.

Colin: Lastly, our U S segments results on slide 18.

Colin: In the U S. We once again delivered solid sales growth of 6% demand for accumulation insurance products from affluent customers has remained firm contributing to the growth in new business value of 30%.

Colin: In addition, we generated strong sequential growth of 8% from core earnings and delivered another quarter of favorable insurance experience in both core earnings and CSM.

Colin: Core earnings decreased 25% from a year earlier due to unfavorable net claims experience recorded in earnings lower investment spreads and increasingly ECL provision as well as the net impact of the basis change last year, partially offset by favorable lapse experience.

Colin: Moving to one of our other high potential businesses global one on slide 16.

Colin: Global wealth had another strong quarter with 24% growth in core earnings. This was again supported by higher average third party M. A higher performance fees and our ongoing focus on expense management.

Colin: We delivered positive net flows for the quarter of half a billion dollars driven by inflows from our institutional business.

Colin: ECL provision given the current macroeconomic challenges lower investment spreads and last year's basis change, which reduced the CSM.

Colin: These were largely offset by net outflows from our retirement business due to pension plan redemptions and member withdrawals in North America.

Colin: Despite these recent headwinds we remain confident in the U S segments ability to deliver steady earnings given the growth and profitable new business.

Colin: We again generated positive operating leverage with our core EBITDA margin of 28, 4%, which expanded 290 basis points from the prior year.

Colin: Bringing to a book value on Slide 19, you can see we are continuing to steadily grow our adjusted book value per share with 12% growth from the first quarter of 2024 to $36.66. Even after returning nearly $6 $4 billion of capital to shareholders through dividends and share buybacks over the PA.

Colin: Next we come to Canada on Slide 17, where we delivered strong new business results during the quarter.

Colin: <unk> sales increased 9% from a year earlier with contributions from all business lines, which supported the double digit growth in new business, CSM and new business funny.

Colin: Yeah as.

Colin: As previously announced we launched a new buyback program in late February 2025, allowing us to return freed up capital from our recent LTC reinsurance transaction to shareholders and together with dividends and share buybacks, we returned over $1 $2 billion of capital to shareholders during the quarter.

Colin: <unk> interest rate cuts.

Colin: Onto our robust balance sheet on slide 20.

Colin: Lastly, our U S segments results on slide 18.

Colin: <unk> capital ratio remained strong at 137% and a financial leverage ratio was 23, 9% staying well below our 25% medium term target.

Colin: These metrics reflect our strong financial resilience together with our significantly lower risk profile. They reinforce my confidence in our ability to operate from a position of strength in today's uncertain economic environment.

Colin: <unk> decreased 25% from a year earlier.

Colin: Unfavorable net claims experience recorded in earnings lower investment spreads and increasingly ECL provision as well as the net impact of the basis change last year, partially offset by favorable lapse experience.

Colin: While we have observed heightened market volatility in the second quarter, a robust balance sheet management and regular monitoring suggests very little impact to these metrics as we stand today.

Colin: Our U S earnings have been declining over the last few quarters due to a few factors, including the impact of the LTC reinsurance transactions, but this was offset in core EPS through share buybacks higher ECL provision given the current macroeconomic challenges lower investment spreads and last year's basis change which would.

Colin: And finally on Slide 21, you will see the summary of how we are tracking against our 2027 and medium term targets.

Colin: To conclude while we saw an impact on our bottom line due to a few factors that I noted earlier, we are pleased that our topline results continued to exhibit strong momentum and I'm proud of the results we've achieved this quarter.

Joost the CSM.

Colin: Spite these recent headwinds we remain confident in the U S segments ability to deliver steady earnings given the growth and profitable new business.

Colin: We remain focused on executing against our targets and I'm confident that we're well positioned to navigate through the economic cycle and capitalize on growth opportunities as they arise with that I will turn it back over to Roy for some closing remarks.

Colin: Bringing to a book value on Slide 19, you can see we are continuing to steadily grow our adjusted book value per share with 12% growth from the first quarter of 2024 to $36.66.

Roy: Thanks Colin.

Roy: In closing I want to say that it's truly been an honor to serve as CEO of Manulife.

Colin: Even after returning nearly $6 $4 billion of capital to shareholders through dividends and share buybacks over the past year.

Roy: Today marks my 40, <unk> and final quarterly earnings call and it is bittersweet for me.

Roy: I'm incredibly proud of our transformation, our achievements and have the momentum that we've created.

Roy: We've become a digital customer leader growing our highest potential businesses and reduced our risk profile and volatility while significantly improving shareholder returns.

Roy: We also have a strong capital and financial position.

Colin: Onto our robust balance sheet on slide 20.

Roy: Our high performing leadership team and our diverse business and geographic footprint will allow us to continue delivering profitable growth outpacing our peers, while delivering superior returns to our shareholders.

Colin: <unk> capital ratio remained strong at 137% and a financial leverage ratio was 23, 9% staying well below our 25% medium term target.

Roy: Our strong business momentum, particularly in a challenging environment is a testament to the strength of our franchise.

Colin: These metrics reflect our strong financial resilience together without significantly lower risk profile. They reinforce my confidence in our ability to operate from a position of strength in today's uncertain economic environment.

Roy: While I will miss the incredible team and culture that we've built looking forward I know the company is in great hands with Phil.

While we have observed heightened market volatility in the second quarter, a robust balance sheet management and regular monitoring suggests very little impact to these metrics as we stand today.

Phil: We've worked together for many years and he has a tremendous track record of execution and delivery.

Roy: Couldn't be more excited to watch them take manulife to even greater heights.

Phil: Before moving to Q&A.

Colin: And finally on Slide 21, you will see the summary of how we're tracking against our 2027 and medium term targets.

Speaker Change: I'd like to thank God.

Roy: <unk> without whom we wouldn't have a business.

Roy: Two our outstanding Global team your dedication and engagement has been inspiring and I continue to believe that our culture remains a real source of differentiation.

Colin: To conclude while we saw an impact on our bottom line due to a few factors that I noted earlier, we are pleased that our topline results continued to exhibit strong momentum and I am proud of the results we've achieved this quarter.

Roy: And thank you to our analysts and shareholders.

Roy: You Havent shied away from holding us accountable, but have also recognized our progress and accomplishments when dessert.

Roy: With that this concludes our prepared remarks, operator, we will now open the call to questions.

Roy: Thank you.

Speaker Change: We will now take questions from the telephone lines.

Roy: Thanks Colin.

Roy: If you have a question. Please press star one you.

Roy: In closing I want to say that it's truly been an honor to serve as CEO of Manulife.

Roy: You make and sell your question at any time by pressing star two.

Roy: Today marks my 40, <unk> and final quarterly earnings call and it is bittersweet for me.

Roy: Please press star one at this time, if you have a question.

Roy: That was their beef bazemore participants register for questions. We thank you for your patience.

Roy: I'm incredibly proud of our transformation, our achievements and have the momentum that we've created.

Roy: We've become a digital customer leader growing our highest potential businesses and reduced our risk profile and volatility while significantly improving shareholder returns.

Speaker Change: Our first question is from John Aiken from Jefferies. Please go ahead.

John Aiken: Good morning.

Obviously, you highlighted the strong sales we saw in Asia was wondering if you could give us a sense in terms of what youre seeing on the ground and what that may translate for the remainder of the year.

Roy: We also have a strong capital and financial position.

John Aiken: Great. Thank you John this is Phil and you're right and as Colin referenced and Roy referenced it has been a very strong start to 2025 for Asia and that's off the back of a record 2024, what we're seeing in the first quarter and it's really a continuation of the trend from last year is very strong demand.

Roy: Our strong business momentum, particularly in a challenging environment is a testament to the strength of our franchise.

Roy: While I will miss the incredible team and culture that we've built looking forward I know the company is in great hands with Phil.

John Aiken: For saving solutions to support retirement needs.

Roy: We've worked together for many years and he has a tremendous track record of execution and delivery.

John Aiken: Generational wealth transfer needs and this is across Hong Kong, Singapore, China, and we're also seeing strong growth in Japan, as well, where we had launched last year towards the end of last year.

Roy: I couldn't be more excited to watch them take manulife to even greater heights.

Roy: Before moving to Q&A.

Roy: I'd like to thank our customers without whom we wouldn't have a business.

John Aiken: A new product that has proved to be very successful in financial institution channels.

Roy: Two our outstanding Global team your dedication and engagement has been inspiring and I continue to believe that our culture remains a real source of differentiation.

John Aiken: You asked about the outlook on sales and I will draw your attention to last year across Q2, and Q3, we did have a step up in sales momentum and so I would expect as we go through the course of 2025 to see the growth rates normalize to more typical levels.

Roy: And thank you to our analysts and shareholders.

Roy: You Havent shied away from holding us accountable, but have also recognize our progress and accomplishments when dessert.

Roy: With that this concludes our prepared remarks, operator, we will now open the call to questions.

John Aiken: But I think the run rates that you see in sales is something that I feel good about now of course, we are operating in an environment of some macroeconomic uncertainty and while that doesn't have I suppose a direct impact on us the the I suppose the what I would draw your attention to is that.

Roy: Thank you.

Speaker Change: We will now take questions from the telephone lines.

Speaker Change: If you have a question please press star one.

Speaker Change: You make and sell your question at any time by pressing star two.

Speaker Change: Please press star one at this time, if you have any question.

And uncertain external environment can impact consumer sentiment and cause them to differ buying decisions, but at this point I remain cautiously optimistic about about the year ahead.

Speaker Change: That wouldn't there be small small participants register for questions. We thank you for your patience.

Speaker Change: Our first question is from John Aiken from Jefferies. Please go ahead.

Speaker Change: Thanks, Don just wanted to pass on my congratulations to Royal all the best in retirement.

John Aiken: Good morning.

John Aiken: Obviously, you highlighted the strong sales we saw in Asia I was wondering if you could give us a sense in terms of what youre seeing on the ground and what that may translate for the remainder of the year.

Don: Much appreciate it thank you John.

Speaker Change: Thank you.

Speaker Change: Following question is from Doug Young from Desjardin capital markets. Please go ahead.

Doug Young: Hi, good morning.

Doug Young: Maybe I can dig a little further into the sales fell in Asia.

Doug Young: In Japan sales were strong as you talked about I'm just curious how much of your sales are linked to U S. Dollar denominated products then.

Doug Young: Is there an anticipation of the shift in demand for this product in light of everything and something to help avoid and then some.

John Aiken: Demand for saving solutions to.

John Aiken: <unk> supports retirement needs.

Doug Young: That's on the Japan side, and then Hong Kong sales were strong.

Doug Young: <unk> value growth was strong can you talk a bit about the drivers there and any.

Doug Young: Any kind of sense it with us.

Doug Young: For this quarter.

John Aiken: A new product that has proved to be very successful in financial institution channels, you ask about the outlook on sales and I will draw your attention to last year across Q2, and Q3, we did have a step up in sales momentum and so I would expect as we go through the course of 2025.

Doug Young: And what the drivers were.

Phil: Great. Thank you Doug this is Phil so I'll tackle the Japan.

Speaker Change: <unk> question first and you're right to highlight that our you know one of our Differentiators in Japan is the fact that we built we bring our international capabilities to the Japan market and quite a large proportion of our overall business something in the order of.

John Aiken: To see the growth rates normalize to more typical levels.

John Aiken: But I think the run rate that you see in sales is something that I feel good about now of course, we are operating in an environment of some macroeconomic uncertainty and while that doesn't have I suppose a direct impact on us.

Speaker Change: 80% of our business is U S dollar denominated and the driver of demand for U S. Dollar denominated business is really the diversification that that brings for our customers as well as the yield differential between U S dollars and the Japanese yen and both of those.

John Aiken: The I suppose the that what I would draw your attention to is that an uncertain external environment can impact consumer sentiment and caused them to just the buying decisions, but at this point I remain cautiously optimistic about about the year ahead.

Speaker Change: Those drivers of demand remain in place. So I think while we may see fluctuations in currency exchange rates I don't see the exchange rate itself is the main driver of demand for the foreign currency denominated products.

Speaker Change: Thanks, Bill I just wanted to pass on my congratulations to Royal all the best in your retirement.

Speaker Change: I think when you know when we look at Japan, New business, we had seen quite a big second quarter last year and a step up from the second quarter and our sales volumes through our various factors driving that so I would expect the growth rates to sort of moderates as we look forward to Q3, Q4, Q2 Q3 Q4.

Speaker Change: Much appreciate it thank you John.

Speaker Change: Thank you.

Speaker Change: Following question is from Doug Young from Desjardins Capital markets. Please go ahead.

Doug Young: Hi, good morning.

Doug Young: Maybe I can dig a little further into the sales fell in Asia.

Doug Young: Japan sales were strong as he talked about I'm just curious how much of your Japan sales are linked to U S dollar denominated products.

Speaker Change: But I think the run rate that you see is actually a run rate, but I feel good about and is sustainable, particularly in the context of a new product launch towards the end of last year that has provided some momentum and financial institutional channels.

Doug Young: Is there an anticipation of the shift in demand for this product in light of everything and something to help avoid and so that's something that you can sell them in Hong Kong sales were strong.

Speaker Change: Moving on to your question of Hong Kong the drivers so in Hong Kong, we continue to see really strong customer demand and this is visible in all of our channels as Colin referenced in his remarks, So agency bank assurance as well as broker channels.

Doug Young: New business value growth with strong can you talk a bit about the drivers there and any you know any kind of sense.

Doug Young: So far this quarter.

Doug Young: And but the drivers were.

Phil: Great. Thank you Doug this is Phil so I'll tackle the Japan.

Speaker Change: It simply broker channels are growing faster than other channels, but all channels are growing strongly.

Speaker Change: <unk> question first.

Speaker Change: And you're right to highlight that our you know one of our Differentiators in Japan is the fact that we build we bring our international capabilities to the Japan market and quite a large proportion of our overall business something in the order of 80.

Speaker Change: The demand is both from our core domestic customer segment as well as continued growth in the mainland Chinese visitor or mcd customer segments, it's predominantly driven by demand for saving solutions. Although we are in the process of we have recently launched.

Speaker Change: A couple of.

Speaker Change: Critical illness protection products that we expect.

Speaker Change: To sort of drive higher demand.

Speaker Change: To fulfill the health and protection needs of both our domestic and mainland Chinese visitor customers. So I feel good about the growth in Hong Kong.

Speaker Change: Are those drivers of demand remain in place. So I think while we may see fluctuations in currency exchange rates I don't see the exchange rate itself is the main driver of demand for the foreign currency denominated products. That's why I think when you know when we look at Japan, New business, we had seen quite a big set.

Speaker Change: Clearly there is some uncertainty in the external environment that may impact customer sentiment cause could cause some customers to defer that buying decisions and again similar to my earlier comments in the context of Japan from the second quarter of last year and into the third quarter, we saw quite a step change in our.

Speaker Change: Quarter last year, and a step up from the second quarter and our sales volumes through our various factors driving that so I would expect the growth rates to sort of moderates as we look forward into Q3, and Q4 Q2, Q3 Q4, but I think the run rate that you see is actually a run rate that I feel good about.

Sales volumes in Hong Kong, So I would expect the growth rate to normalize as we go through the course of this year.

Speaker Change: Okay second question and sorry filling in for Ken again here, but.

Speaker Change: You put out on the earnings growth target range of 15% and I know that medium term I'm just trying to gauge you know how you feel about achieving that in next year in 2026.

Speaker Change: It is sustainable, particularly in the context of a new product launch towards the end of last year that has provided some momentum and financial institutional channels.

Speaker Change: Yes, this quarter, Japan was down and I think I understand why that was and the other was flat Hong Kong with obviously, the big driver of the beat.

Speaker Change: Yeah, and there's lots going on in the region right now so I'm just trying to get a cat and you've got the GMT. So I'm just trying to get a sense of how you're feeling at that target as we look at 2025 and 26.

Okay. Thanks, Thanks, Doug So our earnings guidance really applies to the total company level, 10% to 12% that we have in the past sort of indicated how that breaks down across segments.

Speaker Change: Simply broker channels are growing faster than other channels, but all channels are growing strongly.

Speaker Change: The demand is both from our core domestic customer segment as well as continued growth in the mainland Chinese visitor or mcd customer segments, it's predominantly driven by demand for savings solutions. Although we are in the process of we have recently launched.

Speaker Change: It's not specific guidance across segments when I look at the the momentum that we've had in Asia clearly very strong earnings growth through 2024, it's been a little lower in the first quarter of 2025, 7% growth, but as you highlight that's been distorted by year on year movements in ECL.

Speaker Change: A couple of quick.

Speaker Change: Critical illness protection products that we expect.

Speaker Change: And recall a year ago in the first quarter, we had an adverse we had a favorable impact in Asia from the global Atlantic reinsurance transaction.

Speaker Change: To sort of drive higher demand.

Speaker Change: Fulfill the health and protection needs of both our domestic and mainland Chinese visitors or customers. So I feel good about the the growth in Hong Kong.

Speaker Change: Big chunk of which related to Japan, so normalizing for that actually the growth in Asia would have been about 11% year on year, and it's actually 8% higher than Q4, so that you see that momentum building quarter on quarter my expectations for the full year is that you know the run rate that you see in the first.

Speaker Change: Clearly there is some uncertainty in the external environment that may impact customer sentiment cause so it could cause some customers to defer their buying decisions and again similar to my earlier comments in the context of Japan from the second quarter of last year and into the third quarter, we saw quite a step change in our.

Speaker Change: Water is a good run rate upon which she will see.

Speaker Change: Sales volumes in Hong Kong, So I would expect the growth rate to normalize as we go through the course of this year.

Speaker Change: Business as usual growth from expansion of the CSM subject to normal fluctuations in ECL and policyholder experience and I think what really gives me confidence in the potential for continued earnings growth is when you look at the contractual service margin, we saw a 16% growth in 2024.

Speaker Change: Okay second question and I'm, sorry, I'm going to pick up again here, but.

Speaker Change: You put out on the earnings growth target range of 15% and I know that medium term I'm just trying to gauge you know how you feel about achieving that in next year in 2026.

Speaker Change: And the first quarter of 2025, the organic growth rate normalized organic growth organic growth rates in the CSM was 12%. So I think there are encouraging signs.

Speaker Change: Yeah. This quarter, Japan was down and I I think I understand why that was and the other was flat Hong Kong with obviously, the big driver of the beat.

Speaker Change: I appreciate the color and thanks for everything and all the best.

Speaker Change: Yeah, and there's lots going on in the region right now so I'm just trying to get a TMT. So I'm just trying to get a sense of how youre feeling about that target as we look at 2025.

Doug Young: Thank you Doug.

Speaker Change: Thank you.

Speaker Change: The following question is from Gabriel <unk> from National Bank Financial. Please go ahead Sir.

Speaker Change: Uh huh.

Speaker Change: Okay. Thanks, Thanks, Doug So our earnings guidance really applies to the total company level, 10% to 12% that we have in the past sort of indicated how that breaks down across segments, it's not specific guidance across segments when when I look at the the.

Speaker Change: Then different the Asia sales question.

Speaker Change: Sales numbers have been.

Speaker Change: Pretty good for a while not very good.

Speaker Change: I'm wondering if mix is still a bit of a challenge from margin standpoint, I know for a while there are selling they are savings products that are super profitable and if youre seeing a shift there or have seen a shift there.

Speaker Change: The momentum that we've had in Asia, clearly very strong earnings growth through 2024, it's been a little lower in the first quarter of 2025, 7% growth, but as you highlight that's been distorted by year on year movements in ECL and recall a year ago in the first quarter, we had an adverse we had a favorable <unk>.

Speaker Change:

Speaker Change: Outlook for that the trend, particularly it looks like.

Speaker Change: And a follow up.

Phil: Okay. Thank thanks, Gabriel this is Phil.

Speaker Change: Right over the course of the past year, we've seen a strong demand for saving solutions and that's been across Hong Kong. It's been in Singapore has been in mainland China.

Speaker Change: Packs are in Asia from the global Atlantic reinsurance transaction.

Speaker Change: Big chunk of which related to Japan, so normalizing for that actually the growth in Asia would have been about 11% a year on year, and it's actually 8% higher than Q4, so that you see that momentum building quarter on quarter my expectations for the full year is that the run rate that you see in the first.

Phil: These are all big markets that.

Speaker Change: Driving some of the key trends in the numbers.

Speaker Change: We're really focused on fulfilling customer needs and we have a range of different solutions on the shelf as we look forward I do see the potential for.

Speaker Change: Quarter is a good run rate upon which she will see.

Speaker Change: Supplementing the savings demand with the fulfillment of other customer needs health and protection needs I referenced earlier, the launch with some critical illness products in Hong Kong and I expect that generates a little bit of excitement and when you look at the actually the quarter on quarter margin trends, particularly for Hong Kong.

Speaker Change: 16% growth in 2024, and the first quarter of 2025, the organic growth rate normalized organic core organic growth rates in the CSM was 12%. So I think there are encouraging signs.

Speaker Change: What youll see is there has been a bit of an uplift a bit of a pick up in Q1 relative to Q4. So I think what youll wait what you see in terms of sales and new business value momentum in the first quarter I think that's a good a good indication of what you can expect in the near term subject to normal.

Speaker Change: I appreciate the color and thanks for everything and all the best.

Doug Young: Thank you Doug.

Speaker Change: More variability in sales volumes that can arise, particularly where we've got a presence in third party channels and notably in Hong Kong. There has been quite a strong emergence in the industry of the broker channel and broker channels can always give rise to graduate to variability quarter on quarter year on year.

Speaker Change: Thank you.

Speaker Change: Following question is from Gabriel <unk> from National Bank Financial Please go ahead.

Doug Young: Hey.

Speaker Change: Then different the Asia sales question.

Doug Young: Sales numbers of them.

Doug Young: Pretty good for a while not very good I'm wondering if mix is still a bit of a challenge from margin standpoint, I know for a while there are selling they are savings products that are super profitable and if if you're seeing a shift there or have you seen a shift there.

Speaker Change: Relative to agency and Bancassurance switch to of course remain our core channels, both in Hong Kong and across Asia.

Speaker Change: It's plausible that you know the sales number will still be good but with this macro environment.

Doug Young: You know what the outlook for that the trend, particularly looks like.

Speaker Change: Maybe the shift to the more higher margin mix might be deferred or delayed.

Doug Young: I have a follow up.

Phil: Okay. Thanks. Thanks, Gabriel This is Phil you are right over the course of the past year, we've seen.

Speaker Change: It's hard to be specific about what scenario might play out so I think in the near term I expect the demand for savings to continue.

Phil: Strong demand for saving solutions and that's been across Hong Kong, it's been in Singapore, it's been in mainland China.

Speaker Change: The what.

Speaker Change: A big portion of our business, particularly in Hong Kong for example is U S dollar denominated and the yields on U S. Dollar business is attractive relative to other currencies.

Phil: And these are all big markets that.

Phil: Driving some of the key trends in the numbers.

Phil: We are really focused on fulfilling customer needs and we have a range of different solutions on the shelf as we look forward I do see the potential for.

Speaker Change: I'd just add that our savings products are still very good margin. So I really want to dispel them at that savings products.

Phil: Supplementing the savings demand with the fulfillment of other customer needs health and protection needs I referenced earlier, the launch with some critical illness products in Hong Kong and I expect that generates a little bit of excitement and when you look at the actually the quarter on quarter margin trends, particularly for <unk>.

Speaker Change: Low margin, we've got you know quite profitable savings products across the geographies in Asia and as Phil said I think one of the unique aspects of our franchisees the diversification not just from a product perspective, but also from a channel perspective, so having a strong agency for a strong banking capabilities and then now broker which is now a much more important part of our.

Phil: Kong, what Youll see is there has been a bit of an uplift a bit of a pick up in Q1 relative to Q4. So I think what youll wait what you see in terms of sales and new business value momentum in the first quarter I think that's a good.

Speaker Change: It allows us to continue that story of margin improvement and as Phil said at the end of the day, we're going to sell products that meet the needs of consumers and again, where we're delighted to have strong savings products that does that.

Speaker Change: Got it and then the U S quickly.

Phil: Good indication of what you can expect in the near term subject to sort of normal variability in sales volumes that can arise, particularly where we've got some presence in third party channels and notably.

Speaker Change: You mentioned some of the headwinds.

Speaker Change: Resulted in the the trend line in profits going down expensive picked up quite a bit this quarter I forget what it was last quarter, there, but I'm just wondering what the story is there you are investing to reposition the business or what because of our consolidated.

Phil: In Hong Kong, there has been quite a strong emergence in the industry of the broker channel and broker channels can always give rise to greater variability quarter on quarter year on year relative to agency and Bancassurance, which do of course remain our core channels, both in Hong Kong and across Asia.

Speaker Change: Level as well that contributed to the.

Speaker Change: The efficiency ratio popping up over your 45%.

Speaker Change: Target.

Speaker Change: Yes, I think thanks, Gabriel it's a brooks tangled appreciate the question I would look at Q1 expenses is very much an aberration tied to some unique and important investments in things like Jan AI digital things that will yield further efficiency gains in the future. If you look over multiple years now U S has been extremely focused.

Phil: So is it plausible that the sales numbers will still be good, but what the macro environment.

Phil: Maybe the shift to the more higher margin mix might be deferred or delayed.

Phil: It's hard to be specific about what scenario might play out, which I think in the near term I expect the demand for savings to continue.

Speaker Change: On efficiency ratio it was taken out a lot of expense and we intend to continue to operate with extreme expense discipline.

Speaker Change: The what.

Speaker Change: Okay, Great and ROI I think I wish you happy or.

Speaker Change: A big portion of our business, particularly in Hong Kong for example is U S dollar denominated and the yields on U S. Dollar business is attractive relative to other currencies.

Speaker Change: Retirement, our next phase last quarter I'll I'll do it again anyway have a good I'll take it twice as Gabriel Thank you.

Speaker Change: I'd just add that our savings products are still very good margin. So I really want to dispel the myth that savings products.

Speaker Change: Thank you. Our following question is from Tom Mackinnon from BMO capital markets. Please go ahead.

Tom Mackinnon: Yeah. Thanks, <unk> just before I ask the question just wanted to say congratulations Troy and thanks for all your help and all the best as you move on to there your next adventures.

Speaker Change: I appreciate that Tom.

Speaker Change: Yeah, so the I.

Speaker Change: I guess the.

Speaker Change: First question would be maybe for Mark.

Speaker Change: If you can talk about.

Speaker Change: Appetite for further legacy transactions.

Speaker Change: What percent is legacy have your or earnings now and you're kind of you're generating a lot of capital year like Catherine.

Speaker Change: Got it and then the U S quickly you mentioned some of the headwinds.

Speaker Change: Flat over the last 12 months, despite a I don't know Mike.

Speaker Change: $3 $5 billion in buybacks here so.

Speaker Change: Need to really do another transaction here.

Speaker Change: Level as well that contributed to the.

Speaker Change: Okay. So any any comments with respect to that thanks.

Speaker Change: Well the efficiency ratio popping up over your 45%.

Speaker Change: Yes, good morning, Tom and smart.

Speaker Change: Target.

Speaker Change: Thanks for the question I appreciate it so there's a there's a few.

Speaker Change: Yeah.

Speaker Change: Yeah. Thanks, Thanks, Gabriel it's up Brooks tangled appreciate the question I would look at Q1 expenses is very much an aberration tied to some unique and important investments in things like Jan AI digital things that will yield further efficiency gains in the future. If you look over multiple years now U S has been extremely focused on it.

Speaker Change: Thanks, Debbie you mentioned to unpack so.

Speaker Change: If I were to our transactions and I think I'd be remiss, if I then saying it.

Speaker Change: Roy mentioned in his opening remarks that we've done three transactions over the last I'll say 18 months.

Speaker Change: That resulted basically in $2 8 billion of dollars of capital released as you imply as well in terms of what we've done in terms of returning that to shareholders, but more importantly.

Speaker Change: Patiency ratio I was taken out a lot of expense and we intend to continue to operate with extreme expense discipline.

Speaker Change: Okay, Great and ROI I think I wish you a happy.

Speaker Change: Two of those transactions were included in long term care and we basically.

Speaker Change: Retirement their next phase last quarter I'll I'll do it again.

Speaker Change: Reinsured.

Speaker Change: So anyway I don't have a good one.

Speaker Change: Over 18% of the risk at the same time as <unk>.

Speaker Change: I'll take it twice to Gabriel Thank you.

Speaker Change: Both.

Speaker Change: Thank you. Our following question is from Tom Mackinnon from BMO capital markets. Please go ahead.

Speaker Change: Roy and Colin mentioned.

Speaker Change: We sold off.

Speaker Change: $3 $8 billion of all of the assets tied to these things and we created the whole thing at book value and long term care itself was traded inside 5% net.

Tom Mackinnon: Yeah. Thanks, <unk> just before a ask the question just wanted to say congratulations Troy and thanks for all your help there and all the best as you move on to your next adventures.

Speaker Change: Negative feed to our book value right.

Speaker Change: And so we feel quite confident that we accomplished what we wanted and it's been demonstrated obviously by the results that have been sued and more importantly, when you combine that with the variable annuity transaction. We did in 2022 and you combine it with these transactions our long term care and VA earnings.

Speaker Change: I appreciate that Tom.

Speaker Change: Yeah. So the.

Speaker Change: I guess the.

Speaker Change: First question would be maybe for Mark.

Speaker Change: If you can talk about.

Speaker Change: Appetite for further legacy transactions.

Speaker Change: What percent is legacy you have your or earnings now and you're kind of you're generating a lot of capital Youre like has been.

Speaker Change: Our less than 10% of the firm's earnings and I would venture to say that mission accomplished in terms of what we wanted to do in terms of Derisking the portfolio and what we want to do in terms of demonstrating the robustness of the liabilities.

Speaker Change: Flat over the last 12 months despite sir.

Speaker Change: I don't know Mike.

Speaker Change: Backing these and the assets backing these liabilities and more importantly, as we discussed a few times on these calls we have very vibrant and robust organic plans times to managing the business on a go forward basis and long term care and those are showing a lot of very positive results and is actually actually you can see in the accordingly results this quarter.

Speaker Change: Lots of $3 $5 billion in buybacks here so.

Speaker Change: You need to really do another transaction here.

Speaker Change: Whereas so any comments with respect to that thanks.

Tom Mackinnon: Yes, good morning, Tom and smart.

Tom Mackinnon: Thanks for the question I appreciate it so there's a there's a few.

Speaker Change: <unk> and the overall long term care experience was modestly positive and thats been the case for a few quarters.

Speaker Change: Thanks, Debbie you mentioned to unpack so.

Tom Mackinnon: You're talking about transactions and I think I'd be remiss, if I, then saying it.

Speaker Change: When we look at the experience. So we feel quite confident that there is absolutely no need to do another transaction, having set so the mandate of the enforce group is to actively manage organically and inorganically and optimize the risk reward trade offs of the balance sheet. So we will continue to do so our first mandate is to do so organically in dental.

Speaker Change: Roy mentioned in his opening remarks that we've done three transactions over the last Oh.

Tom Mackinnon: I'll say 18 months.

Tom Mackinnon: That resulted basically in $2 $8 billion of capital released as you imply as well in terms of what we've done in terms of returned back to shareholders, but more importantly add.

Speaker Change: We will do so inorganically, if a dime management, we feel no obligation and as we demonstrated we always do so.

Tom Mackinnon: Two of those transactions were included in long term care and we basically.

Speaker Change: Doing that for the benefit of our shareholders, while keeping the promises to our policyholders.

Tom Mackinnon: Reinsured over 18% of the risk at the same time as.

Speaker Change: Hey, Tom It's Colin if I could just.

Tom Mackinnon: Roy.

Speaker Change: Roy and Colin mentioned.

Speaker Change: Sold off.

Speaker Change: No I was just going to jump in on the buyback points Euro.

Speaker Change: $3 $8 billion of all their assets tied to these things and we traded the whole thing at book value and long term care itself was traded inside 5% narrowed.

Speaker Change: You referenced <unk> capital position incredibly strong, 137% <unk> ratio. So we don't need a reinsurance transaction to do buybacks, but I will emphasize buybacks don't rank ahead of investing in the business not some number one priority, but the good news about our capital base.

Speaker Change: Negative feed to our book value right.

Speaker Change: So we feel quite confident that we accomplished what we wanted and it's been demonstrated obviously by the results that have been issued and more importantly, when you combine that with the variable annuity transaction. We did in 2022 and you combine it with these transactions our long term care and V earnings.

Speaker Change: Is that you know we can do both quite comfortably as well as look at inorganic opportunities.

Speaker Change: Okay, great and the.

Speaker Change: Second question. The final question is just with respect to the insurance experience gains we're seeing in Asia.

Speaker Change: Our less than 10% of the firm's earnings and I would venture to say mission accomplished in terms of what we wanted to do in terms of Derisking the portfolio and what we want to do in terms of demonstrating the robustness of the liabilities.

Speaker Change: Pretty solid 17 million.

Speaker Change: U S.

Speaker Change: The best we've seen in a while.

Speaker Change: What's driving that or we passed an idiot Vietnam lapse issues right now if you can just address some of that and.

Speaker Change: Backing these and the <unk>.

Speaker Change: Asset backing these liabilities and more importantly, as we discussed a few times.

Speaker Change: What should be the outlook for insurance experience gains in Asia going forward. Thanks.

Speaker Change: This calls we have very vibrant and robust organic plans binds to managing that business on a go forward basis and long term care and those are showing a lot of very positive results is actually actually you can see in the accordingly results this quarter and your overall long term care experience was modestly positive and thats been the case for a few quarters.

Speaker Change: Yeah. Thanks, Tom It's Steve here and as you know that we had if we set aside the P&C provision if we look at our other insurance segments. We had positive experience again in each of our insurance segments in terms of total insurance experience.

Speaker Change: You mentioned Asia. So Asia, we saw favorable claims experienced both mortality and morbidity across a number of markets.

Speaker Change: When we look at the experience. So we feel quite confident that there is absolutely no need to do another transaction, having said so the mandate of the enforce group is to actively manage organically and inorganically and optimize the risk reward trade offs of the balance sheet. So we will continue to do so our first mandate is to do so organically and then.

Speaker Change: In the region.

Speaker Change: And that was the big driver there we saw some modest lapsed losses across a few markets, but that was more than offset by other experience. So overall solid results in Asia in U S.

Speaker Change: We will do so inorganically, if the demand, but we feel no obligation and that we've demonstrated we always do so.

Mark: Overall positive Mark mentioned, a net positive in terms of.

Speaker Change: And doing that for the benefit of our shareholders, while keeping the promises to our policyholders.

Speaker Change: LTC experience, which is.

Speaker Change: <unk> continued the trends, we've largely seen both through and then after the pandemic.

Speaker Change: Hey, Thomas calling me if I could just yeah. Sorry go ahead, Colin no I was just gonna jumping on the buyback points you referenced capital position incredibly strong 137 person like cat ratio. So we don't need a reinsurance transaction to do buybacks, but I will emphasize buybacks don't rank ahead of investing in the business not some number one priority but.

Speaker Change: Modest life at <unk>.

Speaker Change: Lapse losses.

Speaker Change: Oh, sorry light life, we saw modest claims losses, which were normal seasonality and in terms of outlook. There. Our experience has been in line or slightly better than assumptions since COVID-19. So we feel good about that.

Speaker Change: The good news about our capital base.

Speaker Change: Vietnam those issues are behind US, we had gains in Vietnam for the quarter and those that.

Speaker Change: Is that you know we can do both quite comfortably as well as look at inorganic opportunities.

Speaker Change: Okay, Great and the second question or the final question is just with respect to the insurance experience gains we're seeing in Asia.

Speaker Change: That headwind as expected was alleviated in the second half of last year and we've seen continued.

Speaker Change: Favorable so.

Speaker Change: Overall, while there can of course be variability in the large case market, particularly in U S life business, we feel pretty good about the outlook.

Speaker Change: Pretty solid 17 million.

Speaker Change: U S.

Speaker Change: The best we've seen in a while.

Speaker Change: What's driving that or we passed an idiot Vietnam lapse issues right now if you can just address some of that and.

Speaker Change: Okay. Thanks for the color.

Speaker Change: Thank you.

Speaker Change: Our following question is from Paul Holden from CIBC. Please go ahead.

Speaker Change: What should be the outlook for insurance experience gains in Asia going forward. Thanks.

Speaker Change: Thank you. Good morning first question is with respect to the negative auto experience this quarter not unexpected, but just wanted to drill down a little bit in terms of maybe you can give us some color on what drove the negative experience.

Speaker Change: Specifically and just confirmation that it's lower assumed lower than assumed returns versus necessarily any.

Speaker Change: You mentioned Asia. So Asia, we saw favorable claims experienced both mortality and morbidity across a number of markets.

Speaker Change: Impairment.

Speaker Change: Hi, Paul it's it's Trevor Thanks for the question. So just let me start by saying, we still like the strategy. Its a good match for our long term liabilities and produces strong returns with low volatility, but it is not going to be immune from the broader economic environment. As you noted we did see weaker all the experience in the quarter similar to some peers and consistent with slower pub.

Speaker Change: In the region.

Speaker Change: And that was the big driver there we saw some modest lapsed losses across a few markets, but that was more than offset by other experience. So overall, our solid results in Asia and U S.

Speaker Change: <unk> markets in Q4.

Speaker Change: And a little bit of increased economic uncertainty in Q1.

Speaker Change: Just to not even in this environment portfolio continues to provide positive total returns.

Speaker Change: To your question are the main drivers of non core loss was again real estate. It does continue to improve slowly.

Speaker Change: While energy outperformed quite substantially private equity.

Speaker Change: Which given some lumpy gains had been quite strong in Q3, and Q4 of last year was a little bit below target in Q1.

Speaker Change: And then in terms of the outlook, we do expect to get back to our long term assumptions.

Speaker Change: I think given the current uncertainty, but timing is probably a little bit deferred from our prior expectations.

Speaker Change: You may see performance from quarter to quarter being a little bit dependent on the on the broader economic environment, but we do still expect to get back to our long term assumptions. Thanks.

Speaker Change: Worst case market, particularly in U S life business, we feel pretty good about the outlook.

Speaker Change: Okay. Thanks for the color.

Speaker Change: Thanks for the question.

Speaker Change: Thank you. So maybe just a follow up question on that because it's been I guess I don't know.

Speaker Change: Thank you.

Speaker Change: Our following question is from Paul Holden from CIBC. Please go ahead.

Speaker Change: If all those negative returns are negative experience I should say not take if returns but negative experience. This year I think it makes it for four years and Oh excuse me four years in a row, if I'm not mistaken so.

Speaker Change: Thank you. Good morning first question is with respect to the negative although experience this quarter.

Speaker Change: Unexpected, but just want to drill down a little bit in terms of maybe you can give us some color on what drove the negative experience.

Speaker Change: Right.

Speaker Change: What point again do you need to you on those questions come up in past calls, but what but at what point do you kind of need to.

Speaker Change: Specifically and just confirmation that it's lower assumed lower than assumed returns versus necessarily any impairments.

Speaker Change: <unk>.

Speaker Change: Those return assumptions.

Speaker Change: What would it take like how many how many periods in a row it underperforms relative to current assumptions is that.

Speaker Change: Hi, Paul it's it's Trevor Thanks for the question. So just let me start by saying, we still like the strategy. Its a good match for our long term liabilities and produces strong returns with low volatility, but it is not going to be immune from the broader economic environment. As you noted we did see weaker older experienced in the quarter similar to some peers and consistent.

Speaker Change: Sort of a.

Speaker Change: A change in the base value like more impairments versus just under performance, but what would it what would it take to change the ALDA return assumption.

Paul Trevor: Hi, Paul Trevor again.

Speaker Change: For the follow up so I think we've said this before but.

Paul Trevor: The first thing I would say I think we have underperformed our target insurance for two years.

Speaker Change: Slow of public markets in Q4.

Speaker Change: And a little bit of increased economic uncertainty in Q1.

Speaker Change: Hmm.

Speaker Change: Two years, and I think one quarter, but.

Speaker Change: Just to note even in this environment the portfolio continues to provide positive total returns.

Speaker Change: In any event. These all very long term assumptions, so they're not set for any specific to you and we do have a structured process to update them. Its not us mechanical I think is as as you sort of described our experienced over time has actually been similar to our assumptions, but there have been periods of over an underperformance as we've seen over the last couple of years.

Speaker Change: To your question the main driver of the non core loss was again real estate. It does continue to improve slowly.

Speaker Change: While energy outperformed quite substantially private equity though.

Speaker Change: Given some lumpy gains had been quite strong in Q3, and Q4 of last year was a little bit below target in Q1.

Speaker Change: In terms of our process. They are reviewed annually by both Steve and my teams, we do look at our own and benchmark experience. We look at market expectations. We also look at current transactions that we're actually underwriting including transactions, where expected yields are actually above our long term assumptions. So I think for 2025.

Speaker Change: And then in terms of the outlook, we do expect to get back to our long term assumptions I.

Speaker Change: I think given the current uncertainty the timing is probably a little bit deferred from our prior expectations.

Speaker Change: And you may see performance from quarter to quarter being a little bit dependent on the on the broader economic environment, but we do still expect to get back to our long term assumptions.

Speaker Change: <unk> will obviously pick up the sort of recent weeks of experience and will also be considering.

Speaker Change: Thanks for the question.

Speaker Change: Gives me the outlook for potentially slower longer term growth, but we do still feel that the assumptions are appropriate. So while we do recognize the uncertainty that's out there.

Speaker Change: Hum.

Speaker Change: So maybe just a follow up question on that because it's been I guess.

Speaker Change: If if if all those negative returns are negative experience I should say not negative returns, but negative experience. This year I think it makes it for four years and Oh excuse me four years in a row, if I'm not mistaken so.

Speaker Change: I do remain confident in our strategy and in achieving our long term target returns.

Speaker Change: It's Steve I'll, just add I'll just add that.

Speaker Change: While not giving a specific you know what.

Speaker Change: Right.

Speaker Change: Well what would it take to change if we look back when we reduce the return assumptions back in 2017, one of the factors that drove that was interest rates have come down significantly that was impacting cap rates and expectations of future return on our real estate portfolio. So that was one example, obviously interest rates are materially higher than that.

Speaker Change: At what point again, do you need to I know as questions come up in past calls about what but at what point do you kind of need to revise that.

Speaker Change: Those return assumptions then.

Speaker Change: What would it take like how many how many periods in a row. It underperforms relative to current assumptions is that sort of a change in the base value like more impairments versus just under performance, what what would what would it take to change the ALDA return assumption.

Speaker Change: Point.

Speaker Change: Got it that's helpful. Thank you very much.

Speaker Change: Thank you.

Many Goldman: Following question is from many Goldman from Scotiabank.

Speaker Change: I ball Trevor again, thanks for the follow up so I think we've said this before but I.

Speaker Change: Please go ahead.

Speaker Change: Hi, good morning.

Speaker Change: I guess, the first thing I would say I think we have underperformed our target insurance for two years.

Speaker Change: First I want to join my peers in congratulating you and wishing you the best.

Speaker Change: And I wanted to ask about.

Speaker Change: Two years, and I think one quarter, but in any event. These all very long term assumptions. So they're not set for any specific you know we do have a structured process to update them and it's not just mechanical I think because as as you sort of describe our experience over time has actually been similar to our assumptions, but there have been periods of over an underperformance as.

Speaker Change: I wanted a little bit more detail on what drove the <unk> line this quarter.

Speaker Change: Is this specifically economic assumptions are scenarios just wanted to get more detail really in the spirit of trying to understand the evolution of this NCI line as we think about it going forward.

Speaker Change: We've seen over the last couple of years.

Speaker Change: Hi, Manny it's a it's Trevor thanks for the question. So yes in terms of the ECL as you noted the ECL charge was larger this quarter than in Q4, but to your point the underlying investment grade credit experience remained actually quite benign and so just to remind people the ECL charges as broadly might've have to compile.

Speaker Change: In terms of a process. They are reviewed annually by both Steve and my teams, we do look at our own and benchmark experience. We look at market expectations. We also look at current transactions that we're actually underwriting including transactions, where expected yields are actually above our long term assumptions. So I think for 2025, we will.

Speaker Change: That's the first one is the impact of defaults.

Speaker Change: And writing changes and the second is this modeled impacts that reflects changes in the broader economic environment. Our ECL under <unk> nine is actually similar to the large Canadian banks and we include <unk>.

Speaker Change: Obviously pick up the the sort of recent weekend experience and will also be considering.

Speaker Change: Excuse me the outlook for potentially slower longer term growth, but we do still feel that the assumptions are appropriate. So while we do recognize the uncertainty that's out there.

Speaker Change: Both of those components in.

Speaker Change: In core earnings.

Speaker Change: I do remain confident in our strategy and in achieving our long term target for James.

Speaker Change: Specifically to the Q1 experienced underlying credit.

From writing changes in default was actually neutral, which is a pretty strong result.

Speaker Change: It's Steve I'll, just I'll just add that.

Speaker Change: While not giving a specific what would what would it take to change if we look back when we reduced the return assumptions back in 2017, one of the factors that drove that was interest rates have come down significantly that was impacting cap rates and expectations of future return on our real estate portfolio. So that was one example, obviously.

Speaker Change: With the ECL increase that you see largely model driven due to the volatility in investment markets in in Q1, So it really was basically.

Speaker Change: The broader economic environment as well as some changes to the scenario weights, we increase the weights on the on the adverse scenarios within our model.

Speaker Change: Interest rates are materially higher than at that point.

Speaker Change: In terms of the outlook I think Q2 has actually been quite volatile to date. So it's probably too early to say.

Speaker Change: Got it that's helpful. Thank you very much.

Speaker Change: Thank you.

Speaker Change: Where it's actually going to end up at the portfolio. I think is still in is in pretty good shape, it's 96% investment grade and so we do still feel that the $30 million to $50 million a quarter that we've I think guided to.

Many Twellman: Following question is from many Twellman from Scotiabank.

Speaker Change: Please go ahead.

Speaker Change: Hi, good morning.

Speaker Change: First of all I want to join my peers in congratulating you on wishing you the best.

Speaker Change: He is an appropriate run rate I think for normal conditions.

Speaker Change: And I wanted to ask about I.

Speaker Change: I wanted a little bit more detail on what drove the ECL line this quarter.

Speaker Change: Got it.

Speaker Change: Question on Asia.

Speaker Change: So just wanted to clarify in terms of your commentary.

Speaker Change: Is this specifically economic assumptions or scenarios just wanted to get more detail really in the spirit of.

Speaker Change:

Speaker Change: In terms of the impact.

Speaker Change: Trying to understand the evolution of this you can see online as we think about it going forward.

Speaker Change: On consumer behavior in the business.

Speaker Change: Wanted to see if are you seeing any signs of customer behavior changing or your commentary if I interpreted correctly, it's more about.

Speaker Change: Yeah.

Hi, Manny it's a it's trevor thanks for the questions here in terms of the ECL as you noted the ECL charge was larger this quarter than in Q4, but to your point the underlying investment grade credit experience remained actually quite benign and so just to remind people the ECL charges as broadly made up of two.

Speaker Change: You won't be surprised if you see some.

Speaker Change: If you will see in the future. Some some changes to behavior. So just wanted to check if there's anything now that you can point to where where tariffs are actually impacting anything in the business in terms of how consumers are behaving and consumer demand for more specifics.

Speaker Change: That's the first one is the impact of defaults and rating changes and the second is this modeled impact that reflects changes in the broader economic environment are you see Orlando I first non is actually similar to the large Canadian banks and we include.

Speaker Change: Hey, Manny this is Phil. Thank you. Thank you for that follow up question and you've interpreted my comments right that we're not seeing anything right now that suggests.

Speaker Change: Both of those components in a in core earnings so.

Speaker Change: Any notable change in consumer sentiment.

Speaker Change: Specifically to the Q1 experienced underlying credit.

Speaker Change: And of course, you you referenced tariffs, there's no direct impact of tariffs on our tariffs on our business our products to a large extent our souls with in each of our markets.

Speaker Change: From writing changes in default was actually neutral, which is you know pretty strong results.

Speaker Change: With the ECL increase that you see largely model driven due to the volatility in investment markets in in Q1, So it really was basically.

Speaker Change: But I think that there is inherently a risk that where there is uncertainty in the macro environment that could start to impact.

Speaker Change: You know the broader economic environment as well as some changes to the scenario weights, we increase the whites of the of the adverse scenarios within our model.

Speaker Change: Customer sentiment and cause customers to defer some decisions around.

Speaker Change: In terms of the outlook I think Q2 has actually been quite volatile up to date. So it's probably too early to say.

Speaker Change: Particularly long term financial product commitments, so we're not seeing it yet, but it's just on the radar or something that could could emerge in the quarters ahead. We will keep you posted on that and maybe just to the broader question of impact of tariffs beyond Asia sales you know I think what we've said many times in the past as the trade wars aren't going to be good for GDP inflation or unemployment.

Speaker Change: Where it's actually going to end up at the portfolio I think he's still in is in pretty good shape, it's 96% investment grade and so we we do still feel that the $30 million to $50 million a quarter that we've I think guided to it.

Speaker Change: Is an appropriate run rate I think for normal conditions.

Phil: And as Phil said, we haven't seen it yet impact sentiment, though it could.

Speaker Change: Got it and then second question on Asia.

Phil: And I think that that's largely a function of the fact that our products are typically needs not wants and I think that's true for not just us, but the entire industry, which is so far meant that we've been somewhat more immune to the impact of the uncertainty. However, you know who knows how that transpires over the course of the coming quarters. So I think it's important to be cautious there.

Speaker Change: So just wanted to clarify in terms of your commentary.

<unk>.

Speaker Change: The impact of tariffs.

Speaker Change: Hey, if you're in the business.

Speaker Change: Wanted to see if are you seeing any signs of customer behavior changing or your commentary if I interpreted correctly is more about.

Phil: I think the biggest impact as it relates to.

Phil: The uncertainty related to the trade war situation is that it will impact markets and we saw that obviously in Q1 and to some extent earlier in our in the period and.

Speaker Change: You won't be surprised if you see some if you will see in the future. Some some changes to behavior. So just wanted to check if there's anything now that you can point to where where tariffs are actually impacting anything in the business in terms of how consumers are behaving and when consumer demand more specific.

Phil: And we highlighted earlier that we've reduced our sensitivity to market movements quite significantly over the last decade, our interest in equity market sensitivity is a fraction of what it used to be and underlie for 17, the amortization of our earnings is really a function of our back book. So again I don't want to paint too Rosier picture, but there is certainly a lot of Brazil.

Speaker Change: Hey, Manny this is Phil. Thank you. Thank you for that follow up question and you've interpreted my comments right that we're not seeing anything right now that suggests a.

Phil: In our business that will put it put us in good stead.

Speaker Change: Any notable change in consumer sentiment.

Speaker Change: And of course, you you referenced tariffs, there's no direct impact of tariffs on our tariffs on our business our products to a large extent.

Speaker Change: Got it thank you so much.

Phil: Thank you.

Speaker Change: Following question is from Mario Mendonca from TD Securities. Please go ahead.

Speaker Change: Our souls with in each of our markets.

Speaker Change: But I think that there is inherently a risk that where there is uncertainty in the macro environment that could start to impact our <unk>.

Speaker Change: Good morning, So there've been a lot of I think.

Speaker Change: Good questions on Asia insurance sales and whatnot.

Mario Mendonca: And sorry, Mario we have a bit of a static here would you mind just we start again thank you.

Speaker Change: Customer sentiment and caused customers to defer some decisions around.

Speaker Change: So is that any better.

Speaker Change: Yes, yes. Thank you well yeah. So then some good questions on Asia insurance and momentum and the insurance sales what I want to get to is a more like a.

Speaker Change: Very practical question.

Speaker Change: The impact the obvious impact is that it slows down the additions to CSM and then if it were to persist for a very long time, eventually would slow down the amortization of that CSM into earnings.

Speaker Change: And as Phil said, we haven't seen it yet impact sentiment, though it could and I and I think that that's largely a function of the fact that our products are typically needs not wants and I think that's true for not just us, but the entire industry, which is so far meant that we've been somewhat more immune to the impact of the uncertainty. However, you know who knows how.

Speaker Change: That's the obvious but the part that I'm not clear on is if theres anything I'm not thinking about is there any other impact on.

Speaker Change: Asia and the Asia drivers of earnings like expense loads reserve adjustments, if sales were to decline and stay low for an extended period of time.

Speaker Change: Yeah.

Phil: Hey, Mario this is Phil Thanks for the question I'm happy to make a start and then Steve Finch can supplement from a technical perspective.

Speaker Change: How that transpires over the course of the coming quarters. So I think it's important to be cautious there I think the biggest impact as it relates to.

Phil: So if we were to see a sustained decline in sales over a long period of time.

Speaker Change: The uncertainty related to the trade war situation is that it will impact market. So we saw that obviously in Q1 and to some extent earlier and in our in the period and we highlighted earlier that we've reduced our sensitivity to market movements quite significantly over the last decade, our interest in equity market sensitivity is a fraction of what it used.

Phil: Naturally what would happen is you would see a <unk>.

Phil: That flow through to the CSM the CSM would then.

Phil: It would remain stable and then start to decline however that would require quite a significant decline in sales and for it to be sustained everything that I've seen to date doesn't suggest that that's on the horizon and when I look at the longer term drivers of demand across.

Speaker Change: B and underlie for 17.

Speaker Change: Amortization of our earnings is really a function of our back book. So again I don't want to paint too rosy picture, but there is certainly a lot of resiliency in our business that will put it put us in good stead.

Phil: The Asia, they remain very strong and it's partly the Democratic Mega trends, but also the growing relevance as soon as the key markets in Asia from a global perspective, Hong Kong and Singapore as emerging international wealth centers and the the <unk>.

Speaker Change: Got it thank you so much.

Speaker Change: Thank you.

Speaker Change: The following question is from Mario Mendonca from TD Securities. Please go ahead.

Mario Mendonca: Good morning, So there've been a lot of I think.

Mario Mendonca: Good questions on Asia insurance sales and momentum.

Speaker Change: Sorry, Mario we have a bit of a static here would you mind just a we start again thank you.

Phil: Increased interest in generational wealth transfer transfer given the wealth that's been generated in the region over the course of the past three to four decades.

Mario Mendonca: Or is that any better.

Speaker Change: Yes, yes, yes.

Phil: Steve do you have any comments from a technical perspective, yeah, I would just add that Mario you asked about sort of the how.

Speaker Change: Some good questions on Asia insurance and momentum and the insurance sales, what I want to get to is it more like.

Speaker Change: A very practical question.

Phil: How does it impact the view on assumptions were expense assumptions in particular and that tends to play out over a long period of time and we actually saw some of that during COVID-19 when sales across the industry, where we're impacted in different markets at different times, and we looked at that through the expense studies, but.

Speaker Change: The obvious but the part that I'm not clear on is if theres anything I'm not thinking about is there any other impact on.

Mark: Certainly the business takes actions if theres, a very prolonged period of contraction, which we're not expecting here, but that would play out over a long period of time, we'd reflect expense actions and future outlooks. So not I don't think youre missing anything from that perspective, Mark the only other thing I'd, just chime in and add to that.

Speaker Change: Asia and the Asia drivers of earnings like expense loads reserve adjustments, if sales were to decline and stay low for an extended period of time.

Speaker Change: Yeah.

Speaker Change: Hey, Mario this is Phil Thanks for the question I'm happy to make a start and then Steve Finch can supplement from a technical perspective.

Speaker Change: So if we were to see a sustained decline in sales over a long period of time.

Phil: Is that as we've thought about you know.

Mark: Trade rules and the tariff situation and how it could unfold from.

Speaker Change: Naturally what would happen is you'd see a.

Mark: From a risk management perspective, what we think is a source of strength for our franchises that we've got a very diverse business and where these trade will make create more pain is specifically one or two countries, who are maybe more impacted than the fact that we have such a diverse business globally. We think is a source of strength again, we don't want to paint too rosy picture, but that.

Speaker Change: That flow through to the.

Speaker Change: The CSM the CSM wood than.

Speaker Change: Would remain stable and then start to decline however that would require quite a significant decline in sales and for it to be sustained everything that I've seen to date doesn't suggest that that's on the horizon and when I look at the longer term drivers of demand across.

Mark: Is something just to keep in the back of the mine as well.

Mark: Okay.

Speaker Change: Maybe for Phil as the incoming CEO.

Speaker Change: Asia, They remain very strong and it's it's you know partly the Democratic Megatrends, but also the growing relevance of some of the key markets in Asia from a global perspective, Hong Kong and Singapore.

Speaker Change: I'm interested in your philosophical view on share buybacks in a period of stress and what I'm getting at this is.

Speaker Change: You know the banks you can see a change in their share buyback activity pretty abruptly when things turn sour.

Speaker Change: As emerging international wealth centers and the you know the increased interest in generational wealth transfer transfer given the wealth that's being generated in the region over the course of the past three to four decades.

Speaker Change: There were several that were very active in the first few months of their Q2, and then shut it down in April pretty hard when.

Speaker Change: <unk> came in they came in past.

Speaker Change: For you and for Manulife is is that is there a similar philosophy around buybacks that despite having plenty of excess capital you shut it down in periods of extreme volatility.

Speaker Change: Steve do you have any comments from a technical perspective, yeah, I just add that Mario you asked about sort of the.

Speaker Change: How does it impact the view on assumptions were expense assumptions in particular and that tends to play out over a long period of time and we actually saw some of that during COVID-19 when sales across the industry, where we're impacted in different markets at different times, and we looked at that through the expense studies, but.

Speaker Change: And perhaps it's a little unfair because you haven't really sat in the seat yet, but how do you look at that.

Mario Mendonca: Mario Thank you for the question and it's a very fair question and I.

Speaker Change: Firstly I'd just like to say, how excited I am to be.

Speaker Change: Taking on the role it's an incredible privilege that I take very seriously, but with specific reference to your buyback question I do note that we're in a very strong capital position Colin referenced earlier and it's not just that we're in a strong capital position now the capital generation from our businesses and that translating to remittance flows.

Speaker Change: Certainly the business takes actions if if theres, a very prolonged period of contraction, which were not expecting here, but that would play out over a long period of time, we'd reflect expense actions and future outlook. So im not I don't think youre missing anything from that perspective, Mark the only other thing I'd, just chime in and add to that.

Speaker Change: Or is also very strong and that continues to be the case. We also have a track record of delivering on share buyback programs, when we've announced them and so Colin referenced the 2025 program that we announced in February as I transition with ROI. There is absolutely no change to our intent with.

Speaker Change: Is that as we thought about.

Speaker Change: Trade rules and the tariff situation and how it could unfold.

Speaker Change: From a risk management perspective, you know what we think is a source of strength for our franchises that we've got a very good business and where these trade will make create more pain is specifically one or two countries, who are maybe more impacted than the fact that we have such a diverse business globally. We think is a source of strength again, we don't want to paint too rosy picture, but that.

Speaker Change: In respect to that program and of course as is always the case with share buybacks, we will be responsible we'll keep an eye on what's happening in the external environment.

Speaker Change: Is something just to keep in the back of the mine as well.

Speaker Change: But you know the.

Speaker Change: The strength of our capital position provides us to be resilient and actually sort of dollar cost average if you like consistency over time will serve us well with the with the share buyback with respect to decisions on future future share buyback programs. Those decisions will be made at the appropriate time taking into account the.

Speaker Change: Okay.

Speaker Change: For fell as the incoming CEO.

Speaker Change: I'm interested in your philosophical view on share buybacks in a period of stress and what I'm getting at this is.

Speaker Change: You know the banks you can see a change in their share buyback activity pretty abruptly when things turn sour.

Speaker Change: Facts and circumstances internally externally, including alternative opportunities to deploy capital and as Colin said, our number one capital deployment preferences.

Speaker Change: There were several that were very active in the first few months of their Q2, and then shut it down in April pretty hard when liberation.

Speaker Change: Liberation came they came in past.

Speaker Change: Investing in our business and it's the really the excess capital deployment that then gets.

Speaker Change: For you and for Manulife is is that is there a similar philosophy around buybacks that despite having plenty of excess capital you shut it down in periods of extreme volatility.

Speaker Change: Giving back to shareholders by way of buybacks.

Speaker Change: Okay and ROI is the outgoing CEO I have no question for you.

Speaker Change: So perhaps it's a little unfair because you haven't really sat in the seat yet, but how do you look at that.

Speaker Change: My best wishes to you in retirement and appreciate that Mario Thank you.

Mario Mendonca: Mario Thank you for the question and it's a very fair question.

Speaker Change: Thank you.

Speaker Change: <unk> question is from Nomura Prasad from Cormac. Please go ahead.

Speaker Change: Firstly I'd just like to say, how excited I am to be taking.

Nomura Prasad: Yes, Thanks for squeezing me in here and I'll start off by saying congratulations on your retirement.

Speaker Change: <unk> taken on the role it's an incredible privilege that I take very seriously, but with specific reference to your buyback question I do note that we're in a very strong capital position Colin referenced that earlier and it's not just that we're in a strong capital position now the capital generation from our businesses and that translates into remittance flows.

Nomura Prasad: And then maybe I'm reading too much into it here and there has been a lot of discussion about the outlook for Asia, but where are your comments.

Nomura Prasad: To remind us about the contribution of Canada and U S earnings sounds like you are setting us up for a potential weakness in Asia. Obviously, that's not the way that this conference call has has has gone, but tell me why and perhaps I'm reading too much into it but maybe there is something there like maybe the singling out.

Speaker Change: <unk> is also very strong and that continues to be the case. We also have a track record of delivering on share buyback programs, when we've announced them and so Colin referenced the 2025 program that we announced in February as well.

Speaker Change: The transition with ROI, there is absolutely no change to our intent with respect to that program and of course as is always the case with share buybacks. We will be responsible we'll keep an eye on what's happening in the external environment.

Nomura Prasad: The tariffs on China, and the impact that could have on the broader Asia business is why youre reminding us about the contributions.

Nomura Prasad: Canada and the U S you're not seeing it now clearly based on the answers on this call, but perhaps preparing us there could be something in the coming quarters because of the interconnectedness unimportance of China to these other Asian geographies I would say that that makes sense, yeah, well, thanks, Lamar and firstly. Thank you for your best wishes I appreciate that and appreciate engaging with.

Speaker Change: But the strength of our capital position provides us to be resilient and actually sort of dollar cost average if you like consistency over time will serve us well with the with the share buyback with respect to decisions on future future share buyback programs those decisions will be made at the appropriate time taking into.

Nomura Prasad: You and your fellow analysts and obviously the shareholders as well over the last 10 years, it's been an absolute pleasure.

Speaker Change: Account, the facts and circumstances internally externally, including alternative opportunities to deploy capital and as Colin said, our number one capital deployment preferences.

Nomura Prasad: I would say you misread maybe my my comments.

Nomura Prasad: You've interpreted a signaling for maybe weakness in Asia are you know the thing that I really want to emphasize is that one of the greatest strengths of our franchises that we have a very diverse business and I think that makes us more resilient to be perfectly honest. If you think about the last decade, we've seen all boats rising in the value of a diversified business was actually much less.

Speaker Change: Vesting in our business and it's the really the excess capital deployment that then gets a giving back to shareholders by way of buybacks.

Speaker Change: Okay and ROI is the outgoing CEO I have no question for you just my best wishes to you in retirement.

Nomura Prasad: Yes, but as we look at the next chapter with uncertainty both macro economically and geopolitically, having a diverse business that is not reliant on any one particular market I think is a massive source of strength that is true for our insurance business, but it's equally true for our global <unk> business, which again has demonstrated phenomenon resilience and we've talked about the fact that we've had 14 years of.

Mario Mendonca: I appreciate that Mario Thank you.

Speaker Change: Thank you.

Speaker Change: Following question is from Nomura Prasad from Cormack. Please go ahead.

Speaker Change: Yes, Thanks for squeezing me in here and I'll start off by saying, we're all yeah. Congratulations on your retirement.

Speaker Change: Yeah.

Nomura Prasad: Positive net flows were again, others have seen massive outflows. So the message that I was certainly trying to deliver.

Speaker Change: And then maybe I'm reading too much into it here and Theres been a lot of discussion about the outlook for Asia, but where.

Speaker Change: So your comments are.

Nomura Prasad: Is that we will see challenges from time to time in one market or another it could relate to trade and tariffs so quite frankly could relate to other factors and having a business that is as diverse as ours I think really puts us in a position of strength and resilience that will allow us to navigate the challenges we saw that in 'twenty four we had as we've described.

Speaker Change: To remind us about the contribution of Canada and U S to earnings it sounds like you are setting us up for a potential weakness in Asia. Obviously, that's not the way that this conference call has has has gone, but tell me why I'm, perhaps I'm reading too much into it but maybe there is something there like maybe the thing.

Nomura Prasad: The banner year in 'twenty, four and that was again, a year, where there was lots of uncertainty and volatility, but I think we are we demonstrated the resilience of our franchise, but feel you should probably comment a little bit more specifically as it relates to the outlook for <unk> for Asia.

Speaker Change: Going out of tariffs on China, and the impact that could have on the broader Asia businesses, why you're reminding us about the contributions of.

Speaker Change: Canada and the U S you're not seeing it now quarterly based on the answers on this call, but perhaps preparing us that there could be something in the coming quarters because of the interconnectedness and importance of China to these other Asian geographies.

Nomura Prasad: Thanks, Roy agree with everything you said and when I look at the first quarter earnings run rate for Asia, I think it's a good indication of what to expect in coming quarters of course, plus or minus the impacts of ECL and routine policyholder experience variations from quarter to quarter and that stability and earnings as one of the advantages of <unk> 17.

Speaker Change: That makes sense.

Speaker Change: Yeah, well, thanks, Lamar and firstly, thank you for your best wishes I appreciate that and appreciate engaging with you and your fellow analysts and obviously the shareholders as well over the last 10 years, it's been an absolute pleasure.

Nomura Prasad: So I'm not too worried about the impact of a short term variations in sales volumes on earnings outcomes and I think we had touched on that before La you did you did reference.

Speaker Change: I would say you misread maybe my my comments.

Speaker Change: You've interpreted a signaling for maybe weakness in Asia.

Speaker Change: The thing that I really want to emphasize is that one of the greatest strengths of our franchisees that we have a very diverse business and I think that makes us more resilient to be perfectly honest. If you think about the last decade, we've seen all boats rising in the value of a diversified business was actually much less but as we look at the next chapter with uncertainty both macroeconomic.

Nomura Prasad: China mainland China, and your comments a few moments ago and now I will highlight that we've operated in the market for 125 years.

Nomura Prasad: It's over that time, we've seen an awful lot happen, including.

Nomura Prasad: In recent memory as well introduction of tariffs increases in tariffs changes in tariffs and what we've seen in that environment has continued sustained demand, reflecting the sort of demographic drivers that we've talked about on so many occasions. So I continue to remain optimistic about our about our.

Speaker Change: And Geo politically having a diverse business that is not reliant on any one particular market I think has a massive source of strength that is true for our insurance business, but it's equally true for our global land business, which again has demonstrated phenomena resilience and we've talked about the fact that we've had 14 years of positive net flows were again, others have seen massive outflows. So.

Nomura Prasad: Opportunities in Asia, and if there are variations over the short term and sales volumes earnings will be stable.

Speaker Change: The message that I was suddenly trying to deliver.

Nomura Prasad: I appreciate it thank you.

Speaker Change: Is that we will see challenges from time to time in one market or another it could relate to trade and tariffs so quite frankly, it could relate to other factors and having a business that is as diverse as al I think really puts us in a position of strength and resilience that will allow us to navigate the challenges we saw that in 'twenty four we had as we've.

Nomura Prasad: Thank you.

Speaker Change: We have no further questions registered at this time I would now like to turn the meeting back over to Mr. Cole.

Speaker Change: Thank you operator will be available other call. If there are any follow up questions have a good day everyone.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Bribed a banner year in 'twenty, four and that was again a year, where there was lots of uncertainty and volatility, but I think we are we demonstrated the resilience of our franchise, but feel you should probably come in a little bit more specifically as it relates to the outlook for operational yes.

Speaker Change: France has now ended please disconnect your lines at this time and we thank you for your participation.

Speaker Change: Yeah. Thanks, Thanks, Roy agree with everything you said and when I look at the first quarter earnings run rate for Asia, I think it's a good indication of what to expect in <unk>.

Speaker Change: Coming quarters of course, plus or minus the impact of ECL and routine policyholder experience variations from quarter to quarter and Thats ability in earnings as one of the advantages of ire for 17, so I'm not too worried about the impact of a short term variations in sales volumes on the earnings outcomes.

Speaker Change: I think we had touched on that before.

Speaker Change: You did reference.

Speaker Change: China mainland China, and your comments a few moments ago and now I will highlight that we've operated in the market for 125 years.

Speaker Change: It's over that time, we've seen an awful lot happen, including.

Speaker Change: In recent memory as well our introduction of tariffs increases in tariffs changes in tariffs and what we've seen in that environment has continued sustained demand, reflecting the sort of demographic drivers that we've talked about on so many occasions. So I continue to remain opt.

Speaker Change: Optimistic about about our opportunities in Asia, and if there are variations over the short term and sales volumes earnings will be stable.

Speaker Change: I appreciate it thank you.

Speaker Change: Thank you.

Speaker Change: We have no further questions, but just sort of at this time I would now like to turn the meeting back over to Mr. Cole.

Speaker Change: Thank you operator will be available I would call. If there are any follow up questions have a good day everyone.

Speaker Change: Thank you.

Speaker Change: Conference has now ended.

Speaker Change: Please disconnect your lines at this time and we.

Speaker Change: Thank you for your participation.

Speaker Change: This conference is no longer being recorded so it closer to home for me. Please.

Speaker Change: Okay.

Q1 2025 Manulife Financial Corp Earnings Call

Request a DemoDemo

MFC

Manulife Financial

Earnings