Manulife Financial Corporation Q4 2025 Earnings Call - Record core earnings driven by double-digit new business CSM growth despite $9.5B GWAM outflows

Conference Operator: Thank you for standing by. This is the conference operator. Welcome to the Manulife Financial Corporation fourth quarter and full year 2025 results conference call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, will be an opportunity to ask questions. To join the question queue, you may press Star, then one on your telephone keypad. Should you need assistance during the conference call, you may reach an operator by pressing Star, then zero. I would now like to turn the conference over to Mr. Hung Ko, Global Head of Treasury and Investor Relations. Please go ahead.

Hung Ko, Global Head of Treasury and Investor Relations, Manulife Financial Corporation: Thank you. Welcome to Manulife’s earnings conference call to discuss our fourth quarter and full year 2025 financial and operating results. Our earnings materials, including the webcast slide for today’s call, are available in the investor relations section of our website at manulife.com. Before we start, please refer to slide 2 for a caution on forward-looking statements and slide 41 for a note on non-GAAP and other financial measures used in this presentation. Please note that certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from what is stated. Turning to slide 4. We’ll begin today’s presentation with Phil Witherington, our President and Chief Executive Officer, will provide highlights of our full year 2025 results and the progress made toward our new and elevated strategic priorities.

Following Phil, Colin Simpson, our Chief Financial Officer, will discuss the company’s financial operating results in more detail. After their prepared remarks, we move to the live Q&A portion of the call. With that, I’d like to turn the call over to Phil.

Phil Witherington, President and Chief Executive Officer, Manulife Financial Corporation: Thanks, Hung, and thank you everyone for joining us today. 2025 was a defining year for Manulife. We delivered strong financial results, announced our refreshed enterprise strategy to shape Manulife’s next chapter of growth, and are laser-focused on executing against our vision through targeted strategic investments. While macroeconomic and geopolitical uncertainty remains, we’re confident that the diversified nature of our business positions us well to navigate the current environment and capitalize on the opportunities ahead. Let’s start with our 2025 financial results, which we announced yesterday. We delivered strong top-line results, with new business CSM growth exceeding 20% in each insurance segment, contributing to a double-digit growth in our CSM balance and supporting our future earnings potential. Despite experiencing net outflows in the second half of 2025, Global WAM continues to deliver strong margins and core earnings growth.

The strong results in Global WAM, combined with the double-digit earnings growth in Asia, contributed to our record core earnings this year. Together with the benefit of continued share buybacks, we delivered 8% core EPS growth. We also continued to generate attractive returns, with core ROE expanding 30 basis points from the prior year, and we’re tracking well towards our 2027 target of 18%+. Moving to our balance sheet, we generated $6.4 billion of remittances this year and returned nearly $5.5 billion of capital to shareholders. Our LICAT ratio of 136% and leverage ratio of 23.9% provides significant financial flexibility, and I’m pleased to share that we announced a 10% increase in our quarterly common share dividend.

In addition, we have received OSFI approval for a new NCIB program, which will allow us to repurchase up to 42 million shares, or approximately 2.5% of issued and outstanding common shares, highlighting our continued commitment to returning capital to shareholders. We plan to commence buybacks under this new program in late February, subject to approval by the Toronto Stock Exchange. Moving on to slide 7. In November, we introduced our refreshed enterprise strategy, which builds on our strengths, is growth-focused, and is anchored in our ambition to be the number one choice for customers. There is tremendous enthusiasm across the company as we execute on our new and elevated strategic priorities, which provide logical continuity as we progress in our new chapter with refreshed ambition. As a result, we’ve already made meaningful progress in 2025.

Starting with our winning team and culture, our world-class talent is one of our greatest strengths, and this year marked our sixth consecutive year of top-quartile employee engagement. I’m encouraged by the energy and commitment of our colleagues around the world who’ve embraced our ambition to be the number one choice for customers. Together, we will continue to bring focused execution and innovation to the work ahead. As we drive high-quality, sustainable growth, we will maintain a balanced, diversified business model. This year, we’ve made strategic investments, both organically and inorganically, to further strengthen our portfolio. We acquired Comvest Credit Partners, announced a joint venture to enter the India life insurance market, and entered into an agreement to acquire Schroders Indonesia, with the latter two subject to regulatory approval.

We also became the first international life insurer to establish an office in the Dubai International Financial Center, dedicated to advising on and arranging life insurance solutions for high-net-worth customers. We’ve expanded our customer solutions, including a new indexed universal life offering in the U.S., while in Canada, we launched a simplified, specialized lending suite of products in Manulife Bank. As Colin will highlight, the benefit of a diversified portfolio was evident in our fourth quarter results, and I expect our diversification to serve us well amidst rising global uncertainty. On to Slide eight, and our focus on being the most trusted partner in health, wealth, and financial well-being. We took meaningful steps to further empower our customers this year, including a significant milestone in our ambition to be the health partner of choice in Asia.

Through a strategic collaboration in Hong Kong with Bupa International, we will offer greater choice and sustainable healthcare solutions that empower individuals and communities to live healthier and more fulfilling lives. In Canada, we became the first insurer to offer access to GRAIL’s Galleri multi-cancer early detection test, supporting earlier detection and longevity for our customers. In the U.S., we’re providing additional resources and offerings to eligible U.S. customers to proactively manage their health and wellness. These actions deliver measurable benefits for customers while generating value for Manulife, and we’re proud to be a leader in this space. We also continued to invest to make it easier for customers to buy and advisors to sell our solutions. We renewed our bancassurance partnership with China Bank in the Philippines, extending the exclusive partnership to 2039. In Singapore, we leveraged our digital capabilities to enhance our Manulife iFunds platform.

Through using a single platform and leveraging AI-powered analytics, advisors can deliver more personalized and insightful financial guidance. In the U.S., we expanded our wholesaling team to accelerate our penetration into the high net worth and mass affluent markets. By expanding our reach and scaling our digital and AI capabilities, we can more effectively reach our customers and enhance their experience. Finally, over to Slide nine. Becoming an AI-powered organization is core to delivering on our ambitions, and while we’ve been an early adopter of AI and built the underlying infrastructure necessary to support our vision, it’s very important that we sustain our leadership position. We’re investing with discipline and a clear focus on areas where AI can be deployed at scale and further improve our efficiency, enhance our customer and colleague experiences, and support sustainable growth.

In 2025, we ranked first among global life insurers for AI maturity by Evident and achieved 30% of the $1 billion+ of AI enterprise value generation by 2027. To drive measurable outcomes, we’re concentrating on core focus areas where AI can make the greatest difference for Manulife, and we’re already deploying initiatives across businesses and geographies to continue to drive value. Across the organization, we’re deploying virtual assistants that create efficiencies while equipping employees and advisors with deeper insights, more personalized outreach, and instant product guidance, strengthening the quality and consistency of customer interactions. In underwriting, AI is accelerating decision-making by automating data analysis, enabling faster and more accurate assessments while maintaining strong risk discipline. We’re prioritizing AI solutions that remove manual transactions, driving measurable improvements in efficiency and operational outcomes.

Within distribution, AI is enhancing client engagement through tailored sales support, leading to improved sales close ratios and outcomes. We’re strengthening our internal productivity by equipping our global technology teams with modern engineering tools, helping us build better solutions and faster. We’re also exploring how AI can help close the advice access gap and support more meaningful, ongoing investor engagement at scale. Moving forward, we’re progressing towards a proprietary agentic AI platform that will make it easier to manage and coordinate AI tools across the company, allowing us to scale AI even faster and more consistently while ensuring a robust governance process. Overall, these are high-impact areas that reduce friction, support long-term growth, and will enable us to deliver on our 2027 and medium-term targets. In closing, I am thrilled with the progress we’ve made in 2025.

We’ve delivered strong financial results and are already making meaningful strides against our refreshed strategy. As we begin 2026, we’re executing from a position of strength with clear momentum and confidence in our ability to achieve our 2027 targets, while generating high-quality, sustainable growth for all our stakeholders for the long term. With that, I’ll hand it over to Colin to discuss our results in more detail. Colin?

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation: Thanks, Phil, and good morning, everyone. 2025 was a fantastic year for Manulife as we delivered another year of strong financial and operational performance. Let me take a moment to walk you through the quarter’s results before we open the line for Q&A. Let’s begin with our top-line results on Slide 11. We generated strong growth in new business CSM, reflecting more favorable business mix and margin improvements. This marked our sixth consecutive quarter in which new business CSM growth exceeded 20%, a testament to the strength of our balanced and globally diverse business profile. APE sales for the quarter were largely in line with the prior year. Global WAM saw net outflows of $9.5 billion, reflecting several large retirement plan redemptions in the U.S. and to a lesser extent, in Canada, as well as net outflows in our North American retail business.

This was partially offset by strong institutional flows, including contributions from CQS and Comvest. The redemptions in our U.S. retirement business reflect seasonally higher plan redemptions and higher participant withdrawals, as market strength has given rise to higher customer balances. Our retail business saw continued pressure in North American intermediary and Canada wealth. To highlight, our U.S. retail business performed well relative to peers in what was a challenging quarter for active fund managers in the industry. Moving on to slide 12. I’d like to highlight some of the key earnings drivers, comparing them to the same period last year. We continued to see strong growth in our insurance businesses in Asia and Canada, driving a higher insurance service result. We generated positive overall insurance experience this quarter, including a release of PfAD provisions from prior year events, as well as strong gains in Canada.

Though positive, total insurance experience was less favorable than the prior year, largely reflecting unfavorable U.S. life claims experience. Our investment results decreased a modest 5%, mainly driven by lower investment spreads. In the bottom half of the table, you will see that Global WAM reported solid pre-tax core earnings growth of 8% this quarter, supported by strong AUMA growth and margin expansion, though this was partially offset by the transition to EMPF in Hong Kong. Turning to slide 13. Core EPS increased 9% from the prior year quarter as we continued to grow core earnings and actively buy back shares.

We reported $1.5 billion of net income this quarter, which reflects unfavorable market experience, largely driven by a charge of $232 million in our older portfolio, primarily due to lower than expected returns from infrastructure, private equity, and real estate. We also reported a $162 million loss from hedge accounting and effectiveness, primarily due to swap spread widening in Canada and to a lesser extent, derivatives without hedge accounting. Moving to the segment results. We’ll start with Asia on slide 14. APE sales decreased by a modest 3% from the prior year, as double-digit growth in Japan and Asia Other was more than offset by lower sales in Hong Kong.

While we expected some moderation in Hong Kong, given a strong prior year comparative, we also saw anticipated pressure in the broker channel in the fourth quarter as distributors transitioned to new regulations. Even so, we remain confident in the outlook, supported by the strength of our proprietary distribution channels. Despite softer volume, Asia’s new business CSM and new business value delivered strong double-digit growth on the back of a more favorable business mix. As such, NBV margin expanded by 5.5 percentage points from the prior year to 41.2%. These top-line results demonstrate both the strength and diversity of our business in Asia. In fact, when you look at our full year new business CSM growth, we saw greater than 20% growth in multiple markets, including Hong Kong, Japan, Mainland China, and Singapore.

Asia core earnings in the quarter were even stronger, increasing 24% year-over-year, as we benefited from continued business growth and the net favorable impact of the basis change last quarter. Over to Global WAM on slide 15. We maintained our growth momentum in Global WAM, delivering a solid 7% year-over-year increase in core earnings. This was supported by higher average AUMA, the addition of Comvest Credit Partners, and sustained expense discipline. This was partially offset by lower earnings as a result of our transition to the new eMPF platform in Hong Kong in November. Net outflows were elevated this quarter, reaching $9.5 billion as I noted earlier. Our gross flows this quarter, up 15% from the prior year to $50 billion, continued to be strong, supported by growth across each business line.

Our core EBITDA margin expanded 60 basis points from the prior year to 29.2%, a strong result given the eMPF transition. Next, let’s head over to Canada on slide 16, where we delivered solid growth in new business metrics and core earnings. APE sales and new business value increased by 2% and 4% respectively from the prior year, reflecting strong growth in individual insurance and annuity sales, partially offset by lower large case sales and group insurance. New business CSM maintained strong momentum and continued to deliver double-digit year-over-year growth, supported by higher sales volumes and individual insurance. Core earnings increased by 6% year-over-year, driven in part by favorable insurance experience in individual insurance, higher investment spreads, and business growth in group insurance. These tailwinds were partially offset by less favorable insurance experience in group insurance.

Lastly, our U.S. segment’s results on slide 17. In the U.S., we saw continued broad-based demand for our suite of products, resulting in a 9% increase in APE sales versus the prior year quarter. Together with product mix changes, we saw very strong growth in new business CSM of 34%. Core earnings decreased 22% year-on-year, primarily due to lower investment spreads and unfavorable life insurance claims experience, compared with favorable experience in the prior year. Moving on to cash generation and capital allocation on slide 18. In 2025, we generated remittances of CAD 6.4 billion, exceeding our CAD 6 billion expectation, positioning us firmly to meet our cumulative 2027 target of CAD 22 billion plus. Over the past three years, remittances have averaged over 85% of our core earnings.

While this has been positively impacted by in-force reinsurance activities and favorable market movements, we continue to expect 60%-70% of core earnings to materialize as cash remittances on a go-forward basis, a testament to our capital efficient and cash generative businesses. As Phil mentioned earlier, we will initiate a new share buyback program in late February 2026 to repurchase up to 2.5% of our outstanding common shares. In addition, our board has approved a 10% increase in our quarterly common share dividend. Together, these actions reflect our continued commitment to shareholder value creation. Let’s now move to our balance sheet on slide 19.

We grew our adjusted book value per share by 6% from the prior year to CAD 38.27, even after returning significant capital to shareholders, as well as the impact of a strengthening Canadian dollar that reduced the growth rate by 3%. We ended the year with a strong LICAT ratio of 136%, which was CAD 24 billion above the supervisory target ratio. Our financial leverage ratio of 23.9% remained well below our medium-term target of 25%. These robust metrics underpin the strength and resilience of our capital position and balance sheet. Moving to slide 20, which summarizes how we are progressing toward our targets. Our 2025 results reflect disciplined execution and momentum across the business, with meaningful progress towards achieving our Invest Today core ROE, remittances, and efficiency targets.

You can see the three-year progress of our Core ROE expansion in the appendix of the presentation. While our Core EPS growth was slightly below our target, due in part to headwinds in our U.S. segment this year, we achieved or are tracking well towards the remainder of our targets. By executing our refreshed strategy, I’m confident in our ability to achieve our 2027 and medium-term targets going forward. This concludes our prepared remarks. Before we move to the Q&A session, I would like to remind each participant to adhere to a limit of two questions, including follow-ups, and to re-queue if they have additional questions. Operator, we will now open the call to questions.

Conference Operator: Thank you. We will now begin the question-and-answer session. To join the question queue, you may press star, then one on your telephone keypad. You will hear a tone acknowledging your request. If you’re using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. Our first question comes from John Aiken from Jefferies. Please go ahead. Hi, John, is your line on mute?

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation0: Thank you. Sorry about that. Colin, point of clarification in terms of your commentary on the Hong Kong sales down because of the broker pressure and regulatory changes. Is this a step function, or can we see the sales levels maybe move back further, sorry, back up to a run rate level in 2026?

Steve Finch, Executive, Manulife Financial Corporation: Morning, John, it’s Steve Finch here. So for Hong Kong sales, maybe I’ll take a step back first. For the full year, we’re very happy with the Hong Kong performance. We saw strong sales for the full year, up 21%, NBV up 31%, NBCSM up 21%, and strong core earnings up 26%. So really good results. What we’re seeing in the quarter is, as Colin mentioned in his opening, both a tough year-over-year comparative. We had very strong results in Q4 prior year, but isolated to softness that we’re seeing in the broker channel and in particular, the MCV broker channel. The distributors there, they’re adjusting to some regulatory changes.

You know, this is not unusual from what we see in different markets in Asia, with regulatory changes coming in, some adjustment period, and then a resumption of growth. We benefit from a diversified distribution strategy in Asia, and we saw continued growth in Q4 in both our agency and banca channel. So as we look to the future, we’re confident, you know, the underlying customer demand is still there. The fundamentals are strong, so we expect that, you know, the brokers will adjust and we’ll see sales increase over time.

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation: John, this is Phil. Just if I could add one thing. Consistently on this call in recent years, I’ve said that we have appetite for the broker channel, but we can see quarters where there’ll be variability in volume, particularly if there are changes in the regulatory environment, which we have seen over the past six months, and because of competitive factors and the competitive environment. The environment is competitive in the broker channel. I think the really important point is that our core channels of agency as well as bank delivered strong growth in the fourth quarter, as Steve said.

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation0: That’s awesome. Thanks for the color. I’ll requeue.

Conference Operator: Our next question comes from Tom MacKinnon from BMO. Please go ahead.

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation1: Yeah, just to follow up with respect to that, and then one other question. If I look at the NBV margin, it’s in Hong Kong, it’s 52.4% in fourth quarter 2025 and 39.7% in the fourth quarter of 2024. So substantially increased. Is this due to mix? Is the agency and the bank a channel certainly more profitable than the broker channel? And, if so, you know, why focus more on the, on that, MCV broker channel if the others are, provide better, like, new business value and better CSM-- new business CSM growth and better NBV margin?

Steve Finch, Executive, Manulife Financial Corporation: Yeah, thanks, Tom. It’s Steve. You noted an important point there. We saw the margin in Hong Kong, NBV margin year-over-year increase over 12%, and it is a mix. We, you know, we saw with the MCV broker sales dropping, that is a lower margin channel, certainly. You know, we see it as attractive. We regularly, you know, adjust our overall focus on volume versus margin and optimize there. But, you know, the core of our business continues to be domestic agency, where we’ve, you know, we’ve got strong margins and continue to have strong growth. So, yeah, we’re, we’re happy with that mix overall. We did see also a product mix shift.

We’ve been emphasizing and meeting the customer needs around health and protection, and we saw an increase in our health and protection sales, which also contributed to the margin expansion.

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation1: All right, and a question perhaps for Paul. I mean, we’re just into the Comvest close here, but, I think you’ve noted an impact from eMPF in terms of, what it would be post-tax to, GWAM earnings. What about Comvest? I know you’ve talked about overall accretion, but, I mean, you used a lot of cash to make this acquisition. How should we be looking at the GWAM, segment going forward in light of, the incremental earnings from Comvest?

Speaker 6: Yeah, thanks, Tom. It’s Paul here. So just in terms of outlook, as you mentioned, we’re quite pleased with... Maybe I’ll start with the eMPF. Just in terms of the rationale or change there, we’re about halfway. Even though we’ve converted, I would say about half of the impact that we provided guidance is reflected in the current quarter, and that’s still an accurate guidance go forward. As it relates to Comvest, we don’t disclose the metrics separately at this point, but what I would say is it was a positive contributor to, you know, AUMA marginally, because it closed late in the year, to gross flows, net flows and core earnings. And it is tracking in line with what we had expected early. We’re quite excited about it in terms of what we’re seeing in terms of customer demand.

The category itself is expected to double. And just to give you a little bit of a proof point of why we’re so optimistic, if we look at CQS, which closed a number of years, year and a half ago, which is alternative credit, our AUM is up 40% since deal close, and it’s driving a lot of positive top line, and we expect to see similar, you know, similar excitement around the Comvest product suite just because of the demand. So it’s early, but we’re quite optimistic and, and quite happy with how it’s proceeding so far.

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation1: And if I could just squeeze one quick one in here. The 2.5%, NCIB, you got a pretty good track record. I think it’s over 3% you purchased in 2025. Colin, is there anything you can say about what your intentions would be with respect to this NCIB, given that, you’ve generally, historically purchased the bulk of these, NCIBs?

Phil Witherington, President and Chief Executive Officer, Manulife Financial Corporation: Well, thanks for the question, Tom. Let me jump in on that one. It’s Phil. You’re right. Our last NCIB program was 3%, and we completed that in full. This year, we’ve announced 2.5%, and, you know, it’s hard to predict the future, but where we stand now, our intention is to complete the program in full, and if anything changes there, I’m happy to update on future calls. From our perspective, our capital deployment strategy is balanced, and NCIB remains an appropriate use of capital, but at this level, 2.5%, it’s not something that constrains our ability to invest organically in our businesses, which is really important in the context of the refreshed strategy that we laid out three months ago.

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation1: Okay, thanks.

Conference Operator: Our next question comes from Doug Young, from Desjardins Capital Markets. Please go ahead.

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation2: Hi. Good morning. Maybe just going to the U.S. division, it feels like, and correct me if I’m wrong, that you’ve had unfavorable mortality experience for 3-4 quarters, or for sure, unfavorable claims experience or experience in general for about 3-4 quarters in a row. I’m just hoping you can unpack what you’re seeing this quarter. You know, I think it’s mortality. Is there a particular product line? We had heard a little bit more about competition on the mortality side in the U.S. market. So just trying to kind of gauge kind of what you’re seeing and what to expect going forward.

Steve Finch, Executive, Manulife Financial Corporation: Hi, Doug. It’s Brooks Tingle. Thanks for the question. I guess I’d start with a quick reminder that we operate at the very high end of the market in the U.S., quite large policies. Now, that’s a very attractive segment of the market, and you see that reflected in our new business value metrics.

Brooks Tingle, Executive, Manulife Financial Corporation: ... it does result in some variability quarter to quarter and even year to year from a mortality perspective. And you’ll recall that Q2 of 2025 represented a particularly unusual level of variability. But we’re pleased that Q3 showed significant normalization improvement from there, in Q4, still further improvement from there. And I’d actually characterize where we finished Q4 is within sort of a normal range of variability. And I’ll probably leave it at that.

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation2: So you’re not seeing a particular trend here that would, in the end, result in some form of actuarial reserve increase that’s required for these businesses? I guess that’s where I’m trying to go.

Naveed Manzoor, Executive, Manulife Financial Corporation: Hi, it’s Stephanie here. I think, I think Brooks covered it well. What we saw this quarter is sequentially improved claims experience, and I really view this as normal variability due to slightly elevated severity. And we’ll see variability from time to time, given we are in the large case business. I don’t view this as a trend. In fact, same quarter last year, we had and for the full year of 2024, we saw claims gains through PNL in this business.

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation2: Okay. And then second question, maybe for Colin or for Phil. Yeah, I guess my question is: Can you achieve an 18%+ Core ROE target by 2027 with the level of excess capital that you have, and you’re underlevered as well? Or do those things need to kinda normalize? And I assume you’re going to say yes, but maybe if you can map out how you get from 16.5% to 18%+ in the next two years, just to give a sense of what those drivers could be. And then maybe we can kind of tie in, like, why not be more aggressive on the NCIB, given the amount of capital or cash that you’re generating and the amount of excess capital you currently sit on?

Phil Witherington, President and Chief Executive Officer, Manulife Financial Corporation: So, Doug, this is Phil. I will hand over to Colin, but I do want to say, yes, we do remain confident that we can get to the 18%+ Core ROE target, and there are various reasons underpinning that, but I’ll let Colin walk through it.

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation: Yeah, Doug, hey, good morning. I think the important point to note is we’ve mapped out a number of scenarios to get us to the 18%. We’re confident that we’re going to get there. You know, we were at 18.1 last quarter, 17.1 this quarter, so the trajectory is good. You know, we live in a fluid environment, and we will use share buybacks, not as the primary driver to get to the 18% ROE, but as a lever to pull in order for us to get there. You mentioned excess capital being a drag on our ability to grow ROE. That’s, that’s certainly the case.

We have got, you know, around about CAD 10 billion above our upper operating limit, but that becomes a competitive strength in either difficult times or, you know, in a whole range of scenarios. So we’re in no hurry to deplete what is a very favorable capital position.

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation2: Okay, I’ll leave it there. Thank you.

Conference Operator: Our next question comes from Gabriel Dechaine from National Bank Financial. Please go ahead.

Speaker 2: Hi. Actually, just to follow up on that mortality issue in the U.S. So you’re confident this isn’t some trend. I guess one way to, you know, confirm your view more or less is, like, is there any impact of, from what’s happening in this business, mortality-wise, on your appetite for, you know, LTC, dispositions? ’Cause that business would be a, as a hedge to higher mortality. Hello?

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation: I know. We’re here, Gabriel. Just I think it’s probably best for Brooks to take a start on that, and maybe Naveed will comment from an LTC perspective.

Brooks Tingle, Executive, Manulife Financial Corporation: Yeah, I would just say that, you know, certainly we don’t view this as a long-term trend. We look at it very carefully. There’s variability for sure. If you look at our Q4 results, you know, from a core earnings impact, you see a little bit more. It looks a little bit like an outsized impact because we actually had a gain the prior Q4, which again, reflects that variability. But if you look at, you know, sort of post-COVID, the range of, you know, tailwind and headwind from mortality in the life segment in U.S., it’s been within a reasonably tight range, and the Q4 result was in that range. So we’re pleased to see it normalizing, though there’ll always be some amount of variability.

Again, I would point to that while there is that variability associated with operating at the high end of the market, the value metrics are very strong. You saw that last year, and we’re very confident about our ability to continue to grow that business.

Naveed Manzoor, Executive, Manulife Financial Corporation: Yeah, it’s Naveed here. I would just add that, you know, given that we don’t, we don’t feel the mortality is a sort of long-term trend, it’s not really affecting how we’re thinking about LTC transactions. You know, we, as you know, we’ve done two significant transactions with different counterparties at or near book value, which provides sort of external validation of our assumptions in LTC. And, you know, we’re continuing to focus on evaluating opportunistic transactions that drive shareholder value. That won’t go away.

Speaker 2: Okay, and I guess just to continue down that path with regards to legacy book dispositions. Quickly, is the mortality issue tied to a legacy block? But the real question is, when I look at the transactions that you’ve announced in the past and how you’ve neutralized the earnings per share impact from the disposition is by buying back stock, is that dynamic, I mean, much more challenging now, i.e., makes dispositions a lot more difficult to do and make them EPS neutral? Because, you know, it’s a different discussion when your stock’s at, you know, two times book versus, you know, just over one times, when the first deal was announced a couple of years back... or, I guess another, are you committed to making dispositions earnings per share neutral?

Steve Finch, Executive, Manulife Financial Corporation: So, Gabriel, thanks. It’s Brooks. I’ll turn to Naveed on the broader question of legacy dispositions or not. But I will say on the claims we’ve seen really in Q2 of 2025 and a little bit beyond, it’s not anything notable as it relates to a particular block. It you know, incidence, the number of claims is actually favorable. It’s really, again, because we write these large policies, you know, a confluence in a quarter of a small number of large cases that drive, that drove that result. So, there it’s not early duration business. This is generally business written 20+ years ago, so nothing really abnormal there, just works out to variability quarter to quarter, year to year.

Speaker 2: All right.

Naveed Manzoor, Executive, Manulife Financial Corporation: Yeah, I would just add that, you know, on our legacy businesses, I feel really good about how we’re managing them organically. You know, you’ve seen our success in obtaining premium rate increases on LTC, contractually allowed. We’ve continually beat our assumptions on that. We’re investing significant amounts on fraud, waste, and abuse. That said, you know, we have. We connect regularly with the market in terms of opportunistic transactions. There is interest in the market, and we continue to follow up with them. And I don’t think we’re constrained with respect to what we can do there.

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation: Yeah, I think, Gabe, just to pile on there. You know, you talked about the book value multiple in the shares. I mean, that is not a constraint for us to grow our earnings per share. We’ll look at each deal on an individual basis and then make any according capital allocation decision based on that deal on its own merits. So I don’t, I wouldn’t read anything into how the current share price is affecting our ability to do future deals.

Speaker 2: Okay, thanks.

Conference Operator: Our next question comes from Mike Ward from UBS. Please go ahead.

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation3: Thank you, all, and good morning. I was curious about the Japan business, actually. You know, one of your global kind of peers has run into a little bit of a hiccup in terms of just distribution in Japan. So I’m just wondering what you see in this kind of high net worth market for insurance and wealth products in Japan, and if you see any, you know, disruption or change, anything changing there in terms of the market structure?

Steve Finch, Executive, Manulife Financial Corporation: Yeah, thanks, Mike. It’s Steve here. Yes, I’m well aware of what’s been reported by one of our peers in Japan, and it’s not directly applicable to Manulife. One thing I’d point out is we’re very experienced in running a multi-channel distribution model in many countries in Asia, including Japan, and over time, we’ve built and continue to build strong controls and compliance programs. Whenever there are isolated issues, we address them very swiftly. And then to your point around the Japan market, you know, we’re—what we’re seeing is some strong success in the Japan market. You see from our numbers, you know, double-digit growth this year.

We’ve been executing on a strategy to capitalize on customer needs, and some, those needs are driven by interest rates that are structurally higher than they have been in the past. An aging society with long longevity, so a big need for retirement planning. We’ve expanded the product portfolio to meet more of these customer needs in terms of unit-linked product, whole life product, and that’s been driving our success, and we’re optimistic as we look forward in Japan. Thanks.

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation3: All right, my other questions were answered. Thank you.

Conference Operator: The next question comes from Paul Holden from CIBC. Please go ahead.

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation4: Hey. Thank you. Good morning. I want to ask a couple follow-up questions related to topics that have already been discussed. First one is around, Asia sales and I guess Hong Kong particularly. You know, you give us a number of different measures or metrics to follow, and I think we’ve all been conditioned to follow APAE sales because of IFRS 4 accounting. But now maybe there’s an argument that that shouldn’t be the number one, metric to follow. Maybe it should be new CSM growth, because that’s what’s really going to drive future earnings. Point A is like, do you agree with that? If you were to focus on one metric, that should be the most important one. And then second part of the question, like, does that influence, or to what degree does that influence how you think about, sales mix?

Steve Finch, Executive, Manulife Financial Corporation: Yeah, thanks, Paul. It’s Steve here, and you, you hit on an important point. I mean, the, you know, the way we think about this under IFRS 17, when we see sales variability, it does not translate into core earnings variability as the CSM amortizes into income. So we are focused on generating the most value for shareholders. NBV and NBCSM, you know, we report both, are both a good indicator of the value that we’re generating for different reasons. So we focus on both, both of those, and we drive maximum dollar magnitude with an important guiding light of the company’s medium-term ROE target of 18% plus. So, we optimize for dollar of value while meeting that, meeting or exceeding that hurdle rate, and that’s what we’re looking to optimize.

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation4: Okay. So if I, if I measure this quarter on that basis, then it was a really good result for Asia sales?

Steve Finch, Executive, Manulife Financial Corporation: Yes.

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation4: Okay.

Steve Finch, Executive, Manulife Financial Corporation: As Colin noted, NBV up for the segment of 10% and NBCSM up 19%. Helping drive year-over-year, CSM was up.

Brooks Tingle, Executive, Manulife Financial Corporation: ... organically, 11%, total 19%, and a little over $2 billion.

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation5: Yeah. Okay. Okay, good. And then my second question, again, to follow up to, to, to prior discussions, is on the U.S., core insurance experience. So, you know, the questions were a little bit more focused on, on the short term, but if I think about the U.S. segment over the long term, you know, negative experience or unfavorable experience as kind of being the issue or concern for investors for a long, long period of time, for, for, for different reasons. So given the refresh strategy and the renewed focus on wanting to grow the U.S., I think it’d be helpful to give people more comfort around the experience there and how you’re growing.

I don’t know if there’s any actions you can take to kind of get that experience to more neutral or positive, or again, how you’re thinking about that, because I think addressing that issue again would give people a lot more comfort around this renewed growth emphasis on U.S. Just thoughts, comments, there.

Phil Witherington, President and Chief Executive Officer, Manulife Financial Corporation: Hey, Paul, this is Phil. It’s an excellent question, and thank you for asking it. In our strategy refresh, one of the things that we emphasized was the importance of having a diversified portfolio. When I think about that, you know, of course, diversification is a risk mitigant, but in particular for the U.S., there are many things that the U.S. business, John Hancock, contributes to Manulife that we value a great deal, including the earnings generation, including the capital generation and the stability of our capital generation. One of the things that we changed as part of the strategy refresh is actually having a clearer appetite to invest in that business so that we can sustain, for the long term, earnings and capital generation. Now, when we’re talking about investing in the business, it’s not about going back to where we’ve been before.

It’s actually growing in product lines that we have demonstrated tremendous value and success in recent years. And the drivers of adverse experience that you’ve referenced are quite different lines of business. The short-term matter of... that we’ve discussed on this call of, some mortality variability, we do believe that’s short-term variability, but I think it’ll be helpful to hear from Brooks some of the specific initiatives that we’re taking in the U.S. and build that confidence that they’re profitable, they’re sustainable, and, from a risk perspective, with an appetite. Brooks, over to you.

Brooks Tingle, Executive, Manulife Financial Corporation: Yeah, sure. Thanks, Phil, and thanks, Paul. Just quickly on policyholder experience, you know, we—you look at it, and certainly over a very long period of time, yes, whether it’s mortality, persistency or LTC experience, lots of attention there. But we’ve taken a whole range of options with respect to the U.S. segment, to optimize shareholder value, and that’s really resulted in, I think, a winnowing of a lot of that policyholder experience variability. LTC experience in Q4 was benign. The life claims experience, as I’ve said, was really representative, a particularly unusual level of variability in Q2, now normalizing. So we actually feel quite a bit better about policyholder experience in the U.S.

But to pick up on Phil’s point, feel really great about our ability to contribute to strong and profitable growth for Manulife via our new business franchise in the U.S. And, you know, I won’t go on too long about this, but I think everyone knows we’ve got a strong brand, we have an innovative and broad product suite. We have top relationships with independent distribution. And I’d point out, you know, with the couple of the fastest-growing segments in the U.S. economy are the so-called wellness economy and longevity economy, and we remain the only carrier in the U.S. that offers such services to their policyholders, early cancer screenings, things like that. Very strong consumer appeal, and you see that reflected in our new business value metrics for last year.

Similar to the discussion you had with Steve, our APE was up nicely last year, 24% for the full year, but new business CSM up 42%. So, a lot of other initiatives, in the interest of time, I won’t get into backing a quite ambitious growth plan for the U.S., and we feel very good about the risk, and expected policyholder experience profile of that business we’re putting on the books.

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation5: All right. Thank you for your time. I’ll leave it there.

Conference Operator: Our next question comes from Darko Mihelic from RBC Capital Markets. Please go ahead.

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation5: Hi there. Good morning. I just had a modeling question, maybe looking for a range here. I actually want to switching gears here and look to Canada for a moment. When I look at 2024 in Canada, you had a 43% increase in group sales. You know, this year it’s down 24%. So when I think about 2025, you had 12% growth in your expected earnings on the short-term business, and now that we’ve had a very big decline in sales, I wonder if you can give me an idea of what we could expect with respect to that important line item.

I don’t think we should think about a decline, but maybe you can give me a sort of a range or some sort of an outlook on expected earnings in short-term business for 2026.

Phil Witherington, President and Chief Executive Officer, Manulife Financial Corporation: Yeah. Hi, Darko, it’s Naveed here. So what you saw in 2024 was a very large case that we, we sold, a jumbo case. So, you know, as you know, in this business, there’s normal large case variability. So, you know, you have small and medium-sized cases that generally have a, you know, consistent trend, year over year, then you get these large cases that jump around year over year.

Naveed Manzoor, Executive, Manulife Financial Corporation: ... What we look at, in addition to sales, is our persistency and our sort of overall in-force premium, and that continues on a good trajectory. And so I think you can our recent sort of trends on PA profits is something that should continue going forward.

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation6: Okay. But at a similar pace, or should we at least expect a slowdown on the pace?

Naveed Manzoor, Executive, Manulife Financial Corporation: Yeah, no, at a similar pace, because again, our persistency remains very strong.

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation6: Okay, great. Thank you very much.

Conference Operator: Our next question comes from Mario Mendonca from TD Securities. Please go ahead.

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation7: Good morning. There have been a lot of healthy discussions around the liability side of the balance sheet. Can we flip over to the asset side? There’s growing concern among investors around private equity, private debt, and that obviously draws my attention to Manulife’s large private placement debt, the CAD 52, almost 2 billion. Can you talk about how credit experience has evolved in that asset category, and what proportion of that would you sort of—you would label as higher risk or, or sort of topical areas in that specific line, that CAD 51.8 billion of private placement debt?

Trevor Matthews, Executive, Manulife Financial Corporation: Hi, Mario. It’s Trevor. Thanks for the question. So as you noted, there are a wide range of definitions as to what you include in private credit, in private debt, and private placements. We have, for example, successfully participated in the investment-grade private placement market for many years. We like the diversification, the spreads, the covenants that you get relative to public markets. Just breaking down the CAD 52 million that you mentioned, our investment-grade portfolio is around CAD 45 billion, and our below investment-grade private credit portfolio, which, to your point, I would consider to be higher risk, that’s around CAD 4 billion-CAD 4.5 billion. It’s about 1% of our general account assets. It is focused on middle market loans to private equity-sponsored companies, but is also quite diverse by issuer, sector, and sponsors.

So there’s no real, real concentrations there, and we do manage, underwrite, and rate most of those assets in-house. And as I suggested, I would see this as being at the lower end of the risk spectrum, and about 90% of those assets are actually priced by an external vendor each quarter. And we’ve also executed multiple third-party sales from that portfolio, which I think also validates the asset valuations. To your point about performance, I think our investment-grade private placement portfolio has actually done the same or better than our public portfolio, so we have no concerns with that part of the portfolio. And on the private credit portfolio, performance has also been strong, even with COVID and, you know, relatively recent rate increases, and our credit experience is still comfortably within our underwriting loss assumptions.

So really quite happy with both parts of the strategy.

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation7: Okay, and then looking down a little bit on that portfolio composition, the private equity, the CAD 18 billion there. Can you talk about the ALDA-related charges this quarter and the extent to which private equity played a role or any other segment played a role?

Trevor Matthews, Executive, Manulife Financial Corporation: Sure. Thanks for the follow-up. So yes, in terms of ALDA performance this quarter, as I think we disclosed, the ALDA returns did improve. Both real estate and private equity were actually better than Q3. The area that was actually worse was infrastructure, which over the long term has actually been very strong for us. Private equity, it did underperform, but to your point, it is a large portfolio, and so we would expect to see some variability from quarter to quarter. Obviously, given some of the broader economic and geopolitical uncertainty, there’s gonna be a little bit of noise there.

But at the same time, I think strong public markets, the likelihood of short-term rate declines, as well as, I think, improving M-M&A and IPO activity on the middle market, private equity section of the market, I think all of those make us cautiously optimistic of an improvement in 2026.

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation7: So I’ll be quick here. If you buy the notion that sponsors are going to be active, as in returning capital to investors, IPOing, all things you referred to, is that supportive of all the performance, like the private equity performance? Or how would you, how would you describe that?

Trevor Matthews, Executive, Manulife Financial Corporation: I think it would be positive. I’d be looking forward to more of the IPO and M&A activity. I think it’ll improve liquidity, it’ll improve price discovery, and I think it will improve go-forward returns.

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation7: Thank you.

Conference Operator: Our next question is a follow-up from Darko Mihelic from RBC Capital Markets. Please go ahead.

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation6: Yeah, thank you. I just wanted to follow up on the ALDA question there. Slightly different angle, though. I am curious on, on how you’re capable of growing the ALDA portfolio, but not having the sensitivity to ALDA go up. And in fact, the insensitivity is going down. So you know, if I just look at it, it’s up CAD 7.5 billion over the last two years, but your sensitivity is actually down a little bit. So what is it that you’re doing there to... What is, what am I missing in the, in the sort of mark calculation?

Trevor Matthews, Executive, Manulife Financial Corporation: Hi, Darko. It’s Trevor. Thanks for the question. So it’s actually not that complicated. So we do have on the balance sheet, I think CAD 62 billion-CAD 63 billion of ALDA in total. But it backs a different group of liabilities, some of which are guaranteed, which is shareholder risk, and some of which is participating or adjustable, which is policyholder risk. So basically, we expect the ALDA backing the guaranteed liabilities to be flat and slowly decline as those liabilities age and if we do more reinsurance transactions. At the same time, the ALDA backing the adjustable and participating liabilities, where investment experience is passed back to the policyholders, will grow as those businesses grow.

So basically, what you’re seeing is that the overall ALDA portfolio that you see on the balance sheet may continue to grow, but not the income exposure for shareholders, and that’s why you’re seeing it slowly decline.

Colin Simpson, Chief Financial Officer, Manulife Financial Corporation6: Okay. I figured it was something like that, but that’s great. Thank you very much.

Conference Operator: This concludes the question and answer session. I would like to turn the conference back over to Mr. Hung Ko for any closing remarks.

Naveed Manzoor, Executive, Manulife Financial Corporation: Thank you, operator. We will be available after the call if there are any follow-up questions. Have a good day, everyone.

Conference Operator: This brings to a close today’s conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.