1 00:00:00,000 --> 00:00:02,040 Speaker 1: All right, Well, one stock we are watching is the 2 00:00:02,120 --> 00:00:06,080 Speaker 1: Canadian insurance Manulife Financial. The stock is off to a 3 00:00:06,160 --> 00:00:08,559 Speaker 1: hot start this year. It's outpacing the S and P 4 00:00:08,840 --> 00:00:11,560 Speaker 1: by a wide margin. And here and how to talk 5 00:00:11,560 --> 00:00:14,079 Speaker 1: about the landscape for the insurance market. I'm pleased to 6 00:00:14,120 --> 00:00:16,560 Speaker 1: say we have Roy Gory, he is Manual Life President 7 00:00:16,840 --> 00:00:20,920 Speaker 1: and CEO, joining us for an exclusive conversation. So I'm 8 00:00:20,960 --> 00:00:23,960 Speaker 1: looking through the notes, and you have been calling this 9 00:00:24,200 --> 00:00:28,400 Speaker 1: a transformation, twenty twenty three a transformational year. Your stock 10 00:00:28,520 --> 00:00:30,840 Speaker 1: is at the highest level since about two thousand and eight. 11 00:00:31,120 --> 00:00:32,320 Speaker 1: Is it still transformation? 12 00:00:32,800 --> 00:00:33,839 Speaker 2: It is still a transformation. 13 00:00:33,920 --> 00:00:36,400 Speaker 3: Firstly, it's great to be here with you, Katie, and 14 00:00:36,640 --> 00:00:38,760 Speaker 3: you know, for our company, we've been on a journey 15 00:00:38,760 --> 00:00:40,440 Speaker 3: of transformation since twenty seventeen. 16 00:00:40,479 --> 00:00:41,360 Speaker 2: We said we wanted to be. 17 00:00:41,360 --> 00:00:44,000 Speaker 3: The most digital customer century company in our industry, but 18 00:00:44,040 --> 00:00:45,519 Speaker 3: at the same time we knew we had to de 19 00:00:45,640 --> 00:00:48,680 Speaker 3: risk our business and improve our returns. Over the last 20 00:00:48,680 --> 00:00:51,600 Speaker 3: six years, we've increased our return on equery from about 21 00:00:51,600 --> 00:00:54,200 Speaker 3: eleven percent to sixteen percent. We've divested a lot of 22 00:00:54,240 --> 00:00:58,680 Speaker 3: low roe businesses, and we've also digitized our franchise. So 23 00:00:58,760 --> 00:01:01,840 Speaker 3: we're really pleased with the progress that we've made, and 24 00:01:01,920 --> 00:01:05,200 Speaker 3: twenty three was certainly a milestone year for US. We 25 00:01:05,319 --> 00:01:08,360 Speaker 3: achieved great operating results, Our core innings for share grew 26 00:01:08,440 --> 00:01:11,319 Speaker 3: by seventeen percent, double digit growth in our sales metrics, 27 00:01:11,400 --> 00:01:13,440 Speaker 3: and we delivered positive netflows from our wealth and. 28 00:01:13,400 --> 00:01:14,560 Speaker 2: Ass management franchise. 29 00:01:15,080 --> 00:01:18,680 Speaker 3: Q one was a nice momentum follow on from twenty 30 00:01:18,720 --> 00:01:22,120 Speaker 3: twenty three. But you're right, you know, I think organizations 31 00:01:22,160 --> 00:01:24,640 Speaker 3: like ours don't ever stop transforming. I think as I 32 00:01:24,640 --> 00:01:27,120 Speaker 3: look to the decade ahead, there's still a lot of 33 00:01:27,120 --> 00:01:29,040 Speaker 3: opportunity for us, and we need to continue to look 34 00:01:29,080 --> 00:01:32,679 Speaker 3: for ways to advance our agenda and deliver great value 35 00:01:32,720 --> 00:01:35,160 Speaker 3: for not just customers but also for shareholders. 36 00:01:35,280 --> 00:01:38,759 Speaker 1: Well, let's get into some of that, particularly in reinsurance. 37 00:01:38,800 --> 00:01:41,280 Speaker 1: So you've done several deals over the past couple of months, 38 00:01:41,280 --> 00:01:43,160 Speaker 1: But just to set the scene, the way I think 39 00:01:43,200 --> 00:01:47,240 Speaker 1: about reinsurance is basically insurance for insurance companies. Is that 40 00:01:47,280 --> 00:01:48,160 Speaker 1: a fair description. 41 00:01:48,560 --> 00:01:49,440 Speaker 2: I think that's right. 42 00:01:49,600 --> 00:01:53,440 Speaker 3: So insurance companies will reduce their risk by either reinsuring 43 00:01:53,440 --> 00:01:55,360 Speaker 3: them or divesting blocks. 44 00:01:55,920 --> 00:01:57,760 Speaker 2: And again for US, a big priority for. 45 00:01:57,760 --> 00:02:00,360 Speaker 3: US over the last six years has been reinsured ssurance 46 00:02:00,400 --> 00:02:03,240 Speaker 3: or divestitures. We freed up eleven billion dollars worth a capital, 47 00:02:03,280 --> 00:02:05,760 Speaker 3: which has been a key part of how we've actually 48 00:02:05,800 --> 00:02:08,919 Speaker 3: improved our return on equity and reduced our risk profile. 49 00:02:09,280 --> 00:02:11,680 Speaker 3: And we work with partners that either take the business 50 00:02:11,720 --> 00:02:15,160 Speaker 3: off our books or who reinsure the business and basically 51 00:02:15,200 --> 00:02:17,080 Speaker 3: take on the risk associated with it. 52 00:02:17,520 --> 00:02:19,800 Speaker 1: Well, you've been particularly active when it comes to long 53 00:02:19,880 --> 00:02:22,720 Speaker 1: term care. Actually, it looks like you've reduced your exposure 54 00:02:22,760 --> 00:02:26,840 Speaker 1: to long term care and variable annuities through reinsurance to 55 00:02:26,960 --> 00:02:31,160 Speaker 1: eleven percent from twenty four percent from twenty seventeen, which 56 00:02:31,240 --> 00:02:33,760 Speaker 1: is also the year that you took over as CEO. 57 00:02:34,080 --> 00:02:36,600 Speaker 2: Do you think that there's more deals there? 58 00:02:36,639 --> 00:02:39,600 Speaker 1: Are you going to pursue more long term care reinsurance 59 00:02:39,600 --> 00:02:42,440 Speaker 1: deals to further exit that business. 60 00:02:42,040 --> 00:02:43,400 Speaker 2: Yes, is the short answer. 61 00:02:43,440 --> 00:02:46,519 Speaker 3: In twenty three we did a milestone historic long term 62 00:02:46,560 --> 00:02:50,200 Speaker 3: care deal. There weren't many deals ever done before our transaction, 63 00:02:51,040 --> 00:02:54,040 Speaker 3: and it was the largest ever in history. So it 64 00:02:54,120 --> 00:02:56,520 Speaker 3: was an important signal to the market that long term 65 00:02:56,560 --> 00:02:59,560 Speaker 3: care is transactable and for us to be to have 66 00:02:59,639 --> 00:03:02,240 Speaker 3: been able to trade the book pretty close to our 67 00:03:02,280 --> 00:03:06,000 Speaker 3: book value sent a really positive message to the market 68 00:03:06,240 --> 00:03:08,360 Speaker 3: and as a result of that, there are now many 69 00:03:08,400 --> 00:03:10,880 Speaker 3: more interested parties who are coming to talk to us 70 00:03:11,320 --> 00:03:13,960 Speaker 3: about other parts of our long term care portfolio that 71 00:03:14,000 --> 00:03:17,160 Speaker 3: they may want to acquire or take on from us. 72 00:03:17,320 --> 00:03:19,280 Speaker 2: So we think it was a good first step. 73 00:03:19,560 --> 00:03:22,640 Speaker 3: We traded at a really very attractive price, but we 74 00:03:22,760 --> 00:03:24,200 Speaker 3: think that there's further opportunity. 75 00:03:24,440 --> 00:03:27,600 Speaker 1: So inbound offers you're receiving, you're not just soliciting bid 76 00:03:27,720 --> 00:03:28,280 Speaker 1: sort of sphere. 77 00:03:28,320 --> 00:03:31,080 Speaker 3: Yeah, So there are people that are or companies that 78 00:03:31,120 --> 00:03:33,480 Speaker 3: are interested in talking to us about our long term 79 00:03:33,520 --> 00:03:36,920 Speaker 3: care portfolio, and we're certainly engaging in conversations with them. 80 00:03:37,320 --> 00:03:40,839 Speaker 1: So if your exposure is about eleven percent right now, 81 00:03:40,880 --> 00:03:42,920 Speaker 1: do you have a specific target in mind for where 82 00:03:42,960 --> 00:03:43,760 Speaker 1: you'd like to get to. 83 00:03:44,120 --> 00:03:46,520 Speaker 3: We wanted to get our long term care and variable annuity, 84 00:03:46,560 --> 00:03:50,960 Speaker 3: which were the more problematic parts of our portfolio, significantly 85 00:03:51,160 --> 00:03:54,200 Speaker 3: reduce and as you rightly point out, they represented about 86 00:03:54,680 --> 00:03:57,520 Speaker 3: twenty four percent of our earnings in twenty seventeen and 87 00:03:57,640 --> 00:04:01,560 Speaker 3: now down to approximately eleven percent. We think a as 88 00:04:01,600 --> 00:04:05,720 Speaker 3: we naturally grow our business, that percentage will continue to decrease, 89 00:04:06,000 --> 00:04:08,560 Speaker 3: but if we can transact, then that will be a 90 00:04:08,680 --> 00:04:11,480 Speaker 3: quicker way for us to actually get down to certainly 91 00:04:11,560 --> 00:04:12,360 Speaker 3: less than ten percent. 92 00:04:12,880 --> 00:04:15,560 Speaker 1: So that's the state of reinsurance and long term care. 93 00:04:15,680 --> 00:04:18,080 Speaker 1: Let's also talk about Asia, because you think about your 94 00:04:18,120 --> 00:04:20,839 Speaker 1: recent earnings report, I think a lot of the street 95 00:04:20,880 --> 00:04:24,160 Speaker 1: was pleasantly surprised by the growth in Asia. Bloomberg Intelligence 96 00:04:24,200 --> 00:04:28,680 Speaker 1: actually expects that the region's profit contribution could be fifty 97 00:04:28,720 --> 00:04:33,120 Speaker 1: percent by twenty twenty seven. How do you expand distribution 98 00:04:33,480 --> 00:04:34,800 Speaker 1: in Asia? What does that look like? 99 00:04:34,960 --> 00:04:38,039 Speaker 3: Yeah, well, we're really proud of our Asia franchise. It's 100 00:04:38,040 --> 00:04:41,320 Speaker 3: one of the things that really differentiates us from our peers. 101 00:04:41,400 --> 00:04:44,479 Speaker 3: We've got such a strong presence in Asia that complements 102 00:04:44,520 --> 00:04:46,600 Speaker 3: our North America capabilities, both. 103 00:04:46,400 --> 00:04:49,400 Speaker 2: In Canada and in the US. And again, having a 104 00:04:49,440 --> 00:04:50,600 Speaker 2: diversified business. 105 00:04:50,360 --> 00:04:53,640 Speaker 3: Across three broad geographies is a significant advantage, certainly in 106 00:04:53,680 --> 00:04:56,200 Speaker 3: an environment where we're seeing GDP growth in North America 107 00:04:56,279 --> 00:04:58,400 Speaker 3: slow a little bit and Asia continue to grow at 108 00:04:58,400 --> 00:04:59,320 Speaker 3: four to five percent. 109 00:05:00,080 --> 00:05:00,640 Speaker 2: We were the. 110 00:05:00,600 --> 00:05:03,200 Speaker 3: Sixth largest Pan Asian player many years ago, and now 111 00:05:03,279 --> 00:05:05,160 Speaker 3: we're a top three player, and you need to be 112 00:05:05,240 --> 00:05:08,400 Speaker 3: a top three player to grow and to have credibility 113 00:05:08,480 --> 00:05:10,440 Speaker 3: in that part of the world. Now we've been in 114 00:05:10,480 --> 00:05:12,560 Speaker 3: Asia for more than one hundred and twenty five years, 115 00:05:12,960 --> 00:05:15,359 Speaker 3: so we've got a strong brand and presence there. 116 00:05:15,600 --> 00:05:16,800 Speaker 2: We've got a strong. 117 00:05:16,520 --> 00:05:20,200 Speaker 3: Distribution capability with about one hundred thousand agents, but also 118 00:05:20,480 --> 00:05:24,440 Speaker 3: ten bank assurance partners that we work with to sell 119 00:05:24,440 --> 00:05:28,640 Speaker 3: our insurance products. So for us, distribution is really key. 120 00:05:28,839 --> 00:05:32,400 Speaker 3: Presence and a brand also matters, but we're very optimistic 121 00:05:32,440 --> 00:05:34,839 Speaker 3: about the outlook for our business in Asia. 122 00:05:34,920 --> 00:05:37,680 Speaker 1: I have to say bank assurance was a new vocal 123 00:05:37,760 --> 00:05:40,280 Speaker 1: word for me as I was preparing for this interview. 124 00:05:40,920 --> 00:05:42,360 Speaker 1: But before I let you go, I do want to 125 00:05:42,400 --> 00:05:45,440 Speaker 1: talk about wealth and asset management, obviously an area of 126 00:05:45,440 --> 00:05:48,279 Speaker 1: focus for you. I know you were recently closed a 127 00:05:48,320 --> 00:05:51,560 Speaker 1: deal to acquire CQS and I'm wondering when you think 128 00:05:51,560 --> 00:05:54,400 Speaker 1: about growing that side of the business, are you're trying 129 00:05:54,440 --> 00:05:58,599 Speaker 1: to do that through more acquisitions or through organic growth. 130 00:05:58,720 --> 00:05:59,960 Speaker 2: Yeah, that's a great question. 131 00:06:00,200 --> 00:06:02,720 Speaker 3: Our wealth and asset management business has been a really 132 00:06:02,800 --> 00:06:05,960 Speaker 3: big priority and focus for us. Again, we're quite unique 133 00:06:06,000 --> 00:06:10,719 Speaker 3: in that we're geographically diverse, but we're also business diverse 134 00:06:11,000 --> 00:06:12,840 Speaker 3: in that we're not just a retail shop. 135 00:06:12,839 --> 00:06:14,479 Speaker 2: We have an institutional. 136 00:06:13,839 --> 00:06:17,120 Speaker 3: Capability, but we also have a retirement capability and with 137 00:06:17,480 --> 00:06:21,560 Speaker 3: a world where the population is constantly aging and there 138 00:06:21,640 --> 00:06:25,400 Speaker 3: is a huge retirement gap that really positions us really 139 00:06:25,520 --> 00:06:30,520 Speaker 3: very well to capture business growth and momentum. So for us, 140 00:06:30,600 --> 00:06:33,000 Speaker 3: growth will happen organically because we're in parts of the 141 00:06:33,040 --> 00:06:36,320 Speaker 3: world where our products are in huge demand and need. 142 00:06:36,680 --> 00:06:38,400 Speaker 2: But there's also an opportunity to put. 143 00:06:38,200 --> 00:06:41,560 Speaker 3: Our capital to work, and we're very well capitalized. So 144 00:06:41,680 --> 00:06:45,240 Speaker 3: the investing in businesses like CQS that add to our 145 00:06:45,360 --> 00:06:48,400 Speaker 3: capabilities is another way that we're going to grow beyond 146 00:06:48,440 --> 00:06:50,160 Speaker 3: the organic opportunity that we've got. 147 00:06:50,560 --> 00:06:53,200 Speaker 1: Well, given the share performance, it seems like you certainly 148 00:06:53,240 --> 00:06:55,919 Speaker 1: have some money to spend, but Roy, unfortunately we have 149 00:06:55,960 --> 00:06:57,880 Speaker 1: to leave it there. Hope to see you again soon. 150 00:06:57,960 --> 00:07:01,200 Speaker 1: Our thanks, of course to Ry of Manulife.