Manulife Financial Q1 Earnings Call Highlights

Manulife Financial NYSE: MFC reported what executives described as solid first-quarter 2026 results, with growth in insurance sales and earnings in Asia helping offset pressure in Global Wealth and Asset Management and unfavorable insurance experience in Canada.

President and Chief Executive Officer Phil Witherington said the company built on its 2025 momentum despite “heightened macro uncertainty,” pointing to double-digit growth in new business contractual service margin, or CSM, across each insurance segment. Manulife’s CSM balance rose 18%, while new business CSM increased 16% from the prior year.

Core earnings per share rose 11% year over year, which Witherington said was in line with the company’s medium-term target. Core return on equity was 16.5%, up 90 basis points from a year earlier, as management reiterated its goal of reaching 18% or higher by 2027.

Chief Financial Officer Colin Simpson said net income for the quarter was $1.1 billion, reflecting a market experience charge driven primarily by public equity performance. He added that most equity markets had “largely reversed their first quarter underperformance” by the time of the call. The company also recorded a $242 million charge in its ALDA portfolio, primarily tied to lower-than-expected returns in real estate, timber and private equity investments.

Asia Drives Growth as Japan, Hong Kong and Singapore Post Gains

Asia remained a key contributor to Manulife’s results. Witherington said the region generated strong sales, with meaningful growth in Hong Kong, Japan and Singapore. Simpson said Asia annualized premium equivalent, or APE, sales rose 11% year over year, supported by double-digit growth in those three markets. Hong Kong delivered record quarterly sales after a softer fourth quarter, with APE sales up 18% from a year earlier.

Asia core earnings increased 22% year over year, reflecting business growth and the favorable net impact of last year’s basis change, partly offset by less favorable insurance experience.

During the question-and-answer session, Steve Finch, President and CEO of Manulife Asia, said Japan’s performance reflected continued momentum from 2025 and the company’s effort to broaden its product lineup across distribution channels. Finch said Manulife had introduced whole life and investment-linked products that “hit the mark” with customer needs. He said the environment in Japan remained supportive for insurance, aided by customer demand for retirement savings and an interest rate backdrop that improved product attractiveness.

Asked whether first-quarter Asia earnings were a good baseline, Finch said the quarter was “a good base” for future growth, subject to normal variability.

Global WAM Sees Outflows Despite Record Gross Flows

Global Wealth and Asset Management recorded net outflows of $4.4 billion in the quarter, despite record gross flows. Simpson said outflows were driven by active mutual fund redemptions in North America retail and, to a lesser extent, U.S. retirement plan redemptions. These pressures were partially offset by institutional inflows, including contributions from the recently acquired Comvest business and CQS.

Paul Lorentz, President and CEO of Global Wealth and Asset Management, said gross flows reached $56 billion, up 13% from the prior quarter and 15% from the prior year. He said two model redemptions late in the quarter accounted for $3.4 billion of the $4.4 billion in net outflows and were related to partners reallocating asset mix rather than performance.

Global WAM core EBITDA margin expanded 60 basis points from the prior year, helped by AUMA growth, the Comvest acquisition and expense discipline, partly offset by the Hong Kong eMPF transition and lower performance fees. Core earnings grew 2%.

Lorentz said the eMPF impact was consistent with prior guidance at about CAD 33 million in the quarter, and that some one-time transition costs would not recur in the second quarter. He said the second-quarter earnings run rate should approach the $500 million mark, assuming current market levels.

Canada Pressured by Group Insurance Experience

Manulife Canada reported a 15% decline in APE sales, reflecting lower group insurance sales, partially offset by higher individual insurance sales. New business CSM rose 13%, driven by growth in individual insurance.

Canada core earnings declined 6% year over year, mainly due to unfavorable group insurance experience compared with favorable experience in the prior year. Simpson said the pressure reflected higher incidence and lower recoveries in long-term disability, as well as higher expenses tied to business growth and transformation investments.

Naveed Irshad, President and CEO of Manulife Canada and Global Head of Inforce Management and Group Reinsurance, said the company saw modestly higher long-term disability incidence and lower recoveries. He also cited experience losses in travel insurance due to recent global disruptions, which management does not expect to persist. Irshad said Manulife began hiring additional case managers in 2025 after disability caseloads exceeded target levels following business growth, and expects Canada segment total insurance experience to improve toward more normal levels by year-end.

Witherington noted that group sales can be lumpy and said persistency is a better metric for that business. He said persistency remains strong.

U.S. Sales Rise on Adjustable Products and Expanded Distribution

In the U.S., APE sales increased 29% year over year, driven by demand for insurance accumulation products. New business CSM also grew strongly. Core earnings declined modestly, mainly due to lower investment spreads, partly offset by favorable insurance experience.

Brooks Tingle, President and CEO of John Hancock, said the quarter marked the seventh consecutive period of strong new business growth. He pointed to a more than 50% increase in the wholesaling team from a year earlier, and said Manulife continues to benefit from differentiated offerings tied to wellness and longevity through its Vitality platform.

Tingle said the company’s U.S. business has largely moved away from long-duration guarantees since 2010, and that its current block is “virtually entirely adjustable.” Witherington said that shift should change the composition of U.S. earnings over time, with net investment income declining and insurance service results increasing as CSM is generated and amortized.

Capital Position Remains Strong as Management Reaffirms Targets

Manulife ended the quarter with a LICAT ratio of 136%, which Simpson said was $25 billion above its supervisory target ratio. The financial leverage ratio was 22.5%, below the company’s medium-term target of 25%.

Adjusted book value per share rose 6% from a year earlier to $39.01, even as the company returned $5.3 billion of capital to shareholders over the past year. During the quarter, Manulife returned $1.2 billion through dividends and buybacks. Its new buyback program, announced previously, allows the company to repurchase up to 2.5% of common shares outstanding.

Simpson said Manulife continues to expect 60% to 70% of earnings to convert into remittances, supported by a shift toward capital-generative products and strong subsidiary capital positions.

Management also highlighted strategic initiatives, including the acquisition of Schroders Indonesia, a partnership with L&G, expanded U.S. distribution and new AI tools across the enterprise. Witherington said developer productivity rose 30% in the quarter from AI tools, while an AI-powered U.S. retail sales platform in Global WAM increased meaningful advisor interactions by 40%.

Witherington said Manulife remains focused on executing its refreshed strategy and reaffirmed the company’s 18%+ core ROE target by the end of 2027. “We stand by the 18%+ Investor Day target,” he said, adding that he expects improvements through 2026.

About Manulife Financial NYSE: MFC

Manulife Financial Corporation is a multinational insurance and financial services company headquartered in Toronto, Ontario. Founded in the late 19th century as The Manufacturers Life Insurance Company, Manulife provides a broad range of financial products and services to individual and institutional clients. Its core businesses include life and health insurance, retirement and pension solutions, wealth and asset management, and group benefits.

In wealth and asset management, Manulife operates through Manulife Investment Management and offers mutual funds, segregated funds, institutional asset management, and retirement plan solutions.

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