Speaker 1: All right, Well, one stock we are watching is the
Speaker 1: Canadian insurance Manulife Financial. The stock is off to a
Speaker 1: hot start this year. It's outpacing the S and P
Speaker 1: by a wide margin. And here and how to talk
Speaker 1: about the landscape for the insurance market. I'm pleased to
Speaker 1: say we have Roy Gory, he is Manual Life President
Speaker 1: and CEO, joining us for an exclusive conversation. So I'm
Speaker 1: looking through the notes, and you have been calling this
Speaker 1: a transformation, twenty twenty three a transformational year. Your stock
Speaker 1: is at the highest level since about two thousand and eight.
Speaker 1: Is it still transformation?
Speaker 2: It is still a transformation.
Speaker 3: Firstly, it's great to be here with you, Katie, and
Speaker 3: you know, for our company, we've been on a journey
Speaker 3: of transformation since twenty seventeen.
Speaker 2: We said we wanted to be.
Speaker 3: The most digital customer century company in our industry, but
Speaker 3: at the same time we knew we had to de
Speaker 3: risk our business and improve our returns. Over the last
Speaker 3: six years, we've increased our return on equery from about
Speaker 3: eleven percent to sixteen percent. We've divested a lot of
Speaker 3: low roe businesses, and we've also digitized our franchise. So
Speaker 3: we're really pleased with the progress that we've made, and
Speaker 3: twenty three was certainly a milestone year for US. We
Speaker 3: achieved great operating results, Our core innings for share grew
Speaker 3: by seventeen percent, double digit growth in our sales metrics,
Speaker 3: and we delivered positive netflows from our wealth and.
Speaker 2: Ass management franchise.
Speaker 3: Q one was a nice momentum follow on from twenty
Speaker 3: twenty three. But you're right, you know, I think organizations
Speaker 3: like ours don't ever stop transforming. I think as I
Speaker 3: look to the decade ahead, there's still a lot of
Speaker 3: opportunity for us, and we need to continue to look
Speaker 3: for ways to advance our agenda and deliver great value
Speaker 3: for not just customers but also for shareholders.
Speaker 1: Well, let's get into some of that, particularly in reinsurance.
Speaker 1: So you've done several deals over the past couple of months,
Speaker 1: But just to set the scene, the way I think
Speaker 1: about reinsurance is basically insurance for insurance companies. Is that
Speaker 1: a fair description.
Speaker 2: I think that's right.
Speaker 3: So insurance companies will reduce their risk by either reinsuring
Speaker 3: them or divesting blocks.
Speaker 2: And again for US, a big priority for.
Speaker 3: US over the last six years has been reinsured ssurance
Speaker 3: or divestitures. We freed up eleven billion dollars worth a capital,
Speaker 3: which has been a key part of how we've actually
Speaker 3: improved our return on equity and reduced our risk profile.
Speaker 3: And we work with partners that either take the business
Speaker 3: off our books or who reinsure the business and basically
Speaker 3: take on the risk associated with it.
Speaker 1: Well, you've been particularly active when it comes to long
Speaker 1: term care. Actually, it looks like you've reduced your exposure
Speaker 1: to long term care and variable annuities through reinsurance to
Speaker 1: eleven percent from twenty four percent from twenty seventeen, which
Speaker 1: is also the year that you took over as CEO.
Speaker 2: Do you think that there's more deals there?
Speaker 1: Are you going to pursue more long term care reinsurance
Speaker 1: deals to further exit that business.
Speaker 2: Yes, is the short answer.
Speaker 3: In twenty three we did a milestone historic long term
Speaker 3: care deal. There weren't many deals ever done before our transaction,
Speaker 3: and it was the largest ever in history. So it
Speaker 3: was an important signal to the market that long term
Speaker 3: care is transactable and for us to be to have
Speaker 3: been able to trade the book pretty close to our
Speaker 3: book value sent a really positive message to the market
Speaker 3: and as a result of that, there are now many
Speaker 3: more interested parties who are coming to talk to us
Speaker 3: about other parts of our long term care portfolio that
Speaker 3: they may want to acquire or take on from us.
Speaker 2: So we think it was a good first step.
Speaker 3: We traded at a really very attractive price, but we
Speaker 3: think that there's further opportunity.
Speaker 1: So inbound offers you're receiving, you're not just soliciting bid
Speaker 1: sort of sphere.
Speaker 3: Yeah, So there are people that are or companies that
Speaker 3: are interested in talking to us about our long term
Speaker 3: care portfolio, and we're certainly engaging in conversations with them.
Speaker 1: So if your exposure is about eleven percent right now,
Speaker 1: do you have a specific target in mind for where
Speaker 1: you'd like to get to.
Speaker 3: We wanted to get our long term care and variable annuity,
Speaker 3: which were the more problematic parts of our portfolio, significantly
Speaker 3: reduce and as you rightly point out, they represented about
Speaker 3: twenty four percent of our earnings in twenty seventeen and
Speaker 3: now down to approximately eleven percent. We think a as
Speaker 3: we naturally grow our business, that percentage will continue to decrease,
Speaker 3: but if we can transact, then that will be a
Speaker 3: quicker way for us to actually get down to certainly
Speaker 3: less than ten percent.
Speaker 1: So that's the state of reinsurance and long term care.
Speaker 1: Let's also talk about Asia, because you think about your
Speaker 1: recent earnings report, I think a lot of the street
Speaker 1: was pleasantly surprised by the growth in Asia. Bloomberg Intelligence
Speaker 1: actually expects that the region's profit contribution could be fifty
Speaker 1: percent by twenty twenty seven. How do you expand distribution
Speaker 1: in Asia? What does that look like?
Speaker 3: Yeah, well, we're really proud of our Asia franchise. It's
Speaker 3: one of the things that really differentiates us from our peers.
Speaker 3: We've got such a strong presence in Asia that complements
Speaker 3: our North America capabilities, both.
Speaker 2: In Canada and in the US. And again, having a
Speaker 2: diversified business.
Speaker 3: Across three broad geographies is a significant advantage, certainly in
Speaker 3: an environment where we're seeing GDP growth in North America
Speaker 3: slow a little bit and Asia continue to grow at
Speaker 3: four to five percent.
Speaker 2: We were the.
Speaker 3: Sixth largest Pan Asian player many years ago, and now
Speaker 3: we're a top three player, and you need to be
Speaker 3: a top three player to grow and to have credibility
Speaker 3: in that part of the world. Now we've been in
Speaker 3: Asia for more than one hundred and twenty five years,
Speaker 3: so we've got a strong brand and presence there.
Speaker 2: We've got a strong.
Speaker 3: Distribution capability with about one hundred thousand agents, but also
Speaker 3: ten bank assurance partners that we work with to sell
Speaker 3: our insurance products. So for us, distribution is really key.
Speaker 3: Presence and a brand also matters, but we're very optimistic
Speaker 3: about the outlook for our business in Asia.
Speaker 1: I have to say bank assurance was a new vocal
Speaker 1: word for me as I was preparing for this interview.
Speaker 1: But before I let you go, I do want to
Speaker 1: talk about wealth and asset management, obviously an area of
Speaker 1: focus for you. I know you were recently closed a
Speaker 1: deal to acquire CQS and I'm wondering when you think
Speaker 1: about growing that side of the business, are you're trying
Speaker 1: to do that through more acquisitions or through organic growth.
Speaker 2: Yeah, that's a great question.
Speaker 3: Our wealth and asset management business has been a really
Speaker 3: big priority and focus for us. Again, we're quite unique
Speaker 3: in that we're geographically diverse, but we're also business diverse
Speaker 3: in that we're not just a retail shop.
Speaker 2: We have an institutional.
Speaker 3: Capability, but we also have a retirement capability and with
Speaker 3: a world where the population is constantly aging and there
Speaker 3: is a huge retirement gap that really positions us really
Speaker 3: very well to capture business growth and momentum. So for us,
Speaker 3: growth will happen organically because we're in parts of the
Speaker 3: world where our products are in huge demand and need.
Speaker 2: But there's also an opportunity to put.
Speaker 3: Our capital to work, and we're very well capitalized. So
Speaker 3: the investing in businesses like CQS that add to our
Speaker 3: capabilities is another way that we're going to grow beyond
Speaker 3: the organic opportunity that we've got.
Speaker 1: Well, given the share performance, it seems like you certainly
Speaker 1: have some money to spend, but Roy, unfortunately we have
Speaker 1: to leave it there. Hope to see you again soon.
Speaker 1: Our thanks, of course to Ry of Manulife.