Earnings Call Transcript - MFC Q4 2025

Operator, Conference Operator

Thank you for your patience. This is the conference operator. Welcome to the Manulife Financial Corporation Fourth Quarter and Full Year 2025 Results Conference Call. The conference is being recorded. I would now like to turn the conference over to Mr. Hung Ko, Global Head of Treasury and Investor Relations. Please proceed.

Hung Ko, Global Head of Treasury and Investor Relations

Thank you. Welcome to Manulife's earnings conference call to discuss our fourth quarter and full year 2025 financial and operating results. Our earnings materials, including the webcast slide for today's call, are available in 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 41 for a note on non-GAAP and other financial measures used in this presentation. Please note that certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from what is stated. Turning to Slide 4. We'll begin today's presentation with Phil Witherington, our President and Chief Executive Officer, who will provide highlights of our full year 2025 results and the progress made toward our new and elevated strategic priorities. Following Phil, Colin Simpson, our Chief Financial Officer, will discuss the company's financial reporting results in more detail. After the prepared remarks, we move to the live Q&A portion of the call. With that, I'd like to turn the call over to Phil.

Philip Witherington, President and Chief Executive Officer

Thanks, Hung, and thank you, everyone, for joining us today. 2025 was a defining year for Manulife. We delivered strong financial results, announced our refreshed enterprise strategy to shape Manulife's next chapter of growth, and are laser-focused on executing against our vision through targeted strategic investments. While macroeconomic and geopolitical uncertainty remains, we're confident that the diversified nature of our business positions us well to navigate the current environment and capitalize on the opportunities ahead. So let's start with our 2025 financial results, which we announced yesterday. We delivered strong top line results with new business CSM growth exceeding 20% in each insurance segment, contributing to a double-digit growth in our CSM balance and supporting our future earnings potential. Despite experiencing net outflows in the second half of 2025, Global WAM continues to deliver strong margins and core earnings growth. The strong results in Global WAM, combined with the double-digit earnings growth in Asia, contributed to our record core earnings this year. Together with the benefit of continued share buybacks, we delivered 8% core EPS growth. We also continue to generate attractive returns with core ROE expanding 30 basis points from the prior year, and we're tracking well towards our 2027 target of 18% plus. Moving to our balance sheet, we generated $6.4 billion of remittances this year and returned nearly $5.5 billion of capital to shareholders. Our LICAT ratio of 136% and leverage ratio of 23.9% provides significant financial flexibility. And I'm pleased to share that we announced a 10% increase in our quarterly common share dividend. In addition, we have received OSFI approval for a new NCIB program, which will allow us to repurchase up to 42 million shares, or approximately 2.5% of issued and outstanding common shares, highlighting our continued commitment to returning capital to shareholders. We plan to commence buybacks under this new program in late February, subject to approval by the Toronto Stock Exchange. Moving on to Slide 7. In November, we introduced our refreshed enterprise strategy, which builds on our strengths, is growth-focused, and is anchored in our ambition to be the #1 choice for customers. There is tremendous enthusiasm across the company as we execute on our new and elevated strategic priorities, which provide logical continuity as we progress in our new chapter with refreshed ambition. As a result, we've already made meaningful progress in 2025. Starting with our winning team and culture, our world-class talent is one of our greatest strengths, and this year marked our sixth consecutive year of top quartile employee engagement. I'm encouraged by the energy and commitment of our colleagues around the world who've embraced our ambition to be the #1 choice for customers. Together, we will continue to bring focused execution and innovation to the work ahead. And as we drive high-quality sustainable growth, we will maintain a balanced, diversified business model. This year, we've made strategic investments both organically and inorganically to further strengthen our portfolio. We acquired Comvest Credit Partners, announced a joint venture to enter the India life insurance market, and entered into an agreement to acquire Schroders Indonesia, with the latter two subject to regulatory approval. We also became the first international life insurer to establish an office in the Dubai International Financial Center dedicated to advising on and arranging life insurance solutions for high net worth customers. And we've expanded our customer solutions, including a new indexed universal life offering in the U.S., while in Canada, we launched a simplified specialized lending suite of products in Manulife Bank. As Colin will highlight, the benefit of a diversified portfolio was evident in our fourth quarter results, and I expect our diversification to serve as well amidst rising global uncertainty. On to Slide 8 and our focus on being the most trusted partner in health, wealth, and financial well-being. We took meaningful steps to further empower our customers this year, including a significant milestone in our ambition to be the health partner of choice in Asia. Through a strategic collaboration in Hong Kong with Bupa International, we will offer greater choice and sustainable healthcare solutions that empower individuals and communities to lead healthier and more fulfilling lives. In Canada, we became the first insurer to offer access to GRAIL's Galleri multi-cancer early detection test, supporting earlier detection and longevity for our customers. And in the U.S., we're providing additional resources and offerings to eligible U.S. customers to proactively manage their health and wellness. These actions deliver measurable benefits for customers while generating value for Manulife, and we're proud to be a leader in this space. We also continued to invest to make it easier for customers to buy and advisers to sell our solutions. We renewed our bancassurance partnership with Chinabank in the Philippines, extending the exclusive partnership to 2039. In Singapore, we leveraged our digital capabilities to enhance our Manulife iFUNDS platform, and through using a single platform and leveraging AI-powered analytics, advisers can deliver more personalized and insightful financial guidance. And in the U.S., we expanded our wholesaling team to accelerate our penetration into the high net worth and mass affluent markets. By expanding our reach and scaling our digital and AI capabilities, we can more effectively reach our customers and enhance their experience. Finally, over to Slide 9. Becoming an AI-powered organization is core to delivering on our ambitions, and while we've been an early adopter of AI and built the underlying infrastructure necessary to support our vision, it's very important that we sustain our leadership position. We're investing with discipline and a clear focus on areas where AI can be deployed at scale and further improve our efficiency, enhance our customer and colleague experiences, and support sustainable growth. In 2025, we ranked 1st among global life insurers for AI maturity by Evident and achieved 30% of the $1 billion plus of AI enterprise value generation by 2027. To drive measurable outcomes, we're concentrating on core focus areas where AI can make the greatest difference for Manulife, and we're already deploying initiatives across businesses and geographies to continue to drive value. Across the organization, we're deploying virtual assistance that create efficiencies while equipping employees and advisers with deeper insights, more personalized outreach, and instant product guidance, strengthening the quality and consistency of customer interactions. In underwriting, AI is accelerating decision-making by automating data analysis, enabling faster and more accurate assessments while maintaining strong risk discipline. And we're prioritizing AI solutions that remove manual transactions, driving measurable improvements in efficiency and operational outcomes. Within distribution, AI is enhancing client engagement through tailored sales support, leading to improved sales close ratios and outcomes. We're strengthening our internal productivity by equipping our global technology teams with modern engineering tools, helping us build better solutions faster. And we're also exploring how AI can help close the advice-access gap and support more meaningful ongoing investor engagement at scale. Moving forward, we're progressing towards a proprietary Agentic AI platform that will make it easier to manage and coordinate AI tools across the company, allowing us to scale AI even faster and more consistently, while ensuring a robust governance process. Overall, these are high-impact areas that reduce friction, support long-term growth, and will enable us to deliver on our 2027 and medium-term targets. In closing, I am thrilled with the progress we've made in 2025. We've delivered strong financial results and are already making meaningful strides against our refreshed strategy. As we begin 2026, we're executing from a position of strength with clear momentum and confidence in our ability to achieve our 2027 targets while generating high-quality, sustainable growth for all our stakeholders for the long term. With that, I'll hand it over to Colin to discuss our results in more detail. Colin?

Colin Simpson, Chief Financial Officer

Thanks, Phil, and good morning, everyone. 2025 was a fantastic year for Manulife as we delivered another year of strong financial and operational performance. Let me take a moment to walk you through the quarter's results before we open the line for Q&A. Let's begin with our top line results on Slide 11. We generated strong growth in new business CSM, reflecting more favorable business mix and margin improvements. This marked our sixth consecutive quarter in which new business CSM growth exceeded 20%, a testament to the strength of our balanced and globally diverse business profile. APE sales for the quarter were largely in line with the prior year. Global WAM saw net outflows of $9.5 billion, reflecting several large retirement plan redemptions in the U.S. and to a lesser extent, in Canada, as well as net outflows in our North American retail business. This was partially offset by strong institutional flows, including contributions from CQS and Comvest. The redemptions in our U.S. retirement business reflect seasonally higher planned redemptions and higher participant withdrawals as market strength has given rise to higher customer balances. Our retail business saw continued pressure in North American intermediary and Canada Wealth, though I'd highlight our U.S. retail business performed well relative to peers in what was a challenging quarter for active fund managers in the industry. Moving on to Slide 12. I'd like to highlight some of the key earnings drivers comparing them to the same period last year. We continued to see strong growth in our insurance businesses in Asia and Canada, driving a higher insurance service results. We generated positive overall insurance experience this quarter, including a release of P&C provisions from prior year events as well as strong gains in Canada. Though positive, total insurance experience was less favorable than the prior year, largely reflecting unfavorable U.S. life claims experience. Our investment results decreased a modest 5%, mainly driven by lower investment spreads. In the bottom half of the table, you will see that Global WAM reported solid pretax core earnings growth of 8% this quarter, supported by strong AUMA growth and margin expansion, but this was partially offset by the transition to eMPF in Hong Kong. Turning to Slide 13. Core EPS increased 9% from the prior year quarter as we continue to grow core earnings and actively buy back shares. We reported $1.5 billion of net income this quarter, which reflects unfavorable market experience, largely driven by a charge of $232 million in our ALDA portfolio, primarily due to lower-than-expected returns from infrastructure, private equity, and real estate. We also reported a $162 million loss from hedge accounting and effectiveness, primarily due to swap spread widening in Canada and, to a lesser extent, derivatives without hedge accounting. Moving to the segment results. We'll start with Asia on Slide 14. APE sales decreased by a modest 3% from the prior year as double-digit growth in Japan and Asia Other was more than offset by lower sales in Hong Kong. While we expected some moderation in Hong Kong given a strong prior year comparative, we also saw anticipated pressure in the broker channel in the fourth quarter as distributors transitioned to new regulations. Even so, we remain confident in the outlook, supported by the strength of our proprietary distribution channels. Despite softer volume, Asia's new business CSM and new business value delivered strong double-digit growth on the back of a more favorable business mix. As such, NBV margin expanded by 5.5 percentage points from the prior year to 41.2%. These top line results demonstrate both the strength and diversity of our business in Asia. In fact, when you look at our full year new business CSM growth, we saw greater than 20% growth in multiple markets, including Hong Kong, Japan, Mainland China, and Singapore. Asia core earnings in the quarter were even stronger, increasing 24% year-over-year as we benefited from continued business growth and the net favorable impact of the basis change last quarter. Over to Global WAM on Slide 15. We maintained our growth momentum in Global WAM, delivering a solid 7% year-over-year increase in core earnings. This was supported by higher average AUMA, the addition of Comvest Credit Partners, and sustained expense discipline. This was partially offset by lower earnings as a result of our transition to the new eMPF platform in Hong Kong in November. Net outflows were elevated this quarter, reaching $9.5 billion, as I noted earlier. Our gross flows this quarter, up 15% from the prior year to $50 billion continued to be strong, supported by growth across each business line. And our core EBITDA margin expanded 60 basis points from the prior year to 29.2%, strong results given the eMPF transition. Next, let's head over to Canada on Slide 16, where we delivered solid growth in new business metrics and core earnings. APE sales and new business value increased by 2% and 4%, respectively, from the prior year, reflecting strong growth in individual insurance and annuity sales, partially offset by lower large case sales in group insurance. New business CSM maintained strong momentum and continued to deliver double-digit year-over-year growth, supported by higher sales volumes in individual insurance. Core earnings increased by 6% year-over-year, driven in part by favorable insurance experience in individual insurance, higher investment spreads, and business growth in group insurance. These tailwinds were partially offset by less favorable insurance experience in group insurance. Lastly, our U.S. segment results on Slide 17. In the U.S., we saw continued broad-based demand for our suite of products, resulting in a 9% increase in APE sales versus the prior year quarter. Together with product mix changes, we saw very strong growth in new business CSM of 34%. Core earnings decreased 22% year-on-year, primarily due to lower investment spreads and unfavorable life insurance claims experience, compared with favorable experience in the prior year. Moving on to cash generation and capital allocation on Slide 18. In 2025, we generated remittances of $6.4 billion, exceeding our $6 billion expectation, positioning us firmly to meet our cumulative 2027 target of $22 billion plus. Over the past three years, remittances have averaged over 85% of our core earnings. And while this has been positively impacted by in-force reinsurance activities and favorable market movements, we continue to expect 60% to 70% of core earnings to materialize as cash remittances on a go-forward basis, a testament to our capital-efficient and cash-generative businesses. As Phil mentioned earlier, we will initiate a new share buyback program in late February 2026 to repurchase up to 2.5% of our outstanding common shares. In addition, our Board has approved a 10% increase in our quarterly common share dividend. Together, these actions reflect our continued commitment to shareholder value creation. Let's now move to our balance sheet on Slide 19. We grew our adjusted book value per share by 6% from the prior year to $38.27, even after returning significant capital to shareholders as well as the impact of a strengthening Canadian dollar that reduced the growth rate by 3%. We ended the year with a strong LICAT ratio of 136%, which was $24 billion above the supervisory target ratio. Our financial leverage ratio of 23.9% remained well below our medium-term target of 25%. These robust metrics underpin the strength and resilience of our capital position and balance sheet. Moving to Slide 20, which summarizes how we are progressing toward our targets. Our 2025 results reflect disciplined execution and momentum across the business, with meaningful progress towards achieving our Investor Day core ROE remittances and efficiency targets. You can see the three-year progress of our core ROE expansion in the appendix of the presentation. While our core EPS growth was slightly below our target due in part to headwinds in our U.S. segment this year, we achieved or are tracking well towards the remainder of our targets. And by executing our refreshed strategy, I'm confident in our ability to achieve our 2027 and medium-term targets going forward. 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 two questions, including follow-ups and to requeue if they have additional questions. Operator, we will now open the call to questions.

Operator, Conference Operator

Our first question comes from John Aiken from Jefferies.

John Aiken, Analyst

Thank you. I have a clarification regarding your comments on the Hong Kong sales being down due to broker pressure and regulatory changes. Is this a significant shift? Or do you think we might see the sales levels return to a run rate by 2026?

Steven Finch, Analyst

John, it's Steven Finch here. So for Hong Kong sales, maybe I'll take a step back first. For the full year, we're very happy with the Hong Kong performance. We saw strong sales for the full year up 21%, NBV up 31%, NBCSM up 21% and strong core earnings up 26%. So really good results. What we're seeing in the quarter is, as Colin mentioned in his opening, both a tough year-over-year comparative. We had very strong results in Q4 the prior year. But isolated to softness that we're seeing in the broker channel and in particular, the MCV broker channel. The distributors there, they're adjusting to some regulatory changes. And this is not unusual from what we see in different markets in Asia with regulatory changes coming in, some adjustment period, and then a resumption of growth. We benefit from a diversified distribution strategy in Asia, and we saw continued growth in Q4 in both our agency and banca channel. So as we look to the future, we're confident the underlying customer demand is still there. The fundamentals are strong. So we expect that the brokers will adjust, and we'll see sales increase over time.

Philip Witherington, President and Chief Executive Officer

And John, this is Phil. Just if I could add one thing. Consistently on this call in recent years, I've said that we have appetite for the broker channel, but we can see quarters where there will be variability in volume, particularly if there are changes in the regulatory environment, which we have seen over the past six months and because of competitive factors in the competitive environment. The environment is competitive in the broker channel. I think the really important point is that our core channels of agency as well as bank delivered strong growth in the fourth quarter, as Steve said.

Operator, Conference Operator

Our next question comes from Tom MacKinnon from BMO.

Tom MacKinnon, Analyst

I have a follow-up question regarding the NBV margin in Hong Kong, which has increased significantly from 39.7% in the fourth quarter of 2024 to 52.4% in the fourth quarter of 2025. Is this increase primarily due to the mix of channels? Are the agency and banca channels more profitable compared to the broker channel? If that's the case, why are we focusing more on the MCV broker channel when the others seem to provide better new business value, CSM growth, and NBV margins?

Steven Finch, Analyst

Yes. Thanks, Tom. It's Steve. You highlighted an important aspect. We observed that the margin in Hong Kong's new business value increased by over 12% year-over-year. This is influenced by our sales mix. The decline in MCV broker sales is associated with a lower margin channel, which we still find attractive. We continually adjust our overall strategy between volume and margin to optimize our performance. However, our primary strength remains in domestic agency sales, where we maintain strong margins and robust growth. Overall, we are satisfied with this mix. Additionally, we experienced a shift in product mix. We have been focusing on meeting customer needs in health and protection, leading to an increase in sales in these areas, which also contributed to margin growth.

Tom MacKinnon, Analyst

All right. And a question perhaps for Paul. I mean, we're just into the Comvest close here, but I think you've noted an impact from eMPF in terms of what it would be post tax to GWAM earnings. What about Comvest? I know you've talked about overall accretion, but I mean you used a lot of cash to make this acquisition. How should we be looking at the GWAM segment going forward in light of the incremental earnings from Comvest?

Paul Lorentz, Analyst

Thanks, Tom. It's Paul here. Regarding the outlook, we're pleased with the eMPF. Although we've converted about half of the expected impact in the current quarter, our guidance remains accurate going forward. As for Comvest, we don't share specific metrics at this time, but it has positively contributed to gross flows, net flows, and core earnings since it closed late last year. It's meeting our expectations and we're excited about the customer demand we're witnessing. The category is projected to double. For instance, CQS, which closed about 1.5 years ago in alternative credit, has seen a 40% increase in AUM since the deal, which has positively impacted our top line. We anticipate similar enthusiasm for the Comvest product suite due to demand. While it's still early, we're very optimistic about its progress so far.

Tom MacKinnon, Analyst

And if I could just squeeze one quick one in here. The 2.5% NCIB, you got a pretty good track record; I think it's over 3% you purchased in 2025. Colin, is there anything you can say about what your intentions would be with respect to this NCIB, given that you've generally historically purchased the bulk of these NCIBs?

Philip Witherington, President and Chief Executive Officer

Well, thanks for the question, Tom. Let me jump in on that one. It's Phil. You're right. Our last NCIB program was 3%, and we completed that in full. This year, we've announced 2.5%. And it's hard to predict the future. But where we stand now, our intention is to complete the program in full. And if anything changes there, I'm happy to update on future calls. From our perspective, our capital deployment strategy is balanced, and NCIB remains an appropriate use of capital. But at this level, 2.5%, it's not something that constrains our ability to invest organically in our businesses, which is really important in the context of the refreshed strategy that we laid out 3 months ago.

Operator, Conference Operator

Our next question comes from Doug Young from Desjardins Capital Markets.

Doug Young, Analyst

Maybe just focusing on the U.S. division, it seems that we have experienced unfavorable mortality or claims trends for about three to four consecutive quarters. I'm hoping you can clarify what you're observing this quarter. I believe it relates to mortality. Is there a specific product line affected? We have heard some insights about increased competition concerning mortality in the U.S. market. I'm looking to understand what you're seeing and what we might anticipate moving forward.

Brooks Tingle, Analyst

Doug, it's Brooks Tingle. Thanks for the question. And I guess I'd start with a quick reminder that we operate at the very high end of the market in the U.S., quite large policies. Now that's a very attractive segment of the market, and you see that reflected in our new business value metrics. It does result in some variability quarter-to-quarter and even year-to-year from a mortality perspective. And you'll recall that Q2 of '25 represented a particularly unusual level of variability. But we're pleased that Q3 showed significant normalization improvement from there. In Q4, still further improvement from there. And I'd actually characterize where we finished Q4 as within sort of a normal range of variability. And I'll probably leave it at that.

Doug Young, Analyst

So you're not seeing a particular trend here that would in the end result in some form of actuarial reserve increase that's required for these businesses? I guess that's where I'm trying to go.

Stephanie Fadous, Analyst

It's Stephanie here. I think Brooks covered it well. What we observed this quarter is an improved claims experience compared to the previous period, and I consider this to be normal variability due to slightly elevated severity. We will experience some variability occasionally, given our position in the large case business. I do not see this as a trend. In fact, during the same quarter last year, we experienced claims gains through P&L in this business for the entire year of 2024.

Doug Young, Analyst

Okay. And then second question, maybe for Colin or for Phil. I guess my question is, can you achieve an 18% plus core ROE target by 2027 with the level of excess capital that you have and you're under levered as well? Or do those things need to kind of normalize? And I assume you're going to say yes. But maybe if you can map out how you get 16.5% to 18% plus in the next two years? Just to give a sense of what those drivers could be? And then maybe if you can kind of tie in, like why not be more aggressive on the NCIB given the amount of capital or cash that you're generating and the amount of excess capital you currently sit on?

Philip Witherington, President and Chief Executive Officer

So Doug, this is Phil. I will hand over to Colin, but I do want to say, yes, we do remain confident that we can get to the 18% plus core ROE target, and there are various reasons underpinning that, but I'll let Colin walk through it.

Colin Simpson, Chief Financial Officer

Yes. Doug, I think the important point to note is we've mapped out a number of scenarios to get us to the 18%. We're confident that we're going to get there. We were at 18.1% last quarter, 17.1% this quarter. So the trajectory is good. We live in a fluid environment, and we will use share buybacks not as the primary driver to get to the 18% ROE, but as a lever to pull in order for us to get there. You mentioned excess capital being a drag on our ability to grow ROE. That's certainly the case. We have got around about $10 billion above our upper operating limit, but that becomes a competitive strength in either difficult times or in a whole range of scenarios. So we're in no hurry to deplete what is a very favorable capital position.

Operator, Conference Operator

Our next question comes from Gabriel Dechaine from National Bank Financial.

Gabriel Dechaine, Analyst

Actually, just a follow-up on that mortality issue in the U.S. So you're confident this isn't some trend. I guess one way to confirm your view more or less is, is there any impact from what's happening in this business mortality-wise on your appetite for LTC dispositions? Because that business would be as a hedge to higher mortality.

Philip Witherington, President and Chief Executive Officer

We're here, Gabriel. I think it's probably best for Brooks to start on that, and maybe Naveed will comment from an LTC perspective.

Brooks Tingle, Analyst

Yes, we don't consider this a long-term trend. We're monitoring it closely. There is definitely some variability. When you examine our Q4 results regarding core earnings, the impact appears somewhat exaggerated because we had a gain in the previous Q4, highlighting that variability. However, post-COVID, the effects of mortality in the Life segment in the U.S. have remained within a fairly consistent range, and the Q4 results fit within that. We're pleased to see it stabilizing, though variability will always exist. I want to emphasize that despite the variability linked to operating at the premium end of the market, our value metrics remain very strong. We demonstrated that last year, and we are confident in our ability to keep growing that business.

Naveed Irshad, Analyst

It's Naveed here. I would just add that given that we don't feel the mortality is a sort of long-term trend, it's not really affecting how we're thinking about LTC transactions. As you know, we've done two significant transactions with different counterparties at or near book value, which provides sort of external validation of our assumptions in LTC. And we're continuing to focus on evaluating opportunistic transactions that drive shareholder value, that won't go away.

Colin Simpson, Chief Financial Officer

Yes, Gabe, to add to your point about the book value multiple in the shares, it does not limit our ability to grow earnings per share. We will evaluate each deal individually and make capital allocation decisions based on the merits of that specific deal. Therefore, the current share price does not influence our capacity to pursue future deals.

Operator, Conference Operator

Our next question comes from Mike Ward from UBS.

Michael Ward, Analyst

I was curious about the Japan business actually. One of your global kind of peers has run into a little bit of a hiccup in terms of just distribution in Japan. So I'm just wondering what you see in this kind of high net worth market for insurance and wealth products in Japan? And if you see any disruption or anything changing there in terms of the market structure?

Steven Finch, Analyst

Yes. Thanks, Mike. It's Steve here. Yes, I'm well aware of what's been reported by one of our peers in Japan, and it's not directly applicable to Manulife. One thing I'd point out is we're very experienced in running a multichannel distribution model in many countries in Asia, including Japan. And over time, we've built and continue to build strong controls and compliance programs. Whenever there are isolated issues, we address them very swiftly. And then to your point around the Japan market, what we're seeing is some strong success in the Japan market. You see from our numbers double-digit growth this year. We've been executing on a strategy to capitalize on customer needs. And so those needs are driven by interest rates that are structurally higher than they have been in the past, an aging society with a long longevity, so a big need for retirement planning. We've expanded the product portfolio to meet more of these customer needs, in terms of unit-linked product, whole life product. And that's been driving our success, and we're optimistic as we look forward in Japan.

Operator, Conference Operator

The next question comes from Paul Holden from CIBC.

Paul Holden, Analyst

I want to ask a couple of follow-up questions related to topics that have already been discussed. So first one is around Asia sales and I guess, Hong Kong, particularly, you gave us a number of different measures or metrics to follow. And I think we've all been conditioned to follow APE sales because of IFRS 4 accounting. But now maybe there's an argument that, that shouldn't be the number one metric to follow; maybe it should be new CSM growth because that's what's really going to drive future earnings. So point is like, to agree with that, if you were to focus on one metric, that should be the most important one. And then second part of the question, like does that influence or to what degree does that influence? How you think about sales mix?

Steven Finch, Analyst

Yes, thanks, Paul. It's Steve here. You made an important point. Under IFRS 17, sales variability does not affect core earnings variability because the CSM amortizes into income. We aim to maximize value for shareholders. We report both NBV and NBCSM as they both indicate the value we are generating for different reasons. We focus on both metrics and strive to achieve maximum dollar value, guided by our medium-term return on equity target of over 18%. Our objective is to optimize value while meeting or exceeding that target, and that's what we aim to achieve.

Paul Holden, Analyst

Okay. So if I measure this quarter on that basis, then it was a really good result for Asia sales. Yes.

Steven Finch, Analyst

As Colin noted, NBV up for the segment of 10% and NBCSM up 19%, helping drive year-over-year CSM was up organically 11% total 19% and a little over USD 2 billion.

Operator, Conference Operator

This concludes the question-and-answer session. I would like to turn the conference back over to Mr. Hung Ko for any closing remarks.

Hung Ko, Global Head of Treasury and Investor Relations

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

Operator, Conference Operator

This brings to a close today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.