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Keys to Sustaining Success- Manulife in Japan
Tadayoshi OtsukaVice President & Corporate OfficerManulife Life Insurance Japan
October 23rd, 2008
2
Manulife Financial - Vision and Strength
Vision
To be the most professional life insurance company in the world
Strengths
Solid Financials
Innovative Products
Strong Management
Team
Conservative Balance Sheet
Excellent Distribution
Well-suited to Changing
Demographics
Effective Risk Management
High Quality Investment
3
Manulife Financial – Operating in over 19 Different Countries and Territories Globally
Canada• Individual Insurance • Individual Wealth Management• Group Benefits• Group Pensions
United States• Insurance• Long Term Care• Annuities• Group Pensions• Mutual Funds• Fixed Products
AsiaHong Kong, Philippines, Singapore, Indonesia, Vietnam, Malaysia, Thailand, Taiwan, China
• Individual Life Insurance• Group Life & Health Insurance• Variable Annuities• Pension Products• Mutual Funds
InvestmentsUnited States, Canada, United Kingdom, Japan, Australia, Hong Kong, Southeast Asia
Japan • Individual Insurance• Variable Annuities
ReinsuranceUnited StatesCanadaEuropeAsia
4
Significant Scale
5
Reasons Why MFC Entered Japan
Second largest economy & second largest insurance market in the world
Sophisticated consumers with high standard of living
Substantial potential for savings & inter-generational wealth transfer needs
Under-serviced by product innovation
MFC has over 100 years of experience in Asia
6
Demographic Characteristics
One of most aged societies in the world 40% of population projected to be over 65 by 2050
High life expectancy & falling birth rates
Concentrated spending power
Shift from concerns of dying to affordability of living
High consumer savings rate
Sources: World Population Ageing 2007 and Towers Perrin Changing Life Insurance in Japan, 2008.
7
How Manulife Japan Was Established
1999: Struck a joint venture deal with Daihyaku & capitalized a new company called Manulife Century Life with a ¥40 billion ($500MM CAD) investment (approx. 50% of the company)
2000: DHY taken over by the regulator, MCL continued to operate
2001: MCL purchased the assets and liabilities of DHY and was renamed to Manulife Life Insurance Company
2003: Manulife Japan began to prosper
8
Strategy After Acquiring Daihyaku
Leverage global experience and recruit top-quality Japanese talent
Introduce a more modern, capital efficient and profitable product portfolio
• Introduced a variety of innovative products including universal life and variable annuity products
Revitalize and expand channels of distribution• Formed partnerships with banks and retail brokerages (Jan 04: Strategic
alliance with the Bank of Tokyo Mitsubishi)
Reduce expense bases• Eliminated duplication
• Centralized administration
• Re-negotiated supply contracts
As a result of diligently pursuing the above strategy...
9
MLJ - Significant Growth
111 106 123
261208 186
84 106
3171 103
46
724
2002 2003 2004 2005 2006 2007 1H07 1H08
Insurance Wealth
2,546
1,3421,621
1,899
2,704
3,933
3,164
3,791
2002 2003 2004 2005 2006 2007 1H07 1H08
Net Income
5-yr CAGR 21%
Premiums & Deposits
5-yr CAGR 19%
15,449
12,36211,361
9,6168,2538,441
12,760
16,729
2002 2003 2004 2005 2006 2007 1H07 1H08
Insurance Wealth
Fund Under
Management
5-yr CAGR 13%
Recent Japan Successes1
G R O W T H
+37%+90%
+31%
+37% +90% +31%Earnings P & D FUM
1H07 vs 1H08
10
Significant Contribution to MFC
Japan7%
Net Income
VA36%
Insurance64%
Business Unit Net Income
Data as at 31Dec07 in $US
“In order to meet our ambitious objectives, we will leverage the positive momentum achieved and grow our business even faster”
– Craig BromleyEVP & GM, Japan
37% YoY Earnings GrowthKey contributors:
Inforce growth Impact of strong sales in Insurance & WealthFavorable currency
Data as at 31Dec07 in $US
YoY based on 1H08 vs 1H07
11
Market Share
Insurance Sales
10,638
13,685
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2006 FY 2007 FY
Yen
M
Wealth Sales
221,573
420,954
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
2006 FY 2007 FY
Yen
M
Market Share
Industry Growth
11.5% 614Bp
-14.0% -11.0%
0.7% 1.1% 37Bp 5.4%
Wealth2006 FY 2007 FY Growth
Insurance2006 FY 2007 FY Growth
Source: Market share and sales are based on numbers from statutory accounts
12
Our Distribution Partners
13
Core Strategy & Implementation
To be the fastest growing insurance provider in Japan
Expand existing distribution channels
Focus on developing innovative products
Expand infrastructure to meet growth
Develop new markets & strategically invest in areas of growth
14
Strengths & Challenges
Strengths
“AAA” credit rating
Strong products development capability
Recognized market leader of VA in Japan
Excellent account management appreciated by distributors
Move quickly to catch opportunities
Challenges
Changing regulations
Shrinking overall market in Japan
Fiercer competition and new entrants
Turbulent economic environment
15
What are we facing today?
Source: Towers Perrin Changing Life Insurance in Japan, 2008.
16
Looking Forward
We will keep ourselves well positioned, no matter what.
Strong market position
A track record of successful industry leading products
Growth of alternative distribution channels
Lever large customer base and sell products through multiple channels