Mr. Roy Gori reports

MANULIFE REPORTS 1Q23 NET INCOME ATTRIBUTED TO SHAREHOLDERS OF $1.4 BILLION, CORE EARNINGS OF $1.5 BILLION, STRONG CORE EPS GROWTH AND CORE ROE, AND GLOBAL WEALTH AND ASSET MANAGEMENT NET INFLOWS OF $4.4 BILLION

Today, Manulife Financial Corp. released its first quarter of 2023 (Q1 2023) results. This marks the first quarter of reporting under IFRS 17 and IFRS 9 (international financial reporting standards), and the transition impacts on the company's results are consistent with the guidance that Manulife provided previously. Key highlights of Q1 2023 include:

• Net income attributed to shareholders of $1.4-billion in Q1 2023, up $100-million compared with transitional net income attributed to shareholders for the first quarter of 2022 (Q1 2022) and up $2.6-billion compared with Q1 2022 net income attributed to shareholders;
• Core earnings of $1.5-billion in Q1 2023, up 6 per cent on a constant exchange rate basis from Q1 2022;
• Core earnings per share (EPS) of 79 cents in Q1 2023, up 11 per cent compared with Q1 2022, and diluted EPS of 73 cents in Q1 2023, up 4 per cent compared with transitional EPS of 66 cents in Q1 2022 and up $1.39 compared with EPS of negative 66 cents in Q1 2022;
• Core return on equity (ROE) of 14.8 per cent and ROE of 13.6 per cent in Q1 2023;
• Annualized premium equivalent (APE) sales of $1.6-billion in Q1 2023, down 3 per cent from Q1 2022;
• Net book value (NBV) of $509-million in Q1 2023, down 5 per cent from Q1 2022;
• New business contractual service margin (CSM) of $442-million in Q1 2023, down 13 per cent from Q1 2022;
• CSM balance net of NCI of $17.5-billion and posttax CSM net of NCI of $14.9-billion as at March 31, 2023;
• Global wealth and asset management (WAM) net inflows of $4.4-billion in Q1 2023, compared with net inflows of $6.8-billion in Q1 2022;
• Life insurance capital adequacy test (LICAT) ratio of 138 per cent;
• Purchased for cancellation 0.8 per cent of common shares outstanding or approximately 15.6 million common shares for $400-million in Q1 2023;
• Adjusted book value per common share of $30.04 as of March 31, 2023, an increase of $2.51 from March 31, 2022, and book value per common share of $22.01 as at March 31, 2023, an increase of $1.90 from March 31, 2022;
• Embedded value of $63.9-billion or $34.29 per common share, as of Dec. 31, 2022, compared with $64.8-billion or $33.35 per common share as of Dec. 31, 2021.

"We reported strong operating results in the first quarter of 2023 despite continued market volatility, delivering core earnings of $1.5-billion, net income attributed to shareholders of $1.4-billion and core return on equity of 14.8 per cent," said Roy Gori, Manulife president and chief executive officer. "We delivered core EPS growth of 11 per cent, reflecting strong core earnings and the impact of our share buyback actions over the past year. The strength and global diversity of our franchise was again demonstrated this quarter with year-over-year core earnings growth in our North America insurance businesses. In Asia, we are encouraged by the sales momentum building progressively through the first quarter as the region continues to rebound from the global pandemic, which contributed to double-digit APE sales growth in Hong Kong compared with Q1 2022. Global WAM generated net inflows of $4.4-billion with positive contributions from all business lines and geographies."

"As we report our first quarter of financial results under IFRS 17 and IFRS 9, I am pleased to confirm that the transition impacts are consistent with the guidance we provided previously," said Phil Witherington, chief financial officer. "Adjusted book value per common share, which reflects the intrinsic value of our insurance businesses, demonstrated stable growth throughout 2022 and increased 9 per cent in Q1 2023 compared with the first quarter of 2022. Our capital position remains strong with a LICAT ratio of 138 per cent. We continue to execute on our share buyback program and repurchased 0.8 per cent of our outstanding common shares for $400-million in Q1 2023. An important metric under IFRS 17 is the contractual service margin or CSM. For the first quarter, we reported $14.9-billion of posttax CSM, reflecting $400-million of CSM generated from new business in the quarter. While the pace of growth was impacted by lower sales volumes in an operating environment that continued to be challenging, we continue to view our target of growing CSM by 8 to 10 per cent per year to be appropriate. I am optimistic about the momentum we are seeing in our Asia business and am confident that we are well positioned for the future as insurance markets across Asia continue to grow."

"Our financial strength, robust risk management and diversified business portfolio continue to drive the performance for our global franchise," added Mr. Gori.

Business highlights:

In Asia, Manulife continued to leverage its health and wellness platform, ManulifeMove, to drive incremental sales, with over 50 per cent of the company's in-force eligible customers having activated the ManulifeMove app, of which 38 per cent have made a subsequent insurance purchase. In Canada, Manulife partnered with Cleveland Clinic Canada using its global health care expertise to enhance product offerings and services to Manulife's five million group benefits customers by providing industry research, thought leadership and education materials. In the United States, Manulife continued to innovate its customer wellness offerings by expanding access to Grail's Galleri multicancer early detection test to all eligible life insurance customers who have registered with the John Hancock Vitality Plus program. This expanded access comes after a successful initial pilot when Manulife became the first life insurance carrier to make the test available in September, 2022. In Global WAM, Manulife's Hong Kong retirement business won a total of 19 awards in The 2023 MPF Awards organized by MPF Ratings, including the MPF Gold Rating, Best Employer Experience, Environmentally Responsible, People's Choice and 15 Consistent Performer awards. Among these, Manulife has been voted the People's Choice for five consecutive years.

In addition, Manulife continued to make progress on its digital journey in Q1 2023. In Asia, Manulife further accelerated user adoption of its customer website in Vietnam by implementing additional servicing features and user interface improvements to enhance the customer experience, with the proportion of active users increasing 29 percentage points from Q1 2022 to 37 per cent at the end of Q1 2023, materially contributing to an increase of 10 percentage points in servicing straight-through-processing for the segment. In Canada, Manulife enhanced its Manulife Vitality program with continued expansion of compatible devices and apps, enabling members to now earn points for activities recorded on additional wearable devices and mobile applications. In the U.S., Manulife optimized the customer registration experience across its life and long-term care insurance customer websites at the end of 2022, resulting in a 35-per-cent increase in on-line registrations in Q1 2023 compared with Q1 2022, contributing to a 13-per-cent improvement in unique website traffic. In Global WAM, Manulife announced a strategic agreement with Fidelity Clearing Canada, which will provide access to a leading advisory technology platform for Manulife's Canadian retail wealth channel. The agreement will bring a robust digital experience and powerful technology directly to advisers and clients as Manulife continues to enhance and broaden its wealth planning and advice business.

Profitability

Manulife reported net income attributed to shareholders of $1.4-billion in Q1 2023, in line with Q1 2022 transitional net income attributed to shareholders and $2.6-billion higher than Q1 2022 net loss attributed to shareholders.

Net income attributed to shareholders in Q1 2023 was in line with Q1 2022 transitional net income attributed to shareholders, reflecting higher core earnings, largely offset by charges from market experience (compared with a small gain in the prior year on a transitional basis). The net charge from market experience in Q1 2023 was primarily driven by lower-than-expected returns (including fair value changes) on alternative long-duration assets (ALDA) related to real estate and private equity, and a net realized loss from the sale of fixed income assets that are classified as fair value through other comprehensive income (FVOCI), partially offset by higher-than-expected returns on public equity, favourable foreign exchange impacts, and a modest net gain from derivatives and hedge ineffectiveness. Net income attributed to shareholders in Q1 2023 increased by $2.6-billion compared with Q1 2022, driven by factors mentioned above and $2.5-billion of transitional impacts due to the application of IFRS 9 hedge accounting and ECL principles (transitional impacts are geography-related and do not impact total shareholders' equity as the corresponding offset is in other comprehensive income).

Manulife delivered core earnings of $1.5-billion in Q1 2023, an increase of 6 per cent compared with Q1 2022.

The increase in core earnings compared with Q1 2022 was driven by the non-recurrence of excess mortality claims related to COVID-19 in Q1 2022 in the U.S. life insurance business, an increase in expected investment earnings related to business growth and higher reinvestment yields, higher returns on surplus assets net of higher cost of debt financing and lower new insurance business losses related to onerous contracts driven by pricing actions. These were partially offset by an increase in the ECL provision primarily related to commercial mortgages, lower CSM recognized into earnings for service provided reflecting slower amortization of CSM for certain VFA contracts and the impact of the U.S. variable annuity reinsurance transactions in 2022, and lower net fee income from lower average AUMA and higher general expenses in global WAM.

Business performance

Annualized premium equivalent (APE) sales were $1.6-billion in Q1 2023, a decrease of 3 per cent compared with Q1 2022.

In Asia, APE sales increased 5 per cent, driven by growth in Hong Kong. APE sales in Japan and Asia other were in line with Q1 2022. In Hong Kong, APE sales increased 26 per cent, reflecting strong growth in Manulife's broker and agency channels, primarily driven by a return of demand from mainland Chinese visitors (MCV) customers following the reopening of the border between Hong Kong and mainland China. In Japan, APE sales were in line with Q1 2022, as higher other wealth sales were offset by lower sales in individual protection and corporate-owned life insurance products. Asia other APE sales were in line with Q1 2022, as lower agency sales in Vietnam and bancassurance sales in Singapore were offset by higher sales in mainland China and in Manulife's international high-net-worth business. In Canada, APE sales decreased 19 per cent, primarily due to the impact of market volatility on the demand for segregated fund products and variability in the large-case group insurance market, partially offset by higher participating life insurance sales. In the U.S., APE sales decreased 22 per cent due to the adverse impact of higher short-term interest rates and equity market volatility on consumer sentiment. APE sales of products with the John Hancock Vitality Plus feature in Q1 2023 increased to 74 per cent of overall U.S. sales compared with 70 per cent in Q1 2022.

New business value (NBV) was $509-million in Q1 2023, a decrease of 5 per cent compared with Q1 2022.

In Asia, NBV decreased 4 per cent from Q1 2022, driven by less favourable product mix partially offset by higher sales volumes. In Canada, NBV decreased 12 per cent driven by lower volumes in annuities and group insurance, partially offset by higher margins in individual insurance and annuities. In the U.S., NBV increased 6 per cent due to pricing actions and favourable mix, partially offset by lower sales volumes.

New business CSM was $442-million in Q1 2023, a decrease of 13 per cent compared with Q1 2022.

In Asia, new business CSM decreased 9 per cent from Q1 2022 driven, by less favourable product mix, partially offset by higher sales volumes. In Canada, new business CSM decreased 25 per cent due to lower segregated fund sales volumes and less favourable product mix in individual insurance. Under IFRS 17, the majority of group insurance and affinity products are classified as premium allocation approach (PAA) and do not generate CSM. In the U.S., new business CSM decreased 20 per cent consistent with lower sales volumes.

CSM net of NCI was $17,467-million as at March 31, 2023, an increase of $184-million compared with Dec. 31, 2022.

The $184-million increase in CSM net of NCI reflects an increase in total CSM movement of $223-million, net of an increase in NCI of $39-million. Organic CSM movement was an increase of $166-million in Q1 2023, driven by the impact of new insurance business and expected movements related to finance income or expenses, partially offset by amounts recognized for service provided in current period earnings and a loss from insurance experience. Inorganic CSM movement was an increase of $57-million, driven by the impact of movement in exchange rates and reinsurance related gains. Posttax CSM net of NCI was $14,850-million as at March 31, 2023.

Manulife reported global wealth and asset management net inflows of $4.4-billion in Q1 2023, compared with Q1 2022 net inflows of $6.8-billion.

Net inflows in retirement were $1.2-billion in Q1 2023, compared with net inflows of $2.0-billion in Q1 2022, driven by higher plan redemptions and lower new pension plan sales, partially offset by growth in member contributions and lower member withdrawals. Net inflows in retail were $800-million in Q1 2023, compared with net inflows of $4.0-billion in Q1 2022, reflecting lower investor demand amid continued market volatility and higher interest rates. Net inflows in institutional asset management were $2.5-billion in Q1 2023, compared with net inflows of $900-million in Q1 2022, driven by higher gross flows and new product launches in mainland China, partially offset by higher redemptions in mainland China.

Quarterly earnings results conference call

Manulife will host a first quarter 2023 earnings results conference call at 8 a.m. ET on May 11, 2023. As this will mark the first quarter of reporting under the new accounting standards, Manulife has extended the length of the call to two hours. For local and international locations, please call 416-340-2217 or toll-free 1-800-806-5484 in North America (passcode 7425868 followed by the pound key). Please call in 15 minutes before the call starts. You will be required to provide your name and organization to the operator. A replay of this call will be available until Aug. 5, 2023, by calling 905-694-9451 or 1-800-408-3053 (passcode 7830868 followed by the pound key).

The conference call will also be webcast through Manulife's website at 8 a.m. ET on May 11, 2023. An archived version of the webcast will be available on the website following the call.

The first quarter 2023 statistical information package is also available on the Manulife website.

Earnings

The attached table presents net income attributed to shareholders for Q1 2023 and transitional net income attributed to shareholders for Q1 2022 and Q4 2022, consisting of core earnings and details of the items excluded from core earnings.

We seek Safe Harbor.