Transcript Presentation - International Insurance Society

A NEW WORLD OF OPPORTUNITY
Presentation to the
International Insurance Society’s
41st Annual Seminar in Hong Kong
Dominic D’Alessandro
President & CEO
Manulife Financial
July 11th 2005
A New World of Opportunity
• Industry has changed dramatically over the
last 10 years
• Significant opportunities for future growth
• High growth geographies, evolving product lines
and further consolidation
• Manulife is well positioned for a leading role
in the future of the life insurance industry
Significant Opportunities for Growth
• Select Geographic Markets

China, India, South East Asia
• Evolving Product Segments

Pensions, Long Term Care
• Consolidation Opportunities

United States, Asia
Select Geographic Markets
• North America
• Wave of demutualizations
• Consolidation driven by need for scale
• Europe
• Erosion of market capitalizations following equity
market decline
• Asia
• Negative spreads / industry restructuring in Japan
• High growth in other countries
Select Geographic Markets
Asia
Year Of
Manulife’s
Entry
2003 GDP
(US$ blns)
Est. 2004
Real GDP
Growth
Life Premiums
as a % of GDP
US
1862
11,004
4.4%
4.4%
Canada
1887
870
2.4%
2.7%
China
1996
1,417
9.1%
2.3%
Hong Kong
1897
157
7.9%
6.3%
Indonesia
1985
243
4.9%
0.6%
Japan
1999
4,436
2.9%
8.4%
Malaysia
1963
106
7.1%
3.3%
Philippines
1901
79
5.9%
0.9%
Singapore
1980
91
8.1%
6.1%
Taiwan
1992
287
6.0%
9.6%
Thailand
1951
143
6.1%
1.8%
Vietnam
1999
39
7.7%
1.1%
India
N/A
549
6.2%
2.6%
South Korea
N/A
621
4.6%
6.9%
Source: Swiss Re Sigma (Study 3/2004) and CIA World Factbook.
Select Geographic Opportunities
Product Portfolios Vary
Breakup of premium
income (%)
100
1.2
0.5
1.0
14.9
75
Income Protection
22.3
Critical Illness
Protection
93.0
50
29
Savings
Individual Pension
25
Group Pension
32
4
0
UK
Source: Boston Consulting Group
India
2
Select Geographic Markets
China
RMB:Billions
Inforce Life Premium Growth
350
300
250
200
150
100
50
0
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Select Geographic Opportunities
India
•
•
Insurance industry in India
has made significant progress
in recent years

New competitors,
products and distribution
channels
Immense size and increasing
prosperity will create
significant opportunity
Select Geographic Markets
Key Issues for Emerging Markets
• Exponential growth can create unstable
environments

Regulators are stretched

Lack of experienced management

Poorly trained agents

Poor persistency

Insufficient attention to expense control

Little concern for consumers
• Ownership restrictions can limit control
Select Geographic Markets
Key Issues for Emerging Markets
•
•
Challenging conditions and lack of scale make
success elusive
Majority of Manulife’s acquisitions have been
departures by foreign firms
1998
AMP Panin Life (Indonesia), Ongko Life (Indonesia)
2001
Daihyaku Mutual’s inforce business (Japan), Principal, Indonesia
2002
CIGNA Taiwan’s agency business, CMG Philippines, MetLife
Philippines, Manulife Singapore (50% from UOB)
2003
Zurich Indonesia, Zurich Philippines, ING Indonesia
2004
John Hancock Asia
Evolving Product Segments
Demographic Shift
World population is aging
Average annual
growth rates (%)
3.5
3
2.5
2
1.5
1
0.5
0
World
Sub-Saharan
Near East / N.
Africa
Africa
China
India
Other Asia /
Latin Am. /
Eastern
Developed
Oceania
Caribbean
Europe and
World
the NIS
Total Population
Source: U.S. Census Bureau
Population 65 and Older
Evolving Product Segments
High Growth Products
• Aging population creating new pressure
points
• Governments cannot shoulder entire burden
of progressively costly schemes
• Individuals realizing need to actively plan for
retirement needs
• Long term care and pension products well
suited to fill demand
Consolidation
Creating Opportunity for Growth
•
Benefits of scale continue to drive
consolidation
•
Rate of consolidation varies by geographic
sector


Western Europe, Canada consolidated
markets
Eastern Europe, United States, parts of Asia
remain fragmented
Consolidation
Active Consolidation
Value and number of life insurance transactions
$US Millions
$40,000
25
13
26
$30,000
14
$20,000
16
40
33
$10,000
23
14
15
14
13
13
8
6
$0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Source: Morgan Stanley, Zephyr and Bloomberg. Transactions are reported as of the date
announced, not all deal values were available.
Manulife Financial
Manulife
Ten Years of Change
1994
•
•
•
•
•
•
•
Divestitures of non-core businesses
Renewed focus on core capabilities
Acquired Confederation Life’s Group business (’94)
Amalgamation with North American Life (’96)
China’s 1st JV life insurance company (’96)
Expanded into four additional countries in Asia (’96 -’04)
Entered Japan via JV and subsequent acquisition of
significant in force block (’99)
• Demutualization (’99)
• Selective acquisitions in Canada
• Acquired John Hancock Financial Services (’04)
2005
Manulife
Ten Years of Growth
10 Years of Strong Earnings Growth
Net Income
C$ in millions
$2,800
$2,550
$2,400
$2,000
$1,539
$1,600
$1,378
$1,075
$1,200
$1,159
$874
$800
$400
$481
$503
1995
1996
$743
$710
1997
1998
$281
$0
1994
1999
2000
2001
2002
2003
2004
Manulife
Global Operations
Asia
Canada (1887)
Hong Kong (1897), Philippines (1907),
Singapore (1980), Indonesia (1985),
Taiwan (1992), China (1996),
Macau (1996), Vietnam (1999)
Thailand (2004), Malaysia (2004)
• Individual Insurance
• Individual Wealth Management
• Group Benefits
• Group Pensions
United States (1903)
• Individual Insurance
• Long-term Care
• Group Pensions
• Annuities
• College Savings
• Mutual Funds
• Guaranteed & Structured
Financial Products
• Individual Life Insurance
• Group Life & Health Insurance
• Pension Products
Investments
• Mutual Funds
United States, Canada, United
Japan (1999)
Kingdom, Japan, Australia, Hong
• Individual Insurance
Kong, Southeast Asia
• Annuities
Reinsurance
• United States
• Canada
• Europe
• Asia
Manulife
China Operations: Profitable Growth
Ningbo
Foshan
Office established
Licenses granted
Dongguan
Manulife
Product Opportunities
• Significant expertise in both pensions and long
term care
• Opportunity to expand business by leveraging
expertise into evolving markets
A Leader in Pensions and Long Term Care




#1 in U.S. small case pension market
#2 in Hong Kong (MPF)
#1 International pension provider in Indonesia
#2 in U.S. Long Term Care market
Manulife
Key Elements of Success
• Core Competencies

Customer Focus

Distribution Excellence

Product Innovation

Technology

Risk and Investment Management
• Focus on the bottom line
Summary
•
The life industry provides limitless opportunities
for well-established players
•
Emerging economies, shifting demographics and
consolidation to drive growth
•
Life insurers well suited to provide solutions to
emerging middle-class in Asia and aging
populations
•
Manulife is positioned as consolidator with
premium franchises in high growth markets