Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| Statement |
|---|
| All in, we've delivered strong operating and new business results |
| Both top and bottom line performances were strong |
| In the third quarter, we saw double-digit growth in APE sales and new business value compared with the prior year quarter |
| We also generated solid growth in new business CSM of 6%, which contributed to an annualized organic CSM growth of 5% on a year-to-date basis |
| Since the adoption of IFRS 17, we've been delivering steady year-on-year growth in core earnings over the past three quarters, including a 35% rise in core EPS this quarter |
| We also reported core ROE of 16.8%, ahead of our medium term target of 15% plus for the second consecutive quarter |
| So I'm feeling pretty positive on the growth of two of the three sectors that we have |
| So when we look at that, our focus on expenses and net flows, we feel very optimistic that we'll continue to improve this margin over time |
| And finally, enabled by our strong capital position, we continued to deploy capital to further enhance returns to shareholders through dividends and share buybacks |
| Turning to slide 7, we are driving profitable growth, while focusing on the needs of our customers and returning capital to our shareholders, which contributed to a strong third quarter |
| Asia continued to build on the momentum of the previous quarter, capitalizing on the return of demand from Mainland Chinese visitor customers, and delivered strong new business results, with APE sales and new business CSM growth of 20% and 16% year-on-year, respectively |
| In Canada, we delivered impressive APE sales growth of 51% compared with the prior-year quarter, driven by a large affinity market sale, and it translated into an increase in new business value of 72% in the segment |
| But if you look at some of the other metrics, the top line, as you mentioned, has been very strong, $5.3 billion year-to-date, 12 out of 13 years |
| Notably to accelerate the growth of our global high net worth business |
| But overall, I do feel positive about the sustainability, not just of Q3, but also growth from there |
| I'm encouraged by the continued growth across our global franchise |
| And I do think there is upside to that 10% rate of growth from factors, such as the opportunity for stronger productivity in our agency channel, as well as the continued emergence of the MCV channel post pandemic |
| And I think what we see in the third quarter is a very good foundation to project from for the future |
| In global WAM, we accelerated customer adoption of digital applications in Canada retirement through our Say Goodbye to Paper campaign, which contributed to a 165% increase in members converting to e-statements over the three month campaign period and an increase in satisfaction in their digital experience over the prior quarter |
| Moving to Asia, we further automated our claims handling process in Hong Kong to deliver a better customer experience and drive operational efficiency |
| And I think what you're getting at is the very strong contribution to core earnings |
| We feel good about it |
| It's through the cycle, and we have strong conviction with our assumption |
| as Colin mentioned in his introductory remarks, we're more confident than ever of achieving those long term returns |
| But the eight sequential quarters before that, returns were above our long term targets |
| We also generated stable growth in adjusted book value per share with a 4% increase year-on-year in the third quarter |
| So, we feel really good about our US business |
| And as Brooks highlighted, our vitality proposition actually is a significant differentiator for us and has allowed us to outperform the market over actually quite a number of years |
| And we've seen a very, very positive and strong market reaction to that, and feel quite good about our ability to deliver profitable growth in our new business franchise in the US |
| In summary, I'm pleased with our strong results in the third quarter |
| Statement |
|---|
| Tom MacKinnon With respect to the US, like we're having some negative sales momentum here |
| Lower sales contributed to the lower new business results |
| The challenging macroeconomic environment led to $1 billion market experience net charge in the third quarter |
| Our CSM growth metrics are below our medium term targets, partly due to the impacts of market and foreign exchange movements |
| In the US, lower APE sales were driven by the backdrop of a continued high rate environment, adversely impacting our accumulation insurance products in particular, especially for our affluent customers |
| Commercial real estate was again the biggest driver of our ALDA underperformance as higher long term risk free rates are pressuring valuations |
| Turning to slide 11, our net income was lower than core earnings this quarter caused by the challenging investment environment, but it is important to consider that some of this adverse result was offset by gains in other comprehensive income, or OCI, which contributed to the increase in our book value |
| This year, and Q3 in particular, has definitely been a challenging market |
| Can you maybe delve into a bit of what the issue is and the reserves need to be adjusted on that business? And then, I guess on the flip side, in Asia, it also looks like there was some negative claims experience |
| And when you look at the movement in policyholder experience in the CSM, that's really a reflection almost in its entirety of the challenging persistency that the entire industry is seeing in Vietnam and where we're seeing that as well in our business |
| I guess I would be a little concerned for the next quarter or two that we see cap rates go up and continue to weigh on the real estate portfolio |
| And I would say on the office side, I would say growth could be challenged |
| But to your first point on Vietnam, the market has been experiencing challenges |
| And we're seeing that translate into lower new business volumes, but also lower levels of persistency |
| One office, as we know, has performed poorly |
| This included a $400 million charge from lower-than-expected returns on ALDA, a $273 million charge due to lower-than-expected public equity returns during the quarter and the $266 million loss in derivatives and hedge accounting ineffectiveness, driven by the significant increase in rates and steepening of yield curves where the 10 and 30-year rates increased more than 70 basis points while the shorter rates between 1 and 5 years rose on average 30 basis points |
| And then, on multifamily, there's certainly a shortage of housing, which I think bodes well in the long run |
| Retail net outflows in the quarter reflected lower demand as investors continued to favor short term cash and money market instruments amid market volatility and higher interest rates |
| We've talked about the ongoing challenges that the industry has seen in Vietnam |
| But you may recall that, in 2018, we did reduce those assumptions that we've put through core to reflect – even though we had hit the target returns, we were less confident we would achieve them going forward, given the cap rates had come down |
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