Leadership in challenging times J. Roy Firth EVP Individual Wealth Management
Agenda Manulife is strong and has a plan Canada s key strategies Looking ahead 2
Manulife is strong and has a plan Key themes: Manulife has addressed its challenges head on Manulife is well-positioned and strong Manulife is pursuing sustainable growth in all the right areas 3
Themes Manulife has addressed its challenges head on Manulife is well-positioned and strong Manulife is pursuing sustainable growth in all the right areas 4
Equity risk & interest rate risk Earnings sensitivity 1 to a 10% equity market decline 2 (C$ billions) Earnings sensitivity 1 to 100 bps interest rate decline (C$ billions) 1.5 1.2 Down 60% 2.2 1.8 Down 55% 0.7 0.6 1.0 0.2 5 2008 2009 2010 2011 2009 2010 2011 Including 100% AFS3 1 Please refer to Caution related to sensitivities on page 29 of the fourth quarter press release. bond 2 Assuming 100% hedge asset offset. 3 AFS is Available for Sale. offset
Canada Sales strength in key products Affinity Markets sales (C$ millions) Increased 15% 91 105 Despite higher prices Manulife Bank assets (C$ billions) Increased 30% 15.4 20.0 2009 2011 2009 2011 Canadian Mutual Fund sales (C$ millions) Manulife Bank earnings (C$ millions) Increased 293% 1,996 Increased 54% 80 123 508 2009 2011 2009 2011 6
U.S. Important transition underway Life Insurance sales (targeted for growth) (US$ millions) Increased 28% 316 404 Despite higher prices RPS Funds under management (US$ billions) Increased 16% 54.1 62.8 2009 2011 Mutual Fund sales (US$ billions) Increased 91% 6.5 12.5 2009 2011 JH Funds assets under management 1 (US$ billions) Increased 30% 27.3 35.5 2009 2011 1 Non-GAAP measure. See Note to Users Performance and Non-GAAP Measures below. 2009 2011 7
Asia Targeted growth areas having success Asia Insurance sales (US$ millions) Asia Contract Agents Increased 63% 1,244 Increased 42% 50,179 763 35,263 2009 2011 Asia Wealth sales (ex. variable annuities) (US$ millions) Increased 74% 2,168 3,767 2009 2011 ASEAN Wealth sales (US$ millions) Increased 65% 496 817 2009 2011 2009 2011 8
Themes Manulife has addressed its challenges head on Manulife is well-positioned and strong Manulife is pursuing sustainable growth in all the right areas 9
MCCSR Well above target Minimum continuing capital and surplus requirements (MCCSR) ratio (MLI) (%) 221 234 240 249 216 150% Supervisory Target Given our reduced sensitivity to movements in financial markets and Provisions for Adverse Deviation, MLI s capital position represents a substantial cushion 2007 2008 2009 2010 2011 Note: A number of changes not related to capital reduction or risk have negatively impacted the MCCSR ratio, including: U.S. Sub re-organization at 4Q09 represents impact at that time, IFRS Phase I and changes to asset risk capital transfer under affiliate reinsurance treaties as at 3Q11. These items amount to a total of 38 points. 10
Manulife is well positioned in key economies The top three economies in the world: U.S. China Japan Including Canada, four of the top ten economies: Canada Our other eight operations are located in the fastest growing economies in the world: Hong Kong Philippines Singapore Indonesia Vietnam Malaysia Thailand Taiwan Entering Cambodia Not in Europe 11
We have balanced earnings 2011 Net income excluding notable items 1 (C$2,792 million, excludes Corporate and other Division) U.S. Division 36% Asia Division 34% Canadian Division 30% 1 Non-GAAP measure; see Note to Users Performance and Non-GAAP Measures below. See slide 39 for 2011 Net income excluding notable items by division. 12
Themes Manulife has addressed its challenges head on Manulife is well-positioned and strong Manulife is pursuing sustainable growth in all the right areas 13
Manulife is pursuing sustainable growth in all the right areas Continuing to build our balanced Canadian franchise Continuing to grow higher ROE, lower risk U.S. businesses Exploiting our Asian opportunity to the fullest Growing asset management businesses U.S., Canada and Asia 14
Canada Our businesses Wealth Investments Bank Securities HNW Insurance Insurance Affinity Group Benefits Retirement PRPP 15
Canada s key strategies Key strategies for Canada Executing a broad based, diversified financial services strategy Focusing on growing higher return / less capital intensive businesses & diversification Leveraging in-force through increased cross selling Continuing to build on reputation for product innovation 16
Canada Comprehensive product offering Protection Term Insurance Critical Illness Disability Travel Medical & Dental Universal Life Whole Life Variable Annuities Manulife Bank Savings Mutual Funds GICs Annuities Group Retirement Meeting the needs of Canadians, across the spectrum of financial services products 17
Manulife Mutual Funds Fixed distributions to help cover income needs Targeted monthly distribution payout Manulife Preferred Income Fund 100% Manulife Diversified Income Portfolio 30% 70% $0.042 $0.042 Manulife Yield Opportunities Fund 30% 70% $0.05 The above target allocations and payouts are not guaranteed and may be subject to change. For illustration purposes only. Manulife Monthly High Income Fund 60% $0.06 40% Equities Fixed Income 18
Manulife Mutual Funds Not your plain vanilla bond shop Distribution yield (%) 19 9 8 7 6 5 4 3 2 1 0 Manulife Short Term Bond Fund 2.16% Fixed Income Manulife Bond Fund 2.44% Manulife Canadian Bond Fund 2.78% Manulife Strategic Income Fund 3.73% Manulife Asia Total Return Bond Fund* Manulife Floating Rate Income Fund Manulife Manulife Corporate Emerging Bond Fund Markets Debt Fund* Manulife High Yield Bond Fund* As of December 31, 2011. Figures are based on an average of paid distributions over prior 12 months. Distribution yields calculated using average of month end Net Asset Value Per Share. Positioning on yield spectrum is an approximate. *New funds launched May 30, 2011 and August 19, 2011; positions on the spectrum are based on target distributions. Distributions are not guaranteed. For illustration purposes only. NEW! 4.16% NEW! 6.50% NEW!
Manulife Mutual Funds Balanced fund choice A diversified balanced fund line up across investment philosophies Manulife Monthly High Income Fund (MAM) Manulife Diversified Investment Fund (Mawer) Manulife Value Balanced Fund (MAM) Manulife Global Small Cap Balanced Fund (Mawer) 60% 40% 70% 30% Manulife Canadian Opportunities Balanced Fund (MAM) Manulife Global Focused Balanced Fund (Third Ave) 50% 50% Equity exposure increases Manulife Yield Opportunities Fund (MAM) Manulife Diversified Income Fund (MAM) 30% 70% Equities Fixed Income The above target allocations are not guaranteed and may be subject to change. For illustration purposes only. 20
Manulife Mutual Funds Non-traditional mandates allow you to explore Manulife Mutual Fund name Approx. # of Competitors Manulife Leveraged Companies Class 0 Manulife Global Small Cap Balanced Fund 0 Manulife Asia Total Return Bond Fund 0 Manulife Emerging Markets Balanced Fund 1 Manulife Floating Rate Income Fund/Class 2 Manulife Preferred Income Fund 2 Manulife Global Natural Resources Fund 3 Manulife Emerging Markets Debt Fund 4 Manulife Global Infrastructure Fund/Class 11 Manulife Global Real Estate Fund/Class 14 Source: The above data was comprised by Manulife Mutual Funds using Morningstar Direct as of January 31, 2011 and may not be reliable. Used category, key word & key word short forms search to determine # of competitors ie typed leveraged companies or funds with lev in the name to see if there were funds with similar names. Due to non-standardized naming conventions some funds may have been missed. Risk and investment objective were out of scope. Due to new funds constantly being developed and different naming conventions possibility of errors exist. 21
Manulife Mutual Funds Tools to help you build your business SOLUT!ONS Magazine/ Online CE Centre Portfolio Optimizer Product Allocation Small Business Centre Tax and Retirement Services Marketing Support 22
Manulife Mutual Funds A strong commitment to sales and services One of the largest sales forces in Canada (86 sales professionals) # 2 ranked wholesaling team # 1 ranked Inside Sales team* Source: 2011 Environics Advisor Perception Study * Tied for 1 st with another fund company 23
Manulife Investments Guaranteed Products Clients need for income solutions and the significant shift in demographics will continue to drive Canadian lifetime income market growth Product designs will continue to evolve, balancing risks with benefits Products will show flexibility, adapting to changing market conditions Manulife Investments is committed to providing guaranteed income solutions 24
Manulife Investments Suite of income solutions Income Mutual Funds Series T Annuities GIC RRIF GIC refers to Guaranteed Interest Contract. 25
26 Manulife Investments PensionBuilder Advertising begins next week
Manulife Insurance Manulife s original business 27
Manulife Insurance A diversified product portfolio Protection Synergy Family Term Lifecheque Disability (Proguard, Venture, etc) Estate Planning Performax Gold InnoVision T100 Meeting the needs of Canadians across the broad spectrum of insurance products 28
Manulife Insurance Developing innovative products Synergy is an innovative solution to meet the needs of young families and professionals Integrates life, critical illness and disability insurance with a unique pool of money that can be accessed in three different ways Excellent starter insurance plan or top-up to group benefits Performax Gold Performax Gold is a powerful tool for long-term financial planning, such as retirement or estate planning Permanent, whole life insurance that gives clients lifetime insurance protection with Guaranteed Cash Values. Its unique product features help increase plan values and maximize wealth on a tax-deferred basis 29
Manulife Insurance Reaching out in innovative ways Synergy consumer advertising on TV beginning May 28 th 30
Manulife Bank Profile Canada s advisor bank since 1993 $20.9 billion in assets* 250+ reps to serve you 20,000 advisors Your clients have banking needs. Shouldn t you be the one to address them? mymanulifebankrep.ca * As at February 29, 2012 31
Manulife Bank Product development continues Manulife Bank One for Business Coming soon for BC, AB, SK, ON, PQ Manulife Bank Select New mortgage option Enhancements coming in June 32
Manulife Bank Advertising and marketing support New Manulife One commercial Coming soon refreshed websites 33
Bank Commercial
Coming soon The Pooled Registered Pension Plan New registered retirement savings vehicle National scope potentially 526K employers and 7.6M Canadians will need a plan in condensed timeframe What can you do? Visit Repsource to learn more about PRPP 35
Coming soon Manulife Private Wealth referral opportunity Your Personal Banker Your Relationship Team* Your Investment Counsellor Specialists on call: trust, tax, legal, etc. Your Referring Advisor Banking Wealth Banking: Premium Cash Management Family Wealth Account Personalized Credit Solutions Net Worth Optimization *Primary point of contact will be defined Investments Discretionary Portfolio Management: Experienced portfolio management Global investment solutions Disciplined asset allocation & rebalancing Consolidated reporting Insurance, Trust & Advisory Wealth and Estate Services: Retirement Services Insurance Services Tax and Estate Planning Trust Services Private Company Advisory Philanthropy 36
Coming soon Manulife sponsorship June 18 to 24, 2012 Waterloo, Ontario 37
Leadership in challenging times Summary Manulife is strong Balanced approach in Canada We re making the necessary changes New products/marketing/branding/promotion Advisor-focused 38
39 Thanks for your business!