Mr. Roy Gori reports
MANULIFE REPORTS 2020 NET INCOME OF $5.9 BILLION, CORE EARNINGS OF $5.5 BILLION, APE SALES OF $5.6 BILLION, AND STRONG GLOBAL WAM NET INFLOWS OF $8.9 BILLION
Manulife Financial Corp. has released its 2020 and fourth quarter of 2020 results. Key highlights include:
Net income attributed to shareholders of $5.9-billion in 2020, up $300-million from 2019, and $1.8-billion in fourth quarter of 2020, up $600-million from the fourth quarter of 2019;
Core earnings (1) of $5.5-billion in 2020, down $500-million from 2019, and $1.5-billion in fourth quarter 2020, in line with fourth quarter 2019;
Strong LICAT (life insurance capital adequacy test) ratio (2) of 149 per cent;
Core ROE (core return on common shareholders' equity) (1) of 10.9 per cent in 2020 and 11.6 per cent in fourth quarter 2020, and ROE of 11.6 per cent in 2020 and 14.1 per cent in fourth quarter 2020;
NBV (new business value) (1) of $1.8-billion in 2020, down 13 per cent (3) from 2019, and $489-million in fourth quarter 2020, down 7 per cent from fourth quarter 2019;
APE (annualized premium equivalent) sales (1) of $5.6-billion in 2020, down 8 per cent from 2019, and $1.4-billion in fourth quarter 2020, down 5 per cent from fourth quarter 2019;
Global WAM net inflows (1) of $8.9-billion in 2020 compared with net outflows of $900-million in 2019 and net inflows of $2.8-billion in fourth quarter 2020 compared with net inflows of $4.9-billion in fourth quarter 2019;
As of Dec. 31, 2020, delivered a cumulative reduction in pretax annual general expenses of $1.0-billion, achieving medium-term target two years ahead of schedule.
"Two thousand twenty was an incredibly challenging year in so many ways. Countless people were affected by illness and loss, as well as isolation from loved ones, putting stress on their physical and mental health, and creating anxiety for their financial well-being. We want to thank all of the front line workers globally for their incredible efforts through this unprecedented time," said Manulife president and chief executive officer Roy Gori.
"I want to also take this opportunity to thank every colleague, along with our agents and business partners, for all they have done to make decisions easier and lives better for our customers over the past year. As the year ahead presents continued challenges, I am enormously grateful for their passion for serving our customers' evolving needs while most are persevering through the personal and professional challenges of doing so while working from home," Mr. Gori continued.
"Navigating the challenges presented by the pandemic, we achieved very solid operating results in 2020, illustrating the global strength and diversity of our business, our strong digital capabilities, and the tremendous resilience of our team. Core earnings increased year over year across three of our four operating segments, global WAM delivered net inflows of $8.9-billion and our APE sales were down just 8 per cent compared to 2019," added Mr. Gori.
(1) Core earnings, core return on common shareholders' equity, new business value, annualized premium equivalent sales and net flows are non-generally accepted accounting principle measures. See "Performance and Non-GAAP Measures" in the company's 2020 management's discussion and analysis for additional information.
(2) Life insurance capital adequacy test ratio of The Manufacturers Life Insurance Company (MLI).
(3) All percentage growth/declines in financial metrics in this news release are reported on a constant exchange rate basis. Constant exchange rate basis excludes the impact of currency fluctuations and is a non-GAAP measure. See "Performance and Non-GAAP Measures" in the company's 2020 MD&A for additional information.
"We continued to execute against our strategic priorities (1) throughout 2020, including deploying capital to expand our distribution footprint in Asia. Our insurance agency force grew by 21 per cent and now exceeds 115,000 agents, and we extended our exclusive partnership with Bank Danamon in Indonesia and announced a new exclusive partnership with VietinBank, one of the largest banks in Vietnam," Mr. Gori noted.
Phil Witherington, chief financial officer, offered: "We continued to make significant progress on improving our expense efficiency in 2020. Core general expenses (2) declined by 3 per cent compared with the prior year, and we have now delivered $1-billion of sustainable expense efficiencies, achieving our 2022 target two years ahead of schedule. In addition, we are on track to achieve our target expense efficiency ratio of less than 50 per cent by 2022 (3), despite headwinds related to the global pandemic.
"Our LICAT ratio of 149 per cent is strong, and we continue to maintain substantial financial flexibility. Reflecting the challenging operating environment and our robust capital position, we delivered core ROE of 10.9 per cent in 2020. Although the result fell short of our medium-term target of 13 per cent plus, we view this as a good outcome given the circumstances," added Mr. Witherington.
"The events of the past year have reinforced the value of insurance, well-being, retirement and wealth management programs, and the products and services we provide," said Mr. Gori. "And I am optimistic about the tremendous opportunity we have in this year to help people live better, happier and healthier lives."
2020 business highlights
The company made further progress on portfolio optimization in 2020 through a variety of initiatives. It completed an agreement to reinsure its legacy U.S. bank-owned life insurance business, experienced continued success from its annuity guaranteed minimum withdrawal benefit offer program, and recognized impacts from the sale of alternative long-duration assets enabled by reinsurance of individual and group payout annuity policies. In total, portfolio optimization initiatives generated additional capital benefits of $780-million.
The company made significant strategic investments in its technology infrastructure in recent years. As the COVID-19 pandemic took hold globally, it leveraged these investments to provide quality service to its existing customers and to those seeking to purchase its products; and 97 per cent (4) of its product shelf in Asia and Canada, 90 per cent (5) of its global WAM product shelf, and 80 per cent (4) of its U.S. product shelf are accessible to customers through virtual face-to-face (6) methods. In addition, these investments enabled a seamless transition to remote work arrangements for employees, 95 per cent of whom have worked remotely for prolonged periods during the pandemic.
In Asia, the company increased the number of insurance agents by 21 per cent to over 115,000, announced an exclusive bancassurance partnership with VietinBank (7) and reached an early extension of its bancassurance agreement with PT Bank Danamon Indonesia to 2036. In addition, in fourth quarter 2020, the company received approval from the China Banking and Insurance Regulatory Commission to begin preparation work to establish a new branch in the Shaanxi province. In Canada, it introduced health by design to its group benefit product offering, a pro-active approach using the latest science, technology and predictive analytics to help members with their unique health journey. In the United States, the company continued to see growth in its Vitality-for-all strategy through Vitality Go and Vitality Plus, extending Vitality benefits to all insurance customers, and it announced a strategic collaboration with Amazon, which adds the Halo wellness band to the devices supported by John Hancock's Vitality program. In its global wealth and asset management business, it acquired a minority stake in Albamen Capital Partners, a private equity infrastructure investment manager with a focus on renewable energy, data centres and other power-intensive infrastructure assets in mainland China, and completed the formation of its retail and institutional joint venture with Mahindra Finance in India.
(1) The company's strategic priorities include portfolio optimization, expense efficiency, accelerate growth, digital customer leader and high performing team. For more information, please refer to "Strategic priorities progress update" in the company's 2020 MD&A.
(2) This item is a non-generally accepted accounting principle measure. See "Performance and Non-GAAP Measures" in the company's 2020 MD&A for additional information.
(3) Note the forward-looking statement.
(4) Represents the percentage of 2019 APE sales that are currently available for sale through virtual face-to-face methods (applies to Asia, Canada and U.S.).
(5) Reflects global WAM's AUMA available to new and existing retail and retirement customers.
(6) Virtual face to face includes digital, as well as non-digital, solutions.
(7) Pending regulatory approval.
($ millions, unless otherwise stated)
Quarterly results Full-year results
Q4 2020 Q4 2019 2020 2019
Net income attributed to shareholders $1,780 $1,228 $5,871 $5,602
Core earnings (1) 1,474 1,477 5,516 6,004
Diluted earnings per common share ($) 0.89 0.61 2.93 2.77
Diluted core earnings per common share ($) (1) 0.74 0.73 2.75 2.97
Return on common shareholders' equity (ROE) 14.1% 10.3% 11.6% 12.2%
Core ROE (1) 11.6% 12.5% 10.9% 13.1%
Expense efficiency ratio (1) 52.7% 54.2% 52.9% 52.0%
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Asian new business value 368 390 1,387 1,595
Canadian new business value 65 59 255 237
U.S. new business value 56 77 160 218
Total new business value (1) 489 526 1,802 2,050
Asian APE sales 996 975 3,869 4,278
Canadian APE sales 245 271 1,148 1,057
U.S. APE sales 178 249 609 702
Total APE sales (1) 1,419 1,495 5,626 6,037
Global wealth and asset management net flows ($ billions) (1) 2.8 4.9 8.9 (0.9)
Global wealth and asset management gross flows ($ billions) (1) 31.5 32.9 130.2 114.2
Global wealth and asset management assets under management
and administration ($ billions) (1) 753.6 681.4 753.6 681.4
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MLI's LICAT ratio 149% 140% 149% 140%
Financial leverage ratio 26.6% 25.1% 26.6% 25.1%
Book value per common share ($) 25.00 23.25 25.00 23.25
Book value per common share excluding AOCI ($) 21.74 19.94 21.74 19.94
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(1) This item is a non-GAAP measure. See "Performance and Non-GAAP Measures" in the company's 2020 MD&A
for additional information.
Quarterly earnings results conference call
Manulife Financial will host a fourth quarter and year-end 2020 earnings results conference call at 8 a.m. ET on Feb. 11, 2021. For local and international locations, please call 416-340-2217 or toll-free, North America, 1-800-806-5484 (passcode: 6747325 followed by the number sign). 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 by 11 a.m. ET on Feb. 11, 2021, through May 14, 2021, by calling 905-694-9451 or 1-800-408-3053 (passcode: 1451526 followed by the number sign).
The conference call will also be webcast through Manulife's website at 8 a.m. ET on Feb. 11, 2021. You may access the webcast at the Manulife website. An archived version of the webcast will be available on the website following the call.
The fourth quarter 2020 statistical information package is also available on the Manulife website.
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