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This earnings news release for |
- Net income attributed to shareholders of
$783 million in 1Q21, down$513 million from the first quarter of 2020 ("1Q20") - Core earnings1 of
$1.6 billion in 1Q21, up 67%2 from 1Q20 - Core ROE1 of 13.7% and ROE of 6.4% in 1Q21
- NBV1 of
$599 million in 1Q21, up 32% from 1Q20 - APE sales1 of
$1.8 billion in 1Q21, up 14% from 1Q20 - Global Wealth and Asset Management ("Global WAM") net inflows1 of
$1.4 billion in 1Q21, compared with net inflows of$3.2 billion in 1Q20 - Strong LICAT ratio3 of 137%
- Expense efficiency ratio1 of 48.5%, compared with our target of consistently achieving less than 50%
- Embedded value1 of
$61.1 billion or$31.49 per share, as ofDecember 31, 2020 , up$1.70 per share from 2019
"We delivered very strong operating results in the first quarter of 2021, driven by double-digit growth in core earnings across all of our operating segments. While the overall impact of higher interest rates is positive over the long term for our Company, higher risk-free rates and a steepening yield curve within
"Despite ongoing challenges presented by the pandemic, the global strength and diversity of our business continues to shine through. We are progressing on our digital transformation with auto-underwriting at 72%, straight-through-processing4 at 81% and eClaims at 92%. We delivered 14% growth in APE sales, driven by a very strong result in
1 | Core earnings, core return on common shareholders' equity ("core ROE"), new business value ("NBV"), annualized premium equivalent ("APE") sales, net flows, expense efficiency ratio and embedded value are non-GAAP measures. See "Performance and Non-GAAP Measures" below and in our First Quarter 2021 Management's Discussion and Analysis ("1Q21 MD&A") for additional information. | |||
2 | All percentage growth / declines in financial metrics in this news release are reported on a constant exchange rate basis. Constant exchange rate basis excludes the impact of currency fluctuations and is a non-GAAP measure. See "Performance and Non-GAAP Measures" below and in our 1Q21 MD&A for additional information. | |||
3 | Life Insurance Capital Adequacy Test ("LICAT") ratio of The | |||
4 | Straight-through-processing includes money movement. |
"Our expense efficiency ratio improved to 48.5% in the quarter, favourable to our 50% target. We remain steadfast in our commitment to expense discipline and are making solid progress towards achieving a ratio of 50% or less," added
BUSINESS HIGHLIGHTS:
We continued to make progress on our digital journey in 1Q21, through a variety of initiatives. In
Additionally in
FINANCIAL HIGHLIGHTS:
Quarterly Results | ||||
($ millions, unless otherwise stated) | 1Q21 | 1Q20 | ||
Profitability: | ||||
Net income attributed to shareholders | $ | 783 | $ | 1,296 |
Core earnings(1) | $ | 1,629 | $ | 1,028 |
Diluted earnings per common share ($) | $ | 0.38 | $ | 0.64 |
Diluted core earnings per common share ($)(1) | $ | 0.82 | $ | 0.51 |
Return on common shareholders' equity ("ROE") | 6.4% | 10.4% | ||
Core ROE(1) | 13.7% | 8.2% | ||
Expense efficiency ratio(1) | 48.5% | 60.0% | ||
Performance: | ||||
Asia new business value | $ | 477 | $ | 356 |
Canada new business value | $ | 78 | $ | 77 |
$ | 44 | $ | 36 | |
Total new business value(1) | $ | 599 | $ | 469 |
Asia APE sales | $ | 1,280 | $ | 1,084 |
Canada APE sales | $ | 355 | $ | 376 |
$ | 150 | $ | 141 | |
Total APE sales(1) | $ | 1,785 | $ | 1,601 |
Global Wealth and Asset Management net flows ($ billions)(1) | $ | 1.4 | $ | 3.2 |
Global Wealth and Asset Management gross flows ($ billions)(1) | $ | 39.7 | $ | 38.2 |
Global Wealth and Asset Management assets under management and administration ($ billions)(1) | $ | 764.1 | $ | 636.2 |
Financial Strength: | ||||
MLI's LICAT ratio | 137% | 155% | ||
Financial leverage ratio | 29.5% | 23.0% | ||
Book value per common share ($) | $ | 23.40 | $ | 26.53 |
Book value per common share excluding AOCI ($) | $ | 21.84 | $ | 20.29 |
(1) | This item is a non-GAAP measure. See "Performance and non-GAAP Measures" below and in our 1Q21 MD&A for additional information. |
PROFITABILITY:
Reported net income attributed to shareholders of
The decrease reflects losses in 1Q21 from the direct impact of markets driven by the steepening of the yield curve in
Delivered core earnings of
The increase in core earnings in 1Q21 compared with 1Q20 was driven by the favourable impact of markets on seed money investments in new segregated and mutual funds (compared to losses in the prior year quarter), higher new business gains in
____________________________ | ||||
1 | Core investment gains and average assets under management and administration ("average AUMA") are non-GAAP measures. See "Performance and non-GAAP measures" below and in our 1Q21 MD&A for additional information. |
BUSINESS PERFORMANCE:
New business value ("NBV") of
In
Annualized premium equivalent ("APE") sales of
In
Reported Global Wealth and Asset Management net inflows of
Net outflows in
___________________________ | ||||
1 | Asia Other excludes | |||
2 | This item is a non-GAAP measure. See "Performance and non-GAAP measures" below and in our 1Q21 MD&A for additional information. |
QUARTERLY EARNINGS RESULTS CONFERENCE CALL
The conference call will also be webcast through Manulife's website at
The First Quarter 2021 Statistical Information Package is also available on the Manulife website at: www.manulife.com/en/investors/results-and-reports.
EARNINGS:
The following table reconciles core earnings to net income attributed to shareholders:
Quarterly Results | ||||||
($ millions) | 1Q21 | 4Q20 | 1Q20 | |||
Core earnings(1) | ||||||
Global Wealth and Asset Management | $ | 312 | $ | 304 | $ | 250 |
570 | 571 | 491 | ||||
264 | 316 | 237 | ||||
501 | 479 | 416 | ||||
Corporate and Other (excluding core investment gains) | (118) | (196) | (366) | |||
Core investment gains(1) | 100 | - | - | |||
Total core earnings | $ | 1,629 | $ | 1,474 | $ | 1,028 |
Items excluded from core earnings: Investment-related experience outside of core earnings | 77 | 585 | (608) | |||
Direct impact of equity markets and interest rates and variable annuity guarantee liabilities | (835) | (323) | 792 | |||
Reinsurance transactions | 8 | 44 | 12 | |||
Restructuring charge | (115) | - | - | |||
Tax-related items and other | 19 | - | 72 | |||
Net income attributed to shareholders | $ 783 | $ 1,780 | $ | 1,296 |
(1) | This item is a non-GAAP measure. See "Performance and Non-GAAP Measures" below and in our 1Q21 MD&A for additional information. |
PERFORMANCE AND NON-GAAP MEASURES:
We use a number of non-GAAP financial measures to measure overall performance and to assess each of our businesses. A financial measure is considered a non-GAAP measure if it is presented other than in accordance with generally accepted accounting principles used for the Company's audited financial statements. Non-GAAP measures referenced in this news release include: core earnings; core ROE; diluted core earnings per common share; core investment gains; core general expenses; expense efficiency ratio; APE sales; new business value; embedded value; gross flows; net flows; assets under management and administration; average assets under management and administration ("average AUMA"); and constant exchange rate basis (measures that are reported on a constant exchange rate basis include percentage growth/decline in core earnings, core general expenses, APE sales, new business value, and gross flows). Non-GAAP financial measures are not defined terms under GAAP and, therefore, are unlikely to be comparable to similar terms used by other issuers. Therefore, they should not be considered in isolation or as a substitute for any other financial information prepared in accordance with GAAP. For more information on non-GAAP financial measures, including those referred to above, see "Performance and Non-GAAP Measures" in our First Quarter 2021 MD&A and 2020 MD&A.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS:
From time to time, Manulife makes written and/or oral forward-looking statements, including in this document. In addition, our representatives may make forward-looking statements orally to analysts, investors, the media and others. All such statements are made pursuant to the "safe harbour" provisions of Canadian provincial securities laws and the
The forward-looking statements in this document include, but are not limited to, statements with respect to our objectives, goals, strategies, intentions, plans, beliefs, expectations and estimates, and can generally be identified by the use of words such as "may", "will", "could", "should", "would", "likely", "outlook", "expect", "intend", "estimate", "anticipate", "believe", "plan", "forecast", "objective", "seek", "aim", "continue", "goal", and "restore" (or the negative thereof) and words and expressions of similar import, and include statements concerning possible or assumed future results. Although we believe that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements and they should not be interpreted as confirming market or analysts' expectations in any way.
Certain material factors or assumptions are applied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements.
Important factors that could cause actual results to differ materially from expectations include but are not limited to: general business and economic conditions (including but not limited to the performance, volatility and correlation of equity markets, interest rates, credit and swap spreads, currency rates, investment losses and defaults, market liquidity and creditworthiness of guarantors, reinsurers and counterparties); the severity, duration and spread of the COVID-19 outbreak, as well as actions that have been or may be taken by governmental authorities to contain COVID-19 or to treat its impact; changes in laws and regulations; changes in accounting standards applicable in any of the territories in which we operate; changes in regulatory capital requirements; our ability to execute strategic plans and changes to strategic plans; downgrades in our financial strength or credit ratings; our ability to maintain our reputation; impairments of goodwill or intangible assets or the establishment of provisions against future tax assets; the accuracy of estimates relating to morbidity, mortality and policyholder behaviour; the accuracy of other estimates used in applying accounting policies, actuarial methods and embedded value methods; our ability to implement effective hedging strategies and unforeseen consequences arising from such strategies; our ability to source appropriate assets to back our long-dated liabilities; level of competition and consolidation; our ability to market and distribute products through current and future distribution channels; unforeseen liabilities or asset impairments arising from acquisitions and dispositions of businesses; the realization of losses arising from the sale of investments classified as available-for-sale; our liquidity, including the availability of financing to satisfy existing financial liabilities on expected maturity dates when required; obligations to pledge additional collateral; the availability of letters of credit to provide capital management flexibility; accuracy of information received from counterparties and the ability of counterparties to meet their obligations; the availability, affordability and adequacy of reinsurance; legal and regulatory proceedings, including tax audits, tax litigation or similar proceedings; our ability to adapt products and services to the changing market; our ability to attract and retain key executives, employees and agents; the appropriate use and interpretation of complex models or deficiencies in models used; political, legal, operational and other risks associated with our non-North American operations; acquisitions and our ability to complete acquisitions including the availability of equity and debt financing for this purpose; the disruption of or changes to key elements of the Company's or public infrastructure systems; environmental concerns; our ability to protect our intellectual property and exposure to claims of infringement; and our inability to withdraw cash from subsidiaries.
Additional information about material risk factors that could cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements may be found under "Risk Factors and Risk Management" and "Critical Actuarial and Accounting Policies" in the Management's Discussion and Analysis in our most recent annual report, under "Risk Management and Risk Factors Update" and "Critical Actuarial and Accounting Policies" in the Management's Discussion and Analysis in our most recent interim report, in the "Risk Management" note to the consolidated financial statements in our most recent annual and interim reports as well as elsewhere in our filings with Canadian and
The forward-looking statements in this document are, unless otherwise indicated, stated as of the date hereof and are presented for the purpose of assisting investors and others in understanding our financial position and results of operations, our future operations, as well as our objectives and strategic priorities, and may not be appropriate for other purposes. We do not undertake to update any forward-looking statements, except as required by law.
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