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Manulife Financial Corp
Symbol MFC
Shares Issued 1,948,859,681
Close 2019-11-06 C$ 25.47
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Manulife Financial earns $723-million in Q3

2019-11-06 17:32 ET - News Release

Mr. Roy Gori reports


Manulife Financial Corp. has released its third quarter 2019 results. Key highlights include:

  • Net income attributed to shareholders of $700-million in third quarter 2019, down $900-million from third quarter 2018; third quarter 2019 results included the previously announced URR impact of $500-million;
  • Core earnings (1) of $1.5-billion in third quarter 2019, in line with third quarter 2018;
  • Core ROE (return on equity) (1) of 13.0 per cent and ROE of 5.9 per cent in third quarter 2019;
  • NBV (1) of $500-million in third quarter 2019, up 14 per cent (2) from third quarter 2018;
  • APE sales (1) of $1.4-billion in third quarter 2019, in line with third quarter 2018;
  • WAM net outflows (1) of $4.4-billion in third quarter 2019 compared with net flows of $400-million in third quarter 2018;
  • Strong LICAT ratio (3) of 146 per cent;
  • The impact to net income of the annual actuarial review was approximately net neutral in total and for LTC.

"We delivered solid core earnings in line with a very strong prior-year quarter, driven by double-digit growth in Asia," said Manulife president and chief executive officer Roy Gori.

"We continued to execute against our strategic priorities, with portfolio optimization initiatives announced to date resulting in a cumulative capital benefit of $3.9-billion. We also expanded Manulife's distribution capabilities across our global footprint, entering into long-term partnerships in mainland China and Vietnam," added Mr. Gori.

Phil Witherington, chief financial officer, said: "Our insurance businesses delivered 14-per-cent growth in new business value, while the retail and retirement business lines of our global wealth and asset management business achieved strong net inflows of almost $3-billion. Institutional net outflows reflected the decision by one client to internalize the management of several large, primarily fixed income, mandates.

"We are pleased to have ended the quarter in a strong capital position, including an increase in our LICAT ratio to 146 per cent and a reduction in our leverage ratio to 26.1 per cent," added Mr. Witherington.

Business highlights

The company made further progress on its portfolio optimization strategic priority, renegotiating reinsurance agreements on a universal life block in Canada that resulted in a capital benefit of approximately $120-million. In the company's long-term-care (LTC) business, the company continued to make progress in securing premium rate increases and introduced innovative co-pay options to its LTC customers to manage higher rates.

During the quarter, the company continued to enhance and expand its global distribution capabilities. In Asia, the company entered into a long-term strategic partnership with HaoDf, a leading on-line medical platform in China, as well as a new bancassurance relationship in Vietnam with Asia Commercial Bank.

(1) Core earnings, core return on common shareholders' equity, new business value (NBV), annualized premium equivalent (APE) sales and net flows are non-generally accepted accounting principle measures. See "Performance and non-GAAP measures" in the company's third quarter 2019 management's discussion and analysis for additional information.

(2) 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.

(3) Life insurance capital adequacy test (LICAT) ratio of The Manufacturers Life Insurance Company (MLI).

                                         FINANCIAL HIGHLIGHTS
                                ($ millions, unless otherwise stated)  

                                                                  Quarterly results            YTD results 
                                                               Q3 2019      Q3 2018         2019         2018
Net income attributed to shareholders                             $723       $1,573       $4,374       $4,207
Core earnings (1)                                                1,527        1,539        4,527        4,273
Diluted earnings per common share ($)                             0.35         0.77         2.16         2.05
Diluted core earnings per common share ($) (1)                    0.76         0.75         2.24         2.09
Return on common shareholders' equity (ROE)                        5.9%        15.1%        12.8%        13.9%
Core ROE (1)                                                      13.0%        14.8%        13.3%        14.1%
Expense efficiency ratio (1)                                      51.4%        49.5%        51.2%        50.9%
                                                              --------     --------     --------     --------
Asia new business value                                            430          382        1,205        1,041
Canada new business value                                           51           42          178          156
U.S. new business value                                             45           28          141           50
Total new business value (1)                                       526          452        1,524        1,247
Asia APE sales                                                   1,052        1,070        3,303        2,972
Canada APE sales                                                   235          210          786          698
U.S. APE sales                                                     156          159          453          401
Total APE sales (1)                                              1,443        1,439        4,542        4,071
Wealth and asset management net flows ($ billions) (1)            (4.4)         0.4         (5.8)        10.5
Wealth and asset management gross flows ($ billions) (1)          28.0         27.1         81.3         92.7
Wealth and asset management assets under management and
administration ($ billions) (1)                                  659.2        644.0        659.2        644.0
                                                              --------     --------     --------     --------
Financial strength
MLI's LICAT ratio                                                  146%         134%         146%         134%
Financial leverage ratio                                          26.1%        29.2%        26.1%        29.2%
Book value per common share ($)                                  23.51        20.24        23.51        20.24
Book value per common share excluding AOCI ($)                   19.60        18.23        19.60        18.23
                                                              ========     ========     ========     ========

(1) This item is a non-generally accepted accounting principle measure. See "Performance and 
non-GAAP measures" in the company's third quarter 2019 management's discussion and analysis
for additional information.

Quarterly earnings results conference call

Manulife Financial will host a third quarter earnings results conference call at 8 a.m. ET on Nov. 7, 2019. For local and international locations, please call 416-340-2218 or toll-free, North America, 1-800-377-0758. Please call in 10 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 Nov. 7, 2019, through Feb. 7, 2020, by calling 905-694-9451 or 1-800-408-3053 (passcode: 4700000 followed by the number sign).

The conference call will also be webcast through Manulife's website at 8 a.m. ET on Nov. 7, 2019. 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 third quarter 2019 statistical information package is also available on the Manulife website.

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