exhibit99-1.htm

MANAGEMENT’S DISCUSSION AND ANALYSIS

This MD&A is current as of May 11, 2011.

This MD&A should be read in conjunction with our unaudited interim consolidated financial statements as at and for the three months ended March 31, 2011 and 2010 and the MD&A and audited consolidated financial statements contained in our 2010 Annual Report.

FINANCIAL HIGHLIGHTS

(Unaudited)

	Quarterly results
		1Q 2011		4Q 2010		1Q 2010
Net income attributed to shareholders (C$ millions)	$	985	$	1,796	$	1,224
Net income available to common shareholders (C$ millions)	$	965	$	1,776	$	1,204
Earnings per common share (C$)
·basic	$	0.54	$	1.00	$	0.68
·diluted, excluding convertible instruments(a)	$	0.54	$	1.00	$	0.68
·diluted	$	0.53	$	0.96	$	0.66
Return on common shareholders’ equity(a) (%, annualized)		17.4		32.3		19.2
Premiums and deposits(a) (C$ millions)
·Insurance products targeted for growth(b)	$	4,732	$	4,757	$	4,237
·Wealth products targeted for growth(c)	$	10,924	$	9,706	$	9,885
·Insurance products not targeted for growth (b)	$	865	$	972	$	954
·Wealth products not targeted for growth (c)	$	1,141	$	1,284	$	2,078
Funds under management(a) (C$ billions)	$	478.3	$	477.0	$	448.3
Capital(a) (C$ billions)	$	28.6	$	28.7	$	32.2

(a)	This item is a non-GAAP measure. For a discussion of our use of non-GAAP measures, see “Performance and Non-GAAP Measures” below.

(b)	Insurance products targeted for growth exclude universal life with lifetime no-lapse guarantees, guaranteed non-par whole life and long-term card insurance in the U.S., which are not targeted for growth.

(c)

Wealth products targeted for growth exclude variable annuities across all geographies (other than InvestmentPlus in Canada) and book value fixed deferred annuities in the U.S. which are not targeted for growth. InvestmentPlus is a Canadian Division product with a 75% minimum death benefit guarantee and a 75% maturity benefit guarantee at age 100 that is used as an alternative to mutual funds for some customers. Because of the low risk nature of the guarantees this product is in the products targeted for growth category.

Adoption of IFRS

Effective January 1, 2011, the Company adopted International Financial Reporting Standards (“IFRS”) as a replacement of prior Canadian GAAP5. The interim consolidated financial statements for the period ended March 31, 2011 reflect the Company’s first set of financial statements prepared under IFRS and include corresponding comparative financial information for 2010. For an overview of the impacts of the adoption of IFRS including a description of accounting policies selected, refer to Note 15 – First time adoption of IFRS to the interim Consolidated Financial Statements for the period ending March 31, 2011 as well as Note 2 – Future Accounting and Reporting Changes to our Consolidated Financial Statements found in our 2010 Annual Report and our press release reporting certain IFRS financial information, dated April 14, 2011, available on our website at www.manulife.com/investorrelations.

The adoption of IFRS did not have a significant impact on our disclosure controls and procedures, information technology systems or business activities.

Net income attributed to shareholders

First quarter 2011 net income attributed to shareholders was $985 million compared to $1,224 million in the first quarter of 2010. First quarter 2011 results included $111 million related to the direct impact of equity markets and interest rates, a charge of $151 million related to the earthquake in northeastern Japan and a number of other notable items. These other notable items included:

·	$100 million of expected macro hedge costs in addition to the higher costs due to the strong North American equity markets,

·	$254 million of gains from actions to reduce interest rate exposure, reflecting the impact of lower risk margins required in the valuation of policy liabilities. Lower risk margins are required as a result of the improved match between the asset and liability cash flows, and

·	$170 million of gains primarily from fair value increases on oil & gas and real estate investments (in excess of the returns assumed in the valuation of the policy liabilities), as well as from fixed income trading activities and favourable credit experience.

5 Unless otherwise specified, references to GAAP refer to Canadian GAAP prior to the adoption of IFRS for 2010 and earlier and IFRS for 2011 and beyond.

Manulife Financial Corporation – First Quarter 2011

In addition to the items noted above, compared to the first quarter of 2010, earnings benefitted from lower new business strain in U.S. Insurance. However earnings were dampened by higher dynamic hedge costs and lower realized gains on equities held as available-for-sale (“AFS”).

Notable items:

C$ millions (unaudited)
For the quarter ended March 31	2011			2010
Net income attributed to shareholders	$	985		$	1,224
Less the direct impact of higher equity markets and higher interest rates on(a):
Variable annuity guarantee liabilities that are not dynamically hedged	$	102		$	271
General fund equity investments supporting policy liabilities and on fee income		30			23
Macro equity hedges, actual result relative to expected cost(b)		(138	)		-
Fixed income re-investment assumptions used in the determination of policy liabilities		192			26
Loss on sale of AFS bonds		(75	)		-
Total direct impact of equity markets and interest rates	$	111		$	320
Net income excluding the direct impact of equity markets and interest rates6	$	874		$	904
Other notable items:
Macro hedging losses based on long-term valuation assumptions (b)		(100	)		-
Estimated net impact from P&C reinsurance claims related to the earthquake in Japan		(151	)		-
Impact on policy liabilities related to activities to reduce interest rate exposures		254			-
Investment related gains including fair value gains on oil & gas and real estate investments, gains on fixed income trading activities and favourable credit experience		170			276
Refinements in assumptions used to value policy liabilities ( c)		8			(50	)

(a)	For clarity, the direct impact of equity markets and interest rates is relative to our policy liability valuation assumptions The one exception is the loss on AFS bonds.

(b)	The total cost of macro equity hedges was $238 million and includes a $100 million charge related to the estimated expected cost of the macro equity hedges relative to our long-term valuation assumptions. The remaining $138 million was reported as a direct impact of equity markets.

(c)

Refinements in assumptions used to value policy liabilities include a charge of $70 million of related to the refinement of methods and models in the quarter, offset by an update to the prior quarter’s estimate of policy liabilities upon completion of the detailed data models made available in the following quarter. The 2010 amount relates to an update of the prior quarter’s estimate.

Earnings per share and return on common shareholders’ equity

Diluted earnings per share, excluding convertible instruments7 for the first quarter of 2011 was $0.54 compared to $0.68 for the first quarter of 2010. The return on common shareholders’ equity8 was 17.4 per cent for the first quarter of 2011 (19.2 per cent for the first quarter of 2010).

Premiums and deposits9 (“P&D”) measures

Total Company first quarter P&D of $4.7 billion for insurance products that we are targeting to grow was up 13 per cent on a constant currency basis10 over the first quarter of 2010. Strong growth was delivered in targeted U.S. products and in Asia, with growth in Japan being particularly strong. P&D reflects both P&D received on new sales as well as the recurring P&D on the growing in-force business.

Total Company first quarter P&D for the insurance lines we are not targeting to grow was $0.9 billion, a decrease of four per cent on a constant currency basis from the first quarter of 2010. The decline reflects the impact of lower sales.

Total Company P&D for the wealth businesses we are targeting to grow was $10.9 billion for the first quarter of 2011, an increase of 15 per cent on a constant currency basis relative to the same quarter in 2010. Growth was driven by strong mutual fund sales and broad based growth in Asian wealth businesses, partially offset by lower fixed product sales in both the U.S. and Canada.

Total Company P&D for the wealth products we are not targeting to grow amounted to $1.1 billion for the first quarter of 2011. This result represents a decrease of 44 per cent compared to the first quarter of 2010.

Funds under management11

Total funds under management as at March 31, 2011 were $478 billion, the highest level in the Company’s history. The increase of $30 billion over March 31, 2010 (11 per cent growth on a constant currency basis) was driven by $39 billion related to investment returns; $8 billion of net positive policyholder cash flows; and $1.7 billion of net financing issued. These items were partially offset by $12 billion due to the strengthening of the Canadian dollar and $7 billion of expenses, commissions, taxes and other movements.

6 Net income excluding the direct impact of equity markets and interest rates is a non-GAAP measure. See “Performance and Non-GAAP Measures” below.

7	Diluted earnings per share, excluding convertible instruments is a non-GAAP measure. See “Performance and Non-GAAP Measures” below.

8	Return on common shareholders’ equity is a non-GAAP measure. See “Performance and Non-GAAP Measures” below.

9	Premiums and deposits is a non-GAAP measure. See “Performance and Non-GAAP Measures” below

10	Constant currency is a non-GAAP measure. See “Performance and Non-GAAP Measures” below.

11	Funds under management is a non-GAAP measure. See “Performance and Non-GAAP Measures” below.

Manulife Financial Corporation – First Quarter 2011

U.S. GAAP results

With the adoption of IFRS beginning this quarter, the Company will no longer reconcile its annual financial results to U.S. GAAP in the consolidated financial statements and instead will disclose certain consolidated quarterly U.S. GAAP information in our MD&A.

Net income in accordance with U.S. GAAP12 for the first quarter of 2011 was $204 million, compared to $932 million in the first quarter of 2010. U.S. GAAP results included a number of notable items as follows:

(C$ millions) For the three months ended March 31,	2011			2010
Total macro hedging losses	$	(238	)	$	-
Estimated net impact from P&C reinsurance claims related to the earthquake in Japan		(151	)		-
Net losses on the sale of AFS bonds in the surplus segment		(75	)		-
Net gain (loss) on variable annuity guarantees (a)		(31	)		256

(a)	U.S. GAAP variable annuity results include the impact of the insurer’s own credit standing in the measurement of the liability. See “accounting for variable annuity guarantee liabilities” in the table below.

The first quarter 2011 U.S. GAAP results were $785 million lower than our results under IFRS. As we are no longer reconciling our annual financial results under U.S. GAAP in our consolidated financial statements, net income in accordance with U.S. GAAP is considered a non-GAAP financial measure. A reconciliation of the major differences in net income attributed to shareholders for the first quarter is as follows:

(C$ millions) For the three months ended March 31,	2011			2010
Net income attributed to shareholders in accordance with IFRS	$	985		$	1,224
Non-controlling interest and participating policyholders’ income under IFRS		4			9
Net income in accordance with IFRS	$	989		$	1,233
Key earnings differences:
For variable annuity guarantee liabilities	$	(126	)	$	(75	)
Related to the impact of mark-to-market accounting and investing activities on investment income and policy liabilities13		(693	)		(233	)
For acquisition costs and other new business items		(95	)		(45	)
Changes in actuarial methods and assumptions and other differences		129			52
Total earnings differences	$	(785	)	$	(301	)
Net income in accordance with U.S. GAAP	$	204		$	932

The primary earnings differences in accounting bases relate to:

Accounting for variable annuity guarantee liabilities – IFRS follows a predominantly “mark-to-market” accounting approach to measure variable annuity guarantee liabilities whereas U.S. GAAP only uses “mark-to-market” accounting for certain benefit guarantees which includes the own credit standing of the Company in the measurement of the liability. In the first quarter of 2011, the lower U.S. GAAP earnings are a result of the narrowing of credit spreads attributed to the Company’s own credit standing impacting U.S. GAAP results only.

Investment income and policy liabilities – Unrealized gains on fixed income investments are reported in equity under U.S. GAAP, but where the investments are supporting policy liabilities, these unrealized gains are largely offset in the valuation of the policy liabilities under IFRS. The first quarter IFRS impacts on insurance liabilities of fixed income re-investment assumptions, general fund equity investments, activities to reduce interest rate exposures, and certain market and trading gains did not impact U.S. GAAP results.

Differences in the treatment of acquisition costs and gains/losses on new business – acquisition costs that are related to and vary with the production of new business are explicitly deferred and amortized under U.S. GAAP but are recognized as an implicit reduction in insurance liabilities under IFRS. In the first quarter, IFRS results benefited from lower new business strain, primarily in U.S. insurance.

Total equity in accordance with U.S. GAAP14 is approximately $6.4 billion higher than under IFRS. The primary reason for the difference is that the unrealized gains on fixed income investments are reported in equity under U.S. GAAP, but where the investments are supporting policy liabilities, these accumulated unrealized gains are largely offset in the valuation of the policy liabilities under IFRS. The fixed income

12	Net income in accordance with U.S. GAAP is a non-GAAP measure. See “Performance and Non-GAAP Measures” below.

13 Until the new IFRS standard for insurance contracts is effective, the requirements under prior Canadian GAAP for the valuation of insurance liabilities (CALM) will be

maintained. Under CALM, the measurement of insurance liabilities is based on projected liability cash flows, together with estimated future premiums and net investment income

generated from assets held to support those liabilities.

14	Total equity in accordance with U.S. GAAP is a non-GAAP measure. See “Performance and Non-GAAP Measures” below.

Manulife Financial Corporation – First Quarter 2011

investments which have significant unrealized gains as a result of the current low levels of interest rates, along with the cumulative earnings differences, result in materially higher U.S. GAAP equity.

A reconciliation of the major differences in total equity is as follows:

(C$ millions) As at	March 31, 2011			December 31 , 2010 0
Total equity in accordance with IFRS	$	25,112		$	24,675
Differences in shareholder retained earnings and participating policyholders’ equity		5,974			6,790
Difference in Accumulated Other Comprehensive Income attributable to:
(i) Available-for-sale securities and others;		1,407			1,723
(ii) Cash flow hedges; and		261			458
(iii) Currency translation(a)		(1,427	)		(1,418	)

Differences in share capital, contributed surplus and non controlling interest in subsidiaries		144			162
Total equity in accordance with U.S. GAAP	$	31,471		$	32,390

(a)	Reflects the net difference in the currency translation account after the re-set to zero through retained earnings upon adoption of IFRS at January 1, 2010.

Capital

Total capital was $28.6 billion as at March 31, 2011, $3.6 billion lower than $32.2 billion as at March 31, 2010. Capital decreased as a result of a $0.4 billion decrease in unrealized gains on AFS securities, the $0.5 billion negative impact of the stronger Canadian dollar, $1.9 billion of net loss attributed to shareholders and $0.7 billion of shareholder dividends paid in cash and the redemption of $0.55 billion of subordinated debentures, partially offset by the issue of $0.2 billion of preferred shares.

As at March 31, 2011, The Manufacturers Life Insurance Company’s (“MLI”) Minimum Continuing Capital and Surplus Requirements (“MCCSR”) ratio remained strong at 243 per cent compared to 249 per cent at December 31, 2010. There were three key factors contributing to the change: maturity of debt only partially offset by issuance of preferred shares, changes to the balance sheet as a result of the adoption of IFRS and increased capital requirements of a related party reinsurance agreement.

Under the IFRS transition guidance outlined by the Office of the Superintendent of Financial Institutions, the impact of IFRS adoption on available capital is largely phased-in over an eight quarter period beginning with the first quarter of 2011. The impact on required capital is not subject to the phase-in rules. The adoption of IFRS initially decreased MLI’s MCCSR ratio by approximately three points beginning in the first quarter of 2011 and is expected to decrease the ratio by approximately a further three points over the two year phase-in period ending with the fourth quarter of 2012. MLI’s MCCSR ratio under prior Canadian GAAP at December 31, 2010 was 249 per cent and was approximately 246 per cent under IFRS as at January 1, 2011.

Under the 2011 MCCSR guidelines, asset risk required capital cannot be transferred via a reinsurance agreement unless the assets are also transferred. This change, which is phased in over 2011, results in higher required capital for MLI, reducing MLI’s MCCSR ratio in the first quarter of 2011 by approximately three points. When fully phased in MLI’s MCCSR ratio is expected to reduce by a further seven points.

Prior period adjustment to opening retained earnings

During the quarter, the Company identified errors originating primarily from periods prior to the merger with John Hancock Financial Services, Inc. in April 2004. The result of these errors included an understatement of other liabilities of $133 million. Because these errors are not material to the financial statements for prior years, but correcting them in the current quarter would have materially distorted the current quarter’s earnings, the Company has corrected the errors by reducing opening shareholders’ retained earnings as at January 1, 2010 by $133 million.

PERFORMANCE BY DIVISION

Change in reporting approach for segment results

Effective January 1, 2011, we no longer allocate investment gains and losses to our reporting segments on a pooled basis. Previously, those gains and losses were accumulated into two pools – insurance and wealth management, and were then allocated pro-rata back to the business units based on their respective policy liabilities. Beginning in 2011, in conjunction with the previous actions taken to reduce interest rate and equity risks, the Company no longer monitors the assets and related risk positions in a pooled manner and instead monitors each business unit’s performance based on the direct impact of interest and equity investment performance for the particular business unit. This change required retroactive application to our fiscal 2010 segmented reporting results and did not have any impact on consolidated net income or the consolidated statement of financial position of the Company.

Manulife Financial Corporation – First Quarter 2011

Asia Division

	Quarterly results
Canadian dollars		1Q 2011		4Q 2010		1Q 2010
Net income attributed to shareholders (millions)	$	351	$	411	$	365
Premiums & deposits for products targeted for growth (millions)		2,286		2,767		1,672
Premiums & deposits for products not targeted for growth (millions)		85		73		751
Funds under management (billions)		67.4		67.7		58.7
U.S. dollars
Net income attributed to shareholders (millions)	$	357	$	407	$	351
Premiums & deposits for products targeted for growth (millions)		2,320		2,731		1,608
Premiums & deposits for products not targeted for growth (millions)		86		72		722
Funds under management (billions)		69.4		68.0		57.8

Asia Division reported net income attributed to shareholders of US$357 million for the first quarter of 2011 compared with US$351 million for the first quarter of 2010. Included in the first quarter of 2011 are net experience gains of US$100 million (2010 – US$123 million) as a result of the equity, interest rate, credit and other non-fixed income returns differing from our best estimate policy liability assumptions. Net income attributed to shareholders excluding these items increased by US$29 million driven by higher fee income and in-force earnings, a result of business growth.

Premiums and deposits for products targeted for growth for the first quarter of 2011 were US$2.3 billion, up 38 per cent on a constant currency basis from US$1.6 billion reported in the first quarter of 2010. Higher premiums and deposits were driven by robust insurance sales and strong business growth, a result of broadening distribution and successful product launches. Wealth management premiums and deposits were fueled by mutual fund growth which quadrupled over the first quarter of 2010 driven by the acquisition of Manulife TEDA, the acquired asset management joint venture in China as well as strong growth in most of the wealth management businesses across the region.

Funds under management as at March 31, 2011 were US$69.4 billion, up 13 per cent on a constant currency basis from March 31, 2010. Growth was driven by net policyholder cash inflows across the territories of US$3.8 billion, higher investment returns of $3.8 billion due to improved market conditions and a favourable currency impact.

Canadian Division

	Quarterly results
Canadian dollars		1Q 2011		4Q 2010		1Q 2010
Net income attributed to shareholders (millions)	$	505	$	495	$	282
Premiums & deposits for products targeted for growth (millions)		4,205		3,691		3,936
Premiums & deposits for products not targeted for growth (millions)		529		612		544
Funds under management (billions)		116.9		114.4		104.7

Canadian Division reported net income attributed to shareholders of $505 million for the first quarter of 2011, an increase of $223 million from the first quarter of 2010. First quarter earnings in 2011 included net experience gains of $294 million (2010 – $65 million) as a result of equity, interest rate, credit and other non-fixed income returns differing from our best estimate policy liability assumptions.

Excluding the above noted items, net income attributed to shareholders in the first quarter of 2011 was marginally below that of the first quarter of 2010. The positive impact of growth in asset levels in the Canadian wealth management operations and Manulife Bank was partially offset by the impact of increased hedging of in-force variable annuity guarantees. Strong sales growth in Individual Insurance, in combination with lower market yields, drove higher strain on new business reducing earnings as compared to the same period in 2010.

Premiums and deposits for products targeted for growth were $4.2 billion for the first quarter of 2011, an increase of seven per cent compared to the first quarter of 2010. Premiums and deposits for wealth products targeted for growth rose by 10 per cent from a year ago reflecting record sales of mutual funds and InvestmentPlus, our low guarantee variable annuity product, as well as increases in group retirement deposit activity from a growing block of in-force participants. Growth was dampened by the continued decline in sales of fixed products from a year ago reflecting consumer preference for variable products in a rising market. Premiums and deposits for insurance products targeted for growth increased by five per cent in the first quarter of 2011 as compared to the same period in 2010. Premiums and deposits for variable annuity products not targeted for growth were $0.5 billion for the first quarter of 2011, consistent with the first quarter of 2010.

Funds under management grew by 12 per cent or $12.2 billion to a record $116.9 billion as at March 31, 2011 compared to March 31, 2010. The increase reflects the impact of equity market appreciation and the decline in interest rates on asset values, as well as growth across the division driven by $0.8 billion of net policyholder cash inflows in wealth businesses over the past twelve months. Continued strong growth in Manulife Bank contributed over 20 per cent of the year over year increase.

Manulife Financial Corporation – First Quarter 2011

U.S. Insurance

	Quarterly results
Canadian dollars		1Q 2011		4Q 2010		1Q 2010
Net income attributed to shareholders (millions)	$	403	$	404	$	211
Premiums & deposits for products targeted for growth (millions)		943		1,009		748
Premiums & deposits for products not targeted for growth (millions)		864		972		954
Funds under management (billions)		74.7		73.8		69.8

U.S. dollars
Net income attributed to shareholders (millions)	$	409	$	399	$	203
Premiums & deposits for products targeted for growth (millions)		957		996		719
Premiums & deposits for products not targeted for growth (millions)		877		960		917
Funds under management (billions)		76.9		74.2		68.8

U.S. Insurance reported net income attributed to shareholders of US$409 million for the first quarter of 2011, compared to net income of US$203 million for the first quarter of 2010. Included in the first quarter of 2011 are net experience gains of US$265 million (2010 – US$173 million) as a result of equity, interest rate, credit and other non-fixed income returns differing from our best estimate policy liability assumptions. Excluding these items, net income attributed to shareholders increased by US$114 million primarily due to lower new business strain as a result of repositioning activities and improved policyholder related experience.

Premiums and deposits for the first quarter of 2011 were $1.8 billion, up US$0.2 billion or 12 per cent over the same period in 2010. This included premiums and deposits for products targeted for growth of US$1.0 billion, an increase of US$0.2 billion or 33 per over the first quarter of 2010. Premiums and deposits for products not targeted for growth were US$0.9 billion, four per cent lower than the first quarter of 2010 as a result of transitioning to sales of lower risk products.

Funds under management as at March 31, 2011 were US$76.9 billion, up 12 per cent from March 31, 2010 due to growth in in-force business.

U.S. Wealth Management

	Quarterly results
Canadian dollars		1Q2011		4Q2010		1Q2010
Net income attributed to shareholders (millions)	$	312	$	684	$	368
Premiums & deposits for products targeted for growth (millions)		7,251		6,307		6,656
Premiums & deposits for products not targeted for growth (millions)		528		599		784
Funds under management (billions)		187.8		187.1		178.4

U.S. dollars
Net income attributed to shareholders (millions)	$	317	$	675	$	353
Premiums & deposits for products targeted for growth (millions)		7,357		6,229		6,399
Premiums & deposits for products not targeted for growth (millions)		536		592		754
Funds under management (billions)		193.3		188.1		175.7

U.S. Wealth Management reported net income attributed to shareholders of US$317 million for the first quarter of 2011, compared to US$353 million for the first quarter of 2010. Included in the first quarter of 2011 are net experience gains of US$167 million (2010 – US$185 million) as a result of equity, interest rate, credit and other non-fixed income returns differing from our best estimate policy liability assumptions. Excluding these items, net income attributed to shareholders decreased by US$18 million primarily driven by the costs associated with the hedging of additional in-force variable annuity guaranteed value, the impact of lower sales of fixed products and higher acquisition costs related to higher sales of mutual funds. Partially offsetting these was higher fee income in Wealth Asset Management from higher average assets under management.

Premiums and deposits for the first quarter of 2011 were US$7.9 billion, up US$0.7 billion or 10 per cent over the same period in 2010. Premiums and deposits for products targeted for growth for the first quarter of 2011 were US$7.4 billion, up 15 per cent from US$6.4 billion in the first quarter of 2010 driven by higher sales in Wealth Asset Management, including a 42 per cent increase in mutual fund sales.

Premiums and deposits for products not targeted for growth were US$0.5 billion for the first quarter of 2011, down from US$0.8 billion in the first quarter of 2010 as a result of ongoing risk management initiatives.

Funds under management as at March 31, 2011 were US$193.3 billion, up 10 per cent from US$175.7 billion as at March 31, 2010 driven by positive investment returns. Over the last twelve months Wealth Asset Management net sales of $5.5 billion were offset by scheduled maturities, and annuity and surrender payments in JH Fixed Products and JH Variable Annuities.

Manulife Financial Corporation – First Quarter 2011

Reinsurance Division

	Quarterly results
Canadian dollars		1Q 2011			4Q 2010		1Q 2010
Net income (loss) attributed to shareholders (millions)	$	(92	)	$	77	$	45
Premiums & deposits (millions)		303			246		263

U.S. dollars
Net income (loss) attributed to shareholders (millions)	$	(93	)	$	76	$	43
Premiums & deposits (millions)		308			243		253

Reinsurance Division reported a net loss of US$93 million in the first quarter of 2011, a decrease of US$136 million from the net income of US$43 million reported in the first quarter of 2010, primarily due to estimated claims net related reinsurance premiums of US$153 million related to the earthquake in Japan in the Property and Casualty line of business. Net experience gains as a result of equity, interest rate, credit and other non-fixed income returns differing from our best estimate policy liability assumptions were not material in either period. Life reinsurance claims experience in the first quarter of 2011 was favourable, whereas experience in the first quarter of 2010 was unfavourable.

Premiums for the first quarter of 2011 were US$308 million, up 22 per cent from US$253 million reported in the first quarter of 2010. The increase is primarily driven by Property and Casualty reinstatement premiums resulting from the Japan earthquake loss. International Group Program premiums increased due to higher volumes reported by clients and Life Reinsurance premiums were also up as a result of lower experience refunds.

Corporate and Other

	Quarterly results
Canadian dollars		1Q 2011			4Q 2010			1Q 2010
Net loss attributed to shareholders (millions)	$	(494	)	$	(275	)	$	(47	)
Funds under management (billions)		29.1			31.6			34.2

Corporate and Other is comprised of the earnings on assets backing capital, net of amounts allocated to operating divisions, changes in actuarial assumptions and model enhancements, Investment Division’s external asset management business, the John Hancock Accident and Health operation, settlement costs for macro equity hedges and other non operating items.

Corporate and Other reported a net loss attributed to shareholders of $494 million for the first quarter of 2011 compared to a net loss of $47 million for the first quarter of 2010. Results in the first quarter of 2011 include losses related to macro equity hedges of $238 million, realized losses on AFS bonds of $90 million and a charge for refinements to actuarial methods and assumptions of $70 million. Excluding these factors, earnings declined by $49 million due to lower realized gains on AFS equities and the non-recurrence of derivative gains realized in 2010.

Funds under management of $29.1 billion as at March 31, 2011 include assets managed by Manulife Asset Management on behalf of institutional clients of $22.9 billion (December 31, 2010 – $23.2 billion). Corporate and Other funds under management of $6.3 billion (December 31, 2010 – $8.5 billion) decreased in the current quarter reflecting an increased allocation of capital to the operating divisions.

RISK MANAGEMENT

Overview

Manulife Financial is a financial institution offering insurance, wealth and asset management products and services, which subjects the Company to a broad range of risks. We manage these risks within an enterprise-wide risk management framework.

For further information relating to our risk management practices and risk factors affecting the Company, see “Risk Factors” in our most recent Annual Information Form, “Risk Management” and “Critical Accounting and Actuarial Policies” in Management’s Discussion and Analysis (“MD&A”) in our 2010 Annual Report and the “Risk Management” note to the consolidated financial statements in our most recent annual and interim reports.

Market risk hedging strategies

As a result of the dynamic and macro hedges, as at March 31, 2011, it was estimated that approximately 59 to 65 per cent of our underlying earnings sensitivity to a ten per cent equity market decline would be offset by hedges. The lower end of the range assumes that the dynamic hedge assets would cover 80 per cent of the loss from the dynamically hedged variable annuity guarantee liabilities and the upper end of the range assumes the dynamic hedge assets would completely offset the loss from the dynamically hedged variable annuity guarantee liabilities. The range at December 31, 2010 was 50 to 55 per cent. As previously communicated, our goal is to have approximately 60 per cent of the underlying earnings sensitivity to equity markets offset by hedges by the end of 2012 and 75 per cent by the end of 2014. The Company intends to achieve these goals through a combination of time-scheduled and market-trigger based actions.

The Company’s goal is to reduce its interest rate exposures, as measured by the sensitivity of net income attributed to shareholders to a 100 basis point decline in interest rates, to achieve a maximum exposure of $1.65 billion and $1.1 billion, as at year end 2012 and 2014,

Manulife Financial Corporation – First Quarter 2011

respectively. As at March 31, 2011, primarily as a result of the actions in the fourth quarter 2010 and the first quarter of 2011, the sensitivity of our net income to a 100 basis point decline was $1.5 billion, and thus we have already surpassed our 2012 year end goal.

As part of our risk reduction activities, we initiated dynamic hedging on $8.5 billion of in-force variable annuity guarantee value during the first quarter of 2011 and continued to dynamically hedge virtually all new variable annuity business written. By March 31, 2011 approximately 63 per cent of the guarantee value was either dynamically hedged or reinsured, compared to 55 per cent at December 31, 2010. The business dynamically hedged at March 31, 2011 comprises 59 per cent of the variable annuity guarantee values, net of amounts reinsured.

We also continued our macro equity risk hedging strategy and during the first quarter of 2011 shorted approximately $200 million of equity TOPIX futures contracts. The macro hedging strategy, which commenced in 2010, is designed to mitigate public equity risk arising from variable annuity guarantees not dynamically hedged and from other products and fees.

In the first quarter of 2011, we further lengthened the duration of assets backing our liability segments by executing interest rate swaps. These actions, combined with higher interest rates contributed to a net reduction in the sensitivity of net income attributed to shareholders to declines in interest rates. As part of our overall interest rate management, we also reduced the term of the AFS fixed income assets in our surplus segment.

There can be no assurance that the Company's exposure to equity performance and movements in interest rates will be reduced to within our 2014 targets or remain within our 2012 targets. We may be unable to hedge our existing unhedged business as outlined in our risk reduction plans, or if we do so, we may be required to record a charge to income when we initiate hedging. Under certain market conditions, which include a sustained increase in realized equity and interest rate volatilities, a decline in interest rates or equity markets, or an increase in the correlation between equity market declines and interest rate declines, the costs of hedging the benefit guarantees provided in variable annuities may increase or become uneconomic, in which case we may reduce or discontinue sales of certain of these products. In addition, there can be no assurance that our dynamic hedging strategy will fully offset the risks arising from the variable annuities being hedged.

Our hedging strategies expose the Company to additional risks. Hedging relies on the execution of derivative transactions and the ability to execute may be negatively impacted if markets for these instruments become illiquid. Hedging also subjects the Company to the risk of increased funding and collateral demands which may become significant as markets rise.

Sensitivities and risk exposure measures

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

Variable annuity and segregated fund guarantees Guarantees on variable products and segregated funds may include one or more of death, maturity, income and withdrawal guarantees. Variable annuity and segregated fund guarantees are contingent and only payable upon the occurrence of the relevant event, if fund values at that time are below guaranteed values. Depending on future equity market levels, liabilities on current in-force business could be due primarily in the period from 2015 to 2038.

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

Manulife Financial Corporation – First Quarter 2011

Variable annuity and segregated fund guarantees

As at	March 31, 2011						December 31, 2010
(C$ millions)	Guarantee value		Fund value		Amount at risk (d)		Guarantee value		Fund value		Amount at risk (d)
Guaranteed minimum income benefit(a)	$	7,829	$	6,241	$	1,610	$	8,202	$	6,359	$	1,856
Guaranteed minimum withdrawal benefit		61,796		57,653		5,603		62,382		57,331		6,391
Guaranteed minimum accumulation benefit		22,958		24,556		1,745		23,902		25,152		1,980
Gross living benefits(b)	$	92,583	$	88,450	$	8,958	$	94,486	$	88,842	$	10,227
Gross death benefits(c)		15,536		12,487		2,408		16,279		12,736		2,813
Total gross of reinsurance & hedging	$	108,119	$	100,937	$	11,366	$	110,765	$	101,578	$	13,040
Living benefits reinsured	$	6,774	$	5,394	$	1,394	$	7,108	$	5,506	$	1,611
Death benefits reinsured		4,641		3,940		897		4,924		4,070		1,052
Total reinsured	$	11,415	$	9,334	$	2,291	$	12,032	$	9,576	$	2,663
Total, net of reinsurance	$	96,704	$	91,603	$	9,075	$	98,733	$	92,002	$	10,377
Living benefits dynamically hedged	$	52,245	$	52,295	$	3,109	$	44,606	$	44,827	$	2,685
Death benefits dynamically hedged		4,991		3,385		356		4,685		3,032		424
Total dynamically hedged	$	57,236	$	55,680	$	3,465	$	49,291	$	47,859	$	3,109
Living benefits retained	$	33,564	$	30,761	$	4,455	$	42,772	$	38,509	$	5,931
Death benefits retained		5,904		5,162		1,155		6,670		5,634		1,337
Total, net of reinsurance & hedging	$	39,468	$	35,923	$	5,610	$	49,442	$	44,143	$	7,268

(a)	Contracts with guaranteed long-term care benefits are included in this category.

(b)	Where a policy includes both living and death benefits, the guarantee in excess of the living benefit is included in the death benefit category as outlined in footnote (c).

(c)	Death benefits include stand-alone guarantees and guarantees in excess of living benefit guarantees where both death and living benefits are provided on a policy.

(d)

Amount at risk (in-the-money amount) is the excess of guarantee values over fund values on all policies where the guarantee value exceeds the fund value. This amount is not currently payable. For guaranteed minimum death benefit, the net amount at risk is defined as the current guaranteed minimum death benefit in excess of the current account balance. For guaranteed minimum income benefit, the net amount at risk is defined as the excess of the current annuitization income base over the current account value. For all guarantees, the net amount at risk is floored at zero at the single contract level.

The policy liabilities established for these benefits were $2,387 million at March 31, 2011 (December 31, 2010 – $3,101 million). These policy liabilities included the policy liabilities for both the hedged and the unhedged business. For unhedged business, policy liabilities were $1,670 million at March 31, 2011 (December 31, 2010 – $2,083 million). The policy liabilities for the hedged block were $717 million at March 31, 2011 (December 31, 2010 – $1,018 million). The decrease in the policy liabilities for the hedged business was primarily due to increases in interest rates, offset by reserves established for the additional business hedged in the first quarter of 2011. The quarter over quarter decrease in policy liabilities related to the unhedged block was due primarily to improvements in equity markets, transfer of reserves from unhedged to hedged and from favourable foreign exchange impacts.

Publicly traded equity performance risk

Our variable annuity guarantee dynamic hedging strategy is not designed to completely offset the sensitivity of policy liabilities to all risks associated with the guarantees embedded in these products. The profit (loss) on the hedge instruments will not completely offset the underlying (losses) gains related to the guarantee liabilities hedged because:

·	Policyholder behaviour and mortality experience is not hedged;

·	Provisions for adverse deviation in the policy liabilities are not completely hedged;

·	A portion of interest rate risk is not hedged;

·	Fund performance on a small portion of the underlying funds is not hedged due to lack of availability of effective exchange traded hedge instruments;

·	Performance of the underlying funds hedged may differ from the performance of the corresponding hedge instruments;

·	Unfavourable realized equity volatility, bond return volatility and interest rate volatility may result in higher than expected rebalancing costs; and

·	Not all other risks are hedged (see MD&A in the 2010 Annual Report).

The tables below show the potential impact on net income attributed to shareholders resulting from an immediate 10, 20 and 30 per cent change in market values of publicly traded equities followed by a return to the expected level of growth assumed in the valuation of policy liabilities. The potential impact is shown before and after taking into account the impact of the change in markets on the hedge assets. The potential impact is shown assuming that change in value of the hedge assets completely offsets the change in the dynamically hedged variable annuity guarantee liabilities and also is shown assuming the change in value is not completely offset.

Manulife Financial Corporation – First Quarter 2011

While we cannot reliably estimate the amount of the change in dynamically hedged variable annuity guarantee liabilities that will not be offset by the profit or loss on the dynamic hedge assets, we make certain assumptions for the purposes of estimating the impact on shareholders’ net income. We report the impact based on the assumption that for a 10, 20 and 30 per cent decrease in the market value of equities, the profit from the hedge assets offsets 80, 75 and 70 per cent, respectively, of the loss arising from the change in the policy liabilities of the guarantees dynamically hedged. For a 10, 20 and 30 per cent market increase in the market value of equities the loss on the dynamic hedges is assumed to be 120, 125 and 130 per cent of the gain from the dynamically hedged variable annuity guarantee liabilities, respectively.

Exposures at March 31, 2011 declined compared to December 31, 2010 primarily due to improvements in global equity markets and the additional in-force variable annuity business the Company initiated dynamic hedging for, and the addition of a small amount of macro equity hedges.

As at March 31, 2011 the change in the value of the hedge assets was estimated to offset 59 to 65 per cent of the underlying impact on net income attributed to shareholders from a 10 per cent decline in publicly traded equity markets (50 to 55 per cent as at December 31, 2010)15. The lower end of the range assumes that the dynamic hedge assets offset 80 per cent of the loss from the dynamically hedged variable annuity guarantee liabilities and the upper end of the range assumes the dynamic hedge assets completely offset the loss from the dynamically hedged variable annuity guarantee liabilities.

The Company targets to have 60 per cent of the underlying impact of declines in equity markets offset by hedge assets by the end of 2012 and 75 per cent of the underlying impact by the end of 2014.

15	Defined as earnings sensitivity to a 10 per cent decline in public equity markets including settlements on reinsurance contracts existing at the end of the previous quarter but before the offset of hedge assets or other risk mitigants.

Manulife Financial Corporation – First Quarter 2011

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

As at March 31, 2011
(C$ millions)		-30	%		-20	%		-10	%		+10	%		+20	%		+30	%
Underlying sensitivity of net income attributed to shareholders (b)
Variable annuity guarantees	$	(4,480	)	$	(2,720	)	$	(1,200	)	$	930		$	1,690		$	2,160
Asset based fees		(270	)		(180	)		(100	)		90			180			280
General fund equity investments(c)		(300	)		(200	)		(100	)		120			240			350
Total underlying sensitivity	$	(5,050	)	$	(3,100	)	$	(1,400	)	$	1,140		$	2,110		$	2,790
Impact of hedge assets
Impact of macro hedge assets	$	1,350		$	900		$	450		$	(450	)	$	(910	)	$	(1,350	)
Impact of dynamic hedge assets assuming the change in the value of the hedge assets completely offsets the change in the dynamically hedged variable annuity guarantee liabilities.		1,910			1,120			460			(300	)		(530	)		(690	)
Total impact of hedge assets assuming the change in value of the dynamic hedge assets completely offsets the change in the dynamically hedged variable annuity guarantee liabilities	$	3,260		$	2,020		$	910		$	(750	)	$	(1,440	)	$	(2,040	)
Net impact assuming the change in the value of the hedge assets completely offsets the change in the dynamically hedged variable annuity guarantee liabilities	$	(1,790	)	$	(1,080	)	$	(490	)	$	390		$	670		$	750
Impact of assuming the change in value of the dynamic hedge assets does not completely offset the change in the dynamically hedged variable annuity guarantee liabilities(d)		(570	)		(280	)		(90	)		(70	)		(130	)		(210	)
Net impact assuming the change in value of the dynamic hedge assets does not completely offset the change in the dynamically hedged variable annuity guarantee liabilities(d)	$	(2,360	)	$	(1,360	)	$	(580	)	$	320		$	540		$	540
Percentage of underlying earnings sensitivity to movements in equity markets that is offset by hedges if dynamic hedge assets completely offset the change in the dynamically hedged variable annuity guarantee liabilities		65	%		65	%		65	%		66	%		68	%		73	%
Percentage of underlying earnings sensitivity to movements in equity markets that is offset by hedge assets if dynamic hedges do not completely offset the change in the dynamically hedged variable annuity guarantee liabilities(d)		53	%		56	%		59	%		72	%		74	%		81	%

(a)	See ”Caution related to sensitivities” above.

(b)	Defined as earnings sensitivity to a change in public equity markets including settlements on reinsurance contracts existing at the end of the previous quarter, but before the offset of hedge assets or other risk mitigants.

(c)

This impact for general fund equities at a point-in-time and does not include: (i) any potential impact on public equity weightings; (ii) any gains or losses on public equities held in the Corporate and Other segment; or (iii) any gains or losses on public equity investments held in Manulife Bank. The sensitivities assume that the participating policy funds are self supporting and generate no material impact on net income attributed to shareholders as a result of changes in equity markets.

(d)

For a 10, 20 and 30 per cent market decrease the gain on the dynamic hedge assets is assumed to be 80, 75 and 70 per cent of the loss from the dynamically hedged variable annuity guarantee liabilities, respectively. For a 10, 20 and 30 per cent market increase the loss on the dynamic hedges is assumed to be 120, 125 and 130 per cent of the gain from the dynamically hedged variable annuity guarantee liabilities, respectively. For presentation purposes, numbers are rounded.

Manulife Financial Corporation – First Quarter 2011

As at December 31, 2010
(C$ millions)		-30	%		-20	%		-10	%		+10	%		+20	%		+30	%
Underlying sensitivity of net income attributed to shareholders (b)
Variable annuity guarantees	$	(4,840	)	$	(2,940	)	$	(1,300	)	$	1,010		$	1,830		$	2,300
Asset based fees		(270	)		(180	)		(90	)		90			180			270
General fund equity investments(c)		(270	)		(180	)		(90	)		100			200			300
Total underlying sensitivity	$	(5,380	)	$	(3,300	)	$	(1,480	)	$	1,200		$	2,210		$	2,870
Impact of hedge assets
Impact of macro hedge assets	$	1,270		$	850		$	420		$	(420	)	$	(850	)	$	(1,270	)
Impact of dynamic hedge assets assuming the change in the value of the hedge assets completely offsets the change in the dynamically hedged variable annuity guarantee liabilities.		1,680			980			400			(260	)		(440	)		(560	)
Total impact of hedge assets assuming the change in value of the dynamic hedge assets completely offsets the change in the dynamically hedged variable annuity guarantee liabilities	$	2,950		$	1,830		$	820		$	(680	)	$	(1,290	)	$	(1,830	)
Net impact assuming the change in the value of the hedge assets completely offsets the change in the dynamically hedged variable annuity guarantee liabilities	$	(2,430	)	$	(1,470	)	$	(660	)	$	520		$	920		$	1,040
Impact of assuming the change in value of the dynamic hedge assets does not completely offset the change in the dynamically hedged variable annuity guarantee liabilities(d)		(500	)		(240	)		(80	)		(60	)		(110	)		(170	)
Net impact assuming the change in value of the dynamic hedge assets does not completely offset the change in the dynamically hedged variable annuity guarantee liabilities(d)	$	(2,930	)	$	(1,710	)	$	(740	)	$	460		$	810		$	870
Percentage of underlying earnings sensitivity to movements in equity markets that is offset by hedges if dynamic hedge assets completely offset the change in the dynamically hedged variable annuity guarantee liabilities		55	%		55	%		55	%		57	%		58	%		64	%
Percentage of underlying earnings sensitivity to movements in equity markets that is offset by hedge assets if dynamic hedges do not completely offset the change in the dynamically hedged variable annuity guarantee liabilities(d)		46	%		48	%		50	%		62	%		63	%		70	%

(a)	See ”Caution related to sensitivities” above.

(b)	Defined as earnings sensitivity to a change in public equity markets including settlements on reinsurance contracts existing at the end of the previous quarter, but before the offset of hedge assets or other risk mitigants.

(c)

(d)

Potential impact on MLI’s MCCSR ratio arising from public equity returns different than the expected return for policy liability valuation (a),(b)

As at	March 31, 2011						December 31, 2010
(percentage points)	-30%	-20%	-10%	10%	20%	30%	-30%	-20%	-10%	10%	20%	30%
Impact on MLI MCCSR	(21)	(12)	(5)	10	15	15	(27)	(16)	(7)	7	15	24

(a)	See ”Caution related to sensitivities” above.

(b)

For a 10, 20 and 30 per cent market decrease the gain on the dynamic hedge assets is assumed to be 80, 75 and 70 per cent of the loss from the dynamically hedged variable annuity guarantee liabilities, respectively. For a 10, 20 and 30 per cent market increase the loss on the dynamic hedge assets is assumed to be 120, 125 and 130 per cent of the gain from the dynamically hedged variable annuity guarantee liabilities, respectively.

Manulife Financial Corporation – First Quarter 2011

The following table shows the notional value of shorted equity futures contracts utilized for our variable annuity guarantee dynamic hedging and our macro equity risk hedging strategies.

As at
(C$ millions)	March 31, 2011		December 31, 2010
For variable annuity guarantee dynamic hedging strategy	$	5,100	$	4,200
For macro equity risk hedging strategy		5,500		5,100
Total	$	10,600	$	9,300

Interest rate and spread risk

The following table shows the potential impact on net income attributed to shareholders of a change of one per cent, in current government, swap and corporate rates for all maturities across all markets with no change in credit spreads between government, swap and corporate rates, and with a floor of zero on government rates, relative to the rates assumed in the valuation of policy liabilities. We also assume no change to the ultimate reinvestment rate (“URR”).

Potential impact on annual net income attributed to shareholders of an immediate one per cent parallel change in interest rates relative to rates assumed in the valuation of policy liabilities(a)

As at	March 31, 2011						December 31, 2010
(C$ millions)		-100	bp		+100	bp		-100	bp		+100	bp
General fund products(b)	$	(1,200	)	$	1,000		$	(1,400	)	$	1,200
Variable annuity guarantees(c)		(300	)		200			(400	)		300
Total	$	(1,500	)	$	1,200		$	(1,800	)	$	1,500

(a)	See ”Caution related to sensitivities” above.

(b)	The sensitivities assume that the participating policy funds are self supporting and generate no material impact on net income attributed to shareholders as a result of changes in interest rates.

(c)	For variable annuity guarantee liabilities that are dynamically hedged, it is assumed that interest rate hedges are rebalanced at 20 basis point intervals.

The decrease in exposures was primarily driven by the actions to extend the duration of our assets supporting policyholder liabilities.

Changes in the market value of the AFS fixed income assets may provide a natural economic offset to the interest rate risk arising from our product liabilities. In order for there to also be an accounting offset, the Company would need to realize a portion of the AFS fixed income unrealized gains or losses. For example, the Company reported $75 million of net realized losses on AFS fixed income assets held in surplus segments in the first quarter of 2011. As at March 31, 2011 the AFS fixed income assets held in the surplus segments were in a net after-tax unrealized gain position of $129 million.

During the first quarter, as part of our overall interest rate management, we shortened the duration of the AFS assets in our surplus segments, neutralizing the economic impact of the actions, outlined above, from lengthening the duration of the assets in the liability segments. As a result, the interest rate sensitivity of AFS fixed income assets in the surplus segments declined.

Potential impact on annual net income attributed to shareholders of an immediate one per cent parallel change in interest rates including on the change in market value of AFS fixed income assets in the surplus segment(a),(b)

As at	March 31, 2011						December 31, 2010
(C$ millions)		-100	bp		+100	bp		-100	bp		+100	bp
Impact excluding the change in the market value of AFS fixed income assets held in the surplus segment	$	(1,500	)	$	1,200		$	(1,800	)	$	1,500
Impact of the change in the market value of AFS fixed income assets held in the surplus segment(b)		700			(600	)		1,200			(900	)
Including 100% of the change in the market value of fixed income assets held in the surplus segment(b)	$	(800	)	$	600		$	(600	)	$	600

(a)	See “Caution related to sensitivities” above.

(b)

The amount of gain or loss that can be realized on AFS fixed income assets held in the surplus segment will depend on the amount of unrealized gain or loss. The table above only shows the change in the unrealized position, as the total unrealized position will depend upon the unrealized position at the beginning of the period.

Manulife Financial Corporation – First Quarter 2011

Potential impact on MLI’s MCCSR ratio arising from an immediate one percent parallel change in interest rates (a)

As at	March 31, 2011					December 31, 2010
(percentage points)		-100	bp	+100	bp		-100	bp	+100	bp
Impact excluding the change in the market value of AFS fixed-income assets held in the surplus segment		(21	)	17			(23	)	19
Impact including 100% of the change in the market value of the AFS fixed income assets held in the surplus segment(b)		(16	)	12			(14	)	12

(a)	See ”Caution related to sensitivities” above.

(b)

The following tables show the potential impact on net income attributed to shareholders resulting from a change in credit spreads and swap spreads over government bond rates for all maturities across all markets with a floor of zero on the total interest rate, relative to the spreads assumed in the valuation of policy liabilities.

Potential impact on annual net income attributed to shareholders arising from changes to corporate spreads(a),(b)

As at March 31, 2011	March 31, 2011						December 31, 2010
(C$ millions)		-50	bp		+50	bp		-50	bp		+50	bp
Corporate spreads(c),(d)	$	(500	)	$	500		$	(500	)	$	400

(a)	See ”Caution related to sensitivities” above.

(b)	The sensitivity was estimated as 50% of the sensitivity to a 100 basis point change. Actual results may differ materially from these estimates.

(c)

The impact on net income attributed to shareholders assumes no gains or losses are realized on our AFS fixed income assets held in the surplus segment and excludes the impact arising from changes in off-balance sheet bond fund value arising from changes in credit spreads. The sensitivities assume that the participating policy funds are self supporting and generate no material impact on net income attributed to shareholders as a result of changes in interest rates.

(d)	Corporate spreads are assumed to grade to the long term average over five years.

Potential impact on annual net income attributed to shareholders arising from changes to swap spreads(a)

As at March 31, 2011	March 31, 2011						December 31, 2010
(C$ millions)		-20	bp		+20	bp		-20	bp		+20	bp
Swap spreads(b)	$	300		$	(300	)	$	200		$	(200	)

(a)	See ”Caution related to sensitivities” above.

(b)

Legal proceedings update

The Company announced on April 21, 2011 that it had been informed by staff of the Ontario Securities Commission (“OSC”) that staff would not seek any orders from the OSC in connection with the enforcement notice delivered by staff in June 2009 relating to the Company’s disclosure before March 2009 of risks related to its variable annuity guarantee and segregated funds business.

As outlined in our 2010 Annual Report, proposed class action lawsuits against the Company have been filed in Canada and the United States, on behalf of investors in those jurisdictions, based on allegations that the Company failed to meet its disclosure obligations related to its exposure to market price risk in its segregated funds and variable annuity guaranteed products. The Company believes that its disclosure satisfied applicable disclosure requirements and intends to vigorously defend itself against any claims based on these allegations.

ACCOUNTING MATTERS AND CONTROLS

Critical accounting and actuarial policies

Our significant accounting policies are described in note 1 to our interim Consolidated Financial Statements for the period ended March 31, 2011. Significant estimation processes relate to the determination of insurance and investment contract liabilities, evaluation of invested asset impairment, the application of derivative and hedge accounting, assessment of relationships with other entities for consolidation, determination of pension and other post-employment benefit obligations and expenses, income taxes and uncertain tax positions and valuation of goodwill and intangible assets. In addition, in the determination of the fair values of invested assets, where observable market data is not available, management applies judgment in the selection of valuation models.

The critical accounting policies and the estimation processes related to the determination of insurance contract liabilities, fair values of financial instruments, the application of derivative and hedge accounting, the determination of pension and other post-employment benefit obligations and expenses, and accounting for income taxes and uncertain tax positions have remained unchanged from practices under prior Canadian GAAP and are described on pages 61 to 68 of our 2010 Annual Report. For a description of our accounting policy and estimation process related to the evaluation of invested asset impairment, assessment of relationships with other entities for consolidation, and the valuation of goodwill and intangible assets under IFRS, refer to pages 98 to 102 of our Annual Consolidated Financial Statements in our 2010 Annual Report and note 1 to our interim Consolidated Financial Statements for the period ended March 31, 2011.

Manulife Financial Corporation – First Quarter 2011

Changes in internal control over financial reporting

No changes were made in our internal control over financial reporting during the three months ended March 31, 2011, that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

Future Accounting and Reporting Changes

The amendments to IFRS 7 “Disclosures – Transfer of Financial Assets”, issued in October 2010, increase the disclosure requirements for transactions involving transfers of financial assets. These amendments are intended to provide greater transparency around risk exposures when a financial asset is transferred but the transferor retains some level of continuing involvement in the asset. The amendments also require disclosures where transfers of financial assets do not occur evenly throughout the period.

The amendment to IFRS 7 is effective for annual periods beginning on or after July 1, 2011. The Company is currently assessing the impact of this amendment on its consolidated financial statement disclosures.

An amendment to IAS 12 was issued in December 2010 that provides a practical approach to the measurement of deferred tax assets and deferred tax liabilities when investment property is measured using the fair value model under IAS 40 “Investment Property”. Where entities measure deferred tax liabilities and deferred tax assets using a tax rate and tax base that is consistent with the expected manner of recovery or settlement, the amendment provides a rebuttable presumption for investment property measuring using the fair value that its carrying amount will be recovered through sale.

This amendment is effective for annual periods beginning on or after January 1, 2012. Earlier application is permitted. The Company does not expect that the adoption of this amendment will have a significant impact on its consolidated financial statements.

IFRS 9 “Financial Instruments” issued in November 2009 and amended in October 2010 is the first phase of a three phase project to replace IAS 39 “Financial Instruments” Recognition and Measurement”. IFRS 9 currently provides that financial assets are measured at either amortized cost or fair value on the basis of the entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets. The classification and measurement for financial liabilities remains generally unchanged, however, revisions have been made in the accounting for changes in fair value of a financial liability attributable to changes in the credit risk of the liability. The other phases of this project which are currently under development include impairment and hedge accounting.

IFRS 9 is effective for annual periods beginning on or after January 1, 2013. The Company will assess the full impact of IFRS 9 on its consolidated financial statements in conjunction with the completion of the other phases of this project.

Audit Committee

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

Manulife Financial Corporation – First Quarter 2011

QUARTERLY FINANCIAL INFORMATION

The following table provides summary information related to our eight most recently completed quarters:

	IFRS															Canadian GAAP
As at and for the three months ended, (Canadian $ in millions, except per share amounts)	Mar 31, 2011			Dec 31, 2010			Sept 30, 2010			Jun 30, 2010			Mar 31, 2010			Dec 31, 2009			Sept 30, 2009			Jun 30, 2009
Revenue
Premium income
Life and health insurance	$	3,593		$	3,663		$	3,568		$	3,433		$	3,268		$	3,575		$	3,576		$	3,573
Annuities and pensions		1,022			1,186			1,090			1,045			1,143			1,156			1,947			2,147
Total premium income	$	4,615		$	4,849		$	4,658		$	4,478		$	4,411		$	4,731		$	5,523		$	5,720
Investment income		2,044			2,252			3,056			2,089			2,200			2,061			2,082			2,061
Realized and unrealized gains (losses) on assets supporting insurance and investment contract liabilities and deposits (a)		(1,264	)		(5,196	)		4,023			3,707			1,031			(1,441	)		4,661			2,145
Other revenue		1,758			1,645			1,563			1,549			1,589			1,620			1,486			1,459
Total revenue	$	7,153		$	3,550		$	13,300		$	11,823		$	9,231		$	6,971		$	13,752		$	11,385
Income (loss) before income taxes	$	1,296		$	2,174		$	(2,598	)	$	(3,408	)	$	1,507		$	981		$	(701	)	$	1,695
Income tax (expense) recovery		(307	)		(349	)		421			1,001			(274	)		(136	)		563			89
Net income (loss)	$	989		$	1,825		$	(2,177	)	$	(2,407	)	$	1,233		$	845		$	(138	)	$	1,784
Net income (loss) attributed to shareholders	$	985		$	1,796		$	(2,249	)	$	(2,434	)	$	1,224		$	868		$	(172	)	$	1,774
Basic earnings (loss) per common share	$	0.54		$	1.00		$	(1.28	)	$	(1.39	)	$	0.68		$	0.51		$	(0.12	)	$	1.09
Diluted earnings excluding convertible instruments per common share	$	0.54		$	1.00		$	(1.28	)	$	(1.39	)	$	0.68			N/A			N/A			N/A
Diluted earnings (loss) per common share	$	0.53		$	0.96		$	(1.28	)	$	(1.39	)	$	0.66		$	0.51		$	(0.12	)	$	1.09
Segregated funds deposits	$	5,919		$	6,025		$	5,347		$	5,968		$	7,204		$	7,343		$	6,091		$	7,391
Total assets	$	423,397		$	424,767		$	438,448		$	420,318		$	408,786		$	205,845		$	208,650		$	208,238
Weighted average common shares (in millions)		1,778			1,773			1,767			1,762			1,758			1,669			1,615			1,611
Diluted weighted average common shares, excluding convertible instruments (in millions)		1,781			1,776			1,767			1,762			1,763			N/A			N/A			N/A
Diluted weighted average common shares (in millions)		1,861			1,873			1,767			1,762			1,834			1,673			1,615			1,616
Dividends per common share	$	0.13		$	0.13		$	0.13		$	0.13		$	0.13		$	0.13		$	0.13		$	0.13
CDN$ to $1US – Balance Sheet		0.9718			0.9946			1.0298			1.0606			1.0156			1.0466			1.0722			1.1625
CDN$ to $1US – Statement of Operations		0.9855			1.0128			1.0391			1.0276			1.0401			1.0562			1.0979			1.1668

(a)

For fixed income assets supporting insurance and investment contract liabilities and for equities supporting pass through products and derivatives related to variable hedging programs, the impact of realized and unrealized (losses) gains on the assets is largely offset in the change in insurance and investment contract liabilities.

Manulife Financial Corporation – First Quarter 2011

QUARTERLY DIVIDEND

On May 5, our Board of Directors approved a quarterly shareholders’ dividend of $0.13 per share on the common shares of MFC, payable on or after June 20, 2011 to shareholders of record at the close of business on May 17, 2011.

The Board also declared dividends on the following non-cumulative preferred shares, payable on or after June 19, 2011 to shareholders of record at the close of business on May 17, 2011.

Class A Shares Series 1 – $0.25625 per share

Class A Shares Series 2 – $0.29063 per share

Class A Shares Series 3 – $0.28125 per share

Class A Shares Series 4 – $0.4125 per share

Class 1 Shares Series 1 – $0.35 per share

Class 1 Shares Series 3 – $0.28767 per share

OUTSTANDING SHARES – SELECTED INFORMATION

Class A Shares Series 1

As of May 9, 2011, MFC had 14 million Class A Shares Series 1 (“Series 1 Preferred Shares”) outstanding at a price of $25.00 per share, for an aggregate amount of $350 million. The Series 1 Preferred Shares are non-voting and are entitled to non-cumulative preferential cash dividends payable quarterly, if and when declared, at a per annum rate of 4.10%. With regulatory approval, the Series 1 Preferred Shares may be redeemed by MFC in whole or in part, at declining premiums that range from $1.25 to nil per Series 1 Preferred Share, by either payment of cash or the issuance of MFC common shares. On or after December 19, 2015, the Series 1 Preferred Shares will be convertible at the option of the holder into MFC common shares, the number of which is determined by a prescribed formula, and is subject to the right of MFC prior to the conversion date to redeem for cash or find substitute purchasers for such preferred shares. The prescribed formula is the face amount of the Series 1 Preferred Shares divided by the greater of $2.00 and 95% of the average trading of MFC common shares for the 20 days ending four days prior to the exchange date.

Common Shares

As at May 9, 2011, MFC had 1,783 million common shares outstanding.

PERFORMANCE AND NON-GAAP MEASURES

We use a number of non-GAAP financial measures to measure overall performance and to assess each of our businesses. A financial measure is considered a non-GAAP measure for Canadian securities law purposes if it is presented other than in accordance with generally accepted accounting principles used for the Company’s audited historical financial statements which is prior Canadian GAAP for 2010 and earlier and IFRS for 2011 and beyond. Non-GAAP measures include: Net Income Excluding the Direct Impact of Equity Markets and Interest Rates; Net Income in Accordance with U.S. GAAP; Total Equity in Accordance with U.S. GAAP; Diluted Earnings per Share, excluding Convertible Instruments; Return on Common Shareholders’ Equity; Constant Currency Basis; Premiums and Deposits; Funds under Management; and Capital. Non-GAAP financial measures are not defined terms under GAAP and, therefore, with the exception of Net Income in Accordance with U.S. GAAP and Total Equity in Accordance with U.S. GAAP (which are comparable to the equivalent measures of issuers whose financial statements are prepared in accordance with U.S. GAAP), are unlikely to be comparable to similar terms used by other issuers. Therefore, they should not be considered in isolation or as a substitute for any other financial information prepared in accordance with GAAP.

Net income excluding the direct impact of equity markets and interest rates is a non-GAAP profitability measure. It shows what the net income attributed to shareholders would have been assuming that existing hedges are unchanged and that interest and equity markets performed as assumed in our policy valuation. We consider the gains or losses on the variable annuity business that is dynamically hedged to be an indirect impact, not a direct impact, of changes in equity markets and interest rates.

Net income in accordance with U.S. GAAP is a non-GAAP profitability measure. It shows what the net income would have been if the Company had applied U.S. GAAP as its primary financial reporting basis. We consider this to be a relevant profitability measure given our large U.S. domiciled investor base and for comparability to our U.S. peers who report under U.S. GAAP.

Total equity in accordance with U.S. GAAP is a non-GAAP measure. It shows what the total equity would have been if the Company had applied U.S. GAAP as its primary financial reporting basis. We consider this to be a relevant measure given our large U.S. domiciled investor base and for comparability to our U.S. peers who report under U.S. GAAP.

Diluted earnings per share, excluding convertible instruments is a non-GAAP measure. It shows diluted earnings per share excluding the dilutive effect of convertible instruments.

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

Manulife Financial Corporation – First Quarter 2011

For the period ended (in millions)	March 31, 2011		March 31, 2010
Weighted average number of actual common shares outstanding		1,778		1,758
Dilutive number of shares for stock-based awards		3		5
Weighted average number of common shares used to calculate diluted earnings per share, excluding convertible instruments		1,781		1,763
Dilutive number of shares for convertible instruments		80		71
Weighted average number of common shares used in the diluted earnings per share calculation		1,861		1,834

Return on common shareholders’ equity (“ROE”) is a non-GAAP profitability measure that presents the net income available to common shareholders as a percentage of the capital deployed to earn the income. The Company calculates return on common shareholders’ equity using average common shareholders’ equity excluding Accumulated Other Comprehensive Income (Loss) (“AOCI”) on AFS securities and cash flow hedges.

Return on common shareholders’ equity
	Quarterly results
(C$ millions)		1Q 2011			4Q 2010			1Q 2010
Net income (loss) available to common shareholders	$	965		$	1,776		$	1,204
Opening total equity available to common shareholders	$	22,688		$	21,865		$	25,836
Closing total equity available to common shareholders	$	22,893		$	22,688		$	26,410
Weighted average total equity available to common shareholders	$	22,791		$	22,277		$	26,123
Opening AOCI on AFS securities and cash flow hedges	$	278		$	584		$	641
Closing AOCI on AFS securities and cash flow hedges	$	255		$	278		$	704
Adjustment for average AOCI	$	(266	)	$	(431	)	$	(672	)
Weighted average total equity available to common shareholders excluding average AOCI adjustment	$	22,525		$	21,846		$	25,451

ROE based on weighted average total equity available to common shareholders (annualized)		17.2	%		31.6	%		18.7	%
ROE based on weighted average total equity available to common shareholders excluding average AOCI adjustment (annualized)		17.4	%		32.3	%		19.2	%

The Company also uses financial performance measures that are prepared on a constant currency basis, which exclude the impact of currency fluctuations and which are non-GAAP measures. Quarterly amounts stated on a constant currency basis in this report are calculated, as appropriate, using the income statement and balance sheet exchange rates effective for the first quarter of 2010.

Premiums and deposits is a non-GAAP measure of top line growth. The Company calculates premiums and deposits as the aggregate of (i) general fund premiums net of reinsurance, reported as premiums on the Consolidated Statement of Income, (ii) premium equivalents for administration only group benefit contracts, (iii) premiums in the Canadian Group Benefits reinsurance ceded agreement, (iv) segregated fund deposits, excluding seed money, (v) mutual fund deposits, and (vi) deposits into institutional advisory accounts, and (vii) other deposits in other managed funds.

Manulife Financial Corporation – First Quarter 2011

Premiums and deposits
	Quarterly results
(C$ millions)		1Q 2011		4Q 2010		1Q 2010
Premium income	$	4,615	$	4,849	$	4,411
Deposits from policyholders		5,919		6,025		7,204
Premiums and deposits per financial statements	$	10,534	$	10,874	$	11,615
Mutual fund deposits		4,658		3,662		2,966
Institutional advisory account deposits		669		443		847
ASO premium equivalents		684		662		676
Group benefits ceded premiums		949		933		906
Other fund deposits		168		145		144
Total premiums and deposits	$	17,662	$	16,719	$	17,154
Currency impact		584		239		-
Constant currency premiums and deposits	$	18,246	$	16,958	$	17,154

Funds under management is a non-GAAP measure of the size of the Company. It represents the total of the invested asset base that the Company and its customers invest in.

Funds under management
	Quarterly results
(C$ millions)		1Q 2011		4Q 2010		1Q 2010
Total invested assets	$	198,603	$	201,222	$	190,119
Total segregated funds net assets held by policyholders		200,890		199,120		193,225
Funds under management per financial statements	$	399,493	$	400,342	$	383,344
Mutual funds		50,129		47,726		36,766
Institutional advisory accounts (excluding segregated funds)		20,708		20,918		20,744
Other funds		7,967		7,971		7,419
Total funds under management	$	478,297	$	476,957	$	448,273
Currency impact		11,781		3,130		-
Constant currency funds under management	$	490,078	$	480,087	$	448,273

Capital - The definition we use for capital, a non-GAAP measure, serves as a foundation of our capital management activities at the MFC level. For regulatory reporting purposes, the numbers are further adjusted for various additions or deductions to capital as mandated by the guidelines used by OSFI. Capital is calculated as the sum of: (i) total equity excluding AOCI on cash flow hedges; and (ii) liabilities for preferred shares and qualifying capital instruments.

Capital
	Quarterly results
(C$ millions)		1Q 2011		4Q 2010		1Q 2010
Total equity	$	25,112	$	24,675	$	28,163
Add AOCI loss on cash flow hedges		54		55		33
Add liabilities for preferred shares and qualifying capital instruments		3,442		4,004		4,010
Total capital	$	28,608	$	28,734	$	32,206

Manulife Financial Corporation – First Quarter 2011

Caution regarding forward-looking statements

This document contains forward-looking statements within the meaning of the “safe harbour” provisions of Canadian provincial securities laws and the U.S. Private Securities Litigation Reform Act of 1995. The forward-looking statements in this document include, but are not limited to, statements with respect to management objectives with respect to hedging equity markets and interest rate risks. The forward-looking statements in this document also relate to, among other things, our objectives, goals, strategies, intentions, plans, beliefs, expectations and estimates, and can generally be identified by the use of words such as “may”, “will”, “could”, “should”, “would”, “likely”, “suspect”, “outlook”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “plan”, “forecast”, “objective”, “goal”, “seek”, “aim”, “continue”, “embark” and “endeavour” (or the negative thereof) and words and expressions of similar import, and include statements concerning possible or assumed future results. Although we believe that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements and they should not be interpreted as confirming market or analysts’ expectations in any way. Certain material factors or assumptions are applied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements. Important factors that could cause actual results to differ materially from expectations include but are not limited to: general business and economic conditions (including but not limited to performance and volatility of equity markets, interest rate fluctuations and movements in credit and swap spreads, currency rates, investment losses and defaults, market liquidity and creditworthiness of guarantors, reinsurers and counterparties); changes in laws and regulations; changes in accounting standards; our ability to execute strategic plans and changes to strategic plans; downgrades in our financial strength or credit ratings; our ability to maintain our reputation; impairments of goodwill or intangible assets or the establishment of valuation allowances against future tax assets; the accuracy of estimates relating to long-term morbidity, mortality and policyholder behavior; the accuracy of other estimates used in applying accounting policies and actuarial methods; level of competition and consolidation; our ability to market and distribute products through current and future distribution channels; unforeseen liabilities or asset impairments arising from acquisitions and dispositions of businesses; our ability to implement effective hedging strategies and unforeseen consequences arising from such strategies; our ability to source appropriate non-fixed income assets to back our long dated liabilities; the realization of losses arising from the sale of investments classified as available for sale; our liquidity, including the availability of financing to satisfy existing financial liabilities on their expected maturity dates when required; obligations to pledge additional collateral; the availability of letters of credit to provide capital management flexibility; accuracy of information received from counterparties and the ability of counterparties to meet their obligations; the availability, affordability and adequacy of reinsurance; legal and regulatory proceedings, including tax audits, tax litigation or similar proceedings; our ability to adapt products and services to the changing market; our ability to attract and retain key executives, employees and agents; the appropriate use and interpretation of complex models or deficiencies in models used; political, legal, operational and other risks associated with our non-North American operations; acquisitions and our ability to complete acquisitions including the availability of equity and debt financing for this purpose; the disruption of or changes to key elements of the Company’s or public infrastructure systems; environmental concerns; and our ability to protect our intellectual property and exposure to claims of infringement. Additional information about material factors that could cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements may be found in the body of this document as well as under “Risk Factors” in our most recent Annual Information Form, under “Risk Management” and “Critical Accounting and Actuarial Policies” in the Management’s Discussion and Analysis in our most recent annual and interim reports, in the “Risk Management” note to consolidated financial statements in our most recent annual and interim reports and elsewhere in our filings with Canadian and U.S. securities regulators. We do not undertake to update any forward-looking statements except as required by law.

Manulife Financial Corporation – First Quarter 2011

Fair value of financial instruments
As at December 31, 2010	Total fair value		Level 1		Level 2		Level 3
ASSETS
Cash and short-term securities
Fair-value-through-profit-and-loss	$	668	$	-	$	668	$	-
Available-for-sale		8,827		-		8,827		-
Other		2,354		2,354		-		-
Bonds
Fair-value-through-profit-and-loss
Canadian government & agency		10,044		-		9,884		160
U.S. government & agency		13,109		-		12,945		164
Other government & agency		7,591		-		6,994		597
Corporate		47,648		-		45,943		1,705
Residential mortgage/asset-
backed securities		384		-		24		360
Commercial mortgage/asset-
backed securities		4,127		-		3,697		430
Other securitized assets		1,436		-		1,276		160
Available-for-sale
Canadian government & agency		5,177		-		5,143		34
U.S. government & agency		5,587		-		5,582		5
Other government & agency		1,417		-		1,357		60
Corporate		4,367		-		4,108		259
Residential mortgage/asset-
backed securities		98		-		5		93
Commercial mortgage/asset-
backed securities		438		-		366		72
Other securitized assets		137		-		85		52
Stocks
Fair-value-through-profit-and-loss		8,297		8,296		1		-
Available-for-sale		2,178		2,178		-		-
Other invested assets (1)
Private stocks FVTPL		3,283		1		-		3,282
Private stocks AFS		80		-		-		80
Derivative assets
Interest rate contracts		3,357		-		3,289		68
Foreign exchange contracts		628		-		628		-
Equity contracts		15		-		-		15
Segregated funds net assets (2)		199,120		194,805		2,194		2,121
Total assets carried at fair value	$	330,367	$	207,634	$	113,016	$	9,717
LIABILITIES
Derivative liabilities
Interest rate contracts	$	2,728	$	-	$	2,691	$	37
Foreign exchange contracts		554		-		511		43
Equity contracts		5		-		-		5
Total liabilities carried at fair value	$	3,287	$	-	$	3,202	$	85

(1)	Only private stocks that are carried at fair value are included.

(2)

Segregated funds net assets are recorded at fair value. Investment performance related to segregated funds net assets is fully offset by corresponding amounts credited to contract holders whose interest in the segregated funds net assets is recorded by the Company as segregated funds net liabilities.

Manulife Financial Corporation – First Quarter 2011

Fair value of financial instruments
As at January 1, 2010	Total fair value		Level 1		Level 2		Level 3
ASSETS
Cash and short-term securities
Fair-value-through-profit-and-loss	$	651	$	-	$	651	$	-
Available-for-sale		16,124		-		16,124		-
Other		2,030		2,030		-		-
Bonds
Fair-value-through-profit-and-loss
Canadian government & agency		8,131		-		8,002		129
U.S. government & agency		5,365		-		5,044		321
Other government & agency		5,105		-		4,638		467
Corporate		45,780		-		44,164		1,616
Residential mortgage/asset-
backed securities		421		-		32		389
Commercial mortgage/asset-
backed securities		4,578		-		4,179		399
Other securitized assets		1,557		-		1,390		167
Available-for-sale
Canadian government & agency		4,337				4,288		49
U.S. government & agency		2,230		-		2,228		2
Other government & agency		1,022		-		971		51
Corporate		5,690		-		5,447		243
Residential mortgage/asset-
backed securities		105		-		6		99
Commercial mortgage/asset-
backed securities		532		-		462		70
Other securitized assets		254		-		212		42
Stocks
Fair-value-through-profit-and-loss		7,276		7,276		-		-
Available-for-sale		2,412		2,412		-		-
Other invested assets (1)
Private stocks FVTPL		2,544		-		-		2,544
Private stocks AFS		124		-		-		124
Derivative assets
Interest rate contracts		2,101		-		2,029		72
Foreign exchange contracts		593		-		593		-
Equity contracts		13		-		2		11
Segregated funds net assets (2)		190,783		185,850		2,693		2,240
Total assets carried at fair value	$	309,758	$	197,568	$	103,155	$	9,035
LIABILITIES
Derivative liabilities
Interest rate contracts	$	1,648	$	-	$	1,623	$	25
Foreign exchange contracts		801		-		780		21
Equity contracts		-		-		-		-
Embedded derivatives - insurance contracts		2		-		-		2
Total liabilities carried at fair value	$	2,451	$	-	$	2,403	$	48

(1)	Only private stocks that are carried at fair value are included.

(2)

Assets and liabilities measured at fair value on the Consolidated Statements of Financial Position using significant unobservable inputs (Level 3)

The table below provides a fair value roll forward for the financial instruments for which significant unobservable inputs (Level 3) are used in the fair value measurement. The Company classifies the fair values of financial instruments within Level 3 if there are no observable markets for the instruments or, in the absence of active markets, the majority of the inputs used to determine fair value are based on the Company’s own assumptions about market participant assumptions. The Company prioritizes the use of market-based inputs over entity-based assumptions in determining Level 3 fair values and, therefore, the gains and losses in the tables below include changes in fair value due partly to observable and unobservable factors.

Roll-forward of financial instruments measured at fair value using significant unobservable inputs (Level 3)

The following table presents a roll forward for all financial instruments measured at fair value using significant non-observable inputs (Level 3) for the three months ended March 31, 2011.

Manulife Financial Corporation – First Quarter 2011

				Net realized / unrealized gains (losses) included in:											Transfers
	Balance as at January 1, 2011			Net income (1)			OCI (2)			Purchases		Sales			Into Level 3 (3)		Out of Level 3 (3)			Currency movement			Balance as at March 31, 2011			Change in unrealized gains (losses) on instruments still held
Bonds
Fair-value-through-profit-and-loss
Canadian government & agency	$	160		$	(4	)	$	-		$	-	$	-		$	-	$	-		$	(1	)	$	155		$	(4	)
U.S. government & agency		164			-			-			6		(32	)		-		(16	)		(3	)		119			(3	)
Other government & agency		597			(3	)		-			28		(10	)		-		-			(9	)		603			(2	)
Corporate		1,705			16			-			92		(167	)		-		(14	)		(51	)		1,581			13
Residential mortgage/asset-backed securities		360			18			-			-		(22	)		-		-			(9	)		347			18
Commercial mortgage/asset-backed securities		430			18			-			-		(19	)		-		-			(10	)		419			22
Other securitized assets		160			12			-			-		(1	)		-		(6	)		(4	)		161			12
	$	3,576		$	57		$	-		$	126	$	(251	)	$	-	$	(36	)	$	(87	)	$	3,385		$	56
Available-for-sale
Canadian government & agency	$	34		$	-		$	-		$	-	$	-		$	-	$	-		$	(1	)	$	33		$	-
U.S. government & agency		5			-			-			-		-			-		-			-			5			-
Other government & agency		60			-			-			-		-			-		-			-			60			-
Corporate		259			-			(1	)		19		-			-		-			(8	)		269			-
Residential mortgage/asset-backed securities		93			-			5			-		(6	)		-		-			(2	)		90			-
Commercial mortgage/asset-backed securities		72			(1	)		2			-		-			-		-			(2	)		71			-
Other securitized assets		52			-			2			-		-			-		(15	)		(1	)		38			-
	$	575		$	(1	)	$	8		$	19	$	(6	)	$	-	$	(15	)	$	(14	)	$	566		$	-
Other invested assets
Private stocks FVTPL	$	3,282		$	(36	)	$	-		$	150	$	(78	)	$	-	$	-		$	(60	)	$	3,258		$	(38	)
Private stocks AFS		80			-			(2	)		48		(24	)		-		-			(1	)		101			-
	$	3,362		$	(36	)	$	(2	)	$	198	$	(102	)	$	-	$	-		$	(61	)	$	3,359		$	(38	)
Net derivatives	$	(2	)	$	-		$	(4	)	$	-	$	-		$	-	$	-		$	(5	)	$	(11	)	$	2
Segregated funds net assets		2,121			(18	)		-			5		(13	)		-		-			(48	)		2,047			(19	)
	$	9,632		$	2		$	2		$	348	$	(372	)	$	-	$	(51	)	$	(215	)	$	9,346		$	1

(1)	These amounts are included in investment income on the Consolidated Statement of Income, except for the segregated funds amount which is included in the Investment related section of the changes in net assets for segregated funds (note 13).

(2)	These amounts are included in accumulated other comprehensive income (loss) on the Consolidated Statements of Financial Position.

(3)	For financial assets that are transferred into and/or out of Level 3, the Company uses the fair value of the assets at the beginning of the period.

Manulife Financial Corporation – First Quarter 2011

The following table presents a roll forward for all financial instruments measured at fair value using significant non-observable inputs (Level 3) for the three months ended March 31, 2010.

			Net realized / unrealized gains (losses) included in:											Transfers										Change in unrealized gains (losses) on instruments still held
	Balance as at January 1, 2010		Net income (1)			OCI (2)			Purchases		Sales			Into Level 3 (3)		Out of Level 3 (3)			Currency movement			Balance as at March 31, 2010
Bonds
Fair-value-through-profit-and-loss
Canadian government & agency	$	129	$	(2	)	$	-		$	-	$	-		$	-	$	-		$	(1	)	$	126	$	(2	)
U.S. government & agency		321		4			-			148		-			-		(74	)		(7	)		392		4
Other government & agency		467		4			-			-		(11	)		-		-			(4	)		456		3
Corporate		1,616		48			-			2		(17	)		-		(38	)		(37	)		1,574		14
Residential mortgage/asset-backed securities		389		22			-			-		(26	)		-		-			(12	)		373		35
Commercial mortgage/asset-backed securities		399		32			-			-		(31	)		1		-			(13	)		388		34
Other securitized assets		167		13			-			-		(8	)		-		(1	)		(6	)		165		39
	$	3,488	$	121		$	-		$	150	$	(93	)	$	1	$	(113	)	$	(80	)	$	3,474	$	127
Available-for-sale
Canadian government & agency	$	49	$	-		$	-		$	-	$	-		$	-	$	-		$	(1	)	$	48	$	-
U.S. government & agency		2		-			-			-		-			-		(2	)		-			-		-
Other government & agency		51		-			1			-		-			-		-			1			53		-
Corporate		243		-			2			7		(2	)		-		(10	)		(6	)		234		-
Residential mortgage/asset-backed securities		99		(5	)		9			-		(6	)		-		-			(3	)		94		-
Commercial mortgage/asset-backed securities		70		-			4			-		(4	)		-		-			(2	)		68		-
Other securitized assets		42		-			7			-		-			-		-			(2	)		47		-
	$	556	$	(5	)	$	23		$	7	$	(12	)	$	-	$	(12	)	$	(13	)	$	544	$	-
Other invested assets
Private stocks FVTPL	$	2,544	$	29		$	-		$	260	$	(83	)	$	-	$	-		$	(72	)	$	2,678	$	42
Private stocks AFS		124		(19	)		12			1		-			-		-			(3	)		115		-
	$	2,668	$	10		$	12		$	261	$	(83	)	$	-	$	-		$	(75	)	$	2,793	$	42
Net derivatives	$	35	$	(4	)	$	(1	)	$	-	$	-		$	2	$	1		$	(3	)	$	30	$	(4	)
Segregated funds net assets		2,240		(18	)		-			1		(41	)		-		-			(65	)		2,117		(12	)
	$	8,987	$	104		$	34		$	419	$	(229	)	$	3	$	(124	)	$	(236	)	$	8,958	$	153

(1)	These amounts are included in investment income on the Consolidated Statement of Income, except for the segregated funds amount which is included in the Investment related section of the changes in net assets for segregated funds (note 13).

(2)	These amounts are included in accumulated other comprehensive income (loss) on the Consolidated Statements of Financial Position.

(3)	For financial assets that are transferred into and/or out of Level 3, the Company uses the fair value of the assets at the beginning of the period.

Manulife Financial Corporation – First Quarter 2011

The following table presents a roll forward for all financial instruments measured at fair value using significant non-observable inputs (Level 3) for the twelve months ended December 31, 2010.

			Net realized / unrealized gains (losses) included in:											Transfers
	Balance as at January 1, 2010		Net income (1)			OCI (2)			Purchases		Sales			Into Level 3 (3)		Out of Level 3 (3)			Currency movement			Balance as at December 31, 2010			Change in unrealized gains (losses) on instruments still held
Bonds
Fair value through profit and loss
Canadian government & agency	$	129	$	12		$	-		$	22	$	-		$	-	$	-		$	(3	)	$	160		$	12
U.S. government & agency		321		(5	)		-			387		-			-		(534	)		(5	)		164			(5	)
Other government & agency		467		33			-			151		(49	)		-		-			(5	)		597			34
Corporate		1,616		100			-			247		(112	)		46		(244	)		52			1,705			46
Residential mortgage/asset-backed securities		389		89			-			-		(100	)		-		-			(18	)		360			122
Commercial mortgage/asset-backed securities		399		107			-			-		(52	)		-		(1	)		(23	)		430			118
Other securitized assets		167		44			-			-		(41	)		-		(1	)		(9	)		160			74
	$	3,488	$	380		$	-		$	807	$	(354	)	$	46	$	(780	)	$	(11	)	$	3,576		$	401
Available-for-sale
Canadian government & agency	$	49	$	16		$	(8	)	$	-	$	(21	)	$	-	$	-		$	(2	)	$	34		$	-
U.S. government & agency		2		-			-			5		-			-		(2	)		-			5			-
Other government & agency		51		-			2			15		(10	)		-		-			2			60			-
Corporate		243		(1	)		15			14		(52	)		50		(15	)		5			259			-
Residential mortgage/asset-backed securities		99		(12	)		34			-		(23	)		-		-			(5	)		93			-
Commercial mortgage/asset-backed securities		70		2			7			-		(3	)		-		-			(4	)		72			-
Other securitized assets		42		(1	)		16			-		(2	)		-		-			(3	)		52			-
	$	556	$	4		$	66		$	34	$	(111	)	$	50	$	(17	)	$	(7	)	$	575		$	-
Other invested assets
Private stocks FVTPL	$	2,544	$	190		$	-		$	1,121	$	(443	)	$	-	$	-		$	(130	)	$	3,282		$	207
Private stocks AFS		124		(28	)		6			8		(27	)		-		-			(3	)		80			-
	$	2,668	$	162		$	6		$	1,129	$	(470	)	$	-	$	-		$	(133	)	$	3,362		$	207
Net derivatives	$	35	$	(14	)	$	(9	)	$	-	$	-		$	-	$	(9	)	$	(5	)	$	(2	)	$	(11	)
Segregated funds net assets		2,240		(13	)		-			16		(75	)		63		-			(110	)		2,121			7
	$	8,987	$	519		$	63		$	1,986	$	(1,010	)	$	159	$	(806	)	$	(266	)	$	9,632		$	604

(1)	These amounts are included in investment income on the Consolidated Statement of Income, except for the segregated funds amount which is included in the Investment related section of the changes in net assets for segregated funds (note 13).

(2)	These amounts are included in accumulated other comprehensive income (loss) on the Consolidated Statements of Financial Position.

(3)	For financial assets that are transferred into and/or out of Level 3, the Company uses the fair value of the assets at the beginning of the period.

The Company may hedge positions with offsetting positions that are classified in a different level. For example, the gains and losses for assets and liabilities in the Level 3 category presented in the tables above may not reflect the effect of offsetting gains and losses on hedging instruments that have been classified by the Company in the Level 1 and Level 2 categories.

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 assets into Level 3. The transfers from Level 3 primarily result from observable market data now being available from the entire term structure of the bond, thus eliminating the need to extrapolate market data beyond observable points.

Manulife Financial Corporation – First Quarter 2011

Note 8 Liabilities for Preferred Shares and Capital Instruments

	March 31,		December 31,		January 1,
As at	2011		2010		2010
Preferred shares – Class A Shares, Series 1	$	344	$	344	$	344
Manulife Financial Capital Securities – Series A		60		60		60
Manulife Financial Capital Securities – Series B		940		940		940
Manulife Financial Capital Trust II Notes – Series I		992		991		989
Surplus notes – 7.375% U.S. dollar		460		471		497
Subordinated notes – 6.24% Canadian dollar		-		550		550
Subordinated debentures – 5.059% fixed/floating Canadian dollar		646		648		642
Total	$	3,442	$	4,004	$	4,022
Fair value	$	3,543	$	4,105	$	4,166

The fair value of liability instruments is determined using quoted market prices.

The carrying value of the surplus notes reflects an unamortized fair value increment of US$40 (December 31, 2010 – US$41 and January 1, 2010 – US$43), which arose as a result of the acquisition of John Hancock Financial Services, Inc. The amortization of the fair value adjustment is recorded in interest expense.

Issue costs are amortized over the term of the underlying instruments.

On December 14, 2006, Manulife Finance (Delaware) LP (“MFLP”), a wholly-owned partnership, issued $650 of subordinated debentures which mature on December 15, 2041 and bear interest at the rate of 5.059% per annum payable semi-annually until December 15, 2036 and thereafter at the 90-day Bankers’ Acceptance Rate plus 1% payable quarterly.

With regulatory approval, the subordinated debentures are redeemable at any time, in whole or in part, prior to December 15, 2036 at the greater of par or the fair value of the debt based on the yield on Government of Canada bonds plus 26.5 basis points or on any interest payment date, on or after December 15, 2036 at par, in each case together with accrued and unpaid interest. Upon certain tax changes, the subordinated debentures are redeemable as a whole, with regulatory approval, at the fair market value, together with accrued and unpaid interest.

On July 10, 2009, Manulife Financial Capital Trust II (“Trust II”) issued $1,000 in subordinated notes. The notes mature on December 31, 2108 and interest is payable semi-annually on June 30 and December 31. From July 10, 2009 to December 30, 2019, the rate of interest is 7.405% per annum. On December 31, 2019 and on every fifth anniversary after December 31, 2019 (the “Interest Reset Date”), the rate of interest will be reset to the yield on five year Government of Canada bonds plus 5%.

On or after December 31, 2014, Trust II may redeem the notes, with regulatory approval, in whole or in part, on any day that is not an Interest Reset Date, at the greater of the par or the fair value of the debt based on the yield on uncallable Government of Canada bonds plus 1% if the redemption is prior to December 31, 2019, or 2% if the redemption date is after December 31, 2019, in each case together with accrued and unpaid interest. Trust II may redeem the notes, on or after December 31, 2019, with regulatory approval, on an Interest Reset Date at par, together with accrued and unpaid interest.

On February 16, 2011, MLI redeemed the outstanding $550 principal amount of the 6.24% subordinated debentures at par plus accrued and unpaid interest.

Manulife Financial Corporation – First Quarter 2011

Note 9 Share Capital

As at March 31, 2011, there were 39 million outstanding stock options and deferred share units that entitle the holder to receive common shares or payment in cash or common shares, at the option of the holder (December 31, 2010 – 38 million and January 1, 2010 – 38 million).

For the	three months ended		the year ended
Number of common shares (in millions)	March 31, 2011		December 31, 2010
Balance, beginning of period		1,778		1,758
Issued on exercise of stock options and deferred share units		-		1
Issued under dividend re-investment and share purchase plans		5		19
Balance, end of period		1,783		1,778

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

Dilutive effect of stock-based compensation awards and convertible instruments
For the	the three months ended				the year ended
	March 31, 2011		March 31, 2010		Dceember 31, 2010
Weighted average number of common shares (in millions)		1,778		1,758		1,765
Dilutive stock-based awards(1) (in millions)		3		5		-
Dilutive convertible instruments(2) (in millions)		80		71		-
Weighted average number of diluted common shares(3) (in millions)		1,861		1,834		1,765

(1)

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

(2)	Convertible preferred share liabilities and MaCS series I and II have been included in the calculation since holders of these convertible instruments have the right to redeem them for MFC shares prior to the conversion date.

(3)	For the year ended December 31, 2010, the dilutive effect calculation utilizes the basic weighted average number of common shares because the loss for the year results in all awards being anti-dilutive.

Preferred shares

On March 11, 2011, MFC issued 8 million Class 1 Shares Series 3 (“Series 3 Preferred Shares”) at a price of $25 per share, for an aggregate amount of $200. The Series 3 Preferred Shares are entitled to non-cumulative preferential cash dividends, payable quarterly, if and when declared, at a per annum rate of 4.20% until June 19, 2016, after which the dividend rate will be reset every five years at a rate equal to the five year Government of Canada bond yield plus 1.41%. On June 19, 2016 and on June 19 every five years thereafter, the Series 3 Preferred Shares will be convertible at the option of the holder into Class 1 Series 4 Preferred Shares (“Series 4 Preferred Shares”). The Series 4 Preferred Shares are entitled to non-cumulative preferential cash dividends, payable quarterly, if and when declared, at a rate equal to the three month Government of Canada Treasury Bill yield plus 1.41%. Subject to regulatory approval, MFC may redeem Series 3 Preferred Shares, in whole or in part, at par, on June 19, 2016 and on June 19 every five years thereafter.

Manulife Financial Corporation – First Quarter 2011

Note 10 Employee Future Benefits

The Company maintains a number of pension and benefit plans for its eligible employees and agents. Information about the cost of the Company’s benefit plans, in aggregate, is as follows:

	Pension benefits						Post-employment benefits
For the three months ended March 31,	2011			2010			2011			2010
Defined benefit current service cost	$	13		$	14		$	3		$	2
Defined benefit past service cost		-			-			(3	)		-
Defined contribution current service cost		21			20			-			-
Interest cost		44			48			9			11
Expected return on plan assets		(47	)		(47	)		(6	)		(6	)
Amortization of actuarial (gains) losses		15			17			4			(1	)
Curtailment		-			-			-			(8	)
Effect of asset limit		-			-			-			-
Total	$	46		$	52		$	7		$	(2	)

For the year ended December 31, 2010	Pension benefits			Post-employment benefits
Defined benefit current service cost	$	63		$	7
Defined benefit past service cost		-			-
Defined contribution current service cost		67			-
Interest cost		194			42
Expected return on plan assets		(184	)		(25	)
Amortization of actuarial losses		64			2
Curtailment		-			(31	)
Effect of asset limit		3			-
Total	$	207		$	(5	)

Note 11 Commitments and Contingencies

(a) Legal proceedings

The Company is regularly involved in legal actions, both as a defendant and as a plaintiff. The legal actions naming the Company as a defendant ordinarily involve its activities as a provider of insurance protection and wealth management products, as well as an investment adviser, employer and taxpayer. In addition, government and regulatory bodies in Canada, the United States and Asia 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.

The Company announced on April 21, 2011 that it had been informed by staff of the Ontario Securities Commission (“OSC”) that staff would not seek any orders from OSC in connection with the enforcement notice delivered by staff in June 2009 relating to the Company’s disclosure before March 2009 of risks related to the Company’s variable annuity guarantee and segregated funds business.

The Company may become subject to regulatory or other action by regulatory authorities in other jurisdictions based on similar allegations.

Proposed class action lawsuits against the Company have been filed in Canada and the United States, on behalf of investors in those jurisdictions, based on allegations that the Company failed to meet its disclosure obligations related to its exposure to market price risk in its segregated funds and variable annuity guaranteed products. The Company may become subject to other similar lawsuits by investors.

Manulife Financial Corporation – First Quarter 2011

The Company believes that its disclosure satisfied applicable disclosure requirements and intends to vigorously defend itself against any claims based on these allegations.

(b) Guarantees

Guarantees regarding Manulife Finance (Delaware), L.P.

MFC has guaranteed the payment of amounts on the $550 senior debentures due December 15, 2026 and $650 subordinated debentures due December 15, 2041 issued by MFLP, a wholly owned partnership. The senior debentures pay a fixed interest rate of 4.448% per annum, payable semi-annually, until December 15, 2016 and, thereafter, will pay a floating rate of interest equal to the 90-day Bankers Acceptance rate plus 1.5%, payable quarterly. The subordinated debentures pay a fixed interest rate of 5.059% per annum, payable semi-annually, until December 15, 2036 and, thereafter, will pay a floating rate of interest equal to the 90-day Bankers Acceptance rate plus 1%, payable quarterly. MFC’s guarantee of the senior debentures has the effect of making the $550 senior debentures into a senior obligation of the Company. MFC’s guarantee of the $650 subordinated debentures is a subordinated obligation of the Company.

Guarantees regarding The Manufacturers Life Insurance Company

On January 29, 2007, MFC provided a subordinated guarantee of Class A Shares and Class B Shares of MLI and any other class of preferred shares that rank on a parity with Class A Shares or Class B Shares of MLI

The following tables set forth certain condensed consolidating financial information for MFC:

For the three months ended March 31, 2011	MFC (Guarantor)			Manulife Finance (Delaware), L.P.			MLI Consolidated			Other Subsidiaries of MFC on a Combined Basis			Consolidating Adjustments			Total Consolidated Amounts
Total revenue	$	83		$	16		$	7,030		$	422		$	(398	)	$	7,153
Net income (loss) attributed to shareholders		985			(5	)		936			44			(975	)		985

For the three months ended March 31, 2010
Total revenue	$	39		$	15		$	9,063		$	266		$	(152	)	$	9,231
Net income (loss) attributed to shareholders		1,224			-			1,023			204			(1,227	)		1,224

For the year ended December 31, 2010
Total revenue	$	151		$	56		$	37,264		$	1,681		$	(1,248	)	$	37,904
Net income (loss) attributed to shareholders		(1,663	)		(1	)		(996	)		(567	)		1,564			(1,663	)

As at March 31, 2011
Invested assets	$	237		$	4		$	195,526		$	2,836		$	-		$	198,603
Total other assets		38,623			1,407			30,934			21,680			(68,740	)		23,904
Segregated funds net assets		-			-			200,890			-			-			200,890
Insurance contract liabilities		-			-			154,698			8,430			(7,503	)		155,625
Investment contract liabilities and deposits		-			-			2,617			-			-			2,617
Total other liabilities		14,349			1,263			38,819			15,715			(30,993	)		39,153
Segregated funds net liabilities		-			-			200,890			-			-			200,890

As at December 31, 2010
Invested assets	$	39		$	4		$	198,283		$	2,896		$	-		$	201,222
Total other assets		30,170			1,445			31,386			6,543			(45,119	)		24,425
Segregated funds net assets		-			-			199,120			-			-			199,120
Insurance contract liabilities		-			-			157,449			8,602			(7,739	)		158,312
Investment contract liabilities and deposits		-			-			2,990			-			-			2,990
Total other liabilities		6,099			1,297			39,315			496			(7,537	)		39,670
Segregated funds net liabilities		-			-			199,120			-			-			199,120

As at January 1, 2010
Invested assets	$	3		$	3		$	187,149		$	2,152		$	(79	)	$	189,228
Total other assets		31,082			1,384			32,316			5,293			(44,086	)		25,989
Segregated funds net assets		-			-			190,783			-			-			190,783
Insurance contract liabilities		-			-			147,773			6,942			(6,772	)		147,943
Investment contract liabilities and deposits		-			-			3,778			-			-			3,778
Total other liabilities		3,827			1,237			37,253			373			(6,770	)		35,920
Segregated funds net liabilities		-			-			190,783			-			-			190,783

Manulife Financial Corporation – First Quarter 2011

Guarantees regarding Manulife Finance Holdings Limited (“MFHL”)

MFC has guaranteed the payment of amounts on the $220 of 6.822% senior notes due May 31, 2011 and the $175 of 6.646% senior notes due November 30, 2011 assumed by MFHL, a wholly owned subsidiary.

Details of guarantees regarding certain securities issued or to be issued by John Hancock Life Insurance Company (U.S.A), John Hancock Life Insurance Company of New York and Manulife Financial Holdings Limited are outlined in note 14.

Note 12 Segmented Information

The Company’s reporting segments are U.S. Insurance and U.S. Wealth Management, which combine to form the U.S. Division, as well as the Asia, Canadian, and Reinsurance Divisions and the Corporate and Other segment. Each division has profit and loss responsibility and develops products, services and distribution strategies based on the profile of its business and the needs of its market. The significant product and service offerings of each segment are:

Protection (U.S. Insurance, Asia and Canadian Divisions). Offers a variety of individual life insurance and individual and group long-term care insurance. Products are distributed through multiple distribution channels, including insurance agents, brokers, banks, financial planners, and direct marketing.

Wealth Management (U.S. Wealth, Asia and Canadian Divisions). Offers annuities, pension contracts, and mutual fund products and services. These businesses also offer a variety of retirement products to group benefit plans. Annuity contracts provide non-guaranteed, partially guaranteed and fully guaranteed investment options through general and separate account products. The Canadian Wealth Management business also includes Manulife Bank, which offers a variety of deposit and credit products to Canadian customers. These businesses distribute products through multiple distribution channels, including insurance agents and brokers affiliated with the Company, securities brokerage firms, financial planners, pension plan sponsors, pension plan consultants, and banks.

Reinsurance. Provides life and property and casualty retrocession coverage, and international employee benefits management services. Manulife Financial writes reinsurance business in the Americas, Europe, Asia and Australia. The Division has offices in Canada, the United States, Germany, Belgium, Barbados, Singapore and Japan.

Corporate and Other Segment. Comprised of the Investment Division’s external asset management business, earnings on assets backing capital, net of amounts allocated to operating divisions, changes in actuarial methods and assumptions, the John Hancock Accident and Health operation and other non operating items.

Certain allocation methodologies are employed in the preparation of segmented financial information. Indirect expenses are allocated to business segments using allocation formulas applied on a consistent basis, while capital is apportioned to the Company's business segments using a risk-based methodology. The income statement impact of changes in actuarial methods and assumptions (note 5) and the income statement impact of the goodwill impairment change are reported in the Corporate and Other segment.

Manulife Financial Corporation – First Quarter 2011

By segment										U.S.
For the three months ended	Asia			Canadian			U.S.			Wealth			Reinsurance			Corporate
March 31, 2011	Division			Division			Insurance			Management			Division			and Other			Total
Revenue
Premium income
Life and health insurance	$	1,128		$	664		$	1,498		$	-		$	303		$	-		$	3,593
Annuities and pensions		162			255			-			605			-			-			1,022
Net premium income	$	1,290		$	919		$	1,498		$	605		$	303		$	-		$	4,615
Net investment income (loss)		144			306			452			176			24			(322	)		780
Net other revenue		237			552			167			717			8			77			1,758
Total revenue	$	1,671		$	1,777		$	2,117		$	1,498		$	335		$	(245	)	$	7,153
Contract benefits and expenses
Life and health insurance	$	843		$	283		$	1,058		$	-		$	386		$	110		$	2,680
Annuities and pensions		17			100			-			556			-			-			673
Net benefits and claims	$	860		$	383		$	1,058		$	556		$	386		$	110		$	3,353
Interest expense		16			62			10			3			-			190			281
Other expenses		412			720			448			490			25			128			2,223
Total policy benefits and expenses	$	1,288		$	1,165		$	1,516		$	1,049		$	411		$	428		$	5,857
Income (loss) before income taxes	$	383		$	612		$	601		$	449		$	(76	)	$	(673	)	$	1,296
Income tax recovery (expense)		(30	)		(105	)		(198	)		(137	)		(16	)		179			(307	)
Net income (loss)	$	353		$	507		$	403		$	312		$	(92	)	$	(494	)	$	989
Less net (income) loss attributed to:
Participating policyholders		3			(2	)		-			-			-			-			1
Non-controlling interests		(5	)		-			-			-			-			-			(5	)
Net income (loss) attributed to shareholders	$	351		$	505		$	403		$	312		$	(92	)	$	(494	)	$	985

										U.S.
For the three months ended	Asia			Canadian			U.S.			Wealth			Reinsurance			Corporate
March 31, 2010	Division			Division			Insurance			Management			Division			and Other			Total
Revenue
Premium income
Life and health insurance	$	993		$	613		$	1,399		$	-		$	263		$	-		$	3,268
Annuities and pensions		49			421			-			673			-			-			1,143
Net premium income	$	1,042		$	1,034		$	1,399		$	673		$	263		$	-		$	4,411
Net investment income		320			992			1,101			622			40			156			3,231
Net other revenue		249			414			166			679			8			73			1,589
Total revenue	$	1,611		$	2,440		$	2,666		$	1,974		$	311		$	229		$	9,231
Contract benefits and expenses
Life and health insurance	$	895		$	744		$	1,865		$	-		$	223		$	7		$	3,734
Annuities and pensions		(83	)		683			-			950			-			-			1,550
Net benefits and claims	$	812		$	1,427		$	1,865		$	950		$	223		$	7		$	5,284
Interest expense		14			53			8			3			1			195			274
Other expenses		393			645			478			488			33			129			2,166
Total policy benefits and expense	$	1,219		$	2,125		$	2,351		$	1,441		$	257		$	331		$	7,724
Income (loss) before income taxes	$	392		$	315		$	315		$	533		$	54		$	(102	)	$	1,507
Income tax recovery (expense)		(19	)		(29	)		(104	)		(165	)		(9	)		52			(274	)
Net income (loss)	$	373		$	286		$	211		$	368		$	45		$	(50	)	$	1,233
Less net (income) loss attributed to:
Participating policyholders		(3	)		(4	)		-			-			-			-			(7	)
Non-controlling interests		(5	)		-			-			-			-			3			(2	)
Net income (loss) attributed to shareholders	$	365		$	282		$	211		$	368		$	45		$	(47	)	$	1,224

Manulife Financial Corporation – First Quarter 2011

										U.S.
For the year ended	Asia			Canadian			U.S.			Wealth			Reinsurance			Corporate
December 31, 2010	Division			Division			Insurance			Management			Division			and Other			Total
Revenue
Premium income
Life and health insurance	$	4,321		$	2,615		$	5,979		$	-		$	1,017		$	-		$	13,932
Annuities and pensions		534			1,240			-			2,690			-			-			4,464
Net premium income	$	4,855		$	3,855		$	5,979		$	2,690		$	1,017		$	-		$	18,396
Net investment income		1,710			3,942			4,060			2,209			150			1,091			13,162
Net other revenue		838			1,762			687			2,792			38			229			6,346
Total revenue	$	7,403		$	9,559		$	10,726		$	7,691		$	1,205		$	1,320		$	37,904
Contract benefits and expenses
Life and health insurance	$	3,951		$	3,420		$	9,178		$	-		$	842		$	2,955		$	20,346
Annuities and pensions		798			2,213			-			4,516			-			-			7,527
Net benefits and claims	$	4,749		$	5,633		$	9,178		$	4,516		$	842		$	2,955		$	27,873
Interest expense		59			249			44			13			2			677			1,044
Other expenses		1,650			2,685			1,979			1,947			110			2,941			11,312
Total policy benefits and expense	$	6,458		$	8,567		$	11,201		$	6,476		$	954		$	6,573		$	40,229
Income (loss) before income taxes	$	945		$	992		$	(475	)	$	1,215		$	251		$	(5,253	)	$	(2,325	)
Income tax recovery (expense)		(127	)		108			177			(333	)		(47	)		1,021			799
Net income (loss)	$	818		$	1,100		$	(298	)	$	882		$	204		$	(4,232	)	$	(1,526	)
Less net (income) loss attributed to : Participating policyholders		(64	)		(15	)		-			-			-			-			(79	)
Non-controlling interests		(42	)		-			-			-			-			(16	)		(58	)
Net income (loss) attributed to shareholders	$	712		$	1,085		$	(298	)	$	882		$	204		$	(4,248	)	$	(1,663	)

By segment										U.S.
	Asia			Canadian			U.S.			Wealth			Reinsurance			Corporate
	Division			Division			Insurance			Management			Division			and Other			Total
Goodwill
Balance, January 1, 2011	$	561		$	2,014		$	914		$	360		$	66		$	75		$	3,990
Effect of exchange rate changes		(20	)		-			(21	)		(8	)		(1	)		-			(50	)
Balance, March 31, 2011	$	541		$	2,014		$	893		$	352		$	65		$	75		$	3,940

Balance, January 1, 2010	$	537		$	2,166		$	1,694		$	1,843		$	70		$	79		$	6,389
Impairments		-			(150	)		(727	)		(1,453	)		-			-			(2,330	)
Acquisition of subsidiaries		-			(2	)		-			-			-			2			-
Effect of exchange rate changes		24			-			(53	)		(30	)		(4	)		(6	)		(69	)
Balance, December 31, 2010	$	561		$	2,014		$	914		$	360		$	66		$	75		$	3,990

The results of the Company’s business segments differ from geographic segmentation primarily as a consequence of segmenting the results of the Company’s Reinsurance Division into the different geographic segments to which its businesses pertain.

By geographic location
For the three months ended
March 31, 2011	Asia			Canada		United States		Other		Total
Revenue
Premium income
Life and health insurance	$	1,130		$	671	$	1,606	$	186	$	3,593
Annuities and pensions		162			255		605		-		1,022
Total premium income	$	1,292		$	926	$	2,211	$	186	$	4,615
Investment income (loss)		(11	)		328		459		4		780
Other revenue		268			514		960		16		1,758
Total revenue	$	1,549		$	1,768	$	3,630	$	206	$	7,153

For the three months ended
March 31, 2010	Asia		Canada		United States		Other			Total
Revenue
Premium income
Life and health insurance	$	995	$	626	$	1,505	$	142		$	3,268
Annuities and pensions		49		421		673		-			1,143
Total premium income	$	1,044	$	1,047	$	2,178	$	142		$	4,411
Investment income (loss)		341		1,096		1,800		(6	)		3,231
Other revenue		252		433		898		6			1,589
Total revenue	$	1,637	$	2,576	$	4,876	$	142		$	9,231

Manulife Financial Corporation – First Quarter 2011

For the year ended
December 31, 2010	Asia		Canada		United States		Other		Total
Revenue
Premium income
Life and health insurance	$	4,329	$	2,658	$	6,409	$	536	$	13,932
Annuities and pensions		534		1,240		2,690		-		4,464
Total premium income	$	4,863	$	3,898	$	9,099	$	536	$	18,396
Investment income		1,752		4,519		6,731		160		13,162
Other revenue		750		1,392		4,114		90		6,346
Total revenue	$	7,365	$	9,809	$	19,944	$	786	$	37,904

Note 13 Segregated Funds

Net Assets

As at	March 31, 2011			December 31, 2010			January 1, 2010
Investments, at market value
Cash and short-term securities	$	1,386		$	1,750		$	1,802
Bonds		921			928			1,133
Stocks and mutual funds		196,534			194,188			185,356
Other investments		2,260			2,426			2,563
Accrued investment income		65			75			76
Other liabilities, net		(276	)		(247	)		(147	)
Total segregated funds net assets	$	200,890		$	199,120		$	190,783

Changes in Net Assets

	three months ended						year ended
	March 31,			March 31,			December 31,
For the	2011			2010			2010
Net policyholder cash flow
Deposits from policyholders	$	5,919		$	7,204		$	24,544
Net transfers from general fund		42			185			76
Payments to policyholders		(5,840	)		(5,354	)		(21,578	)
	$	121		$	2,035		$	3,042
Investment related
Interest and dividends	$	300		$	270		$	4,948
Net realized and unrealized investment gains		6,244			5,689			16,156
	$	6,544		$	5,959		$	21,104
Other
Management and adminstration fees		(915	)		(849	)		(3,302	)
Transfer to mutual funds resulting from restructuring of the Hong Kong pension business		-			-			(6,614	)
Currency revaluation		(3,980	)		(4,703	)		(5,893	)
	$	(4,895	)	$	(5,552	)	$	(15,809	)
Net additions	$	1,770		$	2,442		$	8,337
Segregated funds net assets, beginning of period		199,120			190,783			190,783
Segregated funds net assets, end of period	$	200,890		$	193,225		$	199,120

Manulife Financial Corporation – First Quarter 2011

NNote 14 Information Provided in Connection with the Fixed Investment Option of the Deferred Annuity Contracts and Signature Notes Issued or Assumed by John Hancock Life Insurance Company (U.S.A.) and the Fixed Investment Option of the Deferred Annuity Contracts to be Issued by John Hancock Life Insurance Company of New York

The following condensed consolidating financial information, presented in accordance with IFRS, and the related disclosure have been included in these consolidated financial statements with respect to John Hancock Life Insurance Company (U.S.A.) (“JHUSA”) and John Hancock Life Insurance Company of New York (“JHNY”) in compliance with Regulation S-X and Rule 12h-5 of the United States Securities and Exchange Commission (the “Commission”) and, with respect to Manulife Finance Holdings Limited (“MFHL”), in accordance with National Instrument 51-102 – Continuous Disclosure Obligations of Canadian provincial securities laws. These financial statements are (i) incorporated by reference in the registration statements of MFC and its subsidiaries that are described below and which relate to MFC’s guarantee of certain securities to be issued by its subsidiaries and (ii) with respect to MFHL, are provided in reliance on an exemption from continuous disclosure obligations pursuant to Canadian provincial securities law requirements.

Condensed Consolidating Statement of Financial Position
					John Hancock		John Hancock
	Manulife		Manulife		Life Insurance		Life Insurance							Consolidated
	Financial		Finance		Company		Company of							Manulife
	Corporation		Holdings		(U.S.A.)		New York		Other		Consolidation			Financial
As at March 31, 2011	(Guarantor)		Limited		(Issuer)		(Issuer)		Subsidiaries		Adjustments			Corporation
Assets
Invested assets	$	237	$	9	$	77,657	$	9,394	$	111,803	$	(497	)	$	198,603
Investments in unconsolidated subsidiaries		30,152		1		3,613		1		19,212		(52,979	)		-
Reinsurance assets		-		-		13,928		870		3,746		(10,766	)		7,778
Other assets		8,471		404		12,812		280		21,331		(27,172	)		16,126
Segregated fund net assets		-		-		124,683		7,364		70,382		(1,539	)		200,890
Total assets	$	38,860	$	414	$	232,693	$	17,909	$	226,474	$	(92,953	)	$	423,397
Liabilities and equity
Insurance contract liabilities	$	-	$	-	$	82,340	$	6,209	$	78,136	$	(11,060	)	$	155,625
Investment contract liabilities and deposits		-		-		1,414		49		1,715		(561	)		2,617
Other liabilities		9,155		6		12,060		2,878		30,655		(24,849	)		29,905
Long-term debt		4,850		402		-		-		610		(56	)		5,806
Liabilities for preferred shares and capital instruments		344		-		986		-		11,749		(9,637	)		3,442
Segregated fund net liabilities		-		-		124,683		7,364		70,382		(1,539	)		200,890
Shareholders' equity		24,511		6		11,210		1,409		32,719		(45,344	)		24,511
Participating policyholders' equity		-		-		-		-		185		-			185
Non-controlling interest in subsidiaries		-		-		-		-		323		93			416
Total liabilities and equity	$	38,860	$	414	$	232,693	$	17,909	$	226,474	$	(92,953	)	$	423,397

Manulife Financial Corporation – First Quarter 2011

Condensed Consolidating Statement of Financial Position
					John Hancock		John Hancock
	Manulife		Manulife		Life Insurance		Life Insurance							Consolidated
	Financial		Finance		Company		Company of							Manulife
	Corporation		Holdings		(U.S.A.)		New York		Other		Consolidation			Financial
As at December 31, 2010	(Guarantor)		Limited		(Issuer)		(Issuer)		Subsidiaries		Adjustments			Corporation
Assets
Invested assets	$	39	$	3	$	79,971	$	9,522	$	112,187	$	(500	)	$	201,222
Investments in unconsolidated subsidiaries		29,766		2		3,589		1		11,123		(44,481	)		-
Reinsurance assets		-		-		14,994		895		3,291		(11,348	)		7,832
Other assets		404		407		13,170		512		12,660		(10,560	)		16,593
Segregated fund net assets		-		-		123,657		7,288		69,720		(1,545	)		199,120
Total assets	$	30,209	$	412	$	235,381	$	18,218	$	208,981	$	(68,434	)	$	424,767
Liabilities and equity
Insurance contract liabilities	$	-	$	-	$	85,137	$	6,608	$	78,213	$	(11,646	)	$	158,312
Investment contract liabilities and deposits		-		-		1,805		40		1,145		-			2,990
Other liabilities		881		-		12,616		2,913		22,309		(8,894	)		29,825
Long-term debt		4,874		407		-		-		610		(50	)		5,841
Liabilities for preferred shares and capital instruments		344		-		1,009		-		4,346		(1,695	)		4,004
Segregated fund net liabilities		-		-		123,657		7,288		69,720		(1,545	)		199,120
Shareholders' equity		24,110		5		11,157		1,369		32,167		(44,698	)		24,110
Participating policyholders' equity		-		-		-		-		155		-			155
Non-controlling interest in subsidiaries		-		-		-		-		316		94			410
Total liabilities and equity	$	30,209	$	412	$	235,381	$	18,218	$	208,981	$	(68,434	)	$	424,767

Condensed Consolidating Statement of Financial Position
					John Hancock		John Hancock
	Manulife		Manulife		Life Insurance		Life Insurance							Consolidated
	Financial		Finance		Company		Company of							Manulife
	Corporation		Holdings		(U.S.A.)		New York		Other		Consolidation			Financial
As at January 1, 2010	(Guarantor)		Limited		(Issuer)		(Issuer)		Subsidiaries		Adjustments			Corporation
Assets
Invested assets	$	3	$	-	$	87,431	$	2,162	$	100,785	$	(1,153	)	$	189,228
Investments in unconsolidated subsidiaries		30,479		2		3,576		1		13,305		(47,363	)		-
Reinsurance assets		-		-		10,399		598		4,159		(7,112	)		8,044
Other assets		603		-		12,572		34		12,043		(7,307	)		17,945
Segregated fund net assets		-		-		117,355		6,945		67,964		(1,481	)		190,783
Total assets	$	31,085	$	2	$	231,333	$	9,740	$	198,256	$	(64,416	)	$	406,000
Liabilities and equity
Insurance contract liabilities	$	-	$	-	$	86,087	$	1,136	$	68,777	$	(8,057	)	$	147,943
Investment contract liabilities and deposits		-		-		2,494		-		1,284		-			3,778
Other liabilities		594		-		10,963		347		21,692		(5,554	)		28,042
Long-term debt		2,889		-		-		-		1,002		(35	)		3,856
Liabilities for preferred shares and capital instruments		344		-		1,063		-		4,404		(1,789	)		4,022
Segregated fund net liabilities		-		-		117,355		6,945		67,964		(1,481	)		190,783
Shareholders' equity		27,258		2		13,371		1,312		32,883		(47,568	)		27,258
Participating policyholders' equity		-		-		-		-		80		-			80
Non-controlling interest in subsidiaries		-		-		-		-		170		68			238
Total liabilities and equity	$	31,085	$	2	$	231,333	$	9,740	$	198,256	$	(64,416	)	$	406,000

Condensed Consolidating Statement of Income
						John Hancock			John Hancock
	Manulife			Manulife		Life Insurance			Life Insurance									Consolidated
	Financial			Finance		Company			Company of									Manulife
For the three months ended	Corporation			Holdings		(U.S.A.)			New York			Other			Consolidation			Financial
March 31, 2011	(Guarantor)			Limited		(Issuer)			(Issuer)			Subsidiaries			Adjustments			Corporation
Revenue
Net premium income	$	-		$	-	$	1,539		$	117		$	2,959		$	-		$	4,615
Net investment income (loss)		81			8		399			109			484			(301	)		780
Net other revenue		2			-		416			31			1,741			(432	)		1,758
Total revenue	$	83		$	8	$	2,354		$	257		$	5,184		$	(733	)	$	7,153
Policy benefits and expenses
Net benefits and claims	$	-		$	-	$	1,306		$	94		$	2,110		$	(157	)	$	3,353
Commissions, investment and general expenses		8			-		699			45			1,632			(217	)		2,167
Other expenses		83			7		90			2			514			(359	)		337
Total policy benefits and expenses	$	91		$	7	$	2,095		$	141		$	4,256		$	(733	)	$	5,857
Income (loss) before income taxes	$	(8	)	$	1	$	259		$	116		$	928		$	-		$	1,296
Income tax (expense) recovery		-			-		(52	)		(40	)		(215	)		-			(307	)
Income (loss) after income taxes	$	(8	)	$	1	$	207		$	76		$	713		$	-		$	989
Equity in net income (loss) of unconsolidated subsidiaries		993			-		75			-			282			(1,350	)		-
Net income (loss)	$	985		$	1	$	282		$	76		$	995		$	(1,350	)	$	989
Net income (loss) attributed to:
Non-controlling interest in subsidiaries	$	-		$	-	$	-		$	-		$	5		$	-		$	5
Participating policyholders		-			-		(13	)		(11	)		10			13			(1	)
Shareholders		985			1		295			87			980			(1,363	)		985
	$	985		$	1	$	282		$	76		$	995		$	(1,350	)	$	989

Manulife Financial Corporation – First Quarter 2011

Condensed Consolidating Statement of Income
						John Hancock			John Hancock
	Manulife			Manulife		Life Insurance			Life Insurance									Consolidated
	Financial			Finance		Company			Company of									Manulife
For the three months ended	Corporation			Holdings		(U.S.A.)			New York			Other			Consolidation			Financial
March 31, 2010	(Guarantor)			Limited		(Issuer)			(Issuer)			Subsidiaries			Adjustments			Corporation
Revenue

Net premium income	$	-		$	-	$	1,668		$	148		$	2,595		$	-		$	4,411
Net investment income (loss)		39			-		1,570			236			1,556			(170	)		3,231
Net other revenue		-			-		512			32			1,434			(389	)		1,589
Total revenue	$	39		$	-	$	3,750		$	416		$	5,585		$	(559	)	$	9,231
Policy benefits and expenses
Net benefits and claims	$	-		$	-	$	2,876		$	296		$	2,293		$	(181	)	$	5,284
Commissions, investment and general expenses		8			-		760			46			1,500			(221	)		2,093
Other expenses		47			-		139			3			315			(157	)		347
Total policy benefits and expenses	$	55		$	-	$	3,775		$	345		$	4,108		$	(559	)	$	7,724
Income (loss) before income taxes	$	(16	)	$	-	$	(25	)	$	71		$	1,477		$	-		$	1,507
Income tax (expense) recovery		1			-		31			(24	)		(282	)		-			(274	)
Income (loss) after income taxes	$	(15	)	$	-	$	6		$	47		$	1,195		$	-		$	1,233
Equity in net income (loss) of unconsolidated subsidiaries		1,239			-		76			-			90			(1,405	)		-
Net income (loss)	$	1,224		$	-	$	82		$	47		$	1,285		$	(1,405	)	$	1,233
Net income (loss) attributed to:
Non-controlling interest in subsidiaries	$	-		$	-	$	-		$	-		$	1		$	1		$	2
Participating policyholders		-			-		(2	)		1			7			1			7
Shareholders		1,224			-		84			46			1,277			(1,407	)		1,224
	$	1,224		$	-	$	82		$	47		$	1,285		$	(1,405	)	$	1,233

Condensed Consolidating Statement of Income
						John Hancock			John Hancock
	Manulife			Manulife		Life Insurance			Life Insurance									Consolidated
	Financial			Finance		Company			Company of									Manulife
For the year ended	Corporation			Holdings		(U.S.A.)			New York			Other			Consolidation			Financial
December 31, 2010	(Guarantor)			Limited		(Issuer)			(Issuer)			Subsidiaries			Adjustments			Corporation
Revenue

Net premium income	$	-		$	-	$	6,769		$	607		$	11,023		$	(3	)	$	18,396
Net investment income (loss)		149			21		6,010			709			7,051			(778	)		13,162
Net other revenue		2			-		1,887			131			6,314			(1,988	)		6,346
Total revenue	$	151		$	21	$	14,666		$	1,447		$	24,388		$	(2,769	)	$	37,904
Policy benefits and expenses
Net benefits and claims	$	-		$	-	$	11,460		$	1,347		$	16,275		$	(1,209	)	$	27,873
Commissions, investment and general expenses		28			-		2,970			191			6,383			(852	)		8,720
Goodwill impairment		-			-		1,557			-			773			-			2,330
Other expenses		235			20		438			11			1,310			(708	)		1,306
Total policy benefits and expenses	$	263		$	20	$	16,425		$	1,549		$	24,741		$	(2,769	)	$	40,229
Income (loss) before income taxes	$	(112	)	$	1	$	(1,759	)	$	(102	)	$	(353	)	$	-		$	(2,325	)
Income tax (expense) recovery		17			2		214			40			526			-			799
Income (loss) after income taxes	$	(95	)	$	3	$	(1,545	)	$	(62	)	$	173		$	-		$	(1,526	)
Equity in net income (loss) of unconsolidated subsidiaries		(1,568	)		-		(135	)		-			(1,657	)		3,360			-
Net income (loss)	$	(1,663	)	$	3	$	(1,680	)	$	(62	)	$	(1,484	)	$	3,360		$	(1,526	)
Net income (loss) attributed to:
Non-controlling interest in subsidiaries	$	-		$	-	$	-		$	-		$	46		$	12		$	58
Participating policyholders		-			-		(5	)		-			70			14			79
Shareholders		(1,663	)		3		(1,675	)		(62	)		(1,600	)		3,334			(1,663	)
	$	(1,663	)	$	3	$	(1,680	)	$	(62	)	$	(1,484	)	$	3,360		$	(1,526	)

Manulife Financial Corporation – First Quarter 2011

Consolidating Statement of Cash Flows
							John Hancock			John Hancock
	Manulife			Manulife			Life Insurance			Life Insurance									Consolidated
	Financial			Finance			Company			Company of									Manulife
	Corporation			Holdings			(U.S.A.)			New York			Other			Consolidation			Financial
For the three months ended March 31, 2011	(Guarantor)			Limited			(Issuer)			(Issuer)			Subsidiaries			Adjustments			Corporation

Operating activities
Net income (loss)	$	985		$	1		$	282		$	76		$	995		$	(1,350	)	$	989
Adjustments for non-cash items in net income (loss):
Equity in net income of unconsolidated subsidiaries		(993	)		-			(75	)		-			(282	)		1,350			-
Increase (decrease) in insurance contract liabilities		-			-			(613	)		(264	)		511			-			(366	)
Increase (decrease) in reinsurance assets		-			-			733			5			(809	)		-			(71	)
Accretion of discount on invested assets		-			-			(32	)		(3	)		(57	)		-			(92	)
Other amortization		1			(5	)		20			-			58			5			79
Net realized and unrealized (gains) losses including impairments		(3	)		-			900			46			632			-			1,575
Deferred income tax expense (recovery)		-			-			135			15			115			(1	)		264
Stock option expense		-			-			2			-			5			-			7
Net income adjusted for non-cash items	$	(10	)	$	(4	)	$	1,352		$	(125	)	$	1168		$	4		$	2,385
Changes in policy related and operating receivables and payables		(36	)		10			(965	)		220			456			1			(314	)
Cash (used in) provided by operating activities	$	(46	)	$	6		$	387		$	95		$	1,624		$	5		$	2,071

Investing activities
Purchases and mortgage advances	$	-		$	-		$	(4,143	)	$	(781	)	$	(8,796	)	$	-		$	(13,720	)
Disposals and repayments		-			-			3,914			688			7,121			-			11,723
Amortization of premium on invested assets		-			-			42			24			39			-			105
Changes in investment broker net receivables and payables		-			-			7			11			(130	)		-			(112	)
Capital contribution to unconsolidated subsidiaries		-			-			(61	)		-			-			61			-
Notes receivables from affiliates		(8,000	)		-			-			-			-			8,000			-
Notes receivables from parent		-			-			-			-			(8,339	)		8,339			-
Notes receivables from subsidiaries		(117	)		-			4			-			-			113			-
Cash (used in) provided by investing activities	$	(8,117	)	$	-		$	(237	)	$	(58	)	$	(10,105	)	$	16,513		$	(2,004	)

Financing activities
Increase (decrease) in repurchase agreements and securities sold but not yet purchased	$	-		$	-		$	(339	)	$	-		$	32		$	-		$	(307	)
Issue of long-term debt		-			-			-			-			5			(5	)		-
Repayment of capital instruments		-			-			-			-			(550	)		-			(550	)
(Decrease) increase in investment contract liabilities		-			-			(347	)		3			43			-			(301	)
Funds borrowed, net		-			-			-			-			34			-			34
Changes in bank deposits, net		-			-			-			-			607			-			607
Shareholder dividends paid in cash		(175	)		-			-			-			-			-			(175	)
Common shares issued, net		1			-			-			-			-			-			1
Preferred shares issued, net		196			-			-			-			-			-			196
Capital contributions by parent		-			-			-			-			61			(61	)		-
Notes payable to affiliates		-			-			-			-			8,000			(8,000	)		-
Notes payable to parent		-			-			-			-			113			(113	)		-
Notes payable to subsidiaries		8,339			-			-			-			-			(8,339	)		-
Cash provided by (used in) financing activities	$	8,361		$	-		$	(686	)	$	3		$	8,345		$	(16,518	)	$	(495	)

Cash and short-term securities
Increase (decrease) during the period	$	198		$	6		$	(536	)	$	40		$	(136	)	$	-		$	(428	)
Effect of exchange rate changes on cash and short-term securities		-			-			(38	)		(10	)		(82	)		-			(130	)
Balance, January 1		39			3			1,708			421			9,151			-			11,322
Balance, March 31	$	237		$	9		$	1,134		$	451		$	8,933		$	-		$	10,764

Cash and short-term securities
Beginning of period
Gross cash and short-term securities	$	39		$	3		$	2,063		$	443		$	9,301		$	-		$	11,849
Net payments in transit, included in other liabilities		-			-			(355	)		(22	)		(150	)		-			(527	)
Net cash and short-term securities, January 1	$	39		$	3		$	1,708		$	421		$	9,151		$	-		$	11,322

End of period
Gross cash and short-term securities	$	237		$	9		$	1,509		$	470		$	9,154		$	-		$	11,379
Net payments in transit, included in other liabilities		-			-			(375	)		(19	)		(221	)		-			(615	)
Net cash and short-term securities, March 31	$	237		$	9		$	1,134		$	451		$	8,933		$	-		$	10,764

Supplemental disclosures on cash flow from operating activities:
Interest paid	$	72		$	-		$	53		$	1		$	266		$	(135	)	$	257
Interest received	$	-		$	-		$	1,099		$	135		$	872		$	-		$	2,106

Manulife Financial Corporation – First Quarter 2011

Consolidating Statement of Cash Flows
							John Hancock			John Hancock
	Manulife			Manulife			Life Insurance			Life Insurance									Consolidated
	Financial			Finance			Company			Company of									Manulife
	Corporation			Holdings			(U.S.A.)			New York			Other			Consolidation			Financial
For the three months ended March 31, 2010	(Guarantor)			Limited			(Issuer)			(Issuer)			Subsidiaries			Adjustments			Corporation

Operating activities
Net income (loss)	$	1,224		$	-		$	82		$	47		$	1,285		$	(1,405	)	$	1,233
Adjustments for non-cash items in net income (loss):
Equity in net income of unconsolidated subsidiaries		(1,239	)		-			(76	)		-			(90	)		1,405			-
Increase (decrease) in insurance contract liabilities		-			-			1,196			416			(153	)		-			1,459
(Decrease) increase in reinsurance assets		-			-			(2,680	)		(216	)		3,136			-			240
Accretion of discount on invested assets		-			-			(26	)		(3	)		(61	)		-			(90	)
Other amortization		-			-			23			(1	)		52			-			74
Net realized and unrealized (gains) losses including impairments		-			-			(357	)		(88	)		(609	)		-			(1,054	)
Deferred income tax (recovery) expense		-			-			(101	)		(10	)		185			-			74
Stock option expense		-			-			3			-			5			-			8
Net (loss) income adjusted for non-cash items	$	(15	)	$	-		$	(1,936	)	$	145		$	3,750		$	-		$	1,944
Changes in policy related and operating receivables and payables		34			9			2,101			391			(2,063	)		-			472
Cash provided by (used in) operating activities	$	19		$	9		$	165		$	536		$	1,687		$	-		$	2,416

Investing activities
Purchases and mortgage advances	$	-		$	-		$	(5,074	)	$	(564	)	$	(7,325	)	$	-		$	(12,963	)
Disposals and repayments		-			-			3,458			271			4,743			-			8,472
Amortization of premium on invested assets		-			-			61			24			41			-			126
Changes in investment broker net receivables and payables		-			-			14			28			324			-			366
Capital contribution to unconsolidated subsidiaries		(309	)		-			(2	)		-			-			311			-
Return of capital from unconsolidated subsidiaries		-			-			1			-			-			(1	)		-
Notes receivable from affiliates		(4,000	)		-			-			-			(3,989	)		7,989			-
Notes receivable from parent		-			(429	)		-			-			(296	)		725			-
Notes receivable from subsidiaries		(243	)		-			4			-			-			239			-
Cash (used in) provided by investing activities	$	(4,552	)	$	(429	)	$	(1,538	)	$	(241	)	$	(6,502	)	$	9,263		$	(3,999	)

Financing activities
Increase (decrease) in repurchase agreements and securities sold but not yet purchased	$	-		$	-		$	41		$	-		$	(42	)	$	-		$	(1	)
Issue of long-term debt		-			420			-			-			(420	)		-			-
Repayment of long-term debt		-			-			(1	)		-			-			-			(1	)
(Decrease) increase in investment contract liabilities		-			-			(9	)		5			(44	)		-			(48	)
Funds borrowed, net		-			-			-			-			3			-			3
Changes in bank deposits, net		-			-			-			-			583			-			583
Shareholder dividends paid in cash		(183	)		-			-			-			-			-			(183	)
Contribution from (distribution to) non- controlling interest		-			-			-			-			40			-			40
Common shares issued, net		1			-			-			-			-			-			1
Capital contributions by parent		-			-			-			-			310			(310	)		-
Return of capital to parent		-			-			-			-			(1	)		1			-
Notes payable to affiliates		3,989			-			-			-			4,000			(7,989	)		-
Notes payable to parent		-			-			-			-			240			(240	)		-
Notes payable to subsidiaries		725			-			-			-			-			(725	)		-
Cash provided by (used in) financing activities	$	4,532		$	420		$	31		$	5		$	4,669		$	(9,263	)	$	394

Cash and short-term securities
(Decrease) increase during the period	$	(1	)	$	-		$	(1,342	)	$	300		$	(146	)	$	-		$	(1,189	)
Effect of exchange rate changes on cash and short-term securities		-			-			(150	)		(21	)		(195	)		-			(366	)
Balance, January 1		3			-			5,061			707			12,509			-			18,280
Balance, March 31	$	2		$	-		$	3,569		$	986		$	12,168		$	-		$	16,725

Cash and short-term securities
Beginning of period
Gross cash and short-term securities	$	3		$	-		$	5,339		$	726		$	12,737		$	-		$	18,805
Net payments in transit, included in other liabilities		-			-			(278	)		(19	)		(228	)		-			(525	)
Net cash and short-term securities, January 1	$	3		$	-		$	5,061		$	707		$	12,509		$	-		$	18,280

End of period
Gross cash and short-term securities	$	2		$	-		$	3,956		$	1,002		$	12,358		$	-		$	17,318
Net payments in transit, included in other liabilities		-			-			(387	)		(16	)		(190	)		-			(593	)
Net cash and short-term securities, March 31	$	2		$	-		$	3,569		$	986		$	12,168		$	-		$	16,725

Supplemental disclosures on cash flow from operating activities:
Interest paid	$	14		$	-		$	49		$	1		$	127		$	(30	)	$	161
Interest received	$	-		$	9		$	1,070		$	38		$	719		$	(3	)	$	1,833

Manulife Financial Corporation – First Quarter 2011

Consolidating Statement of Cash Flows
							John Hancock			John Hancock
	Manulife			Manulife			Life Insurance			Life Insurance									Consolidated
	Financial			Finance			Company			Company of									Manulife
	Corporation			Holdings			(U.S.A.)			New York			Other			Consolidation			Financial
For the twelve months ended December 31, 2010	(Guarantor)			Limited			(Issuer)			(Issuer)			Subsidiaries			Adjustments			Corporation

Operating activities
Net (loss) income	$	(1,663	)	$	3		$	(1,680	)	$	(62	)	$	(1,484	)	$	3,360		$	(1,526	)
Adjustments for non-cash items in net (loss) income:																				-
Equity in net income of unconsolidated subsidiaries		1,568			-			135			-			1,657			(3,360	)		-
Increase (decrease) in insurance contract liabilities		-			-			6,527			872			6,243			-			13,642
(Decrease) increase in reinsurance assets		-			-			(5,361	)		(344	)		5,650			-			(55	)
Accretion of discount on invested assets		-			-			(108	)		(12	)		(236	)		-			(356	)
Other amortization		-			(14	)		86			1			229			14			316
Net realized and unrealized losses (gains) including impairments		9			-			(1,016	)		(102	)		(3,382	)		-			(4,491	)
Deferred income tax (recovery) expense		(17	)		(2	)		413			(157	)		(713	)		2			(474	)
Stock option expense		-			-			8			-			17			-			25
Goodwill impairment		-			-			1,557			-			773			-			2,330
Net (loss) income adjusted for non-cash items	$	(103	)	$	(13	)	$	561		$	196		$	8,754		$	16		$	9,411
Dividends from unconsolidated subsidiaries		1,360			-			99			-			-			(1,459	)		-
Changes in policy related and operating receivables and payables		(9	)		(1	)		1,361			283			(109	)		(3	)		1,522
Cash provided by (used in) operating activities	$	1,248		$	(14	)	$	2,021		$	479		$	8,645		$	(1,446	)	$	10,933

Investing activities
Purchases and mortgage advances	$	-		$	-		$	(28,483	)	$	(3,601	)	$	(44,006	)	$	-		$	(76,090	)
Disposals and repayments		-			-			23,153			2,852			28,528			-			54,533
Amortization of premium on invested assets		-			-			228			90			156			-			474
Changes in investment broker net receivables and payables		-			-			100			(2	)		39			-			137
Net cash decrease from purchase of subsidiaries		-			-			-			-			(28	)		-			(28	)
Capital contribution to unconsolidated subsidiaries		(2,992	)		-			(337	)		-			(348	)		3,677			-
Return of capital from unconsolidated subsidiaries		-			-			4			-			-			(4	)		-
Notes receivable from affiliates		-			-			-			-			(69	)		69			-
Notes receivable from parent		-			(404	)		-			-			256			148			-
Notes receivable from subsidiaries		229			-			14			-			-			(243	)		-
Cash (used in) provided by investing activities	$	(2,763	)	$	(404	)	$	(5,321	)	$	(661	)	$	(15,472	)	$	3,647		$	(20,974	)

Financing activities
Increase (decrease) in repurchase agreements and securitiessold but not yet purchased	$	-		$	-		$	472		$	-		$	64		$	-		$	536
Issue of long-term debt		2,024			421			-			-			(407	)		(14	)		2,024
Repayment of long-term debt		(1	)		-			(1	)		-			-			1			(1	)
(Decrease) increase in investment contract liabilities		-			-			(634	)		32			(39	)		-			(641	)
Funds borrowed, net		-			-			(2	)		-			7			-			5
Secured borrowings from securitization transactions		-			-			15			-			562			-			577
Changes in bank deposits, net		-			-			-			-			1,574			-			1,574
Shareholder dividends paid in cash		(691	)		-			-			-			-			-			(691	)
Contribution from (distribution to) non- controlling interest		-			-			-			-			36			-			36
Common shares issued, net		2			-			-			-			1			-			3
Capital contributions by parent		-			-			348			-			3,329			(3,677	)		-
Return of capital to parent		-			-			-			-			(4	)		4			-
Dividends paid to parent		-			-			-			(101	)		(1,358	)		1,459			-
Notes payable to affiliates		69			-			-			-			-			(69	)		-
Notes payable to parent		-			-			-			-			(243	)		243			-
Notes payable to subsidiaries		148			-			-			-			-			(148	)		-
Cash provided by (used in) financing activities	$	1,551		$	421		$	198		$	(69	)	$	3,522		$	(2,201	)	$	3,422

Cash and short-term securities
Increase (decrease) during the period	$	36		$	3		$	(3,102	)	$	(251	)	$	(3,305	)	$	-		$	(6,619	)
Effect of exchange rate changes on cash and short-term securities		-			-			(251	)		(35	)		(53	)		-			(339	)
Balance, January 1		3			-			5,061			707			12,509			-			18,280
Balance, December 31	$	39		$	3		$	1,708		$	421		$	9,151		$	-		$	11,322

Cash and short-term securities
Beginning of period
Gross cash and short-term securities	$	3		$	-		$	5,339		$	726		$	12,737		$	-		$	18,805
Net payments in transit, included in other liabilities		-			-			(278	)		(19	)		(228	)		-			(525	)
Net cash and short-term securities, January 1	$	3		$	-		$	5,061		$	707		$	12,509		$	-		$	18,280

End of period
Gross cash and short-term securities	$	39		$	3		$	2,063		$	443		$	9,301		$	-		$	11,849
Net payments in transit, included in other liabilities		-			-			(355	)		(22	)		(150	)		-			(527	)
Net cash and short-term securities, December 31	$	39		$	3		$	1,708		$	421		$	9,151		$	-		$	11,322

Supplemental disclosures on cash flow from operating activities:
Interest paid	$	207		$	18		$	156		$	4		$	641		$	(162	)	$	864
Interest received	$	-		$	-		$	4,240		$	424		$	3,400		$	(21	)	$	8,043

Manulife Financial Corporation – First Quarter 2011

Note 15 First time adoption of IFRS

As outlined in note 1, the Company has adopted IFRS as a replacement of previous Canadian GAAP effective January 1, 2011. References to Canadian GAAP throughout this note relate to Canadian GAAP prior to the adoption of IFRS. The Company’s opening Consolidated Statement of Financial Position was prepared at January 1, 2010, the Company’s date of transition to IFRS (the “Transition Date”) in accordance with the requirements of IFRS 1 “First-Time Adoption of International Financial Reporting Standards”. This note explains the principal adjustments made by the Company in preparing the opening IFRS Consolidated Statement of Financial Position as at January 1, 2010 compared to the Consolidated Balance Sheet as at December 31, 2009 under Canadian GAAP and the required adjustments between IFRS and previous Canadian GAAP to total equity and total comprehensive income for the 2010 comparative periods. Refer to note 2 “Future Accounting and Reporting Changes” in the Annual Financial Statements in the 2010 Annual Report for a description of the key differences between Canadian GAAP and IFRS, and the key accounting policy choices selected.

IFRS has been applied retrospectively, except for certain optional and mandatory exemptions from full retrospective application provided for under IFRS 1, as detailed below.

(a)	First time adoption elections:

Optional exemptions:

(i)	Business combinations

The Company has elected to apply IFRS 3 “Business Combinations” prospectively only to business combinations on or after the Transition Date. As a result, business combinations prior to transition have not been restated.

(ii)	Share-based payment transactions

The Company elected to apply IFRS 2 “Share-based Payments” to all equity instruments granted after November 7, 2002 that had not vested by the Transition Date. The Company applied IFRS 2 for all liabilities arising from share-based payment transactions that existed at the Transition Date.

(iii) Insurance contracts

The Company has elected to maintain the existing Canadian GAAP requirements under CALM for the measurement of its insurance contracts until the new IFRS standard for insurance contracts is completed and becomes effective.

(iv)	Fair value or revaluation value as deemed cost

The Company has elected to use amortized cost of own use property as the deemed cost at the Transition Date. A revaluation of assets in this category was performed on Transition Date.

(v)	Employee benefits

The Company did not elect prospective application of the IFRS requirements for employee benefits and instead applied the requirements retrospectively.

(vi) Currency translation differences

The Company elected to reset all cumulative translation gains and losses to zero in opening retained earnings at the Transition Date.

(vii)

Designation of financial assets and financial liabilities

At the Transition Date, consistent with Canadian GAAP, the Company chose to designate bonds and stocks held to support insurance contract liabilities as FVTPL, with realized and unrealized changes in fair value recognized in income. Bonds and stocks supporting the Company’s corporate and surplus segments and certain investment contracts have been classified as AFS under IFRS, which are carried at fair value with unrealized gains and losses recorded in Other Comprehensive Income.

Mandatory exemptions:

(viii) Estimates

At the date of transition, the Company’s estimates under IFRS are consistent with estimates previously made under previous Canadian GAAP at the same date, after adjusting for differences in accounting policies.

Manulife Financial Corporation – First Quarter 2011

(ix) Derecognition of financial assets and liabilities

The Company has applied the derecognition requirements in IAS 39 Financial Instruments: Recognition and Measurement prospectively to transactions occurring on or after January 1, 2004.

(x) Hedge accounting

The Company continued to apply hedge accounting only for those hedging relationships that met the hedge accounting criteria under IFRS. Hedge accounting was discontinued at the Transition Date for any derivatives that did not meet the requirements for hedge accounting under IFRS.

(b) Summary of significant measurement differences between Canadian GAAP and IFRS:

Topic / Adjustment	Summary of differences
(i) Investment adjustments:
Real estate	§Under Canadian GAAP is carried on a move-to-market measurement, with realized gains and losses deferred and amortized. Under IFRS, the accounting for real estate follows two primary models: §Own use property – measured at depreciated cost less impairment §Investment property – the Company has elected to measure at fair value through earnings
Other invested assets	§Agriculture – Under Canadian GAAP is recorded on a “move-to-market” basis similar to real estate. Under IFRS is measured at fair value through earnings §Private equities – Are measured at historical cost less impairments under Canadian GAAP where significant influence is not held over the investment. Under IFRS they are measured at fair value. §Impairments of available-for-sale equities – Under IFRS impairments are recognized when declines in the carrying values are significant or prolonged, irrespective of expectations of future recoveries of the carrying values. Under Canadian GAAP the consideration of future recovery is permitted, resulting in additional impairment charges under IFRS. §Oil and gas investments – Asset retirement obligations associated with these investments are discounted using a risk-free discount rate under IFRS, as opposed to a risk-adjusted rate under Canadian GAAP. §Loan origination costs - Certain internal costs incurred to originate loans issued by Manulife Bank of Canada are included as an adjustment to the carrying value of the loan and are amortized into income over the effective life of the loan or mortgage under Canadian GAAP. These internal costs are expensed as incurred under IFRS. §Hedge accounting - Certain hedge relationships under Canadian GAAP do not qualify for hedge accounting under IFRS and/or were subject to a change in hedge effectiveness testing and/or measurement. §Mortgage securitizations - Certain mortgages in third party securitization vehicles are accounted for on-balance sheet as secured borrowings under IFRS. These transactions qualified for derecognition and are not recognized on-balance sheet under Canadian GAAP. §Foreign exchange gains/losses on debt instruments classified as Available-for-Sale - Are recorded in earnings under IFRS as opposed to other comprehensive income under Canadian GAAP.
Changes in insurance contract liabilities related to invested asset changes	§Upon adoption of IFRS and until the new IFRS standard for insurance contracts is effective, the previous Canadian GAAP requirements for the valuation of insurance liabilities (CALM) will be maintained. Under CALM, changes in the carrying value of the assets supporting insurance liabilities highlighted under “investment adjustments” above that are not the result of changes in expected future cash flows are largely offset by a corresponding change in insurance liabilities.

Manulife Financial Corporation – First Quarter 2011

ii) Actuarial adjustments	§Product classification - The definition of insurance contracts under IFRS includes contracts that have significant insurance risk, while the Canadian GAAP definition is based on the form of the contract. Certain contracts that do not now qualify as insurance contracts are measured as financial liabilities at amortized cost or fair value under IFRS. Additionally, for those financial liabilities measured at amortized cost, acquisition costs that were not considered incremental to the issuance of the financial liability were expensed as incurred under IFRS. Previously, these costs were included in the carrying amount of the policyholder liabilities under Canadian GAAP. §Embedded derivatives - Certain insurance contracts contain embedded derivatives under IFRS that are presented separately in other assets or other liabilities and measured at fair value through earnings.
(iii) Consolidation adjustments	§IFRS requires the consolidation of all entities, including special purpose entities, over which the Company has control. Several entities, including certain private equity investments and financing vehicles that were not consolidated under Canadian GAAP are consolidated under IFRS.
(iv) Corporate adjustments	§Goodwill – Is tested at the cash generating unit level under IFRS, a more granular level than a reporting unit under Canadian GAAP, which resulted in an impairment charge upon transition to IFRS and in Q3 2010 and could result in more frequent impairment charges going forward under IFRS. §Investments in leveraged leases – Are measured in a similar manner to a capital lease with income recognized on an effective yield basis under IFRS. Income is only recognized during the period in which the net investment in the lease is positive under Canadian GAAP. §Stock-based compensation – IFRS requires the use of the graded vesting method to account for share based compensation awards that vest in installments over the vesting period as opposed to straight line recognition applied under Canadian GAAP. §Employee future benefits – Actuarial gains and losses are determined using the fair value of plan assets under IFRS as opposed to the “market-related” value under Canadian GAAP. Where plan benefits are improved under IFRS, past service costs are recognized in income on a straight-line basis until the benefits become vested, unless fully vested in which case they are recognized immediately. §Income tax accounting differences – liabilities are recorded for tax positions under IFRS based on a probability-weighted assessment of the outflows on the range of possible outcomes. Under Canadian GAAP, emphasis is instead placed on the appropriateness of recognizing the tax benefit. Specifically, a tax benefit is only recognized if it is probable that the tax position will be accepted by the relevant tax authority based on its technical merits.
Diluted earnings per share	§Under IFRS, convertible financial instruments that contain features enabling the holder to convert their security into common shares must be included in the calculation of diluted earnings per share (“EPS”), irrespective of the likelihood of conversion. Under Canadian GAAP, the inclusion or exclusion of such instruments in the calculation of diluted EPS is based on past experience and expectations of whether these instruments will be settled in cash rather than shares. The impact of including certain convertible preferred shares and debentures issued by the Company in the calculation of diluted EPS resulted in a reduction of two cents and four cents for the first and fourth quarters of 2010, respectively, compared to diluted EPS for the same periods under Canadian GAAP.

Manulife Financial Corporation – First Quarter 2011

A summary of the various earnings impacts to total comprehensive income as a result of the adoption of IFRS is as follows:

	Three months ended March 31, 2010			Year ended December 31, 2010
Net income (loss) in accordance with Canadian GAAP	$	1,148		$	(312	)
Add back: non-controlling interest		5			40
IFRS adjustments increasing (decreasing) reported net income
(i) Investment adjustments:
Real estate		(145	)		(93	)
Private equity		49			183
Agriculture		17			--
Hedge accounting		(33	)		(73	)
Oil and gas		15			19
Other invested assets		30			(6	)
Changes in insurance contract liabilities related to invested asset changes		92			(47	)
(ii) Actuarial adjustments:
Product classification		8			64
Embedded derivatives		2			(16	)
(iii) Consolidation adjustments		33			(16	)
(iv) Corporate adjustments:
Goodwill impairment		--			(1,291	)
Investments in leveraged leases		119			150
Other adjustments		(37	)		(87	)
Income tax accounting differences		4			(26	)
Non-controlling interest		(3	)		18
Income tax adjustments on the above		(71	)		(33	)
Net income (loss) in accordance with IFRS	$	1,233		$	( 1,526	)
Other comprehensive loss under Canadian GAAP		(555	)		(1,058	)
IFRS adjustments to other comprehensive income (loss) including amounts attributed to participating policyholders and non controlling interest on:
Change in unrealized gains on available-for-sale securities		--			34
Change in unrealized gains (losses) on cash flow hedges		(8	)		14
Translation of self-sustaining foreign operations		51			183
Total comprehensive income in accordance with IFRS	$	721		$	(2,353	)

Manulife Financial Corporation – First Quarter 2011

A summary of the various adjustments to total equity as a result of the adoption of IFRS is as follows:

As at	March 31, 2010			December 31, 2010			January 1, 2010
Total equity determined in accordance with Canadian GAAP(1)	$	29,193		$	26,740		$	28,774
Reclassification of non-controlling interests to equity under IFRS		246			254			202
IFRS adjustments increasing (decreasing) reported equity
Retained earnings:
(i) Investment adjustments:
Real estate		52			97			194
Private equity		65			201			23
Agriculture		102			85			85
Hedge accounting		145			106			177
Oil and gas		(46	)		(44	)		(61	)
Other invested assets		(131	)		(166	)		(160	)
Changes in insurance contract liabilities related to invested asset changes		(243	)		(376	)		(333	)
(ii) Actuarial adjustments:
Product classification		(109	)		(53	)		(117	)
Embedded derivatives		(27	)		(45	)		(28	)
(iii) Consolidation adjustments		(65	)		(99	)		(99	)
(iv) Corporate adjustments:
Goodwill impairment		(734	)		(2,025	)		(734	)
Investments in leveraged leases		(404	)		(374	)		(523	)
Other adjustments		(80	)		(146	)		(51	)
Income tax accounting differences		(155	)		(185	)		(159	)
Income tax adjustments on the above		198			237			269
Currency translation account reset through equity		(5,144	)		(5,144	)		(5,144	)
Accumulated other comprehensive income on:
Available-for-sale financial assets		49			82			51
Cash flow hedges		20			44			26
Currency translation		5,199			5,330			5,148
Non-controlling interest		32			156			36
Total equity determined in accordance with IFRS	$	28,163		$	24,675		$	27,576

(1) Canadian GAAP opening retained earnings as at January 1, 2010, included in Canadian GAAP total equity, have been restated. Refer to note 1(q).

The Company did not have any material adjustments to the Consolidated Statements of Cash Flows upon first time adoption of IFRS.

(c)	Summary of key financial statement presentation differences between Canadian GAAP and IFRS are as follows:

Topic	Summary of differences
Amounts ceded under reinsurance arrangements	·Are included as part of: (i) policy liabilities on the statement of financial position, and (ii) premium income and policy benefits and expenses on the income statement under Canadian GAAP. Under IFRS, these balances are presented on a gross basis on both the statement of financial position and income statement under IFRS.
Segregated funds	·Under Canadian GAAP are disclosed on the face of the statement of financial position, but not included in the total assets and liabilities. Under IFRS, these balances are included in total assets and liabilities on the statement of financial position.

Manulife Financial Corporation – First Quarter 2011

Investments in leveraged leases	·Are classified as investments in capital leases within other investments under IFRS. Previously, these investments were included in private placement bonds. In addition, certain tax balances associated with the investments in leveraged leases were reclassified between deferred tax liabilities, other liabilities and other investments under IFRS.
Deferred tax assets	·Are disclosed separately on the face of the statement of financial position under IFRS. Previously, these balances were included in miscellaneous assets under Canadian GAAP. ·Additionally, certain miscellaneous tax assets, previously included in deferred tax liabilities under Canadian GAAP are now presented in miscellaneous assets under IFRS.
Non-controlling interest	·Is included as a separate component of equity on the statement of financial position under IFRS. Under Canadian GAAP, non-controlling interest is included in liabilities. Under IFRS net income includes income attributable to non-controlling interest. Total net income on the income statement is then attributed to controlling interests (shareholders and participating products) and non-controlling interests. The determination of earnings per share will continue to exclude the income attributable to the non-controlling interests.

Note 16 Additional Annual Disclosures under IFRS

As these interim financial statements are the Company’s first financial statements prepared under IFRS, the following IFRS annual disclosures, that were not included in the Company’s most recent annual financial statements prepared in accordance with Canadian GAAP, have been included in these financial statements for the comparative annual period. Certain information and footnote disclosures were omitted or condensed where such information is not considered material to the understanding of the Company’s interim financial information. For additional disclosures, refer to the Company’s 2010 Annual Consolidated Financial Statements.

(a)	Invested assets

(i)	Other invested assets

Other invested assets include investment in associates accounted for using the equity method of accounting as follow:


As at December 31, 2010	Carrying value		% of total
Private equity and mezzanine debt	$	16		1.6	%
Timber		181		18.6	%
Agriculture		224		23.0	%
Affordable housing		379		39.0	%
Other		173		17.8	%
Total other investments	$	973		100.0	%

The Company’s share of profit from its investments in associates included in earnings for the year ended December 31, 2010 was $21.

For the year ended December 31, 2010, the Company did not receive dividends from any of its investments in associates.

(ii) Real estate

A summary of the Company’s real estate assets by type is as follows:

As at December 31, 2010
Own use property(1)	$ 822
Investment property	5,531
	$ 6,353

(1) Net of accumulated depreciation of $231

Manulife Financial Corporation – First Quarter 2011

(iii)

Own use real estate

Real estate held for own use consists of real estate and buildings, including buildings on leased land. Changes in own use real estate for the year ended December 31, 2010 can be summarized as follows:

For the year ended December 31, 2010
Balance at January 1,	$	859
Additions		10
Disposals		(5	)
Depreciation		(19	)
Effect of movements in exchange rates		(23	)
Balance at December 31,	$	822

(iv)	Investment property

Investment property comprises a number of commercial properties that are leased to third parties. Investment property activity for the year can be summarized as follows:

For the year ended December 31, 2010
Balance at January 1,	$	5,129
Acquisitions		579
Disposals		(50	)
Foreign currency exchange		(97	)
Change in fair value		(30	)
Balance at December 31,	$	5,531

The following table identifies the amounts included in investment income relating to investment property:

For the year ended December 31, 2010
Rental income from investment property	$	265
Direct operating expenses that generated rental income		(135	)
Net profit from investment property	$	130

(v)	Mortgage securitization

As described in note 7(f) on page 129 of our Annual Consolidated Financial Statements in our 2010 Annual Report, the Company securitizes certain insured fixed and variable rate commercial and residential mortgages and Home Equity Lines of Credit (“HELOC”) through creation of mortgage backed securities under the Canadian Mortgage Bond Program (“CMB”), Government of Canada NHA MBS Auction program, as well as to other third party investors. Additionally, the Company mitigates credit risk on certain mortgages through transfers to third party investors. Under IFRS, these transactions remain “on-balance sheet” and are accounted for as secured borrowings, as described in note 1(d).

There are no expected credit losses on the mortgages that have been securitized under the Government of Canada CMB and NHA MBS programs and the HELOC securitization as they are government guaranteed. For the mortgages transferred to third party investors, credit risk is mitigated by the terms of the transfer arrangement. Benefits received from the transfers include interest spread between the asset and associated liability.

Manulife Financial Corporation – First Quarter 2011

The carrying amount of securitized assets reflecting the Company’s continuing involvement with the mortgages, and the associated liabilities is as follows:

As at December 31, 2010	Securitized assets						Secured borrowing liabilities
Securitization program	Securitized mortgages		Restricted cash and short-term securities		Total
HELOC securitization	$	500	$	-	$	500	$	497
CMB securitization		439		42		481		481
NHA MBS securitization		46		1		47		47
Other		16		-		16		16

(b)	Derivative and hedging instruments

(i)	Embedded derivatives

Certain insurance contracts contain features that are classified as embedded derivative financial instruments and are measured separately at fair value though profit or loss including reinsurance contracts related to guaranteed minimum income benefits and contracts containing certain credit and interest rate features.

Certain reinsurance contracts related to guaranteed minimum income benefits are considered embedded derivatives requiring separate measurement at fair value through profit or loss as the financial component contained in the reinsurance contracts does not contain significant insurance risk. At December 31, 2010, reinsurance ceded guaranteed minimum income benefits had a fair value of $1,111 and reinsurance assumed guaranteed minimum income benefits had a fair value of $85. Claims recovered under reinsurance ceded contracts offset the claim expense and claims paid on the reinsurance assumed are reported as contract benefits.

The Company’s credit and interest rate embedded derivatives promise to pay the returns on a portfolio of assets to the contract holder and contain a credit and interest rate risk that is a financial risk embedded in the underlying insurance contract. At December 31, 2010, these embedded derivatives had a fair value of $96.

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

(c)	Insurance contract liabilities and reinsurance assets

(i) Insurance contract liabilities and reinsurance assets

Insurance contract liabilities are reported gross of reinsurance ceded and the ceded liabilities are reported separately as a reinsurance asset. Insurance contract liabilities, gross and net of reinsurance ceded, are shown below.

As at December 31, 2010
Gross insurance contract liabilities	$	158,312
Impact of reinsurance asset		(7,832	)
Net insurance contract liabilities	$	150,480

Insurance contract liabilities include actuarial liabilities as well as benefits payable, provision for unreported claims, and policyholder amounts on deposit. The components of insurance contract liabilities are shown below.

Manulife Financial Corporation – First Quarter 2011

As at December 31, 2010
Gross actuarial liabilities	$	149,674
Gross benefits payable and provision for unreported claims		2,478
Gross policyholder amounts on deposit		6,160
Impact of reinsurance asset		(7,832	)
Net insurance contract liabilities	$	150,480

Net insurance contract liabilities represent the amount which, together with estimated future premiums and net investment income, will be sufficient to pay estimated future benefits, policyholder dividends and refunds, taxes (other than income taxes) and expenses on policies in-force.

Net insurance contract liabilities under IFRS retain the existing valuation methodology. Net actuarial liabilities are determined using the Canadian Asset Liability Method, or CALM, as required by the Canadian Institute of Actuaries (“CIA”). Liabilities are set equal to the value in the statement of financial position of the assets required to support them.

The determination of net actuarial liabilities is based on an explicit projection of cash flows using current best estimate assumptions for each material cash flow item and contingency. Investment returns are projected using the current asset portfolios and projected re-investment strategies.

Each assumption is adjusted by a margin for adverse deviation. For fixed income returns, this margin is established by scenario testing that is generally done on a deterministic basis, testing a range of prescribed and company-developed scenarios. For minimum guarantees on segregated fund products, the margin for adverse deviation for investment returns is done stochastically. For other assumptions, this margin is established by directly adjusting the best estimate assumption.

Cash flows used in the net actuarial valuation adjust the gross policy cash flows to reflect the projected cash flows from ceded reinsurance. The cash flow impact of ceded reinsurance varies depending upon the amount of reinsurance, the structure of the reinsurance treaties, the expected economic benefit from the treaty cash flows and the impact of margins for adverse deviation. The gross actuarial liabilities are determined by discounting the gross policy cash flows using the same discount rate as the net CALM model discount rate.

The reinsurance asset is determined by taking the difference between the gross insurance contract liabilities and the net insurance contract liabilities. The reinsurance asset represents the benefit derived from reinsurance arrangements in force at the balance sheet date.

The period used for the projection of cash flows is the policy lifetime for most individual insurance contracts. For other types of contracts a shorter projection period may be used, limiting the period to the term of the liability over which the Company is exposed to material insurance risk without the ability to adjust premiums or policy charges. Where the projection period is less than the policy lifetime, actuarial liabilities may be reduced by an allowance for acquisition expenses expected to be recovered from policy cash flows beyond the projection period used for the liabilities. Such allowances are tested for recoverability using assumptions that are consistent with other components of the actuarial valuation.

Manulife Financial Corporation – First Quarter 2011

(ii)	Composition

The composition of insurance contract liabilities and reinsurance assets by line of business and reporting segment is as follows:

	Individual insurance
Insurance contract liabilities as at December 31, 2010	Participating		Non-participating		Annuities and pensions		Other insurance contract liabilities (1)			Total, net of reinsurance ceded			Total reinsurance ceded		Total, gross of reinsurance ceded
Asia Division	$	14,239	$	3,792	$	2,310	$	1,038		$	21,379		$	288	$	21,667
Canadian Division		8,164		13,123		14,091		6,939			42,317			2,302		44,619
U.S. Insurance		19,398		20,974		23		17,424			57,819			3,591		61,410
U.S. Wealth Management		-		-		27,697		53			27,750			1,412		29,162
Reinsurance Division		-		1,186		-		276			1,462			150		1,612
Corporate and Other		-		-		-		(247	)		(247	)		89		(158	)
Total, net of reinsurance ceded	$	41,801	$	39,075	$	44,121	$	25,483		$	150,480		$	7,832	$	158,312
Total reinsurance ceded	$	612	$	4,450	$	1,464	$	1,306		$	7,832
Total gross of reinsurance ceded	$	42,413	$	43,525	$	45,585	$	26,789		$	158,312

(1)	Other insurance contract liabilities include group insurance, and individual and group health including long-term care insurance.

(iii)

Change in insurance contract liabilities

The change in insurance contract liabilities during the year was a result of the following business activities and changes in actuarial estimates:

For the year ended December 31, 2010	Net actuarial liabilities			Other insurance contract liabilities (1)			Net insurance contract liabilities			Reinsurance asset			Gross insurance contract liabilities
Balance, January 1	$	132,519		$	7,380		$	139,899		$	8,044		$	147,943
New policies		3,133			-			3,133			399			3,532
Normal in-force movement		7,817			888			8,705			538			9,243
Changes in methods and assumptions		2,888			(9	)		2,879			(879	)		2,000
Currency impact		(3,911	)		(225	)		(4,136	)		(270	)		(4,406	)
Balance, December 31	$	142,446		$	8,034		$	150,480		$	7,832		$	158,312

(1)	Other insurance contract liabilities is comprised of benefits payable and provision for unreported claims and policyholder amounts on deposit.

(iv)	Insurance contracts’ contractual obligations

Insurance contracts give rise to obligations fixed by agreement. As at December 31, 2010, the Company’s contractual obligations and commitments relating to insurance contracts are as follows:

Payments due by period	Less than 1 year	1 to 3 years	3 to 5 years	Over 5 years	Total
Insurance contract liabilities (1)	$10,864	$10,940	$12,712	$448,017	$482,533

(1)

Insurance contract liability cash flows include estimates related to the timing and payment of death and disability claims, policy surrenders, policy maturities, annuity payments, minimum guarantees on segregated fund products, policyholder dividends, commissions and premium taxes offset by contractual future premiums on in-force contracts, These estimated cash flows are based on the best estimate assumptions used in the determination of policy liabilities. These amounts are undiscounted and reflect recoveries from reinsurance agreements. Due to the use of assumptions, actual cash flows may differ from these estimates. Cash flows include embedded derivatives measured separately at fair value.

(d)	Investment contract liabilities

Investment contract liabilities do not contain “significant insurance risk” and are measured either at fair value or at amortized cost.

Manulife Financial Corporation – First Quarter 2011

(i) Investment contracts measured at fair value

Investment contract liabilities measured at fair value are shown below.

As at December 31, 2010
Asia Division	$	812
U.S. Division		5
Investment contract liabilities	$	817

The change in liabilities during the year for investment contracts measured at fair value was a result of the following:

For the year ended December 31,	2010
Balance, January 1	$	882
New policies		2
Changes in market conditions		-
Changes in credit spreads		-
Changes in methods and assumptions		1
Redemptions, surrenders and maturities		(43	)
Currency impact		(25	)
Balance, December 31	$	817

For the year ended December 31, 2010, the total net gains relating to investment contracts at fair value were $40.

(ii)	Investment contracts measured at amortized cost

Investment contract liabilities measured at amortized cost are shown below. The fair value associated with these contracts is also shown for comparative purposes.

As at December 31, 2010
	Amortized cost		Fair value
U.S. medium term notes	$	1,078	$	1,123
U.S. annuity certain products		836		769
Canadian annuity certain products		259		288
Investment contract liabilities	$	2,173	$	2,180

The change in liabilities during the year for investment contracts measured at amortized cost was a result of the following business activities:

For the year ended December 31, 2010
Balance, January 1	$	2,897
New policy deposits		293
Renewal deposits		-
Interest		122
Withdrawals		(1,035	)
Fees		3
Other		(2	)
Currency impact		(105	)
Balance, December 31	$	2,173

For the year ended December 31, 2010, the total net gains relating to investment contracts measured at amortized cost were $619.

Medium term notes offer a specified guaranteed fixed or floating rate of return based on external market indices and are comprised of the following contractual terms.

Manulife Financial Corporation – First Quarter 2011

As at December 31, 2010	Issue date	Maturity date	Carrying value
4.280% SGD Medium term notes	February 22, 2001	February 22, 2011	$	79
6.500% USD Medium term notes	February 28, 2001	March 1, 2011		305
6.000% GBP Medium term notes	May 11, 2001	July 12, 2011		239
EURIBOR3 + 35bps EUR Medium term notes	June 26, 2002	June 25, 2012		69
5.000% USD Medium term notes	September 24, 2003	September 30, 2013		50
4.670% HKD Medium term notes	March 16, 2004	March 17, 2014		32
5.250% USD Medium term notes	February 18, 2003	February 25, 2015		304
Total carrying value			$	1,078
Fair value			$	1,123

The carrying value of the medium term notes is amortized at the effective interest rates which exactly discount the contractual cash flows to the net carrying amount of the liabilities at issue.

The fair value of the medium term notes is determined using a discounting cash flow approach based on current market interest rates adjusted for the Company’s own credit standing.

Annuity certain products are typically issued to provide guaranteed income payments for a contractually determined period of time, irrespective of policyholder survival or death. The carrying value of these non-life contingent annuities are amortized at a rate that exactly discounts the projected actual cash flows to the net carrying amount of the liability at issue.

The fair value of annuity certain products is determined by projecting cash flows according to the contract terms and discounting the cash flows at current market rates adjusted for the Company’s own credit standing.

(iii)

Investment contracts contractual obligations

Investment contracts give rise to obligations fixed by agreement. As at December 31, 2010, the Company’s contractual obligations and commitments relating to investment contracts are as follows:

Payment due by period	Less than 1 year	1 to 3 years	3 to 5 years	Over 5 years	Total
Investment contract liabilities (1)	$932	$555	$666	$2,043	$4,196

(1)	Due to the nature of the products, the timing of net cash flows may be before contract maturity. Cash flows are undiscounted.

(e)	Risk management

(i)	Liquidity risk

Maturity of financial liabilities (1), (2)

The following table outlines the expected maturity of the Company’s significant financial liabilities. The expected maturity dates are based on estimates made by management.

As at December 31, 2010	Less than 1 year		1 to 3 years		3 to 5 years		Over 5 years		Total
Long-term debt	$	406	$	350	$	3,047	$	2,038	$	5,841
Capital instruments		550		-		-		3,110		3,660
Derivative liabilities		97		366		302		2,522		3,287
Bank deposits		13,558		1,462		1,157		123		16,300

(1)	The amounts shown above are net of the related unamortized deferred issue costs.

(2)

Class A preferred shares, Series 1 are redeemable by the Company on or after June 19, 2010 by payment of cash or issuance of MFC common shares and are convertible at the option of the holder into MFC common shares on or after December 19, 2015. These shares have not been included in the above table.

(ii)	Credit risk

Concentration risk

The geographic concentration of the Company’s insurance and investment contract liabilities, including embedded derivatives, is shown below. The disclosure is based on the countries in which the business is written.

Manulife Financial Corporation – First Quarter 2011

At December 31, 2010
	Gross liabilities		Reinsurance assets			Net liabilities
United States and Canada	$	137,859	$	(7,517	)	$	130,342
Europe		28		-			28
Asia and other		23,596		(315	)		23,281
Total insurance and investments contract liabilities, including embedded derivatives	$	161,483	$	(7,832	)	$	153,651

(f)	Long-term debt

As at December 31, 2010
3.40% Senior notes (US$600)	$	593
4.90% Senior notes (US$500)		493
4.079% Medium term notes		896
4.896% Medium term notes		997
7.768% Medium term notes		597
5.161% Medium term notes		549
5.505% Medium term notes		399
4.67% Medium term notes		350
4.448 % fixed/floating Senior debentures		548
Other notes payable		419
Total long-term debt	$	5,841
Fair value	$	6,081

On December 14, 2006, Manulife Finance (Delaware) LP (“MFLP”), a wholly-owned partnership, issued $550 of senior debentures which mature on December 15, 2026 and bear interest at the rate of 4.448% per annum payable semi-annually until December 15, 2016 and thereafter at the 90-day Bankers’ Acceptance Rate plus 1.50%, payable quarterly.

The senior debentures are redeemable in whole or in part, prior to December 15, 2016 at the greater of par or the fair value of the debt based on the yield on Government of Canada bonds plus 14 basis points and on or after December 15, 2016 at par, in each case together with accrued and unpaid interest. Upon certain tax changes, the senior debentures are redeemable as a whole, at the fair market value, together with accrued and unpaid interest.

Other notes payable are comprised of fixed rate notes bearing interest at rates ranging from 6.1% to 12.1% and maturing in varying amounts to 2015.

(g)	Income taxes

Components of the income tax recovery are as follows:

For the year ended December 31, 2010
Current tax
Current year	$	(133	)
Adjustments to prior year		(192	)
		(325	)
Deferred tax
Reversal of temporary differences		(474	)
Income tax recovery	$	(799	)

The effective income tax rate reported in the Consolidated Statements of Income varies from Canadian tax rate of 30 per cent for the year ended December 31, 2010 for the following reasons:

Manulife Financial Corporation – First Quarter 2011

Reconciliation of income tax recovery

For the year ended December 31, 2010
Net loss before income taxes	$	(2,325	)
Income tax (recovery) expense at Canadian statutory tax rate	$	(697	)
Increase (decrease) in income taxes due to:
Tax-exempt investment income		(131	)
Differences in tax rate on income not subject to tax in Canada		(509	)
General business tax credit		(58	)
Goodwill Impairment		810
Other adjustment to current tax related to current tax of prior year		(192	)
Unused tax losses not recognized as deferred tax assets		21
Other adjustments related to prior years		(43	)
Income tax recovery	$	(799	)

Recognized deferred tax assets and liabilities

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and they relate to the same tax authority on the same taxable entity.


As at December 31, 2010
Deferred income tax assets
Loss carry forward	$	1,189
Actuarial liabilities		1,768
Tax credits		545
Accrued interest		380
Deferred income tax assets	$	3,882

Deferred income tax liability
Real estate	$	(424	)
Securities and other investments		(1,682	)
Sale of invested assets		(373	)
Intangible assets		(580	)
Other		(90	)
Deferred income tax liability	$	(3,149	)
Net deferred income tax liability	$	733

Deferred tax assets are recognized in respect of tax losses and other temporary differences giving rise to deferred tax assets only to the extent that it is probable that sufficient taxable profits will be available to allow the asset to be recovered.

Deferred tax assets and liabilities
	Real estate			Securities and other investments			Sales of invested assets			Intangible assets			Actuarial liabilities			Loss carry- forwards			Accrued interest			Tax credits			Other			Total
Balance at January 1, 2010	$	(256	)	$	(1,916	)	$	(430	)	$	(586	)	$	1,673		$	1,024		$	322		$	475		$	(77	)	$	229
Recognized in profit or loss		(174	)		84			57			(18	)		171			209			76			95			(26	)		474
Recognized in other comprehensive income		-			111			-			-			-			-			-			-			54			165
Recognized in equity		-			-			-			-			4			-			-			-			(46	)		(42	)
Net exchange differences		6			40			-			24			(80	)		(43	)		(18	)		(25	)		3			(93	)
Balance December 31, 2010	$	(424	)	$	(1,681	)	$	(373	)	$	(580	)	$	1,768		$	1,190		$	380		$	545		$	(92	)	$	733

The Company is subject to income tax laws in various jurisdictions. Tax laws are complex and potentially subject to different interpretations by the taxpayer and the relevant tax authority. The provision for income taxes and deferred tax represents management’s interpretation of the relevant tax laws and its estimate of current and future income tax implications of the

Manulife Financial Corporation – First Quarter 2011

transactions and events during the period. The Company may be required to change its provision for income taxes or deferred tax balances when the ultimate deductibility of certain items is successfully challenged by taxing authorities or if estimates used in determining the amount of deferred tax asset to recognize change significantly, or when receipt of new information indicates the need for adjustment in the amount of deferred tax to be recognized. Additionally, future events, such as changes in tax laws, tax regulations, or interpretations of such laws or regulations, could have an impact on the provision for income tax, deferred tax balances and the effective tax rate. Any such changes could materially affect the amounts reported in the consolidated financial statements in the year these changes occur.

(h)	Employee future benefits

As at December 31, 2010	Pension benefits			Post-employment benefits
Deficit	$	874		$	440
Unrecognized net actuarial losses		(839	)		(25	)
Effect of asset limit		3			-
Net defined benefit liability	$	38		$	415

Overall, the Company’s funded or partially funded defined benefit pension and other post-employment benefit plans consist of assets of $3,214 and obligations of $3,492. Obligations for unfunded pension plans and other post-employment benefit plans total $1,036.

The Company’s best estimate of expected payments for employee future benefits for the year ending December 31, 2011 is $86 for defined benefit pension plans, $ 72 for defined contribution pension plans and $57 for post-employment benefit plans.

Sensitivity of key assumptions

The impact of a 1% increase (or decrease) in the healthcare cost trend rate on the aggregate service and interest cost for the other post-employment benefit plans is a $3 increase (or $2 decrease) in cost.

Historical Information

As at and for the year ended December 31, 2010	Pension benefits			Post-employment benefits
Defined benefit obligation	$	3,743		$	785
Fair value of plan assets		2,869			345
Deficit		874			440
Experience loss adjustment on defined benefit obligation		132			7
Experience (gain) adjustment on assets		(172	)		(16	)

Manulife Financial Corporation – First Quarter 2011

SHAREHOLDER INFORMATION

MANULIFE FINANCIAL

CORPORATION HEAD OFFICE

200 Bloor Street East

Toronto, ON Canada M4W 1E5

Telephone 416 926-3000

Fax: 416 926-5454

Web site: www.manulife.com

INVESTOR RELATIONS

Financial analysts, portfolio managers

and other investors requiring financial

information may contact our Investor

Relations Department or access our

Web site at www.manulife.com.

Fax: 416 926-6285

E-mail: investor_relations@manulife.com

SHAREHOLDER SERVICES

For information or assistance regarding

your share account, including dividends,

changes of address or ownership, lost

certificates, to eliminate duplicate

mailings or to receive shareholder

material electronically, please contact

our Transfer Agents in Canada, the United

States, Hong Kong or the Philippines. If you

live outside one of these countries please

contact our Canadian Transfer Agent.

TRANSFER AGENTS

Canada

CIBC Mellon Trust Company

P.O. Box 7010, Adelaide Street Postal Station

Toronto, ON Canada M5C 2W9

Local: 416 643-6268

Toll Free: 1 800 783-9495

Fax: 1 877 713-9291

E-mail: inquiries@cibcmellon.com

Online: www.cibcmellon.com

CIBC Mellon offices are also located in

Montreal, Halifax, Vancouver and Calgary.

United States

BNY Mellon Shareowner Services

480 Washington Blvd.

Jersey City, NJ 07310 USA

P.O. Box 358015

Pittsburgh, PA 15252-8015 U.S.A.

Telephone: 1 800 249-7702

E-mail: shrrelations@bnymellon.com

Online: www.bnymellon.com/shareowner/

equityaccess

Hong Kong

Registered Holders:

Computershare Hong Kong

Investor Services Limited

17M Floor, Hopewell Centre

183 Queen’s Road East,

Wan Chai, Hong Kong

Telephone: 852 2862–8555

Ownership Statement Holders:

The Hongkong and Shanghai

Banking Corporation Limited

Sub-Custody and Clearing, Hong Kong Office

GPO Box 64 Hong Kong

Telephone: 852 2288-8346

Philippines

The Hongkong and Shanghai

Banking Corporation Limited

HSBC Stock Transfer Unit

7th Floor, HSBC Centre

3058 Fifth Avenue West

Bonifacio Global City

Taguig City, 1634

Philippines

Telephone: PLDT 632 581-7595;

GLOBE 632 976-7595

RATING

Financial strength is a key factor in generating new business, maintaining and expanding distribution relations and providing a base for expansion, acquisitions and growth. As at March 31, 2011, Manulife Financial had total capital of Cdn$28.6 billion, including Cdn$22.9 billion of common shareholders’ equity. Manufacturers Life’s financial strength and claims paying ratings are among the strongest in the insurance industry.

Standard & Poor’s	AA-	(4th of 21 ratings)
Moody’s	A1	(5th of 21 ratings)
Fitch Ratings	AA-	(4th of 21 ratings)
Dominion Bond Rating Service	IC-1	(1st of 6 ratings)
A.M. Best	A+	(2nd of 15 ratings)

COMMON STOCK TRADING DATA

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

As at March 31, 2011, there were 1,783 million common shares outstanding.

January 1 – March 31, 2011	Toronto Canadian $		New York United States $		Hong Kong Hong Kong $		Philippines Philippine Pesos
High	$	18.96	$	19.27	$	149.2		P 820
Low	$	16.26	$	16.56	$	128.5		P 700
Close	$	17.18	$	17.69	$	137.1		P 707
Average Daily Volume (000)		5,157		2,769		380		0.4

AUDITORS

Ernst & Young LLP

Chartered Accountants

Licensed Public Accountants

Toronto, Canada

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

·	Annual Report and Proxy Circular

·	Notice of Annual Meeting

·	Shareholders Reports

·	Public Accountability Statement

·	Corporate Governance material

Manulife Financial Corporation – First Quarter 2011

Consent to receive documents electronically

Electronic documents available from Manulife Financial

Manulife Financial is pleased to offer Electronic Documents. Access the information when you want, no more waiting for the mail.

The Manulife Financial documents available electronically are:

·	Annual Report and Proxy Circular

·	Notice of Annual Meeting

·	Shareholder Reports

·	Public Accountability Statement

·	Corporate Governance material

These documents will be available to you on our Web site at www.manulife.com at the same time as they are mailed to other shareholders. Documents relating to the annual meeting, including annual reports will be available on the Web site at least until the next version is available.

We will notify you when documents will be available on the Web site and confirm the instructions for accessing the documents at the same time. In the event that the documents are not available on our Web site, paper copies will be mailed to you.

To view, download and/or save the materials you will require access to an Internet service provider and a personal computer with Adobe Acrobat Reader™ and either Netscape Navigator™ or Microsoft Internet Explorer™ installed.

…………………………………………………………………………………….…..… Detach Here .………………………………….............…………….……………………………….

To receive documents electronically when they are available through Manulife Financial’s electronic delivery service, complete this form and return it as indicated.

I have read and understand the statement on the reverse and consent to receive electronically the Manulife Financial documents listed in the manner described. I acknowledge that I have the computer requirements to access the documents that are made available on Manulife Financial’s Web site. I understand that I am not required to consent to electronic delivery and that I may revoke my consent at any time.

Please note: We will contact you by phone only if there is a problem with your email address.

The information provided is confidential and will not be used for any purpose other than that described.

Please Print:

____________________________________________________

Shareholder Name

____________________________________________________

Contact Phone Number

____________________________________________________

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____________________________________________________

Shareholder Signature

____________________________________________________

Date

Manulife Financial Corporation – First Quarter 2011

As at March 31, 2011	Fair value through profit and loss		Available- for-sale		Other		Total carrying value		Total fair value
Cash and short-term securities (1)	$	684	$	8,376	$	2,319	$	11,379	$	11,379
Bonds (2)
Canadian government & agency		10,148		4,460		-		14,608		14,608
U.S. government & agency (3)		13,117		6,207		-		19,324		19,324
Other government & agency		7,597		1,390		-		8,987		8,987
Corporate		46,109		4,389		-		50,498		50,498
Mortgage/asset-backed securities		5,739		600		-		6,339		6,339
Stocks (4)		8,470		2,164		-		10,634		10,634
Loans
Mortgages (5)		-		-		32,820		32,820		34,192
Private placements (6)		-		-		19,281		19,281		20,383
Policy loans (7)		-		-		6,400		6,400		6,400
Bank loans (5)		-		-		2,342		2,342		2,350
Real estate (8)
Own use property		-		-		806		806		1,192
Investment property		5,459		-		-		5,459		5,459
Other invested assets (9)		3,259		101		6,366		9,726		10,195
Total invested assets	$	100,582	$	27,687	$	70,334	$	198,603	$	201,940

As at December 31, 2010	Fair value through profit and loss		Available- for-sale		Other		Total carrying value		Total fair value
Cash and short-term securities (1)	$	668	$	8,827	$	2,354	$	11,849	$	11,849
Bonds (2)
Canadian government & agency		10,044		5,177		-		15,221		15,221
U.S. government & agency (3)		13,109		5,587		-		18,696		18,696
Other government & agency		7,591		1,417		-		9,008		9,008
Corporate		47,648		4,367		-		52,015		52,015
Mortgage/asset-backed securities		5,947		673		-		6,620		6,620
Stocks (4)		8,297		2,178		-		10,475		10,475
Loans
Mortgages (5)		-		-		32,837		32,837		34,375
Private placements (6)		-		-		19,577		19,577		20,838
Policy loans (7)		-		-		6,486		6,486		6,486
Bank loans (5)		-		-		2,353		2,353		2,364
Real estate (8)
Own use property		-		-		822		822		1,207
Investment property		5,531		-		-		5,531		5,531
Other invested assets (9)		3,283		80		6,369		9,732		10,113
Total invested assets	$	102,118	$	28,306	$	70,798	$	201,222	$	204,798

As at January 1, 2010	Fair value through profit and loss		Available- for-sale		Other		Total carrying value		Total fair value
Cash and short-term securities (1)	$	651	$	16,124	$	2,030	$	18,805	$	18,805
Bonds (2)
Canadian government & agency		8,131		4,337		-		12,468		12,468
U.S. government & agency (3)		5,365		2,230		-		7,595		7,595
Other government & agency		5,105		1,022		-		6,127		6,127
Corporate		45,780		5,690		-		51,470		51,470
Mortgage/asset-backed securities		6,556		891		-		7,447		7,447
Stocks (4)		7,276		2,412		-		9,688		9,688
Loans
Mortgages (5)		-		-		31,158		31,158		32,112
Private placements (6)		-		-		19,980		19,980		20,594
Policy loans (7)		-		-		6,609		6,609		6,609
Bank loans (5)		-		-		2,457		2,457		2,468
Real estate (8)
Own use property		-		-		859		859		1,212
Investment property		5,129		-		-		5,129		5,129
Other invested assets (9)		2,544		124		6,768		9,436		9,931
Total invested assets	$	86,537	$	32,830	$	69,861	$	189,228	$	191,655

As at March 31, 2011	Amortized cost		Fair value
Maturity
One year or less	$	1,110	$	1,115
Over one year through five years		3,072		3,120
Over five years through ten years		3,414		3,490
Over ten years		8,589		8,721
Subtotal	$	16,185	$	16,446
Asset-backed and mortgage-backed securities		654		600
Total	$	16,839	$	17,046

Derivatives in cash flow hedging relationships For the three months ended March 31, 2011	Hedged items in cash flow hedging relationships	Gains (losses) deferred in AOCI on derivatives			Gains (losses) reclassified from AOCI into investment income			Ineffectiveness recognized in investment income
Interest rate swaps	Forecasted liabilities	$	-		$	(3	)	$	-
Foreign currency swaps	Fixed rate assets		(1	)		-			-
	Floating rate liabilities		-			-			-
Foreign currency forwards	Forecasted expenses		(5	)		-			-
Total return swaps	Stock-based compensation		(3	)		-			-
Total		$	(9	)	$	(3	)	$	-

For the three months ended March 31, 2010

Interest rate swaps	Forecasted liabilities	$	(27	)	$	(4	)	$	-
Foreign currency swaps	Fixed rate assets		(1	)		-			-
	Floating rate liabilities		-			-			-
Foreign currency forwards	Forecasted expenses		1			-			-
Total return swaps	Stock-based compensation		1			-			-
Total		$	(26	)	$	(4	)	$	-

FINANCIAL HIGHLIGHTS
As at and for the three months ended March 31
(Canadian $ in millions unless otherwise stated and per share information, unaudited)
	2011			2010			% Change
Net income	$	989		$	1,233			(20	)
Less: Net income attributed to non-controlling interest in subsidiaries		(5	)		(2	)		150
Loss (net income) attributed to participating policyholders		1			(7	)		-
Net income attributed to shareholders	$	985		$	1,224			(20	)
Preferred share dividends		(20	)		(20	)		-
Net income available to common shareholders	$	965		$	1,204			(20	)
Premiums and deposits:
Premiums and deposits - targeted growth products
Life and health insurance premiums	$	2,815		$	2,361			19
Annuity and pension premiums		933			1,058			(12	)
Segregated fund deposits		4,780			5,164			(7	)
Mutual fund deposits		4,658			2,966			57
Institutional advisory account deposits		669			847			(21	)
ASO premium equivalents		684			676			1
Group Benefits ceded		949			906			5
Other fund deposits		168			144			17
Premiums and deposits - targeted growth products	$	15,656		$	14,122			11
Premiums and deposits - products not targeted for growth		2,006			3,032			(34	)
Total premiums and deposits	$	17,662		$	17,154			3
Funds under management
General fund	$	198,603		$	190,119			4
Segregated funds excluding institutional advisory accounts		198,736			190,895			4
Mutual funds		50,129			36,766			36
Institutional advisory accounts		22,862			23,074			(1	)
Other funds		7,967			7,419			7
Total funds under management	$	478,297		$	448,273			7
							% of Total			% of Total
Capital								2011			2010

Liabilities for preferred shares and capital instruments	$	3,442		$	4,010			12			12

Equity
Non-controlling interest in subsidiaries		416			278			1			1
Participating policyholders' equity		185			53			1			-
Shareholders' equity
Preferred shares		1,618			1,422			6			4
Common shares		19,332			19,005			68			59
Contributed surplus		229			204			1			1
Retained earnings		4,124			7,036			14			22
Accumulated other comprehensive income (loss) on AFS securities and translation of self-sustaining foreign operations		(738	)		198			(3	)		1
Total capital	$	28,608		$	32,206			100			100


Selected key performance measures
Basic earnings per common share	$	0.54		$	0.68
Diluted earnings, excluding convertible instruments, per common share	$	0.54		$	0.68
Diluted earnings per common share	$	0.53		$	0.66
Return on common shareholders' equity (annualized) 1		17.4	%		19.2	%
Book value per common share	$	12.84		$	15.00
Common shares outstanding (in millions)
End of period		1,783			1,761
Weighted average - basic		1,778			1,758
Weighted average - diluted, excluding convertible instruments		1,781			1,763
Weighted average - diluted		1,861			1,834

1 Return on common shareholders' equity is net income available to common shareholders divided by average common shareholders' equity excluding accumulated other comprehensive income (loss) on AFS securities and cash flow hedges.

Consolidated Statements of Financial Position
As at
(Canadian $ in millions, unaudited)	March 31, 2011			December 31, 2010			January 1, 2010
ASSETS
Cash and short-term securities	$	11,379		$	11,849		$	18,805
Securities
Bonds		99,756			101,560			85,107
Stocks		10,634			10,475			9,688
Loans
Mortgages		32,820			32,837			31,158
Private placements		19,281			19,577			19,980
Policy loans		6,400			6,486			6,609
Bank loans		2,342			2,353			2,457
Real estate		6,265			6,353			5,988
Other invested assets		9,726			9,732			9,436
Total invested assets (note 3)	$	198,603		$	201,222		$	189,228
Other assets
Accrued investment income	$	1,735		$	1,642		$	1,583
Outstanding premiums		754			671			812
Derivatives (note 4)		3,400			4,000			2,707
Reinsurance assets		7,778			7,832			8,044
Deferred tax asset		1,190			1,373			1,255
Goodwill and intangible assets		5,817			5,907			8,405
Miscellaneous		3,230			3,000			3,183
Total other assets	$	23,904		$	24,425		$	25,989
Segregated funds net assets	$	200,890		$	199,120		$	190,783
Total assets	$	423,397		$	424,767		$	406,000
LIABILITIES and EQUITY
Liabilities
Policy liabilities (note 5)
Insurance contract liabilities	$	155,625		$	158,312		$	147,943
Investment contract liabilities and deposits		2,617			2,990			3,778
Bank deposits		16,900			16,300			14,734
Derivatives (note 4)		3,185			3,287			2,451
Deferred tax liability		758			640			1,026
Other liabilities		9,062			9,598			9,831
	$	188,147		$	191,127		$	179,763
Long-term debt		5,806			5,841			3,856
Liabilities for preferred shares and capital instruments (note 8)		3,442			4,004			4,022
Segregated funds net liabilities		200,890			199,120			190,783
Total liabilities	$	398,285		$	400,092		$	378,424
Equity
Issued share capital
Preferred shares (note 9)	$	1,618		$	1,422		$	1,422
Common shares (note 9)		19,332			19,254			18,937
Contributed surplus		229			222			196
Shareholders’ retained earnings(1)		4,124			3,393			6,062
Shareholders’ accumulated other comprehensive income (loss)
On available-for-sale securities		309			333			660
On cash flow hedges		(54	)		(55	)		(19	)
On translation of net foreign operations		(1,047	)		(459	)		–
Total shareholders’ equity	$	24,511		$	24,110		$	27,258
Participating policyholders’ equity		185			155			80
Non-controlling interest in subsidiaries		416			410			238
Total equity	$	25,112		$	24,675		$	27,576
Total liabilities and equity	$	423,397		$	424,767		$	406,000

Consolidated Statements of Income (Loss)
For the	three months ended						year ended
(Canadian $ in millions except per share amounts, unaudited)	March 31, 2011			March 31, 2010			December 31, 2010
Revenue
Premium income (note 12)
Gross premiums	$	6,187		$	5,869		$	24,423
Premiums ceded to reinsurers		(1,572	)		(1,458	)		(6,027	)
Net premiums	$	4,615		$	4,411		$	18,396
Investment income
Investment income	$	2,044		$	2,200		$	9,597
Realized and unrealized gains (losses) on assets supporting insurance and investment contract liabilities and deposits		(1,264	)		1,031			3,565
Net investment income	$	780		$	3,231		$	13,162
Other revenue	$	1,758		$	1,589		$	6,346
Total revenue	$	7,153		$	9,231		$	37,904
Contract benefits and expenses
To contract holders and beneficiaries
Death, disability and other claims	$	2,576		$	2,295		$	8,837
Maturity and surrender benefits		1,652			1,146			6,115
Annuity payments		799			812			3,095
Policyholder dividends and experience rating refunds		269			290			1,130
Net transfers to segregated funds		42			185			76
Change in insurance contract liabilities		(366	)		1,459			13,642
Change in investment contract liabilities		(301	)		(48	)		(641	)
Ceded benefits and expenses		(1,223	)		(1,225	)		(4,828	)
Change in reinsurance assets		(95	)		370			447
Net benefits and claims	$	3,353		$	5,284		$	27,873
General expenses		957			905			3,848
Investment expenses		238			242			981
Commissions		972			946			3,891
Interest expense		281			274			1,044
Net premium taxes		56			73			262
Goodwill impairment		–			–			2,330
Total policy benefits and expenses	$	5,857		$	7,724		$	40,229
Income (loss) before income taxes	$	1,296		$	1,507		$	(2,325	)
Income tax (expense) recovery		(307	)		(274	)		799

NET INCOME (LOSS)	$	989		$	1,233		$	(1,526	)
Net income (loss) attributed to:
Non-controlling interest in subsidiaries	$	5		$	2		$	58
Participating policyholders		(1	)		7			79
Shareholders		985			1,224			(1,663	)
	$	989		$	1,233		$	(1,526	)
Net income (loss) attributed to shareholders	$	985		$	1,224		$	(1,663	)
Preferred share dividends		(20	)		(20	)		(79	)
Net income (loss) available to common shareholders	$	965		$	1,204		$	(1,742	)

EARNINGS PER SHARE
Weighted average number of common shares outstanding (in millions)		1,778			1,758			1,765
Weighted average number of diluted common shares outstanding (in millions)		1,861			1,834			1,765
Basic earnings (loss) per common share	$	0.54		$	0.68		$	(0.99	)
Diluted earnings (loss) per common share	$	0.53		$	0.66		$	(0.99	)
Dividends per common share	$	0.13		$	0.13		$	0.52

Consolidated Statements of Comprehensive Income (Loss)
For the	three months ended						year ended
(Canadian $ in millions, unaudited)	March 31, 2011			March 31, 2010			December 31, 2010
Net income (loss)	$	989		$	1,233		$	(1,526	)
Other comprehensive income (loss), net of tax
Change in unrealized currency translation gains (losses) of self-sustaining operations
On translating financial statements	$	(560	)	$	(706	)	$	(624	)
On hedges		3			133			161
Change in unrealized gains (losses) on available-for-sale financial securities
Unrealized gains (losses) arising during the period		(97	)		121			348
Reclassification of realized (gains) losses and (recoveries) impairments to net income		74			(46	)		(669	)
Changes in unrealized gains (losses) on derivative instruments designated as cash flow hedges
Unrealized losses arising during the period		(1	)		(16	)		(45	)
Reclassification of realized losses to net income		2			2			8
Share of other comprehensive loss of associates		–			–			(6	)
Other comprehensive loss, net of tax	$	(579	)	$	(512	)	$	(827	)
Total comprehensive income (loss)	$	410		$	721		$	(2,353	)
Total comprehensive income (loss) attributed to:
Non-controlling interest	$	6		$	–		$	57
Participating policyholders		30			(27	)		75
Shareholders		374			748			(2,485	)

Income Taxes Included in Other Comprehensive Loss
For the	three months ended						year ended
(Canadian $ in millions, unaudited)	March 31, 2011			March 31, 2010			December 31, 2010
Income tax (recovery) expense
Change in unrealized currency translation gains (losses) of self-sustaining operations
On translating financial statements	$	(2	)	$	(7	)	$	(7	)
Income tax expense on hedges		9			54			80
Change in unrealized gains (losses) on available-for-sale financial securities
Income tax (recovery) expense from unrealized gains (losses) arising during the period		(31	)		45			82
Income tax recovery (expense) related to reclassification of realized gains/losses and recoveries/impairments to net income		36			(8	)		(252	)
Changes in unrealized gains/losses on derivative instruments designated as cash flow hedges
Income tax expense (recovery) from unrealized losses arising during the period		3			(9	)		(24	)
Income tax recovery (expense) related to reclassification of realized losses to net income		1			1			5
Income tax (recovery) on share of other comprehensive loss of associates		–			–			(3	)
Total income tax expense (recovery)	$	16		$	76		$	(119	)

Consolidated Statements of Changes in Equity
For the	three months ended						year ended
(Canadian $ in millions, unaudited)	March 31, 2011			March 31, 2010			December 31, 2010
Preferred shares
Balance, beginning of period	$	1,422		$	1,422		$	1,422
Issued during the period (note 9)		200			–			–
Issuance costs, net of tax		(4	)		–			–
Balance, end of period	$	1,618		$	1,422		$	1,422
Common shares
Balance, beginning of period	$	19,254		$	18,937		$	18,937
Issued on exercise of stock options and deferred share units		1			1			3
Issued under dividend reinvestment and share purchase plans		77			67			314
Balance, end of period	$	19,332		$	19,005		$	19,254
Contributed surplus
Balance, beginning of period	$	222		$	196		$	196
Exercise of stock options and deferred share units		–			–			1
Stock option expense		7			8			25
Balance, end of period	$	229		$	204		$	222
Shareholders’ retained earnings (1)
Balance, beginning of period	$	3,393		$	6,062		$	6,062
Net income (loss) attributed to shareholders		985			1,224			(1,663	)
Preferred share dividends		(20	)		(20	)		(79	)
Common share dividends		(234	)		(230	)		(927	)
Balance, end of period	$	4,124		$	7,036		$	3,393
Shareholders’ accumulated other comprehensive loss (“AOCI”)
Balance, beginning of period	$	(181	)	$	641		$	641
Change in unrealized currency translation gains/losses of self-sustaining operations		(588	)		(539	)		(459	)
Change unrealized gains/losses on available-for-sale financial securities		(24	)		77			(320	)
Changes in unrealized gains/losses on derivative instruments designated as cash flow hedges		1			(14	)		(37	)
Share of other comprehensive loss of associates		–			–			(6	)
Balance, end of period	$	(792	)	$	165		$	(181	)

Total shareholders’ equity, end of period	$	24,511		$	27,832		$	24,110
Participating policyholders’ equity
Balance, beginning of period	$	155		$	80		$	80
Net income (loss) attributed to participating policyholders		(1	)		7			79
Other comprehensive income (loss) attributed to participating policyholders		31			(34	)		(4	)
Balance, end of period	$	185		$	53		$	155
Non-controlling interest
Balance, beginning of period	$	410		$	238		$	238
Net income attributed to non-controlling interest		5			2			58
Other comprehensive income (loss) attributed to non-controlling interest		1			(2	)		(1	)
Deconsolidation of a subsidiary		–			–			107
Contributions, net		–			40			8
Balance, end of period	$	416		$	278		$	410
Total equity, end of period	$	25,112		$	28,163		$	24,675
(1) Opening retained earnings as at January 1, 2010 have been restated. Refer to note 1(q).

Consolidated Statements of Cash Flows
For the	three months ended						year ended
(Canadian $ in millions, unaudited)	March 31, 2011			March 31, 2010			December 31, 2010
Operating activities
Net income (loss)	$	989		$	1,233		$	(1,526	)
Adjustments for non-cash items in net income:
Increase (decrease) in insurance contract liabilities		(366	)		1,459			13,642
Increase (decrease) in reinsurance assets		(71	)		240			(55	)
Accretion of discount on invested assets		(92	)		(90	)		(356	)
Other amortization		79			74			316
Net realized and unrealized losses (gains) including impairments		1,575			(1,054	)		(4,491	)
Deferred income tax expense (recovery)		264			74			(474	)
Stock option expense		7			8			25
Goodwill impairment		–			–			2,330
Net income adjusted for non-cash items		2,385			1,944			9,411
Changes in policy related and operating receivables and payables		(314	)		472			1,522
Cash provided by operating activities	$	2,071		$	2,416		$	10,933
Investing activities
Purchases and mortgage advances	$	(13,720	)	$	(12,963	)	$	(76,090	)
Disposals and repayments		11,723			8,472			54,533
Amortization of premium on invested assets		105			126			474
Changes in investment broker net receivables and payables		(112	)		366			137
Net cash decrease from purchase of subsidiaries		–			–			(28	)
Cash used in investing activities	$	(2,004	)	$	(3,999	)	$	(20,974	)
Financing activities
Increase (decrease) in repurchase agreements and securities	$	(307	)	$	(1	)	$	536
sold but not yet purchased
Issue of long-term debt, net		–			–			2,024
Repayment of long-term debt		–			(1	)		(1	)
Repayment of capital instruments		(550	)		–			–
Decrease in investment contract liabilities		(301	)		(48	)		(641	)
Fund borrowed, net		34			3			5
Secured borrowings from securitization transactions		–			–			577
Changes in bank deposits, net		607			583			1,574
Shareholder dividends paid in cash		(175	)		(183	)		(691	)
Contribution from (distribution to) non-controlling interest		–			40			36
Common shares issued, net		1			1			3
Preferred shares issued, net		196			–			–
Cash provided by (used in) financing activities	$	(495	)	$	394		$	3,422
Cash and short-term securities
Decrease during the period	$	(428	)	$	(1,189	)	$	(6,619	)
Effect of exchange rate changes on cash and short-term securities		(130	)		(366	)		(339	)
Balance, beginning of period		11,322			18,280			18,280
Balance, end of period	$	10,764		$	16,725		$	11,322
Cash and short-term securities
Beginning of period
Gross cash and short-term securities	$	11,849		$	18,805		$	18,805
Net payments in transit, included in other liabilities		(527	)		(525	)		(525	)
Net cash and short-term securities, beginning of period	$	11,322		$	18,280		$	18,280
End of period
Gross cash and short-term securities	$	11,379		$	17,318		$	11,849
Net payments in transit, included in other liabilities		(615	)		(593	)		(527	)
Net cash and short-term securities, end of period	$	10,764		$	16,725		$	11,322

Supplemental disclosures on cash flows from operating activities:
Interest paid	$	257		$	161		$	864
Interest received	$	2,106		$	1,833		$	8,043

As at March 31, 2011	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value
Bonds
Canadian government & agency	$	4,294	$	302	$	(136	)	$	4,460
U.S. government & agency		6,282		43		(118	)		6,207
Other government & agency		1,372		26		(8	)		1,390
Corporate		4,237		183		(31	)		4,389
Mortgage/asset-backed securities		654		22		(76	)		600
Total bonds	$	16,839	$	576	$	(369	)	$	17,046
Stocks (1)		1,950		251		(37	)		2,164
Other invested assets - private stocks		109		-		(8	)		101
Total bonds and stocks	$	18,898	$	827	$	(414	)	$	19,311

	Less than 12 months							12 months or more							Total
As at March 31, 2011	Amortized cost		Fair value		Unrealized losses			Amortized cost		Fair value		Unrealized losses			Amortized cost		Fair value		Unrealized losses
Bonds
Canadian government & agency	$	2,794	$	2,658	$	(136	)	$	-	$	-	$	-		$	2,794	$	2,658	$	(136	)
U.S. government & agency		3,708		3,590		(118	)		1		1		-			3,709		3,591		(118	)
Other government & agency		405		398		(7	)		12		11		(1	)		417		409		(8	)
Corporate		1,157		1,133		(24	)		108		101		(7	)		1,265		1,234		(31	)
Mortgage/asset-backed securities		42		41		(1	)		239		164		(75	)		281		205		(76	)
Total bonds	$	8,106	$	7,820	$	(286	)	$	360	$	277	$	(83	)	$	8,466	$	8,097	$	(369	)
Stocks		438		402		(36	)		10		9		(1	)		448		411		(37	)
Other invested assets - private stocks		38		33		(5	)		26		23		(3	)		64		56		(8	)
Total bonds and stocks	$	8,582	$	8,255	$	(327	)	$	396	$	309	$	(87	)	$	8,978	$	8,564	$	(414	)


As at December 31, 2010
Bonds
Canadian government & agency	$	3,111	$	3,057	$	(54	)	$	103	$	97	$	(6	)	$	3,214	$	3,154	$	(60	)
U.S. government & agency		3,942		3,783		(159	)		-		-		-			3,942		3,783		(159	)
Other government & agency		321		317		(4	)		11		11		-			332		328		(4	)
Corporate		1,020		1,000		(20	)		127		119		(8	)		1,147		1,119		(28	)
Mortgage/asset-backed securities		37		36		(1	)		257		170		(87	)		294		206		(88	)
Total bonds	$	8,431	$	8,193	$	(238	)	$	498	$	397	$	(101	)	$	8,929	$	8,590	$	(339	)
Stocks		415		378		(37	)		41		34		(7	)		456		412		(44	)
Other invested assets - private stocks		78		72		(6	)		3		3		-			81		75		(6	)
Total bonds and stocks	$	8,924	$	8,643	$	(281	)	$	542	$	434	$	(108	)	$	9,466	$	9,077	$	(389	)

Derivatives in fair value hedging relationships For the three months ended March 31, 2011	Hedged items in fair value hedging relationships	Gains (losses) recognized on derivatives			Gains (losses) recognized for hedged items			Ineffectiveness recognized in investment income
Interest rate swaps	Fixed rate assets	$	102		$	(111	)	$	(9	)
	Fixed rate liabilities		(24	)		24			-
Foreign currency swaps	Fixed rate assets		3			(2	)		1
	Floating rate liabilities		9			1			10
Total		$	90		$	(88	)	$	2

For the three months ended March 31, 2010

Interest rate swaps	Fixed rate assets	$	(56	)	$	37		$	(19	)
	Fixed rate liabilities		(3	)		3			-
Foreign currency swaps	Fixed rate assets		(9	)		33			24
	Floating rate liabilities		2			(2	)		-
Total		$	(66	)	$	71		$	5

Derivatives in net investment hedging relationships For the three months ended March 31, 2011	Gains (losses) deferred in AOCI on derivatives		Gains (losses) reclassified from AOCI into investment income		Ineffectiveness recognized in investment income
Currency swaps	$	9	$	-	$	-
Foreign currency forwards		-		-		-
Total	$	9	$	-	$	-

For the three months ended March 31, 2010
Currency swaps	$	13	$	-	$	-
Foreign currency forwards		187		-		-
Total	$	200	$	-	$	-

For the year ended December 31, 2010
Currency swaps	$	87	$	-	$	-
Foreign currency forwards		119		-		-
Total	$	206	$	-	$	-

Term to maturity	Less than		1 to 3		3 to 5		Over 5
As at March 31, 2011	1 year		years		years		years		Total
Derivative assets	$	110	$	167	$	175	$	2,948	$	3,400
Derivative liabilities		90		305		313		2,477		3,185

As at December 31, 2010
Derivative assets	$	153	$	179	$	182	$	3,486	$	4,000
Derivative liabilities		97		366		302		2,522		3,287

Type of hedge	Instrument type	Notional amount	Assets	Liabilities	Notional amount	Assets	Liabilities	Notional amount	Assets	Liabilities
Qualifying hedging relationships
Fair value hedges	Interest rate swaps	$ 6,578	$ 65	$ 131	$ 2,903	$ 58	$ 223	$ 1,951	$ 14	$ 73
	Foreign currency swaps	469	62	17	472	53	19	1,064	47	79
	Forward contracts	-	-	-	148	-	-	-	-	-
Cash flow hedges	Interest rate swaps	344	3	-	352	3	-	1,108	39	-
	Foreign currency swaps	10	-	-	13	1	-	67	-	4
	Forward contracts	104	24	-	139	29	-	278	45	-
	Equity contracts	165	3	5	116	5	3	91	10	-
Net investment hedges	Foreign currency swaps	972	73	58	972	82	76	322	-	43
	Forward contracts	-	-	-	202	3	4	5,377	110	13
Total derivatives in hedging relationships		$ 8,642	$ 230	$ 211	$ 5,317	$ 234	$ 325	$ 10,258	$ 265	$ 212
Non-hedging relationships
	Interest rate swaps	$ 84,680	$ 2,680	$ 2,528	$ 81,533	$ 3,233	$ 2,505	$ 62,058	$ 2,046	$ 1,575
	Interest rate futures	2,811	-	-	2,596	-	-	885	-	-
	Interest rate options	176	-	-	180	-	-	300	2	-
	Foreign currency swaps	6,684	484	438	7,037	516	451	8,455	391	660
	Currency rate futures	3,851	-	-	3,643	-	-	757	-	-
	Forward contracts	697	4	2	580	7	4	525	-	2
	Equity contracts	160	2	6	146	10	2	184	3	-
	Equity futures	10,738	-	-	9,714	-	-	2,078	-	-
	Embedded derivatives	-	-	-	-	-	-	-	-	2
Total derivatives in non-hedging relationships		$ 109,797	$ 3,170	$ 2,974	$ 105,429	$ 3,766	$ 2,962	$ 75,242	$ 2,442	$ 2,239
Total derivatives		$ 118,439	$ 3,400	$ 3,185	$ 110,746	$ 4,000	$ 3,287	$ 85,500	$ 2,707	$ 2,451

As at March 31, 2011	AAA		AA			A	BBB		BB		B & lower		Total
Loans (excluding Manulife Bank of Canada)
Private placements	$	426	$	2,110	$	5,566	$	9,015	$	991	$	1,173	$	19,281
Mortgages		2,359		1,611		3,275		12,315		933		346		20,839
Total	$	2,785	$	3,721	$	8,841	$	21,330	$	1,924	$	1,519	$	40,120

As at December 31, 2010
Loans (excluding Manulife Bank of Canada)
Private placements	$	422	$	2,150	$	5,653	$	9,099	$	1,002	$	1,251	$	19,577
Mortgages		2,454		1,736		3,229		12,762		810		359		21,350
Total	$	2,876	$	3,886	$	8,882	$	21,861	$	1,812	$	1,610	$	40,927

As at March 31, 2011		1		2		3	4 & lower		Total
Manulife Bank of Canada
Mortgages	$	-	$	10,333	$	1,642	$	6	$	11,981
Bank loans		1		429		1,861		51		2,342
Total	$	1	$	10,762	$	3,503	$	57	$	14,323

As at December 31, 2010
Manulife Bank of Canada
Mortgages	$	-	$	9,621	$	1,866	$	-	$	11,487
Bank loans		1		438		1,888		26		2,353
Total	$	1	$	10,059	$	3,754	$	26	$	13,840

	Past due but not impaired
As at March 31, 2011	Less than 90 days		90 days and greater		Total past due but not impaired		Total impaired
Bonds
FVTPL	$	13	$	-	$	13	$	146
AFS		7		-		7		33
Loans
Private placements		130		-		130		242
Mortgages and bank loans		55		61		116		112
Other financial assets		11		30		41		5
Total	$	216	$	91	$	307	$	538

As at December 31, 2010
Bonds
FVTPL	$	1	$	3	$	4	$	152
AFS		-		-		-		34
Loans
Private placements		304		-		304		265
Mortgages and bank loans		53		64		117		83
Other financial assets		16		24		40		2
Total	$	374	$	91	$	465	$	536

Impaired loans As at and for the three months ended March 31, 2011	Recorded investment (1)		Unpaid principal balance		Related allowance		Average recorded investment (1)		Interest income recognized
Private placements	$	319	$	406	$	77	$	334	$	-
Mortgages and bank loans		152		159		40		135		-
Total	$	471	$	565	$	117	$	469	$	-

As at and for the year ended December 31, 2010
Private placements	$	349	$	421	$	84	$	445	$	-
Mortgages and bank loans		117		124		34		186		-
Total	$	466	$	545	$	118	$	631	$	-