Over the past year, our team has driven significant momentum and strong results. Guided by our strategy, values, and mission, we have created greater shareholder value and are moving faster than ever on our ambition of becoming the most digital, customer-centric company in our industry.
Since 2018, we have focused on transforming Manulife, and 2023 was a milestone year in that journey. We announced a historic reinsurance transaction in our legacy Long-Term Care (LTC) business, adopted our industry’s most significant accounting standard change in decades, and continued accelerating growth with double-digit increases in our key profit and new business metrics.
Our Transformation Journey
Today we are a radically different company than when we began our efforts to reshape our portfolio toward lower risk and higher returns and enhance Manulife’s attractiveness to investors.
We’re delivering greater shareholder value. Following the closing of our reinsurance transaction announced in 2023, we will have freed up more than $10 billion of capital, improved core return on equity (ROE) by 4.6 percentage points from 11.3 percent in 2017 to 15.9 percent, and returned $18.9 billion to shareholders through dividends and buybacks since 2018. In 2023, we became the top performer in our peer group with 28 percent total shareholder return on the Toronto Stock Exchange.
We’re optimizing our portfolio. In 2023, we announced a sale of some of our lowest return businesses at 9.5 times core earnings, showcasing our potential. This historic reinsurance transaction transfers the risk on $13 billion of insurance and investment reserves, including $6 billion of LTC insurance reserves, making it the largest deal of its kind in the industry. Along with our U.S. Variable Annuity (VA) reinsurance transactions in 2022, this has helped reduce our risk profile and brought core earnings contributions from LTC and VA to an expected 11 percent, down from 24 percent in 2017.
We’re driving additional organic actions, including launching new wellness programs to help better manage claims, implementing additional anti-fraud efforts with digital claim controls and advanced analytical modeling, and investing in self-service and increased automation to improve expense efficiency.
But we aren’t stopping here. We believe we have taken an important step in establishing an active LTC reinsurance market and that, organically and inorganically, we can create additional shareholder value.
We’re accelerating growth in our highest potential businesses. In Asia, we are now a top three pan-Asian life insurer, up from number six, and Global Wealth and Asset Management (Global WAM) has delivered positive net flows across 13 of the past 14 years. Canada Group Benefits expanded partnerships to provide increased access for customers to preventative care, and our Behavioural Insurance offerings are helping two million customers across the globe live longer, healthier, better lives. We are a top ten insurer globally, a leader in Canada and the U.S. with our innovative Behavioural Insurance offering, and we serve 17 million customers across Global WAM’s diverse and scaled business.
We are embracing the power of digital and improving customer experience. We have increased our straight-through-processing from 68 percent in 2018 to 85 percent, speeding up our processing times and reducing the volume of paperwork. We’re using advanced analytics to improve how we serve our customers, providing them holistic and personalized advice, and leveraging our partnership ecosystems to meet their health and wellness needs. These efforts have contributed to a 22-point improvement in our Net Promoter Score since 2017, and we are leading or on par with peers across the majority of our business lines.
We are driving expense efficiency. Our global scale and expense discipline are driving improved returns and have allowed us to provide more compelling products and services to our customers. We have achieved an expense efficiency ratio of 45.5 percent, which exceeds our target and is an improvement from our 55.4 percent pre-IFRS 17 2017 baseline.
Our team and culture continue to be our long-term competitive advantage. Since 2019, we have achieved and maintained top-quartile employee engagement results against Gallup’s financial and insurance company benchmark, enabled by our diverse and inclusive culture, and commitment to learning and development. Our team is passionate about making our customers’ lives better and continues to show resilience and tenacity in driving our accomplishments to date.
Focused Execution in 2023
Our continued focus on execution helped us deliver strong financial results in 2023. We drove double-digit increases in core earnings per share, core earnings, annualized premium equivalent sales, new business contractual service margin, and new business value. We generated $4.5 billion of net inflows in Global WAM despite a challenging year for the retail fund industry. Additionally, our LICAT ratio increased from 131 percent to 137 percent, and we returned $4.3 billion of capital to shareholders through dividends and share buybacks throughout the year.
As we continue to accelerate growth, we launched and expanded new products and partnerships across our four operating segments and increased our customer base by one million, for a total of more than 35 million customers in 2023.
Our Asia markets, among the hardest hit by the pandemic, made a noteworthy recovery with the reopening of borders. This was especially true in Hong Kong, where sales from mainland Chinese visitors doubled compared to 2019 pre-pandemic levels.
In Global WAM, we entered into an agreement to acquire CQS, whose multi-sector alternative credit capabilities complement our existing fixed-income and multi-asset solutions business. We also further enhanced and broadened our retail wealth planning and advice in Canada through strategic agreements that will provide access to industry-leading advisor technology and portfolio management platforms.
As part of our Digital, Customer Leader ambitions, we launched a unified global onboarding platform for our High Net Worth business in Bermuda, Singapore, and Hong Kong to deliver a consistent, high-touch experience. Across our Group Benefits business in Canada, we are leveraging strategic partnerships to meet customer needs, like the one we announced with League, a leading healthcare technology provider. This partnership will provide members with a personalized and digital healthcare experience that is fully integrated with Manulife’s Group Benefits ecosystem.
We also further enhanced our focus on Behavioural Insurance, expanding access to the GRAIL Galleri® multi-cancer early detection test through our John Hancock Vitality Program and hosting our "Longer. Healthier. Better." symposium in the U.S. This first-of-its-kind event brought together life insurance brokers, leaders from reinsurance companies, media, and local government officials to give them a first-hand look at the innovations and science shaping the future of longevity.
As artificial intelligence (AI) begins to have a transformative effect across industries, we want to be a leader in ours. Over the past year, we've launched a series of initiatives to familiarize our colleagues with the technology and identify more significant, scalable opportunities that will allow us to accelerate our digital agenda. We're exploring more than 80 use cases, from driving greater efficiency in day-to-day tasks to imagining AI's impact on the agent of the future. And we're experimenting responsibly, guided by our values and ensuring the protection of our customer and colleague data.
Our mission, “Decisions made easier. Lives made better,” is what motivates us to deliver for our customers every day.
The impact we have is clear from the stories our customers share with us. Take one of our John Hancock customers, whose Vitality policy gave him access to the GRAIL Galleri® multi-cancer early detection test. The test helped his cancer get diagnosed early, improving his chance of survival.
We’re proud to be helping our customers live longer, healthier, and better lives by offering access to this technology. When cancer is diagnosed before it has time to spread, the overall five-year cancer-specific survival rate is four times higher. Thankfully, for this customer the cancer was caught early enough for a treatment plan.
I’m proud of what our team accomplished in 2023, but great teams push for extraordinary. We have a relentless focus on our mission and a dedicated team that is driving superior results.
As we look to 2024 and beyond, with a backdrop of geopolitical and macroeconomic uncertainty, our unique and diverse geographic footprint and all-weather strategy positions us well to continue delivering superior value for our customers, shareholders, and the communities we operate in.
Thank You
I would like to thank Don Lindsay, our Board Chair, and our Board of Directors for their continued strategic guidance and trust.
Thank you to the entire Executive Leadership Team, and welcome to our newest members, Colin Simpson, Group Chief Financial Officer, Brooks Tingle, President and CEO of John Hancock, and Halina von dem Hagen, Chief Risk Officer, who are already making a strategic impact.
Thank you to our more than 38,000 colleagues and 98,000 agents for their dedication to our mission, customers, and values, which has made our progress possible. Finally, thank you to our shareholders and customers for your trust in us.
I speak on behalf of our entire team in saying it’s an incredible privilege to serve an organization where what we do every day truly matters. As we begin 2024, we’re moving faster than ever in pursuit of better and the future we all share.
