Please standby, your meeting is about to begin. Please be advised that this conference call is being recorded. Good morning, ladies and gentlemen and welcome to the Manulife Financial Third Quarter 2024 Financial Results Conference Call. I would now like to turn the meeting over to Mr. Ko. Please go ahead, sir.

Thank you. Welcome to Manulife's earnings conference call to discuss our third quarter and year-to-date 2024 financial and operating results. Our earnings materials, including the webcast live for today's call, are available on the Investor Relations section of our website at manulife.com. Before we start, please refer to Slide 2 for a caution on forward-looking statements and Slide 34 where notes on the non-GAAP and other financial measures used in this presentation. Note that certain material factors or assumptions apply in making forward-looking statements and actual results may differ materially from what is stated. Turning to Slide 4. Roy Gori, our President and Chief Executive Officer, will begin the presentation with a highlight of our third quarter and year-to-date 2024's results and a strategic update. Following Roy's remarks, Colin Simpson, our Chief Financial Officer, will discuss the company's financial and operating results in more detail. After their prepared remarks, we will move to the live Q&A portion of the call. With that, I would like to turn the call over to Roy Gori, our President and Chief Executive Officer. Roy?

Thanks, Hung, and thank you, everyone, for joining us today. Yesterday, we announced our third quarter 2024 financial results. These strong results are a testament to the benefits of our unique business mix and geographic footprint and the tremendous momentum that we have in the franchise. We are executing on our strategy and delivering strong financial performance while making great progress towards our goal of being the digital customer leader in our industry. In the third quarter of 2024, we delivered record financial and operating results, including core earnings, APE sales, new business CSM, new business value, our customer Net Promoter Score, or NPS and straight-through processing or STP. We generated significant top-line growth, including 40% growth in APE sales, led by broad-based growth in Asia which delivered record levels of APE sales, new business CSM and new business value. I'm also very pleased with the contributions from our businesses in North America. Global WAM also delivered another strong quarter with over $5 billion of net flows and positive contributions from each business line and geography. We've now generated positive net flows in 13 of the past 14 calendar years and on a year-to-date basis, we've delivered over $12 billion of net flows in 2024. We generated solid core earnings growth of 4% which was led by 17% growth in Asia and 37% growth in Global WAM. Excluding the impact of global minimum taxes, or GMT, core earnings growth would have been 7%. On a per-share basis, core EPS grew 7% year-over-year or 11% if adjusted for the impact of GMT. We delivered an attractive core ROE of 16.6%, demonstrating that we're on our path towards our 18%-plus goal. Finally, we maintained a strong balance sheet and ample financial flexibility with a strong LICAT ratio of 137% and leverage ratio of 23.5%. As we made clear at our Investor Day in June, Manulife is well positioned to continue delivering strong results like these and outperform peers, thanks to our unique geographic footprint and attractive business mix, our scale and ability to capture global megatrends and a clear path to deliver against our strategic priorities. Moving to Slide 7. As you can see, our disciplined execution continued to drive strong growth in key metrics on a year-to-date basis. Asia and Global WAM continue to demonstrate strong contributions to our year-to-date growth. In Asia, we have a diversified high-quality distribution platform and our ambition is to be the number one choice for customers. We generated strong sales throughout the year driven by growth across distribution channels. In Global WAM, our scale, unique footprint and business mix, along with expense discipline is driving operating leverage with our year-to-date core EBITDA margin up 190 basis points. We delivered 12% core EPS growth on a year-to-date basis, at the top end of our medium-term target range, driven by sustained strong performance in our high-growth segments coupled with share buybacks. This is an excellent result as year-to-date core EPS would have grown 14% without the impact of GMT. Similarly, our core ROE continues to expand and improved 0.6 points year-over-year. We've also delivered robust book value growth over this period with 14% growth in adjusted book value per share and 9% growth in book value per share. It's worth noting that we've delivered this growth net of returning close to $5 billion of capital to shareholders over the past year. We have repurchased 58 million common shares so far this year. And as a reminder, we're committed to fully executing the remaining 32 million shares of our current NCIB program which expires in February 2025. Based on our current share price, our share buybacks have generated a benefit of more than $2.5 billion since 2021 and we continue to view these as a good tool to generate value for shareholders. Turning to Slide 8. In addition to capitalizing on our strong operating momentum, we remain focused on execution and on investing for the future. And we continue to make progress towards our goal of being the digital customer leader in our industry. To that end, we're leveraging our advanced GenAI capabilities across the franchise. We've already launched 11 use cases into production with another 13 to be launched before year-end and an additional 16 in development. These encompass all areas of our business and are being ambitiously scaled to maximize business value. For example, the Singapore GenAI sales tool that we showcased at Investor Day has achieved a successful pilot result of more than 5% higher repurchase rate and we've since extended the tool to all agents in Singapore. We plan to further expand the tool to other markets before year-end. We've also extended AI-powered core summarization and contract look-up tools to 15% of our North American contact center agents in the past 6 months. These are two significant drivers of efficiency and have already delivered a 12% reduction in average handle time so far this year. We plan to continue rapidly rolling this out globally and enhancing these capabilities to drive even greater efficiencies. Our mission is decisions made easier, lives made better. And our digital priorities are all about optimizing the customer experience. Our relationship NPS score is now at an all-time high of 25 and our STP has now exceeded our 2025 target of 88%. We also continue to invest in helping our customers' health and well-being. We held our second Longevity Symposium in Boston in October, where we gathered over 500 industry leaders, distribution partners, academics and government officials to discuss the latest developments to help our customers live longer, healthier, better lives. This event generated overwhelming positive feedback from the participants and preliminary results of our post-event survey saw an NPS of over 92. Our digital efforts have not only enhanced customer experience but also driven the improved financial outcomes. To that end, we are well positioned to extract maximum value from our digital investments and we're on track to exceed the $500 million in benefits we expected to generate in 2024, representing more than 2.5x growth from 2023. We have a clear line of sight to generating additional value and look forward to updating you on our progress going forward. In summary, our strong execution this year is driving quality growth in new business and earnings and generating significant value for shareholders. We're delivering strong operating and customer satisfaction metrics and we are well positioned to deliver on the ambitious but achievable new targets that we announced at Investor Day. With that, I'll hand it over to Colin to review the highlights of our financial results. Colin?

Thanks, Roy. It has been another strong quarter for Manulife. Let me dive into a little more detail on the results before the Q&A. I'll start with our top line on Slide 10, where we delivered record levels of APE sales, new business CSM and new business value. Our APE sales increased 40% from the prior year, reflecting very strong growth in Asia and despite the prior year results, including a large affinity market sale in Canada. Asia generated higher volume across multiple markets, most notably in Hong Kong, supported by our high-quality diversified distribution capabilities and our differentiated product offerings. Our strong sales contributed to substantial increases in new business CSM of 57% and new business value of 39%. Global WAM saw solid net inflows of $5.2 billion with contributions from all business lines and real strength in our retail business. The continued strength in our top line is encouraging, particularly in our Asia and Global WAM segments as we reshape our earnings profile toward higher-return businesses. On our core earnings results on Slide 11, I'd like to call out some of the highlights of the drivers of earnings analysis presented relative to the prior year quarter. The first point to highlight is that we continue to see the benefits of growth in our insurance businesses as well as an improved change in the ECL but this was partially offset by lower investment spreads. The core net insurance service result has once again grown faster than the core net investment results and made up 48% of pre-tax core earnings in the quarter. In the bottom half of the table, you'll see that Global WAM significantly increased its contribution to pre-tax earnings supported by average AUMA growth and margin expansion. The impact of GMT on our core earnings was a $61 million charge for the quarter. And as Roy mentioned, this reduced our core earnings growth by approximately 3 percentage points. In addition, the reinsurance transactions with Global Atlantic and RGA that closed earlier this year reduced core earnings by $23 million across multiple lines of the DOE. On to Slide 12. Core EPS increased 7% as we grew core earnings and continued buying back shares. If you normalize for the impact of GMT, core EPS would have grown 11%, in line with our medium-term target of 10% to 12%. Net income was higher than core earnings this quarter, with a few largely offsetting noncore items driving a modest net positive impact. Let me expand on the notable items. We reported an approximate $100 million realized gain from the disposal of fixed income out this quarter which included trading activity in Mainland China, where we have seen interest rates decreasing as well as core premiums on bond prepayments. Our older portfolio resulted in a $167 million noncore charge. Our portfolio remains well diversified and reflects current valuations and our experience this quarter marked a significant improvement from recent quarters with commercial real estate contributing to the majority of this charge. During the quarter, we also completed our annual review of actuarial models and assumptions or basis change which resulted in an overall reduction of $174 million in pre-tax fulfillment cash flows which comprised of a net $816 million increase in OCI, partially offset by decreases in CSM and a $199 million post-tax adverse impact to net income shown here. Overall, the net impact from the basis change was modest and further illustrates the stability of our reserve development. More information on the actuarial review is available in the appendix of this presentation. Bringing you to our book value on Slide 13. You can see we grew our adjusted book value per share by 14% from the prior year quarter to $34.97 even after returning nearly $5 billion of capital to shareholders via dividends and our NCIB program over the past year. It's worth reiterating that we expect a much steadier growth in adjusted book value under IFRS 17. And you can see from this chart that this is playing out. Now, we'll cover the segment view of our results in the next few slides, starting with Asia on Slide 14. Our Asia segment generated strong growth in both top and bottom line metrics. APE sales increased by 64% from the prior year quarter, driven by growth across most markets, led by Hong Kong which saw growth across all sales channels, including from both MCV and domestic customers. The overall increase in sales contributed to 45% and 55% growth in our metrics, new business CSM and NBV, respectively. Our three top line metrics highlighted here reached record levels for the quarter. We delivered 17% core earnings growth in Asia as we benefit from higher expected earnings on insurance contracts and higher expected investment earnings with notable growth from our largest in-force business, Hong Kong. These results demonstrate why we showcased Asia at our Investor Day in June. Moving over to Global WAM's results on Slide 15. It really was a fantastic quarter for Global WAM, delivering record core earnings for the quarter with growth of 37% supported by higher average AUMA along with favorable tax true-ups and tax benefits of approximately $70 million. Even excluding the impact of these tax items, the segment still generated record core earnings for the third quarter. We reported $5.2 billion of net inflows for the quarter with positive flows across all business lines and regions. Notably, we generated strong net inflows in our retail business, benefiting from strong equity markets which helped drive investor demand. And we saw adviser growth in our Canada wealth business. We continued to generate positive operating leverage, driving another quarter of core EBITDA margin expansion which increased 90 basis points from the prior year to 27.8%. Bringing over to Canada on Slide 16. We delivered solid results across our insurance businesses during the quarter. APE sales decreased 20% from the prior year quarter but this was attributable to the non-recurrence of the large affinity market sale in the same quarter last year. Excluding this, we generated strong sales growth of 27%, driven by higher retail sales in individual insurance, mid and large case sales in group insurance and segregated fund sales in our annuities business. Core earnings grew modestly in Canada, primarily driven by business growth in group insurance, neutral ECL experience compared with the charge in the prior year but this was mostly offset by positive but less favorable claims experience in our group insurance business. On to Slide 17 which shows our U.S. segment's results. In the U.S., we saw a rebound in demand for our accumulation insurance products from affluent customers which drove up APE sales and contributed to the growth in new business CSM and new business value. Core earnings decreased 8% from the prior year quarter as a lower charge in the ECL and more favorable claims experience in our U.S. life business was more than offset by lower investment spreads, lower earnings from the Global Atlantic reinsurance transaction that closed earlier this year as well as the net impact of the basis change. Let's now move to our balance sheet on Slide 18. In the third quarter, our LICAT ratio remained strong at 137% which was $23 billion above the supervisory target ratio. Our financial leverage ratio reduced further and continues to provide ample financial flexibility at 23.5% or 23%, including the impact of the announced redemption of subordinated debentures. This puts us comfortably below our target ratio of 25%. During the third quarter, we accelerated the pace of our share buybacks and together with dividends, we returned close to $1.7 billion of capital to shareholders. Our accelerated share buyback pace is reflective of our intention to fully execute our current NCIB program of 90 million shares as we announced last quarter. And as Roy mentioned, as of October 31, there remained approximately 32 million shares capacity until the expiry of the program in February 2025. And finally, moving to Slide 19 which summarizes how we're tracking against our 2027 and medium-term targets. As you can see from our year-to-date results, we are showing momentum towards our new core ROE target with an attractive 16.3% reflecting strong business performance and disciplined capital allocation. The discrete quarter's ROE was 16.6%. And we are continuing to deliver on our remaining medium-term targets which includes expense efficiency, where our disciplined expense management, together with core earnings growth has brought our year-to-date ratio down to 45%, in line with our target. This concludes our prepared remarks. Before we move to the Q&A session, I would like to remind each participant to adhere to a limit of 2 questions, including follow-ups and to requeue if they have additional questions. Operator, we will now open the call to questions.

Our first question is from Meny Grauman from Scotiabank.

Question on ALDA, whether this is an inflection point for your PE portfolio. Obviously, you mentioned the sort of the moderating impact from commercial real estate but you didn't talk about PE. So just wondering what the outlook is there based on what you saw in Q3.

Thanks for the question. It's Trevor. So obviously, very happy to see the strong ALDA performance in the quarter. Still a little bit below target but as you noted, I think, substantially better than we've seen recently and actually the best over the last 9 quarters. The main driver of the loss, as Colin mentioned, was real estate. The experience was actually similar to Q2 and just really reflected flat performance for the asset class. In terms of the remaining classes which I think was your question, it was really a mix of gains and losses. Infrastructure was substantially better than it had been in Q2 and private equity as well was also materially better than in the second quarter. In terms of the outlook, it's obviously difficult to say. We do expect, I think, a continued improvement in, I think, the overall portfolio and private equity as well. We do still think that we will get back to our long-term assumptions around the middle of 2025 and so remain confident in the long-term performance of the strategy and the portfolio.

And then, maybe just another question maybe for Roy. We saw the stock react quite favorably to the U.S. election yesterday. Just wondering from your perspective how you see the impact from the U.S. election across your business. Sometimes we get questions about people trying to think through the impact for your Asia business specifically but more broadly, if you have any thoughts on that.

Yes. Look, at a very macro level, I would say that we don't really see that the U.S. election would be a major factor in our performance or our business. And that's really a large function of the fact that we're a very diversified business across three broad geographies which has really helped us weather a whole lot of different weathers and storms. If you look at yesterday's market reaction, obviously, the U.S. dollar reacted very positively and we saw equities rally. Those are positives but we wouldn't be banking those as big wins that we should be celebrating. We think that we're going to see a little bit of volatility off the back of the announcement but that will normalize. And really, the underlying performance of the business that you see come through in our Q3 results, we expect to show the resilience of our business for not only the rest of the year but for the following year.

Our following question is from Tom Gallagher from Evercore ISI.

I had a few questions on the actuarial review. Given the SGUL charge, would you expect a related U.S. statutory impact? And would you expect this to impact your remittance plans for 2025? And I guess the same question in reverse for Asia. Does the positive release have any cash flow impact when you think about Asian cash flows?

Sure, Tom. Thanks, it's Steve here. So with respect to the review, the impact in the U.S., we do not expect any negative impact, immediate impact on remittances. There's no impact on the RBC ratio. It remains very strong and does not impact our remittance for 2025. I'd say overall, the results of the review don't have an impact in terms of our commitment to the target, the new target remittances that we set out at Investor Day. So no significant impact there at all.

Great. And then I guess my follow-up is does taking the size of a reserve addition on SGUL make it more affordable when you think about considering potential risk transfer? Is that a risk in a block that you're considering?

It's Marc Costantini here. Thanks for the question. I guess I'll start by saying that if you look at our track record of execution on our legacy businesses and optimizing, I think you will see a very strong track record of execution there in delivering value to our shareholders. And I think last time we took a look at it, it was over $11 billion over the last number of years. And most notably, obviously, the last couple of transactions over the last 12 months which were in solidifying our balance sheet. So having said that, we'll never talk about ongoing transactions until they take place but we will look to continue to manage and actively manage the legacy portfolio as we move forward. Obviously, we have a focus on some of these U.S. liabilities you mentioned, including LTC as well. So more to come as we work through all those files. But I would say the basis change itself does not necessarily impact because any buy or counterpart would factor in some of the current experience. So what Steve alluded to earlier does not necessarily impact how we would approach transacting on a block like this. So, thanks.

Our following question is from Gabriel Dechaine from National Bank Financial.

Similar line of questioning, I guess but more on the Asia business. I saw there was some negative experience there, insurance experience. I assume that's lapse-related. And when I read the actuarial review details, it says you did strengthen reserves for lapse in the U.S. and in Asia but not like the Vietnam stuff that's been a problem in the past. A, is that kind of dealt with now? And B, do you think that the actions you took this quarter will simmer down those lapse trends in the P&L?

Thanks, Gabriel. This is Phil. Maybe I make a start on that Asia question and hand over to Steve to supplement. What you see in the drivers of earnings analysis in terms of experience, an $18 charge. I would say that's within the range of normal variability quarter-to-quarter in policyholder experience. When you look at it on a year-to-date basis, it's a negative $6 million. So there are positives, there are negatives and it will move around from quarter-to-quarter. There were a couple of larger claims this quarter relating to some of the high net worth business across our high net worth markets but nothing beyond that, that I would particularly highlight. You referenced Vietnam. I think it's important to note that some of the headwinds that we had seen from an experience perspective in Vietnam flowing through the CSM in prior quarters, that's now normalized, so substantially less and you can see an approximately neutral experience in the CSM for Asia. Steve, is there anything you'd like to supplement?

Yes. I would just add a little bit, Phil, that particularly the point on Vietnam. If you look at prior year, that was driving the negative experience. And as we said, we expected normalization there and that's what we've seen in the quarter which Phil highlighted.

Okay. And my next question also sort of connecting dots here but just so I understand it, the reinsurance assumption, you're assuming higher costs for old age mortality reinsurance in the future and that's where there was a reserve stripping. That's the gist of it?

Yes. Thanks, Gabe. Maybe I'll start by reminding people the point Colin said. So overall, the assumption was a release observed of about $174 million. Moving on to the item that you're asking about specifically, yes. So as part of our review, the reinsurance and risk adjustment review, we recalibrated our risk adjustment in North America to a similar approach to what we did in Asia the prior year. And we also updated our reinsurance reserves. It was a regular review that we did and really updated to reflect, true up our current views on current market conditions. And it was, as you know, it's an older mortality reinsurance.

I guess my point on this is not to belabor or the details of the actuarial review, there's a lot of moving pieces, is that if reinsurers are charging more for old age mortality risk, just does that maybe suggest that there is more demand for products that benefit from higher mortality in the legacy business like long-term care? Does that make any sense at all that because that trend's happening, it might actually enhance the appeal of your long-term care legacy block and make them easier to transact?

I'll start and I'll hand it over to Marc. And just sort of reemphasize what you said is we have seen and you saw through the pandemic that we had fantastic offsets between mortality and longevity. So when mortality is really low, we see gains in life, we see losses in LTC and vice versa.

Steve, you pointed out the strong point I was going to make, which is that we have a natural balance in our portfolio. As we consider engaging in any business transactions, the counterparties take that into account as well. We strive to achieve mutually beneficial outcomes for both ourselves and the counterparties, which highlights the effectiveness of our team and our partners.

Our following question is from Alex Scott from Barclays Capital.

First one I'll ask is on the sales in Hong Kong. I was just hoping you could unpack some of the success you're having both in the domestic market and elsewhere.

Thank you, Alex. This is Phil. We have had a fantastic quarter in many ways across Asia, particularly in sales. Hong Kong has played a significant role in this, along with other markets. In Hong Kong, we've experienced an 83% increase in new business value, marking a record level. We're seeing strong growth across all our distribution channels, including agency, bank, and broker, with notable demand from both the domestic customer segments—which is our primary market—and the Mainland Chinese visitor customer segment, which is growing due to our targeted investments to increase market share, even though the domestic segment remains the larger portion of our business. The demand in Hong Kong is driven by a mix of factors, primarily favorable macro conditions that are increasing customer interest in savings solutions. This coincided with our launch of a new competitive participating savings product earlier this year, which has aligned well with the market conditions. Additionally, we held a brand campaign across the region, and our annual sales campaign took place in the third quarter within our agency channel. A lot of positive developments have occurred concurrently. While there can be variability in sales from quarter to quarter, the overall trend shows that we are addressing a larger share of customer needs, which aligns with the strategy we discussed at our Investor Day in June. It’s worth noting that we are not only seeing growth in Hong Kong; we have experienced similar levels of new business value growth in Japan, Singapore, the Philippines, Indonesia, and other Asian markets, including Mainland China.

That's really helpful. As a follow-up, I wanted to come back to the conversation around the actuarial impacts and I know it's overall net favorable. I guess on the CSM margin, specifically, it was a bit unfavorable overall. And I think it was noted in the presentation that it was a net neutral impact on earnings. I would think the U.S. segment probably has a headwind. And I just wanted to see if you could help us out with how to think through the impact on go-forward earnings in the U.S. and sort of where that's offset in Asia, if there's a little in Canada and just how to think about the mix and how it's changing here.

Sure, Alex. It's Steve. Yes, so the way the basis change works under IFRS 17 is we calculate the change in reserves and then we have to record it in different places in our financial statements. And as you note, there was a reduction in the CSM, a reduction in the U.S. and that was partially offset by an increase in Asia. So you're right in terms of, we expect a neutral impact overall in the run rate core earnings. And you're absolutely right, we'll see a reduction in the U.S. offset by an increase in Asia. So overall, roughly neutral.

Our following question is from Paul Holden from CIBC.

Another question related to the ACMA update. I guess on the lapse assumption change, you highlighted that you changed sort of, let's call it, near to medium term assumptions only and left the terminal lapse assumption unchanged. So I guess first part of the question, like why not change the terminal assumptions? Maybe you can explain that. And then two, if you had changed the terminal assumption by a similar magnitude to the change in near- to medium-term lapse, how big would that impact have been relative to the $620 million charge you took?

Yes. To provide some context, our U.S. lapse rates and all assumptions are regularly updated. We were fully updated before COVID. As you may remember, there were discrepancies in lapse rates during COVID across various product lines. Most of these, including Canada UL and segregation funds, have returned to pre-pandemic levels. However, in the U.S., while we have seen some recovery, it hasn't been uniform across all products. This review has been conducted prudently, considering the post-COVID experience and trends. We also examined additional data in the Ultimate, which confirmed that we are comfortable and do not need to adjust the ultimate lapse rates as we had already made significant adjustments in prior reviews. Regarding the theoretical aspect of your question, I don’t have that information readily available about the potential impact of an assumption change. Our annual disclosures do provide sensitivities related to lapse rates, but the data confirms that we do not need to modify those assumptions.

Okay. I'm assuming based on the duration of the product though, there are probably a little bit more sensitivity to the terminal lapse assumption. Is that fair?

There is a small amount. However, remember that about half of the change relates to guaranteed universal life insurance. We ceased writing that business over a decade ago, so we are now entering the ultimate period.

Okay, got it. That's helpful. And then for Phil, I want to circle back to the Hong Kong sales. Giving me a little bit of a challenge here just given how strong it was in the quarter, like I looked historically going back a long way and this quarter really stands out. So I guess the question is, how sustainable or not sort of is this as a run rate number? I don't expect you to quantify it for me but maybe any kind of guidance on what we should expect going forward relative to the really strong Q3 result in Hong Kong?

Thanks, Paul. This is Phil. You're right. It's been a really strong quarter and a lot of things have gone well, as I referenced earlier. The timing of the management actions we had taken with, I suppose, the favorable macro conditions. And specifically there, I'm thinking about the fact that interest rates, short-term interest rates turned over the course of the last few months. And that has prompted customers to think more long term rather than short term in terms of their strategy. So while we are in that interest rate downward cycle, I think that is a tailwind in terms of consumer sentiment. I think it's really important to note that while there can be variability in sales from quarter-to-quarter, what's very clear from our results is that we're generating value and the CSM accretion that we're seeing. And when you look at the CSM balance year-on-year, it's up 10%. That supports stable earnings growth in the quarters and years to come. And that really is our focus. But in terms of sustainability, I do expect stable growth in new business from our exclusive channels, agency and bank for our third-party channels and notably broker. That can vary from quarter-to-quarter and we'll call that out as and when it happens.

Paul, I just might add a couple of comments to Phil's which I think were excellent summaries. The quarter was really solid for sales in Asia, quite frankly, across the entire business. But our year-to-date results are also really very strong and that's what gives me a lot of confidence the momentum that we've got across our franchise. And the thing that's particularly exciting for me about our Asia momentum is that it's not any one particular market in isolation or any one particular channel. So we're seeing, as I think Phil noted, good broad-based growth across our channels, whether that's banker, agency, broker, and affiliated. But we're also seeing our markets across Asia also performing really well. So that momentum, I think, bodes well but again I'd caution folks to not expect a 30% to 40% growth in sales across all of those metrics on an ongoing basis. We've got a good baseline here. We think that momentum is our friend. But obviously, we wouldn't expect 30% growth every quarter.

Our following question is from Mario Mendonca from TD Securities.

Roy, can I take you back a few years? In November 2007, Manulife was a $43 stock, and it has returned to that level today. Looking at how you got there, it's a successful blend of wealth growth in Asia, but the company has also been contracting for some time as you reinsure books and repurchase stock. When you meet with your Board and discuss with your executive team, how do you envision the next five years? Will it be more of the same, focusing on your strengths in wealth and Asia and buying back stock as possible? Or do you plan to adopt a more ambitious growth strategy? How would you describe that?

Yes. Mario, thanks for the question. I think you're absolutely right. When we sort of looked at our performance over a number of years and certainly looking back to where we were pre-global financial crisis, we really had to appreciate that for us to succeed in the long run, we needed sustainable growth but also quality growth. So in 2018, when we established our transformation agenda, we said that we clearly want to improve our returns, reduce our risk and then also focus much more on customer and digital. And the progress that we've made is something that we're very proud of. We think that we've really transformed the company in terms of fixing some of the things that were less strong. But at the same time, we feel like we've built a platform for sustainable future growth. And whilst Asia and GWAM are tremendous platforms and I think, quite frankly, if you stack up our business as both Asia and GWAM against many of our competitors, we'd be quite enviable. But it's not just Asia and GWAM that really drives our success. I think we've got a really solid business in the U.S. that provides great remittances, great returns on a new business, as we highlighted at our Investor Day and our Canada business, where we're a strong leader across individual insurance as well as group benefits really positions us well. So to get to the crux of your question, in terms of ambition, at our Investor Day we've declared quite an ambitious agenda for where we want to go. And our 10% to 12% earnings per share growth target is what we reaffirmed. We believe that we've got the footprint to continue to deliver that. Our 18%-plus ROE, we think, is quite ambitious but very achievable. So I think with a lot of the hard yards to basically fix our platform and transform our business, we think that we've largely completed that chapter. And now the next chapter is all about building on that platform and accelerating our growth momentum so that it can be sustainable and continuous.

That's helpful. Let me push this a little further. Are you content with your current capabilities and distribution, so much so that you don't feel the need for consolidation or acquisitions? Do you believe that the business has enough potential for growth without that?

We are very pleased with our platform and believe we have all the essential components to achieve our goals, particularly those outlined at our Investor Day. However, we are in a very strong capital position with $10 billion in capital beyond our upper operating range. Our leverage ratio is at an all-time low of over 23%. This gives us the opportunity to consider mergers and acquisitions. We will pursue transactions if we find opportunities that enhance our capabilities and provide further scale, but we will be very disciplined in our approach. There has been a lot of unsatisfactory M&A activity in our industry, and we want to avoid that. While we are well-capitalized and can engage in M&A, we are not desperate and will proceed carefully.

Our the following question is from Lemar Persaud from Cormark Securities.

Roughly two relatively quick modeling questions for me. Just there's a sharp drop in the impact of new business on the consolidated DOE. It looks like this is related to a lower charge from Asia. Is this really because of the change in sales mix in the quarter? I get lower sales of onerous contract products. Is this something we can expect going forward?

Lemar, this is Phil. Thanks for the question. Given that it's driven by Asia, let me take that and ask Steve whether he would like to supplement. So you have seen a lowering of the impact of new business in the drivers of earnings analysis. And a reminder that this reflects a couple of things. It reflects what we call onerous losses as well as any acquisition expense variance. And so in the third quarter, that's fallen to $7 million and it's been at a run rate of around $20 million negative in prior quarters. And a couple of things happening there. One is that as part of the basis change, the expense loadings were updated and that's had a favorable impact on this line, as well as it's been a particularly strong new business quarter. And when we have strong volumes, that reduces the expense per unit and has a favorable impact on this line item. At $7 million, this is U.S., $7 million, I think that's at the low end of the range of what you would typically expect and it will vary from quarter-to-quarter. But Steve, is there anything that you'd like to supplement there?

I'd just add that this has been an area of focus since we started reporting under IFRS 17. It's an opportunity. We directly see improvement in margins coming through this line so it has been an area of focus.

Okay, that's helpful. And then just my next question here. I'm looking at the negative impact of the reinsurance transaction, so RGA and Globe. Looks like those are lower again this quarter. Can you guys talk about what's driving that? And should we think of the negative impact of being less than originally anticipated?

Yes, thanks, Lemar. It's Colin here. When examining the $23 million negative impact, several factors are at play. I'm not entirely convinced about the sale of the older transactions, but there are a few experience-related items that are one-time occurrences. However, if we exclude those, the quarterly run rate aligns perfectly with the annual guidance we provided, which was $130 million for Global Atlantic and $50 million for the RGA transaction in Canada.

Our following question is from Doug Young from Desjardins Capital Markets.

Steve, maybe back to you. U.S. long-term care insurance, I think there was negative experience this quarter in both the P&L and the CSM. Can you talk a bit about what drove this? Because not too long ago, they were kind of offset neutral and I think the last two quarters, it's been net negative. And just wondering if it's the same as last quarter, how material is this? Is this a trend that's developing that we should keep an eye on?

Sure, Doug. I'll take a moment to reflect on our long-term care experience over the past several years. Going back to 2017, the long-term care experience has generally been slightly positive, even when factoring in the gains we recorded during COVID. In this quarter, however, we did experience a loss in long-term care, primarily due to very low mortality rates, which affected our Life business related to claims gains. As a result, there were losses in long-term care at these low mortality levels. Similar dynamics were observed during the pandemic. We also noted, as in previous quarters, increased costs for those on claims. I don't view this singular quarter of experience as indicative of a trend; instead, I consider it a normal variation.

And was it the same as last quarter or is this a new mortality?

No, the mortality was a very noticeable difference just this quarter.

Okay. And then maybe, Phil, just on Asia, on Hong Kong, in particular, I mean, new business value, CSM new business CSM growth was strong but new business value margins are down over the last year and it's been a steady decline. And just is this mix that's going through? Is this not just product mix but distribution mix? Is the goal really just to drive sales and drive earnings growth and focus maybe less on the margins going forward? Just trying to get a sense of how to think about that.

Thank you for your question, Doug. This is Phil. Our overall margin for Asia in the third quarter was 39%, which is a decline of 3 percentage points year-on-year and 5 percentage points quarter-on-quarter. As you pointed out, Hong Kong is a significant factor in this. We observed a margin of 42% in Hong Kong during Q3, whereas we typically expect around 60%. The current situation reflects a shift in consumer demand towards savings solutions. While we are experiencing growth in both savings and Health & Protection Solutions, savings growth has exceeded that of Health & Protection this quarter, contributing to the overall margin decline. Nevertheless, the absolute value generated remains robust, as evidenced by the 83% increase in new business value in Hong Kong. Regarding your question about our focus on driving sales versus managing to value, we are indeed focused on managing to value. This will involve a balance of sales volume growth and margin improvement. At our recent Investor Day, we discussed our ongoing ambition for average margins across Asia, which remains at 50%, as originally stated in June. While this ambition may differ from quarter to quarter, we are pleased with the strong new business value generation observed in the third quarter.

And then, just maybe a follow-up while I have you, Phil. Asia Other core earnings dropped versus Q2 and Q1. What region drove that? And is there anything in particular to note in Asia Other?

So Asia, so year-on-year, Asia Other is up 9% core earnings but there is some variability quarter-on-quarter. What I would highlight with Asia Other is this is a collection of smaller markets with less mature in-force portfolio. So you will see some variation between quarters. Nothing in particular that I'd like to call out on that. But just expect, in those smaller markets, variability quarter-to-quarter.

Our last question is from Tom MacKinnon from BMO Capital.

First question regarding the CSM impact in the U.S. Was this mainly due to SGUL? Did it come from any new business that you are currently writing? Or was it related to Vitality or any other new business that you are still actively pursuing in the U.S.?

Yes. Thanks, Tom. It's Steve. And just a reminder for people of where we book the basis change in the financial statements because I'll come back to your CSM. So the financial-related items or discount rates go through OCI. Then the rest of our noneconomic assumptions go through CSM and if the CSM is depleted, it goes through P&L. So in terms of the U.S., the CSM move, that was really driven in part by the update to the lapse assumptions and the net impact of the risk adjustment and reinsurance reviews, primarily related to older business, not on new business, not on Vitality.

Okay, good. I have a follow-up question regarding the expected investment earnings. I view this as the yield on your invested asset portfolio, including the ALDA, minus the influence of discount rate changes. You would expect this to remain relatively stable and to increase as your invested assets grow. This was observed in 2023. However, in 2024, we haven't seen this figure increase. I assume this is partly because you've had transactions and some business has left the company due to those reinsurance deals. How should we approach this number moving forward? Should it not grow at the same rate as the anticipated insurance earnings?

Tom, it's Colin here. I'll take this one. When you examine the year-on-year change in the expected investment spread, it amounts to a reduction of $43 million. You're correct that we would anticipate this line to increase along with our business growth. You can actually observe this trend in Asia where it has increased by $29 million. However, in the U.S. and Canada, we are seeing declines for the reasons you outlined. Canada is notably impacted by the RGA transaction. In the U.S., we have experienced the most significant drop, totaling $54 million year-on-year and $24 million quarter-on-quarter. The two main factors are the transaction with Global Atlantic and changes in the basis that have affected this figure moving forward. Additionally, there are several smaller items that contribute to this, one example being the mix of assets supporting our guaranteed fund. The key takeaway, which addresses your question, is that I would consider the third quarter number to be a solid starting point, but you would expect it to align with our earnings growth.

We have no further questions registered at this time. I would now like to turn the meeting back over to Mr. Ko.

Thank you, operator. We'll be available after the call if there are any follow-up questions. Have a good day, everyone.

The conference has now ended. Please disconnect your lines at this time and we thank you for your participation.