Aug 6, 2026 earnings call — Long-term care reinsurance and growth update
Announced stand-alone long-term care biometric risk transfer on $3.2 billion of reserves at 80% quota share.
Revenue $13.9B (est $7.3B) · EPS $0.79 (est $0.78)
Key quotes
"First, it is a full risk transfer of biometric risk on $3.2 billion of reserves at 80% quota share."
"In Asia, we achieved a 9% year-over-year increase in Million Dollar Round Table members, the highest increase among the top 10 multinational insurers, reflecting continued progress in scaling our high-quality agency force."
"For the stand-alone quarter, we returned $1.4 billion to shareholders through a combination of dividends and share buybacks underpinned by our continued strong cash generation."
Analyst Q&A 12
China tax impact on Hong Kong business
Q (John Aiken · Jefferies): How will the Chinese government's tax on offshore insurance policies affect your business in the region?
A: Management said it is early to judge but Hong Kong is diversified: domestic franchise is about 75% of sales and MCV about 25%. They noted enforcement focus rather than new laws and said clearer guidance could remove ambiguity and support the business. They expect Mainland customers will continue to access Hong Kong for currency diversification and investment access, and tax benefits are not the primary driver.
"My expectation is that as guidance gets more clear, it could actually provide more clarity, remove ambiguity and actually help support the development of this business over time." — Steven Finch
Impact and structure of LTC reinsurance deal
Q (Thomas Gallagher · Evercore): Will MCV sales go to zero and what was the ceding on U.S. statutory? Why did you retain asset risk instead of transferring it?
A: Management does not expect sales to go to 0 and said any short-term impacts would be manageable and not hit core earnings immediately. On the reinsurance, on an NAIC basis the ceding commission would have been around 6% to 7%, and they ceded biometric risk while retaining asset management to preserve earnings and capital generation.
"So on an NAIC basis, the ceding commission would have been around 6% to 7%." — Stephanie Fadous
Offshore high net worth exposure
Q (Gabriel Dechaine · National Bank): Could the tax/enforcement actions affect your offshore high net worth business managed out of Hong Kong or Bermuda?
A: Management clarified the international high net worth business is the Bermuda business and it had some China national sales. Last year that Bermuda APE was a little bit over $150 million, and the China portion of that was a little under 10%.
"Last year, our APE was a little bit over $150 million." — Steven Finch
Assets and management strategy for LTC block
Q (Trevor Kreel): Will you change the asset strategy for assets backing this LTC block? Why emphasize organic management going forward?
A: Management said they will manage the assets within their broader ALM framework and have no current plans to change the investment strategy. They will emphasize organic management actions, citing the LTC customer care program that has delivered a 6% reduction in claims and premium re-rates as effective tools. Retaining asset management preserves earnings, yield opportunity and capital generation while keeping flexibility to transact later.
"That has delivered a 6% reduction in claims through various initiatives, including reduction in fraud, waste and abuse." — Philip Witherington (CEO)
Timing of capital release and Canada insurance sales
Q (Paul Holden · CIBC): When will IFRS and statutory reserves start coming down and capital return to shareholders? And what's driving strong Canadian individual insurance sales?
A: They said the remaining LTC block is slightly younger and they expect it to be relatively stable and start declining in the next 5 to 10 years, with capital (IFRS and statutory) releasing and generating at the same time. For the reinsured block, which was more mature, capital generation will be a little quicker. On Canadian insurance, they said Q1 individual sales were strong, driven by their par product and high net worth distribution, and they view the growth as sustainable with opportunities in underserved segments.
"And I would expect the capital, both IFRS and statutory to start releasing generating capital at the same time." — Stephanie Fadous
Recent Hong Kong sales and Canadian LTD outlook
Q (Tom MacKinnon · BMO Capital): What have you seen in Hong Kong sales recently after the MCV news? And why do you expect Canadian LTD claims to trend to neutral by year-end?
A: They reported strong Hong Kong results this quarter with APE growth of 37% and NBV growth of 12%, driven by a diversified distribution platform and customer campaigns that offset lower MCV sales. On Canadian LTD, they said unfavorable morbidity is largely driven by disability claims with roughly 1/3 of new claims from mental health; they are investing in earlier intervention, treatment access and specialized case management, saw modest Q2 improvements, and are confident the segment will trend toward neutral by year-end. They also noted LTD business is annually repriceable if adverse experience persists.
"As was commented on earlier, we saw growth in APE of 37% and growth in NBV of 12%." — Steven Finch
Front-loading sales and buyback pace/ROE
Q (Mario Mendonca · TD): Was there front-ending of Hong Kong sales this quarter? If transactions now retain assets, can buybacks return to prior pace and reach 18% ROE?
A: Management said quarter sales were driven by customer campaigns and not accelerated by regulatory changes. They explained the biometric-risk-only structure retains assets and capital generation, carries a cost (5% negative cede) but preserves earnings with limited impact, and they have a 2.5% share buyback program in place supported by strong capital generation and remittance targets. Management does not expect outsized buybacks and said the current buyback pace is consistent with achieving the 18% core ROE.
"We have a 2.5% share buyback program in place." — Philip Witherington (CEO)
Ceding commission mechanics and legacy earnings
Q (Doug Young · Desjardins): What drives the ceding commission and how does it flow through the accounting? Also, how much of core earnings and equity back legacy businesses now?
A: They said the ceding commission is due to a difference in expectation of returns rather than reserve assumptions, and the 5% ceding commission flows through the CSM amortization over time. They described the transaction as accounting-clean with a modest CSM impact and no noise to core earnings or net income. On legacy businesses, they said earnings from LTC and VA are comfortably less than 10% of earnings and this transaction further reduces that; common equity backing was not provided.
"In terms of the ceding commission, it's really due to a difference in expectation of returns as opposed to a different view of reserve or assumption, so similar to what we mentioned on prior deal." — Stephanie Fadous
Other Asia sales weakness and MPF fees
Q (Darko Mihelic · RBC Capital): Why are sales and earnings weak in the 'other' Asia category and is there visibility on Mandatory Provident Fund fees review?
A: Management said the 'other' category weakness is driven by their Bermuda international high net worth business facing headwinds from Middle East conflicts; flows have shifted to Hong Kong and Singapore and it's unclear how long that will last. On MPF fees, they said fee reviews are regular (not one-time), are built into planning as part of ongoing fee compression, and they treat it as business-as-usual while balancing competitiveness.
"So part of that process is we build that into our planning, we make proposals to the regulator." — Paul Lorentz
Expense efficiency outlook and levers
Q (Mehmed Rizvanovic · Scotiabank): Can the expense efficiency ratio improve sustainably, and which segments can drive that?
A: They reiterated the medium-term target around 44.5% while emphasizing continued investment across businesses, citing Comvest adding $25 million and Asia and Canada technology spending. Management said expense efficiency could improve maybe 1 or 2 percentage points, with AI initiatives key, and noted GWAM has about a 60% efficiency ratio while Asia has the lowest expense ratio.
"In terms of can we see expense efficiency going forward, maybe 1 or 2 percentage points, absolutely." — Colin Simpson (CFO)
Drivers of group LTD claims in Canada
Q (Gabriel Dechaine · National Bank): Are economic factors driving the volume and duration of group LTD claims in Canada, and how will you improve experience?
A: They said higher disability claims are a recognized phenomenon in economic down cycles, especially with increased unemployment, and roughly 1/3 of new claims are mental health related which tend to be longer and stickier. They are investing in programs for earlier intervention, treatment access and case management to improve recoveries and will use annual repricing as needed while balancing margin and growth.
"I mean it's a globally recognized phenomenon that in down cycles in the economy, particularly where there's increased unemployment that there are rises in certain types of disability claims." — Patrick David Graham (CEO)
Why corporate losses are rising
Q (Mario Mendonca): Why are losses in the corporate segment increasing again after IFRS 17 cleanup?
A: They explained the $45 million year-on-year adverse movement is largely explainable: about one-third is from a softening in their retro P&C business, and the rest reflects higher central project and AI spending plus an accrual for higher withholding tax on expected dividends. They reiterated guidance that corporate is expected to be between $300 million and $400 million and they expect to be toward the top end of that range.
"We've said now that we expect the corporate result to be between $300 million and $400 million." — Colin Simpson (CFO)