NBVR 2024

2024 New Business Value Report for Manulife's Insurance Businesses

(Excludes the value of new business for Global Wealth and Asset Management, Bank and Property and Casualty Reinsurance businesses)

Overview:

Manulife Financial Corporation (the "Company" or "Manulife") generated New Business Value ("NBV")1 of $3,077 million in 2024, up $753 million or 32%2 from 2023. In addition, NBV margin1 was 39.7% in 2024 and 39.3% in 2023.

Effective 2024, Manulife has ceased reporting Embedded Value ("EV") associated with the inforce business.

Background:

NBV is a measure of the present value of shareholders' interests in the expected future distributable earnings associated with sales in the reporting period. NBV is a useful metric to evaluate the value created by the Company's new business franchise.

We use a traditional deterministic discounted cash flow methodology for determining our NBV. This methodology makes implicit allowance for all material sources of risk embedded in our products using a risk-adjusted discount rate. It should be noted that this allowance for risk is approximate and may not correspond with the allowance determined using market consistent techniques.

The calculation of NBV necessarily requires several assumptions with respect to future experience. Future experience may vary from that assumed in the calculation, which may materially impact NBV. See "Caution Regarding Forward-Looking Statements" below.

‌1 For more information on NBV and NBV margin, see "Methodology and Definitions" below.‌

2 Percentage growth in NBV is stated on a constant exchange rate basis.

Willis Towers Watson Review Opinion on New Business Value

Manulife and its subsidiaries have prepared NBV results for the calendar year 2024. The NBV results, together with a description of the methodology and assumptions that have been used, were shown in the "2024 New Business Value Report for Manulife's Insurance Businesses (excludes the value of new business for Global Wealth and Asset Management, Bank and Property and Casualty Reinsurance businesses)".

Our scope of work covered:

• a review of methodology and assumptions used to determine the NBV for 2024, on standards in place at December 31 2024, and

• a review of the results of Manulife's calculation of the NBV. Willis Towers Watson has concluded that:

• the methodology used for the North American and Asian business is consistent with recent industry practice in each respective region as regards to traditional deterministic discounted cash flow methodology. This methodology makes an overall allowance for risk for the Company using risk discount rates which incorporate risk margins which vary by business, together with an explicit allowance for the cost of holding required capital. Willis Towers Watson has not considered how this compares to a capital markets valuation of such risk (so called "market consistent valuation"),

• the economic assumptions used have made allowance for the Company's current and expected future asset mix and investment strategy and are internally consistent, and

• the operating assumptions have been set with appropriate regard to past, current, and expected future experience, considering the nature of the business.

Willis Towers Watson has performed a number of high-level checks on the results of the calculations, without undertaking detailed checks on the models and processes involved, and has confirmed that no issues have been discovered that have a material impact on the disclosed NBV for the twelve-month period January 1, 2024 to December 31, 2024, or the sensitivity analysis.

New Business Value Results

(1) New Business Value ("NBV") for Canada and International High Net Worth business reflect IFRS reserving requirements and LICAT required capital. Asia and the U.S. reflect local regulatory reserving and capital requirements, except business ceded to an affiliate reinsurer, where it reflects IFRS reserving and LICAT required capital.

(2) Annualized Premium Equivalent ("APE") sales are calculated as 100% of regular premiums/deposits sales and 10% of single premiums/deposits sales.

(3) NBV margin is calculated as NBV divided by APE sales excluding non-controlling interest.

(4) Asia's NBV includes International High Net Worth business.

(5) NBV does not include Global WAM, Bank and P&C Reinsurance businesses.

2024 Results

Manulife reported an NBV of $3,077 million in 2024, an increase of 32%1 compared with 2023. In Asia, NBV increased 35% compared with 2023, driven by higher sales volumes in key markets including Hong Kong, Japan, Singapore and China. NBV margin remained resilient at 40.7%, with lower margins in Hong Kong with the growth in saving products outpacing protection products, offset by favourable business mix shift to higher margin savings products in China and Singapore. In Canada, NBV increased 28% in 2024 compared with 2023, driven by higher sales volumes in Group Insurance across all group benefits markets, along with higher participating life insurance and segregated fund products sales, partially offset by the non-recurrence of a large affinity markets sale in 2023. Higher margins in Individual Insurance also contributed to the growth in NBV. In the U.S., NBV increased 14% in 2024 compared with 2023, reflecting increased demand from affluent customers for accumulation insurance products, partially offset by lower sales of protection insurance products.

Update for Global Minimum Tax ("GMT")

In 2024, the Global Minimum Tax ("GMT") Act passed into law in Canada, reflecting a global minimum income tax rate of 15%, as agreed by certain members of the Organization for Economic Co-Operation and Development. For 2024 we recorded the resulting tax expenses in Corporate and Other, with no impact to NBV.

As additional local jurisdictions are expected to enact the GMT in 2025, we will recognize GMT in the reporting segment whose earnings are subject to it starting in 1Q25. Manulife has released a revised template for its statistical information package ("SIP"), together with updated 2024 quarterly results to reflect the impact of Global Minimum Taxes ("GMT"), to improve the year-over-year comparability of our financial metrics. The impact is a reduction to 2024 NBV of $131 million and a reduction in 2024 NBV margin of 1.7%, as shown below:

‌1 Growth in NBV is stated on a constant exchange rate basis.

Potential Impact on New Business Value Arising from Changes in Assumptions

The "Potential Impact on New Business Value Arising from Changes in Assumptions" table below outlines the potential impact on NBV for the year ended December 31, 2024 of changes in the assumptions used for NBV.

This includes sensitivities due to specific changes in market prices and interest rate levels projected using internal models as at a specific date. The sensitivities measure the impact of changing one factor at a time and assume that all other factors remain unchanged. For example, the discount rate, public equity return, and alternative long-duration asset ("ALDA") returemain unchanged when we test a 50 basis points ("bps") increase or decrease in fixed income market yields. Actual results can differ significantly from these estimates for a variety of reasons including the interaction among these factors when more than one changes; changes in investment retuand future investment activity assumptions; changes in business mix, effective tax rates and other market factors; and the general limitations of our internal models.

The potential impact on NBV of changes in assumptions includes impacts due to changes in the present value of expected future earnings on new business, and the present value of the cost of holding capital to support new business. We reflected a change in reserve assumptions only where the assumptions are set with reference to current market rates. This applies to the change in fixed income market yield in Canada, the U.S., and some Asia territories.

The sensitivities should only be viewed as directional estimates of the underlying sensitivities for the respective factors based on the changes in assumptions outlined below. Given the nature of these calculations, we cannot provide assurance that the actual impact on NBV will be as indicated.

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(1) For general fund adjustable benefit products subject to minimum rate guarantee, the sensitivities assume that credited rates are floored at the minimum.

(2) For the purpose of NBV sensitivities, assumption changes have been assumed to occur after the point-of-sale. Therefore, the NBV sensitivity gives an indication of how the NBV written during the year would have been affected by an economic shock occurring after the point-of-sale. NBV sensitivities consider hedging strategies on new business which are intended to be implemented shortly after sale. Actual changes in NBV due to experience being different from assumed may vary from what is shown above due to changes in product mix.

(3) ALDA include commercial real estate, timber and farmland real estate, oil and gas, and private equities.

(4) This shows the impact of increasing required capital levels by a relative 25% above those shown in the "Assumptions" table below.

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Manulife Financial Corporation published this content on May 07, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 07, 2025 at 22:10 UTC.