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A NEW WORLD OF OPPORTUNITY

A NEW WORLD OF OPPORTUNITY. Presentation to the International Insurance Society’s 41 st Annual Seminar in Hong Kong. Dominic D’Alessandro President & CEO Manulife Financial July 11 th 2005. A New World of Opportunity. Industry has changed dramatically over the last 10 years

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A NEW WORLD OF OPPORTUNITY

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  1. A NEW WORLD OF OPPORTUNITY Presentation to the International Insurance Society’s 41st Annual Seminar in Hong Kong Dominic D’Alessandro President & CEO Manulife Financial July 11th 2005

  2. A New World of Opportunity • Industry has changed dramatically over the last 10 years • Significant opportunities for future growth • High growth geographies, evolving product lines and further consolidation • Manulife is well positioned for a leading role in the future of the life insurance industry

  3. Significant Opportunities for Growth • Select Geographic Markets • China, India, South East Asia • Evolving Product Segments • Pensions, Long Term Care • Consolidation Opportunities • United States, Asia

  4. Select Geographic Markets • North America • Wave of demutualizations • Consolidation driven by need for scale • Europe • Erosion of market capitalizations following equity market decline • Asia • Negative spreads / industry restructuring in Japan • High growth in other countries

  5. Select Geographic Markets Asia Source: Swiss Re Sigma (Study 3/2004) and CIA World Factbook.

  6. Income Protection Critical Illness Protection Savings Individual Pension Group Pension Select Geographic OpportunitiesProduct Portfolios Vary Breakup of premium income (%) Source: Boston Consulting Group

  7. Select Geographic MarketsChina Inforce Life Premium Growth RMB:Billions CAGR +32%

  8. Select Geographic OpportunitiesIndia • Insurance industry in India has made significant progress in recent years • New competitors, products and distribution channels • Immense size and increasing prosperity will create significant opportunity

  9. Select Geographic MarketsKey Issues for Emerging Markets • Exponential growth can create unstable environments • Regulators are stretched • Lack of experienced management • Poorly trained agents • Poor persistency • Insufficient attention to expense control • Little concern for consumers • Ownership restrictions can limit control

  10. Select Geographic MarketsKey Issues for Emerging Markets • Challenging conditions and lack of scale make success elusive • Majority of Manulife’s acquisitions have been departures by foreign firms

  11. Evolving Product SegmentsDemographic Shift World population is aging Average annual growth rates (%) Source: U.S. Census Bureau

  12. Evolving Product SegmentsHigh Growth Products • Aging population creating new pressure points • Governments cannot shoulder entire burden of progressively costly schemes • Individuals realizing need to actively plan for retirement needs • Long term care and pension products well suited to fill demand

  13. ConsolidationCreating Opportunity for Growth • Benefits of scale continue to drive consolidation • Rate of consolidation varies by geographic sector • Western Europe, Canada consolidated markets • Eastern Europe, United States, parts of Asia remain fragmented

  14. ConsolidationActive Consolidation Value and number of life insurance transactions $US Millions Source: Morgan Stanley, Zephyr and Bloomberg. Transactions are reported as of the date announced, not all deal values were available.

  15. Manulife Financial

  16. ManulifeTen Years of Change 1994 • Divestitures of non-core businesses • Renewed focus on core capabilities • Acquired Confederation Life’s Group business (’94) • Amalgamation with North American Life (’96) • China’s 1st JV life insurance company (’96) • Expanded into four additional countries in Asia (’96 -’04) • Entered Japan via JV and subsequent acquisition of significant in force block (’99) • Demutualization (’99) • Selective acquisitions in Canada • Acquired John Hancock Financial Services (’04) 2005

  17. Net Income C$ in millions ManulifeTen Years of Growth 10 Years of Strong Earnings Growth CAGR + 25%

  18. ManulifeGlobal Operations • Asia • Hong Kong (1897), Philippines (1907), Singapore (1980), Indonesia (1985), • Taiwan (1992), China (1996), • Macau (1996), Vietnam (1999) • Thailand (2004), Malaysia (2004) • Individual Life Insurance • Group Life & Health Insurance • Pension Products • Mutual Funds • Canada (1887) • Individual Insurance • Individual Wealth Management • Group Benefits • Group Pensions Investments United States, Canada, United Kingdom, Japan, Australia, Hong Kong, Southeast Asia • United States (1903) • Individual Insurance • Long-term Care • Group Pensions • Annuities • College Savings • Mutual Funds • Guaranteed & Structured Financial Products • Japan (1999) • Individual Insurance • Annuities • Reinsurance • United States • Canada • Europe • Asia

  19. Manulife China Operations: Profitable Growth Ningbo Dongguan Foshan Office established Licenses granted

  20. Manulife Product Opportunities • Significant expertise in both pensions and long term care • Opportunity to expand business by leveraging expertise into evolving markets A Leader in Pensions and Long Term Care • #1 in U.S. small case pension market • #2 in Hong Kong (MPF) • #1 International pension provider in Indonesia • #2 in U.S. Long Term Care market

  21. ManulifeKey Elements of Success • Core Competencies • Customer Focus • Distribution Excellence • Product Innovation • Technology • Risk and Investment Management • Focus on the bottom line

  22. Summary • The life industry provides limitless opportunities for well-established players • Emerging economies, shifting demographics and consolidation to drive growth • Life insurers well suited to provide solutions to emerging middle-class in Asia and aging populations • Manulife is positioned as consolidator with premium franchises in high growth markets

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