GWAM margin decline post-eMPF, new core definition, and Comvest accretion metrics.

Paul Lorentz expects GWAM margin to decline by ~150 bps post-eMPF, then grow. Colin Simpson clarified the core earnings definition change is for acquired intangibles, with Comvest adding $30M annually to non-core. Comvest accretion is $0.02-$0.03 core EPS annually from 2026. “That translates to roughly $0.02 to $0.03 of core EPS accretion.”

Justify Comvest acquisition given small EPS accretion vs. buybacks, and impact of Hong Kong regulator caps on sales illustrations.

Phil Witherington emphasized strategic capital allocation to high-growth GWAM/private markets, focusing on long-term growth beyond initial accretion. Steven Finch stated no material impact expected from Hong Kong sales cap as Manulife's products are not materially affected. “This is not only about the accretion that occurs in year 1, which is robust. But then it's the growth that will arise over time.”

Defend Comvest valuation given perceived richness, and explain Japan sales decline.

Paul Lorentz highlighted future value creation, market growth, global distribution, and synergies. Phil Witherington stressed high bar for inorganic deployment and strategic relevance. Steven Finch attributed Japan sales decline to an unusually strong Q2 last year and product diversification, noting overall broad-based sales success in Asia. “It really speaks to the future value we expect to create from this and the alignment of interest.”

MFC

Manulife (MFC) Q2 FY25 earnings call: guidance and Q&A

Earnings call· Jun 2025 (Q2 FY25)· Financials· Aug 7, 2025

Source: earnings call transcript

Executive summary

Manulife Q2 FY25 — Strong Asia & GWAM Growth, Comvest Acquisition

Manulife delivered solid Q2 FY25 results, driven by strong top-line growth in Asia and Global WAM, and the strategic acquisition of Comvest Credit Partners to scale its private markets business. Despite short-term headwinds from elevated U.S. mortality and credit provisions, the company maintains a strong balance sheet and remains confident in achieving its 2027 targets through continued strategic capital deployment and focus on high-growth areas.

Highlights

APE sales increased 15% YoY, with Asia and U.S. growing over 30%.
New business CSM grew 37% YoY, with each insurance segment over 30%.
Global WAM generated nearly $1 billion in positive net flows.
Global WAM pretax core earnings grew 19% YoY, marking its seventh consecutive quarter of over 20% growth.
Adjusted book value per share grew 7% YoY to $35.78.

Concerns

Core EPS grew only 2% YoY, dampened by elevated U.S. mortality and an expected credit loss (ECL) provision.
U.S. core earnings decreased 53% YoY due to unfavorable mortality, lower investment spreads, and strengthened ECL provisions.
Elevated U.S. mortality claims on large policies impacted earnings.
Net charge in expected credit loss (ECL) provision, primarily related to certain below investment-grade loan investments in the U.S.
eMPF transition in Hong Kong expected to reduce core earnings by USD 25 million quarterly starting Q1 2026.

Guidance & targets

Category	Target	Timeline	Confidence
Core EPS accretion from Comvest acquisition	$0.02 to $0.03 medium materiality	Annually · FY26 onwards	High
eMPF transition core earnings impact	USD 25 million medium materiality	Q1 · FY26	High
Expected Credit Loss (ECL) charge	$30 million to $50 million medium materiality	Quarterly average	Medium
LICAT ratio impact from Comvest acquisition	less than 3 percentage points low materiality	Post-acquisition	High
Financial leverage ratio target	25% low materiality	Medium-term	High
Core ROE target	18% plus high materiality	FY27	High
GWAM Core EBITDA margin post-eMPF	decline by ~150 basis points, then grow medium materiality	Post-transition	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Asia Continued strong growth across all new business metrics, led by broad-based growth in Hong Kong, Mainland China, and Singapore. Core earnings growth reflects business momentum and favorable claims experience, partially offset by ECL provisions. APE sales: +31% YoYNew business CSM: +34% YoYNew business value: +28% YoYNew business value margin: in line YoY, +1.9 pts QoQ (driven by Asia Other and Japan)Core earnings: +13% YoY	—	—	—	—
Global WAM Another strong quarter with significant core earnings growth, supported by higher average third-party AUMA, higher performance fees, and expense management. Positive net flows driven by institutional and retirement inflows, partially offset by retail outflows. Margin expansion partly due to proactive expense management ahead of eMPF transition. Core earnings: +19% YoYNet flows: nearly $1 billionCore EBITDA margin: +380 bps YoYCore EBITDA margin: +170 bps sequentially	—	—	—	Core EBITDA margin: 30.1%
Canada APE sales decreased due to the non-recurrence of a large group insurance case sale in the prior year, despite strong individual insurance growth. New business CSM saw strong growth from individual insurance. Core earnings increased due to group insurance growth and higher investment spreads, partially offset by non-recurrence of an ECL release and RGA reinsurance transaction impact. APE sales: -34% YoYNew business CSM: +32% YoYCore earnings: +4% YoY	—	—	—	—
U.S. Strong APE sales growth driven by demand for accumulation insurance products. Core earnings decreased significantly due to unfavorable mortality experience in the life business, lower investment spreads, and strengthened ECL provisions. These impacts are viewed as short-term headwinds, not a trend. APE sales: +40% YoYNew business CSM: +59% YoYNew business value: +12% YoYCore earnings: -53% YoY	—	—	—	—

MFC operating KPIs by quarter

MFC operating KPIs stated on its earnings calls, by fiscal quarter
KPI	This call Jun 2025 Q2 FY25	Sep 2025 Q3 FY25	Change vs prior quarter
LICAT ratio	136% Our balance sheet remains strong and provides financial flexibility with a strong LICAT ratio of 136% and a leverage ratio that is well below our 25% target. Source: earnings call transcript	138% Our balance sheet remains strong with a LICAT ratio of 138% and a leverage ratio of 22.7% and we generated another quarter of book value per share growth with an increase of 7% from the prior year while continuing to return a significant amount of capital to shareholders. Source: earnings call transcript	+2 pt
Financial leverage ratio	23.6% Our LICAT capital ratio remained strong at 136%, and our financial leverage ratio was 23.6%, continuing to stay well below our 25% medium-term target. Source: earnings call transcript	22.7% Our balance sheet remains strong with a LICAT ratio of 138% and a leverage ratio of 22.7% and we generated another quarter of book value per share growth with an increase of 7% from the prior year while continuing to return a significant amount of capital to shareholders. Source: earnings call transcript	-0.9 pt

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Deals & partnerships

Comvest Credit Partners Acquisition of a 75% stake in a middle market private credit manager, with a predefined path to acquiring the remaining 25% interest in 6 years. Scales private markets business and expands private credit capabilities. USD 937.5 million 6 years (for full ownership)

Comvest has USD 14.7 billion on its platform, compounding fee-paying AUM at 50% CAGR since 2020. Combines with Manulife's existing direct lending to create a USD 18.4 billion private credit manager. Comvest employees will retain a 25% interest.

Risks & headwinds

Elevated U.S. mortality claims Q2 FY25

Dampened core EPS growth, contributed to U.S. core earnings decrease of 53%.

Mitigation:Viewed as normal claim volatility, not an unfavorable mortality trend.

Expected Credit Loss (ECL) provision Q2 FY25

Net charge in ECL provision, primarily related to certain below investment-grade loan investments in the U.S. Dampened core EPS growth, contributed to U.S. core earnings decrease of 53%. $82 million post-tax charge in Q2 FY25.

Mitigation:Not seen as an extrapolation across the rest of the portfolio (96% investment grade). Expect $30M-$50M quarterly on average.

Hong Kong eMPF transition Beginning Q1 2026 (transition starts Q4 2025)

Full quarterly run rate impact of approximately USD 25 million on core earnings.

Mitigation:Proactive expense management taken in advance. Business remains attractive given scale and capabilities.

Market volatility This year

Not explicitly quantified for this quarter, but mentioned as a general factor.

Mitigation:Strong financial resilience, underpinned by strong balance sheet (LICAT 136%, leverage 23.6%).

Currency translation of foreign operations Q2 FY25

Caused modest QoQ decline in book value per share.

Mitigation:Does not reflect fundamental business performance. Year-over-year impact largely immaterial.

What to watch in Q3 FY25

U.S. Long-Term Care (LTC) triennial review outcome

Q3 FY25

Current Experience largely in line with expectations to small positive. Over 90% of 2022 rate increases achieved.

Target Updated assumptions and any reserve adjustments.

Why it matters

The triennial review can lead to significant reserve adjustments and impact future earnings, especially given past volatility in LTC.

Tom, it's Stephanie. You are right. In the third quarter this year will be the triennial review of our long-term care business.

Find out whether MFC delivers this. Inve re-checks your case every morning.

Q&A highlights

What other areas does Manulife want to bulk up in GWAM, and confirm the eMPF impact.

Paul Lorentz stated the focus is on organic growth but will look for opportunities to accelerate it, like Comvest. Colin Simpson confirmed the eMPF impact is USD 25 million quarterly.

“John, yes, it's USD 25 million a quarter.”

asked by John Aiken · answered by Colin Simpson

3 min read 7 chapters

Detailed narrative

Strategic Direction and Leadership Transition

Phil Witherington, the new President and CEO, shared his initial observations, highlighting the strong foundation laid by transformation efforts since 2017. He emphasized the company's attractive business profile, market-leading operations in high-growth markets, and significant synergies across segments. Witherington noted tremendous progress in digital ambition and AI capabilities, contributing to both growth and productivity.

He reaffirmed commitment to investing in businesses for high-quality, sustainable growth and maintaining unchanged capital deployment priorities, including strategic inorganic opportunities.

Comvest Credit Partners Acquisition

Manulife's Global Wealth and Asset Management (GWAM) entered an agreement to acquire a 75% stake in Comvest Credit Partners for USD 937.5 million, with a predefined path to acquiring the remaining 25% in 6 years. Comvest, a rapidly growing middle-market private credit manager with USD 14.7 billion on its platform, will scale Manulife's private markets business and enhance existing private credit capabilities.

The acquisition is expected to be immediately accretive to core EPS, core ROE, and core EBITDA margin, and will reduce the LICAT ratio by less than 3 percentage points.

Q2 Financial Performance Overview

Manulife reported continued strong top-line growth in Q2 FY25, with APE sales increasing 15% YoY and new business CSM growing 37% YoY. Core EPS grew 2% from the prior year, impacted by elevated U.S. mortality and an expected credit loss (ECL) provision.

Net income for the quarter was $1.8 billion, an increase of $747 million YoY, driven by positive overall market experience, including a $217 million gain from public equity returns, partially offset by a $172 million charge in the ALDA portfolio.

Balance Sheet Strength and Capital Deployment

The company maintained a robust balance sheet with a LICAT capital ratio of 136% and a financial leverage ratio of 23.6%, remaining well below its 25% medium-term target. Manulife returned nearly $1.4 billion of capital to shareholders in the quarter through dividends and share buybacks.

Over the past year, the company returned over $6.4 billion of capital, contributing to a 7% YoY growth in adjusted book value per share to $35.78.

Hong Kong eMPF Transition Impact

The transition to the new eMPF platform in Hong Kong is expected to commence during Q4 2025. This transition will centralize and digitize eMPF schemes, reducing fees earned. Management anticipates a full quarterly run rate impact of approximately USD 25 million on core earnings in the retirement business beginning in Q1 2026.

Proactive expense management has been undertaken to mitigate this impact, and the MPF business remains attractive given its scale and capabilities.

U.S. Segment Headwinds and Outlook

The U.S. segment experienced a 53% decrease in core earnings YoY, primarily due to unfavorable mortality experience in its life business and strengthened ECL provisions. Management views these as short-term headwinds and not indicative of a trend, citing strong new business metrics, including 40% YoY APE sales growth and 59% YoY new business CSM growth.

The U.S. business is seen as having a strong brand (John Hancock), differentiated new business propositions, and a critical role in capital generation and remittances.

Core Earnings Definition Change

Manulife announced a change in its core earnings definition to exclude the amortization of acquired intangibles from business combinations, aligning with industry practice. This change will have minimal impact currently, but the Comvest acquisition is expected to add approximately $30 million annually to this non-core item once closed.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.