Mfc 4 q12_slides

Fourth Quarter and Year End 2012
Financial & Operating Results

February 7, 2013

Caution regarding forward-looking statements

This presentation contains forward-looking statements within the meaning of 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 presentation include, but are not limited to, statements with respect to our 2016 management objectives for core earnings and
core ROE, potential future charges related to URR assumptions if current low interest rates persist, changes in MLI’s MCCSR ratio and additional risks regarding entities within the MFC
group that are interconnected which may make separation difficult. The forward-looking statements in this presentation 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, including in the case of our 2016 management
objectives for core earnings and core ROE, the assumptions described under “Key Planning Assumptions and Uncertainties” in our fourth quarter 2012 press release 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: the factors identified in “Key Planning Assumptions and Uncertainties” in our fourth quarter 2012 press release; general business and economic conditions (including but not limited to
the performance, volatility and correlation of equity markets, interest rates, credit and swap spreads, currency rates, investment losses and defaults, market liquidity and creditworthiness
of guarantors, reinsurers and counterparties); changes in laws and regulations; changes in accounting standards; 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 behavior; the accuracy of other estimates used in applying accounting policies and actuarial 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 available for sale; our liquidity, including the availability of financing
to satisfy existing financial liabilities on their expected maturity dates when required; obligations to pledge additional collateral; 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; 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; and our ability to protect our intellectual property and exposure to
claims of infringement. Additional information about material 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 the body of this presentation as well as under “Risk Factors” in our most recent Annual Information Form, under “Risk
Management”, “Risk Management and Risk Factors” and “Critical Accounting and Actuarial Policies” in the Management’s Discussion and Analysis in our most recent annual report, under
“Risk Management”, “Risk Management and Risk Factors Update” and “Critical Accounting and Actuarial Policies” in the Management’s Discussion and Analysis in our most recent interim
report, in the “Risk Management” note to consolidated financial statements in our most recent annual and interim reports and elsewhere in our filings with Canadian and U.S. securities
regulators. We do not undertake to update any forward-looking statements except as required by law.

2

CEO’s remarks

Donald Guloien
President & Chief Executive Officer

3
3

2012 strategic highlights
Net Income (loss)
Attributed to Shareholders
(C$ million)
Substantive progress made on our strategic priorities:
 Developing our Asian opportunity to the fullest
 Growing our wealth and asset management businesses in Asia,
Canada and the U.S.
 Continuing to build our balanced Canadian franchise
 Continuing to grow higher ROE, lower risk U.S. businesses 1,736

Delivered strong financial results:
129
 Delivered core earnings1 of $2.2 billion in-line with 2011, despite
additional hedging costs
 Generated record2 annual insurance and wealth sales1 in 2012
 Strengthened MLI’s MCCSR to 211%, a seven point improvement
over 3Q12
 Reported record funds under management1 of $532 billion (1,663)

Achieved our 2014 hedging objectives two years ahead
of schedule

2010 2011 2012
1 Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below.
2 Wealth sales were a record excluding variable annuities.

4

CFO’s remarks

Steve Roder
Senior Executive Vice President & Chief Financial Officer

5

4Q12 financial highlights

 Reported net income attributed to shareholders of $1,057 million
 Delivered core earnings1 of $537 million, slightly below 3Q12
 Increased insurance sales1 by 49%2 and delivered a 31% increase in wealth sales over
4Q11
 Generated new business embedded value1 (“NBEV”) of $245 million, and increase of
71% over 4Q11
 Continued to generate strong investment gains of $368 million, $50 million of which is
included in core earnings
 Reported in-force embedded value1 of $38 billion as at December 31, 2012, an increase
of $1.9 billion over the prior year

2 All sales growth (decline) figures stated on a constant currency basis, a Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below.

6

Full year 2012 reported earnings of $1.7 billion
up significantly versus 2011
Core Earnings1
(C$ million)
+44% +1%
4Q12 core earnings of $537 million, representing:
+ An increase of over $160 million from 4Q11, reflecting
increased fee income on higher FUM as well as a
significant improvement in new business strain
537 2,169 2,187
373
- A decline of $19 million from 3Q12
Full year 2012 core earnings of $2.2 billion, in-line
with 2011:
4Q11 4Q12 2011 2012 + Improved new business strain, increased fee income,
and the non-recurrence of P&C reinsurance claims
Net Income (loss) attributed to shareholders - Additional macro hedging costs and amortization of
(C$ million)
unrealized pension losses
n.m. n.m.
1,206
4Q12 net income attributed to shareholders of $1.1
1,057 billion, versus 4Q11 net loss of $69 million
1,736

129 2012 net income attributed to shareholders of $1.7
(69) billion, up $1.6 billion from 2011
4Q11 4Q12 2011 2012


7

Core earnings impacted by higher strain on wealth
sales and other expenses in Asia
Core Earnings1
(C$ million)

(16)
(50) 5 38
4

556 537

3Q12 Core Asia Canada U.S. Corporate Expected macro 4Q12 Core
earnings & Other hedge costs earnings

 Asia Division core earnings were negatively impacted by increased expenses related to higher sales
incentives and systems costs and higher new business strain in the fourth quarter
 Canadian Division reported favourable policyholder experience partially offset by modestly higher new
business strain
 U.S. Division's core earnings included claims experience, tax items partly offset by higher new business
strain related to new business mix and higher wealth sales
 Corporate and Other core earnings increase largely reflected a $44 million gain related to the release of P&C
Reinsurance provisions for the Japan earthquake & tsunami, partly offset by a provision for Hurricane Sandy
 Expected macro hedging costs increased reflecting higher notional values
1 Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below. See also “Earnings reconciliation history below for a reconciliation of core earnings
to net income.

8

Net income benefited from strong investment
gains and non-recurring tax items in 4Q12

(C$ millions) 4Q12

Core earnings1 $537
Investment related gains in excess of amount included in core earnings 318
Core earnings plus investment related gains above $855
Impact of the following items excluded from core earnings:
Material and exceptional tax related items 264
Income on variable annuity guarantee liabilities that are dynamically hedged 100
Change in actuarial methods and assumptions (87)
Restructuring charge related to organizational design (57)
Direct impact of equity markets & interest rates (18)
Net Income (loss) attributed to shareholders $1,057
Preferred share dividends (29)
Common shareholders’ net income (loss) $1,028


9

New business strain reflects strong growth in
wealth sales and a change in new business mix
Source of Earnings1  Expected Profit on In-Force increased 2%2 largely due to
(C$ millions) higher fee income, partly offset by lower expected earnings on
variable annuity businesses
 Impact of New Business deteriorated largely due to higher
3Q12 4Q12 wealth sales volumes driving higher non-deferrable acquisition
expenses and a change in new business mix
Expected Profit on In-Force 882 871
 Experience Gains reflect favourable investment-related gains
Impact of New Business (117) (146) and VA experience, the release of Japan earthquake
provisions, partly offset by experience losses on macro hedge
Experience Gains (Losses) 290 537 program
Mgmt Actions & Chgs in Assumptions (1,740) (331)  Mgmt Actions and Chgs in Assumptions largely reflect
expected macro hedge costs and a systems conversion which
Earnings on Surplus Funds 152 151 refines the modeling of policy liabilities
Other (61) (47)  Earnings on Surplus:
Income Before Taxes (594) 1,035  Core pre-tax Earnings on Surplus of $149 million
increased by $33 million driven primarily by a release of
Income Taxes 367 22 tax-related interest provisions. This benefit was
substantially offset by one-time tax adjustments recorded in
Net Income (Loss) (227) 1,057 income taxes on core earnings
Preferred Dividends (31) (29)  Non-core pre-tax Earnings on Surplus of $2 million
declined by $34 million. Non-core items are primarily mark-
Common Shareholders’ Net Income (Loss) (258) 1,028 to-market gains other than AFS equities and seed money
 Income Taxes reflect income earned in low tax jurisdictions
Currency Adjusted2 Expected Profit on In-force 856 871 and material and exceptional tax items

1 The Source of Earnings (SOE) analysis is prepared following OSFI regulatory guidelines and draft guidelines of the Canadian Institute of Actuaries. The SOE is used to identify
the primary sources of gains or losses in each reporting period. Per OSFI instructions, SOE amounts denominated in foreign currencies are translated at the prior quarter's
balance sheet exchange rates, with the difference between those rates and the average rates used in the Statement of Income included in Experience gains (losses).
2 Constant currency basis is a Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below.

10

Record insurance sales for 2012 exceeded $3.3
billion, an increase of 33% over 2011
Insurance Sales1,2 Asia
(C$ millions) Canada
U.S. 4Q12 insurance sales of $929 million, up 49%
versus 4Q11:
+49% +33% + Asia sales were up 20% vs. 4Q11, driven largely by
929 3,349
record sales in Indonesia and sales of the Increasing
Term product in Japan ahead of pricing changes
1,328 + Sales in Canada were more than twice 4Q11 levels
driven by Group Benefits, partially offset by lower, yet
358
2,507 1,440 more profitable sales in Individual Insurance
640 + U.S. sales were up 13% vs. 4Q11, driven by strong
new product offerings with favourable risk
characteristics
1,230
312
Record full year 2012 insurance sales of $3.3
399 3,115 billion, up 33% compared to 2011 largely due to:
1,310

658 + Record sales in Asia, with strong contributions from
172
most territories
+ Record Group Benefits and Affinity Markets sales in
156 172 619 599 Canada

4Q11 4Q12 2011 2012

11

Wealth sales up 31% versus 4Q11 largely due to
strong sales growth in Asia and the U.S.
Wealth Sales1,2 Asia
4Q12 wealth sales were $10.4 billion, up 31%
(C$ millions) Canada
versus 4Q11:
U.S.
+ Record Asia wealth sales (ex. variable annuities)
were more than double 4Q11 levels, with
+31% +4%
contributions from all territories
10,439 35,940 - In Canada, record mutual fund sales and strong
34,298
Group Retirement Solutions sales were more than
2,114 5,690 offset by lower annuity sales and lower new loan
4,131
volumes at Manulife Bank
8,141
+ U.S. wealth sales increased 31% over 4Q11 driven by
939 record sales in both our Retirement Plan Services
10,784 10,057
2,507 and mutual fund businesses
2,624
Full year 2012 wealth sales were $36 billion, up 4%
versus 2011:
+ Record wealth sales (ex. variable annuities)
5,818 19,383 20,193
+ Record performance in Asia, driven by strong mutual
4,578 fund sales in Japan, Indonesia and Taiwan
+ Record U.S. mutual fund sales and Retirement Plan
Services sales
- Record mutual funds sales in Canada outweighed by
4Q11 4Q12 2011 2012 actions to moderate variable annuity sales

12

Premiums & deposits increased 55% in 4Q12 on
strong wealth deposits & growth of in-force business
Premiums & Deposits1,2 Insurance products
(C$ millions) Wealth products

+55% +14%
Premiums and Deposits of $24.1 billion in 4Q12,
24,128 75,501
were 55% higher than 4Q11:
66,061 + Wealth P&D of $17.5 billion increased 76% vs. 4Q11
6,629
24,221
driven by strong growth in mutual fund and pension
deposits and an institutional investment mandate
22,278
awarded to Manulife Asset Management
15,917
+ Insurance P&D of $6.6 billion, were up 18% vs. 4Q11
due to growth in Asia and strong Group Benefits
5,749 results

17,499
51,280
Premiums and Deposits of $75.5 billion in 2012,
43,783 were 14% higher than 2011
10,168

4Q11 4Q12 2011 2012
2 All P&D growth (decline) figures stated on a constant currency basis, a Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below.

13

Substantial increase in 4Q12 NBEV driven by
strong sales and actions taken to improve margins
New Business Embedded Value1
(C$ million)
Insurance products
Wealth products
4Q12 New Business Embedded Value (NBEV) of
+71% +7% $245 million, up 71% vs. 4Q11:
245 1,024 + Insurance NBEV increased 84%, reflecting actions
954 taken to improve profitability in U.S. Insurance,
business mix shift and higher sales in Japan
Insurance
+ Wealth NBEV increased 59%, due to repricing of
129 segregated fund rider fees in Canada and higher
489 648 wealth sales
143
2012 NBEV of $1.0 billion, up 7% vs. 2011
+ Full Year Insurance NBEV increased 33%, reflecting
70 repricing actions on insurance businesses and higher
sales partially offset by lower investment yields
- Full Year Wealth NBEV decreased 19%, reflecting
116 465 higher cost of hedging for variable annuities due to
376 lower interest rates and lower expected bank spreads
73

4Q11 4Q12 2011 2012


14

In-force embedded value increased to $38 billion
as at December 31, 2012
(C$ billions)
+1.0 +0.3
+3.1
(0.5) 39.7
(1.2)
(0.8) 38.0
36.1

Embedded Interest on New Business Experience & EV before Discount Rate Currency Shareholder Embedded
Value (12/31/11) Embedded Review of Discount rates, Changes Dividends and Value (12/31/12)
Value Actuarial FX and Capital Other
Assumptions

In-force embedded value/share of $20.79, up 4% from the prior year:
+ Interest on embedded value and the value of new business
- Partly offset by unfavourable currency impact and shareholder dividends


15

Asia wealth sales more than doubled 4Q11, driven by new
products & strong pension/mutual fund sales
Asia Annualized Premiums Equivalent (APE)1,3
(US$ million, excludes variable annuities)
 Core earnings1
of US$182 million in 4Q12, down 21%
from 3Q12, and down 13% vs. 4Q11 +46% +21%
 Insurance sales1 of US$362 million, up 20% vs. 4Q11:
+ Record Indonesian insurance sales driven by strong
sales in both the agency and bank channels
+ Sales increase partially driven by higher sales of
Increasing Term product prior to re-pricing in Japan 607 2,061
1,704
 Record full year insurance sales in 2012 with strong 422
contributions from most territories
 Wealth sales2 of US$2.1 billion more than doubled
4Q11 levels: 4Q11 4Q12 2011 2012
+ Record Indonesian wealth sales, up almost 300%
+ Japan wealth sales more than quadrupled on the launch Asia Total Weighted Premium Income (TWPI)1,3
of the Strategic Income Fund (US$ million, excludes variable annuities)
+ Strong pension sales in Hong Kong due to successful +42% +23%
efforts to capture transfers resulting from the new
Employee Choice arrangement
 Record full year wealth sales (ex. VA) in 2012
 APE2 of US$607 million, up 46% vs. 4Q11 driven by 2,414 8,160
strong wealth sales 1,725 6,655
 TWPI2 of US$2.4 billion, up 42% vs. 4Q11, driven by
sales growth and strong persistency
4Q11 4Q12 2011 2012
1 Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below. See also “Segment Reconciliation” below. 2 Excludes variable annuities.
3 All sales, TWPI, APE growth (decline) figures stated on a constant currency basis, a Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below.

16

Group Benefits continued to lead the Canadian
industry in sales
Group Benefits Sales
(C$ million)
 Core earnings1 of $233 million in 4Q12, up 2% from
+270% +188%
3Q12 and up 64% from 4Q11
 Insurance sales1 of $399 million in 4Q12 were more
than twice 4Q11 levels:
+ Group Benefits sales increased 270% vs. 4Q11
- Continued to slow sales of guaranteed long duration 333 1,026
products, in line with business plans
 Full year insurance sales were twice 2011 levels, driven 356
by record sales in Group Benefits and Affinity Markets 90

 Wealth sales of $2.5 billion in 4Q12 down 4% vs. 4Q11:
4Q11 4Q12 2011 2012
+ Record mutual fund sales and strong GRS sales
- Segregated fund product sales down 56% from 4Q11, Group Retirement Solutions (GRS) Sales
reflecting actions taken to moderate sales (C$ million)
 On a full year 2012 basis, wealth sales were down 7% 3,115
versus 2011 +45% +17%

 Manulife Mutual Funds delivered record full year sales of
$2.1 billion and record AUM exceeding $20 billion
 GRS led the industry in Defined Contribution sales for 11 223 1,100
consecutive quarters2 154
937
 Record assets in Manulife Bank exceeded $21 billion.
Stable new loan volumes year-over-year
4Q11 4Q12 2011 2012

1 Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below. See also “Segment Reconciliation” below. 2 Through 3Q12, Source: LIMRA.

17

Record wealth sales in U.S. Division, driven by
mutual funds and Retirement Plan Services
U.S. Wealth Sales JH Annuities

(US$ million) JH Retirement Plan Services

 Core earnings1 of US$297 million in 4Q12, up 3% from JH Mutual Funds
3Q12 and 61% from 4Q11
 Wealth sales1 of US$5.9 billion in 4Q12 increased 31% +31% +3%
vs. 4Q11:
5,867 20,213
+ Record mutual fund sales of $3.7 billion, up 54% over 152 19,609
1,158
4Q11
1,328 2,775
+ Net mutual fund sales of $1.2 billion in 4Q12, and
$3.9 billion for 2012, up 36% over 2011 1,995
4,473 6,044
+ Record Retirement Plan Services sales of $2.0 billion,
44% higher vs. 4Q11 677 4,737
- Annuity sales declined 78%, consistent with our exit from
the variable annuity and fixed annuity markets
 Full year wealth sales increase of 3% was impacted by a 1,383
decline in Annuity sales
 Added new mutual funds to platforms at key firms 3,115
 Insurance sales1 of US$173 million in 4Q12 increased 3,720 12,097
13,011
13% vs. 4Q11:
2,413
+ JH Life sales of $163 million up 18% over 4Q11, driven
by successful new product offerings
- LTC sales down 33% vs. 4Q11, reflecting the continued
impact of new business price increases
 Life insurance sales increased 12% on a full year basis 4Q11 4Q12 2011 2012

1 Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below. See also “Segment Reconciliation” below.

18

Record Funds under Management achieved in
4Q12
Funds Under Management1
(C$ billions)

1
(15)
22 9

Record funds under management of $532 billion as
at Dec. 31, 2012, up $17 billion from Sept. 30,
532 2012:
+ Net policy cash flows of $7 billion
515
+ Investment income of $9 billion

2
FUM P&D Policy Investment Currency FUM
(9/30/2012) Payments Income & Other (12/31/2012)

2 Excludes Administrative Services Only premium equivalents and Group Benefits ceded premiums.

19

Diversified high quality asset mix avoids risk
concentrations
Total Invested Assets
(C$230 billion, Carrying value as at December 31, 2012)
Fixed Income & Other Diversified, high quality portfolio:
Alternative Long-Duration Assets
Stocks  87% of the total portfolio is Fixed Income, of which
Private Placement 96% is Investment Grade
Debt
9% Government Bonds  8% Alternative Long-Duration Assets including Real
25% Estate; well diversified by asset class and
Securitized
MBS/ABS geography; majority of the assets are managed in-
2%
house
 5% Stocks, diversified by industry and geography,
Mortgages primarily backing participating or pass-through
15%
liabilities
Corporate Bonds
25%
Cash &
Short-Term
Securities Limited Net Exposure1 to Greece, Italy, Ireland,
6%
Policy Loans
Portugal, and Spain:
3%  No direct sovereign or financial sector exposure to
Bank Loans
1%
Greece, Portugal or Spain
Other  Banks and financials (C$18 million)
1% Stocks
5%  Sovereign debt (C$13 million)
Other Alternative
Long-Duration Assets Real Estate
4% 4%

1 Net Exposure excludes par and pass-through and reflects the impact of downgrades on reserves. Presented based on location of issuer.

20

Favourable credit experience reflects the
strength of our underwriting
Net Credit Experience
(C$ millions)

Impact on 4Q12 Earnings:
(C$ millions, post-tax)
26
Credit recoveries 15

9 Credit downgrades (20)
0
Total Credit Impacts $(5)
(3) Assumed in policy liabilities 31
Net Credit Experience Gain $ 26
(32)

4Q11 1Q12 2Q12 3Q12 4Q12

21

Added to macro and dynamic hedging programs
in 4Q12
Interest Rate Sensitivity1 Equity Market Sensitivity1
(C$ billions) (% of underlying sensitivity)
Net unhedged

(2.2) Offset by hedging programs
17%

(1.8)
83% hedged
2014 goal:
< $1.1 billion

(1.0) 2014 goal:
>75% hedged

83%
(0.4)

2009 2010 2011 2012

Estimated impact of 1% parallel decline in interest rates Estimated impact of 10% equity market decline:
(excluding AFS bond offset):  Range of $(310) million to $(500) million to earnings
 $(400) million impact to earnings  (5) pts to MLI’s MCCSR ratio
 (16) pts to MLI’s MCCSR ratio
Achieved our 2014 goal of reducing interest rate sensitivity to 72% - 83% of underlying earnings sensitivity to equity
$1.1 billion more than two years ahead of schedule market changes now hedged:
 Achieved our 2014 goal to hedge 75% two years ahead
of schedule

1 Earnings sensitivity to equity markets is defined by the impact of a 10 per cent decline in the market value of equity funds on the net income attributed to shareholders. Earnings
sensitivity to interest rates is defined by the impact of a one per cent parallel decline in interest rates on the net income attributed to shareholders. Please refer to “Caution related
to sensitivities” in section D of the fourth quarter 2012 press release.

22

Strengthened MCCSR ratio in the quarter, by
seven points over 3Q12
Minimum Continuing Capital and
Surplus Requirements Ratio (MLI)1
(%) MLI ended 4Q12 with an MCCSR ratio of 211%,
largely reflecting:
+ Fourth quarter 2012 earnings
+ Reinsurance of a portion of the Japanese life
business
+ $200 million preferred share issuance

Risk sensitivity of our capital position is mitigated by
our significant hedging programs
216 225
213 204 211
Estimated impact to MCCSR ratio as of January 1,
2013, reflective of 2013 OSFI MCCSR Guidelines:
+ MCCSR ratio increase of 4 points due to OSFI
amendments to lapse risk capital requirements
- MCCSR ratio decrease of 5 points by December 31,
2014 due to OSFI's alignment of capital rules with
the new pension accounting standard (IAS 19R);
Impact to be amortized on straight-line basis over 8
4Q11 1Q12 2Q12 3Q12 4Q12
quarters, with ~1 point decline at 1Q13

1 MLI refers to The Manufacturers Life Insurance Company.

23

Key questions

 New business strain

 Equity hedging

24

Summary

In 2012, Manulife:

 Made substantive progress against its strategic priorities
 Enjoyed positive progression in earnings since 2010 and improved 2012 net income by
$1.6 billion as compared to 2011
 Delivered core earnings1 of $2.2 billion, in-line with 2011
 Generated record2 annual insurance and wealth sales1 in 2012
 Ended the year with strong MLI MCCSR ratio of 211%, a seven point improvement over
3Q12
 Reported record funds under management1 of $532 billion
 Achieved our 2014 hedging targets two years ahead of schedule

2 Wealth sales were a record excluding variable annuities.

25

Question & Answer
Session

26
26

Appendix
 Segment Reconciliation
 Risk Disclosures
 Investment-related gains
 C-IFRS vs. U.S. GAAP differences

27
27

Segment Reconciliation

4Q12 reconciliation of core earnings to net income by division1,2
Corp & MFC
(C$ millions) Asia Canadian U.S.
Other3 Total
Core earnings (losses)1 $180 $233 $293 $(169) $537
Investment related gains (losses) in excess of core investment
33 (31) 365 (49) 318
gains
Core earnings plus investment related gains in excess of
$213 $202 $658 $(218) $855
core investment gains
Other items to reconcile core earnings to net income (loss)
attributed to shareholders
Income on variable annuity guarantee liabilities that are
9 45 46 - 100
dynamically hedged
Impact of major reinsurance transactions - - - - -
Direct impact of equity markets and interest rates 460 4 (150) (332) (18)
Changes in actuarial methods and assumptions, excl URR - - - (87) (87)
Goodwill impairment charge - - - - -
Gain (loss) on sale of Retrocession Business - - - - -
Tax items and restructuring charge related to organizational
- - 170 37 207
design
Net income (loss) attributed to shareholders $682 $251 $724 $(600) $1,057
2 Please refer to “Performance by Division” in section C of the fourth quarter 2012 press release for Asia Division and U.S. Division results on a U.S. dollar basis.
3 Corporate & Other segment includes Reinsurance business and $50 million of core investment gains.

28

Segment Reconciliation

2012 reconciliation of core earnings to net income by division1,2
Corp & MFC
(C$ millions) Asia Canadian U.S.
Other3 Total
Core earnings (losses)1 $963 $835 $1,085 $(696) $2,187
Investment related gains (losses) in excess of core investment
55 (10) 1,018 (126) 937
gains
Core earnings plus investment related gains in excess of
$1,018 $825 $2,103 $(822) $3,124
core investment gains
Other items to reconcile core earnings to net income (loss)
attributed to shareholders
Income on variable annuity guarantee liabilities that are
5 50 121 - 176
dynamically hedged
Impact of major reinsurance transactions, in-force product
- 259 1 - 260
changes
Direct impact of equity markets and interest rates 906 35 (484) (1,215) (758)
Changes in actuarial methods and assumptions, excl. URR - - - (1,081) (1,081)
Goodwill impairment charge - - - (200) (200)
Gain (loss) on sale of Retrocession Business - - - (50) (50)
Tax items and restructuring charge related to organizational
40 - 170 55 265
design
Net income (loss) attributed to shareholders $1,969 $1,169 $1,911 $(3,313) $1,736
2 Please refer to “Performance by Division” in section C of the fourth quarter 2012 press release for Asia Division and U.S. Division results on a U.S. dollar basis.
3 Corporate & Other segment includes Reinsurance business and $200 million of core investment gains.

29

Earnings reconciliation history

(C$ millions, unless otherwise stated) 1Q11 2Q11 3Q11 4Q11 2011 1Q12 2Q12 3Q12 4Q12 2012
Asia Division 252 253 220 213 938 267 286 230 180 963
Canadian Division 215 233 259 142 849 172 201 229 233 835
U.S. Division 290 266 260 189 1,005 257 247 288 293 1,085
Corporate & Other1 (225) (8) (58) (124) (415) (128) (83) (117) (79) (407)
Expected cost of macro equity hedges (100) (104) (107) (97) (408) (107) (118) (124) (140) (489)
Core Investment gains 50 50 50 50 200 50 50 50 50 200
Core earnings2 482 690 624 373 2,169 511 583 556 537 2,187
Diluted core earnings per share $0.26 $0.37 $0.33 $0.19 $1.14 $0.26 $0.30 $0.29 $0.28 $1.12
Core ROE1 8.1% 11.5% 10.4% 6.1% 9.1% 8.5% 9.6% 9.3% 9.0% 9.1%

Investment related gains in excess of core investment gains 470 323 236 261 1,290 205 51 363 318 937
Core earnings plus investment related gains in excess of core investment
$952 $1,013 $860 $634 $3,459 $716 $634 $919 $855 $3,124
gains

Other items to reconcile core earnings to net income (loss) attributed to
shareholders
Income (charges) on VA dynamically hedged (8) (52) (900) (193) (1,153) 223 (269) 122 100 176
Actuarial methods/assumptions (ex. URR changes) (70) (32) (651) 2 (751) 12 - (1,006) (87) (1,081)
Goodwill impairment charges - - - (665) (665) - - (200) - (200)
Impact of reinsurance transactions, product changes, dispositions & other - - 303 - 303 180 62 26 207 475
Total direct impact of equity markets and interest rates 111 (439) (889) 153 (1,064) 75 (727) (88) (18) (758)
Net income (loss) attributed to shareholders 985 490 (1,277) (69) 129 1,206 (300) (227) 1,057 1,736
Preferred share dividends (20) (22) (22) (21) (85) (24) (28) (31) (29) (112)
Common shareholders’ net income (loss) 965 468 (1,299) (90) 44 1,182 (328) (258) 1,028 1,624

1 Corporate & Other segment includes Reinsurance business. 2 Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below.

30

Changes in interest rates could impact multiple
areas of our balance sheet and income statement
Potential impacts of flat or declining rates Potential impacts of an increase in rates

Initial
Reserves would be strengthened to reflect lower rates, Reserves would be released to reflect higher rates, but
Reinvestment Rate but realized gains on AFS bonds may offset the impact realized losses on AFS bonds may mitigate the benefit
(“IRR”)

Ultimate An immediate and sustained increase in rates would likely
Further declines in interest rates would likely result in
Reinvestment Rate higher cumulative URR charges over the next 10 years
reduce, but not eliminate, the cumulative URR charges over
(“URR”) the next 10 years

Available capital would likely decline reflecting charges
Available capital would likely rise reflect gains from rising
from declining rates; while required capital is pro-
MCCSR cyclical, resulting in higher required capital when
interest rates; while required capital is pro-cyclical, resulting
in lower required capital when interest rates rise
interest rates decline

New Business
Higher new business strain, until products are re-priced Lower new business strain
Strain

Potential for reserves to be valued on an alternate
Reserve Scenarios interest rate scenario which results in higher earnings No change expected to booking scenarios
sensitivity to further declines in rates

Lower expected hedging costs; easier to add more in-force
Increase to expected dynamic and macro hedging
Hedging Costs costs
blocks to the dynamic hedging program at higher interest
rates

Earnings on Re-investment of cash flows into lower yielding bonds The re-investment of cash flows into higher yielding bonds
Surplus could result in declining earnings on surplus over time could result in improved earnings on surplus over time

Economic Could be correlated with unfavourable economic growth May be correlated with favourable economic growth and
Environment and lower returns on other asset classes higher returns on other asset classes

31

Reduced sensitivities to changes in interest
rates, credit spreads and swap spreads in 4Q12

Potential Impact1 of an immediate parallel change in “all rates”: 4Q12 3Q12
(C$ millions) -100 bps +100 bps -100 bps +100 bps
Excluding change in market value of AFS bonds held in the surplus $(400) $200 $(600) $200
From fair value changes in AFS bonds held in surplus, if realized2 $800 $(700) $900 $(800)

MCCSR Impact:
- Excluding change in market value of AFS bonds held in surplus (16) pts +10 pts (17) pts +9 pts
- From fair value changes in AFS bonds held in surplus, if realized 5 pts (5) pts +5 pts (5) pts

Potential Impact1 of a parallel change in corporate bond spreads: 4Q12 3Q12
Corporate Spreads $(1,000) $500 $(1,200) $600

Potential Impact1 of a parallel change in swap spreads: 4Q12 3Q12
Swap Spreads $600 $(600) $700 $(700)

1 All estimated sensitivities are approximate and based on a single parameter. No simple formula can accurately estimate ultimate future impact.
2 The amount of gain or loss that can be realized on AFS fixed income assets held in the surplus segment will depend on the amount of unrealized gain or loss. The table above
only shows the change in the unrealized position, as the total unrealized position will depend upon the unrealized position at the beginning of the period.

32

Earnings impact from potential changes to the
Fixed Income Ultimate Reinvestment Rate

Potential cumulative impact on net income attributed to shareholders arising from
potential changes to the fixed income ultimate reinvestment rates (URR)1
Next Subsequent Total over
(C$ millions, post-tax)
5 years 5 years 10 years

Risk free rates remain at current levels $(1,600) $(300) $(1,900)

Risk free rates rise 50 bp immediately from their current levels
$(900) $0 $(900)
and then remain at those new levels thereafter

Risk free rates fall 50 bp immediately from their current levels
$(2,200) $(500) $(2,700)
and then remain at those new levels thereafter

As at December 31, 2012

1 Excludes potential fair value changes in AFS bonds held in surplus, if realized.

33

Financial results benefited from Japan public
equity market gains in 4Q12
(C$ millions)

Hedging programs offset $691
Absent hedging programs, changes in equity markets and VA-related million of the benefit of equity
risks would have increased earnings by $1,103 million in 4Q12 markets and VA-risks in 4Q12

517

(399)

48
(18)
(292)
556
The dynamic hedging program
result of 123% vs. experience
gains on the hedged VA block 412
388

$100 million income from dynamically hedged VA

VA guarantee General fund Other Hedged VA Experience gain on Loss on dynamic Experience loss on Earnings impact of
liabilities not equities & asset Impacts hedged VA block hedge assets macro hedge unhedged items &
dynamically hedged based fees assets ineffectiveness

34

Exposure by market
Potential impact on net income attributed to shareholders arising from a 10% decline
in public equity returns1,2
(C$ millions)
3Q12 4Q12

S&P (160) (130)
TSX (70) (60)
TOPIX (110) (60)
Europe, Australasia & Far East (ex. Japan) (70) (60)
Net income impact assuming full hedge offset (410) (310)
Assumed partial hedge offset (210) (190)
Net income impact assuming partial hedge offset (620) (500)

MLI MCCSR ratio impact (6) pts (5) pts

 Achieved equity risk reduction goal two years ahead of schedule
 After the impact of dynamic and macro hedging programs, we remain most sensitive to
changes in the S&P
1 All estimated sensitivities are approximate and based on a single parameter. No simple formula can accurately estimate ultimate future impact.
2 Please note the Company’s disclosures which describe risk factors for hedging and reinsurance strategies.

35

Notional hedging exposures
Notional Value Approximate
(C$ billions) Long-Term
Exposure Index
Annual Return
3Q12 4Q12 Assumption
U.S. Equities S&P 500 $(4.0) $(4.0) ~9.5%
Canadian Equities S&P/TSX (0.3) (0.3) ~9.5%
Japanese Equities TOPIX (1.4) (1.7) ~6.25%
Europe & Other Equities Various (1.6) (1.8) ~7.75-9.75%
Macro hedges $(7.3) $(7.8)
Dynamic hedges (9.8) (9.5)
Notional value of hedges $(17.1) $(17.3)

 Continued progress in managing sensitivity of earnings to equity markets in 4Q12:
 Added approximately $250 million of equity futures to the macro hedging program
 Added ~$700 million of in-force guarantee value to our dynamic hedging program
 Macro hedging costs will vary depending on a number of factors, including:
 Notional amount of futures sold short, including changes during the period
 Swap and currency rates
 Tax rates of legal entities

36

Net Income in accordance with IFRS and U.S.
GAAP
Net income
(C$ billions)
3.0 IFRS
(1)
U.S. GAAP
2.0

1.0

0.0

(1.0)

(2.0)
4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12

 IFRS net income is typically more volatile compared to U.S. GAAP in periods of market dislocation due
to more extensive use of mark-to-market accounting
 Because our hedging strategies for equity risk (dynamic and macro) are more closely aligned with the
exposure as measured by IFRS, we are over hedged on a U.S. GAAP accounting basis. Therefore:
 On a U.S. GAAP basis, in rising equity markets we will likely incur losses on our variable annuity book
 Conversely, in declining equity markets we will likely report gains on our VA book on a U.S. GAAP basis
1 Net income in accordance with U.S. GAAP is a non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below.

37

Total equity in accordance with U.S. GAAP is
$15.8 billon higher than under IFRS basis
Equity (Book Value)
(C$ billions)
(1)
U.S. GAAP Equity 42.7 42.2 41.9
IFRS Equity 39.8 39.6
38.0

32.2 31.4
30.0

24.7 25.1 25.4 25.3 24.9 25.8 26.1 25.0 26.1

4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12

 “Mark-to-market" accounting approach of IFRS, which recognizes the current low interest
rates and updated actuarial assumptions, is not generally reflected in U.S. GAAP results
 Differences in accounting methods result in C$15.8 billion higher equity under U.S. GAAP
than IFRS for 4Q12
1 Total equity in accordance with U.S. GAAP is a non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below.

38

Note to users -
Performance and Non-GAAP Measures
We use a number of non-GAAP financial measures to measure overall performance and to assess each of our businesses. A financial measure is considered a non-GAAP measure for
Canadian securities law purposes if it is presented other than in accordance with generally accepted accounting principles used for the Company’s audited historical financial statements
which is prior Canadian GAAP for 2010 and earlier and IFRS for 2011 and beyond. Non-GAAP measures include: Core Earnings (Losses); Core return on common shareholders’ equity
(“Core ROE”); Core Earnings Per Share; In-Force Embedded Value; Net Income in Accordance with U.S. GAAP; Total Equity in Accordance with U.S. GAAP; Constant Currency Basis; Total
Weighted Premium Income (TWPI); Premiums and Deposits; Funds under Management; New Business Embedded Value; Total Annual Premium Equivalent (APE) Sales and Sales. Non-
GAAP financial measures are not defined terms under GAAP and, therefore, with the exception of Net Income in Accordance with U.S. GAAP (which is comparable to the equivalent measure
of issuers whose financial statements are prepared in accordance with U.S. GAAP), are unlikely to be comparable to similar terms used 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 (losses) is a non-GAAP measure we use to better understand
the long-term earnings capacity and valuation of the business. Core earnings excludes the direct impact of equity markets and interest rates as well as a number of other items that are
considered material and exceptional in nature. While this metric is relevant to how we manage our business and offers a consistent methodology, it is not insulated from macro-economic
factors which can have a significant impact. Core ROE is a non-GAAP profitability measure that presents 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. Core earnings per share is core earnings available to common
shareholders expressed per weighted average common share outstanding. In-force embedded value is calculated as tangible shareholders' equity plus the value of in-force business,
where the value of in-force business is the present value of expected future earnings on in-force business less the present value cost of holding capital required to support the in-force
business. In-force embedded value is a measure of the shareholder value embedded in the current balance sheet of the Company, excluding any value associated with future new business.
The change in In-force embedded value between reporting periods, excluding changes due to discount rates, foreign exchange rates and capital, is used as a measure of the value created
by the year’s operations. Net income in accordance with U.S. GAAP is a non-GAAP profitability measure. It shows what the net income would have been if the Company had applied U.S.
GAAP as its primary financial reporting basis. We consider this to be a relevant profitability measure given our large U.S. domiciled investor base and for comparability to our U.S. peers who
report under U.S. GAAP. Total equity in accordance with U.S. GAAP is a non-GAAP measure. It shows what the total equity would have been if the Company had applied U.S. GAAP as
its primary financial reporting basis. We consider this to be a relevant measure given our large U.S. domiciled investor base and for comparability to our U.S. peers who report under U.S.
GAAP. The Company uses financial performance measures that are prepared on a constant currency basis, which exclude the impact of currency fluctuations and which are non-GAAP
measures. Quarterly amounts stated on a constant currency basis in this presentation are calculated, as appropriate, using the income statement and balance sheet exchange rates effective
for the fourth quarter of 2012. Total Weighted Premium Income (TWPI) includes 10 percent of single premiums/deposits, plus 100 percent of first year and renewal premiums/deposits. This
applies to general funds, segregated funds and Mutual Funds. Premiums and deposits is a non-GAAP measure of top line growth. The Company calculates premiums and deposits as the
aggregate of (i) general fund premiums, net of reinsurance, reported as premiums on the Consolidated Statement of Income, (ii) adding back the premiums ceded related to FDA
coinsurance, (iii) premium equivalents for administration only group benefit contracts, (iv) premiums in the Canadian Group Benefits reinsurance ceded agreement, (v) segregated fund
deposits, excluding seed money, (vi) mutual fund deposits, (vii) deposits into institutional advisory accounts, and (viii) other deposits in other managed funds. Funds under management is a
non-GAAP measure of the size of the Company. It represents the total of the invested asset base that the Company and its customers invest in. New business embedded value (“NBEV”)
is the change in shareholders’ economic value as a result of sales in the reporting period. NBEV is calculated as the present value of expected future earnings, after the cost of capital, on
actual new business sold in the period using future mortality, morbidity, policyholder behaviour, expense and investment assumptions that are consistent with the assumptions used in the
valuation of our policy liabilities. Total APE Sales comprise of 100 per cent of regular premiums and 10 per cent of single premiums, for both insurance and wealth management products.
Sales are measured according to product type. (i) For total individual insurance, sales include 100 per cent of new annualized premiums and 10 per cent 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.
Sales are reported gross before the impact of reinsurance. Single premium is the lump sum premium from the sale of a single premium product, e.g. travel insurance. (ii) 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. (iii) For individual wealth management contracts, all new deposits are reported as sales. This includes individual annuities, both fixed and variable; mutual
funds; college savings 529 plans; and authorized bank loans and mortgages. (iv) For group pensions/retirement savings, sales of new regular premiums and deposits reflect an estimate of
expected deposits in the first year of the plan with the Company. Single premium sales reflect the assets transferred from the previous plan provider. Sales include the impact of the addition
of a new division or of a new product to an existing client. Total sales include both new regular and single premiums and deposits. For further information regarding these subjects, see our
press release announcing our 2012 fourth quarter results.

39

Investor Relations contacts

Steven Moore, MBA, FCSI, CGA, CFA, CFP
Senior Vice President, Treasurer & Head of Investor Relations
steven_moore@manulife.com
(416) 926-6495

Anique Asher, MBA, CA Robert Veloso, MBA, CFA
Vice President Assistant Vice President
anique_asher@manulife.com robert_veloso@manulife.com
(416) 852-9580 (416) 852-8982

40
40

Mfc 4 q12_slides

More Related Content

What's hot

Viewers also liked

Similar to Mfc 4 q12_slides

More from Brian Macleod

Mfc 4 q12_slides