Manulife Financial Corporation (MFC) Earnings Call Transcript & Summary

I trust you enjoyed the Manulife Prestige customer center visit, and that it really showed you the value that we create for our customers here in Hong Kong and the tremendous talent actually that we have in our business that Patrick, Calvin, Carry Ivan, I think you all did a fantastic job and as well as the teams that supported you in doing that. I think for me, it really demonstrated the uniqueness of our propositions, in Hong Kong that we can create holistic solutions, wealth, retirement and insurance as well as health all combined together. Now yesterday, you may recall that during that my presentation, I referenced DBS at least 3 times. I lost count. And you can probably tell that it's a partnership that I'm very passionate about, Roy is very passionate about, and I speak for all my colleagues at Manulife when I say we're passionate about this partnership. It's a partnership that started in 2016 and has been truly transformational. And I did give you a teaser yesterday that there would be a fireside chat between Roy and Piyush. That time has now come. So please join me in welcoming Roy and Piyush to the stage.

Okay. Good morning, everyone. I am delighted to be joined on stage by -- with Push Gupta, the CEO of DBS Bank. We did talk about this fireside chat yesterday, and I know that a lot of you have been anticipating this for some time. Now Piyush doesn't really need introduction, but it would be remiss of me not to highlight some of the incredible achievements that he's achieved at DBS and his own personal accomplishments. He joined DBS as a CEO in 2009, where he's shown exceptional leadership, he transformed DBS from a banking leader to a technology leader, and DBS under his leadership was named the World's Best Bank as well as the World's Most Digital Bank by several leading publications. In 2019, the Harvard Business Review named DBS, one of the most transformative organizations of the decade. Same time, Piyush has also been personally recognized for his successors in 2020. He was awarded the public service star by the President of Singapore, '21. Global Indian of the year by the Economic Times and in '23, was named the Pravasi Bharatiya Samman Award, the Indian government's highest honor for the country's diaspora, and I'm also proud to say that Piyush is a very dear and close friend of mine. Welcome, Piyush. Thank you for joining us.

Thank you. Happy to be here. I heard Philip talk about this passionate relationship. I got to tell you that passionate relationship starts here. We worked together many years and we've been old friends.

Now Piyush what I'm going to do is I'm going to maybe start with the macro perspective on Asia, then dive into some of the countries before talking about our partnership and then opening the floor for Q&A. But maybe we could just start with your perspective on Asia, the macroeconomic environment and how you see things unfolding for the next 3 to 5 years?

So let me start with some fundamentals. I think a lot of people might know that, but say that nevertheless, obviously, I got to speak in my book. I'm very constructive in Asia because the fundamental mega trends that are driving Asia, those are pretty much intact. And while like all emerging markets will go through ups and downs, those underlying drivers are very strong. The first of those is a share used to be only the factory of the world. You think about the 1980s, '90s and so on. In the last couple of decades, it shifted from being just the factory of the world to also being a massive market. It's a consuming Asia. So this is the first mega trend. It's a massive in Asia. The total middle class in Asia is expected to go from about 2 billion to 3.5 billion over a decade. Don't ask me how they count middle class because that number keeps changing, but McKinsey sort of called it a $10 trillion consumption economy. And that you can see. You go to any shopping malls, street markets, anywhere in Asia is buzzing and alive. So people are out there and people are spending. You're going to be in Jakarta, some of you. You're going to see any of the malls in shopping business. You can see that activity is there. But it's not just the consumer market, mass affluent, dissect with more confidence, the wealth creation in Asia has just been unbelievable in 5 years, 2020 to '25 or something like that. Mass affluent wealth has gone from $2.5 trillion to $4.5 trillion or will by next year. That's unbelievable, that kind of well growth. The upper -- the ultra high net worth. There are about 1,000 billionaires in Asia, all new limited, right, in the last 15, 20 years. Now that whole dynamic of consuming Asia marketplace and bundling this, that's very significant. And I don't think that trend is changing anytime soon. There is we look at the capital in term, most of the countries, 3,000, 4,000, 6,000, 8,000. They're at the level when all the economic tells you they're hitting their stride in terms of being consuming economies. I said it's also become a consumer economy, but it used to be a factory. I understood. If you look at the PMI data, production and industrial data for all of these countries, they have done a great job of the migration from the shoes, slippers, the apparel, the clothing to tech to precision engineering, et cetera, et cetera. And the interesting thing is geopolitics notwithstanding, and all of these questions about China Plus One and everybody moving out, a large part of that manufacturing thing continues to stay in the region. In our own analysis, data showed that to take the TMT supply chain out of China is 10 to 15 years of work. It can't be done easily. On top of that what happens when your market is here, for many the companies, you need to have your production facilities where your market is. Why would you move it to Mexico and Canada, you do it to service the U.S. market. But in large chunk of the market is right here, so you keep your facilities here. We are seeing that even in the last few years that people are moving and diversifying out of China and doing stuff is going to Vietnam, is going to Thailand for automotive, is going to Malaysian Penang electronics, is going into Indonesia, is going to China. So the manufacturing prowess of the region is pretty substantive and intact. So integrating Asia. And something people don't realize. EU everybody, realizes the 27 or 28 countries and Brussels run things, but in Asia, the underlying systems of trade and capital have been integrating massively in the last 2, 3 decades. Today, 58% or 59% of Asian trade happens in Asia. And partly because the things they are talking about. So people are sort of manufacturing in one place, exporting from another place, shipping from another place and so on. But also FDI, if you look at total FDI, about 55% or 60% of Asian FDI is in Asia. So capital flows are circulating in the past. Asia money used to go to the west and circle back. Today, a lot of the money trade flows, capital flows are in the region. So it's an integrating Asia. And the last mega trend to me the demographics, while some countries are aging. By and large, average age in Asia is 27, 28. The U.S. is 38. Europe is 42, what that is digitally native. And it means that the capacity to use digital tools, technologies, infrastructure and leapfrog what you're seeing in other parts of the world, that's very real. 50% more than that, 50%, 60% of the world's global electronic payments on a mobile phone happen in 1 country, that's India. 50% happen in India. 5, 10 years ago, India didn't have any. The mostly was in China. But if you look at digital infrastructure, digital tools, the willingness to embrace digitally, Asia shares at a completely different place to other parts of the world, right? So the mega trend is still there, I think that a slow Asia grows at 4.5%, 5%. On a 35%, 40% of global GDP is in this region, 4.5%, 5% growth is not shabby compared to any other part of the world. So China grows at 4%, 5% on an $18 trillion economy, that's a $1 trillion of growth. What's wrong with $1 trillion of growth. So fundamentally, I think the long-term distinct is there. Now like I said, within that, there are cycles. In the early part of the decade to 4, 5 years ago for us, China was a big driver of the growth. China outbound, the renminbi trade, the Chinese companies going internationally. The last 3, 4 years, we've been treading water in China. But India, Indonesia, the other big markets, they picked up the momentum. So with enough economies, with enough diversification to be able to actually build a very balanced book of businesses if you have the balance in your business. We're seeing that. So while there is some slowdown, whether is product Singapore will grow 2% this year, but that's up from 1%. Hong Kong will grow about 2% this year, and that's down from 3%. Taiwan will grow 4% this year. China will grow 4%, 5% this year. Indonesia grew 5% this year. India will grow 7% to 8% this year. So the underlying economies are not bad. And in fact, they've also shown a lot more resilience. In the past, Asian financial crisis, the GFC, the Asian economy is tended to be more fragile, particularly to a strong dollar and rising rates. And so you find the Asian financial crash, the bad sold off, the rupee sold off, the Korean won sold off. In the 20 years since then, I think every Asian economy doubled down and created a far more resilient system. So reserves are much higher. Every country has a reasonable 8 to 12 months of import cover. Debt is much lower, both public debt. The fiscal situations are much stronger. Leverage in the system is lower. Consumer leverage is lower than a couple of countries. And so on the whole, the financial architecture stability in the system gives them a lot more resiliency than they used to have. So in this cycle, with rates going where they are in the strong dollar, none of the Asian countries have really fared the impact of that material. Sorry long answer.

But it's a good answer. And I think you provided a real double click into the drivers they're going to fuel that 4% to 7% growth in GDP. And the compelling trend there is the growth of the middle class, which I think you articulated very well, and we think is a huge driver of opportunity for us. You touched on geopolitics and that's has been a headwind for Asia in the last 3 years. And we haven't seen that for decades before. Do you think that the current situation that we currently have, specifically as it relates to the U.S.-China but more broader than that, is this the new norm that we're going to live with for the next decade? Is it going to get better? Is it going to get worse?

So -- and I'm not too sure. I'm not a political scientist. So I can tell you first of my read on it and take it for what it's worth. I think -- my own take is we're not going into a bipolar world situation. I think the chances are we going into multi-polar world, and this is not unusual. If you think about Europe in the 19th century, if any of you remember studying European history, I used to be constantly confused about who was citing with whom and against whom. And every 20 years in the world, France would be the oppressor with Germany and then they tie up with Britain. And so it was all issues. I think we're into a world where you'll have a couple of disparate people issues based. And you're finding that there are people who have already been demonstrated Saudi Arabia, right, India, ASEAN as a block. They're quite happy to try and play both sides. You take India, it's so interesting. I come from there, but they're part of the Accord where they signed up with the U.S., they're also part of bricks and they signed up with China. The largest trading partner in China, even though they're a facing each other at the border. And when somebody asked the informed minister, he pushed to it with side will you choose. He said was totally the smart. They said we have 1.4 billion, we make our own side. So I take this multiple or thing, which is issues based to be there. But what that means is there'll always be possibilities of friction on issues. Now it's challenging because continue will have to navigate better. Asia has been blessed for 40, 50 years with a very peaceful and calm geopolitical environment. The U.S. business was very helpful. Growth was nice. So I think there'll be more friction. So let's start with that. But will these be at a level that displays the capacity of these countries to operate, I don't think. Again, somebody wants told me I'm like, Asia grows a bit when the governments are a sleep, right? And so it's exactly what happens, right? Thailand has had more changes in the government since the Second World War than any country except Italy. Its average growth rate 5%, right? And Malaysia politics is a mess. Growth trade 5%. So I think the capacity of the region to continue to propel will be driven by the mega trends. And so geopolitics matter, but I don't think it will displace things. Now the other thing, China in particular. A lot of people sort of look at the panel with the cold war. So will there be an iron curtain? Do you get 2 competing systems? You've got to reflect the entire Soviet block at that time had single-digit portion of global GDP. It is 5%, 7% of GDP. You can create a block when it's a small portion of global GDP. China is the largest trading partner to 120 countries in the world. How do you extricate 120 countries, largest trading partner and say, okay, we can isolate the block. It's much harder to do. And if you look at most of Asia, we're the largest -- the largest trading partner to 8 Asian country. But also to countries like India and Australia, where you could say that there's geopolitical tensions, but business doesn't sort of stop. So I think it's going to be hard to create a complete block. There will be area, the semiconductor complex, the high tech, where people will put friction, there will be noise. But I don't see this as a showstopper fundamentally. I think the China has issues and maybe we can talk about that later. People say what happens at Trump's wins. It looks like he will. But if you exclude the rhetoric, Trump's rhetoric is obnoxious. But if you exclude the rhetoric and you look under that to the policies, and you look at the policy framework that the Democrats have run for the last 2, 3 years relative to the -- there's not that much to choose from. Trump is the deal maker. He'll raise tariffs up-front than he try and to get in the papers and cut tariffs on some things. Business goes on. My last anecdote. I tell you how right here. We have one of our clients here in Hong Kong is the manufacturer of Christmas trees. He claims he's got 70% of global market share in Christmas, tree. Every Walmart to go to the Christmas tree buy is like from him. And so for some reason, in the Trump administration, they put Christmas trees on the tariff list of the banned. I thought maybe he thought the cones of the tree could be made into missile.

Security threat.

Anyway, so they put it on the tariff list. So I asked him, so what do you do? Now I know he is another place in Mexico. So I assume that he died up the production in the Mexico plant. And he said, "No, no, I tried that. It doesn't work because it is 30% more expensive, to do stuff in Mexico and 30% as efficient. I lost productivity and increased cost." So I said, "then, what do you do?" He said, "I just acquired some land near the Jakarta Airport." And it's a large acreage, and I pretty much make the deal. I ship it to Jakarta, rebrand it and we ship it from Indonesia all over the world. And everybody knows, so it's transparent. I'm not hiding anything, but it's Indonesia growth. So you can see this in the underlying data. Chinese exports into Southeast Asia have gone up. Southeast Asian exports to the U.S. and the West have gone up, but Chinese direct exports to U.S. have gone down. So my dear theory is that geopolitics matters don't get me wrong, but I think by and large, the underlying momentum of business, the region, et cetera, I think that's got good momentum.

So it's a more challenging environment, one that needs to be navigated delicately, but not one that will derail the opportunity for Asia. So you touched on China, and China has been in a more challenging environment. It's used to growing between 7% and 9%, more recently, 4% to 5%, if you believe the numbers that are being quoted. And it's a market where it has been feeling and certainly receiving a lot of pain. The real estate market has been one that's challenged. It's clearly being impacted by the tariffs that are being imposed on it and so on. Have we seen China bottom in terms of its economic pain? Or is there more pain to come?

So in the short term, China's big problems are well known. The real estate is a real problem. They've got massive leverage and significant overcapacity in large parts of the system and complex. The question is how do you try to work out of it? In similar oversupplied situations in the U.S. or the Spanish real estate prices, the market clearing price that was needed to get rid of that excess was a really sharp problem. You needed prices to be off by 50%, 60% to clear the market. The Chinese don't want to do that because they're trying to balance the social consequences of huge erosion and wealth. But at the same time, the conscious of what Japan did, which is kick the can down the road and then it takes you 30 years. So they don't want to do that either. So they're trying to do this sort of in between things. And I was fairly interested with the policies that came out with 2, 3 months ago, where they're really trying to take some of this overcapacity on to the government books effectively. So they said we'd pull out this thing and we'll essentially buy some of the stock and keep it. And because the government like Japan, if you're issuing taking local currency debt, the debt capacity is in finance, it's not foreign currency debt, so you can just [indiscernible]. So it's an interesting way to deal with it. But the numbers that they put behind it were not staggering. So I think if they really want to go down the path, they're going to have to commit a lot more fiscal resource to being able to do that. So they might wind up there. I thought. My own view is that the property cycle will take at least another 3 to 5 years to clear. If they get it right, it will take 3, 4 years to do. And because real estate is still 30%, 35% of Chinese GDP, an overhang on the property side will continue to spill over into everything else in China. So that's one. I'm not sort of the view that you see a quick bounce back in the property space. Having said that, I do think that they put a floor under the market now. So all of the policies they put in the last 12 months are actually may be sure that you're not continuing to see a [indiscernible] decline, right? And so I think there is a little bit of a floor. There is some upside. Some of the industries that they doubled down on, they're really doing extremely well. So obviously, the entire renewable complex. And last year, they put 80 gigawatts of renewable energy. That's more than the whole world, right? So it's a massive growing industry the EV complex. They just -- the consolidation. But underlying, you look at the cars they're creating, it's just mind boggling. The Nios and the BYDs and so on. fabulous cars. You look at what they're doing in the high-tech space, they doing -- so some of the industries, they're really creating cutting-edge stuff. So I think there are pockets of opportunity around that. So the big question to me personally is what they need to fix and they've not been able to fix is a confidence problem, right? Confidence is more about sentiment than it is about it. They've got good policies, which are putting a floor. I think they know -- and they got that capacity, they've got fiscal resolved. What they don't have is confidence and it's on both sides. They're lacking confidence, obviously, in the international community. So most of the companies represented in the room have reduced allocation to China, right? People, by the way, in the last couple of months, people have been nibbling back because valuations are just so attractive, right? It's very cheap. So people are nibbling back, but generally speaking, the big scheme of things, they've lost international confidence. To me, the more worrying thing is they've also not been able to revive domestic confidence. So the domestic consumer, domestic investor, et cetera, is also not very confident about putting money to work. So they need something to fire up this domestic confidence issue, which typically means we either got to prop up the stock market to create a wealth effect we're going to prop up the property. You need something to capitalize that, and they've not done that yet. Now to me, therefore, the bigger way -- the bigger question in China, right, honestly, are really the 5-year questions. And the 5-year view, you can be in 1 of 2 hands. You can be in the camp, which essentially says that president sees a status, he's from the lending [indiscernible], the party matters most. And as a consequence, they're just not comfortable with the market economy. And so it's a real shift from big jumping whose thing was the market will determine it, and it doesn't matter to me whether the cat is black or white as long as it catches mice. That does bring [indiscernible]. So there is a school that says that he's trying to effectively go back to more planned economy construct. If that is actually the case, then I think the challenges for China. Because we know that by and large, planned allocation of capital is always sooner or later, becomes suboptimal. There's alternative CAM, which by the way, I mean as well is actually some of the things they're trying to do are very constructive for China, if you have a 10-, 15-, 20-year view on a country. China had fantastic growth for 25 years. But what China did not put in place is the soft infrastructure that requires you to support growth of the sort every developed country in the world. And when you look at the U.S. as an example, it took them 100 years to build some of the soft infrastructure. 1920s, they had oligopolies of monopoly. They had to get it to the [indiscernible]. They had to do the AT&T restructuring. They had to change their view on corruption. They had to put in a whole bunch of controls. So you look at what seas trying to do. I think he's taken a lesson from the Singapore book. Lee Kwan Yew cleaned up corruption in Singapore in the 1960s and '70s. And there's been the singular difference between Singapore and every other Southeast Asian country. There's no corruption. I think he took a lesson from that. They've got to try and make sure that we drive corruption out of the system. He took a view on oligopolistic and monopolistic practices, and he tried to say, okay, how do I take this and not give all oligopoly part and so on. So they're trying to do some of the stuff. So if you believe in the can, what they're doing is constructive, then you've got to figure in 5, 7 years, you'll get to a better China. It's not a state journey, it will not be a linear journey because of what I said. If you lose confidence in the people, without a short term, we don't have it long term. So if they screw up the short term, they might not get to the long term. But I think if they're trying to do it for the right reasons, they have capacity to be able to navigate from here to there.

And you put around confidence, I think, is spot on savings rates in Mainland China are at historic highs. But we're starting to see a little bit of that confidence start to come back. And consumers are getting more active with investing their money and talking about options to diversify their portfolio and look at how they can actually build in create wealth. So hopefully, that is a pivot point.

That is, too, our first quarter in China was very strong and including in the consumer wealth space. So I can see some of what you're saying. The Chinese have been to travel again. You're seeing them around the region. They're not spending the kind of money they were spending earlier. So the wallet size is slightly lower, but we bleed to see the green shoots come back. I would agree with that.

No, I agree with that. We go from here to -- many of us are going to be moving now to Jakarta for a day there with our business and the team there. DBS has a great business in Indonesia. Indonesia has always represented a tremendous opportunity. One of the most populated countries in the world, 250-odd million people. Jokowi and the government there has done a tremendous job building an infrastructure, but also taking a significant percentage of the population out of poverty. How optimistic are you about the Indonesia economy? They've just had new elections. Does that encourage you? Or does that discourage you?

I want to start with the history. When we were together in the Citibank days, in the mid-90s, I was asked to run the strategy group for the emerging markets to figure where we should allocate capital, and we sort of sat in Oxford and we worked with some [indiscernible] and we need all the usual macroeconomic data and so on. And at the end of the exercise, the #1 country in the world to invested ahead of Brazil, Russia, India, China, was Indonesia, #1, for all the reason I cite. Fantastic demographics, great resource base, fantastic population, et cetera, et cetera. Despite that, if you look at history, Indonesia has always underperformed. It grows at 5%. Indonesia should grow at 7%. They give up a couple of percentage points of growth. And you can argue, I think for two reasons. One, the education system in Indonesia has been inadequate. So they have good primary education, but the tertiary education is not that great. And therefore, talent has always been a challenge in Indonesia. The second big issue is that their rule of law, the judicial system, has been opaque. And therefore, I think you give up something on account of that as well, right? So it's now [indiscernible]. So 4 in the pluses. I think one of the least appreciated stories in Asia over the last 2, 3 decades, has been Indonesias transition to democracy. It is not easy for a country of that size, with the demographics they have a lot, a large Muslim population, a young population, many of them study in the Madrasa in the schools. There is a degree of militancy out in the extreme, right? And despite all that, they made a fantastic and successful transition to a democratic system, where every 5 years, they have elections, they have a peaceful change of government, and there's continuity in that system. And now this is about 25 years plus they've been doing that. I think that's a great story. And in the second underlying part of the story, there was a treated economic policy continuity. So whether it was now with Jokowi or earlier with SBY or with presidents in the past, you haven't seen huge vacillating from one point. You tweak up some, et cetera, but there's been consistency in policy. I'm encouraged that at the end of the day, Jokowi and his son, et cetera, all part of this new administration. So there is this people coming together. So I do expect large parts of continuity in what they're trying to do. I think what you said is correct when Jokowi has been very good about driving our investment and infrastructure. So 18, 20 ports, airports, toll roads, the railway links, et cetera. I don't see that changing, right? And I think they will continue to do that. They've been fortunate in some ways, the timing has been good. The switch to EVs and the renewable complex means the nickel has gone from 6 billion to 30 billion of exports. They've got the third biggest -- the biggest nickel resource in the country in the world. They're #3 for cobalt. So there were a lot of get resources, but they've done well in not just mining the stuff and shipping it out but building the downstream, the processing facility, the smarting facilities and so on. So that's creating a whole range of economic activity in the system. And so some of that is filling out. Like I said, they've now got 120 million middle class people, and it was half of that a decade ago. So a lot of people are beginning to hit this stride into that middle class in Indonesia. And so for us there, we're focused on 4 markets in Asia, India, China, Indonesia and Taiwan. They are the biggest markets in Asia and ex Korea Coria. And for us, we are beginning, we continue to see great growth. our Indonesia business is growing double digit, grew 20%, I think, last year. We make midteen returns in that country. And again, because of the nature of the digital distribution in the country is a real winner.

Yes, we would share that perspective, and we're quite excited to share with the people that are going to be joining us to -- on our trip to Jakarta why we're excited, not just about the business that we've built, but also where we see the future of that marketplace. So I want to pivot to our partnership. And from annualized perspective, we couldn't be happier. We started our partnership in 2016, covers a variety of markets, and it's been incredibly successful for us. We've written $4.3 billion worth of premium since we started our partnership. It's transformed our business in Singapore. We had 5% market share before we joined with DBS. And today, we have more than 20% on a given quarter. And then from an Asia perspective, our banker contribution went from about 16% to 38% as at '23. So it's been a transformative partnership for us and one that we're really very proud of.

I'm going to start with a question which is centered on your selection process. You looked at many other pan-Asian players when you selected Manulife, so apart from a very charismatic Manulife CEO of Asia...

You're are CEO at that time, Roy.

CEO of Asia, what were the reasons why you selected Manulife?

This is actually going back in time. So for me, the same thing where I look at every, any M&A [indiscernible] like M&A, right? And for me, the 3 things they've guided us. So first, obviously, the economics guide us. You have to competitive. But honestly if remember right, Manulife is not the biggest payer of bidder in this thing. And you weren't very far off, but it wasn't because of the economics. So for me, the second and third piece are actually a lot more important. The second piece on is culture. I'm a big believer in marrying like cultures or cultures that you can work with. We've given up on a couple of M&As in the last few years because I figure this culture is not going to work with us. And you'll wind up giving up so much in the tensions that you create and creating the wrong incentive structures for people. It's not worth it. I liked what I saw first fill in the Canadian culture. But then it wasn't just Canadian also talk to our competitors at that time. But I like what I saw in the Manulife culture, which I think is a win-win culture. And frankly, as I look back at our partnership, that's the one thing which stands out for me. That has not been a one-way, right? We always have tension between volume and profitability. We have we're not tracking to what we said we would do. COVID came in. So you've got kind of a partner that you can have a pragmatic discussion with. And look at things and say, okay, what works, what does not work, what do we win, what do we lose and make trade-offs. And our call at that time was that Manulife would be a great partner because they're willing to have those discussions open upfront. And to me, that culture thing of having authenticity, honesty, trade-offs is very important. One of the things -- and I'll come back to this, one of the things in our partnership, for example, I think we both look at and I certainly do. And my first question to my team is, how is Manulife doing? What's in it for them? Are they making money? There's no point in my doing well if my partner not making money is not going to work. But I think that works both ways, right? So that's a very big element of our decision-making process. The other element of our decision-making process is you know, we had doubled down on digital in 2013, as a company, we took a view that we're just going to go all in on the digital future. And we went all in, so we started investing a lot in our back-end systems. We move from legacy to cloud systems, middleware or front end. So by 2016, we've already named the world's best digital bank because we've got 3 years of a lot of digital work behind us. I'm still of the view and I said it in my opening comments, but particularly in Asia, given the demographics and the kind of people you're reaching out to also given the expansive geographies, digital is the way to go. And so my other big rubric was I wanted a partner who was willing to invest with me in thinking customer journeys and actually thinking end-to-end digital. To be candid, I was actually quite surprised at the time that even though I thought the banks were so far behind, the insurance on that industry was 10 years behind the packs. Every insurance company I talked to was stuck with home backward and how inefficient the processes work, nothing has been digitized. So I was really looking for within that people who had the commitment to make the investment, had the green shoots of having done some stuff, and we're willing to partner with, of course. And frankly, the single biggest thing we've decided to go with Manulife is figure we could do digital together. And again, as I look back at our partnership last 8 years, that's really worked. I give us some data. I'll tell you Singapore OCBC competitor bank, they own their own insurance company. And at the start of the journey, they had 35% of the bancassurance market, and we were like low teens. And they were using apart from the branch system relationship managers, agents and so on. And we figured we're going to have to try and do this differently and really take and build digital journeys to do it differently. And so together, and we've created some really extraordinary digital journeys, both from needs analysis, financial profile, all the way through to underwriting, creating product, delivery back in the hands of the customer all in 4, 5 days. Today, we are running 35% market share bank assurance and they're down to the 20s. In fact, on last quarter before, we are 38% to 39%, this became, I think a large part of this was the digital capabilities that we built together.

Yes. No, I would echo everything you said. I would say, first, it starts with the cultural alignment. You can't have a partnership that's going to last 15 years is unless you have a strong alignment of cultures in terms of how people want to operate. And actually, it works better if people like each other. The second was the focus on digital. And as you said, when we launched our partnership, we actually put significant dollars aside so that we ensure that we are investing on both sides into the digital capabilities and also making it seamless. Most bancassurance partnerships across Asia work in a very manual way. So the relationship manager of the bank basically pulls out the draw when they have to talk about insurance, and it's a 35-page application form, and they painfully go through and fill it out. And then it goes to the insurance company, and it takes like 4 weeks finally execute the sale. But for us, we connected our pipes into the DBS system, and it's basically the same application that's being used to sell a credit card is being used to sell an insurance product. And that was quite revolutionary, and it's only getting better with every year of advancements.

So one of the big improvements that we're seeing. So apart from convenience is the first thing. It's got to be -- if you're digital, you've got to make it convenient and they've got to make it contextual. So it's got to be there when somebody wants it, et cetera. But the other big thing, which is really making a big difference now in the last 3, 4 years is the data and API. So we've been able to leverage collective this idea of to agree about how to use artificial intelligence to do the nudge or the conversation at the right time. So the way we're sending out 30 million nudges directly to customers every month. And the nudges, effectively, some of them are service nudges. I'll tell you your electricity bill looks too high compared to everybody else around it. So we just feel good about it. But a lot of the nudges are really contextual opportune based to do business. And so the nut will look at what you've been leading, whether you interest in this thing, what protection you have. And based on that, we said you're not saying you might want to look at XYZ either investment or insurance or retirement product and then so on. And then for the affluent segment, we don't send it directly to the consumer, we send it to the RM, relationship manager. So that's called Next Best Conversations so NBC. The Next Best Conversation goes to the RM, but the same thing saying, hey, this is what we think our customer is interested in. This is what we think the system does all that. And yes, this is the conversation that you should have, and this is how you might want to lead that conversation to this channel. So we're working extremely well, and we've been able to plug in a lot of our insurance both protection product, retirement product, savings product nudges through the process. It's been actually -- the response rate, you can visibly imagine there's a lift. We do a simple way of measuring. We have a control group where we don't use any nudges, and then we measure everything as compared to that. And last year, we effectively figured we had about $350 million of economic value creation, of which more than half was in wealth planning advisory with a substantial portion is insurance and protection.

Yes. The digital connection between the organizations is a standout leadership position that we have. And I would argue the third beyond culture and digital is that the commercial terms that we have create an alignment. Again, the challenging part of the banker agreement is that the banks typically want to sell low-margin products and the insurance company want high margin, and that is always the source of friction, but we came up with a construct where the compensation was very much linked to the value for the insurance company. And again, that was something that you agreed early, Piyush, which I think has been also a driving force. I think we agreed that when we're at the leadership team meeting on a monthly basis reviewing results, we never want to be in a situation where one party is happy and the other one is unhappy. It's either way both happy or we're both unhappy because that's the only way that you're going to solve the problems. I'm going to pivot just one last question before I open to the floor. Insurance is clearly still a very low penetrated product in Asia. And that's true globally, but more so in Asia. I know you've been very focused on really providing a comprehensive solution for your customers across all their different needs, and insurance is a part of that. Do you think that it's just because the products are so complex? Is it because maybe they're not digitally easy to execute? What's going to drive the next level of penetration improvement in relation to how we are able to offer insurance as a partnership?

So I've thought about this. I think one, there's a cultural dimension. People are not more fatalistic in Asia, frankly. So everybody in India is karmic. So karma will do the karma will do. But even elsewhere, the family of extended family support system, people count on that a lot. Indonesia, any probably go back to the Kampong and so you don't worry about stuff because culturally, the downside of having a strong extended family support system is less self-reliant. So there's a cultural dimension to it. There's a concept the way insurance has been sold by us and as has been pushed, right, which by the agency forces, you look at your competitors here. And they've got millions of people pounding the street hustling to sell insurance. And when you're trying to push a product, but the underlying understanding of what does the consumer need is not that they don't see the need, so you're pushing the product, right? So I'm convinced that actually selling it the way we are selling it which is a solution-oriented sale as part of our long-term retirement planning or protection planning agenda is the way to go. I think that's the only way to break this, and we're seeing the benefits of that already. We don't push. We do the -- I call it from cross-sell to cross-buy. How do you create the context and with the consumer recognized that this is good for them and why in a particular context. You train your bankers that way. You use data that way and you push that agenda. And then you layer that in the community. You use the digital tools on top of that. What you said is correct. Insurance, [indiscernible] had this thing. I don't know how they count it. But they said the mortality protection gap is $120 trillion in Asia. I mean it looks like a big number to me. I certainly know that life penetration ranges between 2% and 8% in Asia. Non-life is 1% to 3%. So even relative to low penetration in other parts of the world, Asia is underpenetrated for insurance. But also the retirement, [indiscernible] the 2 pockets of demographics. Even the average Asian is 27, 28. This country is Japan, China, China, in particular, Singapore, Hong Kong, Thailand. 1/4 of the population will be over 60 now right, whereas you have these young country elsewhere. But this worry about retirement and also retirement tanks, 4 of the most underfunded retirement plan countries in the world are area. It is China, Japan, Australia interesting. So they reached in a cusp in a point in time where this consumer need to think about the future, to think about the mortality, to think about the retirement, to think about estate planning, the next generation part. It's all happening as we speak, but you can't push the product. You have to pull the product through these kinds of sales process. I think that's what it takes. And I think we're doing the right thing together.

Yes. And the education is certainly something that we've been focusing on collectively to try to help people understand why it's important. Ironically, to some extent, the pandemic has actually helped people appreciate why insurance is critical. I'm going to now go to the floor. I want to make sure that we have some time at the very least to answer questions that you might have. So please, if you could put your hand up. Meny.

It's Meny Grauman from Scotiabank. Wondering how does insurance fit into your overall strategy and what the knock-on effects of your business are from these insurance sales?

Yes. So wealth management is what we started off with. First, this thing was we got to be a wealth provider and we think about wealth provision. A lot of people buy insurance as a retirement product, investment product, part of the estate planning, looking after the next generation. Wealth planning, therefore, wealth management has been big for us. It used to be 5% of our business. Today, it's 20% of the bank, and it's a fantastic high ROE business. It's really what starts DBS really, we used to be not -- we weren't in the top 30 private banks in Asia, [indiscernible] #3 in AUM and sales. And so it's been a big growth agenda for us. So that's the affluent -- it is based in the mass affluent base. But on top of that, as we started scaling up, we figured that even in the mass market space, there's a real opportunity to change the economics, which is, frankly, we are really a balance sheet bank. If we take a deposit give you loans. But if you really want to maximize the customer more value, then you've got to figure what are the other products and services you can offer even into the mass market base. And so a lot part of the protection products, et cetera, fits very well in that base, they like to buy it, we'd like to be able to work with them because it improves the economics for us. So collectively, the whole wealth parent, 20% of our business. And the banca portion of that is rapidly growing. 7 years ago, we were making -- how do $300 million, $300 million of banca. Today, it's $600 million, $700 million. So it's a fast growth business over this period of time. We sell -- this year, we sell about $1 billion of volume. But more than that, we will contribute meaningfully to our own bottom line as well. So that's from an economic standpoint. The bigger thing to me is from the customer standpoint. For me, at the end of the day, to be able to keep the customer relationships sticky I have to be able to do more products with the customer. And it's one of the ways in which digital banks, they come in with a very simple, you can do your payment or you can do your thing. I offer a full service [indiscernible]. And I found that the more digitally you can engage with the customer, the more they choose to do with you and the more they do with you, the more sticky they are. So to me, the insurance product is a critical part of building and cementing the customer relationship and a longer-term customer value proposition.

Tom MacKinnon, BMO Capital. I mean if you like have an insurance company to partner with, what's stopping you from just buying one or developing one instead, then you don't have to share the economics get them all?

So we thought up very hard when we did the deal before. I think the skill sets in manufacturing and running insurance are very different from the skill sets in distribution and customer engagement. They're not the same skill set. You could do that. You have to create a conglomerate. I could own an insurance company, asset management company, but we chose in the past to focus on the customer of the business, which is the distribution side of the business, knowing the customer and creating a customer acquisition that we could work with and go out to buy the products. So we do some internal but mutual funds, I don't treat that I go to BlackRock and back Insurance, I go to the insurance to get it and so on and so forth. I think over the last 10, 15 years, the strategy has worked well for us. We're generating 18%, 19% return on equity. We are growing at double-digit bottom line. We're growing at strong single-digit top line. And by that, I think we're outperforming most of our competitors have tried to do all things together. I think it's sometimes distracts you if we try to do a whole bunch of things and not focus on a single core competency. But the people who do everything and do it reasonably well. I just found that maybe focus on where you think your competencies and what you want to build, you get better performance.

Doug Young from Desjardins. Just you have a 15-year partnership, just want to understand how do you approach renewing that partnership, the processes you go through, how do you think about it? And do you always take that partnership to market when you get to the end? I'm just trying to understand the steps you go through.

I haven't done this before, so I'm not, I know the answer to that. But let me give you first an anecdote, right? It is a 15-year partnership and then COVID happen. And to COVID, I realized that because of everything that was happening we weren't going to be able to deliver for Manulife what I was hoping to be able to deliver, right, in terms of getting customers to customers are just completely share shock. And so we went back to Manulife and said, "You know what, let's extend this partnership to 1 year. And I'm not going to charge you for extending it 1 year because I think collectively, we owe it to each other that you benefit from it as much as I do, right?" So that's the spirit in which we engage with this. We're not just a dollar-and-cent kind of bank, not just dollar-and-cent. So we extended it on just to make sure that the collective commitment we have, we can make it come good, right? I'm sure that come the end of the decade with somebody is going to look at it, hopefully, not me by then. They will approach it with the same mindset. We are, say -- we're a kind of bank sense. So well, obviously, the economics matter, but relationship matters a lot. And so we are the kind of bank that goes through cycles. We're happy to go through down cycles because we know there's an up cycle. So all the same things will matter. We work well together. It's a good relationship. Culture matters now. We're all economically minded. If Manulife minds under bidding everybody were 50%, of course, we look at another partner.

I think you raised some good points. And I think your exact illustrates how each party is looking out for the interest of the other. And I think that goes back to the cultural alignment. We often hear win-win and lose-lose, but very rarely does it get executed in a partnership. And I'm proud to say that actually for our partnership, it is one that is very much the way we think about it. And I think the other objective that we both have is that we make this partnership so successfully valuable to both institutions that the friction to actually work with another party would be painful for both of us. And I think that's exactly the goal that we're working towards. Any last questions? I think we can wrap it there. So what I'd like to do is just to offer a huge thank you to you, Piyush, firstly for joining us. Secondly, for sharing some phenomenal insights. I think we all come away with a lot deeper and knowledge of the markets in Asia and actually your perspectives as it relates to how things are going to unfold over the next 5 to 10 years. And then obviously, the huge thank you to you for the leadership that you provide for our partnership. Please, if I could ask you all to put together for Piyush.

Thank you.

Thank you so much, Roy and Piyush. I hope you enjoyed the discussion. It's very insightful to me. It's very important to acknowledge the fact of how we offer solutions for our customers with our partners such as DBS. And I cannot find another position to do this because the digital focus for both DBS and us really bring to life. And now I would like to, in a moment, welcome Karen Leggett, our Global Chief Marketing Officer; as well as Jodie Wallis, our Chief Analytics Officer coming on stage, talk about our digital customer leadership strategy. In addition to a presentation, Jodie actually going to walk us through a live demo, showcasing some of our in-flight opportunities to use generative AI, which is obviously a buzz word these days, but we want to showcase to you how we are using that Manulife and create value. With that, Karen?

Good morning. As we head into the home stretch, Jodie and I are very excited to be hosting this session this morning. And as global CMO, a critical part of my mandate is accountability for our digital customer transformation and AI, 2 areas experiencing rapid change and innovation and generating a high degree of interest. On the back half of the session, Jodie will explain to us to demonstrate how we are scaling deployments in generative AI to lead against our competitors, and I'll start with a progress update on our digital customer transformation. Our transformation has evolved the way we work, the way we innovate and the way we scale and deliver value. And as I take you through our journey, there's really 2 key differentiators that I want to highlight. Firstly, in addition to the $1 billion we invested prior to 2023, we have now committed another $1 billion as part of an enhanced programmatic approach to digital customer leadership. And this approach is underpinned by detailed road maps leading us through 2023 to 2025, developed at the line of business level and globally governed. Secondly, the material investments we have made in cloud, data and AI capabilities and skill sets are allowing us to execute faster than our peers. So let's take a look back at where we started in 2018, and the progress, as you can see, has been striking. Some notable highlights. We are now leading in the majority of our business lines in relationship NPS which we know to be the barometer of customer experience. We've achieved an STP rate of 85%, up from only 68% in 2018, and digital has become the dominant channel for customer servicing interactions, allowing us to deepen our customer engagement while transforming our cost base. These accomplishments have actually created significant tailwinds, enabling us to deliver $185 million in financial benefits in 2023 alone, and our momentum has us on track to deliver $500 million by the end of this year. Our focus on STP is a critical lever to transform our cost base through automation and digitization of manual processes. One example of that is our migration to a global contact center platform. And this allows us to diverse call center interactions to digital, thereby reducing our unit costs. And these unit cost reductions in the first year of deployment of the platform are in the magnitude of 12% to 20%. And we are on track to complete Asia, GWAM and Canada in Q3 of this year, thereby expecting further upside. I always like to caution that build it and they will come, doesn't always work. Automation and digitization give us the value only if customers adopt if they start digital and they stay digital. And as a result, we've developed very detailed adoption plans that accompany our 3-year road maps. We're rigorously tracking global adoption metrics that we've developed at the bottom sector from the line of business, rolled up to the segment rolled up globally, and we are competitively benchmarking ourselves so that we understand how we are leading. And how this translates is that we've actually automated 53% of our customer servicing processes globally. And that represents 69% of our total global servicing volume. And this is reflective of us actually in a disciplined way, tackling automation of highest volume transactions, which gets us to the 69%. And now we're pivoting to tackle less frequent, but still high-cost manual processes, and so that clearly delivers more upside. One of the key levers to driving adoption is our market-leading mobile apps. We've made significant progress over the last 3 years improving experiences on our mobile apps. And that has resulted in us exceeding our peer average in mobile app ratings in every segment. And so beyond the impact, the NPS, the reason this is important, it's important from a cost perspective because our mobile adoption data shows us that mobile users are 4x more digitally active than web-only users. We've also delivered competitively differentiated solutions for our customers. For example, in our U.S. business, and Brooks will get into this in a lot more detail, our Vitality Plus customers digitally engage with us over 24x per month. That's huge. That allows us to increase upsell, cross-sell and improve persistency. As you know, most insurers are lucky to speak to their customers once a year or once every 2 years. Another example is the migration of our group benefits customers to a new claims platform that instantly adjudicates between 92% to 95% of claims up from 65% today. And then lastly, right here in our largest market in Asia and Hong Kong, we provide a seamless, integrated digital experience for our insurance and wealth and asset management customers. As I mentioned earlier, we've also made meaningful investments in our cloud infrastructure and data capabilities with 100% of our data lakes and AI models as well as 71% of our apps now in the cloud. And the reason that this matters is that the impact of these investments has actually reduced our time to provision infrastructure from 60 days down to 3. And our infrastructure costs for compute and storage have been reduced by 30%, allowing us to reinvest those savings in our digital customer transformation. This is a step-change from where we were, but most importantly, these capabilities are allowing us to rapidly scale and capitalize on innovation opportunities such as GenAI faster than our peers. These investments have also allowed us to democratize innovation across our company through deploying GenAI productivity tools to our entire employee base in the last 60 days. We also have a very strong position in traditional AI. It's odd that we now talk about traditional AI, having deployed over 103 models across our businesses. And we've moved well beyond piloting in GenAI. You're going to read a lot and hear from competitors. Everyone's piloting in GenAI. We are actually live and scaling multiple global use cases. The impact of these investments is facilitating the deployment of proprietary tools such as our intelligent customer data platform and what we call VOICE. These are proprietary tools that give us a complete view of customer interactions on a near realtime basis. And that is important because otherwise, you only survey about 1% to 2% of your customers. We've injected all the contact center transcripts digital footprint, holdings, interactions, et cetera. And this level of granularity not only allows us to pinpoint with high accuracy where customer friction points are our customer irritants are, but it also allows us to address those in an accelerated way. And we believe this is another reason that is another factor that is contributing to our leadership and relationship NPS, where in 11 of 16 markets, we are leading. And we're also, in the last year, month-over-month experiencing record high transactional or tNPS results. So in summary, we've made material progress in our digital customer leader transformation and is giving high confidence in our ability to achieve accelerated performance in the future. So let's pivot and look at where we go from here. So we will continue to raise the bar on customer experience, on value delivered and operational excellence. As I mentioned earlier, we've already delivered $185 million in 2023 in financial benefits and are on track to deliver $500 million by the end of this year. And in total, we expect to deliver $1.5 billion in financial benefits from our 2023 to 2025 road maps, which over a 5-year time horizon equates to a 3x return. We'll continue to focus on digitization and automation, and we'll improve our STP from 85% to 88% by the end of next year. And we're also confident that we will meet our plus 37 target for rNPS by the end of 2027. And if you recall, we were at only plus 1 rNPS and 68% STP and in 2018. And then lastly, we're already beginning work on the next set of 3-year road maps that will cover 2026 through 2028. So we're confident in achieving these outcomes because of our diverse set of capabilities. The impacts of automation, digitization and adoption are already well anchored in our road maps and in our plans, but we expect further tailwinds in from the deployment and scaling of lead generation and personalization, which you heard Piyush speak of. I want to share a couple of examples to bring this to life. As I mentioned, we have detailed adoption plans that identify areas where we can significantly improve digital engagement. And one such area is in U.S. retail plan administrators who submit member contributions. We were able to double adoption from 34% to 69% in an 8-week period with a targeted outreach campaign. And I see Amy here in our Canada retirement business, we used personalization through in-app notification to encourage customers to update their banking information or add their banking information. And we've doubled adoption from 34% to 51% and in a 90-day period. As you can imagine, that reduces calls to the contact center, reduces the issuance and mailing of checks and is obviously a much better customer experience. With respect to digital leads, we made a decision in late 2022 to in-house our digital media buying because we felt we could drive better outcomes internally. In the first full year of operation in 2023, we improved our total costs and significantly improved our efficiency. It's still early days. We're still nascent in digital lead generation, but we've actually decreased our digital media spend. We improved our targeting. We drove 14% more leads. We converted 10% more leads, and we did it at a 49% lower cost. And so that positions us very well to scale our spend and scale our impact as it relates to digital lead generation. And lastly, the early results from our GenAI deployments are really highly promising. And to demonstrate that, I'm now going to turn it over to Jodie to show how our talent and our investments are enabling speed, efficiency and innovation in the GenAI space. Jodie?

Thanks so much, Karen. I am so excited to talk to you about how we're embedding GenAI as a strategic capability across our organization and show you one of the great solutions that we've launched recently. So what is it that's enabling us to deliver GenAI solutions. Well, we have a deep talent pool with a team of about 190 data scientists and machine learning engineers. 80% of our AI talent is embedded in our businesses and functions, which allows close alignment to business priorities. In generative AI specifically, we are well past the phase of experimentation, as Karen noted. We have identified over 240 use cases, we've deployed 7 use cases into full-scale production, and we have another 16 coming live in the next few months. We're also combining GenAI with traditional AI or machine learning and integrated solutions, like in underwriting, where we're using GenAI to interpret and summarize physician statements and then using machine learning to make decisions. In sales, and you'll see this in a few minutes, we're using machine learning to generate leads edges as is called them, generate leads and score those leads and then using GenAI to create personalized talking points and communications. Others we speak to in our industry have also identified use cases and some have launched tool sets to drive productivity. We believe we are differentiated in 3 ways. First, our investments in our data and AI platforms have really set us up for success. Second, our programmatic approach is allowing us to move with speed and scale across the organization, and we are on the agenda of our most senior leaders. And third, we have a track record of successfully creating value from AI. We launched our AI practice, coincidentally, the same year that we did the DBS deal in 2016. And now we have data scientists and ML engineers embedded in all of our businesses and functions. In the last 3 years, we doubled the value we deliver from AI by improving our throughput through enhanced tooling and skills development and also diversifying our portfolio of AI solutions. All of this is underpinned by a responsible AI framework and a set of AI principles that guides everything we do. Outside of our AI practice, we also have the broader organizational ingredients for success. We have leadership from the top with a hands-on approach to GenAI from Roy and the leadership team. We align all of our AI activities with our code of business ethics, commitment to customers and employees and our position on sustainability. We take a cross-functional approach to GenAI as well, recognizing this can't be owned by a technology team alone. And finally, we design our solutions with transparency in mind. So we're clear about when and how we use AI and so we can provide clear explanations for the GenAI responses that we generate. Late last year, we rolled out GenAI awareness and training for our leaders and our people. And earlier this year, we launched a program to illicit use cases from all employees. We have collected over 240 use cases with over 20 of them either deployed to production or in development. Let me give you a few examples. We deployed an AI productivity tool called Chat MFC for our 38,000 employees for use in their day-to-day activities. In our Canadian business, we're using GenAI to summarize call transcripts, and Karen mentioned this, and then using traditional machine learning models to model trending topics. This provides management of daily view of emerging issues both in advance of NPS surveys and every interaction instead of the 1% to 2% that we survey, and we're going to scale this capability to all North American contact centers by the 2024. In the U.S., in our Annuities business, we have deployed a contract lookup solution for complex contracts. We received in this particular contact center, about 360,000 calls a year. Previously, customer service agents had to navigate between multiple systems for policy information, for state regulation, for contract details. With GenAI, they can now get a summary of coverage depending on the specific question that the caller is asking about. This both delivers a better customer experience because we're answering the question much more quickly and provides greater efficiency as well. And we supplement the responses with two things. One, we provide the agent with sources, particular snippets in the contract where the answer came from, so they can double check it or read it for themselves. And two, we provide them with confidence scores from the AI model, so they know how likely is this to be the right answer or do I need to intervene. In our first month, we already saw a 5% improvement in average handle time, which is pretty significant in a high-volume contact center. This has now been rolled out to 2 U.S. contact centers that handle a total of 1.23 million calls per year and will deploy to an additional 5 contact centers this year alone. But it's not sufficient just to roll out tools. Our culture and behavior change are key to driving value from any transformation, we know that, but particularly in the GenAI world. Like Karen said before, build it and they will come, does not always work. Our goal is to embed GenAI as an organizational capability, not just as I said of tools. With a broad adoption program that will democratize use for all of our employees. We delivered a communications hub. Employees can participate in our program of crowd-sourced idea generation and they can access self-service learning about GenAI. We're also deploying tailored hands-on workshops for teams to help them develop their own prompts and their own AI skills that are relevant to their jobs. And the program is working. We've seen a usage increase in terms of transactions, but also in terms of the breadth of the user base across geographies, levels and roles. And I love this. I was looking at our usage statistics before coming over to Hong Kong. And as of the end of May, our top 10 users of our GenAI tools spend a client account representative in our retirement business, full stack engineer, a talent acquisition manager in Canada and a marketing Director in Hong Kong. I'm trying to get on the list of top 10, but I haven't put in enough prompts yet. So now I am excited to move over here to this iPad and provide you with a live demo of one of the GenAI tools that we recently launched for Singapore sales agents. These capabilities have rolled out to 220 agents across 6 branches so far, and we'll ramp up to 2,000 agents in the next few weeks. I'm going to show you how we incorporate machine learning or traditional AI together with generative AI as well as insights from our intelligent customer data platform. I'm going to show you how easy we have made it for our agents to increase their engagement with customers on topics that are meaningful in the moment, personalized and in the language and tone that is most comfortable for the agent. And I'm going to show you how we have kept the power in the hands of the agents, giving them choices on how to engage on their own terms. I'm going to switch hats now. So forget about Jodie, the Chief Analytics Officer. I'm now Jodie, the insurance sales agent. And I have 6 years of experience as an insurance adviser in Singapore. I joined Manulife 2 years ago from another firm. I have 92 customers. And I am able to met with about 25 of those customers once every couple of months and another 25 customers maybe twice a year. Going to bring this live here for us. This is a home page that I log into every day. There it is. And what I have here is some of my performance statistics and outstanding activities. One of the first things I do each morning as I look at my leads, and these are leads generated by our machine learning models that show me the top customers to reach out to in terms of their propensity for new or follow-up opportunities. I'm going to pick the first customer from the list, which is [indiscernible]. So what we have first is information about [indiscernible], some insights about who he is and what he might be looking for. And what it's telling me here is that our next best recommendation GenAI is telling me that he has needs in life protection, critical illness and retirements. But beyond telling me that he has needs in those areas, I'm provided with an explanation Here's why we think he has needs in these areas. And I'm also provided with the most recent interactions that [indiscernible]she's saying he has done with Manulife. You can see here, he requested a fun switch in the app. He e-mailed us about reinvesting dividends, and he has a number of claims as well. So that's what I'm seeing. Now for the magic. I'm going to go to generate, and I said earlier that we wanted to keep the power in the hands of the agents. As a matter of fact, that was feedback that they gave us while we were developing this solution. So what we've allowed them to do -- what we've enabled them to do is to generate engagement ideas how to talk to [indiscernible] saying he in 3 different ways: one, based on his life stage needs and gaps, one based on his most recent transactions, and one based on news articles or things happening in the environment. So we'll start with life stage needs and gaps, and here, again, you can see because our next best recommendation engine said, critical illness retirement and life protection were his high-needs areas. Those are highlighted for me. I'm going to pick life protection, and I'm going to click generate. What this is going to do is going to give me some background about [indiscernible] saying he and why he has life protection needs. It's then going to tell me how I might engage with [indiscernible] on this topic. So we call it engagement idea. Here it says suggests that he maintains his current needs or add on more for family and loved ones in the category of life protection. It's also suggesting I might highlight the importance of having adequate life protection coverage to safeguard against unforeseen circumstances. From there, I can go ahead and generate an e-mail on this topic. And it will present me with a copy of an e-mail that I can grab and put into Outlook. If I don't like how this sounds, if it doesn't quite sound like me, I can change the tone, make it more professional or more casual. Here, it says, I hope this e-mail finds you well, et cetera, et cetera. I'll change it to something a little more casual. Says I hope you're doing well, and it says, I'd love to have a chat to understand your specific needs. So I can continue to regenerate the e-mail as many times as I want until I find something that feels like me. Now this is not scripted. The engagement ideas are not scripted, and the e-mails are not scripted. These are truly generated by our large language model by our GenAI solution. I also have the ability to turn it into a text message, if that's how I like to communicate. And here, it will shorten it and make it something I can fit into a text, and I have the ability, of course, to translate it, in this case, to Mandarin with other languages coming soon. So that's one example. I've just given myself lots of ways to engage with this customer based on his life stage needs and gaps. I'm going to go ahead and show you another way that we can engage. So instead of life stage needs and gaps are going to pick customer activities. So I noticed that fun switch. Did you see that fun switch that he had done recently in the app? So I'm going to select the app transactions, and now it's going to generate some engagement ideas based on him having made that fun switch. It gives me the background that he made a fun switch on the 27th of May. And it tells me the implication is that the fund switch indicates that the customer is actively managing his investments and may be seeking better returns. If I'm someone who normally sells life protection, this might be a new topic for me. So I'm going to go ahead and generate an e-mail, which will give me the text that I need to reach out to my customer. I hope this e-mail finds you well. I wanted to reach out to acknowledge the recent funds which you made. Your proactive approach to managing your investments is commendable, and I would love to understand more about your financial goals. So I can go ahead and send this Again, I can change the tone to make it more professional, more casual, I can generate a text message or translate it. I'm going to give you one more example. I'm going to generate some talking points, some engagement ideas and some e-mail based on recent news on news articles. Recall one of the areas that we thought would be of interest that [indiscernible] he was retirement planning. So I'm going to pick retirement planning, Click next. Now I'm going to get a list of articles that are related to retirement planning. I see there's one here around guide to retirement planning for young adults. I like that one. I'm going to pick it, and then I could click the view article and read it or I can ask GenAI to give me a summary of the article, which it will do. It will give me the article summary, which says this provides a guide to retirement planning for young adults, emphasizing the importance of starting earlier -- early, excuse me. And then it gives me the implications to this customer specifically based on his age, his life stage and the products that he already has. I can again generate the e-mail. And what I get here is an e-mail that I can send to [indiscernible] includes the link to the article, and I can go ahead and send that. So to recap, what hopefully you've seen here is that we're using GenAI and machine learning models to make it really easy for agents to understand customer opportunities but also to generate these personalized communications at the click of a button to help them engage with more customers more often. In our first 2 weeks live, about 68% of our agents had already used the new GenAI capabilities. And in July, we will be broadening that user base to about 2,000. Based on our analysis in Singapore, we anticipate a 17% uplift and repurchase rates for our customer base, when this is fully rolled out to all of our agents. It's still early days. So it's difficult to get a full picture of where this will go. But at a minimum, we expect to see about a 5% increase in APE sales impact across our businesses. In addition -- so in addition to these sales results, we're increasing the efficiency of our agents, and we're improving the effectiveness of recruiting to support the ambition that Phil talked about yesterday, and we are not stopping here. We have about 12 enhancements planned to this solution for the remainder of the year, including additional languages and new capabilities for recruitment managers. One of the great pieces of feedback we received from our distribution transformation lead was that this is great for the sales agents, but it's also fantastic for the recruiting managers. And we're also in the process now of scaling to Japan to our U.S. wholesalers, and we have more businesses to follow. I hope you enjoyed that, and thankfully, it worked. The hotel WiFi seems to be on our side today. With that, I'm going to turn it back to Karen.

So thank you, Jodie. And in closing, there were 3 key takeaways we'd love to leave you with today. Firstly, as you saw from Jodie's presentation, we are extremely well positioned to lead in GenAI. Secondly, our programmatic and enhanced and disciplined approach to value generation, we will continue to execute in this way through 2028. And lastly, we also have confidence in the momentum of our future performance as we scale our investments in leading-edge capabilities that we shared with you today. And that is how we are raising the bar in our digital customer ambition. Thank you. And Hung, I will turn it back over to you.

Welcome back, everyone. Our next presenter is Naveed Irshad, President and CEO of our Canadian business. Since we're here in Hong Kong, it's natural that we spend a lot of our time talking about Asia business, but it's actually very important to talk about home market as well. And these business how we're going to win and to help to service our customer in Canada. With that, Naveed.

Thank you, and good morning. I'm really excited to be back in Asia. I spent 4 years in the region, overseeing the transformation of our Singapore business. I just love the energy and vibrancy of Asia. As a proud Canadian, I'm thrilled to be here to talk to you about Manulife Canada and how we're going to win in our home market. I'll take you on our journey of becoming the undisputed leading insurer in Canada. We're proud of the foundation that we've built. Our track record speaks for itself. We're already #1 in core earnings in Canada relative to peers, and we'll look to increase the distance between them and -- between us and our competitors. I'll talk about our winning strategy and why it's the right one for our business and for millions of our customers. We've built a strong foundation with really solid fundamentals, and we're set up nicely for the next stage of growth. Looking back, we have a leading presence at home, a proven track record of delivery and execution at scale operating units with a very attractive product shelf, a culture of expense efficiency driven by win-win solutions for customers, and Canada is an attractive platform for growth. We have a broad coast-to-coast presence across Canada. We've been protecting Canadians for over 135 years. We serve 1 in 4 adult Canadians today. 3 million Canadians have multiple products with us. 5 million group benefit members depend on us. We have a broad distribution ecosystem. We're the leading bank for financial advisers with a complementary offering with significant overlap with insurance and wealth advisers. We have #1 or #2 market shares across the board, #2, in group insurance, #1 excluding the Canadian Federal Employees Plan, which changed hands last year, #2 in retail individual insurance, #1 in Group Retirement, #2 in mortgage creditor, #1 in travel insurance, #1 in association in dental. These rankings are no accident. We have a proven track record of making the right decisions for our business. We have a clear right to win in Canada. We have a strong brand built on innovation, innovation that drives value for customers. We were the first company in Canada to underwrite using artificial intelligence. We were the first country to offer coverage to Canadians living with HIV. We are the first company to offer coverage to Canadians living with diabetes. We were the first company to offer lower premiums to non-smokers. We're the first company to embrace behavioral insurance through our Vitality program. Vitality is now available on all our core retail insurance products, it drives better health and financial outcomes. You'll hear more about Vitality from Brooks in our next session. We have a top-tier product shelf, broad multi-channel distribution from independent advisers consultants, brokers, travel agencies, right through to direct-to-consumer. Manulife Canada is significant. We represent 22% of the company's earnings. We have diversified and comprehensive product lines. We help protect Canadians physical, mental and financial health. Our current product shelf is a mix of short-term repriceable and long-term adjustable products with minimal material long-term guarantees. Our bank has a high-quality fully secured low credit risk portfolio. We have a track record of execution, strong earnings growth across the board, efficient capital deployment on new business, and efficient capital management in force. That was highlighted by our -- the largest UL transaction in Canadian history that we completed earlier this year. We're driving improved return on equity and consistent cash generation and romances year after year. So I mentioned new business. We have a product shelf with an excellent risk return profile. Management actions we've taken include new reinsurance agreements, new product launches, exiting certain higher-risk product lines, targeted repricing in other product lines, claims management actions, underwriting modernization activities and expense efficiency activities. This driven really attract our returns, as you can see from the slide. Our product shelf is ready for distribution expansion. Now I mentioned expense efficiency. We've developed a strong culture of expense management across the segment, primarily by driving the digital agenda, win-win solutions, better experiences for customers and lower cost to the company. We handled 56 million group insurance health and dental claims into the unit cost of $0.55. In this year, we'll handle $75 million at a unit cost of $0.45. So that's an increase in claims of 34% and an increase in expenses of only 9%. All the benchmarking we've done has shown us to be top of class both in terms of unit costs and expense efficiency ratios. So expenses are a competitive advantage for us in product development. So to summarize, we have a leading presence in Canada, a track record of execution at scale, diversified business units, a strong product shelf, a culture of expense efficiency driven by digitization. And so we're attacking the future from a position of strength. We're ready, and we have the right strategy to truly win in our home market of Canada. Now looking ahead, it's actually the exciting part. We're really well positioned in Canada. Canada is an attractive platform for growth. We're going to continue to focus on execution. We're going to continue to focus on best-in-class offerings, and we'll drive step change on digital distribution and differentiation through health. That's how we become the undisputed leader. We have a strong market position in Canada, but a potential to do a lot more. Canada has had record population growth driven by immigration. Underinsurance is prevalent in the newcomer segment. This resonates with me personally as a first-generation Canadian. Growing up, friends from my communities, families, I saw many of them go into financial distress because 1 parent passed away unexpectedly and they did not have adequate insurance coverage in place. I saw what it did to those families. This is an area where we can make a huge difference. There's also a significant upcoming intergenerational wealth transfer. And while we have a strong public health system in Canada, they will need to be complemented by some additional private spending. So this is our road map, our strategy on a page, becoming the undisputed leading insurer in Canada, call these the 4 Ds: deliver and core, digital customer leadership, expansion and differentiation through health. All will contribute to increase in core ROE. Of course, any other additional legacy actions working with Mark and the in-force management team provide further upside to this. The right side of the slide shows incremental core ROE growth for each of the 4Ds, and I'll drill into each of these separately. Delivering core is all about focusing on the brilliant basics. Vitality is available on all our core retail insurance products. Vitality customers buy 20% plus higher face amounts, have 50% lower lapse rates, are 55% more likely to cross-sell to other product lines and a 3x higher Net Promoter Scores than our traditional offering. Our power fund returns are amongst the highest in the industry, driven by our investment expertise, including alternative assets. We launched in Q4 of last year a new version of our power product and a payout annuity product, and we're seeing great traction on both of those. On the group insurance side, it's about maintaining our industry-leading metrics. Last year, our persistency was over 97%. Our direct expenses are below peer averages. And so we'll drive continued increased short-term insurance profits. We'll continue to optimize the product suite and continue to leverage existing distribution. You heard from Karen and Jodie all the great things we're doing to become the digital customer leader. Digital is a second D for the Canada strategy. It's about moving from very good to exceptional. Now I'm really excited about this because these are win-win solutions, better experiences for customers and expense efficiency for the company. Take, for example, a group health insurance claims claim with our out-of-pocket costs like massage therapy. So this is not one of the claims that's instantly adjudicated. So it's the one where someone has to provide a submission. In the past, it's taken us a few days to process and approve such a claim. By the end of the year, it will be within a day, and we're targeting to get that one to instant also. We're the leader in underwriting using artificial intelligence. Currently, about 25% of our business is underwritten in this way. We're targeting to get -- to increase that proportionately 2 to 3x by 2027. We're laser-focused on increasing all aspects of the digital experience. It's a top priority across the segment. There are multiple elements to distribution expansion -- there's significant underinsurance in the mass market, the mass market requires simple products and processes, products have to be easy to buy, easy to sell, easy to service. This complements perfectly with our digital ambitions. The goal is to obtain a representative share of this market. The natural share of the market for us is 20%, and our strategy is about simply getting to this. It's very achievable. The MGA within Manulife wealth, which Paul talked about yesterday, is a strategic asset for us. Taking insurance productivity at top of class will double sales, further activating wealth advisers who don't currently sell insurance provides further upside. These opportunities are about execution. We're also looking to proactively engage specific target market segments with custom strategies. The Asian Canadian market, for example, is the fastest-growing market segment in Canada, and the highest utilization of Vitality. It's a natural opportunity for expansion for us given our Asian footprint. The high net worth market. We get feedback from our reinsurance partners that our underwriting is best-in-class in the high net worth space. And of course, we're leveraging our global capabilities here. We get feedback from advisers that our tax and estate planning team is best in market. So again, a natural opportunity for distribution expansion. Differentiation through health is about moving from a stand-alone claims payer to an integrated health platform. We talk to Canadians all the time, and they're telling us they're having challenges accessing and navigating the health care system. We have the tools to help. Our North Star is improved health outcomes, the right care, at the right time, in the right way. This is not just theoretical. We have built the platform and rolled it out. With my life employees, we did a pilot for many plays in Canada, and we increased the utilization of the app from 40% to 70% within 6 months. We're already seeing how we can improve the health outcomes for millions of Canadians. Our strategic partnerships are showing great promise. On our specialty drug program, we saw a 5% increase in prescription adherence and a 45% decrease in disability claims for members using our strategic partner, which is [indiscernible] Overall on the block, we have $6.5 billion of reserves and $3 billion claims every year, and we hold $3 billion of reserves against a nonpermanent disability. Moving the needle just 5% is a huge impact for us and our sponsors. Healthier members, lower claims and continued excellent persistency. Now unlike some of our peers, our platform is fully integrated with the claims model. Two, our strategic partners are world-class players and household names in Canada, not something that smaller players can duplicate. The platform is powered by league, a global health tech company and a Canadian success story. Aeroplan is our new Health Rewards partner. TELUS Health for mental health, virtual care and employee assistance programs plugs right in seamlessly with a single sign-on. Cleveland Clinic in Canada is our medical director. This is just the beginning. We're going to continue to expand partnerships and enhance our platform. This will be a true differentiator. So I want you to leave with the same confidence as I have in the future of Canadian business. We're already the market leader. We're #1 in core earnings, and we're #1 in sales across multiple product lines. We're committed to making decisions easier and lives better for millions of Canadians. We're excited to take that to the next level. We're ready to continue to drive growth for Manulife and become the undisputed leading insurer in Canada. Thank you very much, and I'll turn it back to you, Hung.

Thank you, Naveen. It's great to hear how we come the undisputed leader in Canada. Our next presenter will be Brooks Tingle, President and CEO of John Hancock, our U.S. business. Brooks will share with us our transmission journey and also how unique product offering will continue to drive profitability in that market. With that, please welcome Brooks.

Thank you, Hung. Great to be with you. It's exciting to sort of wrap up the presentations over the past 1.5 days because over the past 1.5 days, you've heard a lot about Manulife overall and the great transformation journey we've undertaken. But the U.S. is a really interesting and exciting microcosm of that. There are three things that I hope you remember from my presentation this morning. One, we have dramatically transformed -- where am I? Looking back, I don't want to be looking at Okay. We've dramatically transformed the profitability of our U.S. business. The legacy businesses, the in-force businesses, a lot of people have, I think, old tapes, maybe stereotypes about the U.S. insurance business to be able to drive improvement in ROE over the past few years from 8% to 16% in the U.S. insurance business is something we're very, very proud of. The second is an equally powerful transformation in the profitability of the new business that we write. So dramatic improvement in the in-force, dramatic improvement in the in-force. The third thing I want to share with you and add some color to is the unique foundation we now have to grow profitably in the future. And the heart of that foundation is our investment, our commitment to behavioral insurance. brought to life through something we call John Hancock Vitality. It's a very unique value proposition for us, highly differentiated, driving not just improved financial performance but a unique right to win. So before I get into the first of those, which is the transformation of our in-force legacy businesses, I did want to just show you a quick highlight of where we operate today from a go-to-market perspective. Over the past several years or decade-plus really, we win out our focus a bit from a go-to-market perspective, really to try to drive that ROE improvement. So where we offer product today, individual life insurance is really in some of the most attractive market segments in the space. We have diversified sales people in the U.S. buy life insurance for primarily 1 of 2 reasons, protection as the name implies, protection against unexpected death, lost income, protection against perhaps an estate tax liability, protection in that regard. The other reason people buy life insurance is accumulation. Also, as the name suggests, to accumulate wealth. In the U.S., there aren't a ton of ways to accumulate assets on a tax favored basis anymore. Of course, you have 401(k)s, IRAs. Beyond that, really sort of muni bonds and life insurance and annuities, and particularly at the higher end of the market, a lot of people in the U.S. use life insurance as a means to accumulate wealth. And we're nicely diversified, as you can see here, between protection and accumulation. That's important because as tax laws change, come under threat, as economic conditions change, we can kind of pivot our product focus between protection and accumulation to thrive. Within primarily permanent life insurance, we offer term insurance. It's really sort of just a necessary thing to have on the platform to keep brokers attention. But we really focus our energy on the frankly, higher-value permanent products. And within that, variable life, universal life and indexed universal life, strong shareholder value, really compelling customer value with innovative sort of pass-through designs that have a very attractive risk profile associated with them. A few highlights here as I start to talk about the transformation over the past few years of our in-force and legacy businesses. You can see the large quantum of remittances we've been able to deliver to Manulife, perhaps the most striking number for me on this slide is the new business value transformation. The life insurance business that our brokerage operation was selling in 2017 actually destroyed new business value. You can see a negative year. Just over a few years, we've been able to transform that to where those products have nice margins on them. You'll see another chart on that in a moment, and we're creating a lot of value with every sale that we make. So we're now confident actually growing this business. So quite a amount of transformation there. Solid contributions on the core earnings growth. You may look at sales and say, "Geez, that's not really scorching growth there. Brooks fair enough. But I can tell you, our priority over the past few years has been to improve the left side of this chart, not the right." The fact that we've been able to grow while strengthening margins the way that we have to yield this new business value improvement is quite significant. U.S. market, individual life insurance market, I'm sure you know, is not growing fast. We've actually outgrown the market 5 out of the last 6 years, and we think we're in a position now to outgrow the market nicely in the coming years. So I talked about the improvement in return on equity, something we're extremely proud of, quite dramatic, quite important to the overall Manulife franchise. Really pretty simple story as to how this was achieved, simple, though not easy, but very focused and determined management actions. First and foremost, divesting of lower-margin businesses of lower ROE businesses. My team, I, myself enjoy just a wonderful relationship with Mark and his team, partner extremely closely in an ongoing series of transactions that you're all familiar with to reduce the quantum of these lower-margin businesses in our overall portfolio, a big driver of this improvement. The second is really sort of organic activity as it relates to the in-force block. And that is most notably very, very disciplined expense management. And by disciplined expense management, I don't mean just let's keep it to inflation or less significant reductions and expenses in the U.S., which I'll highlight in a moment. And then lastly, in terms of the material drivers of this ROE improvement is that significant improvement in the profitability of the new business that we're writing each year. So altogether, extremely proud of this improvement. I mentioned before the collaboration between my team and Naveed's team as well with Mark's team and just extremely proud of this track record. I mean you can't get much more sort of reliable and predictable than this nice series of transactions. I know it was discussed yesterday. I know you all know that we're not done. Mark's not done. But we've proven that not only can these opportunities be identified, but they can be executed really, really well and successfully. I mentioned cost management. I don't have the time to get into this in a huge amount of detail. But again, this isn't just about sort of holding the line on expenses. It was about transforming the expense base in the U.S., taking out large swaths of expense. You can see that materialize and some important metrics. I don't -- didn't have the space or the time to share a lot of them, but we have a lot of them that show quite favorable unit costs, whether it's operations, technology or other spaces relative to the market relative to our competitors. Most important thing I want to note about this whenever you see an organization taking out literally hundreds of millions of dollars of expense over a period of relatively few years, you might wonder have we compromised the franchise somehow? Are we able to service our customers properly? And I'm extremely proud to share that because of the way that we've done this, investments in digital moving some of the technology things to the cloud, consolidating technology, administrative systems and things like that, we've not only taken out a couple of hundred million of expense. We've improved the quality of the service we're able to deliver to our customers. Our NPS scores have literally never been higher after taking out this type of expense. So we're very proud of that. Again, new business transformation. You can see the evolution here of our new business value margins, our LROCs, lifetime return on capital, dramatic improvement over just a few years, easily double the average in the U.S. And then again, notable improvement in the capital payback year. So it took a little bit of time to get here, but we are now in a position where we're happy to sell all the life insurance we can at these types of margins. So it's a great position to be in. And again, we have a great platform for that, which is John Hancock Vitality. So you probably heard of Vitality, most of you. Vitality has partnered with other companies in different parts of the world. Let me tell you at the risk of sounding a modest. No one is bringing vitality to life the way we are. Both in the U.S. under John Hancock and Naveed now in Canada. We are investing heavily. We take what Vitality offers for sure, but we've invested a ton around that ton of creativity, partnerships energy passion around this concept of Vitality. And it's a really simple concept. In the grand scheme of everyone's life here, who should care about you living a long healthy life beyond your friends and family, more than your life insurance company, right? And it strikes us as being profoundly-odd that for hundreds of years, this industry underwrote the daylights out of people, issued them policies, and sat back and said, I sure hope they live a long healthy life. That would be great. I mean you don't know how we make money, right? You guys are kind enough to pay us premiums. Scott and Paul and others invest them for us. And the longer we get to collect those premiums, invest the dollars more money we make. So why would we just sit back and hope our customers live a longer, healthier life? Let's try to affect that outcome. And that's exactly what we're trying to do here. Shift from passive claims payer sit back and wait to pay the claims to active risk manager. Let's engage and try to bend that mortality curve. We do that through a really nifty app, education and importantly, incentives and rewards all correlated to things that correlate with a longer, healthier, better life, a ton of science behind here. You see the types of things that we give people points for. It's crudely analogous to an airline frequent flyer program. The airline, the more miles you fly, your status improves and you get more perks, right? Or you get treated less poorly -- sorry, airline fans. But here, you get points they accumulate to a status brand silver, gold or platinum and that correlates with the value you get back because you're creating value for us. I won't get into all the science behind this, but here's a simple reality. Most people in America do not conform with the recommendations for when you're supposed to go for a colonoscopy at what age, a mammogram, [indiscernible], all these different things, not great compliance with that. We give people points for that, and we see our clients much more often going for those preventative screens. Just one simple, our customers take twice as many steps on average as the average America. But anyways, points for doing these things that correlate with longevity. Status, then you get the rewards of it. Premium savings, I want to note, by the way, that those premium savings, the discounts that our customers can enjoy are fully backed by our reinsurers. And then launch other cool rewards that oddly customers are more excited about. We have customers that literally are like billionaires with a B. We have this thing called a vitality wheel, every tenth work out you get, you get to spend this wheel. And I got to text them literally a billionaire recently saying, I got $5 from Amazon on the Vitality wheel. I mean it's almost illogical, right? But people are motivated by this stuff. But again, the concept, it's fun, it's engaging. Karen mentioned a really important stat. Our customers are now engaging with us 20 to 30 times a month through this platform. So it sounds fun and cool, all that, but very, very important things are happening behind the scenes about longevity and long-term experience, mortality results that we expect here. And a few stats I want to share on this. In the U.S., I joke today that well, 9 out of 10 consumers, this isn't broadcasting friends and family. Would you prefer Vitality to other life insurance independent third-party research, 9 out of 10 consumers say they would prefer life insurance with Vitality to life insurance without it. I joke all the time in America today, you cannot get 9 out of 10 Americans to agree that the earth is round, but 9 out of 10 Americans prefer Vitality. 7 out of 10 U.S. consumers say the presence of Vitality would make them more likely to buy life insurance. Maybe you shared some of the stats, they buy higher face amounts, the NPS among our Vitality customers, we have 64 here, to be honest with you, it's actually trading up into ranges that life insurance companies don't see. So a really sort of virtuous cycle where if we can encourage our customers to do things that promote longevity creates value for us, we plow part of that value back. An improved mortality side, [ Mr. French ], wherever he is with lunch up here and drag me off the stage if I started to share actual mortality results because they're not yet fully mature. We need a more -- not something we're sitting back and cheering for. We need a certain number of deaths among our Vitality customers to be able to share with you "credible [indiscernible] credible mortality data." But I can tell you as deaths have increased slowly at every step of the way, we're seeing meaningful differences in mortality between Vitality customers and non and within Vitality by status. So we're very excited about the future here. Okay. So looking back, incredibly proud of the improvement in the ROE for the U.S. business, excited about the transformation of the new business profitability and really, really excited to take this platform that we've built anchored around behavioral insurance into the future. So let's talk about the future. We certainly are going to continue. We don't consider the job done with respect to in-force and legacy businesses. That work is continuing. Trust me. Marc and others are very busy. It's continuing, and we're going to continue to support that, the execution of those transactions. And we will maintain a very persistent focus, not just on inorganic activity related to the in-force blocks, but organic activity. And I want to spend a minute in a moment sharing with you some of the things we're doing on the organic side to further improve there. Karen and Jodie did a great job talking about digital. Digital is hugely important to us in the U.S., and we have an advantage that no competitor can touch in terms of driving digital engagement in the U.S. Most people, sorry to disappoint you, aren't really super excited to digitally engage or engage in any way with their life insurance company. So driving digital adoption can be pretty tricky. We have customers that want to engage with us digitally because they're getting these rewards, these benefits and things. So we have these positive interactions all digital, 20 to 30 a month, so it's very easy for us to slide into that, hey, do your customer service this way? Perhaps buy your next amount of insurance the same way. So a huge advantage there. And again, we're confident that we can outpace the growth in our insurance business of the industry in the coming years based on the uniqueness of Vitality. So think about ROE. We talked a bit about the journey from 8% to 16%. We see getting to 17% by 2027. I do want to point out that notably, this projection and sort of crude guide path as to how we're going to get there does not include potential additional inorganic transactions, that's sort of the dotted line on the far right. So a lot of ROE improvement so far about -- through continuing actions digital leadership and growth of profitable sales, we believe we can improve that ROE even further between now and 2027. I mentioned this focus on not just inorganic activity to drive improved results on our legacy businesses, but organic activity. We talked about expense reduction. But particularly with our LTC business, there is a tremendous opportunity to shape outcomes there. Investments, partnering with Jodie and Karen on investments in AI and other things to eliminate fraud, waste and abuse in our long-term care claims. What I'm most excited about probably is trying to bend the morbidity curve, influence outcomes for long-term care claims. We have shown over the past 10 years that we can bend the mortality curve. We can shape mortality outcomes on the life insurance side through Vitality. Well, let me tell you, in the U.S., probably not anywhere in the world, no one is looking forward to the day that they get to go into an assisted living facility. No one looks forward to the day that they require assisted living services. And you know what, we kind of hope they don't need them either, right, because we got a bunch of risk there. So can't we, shouldn't we and we will engage our existing long-term care customers to help shape those outcomes. So if you're in your 50s, we're going to incentivize you to exercise and eat well; 60s, exercise, eat well, maybe add some medication adherence; 70s, those things, maybe some brain plasticity things. Companies, we partner very closely through Vitality with the Apples and Googles and Amazons and others of the world. People are working on wearables, not just that will say so and so has fallen but alerting a loved one that so and so is within 30 to 60 days of taking a fall, which were our LTC business, knowing before the fall happens is really important. And then you're in your 80s, and we're already doing some of this today. We're going to send someone to your house to make sure your carpet secure. You've got a railing, all these things. So we are confident we can actually shape those outcomes with respect to long-term care, a huge win for the customer, a huge win for us. Digital, I've already touched on it. Just again, we've got a meaningful advantage here through the Vitality program. People actually want to interact with us digitally. So we're going to build on that to be a leader. And then just some overall tailwinds that we see for the business as it relates to growth. You've heard every market pretty much talks about this unmet need. I will tell you, I was always sort of skeptical about this unmet need, the protection gap until I started spending a lot of time with the companies that we work with through Vitality, again, the Apples, Googles, Amazons. Every time I'm meeting with one of those execs I ask, do you have individual life insurance. And I think in a meeting with -- I probably had meetings with 200 execs of those companies and there have been 3 that have said they have individual life insurance. 3, trust me, these people have a lot of money. And I never forgot asking this one executive at Amazon, like why don't you have insurance because I want more life insurance, I love this Vitality thing. So why don't you have more. So I tried to sign up for more, but they wanted to send a nurse to my house and weigh me and like take my blood. I'm not going to do that. And there's this whole generation of digital savvy people that are earning real money now that we have to evolve the buying process using AI and things like that electronic health workers, and that's where you get a lot of those people to start buying our products. The huge wealth transfer that's occurring globally, it's very pronounced in the U.S. Again, we have a distinct advantage there. We know all of our customers who have large policies, and we've got a lot of customers with very large policies. We know who typically adult children, but we know who stands to get the death benefit proceeds. We know who stands to inherit that money. Why wouldn't we now offer Vitality to those adult children of these wealthy people who have policies with us so when they pass and the money goes down, the customers are already in Vitality, far more likely to stay with John Hancock for their plan because they're now going to have their own planning needs, stay with John Hancock. So we're very well positioned there. And then just a broad headwind -- I'm sorry, tailwind for the U.S. insurance market is some tax reform activity occurring over the next 18 months. State taxes are scheduled to sunset boring stuff, but we're in a great position there. We are top 2 player in the survivorship market, which will benefit enormously from this state tax reform. So very well positioned. Innovative capabilities, really strong distribution relationships. I just spent the weekend with 200 or 300 of the top independent distributors in the U.S., some interesting things happening there, by the way, I'm interested during the Q&A. We're really uniquely well positioned to grow profitably going forward. And I'll leave you with one of the things that I think positions us best for the future and that I'm most excited about, a really unique ecosystem of partners. Partners that help us in a range of ways, but particularly as it relates to helping people live longer, healthier, better lives. And I'll just highlight 2 quickly. Who here has heard of a company called GRAIL, a test called Galleri. Anybody actually do the test here? A couple of you, okay. So GRAIL has this test, it's called a multi-cancer early detection test through a simple blood draw, they can detect the presence of over 50 types of cancer in your body. This isn't J. Brooks, you're more likely to get some sort of cancer down the road. This is like you do or do not have cancer in your body today. We were the first life insurance company to begin offering that to our customers almost 2 years ago. And we have now had many customers find out that they have early stage cancer as a result of our offering. Many people have said, Jeez, if I hadn't bought a policy from John Hancock, if I hadn't signed up for Vitality, I hadn't done that test, I wouldn't know I have cancer. Including people, one guy with a really large policy, by the way, found out that he had Stage 2 pancreatic cancer by virtue of all of [ our offering ]. Anybody ever here somebody getting diagnosed with Stage 2 pancreatic cancer? It's unfortunately almost always 3 or 4 and the prognosis is exceptionally poor. This client of ours, 45 straight days chemoradiation, surgery just ran a half marathon. So it sounds great from sort of a warm and fuzzy feeling and I mean that in a serious way, and my mom died from a type of cancer, way too young that should have been detected way too early. Early detection is essential. So it's great from a human perspective, but from a business perspective, that policyholder with a $20 million policy that got diagnosed with pancreatic cancer in Stage 2. That probably would have been a death claim within what, 2 years. Now I don't know, 5 years, 10 years, 15 years, so great for the customer, great for business. So GRAIL has been an important partnership. We just launched -- who's heard of Prenuvo, a company called Prenuvo, full body imaging, MRI scan, head to ankles, I don't know why not toes, but ankles. And literally head to toe MRI. They can identify 70 factors that tie to mortality from the scan. I did it myself, it's amazing. We just -- we're the first life insurance to partner with them in the U.S., all of our customers will get a $500 discount on the screening. What our brokers love the most is that our customers move to the front of the line. This is just taking off in popularity with wealthy people in the U.S. in particular, oftentimes a 10- or 12-week wait time at their facilities, brokers just love that our customers get to cut the line and go to the front, huge differentiator for us. So incredibly excited about these things. I want to leave you with with a -- well, again, I mentioned already, just to summarize, great improvement in ROE, great improvement in new business and despite behavioral insurance platform through Vitality. And I want to leave you with a video that I think sums up what we're doing in a really powerful way, not just for people, not just for society but for our shareholders. Because as you hear Kelly King story, again, I've met Kelly many times, I can't tell you how powerful it is to meet somebody who tells you that you saved their life, surely wasn't me. It was all the great people in the team. But he only knows he has cancer because he was a John Hancock customer, and he participated in John Hancock Vitality. But again, I ask you to think about from a shareholder perspective, 36%, 38% of our customers are going to get cancer, just a fact. Would we, as a life insurance company, rather they find out early with 8x the successful treatment outcomes or later with much poor outcomes, of course, earlier. So as you think about the story, that's a great customer to what we're trying to do and why our business -- why we're excited about our business going forward. So thank you, and please enjoy the video. [Presentation]

Thank you, Brooks. I'm sure you can hear the passion and excitement we have of U.S. business. Now I would like to bring back the panelists who had the last few sessions to join. Roy on stage, the last Q&A panel of our event in Hong Kong.

[Operator Instructions] Welcome for questions.

Gabriel Dechaine, National Bank. One question for Naveed. I noticed the -- in the last I missed it, the ROE, we saw the progress from 17% to 23% on ROE, but no objective. Hopefully, I didn't miss that. But do you have a target for 2027? And then the -- yes, I'll stop there actually.

Yes. The target -- there was a slide on that, the target is from 14% to 16%, yes, by 2027.

All right. Okay. I guess I didn't miss that. The system that we saw over the Gen AI thing, just curious, how much is something like that cost?

I can answer it in weeks. The original system took us 12 weeks to develop. And it was probably a team of 10 that were involved in that. And the reason we were able to do it that efficiently is because we made some significant investments in our data AI platforms. We moved everything to the cloud. We moved all of our data lakes. We moved all of our AI models. And so we used that kind of as the starting point for delivering what you saw.

And just to add to that, Gabriel, it's a great question. And we think that this is a competitive advantage for us and a disadvantage for the companies that haven't invested in the infrastructure. So the $1 billion that I talk about having invested over the last 5 years, putting the data architecture, the data infrastructure that we've put in place to support advanced analytics and AI now allows us to accelerate the use of Gen AI. And quite frankly, without that, it would have taken us possibly not just months, but years to be able to really at scale, deploy some of the use cases that Jodie just talked about.

And is that we saw the examples of sending e-mails out and changing the tone? Is that -- it's like a mass market type product capability or sales capability rather as opposed to some more high touch?

Let me start, Jodie, add in. We don't think it's limited to one segment. So we think the tool and the capability is to scale across all different customer segments, but also channels. Obviously, the tone will change and the interaction that will exist between, for example, an agent. And ultimately, what gets sent out is really still critical. You can't just have this machine just send stuff out. You need a human in there. But if they can -- if this process can greatly optimize the efficiency and then convert into a much more significant sales ratio, that's quite tremendous.

Yes, I might add, one of the advantages is the -- as we refer to the intelligent customer data platform, and that's where we've got a holistic 360 view of the customer. So we know everything about the customer. And that is where the Gen AI model is drawing the data from in order to come to those conclusions. So if there -- if it's a mass market client, we will know by their holdings, we will know by a whole bunch of different parameters. And if it's a high net worth customer, we will know that as well. And then the -- we can manage the tone and the approach correspondingly. So it is highly adaptive.

Next question, table 8.

Mario Mendonca, TD Securities. So you sell insurance, which is a pretty mature product. It's an old product in 2 economies that are very mature economies. But you're talking about 16% and 17% ROEs. So that just seems odd to me. That's not what I grew up with. So what gives -- like how do you generate ROEs of that magnitude, mature products and mature economies? And I appreciate the IFRS 17 probably has something to do with this, maybe it's 200 to 300 basis points. But walk me through that type of an ROE because Finance 101, Eco 101 wouldn't get you there.

Yes. Let me start, Naveed, Brooks chime in. I think the first thing is that we've been much more selective with the products that we're offering. You've seen throughout all the presentations, the focus on LROCs, Lifetime Return On Capital. So where traditionally, you look at the market average returns on new business, and they're historically quite low. We're saying we're not going to be all things to everyone. We're going to focus on those products that we can actually generate a return that's acceptable to our shareholders. So that's certainly part of the reason why we can actually generate improvements in ROE. You're right, IFRS 17 is another factor. But the third big factor is the benefits of scale and now digitization. We've got this incredible transformative technology through Gen AI, but even before that AI and machine learning, which is completely changing the game, the efficiency ratio that we talked about earlier, 55% down to 45%, the scale benefits that we're getting through our procurement and operational teams, but then the use of technology to take cost out is, in my mind, what's driving a significant improvement in our profitability and why our LROCs are now so much higher, but why our returns are so much higher than what historically has been the case. Our efficiency ratios are amongst the best in the industry and that is significant value. It's not a theoretical presentation that Colin provided earlier, but it's real hard coal dollars. We -- you remember back in 2017, 2018, we said we wanted to improve our efficiency. We also said we wanted to take $1 billion worth of cost out. We achieved that $1 billion 2 years ahead of schedule. Now as we look to the next chapter, I'm incredibly excited about Gen AI, and I think it's going to drive a next level of efficiency and improvements. But Naveed, Brooks, please chime me.

Yes. Let me start. Yes, exactly what you said, Roy. So our in-force block, our current ROE is 14% in Canada. And the lifetime return of capital of the new business we're writing is over 20%. So as that comes in over time. And some of the things you talked about, it's about scale. We have the scale already and some of the investments we're making are going to take it to the next level. We're already industry-leading. We're going to get to another level. So that's a big part of it. It's about really capitalizing the opportunities. So I mentioned that our Group Health -- Group Benefits Health Platform, we have 5 million group benefit members, right? And so historically, they've just been going to the application or website and so many claims. Super claims paying model. It's about really activating those and offering them experiences that are win-win and taking it to that level.

Yes. I mean I totally respect and appreciate the question. I've grown up in this business, and I'm used to thinking of U.S. insurance as a cost of capital plus a little bit, right? And for 50 years, it's been that, really, you look at the U.S. market. But if you think about what the dynamics have been that have been keeping that sort of pressure on it, these big legacy blocks with a mix of sort of marginally profitable businesses and frankly, new sales that aren't optimally profitable, we've addressed both parts of that. We've said, let's shed some of the lower ROE components of our in-force. I would argue as aggressively, if not more than anybody in the U.S. And then you saw the dramatic turnaround in the profitability of the new business we're writing. So every piece of new business, we right now pulls that number up, not dampens it down. We've been selective, as Roy said, and where we play. I think you see a lot of carriers that are tempted to try to be all things to all people. Trust me, I could be a top 2 or 3 player in the term insurance market if I wanted to be. But I don't, because I have to compromise the very metrics we're talking about, we're okay being #20 there. And then all the reasons that Roy and Naveed have described around expense efficiency. And I think there's just more to [ contact ] on the expense efficiency.

And I might just add that the $185 million and the $500 million, the $1.5 billion overall, the way to think about that is actually 50% of that is hard cost savings that were -- will flow through earnings as they're realized and will actually impact efficiency ratios, and those are baked into the segment plans.

Next question, down table 16.

Brendan at RBC. I'm curious, some insurance companies have talked about the impact of GLP-1 drugs. Any early thoughts on that? And what it could mean for the business over time?

Sorry. Go for it.

Yes. I -- personal view here, personal and professional, I guess. I think they're game changers. Every -- we -- again, one of the real strategic advantages we have is the company we keep. I have nothing against the rest of the -- like the U.S. life industry or global, but I spend very little time with CEOs of other life insurance companies. I spend most of my time with people at MIT and Apple and all these places, trying to understand what's in their heads. And every smart person that I know says game changer on GLP-1s. And I think a game changer for our industry. Just think about the proportion of people in really every market we're in, that experience matters relating to obesity, the cost and the toll, the life expectancy implications of that. So I think we're on the precipice of some major macro tailwinds, not just GLP-1, some of the technology I touched on and any one of them in and of itself, but you start stacking these things on top of each other, you do the Galleri test from GRAIL, you do the Prenuvo scan. If you need it, you're on a GLP-1. You're stacking things in your favor. And I think we've got a major tailwind on mortality. And I can tell you there's not a company around that can capitalize on a better -- right now, we offer the GRAIL test, we offer Prenuvo. We're thinking about what do we do for our clients that maybe don't have access to GLP-1s, shouldn't we want them to have that access? How do we perhaps incentivize that? So a brilliant question, I think, a huge game changer.

Brendan, I think the pharmaceutical advancements that we've seen over the last 5 years, and we're expecting to see over the next decade is another tailwind. I can't put my finger on how big that is and what the potential is. You've talked to one area, but the research that we're seeing in Alzheimer's, dementia, this is quite transformative, a, for the general well-being of the population but for our business and our industry. So we are quite excited about that and how it's going to actually help us. Brooks talk very passionately about trying to help our customers live longer. And we think that too much of the health care system is reactive. You're dealing with a symptom and then you're trying to correct that symptom. The true game is to be thought in the preventative care space. And I think we've just seen so much more being done there. We want to be the leader on that front. We -- as I said in the very beginning of this program, we want to move from being a company that's focused as our industry is on deaths and claims to being one that's focused on really helping our customers live longer and improving their wellness.

Question here, table 11.

Tom MacKinnon, BMO Capital. A question for Naveed. The mass market is underserved, and it's hard to get brokers to go for it because the commission dollars are so much higher if they're going after high net worth. So what's -- why would they chase that marketplace? So when you said that you wanted to double your share from 10% to 20% over 4 years in the mass market, that seems to be a tall order. And I don't know if you can do it just by telling you your distribution to go after them. They go where the money is. So like what's your strategy there? Because this is an underserved market where there's potential for some good margin expansion.

Yes. So Tom, I agree it's underserved. The opportunity is staring us in the face. And again, the 10% to 20% is on a relative basis, right, in terms of market share. So you're right that some distributors have shied away from the market because they're smaller tickets, and there's a lot of work involved in making the sale. And so what's important here is to make it a seamless process, right, really easy, really easy to buy, really easy to sell, really easy to service. And so as we're building our digital capabilities, both capabilities can be repurposed within this market. So this is a natural connection to our digital customer ambitions.

It would seem that you have a natural way to get into that through the affinity market. Can you take advantage of that more than you're currently doing?

Yes. So we have a multichannel distribution strategy for mass market. So on -- there are a number of brokers in the market and MGAs that focus on the mass market. We'll sort of activate those. We've built an in-house wholesaling team to interact with those. And I agree with the affinity market is sort of this captive opportunity for us, we have access to all the different professional associations and university alumni. Again offering simple solutions digitally enabled is a big opportunity and a big focus.

Any questions from the audience? So I'll say it's a wrap for us. I would like to thank our panelists for joining us here. And -- but the board, please stay behind. I'd like to have you offer some [indiscernible].

How we all going? How is the jet lag? We're still in there. We're hanging in there, I hope so. And I hope you've enjoyed the last couple of days. I wanted to sort of close this part of our Investor Day sessions with a huge thank you. The first thank you is to all of you for investing the time to come and be with us for a few days. I know it's a huge commitment to travel for many of you across the world and to actually invest the time to be here. And I hope you've also found it very valuable and informative but also insightful in terms of, a, the journey that we've been on as a company, but also where we're going as to our future direction. I want to thank you all also for the support that you offer and give us. As shareholders, you've placed a lot of trust in us. And we don't take that for granted. It's absolutely critical for us that we deliver to the requirements of our shareholders, and it's not lost on us. And obviously, for the analysts in the room, we appreciate the engagement. I want to also just thank you for the engagement throughout the course of the last couple of days. The questions, the engagement from the crowd has been energizing for the team. As you can imagine, an incredible amount of work goes into preparing for these events. But it's really fulfilling when we can get a real sense from the team that is here, that it's valuable and that you're finding the content useful. So I want to thank you for that. I want to wrap the session really where I started and that is to leave you with a couple of key messages. The first message is that we are Manulife, a dramatically different company today to the one that we were in 2017. We don't say this lightly. This journey of transformation that we've been on is something we're incredibly passionate about and it's something that's really driven incredible energy and excitement from every one of the ELT that are here and also that are in our head office. And we are proud of what we've achieved. We've taken a company that was high risk, low ROE, and we've converted into a company that is lower risk and higher ROE. And that's certainly something that has taken an incredible amount of effort, but it's also been something that the teams being passionate about. The second message I wanted to leave you with is that we do have an incredibly high-quality team and culture. And that has allowed us to deliver the results and the execution that you've been able to demonstrate or we've been able to demonstrate and you've been able to see. And I'm hoping again that you've had an opportunity to connect not just with the leadership team, but the next level down, and you will get a sense of not only the quality of these individuals, but the focus that they have on executing and delivering value. So that's really critical for us. We believe that we are uniquely positioned to capitalize on the megatrends that are shaping the global economy. It's not something that we say lightly. We think the next decade is transformative in terms of the global economy. And I can't think of a better footprint to have than the one that we have to take -- to make the most use of or to take advantage of those megatrends. The footprint that we have, I would not trade with any one of my peers. And that is what excites me about the journey that we have. And we do talk about raising the bar, not just -- not just in terms of our financial targets, but in terms of how we will show up and how we will operate. And again, I'm hoping that you get a real sense of the kind of transformation that's underpinning our business and how we actually operate culturally, but also in terms of how we're showing up for our customers. So I am incredibly excited. We say that the best is still ahead of us. And I'm hoping that you get a sense of that energy excitement and passion that's there, but also have confidence that we have deep and very clear plans on how we're going to actually execute against that agenda. So thank you again for being with us. For those of you who are coming on to Jakarta with us, we'll -- we won't say goodbye, but for the rest of you, thank you, and safe travels back and all the best, cheers.