[MFC] Manulife: Q3 2026 Earnings Test Hong Kong Savings Margins

Manulife is a Canadian insurance group built mainly on life insurance and wealth and asset management. It operates as Manulife across Canada, Asia and Europe and primarily as John Hancock in the United States[1]. Manulife Q3 2026 earnings are scheduled for 2026-11-04 and will cover the Third quarter 2026 (three months ended September 30, 2026)[2]. In the latest disclosed quarter, the second quarter of 2026, core earnings were C$1,923 million, up 12% year over year; core EPS was C$1.09, up 16%; and core ROE was 16.3%. APE sales were C$2,698 million, up 21%, and new business contractual service margin (CSM) was C$1,024 million, up 16%[3]. The company does not give quarterly profit guidance. On its second-quarter call, management said full-year core losses in Corporate and Other should fall between C$300 million and C$400 million, toward the top of that range, and that overall Canada insurance experience should return to neutral by year end[4]; on the first-quarter call it reaffirmed its target of a core ROE of 18% or more by 2027[5]. Drillr's earnings calendar puts third-quarter consensus EPS at 0.83. The calendar does not label the currency, but it records the second-quarter actual as 0.79 while the company reported core EPS of C$1.09, so the figure appears to be core EPS in US dollars[6].

Three things matter most in this report. The first is whether Hong Kong savings sales can hold their margin after a surge: Hong Kong APE rose 37% in the second quarter, but Asia's NBV margin fell from 40.0% to 36.3%[3], and management acknowledged that sales campaigns lifted volume while lowering margin[4]. The third quarter laps a soft prior-year base, when Hong Kong APE fell 6%[7], so it tests whether the growth is both durable and healthy. The second is whether Canadian group long-term disability claims have bottomed: Canada core earnings fell 6% and 10% year over year in the first and second quarters[8][3], management has publicly said experience should return to neutral by year end[4], and the third quarter is the midpoint check on that call. The third is how much of Global WAM's earnings growth comes from the business itself: segment core earnings rose 9% in the second quarter, but retirement net outflows were C$4.9 billion, and net flows turned positive only because of C$6.7 billion of institutional inflows[3]. Third-quarter flows and margins will show whether earnings are simply tracking market-driven asset levels.

Company Background and Business Structure

Manulife is a multi-region group with insurance at its core and asset management alongside it, and its scale comes from a broad agent and distribution network. At the end of 2024 it had more than 37,000 employees, over 109,000 agents and thousands of distribution partners, serving over 36 million customers[1]. On its second-quarter 2026 call, management described a long-term care reinsurance transaction: an 80% quota share on C$3.2 billion of reserves that fully transfers biometric risk, with forgone core earnings of about C$30 million in the first year, which management called relatively immaterial[4].

The company reports four operating segments, Asia, Canada, the U.S. and Global WAM, plus Corporate and Other. In 2024, post-tax core earnings were C$2,589 million in Asia, C$1,568 million in Canada, C$1,690 million in the U.S. and C$1,736 million in Global WAM, with a C$357 million loss in Corporate and Other, for a total of C$7,226 million[1]. The Asia segment sells insurance in Hong Kong, Japan, mainland China and other Asian markets through agency, bancassurance and broker channels, and Hong Kong is its largest single market[7]. The Canada segment has group insurance and individual insurance lines, and group benefit contracts renew annually and can be repriced[4]; Global WAM manages assets for retirement plan, retail and institutional clients and charges fees on asset levels, with average assets under management and administration (AUMA) of C$946 billion in 2024[1].

On 2024 core earnings, Asia contributed about 36% of the consolidated total, Global WAM about 24%, the U.S. about 23% and Canada about 22%, while Corporate and Other was a negative contributor[1]. In the second quarter of 2026, segment core earnings were C$853 million in Asia, C$379 million in Canada, C$301 million in the U.S. and C$505 million in Global WAM, with a C$115 million loss in Corporate and Other[3]. In Hong Kong, management said domestic customers account for about 75% of year-to-date sales and mainland Chinese visitors about 25%[4], which means the Hong Kong business has a material but not dominant reliance on mainland visitors.

Financial History and Current Position

Manulife set records in both earnings and new business in full-year 2024. Core earnings were C$7,226 million (C$6,684 million in 2023), net income attributed to shareholders was C$5,385 million, core EPS was C$3.87 and core ROE was 16.4%. APE sales were C$8,385 million, up 30%, new business CSM was C$2,887 million, up 32%, the year-end CSM balance was C$22,127 million, and Global WAM took in C$13.3 billion of net inflows for the year[1]. In full-year 2025, APE sales, new business CSM and NBV rose 14%, 28% and 18%, respectively, and net income attributed to shareholders was C$5.6 billion, with the net market experience charge driven mainly by lower-than-expected returns on alternative long-duration assets[9].

The third quarter of 2025 and the first quarter of 2026 set the direct comparison base for this report. In the third quarter of 2025, core earnings were C$2,035 million, core EPS was C$1.16 and core ROE was 18.1%; that quarter included the impact of the annual review of actuarial methods and assumptions, and Global WAM had C$6.2 billion of net outflows[7]. In the first quarter of 2026, core earnings were C$1,836 million, up 8%, core EPS was C$1.06, core ROE was 16.5%, APE sales were C$2,821 million, and Global WAM had C$4.4 billion of net outflows[8].

Earnings and capital both improved in the second quarter of 2026, but core ROE remains below the 2027 target of 18% or more. Net income attributed to shareholders was C$2,110 million, up 17%, and first-half core earnings were C$3,759 million, up 10%. CSM net of non-controlling interests was C$27,263 million, up C$2,294 million from the end of 2025, adjusted book value per common share was C$41.12, and the financial leverage ratio was 22.2% (23.6% a year earlier)[3]. The LICAT ratio of MLI, the main operating subsidiary, was 136%, or C$26 billion above the supervisory target[4].

Operating Model

Manulife's "revenue" should not be read as sales, because the value of its insurance business first accumulates in the contractual service margin. Under IFRS 17, the company sets up CSM from expected future profit when a customer signs a contract, then releases it into the insurance service result as coverage is provided. Sales are measured by APE and the value of new policies shows up as new business CSM, which were C$2,698 million and C$1,024 million, respectively, in the second quarter of 2026[3]. Changes in volume and margin therefore move the CSM balance first and turn into core earnings gradually over many years, with a clear lag.

Core earnings combine the insurance service result, the investment result and asset management earnings, less corporate expenses and tax. The insurance service result includes CSM amortization, release of the risk adjustment, and claims and expense experience gains or losses; Canadian group disability claims hit core earnings directly and in the current period through that experience line[8]. The investment result comes from the spread between investment income and amounts credited to policyholders. Global WAM earnings roughly equal average AUMA times the net fee rate, less operating expenses, and average AUMA was C$1.162 trillion in the second quarter of 2026[3]. The gap between actual and expected returns on public equity and alternative long-duration assets is booked as market experience, which stays out of core earnings but affects shareholder net income; second-quarter 2026 market experience was a net gain of C$201 million[3].

Cash and capital move from subsidiaries to the group as remittances and then to shareholders. Management has set a C$22 billion cumulative remittance target and said 60% to 70% of earnings should convert into remittances, above the 35% to 45% dividend payout ratio, leaving room for buybacks; the buyback program that began in late February 2026 allows the company to repurchase up to 2.5% of common shares[5]. Capital strength is measured by LICAT, which was 136% at the end of June 2026[4], so the pace of capital release affects buyback size and, through it, core EPS growth and core ROE.

Industry and Competitive Position

Manulife's competitive advantage shows up mainly in its Asian distribution scale and its domestic Hong Kong customer base. In 2024, Asia's APE sales, new business CSM and NBV rose 36%, 38% and 35%, respectively, led by Hong Kong, while the NBV margin held at 40.7%[1]; in 2025, the three Asia metrics grew another 18%, 27% and 20%, with an NBV margin of 39.5%[9]. Management calls the domestic Hong Kong franchise the company's core strength, at about 75% of year-to-date sales[4], which lowers reliance on mainland visitor business but does not remove exposure to mainland policy changes.

In asset management and Canadian group insurance, Manulife's position depends more on scale and pricing power. Global WAM's average AUMA reached C$1.162 trillion in the second quarter and gross flows were C$58.7 billion, yet both retirement and retail had net outflows[3], which shows that scale has not automatically translated into net client inflows. Canadian group benefits are repriced annually, and management said the company has the ability and intent to reprice if adverse experience persists[4]; the company's disclosures provide no comparable peer figures, however, so Manulife's gap with competitors on share, margin or claims experience cannot be quantified.

Core Debates

Can Hong Kong savings sales keep growing in the third quarter under mainland-visitor scrutiny without further margin sacrifice?

This debate bears on Manulife's largest source of earnings. Asia contributed about 36% of consolidated core earnings in 2024[1], and Hong Kong is Asia's largest single market, so the volume and pricing of Hong Kong new business directly shape CSM growth for years. In the second quarter, Asia APE rose 21% year over year while the NBV margin fell from 40.0% to 36.3%[3], which makes the quality of growth the open question.

Current evidence shows that the second-quarter surge came mainly from savings products and sales campaigns. Hong Kong APE rose US$191 million, or 37%, driven by savings products across all channels, while Hong Kong NBV grew only 12%; Asia APE was US$1,496 million, new business CSM was US$561 million, up 17%, and the first-half NBV margin was 37.3% (39.0% a year earlier)[3]. Management explained that campaigns resonated with customers, which is why APE grew faster than NBV and the margin was lower[4]. The prior-year comparison base is soft: in the third quarter of 2025, Asia APE was US$1,452 million, new business CSM was US$516 million, the NBV margin was 39.0%, and Hong Kong APE was US$535 million, down 6%[7].

The financial transmission runs from Hong Kong customers buying participating savings policies, to APE times the NBV margin forming new business CSM, to the CSM balance amortizing into Asia core earnings over time; Asia core earnings were US$616 million in the second quarter of 2026[3]. An alternative explanation is that part of the second-quarter surge reflected campaigns and buying brought forward ahead of expected regulation, so Hong Kong volume and margin would fall together once campaigns fade and mainland enforcement tightens. Neither explanation can be confirmed yet, because Hong Kong APE for the second quarter was disclosed only as a year-over-year increase, and the mainland visitor share is available only as the roughly 25% year-to-date figure given on the call[4].

Three points matter in the third quarter: whether Asia new business CSM exceeds the prior-year US$516 million, whether Hong Kong APE can grow from the soft US$535 million base, and whether the Asia NBV margin recovers from 36.3%[7][3]. If Hong Kong APE grows, the margin recovers and new business CSM beats the prior-year base, the surge did not come at the cost of margin. If new business CSM still fails to grow from a soft base, or volume falls without any margin improvement, the view that growth was campaign-driven and hard to sustain becomes more persuasive.

After two quarters of drag from Canadian group disability claims, can the third quarter show progress toward the promised return to neutral experience?

This debate tests management's public call on its home market. Canada contributed about 22% of consolidated core earnings in 2024[1], and Canada core earnings fell 6% and 10% year over year in the first and second quarters of 2026, both times because of higher group long-term disability claims and higher expenses to support business growth and transformational investment[8][3]. Management said on the second-quarter call that overall Canada insurance experience should return to neutral by year end[4], and the third-quarter result will show how far along that path the business is.

Current evidence shows experience improving but still unfavorable. Canada insurance-line core earnings were C$282 million in the second quarter, above C$261 million in the first quarter but below C$326 million in both the prior-year quarter and the third quarter of 2025; total Canada core earnings were C$379 million, against a third-quarter 2025 comparison base of C$428 million that included the annual actuarial review[3][7]. Management said about a third of new disability claims relate to mental health, which tend to last longer, and the company is using case management to help members return to work[4]. First-quarter group insurance APE sales were C$193 million, down 32%, mainly because of lower large-case sales[8].

The financial transmission runs from disability incidence and recovery rates on employer group benefit contracts, to group insurance experience gains or losses, to Canada insurance-line core earnings and total Canada core earnings; because contracts reprice annually, persistent adverse experience turns into price increases at renewal[4]. An alternative explanation is that claims deterioration is tied to the employment cycle, so case management can only soften it and the real repair must wait for renewal repricing; in that case the third quarter would stay weak, and higher prices could hurt group sales. The company does not quantify group insurance experience separately, so the direction can be judged only from insurance-line core earnings and the company's narrative.

In the third quarter, watch whether Canada insurance-line core earnings exceed the second quarter's C$282 million, whether the company's description of group claims experience keeps improving and it maintains the year-end neutral call, and whether group sales hold up amid repricing[3][4]. If insurance-line earnings rise and management keeps its call, the repair is under way. If insurance-line earnings fall below the first quarter's C$261 million, or the company pushes back the timing of a return to neutral, the call is weakened.

With retirement outflows and Hong Kong MPF fee pressure, can Global WAM keep growing earnings in the third quarter on institutional flows and asset growth?

This debate determines the earnings quality of one of Manulife's two growth engines. Global WAM contributed about 24% of consolidated core earnings in 2024 and took in C$13.3 billion of net inflows that year[1]; but it had C$4.4 billion of net outflows in the first quarter of 2026 and only C$0.4 billion of net inflows in the second, for combined net outflows of about C$4.0 billion across the two quarters[8][3]. The third quarter tests how much earnings growth comes from market-driven asset levels and how much from the business itself.

Current evidence shows earnings growing on a weak flow mix. Global WAM core earnings were C$505 million in the second quarter, up 9%, which the company attributed to higher net fee income from favorable markets over the past 12 months and the contribution of the Manulife | Comvest business, partly offset by the eMPF transition in Hong Kong and higher expenses. Institutional net inflows were C$6.7 billion, retirement net outflows were C$4.9 billion (against C$2.0 billion of net inflows a year earlier), retail net outflows were C$1.4 billion, and the core EBITDA margin was 31.2%, up 110 basis points[3]. Management said retirement outflows reflected higher plan sponsor redemptions and increased member withdrawals as account balances rose with markets[4].

The financial transmission runs from subscriptions and redemptions forming net flows, to net flows plus market moves setting average AUMA, to average AUMA times the net fee rate producing net fee income, which after operating expenses becomes Global WAM core earnings; the eMPF transition lowers net fee rates on Hong Kong MPF business[3][5]. An alternative explanation is that earnings growth comes mainly from market-inflated AUMA rather than operating improvement; if markets retreat while retirement outflows persist, core earnings and margin would fall together, and institutional inflows may not stay at second-quarter levels. The third-quarter 2025 comparison base is core earnings of C$525 million, average AUMA of C$1.066 trillion and a core EBITDA margin of 30.9%, with net outflows of C$1.6 billion in retirement, C$3.9 billion in retail and C$0.7 billion in institutional[7].

In the third quarter, watch whether Global WAM core earnings exceed the prior-year C$525 million, whether retirement net outflows narrow and institutional inflows continue, and whether the core EBITDA margin holds above 30.9%[7]. If earnings and margin rise together while flows improve, growth is not just a market effect. If retirement outflows widen while institutional inflows fade, and the margin slips back toward the first quarter's 29.0%[8], the market-driven explanation becomes more persuasive.

Risks and Falsifiers

The annual review of actuarial methods and assumptions in the third quarter is the most direct source of earnings disruption. The company generally implements the review in the third quarter; in 2025 it reduced pre-tax net income attributed to shareholders by C$244 million, or C$216 million post-tax, while increasing CSM by C$1,080 million[7]. Review results flow directly into third-quarter net income and CSM and change expected earnings for later quarters; if the 2026 review is close to neutral for net income and CSM and the company does not lower its core earnings base in the U.S. or Canada, this risk has not materialized.

Persistently weak returns on alternative long-duration assets would erode net income and capital. The net market experience charge in full-year 2025 came mainly from lower-than-expected returns on real estate, private equity and timber investments[9], and although market experience was a net gain in the second quarter of 2026, alternative long-duration asset returns were still below expectations[3]. These losses stay out of core earnings but reduce shareholder net income and capital, and persistent shortfalls could force lower return assumptions in the annual review; if third-quarter alternative asset returns meet expectations and market experience is a net gain, this risk eases.

A slower pace of capital return would weaken core EPS growth. The latest long-term care reinsurance deal transfers only biometric risk[4], buybacks are an important source of core EPS growth, and the buyback program is capped at 2.5% of common shares[5]. If capital release falls short, lifting core ROE from the second quarter's 16.3%[3] to 18% or more would rely entirely on earnings growth; if third-quarter buybacks stay on a 2.5% annualized pace and LICAT holds near 136%[4], this risk has not materialized.

Regulatory and tax enforcement risk on mainland visitor business acts directly on Asian new business. Mainland visitors account for about 25% of Hong Kong year-to-date sales[4], and in the third quarter of 2025 Hong Kong APE of US$535 million was about 37% of Asia APE of US$1,452 million[7], which puts mainland visitor business at roughly a tenth of Asia APE. Wider mainland tax enforcement on overseas investment could depress those sales and in turn reduce Asia new business CSM and future core earnings; if third-quarter Hong Kong APE grows year over year and the company says mainland visitor sales are stable, this risk has not materialized.

Continued deterioration in group long-term disability claims would hit both current earnings and reserves. Mental health claims last longer[4], and lower recovery rates could force the company to strengthen reserves, directly reducing Canada insurance-line core earnings; if claims assumptions need updating, the third-quarter annual review would also affect net income and CSM. If third-quarter Canada insurance experience improves from the second quarter and the annual review makes no adverse change to group disability, this risk is falsified.

Falling Hong Kong MPF fee rates act on Global WAM's net fee rate. On the first-quarter call, management said the eMPF transition moderated Global WAM core earnings growth[5], and the second-quarter report still listed the eMPF transition as an offset to earnings[3]; lower fee rates reduce net fee income in the Hong Kong retirement business. If the third-quarter core EBITDA margin rises year over year and the company no longer cites eMPF as a drag on earnings, this risk is falsified.

What to Watch Next

• Hong Kong savings volume and margin: second-quarter 2026 new business CSM was US$561 million with a 36.3% NBV margin, against third-quarter 2025 new business CSM of US$516 million and Hong Kong APE of US$535 million. New business CSM above US$516 million with a recovering margin would confirm healthy growth; no growth from that soft base would falsify it.
• Canadian group disability claims: insurance-line core earnings were C$282 million in the second quarter of 2026 (C$261 million in the first quarter, C$326 million a year earlier). A figure above C$282 million with the year-end neutral call intact would confirm repair; a figure below C$261 million or a delayed timeline would falsify it.
• Global WAM earnings quality: second-quarter 2026 core earnings were C$505 million, retirement net outflows were C$4.9 billion and the margin was 31.2%, against third-quarter 2025 core earnings of C$525 million and a 30.9% margin. Core earnings above C$525 million with a margin of at least 30.9% would confirm; a margin back near 29.0% would falsify.
• Annual actuarial review: the 2025 review cut post-tax net income by C$216 million and added C$1,080 million to CSM. A near-neutral 2026 result would confirm the current earnings base; a lower U.S. or Canada core earnings base would falsify it.

Conclusion

Manulife's core earnings are driven by three forces: CSM built from Asian new business, insurance experience in Canada and the U.S., and Global WAM fee income that moves with asset levels. In the second quarter of 2026, core earnings were C$1,923 million, core ROE was 16.3%, CSM net of non-controlling interests rose to C$27,263 million[3], and LICAT was 136%[4], leaving both capital and new business in a strong position. The unresolved relationship is the quality of growth: whether Hong Kong volume is coming at the cost of margin, whether Canadian group disability claims return to neutral as management has said, and whether Global WAM earnings growth can stop depending on rising markets.

Between August 5 and October 28, 2026, the reports that could be found were mostly call highlights and event coverage, and none offered a clear independent assessment of the second-quarter results, so there is no outside interpretation to synthesize here, and that event coverage should not be treated as market consensus. Readers have only the company's disclosures and management's statements to go on, and none of the three debates above has cross-checking from outside analysis yet.

If the third quarter delivers the following combination, the current view of Manulife as strong in new business with experience under repair would be materially strengthened: Asia new business CSM above the prior-year US$516 million with a recovering NBV margin, Canada insurance-line core earnings above C$282 million, Global WAM core earnings above C$525 million with the margin holding at 30.9%, and an annual actuarial review close to neutral[7][3]. Conversely, if Hong Kong sales fall from a soft base, Canadian experience fails to improve, retirement outflows widen and the review lowers the core earnings base, the second-quarter growth more likely reflected a temporary combination of campaigns and rising markets.

Sources

[1] MFC FY2024 40-F filed 2025-02-19 · 2025-02-19 · 40-F · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001086888&type=40-F&dateb=&owner=include&count=40

[2] MFC earnings calendar updated 2026-10-26 · 2026-10-26 · Drillr earnings calendar

[3] MFC 2Q26 6-K filed 2026-08-05 · 2026-08-05 · 6-K · https://www.sec.gov/Archives/edgar/data/0001086888/000108688826000081/q22026reporttoshareholderl.htm

[4] MFC Q2 2026 earnings call 2026-08-06 · 2026-08-06 · earnings-call · https://gateway.drillr.ai/mcp/private

[5] MFC Q1 2026 earnings call 2026-05-14 · 2026-05-14 · earnings-call · https://gateway.drillr.ai/mcp/private

[6] Drillr earnings calendar consensus MFC Q3 2026 retrieved 2026-10-26 · 2026-10-26 · Drillr earnings calendar · https://gateway.drillr.ai/mcp/private

[7] MFC 3Q25 6-K filed 2025-11-12 · 2025-11-12 · 6-K · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001086888&type=6-K&dateb=&owner=include&count=40

[8] MFC 1Q26 6-K filed 2026-05-14 · 2026-05-14 · 6-K · https://www.sec.gov/Archives/edgar/data/0001086888/000108688826000044/q12026reporttoshareholderl.htm

[9] MFC 4Q25 6-K filed 2026-02-11 · 2026-02-11 · 6-K · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001086888&type=6-K&dateb=&owner=include&count=40