Virtual fireside chat with Mario Mendonca of TD Securities

Earlier this week, I participated in a virtual fireside chat with TD Securities equity research analyst Mario Mendonca. We discussed the global impact of the coronavirus and how Manulife has positioned itself to navigate turbulent times.

Here is a summary of the key points we covered. You can also find a link to the full recording of our conversation below.

1. The health and safety of our team, our customers and communities around the world is our top priority.

We all have an obligation to step up and the protect the health of our people, our customers and the communities we operate in. On March 15, I joined other Canadian business leaders in signing an open letter focused on slowing the pace of transmission of the virus – this has to be our number one priority. 

At Manulife, we continue to take the necessary actions to ensure business continuity and I’m confident that we’re well positioned to navigate this evolving situation.

In North America, nearly all of our employees are now working from home, which is a testament to the power of our remote capabilities and business continuity practices. This gives us the confidence to support our team and our customers, who rely on us in trying times.

We are also providing support to the most vulnerable in our communities, and are donating funds to support communities in need across Canada, in Boston, and Asia.

2. Manulife is a very different company today than it was in 2008.

Over the past decade, we have significantly de-risked our business and reduced our company’s sensitivity to market movements. Our sensitivity to a 50 basis point parallel shift in interest rates is one tenth of what it was in 2009 and our equity market sensitivity is less than half of what it was in 2009.

We have sophisticated hedging programs in place and, as you have seen in recent years, they have performed in-line with expectations.

The fourth quarter of 2018 is a good example of this. We saw heightened market volatility as markets declined roughly 15% and our results were broadly in-line with our disclosures.

Another benefit we have, as an insurance company, is a steady stream of revenues regardless of the sales generated in any given quarter. We are privileged to have been in business around the world for over 100 years and today we serve 30 million amazing customers.

3. We have the right strategy, and the right team.

The underlying demographic trends that underpin our strategy remain valid. These include the growing middle class in Asia, a significant global retirement gap, and the increase of digitization. If anything, the current crisis underscores the importance of insurance, wealth management and being well prepared for retirement.

When we established our strategy two-and-a-half years ago, we identified five key priorities and have made significant progress on each one:

1. Portfolio Optimization
2. Expense Efficiency
3. Accelerate Growth
4. Digital, Customer Leader
5. High Performing Team

As of 4Q19, we released a total of $5.1 billion of capital, achieving our 2022 portfolio optimization target three years ahead of schedule. We remain focused on portfolio optimization and will continue to pursue opportunities to optimize our legacy portfolio which are in the best interest of our shareholders. As I’ve said before, this includes both organic and inorganic solutions and we will execute against those if interests align.

We also delivered savings of $700 million in 2019 and are on track to deliver further savings. Expense growth has also slowed significantly, from 7-9% in the past, down to 3% or less in recent periods.

We have the right team in place to deliver on our ambition and the strength, resilience and commitment to weather this unprecedented storm.

Be safe and be kind to each other – we will get through this together.

-Roy

Please click here to listen to the virtual fireside chat in full.