Mr. Roy Gori reports

MANULIFE ANNOUNCES LARGEST CANADIAN UNIVERSAL LIFE REINSURANCE TRANSACTION

Manulife Financial Corp. has agreed to reinsure $5.8-billion of reserves of low-ROE (return on equity) Canadian Universal Life block to RGA Life Reinsurance Company of Canada.

Key highlights of the transaction:

• Reinsures $5.8-billion of reserves of low-ROE Canadian Universal Life block;
• Represents largest Universal Life reinsurance transaction in Canada;
• Attractive earnings multiple of 16.2 times and book value multiple of 1.0 times;
• Releases $800-million of capital, which Manulife intends to return to shareholders via share buybacks, resulting in core ROE and core EPS (earnings per share) accretion of 0.14 pps and one cent, respectively; as well as ROE and EPS accretion of 0.16 pps and two cents, respectively;
• Expect to dispose $600-million of alternative long-duration assets (ALDA).

"This transaction is the largest Universal Life reinsurance transaction in the Canadian insurance industry and represents another milestone in our journey to transform our portfolio to higher-ROE and lower-risk businesses. This deal, valued at 16.2 times earnings and priced at book value, further demonstrates our focus and ability to execute on attractive terms and our commitment to unlocking shareholder value. With this transaction, we will have released $11-billion of capital since 2018 and improved core ROE by approximately 5 per cent since 2017. We remain highly focused on exploring additional organic and inorganic actions to deliver value to shareholders," commented Roy Gori, Manulife president and chief executive officer.

"We are pleased to partner with RGA, a highly reputable and experienced counterparty. Manulife has been committed to improving the profitability and profile of our inforce business. This transaction will reduce our Canadian Universal Life reserves by $5.8-billion, and we will dispose $0.6-billion of ALDA backing this block, further reducing our sensitivities to markets," commented Marc Costantini, Manulife global head of inforce management.

Transaction summary

Manulife will reinsure $5.8-billion of reserves of low-ROE Canadian Universal Life block to RGA at 16.2 times earnings multiple and approximately 1.0 times book value multiple. In connection with the transaction, Manulife expects to dispose $600-million of ALDA backing this block.

Manulife will continue to administer all policies to maintain a seamless customer service experience, while reinsuring a 100-per-cent quota share on the reserves ceded, backed by significant structural protections including posted collateral. The transaction is not subject to closing conditions and is expected to close early in the second quarter of 2024.

RGA is a highly rated global reinsurance company and is an existing reinsurance partner of Manulife. This transaction marks the third large inforce reinsurance transaction between Manulife and RGA.

Delivering value for shareholders

The transaction is priced at book value and is expected to result in an annual reduction to core earnings of approximately $50-million and net income attributed to shareholders of approximately $40-million and, with a capital release of $800-million, represents an attractive deal multiple of 16.2 times core earnings. The transaction is expected to be 0.14 pps accretive to core ROE and one cent accretive to core EPS, including the impact of share buybacks.

Normal course issuer bid (NCIB)

Manulife has received approval from the Office of the Superintendent of Financial Institutions (OSFI) to amend its existing NCIB to increase the number of common shares that it may repurchase for cancellation, from up to 50 million common shares (approximately 2.8 per cent of shares outstanding) to up to 90 million common shares (approximately 5 per cent of shares outstanding). The amended NCIB remains subject to the approval of the Toronto Stock Exchange. As at Feb. 29, 2024, Manulife had 1,805,798,064 common shares issued and outstanding. Since the commencement of its current NCIB on Feb. 23, 2024, to March 21, 2024, Manulife has completed the repurchase for cancellation of 4.96 million common shares at a volume-weighted average repurchase price per common share of $32.53. All repurchases were made through the facilities of the TSX.

Manulife's current NCIB commenced on Feb. 23, 2024, and will continue until Feb. 22, 2025, when the NCIB expires, or such earlier date as Manulife completes its purchases. Purchases under the NCIB may be made through the facilities of the TSX, the New York Stock Exchange, other designated exchanges and alternative trading systems in Canada and the United States at market prices prevailing at the time of purchase or such other price as may be permitted. Manulife will file an amended notice of intention to make an NCIB with the TSX. The amended bid will commence after the TSX has accepted the amended notice of intention, and continue until up to Feb. 22, 2025. All common shares acquired by Manulife under the NCIB will be cancelled. Repurchases will be subject to compliance with applicable Canadian securities laws and United States federal securities laws.

About Manulife Financial Corp.

Manulife Financial is a leading international financial services provider, helping people make their decisions easier and lives better. With its global headquarters in Toronto, Canada, the company provides financial advice and insurance, operating as Manulife across Canada, Asia and Europe, and primarily as John Hancock in the United States. Through Manulife Investment Management, the global brand for its global wealth and asset management segment, Manulife serves individuals, institutions and retirement plan members worldwide. At the end of 2023, Manulife had more than 38,000 employees, over 98,000 agents and thousands of distribution partners, serving over 35 million customers.

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