Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16]

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of May 2024

Commission File Number: 1-14942

 

 

MANULIFE FINANCIAL CORPORATION

(Translation of registrant’s name into English)

 

 

200 Bloor Street East

North Tower 10

Toronto, Ontario, Canada M4W 1E5

[phone]

(Address of principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☐   Form 40-F ☒

The registrant’s Management’s Discussion and Analysis and Unaudited Interim Consolidated Financial Statements for the quarter ended March 31, 2024 included in the registrant’s 2024 First Quarter Report to Shareholders filed with this Form 6-K as Exhibit 99.1, are incorporated by reference in the registration statements filed with the Securities and Exchange Commission by the registrant on Form S-8 (Registration Nos. 333-12610, 333-13072, 333-114951, 333-129430, 333-157326, 333-211366, 333-272672, 333-277446), on Form F-3 (Registration No. 333-159176) and on Form F-10 (Registration No. 333-274698). Except for the foregoing, no other document or portion of a document filed with this Form 6-K is incorporated by reference in the above registration statements.

 

 

 

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DOCUMENTS FILED AS PART OF THIS FORM 6-K

The following documents, filed as exhibits to this Form 6-K, are incorporated by reference as part of this Form 6-K:

 

Exhibit		Description of Exhibit
99.1		First Quarter Report to Shareholders
99.2   99.3		Certification Chief Executive Officer   Certification Chief Financial Officer

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

MANULIFE FINANCIAL CORPORATION
By:		/s/ Scott MacIntosh
Name:		Scott MacIntosh
Title:		Assistant Corporate Secretary

Date: May 8, 2024

Table of Contents

Exhibit 99.1

 

First Quarter Report to Shareholders Three months ended March 31, 2024

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Manulife Financial Corporation (“Manulife” or the “Company”) reported its first quarter results for the period ended March 31, 2024, delivering strong core ROE and topline growth, and closing the largest long-term care (“LTC”) reinsurance transaction in the industry.

Key highlights for the first quarter of 2024 (“1Q24”) include:

 

•

Core earnings1 of $1.8 billion, up 16% on a constant exchange rate basis2 from the first quarter of 2023 (“1Q23”)

 

•

Net income attributed to shareholders of $0.9 billion, down $0.5 billion from 1Q23. Excluding the impact of the reinsurance transaction with Global Atlantic (the “GA Reinsurance Transaction”), which had a largely neutral impact on book value, 1Q24 net income attributed to shareholders was $1.6 billion1, up $0.2 billion from 1Q23

 

•

Core EPS3 of $0.94, up 20%2 from 1Q23. EPS of $0.45, down 38%2 from 1Q23. Excluding the impact of the GA Reinsurance Transaction, EPS was $0.873, up 21%2 from 1Q23

 

•

Core ROE3 of 16.7% and ROE of 8.0%. Excluding the impact of the GA Reinsurance Transaction, ROE was 15.5%3

 

•

LICAT ratio4 of 138%

 

•

APE sales 21% higher5, new business CSM up 52%2 and new business value (“NBV”) up 34%5 from 1Q236

 

•

Global Wealth and Asset Management (“Global WAM”) net inflows5 of $6.7 billion, up from $4.4 billion in 1Q23

 

“After a milestone year for Manulife, we continued to show strong momentum in 1Q24 by delivering superior results, including 20% core EPS growth, an increase of 11% in adjusted book value per common share3, and record level APE sales with double-digit growth across each of our insurance segments. We again demonstrated a disciplined focus on execution by closing the largest ever LTC reinsurance transaction in the first quarter and entering the largest ever universal life reinsurance agreement in Canada. I’m excited by our momentum in the first quarter and by the opportunities ahead of us to continue generating shareholder value.”   — Roy Gori, Manulife President & Chief Executive Officer   “We had a strong start to 2024 with record levels of new business CSM and new business value, reflecting 52% and 34% growth, respectively. Global WAM saw strong net inflows of $6.7 billion, and our capital position remains robust with a LICAT ratio of 138%. Looking ahead, we remain committed to further improving ROE through disciplined capital allocation and continued business performance improvements.”   — Colin Simpson, Manulife Chief Financial Officer

 

1  Core earnings and net income attributed to shareholders excluding the impact of the GA Reinsurance Transaction are non-GAAP financial measures. For more information on non-GAAP and other financial measures, see “Non-GAAP and other financial measures” in our 1Q24 Management’s Discussion and Analysis (“1Q24 MD&A”). 2  Percentage growth / declines in core earnings, diluted core earnings per common share (“core EPS”), diluted earnings (loss) per share (“EPS”), EPS excluding the impact of the GA Reinsurance Transaction, and new business contractual service margin net of NCI (“new business CSM”) are stated on a constant exchange rate basis and are non-GAAP ratios. 3  Core EPS, EPS excluding the impact of the GA Reinsurance transaction, core ROE, ROE excluding the impact of the GA Reinsurance Transaction and adjusted book value per common share (“adjusted BV per common share”) are non-GAAP ratios. 4  Life Insurance Capital Adequacy Test (“LICAT”) ratio of The Manufacturers Life Insurance Company (“MLI”) as at March 31, 2024. LICAT ratio is disclosed under the Office of the Superintendent of Financial Institutions Canada’s (“OSFI’s”) Life Insurance Capital Adequacy Test Public Disclosure Requirements guideline. 5  For more information on annualized premium equivalent (“APE”) sales, NBV and net flows, see “Non-GAAP and other financial measures” in our 1Q24 MD&A. Percentage growth/decline in APE sales, NBV and net flows are stated on a constant exchange rate basis. 6  Refer to “Result at a Glance” for 1Q24 and 1Q23 results.

 

 

Manulife Financial Corporation – First Quarter 2024		1

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Results at a Glance

 

		Quarterly Results
($ millions, unless otherwise stated)		1Q24				1Q23				Change1,2
Net income attributed to shareholders		$	866			$	1,406			(38)%
Core earnings		$	1,754			$	1,531			16%
EPS ($)		$	0.45			$	0.73			(38)%
Core EPS ($)		$	0.94			$	0.79			20%
ROE			8.0%				13.6%			(5.6) pps
Core ROE			16.7%				14.8%			1.9 pps
Book value per common share ($)		$	23.09			$	22.01			5%
Adjusted BV per common share ($)		$	33.39			$	30.04			11%
Financial leverage ratio (%)3			24.3%				26.0%			(1.7) pps
APE sales		$	1,883			$	1,600			21%
New business CSM		$	658			$	442			52%
NBV		$	669			$	509			34%
Global WAM net flows ($ billions)		$	6.7			$	4.4			55%
Results by Segment
		Quarterly Results
($ millions, unless otherwise stated)		1Q24				1Q23				Change2
Asia (US$)
Net income attributed to shareholders		$	270			$	384			(29)%
Core earnings			488				361			39%
APE sales			950				868			13%
New business CSM			364				222			68%
NBV			343				275			28%
Canada
Net income attributed to shareholders		$	273			$	309			(12)%
Core earnings			364				353			3%
APE sales			450				293			54%
New business CSM			70				46			52%
NBV			157				92			71%
U.S. (US$)
Net income attributed to shareholders		$	(80)			$	138			nm
Core earnings			335				285			18%
APE sales			113				99			14%
New business CSM			72				70			3%
NBV			37				34			9%
Global WAM
Net income attributed to shareholders		$	365			$	297			24%
Core earnings			357				287			25%
Gross flows ($ billions)2			45.4				38.8			19%
Average AUMA ($ billions)2			880				804			9%
Core EBITDA margin (%)3			25.5%				22.4%			310 bps

 

1  Percentage growth / decline in net income attributed to shareholders is stated on a constant exchange rate basis and is a non-GAAP ratio. 2  For more information on gross flows and average asset under management and administration (“average AUMA”), see “Non-GAAP and other financial measures” in our 1Q24 MD&A. Percentage growth/decline in gross flows and average AUMA are stated on a constant exchange rate basis. 3  Financial leverage ratio and core EBITDA margin are non-GAAP ratios.

 

 

Manulife Financial Corporation – First Quarter 2024		2

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Strategic Highlights

We are delivering against our strategy to optimize our portfolio

In the first quarter, we closed a milestone reinsurance transaction with Global Atlantic on four in-force blocks of legacy/low ROE business, including the largest LTC reinsurance deal in history. We have commenced a share buyback program to return capital released from this transaction to our shareholders.

In Canada, we entered into the largest universal life reinsurance agreement of its kind. The transaction, which closed on April 2, 2024, transferred $5.6 billion of insurance contract net liabilities to RGA Canada¹. The expected capital release of $0.8 billion represents an attractive 16.2 times earnings multiple and will be returned to shareholders through an ordinary share repurchase program. ²

In Asia, we continued to roll out our top-tier recognition and activation program, Manulife Pro, across the region with the recent expansion to Indonesia and Japan. The program provides selected agents with differentiated resources and tools, including dedicated underwriting support and enhanced customer engagement services with access to customer leads.

In Global WAM, we announced the closing of a $1.0 billion institutional fund - Manulife Capital Partners VII. The fund will invest in U.S. middle market companies across multiple industries, focusing on growth and high-yield opportunities.

In addition, we partnered with the Indonesia Investment Authority sovereign wealth fund to raise and manage funds for investment. The partnership involves co-investments between the sovereign wealth fund, Manulife, and third-party investors in Indonesian infrastructure, real estate, and the natural capital sectors, which include timberland and agriculture assets.

We are enhancing our digital leadership, delivering better customer experience and superior distribution capabilities

In Asia, we completed the roll-out of M-Pro, a first-in-market digital pre-issuance verification tool, to all distribution channels in Vietnam. M-Pro has further improved customer experience and we have received outstanding feedback on the ease of navigating policy issuance details, ability to review crucial policy information and transparency of the consultation process.

In the U.S., we accelerated our distribution team’s ability to act on sales opportunities and improved their efficiency in assisting agents by implementing JHINI – our new, AI-powered, sales enablement tool.

In addition, we streamlined our underwriting process and improved our John Hancock customers’ experience by expanding our usage of electronic health records and leveraging other types of underwriting evidence, which have allowed us to eliminate certain medical test requirements for all ages and face amounts.

In Global WAM, we completed the implementation of a new advisor retail wealth platform in Canada as part of our digital transformation strategy, representing more than $54 billion in AUMA, by leveraging an industry leading technology platform. The platform delivers an enhanced advisor and client experience and enables advisors to streamline their processes.

We are helping our customers live longer, healthier, and better lives

In Canada, we entered into a multi-year loyalty rewards partnership agreement with Aeroplan. Beginning in early summer 2024, eligible Manulife group benefits members will be able to earn rewards points using our group benefits digital platforms by engaging in behaviours and activities that encourage health and well-being.

In the U.S., we drove a 43% improvement compared with 1Q23 in the number of visits to the Vitality page of JohnHancock.com supported by the launch of Your Year in Wellness – our first social-sharing campaign to raise awareness about the value of John Hancock Vitality.

 

1  RGA Life Reinsurance Company of Canada. Insurance contract net liabilities as of March 31, 2024. 2  See “Caution regarding forward-looking statements” below. Expected capital release and earnings multiple estimates were as of December 31, 2023.

 

 

Manulife Financial Corporation – First Quarter 2024		3

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Delivered strong core earnings growth, while net income reflected the impact of the GA Reinsurance Transaction with largely neutral impact to book value¹

Core earnings of $1.8 billion in 1Q24, up 16% from 1Q23

The 16% year-over-year increase in core earnings reflects strong business growth across our insurance businesses and higher fee income in Global WAM benefitting from favourable market impacts and positive net flows. Core earnings increased 39% in Asia and 25% in Global WAM compared with 1Q23. The provision for expected credit loss was a modest net release in 1Q24 compared with a net charge in 1Q23, reflecting a benign credit experience this quarter. Updates to actuarial methods and assumptions in the second half of 2023 also contributed to core earnings growth. These were partially offset by modestly more adverse insurance experience, and higher workforce-related costs primarily reflecting strong TSR² performance. The net impact of the GA Reinsurance Transaction on core earnings was a $18 million charge in 1Q24.

Net Income attributed to shareholders of $0.9 billion in 1Q24, $0.5 billion lower compared with 1Q23

The $0.5 billion decrease in net income reflects the $0.8 billion impact from the GA Reinsurance Transaction, partially offset by core earnings growth. Most of the GA Reinsurance Transaction impact is from the sale of debt instruments related to the transaction, which, is broadly offset by an associated change in Other Comprehensive Income resulting in a neutral impact to book value. This, along with lower-than-expected returns on alternative long-duration assets and higher-than-expected returns on public equity, resulted in a $0.8 billion market experience loss in 1Q24. The overall book value per common share increased 5% compared with 1Q23.

Record levels of new insurance business results and strong net inflows in Global WAM

Continued momentum in our 1Q24 new business results with year-over-year growth across all insurance segments, resulting in increases of 21%, 52% and 34% in APE sales, new business CSM and NBV, respectively

 

•

In Asia, APE sales increased 13% from 1Q23, driven by growth in Asia Other and Japan, partially offset by lower sales in Hong Kong. Business mix and the impact of updates to actuarial methods and assumptions in the prior year further contributed to a 68% growth in new business CSM. NBV also increased 28% compared with 1Q23. The improvement in NBV margin was driven by our pricing discipline and changes in business mix.

 

•

Canada generated 54% growth in APE sales, driven by higher sales volumes in all business units, led by large-case Group Insurance sales. Combined with margin expansion in our insurance businesses, NBV and new business CSM increased 71% and 52%, respectively.

 

•

In the U.S., APE sales increased 14%, reflecting an increase in demand from affluent customers for accumulation insurance products. Combined with product mix, this led to a 3% and 9% increase in new business CSM and NBV, respectively.

Global WAM net inflows of $6.7 billion in 1Q24, increased $2.3 billion compared with $4.4 billion in 1Q23

 

•

Retirement net inflows of $3.2 billion in 1Q24 increased from $1.2 billion in 1Q23, reflecting higher new retirement plan sales across our three geographies.

 

•

Retail net inflows of $1.7 billion in 1Q24 increased from $0.8 billion in 1Q23, driven by increased demand for investment products amid equity market recovery and improved investor sentiment.

 

•

Institutional Asset Management net inflows of $1.8 billion in 1Q24 decreased compared with $2.5 billion in 1Q23 as higher fixed income mandates sales and lower money market redemptions were more than offset by higher redemptions in fixed income and equity mandates.

 

1  See section A1 “Profitability” in our 1Q24 MD&A for more information on notable items attributable to core earnings and net income attributed to shareholders. 2  Total shareholder return (“TSR”).

 

 

Manulife Financial Corporation – First Quarter 2024		4

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Increase in CSM balance driven by organic CSM growth and favourable impact of markets

CSM net of NCI¹ was $21,089 million as at March 31, 2024

CSM net of NCI increased $649 million compared with December 31, 2023. Organic CSM movement was an increase of $314 million in 1Q24, primarily driven by the impact of new business and interest accretion, partially offset by amortization recognized in core earnings. Insurance experience improved both quarter-over-quarter and year-over-year. Inorganic CSM movement was an increase of $335 million for the same period, primarily driven by the favourable impacts of equity market performance and changes in foreign currency exchange rates, partially offset by the impact of the GA Reinsurance Transaction. Post-tax CSM net of NCI² was $18,547 million as at March 31, 2024.

 

1  Non-controlling interests (“NCI”). 2  Post-tax contractual service margin net of NCI (“post-tax CSM net of NCI”) is a non-GAAP financial measure. For more information on non-GAAP and other financial measures, see “Non-GAAP and other financial measures” in our 1Q24 MD&A.

 

 

Manulife Financial Corporation – First Quarter 2024		5

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MANAGEMENT’S DISCUSSION AND ANALYSIS

This Management’s Discussion and Analysis (“MD&A”) is current as of May 8, 2024, unless otherwise noted. This MD&A should be read in conjunction with our unaudited Interim Consolidated Financial Statements for the three months ended March 31, 2024 and the MD&A and audited Consolidated Financial Statements contained in our 2023 Annual Report.

For further information relating to our risk management practices and risk factors affecting the Company, see “Risk Management and Risk Factors” and “Critical Actuarial and Accounting Policies” in the MD&A in our 2023 Annual Report (“2023 MD&A”) and the “Risk Management” note to the Consolidated Financial Statements in our most recent annual and interim reports.

In this MD&A, the terms “Company”, “Manulife”, “we” and “our” mean Manulife Financial Corporation (“MFC”) and its subsidiaries. All amounts are reported in Canadian dollars, unless otherwise indicated. Any information contained in, or otherwise accessible through, websites mentioned in this MD&A does not form a part of this document.

CONTENTS

 

 

A.		TOTAL COMPANY PERFORMANCE
1.		Profitability
2.		Business performance
3.		Financial strength
4.		Assets under management and administration
5.		Impact of foreign currency exchange rates
6.		Business highlights
7.		Embedded Value
8.		Normal course issuer bid update
B.		PERFORMANCE BY SEGMENT
1.		Asia
2.		Canada
3.		U.S.
4.		Global Wealth and Asset Management
5.		Corporate and Other

C.		RISK MANAGEMENT AND RISK FACTORS UPDATE
1.		Variable annuity and segregated fund guarantees
2.		Caution related to sensitivities
3.		Publicly traded equity performance risk sensitivities and exposure measures
4.		Interest rate and spread risk sensitivities and exposure measures
5.		Alternative long-duration asset performance risk sensitivities and exposure measures
6.		Risk management and risk factors update
D.		CRITICAL ACTUARIAL AND ACCOUNTING POLICIES
1.		Critical actuarial and accounting policies
2.		Sensitivity to changes in assumptions
3.		Accounting and reporting changes
E.		OTHER
1.		Outstanding common shares – selected information
2.		Legal and regulatory proceedings
3.		Non-GAAP and other financial measures
4.		Caution regarding forward-looking statements
5.		Quarterly financial information
6.		Revenue
7.		Other

 

 

 

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A	TOTAL COMPANY PERFORMANCE

 

A1	Profitability

 

		Quarterly Results
($ millions, unless otherwise stated)		1Q24				4Q23				1Q23
Net income (loss) attributed to shareholders		$	866			$	1,659			$	1,406
Core earnings(1)		$	1,754			$	1,773			$	1,531
Diluted earnings (loss) per common share ($)		$	0.45			$	0.86			$	0.73
Diluted core earnings per common share (“Core EPS”) ($)(2)		$	0.94			$	0.92			$	0.79
ROE			8.0%				15.3%				13.6%
Core return on shareholders’ equity (“Core ROE”)(2)			16.7%				16.4%				14.8%
Expense efficiency ratio(2)			45.1%				45.5%				47.1%
General expenses		$	1,102			$	1,180			$	1,086
Core expenses(1)		$	1,673			$	1,725			$	1,605
(1)  This item is a non-GAAP financial measure. See “Non-GAAP and other financial measures” below for more information. (2)  This item is a non-GAAP ratio. See “Non-GAAP and other financial measures” below for more information.

Manulife’s net income attributed to shareholders was $866 million in the first quarter of 2024 (“1Q24”) compared with $1,406 million in the first quarter of 2023 (“1Q23”). Net income attributed to shareholders is comprised of core earnings (consisting of items we believe reflect the underlying earnings capacity of the business), which amounted to $1,754 million in 1Q24 compared with $1,531 million in 1Q23, and items excluded from core earnings, which amounted to a net charge of $888 million in 1Q24 compared with a net charge of $125 million in 1Q23. The effective tax rate on net income (loss) attributed to shareholders was 22% in 1Q24 compared with 17% in 1Q23.

Net income attributed to shareholders in 1Q24 decreased $540 million compared with 1Q23, reflecting a net loss of $767 million from the reinsurance transaction with Global Atlantic (“GA Reinsurance Transaction”), primarily related to market experience from the sale of fair value through OCI (“FVOCI”) debt instruments (there is an offsetting change in Other Comprehensive Income attributed to shareholders resulting in a neutral impact to book value), partially offset by core earnings growth. The net charge from 1Q24 market experience was also driven by lower-than-expected returns on alternative long duration assets (“ALDA”) largely related to real estate, partially offset by higher-than-expected returns on public equity.

Core earnings increased $223 million or 16% on a constant exchange rate basis¹ compared with 1Q23. The increase in core earnings compared with 1Q23 was driven by strong business growth across all insurance businesses, the impact of updates to actuarial methods and assumptions in the second half of 2023 and higher fee income in Global Wealth and Asset Management (“Global WAM”) from higher average assets under management and administration² (“average AUMA”) and positive net flows². The provision for expected credit loss (“ECL”) was a modest net release in 1Q24 compared with a net charge in 1Q23, reflecting a benign credit experience. This was partially offset by modestly more adverse insurance experience, and higher workforce-related costs primarily reflecting strong TSR³ performance relative to peers and business performance. The net impact of the GA Reinsurance Transaction on core earnings was an $18 million charge in 1Q24 reflecting foregone earnings, primarily expected earnings on insurance contracts and expected investment earnings, partially offset by a release of ECL provisions on assets sold and higher expected investment earnings due to the timing of asset realignment.

 

1  Percentage growth / declines in core earnings, pre-tax core earnings, total expenses, core expenses, general expenses, contractual service margin (“CSM”) net of non-controlling interests (“NCI”), new business contractual service margin (“new business CSM”), assets under management and administration (“AUMA”), assets under management (“AUM”), core earnings before income taxes, depreciation and amortization (“core EBITDA”), and Manulife Bank average net lending assets are stated on a constant exchange rate basis, a non-GAAP ratio. See “Non-GAAP and other financial measures” below for more information. 2  For more information on this metric, see “Non-GAAP and other financial measures” below. 3  Total Shareholder Return.

 

 

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Core earnings by segment is presented in the table below.

 

Core earnings by segment		Quarterly Results
($ millions, unaudited)		1Q24				4Q23				1Q23
Asia		$	657			$	564			$	489
Canada			364				352				353
U.S.			452				474				385
Global Wealth and Asset Management			357				353				287
Corporate and Other			(76)				30				17
Total core earnings		$	1,754			$	1,773			$	1,531

The table below presents net income attributed to shareholders consisting of core earnings and items excluded from core earnings.

 

		Quarterly Results
($ millions, unaudited)		1Q24				4Q23				1Q23
Core earnings		$	1,754			$	1,773			$	1,531
Items excluded from core earnings:
Market experience gains (losses)(1)			(779)				(133)				(65)
Realized gains (losses) on debt instruments			(670)				(51)				(31)
Derivatives and hedge accounting ineffectiveness			(42)				34				93
Actual less expected long-term returns on public equity			216				182				108
Actual less expected long-term returns on ALDA			(255)				(381)				(364)
Other investment results			(28)				83				129
Changes in actuarial methods and assumptions that flow directly through income			–				119				–
Restructuring charge			–				(36)				–
Reinsurance transactions, tax-related items and other(2)			(109)				(64)				(60)
Total items excluded from core earnings			(888)				(114)				(125)
Net income (loss) attributed to shareholders		$	866			$	1,659			$	1,406

(1)

Market experience was a net charge of $779 million in 1Q24, primarily driven by net realized losses from debt instruments of which $568 million was related to the transfer of assets with respect to the GA Reinsurance Transaction, which are classified as fair value through other comprehensive income (“FVOCI”), lower-than-expected returns on ALDA mainly related to real estate, a charge from derivatives and hedge accounting ineffectiveness and a charge from unfavourable foreign exchange impacts. These were partially offset by a gain from higher-than-expected returns on public equity. Market experience was a net charge of $65 million in 1Q23 primarily driven by lower-than-expected returns on ALDA related to real estate and private equity, and net realized losses from the sale of debt instruments which are classified as FVOCI. These were partially offset by higher-than-expected returns on public equity, favourable foreign exchange impacts and a modest net gain from derivatives and hedge accounting ineffectiveness.

(2)

The 1Q24 net charge of $109 million mainly included a charge of $70 million resulting from the GA Reinsurance Transaction in the U.S and Japan, and a charge of $48 million related to U.S. withholding taxes on anticipated remittances associated with the reinsurance transaction discussed above. The 1Q23 net charge of $60 million mainly included a charge of $33 million related to legal settlements in U.S. and a charge of $28 million related to a jurisdictional adjustment to a deferred tax asset in Corporate and Other.

Net income attributed to shareholders by segment is presented in the following table.

 

Net income attributed to shareholders by segment		Quarterly Results
($ millions, unaudited)		1Q24				4Q23				1Q23
Asia		$	363			$	615			$	519
Canada			273				365				309
U.S.			(108)				198				186
Global Wealth and Asset Management			365				365				297
Corporate and Other			(27)				116				95
Total net income attributed to shareholders		$	866			$	1,659			$	1,406

 

 

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Expense efficiency ratio

The expense efficiency ratio is a financial measure which we use to measure progress on our strategic priority of expense efficiency and reflects expenses that flow directly through core earnings (“core expenses”). Core expenses include core general expenses, directly attributable maintenance expenses and directly attributable acquisition expenses for products measured using the premium allocation approach (“PAA”). Core expenses exclude certain expenses directly attributable to acquiring new business that are capitalized into the CSM instead of flowing directly through core earnings.

The expense efficiency ratio was 45.1% in 1Q24, compared with 47.1% in 1Q23. The 2.0 percentage point improvement in the ratio compared with 1Q23 reflects a 15% increase in pre-tax core earnings¹, and a 5% increase in core expenses. The increase in core expenses was driven by higher workforce-related costs, including long-term incentive compensation, reflecting strong TSR performance relative to peers, and performance related costs reflecting strong business performance.

Total 1Q24 general expenses increased 2% both on an actual exchange rate basis and on a constant exchange rate basis compared with 1Q23, driven by the items noted above related to the increase in core expenses and items outside of core earnings. General expenses excluded from core earnings were not material in 1Q24, and in 1Q23, consisted primarily of a true-up of an existing legal provision in 1Q23.

 

A2	Business performance

 

		Quarterly Results
($ millions, unless otherwise stated) (unaudited)		1Q24				4Q23				1Q23
Asia APE sales		$	1,281			$	995			$	1,173
Canada APE sales			450				363				293
U.S. APE sales			152				192				134
Total APE sales(1)			1,883				1,550				1,600
Asia new business value			463				417				372
Canada new business value			157				139				92
U.S. new business value			49				74				45
Total new business value(1)			669				630				509
Asia new business CSM(2)			491				414				301
Canada new business CSM			70				70				46
U.S. new business CSM			97				142				95
Total new business CSM(2)			658				626				442
Asia CSM net of NCI			13,208				12,617				9,678
Canada CSM			4,205				4,060				3,659
U.S. CSM			3,649				3,738				4,080
Corporate and Other CSM			27				25				50
Total CSM net of NCI			21,089				20,440				17,467
Post-tax CSM net of NCI(3)			18,547				17,748				14,850
Global WAM gross flows ($ billions)(1)			45.4				35.1				38.8
Global WAM net flows ($ billions)(1)			6.7				(1.3)				4.4
Global WAM assets under management and administration ($ billions)(3)			911.4				849.2				814.5
Global WAM total invested assets ($ billions)			8.1				7.1				5.6
Global WAM segregated funds net assets ($ billions)			266.2				248.1				235.6
Total assets under management and administration ($ billions)(3),(4)			1,450.0				1,388.8				1,349.9
Total invested assets ($ billions)(4)			410.7				417.2				412.5
Segregated funds net assets ($ billions)(4)			402.1				377.5				364.0

(1)  For more information on this metric, see “Non-GAAP and other financial measures” below. (2)  New business CSM is net of NCI. (3)  This item is a non-GAAP financial measure. See “Non-GAAP and other financial measures” below for more information. (4)  See section A4 below for more information.

 

 

 

1	This is a non-GAAP financial measure. See “Non-GAAP and other financial measures” below for more information.

 

 

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Annualized premium equivalent (“APE”) sales were $1.9 billion in 1Q24, an increase of 21%¹ compared with 1Q23, new business value (“NBV”) was $669 million in 1Q24, an increase of 34%¹ compared with 1Q23 and new business CSM was $658 million, an increase of 52% compared with 1Q23. New business results by segment were as follows:

 

•

In Asia, APE sales increased 13% compared with 1Q23, driven by growth in Asia Other2 and Japan, partially offset by lower sales in Hong Kong. Business mix and the impact of updates to actuarial methods and assumptions in the second half of 2023 further contributed to a 68% increase in new business CSM compared with 1Q23. NBV also increased 28% compared with 1Q23.

 

•

Canada generated 54% growth in APE sales compared with 1Q23, driven by higher sales volumes in all business units, led by large-case Group Insurance sales. Combined with margin expansion in our insurance businesses, NBV and new business CSM increased 71% and 52%, respectively compared with 1Q23.

 

•

In the U.S., APE sales increased 14% compared with 1Q23, reflecting an increase in demand from affluent customers for accumulation insurance products. Combined with product mix, this led to a 3% and 9% increase in new business CSM and NBV, respectively, compared with 1Q23.

The contractual service margin (“CSM”) net of NCI was $21,089 million as at March 31, 2024, an increase of $649 million compared with December 31, 2023. Organic CSM movement was an increase of $314 million in 1Q24, primarily driven by the impact of new business and interest accretion, partially offset by amortization recognized in core earnings. Insurance experience improved compared with both the fourth quarter of 2023 and 1Q23. Inorganic CSM movement was an increase of $335 million in 1Q24, primarily driven by the favourable impacts of equity market performance and changes in foreign currency exchange rates, partially offset by the impact of the GA Reinsurance Transaction.

Global WAM reported net inflows were $6.7 billion in 1Q24 compared with net inflows of $4.4 billion in 1Q23:

 

•

Retirement net inflows of $3.2 billion in 1Q24 increased from net inflows of $1.2 billion in 1Q23, reflecting higher new retirement plan sales across our three geographies.

 

•

Retail net inflows of $1.7 billion in 1Q24 increased from net inflows of $0.8 billion in 1Q23, driven by increased demand for investment products amid equity market recovery and improved investor sentiment.

 

•

Institutional Asset Management net inflows of $1.8 billion in 1Q24 decreased compared with net inflows of $2.5 billion in 1Q23, as higher fixed income mandates sales and lower money market redemptions were more than offset by higher redemptions in fixed income and equity mandates.

 

A3	Financial strength

 

		Quarterly Results
(unaudited)		1Q24				4Q23				1Q23
MLI’s LICAT ratio(1)			138%				137%				138%
Financial leverage ratio(2)			24.3%				24.3%				26.0%
Consolidated capital ($ billions)(3)		$	76.4			$	73.9			$	71.6
Book value per common share ($)		$	23.09			$	22.36			$	22.01
Adjusted book value per common share ($)(2)		$	33.39			$	32.19			$	30.04

(1)  This item is disclosed under OSFI’s Life Insurance Capital Adequacy Test Public Disclosure Requirements guideline. (2)  This item is a non-GAAP ratio. See “Non-GAAP and other financial measures” below for more information. (3)  This item is a capital management measure. For more information on this metric, see “Non-GAAP and other financial measures” below.

The Life Insurance Capital Adequacy Test (“LICAT”) ratio for The Manufacturers Life Insurance Company (“MLI”) as at March 31, 2024 was 138% compared with 137% as at December 31, 2023. The 1 percentage point increase was driven by a capital issuance, partially offset by market movements and common share buybacks.

 

1  Percentage growth / declines in APE sales and NBV are stated on a constant exchange rate basis. 2  Asia Other excludes Hong Kong and Japan.

 

 

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MFC’s LICAT ratio was 126% as at March 31, 2024 compared with 124% as at December 31, 2023, with the increase driven by similar factors that impacted the movement in MLI’s LICAT ratio. The difference between the MLI and MFC ratios as at March 31, 2024 was largely due to the $6.2 billion of MFC senior debt outstanding that does not qualify as available capital at the MFC level but, based on the form it was down-streamed, qualifies as regulatory capital for MLI.

MFC’s financial leverage ratio as at March 31, 2024 was 24.3%, in line with the ratio as at December 31, 2023. The impact of the net issuance of capital instruments¹ was offset by an increase in total equity and higher post-tax CSM.² The increase in total equity was mainly from 1Q24 total comprehensive income, partially offset by dividends.

MFC’s consolidated capital was $76.4 billion as at March 31, 2024, an increase of $2.5 billion compared with $73.9 billion as at December 31, 2023. The increase was primarily driven by an increase in total equity, higher post-tax CSM, and net issuance of capital instruments.¹ The increase in total equity was from 1Q24 total comprehensive income, partially offset by dividends and common share buybacks.

Cash and cash equivalents and marketable securities³ was $242.1 billion as at March 31, 2024 compared with $250.7 billion as at December 31, 2023. The decrease was primarily driven by the lower market value of debt instruments due to higher interest rates.

Book value per common share as at March 31, 2024 was $23.09, a 3% increase compared with $22.36 as at December 31, 2023. The number of common shares outstanding was 1,801 million as at March 31, 2024, a net decrease of 5 million shares from 1,806 million as at December 31, 2023, primarily driven by common share buybacks.

Adjusted book value per common share as at March 31, 2024 was $33.39, a 4% increase compared with $32.19 as at December 31, 2023 driven by an increase in the adjusted book value⁴ and a lower number of common shares outstanding. Adjusted book value increased $2.0 billion due to growth in total common shareholders’ equity and an increase in post-tax CSM, net of NCI. The increase in common shareholders’ equity reflects the impact of growth in total comprehensive income, partially offset by dividends and common share buybacks.

 

A4	Assets under management and administration (“AUMA”)

AUMA as at March 31, 2024 was $1.4 trillion, an increase of 3% compared with December 31, 2023, primarily due to the favourable impact of interest rates and equity markets and net inflows. Total invested assets decreased 2% on an actual exchange rate basis, primarily due to the transfer of invested assets related to the GA Reinsurance Transaction. Segregated funds net assets increased 7% on an actual exchange rate basis, primarily due to the impact of equity markets.

 

A5	Impact of foreign currency exchange rates

Changes in foreign currency exchange rates from 1Q23 to 1Q24 reduced core earnings by $27 million in 1Q24, primarily due to a stronger Canadian dollar relative to the Japanese Yen. The impact of foreign currency exchange rates on items excluded from core earnings does not provide relevant information given the nature of those items.

 

 

 

1  The net issuance of subordinated debt consists of the issuance of $1.1 billion of subordinated debt and the redemption of $0.6 billion of JHUSA Surplus Notes in the first quarter of 2024. 2  This item is a non-GAAP financial measure. See “Non-GAAP and other financial measures” below for more information. 3  Includes cash & cash equivalents, comprised of cash on deposit, Canadian and U.S. Treasury Bills and high quality short-term investments, and marketable assets, comprised of investment grade government and agency bonds, investment grade corporate bonds, investment grade securitized instruments, publicly traded common stocks and preferred shares. 4  This item is a non-GAAP financial measure. See “Non-GAAP and other financial measures” below for more information.

 

 

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A6	Business highlights

We are delivering against our strategy to optimize our portfolio

In the first quarter, we closed a milestone reinsurance transaction with Global Atlantic on four in-force blocks of legacy/low ROE business, including the largest LTC reinsurance deal in history. We have commenced a share buyback program to return capital released from this transaction to our shareholders.

In Canada, we entered into the largest universal life reinsurance agreement of its kind. The transaction, which closed on April 2, 2024, transferred $5.6 billion of insurance contract net liabilities to RGA Canada¹. The expected capital release of $0.8 billion represents an attractive 16.2 times earnings multiple and will be returned to shareholders through an ordinary share repurchase program.²

In Asia, we continued to roll out our top-tier recognition and activation program, Manulife Pro, across the region with the recent expansion to Indonesia and Japan. The program provides selected agents with differentiated resources and tools, including dedicated underwriting support and enhanced customer engagement services with access to customer leads.

In Global WAM, we announced the closing of a $1.0 billion institutional fund - Manulife Capital Partners VII. The fund will invest in U.S. middle market companies across multiple industries, focusing on growth and high-yield opportunities.

In addition, we partnered with the Indonesia Investment Authority sovereign wealth fund to raise and manage funds for investment. The partnership involves co-investments between the sovereign wealth fund, Manulife, and third-party investors in Indonesian infrastructure, real estate, and the natural capital sectors, which include timberland and agriculture assets.

We are enhancing our digital leadership, delivering better customer experience and superior distribution capabilities

In Asia, we completed the roll-out of M-Pro, a first-in-market digital pre-issuance verification tool, to all distribution channels in Vietnam. M-Pro has further improved customer experience and we have received outstanding feedback on the ease of navigating policy issuance details, ability to review crucial policy information and transparency of the consultation process.

In the U.S., we accelerated our distribution team’s ability to act on sales opportunities and improved their efficiency in assisting agents by implementing JHINI – our new, AI-powered, sales enablement tool.

In addition, we streamlined our underwriting process and improved our John Hancock customers’ experience by expanding our usage of electronic health records and leveraging other types of underwriting evidence, which have allowed us to eliminate certain medical test requirements for all ages and face amounts.

In Global WAM, we completed the implementation of a new advisor retail wealth platform in Canada as part of our digital transformation strategy representing more than $54 billion in AUMA by leveraging an industry leading technology platform. The platform delivers an enhanced advisor and client experience and enables advisors to streamline their processes.

We are helping our customers live longer, healthier, and better lives

In Canada, we entered into a multi-year loyalty rewards partnership agreement with Aeroplan. Beginning in early summer 2024, eligible Manulife group benefits members will be able to earn rewards points using our group benefits digital platforms by engaging in behaviours and activities that encourage health and well-being.

In the U.S., we drove a 43% improvement compared with 1Q23 in the number of visits to the Vitality page of JohnHancock.com supported by the launch of Your Year in Wellness – our first social-sharing campaign to raise awareness about the value of John Hancock Vitality.

 

1  RGA Life Reinsurance Company of Canada. Insurance contract net liabilities as of March 31, 2024. 2  See “Caution regarding forward-looking statements” below. Expected capital release and earnings multiple estimates were as of December 31, 2023.

 

 

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A7	Embedded value

Embedded value was $61.0 billion or $33.78 per common share, as of December 31, 2023, compared with $59.4 billion or $31.87 per common share as of January 1, 2023.¹ More information about embedded value can be found in our 2023 Embedded Value report, which is available on our website.

 

A8	Normal course issuer bid update

On February 20, 2024, we received approval from the Toronto Stock Exchange (“TSX”) to launch a normal course issuer bid (“NCIB”) that permits the purchase for cancellation of up to 50 million common shares, representing approximately 2.8% of issued and outstanding common shares. Purchases under the NCIB commenced on February 23, 2024 and may continue until February 22, 2025, when the NCIB expires, or such earlier date as we complete our purchases. During the three months ended March 31, 2024, we purchased for cancellation 6.2 million shares for $203 million.

On May 7, 2024, we announced that the TSX approved an amendment to the existing NCIB to increase the number of common shares that we may repurchase for cancellation from up to 50 million common shares (approximately 2.8% of shares outstanding) to up to 90 million common shares (approximately 5% of shares outstanding as at February 12, 2024).

 

B	PERFORMANCE BY SEGMENT

 

B1

Asia

 

($ millions, unless otherwise stated)		Quarterly Results
Canadian dollars				1Q24						4Q23						1Q23
Profitability:
Net income attributed to shareholders		$			363			$			615			$			519
Core earnings(1)					657						564						489
Business performance:
Annualized premium equivalent sales					1,281						995						1,173
New business value					463						417						372
New business contractual service margin					491						414						301
Contractual service margin					13,208						12,617						9,678
Assets under management ($ billions)(2)					170.9						169.3						162.2
Total invested assets ($ billions)					144.7						144.4						138.0
Segregated funds net assets ($ billions)					26.2						24.9						24.2
U.S. dollars
Profitability:
Net income attributed to shareholders		US$			270			US$			452			US$			384
Core earnings(1)					488						414						361
Business performance:
Annualized premium equivalent sales					950						731						868
New business value					343						306						275
New business contractual service margin					364						303						222
Contractual service margin					9,748						9,570						7,156
Assets under management ($ billions)(2)					126.2						128.4						119.9
Total invested assets ($ billions)					106.9						109.5						102.0
Segregated funds net assets ($ billions)					19.3						18.9						17.9

(1)  See “Non-GAAP and other financial measures” below for a reconciliation of quarterly core earnings to net income (loss) attributed to shareholders. (2)  This item is a non-GAAP financial measure. See “Non-GAAP and other financial measures” below for more information.

 

 

 

1	January 1, 2023 and December 31, 2023 embedded value results reflect updates to the calculation methodology. See “Non-GAAP and other financial measures” below for more information.

 

 

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Asia’s net income attributed to shareholders was $363 million in 1Q24 compared with $519 million in 1Q23. Net income attributed to shareholders is comprised of core earnings, which were $657 million in 1Q24 compared with $489 million in 1Q23, and items excluded from core earnings, which amounted to a net charge of $294 million in 1Q24 compared with a net gain of $30 million in 1Q23. See section E3 “Non-GAAP and other financial measures” below, for a reconciliation of quarterly core earnings to net income (loss) attributed to shareholders and section A1 “Profitability” above, for explanations of the items excluded from core earnings. The changes in core earnings expressed in Canadian dollars were due to the factors described below and additionally, reflected a net $24 million unfavourable impact due to changes in various foreign currency exchange rates versus the Canadian dollar.

Expressed in U.S. dollars, the presentation currency of the segment, net income attributed to shareholders was US$270 million in 1Q24 compared with US$384 million in 1Q23. Core earnings were US$488 million in 1Q24 compared with US$361 million in 1Q23, and items excluded from core earnings were a net charge of US$218 million in 1Q24 compared with a net gain of US$23 million in 1Q23.

Core earnings in 1Q24 increased 39% compared with 1Q23, driven by an increase in expected earnings on insurance contracts, favourable claims experience, and higher expected investment income due to business growth and higher investment yields. The increase in expected earnings on insurance contracts was driven primarily by the net impact of updates to actuarial methods and assumptions on our CSM and risk adjustment in the second half of 2023, and business growth. Investment income on allocated capital also increased core earnings by US$19 million compared with 1Q23 (see Corporate and Other segment). In addition, the GA Reinsurance Transaction increased core earnings by US$6 million in 1Q24 driven by a release of ECL provisions on assets sold and higher expected investment earnings due to the timing of asset realignment, partially offset by foregone earnings.

APE sales were US$950 million in 1Q24, an increase of 13% compared with 1Q23, driven by growth in Asia Other and Japan, partially offset by lower sales in Hong Kong. NBV was US$343 million in 1Q24, an increase of 28% compared with 1Q23, driven by higher sales volumes and business mix. New business value margin (“NBV margin”)¹ was 44.4% in 1Q24 compared with 37.3% in 1Q23. New business CSM was US$364 million in 1Q24, an increase of 68% compared with 1Q23, due to higher sales volumes, business mix and the impact of updates to actuarial methods and assumptions in the second half of 2023.

 

•

Hong Kong APE sales were US$190 million in 1Q24, a decrease of 10% compared with 1Q23 reflecting lower mainland Chinese visitor sales through the broker channel, partially offset by higher sales in the bancassurance channel. Hong Kong NBV was US$128 million in 1Q24, an increase of 15% compared with 1Q23 due to product mix, partially offset by lower sales volumes. Hong Kong NBV margin was 67.7% in 1Q24, an increase of 15.5 percentage points compared with 1Q23. Hong Kong new business CSM was US$124 million in 1Q24, an increase of 41%, compared with 1Q23 due to product mix and the impact of updates to actuarial methods and assumptions in the second half of 2023, partially offset by lower sales volumes.

 

•

Japan APE sales were US$76 million in 1Q24, an increase of 23% compared with 1Q23, reflecting higher sales in other wealth products. Japan NBV was US$39 million in 1Q24, an increase of 54% compared with 1Q23 due to higher sales volumes and product mix. Japan NBV margin was 50.9% in 1Q24, an increase of 10.1 percentage points compared with 1Q23. Japan new business CSM was US$36 million in 1Q24, an increase of 51% compared with 1Q23, due to higher sales volumes, product mix and the impact of updates to actuarial methods and assumptions in the second half of 2023, partially offset by model refinements in the second quarter of 2023.

 

 

1	For more information on this metric, see “Non-GAAP and other financial measures” below.

 

 

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•

Asia Other APE sales were US$684 million in 1Q24, an increase of 20% compared with 1Q23. Higher sales in mainland China, primarily driven by the bancassurance channel, and higher sales in Singapore across all channels were partially offset by lower agency and bancassurance sales in Vietnam. Asia Other NBV was US$176 million in 1Q24, an increase of 33% compared with 1Q23, due to higher sales volumes and product mix. Asia Other NBV margin was 34.8% in 1Q24, an increase of 5.0 percentage points compared with 1Q23. Asia Other new business CSM was US$204 million in 1Q24, an increase of 94% compared with 1Q23, driven by higher sales volumes, product mix and the impact of updates to actuarial methods and assumptions in the second half of 2023.

CSM net of NCI was US$9,748 million as at March 31, 2024, representing an increase of US$178 million compared with December 31, 2023. Organic CSM movement was an increase of US$163 million in 1Q24, driven by the impact of new business and interest accretion, partially offset by amortization recognized in core earnings and a net reduction from insurance experience. The inorganic CSM movement was an increase of US$15 million in 1Q24, largely driven by the impact of equity market performance on certain participating contracts, partially offset by strengthening of the U.S. dollar against Asian currencies. There were no material impacts to CSM net of NCI from the GA Reinsurance Transaction.

Assets under management of US$126.2 billion as at March 31, 2024, were in line with December 31, 2023. The increase was due to lower interest rates and positive equity market performance on invested assets and segregated funds net assets, and was offset by the transfer of invested assets related to the GA Reinsurance Transaction.

Business highlights – In 1Q24, we:

 

•

continued to roll out our top-tier recognition and activation program, Manulife Pro, across the region with the recent expansion to Indonesia and Japan. The program provides selected agents with differentiated resources and tools, including dedicated underwriting support and enhanced customer engagement services with access to customer leads. Manulife Pro has proven successful in Singapore where the 2023 cohort has shown great momentum in enabling our top-tier agents to improve productivity and qualify for the Million Dollar Round Table award; and

 

•

completed the roll-out of M-Pro, a first-in-market digital pre-issuance verification tool, to all distribution channels in Vietnam. M-Pro has further improved customer experience and we have received outstanding feedback on the ease of navigating policy issuance details, ability to review crucial policy information and transparency of the consultation process.

 

B2

Canada

 

		Quarterly Results
($ millions, unless otherwise stated)		1Q24				4Q23				1Q23
Profitability:
Net income attributed to shareholders		$	273			$	365			$	309
Core earnings(1)			364				352				353
Business performance:
Annualized premium equivalent sales			450				363				293
Contractual service margin			4,205				4,060				3,659
Manulife Bank average net lending assets ($ billions)(2)			25.4				25.2				24.8
Assets under management ($ billions)			146.7				147.5				143.9
Total invested assets ($ billions)			109.5				111.5				107.5
Segregated funds net assets ($ billions)			37.2				36.1				36.4

(1)	See “Non-GAAP and other financial measures” below for a reconciliation of quarterly core earnings to net income (loss) attributed to shareholders.

(2)	This item is a non-GAAP financial measure. See “Non-GAAP and other financial measures” below for more information.

 

 

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Canada’s net income attributed to shareholders was $273 million in 1Q24 compared with $309 million in 1Q23. Net income attributed to shareholders is comprised of core earnings, which were $363 million in 1Q24 compared with $353 million in 1Q23, and items excluded from core earnings, which amounted to a net charge of $91 million in 1Q24 compared with a net charge of $44 million in 1Q23. See section E3 “Non-GAAP and other financial measures” below, for a reconciliation of quarterly core earnings to net income (loss) attributed to shareholders and section A1 “Profitability” above, for explanations of the items excluded from core earnings.

Core earnings in 1Q24 increased $11 million or 3% compared with 1Q23, reflecting business growth in our insurance businesses, a release in the provision for ECL in 1Q24 compared with charges in 1Q23 and favourable insurance experience in Group Insurance. These amounts were partially offset by lower investment spreads, and more unfavourable insurance experience in Individual Insurance.

APE sales of $450 million in 1Q24 increased by $157 million or 54% compared with 1Q23.

 

•

Individual insurance APE sales of $109 million in 1Q24 increased $8 million or 8% compared with 1Q23, primarily due to higher participating life insurance sales.

 

•

Group insurance APE sales of $273 million in 1Q24 increased $140 million or 105% compared with 1Q23, driven by higher sales across all markets, led by large-case sales.

 

•

Annuities APE sales of $68 million in 1Q24 increased $9 million or 15% compared with 1Q23, primarily due to higher segregated fund and fixed annuity sales.

CSM was $4,205 million as at March 31, 2024, representing an increase of $145 million compared with December 31, 2023. Organic CSM movement was an increase of $26 million in 1Q24, driven by the impact of new business and interest accretion, partially offset by amortization recognized in core earnings. Inorganic CSM movement was an increase of $119 million in 1Q24, primarily related to favourable equity market experience on certain variable annuity contracts.

Manulife Bank average net lending assets for the quarter were $25.4 billion as at March 31, 2024, up $0.2 billion or 1% compared with December 31, 2023, driven by improved retention and business growth.

Assets under management were $146.7 billion as at March 31, 2024, in line with December 31, 2023, due to lower total invested assets, reflecting the impact of higher interest rates, partially offset by higher segregated fund net assets, primarily related to equity market performance.

Business highlights – In 1Q24, we:

 

•

continued our transformation journey by entering into the largest universal life reinsurance transaction in Canada. The transaction, which successfully closed on April 2, 2024, transferred $5.6 billion of insurance contract net liabilities to RGA Canada1. The expected capital release of $0.8 billion represents an attractive 16.2 times earnings multiple and will be returned to shareholders through an ordinary share repurchase program2;

 

•

entered into a multi-year loyalty rewards partnership agreement with Aeroplan. Beginning in early summer 2024, eligible Manulife group benefits members will be able to earn rewards points using our group benefits digital platforms by engaging in behaviours and activities that encourage health and well-being; and

 

•

continued our commitment to empowering sustainable health and well-being with charitable donations to the Centre for Addiction and Mental Health, supporting women’s mental health and well-being, and to the St. Mary’s General Hospital PREVENT Clinic, focused on preventing cardiac events.

 

1  RGA Life Reinsurance Company of Canada. Insurance contract net liabilities as of March 31, 2024. 2  See “Caution regarding forward-looking statements” below. Expected capital release and earnings multiple estimates were as of December 31, 2023.

 

 

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B3

U.S.

 

($ millions, unless otherwise stated)		Quarterly Results
Canadian dollars						1Q24						4Q23						1Q23
Profitability:
Net income (loss) attributed to shareholders		$					(108)			$			198			$			186
Core earnings(1)							452						474						385
Business performance:
Annualized premium equivalent sales							152						192						134
Contractual service margin							3,649						3,738						4,080
Assets under management ($ billions)							202.4						202.5						204.4
Total invested assets ($ billions)							129.9						134.0						136.5
Segregated funds invested net assets ($ billions)							72.5						68.5						67.9
U.S. dollars
Profitability:
Net income (loss) attributed to shareholders		US$					(80)			US$			146			US$			138
Core earnings(1)							335						349						285
Business performance:
Annualized premium equivalent sales							113						141						99
Contractual service margin							2,691						2,828						3,016
Assets under management ($ billions)							149.6						153.6						151.0
Total invested assets ($ billions)							96.0						101.6						100.8
Segregated funds invested net assets ($ billions)							53.6						52.0						50.2

(1)	See “Non-GAAP and other financial measures” below for a reconciliation of quarterly core earnings to net income (loss) attributed to shareholders.

U.S.’s net loss attributed to shareholders was $108 million in 1Q24 compared with net income attributed to shareholders of $186 million in 1Q23. Net income (loss) attributed to shareholders is comprised of core earnings, which were $452 million in 1Q24 compared with $385 million in 1Q23, and items excluded from core earnings, which amounted to a net charge of $560 million in 1Q24 compared with a net charge of $199 million in 1Q23. See section E3 “Non-GAAP and other financial measures” below, for a reconciliation of quarterly core earnings to net income (loss) attributed to shareholders and section A1 “Profitability” above, for explanations of the items excluded from core earnings. The changes in core earnings expressed in Canadian dollars were due to the factors described below. The impact on core earnings from the change in the foreign currency rate of the U.S. dollar compared with the Canadian dollar was immaterial.

Expressed in U.S. dollars, the functional currency of the segment, the net loss attributed to shareholders was US$80 million in 1Q24 compared with net income attributed to shareholders of US$138 million in 1Q23. Core earnings were US$335 million in 1Q24 compared with US$285 million in 1Q23 and items excluded from core earnings were a net charge of US$415 million in 1Q24 compared with a net charge of US$147 million in 1Q23.

Core earnings in 1Q24 increased US$50 million or 18% compared with 1Q23 reflecting an increase in the ECL provision in 1Q23 and higher expected investment earnings due to higher yields and business growth. These impacts were partially offset by more unfavourable net insurance experience, primarily due to more unfavourable claims experience in long-term care and lapse experience in life. In addition, the GA Reinsurance Transaction reduced core earnings by US$19 million reflecting foregone earnings, primarily from expected earnings on insurance contracts and expected investment earnings, partially offset by a release of ECL provisions on assets sold.

APE sales of US$113 million in 1Q24 increased 14% compared with 1Q23, reflecting an increase in demand from affluent customers for accumulation insurance products. APE sales of products with the John Hancock Vitality PLUS feature represented 81% of overall U.S. sales in 1Q24 compared with 74% in 1Q23.

 

 

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CSM was US$2,691 million as at March 31, 2024, representing a decrease of US$137 million compared with December 31, 2023. Organic CSM movement was an increase of US$50 million in 1Q24, driven by the impact of new business, interest accretion, and net favourable insurance experience, partially offset by amortization recognized in core earnings. The net favourable insurance experience in organic CSM movement was mainly due to long-term care and annuities claims experience, partially offset by life insurance lapse experience. Inorganic CSM movement was a decrease of US$187 million in 1Q24, mainly due to the impact of the GA Reinsurance Transaction, partially offset by favourable market impacts from equity market experience and higher interest rates primarily on variable annuity contracts.

Assets under management were US$149.6 billion as at March 31, 2024, a decrease of US$4.0 billion or 3% compared with December 31, 2023. The decrease in total invested assets was primarily due to the transfer of invested assets related to the GA Reinsurance Transaction, partially offset by the net impact from interest rate and equity markets. The increase in the segregated funds net assets was primarily due to the net impact from interest rate and equity markets.

Business highlights – In 1Q24, we:

 

•

accelerated our distribution team’s ability to act on sales opportunities and improved their efficiency in assisting agents by implementing JHINI – our new, AI-powered, sales enablement tool;

 

•

streamlined our underwriting process and improved our customers’ experience by expanding our usage of electronic health records and leveraging other types of underwriting evidence, which have allowed us to eliminate certain medical test requirements for all ages and face amounts; and

 

•

drove a 43% improvement compared with 1Q23 in the number of visits to the Vitality page of JohnHancock.com supported by the launch of Your Year in Wellness – our first social-sharing campaign to raise awareness about the value of John Hancock Vitality.

 

B4	Global Wealth and Asset Management

 

		Quarterly Results
($ millions, unless otherwise stated)				1Q24						4Q23						1Q23
Profitability:
Net income attributed to shareholders		$			365					$	365			$			297
Core earnings(1)					357						353						287
Core EBITDA(2)					477						474						393
Core EBITDA margin (%)(3)					25.5%						25.7%						22.4%
Business performance:
Sales
Wealth and asset management gross flows					45,444						35,148						38,815
Wealth and asset management net flows					6,723						(1,284)						4,440
Assets under management and administration ($ billions)					911.4						849.2						814.5
Total invested assets ($ billions)					8.1						7.1						5.6
Segregated funds net assets ($ billions)					266.2						248.1						235.6
Global WAM managed AUMA ($ billions)(2)					1,123.0						1,055.0						1,022.5
Average assets under management and administration ($ billions)					879.8						816.7						804.5

(1)  See “Non-GAAP and other financial measures” below for a reconciliation of quarterly core earnings to net income (loss) attributed to shareholders. (2)  This item is a non-GAAP financial measure. See “Non-GAAP and other financial measures” below for more information. (3)  This item is a non-GAAP ratio. See “Non-GAAP and other financial measures” below for more information.

Global WAM’s net income attributed to shareholders was $365 million in 1Q24 compared with $297 million in 1Q23. Net income attributed to shareholders is comprised of core earnings, which were $357 million in 1Q24 compared with $287 million in 1Q23, and items excluded from core earnings, which amounted to a net gain of $8 million in 1Q24 compared with a net gain of $10 million in 1Q23. See section E3 “Non-GAAP and other financial measures” below, for a reconciliation of quarterly core earnings to net income (loss) attributed to shareholders and section A1 “Profitability” above, for explanations of the items excluded from core earnings.

 

 

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Core earnings increased $70 million or 25% compared with 1Q23, driven by an increase in net fee income from higher average AUMA resulting from the favourable impact of markets and net inflows, and disciplined expense management. In addition, investment income on allocated capital increased core earnings by $9 million compared with 1Q23 (see Corporate and Other segment).

Core EBITDA was $477 million in 1Q24, an increase of 22% compared with 1Q23, and core EBITDA margin was 25.5% in 1Q24, an increase of 310 basis points compared with 1Q23, both driven by strong growth and disciplined expense management. See section E3 “Non-GAAP and other financial measures” below, for additional information on core EBITDA and core EBITDA margin.

Net inflows were $6.7 billion in 1Q24 compared with net inflows of $4.4 billion in 1Q23. By business line, the results were:

 

•

Retirement net inflows of $3.2 billion in 1Q24, increased from net inflows of $1.2 billion in 1Q23, reflecting higher new retirement plan sales across our three geographies.

 

•

Retail net inflows of $1.7 billion in 1Q24, increased compared with net inflows of $0.8 billion in 1Q23, driven by increased demand for investment products amid equity market recovery and improved investor sentiment.

 

•

Institutional Asset Management net inflows of $1.8 billion in 1Q24, declined from net inflows of $2.5 billion in 1Q23, as higher fixed income mandate sales and lower money market redemptions were more than offset by higher redemptions in fixed income and equity mandates.

Assets under management and administration of $911.4 billion as at March 31, 2024 increased 6% compared with December 31, 2023. The increase was driven by the favourable impact of equity markets and net inflows. As at March 31, 2024, Global WAM also managed $211.5 billion in assets for the Company’s non-WAM reporting segments. Including those managed assets, Global WAM managed AUMA was $1,123.0 billion compared with $1,055.0 billion as at December 31, 2023.

Segregated funds net assets were $266.2 billion as at March 31, 2024, 7% higher compared with December 31, 2023 on an actual exchange rate basis, driven by favourable impact of equity markets and the strengthening of the U.S. dollar compared with the Canadian dollar.

Business highlights – In 1Q24, we:

 

•

announced the closing of a $1.0 billion institutional fund - Manulife Capital Partners VII. The fund will invest in U.S. middle market companies across multiple industries, focusing on growth and high-yield opportunities. Manulife Investment Management’s private equity and credit platform now has more than US$25 billion in AUM and unfunded commitments;

 

•

partnered with the Indonesia Investment Authority sovereign wealth fund to raise and manage funds for investment. The partnership involves co-investments between the sovereign wealth fund, Manulife, and third-party investors into the Indonesian infrastructure, real estate, and the natural capital sectors, which include timberland and agriculture assets; and

 

•

completed the implementation of a new advisor retail wealth platform in Canada as part of our digital transformation strategy representing more than $54 billion in AUMA by leveraging an industry leading technology platform. The platform delivers an enhanced advisor and client experience and enables advisors to streamline their processes by digitizing administrative tasks to improve their efficiency, freeing up more capacity for meaningful client interactions which will allow them to further grow.

 

 

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B5	Corporate and Other

 

		Quarterly Results
($ millions, unless otherwise stated)		1Q24						4Q23						1Q23
Net income (loss) attributed to shareholders		$	(27)			$			116			$			95
Core earnings (loss)(1)			(76)						30						17

(1)	See “Non-GAAP and other financial measures” below for a reconciliation of quarterly core earnings to net income (loss) attributed to shareholders.

Corporate and Other is composed of investment performance on assets backing capital, net of amounts allocated to operating segments; financing costs; costs incurred by the corporate office related to shareholder activities (not allocated to the operating segments); our Property and Casualty (“P&C”) Reinsurance business; as well as our run-off reinsurance operation including variable annuities and accident and health. In addition, for segment reporting purposes, consolidations and eliminations of transactions between operating segments are also included in Corporate and Other earnings.

Corporate and Other reported a net loss attributed to shareholders of $27 million in 1Q24 compared with net income attributed to shareholders of $95 million in 1Q23. Net income (loss) attributed to shareholders is comprised of core earnings, which was a core loss of $76 million in 1Q24 compared with core earnings of $17 million in 1Q23, and the items excluded from core earnings which amounted to a net gain of $49 million in 1Q24 compared with a net gain of $78 million in 1Q23. See section E3 “Non-GAAP and other financial measures” below, for a reconciliation of quarterly core earnings to net income (loss) attributed to shareholders and section A1 “Profitability” above, for explanations of the items excluded from core earnings.

The $93 million decline in core earnings was primarily related to higher interest on allocated capital to operating segments, primarily Asia and Global WAM, higher core expenses due to higher workforce-related costs, reflecting strong TSR performance relative to peers and business performance and the non-recurrence of 1Q23 gains in our P&C Reinsurance business from updates to provisions for estimated losses.

 

C	RISK MANAGEMENT AND RISK FACTORS UPDATE

This section provides an update to our risk management practices and risk factors outlined in the 2023 MD&A. Text and tables in this section of the MD&A represent our disclosure on insurance, market, and liquidity risk in accordance with IFRS 7 “Financial Instruments – Disclosures”. Disclosures in accordance with IFRS 7 are identified by a vertical line in the left margin of each page. The identified text and tables represent an integral part of our unaudited Interim Consolidated Financial Statements.

 

C1	Variable annuity and segregated fund guarantees

 

As described in the MD&A in our 2023 Annual Report, guarantees on variable annuity products and segregated funds may include one or more of death, maturity, income and withdrawal guarantees. Variable annuity and segregated fund guarantees are contingent and only payable upon the occurrence of the relevant event, if fund values at that time are below guarantee values. Depending on future equity market levels, liabilities on current in-force business would be due primarily in the period from 2024 to 2044.

We seek to mitigate a portion of the risks embedded in our retained (i.e. net of reinsurance) variable annuity and segregated fund guarantee business through the combination of our dynamic and macro hedging strategies (see section C3 “Publicly traded equity performance risk sensitivities and exposure measures” below).

 

 

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The table below shows selected information regarding the Company’s variable annuity and segregated fund investment-related guarantees gross and net of reinsurance.

Variable annuity and segregated fund guarantees, net of reinsurance

 

		March 31, 2024												December 31, 2023
As at ($ millions)		Guarantee value(1)				Fund value				Net amount at risk(1),(2),(3)				Guarantee value(1)				Fund value				Net amount at risk(1),(2),(3)
Guaranteed minimum income benefit		$	3,718			$	2,808			$	968			$	3,864			$	2,735			$	1,156
Guaranteed minimum withdrawal benefit			34,563				34,001				3,667				34,833				33,198				4,093
Guaranteed minimum accumulation benefit			18,972				19,021				99				18,996				19,025				116
Gross living benefits(4)			57,253				55,830				4,734				57,693				54,958				5,365
Gross death benefits(5)			9,006				18,798				715				9,133				17,279				975
Total gross of reinsurance			66,259				74,628				5,449				66,826				72,237				6,340
Living benefits reinsured			24,243				24,124				3,052				24,208				23,146				3,395
Death benefits reinsured			3,407				2,698				326				3,400				2,576				482
Total reinsured			27,650				26,822				3,378				27,608				25,722				3,877
Total, net of reinsurance		$	38,609			$	47,806			$	2,071			$	39,218			$	46,515			$	2,463

(1)		Guarantee Value and Net Amount at Risk in respect of guaranteed minimum withdrawal business in Canada and the U.S. reflect the time value of money of these claims.
(2)		Amount at risk (in-the-money amount) is the excess of guarantee values over fund values on all policies where the guarantee value exceeds the fund value. For guaranteed minimum death benefit, the amount at risk is defined as the current guaranteed minimum death benefit in excess of the current account balance and assumes that all claims are immediately payable. In practice, guaranteed death benefits are contingent and only payable upon the eventual death of policyholders if fund values remain below guarantee values. For guaranteed minimum withdrawal benefit, the amount at risk assumes that the benefit is paid as a lifetime annuity commencing at the earliest contractual income start age. These benefits are also contingent and only payable at scheduled maturity/income start dates in the future, if the policyholders are still living and have not terminated their policies and fund values remain below guarantee values. For all guarantees, the amount at risk is floored at zero at the single contract level.
(3)		The amount at risk net of reinsurance at March 31, 2024 was $2,071 million (December 31, 2023 – $2,463 million) of which: US$318 million (December 31, 2023 – US$391 million) was on our U.S. business, $1,371 million (December 31, 2023 – $1,559 million) was on our Canadian business, US$103 million (December 31, 2023 – US$140 million) was on our Japan business and US$97 million (December 31, 2023 – US$155 million) was related to Asia (other than Japan) and our run-off reinsurance business.
(4)		Where a policy includes both living and death benefits, the guarantee in excess of the living benefit is included in the death benefit category as outlined in footnote 5.
(5)		Death benefits include standalone guarantees and guarantees in excess of living benefit guarantees where both death and living benefits are provided on a policy.

 

C2	Caution related to sensitivities

 

In this document, we provide sensitivities and risk exposure measures for certain risks. These include sensitivities due to specific changes in market prices and interest rate levels projected using internal models as at a specific date, and are measured relative to a starting level reflecting the Company’s assets and liabilities at that date. The risk exposures measure the impact of changing one factor at a time and assume that all other factors remain unchanged. Actual results can differ significantly from these estimates for a variety of reasons including the interaction among these factors when more than one changes; changes in liabilities from updates to non-economic assumptions, changes in business mix, effective tax rates and other market factors; and the general limitations of our internal models. For these reasons, the sensitivities should only be viewed as directional estimates of the underlying sensitivities for the respective factors based on the assumptions outlined below. Given the nature of these calculations, we cannot provide assurance that the actual impact on contractual service margin, net income attributed to shareholders, other comprehensive income attributed to shareholders, and total comprehensive income attributed to shareholders or on MLI’s LICAT ratio will be as indicated.

Market movements affect LICAT capital sensitivities through the available capital, surplus allowance and required capital components of the regulatory capital framework. The LICAT available capital component is primarily affected by total comprehensive income and the CSM.

 

 

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C3	Publicly traded equity performance risk sensitivities and exposure measures

As outlined in our 2023 Annual Report, we have net exposure to equity risk through asset and liability mismatches; our variable annuity and segregated fund guarantee dynamic hedging strategy is not designed to completely offset the sensitivity of insurance contract liabilities to all risks associated with the guarantees embedded in these products. The macro hedging strategy is designed to mitigate public equity risk arising from variable annuity and segregated fund guarantees not dynamically hedged and from other unhedged exposures in our insurance contracts (see page 62 of our 2023 Annual Report).

Changes in public equity prices may impact other items including, but not limited to, asset-based fees earned on assets under management and administration or policyholder account value, and estimated profits and amortization of deferred policy acquisition and other costs. These items are not hedged.

 

The following tables include the potential impacts from an immediate 10%, 20% and 30% change in market values of publicly traded equities on net income attributed to shareholders, the CSM, other comprehensive income attributed to shareholders, and total comprehensive income attributed to shareholders. The potential impact is shown after taking into account the impact of the change in markets on the hedge assets. While we cannot reliably estimate the amount of the change in dynamically hedged variable annuity and segregated fund guarantee liabilities that will not be offset by the change in the dynamic hedge assets, we make certain assumptions for the purposes of estimating the impact on net income attributed to shareholders.

This estimate assumes that the performance of the dynamic hedging program would not completely offset the gain/loss from the dynamically hedged variable annuity and segregated fund guarantee liabilities. It assumes that the hedge assets are based on the actual position at the period end, and that equity hedges in the dynamic program offset 95% of the hedged variable annuity liability movement that occurs as a result of market changes.

It is also important to note that these estimates are illustrative, and that the dynamic and macro hedging programs may underperform these estimates, particularly during periods of high realized volatility and/or periods where both interest rates and equity market movements are unfavourable. The method used for deriving sensitivity information and significant assumptions did not change from the previous period.

Changes in equity markets impact our available and required components of the LICAT ratio. The second set of tables shows the potential impact to MLI’s LICAT ratio resulting from changes in public equity market values.

 

 

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Potential immediate impact on net income attributed to shareholders arising from changes to public equity returns⁽¹⁾

 

As at March 31, 2024		Net income attributed to shareholders
($ millions)		-30%				-20%				-10%				+10%				+20%				+30%
Underlying sensitivity
Variable annuity and segregated fund guarantees(2)		$	(2,140)			$	(1,300)			$	(590)			$	490			$	890			$	1,230
General fund equity investments(3)			(1,300)				(870)				(430)				430				870				1,300
Total underlying sensitivity before hedging			(3,440)				(2,170)				(1,020)				920				1,760				2,530
Impact of macro and dynamic hedge assets(4)			750				450				200				(160)				(280)				(380)
Net potential impact on net income attributed to shareholders after impact of hedging and before impact of reinsurance			(2,690)				(1,720)				(820)				760				1,480				2,150
Impact of reinsurance			1,370				840				390				(320)				(600)				(850)
Net potential impact on net income attributed to shareholders after impact of hedging and reinsurance		$	(1,320)			$	(880)			$	(430)			$	440			$	880			$	1,300
As at December 31, 2023		Net income attributed to shareholders
($ millions)		-30%				-20%				-10%				+10%				+20%				+30%
Underlying sensitivity
Variable annuity and segregated fund guarantees(2)		$	(2,370)			$	(1,460)			$	(670)			$	550			$	1,010			$	1,390
General fund equity investments(3)			(1,170)				(770)				(390)				380				760				1,140
Total underlying sensitivity before hedging			(3,540)				(2,230)				(1,060)				930				1,770				2,530
Impact of macro and dynamic hedge assets(4)			880				530				240				(190)				(340)				(460)
Net potential impact on net income attributed to shareholders after impact of hedging and before impact of reinsurance			(2,660)				(1,700)				(820)				740				1,430				2,070
Impact of reinsurance			1,470				900				420				(350)				(650)				(910)
Net potential impact on net income attributed to shareholders after impact of hedging and reinsurance		$	(1,190)			$	(800)			$	(400)			$	390			$	780			$	1,160

(1)		See “Caution related to sensitivities” above.
(2)		For variable annuity contracts measured under the variable fee approach (“VFA”) the impact of financial risk and changes in interest rates adjusts CSM, unless the risk mitigation option applies. The Company has elected to apply risk mitigation and therefore a portion of the impact is reported in net income attributed to shareholders instead of adjusting the CSM. If the CSM for a group of variable annuity contracts is exhausted the full impact is reported in net income attributed to shareholders.
(3)		This impact for general fund equity investments includes general fund investments supporting our insurance contract liabilities, investment in seed money investments (in segregated and mutual funds made by Global WAM segment) and the impact on insurance contract liabilities related to the projected future fee income on variable universal life and other unit linked products. The impact does not include any potential impact on public equity weightings. The participating policy funds are largely self-supporting and generate no material impact on net income attributed to shareholders as a result of changes in equity markets.
(4)		Includes the impact of assumed rebalancing of equity hedges in the macro and dynamic hedging program. The impact of dynamic hedge represents the impact of equity hedges offsetting 95% of the dynamically hedged variable annuity liability movement that occurs as a result of market changes, but does not include any impact in respect of other sources of hedge accounting ineffectiveness (e.g. fund tracking, realized volatility and equity, interest rate correlations different from expected among other factors).

 

 

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Potential immediate impact on contractual service margin, other comprehensive income to shareholders, total comprehensive income to shareholders and MLI’s LICAT ratio from changes to public equity market values^(1),(2),(3)

 

As at March 31, 2024		-30%				-20%				-10%				+10%				+20%				+30%
Variable annuity and segregated fund guarantees reported in CSM		$	(3,540)			$	(2,180)			$	(1,010)			$	870			$	1,630			$	2,300
Impact of risk mitigation - hedging(4)			990				590				260				(210)				(370)				(500)
Impact of risk mitigation - reinsurance(4)			1,740				1,060				490				(410)				(760)				(1,070)
VA net of risk mitigation			(810)				(530)				(260)				250				500				730
General fund equity			(1,030)				(670)				(330)				320				640				950
Contractual service margin ($ millions, pre-tax)		$	(1,840)			$	(1,200)			$	(590)			$	570			$	1,140			$	1,680
Other comprehensive income attributed to shareholders ($ millions, post-tax)(5)		$	(860)			$	(580)			$	(290)			$	260			$	530			$	790
Total comprehensive income attributed to shareholders ($ millions, post-tax)		$	(2,180)			$	(1,460)			$	(720)			$	700			$	1,410			$	2,090
MLI’s LICAT ratio (change in percentage points)			(3)				(2)				(1)				1				2				2
As at December 31, 2023		-30%				-20%				-10%				+10%				+20%				+30%
Variable annuity and segregated fund guarantees reported in CSM		$	(3,810)			$	(2,370)			$	(1,100)			$	940			$	1,760			$	2,470
Impact of risk mitigation - hedging(4)			1,150				700				310				(250)				(450)				(600)
Impact of risk mitigation - reinsurance(4)			1,850				1,140				530				(450)				(830)				(1,150)
VA net of risk mitigation			(810)				(530)				(260)				240				480				720
General fund equity			(940)				(610)				(300)				290				590				870
Contractual service margin ($ millions, pre-tax)		$	(1,750)			$	(1,140)			$	(560)			$	530			$	1,070			$	1,590
Other comprehensive income attributed to shareholders ($ millions, post-tax)(5)		$	(730)			$	(490)			$	(240)			$	230			$	460			$	680
Total comprehensive income attributed to shareholders ($ millions, post-tax)		$	(1,920)			$	(1,290)			$	(640)			$	620			$	1,240			$	1,840
MLI’s LICAT ratio (change in percentage points)			(3)				(2)				(1)				1				2				2

(1)		See “Caution related to sensitivities” above.
(2)		This estimate assumes that the performance of the dynamic hedging program would not completely offset the gain/loss from the dynamically hedged variable annuity and segregated fund guarantee liabilities. It assumes that the hedge assets are based on the actual position at the period end, and that equity hedges in the dynamic program offset 95% of the hedged variable annuity liability movement that occur as a result of market changes.
(3)		The Office of the Superintendent of Financial Institutions (“OSFI”) rules for segregated fund guarantees reflect full capital impacts of shocks over 20 quarters within a prescribed range. As such, the deterioration in equity markets could lead to further increases in capital requirements after the initial shock.
(4)		For variable annuity contracts measured under VFA the impact of financial risk and changes in interest rates adjusts CSM, unless the risk mitigation option applies. The Company has elected to apply risk mitigation and therefore a portion of the impact is reported in net income attributed to shareholders instead of adjusting the CSM. If the CSM for a group of variable annuity contracts is exhausted the full impact is reported in net income attributed to shareholders.
(5)		The impact of financial risk and changes to interest rates for variable annuity contracts is not expected to generate sensitivity in Other Comprehensive Income.

 

C4	Interest rate and spread risk sensitivities and exposure measures

 

As at March 31, 2024, we estimated the sensitivity of our net income attributed to shareholders to a 50 basis point parallel decline in interest rates to be a benefit of $100 million, and to a 50 basis point parallel increase in interest rates to be a charge of $100 million.

The table below shows the potential impacts from a 50 basis point parallel move in interest rates on the CSM, net income attributed to shareholders, other comprehensive income attributed to shareholders, and total comprehensive income attributed to shareholders. This includes a change in current government, swap and corporate rates for all maturities across all markets with no change in credit spreads between government, swap and corporate rates. Also shown separately are the potential impacts from a 50 basis point parallel move in corporate spreads and a 20 basis point parallel move in swap spreads. The impacts reflect the net impact of movements in asset values in liability and surplus segments and movements in the present value of cash flows for insurance contracts including those with cash flows that vary with the returns of underlying items where the present value is measured by stochastic modelling. The method used for deriving sensitivity information and significant assumptions did not change from the previous period.

 

 

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The disclosed interest rate sensitivities reflect the accounting designations of our financial assets and corresponding insurance contract liabilities. In most cases these assets and liabilities are designated as fair value through other comprehensive income (“FVOCI”) and as a result, impacts from changes to interest rates are largely in other comprehensive income. There are also changes in interest rates that impact the CSM for VFA contracts that relate to amounts that are not passed through to policyholders. In addition, changes in interest rates impact net income as it relates to derivatives not in hedge accounting relationships and on VFA contracts where the CSM has been exhausted.

The disclosed interest rate sensitivities assume no hedge accounting ineffectiveness, as our hedge accounting programs are optimized for parallel movements in interest rates, leading to immaterial net income impacts under these shocks. However, the actual hedge accounting ineffectiveness is sensitive to non-parallel interest rate movements and will depend on the shape and magnitude of the interest rate movements, which could lead to variations in the impact to net income attributed to shareholders.

Our sensitivities vary across all regions in which we operate, and the impacts of yield curve changes will vary depending upon the geography where the change occurs. Furthermore, the impacts from non-parallel movements may be materially different from the estimated impacts of parallel movements.

The interest rate and spread risk sensitivities are determined in isolation of each other and therefore do not reflect the combined impact of changes in government rates and credit spreads between government, swap and corporate rates occurring simultaneously. As a result, the impact of the summation of each individual sensitivity may be materially different from the impact of sensitivities to simultaneous changes in interest rate and spread risk.

The potential impacts also do not take into account other potential effects of changes in interest rate levels, for example, CSM at recognition on the sale of new business or lower interest earned on future fixed income asset purchases.

The impacts do not reflect any potential effect of changing interest rates on the value of our ALDA. Rising interest rates could negatively impact the value of our ALDA (see “Critical Actuarial and Accounting Policies – Fair Value of Invested Assets”, on page 96 of our 2023 Annual Report). More information on ALDA can be found under the section C5 “Alternative long-duration asset performance risk sensitivities and exposure measures”.

The impact to the LICAT ratio from a change in interest rates reflects the impacts on total comprehensive income, the LICAT adjustments to earnings for the CSM, the surplus allowance and required capital components of the regulatory capital framework.

 

 

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Potential impacts on contractual service margin, net income attributed to shareholders, other comprehensive income attributed to shareholders, and total comprehensive income attributed to shareholders of an immediate parallel change in interest rates, corporate spreads or swap spreads relative to current rates^(1),(2),(3)

 

As at March 31, 2024		Interest rates								Corporate spreads								Swap spreads
($ millions, post-tax except CSM)		-50bp				+50bp				-50bp				+50bp				-20bp				+20bp
CSM		$	–			$	(100)			$	–			$	(100)			$	–			$	–
Net income attributed to shareholders			100				(100)				100				(100)				100				(100)
Other comprehensive income attributed to shareholders			–				–				(100)				200				(100)				100
Total comprehensive income attributed to shareholders			100				(100)				–				100				–				–
As at December 31, 2023		Interest rates								Corporate spreads								Swap spreads
($ millions, post-tax except CSM)		-50bp				+50bp				-50bp				+50bp				-20bp				+20bp
CSM		$	–			$	(100)			$	–			$	(100)			$	–			$	–
Net income attributed to shareholders			100				(100)				–				–				100				(100)
Other comprehensive income attributed to shareholders			(300)				300				(200)				300				(100)				100
Total comprehensive income attributed to shareholders			(200)				200				(200)				300				–				–

(1)		See “Caution related to sensitivities” above.
(2)		Estimates include changes to the net actuarial gains/losses with respect to the Company’s pension obligations as a result of changes in interest rates.
(3)		Includes guaranteed insurance and annuity products, including variable annuity contracts as well as adjustable benefit products where benefits are generally adjusted as interest rates and investment returns change, a portion of which have minimum credited rate guarantees. For adjustable benefit products subject to minimum rate guarantees, the sensitivities are based on the assumption that credited rates will be floored at the minimum.

Swap spreads remain at low levels, and if they were to rise, this could generate material changes to net income attributed to shareholders.

Potential impact on MLI’s LICAT ratio of an immediate parallel change in interest rates, corporate spreads or swap spreads relative to current rates^{(1),(2),(3),(4),(5)}

 

As at March 31, 2024

Interest rates

Corporate spreads

Swap spreads

(change in percentage points)

-50bp

+50bp

-50bp

+50bp

-20bp

+20bp

MLI’s LICAT ratio

–

–

(4)

4

–

–

As at December 31, 2023

Interest rates

Corporate spreads

Swap spreads

(change in percentage points)

-50bp

+50bp

-50bp

+50bp

-20bp

+20bp

MLI’s LICAT ratio

–

–

(4)

4

–

–

(1)		See “Caution related to sensitivities” above.
(2)		Estimates include changes to the net actuarial gains/losses with respect to the Company’s pension obligations as a result of changes in interest rates.
(3)		Includes guaranteed insurance and annuity products, including variable annuity contracts as well as adjustable benefit products where benefits are generally adjusted as interest rates and investment returns change, a portion of which have minimum credited rate guarantees. For adjustable benefit products subject to minimum rate guarantees, the sensitivities are based on the assumption that credited rates will be floored at the minimum.
(4)		LICAT impacts reflect the impact of anticipated scenario switches.
(5)		Under LICAT, spread movements are determined from a selection of investment grade bond indices with BBB and better bonds for each jurisdiction. For LICAT, we use the following indices: FTSE TMX Canada All Corporate Bond Index, Barclays USD Liquid Investment Grade Corporate Index, and Nomura-BPI (Japan). LICAT impacts presented for corporate spreads reflect the impact of anticipated scenario switches.

LICAT Scenario Switch

When interest rates change past a certain threshold, reflecting the combined movement in risk-free rates and corporate spreads, a different prescribed interest rate stress scenario needs to be taken into account in the LICAT ratio calculation in accordance with OSFI’s LICAT guideline.

The LICAT guideline specifies four stress scenarios for interest rates and prescribes the methodology to determine the most adverse scenario to apply for each LICAT geographic region¹ based on current market inputs and the Company’s balance sheet.

 

 

1	LICAT geographic locations to determine the most adverse scenario include North America, the United Kingdom, Europe, Japan, and Other Region.

 

 

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With the current level of interest rates in 1Q24, the probability of a scenario switch that could materially impact our LICAT ratio is low.¹ Should a scenario switch be triggered in a LICAT geographic region, the full impact would be reflected immediately for non-participating products while the impact for participating products would be reflected over six quarters using a rolling average of interest rate risk capital, in line with the smoothing approach prescribed in the LICAT guideline. The LICAT interest rate, corporate spread and swap spread sensitivities presented above reflect the impact of scenario switches, if any, for each disclosed sensitivity.

The level of interest rates and corporate spreads that would trigger a switch in the scenarios is dependent on market conditions and movements in the Company’s asset and liability position. The scenario switch, if triggered, could reverse in response to subsequent changes in interest rates and/or corporate spreads.

 

C5	Alternative long-duration asset performance risk sensitivities and exposure measures

 

The following table shows the potential impact on the CSM, net income attributed to shareholders, other comprehensive income attributed to shareholders, and total comprehensive income attributed to shareholders resulting from an immediate 10% change in market values of ALDA. The method used for deriving sensitivity information and significant assumptions did not change from the previous period.

ALDA used in this sensitivity analysis includes commercial real estate, private equity, infrastructure, timber and agriculture, infrastructure, energy2 and other investments.

The impacts do not reflect any future potential changes to non-fixed income return volatility. Refer to “C3 Publicly traded equity performance risk sensitivities and exposure measures” for more details.

Potential immediate impacts on contractual service margin, net income attributed to shareholders, other comprehensive income attributed to shareholders, and total comprehensive income attributed to shareholders from changes in ALDA market values⁽¹⁾

 

As at		March 31, 2024								December 31, 2023
($ millions, post-tax except CSM)		-10%				+10%				-10%				+10%
CSM excluding NCI		$	(100)			$	100			$	(100)			$	100
Net income attributed to shareholders(2)			(2,400)				2,400				(2,400)				2,400
Other comprehensive income attributed to shareholders			(200)				200				(200)				200
Total comprehensive income attributed to shareholders			(2,600)				2,600				(2,600)				2,600

(1)		See “Caution related to sensitivities” above.
(2)		Net income attributed to shareholders includes core earnings and the amounts excluded from core earnings.

Potential immediate impact on MLI LICAT ratio arising from changes in ALDA market values⁽¹⁾

 

		March 31, 2024								December 31, 2023
(change in percentage points)		-10%				+10%				-10%				+10%
MLI’s LICAT ratio			(2)				2				(2)				2

(1)	See “Caution Related to Sensitivities” above.

 

C6	Risk management and risk factors update1

We have outlined our overall approach to risk management in in our 2023 Annual Report. The following are updates to the risk factors for strategic and product risks.

1  See “Caution regarding forward-looking statements” below. 2  Energy includes oil & gas equity interests related to upstream and midstream assets, and energy transition private equity interests in areas supportive of the transition to lower carbon forms of energy, such as wind, solar, batteries, magnets, etc.

 

 

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Strategic risk factors

Changes in tax laws, tax regulations, or interpretations of such laws or regulations could make some of our products less attractive to consumers, could increase our corporate taxes or cause us to change the value of our deferred tax assets and liabilities as well as our tax assumptions included in the valuation of our insurance and investment contract liabilities. This could have a material adverse effect on our business, results of operations and financial condition.

 

•

In 2021, 136 of the 140 members of the Organization for Economic Co-Operation and Development / G20 Inclusive Framework agreed on a two-pillar solution to address tax challenges from the digital economy, and to close the gaps in international tax systems. These include a new approach to allocating certain profits of multinational entities amongst countries and a global minimum income tax rate of 15%. On July 12, 2023, the Canadian government reaffirmed its commitment to the two-pillar solution and the target date of December 31, 2023 for implementation of the Pillar 2 global minimum tax. This would first apply to the Company’s 2024 fiscal year if enacted on this timeline. The Company is closely monitoring developments and potential impacts and, in particular, for issues unique to the insurance industry. If enacted, we expect an increase in the effective tax rate of approximately 2 to 3 percentage points, pending further details on timing and specific implementation in both Canada and other affected countries.

 

•

Canada’s 2024 federal budget proposes to increase the capital gains inclusion rate from 50% to 66.67%, effective June 25, 2024. Most of Manulife’s investments are not treated as capital property, however, and therefore we don’t expect to be materially affected by this tax change. For investments treated as capital properties, the increased effective tax rate on capital gains would result in a modest increase in the deferred tax liabilities on such investments with accrued gains.

Product risk factors

External market conditions determine the availability, terms and cost of reinsurance protection which could impact our financial position and our ability to write new policies.

 

•

As part of our overall risk and capital management strategy, we purchase reinsurance protection on certain risks underwritten or assumed by our various insurance businesses. As the global reinsurance industry continues to review their business models, certain of our reinsurers have attempted to increase rates on our existing reinsurance contracts. The ability of our reinsurers to increase rates depends upon the terms of each reinsurance contract. Typically, a reinsurer’s ability to raise rates is restricted by terms in our reinsurance contracts, which we seek to enforce. Over the past several years we have received rate increase requests from some of our reinsurers. Thus far, dealing with those requests has not had a material adverse effect on our results of operation or financial condition. Consistent with past practice, we dispute requested increases and, if necessary, we can pursue legal action in order to protect our contractual rights. While possible outcomes remain unknown and there can be no assurance that the outcome of any one or more of these disputes would not have a material adverse effect on our results of operation or financial condition for a particular reporting period, we believe that our reserves, inclusive of reinsurance provisions, are appropriate overall.

 

D	CRITICAL ACTUARIAL AND ACCOUNTING POLICIES

Disclosures in accordance with IFRS 7 are identified by a vertical line in the left margin of each page. The identified text and tables represent an integral part of our unaudited Interim Consolidated Financial Statements.

 

 

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D1	Critical actuarial and accounting policies

Our material accounting policies are described in note 1 to our Consolidated Financial Statements for the year ended December 31, 2023. The critical actuarial policies and estimation processes relating to the determination of insurance and investment contract liabilities are described starting on page 88 of our 2023 Annual Report. The critical accounting policies and estimation processes relating to the assessment of control over other entities for consolidation, estimation of fair value of invested assets, evaluation of invested asset impairments, appropriate accounting for derivative financial instruments and hedge accounting, determination of pension and other post-employment benefit obligations and expenses, accounting for income taxes and uncertain tax positions and valuation and impairment of goodwill and intangible assets are described starting on page 96 of our 2023 Annual Report.

 

D2	Sensitivity to changes in assumptions

 

The following table presents information on how reasonably possible changes in assumptions made by the Company for certain economic risk variables impact the CSM, net income attributed to shareholders, other comprehensive income attributed to shareholders and total comprehensive income attributed to shareholders. The method used for deriving sensitivity information and significant assumptions did not change from the previous period.

The analysis is based on a simultaneous change in assumptions across all business units and holds all other assumptions constant. In practice, experience for each assumption will frequently vary by geographic market and business, and assumption updates are made on a business and geographic basis. Actual results can differ materially from these estimates for a variety of reasons including the interaction among these factors when more than one factor changes, actual experience differing from the assumptions, changes in business mix, effective tax rates, and the general limitations of our internal models.

Potential impact on contractual service margin, net income attributed to shareholders, other comprehensive income attributed to shareholders, and total comprehensive income attributed to shareholders arising from changes to certain economic financial assumptions used in the determination of insurance contract liabilities⁽¹⁾

 

As at March 31, 2024 ($ millions, post-tax except CSM)

CSM net of NCI

Net income attributed to shareholders

Other comprehensive income attributed to shareholders

Total comprehensive income attributed to shareholders

Financial assumptions

10 basis point reduction in ultimate spot rate

$

(200)

$

–

$

(200)

$

(200)

50 basis point increase in interest rate volatility(2)

–

–

–

–

50 basis point increase in non-fixed income return volatility(2)

(100)

–

–

–

As at December 31, 2023 ($ millions, post-tax except CSM)

CSM net of NCI

Net income attributed to shareholders

Other comprehensive income attributed to shareholders

Total comprehensive income attributed to shareholders

Financial assumptions

10 basis point reduction in ultimate spot rate

$

(200)

$

–

$

(300)

$

(300)

50 basis point increase in interest rate volatility(2)

–

–

–

–

50 basis point increase in non-fixed income return volatility(2)

(100)

–

–

–

(1)		Note that the impact of these assumptions is not linear.
(2)		Used in the determination of insurance contract liabilities with financial guarantees. This includes universal Life minimum crediting rate guarantees, participating life zero dividend floor implicit guarantees, and variable annuities guarantees, where a stochastic approach is used to capture the asymmetry of the risk.

 

D3	Accounting and reporting changes

For future accounting and reporting changes arising during the quarter, refer to note 2 of our unaudited Interim Consolidated Financial Statements for the three months ended March 31, 2024.

 

 

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E

OTHER

 

E1	Outstanding common shares – selected information

As at April 30, 2024, MFC had 1,795,716,281 common shares outstanding.

 

E2	Legal and regulatory proceedings

We are regularly involved in legal actions, both as a defendant and as a plaintiff. Information on legal and regulatory proceedings can be found in note 13 of our unaudited Interim Consolidated Financial Statements for the three months ended March 31, 2024.

 

E3	Non-GAAP and other financial measures

The Company prepares its Consolidated Financial Statements in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. We use a number of non-GAAP and other financial measures to evaluate overall performance and to assess each of our businesses. This section includes information required by National Instrument 52-112 – Non-GAAP and Other Financial Measures Disclosure in respect of “specified financial measures” (as defined therein).

Non-GAAP financial measures include core earnings (loss); pre-tax core earnings; core earnings available to common shareholders; core earnings before income taxes, depreciation and amortization (“core EBITDA”); total expenses; core expenses; core Drivers of Earnings (“DOE”) line items for core net insurance service result, core net investment result, other core earnings, and core income tax (expenses) recoveries; post-tax contractual service margin (“post-tax CSM”); post-tax contractual service margin net of NCI (“post-tax CSM net of NCI”); Manulife Bank net lending assets; Manulife Bank average net lending assets; assets under management (“AUM”); assets under management and administration (“AUMA”); Global WAM managed AUMA; core revenue; adjusted book value; net income attributed to shareholders excluding the GA Reinsurance Transaction; Common shareholders net income excluding the GA Reinsurance Transaction and net annualized fee income. In addition, non-GAAP financial measures include the following stated on a constant exchange rate (“CER”) basis: any of the foregoing non-GAAP financial measures; net income attributed to shareholders; common shareholders’ net income and new business CSM.

Non-GAAP ratios include core return on shareholders’ equity (“core ROE”); diluted core earnings per common share (“core EPS”); ROE excluding the GA Reinsurance Transaction; diluted EPS excluding the GA Reinsurance Transaction; financial leverage ratio; adjusted book value per common share; common share core dividend payout ratio (“dividend payout ratio”); expense efficiency ratio; core EBITDA margin; effective tax rate on core earnings; and net annualized fee income yield on average AUMA. In addition, non-GAAP ratios include the percentage growth/decline on a CER basis in any of the above non-GAAP financial measures and non-GAAP ratios; net income attributed to shareholders; common shareholders’ net income; pre-tax net income attributed to shareholders; general expenses; CSM; CSM net of NCI; impact of new insurance business net of NCI; new business CSM; basic earnings per common share (“basic EPS”); and diluted earnings per common share (“diluted EPS”).

Other specified financial measures include assets under administration (“AUA”); consolidated capital; embedded value (“EV”); new business value (“NBV”); new business value margin (“NBV margin”); sales; annualized premium equivalent (“APE”) sales; gross flows; net flows; average assets under management and administration (“average AUMA”); Global WAM average managed AUMA; average assets under administration; remittances; any of the foregoing specified financial measures stated on a CER basis; and percentage growth/decline in any of the foregoing specified financial measures on a CER basis. In addition, we provide an explanation below of the components of core DOE line items other than the change in expected credit loss, the items that comprise certain items excluded from core earnings (on a pre-tax and post-tax basis), and the components of CSM movement other than the new business CSM.

 

 

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Our reporting currency for the Company is Canadian dollars and U.S. dollars is the functional currency for Asia and U.S. segment results. Financial measures presented in U.S. dollars are calculated in the same manner as the Canadian dollar measures. These amounts are translated to U.S. dollars using the period end rate of exchange for financial measures such as AUMA and the CSM balance and the average rates of exchange for the respective quarter for periodic financial measures such as our income statement, core earnings and items excluded from core earnings, and line items in our CSM movement schedule and DOE. Year-to-date or full year periodic financial measures presented in U.S. dollars are calculated as the sum of the quarterly results translated to U.S. dollars. See section E5 “Quarterly Financial Information” below for the Canadian to U.S. dollar quarterly rates of exchange.

Non-GAAP financial measures and non-GAAP ratios are not standardized financial measures under GAAP and, therefore, might not be comparable to similar financial measures disclosed by other issuers. Therefore, they should not be considered in isolation or as a substitute for any other financial information prepared in accordance with GAAP.

Core earnings (loss) is a financial measure which we believe aids investors in better understanding the long-term earnings capacity and valuation of the business. Core earnings allows investors to focus on the Company’s operating performance by excluding the impact of market related gains or losses, changes in actuarial methods and assumptions that flow directly through income as well as a number of other items, outlined below, that we believe are material, but do not reflect the underlying earnings capacity of the business. For example, due to the long-term nature of our business, the mark-to-market movements in equity markets, interest rates including impacts on hedge accounting ineffectiveness, foreign currency exchange rates and commodity prices as well as the change in the fair value of ALDA from period-to-period can, and frequently do, have a substantial impact on the reported amounts of our assets, insurance contract liabilities and net income attributed to shareholders. These reported amounts may not be realized if markets move in the opposite direction in a subsequent period. This makes it very difficult for investors to evaluate how our businesses are performing from period-to-period and to compare our performance with other issuers.

We believe that core earnings better reflect the underlying earnings capacity and valuation of our business. We use core earnings and core EPS as key metrics in our short-term incentive plans at the total Company and operating segment level. We also base our mid- and long-term strategic priorities on core earnings.

Core earnings includes the expected return on our invested assets and any other gains (charges) from market experience are included in net income but excluded from core earnings. The expected return for fixed income assets is based on the related book yields. For ALDA and public equities, the expected return reflects our long-term view of asset class performance. These returns for ALDA and public equities vary by asset class and range from 3.25% to 11.5%, leading to an average return of between 9.0% to 9.5% on these assets as of March 31, 2024.

While core earnings is relevant to how we manage our business and offers a consistent methodology, it is not insulated from macroeconomic factors which can have a significant impact. See below for a reconciliation of core earnings to net income attributed to shareholders and income before income taxes. Net income attributed to shareholders excludes net income attributed to participating policyholders and non-controlling interests.

Any future changes to the core earnings definition referred to below, will be disclosed.

Items included in core earnings:

 

1.	Expected insurance service result on in-force policies, including expected release of the risk adjustment, CSM recognized for service provided, and expected earnings from short-term products measured under the premium allocation approach (“PAA”).

 

2.	Impacts from the initial recognition of new contracts (onerous contracts, including the impact of the associated reinsurance contracts).

 

3.	Insurance experience gains or losses that flow directly through net income.

 

4.	Operating and investment expenses compared with expense assumptions used in the measurement of insurance and investment contract liabilities.

 

 

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5.	Expected investment earnings, which is the difference between expected return on our invested assets and the associated finance income or expense from the insurance contract liabilities.

 

6.	Net provision for ECL on FVOCI and amortized cost debt instruments.

 

7.	Expected asset returns on surplus investments.

 

8.	All earnings for the Global WAM segment, except for applicable net income items excluded from core earnings as noted below.

 

9.	All earnings for the Manulife Bank business, except for applicable net income items excluded from core earnings as noted below.

 

10.	Routine or non-material legal settlements.

 

11.	All other items not specifically excluded.

 

12.	Tax on the above items.

 

13.	All tax related items except the impact of enacted or substantively enacted income tax rate changes and taxes on items excluded from core earnings.

Net income items excluded from core earnings:

 

1.	Market experience gains (losses) including the items listed below:

 

•    Gains (charges) on general fund public equity and ALDA investments from returns being different than expected. •    Gains (charges) on derivatives not in hedging relationships, or gains (charges) resulting from hedge accounting ineffectiveness. •    Realized gains (charges) from the sale of FVOCI debt instruments. •    Market related gains (charges) on onerous contracts measured using the variable fee approach (e.g. variable annuities, unit linked, participating insurance) net of the performance on any related hedging instruments. •    Gains (charges) related to certain changes in foreign exchange rates.

 

2.	Changes in actuarial methods and assumptions used in the measurement of insurance contract liabilities that flow directly through income.

 

•    The Company reviews actuarial methods and assumptions annually, and this process is designed to reduce the Company’s exposure to uncertainty by ensuring assumptions remain appropriate. This is accomplished by monitoring experience and selecting assumptions which represent a current view of expected future experience and ensuring that the risk adjustment is appropriate for the risks assumed. •    Changes related to the ultimate spot rate within the discount curves are included in the market experience gains (losses).

 

3.	The impact on the measurement of insurance and investment contract assets and liabilities and reinsurance contract held assets and liabilities from changes in product features and new or changes to in-force reinsurance contracts, if material.

 

4.	The fair value changes in long-term investment plan (“LTIP”) obligations for Global WAM investment management.

 

5.	Goodwill impairment charges.

 

6.	Gains or losses on acquisition and disposition of a business.

 

7.	Material one-time only adjustments, including highly unusual / extraordinary and material legal settlements and restructuring charges, or other items that are material and exceptional in nature.

 

8.	Tax on the above items.

 

9.	Net income (loss) attributed to participating shareholders and non-controlling interests.

 

10.	Impact of enacted or substantially enacted income tax rate changes.

 

 

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Reconciliation of core earnings to net income attributed to shareholders

 

		1Q24
($ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)		Asia				Canada				U.S.				Global WAM				Corporate and Other				Total
Income (loss) before income taxes		$	594			$	381			$	(154)			$	426			$	5			$	1,252
Income tax (expenses) recoveries
Core earnings			(67)				(91)				(103)				(58)				33				(286)
Items excluded from core earnings			(83)				8				149				(3)				(65)				6
Income tax (expenses) recoveries			(150)				(83)				46				(61)				(32)				(280)
Net income (post-tax)			444				298				(108)				365				(27)				972
Less: Net income (post-tax) attributed to
Non-controlling interests (“NCI”)			55				–				–				–				–				55
Participating policyholders			26				25				–				–				–				51
Net income (loss) attributed to shareholders (post-tax)			363				273				(108)				365				(27)				866
Less: Items excluded from core earnings (post-tax)
Market experience gains (losses)			(250)				(91)				(534)				6				90				(779)
Changes in actuarial methods and assumptions that flow directly through income			–				–				–				–				–				–
Restructuring charge			–				–				–				–				–				–
Reinsurance transactions, tax related items and other			(44)				–				(26)				2				(41)				(109)
Core earnings (post-tax)		$	657			$	364			$	452			$	357			$	(76)			$	1,754
Income tax on core earnings (see above)			67				91				103				58				(33)				286
Core earnings (pre-tax)		$	724			$	455			$	555			$	415			$	(109)			$	2,040
Core earnings, CER basis and U.S. dollars
		1Q24
(Canadian $ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)		Asia				Canada				U.S.				Global WAM				Corporate and Other				Total
Core earnings (post-tax)		$	657			$	364			$	452			$	357			$	(76)			$	1,754
CER adjustment(1)			–				–				–				–				–				–
Core earnings, CER basis (post-tax)		$	657			$	364			$	452			$	357			$	(76)			$	1,754
Income tax on core earnings, CER basis(2)			67				91				103				58				(33)				286
Core earnings, CER basis (pre-tax)		$	724			$	455			$	555			$	415			$	(109)			$	2,040
Core earnings (U.S. dollars) – Asia and U.S. segments
Core earnings (post-tax)(3), US $		$	488							$	335
CER adjustment US $(1)			–								–
Core earnings, CER basis (post-tax), US $		$	488							$	335

(1)	The impact of updating foreign exchange rates to that which was used in 1Q24.

(2)	Income tax on core earnings adjusted to reflect the foreign exchange rates for the Statement of Income in effect for 1Q24.

(3)	Core earnings (post-tax) in Canadian $ is translated to US $ using the US $ Statement of Income exchange rate for 1Q24.

 

 

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Reconciliation of core earnings to net income attributed to shareholders

 

		4Q23
($ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)		Asia				Canada				U.S.				Global WAM				Corporate and Other				Total
Income (loss) before income taxes		$	847			$	498			$	244			$	424			$	110			$	2,123
Income tax (expenses) recoveries
Core earnings			(76)				(87)				(113)				(55)				37				(294)
Items excluded from core earnings			(33)				(29)				67				(3)				(30)				(28)
Income tax (expenses) recoveries			(109)				(116)				(46)				(58)				7				(322)
Net income (post-tax)			738				382				198				366				117				1,801
Less: Net income (post-tax) attributed to
Non-controlling interests (“NCI”)			37				–				–				1				1				39
Participating policyholders			86				17				–				–				–				103
Net income (loss) attributed to shareholders (post-tax)			615				365				198				365				116				1,659
Less: Items excluded from core earnings (post-tax)
Market experience gains (losses)			–				9				(279)				51				86				(133)
Changes in actuarial methods and assumptions that flow directly through income			89				4				26				–				–				119
Restructuring charge			–				–				–				(36)				–				(36)
Reinsurance transactions, tax related items and other			(38)				–				(23)				(3)				–				(64)
Core earnings (post-tax)		$	564			$	352			$	474			$	353			$	30			$	1,773
Income tax on core earnings (see above)			76				87				113				55				(37)				294
Core earnings (pre-tax)		$	640			$	439			$	587			$	408			$	(7)			$	2,067
Core earnings, CER basis and U.S. dollars
		4Q23
(Canadian $ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)		Asia				Canada				U.S.				Global WAM				Corporate and Other				Total
Core earnings (post-tax)		$	564			$	352			$	474			$	353			$	30			$	1,773
CER adjustment(1)			(7)				–				(4)				(2)				(1)				(14)
Core earnings, CER basis (post-tax)		$	557			$	352			$	470			$	351			$	29			$	1,759
Income tax on core earnings, CER basis(2)			76				87				112				55				(38)				292
Core earnings, CER basis (pre-tax)		$	633			$	439			$	582			$	406			$	(9)			$	2,051
Core earnings (U.S. dollars) – Asia and U.S. segments
Core earnings (post-tax)(3), US $		$	414							$	349
CER adjustment US $(1)			(1)								–
Core earnings, CER basis (post-tax), US $		$	413							$	349

(1)	The impact of updating foreign exchange rates to that which was used in 1Q24.

(2)	Income tax on core earnings adjusted to reflect the foreign exchange rates for the Statement of Income in effect for 1Q24.

(3)	Core earnings (post-tax) in Canadian $ is translated to US $ using the US $ Statement of Income exchange rate for 4Q23.

 

 

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Reconciliation of core earnings to net income attributed to shareholders

 

		3Q23
($ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)		Asia				Canada				U.S.				Global WAM				Corporate and Other				Total
Income (loss) before income taxes		$	439			$	376			$	68			$	366			$	(75)			$	1,174
Income tax (expenses) recoveries
Core earnings			(62)				(109)				(93)				(59)				30				(293)
Items excluded from core earnings			(73)				15				97				11				294				344
Income tax (expenses) recoveries			(135)				(94)				4				(48)				324				51
Net income (post-tax)			304				282				72				318				249				1,225
Less: Net income (post-tax) attributed to
Non-controlling interests (“NCI”)			25				–				–				–				–				25
Participating policyholders			195				(8)				–				–				–				187
Net income (loss) attributed to shareholders (post-tax)			84				290				72				318				249				1,013
Less: Items excluded from core earnings (post-tax)
Market experience gains (losses)			(286)				(159)				(476)				(43)				(58)				(1,022)
Changes in actuarial methods and assumptions that flow directly through income			(157)				37				106				–				–				(14)
Restructuring charge			–				–				–				–				–				–
Reinsurance transactions, tax related items and other			5				4				–				–				297				306
Core earnings (post-tax)		$	522			$	408			$	442			$	361			$	10			$	1,743
Income tax on core earnings (see above)			62				109				93				59				(30)				293
Core earnings (pre-tax)		$	584			$	517			$	535			$	420			$	(20)			$	2,036
Core earnings, CER basis and U.S. dollars
		3Q23
(Canadian $ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)		Asia				Canada				U.S.				Global WAM				Corporate and Other				Total
Core earnings (post-tax)		$	522			$	408			$	442			$	361			$	10			$	1,743
CER adjustment(1)			(1)				–				2				1				–				2
Core earnings, CER basis (post-tax)		$	521			$	408			$	444			$	362			$	10			$	1,745
Income tax on core earnings, CER basis(2)			61				109				94				59				(30)				293
Core earnings, CER basis (pre-tax)		$	582			$	517			$	538			$	421			$	(20)			$	2,038
Core earnings (U.S. dollars) – Asia and U.S. segments
Core earnings (post-tax)(3), US $		$	390							$	329
CER adjustment US $(1)			(4)								–
Core earnings, CER basis (post-tax), US $		$	386							$	329

(1)	The impact of updating foreign exchange rates to that which was used in 1Q24.

(2)	Income tax on core earnings adjusted to reflect the foreign exchange rates for the Statement of Income in effect for 1Q24.

(3)	Core earnings (post-tax) in Canadian $ is translated to US $ using the US $ Statement of Income exchange rate for 3Q23.

 

 

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Reconciliation of core earnings to net income attributed to shareholders

 

		2Q23
($ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)		Asia				Canada				U.S.				Global WAM				Corporate and Other				Total
Income (loss) before income taxes		$	345			$	312			$	220			$	362			$	197			$	1,436
Income tax (expenses) recoveries
Core earnings			(73)				(97)				(110)				(45)				18				(307)
Items excluded from core earnings			(18)				33				73				1				(47)				42
Income tax (expenses) recoveries			(91)				(64)				(37)				(44)				(29)				(265)
Net income (post-tax)			254				248				183				318				168				1,171
Less: Net income (post-tax) attributed to
Non-controlling interests (“NCI”)			25				–				–				1				–				26
Participating policyholders			99				21				–				–				–				120
Net income (loss) attributed to shareholders (post-tax)			130				227				183				317				168				1,025
Less: Items excluded from core earnings (post-tax)
Market experience gains (losses)			(297)				(147)				(275)				(7)				156				(570)
Changes in actuarial methods and assumptions that flow directly through income			–				–				–				–				–				–
Restructuring charge			–				–				–				–				–				–
Reinsurance transactions, tax related items and other			(46)				–				–				4				–				(42)
Core earnings (post-tax)		$	473			$	374			$	458			$	320			$	12			$	1,637
Income tax on core earnings (see above)			73				97				110				45				(18)				307
Core earnings (pre-tax)		$	546			$	471			$	568			$	365			$	(6)			$	1,944
Core earnings, CER basis and U.S. dollars
		2Q23
(Canadian $ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)		Asia				Canada				U.S.				Global WAM				Corporate and Other				Total
Core earnings (post-tax)		$	473			$	374			$	458			$	320			$	12			$	1,637
CER adjustment(1)			(11)				1				2				–				–				(8)
Core earnings, CER basis (post-tax)		$	462			$	375			$	460			$	320			$	12			$	1,629
Income tax on core earnings, CER basis(2)			70				97				110				45				(17)				305
Core earnings, CER basis (pre-tax)		$	532			$	472			$	570			$	365			$	(5)			$	1,934
Core earnings (U.S. dollars) – Asia and U.S. segments
Core earnings (post-tax)(3), US $		$	353							$	341
CER adjustment US $(1)			(9)								–
Core earnings, CER basis (post-tax), US $		$	344							$	341

(1)	The impact of updating foreign exchange rates to that which was used in 1Q24.

(2)	Income tax on core earnings adjusted to reflect the foreign exchange rates for the Statement of Income in effect for 1Q24.

(3)	Core earnings (post-tax) in Canadian $ is translated to US $ using the US $ Statement of Income exchange rate for 2Q23.

 

 

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Reconciliation of core earnings to net income attributed to shareholders

 

		1Q23
($ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)		Asia				Canada				U.S.				Global WAM				Corporate and Other				Total
Income (loss) before income taxes		$	613			$	423			$	219			$	345			$	119			$	1,719
Income tax (expenses) recoveries
Core earnings			(68)				(85)				(86)				(45)				14				(270)
Items excluded from core earnings			(37)				(14)				53				(3)				(38)				(39)
Income tax (expenses) recoveries			(105)				(99)				(33)				(48)				(24)				(309)
Net income (post-tax)			508				324				186				297				95				1,410
Less: Net income (post-tax) attributed to
Non-controlling interests (“NCI”)			54				–				–				–				–				54
Participating policyholders			(65)				15				–				–				–				(50)
Net income (loss) attributed to shareholders (post-tax)			519				309				186				297				95				1,406
Less: Items excluded from core earnings (post-tax)
Market experience gains (losses)			30				(44)				(166)				9				106				(65)
Changes in actuarial methods and assumptions that flow directly through income			–				–				–				–				–				–
Restructuring charge			–				–				–				–				–				–
Reinsurance transactions, tax related items and other			–				–				(33)				1				(28)				(60)
Core earnings (post-tax)		$	489			$	353			$	385			$	287			$	17			$	1,531
Income tax on core earnings (see above)			68				85				86				45				(14)				270
Core earnings (pre-tax)		$	557			$	438			$	471			$	332			$	3			$	1,801
Core earnings, CER basis and U.S. dollars
		1Q23
(Canadian $ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)		Asia				Canada				U.S.				Global WAM				Corporate and Other				Total
Core earnings (post-tax)		$	489			$	353			$	385			$	287			$	17			$	1,531
CER adjustment(1)			(16)				–				(1)				(1)				–				(18)
Core earnings, CER basis (post-tax)		$	473			$	353			$	384			$	286			$	17			$	1,513
Income tax on core earnings, CER basis(2)			66				85				85				45				(14)				267
Core earnings, CER basis (pre-tax)		$	539			$	438			$	469			$	331			$	3			$	1,780
Core earnings (U.S. dollars) – Asia and U.S. segments
Core earnings (post-tax)(3), US $		$	361							$	285
CER adjustment US $(1)			(10)								–
Core earnings, CER basis (post-tax), US $		$	351							$	285

(1)	The impact of updating foreign exchange rates to that which was used in 1Q24.

(2)	Income tax on core earnings adjusted to reflect the foreign exchange rates for the Statement of Income in effect for 1Q24.

(3)	Core earnings (post-tax) in Canadian $ is translated to US $ using the US $ Statement of Income exchange rate for 1Q23.

 

 

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Reconciliation of core earnings to net income attributed to shareholders

 

		2023
($ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)		Asia				Canada				U.S.				Global WAM				Corporate and Other				Total
Income (loss) before income taxes		$	2,244			$	1,609			$	751			$	1,497			$	351			$	6,452
Income tax (expenses) recoveries
Core earnings			(279)				(378)				(402)				(204)				99				(1,164)
Items excluded from core earnings			(161)				5				290				6				179				319
Income tax (expenses) recoveries			(440)				(373)				(112)				(198)				278				(845)
Net income (post-tax)			1,804				1,236				639				1,299				629				5,607
Less: Net income (post-tax) attributed to
Non-controlling interests (“NCI”)			141				–				–				2				1				144
Participating policyholders			315				45				–				–				–				360
Net income (loss) attributed to shareholders (post-tax)			1,348				1,191				639				1,297				628				5,103
Less: Items excluded from core earnings (post-tax)
Market experience gains (losses)			(553)				(341)				(1,196)				10				290				(1,790)
Changes in actuarial methods and assumptions that flow directly through income			(68)				41				132				–				–				105
Restructuring charge			–				–				–				(36)				–				(36)
Reinsurance transactions, tax related items and other			(79)				4				(56)				2				269				140
Core earnings (post-tax)		$	2,048			$	1,487			$	1,759			$	1,321			$	69			$	6,684
Income tax on core earnings (see above)			279				378				402				204				(99)				1,164
Core earnings (pre-tax)		$	2,327			$	1,865			$	2,161			$	1,525			$	(30)			$	7,848
Core earnings, CER basis and U.S. dollars
		2023
(Canadian $ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)		Asia				Canada				U.S.				Global WAM				Corporate and Other				Total
Core earnings (post-tax)		$	2,048			$	1,487			$	1,759			$	1,321			$	69			$	6,684
CER adjustment(1)			(35)				–				(1)				(2)				–				(38)
Core earnings, CER basis (post-tax)		$	2,013			$	1,487			$	1,758			$	1,319			$	69			$	6,646
Income tax on core earnings, CER basis(2)			273				378				401				204				(99)				1,157
Core earnings, CER basis (pre-tax)		$	2,286			$	1,865			$	2,159			$	1,523			$	(30)			$	7,803
Core earnings (U.S. dollars) – Asia and U.S. segments
Core earnings (post-tax)(3), US $		$	1,518							$	1,304
CER adjustment US $(1)			(24)								–
Core earnings, CER basis (post-tax), US $		$	1,494							$	1,304

(1)	The impact of updating foreign exchange rates to that which was used in 1Q24.

(2)	Income tax on core earnings adjusted to reflect the foreign exchange rates for the Statement of Income in effect for 1Q24.

(3)	Core earnings (post-tax) in Canadian $ is translated to US $ using the US $ Statement of Income exchange rate for the four respective quarters that make up 2023 core earnings.

 

 

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Segment core earnings by business line or geographic source

($ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)

Asia

 

		Quarterly Results																				Full Year    Results
(US $ millions)		1Q24				4Q23				3Q23				2Q23				1Q23				2023
Hong Kong		$	241			$	218			$	190			$	161			$	159			$	728
Japan			102				79				87				81				62				309
Asia Other(1)			151				119				119				119				137				494
International High Net Worth																							72
Mainland China																							49
Singapore																							161
Vietnam																							133
Other Emerging Markets(2)																							79
Regional Office			(6)				(2)				(6)				(8)				3				(13)
Total Asia core earnings		$	488			$	414			$	390			$	353			$	361			$	1,518
(1)  Core earnings for Asia Other is reported by country annually, on a full year basis. (2)  Other Emerging Markets includes Indonesia, the Philippines, Malaysia, Thailand, Cambodia and Myanmar.
		Quarterly Results																				Full Year    Results
(US $ millions), CER basis(1)		1Q24				4Q23				3Q23				2Q23				1Q23				2023
Hong Kong		$	241			$	216			$	191			$	161			$	159			$	727
Japan			102				78				84				75				55				292
Asia Other(2)			151				121				117				115				134				487
International High Net Worth																							72
Mainland China																							48
Singapore																							161
Vietnam																							130
Other Emerging Markets(3)																							76
Regional Office			(6)				(2)				(6)				(8)				3				(13)
Total Asia core earnings, CER basis		$	488			$	413			$	386			$	343			$	351			$	1,493
(1)  Core earnings adjusted to reflect the foreign exchange rates for the Statement of Income in effect for 1Q24. (2)  Core earnings for Asia Other is reported by country annually, on a full year basis. (3)  Other Emerging Markets includes Indonesia, the Philippines, Malaysia, Thailand, Cambodia and Myanmar.   Canada
		Quarterly Results																				Full Year    Results
(Canadian $ in millions)			1Q24				4Q23				3Q23				2Q23				1Q23				2023
Insurance		$	266			$	258			$	310			$	276			$	257			$	1,101
Annuities			53				48				48				55				53				204
Manulife Bank			45				46				50				43				43				182
Total Canada core earnings		$	364			$	352			$	408			$	374			$	353			$	1,487

 

 

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U.S.

 

		Quarterly Results																				Full Year    Results
(US $ in millions)			1Q24				4Q23				3Q23				2Q23				1Q23				2023
U.S. Insurance		$	286			$	300			$	283			$	293			$	257			$	1,133
U.S. Annuities			49				49				46				48				28				171
Total U.S. core earnings		$	335			$	349			$	329			$	341			$	285			$	1,304

Global WAM by business line

 

		Quarterly Results																				Full Year    Results
(Canadian $ in millions)			1Q24				4Q23				3Q23				2Q23				1Q23				2023
Retirement		$	202			$	203			$	192			$	186			$	164			$	745
Retail			131				127				135				119				121				502
Institutional asset management			24				23				34				15				2				74
Total Global WAM core earnings		$	357			$	353			$	361			$	320			$	287			$	1,321
		Quarterly Results																				Full Year    Results
(Canadian $ in millions), CER basis(1)			1Q24				4Q23				3Q23				2Q23				1Q23				2023
Retirement		$	202			$	201			$	193			$	186			$	164			$	744
Retail			131				127				135				119				120				501
Institutional asset management			24				23				34				15				2				74
Total Global WAM core earnings, CER basis		$	357			$	351			$	362			$	320			$	286			$	1,319

(1)	Core earnings adjusted to reflect the foreign exchange rates for the Statement of Income in effect for 1Q24.

Global WAM by geographic source

 

		Quarterly Results																				Full Year    Results
(Canadian $ in millions)			1Q24				4Q23				3Q23				2Q23				1Q23				2023
Asia		$	108			$	109			$	108			$	103			$	84			$	404
Canada			90				100				94				96				88				378
U.S.			159				144				159				121				115				539
Total Global WAM core earnings		$	357			$	353			$	361			$	320			$	287			$	1,321
		Quarterly Results																				Full Year    Results
(Canadian $ in millions), CER basis(1)			1Q24				4Q23				3Q23				2Q23				1Q23				2023
Asia		$	108			$	108			$	108			$	103			$	83			$	402
Canada			90				100				94				96				88				378
U.S.			159				143				160				121				115				539
Total Global WAM core earnings, CER basis		$	357			$	351			$	362			$	320			$	286			$	1,319

(1)	Core earnings adjusted to reflect the foreign exchange rates for the Statement of Income in effect for 1Q24.

 

 

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Core earnings available to common shareholders is a financial measure that is used in the calculation of core ROE and core EPS. It is calculated as core earnings (post-tax) less preferred share dividends and other equity distributions.

 

($ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)		Quarterly Results																				Full Year Results
		1Q24				4Q23				3Q23				2Q23				1Q23				2023
Core earnings		$	1,754			$	1,773			$	1,743			$	1,637			$	1,531			$	6,684
Less: Preferred share dividends and other equity distributions			55				99				54				98				52				303
Core earnings available to common shareholders			1,699				1,674				1,689				1,539				1,479				6,381
CER adjustment(1)			–				(14)				2				(8)				(18)				(38)
Core earnings available to common shareholders, CER basis		$	1,699			$	1,660			$	1,691			$	1,531			$	1,461			$	6,343

(1)	The impact of updating foreign exchange rates to that which was used in 1Q24.

Core ROE measures profitability using core earnings available to common shareholders as a percentage of the capital deployed to earn the core earnings. The Company calculates core ROE using average common shareholders’ equity quarterly, as the average of common shareholders’ equity at the start and end of the quarter, and annually, as the average of the quarterly average common shareholders’ equity for the year.

 

		Quarterly Results																				Full Year Results
($ millions, unless otherwise stated)		1Q24				4Q23				3Q23				2Q23				1Q23				2023
Core earnings available to common shareholders		$	1,699			$	1,674			$	1,689			$	1,539			$	1,479			$	6,381
Annualized core earnings available to common shareholders (post-tax)		$	6,833			$	6,641			$	6,701			$	6,173			$	5,998			$	6,381
Average common shareholders’ equity (see below)		$	40,984			$	40,563			$	39,897			$	39,881			$	40,465			$	40,201
Core ROE (annualized) (%)			16.7%				16.4%				16.8%				15.5%				14.8%				15.9%
Average common shareholders’ equity
Total shareholders’ and other equity		$	48,250			$	47,039			$	47,407			$	45,707			$	47,375			$	47,039
Less: Preferred shares and other equity			6,660				6,660				6,660				6,660				6,660				6,660
Common shareholders’ equity		$	41,590			$	40,379			$	40,747			$	39,047			$	40,715			$	40,379
Average common shareholders’ equity		$	40,984			$	40,563			$	39,897			$	39,881			$	40,465			$	40,201

Core EPS is equal to core earnings available to common shareholders divided by diluted weighted average common shares outstanding.

Core earnings related to strategic priorities

The Company measures its progress on certain strategic priorities using core earnings, including core earnings from highest potential businesses. The core earnings for these businesses is calculated consistent with our definition of core earnings.

 

For the three months ended March 31, ($ millions and post-tax, unless otherwise stated)		2024				2023
Core earnings highest potential businesses(1)		$	1,180			$	912
Core earnings - All other businesses			574				619
Core earnings			1,754				1,531
Items excluded from core earnings			(888)				(125)
Net income (loss) attributed to shareholders		$	866			$	1,406
Highest potential businesses core earnings contribution			67%				60%

(1)	Includes core earnings from Asia and Global WAM segments, Canada Group Benefits, and behavioural insurance products.

The effective tax rate on core earnings is equal to income tax on core earnings divided by pre-tax core earnings.

 

 

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Common share core dividend payout ratio is a ratio that measures the percentage of core earnings paid to common shareholders as dividends. It is calculated as dividends per common share divided by core EPS.

 

		Quarterly Results																				Full Year Results
		1Q24				4Q23				3Q23				2Q23				1Q23				2023
Per share dividend		$	0.40			$	0.37			$	0.37			$	0.37			$	0.37			$	1.46
Core EPS		$	0.94			$	0.92			$	0.92			$	0.83			$	0.79			$	3.47
Common share core dividend payout ratio			43%				40%				40%				44%				46%				42%

The Company also uses financial performance measures that are prepared on a constant exchange rate basis, which exclude the impact of currency fluctuations (from local currency to Canadian dollars at a total Company level and from local currency to U.S. dollars in Asia). Such financial measures may be stated on a constant exchange rate basis or the percentage growth/decline in the financial measure on a constant exchange rate basis, using the income statement and balance sheet exchange rates effective for the first quarter of 2024.

Information supporting constant exchange rate basis for GAAP and non-GAAP financial measures is presented below and throughout this section.

Basic EPS and diluted EPS, CER basis is equal to common shareholders’ net income on a CER basis divided by the weighted average common shares outstanding and diluted weighted common shares outstanding, respectively.

General expenses, CER basis

($ millions, and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)

 

		Quarterly Results																				Full Year Results
		1Q24				4Q23				3Q23				2Q23				1Q23				2023
General expenses		$	1,102			$	1,180			$	1,042			$	1,022			$	1,086			$	4,330
CER adjustment(1)			–				(8)				3				3				(3)				(5)
General expenses, CER basis		$	1,102			$	1,172			$	1,045			$	1,025			$	1,083			$	4,325

(1)	The impact of updating foreign exchange rates to that which was used in 1Q24.

Net income attributed to shareholders excluding the GA Reinsurance Transaction

Net income attributed to shareholders excluding the GA Reinsurance Transaction is equal to net income attributed to shareholders less the impact of the GA Reinsurance Transaction. This was a significant transaction for the Company and we believe this measure will aid investors to better understand its impact on our overall results.

 

For the three months ended March 31, ($ millions and post-tax)		2024
Net income attributed to shareholders per financial statements		$	866
Less: Net loss attributed to shareholders from the GA Reinsurance Transaction			(767)
Net income attributed to shareholders excluding the GA Reinsurance Transaction		$	1,633

Common shareholders net income excluding the GA Reinsurance Transaction is a financial measure that is used in the calculation of ROE excluding the GA Reinsurance Transaction and diluted EPS excluding the GA Reinsurance Transaction. It is calculated as net income attributed to shareholders excluding the GA Reinsurance transaction less preferred share dividends and other equity distributions. ROE excluding the GA Reinsurance Transaction measures profitability using common shareholders’ net income excluding the GA Reinsurance Transaction as a percentage of the capital deployed to earn the net income attributed to shareholders. The Company calculates ROE excluding the GA Reinsurance Transaction using average common shareholders’ equity quarterly, as the average of common shareholders’ equity at the start and end of the quarter, and annually, as the average of the quarterly average common shareholders’ equity for the year.

 

 

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For the three months ended March 31, ($ millions, unless otherwise stated)		2024
Net income attributed to shareholders excluding the GA Reinsurance Transaction		$	1,633
Less: Preferred share dividends and other equity distributions			55
Common shareholders’ net income excluding the GA Reinsurance transaction		$	1,578
Annualized common shareholders’ net income excluding the GA Reinsurance transaction		$	6,347
Average Common shareholders’ equity		$	40,984
ROE excluding the GA Reinsurance Transaction (annualized)			15.5%

Diluted EPS excluding the GA Reinsurance Transaction is equal to common shareholders’ net income excluding the GA Reinsurance Transaction divided by diluted weighted average common shares outstanding.

Drivers of Earnings (“DOE”) is used to identify the primary sources of gains or losses in each reporting period. It is one of the key tools we use to understand and manage our business. The DOE line items are comprised of amounts that have been included in our financial statements. The core DOE shows the sources of core earnings and the items excluded from core earnings, reconciled to net income attributed to shareholders. The elements of the core earnings DOE are described below:

Net Insurance Service Result represents the core earnings associated with providing insurance service to policyholders within the period including:

 

•

Expected earnings on insurance contracts which includes the release of risk adjustment for expired non-financial risk, the CSM recognized for service provided and expected earnings on short-term PAA insurance business.

 

•

Impact of new insurance business relates to income at initial recognition from new insurance contracts. Losses would occur if the group of new insurance contracts was onerous at initial recognition. If reinsurance contracts provide coverage for the direct insurance contracts, then the loss is offset by a corresponding gain on reinsurance contracts held.

 

•

Insurance experience gains (losses) arise from items such as claims, persistency, and expenses, where the actual experience in the current period differs from the expected results assumed in the insurance and investment contract liabilities. Generally, this line would be driven by claims and expenses, as persistency experience relates to future service and would be offset by changes to the carrying amount of the contractual service margin unless the group is onerous, in which case the impact of persistency experience would be included in core earnings.

 

•

Other represents pre-tax net income on residual items in the insurance result section.

Net Investment Result represents the core earnings associated with investment results within the period. Note that results associated with Global WAM and Manulife Bank are shown on separate DOE lines. However, within the income statement, the results associated with these businesses would impact the total investment result. This section includes:

 

•

Expected investment earnings, which is the difference between expected asset returns and the associated finance income or expense from insurance and investment contract liabilities, net of investment expenses.

 

•

Change in expected credit loss, which is the gain or charge to net income attributed to shareholders for credit losses to bring the allowance for credit losses to a level management considers adequate for expected credit-related losses on its portfolio.

 

•

Expected earnings on surplus reflects the expected investment return on surplus assets.

 

•

Other represents pre-tax net income on residual items in the investment result section.

Global WAM is the pre-tax net income from the Global Wealth and Asset Management segment, adjusted for applicable items excluded from core earnings as noted in the core earnings (loss) section above.

 

 

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Manulife Bank is the pre-tax net income from Manulife Bank, adjusted for applicable items excluded from core earnings as noted in the core earnings (loss) section above.

Other represents net income associated with items outside of the net insurance service result, net investment result, Global WAM and Manulife Bank. Other includes lines attributed to core earnings such as:

 

•

Non-directly attributable expenses are expenses incurred by the Company which are not directly attributable to fulfilling insurance contracts. Non-directly attributable expenses excludes non-directly attributable investment expenses as they are included in the net investment result.

 

•

Other represents pre-tax net income on residual items in the Other section. Most notably this would include the cost of financing debt issued by Manulife.

Net income attributed to shareholders includes the following items excluded from core earnings:

 

•

Market experience gains (losses) related to items excluded from core earnings that relate to changes in market variables.

 

•

Changes in actuarial methods and assumptions that flow directly through income related to updates in the methods and assumptions used to value insurance contract liabilities.

 

•

Restructuring charges includes a charge taken to reorganize operations.

 

•

Reinsurance transactions, tax-related items and other include the impacts of new or changes to in-force reinsurance contracts, the impact of enacted or substantially enacted income tax rate changes and other amounts defined as items excluded from core earnings not specifically captured in the lines above.

All of the above items are discussed in more detail in our definition of items excluded from core earnings.

 

 

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Drivers of Earnings (“DOE”) Reconciliation – 1Q24

($ millions, pre-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)

 

		1Q24
		Asia				Canada				U.S.				Global WAM				Corporate and Other				Total
Net insurance service result reconciliation
Total insurance service result – financial statements		$	547			$	284			$	119			$	–			$	28			$	978
Less: Insurance service result attributed to:
Items excluded from core earnings			11				(3)				2				–				(1)				9
NCI			33				–				–				–				–				33
Participating policyholders			48				24				–				–				–				72
Core net insurance service result			455				263				117				–				29				864
Core net insurance service result, CER adjustment(1)			–				–				–				–				–				–
Core net insurance service result, CER basis		$	455			$	263			$	117			$	–			$	29			$	864
Total investment result reconciliation
Total investment result per financial statements		$	54			$	453			$	(290)			$	(230)			$	361			$	348
Less: Reclassify Manulife Bank(2) and Global WAM to their own DOE lines			–				396				–				(230)				–				166
Add: Consolidation and other adjustments from Other DOE line			–				(1)				–				–				(156)				(157)
Less: Net investment result attributed to:
Items excluded from core earnings			(291)				(100)				(720)				–				106				(1,005)
NCI			40				–				–				–				–				40
Participating policyholders			(3)				7				–				–				–				4
Core net investment result			308				149				430				–				99				986
Core net investment result, CER adjustment(1)			–				–				–				–				–				–
Core net investment result, CER basis		$	308			$	149			$	430			$	–			$	99			$	986
Manulife Bank and Global WAM by DOE line reconciliation
Manulife Bank and Global WAM net income attributed to shareholders		$	–			$	65			$	–			$	426			$	–			$	491
Less: Manulife Bank and Global WAM attributed to:
Items excluded from core earnings			–				4				–				11				–				15
Core earnings in Manulife Bank and Global WAM			–				61				–				415				–				476
Core earnings in Manulife Bank and Global WAM, CER adjustment(1)			–				–				–				–				–				–
Core earnings in Manulife Bank and Global WAM, CER basis		$	–			$	61			$	–			$	415			$	–			$	476
Other reconciliation
Other revenue per financial statements		$	55			$	75			$	39			$	1,750			$	(111)			$	1,808
General expenses per financial statements			(56)				(142)				(21)				(743)				(140)				(1,102)
Commission related to non-insurance contracts			–				(18)				3				(349)				8				(356)
Interest expense per financial statements			(6)				(271)				(4)				(2)				(141)				(424)
Total financial statements values included in Other			(7)				(356)				17				656				(384)				(74)
Less: Reclassifications:
Manulife Bank and Global WAM to their own DOE lines			–				(331)				–				656				–				325
Consolidation and other adjustments to net investment result DOE line			–				(1)				–				–				(156)				(157)
Less: Other attributed to:
Items excluded from core earnings			39				(3)				9				–				9				54
NCI			–				–				–				–				–				–
Participating policyholders			1				–				–				–				–				1
Add: Par earnings transfer to shareholders			8				3				–				–				–				11
Other core earnings			(39)				(18)				8				–				(237)				(286)
Other core earnings, CER adjustment(1)			–				–				–				–				–				–
Other core earnings, CER basis		$	(39)			$	(18)			$	8			$	–			$	(237)			$	(286)
Income tax (expenses) recoveries reconciliation
Income tax (expenses) recoveries per financial statements		$	(150)			$	(83)			$	46			$	(61)			$	(32)			$	(280)
Less: Income tax (expenses) recoveries attributed to:
Items excluded from core earnings			(53)				11				149				(3)				(65)				39
NCI			(18)				–				–				–				–				(18)
Participating policyholders			(12)				(3)				–				–				–				(15)
Core income tax (expenses) recoveries			(67)				(91)				(103)				(58)				33				(286)
Core income tax (expenses) recoveries, CER adjustment(1)			–				–				–				–				–				–
Core income tax (expenses) recoveries, CER basis		$	(67)			$	(91)			$	(103)			$	(58)			$	33			$	(286)
(1)  The impact of updating foreign exchange rates to that which was used in 1Q24. (2)  Manulife Bank is part of Canada segment.

 

 

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Drivers of Earnings (“DOE”) Reconciliation – 4Q23

($ millions, pre-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)

 

		4Q23
		Asia				Canada				U.S.				Global WAM				Corporate and Other				Total
Net insurance service result reconciliation
Total insurance service result – financial statements		$	644			$	306			$	195			$	–			$	91			$	1,236
Less: Insurance service result attributed to:
Items excluded from core earnings			130				12				21				–				(2)				161
NCI			19				–				–				–				1				20
Participating policyholders			60				39				–				–				–				99
Core net insurance service result			435				255				174				–				92				956
Core net insurance service result, CER adjustment(1)			(4)				–				(1)				–				(2)				(7)
Core net insurance service result, CER basis		$	431			$	255			$	173			$	–			$	90			$	949
Total investment result reconciliation
Total investment result per financial statements		$	285			$	511			$	72			$	(139)			$	344			$	1,073
Less: Reclassify Manulife Bank(2) and Global WAM to their own DOE lines			–				377				–				(139)				–				238
Add: Consolidation and other adjustments from Other DOE line			–				3				–				–				(162)				(159)
Less: Net investment result attributed to:
Items excluded from core earnings			(47)				9				(359)				–				39				(358)
NCI			37				–				–				–				–				37
Participating policyholders			50				(10)				–				–				–				40
Core net investment result			245				138				431				–				143				957
Core net investment result, CER adjustment(1)			(3)				–				(4)				–				–				(7)
Core net investment result, CER basis		$	242			$	138			$	427			$	–			$	143			$	950
Manulife Bank and Global WAM by DOE line reconciliation
Manulife Bank and Global WAM net income attributed to shareholders		$	–			$	72			$	–			$	424			$	–			$	496
Less: Manulife Bank and Global WAM attributed to:
Items excluded from core earnings			–				8				–				16				–				24
Core earnings in Manulife Bank and Global WAM			–				64				–				408				–				472
Core earnings in Manulife Bank and Global WAM, CER adjustment(1)			–				–				–				(2)				–				(2)
Core earnings in Manulife Bank and Global WAM, CER basis		$	–			$	64			$	–			$	406			$	–			$	470
Other reconciliation
Other revenue per financial statements		$	(16)			$	75			$	8			$	1,688			$	(36)			$	1,719
General expenses per financial statements			(59)				(136)				(28)				(793)				(164)				(1,180)
Commission related to non-insurance contracts			(3)				(12)				1				(330)				9				(335)
Interest expense per financial statements			(4)				(246)				(4)				(2)				(134)				(390)
Total financial statements values included in Other			(82)				(319)				(23)				563				(325)				(186)
Less: Reclassifications:
Manulife Bank and Global WAM to their own DOE lines			–				(305)				–				564				–				259
Consolidation and other adjustments to net investment result DOE line			–				3				–				–				(162)				(159)
Less: Other attributed to:
Items excluded from core earnings			(26)				4				(5)				(2)				79				50
NCI			(2)				–				–				1				–				(1)
Participating policyholders			(4)				(1)				–				–				–				(5)
Add: Par earnings transfer to shareholders			10				2				–				–				–				12
Other core earnings			(40)				(18)				(18)				–				(242)				(318)
Other core earnings, CER adjustment(1)			–				–				–				–				–				–
Other core earnings, CER basis		$	(40)			$	(18)			$	(18)			$	–			$	(242)			$	(318)
Income tax (expenses) recoveries reconciliation
Income tax (expenses) recoveries per financial statements		$	(109)			$	(116)			$	(46)			$	(58)			$	7			$	(322)
Less: Income tax (expenses) recoveries attributed to:
Items excluded from core earnings			(6)				(20)				67				(3)				(30)				8
NCI			(17)				–				–				–				–				(17)
Participating policyholders			(10)				(9)				–				–				–				(19)
Core income tax (expenses) recoveries			(76)				(87)				(113)				(55)				37				(294)
Core income tax (expenses) recoveries, CER adjustment(1)			–				–				1				–				1				2
Core income tax (expenses) recoveries, CER basis		$	(76)			$	(87)			$	(112)			$	(55)			$	38			$	(292)

(1)	The impact of updating foreign exchange rates to that which was used in 1Q24.

(2)	Manulife Bank is part of Canada segment.

 

 

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Drivers of Earnings (“DOE”) Reconciliation – 3Q23

($ millions, pre-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)

 

		3Q23
		Asia				Canada				U.S.				Global WAM				Corporate and Other				Total
Net insurance service result reconciliation
Total insurance service result – financial statements		$	467			$	366			$	108			$	–			$	64			$	1,005
Less: Insurance service result attributed to:
Items excluded from core earnings			(112)				11				(51)				–				(1)				(153)
NCI			15				–				–				–				–				15
Participating policyholders			177				21				–				–				–				198
Core net insurance service result			387				334				159				–				65				945
Core net insurance service result, CER adjustment(1)			–				–				–				–				–				–
Core net insurance service result, CER basis		$	387			$	334			$	159			$	–			$	65			$	945
Total investment result reconciliation
Total investment result per financial statements		$	4			$	389			$	(45)			$	(303)			$	273			$	318
Less: Reclassify Manulife Bank(2) and Global WAM to their own DOE lines			–				380				–				(303)				–				77
Add: Consolidation and other adjustments from Other DOE line			–				(23)				–				–				(131)				(154)
Less: Net investment result attributed to:
Items excluded from core earnings			(274)				(130)				(418)				–				(5)				(827)
NCI			17				–				–				–				–				17
Participating policyholders			28				(21)				–				–				–				7
Core net investment result			233				137				373				–				147				890
Core net investment result, CER adjustment(1)			(2)				–				2				–				–				–
Core net investment result, CER basis		$	231			$	137			$	375			$	–			$	147			$	890
Manulife Bank and Global WAM by DOE line reconciliation
Manulife Bank and Global WAM net income attributed to shareholders		$	–			$	55			$	–			$	365			$	–			$	420
Less: Manulife Bank and Global WAM attributed to:
Items excluded from core earnings			–				(11)				–				(55)				–				(66)
Core earnings in Manulife Bank and Global WAM			–				66				–				420				–				486
Core earnings in Manulife Bank and Global WAM, CER adjustment(1)			–				–				–				1				–				1
Core earnings in Manulife Bank and Global WAM, CER basis		$	–			$	66			$	–			$	421			$	–			$	487
Other reconciliation
Other revenue per financial statements		$	26			$	53			$	31			$	1,709			$	(174)			$	1,645
General expenses per financial statements			(52)				(128)				(29)				(703)				(129)				(1,041)
Commission related to non-insurance contracts			(3)				(14)				6				(334)				9				(336)
Interest expense per financial statements			(3)				(290)				(3)				(1)				(119)				(416)
Total financial statements values included in Other			(32)				(379)				5				671				(413)				(148)
Less: Reclassifications:
Manulife Bank and Global WAM to their own DOE lines			–				(325)				–				670				–				345
Consolidation and other adjustments to net investment result DOE line			–				(23)				–				–				(132)				(155)
Less: Other attributed to:
Items excluded from core earnings			5				(4)				2				–				(49)				(46)
NCI			2				–				–				1				–				3
Participating policyholders			3				(5)				–				–				–				(2)
Add: Par earnings transfer to shareholders			6				2				–				–				–				8
Other core earnings			(36)				(20)				3				–				(232)				(285)
Other core earnings, CER adjustment(1)			–				–				1				–				–				1
Other core earnings, CER basis		$	(36)			$	(20)			$	4			$	–			$	(232)			$	(284)
Income tax (expenses) recoveries reconciliation
Income tax (expenses) recoveries per financial statements		$	(135)			$	(94)			$	4			$	(48)			$	324			$	51
Less: Income tax (expenses) recoveries attributed to:
Items excluded from core earnings			(58)				16				97				12				294				361
NCI			(9)				–				–				(1)				–				(10)
Participating policyholders			(6)				(1)				–				–				–				(7)
Core income tax (expenses) recoveries			(62)				(109)				(93)				(59)				30				(293)
Core income tax (expenses) recoveries, CER adjustment(1)			1				–				(1)				–				–				–
Core income tax (expenses) recoveries, CER basis		$	(61)			$	(109)			$	(94)			$	(59)			$	30			$	(293)

(1)	The impact of updating foreign exchange rates to that which was used in 1Q24.

(2)	Manulife Bank is part of Canada segment.

 

 

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Drivers of Earnings (“DOE”) Reconciliation – 2Q23

($ millions, pre-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)

 

		2Q23
		Asia				Canada				U.S.				Global WAM				Corporate and Other				Total
Net insurance service result reconciliation
Total insurance service result – financial statements		$	460			$	262			$	131			$	–			$	34			$	887
Less: Insurance service result attributed to:
Items excluded from core earnings			(44)				(4)				(26)				–				1				(73)
NCI			13				–				–				–				–				13
Participating policyholders			122				21				–				–				–				143
Core net insurance service result			369				245				157				–				33				804
Core net insurance service result, CER adjustment(1)			(7)				(1)				2				–				1				(5)
Core net insurance service result, CER basis		$	362			$	244			$	159			$	–			$	34			$	799
Total investment result reconciliation
Total investment result per financial statements		$	(96)			$	354			$	105			$	(244)			$	478			$	597
Less: Reclassify Manulife Bank(2) and Global WAM to their own DOE lines			–				342				–				(244)				–				98
Add: Consolidation and other adjustments from Other DOE line			–				–				–				–				(127)				(127)
Less: Net investment result attributed to:
Items excluded from core earnings			(318)				(184)				(319)				–				183				(638)
NCI			14				–				–				–				–				14
Participating policyholders			(7)				14				–				–				–				7
Core net investment result			215				182				424				–				168				989
Core net investment result, CER adjustment(1)			(8)				1				1				–				–				(6)
Core net investment result, CER basis		$	207			$	183			$	425			$	–			$	168			$	983
Manulife Bank and Global WAM by DOE line reconciliation
Manulife Bank and Global WAM net income attributed to shareholders		$	–			$	59			$	–			$	362			$	–			$	421
Less: Manulife Bank and Global WAM attributed to:
Items excluded from core earnings			–				–				–				(3)				–				(3)
Core earnings in Manulife Bank and Global WAM			–				59				–				365				–				424
Core earnings in Manulife Bank and Global WAM, CER adjustment(1)			–				–				–				–				–				–
Core earnings in Manulife Bank and Global WAM, CER basis		$	–			$	59			$	–			$	365			$	–			$	424
Other reconciliation
Other revenue per financial statements		$	47			$	72			$	16			$	1,647			$	(91)			$	1,691
General expenses per financial statements			(61)				(127)				(25)				(709)				(101)				(1,023)
Commission related to non-insurance contracts			(2)				(13)				(3)				(329)				11				(336)
Interest expense per financial statements			(3)				(236)				(4)				(5)				(133)				(381)
Total financial statements values included in Other			(19)				(304)				(16)				604				(314)				(49)
Less: Reclassifications:
Manulife Bank and Global WAM to their own DOE lines			–				(283)				–				604				–				321
Consolidation and other adjustments to net investment result DOE line			–				–				–				–				(126)				(126)
Less: Other attributed to:
Items excluded from core earnings			23				(1)				(3)				–				19				38
NCI			4				–				–				–				–				4
Participating policyholders			1				(3)				–				–				–				(2)
Add: Par earnings transfer to shareholders			9				2				–				–				–				11
Other core earnings			(38)				(15)				(13)				–				(207)				(273)
Other core earnings, CER adjustment(1)			1				1				(1)				–				–				1
Other core earnings, CER basis		$	(37)			$	(14)			$	(14)			$	–			$	(207)			$	(272)
Income tax (expenses) recoveries reconciliation
Income tax (expenses) recoveries per financial statements		$	(91)			$	(64)			$	(37)			$	(44)			$	(29)			$	(265)
Less: Income tax (expenses) recoveries attributed to:
Items excluded from core earnings			(4)				42				73				1				(47)				65
NCI			(6)				–				–				–				–				(6)
Participating policyholders			(8)				(9)				–				–				–				(17)
Core income tax (expenses) recoveries			(73)				(97)				(110)				(45)				18				(307)
Core income tax (expenses) recoveries, CER adjustment(1)			3				–				–				–				(1)				2
Core income tax (expenses) recoveries, CER basis		$	(70)			$	(97)			$	(110)			$	(45)			$	17			$	(305)
(1)  The impact of updating foreign exchange rates to that which was used in 1Q24. (2)  Manulife Bank is part of Canada segment.

 

 

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Drivers of Earnings (“DOE”) Reconciliation – 1Q23

($ millions, pre-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)

 

		1Q23
		Asia				Canada				U.S.				Global WAM				Corporate and Other				Total
Net insurance service result reconciliation
Total insurance service result – financial statements		$	370			$	259			$	173			$	–			$	47			$	849
Less: Insurance service result attributed to:
Items excluded from core earnings			26				–				1				–				(1)				26
NCI			40				–				–				–				–				40
Participating policyholders			(51)				26				–				–				–				(25)
Core net insurance service result			355				233				172				–				48				808
Core net insurance service result, CER adjustment(1)			(9)				–				(1)				–				–				(10)
Core net insurance service result, CER basis		$	346			$	233			$	171			$	–			$	48			$	798
Total investment result reconciliation
Total investment result per financial statements		$	285			$	463			$	101			$	(260)			$	381			$	970
Less: Reclassify Manulife Bank(2) and Global WAM to their own DOE lines			–				346				–				(260)				–				86
Add: Consolidation and other adjustments from Other DOE line			–				–				–				–				(137)				(137)
Less: Net investment result attributed to:
Items excluded from core earnings			34				(40)				(200)				–				81				(125)
NCI			24				–				–				–				–				24
Participating policyholders			3				–				–				–				–				3
Core net investment result			224				157				301				–				163				845
Core net investment result, CER adjustment(1)			(11)				–				–				–				–				(11)
Core net investment result, CER basis		$	213			$	157			$	301			$	–			$	163			$	834
Manulife Bank and Global WAM by DOE line reconciliation
Manulife Bank and Global WAM net income attributed to shareholders		$	–			$	65			$	–			$	345			$	–			$	410
Less: Manulife Bank and Global WAM attributed to:
Items excluded from core earnings			–				5				–				13				–				18
Core earnings in Manulife Bank and Global WAM			–				60				–				332				–				392
Core earnings in Manulife Bank and Global WAM, CER adjustment(1)			–				–				–				(1)				–				(1)
Core earnings in Manulife Bank and Global WAM, CER basis		$	–			$	60			$	–			$	331			$	–			$	391
Other reconciliation
Other revenue per financial statements		$	10			$	72			$	24			$	1,665			$	(80)			$	1,691
General expenses per financial statements			(48)				(123)				(74)				(726)				(115)				(1,086)
Commission related to non-insurance contracts			(2)				(16)				(1)				(329)				10				(338)
Interest expense per financial statements			(2)				(232)				(4)				(5)				(124)				(367)
Total financial statements values included in Other			(42)				(299)				(55)				605				(309)				(100)
Less: Reclassifications:
Manulife Bank and Global WAM to their own DOE lines			–				(281)				–				605				–				324
Consolidation and other adjustments to net investment result DOE line			–				–				–				–				(137)				(137)
Less: Other attributed to:
Items excluded from core earnings			(9)				(1)				(53)				–				36				(27)
NCI			–				–				–				–				–				–
Participating policyholders			(2)				(3)				–				–				–				(5)
Add: Par earnings transfer to shareholders			9				2				–				–				–				11
Other core earnings			(22)				(12)				(2)				–				(208)				(244)
Other core earnings, CER adjustment(1)			2				–				(1)				–				–				1
Other core earnings, CER basis		$	(20)			$	(12)			$	(3)			$	–			$	(208)			$	(243)
Income tax (expenses) recoveries reconciliation
Income tax (expenses) recoveries per financial statements		$	(105)			$	(99)			$	(33)			$	(48)			$	(24)			$	(309)
Less: Income tax (expenses) recoveries attributed to:
Items excluded from core earnings			(21)				(8)				53				(3)				(38)				(17)
NCI			(10)				–				–				–				–				(10)
Participating policyholders			(6)				(6)				–				–				–				(12)
Core income tax (expenses) recoveries			(68)				(85)				(86)				(45)				14				(270)
Core income tax (expenses) recoveries, CER adjustment(1)			2				–				1				–				–				3
Core income tax (expenses) recoveries, CER basis		$	(66)			$	(85)			$	(85)			$	(45)			$	14			$	(267)
(1)  The impact of updating foreign exchange rates to that which was used in 1Q24. (2)  Manulife Bank is part of Canada segment.

 

 

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Drivers of Earnings (“DOE”) Reconciliation – 2023

($ millions, pre-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)

 

		2023
		Asia				Canada				U.S.				Global WAM				Corporate and Other				Total
Net insurance service result reconciliation
Total insurance service result – financial statements		$	1,941			$	1,193			$	607			$	–			$	236			$	3,977
Less: Insurance service result attributed to:
Items excluded from core earnings			–				19				(55)				–				(3)				(39)
NCI			87				–				–				–				1				88
Participating policyholders			308				107				–				–				–				415
Core net insurance service result		$	1,546			$	1,067			$	662			$	–			$	238			$	3,513
Core net insurance service result, CER adjustment(1)			(20)				–				–				–				(1)				(21)
Core net insurance service result, CER basis		$	1,526			$	1,067			$	662			$	–			$	237			$	3,492
Total investment result reconciliation
Total investment result per financial statements		$	478			$	1,717			$	233			$	(946)			$	1,476			$	2,958
Less: Reclassify Manulife Bank(2) and Global WAM to their own DOE lines			–				1,445				–				(946)				–				499
Add: Consolidation and other adjustments from Other DOE line			–				(20)				–				–				(557)				(577)
Less: Net investment result attributed to:
Items excluded from core earnings			(605)				(345)				(1,296)				–				298				(1,948)
NCI			92				–				–				–				–				92
Participating policyholders			74				(17)				–				–				–				57
Core net investment result			917				614				1,529				–				621				3,681
Core net investment result, CER adjustment(1)			(24)				–				(2)				–				1				(25)
Core net investment result, CER basis		$	893			$	614			$	1,527			$	–			$	622			$	3,656
Manulife Bank and Global WAM by DOE line reconciliation
Manulife Bank and Global WAM net income attributed to shareholders			–				251				–				1,496				–				1,747
Less: Manulife Bank and Global WAM attributed to:
Items excluded from core earnings			–				2				–				(29)				–				(27)
Core earnings in Manulife Bank and Global WAM			–				249				–				1,525				–				1,774
Core earnings in Manulife Bank and Global WAM, CER adjustment(1)			–				–				–				(2)				–				(2)
Core earnings in Manulife Bank and Global WAM, CER basis		$	–			$	249			$	–			$	1,523			$	–			$	1,772
Other reconciliation
Other revenue per financial statements		$	67			$	272			$	79			$	6,709			$	(381)			$	6,746
General expenses per financial statements			(220)				(514)				(156)				(2,931)				(509)				(4,330)
Commission related to non-insurance contracts			(10)				(55)				3				(1,322)				39				(1,345)
Interest expense per financial statements			(12)				(1,004)				(15)				(13)				(510)				(1,554)
Total financial statements values included in Other			(175)				(1,301)				(89)				2,443				(1,361)				(483)
Less: Reclassifications:
Manulife Bank and Global WAM to their own DOE lines			–				(1,194)				–				2,443				–				1,249
Consolidation and other adjustments to net investment result DOE line			–				(20)				–				–				(557)				(577)
Less: Other attributed to:
Items excluded from core earnings			(7)				(2)				(59)				(2)				85				15
NCI			4				–				–				2				–				6
Participating policyholders			(2)				(12)				–				–				–				(14)
Add: Par earnings transfer to shareholders			34				8				–				–				–				42
Other core earnings			(136)				(65)				(30)				–				(889)				(1,120)
Other core earnings, CER adjustment(1)			3				–				–				–				–				3
Other core earnings, CER basis		$	(133)			$	(65)			$	(30)			$	–			$	(889)			$	(1,117)
Income tax (expenses) recoveries reconciliation
Income tax (expenses) recoveries per financial statements		$	(440)			$	(373)			$	(112)			$	(198)			$	278			$	(845)
Less: Income tax (expenses) recoveries attributed to:
Items excluded from core earnings			(89)				30				290				7				179				417
NCI			(42)				–				–				(1)				–				(43)
Participating policyholders			(30)				(25)				–				–				–				(55)
Core income tax (expenses) recoveries			(279)				(378)				(402)				(204)				99				(1,164)
Core income tax (expenses) recoveries, CER adjustment(1)			6				–				1				–				–				7
Core income tax (expenses) recoveries, CER basis		$	(273)			$	(378)			$	(401)			$	(204)			$	99			$	(1,157)
(1)  The impact of updating foreign exchange rates to that which was used in 1Q24. (2)  Manulife Bank is part of Canada segment.

 

 

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The contractual service margin (“CSM”) is a liability that represents future unearned profits on insurance contracts written. It is a component of our insurance and reinsurance contract liabilities on our Statement of Financial Position and includes amounts attributed to common shareholders, participating policyholders and non-controlling interests.

In 2023, we included amounts attributed to common shareholders, participating policyholders and non-controlling interests in our reporting of changes in the CSM. Effective January 1, 2024, we no longer include amounts related to non-controlling interests in this reporting, and prior year amounts have been restated. In addition, the new business CSM reconciliation has been adjusted to remove NCI information.

Changes in the CSM net of NCI are classified as organic and inorganic. CSM growth is the percentage change in the CSM net of NCI compared with a prior period on a constant exchange rate basis.

Changes in CSM net of NCI that are classified as organic include the following impacts:

 

•

Impact of new insurance business (“impact of new business” or “new business CSM”) is the impact from insurance contracts initially recognized in the period and includes acquisition expense related gains (losses) which impact the CSM in the period. It excludes the impact from entering into new in-force reinsurance contracts which would generally be considered a management action.

 

•

Expected movement related to finance income or expenses (“interest accretion”) includes interest accreted on the CSM net of NCI during the period and the expected change on VFA contracts if returns are as expected.

 

•

CSM recognized for service provided (“CSM amortization”) is the portion of the CSM net of NCI that is recognized in net income for service provided in the period; and

 

•

Insurance experience gains (losses) and other is primarily the change from experience variances that relate to future periods. This includes persistency experience and changes in future period cash flows caused by other current period experience.

Changes in CSM net of NCI that are classified as inorganic include:

 

•

Changes in actuarial methods and assumptions that adjust the CSM;

 

•

Effect of movement in exchange rates over the reporting period;

 

•

Impact of markets; and

 

•

Reinsurance transactions, tax-related and other items that reflects the impact related to future cash flows from items such as gains or losses on disposition of a business, the impact of enacted or substantially enacted income tax rate changes, material one-time only adjustments that are exceptional in nature and other amounts not specifically captured in the previous inorganic items.

Post-tax CSM is used in the definition of financial leverage ratio and consolidated capital and is calculated as the CSM adjusted for the marginal income tax rate in the jurisdictions that report a CSM balance. Post-tax CSM net of NCI is used in the adjusted book value per share calculation and is calculated as the CSM net of NCI adjusted for the marginal income tax rate in the jurisdictions that report this balance.

New business CSM growth is the percentage change in the new business CSM compared with a prior period on a constant exchange rate basis.

 

 

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CSM and post-tax CSM information

($ millions pre-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)

 

As at		Mar 31, 2024				Dec 31, 2023				Sept 30, 2023				June 30, 2023				Mar 31, 2023
CSM		$	22,075			$	21,301			$	18,149			$	18,103			$	18,200
Less: CSM for NCI			986				861				780				680				733
CSM, net of NCI		$	21,089			$	20,440			$	17,369			$	17,423			$	17,467
CER adjustment(1)			(26)				206				(27)				175				(316)
CSM, net of NCI, CER basis		$	21,063			$	20,646			$	17,342			$	17,598			$	17,151
CSM by segment
Asia		$	13,208			$	12,617			$	10,030			$	9,630			$	9,678
Asia NCI			986				861				780				680				733
Canada			4,205				4,060				3,662				3,656				3,659
U.S.			3,649				3,738				3,651				4,106				4,080
Corporate and Other			27				25				26				31				50
CSM		$	22,075			$	21,301			$	18,149			$	18,103			$	18,200
CSM, CER adjustment(1)
Asia		$	(5)			$	132			$	(9)			$	98			$	(301)
Asia NCI			–				6				7				17				(37)
Canada			–				–				–				–				–
U.S.			(20)				74				(18)				77				(14)
Corporate and Other			–				–				–				–				–
Total		$	(25)			$	212			$	(20)			$	192			$	(352)
CSM, CER basis
Asia		$	13,203			$	12,749			$	10,021			$	9,728			$	9,377
Asia NCI			986				867				787				697				696
Canada			4,205				4,060				3,662				3,656				3,659
U.S.			3,629				3,812				3,633				4,183				4,066
Corporate and Other			27				25				26				31				50
Total CSM, CER basis		$	22,050			$	21,513			$	18,129			$	18,295			$	17,848
Post-tax CSM
CSM		$	22,075			$	21,301			$	18,149			$	18,103			$	18,200
Marginal tax rate on CSM			(2,650)				(2,798)				(2,474)				(2,645)				(2,724)
Post-tax CSM		$	19,425			$	18,503			$	15,675			$	15,458			$	15,476
CSM, net of NCI		$	21,089			$	20,440			$	17,369			$	17,423			$	17,467
Marginal tax rate on CSM net of NCI			(2,542)				(2,692)				(2,377)				(2,546)				(2,617)
Post-tax CSM net of NCI		$	18,547			$	17,748			$	14,992			$	14,877			$	14,850

(1)	The impact of reflecting CSM and CSM net of NCI using the foreign exchange rates for the Statement of Financial Position in effect for 1Q24.

 

 

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New business CSM⁽¹⁾ detail, CER basis

($ millions pre-tax, and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)

 

		Quarterly Results																				Full Year Results
		1Q24				4Q23				3Q23				2Q23				1Q23				2023
New business CSM
Hong Kong		$	168			$	199			$	167			$	191			$	119			$	676
Japan			48				42				29				19				36				126
Asia Other			275				173				206				222				146				747
International High Net Worth																							231
Mainland China																							138
Singapore																							244
Vietnam																							87
Other Emerging Markets																							47
Asia			491				414				402				432				301				1,549
Canada			70				70				51				57				46				224
U.S.			97				142				54				103				95				394
Total new business CSM			658				626				507				592				442				2,167
New business CSM, CER adjustment(2),(3)
Hong Kong		$	–			$	(2)			$	2			$	1			$	(1)			$	–
Japan			–				(3)				(1)				(1)				(3)				(8)
Asia Other			–				–				1				(2)				(4)				(5)
International High Net Worth																							1
Mainland China																							(1)
Singapore																							–
Vietnam																							(4)
Other Emerging Markets																							(1)
Asia			–				(5)				2				(2)				(8)				(13)
Canada			–				–				1				(1)				–				–
U.S.			–				(2)				1				–				–				(1)
Total new business CSM			–				(7)				4				(3)				(8)				(14)
New business CSM, CER basis
Hong Kong		$	168			$	197			$	169			$	192			$	118			$	676
Japan			48				39				28				18				33				118
Asia Other			275				173				207				220				142				742
International High Net Worth																							232
Mainland China																							137
Singapore																							244
Vietnam																							83
Other Emerging Markets																							46
Asia			491				409				404				430				293				1,536
Canada			70				70				52				56				46				224
U.S.			97				140				55				103				95				393
Total new business CSM, CER basis			658				619				511				589				434				2,153

(1)  New business CSM is net of NCI. (2)  The impact of updating foreign exchange rates to that which was used in 1Q24. (3)  New business CSM for Asia Other is reported by country annually, on a full year basis. Other Emerging Markets within Asia Other include Indonesia, the Philippines, Malaysia, Thailand, Cambodia and Myanmar.

 

 

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Net income financial measures on a CER basis

($ Canadian millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)

 

		Quarterly Results																				Full Year Results
		1Q24				4Q23				3Q23				2Q23				1Q23				2023
Net income (loss) attributed to shareholders:
Asia		$	363			$	615			$	84			$	130			$	519			$	1,348
Canada			273				365				290				227				309				1,191
U.S.			(108)				198				72				183				186				639
Global WAM			365				365				318				317				297				1,297
Corporate and Other			(27)				116				249				168				95				628
Total net income (loss) attributed to shareholders			866				1,659				1,013				1,025				1,406				5,103
Preferred share dividends and other equity distributions			(55)				(99)				(54)				(98)				(52)				(303)
Common shareholders’ net income (loss)		$	811			$	1,560			$	959			$	927			$	1,354			$	4,800
CER adjustment(1)
Asia		$	–			$	(6)			$	2			$	13			$	(5)			$	4
Canada			–				1				1				–				(2)				–
U.S.			–				(5)				(1)				3				(1)				(4)
Global WAM			–				(3)				1				1				(3)				(4)
Corporate and Other			–				(1)				1				(12)				(2)				(14)
Total net income (loss) attributed to shareholders			–				(14)				4				5				(13)				(18)
Preferred share dividends and other equity distributions			–				–				–				–				–				–
Common shareholders’ net income (loss)		$	–			$	(14)			$	4			$	5			$	(13)			$	(18)
Net income (loss) attributed to shareholders, CER basis
Asia		$	363			$	609			$	86			$	143			$	514			$	1,352
Canada			273				366				291				227				307				1,191
U.S.			(108)				193				71				186				185				635
Global WAM			365				362				319				318				294				1,293
Corporate and Other			(27)				115				250				156				93				614
Total net income (loss) attributed to shareholders, CER basis			866				1,645				1,017				1,030				1,393				5,085
Preferred share dividends and other equity distributions, CER basis			(55)				(99)				(54)				(98)				(52)				(303)
Common shareholders’ net income (loss), CER basis		$	811			$	1,546			$	963			$	932			$	1,341			$	4,782
Asia net income attributed to shareholders, U.S. dollars
Asia net income (loss) attributed to shareholders, US $(2)		$	270			$	452			$	63			$	96			$	384			$	995
CER adjustment, US $(1)			–				–				1				10				(2)				9
Asia net income (loss) attributed to shareholders, U.S. $, CER basis(1)		$	270			$	452			$	64			$	106			$	382			$	1,004
Net income (loss) attributed to shareholders (pre-tax)
Net income (loss) attributed to shareholders (post-tax)		$	866			$	1,659			$	1,013			$	1,025			$	1,406			$	5,103
Tax on net income attributed to shareholders			247				288				(67)				242				287				750
Net income (loss) attributed to shareholders (pre-tax)			1,113				1,947				946				1,267				1,693				5,853
CER adjustment(1)			–				(15)				–				15				(20)				(20)
Net income (loss) attributed to shareholders (pre-tax), CER basis		$	1,113			$	1,932			$	946			$	1,282			$	1,673			$	5,833

(1)	The impact of updating foreign exchange rates to that which was used in 1Q24.

(2)	Asia net income attributed to shareholders (post-tax) in Canadian dollars is translated to U.S. dollars using the U.S. dollar Statement of Income rate for the reporting period.

AUMA is a financial measure of the size of the Company. It is comprised of AUM and AUA. AUM includes assets of the General Account, consisting of total invested assets and segregated funds net assets, and external client assets for which we provide investment management services, consisting of mutual fund, institutional asset management and other fund net assets. AUA are assets for which we provide administrative services only. Assets under management and administration is a common industry metric for wealth and asset management businesses.

Our Global WAM business also manages assets on behalf of other segments of the Company. Global WAM-managed AUMA is a financial measure equal to the sum of Global WAM’s AUMA and assets managed by Global WAM on behalf of other segments. It is an important measure of the assets managed by Global WAM.

 

 

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Table of Contents

AUM and AUMA reconciliations

(Canadian $ in millions, and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)

 

		CAD $																								US $(4)
		March 31, 2024																								March 31, 2024
As at		Asia				Canada				U.S.				Global WAM				Corporate and Other				Total				Asia				U.S.
Total invested assets
Manulife Bank net lending assets		$	–			$	25,420			$	–			$	–			$	–			$	25,420			$	–			$	–
Derivative reclassification(1)			–				–				–				–				5,114				5,114				–				–
Invested assets excluding above items			144,720				84,075				129,896				8,133				13,318				380,142				106,881				95,988
Total			144,720				109,495				129,896				8,133				18,432				410,676				106,881				95,988
Segregated funds net assets
Segregated funds net assets – Institutional			–				–				–				3,334				–				3,334				–				–
Segregated funds net assets – Other(2)			26,203				37,218				72,547				262,854				(47)				398,775				19,360				53,609
Total			26,203				37,218				72,547				266,188				(47)				402,109				19,360				53,609
AUM per financial statements			170,923				146,713				202,443				274,321				18,385				812,785				126,241				149,597
Mutual funds			–				–				–				300,178				–				300,178				–				–
Institutional asset management(3)			–				–				–				121,263				–				121,263				–				–
Other funds			–				–				–				16,981				–				16,981				–				–
Total AUM			170,923				146,713				202,443				712,743				18,385				1,251,207				126,241				149,597
Assets under administration			–				–				–				198,698				–				198,698				–				–
Total AUMA		$	170,923			$	146,713			$	202,443			$	911,441			$	18,385			$	1,449,905			$	126,241			$	149,597
Total AUMA, US $(4)																						$	1,071,424
Total AUMA		$	170,923			$	146,713			$	202,443			$	911,441			$	18,385			$	1,449,905
CER adjustment(5)			–				–				–				–				–				–
Total AUMA, CER basis		$	170,923			$	146,713			$	202,443			$	911,441			$	18,385			$	1,449,905
Global WAM Managed AUMA
Global WAM AUMA														$	911,441
AUM managed by Global WAM for Manulife’s other segments															211,528
Total														$	1,122,969

(1)	Corporate and Other amount is related to net derivative assets reclassified from total invested assets to other lines on the Statement of Financial Position.

(2)	Corporate and Other segregated funds net assets represent elimination of amounts held by the Company.

(3)	Institutional asset management excludes Institutional segregated funds net assets.

(4)	US $ AUMA is calculated as total AUMA in Canadian $ divided by the US $ exchange rate in effect at the end of the quarter.

(5)	The impact of updating foreign exchange rates to that which was used in 1Q24.

 

 

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Table of Contents

AUM and AUMA reconciliations

(Canadian $ in millions, and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)

 

		CAD $																								US $(4)
		December 31, 2023																								December 31, 2023
As at		Asia				Canada				U.S.				Global WAM				Corporate and Other				Total				Asia				U.S.
Total invested assets
Manulife Bank net lending assets		$	–			$	25,321			$	–			$	–			$	–			$	25,321			$	–			$	–
Derivative reclassification(1)			–				–				–				–				3,201				3,201				–				–
Invested assets excluding above items			144,433				86,135				133,959				7,090				17,071				388,688				109,533				101,592
Total			144,433				111,456				133,959				7,090				20,272				417,210				109,533				101,592
Segregated funds net assets
Segregated funds net assets – Institutional			–				–				–				3,328				–				3,328				–				–
Segregated funds net assets – Other(2)			24,854				36,085				68,585				244,738				(46)				374,216				18,846				52,014
Total			24,854				36,085				68,585				248,066				(46)				377,544				18,846				52,014
AUM per financial statements			169,287				147,541				202,544				255,156				20,226				794,754				128,379				153,606
Mutual funds			–				–				–				277,365				–				277,365				–				–
Institutional asset management(3)			–				–				–				119,161				–				119,161				–				–
Other funds			–				–				–				15,435				–				15,435				–				–
Total AUM			169,287				147,541				202,544				667,117				20,226				1,206,715				128,379				153,606
Assets under administration			–				–				–				182,046				–				182,046				–				–
Total AUMA		$	169,287			$	147,541			$	202,544			$	849,163			$	20,226			$	1,388,761			$	128,379			$	153,606
Total AUMA, US $(4)																						$	1,053,209
Total AUMA		$	169,287			$	147,541			$	202,544			$	849,163			$	20,226			$	1,388,761
CER adjustment(5)			1,556				–				5,302				14,159				–				21,017
Total AUMA, CER basis		$	170,843			$	147,541			$	207,846			$	863,322			$	20,226			$	1,409,778
Global WAM Managed AUMA
Global WAM AUMA														$	849,163
AUM managed by Global WAM for Manulife’s other segments															205,814
Total														$	1,054,977

Note: For footnotes (1) to (5), refer to the “AUM and AUMA reconciliation” table as at March 31, 2024 above.

 

 

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Table of Contents

AUM and AUMA reconciliations

(Canadian $ in millions, and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)

 

		CAD $																								US $(4)
		September 30, 2023																								September 30, 2023
As at		Asia				Canada				U.S.				Global WAM				Corporate and Other				Total				Asia				U.S.
Total invested assets
Manulife Bank net lending assets		$	–			$	25,123			$	–			$	–			$	–			$	25,123			$	–			$	–
Derivative reclassification(1)			–				–				–				–				8,141				8,141				–				–
Invested assets excluding above items			135,820				78,377				128,790				6,723				15,762				365,472				100,438				95,259
Total			135,820				103,500				128,790				6,723				23,903				398,736				100,438				95,259
Segregated funds net assets
Segregated funds net assets – Institutional			–				–				–				3,477				–				3,477				–				–
Segregated funds net assets – Other(2)			23,769				34,448				64,796				230,469				(47)				353,435				17,587				47,926
Total			23,769				34,448				64,796				233,946				(47)				356,912				17,587				47,926
AUM per financial statements			159,589				137,948				193,586				240,669				23,856				755,648				118,025				143,185
Mutual funds			–				–				–				266,069				–				266,069				–				–
Institutional asset management(3)			–				–				–				111,754				–				111,754				–				–
Other funds			–				–				–				14,359				–				14,359				–				–
Total AUM			159,589				137,948				193,586				632,851				23,856				1,147,830				118,025				143,185
Assets under administration			–				–				–				173,897				–				173,897				–				–
Total AUMA		$	159,589			$	137,948			$	193,586			$	806,748			$	23,856			$	1,321,727			$	118,025			$	143,185
Total AUMA, US $(4)																						$	977,609
Total AUMA		$	159,589			$	137,948			$	193,586			$	806,748			$	23,856			$	1,321,727
CER adjustment(5)			189				–				181				433				–				803
Total AUMA, CER basis		$	159,778			$	137,948			$	193,767			$	807,181			$	23,856			$	1,322,530
Global WAM Managed AUMA
Global WAM AUMA														$	806,748
AUM managed by Global WAM for Manulife’s other segments															201,407
Total														$	1,008,155

Note: For footnotes (1) to (5), refer to the “AUM and AUMA reconciliation” table as at March 31, 2024 above.

 

 

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Table of Contents

AUM and AUMA reconciliations

(Canadian $ in millions, and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)

 

		CAD $																								US $(4)
		June 30, 2023																								June 30, 2023
As at		Asia				Canada				U.S.				Global WAM				Corporate and Other				Total				Asia				U.S.
Total invested assets
Manulife Bank net lending assets		$	–			$	25,003			$	–			$	–			$	–			$	25,003			$	–			$	–
Derivative reclassification(1)			–				–				–				–				3,895				3,895				–				–
Invested assets excluding above items			135,208				83,026				132,133				5,464				18,699				374,530				102,166				99,855
Total			135,208				108,029				132,133				5,464				22,594				403,428				102,166				99,855
Segregated funds net assets
Segregated funds net assets – Institutional			–				–				–				3,564				–				3,564				–				–
Segregated funds net assets – Other(2)			24,052				35,993				67,303				235,113				(44)				362,417				18,182				50,862
Total			24,052				35,993				67,303				238,677				(44)				365,981				18,182				50,862
AUM per financial statements			159,260				144,022				199,436				244,141				22,550				769,409				120,348				150,717
Mutual funds			–				–				–				267,835				–				267,835				–				–
Institutional asset management(3)			–				–				–				112,491				–				112,491				–				–
Other funds			–				–				–				14,674				–				14,674				–				–
Total AUM			159,260				144,022				199,436				639,141				22,550				1,164,409				120,348				150,717
Assets under administration			–				–				–				180,430				–				180,430				–				–
Total AUMA		$	159,260			$	144,022			$	199,436			$	819,571			$	22,550			$	1,344,839			$	120,348			$	150,717
Total AUMA, US $(4)																						$	1,016,277
Total AUMA		$	159,260			$	144,022			$	199,436			$	819,571			$	22,550			$	1,344,839
CER adjustment(5)			2,189				–				4,509				12,431				–				19,129
Total AUMA, CER basis		$	161,449			$	144,022			$	203,945			$	832,002			$	22,550			$	1,363,968
Global WAM Managed AUMA
Global WAM AUMA														$	819,571
AUM managed by Global WAM for Manulife’s other segments															203,825
Total														$	1,023,396

 

Note:

For footnotes (1) to (5), refer to the “AUM and AUMA reconciliation” table as at March 31, 2024 above.

 

 

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Table of Contents

AUM and AUMA reconciliations

(Canadian $ in millions, and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)

 

		CAD $																								US $(4)
		March 31, 2023																								March 31, 2023
As at		Asia				Canada				U.S.				Global WAM				Corporate and Other				Total				Asia				U.S.
Total invested assets
Manulife Bank net lending assets		$	–			$	24,747			$	–			$	–			$	–			$	24,747			$	–			$	–
Derivative reclassification(1)			–				–				–				–				3,488				3,488				–				–
Invested assets excluding above items			138,029				82,733				136,454				5,565				21,460				384,241				102,014				100,827
Total			138,029				107,480				136,454				5,565				24,948				412,476				102,014				100,827
Segregated funds net assets
Segregated funds net assets – Institutional			–				–				–				3,718				–				3,718				–				–
Segregated funds net assets – Other(2)			24,203				36,374				67,935				231,860				(46)				360,326				17,893				50,197
Total			24,203				36,374				67,935				235,578				(46)				364,044				17,893				50,197
AUM per financial statements			162,232				143,854				204,389				241,143				24,902				776,520				119,907				151,024
Mutual funds			–				–				–				267,767				–				267,767				–				–
Institutional asset management(3)			–				–				–				113,781				–				113,781				–				–
Other funds			–				–				–				14,302				–				14,302				–				–
Total AUM			162,232				143,854				204,389				636,993				24,902				1,172,370				119,907				151,024
Assets under administration			–				–				–				177,510				–				177,510				–				–
Total AUMA		$	162,232			$	143,854			$	204,389			$	814,503			$	24,902			$	1,349,880			$	119,907			$	151,024
Total AUMA, US $(4)																						$	997,399
Total AUMA		$	162,232			$	143,854			$	204,389			$	814,503			$	24,902			$	1,349,880
CER adjustment(5)			(4,574)				–				(31)				(3,524)				–				(8,129)
Total AUMA, CER basis		$	157,658			$	143,854			$	204,358			$	810,979			$	24,902			$	1,341,751
Global WAM Managed AUMA
Global WAM AUMA														$	814,503
AUM managed by Global WAM for Manulife’s other segments															208,013
Total														$	1,022,516

Note: For footnotes (1) to (5), refer to the “AUM and AUMA reconciliation” table as at March 31, 2024 above.

 

 

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Global WAM AUMA and Managed AUMA by business line and geographic source

($ millions, and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)

 

As at		Mar 31, 2024				Dec 31, 2023				Sept 30, 2023				June 30, 2023				Mar 31, 2023
Global WAM AUMA by business line
Retirement		$	467,579			$	431,601			$	410,433			$	419,380			$	413,769
Retail			316,406				292,629				278,372				281,814				281,198
Institutional asset management			127,456				124,933				117,943				118,377				119,536
Total		$	911,441			$	849,163			$	806,748			$	819,571			$	814,503
Global WAM AUMA by business line, CER basis(1)
Retirement		$	467,579			$	440,299			$	410,679			$	426,683			$	413,639
Retail			316,406				296,998				278,488				285,608				279,888
Institutional asset management			127,456				126,025				118,014				119,711				117,452
Total		$	911,441			$	863,322			$	807,181			$	832,002			$	810,979
Global WAM AUMA by geographic source
Asia		$	122,354			$	115,523			$	113,642			$	112,283			$	115,819
Canada			243,678				233,351				219,518				226,087				223,045
U.S.			545,409				500,289				473,588				481,201				475,639
Total		$	911,441			$	849,163			$	806,748			$	819,571			$	814,503
Global WAM AUMA by geographic source, CER basis(1)
Asia		$	122,354			$	116,536			$	113,635			$	113,804			$	112,328
Canada			243,678				233,351				219,518				226,087				223,045
U.S.			545,409				513,435				474,028				492,111				475,606
Total		$	911,441			$	863,322			$	807,181			$	832,002			$	810,979
Global WAM Managed AUMA by business line
Retirement		$	467,579			$	431,601			$	410,433			$	419,380			$	413,769
Retail			395,755				368,843				351,384				357,539				358,098
Institutional asset management			259,635				254,533				246,338				246,477				250,649
Total		$	1,122,969			$	1,054,977			$	1,008,155			$	1,023,396			$	1,022,516
Global WAM Managed AUMA by business line, CER basis(1)
Retirement		$	467,579			$	440,299			$	410,679			$	426,683			$	413,639
Retail			395,755				374,407				351,511				362,384				356,793
Institutional asset management			259,635				258,501				246,510				250,258				248,557
Total		$	1,122,969			$	1,073,207			$	1,008,700			$	1,039,325			$	1,018,989
Global WAM Managed AUMA by geographic source
Asia		$	198,464			$	191,238			$	188,098			$	185,198			$	191,720
Canada			294,591				282,487				266,935				274,957				272,101
U.S.			629,914				581,252				553,122				563,241				558,695
Total		$	1,122,969			$	1,054,977			$	1,008,155			$	1,023,396			$	1,022,516
Global WAM Managed AUMA by geographic source, CER basis(1)
Asia		$	198,464			$	194,238			$	188,165			$	188,377			$	188,232
Canada			294,591				282,487				266,935				274,957				272,101
U.S.			629,914				596,482				553,600				575,991				558,656
Total		$	1,122,969			$	1,073,207			$	1,008,700			$	1,039,325			$	1,018,989

(1)	AUMA adjusted to reflect the foreign exchange rates for the Statement of Financial Position in effect for 1Q24.

Average assets under management and administration (“average AUMA”) is the average of Global WAM’s AUMA during the reporting period. It is a measure used in analyzing and explaining fee income and earnings of our Global WAM segment. It is calculated as the average of the opening balance of AUMA and the ending balance of AUMA using daily balances where available and month-end or quarter-end averages when daily averages are unavailable. Similarly, Global WAM average managed AUMA and average AUA are the average of Global WAM’s managed AUMA and AUA, respectively, and are calculated in a manner consistent with average AUMA.

 

 

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Manulife Bank net lending assets is a financial measure equal to the sum of Manulife Bank’s loans and mortgages, net of allowances. Manulife Bank average net lending assets is a financial measure which is calculated as the quarter-end average of the opening and the ending balance of net lending assets. Both of these financial measures are a measure of the size of Manulife Bank’s portfolio of loans and mortgages and are used to analyze and explain its earnings.

 

As at ($ millions)		Mar 31, 2024				Dec 31, 2023				Sept 30, 2023				June 30, 2023				Mar 31, 2023
Mortgages		$	52,605			$	52,421			$	51,012			$	51,459			$	52,128
Less: mortgages not held by Manulife Bank			29,568				29,536				28,402				29,088				30,087
Total mortgages held by Manulife Bank			23,037				22,885				22,610				22,371				22,041
Loans to Bank clients			2,383				2,436				2,513				2,632				2,706
Manulife Bank net lending assets		$	25,420			$	25,321			$	25,123			$	25,003			$	24,747
Manulife Bank average net lending assets
Beginning of period		$	25,321			$	25,123			$	25,003			$	24,747			$	24,779
End of period			25,420				25,321				25,123				25,003				24,747
Manulife Bank average net lending assets by quarter		$	25,371			$	25,222			$	25,063			$	24,875			$	24,763
Manulife Bank average net lending assets – full year		$	25,100			$	25,050

Financial leverage ratio is a debt-to-equity ratio. The ratio is calculated as the sum of long-term debt, capital instruments and preferred shares and other equity instruments divided by the sum of long-term debt, capital instruments, equity and post-tax CSM.

Adjusted book value is the sum of common shareholders’ equity and post-tax CSM net of NCI. It is an important measure for monitoring growth and measuring insurance businesses’ value. Adjusted book value per common share is calculated by dividing adjusted book value by the number of common shares outstanding at the end of the period.

 

As at ($ millions)		Mar 31, 2024				Dec 31, 2023				Sept 30, 2023				June 30, 2023				Mar 31, 2023
Common shareholders’ equity		$	41,590			$	40,379			$	40,747			$	39,047			$	40,715
Post-tax CSM, net of NCI			18,547				17,748				14,992				14,877				14,850
Adjusted book value		$	60,137			$	58,127			$	55,739			$	53,924			$	55,565

Consolidated capital serves as a foundation of our capital management activities at the MFC level. Consolidated capital is calculated as the sum of: (i) total equity excluding accumulated other comprehensive income (“AOCI”) on cash flow hedges; (ii) post-tax CSM; and (iii) certain other capital instruments that qualify as regulatory capital. For regulatory reporting purposes under the LICAT framework, the numbers are further adjusted for various additions or deductions to capital as mandated by the guidelines defined by OSFI.

 

As at ($ millions)		Mar 31, 2024				Dec 31, 2023				Sept 30, 2023				June 30, 2023				Mar 31, 2023
Total equity		$	49,892			$	48,727			$	49,035			$	47,156			$	48,751
Less: AOCI gain/(loss) on cash flow hedges			70				26				47				–				(38)
Total equity excluding AOCI on cash flow hedges			49,822				48,701				48,988				47,156				48,789
Post-tax CSM			19,425				18,503				15,675				15,458				15,476
Qualifying capital instruments			7,196				6,667				6,702				6,662				7,317
Consolidated capital		$	76,443			$	73,871			$	71,365			$	69,276			$	71,582

 

 

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Core EBITDA is a financial measure which Manulife uses to better understand the long-term earnings capacity and valuation of our Global WAM business on a basis more comparable to how the profitability of global asset managers are generally measured. Core EBITDA presents core earnings before the impact of interest, taxes, depreciation, and amortization. Core EBITDA excludes certain acquisition expenses related to insurance contracts in our retirement businesses which are deferred and amortized over the expected lifetime of the customer relationship. Core EBITDA was selected as a key performance indicator for our Global WAM business, as EBITDA is widely used among asset management peers, and core earnings is a primary profitability metric for the Company overall.

Reconciliation of Global WAM core earnings to core EBITDA and Global WAM core EBITDA by business line and geographic source

($ millions, pre-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)

 

		Quarterly Results																				Full Year Results
		1Q24				4Q23				3Q23				2Q23				1Q23				2023
Global WAM core earnings (post-tax)		$	357			$	353			$	361			$	320			$	287			$	1,321
Add back taxes, acquisition costs, other expenses and deferred sales commissions
Core income tax (expenses) recoveries (see above)			58				55				59				45				45				204
Amortization of deferred acquisition costs and other depreciation			42				45				41				40				40				166
Amortization of deferred sales commissions			20				21				19				19				21				80
Core EBITDA		$	477			$	474			$	480			$	424			$	393			$	1,771
CER adjustment(1)			–				(4)				1				1				(2)				(4)
Core EBITDA, CER basis		$	477			$	470			$	481			$	425			$	391			$	1,767
Core EBITDA by business line
Retirement		$	265			$	265			$	242			$	233			$	217			$	957
Retail			178				175				190				168				171				704
Institutional asset management			34				34				48				23				5				110
Total		$	477			$	474			$	480			$	424			$	393			$	1,771
Core EBITDA by geographic source
Asia		$	139			$	135			$	132			$	125			$	113			$	505
Canada			139				152				146				148				136				582
U.S.			199				187				202				151				144				684
Total		$	477			$	474			$	480			$	424			$	393			$	1,771
Core EBITDA by business line, CER basis(2)
Retirement		$	265			$	262			$	243			$	234			$	217			$	956
Retail			178				174				190				168				170				702
Institutional asset management			34				34				48				23				4				109
Total, CER basis		$	477			$	470			$	481			$	425			$	391			$	1,767
Core EBITDA by geographic source, CER basis(2)
Asia		$	139			$	133			$	132			$	126			$	111			$	502
Canada			139				152				146				148				136				582
U.S.			199				185				203				151				144				683
Total, CER basis		$	477			$	470			$	481			$	425			$	391			$	1,767

(1)	The impact of updating foreign exchange rates to that which was used in 1Q24.

(2)	Core EBITDA adjusted to reflect the foreign exchange rates for the Statement of Income in effect for 1Q24.

 

 

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Core EBITDA margin is a financial measure which Manulife uses to better understand the long-term profitability of our Global WAM business on a more comparable basis to how profitability of global asset managers are measured. Core EBITDA margin presents core earnings before the impact of interest, taxes, depreciation, and amortization divided by core revenue from these businesses. Core revenue is used to calculate our core EBITDA margin, and is equal to the sum of pre-tax other revenue and investment income in Global WAM included in core EBITDA, and it excludes such items as revenue related to integration and acquisitions and market experience gains (losses). Core EBITDA margin was selected as a key performance indicator for our Global WAM business, as EBITDA margin is widely used among asset management peers, and core earnings is a primary profitability metric for the Company overall.

 

		Quarterly Results																				Full Year Results
($ millions, unless otherwise stated)		1Q24				4Q23				3Q23				2Q23				1Q23				2023
Core EBITDA margin
Core EBITDA		$	477			$	474			$	480			$	424			$	393			$	1,771
Core revenue		$	1,873			$	1,842			$	1,783			$	1,722			$	1,756			$	7,103
Core EBITDA margin			25.5%				25.7%				26.9%				24.6%				22.4%				24.9%
Global WAM core revenue
Other revenue per financial statements		$	1,808			$	1,719			$	1,645			$	1,691			$	1,691			$	6,746
Less: Other revenue in segments other than Global WAM			58				31				(64)				44				26				37
Other revenue in Global WAM (fee income)		$	1,750			$	1,688			$	1,709			$	1,647			$	1,665			$	6,709
Investment income per financial statements		$	4,251			$	4,497			$	4,028			$	4,135			$	3,520			$	16,180
Realized and unrealized gains (losses) on assets supporting insurance and investment contract liabilities per financial statements			538				2,674				(2,430)				950				1,944				3,138
Total investment income			4,789				7,171				1,598				5,085				5,464				19,318
Less: Investment income in segments other than Global WAM			4,649				6,941				1,578				5,010				5,357				18,886
Investment income in Global WAM		$	140			$	230			$	20			$	75			$	107			$	432
Total other revenue and investment income in Global WAM		$	1,890			$	1,918			$	1,729			$	1,722			$	1,772			$	7,141
Less: Total revenue reported in items excluded from core earnings
Market experience gains (losses)			8				63				(54)				7				12				28
Revenue related to integration and acquisitions			9				13				–				(7)				4				10
Global WAM core revenue		$	1,873			$	1,842			$	1,783			$	1,722			$	1,756			$	7,103

Expense measures

With the adoption of IFRS 17, we have replaced core general expenses with two new measures: core expenses and core expenditures. Under IFRS 17, expenses previously reported in general expenses are now reported as:

 

1.

General expenses that flow directly through income;

 

2.

Directly attributable maintenance expenses, which are reported in insurance service expenses and flow directly through income;

 

3.

Directly attributable acquisition expenses for contracts measured using the PAA method which are reported in insurance service expenses, and flow directly through income; and

 

4.

Directly attributable acquisition expenses that are capitalized into the CSM.

Total expenses include items 1 to 3 above and total expenditures include items 1 to 4 above.

Core expenses is used to calculate our expense efficiency ratio and is equal to total expenses that are included in core earnings and excludes such items as material legal provisions for settlements, restructuring charges and expenses related to integration and acquisitions.

 

 

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		Quarterly Results																				Full Year Results
($ millions, and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)		1Q24				4Q23				3Q23				2Q23				1Q23				2023
Core expenses
General expenses - Statements of Income		$	1,102			$	1,180			$	1,042			$	1,022			$	1,086			$	4,330
Directly attributable acquisition expense for contracts measured using the PAA method(1)			38				42				37				35				33				147
Directly attributable maintenance expense(1)			539				565				544				550				546				2,205
Total expenses			1,679				1,787				1,623				1,607				1,665				6,682
Less: General expenses included in items excluded from core earnings
Restructuring charge			–				46				–				–				–				46
Integration and acquisition			–				8				–				–				–				8
Legal provisions and Other expenses			6				8				1				9				60				78
Total			6				62				1				9				60				132
Core expenses		$	1,673			$	1,725			$	1,622			$	1,598			$	1,605			$	6,550
CER adjustment(2)			–				(11)				2				(2)				(14)				(25)
Core expenses, CER basis		$	1,673			$	1,714			$	1,624			$	1,596			$	1,591			$	6,525
Total expenses		$	1,679			$	1,787			$	1,623			$	1,607			$	1,665			$	6,682
CER adjustment(2)			–				(12)				2				(3)				(13)				(26)
Total expenses, CER basis		$	1,679			$	1,775			$	1,625			$	1,604			$	1,652			$	6,656

(1)	Expenses are components of insurance service expenses on the Statements of Income that flow directly through income.

(2)	The impact of updating foreign exchange rates to that which was used in 1Q24.

Expense efficiency ratio is a financial measure which Manulife uses to measure progress towards our target to be more efficient. It is defined as core expenses divided by the sum of core earnings before income taxes (“pre-tax core earnings”) and core expenses.

Embedded value (“EV”) is a measure of the present value of shareholders’ interests in the expected future distributable earnings on in-force business reflected in the Consolidated Statements of Financial Position of Manulife, excluding any value associated with future new business.

With the adoption of IFRS 17, the calculation of EV has changed for periods beginning after 2022 as follows:

 

•

Canadian businesses, the International High Net Worth business, as well as business ceded to an affiliate reinsurer, reflect IFRS 17 earnings and LICAT required capital, instead of IFRS 4 earnings and LICAT required capital;

 

•

U.S. businesses reflects local statutory earnings (NAIC) and capital requirements (RBC), instead of IFRS 4 earnings and LICAT required capital; and

 

•

Asian businesses remained on local statutory bases.

EV for periods after December 31, 2022 is calculated as the sum of the adjusted net worth and the value of in-force business calculated as at December 31. The adjusted net worth is the IFRS shareholders’ equity adjusted for goodwill and intangible assets, fair value of surplus assets, the fair value of debt, preferred shares, and other equity, and local statutory balance sheet, regulatory reserve, and capital for our U.S. and Asian businesses. The value of in-force business in Canada and the International High Net Worth business and business ceded to an affiliate reinsurer is the present value of expected future IFRS earnings, on an IFRS 17 basis, on in-force business less the present value of the cost of holding capital to support the in-force business under the LICAT framework. The value of the remaining in-force business in the U.S. and Asia reflects local statutory earnings and capital requirements. The value of in-force business excludes Global WAM, Bank or P&C Reinsurance businesses.

Net annualized fee income yield on average AUMA (“Net fee income yield”) is a financial measure that represents the net annualized fee income from Global WAM channels over average AUMA. This measure provides information on Global WAM’s adjusted return generated from managing AUMA.

 

 

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Net annualized fee income is a financial measure that represents Global WAM income before income taxes, adjusted to exclude items unrelated to net fee income, including general expenses, investment income, non-AUMA related net benefits and claims, and net premium taxes. It also excludes the components of Global WAM net fee income from managing assets on behalf of other segments. This measure is annualized based on the number of days in the year divided by the number of days in the reporting period.

Reconciliation of income before income taxes to net fee income yield

 

		Quarterly Results																				Full Year Results
($ millions, unless otherwise stated)		1Q24				4Q23				3Q23				2Q23				1Q23				2023
Income before income taxes		$	1,252			$	2,123			$	1,174			$	1,436			$	1,719			$	6,452
Less: Income before income taxes for segments other than Global WAM			826				1,699				808				1,074				1,374				4,955
Global WAM income before income taxes			426				424				366				362				345				1,497
Items unrelated to net fee income			665				648				717				674				676				2,715
Global WAM net fee income			1,091				1,072				1,083				1,036				1,021				4,212
Less: Net fee income from other segments			155				174				171				142				136				623
Global WAM net fee income excluding net fee income from other segments			936				898				912				894				885				3,589
Net annualized fee income		$	3,765			$	3,563			$	3,618			$	3,584			$	3,589			$	3,589
Average Assets under Management and Administration		$	879,837			$	816,706			$	813,157			$	814,945			$	804,455			$	812,662
Net fee income yield (bps)			42.8				43.6				44.5				44.0				44.6				44.2

New business value (“NBV”) is the change in embedded value as a result of sales in the reporting period. NBV is calculated as the present value of shareholders’ interests in expected future distributable earnings, after the cost of capital calculated under the LICAT framework in Canada and the International High Net Worth business, and the local capital requirements in Asia and the U.S., on actual new business sold in the period using assumptions that are consistent with the assumptions used in the calculation of embedded value. NBV excludes businesses with immaterial insurance risks, such as the Company’s Global WAM, Manulife Bank and the P&C Reinsurance businesses. NBV is a useful metric to evaluate the value created by the Company’s new business franchise.

New business value margin (“NBV margin”) is calculated as NBV divided by APE sales excluding non-controlling interests. APE sales are calculated as 100% of regular premiums and deposits sales and 10% of single premiums and deposits sales. NBV margin is a useful metric to help understand the profitability of our new business.

Sales are measured according to product type:

For individual insurance, sales include 100% of new annualized premiums and 10% of both excess and single premiums. For individual insurance, new annualized premiums reflect the annualized premium expected in the first year of a policy that requires premium payments for more than one year. Single premium is the lump sum premium from the sale of a single premium product, e.g. travel insurance. Sales are reported gross before the impact of reinsurance.

For group insurance, sales include new annualized premiums and administrative services only premium equivalents on new cases, as well as the addition of new coverages and amendments to contracts, excluding rate increases.

Insurance-based wealth accumulation product sales include all new deposits into variable and fixed annuity contracts. As we discontinued sales of new variable annuity contracts in the U.S. in the first quarter of 2013, subsequent deposits into existing U.S. variable annuity contracts are not reported as sales. Asia variable annuity deposits are included in APE sales.

APE sales are comprised of 100% of regular premiums and deposits and 10% of excess and single premiums and deposits for both insurance and insurance-based wealth accumulation products.

 

 

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Gross flows is a new business measure presented for our Global WAM business and includes all deposits into mutual funds, group pension/retirement savings products, private wealth and institutional asset management products. Gross flows is a common industry metric for WAM businesses as it provides a measure of how successful the businesses are at attracting assets.

Net flows is presented for our Global WAM business and includes gross flows less redemptions for mutual funds, group pension/retirement savings products, private wealth and institutional asset management products. In addition, net flows include the net flows of exchange traded funds and non-proprietary products sold by Manulife Securities. Net flows is a common industry metric for WAM businesses as it provides a measure of how successful the businesses are at attracting and retaining assets. When net flows are positive, they are referred to as net inflows. Conversely, negative net flows are referred to as net outflows.

Remittances is defined as the cash remitted or made available for distribution to Manulife Financial Corporation from its subsidiaries. It is a key metric used by management to evaluate our financial flexibility.

 

E4	Caution regarding forward-looking statements

From time to time, MFC makes written and/or oral forward-looking statements, including in this document. In addition, our representatives may make forward-looking statements orally to analysts, investors, the media and others. All such statements are made pursuant to the “safe harbour” provisions of Canadian provincial securities laws and the U.S. Private Securities Litigation Reform Act of 1995.

The forward-looking statements in this document include, but are not limited to, statements with respect to the capital release associated with reinsurance transactions, possible share buybacks, the impact of changes in tax laws, the probability and impact of LICAT scenario switches, and strategic and products risks and also relate to, among other things, our objectives, goals, strategies, intentions, plans, beliefs, expectations and estimates, and can generally be identified by the use of words such as “may”, “will”, “could”, “should”, “would”, “likely”, “suspect”, “outlook”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “plan”, “forecast”, “objective”, “seek”, “aim”, “continue”, “goal”, “restore”, “embark” and “endeavour” (or the negative thereof) and words and expressions of similar import, and include statements concerning possible or assumed future results. Although we believe that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements and they should not be interpreted as confirming market or analysts’ expectations in any way.

Certain material factors or assumptions are applied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements. Important factors that could cause actual results to differ materially from expectations include but are not limited to: general business and economic conditions (including but not limited to the performance, volatility and correlation of equity markets, interest rates, credit and swap spreads, inflation rates, currency rates, investment losses and defaults, market liquidity and creditworthiness of guarantors, reinsurers and counterparties); the ongoing prevalence of COVID-19, including any variants, as well as actions that have been, or may be taken by governmental authorities in response to COVID-19, including the impacts of any variants; changes in laws and regulations; changes in accounting standards applicable in any of the territories in which we operate; changes in regulatory capital requirements; our ability to obtain premium rate increases on in-force policies; our ability to execute strategic plans and changes to strategic plans; downgrades in our financial strength or credit ratings; our ability to maintain our reputation; impairments of goodwill or intangible assets or the establishment of provisions against future tax assets; the accuracy of estimates relating to morbidity, mortality and policyholder behaviour; the accuracy of other estimates used in applying accounting policies, actuarial methods and embedded value methods; our ability to implement effective hedging strategies and unforeseen consequences arising from such strategies; our ability to source appropriate assets to back our long-dated liabilities; level of competition and consolidation; our ability to market and distribute products through current and future distribution channels; unforeseen liabilities or asset impairments arising from acquisitions and dispositions of businesses; the realization of losses arising from the sale of investments classified as fair value through other comprehensive income; our liquidity, including the availability of financing to satisfy existing financial liabilities on expected maturity dates when required; obligations to pledge additional collateral;

 

 

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the availability of letters of credit to provide capital management flexibility; accuracy of information received from counterparties and the ability of counterparties to meet their obligations; the availability, affordability and adequacy of reinsurance; legal and regulatory proceedings, including tax audits, tax litigation or similar proceedings; our ability to adapt products and services to the changing market; our ability to attract and retain key executives, employees and agents; the appropriate use and interpretation of complex models or deficiencies in models used; political, legal, operational and other risks associated with our non-North American operations; geopolitical uncertainty, including international conflicts; acquisitions and our ability to complete acquisitions including the availability of equity and debt financing for this purpose; the disruption of or changes to key elements of the Company’s or public infrastructure systems; environmental concerns, including climate change; our ability to protect our intellectual property and exposure to claims of infringement; and our inability to withdraw cash from subsidiaries and the fact that the amount and timing of any future common share repurchases will depend on the earnings, cash requirements and financial condition of Manulife, market conditions, capital requirements (including under LICAT capital standards), common share issuance requirements, applicable law and regulations (including Canadian and U.S. securities laws and Canadian insurance company regulations), and other factors deemed relevant by Manulife, and may be subject to regulatory approval or conditions.

Additional information about material risk factors that could cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements may be found in this document under “Risk Management and Risk Factors Update” and “Critical Actuarial and Accounting Policies”, under “Risk Management and Risk Factors” and “Critical Actuarial and Accounting Policies” in the Management’s Discussion and Analysis in our most recent annual report and, in the “Risk Management” note to the consolidated financial statements in our most recent annual and interim reports and elsewhere in our filings with Canadian and U.S. securities regulators.

The forward-looking statements in this document are, unless otherwise indicated, stated as of the date hereof and are presented for the purpose of assisting investors and others in understanding our financial position and results of operations, our future operations, as well as our objectives and strategic priorities, and may not be appropriate for other purposes. We do not undertake to update any forward-looking statements, except as required by law.

 

E5	Quarterly financial information

The following table provides summary information related to our eight most recently completed quarters. With the adoption of IFRS 17 and IFRS 9 on January 1, 2023, we have restated 2022 quarterly information using the new standards.

 

As at and for the three months ended ($ millions, except per share amounts or otherwise stated)		Mar 31, 2024				Dec 31, 2023				Sept 30, 2023				Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sept 30, 2022				Jun 30, 2022
Revenue
Insurance revenue		$	6,497			$	6,414			$	6,215			$	5,580			$	5,763			$	6,128			$	5,560			$	5,732
Net investment result			4,493				6,784				1,265				4,819				5,153				1,440				2,439				(2,454)
Other revenue			1,808				1,719				1,645				1,691				1,691				1,671				1,547				1,446
Total revenue		$	12,798			$	14,917			$	9,125			$	12,090			$	12,607			$	9,239			$	9,546			$	4,724
Income (loss) before income taxes		$	1,252			$	2,123			$	1,174			$	1,436			$	1,719			$	697			$	484			$	(2,656)
Income tax (expenses) recoveries			(280)				(322)				51				(265)				(309)				226				(60)				553
Net income (loss)		$	972			$	1,801			$	1,225			$	1,171			$	1,410			$	923			$	424			$	(2,103)
Net income (loss) attributed to shareholders		$	866			$	1,659			$	1,013			$	1,025			$	1,406			$	915			$	491			$	(2,119)
Basic earnings (loss) per common share		$	0.45			$	0.86			$	0.53			$	0.50			$	0.73			$	0.43			$	0.23			$	(1.13)
Diluted earnings (loss) per common share		$	0.45			$	0.86			$	0.52			$	0.50			$	0.73			$	0.43			$	0.23			$	(1.13)
Segregated funds deposits		$	12,206			$	10,361			$	10,172			$	10,147			$	11,479			$	10,165			$	9,841			$	10,094
Total assets (in billions)		$	907			$	876			$	836			$	851			$	862			$	834			$	818			$	810
Weighted average common shares (in millions)			1,805				1,810				1,826				1,842				1,858				1,878				1,902				1,921
Diluted weighted average common shares (in millions)			1,810				1,814				1,829				1,846				1,862				1,881				1,904				1,924
Dividends per common share		$	0.400			$	0.365			$	0.365			$	0.365			$	0.365			$	0.330			$	0.330			$	0.330
CDN$ to US$1 - Statement of Financial Position			1.3533				1.3186				1.3520				1.3233				1.3534				1.3549				1.3740				1.2900
CDN$ to US$1 - Statement of Income			1.3485				1.3612				1.3411				1.3430				1.3524				1.3575				1.3057				1.2765

 

 

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E6

Revenue

 

Revenue		Quarterly Results
($ millions, unaudited)		1Q24				4Q23				1Q23
Insurance revenue		$	6,497			$	6,414			$	5,763
Net investment income			4,493				6,784				5,153
Other revenue			1,808				1,719				1,691
Total revenue		$	12,798			$	14,917			$	12,607
Asia		$	3,586			$	3,572			$	3,283
Canada			3,540				4,663				3,545
U.S.			3,691				4,566				3,856
Global Wealth and Asset Management			1,552				1,632				1,451
Corporate and Other			429				484				472
Total revenue		$	12,798			$	14,917			$	12,607

Total revenue was $12.8 billion in 1Q24 compared with $12.6 billion in 1Q23 due to an increase in insurance revenue and other revenue, partially offset by lower net investment income.

By segment, the increase in revenue reflected a higher insurance revenue in the U.S, Canada and Asia, and higher other revenue in Global WAM and Asia. Net investment income declined in the U.S., Canada and Corporate and Other and increased in Asia and Global WAM.

 

E7

Other

No changes were made in our internal control over financial reporting during the three months ended March 31, 2024, that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

As in prior quarters, MFC’s Audit Committee has reviewed this MD&A and the unaudited interim financial report and MFC’s Board of Directors approved this MD&A prior to its release.

 

 

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Consolidated Statements of Financial Position

 

As at (Canadian $ in millions, unaudited)		March 31, 2024				December 31, 2023
Assets
Cash and short-term securities		$	21,481			$	20,338
Debt securities			200,103				212,149
Public equities			27,695				25,531
Mortgages			52,605				52,421
Private placements			45,762				45,606
Loans to Bank clients			2,383				2,436
Real estate			13,052				13,049
Other invested assets			47,595				45,680
Total invested assets (note 3)			410,676				417,210
Other assets
Accrued investment income			2,971				2,678
Derivatives (note 4)			8,368				8,546
Insurance contract assets (note 5)			140				145
Reinsurance contract held assets (note 5)			54,070				42,651
Deferred tax assets			6,467				6,739
Goodwill and intangible assets			10,399				10,310
Miscellaneous			12,019				9,751
Total other assets			94,434				80,820
Segregated funds net assets (note 15)			402,109				377,544
Total assets		$	907,219			$	875,574
Liabilities and Equity
Liabilities
Insurance contract liabilities, excluding those for account of segregated fund holders (note 5)		$	370,940			$	367,996
Reinsurance contract held liabilities (note 5)			2,987				2,831
Investment contract liabilities (note 6)			12,174				11,816
Deposits from Bank clients			21,871				21,616
Derivatives (note 4)			13,465				11,730
Deferred tax liabilities			1,818				1,697
Other liabilities			18,534				18,879
Long-term debt (note 8)			6,233				6,071
Capital instruments (note 9)			7,196				6,667
Total liabilities, excluding those for account of segregated fund holders			455,218				449,303
Insurance contract liabilities for account of segregated fund holders (note 5)			119,896				114,143
Investment contract liabilities for account of segregated fund holders			282,213				263,401
Insurance and investment contract liabilities for account of segregated fund holders (note 15)			402,109				377,544
Total liabilities			857,327				826,847
Equity
Preferred shares and other equity (note 10)			6,660				6,660
Common shares (note 10)			21,488				21,527
Contributed surplus			217				222
Shareholders and other equity holders’ retained earnings			4,779				4,819
Shareholders and other equity holders’ accumulated other comprehensive income (loss) (“AOCI”):
Insurance finance income (expenses)			34,196				30,010
Reinsurance finance income (expenses)			(5,753)				(4,634)
Fair value through other comprehensive income (“OCI”) investments			(18,715)				(16,262)
Translation of foreign operations			5,393				4,801
Other			(15)				(104)
Total shareholders and other equity holders’ equity			48,250				47,039
Participating policyholders’ equity			314				257
Non-controlling interests			1,328				1,431
Total equity			49,892				48,727
Total liabilities and equity		$	907,219			$	875,574

The accompanying notes are an integral part of these unaudited Interim Consolidated Financial Statements.

 

Roy Gori						Don Lindsay
President and Chief Executive Officer						Chair of the Board of Directors

 

 

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Consolidated Statements of Income

 

For the three months ended March 31, (Canadian $ in millions except per share amounts, unaudited)		2024				2023
Insurance service result
Insurance revenue (note 5)		$	6,497			$	5,763
Insurance service expenses			(5,272)				(4,782)
Net expenses from reinsurance contracts held			(247)				(132)
Total insurance service result			978				849
Investment result
Investment income (note 3)
Investment income			4,251				3,520
Realized and unrealized gains (losses) on assets supporting insurance and investment contract liabilities			538				1,944
Investment expenses			(296)				(311)
Net investment income (loss)			4,493				5,153
Insurance finance income (expenses) and effect of movement in foreign exchange rates (note 5)			(4,458)				(3,778)
Reinsurance finance income (expenses) and effect of movement in foreign exchange rates (note 5)			424				(322)
Decrease (increase) in investment contract liabilities			(111)				(83)
			348				970
Segregated funds investment result (note 15)
Investment income related to segregated funds net assets			22,626				17,613
Financial changes related to insurance and investment contract liabilities for account of segregated fund holders			(22,626)				(17,613)
Net segregated funds investment result			–				–
Total investment result			348				970
Other revenue (note 11)			1,808				1,691
General expenses			(1,102)				(1,086)
Commissions related to non-insurance contracts			(356)				(338)
Interest expenses			(424)				(367)
Net income (loss) before income taxes			1,252				1,719
Income tax (expenses) recoveries			(280)				(309)
Net income (loss)		$	972			$	1,410
Net income (loss) attributed to:
Non-controlling interests		$	55			$	54
Participating policyholders			51				(50)
Shareholders and other equity holders			866				1,406
		$	972			$	1,410
Net income (loss) attributed to shareholders		$	866			$	1,406
Preferred share dividends and other equity distributions			(55)				(52)
Common shareholders’ net income (loss)		$	811			$	1,354
Earnings per share
Basic earnings per common share (note 10)		$	0.45			$	0.73
Diluted earnings per common share (note 10)			0.45				0.73
Dividends per common share			0.40				0.37

The accompanying notes are an integral part of these unaudited Interim Consolidated Financial Statements.

 

 

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Consolidated Statements of Comprehensive Income

 

For the three months ended March 31,
(Canadian $ in millions, unaudited)		2024				2023
Net income (loss)		$	972			$	1,410
Other comprehensive income (loss) (“OCI”), net of tax:
Items that may be subsequently reclassified to net income:
Foreign exchange gains (losses) on:
Translation of foreign operations			747				28
Net investment hedges			(155)				19
Insurance finance income (expenses)			4,047				(7,096)
Reinsurance finance income (expenses)			(1,084)				788
Fair value through OCI investments:
Unrealized gains (losses) arising during the period on assets supporting insurance and investment contract liabilities			(3,396)				6,482
Reclassification of net realized gains (losses) and provision for credit losses recognized in income			895				46
Other			39				(33)
Total items that may be subsequently reclassified to net income			1,093				234
Items that will not be reclassified to net income			49				(14)
Other comprehensive income (loss), net of tax			1,142				220
Total comprehensive income (loss), net of tax		$	2,114			$	1,630
Total comprehensive income (loss) attributed to:
Non-controlling interests		$	(104)			$	84
Participating policyholders			57				(58)
Shareholders and other equity holders			2,161				1,604
Income Taxes included in Other Comprehensive Income
For the three months ended March 31,
(Canadian $ in millions, unaudited)		2024				2023
Income tax expenses (recoveries) on:
Unrealized foreign exchange gains (losses) on net investment hedges		$	(7)			$	2
Insurance / reinsurance finance income (expenses)			949				(1,328)
Unrealized gains (losses) on fair value through OCI investments			(739)				1,306
Reclassification of net realized gains (losses) on fair value through OCI investments			186				–
Other			25				(14)
Total income tax expenses (recoveries)		$	414			$	(34)

The accompanying notes are an integral part of these unaudited Interim Consolidated Financial Statements.

 

 

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Consolidated Statements of Changes in Equity

 

For the three months ended March 31,
(Canadian $ in millions, unaudited)		2024				2023
Preferred shares and other equity
Balance, beginning of period		$	6,660			$	6,660
Issued (note 10)			–				–
Balance, end of period			6,660				6,660
Common shares
Balance, beginning of period			21,527				22,178
Repurchased (note 10)			(74)				(186)
Issued on exercise of stock options and deferred share units			35				20
Balance, end of period			21,488				22,012
Contributed surplus
Balance, beginning of period			222				238
Exercise of stock options and deferred share units			(5)				(4)
Stock option expense			–				1
Balance, end of period			217				235
Shareholders and other equity holders’ retained earnings
Balance, beginning of period			4,819				3,947
Opening adjustment of financial assets at adoption of IFRS 9			–				(409)
Restated balance, beginning of period			4,819				3,538
Net income (loss) attributed to shareholders and other equity holders			866				1,406
Common shares repurchased			(129)				(212)
Common share dividends			(722)				(671)
Preferred share dividends and other equity distributions			(55)				(52)
Balance, end of period			4,779				4,009
Shareholders and other equity holders’ accumulated other comprehensive income (loss) (“AOCI”)
Balance, beginning of period			13,811				13,853
Opening adjustment of financial assets at adoption of IFRS 9			–				408
Restated balance, beginning of period			13,811				14,261
Change in unrealized foreign exchange gains (losses) on net foreign operations			592				45
Changes in insurance / reinsurance finance income (expenses)			3,067				(5,682)
Change in unrealized gains (losses) on fair value through OCI investments			(2,453)				5,882
Other changes in OCI attributed to shareholders and other equity holders			89				(47)
Balance, end of period			15,106				14,459
Total shareholders and other equity holders’ equity, end of period			48,250				47,375
Participating policyholders’ equity
Balance, beginning of period			257				(77)
Net income (loss) attributed to participating policyholders			51				(50)
Other comprehensive income (losses) attributed to participating policyholders			6				(8)
Balance, end of period			314				(135)
Non-controlling interests
Balance, beginning of period			1,431				1,427
Net income (loss) attributed to non-controlling interests			55				54
Other comprehensive income (losses) attributed to non-controlling interests			(159)				30
Contributions (distributions and acquisition), net			1				–
Balance, end of period			1,328				1,511
Total equity, end of period		$	49,892			$	48,751

The accompanying notes are an integral part of these unaudited Interim Consolidated Financial Statements.

 

 

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Consolidated Statements of Cash Flows

 

For the three months ended March 31,
(Canadian $ in millions, unaudited)			2024				2023
Operating activities
Net income (loss)		$	972			$	1,410
Adjustments:
Increase (decrease) in insurance contract net liabilities			1,004				6,162
Increase (decrease) in investment contract liabilities			111				83
(Increase) decrease in reinsurance contract assets, excluding reinsurance transaction noted below (note 5)			(316)				356
Amortization of (premium) discount on invested assets			(61)				28
Contractual service margin (“CSM”) amortization			(592)				(447)
Other amortization			146				138
Net realized and unrealized (gains) losses and impairment on assets			299				(1,863)
Deferred income tax expenses (recoveries)			2				117
Loss on reinsurance transaction (pre-tax) (note 5)			118				–
Stock option expense			–				1
Cash provided by operating activities before undernoted items			1,683				5,985
Changes in policy related and operating receivables and payables			2,893				(3,030)
Cash provided by (used in) operating activities			4,576				2,955
Investing activities
Purchases and mortgage advances			(36,472)				(22,286)
Disposals and repayments			32,745				17,928
Change in investment broker net receivables and payables			223				405
Cash provided by (used in) investing activities			(3,504)				(3,953)
Financing activities
Change in repurchase agreements and securities sold but not yet purchased			(81)				152
Issue of capital instruments, net (note 9)			1,094				1,194
Redemption of capital instruments (note 9)			(609)				–
Secured borrowing from securitization transactions			131				194
Change in deposits from Bank clients, net			244				(686)
Lease payments			(30)				(11)
Shareholders’ dividends and other equity distributions			(777)				(723)
Contributions from (distributions to) non-controlling interests, net			1				–
Common shares repurchased (note 10)			(203)				(398)
Common shares issued, net (note 10)			35				20
Cash provided by (used in) financing activities			(195)				(258)
Cash and short-term securities
Increase (decrease) during the period			877				(1,256)
Effect of foreign exchange rate changes on cash and short-term securities			264				11
Balance, beginning of period			19,884				18,635
Balance, end of period			21,025				17,390
Cash and short-term securities
Beginning of period
Gross cash and short-term securities			20,338				19,153
Net payments in transit, included in other liabilities			(454)				(518)
Net cash and short-term securities, beginning of period			19,884				18,635
End of period
Gross cash and short-term securities			21,481				18,775
Net payments in transit, included in other liabilities			(456)				(1,385)
Net cash and short-term securities, end of period		$	21,025			$	17,390
Supplemental disclosures on cash flow information
Interest received		$	3,124			$	2,627
Interest paid			386				329
Income taxes paid			517				131

The accompanying notes are an integral part of these unaudited Interim Consolidated Financial Statements.

 

 

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CONDENSED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Canadian $ in millions except per share amounts or unless otherwise stated, unaudited)

 

Note 1 Nature of Operations and Material Accounting Policy Information

(a) Reporting entity

Manulife Financial Corporation (“MFC”) is a publicly traded company and the holding company of The Manufacturers Life Insurance Company (“MLI”), a Canadian life insurance company. MFC, including its subsidiaries (collectively, “Manulife” or the “Company”) is a leading financial services group with principal operations in Asia, Canada and the United States. Manulife’s international network of employees, agents and distribution partners offers financial protection and wealth management products and services to personal and business clients as well as asset management services to institutional customers. The Company operates as Manulife in Asia and Canada and as John Hancock and Manulife in the United States.

These Interim Consolidated Financial Statements and condensed notes have been prepared in accordance with International Accounting Standard (“IAS”) 34 “Interim Financial Reporting” as issued by the International Accounting Standards Board (“IASB”), using accounting policies which are consistent with those used in the Company’s 2023 Annual Consolidated Financial Statements.

These Interim Consolidated Financial Statements should be read in conjunction with the audited Annual Consolidated Financial Statements for the year ended December 31, 2023, included on pages 155 to 276 of the Company’s 2023 Annual Report, as well as the disclosures on risk in denoted components of the “Risk Management and Risk Factors” section of the First Quarter 2024 Management Discussion and Analysis (“MD&A”). Those denoted risk disclosures are an integral part of these Interim Consolidated Financial Statements.

These Interim Consolidated Financial Statements as at and for the three months ended March 31, 2024 were authorized for issue by MFC’s Board of Directors on May 8, 2024.

(b) Basis of preparation

Refer to note 1 of the Company’s 2023 Annual Consolidated Financial Statements for a summary of material estimation processes used in the preparation of these Interim Consolidated Financial Statements under International Financial Reporting Standards (“IFRS”) and description of the Company’s measurement techniques in determining carrying values and respective fair values of its assets and liabilities.

 

Note 2 Accounting and Reporting Changes

Future accounting and reporting changes

(I) IFRS 18 “Presentation and Disclosure in the Financial Statements”

IFRS 18 “Presentation and Disclosure in Financial Statements” (“IFRS 18”) was issued in April 2024 to be effective for years beginning on January 1, 2027 and to be applied retrospectively. The standard replaces IAS 1 “Presentation of Financial Statements” (“IAS 1”) while carrying forward many elements of IAS 1 unchanged. IFRS 18 introduces three sets of new requirements for presentation of financial statements and disclosures within financial statements:

 

•

Introduction of a specific structure for income statements, to include three defined categories of income and expenses: operating, investing and financing activities, with defined subtotals including operating profit and income before financing and income taxes,

 

 

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•

Required disclosure of management-defined performance measures (“MPM”) with a reconciliation between these measures and totals or subtotals specified by IFRS Accounting Standards. These disclosures will be subject to audit. MPMs are defined as subtotals of income and expenses not specified by IFRS Accounting Standards that are used in public communications to communicate management’s view of the Company’s financial performance, and

 

•

Enhanced guidance on organizing information and determining whether to provide the information in the financial statements or in the notes. IFRS 18 also requires enhanced disclosure of operating expenses based on their characteristics, including their nature, function or both.

The Company is assessing the impact of this standard on the Company’s Consolidated Financial Statements.

(II) Amendments to IAS 12 “Income Taxes”

Amendments to IAS 12 “Income Taxes” (“IAS 12”) were issued in May 2023. The amendments relate to the Organization for Economic Co-operation and Development’s International Pillar Two tax reform, which seeks to establish a global minimum tax (“GMT”) of fifteen per cent and address inter-jurisdictional base erosion and profit shifting, targeting larger international companies. Most jurisdictions have agreed to participate and effective dates for the GMT vary by jurisdiction based on local legislation.

The amendments require that, effective for the year ended December 31, 2023, disclosure of current tax expense or recovery related to the GMT is required along with, to the extent that the GMT legislation is enacted or substantively enacted but not yet in effect, disclosure of known or reasonably estimable information that helps users of financial statements understand the Company’s exposure to the GMT arising from that legislation. As of March 31, 2024, certain jurisdictions in which the Company operates, including Belgium, Ireland, Japan, Luxembourg, Malaysia, the Netherlands, New Zealand, the United Kingdom, and Vietnam, have enacted legislation to adopt the GMT. The assessment of the Company’s potential exposure to the GMT in these jurisdictions is based on the most recent information available regarding the financial performance of the constituent entities therein. Based on the assessment, the Company’s operations within these jurisdictions do not have a material exposure to the GMT and therefore no disclosure of current tax expense or recovery related to the GMT is provided.

The United States adopted a corporate alternative minimum tax (“CAMT”) of fifteen per cent, with an effective date of January 1, 2023. CAMT is not a Qualifying Domestic Minimum Top-up Tax for the purposes of the GMT.

In response to the GMT, Bermuda enacted the Corporate Income Tax 2023 Act on December 27, 2023. The Company’s Bermuda tax-resident subsidiaries and branches will be subject to this new tax regime effective January 1, 2025, at a rate of fifteen per cent. The Bermuda corporate income tax is not a Qualifying Domestic Minimum Top-up Tax for the purposes of the GMT.

Countries without a qualified domestic minimum top-up tax of their own will be in scope for Canada’s global minimum tax calculations, once enacted. The Company does not expect this will affect Manulife’s total global minimum tax exposure; however, it will dictate which jurisdiction has the taxing right for local country income.

The amendments introduce a temporary mandatory exception in IAS 12 from recognizing and disclosing deferred tax assets and liabilities related to the GMT. The Company has applied the mandatory temporary exception from accounting for deferred taxes in respect of the GMT.

 

 

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Note 3 Invested Assets and Investment Income

 

(a) Carrying values and fair values of invested assets

 

As at March 31, 2024		FVTPL(1)				FVOCI(2)				Other(3)				Total carrying value				Total fair value(4)
Cash and short-term securities(5)		$	15			$	14,011			$	7,455			$	21,481			$	21,481
Debt securities(6),(8)
Canadian government and agency			1,105				19,120				–				20,225				20,225
U.S. government and agency			48				26,301				911				27,260				27,009
Other government and agency			90				30,395				–				30,485				30,485
Corporate			2,392				117,461				497				120,350				120,181
Mortgage / asset-backed securities			16				1,767				–				1,783				1,783
Public equities (FVTPL mandatory)			27,695				–				–				27,695				27,695
Mortgages			1,102				28,458				23,045				52,605				52,566
Private placements(7)			649				45,113				–				45,762				45,762
Loans to Bank clients			–				–				2,383				2,383				2,358
Real estate
Own use property(8)			–				–				2,598				2,598				2,719
Investment property			–				–				10,454				10,454				10,454
Other invested assets
Alternative long-duration assets(9)			31,234				401				11,566				43,201				44,244
Various other			130				–				4,264				4,394				4,394
Total invested assets		$	64,476			$	283,027			$	63,173			$	410,676			$	411,356

 

As at December 31, 2023		FVTPL(1)				FVOCI(2)				Other(3)				Total carrying value				Total fair value(4)
Cash and short-term securities(5)		$	1			$	13,993			$	6,344			$	20,338			$	20,338
Debt securities(6),(8)
Canadian government and agency			1,219				19,769				–				20,988				20,988
U.S. government and agency			1,303				26,287				888				28,478				28,251
Other government and agency			90				30,576				–				30,666				30,666
Corporate			2,372				127,190				484				130,046				129,899
Mortgage / asset-backed securities			16				1,955				–				1,971				1,971
Public equities (FVTPL mandatory)			25,531				–				–				25,531				25,531
Mortgages			1,055				28,473				22,893				52,421				52,310
Private placements(7)			654				44,952				–				45,606				45,606
Loans to Bank clients			–				–				2,436				2,436				2,411
Real estate
Own use property(8)			–				–				2,591				2,591				2,716
Investment property			–				–				10,458				10,458				10,458
Other invested assets
Alternative long-duration assets(9)			29,671				360				11,403				41,434				42,313
Various other			126				–				4,120				4,246				4,246
Total invested assets		$	62,038			$	293,555			$	61,617			$	417,210			$	417,704

(1)

Fair value through profit or loss (“FVTPL”) classification was elected for debt instruments backing certain insurance contract liabilities to substantially reduce any accounting mismatch arising from changes in the fair value of these assets, or changes in the carrying value of the related insurance contract liabilities.

(2)

Fair value through other comprehensive income (“FVOCI”) classification for debt instruments backing certain insurance contract liabilities inherently reduces any accounting mismatch arising from changes in the fair value of these assets, or changes in the carrying value of the related insurance contract liabilities.

(3)

Other includes mortgages and loans to Bank clients held at amortized cost, own use properties, investment properties, equity method accounted investments, and leveraged leases. Also includes debt securities, which qualify as having Solely Payment of Principal and Interest (“SPPI”), are held to collect contractual cash flows and are carried at amortized cost.

(4)

Invested assets above include debt securities, mortgages, private placements and approximately $401 (December 31, 2023 – $360) of other invested assets, which primarily qualify as SPPI. Invested assets which do not have SPPI qualifying cash flows as at March 31, 2024 include debt securities, private placements and other invested assets with fair values of $1, $115 and $532, respectively (December 31, 2023 – $nil, $115 and $539, respectively). The change in the fair value of these invested assets for the three months ended March 31, 2024 was $6 decrease ($49 increase during the year ended December 31, 2023).

(5)

Includes short-term securities with maturities of less than one year at acquisition amounting to $6,999 (December 31, 2023 – $6,162), cash equivalents with maturities of less than 90 days at acquisition amounting to $7,030 (December 31, 2023 – $7,832) and cash of $7,452 (December 31, 2023 – $6,344).

(6)	Debt securities include securities which were acquired with maturities of less than one year and less than 90 days of $1,403 and $672, respectively (December 31, 2023 – $1,294 and $1,413, respectively).

(7)

Floating rate invested assets above which are subject to interest rate benchmark reform, but have not yet transitioned to replacement reference rates, include debt securities benchmarked to CDOR and AUD BBSW of $170 and $15, respectively (December 31, 2023 – $167 and $16, respectively), and private placements benchmarked to AUD BBSW and NZD BKBM of $194 and $59, respectively (December 31, 2023 – $198 and $61, respectively). Exposures indexed to CDOR represent floating rate invested assets with maturity dates beyond June 28, 2024. The interest rate benchmark reform is expected to have an impact on the valuation of invested assets whose value is tied to the affected interest rate benchmarks. The Company has assessed its exposure at the contract level, by benchmark and instrument type. The Company is monitoring market developments with respect to alternative reference rates and the time horizon during which they will evolve. As at March 31, 2024, the interest rate benchmark reform has not resulted in material changes in the Company’s risk management strategy.

(8)

Own use property of $2,434 as at March 31, 2024 (December 31, 2023 – $2,430), are underlying items for insurance contracts with direct participating features and are measured at fair value as if they were investment properties, as permitted by IAS 16 “Property, Plant and Equipment”. Own use property of $164 (December 31, 2023 – $161) is carried at cost less accumulated depreciation and any accumulated impairment losses.

(9)	Alternative long-duration assets (“ALDA”) include investments in private equity of $16,256, infrastructure of $15,796, timber and agriculture of $5,809, energy of $1,846 and various other ALDA of $3,494 (December 31, 2023 – $15,445, $14,950, $5,719, $1,859, and $3,461, respectively).

 

 

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(b) Fair value measurement

The following tables present fair values and the fair value hierarchy of invested assets and segregated funds net assets measured at fair value in the Consolidated Statements of Financial Position.

 

As at March 31, 2024		Total fair value				Level 1				Level 2				Level 3
Cash and short-term securities
FVOCI		$	14,011			$	–			$	14,011			$	–
FVTPL			15				–				15				–
Other			7,452				7,452				–				–
Debt securities
FVOCI
Canadian government and agency			19,120				–				19,120				–
U.S. government and agency			26,301				–				26,301				–
Other government and agency			30,395				–				30,381				14
Corporate			117,461				–				117,226				235
Residential mortgage-backed securities			6				–				6				–
Commercial mortgage-backed securities			356				–				356				–
Other asset-backed securities			1,405				–				1,386				19
FVTPL
Canadian government and agency			1,105				–				1,105				–
U.S. government and agency			48				–				48				–
Other government and agency			90				–				90				–
Corporate			2,392				1				2,391				–
Commercial mortgage-backed securities			1				–				1				–
Other asset-backed securities			15				–				15				–
Private placements(1)
FVOCI			45,113				–				37,595				7,518
FVTPL			649				–				597				52
Mortgages
FVOCI			28,458				–				–				28,458
FVTPL			1,102				–				–				1,102
Public equities
FVTPL			27,695				27,581				72				42
Real estate(2)
Investment property			10,454				–				–				10,454
Own use property			2,434				–				–				2,434
Other invested assets(3)			35,344				71				–				35,273
Segregated funds net assets(4)			402,109				366,486				32,183				3,440
Total		$	773,531			$	401,591			$	282,899			$	89,041

(1)

Fair value of private placements is determined through an internal valuation methodology using both observable and non-market observable inputs. Non-market observable inputs include credit assumptions and liquidity spread adjustments. Private placements are classified within Level 2 unless the liquidity adjustment constitutes a material price impact, in which case the securities are classified as Level 3.

(2)

For real estate properties, the significant non-market observable inputs are capitalization rates ranging from 2.26% to 9.50% for the three months ended March 31, 2024 (ranging from 2.72% to 10.75% for the year ended December 31, 2023), terminal capitalization rates ranging from 3.10% to 9.50% for the three months ended March 31, 2024 (ranging from 3.00% to 10.00% for the year ended December 31, 2023) and discount rates ranging from 3.20% to 13.75% for the three months ended March 31, 2024 (ranging from 3.20% to 14.00% for the year ended December 31, 2023). Holding other factors constant, a lower capitalization or terminal capitalization rate will tend to increase the fair value of an investment property. Changes in fair value based on variations in non-market observable inputs generally cannot be extrapolated because the relationship between the directional changes of each input is not usually linear.

(3)

Other invested assets measured at fair value are held in infrastructure and timber sectors and include fund investments of $28,976 as at March 31, 2024 (December 31, 2023 – $27,532) recorded at net asset value. The significant inputs used in the valuation of the Company’s infrastructure investments are primarily future distributable cash flows, terminal values and discount rates. Holding other factors constant, an increase to future distributable cash flows or terminal values would tend to increase the fair value of an infrastructure investment, while an increase in the discount rate would have the opposite effect. Discount rates for the three months ended March 31, 2024 ranged from 7.48% to 20.00% (ranged from 7.35% to 15.60% for the year ended December 31, 2023). Disclosure of distributable cash flow and terminal value ranges are not meaningful given the disparity in estimates by project. The significant inputs used in the valuation of the Company’s investments in timberland properties are timber prices and discount rates. Holding other factors constant, an increase to timber prices would tend to increase the fair value of a timberland investment, while an increase in the discount rates would have the opposite effect. Discount rates for the three months ended March 31, 2024 ranged from 4.00% to 7.00% (ranged from 4.00% to 7.00% for the year ended December 31, 2023). A range of prices for timber is not meaningful as the market price depends on factors such as property location and proximity to markets and export yards.

(4)	Segregated funds net assets are measured at fair value. The Company’s Level 3 segregated funds underlying assets are predominantly in investment properties and timberland properties valued as described above.

 

 

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As at December 31, 2023		Total fair value				Level 1				Level 2				Level 3
Cash and short-term securities
FVOCI		$	13,993			$	–			$	13,993			$	–
FVTPL			1				–				1				–
Other			6,343				6,343				–				–
Debt securities
FVOCI
Canadian government and agency			19,769				–				19,769				–
U.S. government and agency			26,287				–				26,287				–
Other government and agency			30,576				–				30,566				10
Corporate			127,190				–				126,959				231
Residential mortgage-backed securities			6				–				6				–
Commercial mortgage-backed securities			370				–				370				–
Other asset-backed securities			1,579				–				1,558				21
FVTPL
Canadian government and agency			1,219				–				1,219				–
U.S. government and agency			1,303				–				1,303				–
Other government and agency			90				–				90				–
Corporate			2,372				–				2,372				–
Commercial mortgage-backed securities			1				–				1				–
Other asset-backed securities			15				–				15				–
Private placements(1)
FVOCI			44,952				–				37,270				7,682
FVTPL			654				–				575				79
Mortgages
FVOCI			28,473				–				–				28,473
FVTPL			1,055				–				–				1,055
Public equities
FVTPL			25,531				25,423				67				41
Real estate(2)
Investment property			10,458				–				–				10,458
Own use property			2,430				–				–				2,430
Other invested assets(3)			33,653				68				–				33,585
Segregated funds net assets(4)			377,544				343,061				30,991				3,492
Total		$	755,864			$	374,895			$	293,412			$	87,557

Note: For footnotes (1) to (4), refer to the “Fair value measurement” table as at March 31, 2024 above.

The following tables present fair value of invested assets not measured at fair value by the fair value hierarchy.

 

As at March 31, 2024		Carrying value				Total fair value				Level 1				Level 2				Level 3
Short-term securities		$	3			$	3			$	–			$	3			$	–
Mortgages			23,045				23,006				–				–				23,006
Loans to Bank clients			2,383				2,358				–				2,358				–
Real estate - own use property			164				285				–				–				285
Public bonds held at amortized cost			1,408				988				–				988				–
Other invested assets(1)			12,251				13,294				245				–				13,049
Total invested assets disclosed at fair value		$	39,254			$	39,934			$	245			$	3,349			$	36,340
As at December 31, 2023		Carrying value				Total fair value				Level 1				Level 2				Level 3
Short-term securities		$	1			$	1			$	–			$	1			$	–
Mortgages			22,893				22,782				–				–				22,782
Loans to Bank clients			2,436				2,411				–				2,411				–
Real estate - own use property			161				286				–				–				286
Public bonds held at amortized cost			1,372				998				–				998				–
Other invested assets(1)			12,027				12,906				240				–				12,666
Total invested assets disclosed at fair value		$	38,890			$	39,384			$	240			$	3,410			$	35,734

(1)

The carrying value of other invested assets includes equity method accounted other invested assets of $8,321 (December 31, 2023 – $8,237) and leveraged leases of $3,930 (December 31, 2023 – $3,790). Fair value of leveraged leases is disclosed at their carrying values as fair value is not routinely calculated on these investments. Fair value for energy properties is determined using external appraisals based on discounted cash flow methodology. Inputs used in valuation are primarily comprised of forecasted price curves, planned production, as well as capital expenditures, and operating costs. Fair value of equity method accounted other invested assets is determined using a variety of valuation techniques including discounted cash flows and market comparable approaches. Inputs vary based on the specific investment.

 

 

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Transfers between Level 1 and Level 2

The Company records transfers of assets and liabilities between Level 1 and Level 2 at their fair values as at the end of each reporting period, consistent with the date of the determination of fair value. Assets are transferred out of Level 1 when they are no longer transacted with sufficient frequency and volume in an active market. Conversely, assets are transferred from Level 2 to Level 1 when transaction volume and frequency are indicative of an active market. During the three months ended March 31, 2024 and March 31, 2023, there were no transfers of assets between Level 1 and Level 2.

For segregated funds net assets, during the three months ended March 31, 2024 and March 31, 2023, there were no transfers of assets between Level 1 and Level 2.

Invested assets and segregated funds net assets measured at fair value using significant non-market observable inputs (Level 3)

The Company classifies fair values of invested assets, derivatives and segregated funds net assets as Level 3 if there are no observable markets for these assets or, in the absence of active markets, significant non-market observable inputs are used to determine fair value. The Company prioritizes the use of market-based inputs over non-market observable inputs in determining Level 3 fair values. The gains and losses in the table below include the changes in fair value due to both observable and non-market observable factors.

The following tables present the movement in invested assets, net derivatives and segregated funds net assets measured at fair value using significant non-market observable inputs (Level 3) for the three months ended March 31, 2024 and March 31, 2023.

 

For the three months ended March 31, 2024		Balance, January 1, 2024				Total gains (losses) included in net income(1)				Total gains (losses) included in AOCI(2)				Purchases				Sales				Settlements				Transfer in(3)				Transfer out(3)				Currency movement				Balance, March 31, 2024				Change in unrealized gains (losses) on assets still held
Debt securities
FVOCI
Other government & agency		$	10			$	–			$	–			$	–			$	–			$	–			$	4			$	–			$	–			$	14			$	–
Corporate			231				–				3				–				–				–				–				–				1				235				–
Other securitized assets			21				–				1				–				–				(3)				–				–				–				19				–
Public equities
FVTPL			41				1				–				–				–				–				–				–				–				42				1
Private placements
FVOCI			7,682				2				32				818				(556)				(251)				196				(514)				109				7,518				–
FVTPL			79				(1)				–				–				–				(11)				–				(14)				(1)				52				(1)
Mortgages
FVOCI			28,473				9				(311)				483				(470)				(185)				–				–				459				28,458				–
FVTPL			1,055				(8)				–				90				(28)				(8)				–				–				1				1,102				–
Investment property			10,458				(166)				–				80				(39)				–				–				–				121				10,454				(177)
Own use property			2,430				(31)				–				10				–				–				–				–				25				2,434				(31)
Other invested assets			33,585				556				33				947				(113)				(258)				–				–				523				35,273				515
Total invested assets			84,065				362				(242)				2,428				(1,206)				(716)				200				(528)				1,238				85,601				307
Derivatives, net			(2,166)				(576)				–				–				–				(19)				–				106				(42)				(2,697)				(585)
Segregated funds net assets			3,492				(29)				5				76				(179)				29				–				–				46				3,440				(90)
Total		$	85,391			$	(243)			$	(237)			$	2,504			$	(1,385)			$	(706)			$	200			$	(422)			$	1,242			$	86,344			$	(368)

(1)	These amounts are included in net investment income on the Consolidated Statements of Income except for the amount related to segregated funds net assets, where the amount is recorded in investment income related to segregated funds net assets.

(2)	These amounts are included in AOCI on the Consolidated Statements of Financial Position.

(3)	The Company uses fair values of the assets at the beginning of the year for assets transferred into and out of Level 3 except for derivatives, where the Company uses fair value at the end of the period and at the beginning of the year, respectively.

 

 

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For the three months ended March 31, 2023		Balance, January 1, 2023				Total gains (losses) included in net income(1)				Total gains (losses) included in AOCI(2)				Purchases				Sales				Settlements				Transfer in(3)				Transfer out(3)				Currency movement				Balance, March 31, 2023				Change in unrealized gains (losses) on assets still held
Debt securities
FVOCI
Other government & agency		$	9			$	–			$	–			$	2			$	–			$	–			$	–			$	–			$	(1)			$	10			$	–
Corporate			32				–				(1)				–				–				–				8				–				–				39				–
Other securitized assets			26				–				–				–				–				(3)				–				–				–				23				–
Public equities
FVTPL			71				–				–				–				–				–				–				(67)				–				4				–
Private placements
FVOCI			7,828				(9)				182				849				(258)				(115)				2,237				(272)				26				10,468				–
FVTPL			31				1				–				12				–				–				–				–				–				44				1
Mortgages
FVOCI			28,621				19				497				324				(258)				(195)				–				–				(27)				28,981				–
FVTPL			1,138				15				–				–				(44)				(11)				–				–				–				1,098				–
Investment property			11,417				(217)				–				47				(35)				–				–				–				(10)				11,202				(215)
Own use property			2,682				(18)				–				2				–				–				–				–				3				2,669				(18)
Other invested assets			31,069				305				(1)				1,198				(162)				(310)				–				–				(89)				32,010				310
Total invested assets			82,924				96				677				2,434				(757)				(634)				2,245				(339)				(98)				86,548				78
Derivatives, net			(3,188)				536				–				–				–				(1)				–				351				7				(2,295)				537
Segregated funds net assets			3,985				(9)				–				30				(38)				(4)				–				–				(2)				3,962				4
Total		$	83,721			$	623			$	677			$	2,464			$	(795)			$	(639)			$	2,245			$	12			$	(93)			$	88,215			$	619

(1)	For footnotes (1) to (3), refer to the “Invested assets and segregated funds net assets measured at fair value using significant non-market observable inputs (Level 3)” table for the three months ended March 31, 2024 above.

Transfers into Level 3 primarily result from private placements that were impaired during the period or where a lack of observable market data (versus the previous period) resulted in reclassifying assets into Level 3. Transfers from Level 3 primarily result from observable market data becoming available for the entire term structure of the private placements.

(c) Investment income

 

For the three months ended March 31,		2024				2023
Interest income		$	3,436			$	2,923
Dividends, rental income and other income			681				682
Impairments, provisions and recoveries, net			37				(191)
Other			97				106
Investment income			4,251				3,520
Realized and unrealized gains (losses) on assets supporting insurance and investment contract liabilities
Debt securities			(687)				300
Public equities			1,753				1,110
Mortgages			(6)				27
Private placements			244				83
Real estate			(228)				(232)
Other invested assets			511				216
Derivatives			(1,049)				440
			538				1,944
Investment expenses			(296)				(311)
Net investment income (loss)		$	4,493			$	5,153

 

 

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(d) Remaining term to maturity

The following tables present remaining term to maturity for invested assets.

 

		Remaining term to maturity(1)
As at March 31, 2024		Less than 1 year				1 to 3 years				3 to 5 years				5 to 10 years				Over 10 years				With no specific maturity				Total
Cash and short-term securities		$	21,481			$	–			$	–			$	–			$	–			$	–			$	21,481
Debt securities
Canadian government and agency			815				1,486				1,486				3,560				12,878				–				20,225
U.S. government and agency			246				724				868				3,804				21,618				–				27,260
Other government and agency			331				996				1,320				3,328				24,510				–				30,485
Corporate			7,953				14,535				15,870				31,698				50,276				18				120,350
Mortgage / asset-backed securities			11				201				245				457				869				–				1,783
Public equities			–				–				–				–				–				27,695				27,695
Mortgages			3,739				12,606				9,717				7,524				9,503				9,516				52,605
Private placements			1,299				3,704				4,896				9,487				26,308				68				45,762
Loans to Bank clients			32				25				3				–				–				2,323				2,383
Real estate
Own use property			–				–				–				–				–				2,598				2,598
Investment property			–				–				–				–				–				10,454				10,454
Other invested assets
Alternative long-duration assets			43				21				61				77				735				42,264				43,201
Various other(2)			–				20				–				3,312				598				464				4,394
Total invested assets		$	35,950			$	34,318			$	34,466			$	63,247			$	147,295			$	95,400			$	410,676

 

		Remaining term to maturity(1)
As at December 31, 2023		Less than 1 year				1 to 3 years				3 to 5 years				5 to 10 years				Over 10 years				With no specific maturity				Total
Cash and short-term securities		$	20,338			$	–			$	–			$	–			$	–			$	–			$	20,338
Debt securities
Canadian government and agency			657				1,435				1,580				3,656				13,660				–				20,988
U.S. government and agency			297				725				744				4,504				22,208				–				28,478
Other government and agency			412				1,052				1,892				3,864				23,446				–				30,666
Corporate			8,475				15,512				18,548				33,361				54,100				50				130,046
Mortgage / asset-backed securities			106				153				279				556				877				–				1,971
Public equities			–				–				–				–				–				25,531				25,531
Mortgages			3,363				12,076				10,181				7,690				9,644				9,467				52,421
Private placements			1,418				3,486				4,704				9,137				26,790				71				45,606
Loans to Bank clients			39				23				1				–				–				2,373				2,436
Real estate
Own use property			–				–				–				–				–				2,591				2,591
Investment property			–				–				–				–				–				10,458				10,458
Other invested assets
Alternative long-duration assets			–				67				22				82				732				40,531				41,434
Various other(2)			–				–				19				1,528				2,242				457				4,246
Total invested assets		$	35,105			$	34,529			$	37,970			$	64,378			$	153,699			$	91,529			$	417,210

(1)	Represents contractual maturity. Actual maturity may differ due to prepayment privileges in the applicable contract.

(2)	Primarily includes equity method accounted investments and leveraged leases.

 

 

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Note 4 Derivative and Hedging Instruments

 

The Company uses derivative financial instruments (“derivatives”) including swaps, forward and futures agreements, and options to manage current and anticipated exposures to changes in interest rates, foreign exchange rates, commodity prices and equity market prices, and to replicate exposure to different types of investments. The Company’s policies and procedures for derivative and hedging instruments can be found in notes 1 and 5 of the Company’s 2023 Annual Consolidated Financial Statements.

(a) Fair value of derivatives

The following table presents gross notional amount and fair value of derivative instruments by the underlying risk exposure.

 

				March 31, 2024												December 31, 2023
As at				Notional				Fair value								Notional				Fair value
Type of hedge		Instrument type		amount				Assets				Liabilities				amount				Assets				Liabilities
Qualifying hedge accounting relationships
Fair value hedges		Interest rate swaps		$	193,073			$	2,682			$	3,564			$	184,309			$	2,627			$	3,044
		Foreign currency swaps			7,788				59				1,628				9,055				78				1,518
		Forward contracts			23,275				112				3,123				23,461				165				2,672
Cash flow hedges		Interest rate swaps			8,592				22				22				8,372				20				48
		Foreign currency swaps			1,151				35				179				1,150				35				181
		Forward contracts			50				–				–				–				–				–
		Equity contracts			418				12				–				240				3				–
Net investment hedges		Forward contracts			648				6				–				654				–				16
Total derivatives in qualifying hedge accounting relationships					234,995				2,928				8,516				227,241				2,928				7,479
Derivatives not designated in qualifying hedge accounting relationships
		Interest rate swaps			100,492				2,514				3,683				103,806				2,361				3,098
		Interest rate futures			8,622				–				–				9,449				–				–
		Interest rate options			5,833				24				–				5,841				33				–
		Foreign currency swaps			34,981				1,582				538				33,148				1,873				398
		Currency rate futures			2,318				–				–				2,581				–				–
		Forward contracts			43,048				554				619				34,080				769				597
		Equity contracts			21,153				763				65				19,760				579				115
		Credit default swaps			125				3				–				131				3				–
		Equity futures			3,852				–				–				4,040				–				–
Total derivatives not designated in qualifying hedge accounting relationships					220,424				5,440				4,905				212,836				5,618				4,208
Total derivatives				$	455,419			$	8,368			$	13,421			$	440,077			$	8,546			$	11,687

The total notional amount above includes $79 billion (December 31, 2023 – $79 billion) of derivative instruments which reference rates that are impacted under the interest rate benchmark reform, with a significant majority to CDOR. Exposures indexed to CDOR represent derivatives with a maturity date beyond June 28, 2024. Upon adoption of IFRS 9, the Company designated additional existing derivatives in hedge accounting relationships. The exposure in the Company’s hedge accounting programs is primarily to the CDOR benchmark. Compared to the overall risk exposure, the effect of interest rate benchmark reform on existing accounting hedges is not significant. The Company continues to apply high probability and high effectiveness expectation assumptions for cash flows and there would be no automatic de-designation of qualifying hedge relationships due to the impact from interest rate benchmark reform.

The following tables present the fair values of the derivative instruments by the remaining term to maturity. Fair values disclosed below do not incorporate the impact of master netting agreements (refer to note 7).

 

		Remaining term to maturity
As at March 31, 2024		Less than 1 year				1 to 3 years				3 to 5 years				Over 5 years				Total
Derivative assets		$	1,067			$	579			$	488			$	6,234			$	8,368
Derivative liabilities			2,153				1,570				827				8,871				13,421
		Remaining term to maturity
As at December 31, 2023		Less than 1 year				1 to 3 years				3 to 5 years				Over 5 years				Total
Derivative assets		$	1,189			$	603			$	573			$	6,181			$	8,546
Derivative liabilities			1,561				1,982				717				7,427				11,687

 

 

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Fair value and the fair value hierarchy of derivative instruments

 

As at March 31, 2024		Fair value				Level 1				Level 2				Level 3
Derivative assets
Interest rate contracts		$	5,653			$	–			$	5,300			$	353
Foreign exchange contracts			1,937				–				1,937				–
Equity contracts			775				–				757				18
Credit default swaps			3				–				3				–
Total derivative assets		$	8,368			$	–			$	7,997			$	371
Derivative liabilities
Interest rate contracts		$	10,741			$	–			$	7,675			$	3,066
Foreign exchange contracts			2,615				–				2,613				2
Equity contracts			65				–				65				–
Total derivative liabilities		$	13,421			$	–			$	10,353			$	3,068
As at December 31, 2023		Fair value				Level 1				Level 2				Level 3
Derivative assets
Interest rate contracts		$	5,813			$	–			$	5,262			$	551
Foreign exchange contracts			2,148				–				2,148				–
Equity contracts			582				–				572				10
Credit default swaps			3				–				3				–
Total derivative assets		$	8,546			$	–			$	7,985			$	561
Derivative liabilities
Interest rate contracts		$	9,176			$	–			$	6,451			$	2,725
Foreign exchange contracts			2,396				–				2,395				1
Equity contracts			115				–				114				1
Total derivative liabilities		$	11,687			$	–			$	8,960			$	2,727

Movement in net derivatives measured at fair value using significant non-market observable inputs (Level 3) is presented in note 3 (b).

(b) Embedded derivatives

Certain insurance contracts contain features that are classified as embedded derivatives and are measured separately at FVTPL, including reinsurance contracts related to guaranteed minimum income benefits and contracts containing certain credit and interest rate features.

Certain reinsurance contracts related to guaranteed minimum income benefits contain embedded derivatives requiring separate measurement at FVTPL as the financial component contained in the reinsurance contracts does not contain significant insurance risk. Claims recovered under reinsurance ceded contracts offset claims expenses and claims paid on the reinsurance assumed. As at March 31, 2024, reinsurance ceded guaranteed minimum income benefits had a fair value of $337 (December 31, 2023 – $402) and reinsurance assumed guaranteed minimum income benefits had a fair value of $nil (December 31, 2023 – $46).

The Company’s credit and interest rate embedded derivatives promise to pay the returns on a portfolio of assets to the contract holder. These embedded derivatives contain credit and interest rate risks that are financial risks embedded in the underlying insurance and investment contracts. As at March 31, 2024, these embedded derivative liabilities had a fair value of $365 (December 31, 2023 – $487).

Other insurance contract features which are classified as embedded derivatives but are exempt from separate measurement at fair value include variable universal life and variable life products’ minimum guaranteed credited rates, no lapse guarantees, guaranteed annuitization options, Consumer Price Index (“CPI”) indexing of benefits, and segregated fund minimum guarantees other than reinsurance ceded/assumed guaranteed minimum income benefits. These embedded derivatives are measured and reported within insurance contract liabilities and are exempt from separate fair value measurement as they contain insurance risk and/or are closely related to the insurance host contracts.

 

 

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Note 5 Insurance and Reinsurance Contract Assets and Liabilities

 

(a) Movements in carrying amounts of insurance and reinsurance contracts

The following tables present the movement in the net carrying amounts of insurance contracts issued and reinsurance contracts held during the period for the Company. The changes include amounts that are recognized in income and OCI, and movements due to cash flows.

Insurance contracts – Analysis by measurement components

The following tables present the movement in the net assets or liabilities for insurance contracts issued, showing estimates of the present value of future cash flows, risk adjustment and CSM for the three months ended March 31, 2024 and for the year ended December 31, 2023.

 

		Estimates of PV of future cash flows				Risk adjustment for non- financial risk				CSM				Assets for insurance acquisition cash flows				Total
Opening General Measurement Method (“GMM”) and Variable Fee Approach (“VFA”) insurance contract assets		$	(416)			$	141			$	131			$	–			$	(144)
Opening GMM and VFA insurance contract liabilities			310,807				22,697				21,973				(59)				355,418
Opening Premium Allocation Approach (“PAA”) insurance contract net liabilities			12,712				626				–				(761)				12,577
Opening insurance contract liabilities for account of segregated fund holders			114,143				–				–				–				114,143
Net opening balance, January 1, 2024			437,246				23,464				22,104				(820)				481,994
Changes that relate to current services			(109)				(366)				(640)				–				(1,115)
Changes that relate to future services			(1,342)				152				1,290				–				100
Changes that relate to past services			(21)				(3)				–				–				(24)
Insurance service result			(1,472)				(217)				650				–				(1,039)
Insurance finance (income) expenses			(3,151)				(359)				81				–				(3,429)
Effects of movements in foreign exchange rates			5,130				501				329				–				5,960
Total changes in income and OCI			507				(75)				1,060				–				1,492
Total cash flows			1,402				–				–				–				1,402
Movements related to insurance acquisition cash flows			(1)				–				–				(1)				(2)
Change in PAA balance			(34)				5				–				86				57
Movements related to insurance contract liabilities for account of segregated fund holders			5,753				–				–				–				5,753
Net closing balance			444,873				23,394				23,164				(735)				490,696
Closing GMM and VFA insurance contract assets			(416)				140				139				–				(137)
Closing GMM and VFA insurance contract liabilities			312,715				22,623				23,025				(60)				358,303
Closing PAA insurance contract net liabilities			12,678				631				–				(675)				12,634
Closing insurance contract liabilities for account of segregated fund insurance holders			119,896				–				–				–				119,896
Net closing balance, March 31, 2024		$	444,873			$	23,394			$	23,164			$	(735)			$	490,696

 

Insurance finance (income) expenses (“IFIE”)		For the three months ended March 31, 2024
Insurance finance (income) expenses for products not under PAA, per disclosure above(1)		$	(3,429)
Insurance finance (income) expenses for products under PAA			(53)
Reclassification of derivative OCI to IFIE – cash flow hedges			(127)
Reclassification of derivative (income) loss changes to IFIE – fair value hedge			1,734
Total insurance finance (income) expenses from insurance contracts issued			(1,875)
Effect of movements in foreign exchange rates			1,263
Total insurance finance (income) expenses from insurance contracts issued and effect of movement in foreign exchange rates		$	(612)
Portion recognized in (income) expenses, including effects of foreign exchange rates		$	4,458
Portion recognized in OCI, including effects of foreign exchange rates			(5,070)

(1)

The insurance finance (income) expenses reflect effect of time value of money and financial risk, which includes but is not limited to interest accreted using locked-in rate, changes in interest rates and other financial assumptions, changes in fair value of underlying items of direct participation contracts and effects of risk mitigation option.

 

 

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		Estimates of PV of future cash flows				Risk adjustment for non- financial risk				CSM				Assets for insurance acquisition cash flows				Total
Opening GMM and VFA insurance contract assets		$	(1,827)			$	512			$	657			$	–			$	(658)
Opening GMM and VFA insurance contract liabilities			297,967				25,750				19,192				(56)				342,853
Opening PAA insurance contract net liabilities			12,125				605				–				(749)				11,981
Opening insurance contract liabilities for account of segregated fund holders			110,216				–				–				–				110,216
Net opening balance, January 1, 2023			418,481				26,867				19,849				(805)				464,392
Changes that relate to current services			152				(1,620)				(2,162)				–				(3,630)
Changes that relate to future services			(1,884)				(2,667)				4,642				–				91
Changes that relate to past services			(28)				(4)				–				–				(32)
Insurance service result			(1,760)				(4,291)				2,480				–				(3,571)
Insurance finance (income) expenses			22,340				1,646				320				–				24,306
Effects of movements in foreign exchange rates			(8,405)				(779)				(545)				–				(9,729)
Total changes in income and OCI			12,175				(3,424)				2,255				–				11,006
Total cash flows			2,081				–				–				–				2,081
Movements related to insurance acquisition cash flows			(5)				–				–				(3)				(8)
Change in PAA balance			587				21				–				(12)				596
Movements related to insurance contract liabilities for account of segregated fund holders			3,927				–				–				–				3,927
Net closing balance			437,246				23,464				22,104				(820)				481,994
Closing GMM and VFA insurance contract assets			(416)				141				131				–				(144)
Closing GMM and VFA insurance contract liabilities			310,807				22,697				21,973				(59)				355,418
Closing PAA insurance contract net liabilities			12,712				626				–				(761)				12,577
Closing insurance contract liabilities for account of segregated fund insurance holders			114,143				–				–				–				114,143
Net closing balance, December 31, 2023		$	437,246			$	23,464			$	22,104			$	(820)			$	481,994

Reinsurance contracts held – Analysis by measurement components

The following tables present the movement in the net assets or liabilities for reinsurance contracts held, showing estimates of the present value of future cash flows, risk adjustment and CSM for the three months ended March 31, 2024 and for the year ended December 31, 2023.

 

		Estimates of PV of future cash flows				Risk adjustment for non- financial risk				CSM				Total
Opening reinsurance contract held assets		$	38,156			$	3,685			$	513			$	42,354
Opening reinsurance contract held liabilities			(4,384)				1,305				290				(2,789)
Opening PAA reinsurance contract net assets			239				16				–				255
Net opening balance, January 1, 2024			34,011				5,006				803				39,820
Changes that relate to current services			(87)				(137)				(48)				(272)
Changes that relate to future services			(1,130)				830				324				24
Changes that relate to past services			2				–				–				2
Insurance service result			(1,215)				693				276				(246)
Insurance finance (income) expenses from reinsurance contracts			(792)				(162)				7				(947)
Effects of changes in non-performance risk of reinsurers			12				–				–				12
Effects of movements in foreign exchange rates			1,083				90				3				1,176
Total changes in income and OCI			(912)				621				286				(5)
Total cash flows			11,279				–				–				11,279
Change in PAA balance			(11)				–				–				(11)
Net closing balance			44,367				5,627				1,089				51,083
Closing reinsurance contract held assets			48,734				4,345				701				53,780
Closing reinsurance contract held liabilities			(4,595)				1,266				388				(2,941)
Closing PAA reinsurance contract net assets			228				16				–				244
Net closing balance, March 31, 2024		$	44,367			$	5,627			$	1,089			$	51,083

 

 

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		Estimates of PV of future cash flows				Risk adjustment for non- financial risk				CSM				Total
Opening reinsurance contract held assets		$	39,656			$	4,049			$	1,873			$	45,578
Opening reinsurance contract held liabilities			(3,919)				1,574				(1)				(2,346)
Opening PAA reinsurance contract net assets			240				8				–				248
Net opening balance, January 1, 2023			35,977				5,631				1,872				43,480
Changes that relate to current services			(19)				(478)				(164)				(661)
Changes that relate to future services			1,412				(442)				(894)				76
Changes that relate to past services			5				–				–				5
Insurance service result			1,398				(920)				(1,058)				(580)
Insurance finance (income) expenses from reinsurance contracts			173				447				10				630
Effects of changes in non-performance risk of reinsurers			(14)				–				–				(14)
Effects of movements in foreign exchange rates			(916)				(160)				(21)				(1,097)
Total changes in income and OCI			641				(633)				(1,069)				(1,061)
Total cash flows			(2,606)				–				–				(2,606)
Change in PAA balance			(1)				8				–				7
Net closing balance			34,011				5,006				803				39,820
Closing reinsurance contract held assets			38,156				3,685				514				42,355
Closing reinsurance contract held liabilities			(4,384)				1,305				289				(2,790)
Closing PAA reinsurance contract net assets			239				16				–				255
Net closing balance, December 31, 2023		$	34,011			$	5,006			$	803			$	39,820

(b) Effect of new business recognized in the period

The following table presents components of new business for insurance contracts issued for the periods presented.

 

		For the three months ended March 31, 2024								For the year ended December 31, 2023
		Non-onerous				Onerous				Non-onerous				Onerous
New business insurance contracts
Estimates of present value of cash outflows		$	7,843			$	520			$	22,211			$	3,796
Insurance acquisition cash flows			1,262				103				4,295				623
Claims and other insurance service expenses payable			6,581				417				17,916				3,173
Estimates of present value of cash inflows			(8,812)				(522)				(25,541)				(3,761)
Risk adjustment for non-financial risk			184				32				962				218
Contractual service margin			785				–				2,368				–
Amount included in insurance contract liabilities for the period		$	–			$	30			$	–			$	253

The following table presents components of new business for reinsurance contracts held portfolios for the periods presented.

 

		For the three months ended March 31, 2024				For the year ended December 31, 2023
New business reinsurance contracts
Estimates of present value of cash outflows		$	(13,007)			$	(1,997)
Estimates of present value of cash inflows			11,887				1,933
Risk adjustment for non-financial risk			840				399
Contractual service margin			291				(263)
Amount included in reinsurance assets for the period		$	11			$	72

(c) Insurance revenue

The following table shows the components of insurance revenue in the Consolidated Statements of Income. Insurance revenue excludes investment components and loss component. It also does not reflect any financial changes such as effect of time value of money, which are recognized in insurance finance income and expenses.

 

For the three months ended March 31,		2024				2023
Expected incurred claims and other insurance service result		$	3,553			$	3,276
Change in risk adjustment for non-financial risk expired			366				315
CSM recognized for services provided			640				506
Recovery of insurance acquisition cash flows			279				179
Contracts under PAA			1,659				1,487
Total insurance revenue		$	6,497			$	5,763

 

 

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(d) Significant judgements and estimates

Discount rates

The following tables present the spot rates used for discounting liability cash flows.

 

										March 31, 2024
		Currency		Liquidity category		Observable years		Ultimate year		1 year				5 years				10 years				20 years				30 years				Ultimate
Canada		CAD		Illiquid		30		70			5.23%				4.58%				5.20%				5.14%				5.20%				4.40%
				Somewhat liquid(1)		30		70			5.21%				4.50%				5.03%				5.04%				5.02%				4.40%
U.S.		USD		Illiquid		30		70			5.25%				4.84%				5.70%				5.87%				5.57%				5.00%
				Somewhat liquid(1)		30		70			5.46%				5.01%				5.62%				5.90%				5.61%				4.88%
Japan		JPY		Somewhat liquid(1)		30		70			0.41%				0.85%				1.28%				1.95%				2.45%				1.60%
Hong Kong		HKD		Illiquid		15		55			4.16%				4.34%				5.41%				4.91%				4.32%				3.80%
										December 31, 2023
		Currency		Liquidity category		Observable years		Ultimate year		1 year				5 years				10 years				20 years				30 years				Ultimate
Canada		CAD		Illiquid		30		70			5.17%				4.33%				4.92%				4.86%				4.80%				4.40%
				Somewhat liquid(1)		30		70			5.14%				4.22%				4.69%				4.72%				4.69%				4.40%
U.S.		USD		Illiquid		30		70			5.38%				4.54%				5.37%				5.65%				5.27%				5.00%
				Somewhat liquid(1)		30		70			5.32%				4.57%				5.25%				5.56%				5.18%				4.88%
Japan		JPY		Somewhat liquid(1)		30		70			0.53%				0.77%				1.08%				1.75%				2.24%				1.60%
Hong Kong		HKD		Illiquid		15		55			4.20%				4.01%				4.98%				4.61%				4.19%				3.80%

(1)	Somewhat liquid refers to liquidity level that is between liquid and illiquid. It is higher liquidity than illiquid and lower liquidity than liquid.

(e) Reinsurance transactions

Agreement with Global Atlantic Financial Group

On December 11, 2023, the Company announced it entered into agreements with Global Atlantic Financial Group Ltd. (“GA”) to reinsure policies from the U.S. long-term care (“LTC”), U.S. structured settlements, and Japan whole life legacy blocks. Under the terms of the transaction, the Company will retain responsibility for the administration of the policies, with no intended impact to policyholders. The transaction was structured as coinsurance of an 80% quota share for the LTC block and 100% quota shares for the other blocks.

The transaction closed on February 22, 2024, with the Company transferring invested assets measured at FVOCI of $13.4 billion and reinsuring insurance and investment contract net liabilities of $13.2 billion. The Company recognized a reinsurance contractual service margin of $308 and financial assets of $134.

Agreement with RGA Life Reinsurance Company of Canada

On March 25, 2024, the Company announced it entered into an agreement with RGA Life Reinsurance Company of Canada to reinsure policies from its Canadian universal life block. Under the terms of the transaction, the Company will retain responsibility for the administration of the policies, with no intended impact to policyholders. The transaction will be structured as coinsurance with a 100% quota share.

The transaction closed on April 2, 2024, with the reinsurance of $5.6 billion of insurance contract net liabilities as at March 31, 2024.

Note 6 Investment Contract Assets and Liabilities

 

Investment contract liabilities are contractual financial obligations of the Company that do not contain significant insurance risk. Those contracts are subsequently measured either at fair value or at amortized cost.

As at March 31, 2024, the carrying value and fair value of investment contract liabilities measured at amortized cost were $11,469 and $11,363, respectively (December 31, 2023 – $11,067 and $10,994, respectively). The fair value of investment contract liabilities measured at fair value was $705 (December 31, 2023 – $749).

 

 

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As at March 31, 2024, the carrying value and fair value of the reinsurance financial assets measured at amortized cost were $1,036 and $975, respectively (December 31, 2023 - $27 and $27, respectively). The fair value of the reinsurance financial assets measured at fair value was $670 (December 31, 2023 – $nil).

As at March 31, 2024, the net carrying value and fair value of investment contract assets and liabilities measured at amortized cost were $10,433 and $10,388, respectively (December 31, 2023 – $11,040 and $10,967, respectively). The net fair value of the investment contract assets and liabilities measured at fair value was $35 (December 31, 2023 - $749).

Note 7 Risk Management

 

The Company’s policies and procedures for managing risk related to financial instruments and insurance contracts can be found in note 9 of the Company’s 2023 Annual Consolidated Financial Statements as well as the denoted text and tables in the “Risk Management and Risk Factors” section of the Company’s MD&A in the Company’s 2023 Annual Report.

(a) Risk disclosures included in the First Quarter 2024 MD&A

Market risk sensitivities related to variable annuity and segregated fund guarantees, publicly traded equity performance risk, interest rate and spread risk and alternative long-duration asset performance risk are disclosed in denoted text and tables in the “Risk Management and Risk Factors” section of the First Quarter 2024 MD&A. These disclosures are in accordance with IFRS 7 “Financial Instruments: Disclosures”, IFRS 17 and IAS 34 “Interim Financial Reporting” and are an integral part of these Interim Consolidated Financial Statements. The risks to which the Company is exposed at the end of the reporting period are representative of risks it is typically exposed to throughout the reporting period.

(b) Credit risk

Credit risk is the risk of loss due to inability or unwillingness of a borrower, or counterparty, to fulfill its payment obligations. Worsening regional and global economic conditions, segment or industry sector challenges, or company specific factors could result in defaults or downgrades and could lead to increased provisions or impairments related to the Company’s general fund invested assets.

The Company’s exposure to credit risk is managed through risk management policies and procedures which include a defined credit evaluation and adjudication process, delegated credit approval authorities and established exposure limits by borrower, corporate connection, credit rating, industry and geographic region. The Company measures derivative counterparty exposure as net potential credit exposure, which takes into consideration fair values of all transactions with each counterparty, net of any collateral held, and an allowance to reflect future potential exposure. Reinsurance counterparty exposure is measured reflecting the level of ceded liabilities.

The Company also ensures where warranted, that mortgages, private placements and loans to Bank clients are secured by collateral, the nature of which depends on the credit risk of the counterparty.

Credit risk associated with derivative counterparties is discussed in note 7(e).

 

 

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(I) Credit quality

The following tables present financial instruments subject to credit exposure, without considering any collateral held or other credit enhancements, presenting separately Stage 1, Stage 2, and Stage 3 credit risk profiles, with allowances, plus allowances for loan commitments.

 

As at March 31, 2024		Stage 1				Stage 2				Stage 3				Total
Debt securities, measured at amortized cost
Investment grade		$	1,409			$	–			$	–			$	1,409
Non-investment grade			–				–				–				–
Total			1,409				–				–				1,409
Allowance for credit losses			1				–				–				1
Total carrying value, net of allowance			1,408				–				–				1,408
Debt securities, measured at FVOCI
Investment grade			187,966				1,024				–				188,990
Non-investment grade			5,411				635				8				6,054
Total carrying value			193,377				1,659				8				195,044
Allowance for credit losses			255				45				14				314
Private placements, measured at FVOCI
Investment grade			38,682				697				–				39,379
Non-investment grade			4,731				924				79				5,734
Total carrying value			43,413				1,621				79				45,113
Allowance for credit losses			124				120				83				327
Commercial mortgages, measured at amortized cost
AAA			–				–				–				–
AA			–				–				–				–
A			149				44				–				193
BBB			–				–				–				–
BB			–				–				–				–
B and lower			163				49				–				212
Total			312				93				–				405
Allowance for credit losses			1				2				–				3
Total carrying value, net of allowance			311				91				–				402
Commercial mortgages, measured at FVOCI
AAA			258				–				–				258
AA			6,773				39				–				6,812
A			14,230				–				–				14,230
BBB			5,471				994				–				6,465
BB			10				532				–				542
B and lower			–				44				107				151
Total carrying value			26,742				1,609				107				28,458
Allowance for credit losses			39				41				144				224
Residential mortgages, measured at amortized cost
Performing			21,293				1,306				–				22,599
Non-performing			–				–				52				52
Total			21,293				1,306				52				22,651
Allowance for credit losses			4				2				2				8
Total carrying value, net of allowance			21,289				1,304				50				22,643
Loans to Bank clients, measured at amortized cost
Performing			2,337				42				–				2,379
Non-performing			–				–				6				6
Total			2,337				42				6				2,385
Allowance for credit losses			1				–				1				2
Total carrying value, net of allowance			2,336				42				5				2,383
Other invested assets, measured at amortized cost
Investment grade			3,931				–				–				3,931
Non-investment grade			–				–				–				–
Total			3,931				–				–				3,931
Allowance for credit losses			1				–				–				1
Total carrying value, net of allowance			3,930				–				–				3,930
Other invested assets, measured at FVOCI
Investment grade			–				–				–				–
Non-investment grade			401				–				–				401
Total carrying value			401				–				–				401
Allowance for credit losses			15				–				–				15
Loan commitments
Allowance for credit losses			8				1				2				11
Total carrying value, net of allowance		$	293,207			$	6,326			$	249			$	299,782

 

 

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As at December 31, 2023		Stage 1				Stage 2				Stage 3				Total
Debt securities, measured at amortized cost
Investment grade		$	1,373			$	–			$	–			$	1,373
Non-investment grade			–				–				–				–
Total			1,373				–				–				1,373
Allowance for credit losses			1				–				–				1
Total carrying value, net of allowance			1,372				–				–				1,372
Debt securities, measured at FVOCI
Investment grade			197,562				2,252				–				199,814
Non-investment grade			5,367				596				–				5,963
Total carrying value			202,929				2,848				–				205,777
Allowance for credit losses			283				54				6				343
Private placements, measured at FVOCI
Investment grade			37,722				1,644				–				39,366
Non-investment grade			5,210				295				81				5,586
Total carrying value			42,932				1,939				81				44,952
Allowance for credit losses			126				108				83				317
Commercial mortgages, measured at amortized cost
AAA			–				–				–				–
AA			–				–				–				–
A			148				48				–				196
BBB			–				–				–				–
BB			–				–				–				–
B and lower			145				35				–				180
Total			293				83				–				376
Allowance for credit losses			1				2				–				3
Total carrying value, net of allowance			292				81				–				373
Commercial mortgages, measured at FVOCI
AAA			279				–				–				279
AA			6,815				–				–				6,815
A			14,111				86				–				14,197
BBB			5,513				984				–				6,497
BB			10				532				–				542
B and lower			–				36				107				143
Total carrying value			26,728				1,638				107				28,473
Allowance for credit losses			40				42				143				225
Residential mortgages, measured at amortized cost
Performing			20,898				1,570				–				22,468
Non-performing			–				–				60				60
Total			20,898				1,570				60				22,528
Allowance for credit losses			4				2				2				8
Total carrying value, net of allowance			20,894				1,568				58				22,520
Loans to Bank clients, measured at amortized cost
Performing			2,387				44				–				2,431
Non-performing			–				–				8				8
Total			2,387				44				8				2,439
Allowance for credit losses			2				–				1				3
Total carrying value, net of allowance			2,385				44				7				2,436
Other invested assets, measured at amortized cost
Investment grade			3,791				–				–				3,791
Non-investment grade			–				–				–				–
Total			3,791				–				–				3,791
Allowance for credit losses			1				–				–				1
Total carrying value, net of allowance			3,790				–				–				3,790
Other invested assets, measured at FVOCI
Investment grade			–				–				–				–
Non-investment grade			360				–				–				360
Total carrying value			360				–				–				360
Allowance for credit losses			16				–				–				16
Loan commitments
Allowance for credit losses			9				1				2				12
Total carrying value, net of allowance		$	301,682			$	8,118			$	253			$	310,053

 

 

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(II) Allowance for credit losses

The following tables provide details on the allowance for credit losses by stage as at and for the three months ended March 31, 2024 and for the year ended December 31, 2023.

 

As at March 31, 2024		Stage 1				Stage 2				Stage 3				Total
Balance, January 1, 2024		$	482			$	210			$	237			$	929
Net re-measurement due to transfers			3				(5)				2				–
Transfer to stage 1			6				(6)				–				–
Transfer to stage 2			(3)				3				–				–
Transfer to stage 3			–				(2)				2				–
Net originations, purchases, disposals and repayments			(1)				(2)				(12)				(15)
Changes to risk, parameters, and models			(42)				4				14				(24)
Foreign exchange and other adjustments			7				4				5				16
Balance, end of the period		$	449			$	211			$	246			$	906
As at December 31, 2023		Stage 1				Stage 2				Stage 3				Total
Balance, beginning of the year		$	511			$	141			$	72			$	724
Net re-measurement due to transfers			4				6				(10)				–
Transfer to stage 1			12				(11)				(1)				–
Transfer to stage 2			(6)				28				(22)				–
Transfer to stage 3			(2)				(11)				13				–
Net originations, purchases, disposals and repayments			45				8				(23)				30
Changes to risk, parameters, and models			(71)				48				233				210
Foreign exchange and other adjustments			(6)				6				(35)				(35)
Balance, end of the year		$	483			$	209			$	237			$	929

(III) Significant judgements and estimates

The following table shows certain key macroeconomic variables used to estimate the expected credit loss (“ECL”) allowances by market. For the base case, upside and downside scenarios, the projections are provided for the next 12 months and then for the remaining forecast period, which represents a medium-term view.

 

						Base case scenario								Upside scenario								Downside scenario 1								Downside scenario 2
As at March 31, 2024		Current quarter				Next 12 months				Ensuing 4 years				Next 12 months				Ensuing 4 years				Next 12 months				Ensuing 4 years				Next 12 months				Ensuing 4 years
Canada
Gross Domestic Product (GDP), in U.S. $ billions		$	1,947				1.1%				1.9%				3.1%				2.1%				(2.6%)				2.1%				(4.5%)				2.0%
Unemployment rate			6.0%				6.2%				6.1%				5.5%				5.3%				8.2%				8.0%				9.5%				9.7%
NYMEX Light Sweet Crude Oil (in U.S. dollars, per barrel)			78.3				79.2				71.6				81.8				71.9				64.7				65.0				55.0				58.8
U.S.
Gross Domestic Product (GDP), in U.S. $ billions		$	22,762				1.5%				2.2%				3.6%				2.4%				(2.4%)				2.6%				(4.2%)				2.5%
Unemployment rate			3.8%				4.0%				4.0%				3.2%				3.3%				6.5%				5.8%				6.9%				7.6%
7-10 Year BBB U.S. Corporate Index			5.7%				6.2%				6.1%				6.0%				6.1%				5.8%				5.5%				6.4%				5.4%
Japan
Gross Domestic Product (GDP), in JPY billions		¥	557,888				1.0%				0.8%				3.1%				1.0%				(4.1%)				1.1%				(7.8%)				1.7%
Unemployment rate			2.5%				2.5%				2.3%				2.4%				2.1%				3.0%				3.0%				3.1%				3.6%
Hong Kong
Unemployment rate			2.9%				2.9%				3.1%				2.6%				2.8%				4.0%				3.9%				4.4%				4.7%
Hang Seng Index			15,559				19.8%				9.7%				34.1%				9.3%				(14.2%)				16.2%				(34.4%)				19.8%
China
Gross Domestic Product (GDP), in CNY billions		$	110,067				5.4%				4.3%				8.1%				4.5%				(1.7%)				4.5%				(5.2%)				3.8%
FTSE Xinhua A200 Index			9,105				8.0%				4.6%				27.4%				2.5%				(30.9%)				11.5%				(41.6%)				12.9%

(IV) Sensitivity to changes in economic assumptions

The following table shows the actual ECL allowance recorded by the Company which results from using all four macroeconomic scenarios (including the more heavily weighted best estimate baseline scenario, one upside and two downside scenarios) weighted by probability of occurrence and shows the ECL allowance which would result from using only the baseline scenario.

 

As at		March 31, 2024				December 31, 2023
Probability-weighted ECLs		$	906			$	929
Baseline ECL		$	666			$	659
Difference – in amount		$	240			$	270
Difference – in percentage			26.40%				29.08%

 

 

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(c) Securities lending, repurchase and reverse repurchase transactions

As at March 31, 2024, the Company had loaned securities (which are included in invested assets) with a market value of $1,110 (December 31, 2023 – $626). The Company holds collateral with a current market value that exceeds the value of securities lent in all cases.

As at March 31, 2024, the Company had engaged in reverse repurchase transactions of $122 (December 31, 2023 – $466) which are recorded as short-term receivables. In addition, the Company had engaged in repurchase transactions of $122 as at March 31, 2024 (December 31, 2023 – $202) which are recorded as payables.

(d) Credit default swaps

The Company replicates exposure to specific issuers by selling credit protection via credit default swaps (“CDS”) to complement its cash debt securities investing. The Company does not write CDS protection more than its government bond holdings.

The following tables present details of the credit default swap protection sold by type of contract and external agency rating for the underlying reference security.

 

As at March 31, 2024		Notional amount(1)				Fair value				Weighted average maturity (in years)(2)
Single name CDS(3),(4) – Corporate debt
AA		$	22			$	1				3
A			90				2				3
BBB			13				–				–
Total single name CDS		$	125			$	3				3
Total CDS protection sold		$	125			$	3				3
As at December 31, 2023		Notional amount(1)				Fair value				Weighted average maturity (in years)(2)
Single name CDS(3),(4) – Corporate debt
AA		$	23			$	1				4
A			94				2				3
BBB			14				–				1
Total single name CDS		$	131			$	3				3
Total CDS protection sold		$	131			$	3				3

(1)  Notional amounts represent the maximum future payments the Company would have to pay its counterparties assuming a default of the underlying credit and zero recovery on the underlying issuer obligations. (2)  The weighted average maturity of the CDS is weighted based on notional amounts. (3)  Ratings are based on S&P where available followed by Moody’s, DBRS, and Fitch. If no rating is available from a rating agency, an internally developed rating is used. (4)  The Company held no purchased credit protection as at March 31, 2024 and December 31, 2023.

(e) Derivatives

The Company’s point-in-time exposure to losses related to credit risk of a derivative counterparty is limited to the amount of any net gains that may have accrued with the particular counterparty. Gross derivative counterparty exposure is measured as the total fair value (including accrued interest) of all outstanding contracts in a gain position excluding any offsetting contracts in a loss position and the impact of collateral on hand. The Company limits the risk of credit losses from derivative counterparties by using investment grade counterparties, entering into master netting arrangements which permit the offsetting of contracts in a loss position in the case of a counterparty default and entering into Credit Support Annex agreements whereby collateral must be provided when the exposure exceeds a certain threshold.

All contracts are held with or guaranteed by investment grade counterparties, the majority of whom are rated A- or higher. As at March 31, 2024, the percentage of the Company’s derivative exposure with counterparties rated AA- or higher was 33 per cent (December 31, 2023 – 33 per cent). As at March 31, 2024, the largest single counterparty exposure, without taking into consideration the impact of master netting agreements or the benefit of collateral held, was $1,503 (December 31, 2023 – $1,357). The net exposure to this counterparty, after taking into consideration master netting agreements and the fair value of collateral held, was $nil (December 31, 2023 – $nil).

 

 

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(f) Offsetting financial assets and financial liabilities

Certain derivatives, securities lent and repurchase agreements have conditional offset rights. The Company does not offset these financial instruments in the Consolidated Statements of Financial Position, as the rights of offset are conditional.

In the case of derivatives, collateral is collected from and pledged to counterparties and clearing houses to manage credit risk exposure in accordance with Credit Support Annexes to swap agreements and clearing agreements. Under master netting agreements, the Company has a right of offset in the event of default, insolvency, bankruptcy or other early termination.

In the case of reverse repurchase and repurchase transactions, additional collateral may be collected from or pledged to counterparties to manage credit exposure according to bilateral reverse repurchase or repurchase agreements. In the event of default by a reverse repurchase transaction counterparty, the Company is entitled to liquidate the collateral held to offset against the same counterparty’s obligation.

The following tables present the effect of conditional master netting agreements and similar arrangements. Similar arrangements may include global master repurchase agreements, global master securities lending agreements, and any related rights to financial collateral pledged or received.

 

						Related amounts not set off in the Consolidated Statements of Financial Position
As at March 31, 2024		Gross amounts of financial instruments(1)				Amounts subject to enforceable master netting agreements or similar arrangements				Financial and cash collateral pledged (received)(2)				Net amounts including financing entity(3)				Net amounts excluding financing entity
Financial assets
Derivative assets		$	8,912			$	(6,762)			$	(1,979)			$	171			$	171
Securities lending			1,110				–				(1,110)				–				–
Reverse repurchase agreements			122				(122)				–				–				–
Total financial assets		$	10,144			$	(6,884)			$	(3,089)			$	171			$	171
Financial liabilities
Derivative liabilities		$	(14,259)			$	6,762			$	7,449			$	(48)			$	(10)
Repurchase agreements			(122)				122				–				–				–
Total financial liabilities		$	(14,381)			$	6,884			$	7,449			$	(48)			$	(10)
						Related amounts not set off in the Consolidated Statements of Financial Position
As at December 31, 2023		Gross amounts of financial instruments(1)				Amounts subject to enforceable master netting agreements or similar arrangements				Financial and cash collateral pledged (received)(2)				Net amounts including financing entity(3)				Net amounts excluding financing entity
Financial assets
Derivative assets		$	9,044			$	(6,516)			$	(2,374)			$	154			$	154
Securities lending			626				–				(626)				–				–
Reverse repurchase agreements			466				(202)				(264)				–				–
Total financial assets		$	10,136			$	(6,718)			$	(3,264)			$	154			$	154
Financial liabilities
Derivative liabilities		$	(12,600)			$	6,516			$	5,958			$	(126)			$	(57)
Repurchase agreements			(202)				202				–				–				–
Total financial liabilities		$	(12,802)			$	6,718			$	5,958			$	(126)			$	(57)

(1)  Financial assets and liabilities include accrued interest of $559 and $843, respectively (December 31, 2023 – $502 and $913, respectively). (2)  Financial and cash collateral exclude over-collateralization. As at March 31, 2024, the Company was over-collateralized on OTC derivative assets, OTC derivative liabilities, securities lending and reverse repurchase agreements and repurchase agreements in the amounts of $569, $2,193, $46 and $nil, respectively (December 31, 2023 – $424, $1,420, $20 and $nil, respectively). As at March 31, 2024, collateral pledged (received) does not include collateral-in-transit on OTC instruments or initial margin on exchange traded contracts or cleared contracts. (3)  Includes derivative contracts entered between the Company and its unconsolidated financing entity. The Company does not exchange collateral on derivative contracts entered with this entity.

 

 

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The Company also has certain credit linked note assets and variable surplus note liabilities which have unconditional offsetting rights. Under the netting agreements, the Company has rights of offset including in the event of the Company’s default, insolvency, or bankruptcy. These financial instruments are offset in the Consolidated Statements of Financial Position.

A credit linked note is a debt instrument the term of which, in this case, is linked to a variable surplus note. A surplus note is a subordinated debt obligation that often qualifies as surplus (the U.S. statutory equivalent of equity) by some U.S. state insurance regulators. Interest payments on surplus notes are made after all other contractual payments are made. The following tables present the effect of unconditional netting.

 

As at March 31, 2024		Gross amounts of financial instruments				Amounts subject to an enforceable netting arrangement				Net amounts of financial instruments
Credit linked note		$	1,351			$	(1,351)			$	–
Variable surplus note			(1,351)				1,351				–
As at December 31, 2023		Gross amounts of financial instruments				Amounts subject to an enforceable netting arrangement				Net amounts of financial instruments
Credit linked note		$	1,276			$	(1,276)			$	–
Variable surplus note			(1,276)				1,276				–

Note 8 Long-Term Debt

 

(a) Carrying value of long-term debt instruments

 

As at

Issue date

Maturity date

Par value

March 31, 2024

December 31, 2023

3.050% Senior notes(1)

August 27, 2020

August 27, 2060

US$1,155

$

1,560

$

1,519

5.375% Senior notes(1)

March 4, 2016

March 4, 2046

US$750

1,003

977

3.703% Senior notes(1)

March 16, 2022

March 16, 2032

US$750

1,010

983

2.396% Senior notes(1)

June 1, 2020

June 1, 2027

US$200

270

263

2.484% Senior notes(1)

May 19, 2020

May 19, 2027

US$500

674

657

3.527% Senior notes(1)

December 2, 2016

December 2, 2026

US$270

365

356

4.150% Senior notes(1)

March 4, 2016

March 4, 2026

US$1,000

1,351

1,316

Total

$

6,233

$

6,071

(1)	These U.S. dollar senior notes have been designated as hedges of the Company’s net investment in its U.S. operations which reduces the earnings volatility that would otherwise arise from the re-measurement of these senior notes into Canadian dollars.

(b) Fair value measurement

The Company measures long-term debt at amortized cost in the Consolidated Statements of Financial Position. As at March 31, 2024, the fair value of long-term debt was $5,432 (December 31, 2023 – $5,525). Fair value of long-term debt was determined using Level 2 valuation techniques (December 31, 2023 – Level 2).

 

 

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Note 9 Capital Instruments

 

(a) Carrying value of capital instruments

 

As at

Issue date

Earliest par redemption date

Maturity date

Par value

March 31, 2024

December 31, 2023

JHFC Subordinated notes(1)

December 14, 2006

n/a

December 15, 2036

$650

$

647

$

647

2.818% MFC Subordinated debentures(1)

May 12, 2020

May 13, 2030

May 13, 2035

$1,000

997

996

5.054% MFC Subordinated debentures(2)

February 23, 2024

February 23, 2029

February 23, 2034

$1,100

1,095

–

5.409% MFC Subordinated debentures(1)

March 10, 2023

March 10, 2028

March 10, 2033

$1,200

1,195

1,195

4.061% MFC Subordinated notes(1),(3)

February 24, 2017

February 24, 2027

February 24, 2032

US$750

1,012

987

2.237% MFC Subordinated debentures(1)

May 12, 2020

May 12, 2025

May 12, 2030

$1,000

999

999

3.00% MFC Subordinated notes(1)

November 21, 2017

November 21, 2024

November 21, 2029

S$500

501

499

3.049% MFC Subordinated debentures(1)

August 18, 2017

August 20, 2024

August 20, 2029

$750

750

750

7.375% JHUSA Surplus notes(4)

February 25, 1994

n/a

February 15, 2024

US$450

–

594

Total

$

7,196

$

6,667

(1)  The Company is monitoring regulatory and market developments globally with respect to the interest rate benchmark reform. The Company will take appropriate actions in due course to accomplish any necessary transitions or replacements. As at March 31, 2024, capital instruments of $647 (December 31, 2023 – $647) have an interest rate referencing CDOR. In addition, capital instruments of $2,746, $1,012 and $501 (December 31, 2023 – $2,745, $987 and $499, respectively) have interest rate resets in the future referencing CDOR, the US Dollar Mid-Swap rate (based on LIBOR), and the Singapore Dollar Swap Offer rate, respectively. Future rate resets for these capital instruments may rely on alternative reference rates such as the Canadian Overnight Repo Rate Average (CORRA), the alternative rate for CDOR, the Secured Overnight Financing Rate (SOFR), the alternative rate for USD LIBOR, and the Singapore Overnight Rate Average (SORA), the alternative rate for the Singapore Swap Offer Rate (SOR). (2)  Issued by MFC during the first quarter of 2024, interest is payable semi-annually. After February 23, 2029, the interest rate will reset to equal the Daily Compounded CORRA plus 1.44%. With regulatory approval, MFC may redeem the debentures, in whole, or in part, on or after February 23, 2029, at a redemption price equal to par, together with accrued and unpaid interest to, but excluding, the date fixed for redemption. (3)  Designated as a hedge of the Company’s net investment in its U.S. operations which reduces the earnings volatility that would otherwise arise from the re-measurement of the subordinated notes into Canadian dollars. (4)  The 7.375% JHUSA Surplus notes matured and were redeemed on February 15, 2024.

(b) Fair value measurement

The Company measures capital instruments at amortized cost in the Consolidated Statements of Financial Position. As at March 31, 2024, the fair value of capital instruments was $7,028 (December 31, 2023 – $6,483). Fair value of capital instruments was determined using Level 2 valuation techniques (December 31, 2023 – Level 2).

 

 

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Note 10 Equity Capital and Earnings Per Share

 

(a) Preferred shares and other equity instruments

The following table presents information about the outstanding preferred shares and other equity instruments as at March 31, 2024 and December 31, 2023.

 

						Annual				Earliest				Number of								Net amount(4)
As at		Issue date				dividend / distribution rate(1)				redemption date(2),(3)				shares (in millions)				Face amount				March 31, 2024				December 31, 2023
Preferred shares
Class A preferred shares
Series 2			February 18, 2005				4.65%				n/a				14			$	350			$	344			$	344
Series 3			January 3, 2006				4.50%				n/a				12				300				294				294
Class 1 preferred shares
Series 3(5),(6)			March 11, 2011				2.348%				June 19, 2026				7				163				160				160
Series 4(7)			June 20, 2016				floating				June 19, 2026				1				37				36				36
Series 9(5),(6)			May 24, 2012				5.978%				September 19, 2027				10				250				244				244
Series 11(5),(6)			December 4, 2012				6.159%				March 19, 2028				8				200				196				196
Series 13(5),(6)			June 21, 2013				6.350%				September 19, 2028				8				200				196				196
Series 15(5),(6)			February 25, 2014				3.786%				June 19, 2024				8				200				195				195
Series 17(5),(6)			August 15, 2014				3.800%				December 19, 2024				14				350				343				343
Series 19(5),(6)			December 3, 2014				3.675%				March 19, 2025				10				250				246				246
Series 25(5),(6)			February 20, 2018				5.942%				June 19, 2028				10				250				245				245
Other equity instruments
Limited recourse capital notes (LRCN)(8)
Series 1(9)			February 19, 2021				3.375%				May 19, 2026				n/a				2,000				1,982				1,982
Series 2(9)			November 12, 2021				4.100%				February 19, 2027				n/a				1,200				1,189				1,189
Series 3(9)			June 16, 2022				7.117%				June 19, 2027				n/a				1,000				990				990
Total															102			$	6,750			$	6,660			$	6,660

(1)  Holders of Class A and Class 1 preferred shares are entitled to receive non-cumulative preferential cash dividends on a quarterly basis, as and when declared by the Board of Directors. Non-deferrable distributions are payable to all LRCN holders semi-annually at the Company’s discretion. (2)  Redemption of all preferred shares is subject to regulatory approval. MFC may redeem each series, in whole or in part, at par, on the earliest redemption date or every five years thereafter, except for Class A Series 2, Class A Series 3 and Class 1 Series 4 preferred shares. Class A Series 2 and Series 3 preferred shares are past their respective earliest redemption date and MFC may redeem these preferred shares, in whole or in part, at par at any time, subject to regulatory approval, as noted. MFC may redeem the Class 1 Series 4 preferred shares, in whole or in part, at any time, at $25.00 per share if redeemed on June 19, 2026 (the earliest redemption date) and on June 19 every five years thereafter, or at $25.50 per share if redeemed on any other date after June 19, 2021, subject to regulatory approval, as noted. (3)  Redemption of all LRCN series is subject to regulatory approval. MFC may at its option redeem each series in whole or in part, at a redemption price equal to par, together with accrued and unpaid interest. The redemption period for Series 1 is every five years during the period from May 19 and including June 19, commencing in 2026. The redemption period for Series 2 is every five years during the period from February 19 and including March 19, commencing in 2027. After the first redemption date, the redemption period for Series 3 is every five years during the period from May 19 to and including June 19, commencing in 2032. (4)  Net of after-tax issuance costs. (5)  On the earliest redemption date and every five years thereafter, the annual dividend rate will be reset to the five-year Government of Canada bond yield plus a yield specified for each series. The specified yield for Class 1 preferred shares is: Series 3 – 1.41%, Series 9 – 2.86%, Series 11 – 2.61%, Series 13 – 2.22%, Series 15 – 2.16%, Series 17 – 2.36%, Series 19 – 2.30%, and Series 25 – 2.55%. (6)  On the earliest redemption date and every five years thereafter, Class 1 preferred shares are convertible at the option of the holder into a new series that is one number higher than their existing series, and the holders are entitled to non-cumulative preferential cash dividends, payable quarterly if and when declared by the Board of Directors, at a rate equal to the three-month Government of Canada Treasury bill yield plus the rate specified in footnote 5 above. (7)  The floating dividend rate for the Class 1 Series 4 shares equals the three-month Government of Canada Treasury bill yield plus 1.41%. (8)  Non-payment of distributions or principal on any LRCN series when due will result in a recourse event. The recourse of each noteholder will be limited to their proportionate amount of the Limited Recourse Trust’s assets which comprise of Class 1 Series 27 preferred shares for LRCN Series 1, Class 1 Series 28 preferred shares for LRCN Series 2, and Class 1 Series 29 preferred shares for LRCN Series 3. All claims of the holders of LRCN series against MFC will be extinguished upon receipt of the corresponding trust assets. The Class 1 Series 27, Class 1 Series 28, and Class 1 Series 29 preferred shares are eliminated on consolidation while being held in the Limited Recourse Trust. (9)  The LRCN Series 1 distribute at a fixed rate of 3.375% payable semi-annually, until June 18, 2026; on June 19, 2026 and every five years thereafter until June 19, 2076, the rate will be reset at a rate equal to the five-year Government of Canada yield as defined in the prospectus, plus 2.839%. The LRCN Series 2 distribute at a fixed rate of 4.10% payable semi-annually, until March 18, 2027; on March 19, 2027 and every five years thereafter until March 19, 2077, the rate will be reset at a rate equal to the five-year Government of Canada yield as defined in the prospectus, plus 2.704%. The LRCN Series 3 distribute at a fixed rate of 7.117% payable semi-annually, until June 18, 2027; on June 19, 2027 and every five years thereafter until June 19, 2077, the rate will be reset at a rate equal to the five-year Government of Canada yield as defined in the prospectus, plus 3.95%.

(b) Common shares

As at March 31, 2024, there were 16 million outstanding stock options and deferred share units that entitle the holders to receive common shares or payment in cash or common shares, at the option of the holders (December 31, 2023 – 17 million).

 

 

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The following table presents changes in common shares issued and outstanding.

 

Number of common shares (in millions)		For the three months ended March 31, 2024				For the year ended   December 31, 2023
Balance, beginning of period		1,806				1,865
Repurchased for cancellation		(6)				(63)
Issued on exercise of stock options and deferred share units		1				4
Balance, end of period		1,801				1,806

Normal course issuer bid

On February 20, 2024, the Company received approval from the Toronto Stock Exchange (“TSX”) to launch a normal course issuer bid (“NCIB”) that permits the purchase for cancellation of up to 50 million common shares, representing approximately 2.8% of its issued and outstanding common shares. Purchases under the NCIB commenced on February 23, 2024 and may continue until February 22, 2025, when the NCIB expires, or such earlier date as the Company completes its purchases.

During the three months ended March 31, 2024, the Company purchased for cancellation 6.2 million shares for $203. Of this, $74 was recorded in common shares and $129 was recorded in retained earnings in the Consolidated Statements of Changes in Equity.

On May 7, 2024, the Company announced that the TSX approved an amendment to the existing NCIB to increase the number of common shares that it may repurchase for cancellation from up to 50 million common shares (approximately 2.8% of shares outstanding) to up to 90 million common shares (approximately 5% of shares outstanding as at February 12, 2024).

(c) Earnings per share

The following is a reconciliation of the denominator (number of shares) in the calculation of basic and diluted earnings per common share.

 

For the three months ended March 31,		2024				2023
Weighted average number of common shares (in millions)			1,805				1,858
Dilutive stock-based awards(1) (in millions)			5				4
Weighted average number of diluted common shares (in millions)			1,810				1,862

(1)

The dilutive effect of stock-based awards was calculated using the treasury stock method. This method calculates the number of incremental shares by assuming the outstanding stock-based awards are (i) exercised and (ii) then reduced by the number of shares assumed to be repurchased from the issuance proceeds, using the average market price of MFC common shares for the period. Excluded from the calculation was a weighted average of nil million (2023 – nil million) anti-dilutive stock-based awards.

Note 11 Revenue from Service Contracts

 

The Company provides investment management services, transaction processing and administrative services and distribution and related services to proprietary and third-party investment funds, retirement plans, group benefit plans, institutional investors and other arrangements. The Company also provides real estate management services to tenants of the Company’s investment properties.

The Company’s service contracts generally impose single performance obligations, each consisting of a series of similar related services for each customer.

The Company’s performance obligations within service arrangements are generally satisfied over time as the customer simultaneously receives and consumes the benefits of the services rendered, measured using an output method. Fees typically include variable consideration and the related revenue is recognized to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty is subsequently resolved.

 

 

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Asset based fees vary with asset values of accounts under management, subject to market conditions and investor behaviors beyond the Company’s control. Transaction processing and administrative fees vary with activity volume, also beyond the Company’s control. Some fees, including distribution fees, are based on account balances and transaction volumes. Fees related to account balances and transaction volumes are measured daily. Real estate management service fees include fixed portions plus recovery of variable costs of services rendered to tenants. Fees related to services provided are generally recognized as services are rendered, which is when it becomes highly probable that no significant reversal of cumulative revenue recognized will occur. The Company has determined that its service contracts have no significant financing components because fees are collected monthly. The Company has no significant contract assets or contract liabilities.

The following tables present revenue from service contracts by service lines and reporting segments as disclosed in note 14.

 

For the three months ended March 31, 2024		Global WAM				Asia, Canada, U.S., and Corporate and Other				Total
Investment management and other related fees		$	850			$	(118)			$	732
Transaction processing, administration, and service fees			682				81				763
Distribution fees and other			222				15				237
Total included in other revenue			1,754				(22)				1,732
Revenue from non-service lines			(4)				80				76
Total other revenue		$	1,750			$	58			$	1,808
Real estate management services included in net investment income		$	–			$	84			$	84
For the three months ended March 31, 2023		Global WAM				Asia, Canada, U.S., and Corporate and Other				Total
Investment management and other related fees		$	831			$	(94)			$	737
Transaction processing, administration, and service fees			625				69				694
Distribution fees and other			208				13				221
Total included in other revenue			1,664				(12)				1,652
Revenue from non-service lines			1				38				39
Total other revenue		$	1,665			$	26			$	1,691
Real estate management services included in net investment income		$	–			$	83			$	83

Note 12 Employee Future Benefits

 

The Company maintains defined contribution and defined benefit pension plans, and other post-employment plans for eligible employees and agents. The following table presents information about the financial impacts of the Company’s material pension and retiree welfare plans in the U.S. and Canada.

 

		Pension plans								Retiree welfare plans(1)
For the three months ended March 31,		2024				2023				2024				2023
Defined benefit current service cost		$	11			$	10			$	–			$	–
Defined benefit administrative expenses			7				3				–				–
Service cost			18				13				–				–
Interest on net defined benefit (asset) liability			1				1				(1)				(1)
Defined benefit cost			19				14				(1)				(1)
Defined contribution cost			29				28				–				–
Net benefit cost reported in earnings		$	48			$	42			$	(1)			$	(1)
Actuarial (gain) loss on economic assumption changes		$	(48)			$	65			$	(8)			$	9
Investment (gain) loss (excluding interest income)			11				(87)				(1)				(11)
Change in effect of asset limit			–				4				–				–
Remeasurement (gain) loss recorded in AOCI, net of tax		$	(37)			$	(18)			$	(9)			$	(2)

(1)	There are no material current service costs for the retiree welfare plans as they are closed and mostly frozen. The remeasurement gain or loss on these plans is due to the volatility of discount rates and investment returns.

 

 

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Note 13 Commitments and Contingencies

 

(a) Legal proceedings

The Company is regularly involved in legal actions, both as a defendant and as a plaintiff. The legal actions where the Company is a party ordinarily relate to its activities as a provider of insurance protection or wealth management products, reinsurance, or in its capacity as an investment adviser, employer, or taxpayer. Other life insurers and asset managers, operating in the jurisdictions in which the Company does business, have been subject to a wide variety of other types of actions, some of which resulted in substantial judgments or settlements against the defendants; it is possible that the Company may become involved in similar actions in the future. In addition, government and regulatory bodies in Canada, the United States, Asia and other jurisdictions where the Company conducts business regularly make inquiries and, from time to time, require the production of information or conduct examinations concerning the Company’s compliance with, among other things, insurance laws, securities laws, and laws governing the activities of broker-dealers.

In June 2018, a class action was initiated against the Company in the U.S. District Court for the Southern District of New York on behalf of owners of Performance Universal Life (“Perf UL”) policies issued between 2003 and 2010 whose policies were subject to a Cost of Insurance (“COI”) increase announced in 2018.

In addition to the class action, twelve individual lawsuits opposing the Perf UL COI increases were filed; nine in federal court and three in state court. The Company has now resolved litigation with respect to 100% of the filed lawsuits, which represents 84% of the total face amount of policies in the COI-increase block. Litigation remains possible with the final approximately 16% of the total face amount of the COI-increase block.

Subsequent to the resolution of the Perf UL COI-increase lawsuits, in September 2023 an unrelated lawsuit was initiated against the Company in the U.S. District Court of the Southern District of New York as a putative class action on behalf of all current and former owners of universal life insurance policies issued by the Company “that state that cost of insurance rates will be based on future expectations that include taxes.” The Plaintiff’s theory is that the Company impermissibly failed to decrease the COI rates charged to these policy owners after the implementation of the Tax Cuts and Jobs Act of 2018. It is too early in the litigation to offer any reliable opinion about the scope of the class policies that may be at issue or the likely outcome.

(b) Guarantees

(I) Guarantees regarding Manulife Finance (Delaware), L.P. (“MFLP”)

MFC has guaranteed the payment of amounts on the $650 subordinated debentures due on December 15, 2041 issued by MFLP, a wholly owned unconsolidated financing entity.

The following tables present certain condensed consolidated financial information for MFC and MFLP.

Condensed Consolidated Statements of Income Information

 

For the three months ended March 31, 2024		MFC (Guarantor)				Subsidiaries on a combined basis				Consolidation adjustments				Total consolidated amounts				MFLP
Total insurance service result		$	–			$	978			$	–			$	978			$	–
Total investment result			5				345				(2)				348				14
Other revenue			(3)				1,811				–				1,808				6
Net income (loss) attributed to shareholders and other equity holders			866				951				(951)				866				9

 

For the three months ended March 31, 2023		MFC (Guarantor)				Subsidiaries on a combined basis				Consolidation adjustments				Total consolidated amounts				MFLP
Total insurance service result		$	–			$	849			$	–			$	849			$	–
Total investment result			5				977				(12)				970				12
Other revenue			(4)				1,695				–				1,691				–
Net income (loss) attributed to shareholders and other equity holders			1,406				1,490				(1,490)				1,406				1

 

 

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Condensed Consolidated Statements of Financial Position Information

 

As at March 31, 2024		MFC (Guarantor)				Subsidiaries on a combined basis				Consolidation adjustments				Total consolidated amounts				MFLP
Total invested assets		$	88			$	410,588			$	–			$	410,676			$	10
Insurance contract assets			–				140				–				140				–
Reinsurance contract held assets			–				54,070				–				54,070				–
Total other assets			62,516				45,597				(67,889)				40,224				958
Segregated funds net assets			–				402,109				–				402,109				–
Insurance contract liabilities, excluding those for account of segregated fund holders			–				370,940				–				370,940				–
Reinsurance contract held liabilities			–				2,987				–				2,987				–
Investment contract liabilities			–				12,174				–				12,174				–
Total other liabilities			14,354				56,354				(1,591)				69,117				700
Insurance contract liabilities for account of segregated fund holders			–				119,896				–				119,896				–
Investment contract liabilities for account of segregated fund holders			–				282,213				–				282,213				–

 

As at December 31, 2023		MFC (Guarantor)				Subsidiaries on a combined basis				Consolidation adjustments				Total consolidated amounts				MFLP
Total invested assets		$	86			$	417,124			$	–			$	417,210			$	9
Insurance contract assets			–				145				–				145				–
Reinsurance contract held assets			–				42,651				–				42,651				–
Total other assets			59,023				42,411				(63,410)				38,024				969
Segregated funds net assets			–				377,544				–				377,544				–
Insurance contract liabilities, excluding those for account of segregated fund holders			–				367,996				–				367,996				–
Reinsurance contract held liabilities			–				2,831				–				2,831				–
Investment contract liabilities			–				11,816				–				11,816				–
Total other liabilities			12,070				55,129				(539)				66,660				718
Insurance contract liabilities for account of segregated fund holders			–				114,143				–				114,143				–
Investment contract liabilities for account of segregated fund holders			–				263,401				–				263,401				–

(II) Guarantees regarding John Hancock Life Insurance Company (U.S.A.) (“JHUSA”)

Details of guarantees regarding certain securities issued or to be issued by JHUSA are outlined in note 16.

Note 14 Segment and Geographic Reporting

 

The Company’s reporting segments are Asia, Canada, U.S., Global WAM and Corporate and Other. Each reporting segment is responsible for managing its operating results, developing products, and defining strategies for services and distribution based on the profile and needs of its businesses and markets. The Company’s significant product and service offerings by the reporting segments are mentioned below.

Wealth and asset management businesses (Global WAM) – branded as Manulife Investment Management, provides investment advice and innovative solutions to retirement, retail, and institutional clients. Products and services are distributed through multiple distribution channels, including agents and brokers affiliated with the Company, independent securities brokerage firms and financial advisors pension plan consultants and banks.

Insurance and annuity products (Asia, Canada and U.S.) – include a variety of individual life insurance, individual and group long-term care insurance and guaranteed and partially guaranteed annuity products. Products are distributed through multiple distribution channels, including insurance agents, brokers, banks, financial planners and direct marketing. Manulife Bank of Canada offers a variety of deposit and credit products to Canadian customers.

Corporate and Other segment – comprised of investment performance of assets backing capital, net of amounts allocated to operating segments; costs incurred by the corporate office related to shareholder activities (not allocated to the operating segments); financing costs; property and casualty reinsurance business; and run-off reinsurance operations including variable annuities and accident and health. In addition, consolidations and eliminations of transactions between operating segments are also included.

 

 

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The following tables present results by reporting segments and by geographical location.

(a) By Segment

 

For the three months ended March 31, 2024		Asia				Canada				U.S.				Global WAM				Corporate and Other				Total
Insurance service result
Life, health and property and casualty insurance		$	564			$	228			$	95			$	–			$	28			$	915
Annuities and pensions			(17)				56				24				–				–				63
Total insurance service result			547				284				119				–				28				978
Net investment income (loss)			2,228				1,204				905				(177)				333				4,493
Insurance finance income (expenses)
Life, health and property and casualty insurance			(1,440)				(1,055)				(1,611)				–				24				(4,082)
Annuities and pensions			(1,128)				325				427				–				–				(376)
Total insurance finance income (expenses)			(2,568)				(730)				(1,184)				–				24				(4,458)
Reinsurance finance income (expenses)
Life, health and property and casualty insurance			(184)				(5)				476				–				–				287
Annuities and pensions			586				–				(449)				–				–				137
Total reinsurance finance income (expenses)			402				(5)				27				–				–				424
Decrease (increase) in investment contract liabilities			(8)				(16)				(38)				(53)				4				(111)
Net segregated fund investment result			–				–				–				–				–				–
Total investment result			54				453				(290)				(230)				361				348
Other revenue			55				75				39				1,750				(111)				1,808
Other expenses			(56)				(160)				(18)				(1,092)				(132)				(1,458)
Interest expenses			(6)				(271)				(4)				(2)				(141)				(424)
Net income (loss) before income taxes			594				381				(154)				426				5				1,252
Income tax (expenses) recoveries			(150)				(83)				46				(61)				(32)				(280)
Net income (loss)			444				298				(108)				365				(27)				972
Less net income (loss) attributed to:
Non-controlling interests			55				–				–				–				–				55
Participating policyholders			26				25				–				–				–				51
Net income (loss) attributed to shareholders and other equity holders		$	363			$	273			$	(108)			$	365			$	(27)			$	866
Total assets		$	184,829			$	156,211			$	252,120			$	277,148			$	36,911			$	907,219

 

 

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For the three months ended March 31, 2023		Asia				Canada				U.S.				Global WAM				Corporate and Other				Total
Insurance service result
Life, health and property and casualty insurance		$	422			$	211			$	147			$	–			$	47			$	827
Annuities and pensions			(52)				48				26				–				–				22
Total insurance service result			370				259				173				–				47				849
Net investment income (loss)			2,084				1,500				1,389				(204)				384				5,153
Insurance finance income (expenses)
Life, health and property and casualty insurance			(1,636)				(941)				(1,308)				–				673				(3,212)
Annuities and pensions			(110)				(83)				(373)				–				–				(566)
Total insurance finance income (expenses)			(1,746)				(1,024)				(1,681)				–				673				(3,778)
Reinsurance finance income (expenses)
Life, health and property and casualty insurance			(48)				7				197				–				(670)				(514)
Annuities and pensions			–				–				192				–				–				192
Total reinsurance finance income (expenses)			(48)				7				389				–				(670)				(322)
Decrease (increase) in investment contract liabilities			(5)				(20)				4				(56)				(6)				(83)
Net segregated fund investment result			–				–				–				–				–				–
Total investment result			285				463				101				(260)				381				970
Other revenue			10				72				24				1,665				(80)				1,691
Other expenses			(50)				(139)				(75)				(1,055)				(105)				(1,424)
Interest expenses			(2)				(232)				(4)				(5)				(124)				(367)
Net income (loss) before income taxes			613				423				219				345				119				1,719
Income tax (expenses) recoveries			(105)				(99)				(33)				(48)				(24)				(309)
Net income (loss)			508				324				186				297				95				1,410
Less net income (loss) attributed to:
Non-controlling interests			54				–				–				–				–				54
Participating policyholders			(65)				15				–				–				–				(50)
Net income (loss) attributed to shareholders and other equity holders		$	519			$	309			$	186			$	297			$	95			$	1,406
Total assets		$	170,495			$	153,325			$	251,020			$	242,815			$	44,467			$	862,122

(b) By Geographic Location

 

For the three months ended March 31, 2024		Asia				Canada				U.S.				Other				Total
Insurance service result
Life, health and property and casualty insurance		$	565			$	224			$	95			$	31			$	915
Annuities and pensions			(17)				56				24				–				63
Total insurance service result			548				280				119				31				978
Net investment income (loss)			2,256				1,387				849				1				4,493
Insurance finance income (expenses)
Life, health and property and casualty insurance			(1,440)				(1,055)				(1,587)				–				(4,082)
Annuities and pensions			(1,128)				325				427				–				(376)
Total insurance finance income (expenses)			(2,568)				(730)				(1,160)				–				(4,458)
Reinsurance finance income (expenses)
Life, health and property and casualty insurance			(184)				(5)				476				–				287
Annuities and pensions			586				–				(449)				–				137
Total reinsurance finance income (expenses)			402				(5)				27				–				424
Decrease (increase) in investment contract liabilities			(41)				(35)				(34)				(1)				(111)
Net segregated fund investment result			–				–				–				–				–
Total investment result		$	49			$	617			$	(318)			$	–			$	348
Other revenue		$	504			$	535			$	858			$	(89)			$	1,808

 

 

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For the three months ended March 31, 2023		Asia				Canada				U.S.				Other				Total
Insurance service result
Life, health and property and casualty insurance		$	427			$	204			$	142			$	54			$	827
Annuities and pensions			(52)				48				26				–				22
Total insurance service result			375				252				168				54				849
Net investment income (loss)			2,201				1,636				1,292				24				5,153
Insurance finance income (expenses)
Life, health and property and casualty insurance			(1,636)				(275)				(1,303)				2				(3,212)
Annuities and pensions			(110)				(83)				(373)				–				(566)
Total insurance finance income (expenses)			(1,746)				(358)				(1,676)				2				(3,778)
Reinsurance finance income (expenses)
Life, health and property and casualty insurance			(52)				(659)				197				–				(514)
Annuities and pensions			–				–				192				–				192
Total reinsurance finance income (expenses)			(52)				(659)				389				–				(322)
Decrease (increase) in investment contract liabilities			(59)				(28)				6				(2)				(83)
Net segregated fund investment result			–				–				–				–				–
Total investment result		$	344			$	591			$	11			$	24			$	970
Other revenue		$	335			$	520			$	843			$	(7)			$	1,691

 

Note 15

Segregated Funds

 

The Company manages a number of segregated funds on behalf of policyholders. Policyholders are provided with the opportunity to invest in different categories of segregated funds that hold a range of underlying investments. The underlying investments consist of both individual securities and mutual funds.

Segregated funds underlying investments may be exposed to a variety of financial and other risks. These risks are primarily mitigated by investment guidelines that are actively monitored by professional and experienced portfolio advisors. The Company is not exposed to these risks beyond the liabilities related to the guarantees associated with certain variable life and annuity products included in segregated funds. Accordingly, the Company’s exposure to loss from segregated fund products is limited to the value of these guarantees.

As at March 31, 2024, these guarantees are recorded within the Company’s insurance contract liabilities and amount to $1,836 (December 31, 2023 – $2,675), of which $552 are reinsured (December 31, 2023 – $980). Assets supporting these guarantees, net of reinsurance, are recognized in invested assets according to their investment type. “Insurance contract liabilities for account of segregated fund holders” on the Consolidated Statements of Financial Position exclude these guarantees and are considered to be a non-distinct investment component of insurance contract liabilities. The “Risk Management and Risk Factors Update” section of the First Quarter 2024 MD&A provides information regarding market risk sensitivities associated with variable annuity and segregated fund guarantees.

 

Note 16

Information Provided in Connection with Investments in Deferred Annuity Contracts and Signature Notes Issued or Assumed by John Hancock Life Insurance Company (U.S.A.)

 

The following condensed consolidated financial information, presented in accordance with IFRS, and the related disclosure have been included in these Interim Consolidated Financial Statements with respect to JHUSA in compliance with Regulation S-X and Rule 12h-5 of the United States Securities and Exchange Commission (the “Commission”). These financial statements are incorporated by reference in certain of the MFC and its subsidiaries registration statements and relate to MFC’s guarantee of certain securities to be issued by its subsidiaries. For information about JHUSA, the MFC guarantees and restrictions on the ability of MFC to obtain funds from its subsidiaries by dividend or loan, refer to note 24 to the Company’s 2023 Annual Consolidated Financial Statements.

 

 

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Table of Contents

Condensed Consolidated Statement of Financial Position

 

As at March 31, 2024		MFC (Guarantor)				JHUSA (Issuer)				Other subsidiaries				Consolidation adjustments				Consolidated MFC
Assets
Total invested assets		$	88			$	103,834			$	306,999			$	(245)			$	410,676
Investments in unconsolidated subsidiaries			62,104				8,917				19,348				(90,369)				–
Insurance contract assets			–				–				216				(76)				140
Reinsurance contract held assets			–				47,115				17,327				(10,372)				54,070
Other assets			412				10,710				33,928				(4,826)				40,224
Segregated funds net assets			–				201,783				202,010				(1,684)				402,109
Total assets		$	62,604			$	372,359			$	579,828			$	(107,572)			$	907,219
Liabilities and equity
Insurance contract liabilities, excluding those for account of segregated fund holders		$	–			$	145,078			$	236,639			$	(10,777)			$	370,940
Reinsurance contract held liabilities			–				–				2,990				(3)				2,987
Investment contract liabilities			–				3,960				8,832				(618)				12,174
Other liabilities			1,572				6,391				52,589				(4,864)				55,688
Long-term debt			6,233				–				–				–				6,233
Capital instruments			6,549				–				647				–				7,196
Insurance contract liabilities for account of segregated fund holders			–				54,822				65,074				–				119,896
Investment contract liabilities for account of segregated fund holders			–				146,961				136,936				(1,684)				282,213
Shareholders and other equity holders’ equity			48,250				15,205				74,421				(89,626)				48,250
Participating policyholders’ equity			–				(58)				372				–				314
Non-controlling interests			–				–				1,328				–				1,328
Total liabilities and equity		$	62,604			$	372,359			$	579,828			$	(107,572)			$	907,219

Condensed Consolidated Statement of Financial Position

 

As at December 31, 2023		MFC (Guarantor)				JHUSA (Issuer)				Other subsidiaries				Consolidation adjustments				Consolidated MFC
Assets
Total invested assets		$	86			$	109,433			$	307,930			$	(239)			$	417,210
Investments in unconsolidated subsidiaries			58,694				8,674				17,916				(85,284)				–
Insurance contract assets			–				–				217				(72)				145
Reinsurance contract held assets			–				42,418				10,380				(10,147)				42,651
Other assets			329				8,731				32,700				(3,736)				38,024
Segregated funds net assets			–				188,067				191,241				(1,764)				377,544
Total assets		$	59,109			$	357,323			$	560,384			$	(101,242)			$	875,574
Liabilities and equity
Insurance contract liabilities, excluding those for account of segregated fund holders		$	–			$	145,589			$	232,972			$	(10,565)			$	367,996
Reinsurance contract held liabilities			–				–				2,831				–				2,831
Investment contract liabilities			–				3,487				8,928				(599)				11,816
Other liabilities			573				5,869				51,266				(3,786)				53,922
Long-term debt			6,071				–				–				–				6,071
Capital instruments			5,426				594				647				–				6,667
Insurance contract liabilities for account of segregated fund holders			–				51,719				62,424				–				114,143
Investment contract liabilities for account of segregated fund holders			–				136,348				128,817				(1,764)				263,401
Shareholders and other equity holders’ equity			47,039				13,773				70,755				(84,528)				47,039
Participating policyholders’ equity			–				(56)				313				–				257
Non-controlling interests			–				–				1,431				–				1,431
Total liabilities and equity		$	59,109			$	357,323			$	560,384			$	(101,242)			$	875,574

 

 

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Condensed Consolidated Statement of Income

 

For the three months ended March 31, 2024		MFC (Guarantor)				JHUSA (Issuer)				Other subsidiaries				Consolidation adjustments				Consolidated MFC
Insurance service result
Insurance revenue		$	–			$	2,714			$	4,149			$	(366)			$	6,497
Insurance service expenses			–				(2,504)				(3,143)				375				(5,272)
Net expenses from reinsurance contracts held			–				(97)				(150)				–				(247)
Total insurance service result			–				113				856				9				978
Investment result
Net investment income (loss)			5				854				3,513				121				4,493
Insurance / reinsurance finance income (expenses)			–				(887)				(3,156)				9				(4,034)
Other investment result			–				(25)				(61)				(25)				(111)
Total investment result			5				(58)				296				105				348
Other revenue			(3)				202				1,736				(127)				1,808
Other expenses			(12)				(275)				(1,243)				72				(1,458)
Interest expenses			(115)				4				(254)				(59)				(424)
Net income (loss) before income taxes			(125)				(14)				1,391				–				1,252
Income tax (expenses) recoveries			42				43				(365)				–				(280)
Net income (loss) after income taxes			(83)				29				1,026				–				972
Equity in net income (loss) of unconsolidated subsidiaries			949				47				76				(1,072)				–
Net income (loss)		$	866			$	76			$	1,102			$	(1,072)			$	972
Net income (loss) attributed to:
Non-controlling interests		$	–			$	–			$	55			$	–			$	55
Participating policyholders			–				–				51				–				51
Shareholders and other equity holders			866				76				996				(1,072)				866
		$	866			$	76			$	1,102			$	(1,072)			$	972

Condensed Consolidated Statement of Income

 

For the three months ended March 31, 2023		MFC (Guarantor)				JHUSA (Issuer)				Other subsidiaries				Consolidation adjustments				Consolidated MFC
Insurance service result
Insurance revenue		$	–			$	2,402			$	3,793			$	(432)			$	5,763
Insurance service expenses			–				(2,165)				(2,987)				370				(4,782)
Net expenses from reinsurance contracts held			–				(152)				(36)				56				(132)
Total insurance service result			–				85				770				(6)				849
Investment result
Net investment income (loss)			5				1,133				3,957				58				5,153
Insurance / reinsurance finance income (expenses)			–				(1,266)				(2,840)				6				(4,100)
Other investment result			–				(18)				(38)				(27)				(83)
Total investment result			5				(151)				1,079				37				970
Other revenue			(4)				208				1,606				(119)				1,691
Other expenses			(11)				(303)				(1,183)				73				(1,424)
Interest expenses			(102)				(31)				(249)				15				(367)
Net income (loss) before income taxes			(112)				(192)				2,023				–				1,719
Income tax (expenses) recoveries			38				79				(426)				–				(309)
Net income (loss) after income taxes			(74)				(113)				1,597				–				1,410
Equity in net income (loss) of unconsolidated subsidiaries			1,480				206				93				(1,779)				–
Net income (loss)		$	1,406			$	93			$	1,690			$	(1,779)			$	1,410
Net income (loss) attributed to:
Non-controlling interests		$	–			$	–			$	54			$	–			$	54
Participating policyholders			–				15				(68)				3				(50)
Shareholders and other equity holders			1,406				78				1,704				(1,782)				1,406
		$	1,406			$	93			$	1,690			$	(1,779)			$	1,410

 

 

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Consolidated Statement of Cash Flows

 

For the three months ended March 31, 2024		MFC (Guarantor)				JHUSA (Issuer)				Other subsidiaries				Consolidation adjustments				Consolidated MFC
Operating activities
Net income (loss)		$	866			$	76			$	1,102			$	(1,072)			$	972
Adjustments:
Equity in net income of unconsolidated subsidiaries			(949)				(47)				(76)				1,072				–
Increase (decrease) in insurance contract net liabilities			–				103				901				–				1,004
Increase (decrease) in investment contract liabilities			–				10				101				–				111
(Increase) decrease in reinsurance contract assets, excluding reinsurance transactions			–				(131)				(185)				–				(316)
Amortization of (premium) discount on invested assets			–				8				(69)				–				(61)
CSM amortization			–				(103)				(489)				–				(592)
Other amortization			3				34				109				–				146
Net realized and unrealized (gains) losses and impairment on assets			(4)				397				(94)				–				299
Deferred income tax expenses (recoveries)			(42)				69				(25)				–				2
Loss on reinsurance transaction (pre-tax)			–				33				85				–				118
Cash provided by (used in) operating activities before undernoted items			(126)				449				1,360				–				1,683
Dividends from unconsolidated subsidiaries			–				91				–				(91)				–
Changes in policy related and operating receivables and payables			(29)				926				1,996				–				2,893
Cash provided by (used in) operating activities			(155)				1,466				3,356				(91)				4,576
Investing activities
Purchases and mortgage advances			–				(4,407)				(32,065)				–				(36,472)
Disposals and repayments			–				2,785				29,960				–				32,745
Changes in investment broker net receivables and payables			–				20				203				–				223
Investment in common shares of subsidiaries			(1,100)				–				–				1,100				–
Capital contribution to unconsolidated subsidiaries			–				(1)				–				1				–
Notes receivable from parent			–				–				(1,142)				1,142				–
Notes receivable from subsidiaries			(35)				–				–				35				–
Cash provided by (used in) investing activities			(1,135)				(1,603)				(3,044)				2,278				(3,504)
Financing activities
Change in repurchase agreements and securities sold but not yet purchased			–				–				(81)				–				(81)
Issue of capital instruments, net			1,094				–				–				–				1,094
Redemption of capital instruments			–				(609)				–				–				(609)
Secured borrowing from securitization transactions			–				–				131				–				131
Changes in deposits from Bank clients, net			–				–				244				–				244
Lease payments			–				(1)				(29)				–				(30)
Shareholders’ dividends and other equity distributions			(777)				–				–				–				(777)
Common shares repurchased			(203)				–				–				–				(203)
Common shares issued, net			35				–				1,100				(1,100)				35
Contributions from (distributions to) non-controlling interests, net			–				–				1				–				1
Dividends paid to parent			–				–				(91)				91				–
Capital contributions by parent			–				–				1				(1)				–
Notes payable to parent			–				–				35				(35)				–
Notes payable to subsidiaries			1,142				–				–				(1,142)				–
Cash provided by (used in) financing activities			1,291				(610)				1,311				(2,187)				(195)
Cash and short-term securities
Increase (decrease) during the period			1				(747)				1,623				–				877
Effect of foreign exchange rate changes on cash and short-term securities			1				105				158				–				264
Balance, beginning of period			86				4,004				15,794				–				19,884
Balance, end of period			88				3,362				17,575				–				21,025
Cash and short-term securities
Beginning of period
Gross cash and short-term securities			86				4,329				15,923				–				20,338
Net payments in transit, included in other liabilities			–				(325)				(129)				–				(454)
Net cash and short-term securities, beginning of period			86				4,004				15,794				–				19,884
End of period
Gross cash and short-term securities			88				3,716				17,677				–				21,481
Net payments in transit, included in other liabilities			–				(354)				(102)				–				(456)
Net cash and short-term securities, end of period		$	88			$	3,362			$	17,575			$	–			$	21,025
Supplemental disclosures on cash flow information:
Interest received		$	15			$	896			$	2,277			$	(64)			$	3,124
Interest paid			176				7				267				(64)				386
Income taxes paid (refund)			4				(3)				516				–				517

 

 

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Consolidated Statement of Cash Flows

 

For the three months ended March 31, 2023		MFC (Guarantor)				JHUSA (Issuer)				Other subsidiaries				Consolidation adjustments				Consolidated MFC
Operating activities
Net income (loss)		$	1,406			$	93			$	1,690			$	(1,779)			$	1,410
Adjustments:
Equity in net income of unconsolidated subsidiaries			(1,480)				(206)				(93)				1,779				–
Increase (decrease) in insurance contract net liabilities			–				129				6,033				–				6,162
Increase (decrease) in investment contract liabilities			–				55				28				–				83
(Increase) decrease in reinsurance contract assets, excluding reinsurance transactions			–				17				339				–				356
Amortization of (premium) discount on invested assets			–				16				12				–				28
CSM amortization			–				(128)				(319)				–				(447)
Other amortization			2				35				101				–				138
Net realized and unrealized (gains) losses and impairment on assets			(4)				(7)				(1,852)				–				(1,863)
Deferred income tax expenses (recoveries)			(38)				(98)				253				–				117
Stock option expense			–				(1)				2				–				1
Cash provided by (used in) operating activities before undernoted items			(114)				(95)				6,194				–				5,985
Dividends from unconsolidated subsidiaries			–				85				–				(85)				–
Changes in policy related and operating receivables and payables			(29)				(437)				(2,564)				–				(3,030)
Cash provided by (used in) operating activities			(143)				(447)				3,630				(85)				2,955
Investing activities
Purchases and mortgage advances			–				(4,647)				(17,639)				–				(22,286)
Disposals and repayments			–				4,332				13,596				–				17,928
Changes in investment broker net receivables and payables			–				119				286				–				405
Investment in common shares of subsidiaries			(1,200)				–				–				1,200				–
Notes receivable from parent			–				–				(1,284)				1,284				–
Notes receivable from subsidiaries			(21)				–				–				21				–
Cash provided by (used in) investing activities			(1,221)				(196)				(5,041)				2,505				(3,953)
Financing activities
Change in repurchase agreements and securities sold but not yet purchased			–				–				152				–				152
Issue of capital instruments, net			1,194				–				–				–				1,194
Secured borrowing from securitization transactions			–				–				194				–				194
Changes in deposits from Bank clients, net			–				–				(686)				–				(686)
Lease payments			–				(1)				(10)				–				(11)
Shareholders’ dividends and other equity distributions			(723)				–				–				–				(723)
Common shares repurchased			(398)				–				–				–				(398)
Common shares issued, net			20				–				1,200				(1,200)				20
Dividends paid to parent			–				–				(85)				85				–
Notes payable to parent			–				–				21				(21)				–
Notes payable to subsidiaries			1,284				–				–				(1,284)				–
Cash provided by (used in) financing activities			1,377				(1)				786				(2,420)				(258)
Cash and short-term securities
Increase (decrease) during the period			13				(644)				(625)				–				(1,256)
Effect of foreign exchange rate changes on cash and short-term securities			–				(2)				13				–				11
Balance, beginning of period			63				2,215				16,357				–				18,635
Balance, end of period			76				1,569				15,745				–				17,390
Cash and short-term securities
Beginning of period
Gross cash and short-term securities			63				2,614				16,476				–				19,153
Net payments in transit, included in other liabilities			–				(399)				(119)				–				(518)
Net cash and short-term securities, beginning of period			63				2,215				16,357				–				18,635
End of period
Gross cash and short-term securities			76				1,986				16,713				–				18,775
Net payments in transit, included in other liabilities			–				(417)				(968)				–				(1,385)
Net cash and short-term securities, end of period		$	76			$	1,569			$	15,745			$	–			$	17,390
Supplemental disclosures on cash flow information:
Interest received		$	16			$	553			$	2,117			$	(59)			$	2,627
Interest paid			146				13				229				(59)				329
Income taxes paid (refund)			1				(1)				131				–				131

Note 17 Comparatives

 

Certain comparative amounts have been reclassified to conform to the current period’s presentation.

 

 

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SHAREHOLDER INFORMATION

 

 

MANULIFE FINANCIAL CORPORATION

HEAD OFFICE

200 Bloor Street East

Toronto, ON Canada M4W 1E5

Telephone: [phone]

Website: www.manulife.com

INVESTOR RELATIONS

Financial analysts, portfolio managers and other investors requiring financial information may contact our Investor Relations Department or access our website at www.manulife.com

Email: [e-mail]

SHAREHOLDER SERVICES

For information or assistance regarding your share account, including dividends, changes of address or ownership, lost certificates, to eliminate duplicate mailings or to receive shareholder material electronically, please contact our Transfer Agents in Canada, the United States, Hong Kong or the Philippines. If you live outside one of these countries, please contact our Canadian Transfer Agent.

 

TRANSFER AGENTS

Canada

TSX Trust Company

301 – 100 Adelaide St. West

Toronto, ON Canada M5H 4H1

Toll Free: 1 800 783-9495

Collect: 416 682-3864

Email: [e-mail]

Website: www.tsxtrust.com

TSX Trust Company offices are also located in Toronto, Vancouver and Calgary.

United States

Equiniti Trust Company, LLC

P.O. Box 27756

Newark, NJ

United States 07101

Toll Free: 1 800 249-7702

Collect: 416 682-3864

Email: [e-mail]

Website: https://tsxtrust.com/manulife

Hong Kong

Tricor Investor Services Limited

17/F, Far East Finance Centre

16 Harcourt Road

Hong Kong

Telephone: [phone]

Email: [e-mail]

Website: www.tricoris.com

 

Philippines

RCBC Trust Company

Ground Floor, West Wing

GPL (Grepalife) Building

221 Senator Gil Puyat Avenue

Makati City, Metro Manila, Philippines

Telephone: [phone]

Email: [e-mail]

Website: www.rcbc.com/stocktransfer

AUDITORS

Ernst & Young LLP

Chartered Professional Accountants

Licensed Public Accountants

Toronto, Canada

The following Manulife documents are available online at www.manulife.com

 

•

Annual Report and Proxy Circular

 

•

Notice of Annual Meeting

 

•

Shareholders Reports

 

•

Public Accountability Statement

 

•

2023 Sustainability Report

 

 

Rating

 

 

Financial strength is a key factor in generating new business, maintaining and expanding distribution relations and providing a base for expansion, acquisitions and growth. As at March 31, 2024, Manulife had total capital of C$76.4 billion, including C$48.3 billion of total shareholders’ and other equity. The Manufacturers Life Insurance Company’s financial strength ratings are among the strongest in the insurance industry. Rating agencies include AM Best Company (“AM Best”), DBRS Limited and affiliated entities (“Morningstar DBRS”), Fitch Ratings Inc. (“Fitch”), Moody’s Investors Service Inc. (“Moody’s”), and S&P Global Ratings (“S&P”).

Rating Agency		MLI Rating		Rank
S&P		AA-		(4th of 21 ratings)
Moody’s		A1		(5th of 21 ratings)
Fitch		AA-		(4th of 21 ratings)
Morningstar DBRS		AA		(3rd of 22 ratings)
AM Best		A+ (Superior)		(2nd of 13 ratings)

 

 

 

Common Stock Trading Data

 

 

The following values are the high, low and close prices, including the average daily trading volume for Manulife Financial Corporation’s common stock on the Canadian exchanges, the U.S. exchanges, The Stock Exchange of Hong Kong and the Philippine Stock Exchange for the first quarter. The common stock symbol is MFC on all exchanges except Hong Kong where it is 945.

As at March 31, 2024, there were 1,801 million common shares outstanding.

 

January 1 – March 31, 2024		Canada Canadian $		U.S. United States $		Hong Kong Hong Kong $		Philippines Philippine Pesos
High		$  33.83		$    24.99		$   191.70		P   1,300
Low		$  28.34		$    21.00		$   163.30		P   1,001
Close		$  33.83		$    24.99		$   190.50		P   1,250
Average Daily Volume (000)		9,611		3,436		20		0.3

 

 

 

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Electronic documents available from Manulife.

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Manulife Financial Corporation – First Quarter 2024		109

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Table of Contents

 

 

 

 

manulife.com

Manulife, Manulife & Stylized M Design, and Stylized M Design are trademarks of The Manufacturers Life Insurance Company and are used by it, and by its affiliates, including Manulife Financial Corporation, under license.

Exhibit 99.2

Form 52-109F2

Certification of Interim Filings

Full Certificate

I, Roy Gori, President and Chief Executive Officer of Manulife Financial Corporation, certify the following:

 

1.

Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Manulife Financial Corporation (the “issuer”) for the interim period ended March 31, 2024.

 

2.

No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

 

3.

Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

 

4.

Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuer’s Annual and Interim Filings, for the issuer.

 

5.

Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

 

(a)

designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

 

(i)

material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

 

(ii)

information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

 

(b)

designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

 

5.1

Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

 

5.2

N/A

 

5.3

N/A

 

6.

Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2024 and ended on March 31, 2024 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: May 8, 2024

 

/s/ Roy Gori

Roy Gori

President and Chief Executive Officer

Exhibit 99.3

Form 52-109F2

Certification of Interim Filings

Full Certificate

I, Colin Simpson, Chief Financial Officer of Manulife Financial Corporation, certify the following:

 

1.

Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Manulife Financial Corporation (the “issuer”) for the interim period ended March 31, 2024.

 

2.

No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

 

3.

Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

 

4.

Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuer’s Annual and Interim Filings, for the issuer.

 

5.

Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

 

(a)

designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

 

(i)

material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

 

(ii)

information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

 

(b)

designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

 

5.1

Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

 

5.2

N/A

 

5.3

N/A

 

6.

Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2024 and ended on March 31, 2024 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: May 8, 2024

 

/s/ Colin Simpson

Colin Simpson

Chief Financial Officer

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