MANULIFE FINANCIAL CORP MFC

Manulife unveiled a refreshed enterprise strategy, building on its strengths with a growth focus and an ambition to be the #1 choice for customers. Key elements include maintaining a diversified portfolio, capturing growth opportunities in Asia and Global WAM, enhancing leadership in Canada, and maintaining a scaled presence in the U.S. The strategy also emphasizes leveraging early leadership in AI to become an AI-powered organization and utilizing product, digital innovation, and partnerships to become a trusted partner for customer well-being.

The company announced an agreement with Mahindra, a leading Indian conglomerate and existing asset management partner, to form a joint venture to enter the India insurance market, subject to regulatory approvals. This strategic move is driven by favorable regulatory and digital environments, consistent economic growth, and increased wealth in India. Manulife will contribute global insurance expertise, including product development and risk management, while Mahindra offers substantial local knowledge, a strong brand, and distribution infrastructure. The operational launch is expected within 12-18 months, with a projected capital cost of USD 400 million over the next decade.

Marc Costantini, Global Head of Inforce Management, is departing after over 25 years with Manulife. His role, which included the completion of several monumental reinsurance transactions, has been embedded as a core capability within the organization. Naveed Irshad, President and CEO of Manulife Canada, has taken on expanded responsibility for Inforce Management and reinsurance globally, while continuing to lead the Canada segment.

Manulife completed its annual basis change, including a comprehensive triennial review of its U.S. long-term care (LTC) business. This resulted in a net favorable impact of a $605 million decrease in overall pre-tax fulfill and cash flows, comprising a $1.1 billion increase in CSM, partially offset by a modest decrease in net income of $216 million post-tax. The LTC study was slightly favorable due to favorable re-rate experience, assumed future premium rate increases, and higher terminations, partially offset by higher utilization of benefits driven by elevated medical cost inflation, which is expected to persist longer.

Global WAM experienced net outflows of $6.2 billion in the quarter, following six consecutive quarters of positive net flows. This was primarily due to $3.9 billion in outflows from North American Retail intermediary and wealth channels, and $1.6 billion from the U.S. retirement business, where elevated markets led to higher participant withdrawals. Institutional business also saw modest net outflows of $0.7 billion. Despite these challenges, GWAM delivered positive operating leverage and expanded its core EBITDA margin by 310 basis points year-on-year to 30.9%.

The U.S. business strategy for John Hancock focuses on scaling its existing profitable behavioral insurance products, which promote health and wellness, to a broader range of customer segments including affluent individuals and emerging high net worth individuals, beyond its current niche in high net worth. The company is also exploring opportunities in adjacent products that align with its risk appetite, but explicitly stated no intention to return to higher market risk products like variable annuities, which were part of its past broader business.