As filed with the Securities and Exchange Commission on April 29, 2016

Registration No. 333-164147

811-7711

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

POST-EFFECTIVE AMENDMENT NO. 7

and/or

REGISTRATION STATEMENT

UNDER

THE INVESTMENT COMPANY ACT OF 1940

AMENDMENT NO. 59

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

SEPARATE ACCOUNT Q

(formerly, John Hancock Variable Annuity Account H)

(Exact name of Registrant)

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

(formerly, The Manufacturers Life Insurance Company (U.S.A.))

(Name of Depositor)

(617) 663-3000

(Depositor’s Telephone Number Including Area Code)

Copy to:

	Thomas J. Loftus, Esquire
	John Hancock Life Insurance Company (U.S.A.)
38500 Woodward Avenue	601 Congress Street
Bloomfield Hills, Michigan 48304	Boston, MA 02210-2805
(Address of Depositor’s Principal Executive Offices)	(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering:

It is proposed that this filing will become effective:

¨ immediately upon filing pursuant to paragraph (b) of Rule 485

x on May 2, 2016 pursuant to paragraph (b) of Rule 485

¨ 60 days after filing pursuant to paragraph (a)(1) of Rule 485

¨ on              pursuant to paragraph (a)(1) of Rule 485

If appropriate, check the following box:

¨ this post-effective amendment designates a new effective date for a previously filed post-effective amendment

Title of Securities Being Registered: Variable Annuity Insurance Contracts

PART A

INFORMATION REQUIRED IN A PROSPECTUS

Revolution Value Variable Annuity Prospectus

PREVIOUSLY ISSUED CONTRACTS

May 2, 2016

This Prospectus describes interests in the Revolution Value deferred payment Variable Annuity Contracts that were previously issued by John Hancock Life Insurance Company (“JHLICO”) and subsequently assumed by John Hancock Life Insurance Company (U.S.A.) (“John Hancock USA”). These Contracts are no longer offered for sale; however, you may make Additional Purchase Payments as permitted under your Contract. In this Prospectus, “we,” “us,” “our,” or “the Company” refers to John Hancock USA.

This Prospectus describes the Variable Investment Options of the Contracts to which you may allocate Additional Purchase Payments, to the extent permitted by your Contract. If you do, your Contract Value (other than amounts allocated to a Fixed Investment Option) and Variable Annuity payments will vary according to the investment performance of the applicable Subaccounts of John Hancock Life Insurance Company (U.S.A.) Separate Account Q (the “Separate Account”). Each Subaccount invests in one of the following Portfolios that corresponds to a Variable Investment Option we make available on the date of this Prospectus. Certain Variable Investment Options may not be available under a Contract.

JOHN HANCOCK VARIABLE INSURANCE TRUST	JOHN HANCOCK VARIABLE INSURANCE TRUST	M FUND, INC. M Capital Appreciation Fund4
500 Index Trust B	Lifestyle Balanced MVP	M International Equity Fund4
Active Bond Trust	Mid Cap Index Trust	M Large Cap Growth Fund4
Blue Chip Growth Trust	Mid Cap Stock Trust	M Large Cap Value Fund4
Capital Appreciation Trust	Mid Value Trust
Core Bond Trust	Money Market Trust2
Equity Income Trust1	Real Estate Securities Trust
Financial Industries Trust	Short Term Government Income Trust
Fundamental All Cap Core Trust	Small Cap Growth Trust
Global Bond Trust	Small Cap Index Trust3
Health Sciences Trust	Small Cap Value Trust
High Yield Trust	Total Bond Market Trust B
International Equity Index Trust B	Total Stock Market Index Trust
International Value Trust

¹  Formerly Equity-Income Trust.

²  Successor to Money Market Trust B.

³  Not available for Contracts issued after April 30, 2003.

⁴  Available only for Contracts purchased through registered representatives affiliated with the M Financial Group. Subject to restrictions (see “IV. Basic Information – Allocation of Purchase Payments”).

Contracts are not deposits or obligations of, or insured, guaranteed or endorsed by any bank, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other agency. Please read this Prospectus carefully and keep it for future reference. It contains information about the Separate Accounts and the Variable Investment Options that you should know before investing. The Contracts have not been approved or disapproved by the Securities and Exchange Commission (“SEC”). Neither the SEC nor any state has determined whether this Prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) John Hancock Annuities Service Center
Overnight Mail Address 30 Dan Road – Suite 55444 Canton, MA 02021-2809 (800) 824-0335	Mailing Address P.O. Box 55444 Boston, MA 02205-5444 www.jhannuities.com

0516:RVAVIP Revolution Value 2016

Table of Contents

I. GLOSSARY	1
II. OVERVIEW	3
III. FEE TABLES	5
Examples	6
IV. BASIC INFORMATION	7
What is the Contract?	7
Who owns the Contract?	7
Is the Owner also the Annuitant?	7
How can I invest money in a Contract?	7
Purchase Payments	7
Initial Purchase Payment	7
Limits on Additional Purchase Payments	8
Ways to Make Additional Purchase Payments	8
Additional Purchase Payments by Wire	8
How will the value of my investment in the Contract change over time?	8
What annuity benefits does the Contract provide?	9
To what extent can John Hancock USA vary the terms and conditions of the Contracts?	9
What are the tax consequences of owning a Contract?	9
How can I change my Contract’s Investment Options?	10
Allocation of Purchase Payments	10
Transfers Among Investment Options	10
Procedure for Transfers among Investment Options	11
Telephone and Electronic Transactions	11
Dollar-Cost Averaging Programs	12
Special Transfer Services – Asset Rebalancing Program	13
What fees and charges are deducted from my Contract?	13
Asset-Based Charges	13
Annual Contract Fee	13
Premium Taxes	14
Withdrawal Charge	14
Other Charges	16
How can I withdraw money from my Contract?	16
Surrenders and Withdrawals	16
Signature Guarantee Requirements for Surrenders and Withdrawals	17
Waiver of Withdrawal Charge Rider	17
Systematic Withdrawal Plan	18
Telephone Withdrawals	18
What happens if the Owner or Annuitant dies before my Contract’s Maturity Date?	18
What other optional benefits may have been available when I purchased a Contract?	20
V. GENERAL INFORMATION ABOUT US, THE SEPARATE ACCOUNT AND THE PORTFOLIOS	22
The Company	22
The Separate Account	22
The Portfolios	23
VI. INFORMATION ABOUT FIXED INVESTMENT OPTIONS	28
In General	28
How the Fixed Investment Options Work	28
VII. THE ACCUMULATION PERIOD	30

Your Value in Our Variable Investment Options	30
Valuation of Accumulation Units	30
Variable Investment Option Valuation Procedures	30
Your Value in the Fixed Investment Options	30
VIII. THE ANNUITY PERIOD	31
Maturity Date	31
Choosing Fixed or Variable Annuity Payments	31
Variable Monthly Annuity Payments	32
Fixed Monthly Annuity Payments	32
Annuity Options	33
IX. FEDERAL TAX MATTERS	34
Introduction	34
Our Tax Status	34
Special Considerations for Optional Benefits	34
General Information Regarding Nonqualified Contracts	35
General Information Regarding Qualified Contracts	38
Traditional IRAs	39
Roth IRAs	41
Other Qualified Plans	42
See Your Own Tax Advisor	46
X. OTHER INFORMATION	47
Assignment; Change of Owner or Beneficiary	47
Beneficiary	47
Code Section 72(s)	47
Reports	48
Voting Privileges	48
Changes to the Separate Account	48
Variations in Charges or Rates for Eligible Classes	48
Distribution of Contracts	49
Transaction Confirmations	49
Statement of Additional Information	50
Financial Statements	50
APPENDIX A: Details About Our Fixed Investment Options	A-1
APPENDIX B: Example of Withdrawal Charge Calculation	B-1
APPENDIX C: Optional Enhanced Death Benefits	C-1
APPENDIX U: Accumulation Unit Value Tables	U-1

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I. Glossary

The following terms as used in this Prospectus have the indicated meanings. We also define other terms in specific sections of this Prospectus.

1940 Act: The Investment Company Act of 1940, as amended.

Accumulation Period: The period between the issue date of the Contract and its Maturity Date.

Additional Purchase Payment: Any Purchase Payment made after the initial Purchase Payment.

Annuitant: Any natural person or persons to whom annuity payments are made and whose life is used to determine the duration of annuity payments involving life contingencies. If the Contract Owner names more than one person as an Annuitant, the second person named is referred to as “co-Annuitant.” The Annuitant and co-Annuitant are referred to collectively as “Annuitant.” The Annuitant is as designated on the Contract specification page or in the application.

Annuities Service Center: The mailing address of our service office is listed on the first page of this Prospectus. You can send overnight mail to 30 Dan Road – Suite 55444, Canton, MA 02021-2809.

Annuity Option: The method selected by the Contract Owner (or as specified in the Contract if no selection is made) for annuity payments made by us.

Annuity Period: The period when we make annuity payments to you following the Maturity Date.

Annuity Unit: A unit of measure that is used after the election of an Annuity Option to calculate Variable Annuity payments.

Beneficiary: The person, persons or entity entitled to the death benefit under the Contract upon the death of a Contract Owner. The Beneficiary is as specified in the application, unless changed.

Business Day: Any day on which the New York Stock Exchange is open for business. The end of a Business Day is the close of daytime trading of the New York Stock Exchange, which generally is 4:00 p.m. Eastern Time.

Code: The Internal Revenue Code of 1986, as amended.

Company: John Hancock Life Insurance Company (U.S.A.).

Contract: The Variable Annuity contract described by this Prospectus.

Contract Anniversary: The day in each calendar year after the Contract Date that is the same month and day as the Contract Date.

Contract Date: The date of issue of the Contract.

Contract Value: The total of the Investment Account values attributable to the Contract.

Contract Year: A period of twelve consecutive months beginning on the date as of which the Contract was issued, or any anniversary of that date.

Fixed Annuity: An Annuity Option with payments for a set dollar amount that we guarantee.

Fixed Investment Option: An Investment Option in which a Company guarantees the principal value and the rate of interest credited to the Investment Account for the term of any guarantee period.

General Account: All of the Company’s assets other than assets in its Separate Account or any other separate account that it may maintain.

Good Order: The standard that we apply when we determine whether an instruction is satisfactory. An instruction will be considered in Good Order if it is received at our Annuities Service Center: (a) in a manner that is satisfactory to us such that it is sufficiently complete and clear that we do not need to exercise any discretion to follow such instruction and it complies with all relevant laws and

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regulations and Company requirements; (b) on specific forms, or by other means we then permit (such as via telephone or electronic submission); and/or (c) with any signatures and dates we may require. We will notify you if an instruction is not in Good Order.

Investment Account: An account we established for you which represents your interests in an Investment Option during the Accumulation Period.

Investment Options: The investment choices available to Contract Owners. We refer to the Variable Investment Options and the Fixed Investment Option together as Investment Options.

JHLICO: John Hancock Life Insurance Company.

John Hancock USA: John Hancock Life Insurance Company (U.S.A.).

Maturity Date: The date on which we begin to make annuity payments to the Annuitant. The Maturity Date is the date specified on the Contract specifications page, unless changed with our consent.

Nonqualified Contract: A Contract which was not issued under a Qualified Plan.

Owner or Contract Owner (“you”): The person, persons, co-Owners or entity entitled to all of the ownership rights under the Contract. The Owner has the legal right to make all changes in contractual designations where specifically permitted by the Contract. The Owner is as specified in the application, unless changed. We may refer to the Owner in this Prospectus as “you.”

Portfolio: A series of a registered open-end management investment company which corresponds to a Variable Investment Option.

Prospectus: This prospectus that describes interests in a Contract.

Purchase Payment: An amount you pay to us for the benefits provided by the Contract.

Qualified Contract: A Contract issued under a Qualified Plan.

Qualified Plan: A retirement plan that receives favorable tax treatment under section 401, 403, 408 (IRAs), 408A (Roth IRAs) or 457 of the Code.

Rider: An optional benefit that you may have elected for an additional charge.

Separate Account: John Hancock Life Insurance Company (U.S.A.) Separate Account Q. Each Separate Account is a segregated asset account of a Company that is not commingled with the general assets and obligations of the Company.

Spouse: Any person recognized as a “spouse” in the state where the couple was legally married. The term does not include a party to a registered domestic partnership, civil union, or other similar formal relationship recognized under state law that is not denominated as a marriage under that state’s law.

Subaccount: A separate division of the Separate Account.

Surrender Value: The total value of a Contract, after any market value adjustment, minus the annual Contract fee, any applicable premium tax, and any applicable Rider charges, and any withdrawal charges (if applicable). We will determine the amount surrendered or withdrawn as of the date we receive your request in proper form at the Annuities Service Center.

Unpaid Loan: The unpaid amount (including any accrued interest) of loans a Qualified Contract Owner may have taken from us, using certain Contract Value as collateral.

Variable Annuity: An Annuity Option with payments which: (1) are not predetermined or guaranteed as to dollar amount; and (2) vary in relation to the investment experience of one or more specified Subaccounts.

Variable Investment Option: An Investment Option corresponding to a Subaccount of the Separate Account that invests in shares of a specific Portfolio.

Withdrawal Amount: The total amount taken from your Contract Value, including any applicable withdrawal charge, tax, proportional share of administrative fee and market value adjustment, to process a withdrawal.

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II. Overview

This overview tells you some key points you should know about the Contract. Because this is an overview, it does not contain all the information that may be important to you. You should read carefully this entire Prospectus, including its Appendices and the Statement of Additional Information (the “SAI”) for more detailed information.

We disclose all material features and benefits of the Contracts in this Prospectus. Insurance laws and regulations apply to us in every state in which our Contracts were sold. As a result, some terms and conditions of your Contract may vary from the terms and conditions described in this Prospectus, depending upon where you purchased a Contract. These variations will be reflected in your Contract or in a Rider attached to your Contract. We disclose all material variations in this Prospectus.

The Contracts described in this Prospectus are no longer offered for sale; however, you may make Additional Purchase Payments as permitted under your Contract.

Prospectuses for Contracts often undergo certain changes in their terms from year to year to reflect changes in the Contracts. The changes include such things as the liberalization of benefits, the exercise of rights reserved under the Contract, the alteration of administrative procedures and changes in the Investment Options available. Any such change may or may not apply to Contracts issued prior to the effective date of the change. This Prospectus reflects the status of the product as of the date of this Prospectus. Therefore, this Prospectus may contain information that is inapplicable to your Contract. You should consult your Contract to verify whether any particular provision applies to you.

The Variable Investment Options shown on the first page of this Prospectus are those available as of the date of this Prospectus. There may be Variable Investment Options that are not available to you. We may add, modify or delete Variable Investment Options in the future.

When you select one or more of these Variable Investment Options, we invest your money in NAV shares of a corresponding Portfolio of John Hancock Variable Insurance Trust or in a corresponding Portfolio of M Fund, Inc. (we refer to the John Hancock Variable Insurance Trust and M Fund, Inc. as the “Series Portfolios.”) The Series Portfolios are so-called “series” type mutual funds registered with the SEC. The investment results of each Variable Investment Option you select will depend on those of the corresponding Portfolio of the Trust. Each of the Portfolios is separately managed and has its own investment objective and strategies. The Trust prospectus contains detailed information about each available Portfolio. Be sure to read that prospectus before selecting any of the Variable Investment Options.

Restrictions on the M Fund, Inc. Investment Options. You are not permitted to make new investments in the M Capital Appreciation Investment Option, M International Equity Investment Option, M Large Cap Growth Investment Option, or the M Large Cap Value Investment Option. Transfers of amounts from other Investment Options into these Investment Options also are not permitted. If you currently have Contract Value in the M Capital Appreciation Investment Option, M International Equity Investment Option, M Large Cap Growth Investment Option, or the M Large Cap Value Investment Option, you may continue to keep that Contract Value in those Investment Options, but any transfer or withdrawal from them cannot be replaced (for more information on transfer restrictions, please see “Transfers Among Investment Options”).

For amounts you do not wish to invest in a Variable Investment Option, you may be able to invest these amounts in a currently offered Fixed Investment Option if permitted by your Contract. We invest the assets allocated to a Fixed Investment Option in our General Account and they earn interest at a fixed rate, declared by us, subject to a minimum rate stated in your Contract. If you remove money from any Fixed Investment Option prior to its expiration, however, we may increase or decrease your Contract Value to compensate for changes in interest rates that may have occurred subsequent to the beginning of that Fixed Investment Option. This is known as a “market value adjustment.”

In addition to the transfer restrictions that we impose, the John Hancock Variable Insurance Trust and M Fund, Inc. also have adopted policies under Rule 22c-2 of the 1940 Act to detect and deter abusive short term trading. Accordingly, a Portfolio may require us to impose trading restrictions if it discovers violations of its frequent short-term trading policy. We will provide tax identification numbers and other Contract Owner transaction information to the John Hancock Variable Insurance Trust upon request, which it may use to identify any pattern or frequency of activity that violates its short-term trading policy.

We refer to the Variable Investment Options and any available Fixed Investment Option together as Investment Options.

The annuity described in this Prospectus may have been sold on a group basis. If you purchased the annuity under a group contract, you would have been issued a group certificate. If that is the case, the word “Contract” as used in this Prospectus should be interpreted as meaning the certificate issued to you under the group contract.

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Section 403(b) Plans. If you purchased this Contract for use in a retirement plan intended to qualify under section 403(b) of the Code (a “Section 403(b) Plan” or a “403(b) Plan”), we may restrict your ability to make Additional Purchase Payments unless: (i) we receive the Additional Purchase Payment for the Contract directly from the Section 403(b) Plan through your employer, the 403(b) Plan’s administrator, the 403(b) Plan’s sponsor or in the form of a transfer acceptable to us; (ii) we have entered into an agreement with your Section 403(b) Plan concerning the sharing of information related to your Contract (an “Information Sharing Agreement”); and (iii) unless contained in an Information Sharing Agreement, we have received a written determination by your employer, the 403(b) Plan administrator or the 403(b) Plan sponsor that the plan qualifies under section 403(b) of the Code and complies with applicable Treasury regulations (a “Certificate of Compliance”) (Information Sharing Agreement and Certificate of Compliance, together, the “Required Documentation”).

We may have accepted, rejected or modified any of the terms of a proposed Information Sharing Agreement presented to us, and we may not have entered into an Information Sharing Agreement with your Section 403(b) Plan.

For more information regarding Section 403(b) Plans, please see “IX. Federal Tax Matters – Qualified Plan Types,” or you may request a copy of the SAI from the Annuities Service Center.

The Contracts were not available in all states. Certain features of the Contracts, including optional benefit Riders, may not have been available or may have been modified for Contracts issued in various states. You should review your Contract, or contact the Annuities Service Center, for additional information. You should disregard all references in the Prospectus to benefits that are not available in your state.

This Prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, securities in any state to any person to whom it is unlawful to make or solicit an offer in that state.

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III. Fee Tables

The following tables describe the fees and expenses applicable to buying, owning and surrendering Contract. The first table describes the fees and expenses that you paid at the time that you bought the Contract as well as the fees and expenses you pay when you make Additional Purchase Payments under the Contract, surrender the Contract, or transfer Contract Value between Investment Options. State premium taxes may also be deducted.

Contract Owner Transaction Expenses1	Revolution Value
Withdrawal Charge (as % of amount withdrawn or surrendered)2	7% for the 1st year 6% for the 2nd year 5% for the 3rd year 4% for the 4th year 3% for the 5th year 2% for the 6th year 1% for the 7th year 0% thereafter
Maximum transfer charge3	$25

¹  State premium taxes may also apply to your Contract, which currently range from 0.04% to 4.00% of each Purchase Payment.

²  This charge is taken upon withdrawal or surrender within the specified period of years measured from the date of Purchase Payment.

³  This charge is not currently imposed, but we reserve the right to do so in the Contract. If we do, it will be taken upon each transfer into or out of any Investment Option beyond an annual limit of not less than 12.

The next table describes the fees and expenses that you pay periodically during the time you own the Contract. This table does not include fees and expenses paid at the Portfolio level.

	Revolution Value Variable Annuity
Maximum Annual Contract Fee1	$50
Current Annual Contract Fee2	$30
Separate Account Annual Expenses (as a percentage of Contract Value in the Variable Investment Options)3
Asset-Based Charge4	1.25%
Optional Benefit Rider Charges (as a percentage of your Contract’s total value unless otherwise stated)5
Accumulated Value Enhancement (“CARESolutions Plus”) Rider (as a percentage of your initial Purchase Payment)6	Maximum:   1.00%
	Current:     0.35%
Earnings Enhancement (“Beneficiary Tax Relief”) Death Benefit Rider	0.25%
Enhanced Death Benefit Rider7	0.25%
Guaranteed Retirement Income Benefit Rider8	0.30%
Waiver of Withdrawal Charge (“CARESolutions”) Rider9	0.10%

¹  This charge is not currently imposed, and would only apply to Revolution Value Contracts of less than $50,000.

²  This charge applies only to Revolution Value Variable Annuity Contracts of less than $50,000. It is taken at the end of each Contract Year but, if you surrender a Contract before then, it will be taken at the time of surrender.

³  We deduct from each of the Subaccounts a daily charge at an annual effective percentage of the Contract Value held in the Variable Investment Options. The charge does not apply to amounts in the Fixed Investment Options or in the guarantee rate account under our dollar-cost averaging value program.

⁴  This charge is assessed on all active Contracts, including Contracts continued by a Beneficiary upon the death of the Contract Owner.

⁵  Charges for optional benefit Riders are assessed monthly. The monthly charge is 1/12^th of the annual charge shown in the table.

⁶  This Rider was available only if you purchased the Waiver of Withdrawal Charge Rider as well. We do not currently impose the maximum charge shown, but reserve the right to increase the annual charge shown on a uniform basis for all Accumulated Value Enhancement Riders issued in the same state.

⁷  In certain states (and for Riders issued prior to May 1, 2002), the rate for the Enhanced Death Benefit Rider may be lower than the amount shown.

⁸  This Rider was not available for Contracts issued after April 30, 2004.

⁹  The charge is shown as a percentage of that portion of your Contract’s total value attributable to Purchase Payments that are still subject to withdrawal charges.

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The next table describes the minimum and maximum total operating expenses charged by the Portfolios that you may pay periodically during the time that you own the Contract. More detail concerning each Portfolio’s fees and expenses is contained in the Portfolio’s prospectus.

Total Annual Portfolio Operating Expenses (as a percentage of the Portfolio’s average net assets for the fiscal year ended December 31, 2015)	Minimum	Maximum
Range of expenses that are deducted from Portfolio assets, including management fees and other expenses	0.25%	1.12%

Examples

The following two examples are intended to help you compare the cost of investing in Contracts with the cost of investing in other variable annuity contracts. These costs include Contract Owner transaction expenses, Contract fees, Separate Account annual expenses and Portfolio fees and expenses.

The first example assumes that you invest $10,000 in a Contract with the following optional benefit Riders: Waiver of Withdrawal Charge Rider, Enhanced Death Benefit Rider, Earnings Enhancement Death Benefit Rider, Accumulated Value Enhancement Rider and Guaranteed Retirement Income Benefit Rider. The first example also assumes that your investment has a 5% return each year and assumes the maximum annual Contract fee and the maximum fees and expenses of any of the Portfolios. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

Revolution Value - maximum Portfolio-level total operating expenses

	1 Year	3 Years	5 Years	10 Years
If you surrender the Contract at the end of the applicable time period:	$1,061	$1,749	$2,447	$4,418
If you annuitize, or do not surrender the Contract at the end of the applicable time period:	$431	$1,300	$2,178	$4,418

The next example assumes that you invest $10,000 in a Contract with no optional benefit Riders. This example also assumes that your investment has a 5% return each year and assumes the average annual Contract fee we expect to receive for the Contracts and the minimum fees and expenses of any of the Portfolios. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

Revolution Value - minimum Portfolio-level total operating expenses

	1 Year	3 Years	5 Years	10 Years
If you surrender the Contract at the end of the applicable time period:	$784	$925	$1,092	$1,808
If you annuitize, or do not surrender the Contract at the end of the applicable time period:	$154	$479	$827	$1,808

A Table of Accumulation Unit Values relating to the Contract is included in Appendix U to this Prospectus.

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IV. Basic Information

What is the Contract?

The Contract is a deferred payment Variable Annuity contract. An “annuity contract” provides a person (known as the “Annuitant” or “payee”) with a series of periodic payments. Because this Contract is also a “deferred payment” contract, the annuity payments will begin on a future date, called the Contract’s Maturity Date. Under a “variable annuity” contract, the amount you have invested can increase or decrease in value daily based upon the value of the Variable Investment Options chosen. If your annuity was provided under a master group contract, the term “Contract” as used in this Prospectus refers to the certificate you were issued and not to the master group contract.

We measure the years and anniversaries of your Contract from its date of issue. We use the term Contract Year to refer to each period of time between anniversaries of your Contract’s date of issue.

Who owns the Contract?

Unless the Contract provides otherwise, the Owner of the Contract is the person who can exercise the rights under the Contract, such as the right to choose the Investment Options or the right to surrender the Contract. In many cases, the person who bought the Contract is the Owner. However, you are free to name another person or entity (such as a trust) as Owner. In writing this Prospectus, we’ve assumed that you, the reader, are the person or persons entitled to exercise the rights and obligations under discussion. If a Contract has joint Owners, both must join in any written notice or request.

Is the Owner also the Annuitant?

In many cases, the same person is both the Annuitant and the Owner of a Contract. The Annuitant is the person whose lifetime is used to measure the period of time when we make various forms of annuity payments. Also, the Annuitant receives payments from us under any Annuity Option that commences during the Annuitant’s lifetime. We may have permitted you to name another person as Annuitant if that person met our underwriting standards.

How can I invest money in a Contract?

Purchase Payments

We call the investments you make in your Contract Payments or Purchase Payments. The Contracts described in this Prospectus are no longer available for sale; however, the minimum initial Purchase Payment requirements for the Contracts are outlined in the table below, along with the minimum Purchase Payment for each Additional Purchase Payment into the Contracts. If you purchased your Contract through the automatic investment plan, different minimums may apply. If your Contract Value ever falls to zero, we may terminate it. Therefore, you may need to pay more Additional Purchase Payments to keep the Contract in force.

Minimum Initial Purchase Payment	Minimum Additional   Purchase Payment	Minimum Direct Deposit   Additional Purchase Payment
$5,000	$200	$100

Currently, we do not enforce these minimum Additional Purchase Payment amounts, but may do so in the future.

Initial Purchase Payment

When we received your initial Purchase Payment and all necessary information, we issued your Contract and invested your initial Purchase Payment. If the information was not in Good Order, we contacted you to get the necessary information. If for some reason, we were unable to complete this process within five (5) Business Days, we either sent back your money or received your permission to keep it until we received all of the necessary information.

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Limits on Additional Purchase Payments

You can make Additional Purchase Payments of up to $1,000,000 in any one Contract Year. The total of all new Purchase Payments and transfers that you may allocate to any one Variable Investment Option or Fixed Investment Option in any one Contract Year may not exceed $1 million. While the Annuitant is alive and the Contract is in force, you can make Purchase Payments at any time before the Maturity Date, until the age limit shown below:

If your Contract is used to fund	You may not make any Purchase Payments after the Annuitant reaches age
A Qualified Plan	70 1⁄21
A Non-Qualified Plan	85

¹ Except for a Roth IRA, which has an age limit of 85.

We may waive any of these limits on Purchase Payments.

Ways to Make Additional Purchase Payments

Additional Purchase Payments made by check must be:

• drawn on a U.S. bank;

• drawn in U.S. dollars; and

• made payable to “John Hancock” and sent to the Annuities Service Center.

We credit any Additional Purchase Payments to your Contract received by mail or wire transfer at the close of the Business Day in which we receive them in Good Order at the Annuities Service Center. Each Business Day ends at the close of daytime trading for the day on the New York Stock Exchange (usually 4:00 p.m. Eastern Time). If we receive an Additional Purchase Payment after the close of a Business Day, we credit it to your Contract on the next Business Day. We will promptly return any Additional Purchase Payment not in Good Order.

We will not accept credit card checks or money orders. Nor will we accept starter or third party checks that fail to meet our administrative requirements. Additional Purchase Payments should be sent to the Annuities Service Center at the address shown on the first page of this Prospectus. You can find information about other methods of making Purchase Payments by contacting us.

Additional Purchase Payments by Wire

You may transmit Additional Purchase Payments by wire through your bank to our bank, as long as you provide appropriate instructions with the transmittal to identify your Contract, and the selected Investment Options (unless you have provided us with standing allocation instructions). Information about our bank, our account number, and the ABA routing number may be obtained from the Annuities Service Center. Banks may charge a fee for wire services.

If your wire order is complete, we will invest the Additional Purchase Payment in your selected Investment Options as of the day we received the wire order. If the wire order is incomplete for an identified Contract, we will immediately return it.

How will the value of my investment in the Contract change over time?

Variable Investment Options

You may invest in any of the Variable Investment Options (subject to any restrictions). Each Variable Investment Option is a Subaccount of a Separate Account that invests in a corresponding Portfolio. The Portfolio prospectus contains a full description of a Portfolio. The amount you’ve invested in any Variable Investment Option will increase or decrease based upon the investment performance of the corresponding Portfolio (reduced by certain charges we deduct - see “III. Fee Tables”). Your Contract Value during the Accumulation Period and the amounts of annuity payments will depend upon the investment performance of the underlying Portfolios of the Variable Investment Options you select and/or upon the interest we credit on each Fixed Investment Option you select.

You bear the investment risk that your Contract Value will increase or decrease to reflect the investment results of the Contract’s investment Portfolios. Although a Portfolio may invest in other underlying portfolios, you will not have the ability to make those investment decisions. You (and your financial advisor) should carefully consider the features of other variable annuity contracts offered by us or by other life insurance companies, before submitting an Additional Purchase Payment if you would prefer a broader range of investment options.

Fixed Investment Options

The amount you’ve invested in a Fixed Investment Option will earn interest at the rate we have set for that Fixed Investment Option. The interest rate depends upon the length of the guarantee period of the Fixed Investment Option you select. In states where approved,

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we currently make available various Fixed Investment Options with durations of up to five years, and we may make one or more additional Fixed Investment Options available for Contracts issued before September 30, 2002. As long as you keep your money in a Fixed Investment Option until its expiration date, we bear all the investment risk on that money.

However, if you prematurely transfer, “surrender” or otherwise withdraw money from a Fixed Investment Option we will increase or reduce the remaining value in your Contract by an amount that approximates the impact that any changes in interest rates would have had on the market value of a debt instrument with terms comparable to that Fixed Investment Option. This “market value adjustment” (or “MVA”) imposes investment risks on you. We describe how the market value adjustments work in “Calculation of Market Value Adjustment (“MVA”).”

What annuity benefits does the Contract provide?

If your Contract is still in effect on its Maturity Date, it enters what is called the Annuity Period. During the Annuity Period, we make a series of fixed or variable payments to you as provided under one of our several Annuity Options. The form in which we will make the annuity payments, and the proportion of such payments that will be on a fixed basis and on a variable basis, depend on the elections that you have in effect on the Maturity Date. Therefore, you should exercise care in selecting your choices that are in effect on the Maturity Date.

You should carefully review the discussion under “VIII. The Annuity Period” for information about all of these choices you can make.

To what extent can John Hancock USA vary the terms and conditions of the Contracts?

State Insurance Law Requirements

Insurance laws and regulations apply to us in every state in which our Contracts were sold. As a result, a Contract purchased in one state may have terms and conditions that vary from the terms and conditions of a Contract purchased in a different jurisdiction. We disclose all material features and benefits of the Contracts in this Prospectus.

Variations in Charges or Rates

We may vary the charges, durations of Fixed Investment Options, rates and other terms of our Contracts where special circumstances resulted in sales or administrative expenses, mortality risks or other risks that are different from those normally associated with the Contracts. These include the types of variations discussed under the “Variations in Charges or Rates for Eligible Classes” section of this Prospectus.

What are the tax consequences of owning a Contract?

In most cases, no income tax will have to be paid on amounts you earn under a Contract until these earnings are paid out. All or part of the following distributions from a Contract may constitute a taxable payout of earnings:

• withdrawals (including surrenders and systematic withdrawals);

• payment of any death benefit proceeds;

• periodic payments under one of our annuity payment options;

• certain ownership changes; and

• any loan, assignment or pledge of the Contract as collateral.

How much you will be taxed on a distribution is based upon complex tax rules and depends on matters such as:

• the type of the distribution;

• when the distribution is made;

• the nature of any Qualified Plan for which the Contract is being used, if any; and

• the circumstances under which the payments are made.

If your Contract was issued in connection with a Qualified Plan, all or part of your Purchase Payments may be tax-deductible or excludible from income.

A 10% penalty tax applies in many cases to the taxable portion of any distributions taken from a Contract before you reach age 59 ¹⁄₂. Also, most Qualified Plans require that minimum distributions from a Contract commence and/or be completed within a certain period of time. This effectively limits the period of time during which you can continue to derive tax deferral benefits from any tax-deductible or tax-deferred Purchase Payments you paid or on any earnings under the Contract.

A Contract purchased as an investment vehicle for a Qualified Plan, including an IRA, does not provide any additional tax-deferral benefits beyond the treatment provided by the Qualified Plan. The favorable tax-deferral benefits available for Qualified Plans that invest in annuity contracts are also generally available if the Qualified Plans purchase other types of

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investments, such as mutual funds, equities and debt instruments. However, the Contract offers features and benefits that other investments may not offer, including the Investment Options and protection through living guarantees, death benefits and other benefits.

We provide additional information on taxes in the Federal Tax Matters section of this Prospectus. We make no attempt to provide more than general information about use of the Contract with the various types of retirement plans.

How can I change my Contract’s Investment Options?

Allocation of Purchase Payments

When you applied for your Contract, you specified the Variable Investment Options or Fixed Investment Options (together, your Investment Options) into which your Purchase Payments were allocated. You may change this investment allocation for future Investment Options to which your Purchase Payments will be allocated at any time (subject to restrictions described below). Any change in allocation will be effective as of the receipt of your request at the Annuities Service Center.

We do not impose a limit on the number of Investment Options to which you may allocate Purchase Payments at any one time during the Accumulation Period. For limits imposed during the Annuity Period, please see “Choosing Fixed or Variable Annuity Payments” in “VIII. The Annuity Period.”

Restrictions on the M Fund, Inc. Investment Options. You are not permitted to make new investments in the M Capital Appreciation Investment Option, M International Equity Investment Option, M Large Cap Growth Investment Option, or the M Large Cap Value Investment Option. Transfers of amounts from other Investment Options into these Investment Options also are not permitted. If you currently have Contract Value in the M Capital Appreciation Investment Option, M International Equity Investment Option, M Large Cap Growth Investment Option, or the M Large Cap Value Investment Option, you may continue to keep that Contract Value in those Investment Options, but any transfer or withdrawal from them cannot be replaced (for more information on transfer restrictions, please see the following section).

Transfers Among Investment Options

During the Accumulation Period, you may transfer amounts among the Investment Options, subject to the restrictions set forth below. To make a transfer, you must tell us how much to transfer, either as a whole number percentage or as a specific dollar amount. A confirmation of each transfer will be sent to you.

You may make a transfer by providing written notice to us, by telephone or by other electronic means that we may provide through the Internet (see “Telephone and Electronic Transactions,” below). We will cancel accumulation units from the Investment Account from which you transfer amounts and we will credit accumulation units to the Investment Account to which you transfer amounts. Your Contract Value on the date of the transfer will not be affected by a transfer. Although your Contract may impose restrictions on the maximum dollar amount that may be transferred among Variable Investment Options, we currently do not enforce these restrictions.

We do not impose a charge for transfer requests under your Contract.

Frequent Transfer Restrictions. Variable investment options in variable annuity and variable life insurance products can be a target for abusive transfer activity. To discourage disruptive frequent trading activity, we have adopted a policy for the Separate Account to restrict transfers you make to two per calendar month per Contract, with certain exceptions, and have established procedures to count the number of transfers made under a Contract.

Under the current procedures of the Separate Accounts, we count all transfers made during each Business Day as a single transfer. We do not count: (a) scheduled transfers made pursuant to any of our dollar-cost averaging programs, or our Asset Rebalancing program; (b) transfers from a Fixed Investment Option at the end of its fixed investment period; (c) transfers made within a prescribed period before and after a substitution of underlying Portfolios; and (d) transfers made during the Annuity Period (these transfers are subject to a 30-day notice requirement, however, as described below). Under the Separate Account’s policy and procedures, a Contract Owner may transfer Contract Value to the Money Market Investment Option even if the Contract Owner reaches the two-transfer-per-month limit, as long as 100% of the Contract Value in all Variable Investment Options is transferred to the Money Market Investment Option. If such a transfer to the Money Market Investment Option is made, for a 30- day period after such transfer a Contract Owner may not make any subsequent transfers from the Money Market Investment Option to another Variable Investment Option. We apply the Separate Account’s policy and procedures uniformly to all Contract Owners.

We reserve the right to take other actions to restrict trading, including, but not limited to:

• restricting the number of transfers made during a defined period;

• restricting the dollar amount of transfers;

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• restricting the method used to submit transfers (e.g., requiring transfer requests to be submitted in writing via U.S. mail); and

• restricting transfers into and out of certain Subaccount(s).

In addition, we reserve the right to defer a transfer at any time we are unable to purchase or redeem shares of the Portfolios. We also reserve the right to modify or terminate the transfer privilege at any time (to the extent permitted by applicable law), and to prohibit a transfer less than 30 days prior to the Contract’s Maturity Date, and to reimpose the annual limit of 12 transfers as stated in your Contract.

In addition to the transfer restrictions that we impose, the John Hancock Variable Insurance Trust and M Fund, Inc. also have adopted policies under Rule 22c-2 of the 1940 Act to detect and deter abusive short-term trading. Accordingly, a Portfolio may require us to impose trading restrictions if it discovers violations of its frequent short-term trading policy. We will provide tax identification numbers and other Contract Owner transaction information to John Hancock Variable Insurance Trust and M Fund, Inc. upon request, which they may use to identify any pattern or frequency of activity that violates its short-term trading policy.

Restrictions on the M Fund, Inc. Investment Options. You are not permitted to transfer Contract Values from other Investment Options into the M Capital Appreciation Investment Option, M International Equity Investment Option, M Large Cap Growth Investment Option, or the M Large Cap Value Investment Option. If you currently have Contract Value in the M Capital Appreciation Investment Option, M International Equity Investment Option, M Large Cap Growth Investment Option, or the M Large Cap Value Investment Option, you may continue to keep that Contract Value in those Investment Options, but any transfer or withdrawal from them cannot be replaced. However, if you are enrolled in an Asset Rebalancing Program that includes scheduled transfers of Contract Value into any of these Investment Options, then the program will continue to make those transfers (see “Special Transfer Services - Asset Rebalancing Program” in this section, below).

During the Annuity Period, you may not make any transfer that would result in more than four Investment Options being used at once. You must submit your transfer request to our Annuities Service Center at least 30 days before the due date of the first annuity payment to which your transfer will apply.

While we seek to identify and prevent disruptive frequent trading activity, it is not always possible to do so. Therefore, we cannot provide assurance that the restrictions we impose will be successful in restricting disruptive frequent trading activity and avoiding harm to long-term investors.

Procedure for Transfers among Investment Options

You may request a transfer in writing or, if you have authorized telephone transfers, by telephone. All transfer requests should be directed to the Annuities Service Center. Your request should include:

• your name;

• daytime telephone number;

• Contract number;

• the names of the Investment Options to and from which assets are being transferred;

• the amount of each transfer;

• your signature and date of the request.

Your request becomes effective at the close of the Business Day in which we receive it, in proper form at the Annuities Service Center. Each Business Day ends at the close of daytime trading for the day on the New York Stock Exchange (usually 4:00 p.m. Eastern Time). If we receive a transfer request, in proper form, after the close of a Business Day, it will become effective at the end of the next Business Day.

Telephone and Electronic Transactions

If you complete a special authorization form, we will permit you to request transfers and withdrawals by telephone. We additionally encourage you to access information about your Contract, request transfers and perform some transactions electronically through the Internet. If you have not done so, we encourage you to register for electronic delivery of your transaction confirmations. Please contact the John Hancock Annuities Service Center at the applicable telephone number or Internet address shown on the first page of this Prospectus for more information on electronic transactions.

To access information and perform electronic transactions through our website, we require you to create an account with a username and password, and to maintain a valid e-mail address. You may also authorize other people to make certain transaction requests by telephone by sending us instructions in a form acceptable to us. If you register for electronic delivery, we keep your personal information confidential and secure, and we do not share this information with outside marketing agencies.

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We will not be liable for following instructions communicated by telephone or electronically that we reasonably believe to be genuine. We employ reasonable procedures to confirm that instructions we receive are genuine. Our procedures require you to provide information to verify your identity when you call us and we record all conversations with you. When someone contacts us by telephone and follows our procedures, we assume that you are authorizing us to act upon those instructions. For electronic transactions through the Internet, you will need to provide your username and password. You are responsible for keeping your password confidential and must notify us of:

• any loss or theft of your password; or

• any unauthorized use of your password.

We may be liable for any losses due to unauthorized or fraudulent instructions only where we fail to employ our procedures properly.

All transaction instructions we receive by telephone or electronically will be followed by either a hardcopy or electronic delivery of a transaction confirmation. Transaction instructions we receive by telephone or electronically before the close of any Business Day are usually effective at the end of that day. Your ability to access or transact business electronically may be limited due to circumstances beyond our control, such as system outages, or during periods when our telephone lines or our website may be busy. We may, for example, experience unusual volume during periods of substantial market change.

We may suspend, modify or terminate our telephone or electronic transaction procedures at any time. We may, for example, impose limits on the maximum Withdrawal Amount available to you through a telephone transaction. Also, as stated earlier in this Prospectus, we have imposed restrictions on transfers and reserve the right to take other actions to restrict trading, including the right to restrict the method used to submit transfers (e.g., by requiring transfer requests to be submitted in writing via U.S. mail). We also reserve the right to suspend or terminate the transfer privilege altogether with respect to anyone who we feel is abusing the privilege to the detriment of others.

Dollar-Cost Averaging Programs

Under our standard dollar-cost averaging program, you may elect, at no cost, to automatically transfer assets from any Variable Investment Option to one or more other Variable Investment Options on a monthly, quarterly, semiannual, or annual basis before annuity payments start. The following conditions apply to the standard dollar-cost averaging program:

• you may change your Variable Investment Option allocation instructions at any time in writing or, if you have authorized telephone transfers, by telephone;

• you may discontinue the program at any time;

• the program automatically terminates when the Variable Investment Option from which we are taking the transfers has been exhausted;

• automatic transfers to or from Fixed Investment Options are not permitted under this program; and

• the program will automatically terminate after the Maturity Date when payments from one of our Annuity Options begin.

We reserve the right to suspend, modify or terminate the program at any time.

Under our dollar-cost averaging value program, you may elect to deposit any new Purchase Payment of $5,000 or more in a guarantee rate account that we call the “DCA rate account.” For Contracts issued after April 30, 2004, your deposits under this program will be depleted over a 6 month period. For Contracts issued prior to May 1, 2004, the assets in this account attributable to a new Purchase Payment will be transferred automatically to one or more Variable Investment Options over a period that is equal in length (i.e., either 6 months or 12 months) to the period you initially selected. A new period will begin on the date each new Purchase Payment is deposited in the DCA rate account program with respect to that Purchase Payment. At the time of each deposit into this program, you must tell us in writing:

• that your deposit should be allocated to this program;

• the Variable Investment Options to which assets will be transferred; and

• the percentage amount to be transferred to each such Variable Investment Option.

Transfers to Fixed Investment Options are not permitted under this program, and transfers of your account value from a Variable Investment Option are not currently permitted to initiate the program. (You may, however, change your variable investment allocation instructions at any time in writing or, if you have authorized telephone transfers, by telephone.)

Your participation in the dollar-cost averaging value program will end if you request a withdrawal from the DCA rate account, or if you request a transfer from the DCA rate account that is in addition to the automatic transfers.

You may not use the standard dollar-cost averaging program and the dollar-cost averaging value program at the same time.

The dollar-cost averaging programs allow investments to be made in equal installments over time in an effort to reduce the risk posed

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by market fluctuations. Therefore, you may achieve a lower purchase price over the long-term by purchasing more accumulation units of a particular Subaccount when the unit value is low, and less when the unit value is high. However, the dollar-cost averaging programs do not guarantee profits or prevent losses in a declining market and require regular investment regardless of fluctuating price levels. In addition, the dollar-cost averaging programs do not protect you from market fluctuations in the Variable Investment Option from which we are taking the transfers. If you are interested in either dollar-cost averaging program, you may obtain an authorization form and full information concerning the program and its restrictions from your financial advisor or our Annuities Service Center. You may elect out of the dollar-cost averaging programs at any time.

You should consult with your financial advisor to assist you in determining whether a dollar-cost averaging program is suited for your financial needs and investment risk tolerance.

Special Transfer Services – Asset Rebalancing Program

We administer an Asset Rebalancing program which enables you to specify the allocation percentage levels you would like to maintain in particular Investment Options. We automatically rebalance your Contract Value pursuant to the schedule described below to maintain the indicated percentages by transfers among the Variable Investment Options. (Fixed Investment Options are not eligible for participation in the Asset Rebalancing program.) You must include all Contract Value in your Variable Investment Options in the Asset Rebalancing program. Other investment programs, such as the dollar-cost averaging program, or other transfers or withdrawals may not work in concert with the Asset Rebalancing program. Therefore, you should monitor your use of these other programs and any other transfers or withdrawals while the Asset Rebalancing program is being used. If you are interested in the Asset Rebalancing program, you may obtain a separate authorization form and full information concerning the program and its restrictions from your financial advisor or our Annuities Service Center. There is no charge for participation in the Asset Rebalancing program.

We permit asset rebalancing only on the following time schedules:

• quarterly on the 25th day of the last month of the calendar quarter (or the next Business Day if the 25th is not a Business Day);

• semi-annually on June 25th and December 26th (or the next Business Day if these dates are not Business Days); or

• annually on December 26th (or the next Business Day if December  26th is not a Business Day).

What fees and charges are deducted from my Contract?

We assess charges and deductions under the Contract against Purchase Payments, Contract Values or withdrawals. Currently, there are no deductions made from Purchase Payments. In addition, there are deductions from and expenses paid out of the assets of the Portfolios that are described in the Portfolios’ prospectuses.

Asset-Based Charges

We deduct asset-based charges daily to compensate us primarily for our administrative and distribution expenses, and for the mortality and expense risks that we assume under the Contracts. The total Separate Account annual expenses are 1.25% as a percentage of average account value. This charge does not apply to assets you have in our Fixed Investment Options. We take the deduction proportionally from each Variable Investment Option you are then using.

In return for the mortality risk charge, we assume the risk that Annuitants as a class will live longer than expected, requiring us to pay a greater number of annuity payments. In return for the expense risk charge, we assume the risk that our expenses relating to the Contracts may be higher than we expected when we set the level of the Contracts’ other fees and charges, or that our revenues from such other sources will be less than expected. We deduct the asset-based administrative services charge daily for administrative and clerical services that the Contracts require us to provide. The rate of the mortality and expense risks and administrative services charges cannot be increased. The charge is assessed on all active Contracts, including Contracts continued by a Beneficiary upon the death of the Contract Owner or continued under any Annuity Option payable on a variable basis. If the charge is insufficient to cover the actual cost of the mortality and expense risks assumed, we will bear the loss. Conversely, if the charge proves more than sufficient, the excess will be profit to us and will be available for any proper corporate purpose including, among other things, payment of distribution expenses. In cases where no death proceeds are payable (e.g., for Contracts continued by a Beneficiary upon the death of the Owner), or under the Period Certain Only Annuity Option, if you elect benefits payable on a variable basis, we continue to assess the Contractual mortality and expense risks charge, although we bear only the expense risk and not any mortality risk.

Annual Contract Fee

We deduct a $30 annual Contract fee from Contracts of less than $50,000. We deduct this charge at end of each Contract Year. We also deduct it if you surrender your Contract, unless your Contract’s total value, at the time of surrender, is above $50,000.

We take the deduction proportionally from each Variable Investment Option and each Fixed Investment Option you are then using. We reserve the right to increase the annual Contract fee up to $50.

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Premium Taxes

We make deductions for any applicable premium or similar taxes. Currently, certain local jurisdictions assess a tax of up to 4% of each Purchase Payment.

In most cases, and subject to applicable state law, we deduct a charge in the amount of the tax from the total value of the Contract only at the time of annuitization, death, surrender, or withdrawal. We reserve the right, however, to deduct the charge from each Purchase Payment at the time it is made. We compute the amount of the charge by multiplying the applicable premium tax percentage by the amount you are withdrawing, surrendering, annuitizing or applying to a death benefit.

	Premium Tax Rate1
State or Territory	Qualified Contracts	Nonqualified Contracts
CA	0.50%	2.35%
GUAM	4.00%	4.00%
ME2	0.00%	2.00%
NV	0.00%	3.50%
PR	1.00%	1.00%
SD2	0.00%	1.25%3
TX4	0.04%	0.04%
WV	1.00%	1.00%
WY	0.00%	1.00%

¹  Based on the state of residence at the time the tax is assessed.

²  We pay premium tax upon receipt of Purchase Payment.

³  0.08% on Purchase Payments in excess of $500,000.

⁴  Referred to as a “maintenance fee.”

Withdrawal Charge

If you withdraw some of your Purchase Payments from your Contract prior to the Maturity Date or if you surrender (turn in) your Contract, in its entirety, for cash prior to the Maturity Date, we may assess a withdrawal charge. Some people refer to this charge as a “contingent deferred withdrawal load.” We use this charge to help defray expenses relating to the sales of the Contracts, including commissions paid and other distribution costs.

Here’s how we determine the charge: In any Contract Year after the first, you may withdraw, free of charge, up to 10% of the difference between:

• the Purchase Payments made prior to the beginning of the Contract Year; and

• any withdrawals made prior to the beginning of the Contract Year.

We refer to this amount as the free Withdrawal Amount. However, if the amount you withdraw or surrender totals more than the free Withdrawal Amount during the Contract Year, we will assess a withdrawal charge on any amount of the excess that we attribute to Purchase Payments you made within seven years of the date of the withdrawal or surrender.

The withdrawal charge percentage depends upon the number of years that have elapsed from the date you paid the Purchase Payment to the date of its withdrawal, as follows:

Withdrawal Charge

(as percentage amount withdrawn or surrenders) ¹

First Year	7	%
Second Year	6	%
Third Year	5	%
Fourth Year	4	%
Fifth Year	3	%
Sixth Year	2	%
Seventh Year	1	%
Thereafter	0	%

¹This charge is taken upon withdrawal or surrender within the specified period of years measured from the date of Purchase Payment. We calculate the amount of the withdrawal charge by multiplying the amount of the Purchase Payment being liquidated by the applicable withdrawal charge percentage shown above. The total withdrawal charge will be the sum of the withdrawal charges for the Purchase Payments being liquidated.

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Withdrawal charges help to compensate us for the cost of selling the Contracts. The amount of the charges in any Contract Year does not specifically correspond to sales expenses for that year. We expect to recover our total sales expenses over the life of the Contracts. To the extent that the withdrawal charges do not cover total sales expenses, the sales expenses may be recovered from other sources, including gains from the asset-based risk charge and other gains with respect to the Contracts or from our general assets. Similarly, administrative expenses not fully recovered by the administration fee may also be recovered from such other sources.

Free withdrawal amounts: If you have any earnings in your Contract, you can always withdraw those earnings without any withdrawal charge. By “earnings,” we mean the amount by which your Contract’s total value exceeds the Purchase Payments you have paid and have not (as discussed below) already withdrawn. If your Contract doesn’t have any earnings (or you have withdrawn it all) you can still make charge free withdrawals, unless and until all of your withdrawals during the same Contract Year exceed 10% of all of the Purchase Payments you have paid to date.

Here’s how we determine and deduct the charge: If the amount you withdraw or surrender totals more than the free Withdrawal Amount during the Contract Year, we will assess a withdrawal charge shown in the Fee Tables on any amount of the excess that we attribute to Purchase Payments you made within seven years of the date of the withdrawal or surrender.

The withdrawal charge percentage depends upon the number of years that have elapsed from the date you paid the Purchase Payment to the date of its withdrawal, as follows:

Solely for purposes of determining the amount of the withdrawal charge, we assume that the amount of each withdrawal that exceeds the free Withdrawal Amount (together with any associated withdrawal charge) is a withdrawal first from the earliest Purchase Payment, and then from the next earliest Purchase Payment, and so forth until all payments have been exhausted. Once a Purchase Payment has been considered to have been “withdrawn” under these procedures, that Purchase Payment will not enter into any future withdrawal charge calculations.

We deduct the withdrawal charge proportionally from each Variable Investment Option and each Fixed Investment Option being reduced by the surrender or withdrawal. For example, if 60% of the Withdrawal Amount comes from Investment Option “A” and 40% from Investment Option “B,” then we deduct 60% of the withdrawal charge from Investment Option “A” and 40% from Investment Option “B.” If any such option has insufficient remaining value to cover the charge, we deduct any shortfall from all of your other Investment Options, pro rata based on the value in each. If your Contract as a whole has insufficient Surrender Value to pay the entire charge, we pay you no more than the Surrender Value.

You will find examples of how we compute the withdrawal charge in Appendix B to this Prospectus.

When withdrawal charges don’t apply: We don’t assess a withdrawal charge in the following situations:

• on amounts applied to an Annuity Option at the Contract’s Maturity Date or to pay a death benefit;

• on certain withdrawals if you have elected a Rider that waives the withdrawal charge; or

• on amounts withdrawn to satisfy the minimum distribution requirements for Qualified Plans, with respect to this Contract only. (Amounts above the minimum distribution requirements are subject to any applicable withdrawal charge, however.)

How an MVA affects the withdrawal charge: If you make a withdrawal from a Fixed Investment Option at a time when the related MVA results in an upward adjustment in your remaining value, we calculate the withdrawal charge as if you had withdrawn that much more. Similarly, if the MVA results in a downward adjustment, we compute any withdrawal charge as if you had withdrawn that much less.

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Other Charges

If you purchased an optional benefit Rider, we deduct the applicable charges for that benefit proportionally from each of your Investment Options, including the Fixed Investment Options, based on your value in each. We list these charges below:

Optional Benefit Rider Charges (as a percentage of your Contract’s total value unless otherwise stated)1
Accumulated Value Enhancement (“CARESolutions Plus”) Rider (as a percentage of your initial Purchase Payment)2	Maximum:   1.00% Current:        0.35%
Earnings Enhancement (“Beneficiary Tax Relief”) Death Benefit Rider	0.25%
Enhanced Death Benefit Rider3	0.25%
Guaranteed Retirement Income Benefit Rider4	0.30%
Waiver of Withdrawal Charge (“CARESolutions”) Rider5	0.10%

¹  Charges for optional benefit Riders are assessed monthly. The monthly charge is 1/12th of the annual charge shown in the table.

²  This Rider was available only if you purchased the Waiver of Withdrawal Charge Rider as well. We do not currently impose the maximum charge shown, but reserve the right to increase the annual charge shown on a uniform basis for all Accumulated Value Enhancement Riders issued in the same state.

³  In certain states (and for Riders issued prior to May 1, 2002), the rate for the Enhanced Death Benefit Rider may be lower than the amount shown.

⁴  This Rider was not available for Contracts issued after April 30, 2004.

⁵  The charge is shown as a percentage of that portion of your Contract’s total value attributable to Purchase Payments that are still subject to withdrawal charges.

How can I withdraw money from my Contract?

Surrenders and Withdrawals

Prior to your Contract’s Maturity Date, if the Annuitant is living, you may:

• surrender your Contract for a cash payment of its “Surrender Value”; or

• make a withdrawal of a portion of your Surrender Value.

The Surrender Value of a Contract is the Contract Value minus the annual Contract fee and any applicable premium tax. We determine the amount surrendered or withdrawn as of the date we receive your request in Good Order at the Annuities Service Center. Certain surrenders and withdrawals may result in taxable income to you or other tax consequences as described under “IX. Federal Tax Matters.” Among other things, if you make a full surrender or withdrawal from your Contract before you reach age 59 ¹⁄₂, a 10% penalty tax (in addition to any income tax due) generally applies to any taxable portion of the withdrawal.

We deduct any withdrawal proportionally from each of your Investment Options based on the value in each, unless you direct otherwise.

We reserve the right to terminate your Contract if the value of your Contract becomes zero. You generally may not make any surrenders or withdrawals once we begin making payments under an Annuity Option. Your Contract also provides that, without our prior approval, you may not make a withdrawal for less than $100, or if the remaining total value of your Contract would be less than $1,000. We are not currently enforcing this limitation, but may do so in the future.

Your request to surrender your Contract or to make a withdrawal becomes effective at the close of the Business Day in which we receive it in Good Order at the Annuities Service Center. Each Business Day ends at the close of daytime trading for the day on the New York Stock Exchange (usually 4:00 p.m. Eastern Time). If we receive a request, in Good Order, after the close of a Business Day, it will become effective at the end of the next Business Day.

We do not permit you to apply any amount less than your entire Contract Value to the Annuity Options available under your Contract. If you want to use a part of your Contract Value to purchase an immediate annuity contract, you must make a withdrawal request, which is subject to any applicable withdrawal charge. Such a withdrawal may also have tax consequences.

When we receive a withdrawal request in Good Order at our Annuities Service Center, we will pay the amount of the withdrawal from the Variable Investment Options promptly, and in any event within seven days of receipt of the request. We reserve the right to defer the right of withdrawal or postpone payments for any period when:

• the New York Stock Exchange is closed (other than customary weekend and holiday closings);

• trading on the New York Stock Exchange is restricted;

• an emergency exists as determined by the SEC, as a result of which disposal of securities held in the Separate Account is not reasonably practicable or it is not reasonably practicable to determine the value of the Separate Account’s net assets;

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• pursuant to SEC rules, the Money Market Subaccount suspends payment of redemption proceeds in connection with a liquidation of the underlying Portfolio; or

• the SEC, by order, so permits for the protection of security holders.

Applicable rules and regulations of the SEC shall govern as to whether trading is restricted or an emergency exists.

Impact of Divorce. In the event that you and your Spouse become divorced, we will treat any request to reduce or divide benefits under a Contract as a request for a withdrawal of Contract Value. The transaction may be subject to any applicable tax or withdrawal charge. We will permit you to continue the existing Rider under the existing Contract, subject to any Rider restrictions on changes of Owner or Annuitant.

Tax Considerations. Withdrawals from the Contract may be subject to income tax and a 10% penalty tax (see “IX. Federal Tax Matters”). Withdrawals are permitted from Contracts issued in connection with Section 403(b) Plans only under limited circumstances (see “IX. Federal Tax Matters – Other Qualified Plans”).

We deduct any withdrawal proportionally from each of your Investment Options based on the value in each, unless you direct otherwise. When you take a withdrawal, we deduct any applicable withdrawal charge as a percentage of the total amount withdrawn. We take any applicable withdrawal charge from the amount remaining in a Contract after we process the amount you request.

Signature Guarantee Requirements for Surrenders and Withdrawals

(Not applicable to Contracts issued in New Jersey)

We may require that you provide a signature guarantee on a surrender or withdrawal request in the following circumstances:

• you are requesting that we mail the amount withdrawn to an alternate address; or

• you have changed your address within 30 days of the withdrawal request; or

• you are requesting a withdrawal in the amount of $250,000 or greater.

We must receive the original signature guarantee on your withdrawal request. We do not accept copies or faxes of a signature guarantee. You may obtain a signature guarantee at most banks, financial institutions or credit unions. A notarized signature is not the same as a signature guarantee and does not satisfy this requirement. There may be circumstances, of which we are not presently aware, in which we would not impose a signature guarantee on a surrender or withdrawal as described above.

Waiver of Withdrawal Charge Rider

You may have purchased an optional waiver of withdrawal charge Rider when you applied for your Contract, as permitted by state law. The “covered persons” under the Rider are the Owner and the Owner’s Spouse, unless the Owner is a trust. If the Owner is a trust, the “covered persons” are the Annuitant and the Annuitant’s Spouse.

Under this Rider, we waive withdrawal charges on any withdrawals, if all the following conditions apply to a “covered person”:

• a covered person becomes confined to a nursing home beginning at least 30 days after we issued your Contract;

• such covered person remains in the nursing home for at least 90 consecutive days receiving nursing care; and

• the covered person’s confinement is prescribed by a doctor and medically necessary because of a covered physical or mental impairment.

In addition, depending on your state, the Rider may also provide for a waiver of withdrawal charges if a covered person has been diagnosed with a chronic, critical or terminal illness to the extent so provided in the Rider. In FL, the Rider does not provide a waiver of withdrawal charges if a covered person has been diagnosed with a critical illness. The waiver of withdrawal charge Rider in FL does provide benefits if a covered person satisfies the three conditions listed above, subject to the terms and conditions of this benefit.

At the time of application, you could not purchase this Rider: (1) if either of the covered persons was older than 74 years (79 for Contracts issued in NY) or (2) in most states, if either of the covered persons was confined to a nursing home within the two years preceding your application.

There is a charge for this Rider, as set forth in the Fee Tables. This Rider (and the related charges) will terminate on the Contract’s Maturity Date, upon your surrendering the Contract, or upon your written request that we terminate it.

If you purchased this Rider, you and your immediate family may have had access to a national program of eldercare services, including access to a list of long-term care providers who provide special discounts. This benefit is no longer available with the Rider.

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You should carefully review the tax considerations for optional benefit Riders under “IX. Federal Tax Matters.” For a more complete description of the terms and conditions of this benefit, you should refer directly to the Rider. We will provide you with a copy on request. In certain marketing materials, this Rider may be referred to as “CARESolutions.”

There are or may be situations other than those described above or elsewhere in the Prospectus (e.g., “Variations in Charges or Rates for Eligible Classes”), that merit waiver of withdrawal charges, which we may consider on a case-by-case basis.

Systematic Withdrawal Plan

Our optional systematic withdrawal plan enables you to preauthorize periodic withdrawals. If you elect this plan, we withdraw a percentage or dollar amount from your Contract on a monthly, quarterly, semiannual, or annual basis, based upon your instructions. Unless otherwise directed, we deduct the requested amount from each applicable Investment Option in the ratio that the value of each bears to the Contract Value. Each systematic withdrawal is subject to any market value adjustment or withdrawal charge that would apply to an otherwise comparable non-systematic withdrawal. See “How will the value of my investment in the Contract change over time?” and “What fees and charges are deducted from my Contract?” The same tax consequences that apply to other withdrawals also generally apply.

You may cancel the systematic withdrawal plan at any time.

We reserve the right to modify the terms or conditions of the plan at any time without prior notice.

Telephone Withdrawals

If you complete a separate authorization form, you may make requests to withdraw a portion of your Contract Value by telephone. We reserve the right to impose a maximum Withdrawal Amount and procedural requirements regarding this privilege. For additional information regarding telephone procedures, see “IV. Basic Information – Telephone and Electronic Transactions.”

What happens if the Owner or Annuitant dies before my Contract’s Maturity Date?

Death Benefits – In General

The Contracts described in this Prospectus generally provide for distribution of death benefits if you die before a Contract’s Maturity Date. The minimum death benefits provided under the Contracts differ, depending on when you purchased a Contract, our maximum limits on death benefits at that time, the jurisdiction in which we issued a Contract, and the age of the oldest Owner (or Annuitant) on the date of issue. We may pay death benefits in some cases on the Annuitant’s death, instead of the Owner’s death, if the Annuitant predeceases the Owner. In addition, you may have purchased a Contract with an optional death benefit Rider that will enhance the amount of death benefit. You should read your Contract carefully to determine the minimum death benefit and any enhanced death benefit payable during the Accumulation Period.

Distribution Requirements Following Death of Owner

If you did not purchase your Contract under a Qualified Plan, the Code requires that the following distribution provisions apply if you die. We summarize these provisions below. If your Contract has joint Owners, these provisions apply upon the death of the first to die.

If you die before annuity payments have begun:

• If the Contract’s designated Beneficiary is your surviving Spouse, your Spouse may continue the Contract as the new Owner without triggering adverse federal tax consequences. In that case:

^¡  we will not pay a death benefit but your Contract Value will equal the death benefit that would have been payable, including amounts payable under any optional benefit Riders; and

^¡  under the Contracts, any additional amount that we credit to your Contract will be allocated to the Investment Options in the same ratio as the investment allocations held at the time of death and will not be subject to any future surrender or withdrawal charges. If your Spouse makes any Additional Purchase Payments (and if there are any unliquidated Purchase Payments at the time of your death), however, they will be subject to future surrender or withdrawal charges as provided in your Contract.

• If the Beneficiary is not your surviving Spouse or if the Beneficiary is your surviving Spouse but chooses not to continue the Contract, the “entire interest” (as discussed below) in a Contract on the date of your death must be:

^¡  paid out in full within five years of your death; or

^¡  where the Beneficiary is an individual, applied in full towards the purchase of a life annuity on the Beneficiary, or for a similar benefit payable over a period not extending beyond the life expectancy of the Beneficiary, with payments commencing within one year of your death.

Your “entire interest” in a Contract, as issued in most states, equals the standard death benefit (or any enhanced death benefit) for the Contract on the date of your death. If an Earnings Enhancement Death Benefit Rider is then in force, the “entire interest” in most

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states will also include any earnings enhancement death benefit amount that may then be payable. If you are the Owner of a Contract issued in certain states (such as IL or MN), but not the last surviving Annuitant, the “entire interest” equals:

• the Surrender Value if paid out in full within five years of your death; or

• where the Beneficiary is an individual, your Contract Value applied in full towards the purchase of a life annuity on the Beneficiary, or for a similar benefit payable over a period not extending beyond the life expectancy of the Beneficiary, with payments commencing within one year of your death.

You should review your Contract carefully to determine the “entire interest” that will be distributed upon an Owner’s death.

If you die on or after annuity payments have begun, any remaining amount that we owe must be paid out at least as rapidly as under the method of making annuity payments that is then in use.

The Code imposes very similar distribution requirements on Contracts used to fund Qualified Plans. We provide the required provisions for Qualified Plans in separate disclosures and endorsements.

Notice of the death of an Owner or Annuitant should be furnished promptly to the John Hancock Annuities Service Center.

Death benefits following death of Annuitant. Our payment of the “standard” death benefit, and any enhanced death benefits, depends on the form of ownership and whether there is one Annuitant or joint Annuitants:

• If your Contract is owned by a single natural person and has a single Annuitant, the death benefit is payable on the earlier of the Owner’s death and the Annuitant’s death.

• If your Contract is owned by a single natural person and has joint Annuitants, the death benefit is payable on the earliest of the Owner’s death (whether or not the Owner is also an Annuitant) and the last Annuitant’s death.

• If your Contract is owned by joint Owners and has a single Annuitant, the death benefit is payable on the earliest of the first Owner’s death (whether or not the Owner is also an Annuitant) and the Annuitant’s death.

• If your Contract is owned by joint Owners and has joint Annuitants, the death benefit is payable on the earliest of the first Owner’s death (whether or not the Owner is also an Annuitant) and the last Annuitant’s death.

In certain states, such as IL and MN, the death benefit under the Contracts is payable only upon an Annuitant’s death. You should review your Contract carefully to determine when a “standard” death benefit is payable.

We continue to assess the asset-based charges during this period, even though we bear only the expense risk and not any mortality risk (see “IV. Basic Information – What fees and charges are deducted from my Contract? – Asset-Based Charges”).

If your Contract has joint Owners, each Owner will automatically be deemed to be the Beneficiary of the other. This means that any death benefit payable upon the death of one Owner will be paid to the other Owner. In that case, any other Beneficiary you have named would receive the death benefit only if neither joint Owner remains alive at the time the death benefit becomes payable.

Standard death benefit. The standard death benefit under the Contracts is the greater of:

• your Contract Value, adjusted by any then-applicable market value adjustment; or

• the total amount of Purchase Payments made, minus any withdrawals and related withdrawal charges.

Enhanced Death Benefit Riders. We offered several optional death benefit Riders under the Contracts that, depending on state availability and our underwriting rules, were available to you at the time you purchased your Contract. For an extra fee, these optional death benefit Riders could enhance the standard death benefit payable under your Contract, subject to the terms and limitations contained in the Rider.

We offered an “Enhanced” Death Benefit Rider if each Owner and each Annuitant was under age 80 at the time of purchase. We also offered an “Earnings Enhancement” Death Benefit Rider to if each Owner and each Annuitant was under age 75 at the time of purchase. The “Earnings Enhancement” Death Benefit Rider was not available, however, to Contracts issued in connection with Qualified Plans. We provide a general description of each of these Riders in Appendix C to this Prospectus.

Calculation and Payment of Death Benefit Value.

We calculate the death benefit value as of the day we receive in Good Order at the Annuities Service Center:

• proof of death before the Contract’s date of maturity; and

• any required instructions as to method of settlement.

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We will generally pay the death benefit in a “lump sum” under our current administrative procedures to the Beneficiary you chose, unless:

• the death benefit is payable because of the Owner’s death, the designated Beneficiary is the Owner’s Spouse, and he or she elects to continue the Contract in force; or

• an optional method of settlement is in effect. If you have not elected an optional method of settlement, the Beneficiary may do so. However, if the death benefit is less than the minimum stated in your Contract (in most states, $5,000), we will pay it in a lump sum, regardless of any election. You can find more information about optional methods of settlement under “Annuity Options.”

We will pay the death benefit within seven calendar days of the date that we determine the amount of the death benefit, subject to postponement under the same circumstances for which payment of withdrawals may be postponed (see “IV. Basic Information – How can I withdraw money from my Contract?”). Beneficiaries who opt for a lump sum payout of their portion of the death benefit may choose to receive the funds either in a single check or wire transfer or in a John Hancock Safe Access Account (“JHSAA”). Similar to a checking account, the JHSAA provides the Beneficiary access to the payout funds via a checkbook, and account funds earn interest at a variable interest rate. Any interest paid may be taxable. The Beneficiary can obtain the remaining death benefit proceeds in a single sum at any time by cashing one check for the entire amount. Note, however, that a JHSAA is not a true checking account, but is solely a means of distributing the death benefit. The Beneficiary can make only withdrawals, and not deposits. The JHSAA is part of our General Account; it is not a bank account and it is not insured by the FDIC or any other government agency. As part of our General Account, it is subject to the claims of our creditors. We receive a benefit from all amounts left in the JHSAA.

You can find more information about optional methods of settlement under “Annuity Options.”

What other optional benefits may have been available when I purchased a Contract?

Accumulated Value Enhancement Benefit

If you elected this benefit when you purchased a Contract, we will make a contribution to the Contract Value on a monthly basis if the covered person (who must be an Owner and the Annuitant):

• is unable to perform at least 2 activities of daily living without human assistance or has a cognitive impairment; and

• is receiving certain qualified services described in the Rider.

The amount of the contribution (called the “Monthly Benefit”) is shown in the specifications page of the Contract. However, the benefit contains an inflation protection feature that will increase the Monthly Benefit by 5% each year after the 7th Contract Year. The specifications page of the Contract also contains a limit on how much the Contract Value can be increased by this benefit (the “benefit limit”). The Rider must be in effect for 7 years before any increase will occur.

You could elect this benefit only when you applied for a Contract, if it was then available in your state. Under our current administrative rules, the Monthly Benefit (without regard to the inflation protection feature) is equivalent to 1% of your initial Purchase Payment, up to a maximum Purchase Payment of $300,000. We may reduce this $300,000 limit further, however, if you own additional annuity contracts issued by John Hancock USA and its affiliates that provide a similar benefit. The $300,000 limit applies only to the calculation of the Monthly Benefit under the accumulated value enhancement Rider. (See “Limits on Purchase Payments” for a general description of other Purchase Payment limits under the Contract.)

You could not have elected this Rider unless you also elected the waiver of withdrawal charge Rider. There is a monthly charge for this Rider as described in the Fee Tables.

The Rider terminates if the Contract terminates, if the covered person dies, if the benefit limit is reached, if the Owner is the covered person and the ownership of the Contract changes, or if, before annuity payments start, the Contract Value falls below an amount equal to 25% of your initial Purchase Payment. You may cancel the Rider by written notice at any time. The Rider charge terminates when the Rider terminates.

If you choose to continue the Rider after the Contract’s Maturity Date, charges for the Rider will be deducted from annuity payments and any Monthly Benefit for which the covered person qualifies will be added to the next annuity payment.

In certain marketing materials, this Rider may have been referred to as “CARESolutions Plus.” The Rider was not available in FL, ND, NY and OR.

You should carefully review the tax considerations for optional benefit Riders under “IX. Federal Tax Matters” in this Prospectus.

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Guaranteed Retirement Income Benefit

(Applicable only to Contracts issued before May 1, 2004 that may have been issued with the Guaranteed Retirement Income Benefit Rider)

Under this Rider, we guarantee the amount of annuity payments you receive, if the following conditions are satisfied:

• The Maturity Date must be within the 30 day period following a Contract Anniversary.

• If the Annuitant was age 45 or older on the date of issue, the Contract must have been in effect for at least 10 Contract Years on the Maturity Date and the Maturity Date must be on or after the Annuitant’s 60th birthday and on or before the Annuitant’s 90th birthday.

• If the Annuitant was less than age 45 on the date of issue, the Contract must have been in effect for at least 15 Contract Years on the Maturity Date and the Maturity Date must be on or before the Annuitant’s 90th birthday.

If your Contract was issued with this Rider, you need not choose to receive the guaranteed income benefit that it provides. Rather, unless and until such time as you exercise your option to receive a guaranteed income benefit under this Rider, you will continue to have the option of exercising any other right or option that you would have under the Contract (including withdrawal and annuity payment options) if the Rider had not been added to it.

If you decided to add this Rider to your Contract, and if you ultimately decide to take advantage of the guaranteed income it provides, we will automatically provide that guaranteed income in the form of fixed payments under our “Option A: Life Annuity with Payments for a Guaranteed Period” described below under “Annuity Options.” The guaranteed period will automatically be a number of years that the Rider specifies, based on the Annuitant’s age at the annuity date and whether your Contract is purchased in connection with a Qualified Plan. (These specified periods range from 5 to 10 years.) You will have no discretion to vary this form of payment, if you choose the guaranteed income benefit under this Rider.

We guarantee that the amount you can apply to this Annuity Option to be at least equal to the amount of each Purchase Payment you have paid, accumulated at the rate(s) specified in the Contract, but adjusted for any withdrawals you have taken. The accumulation rates differ between (a) Contract Value allocated to a Fixed Investment Option or Money Market Investment Option (currently 4%) and (b) Contract Value allocated to all other Variable Investment Options (currently 5%). Withdrawals reduce the accumulated amount in direct proportion to the percentage of Contract Value that was reduced by the withdrawal (including any withdrawal charges). After a withdrawal, the accumulation rate(s) are only applied to the remaining accumulated amount. If your total Contract Value is higher than the amount we guarantee, we apply the higher amount to the Annuity Option instead of the guaranteed amount.

There is a monthly charge for this Rider as described in the Fee Tables. The Rider (and the related charges) automatically terminate if your Contract is surrendered or the Annuitant dies. After you’ve held your Contract for 10 years, you can terminate the Rider by written request.

Will I receive a Transaction Confirmation?

We will send you a confirmation statement for certain transactions in your Investment Accounts. You should carefully review these transaction confirmations to verify their accuracy. You should immediately report any mistakes to our Annuities Service Center (at the address or phone number shown on the first page of this Prospectus). If you fail to notify our Annuities Service Center of any mistake within 60 days of the delivery of the transaction confirmation, you will be deemed to have ratified the transaction. Please contact the John Hancock Annuities Service Center at the applicable telephone number or Internet address shown on the first page of this Prospectus for more information on electronic transactions.

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V. General Information about Us, the Separate Account and the Portfolios

The Company

We are a stock life insurance company originally organized under the laws of Maine on August 20, 1955 by a special act of the Maine legislature. We redomesticated under the laws of Michigan on December 30, 1992. We are authorized to transact life insurance and annuity business in all states (except New York), the District of Columbia, Guam, Puerto Rico and the Virgin Islands. Our principal office is located at 601 Congress Street, Boston, Massachusetts 02210-2805. We also have an Annuities Service Center – its mailing address is P.O. Box 55444, Boston, MA 02205-5444, and its overnight mail address is 30 Dan Road – Suite 55444, Canton, MA 02021-2809.

Our ultimate parent is Manulife Financial Corporation, a publicly traded company, based in Toronto, Canada. Manulife Financial Corporation is the holding company of The Manufacturers Life Insurance Company and its subsidiaries, collectively known as Manulife Financial. The Company changed its name to John Hancock Life Insurance Company (U.S.A.) on January 1, 2005 following Manulife Financial Corporation’s acquisition of John Hancock Financial Services, Inc.

The Company incurs obligations under the Contract to guarantee certain amounts, and investors must depend on the financial strength of the Company for satisfaction of the Company’s obligations such as the death benefit and fixed Annuity Options. You should be aware that, unlike the Separate Account, the Company’s General Account is not segregated or insulated from the claims of the Company’s creditors. The General Account consists of securities and other investments that may decline in value during periods of adverse market conditions. The Company’s financial statements contained in the SAI include a further discussion of risks inherent within the Company’s General Account investments.

The Separate Account

Effective December 31, 2009, we entered into a merger agreement with John Hancock Life Insurance Company (“JHLICO”) and John Hancock Variable Life Insurance Company (“JHVLICO”) and assumed legal ownership of all of the assets of JHLICO and JHVLICO, including those assets related to the John Hancock Life Insurance Company (U.S.A.) Separate Account Q (formerly John Hancock Variable Annuity Account H). Effective at the time of the merger, we became the depositor of John Hancock Life Insurance Company (U.S.A.) Separate Account Q.

Except for the succession of John Hancock USA as the depositor for the Separate Account and to the liabilities and obligations arising under the Contracts, the merger did not affect the Separate Account or any provisions of, any rights and obligations under, or any of your allocations among investment options under, the Contracts. We will continue to administer and service inforce Contracts of JHLICO and JHVLICO in all jurisdictions where issued and will assume the direct responsibility for the payment of all claims and benefits and other obligations under these Contracts.

You do not invest directly in the Portfolios made available under the Contract. When you direct or transfer money to a Variable Investment Option, we will purchase shares of a corresponding Portfolio through John Hancock Life Insurance Company (U.S.A.) Separate Account Q. We hold the Portfolio’s shares in a “Subaccount” (usually with a name similar to that of the corresponding Portfolio).

The Company established John Hancock Life Insurance Company (U.S.A.) Separate Account Q under Massachusetts law. The Separate Account’s assets, including the Portfolios’ shares, belong to John Hancock USA. Each Contract provides that amounts we hold in the Separate Account pursuant to the Contract cannot be reached by any other persons who may have claims against the Company.

The income, gains and losses, whether or not realized, from assets of the Separate Account are credited to or charged against the Separate Account without regard to our other income, gains, or losses. Nevertheless, all obligations arising under the Contracts are general corporate obligations of the Company. Assets of our Separate Accounts may not be charged with liabilities arising out of any of our other business.

We reserve the right, subject to compliance with applicable law: to add other Subaccounts; to eliminate existing Subaccounts; or to combine Subaccounts or transfer assets in one Subaccount to another Subaccount that we, or an affiliated company, may establish. We will not eliminate existing Subaccounts or combine Subaccounts without the prior approval of the appropriate state and/or federal regulatory authorities.

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We registered the Separate Account with the SEC under the Investment Company Act of 1940, as amended (the “1940 Act”) as a unit investment trust. Registration under the 1940 Act does not involve supervision by the SEC of the management or investment policies or practices of the Separate Account. If we determine that it would be in the best interests of persons having voting rights under the Contracts, the Separate Account may be operated as a management investment company under the 1940 Act or it may be deregistered if 1940 Act registration were no longer required.

The Portfolios

When you select a Variable Investment Option, we invest your money in a Subaccount of our Separate Account and it invests in NAV shares of a corresponding Portfolio of John Hancock Variable Insurance Trust or in shares of a corresponding Portfolio of M Fund, Inc.

The Portfolios in the Separate Account are NOT publicly traded mutual funds. The Portfolios are available to you only as Investment Options in the Contracts or, in some cases, through other variable annuity contracts or variable life insurance policies issued by us or by other life insurance companies. In some cases, the Portfolios also may be available through participation in certain tax-qualified pension, retirement or college savings plans.

Investment Management

The Portfolios’ investment advisers and managers may manage publicly traded mutual funds with similar names and investment objectives. However, the Portfolios are NOT directly related to any publicly traded mutual fund. You should not compare the performance of any Portfolio described in this Prospectus with the performance of a publicly traded mutual fund. The performance of any publicly traded mutual fund could differ substantially from that of any of the Portfolios held in our Separate Account.

Our Managed Volatility Portfolio (“MVP”)

In selecting the Portfolios that are available as Investment Options under the Contract, we may establish requirements that are intended, among other things, to mitigate market price and interest rate risk for compatibility with our obligations to pay guarantees and benefits under the Contract. We seek to make available an Investment Option that uses strategies that are intended to lower potential volatility of returns and limit the magnitude of Portfolio losses. These include, but are not limited to, strategies that: encourage diversification in asset classes and style; combine equity exposure with exposure to fixed income securities; and allow us to effectively and efficiently manage our exposure under the Contracts. The requirements we impose are intended to protect us from loss. They may increase a Portfolio’s transaction costs, and may otherwise lower the performance and reduce the availability of Investment Options under the Contract.

During rising markets, the strategies employed to manage volatility could result in your Contract Value rising less than would have been the case if you had been invested in a Portfolio without the managed volatility strategy. The managed volatility strategy may also suppress the value of the guaranteed Rider benefits. On the other hand, the managed volatility strategy seeks to manage the volatility of returns and limit the magnitude of Portfolio losses during declining markets with high volatility, although there is no guarantee that it will do so.

The MVP offered under the Contract has the following objective and strategies:

Lifestyle Balanced MVP. Seeks growth of capital and current income while seeking to both manage the volatility of return and limit the magnitude of Portfolio losses. The Portfolio seeks to limit the volatility of returns to a range of 8.25% to 10.25%. The Portfolio is a fund of funds and invests primarily in underlying portfolios that invest primarily in equity securities and underlying portfolios that invest primarily in fixed-income securities. The Portfolio’s risk management strategy may cause the Portfolio’s economic exposure to equity securities, fixed-income securities and cash and cash equivalents to fluctuate and during extreme market volatility, the Portfolio’s economic exposure to either equity securities or fixed-income securities could be reduced to 0% and its economic exposure to cash and cash equivalents could increase to 100%. The Portfolio’s exposure to equity securities normally will not exceed 100%.

You can find a full description of the Lifestyle Balanced MVP Portfolio, including the investment objective, policies and restrictions of, and the risks relating to, investment in the Portfolio in the prospectus for that Portfolio.

The John Hancock Variable Insurance Trust and M Fund, Inc. are each a so-called “series” type mutual fund and each is registered under the 1940 Act as an open-end management investment company.

John Hancock Investment Management Services, LLC (“JHIMS LLC”) provides investment advisory services to the John Hancock Variable Insurance Trust and receives investment management fees for doing so. JHIMS LLC pays a portion of its investment

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management fees to other firms that manage the John Hancock Variable Insurance Trust’s Portfolios (i.e., subadvisers). JHIMS LLC is our affiliate and we indirectly benefit from any investment management fees JHIMS LLC retains.

The John Hancock Variable Insurance Trust has obtained an order from the SEC permitting JHIMS LLC, subject to approval by the Board of Trustees, to change a subadviser for a Portfolio or the fees paid to subadvisers and to enter into new subadvisory agreements from time to time without the expense and delay associated with obtaining shareholder approval of the change. This order does not, however, permit JHIMS LLC to appoint a subadviser that is an affiliate of JHIMS LLC or the John Hancock Variable Insurance Trust (other than by reason of serving as subadviser to a Portfolio) (an “Affiliated Subadviser”) or to change a subadvisory fee of an Affiliated Subadviser without the approval of shareholders.

If shares of a Portfolio are no longer available for investment or in our judgment investment in a Portfolio becomes inappropriate, we may eliminate the shares of a Portfolio and substitute shares of another Portfolio, or of another open-end registered investment company. A substitution may be made with respect to both existing investments and the investment of future Purchase Payments. However, we will make no such substitution without first notifying you and obtaining approval of the SEC (to the extent required by the 1940 Act).

Portfolio Expenses

Fees and expenses of the Portfolios include investment management fees. The fees and expenses are not fixed or specified under the terms of the Contracts and may vary from year to year. These fees and expenses differ for each Portfolio and reduce the investment return of each Portfolio. Therefore, they also indirectly reduce the return you might earn on any Separate Account Investment Options.

All of the Portfolios are NAV class shares that are not subject to Rule 12b-1 fees. These NAV class shares commenced operations on April 29, 2005. The NAV class shares of a Portfolio are based upon the expense ratios of the Portfolio’s Series I shares for the year ended December 31, 2015, adjusted to reflect the absence of any Rule 12b-1 fee.

The Portfolios pay us or certain of our affiliates compensation for some of the distribution, administrative, shareholder support, marketing and other services we or our affiliates provide to the Portfolios. The amount of this compensation is based on a percentage of the assets of the Portfolios attributable to the variable insurance products that we and our affiliates issue. These percentages may differ from Portfolio to Portfolio and among classes of shares within a Portfolio. Compensation payments may be made by a Portfolio’s investment adviser or its affiliates. None of these compensation payments results in any additional charge to you.

Fund of Funds

The John Hancock Variable Insurance Trust’s Lifestyle Balanced MVP is a “fund of funds” that invests in other underlying mutual funds. Expenses for a fund of funds may be higher than those for other Portfolios because a fund of funds bears its own expenses and indirectly bears its proportionate share of expenses of the underlying portfolios in which it invests. The prospectus for the John Hancock Variable Insurance Trust’s Lifestyle Balanced MVP contains a description of the underlying portfolios for that Portfolio, including expenses of the portfolios, associated investment risks, and deductions from and expenses paid out of the assets of the Portfolio.

Portfolio Investment Objectives

You bear the investment risk of any Portfolio you choose as a Variable Investment Option for your Contract. The following table contains a general description of the investment objectives of the Portfolios that we make available under the Contracts. You can find a full description of each Portfolio, including the investment objectives, policies and restrictions of, and the risks relating to, investment in the Portfolio in the prospectus for that Portfolio. You can obtain a copy of a Portfolio’s prospectus, without charge, by contacting us at the Annuities Service Center website, phone number or address shown on the first page of this Prospectus. You should read the Portfolio’s prospectus carefully before investing in the corresponding Variable Investment Option.

JOHN HANCOCK VARIABLE INSURANCE TRUST We show the Portfolio’s investment adviser or subadviser (“manager”) in bold above the name of the Portfolio.
Declaration Management & Research LLC
Total Bond Market Trust B Series NAV	Seeks to track the performance of the Barclays U.S. Aggregate Bond Index (which represents the U.S. investment grade bond market).

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JOHN HANCOCK VARIABLE INSURANCE TRUST We show the Portfolio’s investment adviser or subadviser (“manager”) in bold above the name of the Portfolio.
Declaration Management & Research LLC and John Hancock Asset Management a division of Manulife Asset Management (US) LLC1
Active Bond Trust Series NAV	Seeks income and capital appreciation.
Deutsche Investment Management Americas Inc. (“DIMA”)
Real Estate Securities Trust2 Series NAV	Seeks to achieve a combination of long-term capital appreciation and current income.
Jennison Associates LLC
Capital Appreciation Trust Series NAV	Seeks long-term growth of capital.
John Hancock Asset Management a division of Manulife Asset Management (US) LLC
Financial Industries Trust Series NAV	Seeks growth of capital.
Fundamental All Cap Core Trust Series NAV	Seeks long-term growth of capital.
Short Term Government Income Trust Series NAV	Seeks a high level of current income consistent with preservation of capital. Maintaining a stable share price is a secondary goal.
John Hancock Asset Management a division of Manulife Asset Management (North America) Limited
500 Index Trust B Series NAV	Seeks to approximate the aggregate total return of a broad-based U.S. domestic equity market index.
Mid Cap Index Trust Series NAV	Seeks to approximate the aggregate total return of a mid-cap U.S. domestic equity market index.
Money Market Trust (successor to Money Market Trust B) Series NAV	Seeks to obtain maximum current income consistent with preservation of principal and liquidity.
Small Cap Index Trust3 Series NAV	Seeks to approximate the aggregate total return of a small cap U.S. domestic equity market index.
Total Stock Market Index Trust Series NAV	Seeks to approximate the aggregate total return of a broad-based U.S. domestic equity market index.
John Hancock Asset Management a division of Manulife Asset Management (US) LLC and John Hancock Asset Management a division of Manulife Asset Management (North America) Limited
Lifestyle Balanced MVP Series NAV	Seeks growth of capital and current income while seeking to both manage the volatility of return and limit the magnitude of Portfolio losses.
Pacific Investment Management Company LLC
Global Bond Trust Series NAV	Seeks maximum total return, consistent with preservation of capital and prudent investment management.
SSgA Funds Management, Inc.
International Equity Index Trust B Series NAV	Seeks to track the performance of a broad-based equity index of foreign companies primarily in developed countries and, to a lesser extent, in emerging markets.

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JOHN HANCOCK VARIABLE INSURANCE TRUST We show the Portfolio’s investment adviser or subadviser (“manager”) in bold above the name of the Portfolio.
T. Rowe Price Associates, Inc.
Blue Chip Growth Trust Series NAV	Seeks to provide long-term growth of capital. Current income is a secondary objective.
Equity Income Trust Series NAV	Seeks to provide substantial dividend income and also long-term growth of capital.
Health Sciences Trust Series NAV	Seeks long-term capital appreciation.
Mid Value Trust Series NAV	Seeks long-term capital appreciation.
Templeton Investment Counsel, LLC
International Value Trust4 Series NAV	Seeks long-term growth of capital.
Wellington Management Company, LLP
Mid Cap Stock Trust Series NAV	Seeks long-term growth of capital.
Small Cap Growth Trust Series NAV	Seeks long-term capital appreciation.
Small Cap Value Trust Series NAV	Seeks long-term capital appreciation.
Wells Capital Management, Incorporated
Core Bond Trust (successor to Total Return Trust) Series NAV	Seeks total return consisting of income and capital appreciation.
Western Asset Management Company
High Yield Trust5 Series NAV	Seeks to realize an above-average total return over a market cycle of three to five years, consistent with reasonable risk.

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M FUND, INC.6 (M Financial Investment Advisers, Inc. is the Portfolio’s adviser. We show the Portfolio’s manager (i.e., subadviser) in bold above the name of the Portfolio, and we list the Portfolios alphabetically by manager.)
Northern Cross, LLC
M International Equity Fund Series NAV	Seeks to provide long-term capital appreciation.
DSM Capital Partners LLC
M Large Cap Growth Fund Series NAV	Seeks to provide long-term capital appreciation.
Frontier Capital Management Company, LLC
M Capital Appreciation Fund Series NAV	Seeks to provide maximum capital appreciation.
AJO, LP (Aronson Johnson Ortiz)
M Large Cap Value Fund Series NAV	Seeks to provide long-term capital appreciation.

¹  The Active Bond Trust is subadvised by Declaration Management & Research LLC and John Hancock Asset Management a division of Manulife Asset Management (US) LLC, with each subadviser subadvising approximately one half of the assets of the Portfolio. Since the Portfolio is only rebalanced periodically, the actual percentage of the Portfolio managed by each subadviser will vary.

²  RREEF America L.L.C. provides sub-subadvisory services to DIMA in its management of the Real Estate Securities Trust.

³  The Small Cap Index Trust is not available for Contracts issued after April 30, 2003.

⁴  The International Value Trust is sub-subadvised by Templeton Investment Counsel, LLC under an agreement with Templeton Global Advisors Limited.

⁵  High Yield Trust is sub-subadvised by Western Asset Management Company Limited.

⁶  Available only for Contracts purchased through registered representatives affiliated with the M Financial Group.

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VI. Information About Fixed Investment Options

In General

All of John Hancock USA’s general assets (discussed above) support its obligations under the Fixed Investment Options (as well as all of its other obligations and liabilities). To hold the assets that support primarily the Fixed Investment Options, other than the DCA rate account used with our dollar-cost averaging value program, we have established a “non-unitized” separate account. With a non-unitized separate account, you have no interest in or preferential claim on any of the assets held in the account. The investments we purchase with amounts you allocated to any Fixed Investment Option belong to us; any favorable investment performance on the assets allocated to the Fixed Investment Options belongs to us. Instead, you earn interest at the guaranteed interest rate of the Fixed Investment Option you selected, provided that you don’t surrender, transfer, or withdraw your assets prior to the end of your selected Fixed Investment Option.

Because of exemptive and exclusionary provisions, interests in the Fixed Investment Options have not been registered under the Securities Act of 1933, and our non-unitized separate account has not been registered as an investment company under the Investment Company Act of 1940. Accordingly, neither the General Account nor any of its assets are subject to the provision of these acts. We have been advised that the SEC staff has not reviewed the disclosure in this Prospectus relating to the Fixed Investment Options. Disclosure regarding the Fixed Investment Options is, however, subject to certain generally-applicable provisions of the federal securities laws relating to accuracy and completeness of statements made in prospectuses.

How the Fixed Investment Options Work

Amounts you allocate to the Fixed Investment Options earn interest at a guaranteed rate commencing with the date of allocation. At the expiration of the Fixed Investment Options, we will automatically transfer its total value to the Money Market Variable Investment Option under your Contract, unless you elect to:

• withdraw all or a portion of any such amount from the Contract;

• allocate all or a portion of such amount to a new Fixed Investment Option or periods of the same or different duration as the expiring Fixed Investment Option; or

• allocate all or a portion of such amount to one or more of the Variable Investment Options.

You must notify us of any such election, by mailing a request to us at the Annuities Service Center at least 30 days prior to the end of the expiring Fixed Investment Option. We will notify you of the end of the Fixed Investment Option at least 30 days prior to its expiration (45 days for Contracts issued in NY). The first day of the new Fixed Investment Option or other reallocation will begin the day after the end of the expiring Fixed Investment Option.

We currently make available Fixed Investment Options with durations of five years. For Contracts issued before September 30, 2002, however, we may permit you to select different durations. If you select any Fixed Investment Option with a duration that extends beyond your Contract’s Maturity Date, your Maturity Date will automatically be changed to the Annuitant’s 95th birthday (90th for Contracts issued in NY), or a later date, if we approve. We reserve the right to add or delete Fixed Investment Options for new allocations to or from those that are available at any time.

Guaranteed Interest Rates

Each Fixed Investment Option has its own guaranteed interest rate. We may, at our discretion, change the guaranteed rate for future Fixed Investment Options. These changes will not affect the guaranteed rates being paid on Fixed Investment Options that have already commenced. Each time you allocate or transfer money to a Fixed Investment Option, a new Fixed Investment Option, with a new interest rate, begins to run with respect to that amount. The amount allocated or transferred earns a guaranteed rate that will continue unchanged until the end of that period. We will not make available any Fixed Investment Option offering a guaranteed rate below 3%.

We make the final determination of guaranteed rates and Fixed Investment Options to be declared. We cannot predict or assure the level of any future guaranteed rates or the availability of any future Fixed Investment Options.

You may obtain information concerning the guaranteed rates applicable to the various Fixed Investment Options, and the durations of the Fixed Investment Options offered at any time by calling the Annuities Service Center.

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Calculation of Market Value Adjustment (“MVA”)

If you withdraw, surrender, transfer, or otherwise remove money from a Fixed Investment Option (other than the DCA rate account used with our dollar-cost averaging value program) prior to its expiration date, we will apply a market value adjustment. A market value adjustment also generally applies to:

• death benefits pursuant to your Contract (not applicable to Contracts issued in NY);

• amounts you apply to an Annuity Option; and

• amounts paid in a single sum in lieu of an annuity.

The market value adjustment increases or decreases your remaining value in the Fixed Investment Option. If the value in that Fixed Investment Option is insufficient to pay any negative MVA, we will deduct any excess from the value in your other Investment Options pro rata based on the value in each. If there is insufficient value in your other Investment Options, we will in no event pay out more than the Surrender Value of the Contract. Here is how the MVA works:

We compare:

• the guaranteed rate of the Fixed Investment Option from which the assets are being taken with

• the guaranteed rate we are currently offering for Fixed Investment Options of the same duration as remains on the Fixed Investment Option from which the assets are being taken.

If the first rate exceeds the second by more than  ¹⁄₂% ( ¹⁄₄% for Contracts issued in FL and NY), the market value adjustment produces an increase in your Contract’s value.

If the first rate does not exceed the second by at least  ¹⁄₂% ( ¹⁄₄% for Contracts issued in FL and NY), the market value adjustment produces a decrease in your Contract’s value.

For this purpose, we consider that the amount withdrawn from a Fixed Investment Option includes the amount of any negative MVA and is reduced by the amount of any positive MVA.

The mathematical formula and sample calculations for the MVA appear in Appendix A.

Limitation on Market Value Adjustments

In no event will the market value adjustment (positive or negative) exceed the amount of any excess interest we credit on a Fixed Investment Option up to the date of computation. Excess interest means the dollar amount of interest earned to date on the amount being withdrawn in excess of what would have been earned if the effective annual interest rate had been 3%.

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VII. The Accumulation Period

Your Value in Our Variable Investment Options

Each Purchase Payment or transfer that you allocate to a Variable Investment Option purchases “accumulation units” of that Variable Investment Option. Similarly, each withdrawal or transfer that you take from a Variable Investment Option (as well as certain charges that may be allocated to that option) results in a cancellation of such accumulation units.

Valuation of Accumulation Units

To determine the number of accumulation units that a specific transaction will purchase or cancel, we use the following formula:

dollar amount of transaction

divided by

value of one accumulation unit for the applicable

Variable Investment Option at the time of such

transaction

The value of each accumulation unit will change daily depending upon the investment performance of the Portfolio that corresponds to that Variable Investment Option and certain charges we deduct from such Investment Option. (See below under “Variable Investment Option Valuation Procedures.”)

Therefore, at any time prior to the Maturity Date, the portion of the Contract Value in any Variable Investment Option can be computed according to the following formula:

number of accumulation units in the applicable

Variable Investment Option

multiplied by

value of one accumulation unit for the Variable

Investment Option at that time

Variable Investment Option Valuation Procedures

We compute the net investment return and accumulation unit values for each Variable Investment Option as of the end of each Business Day. On any date other than a Business Day, the accumulation unit value will be the same as the value at the close of the next following Business Day.

Your Value in the Fixed Investment Options

On any date, the total value of your Contract in a Fixed Investment Option equals:

• the amount of Purchase Payments or transferred amounts allocated to the Fixed Investment Option, minus

• the amount of any withdrawals or transfers paid out of the Fixed Investment Option, minus

• the amount of any negative market value adjustments resulting from such withdrawals or transfers, plus

• the amount of any positive market value adjustments resulting from such withdrawals and transfers, minus

• the amount of any charges and fees deducted from that Fixed Investment Option, plus

• interest compounded daily on any amounts in the Fixed Investment Option from time to time at the effective annual rate of interest we have declared for that Fixed Investment Option.

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VIII. The Annuity Period

Annuity payments are made to the Annuitant, if still living. If more than one Annuitant is living at the Maturity Date, the payments are made to the younger co-Annuitant.

Maturity Date

Your Contract specifies the Maturity Date, when payments from one of our Annuity Options are scheduled to begin. You initially chose a Maturity Date when you completed your application for a Contract. Unless we otherwise permit, the Maturity Date must be:

• at least 6 months (12 months for Contracts issued in NY) after the date the first Purchase Payment is applied to your Contract; and

• no later than the maximum age specified in your Contract (normally age 95; in NY it’s the later of age 90 or 10 years after the date we issued your Contract).

Subject to these requirements, you may subsequently select an earlier Maturity Date or a later date, so long as it is not more than 5 years after the original Maturity Date. Maturity Dates which occur when the Annuitant is at an advanced age, e.g., past age 90, may have adverse income tax consequences. Also, if you are selecting or changing your Maturity Date for a Contract issued under a Qualified Plan, special limits apply (see “IX. Federal Tax Matters”). The Annuities Service Center must receive your new selection at least 31 days prior to the new Maturity Date.

Notice of Maturity Date. Under our current administrative procedures, we will send you one or more notices at least 30 days before your scheduled Maturity Date and request that you verify information we currently have on file. If you fail to verify this information, or if you do not choose an Annuity Option, do not make a total withdrawal of the Surrender Value, or do not ask us to change the Maturity Date to a later date, we will provide as a default Annuity Option A – a life annuity with monthly payments guaranteed for ten years, as described in “Annuity Options” below.

Choosing Fixed or Variable Annuity Payments

During the Annuity Period, the total value of your Contract must be allocated to no more than four Investment Options. During the Annuity Period, we do not offer the Fixed Investment Options. Instead, we offer annuity payments on a fixed basis as one Investment Option, and annuity payments on a variable basis for each Variable Investment Option.

We generally apply (1) amounts allocated to the Fixed Investment Options as of the Maturity Date to provide annuity payments on a fixed basis and (2) amounts allocated to Variable Investment Options to provide annuity payments on a variable basis. If you are using more than four Investment Options on the Maturity Date, we divide your Contract Value pro rata among the four Investment Options with the largest values (considering all Fixed Investment Options as a single option), based on the amount of the total value of your Contract that you have in each.

We make a market value adjustment to any remaining Fixed Investment Option amounts on the Maturity Date before we apply such amounts to an Annuity Option. We also deduct any premium tax charge.

Once annuity payments commence, you may not make transfers from fixed to variable or from variable to fixed.

Selecting an Annuity Option

Each Contract provides, at the time of its issuance, for annuity payments to commence on the Maturity Date pursuant to Option A: “Life Annuity with Payments for a Guaranteed Period” for a 10 year period (discussed under “Annuity Options”).

Prior to the Maturity Date, you may select a different Annuity Option. However, if your Contract Value on the Maturity Date is less than $5,000, you may only select Option A: “Life Annuity with Payments for a Guaranteed Period” for the 10 year period as an Annuity Option, regardless of any other election that you have made. You may not change the form of Annuity Option once payments commence.

If the initial monthly payment under an Annuity Option would be less than $50, we may make a single sum payment equal to the total Surrender Value of your Contract on the date the initial payment would be payable. Such single payment would replace all other benefits. Alternatively, if you agree, we will make payments at quarterly, semi-annual, or annual intervals in place of monthly payments.

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Subject to that $50 minimum limitation, your Beneficiary may elect an Annuity Option if:

• you have not made an election prior to the Annuitant’s death;

• the Beneficiary is entitled to payment of a death benefit of at least $5,000 in a single sum; and

• the Beneficiary notifies us of the election prior to the date the proceeds become payable.

Variable Monthly Annuity Payments

During the Annuity Period, the Contract Value must be allocated to no more than four Investment Options. During the Annuity Period, we offer annuity payments on a variable basis for each Variable Investment Option. If you are using more than four Investment Options on the Maturity Date, under a deferred Contract, we will divide your Contract Value (after deducting any premium tax charge that was not deducted from Purchase Payments) among the four Investment Options with the largest values, pro rata based on the amount of the Contract Value that you have in each.

We determine the amount of the first variable monthly payment under any Variable Investment Option by using the applicable annuity purchase rate for the Annuity Option under which the payment will be made. The Contract sets forth these annuity purchase rates. In most cases they vary by the age and gender of the Annuitant or other payee.

The amount of each subsequent Variable Annuity payment under that Variable Investment Option depends upon the investment performance of that Variable Investment Option.

Here’s how it works:

• We calculate the actual net investment return of the Variable Investment Option (after deducting all charges) during the period between the dates for determining the current and immediately previous monthly payments.

• If that actual net investment return exceeds the “assumed investment rate” (explained below), the current monthly payment will be larger than the previous one.

• If the actual net investment return is less than the assumed investment rate, the current monthly payment will be smaller than the previous one.

Variable Investment Option Valuation Procedures

We compute the net investment return and Annuity Unit values for each Variable Investment Option as of the end of each Business Day. On any date other than a Business Day, the Annuity Unit value will be the same as the value at the close of the next following Business Day.

Assumed Investment Rate

The assumed investment rate for any variable portion of your annuity payments will be 3 ¹⁄₂% per year, except as follows.

You may elect an assumed investment rate of 5% or 6%, provided such a rate is available in your state. If you elect a higher assumed investment rate, your initial Variable Annuity payment will also be higher. Eventually, however, the monthly Variable Annuity payments may be smaller than if you had elected a lower assumed investment rate.

Transfers During the Annuity Period

Some transfers are permitted during the Annuity Period, but subject to different limitations than during the Accumulation Period. Once annuity payments on a variable basis have begun, you may transfer all or part of the investment upon which those payments are based from one Subaccount to another. You must submit your transfer request to the Annuities Service Center at least 30 days before the due date of the first annuity payment to which your transfer will apply. Transfers after the Maturity Date will be made by converting the number of Annuity Units being transferred to the number of Annuity Units of the Subaccount to which the transfer is made, so that the next annuity payment if it were made at that time would be the same amount that it would have been without the transfer. Thereafter, annuity payments will reflect changes in the value of the Annuity Units for the new Subaccount selected. Once annuity payments begin, no transfers may be made from payments on a fixed basis to payments on a variable basis or from payments on a variable basis to payments on a fixed basis. In addition, we reserve the right to defer the transfer privilege at any time that we are unable to purchase or redeem shares of a Portfolio. We also reserve the right to modify or terminate the transfer privilege at any time in accordance with applicable law.

Fixed Monthly Annuity Payments

The dollar amount of each fixed monthly annuity payment is specified during the entire period of annuity payments, according to the provisions of the Annuity Option selected. To determine such dollar amounts we first, in accordance with the procedures described above, calculate the amount to be applied to the Fixed Annuity Option as of the Maturity Date. We then subtract any applicable premium tax charge, if applicable, and divide the difference by $1,000.

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We then multiply the result by the greater of:

• the applicable Fixed Annuity purchase rate shown in the appropriate table in the Contract; or

• the rate we currently offer at the time of annuitization. (This current rate may be based on the sex of the Annuitant, unless prohibited by law.)

Annuity Options

Here are some of the Annuity Options that are available, subject to the terms and conditions described above. We reserve the right to make available optional methods of payment in addition to those Annuity Options listed here and in your Contract.

Option A - Life Annuity with Payments for a Guaranteed Period - We will make monthly payments for a guaranteed period of 5, 10, or 20 years, as selected by you or your Beneficiary, and after such period for as long as the payee lives. If the payee dies prior to the end of such guaranteed period, we will continue payments for the remainder of the guaranteed period to a contingent payee, subject to the terms of any supplemental agreement issued.

Federal income tax requirements currently applicable to contracts used with Qualified Plans, including IRAs, provide that the period of years guaranteed under Option A cannot be any greater than the joint life expectancies of the payee and his or her designated Beneficiary.

Option B - Life Annuity without Further Payment on Death of Payee - We will make monthly payments to the payee as long as he or she lives. We guarantee no minimum number of payments.

Option C - Joint and Last Survivor - We will provide payments monthly, quarterly, semiannually, or annually, for the payee’s life and the life of the payee’s Spouse/joint payee. Upon the death of one payee, we will continue payments to the surviving payee. All payments stop at the death of the surviving payee.

Option D - Joint and 1/2 Survivor; or Joint and 2/3 Survivor - We will provide payments monthly, quarterly, semiannually, and annually for the payee’s life and the life of the payee’s Spouse/joint payee. Upon the death of one payee, we will continue payments (reduced to 1/2 or 2/3 the full payment amount) to the surviving payee. All payments stop at the death of the surviving payee.

Option E - Life Income with Cash Refund - We will provide payments monthly, quarterly, semiannually, or annually for the payee’s life. Upon the payee’s death, we will provide a contingent payee with a lump sum payment, if the total payments to the payee were less than the accumulated value at the time of annuitization. The lump sum payment, if any, will be for the balance.

Option F - Income for a Fixed Period - We will provide payments monthly, quarterly, semiannually, or annually for a pre-determined period of time to a maximum of 30 years. If the payee dies before the end of the fixed period, payments will continue to a contingent payee until the end of the period.

Option G - Income of a Specific Amount - We will provide payments for a specific amount. Payments will stop only when the amount applied and earnings have been completely paid out. If the payee dies before receiving all the payments, we will continue payments to a contingent payee until the end of the Contract.

With Options A, B, C, and D, we offer both Fixed and/or Variable Annuity payments. With Options E, F, and G, we offer only Fixed Annuity payments. Payments under Options F and G must continue for 10 years, unless your Contract has been in force for 5 years or more.

If the payee is more than 85 years old on the Maturity Date, the following two options are not available without our consent:

• Option A: “Life Annuity with Payments for a Guaranteed Period” for the 5 year period and

• Option B: “Life Annuity without Further Payment on Death of Payee.”

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IX. Federal Tax Matters

Introduction

The following discussion of the federal income tax treatment of the Contract is not exhaustive, does not purport to cover all situations, and is not intended as tax advice. The federal income tax treatment of a Contract is quite complex, and you should consult a qualified tax advisor with regard to the application of the law to your circumstances. This discussion is based on the Code, Treasury Department regulations, and Internal Revenue Service (“IRS”) rulings and interpretations existing on the date of this Prospectus. These authorities, however, are subject to change by Congress, the Treasury Department and judicial decisions.

This discussion does not address state or local tax consequences associated with a Contract. The discussion also does not address the potential tax and withholding rules that might apply to a Contract held by, or distribution paid to, any foreign person, including any foreign financial institution, other entity or individual. Please consult with your tax advisor if there is a possibility that a Contract might be held by, or payable to, a foreign person. In addition, we make no guarantee regarding any tax treatment – federal, state, or local – of any Contract or of any transaction involving a Contract.

Our Tax Status

We are taxed as a life insurance company. Under current tax law rules, we include the investment income (exclusive of capital gains) of a Separate Account in our taxable income and take deductions for investment income credited to our “policyholder reserves.” We are also required to capitalize and amortize certain costs instead of deducting those costs when they are incurred. We do not currently charge a Separate Account for any resulting income tax costs. We also claim certain tax credits or deductions relating to foreign taxes paid and dividends received by the Portfolios. These benefits can be material. We do not pass these benefits through to a Separate Account, principally because: (i) the deductions and credits are allowed to the Company and not the Contract Owners under applicable tax law; and (ii) the deductions and credits do not represent investment return on Separate Account assets that is passed through to Contract Owners.

The Contracts permit us to deduct a charge for any taxes we incur that are attributable to the operation or existence of the Contracts or a Separate Account. Currently, we do not anticipate making a charge for such taxes. If the level of the current taxes increases, however, or is expected to increase in the future, we reserve the right to make a charge in the future. (Please note that this discussion applies to federal income tax but not to any state or local taxes.)

Special Considerations for Optional Benefits

At present, the IRS has not provided guidance as to the tax treatment of charges for optional benefits to an annuity contract. The IRS might take the position that each charge associated with these optional benefits is deemed a withdrawal from the contract subject to current income tax to the extent of any gains and, if applicable, a 10% penalty tax for premature withdrawals. We do not currently report charges for optional benefits as withdrawals, but we may do so in the future if we believe that the IRS would require us to report them as such.

If the Contract you purchased is not intended for use with a tax-qualified retirement plan or as an IRA (a “Nonqualified Contract”):

• Any withdrawal you take ordinarily is taxable as ordinary income to the extent of any gain in the Contract at the time of the withdrawal.

• Under current IRS guidance, we expect to determine gain on a withdrawal using the Contract Value. See “IV. Basic Information – What other optional benefits may have been available to me under a Contract?” for a description of the optional benefit Riders available under the Contracts. It is possible, however, that the IRS may take the position that the value of amounts guaranteed to be available in the future should also be taken into account in computing the taxable portion of a withdrawal. In that event, you may be subject to a higher amount of tax on a withdrawal.

If the Contract you purchased is intended for use with a tax-qualified retirement plan or as an IRA (a “Qualified Contract”):

• Please see “Roth IRAs – Conversions and Rollovers to Roth IRAs” below for additional information on the tax impact of optional benefit Riders on a conversion to a Roth IRA.

• The amount of any required minimum distributions may be increased under federal tax rules if your Contract has an optional death benefit or other optional benefit Rider. See “General Information Regarding Qualified Contracts” below.

You should consult a qualified tax advisor for information on any optional benefit Rider.

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General Information Regarding Nonqualified Contracts

(Contracts Not Purchased to Fund an IRA or Other Qualified Plan)

Tax Deferral During Accumulation Period

Except where the Owner is not an individual, we expect our Contracts to be considered annuity contracts under section 72 of the Code. This means that, ordinarily, federal income tax on any gains in your Contract will be deferred until we actually make a distribution to you or you assign or pledge an interest in your Contract.

However, a Contract held by an Owner other than a natural person (for example, a corporation, partnership, limited liability company, trust, or other such entity) does not generally qualify as an annuity contract for tax purposes. Any increase in value therefore would constitute ordinary taxable income to such an Owner in the year earned. Notwithstanding this general rule, a Contract will ordinarily be treated as held by a natural person if the nominal Owner is a trust or other entity which holds the Contract as an agent for a natural person. This exception does not apply in the case of any employer which is the nominal owner of an annuity contract under a nonqualified deferred compensation arrangement for its employees.

In addition to the foregoing, if the Contract’s Maturity Date occurs, or is scheduled to occur, at a time when the Annuitant is at an advanced age, such as over age 95, it is possible that the Owner will be taxed currently on the annual increase in the Contract Value.

The remainder of this discussion assumes that the Contract will constitute an annuity for federal tax purposes.

Aggregation of Contracts

In certain circumstances, the IRS may determine the portion of an annuity payment or a withdrawal from a contract that is includible in income by combining some or all of the annuity contracts owned by an individual which are not issued in connection with a Qualified Plan.

For example, if you purchase two or more deferred annuity contracts from the same insurance company (or its affiliates) during any calendar year, all such contracts will be treated as one contract for purposes of determining whether any payment not received as an annuity (including withdrawals prior to the Maturity Date) is includible in income. Thus, if during a calendar year you bought two or more of the Contracts offered by this Prospectus (which might be done, for example, in order to purchase different guarantees and/or benefits under different contracts), all of such Contracts would be treated as one Contract in determining whether withdrawals from any of such Contracts are includible in income. The IRS may also require aggregation in other circumstances and you should consult a qualified tax advisor if you own or intend to purchase more than one annuity contract.

The effects of such aggregation are not always clear and depend on the circumstances. However, aggregation could affect the amount of a withdrawal that is taxable and the amount that might be subject to the 10% penalty tax described below.

Exchanges of Annuity Contracts

We may have issued the Contract in exchange for all or part of another annuity contract that you owned. Such an exchange would be tax free if certain requirements were satisfied. If you satisfied these requirements, your investment in the Contract immediately after the exchange is generally the same as that of the annuity contract you exchanged, increased by any Additional Purchase Payment you made as part of the exchange. Your investment in the Contract may be more, less or the same as the Contract Value immediately after the exchange. If your Contract Value exceeds your investment in the Contract, that excess represents gain in the Contract. You have to include that gain in your gross income if you subsequently take a withdrawal or distribution from the Contract (e.g., as a partial surrender, full surrender, annuity payment, or death benefit), or are deemed to receive a distribution (e.g., through a collateral assignment) from the Contract.

In Revenue Procedure 2011-38, the IRS amended the tax rules applicable to the partial exchange of an annuity contract for another annuity contract, effective for partial exchanges that occur after October 23, 2011. If you exchange part of an existing Contract after that date, and within 180 days of the exchange you receive a payment (e.g., you make a withdrawal) from either contract, all or a portion of the amount received could be includible in your income and also subject to a 10% penalty tax. The IRS has announced that it will apply general tax principles to determine the consequences of receiving such a payment. For example, the IRS could treat the payment as taxable only to the extent of the gain in the particular contract from which the payment was received. Alternatively, the IRS could determine that the payment was an integrated part of the exchange. In that case, the payment would be taxable to the extent of all the gain accumulated in the original Contract at the time of the partial exchange, regardless of whether the payment came from the existing Contract or from the contract received in the exchange. Application of general tax principles is dependent on the facts and circumstances of each case. However, amounts received as an annuity during the 180-day period are not subject to the new rules, provided that the annuity payments will be made for a period of at least 10 years or for a life or joint lives.

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EXAMPLE: An annuity Contract had $100,000 of Contract Value, of which $56,000 was gain and $44,000 was the Owner’s investment in the Contract, or “cost basis.” After October 23, 2011, the Owner did a partial exchange of 25% of the Contract Value for a new annuity contract. Of the $25,000 transferred to the new contract, $14,000 represents gain and $11,000 represents cost basis transferred from the original Contract. Two months after the partial exchange, the Owner takes a withdrawal from the new contract in the amount of $17,000. If the IRS treats the withdrawal as a distribution from the new contract, only $14,000 will be taxable as a distribution of income ($25,000 of contract value – $11,000 of cost basis in the new contract). If instead the IRS determines that the withdrawal is part of the exchange, the entire $17,000 is taxable as income because there was $56,000 of gain in the original Contract at the time of the exchange.

You should consult with your own qualified tax advisor in connection with an exchange of all or part of a Contract for another annuity contract, especially if you make a withdrawal from either contract after the exchange. The date a partial exchange occurs will be a factor in determining the tax treatment of subsequent withdrawals and other distributions from either contract.

Loss of Interest Deduction Where Contracts are Held by or for the Benefit of Certain Non-Natural Persons

In the case of Contracts issued after June 8, 1997 to a non-natural taxpayer (such as a corporation or a trust), or held for the benefit of such an entity, a portion of otherwise deductible interest may not be deductible by the entity, regardless of whether the interest relates to debt used to purchase or carry the Contract. However, this interest deduction disallowance does not affect Contracts where the income on such Contracts is treated as ordinary income that is received or accrued by the Owner during the taxable year. Entities that have purchased the Contract, or entities that will be Beneficiaries under the Contract, should consult a qualified tax advisor.

Taxation of Annuity Payments

When we make payments under a Nonqualified Contract in the form of an annuity, normally a portion of each annuity payment is taxable as ordinary income. The taxable portion of an annuity payment is equal to the excess of the payment over the exclusion amount.

In the case of Variable Annuity payments, the exclusion amount is the investment in the Contract when payments begin to be made divided by the number of payments expected to be made (taking into account the Annuitant’s life expectancy and the form of annuity benefit selected). In the case of Fixed Annuity payments, the exclusion amount is based on the investment in the Contract and the total expected value of Fixed Annuity payments for the term of the Contract (determined under Treasury Department regulations). In general, your investment in the Contract equals the aggregate amount of Purchase Payments you have made over the life of the Contract, reduced by any amounts previously distributed from the Contract that were not subject to income tax.

Once you have recovered your total investment in the Contract tax-free, further annuity payments will be fully taxable. If annuity payments cease because the Annuitant dies before all of the investment in the Contract is recovered, the unrecovered amount generally will be allowed as a deduction on the Annuitant’s last tax return or, if there is a Beneficiary entitled to receive further payments, will be distributed to the Beneficiary as described more fully below under “Taxation of Death Benefit Proceeds.”

Effective January 1, 2011, section 72(a)(2) of the Code permits partial annuitization of an annuity contract and specifies that the cost basis, or investment in the contract, be allocated pro rata between the portion of the contract being annuitized and the portion of the contract remaining deferred. We do not permit you to apply any amount less than your entire Contract Value to the Annuity Options available under your Contract. Accordingly, any portion of your Contract that you withdraw to be annuitized will be reported to the IRS as a taxable distribution unless you transfer it into another contract in a partial exchange conforming to the rules of section 1035 of the Code and Rev. Proc. 2011-38. Any such withdrawal, whether carried out as a tax-deferred partial exchange or as a taxable withdrawal, will be subject to withdrawal charges.

Surrenders, Withdrawals, Transfers and Death Benefits

When we make a single sum payment consisting of the entire value of your Contract, you have ordinary taxable income to the extent the payment exceeds your investment in the Contract (discussed above). Such a single sum payment can occur, for example, if you surrender your Contract before the Maturity Date or if you or your Beneficiary do not select an extended payment option for a death benefit payment.

When you take a withdrawal from a Contract before the Maturity Date (or Annuity Commencement Date, if earlier), including a payment under a systematic withdrawal plan or guaranteed minimum withdrawal benefit, all or part of the payment may constitute taxable ordinary income to you. If, on the date of withdrawal, the total value of your Contract exceeds the investment in the Contract, the excess will be considered gain and the withdrawal will be taxable as ordinary income up to the amount of such gain. If a withdrawal exceeds the gain in your Contract, the excess amount is a tax-free return of your investment in the Contract. If you have recovered your entire investment in the Contract, any additional withdrawals based upon a Rider guarantee will be subject to income tax. If you assign or pledge any part of your Contract Value, the value so pledged or assigned is taxed the same as an actual withdrawal.

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For purposes of determining the amount of taxable income resulting from a single sum payment or a withdrawal, all nonqualified annuity contracts issued by us or our affiliates to the Owner within the same calendar year will be treated as if they were a single contract. Taxable withdrawals may also be subject to a penalty tax for premature withdrawals as explained below.

When an individual Owner transfers ownership of a Contract without receiving full and adequate consideration, the transfer is taxed like a surrender. The transferor must include in gross income the amount by which the cash surrender value exceeds any investment in the Contract. The amount included in income may also be subject to a penalty tax for premature withdrawals as explained below. The new Owner’s investment in the Contract is increased by the amount included in the transferor’s gross income as a result of the transfer. These tax issues may apply, for example, in situations where the Owner and Annuitant are not the same person and are not married to each other. A qualified tax advisor should be consulted in those situations. However, these tax rules do not apply to a transfer between Spouses or a transfer to a former Spouse incident to a divorce under Code section 1041.

Taxation of Death Benefit Proceeds

All or part of any death benefit proceeds may constitute a taxable payout of earnings. A death benefit payment generally results in taxable ordinary income to the extent of gain in the Contract.

Amounts may be distributed from a Contract because of the death of an Owner or the Annuitant. During the Accumulation Period, death benefit proceeds are includible in income as follows:

• if distributed in a single sum payment under our current administrative procedures, they are taxed in the same manner as a full withdrawal, as described above; or

• if distributed under an Annuity Option, they are taxed in the same manner as annuity payments, as described above; or

• if distributed as a series of withdrawals over the Beneficiary’s life expectancy, they are taxable to the extent there is gain in the Contract.

After a Contract matures and annuity payments begin, if the Contract guarantees payments for a stated period and the Annuitant dies before the end of that period, payments made to the Beneficiary for the remainder of that period are includible in the Beneficiary’s income as follows:

• if received in a single sum under our current administrative procedures, they are includible in income to the extent that they exceed the unrecovered investment in the Contract at that time; or

• if distributed in accordance with an existing Annuity Option other than a Period Certain Only Annuity Option, they are fully excludible from income until the remaining investment in the Contract has been recovered, and all annuity benefit payments thereafter are fully includible in income; or

• if distributed in accordance with an existing Period Certain Only Annuity Option, the payments are taxed the same as the annuity payments made before death. A portion of each annuity payment is includible in income and the remainder is excluded from income as a return of the investment in the Contract.

Penalty Tax on Premature Distributions

There is a 10% penalty tax on the taxable portion of any payment from a Nonqualified Contract. Exceptions to this penalty tax include distributions:

• received on or after the date on which the Contract Owner reaches age 59 ¹⁄₂;

• attributable to the Contract Owner becoming disabled (as defined in the tax law);

• made to a Beneficiary on or after the death of the Contract Owner or, if the Contract Owner is not an individual, on or after the death of the primary Annuitant;

• made as a series of substantially equal periodic payments (not less frequently than annually) for the life (or life expectancy) of the Contract Owner or for the joint lives (or joint life expectancies) of the Contract Owner and a designated Beneficiary;*

• made under a single-premium immediate annuity contract; or

• made with respect to certain annuities issued in connection with structured settlement agreements.

*You may be subject to a retroactive application of the penalty tax, plus interest, if you begin taking a series of substantially equal periodic payments (Life Expectancy Distribution) and then modify the payment pattern (other than by reason of death or disability) before the later of your turning age 59 ¹⁄₂ and the passage of five years after the date of the first payment.

Diversification Requirements

Your Contract will not qualify for the tax benefits of an annuity contract unless the Separate Account follows certain rules requiring diversification of investments underlying the Contract. In addition, the rules require that the Contract Owner not have “investment control” over the underlying assets.

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In certain circumstances, the owner of a variable annuity contract may be considered the owner, for federal income tax purposes, of the assets of the separate account used to support the contract. In those circumstances, income and gains from the separate account assets would be includible in the Contract Owner’s gross income. The IRS has stated in published rulings that a variable contract owner will be considered the owner of separate account assets if the contract owner possesses incidents of ownership in those assets, such as the ability to exercise investment control over the assets. A Treasury Decision issued in 1986 stated that guidance would be issued in the form of regulations or rulings on the “extent to which Policyholders may direct their investments to particular subaccounts of a separate account without being treated as owners of the underlying assets.” As of the date of this Prospectus, no comprehensive guidance on this point has been issued. In Rev. Rul. 2003-91, however, the IRS ruled that a contract holder would not be treated as the owner of assets underlying a variable annuity contract despite the owner’s ability to allocate funds among as many as twenty subaccounts.

The ownership rights under your Contract are similar to, but different in certain respects from, those described in IRS rulings in which the IRS determined that contract owners were not owners of separate account assets. Since you have greater flexibility in allocating premiums and Contract Value than was the case in those rulings, it is possible that you would be treated as the owner of your Contract’s proportionate share of the assets of the Separate Account.

We do not know what future Treasury Department regulations or other guidance may require. We cannot guarantee that an underlying Portfolio will be able to operate as currently described in its prospectus, or that a Portfolio will not have to change any of its investment objectives or policies. We have reserved the right to modify your Contract if we believe doing so will prevent you from being considered the owner of your Contract’s proportionate share of the assets of the Separate Account, but we are under no obligation to do so.

Medicare Tax on Unearned Income

A Medicare tax applies to certain unearned income at a maximum rate of 3.8% for taxable years beginning after December 31, 2012. Also referred to as the Net Investment Income tax, the tax is imposed on an amount equal to the lesser of (a) “net investment income” or (b) the excess of the taxpayer’s modified adjusted gross income over a specified income threshold ($250,000 for married couples filing jointly, $125,000 for married couples filing separately, and $200,000 for everyone else). “Net investment income,” for these purposes, includes the excess (if any) of gross income from annuities, interest, dividends, royalties and rents, and certain net gain, over allowable deductions, as such terms are defined in the Act or as may be defined in future Treasury Regulations or IRS guidance. The term “net investment income” does not include any distribution from a plan or arrangement described in Code sections 401(a), 403(a), 403(b), 408 (i.e., IRAs), 408A (i.e., Roth IRAs) or 457(b).

You should consult a qualified tax advisor for further information about the impact of the Act on your individual circumstances.

Puerto Rico Nonqualified Contracts

Distributions from Puerto Rico annuity contracts issued by us are subject to federal income taxation, withholding and reporting requirements as well as Puerto Rico tax laws. Both jurisdictions impose a tax on distributions. Under federal requirements, distributions are deemed to be income first. Under the Puerto Rico tax laws, however, distributions from a Contract not purchased to fund a Qualified Plan (“Nonqualified Contract”) are generally treated as a nontaxable return of principal until the principal is fully recovered. Thereafter, all distributions under a Nonqualified Contact are fully taxable. Puerto Rico does not currently impose an early withdrawal penalty tax on premature distributions from a Nonqualified Contract. The Code, however, does impose such a penalty and bases it on the amount that is taxable under federal rules.

Annuitized distributions under a Nonqualified Contract are treated as part taxable income and part non-taxable return of principal. With annuitization, the annual amount excluded from gross income under Puerto Rico tax law is equal to the amount of the distribution in excess of 3% of the total Purchase Payments paid, until an amount equal to the total Purchase Payments paid has been excluded. Thereafter, the entire distribution from a Nonqualified Contract is included in gross income. For federal income tax purposes, however, the portion of each annuity payment that is subject to tax is computed on the basis of investment in the Contract and the expected payout. Generally Puerto Rico does not require income tax to be withheld from distributions of income from Nonqualified Contracts. Although Puerto Rico allows a credit against its income tax for taxes paid to the federal government, you may not be able to use the credit fully.

General Information Regarding Qualified Contracts

(Contracts Purchased to Fund an IRA or Other Qualified Plan)

Numerous special tax rules apply to the participants in certain types of retirement plans that receive favorable treatment under the Code (“Qualified Plans”), and to the Contracts used in connection with these plans. We provide a brief description of types of Qualified Plans in this Prospectus and in the SAI, but make no attempt to provide more than general information in this Prospectus and the SAI about use of Contracts with the various types of Qualified Plans.

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When we issued a Contract in connection with a Qualified Plan (“Qualified Contract”), we amended the Contract as necessary to conform to the requirements of the Code. We have no responsibility, however, for determining whether a particular retirement plan or a particular contribution to the plan satisfies the applicable requirements of the Code, or whether a particular employee is eligible for inclusion under a plan. Your rights to any benefits under the plan may be subject to the terms and conditions of the plan itself, regardless of the terms and conditions of the Contracts.

You should consult a qualified tax advisor for specific information about the impact of tax rules and plan requirements on your particular facts and circumstances.

Additional Purchase Payments to Qualified Contracts

You may make Additional Purchase Payments to a Qualified Contract, subject to our requirements and limitations for Additional Purchase Payments (see “IV. Basic Information – How can I invest money in a Contract?” for information on our Additional Purchase Payment requirements and limitations):

• as a transfer from a traditional IRA to a Contract issued as a traditional IRA;

• as a direct or indirect rollover* from a retirement plan qualified under sections 401(a), 403(a) or 403(b) of the Code or a governmental deferred compensation plan described in section 457 of the Code to a Contract issued either as a traditional IRA or as a Roth IRA; or

• by making annual contributions to the extent permitted under the Code.

*We use the term “direct rollovers” to refer to amounts that a Qualified Plan remits directly to us as an Additional Purchase Payment. We use the term “indirect rollovers” to refer to amounts that you may receive from a Qualified Plan, and then remit to us as an Additional Purchase Payment. The Code permits an indirect rollover to be tax-deferred if it is contributed to an IRA within 60 days of receipt. Note that an individual can make only one indirect rollover from his IRA(s) during any 12-month period. The tax law does not limit the number of indirect rollovers from other Qualified Plans to an IRA.

Distribution Requirements

The Code imposes requirements on Qualified Plans to comply with minimum distribution requirements. We provide general information, below, on minimum distribution requirements for traditional IRAs, Roth IRAs and certain other Qualified Plans.

Traditional IRAs

Section 408 of the Internal Revenue Code (“Code”) permits eligible individuals to contribute to an individual retirement program known as an Individual Retirement Annuity (“IRA”) or traditional IRA (to distinguish it from the Roth IRA discussed below). Contracts issued as traditional IRAs are subject to limits on the amounts that may be contributed, the persons who may be eligible and the time when distributions may commence. Under the tax rules, the Owner and the Annuitant may not be different individuals. If a co-Annuitant is named, all distributions made while the Annuitant is alive must be made to the Annuitant. The Contract does not qualify for use in connection with an Education IRA under section 530 of the Code.

The Contract may have been issued with a death benefit or certain benefits provided by an optional Rider. The presence of such benefits may increase the amount of any required minimum distributions for IRAs and other Contracts subject to the Required Minimum Distribution (“RMD”) rules.

Under our current administrative rules, we do not permit a Beneficiary of a Contract intended for use as a traditional IRA to purchase a new optional benefit Rider if the Beneficiary elects to maintain it as an inherited IRA or an inherited Roth IRA.

Contributions to a Traditional IRA

Eligible rollover distributions from certain types of qualified retirement plans may be rolled over on a tax-deferred basis into a traditional IRA by former participants in the plans. For these purposes, eligible rollover distributions include lump sum amounts payable from the plan upon termination of employment, termination of the plan, disability or retirement. Eligible rollover distributions do not include: (i) required minimum distributions as described in section 401(a)(9) of the Code; (ii) certain distributions for life, life expectancy, or for 10 years or more which are part of a “series of substantially equal periodic payments”; and (iii) if applicable, certain hardship withdrawals.

If you are the surviving Spouse and “designated beneficiary” (as defined in the tax law) of a participant in a tax-qualified retirement account, you may make a direct rollover contribution as an Additional Purchase Payment to a Contract issued as a traditional IRA to the extent permitted. See “IV. Basic Information – How can I invest money in a Contract?” for information on our Purchase Payment requirements.

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Distributions from a Traditional IRA

In general, unless you rolled over non-deductible contributions from any other Qualified Plan or made non-deductible contributions to your Contract, all amounts paid out from a traditional IRA Contract (in the form of an annuity, a single sum, death benefits or partial withdrawal), are taxable to the payee as ordinary income. You may incur an additional 10% penalty tax if you surrender the Contract or make a withdrawal before you reach age 59 ¹⁄₂, unless certain exceptions apply as specified in section 72(t) of the Code. If any part of your direct rollover from a tax-qualified retirement plan includes after-tax contributions to the plan, or if you have made any non-deductible contributions to a Contract issued as a traditional IRA, part of any withdrawal or surrender distribution, single sum, death proceeds or annuity payment from the Contract may be excluded from taxable income when received.

You may make tax-deferred direct transfers from a Contract held as a Traditional IRA to another Traditional IRA. If instead you take a withdrawal with the intent to roll the proceeds to another IRA as an indirect rollover, you should be aware of certain limitations under the tax law. You must complete any indirect rollover within 60 days of receiving the withdrawal. Moreover, during any 12-month period, you can make only one indirect rollover, with respect to all IRAs you own including Roth IRAs. Any additional indirect rollover attempted during the 12-month period will be treated as a distribution, subject to income tax and potentially the 10% penalty tax.

A Beneficiary who is not your Spouse may make a direct transfer to an inherited IRA of the amount otherwise distributable to him or her under a Contract issued as a traditional IRA.

Required Minimum Distributions from a Traditional IRA

Treasury Department regulations prescribe required minimum distribution (“RMD”) rules governing the time at which distributions from a traditional IRA to the Owner and Beneficiary must commence and the form in which the distributions must be paid. These special rules may also require the length of any guarantee period to be limited. They also affect the restrictions that the Owner may impose on the timing and manner of payment of death benefits to a Beneficiary or the period of time over which a Beneficiary may extend payment of the death benefits under the Contract. In addition, the presence of the death benefit or a lifetime income benefit feature may affect the amount of the RMD that must be made under the Contract. Failure to comply with RMD requirements will result in the imposition of an excise tax, generally 50% of the amount by which the amount required to be distributed exceeds the actual distribution. In the case of IRAs (other than Roth IRAs), distributions of minimum amounts (as specified in the tax law) to the Owner must generally commence by April 1 of the calendar year following the calendar year in which the Owner turns age 70 ¹⁄₂. The amount that must be distributed each year is computed on the basis of the Owner’s age, the value of the Contract (taking into account both the account balance and the actuarial present value of other benefits provided under the Contract), and the value of all other traditional IRAs owned by the taxpayer.

Distributions made from traditional IRAs (and Roth IRAs) after the Owner’s death must also comply with RMD requirements. Different rules governing the timing and the manner of payments apply, depending on whether the designated beneficiary is an individual and, if so, the Owner’s Spouse, or an individual other than the Owner’s Spouse. If you wish to impose restrictions on the timing and manner of payment of death benefits to your designated beneficiary or if your Beneficiary wishes to extend over a period of time the payment of the death benefits under your Contract, please consult your own qualified tax advisor.

If you make a direct transfer of all the value from a traditional IRA to any other traditional IRA, the minimum distribution requirements (and taxes on the distributions) apply to amounts withdrawn from the other traditional IRA.

Penalty Tax on Premature Distributions from a Traditional IRA

A 10% penalty tax may be imposed on the taxable amount of any payment from a traditional IRA. The penalty tax does not apply to a payment:

• received on or after the date on which the Contract Owner reaches age 59 ¹⁄₂;

• received on or after the Owner’s death or because of the Owner’s disability (as defined in the tax law); or

• made as a series of substantially equal periodic payments (not less frequently than annually) for the life (or life expectancy) of the Owner or for the joint lives (or joint life expectancies) of the Owner and designated beneficiary.

You may be subject to a retroactive application of the penalty tax, plus interest, if you begin taking a series of substantially equal periodic payments and then modify the payment pattern (other than by reason of death or disability) before the later of your turning age 59 ¹⁄₂ and the passage of five years after the date of the first payment.

In addition, the penalty tax does not apply to certain distributions from IRAs that are used for first time home purchases or for higher education expenses, or to distributions made to certain eligible individuals called to active duty after September 11, 2001. Special conditions must be met to qualify for these three exceptions to the penalty tax. If you wish to take a distribution from a traditional IRA for these purposes, you should consult your own qualified tax advisor.

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If you rollover a Contract issued as a traditional IRA to a Roth IRA by surrendering the Contract and purchasing a Roth IRA, you may be subject to federal income taxes, including withholding taxes. Please read “Conversion or Rollover to a Roth IRA,” below, for more information.

Roth IRAs

Section 408A of the Code permits eligible individuals to contribute to a type of IRA known as a Roth IRA. Roth IRAs are generally subject to the same rules as traditional IRAs, but they differ in certain significant ways with respect to the taxation of contributions and distributions.

Contributions to a Roth IRA

Unlike a traditional IRA, contributions to a Roth IRA are not deductible. As with a traditional IRA, eligible rollover distributions from certain types of qualified retirement plans may be directly rolled over into a Roth IRA by former participants in the plan. For these purposes, eligible rollover distributions include lump sum amounts payable from the plan upon termination of employment, termination of the plan, disability or retirement. Eligible rollover distributions do not include: (i) required minimum distributions as described in section 401(a)(9) of the Code; (ii) certain distributions for life, life expectancy, or for 10 years or more which are part of a “series of substantially equal periodic payments”; and (iii) if applicable, certain hardship withdrawals.

Federal income tax will apply to direct rollovers from “non-Roth” accounts in retirement plans described in sections 401(a), 403(a), 403(b) of the Code or a governmental deferred compensation plan described in section 457(b) of the Code to Contracts issued as Roth IRAs. Please read “Rollover to a Roth IRA,” below, for more information. Under current rules, direct rollovers from “Roth” accounts in a 401(k) retirement plan to Contracts issued as Roth IRAs generally are not subject to federal income tax.

Distributions from a Roth IRA

Unlike a traditional IRA, distributions from Roth IRAs need not commence after the Owner turns age 70 ¹⁄₂. Distributions must, however, begin after the Owner’s death. Distributions after the Owner’s death must comply with the minimum distribution requirements described above for traditional IRAs. Different rules governing the timing and the manner of payments apply, depending on whether the designated beneficiary is an individual and, if so, the Owner’s Spouse, or an individual other than the Owner’s Spouse.

If you wish to impose restrictions on the timing and the manner of payment of death proceeds to your designated beneficiary or if your Beneficiary wishes to extend payment of the Contract death proceeds over a period of time, please consult your own qualified tax advisor. Under our current administrative rules, we do not permit a Beneficiary of a Contract intended for use as a Roth IRA to purchase a new optional benefit Rider if the Beneficiary elects to maintain it as a Roth IRA.

Qualified distributions from a Roth IRA are excluded from income. A qualified distribution for these purposes is a distribution that satisfies two requirements. First, the distribution must be made in a taxable year that is at least five years after the first taxable year for which a contribution to any Roth IRA established for the Owner was made. Second, the distribution must be:

• made after the Owner turns age 59 ¹⁄₂;

• made after the Owner’s death;

• attributable to the Owner being disabled; or

• a qualified first-time homebuyer distribution within the meaning of section 72(t)(2)(F) of the Code.

A direct transfer from a Contract issued as a Roth IRA to another Roth IRA is not subject to income tax. However, during any 12-month period, you can make only one indirect rollover with respect to all IRAs you own, including Roth IRAs.

Penalty Tax on Premature Distributions from a Roth IRA

Taxable distributions before age 59 ¹⁄₂ may also be subject to a 10% penalty tax. This early distribution penalty may also apply to amounts converted to a Roth IRA that are subsequently distributed within a 5-taxable year period beginning in the year of conversion. Please read “Penalty Tax on Premature Distributions from a Traditional IRA,” above, for more information.

The state tax treatment of a Roth IRA may differ from the federal income tax treatment of a Roth IRA. You should seek independent tax advice if you intend to use the Contract in connection with a Roth IRA.

Conversion or Rollover to a Roth IRA

You can convert a traditional IRA to a Roth IRA. You also can initiate a direct rollover distribution from a retirement plan described in sections 401(a), 403(a), or 403(b) of the Code or a governmental deferred compensation plan described in section 457(b) of the Code to a Roth IRA Contract. The Roth IRA annual contribution limit does not apply to conversion or rollover amounts, but you must satisfy our requirements for Additional Purchase Payments. See “IV. Basic Information – How can I invest money in a Contract?” for additional information.

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You must pay tax on any portion of a conversion or rollover amount that would have been taxed if you had not converted or rolled over to a Roth IRA. If you convert a Contract issued as a traditional IRA to a Roth IRA, the amount deemed to be the conversion amount for tax purposes may be higher than the Contract Value because of the deemed value of guarantees. If you convert a Contract issued as a traditional IRA to a Roth IRA, you may instruct us not to withhold any of the conversion amount for taxes and remittance to the IRS. If you do instruct us to withhold for taxes when converting a Contract issued as a traditional IRA to a Roth IRA, we will treat any amount we withhold as a withdrawal from your Contract, which could result in a reduction in the guarantees and benefits that you may have purchased under an optional benefits Rider to your Contract. Please read “IV. Basic Information - What other optional benefits may have been available when I purchased a Contract?” for information about the impact of withdrawals on optional benefit Riders.

If you direct the sponsor or administrator to transfer a rollover amount from your “non-Roth” Qualified Plan to a Roth IRA Contract, there is no mandatory tax withholding that applies to the rollover amount. A direct rollover to a Roth IRA is not subject to mandatory tax withholding, even though the distribution is includible in gross income.

Current tax law no longer imposes a restriction based on adjusted gross income on a taxpayer’s ability to convert a traditional IRA or other qualified retirement accounts to a Roth IRA. Accordingly, taxpayers with more than $100,000 of adjusted gross income may now convert such assets to a Roth IRA. Generally, the amount converted to a Roth IRA is included in ordinary income for the year in which the account was converted. Given the taxation of Roth IRA conversions and the potential for an early distribution penalty tax, you should consider the resources that you have available, other than your retirement plan assets, for paying any taxes that would become due the year of any such conversion or a subsequent year. You should seek independent qualified tax advice if you intend to use the Contract in connection with a Roth IRA.

You are not subject to federal income tax on a direct rollover of distributions from a Roth account in another Qualified Plan permitted to be rolled over into a Contract issued as a Roth IRA, or from a Contract issued as a Roth IRA to another Roth IRA.

Other Qualified Plans

You may have purchased a Qualified Contract for use in connection with certain retirement plans that receive favorable treatment under the Code, but are not traditional IRAs or Roth IRAs. The other types of retirement plans (“Other Qualified Plans”) include:

Other Qualified Plan Type
SIMPLE IRA Plans	In general, under Section 408(p) of the Code a small business employer may establish a SIMPLE IRA plan if the employer employed no more than 100 employees earning at least $5,000 during the preceding year. Under a SIMPLE IRA plan both employees and the employer make deductible contributions. SIMPLE IRAs are subject to various requirements, including limits on the amounts that may be contributed, the persons who may be eligible, and the time when distributions may commence. The requirements for minimum distributions from a SIMPLE IRA plan are generally the same as those discussed above for distributions from a traditional IRA. The rules on taxation of distributions are also similar to those that apply to a traditional IRA with a few exceptions.
Simplified Employee Pensions (SEP-IRAs)	Section 408(k) of the Code allows employers to establish simplified employee pension plans for their employees, using the employees’ IRAs for such purposes, if certain criteria are met. Under these plans the employer may, within specified limits, make deductible contributions on behalf of the employees to IRAs. The requirements for minimum distributions from a SEP-IRA, and rules on taxation of distributions from a SEP-IRA, are generally the same as those discussed above for distributions from a traditional IRA.
Section 403(b) Plans or Tax-Sheltered Annuities	Section 403(b) of the Code permits public school employees and employees of certain types of tax-exempt organizations to have their employers purchase annuity contracts for them and, subject to certain limitations, to exclude the Purchase Payments from gross income for tax purposes. There also are limits on the amount of incidental benefits that may be provided under a tax-sheltered annuity. These Contracts are commonly referred to as “tax-sheltered annuities.” Please see the SAI for information on withdrawal restrictions under Section 403(b) Plans. You may request a copy of the SAI from the Annuities Service Center.
Corporate and Self- Employed Pension and Profit-Sharing Plans (H.R. 10 and Keogh)	Sections 401(a) and 403(a) of the Code permit corporate employers to establish various types of tax-deferred retirement plans for employees. The Self-Employed Individuals’ Tax Retirement Act of 1962, as amended, commonly referred to as “H.R. 10” or “Keogh,” permits self-employed individuals to establish tax-favored retirement plans for themselves and their employees. Such retirement plans may permit the purchase of annuity contracts in order to provide benefits under the plans; however, there are limits on the amount of incidental benefits that may be provided under pension and profit sharing plans.

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Other Qualified Plan Type

Deferred Compensation Plans of State and Local Governments and Tax-Exempt Organizations

Section 457 of the Code permits employees of state and local governments and tax-exempt organizations to defer a portion of their compensation without paying current taxes. The employees must be participants in an eligible deferred compensation plan. A Section 457 plan must satisfy several conditions, including the requirement that it must not permit distributions prior to your separation from service (except in the case of an unforeseen emergency). When we make payments under a Section 457 Contract, the payment is taxed as ordinary income. Please see the SAI for information on restrictions under the Texas Optional Retirement Program. You may request a copy of the SAI from the Annuities Service Center.

In the case of a Contract held by the trustee of a Qualified Plan, references to the Owner in the discussion below should be read to mean the employee named as the Annuitant on the Contract.

Collecting and Using Information

Through your participation in a Qualified Plan, the Company, your employer, your Plan administrator, and your Plan sponsor collect various types of confidential information you provide in your agreements, such as your name and the name of any Beneficiary, Social Security Numbers, addresses, and occupation information. The Company, your employer, the Plan administrator, and your Plan sponsor also collect confidential information relating to your Plan transactions, such as contract values, purchase payments, withdrawals, transfers, loans and investments. In order to comply with IRS regulations and other applicable law in servicing your Contract, the Company, your employer, the Plan administrator and the Plan sponsor may be required to share such confidential information among themselves, other current, former or future providers under your Qualified Plan, and among their employees. By maintaining a Contract for use in a Qualified Plan or by intending to make an additional purchase payment, transfer of ownership, transfer, withdrawal or loan on an existing Contract used in a Section 403(b) Plan, you consent to such sharing of confidential information. The Company will not disclose any such confidential information to anyone, except as permitted by law or in accordance with your consent.

Contributions to Other Qualified Plans

You may make Additional Purchase Payments through rollovers or conversions only from certain types of Qualified Plans or by making annual contributions to the extent permitted under the Code and by us. See “IV. Basic Information – How can I invest money in a Contract?” for information on our Purchase Payment requirements.

We have no responsibility for determining whether a particular retirement plan or a particular contribution to the plan satisfies the applicable requirements of the Code and the plan. In general, the Code imposes limitations on the amount of annual compensation that can be contributed into Other Qualified Plans and contains rules to limit the total amount you can contribute to all of your IRAs and Other Qualified Plans. Trustees and administrators of Other Qualified Plans may, however, generally invest and reinvest existing plan assets without regard to such Code imposed limitations on contributions. Certain distributions from Other Qualified Plans may be transferred directly to another plan, unless funds are added from other sources, without regard to such limitations.

Distributions from Other Qualified Plans

If permitted under your plan, you may take a withdrawal in the form of a distribution:

• from a Contract intended for use with any Qualified Plan (other than a section 457 deferred compensation plan maintained by a tax-exempt organization) and make a “tax-free rollover” to a traditional IRA;

• from a Contract intended for use with any Qualified Plan (other than a section 457 deferred compensation plan maintained by a tax-exempt organization) and make a “tax-free rollover” to a SIMPLE IRA, but only after the 2-year period beginning on the date the individual first participated in any qualified salary reduction arrangement maintained by the individual’s employer*; or

• from a Contract intended for use with a retirement plan qualified under sections 401(a), 403(a), or 403(b) of the Code or a governmental deferred compensation plan described in section 457(b) of the Code and make a “tax-free rollover” to any such plans.

* Note that if your Contract is a SIMPLE IRA, it does not accept a rollover from any Qualified Plan other than another SIMPLE IRA.

In addition, if your Spouse is your designated beneficiary and survives you, he or she is permitted to take a distribution from a Contact intended for use with your tax-qualified retirement account and make a “tax-free rollover” to another tax-qualified retirement account in which your surviving Spouse participates, to the extent permitted by your surviving Spouse’s plan. A Beneficiary who is not your surviving Spouse may, if permitted by the plan, make a direct rollover to a traditional IRA of the amount otherwise distributable to him or her upon your death under a Contract that is held as part of a retirement plan described in sections 401(a), 403(a), or 403(b) of the Code or a governmental deferred compensation plan described in section 457(b) of the Code. The IRA is treated as an inherited IRA of the non-Spouse Beneficiary.

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You may make a “tax-free rollover” to a Roth IRA from a Contract intended for use as a Roth account in a retirement plan described in section 401(a) or section 403(b) of the Code or a governmental deferred compensation plan described in section 457(b) of the Code.

In lieu of taking a distribution from your plan (including a section 457 deferred compensation plan maintained by a tax-exempt organization), your plan may permit you to make a direct trustee-to-trustee transfer of a Qualified Contract from the plan.

Current Treasury Department regulations provide a simplified method to determine the taxable portion of annuity payments under Contracts issued in connection with Other Qualified Plans. Please consult with a qualified tax advisor for further information.

Required Minimum Distributions from Other Qualified Plans

Treasury Department regulations prescribe RMD rules governing the time at which distributions from Other Qualified Plans to the Owner and Beneficiary must commence and the form in which the distributions must be paid. These rules are substantially similar to the RMD rules described above for a traditional IRA, except that distributions of required minimum amounts must generally commence by the later of:

• April 1 of the calendar year following the calendar year in which the Qualified Plan participant turns 70 ¹⁄₂, or

• April 1 of the calendar year following the calendar year in which Qualified Plan participant (other than a 5% owner) retires from the employer that sponsored the Qualified Plan.

Penalty Tax on Premature Distributions from Other Qualified Plans

A 10% penalty tax may be imposed on the taxable amount of any payment from certain Qualified Contracts (but generally not section 457 plans). (The amount of the penalty tax is 25% of the taxable amount of any payment received from a SIMPLE retirement account during the 2-year period beginning on the date the individual first participated in any qualified salary reduction arrangement maintained by the individual’s employer.) There are exceptions to this penalty tax which vary depending on the type of Qualified Plan. In the case of distributions from certain Qualified Contracts, including a SIMPLE IRA, the penalty tax does not apply to a payment:

• received on or after the date on which the Contract Owner reaches age 59 ¹⁄₂;

• received on or after the Owner’s death or because of the Owner’s disability (as defined in the tax law); or

• made as a series of substantially equal periodic payments (not less frequently than annually) for the life (or life expectancy) of the Owner or for the joint lives (or joint life expectancies) of the Owner and designated beneficiary.

You may be subject to a retroactive application of the penalty tax, plus interest, if you begin taking a series of substantially equal periodic payments and then modify the payment pattern (other than by reason of death or disability) before the later of your turning age 59 ¹⁄₂ and the passage of five years after the date of the first payment.

These exceptions, as well as certain others not described herein, generally apply to taxable distributions from Other Qualified Plans (although, in the case of plans qualified under sections 401 and 403 of the Code, the exception for substantially equal periodic payments applies only if the Owner has separated from service). If you wish to take a distribution and rely on an exception to the penalty tax, you should consult your own qualified tax advisor.

Withholding on Eligible Rollover Distributions

Eligible rollover distributions from a retirement plan that is qualified under sections 401(a), 403(a) or 403(b) of the Code, or from a governmental deferred compensation plan described in section 457(b) of the Code are subject to mandatory withholding. An eligible rollover distribution generally is any taxable distribution from such plans except (i) minimum distributions required under section 401(a)(9) of the Code, (ii) certain distributions for life, life expectancy, or for 10 years or more which are part of a “series of substantially equal periodic payments,” and (iii) if applicable, certain hardship withdrawals.

Federal income tax of 20% will be withheld from an eligible rollover distribution. The withholding is mandatory, and you cannot elect to have it not apply. This 20% withholding will not apply, however, if instead of receiving the eligible rollover distribution, you choose to have it directly transferred to an eligible retirement plan, including a traditional IRA, or to a Roth IRA.

If we have to withhold a portion of your distribution, we will treat any amount we withhold as a withdrawal from your Contract, which could result in a reduction in the guarantees and benefits that you may have purchased under an optional benefits Rider to your Contract. Please read “IV. Basic Information - What other optional benefits may have been available when I purchased a Contract?” for information about the impact of withdrawals on optional benefit Riders.

We do not need to withhold any amounts if you provide us with information, on the forms we require for this purpose, that you wish to assign a Qualified Contract and/or transfer amounts from that Contract directly to another Qualified Plan. Similarly, if you wish to make Additional Purchase Payments to a Qualified Contract, you may find it advantageous to instruct your existing retirement plan to transfer amounts directly to us, in lieu of making a distribution to you. You should seek independent tax advice if you intend to maintain a Contract for use with a Qualified Plan.

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Designated Roth Accounts within Other Qualified Plans

The Small Business Jobs Act of 2010 authorizes: (1) participants in governmental deferred compensation plans described in section 457(b) to contribute deferred amounts to designated Roth accounts within their 457(b) plan; and (2) participants in 401(k), 403(b) and certain other plans to roll over qualified distributions into a designated Roth account within their plans, if allowed by their plans. The Contract, however, was not designed to separately account for any Contract Value in a single Contract that is split between Roth and non-Roth accounts, even if your 401(k) Plan, 403(b) Plan or 457 Plan allows you to split your account. If your plan allows it, and you split your Contract Value into Roth and non-Roth accounts, you or your plan administrator (in the case of 401(k) Plans) will be responsible for the accounting of your Contract Value for tax purposes: calculating withholding, income tax reporting, and verifying Required Minimum Distributions. We are not responsible for the calculations of any service provider that you may use to split Contract Value between Roth and non-Roth accounts. We will deny any request that would create such a split.

Rollover to a Roth IRA

Current tax law no longer imposes a restriction, based on adjusted gross income, on a taxpayer’s ability to initiate a direct rollover from a non-Roth account in a Qualified Plan to a Roth IRA. Accordingly, taxpayers with more than $100,000 of adjusted gross income may now initiate a direct rollover of a distribution from a retirement plan described in sections 401(a), 403(a), or 403(b) of the Code or a governmental deferred compensation plan described in section 457(b) of the Code to a Roth IRA. The Roth IRA annual contribution limit does not apply to rollover amounts.

You must, however, pay tax on any portion of the rollover amount that would have been taxed if you had not made a direct rollover to a Roth IRA. No similar limitations apply to rollovers to one Roth IRA from another Roth IRA or from a Roth account in a retirement plan described in section 401(a) or section 403(b) of the Code or a governmental deferred compensation plan described in section 457(b) of the Code. Please note that the amount deemed to be the “rollover amount” for tax purposes may be higher than the Contract Value because of the deemed value of guarantees.

A 10% penalty tax for premature distributions may apply if amounts converted to a Roth IRA are distributed within the 5-taxable year period beginning in the year the conversion is made. Generally, the amount converted to a Roth IRA is included in ordinary income for the year in which the account was converted.

If you instruct us to transfer a rollover amount from a Qualified Contract to a Roth IRA, we will assume it is permitted under your plan and you may instruct us to not withhold any of the rollover for taxes and remittance to the IRS. A direct rollover is not subject to mandatory tax withholding, even if the distribution is includible in gross income. If you instruct us to withhold taxes in connection with a direct rollover from an existing Contract to a Roth IRA, we will treat any amount we withhold as a withdrawal from your Contract. This could result in reduction of the guarantees and benefits you may have purchased under an optional benefits Rider to your Contract. Please read “IV. Basic Information – What other optional benefits may have been available when I purchased a Contract?” for information about the impact of withdrawals on optional benefit Riders.

Given the taxation of direct rollovers to a Roth IRA and the potential for an early distribution penalty tax, you should consider the resources that you have available, other than your retirement plan assets, for paying any taxes that would become due the year of any such rollover or a subsequent year. You should seek independent qualified tax advice if you intend to use the Contract in connection with a Roth IRA.

Section 403(b) Plans

Section 403(b) of the Code permits public school employees and employees of certain types of tax-exempt organizations to have their employers purchase annuity contracts for them and, subject to certain limitations, to exclude the Purchase Payments from gross income for tax purposes. If you purchased a Contract for use in a retirement plan intended to qualify under section 403(b) of the Code (a “Section 403(b) Plan” or the “Plan”), we may restrict your ability to make Additional Purchase Payments unless: (a) we receive the Additional Purchase Payment directly from the Section 403(b) Plan through your employer, the Plan’s administrator, the Plan’s sponsor or in the form of a transfer acceptable to us; (b) we have entered into an agreement with your Section 403(b) Plan concerning the sharing of information related to your Contract (an “Information Sharing Agreement”); and (c) unless contained in the Information Sharing Agreement, we have received a written determination by your employer, the Plan administrator or the Plan sponsor of your Section 403(b) Plan that the plan qualifies under section 403(b) of the Code and complies with applicable Treasury Department regulations (a “Certificate of Compliance”) (Information Sharing Agreement and Certificate of Compliance, together, the “Required Documentation”).

We may accept, reject or modify any of the terms of a proposed Information Sharing Agreement presented to us, and make no representation that we will enter into an Information Sharing Agreement with your Section 403(b) Plan.

Additional Purchase Payments. We will not accept Additional Purchase Payments in the form of salary reduction, matching or other similar contributions in the absence of the Required Documentation. Matching or other employer contributions to Contracts issued on or after January 1, 2009, will be subject to restrictions on withdrawals specified in the Section 403(b) Plan.

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We will not knowingly accept transfers, in the absence of the Required Documentation, from another existing annuity contract or other investment under a Section 403(b) Plan to a previously issued Contract used in a Section 403(b) Plan. Subject to our receipt of the Required Documentation, such transfers shall be made directly from a Plan through an employer, a Plan administrator or a Plan sponsor, or by a transfer acceptable to us.

In the event that we do not receive the Required Documentation and you nonetheless direct us to accept a Purchase Payment, the transfer may be treated as a taxable transaction.

Please see the SAI for information regarding withdrawals under Section 403(b) Plans. You may request a copy of the SAI from the Annuities Service Center.

Loans under section 403(b) of the Code

You may be eligible for a loan of some or all of your Contract Value if:

• We issued your Contract prior to November 12, 2007;

• Your Contract is intended for use with a retirement plan qualified under section 403(b) of the Code;

• The retirement plan is not subject to Title 1 of ERISA; and

• Your retirement plan permits you to request the loan.

Loans from Qualified Contracts intended for use under retirement plans qualified under section 403(b) of the Code, where allowed, are subject to a variety of limitations, including restrictions as to the amount that may be borrowed, the duration of the loan and the manner in which the loan must be repaid.

Loans are subject to the Code, Treasury regulations, IRS rulings, and our procedures in effect at the time you apply for a loan. Because the rules governing loans under section 403(b) Contracts are complicated, you should consult your tax advisor before exercising any loan privilege for which you are eligible. Failure to meet the requirements for loans may result in adverse income tax consequences to you. The loan agreement you sign will describe the restrictions and limitations applicable to the loan at the time you apply.

Federal tax law generally requires loans to be repaid within 5 years (except in cases where the loan was used to acquire the principal residence of a plan participant), with repayments made at least quarterly and in level payments over the term of the loan. Interest will be charged on your Loan Amount. Failure to make a loan repayment when due will result in adverse tax consequences to you.

We deduct the amount of any Unpaid Loans from the death benefit otherwise payable under the Contract. In addition, loans, whether or not repaid, will have a permanent effect on the Contract Value because the investment results of the Investment Accounts will apply only to the unborrowed portion of the Contract Value. The longer a loan is unpaid, the greater the effect is likely to be. The effect could be favorable or unfavorable.

If you have a loan outstanding under a Contract intended for use with a Section 403(b) Plan, any surrender or transfer of your Contract may subject you to income taxation on the amount of the loan balance.

Puerto Rico Contracts Issued to Fund Retirement Plans

The tax laws of Puerto Rico vary significantly from the provisions of the Internal Revenue Code of the United States that are applicable to various Qualified Plans. If you purchased a Contract intended for use in connection with Puerto Rican “tax qualified” retirement plans, please note that the text of this Prospectus addresses U.S federal tax law only and is inapplicable to the tax laws of Puerto Rico.

See Your Own Tax Advisor

The foregoing description of federal income tax topics and issues is only a brief summary and is not intended as tax advice. It does not include a discussion of federal estate and gift tax or state tax consequences. The rules under the Code governing Qualified Plans are extremely complex and often difficult to understand. Changes to the tax laws may be enforced retroactively. Anything less than full compliance with the applicable rules, all of which are subject to change from time to time, can have adverse tax consequences. The taxation of an Annuitant or other payee has become so complex and confusing that great care must be taken to avoid pitfalls. For further information you should always consult a qualified tax advisor.

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X. Other Information

Assignment; Change of Owner or Beneficiary

To qualify for favorable tax treatment, certain Contracts cannot be sold, assigned, discounted, or pledged as collateral for a loan, as security for the performance of an obligation, or for any other purpose, unless the Owner is a trustee under section 401(a) of the Code.

Subject to these limits, while the Annuitant is alive, you may designate someone else as the Owner by written notice to the Annuities Service Center. Before requesting a change of ownership or making an assignment of your Contract, however, you should consider:

• A change of ownership may be treated as a distribution from the Contract and subject to tax. We consider a collateral assignment to be a distribution from the Contract, and we will report any taxable amounts as may be required.

• A change of ownership (or collateral assignment) is subject to the rights of any irrevocable Beneficiary.

• You may not change ownership or make a collateral assignment after the earlier of the Maturity Date or the Annuity Commencement Date.

• Contracts issued to a Qualified Plan may be subject to restrictions on transferability. For example, Qualified Contracts generally may not be transferred except by the trustee of an exempt employees’ trust which is part of a retirement plan qualified under section 401 of the Code or as otherwise permitted by applicable Treasury Department regulations. You may not be able to sell, assign, transfer, discount or pledge (as collateral for a loan or as security for the performance of an obligation, or for any other purpose) a Qualified Contract to any person other than us.

We assume no liability for any payments made or actions taken before a change is approved or an assignment is accepted. We assume no responsibility for the validity or sufficiency of any assignment. An absolute assignment or ownership change will revoke the interest of any revocable Beneficiary.

You chose the Beneficiary in the application for the Contract. You may change the Beneficiary by written notice no later than receipt of due proof of the death of the Annuitant. Changes of Owner or Beneficiary will take effect when we receive them, whether or not you or the Annuitant is then alive. However, these changes are subject to:

• the rights of any assignees of record; and

• certain other conditions referenced in the Contract.

An assignment, pledge, or other transfer may be a taxable event. See “IX. Federal Tax Matters” above. Therefore, you should consult a competent tax advisor before taking any such action.

Beneficiary

The Beneficiary is the person, persons or entity designated in the Contract specifications page (or as subsequently changed). However, if there is a surviving Contract Owner, we treat that person as the Beneficiary. You may change the Beneficiary subject to the rights of any irrevocable Beneficiary. You must make any change in writing and the change must be received at our Annuities Service Center. We must approve any change. If approved, we effect such change as of the date on which it was written. We assume no liability for any payments made or actions taken before the change is approved. If no Beneficiary is living, any designated Contingent Beneficiary becomes the Beneficiary. The interest of any Beneficiary is subject to that of any assignee. If no Beneficiary or Contingent Beneficiary is living, the Beneficiary is the estate of the deceased Contract Owner. In the case of certain Qualified Contracts, Treasury Department regulations may limit designations of Beneficiaries.

Code Section 72(s)

In order for our Nonqualified Contracts (i.e., Contracts not purchased to fund an IRA or other Qualified Plan) to be treated as annuities under the Code, we will interpret the provisions of the Contract so as to comply with the requirements of section 72(s) of the Code, which prescribes certain required provisions governing distributions after the death of the Owner.

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Reports

At least annually, we will send you (1) a report showing the number and value of the accumulation units in your Contract and (2) the financial statements of the Portfolios.

Voting Privileges

We vote Portfolio shares held in a Separate Account at any Portfolio shareholder meeting in accordance with timely voting instructions received from the persons having the voting interest under the Contract. We determine the number of Portfolio shares for which voting instructions may be given not more than 90 days prior to the meeting. We arrange for voting materials to be distributed to each person having the voting interest under the Contract together with appropriate forms for giving voting instructions. If there are shares of a Portfolio held by a Subaccount for which we do not receive timely voting instructions, we will vote those shares in the same proportion as the total votes for all of our registered separate accounts for which we have received timely instructions. We will vote all Portfolio shares that we hold directly in our General Account in the same proportion as the total votes for all our registered separate accounts and those of any of our affiliates for which we have received timely instructions. One effect of this proportional voting is that a small number of Contract Owners can determine the outcome of a vote.

Changes to the Separate Account

We reserve the right, subject to applicable law, including any required shareholder approval:

• to transfer assets from the Separate Account to another Separate Account or Investment Option by withdrawing the same percentage of each investment in the Separate Account with proper adjustments to avoid odd lots and fractions;

• to add or delete Variable Investment Options;

• to change the underlying investment vehicles;

• to operate the Separate Account;

• in any form permitted by law; and

• to terminate the Separate Account’s registration under the 1940 Act, if such registration should no longer be legally required.

Unless otherwise required under applicable laws and regulations, notice to or approval of Owners will not be necessary for us to make such changes.

Variations in Charges or Rates for Eligible Classes

We may have reduced or eliminated the amount of charges and deductions of some Contracts where permitted by state law. The affected Contracts involved sales to groups or classes of individuals under special circumstances that we expected to result in a reduction in our expenses associated with the sale or maintenance of the Contracts, or that we expected to result in mortality or other risks that were different from those normally associated with the Contracts.

The entitlement to such variation in charges or rates was determined by us based upon such factors as the following:

• the size of the initial Purchase Payment;

• the size of the group or class;

• the total amount of Purchase Payments expected to be received from the group or class and the manner in which the Purchase Payments were remitted;

• the nature of the group or class for which the Contracts were being purchased and the persistency expected from that group or class as well as the mortality or morbidity risks associated with that group or class;

• the purpose for which the Contracts were being purchased and whether that purpose made it likely that the costs and expenses would be reduced; or

• the level of commissions paid to selling broker-dealers or certain financial institutions with respect to Contracts within the same group or class.

We made any reduction in charges or increase in initial guarantee rates according to our rules in effect at the time an application for a Contract was approved. We reserve the right to modify, suspend or terminate any reductions or waivers of charges at any time. Any variation in charges or rates will reflect differences in costs and services and will not be unfairly discriminatory to the interests of any Owner.

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Distribution of Contracts

John Hancock Distributors, LLC (“JH Distributors”), a Delaware limited liability company and an affiliate of ours, is the principal underwriter and distributor of the Contract interests offered by this Prospectus and of other annuity and life insurance products we and our affiliates offer. JH Distributors also acts as the principal underwriter of John Hancock Variable Insurance Trust, whose securities are used to fund certain Variable Investment Options under the Contract and under other annuity and life insurance products we offer.

JH Distributors’ principal address is 200 Bloor Street East, Toronto, Canada M4W 1E5. It also maintains offices with us at 601 Congress Street, Boston, Massachusetts 02210. JH Distributors is a broker-dealer registered under the Securities Exchange Act of 1934, as amended (the “1934 Act”) and is a member of the Financial Industry Regulatory Authority (“FINRA”).

We offered the Contract for sale through broker-dealers that entered into selling agreements for the sale of the Contracts. Broker-dealers sold the Contract through their registered representatives who were appointed by us to act as our insurance agents. Signator Investors, Inc. (“Signator”), a subsidiary of ours, or any of its affiliates that is registered under the 1934 Act and a member of FINRA, may also have offered the Contract.

JH Distributors may continue to pay compensation to broker-dealers in connection with the promotion or servicing of the Contracts. In turn, the broker-dealers pay a portion of the compensation to their registered representatives, under their own arrangements. Signator compensated its registered representatives for sales of the Contracts on a commission and fee for service basis. We may also reimburse Signator for direct and indirect expenses actually incurred in connection with the distribution and servicing of these Contracts.

Signator representatives may have received additional cash or non-cash incentives (including expenses for conference or seminar trips and certain gifts) in connection with the sale of Contracts issued by us. From time to time, Signator, at its expense, may also have provided significant additional amounts to broker dealers or other financial services firms which sold or arranged for the sale of the Contracts. Such compensation may have included, for example, financial assistance to financial services firms in connection with their conferences or seminars, sales or training programs for invited registered representatives and other employees, payment for travel expenses, including lodging, incurred by registered representatives and other employees for such seminars or training programs, seminars for the public, advertising and sales campaigns regarding the Contracts, and/or other events or activities sponsored by the financial services firms. As a consequence of such additional compensation, representatives and financial services firms, including but not limited to Signator and its representatives, may have been motivated to sell our Contracts instead of Contracts issued by other insurance companies.

We may also continue to pay commissions or overrides to a limited number or affiliated and/or non-affiliated broker-dealers that provided marketing support and training services to the broker-dealer firms that sold and service the Contracts.

Transaction Confirmations

We will send you confirmation statements for certain transactions in your Investment Accounts. You should carefully review these transaction confirmations to verify their accuracy. You should report any mistakes immediately to our Annuities Service Center. If you fail to notify our Annuities Service Center of any mistake within 60 days of the delivery of the transaction confirmation, we will deem you to have ratified the transaction. We encourage you to register for electronic delivery of your transaction confirmations. Please contact the John Hancock Annuities Service Center at the applicable telephone number or Internet address shown on the first page of this Prospectus for more information on electronic transactions.

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Statement of Additional Information

Our Statements of Additional Information (SAI) provide additional information about the Contracts and the Separate Accounts, including information on our history, services provided to the Separate Accounts and legal and regulatory matters. We filed the SAI with the SEC on the same date as this Prospectus and incorporate them herein by reference. You may obtain a copy of the current SAI without charge by contacting us at the Annuities Service Center shown on the first page of this Prospectus. The SEC also maintains a website (http://www.sec.gov) that contains the SAI and other information about us, the Contracts and the Separate Accounts. We list the Table of Contents of the SAI below.

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT Q

(formerly JOHN HANCOCK VARIABLE ANNUITY ACCOUNT H)

Statement of Additional Information

Table of Contents

General Information And History

Accumulation Unit Value Tables

Services

Independent Registered Public Accounting Firm

Servicing Agent

Principal Underwriter

Compensation

Additional Information On Section 403(B) Plans Or Tax-Sheltered Annuities

Additional Information On Deferred Compensation Plans Of State And Local Governments And Tax-Exempt Organizations

Calculation Of Annuity Payments

Calculation of Annuity Units

Annuity Unit Values

Mortality Tables

Additional Information About Determining Unit Values

Net Investment Rate

Adjustment of Units and Values

Hypothetical Examples Illustrating the Calculation of Accumulation Unit Values and Annuity Unit Values

Purchases And Redemptions Of Portfolio Shares

The Separate Account

Liability For Telephone Transfers

Voting Privileges

Legal And Regulatory Matters

Appendix A: Audited Financial Statements

Financial Statements

The Statement of Additional Information also contains the Company’s financial statements for the years ended December 31, 2015 and 2014, and its Separate Account financial statements for the year ended December 31, 2015 (the “Financial Statements”). Our Financial Statements provide information on our financial strength as of December 31, 2015, including information on our General Account assets that were available at that time to support our guarantees under the Contracts and any optional benefit Riders. The Company’s General Account consists of securities and other investments, the value of which may decline during periods of adverse market conditions.

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APPENDIX A: Details About Our Fixed Investment Options

Investments That Support Our Fixed Investment Options

We back our obligations under the Fixed Investment Options with John Hancock USA’s general assets. Subject to applicable law, we have sole discretion over the investment of our general assets (including those held in our “non-unitized” separate account that primarily supports the Fixed Investment Options). We invest these amounts in compliance with applicable state insurance laws and regulations concerning the nature and quality of our general investments.

We invest the non-unitized separate account assets, according to our detailed investment policies and guidelines, in fixed income obligations, including:

• corporate bonds;

• mortgages;

• mortgage-backed and asset-backed securities; and

• government and agency issues.

We invest primarily in domestic investment-grade securities. In addition, we use derivative contracts only for hedging purposes, to reduce ordinary business risks associated with changes in interest rates, and not for speculating on future changes in the financial markets. Notwithstanding the foregoing, we are not obligated to invest according to any particular strategy.

No Fixed Investment Options or Market Value Adjustments in OR and WA Contracts

Fixed Investment Options are not available as Investment Options in Contracts issued in OR and WA. Owners of affected Contracts may allocate Purchase Payments and transfer Contract Value only to the Variable Investment Options. We will not apply a “market value adjustment” or “MVA” to proceeds of such Contracts. Owners of such Contracts should disregard all references to these terms in the Prospectus.

Guaranteed Interest Rates

We declare the guaranteed rates from time to time as market conditions and other factors dictate. We advise you of the guaranteed rate for a selected Fixed Investment Option at the time we:

• receive your Purchase Payment;

• effectuate your transfer; or

• renew your Fixed Investment Option.

We have no specific formula for establishing the guaranteed rates for the Fixed Investment Options. The rates may be influenced by interest rates generally available on the types of investments acquired with amounts allocated to the Fixed Investment Option. In determining guarantee rates, we may also consider, among other factors, the duration of the Fixed Investment Option, regulatory and tax requirements, sales and administrative expenses we bear, risks we assume, our profitability objectives, and general economic trends.

Computation of Market Value Adjustment

We determine the amount of the market value adjustment by multiplying the amount being taken from the Fixed Investment Option (before any applicable withdrawal charge) by a factor expressed by the following formula:

where:

• g is the guaranteed rate in effect for the current Fixed Investment Option,

• c is the current guaranteed rate in effect for new Fixed Investment Options with duration equal to the number of years remaining in the current Fixed Investment Option (rounded to the nearest whole number of years). If we are not currently offering such a Fixed Investment Option, we will declare a guarantee rate, solely for this purpose, consistent with interest rates currently available,

• n is the number of complete months from the date of withdrawal to the end of the current Fixed Investment Option. (If less than one complete month remains, n equals one unless the withdrawal is made on the last day of the Fixed Investment Option, in which case no adjustment applies.)

A-1

For Contracts issued in FL and NY, we use the following formula instead:

SAMPLE CALCULATION 1: POSITIVE ADJUSTMENT

Premium payment	$10,000
Guarantee period	5 years
Time of withdrawal or transfer	beginning of 3rd year of guaranteed period
Amount withdrawn or transferred	$10,816
Guaranteed rate (g)	4%
Guaranteed rate for new 3 year guarantee (c)	3%
Remaining guarantee period (n)	36 months

Maximum positive adjustment: $10,000 x (1.04² - 1.03²) = $207

(i.e., the maximum withdrawal adjusted for market value adjustment is $11,023, or $10,816 + $207)

Market Value Adjustment:

Amount withdrawn or transferred (adjusted for market value adjustment): $10,816 + $157.51 = $10,973.51

For Contracts issued in FL and NY, assume that the Guaranteed rate (g) is 3.50%, and determine the amount withdrawn or transferred (adjusted for market value adjustment) as follows:

In this case, the amount withdrawn or transferred (adjusted for market value adjustment) is $10,712 + $78 = $10,790.

SAMPLE CALCULATION 2: NEGATIVE ADJUSTMENT

Premium payment	$10,000
Guarantee period	5 years
Time of withdrawal or transfer	beginning of 3rd year of guaranteed period
Amount withdrawn or transferred	$11,025
Guaranteed rate (g)	5%
Guaranteed rate for new 3 year guarantee (c)	5.5%
Remaining guarantee period (n)	36 months

Maximum negative adjustment: $10,000 x (1.05² - 1.03²) = $416

(i.e., the maximum withdrawal adjusted for market value adjustment is $10,609, or $11,025 - $416)

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Market Value Adjustment:

Amount withdrawn or transferred (adjusted for market value adjustment): $11,025 - $309.09 = $10,715.91

For Contracts issued in FL and NY, we would use the following equation instead:

In this case, the amount withdrawn or transferred (adjusted for market value adjustment) is $11,025 - $232.92 = $10,792.08.

SAMPLE CALCULATION 3: POSITIVE ADJUSTMENT LIMITED BY AMOUNT OF EXCESS INTEREST

Premium payment	$10,000
Existing guarantee period	5 years
Time of withdrawal or transfer	beginning of 3rd year of guaranteed period
Amount withdrawn or transferred	$11,025
Guaranteed rate (g)	5%
Guaranteed rate for new 3 year guarantee (c)	3%
Remaining guarantee period (n)	36 months

Amount of excess interest: $10,000 x (1.05² - 1.03²) = $416

(i.e. the maximum withdrawal adjusted for market value adjustment is $11,441, or $11,025 + $416)

Market Value Adjustment:

Since the market value adjustment exceeds the amount of excess interest of $416, the actual market value adjustment is $416.

Amount withdrawn or transferred (adjusted for market value adjustment): $11,025 + $416 = $11,441.

For Contracts issued in FL and NY, we would use the following equation instead:

In this case, the market value adjustment also exceeds the amount of excess interest of $416, so the actual market value adjustment is $416.

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SAMPLE CALCULATION 4: NEGATIVE ADJUSTMENT LIMITED BY AMOUNT OF EXCESS INTEREST

Premium payment	$10,000
Guarantee period	5 years
Time of withdrawal or transfer	beginning of 3rd year of guaranteed period
Amount withdrawn or transferred	$10,816
Guaranteed rate (g)	4%
Guaranteed rate for new 3 year guarantee (c)	7%
Remaining guarantee period (n)	36 months

Amount of excess interest: $10,000 x (1.04² - 1.03²) = $207

(i.e., the minimum withdrawal adjusted for market value adjustment is $10,609, or $10,816 - $207)

Market Value Adjustment:

Since the market value adjustment exceeds the amount of excess interest of $207, the actual market value adjustment is -$207.

Amount withdrawn or transferred (adjusted for market value adjustment): $10,816 - $207 = $10,609

For Contracts issued in FL and NY, we would use the following equation instead:

In this case, since the market value adjustment also exceeds the amount of excess interest of $207, the actual market value adjustment is -$207.

NOTE: All interest rates shown have been arbitrarily chosen for purposes of these examples. In most cases they will bear little or no relation to the rates we are actually guaranteeing at any time.

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APPENDIX B: Example of Withdrawal Charge Calculation

Assume the Following Facts:

On January 1, 2001, you make a $5,000 initial Purchase Payment and we issue you a Contract.

On January 1, 2002, you make a $1,000 Purchase Payment.

On January 1, 2003, you make a $1,000 Purchase Payment.

On January 1, 2004, the total value of your Contract is $7,500 because of favorable investment earnings.

Now assume you make a withdrawal of $7,000 (no tax withholding) on January 2, 2004. In this case, assuming no prior withdrawals, we would deduct a CDSL of $289.36. We withdraw a total of $7,289.36 from your Contract.

$  7,000.00 — withdrawal request payable to you

+     289.36 — withdrawal charge payable to us

$  7,289.36 — total amount withdrawn from your Contract

Here Is How We Determine the Withdrawal Charge:

(1)         We first distribute to you the $500 profit you have in your Contract ($7,500 total Contract Value less $7,000 of Purchase Payments you have paid) under the free withdrawal provision.

(2)         Next we repay to you the $5,000 Purchase Payment you paid in 2001. Under the free withdrawal provision, $200 of that Purchase Payment is charge free ($7,000 total Purchase Payments paid x 10%; less the $500 free withdrawal in the same Contract Year described in paragraph 1 above). We assess a withdrawal charge on the remaining balance of $4,800 from your 2001 Purchase Payment. Because you made that Purchase Payment 3 years ago, the withdrawal charge percentage is 4%. We deduct the resulting $192 from your Contract to cover the withdrawal charge on your 2001 Purchase Payment. We pay the remainder of $4,608 to you as a part of your withdrawal request.

$  5,000

-      200 — free Withdrawal Amount (payable to you)

$  4,800

x      .04

$     192 — withdrawal charge on 2001 Purchase Payment (payable to us)

$  4,800

-      192

$  4,608 — part of withdrawal request payable to you

(3)         We next deem the entire amount of your 2002 Purchase Payment to be withdrawn and we assess a withdrawal charge on that $1,000 amount. Because you made this Purchase Payment 2 years ago, the withdrawal charge percentage is 5%. We deduct the resulting $50 from your Contract to cover the withdrawal charge on your 2002 Purchase Payment. We pay the remainder of $950 to you as a part of your withdrawal request.

$  1,000

x      .05

$       50 — withdrawal charge on 2002 Purchase Payment (payable to us)

$  1,000

-        50

$     950 — part of withdrawal request payable to you

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(4)         We next determine what additional amount we need to withdraw to provide you with the total $7,000 you requested, after the deduction of the withdrawal charge on that additional amount. We have already allocated $500 from profits under paragraph 1 above, $200 of additional free Withdrawal Amount under paragraph 2, $4,608 from your 2001 Purchase Payment under paragraph 2, and $950 from your 2003 Purchase Payment under paragraph 3. Therefore, $742 is needed to reach $7,000.

$  7,000	— total Withdrawal Amount requested
-     500	— profit
-     200	— free Withdrawal Amount
-  4,608	— payment deemed from initial Purchase Payment
-     950	— payment deemed from 2002 Purchase Payment
$     742	— additional payment to you needed to reach $7,000

We know that the withdrawal charge percentage for this remaining amount is 6%, because you are already deemed to have withdrawn all Purchase Payments you paid prior to 2003. We use the following formula to determine how much more we need to withdraw:

Remainder due to you = Withdrawal needed – [applicable withdrawal charge percentage times withdrawal needed]

$ 742.00	=	x – [.06x]
$ 742.00	=	.94x
$ 742.00/.94	=	x
$ 789.36	=	x
$ 789.36	—	deemed withdrawn from 2003 Purchase Payment
$ 742.00	—	part of withdrawal request payable to you
$   47.36	—	withdrawal charge on 2003 Purchase Payment deemed withdrawn (payable to us)

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APPENDIX C: Optional Enhanced Death Benefits

You could have elected a death benefit that differs from the standard death benefit by purchasing an optional death benefit Rider:

• only if the Rider was available in your state;

• only when you applied for the Contract;

• if you elected the Enhanced Death Benefit Rider, only if each Owner and each Annuitant was under age 80 at the time you applied for the Contract; and

• if you elected the Earnings Enhancement Death Benefit Rider, only if each Owner and each Annuitant was under age 75 at the time you applied for the Contract.

We may have waived either or both of the last two restrictions for Contracts purchased prior to the date a Rider was available in your state.

As long as an optional death benefit Rider is in effect, you pay the monthly charge shown in the Fee Tables for that benefit. The Rider and its related charges terminate on:

• the Contract’s Maturity Date; or

• upon your surrendering the Contract; or

• a change of ownership, except where a Spousal Beneficiary continues the Rider after an Owner’s death (we explain Contract continuation by a Spouse in the “Distribution Requirements Following Death of Owner” section).

In addition, you may terminate the Enhanced Death Benefit Rider at any time by providing written notification to us at the Annuities Service Center shown on the first page of this Prospectus. If you purchased an Earnings Enhancement Death Benefit Rider, however, you cannot request us to terminate the Rider and its charges.

Enhanced Death Benefit Rider

Under this benefit, we will pay the greatest of:

• the standard death benefit;

• the amount of each Purchase Payment you have paid (but not including any extra credits), accumulated at 5% effective annual interest during the benefit’s measuring period (less any withdrawals you have taken and not including any interest on such amounts after they are withdrawn); or

• the highest total value of your Contract (adjusted by any market value adjustment) as of any anniversary of your Contract during the benefit’s measuring period, plus any Purchase Payments you have made since that anniversary, minus any withdrawals you have taken since that anniversary.

The benefit’s “measuring period” includes only those Contract Anniversaries that occur (1) before we receive proof of death and (2) before the measuring life turns age 81. The benefit’s “measuring life” is:

• the Owner, if there is only one Owner under your Contract and the death benefit is payable because the Owner dies before the Maturity Date;

• the oldest Owner, if there are joint Owners under your Contract and the death benefit is payable because either Owner dies before the Maturity Date;

• the Annuitant, if there is only one Annuitant under your Contract and the death benefit is payable because the Annuitant dies before the Maturity Date; or

• the youngest Annuitant, if there are joint Annuitants under your Contract and the death benefit is payable because the surviving Annuitant dies during the Owner(s) lifetime(s) but before the Maturity Date.

If an Owner is also an Annuitant, we generally consider that person to be an “Owner” instead of an “Annuitant” for purposes of determining the benefit’s measuring life.

The Enhanced Death Benefit Rider that we offered in IL, MN, NY and WA differs from that described above, and the charge assessed under Contracts issued in those states with this Rider may differ from the current optional benefit Rider charge shown in the Fee Tables section of the Prospectus. Under the Rider available NY and WA, we will pay an enhanced death benefit (in lieu of the standard death benefit) that is the greater of (i) the highest total value of your Contract as of any anniversary of your Contract during the Rider’s measuring period, plus any Purchase Payments you have made since that anniversary, minus any withdrawals you have taken since that anniversary or (ii) the total value of your Contract as of the date we receive proof of death. In IL and MN, the benefit is based on the life of the Annuitant.

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For Contracts issued in IL, MN, NY, ND, OR and WA, the annual charge for the Enhanced Death Benefit Rider is 0.15% of your Contract’s total value. We assess 1/12th of this charge monthly. For a more complete description of the terms and conditions of this benefit, you should refer directly to the Rider. We will provide you with a copy on request. This Rider (and related charges) will terminate on the Contract’s date of maturity, upon your surrendering the Contract, or upon your written request that we terminate it.

For a more complete description of the terms and conditions of the Rider you purchased, you should refer directly to your Contract.

You should carefully review the tax considerations for optional benefits under “IX. Federal Tax Matters” if you selected this optional benefit.

Earnings Enhancement Death Benefit Rider

(not offered with Contracts issued to Qualified Plans or for Contracts issued in IL, MN, ND, OR, NY and WA)

Under this benefit, the death benefit may be increased by an earnings enhancement amount that will vary based on the age of the Owners and Annuitants when you purchased the benefit. In certain marketing materials, this benefit may have been referred to as the “Beneficiary Tax Relief” benefit because any amounts paid under this benefit can be used to cover taxes that may be due on death benefit proceeds under your Contract. Amounts paid under this benefit, however, may also be subject to tax and may be greater than or less than the amount of taxes due on the death benefits.

The earnings enhancement amount is determined as follows:

• if all of the Owners and the Annuitant are under age 70 on the date your benefit was issued, the earnings enhancement amount will be 40% of the difference between the standard death benefit (or enhanced death benefit, if that benefit is in effect) and your “Net Purchase Payments,” up to a maximum benefit amount of 80% of your “Adjusted Net Purchase Payments” prior to the date of the decedent’s death;

• if any of the Owners or the Annuitant is age 70 or older on the date your benefit was issued, the earnings enhancement amount will be 25% of the difference between the standard death benefit (or enhanced death benefit, if that benefit is in effect) and your “Net Purchase Payments,” up to a maximum benefit amount of 50% of your “Adjusted Net Purchase Payments” prior to the date of the decedent’s death; but

• if there are joint Annuitants under your Contract, we will not count the age of the older Annuitant for either of these purposes unless the older Annuitant is also an Owner.

“Net Purchase Payments,” for purposes of this benefit, means Purchase Payments you paid for the Contract, less any withdrawals in excess of earnings from your Contract (including any charges imposed on these withdrawals). For this purpose, we consider withdrawals to be taken first from earnings on your Contract before they are taken from your Purchase Payments. “Adjusted Net Purchase Payments” means Net Purchase Payments minus any Purchase Payments you paid in the 12 month period prior to the decedent’s death (excluding the initial Purchase Payments).

For a more complete description of the terms and conditions of the Rider you purchased, you should refer directly to your Contract.

Examples of Earnings Enhancement Death Benefit Calculation

The following are examples of the optional earnings enhancement death benefit. We have assumed that there are earnings under the Contracts in each case. Actual investment performance may be greater or lower than the amounts shown.

Example 1 - Earnings enhancement death benefit with standard death benefit, no adjustments for withdrawals or Additional Purchase Payments

Assume:

• You elect the Earnings Enhancement Death Benefit Rider (but not the Enhanced Death Benefit Rider) when you purchased your Contract,

• At the time of purchase, you and the Annuitant are each under age 70 and you pay an initial Purchase Payment of $100,000,

• You allocate the Purchase Payment to a Variable Investment Option, and make no transfers of Contract Value to other Investment Options,

• We determine the death benefit before the Maturity Date, in the fourth year of your Contract on a day when your Contract Value is $180,000.

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Calculation of Standard Death Benefit

We compare the total value of your Contract ($180,000, with no market value adjustment) to the total amount of Purchase Payments you paid ($100,000, with no adjustment for withdrawals). The standard death benefit is the higher of the two, or $180,000.

Calculation of Earnings Enhancement Amount

Because you and the Annuitant were both under age 70 when the Rider was issued, the earnings enhancement amount is 40% of the difference between the standard death benefit and your “Net Purchase Payments,” up to a maximum benefit amount equal to 80% of your “Adjusted Net Purchase Payments.”

Calculation of Net Purchase Payments and Adjusted Net Purchase Payments – To determine “Net Purchase Payments,” we reduce the Purchase Payments you paid ($100,000) by the amount of any withdrawals in excess of earnings ($0, with no adjustment for withdrawal charges). In this example, the Net Purchase Payments is $100,000. To determine “Adjusted Net Purchase Payments,” we reduce the Net Purchase Payments ($100,000) by any Purchase Payments you made, other than the initial Purchase Payment, during the 12 months before we calculated the death benefit ($0). In this example, the “Adjusted Net Purchase Payments” is $100,000.

Calculation of Maximum Benefit Amount – The maximum benefit amount under the Earnings Enhancement Death Benefit Rider in this example is 80% of the Adjusted Net Purchase Payments ($100,000), or $80,000.

The earnings enhancement amount is 40% of the difference between the standard death benefit ($180,000) and your Net Purchase Payments ($100,000), up to the maximum benefit amount. In this example, 40% of the difference is $32,000, which is less than the maximum benefit amount ($80,000). The earnings enhancement amount is therefore $32,000.

The total death benefit in this example is the standard death benefit ($180,000) plus the earnings enhancement amount ($32,000), or $212,000.

Example 2 - Earnings enhancement death benefit with enhanced death benefit, adjusted for withdrawal and Additional Purchase Payment

Assume:

• You elect the Earnings Enhancement Death Benefit Rider and the Enhanced Death Benefit Rider when you purchase your Contract,

• At the time of purchase, you are over age 70 and you pay an initial Purchase Payment of $100,000,

• You allocate the Purchase Payment to a Variable Investment Option, and make no transfers of Contract Value to other Investment Options,

• On the seventh anniversary of your Contract, your Contract Value is $175,000, which is the highest value on any anniversary date,

• On the day after the seventh anniversary of your Contract, you make a withdrawal of $80,000,

• On the eighth anniversary of your Contract, your Contract Value is $110,000, and you make an Additional Purchase Payment of $10,000 at the end of the eighth year of your Contract,

• We determine the death benefit before the Maturity Date in the middle of the ninth year of your Contract, on a day when your Contract Value is $120,000.

Calculation of Enhanced Death Benefit

In this example, the enhanced death benefit is the highest of an accumulated Purchase Payment “roll-up” amount, a “highest anniversary value” amount and your Contract Value on the date the death benefit is determined.

Calculation of Purchase Payment Roll-up - We calculate the amount of each Purchase Payment you have paid, accumulated at a 5% effective annual rate, minus any withdrawals. In this example, the accumulated value of your initial Purchase Payment, after adjustment for the $80,000 withdrawal, is $65,319.75, and the accumulated value of your second Purchase Payment is $10,246.95. The total amount of the Purchase Payment “roll-up” is $75,566.70.

Calculation of Highest Anniversary Value - We determine the highest anniversary value of your Contract on any anniversary date during the Rider’s measuring period ($175,000), plus any Purchase Payments since that date ($10,000), minus any withdrawals since that date ($80,000). In this example, the “highest anniversary value” is $105,000.

Your Contract Value on the date the death benefit is determined ($120,000, with no market value adjustment) is higher than the Purchase Payment roll-up amount ($75,566.70) and higher than the “highest anniversary value” amount ($105,000). The enhanced death benefit is therefore $120,000.

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Calculation of Earnings Enhancement Amount

Because you were over age 70 when the Rider was issued, the earnings enhancement amount is 25% of the difference between the enhanced death benefit and your “Net Purchase Payments,” up to a maximum benefit amount equal to 50% of your “Adjusted Net Purchase Payments.”

Calculation of Net Purchase Payments and Adjusted Net Purchase Payments – To determine “Net Purchase Payments,” we reduce the Purchase Payments you paid by the amount of any withdrawals in excess of earnings (including withdrawal charges). In this example, you withdrew $80,000 at a time when your earnings were $75,000 and no withdrawal charges were imposed. The amount withdrawn in excess of earnings is therefore $5,000. Net Purchase Payments is the amount of Purchase Payments paid ($110,000) less amounts withdrawn in excess of earnings ($5,000), or $105,000. To determine “Adjusted Net Purchase Payments,” we reduce the Net Purchase Payments ($105,000) by any Purchase Payments you made during the 12 months before we calculated the death benefit ($10,000). In this example, the “Adjusted Net Purchase Payments” is $95,000.

Calculation of Maximum Benefit Amount – The maximum benefit amount under the Earnings Enhancement Death Benefit Rider in this example is 50% of your Adjusted Net Purchase Payments ($95,000), or $47,500.

The earnings enhancement amount is 25% of the difference between the enhanced death benefit ($120,000) and your Net Purchase Payments ($105,000), up to the maximum benefit amount. In this example, 25% of the difference is $3,750, which is less than the maximum benefit amount ($47,500). The earnings enhancement amount is therefore $3,750.

The total death benefit in this example is the enhanced death benefit ($120,000) plus the earnings enhancement amount ($3,750), or $123,750.

You should carefully review the tax considerations for optional benefit Riders if you selected any of these optional death benefit Riders. The death benefits under these Riders will decrease if you make withdrawals under your Contract.

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APPENDIX U: Accumulation Unit Value Tables

The following table provides information about Variable Investment Options available under the Contracts described in this Prospectus. We present this information in columns that compare the value of Accumulation Units for each Variable Investment Option during the periods shown.

We use Accumulation Units to measure the value of your investment in a particular Variable Investment Option. Each Accumulation Unit reflects the value of underlying shares of a particular Portfolio (including dividends and distributions made by that Portfolio), as well as the charges we deduct on a daily basis for Separate Account Annual Expenses. (See “III. Fee Tables” for additional information on these charges.)

U-1

Revolution Value

John Hancock Life Insurance Company (U.S.A.) Separate Account Q

Accumulation Unit Values - Revolution Value Variable Annuity

	Year Ended 12/31/15		Year Ended 12/31/14		Year Ended 12/31/13		Year Ended 12/31/12		Year Ended 12/31/11		Year Ended 12/31/10		Year Ended 12/31/09		Year Ended 12/31/08		Year Ended 12/31/07		Year Ended 12/31/06
(M-Fund) M Large Cap Value Fund (formerly M Business Opportunity Value Fund) - NAV Shares (units first credited 05-05-2003)
Contracts with no Optional Benefits
Value at Start of Year		20.36		18.79		14.18		12.24		12.92		11.98		9.73		15.05		14.45		12.85
Value at End of Year		19.97		20.36		18.79		14.18		12.24		12.92		11.98		9.73		15.05		14.45
No. of Units		976		1,018		1,100		1,156		1,240		1,241		1,757		1,759		3,839		806
(M-Fund) M Capital Appreciation Fund (formerly Frontier Capital Appreciation Fund) - NAV Shares (units first credited 05-01-2001)
Contracts with no Optional Benefits
Value at Start of Year		27.71		24.96		18.15		15.65		17.08		13.62		9.28		16.21		14.67		12.76
Value at End of Year		25.57		27.71		24.96		18.15		15.65		17.08		13.62		9.28		16.21		14.67
No. of Units		3,805		3,794		3,838		3,734		3,554		8,901		10,815		10,985		17,917		6,581
(M-Fund) M International Equity Fund (formerly Brandes International Equity Fund) - NAV Shares (units first credited 11-11-2004)
Contracts with no Optional Benefits
Value at Start of Year		16.90		18.41		16.03		13.45		15.75		15.25		12.33		20.75		19.45		15.53
Value at End of Year		16.03		16.90		18.41		16.03		13.45		15.75		15.25		12.33		20.75		19.45
No. of Units		2,223		2,249		2,273		2,946		3,143		3,698		6,089		8,185		13,490		9,919
(M-Fund) M Large Cap Growth Fund (formerly Turner Core Growth Fund) - NAV Shares (units first credited 05-01-2001)
Contracts with no Optional Benefits
Value at Start of Year		14.00		12.86		9.57		8.12		8.28		6.82		5.02		9.97		8.24		7.69
Value at End of Year		14.89		14.00		12.86		9.57		8.12		8.28		6.82		5.02		9.97		8.24
No. of Units		6,516		6,838		7,173		7,709		8,138		8,590		4,061		5,641		8,011		4,525
500 Index Trust B - NAV Shares (units first credited 04-29-2005)
Contracts with no Optional Benefits
Value at Start of Year		7.31		7.31		7.31		7.31		7.31		7.31		7.31		22.93		22.06		19.32
Value at End of Year		7.31		7.31		7.31		7.31		7.31		7.31		7.31		7.31		22.93		22.06
No. of Units		1,018,820		1,172,025		1,214,976		1,419,822		1,642,059		2,050,144		2,679,049		3,832,019		5,479,803		7,014,739
Active Bond Trust - NAV Shares (units first credited 04-29-2005)
Contracts with no Optional Benefits
Value at Start of Year		18.71		17.71		17.89		16.51		15.78		14.02		11.37		12.86		12.52		12.13
Value at End of Year		18.50		18.71		17.71		17.89		16.51		15.78		14.02		11.37		12.86		12.52
No. of Units		1,390,883		1,599,893		1,882,734		2,218,852		2,588,799		3,243,692		4,185,127		5,815,840		8,191,749		10,198,612
Blue Chip Growth Trust - NAV Shares (units first credited 04-29-2005)
Contracts with no Optional Benefits
Value at Start of Year		8.43		8.43		8.43		8.43		8.43		7.56		5.35		9.43		8.47		7.82
Value at End of Year		8.43		8.43		8.43		8.43		8.43		8.43		7.56		5.35		9.43		8.47
No. of Units		1,165,179		1,314,729		1,582,301		1,874,188		2,179,637		2,709,463		3,323,839		4,399,825		5,680,739		6,669,200
Capital Appreciation Trust - NAV Shares (units first credited 04-29-2006)
Contracts with no Optional Benefits
Value at Start of Year		3.50		3.50		3.50		3.50		4.05		3.67		2.61		4.21		3.81		3.71
Value at End of Year		3.50		3.50		3.50		3.50		3.50		4.05		3.67		2.61		4.21		3.81
No. of Units		892,557		978,744		1,174,646		1,415,629		1,634,156		1,976,953		2,573,803		3,675,145		5,049,975		6,237,021
Core Bond Trust - NAV Shares (units first credited 04-27-2015)
Contracts with no Optional Benefits
Value at Start of Year		12.50		—		—		—		—		—		—		—		—		—
Value at End of Year		15.40		—		—		—		—		—		—		—		—		—
No. of Units		258,216		—		—		—		—		—		—		—		—		—
Core Strategy Trust - NAV Shares (units first credited 04-27-2015)
Contracts with no Optional Benefits
Value at Start of Year		12.50		—		—		—		—		—		—		—		—		—
Value at End of Year		12.50		—		—		—		—		—		—		—		—		—
No. of Units		—		—		—		—		—		—		—		—		—		—

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Revolution Value

	Year Ended 12/31/15		Year Ended 12/31/14		Year Ended 12/31/13		Year Ended 12/31/12		Year Ended 12/31/11		Year Ended 12/31/10		Year Ended 12/31/09		Year Ended 12/31/08		Year Ended 12/31/07		Year Ended 12/31/06
Equity Income Trust - NAV Shares (units first credited 04-29-2005)
Contracts with no Optional Benefits
Value at Start of Year		13.30		13.30		13.30		13.30		13.30		13.29		10.70		16.92		16.57		14.09
Value at End of Year		13.30		13.30		13.30		13.30		13.30		13.30		13.29		10.70		16.92		16.57
No. of Units		938,750		1,092,613		1,252,554		1,515,452		1,762,235		2,275,569		2,913,865		4,309,129		5,992,081		7,464,485
Financial Industries Trust (formerly Financial Services Trust) - NAV Shares (units first credited 04-29-2005)
Contracts with no Optional Benefits
Value at Start of Year		22.57		21.04		16.28		13.96		15.60		14.08		10.07		18.42		20.00		16.44
Value at End of Year		21.71		22.57		21.04		16.28		13.96		15.60		14.08		10.07		18.42		20.00
No. of Units		113,170		132,610		165,297		194,024		248,524		326,085		412,914		530,531		771,807		1,017,826
Fundamental All Cap Core Trust (formerly Optimized All Cap Trust) - NAV Shares (units first credited 04-25-2008)
Contracts with no Optional Benefits
Value at Start of Year		13.16		12.14		9.05		7.41		7.65		6.48		5.11		8.56		—		—
Value at End of Year		13.53		13.16		12.14		9.05		7.41		7.65		6.48		5.11		—		—
No. of Units		2,641,249		3,102,725		3,684,136		4,168,494		5,004,759		6,214,410		7,721,071		10,570,987		—		—
Global Bond Trust - NAV Shares (units first credited 04-29-2005)
Contracts with no Optional Benefits
Value at Start of Year		19.68		19.46		20.86		19.71		18.30		16.78		14.73		15.60		14.41		13.86
Value at End of Year		18.76		19.68		19.46		20.86		19.71		18.30		16.78		14.73		15.60		14.41
No. of Units		226,283		282,565		315,713		386,396		458,197		540,496		645,588		1,074,915		1,117,708		1,426,603
Growth & Income Trust (merged into Optimized All Cap Trust eff 04-25-2008) - NAV Shares (units first credited 04-29-2005)
Contracts with no Optional Benefits
Value at Start of Year		—		—		—		—		—		—		—		—		9.12		8.19
Value at End of Year		—		—		—		—		—		—		—		—		9.37		9.12
No. of Units		—		—		—		—		—		—		—		—		14,812,691		18,518,392
Health Sciences Trust - NAV Shares (units first credited 04-29-2005)
Contracts with no Optional Benefits
Value at Start of Year		45.36		34.83		23.32		17.90		16.38		14.32		11.00		15.88		13.65		12.75
Value at End of Year		50.51		45.36		34.83		23.32		17.90		16.38		14.32		11.00		15.88		13.65
No. of Units		177,335		202,321		218,417		278,285		271,762		322,045		402,625		582,274		772,294		871,942
High Yield Trust - NAV Shares (units first credited 04-29-2005)
Contracts with no Optional Benefits
Value at Start of Year		17.64		17.86		16.64		14.15		14.17		12.61		8.26		11.87		11.82		10.84
Value at End of Year		15.96		17.64		17.86		16.64		14.15		14.17		12.61		8.26		11.87		11.82
No. of Units		225,603		281,582		326,694		404,812		485,082		631,675		846,455		1,183,852		1,729,498		2,166,931
International Equity Index Trust B - NAV Shares (units first credited 04-29-2005)
Contracts with no Optional Benefits
Value at Start of Year		6.10		6.10		6.10		6.10		6.10		6.10		6.10		18.67		16.33		13.01
Value at End of Year		6.10		6.10		6.10		6.10		6.10		6.10		6.10		6.10		18.67		16.33
No. of Units		391,255		443,946		504,920		593,744		726,567		909,622		1,148,561		1,655,592		2,578,022		2,663,162
International Value Trust - NAV Shares (units first credited 05-03-2010)
Contracts with no Optional Benefits
Value at Start of Year		12.74		14.74		11.83		10.03		11.65		10.95		—		—		—		—
Value at End of Year		11.61		12.74		14.74		11.83		10.03		11.65		—		—		—		—
No. of Units		523,326		565,695		665,170		729,066		907,627		1,083,059		—		—		—		—
Lifestyle Balanced MVP (formerly Lifestyle Balanced Trust) - NAV Shares (units first credited 11-09-2008)
Contracts with no Optional Benefits
Value at Start of Year		15.13		14.69		13.18		11.92		11.99		10.86		8.40		8.49		—		—
Value at End of Year		14.61		15.13		14.69		13.18		11.92		11.99		10.86		8.40		—		—
No. of Units		3,670,546		4,183,933		5,338,615		6,082,166		7,063,359		8,885,248		11,185,992		14,811,291		—		—
Managed Trust (merged into Lifestyle Balanced Trust eff 11-07-2008) - NAV Shares (units first credited 04-29-2005)
Contracts with no Optional Benefits
Value at Start of Year		—		—		—		—		—		—		—		—		10.82		10.19
Value at End of Year		—		—		—		—		—		—		—		—		10.90		10.82
No. of Units		—		—		—		—		—		—		—		—		20,953,611		26,879,301

U-3

Revolution Value

	Year Ended 12/31/15		Year Ended 12/31/14		Year Ended 12/31/13		Year Ended 12/31/12		Year Ended 12/31/11		Year Ended 12/31/10		Year Ended 12/31/09		Year Ended 12/31/08		Year Ended 12/31/07		Year Ended 12/31/06
Mid Cap Index Trust - NAV Shares (units first credited 04-29-2005)
Contracts with no Optional Benefits
Value at Start of Year		23.55		21.80		16.58		14.29		14.78		11.87		8.79		13.99		13.17		12.15
Value at End of Year		22.67		23.55		21.80		16.58		14.29		14.78		11.87		8.79		13.99		13.17
No. of Units		43,099		46,972		62,357		87,632		130,116		163,945		183,282		254,466		389,164		355,738
Mid Cap Stock Trust - NAV Shares (units first credited 04-29-2005)
Contracts with no Optional Benefits
Value at Start of Year		23.89		23.89		23.89		23.89		23.89		23.89		22.94		41.30		33.84		30.14
Value at End of Year		23.89		23.89		23.89		23.89		23.89		23.89		23.89		22.94		41.30		33.84
No. of Units		135,691		151,467		178,992		236,712		274,215		335,719		416,266		551,782		762,360		878,156
Mid Value Trust - NAV Shares (units first credited 04-29-2005)
Contracts with no Optional Benefits
Value at Start of Year		38.76		35.46		27.31		23.13		24.60		21.45		14.85		23.01		23.18		19.50
Value at End of Year		36.98		38.76		35.46		27.31		23.13		24.60		21.45		14.85		23.01		23.18
No. of Units		148,816		172,486		201,299		238,447		294,518		367,302		473,836		673,639		1,005,541		1,253,153
Money Market Trust B - NAV Shares (units first credited 04-29-2005)
Contracts with no Optional Benefits
Value at Start of Year		10.33		10.47		10.61		10.74		10.87		11.01		11.09		11.00		10.62		10.27
Value at End of Year		10.20		10.33		10.47		10.61		10.74		10.87		11.01		11.09		11.00		10.62
No. of Units		1,468,480		1,668,973		1,966,967		2,316,166		2,584,549		3,059,207		4,398,470		7,076,794		6,141,993		6,525,846
Overseas Equity Trust (merged into International Value Trust eff 05-03-2010) - NAV Shares (units first credited 04-29-2005)
Contracts with no Optional Benefits
Value at Start of Year		—		—		—		—		—		—		8.48		14.81		13.33		11.27
Value at End of Year		—		—		—		—		—		—		10.95		8.48		14.81		13.33
No. of Units		—		—		—		—		—		—		1,355,135		1,925,608		2,644,405		3,217,561
Real Estate Securities Trust - NAV Shares (units first credited 04-29-2005)
Contracts with no Optional Benefits
Value at Start of Year		41.63		31.99		32.41		27.97		25.85		20.26		15.75		26.31		31.55		23.12
Value at End of Year		42.27		41.63		31.99		32.41		27.97		25.85		20.26		15.75		26.31		31.55
No. of Units		216,769		258,569		279,127		350,958		449,716		580,856		684,278		957,522		1,422,400		2,071,873
Short Term Government Income Trust - NAV Shares (units first credited 05-03-2010)
Contracts with no Optional Benefits
Value at Start of Year		15.76		15.76		16.08		16.09		15.85		15.10		—		—		—		—
Value at End of Year		15.67		15.76		15.76		16.08		16.09		15.85		—		—		—		—
No. of Units		428,883		472,137		544,590		676,118		753,619		933,304		—		—		—		—
Short-Term Bond Trust (merged into Short Term Government Income Trust eff 05-03-2010) - NAV Shares (units first credited 04-29-2005)
Contracts with no Optional Benefits
Value at Start of Year		—		—		—		—		—		—		12.82		16.01		15.70		15.20
Value at End of Year		—		—		—		—		—		—		15.10		12.82		16.01		15.70
No. of Units		—		—		—		—		—		—		1,195,626		1,677,093		2,513,136		3,162,936
Small Cap Growth Trust - NAV Shares (units first credited 04-29-2005)
Contracts with no Optional Benefits
Value at Start of Year		19.95		18.77		13.18		11.45		12.44		10.31		7.77		13.01		11.56		10.31
Value at End of Year		17.97		19.95		18.77		13.18		11.45		12.44		10.31		7.77		13.01		11.56
No. of Units		387,081		448,203		545,120		631,105		767,639		931,511		1,175,580		1,601,050		2,291,460		2,897,082
Small Cap Index Trust - NAV Shares (units first credited 04-29-2005)
Contracts with no Optional Benefits
Value at Start of Year		22.01		21.29		15.54		13.55		14.35		11.49		9.19		14.03		14.51		12.49
Value at End of Year		20.74		22.01		21.29		15.54		13.55		14.35		11.49		9.19		14.03		14.51
No. of Units		89,736		103,061		122,997		143,870		166,751		230,779		269,639		402,481		603,227		720,128
Small Cap Value Trust - NAV Shares (units first credited 04-29-2005)
Contracts with no Optional Benefits
Value at Start of Year		57.14		53.95		40.97		35.83		35.87		28.79		22.64		31.01		32.34		27.44
Value at End of Year		55.69		57.14		53.95		40.97		35.83		35.87		28.79		22.64		31.01		32.34
No. of Units		282,393		339,470		406,122		483,072		568,182		741,329		932,309		1,308,208		2,009,842		2,687,994

U-4

Revolution Value

	Year Ended 12/31/15		Year Ended 12/31/14		Year Ended 12/31/13		Year Ended 12/31/12		Year Ended 12/31/11		Year Ended 12/31/10		Year Ended 12/31/09		Year Ended 12/31/08		Year Ended 12/31/07		Year Ended 12/31/06
Total Bond Market Trust B (formerly Bond Index Trust B) - NAV Shares (units first credited 04-29-2005)
Contracts with no Optional Benefits
Value at Start of Year		18.06		17.24		17.89		17.41		16.38		15.57		14.84		14.20		13.42		13.06
Value at End of Year		17.89		18.06		17.24		17.89		17.41		16.38		15.57		14.84		14.20		13.42
No. of Units		630,408		767,195		611,197		722,605		840,833		1,044,505		1,392,129		2,125,665		3,056,726		3,710,299
Total Return Trust (merged into Core Bond Trust eff 04-27-2015) - NAV Shares (units first credited 04-29-2005)
Contracts with no Optional Benefits
Value at Start of Year		15.59		15.07		15.57		14.52		14.14		13.30		11.84		11.67		10.88		10.63
Value at End of Year		—		15.59		15.07		15.57		14.52		14.14		13.30		11.84		11.67		10.88
No. of Units		—		292,770		372,556		519,203		503,818		633,816		755,468		835,932		634,249		620,783
Total Stock Market Index Trust - NAV Shares (units first credited 04-29-2005)
Contracts with no Optional Benefits
Value at Start of Year		11.56		11.56		11.56		11.56		11.56		11.56		9.35		15.07		14.51		12.74
Value at End of Year		11.56		11.56		11.56		11.56		11.56		11.56		11.56		9.35		15.07		14.51
No. of Units		535,888		605,169		691,311		797,364		948,013		1,193,131		1,472,270		2,131,691		3,121,007		3,967,213
Ultra Short Term Bond - NAV Shares (units first credited 08-02-2010)
Contracts with no Optional Benefits
Value at Start of Year		12.50		—		—		—		—		—		—		—		—		—
Value at End of Year		12.47		—		—		—		—		—		—		—		—		—
No. of Units		776		—		—		—		—		—		—		—		—		—

U-5

To obtain a Revolution Value Variable Annuity

Statement of Additional Information (“SAI”)

Send this request to:

Revolution Value SAI

John Hancock Annuities Service Center

P.O. Box 55444

Boston, MA 02205-5444

Please send me a REVOLUTION VALUE VARIABLE ANNUITY Statement of Additional Information dated May 2, 2016, funded in John Hancock Life Insurance Company (U.S.A.) Separate Account Q (formerly John Hancock Variable Annuity Account H). We will mail the Statement of Additional Information applicable to contracts with the address of record written below. If no contracts are listed with the address of record written below, we may be unable to fulfill the request.

Name                                                                                                                                                                   

Address                                                                                                                                                               

City                                                                  State                             Zip                                                        

PART B

INFORMATION REQUIRED IN A

STATEMENT OF ADDITIONAL INFORMATION

Statement of Additional Information

Dated May 2, 2016

Statement of Additional Information

John Hancock Life Insurance Company (U.S.A.) Separate Account Q

This Statement of Additional Information is not a Prospectus. This Statement of Additional Information should be read in conjunction with the Prospectuses dated the same date as this Statement of Additional Information. This Statement of Additional Information describes additional information regarding the variable portion of the flexible purchase payment deferred combination fixed and variable annuity contracts (singly, a “Contract and collectively, the “Contracts”) issued by JOHN HANCOCK LIFE INSURANCE COMPANY (“JHLICO”) and subsequently assumed by John Hancock Life Insurance Company (U.S.A.) (“John Hancock USA”) in all jurisdictions as follows:

Related JHLICO-Issued Variable Annuity Prospectus

(to be read with this Statement of Additional Information)

Revolution Value Variable Annuity

Unless otherwise specified, “we,” “us,” “our,” or the “Company” refers to John Hancock USA.

You may obtain a copy of the Prospectus listed above by contacting us at the following addresses:

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)
	John Hancock Annuities Service Center
	Overnight Mail Address	Mailing Address
	30 Dan Road – Suite 55444	Post Office Box 55444
	Canton, MA 02021-2809	Boston, MA 02205-5444
	(800) 344-1029	www.jhannuities.com

JHUSA SEP ACCT Q SAI 05/16

Table of Contents

GENERAL INFORMATION AND HISTORY	1
ACCUMULATION UNIT VALUE TABLES	1
SERVICES	1
Independent Registered Public Accounting Firm	1
Servicing Agent	1
Principal Underwriter	2
Compensation	2
ADDITIONAL INFORMATION ON SECTION 403(B) PLANS OR TAX-SHELTERED ANNUITIES	2
ADDITIONAL INFORMATION ON DEFERRED COMPENSATION PLANS OF STATE AND LOCAL GOVERNMENTS AND TAX-EXEMPT ORGANIZATIONS	3
CALCULATION OF ANNUITY PAYMENTS	3
Calculation of Annuity Units	3
Annuity Unit Values	4
Mortality Tables	4
ADDITIONAL INFORMATION ABOUT DETERMINING UNIT VALUES	4
Net Investment Rate	5
Adjustment of Units and Values	5
Hypothetical Examples Illustrating the Calculation of Accumulation Unit Values and Annuity Unit Values	5
PURCHASES AND REDEMPTIONS OF PORTFOLIO SHARES	5
THE SEPARATE ACCOUNT	5
LIABILITY FOR TELEPHONE TRANSFERS	5
VOTING PRIVILEGES	6
LEGAL AND REGULATORY MATTERS	6
APPENDIX A: AUDITED FINANCIAL STATEMENTS	A-1

ii

General Information and History

John Hancock Life Insurance Company (U.S.A.) Separate Account Q (formerly known as John Hancock Variable Annuity Account H) (the “Separate Account”), is a separate investment account of John Hancock Life Insurance Company (U.S.A.) and was established on April 8, 1996 as a separate account of John Hancock Life Insurance Company (“JHLICO”). Your Contract was issued by JHLICO. In this Statement of Additional Information, John Hancock Life Insurance Company (U.S.A.) is referred to as “John Hancock USA” and also referred to as “we,” “us,” “our,” or “the Company” in its role as successor to JHLICO. Effective December 31, 2009, we entered into a merger agreement with JHLICO and John Hancock Variable Life Insurance Company (“JHVLICO”) and assumed legal ownership of all of the assets of JHLICO and JHVLICO, including those assets related to the separate account that currently funds your Contract: John Hancock Life Insurance Company (U.S.A.) Separate Account Q (formerly John Hancock Variable Annuity Account H). Effective at the time of the merger, we became the depositor of John Hancock Life Insurance Company (U.S.A.) Separate Account Q (the “Separate Account”).

Except for the succession of John Hancock USA as the depositor for the Separate Account and to the liabilities and obligations arising under the Contracts, the merger did not affect the Separate Account or any provisions of, any rights and obligations under, or any of your allocations among investment options under, the Contracts. We will continue to administer and service inforce contracts of JHLICO and JHVLICO in all jurisdictions where issued and will assume the direct responsibility for the payment of all claims and benefits and other obligations under these contracts.

We are a stock life insurance company and are currently licensed in the District of Columbia and all states of the United States except New York. We were incorporated in Maine on August 20, 1955 by a special act of the Maine legislature and redomesticated under the laws of Michigan on December 30, 1992. Our Michigan office is located at 201 Townsend Street, Suite 900, Lansing, Michigan 48933. Our principal office is located at 601 Congress Street, Boston, Massachusetts 02210-2382. John Hancock USA also has an Annuities Service Center – its mailing address is P.O. Box 55444, Boston, MA 02205-5444; its overnight mail address is 30 Dan Road – Suite 55444, Canton, MA 02021-2809; and its email address is www.jhannuities.com. Our ultimate parent is Manulife Financial Corporation (“MFC”), a publicly traded company based in Toronto, Canada. MFC is the holding company of John Hancock USA and its subsidiaries.

Our financial statements which are included in this Statement of Additional Information should be considered only as bearing on our ability to meet our obligations under the contracts. They should not be considered as bearing on the investment performance of the assets held in the Separate Account.

Accumulation Unit Value Tables

The Accumulation Unit Value Tables are located in Appendix U of the Prospectus.

Services

I ndependent Registered Public Accounting Firm

The statutory-basis financial statements of John Hancock Life Insurance Company (U.S.A.) at December 31, 2015 and 2014, and for each of the three years in the period ended December 31, 2015, and the financial statements of John Hancock Life Insurance Company (U.S.A.) Separate Account Q at December 31, 2015, and for each of the two years in the period ended December 31, 2015, appearing in this Statement of Additional Information of the Registration Statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their reports thereon appearing elsewhere herein, and are included in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.

Servi cing Agent

Computer Sciences Corporation (“CSC”) provides to us a computerized data processing recordkeeping system for variable and fixed annuity administration. CSC provides various daily, semimonthly, monthly, semiannual and annual reports including:

● daily updates on accumulation unit values, variable annuity participants and transactions, and agent production and commissions;

● semimonthly commission statements;

● monthly summaries of agent production and daily transaction reports;

● semiannual statements for Contract Owners; and

● annual Contract Owner tax reports.

1

We pay CSC a fixed cost of $2.55 million per year, plus certain other fees for the services provided.

Principal Underwriter

John Hancock Distributors, LLC, (“JH Distributors”), an indirect wholly owned subsidiary of MFC, serves as principal underwriter of the Contracts. Contracts are offered on a continuous basis. Prior to May 1, 2006, Signator Investors, Inc. (“Signator”), a subsidiary of JHLICO, served as the principal underwriter of the Contracts. The aggregate dollar amounts of underwriting commissions paid to JH Distributors in 2015, 2014, and 2013 were $252,644,283, $284,122,028, and $290,380,853, respectively.

Compensation

The Contracts are primarily sold through selected firms. The Contracts’ principal distributor, JH Distributors, and its affiliates (collectively, “JHD”) pay compensation to broker-dealers (firms) for the promotion, sale and servicing of the Contracts. The compensation JHD pays may vary depending on each firm’s selling agreement and the specific Contract(s) distributed by the firm, but compensation (inclusive of wholesaler overrides and expense allowances) paid to the firms for sale of the Contracts and ongoing services to Contract Owners is not expected to exceed the standard compensation amounts referenced in the Prospectus for the applicable Contract. The amount and timing of this compensation may differ among firms.

The financial advisor through whom your Contract is sold is a registered representative of a broker-dealer, and as such will be compensated pursuant to that registered representative’s own arrangement with his or her broker-dealer. The registered representative and the firm may have multiple options on how they wish to allocate their commissions and/or compensation. We are not involved in determining your financial advisor’s compensation. You are encouraged to ask your financial advisor about the basis upon which he or she will be personally compensated for the advice or recommendations provided in connection with the sale of your Contract.

Compensation to firms for the promotion, sale and servicing of the Contracts is not paid directly by Contract owners, but we expect to recoup it through the fees and charges imposed under the Contract.

Additional Information on Section 403(b) Plans or Tax-Sheltered Annuities

Restrictions on Section 403(b) Plans

Tax-sheltered annuity contracts must contain restrictions on withdrawals of:

● contributions made pursuant to a salary reduction agreement in years beginning after December 31, 1988;

● earnings on those contributions; and

● earnings after 1988 on amounts attributable to salary reduction contributions (and earnings on those contributions) held as of the last day of 1988.

These amounts can be paid only if the employee has reached age 59 ¹⁄₂, separated from service, died, or become disabled (within the meaning of the tax law), or in the case of hardship (within the meaning of the tax law). Amounts permitted to be distributed in the event of hardship are limited to actual contributions for elective contributions made after 1988; earnings thereon cannot be distributed on account of hardship. Amounts subject to the withdrawal restrictions applicable to section 403(b)(7) custodial accounts may be subject to more stringent restrictions.

Exercise of the withdrawal right for each withdrawal under the Contract may be subject to the terms of the Section 403(b) Plan and may require the consent of the employer, the Plan administrator or the Plan sponsor, as well as the participant’s spouse, under section 403(b) of the Code and applicable Treasury Regulations.

In the event that we do not receive the Required Documentation and you nonetheless direct us to proceed with the withdrawal, your Contract may no longer be qualified under section 403(b), which may result in additional adverse tax consequences to you. Employer consent is not required when we have received documentation in a form acceptable to us confirming that you have reached age 59  ¹⁄₂, separated from service, died or become disabled. (These limitations on withdrawals do not apply to the extent we are directed to transfer some or all of the Contract Value to the issuer of another tax-sheltered annuity or into a section 403(b)(7) custodial account.)

2

Additional Information on Deferred Compensation Plans of State and

Local Governments and Tax-Exempt Organizations

Restrictions under the Texas Optional Retirement Program

Section 830.105 of the Texas Government Code permits participants in the Texas Optional Retirement Program (“ORP”) to withdraw their interest in a variable annuity contract issued under the ORP only upon:

● termination of employment in all Texas public institutions of higher education;

● retirement;

● death; or

● the participant’s turning age 70 ¹⁄₂.

Accordingly, before you withdraw any amounts from the Contract, you must furnish proof to us that one of these four events has occurred. For these purposes a change of company providing ORP benefits or a participant’s transfer between institutions of higher education is not a termination of employment. Consequently there is no termination of employment when a participant in the ORP transfers the Contract Value to another Contract or another qualified custodian during the period of participation in the ORP.

Calculation of Annuity Payments

Calculation of Annuity Units

We use a measuring device called an “annuity unit” to help us compute the amount of each monthly payment that is based on a Variable Investment Option. Each Variable Investment Option has its own annuity unit with its own annuity unit value.

The number of the Contract’s annuity units for each Variable Investment Option normally doesn’t change while the payee continues to receive payments, unless the payee makes a transfer from one Variable Investment Option to another. The amount of each monthly annuity payment based on a Variable Investment Option equals the number of the Contract’s annuity units in that option times the value of one such unit as of the tenth day preceding the payment’s due date.

To compute the amount of the first annuity payment that is based on any Variable Investment Option, we first determine the amount of your Contract Value that we will apply to that Variable Investment Option. We do this as of 10 calendar days prior to the date the initial monthly annuity payment is due, in the manner described in the prospectus under “The annuity period – choosing fixed or variable annuity payments.”

For each Variable Investment Option, we then divide:

the resulting value (minus any

premium tax charge)

by

$1,000

and multiply the result by

the applicable annuity purchase rate set forth in the Contract and reflecting

(1) the age and, possibly, sex of the payee and

(2) the assumed investment rate (discussed below)

This computation determines the amount of the initial monthly variable annuity payment to the annuitant from each Variable Investment Option.

3

We then determine the number of annuity units to be credited to the Contract from each of such Variable Investment Options by dividing:

the amount of the initial monthly variable annuity

payment from that Variable Annuity Option

by

the annuity unit value of that Variable

Investment Option as of 10 calendar days

prior to the date the initial payment is due

For example, assume that 10 days before the date of maturity, a Contract has credited to it 4000.000 accumulation units, each having a value of $12.000000. Assume, further, that the appropriate annuity purchase rate in the Contract for an assumed investment rate of 3 ¹⁄₂% is $5.47 per $1000 of proceeds for the Annuity Option elected. The initial monthly annuity payment would be $262.56.

4000.000 x 12.000000 x 5.47

1,000

If the value of an annuity unit 10 days before the date of maturity was $1.4000000, the number of annuity units represented by the first and subsequent payments would be 187.543 ($262.56/$1.4000000). If the annuity unit value 10 days before the due date of the second monthly payment was $1.405000, the amount of the second payment would be $263.50 (187.543 x $1.405000).

Annuity Unit Values

The value of the annuity units varies from day to day, depending on the investment performance of the Variable Investment Option, the deductions made against the Variable Investment Option, and the assumed investment rate used in computing annuity unit values. Thus, the variable monthly annuity payments vary in amount from month to month.

We calculate annuity unit value separately for each Variable Investment Option. As of the close of each Business Day, we calculate the value of one annuity unit by

(1) multiplying the immediately preceding annuity unit value by the sum of one plus the applicable net investment rate for the period subsequent to such preceding value and then

(2) multiplying this product by an adjustment factor to neutralize the assumed investment rate used in determining the amounts of annuity payable. If your Contract has an assumed investment rate of 3 ¹⁄₂% per year, the adjustment factor for a valuation period of one day would be 0.999905754. We neutralize the assumed investment rate by applying the adjustment factor so that the variable annuity payments will increase only if the actual net investment rate of the Variable Investment Option exceeds 3 ¹⁄₂% per year and will decrease only if it is less than 3 ¹⁄₂% per year.

The amount of the initial variable monthly payment is determined on the assumption that the actual net investment rate of each Variable Investment Option used in calculating the “net investment factor” (described below) will be equal on an annual basis to the “assumed investment rate” (described under “VIII. The Annuity Period – Variable Monthly Annuity Payments” in the Prospectus). If the actual net investment rate between the dates for determining two monthly annuity payments is greater than the assumed investment rate, the latter monthly payment will be larger in amount than the former. On the other hand, if the actual net investment rate between the dates for determining two monthly annuity payments is less than the assumed investment rate, the latter monthly payment will be smaller in amount than the former.

Mortality Tables

The mortality tables used as a basis for both variable and fixed annuity purchase rates are the 1983a Mortality Tables, with projections of mortality improvements and with certain age adjustments based on the contract year of annuitization. The mortality table used in a Contract purchased in connection with certain employer-related plans and used in all contracts issued in Montana will be the Female Annuity Table of the 1983a Mortality Tables. The impact of this change will be lower benefits (5% to 15%) from a male’s viewpoint than would otherwise be the case.

Additional Information about Determining Unit Values

The general manner in which we compute annuity unit values is discussed above. Like annuity unit values, we calculate accumulation unit values separately for each Variable Investment Option. As of the close of each Business Day, we calculate the value of one accumulation unit of a Variable Investment Option by multiplying the immediately preceding accumulation unit value by the sum of one plus the applicable “net investment rate” for the period subsequent to such preceding value. See “Net Investment Rate” below.

4

Net Investment Rate

For any period, the net investment rate for a Variable Investment Option equals

(1) the percentage total investment return of the corresponding Portfolio for that period (assuming reinvestment of all dividends and other distributions from the Portfolio), less

(2) for each calendar day in the period, a deduction of 0.003425% or 0.003151% (depending on the charge for mortality and expense risks) of the value of the Variable Investment Option at the beginning of the period, and less

(3) a further adjustment in an appropriate amount if we ever elect to impose a charge for our income taxes.

A djustment of Units and Values

We reserve the right to change the number and value of the accumulation units and/or annuity units credited to your Contract, without notice, provided that strict equity is preserved and the change does not otherwise affect the benefits, provisions, or investment return of your Contract.

Hypothetical Examples Illustrating the Calculation of Accumulation Unit Values and Annuity Unit Values

Assume at the beginning of the period being considered, the value of a particular Variable Investment Option was $4,000,000. Investment income during the period totaled $2000, while capital gains were $3000 and capital losses were $1000. Assume also that we are not imposing any tax charge. Charges against the beginning value of the Variable Investment Option amount to $137.00 assuming a one day period. The $137.00 was computed by multiplying the beginning value of $4,000,000 by the factor 0.00003425. By substituting in the first formula above, the net investment rate is equal to $3863.00 ($2000 + $3000 - $1000 - $137.00) divided by $4,000,000 or 0.0009658.

Assume further that each accumulation unit had a value of $11.250000 on the previous Business Day, and the value of an annuity unit on such previous date was $1.0850000. Based upon the experience of the Variable Investment Option during the period, the value of an accumulation unit at the end of the period would be $11.250000 x (1 + .0009658) or $11.260865. The value of an annuity unit at the end of the period would be $1.0850000 x (1. + .0009658) x .999905754 or $1.085946. The final figure, .999905754, neutralizes the effect of a 3 ¹⁄₂% assumed investment rate so that the annuity unit’s change in value reflects only the actual investment experience of the Variable Investment Option.

Purchases and Redemptions of Portfolio Shares

The Company purchases and redeems Portfolio shares for the Account at their net asset value without any sales or redemption charges. Each available Portfolio issues its own separate series of Portfolio shares. Each such series represents an interest in one of the Portfolios of the Trusts, which corresponds to one of our Variable Investment Options. Any dividend or capital gains distributions received by the Account will be reinvested in shares of that same Portfolio at their net asset value as of the dates paid.

On each Business Day, the Separate Account purchases and redeems shares of each Portfolio for each Variable Investment Option based on, among other things, the amount of Purchase Payments allocated to that option, dividends reinvested, and transfers to, from and among Investment Options, all to be effected as of that date. Such purchases and redemptions are effective at the net asset value per Trust share for each Portfolio determined on that same date.

The Separate Account

In addition to the assets attributable to Contracts, the Separate Account may include amounts contributed by John Hancock USA or its predecessor, JHLICO, to commence operations of a Variable Investment Option or an underlying Portfolio. From time to time these additional amounts may be transferred in cash by us to our General Account. Before any such transfer, we will consider any possible adverse impact the transfer might have on any Variable Investment Option. The assets of one Variable Investment Option are not necessarily legally insulated from liabilities associated with another Variable Investment Option.

Liability for Telephone Transfers

If you authorize telephone transfers, you will be liable for any loss, expense or cost arising out of any unauthorized or fraudulent telephone or fax instructions which we reasonably believe to be genuine, unless such loss, expense or cost is the result of our mistake or negligence. We employ procedures which provide safeguards against unauthorized transactions, and which are reasonably designed to confirm that instructions received by telephone are genuine. These procedures include:

● requiring personal identification,

● tape recording calls, and

● providing written confirmation to the owner.

5

If we do not employ reasonable procedures to confirm that instructions communicated by telephone are genuine, we may be liable for any loss due to unauthorized or fraudulent instructions.

Voting Privileges

Here’s the formula we use to determine the number of Portfolio shares as to which you may give instructions:

the total value of your

accumulation units in a

Variable Investment Option

divided by

the net asset value of 1 share of

the corresponding class

of Portfolio shares

At a shareholders’ meeting, you may give instructions regarding:

(1) the election of a Board of Trustees,

(2) the ratification of the selection of independent auditors,

(3) the approval of a Series Portfolio’s investment management agreements, and

(4) other matters requiring a vote under the 1940 Act.

The annuitant or other payee will also be entitled to give voting instructions with respect to the Portfolio shares corresponding to any Variable Investment Option under which variable annuity payments are then being made. We determine the number of Portfolio shares for which the payee can give instructions by dividing the actuarially determined present value of the payee’s annuity units that correspond to that Portfolio by the net asset value of one share of that Portfolio.

We will furnish you information and forms so that you may give voting instructions.

We may own Portfolio shares that we do not hold in any separate account whose participants are entitled to give voting instructions. We will vote such shares in proportion to the instructions we receive from all variable annuity contract and variable life insurance policy owners who give us instructions for that Portfolio’s shares (including owners who participate in separate accounts other than the Separate Account). The effect of this proportional voting is that a small number of Contract Owners can determine the outcome of a vote.

We have designed your voting privileges based upon our understanding of the requirements of the federal securities laws. If the applicable laws, regulations, or interpretations change to eliminate or restrict the need for such voting privileges, we reserve the right to proceed in accordance with any such revised requirements.

Legal and Regulatory Matters

There are no legal proceedings to which we, the Separate Account or the principal underwriter is a party, or to which the assets of the Separate Account are subject, that are likely to have a material adverse effect on:

● the Separate Account; or

● the ability of the principal underwriter to perform its contract with the Separate Account; or

● on our ability to meet our obligations under the variable annuity contracts funded through the Separate Account.

6

APPENDIX A: Audited Financial Statements

A-1

AUDITED STATUTORY-BASIS FINANCIAL STATEMENTS

John Hancock Life Insurance Company (U.S.A.)

For the Years Ended December 31, 2015, 2014 and 2013

With Report of Independent Auditors

AUDITED STATUTORY-BASIS FINANCIAL STATEMENTS

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

Years Ended December 31, 2015, 2014 and 2013

Contents

Report of Independent Auditors	F-1
Statutory-Basis Financial Statements
Balance Sheets- Statutory-Basis	F-3
Statements of Operations- Statutory-Basis	F-5
Statements of Changes in Capital and Surplus- Statutory-Basis	F-6
Statements of Cash Flow- Statutory-Basis	F-7
Notes to Statutory-Basis Financial Statements	F-8

Report of Independent Auditors

The Board of Directors and Shareholder

John Hancock Life Insurance Company (U.S.A.)

We have audited the accompanying statutory-basis financial statements of John Hancock Life Insurance Company (U.S.A.) (the Company), which comprise the balance sheets as of December 31, 2015 and 2014, and the related statements of operations, changes in capital and surplus and cash flow for each of the three years in the period ended December 31, 2015, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in conformity with accounting practices prescribed or permitted by the Michigan Office of Financial and Insurance Regulation. Management also is responsible for the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles

As described in Note 2, to meet the requirements of Michigan the financial statements have been prepared in conformity with accounting practices prescribed or permitted by the Michigan Office of Financial and Insurance Regulation, which practices differ from U.S. generally accepted accounting principles. The variances between such practices and U.S. generally accepted accounting principles and the effects on the accompanying financial statements are described in Note 2.

Adverse Opinion on U.S. Generally Accepted Accounting Principles

In our opinion, because of the effects of the matter described in the preceding paragraph, the statutory-basis financial statements referred to above do not present fairly, in conformity with U.S. generally accepted accounting principles, the financial position of the Company at December 31, 2015 and 2014, or the results of its operations or its cash flows for each of the three years in the period ended December 31, 2015.

F-1

Opinion on Statutory-Basis of Accounting

However, in our opinion, the statutory-basis financial statements referred to above present fairly, in all material respects, the financial position of the Company at December 31, 2015 and 2014, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2015 in conformity with accounting practices prescribed or permitted by the Michigan Office of Financial and Insurance Regulation.

/s/ Ernst & Young LLP

Boston, Massachusetts

April 5, 2016

F-2

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

BALANCE SHEETS – STATUTORY BASIS

	December 31,
	2015		2014
	(in millions)
Admitted assets
Cash and invested assets:
Bonds	$	44,463	$	49,226
Stocks:
Preferred stocks		23		26
Common stocks		658		477
Investments in affiliates		3,205		2,911
Mortgage loans on real estate		10,475		11,519
Real estate:
Company occupied		299		300
Investment properties		6,487		5,203
Cash, cash equivalents and short-term investments		4,528		7,702
Policy loans		3,718		5,039
Derivatives		11,001		10,458
Receivable for collateral on derivatives		26		400
Receivable for securities		5		10
Other invested assets		5,618		5,978
Total cash and invested assets		90,506		99,249
Investment income due and accrued		758		887
Premiums due and deferred		303		388
Amounts recoverable from reinsurers		162		196
Funds held by or deposited with reinsured companies		3,660		1,958
Other reinsurance receivable		670		439
Amounts due from affiliates		304		247
Other assets		1,755		2,364
Assets held in separate accounts		129,725		140,164
Total admitted assets	$	227,843	$	245,892

The accompanying notes are an integral part of these statutory-basis financial statements.

F-3

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

BALANCE SHEETS – STATUTORY BASIS – (CONTINUED)

	December 31,
	2015			2014
	(in millions)
Liabilities and capital and surplus
Liabilities:
Policy and contract obligations:
Policy reserves	$	66,516		$	69,184
Policyholders’ and beneficiaries funds		2,624			3,834
Consumer notes		265			411
Dividends payable to policyholders		428			574
Policy benefits in process of payment		499			556
Other amount payable on reinsurance		480			1,039
Other policy obligations		68			78
Total policy and contract obligations		70,880			75,676
Payable to parent and affiliates		1,816			3,073
Transfers to (from) separate account, net		(540	)		(1,390	)
Asset valuation reserve		1,844			1,927
Reinsurance in unauthorized companies		3			3
Funds withheld from unauthorized reinsurers		7,784			8,873
Interest maintenance reserve		1,630			1,745
Net deferred tax liability		387			456
Derivatives		6,094			5,229
Payables for collateral on derivatives		1,640			2,939
Payables for securities		42			26
Other general account obligations		1,094			1,843
Obligations related to separate accounts		129,725			140,164
Total liabilities		222,399			240,564
Capital and surplus:
Preferred stock (par value $1; 50,000,000 shares authorized; 100,000 shares issued and outstanding at December 31, 2015 and 2014)		-			-
Common stock (par value $1; 50,000,000 shares authorized; 4,728,939 shares issued and outstanding at December 31, 2015 and 2014)		5			5
Paid-in surplus		3,196			3,196
Surplus notes		990			990
Unassigned surplus		1,253			1,137
Total capital and surplus		5,444			5,328
Total liabilities and capital and surplus	$	227,843		$	245,892

The accompanying notes are an integral part of these statutory-basis financial statements.

F-4

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

STATEMENTS OF OPERATIONS – STATUTORY-BASIS

	Years Ended December 31,
	2015			2014			2013
	(in millions)
Premiums and other revenues:
Life, long-term care and annuity premiums	$	16,323		$	12,738		$	12,882
Consideration for supplementary contracts with life contingencies		140			183			266
Net investment income		4,387			4,297			4,551
Amortization of interest maintenance reserve		181			176			183
Commissions and expense allowance on reinsurance ceded		1,040			817			1,224
Reserve adjustment on reinsurance ceded		(16,494	)		(10,652	)		(9,775	)
Separate account administrative and contract fees		1,786			1,841			1,848
Other revenue		415			467			188
Total premiums and other revenues		7,778			9,867			11,367
Benefits paid or provided:
Death, surrender and other contract benefits, net		9,762			9,064			7,710
Annuity benefits		1,796			1,733			1,784
Disability and long-term care benefits		647			584			542
Interest and adjustments on policy or deposit-type funds		91			125			132
Payments on supplementary contracts with life contingencies		179			170			159
Increase (decrease) in life and long-term care reserves		(2,506	)		2,161			1,017
Total benefits paid or provided		9,969			13,837			11,344
Insurance expenses and other deductions:
Commissions and expense allowance on reinsurance assumed		1,289			1,203			1,360
General expenses		960			972			1,092
Insurance taxes, licenses and fees		145			138			150
Net transfers to (from) separate accounts		(6,554	)		(8,229	)		(6,388	)
Investment income ceded		2,465			4,954			(1,356	)
Other deductions		(160	)		21			14
Total insurance expenses and other deductions		(1,855	)		(941	)		(5,128	)
Income (loss) from operations before dividends to policyholders, federal income taxes and net realized capital gains (losses)		(336	)		(3,029	)		5,151
Dividends to policyholders		(36	)		77			81
Income (loss) from operations before federal income taxes and net realized capital gains (losses)		(300	)		(3,106	)		5,070
Federal income tax expense (benefit)		(778	)		(716	)		262
Income (loss) from operations before net realized capital gains (losses)		478			(2,390	)		4,808
Net realized capital gains (losses)		216			(74	)		(1,793	)
Net income (loss)	$	694		$	(2,464	)	$	3,015

The accompanying notes are an integral part of these statutory-basis financial statements.

F-5

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS – STATUTORY-BASIS

	Preferred and Common Stock		Paid-in Surplus		Surplus Notes		Unassigned Surplus (Deficit)			Total Capital and Surplus
	(in millions)
Balances at January 1, 2013	$	5	$	3,196	$	990	$	1,603		$	5,794
Net income (loss)								3,015			3,015
Change in net unrealized capital gains (losses)								(1,455	)		(1,455	)
Change in net deferred income tax								(347	)		(347	)
Decrease (increase) in non-admitted assets								(12	)		(12	)
Change in liability for reinsurance in unauthorized reinsurance								-			-
Decrease (increase) in asset valuation reserves								(180	)		(180	)
Dividend paid to Parent								(300	)		(300	)
Change in surplus as a result of reinsurance								(573	)		(573	)
Other adjustments, net						-		(133	)		(133	)
Balances at December 31, 2013		5		3,196		990		1,618			5,809
Net income (loss)								(2,464	)		(2,464	)
Change in net unrealized capital gains (losses)								2,389			2,389
Change in net deferred income tax								973			973
Decrease (increase) in non-admitted assets								56			56
Change in liability for reinsurance in unauthorized reinsurance								3			3
Decrease (increase) in asset valuation reserves								(553	)		(553	)
Dividend paid to Parent								(500	)		(500	)
Change in surplus as a result of reinsurance								(252	)		(252	)
Other adjustments, net						-		(133	)		(133	)
Balances at December 31, 2014		5		3,196		990		1,137			5,328
Net income (loss)								694			694
Change in net unrealized capital gains (losses)								(394	)		(394	)
Change in net deferred income tax								(158	)		(158	)
Decrease (increase) in non-admitted assets								(43	)		(43	)
Change in liability for reinsurance in unauthorized reinsurance								-			-
Decrease (increase) in asset valuation reserves								83			83
Dividend paid to Parent								(210	)		(210	)
Change in surplus as a result of reinsurance								107			107
Other adjustments, net						-		37			37
Balances at December 31, 2015	$	5	$	3,196	$	990	$	1,253		$	5,444

The accompanying notes are an integral part of these statutory-basis financial statements.

F-6

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

STATEMENTS OF CASH FLOW – STATUTORY-BASIS

	Years Ended December 31,
	2015			2014			2013
	(in millions)
Operations
Premiums and other considerations collected, net of reinsurance	$	19,961		$	12,924		$	13,205
Net investment income received		4,600			4,399			4,635
Separate account fees		1,786			1,841			1,848
Commissions and expenses allowance on reinsurance ceded		1,040			817			1,224
Miscellaneous income		2,852			450			(172	)
Benefits and losses paid		(29,836	)		(21,960	)		(20,462	)
Net transfers from (to) separate accounts		7,404			8,206			6,493
Commissions and expenses (paid) recovered		(5,153	)		(7,147	)		(1,572	)
Dividends paid to policyholders		(250	)		(89	)		(91	)
Federal and foreign income and capital gain taxes (paid) recovered		847			(382	)		(1,195	)
Net cash provided by (used in) operating activities		3,251			(941	)		3,913
Investment activities
Proceeds from sales, maturities, or repayments of investments:
Bonds		19,217			20,471			19,130
Stocks		190			130			149
Mortgage loans on real estate		1,834			1,789			1,660
Real estate		8			1,053			22
Other invested assets		955			941			498
Derivatives		32			-			-
Net gains (losses) on cash, cash equivalents and short term investments		(9	)		3			(2	)
Total investment proceeds		22,227			24,387			21,457
Cost of investments acquired:
Bonds		19,734			21,430			17,853
Stocks		848			234			78
Mortgage loans on real estate		1,715			1,088			1,813
Real estate		1,155			539			743
Other invested assets		905			1,281			882
Derivatives		-			739			1,916
Total cost of investments acquired		24,357			25,311			23,285
Net increase (decrease) in receivable/payable for securities and collateral on derivatives		904			(1,729	)		1,197
Net increase (decrease) in policy loans		56			(150	)		140
Net cash provided by (used in) investment activities		(3,090	)		955			(3,165	)
Financing and miscellaneous activities
Borrowed funds		(276	)		(232	)		(48	)
Net deposits (withdrawals) on deposit-type contracts		(333	)		(85	)		(134	)
Dividend paid to Parent		(210	)		(500	)		(300	)
Repurchase agreements		-			-			(437	)
Other cash provided (applied)		(2,516	)		3,756			14
Net cash provided by (used in) financing and miscellaneous activities		(3,335	)		2,939			(905	)
Net increase (decrease) in cash, cash equivalents and short-term investments		(3,174	)		2,953			(157	)
Cash, cash equivalents and short-term investments at beginning of year		7,702			4,749			4,906
Cash, cash equivalents and short-term investments at end of year	$	4,528		$	7,702		$	4,749
Non-cash investing activities during the year:
Premium, deposit type contracts and other operating activity for New York Life (NYL) reinsurance transaction and other transactions, net	$	8,357		$	-		$	-
Transfer of invested assets for NYL reinsurance transaction and other affiliates, net		(8,357	)		-			-

The accompanying notes are an integral part of these statutory-basis financial statements.

F-7

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

1. Organization and Nature of Operations

John Hancock Life Insurance Company (U.S.A.) (“JHUSA” or the “Company”) is a wholly-owned subsidiary of The Manufacturers Investment Corporation (“MIC”). MIC is a wholly-owned subsidiary of John Hancock Financial Corporation (“JHFC”), which is an indirect, wholly-owned subsidiary of The Manufacturers Life Insurance Company (“MLI”). MLI, in turn, is a wholly-owned subsidiary of Manulife Financial Corporation (“MFC”), a Canadian-based, publicly traded financial services holding company.

The Company provides a wide range of financial protection and wealth management products and services to both individual and institutional customers located primarily in the United States. Through its insurance operations, the Company offers a variety of individual life insurance and individual and group long-term care insurance products that are distributed through multiple distribution channels, including insurance agents, brokers, banks, financial planners, and direct marketing. The Company also offers mutual fund products and services which include a variety of retirement products to retirement plans. The Company distributes these products through multiple distribution channels, including insurance agents and affiliated brokers, securities brokerage firms, financial planners, pension plan sponsors, pension plan consultants, and banks. In 2013, the Company discontinued sales of its structured settlements and single premium immediate annuity products. The Company is licensed to sell insurance in 49 states, the District of Columbia, Guam, Puerto Rico and the U.S. Virgin Islands.

Pursuant to a distribution agreement with the Company, John Hancock Distributors LLC (“JHD”), a registered broker-dealer and a wholly-owned subsidiary of the Company, acts as the principal underwriter of variable life contracts and other products issued by the Company.

The Company has two wholly-owned life insurance subsidiaries, John Hancock Life Insurance Company of New York (“JHNY”) and John Hancock Life & Health Insurance Company (“JHLH”).

2. Significant Accounting Policies

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known and may impact the amounts reported and disclosed herein.

Basis of Presentation

These financial statements have been prepared in conformity with accounting practices prescribed or permitted by the Michigan Department of Insurance and Financial Services (the “Insurance Department”). The National Association of Insurance Commissioners’ (“NAIC”) Accounting Practices and Procedures Manual (“NAIC SAP”) has been adopted as a component of practices prescribed or permitted by the State of Michigan. The Michigan Director of the Department of Insurance and Financial Services (the “Director”) has the authority to prescribe or permit other specific practices that deviate from prescribed practices. NAIC SAP practices differ from accounting principles generally accepted in the United States (“GAAP”) as described below.

Investments: Investments in bonds not backed by other loans are principally stated at amortized cost using the constant yield (interest) method. Bonds can also be stated at the lesser of amortized cost or fair value based on their NAIC designated rating. Non-redeemable preferred stocks, which have characteristics of equity securities, are reported at cost or lower of cost or market value as determined by the Securities Valuation Office of the NAIC (“SVO”) rating, and the related net unrealized capital gains (losses) are reported in unassigned surplus along with any adjustment for federal income taxes. Redeemable preferred stocks, which have characteristics of debt securities and are rated as medium quality or better, are reported at cost or amortized cost. All other redeemable preferred stocks are reported at the lower of cost, amortized cost, or fair value.

For bonds other than loan-backed and structured securities, the Company has a process in place to identify securities that could potentially have an impairment that is other-than-temporary. The Company recognizes other-than-temporary impairment losses on bonds with unrealized losses when either of the following two conditions exist: the entity either (1) has the intent to sell the debt security or (2) is more likely than not to be required to sell the debt security before its anticipated recovery. Declines in value due to credit difficulties are also considered to be other-than-temporarily impaired when the Company does not have the intent and ability to hold the security for a period of time sufficient to allow for any anticipated

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NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

2. Significant Accounting Policies - (continued)

recovery in value. The entire difference between amortized cost and fair value on such bonds with credit difficulties is recognized as an impairment loss in income.

Loan-backed and structured securities (i.e., collateralized mortgage obligations) are adjusted for the effects of changes in prepayment assumptions on the related accretion of discounts or amortization of premiums of such securities using either the retrospective or prospective methods. The retrospective adjustment method is used to value all such securities, except principal-only and interest-only securities and such securities with NAIC designations of 3-6, which are valued using the prospective method. If it is determined that a decline in fair value is other-than-temporary, the cost basis of the security is written down to the present value of estimated future cash flows using the original effective interest rate inherent in the security.

Common stocks are primarily reported at fair value based on quoted market prices and the related net unrealized capital gains (losses) are reported in unassigned surplus, net of any adjustment for federal income taxes. There are no restrictions on common and preferred stocks.

Insurance subsidiaries are reported at their underlying statutory equity. Non-insurance subsidiaries, which have significant ongoing operations other than for the benefit of the Company and its affiliates, are reported at GAAP equity. Non-insurance subsidiaries, which have no significant ongoing operations other than for the benefit of the Company and its affiliates, are reported based on the underlying equity, plus the admitted portion of goodwill. Dividends from subsidiaries are included in net investment income. The remaining net change in the subsidiaries’ equity is included in the change in net unrealized capital gains (losses).

Realized capital gains (losses) on sales of securities are recognized using the first in, first out (“FIFO”) method. The cost basis of bonds and common and preferred stocks is adjusted for impairments in value deemed to be other-than-temporary and such adjustments are reported as a component of net realized capital gains (losses).

Mortgage loans on real estate are reported at unpaid principal balances, less an allowance for impairments. Valuation allowances, if necessary, are established for mortgage loans on real estate based on the difference between the net value of the collateral, determined as the fair value of the collateral less estimated costs to obtain and sell, and the recorded investment in the mortgage loan. The initial valuation allowance and subsequent changes in the allowance for mortgage loans are charged or credited directly to unassigned surplus. A mortgage loan is considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect all principal and interest amounts due according to the contractual terms of the mortgage agreement. When management determines foreclosure is probable and the impairment is other-than-temporary, the mortgage loan is written down and a realized loss is recognized.

Real estate occupied by the Company and real estate held for the production of income are reported at depreciated cost, net of related obligations. Real estate that the Company has the intent to sell is reported at the lower of depreciated cost or fair value, net of related obligations. Depreciation is calculated on a straight-line basis over the estimated useful lives of the properties. Investment income and operating expenses include rent for the Company’s occupancy of Company-owned properties.

Cash equivalents are short-term highly liquid investments with original maturities of three months or less and are principally stated at amortized cost. Short-term investments include investments with maturities of one year or less and greater than three months at the date of acquisition and are principally stated at amortized cost.

Policy loans are reported at unpaid principal balances.

Derivative instruments that meet the criteria to qualify for hedge accounting are accounted for in a manner consistent with the item hedged (i.e., amortized cost or fair value with the related net unrealized capital gains (losses) reported in unassigned surplus along with any adjustment for federal income taxes). Derivative instruments that are entered into for other than hedging purposes or that do not meet the criteria to qualify for hedge accounting are accounted for at fair value, and the related changes in fair value are recognized as net unrealized capital gains (losses) reported in unassigned surplus, net of any adjustments for federal income taxes. Embedded derivatives are not accounted for separately from the host contract.

Other invested assets consist of ownership interests in partnerships and limited liability corporations (“LLCs”) which are carried based on the underlying GAAP equity, with the exception of affordable housing tax credit properties, which are carried at amortized cost. The related net unrealized capital gains (losses) are reported in unassigned surplus, net of any

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

2. Significant Accounting Policies - (continued)

adjustments for federal income taxes. The Company records its share of income using the most recent financial information available, which is generally on a three month lag. Depending on the timing of receipt of the audited financial statements of these other invested assets, the investee level financial data may be up to one year in arrears.

Interest Maintenance and Asset Valuation Reserves: Under a formula prescribed by the NAIC, the Company defers the portion of realized capital gains (losses) on sales of fixed income investments, principally bonds and mortgage loans, and interest-related hedging activities that are attributable to changes in the general level of interest rates and amortizes those deferrals over the remaining period to maturity based on groupings of individual securities sold in five-year bands. That net deferral is reported as the interest maintenance reserve (“IMR”) in the accompanying Balance Sheets. Realized capital gains (losses) are reported in income, net of federal income tax and transferred to the IMR. The asset valuation reserve (“AVR”) provides a valuation allowance for invested assets. The AVR is determined by an NAIC prescribed formula with changes reflected directly in unassigned surplus.

Subsidiaries: The accounts and operations of the Company’s subsidiaries are not consolidated with the accounts and operations of the Company.

Goodwill: Goodwill is admitted subject to an aggregate limitation of 10% of the capital and surplus in the most recently filed quarterly statement, excluding EDP equipment, operating system software, net deferred tax assets, and net positive goodwill. Goodwill is amortized over the period the Company benefits economically, not to exceed 10 years. Goodwill held by non-insurance subsidiaries is assessed in accordance with GAAP, subject to certain limitations for holding companies and foreign insurance subsidiaries.

Separate Accounts: Separate account assets and liabilities reported in the accompanying Balance Sheets represent funds that are separately administered, principally for annuity contracts and variable life insurance policies, and for which the contract holder, rather than the Company, bears the investment risk. Separate account obligations are intended to be satisfied from separate account assets and not from assets of the general account. Separate accounts are generally reported at fair value. The operations of the separate accounts are not included in the Statements of Operations; however, income earned on amounts initially invested by the Company in the formation of new separate accounts is included in other revenue. Fees charged to contract holders, principally mortality, policy administration, and surrender charges are included in separate account administrative and contract fees. The assets in the separate accounts are not pledged to others as collateral or otherwise restricted. For the years ended December 31, 2015, 2014 and 2013, there were no gains (losses) on transfers of assets from the general account to the separate account.

Nonadmitted Assets: Certain assets designated as nonadmitted, principally furniture and equipment, past due agents’ balances, and other assets not specifically identified as an admitted asset within the NAIC SAP are excluded from the accompanying Balance Sheets and are charged directly to unassigned surplus.

Policy Acquisition Costs: The costs of acquiring and renewing business are expensed when incurred.

Policy Reserves: Reserves for life, long-term care, annuity, and deposit-type contracts are developed by actuarial methods and are determined based on interest rates, mortality tables and valuation methods prescribed by the NAIC that will provide, in the aggregate, reserves that are greater than or equal to the maximum of guaranteed policy cash values or the amounts required by the Insurance Department.

• The Company waives deduction of deferred fractional premiums on the death of lives insured and annuity contract holders and returns any premium beyond the date of death. Surrender values on policies do not exceed the corresponding benefit reserves. Additional reserves are established when the results of asset adequacy testing indicate the need for such reserves or the net premiums exceed the gross premiums on any insurance in-force. This includes asset adequacy testing required under NAIC Actuarial Guideline 38 Section 8D (“AG 38 8D”). The Company recorded gross reserves of $791 million and $641 million for the calculation required under AG 38 8D, of which $465 million and $446 million was ceded to Manulife Reinsurance Limited (“MRL”) under an existing coinsurance transaction at December 31, 2015 and 2014, respectively. At December 31, 2015 and 2014, the Company held reserves of $920 million and $1,030 million, respectively, on insurance in-force for which gross premiums were less than net premiums according to the standard of valuation set by the State of Michigan.

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

2. Significant Accounting Policies - (continued)

• Reserves for individual life insurance policies are maintained using the 1941, 1958, 1980, and 2001 Commissioner’s Standard Ordinary and American Experience Mortality Tables. Methods used include the net level premium method principally for policies issued prior to 1978, a modified preliminary term method, and the Commissioner’s Reserve Valuation Method.

• Annuity and supplementary contracts with life contingency reserves are based principally on modifications of the 1937 Standard Annuity Table, the Group Annuity Mortality Tables for 1951, 1971, 1983, and 1994, the 1971 and 1983 Individual Annuity Mortality Tables, the 2000 Individual Annuity Mortality Table, and the 2012 Individual Annuity Mortality Table.

• Liabilities related to policyholder funds left on deposit with the Company are generally equal to fund balances.

• Long-term care reserves are generally calculated using the one-year preliminary term method based on various mortality, morbidity, and lapse tables.

• The mean reserve method is used to adjust the calculated terminal reserve to the appropriate reserve at December 31, 2015 or 2014. Mean reserves are determined by computing the terminal reserve for the plan at the rated age and assuming annual premiums have been paid as of the valuation date. For certain policies with substandard table ratings, mean reserves are based on rated mortality from 125% to 500% of standard rating; for certain policies with flat extra ratings, mean reserves are based on standard mortality rates increased by 1 to 25 deaths per thousand. An asset is recorded for deferred premiums, net of loading, to adjust the reserve for modal premium payments.

• For long-term care, the interpolated reserve method is used to adjust the calculated terminal reserve, and in addition an unearned premium reserve is held.

• Tabular interest, tabular less actual reserve released, and tabular costs have been determined by formula. Tabular interest on funds not involving life contingencies is calculated as one percent of the product of such valuation rate of interest times the mean of the amount of funds subject to such valuation rate of interest held at the beginning and end of the valuation year.

• From time to time, the Company finds it appropriate to modify certain required policy reserves because of changes in actuarial assumptions. Reserve modifications resulting from such determinations are recorded directly to unassigned surplus.

• Reserves for variable deferred annuity contracts are calculated in accordance with NAIC Actuarial Guideline 43, and primarily use the 1994 Minimum Guaranteed Death Benefit or Annuity 2000 tables. The reserve is based on the present value of accumulated losses from the perspective of the Company. The liability is evaluated under both a standard scenario and stochastic scenario, and the Company holds the higher of the standard or stochastic values.

Reinsurance: Reinsurance ceded contracts do not relieve the Company from its obligations to policyholders. The Company remains liable to its policyholders for the portion reinsured to the extent that any reinsurer does not meet its obligations for reinsurance ceded to it under the reinsurance agreements. Failure of the reinsurers to honor their obligations could result in losses to the Company; consequently, estimates are established for amounts deemed or estimated to be uncollectible. To minimize its exposure to significant losses from reinsurance insolvencies, the Company evaluates the financial condition of its reinsurers and monitors concentration of credit risk arising from similar characteristics of the insurer.

Premiums, commissions, expense reimbursements, benefits, and reserves related to reinsured business are accounted for on bases consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Premiums ceded to other companies have been reported as a reduction of premium income. Amounts applicable to reinsurance ceded for future policy benefits, unearned premium reserves, and claim liabilities have been reported as reductions of these items.

The Company records a liability for unsecured policy reserves ceded to reinsurers not authorized in the State of Michigan to assume such business. Changes to those amounts are credited or charged directly to unassigned surplus. Policy and contract liabilities ceded to reinsurers have been reported as reductions of the related reserves. Commissions allowed by reinsurers on business ceded are reported as income when received. Investment income ceded includes separate account fee income, net

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

2. Significant Accounting Policies - (continued)

investment income and realized investment and other gains (losses), which was ceded to the affiliated reinsurers. NAIC SAP prescribes that no gain be recognized upon inception of a reinsurance treaty. The initial consideration is recorded directly to unassigned surplus and released into income over the life of the treaty.

Federal Income Taxes: Total federal income taxes are based upon the Company’s best estimate of its current and deferred tax assets or liabilities. Current tax expense is reported in the Statements of Operations as federal income tax expense if resulting from operations and within net unrealized capital gains (losses) if resulting from capital transactions. Changes in the balances of deferred taxes, which provide for book versus tax temporary differences, are subject to limitations and are reported within various lines within surplus. Accordingly, the reporting of statutory to tax temporary differences, such as reserves and policy acquisition costs, and of statutory to tax permanent differences, such as tax-exempt interest and tax credits, results in effective tax rates in the Statements of Operations that differ from the federal statutory tax rate.

Participating Insurance and Policyholder Dividends: Participating business represented approximately 15% and 26% of the Company’s aggregate reserve for life contracts at December 31, 2015 and 2014. The amount of policyholders’ dividends to be paid is approved annually by the Company’s Board of Directors. Policyholder dividends are recognized when declared rather than over the term of the related policies. The determination of the amount of policyholder dividends is complex and varies by policy type. In general, the aggregate amount of policyholders’ dividends is calculated based upon actual interest, mortality, morbidity, persistency, and expense experience for the year, as well as management’s judgment as to the appropriate level of statutory surplus to be retained by the Company. John Hancock Life Insurance Company (“JHLICO”) was a predecessor company that was merged into JHUSA on December 31, 2009. For additional information on the closed blocks, see the Closed Blocks Note.

Surplus Notes: Surplus notes are reported in capital and surplus, and the interest expense is not accrued unless approved for payment by the Insurance Department.

Statements of Cash Flow: Cash, cash equivalents and short-term investments in the Statements of Cash Flow represent movements of cash and highly liquid debt investments with initial maturities of one year or less.

Premiums and Benefits: Premiums for whole, term, and universal life, long-term care, annuity policies, guaranteed interest, and group annuity contracts with any mortality and morbidity risk are recognized as revenue when due. Revenues for universal life and annuity policies with mortality or morbidity risk, except for guaranteed interest, term certain supplementary contracts, and funding agreements, consist of the entire premium received. Premiums received for annuity policies, guaranteed interest, funding agreements, variable universal life, and group annuity contracts without mortality or morbidity risk are recorded using deposit accounting and are credited directly to an appropriate policy reserve account, without recognizing premium revenue. Benefits incurred represent the total of death benefits paid, annuity benefits paid and the change in policy reserves.

Policy and Contract Claims: Policy and contract claims are determined on an individual-case basis for reported losses. Estimates of incurred but not reported losses are developed on the basis of past experience.

Guaranty Fund Assessments: Guaranty fund assessments are accrued when the Company receives knowledge of an insurance insolvency.

Variances Between NAIC SAP and GAAP: The more significant variances from GAAP are: (a) bonds would generally be reported at fair value; (b) changes in the fair value of derivative financial instruments would generally be reported as revenue unless deemed an effective hedge; (c) embedded derivatives would be bifurcated from the underlying contract or security and accounted for separately at fair value; (d) income recognition on partnerships and LLCs, which are accounted for under the equity method, would not be limited to the amount of cash distribution; (e) majority-owned noninsurance subsidiaries, variable interest entities where the Company is the primary beneficiary, and certain other controlled entities would be consolidated; (f) changes in the balances of deferred income taxes would generally be included in net income; (g) market value adjusted (“MVA”) annuity products would be reported in the general account of the Company; (h) all assets, subject to valuation allowances, would be recognized; (i) reserves would generally be based upon the net level premium method or the estimated gross margin method with estimates of future mortality, morbidity, persistency and interest; (j) reinsurance ceded, unearned ceded premium and unpaid ceded claims would be reported as an asset; (k) AVR and IMR would not be recorded; (l) changes to the mortgage loan valuation allowance would be reported in income; (m) surplus notes would be reported as liabilities; (n) premiums received in excess of policy charges for universal life and annuity policies would not be recognized as premium revenue and benefits would represent the excess of benefits paid over the policy account value and interest

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

2. Significant Accounting Policies - (continued)

credited to the account values; (o) certain acquisition costs, such as commissions and other variable costs, directly related to acquiring new business are charged to current operations as incurred, would generally be capitalized and amortized based on profit emergence over the expected life of the policies or over the premium payment period; and (p) changes in unrealized capital gains (losses) and foreign currency translations would be presented as other comprehensive income.

3. Permitted Statutory Accounting Practices

The financial statements of the Company are presented in conformity with accounting practices prescribed or permitted by the Insurance Division.

For determining the Company’s solvency under the State of Michigan’s insurance laws and regulations, the Insurance Department recognizes only statutory accounting practices prescribed or permitted by the State of Michigan for determining and reporting the financial condition and results of operations of the Company. NAIC SAP has been adopted as a component of practices prescribed or permitted by the State of Michigan. The Director has the authority to prescribe or permit other specific practices that deviate from prescribed practices.

As of December 31, 2015 and 2014, the Director had not prescribed or permitted the Company to use any accounting practices that would result in the Company’s income or financial position to deviate from NAIC SAP.

4. Accounting Changes

Accounting changes adopted to conform to the provisions of NAIC SAP are reported as changes in accounting principles. The cumulative effect of changes in accounting principles is reported as an adjustment to unassigned surplus in the period of the change in accounting principle. The cumulative effect is the difference between the amount of unassigned surplus at the beginning of the year and the amount of unassigned surplus that would have been reported at that date if the new accounting principle had been applied retrospectively.

Adoption of New Accounting Standards

In December 2014, the NAIC adopted revisions to Statement of Statutory Accounting Principles (“SSAP”) No. 40R, Real Estate Investments (“SSAP 40R”) which became effective January 1, 2015 allowing real estate property investments that are wholly-owned by a LLC that are directly and wholly-owned by the reporting entity to be reported as real estate. For these investments previously reported within SSAP No. 48, Joint Ventures, Partnerships and Limited Liability Companies (“SSAP 48”), and owned as of the effective date, the Company recorded a $248 million reduction in other invested assets, and a corresponding increase in real estate investment property holdings.

Future Adoption of New Accounting Standards

As of December 31, 2015, there were no pending new accounting standards that would have a material impact on the Company’s Balance Sheet or Statement of Operations.

Reconciliation Between Audited Financial Statements and NAIC Annual Statements

There were no differences in net income (loss) or capital and surplus between the audited financial statements and the NAIC statements as filed as of and for the years ended December 31, 2015, 2014 and 2013.

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

5. Investments

Bonds

The carrying value and fair value of the Company’s investments in bonds are summarized as follows:

	Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in millions)
December 31, 2015:
U.S. government and agencies	$	5,378	$	348	$	(46	)	$	5,680
States and political subdivisions		2,666		435		(11	)		3,090
Foreign governments		2,737		201		(16	)		2,922
Corporate bonds		27,480		1,935		(655	)		28,760
Mortgage-backed and asset-backed securities		6,202		389		(93	)		6,498
Total bonds	$	44,463	$	3,308	$	(821	)	$	46,950
December 31, 2014:
U.S. government and agencies	$	5,420	$	863	$	(1	)	$	6,282
States and political subdivisions		2,842		606		—			3,448
Foreign governments		2,849		205		(10	)		3,044
Corporate bonds		31,347		3,633		(140	)		34,840
Mortgage-backed and asset-backed securities		6,768		618		(49	)		7,337
Total bonds	$	49,226	$	5,925	$	(200	)	$	54,951

A summary of the carrying value and fair value of the Company’s investments in bonds at December 31, 2015, by contractual maturity, is as follows:

	Carrying Value		Fair Value
	(in millions)
Due in one year or less	$	747	$	760
Due after one year through five years		5,659		5,764
Due after five years through ten years		6,962		7,010
Due after ten years		24,893		26,918
Mortgage-backed and asset-backed securities		6,202		6,498
Total	$	44,463	$	46,950

The expected maturities in the foregoing table may differ from the contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

The Company maintains assets which are pledged as collateral in connection with various agreements and transactions. Additionally, the Company holds assets on deposit with government authorities as required by state law. The following table summarizes the carrying value or fair value, as applicable, of the pledged or deposited assets:

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

5. Investments - (continued)

	December 31,
	2015		2014
	(in millions)
At fair value:
Bonds pledged in support of over-the-counter derivative instruments	$	244	$	125
Bonds pledged in support of exchange-traded futures		609		498
Bonds and cash pledged in support of cleared interest rate swaps		120		551
Total fair value	$	973	$	1,174
At carrying value:
Bonds on deposit with government authorities	$	16	$	16
Mortgage loans pledged in support of real estate		17		45
Bonds held in trust		92		132
Pledged collateral under reinsurance agreements		3,407		2,800
Total carrying value	$	3,532	$	2,993

At December 31, 2015 and 2014, the Company held below investment grade corporate bonds of $2,047 million and $2,096 million, with an aggregate fair value of $1,990 million and $2,197 million, respectively. The Company performs periodic evaluations of the relative credit standing of the issuers of these bonds.

The Company has a process in place to identify securities that could potentially have an impairment that is other-than-temporary. This process involves monitoring market events that could impact issuers’ credit ratings, business climate, management changes, litigation and government actions, and other similar factors. This process also involves monitoring late payments, downgrades by rating agencies, key financial ratios, financial statements, revenue forecasts, and cash flow projections as indicators of credit issues.

At the end of each quarter, the MFC Loan Review Committee reviews all securities where there is evidence of impairment or a significant unrealized loss at the Balance Sheet date. Generally, securities with market value less than 60 percent of amortized cost for six months or more indicate an impairment is present. Accordingly, securities in this category are normally deemed impaired unless there is clear evidence they should not be impaired. The analysis focuses on each company’s or project’s ability to service its debts in a timely fashion and the length of time the security has been trading below amortized cost. The results of this analysis are reviewed by the Transaction and Portfolio Review Committee at MFC. This committee includes MFC’s Chief Financial Officer, Chief Investment Officer, Chief Risk Officer, Chief Credit Officer, and other senior management. This quarterly process includes a fresh assessment of the credit quality of each investment in the entire fixed maturity security portfolio.

The Company considers relevant facts and circumstances in evaluating whether the impairment of a security is other-than-temporary. Relevant facts and circumstances considered include (1) the length of time the fair value has been below cost; (2) the financial position of the issuer, including the current and future impact of any specific events; and (3) the Company’s ability and intent to hold the security to maturity or until it recovers in value. To the extent the Company determines that a security, other than loan-backed and structured securities, is deemed to be other-than-temporarily impaired, the difference between amortized cost and fair value would be charged to income. For loan-backed and structured securities in an unrealized loss position, where the Company does not intend to sell or is not likely to be required to sell the security, the Company calculates an other-than-temporary impairment loss by subtracting the net present value of the projected future cash flows of the security from the amortized cost of the security. The net present value is calculated by discounting the Company’s best estimate of projected future cash flows at the effective interest rate implicit in the debt security prior to impairment. The projection of future cash flows is subject to the same analysis the Company applies to its overall impairment evaluation process, as noted above, which incorporates security specific information such as late payments, downgrades by rating agencies, key financial ratios, financial statements, and fundamentals of the industry and geographic area in which the issuer operates, as well as overall macroeconomic conditions. The cash flow estimates, including prepayment assumptions, are based on data from third-party data sources or internal estimates, and are driven by assumptions regarding the underlying collateral, including default rates, recoveries, and changes in value.

There are a number of significant risks and uncertainties inherent in the process of monitoring impairments and determining if impairment is other-than-temporary. These risks and uncertainties include (1) the risk that the Company’s assessment of an

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

5. Investments - (continued)

issuer’s ability to meet all of its contractual obligations will change based on changes in the credit characteristics of that issuer; (2) the risk that the economic outlook will be worse than expected or have more of an impact on the issuer than anticipated; (3) the risk that fraudulent information could be provided to the Company’s investment professionals who determine the fair value estimates and other-than-temporary impairments; and (4) the risk that new information obtained by the Company or changes in other facts and circumstances lead the Company to change its intent to hold the security to maturity or until it recovers in value. Any of these situations could result in a charge to income in a future period.

The impact of Other-Than-Temporary Impairments (OTTI) on Carrying Values (CV), including the Present Value (PV) of Cash Flows (CF) less than Book Value (BV), is as follows:

	December 31, 2015
	CV Before OTTI		Interest OTTI		Credit OTTI		CV After OTTI		Fair Value
	(in millions)
Aggregate PV of CFs less than BV	$	8	$	-	$	2	$	6	$	6
Aggregate intent to sell		-		-		-		-		-
Aggregate lack of intent or inability to sell		-		-		-		-		-
Total	$	8	$	-	$	2	$	6	$	6
	December 31, 2014
	CV Before OTTI		Interest OTTI		Credit OTTI		CV After OTTI		Fair Value
	(in millions)
Aggregate PV of CF’s less than BV	$	33	$	-	$	5	$	28	$	28
Aggregate intent to sell		-		-		-		-		-
Aggregate lack of intent or inability to sell		-		-		-		-		-
Total	$	33	$	-	$	5	$	28	$	28

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

5. Investments - (continued)

The following tables disclose the impact of Other-Than-Temporary Impairments (OTTI) on Carrying Values (CV), including the Net Present Value (NPV) of Projected Cash Flows (CF) less than Book Value (BV) by CUSIP:

Year Ended December 31, 2015

CUSIP#	CV Before OTTI		NPV of Projected CFs		Credit OTTI Recognized in Loss		CV After OTTI		Fair         Value
36242DFH1	$	3	$	1	$	2	$	1	$	1
75970NBK2		-		-		-		-		-
94981QAZ1		-		-		-		-		-
805564PN5		2		2		-		2		2
36242DFH1		1		1		-		1		1
55265KS34		1		1		-		1		1
75970NBK2		-		-		-		-		-
126671TU0		-		-		-		-		-
294751CT7		1		1		-		1		1
Total	$	8	$	6	$	2	$	6	$	6

F-17

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

5. Investments - (continued)

Year Ended December 31, 2014

CUSIP#	CV Before OTTI		NPV of Projected CFs		Credit OTTI Recognized in Loss		CV After OTTI		Fair         Value
00075XAE7	$	1	$	1	$	-	$	1	$	1
12669FUY7		-		-		-		-		-
361849RK0		15		14		1		14		14
126670AJ7		-		-		-		-		-
126673WJ7		-		-		-		-		-
126673WK4		-		-		-		-		-
12669ERQ1		4		3		1		3		3
12669FD67		-		-		-		-		-
50180LAP5		4		3		1		3		3
55265KS42		-		-		-		-		-
75970NAR8		1		1		-		1		1
75970NBK2		1		1		-		1		1
126673WJ7		-		-		-		-		-
12669FD59		2		1		1		1		1
55265KS34		1		1		-		1		1
59020UAZ8				-		-		-		-
75970NAR8		1		1		-		1		1
75970NBK2		-		-		-		-		-
94981QAZ1		-		-		-		-		-
50180LAP5		3		2		1		2		2
75970NBK2		-		-		-		-		-
Total	$	33	$	28	$	5	$	28	$	28

All impaired securities which have fair value less than cost or amortized cost, for which an other-than-temporary impairment has not been recognized in income as a realized loss, including securities with a recognized other-than-temporary impairment for non-interest related declines when a non-recognized interest related impairment remains:

	December 31,
	2015		2014
	(in millions)
Continuous Unrealized Losses
Less than 12 months	$	-	$	-
12 months or longer		-		-
Fair Value of Securities with Continuous Unrealized Losses
Less than 12 months		-		3
12 months or longer		-		4

F-18

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

5. Investments - (continued)

The following table shows gross unrealized losses and fair values of bonds, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

	Less than 12 months					12 months or more					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
						(in millions)
December 31, 2015:
U.S. government and agencies	$	3,260	$	(46	)	$	-	$	-		$	3,260	$	(46	)
States and political subdivisions		213		(10	)		11		(1	)		224		(11	)
Foreign governments		16		(3	)		46		(12	)		62		(15	)
Corporate bonds		8,424		(482	)		1,167		(174	)		9,591		(656	)
Mortgage-backed and asset-backed securities		1,744		(57	)		242		(36	)		1,986		(93	)
Total	$	13,657	$	(598	)	$	1,466	$	(223	)	$	15,123	$	(821	)
	Less than 12 months					12 months or more					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
						(in millions)
December 31, 2014:
U.S. government and agencies	$	94	$	-		$	58	$	(1	)	$	152	$	(1	)
States and political subdivisions		8		-			8		-			16		-
Foreign governments		80		-			52		(10	)		132		(10	)
Corporate bonds		2,033		(45	)		2,651		(95	)		4,684		(140	)
Mortgage-backed and asset-backed securities		412		(8	)		459		(41	)		871		(49	)
Total	$	2,627	$	(53	)	$	3,228	$	(147	)	$	5,855	$	(200	)

At December 31, 2015 and 2014, there were 889 and 574 bonds that had a gross unrealized loss, of which the single largest unrealized loss was $25 million and $12 million, respectively. The Company anticipates that these bonds will perform in accordance with their contractual terms and the Company currently has the ability and intent to hold these bonds until they recover or mature. Unrealized losses can be created by rising interest rates or by rising credit concerns and hence widening credit spreads. Credit concerns are apt to play a larger role in the unrealized loss on below investment grade securities. Unrealized losses on investment grade securities principally relate to changes in interest rates or changes in credit spreads since the securities were acquired. Credit rating agencies’ statistics indicate that investment grade securities have been found to be less likely to develop credit concerns.

For the years ended December 31, 2015, 2014 and 2013, realized capital losses include $28 million, $24 million, and $88 million related to bonds that have experienced an other-than-temporary decline in value and were comprised of 13, 21, and 43 securities, respectively. These are primarily made up of impairments on public and private bonds and sub-prime mortgage-backed securities.

The total recorded investment in restructured corporate bonds at December 31, 2015, 2014 and 2013 was $18 million, $17 million, and $0 respectively. There were 0, 2, and 0 restructured corporate bonds for which an impairment was recognized during 2015, 2014 and 2013, respectively. The Company accrues interest income on impaired securities to the extent deemed

F-19

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

5. Investments - (continued)

collectible and the loan continues to perform under its original or restructured contractual terms. Interest income on non-performing loans generally is recognized on a cash basis.

The sales of investments in bonds resulted in the following:

	Years Ended December 31,
	2015			2014			2013
	(in millions)
Proceeds	$	17,078		$	18,292		$	14,555
Realized gross gains		500			579			244
Realized gross losses		(123	)		(111	)		(483	)

The Company had no nonadmitted accrued investment income from bonds (unaffiliated) at December 31, 2015 and 2014.

Affiliate Transactions

In 2015, the Company transferred certain bonds to an affiliate, John Hancock Reassurance Company Limited (“JHRECO”) in lieu of a reinsurance cash settlement. These bonds had a book value of $537 million and fair value of $609 million. The Company recognized $72 million in pre-tax realized gains before transfer to the IMR.

In 2015, the Company sold certain bonds to an affiliate, Bermuda Branch of The Manufacturers Life Insurance Company (“BBMLI”). These bonds had a book value of $270 million and fair value of $284 million at the date of the transaction. The Company recognized $15 million in pre-tax realized gains before transfer to the IMR.

In 2015, the Company sold certain bonds to an affiliate, Manufacturers International Limited (Hong Kong) (“MIL”). These bonds had a book value of $298 million and fair value of $332 million at the date of the transaction. The Company recognized $33 million in pre-tax realized gains before transfer to the IMR.

In 2015, the Company sold certain bonds to an affiliate, Manulife Financial Singapore (“MLS”). These bonds had a book value of $135 million and fair value of $147 million at the date of the transaction. The Company recognized $12 million in pre-tax realized gains before transfer to the IMR.

In 2015, the Company sold certain bonds with an affiliate, Manulife Japan (“MLJ”). These bonds had a net book value of $224 million and fair value of $248 million at the date of the transaction. The Company recognized $24 million in pre-tax realized gains before transfer to the IMR.

In 2015, the Company acquired, at fair value, certain bonds from an affiliate, JHNY, for $152 million.

In 2015, the Company acquired, at fair value, certain bonds from an affiliate, JHLH, for $282 million.

In 2014, JHUSA sold certain bonds to an affiliate, MLI. These bonds had a book value of $178 million and a fair value of $206 million at the date of the transaction. The Company recognized $28 million in pre-tax realized gains which was deferred in the IMR.

In 2014, JHUSA sold certain bonds to an affiliate, MIL. These bonds had a book value of $371 million and a fair value of $433 million in exchange for certain bonds from MIL with a book value of $389 million and fair value of $435 million at the date of the transaction. The Company recognized $62 million in pre-tax realized gains which was deferred in the IMR.

In 2014, JHUSA sold certain bonds to an affiliate, JHRECO. These bonds had a book value of $244 million and fair value of $284 million in exchange for certain bonds from JHRECO with a book value of $282 million and fair value of $291 million at the date of the transaction. The Company recognized $41 million in pre-tax realized gains which was deferred in the IMR.

F-20

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

5. Investments - (continued)

In 2014, JHUSA acquired certain and sold certain bonds from an affiliate, JHNY. These bonds had a net book value of $165 million and a fair value of $188 million at the date of the transactions. The Company recognized $1 million in pre-tax realized gains before transfer to the IMR.

In 2014, JHUSA acquired, at fair value, certain bonds from an affiliate, JHLH, for $72 million.

In 2013, JHUSA sold certain bonds to an affiliate, MIL. These bonds had a book value of $397 million and a fair value of $454 million at the date of the transaction. The Company recognized $57 million in pre-tax realized gains before transfer to the IMR.

In 2013, JHUSA sold certain bonds to an affiliate, JHRECO. These bonds had a book value of $184 million and a fair value of $181 million at the date of the transaction. The Company recognized $3 million in pre-tax realized losses before transfer to the IMR.

In 2013, JHUSA sold certain and acquired certain bonds from an affiliate, BBMLI. The bonds had a net book value of $338 million and a fair value of $372 million at the date of the transaction. The Company recognized $27 million in pre-tax realized gains before transfer to the IMR.

F-21

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

5. Investments - (continued)

Preferred and Common Stocks

Unrealized gains and losses on investments in preferred and common stocks are reported directly in unassigned surplus and do not affect operations. The gross unrealized gains and losses on, and the cost and fair values of, those investments are summarized as follows:

	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in millions)
December 31, 2015:
Preferred stocks:
Nonaffiliated	$	23	$	11	$	-	$	34
Affiliates		3		-		(3)		-
Common stocks:
Nonaffiliated		634		64		(40)		658
Affiliates*		971		2,241		(7)		3,205
Total stocks	$	1,631	$	2,316	$	(50)	$	3,897
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in millions)
December 31, 2014:
Preferred stocks:
Nonaffiliated	$	29	$	18	$	(1)	$	46
Affiliates		3		-		(3)		-
Common stocks:
Nonaffiliated		420		71		(14)		477
Affiliates*		971		1,947		(7)		2,911
Total stocks	$	1,423	$	2,036	$	(25)	$	3,434

* Affiliates — fair value represents the carrying value

At December 31, 2015 and 2014, there were 276 and 134 nonaffiliated equity securities that had a gross unrealized loss excluding securities that have been written down to zero. The single largest unrealized loss was $19 million and $3 million at December 31, 2015 and 2014, respectively. The Company anticipates that these equity securities will recover in value in the near term.

The Company has a process in place to identify equity securities that could potentially have an impairment that is other-than-temporary. The Company considers relevant facts and circumstances in evaluating whether the impairment of a security is other-than-temporary. Relevant facts and circumstances include (1) the length of time the fair value has been below cost; (2) the financial position of the issuer; and (3) the Company’s ability and intent to hold the security until it recovers. To the extent the Company determines that a security is deemed to be other-than-temporarily impaired, the difference between book value and fair value would be charged to income.

For the years ended December 31, 2015, 2014 and 2013, realized capital losses include $4 million, $2 million, $5 million and related to preferred and common stocks that have experienced an other-than-temporary decline in value and were comprised of 115, 33, and 69 securities, respectively. These are primarily made up of impairments on public and private common stocks.

F-22

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

5. Investments - (continued)

Mortgage Loans on Real Estate

At December 31, 2015 and 2014, the mortgage loan portfolio was diversified by geographic region and specific collateral property type as displayed below. The Company controls credit risk through credit approvals, limits, and monitoring procedures.

December 31, 2015:
Property Type	Carrying Value			Geographic Concentration	Carrying Value
	(in millions)				(in millions)
Apartments	$	2,206		East North Central	$	1,445
Industrial		739		East South Central		157
Office buildings		2,562		Middle Atlantic		1,599
Retail		3,278		Mountain		516
Agricultural		171		New England		586
Agribusiness		471		Pacific		3,210
Mixed use		22		South Atlantic		1,986
Other		1,034		West North Central		449
Allowance		(8	)	West South Central		453
				Canada / Other		82
				Allowance		(8	)
Total mortgage loans on real estate	$	10,475		Total mortgage loans on real estate	$	10,475
December 31, 2014:
Property Type	Carrying Value			Geographic Concentration	Carrying Value
	(in millions)				(in millions)
Apartments	$	2,136		East North Central	$	1,394
Industrial		920		East South Central		83
Office buildings		3,347		Middle Atlantic		1,997
Retail		3,209		Mountain		511
Agricultural		405		New England		682
Agribusiness		516		Pacific		3,310
Mixed use		22		South Atlantic		2,459
Other		974		West North Central		468
Allowance		(10	)	West South Central		533
				Canada / Other		92
				Allowance		(10	)
Total mortgage loans on real estate	$	11,519		Total mortgage loans on real estate	$	11,519

The aggregate mortgages outstanding to any one borrower do not exceed $263 million.

During 2015, the respective maximum and minimum lending rates for mortgage loans issued were 7.49% and 3.72% for agricultural loans and 5.19% and 3.00% for commercial loans. The Company issued no purchase money mortgages in 2015 and 2014. At the issuance of a loan, the percentage of any one loan to value of security, exclusive of insured, guaranteed, or purchase money mortgages does not exceed 75%. Impaired mortgage loans without an allowance for credit losses were $0 million, $0 million, and $0 million at December 31, 2015, 2014 and 2013, respectively. The average recorded investment in impaired loans was $34 million, $41 million, and $60 million at December 31, 2015, 2014 and 2013, respectively. The Company recognized $2 million, $3 million, and $0 million of interest income during the period the loans were impaired for the years ended December 31, 2015, 2014 and 2013, respectively.

F-23

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

5. Investments - (continued)

Generally, the terms of the restructured mortgage loans call for the Company to receive some form or combination of an equity participation in the underlying collateral, excess cash flows or an effective yield at the maturity of the loans sufficient to meet the original terms of the loans. There are no contractual commitments made to extend credit to debtors owning receivables whose terms have been modified in troubled debt restructurings. The Company accrues interest income on impaired loans to the extent deemed collectible and the loan continues to perform under its original or restructured contractual terms. Interest income on non-performing loans generally is recognized on a cash basis.

The following table provides a reconciliation of the beginning and ending balances for allowance for losses for the periods indicated.

	2015			2014			2013
	(in millions)
Balance at beginning of year	$	10		$	10		$	19
Additions, net		3			10			13
Recoveries of amounts previously charged off		(5	)		(10	)		(22	)
Balance at end of year	$	8		$	10		$	10

For mortgage loans, the Company evaluates credit quality through regular monitoring of credit related exposures, considering both qualitative and quantitative factors in assigning an internal risk rating (“IRR”). These ratings are updated at least annually.

The carrying value of mortgage loans by IRR was as follows:

	December 31,
	2015		2014
	(in millions)
AAA	$	345	$	436
AA		1,974		1,594
A		4,685		4,141
BBB		3,251		4,979
BB		177		267
B and lower and unrated		43		102
Total	$	10,475	$	11,519

Affiliate Transactions

In 2015, the Company sold certain mortgages to an affiliate, JHNY. These mortgages had a book value of $67 million and fair value of $73 million at the date of the transaction. The Company recognized $5 million in pre-tax realized gains before transfer to the IMR.

In 2015, the Company sold certain mortgages to an affiliate, JHLH. These mortgages had a book value of $2 million and fair value of $2 million at the date of the transaction. The Company recognized $0 million in pre-tax realized gains before transfer to the IMR.

F-24

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

5. Investments - (continued)

Real Estate

The composition of the Company’s investment in real estate is summarized as follows:

	December 31,
	2015			2014
	(in millions)
Properties occupied by the company	$	381		$	374
Properties held for the production of income		7,178			5,764
Properties held for sale		-			-
Less accumulated depreciation		(773	)		(635	)
Total	$	6,786		$	5,503

The Company recorded $0 million, $0 million, and $0 million of impairments on real estate investments during the years ended December 31, 2015, 2014 and 2013, respectively.

On December 12, 2014, the Company entered into an arrangement with Allianz to co-invest up to $1 billion in the U.S. real estate market. As part of this arrangement, the Company sold 100% of certain real estate holding to an unaffiliated joint venture limited partnership (“LP”) in return for cash and a 20% equity interest in the LP. These properties had a book value of $343 million and fair value of $545 million, which resulted in a gain to operations of $161 million (after 20% deferral of realized gain). The Company provides the LP with property management services and through a wholly-owned subsidiary provides the LP with asset management services.

Affiliate Transactions

In 2014, JHUSA acquired, at fair value, real estate from an affiliate, JHNY, for approximately $33 million.

Other Invested Assets

The Company had no investments in partnerships or LLCs that exceed 10% of its admitted assets at December 31, 2015 and 2014.

Other invested assets primarily consist of investments in partnerships and LLCs. The Company recorded $120 million, $3 million, and $0 million of impairments on partnerships and LLCs during the years ended December 31, 2015, 2014 and 2013, respectively. These impairments are based on significant judgement by the Company in determining whether the objective evidence of other-than-temporary impairment exists. The Company considers relevant facts and circumstances in evaluating whether the impairment of an other invested asset is other-than-temporary. Relevant facts and circumstances include (1) the length of time the fair value has been below cost; (2) the financial position of the investee; (3) the Company’s ability and intent to hold the other invested asset until it recovers. To the extent the Company determines that an other invested asset is deemed to be other-than-temporarily impaired, the difference between book and fair value would be charged to income.

Other

The subprime lending sector, also referred to as B-paper, near-prime, or second chance lending, is the sector of the mortgage lending industry which lends to borrowers who do not qualify for prime market interest rates because of poor or insufficient credit history.

For purposes of this disclosure, subprime exposure is defined as the potential for financial loss through direct investment, indirect investment, or underwriting risk associated with risk from the subprime lending sector. For purposes of this note, subprime exposure is not limited solely to the risk associated with holding direct mortgage loans, but also includes any indirect risk through investments in asset-backed or structured securities, hedge funds, common stock, subsidiaries and affiliates, and insurance product issuance.

F-25

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

5. Investments - (continued)

Although it can be difficult to determine the indirect risk exposures, it should be noted that not only does it include expected losses, it also includes the potential for losses that could occur due to significantly depressed fair value of the related assets in an illiquid market.

The Company had no direct exposure through investments in subprime mortgage loans as of December 31, 2015 or 2014.

Management considers several factors when classifying a structured finance or residential mortgage-backed security holding as “subprime” or placing a security in the highest risk category. These factors include the transaction’s weighted average FICO or credit score, loan-to-value ratio (LTV), geographic composition, lien position, loan purpose, and loan documentation.

The Company has entered into certain repurchase agreements with an aggregate carrying value of $0 million and $0 million as of December 31, 2015 and 2014, respectively. For such agreements, the Company agrees to a specified term, price, and interest rate through the date of the repurchase.

The Company established a facility with an affiliate, Manulife Reinsurance (Bermuda) Limited (“MRBL”) whereby cash collateral can be received under a repurchase agreement program. There was no repurchase agreement activity in 2015.

The Company’s practice is to require a minimum of 102% of the fair value of securities loaned under securities lending agreements to be maintained as non-cash collateral. Positions are marked to market and adjusted on a daily basis to ensure the 102% margin requirement is maintained. Any cash collateral received is not re-invested nor is a rebate paid to the lending counterparty. There were no securities on loan as of December 31, 2015 and 2014.

F-26

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

5. Investments - (continued)

Net Investment Income and Net Realized and Other Gains (Losses)

Major categories of the Company’s net investment income are summarized as follows:

	Years Ended December 31,
	2015			2014			2013
	(in millions)
Income:
Bonds	$	2,231		$	2,378		$	2,577
Preferred stocks		-			2			-
Common stocks		372			76			4
Mortgage loans on real estate		670			738			730
Real estate		722			669			605
Policy loans		190			287			283
Cash, cash equivalents and short-term investments		8			7			5
Other invested assets		466			464			620
Derivatives		520			452			464
Other income		27			23			25
Total investment income		5,206			5,096			5,313
Expenses
Investment expenses		(533	)		(516	)		(493	)
Investment taxes, licenses and fees, excluding federal income taxes		(84	)		(85	)		(83	)
Investment interest expense		(84	)		(91	)		(97	)
Depreciation on real estate and other invested assets		(118	)		(107	)		(89	)
Total investment expenses		(819	)		(799	)		(762	)
Net investment income	$	4,387		$	4,297		$	4,551
Realized capital gains (losses) and amounts transferred to the IMR are as follows:
	Years Ended December 31,
	2015			2014			2013
	(in millions)
Realized capital gains (losses)	$	965		$	431		$	(1,701	)
Less amount transferred to the IMR (net of related tax benefit (expense) of $(138) in 2015, $(66) in 2014, and $(8) in 2013)		256			123			(16	)
Realized capital gains (losses) before tax		709			308			(1,685	)
Less federal income taxes on realized capital gains (losses) before effect of transfer to the IMR		493			382			108
Net realized capital gains (losses)	$	216		$	(74	)	$	(1,793	)

F-27

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

6. Derivatives

Derivatives are financial contracts, the value of which is derived from underlying interest rates, foreign exchange rates, credit, equity price movements, indices or other market risks arising from on-balance sheet financial instruments and selected anticipated transactions. The Company uses derivatives including swaps, forward and futures agreements, floors, and options to manage current and anticipated exposures to changes in interest rates, foreign exchange rates, credit and equity market prices.

Over-the-counter (“OTC”) swaps are contractual agreements between the Company and a counterparty to exchange a series of cash flows based upon rates applied to a notional amount. For interest rate swaps, counterparties generally exchange fixed or floating interest rate payments based on a notional value in a single currency. Cross currency swaps involve the exchange of principal amounts between parties as well as the exchange of interest payments in one currency for the receipt of interest payments in another currency. Total return swaps are contracts that involve the exchange of payments based on changes in the values of a reference asset, including any returns such as interest earned on these assets, in return for amounts based on reference rates specified in the contract.

Cleared interest rate swaps are contractual agreements between the Company and a counterparty whereby the transaction must be cleared through a central clearing house, and subject to mandatory margin and reporting requirements.

Forward and futures agreements are contractual obligations to buy or sell a financial instrument or foreign currency on a predetermined future date at a specified price. Forward contracts are OTC contracts negotiated between counterparties, whereas futures agreements are contracts with standard amounts and settlement dates that are traded on regulated exchanges.

Interest rate floors are contracts with counterparties which require payment of a premium for the right to receive payments when the market interest rate on specified future dates falls below the agreed upon strike price. Interest rate treasury lock contracts are customized agreements securing current interest rates on Treasury securities for payment on a future date.

Options are contractual agreements whereby the holder has the right, but not the obligation, to buy (call option) or sell (put option) a security, exchange rate, interest rate, or other financial instrument at a predetermined price/rate within a specified time.

Swaptions are contractual agreements whereby the holder has the right, but not obligation, to enter into a given swap agreement on a specified future date.

Types of Derivatives and Derivative Strategies

Interest Rate Contracts. The Company uses interest rate futures contracts, OTC interest rate swap agreements, cleared interest rate swap agreements, pre-payable interest rate swap agreements, swaptions, and interest rate treasury locks as part of its overall strategies of managing the duration of assets and liabilities or the average life of certain asset portfolios to specified targets. Interest rate swap agreements are contracts with counterparties to exchange interest rate payments of a differing character (i.e., fixed-rate payments exchanged for variable-rate payments) based on an underlying principal balance (notional principal). The net differential to be paid or received on interest rate swap agreements is accrued and recognized as a component of net investment income.

The Company uses interest rate swap agreements in effective cash flow and fair value hedge accounting relationships. These derivatives hedge the variable cash flows associated with certain floating-rate bonds, as well as, future fixed income asset acquisitions, which will support the Company’s long-term care and life insurance businesses. These derivatives reduce the impact of future interest rate changes on the cost of acquiring adequate assets to support the investment income assumptions used in pricing these products. For its fair value hedging relationships, the Company uses interest rate swap agreements to hedge the risk of changes in fair value of existing fixed rate assets and liabilities arising from changes in benchmark interest rates.

The Company also enters into basis swaps to better match the cash flows from assets and related liabilities. Basis swaps are included in interest rate swaps for disclosure purposes. The Company utilizes basis swaps in other hedging relationships.

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NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

6. Derivatives - (continued)

Inflation swaps are used to reduce inflation risk generated from inflation-indexed liabilities. Inflation swaps are classified within interest rate swaps for disclosure purposes. The Company utilizes inflation swaps in effective hedge accounting relationships and other hedging relationships.

The Company uses exchange-traded interest rate futures primarily to hedge mismatches between the duration of assets in a portfolio and the duration of liabilities supported by those assets, to hedge against changes in value of securities the Company owns or anticipates acquiring, and to hedge against changes in interest rates on anticipated liability issuances by replicating U.S. Treasury or swap curve performance. The Company utilizes exchange-traded interest rate futures in other hedging relationships.

The Company also uses interest rate floors and swaptions primarily to protect against interest rate exposure arising from mismatches between assets and liabilities (duration mismatches). The Company utilizes interest rate floors in other hedging relationships.

Foreign Currency Contracts. Foreign currency derivatives, including foreign currency swaps, foreign currency forwards, and foreign currency futures are used by the Company to reduce the risk from fluctuations in foreign currency exchange rates associated with its assets and liabilities denominated in foreign currencies.

Cross currency rate swap agreements are used to manage the Company’s exposure to foreign exchange rate fluctuations, interest rate fluctuations, or both, on foreign currency financial instruments. Cross currency rate swap agreements are contracts to exchange the currencies of two different countries at the same rate of exchange at specified future dates. The net differential to be paid or received on cross currency rate swap agreements is accrued and recognized as a component of net investment income.

Under foreign currency forwards, the Company agrees with other parties to deliver a specified amount of an identified currency at a specified future date. Typically, the price is agreed upon at the time of the contract and payment for such a contract is made at the specified future date. The maturities of these forwards correspond with the future periods in which the foreign currency transactions are expected to occur. The Company utilizes currency forwards in effective hedge accounting relationships and other hedging relationships.

Foreign currency futures are contractual obligations to buy or sell a foreign currency on a predetermined future date at a specified price. These contracts are standardized contracts traded on an exchange. The Company utilizes foreign exchange futures in other hedging relationships.

Equity Market Contracts. Total return swaps are contracts that involve the exchange of payments based on changes in the value of a reference asset, including any returns such as interest earned on these assets, in exchange for amounts based on reference rates specified in the contract. The Company utilizes total return swaps in effective hedge accounting relationships and other hedging relationships.

Equity index options are contractual agreements whereby the holder has the right, but not the obligation, to buy (call option) or sell (put option) an underlying equity market index on or before a specified future date at a specified price. The Company utilizes equity index options that are exchange-traded in other hedging relationships.

Equity index futures contracts are contractual obligations to buy or sell a specified amount of an underlying equity index at an agreed contract price on a specified date. Equity index futures are contracts with standard amounts and settlement dates that are traded on regulated exchanges. The Company utilizes equity index futures in other hedging relationships.

Credit Contracts. The Company manages credit risk through the issuance of credit default swaps (“CDS”) or the purchase of credit default swap index (“CDX”). A CDS is a derivative instrument representing an agreement between two parties to exchange the credit risk of a single specified entity or an index based on the credit risk of a group of entities (all commonly referred to as the “reference entity” or a portfolio of “reference entities”), in return for a periodic premium. CDS contracts typically have a five-year term.

A CDX is similar to a CDS in that it is a credit derivative used to hedge credit risk; however, it uses a basket of credit entities or indexes rather than a single reference entity or index. CDX is a standardized credit security and it is cleared through a clearing house.

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NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

6. Derivatives - (continued)

Replication Synthetic Assets. Replication synthetic asset transactions (“RSATs”) are derivative transactions made in combination with a cash instrument in order to reproduce the investment characteristic of an otherwise permissible investment. The Company uses interest rate swaps and credit default swaps in these transactions when direct investments are either too expensive to acquire or otherwise unavailable in the market. Such derivatives can only be RSATs and not hedging vehicles.

The table below provides a summary of the gross notional amount and fair value of derivatives contracts for all derivatives in effective hedge accounting relationships, other hedging relationships, and RSATs:

		December 31, 2015
		Notional Amount		Carrying Value Assets		Carrying Value Liabilities		Fair Value Assets		Fair Value Liabilities
		(in millions)
Effective Hedge Accounting Relationships
Fair value hedges	Interest rate swaps	$	3,553	$	-	$	-	$	457	$	256
	Foreign currency swaps		142		10		7		1		24
Cash flow hedges	Interest rate swaps		10,358		-		-		1,516		267
	Foreign currency swaps		1,571		168		93		420		339
	Foreign currency forwards		288		-		-		-		31
	Equity total return swaps		26		-		-		-		1
Total Derivatives in Effective Hedge Accounting Relationships		$	15,938	$	178	$	100	$	2,394	$	918
Other Hedging Relationships
	Interest rate swaps	$	149,942	$	10,043	$	5,770	$	10,043	$	5,770
	Interest rate treasury locks		8,429		364		153		364		153
	Interest rate options		4,253		144		-		144		-
	Interest rate futures		4,656		-		-		-		-
	Foreign currency swaps		972		123		62		123		62
	Foreign currency forwards		73		8		-		8		-
	Foreign currency futures		1,842		-		-		-		-
	Equity total return swaps		131		2		1		2		1
	Equity options		2,878		138		8		138		8
	Equity index futures		9,169		-		-		-		-
	Credit default swaps		-		-		-		-		-
Total Derivatives in Other Hedging Relationships		$	182,345	$	10,822	$	5,994	$	10,822	$	5,994
Replication Synthetic Asset Transactions
	Interest rate swaps	$	2,385	$	-	$	-	$	90	$	13
	Credit default swaps		295		1		-		3		-
Total Derivatives in Replication Synthetic Asset Transactions		$	2,680	$	1	$	-	$	93	$	13
Total Derivatives		$	200,963	$	11,001	$	6,094	$	13,309	$	6,925

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NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

6. Derivatives - (continued)

		December 31, 2014
		Notional Amount		Carrying Value Assets		Carrying Value Liabilities		Fair Value Assets		Fair Value Liabilities
		(in millions)
Effective Hedge Accounting Relationships
Fair value hedges	Interest rate swaps	$	5,461	$	-	$	1	$	496	$	641
	Foreign currency swaps		169		1		29		-		62
Cash flow hedges	Interest rate swaps		12,053		-		-		1,543		263
	Foreign currency swaps		1,640		29		15		266		261
	Foreign currency forwards		102		-		-		-		4
	Equity total return swaps		27		-		-		6		-
Total Derivatives in Effective Hedge Accounting Relationships		$	19,452	$	30	$	45	$	2,311	$	1,231
Other Hedging Relationships
	Interest rate swaps	$	128,704	$	9,059	$	5,154	$	9,059	$	5,154
	Interest rate treasury locks		6,323		938		-		938		-
	Interest rate options		3,362		93		-		93		-
	Interest rate futures		3,697		-		-		-		-
	Foreign currency swaps		978		43		30		43		30
	Foreign currency forwards		43		4		-		4		-
	Foreign currency futures		1,775		-		-		-		-
	Equity total return swaps		31		11		-		11		-
	Equity options		3,940		277		-		277		-
	Equity index futures		8,323		-		-		-		-
	Credit default swaps		-		-		-		-		-
Total Derivatives in Other Hedging Relationships		$	157,176	$	10,425	$	5,184	$	10,425	$	5,184
Replication Synthetic Asset Transactions
	Interest rate swaps	$	1,040	$	-	$	-	$	61	$	-
	Credit default swaps		315		3		-		6		-
Total Derivatives in Replication Synthetic Asset Transactions		$	1,355	$	3	$	-	$	67	$	-
Total Derivatives		$	177,983	$	10,458	$	5,229	$	12,803	$	6,415

Hedging Relationships

The Company generally does not enter into derivative contracts for speculative purposes. In certain circumstances, these hedges also meet the requirements for hedge accounting and are reported in a manner consistent with the hedged asset or liability. For the years ended December 31, 2015, 2014 and 2013, respectively, the Company recorded unrealized gains (losses) of ($33) million, $1,215 million, and $168 million, respectively, related to derivatives that no longer qualify for hedge accounting.

Fair Value Hedges. The Company uses interest rate swaps to manage its exposure to changes in fair value of fixed-rate financial instruments caused by changes in interest rates. The Company also uses cross currency swaps and currency forwards to manage its exposure to foreign exchange rate fluctuations and interest rate fluctuations.

Cash Flow Hedges. The Company uses interest rate swaps and interest rate treasury locks to hedge the variability in cash flows from variable rate financial instruments and forecasted transactions. The Company also uses cross currency swaps and forward agreements to hedge currency exposure on foreign currency financial instruments and foreign currency denominated

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

6. Derivatives - (continued)

expenses, respectively. Total return swaps are used to hedge the variability in cash flows associated with certain stock-based compensation awards. Inflation swaps are used to reduce inflation risk generated from inflation-indexed liabilities.

In 2014, the Company concluded that a portion of the hedged transactions for its long-term care business and life insurance business were probable not to occur resulting in the de-designation of $2.7 billion (notional principal) of forward-starting interest rate swaps. The de-designation of these interest rate swaps resulted in an increase to unrealized capital gains (losses) of $445 million, net of tax. In addition as part of our affiliate reinsurance agreement with JHRECO, we were required as part of the net investment income component of the treaty settlement calculation to cede $440 million, net of tax, and therefore the overall impact of this transaction was not material to capital and surplus.

For the year ended December 31, 2015, all of the Company’s hedged forecast transactions qualified as cash flow hedges and no cash flow hedges were discontinued because it was probable that the original forecasted transactions would occur by the end of the originally specified time period documented at inception of the hedging relationship.

The maximum time frame for which variable cash flows are hedged is 31 years.

Derivatives Not Designated as Hedging Instruments in Effective Hedge Accounting or RSAT Relationships. The Company enters into interest rate swap agreements, cancelable interest rate swap agreements, and interest rate futures contracts to manage interest rate risk, total return swap agreements to manage equity risk, and CDS to manage credit risk. The Company also uses interest rate treasury locks and interest rate floor agreements to manage exposure to interest rates without designating the derivatives as hedging instruments. Interest rate floor agreements hedge the interest rate risk associated with minimum interest rate guarantees in certain life insurance and annuity businesses.

The Company offers certain variable annuity products with a guaranteed minimum withdrawal benefit (“GMWB”) and guaranteed minimum death benefit (“GMDB”). These guarantees are effectively an embedded option on the basket of mutual funds offered to contract holders. The Company manages a hedging program to reduce its exposure to certain contracts with the GMWB and GMDB guarantees. This dynamic hedging program uses interest rate swap agreements, equity index futures (including but not limited to the Dow Jones Industrial, Standard & Poor’s 500, Russell 2000, and Dow Jones Euro Stoxx 50 indices), equity index options, and U.S. Treasury futures to match the sensitivities of the GMWB and GMDB liabilities to the market risk factors.

The Company also has a macro equity risk hedging program using equity and currency futures, as well as equity index options. This program is designed to reduce the Company’s overall exposure to public equity markets arising from several sources including, but not limited to, variable annuity guarantees not dynamically hedged, separate account fees not associated with guarantees, and Company equity holdings.

The Company uses foreign currency swaps and foreign currency forwards to reduce the risk from fluctuations in foreign currency exchange rates associated with its assets and liabilities denominated in foreign currencies.

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NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

6. Derivatives - (continued)

For the years ended December 31, 2015, 2014 and 2013 net gains and losses related to derivatives in other hedging relationships were recognized by the Company, and the components were recorded in net unrealized and net realized gains (losses) as follows:

	Years ended December 31,
	2015			2014			2013
	(in millions)
Other Hedging Relationships
Net unrealized capital gain (loss):
Interest rate swaps	$	367		$	2,043		$	(2,530	)
Interest rate treasury locks		(728	)		1,323			(385	)
Interest rate options		16			67			(46	)
Foreign currency swaps		-			(5	)		(9	)
Foreign currency forwards		5			4			(1	)
Equity total return swaps		2			-			-
Equity options		(76	)		(23	)		(39	)
Credit default swaps		-			-			-
Total net unrealized capital gain (loss)	$	(414	)	$	3,409		$	(3,010	)
Net realized capital gain (loss):
Interest rate swaps	$	(495	)	$	(178	)	$	164
Interest rate treasury locks		446			157			-
Interest rate options		-			-			-
Interest rate futures		(25	)		(141	)		78
Foreign currency swaps		4			18			(10	)
Foreign currency forwards		26			1			5
Foreign currency futures		99			165			74
Equity total return swaps		11			24			5
Equity options		(18	)		5			3
Equity index futures		(42	)		(692	)		(1,892	)
Credit default swaps		-			-			-
Commodity futures		-			-			-
Total net realized capital gain (loss)	$	6		$	(641	)	$	(1,573	)
Total gain (loss) from derivatives in other hedging relationships	$	(408	)	$	2,768		$	(4,583	)

The Company also deferred net realized gains (losses) of ($495) million, ($192) million, and $146 million (including ($495) million and ($174) million of losses, and $148 million of gains for derivatives in other hedging relationships, respectively) related to interest rates for the years ended December 31, 2015, 2014 and 2013, respectively. Deferred net realized gains and losses are reported in IMR and amortized over the remaining period to expiration date.

Credit Default Swaps

The Company replicates exposure to specific issuers by selling credit protection via CDS in order to complement its cash bond investing. In addition, the Company replicates the exposure of a basket of entities using CDX with complementary cash bond investing. The Company does not employ leverage in its CDS program and therefore, does not write CDS protection in excess of its government bond holdings.

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NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

6. Derivatives - (continued)

The following table provides details of the CDS protection sold by type of contract and external agency rating for the underlying reference security, as of December 31, 2015 and 2014, respectively.

	December 31, 2015						December 31, 2014
	Notional Amount2		Fair Value		Weighted average maturity (in  years)3		Notional Amount2		Fair Value		Weighted average maturity (in  years)3
	(in millions)
Single name CDS1
Corporate debt
AAA	$	35	$	-		1	$	35	$	1		2
AA		95		1		1		95		2		2
A		165		2		1		185		3		2
BBB		-		-		-		-		-		-
Total CDS protection sold	$	295	$	3			$	315	$	6

¹  The rating agency designations are based on S&P where available followed by Moody’s, Dominion Bond Rating Services (DBRS), and Fitch. If no rating is available from a rating agency, then an internally developed rating is used.

²  Notional amount represents 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 obligation.

³  The weighted average maturity of the CDS is weighted based on notional amounts.

The Company holds no purchased credit protection at December 31, 2015 and 2014. The average credit rating of the counterparties guaranteeing the underlying credits is A and the weighted average maturity is 1 year.

Credit Risk

The Company’s exposure to loss on derivatives is limited to the amount of any net gains that may have accrued with a 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 negative positions and the impact of collateral on hand. The Company may be exposed to credit-related losses in the event of nonperformance by counterparties to the derivative financial instruments. The current credit exposure of the Company’s derivative contracts is limited to the fair value in excess of the collateral held at the reporting date.

The Company manages its credit risk by entering into transactions with creditworthy counterparties, obtaining collateral where appropriate, and entering into master netting agreements that provide for a netting of payments and receipts with a single counterparty. The Company enters into credit support annexes with its OTC derivative dealers in order to manage its credit exposure to those counterparties. As part of the terms and conditions of those agreements, the pledging and accepting of collateral in connection with the Company’s derivative usage is required. As of December 31, 2015 and 2014, the Company accepted collateral consisting of cash of $1,640 million and $2,939 million, and various securities with a fair value of $5,014 million and $3,895 million, respectively, which is held in separate custodial accounts. In addition, the Company has pledged collateral to support both the OTC derivative instruments, exchange traded futures and cleared interest rate swap transactions. For further details regarding pledged collateral see the Investments Note.

Under U.S. regulations, certain interest rate swap agreements and credit default swap agreements are required to be cleared through central clearing houses. These transactions are contractual agreements that require initial and variation margin collateral postings and are settled on a daily basis through a clearing house. As such, they reduce the credit risk exposure in the event of default by a counterparty.

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NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

6. Derivatives - (continued)

Transactions with Affiliates

The Company has entered into two currency swap agreements with JHFC which are recorded at fair value. JHFC utilizes the currency swaps to hedge currency exposure on foreign currency financial instruments. The Company has also entered into two currency agreements with external counterparties which offset the currency swap agreements with JHFC. As of December 31, 2015 and 2014, the currency swap agreements with JHFC and the external counterparties had offsetting fair values of $397 million and $238 million, respectively.

7. Fair Value

The following is a description of the valuation techniques used to measure fair value and the general classification of these instruments pursuant to the fair value hierarchy:

• Financial Instruments Measured at Fair Value and Reported in the Balance Sheet after Initial Recognition — This category includes assets and liabilities measured at fair value. Financial instruments in this category include bonds and preferred stocks carried at the lower of cost or fair value due to their SVO quality rating, common stocks, derivatives, and separate account assets.

• Other Financial Instruments Not Reported at Fair Value After Initial Recognition – This category includes assets and liabilities as follows:

Bonds — For bonds, including corporate debt, U.S. Treasury, commercial and residential mortgage-backed securities, asset-backed securities, collateralized debt obligations, issuances by foreign governments, and obligations of state and political subdivisions, fair values are based on quoted market prices when available. When market prices are not available, fair value is generally estimated using discounted cash flow analyses, incorporating current market inputs for similar financial instruments with comparable terms and credit quality (matrix pricing). The significant inputs into these models include, but are not limited to, yield curves, credit risks and spreads, measures of volatility, and prepayment speeds.

Mortgage Loans on Real Estate — The fair value of unimpaired mortgage loans is estimated using discounted cash flows and takes into account the contractual maturities and discount rates, which were based on current market rates for similar maturity ranges and adjusted for risk due to the property type. The fair value of impaired mortgage loans is based on the net of the collateral less estimated cost to obtain and sell.

Cash, Cash Equivalents and Short-Term Investments — The carrying values for cash, cash equivalents, and short-term investments approximate their fair value due to the short-term maturities of these instruments.

Policy Loans — These loans are carried at unpaid principal balances, which approximate their fair values.

Policy Reserves — Policy reserves consists of guaranteed investment contracts. The fair values associated with these financial instruments are determined by projecting cash flows and discounting the cash flows at current corporate rates, defined as U.S. Treasury rates plus MFC’s corporate spread. The fair value attributable to credit risk represents the present value of the spread.

Policyholders’ and Beneficiaries Funds — Includes term certain contracts, funding agreements, supplementary contracts without life contingencies and those balances that can be withdrawn by the policyholder at any time without prior notice or penalty. The fair values associated with the term certain contracts, funding agreements and supplementary contracts without life contingencies are determined by projecting cash flows and discounting the cash flows at current corporate rates, defined as U.S. Treasury rates plus MFC’s corporate spread. The fair value attributable to credit risk represents the present value of the spread. For those balances that can be withdrawn by the policyholder at any time without prior notice or penalty, the fair value is the amount estimated to be payable to the policyholder as of the reporting date, which is generally the carrying value.

Consumer Notes — The fair value of consumer notes is determined by projecting cash flows and discounting the cash flows at current corporate rates, defined as U.S. Treasury rates plus MFC’s corporate spread. The fair value attributable to credit risk represents the present value of the spread.

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NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

7. Fair Value - (continued)

Financial Instruments Measured at Fair Value and Reported in the Balance Sheet after Initial Recognition

Valuation Hierarchy

The Company categorizes its fair value measurements according to a three-level hierarchy. The hierarchy prioritizes the inputs used by the Company’s valuation techniques. A level is assigned to each fair value measurement based on the lowest level input significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are defined as follows:

• Level 1 — Fair value measurements that reflect unadjusted, quoted prices in active markets for identical assets and liabilities that the Company has the ability to access at the measurement date. Active markets are defined as having the following characteristics for the measured asset/liability: (i) many transactions, (ii) current prices, (iii) price quotes not varying substantially among market makers, (iv) narrow bid/ask spreads, and (v) most information is publicly available. Valuations are based on quoted prices reflecting market transactions involving assets or liabilities identical to those being measured. Level 1 assets primarily include exchange traded equity securities and certain separate account assets.

• Level 2 — Fair value measurements using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in inactive markets, inputs that are observable that are not prices (such as interest rates, credit risks, etc.), and inputs that are derived from or corroborated by observable market data. Certain of the Company’s separate account assets and derivative assets and liabilities are included within Level 2. A description of valuation techniques used to measure the fair value of derivatives is described below.

• Level 3 — Fair value measurements using significant nonmarket observable inputs. These include valuations for assets and liabilities that are derived using data, some or all of which is not market observable data, including assumptions about risk. Level 3 securities include impaired bonds and less liquid securities, such as structured asset-backed securities, commercial mortgage-backed securities, and other securities that have little or no price transparency. The valuation techniques used to measure the fair value of derivative assets and separate account investments in timber and agriculture are included in Level 3 as described below.

Determination of Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction (not a forced liquidation or distress sale) between market participants at the measurement date, that is, an exit value.

When available, quoted market prices are used to determine fair value. If quoted market prices are not available, fair value is typically based upon alternative valuation techniques such as discounted cash flows, matrix pricing, consensus pricing services and other techniques. Broker quotes are generally used when external public vendor prices are not available.

The Company has a process in place that includes a review of price movements relative to the market, a comparison of prices between vendors, and a comparison to internal matrix pricing which uses predominately external observable data. Judgment is applied in adjusting external observable data for items including liquidity and credit factors.

The following is a description of the valuation techniques used to measure fair value and the general classification of these instruments pursuant to the fair value hierarchy:

Bonds

Refer to the previous page for the determination of fair value of bonds. Generally, impaired bonds with a NAIC designation rating of 6 whose cost is greater than its fair value are reported at fair value and are classified within Level 3.

Preferred Stocks

Preferred stocks with active markets are classified within Level 1, as fair values are based on quoted market prices. Preferred stocks not traded in active markets are classified within Level 3.

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NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

7. Fair Value - (continued)

Common Stocks

Common stocks with active markets are classified within Level 1, as fair values are based on quoted market prices. Common stocks not traded in active markets are classified within Level 3.

Derivatives

The fair value of derivatives is determined through the use of quoted market prices for exchange-traded derivatives or through the use of pricing models for OTC derivatives. The pricing models used are based on market standard valuation methodologies, and the inputs to these models are consistent with what a market participant would use when pricing the instruments. Derivative valuations can be affected by changes in interest rates, currency exchange rates, financial indices, credit spreads, default risk (including the counterparties to the contract), and volatility. The Company’s derivatives are generally classified within Level 2 given the significant inputs to the pricing models for most OTC derivatives are observable or can be corroborated by observable market data. Inputs that are observable generally include interest rates, foreign currency exchange rates, and interest rate curves. However, certain OTC derivatives may rely on inputs that are significant to the fair value, that are unobservable in the market or cannot be derived principally from or corroborated by observable market data and would be classified within Level 3. Inputs that are unobservable generally include broker quotes, volatilities, and inputs that are outside of the observable portion of the interest rate curve or other relevant market measures. These unobservable inputs may involve significant management judgment or estimation.

Even though unobservable, these inputs are based on assumptions deemed appropriate given the circumstances and consistent with what market participants would use when pricing such instruments. The credit risk of both the counterparty and the Company are considered in determining the fair value for all OTC derivatives after taking into account the effects of netting agreements and collateral arrangements.

Separate Account Assets and Liabilities

For separate accounts structured as a non-unitized fund, the fair value of separate account assets is based on the fair value of the underlying assets owned by the separate account. For separate accounts structured as a unitized fund, the fair value of the separate account assets is based on the fair value of the underlying funds owned by the separate account. Assets owned by the Company’s separate accounts primarily include: investments in mutual funds, bonds, common stock, short-term investments, real estate, and cash and cash equivalents. Investment performance related to separate account assets is fully offset by corresponding amounts credited to contract holders whose interest in the separate account assets is recorded by the Company as separate account liabilities. Separate account liabilities are set equal to the fair value of separate account assets.

The fair value of fund investments is based upon quoted market prices or reported net asset value (“NAV”). Fund investments that are traded in an active market and have a NAV that the Company can access at the measurement date are classified within Level 1. Level 2 assets consist primarily of bonds which are valued using matrix pricing with independent pricing data.

Separate account assets classified as Level 3 consist primarily of fixed maturity and equity investments in private companies, which own timber and agriculture and carry them at fair value. The values of the timber and agriculture investments are estimated using generally accepted valuation techniques. A comprehensive appraisal is performed shortly after initial purchase and at two or three-year intervals thereafter. Appraisal updates are conducted according to client contracts, generally at one-year or six-month intervals. In the quarters in which an investment is not independently appraised or its valuation updated, the market value is reviewed by management. The valuation of an investment is adjusted only if there has been a significant change in economic circumstances related to the investment since acquisition or the most recent independent valuation and upon the independent appraiser’s review and concurrence with management. Further, these valuations are prepared giving consideration to the income, cost, and sales comparison approaches of estimating asset value. The significant unobservable inputs used in the fair value measurement of the Company’s timberland investments are harvest volumes, timber prices, operating costs and discount rates. Significant changes to any one of these inputs in isolation could result in a significant change to fair value measurement. Holding other factors constant, an increase to either harvest volumes or timber prices would tend to increase the fair value of a timberland investment, while an increase in operating costs or discount rate would have the opposite effect. These investments are classified as Level 3 by the companies owning them, and therefore the equity investments in these companies are considered to be Level 3 by the Company.

F-37

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

7. Fair Value - (continued)

The following table presents the Company’s assets and liabilities that are measured and reported at fair value in the Balance Sheets after initial recognition by fair value hierarchy level:

	December 31, 2015
	Carrying Value		Total Fair Value		Level 1		Level 2		Level 3
	(in millions)
Assets:
Bond with NAIC 6 rating:
Industrial and misc	$	29	$	29	$	-	$	-	$	29
Loan-backed and structured securities		7		7		-		-		7
Total bonds with NAIC 6 rating		36		36		-		-		36
Preferred stocks:
Industrial and misc		-		-		-		-		-
Total preferred stocks		-		-		-		-		-
Common stocks:
Industrial and misc		658		658		548		-		110
Total common stocks		658		658		548		-		110
Derivatives:
Interest rate swaps		10,043		10,043		-		10,043		-
Interest rate treasury locks		364		364		-		-		364
Interest rate options		144		144		-		-		144
Interest rate futures		-		-		-		-		-
Foreign currency swaps		123		123		-		123		-
Foreign currency forwards		8		8		-		8		-
Foreign currency futures		-		-		-		-		-
Equity total return swaps		2		2		-		-		2
Equity options		138		138		-		36		102
Equity index futures		-		-		-		-		-
Credit default swaps		-		-		-		-		-
Total derivatives		10,822		10,822		-		10,210		612
Assets held in separate accounts		129,725		129,725		124,290		3,470		1,965
Total assets	$	141,241	$	141,241	$	124,838	$	13,680	$	2,723
Liabilities:
Derivatives:
Interest rate swaps	$	5,770	$	5,770	$	-	$	5,700	$	70
Interest rate treasury locks		153		153		-		-		153
Interest rate options		-		-		-		-		-
Interest rate futures		-		-		-		-		-
Foreign currency swaps		62		62		-		62		-
Foreign currency forwards		-		-		-		-		-
Foreign currency futures		-		-		-		-		-
Equity total return swaps		1		1		-		-		1
Equity options		8		8		-		8		-
Equity index futures		-		-		-		-		-
Credit default swaps		-		-		-		-		-
Total derivatives		5,994		5,994		-		5,770		224
Liabilities held in separate accounts		129,725		129,725		124,290		3,470		1,965
Total liabilities	$	135,719	$	135,719	$	124,290	$	9,240	$	2,189

F-38

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

7. Fair Value - (continued)

	December 31, 2014
	Carrying Value		Total Fair Value		Level 1		Level 2		Level 3
	(in millions)
Assets:
Bond with NAIC 6 rating:
Industrial and misc	$	-	$	-	$	-	$	-	$	-
Loan-backed and structured securities		39		39		-		18		21
Total bonds with NAIC 6 rating		39		39		-		18		21
Preferred stocks:
Industrial and misc		-		-		-		-		-
Total preferred stocks		-		-		-		-		-
Common stocks:
Industrial and misc		477		477		379		-		98
Total common stocks		477		477		379		-		98
Derivatives:
Interest rate swaps		9,059		9,059		-		9,058		1
Interest rate treasury locks		938		938		-		168		770
Interest rate options		93		93		-		-		93
Interest rate futures		-		-		-		-		-
Foreign currency swaps		43		43		-		43		-
Foreign currency forwards		4		4		-		4		-
Foreign currency futures		-		-		-		-		-
Equity total return swaps		11		11		-		-		11
Equity options		277		277		-		61		216
Equity index futures		-		-		-		-		-
Credit default swaps		-		-		-		-		-
Total derivatives		10,425		10,425		-		9,334		1,091
Assets held in separate accounts		140,164		140,164		134,070		3,756		2,338
Total assets	$	151,105	$	151,105	$	134,449	$	13,108	$	3,548
Liabilities:
Derivatives:
Interest rate swaps	$	5,154	$	5,154	$	-	$	5,113	$	41
Interest rate treasury locks		-		-		-		-		-
Interest rate options		-		-		-		-		-
Interest rate futures		-		-		-		-		-
Foreign currency swaps		30		30		-		30		-
Foreign currency forwards		-		-		-		-		-
Foreign currency futures		-		-		-		-		-
Equity total return swaps		-		-		-		-		-
Equity options		-		-		-		-		-
Equity index futures		-		-		-		-		-
Credit default swaps		-		-		-		-		-
Total derivatives		5,184		5,184		-		5,143		41
Liabilities held in separate accounts		140,164		140,164		134,070		3,756		2,338
Total liabilities	$	145,348	$	145,348	$	134,070	$	8,899	$	2,379

F-39

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

7. Fair Value - (continued)

The table below presents the carrying amounts and fair value by fair value hierarchy level for certain assets and liabilities that are not reported at fair value in the Balance Sheets:

	December 31, 2015
	Carrying Value		Total Fair Value		Level 1		Level 2		Level 3
	(in millions)
Assets:
Bonds (1)	$	44,427	$	44,595	$	-	$	40,866	$	3,729
Preferred stocks		23		34		-		-		34
Mortgage loans on real estate		10,475		11,213		-		-		11,213
Cash, cash equivalents and short term investments		4,528		4,528		2,059		2,469		-
Policy loans		3,718		3,718		-		3,718		-
Derivatives in effective hedge accounting and RSAT relationships		179		2,487		-		2,484		3
Total assets	$	63,350	$	66,575	$	2,059	$	49,537	$	14,979
Liabilities:
Consumer notes	$	265	$	289	$	-	$	-	$	289
Borrowed money		160		160		-		160		-
Policy reserves		1,553		1,533		-		-		1,533
Policyholders’ and beneficiaries funds		2,685		2,850		-		1,151		1,699
Derivatives in effective hedge accounting and RSAT relationships		100		931		-		664		267
Total liabilities	$	4,763	$	5,763	$	-	$	1,975	$	3,788
	December 31, 2014
	Carrying Value		Total Fair Value		Level 1		Level 2		Level 3
	(in millions)
Assets:
Bonds (1)	$	49,187	$	52,644	$	-	$	48,392	$	4,252
Preferred stocks		26		46		-		-		46
Mortgage loans on real estate		11,519		12,785		-		-		12,785
Cash, cash equivalents and short term investments		7,702		7,702		4,407		3,295		-
Policy loans		5,039		5,039		-		5,039		-
Derivatives in effective hedge accounting and RSAT relationships		33		2,378		-		2,372		6
Total assets	$	73,506	$	80,594	$	4,407	$	59,098	$	17,089
Liabilities:
Consumer notes	$	411	$	454	$	-	$	-	$	454
Borrowed money		290		290		-		290		-
Policy reserves		1,661		1,648		-		-		1,648
Policyholders’ and beneficiaries funds		3,901		4,352		-		1,457		2,895
Derivatives in effective hedge accounting and RSAT relationships		45		1,231		-		964		267
Total liabilities	$	6,308	$	7,975	$	-	$	2,711	$	5,264

(1) Bonds are carried at amortized cost unless they have NAIC designation rating of 6. Fair value of bonds exclude leveraged leases of $ 2,319 million and $2,268 million at December 31, 2015 and 2014, respectively. The Company calculates the carrying value by accruing income at its expected internal rate of return.

F-40

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

7. Fair Value - (continued)

Transfers of Level 1 and Level 2 Assets and Liabilities

The Company’s policy is to record transfers of assets and liabilities between Level 1 and Level 2 at their fair values as of 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. During the years ended December 31, 2015 and 2014, the Company did not have any transfers from Level 1 to Level 2. Conversely, assets are transferred from Level 2 to Level 1 when transaction volume and frequency are indicative of an active market. The Company did not transfer assets from Level 2 to Level 1 during the years ended December 31, 2015 and 2014.

F-41

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

7. Fair Value - (continued)

Level 3 Financial Instruments

The changes in Level 3 financial instruments measured and reported at fair value for the years ended December 31, 2015, 2014 and 2013, are summarized as follows:

			Net realized/unrealized gains (losses) included in:																	Transfers
	Balance at January 1, 2015		Net income (1)			Surplus			Amounts credited to separate account liabilities (2)		Purchases		Issuances		Sales			Settlements		Into Level 3 (3)		Out of Level 3 (3)			Balance at December 31, 2015
	(in millions)
Bonds with NAIC 6 rating:
Impaired corporate bonds	$	-	$	(4	)	$	(1	)	$	-	$	2	$	-	$	(2	)	$	-	$	41	$	(7	)	$	29
Impaired mortgage-backed and asset-backed securities		21		(3	)		3			-		-		-		(24	)		-		15		(5	)		7
Total bonds with NAIC 6 rating		21		(7	)		2			-		2		-		(26	)		-		56		(12	)		36
Preferred stocks:
Industrial and misc		-		-			-			-		-		-		-			-		-		-			-
Total preferred stocks		-		-			-			-		-		-		-			-		-		-			-
Common stocks:
Industrial and misc		98		(2	)		8			-		7		-		(3	)		-		2		-			110
Total common stocks		98		(2	)		8			-		7		-		(3	)		-		2		-			110
Net derivatives		1,050		-			(614	)		-		27		-		-			-		-		(75	)		388
Separate account assets/liabilities		2,338		189			-			-		27		-		(593	)		-		4		-			1,965
Total	$	3,507	$	180		$	(604	)	$	-	$	63	$	-	$	(622	)	$	-	$	62	$	(87	)	$	2,499

F-42

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

7. Fair Value - (continued)

				Net realized/unrealized gains (losses) included in:																Transfers
	Balance at January 1, 2014			Net income (1)		Surplus			Amounts credited to separate account liabilities (2)		Purchases		Issuances		Sales			Settlements		Into Level 3 (3)		Out of Level 3 (3)			Balance at December 31, 2014
	(in millions)
Bonds with NAIC 6 rating:
Impaired corporate bonds	$	26		$	-	$	(3	)	$	-	$	-	$	-	$	-		$	-	$	-	$	(23	)	$	-
Impaired mortgage-backed and asset-backed securities		34			-		1			-		-		-		-			-		11		(25	)		21
Total bonds with NAIC 6 rating		60			-		(2	)		-		-		-		-			-		11		(48	)		21
Preferred stocks:
Industrial and misc		-			-		-			-		-		-		-			-		-		-			-
Total preferred stocks		-			-		-			-		-		-		-			-		-		-			-
Common stocks:
Industrial and misc		86			-		(1	)		-		14		-		(1	)		-		-		-			98
Total common stocks		86			-		(1	)		-		14		-		(1	)		-		-		-			98
Net derivatives		(114	)		26		1,088			-		72		-		(25	)		-		41		(38	)		1,050
Separate account assets/liabilities		2,221			162		-			-		68		-		(270	)		-		163		(6	)		2,338
Total	$	2,253		$	188	$	1,085		$	-	$	154	$	-	$	(296	)	$	-	$	215	$	(92	)	$	3,507

F-43

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

7. Fair Value - (continued)

			Net realized/unrealized gains (losses) included in:																		Transfers
	Balance at January 1, 2013		Net income (1)			Surplus			Amounts credited to separate account liabilities (2)		Purchases		Issuances		Sales			Settlements			Into Level 3 (3)		Out of Level 3 (3)			Balance at December 31, 2013
	(in millions)
Bonds with NAIC 6 rating:
Impaired corporate bonds	$	12	$	(2	)	$	-		$	-	$	-	$	-	$	-		$	-		$	23	$	(7	)	$	26
Impaired mortgage-backed and asset-backed securities		53		(37	)		39			-		-		-		(23	)		(5	)		16		(9	)		34
Total bonds with NAIC 6 rating		65		(39	)		39			-		-		-		(23	)		(5	)		39		(16	)		60
Preferred stocks:
Industrial and misc		4		-			-			-		-		-		-			-			-		(4	)		-
Total preferred stocks		4		-			-			-		-		-		-			-			-		(4	)		-
Common stocks:
Industrial and misc		44		-			(2	)		-		58		-		(18	)		-			4		-			86
Total common stocks		44		-			(2	)		-		58		-		(18	)		-			4		-			86
Net derivatives		58		6			(459	)		-		287		-		(7	)		-			-		1			(114	)
Separate account assets/liabilities		2,223		160			-			-		31		-		(195	)		-			3		(1	)		2,221
Total	$	2,394	$	127		$	(422	)	$	-	$	376	$	-	$	(243	)	$	(5	)	$	46	$	(20	)	$	2,253

(1) This amount is included in net realized capital gains (losses) on the Statements of Operations.

(2) Changes in the fair value of separate account assets are credited directly to separate account liabilities in accordance with NAIC SAP and are not reflected in income.

(3) For financial instruments that are transferred into and/or out of Level 3, the Company uses the fair value of the instruments at the beginning of the reporting period.

F-44

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

7. Fair Value - (continued)

The transfers into Level 3 primarily result from securities that were impaired during the year or securities where a lack of observable market data (versus the previous year) resulted in reclassifying instruments into Level 3. The transfers out of Level 3 primarily result from observable market data becoming available for that instrument, thus eliminating the need to extrapolate market data beyond observable points. Additionally, securities carried at fair value at the beginning of the period but carried at amortized cost at the end of the period due to rating change or change in fair value relative to amortized cost, are included in transfers out of Level 3. Conversely, any securities carried at amortized cost at the beginning of the period and carried at fair value at the end of the year due to SVO rating change or change in fair value relative to amortized cost, are included into transfers into Level 3.

8. Reinsurance

Certain premiums and benefits are assumed from or ceded to affiliate and other insurance companies under various reinsurance agreements. The Company entered into these reinsurance agreements to shift underlying risk on certain of its products, and to improve cash flow and statutory capital. The ceded reinsurance agreements provide the Company with increased capacity to write larger risks and maintain its exposure to loss within its capital resources.

Total reinsurance amounts included in the Company’s accompanying statutory-basis financial statements were as follows:

	Years ended December 31,
	2015			2014			2013
	(in millions)
Premiums earned
Direct	$	20,189		$	19,525		$	20,311
Assumed		1,867			792			1,062
Ceded		(5,733	)		(7,579	)		(8,491	)
Net	$	16,323		$	12,738		$	12,882
Benefits to policyholders ceded	$	(16,713	)	$	(18,500	)	$	(17,988	)

Reserve amounts ceded to reinsurers not authorized in the State of Michigan are mostly covered by letters of credit or trust agreements. Amounts payable or recoverable for reinsurance on policy and contract liabilities are not subject to periodic or maximum limits. At December 31, 2015, any material recoveries were secured by letters of credit or assets placed in trust by the assuming company.

Neither the Company nor any of its related parties control, directly or indirectly, any external reinsurers with whom the Company conducts business. No policies issued by the Company have been reinsured with a foreign company, which is controlled, either directly or indirectly, by a party not primarily engaged in the business of insurance. The Company does not have any reinsurance agreements in effect under which the reinsurer may unilaterally cancel the agreement. At December 31, 2015, there was no reinsurance agreements in effect such that the amount of losses paid or accrued exceed the total direct premium collected.

As of December 31, 2015, if all reinsurance agreements were cancelled the estimated aggregate reduction in unassigned surplus is $1,328 million.

The Company has not entered into any reinsurance transactions within the scope of Actuarial Guideline 48, the NAIC Term Life and Universal Life with Secondary Guarantees (XXX/AXXX) Credit for Reinsurance Model Regulation.

Non-Affiliated Reinsurance

Effective July 1, 2015, the Company entered into coinsurance reinsurance agreements with New York Life (“NYL”) to cede 100% quota share (“QS”) of the Company’s JHLICO Closed Block policies (“NYL 100% Coinsurance”). In addition, NYL agreed to retrocede 40% QS of the same policy risks back to the Company under a coinsurance funds withheld (“FWH”) agreement (“NYL 40% FWH Retrocession”). Collectively, these agreements are known as the NYL Agreements. The NYL 100% Coinsurance keeps the assets supporting the JHLICO Closed Block together in NYL, and the NYL 40% FWH Retrocession adjusts the net reinsurance to NYL to 60% of the JHLICO Closed Block policies at risk. The transactions included the transfer to NYL of $8,916 million of invested assets and $5,282 million in net policy liabilities. In addition, the

F-45

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

8. Reinsurance - (continued)

Company recognized approximately $3,698 million of FWH assets. The transactions resulted in a pre-tax loss of $70 million, including a ceding commission paid of $263 million, and an increase in surplus of $281 million, net of tax, which was deferred and will be amortized over a period of approximately 20 years.

The table below consists of the impact of the NYL Agreements:

	Year ended December 31,
	2015
	(in millions)
Premiums ceded	$	(8,180	)
Premiums assumed		3,272
Benefits ceded		(314	)
Benefits assumed		126
Other reinsurance receivable		362
Funds held by or deposited with reinsured companies		3,655

In conjunction with the NYL Agreements, the existing 100% coinsurance FWH agreement which retrocedes the JHLICO Closed Block New York business back to the Company from JHNY was recaptured. The recapture resulted in a decrease in FWH assets of $1,919 million, a net decrease in policy assets and liabilities of $1,918 million, and an increase in surplus of $96 million. In addition, the 90% modified coinsurance FWH treaty with MRBL was also recaptured. The recapture resulted in a decrease in assets of $1,000 million, an increase in net policy liabilities of $1,266 million and a decrease in surplus of $173 million, net of tax. The recaptures were necessary to complete the NYL Agreements, because the policies under these agreements are the same policies at risk under the NYL Agreements.

On July 1, 2011, JHUSA entered into a sale of its Life Retrocession business by way of a coinsurance treaty with Pacific Life Insurance Company that resulted in the recognition of approximately $432 million deferred gain (net of deferred taxes) recorded to surplus. During 2013, JHUSA novated 95% of the underlying reinsurance agreements to Pacific Life Insurance Company. Based on this novation, the Company recorded a gain of $352 million to the Statements of Operations (pre-tax). In 2014, the Company completed the novation of the remaining 5% of the agreements and recorded $20 million to the Statements of Operations (pre-tax).

Affiliated Reinsurance

The table and commentary below consist of the impact of the reinsurance agreements with an affiliate, JHNY:

	Years ended December 31,
	2015			2014			2013
	(in millions)
Premiums ceded, net	$	(2,231	)	$	(192	)	$	(216	)
Benefits ceded, net		(436	)		(394	)		(483	)
Funds held by or deposited with reinsured companies		-			1,952			1,978
Other reinsurance receivable		60			86			124
Other amounts payable on reinsurance		1			10			15
Treaty settlement received (paid)		527			449			532

* Treaty settlement consisted primarily of ceded investment income, ceded benefit payments and ceded statutory reserves.

F-46

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

8. Reinsurance - (continued)

On January 1, 2010, the assets supporting the policyholders who reside in the state of New York (“NY business”) were transferred to JHNY from the Company. The transfer included participating traditional life insurance, universal life insurance, fixed deferred and immediate annuities, participating pension contracts, and variable annuities. The NY business was transferred using assumption reinsurance, modified coinsurance and coinsurance with cut-through provisions.

The NY business related to participating traditional life insurance policies was transferred from JHUSA to JHNY under a coinsurance agreement and was immediately retroceded back to JHUSA using a coinsurance FWH agreement. JHNY retained the invested assets supporting this block of business. As previously noted, the coinsurance FWH agreement was recaptured effective July 1, 2015. The NY business related to variable universal life was reinsured through coinsurance and modified coinsurance. The NY business related to universal life was transferred from the Company to JHNY under coinsurance agreements.

The NY business related to a majority of the fixed deferred annuity business was transferred from the Company to JHNY under an assumption reinsurance agreement. The NY business related to variable annuities and some participating pension contracts where assets were held in separate accounts were reinsured through modified coinsurance. The NY business related to fixed deferred and immediate annuities and participating pension contracts was transferred from the Company to JHNY under a coinsurance agreement.

The table and commentary below consist of the impact of the reinsurance agreements with an affiliate, JHRECO:

	Years ended December 31,
	2015			2014			2013
	(in millions)
Premiums ceded	$	(530	)	$	(546	)	$	(570	)
Benefits ceded		(756	)		(759	)		(730	)
Other amounts payable on reinsurance		25			58			45
Funds withheld from unauthorized reinsurers		7,544			7,409			5,425
Treaty settlement received (paid)		(468	)		(489	)		(55	)

* Treaty settlement consisted primarily of ceded investment income, ceded benefit payments and ceded statutory reserves.

The Company reinsures certain portions of its long-term care insurance business with JHRECO through coinsurance FWH transactions. Under reinsurance treaties covering life insurance business, the Company cedes to JHRECO on a coinsurance FWH basis to the death benefits from the no-lapse guarantee on a small block of policies. The Company also reinsures a portion of the risk related to certain annuity policies and during 2013 a small number of these policies were recaptured for administration purposes. This recapture did not have a material impact on the Company’s results of operations. The reinsurance agreement is written on a modified coinsurance basis where the assets supporting the reinsured policies remain invested with the Company.

F-47

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

8. Reinsurance - (continued)

The table and commentary below consist of the impact of the reinsurance agreements with an affiliate, MRBL:

	Years ended December 31,
	2015			2014			2013
	(in millions)
Premiums ceded	$	5,332		$	(4,599	)	$	(5,128	)
Benefits ceded		(12,125	)		(14,303	)		(13,966	)
Other reinsurance receivable		-			40			398
Other amounts payable on reinsurance		351			837			55
Funds withheld from unauthorized reinsurers		240			1,251			1,256
Treaty settlement received (paid)		(712	)		(2,080	)		1,095

* Treaty settlement consisted primarily of ceded investment income related to non-qualifying hedging strategies and changes in the modified coinsurance and coinsurance reserves.

The Company reinsures 87% of certain group annuity contracts in-force with MRBL. The reinsurance agreement covers all contracts, excluding the guaranteed benefit rider. As the underlying contracts being reinsured are considered investment contracts, the agreement does not meet the criteria for reinsurance accounting and was classified as a financial instrument.

The Company reinsures 90% of a significant block of variable annuity contracts in-force with MRBL. All substantial risks, including all guaranteed benefits (GMDB, Guaranteed Minimum Income Benefit (“GMIB”), and GMWB), related to certain specified policies not already reinsured to third parties, are reinsured under the agreement. The base contracts are reinsured on a modified coinsurance basis, while the guaranteed benefit reinsurance coverage is apportioned in accordance with the reinsurance agreement provisions between modified coinsurance and coinsurance FWH. The assets supporting the reinsured policies remain invested with the Company. Since the inception of the treaty in 2008, several amendments have been enacted to refine certain aspects of the treaty. The net MRBL reinsurance recoverable includes the impact of ongoing reinsurance cash flows and is accounted for over the life of the underlying reinsured policies using assumptions consistent with those used to account for the underlying policies with changes to ceded reserves and cost of reinsurance recognized as a component of benefits to policyholders on the Statements of Operations.

The Company’s indirect parent company, MFC, is regulated on a global basis by the Canadian insurance regulator, The Office of the Superintendent of Financial Institutions (“OSFI”), and reports on a consolidated international financial reporting standards (“IFRS”) basis. The Company utilizes a dynamic hedging program to manage risks on an economic basis. The IFRS accounting for these derivatives aligns with MFC’s market-based reserving regime. The US statutory accounting and reserving framework does not provide appropriate alignment of economic risk management strategies (hedging) and associated reserve methodologies. The treaty with MRBL provides a mechanism to allow management of the majority of the variable annuity risk under a single consolidated reserve and capital regime, rather than managing the block simultaneously under two very diverse frameworks.

As a coinsurance / modified coinsurance treaty, MRBL holds $2,992 million as a coinsurance reserve and JHUSA holds $325 million as a modified coinsurance reserve. The IFRS reserves that MRBL holds for variable annuities are similar in concept to AG43. The calculations are a real-world stochastic calculation at CTE(70), based on the guaranteed benefits and fees in isolation rather than the whole contract, including the cash flows generated from the dynamic hedging program and including margins for adverse deviation. The real-world stochastic scenarios are subject to Canadian Institute of Actuaries equity and bond fund return calibration criteria. Reserve credits taken were $0 at December 31, 2015 and there is no supporting collateral.

MRBL does not retrocede any risks to a third party. The risks assumed by MRBL are solely the responsibility of MRBL, but they are also retained within MFC. This transaction has no impact on MFC’s financial statements as it reports its risks on a consolidated basis.

Prior to the previously noted transactions with NYL, the Company reinsured 90% of the non-reinsured risk of the JHLICO closed block. The reinsurance agreement was written on a modified coinsurance basis where the related financial assets

F-48

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

8. Reinsurance - (continued)

remain invested with the Company. As the reinsurance agreement did not subject the reinsurer to the reasonable possibility of significant loss, it was classified as structured reinsurance and given deposit-type accounting treatment with only the reinsurance risk fee being reported in other operating costs and expenses in the Statements of Operations. This reinsurance agreement was recaptured effective July 1, 2015.

The table and commentary below consist of the impact of the reinsurance agreements with an affiliate, Manulife Reinsurance Limited (“MRL”):

	Years ended December 31,
	2015			2014			2013
	(in millions)
Premiums ceded	$	(392	)	$	(338	)	$	(536	)
Benefits ceded		(448	)		(298	)		(338	)
Other reinsurance receivable		36			82			18
Funds withheld from unauthorized reinsurers		-			213			-
Treaty settlement received (paid)		14			(97	)		146

* Treaty settlement consisted primarily of ceded investment income, ceded benefit payments and ceded statutory reserves.

The Company entered into a coinsurance/modified coinsurance agreement with an affiliate, MRL, to reinsure 90% of all risks not already reinsured to third parties on various universal life contracts effective December 15, 2000. Subsequent amendments added further UL and some term contracts. The Company amended the agreement during 2014 to simplify treaty administration and to modify the structure of the treaty to a modified coinsurance FWH structure.

Other

On July 31, 2013, MFC signed an agreement to sell its life insurance business in Taiwan to CTBC Life Insurance Company (CTBC Life). Under the agreement, CTBC Life will assume all of the life insurance business related obligations. In connection with this transaction, on December 31, 2013, the Company paid $111 million in fees to an affiliate, Manufacturers Life Reinsurance Limited for the recapture of certain traditional life business reserves and net liabilities of $42 million, which resulted in a pre-tax loss of $69 million.

F-49

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

9. Federal Income Taxes

The components of the net deferred tax asset/(liability) are as follows:

	December 31, 2015
	(1)			(2)			(3)
							(Col 1 + 2)
	Ordinary			Capital			Total
	(in millions)
(a) Gross deferred tax assets	$	4,114		$	383		$	4,497
(b) Statutory valuation allowance adjustments		50			-			50
(c) Adjusted gross deferred tax assets (a — b)		4,064			383			4,447
(d) Deferred tax assets nonadmitted		-			-			-
(e) Subtotal net admitted deferred tax asset (c — d)		4,064			383			4,447
(f) Deferred tax liabilities		4,639			195			4,834
(g) Net admitted deferred tax asset / (net deferred tax liability) (e — f)	$	(575	)	$	188		$	(387	)
	December 31, 2014
	(4)			(5)			(6)
							(Col 4 + 5)
	Ordinary			Capital			Total
	(in millions)
(a) Gross deferred tax assets	$	4,300		$	479		$	4,779
(b) Statutory valuation allowance adjustments		50			-			50
(c) Adjusted gross deferred tax assets (a — b)		4,250			479			4,729
(d) Deferred tax assets nonadmitted		-			-			-
(e) Subtotal net admitted deferred tax asset (c — d)		4,250			479			4,729
(f) Deferred tax liabilities		4,871			314			5,185
(g) Net admitted deferred tax asset / (net deferred tax liability) (e — f)	$	(621	)	$	165		$	(456	)
	Change
	(7)			(8)			(9)
	(Col 1 - 4)			(Col 2 - 5)			(Col 7 + 8)
	Ordinary			Capital			Total
	(in millions)
(a) Gross deferred tax assets	$	(186	)	$	(96	)	$	(282	)
(b) Statutory valuation allowance adjustments		-			-			-
(c) Adjusted gross deferred tax assets (a — b)		(186	)		(96	)		(282	)
(d) Deferred tax assets nonadmitted		-			-			-
(e) Subtotal net admitted deferred tax asset (c — d)		(186	)		(96	)		(282	)
(f) Deferred tax liabilities		(232	)		(119	)		(351	)
(g) Net admitted deferred tax asset / (net deferred tax liability) (e — f)	$	46		$	23		$	69

The Company has recorded a valuation allowance against specific general business tax credit carryforwards of $50 million for the year ended December 31, 2015. These tax credits were generated by the legacy JHFC group and are subject to the separate return limitation rules. These credits will not expire until 2019, however due to restrictions on the utilization, management believes that it is more likely than not that the Company will not realize the benefit. In assessing the need for a valuation allowance, management considered the future reversal of taxable temporary differences, future taxable income exclusive of reversing temporary differences, taxable income in the carry back period, as well as tax planning strategies. Tax

F-50

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

9. Federal Income Taxes - (continued)

planning strategies were considered to the extent they were both prudent and feasible and if implemented, would result in the realization of deferred tax assets.

The amount of adjusted gross deferred tax assets admitted under each component and the resulting increase in deferred tax assets by character are as follows:

	December 31, 2015
	(1)		(2)		(3)
					(Col 1 + 2)
	Ordinary		Capital		Total
	(in millions)
2. Admission calculation components SSAP No. 101
(a) Federal income taxes paid in prior years recoverable through loss carrybacks.	$	-	$	-	$	-
(b) Adjusted gross deferred tax assets expected to be realized (excluding the amount of deferred tax assets from 2(a) above) after application of the threshold limitation. (The lesser of 2(b)1 and 2(b)2 below)		546		268		814
1. Adjusted gross deferred tax assets expected to be realized following the Balance Sheet date.		1,162		268		1,430
2. Adjusted gross deferred tax assets allowed per limitation threshold.		546		268		814
(c) Adjusted gross deferred tax assets (excluding the amount of deferred tax assets from 2(a) and 2(b) above) offset by gross deferred tax liabilities.		3,518		115		3,633
(d) Deferred tax assets admitted as the result of application of SSAP No. 101. Total (2(a) + 2(b) + 2(c))	$	4,064	$	383	$	4,447
	December 31, 2014
	(4)		(5)		(6)
					(Col 4 + 5)
	Ordinary		Capital		Total
	(in millions)
2. Admission calculation components SSAP No. 101
(a) Federal income taxes paid in prior years recoverable through loss carrybacks.	$	-	$	-	$	-
(b) Adjusted gross deferred tax assets expected to be realized (excluding the amount of deferred tax assets from 2(a) above) after application of the threshold limitation. (The lesser of 2(b)1 and 2(b)2 below)		521		276		797
1. Adjusted gross deferred tax assets expected to be realized following the Balance Sheet date.		1,197		276		1,473
2. Adjusted gross deferred tax assets allowed per limitation threshold.		521		276		797
(c) Adjusted gross deferred tax assets (excluding the amount of deferred tax assets from 2(a) and 2(b) above) offset by gross deferred tax liabilities.		3,729		203		3,932
(d) Deferred tax assets admitted as the result of application of SSAP No. 101. Total (2(a) + 2(b) + 2(c))	$	4,250	$	479	$	4,729

F-51

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

9. Federal Income Taxes - (continued)

	Change
	(7)			(8)			(9)
	(Col 1 - 4)			(Col 2 - 5)			(Col 7 + 8)
	Ordinary			Capital			Total
	(in millions)
2. Admission calculation components SSAP No. 101
(a) Federal income taxes paid in prior years recoverable through loss carrybacks.	$	-		$	-		$	-
(b) Adjusted gross deferred tax assets expected to be realized (excluding the amount of deferred tax assets from 2(a) above) after application of the threshold limitation. (The lesser of 2(b)1 and 2(b)2 below)		25			(8	)		17
1. Adjusted gross deferred tax assets expected to be realized following the Balance Sheet date.		(35	)		(8	)		(43	)
2. Adjusted gross deferred tax assets allowed per limitation threshold.		25			(8	)		17
(c) Adjusted gross deferred tax assets (excluding the amount of deferred tax assets from 2(a) and 2(b) above) offset by gross deferred tax liabilities.		(211	)		(88	)		(299	)
(d) Deferred tax assets admitted as the result of application of SSAP No. 101. Total (2(a) + 2(b) + 2(c))	$	(186	)	$	(96	)	$	(282	)

	2015			2014
	(in millions)
(a) Ratio percentage used to determine recovery period and threshold limitation amount		793	%		917	%
(b) Amount of adjusted capital and surplus used to determine recovery period and threshold limitation in 2(b)2 above	$	5,426		$	5,315

Impact of tax planning strategies is as follows:

	December 31, 2015
	(1)			(2)
	Ordinary			Capital
	(in millions)
(a) Determination of Adjusted Gross Deferred Tax Assets and Net Admitted Deferred Tax Assets by tax character as a percentage.
1. Adjusted Gross DTAs Amount From Note 9A1(c)	$	4,064		$	383
2. Percentage of Adjusted Gross DTAs By Tax Character Attributable To The Impact of Tax Planning Strategies		0	%		0	%
3. Net Admitted Adjusted Gross DTAs Amount from Note 9A1(e)	$	4,064		$	383
4. Percentage of Net Admitted Adjusted Gross DTAs by Tax Character Attributable To The Impact of Tax Planning Strategies		0	%		0	%

F-52

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

9. Federal Income Taxes - (continued)

	December 31, 2014
	(3)			(4)
	Ordinary			Capital
	(in millions)
(a) Determination of Adjusted Gross Deferred Tax Assets and Net Admitted Deferred Tax Assets by tax character as a percentage.
1. Adjusted Gross DTAs Amount From Note 9A1(c)	$	4,250		$	479
2. Percentage of Adjusted Gross DTAs By Tax Character Attributable To The Impact of Tax Planning Strategies		0	%		32	%
3. Net Admitted Adjusted Gross DTAs Amount from Note 9A1(e)	$	4,250		$	479
4. Percentage of Net Admitted Adjusted Gross DTAs by Tax Character Attributable To The Impact of Tax Planning Strategies		0	%		32	%
	Change
	(5)			(6)
	(Col 1 - 3)			(Col 2 - 4)
	Ordinary			Capital
	(in millions)
(a) Determination of Adjusted Gross Deferred Tax Assets and Net Admitted Deferred Tax Assets by tax character as a percentage.
1. Adjusted Gross DTAs Amount From Note 9A1(c)	$	(186	)	$	(96	)
2. Percentage of Adjusted Gross DTAs By Tax Character Attributable To The Impact of Tax Planning Strategies		0	%		(32	%)
3. Net Admitted Adjusted Gross DTAs Amount from Note 9A1(e)	$	(186	)	$	(96	)
4. Percentage of Net Admitted Adjusted Gross DTAs by Tax Character Attributable To The Impact of Tax Planning Strategies		0	%		(32	%)

The Company’s tax planning strategies do not include the use of reinsurance.

There are no unrecognized deferred tax liabilities for amounts described in ASC 740-10-25-3.

F-53

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

9. Federal Income Taxes - (continued)

Current income taxes incurred consist of the following major components:

	Years Ended December 31,
	(1)			(2)			(3)
							(Col 1 - 2)
	2015			2014			Change
	(in millions)
1. Current income tax
(a) Federal	$	(778	)	$	(716	)	$	(62	)
(b) Foreign		-			-			-
(c) Subtotal		(778	)		(716	)		(62	)
(d) Federal income tax on net capital gains		493			382			111
(e) Utilization of capital loss carryforwards		-			-			-
(f) Other		-			-			-
(g) Federal and foreign income taxes incurred	$	(285	)	$	(334	)	$	49

F-54

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

9. Federal Income Taxes - (continued)

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are as follows:

	December 31,
	(1)		(2)		(3)
					(Col 1 - 2)
	2015		2014		Change
	(in millions)
2. Deferred tax assets:
(a) Ordinary:
(1) Discounting of unpaid losses	$	-	$	-	$	-
(2) Unearned premium reserve		-		-		-
(3) Policyholder reserves		1,011		1,034		(23	)
(4) Investments		157		147		10
(5) Deferred acquisition costs		506		755		(249	)
(6) Policyholder dividends accrual		68		111		(43	)
(7) Fixed assets		-		-		-
(8) Compensation and benefits accrual		37		54		(17	)
(9) Pension accrual		-		-		-
(10) Receivables — nonadmitted		67		49		18
(11) Net operating loss carryforward		1,276		1,218		58
(12) Tax credit carry-forward		898		860		38
(13) Other (including items <5% of total ordinary tax assets)		94		72		22
(99) Subtotal	$	4,114	$	4,300	$	(186	)
(b) Statutory valuation allowance adjustment		50		50		-
(c) Nonadmitted		-		-		-
(d) Admitted ordinary deferred tax assets (2(a)(99) — 2(b) — 2(c))	$	4,064	$	4,250	$	(186	)
(e) Capital:
(1) Investments	$	383	$	479	$	(96	)
(2) Net capital loss carryforward		-		-		-
(3) Real estate		-		-		-
(4) Other (including items <5% of total capital tax assets)		-		-		-
(99) Subtotal	$	383	$	479	$	(96	)
(f) Statutory valuation allowance adjustment		-		-		-
(g) Nonadmitted		-		-		-
(h) Admitted capital deferred tax assets (2(e)(99) — 2(f) — 2(g))	$	383	$	479	$	(96	)
(i) Admitted deferred tax assets (2(d)+2(h))	$	4,447	$	4,729	$	(282	)

F-55

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

9. Federal Income Taxes - (continued)

3. Deferred tax liabilities:
(a) Ordinary:
(1) Investments	$	4,146		$	4,202		$	(56	)
(2) Fixed assets		-			-			-
(3) Deferred and uncollected premium		119			148			(29	)
(4) Policyholder reserves		-			-			-
(5) Other (including items <5% of total ordinary tax liabilities)		374			521			(147	)
(99) Subtotal	$	4,639		$	4,871		$	(232	)
(b) Capital:
(1) Investments	$	155		$	276		$	(121	)
(2) Real estate		-			-			-
(3) Other (including items <5% of total capital tax liabilities)		40			38			2
(99) Subtotal	$	195		$	314		$	(119	)
(c) Deferred tax liabilities (3(a)(99) + 3(b)(99))	$	4,834		$	5,185		$	(351	)
4. Net deferred tax assets/liabilities (2(i) — 3(c))	$	(387	)	$	(456	)	$	69

The change in net deferred income taxes is comprised of the following:

	December 31,
	2015			2014			Change
	(in millions)
Total deferred tax assets	$	4,447		$	4,729		$	(282	)
Total deferred tax liabilities		4,834			5,185			(351	)
Net deferred tax assets (liabilities)	$	(387	)	$	(456	)	$	69
Tax effect of unrealized gains and losses								183
Tax effect of unrealized foreign exchange gains (losses)								44
Change in net deferred income taxes							$	(158	)

F-56

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

9. Federal Income Taxes - (continued)

The provision for federal and foreign income taxes incurred is different from that which would be obtained by applying the statutory federal income tax rate of 35% to income before income tax (including realized capital gains). The significant items causing this difference are as follows:

	Years Ended December 31,
	2015			2014			2013
	(in millions)
Ordinary provisions computed at statutory rate	$	(105	)	$	(1,087	)	$	1,775
Net realized capital gains (losses) before IMR at statutory rate		335			151			(595	)
Change in nonadmitted assets		-			-			-
Reinsurance		35			(91	)		(206	)
Valuation allowance		-			-			50
Tax-exempt income		(6	)		(16	)		(2	)
Nondeductible expenses		-			1			7
Foreign tax expense gross up		9			9			8
Amortization of IMR		(128	)		(62	)		(64	)
Tax recorded in surplus		37			15			(18	)
Dividend received deduction		(230	)		(129	)		(102	)
Investment in subsidiaries		(28	)		(32	)		(35	)
Prior year adjustment		(21	)		(23	)		16
Tax credits		(42	)		(52	)		(61	)
Change in tax reserve		18			11			(55	)
Pension		-			-			-
Other		(1	)		(2	)		(1	)
Total	$	(127	)	$	(1,307	)	$	717
Federal and foreign income taxes incurred	$	(778	)	$	(716	)	$	262
Capital gains tax		493			382			108
Change in net deferred income taxes		158			(973	)		347
Total statutory income tax expense (benefit)	$	(127	)	$	(1,307	)	$	717

F-57

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

9. Federal Income Taxes - (continued)

As of December 31, 2015, the Company had the following carry forwards:

	Origination Year	Expiration Year	Amount
	(in millons)
Net operating losses	2008	2023	$	1,594
	2009	2024		259
	2010	2025		200
	2013	2028		902
	2014	2029		628
	2015	2030		62
			$	3,645
Affordable housing tax credits	2001	2021	$	-
	2002	2022		26
	2003	2023		49
	2004	2024		56
	2005	2025		58
	2006	2026		55
	2007	2027		64
	2008	2028		60
	2009	2029		47
	2010	2030		52
	2011	2031		53
	2012	2032		46
	2013	2033		37
	2014	2034		28
	2015	2035		16
			$	647
Foreign tax credits	2005	2015	$	23
	2006	2016		9
	2007	2017		27
	2008	2018		18
	2009	2019		7
	2010	2020		9
	2011	2021		27
	2012	2022		27
	2013	2023		27
	2014	2024		30
	2015	2025		27
			$	231
Alternative minimum tax credits	2002		$	2
	2003			2
			$	4

F-58

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

9. Federal Income Taxes - (continued)

Rehabilitation credits	2003	2023	$	4
	2006	2026		1
			$	5
Other credits	2007	2027	$	1
	2008	2028		1
	2009	2029		1
	2010	2030		2
	2011	2031		2
	2013	2033		2
	2014	2034		2
			$	11

There are no federal income taxes incurred available for recoupment in the event of future net losses for 2015, 2014 and 2013 respectively.

The Company has no deposits under Section 6603 of the Internal Revenue Code.

The Company is included in the consolidated federal income tax return of JHFC with the following entities:

Essex Corporation	John Hancock Insurance Company of Vermont
Farmland Management Services, Inc.	John Hancock Leasing Corp.
Guide Financial, Inc.	John Hancock Life Insurance Company of New York
Hancock Farmland Services, Inc.	John Hancock Life & Health Insurance Company
Hancock Forest Management Inc.	John Hancock Real Estate Finance Inc.
Hancock Natural Resource Group Inc.	John Hancock Realty Advisors Inc.
Hancock Venture Partners Inc.	John Hancock Realty Mgt. Inc.
Hancock Venture Partners Inc. Russia	John Hancock Signature Services Inc.
HVP-Special Purpose Sub I Inc.	John Hancock Natural Resource Corp.
HVP-Special Purpose Sub II Inc.	Manulife Reinsurance (Bermuda) Limited
JH California Real Estate Holdings, Inc.	Manulife Reinsurance Limited
JH Illinois Real Estate Holdings, Inc.	Manulife Service Corporation
JH Networking Insurance Agency Inc.	MCC Asset Management Inc.
JHFS One Corp.	PT Timber Inc.
John Hancock Assignment Company	Signator Insurance Agency Inc.
John Hancock Capital Growth Management Inc.	Signator Investors Inc.
John Hancock Energy Resources Mgt. Inc.	Signator Financial Services Inc.
John Hancock Financial Network Inc.	The Manufacturers Investment Corporation
John Hancock Financial Corporation	Transamerica Fund Distributors Inc.
John Hancock Insurance Agency Inc.	Transamerica Fund Management Company

In accordance with the income tax sharing agreements in effect for the applicable tax years, the Company’s income tax expense (benefit) is computed as if the Company filed separate federal income tax returns with tax benefits provided for operating losses and tax credits when utilized by the consolidated group. Intercompany settlements of income taxes are made through an increase or reduction to amounts due to or from affiliates. Such settlements occur on a periodic basis in accordance with the tax sharing agreements.

Taxes receivable from (payable to) affiliates are $130 million and $728 million at December 31, 2015 and 2014, respectively, and are included in other assets on the Balance Sheets.

F-59

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

9. Federal Income Taxes - (continued)

The Company files income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. The Company is under continuous examination by the Internal Revenue Service (“IRS”). Effective for 2010, the Company’s common parent, JHFC, merged into Manulife Holdings (Delaware) LLC (“MHDLLC”) resulting in a new combined group. With respect to the legacy MHDLLC consolidated return group, the IRS audit for tax years through 2009 have been closed. With respect to the legacy JHFC group, the IRS has completed its examinations of tax years 1997 through 2009. The IRS has issued statutory notices of deficiency relating to issues in years 1997 through 2004. JHFC filed a petition in U.S. Tax Court pertaining to leveraged leases to contest years 1997 to 2001 and the trial was completed in 2011 with final judgment entered on July 22, 2014. The IRS issued Revenue Agent Reports for tax years 2005 through 2009. Protests were filed with respect to disagreed issues. The IRS commenced its audit of tax years 2010 through 2013 in September 2014.

On August, 5, 2013, the U.S. Tax Court issued an opinion in the litigation between the Company and the IRS involving the tax treatment of certain leveraged lease investments. The Court’s opinion effectively ruled against the Company with respect to deductions claimed for tax years 1997 through 2001. The Company and the IRS are in the process of determining the impact of the decision on years subsequent to the years that were decided by the Court. The Company has made advance payments of tax and interest and is awaiting final IRS assessments. Although the Company is fully reserved for the taxes and interest that could be due, this decision may result in a decrease in the admissible book value of other deferred tax assets include in surplus in subsequent periods, absent consideration of further management actions.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	2015			2014
	(in millions)
Balance at beginning of year	$	2,002		$	2,715
Additions based on tax positions related to the current year		40			49
Payments		-			(550	)
Additions for tax positions of prior years		41			23
Reductions for tax positions of prior years		(116	)		(235	)
Balance at end of year	$	1,967		$	2,002

Included in the balances as of December 31, 2015 and 2014, respectively, are $172 million and $154 million of unrecognized benefits that, if recognized, would affect the Company’s effective tax rate. Included in the balances as of December 31, 2015 and 2014, are $1,796 million and $1,848 million of tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Approximately $1,734 million and $1,734 million of such amounts at December 31, 2015 and 2014, respectively, represent deferred tax liability balances related to leveraged lease deductions taken in prior year tax returns that were considered in determining the amount of deferred tax assets that can be admitted by offsetting such amounts against deferred tax liabilities. Excluding the effect of interest and penalties, this will have no impact on the annual effective rate, but would accelerate the payment of taxes to an earlier period.

The Company’s liability for unrecognized tax benefits may decrease in the next twelve months pending the outcome of remaining issues associated with the 2002 through 2009 IRS audit. A reasonable estimate of the decrease cannot be determined at this time however, the Company believes that the ultimate resolution will not result in a material change to its financial statements.

The Company recognizes interest accrued related to unrecognized tax benefits and penalties in income tax expense in the Statements of Operations. The Company recognized approximately $0 million of interest expense, and $9 million, and $11 million of interest benefit for the years ended December 31, 2015, 2014 and 2013, respectively. The Company had approximately $202 million and $209 million accrued for interest as of December 31, 2015 and 2014, respectively. The Company did not recognize any material amounts of penalties for the years ended December 31, 2015, 2014 and 2013.

F-60

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

10. Capital and Surplus

There are no restrictions placed on the Company’s unassigned surplus other than restrictions on dividend payments described below.

Under Michigan State insurance laws, no insurer may pay any shareholder dividends from any source other than statutory earned surplus without the prior approval of the Director. Dividends to the shareholder that may be paid without prior approval of the Director are limited by the laws of the State of Michigan. Such dividends are permissible if, together with other dividends or distributions made within the preceding 12 months, they do not exceed the greater of 10% of the JHUSA surplus as of December 31 of the preceding year, or the net gain from operations excluding realized capital gains and (losses) for the 12 month period ending December 31 of the immediately preceding year. For the years ended December 31, 2015, 2014 and 2013, the Company paid a dividend to its parent company MIC of $210 million, $500 million and $300 million, respectively.

Life/health insurance companies are subject to certain Risk-Based Capital (“RBC”) requirements as specified by the NAIC. Under those requirements, the amount of capital and surplus maintained by a life/health insurance company is to be determined based on the various risk factors related to it. As of December 31, 2015 and 2014, based on calculations pursuant to those requirements, the Company’s total adjusted capital exceeds the company action level.

The Company has surplus notes described below in the amount of $991 million. The issuance of the surplus notes was approved by the insurance regulators with the following repayment conditions and restrictions: payment of principal and accrued interest otherwise required or permissible cannot be made unless approved by the Board of Directors, approved in writing by the Director, and the Company has sufficient earned surplus or such other funds as may be approved by the Director available for such payment.

Surplus notes in the amount of $450 million were issued on February 25, 1994, for cash pursuant to Rule 144A under the Securities Act of 1933. 100% of the issued and outstanding surplus notes are represented by a global note registered in the name of a nominee of the Depository Trust Company. The interest rate is fixed at 7.375%, and interest is payable semi-annually. The notes mature on February 15, 2024. Interest expense was $33 million for years ended December 31, 2015, 2014 and 2013. Total interest paid through December 31, 2015 was $714 million.

Pursuant to two subordinated surplus notes dated September 30, 2008, the Company borrowed the respective amount of $295 million and $110 million from an affiliate, John Hancock Insurance Agency, Inc. (“JHIA”). The interest rate is fixed at 7% per annum and is payable semi-annually. The notes mature on March 31, 2033. The combined interest expense on the notes was $29 million for years ended December 31, 2015, 2014 and 2013. Total interest paid through December 31, 2015 was $202 million.

Pursuant to an amended and restated subordinated surplus note dated September 30, 2008, the Company borrowed $136 million from JHFC. Interest is calculated and reset quarterly at a fluctuating rate equal to 3-month LIBOR plus 130 basis points and is payable semi-annually. The note matures on December 15, 2016. Interest expense was $2 million, $2 million, and $2 million for the years ended December 31, 2015, 2014 and 2013, respectively. Total interest paid through December 31, 2015 was $13 million.

Under Michigan State liquidation statutes, the claims of the Depository Trust Company, JHIA, and JHFC (“the surplus noteholders”) come before those of the Company’s shareholders. There is no preferential treatment in claims between the surplus noteholders.

F-61

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

11. Related Party Transactions

Service Agreements

The Company has formal service agreements with MFC and MLI, which can be terminated by either party upon two months’ notice. Under the various agreements, the Company will pay a fee for services received under the agreement which includes legal, actuarial, investment, data processing, accounting, and certain other administrative services. Management fees relating to the agreement were $377 million, $398 million, and $443 million, respectively, for the years ended December 31, 2015, 2014 and 2013.

The Company has Administrative Service Agreements with its subsidiaries whereby the Company will be reimbursed for operating expenses incurred by the Company. Services provided under the agreement include legal, personnel, marketing, investment accounting, and certain other administrative services and are billed based on intercompany cost allocations or total average daily net assets. The amounts earned under the agreements were $760 million, $618 million, and $328 million for the years ended December 31, 2015, 2014 and 2013, respectively.

Management believes the allocation methods used are reasonable and appropriate in the circumstances; however, the Company’s Balance Sheets and Statements of Operations may not necessarily be indicative of the financial condition that would have existed if the Company operated as an unaffiliated entity.

Other

During 2015, 2014 and 2013, respectively, the Company received dividends of $36 million, $43 million, and $297 million from John Hancock Investment Management Services LLC, $81 million, $90 million, and $98 million from JHD, $0 million, $0 million, $0 million from JHNY, $70 million, $0 million, and $0 million from JHLH, and $289 million, $72 million, and $0 million from John Hancock Subsidiaries, LLC (JHS). These dividends are included in the Company’s net investment income.

During 2015, the Company made a capital contribution of $348 million to JHS in exchange for one share of its common stock.

The Company did not own any shares of the stock of its parent, MIC, or its ultimate parent, MFC at December 31, 2015 and 2014, respectively.

The Company did not recognize any impairment write-down for its investment in subsidiaries, controlled or affiliated companies for the years ended December 31, 2015, 2014 and 2013, respectively.

The Company operates a liquidity pool in which affiliates can invest excess cash. Terms of operation and participation in the liquidity pool are set out in the Second Restated and Amended Liquidity Pool and Loan Facility Agreement effective January 1, 2010. The maximum aggregate amounts that JHUSA can accept into the Liquidity Pool are $5 billion in U.S. dollar deposits and $200 million in Canadian dollar deposits. Under the terms of the agreement, certain participants may receive advances from the Liquidity Pool up to certain predetermined limits. By acting as the banker the Company can earn a spread over the amount it pays its affiliates and this aggregation and resulting economies of scale allows the affiliates to improve the investment return on their excess cash. Interest payable on U.S. dollar funds will be reset daily to the one-month U.S. Dollar London Inter-Bank Bid Rate (“LIBID”) and interest payable on Canadian dollar funds is based off the one-month Canadian Dollar Offering Rate (“CDOR”) plus a spread.

F-62

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

11. Related Party Transactions - (continued)

The following table details the affiliates and their participation in the Company’s Liquidity Pool:

	December 31,
	2015		2014
	(In millions)
The Manufacturers Investment Corporation	$	49	$	105
John Hancock Financial Corporation		138		274
Manulife Reinsurance Limited		44		186
Manulife Reinsurance (Bermuda) Ltd.		167		696
John Hancock Life & Health Insurance Company		30		142
John Hancock Life Insurance Company Vermont		33		39
John Hancock Reassurance Company, Ltd.		126		278
John Hancock Life Insurance Company New York		473		611
John Hancock Investment Management Services LLC		28		31
John Hancock Subsidiaries LLC		45		45
John Hancock Insurance Agency, Inc.		12		16
Essex Corporation		-		1
Hancock Venture Partners, Inc.		-		-
JH Signature Services Inc.		7		9
JH Partnership Holdings I, II LP		4		2
John Hancock Energy Resources Management, Inc.		-		4
John Hancock Real Estate Finance		-		1
John Hancock Realty Advisors		4		8
JH Advisors LLC		84		158
Manulife Asset Management (US) LLC		55		75
Declaration Management and Research LLC		11		4
Hancock Capital Investment Management LLC		10		15
John Hancock RPS, LLC		36		14
The Berkeley Financial Group, LLC		4		4
Manulife Holdings (USA), LLC		-		-
Signator Insurance Agency, Inc.		14		18
JH Networking Insurance Agency, Inc.		6		4
John Hancock Administrative Services LLC		-		-
John Hancock Financial Network, Inc.		-		-
Hancock Natural Resource Group, Inc.		50		-
Hancock Forest Management, Inc.		6		-
John Hancock Personal Financial Services, LLC		1		-
Total	$	1,437	$	2,740

Effective March 31, 1996, MLI provides a claims paying guarantee to certain U.S. policyholders. The claims guarantee agreement was terminated effective August 13, 2008, but still remains in effect with respect to policies issued by the Company prior to that date.

MFC fully and unconditionally guarantees payments from the guarantee periods of the accumulation phase for certain of the Company’s market value adjusted annuity contracts.

MFC fully and unconditionally guarantees JHLICO’s SignatureNotes. In December 2009, the entity that formerly issued these notes, JHLICO, ceased to exist and its property and obligations became the property and obligations of the Company.

F-63

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

11. Related Party Transactions - (continued)

MFC’s guarantees of the market value adjusted deferred annuity contracts and SignatureNotes are unsecured obligations of MFC and are subordinated in right of payment to the prior payment in full of all other obligations of MFC, except for other guarantees or obligations of MFC, which by their terms are designated as ranking equally in right of payment with or subordinate to MFC’s guarantees of the market value adjusted deferred annuity contracts and SignatureNotes.

The Company also enters into debt and reinsurance transactions with its affiliates. Please refer to the debt and reinsurance notes for further details.

12. Commitments, Guarantees, Contingencies, and Legal Proceedings

Commitments: The Company has extended commitments to purchase long-term bonds of $183 million, purchase other invested assets of $1,716 million, purchase real estate of $98 million, and issue agricultural and commercial mortgages of $125 million at December 31, 2015. If funded, loans related to real estate mortgages would be fully collateralized by related properties. Approximately 39% of these commitments expire in 2016.

There were no leasing arrangements that the Company entered into as lessee which could have a material financial effect.

During 2001, the Company entered into an office ground lease agreement, which expires on September 20, 2096. During 2012, the Company entered into a parking lease agreement, which expires on December 31, 2050. The terms of the lease agreements provide for adjustments in future periods. The future minimum lease payments, by year and in the aggregate, under these leases and other non-cancelable operating leases along with the associated sub-lease income are as follows:

	Non-cancelable Operating Leases
	(in millions)
2016	$	12
2017		10
2018		7
2019		5
2020		5
Thereafter		349
Total	$	388

The Company does not have any sublease income related to its office space.

The Company’s investment in leveraged leases relates to equipment used primarily in the transportation industries; however, this type of leasing transaction is not a significant part of the Company’s business activities in terms of revenue, net income, or assets.

Guarantees: In the course of business, the Company enters into guarantees which vary in nature and purpose and which are accounted for and disclosed under statutory accounting principles.

The Company has issued guarantee agreements pursuant to which the Company guarantees the obligations of JHNY and JHLH under the OTC International Swaps and Derivatives Association, Inc. (“ISDA”) cleared and exchange-traded derivative agreements and transactions entered into by JHNY and JHLH with external counterparties. The ISDA guarantees are subject to an overall limit of $1 billion of Potential Future Exposure, using a three-week and 95% confidence parameters, in calculating the counterparty risk exposure.

The Company is party to a financial support agreement with JHLH pursuant to which it has agreed to maintain JHLH’s capital level such that its risk-based capital ratio shall be at or above 225% of the company action level annually. In addition, under the terms of the financial support agreement, the Company undertakes to provide sufficient liquidity to enable JHLH to make timely payment of its contractual obligations.

F-64

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

12. Commitments, Guarantees, Contingencies, and Legal Proceedings - (continued)

Contingencies: The Company is an investor in a number of leasing transactions. On August 5, 2013, the U.S. Tax Court issued an opinion effectively ruling in the government’s favor in the litigation between John Hancock and the IRS involving the tax treatment of John Hancock’s investments in certain leveraged leases. The Company and the IRS are in the process of determining the impact of the decision on years subsequent to the years that were decided by the Court. The Company has made advance payments of tax and interest and is awaiting final IRS assessments. Although the Company is fully reserved for the taxes and interest that could be due, this decision may result in a decrease in the admissible book value of other deferred tax assets included in surplus in subsequent periods, absent consideration of further management actions.

The Company acts as an intermediary/broker in OTC derivative instruments. In these cases, the Company enters into derivative transactions on behalf of affiliated companies and then enters into offsetting derivative transactions with the affiliate. In the event of default of either party, the Company is still obligated to fulfill its obligations with the other party.

The Company is subject to insurance guaranty fund laws in the states in which it does business. Pursuant to these laws, insurance companies are assessed, and required to make periodic payments, to be used to pay benefits to policyholders and claimants of insolvent or rehabilitated insurance companies. Many states allow these assessments to be credited against future premium taxes. The Company believes such assessments in excess of amounts accrued will not materially affect its financial position.

Legal Proceedings: The Company is regularly involved in litigation, both as a defendant and as a plaintiff. The litigation naming the Company as a defendant ordinarily involves its activities as a provider of insurance protection and wealth management products, an employer, and a taxpayer. In addition, the Michigan Department of Insurance and Financial Services, the Michigan Attorney General, the SEC, the Financial Regulatory Authority, and other government and regulatory bodies 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. An estimation of the range of potential outcomes in any given matter is often unavailable until such matters have developed and sufficient information emerges to support an assessment of the range of possible loss, such as quantification of a damage demand from plaintiffs, discovery from other parties and investigation of factual allegations, rulings by the court on motions or appeals, analysis by experts, and the progress of settlement negotiations. On a quarterly and annual basis, the Company reviews relevant information with respect to litigation contingencies and updates its accruals and estimates of reasonably possible losses or ranges of loss based on such reviews.

F-65

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

13. Annuity Actuarial Reserves

The Company’s annuity reserves and deposit fund liabilities and related separate account liabilities that are subject to discretionary withdrawal (with adjustment), subject to discretionary withdrawal (without adjustment), and not subject to discretionary withdrawal provisions are summarized as follows:

	December 31, 2015
	General Account		Separate Account with Guarantees		Separate Account Nonguaranteed		Total		Percent of Total
	(in millions)
Subject to discretionary withdrawal:
With fair value adjustment	$	769	$	503	$	1,793	$	3,065		2	%
At book value less current surrender charge of 5% or more		5		-		-		5		0	%
At fair value		-		-		114,302		114,302		82	%
Total with adjustment or at fair value		774		503		116,095		117,372		84	%
At book value without adjustment (minimal or no charge or adjustment)		7,165		-		-		7,165		5	%
Not subject to discretionary withdrawal		15,068		686		134		15,888		11	%
Total (gross)		23,007		1,189		116,229		140,425		100	%
Reinsurance ceded		4,904		-		-		4,904
Total (net)	$	18,103	$	1,189	$	116,229	$	135,521
	December 31, 2014
	General Account		Separate Account with Guarantees		Separate Account Nonguaranteed		Total		Percent of Total
	(in millions)
Subject to discretionary withdrawal:
With fair value adjustment	$	968	$	559	$	1,879	$	3,406		2	%
At book value less current surrender charge of 5% or more		29		-		-		29		0	%
At fair value		-		-		123,450		123,450		81	%
Total with adjustment or at fair value		997		559		125,329		126,885		83	%
At book value without adjustment (minimal or no charge or adjustment)		8,594		-		-		8,594		6	%
Not subject to discretionary withdrawal		15,577		713		130		16,420		11	%
Total (gross)		25,168		1,272		125,459		151,899		100	%
Reinsurance ceded		5,483		-		-		5,483
Total (net)	$	19,685	$	1,272	$	125,459	$	146,416

F-66

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

14. Separate Accounts

Separate accounts held by the Company include individual and group variable annuity and variable life products that offer guarantee and non-guaranteed returns. The net investment experience of the separate account is credited directly to the policyholder and can be positive or negative.

For guarantees of amounts in the event of death, the net amount at risk is defined as the excess of the initial sum insured over the current sum insured for fixed premium variable life insurance contracts, and, for other variable life insurance contracts, is equal to the sum insured when the account value is zero and the policy is still in force.

The deposits related to variable annuities generally provide a GMDB. For annuity products, this can take the form of either (a) return of no less than total deposits made to the contract less any partial withdrawals; (b) total deposits made to the contract less any partial withdrawals plus a minimum return; (c) the highest contract value on a specified anniversary date minus any withdrawals following the contract anniversary; or (d) a combination benefit of (b) and (c) above. The assets and liabilities of these accounts are carried at fair value. The GMDB reserve is held in the Company’s general account policy reserves.

The Company sold contracts with GMIB riders from 1998 to 2004. The GMIB rider provides a guaranteed lifetime annuity which may be elected by the contract holder after a stipulated waiting period (7 to 15 years), and which may be larger than what the contract account balance could purchase at then-current annuity purchase rates.

The Company sold contracts with a GMWB rider and has since offered multiple variations of this optional benefit. The GMWB rider provides contract holders a guaranteed annual withdrawal amount over a specified time period or in some cases for as long as they live. In general, guaranteed annual withdrawal amounts are based on deposits and may be reduced if withdrawals exceed allowed amounts. Guaranteed amounts may also be increased as a result of “step-up” provisions which increase the benefit base to higher account values at specified intervals. Guaranteed amounts may also be increased if withdrawals are deferred over a specified period. In addition, certain versions of the GMWB rider extend lifetime guarantees to spouses.

Reinsurance has been utilized to mitigate risk related to some of the GMDB and GMIB riders.

For GMDB, the net amount at risk is defined as the current guaranteed minimum death benefit in excess of the current account balance. For GMIB, the net amount at risk is defined as the excess of the current annuitization income base over the current account value. For GMWB, the net amount at risk is defined as the current guaranteed withdrawal amount minus the current account value. For all the guarantees, the net amount at risk is floored at zero at the single contract level.

The deposits related to the variable life insurance contracts are invested in separate accounts and the Company guarantees a specified death benefit if certain specified premiums are paid by the policyholder, regardless of separate account performance.

F-67

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

14. Separate Accounts - (continued)

The assets legally insulated from the general account are attributed to the following products/transactions:

Product/Transaction	Separate Account Legally Insulated Assets				Separate Account Not Legally Insulated Assets
	December 31,
	2015		2014		2015		2014
	(in millions)
Group Annuities (Deposit Administration)	$	75,437	$	78,905	$	-	$	-
Variable Annuities		37,422		43,503		27		29
Life and COLI		12,067		12,359		-		-
Fixed Products — Institutional and stable value fund		2,611		2,713		-		-
Fixed Products — Retail		22		24		472		570
Investments — Funds		1,667		2,061		-		-
Total	$	129,226	$	139,565	$	499	$	599

As of December 31, 2015 and 2014, the general account of the Company had a maximum guarantee for separate account liabilities $10,914 million and $7,816 million, respectively. To compensate the general account for the risk taken, the separate account paid risk charges and amounts toward separate account guarantees are as follows:

	Risk Charges Paid to General Account		Amounts toward Separate Account Guarantees
	(in millions)
2015		$    241		$      59
2014		$    252		$      74
2013		$    263		$    109
2012		$    269		$    165
2011		$    261		$    145

The Company had the following variable annuities with guaranteed benefits:

	December 31,
	2015		2014
	(in millions, except for ages)
Account value	$	37,947	$	44,116
Amount of reserve held		1,179		865
Net amount at risk — gross		7,169		4,699
Weighted average attained age		68		67

The following assumptions and methodology were used to determine the amounts above at December 31, 2015 and 2014:

• Actuarial Guideline 43 (“AG 43”) is used in both years to determine the aggregate reserve for products falling under the scope. Assumptions used in the standard scenario are prescribed by the guideline. Assumptions used in the stochastic scenarios are detailed below.

• The stochastically generated projection scenarios have met the scenario calibration criteria prescribed in AG 43.

• In 2015 and 2014, annuity mortality is based on the Ruark Variable Annuity Table, which is based on an industry study of variable annuity deaths. The table is further adjusted by factors varied by rider types (living benefit/GMDB only) and qualified and non-qualified business.

F-68

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

14. Separate Accounts - (continued)

• In 2015 and 2014, annuity base lapse rates vary by product, policy year, and rider type, where the lapse rates range from 0.5% to 40% for GMDB, GMIB and GMWB. These rates are dynamically reduced for guarantees that are in-the-money. Beginning in 2012, rates are also dynamically increased for GMWBs that are out-of-the-money.

• For variable annuities, the swap curve at December 31 is used for discounting in both years.

• For variable annuities, mean return, volatility and correlation assumptions are determined by indices, which have met the calibration criteria prescribed in AG 43.

Account balances of variable contracts with guarantees were invested in various separate accounts with the following characteristics:

	December 31,
	2015		2014
	(in millions)
Type of Fund
Equity	$	24,131	$	27,353
Balanced		16,993		19,449
Bonds		5,216		5,807
Money Market		668		683
Total	$	47,008	$	53,292

Information regarding the separate accounts of the Company is as follows:

	December 31,
	2015						2014
	Nonindexed Guarantee Less than or Equal to 4%		Nonguaranteed Separate Account		Total		Nonindexed Guarantee Less than or Equal to 4%		Nonguaranteed Separate Account		Total
	(in millions)
Premiums, deposits and other considerations	$	1	$	13,935	$	13,936	$	-	$	13,258	$	13,258
Reserves for accounts with assets at:
Fair value		1,189		127,792		128,981		1,272		137,306		138,578
Amortized cost		-		-		-		-		-		-
Total	$	1,189	$	127,792	$	128,981	$	1,272	$	137,306	$	138,578

F-69

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

14. Separate Accounts - (continued)

	December 31,
	2015						2014
	Nonindexed Guarantee Less than or Equal to 4%		Nonguaranteed Separate Account		Total		Nonindexed Guarantee Less than or Equal to 4%		Nonguaranteed Separate Account		Total
	(in millions)
Reserves for separate accounts by withdrawal characteristics:
Subject to discretionary withdrawal:
With fair value adjustment	$	503	$	1,793	$	2,296	$	531	$	1,879	$	2,410
At book value without fair value adjustments and with current surrender charge of 5% or more		-		1,901		1,901		-		2,483		2,483
At fair value		-		120,337		120,337		28		129,620		129,648
At book value without fair value adjustments and with current surrender charge of less than 5%		-		3,533		3,533		-		3,058		3,058
Subtotal		503		127,564		128,067		559		137,040		137,599
Not subject to discretionary withdrawal		686		228		914		713		266		979
Total	$	1,189	$	127,792	$	128,981	$	1,272	$	137,306	$	138,578

Amounts transferred to and from separate accounts are as follows:

	December 31,
	2015			2014			2013
	(in millions)
Transfers to separate accounts	$	17,071		$	16,100		$	14,916
Transfers from separate accounts		23,625			24,329			21,304
Net transfers to (from) separate accounts	$	(6,554	)	$	(8,229	)	$	(6,388	)

F-70

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

15. Employee Benefit Plans

Retirement Plans: The Company participates in the John Hancock Pension Plan, a qualified defined benefit plan that covers substantially all of its employees. The Company also participates in the John Hancock Non-Qualified Pension Plan, a nonqualified defined benefit plan for employees whose qualified cash balance benefit is restricted by the Internal Revenue Code. Both plans are sponsored by MIC. The non-qualified defined benefit plan was frozen except for grandfathered participants as of January 1, 2008, and the benefits accrued under this plan continue to be subject to the plan’s provisions.

The Company is jointly and severally liable for the funding requirements of the plans and will recognize its allocation, from MIC, of the required contributions to the plans as pension expense in its Statements of Operations. The allocation is derived by utilizing participant data, provided by the plan actuary, to calculate payments into the trust for the qualified plan and payments to participants for the non-qualified plan. The expense for these plans was $35 million, $37 million, and $41 million in 2015, 2014 and 2013, respectively.

The Company participates in the John Hancock Supplemental Retirement Plan, a non-qualified defined contribution plan maintained by MFC, which was established as of January 1, 2008 with participant directed investment options. The expense for this plan was not material for the years ended 2015, 2014 and 2013, respectively. The prior non-qualified defined contribution plan was frozen except for grandfathered participants as of January 1, 2008, and the benefits accrued under the prior plan continue to be subject to the prior plan provisions.

The Company also maintains a separate rabbi trust for the purpose of holding assets to be used to satisfy its obligations with respect to certain other non-qualified retirement plans of $329 million and $332 million at December 31, 2015 and 2014, respectively. In the event of insolvency of the Company, the rabbi trust assets can be used to satisfy claims of general creditors.

401 (k) Plans: The Company participates in qualified defined contribution plans for its employees who meet certain eligibility requirements. These plans include the Investment-Incentive Plan for John Hancock Employees and the John Hancock Savings and Investment Plan. Both plans are sponsored by JHUSA. Expense is primarily comprised of the amounts the Company contributes to the plans, which fully matches eligible participants’ basic pre-tax or Roth contributions, subject to a 4% per participant maximum. The expense for the defined contribution plans was not material for the years ended 2015, 2014 and 2013, respectively.

Deferred Compensation Plan: The Company maintains the Deferred Compensation Plan for Certain Employees of John Hancock, and the Deferred Compensation Plan of the John Hancock Financial Network, both of which are deferred compensation plans sponsored by MFC. These plans are for a select group of management or highly compensated employees and certain qualified agents. The plans are fully funded and accounts are maintained by a third-party administrator. Under these plans, participants have the flexibility and opportunity to invest their plan balances in mutual funds. The liability for these plans at December 31, 2015 and 2014 was $89 million and $91 million, respectively.

Prior to January 1, 2006, the Company offered the Legacy Deferred Compensation Plan for Certain Employees of John Hancock Life Insurance Company (USA), the legacy plan, which is closed to new participation and is unfunded. These are notional accounts and all liabilities have remained with the Company and are paid out of general account assets when a distribution is taken. The liability for this plan was not material as of December 31, 2015 and 2014 respectively.

Postretirement Benefit Plan: The Company participates in the John Hancock Employee Welfare Plan which is sponsored by MIC. Consistent with the pension plan, the Company is jointly and severally liable for the funding requirements of the plan and will recognize its allocation, from MIC, of the benefits earned by plan participants as postretirement benefits expense in its Statements of Operations. The allocation is derived by utilizing participant data, provided by the plan actuary, to calculate the benefits earned; i.e., service cost, relating to participants employed by the Company. In addition, any difference between actual cash paid for benefits to plan participants and benefits earned is recorded directly to unassigned surplus. The expense and charge to surplus for the John Hancock Employee Welfare Plan were not material for the years ended 2015, 2014 and 2013, respectively.

F-71

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

16. Lines of Credit, Consumer Notes and Affiliated Debt

Lines of Credit: At December 31, 2015, the Company, MFC, and other MFC subsidiaries had a committed line of credit through a group of banks totaling $500 million pursuant to a multi-year facility, which will expire in 2020. The banks will commit, when requested, to loan funds at prevailing interest rates as determined in accordance with the line of credit agreement. Under the terms of the agreement, MFC is required to maintain a certain minimum level of net worth, and MFC and the Company are required to comply with certain other covenants, which were met at December 31, 2015. At December 31, 2015, MFC and its subsidiaries, including the Company, had no outstanding borrowings under the agreement.

At December 31, 2015, the Company had a committed line of credit agreement established by MLI totaling $1 billion, which will expire in 2018. MLI will commit, when requested, to loan funds at prevailing interest rates as determined in accordance with the line of credit agreement. Under the terms of the agreement, the Company is required to maintain a certain minimum level of net worth and comply with certain other covenants as long as any amount is owed to the lender under the agreement. At December 31, 2015, the Company had no outstanding borrowings under the agreement.

At December 31, 2015, JHUSA and MIC share in a committed line of credit established by MFC totaling $1 billion, which will expire in 2018. MFC will commit, when requested, to loan funds at prevailing interest rates as determined in accordance with the line of credit agreement. Under the terms of the agreement, the Company is required to maintain a certain minimum level of net worth and comply with certain other covenants, as long as any amount is owed to the lender under the agreement. At December 31, 2015, the Company had no outstanding borrowings under the agreement.

Consumer Notes: The Company issued consumer notes through its SignatureNotes Program. SignatureNotes may be redeemed upon the death of the holder, subject to an annual overall program redemption limitation of 1% of the aggregate securities outstanding, or $1 million, or an individual redemption limitation of $200,000 of aggregate principal. SignatureNotes have a variety of issue dates, maturities, interest rates and call provisions. The notes payable balance as of December 31, 2015 and 2014 was $265 million and $411 million, respectively. Interest ranging from 3.1% to 6.0%. The notes are due in varying amounts to 2032.

Aggregate maturities of consumer notes are as follows: 2016-$64 million; 2017-$4 million; 2018-$43 million; 2019-$16 million; 2020-$0 million; and thereafter $138 million.

Interest expense on consumer notes, included in benefits to policyholders, was $18 million, $24 million, and $ 30 million in 2015, 2014 and 2013, respectively. Interest paid amounted to $18 million, $24 million, and $ 30 million in 2015, 2014 and 2013, respectively.

Affiliated Debt: Pursuant to a demand note receivable dated September 30, 2008, the Company has $295 million outstanding with MIC. The note, which was to have matured on March 31, 2013, was extended to March 31, 2018. This note was reported as a nonadmitted asset at December 31, 2015 and 2014 since the counterparty is the parent entity of the Company; however, this note will continue to accrue interest throughout the duration of the contract as per the terms of the note. Prior to March 31, 2013, the interest rate was calculated at a fluctuating rate equal to 3-month LIBOR plus 83 basis points per annum. Following the extension, the interest rate is calculated at a fluctuating rate equal to 3-month LIBOR plus 180 basis points per annum. Interest income was $6 million, $6 million, and $6 million for the years ended December 31, 2015, 2014 and 2013, respectively.

Pursuant to a promissory note dated June 28, 2012, the Company borrowed $153 million from Manulife Finance Switzerland AG (“MFSA”). Interest on the loan is calculated at a fluctuating rate equal to 3-month LIBOR plus 90 basis points per annum and is payable quarterly. In addition, the Company renewed two previously outstanding promissory notes to MFSA with an outstanding balance of $7 million and combined these notes with the new note issued on June 28, 2012, thus bringing the total principal balance due to $160 million. On June 3, 2015, the maturity date was extended for a period of one year to June 28, 2016. Following the extension, the interest rate was amended and is calculated at a fluctuating rate equal to 3-month LIBOR plus 88 basis points per annum and is payable quarterly effective from June 28, 2015. Interest expense was $2 million, $2 million, and $2 million for the years ended December 31, 2015, 2014 and 2013, respectively.

Pursuant to a demand note dated December 20, 2012, the Company borrowed $130 million from MIC. The note was paid on December 21, 2015. Interest on the loan was calculated at a fluctuating rate equal to the one-month LIBOR rate and was

F-72

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

16. Lines of Credit, Consumer Notes and Affiliated Debt - (continued)

payable monthly. Interest expense was $0 million, $0 million, and $0 million for the years ended December 31, 2015, 2014 and 2013, respectively.

Pursuant to a senior note receivable dated December 9, 2014, the Company has $40 million outstanding with JHS with a fair value of $ 40 million as of December 31, 2015. The note matures on December 9, 2019. Interest on the loan is calculated at a fluctuating rate equal to the 3-month LIBOR rate plus 180 basis points per annum and is payable quarterly. Interest income was $1 million for the year ended December 31, 2015.

FHLB (Federal Home Loan Bank) Agreements: The Company is a member of the Federal Home Loan Bank of Indianapolis (FHLBI). The Company uses advances from the FHLBI as a part of its liquidity management program, and any funds obtained for this purpose would be accounted for as borrowed money.

The following table indicates the aggregate amount of the FHLBI capital stock held related to the agreement:

	December 31, 2015
	(1) (Col 2 +3) Total		(2) General Account		(3) Separate Account
	(in millions)
(a) Membership stock — Class A	$	-	$	-	$	-
(b) Membership stock — Class B		18		18		-
(c) Activity stock		-		-		-
(d) Excess stock		-		-		-
(e) Aggregate total	$	18	$	18	$	-
(f) Actual or estimated borrowing capacity as determined by the insurer	$	400
	December 31, 2014
	(1) (Col 2 +3) Total		(2) General Account		(3) Separate Account
	(in millions)
(a) Membership stock — Class A	$	-	$	-	$	-
(b) Membership stock — Class B		20		20		-
(c) Activity stock		-		-		-
(d) Excess stock		-		-		-
(e) Aggregate total	$	20	$	20	$	-
(f) Actual or estimated borrowing capacity as determined by the insurer	$	446

FHLBI membership stock of $18 million and $20 million was classified as not eligible for redemption for the years ended December 31, 2015 and 2014, respectively.

F-73

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

16. Lines of Credit, Consumer Notes and Affiliated Debt - (continued)

The following table indicates the collateral pledged to the FHLBI at the end of the year:

	December 31, 2015
	Fair Value		Carrying Value		Aggregate Total Borrowing
	(in millions)
(a) General account	$	-	$	-	$	-
(b) Separate account		-		-		-
(c) Total collateral pledged	$	-	$	-	$	-
	December 31, 2014
	Fair Value		Carrying Value		Aggregate Total Borrowing
	(in millions)
(a) General account	$	-	$	-	$	-
(b) Separate account		-		-		-
(c) Total collateral pledged	$	-	$	-	$	-

The following table indicates the maximum collateral pledged to the FHLBI during the year:

	December 31, 2015
	Fair Value		Carrying Value		Amount Borrowed at Time of Maximum Collateral
	(in millions)
(a) General account	$	794	$	738	$	400
(b) Separate account		-		-		-
(c) Total maximum collateral pledged	$	794	$	738	$	400
	December 31, 2014
	Fair Value		Carrying Value		Amount Borrowed at Time of Maximum Collateral
	(in millions)
(a) General account	$	13	$	12	$	10
(b) Separate account		-		-		-
(c) Total maximum collateral pledged	$	13	$	12	$	10

F-74

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

16. Lines of Credit, Consumer Notes and Affiliated Debt - (continued)

The following table represents the aggregate amount of borrowing from FHLBI:

	December 31, 2015
	(1) (Col 2 +3) Total		(2) General Account		(3) Separate Account		(4) Funding Agreements Reserves Established
	(in millions)
(a) Debt	$	-	$	-	$	-		-
(b) Funding agreements		-		-		-
(c) Other		-		-		-		-
(d) Aggregate total	$	-	$	-	$	-	$	-
	December 31, 2014
	(1) (Col 2 +3) Total		(2) General Account		(3) Separate Account		(4) Funding Agreements Reserves Established
	(in millions)
(a) Debt	$	-	$	-	$	-		-
(b) Funding agreements		-		-		-
(c) Other		-		-		-		-
(d) Aggregate total	$	-	$	-	$	-	$	-

The maximum amount of aggregate borrowings from FHLBI during 2015 was $400 million. The Company is not subject to any prepayment obligations under current borrowing agreements.

17. Closed Blocks

The Company operates two separate closed blocks for the benefit of certain classes of individual or joint traditional participating whole life insurance policies. The JHUSA closed block was established upon the demutualization of MLI for those designated participating policies that were in-force on September 23, 1999. The JHLICO closed block was established upon the demutualization of JHLICO for those designated participating policies that were in-force on February 1, 2000. As a result of the merger in 2009, the property and obligations of the JHLICO closed block became the property and obligations of JHUSA, but the Company operates these two closed blocks separately.

Assets were allocated to the closed blocks in an amount that, together with anticipated revenues from policies included in the closed blocks, was reasonably expected to be sufficient to support such business, including provision for payment of benefits, direct asset acquisition and disposition costs, taxes, and for continuation of dividend scales, assuming experience underlying such dividend scales continues.

Assets allocated to the closed blocks inure solely to the benefit of policyholders included in the closed blocks and will not revert to the benefit of the shareholders of the Company. In addition, if the assets allocated to the closed blocks and the revenues from the closed blocks’ business prove to be insufficient to pay the benefits guaranteed in the closed blocks, the Company will be required to make payments from its general funds in an amount equal to the shortfall.

If, over time, the aggregate performance of the assets and policies of a closed block is better than was assumed in funding that closed block, dividends to policyholders for that closed block will be increased. If, over time, the aggregate performance of the assets and policies of a closed block is less favorable than was assumed in funding that closed block, dividends to policyholders for that closed block will be reduced.

F-75

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

17. Closed Blocks - (continued)

No reallocation, transfer, borrowing, or lending of assets can be made between the closed blocks and other portions of the Company’s general account, any of its separate accounts, or any affiliate of the Company without prior notification to or approval of the Insurance Department.

The excess of the closed blocks’ liabilities over the closed blocks’ assets represents the expected future post-tax contribution from that closed block which may be recognized in income over the period the policies and contracts in that closed block remain in force.

As previously discussed in the Reinsurance Note, effective July 1, 2015, the Company entered into a coinsurance reinsurance agreement with NYL to cede 100% QS of the Company’s in-force participating life insurance JHLICO closed block policies.

The following table sets forth certain summarized financial information relating to the JHUSA and JHLICO closed block.

	JHUSA				JHLICO
	2015		2014		2014
	(in millions)
Assets:
Bonds	$	2,802	$	3,153	$	6,248
Stocks:
Preferred stocks		-		-		4
Common stocks		-		1		11
Mortgage loans on real estate		350		402		1,633
Real estate		1,012		842		12
Cash, cash equivalents and short-term investments		6		3		4
Policy loans		1,563		1,551		1,354
Other invested assets		18		113		127
Total cash and invested assets		5,751		6,065		9,393
Investment income due and accrued		101		105		126
Premiums due and deferred		10		12		68
Net deferred tax asset		112		112		157
Other closed block assets		77		63		91
Total closed block assets	$	6,051	$	6,357	$	9,835
Obligations:
Policy reserves		5,756		5,871		9,710
Policyholders’ and beneficiaries’ funds		64		67		1,360
Dividends payable to policyholders		329		314		208
Policy benefits in process of payment		115		52		155
Other policy obligations		2		2		6
Other closed block obligations		474		720		198
Total closed block obligations	$	6,740	$	7,026	$	11,637

18. Subsequent Events

The Company evaluated the recognition and disclosure of subsequent events for its December 31, 2015 financial statements through April 5, 2016, the date the financial statements were issued.

F-76

AUDITED FINANCIAL STATEMENTS

John Hancock Life Insurance Company (U.S.A.) Separate Account Q

December 31, 2015

John Hancock Life Insurance Company (U.S.A.) Separate Account Q

Audited Financial Statements

December  31, 2015

Contents

Report of Independent Registered Public Accounting Firm	3
Statements of Assets and Liabilities	4
Statements of Operations and Changes in Contract Owners’ Equity	9
Notes to Financial Statements	20

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors of John Hancock Life Insurance Company (U.S.A.) and Contract Owners of John Hancock Life Insurance Company (U.S.A.) Separate Account Q

We have audited the accompanying statements of assets and liabilities of John Hancock Life Insurance Company (U.S.A.) Separate Account Q (the Account) comprised of the following sub-accounts,

500 Index Fund B Series NAV
Active Bond Trust Series NAV	M Large Cap Growth
Blue Chip Growth Trust Series NAV	M Large Cap Value
Capital Appreciation Trust Series NAV	Mid Cap Index Trust Series NAV
Core Bond Trust Series NAV	Mid Cap Stock Trust Series NAV
Equity Income Trust Series NAV	Mid Value Trust Series NAV
Financial Industries Trust Series NAV	Money Market Trust B Series NAV
Fundamental All Cap Core Trust Series NAV	Real Estate Securities Trust Series NAV
Global Bond Trust Series NAV	Short Term Government Income Trust Series NAV
Health Sciences Trust Series NAV	Small Cap Growth Trust Series NAV
High Yield Trust Series NAV	Small Cap Index Trust Series NAV
International Equity Index Trust B Series NAV	Small Cap Value Trust Series NAV
International Value Trust Series NAV	Total Bond Market Trust B Series NAV
Lifestyle Balanced MVP Series NAV	Total Stock Market Index Trust Series NAV
M Capital Appreciation	Ultra Short Term Bond Trust Series NAV
M International Equity

as of December 31, 2015, and the related statements of operations and changes in contract owners’ for the above mentioned sub-accounts and for the Total Return Trust Series NAV sub-account (the “closed sub-account”) for each of the periods indicated therein. These financial statements are the responsibility of the Account’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Account’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Account’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2015, by correspondence with the fund companies, or their transfer agents, as applicable. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of each of the above mentioned sub-accounts constituting John Hancock Life Insurance Company (U.S.A.) Separate Account Q at December 31, 2015, the results of their and the closed sub-accounts’ operations, and changes in contract owners’ equity for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

/s/ ERNST & YOUNG LLP

Boston, Massachusetts

April 05, 2016

3

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT Q

STATEMENTS OF ASSETS AND LIABILITIES

December 31, 2015

	500 Index Fund B Series NAV		Active Bond Trust Series NAV		Blue Chip Growth Trust Series NAV		Capital Appreciation Trust Series NAV		Core Bond Trust Series NAV (a)		Equity-Income Trust Series NAV
Total Assets
Investments at fair value	$	50,308,101	$	33,641,260	$	27,579,694	$	9,160,193	$	7,229,861	$	29,079,825
Net Assets
Contracts in accumulation	$	50,249,464	$	33,629,084	$	27,566,620	$	9,142,608	$	7,223,769	$	29,022,869
Contracts in payout (annuitization)		58,637		12,176		13,074		17,585		6,092		56,956
Total net assets	$	50,308,101	$	33,641,260	$	27,579,694	$	9,160,193	$	7,229,861	$	29,079,825
Units outstanding		1,555,801		1,849,827		1,557,356		1,127,656		474,251		1,349,816
Unit value	$	32.34	$	18.19	$	17.71	$	8.12	$	15.24	$	21.54
Shares		1,991,611		3,578,857		849,914		648,280		557,860		1,847,511
Cost	$	34,709,564	$	33,888,627	$	19,194,118	$	7,078,609	$	7,481,207	$	27,137,826

(a) Sub-account available in prior year but no activity.

See accompanying notes.

4

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT Q

STATEMENTS OF ASSETS AND LIABILITIES

December 31, 2015

	Financial Industries Trust Series NAV		Fundamental All Cap Core Trust Series NAV		Global Bond Trust Series NAV		Health Sciences Trust Series NAV		High Yield Trust Series NAV		International Equity Index Trust B Series NAV
Total Assets
Investments at fair value	$	6,422,173	$	46,197,807	$	6,446,575	$	13,148,797	$	6,203,592	$	9,896,007
Net Assets
Contracts in accumulation	$	6,405,855	$	46,050,957	$	6,431,616	$	12,989,224	$	6,106,416	$	9,888,551
Contracts in payout (annuitization)		16,318		146,850		14,959		159,573		97,176		7,456
Total net assets	$	6,422,173	$	46,197,807	$	6,446,575	$	13,148,797	$	6,203,592	$	9,896,007
Units outstanding		299,343		3,330,722		364,711		254,128		385,013		620,513
Unit value	$	21.45	$	13.87	$	17.68	$	51.74	$	16.11	$	15.95
Shares		575,980		2,062,402		548,645		408,348		1,306,019		680,606
Cost	$	6,923,915	$	29,703,653	$	7,154,829	$	11,355,348	$	7,549,950	$	9,410,329

See accompanying notes.

5

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT Q

STATEMENTS OF ASSETS AND LIABILITIES

December 31, 2015

	International Value Trust Series NAV		Lifestyle Balanced MVP Series NAV		M Capital Appreciation (b)		M International Equity (b)		M Large Cap Growth (b)		M Large Cap Value (b)
Total Assets
Investments at fair value	$	8,885,189	$	61,706,919	$	116,153	$	55,122	$	124,048	$	28,921
Net Assets
Contracts in accumulation	$	8,885,189	$	61,599,727	$	116,153	$	55,122	$	124,048	$	28,921
Contracts in payout (annuitization)		—		107,192		—		—		—		—
Total net assets	$	8,885,189	$	61,706,919	$	116,153	$	55,122	$	124,048	$	28,921
Units outstanding		721,219		4,189,144		4,546		3,435		8,330		1,448
Unit value	$	12.32	$	14.73	$	25.55	$	16.05	$	14.89	$	19.97
Shares		789,795		5,033,191		4,618		4,895		5,727		2,416
Cost	$	9,192,032	$	53,785,040	$	100,437	$	54,750	$	94,322	$	29,778

(b) Sub-account that invests in non-affiliated Trust.

See accompanying notes.

6

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT Q

STATEMENTS OF ASSETS AND LIABILITIES

December 31, 2015

	Mid Cap Index Trust Series NAV		Mid Cap Stock Trust Series NAV		Mid Value Trust Series NAV		Money Market Trust B Series NAV		Real Estate Securities Trust Series NAV		Short Term Government Income Trust Series NAV
Total Assets
Investments at fair value	$	2,670,024	$	10,942,053	$	10,048,725	$	24,340,634	$	12,813,758	$	10,223,100
Net Assets
Contracts in accumulation	$	2,670,024	$	10,933,059	$	10,038,373	$	24,332,119	$	12,805,951	$	10,221,382
Contracts in payout (annuitization)		—		8,994		10,352		8,515		7,807		1,718
Total net assets	$	2,670,024	$	10,942,053	$	10,048,725	$	24,340,634	$	12,813,758	$	10,223,100
Units outstanding		113,542		210,421		286,239		2,380,718		312,907		727,561
Unit value	$	23.52	$	52.00	$	35.11	$	10.22	$	40.95	$	14.05
Shares		135,879		714,233		941,774		24,340,634		713,064		834,539
Cost	$	2,465,042	$	10,902,632	$	10,269,170	$	24,340,634	$	8,407,227	$	10,738,215

See accompanying notes.

7

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT Q

STATEMENTS OF ASSETS AND LIABILITIES

December 31, 2015

	Small Cap Growth Trust Series NAV		Small Cap Index Trust Series NAV		Small Cap Value Trust Series NAV		Total Bond Market Trust B Series NAV		Total Stock Market Index Trust Series NAV		Ultra Short Term Bond Trust Series NAV (a)
Total Assets
Investments at fair value	$	10,240,476	$	3,515,631	$	21,440,592	$	16,049,288	$	18,070,740	$	41,022
Net Assets
Contracts in accumulation	$	10,238,627	$	3,515,631	$	21,214,472	$	16,043,544	$	18,066,032	$	41,022
Contracts in payout (annuitization)		1,849		—		226,120		5,744		4,708		—
Total net assets	$	10,240,476	$	3,515,631	$	21,440,592	$	16,049,288	$	18,070,740	$	41,022
Units outstanding		540,511		169,451		410,641		923,869		803,403		3,948
Unit value	$	18.95	$	20.75	$	52.21	$	17.37	$	22.49	$	10.39
Shares		1,178,421		264,532		1,058,795		1,589,038		1,026,164		3,524
Cost	$	11,557,738	$	3,249,145	$	19,644,937	$	16,378,454	$	12,907,291	$	41,495

(a) Sub-account available in prior year but no activity.

See accompanying notes.

8

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT Q

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

	500 Index Fund B Series NAV						Active Bond Trust Series NAV						Blue Chip Growth Trust Series NAV
	2015			2014			2015			2014			2015			2014
Income:
Dividend distributions received	$	899,469		$	909,608		$	1,793,029		$	1,493,756		$	—		$	—
Expenses:
Mortality and expense risk and administrative charges		(695,453	)		(726,905	)		(469,394	)		(530,979	)		(366,131	)		(378,134	)
Net investment income (loss)		204,016			182,703			1,323,635			962,777			(366,131	)		(378,134	)
Realized gains (losses) on investments:
Capital gain distributions received		522,576			837,060			—			—			5,039,085			1,167,047
Net realized gain (loss)		3,539,856			3,362,773			516,854			433,100			2,329,528			3,195,077
Realized gains (losses)		4,062,432			4,199,833			516,854			433,100			7,368,613			4,362,124
Unrealized appreciation (depreciation) during the period		(4,287,090	)		2,145,536			(2,214,288	)		924,436			(4,336,834	)		(1,862,382	)
Net increase (decrease) in contract owners’ equity from operations		(20,642	)		6,528,072			(373,799	)		2,320,313			2,665,648			2,121,608
Changes from principal transactions:
Purchase payments		149,285			327,615			84,742			196,233			65,608			148,779
Transfers between sub-accounts and the company		(429,329	)		3,934,813			107,166			(258,372	)		425,891			54,283
Withdrawals		(7,122,015	)		(7,834,711	)		(5,352,237	)		(6,302,768	)		(4,154,906	)		(5,224,968	)
Annual contract fee		(83,931	)		(88,799	)		(47,252	)		(52,045	)		(44,086	)		(44,955	)
Net increase (decrease) in contract owners’ equity from principal transactions		(7,485,990	)		(3,661,082	)		(5,207,581	)		(6,416,952	)		(3,707,493	)		(5,066,861	)
Total increase (decrease) in contract owners’ equity		(7,506,632	)		2,866,990			(5,581,380	)		(4,096,639	)		(1,041,845	)		(2,945,253	)
Contract owners’ equity at beginning of period		57,814,733			54,947,743			39,222,640			43,319,279			28,621,539			31,566,792
Contract owners’ equity at end of period	$	50,308,101		$	57,814,733		$	33,641,260		$	39,222,640		$	27,579,694		$	28,621,539
	2015			2014			2015			2014			2015			2014
Units, beginning of period		1,785,157			1,906,680			2,132,127			2,487,566			1,774,417			2,113,850
Units issued		32,777			161,893			36,661			63,053			48,241			56,453
Units redeemed		(262,133	)		(283,416	)		(318,961	)		(418,492	)		(265,302	)		(395,886	)
Units, end of period		1,555,801			1,785,157			1,849,827			2,132,127			1,557,356			1,774,417

See accompanying notes.

9

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT Q

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

	Capital Appreciation Trust Series NAV						Core Bond Trust Series NAV					Equity-Income Trust Series NAV
	2015			2014			2015 (a)			2014		2015			2014
Income:
Dividend distributions received	$	2,275		$	7,667		$	130,096		$	—	$	621,691		$	689,015
Expenses:
Mortality and expense risk and administrative charges		(118,877	)		(119,205	)		(69,887	)		—		(419,128	)		(486,571	)
Net investment income (loss)		(116,602	)		(111,538	)		60,209			—		202,563			202,444
Realized gains (losses) on investments:
Capital gain distributions received		1,594,880			995,075			17,193			—		2,850,439			3,191,075
Net realized gain (loss)		484,976			814,162			(25,449	)		—		693,192			857,064
Realized gains (losses)		2,079,856			1,809,237			(8,256	)		—		3,543,631			4,048,139
Unrealized appreciation (depreciation) during the period		(1,078,108	)		(958,883	)		(251,348	)		—		(6,344,789	)		(2,005,239	)
Net increase (decrease) in contract owners’ equity from operations		885,146			738,816			(199,395	)		—		(2,598,595	)		2,245,344
Changes from principal transactions:
Purchase payments		26,467			31,793			58,622			—		125,022			423,653
Transfers between sub-accounts and the company		206,562			(222,213	)		8,117,265			—		(331,342	)		47,347
Withdrawals		(1,008,562	)		(1,361,228	)		(736,108	)		—		(4,404,676	)		(5,989,425	)
Annual contract fee		(13,463	)		(13,332	)		(10,523	)		—		(57,082	)		(65,341	)
Net increase (decrease) in contract owners’ equity from principal transactions		(788,996	)		(1,564,980	)		7,429,256			—		(4,668,078	)		(5,583,766	)
Total increase (decrease) in contract owners’ equity		96,150			(826,164	)		7,229,861			—		(7,266,673	)		(3,338,422	)
Contract owners’ equity at beginning of period		9,064,043			9,890,207			—			—		36,346,498			39,684,920
Contract owners’ equity at end of period	$	9,160,193		$	9,064,043		$	7,229,861		$	—	$	29,079,825		$	36,346,498
	2015			2014			2015			2014		2015			2014
Units, beginning of period		1,224,134			1,456,448			—			—		1,554,597			1,802,282
Units issued		59,800			25,588			556,526			—		22,727			33,741
Units redeemed		(156,278	)		(257,902	)		(82,275	)		—		(227,508	)		(281,426	)
Units, end of period		1,127,656			1,224,134			474,251			—		1,349,816			1,554,597

(a) Sub-account available in prior year but no activity.

See accompanying notes.

10

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT Q

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

	Financial Industries Trust Series NAV						Fundamental All Cap Core Trust Series NAV						Global Bond Trust Series NAV
	2015			2014			2015			2014			2015			2014
Income:
Dividend distributions received	$	71,872		$	57,044		$	—		$	233,103		$	189,704		$	85,495
Expenses:
Mortality and expense risk and administrative charges		(88,887	)		(95,557	)		(631,198	)		(671,517	)		(96,743	)		(117,603	)
Net investment income (loss)		(17,015	)		(38,513	)		(631,198	)		(438,414	)		92,961			(32,108	)
Realized gains (losses) on investments:
Capital gain distributions received		2,105,651			—			2,259,146			—			—			—
Net realized gain (loss)		298,575			496,271			3,212,072			3,278,549			(111,405	)		72,534
Realized gains (losses)		2,404,226			496,271			5,471,218			3,278,549			(111,405	)		72,534
Unrealized appreciation (depreciation) during the period		(2,642,586	)		63,092			(3,318,366	)		1,398,427			(348,025	)		75,265
Net increase (decrease) in contract owners’ equity from operations		(255,375	)		520,850			1,521,654			4,238,562			(366,469	)		115,691
Changes from principal transactions:
Purchase payments		6,202			34,692			99,911			642,573			20,938			24,018
Transfers between sub-accounts and the company		(99,853	)		(142,724	)		(777,995	)		(1,077,088	)		(94,888	)		(109,442	)
Withdrawals		(722,986	)		(872,035	)		(6,777,900	)		(8,155,057	)		(1,398,408	)		(1,035,163	)
Annual contract fee		(10,568	)		(11,756	)		(58,108	)		(60,426	)		(12,422	)		(14,906	)
Net increase (decrease) in contract owners’ equity from principal transactions		(827,205	)		(991,823	)		(7,514,092	)		(8,649,998	)		(1,484,780	)		(1,135,493	)
Total increase (decrease) in contract owners’ equity		(1,082,580	)		(470,973	)		(5,992,438	)		(4,411,436	)		(1,851,249	)		(1,019,802	)
Contract owners’ equity at beginning of period		7,504,753			7,975,726			52,190,245			56,601,681			8,297,824			9,317,647
Contract owners’ equity at end of period	$	6,422,173		$	7,504,753		$	46,197,807		$	52,190,245		$	6,446,575		$	8,297,845
	2015			2014			2015			2014			2015			2014
Units, beginning of period		337,577			384,837			3,868,091			4,547,713			447,561			508,084
Units issued		6,863			7,718			25,578			78,013			22,515			16,360
Units redeemed		(45,097	)		(54,978	)		(562,947	)		(757,635	)		(105,365	)		(76,883	)
Units, end of period		299,343			337,577			3,330,722			3,868,091			364,711			447,561

See accompanying notes.

11

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT Q

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

	Health Sciences Trust Series NAV						High Yield Trust Series NAV						International Equity Index Trust B Series NAV
	2015			2014			2015			2014			2015			2014
Income:
Dividend distributions received	$	—		$	—		$	539,809		$	598,009		$	268,052		$	409,588
Expenses:
Mortality and expense risk and administrative charges		(182,633	)		(155,620	)		(100,212	)		(121,237	)		(148,316	)		(179,513	)
Net investment income (loss)		(182,633	)		(155,620	)		439,597			476,772			119,736			230,075
Realized gains (losses) on investments:
Capital gain distributions received		2,150,702			1,561,642			—			—			—			—
Net realized gain (loss)		1,369,442			1,224,304			(131,963	)		(34,341	)		(172,966	)		(64,591	)
Realized gains (losses)		3,520,144			2,785,946			(131,963	)		(34,341	)		(172,966	)		(64,591	)
Unrealized appreciation (depreciation) during the period		(1,844,470	)		576,727			(996,694	)		(516,639	)		(676,984	)		(916,707	)
Net increase (decrease) in contract owners’ equity from operations		1,493,041			3,207,053			(689,060	)		(74,208	)		(730,214	)		(751,223	)
Changes from principal transactions:
Purchase payments		21,768			58,938			15,345			30,703			38,021			68,067
Transfers between sub-accounts and the company		873,621			319,373			(10,918	)		(31,213	)		(105,171	)		(43,729	)
Withdrawals		(2,503,152	)		(1,660,029	)		(1,386,447	)		(1,397,351	)		(1,423,746	)		(2,143,609	)
Annual contract fee		(16,258	)		(14,700	)		(12,880	)		(14,838	)		(22,707	)		(26,927	)
Net increase (decrease) in contract owners’ equity from principal transactions		(1,624,021	)		(1,296,418	)		(1,394,900	)		(1,412,699	)		(1,513,603	)		(2,146,198	)
Total increase (decrease) in contract owners’ equity		(130,980	)		1,910,635			(2,083,960	)		(1,486,907	)		(2,243,817	)		(2,897,421	)
Contract owners’ equity at beginning of period		13,279,777			11,369,142			8,287,552			9,774,459			12,139,824			15,037,245
Contract owners’ equity at end of period	$	13,148,797		$	13,279,777		$	6,203,592		$	8,287,552		$	9,896,007		$	12,139,824
	2015			2014			2015			2014			2015			2014
Units, beginning of period		285,685			317,141			465,118			541,348			705,552			819,523
Units issued		24,300			27,370			29,712			13,676			17,087			20,064
Units redeemed		(55,857	)		(58,826	)		(109,817	)		(89,906	)		(102,126	)		(134,035	)
Units, end of period		254,128			285,685			385,013			465,118			620,513			705,552

See accompanying notes.

12

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT Q

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

	International Value Trust Series NAV						Lifestyle Balanced MVP Series NAV						M Capital Appreciation (b)
	2015			2014			2015			2014			2015			2014
Income:
Dividend distributions received	$	193,968		$	354,366		$	1,593,573		$	2,146,795		$	—		$	—
Expenses:
Mortality and expense risk and administrative charges		(131,560	)		(169,043	)		(873,600	)		(1,008,512	)		(1,572	)		(2,202	)
Net investment income (loss)		62,408			185,323			719,973			1,138,283			(1,572	)		(2,202	)
Realized gains (losses) on investments:
Capital gain distributions received		—			—			4,821,272			—			13,341			12,158
Net realized gain (loss)		187,138			623,363			3,688,272			7,635,611			519			39,554
Realized gains (losses)		187,138			623,363			8,509,544			7,635,611			13,860			51,712
Unrealized appreciation (depreciation) during the period		(1,096,198	)		(2,484,074	)		(11,423,757	)		(6,377,129	)		(21,945	)		(35,758	)
Net increase (decrease) in contract owners’ equity from operations		(846,652	)		(1,675,388	)		(2,194,240	)		2,396,765			(9,657	)		13,752
Changes from principal transactions:
Purchase payments		20,934			149,525			175,812			183,816			—			—
Transfers between sub-accounts and the company		152,076			97,441			34,260			(7,545,367	)		386			(5,317	)
Withdrawals		(1,009,276	)		(2,432,296	)		(9,848,947	)		(12,048,863	)		(546	)		(116,165	)
Annual contract fee		(18,156	)		(22,482	)		(89,122	)		(101,028	)		(57	)		(61	)
Net increase (decrease) in contract owners’ equity from principal transactions		(854,422	)		(2,207,812	)		(9,727,997	)		(19,511,442	)		(217	)		(121,543	)
Total increase (decrease) in contract owners’ equity		(1,701,074	)		(3,883,200	)		(11,922,237	)		(17,114,677	)		(9,874	)		(107,791	)
Contract owners’ equity at beginning of period		10,586,263			14,469,463			73,629,156			90,743,833			126,027			233,818
Contract owners’ equity at end of period	$	8,885,189		$	10,586,263		$	61,706,919		$	73,629,156		$	116,153		$	126,027
	2015			2014			2015			2014			2015			2014
Units, beginning of period		781,976			921,716			4,823,569			6,117,101			4,550			8,134
Units issued		42,622			31,693			39,675			79,832			42			15
Units redeemed		(103,379	)		(171,433	)		(674,100	)		(1,373,364	)		(46	)		(3,599	)
Units, end of period		721,219			781,976			4,189,144			4,823,569			4,546			4,550

(b) Sub-account that invests in non-affiliated Trust.

See accompanying notes.

13

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT Q

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

	M International Equity (b)						M Large Cap Growth (b)						M Large Cap Value (b)
	2015			2014			2015			2014			2015			2014
Income:
Dividend distributions received	$	977		$	1,638		$	34		$	48		$	401		$	345
Expenses:
Mortality and expense risk and administrative charges		(772	)		(1,846	)		(1,565	)		(2,444	)		(377	)		(1,064	)
Net investment income (loss)		205			(208	)		(1,531	)		(2,396	)		24			(719	)
Realized gains (losses) on investments:
Capital gain distributions received		—			—			20,927			16,807			2,573			3,253
Net realized gain (loss)		344			18,157			3,437			60,815			121			23,985
Realized gains (losses)		344			18,157			24,364			77,622			2,694			27,238
Unrealized appreciation (depreciation) during the period		(2,909	)		(18,928	)		(15,162	)		(67,502	)		(3,249	)		(21,183	)
Net increase (decrease) in contract owners’ equity from operations		(2,360	)		(979	)		7,671			7,724			(531	)		5,336
Changes from principal transactions:
Purchase payments		—			—			—			—			—			—
Transfers between sub-accounts and the company		—			2,250			(99	)		2,792			(37	)		675
Withdrawals		(8,461	)		(164,167	)		(5,238	)		(166,204	)		(1,031	)		(123,901	)
Annual contract fee		(118	)		(237	)		(71	)		(194	)		(43	)		(44	)
Net increase (decrease) in contract owners’ equity from principal transactions		(8,579	)		(162,154	)		(5,408	)		(163,606	)		(1,111	)		(123,270	)
Total increase (decrease) in contract owners’ equity		(10,939	)		(163,133	)		2,263			(155,882	)		(1,642	)		(117,934	)
Contract owners’ equity at beginning of period		66,061			229,194			121,785			277,667			30,563			148,497
Contract owners’ equity at end of period	$	55,122		$	66,061		$	124,048		$	121,785		$	28,921		$	30,563
	2015			2014			2015			2014			2015			2014
Units, beginning of period		3,906			11,206			8,699			17,105			1,501			6,805
Units issued		—			136			9			124			4			35
Units redeemed		(471	)		(7,436	)		(378	)		(8,530	)		(57	)		(5,339	)
Units, end of period		3,435			3,906			8,330			8,699			1,448			1,501

(b) Sub-account that invests in non-affiliated Trust.

See accompanying notes.

14

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT Q

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

	Mid Cap Index Trust Series NAV						Mid Cap Stock Trust Series NAV						Mid Value Trust Series NAV
	2015			2014			2015			2014			2015			2014
Income:
Dividend distributions received	$	31,698		$	33,425		$	—		$	17,504		$	130,129		$	97,474
Expenses:
Mortality and expense risk and administrative charges		(39,732	)		(44,819	)		(153,244	)		(161,109	)		(152,647	)		(170,216	)
Net investment income (loss)		(8,034	)		(11,394	)		(153,244	)		(143,605	)		(22,518	)		(72,742	)
Realized gains (losses) on investments:
Capital gain distributions received		240,577			197,507			2,334,610			2,254,233			2,046,000			1,187,021
Net realized gain (loss)		127,520			214,225			375,904			677,880			449,708			783,136
Realized gains (losses)		368,097			411,732			2,710,514			2,932,113			2,495,708			1,970,157
Unrealized appreciation (depreciation) during the period		(465,782	)		(142,190	)		(2,324,257	)		(1,985,193	)		(2,982,100	)		(780,833	)
Net increase (decrease) in contract owners’ equity from operations		(105,719	)		258,148			233,013			803,315			(508,910	)		1,116,582
Changes from principal transactions:
Purchase payments		5,350			29,100			35,350			157,503			38,807			18,632
Transfers between sub-accounts and the company		(15,147	)		(67,373	)		(125,279	)		(307,134	)		(262,314	)		(34,524	)
Withdrawals		(481,850	)		(623,238	)		(1,253,599	)		(1,886,200	)		(1,498,596	)		(2,248,485	)
Annual contract fee		(5,264	)		(5,851	)		(17,715	)		(18,967	)		(20,064	)		(22,159	)
Net increase (decrease) in contract owners’ equity from principal transactions		(496,911	)		(667,362	)		(1,361,243	)		(2,054,798	)		(1,742,167	)		(2,286,536	)
Total increase (decrease) in contract owners’ equity		(602,630	)		(409,214	)		(1,128,230	)		(1,251,483	)		(2,251,077	)		(1,169,954	)
Contract owners’ equity at beginning of period		3,272,654			3,681,868			12,070,283			13,321,766			12,299,802			13,469,756
Contract owners’ equity at end of period	$	2,670,024		$	3,272,654		$	10,942,053		$	12,070,283		$	10,048,725		$	12,299,802
	2015			2014			2015			2014			2015			2014
Units, beginning of period		132,957			162,222			236,847			279,464			334,251			400,711
Units issued		7,340			4,962			3,076			4,785			4,266			10,816
Units redeemed		(26,755	)		(34,227	)		(29,502	)		(47,402	)		(52,278	)		(77,276	)
Units, end of period		113,542			132,957			210,421			236,847			286,239			334,251

See accompanying notes.

15

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT Q

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

	Money Market Trust B Series NAV						Real Estate Securities Trust Series NAV						Short Term Government Income Trust Series NAV
	2015			2014			2015			2014			2015			2014
Income:
Dividend distributions received	$	446		$	—		$	254,996		$	230,310		$	192,318		$	247,946
Expenses:
Mortality and expense risk and administrative charges		(334,345	)		(402,238	)		(173,391	)		(177,135	)		(144,033	)		(164,057	)
Net investment income (loss)		(333,899	)		(402,238	)		81,605			53,175			48,285			83,889
Realized gains (losses) on investments:
Capital gain distributions received		99			465			—			—			—			—
Net realized gain (loss)		—			—			1,703,988			896,892			(85,919	)		(76,406	)
Realized gains (losses)		99			465			1,703,988			896,892			(85,919	)		(76,406	)
Unrealized appreciation (depreciation) during the period		(2	)		(1	)		(1,593,934	)		2,634,948			(25,030	)		(18,650	)
Net increase (decrease) in contract owners’ equity from operations		(333,802	)		(401,774	)		191,659			3,585,015			(62,664	)		(11,167	)
Changes from principal transactions:
Purchase payments		121,819			86,928			47,123			208,291			72,362			20,357
Transfers between sub-accounts and the company		1,125,801			2,597,632			(263,586	)		161,671			223,568			385,653
Withdrawals		(5,287,137	)		(8,669,144	)		(1,983,823	)		(1,580,407	)		(1,621,504	)		(2,201,624	)
Annual contract fee		(53,664	)		(57,426	)		(19,122	)		(19,559	)		(19,935	)		(22,366	)
Net increase (decrease) in contract owners’ equity from principal transactions		(4,093,181	)		(6,042,010	)		(2,219,408	)		(1,230,004	)		(1,345,509	)		(1,817,980	)
Total increase (decrease) in contract owners’ equity		(4,426,983	)		(6,443,784	)		(2,027,749	)		2,355,011			(1,408,173	)		(1,829,147	)
Contract owners’ equity at beginning of period		28,767,617			35,211,401			14,841,507			12,486,496			11,631,273			13,460,420
Contract owners’ equity at end of period	$	24,340,634		$	28,767,617		$	12,813,758		$	14,841,507		$	10,223,100		$	11,631,273
	2015			2014			2015			2014			2015			2014
Units, beginning of period		2,781,546			3,363,253			367,815			403,920			828,911			958,031
Units issued		270,430			493,665			13,466			14,778			45,125			42,769
Units redeemed		(671,258	)		(1,075,372	)		(68,374	)		(50,883	)		(146,475	)		(171,889	)
Units, end of period		2,380,718			2,781,546			312,907			367,815			727,561			828,911

See accompanying notes.

16

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT Q

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

	Small Cap Growth Trust Series NAV						Small Cap Index Trust Series NAV						Small Cap Value Trust Series NAV
	2015			2014			2015			2014			2015			2014
Income:
Dividend distributions received	$	—		$	—		$	40,979		$	40,905		$	119,413		$	176,049
Expenses:
Mortality and expense risk and administrative charges		(158,223	)		(178,463	)		(49,435	)		(55,073	)		(307,330	)		(342,646	)
Net investment income (loss)		(158,223	)		(178,463	)		(8,456	)		(14,168	)		(187,917	)		(166,597	)
Realized gains (losses) on investments:
Capital gain distributions received		2,183,010			2,108,001			311,686			267,391			3,525,069			3,012,956
Net realized gain (loss)		201,385			567,352			164,200			86,777			1,209,487			1,573,857
Realized gains (losses)		2,384,395			2,675,353			475,886			354,168			4,734,556			4,586,813
Unrealized appreciation (depreciation) during the period		(3,372,967	)		(1,681,973	)		(675,613	)		(211,916	)		(5,121,781	)		(2,991,173	)
Net increase (decrease) in contract owners’ equity from operations		(1,146,795	)		814,917			(208,183	)		128,084			(575,142	)		1,429,043
Changes from principal transactions:
Purchase payments		33,224			56,782			13,806			13,810			44,006			163,019
Transfers between sub-accounts and the company		(189,422	)		(411,681	)		(39,830	)		(59,696	)		(587,304	)		(476,429	)
Withdrawals		(1,815,682	)		(2,295,004	)		(470,464	)		(652,967	)		(3,477,997	)		(4,728,583	)
Annual contract fee		(20,075	)		(21,845	)		(6,564	)		(7,185	)		(33,684	)		(38,327	)
Net increase (decrease) in contract owners’ equity from principal transactions		(1,991,955	)		(2,671,748	)		(503,052	)		(706,038	)		(4,054,979	)		(5,080,320	)
Total increase (decrease) in contract owners’ equity		(3,138,750	)		(1,856,831	)		(711,235	)		(577,954	)		(4,630,121	)		(3,651,277	)
Contract owners’ equity at beginning of period		13,379,226			15,236,057			4,226,866			4,804,820			26,070,713			29,721,990
Contract owners’ equity at end of period	$	10,240,476		$	13,379,226		$	3,515,631		$	4,226,866		$	21,440,592		$	26,070,713
	2015			2014			2015			2014			2015			2014
Units, beginning of period		637,094			772,297			191,967			225,653			486,297			591,509
Units issued		10,648			9,158			1,866			4,358			2,459			8,689
Units redeemed		(107,231	)		(144,361	)		(24,382	)		(38,044	)		(78,115	)		(113,901	)
Units, end of period		540,511			637,094			169,451			191,967			410,641			486,297

See accompanying notes.

17

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT Q

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

	Total Bond Market Trust B Series NAV						Total Return Trust Series NAV						Total Stock Market Index Trust Series NAV
	2015			2014			2015 (c)			2014			2015			2014
Income:
Dividend distributions received	$	469,765		$	640,637		$	959,640		$	294,343		$	262,326		$	256,442
Expenses:
Mortality and expense risk and administrative charges		(228,069	)		(251,166	)		(34,148	)		(122,807	)		(253,656	)		(271,864	)
Net investment income (loss)		241,696			389,471			925,492			171,536			8,670			(15,422	)
Realized gains (losses) on investments:
Capital gain distributions received		—			—			436,813			—			556,455			336,062
Net realized gain (loss)		158,995			154,479			(1,568,065	)		(63,023	)		1,082,758			1,440,676
Realized gains (losses)		158,995			154,479			(1,131,252	)		(63,023	)		1,639,213			1,776,738
Unrealized appreciation (depreciation) during the period		(553,965	)		304,841			311,418			208,947			(1,968,918	)		257,649
Net increase (decrease) in contract owners’ equity from operations		(153,274	)		848,791			105,658			317,460			(321,035	)		2,018,965
Changes from principal transactions:
Purchase payments		38,303			62,764			59,652			37,977			31,954			43,739
Transfers between sub-accounts and the company		(283,719	)		5,022,425			(7,931,272	)		(417,618	)		(313,642	)		401,124
Withdrawals		(3,199,734	)		(2,622,426	)		(496,183	)		(2,524,905	)		(2,463,331	)		(3,304,877	)
Annual contract fee		(22,993	)		(25,267	)		(5,498	)		(17,684	)		(34,180	)		(36,047	)
Net increase (decrease) in contract owners’ equity from principal transactions		(3,468,143	)		2,437,496			(8,373,301	)		(2,922,230	)		(2,779,199	)		(2,896,061	)
Total increase (decrease) in contract owners’ equity		(3,621,417	)		3,286,287			(8,267,643	)		(2,604,770	)		(3,100,234	)		(877,096	)
Contract owners’ equity at beginning of period		19,670,705			16,384,418			8,267,643			10,872,413			21,170,974			22,048,070
Contract owners’ equity at end of period	$	16,049,288		$	19,670,705		$	—		$	8,267,643		$	18,070,740		$	21,170,974
	2015			2014			2015			2014			2015			2014
Units, beginning of period		1,124,748			985,869			535,531			728,591			923,916			1,057,292
Units issued		23,043			311,529			18,373			40,272			7,177			35,713
Units redeemed		(223,922	)		(172,650	)		(553,904	)		(233,332	)		(127,690	)		(169,089	)
Units, end of period		923,869			1,124,748			—			535,531			803,403			923,916

(c) Terminated as an investment option and funds transferred to Core Bond Trust on April 27, 2015.

See accompanying notes.

18

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT Q

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

	Ultra Short Term Bond Trust Series NAV
	2015 (a)			2014
Income:
Dividend distributions received	$	1,103		$	—
Expenses:
Mortality and expense risk and administrative charges		(387	)		—
Net investment income (loss)		716			—
Realized gains (losses) on investments:
Capital gain distributions received		—			—
Net realized gain (loss)		(764	)		—
Realized gains (losses)		(764	)		—
Unrealized appreciation (depreciation) during the period		(472	)		—
Net increase (decrease) in contract owners’ equity from operations		(520	)		—
Changes from principal transactions:
Purchase payments		700			—
Transfers between sub-accounts and the company		203,913			—
Withdrawals		(163,039	)		—
Annual contract fee		(32	)		—
Net increase (decrease) in contract owners’ equity from principal transactions		41,542			—
Total increase (decrease) in contract owners’ equity		41,022			—
Contract owners’ equity at beginning of period		—			—
Contract owners’ equity at end of period	$	41,022		$	—
	2015			2014
Units, beginning of period		—			—
Units issued		23,475			—
Units redeemed		(19,527	)		—
Units, end of period		3,948			—

(a) Sub-account available in prior year but no activity.

See accompanying notes.

19

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT Q

NOTES TO FINANCIAL STATEMENTS

December 31, 2015

1. Organization

John Hancock Life Insurance Company (U.S.A.) Separate Account Q (the “Account”) is a separate account established by John Hancock Life Insurance Company (U.S.A.) (the “Company”). The Account operates as a Unit Investment Trust under the Investment Company Act of 1940, as amended (the “Act”) and is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946 Financial Services – Investment Companies. The Account consists of 26 active sub-accounts which are exclusively invested in a corresponding portfolio of the John Hancock Variable Insurance Trust (the “Trust”), and 4 active sub-accounts that are invested in portfolios of other Non-affiliated Trusts (the “Non-affiliated Trusts”). The Trust and Non-affiliated Trusts are registered under the Act as an open-ended management investment company, commonly known as a mutual fund, which does not transact with the general public. The Account is a funding vehicle for the allocation of net premiums under variable annuity contracts (the “Contracts”) issued by the Company.

The Company is a stock life insurance company incorporated under the laws of Michigan in 1979. The Company is an indirect, wholly owned subsidiary of Manulife Financial Corporation (“MFC”), a Canadian based publicly traded life insurance company. MFC and its subsidiaries are known collectively as Manulife Financial.

The Company is required to maintain assets in the Account with a total fair value of at least equal to the reserves and other liabilities relating to the variable benefits under all Contracts participating in the Account. These assets may not be charged with liabilities which arise from any other business the Company conducts. However, all obligations under the Contracts are general corporate obligations of the Company.

In addition to the Account, certain contract owners may also allocate funds to the fixed account, which is part of the Company’s general account. Because of exemptive and exclusionary provisions, interests in the fixed account have not been registered under the Securities Act of 1933, and the Company’s general account has not been registered as an investment company under the Investment Company Act of 1940. Net interfund transfers include transfers between separate and general accounts.

Each sub-account holds shares of a particular series (“Portfolio”) of a registered investment company. Sub-accounts that invest in Portfolios of the Trust may offer a class of units to fund Contracts issued by the Company. This class, Series NAV, represents an interest in the same Trust Portfolio, but in a different class of that Portfolio.

Sub-accounts closed in 2015 are as follows:

Sub-accounts Closed	Effective Date
Total Return Trust Series NAV		04/27/2015

20

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT Q

NOTES TO FINANCIAL STATEMENTS — (CONTINUED)

December 31, 2015

2. Significant Accounting Policies

Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from reported results using those estimates.

Valuation of Investments

Investments made in the Portfolios of the Trust, and of the Non-affiliated Trusts, are valued at fair value based on the reported net asset values of such Portfolios. Investment transactions are recorded on the trade date. Income from dividends, and gains from realized gain distributions are recorded on the ex-dividend date. Realized gains and losses on the sales of investments are computed on a first-in, first-out basis.

Amounts Receivable/Payable

Receivables/Payables from/to Portfolios/the Company are due to unsettled contract transactions (net of asset -based charges) and/or subsequent/preceding purchases/sales of the respective Portfolios’ shares. The amounts are due from/to either the respective Portfolio and/or the Company for the benefit of contract owners. There are no unsettled policy transactions at December 31, 2015.

21

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT Q

NOTES TO FINANCIAL STATEMENTS — (CONTINUED)

December 31, 2015

3. Federal Income Taxes

The Account does not file separate tax returns. The taxable income of the Account is consolidated with that of the Company within the consolidated federal tax return. Any tax contingencies arising from the taxable income generated by the Account is the responsibility of the Company and the Company holds any and all tax contingencies on its financial statements. The Company’s consolidated federal tax return for the FY 2002 and onward remains open subject to examination by the internal revenue service. The Account is not a party to the consolidated tax sharing agreement thus no amount of income taxes or tax contingencies are passed through to the Account. The legal form of the Account is not taxable in any state or foreign jurisdictions.

The income taxes topic of the FASB ASC establishes a minimum threshold for financial statement recognition of the benefit of positions taken, or expected to be taken, in filing tax returns (including whether the Account is taxable in certain jurisdictions). The topic requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions deemed to meet the more-likely-than-not threshold would be recorded as tax expense or benefit.

The Account complies with the provisions of FASB ASC Topic 740, Income Taxes. As of December 31, 2015, the Account did not have a liability for any uncertain tax positions. The Account recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statements of Operations and Changes in Contract Owners’ Equity.

4. Transactions with Affiliates

The Company has an administrative services agreement with Manulife Financial, whereby Manulife Financial or its designee, with the consent of the Company, performs certain services on behalf of the Company necessary for the operation of the Account. John Hancock Investment Management Services, LLC (“JHIMS”), a Delaware limited liability company controlled by MFC, serves as investment adviser for the Trust.

John Hancock Distributors LLC, a registered broker-dealer and wholly owned subsidiary of JHUSA, acts as the principle underwriter of the Contracts pursuant to a distribution agreement with the Company. Contracts are sold by registered representatives of either John Hancock Distributors LLC or other broker-dealers having distribution agreements with John Hancock Distributors LLC.

Certain officers of the Account are officers and directors of JHUSA or the Trust.

Contract charges, as described in Note 9, are paid to the Company.

22

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT Q

NOTES TO FINANCIAL STATEMENTS — (CONTINUED)

December 31, 2015

5. Fair Value Measurements

ASC 820 “Fair Value Measurements and Disclosures” provides a single definition of fair value for accounting purposes, establishes a consistent framework for measuring fair value, and expands disclosure requirements about fair value measurements. ASC 820 defines fair value as the value that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; that is, an exit value. An exit value is not a forced liquidation or distressed sale.

Following ASC 820 guidance, the Account has categorized its fair value measurements according to a three-level hierarchy. The hierarchy prioritizes the inputs used by the Account’s valuation techniques. A level is assigned to each fair value measurement based on the lowest level input significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are defined as follows:

• Level 1 – Fair value measurements that reflect unadjusted, quoted prices in active markets for identical assets and liabilities that the Account has the ability to access at the measurement date.

• Level 2 – Fair value measurements using inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly.

• Level 3 – Fair value measurements using significant non market observable inputs.

All of the Account’s sub-accounts’ investments in a Portfolio of the Trust were valued at the reported net asset value of the Portfolio and categorized as Level 1 as of December 31, 2015. The following table presents the Account’s assets that are measured at fair value on a recurring basis by fair value hierarchy level under ASC 820, as of December 31, 2015:

	Level 1		Level 2		Level 3		Total
Mutual Funds	$	456,626,280		—		—		456,626,280
Total	$	456,626,280		—		—		456,626,280

Assets owned by the Account are primarily open-ended mutual fund investments issued by the Trust. These are classified within Level 1, as fair values of the underlying funds are based upon reported net asset values (“NAV”), which represent the values at which each sub-account can redeem its investments.

Changes in valuation techniques may result in transfer in or out of an assigned level within the disclosure hierarchy. Transfers between investment levels may occur as the availability of a price source or data used in an investment’s valuation changes. Transfers between investment levels are recognized at the beginning of the reporting period. There have been no transfers between any level of fair value measurements during the period ended December 31, 2015.

23

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT Q

NOTES TO FINANCIAL STATEMENTS — (CONTINUED)

December 31, 2015

6. Purchases and Sales of Investments

The cost of purchases including reinvestment of dividend distributions and proceeds from the sales of investments in the Portfolios of the Trust and Non-affiliated Trusts during 2015 were as follows:

Sub-Account	Purchases		Sales
500 Index Fund B Series NAV	$	2,385,780	$	9,145,179
Active Bond Trust Series NAV		2,440,121		6,324,067
Blue Chip Growth Trust Series NAV		5,843,023		4,877,561
Capital Appreciation Trust Series NAV		2,120,472		1,431,190
Core Bond Trust Series NAV		8,831,929		1,325,272
Equity-Income Trust Series NAV		3,954,425		5,569,501
Financial Industries Trust Series NAV		2,323,391		1,061,959
Fundamental All Cap Core Trust Series NAV		2,624,304		8,510,445
Global Bond Trust Series NAV		569,700		1,961,540
Health Sciences Trust Series NAV		3,411,367		3,067,317
High Yield Trust Series NAV		1,060,038		2,015,341
International Equity Index Trust B Series NAV		541,031		1,934,900
International Value Trust Series NAV		761,825		1,553,840
Lifestyle Balanced MVP Series NAV		6,965,211		11,151,965
M Capital Appreciation (a)		14,389		2,838
M International Equity (a)		977		9,351
M Large Cap Growth (a)		21,089		7,100
M Large Cap Value (a)		3,045		1,558
Mid Cap Index Trust Series NAV		461,777		726,143
Mid Cap Stock Trust Series NAV		2,469,058		1,648,935
Mid Value Trust Series NAV		2,331,499		2,050,183
Money Market Trust B Series NAV		2,739,353		7,166,335
Real Estate Securities Trust Series NAV		769,179		2,906,983
Short Term Government Income Trust Series NAV		849,585		2,146,808
Small Cap Growth Trust Series NAV		2,405,101		2,372,268
Small Cap Index Trust Series NAV		388,274		588,097
Small Cap Value Trust Series NAV		3,739,774		4,457,602
Total Bond Market Trust B Series NAV		843,881		4,070,327
Total Return Trust Series NAV (b)		1,680,014		8,691,009
Total Stock Market Index Trust Series NAV		976,978		3,191,054
Ultra Short Term Bond Trust Series NAV		236,307		194,048

(a) Sub-account that invests in non-affiliated Trust.

(b) Terminated as an investment option and funds transferred to Core Bond Trust on April 27, 2015.

24

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT Q

NOTES TO FINANCIAL STATEMENTS — (CONTINUED)

December 31, 2015

7. Unit Values

A summary of unit values and units outstanding for variable annuity contracts and the expense and income ratios, excluding expenses of the underlying Portfolios, were as follows:

				At December 31,								For the years and periods ended December 31,
Sub-account	Year			Units (000s)		Unit Fair Value Highest to Lowest (a)			Assets (000s)			Expense Ratio Highest to Lowest (b)			Investment Income Ratio (c)			Total Return Highest to Lowest (d)
500 Index Fund B Series NAV		2015			1,556		$	28.99 to $22.69		$	50,308		1.70% to 1.00	%		1.65	%		0.14% to -0.56	%
		2014			1,785			28.95 to 22.81			57,815		1.70 to 1.00			1.60			12.30 to 11.52
		2013			1,907			25.78 to 20.46			54,948		1.70 to 1.00			1.76			30.71 to 29.81
		2012			2,244			19.72 to 15.76			49,664		1.70 to 1.00			0.98			14.65 to 13.86
		2011			2,635			17.20 to 13.84			50,871		1.70 to 1.00			1.63			0.85 to 0.15
Active Bond Trust Series NAV		2015			1,850			24.36 to 15.41			33,641		1.70 to 1.00			4.88			-0.89 to -1.56
		2014			2,132			24.57 to 15.66			39,223		1.70 to 1.00			3.59			5.90 to 5.17
		2013			2,488			23.20 to 14.89			43,319		1.70 to 1.00			5.42			-0.80 to -1.49
		2012			2,978			23.39 to 15.11			52,393		1.70 to 1.00			3.99			8.68 to 7.91
		2011			3,579			21.52 to 14.00			58,055		1.70 to 1.00			5.02			4.91 to 4.19
Blue Chip Growth Trust Series NAV		2015			1,557			77.93 to 26.30			27,580		1.70 to 1.00			0.00			10.02 to 9.25
		2014			1,774			70.83 to 24.07			28,622		1.70 to 1.00			0.00			8.03 to 7.27
		2013			2,114			65.57 to 22.44			31,567		1.70 to 1.00			0.30			40.03 to 39.05
		2012			2,500			46.83 to 16.14			26,713		1.70 to 1.00			0.13			17.22 to 16.41
		2011			2,961			39.95 to 13.86			27,321		1.70 to 1.00			0.01			0.44 to -0.26
Capital Appreciation Trust Series NAV		2015			1,128			22.66 to 7.43			9,160		1.70 to 1.25			0.02			10.08 to 9.60
		2014			1,224			20.68 to 6.75			9,064		1.70 to 1.25			0.08			8.30 to 7.84
		2013			1,456			19.18 to 6.23			9,890		1.70 to 1.25			0.25			35.79 to 35.19
		2012			1,719			14.19 to 4.59			8,506		1.70 to 1.25			0.19			14.56 to 14.09
		2011			2,014			12.43 to 4.01			8,796		1.70 to 1.25			0.10			-1.13 to -1.57
Core Bond Trust Series NAV		2015	(f)		474			14.55 to 14.40			7,230		1.70 to 1.25			2.45			-2.48 to -2.78
Equity -Income Trust Series NAV		2015			1,350			20.60 to 15.82			29,080		1.70 to 1.25			1.92			-7.83 to -8.23
		2014			1,555			22.45 to 17.16			36,346		1.70 to 1.25			1.83			6.21 to 5.74
		2013			1,802			21.23 to 16.16			39,685		1.70 to 1.25			1.88			28.43 to 27.86
		2012			2,191			16.61 to 12.58			37,575		1.70 to 1.25			2.04			16.02 to 15.51
		2011			2,610			14.38 to 10.84			38,598		1.70 to 1.25			1.66			-2.00 to -2.44
Financial Industries Trust Series NAV		2015			299			22.75 to 17.28			6,422		1.70 to 1.00			1.02			-3.55 to -4.23
		2014			338			23.58 to 18.04			7,505		1.70 to 1.00			0.76			7.56 to 6.82
		2013			385			21.93 to 16.89			7,976		1.70 to 1.00			0.67			29.56 to 28.65
		2012			444			16.92 to 13.13			7,125		1.70 to 1.00			0.80			16.86 to 16.05
		2011			532			14.48 to 11.31			7,316		1.70 to 1.00			1.58			-10.29 to -10.92
Fundamental All Cap Core Trust Series NAV		2015			3,331			24.69 to 21.93			46,198		1.70 to 1.00			0.00			3.05 to 2.33
		2014			3,868			23.96 to 21.43			52,190		1.70 to 1.00			0.44			8.72 to 7.95
		2013			4,548			22.04 to 19.85			56,602		1.70 to 1.00			0.97			34.51 to 33.58
		2012			5,180			16.38 to 14.86			48,135		1.70 to 1.00			0.78			22.44 to 21.59
		2011			6,252			13.38 to 12.22			47,688		1.70 to 1.00			1.02			-3.00 to -3.67
Global Bond Trust Series NAV		2015			365			14.02 to 13.10			6,447		1.70 to 1.25			2.56			-4.70 to -5.14
		2014			448			14.78 to 13.74			8,298		1.70 to 1.25			0.95			1.14 to 0.69
		2013			508			14.68 to 13.59			9,318		1.70 to 1.25			0.47			-6.72 to -7.13
		2012			650			15.81 to 14.57			12,767		1.70 to 1.25			6.98			5.82 to 5.36
		2011			789			15.01 to 13.76			14,598		1.70 to 1.25			6.12			7.72 to 7.23
Health Sciences Trust Series NAV		2015			254			59.12 to 46.77			13,149		1.70 to 1.25			0.00			11.36 to 10.86
		2014			286			53.33 to 42.00			13,280		1.70 to 1.25			0.00			30.21 to 29.63
		2013			317			41.14 to 32.25			11,369		1.70 to 1.25			0.00			49.36 to 48.69
		2012			391			27.67 to 21.59			9,360		1.70 to 1.25			0.00			30.30 to 29.73
		2011			406			21.33 to 16.57			7,532		1.70 to 1.25			0.00			9.28 to 8.80
High Yield Trust Series NAV		2015			385			16.29 to 15.22			6,204		1.70 to 1.25			7.06			-9.53 to -9.93
		2014			465			18.08 to 16.82			8,288		1.70 to 1.25			6.46			-1.24 to -1.69
		2013			541			18.39 to 17.03			9,774		1.70 to 1.25			6.32			7.31 to 6.84
		2012			661			17.22 to 15.87			11,130		1.70 to 1.25			7.50			17.59 to 17.07
		2011			798			14.71 to 13.50			11,437		1.70 to 1.25			7.88			-0.13 to -0.57
International Equity Index Trust B Series NAV		2015			621			21.01 to 15.16			9,896		1.70 to 1.25			2.34			-6.98 to -7.39
		2014			706			22.69 to 19.89			12,140		1.70 to 1.15			2.96			-5.66 to -6.18
		2013			820			24.18 to 21.08			15,037		1.70 to 1.15			2.40			13.23 to 12.61
		2012			958			21.47 to 18.62			15,589		1.70 to 1.15			1.16			16.42 to 15.79
		2011			1,171			18.55 to 15.99			16,455		1.70 to 1.15			3.12			-14.98 to -15.44
International Value Trust Series NAV		2015			721			16.46 to 12.12			8,885		1.70 to 1.00			1.91			-8.64 to -9.27
		2014			782			18.14 to 13.26			10,586		1.70 to 1.00			2.73			-13.35 to -13.96
		2013			922			21.08 to 15.30			14,469		1.70 to 1.00			1.78			24.96 to 24.08
		2012			1,036			16.99 to 12.25			13,033		1.70 to 1.00			2.55			18.17 to 17.36
		2011			1,301			14.48 to 10.36			13,920		1.70 to 1.00			2.29			-13.66 to -14.26
Lifestyle Balanced MVP Series NAV		2015			4,189			16.65 to 14.42			61,707		1.70 to 1.25			2.31			-3.42 to -3.85
		2014			4,824			22.61 to 17.32			73,629		1.70 to 1.00			2.70			3.22 to 2.50
		2013			6,117			21.91 to 16.89			90,744		1.70 to 1.00			2.75			11.77 to 10.99
		2012			6,963			19.60 to 15.22			92,712		1.70 to 1.00			2.15			10.79 to 10.02
		2011			8,196			17.69 to 13.83			99,034		1.70 to 1.00			3.03			-0.33 to -1.03

(f) Sub-account available in prior year but no activity.

25

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT Q

NOTES TO FINANCIAL STATEMENTS — (CONTINUED)

December 31, 2015

7. Unit Values — (continued):

			At December 31,								For the years and periods ended December 31,
Sub-account	Year		Units (000s)		Unit Fair Value Highest to Lowest (a)			Assets (000s)			Expense Ratio Highest to Lowest (b)			Investment Income Ratio (c)		Total Return Highest to Lowest (d)
M Capital Appreciation(e)		2015		5		$	34.30 to $25.57		$	116		1.60% to 1.25	%		0.00		-7.74% to -8.06	%
		2014		5			36.88 to 28.11			126		1.70 to 1.15			0.00		11.13 to 10.52
		2013		8			33.37 to 25.29			234		1.70 to 1.15			0.00		37.61 to 36.86
		2012		9			24.38 to 18.38			185		1.70 to 1.15			0.33		16.10 to 15.46
		2011		9			21.12 to 15.83			157		1.70 to 1.15			0.00		-8.28 to -8.79
M International Equity(e)		2015		3			19.66 to 16.03			55		1.60 to 1.25			1.58		-5.13 to -5.47
		2014		4			20.55 to 17.16			66		1.70 to 1.15			1.22		-8.12 to -8.63
		2013		11			22.49 to 18.67			229		1.70 to 1.15			2.25		15.00 to 14.36
		2012		14			19.67 to 16.24			238		1.70 to 1.15			2.02		19.31 to 18.66
		2011		15			16.57 to 13.61			214		1.70 to 1.15			2.28		-14.55 to -15.02
M Large Cap Growth(e)		2015		8			28.74 to 14.89			124		1.60 to 1.25			0.03		6.37 to 5.99
		2014		9			26.80 to 14.20			122		1.70 to 1.15			0.03		8.95 to 8.35
		2013		17			24.74 to 13.03			278		1.70 to 1.15			0.56		34.59 to 33.86
		2012		19			18.48 to 9.68			229		1.70 to 1.15			0.05		17.96 to 17.31
		2011		19			15.75 to 8.21			200		1.70 to 1.15			0.00		-1.93 to -2.47
M Large Cap Value(e)		2015		1			24.01 to 19.97			29		1.60 to 1.25			1.34		-1.89 to -2.23
		2014		2			24.28 to 20.62			31		1.70 to 1.15			0.48		8.43 to 7.83
		2013		7			22.51 to 19.02			148		1.70 to 1.15			2.69		32.68 to 31.96
		2012		8			17.06 to 14.33			133		1.70 to 1.15			0.83		15.96 to 15.33
		2011		8			14.79 to 12.36			116		1.70 to 1.15			0.37		-5.21 to -5.73
Mid Cap Index Trust Series NAV		2015		114			27.71 to 22.67			2,670		1.70 to 1.25			1.05		-3.75 to -4.19
		2014		133			28.92 to 23.55			3,273		1.70 to 1.25			0.98		8.04 to 7.55
		2013		162			26.89 to 21.80			3,682		1.70 to 1.25			1.07		31.44 to 30.85
		2012		196			20.55 to 16.58			3,352		1.70 to 1.25			1.35		16.08 to 15.57
		2011		274			17.78 to 14.29			4,035		1.70 to 1.25			0.65		-3.36 to -3.80
Mid Cap Stock Trust Series NAV		2015		210			32.65 to 22.22			10,942		1.70 to 1.25			0.00		1.76 to 1.30
		2014		237			32.23 to 21.84			12,070		1.70 to 1.25			0.14		6.77 to 6.29
		2013		279			30.32 to 20.45			13,322		1.70 to 1.25			0.06		35.14 to 34.53
		2012		367			22.54 to 15.13			12,997		1.70 to 1.25			0.00		20.83 to 20.29
		2011		447			18.73 to 12.52			12,880		1.70 to 1.25			0.00		-10.29 to -10.70
Mid Value Trust Series NAV		2015		286			31.19 to 20.21			10,049		1.70 to 1.25			1.14		-4.61 to -5.03
		2014		334			35.79 to 32.84			12,300		1.70 to 1.15			0.76		9.43 to 8.83
		2013		401			32.70 to 30.18			13,470		1.70 to 1.15			1.05		29.97 to 29.26
		2012		470			25.16 to 23.35			12,181		1.70 to 1.15			0.86		18.19 to 17.55
		2011		586			21.29 to 19.86			12,875		1.70 to 1.15			0.70		-5.89 to -6.41
Money Market Trust B Series NAV		2015		2,381			12.65 to 9.52			24,341		1.70 to 1.00			0.00		-0.90 to -1.57
		2014		2,782			12.77 to 9.67			28,768		1.70 to 1.00			0.00		-1.07 to -1.79
		2013		3,363			12.91 to 9.84			35,211		1.70 to 1.00			0.01		-1.02 to -1.74
		2012		3,979			13.04 to 10.02			42,129		1.70 to 1.00			0.04		-0.96 to -1.65
		2011		4,186			13.17 to 10.19			44,846		1.70 to 1.00			0.00		-0.97 to -1.63
Real Estate Securities Trust Series NAV		2015		313			33.28 to 19.35			12,814		1.70 to 1.25			1.89		1.52 to 1.07
		2014		368			32.92 to 19.06			14,842		1.70 to 1.25			1.67		30.12 to 29.54
		2013		404			25.42 to 14.65			12,486		1.70 to 1.25			1.79		-1.29 to -1.74
		2012		508			25.87 to 14.84			15,936		1.70 to 1.25			1.68		15.88 to 15.37
		2011		646			22.42 to 12.81			17,469		1.70 to 1.25			1.44		8.21 to 7.72
Short Term Government Income Trust Series NAV		2015		728			10.34 to 9.85			10,223		1.70 to 1.25			1.74		-0.58 to -1.03
		2014		829			12.96 to 9.96			11,631		1.70 to 1.15			1.98		0.04 to -0.53
		2013		958			12.96 to 10.01			13,460		1.70 to 1.15			1.95		-1.86 to -2.43
		2012		1,151			13.20 to 10.26			16,633		1.70 to 1.15			1.62		0.05 to -0.53
		2011		1,413			13.19 to 10.31			19,960		1.70 to 1.15			2.24		1.66 to 1.09
Small Cap Growth Trust Series NAV		2015		541			29.67 to 19.39			10,240		1.70 to 1.00			0.00		-9.69 to -10.32
		2014		637			33.09 to 21.47			13,379		1.70 to 1.00			0.00		6.53 to 5.79
		2013		772			31.28 to 20.15			15,236		1.70 to 1.00			0.00		42.79 to 41.79
		2012		896			22.06 to 14.12			12,430		1.70 to 1.00			0.00		15.37 to 14.57
		2011		1,075			19.25 to 12.23			13,058		1.70 to 1.00			0.00		-7.72 to -8.37
Small Cap Index Trust Series NAV		2015		169			20.74 to 20.74			3,516		1.25 to 1.25			1.04		-5.78 to -5.78
		2014		192			22.01 to 22.01			4,227		1.25 to 1.25			0.93		3.40 to 3.40
		2013		226			21.29 to 21.29			4,805		1.25 to 1.25			1.45		37.03 to 37.03
		2012		263			15.54 to 15.54			4,092		1.25 to 1.25			2.01		14.63 to 14.63
		2011		309			13.55 to 13.55			4,182		1.25 to 1.25			1.09		-5.57 to -5.57
Small Cap Value Trust Series NAV		2015		411			33.06 to 21.66			21,441		1.70 to 1.25			0.50		-2.54 to -2.98
		2014		486			58.02 to 34.08			26,071		1.70 to 1.15			0.66		6.02 to 5.44
		2013		592			54.72 to 32.32			29,722		1.70 to 1.15			0.57		31.80 to 31.08
		2012		702			41.52 to 24.65			26,803		1.70 to 1.15			0.86		14.46 to 13.84
		2011		863			36.27 to 21.66			28,607		1.70 to 1.15			0.80		-0.01 to -0.56
Total Bond Market Trust B Series NAV		2015		924			17.89 to 13.54			16,049		1.70 to 1.25			2.63		-0.94 to -1.38
		2014		1,125			19.00 to 13.73			19,671		1.70 to 1.15			3.26		4.85 to 4.28
		2013		986			18.12 to 13.16			16,384		1.70 to 1.15			3.16		-3.56 to -4.07
		2012		1,203			18.79 to 13.72			20,644		1.70 to 1.15			1.58		2.90 to 2.35
		2011		1,419			18.26 to 13.41			23,632		1.70 to 1.15			4.03		6.37 to 5.79

(e) Sub-account that invests in non-affiliated Trust.

26

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT Q

NOTES TO FINANCIAL STATEMENTS — (CONTINUED)

December 31, 2015

7. Unit Values — (continued):

				At December 31,								For the years and periods ended December 31,
Sub-account	Year			Units (000s)		Unit Fair Value Highest to Lowest (a)			Assets (000s)			Expense Ratio Highest to Lowest (b)			Investment Income Ratio (c)			Total Return Highest to Lowest (d)
Total Return Trust Series NAV		2015	(g)		0		$	14.97 to $14.77		$	0		1.70% to 1.25	%		38.31	%		1.32% to 1.17	%
		2014			536			14.79 to 14.58			8,268		1.70 to 1.25			3.20			3.42 to 2.96
		2013			729			14.37 to 14.09			10,872		1.70 to 1.25			2.96			-3.21 to -3.64
		2012			967			14.91 to 14.56			14,925		1.70 to 1.25			2.03			7.23 to 6.75
		2011			994			13.97 to 13.58			14,322		1.70 to 1.25			4.09			2.67 to 2.23
Total Stock Market Index Trust Series NAV		2015			803			24.84 to 22.23			18,071		1.70 to 1.25			1.32			-1.77 to -2.21
		2014			924			25.40 to 22.63			21,171		1.70 to 1.25			1.21			10.08 to 9.58
		2013			1,057			23.18 to 20.56			22,048		1.70 to 1.25			1.42			31.79 to 31.20
		2012			1,234			17.67 to 15.60			19,573		1.70 to 1.25			1.50			14.13 to 13.62
		2011			1,492			15.55 to 13.67			20,787		1.70 to 1.25			1.17			-0.92 to -1.36
Ultra Short Term Bond Trust Series NAV		2015	(f)		4			12.47 to 9.88			41		1.60 to 1.25			4.35			-0.27 to -1.21

(a) As the unit fair value is presented as a range of minimum to maximum values, based on the product grouping representing the minimum and maximum expense ratio amounts, some individual contract unit values are not within the ranges presented.

(b) These ratios represent the annualized contract expenses of the variable account, consisting primarily of mortality and expense charges, for each period indicated. The ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to policyholder accounts through the redemption of units and expenses of the underlying Portfolio are excluded.

(c) These ratios, which are not annualized, represent the distributions from net investment income received by the sub-account from the underlying Portfolio, net of management fees assessed by the portfolio manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense charges, that are assessed against policyholder accounts either through the reductions in the unit values or the redemptions of units. The recognition of investment income by the sub-account is affected by the timing of the declaration of dividends by the underlying Portfolio in which the sub-accounts invest.

(d) These ratios, which are not annualized, represent the total return for the periods indicated, including changes in the value of the underlying Portfolio, and expenses assessed through the reduction of unit values. These ratios do not include any expenses assessed through the redemption of units. Investment options indicated in footnote 1 with a date notation, if any, denote the effective date of that investment option in the variable account. The total return is calculated for the period indicated or from the effective date through the end of the reporting period. For closed sub-accounts, the total return is calculated from the beginning of the reporting period to the date the sub-account closed. As the total return is presented as a range of minimum to maximum values, based on the product grouping representing the minimum and maximum expense ratio amounts, some individual contract total returns are not within the ranges presented.

(f) Sub-account available in prior year but no activity.

(g) Terminated as an investment option and funds transferred to Core Bond Trust on April 27, 2015.

27

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT Q

NOTES TO FINANCIAL STATEMENTS — (CONTINUED)

December 31, 2015

8. Diversification Requirements

The Internal Revenue Service has issued regulations under Section 817(h) of the Internal Revenue Code (“the Code”). Under the provisions of Section 817(h) of the Code, a Contract will not be treated as a variable annuity contract for federal tax purposes for any period for which the investments of the Account on which the contract is based are not adequately diversified. The Code provides that the “adequately diversified” requirement may be met if the underlying investments satisfy either a statutory safe harbor test or diversification requirement set forth in regulations issued by the Secretary of the Treasury. The Company believes that the Account satisfies the current requirements of the regulations, and the Account will continue to meet such requirements.

9. Contract Charges

The expense ratio represents the contract expenses of the Account for the period indicated and includes only those expenses that are charged through a reduction of the unit value. Included in this category are mortality and expense charges, and the cost of any riders the policy holder has elected. These fees range between 1.00% and 1.70% of net assets of the sub-account depending on the type of contract. In addition, annual contract charges of up to $30 per policy are made through redemption of units.

28

PART C OTHER INFORMATION

Guide to Name Changes and Successions:

NAME CHANGES

DATE OF CHANGE	OLD NAME	NEW NAME
February 1, 2000	John Hancock Mutual Life Insurance Company	John Hancock Life Insurance Company*
January 1, 2005	The Manufacturers Life Insurance Company (U.S.A.)	John Hancock Life Insurance Company (U.S.A.)
January 1, 2005	Manulife Financial Securities LLC	John Hancock Distributors LLC
January 1, 2005	Manufacturers Securities Services LLC	John Hancock Investment Management Services LLC
January 1, 2010	John Hancock Variable Annuity Account H	John Hancock Life Insurance Company (U.S.A.) Separate Account Q

* Effective January 1, 2010, John Hancock Life Insurance Company (“JHLICO”) and John Hancock Variable Life Insurance Company (“JHVLICO”) merged into John Hancock Life Insurance Company (U.S.A.) with the latter becoming the owner of all of JHLICO’s and JHVLICO’s assets.

*   *   *   *   *

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.

(A) FINANCIAL STATEMENTS.

(1) Financial Statements of the Registrant, John Hancock Life Insurance Company (U.S.A.) Separate Account Q. [FILED HEREWITH]

(2) Financial Statements of the Depositor, John Hancock Life Insurance Company (U.S.A.). [FILED HEREWITH]

(B) EXHIBITS:

1.	(a)	John Hancock Life Insurance Company Board Resolution establishing the John Hancock Variable Annuity Account H, dated April 8, 1996; incorporated herein by reference to the Registrant’s Registration Statement, filed with the Commission on July 18, 1996.
	(b)	John Hancock Life Insurance Company (U.S.A.) Board Resolutions dated September 28, 2009 accepting and renaming the separate account upon merger to John Hancock Life Insurance Company (U.S.A.) Separate Account Q - incorporated by reference to Exhibit (24)(B)(1)(b) to this initial Registration Statement filed on Form N-4, File No. 333-164147, filed on January 4, 2010.
2.		Not Applicable.
3.	(a)	Distribution and Servicing Agreement dated February 17, 2009 - incorporated by reference to Exhibit (24)(b)(3)(ii) to Post—Effective Amendment No. 31 to Form N-4, File No. 333-70728, filed on April 30, 2009.
	(b)	General Agent and Broker-Dealer Selling Agreement - incorporated by reference to Exhibit (24)(b)(3)(b) to Post-effective Amendment No. 7 to Form N-4 Registration Statement of John Hancock Life Insurance Company (File Nos. 333-84771) filed April 3, 2009.
4.	(a)	Reserved
	(b)	Reserved
	(c)	Form of deferred combination fixed and variable annuity contract, incorporated by reference to Pre-Effective Amendment No. 1 to this Registration Statement, File No. 333-81103, filed on August 9, 1999.
	(d)	Form of waiver of withdrawal charge rider, incorporated by reference to Pre-Effective Amendment No. 1 to this Registration Statement, File No. 333-81103, filed on August 9, 1999.
	(e)	Form of guaranteed retirement income benefit rider, incorporated by reference to Pre-Effective Amendment No. 1 to this Registration Statement, File No. 333-81103, filed on August 9, 1999.
	(f)	Form of death benefit enhancement rider, incorporated by reference to Pre-Effective Amendment No. 1 to this Registration Statement, File No. 333-81103, filed on August 9, 1999.
	(g)	Form of accumulated value enhancement rider, incorporated by reference to Pre-Effective Amendment No. 1 to this Registration Statement, File No. 333-81103, filed on August 9, 1999.
	(h)	Form of death benefit enhancement rider for Revolution Value II Variable Annuity Contracts, incorporated by reference to Post-Effective Amendment No. 6 this Registration Statement, File No. 333-81103, filed on January 9, 2003.
	(i)	Form of Guaranteed Retirement Income Benefit Rider for Revolution Value II Variable Annuity Contracts, incorporated by reference to Post-Effective Amendment No. 6 to this Registration Statement, File No. 333-81103, filed on January 9, 2003.
	(j)	Form of Highest Anniversary Value Death Benefit Rider for Revolution Value II Variable Annuity Contracts, incorporated by reference to Post-Effective Amendment No. 6 to this Registration Statement, File No. 333-81103, filed on January 9, 2003.
	(k)	Form of Flexible premium deferred variable annuity contract for Revolution Value II Variable Annuity, incorporated by reference to Post-Effective Amendment No. 6 to this Registration Statement, File No. 333-81103, filed on January 9, 2003.
	(l)	Form of Endorsement dated December 31, 2009 applicable to contracts, policies or certificates as a result of the merger of John Hancock Life Insurance Company into John Hancock Life Insurance Company (U.S.A.) - incorporated by reference to Exhibit (24)(B)(4)(l) to this initial Registration Statement filed on Form N-4, File No. 333-164147, filed on January 4, 2010.
5.		Form of contract application, incorporated by reference to Pre-Effective Amendment No. 1 to this Registration Statement, File No. 333-81103, filed on August 9, 1999.
6.	(a)	Restated Articles of Redomestication of The Manufacturers Life Insurance Company (U.S.A.) - Incorporated by reference to Exhibit A(6) to the registration statement on Form S-6 filed July 20, 2000 (File No. 333-41814).

	(b)	Certificate of Amendment to Certificate of Incorporation of the Company, Name Change July 1984 – Incorporated by reference to Exhibit (3)(i)(a) to Form 10Q of The Manufacturers Life Insurance Company of North America, filed November 14, 1997.
	(c)	Certificate of Amendment to Certificate of Incorporation of the Company changing its name to John Hancock Life Insurance Company (U.S.A.) effective January 1, 2005 - Incorporated by reference to Exhibit (b)(6)(iii) to post-effective amendment no. 20 to Registration Statement (File No. 333-70728), filed on May 1, 2007.
	(d)	By-Laws of the John Hancock Life Insurance Company (U.S.A.) (formerly, The Manufacturers Life Insurance Company (U.S.A.) dated December 2, 1992. - Incorporated by reference to Exhibit A(6)(b) to the registration statement on Form S-6 filed July 20, 2000 (File No. 333-41814).
	(e)	Amendment to By-Laws of the John Hancock Life Insurance Company (U.S.A.) (formerly, The Manufacturers Life Insurance Company (U.S.A.) dated June 7, 2000. - Incorporated by reference to pre-effective amendment no. 1 file number 333-126668 filed with the Commission on October 12, 2005.
	(f)	Amendment to By-Laws of the John Hancock Life Insurance Company (U.S.A.) (formerly, The Manufacturers Life Insurance Company (U.S.A.) dated March 12, 1999. - Incorporated by reference to pre-effective amendment no. 1 file number 333-126668 filed with the Commission on October 12, 2005.
	(g)	Amendment to By-Laws reflecting the Company’s name change to John Hancock Life Insurance Company (U.S.A.) effective January 1, 2005 - Incorporated by reference to Exhibit (b)(6)(v) to post-effective amendment no. 20 to Registration Statement (File No. 333-70728), filed on May 1, 2007.
	(h)	Amended and Restated By-Laws of John Hancock Life Insurance Company (U.S.A.) effective June 15, 2010, incorporated by reference to Exhibit 24 (b) (6) (vi) to Post-Effective Amendment No. 35 to Registration Statement, File No. 333-70728, filed November 8, 2010.
	(i)	Amended and Restated Articles of Redomestication and Articles of Incorporation of John Hancock Life Insurance Company (U.S.A.) effective July 26, 2010, incorporated by referenced to Exhibit 24 (b) (6) (vii) to Post-Effective Amendment No. 35 to Registration Statement File No. 333-70728, filed November 8, 2010.
	(j)	Amended and Restated By-Laws of John Hancock Life Insurance Company (U.S.A.) dated October 23, 2012, incorporated by reference to Exhibit 24(b)(6)(viii) to Post-Effective Amendment No. 6 to Registration Statement File No. 333-162245, filed January 18, 2013.
7.		Not Applicable.
8.		Other material contracts not made in the ordinary course of business which are to be performed in whole or in part on or after the date the registration statement is filed:
	(a)	Service Agreement and Indemnity Combination Coinsurance and Modified Coinsurance Agreement of Variable Annuity Contracts between John Hancock Life Insurance Company (U.S.A.) and John Hancock Life Insurance Company of New York-incorporated by reference to Exhibit (24)(B)(8)(a) to this initial Registration Statement filed on Form N-4, File No. 333-164147, filed on January 4, 2010.
	(b)	(1)	CSC Customer Agreement dated June 30, 2004, incorporated by reference to Exhibit 24(b)(8)(a)(i) to Post-Effective Amendment No. 3 to Registration Statement, File No. 333-143073, filed April 1, 2009. [Portions of this Exhibit have been omitted pursuant to an order granting Confidential Treatment granted by the SEC on March 28, 2014.]
		(2)	Addendum No. 2 to the Remote Service Exhibit Number 1 dated July 1, 2006 with CSC, incorporated by reference to Exhibit 24(b)(8)(a)(ii) to Post-Effective Amendment No. 3 to Registration Statement, File No. 333-143073, filed April 1, 2009. [Portions of this Exhibit have been omitted pursuant to an order granting Confidential Treatment granted by the SEC on March 28, 2014.]
	(c)	(i)	Participation Agreement among John Hancock Life Insurance Company (U.S.A.), John Hancock Life Insurance Company of New York, John Hancock Life Insurance Company, John Hancock Variable Life Insurance Company and John Hancock Trust dated April 20, 2005. Incorporated by reference to pre-effective amendment no. 1 file number 333-126668 filed with the Commission on October 12, 2005.
		(ii)	Shareholder Information Agreement between John Hancock Life Insurance Company (U.S.A.), John Hancock Life Insurance Company of New York, John Hancock Life Insurance Company, John Hancock Variable Life Insurance, and John Hancock Trust portfolios (except American Funds Insurance Series) dated April 16, 2007. Incorporated by reference to post-effective amendment number 9 file number 333-85284 filed with the Commission in April, 2007.
		(iii)	Shareholder Information Agreement between John Hancock Life Insurance Company (U.S.A.), John Hancock Life Insurance Company of New York, John Hancock Life Insurance Company, John Hancock Variable Life Insurance, and John Hancock Trust on behalf of series of the Trust that are feeder funds of the American Funds Insurance Series dated April 16, 2007. Incorporated by reference to post-effective amendment number 9 file number 333-85284 filed with the Commission in April, 2007.
		(iv)	Amended and Restated Participation Agreement among M Fund, Inc., M Fund Advisers, Inc., John Hancock Life Insurance Company, John Hancock Variable Life Insurance Company, John Hancock Life Insurance Company (U.S.A.), and John Hancock Life Insurance Company of New York dated November 13, 2009 - incorporated by reference to Exhibit (24)(B)(8)(c)(iv) to this initial Registration Statement filed on Form N-4, File No. 333-164147, filed on January 4, 2010.

9.	(a)	Opinion and Consent of Counsel, incorporated by reference to Post-Effective Amendment No. 4 to this Registration Statement File No. 333-81103, filed on October 19, 2001.
	(b)	Opinion and Consent of Counsel - incorporated by reference to Exhibit 24(B)(9)(b) to this initial Registration Statement filed on Form N-4, File No. 333-164147, filed on January 4, 2010.
10.	(a)	Form of Representation of counsel (included as part of its opinion filed as Exhibit 9(b) and incorporated herein by reference).
	(b)	Consent of Independent Registered Public Accounting Firm. [FILED HEREWITH]
	(c)	Powers of Attorney for: James R. Boyle; Thomas Borshoff, Ruth Ann Fleming, James D. Gallagher, Scott S. Hartz, Rex Schlaybaugh, Jr.; and John G. Vrysen - incorporated by reference to Exhibit 24(B)(10)(c) to this initial Registration Statement filed on Form N-4, File No. 333-164147, filed on January 4, 2010.
	(d)	Powers of Attorney for Paul M. Connolly and Steven Finch, incorporated by reference to Exhibit 24(B)(10)(d) to this Registration Statement, File No. 333-164147, filed on May 2, 2012.
	(e)	Power of Attorney for Marianne Harrison, incorporated by reference to Exhibit 24(B)(10)(e) to this Registration Statement, File No. 333-164147, filed on April 30, 2012.
	(f)	Power of Attorney for Craig Bromley, incorporated by reference to Exhibit 24(B)(10)(f) to this Registration Statement, File No. 333-164147, Filed on April 25, 2013.

(g) Power of Attorney for Michael Doughty, incorporated by reference to Exhibit 24(B)(10)(g) to this Registration Statement, File No. 333-164147, Filed on April 28, 2014.

11.	Not Applicable.
12.	Not Applicable.

ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR.

OFFICERS AND DIRECTORS OF JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

EFFECTIVE AS OF MARCH 30, 2016

NAME AND PRINCIPAL BUSINESS ADDRESS	POSITION WITH DEPOSITOR
Craig Bromley*	Chairman and President
Thomas Borshoff*	Director
Paul M. Connolly*	Director
Michael Doughty***	Director and Executive Vice President
Ruth Ann Fleming*	Director
James D. Gallagher*	Director, Executive Vice President, General Counsel and Chief Administrative Officer
Scott S. Hartz***	Director, Executive Vice President, and Chief Investment Officer – U.S. Investments
Rex Schlaybaugh, Jr.*	Director
John G. Vrysen*	Director
Andrew Arnott*	Executive Vice President
Steven Finch*	Executive Vice President and Chief Financial Officer
Peter Gordon*	Executive Vice President
Timothy Ramza*	Executive Vice President
Halina K. von dem Hagen**	Executive Vice President and Treasurer
John C.S. Anderson	Senior Vice President
Kevin J. Cloherty*	Senior Vice President
Barry Evans#	Senior Vice President
Brian Heapps***	Senior Vice President
Gregory Mack*	Senior Vice President
Janis K. McDonough***	Senior Vice President
William McPadden***	Senior Vice President
James O’Brien†	Senior Vice President
Sebastian Pariath*	Senior Vice President, Head of Operations and Chief Information Officer
Alan R. Seghezzi***	Senior Vice President
Anthony Teta***	Senior Vice President
Brooks Tingle***	Senior Vice President
Leo Zerilli*	Senior Vice President
Emanuel Alves*	Vice President, Counsel, and Corporate Secretary
Roy V. Anderson*	Vice President
Abigail M. Armstrong*	Vice President
Kevin Askew††	Vice President
William Ball	Vice President
William D. Bertrand	Vice President
Ann Birle†	Vice President
Stephen J. Blewitt***	Vice President
Alan Block*	Vice President
Robert Boyda*	Vice President
Grant Buchanan**	Vice President
Rick A. Carlson*	Vice President
Robert Carroll*	Vice President
Brian Collins†	Vice President
Paul M. Crowley	Vice President
John J. Danello*	Vice President
Brent Dennis***	Vice President
Robert Donahue††	Vice President
Melvyn D’Souza**	Vice President, Treasury
Paul Gallagher*	Vice President
Ann Gencarella***	Vice President
Gerald C. Hanrahan, Jr.	Vice President
Richard Harris**	Vice President and Appointed Actuary

OFFICERS AND DIRECTORS OF JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

EFFECTIVE AS OF MARCH 30, 2016

NAME AND PRINCIPAL BUSINESS ADDRESS	POSITION WITH DEPOSITOR
John Hatch*	Vice President
Kevin Hill***	Vice President
Eugene Xavier Hodge, Jr.***	Vice President
James C. Hoodlet***	Vice President
Mitchell Karman*	Vice President, Chief Compliance Officer, and Counsel
Frank Knox*	Vice President, Chief Compliance Officer – Retail Funds/Separate Accounts
Hung Ko**	Vice President, Treasury
David Kroach*	Vice President
Scott Lively*	Vice President
Cheryl Mallett**	Vice President
Nathaniel I. Margolis***	Vice President
John B. Maynard*	Vice President
Karen McCafferty*	Vice President
Scott A. McFetridge***	Vice President
Maureen Milet***	Vice President and Chief Compliance Officer - Investments
Scott Morin*	Vice President
Jeffrey H. Nataupsky*	Vice President
Scott Navin***	Vice President
Betty Ng**	Vice President
Nina Nicolosi*	Vice President
Jacques Ouimet†	Vice President
Jeffrey Packard***	Vice President
Gary M. Pelletier***	Vice President
E. David Pemstein***	Vice President
David Plumb†	Vice President
Tracey Polsgrove*	Vice President
Jill Rebman**	Vice President
George Revoir*	Vice President
Andrew Ross**	Vice President
Lisa Ann Ryan†	Vice President
Thomas Samoluk*	Vice President
Martin Sheerin*	Vice President
Gordon Shone*	Vice President
Susan Simi	Vice President
Rob Stanley*	Vice President
Tony Todisco††	Vice President
Simonetta Vendittelli*	Vice President and Controller
Peter de Vries**	Vice President
Linda A. Watters*	Vice President
Brent Wilkinson†	Vice President
R. Blake Witherington***	Vice President

OFFICERS AND DIRECTORS OF JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

EFFECTIVE AS OF MARCH 30, 2016

NAME AND PRINCIPAL BUSINESS ADDRESS	POSITION WITH DEPOSITOR
Henry Wong***	Vice President

* Principal business office is 601 Congress Street, Boston, MA 02210

** Principal business office is 200 Bloor Street, Toronto, Canada M4W 1E5

*** Principal business office is 197 Clarendon Street, Boston, MA 02117

**** Principal business office is 164 Corporate Drive Portsmouth, NH 03801

† Principal business office is 200 Berkeley Street, Boston, MA 02116

†† Principal business office is 380 Stuart Street, Boston, MA 02116

††† Principal business office is 200 Clarendon Street, Boston, MA 02116

†††† Principal business office is 25 Water Street South, Kitchener, ON Canada N2G 4Y5

# Principal business office is 101 Huntington Avenue, Boston, MA 02199

ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH DEPOSITOR OR REGISTRANT

Registrant is a separate account of John Hancock Life Insurance Company (U.S.A.) (the “Company”), operated as a unit investment trust. Registrant supports benefits payable under the Company’s variable annuity contracts by investing assets allocated to various investment options in shares of John Hancock Trust (the “Trust”), which is a “series” type of mutual fund registered under the Investment Company Act of 1940 (the “Act”) as an open-end management investment company. The purchasers of variable annuity and variable life insurance contracts, in connection with which the Trust is used, will have the opportunity to instruct the Company with respect to the voting of the shares of the Series Fund held by Registrant as to certain matters. Subject to the voting instructions, the Company directly controls Registrant.

On the effective date of this Registration Statement, the Company and its affiliates are controlled by Manulife Financial Corporation (“MFC”). A list of other persons controlled by MFC as of December 31, 2015 appears below:

ITEM 27. NUMBER OF CONTRACT OWNERS

Outstanding, as of April 4, 2016, were 4,893 qualified contracts and 4,071 nonqualified contracts of the series offered.

ITEM 28. INDEMNIFICATION

Article XIV of the Restated Articles of Redomestication of the Company provides as follows:

No director of this Corporation shall be personally liable to the Corporation or its shareholders or policyholders for monetary damages for breach of the director’s fiduciary duty, provided that the foregoing shall not eliminate or limit the liability of a director for any of the following:

i) a breach of the director’s duty or loyalty to the Corporation or its shareholders or policyholders;

ii) acts or omissions not in good faith or that involve intentional misconduct or knowing violation of law;

iii) a violation of Sections 5036, 5276 or 5280 of the Michigan Insurance Code, being MCLA 500.5036, 500.5276 and 500.5280;

iv) a transaction from which the director derived an improper personal benefit; or

v) an act or omission occurring on or before the date of filing of these Articles of Incorporation.

If the Michigan Insurance Code is hereafter amended to authorize the further elimination or limitation of the liability of directors. then the liability of a director of the Corporation, in addition to the limitation on personal liability contained herein, shall be eliminated or limited to the fullest extent permitted by the Michigan Insurance Code as so amended. No amendment or repeal of this Article XIV shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to the effective date of any such amendment or repeal.

Notwithstanding the foregoing, Registrant hereby makes the following undertaking pursuant to Rule 484 under the Securities Act of 1933:

Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

ITEM 29. PRINCIPAL UNDERWRITERS

(a) Set forth below is information concerning other investment companies for which John Hancock Distributors, LLC (“JHD LLC”), the principal underwriter of the contracts, acts as investment adviser or principal underwriter.

NAME OF INVESTMENT COMPANY	CAPACITY IN WHICH ACTING
John Hancock Life Insurance Company (U.S.A.) Separate Account H	Principal Underwriter
John Hancock Life Insurance Company (U.S.A.) Separate Account A	Principal Underwriter
John Hancock Life Insurance Company (U.S.A.) Separate Account N	Principal Underwriter
John Hancock Life Insurance Company (U.S.A.) Separate Account I	Principal Underwriter
John Hancock Life Insurance Company (U.S.A.) Separate Account L	Principal Underwriter
John Hancock Life Insurance Company (U.S.A.) Separate Account M	Principal Underwriter
John Hancock Life Insurance Company of New York Separate Account A	Principal Underwriter
John Hancock Life Insurance Company of New York Separate Account B	Principal Underwriter
John Hancock Life Insurance Company (U.S.A.) Separate Account Q	Principal Underwriter
John Hancock Life Insurance Company (U.S.A.) Separate Account W	Principal Underwriter
John Hancock Life Insurance Company (U.S.A.) Separate Account X	Principal Underwriter
John Hancock Variable Life Account UV	Principal Underwriter
John Hancock Life Insurance Company (U.S.A.) Separate Account R	Principal Underwriter
John Hancock Life Insurance Company (U.S.A.) Separate Account T	Principal Underwriter
John Hancock Variable Life Account S	Principal Underwriter
John Hancock Variable Life Account U	Principal Underwriter
John Hancock Variable Life Account V	Principal Underwriter

(b) John Hancock Life Insurance Company (U.S.A.) is the sole member of John Hancock Distributors LLC (JHD LLC). The management of JHD LLC is vested in its board of managers (consisting of Michael Doughty***, Steven Finch***, James C, Hoodlet***, George Revoir*, Alan Seghezzi***, and Christopher M. Walker**) who have authority to act on behalf of JHD LLC.

* Principal business office is 601 Congress Street, Boston, MA 02210

** Principal business office is 200 Bloor Street, Toronto, Canada M4W 1E5

*** Principal business office is 197 Clarendon Street, Boston, MA 02116

(c) None.

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS

All books and records are maintained at 601 Congress Street, Boston MA 02110.

ITEM 31. MANAGEMENT SERVICES

Not applicable.

ITEM 32. UNDERTAKINGS

(a) Representation of Insurer Pursuant to Section 26 of the Investment Company Act of 1940

John Hancock Life Insurance Company (U.S.A.) (“Company”) hereby represents that the fees and charges deducted under the contracts issued pursuant to this registration statement, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by the Company.

(b) Representation of Registrant Pursuant to Section 403(b) of the Internal Revenue Code of 1986, as amended

Registrant is relying on a no-action letter issued in connection with funding vehicles for retirement plans meeting the requirements of Section 403(b) of the Internal Revenue Code of 1986, as amended, on November 28, 1988, SEC Reference No. IP-6-88, and is complying with the provisions of paragraphs 1-4 of such no action letter.

(c) Undertakings Pursuant to Item 32 of Form N-4

(1) The Depositor and Registrant will file a post-effective amendment to this registration statement as frequently as is necessary to insure that the audited financial statements in the registration statement are never longer than 16 months old for so long as payments under the variable annuity contracts may be accepted;

(2) The Depositor and Registrant will include either (1) as part of any application to purchase a contract offered by the prospectus, a space that an applicant can check to request a Statement of Additional Information, or (2) a post card or similar communication affixed to or included in the prospectus that the applicant can remove to send for a Statement of Additional Information; and

(3) The Depositor and Registrant will deliver any Statement of Additional Information and any financial statements required to be made available under this form promptly upon written or oral request.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant and the Depositor certify that they meet all the requirements for effectiveness of this post-effective amendment to the Registration Statement pursuant to Securities Act of 1933 Rule 485(b) and they have caused this amended Registration Statement to be signed on their behalf in the City of Boston, Massachusetts, on this 29^th day of April 2016.

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT Q (Registrant)
By:	JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) (Depositor)
By:	/s/ Craig Bromley
	Craig Bromley
	Chairman and President
JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)
By:	/s/ Craig Bromley
	Craig Bromley
	Chairman and President

SIGNATURES

As required by the Securities Act of 1933, this amended Registration Statement has been signed by the following persons in their capacities with the Depositor on this 29^th day of April 2016.

Signature	Title
/s/ Craig Bromley Craig Bromley	Chairman and President (Principal Executive Officer)
/s/ Steven Finch Steven Finch	Executive Vice President and Chief Financial Officer (Principal Financial Officer)
/s/ Simonetta Vendittelli Simonetta Vendittelli	Vice President and Controller (Principal Accounting Officer)
* Thomas Borshoff	Director
* Paul M. Connolly	Director
* Michael Doughty	Director
* Ruth Ann Fleming	Director
* James D. Gallagher	Director
* Scott S. Hartz	Director
* Rex Schlaybaugh, Jr.	Director
* John G. Vrysen	Director
*/s/ Thomas J. Loftus Thomas J. Loftus Pursuant to Power of Attorney	Senior Counsel—Annuities

INDEX TO EXHIBITS

FORM N-4

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT Q

Exhibits
24(B)(10)(b)	Consent of Independent Registered Public Accounting Firm.