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