Manulife Financial Corporation (NYSE:MFC) Q4 2019 Earnings Conference Call - Final Transcript

Feb 13, 2020 • 08:00 am ET


Manulife Financial Corporation (NYSE:MFC) Q4 2019 Earnings Conference Call - Final Transcript


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Good morning and welcome to the Manulife Financial Q4 2019 Financial Results Conference Call. Your host for today will be Ms. Adrienne O'Neill. Please go ahead, Ms. O'Neill.

Adrienne O'Neill

Thank you and good morning. Welcome to Manulife's earnings conference call to discuss our fourth quarter and year end 2019 results. Our earnings release, financial statements and related MD&A, statistical package and webcast slides for today's call are available on the Investor Relations section of our website at

We will begin today's presentation with an overview of our fourth quarter and year-end highlights and an update on our strategic priorities by Roy Gori, our President and Chief Executive Officer. Following Roy's remarks, Phil Witherington, our Chief Financial Officer, will discuss the company's financial and operating results.

After the prepared remarks, we will move to the question-and-answer portion of the call. We are aiming to conclude the call in one hour today, and thus ask each participant to adhere to a limit of two questions. If you have additional questions, please requeue and we will do our best to respond to all questions.

Before we start, please refer to Slide 2 for a caution on forward-looking statements and Slide 35 for a note on the use of non-GAAP financial measures in this presentation. Note that certain material, factors or assumptions are applied in making forward-looking statements and actual results may differ materially from what is stated. The slide also indicates where to find more information on these topics and the factors that could cause actual results to differ materially from those stated.

With that, I'd like to turn the call over to Roy, our President and Chief Executive Officer. Roy?

Roy Gori

Thank you, Adrienne. Good morning, everyone and thank you for joining us today. Turning to Slide 5, yesterday, we announced our fourth quarter and full-year 2019 financial results. We delivered net income of $1.2 billion more than double to prior year quarter and core earnings of $1.5 billion, an increase of 10% versus the fourth quarter of 2018.

Core ROE was solid at 12.5%, including the impacts of portfolio optimization actions. The core EBITDA margin in our Global Wealth and Asset Management business increased 90 basis points versus the fourth quarter of 2018, as we continued to build scale. And we returned to positive net flows delivering net inflows of $4.9 billion, an increase of $13.9 billion compared to the prior year quarter. Finally, we achieved our medium-term leverage target of 25%, after taking into account the $500 million debt redemption in January of this year.

Turning to Slide 6, we continue to deliver strong growth on both the full-year basis and five-year time horizon. In 2019, we delivered net income of $5.6 billion, an increase of $800 million from the prior year. The year-over-year increase was driven by growth in core earnings, the non-recurrence of a 2018 restructuring charge and higher investment-related experience gains, partially offset by $500 million charge related to updated ultimate reinvestment rate assumptions issued by the Canadian Actuarial