Form 20-F
|
◻
|
Form 40-F
|
☑
|
Yes
|
◻
|
No
|
☑
|
Exhibit
|
Description of Exhibit
|
99.1
|
Third Quarter Report to Shareholders
|
99.2
|
Certification Chief Executive Officer
|
99.3
|
Certification Chief Financial Officer
|
MANULIFE FINANCIAL CORPORATION
|
|
By: /s/ James D. Gallagher
|
|
Name: James D. Gallagher
|
|
Title: General
Counsel
|
|
Date: November 11, 2020
|
Exhibit
|
Description of Exhibit
|
99.1
|
Third Quarter Report to Shareholders
|
99.2
|
Certification Chief Executive Officer
|
99.3
|
Certification Chief Financial Officer
|
◾
|
Net income attributed to shareholders of $2.1 billion in 3Q20, up $1.3 billion from 3Q19
|
◾
|
Core earnings1
of $1.5 billion in 3Q20, down 6%2 from 3Q19
|
◾
|
Strong LICAT ratio3
of 155%
|
◾
|
Core ROE1 of 11.4% and ROE of 16.4% in 3Q20
|
◾
|
NBV1 of $460 million in 3Q20, down 14% from 3Q19
|
◾
|
APE sales1 of $1.4 billion in 3Q20, down 2% from 3Q19
|
◾
|
Global WAM net outflows1 of $2.2 billion in 3Q20 compared with net outflows of $4.4 billion in 3Q19
|
◾
|
The impact to net income of the annual actuarial review was a net charge of $198 million
|
1 |
Core earnings, core return on common shareholders’ equity (“core ROE”), new business value (“NBV”), annualized premium equivalent (“APE”) sales and net flows are non-GAAP
measures. See “Performance and Non-GAAP Measures” below and in our Third Quarter 2020 Management’s Discussion and Analysis (“3Q20 MD&A”) for additional information.
|
2 |
All percentage growth / declines in financial metrics in this news release are reported on a constant exchange rate basis. Constant exchange rate basis excludes the
impact of currency fluctuations and is a non-GAAP measure. See “Performance and Non-GAAP Measures” below and in our 3Q20 MD&A for additional information.
|
3 |
Life Insurance Capital Adequacy Test (“LICAT”) ratio of The Manufacturers Life Insurance Company (“MLI”).
|
4 |
Our strategic priorities include Portfolio Optimization, Expense Efficiency, Accelerate Growth, Digital Customer Leader and High Performing Team. For more information,
please refer to “Strategic priorities progress update” in our 2019 Annual Report.
|
5 |
Core general expenses and core EBITDA margin are non-GAAP measures. See “Performance and Non-GAAP Measures” below and in our 3Q20 MD&A for additional information.
|
Quarterly Results
|
YTD Results
|
|||||||||||||||
($ millions, unless otherwise stated)
|
3Q20
|
3Q19
|
2020
|
2019
|
||||||||||||
Profitability:
|
||||||||||||||||
Net income attributed to shareholders
|
$
|
2,068
|
$
|
723
|
$
|
4,091
|
$
|
4,374
|
||||||||
Core earnings(1)
|
$
|
1,453
|
$
|
1,527
|
$
|
4,042
|
$
|
4,527
|
||||||||
Diluted earnings per common share ($)
|
$
|
1.04
|
$
|
0.35
|
$
|
2.04
|
$
|
2.16
|
||||||||
Diluted core earnings per common share ($)(1)
|
$
|
0.73
|
$
|
0.76
|
$
|
2.01
|
$
|
2.24
|
||||||||
Return on common shareholders’ equity (“ROE”)
|
16.4
|
%
|
5.9
|
%
|
10.8
|
%
|
12.8
|
%
|
||||||||
Core ROE(1)
|
11.4
|
%
|
13.0
|
%
|
10.6
|
%
|
13.3
|
%
|
||||||||
Expense efficiency ratio(1)
|
51.2
|
%
|
51.4
|
%
|
52.9
|
%
|
51.2
|
%
|
||||||||
Performance:
|
||||||||||||||||
Asia new business value
|
$
|
365
|
$
|
430
|
$
|
1,019
|
$
|
1,205
|
||||||||
Canada new business value
|
$
|
67
|
$
|
51
|
$
|
190
|
$
|
178
|
||||||||
U.S. new business value
|
$
|
28
|
$
|
45
|
$
|
104
|
$
|
141
|
||||||||
Total new business value(1)
|
$
|
460
|
$
|
526
|
$
|
1,313
|
$
|
1,524
|
||||||||
Asia APE sales
|
$
|
1,005
|
$
|
1,052
|
$
|
2,873
|
$
|
3,303
|
||||||||
Canada APE sales
|
$
|
289
|
$
|
235
|
$
|
903
|
$
|
786
|
||||||||
U.S. APE sales
|
$
|
136
|
$
|
156
|
$
|
431
|
$
|
453
|
||||||||
Total APE sales(1)
|
$
|
1,430
|
$
|
1,443
|
$
|
4,207
|
$
|
4,542
|
||||||||
Global Wealth and Asset Management net flows ($ billions)(1)
|
$
|
(2.2
|
)
|
$
|
(4.4
|
)
|
$
|
6.1
|
$
|
(5.8
|
)
|
|||||
Global Wealth and Asset Management gross flows ($ billions)(1)
|
$
|
27.5
|
$
|
28.0
|
$
|
98.7
|
$
|
81.3
|
||||||||
Global Wealth and Asset Management assets under management and administration ($ billions)(1)
|
$
|
715.4
|
$
|
659.2
|
$
|
715.4
|
$
|
659.2
|
||||||||
Financial Strength:
|
||||||||||||||||
MLI’s LICAT ratio
|
155
|
%
|
146
|
%
|
155
|
%
|
146
|
%
|
||||||||
Financial leverage ratio
|
26.7
|
%
|
26.1
|
%
|
26.7
|
%
|
26.1
|
%
|
||||||||
Book value per common share ($)
|
$
|
25.49
|
$
|
23.51
|
$
|
25.49
|
$
|
23.51
|
||||||||
Book value per common share excluding AOCI ($)
|
$
|
21.13
|
$
|
19.60
|
$
|
21.13
|
$
|
19.60
|
(1)
|
This item is a non-GAAP measure. See “Performance and Non-GAAP Measures” below and in our 3Q20 MD&A for
additional information.
|
1 |
A+ awarded for strategy and governance, listed equity incorporation, and fixed-income Sovereign, Supranational, and Agency modules.
|
1 |
This item is a non-GAAP measure. See “Performance and non-GAAP measures” below and in our 3Q20 MD&A for additional information.
|
2 |
Asia Other excludes Hong Kong and Japan.
|
A. TOTAL COMPANY PERFORMANCE
1. Profitability
2. Business Performance
3. Financial strength
4. Revenue
5. Assets under management and administration
6. Impact of fair value accounting
7. Impact of foreign currency exchange rates
8. Business highlights
B. PERFORMANCE BY SEGMENT
1. Asia
2. Canada
3. U.S.
4. Global Wealth and Asset Management
5. Corporate and Other
|
C. RISK MANAGEMENT AND RISK FACTORS UPDATE
1. Variable annuity and segregated fund guarantees
2. Caution related to sensitivities
3. Publicly traded equity performance risk
4. Interest rate and spread risk sensitivities and exposure measures
5. Alternative long-duration asset performance risk
6. Credit risk exposure measures
7. Risk factors - Pandemic risk and potential implications of COVID-19
8. Risk Factors - Global outlook and economic uncertainties
D. CRITICAL ACTUARIAL AND ACCOUNTING POLICIES
1. Critical actuarial and accounting policies
2. Actuarial methods and assumptions
3. Sensitivity of policy liabilities to asset related assumptions
4. Accounting and reporting changes
E. OTHER
1. Outstanding
shares - selected information
2. Legal
and regulatory proceedings
3. Performance
and non-GAAP measures
4. Caution
regarding forward-looking statements
5. Quarterly
financial information
6. Other
|
Quarterly Results
|
YTD Results
|
|||||||||||||||||||
($ millions, unless otherwise stated)
|
3Q20
|
2Q20
|
3Q19
|
2020
|
2019
|
|||||||||||||||
Net income attributed to shareholders
|
$
|
2,068
|
$
|
727
|
$
|
723
|
$
|
4,091
|
$
|
4,374
|
||||||||||
Core earnings(1)
|
$
|
1,453
|
$
|
1,561
|
$
|
1,527
|
$
|
4,042
|
$
|
4,527
|
||||||||||
Diluted earnings per common share ($)
|
$
|
1.04
|
$
|
0.35
|
$
|
0.35
|
$
|
2.04
|
$
|
2.16
|
||||||||||
Diluted core earnings per common share ($)(1)
|
$
|
0.73
|
$
|
0.78
|
$
|
0.76
|
$
|
2.01
|
$
|
2.24
|
||||||||||
Return on common shareholders’ equity (“ROE”)
|
16.4
|
%
|
5.5
|
%
|
5.9
|
%
|
10.8
|
%
|
12.8
|
%
|
||||||||||
Core ROE(1)
|
11.4
|
%
|
12.2
|
%
|
13.0
|
%
|
10.6
|
%
|
13.3
|
%
|
||||||||||
Expense efficiency ratio(1)
|
51.2
|
%
|
48.9
|
%
|
51.4
|
%
|
52.9
|
%
|
51.2
|
%
|
(1)
|
This item is a non-GAAP measure. See “Performance and non-GAAP measures” below.
|
1 |
This item is a non-GAAP measure. See “Performance and non-GAAP measures” below.
|
2 |
Percentage growth / declines in core earnings, core general expenses, pre-tax core earnings, APE sales, gross flows, net flows, NBV, assets under management and
administration, assets under management, core EBITDA and Global Wealth and Asset Management revenue are stated on a constant exchange rate basis. Constant exchange rate basis is a non-GAAP measure. See “Performance and non-GAAP measures”
below.
|
3 |
Asia Other excludes Japan and Hong Kong.
|
4 |
Policyholder experience includes gains of $13 million post-tax in 3Q20 (3Q19 – gains of $42 million post-tax) from the release of margins on medical policies in Hong Kong
that have lapsed for customers who have opted to change their existing policies to the new Voluntary Health Insurance Scheme (“VHIS”) products. These gains did not have a material impact on core earnings as they were mostly offset by new
business strain.
|
Core Earnings by Segment(1)
|
Quarterly Results
|
YTD Results
|
||||||||||||||||||
($ millions, unaudited)
|
3Q20
|
2Q20
|
3Q19
|
2020
|
2019
|
|||||||||||||||
Asia
|
$
|
559
|
$
|
489
|
$
|
520
|
$
|
1,539
|
$
|
1,511
|
||||||||||
Canada
|
279
|
342
|
318
|
858
|
913
|
|||||||||||||||
U.S.
|
498
|
602
|
471
|
1,516
|
1,387
|
|||||||||||||||
Global Wealth and Asset Management
|
308
|
238
|
281
|
796
|
756
|
|||||||||||||||
Corporate and Other (excluding core investment gains)
|
(191
|
)
|
(110
|
)
|
(163
|
)
|
(667
|
)
|
(340
|
)
|
||||||||||
Core investment gains(1),(2)
|
-
|
-
|
100
|
-
|
300
|
|||||||||||||||
Total core earnings
|
$
|
1,453
|
$
|
1,561
|
$
|
1,527
|
$
|
4,042
|
$
|
4,527
|
(1)
|
This item is a non-GAAP measure. See “Performance and non-GAAP measures” below.
|
(2)
|
As outlined in our definition of core earnings in section E3: Up to $400 million of net favourable investment-related experience will
be reported in core earnings in a single year, which are referred to as “core investment gains”. This means up to $100 million in the first quarter, up to $200 million on a year-to-date basis in the second quarter, up to $300 million on a
year-to-date basis in the third quarter and up to $400 million on a full year basis in the fourth quarter. Any investment-related experience losses reported in a quarter will be offset against the net year-to-date investment-related
experience gains with the difference being included in core earnings subject to a maximum of the year-to-date core investment gains and a minimum of zero, which reflects our expectation that investment-related experience will be positive
through-the-business cycle.
|
1 |
Year-to-date policyholder experience includes gains of $47 million post-tax in 2020 (2019 – gains of $63 million post-tax) from the release of margins on medical policies
in Hong Kong that have lapsed for customers who have opted to change their existing policies to the new VHIS products. These gains did not have a material impact on year-to-date core earnings as they were mostly offset by new business
strain.
|
Items excluded from core earnings
|
Quarterly Results
|
YTD Results
|
||||||||||||||||||
($ millions, unaudited)
|
3Q20
|
2Q20
|
3Q19
|
2020
|
2019
|
|||||||||||||||
Investment-related experience outside of core earnings(1)
|
$
|
147
|
$
|
(916
|
)
|
$
|
(289
|
)
|
$
|
(1,377
|
)
|
$
|
184
|
|||||||
Direct impact of equity markets and interest rates and variable
annuity guarantee liabilities(2)
|
390
|
73
|
(494
|
)
|
1,255
|
(389
|
)
|
|||||||||||||
Direct impact of equity markets and
variable annuity guarantee
liabilities
|
162
|
568
|
(38
|
)
|
(579
|
)
|
331
|
|||||||||||||
Fixed income reinvestment rates
assumed in the valuation of
policy liabilities
|
142
|
(1,995
|
)
|
(213
|
)
|
(169
|
)
|
(547
|
)
|
|||||||||||
Sale of AFS bonds and, impact of
derivative positions in the
Corporate and Other segment
|
86
|
1,500
|
257
|
2,003
|
327
|
|||||||||||||||
Changes to the ultimate
reinvestment rate
|
-
|
-
|
(500
|
)
|
-
|
(500
|
)
|
|||||||||||||
Change in actuarial methods and assumptions(3)
|
(198
|
)
|
-
|
(21
|
)
|
(198
|
)
|
(21
|
)
|
|||||||||||
Reinsurance transactions(4)
|
276
|
9
|
-
|
297
|
115
|
|||||||||||||||
Tax related items and other
|
-
|
-
|
-
|
72
|
(42
|
)
|
||||||||||||||
Items excluded from core earnings
|
$
|
615
|
$
|
(834
|
)
|
$
|
(804
|
)
|
$
|
49
|
$
|
(153
|
)
|
(1)
|
Total investment-related experience in 3Q20 was a net gain of $147 million, compared with a net charge of $189 million in 3Q19, and in
accordance with our definition of core earnings, we included no investment-related experience gains in core earnings and a $147 million gain in items excluded from core earnings in 3Q20 (gains of $100 million and a charge of $289 million,
respectively, in 3Q19). Investment-related experience gains in 3Q20 reflected the favourable impact of fixed income reinvestment activities and higher-than-expected returns (including fair value changes) on alternative long-duration assets
(“ALDA”) primarily driven by fair value gains on private equity, partially offset by modest credit losses and the estimated impact of the sale of NAL Resources Limited (“NAL”), a wholly-owned oil & gas subsidiary, to Whitecap Resources
Inc. which is expected to close on January 4, 2021. Under the arrangement, we will receive publicly traded shares in Whitecap Resources Inc. in exchange for all of the issued and outstanding shares of NAL. Investment-related experience
charges in 3Q19 reflected lower-than-expected returns (including fair value changes) on ALDA partially offset by favourable credit experience.
|
(2)
|
The direct impact of markets was a net gain of $390 million in 3Q20 driven by strong equity market performance, higher fixed income reinvestment rates
and gains on the sale of available-for-sale (“AFS”) bonds. The gain from fixed income reinvestment rates reflected nonparallel movement in swap spreads, partially offset by narrowing corporate spreads, primarily in the U.S. The direct
impact of markets was a net charge of $494 million in 3Q19 and included a $500 million charge related to changes to the URR. In July 2019, the Canadian Actuarial Standards Board (“ASB”) issued new assumptions with reductions to the URR and
updates to the calibration criteria for stochastic risk-free rates. The updated standard included a reduction of 15 basis points in the URR and a corresponding change to stochastic risk-free rate modeling and was effective October 15, 2019.
The long-term URR for risk-free rates in Canada is prescribed at 3.05% and we use the same assumption for the U.S. Our assumption for Japan is 1.6%. The ASB is currently conducting another review of the URR with any changes expected to be
announced and implemented in 2021. The 3Q19 charges related to fixed income reinvestment rates was offset by gains on the sale of AFS bonds. The charges for fixed income reinvestment rates related to changes in the yield curve and the
second order impact of changes in actuarial methods and assumptions.
|
(3)
|
Refer to section D2 “Actuarial methods and assumptions” below for detail.
|
(4)
|
In 3Q20, reinsurance transactions in the U.S., Asia and Canada contributed
gains of $262 million, $8 million and $6 million, respectively.
|
1 |
This item is a non-GAAP measure. See “Performance and non-GAAP measures” below.
|
Quarterly Results
|
YTD Results
|
|||||||||||||||||||
($ millions, unaudited)
|
3Q20
|
2Q20
|
3Q19
|
2020
|
2019
|
|||||||||||||||
Asia APE sales
|
$
|
1,005
|
$
|
784
|
$
|
1,052
|
$
|
2,873
|
$
|
3,303
|
||||||||||
Canada APE sales
|
$
|
289
|
$
|
238
|
$
|
235
|
$
|
903
|
$
|
786
|
||||||||||
U.S. APE sales
|
$
|
136
|
$
|
154
|
$
|
156
|
$
|
431
|
$
|
453
|
||||||||||
Total APE sales
|
$
|
1,430
|
$
|
1,176
|
$
|
1,443
|
$
|
4,207
|
$
|
4,542
|
||||||||||
Asia new business value
|
$
|
365
|
$
|
298
|
$
|
430
|
$
|
1,019
|
$
|
1,205
|
||||||||||
Canada new business value
|
$
|
67
|
$
|
46
|
$
|
51
|
$
|
190
|
$
|
178
|
||||||||||
U.S. new business value
|
$
|
28
|
$
|
40
|
$
|
45
|
$
|
104
|
$
|
141
|
||||||||||
Total new business value
|
$
|
460
|
$
|
384
|
$
|
526
|
$
|
1,313
|
$
|
1,524
|
||||||||||
Global Wealth and Asset Management net flows ($ billions)
|
$
|
(2.2
|
)
|
$
|
5.1
|
$
|
(4.4
|
)
|
$
|
6.1
|
$
|
(5.8
|
)
|
|||||||
Global Wealth and Asset Management gross flows ($ billions)
|
$
|
27.5
|
$
|
33.1
|
$
|
28.0
|
$
|
98.7
|
$
|
81.3
|
||||||||||
Global Wealth and Asset Management assets under management
and administration ($ billions)
|
$
|
715.4
|
$
|
696.9
|
$
|
659.2
|
$
|
715.4
|
$
|
659.2
|
(1)
|
These items are non-GAAP measures. See “Performance and non-GAAP measures” below.
|
1 |
This item is a non-GAAP measure. See “Performance and non-GAAP measures” below.
|
Quarterly Results
|
YTD Results
|
|||||||||||||||||||
(unaudited)
|
3Q20
|
2Q20
|
3Q19
|
2020
|
2019
|
|||||||||||||||
MLI’s LICAT ratio
|
155
|
%
|
155
|
%
|
146
|
%
|
155
|
%
|
146
|
%
|
||||||||||
Financial leverage ratio
|
26.7
|
%
|
26.0
|
%
|
26.1
|
%
|
26.7
|
%
|
26.1
|
%
|
||||||||||
Total consolidated capital ($ billions)(1)
|
$
|
62.1
|
$
|
61.8
|
$
|
59.1
|
$
|
62.1
|
$
|
59.1
|
||||||||||
Book value per common share ($)
|
$
|
25.49
|
$
|
25.14
|
$
|
23.51
|
$
|
25.49
|
$
|
23.51
|
||||||||||
Book value per common share excluding AOCI ($)
|
$
|
21.13
|
$
|
20.36
|
$
|
19.60
|
$
|
21.13
|
$
|
19.60
|
(1)
|
This item is a non-GAAP measure. See “Performance and non-GAAP measures” below.
|
Quarterly Results
|
YTD Results
|
|||||||||||||||||||
($ millions, unaudited)
|
3Q20
|
2Q20
|
3Q19
|
2020
|
2019
|
|||||||||||||||
Gross premiums
|
$
|
10,376
|
$
|
9,538
|
$
|
10,508
|
$
|
30,639
|
$
|
30,524
|
||||||||||
Premiums ceded to reinsurers
|
(4,370
|
)
|
(1,305
|
)
|
(1,173
|
)
|
(7,045
|
)
|
(4,184
|
)
|
||||||||||
Net premium income
|
6,006
|
8,233
|
9,335
|
23,594
|
26,340
|
|||||||||||||||
Investment income
|
3,521
|
5,262
|
3,932
|
12,067
|
11,389
|
|||||||||||||||
Other revenue
|
2,749
|
2,365
|
2,770
|
8,094
|
7,966
|
|||||||||||||||
Revenue before realized and unrealized investment gains
and losses
|
12,276
|
15,860
|
16,037
|
43,755
|
45,695
|
|||||||||||||||
Realized and unrealized gains and losses on assets
supporting insurance and investment contract
liabilities and on the macro hedge program
|
1,100
|
11,626
|
6,592
|
17,284
|
22,703
|
|||||||||||||||
Total revenue
|
$
|
13,376
|
$
|
27,486
|
$
|
22,629
|
$
|
61,039
|
$
|
68,398
|
1 |
This item is a non-GAAP measure. See “Performance and non-GAAP measures” below.
|
A5 |
Assets under management and administration (“AUMA”)1
|
A6 |
Impact of fair value accounting
|
1 |
This item is a non-GAAP measure. See “Performance and non-GAAP measures” below.
|
A7 |
Impact of foreign currency exchange rates
|
A8 |
Business highlights
|
1 |
A+ awarded for strategy and governance, listed equity incorporation, and fixed-income Sovereign, Supranational, and Agency modules.
|
B1 |
Asia
|
($ millions, unless otherwise stated)
|
Quarterly Results
|
YTD Results
|
||||||||||||||||||
Canadian dollars
|
3Q20
|
2Q20
|
3Q19
|
2020
|
2019
|
|||||||||||||||
Net income attributed to shareholders(1)
|
$
|
651
|
$
|
377
|
$
|
128
|
$
|
1,123
|
$
|
1,299
|
||||||||||
Core earnings(1)
|
559
|
489
|
520
|
1,539
|
1,511
|
|||||||||||||||
Annualized premium equivalent sales
|
1,005
|
784
|
1,052
|
2,873
|
3,303
|
|||||||||||||||
New business value
|
365
|
298
|
430
|
1,019
|
1,205
|
|||||||||||||||
Revenue
|
7,161
|
8,511
|
7,105
|
20,149
|
22,552
|
|||||||||||||||
Revenue before realized and unrealized investment
gains and losses(2)
|
6,353
|
5,391
|
6,295
|
18,583
|
17,963
|
|||||||||||||||
Assets under management ($ billions)
|
134.5
|
132.1
|
118.8
|
134.5
|
118.8
|
|||||||||||||||
U.S. dollars
|
||||||||||||||||||||
Net income attributed to shareholders(1) |
US$ |
489 | US$ |
272 | US$ |
97 | US$ |
832 | US$ |
976 | ||||||||||
Core earnings(1)
|
420
|
353
|
394
|
1,138
|
1,137
|
|||||||||||||||
Annualized premium equivalent sales
|
755
|
567
|
796
|
2,128
|
2,486
|
|||||||||||||||
New business value
|
274
|
215
|
326
|
754
|
907
|
|||||||||||||||
Revenue
|
5,378
|
6,145
|
5,379
|
14,852
|
16,970
|
|||||||||||||||
Revenue before realized and unrealized investment
gains and losses(2)
|
4,770
|
3,893
|
4,766
|
13,749
|
13,520
|
|||||||||||||||
Assets under management ($ billions)
|
100.8
|
96.9
|
89.7
|
100.8
|
89.7
|
(1)
|
See “Performance and non-GAAP measures” for a reconciliation between net income (loss) attributed to shareholders and core earnings.
|
(2)
|
See section A6 “Impact of fair value accounting”.
|
•
|
Japan APE sales in 3Q20 were US$159 million, an increase of 9% compared with 3Q19 driven by an increase in COLI
sales, partially offset by the adverse impact of COVID-19. Japan NBV in 3Q20 of US$31 million decreased 40% compared with 3Q19 due to higher COLI mix. Japan NBV margin was 19.9% in 3Q20, a decrease of 16.1 percentage points compared with
3Q19.
|
•
|
Hong Kong APE sales in 3Q20 were US$197 million, a 26% decrease compared with 3Q19. The decrease
in sales was driven by the tightening of COVID-19 containment measures during the quarter, a decrease in sales to mainland Chinese visitors as well as strong prior year quarter sales of our VHIS and QDAP products. Hong Kong NBV in 3Q20 of
US$111 million decreased 35% compared with 3Q19 as a result of lower sales and a decline in interest rates. Hong Kong NBV margin was 56.0% in 3Q20, a decrease of 7.7 percentage points compared with 3Q19.
|
•
|
Asia Other APE sales in 3Q20 were US$399 million, a 3% increase compared with 3Q19. Higher sales in agency were
offset by lower sales in bancassurance due to restricted activities in bank branches and temporary bank closures. Asia Other NBV in 3Q20 of US$132 million increased 27% compared with 3Q19, primarily as a result of higher sales, management
actions and a favourable product mix, partially offset by a decline in market interest rates. Asia Other NBV margin was 37.5% in 3Q20, an increase of 7.3 percentage points compared with 3Q19.
|
Quarterly Results
|
YTD Results
|
|||||||||||||||||||
($ millions, unless otherwise stated)
|
3Q20
|
2Q20
|
3Q19
|
2020
|
2019
|
|||||||||||||||
Net income (loss) attributed to shareholders(1)
|
$
|
291
|
$
|
142
|
$
|
(172
|
)
|
$
|
(433
|
)
|
$
|
896
|
||||||||
Core earnings(1)
|
279
|
342
|
318
|
858
|
913
|
|||||||||||||||
Annualized premium equivalent sales
|
289
|
238
|
235
|
903
|
786
|
|||||||||||||||
Manulife Bank average net lending assets ($ billions)
|
22.7
|
22.5
|
22.0
|
22.5
|
21.8
|
|||||||||||||||
Revenue
|
3,313
|
7,934
|
4,524
|
14,632
|
17,366
|
|||||||||||||||
Revenue before realized and unrealized investment income
gains and losses(2)
|
3,553
|
3,404
|
3,550
|
10,032
|
10,925
|
|||||||||||||||
Assets under management ($ billions)
|
157.5
|
156.4
|
152.2
|
157.5
|
152.2
|
(1)
|
See “Performance and non-GAAP measures” below for a reconciliation between net income (loss) attributed to shareholders and core earnings.
|
(2)
|
See section A6 “Impact of fair value accounting”.
|
1 |
This item is a non-GAAP measure. See “Performance and non-GAAP measures” below.
|
•
|
Individual insurance APE sales in 3Q20 of $82 million decreased $24 million or 23% compared with 3Q19, with lower sales due to
the impact of COVID-19.
|
•
|
Group insurance APE sales in 3Q20 of $154 million increased $74 million or 93% compared with 3Q19, due to higher large-case
sales.
|
•
|
Annuities APE sales in 3Q20 of $53 million increased $4 million or 8% compared with 3Q19, due to higher sales in our lower risk
segregated funds. We are focused on growth in lower risk segregated fund products, which in 3Q20 accounted for 85% of annuities APE sales.
|
($ millions, unless otherwise stated)
|
Quarterly Results
|
YTD Results
|
||||||||||||||||||
Canadian dollars
|
3Q20
|
2Q20
|
3Q19
|
2020
|
2019
|
|||||||||||||||
Net income attributed to shareholders(1)
|
$
|
891
|
$
|
(1,580
|
)
|
$
|
342
|
$
|
1,163
|
$
|
1,285
|
|||||||||
Core earnings(1)
|
498
|
602
|
471
|
1,516
|
1,387
|
|||||||||||||||
Annualized premium equivalent sales
|
136
|
154
|
156
|
431
|
453
|
|||||||||||||||
Revenue
|
1,398
|
7,604
|
9,146
|
19,665
|
23,439
|
|||||||||||||||
Revenue before realized and unrealized
investment income gains and losses(2)
|
883
|
3,585
|
4,364
|
8,518
|
11,839
|
|||||||||||||||
Assets under management ($ billions)
|
244.6
|
248.5
|
233.8
|
244.6
|
233.8
|
|||||||||||||||
U.S. dollars
|
||||||||||||||||||||
Net income attributed to shareholders(1)
|
US$ |
669 | US$ |
(1,140) | US$ |
258 | US$ |
906 | US$ |
965 | ||||||||||
Core earnings(1)
|
374
|
434
|
357
|
1,118
|
1,043
|
|||||||||||||||
Annualized premium equivalent sales
|
102
|
111
|
118
|
318
|
341
|
|||||||||||||||
Revenue
|
1,050
|
5,488
|
6,927
|
14,467
|
17,640
|
|||||||||||||||
Revenue before realized and unrealized
investment income gains and losses(2)
|
664
|
2,586
|
3,305
|
6,262
|
8,907
|
|||||||||||||||
Assets under management ($ billions)
|
183.4
|
182.3
|
176.6
|
183.4
|
176.6
|
(1)
|
See “Performance and non-GAAP measures” below for a reconciliation between net income (loss) attributed to shareholders and core earnings.
|
(2)
|
See section A6 “Impact of fair value accounting”.
|
Quarterly Results
|
YTD Results
|
|||||||||||||||||||
($ millions, unless otherwise stated)
|
3Q20
|
2Q20
|
3Q19
|
2020
|
2019
|
|||||||||||||||
Net income attributed to shareholders(1)
|
$
|
308
|
$
|
238
|
$
|
281
|
$
|
796
|
$
|
757
|
||||||||||
Core earnings(1)
|
308
|
238
|
281
|
796
|
756
|
|||||||||||||||
Core EBITDA(2)
|
446
|
381
|
404
|
1,217
|
1,145
|
|||||||||||||||
Core EBITDA margin(2) (%)
|
30.4
|
%
|
28.0
|
%
|
28.7
|
%
|
28.6
|
%
|
27.5
|
%
|
||||||||||
Sales
|
||||||||||||||||||||
Wealth and asset management gross flows
|
27,475
|
33,071
|
27,968
|
98,718
|
81,318
|
|||||||||||||||
Wealth and asset management net flows
|
(2,219
|
)
|
5,149
|
(4,410
|
)
|
6,088
|
(5,767
|
)
|
||||||||||||
Revenue
|
1,465
|
1,361
|
1,409
|
4,252
|
4,162
|
|||||||||||||||
Assets under management and administration ($ billions)
|
715.4
|
696.9
|
659.2
|
715.4
|
659.2
|
|||||||||||||||
Average assets under management and administration
($ billions)(3)
|
707.9
|
672.0
|
655.6
|
686.4
|
645.4
|
(1)
|
See “Performance and non-GAAP measures” below for a reconciliation between net income (loss) attributed to shareholders and core earnings.
|
(2)
|
Core EBITDA and core EBITDA margin are non-GAAP measures. Core EBITDA is core earnings before interest, taxes, depreciation and amortization and core
EBITDA margin is core EBITDA divided by total revenue. See “Performance and non-GAAP measures” below.
|
(3)
|
Average assets under management and administration (“average AUMA”) is a non-GAAP measure reflecting the average of Global WAM’s AUMA
during the reporting period. See “Performance and non-GAAP measures” below.
|
•
|
Gross flows in Asia in 3Q20 were $6.2 billion, an increase of $0.5 billion or 8% compared with 3Q19, driven by higher gross flows
across all business lines. Growth was driven by higher retail gross flows in Indonesia, an institutional fixed income product launch in mainland China and higher retirement gross flows in Indonesia and Hong Kong. Year-to-date gross flows in
2020 of $16.5 billion were 8% higher than the same period of 2019.
|
•
|
Net inflows in Asia in 3Q20 were $1.1 billion, compared with net inflows of $2.3 billion in 3Q19, driven by higher retail
redemptions in mainland China. This was partially offset by higher gross flows as mentioned above. Year-to-date net
|
1 |
This item is a non-GAAP measure. See “Performance and non-GAAP measures” below.
|
inflows were $1.7 billion in 2020 compared with net inflows of $4.6 billion in the same period of 2019.
|
•
|
Gross flows in Canada in 3Q20 were $4.8 billion, a decrease of $1.2 billion or 19% compared with 3Q19, driven by lower gross
flows into fixed income mandates in Institutional Asset Management. This was partially offset by higher new plan sales and recurring deposits growth in Retirement. Year-to-date gross flows in 2020 of $24.4 billion were 38% higher than the
same period of 2019.
|
•
|
Net inflows in Canada were $1.2 billion in 3Q20 compared with net outflows of $6.9 billion in 3Q19, driven by the non-recurrence
of an $8.5 billion redemption in Institutional Asset Management in 3Q19 and lower redemptions in Retirement. This was partially offset by lower gross flows as mentioned above. Year-to-date net inflows were $12.4 billion in 2020 compared
with net outflows of $4.7 billion in the same period of 2019.
|
•
|
Gross flows in the U.S. in 3Q20 were $16.4 billion, in line with 3Q19, as higher gross flows into global equity and fixed income
products in Retail and higher gross flows in Institutional Asset Management offset lower new plan sales and recurring deposits in Retirement. Year-to-date gross flows in 2020 of $57.8 billion were 17% higher than the same period of 2019.
|
•
|
Net outflows in the U.S. were $4.5 billion in 3Q20 compared with net inflows of $0.1 billion in 3Q19, driven by the redemption of
an equity mandate in Institutional Asset Management of $5.0 billion and higher member withdrawals in Retirement. Year-to-date net outflows were $8.0 billion in 2020 compared with net
outflows of $5.7 billion in the same period of 2019.
|
Quarterly Results
|
YTD Results
|
|||||||||||||||||||
($ millions, unless otherwise stated)
|
3Q20
|
2Q20
|
3Q19
|
2020
|
2019
|
|||||||||||||||
Net income (loss) attributed to shareholders(1)
|
$
|
(73
|
)
|
$
|
1,550
|
$
|
144
|
$
|
1,442
|
$
|
137
|
|||||||||
Core loss excluding core investment gains(1)
|
$
|
(191
|
)
|
$
|
(110
|
)
|
$
|
(163
|
)
|
$
|
(667
|
)
|
$
|
(340
|
)
|
|||||
Core investment gains
|
-
|
-
|
100
|
-
|
300
|
|||||||||||||||
Total core gain (loss)
|
$
|
(191
|
)
|
$
|
(110
|
)
|
$
|
(63
|
)
|
$
|
(667
|
)
|
$
|
(40
|
)
|
|||||
Revenue
|
$
|
39
|
$
|
2,076
|
$
|
445
|
$
|
2,341
|
$
|
879
|
(1)
|
See “Performance and non-GAAP measures” for a reconciliation between net income (loss) attributed to shareholders and core earnings.
|
1 |
A+ awarded for strategy and governance, listed equity incorporation, and fixed-income Sovereign, Supranational, and Agency modules.
|
September 30, 2020
|
December 31, 2019
|
|||||||||||||||||||||||
As at
($ millions)
|
Guarantee
value
|
Fund value
|
Amount at
risk(3),(4)
|
Guarantee
value
|
Fund value
|
Amount at
risk(3),(4)
|
||||||||||||||||||
Guaranteed minimum income benefit
|
$
|
4,525
|
$
|
3,499
|
$
|
1,109
|
$
|
4,629
|
$
|
3,696
|
$
|
998
|
||||||||||||
Guaranteed minimum withdrawal benefit
|
51,702
|
44,300
|
7,787
|
53,355
|
48,031
|
6,030
|
||||||||||||||||||
Guaranteed minimum accumulation benefit
|
18,381
|
18,770
|
22
|
17,994
|
18,362
|
10
|
||||||||||||||||||
Gross living benefits(1)
|
74,608
|
66,569
|
8,918
|
75,978
|
70,089
|
7,038
|
||||||||||||||||||
Gross death benefits(2)
|
9,391
|
17,520
|
829
|
9,555
|
17,186
|
802
|
||||||||||||||||||
Total gross of reinsurance
|
83,999
|
84,089
|
9,747
|
85,533
|
87,275
|
7,840
|
||||||||||||||||||
Living benefits reinsured
|
3,877
|
3,022
|
923
|
3,977
|
3,199
|
832
|
||||||||||||||||||
Death benefits reinsured
|
718
|
538
|
302
|
718
|
500
|
318
|
||||||||||||||||||
Total reinsured
|
4,595
|
3,560
|
1,225
|
4,695
|
3,699
|
1,150
|
||||||||||||||||||
Total, net of reinsurance
|
$
|
79,404
|
$
|
80,529
|
$
|
8,522
|
$
|
80,838
|
$
|
83,576
|
$
|
6,690
|
(1)
|
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 2.
|
(2)
|
Death benefits include standalone guarantees and guarantees in excess of living benefit guarantees where both death and living benefits are provided on
a policy.
|
(3)
|
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 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 amount at risk is defined as the excess of the current annuitization income base over the current account value. For all guarantees, the amount at risk is floored at zero at the single contract level.
|
(4)
|
The amount at risk net of reinsurance at September 30, 2020 was $8,522 million (December 31, 2019 – $6,690 million) of which: US$5,336 million
(December 31, 2019 – US$3,995 million) was on our U.S. business, $1,084 million (December 31, 2019 – $1,178 million) was on our Canadian business, US$104 million (December 31, 2019 – US$104 million) was on our Japan business and US$136
million (December 31, 2019 – US$145 million) was related to Asia (other than Japan) and our run-off reinsurance business.
|
As at September 30, 2020
|
||||||||||||||||||||||||
($ millions)
|
-30
|
%
|
-20
|
%
|
-10
|
%
|
+10
|
%
|
+20
|
%
|
+30
|
%
|
||||||||||||
Underlying sensitivity to net income attributed
to shareholders(4)
|
||||||||||||||||||||||||
Variable annuity guarantees
|
$
|
(3,340
|
)
|
$
|
(2,020
|
)
|
$
|
(910
|
)
|
$
|
710
|
$
|
1,250
|
$
|
1,660
|
|||||||||
General fund equity investments(5)
|
(1,400
|
)
|
(890
|
)
|
(400
|
)
|
370
|
730
|
1,080
|
|||||||||||||||
Total underlying sensitivity before hedging
|
(4,740
|
)
|
(2,910
|
)
|
(1,310
|
)
|
1,080
|
1,980
|
2,740
|
|||||||||||||||
Impact of macro and dynamic hedge assets(6)
|
2,590
|
1,580
|
700
|
(690
|
)
|
(1,240
|
)
|
(1,670
|
)
|
|||||||||||||||
Net potential impact on net income attributed to shareholders after impact
of hedging
|
$
|
(2,150
|
)
|
$
|
(1,330
|
)
|
$
|
(610
|
)
|
$
|
390
|
$
|
740
|
$
|
1,070
|
|||||||||
As at December 31, 2019
|
||||||||||||||||||||||||
($ millions)
|
-30
|
%
|
-20
|
%
|
-10
|
%
|
+10
|
%
|
+20
|
%
|
+30
|
%
|
||||||||||||
Underlying sensitivity to net income attributed
to shareholders(4)
|
||||||||||||||||||||||||
Variable annuity guarantees
|
$
|
(3,270
|
)
|
$
|
(1,930
|
)
|
$
|
(860
|
)
|
$
|
620
|
$
|
1,060
|
$
|
1,360
|
|||||||||
General fund equity investments(5)
|
(1,140
|
)
|
(720
|
)
|
(330
|
)
|
340
|
680
|
1,020
|
|||||||||||||||
Total underlying sensitivity before hedging
|
(4,410
|
)
|
(2,650
|
)
|
(1,190
|
)
|
960
|
1,740
|
2,380
|
|||||||||||||||
Impact of macro and dynamic hedge assets(6)
|
2,690
|
1,580
|
670
|
(580
|
)
|
(1,020
|
)
|
(1,340
|
)
|
|||||||||||||||
Net potential impact on net income attributed
to shareholders after impact of hedging
|
$
|
(1,720
|
)
|
$
|
(1,070
|
)
|
$
|
(520
|
)
|
$
|
380
|
$
|
720
|
$
|
1,040
|
(1)
|
See “Caution related to sensitivities” above.
|
(2)
|
The tables above show the potential impact on net income attributed to shareholders resulting from an immediate 10%, 20% and 30% 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, excluding impacts from asset-based fees earned on assets under management and policyholder account
value.
|
(3)
|
Please refer to section D3 “Sensitivity of policy liabilities to asset related assumptions” for more information on the level of growth assumed and on
the net income sensitivity to changes in these long-term assumptions.
|
(4)
|
Defined as earnings sensitivity to a change in public equity markets including settlements on reinsurance contracts, but before the offset of hedge
assets or other risk mitigants.
|
(5)
|
This impact for general fund equity investments includes general fund investments supporting our policy liabilities, investment in seed money
investments (in segregated and mutual funds made by Corporate and Other segment) and the impact on policy liabilities related to the projected future fee income on variable universal life and other unit linked products. The impact does
not include: (i) any potential impact on public equity weightings; (ii) any gains or losses on AFS public equities held in the Corporate and Other segment; or (iii) any gains or losses on public equity investments held in Manulife Bank.
The participating policy funds are largely self-supporting and generate no material impact on net income attributed to shareholders as a result of changes in equity markets.
|
(6)
|
Includes the impact of rebalancing equity hedges in the macro and dynamic hedging program. The impact of dynamic hedge rebalancing
represents the impact of rebalancing equity hedges for dynamically hedged variable annuity guarantee best estimate liabilities at 5% intervals, but does not include any impact in respect of other sources of hedge ineffectiveness (e.g.
fund tracking, realized volatility and equity, interest rate correlations different from expected among other factors).
|
Impact on MLI's LICAT total ratio
|
||||||||||||||||||||||||
Percentage points
|
-30
|
%
|
-20
|
%
|
-10
|
%
|
+10
|
%
|
+20
|
%
|
+30
|
%
|
||||||||||||
September 30, 2020
|
(4
|
)
|
(2
|
)
|
(1
|
)
|
-
|
1
|
-
|
|
||||||||||||||
December 31, 2019
|
(5
|
)
|
(3
|
)
|
(1
|
)
|
1
|
4
|
5
|
(1)
|
See “Caution related to sensitivities” above. In addition, estimates exclude changes to the net actuarial gains/losses with respect to
the Company’s pension obligations as a result of changes in equity markets, as the impact on the quoted sensitivities is not considered to be material.
|
(2)
|
The potential impact is shown assuming that the change in value of the hedge assets does not completely offset the change in the dynamically hedged
variable annuity guarantee liabilities. The estimated amount that would not be completely offset relates to our practices of not hedging the provisions for adverse deviation and of rebalancing equity hedges for dynamically hedged variable
annuity liabilities at 5% intervals.
|
(3)
|
The Office of the Superintendent of Financial Institutions (“OSFI”) rules for segregated fund guarantees reflect full capital impacts
of shocks over 20 quarters within a prescribed range. As such, the deterioration in equity markets could lead to further increases in capital requirements after the initial shock.
|
September 30, 2020
|
December 31, 2019
|
|||||||||||||||
As at
|
-50
|
bp
|
+50
|
bp
|
-50
|
bp
|
+50
|
bp
|
||||||||
Net income attributed to shareholders ($ millions)
|
||||||||||||||||
Excluding change in market value of AFS fixed income assets held in the Corporate and Other
segment
|
$
|
-
|
$
|
(200
|
)
|
$
|
(100
|
)
|
$
|
(100
|
)
|
|||||
From fair value changes in AFS fixed income assets held in the Corporate and Other segment, if
realized
|
2,400
|
(2,200
|
)
|
1,700
|
(1,600
|
)
|
||||||||||
MLI's LICAT total ratio (Percentage points)
|
||||||||||||||||
LICAT total ratio change in percentage points(5)
|
7
|
(7
|
)
|
4
|
(4
|
)
|
(1)
|
See “Caution related to sensitivities” above. In addition, estimates exclude changes to the net actuarial
gains/losses with respect to the Company’s pension obligations as a result of changes in interest rates, as the impact on the quoted sensitivities is not considered to be material.
|
(2)
|
Includes guaranteed insurance and annuity products, including variable annuity contracts as well as adjustable benefit products
where benefits are generally adjusted as interest rates and investment returns change, a portion of which have minimum credited rate guarantees. For adjustable benefit products subject to minimum rate guarantees, the sensitivities are
based on the assumption that credited rates will be floored at the minimum.
|
(3)
|
The amount of gain or loss that can be realized on AFS fixed income assets held in the Corporate and Other segment will depend on the aggregate amount of unrealized gain or loss.
|
(4)
|
Sensitivities are based on projected asset and liability cash flows and the impact of realizing fair value changes in AFS fixed
income is based on the holdings at the end of the period.
|
(5)
|
LICAT impacts include realized and unrealized fair value changes in AFS fixed income assets. LICAT impacts do
not reflect the impact of the scenario switch discussed below.
|
Corporate spreads(4),(5)
|
September 30, 2020
|
December 31, 2019
|
||||||||||||||
As at
|
-50
|
bp
|
+50
|
bp
|
-50
|
bp
|
+50
|
bp
|
||||||||
Net income attributed to shareholders ($ millions)
|
$
|
(1,000
|
)
|
$
|
800
|
$
|
(800
|
)
|
$
|
800
|
||||||
MLI’s LICAT total ratio (change in percentage points)(6)
|
(5
|
)
|
4
|
(7
|
)
|
5
|
Swap spreads
|
September 30, 2020
|
December 31, 2019
|
||||||||||||||
As at
|
-20
|
bp
|
+20
|
bp
|
-20
|
bp
|
+20
|
bp
|
||||||||
Net income attributed to shareholders ($ millions)
|
$
|
-
|
$
|
-
|
$
|
100
|
$
|
(100
|
)
|
|||||||
MLI’s LICAT total ratio (change in percentage points)(6)
|
nil
|
nil
|
nil
|
nil
|
(1)
|
See “Caution related to sensitivities” above.
|
(2)
|
The impact on net income attributed to shareholders assumes no gains or losses are realized on our AFS fixed income
assets held in the Corporate and Other segment and excludes the impact of changes in segregated fund bond values due to changes in credit spreads. The participating policy funds are largely
self-supporting and generate no material impact on net income attributed to shareholders as a result of changes in corporate and swap spreads.
|
(3)
|
Sensitivities are based on projected asset and liability cash flows.
|
(4)
|
Corporate spreads are assumed to grade to the long-term average over five years.
|
(5)
|
As the sensitivity to a 50 basis point decline in corporate spreads includes the impact of a change in
deterministic reinvestment scenarios where applicable, the impact of changes to corporate spreads for less than, or more than, the amounts indicated are unlikely to be linear.
|
(6)
|
LICAT impacts include realized and unrealized fair value change in AFS fixed income assets. Under LICAT, spread
movements are determined from a selection of investment grade bond indices with BBB and better bonds for each jurisdiction. For LICAT, we use the following indices: FTSE TMX Canada All Corporate Bond Index, Barclays USD Liquid Investment
Grade Corporate Index, and Nomura-BPI (Japan). LICAT impacts presented for corporate spreads do not reflect the impact of the scenario switch discussed below.
|
As at
|
September 30, 2020
|
December 31, 2019
|
||||||||||||||
($ millions)
|
-10
|
%
|
+10
|
%
|
-10
|
%
|
+10
|
%
|
||||||||
Net income attributed to shareholders
|
||||||||||||||||
Real estate, agriculture and timber assets
|
$
|
(1,600
|
)
|
$
|
1,400
|
$
|
(1,300
|
)
|
$
|
1,200
|
||||||
Private equities and other ALDA
|
(2,000
|
)
|
1,800
|
(1,800
|
)
|
1,700
|
||||||||||
Total
|
$
|
(3,600
|
)
|
$
|
3,200
|
$
|
(3,100
|
)
|
$
|
2,900
|
||||||
MLI’s LICAT total ratio (change in percentage points)
|
(5
|
)
|
3
|
(5
|
)
|
4
|
(1)
|
See “Caution Related to Sensitivities” above.
|
(2)
|
This impact is calculated as at a point-in-time impact and does not include: (i) any potential impact on ALDA weightings; or (ii) any gains or losses
on ALDA held in the Corporate and Other segment.
|
(3)
|
The participating policy funds are largely self-supporting and generate no material impact on net income attributed to shareholders as a result of
changes in ALDA returns. For some classes of ALDA, where there is not an appropriate long-term benchmark available, the return assumptions used in valuation are not permitted by the Standards of Practice and CIA guidance to result in a
lower reserve than an assumption based on a historical return benchmark for public equities in the same jurisdiction.
|
(4)
|
Net income impact does not consider any impact of the market correction on assumed future return assumptions.
|
(5)
|
Please refer to section D3 “Sensitivity of policy liabilities to asset related assumptions” for more information on the level of growth assumed and on
the net income sensitivity to changes in these long-term assumptions.
|
(6)
|
The impact of changes to the portfolio asset mix supporting our North American legacy businesses are reflected in the sensitivities
when the changes take place.
|
As at
($ millions, unless otherwise stated)
|
September 30,
2020
|
December 31,
2019
|
||||||
Net impaired fixed income assets
|
$
|
315
|
$
|
234
|
||||
Net impaired fixed income assets as a % of total invested assets
|
0.076
|
%
|
0.062
|
%
|
||||
Allowance for loan losses
|
$
|
110
|
$
|
20
|
◾
|
The ongoing COVID-19 pandemic could continue to adversely impact our financial results in future periods as a result of reduced new business, reduced asset-based fee
revenue, and net unfavourable policyholder experience including claims experience and premium persistency. The uncertainty around the expected duration of the pandemic and the measures put in place by governments to respond to it could
further depress business activity and financial markets, which could lead to lower net income attributed to shareholders. While in recent years we’ve taken significant actions
|
1 |
Includes debt securities, private placements and mortgages.
|
2 |
A one-notch downgrade is equivalent to a ratings downgrade from A to A- or BBB- to BB+.
|
|
to diversify and bolster the resilience of our Company, further management actions may be required, including, but not limited to, changes to business and product mix,
pricing structures on in-force and new business, investment mix, hedging programs, and the use of reinsurance.
|
◾
|
Collaborative activities required to advance our strategic initiatives could also be impeded as emergency measures to combat the
virus significantly restrict direct human interactions and movement. Although we expect that our digital capabilities and tools should enable us to reasonably conduct business while emergency measures are in place, there can be no assurance
these or other strategies taken to address adverse impacts related to the COVID-19 pandemic will be successful.
|
◾
|
We have experienced ongoing disruptions to our underwriting processes as a result of government measures taken to stop the spread
of the virus, including the temporary closure of paramedical services in some markets, as well as consumer fears over in-person services which have led to lower sales volumes. To help
mitigate the impacts of these disruptions, and to continue to support our customers with their insurance needs, we took steps to temporarily adjust our underwriting processes to allow us to accept certain low risk applications. We will
continue to monitor the situation and adjust underwriting practices where necessary (i.e. digital applications and further modifications to underwriting requirements in lower risk applications).
|
◾
|
Claims and lower lapses on certain products resulting from pandemic-related events could cause substantial volatility in our
financial results in any period and could materially reduce our profitability or impair our financial condition. Further, large-scale events such as COVID-19 reduce the overall level of economic activity as well as activity through our
distribution channels, which could continue to adversely impact our ability to write new business. It is also possible that geographic concentration of insured individuals could increase the severity of claims experience. The effectiveness
of external parties, including governmental and non-governmental organizations, in combating the pandemic is outside of our control but could also have a material and adverse impact on our results of operations.
|
◾
|
Increased economic uncertainty and increased unemployment resulting from the economic impacts of the spread of COVID-19 may also
result in policyholders seeking sources of liquidity and withdrawing at rates greater than we previously expected. If premium persistency is less than anticipated or if policyholder lapse rates significantly exceed our expectations, it
could have a material adverse effect on our business, financial condition, results of operations and cash flows.
|
◾
|
We purchase reinsurance protection on certain risks underwritten or assumed by our various insurance businesses. As a result of
COVID-19 we may find reinsurance more difficult or costly to obtain. In addition, reinsurers may dispute, or seek to reduce or eliminate, coverage on policies as a result of any changes to policies or practices we make as a result of
COVID-19.
|
◾
|
The pandemic has resulted in the imposition of government measures to restrict the movement of people, including travel bans and
physical distancing requirements and other containment measures. These measures have led to disruptions to business operations across our global offices. While our business continuity plans have been executed across the organization with
the vast majority of employees shifting to remote work arrangements and our networks and systems have generally remained stable in supporting this large-scale effort, there can be no assurance that our ability to continue to operate our
business will not be adversely impacted if our networks and systems, including those aspects of our operations which rely on services provided by third parties, fail to operate as expected. The successful execution of business continuity
strategies by third parties is outside our control. If one or more of the third parties to whom we outsource certain critical business activities fails to perform as a result of the impacts from the spread of COVID-19, it may have a
material adverse effect on our business and operations.
|
◾
|
In the first and second quarter of 2020, our global processing centres’ operational capacity was temporarily impacted due to
strict government measures to lock down businesses and limit the movement of people within their jurisdictions, which resulted in slower processing times and lower than expected customer experience. This reduction in operating capacity
required us to reallocate capacity to less impacted geographies, expand the use of remote work capabilities, and deprioritize non-essential business activities. While the capacity of our global processing centres has been restored, there
can be no assurance that strategies taken to mitigate COVID-19 related pandemic impacts will continue to be successful if operating conditions deteriorate further in the future, either due to additional restrictions imposed by authorities
or because of any other adverse development.
|
◾
|
The implementation of widespread remote work arrangements also increases other operational risks, including, but not limited to,
fraud, money-laundering, information security, privacy, and third-party risks. We are relying on our risk management strategies to monitor and mitigate these and other operational risks during this period of heightened uncertainty.
|
◾
|
We may incur increased administrative expenses as a result of process and other changes we implemented in response to COVID-19.
In addition, we may face increased workplace safety costs and risks and employee-relations challenges and claims.
|
◾
|
The pandemic and resulting economic downturn has contributed to significant volatility and declines in financial and commodity
markets. Central banks announced emergency interest rate cuts, while governments implemented unprecedented fiscal stimulus packages to support economic stability. The pandemic has resulted in a global recessionary environment with continued
market volatility and low or negative interest rates, which may continue to impact our net income attributed to shareholders. Our investment portfolio has been, and may continue to be, adversely affected as a result of market developments
from the COVID-19 pandemic and related uncertainty.
|
◾
|
We have hedging programs, supported by a comprehensive collateral management program in place to help mitigate the risk of
interest rate and public equity market volatility. Our interest rate and public equity variable annuity hedging programs have performed with a high level of effectiveness during this period of volatility to date.
|
◾
|
Extreme market volatility may leave us unable to react to market events in a manner consistent with our historical investment
practices in dealing with more orderly markets. Market dislocations, decreases in observable market activity or unavailability of information arising from the spread of COVID-19, may restrict our access to key inputs used to derive certain
estimates and assumptions made in connection with financial reporting or otherwise, including estimates and changes in long term macro-economic assumptions relating to accounting for future credit losses. Restricted access to such inputs
may make our financial statement balances and estimates and assumptions used to run our business subject to greater variability.
|
◾
|
The global recessionary environment could continue to put downward pressure on asset valuations and increase the risk of potential impairments of
investments, in particular, for more exposed sectors such as transportation, services and consumer cyclical industries. The COVID-19 pandemic has contributed to supply and demand shocks that have created historic dislocation in the energy
markets and could continue to adversely impact our oil and gas and other energy-related investments. Furthermore, delays in general return-to-office policies and practices and/or reduced demand for office space could continue to have a
negative impact on our commercial real estate portfolio.
|
◾
|
Extreme market volatility and stressed conditions resulting from COVID-19 could result in additional cash and collateral demands primarily from
changes to policyholder termination or renewal rates, withdrawals of customer deposit balances, borrowers renewing or extending their loans when they mature, derivative settlements or collateral demands, reinsurance settlements or
collateral demands and our willingness to support the local solvency position of our subsidiaries. Such an environment could also limit our access to capital markets. We maintain strong financial strength ratings from our credit rating
agencies. However, sustained global economic uncertainty could result in adverse credit ratings changes which in turn could result in more costly or limited access to funding sources. In addition, while we currently have a variety of
sources of liquidity including cash balances, short-term investments, government and highly rated corporate bonds, and access to contingent liquidity facilities, there can be no assurance that these sources will provide us with sufficient
liquidity on commercially reasonable terms in the future.
|
◾
|
On March 13, 2020, OSFI announced measures to support the resilience of financial institutions including their expectation for
all federally regulated financial institutions that dividend increases and share buybacks should be halted for the time being. Accordingly, the Company has not repurchased its shares since March 13, 2020.
|
◾
|
A prolonged economic slowdown or recession could continue to impact a wide range of industries to which we are exposed. Further, borrower or
counterparty downgrades or defaults would cause increased provisions or impairments related to our general fund invested assets and derivative financial instruments, and an increase in provisions for future credit impairments to be included
in our policy liabilities. This could result in losses potentially above our long-term expected levels.
|
◾
|
We have experienced downgrades across some industries in our portfolio which may continue in subsequent quarters. The general
fund portfolio is constructed through credit selection criteria and is diversified with the majority of the portfolio rated investment grade which helps to mitigate risks associated with the current economic downturn. Our approach includes
seeking investments which perform more favourably in the longer term, throughout economic
|
and business cycles, but there can be no assurance these or other strategies taken to address adverse impacts related to the
COVID-19 pandemic will be successful.
|
Change in insurance contract liabilities, net of reinsurance
|
||||||||||||||||
For the three and nine months ended September 30, 2020
($ millions)
|
Total
|
Attributed to
Participating
policyholders’
account(1)
|
Attributed to
shareholders’
account
|
Change in net
Income
attributed to
shareholders
(post-tax)
|
||||||||||||
Canada variable annuity product review
|
$
|
(42
|
)
|
$
|
-
|
$
|
(42
|
)
|
$
|
31
|
||||||
Mortality and morbidity updates
|
(304
|
)
|
(1
|
)
|
(303
|
)
|
232
|
|||||||||
Lapses and policyholder behaviour
|
893
|
-
|
893
|
(682
|
)
|
|||||||||||
Investment-related updates
|
(212
|
)
|
(153
|
)
|
(59
|
)
|
31
|
|||||||||
Other updates
|
228
|
455
|
(227
|
)
|
190
|
|||||||||||
Net impact
|
$
|
563
|
$
|
301
|
$
|
262
|
$
|
(198
|
)
|
(1)
|
The change in insurance contract liabilities, net of reinsurance, attributable to the participating policyholders’
account was driven by refinements to our valuation models, primarily due to annual updates to reflect market movements in the first half of 2020.
|
Increase (decrease) in after-tax net income attributed to
shareholders
|
||||||||||||||||
As at
|
September 30, 2020
|
December 31, 2019
|
||||||||||||||
($ millions)
|
Increase
|
Decrease
|
Increase
|
Decrease
|
||||||||||||
Asset related assumptions updated periodically in valuation basis changes
|
||||||||||||||||
100 basis point change in future annual returns for public equities(1)
|
$
|
500
|
$
|
(500
|
)
|
$
|
500
|
$
|
(500
|
)
|
||||||
100 basis point change in future annual returns for ALDA(2)
|
4,300
|
(5,200
|
)
|
3,800
|
(4,400
|
)
|
||||||||||
100 basis point change in equity volatility assumption for stochastic segregated fund modelling(3)
|
(200
|
)
|
200
|
(300
|
)
|
300
|
(1)
|
The sensitivity to public equity returns above includes the impact on both segregated fund guarantee reserves and on other policy
liabilities. Expected long-term annual market growth assumptions for public equities are based on long-term historical observed experience and compliance with actuarial standards. As at September 30, 2020, the growth rates inclusive of
dividends in the major markets used in the stochastic valuation models for valuing segregated fund guarantees are 9.2% per annum in Canada, 9.6% per annum in the U.S. and 6.2% per annum in Japan. Growth assumptions for European equity funds
are market-specific and vary between 8.3% and 9.9%.
|
(2)
|
ALDA include commercial real estate, timber, farmland, direct oil and gas properties, and private equities, some of which relate to oil and gas. Expected
long-term return assumptions for ALDA and public equity are set in accordance with the Standards of Practice for the valuation of insurance contract liabilities and guidance published by the CIA. Annual best estimate return assumptions for
ALDA and public equity include market growth rates and annual income, such as rent, production proceeds and dividends, and will vary based on our holding period. Over a 20-year horizon, our best estimate return assumptions range between
5.25% and 11.65%, with an average of 9.3% based on the current asset mix backing our guaranteed insurance and annuity business as of September 30, 2020. Our return assumptions including the margins for adverse deviations in our valuation,
which take into account the uncertainty of achieving the returns, range between 2.5% and 7.5%, with an average of 6.1% based on the asset mix backing our guaranteed insurance and annuity business as of September 30, 2020.
|
(3)
|
Volatility assumptions for public equities are based on long-term historical observed experience and compliance with actuarial
standards. The resulting volatility assumptions are 16.5% per annum in Canada and 17.1% per annum in the U.S. for large-cap public equities, and 19.1% per annum in Japan. For European equity funds, the volatility varies between 16.3% and
17.7%.
|
1.
|
Expected earnings on in-force policies, including expected release of provisions for adverse deviation, fee income, margins
on group business and spread business such as Manulife Bank and asset fund management.
|
2.
|
Macro hedging costs based on expected market returns.
|
3.
|
New business strain and gains.
|
4.
|
Policyholder experience gains or losses.
|
5.
|
Acquisition and operating expenses compared with expense assumptions used in the measurement of policy liabilities.
|
6.
|
Up to $400 million of net favourable investment-related experience reported in a single year, which are referred to as “core
investment gains”. This means up to $100 million in the first quarter, up to $200 million on a year-to-date basis in the second quarter, up to $300 million on a year-to-date basis in the third quarter and up to $400 million on a full
year basis in the fourth quarter. Any investment-related experience losses reported in a quarter will be offset against the net year-to-date investment-related experience gains with the difference being
included in core earnings subject to a maximum of the year-to-date core investment gains and a minimum of zero, which reflects our expectation that investment-related experience will be positive through-the-business cycle. To the
extent any investment-related experience losses cannot be fully offset in a quarter they will be carried forward to be offset against investment-related experience gains in subsequent quarters in the same year, for purposes of
determining core investment gains. Investment-related experience relates to fixed income investing, ALDA returns, credit experience and asset mix changes other than those related to a strategic change. An example of a
strategic asset mix change is outlined below.
|
•
|
This favourable and unfavourable investment-related experience is a combination of reported investment experience as well as
the impact of investing activities on the measurement of our policy liabilities. We do not attribute specific components of investment-related experience to amounts included or excluded from core earnings.
|
•
|
The $400 million threshold represents the estimated average annualized amount of net favourable investment-related experience
that the Company reasonably expects to achieve through-the-business cycle based on historical experience. It is not a forecast of expected net favourable investment-related experience for any given fiscal year.
|
•
|
Our average net annualized investment-related experience calculated from the introduction of core earnings in 2012 to the end
of 2019 was $527 million (2012 to the end of 2018 was $493 million).
|
•
|
The decision announced on December 22, 2017 to reduce the allocation to ALDA in the portfolio asset mix supporting our legacy
businesses was the first strategic asset mix change since we introduced the core earnings metric in 2012. We refined our description of investment-related experience in 2017 to note that asset mix changes
other than those related to a strategic change are taken into consideration in the investment-related experience component of core investment gains.
|
•
|
While historical investment return time horizons may vary in length based on underlying asset classes generally exceeding 20
years, for purposes of establishing the threshold, we look at a business cycle that is five or more years
|
and includes a recession. We monitor the appropriateness of the threshold as part of our annual five-year planning process and would adjust it, either to a higher or lower amount, in the future if we believed that our threshold was no longer appropriate. |
•
|
Specific criteria used for evaluating a potential adjustment to the threshold may include, but are not limited to, the extent to
which actual investment-related experience differs materially from actuarial assumptions used in measuring insurance contract liabilities, material market events, material dispositions or acquisitions of assets, and regulatory or accounting
changes.
|
7.
|
Earnings on surplus other than mark-to-market items. Gains on available-for-sale (“AFS”) equities and seed money investments in
segregated and mutual funds are included in core earnings.
|
8.
|
Routine or non-material legal settlements.
|
9.
|
All other items not specifically excluded.
|
10.
|
Tax on the above items.
|
11.
|
All tax related items except the impact of enacted or substantively enacted income tax rate changes.
|
1.
|
The direct impact of equity markets and interest rates and variable annuity guarantee liabilities includes the items listed
below.
|
•
|
The earnings impact of the difference between the net increase (decrease) in variable annuity liabilities that are dynamically
hedged and the performance of the related hedge assets. Our variable annuity dynamic hedging strategy is not designed to completely offset the sensitivity of insurance and investment contract liabilities to all risks or measurements
associated with the guarantees embedded in these products for a number of reasons, including; provisions for adverse deviation, fund performance, the portion of the interest rate risk that is not dynamically hedged, realized equity and
interest rate volatilities and changes to policyholder behaviour.
|
•
|
Gains (charges) on variable annuity guarantee liabilities not dynamically hedged.
|
•
|
Gains (charges) on general fund equity investments supporting policy liabilities and on fee income.
|
•
|
Gains (charges) on macro equity hedges relative to expected costs. The expected cost of macro hedges is calculated using the
equity assumptions used in the valuation of insurance and investment contract liabilities.
|
•
|
Gains (charges) on higher (lower) fixed income reinvestment rates assumed in the valuation of insurance and investment contract
liabilities.
|
•
|
Gains (charges) on sale of AFS bonds and open derivatives not in hedging relationships in the Corporate and Other segment.
|
2.
|
Net favourable investment-related experience in excess of $400 million per annum or net unfavourable investment-related
experience on a year-to-date basis.
|
3.
|
Mark-to-market gains or losses on assets held in the Corporate and Other segment other than gains on AFS equities and seed money
investments in new segregated or mutual funds.
|
4.
|
Changes in actuarial methods and assumptions. As noted in the “Critical actuarial and accounting policies” section of our 2019
MD&A, policy liabilities for IFRS are valued in Canada under standards established by the Actuarial Standards Board. The standards require a comprehensive review of actuarial methods and assumptions to be performed annually. The review
is designed to reduce the Company’s exposure to uncertainty by ensuring assumptions for both asset related and liability related risks remain appropriate and is accomplished by monitoring experience and selecting assumptions which represent
a current best estimate view of expected future experience, and margins that are appropriate for the risks assumed. Changes related to ultimate reinvestment rates (“URR”) are included in the direct impact of equity markets and interest
rates and variable annuity guarantee liabilities. By excluding the results of the annual reviews, core earnings assist investors in evaluating our operational performance and comparing our operational performance from period to period with
other global insurance companies because the associated gain or loss is not reflective of current year performance and not reported in net income in most actuarial standards outside of Canada.
|
5.
|
The impact on the measurement of policy liabilities of changes in product features or new reinsurance transactions, if material.
|
6.
|
Goodwill impairment charges.
|
7.
|
Gains or losses on disposition of a business.
|
8.
|
Material one-time only adjustments, including highly unusual/extraordinary and material legal settlements or other items that
are material and exceptional in nature.
|
9.
|
Tax on the above items.
|
10.
|
Impact of enacted or substantially enacted income tax rate changes.
|
Quarterly Results
|
YTD Results
|
|||||||||||||||||||||||||||||||||||||||
($ millions, unaudited)
|
3Q20
|
2Q20
|
1Q20
|
4Q19
|
3Q19
|
2Q19
|
1Q19
|
4Q18
|
2020
|
2019
|
||||||||||||||||||||||||||||||
Core earnings (loss)
|
||||||||||||||||||||||||||||||||||||||||
Asia
|
$
|
559
|
$
|
489
|
$
|
491
|
$
|
494
|
$
|
520
|
$
|
471
|
$
|
520
|
$
|
463
|
$
|
1,539
|
$
|
1,511
|
||||||||||||||||||||
Canada
|
279
|
342
|
237
|
288
|
318
|
312
|
283
|
305
|
858
|
913
|
||||||||||||||||||||||||||||||
U.S.
|
498
|
602
|
416
|
489
|
471
|
441
|
475
|
454
|
1,516
|
1,387
|
||||||||||||||||||||||||||||||
Global Wealth and Asset Management
|
308
|
238
|
250
|
265
|
281
|
242
|
233
|
231
|
796
|
756
|
||||||||||||||||||||||||||||||
Corporate and Other (excluding core
investment gains)
|
(191
|
)
|
(110
|
)
|
(366
|
)
|
(159
|
)
|
(163
|
)
|
(114
|
)
|
(63
|
)
|
(216
|
)
|
(667
|
)
|
(340
|
)
|
||||||||||||||||||||
Core investment gains
|
-
|
-
|
-
|
100
|
100
|
100
|
100
|
100
|
-
|
300
|
||||||||||||||||||||||||||||||
Total core earnings
|
1,453
|
1,561
|
1,028
|
1,477
|
1,527
|
1,452
|
1,548
|
1,337
|
4,042
|
4,527
|
||||||||||||||||||||||||||||||
Items to reconcile core earnings (loss)
to net income (loss) attributed to
shareholders:
|
||||||||||||||||||||||||||||||||||||||||
Investment-related experience
outside of core earnings
|
147
|
(916
|
)
|
(608
|
)
|
182
|
(289
|
)
|
146
|
327
|
(130
|
)
|
(1,377
|
)
|
184
|
|||||||||||||||||||||||||
Direct impact of equity markets and
interest rates and variable annuity
guarantee liabilities
|
390
|
73
|
792
|
(389
|
)
|
(494
|
)
|
(144
|
)
|
249
|
(675
|
)
|
1,255
|
(389
|
)
|
|||||||||||||||||||||||||
Change in actuarial methods and
assumptions
|
(198
|
)
|
-
|
-
|
-
|
(21
|
)
|
-
|
-
|
-
|
(198
|
)
|
(21
|
)
|
||||||||||||||||||||||||||
Reinsurance transactions
|
276
|
9
|
12
|
(34
|
)
|
-
|
63
|
52
|
142
|
297
|
115
|
|||||||||||||||||||||||||||||
Restructuring charge
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(63
|
)
|
-
|
-
|
|||||||||||||||||||||||||||||
Tax-related items and other
|
-
|
-
|
72
|
(8
|
)
|
-
|
(42
|
)
|
-
|
(18
|
)
|
72
|
(42
|
)
|
||||||||||||||||||||||||||
Net income (loss) attributed to
shareholders
|
$
|
2,068
|
$
|
727
|
$
|
1,296
|
$
|
1,228
|
$
|
723
|
$
|
1,475
|
$
|
2,176
|
$
|
593
|
$
|
4,091
|
$
|
4,374
|
Quarterly Results
|
YTD Results
|
|||||||||||||||||||||||||||||||||||||||
($ millions, unaudited)
|
3Q20
|
2Q20
|
1Q20
|
4Q19
|
3Q19
|
2Q19
|
1Q19
|
4Q18
|
2020
|
2019
|
||||||||||||||||||||||||||||||
Asia core earnings(1)
|
$
|
559
|
$
|
489
|
$
|
491
|
$
|
494
|
$
|
520
|
$
|
471
|
$
|
520
|
$
|
463
|
$
|
1,539
|
$
|
1,511
|
||||||||||||||||||||
Items to reconcile core earnings to
net income (loss) attributed to
shareholders:
|
||||||||||||||||||||||||||||||||||||||||
Investment-related experience
outside of core earnings
|
81
|
(40
|
)
|
50
|
46
|
(13
|
)
|
47
|
116
|
99
|
91
|
150
|
||||||||||||||||||||||||||||
Direct impact of equity markets and
interest rates and variable annuity
guarantee liabilities
|
44
|
(81
|
)
|
(458
|
)
|
96
|
(372
|
)
|
(42
|
)
|
59
|
(244
|
)
|
(495
|
)
|
(355
|
)
|
|||||||||||||||||||||||
Change in actuarial methods and
assumptions
|
(41
|
)
|
-
|
-
|
-
|
(7
|
)
|
-
|
-
|
-
|
(41
|
)
|
(7
|
)
|
||||||||||||||||||||||||||
Reinsurance transactions
|
8
|
9
|
12
|
-
|
-
|
-
|
-
|
-
|
29
|
-
|
||||||||||||||||||||||||||||||
Net income (loss) attributed to
shareholders(1)
|
$
|
651
|
$
|
377
|
$
|
95
|
$
|
636
|
$
|
128
|
$
|
476
|
$
|
695
|
$
|
318
|
$
|
1,123
|
$
|
1,299
|
(1)
|
2018 core earnings and net income (loss) attributed to shareholders have been updated to reflect
the 2019 methodology for allocating capital and interest on surplus to our insurance segments from the Corporate and Other segment.
|
Quarterly Results
|
YTD Results
|
|||||||||||||||||||||||||||||||||||||||
($ millions, unaudited)
|
3Q20
|
2Q20
|
1Q20
|
4Q19
|
3Q19
|
2Q19
|
1Q19
|
4Q18
|
2020
|
2019
|
||||||||||||||||||||||||||||||
Canada core earnings(1)
|
$
|
279
|
$
|
342
|
$
|
237
|
$
|
288
|
$
|
318
|
$
|
312
|
$
|
283
|
$
|
305
|
$
|
858
|
$
|
913
|
||||||||||||||||||||
Items to reconcile core earnings to net
income (loss) attributed to
shareholders:
|
||||||||||||||||||||||||||||||||||||||||
Investment-related experience
outside of core earnings
|
(28
|
)
|
(186
|
)
|
(378
|
)
|
69
|
(47
|
)
|
2
|
453
|
(143
|
)
|
(592
|
)
|
408
|
||||||||||||||||||||||||
Direct impact of equity markets and
interest rates and variable
annuity guarantee liabilities
|
(43
|
)
|
(14
|
)
|
(725
|
)
|
(97
|
)
|
(335
|
)
|
7
|
11
|
(234
|
)
|
(782
|
)
|
(317
|
)
|
||||||||||||||||||||||
Change in actuarial methods and
assumptions
|
77
|
-
|
-
|
-
|
(108
|
)
|
-
|
-
|
-
|
77
|
(108
|
)
|
||||||||||||||||||||||||||||
Reinsurance transactions
|
6
|
-
|
-
|
(34
|
)
|
-
|
-
|
4
|
-
|
6
|
4
|
|||||||||||||||||||||||||||||
Tax-related items and other
|
-
|
-
|
-
|
-
|
-
|
(4
|
)
|
-
|
(2
|
)
|
-
|
(4
|
)
|
|||||||||||||||||||||||||||
Net income (loss) attributed to
shareholders(1)
|
$
|
291
|
$
|
142
|
$
|
(866
|
)
|
$
|
226
|
$
|
(172
|
)
|
$
|
317
|
$
|
751
|
$
|
(74
|
)
|
$
|
(433
|
)
|
$
|
896
|
(1)
|
2018 core earnings and net income (loss) attributed to shareholders have been updated to reflect
the 2019 methodology for allocating capital and interest on surplus to our insurance segments from the Corporate and Other segment.
|
Quarterly Results
|
YTD Results
|
|||||||||||||||||||||||||||||||||||||||
($ millions, unaudited)
|
3Q20
|
2Q20
|
1Q20
|
4Q19
|
3Q19
|
2Q19
|
1Q19
|
4Q18
|
2020
|
2019
|
||||||||||||||||||||||||||||||
U.S. core earnings(1)
|
$
|
498
|
$
|
602
|
$
|
416
|
$
|
489
|
$
|
471
|
$
|
441
|
$
|
475
|
$
|
454
|
$
|
1,516
|
$
|
1,387
|
||||||||||||||||||||
Items to reconcile core earnings to net
income (loss) attributed to
shareholders:
|
||||||||||||||||||||||||||||||||||||||||
Investment-related experience
outside of core earnings
|
121
|
(682
|
)
|
(266
|
)
|
177
|
(134
|
)
|
166
|
(143
|
)
|
15
|
(827
|
)
|
(111
|
)
|
||||||||||||||||||||||||
Direct impact of equity markets and
interest rates and variable
annuity guarantee liabilities
|
311
|
(1,500
|
)
|
1,702
|
(515
|
)
|
(66
|
)
|
(173
|
)
|
61
|
(95
|
)
|
513
|
(178
|
)
|
||||||||||||||||||||||||
Change in actuarial methods and
assumptions
|
(301
|
)
|
-
|
-
|
-
|
71
|
-
|
-
|
-
|
(301
|
)
|
71
|
||||||||||||||||||||||||||||
Reinsurance transactions
|
262
|
-
|
-
|
-
|
-
|
63
|
48
|
142
|
262
|
111
|
||||||||||||||||||||||||||||||
Tax-related items and other
|
-
|
-
|
-
|
(8
|
)
|
-
|
5
|
-
|
(3
|
)
|
-
|
5
|
||||||||||||||||||||||||||||
Net income (loss) attributed to
shareholders(1)
|
$
|
891
|
$
|
(1,580
|
)
|
$
|
1,852
|
$
|
143
|
$
|
342
|
$
|
502
|
$
|
441
|
$
|
513
|
$
|
1,163
|
$
|
1,285
|
(1)
|
2018 core earnings and net income (loss) attributed to shareholders have been updated to reflect the 2019 methodology for allocating
capital and interest on surplus to our insurance segments from the Corporate and Other segment.
|
Quarterly Results
|
YTD Results
|
|||||||||||||||||||||||||||||||||||||||
($ millions, unaudited)
|
3Q20
|
2Q20
|
1Q20
|
4Q19
|
3Q19
|
2Q19
|
1Q19
|
4Q18
|
2020
|
2019
|
||||||||||||||||||||||||||||||
Global WAM core earnings
|
$
|
308
|
$
|
238
|
$
|
250
|
$
|
265
|
$
|
281
|
$
|
242
|
$
|
233
|
$
|
231
|
$
|
796
|
$
|
756
|
||||||||||||||||||||
Items to reconcile core earnings to net
income (loss) attributed to shareholders:
|
||||||||||||||||||||||||||||||||||||||||
Tax-related items and other
|
-
|
-
|
-
|
-
|
-
|
1
|
-
|
(13
|
)
|
-
|
1
|
|||||||||||||||||||||||||||||
Net income (loss) attributed to
shareholders
|
$
|
308
|
$
|
238
|
$
|
250
|
$
|
265
|
$
|
281
|
$
|
243
|
$
|
233
|
$
|
218
|
$
|
796
|
$
|
757
|
Quarterly Results
|
YTD Results
|
|||||||||||||||||||||||||||||||||||||||
($ millions, unaudited)
|
3Q20
|
2Q20
|
1Q20
|
4Q19
|
3Q19
|
2Q19
|
1Q19
|
4Q18
|
2020
|
2019
|
||||||||||||||||||||||||||||||
Corporate and Other core income
(loss) (excluding core
investment gains)(1)
|
$
|
(191
|
)
|
$
|
(110
|
)
|
$
|
(366
|
)
|
$
|
(159
|
)
|
$
|
(163
|
)
|
$
|
(114
|
)
|
$
|
(63
|
)
|
$
|
(216
|
)
|
$
|
(667
|
)
|
$
|
(340
|
)
|
||||||||||
Core investment gains (loss)
|
-
|
-
|
-
|
100
|
100
|
100
|
100
|
100
|
-
|
300
|
||||||||||||||||||||||||||||||
Total core earnings (loss)
|
(191
|
)
|
(110
|
)
|
(366
|
)
|
(59
|
)
|
(63
|
)
|
(14
|
)
|
37
|
(116
|
)
|
(667
|
)
|
(40
|
)
|
|||||||||||||||||||||
Other items to reconcile core earnings
(loss) to net income (loss) attributed
to shareholders:
|
||||||||||||||||||||||||||||||||||||||||
Investment-related experience
outside of core earnings
|
(27
|
)
|
(8
|
)
|
(14
|
)
|
(110
|
)
|
(95
|
)
|
(69
|
)
|
(99
|
)
|
(101
|
)
|
(49
|
)
|
(263
|
)
|
||||||||||||||||||||
Direct impact of equity markets and
interest rates
|
78
|
1,668
|
273
|
127
|
279
|
64
|
118
|
(102
|
)
|
2,019
|
461
|
|||||||||||||||||||||||||||||
Changes in actuarial methods and
assumptions
|
67
|
-
|
-
|
-
|
23
|
-
|
-
|
-
|
67
|
23
|
||||||||||||||||||||||||||||||
Tax-related items and other
|
-
|
-
|
72
|
-
|
-
|
(44
|
)
|
-
|
-
|
72
|
(44
|
)
|
||||||||||||||||||||||||||||
Restructuring charge
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(63
|
)
|
-
|
-
|
|||||||||||||||||||||||||||||
Net income (loss) attributed to
shareholders(1)
|
$
|
(73
|
)
|
$
|
1,550
|
$
|
(35
|
)
|
$
|
(42
|
)
|
$
|
144
|
$
|
(63
|
)
|
$
|
56
|
$
|
(382
|
)
|
$
|
1,442
|
$
|
137
|
(1)
|
The Corporate and Other segment includes earnings on assets backing capital net of amounts allocated to operating
segments. 2018 core income (loss) (excluding core investment gains) and net income (loss) attributed to shareholders have been updated to reflect the 2019 methodology for allocating capital and interest on surplus to our insurance segments
from the Corporate and Other segment.
|
Assets under management and administration
|
||||||||||||
As at
|
September 30,
|
June 30,
|
September 30,
|
|||||||||
($ millions)
|
2020
|
2020
|
2019
|
|||||||||
Total invested assets
|
$
|
414,234
|
$
|
413,864
|
$
|
380,115
|
||||||
Segregated funds net assets
|
351,408
|
342,043
|
336,621
|
|||||||||
Assets under management per financial statements
|
765,642
|
755,907
|
716,736
|
|||||||||
Mutual funds
|
221,118
|
213,125
|
207,371
|
|||||||||
Institutional advisory accounts (excluding segregated funds)
|
105,499
|
108,036
|
93,102
|
|||||||||
Other funds
|
9,914
|
9,722
|
8,916
|
|||||||||
Total assets under management
|
1,102,173
|
1,086,790
|
1,026,125
|
|||||||||
Other assets under administration
|
155,211
|
149,511
|
140,425
|
|||||||||
Currency impact
|
-
|
(16,544
|
)
|
9,056
|
||||||||
AUMA at constant exchange rates
|
$
|
1,257,384
|
$
|
1,219,757
|
$
|
1,175,606
|
Consolidated capital
|
||||||||||||
As at
|
September 30,
|
June 30,
|
September 30,
|
|||||||||
($ millions)
|
2020
|
2020
|
2019
|
|||||||||
Total equity
|
$
|
53,884
|
$
|
53,476
|
$
|
50,770
|
||||||
Add AOCI loss on cash flow hedges
|
300
|
329
|
217
|
|||||||||
Add qualifying capital instruments
|
7,915
|
7,950
|
8,143
|
|||||||||
Consolidated capital
|
$
|
62,099
|
$
|
61,755
|
$
|
59,130
|
Quarterly Results
|
||||||||||||||||||||||||||||||||
($ millions, unless otherwise stated, unaudited)
|
3Q20
|
2Q20
|
1Q20
|
4Q19
|
3Q19
|
2Q19
|
1Q19
|
4Q18
|
||||||||||||||||||||||||
Core EBITDA
|
$
|
446
|
$
|
381
|
$
|
390
|
$
|
391
|
$
|
404
|
$
|
375
|
$
|
366
|
$
|
362
|
||||||||||||||||
Amortization of deferred acquisition
costs and other depreciation
|
(80
|
)
|
(81
|
)
|
(80
|
)
|
(78
|
)
|
(78
|
)
|
(79
|
)
|
(76
|
)
|
(77
|
)
|
||||||||||||||||
Amortization of deferred sales
commissions
|
(21
|
)
|
(22
|
)
|
(22
|
)
|
(19
|
)
|
(19
|
)
|
(20
|
)
|
(23
|
)
|
(22
|
)
|
||||||||||||||||
Core earnings before income taxes
|
345
|
278
|
288
|
294
|
307
|
276
|
267
|
263
|
||||||||||||||||||||||||
Core income tax (expense) recovery
|
(37
|
)
|
(40
|
)
|
(38
|
)
|
(29
|
)
|
(26
|
)
|
(34
|
)
|
(34
|
)
|
(32
|
)
|
||||||||||||||||
Core earnings
|
$
|
308
|
$
|
238
|
$
|
250
|
$
|
265
|
$
|
281
|
$
|
242
|
$
|
233
|
$
|
231
|
||||||||||||||||
Core EBITDA
|
$
|
446
|
$
|
381
|
$
|
390
|
$
|
391
|
$
|
404
|
$
|
375
|
$
|
366
|
$
|
362
|
||||||||||||||||
Revenue
|
$
|
1,465
|
$
|
1,361
|
$
|
1,426
|
$
|
1,433
|
$
|
1,409
|
$
|
1,395
|
$
|
1,358
|
$
|
1,371
|
||||||||||||||||
Core EBITDA Margin
|
30.4
|
%
|
28.0
|
%
|
27.3
|
%
|
27.3
|
%
|
28.7
|
%
|
26.9
|
%
|
27.0
|
%
|
26.4
|
%
|
As at and for the three months ended
|
Sept 30,
|
Jun 30,
|
Mar 31,
|
Dec 31,
|
Sept 30,
|
Jun 30,
|
Mar 31,
|
Dec 31,
|
||||||||||||||||||||||||
($ millions, except per share amounts or
otherwise stated, unaudited)
|
2020
|
2020
|
2020
|
2019
|
2019
|
2019
|
2019
|
2018
|
||||||||||||||||||||||||
Revenue
|
||||||||||||||||||||||||||||||||
Premium income
|
||||||||||||||||||||||||||||||||
Life and health insurance(1)
|
$
|
5,302
|
$
|
7,560
|
$
|
8,454
|
$
|
8,373
|
$
|
8,309
|
$
|
7,696
|
$
|
8,077
|
$
|
7,724
|
||||||||||||||||
Annuities and pensions(2)
|
704
|
673
|
901
|
865
|
1,026
|
995
|
237
|
(5,892
|
)
|
|||||||||||||||||||||||
Net premium income
|
6,006
|
8,233
|
9,355
|
9,238
|
9,335
|
8,691
|
8,314
|
1,832
|
||||||||||||||||||||||||
Investment income
|
3,521
|
5,262
|
3,284
|
4,004
|
3,932
|
3,710
|
3,747
|
3,278
|
||||||||||||||||||||||||
Realized and unrealized gains and losses on
assets supporting insurance and investment
contract liabilities(3)
|
1,100
|
11,626
|
4,558
|
(4,503
|
)
|
6,592
|
7,185
|
8,926
|
1,113
|
|||||||||||||||||||||||
Other revenue
|
2,749
|
2,365
|
2,980
|
2,433
|
2,770
|
2,634
|
2,562
|
2,291
|
||||||||||||||||||||||||
Total revenue
|
$
|
13,376
|
$
|
27,486
|
$
|
20,177
|
$
|
11,172
|
$
|
22,629
|
$
|
22,220
|
$
|
23,549
|
$
|
8,514
|
||||||||||||||||
Income (loss) before income taxes
|
$
|
2,170
|
$
|
832
|
$
|
1,704
|
$
|
1,225
|
$
|
715
|
$
|
1,756
|
$
|
2,524
|
$
|
359
|
||||||||||||||||
Income tax (expense) recovery
|
(381
|
)
|
7
|
(597
|
)
|
(89
|
)
|
(100
|
)
|
(240
|
)
|
(289
|
)
|
(43
|
)
|
|||||||||||||||||
Net income (loss)
|
$
|
1,789
|
$
|
839
|
$
|
1,107
|
$
|
1,136
|
$
|
615
|
$
|
1,516
|
$
|
2,235
|
$
|
316
|
||||||||||||||||
Net income (loss) attributed to shareholders
|
$
|
2,068
|
$
|
727
|
$
|
1,296
|
$
|
1,228
|
$
|
723
|
$
|
1,475
|
$
|
2,176
|
$
|
593
|
||||||||||||||||
Reconciliation of core earnings to net
income attributed to shareholders
|
||||||||||||||||||||||||||||||||
Total core earnings(4)
|
$
|
1,453
|
$
|
1,561
|
$
|
1,028
|
$
|
1,477
|
$
|
1,527
|
$
|
1,452
|
$
|
1,548
|
$
|
1,337
|
||||||||||||||||
Other items to reconcile net income attributed
to shareholders to core earnings(5): |
||||||||||||||||||||||||||||||||
Investment-related experience outside of
core earnings
|
147
|
(916
|
)
|
(608
|
)
|
182
|
(289
|
)
|
146
|
327
|
(130
|
)
|
||||||||||||||||||||
Direct impact of equity markets, interest
rates and variable annuity guarantee liabilities
|
390
|
73
|
792
|
(389
|
)
|
(494
|
)
|
(144
|
)
|
249
|
(675
|
)
|
||||||||||||||||||||
Change in actuarial methods and assumptions
|
(198
|
)
|
-
|
-
|
-
|
(21
|
)
|
-
|
-
|
-
|
||||||||||||||||||||||
Reinsurance transactions
|
276
|
9
|
12
|
(34
|
)
|
-
|
63
|
52
|
142
|
|||||||||||||||||||||||
Restructuring charge
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(63
|
)
|
|||||||||||||||||||||||
Tax-related items and other
|
-
|
-
|
72
|
(8
|
)
|
-
|
(42
|
)
|
-
|
(18
|
)
|
|||||||||||||||||||||
Net income (loss) attributed to shareholders
|
$
|
2,068
|
$
|
727
|
$
|
1,296
|
$
|
1,228
|
$
|
723
|
$
|
1,475
|
$
|
2,176
|
$
|
593
|
||||||||||||||||
Basic earnings (loss) per common share
|
$
|
1.04
|
$
|
0.35
|
$
|
0.64
|
$
|
0.61
|
$
|
0.35
|
$
|
0.73
|
$
|
1.09
|
$
|
0.28
|
||||||||||||||||
Diluted earnings (loss) per common share
|
$
|
1.04
|
$
|
0.35
|
$
|
0.64
|
$
|
0.61
|
$
|
0.35
|
$
|
0.73
|
$
|
1.08
|
$
|
0.28
|
||||||||||||||||
Segregated funds deposits
|
$
|
9,158
|
$
|
8,784
|
$
|
11,215
|
$
|
9,417
|
$
|
9,160
|
$
|
9,398
|
$
|
10,586
|
$
|
9,212
|
||||||||||||||||
Total assets (in billions)
|
$
|
876
|
$
|
866
|
$
|
831
|
$
|
809
|
$
|
812
|
$
|
790
|
$
|
780
|
$
|
750
|
||||||||||||||||
Weighted average common shares
(in millions)
|
1,940
|
1,939
|
1,943
|
1,948
|
1,961
|
1,965
|
1,965
|
1,980
|
||||||||||||||||||||||||
Diluted weighted average common shares
(in millions)
|
1,942
|
1,941
|
1,947
|
1,953
|
1,965
|
1,969
|
1,969
|
1,983
|
||||||||||||||||||||||||
Dividends per common share
|
$
|
0.280
|
$
|
0.280
|
$
|
0.280
|
$
|
0.250
|
$
|
0.250
|
$
|
0.250
|
$
|
0.250
|
$
|
0.250
|
||||||||||||||||
CDN$ to US$1 - Statement of Financial
Position
|
1.3339
|
1.3628
|
1.4187
|
1.2988
|
1.3243
|
1.3087
|
1.3363
|
1.3642
|
||||||||||||||||||||||||
CDN$ to US$1 - Statement of Income
|
1.3321
|
1.3854
|
1.3449
|
1.3200
|
1.3204
|
1.3377
|
1.3295
|
1.3204
|
(1)
|
Includes ceded premiums related to the reinsurance of a block of our legacy U.S. Bank-Owned Life Insurance of US$2.4 billion in 3Q20.
|
(2)
|
Includes ceded premiums related to the reinsurance of a block of our legacy U.S. payout annuities of US$0.5 billion in 1Q19 and US$5.3 billion in 4Q18.
|
(3)
|
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 gains and losses on the assets is largely offset in the change in insurance and investment contract liabilities.
|
(4)
|
Core earnings is a non-GAAP measure. See “Performance and non-GAAP measures” above.
|
(5)
|
For explanations of other items, see “Items excluded from core earnings” table in section A1 “Profitability” and for an operating segment split of these
items see the 8 quarter trend tables in “Performance and non-GAAP measures” which reconcile net income (loss) attributed to shareholders to core earnings.
|
Consolidated Statements of Financial Position
|
||||||||
As at
|
||||||||
(Canadian $ in millions, unaudited)
|
September 30, 2020
|
December 31, 2019
|
||||||
Assets
|
||||||||
Cash and short-term securities
|
$
|
26,970
|
$
|
20,300
|
||||
Debt securities
|
222,944
|
198,122
|
||||||
Public equities
|
21,705
|
22,851
|
||||||
Mortgages
|
50,541
|
49,376
|
||||||
Private placements
|
40,785
|
37,979
|
||||||
Policy loans
|
6,844
|
6,471
|
||||||
Loans to bank clients
|
1,941
|
1,740
|
||||||
Real estate
|
13,305
|
12,928
|
||||||
Other invested assets
|
29,199
|
28,760
|
||||||
Total invested assets (note 3)
|
414,234
|
378,527
|
||||||
Other assets
|
||||||||
Accrued investment income
|
2,437
|
2,416
|
||||||
Outstanding premiums
|
1,456
|
1,385
|
||||||
Derivatives (note 4)
|
33,551
|
19,449
|
||||||
Reinsurance assets
|
48,208
|
41,446
|
||||||
Deferred tax assets
|
4,753
|
4,574
|
||||||
Goodwill and intangible assets
|
10,170
|
9,975
|
||||||
Miscellaneous
|
10,194
|
8,250
|
||||||
Total other assets
|
110,769
|
87,495
|
||||||
Segregated funds net assets (note 14)
|
351,408
|
343,108
|
||||||
Total assets
|
$
|
876,411
|
$
|
809,130
|
||||
Liabilities and Equity
|
||||||||
Liabilities
|
||||||||
Insurance contract liabilities (note 5)
|
$
|
392,086
|
$
|
351,161
|
||||
Investment contract liabilities (note 5)
|
3,239
|
3,104
|
||||||
Deposits from bank clients
|
21,290
|
21,488
|
||||||
Derivatives (note 4)
|
17,752
|
10,284
|
||||||
Deferred tax liabilities
|
2,749
|
1,972
|
||||||
Other liabilities
|
19,631
|
16,244
|
||||||
456,747
|
404,253
|
|||||||
Long-term debt (note 7)
|
6,457
|
4,543
|
||||||
Capital instruments (note 8)
|
7,915
|
7,120
|
||||||
Segregated funds net liabilities (note 14)
|
351,408
|
343,108
|
||||||
Total liabilities
|
822,527
|
759,024
|
||||||
Equity
|
||||||||
Preferred shares (note 9)
|
3,822
|
3,822
|
||||||
Common shares (note 9)
|
23,034
|
23,127
|
||||||
Contributed surplus
|
259
|
254
|
||||||
Shareholders' retained earnings
|
17,693
|
15,488
|
||||||
Shareholders' accumulated other comprehensive income (loss):
|
||||||||
Pension and other post-employment plans
|
(467
|
)
|
(350
|
)
|
||||
Available-for-sale securities
|
2,619
|
1,511
|
||||||
Cash flow hedges
|
(300
|
)
|
(143
|
)
|
||||
Real estate revaluation surplus
|
30
|
31
|
||||||
Translation of foreign operations
|
6,587
|
5,398
|
||||||
Total shareholders' equity
|
53,277
|
49,138
|
||||||
Participating policyholders' equity
|
(791
|
)
|
(243
|
)
|
||||
Non-controlling interests
|
1,398
|
1,211
|
||||||
Total equity
|
53,884
|
50,106
|
||||||
Total liabilities and equity
|
$
|
876,411
|
$
|
809,130
|
||||
The accompanying notes are an integral part of these unaudited Interim Consolidated Financial Statements.
|
||||||||
![]() |
![]() |
|||||||
Roy Gori
|
John Cassaday
|
|||||||
President and Chief Executive Officer
|
Chairman of the Board of Directors
|
Consolidated Statements of Income
|
||||||||||||||||
For the
|
three months ended
September 30,
|
nine months ended
September 30,
|
||||||||||||||
(Canadian $ in millions except per share amounts, unaudited)
|
2020
|
2019
|
2020
|
2019
|
||||||||||||
Revenue
|
||||||||||||||||
Premium income
|
||||||||||||||||
Gross premiums
|
$
|
10,376
|
$
|
10,508
|
$
|
30,639
|
$
|
30,524
|
||||||||
Premiums ceded to reinsurers (note 5)
|
(4,370
|
)
|
(1,173
|
)
|
(7,045
|
)
|
(4,184
|
)
|
||||||||
Net premiums
|
6,006
|
9,335
|
23,594
|
26,340
|
||||||||||||
Investment income (note 3)
|
||||||||||||||||
Investment income
|
3,521
|
3,932
|
12,067
|
11,389
|
||||||||||||
Realized and unrealized gains (losses) on assets supporting insurance
and investment contract liabilities and on the macro hedge program
|
1,100
|
6,592
|
17,284
|
22,703
|
||||||||||||
Net investment income (loss)
|
4,621
|
10,524
|
29,351
|
34,092
|
||||||||||||
Other revenue (note 10)
|
2,749
|
2,770
|
8,094
|
7,966
|
||||||||||||
Total revenue
|
13,376
|
22,629
|
61,039
|
68,398
|
||||||||||||
Contract benefits and expenses
|
||||||||||||||||
To contract holders and beneficiaries
|
||||||||||||||||
Gross claims and benefits (note 5)
|
7,346
|
6,920
|
22,543
|
21,376
|
||||||||||||
Increase (decrease) in insurance contract liabilities
|
7,101
|
13,003
|
31,911
|
34,439
|
||||||||||||
Increase (decrease) in investment contract liabilities
|
29
|
26
|
133
|
136
|
||||||||||||
Benefits and expenses ceded to reinsurers
|
(1,550
|
)
|
(802
|
)
|
(5,184
|
)
|
(3,781
|
)
|
||||||||
(Increase) decrease in reinsurance assets (note 5)
|
(5,858
|
)
|
(1,579
|
)
|
(5,566
|
)
|
(1,540
|
)
|
||||||||
Net benefits and claims
|
7,068
|
17,568
|
43,837
|
50,630
|
||||||||||||
General expenses
|
1,853
|
1,925
|
5,542
|
5,620
|
||||||||||||
Investment expenses
|
395
|
388
|
1,301
|
1,206
|
||||||||||||
Commissions
|
1,518
|
1,582
|
4,452
|
4,655
|
||||||||||||
Interest expense
|
281
|
348
|
916
|
994
|
||||||||||||
Net premium taxes
|
91
|
103
|
285
|
298
|
||||||||||||
Total contract benefits and expenses
|
11,206
|
21,914
|
56,333
|
63,403
|
||||||||||||
Income before income taxes
|
2,170
|
715
|
4,706
|
4,995
|
||||||||||||
Income tax (expense) recovery
|
(381
|
)
|
(100
|
)
|
(971
|
)
|
(629
|
)
|
||||||||
Net income
|
$
|
1,789
|
$
|
615
|
$
|
3,735
|
$
|
4,366
|
||||||||
Net income (loss) attributed to:
|
||||||||||||||||
Non-controlling interests
|
$
|
117
|
$
|
13
|
$
|
193
|
$
|
164
|
||||||||
Participating policyholders
|
(396
|
)
|
(121
|
)
|
(549
|
)
|
(172
|
)
|
||||||||
Shareholders
|
2,068
|
723
|
4,091
|
4,374
|
||||||||||||
$
|
1,789
|
$
|
615
|
$
|
3,735
|
$
|
4,366
|
|||||||||
Net income attributed to shareholders
|
$
|
2,068
|
$
|
723
|
$
|
4,091
|
$
|
4,374
|
||||||||
Preferred share dividends
|
(42
|
)
|
(43
|
)
|
(128
|
)
|
(129
|
)
|
||||||||
Common shareholders' net income
|
$
|
2,026
|
$
|
680
|
$
|
3,963
|
$
|
4,245
|
||||||||
Earnings per share
|
||||||||||||||||
Basic earnings per common share (note 9)
|
$
|
1.04
|
$
|
0.35
|
$
|
2.04
|
$
|
2.16
|
||||||||
Diluted earnings per common share (note 9)
|
1.04
|
0.35
|
2.04
|
2.16
|
||||||||||||
Dividends per common share
|
0.28
|
0.25
|
0.84
|
0.75
|
||||||||||||
The accompanying notes are an integral part of these unaudited Interim Consolidated Financial Statements.
|
Consolidated Statements of Comprehensive Income
|
||||||||||||||||
For the
|
three months ended
September 30,
|
nine months ended
September 30,
|
||||||||||||||
(Canadian $ in millions, unaudited)
|
2020
|
2019
|
2020
|
2019
|
||||||||||||
Net income
|
$
|
1,789
|
$
|
615
|
$
|
3,735
|
$
|
4,366
|
||||||||
Other comprehensive income (loss) ("OCI"), net of tax
|
||||||||||||||||
Items that may be subsequently reclassified to net income:
|
||||||||||||||||
Foreign exchange gains (losses) on:
|
||||||||||||||||
Translation of foreign operations
|
(741
|
)
|
280
|
1,364
|
(1,333
|
)
|
||||||||||
Net investment hedges
|
83
|
(23
|
)
|
(175
|
)
|
230
|
||||||||||
Available-for-sale financial securities:
|
||||||||||||||||
Unrealized gains (losses) arising during the period
|
(74
|
)
|
1,082
|
3,055
|
2,941
|
|||||||||||
Reclassification of net realized (gains) losses and impairments to net income
|
(127
|
)
|
(273
|
)
|
(1,942
|
)
|
(342
|
)
|
||||||||
Cash flow hedges:
|
||||||||||||||||
Unrealized gains (losses) arising during the period
|
28
|
(54
|
)
|
(144
|
)
|
(100
|
)
|
|||||||||
Reclassification of realized losses to net income
|
1
|
10
|
(13
|
)
|
10
|
|||||||||||
Share of other comprehensive income (losses) of associates
|
2
|
(1
|
)
|
(1
|
)
|
-
|
||||||||||
Total items that may be subsequently reclassified to net income
|
(828
|
)
|
1,021
|
2,144
|
1,406
|
|||||||||||
Items that will not be reclassified to net income:
|
||||||||||||||||
Change in pension and other post-employment plans
|
36
|
(2
|
)
|
(117
|
)
|
4
|
||||||||||
Real estate revaluation reserve
|
(1
|
)
|
-
|
(1
|
)
|
11
|
||||||||||
Total items that will not be reclassified to net income
|
35
|
(2
|
)
|
(118
|
)
|
15
|
||||||||||
Other comprehensive income (loss), net of tax
|
(793
|
)
|
1,019
|
2,026
|
1,421
|
|||||||||||
Total comprehensive income (loss), net of tax
|
$
|
996
|
$
|
1,634
|
$
|
5,761
|
$
|
5,787
|
||||||||
Total comprehensive income (loss) attributed to:
|
||||||||||||||||
Non-controlling interests
|
$
|
116
|
$
|
13
|
$
|
196
|
$
|
168
|
||||||||
Participating policyholders
|
(394
|
)
|
(123
|
)
|
(548
|
)
|
(174
|
)
|
||||||||
Shareholders
|
1,274
|
1,744
|
6,113
|
5,793
|
Income Taxes included in Other Comprehensive Income
|
||||||||||||||||
For the
|
three months ended
September 30,
|
nine months ended
September 30,
|
||||||||||||||
(Canadian $ in millions, unaudited)
|
2020
|
2019
|
2020
|
2019
|
||||||||||||
Income tax expense (recovery) on:
|
||||||||||||||||
Unrealized foreign exchange gains/losses on translation of foreign operations
|
$
|
(1
|
)
|
$
|
-
|
$
|
-
|
$
|
(1
|
)
|
||||||
Unrealized foreign exchange gains/losses on net investment hedges
|
12
|
9
|
(24
|
)
|
42
|
|||||||||||
Unrealized gains/losses on available-for-sale financial securities
|
(22
|
)
|
246
|
671
|
714
|
|||||||||||
Reclassification of realized gains/losses and recoveries/impairments to net income on
available-for-sale financial securities
|
(28
|
)
|
(82
|
)
|
(525
|
)
|
(103
|
)
|
||||||||
Unrealized gains/losses on cash flow hedges
|
15
|
(16
|
)
|
(40
|
)
|
(26
|
)
|
|||||||||
Reclassification of realized gains/losses to net income on cash flow hedges
|
-
|
3
|
(5
|
)
|
3
|
|||||||||||
Share of other comprehensive income (loss) of associates
|
-
|
-
|
(2
|
)
|
-
|
|||||||||||
Change in pension and other post-employment plans
|
8
|
-
|
(32
|
)
|
2
|
|||||||||||
Total income tax expense (recovery)
|
$
|
(16
|
)
|
$
|
160
|
$
|
43
|
$
|
631
|
|||||||
The accompanying notes are an integral part of these unaudited Interim Consolidated Financial Statements.
|
Consolidated Statements of Changes in Equity
|
||||||||
For the nine months ended September 30,
|
||||||||
(Canadian $ in millions, unaudited)
|
2020
|
2019
|
||||||
Preferred shares
|
||||||||
Balance, beginning of period
|
$
|
3,822
|
$
|
3,822
|
||||
Issued during the period
|
-
|
-
|
||||||
Issuance costs, net of tax
|
-
|
-
|
||||||
Balance, end of period
|
3,822
|
3,822
|
||||||
Common shares
|
||||||||
Balance, beginning of period
|
23,127
|
22,961
|
||||||
Repurchased (note 9)
|
(121
|
)
|
(551
|
)
|
||||
Issued on exercise of stock options and deferred share units
|
28
|
89
|
||||||
Issued under dividend reinvestment and share purchase plans
|
-
|
567
|
||||||
Balance, end of period
|
23,034
|
23,066
|
||||||
Contributed surplus
|
||||||||
Balance, beginning of period
|
254
|
265
|
||||||
Exercise of stock options and deferred share units
|
(5
|
)
|
(17
|
)
|
||||
Stock option expense
|
10
|
8
|
||||||
Impact of deferred tax asset rate change
|
-
|
(2
|
)
|
|||||
Balance, end of period
|
259
|
254
|
||||||
Shareholders' retained earnings
|
||||||||
Balance, beginning of period
|
15,488
|
12,704
|
||||||
Opening adjustment on adoption of IFRS 16
|
-
|
(19
|
)
|
|||||
Net income attributed to shareholders
|
4,091
|
4,374
|
||||||
Common shares repurchased (note 9)
|
(132
|
)
|
(518
|
)
|
||||
Preferred share dividends
|
(128
|
)
|
(129
|
)
|
||||
Common share dividends
|
(1,626
|
)
|
(1,476
|
)
|
||||
Balance, end of period
|
17,693
|
14,936
|
||||||
Shareholders' accumulated other comprehensive income (loss) ("AOCI")
|
||||||||
Balance, beginning of period
|
6,447
|
6,212
|
||||||
Change in unrealized foreign exchange gains (losses) of net foreign operations
|
1,189
|
(1,101
|
)
|
|||||
Change in actuarial gains (losses) on pension and other post-employment plans
|
(117
|
)
|
4
|
|||||
Change in unrealized gains (losses) on available-for-sale financial securities
|
1,109
|
2,595
|
||||||
Change in unrealized gains (losses) on derivative instruments designated as cash flow hedges
|
(157
|
)
|
(90
|
)
|
||||
Change in real estate revaluation reserve
|
(1
|
)
|
11
|
|||||
Share of other comprehensive income (losses) of associates
|
(1
|
)
|
-
|
|||||
Balance, end of period
|
8,469
|
7,631
|
||||||
Total shareholders' equity, end of period
|
53,277
|
49,709
|
||||||
Participating policyholders' equity
|
||||||||
Balance, beginning of period
|
(243
|
)
|
94
|
|||||
Opening adjustment on adoption of IFRS 16
|
-
|
(3
|
)
|
|||||
Net income (loss) attributed to participating policyholders
|
(549
|
)
|
(172
|
)
|
||||
Other comprehensive income (losses) attributed to policyholders
|
1
|
(2
|
)
|
|||||
Balance, end of period
|
(791
|
)
|
(83
|
)
|
||||
Non-controlling interests
|
||||||||
Balance, beginning of period
|
1,211
|
1,093
|
||||||
Net income attributed to non-controlling interests
|
193
|
164
|
||||||
Other comprehensive income (losses) attributed to non-controlling interests
|
3
|
4
|
||||||
Contributions (distributions/disposal), net
|
(9
|
)
|
(117
|
)
|
||||
Balance, end of period
|
1,398
|
1,144
|
||||||
Total equity, end of period
|
$
|
53,884
|
$
|
50,770
|
||||
The accompanying notes are an integral part of these unaudited Interim Consolidated Financial Statements.
|
Consolidated Statements of Cash Flows
|
||||||||
For the nine months ended September 30,
|
||||||||
(Canadian $ in millions, unaudited)
|
2020
|
2019
|
||||||
Operating activities
|
||||||||
Net income
|
$
|
3,735
|
$
|
4,366
|
||||
Adjustments:
|
||||||||
Increase (decrease) in insurance contract liabilities
|
31,911
|
34,439
|
||||||
Increase (decrease) in investment contract liabilities
|
133
|
136
|
||||||
(Increase) decrease in reinsurance assets excluding coinsurance transactions (note 5)
|
(2,677
|
)
|
(828
|
)
|
||||
Amortization of (premium) discount on invested assets
|
103
|
86
|
||||||
Other amortization
|
499
|
464
|
||||||
Net realized and unrealized (gains) losses and impairment on assets
|
(19,546
|
)
|
(24,396
|
)
|
||||
Deferred income tax expense (recovery)
|
431
|
44
|
||||||
Stock option expense
|
10
|
8
|
||||||
Cash provided by operating activities before undernoted items
|
14,599
|
14,319
|
||||||
Changes in policy related and operating receivables and payables
|
(753
|
)
|
565
|
|||||
Cash provided by (used in) operating activities
|
13,846
|
14,884
|
||||||
Investing activities
|
||||||||
Purchases and mortgage advances
|
(83,869
|
)
|
(60,162
|
)
|
||||
Disposals and repayments
|
75,213
|
47,206
|
||||||
Change in investment broker net receivables and payables
|
(235
|
)
|
292
|
|||||
Net cash flows from acquisition and disposal of subsidiaries and businesses
|
-
|
269
|
||||||
Cash provided by (used in) investing activities
|
(8,891
|
)
|
(12,395
|
)
|
||||
Financing activities
|
||||||||
Change in repurchase agreements and securities sold but not yet purchased
|
16
|
462
|
||||||
Issue of long-term debt, net (note 7)
|
2,455
|
-
|
||||||
Redemption of long-term debt
|
(652
|
)
|
-
|
|||||
Issue of capital instruments, net
|
1,990
|
-
|
||||||
Redemption of capital instruments (note 8)
|
(1,250
|
)
|
(500
|
)
|
||||
Secured borrowing
|
1,303
|
-
|
||||||
Changes in deposits from Bank clients, net
|
(212
|
)
|
2,064
|
|||||
Lease payments
|
(99
|
)
|
(85
|
)
|
||||
Shareholders' dividends paid in cash
|
(1,754
|
)
|
(1,038
|
)
|
||||
Contributions from (distributions to) non-controlling interests, net
|
(9
|
)
|
(20
|
)
|
||||
Common shares repurchased (note 9)
|
(253
|
)
|
(1,069
|
)
|
||||
Common shares issued, net (note 9)
|
28
|
89
|
||||||
Cash provided by (used in) financing activities
|
1,563
|
(97
|
)
|
|||||
Cash and short-term securities
|
||||||||
Increase (decrease) during the period
|
6,518
|
2,392
|
||||||
Effect of foreign exchange rate changes on cash and short-term securities
|
136
|
(297
|
)
|
|||||
Balance, beginning of period
|
19,548
|
15,382
|
||||||
Balance, end of period
|
26,202
|
17,477
|
||||||
Cash and short-term securities
|
||||||||
Beginning of period
|
||||||||
Gross cash and short-term securities
|
20,300
|
16,215
|
||||||
Net payments in transit, included in other liabilities
|
(752
|
)
|
(833
|
)
|
||||
Net cash and short-term securities, beginning of period
|
19,548
|
15,382
|
||||||
End of period
|
||||||||
Gross cash and short-term securities
|
26,970
|
18,018
|
||||||
Net payments in transit, included in other liabilities
|
(768
|
)
|
(541
|
)
|
||||
Net cash and short-term securities, end of period
|
$
|
26,202
|
$
|
17,477
|
||||
Supplemental disclosures on cash flow information
|
||||||||
Interest received
|
$
|
8,607
|
$
|
8,533
|
||||
Interest paid
|
842
|
916
|
||||||
Income taxes paid (refund)
|
1,017
|
(288
|
)
|
|||||
The accompanying notes are an integral part of these unaudited Interim Consolidated Financial Statements.
|
Note 1 |
Nature of Operations and Significant Accounting Policies
|
(a)
|
Reporting entity
|
(b)
|
Basis of preparation
|
Note 2 |
Accounting and Reporting Changes
|
(a)
|
Changes in accounting and reporting policy
|
(I)
|
Amendments to IFRS 3 “Business Combinations”
|
(II)
|
Amendments to IAS 1 “Presentation of Financial Statements” and IAS 8 “Accounting
Policies, Changes in Accounting Estimates and Errors”
|
(III)
|
Interest Rate Benchmark Reform Amendments to IFRS 9, IAS 39 and IFRS 7
|
(b)
|
Future accounting and reporting changes
|
(I)
|
IFRS 17 “Insurance Contracts” and IFRS 9 “Financial Instruments”
|
(II)
|
Annual Improvements 2018–2020 Cycle
|
(III)
|
Amendments to IFRS 3 “Business Combinations”
|
(IV)
|
Amendments to IAS 37 “Provisions, Contingent Liabilities and Contingent Assets”
|
(V)
|
Interest Rate Benchmark Reform Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
|
Note 3 |
Invested Assets and Investment Income
|
(a)
|
Carrying values and fair values of invested assets
|
As at September 30, 2020
|
FVTPL(1)
|
AFS(2)
|
Other(3)
|
Total carrying
value
|
Total fair value
|
|||||||||||||||
Cash and short-term securities(4)
|
$
|
2,280
|
$
|
18,719
|
$
|
5,971
|
$
|
26,970
|
$
|
26,970
|
||||||||||
Debt securities(5)
|
||||||||||||||||||||
Canadian government and agency
|
20,865
|
4,164
|
-
|
25,029
|
25,029
|
|||||||||||||||
U.S. government and agency
|
11,343
|
21,392
|
-
|
32,735
|
32,735
|
|||||||||||||||
Other government and agency
|
19,844
|
5,906
|
-
|
25,750
|
25,750
|
|||||||||||||||
Corporate
|
129,474
|
6,565
|
-
|
136,039
|
136,039
|
|||||||||||||||
Mortgage/asset-backed securities
|
3,221
|
170
|
-
|
3,391
|
3,391
|
|||||||||||||||
Public equities
|
20,206
|
1,499
|
-
|
21,705
|
21,705
|
|||||||||||||||
Mortgages
|
-
|
-
|
50,541
|
50,541
|
54,495
|
|||||||||||||||
Private placements
|
-
|
-
|
40,785
|
40,785
|
47,529
|
|||||||||||||||
Policy loans
|
-
|
-
|
6,844
|
6,844
|
6,844
|
|||||||||||||||
Loans to Bank clients
|
-
|
-
|
1,941
|
1,941
|
1,945
|
|||||||||||||||
Real estate
|
||||||||||||||||||||
Own use property
|
-
|
-
|
1,955
|
1,955
|
3,287
|
|||||||||||||||
Investment property
|
-
|
-
|
11,350
|
11,350
|
11,350
|
|||||||||||||||
Other invested assets
|
||||||||||||||||||||
Alternative long-duration assets(6),(7)
|
15,574
|
93
|
9,353
|
25,020
|
25,927
|
|||||||||||||||
Various other
|
149
|
-
|
4,030
|
4,179
|
4,180
|
|||||||||||||||
Total invested assets
|
$
|
222,956
|
$
|
58,508
|
$
|
132,770
|
$
|
414,234
|
$
|
427,176
|
||||||||||
As at December 31, 2019
|
FVTPL(1)
|
AFS(2)
|
Other(3)
|
Total carrying
value
|
Total fair value
|
|||||||||||||||
Cash and short-term securities(4)
|
$
|
1,859
|
$
|
13,084
|
$
|
5,357
|
$
|
20,300
|
$
|
20,300
|
||||||||||
Debt securities(5)
|
||||||||||||||||||||
Canadian government and agency
|
18,582
|
4,779
|
-
|
23,361
|
23,361
|
|||||||||||||||
U.S. government and agency
|
11,031
|
17,221
|
-
|
28,252
|
28,252
|
|||||||||||||||
Other government and agency
|
17,383
|
4,360
|
-
|
21,743
|
21,743
|
|||||||||||||||
Corporate
|
116,044
|
5,285
|
-
|
121,329
|
121,329
|
|||||||||||||||
Mortgage/asset-backed securities
|
3,267
|
170
|
-
|
3,437
|
3,437
|
|||||||||||||||
Public equities
|
20,060
|
2,791
|
-
|
22,851
|
22,851
|
|||||||||||||||
Mortgages
|
-
|
-
|
49,376
|
49,376
|
51,450
|
|||||||||||||||
Private placements
|
-
|
-
|
37,979
|
37,979
|
41,743
|
|||||||||||||||
Policy loans
|
-
|
-
|
6,471
|
6,471
|
6,471
|
|||||||||||||||
Loans to Bank clients
|
-
|
-
|
1,740
|
1,740
|
1,742
|
|||||||||||||||
Real estate
|
||||||||||||||||||||
Own use property
|
-
|
-
|
1,926
|
1,926
|
3,275
|
|||||||||||||||
Investment property
|
-
|
-
|
11,002
|
11,002
|
11,002
|
|||||||||||||||
Other invested assets
|
||||||||||||||||||||
Alternative long-duration assets(6),(7)
|
15,252
|
99
|
9,492
|
24,843
|
25,622
|
|||||||||||||||
Various other
|
149
|
-
|
3,768
|
3,917
|
3,918
|
|||||||||||||||
Total invested assets
|
$
|
203,627
|
$
|
47,789
|
$
|
127,111
|
$
|
378,527
|
$
|
386,496
|
(1)
|
FVTPL classification was elected for securities backing insurance contract liabilities to substantially reduce any accounting mismatch arising from
changes in the fair value of these assets and changes in the value of the related insurance contract liabilities. If this election had not been made and instead the available-for-sale (“AFS”) classification was selected, there would be
an accounting mismatch because changes in insurance contract liabilities are recognized in net income rather than in OCI.
|
(2)
|
Securities that are designated as AFS are not actively traded by the Company, but sales do occur as circumstances warrant. Such sales result in a
reclassification of any accumulated unrealized gain (loss) in AOCI to net income as a realized gain (loss).
|
(3)
|
Primarily includes assets classified as loans and carried at amortized cost, own use and investment properties, equity method accounted investments,
oil and gas investments, and leveraged leases.
|
(4)
|
Includes short-term securities with maturities of less than one year at acquisition amounting to $8,701 (December 31, 2019 – $3,806) cash equivalents
with maturities of less than 90 days at acquisition amounting to $12,298 (December 31, 2019 – $11,137) and cash of $5,971 (December 31, 2019 – $5,357).
|
(5)
|
Debt securities include securities which were acquired with maturities of less than one year and less than 90 days of $954 and $328, respectively
(December 31, 2019 – $537 and $69, respectively).
|
(6)
|
Alternative long-duration assets (“ALDA”) include investments in private equity of $7,313, infrastructure of $8,689, oil and gas of $2,220, timber
and agriculture sectors of $4,797 and various other invested assets of $2,001 (December 31, 2019 – $6,396, $8,854, $3,245, $4,669 and $1,679 respectively).
|
(7)
|
In 2019, the Company sold $1,112 of North American Private Equity investments to Manulife Private Equity Partners, L.P, a closed-end pooled fund of
funds. The Company provides management services to the fund.
|
(b)
|
Investment income
|
three months ended
|
nine months ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
For the
|
2020
|
2019
|
2020
|
2019
|
||||||||||||
Interest income
|
$
|
2,925
|
$
|
2,869
|
$
|
8,711
|
$
|
8,564
|
||||||||
Dividend, rental and other income
|
569
|
620
|
1,643
|
2,035
|
||||||||||||
Impairments, provisions and recoveries, net
|
(136
|
)
|
21
|
(849
|
)
|
68
|
||||||||||
Other
|
163
|
422
|
2,562
|
722
|
||||||||||||
3,521
|
3,932
|
12,067
|
11,389
|
|||||||||||||
Realized and unrealized gains (losses) on assets supporting insurance and
investment contract liabilities and on the macro equity hedging program
|
||||||||||||||||
Debt securities
|
601
|
3,534
|
8,829
|
13,385
|
||||||||||||
Public equities
|
919
|
(3
|
)
|
(31
|
)
|
2,013
|
||||||||||
Mortgages
|
25
|
(39
|
)
|
26
|
(15
|
)
|
||||||||||
Private placements
|
(43
|
)
|
(56
|
)
|
(90
|
)
|
(139
|
)
|
||||||||
Real estate
|
53
|
87
|
(86
|
)
|
402
|
|||||||||||
Other invested assets
|
415
|
(52
|
)
|
(707
|
)
|
632
|
||||||||||
Derivatives, including macro equity hedging program
|
(870
|
)
|
3,121
|
9,343
|
6,425
|
|||||||||||
1,100
|
6,592
|
17,284
|
22,703
|
|||||||||||||
Total investment income
|
$
|
4,621
|
$
|
10,524
|
$
|
29,351
|
$
|
34,092
|
(c)
|
Fair value measurement
|
As at September 30, 2020
|
Total fair value
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Cash and short-term securities
|
||||||||||||||||
FVTPL
|
$
|
2,280
|
$
|
-
|
$
|
2,280
|
$
|
-
|
||||||||
AFS
|
18,719
|
-
|
18,719
|
-
|
||||||||||||
Other
|
5,971
|
5,971
|
-
|
-
|
||||||||||||
Debt securities
|
||||||||||||||||
FVTPL
|
||||||||||||||||
Canadian government and agency
|
20,865
|
-
|
20,865
|
-
|
||||||||||||
U.S. government and agency
|
11,343
|
-
|
11,343
|
-
|
||||||||||||
Other government and agency
|
19,844
|
-
|
19,844
|
-
|
||||||||||||
Corporate
|
129,474
|
-
|
128,887
|
587
|
||||||||||||
Residential mortgage-backed securities
|
12
|
-
|
12
|
-
|
||||||||||||
Commercial mortgage-backed securities
|
1,322
|
-
|
1,322
|
-
|
||||||||||||
Other asset-backed securities
|
1,887
|
-
|
1,845
|
42
|
||||||||||||
AFS
|
||||||||||||||||
Canadian government and agency
|
4,164
|
-
|
4,164
|
-
|
||||||||||||
U.S. government and agency
|
21,392
|
-
|
21,392
|
-
|
||||||||||||
Other government and agency
|
5,906
|
-
|
5,906
|
-
|
||||||||||||
Corporate
|
6,565
|
-
|
6,562
|
3
|
||||||||||||
Residential mortgage-backed securities
|
1
|
-
|
1
|
-
|
||||||||||||
Commercial mortgage-backed securities
|
107
|
-
|
107
|
-
|
||||||||||||
Other asset-backed securities
|
62
|
-
|
62
|
-
|
||||||||||||
Public equities
|
||||||||||||||||
FVTPL
|
20,206
|
20,206
|
-
|
-
|
||||||||||||
AFS
|
1,499
|
1,499
|
-
|
-
|
||||||||||||
Real estate - investment property(1)
|
11,350
|
-
|
-
|
11,350
|
||||||||||||
Other invested assets(2)
|
18,537
|
86
|
-
|
18,451
|
||||||||||||
Segregated funds net assets(3)
|
351,408
|
301,706
|
45,249
|
4,453
|
||||||||||||
Total
|
$
|
652,914
|
$
|
329,468
|
$
|
288,560
|
$
|
34,886
|
As at December 31, 2019
|
Total fair value
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Cash and short-term securities
|
||||||||||||||||
FVTPL
|
$
|
1,859
|
$
|
-
|
$
|
1,859
|
$
|
-
|
||||||||
AFS
|
13,084
|
-
|
13,084
|
-
|
||||||||||||
Other
|
5,357
|
5,357
|
-
|
-
|
||||||||||||
Debt securities
|
||||||||||||||||
FVTPL
|
||||||||||||||||
Canadian government and agency
|
18,582
|
-
|
18,582
|
-
|
||||||||||||
U.S. government and agency
|
11,031
|
-
|
11,031
|
-
|
||||||||||||
Other government and agency
|
17,383
|
-
|
17,383
|
-
|
||||||||||||
Corporate
|
116,044
|
-
|
115,411
|
633
|
||||||||||||
Residential mortgage-backed securities
|
13
|
-
|
13
|
-
|
||||||||||||
Commercial mortgage-backed securities
|
1,271
|
-
|
1,271
|
-
|
||||||||||||
Other asset-backed securities
|
1,983
|
-
|
1,983
|
-
|
||||||||||||
AFS
|
||||||||||||||||
Canadian government and agency
|
4,779
|
-
|
4,779
|
-
|
||||||||||||
U.S. government and agency
|
17,221
|
-
|
17,221
|
-
|
||||||||||||
Other government and agency
|
4,360
|
-
|
4,360
|
-
|
||||||||||||
Corporate
|
5,285
|
-
|
5,270
|
15
|
||||||||||||
Residential mortgage-backed securities
|
1
|
-
|
1
|
-
|
||||||||||||
Commercial mortgage-backed securities
|
102
|
-
|
102
|
-
|
||||||||||||
Other asset-backed securities
|
67
|
-
|
67
|
-
|
||||||||||||
Public equities
|
||||||||||||||||
FVTPL
|
20,060
|
20,060
|
-
|
-
|
||||||||||||
AFS
|
2,791
|
2,788
|
3
|
-
|
||||||||||||
Real estate - investment property(1)
|
11,002
|
-
|
-
|
11,002
|
||||||||||||
Other invested assets(2)
|
18,194
|
91
|
-
|
18,103
|
||||||||||||
Segregated funds net assets(3)
|
343,108
|
293,903
|
44,693
|
4,512
|
||||||||||||
Total
|
$
|
613,577
|
$
|
322,199
|
$
|
257,113
|
$
|
34,265
|
(1)
|
For real estate investment properties, the significant unobservable inputs are capitalization rates (ranging from 2.75% to 8.50%
during the period and ranging from 2.75% to 8.75% during the year 2019) and terminal capitalization rates (ranging from 3.25% to 9.25% during the period and ranging from 3.80% to 9.25% during the year 2019). Holding other factors
constant, a lower capitalization or terminal capitalization rate will tend to increase the fair value of an investment property. Changes in fair value based on variations in unobservable inputs generally cannot be extrapolated because
the relationship between the directional changes of each input is not usually linear.
|
(2)
|
Other invested assets measured at fair value are held primarily in the infrastructure and timber sectors. The significant inputs used in the
valuation of the Company’s infrastructure investments are primarily future distributable cash flows, terminal values and discount rates. Holding other factors constant, an increase to future distributable cash flows or terminal values
would tend to increase the fair value of an infrastructure investment, while an increase in the discount rate would have the opposite effect. Discount rates during the period ranged from 7.00% to 15.6% (for the year ended December 31,
2019 – ranged from 7.00% to 16.5%). Disclosure of distributable cash flow and terminal value ranges are not meaningful given the disparity in estimates by project. The significant inputs used in the valuation of the Company’s
investments in timberland are timber prices and discount rates. Holding other factors constant, an increase to timber prices would tend to increase the fair value of a timberland investment, while an increase in the discount rates would
have the opposite effect. Discount rates during the period ranged from 5.0% to 7.0% (for the year ended December 31, 2019 – ranged from 5.0% to 7.0%). A range of prices for timber is not meaningful as the market price depends on factors
such as property location and proximity to markets and export yards.
|
(3)
|
Segregated funds net assets are measured at fair value. The Company’s Level 3 segregated funds assets are predominantly invested in investment
properties and timberland properties valued as described above.
|
As at September 30, 2020
|
Carrying value
|
Total fair value
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||||
Mortgages
|
$
|
50,541
|
$
|
54,495
|
$
|
-
|
$
|
-
|
$
|
54,495
|
||||||||||
Private placements
|
40,785
|
47,529
|
-
|
41,181
|
6,348
|
|||||||||||||||
Policy loans
|
6,844
|
6,844
|
-
|
6,844
|
-
|
|||||||||||||||
Loans to Bank clients
|
1,941
|
1,945
|
-
|
1,945
|
-
|
|||||||||||||||
Real estate - own use property
|
1,955
|
3,287
|
-
|
-
|
3,287
|
|||||||||||||||
Other invested assets(1)
|
10,662
|
11,570
|
134
|
-
|
11,436
|
|||||||||||||||
Total invested assets disclosed at fair value
|
$
|
112,728
|
$
|
125,670
|
$
|
134
|
$
|
49,970
|
$
|
75,566
|
||||||||||
As at December 31, 2019
|
Carrying value
|
Total fair value
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||||
Mortgages
|
$
|
49,376
|
$
|
51,450
|
$
|
-
|
$
|
-
|
$
|
51,450
|
||||||||||
Private placements
|
37,979
|
41,743
|
-
|
36,234
|
5,509
|
|||||||||||||||
Policy loans
|
6,471
|
6,471
|
-
|
6,471
|
-
|
|||||||||||||||
Loans to Bank clients
|
1,740
|
1,742
|
-
|
1,742
|
-
|
|||||||||||||||
Real estate - own use property
|
1,926
|
3,275
|
-
|
-
|
3,275
|
|||||||||||||||
Other invested assets(1)
|
10,566
|
11,346
|
165
|
-
|
11,181
|
|||||||||||||||
Total invested assets disclosed at fair value
|
$
|
108,058
|
$
|
116,027
|
$
|
165
|
$
|
44,447
|
$
|
71,415
|
(1)
|
Other invested assets disclosed at fair value include $3,517 (December 31, 2019 – $3,371) of leveraged leases
which are disclosed at their carrying values as fair value is not routinely calculated on these investments.
|
For the three months
ended September 30, 2020
|
Balance,
July 1,
2020
|
Total gains
(losses)
included in
net
income(1)
|
Total gains
(losses)
included in
AOCI(2)
|
Purchases
|
Sales
|
Settlements
|
Transfer
in(3),(4)
|
Transfer
out(3),(4)
|
Currency
movement
|
Balance,
September
30, 2020
|
Change in
unrealized
gains
(losses)
on assets
still held
|
|||||||||||||||||||||||||||||||||
Debt securities
|
||||||||||||||||||||||||||||||||||||||||||||
FVTPL
|
||||||||||||||||||||||||||||||||||||||||||||
Corporate
|
$
|
672
|
$
|
54
|
$
|
-
|
$
|
-
|
$
|
(163
|
)
|
$
|
-
|
$
|
37
|
$
|
-
|
$
|
(13
|
)
|
$
|
587
|
$
|
32
|
||||||||||||||||||||
Other asset-backed
securities
|
44
|
(1
|
)
|
-
|
-
|
-
|
-
|
-
|
-
|
(1
|
)
|
42
|
(1
|
)
|
||||||||||||||||||||||||||||||
AFS
|
||||||||||||||||||||||||||||||||||||||||||||
Corporate
|
4
|
(1
|
)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
3
|
-
|
||||||||||||||||||||||||||||||||
Investment property
|
11,171
|
35
|
-
|
209
|
-
|
-
|
40
|
-
|
(105
|
)
|
11,350
|
35
|
||||||||||||||||||||||||||||||||
Other invested assets
|
17,820
|
322
|
3
|
700
|
(10
|
)
|
(139
|
)
|
1
|
(2
|
)
|
(244
|
)
|
18,451
|
330
|
|||||||||||||||||||||||||||||
Total invested assets
|
29,711
|
409
|
3
|
909
|
(173
|
)
|
(139
|
)
|
78
|
(2
|
)
|
(363
|
)
|
30,433
|
396
|
|||||||||||||||||||||||||||||
Derivatives, net
|
4,385
|
231
|
7
|
-
|
-
|
(261
|
)
|
-
|
(266
|
)
|
(85
|
)
|
4,011
|
(18
|
)
|
|||||||||||||||||||||||||||||
Segregated funds net
assets
|
4,395
|
71
|
-
|
33
|
(18
|
)
|
(8
|
)
|
31
|
(1
|
)
|
(50
|
)
|
4,453
|
52
|
|||||||||||||||||||||||||||||
Total
|
$
|
38,491
|
$
|
711
|
$
|
10
|
$
|
942
|
$
|
(191
|
)
|
$
|
(408
|
)
|
$
|
109
|
$
|
(269
|
)
|
$
|
(498
|
)
|
$
|
38,897
|
$
|
430
|
For the three months
ended September 30, 2019
|
Balance,
July 1,
2019
|
Total gains
(losses)
included in
net
income(1)
|
Total gains
(losses)
included in
AOCI(2)
|
Purchases
|
Sales
|
Settlements
|
Transfer
in(3),(4)
|
Transfer
out(3),(4)
|
Currency
movement
|
Balance,
September
30, 2019
|
Change in
unrealized
gains
(losses)
on assets
still held
|
|||||||||||||||||||||||||||||||||
Debt securities
|
||||||||||||||||||||||||||||||||||||||||||||
FVTPL
|
||||||||||||||||||||||||||||||||||||||||||||
Other government &
agency
|
$
|
187
|
$
|
(11
|
)
|
$
|
-
|
$
|
-
|
$
|
(5
|
)
|
$
|
-
|
$
|
-
|
$
|
(178
|
)
|
$
|
7
|
$
|
-
|
$
|
(12
|
)
|
||||||||||||||||||
Corporate
|
930
|
(22
|
)
|
-
|
-
|
(27
|
)
|
(3
|
)
|
-
|
(458
|
)
|
23
|
443
|
(23
|
)
|
||||||||||||||||||||||||||||
Residential mortgage-
backed securities
|
7
|
-
|
-
|
-
|
(1
|
)
|
-
|
-
|
(5
|
)
|
-
|
1
|
-
|
|||||||||||||||||||||||||||||||
AFS
|
||||||||||||||||||||||||||||||||||||||||||||
Other government &
agency
|
42
|
1
|
(3
|
)
|
-
|
(10
|
)
|
-
|
-
|
(31
|
)
|
1
|
-
|
-
|
||||||||||||||||||||||||||||||
Corporate
|
122
|
1
|
(4
|
)
|
1
|
(15
|
)
|
(1
|
)
|
-
|
(93
|
)
|
4
|
15
|
-
|
|||||||||||||||||||||||||||||
Residential mortgage-
backed securities
|
2
|
-
|
-
|
-
|
-
|
-
|
-
|
(1
|
)
|
-
|
1
|
-
|
||||||||||||||||||||||||||||||||
Commercial mortgage-
backed securities
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||||||||
Public equities
|
||||||||||||||||||||||||||||||||||||||||||||
FVTPL
|
3
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
3
|
-
|
|||||||||||||||||||||||||||||||||
Investment property
|
10,866
|
103
|
-
|
69
|
(23
|
)
|
-
|
1
|
-
|
53
|
11,069
|
98
|
||||||||||||||||||||||||||||||||
Other invested assets
|
18,760
|
(75
|
)
|
7
|
690
|
(10
|
)
|
(218
|
)
|
2
|
-
|
142
|
19,298
|
(63
|
)
|
|||||||||||||||||||||||||||||
Total invested assets
|
30,919
|
(3
|
)
|
-
|
760
|
(91
|
)
|
(222
|
)
|
3
|
(766
|
)
|
230
|
30,830
|
-
|
|||||||||||||||||||||||||||||
Derivatives, net
|
1,612
|
1,449
|
4
|
15
|
-
|
30
|
-
|
(224
|
)
|
20
|
2,906
|
1,478
|
||||||||||||||||||||||||||||||||
Segregated funds net
assets
|
4,459
|
4
|
-
|
32
|
(38
|
)
|
2
|
-
|
-
|
28
|
4,487
|
15
|
||||||||||||||||||||||||||||||||
Total
|
$
|
36,990
|
$
|
1,450
|
$
|
4
|
$
|
807
|
$
|
(129
|
)
|
$
|
(190
|
)
|
$
|
3
|
$
|
(990
|
)
|
$
|
278
|
$
|
38,223
|
$
|
1,493
|
(1)
|
Included in net investment income in the Consolidated Statements of Income except for the amount related to segregated funds net assets, where the
amount is recorded in changes in segregated funds net assets, refer to note 14.
|
(2)
|
Included in AOCI in the Consolidated Statements of Financial Position except for the amount related to segregated funds net assets.
|
(3)
|
For assets that are transferred into and/or out of Level 3, the Company uses fair value of the assets at the beginning of period.
|
(4)
|
For derivatives transfer into or out of Level 3, the Company uses fair value at the end of the period and at the beginning of the
period, respectively.
|
For the nine months
ended September 30, 2020
|
Balance,
January 1,
2020
|
Total gains
(losses)
included in
net
income(1)
|
Total gains
(losses)
included in
AOCI(2)
|
Purchases
|
Sales
|
Settlements
|
Transfer
in(3),(4)
|
Transfer
out(3),(4)
|
Currency
movement
|
Balance,
September
30, 2020
|
Change in
unrealized
gains
(losses)
on assets
still held
|
|||||||||||||||||||||||||||||||||
Debt securities
|
||||||||||||||||||||||||||||||||||||||||||||
FVTPL
|
||||||||||||||||||||||||||||||||||||||||||||
Corporate
|
$
|
633
|
$
|
(8
|
)
|
$
|
-
|
$
|
36
|
$
|
(193
|
)
|
$
|
(1
|
)
|
$
|
151
|
$
|
(50
|
)
|
$
|
19
|
$
|
587
|
$
|
90
|
||||||||||||||||||
Other asset-backed
securities
|
-
|
(12
|
)
|
-
|
-
|
-
|
(1
|
)
|
54
|
-
|
1
|
42
|
(4
|
)
|
||||||||||||||||||||||||||||||
AFS
|
||||||||||||||||||||||||||||||||||||||||||||
Corporate
|
15
|
(6
|
)
|
1
|
-
|
-
|
-
|
6
|
(13
|
)
|
-
|
3
|
-
|
|||||||||||||||||||||||||||||||
Investment property
|
11,002
|
(114
|
)
|
-
|
579
|
(331
|
)
|
-
|
40
|
-
|
174
|
11,350
|
(160
|
)
|
||||||||||||||||||||||||||||||
Other invested assets
|
18,103
|
(884
|
)
|
(49
|
)
|
2,009
|
(841
|
)
|
(431
|
)
|
92
|
(2
|
)
|
454
|
18,451
|
(1,298
|
)
|
|||||||||||||||||||||||||||
Total invested assets
|
29,753
|
(1,024
|
)
|
(48
|
)
|
2,624
|
(1,365
|
)
|
(433
|
)
|
343
|
(65
|
)
|
648
|
30,433
|
(1,372
|
)
|
|||||||||||||||||||||||||||
Derivatives, net
|
1,456
|
3,526
|
(47
|
)
|
10
|
-
|
(896
|
)
|
-
|
(85
|
)
|
47
|
4,011
|
2,808
|
||||||||||||||||||||||||||||||
Segregated funds net
assets
|
4,512
|
(84
|
)
|
-
|
19
|
(86
|
)
|
(2
|
)
|
35
|
(3
|
)
|
62
|
4,453
|
2
|
|||||||||||||||||||||||||||||
Total
|
$
|
35,721
|
$
|
2,418
|
$
|
(95
|
)
|
$
|
2,653
|
$
|
(1,451
|
)
|
$
|
(1,331
|
)
|
$
|
378
|
$
|
(153
|
)
|
$
|
757
|
$
|
38,897
|
$
|
1,438
|
For the nine months
ended September 30, 2019
|
Balance,
January 1,
2019
|
Total gains
(losses)
included in
net
income(1)
|
Total gains
(losses)
included in
AOCI(2)
|
Purchases
|
Sales
|
Settlements
|
Transfer
in(3),(4)
|
Transfer
out(3),(4)
|
Currency
movement
|
Balance,
September
30, 2019
|
Change in
unrealized
gains
(losses)
on assets
still held
|
|||||||||||||||||||||||||||||||||
Debt securities
|
||||||||||||||||||||||||||||||||||||||||||||
FVTPL
|
||||||||||||||||||||||||||||||||||||||||||||
Other government &
agency
|
$
|
180
|
$
|
1
|
$
|
-
|
$
|
17
|
$
|
(18
|
)
|
$
|
-
|
$
|
-
|
$
|
(178
|
)
|
$
|
(2
|
)
|
$
|
-
|
$
|
-
|
|||||||||||||||||||
Corporate
|
784
|
32
|
-
|
43
|
(88
|
)
|
(17
|
)
|
162
|
(458
|
)
|
(15
|
)
|
443
|
44
|
|||||||||||||||||||||||||||||
Residential mortgage-
backed securities
|
7
|
-
|
-
|
-
|
(1
|
)
|
-
|
-
|
(5
|
)
|
-
|
1
|
-
|
|||||||||||||||||||||||||||||||
AFS
|
||||||||||||||||||||||||||||||||||||||||||||
Other government &
agency
|
37
|
1
|
-
|
5
|
(12
|
)
|
-
|
-
|
(31
|
)
|
-
|
-
|
-
|
|||||||||||||||||||||||||||||||
Corporate
|
120
|
1
|
(1
|
)
|
14
|
(21
|
)
|
(4
|
)
|
-
|
(93
|
)
|
(1
|
)
|
15
|
-
|
||||||||||||||||||||||||||||
Residential mortgage-
backed securities
|
2
|
-
|
-
|
-
|
-
|
-
|
-
|
(1
|
)
|
-
|
1
|
-
|
||||||||||||||||||||||||||||||||
Commercial mortgage-
backed securities
|
-
|
-
|
-
|
37
|
-
|
-
|
-
|
(37
|
)
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||||
Public equities
|
||||||||||||||||||||||||||||||||||||||||||||
FVTPL
|
3
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
3
|
-
|
|||||||||||||||||||||||||||||||||
Investment property
|
10,761
|
411
|
-
|
208
|
(158
|
)
|
-
|
15
|
-
|
(168
|
)
|
11,069
|
399
|
|||||||||||||||||||||||||||||||
Other invested assets
|
17,562
|
595
|
4
|
2,537
|
(144
|
)
|
(780
|
)
|
2
|
-
|
(478
|
)
|
19,298
|
698
|
||||||||||||||||||||||||||||||
Total invested assets
|
29,456
|
1,041
|
3
|
2,861
|
(442
|
)
|
(801
|
)
|
179
|
(803
|
)
|
(664
|
)
|
30,830
|
1,141
|
|||||||||||||||||||||||||||||
Derivatives, net
|
106
|
2,964
|
35
|
33
|
-
|
(286
|
)
|
149
|
(90
|
)
|
(5
|
)
|
2,906
|
2,838
|
||||||||||||||||||||||||||||||
Segregated funds net
assets
|
4,447
|
90
|
-
|
154
|
(118
|
)
|
(26
|
)
|
-
|
-
|
(60
|
)
|
4,487
|
64
|
||||||||||||||||||||||||||||||
Total
|
$
|
34,009
|
$
|
4,095
|
$
|
38
|
$
|
3,048
|
$
|
(560
|
)
|
$
|
(1,113
|
)
|
$
|
328
|
$
|
(893
|
)
|
$
|
(729
|
)
|
$
|
38,223
|
$
|
4,043
|
(1)
|
These amounts are included in net investment income in the Consolidated Statements of Income except for the amount related to segregated funds net
assets, where the amount is recorded in changes in segregated funds net assets, refer to note 14.
|
(2)
|
These amounts are included in AOCI in the Consolidated Statements of Financial Position.
|
(3)
|
The Company uses fair values of the assets at the beginning of the year for assets transferred into and out of Level 3 except for derivatives, refer
to footnote 4 below.
|
(4)
|
For derivatives transferred into or out of Level 3, the Company uses fair value at the end of the period and at the beginning of
the year, respectively.
|
Note 4 |
Derivative and Hedging Instruments
|
September 30, 2020
|
December 31, 2019
|
||||||||||||||||||||||||
As at
|
Notional
amount
|
Fair value
|
Notional
amount
|
Fair value
|
|||||||||||||||||||||
Type of hedge
|
Instrument type
|
Assets
|
Liabilities
|
Assets
|
Liabilities
|
||||||||||||||||||||
Qualifying hedge accounting relationships
|
|||||||||||||||||||||||||
Fair value hedges
|
Interest rate swaps
|
$
|
100
|
$
|
1
|
$
|
-
|
$
|
350
|
$
|
-
|
$
|
5
|
||||||||||||
Foreign currency
swaps
|
88
|
4
|
3
|
86
|
3
|
1
|
|||||||||||||||||||
Cash flow hedges
|
Foreign currency swaps
|
1,794
|
39
|
569
|
1,790
|
39
|
407
|
||||||||||||||||||
Equity contracts
|
145
|
1
|
15
|
132
|
16
|
-
|
|||||||||||||||||||
Net investment
hedges
|
Foreign currency
contracts
|
598
|
-
|
10
|
2,822
|
7
|
22
|
||||||||||||||||||
Total derivatives in qualifying hedge accounting
relationships
|
2,725
|
45
|
597
|
5,180
|
65
|
435
|
|||||||||||||||||||
Derivatives not designated in qualifying hedge
accounting relationships
|
|||||||||||||||||||||||||
Interest rate swaps
|
291,071
|
26,017
|
14,776
|
283,172
|
15,159
|
8,140
|
|||||||||||||||||||
Interest rate futures
|
16,344
|
-
|
-
|
13,069
|
-
|
-
|
|||||||||||||||||||
Interest rate options
|
12,629
|
879
|
9
|
12,248
|
423
|
-
|
|||||||||||||||||||
Foreign currency swaps
|
31,081
|
751
|
1,985
|
26,329
|
606
|
1,399
|
|||||||||||||||||||
Currency rate futures
|
3,915
|
-
|
-
|
3,387
|
-
|
-
|
|||||||||||||||||||
Forward contracts
|
37,892
|
4,939
|
285
|
33,432
|
2,337
|
273
|
|||||||||||||||||||
Equity contracts
|
15,822
|
917
|
100
|
14,582
|
853
|
37
|
|||||||||||||||||||
Credit default swaps
|
373
|
3
|
-
|
502
|
6
|
-
|
|||||||||||||||||||
Equity futures
|
10,971
|
-
|
-
|
10,576
|
-
|
-
|
|||||||||||||||||||
Total derivatives not designated in qualifying
hedge accounting relationships
|
420,098
|
33,506
|
17,155
|
397,297
|
19,384
|
9,849
|
|||||||||||||||||||
Total derivatives
|
$
|
422,823
|
$
|
33,551
|
$
|
17,752
|
$
|
402,477
|
$
|
19,449
|
$
|
10,284
|
Remaining term to maturity
|
||||||||||||||||||||
As at September 30, 2020
|
Less than
1 year
|
1 to 3
years
|
3 to 5
years
|
Over 5
years
|
Total
|
|||||||||||||||
Derivative assets
|
$
|
1,774
|
$
|
4,148
|
$
|
1,601
|
$
|
26,028
|
$
|
33,551
|
||||||||||
Derivative liabilities
|
297
|
278
|
490
|
16,687
|
17,752
|
|||||||||||||||
Remaining term to maturity
|
||||||||||||||||||||
As at December 31, 2019
|
Less than
1 year
|
1 to 3
years
|
3 to 5
years
|
Over 5
years
|
Total
|
|||||||||||||||
Derivative assets
|
$
|
1,248
|
$
|
1,659
|
$
|
1,309
|
$
|
15,233
|
$
|
19,449
|
||||||||||
Derivative liabilities
|
332
|
145
|
218
|
9,589
|
10,284
|
As at September 30, 2020
|
Fair value
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Derivative assets
|
||||||||||||||||
Interest rate contracts
|
$
|
31,793
|
$
|
-
|
$
|
26,816
|
$
|
4,977
|
||||||||
Foreign exchange contracts
|
837
|
-
|
837
|
-
|
||||||||||||
Equity contracts
|
918
|
-
|
904
|
14
|
||||||||||||
Credit default swaps
|
3
|
-
|
3
|
-
|
||||||||||||
Total derivative assets
|
$
|
33,551
|
$
|
-
|
$
|
28,560
|
$
|
4,991
|
||||||||
Derivative liabilities
|
||||||||||||||||
Interest rate contracts
|
$
|
15,025
|
$
|
-
|
$
|
14,126
|
$
|
899
|
||||||||
Foreign exchange contracts
|
2,612
|
-
|
2,606
|
6
|
||||||||||||
Equity contracts
|
115
|
-
|
40
|
75
|
||||||||||||
Total derivative liabilities
|
$
|
17,752
|
$
|
-
|
$
|
16,772
|
$
|
980
|
||||||||
As at December 31, 2019
|
Fair value
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Derivative assets
|
||||||||||||||||
Interest rate contracts
|
$
|
17,894
|
$
|
-
|
$
|
15,801
|
$
|
2,093
|
||||||||
Foreign exchange contracts
|
680
|
-
|
680
|
-
|
||||||||||||
Equity contracts
|
869
|
-
|
821
|
48
|
||||||||||||
Credit default swaps
|
6
|
-
|
6
|
-
|
||||||||||||
Total derivative assets
|
$
|
19,449
|
$
|
-
|
$
|
17,308
|
$
|
2,141
|
||||||||
Derivative liabilities
|
||||||||||||||||
Interest rate contracts
|
$
|
8,397
|
$
|
-
|
$
|
7,730
|
$
|
667
|
||||||||
Foreign exchange contracts
|
1,850
|
-
|
1,849
|
1
|
||||||||||||
Equity contracts
|
37
|
-
|
20
|
17
|
||||||||||||
Total derivative liabilities
|
$
|
10,284
|
$
|
-
|
$
|
9,599
|
$
|
685
|
Note 5 |
Insurance and Investment Contract Liabilities and Reinsurance Assets
|
(a)
|
Insurance and investment contracts
|
Change in insurance contract liabilities, net of reinsurance
|
||||||||||||||||
For the three and nine months ended September 30, 2020
|
Total
|
Attributed to
participating
policyholders’
account(1)
|
Attributed to
shareholders’
account
|
Change in net
income attributed
to shareholders
(post-tax)
|
||||||||||||
Canada variable annuity product review
|
$
|
(42
|
)
|
$
|
-
|
$
|
(42
|
)
|
$
|
31
|
||||||
Mortality and morbidity updates
|
(304
|
)
|
(1
|
)
|
(303
|
)
|
232
|
|||||||||
Lapses and policyholder behaviour
|
893
|
-
|
893
|
(682
|
)
|
|||||||||||
Investment related updates
|
(212
|
)
|
(153
|
)
|
(59
|
)
|
31
|
|||||||||
Other updates
|
228
|
455
|
(227
|
)
|
190
|
|||||||||||
Net impact
|
$
|
563
|
$
|
301
|
$
|
262
|
$
|
(198
|
)
|
(1)
|
The change in insurance contract liabilities, net of reinsurance, attributable to the participating policyholders’ account was driven by refinements
to the Company’s valuation models, primarily due to annual updates to reflect market movements in the first half of 2020.
|
(i)
|
Canada variable annuity product review
|
(ii)
|
Updates to mortality and morbidity
|
(iii)
|
Updates to lapses and policyholder behaviour
|
(iv)
|
Investment related updates
|
(v)
|
Other updates
|
Change in insurance contract liabilities, net of reinsurance
|
||||||||||||||||
For the three and nine months ended September 30, 2019
|
Total
|
Attributed to
participating
policyholders’
account
|
Attributed to
shareholders’
account
|
Change in net
income attributed
to shareholders
(post-tax)
|
||||||||||||
Long-Term Care triennial review
|
$ |
11
|
$ |
-
|
$ |
11
|
$ |
(8
|
)
|
|||||||
Mortality and morbidity updates
|
|
25
|
|
47
|
|
(22
|
)
|
|
14
|
|||||||
Lapses and policyholder behaviour
|
135
|
17
|
118
|
(75
|
)
|
|||||||||||
Investment return assumptions
|
12
|
81
|
(69
|
)
|
70
|
|||||||||||
Other updates
|
(109
|
)
|
(163
|
)
|
54
|
(22
|
)
|
|||||||||
Net impact
|
$
|
74
|
$
|
(18
|
)
|
$
|
92
|
$
|
(21
|
)
|
(b)
|
Investment contracts – Fair value measurement
|
(c)
|
Gross claims and benefits
|
three months ended
September 30,
|
nine months ended
September 30,
|
|||||||||||||||
For the
|
2020
|
2019
|
2020
|
2019
|
||||||||||||
Death, disability and other claims
|
$
|
4,502
|
$
|
3,690
|
$
|
13,507
|
$
|
11,670
|
||||||||
Maturity and surrender benefits
|
1,917
|
2,068
|
6,399
|
6,367
|
||||||||||||
Annuity payments
|
866
|
990
|
2,691
|
3,023
|
||||||||||||
Policyholder dividends and experience rating refunds
|
398
|
414
|
1,056
|
1,091
|
||||||||||||
Net transfers from segregated funds
|
(337
|
)
|
(242
|
)
|
(1,110
|
)
|
(775
|
)
|
||||||||
Total
|
$
|
7,346
|
$
|
6,920
|
$
|
22,543
|
$
|
21,376
|
(d)
|
Reinsurance transactions
|
Note 6 |
Risk Management
|
(a) |
Risk disclosures included in the Third Quarter’s MD&A
|
(b)
|
Credit risk
|
(I)
|
Credit quality
|
As at September 30, 2020
|
AAA
|
AA
|
A |
BBB
|
BB
|
B and lower
|
Total
|
|||||||||||||||||||||
Commercial mortgages
|
||||||||||||||||||||||||||||
Retail
|
$
|
125
|
$
|
1,400
|
$
|
4,826
|
$
|
2,252
|
$
|
306
|
$
|
1
|
$
|
8,910
|
||||||||||||||
Office
|
70
|
1,491
|
6,080
|
1,075
|
180
|
25
|
8,921
|
|||||||||||||||||||||
Multi-family residential
|
632
|
1,626
|
2,771
|
698
|
35
|
-
|
5,762
|
|||||||||||||||||||||
Industrial
|
26
|
355
|
2,126
|
255
|
3
|
-
|
2,765
|
|||||||||||||||||||||
Other
|
248
|
872
|
887
|
983
|
373
|
7
|
3,370
|
|||||||||||||||||||||
Total commercial
mortgages
|
1,101
|
5,744
|
16,690
|
5,263
|
897
|
33
|
29,728
|
|||||||||||||||||||||
Agricultural mortgages
|
-
|
-
|
135
|
84
|
114
|
-
|
333
|
|||||||||||||||||||||
Private placements
|
1,122
|
4,868
|
15,818
|
15,240
|
1,246
|
2,491
|
40,785
|
|||||||||||||||||||||
Total
|
$
|
2,223
|
$
|
10,612
|
$
|
32,643
|
$
|
20,587
|
$
|
2,257
|
$
|
2,524
|
$
|
70,846
|
||||||||||||||
As at December 31, 2019
|
AAA
|
AA
|
A |
|
BBB
|
BB
|
B and lower
|
Total
|
||||||||||||||||||||
Commercial mortgages
|
||||||||||||||||||||||||||||
Retail
|
$
|
132
|
$
|
1,374
|
$
|
5,285
|
$
|
2,039
|
$
|
10
|
$
|
-
|
$
|
8,840
|
||||||||||||||
Office
|
77
|
1,540
|
5,808
|
1,402
|
26
|
18
|
8,871
|
|||||||||||||||||||||
Multi-family residential
|
640
|
1,585
|
2,397
|
714
|
35
|
-
|
5,371
|
|||||||||||||||||||||
Industrial
|
38
|
364
|
1,820
|
237
|
10
|
-
|
2,469
|
|||||||||||||||||||||
Other
|
260
|
739
|
976
|
1,290
|
-
|
8
|
3,273
|
|||||||||||||||||||||
Total commercial
mortgages
|
1,147
|
5,602
|
16,286
|
5,682
|
81
|
26
|
28,824
|
|||||||||||||||||||||
Agricultural mortgages
|
-
|
27
|
137
|
312
|
-
|
-
|
476
|
|||||||||||||||||||||
Private placements
|
1,098
|
5,513
|
14,311
|
14,139
|
823
|
2,095
|
37,979
|
|||||||||||||||||||||
Total
|
$
|
2,245
|
$
|
11,142
|
$
|
30,734
|
$
|
20,133
|
$
|
904
|
$
|
2,121
|
$
|
67,279
|
As at
|
September 30, 2020
|
December 31, 2019
|
||||||||||||||||||||||
Insured
|
Uninsured
|
Total
|
Insured
|
Uninsured
|
Total
|
|||||||||||||||||||
Residential mortgages
|
||||||||||||||||||||||||
Performing
|
$
|
6,505
|
$
|
13,927
|
$
|
20,432
|
$
|
6,613
|
$
|
13,411
|
$
|
20,024
|
||||||||||||
Non-performing(1)
|
13
|
35
|
48
|
25
|
27
|
52
|
||||||||||||||||||
Loans to Bank clients
|
||||||||||||||||||||||||
Performing
|
n/a
|
1,941
|
1,941
|
n/a
|
1,740
|
1,740
|
||||||||||||||||||
Non-performing(1)
|
n/a
|
-
|
-
|
n/a
|
-
|
-
|
||||||||||||||||||
Total
|
$
|
6,518
|
$
|
15,903
|
$
|
22,421
|
$
|
6,638
|
$
|
15,178
|
$
|
21,816
|
(1)
|
Non-performing refers to assets that are 90 days or more past due.
|
(II)
|
Past due and credit impaired financial assets
|
Past due but not impaired
|
||||||||||||||||||||
As at September 30, 2020
|
Less than 90
days
|
90 days and
greater
|
Total
|
Total impaired
|
Allowance for
credit losses
|
|||||||||||||||
Debt securities
|
||||||||||||||||||||
FVTPL
|
$
|
14
|
$
|
-
|
$
|
14
|
$
|
59
|
$
|
-
|
||||||||||
AFS
|
6
|
1
|
7
|
1
|
-
|
|||||||||||||||
Private placements
|
73
|
5
|
78
|
183
|
79
|
|||||||||||||||
Mortgages and loans to Bank clients
|
54
|
-
|
54
|
69
|
31
|
|||||||||||||||
Other financial assets
|
85
|
33
|
118
|
3
|
-
|
|||||||||||||||
Total
|
$
|
232
|
$
|
39
|
$
|
271
|
$
|
315
|
$
|
110
|
||||||||||
Past due but not impaired
|
||||||||||||||||||||
As at December 31, 2019
|
Less than 90
days
|
90 days and
greater
|
Total
|
Total impaired
|
Allowance for
credit losses
|
|||||||||||||||
Debt securities
|
||||||||||||||||||||
FVTPL
|
$
|
11
|
$
|
-
|
$
|
11
|
$
|
167
|
$
|
-
|
||||||||||
AFS
|
4
|
1
|
5
|
-
|
-
|
|||||||||||||||
Private placements
|
215
|
-
|
215
|
7
|
4
|
|||||||||||||||
Mortgages and loans to Bank clients
|
61
|
-
|
61
|
59
|
16
|
|||||||||||||||
Other financial assets
|
60
|
42
|
102
|
1
|
-
|
|||||||||||||||
Total
|
$
|
351
|
$
|
43
|
$
|
394
|
$
|
234
|
$
|
20
|
(c) |
Securities lending, repurchase and reverse repurchase transactions
|
(d) |
Credit default swaps
|
As at September 30, 2020
|
Notional amount(1)
|
Fair value
|
Weighted average
maturity
(in years)(2)
|
|||||||||
Single name CDS(3),(4) – Corporate debt
|
||||||||||||
A
|
$
|
247
|
$
|
2
|
1
|
|||||||
BBB
|
126
|
1
|
2
|
|||||||||
Total single name CDS
|
$
|
373
|
$
|
3
|
1
|
|||||||
Total CDS protection sold
|
$
|
373
|
$
|
3
|
1
|
As at December 31, 2019
|
Notional amount(1)
|
Fair value
|
Weighted average
maturity
(in years)(2)
|
|||||||||
Single name CDS(3),(4) – Corporate debt
|
||||||||||||
AA
|
$
|
24
|
$
|
-
|
1
|
|||||||
A
|
371
|
5
|
1
|
|||||||||
BBB
|
107
|
1
|
2
|
|||||||||
Total single name CDS
|
$
|
502
|
$
|
6
|
1
|
|||||||
Total CDS protection sold
|
$
|
502
|
$
|
6
|
1
|
(1)
|
Notional amounts represent the maximum future payments the Company would have to pay its counterparties assuming a default of the underlying credit
and zero recovery on the underlying issuer obligation.
|
(2)
|
The weighted average maturity of the CDS is weighted based on notional amounts.
|
(3)
|
Standard & Poor’s assigned credit ratings are used where available followed by Moody’s, DBRS, and Fitch. If no external rating is available, an
internally developed rating is used.
|
(4)
|
The Company held no purchased credit protection.
|
(e) |
Derivatives
|
(f) |
Offsetting financial assets and financial liabilities
|
Related amounts not set off in the Consolidated
Statements of Financial Position
|
||||||||||||||||||||
As at September 30, 2020
|
Gross amounts of
financial instruments(1)
|
Amounts subject to an enforceable
master netting arrangement or
similar agreements
|
Financial and cash
collateral pledged
(received)(2)
|
Net amount
including financing
entities (3)
|
Net amounts
excluding
financing entities
|
|||||||||||||||
Financial assets
|
||||||||||||||||||||
Derivative assets
|
$
|
34,388
|
$
|
(15,662
|
)
|
$
|
(18,702
|
)
|
$
|
24
|
$
|
24
|
||||||||
Securities lending
|
1,174
|
-
|
(1,174
|
)
|
-
|
-
|
||||||||||||||
Reverse repurchase agreements
|
1,101
|
-
|
(1,101
|
)
|
-
|
-
|
||||||||||||||
Total financial assets
|
$
|
36,663
|
$
|
(15,662
|
)
|
$
|
(20,977
|
)
|
$
|
24
|
$
|
24
|
||||||||
Financial liabilities
|
||||||||||||||||||||
Derivative liabilities
|
$
|
(19,082
|
)
|
$
|
15,662
|
$
|
3,025
|
$
|
(395
|
)
|
$
|
(86
|
)
|
|||||||
Repurchase agreements
|
(347
|
)
|
-
|
347
|
-
|
-
|
||||||||||||||
Total financial liabilities
|
$
|
(19,429
|
)
|
$
|
15,662
|
$
|
3,372
|
$
|
(395
|
)
|
$
|
(86
|
)
|
|||||||
Related amounts not set off in the Consolidated
Statements of Financial Position
|
||||||||||||||||||||
As at December 31, 2019
|
Gross amounts of
financial instruments(1)
|
Amounts subject to an enforceable
master netting arrangement or
similar agreements
|
Financial and cash
collateral pledged
(received)(2)
|
Net amount
including financing
entities (3)
|
Net amounts
excluding
financing entities
|
|||||||||||||||
Financial assets
|
||||||||||||||||||||
Derivative assets
|
$
|
20,144
|
$
|
(9,188
|
)
|
$
|
(10,889
|
)
|
$
|
67
|
$
|
67
|
||||||||
Securities lending
|
558
|
-
|
(558
|
)
|
-
|
-
|
||||||||||||||
Reverse repurchase agreements
|
990
|
-
|
(989
|
)
|
1
|
1
|
||||||||||||||
Total financial assets
|
$
|
21,692
|
$
|
(9,188
|
)
|
$
|
(12,436
|
)
|
$
|
68
|
$
|
68
|
||||||||
Financial liabilities
|
||||||||||||||||||||
Derivative liabilities
|
$
|
(11,345
|
)
|
$
|
9,188
|
$
|
1,903
|
$
|
(254
|
)
|
$
|
(53
|
)
|
|||||||
Repurchase agreements
|
(333
|
)
|
-
|
330
|
(3
|
)
|
(3
|
)
|
||||||||||||
Total financial liabilities
|
$
|
(11,678
|
)
|
$
|
9,188
|
$
|
2,233
|
$
|
(257
|
)
|
$
|
(56
|
)
|
(1)
|
Include accrued interest of $843 and $1,330, respectively (December 31, 2019 – $696 and $1,061, respectively).
|
(2)
|
Financial and cash collateral pledged excludes over-collateralization. As at September 30, 2020, the Company was over-collateralized on OTC
derivative assets, OTC derivative liabilities, securities lending and reverse purchase agreements and repurchase agreements in the amounts of $2,320, $619, $65 and $3, respectively (December 31, 2019 – $1,149, $526, $44 and $nil,
respectively). As at September 30, 2020, collateral pledged (received) does not include collateral in transit on OTC instruments or include initial margin on exchange traded contracts or cleared contracts.
|
(3)
|
Includes derivative contracts entered between the Company and its unconsolidated financing entities. The Company does not exchange collateral on
derivative contracts entered with these entities.
|
As at September 30, 2020
|
Gross amounts of
financial instruments
|
Amounts subject to
an enforceable
netting arrangement
|
Net amounts of
financial instruments
|
|||||||||
Credit linked note
|
$
|
912
|
$
|
(912
|
)
|
$
|
-
|
|||||
Variable surplus note
|
(912
|
)
|
912
|
-
|
||||||||
As at December 31, 2019
|
Gross amounts of
financial instruments
|
Amounts subject to
an enforceable
netting arrangement
|
Net amounts of
financial instruments
|
|||||||||
Credit linked note
|
$
|
782
|
$
|
(782
|
)
|
$
|
-
|
|||||
Variable surplus note
|
(782
|
)
|
782
|
-
|
Note 7 |
Long-Term Debt
|
(a)
|
Carrying value of long-term debt instruments
|
September 30,
|
December 31,
|
||||||||||
As at
|
Issue date
|
Maturity date
|
Par value
|
2020
|
2019
|
||||||
3.05% Senior notes(1),(2)
|
August 27, 2020
|
August 27, 2060
|
US$1,155
|
$
|
1,529
|
$
|
-
|
||||
4.70% Senior notes(1)
|
June 23, 2016
|
June 23, 2046
|
US$1,000
|
1,325
|
1,290
|
||||||
5.375% Senior notes(1)
|
March 4, 2016
|
March 4, 2046
|
US$750
|
988
|
962
|
||||||
2.396% Senior notes(3)
|
June 1, 2020
|
June 1, 2027
|
US$200
|
266
|
-
|
||||||
2.484% Senior notes(1),(3)
|
May 19, 2020
|
May 19, 2027
|
US$500
|
662
|
-
|
||||||
3.527% Senior notes(1)
|
December 2, 2016
|
December 2, 2026
|
US$270
|
359
|
350
|
||||||
4.150% Senior notes(1)
|
March 4, 2016
|
March 4, 2026
|
US$1,000
|
1,328
|
1,292
|
||||||
4.90% Senior notes(4)
|
September 17, 2010
|
September 17, 2020
|
US$500
|
-
|
649
|
||||||
Total
|
$
|
6,457
|
$
|
4,543
|
(1)
|
These U.S. dollar senior notes have been designated as hedges of the Company’s net investment in
its U.S. operations which reduces the earnings volatility that would otherwise arise from the re-measurement of these senior notes into Canadian dollars.
|
(2)
|
Issued by MFC during the third quarter, interest is payable semi-annually. The senior notes may be redeemed at the option of MFC in whole, but not in
part, on August 27, 2025, and thereafter on every August 27 at a redemption price equal to par, together with accrued and unpaid interest.
|
(3)
|
Issued by MFC during the second quarter, interest is payable semi-annually. The senior notes may be redeemed in whole or in part at the option of MFC
at any time, at a redemption price equal to the greater of par and a price based on the yield of a corresponding U.S. Treasury bond plus 30 basis points.
|
(4)
|
On September 17, 2020, the 4.90% senior notes matured.
|
(b)
|
Fair value measurement
|
Note 8 |
Capital Instruments
|
(a)
|
Carrying value of capital instruments
|
As at
|
Issue date
|
Earliest par
redemption date
|
Maturity date
|
Par value
|
September 30,
2020
|
December 31,
2019
|
||||||||||||
JHFC Subordinated notes
|
December 14, 2006
|
n/a
|
December 15, 2036
|
$650
|
$
|
647
|
$
|
647
|
||||||||||
2.818% MFC Subordinated debentures(1)
|
May 12, 2020
|
May 13, 2030
|
May 13, 2035
|
$1,000
|
995
|
-
|
||||||||||||
4.061% MFC Subordinated notes(2)
|
February 24, 2017
|
February 24, 2027
|
February 24, 2032
|
US$750
|
996
|
969
|
||||||||||||
2.237% MFC Subordinated debentures(3)
|
May 12, 2020
|
May 12, 2025
|
May 12, 2030
|
$1,000
|
995
|
-
|
||||||||||||
3.00% MFC Subordinated notes
|
November 21, 2017
|
November 21, 2024
|
November 21, 2029
|
S$500
|
486
|
481
|
||||||||||||
3.049% MFC Subordinated debentures
|
August 18, 2017
|
August 20, 2024
|
August 20, 2029
|
$750
|
748
|
747
|
||||||||||||
3.317% MFC Subordinated debentures
|
May 9, 2018
|
May 9, 2023
|
May 9, 2028
|
$600
|
598
|
598
|
||||||||||||
3.181% MLI Subordinated debentures
|
November 20, 2015
|
November 22, 2022
|
November 22, 2027
|
$1,000
|
998
|
998
|
||||||||||||
3.85% MFC Subordinated notes
|
May 25, 2016
|
May 25, 2021
|
May 25, 2026
|
S$500
|
488
|
482
|
||||||||||||
2.389% MLI Subordinated debentures
|
June 1, 2015
|
January 5, 2021
|
January 5, 2026
|
$350
|
350
|
350
|
||||||||||||
2.10% MLI Subordinated debentures(4)
|
March 10, 2015
|
June 1, 2020
|
June 1, 2025
|
$750
|
-
|
750
|
||||||||||||
2.64% MLI Subordinated debentures(4)
|
December 1, 2014
|
January 15, 2020
|
January 15, 2025
|
$500 |
-
|
500
|
||||||||||||
7.375% JHUSA Surplus notes
|
February 25, 1994
|
n/a
|
February 15, 2024
|
US$450
|
614
|
598
|
||||||||||||
Total
|
$
|
7,915
|
$
|
7,120
|
(1)
|
Issued by MFC, interest is payable semi-annually. After May 13, 2030, the interest rate will reset to equal the 90-day Bankers’
Acceptance rate plus 1.82%. With regulatory approval, MFC may redeem the debentures, in whole, or in part, on or after May 13, 2025, at a redemption price together with accrued and unpaid interest. If the redemption date is on or after
May 13, 2025, but prior to May 13, 2030, the redemption price shall be the greater of: (i) the fair value of the debt based on the yield on uncallable Government of Canada bonds with a term to maturity equal to the period between the
date fixed for redemption and May 13, 2030; and (ii) par. If the redemption date is on or after May 13, 2030, the redemption price shall be equal to par.
|
(2)
|
Designated as a hedge of the Company’s net investment in its U.S. operations which reduces the earnings volatility that would otherwise arise from
the re-measurement of the subordinated notes into Canadian dollars.
|
(3)
|
Issued by MFC, interest is payable semi-annually. After May 12, 2025, the interest rate will reset to equal the 90-day Bankers’ Acceptance rate plus
1.49%. With regulatory approval, MFC may redeem the debentures, in whole, or in part, on or after May 12, 2025, at a redemption price equal to par, together with accrued and unpaid interest.
|
(4)
|
MLI redeemed in full the 2.64% and 2.10% subordinated debentures at par, on January 15, 2020 and June 1, 2020 respectively, the
earliest par redemption dates.
|
(b)
|
Fair value measurement
|
Note 9 |
Share Capital and Earnings Per Share
|
(a)
|
Preferred shares
|
Annual
|
Earliest
|
Number of
|
Net amount(3)
|
||||||||||||||||||||||
dividend
|
redemption
|
shares
|
Face
|
September 30,
|
December 31,
|
||||||||||||||||||||
As at
|
Issue date
|
rate(1)
|
date(2)
|
(in millions)
|
amount
|
2020
|
2019
|
||||||||||||||||||
Class A preferred shares
|
|||||||||||||||||||||||||
Series 2
|
February 18, 2005
|
4.65
|
%
|
n/a
|
14
|
$
|
350
|
$
|
344
|
$
|
344
|
||||||||||||||
Series 3
|
January 3, 2006
|
4.50
|
%
|
n/a
|
12
|
300
|
294
|
294
|
|||||||||||||||||
Class 1 preferred shares
|
|||||||||||||||||||||||||
Series 3(4),(5)
|
March 11, 2011
|
2.178
|
%
|
June 19, 2021
|
6
|
158
|
155
|
155
|
|||||||||||||||||
Series 4(6)
|
June 20, 2016
|
floating
|
June 19, 2021
|
2
|
42
|
41
|
41
|
||||||||||||||||||
Series 5(4),(5)
|
December 6, 2011
|
3.891
|
%
|
December 19, 2021
|
8
|
200
|
195
|
195
|
|||||||||||||||||
Series 7(4),(5)
|
February 22, 2012
|
4.312
|
%
|
March 19, 2022
|
10
|
250
|
244
|
244
|
|||||||||||||||||
Series 9(4),(5)
|
May 24, 2012
|
4.351
|
%
|
September 19, 2022
|
10
|
250
|
244
|
244
|
|||||||||||||||||
Series 11(4),(5)
|
December 4, 2012
|
4.731
|
%
|
March 19, 2023
|
8
|
200
|
196
|
196
|
|||||||||||||||||
Series 13(4),(5)
|
June 21, 2013
|
4.414
|
%
|
September 19, 2023
|
8
|
200
|
196
|
196
|
|||||||||||||||||
Series 15(4),(5)
|
February 25, 2014
|
3.786
|
%
|
June 19, 2024
|
8
|
200
|
195
|
195
|
|||||||||||||||||
Series 17(4),(5)
|
August 15, 2014
|
3.80
|
%
|
December 19, 2024
|
14
|
350
|
343
|
343
|
|||||||||||||||||
Series 19(4),(5),(7)
|
December 3, 2014
|
3.675
|
%
|
March 19, 2025
|
10
|
250
|
246
|
246
|
|||||||||||||||||
Series 21(4),(5)
|
February 25, 2016
|
5.60
|
%
|
June 19, 2021
|
17
|
425
|
417
|
417
|
|||||||||||||||||
Series 23(4),(5)
|
November 22, 2016
|
4.85
|
%
|
March 19, 2022
|
19
|
475
|
467
|
467
|
|||||||||||||||||
Series 25(4),(5)
|
February 20, 2018
|
4.70
|
%
|
June 19, 2023
|
10
|
250
|
245
|
245
|
|||||||||||||||||
Total
|
156
|
$
|
3,900
|
$
|
3,822
|
$
|
3,822
|
(1)
|
Holders of Class A and Class 1 preferred shares are entitled to receive non-cumulative
preferential cash dividends on a quarterly basis, as and when declared by the Board of Directors.
|
(2)
|
Redemption of all preferred shares is subject to regulatory approval. MFC may redeem each series, in whole or in part, at par,
on the earliest redemption date or every five years thereafter, except for Class A Series 2, Class A Series 3 and Class 1 Series 4 preferred shares. Class A Series 2 and Series 3 preferred shares are past their respective earliest
redemption date and MFC may redeem these shares, in whole or in part, at par at any time, subject to regulatory approval, as noted. MFC may redeem the Class 1 Series 4, in whole or in part, at any time, at $25.00 per share if redeemed
on June 19, 2021 and on June 19 every five years thereafter, or at $25.50 per share if redeemed on any other date after June 19, 2016, subject to regulatory approval, as noted.
|
(3)
|
Net of after-tax issuance costs.
|
(4)
|
On the earliest redemption date and every five years thereafter, the annual dividend rate will be reset to the five-year Government of Canada bond
yield plus a yield specified for each series. The specified yield for Class 1 shares is: Series 3 – 1.41%, Series 5 – 2.90%, Series 7 – 3.13%, Series 9 – 2.86%, Series 11 – 2.61%, Series 13 – 2.22%, Series 15 – 2.16%, Series 17 – 2.36%,
Series 19 – 2.30%, Series 21 – 4.97%, Series 23 – 3.83% and Series 25 – 2.55%.
|
(5)
|
On the earliest redemption date and every five years thereafter, Class 1 preferred shares are convertible at the option of the holder into a new
series that is one number higher than their existing series, and the holders are entitled to non-cumulative preferential cash dividends, payable quarterly if and when declared by the Board of Directors, at a rate equal to the
three-month Government of Canada Treasury bill yield plus the rate specified in footnote 4 above.
|
(6)
|
The floating dividend rate for the Class 1 Shares Series 4 equals the three-month Government of Canada Treasury bill yield plus
1.41%.
|
(7)
|
MFC did not exercise its right to redeem all or any of the outstanding Class 1 Shares Series 19 on March
19, 2020, the earliest redemption date. The dividend rate was reset as specified in footnote 4 above to an annual fixed rate of 3.675%, for a five-year period commencing on March 20, 2020.
|
(b)
|
Common shares
|
For the
|
nine months ended
|
year ended
|
||||||
Number of common shares (in millions)
|
September 30,2020
|
December 31, 2019
|
||||||
Balance, beginning of period
|
1,949
|
1,971
|
||||||
Repurchased for cancellation
|
(10
|
)
|
(58
|
)
|
||||
Issued under dividend reinvestment plan
|
-
|
31
|
||||||
Issued on exercise of stock options and deferred share units
|
1
|
5
|
||||||
Balance, end of period
|
1,940
|
1,949
|
(c)
|
Earnings per share
|
For the
|
three months ended
September 30,
|
nine months ended
September 30,
|
||||||||||||||
(in millions)
|
2020
|
2019
|
2020
|
2019
|
||||||||||||
Weighted average number of common shares
|
1,940
|
|
|
1,954 |
1,941
|
1,961
|
||||||||||
Dilutive stock-based awards(1)
|
2
|
4
|
2
|
4
|
||||||||||||
Weighted average number of diluted common shares
|
1,942
|
1,958 |
1,943
|
1,965
|
(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.
|
Note 10 |
Revenue from Service Contracts
|
For the three months ended September 30, 2020
|
Asia
|
Canada
|
U.S.
|
Global
WAM
|
Corporate
and Other
|
Total
|
||||||||||||||||||
Investment management and other related fees
|
$
|
45
|
$
|
49
|
$
|
126
|
$
|
705
|
$
|
(59
|
)
|
$
|
866
|
|||||||||||
Transaction processing, administration, and service fees
|
61
|
208
|
4
|
567
|
-
|
840
|
||||||||||||||||||
Distribution fees and other
|
61
|
5
|
23
|
182
|
(15
|
)
|
256
|
|||||||||||||||||
Total included in other revenue
|
167
|
262
|
153
|
1,454
|
(74
|
)
|
1,962
|
|||||||||||||||||
Real estate management services included in net
investment income
|
9
|
37
|
29
|
-
|
2
|
77
|
||||||||||||||||||
Total
|
$
|
176
|
$
|
299
|
$
|
182
|
$
|
1,454
|
$
|
(72
|
)
|
$
|
2,039
|
For the three months ended September 30, 2019
|
Asia
|
Canada
|
U.S.
|
Global
WAM
|
Corporate
and Other
|
Total
|
||||||||||||||||||
Investment management and other related fees
|
$
|
42
|
$
|
43
|
$
|
136
|
$
|
706
|
$
|
(49
|
)
|
$
|
878
|
|||||||||||
Transaction processing, administration, and service fees
|
59
|
209
|
4
|
517
|
1
|
790
|
||||||||||||||||||
Distribution fees and other
|
48
|
13
|
20
|
176
|
(13
|
)
|
244
|
|||||||||||||||||
Total included in other revenue
|
149
|
265
|
160
|
1,399
|
(61
|
)
|
1,912
|
|||||||||||||||||
Real estate management services included in net
investment income
|
9
|
48
|
33
|
-
|
2
|
92
|
||||||||||||||||||
Total
|
$
|
158
|
$
|
313
|
$
|
193
|
$
|
1,399
|
$
|
(59
|
)
|
$
|
2,004
|
For the nine months ended September 30, 2020
|
Asia
|
Canada
|
U.S.
|
Global
WAM
|
Corporate
and Other
|
Total
|
||||||||||||||||||
Investment management and other related fees
|
$
|
130
|
$
|
144
|
$
|
388
|
$
|
2,044
|
$
|
(151
|
)
|
$
|
2,555
|
|||||||||||
Transaction processing, administration, and service fees
|
174
|
603
|
12
|
1,636
|
1
|
2,426
|
||||||||||||||||||
Distribution fees and other
|
158
|
12
|
58
|
536
|
(40
|
)
|
724
|
|||||||||||||||||
Total included in other revenue
|
462
|
759
|
458
|
4,216
|
(190
|
)
|
5,705
|
|||||||||||||||||
Real estate management services included in net
investment income
|
26
|
113
|
100
|
-
|
6
|
245
|
||||||||||||||||||
Total
|
$
|
488
|
$
|
872
|
$
|
558
|
$
|
4,216
|
$
|
(184
|
)
|
$
|
5,950
|
For the nine months ended September 30, 2019
|
Asia
|
Canada
|
U.S.
|
Global
WAM
|
Corporate
and Other
|
Total
|
|||||||||||||||||||
Investment management and other related fees
|
$
|
122
|
$
|
120
|
$
|
407
|
$
|
2,081
|
$
|
(147
|
)
|
$
|
2,583
|
||||||||||||
Transaction processing, administration, and service fees
|
166
|
618
|
12
|
1,517
|
1
|
2,314
|
|||||||||||||||||||
Distribution fees and other
|
148
|
38
|
61
|
527
|
(29
|
)
|
745
|
||||||||||||||||||
Total included in other revenue
|
436
|
776
|
480
|
4,125
|
(175
|
)
|
5,642
|
||||||||||||||||||
Real estate management services included in net
investment income
|
26
|
121
|
101
|
-
|
6
|
254
|
|||||||||||||||||||
Total
|
$
|
462
|
$
|
897
|
$
|
581
|
$
|
4,125
|
$
|
(169
|
)
|
$
|
5,896
|
Note 11 |
Employee Future Benefits
|
Pension plans
|
Retiree welfare plans
|
|||||||||||||||
For the three months ended September 30,
|
2020
|
2019
|
2020
|
2019
|
||||||||||||
Defined benefit current service cost
|
$
|
9
|
$
|
9
|
$
|
-
|
$
|
-
|
||||||||
Defined benefit administrative expenses
|
2
|
2
|
1
|
-
|
||||||||||||
Service cost
|
11
|
11
|
1
|
-
|
||||||||||||
Interest on net defined benefit (asset) liability
|
2
|
4
|
-
|
-
|
||||||||||||
Defined benefit cost
|
13
|
15
|
1
|
-
|
||||||||||||
Defined contribution cost
|
19
|
19
|
-
|
-
|
||||||||||||
Net benefit cost reported in earnings
|
$
|
32
|
$
|
34
|
$
|
1
|
$
|
-
|
||||||||
Actuarial (gain) loss on economic assumption changes
|
$
|
41
|
$
|
-
|
$
|
11
|
$
|
-
|
||||||||
Investment (gain) loss (excluding interest income)
|
(83
|
)
|
-
|
(9
|
)
|
-
|
||||||||||
Remeasurement (gain) loss recorded in AOCI
|
$
|
(42
|
)
|
$
|
-
|
$
|
2
|
$
|
-
|
|||||||
Pension plans
|
Retiree welfare plans
|
|||||||||||||||
For the nine months ended September 30,
|
2020
|
2019
|
2020
|
2019
|
||||||||||||
Defined benefit current service cost
|
$
|
30
|
$
|
30
|
$
|
-
|
$
|
-
|
||||||||
Defined benefit administrative expenses
|
5
|
7
|
1
|
1
|
||||||||||||
Service cost
|
35
|
37
|
1
|
1
|
||||||||||||
Interest on net defined benefit (asset) liability
|
7
|
13
|
-
|
-
|
||||||||||||
Defined benefit cost
|
42
|
50
|
1
|
1
|
||||||||||||
Defined contribution cost
|
65
|
62
|
-
|
-
|
||||||||||||
Net benefit cost reported in earnings
|
$
|
107
|
$
|
112
|
$
|
1
|
$
|
1
|
||||||||
Actuarial (gain) loss on economic assumption changes
|
$
|
281
|
$
|
-
|
$
|
43
|
$
|
-
|
||||||||
Investment (gain) loss (excluding interest income)
|
(146
|
)
|
-
|
(27
|
)
|
-
|
||||||||||
Remeasurement (gain) loss recorded in AOCI
|
$
|
135
|
$
|
-
|
$
|
16
|
$
|
-
|
Note 12 |
Commitments and Contingencies
|
(a)
|
Legal proceedings
|
(b)
|
Guarantees
|
(I)
|
Guarantees regarding Manulife Finance (Delaware), L.P. (“MFLP”)
|
(II)
|
Guarantees regarding The Manufacturers Life Insurance Company
|
For the three months ended September 30, 2020
|
MFC
(Guarantor)
|
MLI
consolidated
|
Other
subsidiaries
of MFC on a
combined
basis
|
Consolidation
adjustments
|
Total
consolidated
amounts
|
MFLP
|
||||||||||||||||||
Total revenue
|
$
|
196
|
$
|
13,389
|
$
|
202
|
$
|
(411
|
)
|
$
|
13,376
|
$
|
5
|
|||||||||||
Net income (loss) attributed to shareholders
|
2,068
|
2,154
|
(193
|
)
|
(1,961
|
)
|
2,068
|
(2
|
)
|
|||||||||||||||
For the three months ended September 30, 2019
|
MFC
(Guarantor)
|
MLI
consolidated
|
Other
subsidiaries
of MFC on a
combined
basis
|
Consolidation
adjustments
|
Total
consolidated
amounts
|
MFLP
|
||||||||||||||||||
Total revenue
|
$
|
148
|
$
|
22,654
|
$
|
153
|
$
|
(326
|
)
|
$
|
22,629
|
$
|
14
|
|||||||||||
Net income (loss) attributed to shareholders
|
723
|
806
|
(147
|
)
|
(659
|
)
|
723
|
4
|
||||||||||||||||
For the nine months ended September 30, 2020
|
MFC
(Guarantor)
|
MLI
consolidated
|
Other
subsidiaries
of MFC on a
combined
basis
|
Consolidation
adjustments
|
Total
consolidated
amounts
|
MFLP
|
||||||||||||||||||
Total revenue
|
$
|
309
|
$
|
61,105
|
$
|
333
|
$
|
(708
|
)
|
$
|
61,039
|
$
|
32
|
|||||||||||
Net income (loss) attributed to shareholders
|
4,091
|
4,359
|
(321
|
)
|
(4,038
|
)
|
4,091
|
6
|
||||||||||||||||
For the nine months ended September 30, 2019
|
MFC
(Guarantor)
|
MLI
consolidated
|
Other subsidiaries
of MFC on a
combined
basis
|
Consolidation
adjustments
|
Total
consolidated
amounts
|
MFLP
|
||||||||||||||||||
Total revenue
|
$
|
290
|
$
|
68,455
|
$
|
276
|
$
|
(623
|
)
|
$
|
68,398
|
$
|
24
|
|||||||||||
Net income (loss) attributed to shareholders
|
4,374
|
4,605
|
(265
|
)
|
(4,340
|
)
|
4,374
|
(1
|
)
|
As at September 30, 2020
|
MFC
(Guarantor)
|
MLI
consolidated
|
Other
subsidiaries of
MFC on a
combined
basis
|
Consolidation
adjustments
|
Total
consolidated
amounts
|
MFLP
|
||||||||||||||||||
Invested assets
|
$
|
38
|
$
|
414,186
|
$
|
10
|
$
|
-
|
$
|
414,234
|
$
|
4
|
||||||||||||
Total other assets
|
98,470
|
114,074
|
60,336
|
(162,111
|
)
|
110,769
|
1,209
|
|||||||||||||||||
Segregated funds net assets
|
-
|
351,408
|
-
|
-
|
351,408
|
-
|
||||||||||||||||||
Insurance contract liabilities
|
-
|
392,086
|
-
|
-
|
392,086
|
-
|
||||||||||||||||||
Investment contract liabilities
|
-
|
3,239
|
-
|
-
|
3,239
|
-
|
||||||||||||||||||
Segregated funds net liabilities
|
-
|
351,408
|
-
|
-
|
351,408
|
-
|
||||||||||||||||||
Total other liabilities
|
45,231
|
66,860
|
60,654
|
(96,951
|
)
|
75,794
|
971
|
|||||||||||||||||
As at December 31, 2019
|
MFC
(Guarantor)
|
MLI
consolidated
|
Other
subsidiaries of
MFC on a
combined
basis
|
Consolidation
adjustments
|
Total
consolidated
amounts
|
MFLP
|
||||||||||||||||||
Invested assets
|
$
|
21
|
$
|
378,496
|
$
|
10
|
$
|
-
|
$
|
378,527
|
$
|
6
|
||||||||||||
Total other assets
|
57,474
|
87,774
|
3
|
(57,756
|
)
|
87,495
|
1,088
|
|||||||||||||||||
Segregated funds net assets
|
-
|
343,108
|
-
|
-
|
343,108
|
-
|
||||||||||||||||||
Insurance contract liabilities
|
-
|
351,161
|
-
|
-
|
351,161
|
-
|
||||||||||||||||||
Investment contract liabilities
|
-
|
3,104
|
-
|
-
|
3,104
|
-
|
||||||||||||||||||
Segregated funds net liabilities
|
-
|
343,108
|
-
|
-
|
343,108
|
-
|
||||||||||||||||||
Total other liabilities
|
8,357
|
53,998
|
-
|
(704
|
)
|
61,651
|
858
|
(III)
|
Guarantees regarding John Hancock Life Insurance Company (U.S.A.) (“JHUSA”)
|
Note 13 |
Segment and Geographic Reporting
|
(a)
|
By Segment
|
For the three months ended
|
Global
|
Corporate
|
||||||||||||||||||||||
September 30, 2020
|
Asia
|
Canada
|
U.S.
|
WAM
|
and Other
|
Total
|
||||||||||||||||||
Revenue
|
||||||||||||||||||||||||
Life and health insurance (1)
|
$
|
4,768
|
$
|
2,218
|
$
|
(1,719
|
)
|
$
|
-
|
$
|
35
|
$
|
5,302
|
|||||||||||
Annuities and pensions
|
616
|
77
|
11
|
-
|
-
|
704
|
||||||||||||||||||
Net premium income
|
5,384
|
2,295
|
(1,708
|
)
|
-
|
35
|
6,006
|
|||||||||||||||||
Net investment income
|
1,637
|
756
|
2,179
|
14
|
35
|
4,621
|
||||||||||||||||||
Other revenue
|
140
|
262
|
927
|
1,451
|
(31
|
)
|
2,749
|
|||||||||||||||||
Total revenue
|
7,161
|
3,313
|
1,398
|
1,465
|
39
|
13,376
|
||||||||||||||||||
Contract benefits and expenses
|
||||||||||||||||||||||||
Life and health insurance
|
4,666
|
2,497
|
(234
|
)
|
-
|
(109
|
)
|
6,820
|
||||||||||||||||
Annuities and pensions
|
699
|
(418
|
)
|
(74
|
)
|
41
|
-
|
248
|
||||||||||||||||
Net benefits and claims
|
5,365
|
2,079
|
(308
|
)
|
41
|
(109
|
)
|
7,068
|
||||||||||||||||
Interest expense
|
67
|
66
|
12
|
-
|
136
|
281
|
||||||||||||||||||
Other expenses
|
1,325
|
766
|
597
|
1,079
|
90
|
3,857
|
||||||||||||||||||
Total contract benefits and expenses
|
6,757
|
2,911
|
301
|
1,120
|
117
|
11,206
|
||||||||||||||||||
Income (loss) before income taxes
|
404
|
402
|
1,097
|
345
|
(78
|
)
|
2,170
|
|||||||||||||||||
Income tax recovery (expense)
|
(78
|
)
|
(65
|
)
|
(206
|
)
|
(37
|
)
|
5
|
(381
|
)
|
|||||||||||||
Net income (loss)
|
326
|
337
|
891
|
308
|
(73
|
)
|
1,789
|
|||||||||||||||||
Less net income (loss) attributed to:
|
||||||||||||||||||||||||
Non-controlling interests
|
117
|
-
|
-
|
-
|
-
|
117
|
||||||||||||||||||
Participating policyholders
|
(442
|
)
|
46
|
-
|
-
|
-
|
(396
|
)
|
||||||||||||||||
Net income (loss) attributed to shareholders
|
$
|
651
|
$
|
291
|
$
|
891
|
$
|
308
|
$
|
(73
|
)
|
$
|
2,068
|
For the three months ended
|
Global
|
Corporate
|
||||||||||||||||||||||
September 30, 2019
|
Asia
|
Canada
|
U.S.
|
WAM
|
and Other
|
Total
|
||||||||||||||||||
Revenue
|
||||||||||||||||||||||||
Life and health insurance
|
$
|
4,420
|
$
|
2,154
|
$
|
1,710
|
$
|
-
|
$
|
25
|
$
|
8,309
|
||||||||||||
Annuities and pensions(2)
|
792
|
74
|
160
|
-
|
-
|
1,026
|
||||||||||||||||||
Net premium income
|
5,212
|
2,228
|
1,870
|
-
|
25
|
9,335
|
||||||||||||||||||
Net investment income
|
1,459
|
2,034
|
6,536
|
9
|
486
|
10,524
|
||||||||||||||||||
Other revenue
|
434
|
262
|
740
|
1,400
|
(66
|
)
|
2,770
|
|||||||||||||||||
Total revenue
|
7,105
|
4,524
|
9,146
|
1,409
|
445
|
22,629
|
||||||||||||||||||
Contract benefits and expenses
|
||||||||||||||||||||||||
Life and health insurance
|
4,819
|
2,536
|
6,877
|
-
|
(32
|
)
|
14,200
|
|||||||||||||||||
Annuities and pensions
|
832
|
1,318
|
1,195
|
23
|
-
|
3,368
|
||||||||||||||||||
Net benefits and claims
|
5,651
|
3,854
|
8,072
|
23
|
(32
|
)
|
17,568
|
|||||||||||||||||
Interest expense
|
60
|
143
|
13
|
2
|
130
|
348
|
||||||||||||||||||
Other expenses
|
1,328
|
809
|
670
|
1,077
|
114
|
3,998
|
||||||||||||||||||
Total contract benefits and expenses
|
7,039
|
4,806
|
8,755
|
1,102
|
212
|
21,914
|
||||||||||||||||||
Income (loss) before income taxes
|
66
|
(282
|
)
|
391
|
307
|
233
|
715
|
|||||||||||||||||
Income tax recovery (expense)
|
(14
|
)
|
73
|
(49
|
)
|
(26
|
)
|
(84
|
)
|
(100
|
)
|
|||||||||||||
Net income (loss)
|
52
|
(209
|
)
|
342
|
281
|
149
|
615
|
|||||||||||||||||
Less net income (loss) attributed to:
|
||||||||||||||||||||||||
Non-controlling interests
|
8
|
-
|
-
|
-
|
5
|
13
|
||||||||||||||||||
Participating policyholders
|
(84
|
)
|
(37
|
)
|
-
|
-
|
-
|
(121
|
)
|
|||||||||||||||
Net income (loss) attributed to shareholders
|
$
|
128
|
$
|
(172
|
)
|
$
|
342
|
$
|
281
|
$
|
144
|
$
|
723
|
As at and for the nine months ended
|
Global
|
Corporate
|
||||||||||||||||||||||
September 30, 2020
|
Asia
|
Canada
|
U.S.
|
WAM
|
and Other
|
Total
|
||||||||||||||||||
Revenue
|
||||||||||||||||||||||||
Life and health insurance (1)
|
$
|
13,353
|
$
|
6,529
|
$
|
1,334
|
$
|
-
|
$
|
100
|
$
|
21,316
|
||||||||||||
Annuities and pensions
|
1,920
|
248
|
110
|
-
|
-
|
2,278
|
||||||||||||||||||
Net premium income
|
15,273
|
6,777
|
1,444
|
-
|
100
|
23,594
|
||||||||||||||||||
Net investment income
|
3,742
|
7,110
|
16,057
|
30
|
2,412
|
29,351
|
||||||||||||||||||
Other revenue
|
1,134
|
745
|
2,164
|
4,222
|
(171
|
)
|
8,094
|
|||||||||||||||||
Total revenue
|
20,149
|
14,632
|
19,665
|
4,252
|
2,341
|
61,039
|
||||||||||||||||||
Contract benefits and expenses
|
||||||||||||||||||||||||
Life and health insurance
|
12,535
|
7,764
|
12,267
|
-
|
(97
|
)
|
32,469
|
|||||||||||||||||
Annuities and pensions
|
2,751
|
4,563
|
3,930
|
124
|
-
|
11,368
|
||||||||||||||||||
Net benefits and claims
|
15,286
|
12,327
|
16,197
|
124
|
(97
|
)
|
43,837
|
|||||||||||||||||
Interest expense
|
201
|
292
|
37
|
1
|
385
|
916
|
||||||||||||||||||
Other expenses
|
3,781
|
2,330
|
1,975
|
3,216
|
278
|
11,580
|
||||||||||||||||||
Total contract benefits and expenses
|
19,268
|
14,949
|
18,209
|
3,341
|
566
|
56,333
|
||||||||||||||||||
Income (loss) before income taxes
|
881
|
(317
|
)
|
1,456
|
911
|
1,775
|
4,706
|
|||||||||||||||||
Income tax recovery (expense)
|
(145
|
)
|
(85
|
)
|
(293
|
)
|
(115
|
)
|
(333
|
)
|
(971
|
)
|
||||||||||||
Net income (loss)
|
736
|
(402
|
)
|
1,163
|
796
|
1,442
|
3,735
|
|||||||||||||||||
Less net income (loss) attributed to:
|
||||||||||||||||||||||||
Non-controlling interests
|
193
|
-
|
-
|
-
|
-
|
193
|
||||||||||||||||||
Participating policyholders
|
(580
|
)
|
31
|
-
|
-
|
-
|
(549
|
)
|
||||||||||||||||
Net income (loss) attributed to shareholders
|
$
|
1,123
|
$
|
(433
|
)
|
$
|
1,163
|
$
|
796
|
$
|
1,442
|
$
|
4,091
|
|||||||||||
Total assets
|
$
|
142,179
|
$
|
165,580
|
$
|
296,101
|
$
|
225,758
|
$
|
46,793
|
$
|
876,411
|
As at and for the nine months ended
|
Global
|
Corporate
|
||||||||||||||||||||||
September 30, 2019
|
Asia
|
Canada
|
U.S.
|
WAM
|
and Other
|
Total
|
||||||||||||||||||
Revenue
|
||||||||||||||||||||||||
Life and health insurance
|
$
|
12,797
|
$
|
6,407
|
$
|
4,802
|
$
|
-
|
$
|
76
|
$
|
24,082
|
||||||||||||
Annuities and pensions(2)
|
2,254
|
272
|
(268
|
)
|
-
|
-
|
2,258
|
|||||||||||||||||
Net premium income
|
15,051
|
6,679
|
4,534
|
-
|
76
|
26,340
|
||||||||||||||||||
Net investment income
|
6,483
|
9,877
|
16,791
|
37
|
904
|
34,092
|
||||||||||||||||||
Other revenue
|
1,018
|
810
|
2,114
|
4,125
|
(101
|
)
|
7,966
|
|||||||||||||||||
Total revenue
|
22,552
|
17,366
|
23,439
|
4,162
|
879
|
68,398
|
||||||||||||||||||
Contract benefits and expenses
|
||||||||||||||||||||||||
Life and health insurance
|
14,394
|
8,341
|
18,402
|
-
|
(43
|
)
|
41,094
|
|||||||||||||||||
Annuities and pensions
|
2,560
|
5,479
|
1,413
|
84
|
-
|
9,536
|
||||||||||||||||||
Net benefits and claims
|
16,954
|
13,820
|
19,815
|
84
|
(43
|
)
|
50,630
|
|||||||||||||||||
Interest expense
|
173
|
389
|
36
|
5
|
391
|
994
|
||||||||||||||||||
Other expenses
|
3,823
|
2,378
|
2,031
|
3,223
|
324
|
11,779
|
||||||||||||||||||
Total contract benefits and expenses
|
20,950
|
16,587
|
21,882
|
3,312
|
672
|
63,403
|
||||||||||||||||||
Income (loss) before income taxes
|
1,602
|
779
|
1,557
|
850
|
207
|
4,995
|
||||||||||||||||||
Income tax recovery (expense)
|
(180
|
)
|
(18
|
)
|
(272
|
)
|
(93
|
)
|
(66
|
)
|
(629
|
)
|
||||||||||||
Net income (loss)
|
1,422
|
761
|
1,285
|
757
|
141
|
4,366
|
||||||||||||||||||
Less net income (loss) attributed to:
|
||||||||||||||||||||||||
Non-controlling interests
|
160
|
-
|
-
|
-
|
4
|
164
|
||||||||||||||||||
Participating policyholders
|
(37
|
)
|
(135
|
)
|
-
|
-
|
-
|
(172
|
)
|
|||||||||||||||
Net income (loss) attributed to shareholders
|
$
|
1,299
|
$
|
896
|
$
|
1,285
|
$
|
757
|
$
|
137
|
$
|
4,374
|
||||||||||||
Total assets
|
$
|
124,619
|
$
|
160,204
|
$
|
279,486
|
$
|
211,602
|
$
|
35,915
|
$
|
811,826
|
(1)
|
During the current quarter, the Company ceded premiums to Global Atlantic Financial Group Ltd to reinsure a block of legacy U.S.
BOLI business. Refer to note 5(d) for details.
|
(2)
|
In 2019, the Company ceded premiums to RGA and Jackson for the JHNY transactions. Refer to note 5(d) for details.
|
(b)
|
By Geographic Location
|
For the three months ended
|
||||||||||||||||||||
September 30, 2020
|
Asia
|
Canada
|
U.S.
|
Other
|
Total
|
|||||||||||||||
Revenue
|
||||||||||||||||||||
Life and health insurance (1)
|
$
|
4,791
|
$
|
2,123
|
$
|
(1,719
|
)
|
$
|
107
|
$
|
5,302
|
|||||||||
Annuities and pensions
|
616
|
77
|
11
|
-
|
704
|
|||||||||||||||
Net premium income
|
5,407
|
2,200
|
(1,708
|
)
|
107
|
6,006
|
||||||||||||||
Net investment income
|
1,669
|
648
|
2,280
|
24
|
4,621
|
|||||||||||||||
Other revenue
|
382
|
695
|
1,665
|
7
|
2,749
|
|||||||||||||||
Total revenue
|
$
|
7,458
|
$
|
3,543
|
$
|
2,237
|
$
|
138
|
$
|
13,376
|
For the three months ended
|
||||||||||||||||||||
September 30, 2019
|
Asia
|
Canada
|
U.S.
|
Other
|
Total
|
|||||||||||||||
Revenue
|
||||||||||||||||||||
Life and health insurance
|
$
|
4,436
|
$
|
2,085
|
$
|
1,710
|
$
|
78
|
$
|
8,309
|
||||||||||
Annuities and pensions(2)
|
792
|
74
|
160
|
-
|
1,026
|
|||||||||||||||
Net premium income
|
5,228
|
2,159
|
1,870
|
78
|
9,335
|
|||||||||||||||
Net investment income
|
1,566
|
2,195
|
6,698
|
65
|
10,524
|
|||||||||||||||
Other revenue
|
638
|
657
|
1,477
|
(2
|
)
|
2,770
|
||||||||||||||
Total revenue
|
$
|
7,432
|
$
|
5,011
|
$
|
10,045
|
$
|
141
|
$
|
22,629
|
For the nine months ended
|
||||||||||||||||||||
September 30, 2020
|
Asia
|
Canada
|
U.S.
|
Other
|
Total
|
|||||||||||||||
Revenue
|
||||||||||||||||||||
Life and health insurance (1)
|
$
|
13,419
|
$
|
6,260
|
$
|
1,335
|
$
|
302
|
$
|
21,316
|
||||||||||
Annuities and pensions
|
1,920
|
248
|
110
|
-
|
2,278
|
|||||||||||||||
Net premium income
|
15,339
|
6,508
|
1,445
|
302
|
23,594
|
|||||||||||||||
Net investment income
|
4,038
|
7,224
|
18,071
|
18
|
29,351
|
|||||||||||||||
Other revenue
|
1,840
|
1,962
|
4,280
|
12
|
8,094
|
|||||||||||||||
Total revenue
|
$
|
21,217
|
$
|
15,694
|
$
|
23,796
|
$
|
332
|
$
|
61,039
|
For the nine months ended
|
||||||||||||||||||||
September 30, 2019
|
Asia
|
Canada
|
U.S.
|
Other
|
Total
|
|||||||||||||||
Revenue
|
||||||||||||||||||||
Life and health insurance
|
$
|
12,847
|
$
|
6,170
|
$
|
4,803
|
$
|
262
|
$
|
24,082
|
||||||||||
Annuities and pensions (2)
|
2,254
|
272
|
(268
|
)
|
-
|
2,258
|
||||||||||||||
Net premium income
|
15,101
|
6,442
|
4,535
|
262
|
26,340
|
|||||||||||||||
Net investment income
|
6,713
|
10,200
|
16,984
|
195
|
34,092
|
|||||||||||||||
Other revenue
|
1,656
|
1,961
|
4,343
|
6
|
7,966
|
|||||||||||||||
Total revenue
|
$
|
23,470
|
$
|
18,603
|
$
|
25,862
|
$
|
463
|
$
|
68,398
|
(1)
|
During the current quarter, the Company ceded premiums to Global Atlantic Financial Group Ltd to reinsure a block of legacy U.S.
BOLI business. Refer to note 5(d) for details.
|
(2)
|
In 2019, the Company ceded premiums to RGA and Jackson for the JHNY transactions. Refer to note 5(d) for details.
|
Note 14 |
Segregated Funds
|
As at
|
September 30,
2020
|
December 31,
2019
|
||||||
Investments at market value
|
||||||||
Cash and short-term securities
|
$
|
4,065
|
$
|
3,364
|
||||
Debt securities
|
17,801
|
16,883
|
||||||
Equities
|
12,615
|
12,989
|
||||||
Mutual funds
|
313,882
|
304,753
|
||||||
Other investments
|
4,718
|
4,785
|
||||||
Accrued investment income
|
293
|
1,678
|
||||||
Other assets and liabilities, net
|
(1,594
|
)
|
(975
|
)
|
||||
Total segregated funds net assets
|
$
|
351,780
|
$
|
343,477
|
||||
Composition of segregated funds net assets
|
||||||||
Held by policyholders
|
$
|
351,408
|
$
|
343,108
|
||||
Held by the Company
|
372
|
369
|
||||||
Total segregated funds net assets
|
$
|
351,780
|
$
|
343,477
|
three months ended
September 30,
|
nine months ended
September 30,
|
|||||||||||||||
For the
|
2020
|
2019
|
2020
|
2019
|
||||||||||||
Net policyholder cash flow
|
||||||||||||||||
Deposits from policyholders
|
$
|
9,157
|
$
|
9,160
|
$
|
29,157
|
$
|
29,144
|
||||||||
Net transfers to general fund
|
(337
|
)
|
(242
|
)
|
(1,110
|
)
|
(775
|
)
|
||||||||
Payments to policyholders
|
(10,226
|
)
|
(11,243
|
)
|
(32,228
|
)
|
(35,505
|
)
|
||||||||
(1,406
|
)
|
(2,325
|
)
|
(4,181
|
)
|
(7,136
|
)
|
|||||||||
Investment related
|
||||||||||||||||
Interest and dividends
|
976
|
5,600
|
3,257
|
7,753
|
||||||||||||
Net realized and unrealized investment gains (losses)
|
15,654
|
(3,001
|
)
|
6,767
|
32,308
|
|||||||||||
16,630
|
2,599
|
10,024
|
40,061
|
|||||||||||||
Other
|
||||||||||||||||
Management and administration fees
|
(965
|
)
|
(954
|
)
|
(2,959
|
)
|
(2,948
|
)
|
||||||||
Impact of changes in foreign exchange rates
|
(4,881
|
)
|
2,523
|
5,419
|
(6,526
|
)
|
||||||||||
(5,846
|
)
|
1,569
|
2,460
|
(9,474
|
)
|
|||||||||||
Net additions (deductions)
|
9,378
|
1,843
|
8,303
|
23,451
|
||||||||||||
Segregated funds net assets, beginning of period
|
342,402
|
335,204
|
343,477
|
313,596
|
||||||||||||
Segregated funds net assets, end of period
|
$
|
351,780
|
$
|
337,047
|
$
|
351,780
|
$
|
337,047
|
Note 15 |
Information Provided in Connection with Investments in Deferred Annuity Contracts and SignatureNotes Issued or Assumed by John Hancock Life
Insurance Company (U.S.A.)
|
As at September 30, 2020
|
MFC
(Guarantor)
|
JHUSA
(Issuer)
|
Other
subsidiaries
|
Consolidation
adjustments
|
Consolidated
MFC
|
|||||||||||||||
Assets
|
||||||||||||||||||||
Invested assets
|
$
|
38
|
$
|
117,274
|
$
|
297,240
|
$
|
(318
|
)
|
$
|
414,234
|
|||||||||
Investments in unconsolidated subsidiaries
|
65,249
|
8,436
|
49,375
|
(123,060
|
)
|
-
|
||||||||||||||
Reinsurance assets
|
-
|
68,753
|
11,427
|
(31,972
|
)
|
48,208
|
||||||||||||||
Other assets
|
33,221
|
30,167
|
87,938
|
(88,765
|
)
|
62,561
|
||||||||||||||
Segregated funds net assets
|
-
|
184,736
|
169,410
|
(2,738
|
)
|
351,408
|
||||||||||||||
Total assets
|
$
|
98,508
|
$
|
409,366
|
$
|
615,390
|
$
|
(246,853
|
)
|
$
|
876,411
|
|||||||||
Liabilities and equity
|
||||||||||||||||||||
Insurance contract liabilities
|
$
|
-
|
$
|
175,320
|
$
|
249,497
|
$
|
(32,731
|
)
|
$
|
392,086
|
|||||||||
Investment contract liabilities
|
-
|
1,106
|
2,134
|
(1
|
)
|
3,239
|
||||||||||||||
Other liabilities
|
33,468
|
28,216
|
88,305
|
(88,567
|
)
|
61,422
|
||||||||||||||
Long-term debt
|
6,457
|
-
|
-
|
-
|
6,457
|
|||||||||||||||
Capital instruments
|
5,306
|
613
|
31,996
|
(30,000
|
)
|
7,915
|
||||||||||||||
Segregated funds net liabilities
|
-
|
184,736
|
169,410
|
(2,738
|
)
|
351,408
|
||||||||||||||
Shareholders' equity
|
53,277
|
19,375
|
73,441
|
(92,816
|
)
|
53,277
|
||||||||||||||
Participating policyholders' equity
|
-
|
-
|
(791
|
)
|
-
|
(791
|
)
|
|||||||||||||
Non-controlling interests
|
-
|
-
|
1,398
|
-
|
1,398
|
|||||||||||||||
Total liabilities and equity
|
$
|
98,508
|
$
|
409,366
|
$
|
615,390
|
$
|
(246,853
|
)
|
$
|
876,411
|
As at December 31, 2019
|
MFC
(Guarantor)
|
JHUSA
(Issuer)
|
Other
subsidiaries
|
Consolidation
adjustments
|
Consolidated
MFC
|
|||||||||||||||
Assets
|
||||||||||||||||||||
Invested assets
|
$
|
21
|
$
|
107,746
|
$
|
271,100
|
$
|
(340
|
)
|
$
|
378,527
|
|||||||||
Investments in unconsolidated subsidiaries
|
57,068
|
7,467
|
16,983
|
(81,518
|
)
|
-
|
||||||||||||||
Reinsurance assets
|
-
|
61,310
|
10,080
|
(29,944
|
)
|
41,446
|
||||||||||||||
Other assets
|
406
|
20,859
|
45,111
|
(20,327
|
)
|
46,049
|
||||||||||||||
Segregated funds net assets
|
-
|
181,982
|
162,845
|
(1,719
|
)
|
343,108
|
||||||||||||||
Total assets
|
$
|
57,495
|
$
|
379,364
|
$
|
506,119
|
$
|
(133,848
|
)
|
$
|
809,130
|
|||||||||
Liabilities and equity
|
||||||||||||||||||||
Insurance contract liabilities
|
$
|
-
|
$
|
157,398
|
$
|
224,378
|
$
|
(30,615
|
)
|
$
|
351,161
|
|||||||||
Investment contract liabilities
|
-
|
1,091
|
2,014
|
(1
|
)
|
3,104
|
||||||||||||||
Other liabilities
|
537
|
21,311
|
48,226
|
(20,086
|
)
|
49,988
|
||||||||||||||
Long-term debt
|
4,543
|
-
|
-
|
-
|
4,543
|
|||||||||||||||
Capital instruments
|
3,277
|
599
|
3,244
|
-
|
7,120
|
|||||||||||||||
Segregated funds net liabilities
|
-
|
181,982
|
162,845
|
(1,719
|
)
|
343,108
|
||||||||||||||
Shareholders' equity
|
49,138
|
16,983
|
64,444
|
(81,427
|
)
|
49,138
|
||||||||||||||
Participating policyholders' equity
|
-
|
-
|
(243
|
)
|
-
|
(243
|
)
|
|||||||||||||
Non-controlling interests
|
-
|
-
|
1,211
|
-
|
1,211
|
|||||||||||||||
Total liabilities and equity
|
$
|
57,495
|
$
|
379,364
|
$
|
506,119
|
$
|
(133,848
|
)
|
$
|
809,130
|
For the three months ended
|
||||||||||||||||||||
September 30, 2020
|
MFC
(Guarantor)
|
JHUSA
(Issuer)
|
Other
subsidiaries
|
Consolidation
adjustments
|
Consolidated
MFC
|
|||||||||||||||
Revenue
|
||||||||||||||||||||
Net premium income
|
$
|
-
|
$
|
(2,050
|
)
|
$
|
8,056
|
$
|
-
|
$
|
6,006
|
|||||||||
Net investment income (loss)
|
194
|
1,444
|
3,395
|
(412
|
)
|
4,621
|
||||||||||||||
Net other revenue
|
2
|
956
|
2,223
|
(432
|
)
|
2,749
|
||||||||||||||
Total revenue
|
196
|
350
|
13,674
|
(844
|
)
|
13,376
|
||||||||||||||
Contract benefits and expenses
|
||||||||||||||||||||
Net benefits and claims
|
-
|
(484
|
)
|
7,670
|
(118
|
)
|
7,068
|
|||||||||||||
Commissions, investment and general expenses
|
4
|
719
|
3,412
|
(369
|
)
|
3,766
|
||||||||||||||
Other expenses
|
113
|
47
|
569
|
(357
|
)
|
372
|
||||||||||||||
Total contract benefits and expenses
|
117
|
282
|
11,651
|
(844
|
)
|
11,206
|
||||||||||||||
Income (loss) before income taxes
|
79
|
68
|
2,023
|
-
|
2,170
|
|||||||||||||||
Income tax (expense) recovery
|
(21
|
)
|
14
|
(374
|
)
|
-
|
(381
|
)
|
||||||||||||
Income (loss) after income taxes
|
58
|
82
|
1,649
|
-
|
1,789
|
|||||||||||||||
Equity in net income (loss) of unconsolidated subsidiaries
|
2,010
|
330
|
412
|
(2,752
|
)
|
-
|
||||||||||||||
Net income (loss)
|
$
|
2,068
|
$
|
412
|
$
|
2,061
|
$
|
(2,752
|
)
|
$
|
1,789
|
|||||||||
Net income (loss) attributed to:
|
||||||||||||||||||||
Non-controlling interests
|
$
|
-
|
$
|
-
|
$
|
117
|
$
|
-
|
$
|
117
|
||||||||||
Participating policyholders
|
-
|
1
|
(396
|
)
|
(1
|
)
|
(396
|
)
|
||||||||||||
Shareholders
|
2,068
|
411
|
2,340
|
(2,751
|
)
|
2,068
|
||||||||||||||
$
|
2,068
|
$
|
412
|
$
|
2,061
|
$
|
(2,752
|
)
|
$
|
1,789
|
For the three months ended
|
||||||||||||||||||||
September 30, 2019
|
MFC
(Guarantor)
|
JHUSA
(Issuer)
|
Other
subsidiaries
|
Consolidation
adjustments
|
Consolidated
MFC
|
|||||||||||||||
Revenue
|
||||||||||||||||||||
Net premium income
|
$
|
-
|
$
|
1,324
|
$
|
8,011
|
$
|
-
|
$
|
9,335
|
||||||||||
Net investment income (loss)
|
151
|
5,659
|
5,066
|
(352
|
)
|
10,524
|
||||||||||||||
Net other revenue
|
(3
|
)
|
739
|
3,908
|
(1,874
|
)
|
2,770
|
|||||||||||||
Total revenue
|
148
|
7,722
|
16,985
|
(2,226
|
)
|
22,629
|
||||||||||||||
Contract benefits and expenses
|
||||||||||||||||||||
Net benefits and claims
|
-
|
7,065
|
12,008
|
(1,505
|
)
|
17,568
|
||||||||||||||
Commissions, investment and general expenses
|
4
|
749
|
3,515
|
(373
|
)
|
3,895
|
||||||||||||||
Other expenses
|
107
|
59
|
633
|
(348
|
)
|
451
|
||||||||||||||
Total contract benefits and expenses
|
111
|
7,873
|
16,156
|
(2,226
|
)
|
21,914
|
||||||||||||||
Income (loss) before income taxes
|
37
|
(151
|
)
|
829
|
-
|
715
|
||||||||||||||
Income tax (expense) recovery
|
(10
|
)
|
104
|
(194
|
)
|
-
|
(100
|
)
|
||||||||||||
Income (loss) after income taxes
|
27
|
(47
|
)
|
635
|
-
|
615
|
||||||||||||||
Equity in net income (loss) of unconsolidated subsidiaries
|
696
|
219
|
172
|
(1,087
|
)
|
-
|
||||||||||||||
Net income (loss)
|
$
|
723
|
$
|
172
|
$
|
807
|
$
|
(1,087
|
)
|
$
|
615
|
|||||||||
Net income (loss) attributed to:
|
||||||||||||||||||||
Non-controlling interests
|
$
|
-
|
$
|
-
|
$
|
13
|
$
|
-
|
$
|
13
|
||||||||||
Participating policyholders
|
-
|
4
|
(121
|
)
|
(4
|
)
|
(121
|
)
|
||||||||||||
Shareholders
|
723
|
168
|
915
|
(1,083
|
)
|
723
|
||||||||||||||
$
|
723
|
$
|
172
|
$
|
807
|
$
|
(1,087
|
)
|
$
|
615
|
For the nine months ended
|
||||||||||||||||||||
September 30, 2020
|
MFC
(Guarantor)
|
JHUSA
(Issuer)
|
Other
subsidiaries
|
Consolidation
adjustments
|
Consolidated
MFC
|
|||||||||||||||
Revenue
|
||||||||||||||||||||
Net premium income
|
$
|
-
|
$
|
234
|
$
|
23,360
|
$
|
-
|
$
|
23,594
|
||||||||||
Net investment income (loss)
|
309
|
13,574
|
16,146
|
(678
|
)
|
29,351
|
||||||||||||||
Net other revenue
|
-
|
2,194
|
11,238
|
(5,338
|
)
|
8,094
|
||||||||||||||
Total revenue
|
309
|
16,002
|
50,744
|
(6,016
|
)
|
61,039
|
||||||||||||||
Contract benefits and expenses
|
||||||||||||||||||||
Net benefits and claims
|
-
|
12,808
|
35,388
|
(4,359
|
)
|
43,837
|
||||||||||||||
Commissions, investment and general expenses
|
17
|
2,286
|
10,040
|
(1,048
|
)
|
11,295
|
||||||||||||||
Other expenses
|
326
|
162
|
1,322
|
(609
|
)
|
1,201
|
||||||||||||||
Total contract benefits and expenses
|
343
|
15,256
|
46,750
|
(6,016
|
)
|
56,333
|
||||||||||||||
Income (loss) before income taxes
|
(34
|
)
|
746
|
3,994
|
-
|
4,706
|
||||||||||||||
Income tax (expense) recovery
|
9
|
(52
|
)
|
(928
|
)
|
-
|
(971
|
)
|
||||||||||||
Income (loss) after income taxes
|
(25
|
)
|
694
|
3,066
|
-
|
3,735
|
||||||||||||||
Equity in net income (loss) of unconsolidated subsidiaries
|
4,116
|
957
|
1,651
|
(6,724
|
)
|
-
|
||||||||||||||
Net income (loss)
|
$
|
4,091
|
$
|
1,651
|
$
|
4,717
|
$
|
(6,724
|
)
|
$
|
3,735
|
|||||||||
Net income (loss) attributed to:
|
||||||||||||||||||||
Non-controlling interests
|
$
|
-
|
$
|
-
|
$
|
193
|
$
|
-
|
$
|
193
|
||||||||||
Participating policyholders
|
-
|
-
|
(549
|
)
|
-
|
(549
|
)
|
|||||||||||||
Shareholders
|
4,091
|
1,651
|
5,073
|
(6,724
|
)
|
4,091
|
||||||||||||||
$
|
4,091
|
$
|
1,651
|
$
|
4,717
|
$
|
(6,724
|
)
|
$
|
3,735
|
For the nine months ended
|
||||||||||||||||||||
September 30, 2019
|
MFC
(Guarantor)
|
JHUSA
(Issuer)
|
Other
subsidiaries
|
Consolidation
adjustments
|
Consolidated
MFC
|
|||||||||||||||
Revenue
|
||||||||||||||||||||
Net premium income
|
$
|
-
|
$
|
3,738
|
$
|
22,602
|
$
|
-
|
$
|
26,340
|
||||||||||
Net investment income (loss)
|
282
|
13,513
|
20,986
|
(689
|
)
|
34,092
|
||||||||||||||
Net other revenue
|
8
|
2,288
|
10,203
|
(4,533
|
)
|
7,966
|
||||||||||||||
Total revenue
|
290
|
19,539
|
53,791
|
(5,222
|
)
|
68,398
|
||||||||||||||
Contract benefits and expenses
|
||||||||||||||||||||
Net benefits and claims
|
-
|
16,821
|
37,236
|
(3,427
|
)
|
50,630
|
||||||||||||||
Commissions, investment and general expenses
|
17
|
2,328
|
10,280
|
(1,144
|
)
|
11,481
|
||||||||||||||
Other expenses
|
313
|
152
|
1,478
|
(651
|
)
|
1,292
|
||||||||||||||
Total contract benefits and expenses
|
330
|
19,301
|
48,994
|
(5,222
|
)
|
63,403
|
||||||||||||||
Income (loss) before income taxes
|
(40
|
)
|
238
|
4,797
|
-
|
4,995
|
||||||||||||||
Income tax (expense) recovery
|
10
|
75
|
(714
|
)
|
-
|
(629
|
)
|
|||||||||||||
Income (loss) after income taxes
|
(30
|
)
|
313
|
4,083
|
-
|
4,366
|
||||||||||||||
Equity in net income (loss) of unconsolidated subsidiaries
|
4,404
|
510
|
823
|
(5,737
|
)
|
-
|
||||||||||||||
Net income (loss)
|
$
|
4,374
|
$
|
823
|
$
|
4,906
|
$
|
(5,737
|
)
|
$
|
4,366
|
|||||||||
Net income (loss) attributed to:
|
||||||||||||||||||||
Non-controlling interests
|
$
|
-
|
$
|
-
|
$
|
164
|
$
|
-
|
$
|
164
|
||||||||||
Participating policyholders
|
-
|
2
|
(172
|
)
|
(2
|
)
|
(172
|
)
|
||||||||||||
Shareholders
|
4,374
|
821
|
4,914
|
(5,735
|
)
|
4,374
|
||||||||||||||
$
|
4,374
|
$
|
823
|
$
|
4,906
|
$
|
(5,737
|
)
|
$
|
4,366
|
For the nine months ended September 30, 2020
|
MFC
(Guarantor)
|
JHUSA
(Issuer)
|
Other
subsidiaries
|
Consolidation
adjustments
|
Consolidated
MFC
|
|||||||||||||||
Operating activities
|
||||||||||||||||||||
Net income (loss)
|
$
|
4,091
|
$
|
1,651
|
$
|
4,717
|
$
|
(6,724
|
)
|
$
|
3,735
|
|||||||||
Adjustments:
|
||||||||||||||||||||
Equity in net income of unconsolidated subsidiaries
|
(4,116
|
)
|
(957
|
)
|
(1,651
|
)
|
6,724
|
-
|
||||||||||||
Increase (decrease) in insurance contract liabilities
|
-
|
10,643
|
21,268
|
-
|
31,911
|
|||||||||||||||
Increase (decrease) in investment contract liabilities
|
-
|
35
|
98
|
-
|
133
|
|||||||||||||||
(Increase) decrease in reinsurance assets excluding coinsurance
transactions
|
-
|
(3,063
|
)
|
386
|
-
|
(2,677
|
)
|
|||||||||||||
Amortization of (premium) discount on invested assets
|
-
|
38
|
65
|
-
|
103
|
|||||||||||||||
Other amortization
|
5
|
112
|
382
|
-
|
499
|
|||||||||||||||
Net realized and unrealized (gains) losses and impairment on
assets
|
(9
|
)
|
(10,118
|
)
|
(9,419
|
)
|
-
|
(19,546
|
)
|
|||||||||||
Deferred income tax expense (recovery)
|
(9
|
)
|
(396
|
)
|
836
|
-
|
431
|
|||||||||||||
Stock option expense
|
-
|
2
|
8
|
-
|
10
|
|||||||||||||||
Cash provided by (used in) operating activities before undernoted
items
|
(38
|
)
|
(2,053
|
)
|
16,690
|
-
|
14,599
|
|||||||||||||
Dividends from unconsolidated subsidiary
|
-
|
252
|
168
|
(420
|
)
|
-
|
||||||||||||||
Changes in policy related and operating receivables and payables
|
(40
|
)
|
8,919
|
(9,632
|
)
|
-
|
(753
|
)
|
||||||||||||
Cash provided by (used in) operating activities
|
(78
|
)
|
7,118
|
7,226
|
(420
|
)
|
13,846
|
|||||||||||||
Investing activities
|
||||||||||||||||||||
Purchases and mortgage advances
|
-
|
(27,063
|
)
|
(56,806
|
)
|
-
|
(83,869
|
)
|
||||||||||||
Disposals and repayments
|
-
|
22,968
|
52,245
|
-
|
75,213
|
|||||||||||||||
Changes in investment broker net receivables and payables
|
-
|
(324
|
)
|
89
|
-
|
(235
|
)
|
|||||||||||||
Investment in common shares of subsidiaries
|
(2,000
|
)
|
-
|
-
|
2,000
|
-
|
||||||||||||||
Capital contribution to unconsolidated subsidiaries
|
-
|
(1
|
)
|
-
|
1
|
-
|
||||||||||||||
Return of capital from unconsolidated subsidiaries
|
-
|
21
|
-
|
(21
|
)
|
-
|
||||||||||||||
Notes receivable from parent
|
-
|
-
|
(31,364
|
)
|
31,364
|
-
|
||||||||||||||
Notes receivable from subsidiaries
|
(31,170
|
)
|
-
|
-
|
31,170
|
-
|
||||||||||||||
Cash provided by (used in) investing activities
|
(33,170
|
)
|
(4,399
|
)
|
(35,836
|
)
|
64,514
|
(8,891
|
)
|
|||||||||||
Financing activities
|
||||||||||||||||||||
Change in repurchase agreements and securities sold but not yet
purchased
|
-
|
-
|
16
|
-
|
16
|
|||||||||||||||
Issue of long-term debt, net
|
2,455
|
-
|
-
|
-
|
2,455
|
|||||||||||||||
Redemption of long-term debt
|
(652
|
)
|
-
|
-
|
-
|
(652
|
)
|
|||||||||||||
Issue of capital instruments, net
|
1,990
|
-
|
-
|
-
|
1,990
|
|||||||||||||||
Redemption of capital instruments
|
-
|
-
|
(1,250
|
)
|
-
|
(1,250
|
)
|
|||||||||||||
Secured borrowings
|
-
|
709
|
594
|
-
|
1,303
|
|||||||||||||||
Changes in deposits from Bank clients, net
|
-
|
-
|
(212
|
)
|
-
|
(212
|
)
|
|||||||||||||
Lease payments
|
-
|
(7
|
)
|
(92
|
)
|
-
|
(99
|
)
|
||||||||||||
Shareholders' dividends paid in cash
|
(1,754
|
)
|
-
|
-
|
-
|
(1,754
|
)
|
|||||||||||||
Dividends paid to parent
|
-
|
(168
|
)
|
(252
|
)
|
420
|
-
|
|||||||||||||
Contributions from (distributions to) non-controlling interests, net
|
-
|
-
|
(9
|
)
|
-
|
(9
|
)
|
|||||||||||||
Common shares repurchased
|
(253
|
)
|
-
|
-
|
-
|
(253
|
)
|
|||||||||||||
Common shares issued, net
|
28
|
-
|
2,000
|
(2,000
|
)
|
28
|
||||||||||||||
Capital contributions by parent
|
-
|
-
|
1
|
(1
|
)
|
-
|
||||||||||||||
Return of capital to parent
|
-
|
-
|
(21
|
)
|
21
|
-
|
||||||||||||||
Notes payable to parent
|
-
|
-
|
31,170
|
(31,170
|
)
|
-
|
||||||||||||||
Notes payable to subsidiaries
|
31,364
|
-
|
-
|
(31,364
|
)
|
-
|
||||||||||||||
Cash provided by (used in) financing activities
|
33,178
|
534
|
31,945
|
(64,094
|
)
|
1,563
|
||||||||||||||
Cash and short-term securities
|
||||||||||||||||||||
Increase (decrease) during the period
|
(70
|
)
|
3,253
|
3,335
|
-
|
6,518
|
||||||||||||||
Effect of foreign exchange rate changes on cash and short-term
securities
|
86
|
83
|
(33
|
)
|
-
|
136
|
||||||||||||||
Balance, beginning of period
|
22
|
2,564
|
16,962
|
-
|
19,548
|
|||||||||||||||
Balance, end of period
|
38
|
5,900
|
20,264
|
-
|
26,202
|
|||||||||||||||
Cash and short-term securities
|
||||||||||||||||||||
Beginning of period
|
||||||||||||||||||||
Gross cash and short-term securities
|
22
|
3,058
|
17,220
|
-
|
20,300
|
|||||||||||||||
Net payments in transit, included in other liabilities
|
-
|
(494
|
)
|
(258
|
)
|
-
|
(752
|
)
|
||||||||||||
Net cash and short-term securities, beginning of period
|
22
|
2,564
|
16,962
|
-
|
19,548
|
|||||||||||||||
End of period
|
||||||||||||||||||||
Gross cash and short-term securities
|
38
|
6,381
|
20,551
|
-
|
26,970
|
|||||||||||||||
Net payments in transit, included in other liabilities
|
-
|
(481
|
)
|
(287
|
)
|
-
|
(768
|
)
|
||||||||||||
Net cash and short-term securities, end of period
|
$
|
38
|
$
|
5,900
|
$
|
20,264
|
$
|
-
|
$
|
26,202
|
||||||||||
Supplemental disclosures on cash flow information:
|
||||||||||||||||||||
Interest received
|
$
|
347
|
$
|
3,241
|
$
|
5,785
|
$
|
(766
|
)
|
$
|
8,607
|
|||||||||
Interest paid
|
325
|
67
|
1,216
|
(766
|
)
|
842
|
||||||||||||||
Income taxes paid (refund)
|
-
|
619
|
398
|
-
|
1,017
|
For the nine months ended September 30, 2019
|
MFC
(Guarantor)
|
JHUSA
(Issuer)
|
Other
subsidiaries
|
Consolidation
adjustments
|
Consolidated
MFC
|
|||||||||||||||
Operating activities
|
||||||||||||||||||||
Net income (loss)
|
$
|
4,374
|
$
|
823
|
$
|
4,906
|
$
|
(5,737
|
)
|
$
|
4,366
|
|||||||||
Adjustments:
|
||||||||||||||||||||
Equity in net income of unconsolidated subsidiaries
|
(4,404
|
)
|
(510
|
)
|
(823
|
)
|
5,737
|
-
|
||||||||||||
Increase (decrease) in insurance contract liabilities
|
-
|
12,699
|
21,740
|
-
|
34,439
|
|||||||||||||||
Increase (decrease) in investment contract liabilities
|
-
|
40
|
96
|
-
|
136
|
|||||||||||||||
(Increase) decrease in reinsurance assets excluding coinsurance
transactions
|
-
|
(2,324
|
)
|
1,496
|
-
|
(828
|
)
|
|||||||||||||
Amortization of (premium) discount on invested assets
|
-
|
29
|
57
|
-
|
86
|
|||||||||||||||
Other amortization
|
4
|
90
|
370
|
-
|
464
|
|||||||||||||||
Net realized and unrealized (gains) losses and impairment on assets
|
(7
|
)
|
(9,886
|
)
|
(14,503
|
)
|
-
|
(24,396
|
)
|
|||||||||||
Deferred income tax expense (recovery)
|
(10
|
)
|
(35
|
)
|
89
|
-
|
44
|
|||||||||||||
Stock option expense
|
-
|
(1
|
)
|
9
|
-
|
8
|
||||||||||||||
Cash provided by (used in) operating activities before undernoted items
|
(43
|
)
|
925
|
13,437
|
-
|
14,319
|
||||||||||||||
Dividends from unconsolidated subsidiary
|
-
|
155
|
-
|
(155
|
)
|
-
|
||||||||||||||
Changes in policy related and operating receivables and payables
|
(341
|
)
|
738
|
168
|
-
|
565
|
||||||||||||||
Cash provided by (used in) operating activities
|
(384
|
)
|
1,818
|
13,605
|
(155
|
)
|
14,884
|
|||||||||||||
Investing activities
|
||||||||||||||||||||
Purchases and mortgage advances
|
-
|
(18,243
|
)
|
(41,919
|
)
|
-
|
(60,162
|
)
|
||||||||||||
Disposals and repayments
|
-
|
16,190
|
31,016
|
-
|
47,206
|
|||||||||||||||
Changes in investment broker net receivables and payables
|
-
|
20
|
272
|
-
|
292
|
|||||||||||||||
Net cash flows from acquisition and disposal of subsidiaries and
businesses
|
-
|
-
|
269
|
-
|
269
|
|||||||||||||||
Return of capital from unconsolidated subsidiaries
|
-
|
134
|
-
|
(134
|
)
|
-
|
||||||||||||||
Notes receivable from parent
|
-
|
-
|
(24,190
|
)
|
24,190
|
-
|
||||||||||||||
Notes receivable from subsidiaries
|
(21,778
|
)
|
-
|
-
|
21,778
|
-
|
||||||||||||||
Cash provided by (used in) investing activities
|
(21,778
|
)
|
(1,899
|
)
|
(34,552
|
)
|
45,834
|
(12,395
|
)
|
|||||||||||
Financing activities
|
||||||||||||||||||||
Change in repurchase agreements and securities sold but not yet
purchased
|
-
|
-
|
462
|
-
|
462
|
|||||||||||||||
Redemption of capital instruments
|
-
|
-
|
(500
|
)
|
-
|
(500
|
)
|
|||||||||||||
Changes in deposits from Bank clients, net
|
-
|
-
|
2,064
|
-
|
2,064
|
|||||||||||||||
Lease payments
|
-
|
(6
|
)
|
(79
|
)
|
-
|
(85
|
)
|
||||||||||||
Shareholders' dividends paid in cash
|
(1,038
|
)
|
-
|
-
|
-
|
(1,038
|
)
|
|||||||||||||
Dividends paid to parent
|
-
|
-
|
(155
|
)
|
155
|
-
|
||||||||||||||
Contributions from (distributions to) non-controlling interests, net
|
-
|
-
|
(20
|
)
|
-
|
(20
|
)
|
|||||||||||||
Common shares repurchased
|
(1,069
|
)
|
-
|
-
|
-
|
(1,069
|
)
|
|||||||||||||
Common shares issued, net
|
89
|
-
|
-
|
-
|
89
|
|||||||||||||||
Return of capital to parent
|
-
|
-
|
(134
|
)
|
134
|
-
|
||||||||||||||
Notes payable to parent
|
-
|
-
|
21,778
|
(21,778
|
)
|
-
|
||||||||||||||
Notes payable to subsidiaries
|
24,190
|
-
|
-
|
(24,190
|
)
|
-
|
||||||||||||||
Cash provided by (used in) financing activities
|
22,172
|
(6
|
)
|
23,416
|
(45,679
|
)
|
(97
|
)
|
||||||||||||
Cash and short-term securities
|
||||||||||||||||||||
Increase (decrease) during the period
|
10
|
(87
|
)
|
2,469
|
-
|
2,392
|
||||||||||||||
Effect of foreign exchange rate changes on cash and short-term
securities
|
-
|
(78
|
)
|
(219
|
)
|
-
|
(297
|
)
|
||||||||||||
Balance, beginning of period
|
21
|
2,317
|
13,044
|
-
|
15,382
|
|||||||||||||||
Balance, end of period
|
31
|
2,152
|
15,294
|
-
|
17,477
|
|||||||||||||||
Cash and short-term securities
|
||||||||||||||||||||
Beginning of period
|
||||||||||||||||||||
Gross cash and short-term securities
|
21
|
2,783
|
13,411
|
-
|
16,215
|
|||||||||||||||
Net payments in transit, included in other liabilities
|
-
|
(466
|
)
|
(367
|
)
|
-
|
(833
|
)
|
||||||||||||
Net cash and short-term securities, beginning of period
|
21
|
2,317
|
13,044
|
-
|
15,382
|
|||||||||||||||
End of period
|
||||||||||||||||||||
Gross cash and short-term securities
|
31
|
2,510
|
15,477
|
-
|
18,018
|
|||||||||||||||
Net payments in transit, included in other liabilities
|
-
|
(358
|
)
|
(183
|
)
|
-
|
(541
|
)
|
||||||||||||
Net cash and short-term securities, end of period
|
$
|
31
|
$
|
2,152
|
$
|
15,294
|
$
|
-
|
$
|
17,477
|
||||||||||
Supplemental disclosures on cash flow information:
|
||||||||||||||||||||
Interest received
|
$
|
300
|
$
|
3,227
|
$
|
5,705
|
$
|
(699
|
)
|
$
|
8,533
|
|||||||||
Interest paid
|
356
|
43
|
1,216
|
(699
|
)
|
916
|
||||||||||||||
Income taxes paid (refund)
|
-
|
(814
|
)
|
526
|
-
|
(288
|
)
|
Note 16 |
Comparatives
|
MANULIFE FINANCIAL CORPORATION
HEAD OFFICE
200 Bloor Street East
Toronto, ON Canada M4W 1E5
Telephone: 416 926-3000
Online: www.manulife.com
INVESTOR RELATIONS
Financial analysts, portfolio managers and
other investors requiring financial information
may contact our Investor Relations Department
or access our website at www.manulife.com
E-mail: InvestRel@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
AST Trust Company (Canada)
P.O. Box 700, Station B
Montreal, QC Canada H3B 3K3
Toll Free: 1 800 783-9495
Collect: 416 682-3864
E-mail: inquiries@astfinancial.com
Online: www.astfinancial.com/ca-en
AST Trust Company (Canada) offices are also
located in Toronto, Vancouver and Calgary.
United States
American Stock Transfer & Trust Company, LLC
P.O. Box 199036
Brooklyn, NY 11219
United States
Toll Free: 1 800 249-7702
Collect: 416 682-3864
E-mail: manulifeinquiries@astfinancial.com
Online: www.astfinancial.com
Hong Kong
Tricor Investor Services Limited
Level 54, Hopewell Centre
183 Queen's Road East
Wan Chai, Hong Kong
Telephone: 852 2980-1333
Email: is-enquiries@hk.tricorglobal.com Online: www.tricoris.com
|
Philippines
Rizal Commercial Banking Corporation
Ground Floor, West Wing
GPL (Grepalife) Building
221 Senator Gil Puyat Avenue
Makati City, Metro Manila, Philippines
Telephone: 632 5318-8567
E-mail: rcbcstocktransfer@rcbc.com
Online: www.rcbc.com/stocktransfer
AUDITORS
Ernst & Young LLP
Chartered Professional Accountants
Licensed Public Accountants
Toronto, Canada
|
The following Manulife documents are
available online at www.manulife.com
· Annual Report
and Proxy Circular
· Notice of
Annual Meeting
· Shareholders
Reports
· Public
Accountability Statement
· Corporate
Governance material
|
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 September 30, 2020, Manulife had total capital of C$62.1 billion, including C$53.3 billion of total shareholders’ equity. The Manufacturers Life
Insurance Company’s financial strength ratings are among the strongest in the insurance industry.
|
||||
Rating Agency |
MLI Rating |
Rank |
||
S&P Global Ratings |
AA- |
(4th of 21 ratings) |
||
Moody’s Investors Services Inc.
|
A1
|
(5th of 21 ratings)
|
||
Fitch Ratings Inc.
|
AA-
|
(4th of 21 ratings)
|
||
DBRS Morningstar
|
AA
|
(3rd of 22 ratings)
|
||
AM Best Company
|
A+ (Superior)
|
(2nd of 13 ratings)
|
Common Stock Trading Data
|
The following values are the high, low and close prices, including the average daily trading volume
for Manulife Financial Corporation’s common stock on the Canadian exchanges, the U.S. exchanges, The Stock Exchange of Hong Kong and the Philippine Stock Exchange for the third quarter. The common stock symbol is MFC on all exchanges except Hong Kong where it is 945.
|
As at September 30, 2020, there were 1,940 million common
shares outstanding.
|
|||||
July 1 –
September 30,
2020 |
Canada
Canadian $
|
U.S.
United States $
|
Hong Kong
Hong Kong $
|
Philippines
Philippine
Pesos
|
||
High
|
$20.79
|
$15.68
|
$119.90
|
P 760
|
||
Low
|
$17.80
|
$13.11
|
$102.30
|
P 610
|
||
Close
|
$18.52
|
$13.91
|
$107.00
|
P 680
|
||
Average Daily
Volume (000)
|
8,785
|
2,066
|
64
|
0.03
|
Consent to receive documents electronically
|
Electronic documents available from Manulife
Manulife is pleased to offer Electronic Documents. Access the
information when you want, no more waiting for the mail.
The Manulife 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 website
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 website at least until the next
version is available.
We will notify you when documents will be available on the website and confirm the
instructions for accessing the documents at the same time.
In the event that the documents are not available on our website, paper
copies will be mailed to you.
This information is also available for viewing or download under
quarterly reports from the Investor Relations section of our website at www.manulife.com
|
To receive documents electronically when they are available through
Manulife’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 documents listed in the manner
described. I acknowledge that I have the computer requirements to
access the documents that are made available on Manulife’s website.
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
_________________________________________________________
Shareholder Email Address
_________________________________________________________
Shareholder Signature
_________________________________________________________
Date
|
1. |
Review: I have reviewed the interim financial report and interim MD&A
(together, the “interim filings”) of Manulife Financial Corporation (the “issuer”) for the interim period ended September 30, 2020.
|
2. |
No misrepresentations: Based on my knowledge, having exercised reasonable
diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it
was made, with respect to the period covered by the interim filings.
|
3. |
Fair presentation: Based on my knowledge, having exercised reasonable
diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of
the date of and for the periods presented in the interim filings.
|
4. |
Responsibility: The issuer’s other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuer’s Annual and Interim Filings, for the issuer.
|
5. |
Design: Subject to the limitations, if any, described in paragraphs 5.2
and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings
|
(a) |
designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
|
(i) |
material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
|
(ii) |
information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded,
processed, summarized and reported within the time periods specified in securities legislation; and
|
(b) |
designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with the issuer’s GAAP.
|
5.1 |
Control framework: The control framework the issuer’s other certifying
officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
|
5.2 |
N/A
|
5.3 |
N/A
|
6. |
Reporting changes in ICFR: The issuer has disclosed in its interim
MD&A any change in the issuer’s ICFR that occurred during the period beginning on July 1, 2020 and ended on September 30, 2020 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.
|
1. |
Review: I have reviewed the interim financial report and interim MD&A
(together, the “interim filings”) of Manulife Financial Corporation (the “issuer”) for the interim period ended September 30, 2020.
|
2. |
No misrepresentations: Based on my knowledge, having exercised reasonable
diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it
was made, with respect to the period covered by the interim filings.
|
3. |
Fair presentation: Based on my knowledge, having exercised reasonable
diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of
the date of and for the periods presented in the interim filings.
|
4. |
Responsibility: The issuer’s other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuer’s Annual and Interim Filings, for the issuer.
|
5. |
Design: Subject to the limitations, if any, described in paragraphs 5.2
and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings
|
(a) |
designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
|
(i) |
material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
|
(ii) |
information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded,
processed, summarized and reported within the time periods specified in securities legislation; and
|
(b) |
designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with the issuer’s GAAP.
|
5.1 |
Control framework: The control framework the issuer’s other certifying
officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
|
5.2 |
N/A
|
5.3 |
N/A
|
6. |
Reporting changes in ICFR: The issuer has disclosed in its interim
MD&A any change in the issuer’s ICFR that occurred during the period beginning on July 1, 2020 and ended on September 30, 2020 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.
|
21W94
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MIKW'A7]K+P=9BXM?''[/_P 0)E?
D!\@'Z @,"# (4
M AT")@(O C@"00)+ E0"70)G G$">@*$ HX"F *B JP"M@+! LL"U0+@ NL"
M]0, PL#%@,A RT#. -# T\#6@-F W(#?@.* Y8#H@.N [H#QP/3 ^ #[ /Y
M! 8$$P0@!"T$.P1(!%4$8P1Q!'X$C 2:!*@$M@3$!-,$X03P!/X%#044%]@8&!A8&)P8W!D@&609J!GL&C :=
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M:AZ4'KX>Z1\3'SX?:1^4'[\?ZB 5($$@;""8(,0@\"$<
M(4@A=2&A( &YXS'DJ>8EYYWI&>J5[!'MC>\)\
M(7R!?.%]07VA?@%^8G["?R-_A'_E@$> J($*@6N!S8(P@I*"](-7@[J$'82
MA..%1X6KA@Z&0+;EO]7+ZX
M]:F237)]F6OHSHIQK4_C\GW#V-3#-4:;YJE'WZ3_
M )Z;^**^5UZ&QX3ND_:0_9TN-!N?W?B.U_(Y+J;B"&0DXZD]J]E^+-UY>C3G^]TKR+0W^U7GV6!=TTT@X'IWK\7XZ
MK7Q<8>9^S<)P=/!RDCO_ A97/Q%\00R3A8UMQP^,+M'O^%=-KET_CW48=%T
MM2;&%AYC-UW#@_A65K6NQ^&M#CT73RLDUT%W21_PD]>?QKK=-EM_@UX-5I-L
MFM7W &6VM_^NN[!4:2@X7TT-/#)W>3_Q
M]0KRY?J>/PKDM!UA=
Z9]B@\M\FWW?*1][/O7IFH6K>*+'[5"OV?5K?Y)$88\Q!U
M('O7,76GKJ5MNMUYSAH?XU/
^'M84?VQH,)&F1R<2!SC\ZSE3E=1@]M
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M93_PC]Q=,;>-_NNF0 1^9K/BO+C]E?\ :@W.KIH/B!FD@0?<$)'!<^5T+MC=G'U-;4
MOA
TL^G2_7_"S0-^?':KI,S?9M>L?DB?\ BD/>G?8K7Q?ITFD7C?8O$5N?+A?^
M)P._YXJ!A%XLL&2W/V;Q-I?RGR^"[=\]Z?8Z5)\3(1 ?]#\26O[M#'PSX[G]
M*TMIK_PYE%