Exhibit 99.1
Manulife Financial Corporation
Consolidated Financial Statements
For the year ended December 31, 2023
 Roy Gori President and Chief Executive Officer |
 Colin Simpson Chief Financial Officer |
 |
155 |
|
157 |
|
159 |
IFRS 17 Insurance Contracts Adoption | ||
Description of the matter |
On January 1, 2023, the Company adopted IFRS 17 ‘Insurance Contracts’ which replaced IFRS 4 ‘Insurance Contracts’ with an effective date of January 1, 2022. As described in Note 25 ‘Adoption of IFRS 17’ of the accompanying financial statements, the Company applied the Full Retrospective Approach to most contracts issued on or after January 1, 2021, and applied the Fair Value Approach for contracts issued prior to this date. Note 25 of the accompanying financial statements also provides quantitative and qualitative information on the impact of the new standard and certain accounting policy choices made by the Company. Auditing the Company’s transition to IFRS 17 was complex as it related to the measurement of the Company’s insurance contract liabilities including the transition Contractual Service Margin (transition CSM) included therein. This required the application of significant auditor judgment due to the complexity of the models, and in the determination of key assumptions, specifically the discount rate and risk adjustment relating to the measurement of the insurance contract liabilities, and the development of fair value assumptions used in the determination of the transition CSM. The audit effort involved professionals with specialized skills and knowledge to assist in evaluating the audit evidence obtained. | |
How we addressed the matter in our audit |
We obtained an understanding, evaluated the design, and tested the operating effectiveness of management’s controls over the transition to the new standard for insurance contract liabilities including the transition CSM. The controls we tested included, among others, controls related to management’s selection of accounting policies and the related determination of the transition approach, as well as controls related to the development of fair value and actuarial models, the integrity of data used, implementation of new systems and models, and assumption setting and implementation processes. To audit the impact of the Company’s adoption of IFRS 17 on the insurance contract liabilities including the transition CSM, our audit procedures included, among others, involving our actuarial specialists to evaluate the related accounting policies, the elections involved in transition, and to assess the appropriateness of the determination of where the Full Retrospective Approach was impracticable. In relation to the key assumptions used in the measurement of the insurance contract liabilities including the transition CSM, with the involvement of our actuarial specialists, we assessed the appropriateness and consistency of key assumptions by comparing to publicly available market data, our knowledge of the products and the requirements of IFRS 17. These procedures also included testing underlying support and documentation, such as executed policyholder insurance contracts. We tested the methodology and calculations of the IFRS 17 insurance contract liabilities and transition CSM either through review of the calculation logic within the newly implemented models, or through calculating an independent estimate of the insurance contract liability for a sample of insurance contracts and comparing the results to those determined by the Company. In addition, we assessed the adequacy of the disclosures related to the adoption of IFRS 17. | |
Valuation of Insurance Contract Liabilities | ||
Description of the matter |
The Company recorded insurance contract liabilities of $482 billion at December 31, 2023 on its consolidated statement of financial position, of which $355 billion as disclosed in Note 7 has been measured under the variable fee approach (VFA) and the general measurement model (GMM). At initial recognition, the Company measures a group of insurance contracts as the total of: (a) fulfilment cash flows, which comprise of estimates of future cash flows, adjusted to reflect the time value of money and financial risks, and a risk adjustment for non-financial risk; and (b) a contractual service margin (CSM), which represents the estimate of unearned profit the Company will recognize as it provides service under the insurance contracts. When projecting future cash flows for these insurance contract liabilities, the Company primarily uses deterministic projections using best estimate assumptions. Key assumptions are subjective and complex and include mortality, morbidity, investment returns, policy termination rates, premium persistency, directly attributable expenses, taxes, and policyholder dividends. Disclosures on this matter are found in Note 1 ‘Nature of Operations and Material Accounting Policy Information’ and Note 7 ‘Insurance and Reinsurance Contract Assets and Liabilities’ of the consolidated financial statements.Auditing the valuation of these insurance contract liabilities was complex and required the application of significant auditor judgment due to the complexity of the cash flow models, the selection and use of assumptions, and the interrelationship of these variables in measuring insurance contract liabilities. The audit effort involved professionals with specialized skills and knowledge to assist in evaluating the audit evidence obtained. | |
How we addressed the matter in our audit |
We obtained an understanding, evaluated the design, and tested the operating effectiveness of management’s controls over the valuation of insurance contract liabilities. The controls we tested related to, among other areas, actuarial methodology, integrity of data used, controls over relevant information technology, and the assumption setting and implementation processes used by management. To test the valuation of insurance contract liabilities, our audit procedures included, among other procedures, involving our actuarial specialists to assess the methodology and assumptions with respect to compliance with the Company’s policies. We performed audit procedures over key assumptions, including the implementation of those assumptions into the models. These procedures included testing underlying support and documentation, including reviewing a sample of experience studies supporting specific assumptions, challenging the nature, timing, and completeness of changes recorded, and assessing whether individual changes were errors or refinements of estimates. We also tested the methodology and calculation of the insurance contract liabilities through both review of the calculation logic within the models, and through calculating an independent estimate of the fulfillment cashflows for a sample of insurance contracts and comparing the results to those determined by the Company. Additionally, we have performed an independent calculation of the CSM for a sample of groups of insurance contracts and compared the amounts to the Company’s results. In addition, we assessed the adequacy of the disclosures related to the valuation of insurance contract liabilities. | |
|
161 |
Valuation of Invested Assets and Derivatives with Significant Non-Observable Market Inputs | ||
Description of the matter |
The Company recorded invested assets of $87.6 billion, as disclosed in Note 4 ‘Invested Assets and Investment Income’, and derivative assets and liabilities of $0.6 billion and $2.7 billion, respectively, as disclosed in Note 5 ‘Derivative and Hedging Instruments’ at December 31, 2023 within its consolidated statement of financial position which are both (a) measured at fair value and (b) classified as Level 3 within the Company’s hierarchy of fair value measurements. The Level 3 invested assets include private placements, commercial mortgages, real estate, timber and agriculture, and private equities valued using internal models. There is increased measurement uncertainty in determining the fair value of these invested assets and derivatives due to volatility in the current economic environment. Fair values are based on internal models or third-party appraisals that incorporate assumptions with a high-level of subjectivity. Examples of such assumptions include discount rates, credit ratings and related spreads, expected future cash flows, transaction prices of comparable assets, volatilities, and correlations. Disclosures on this matter are found in Note 1 ‘Nature of Operations and Material Accounting Policy Information’, Note 4 ‘Invested Assets and Investment Income’, and Note 5 ‘Derivative and Hedging Instruments’ of the consolidated financial statements. Auditing the valuation of these invested assets and derivatives was complex and required the application of significant auditor judgment in assessing the valuation methodologies and non-observable inputs used. The valuation is sensitive to the significant non-observable market inputs described above, which are inherently forward-looking and could be affected by future economic and market conditions. The audit effort involved professionals with specialized skills and knowledge to assist in evaluating the audit evidence obtained. | |
How we addressed the matter in our audit |
We obtained an understanding, evaluated the design, and tested the operating effectiveness of management’s controls over the valuation processes. The controls we tested related to, among other areas, management’s determination and approval of assumptions and methodologies used in model-based valuations. To test the valuation, our audit procedures included, among other procedures, involving our valuation specialists to assess the methodologies and significant assumptions used by management. These procedures included assessing the valuation methodologies used with respect to the Company’s policies, valuation guidelines, and industry practice and comparing a sample of valuation assumptions used against benchmarks including comparable transactions where applicable. We also performed independent investment valuations on a sample basis to evaluate management’s recorded values. In addition, we assessed the adequacy of the disclosures related to the valuation of invested assets and derivatives. | |
IFRS 9 Hedge Accounting | ||
Description of the matter |
The Company has designated new hedge accounting relationships with the objective to reduce potential accounting mismatches between changes in the fair value of derivatives in income and financial risk of insurance contract liabilities and financial assets in other comprehensive income. Specifically, the Company has established relationships to hedge the fair value changes of a group of the Company’s insurance contract liabilities due to changes in the benchmark interest rate. Related to the application of this hedge, the Company recognized changes in value of the hedged items of ($53) million for the year ended December 31, 2023. The Company has also established relationships to hedge the risk of fair value changes of foreign currency denominated debt instruments attributable to changes in the benchmark interest rate and foreign exchange rates. Related to the application of this hedge, the Company recognized changes in value of the hedged items of $742 million for the year ended December 31, 2023. Disclosures on this matter are found in Note 1 ‘Nature of Operations and Material Accounting Policy Information’ and Note 5 ‘Derivative and Hedging Instruments’ of the consolidated financial statements. Auditing the design and application of hedge accounting was complex and required the application of significant auditor judgment related to assessing the appropriateness of the designation of a risk component such as the benchmark interest rate and foreign exchange rate as eligible hedged items, that the hedge ratio between the hedging instrument and the hedged item was consistent with the risk objectives, and the determination and amortization of the resulting accumulated fair value adjustments. The audit effort involved professionals with specialized skills and knowledge to assist in evaluating the audit evidence obtained. | |
How we addressed the matter in our audit |
We obtained an understanding, evaluated the design, and tested the operating effectiveness of management’s controls over the implementation of the above hedge strategies, the application and execution of those strategies, and the measurements of the accumulated fair value adjustments. The controls we tested included, among others, controls related to management’s development and approval of the new strategies, the review of the completeness, accuracy, and eligibility of the hedged items and hedging instruments included in the hedging relationships, determination of the hedge ratio between the hedging instrument and the hedged item with reference to the risk objectives, and the determination and amortization of the resulting accumulated fair value adjustments. To assess the Company’s consistent application of these new hedge accounting strategies under IFRS 9, our audit procedures included, among other procedures, involving our actuarial specialists to support our assessment of the eligibility of hedging the specific risk components. Our derivative specialists also supported our independent testing of the application of the hedge ratio by the Company and the valuation of a sample of the accumulated fair value adjustments. Other procedures performed include testing over the completeness and accuracy of the hedged items and hedging instruments designated in these relationships and the determination and amortization of the resulting accumulated fair value adjustments. In addition, we assessed the adequacy of the disclosures related to hedge accounting. | |
|
163 |
As at (Canadian $ in millions) |
December 31, 2023 |
Restated (note 2) December 31, 2022 |
Restated (note 2) January 1, 2022 |
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Assets |
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Cash and short-term securities |
$ |
$ | $ | |||||||||
Debt securities |
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Public equities |
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Mortgages |
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Private placements |
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Loans to Bank clients |
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Real estate |
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Other invested assets |
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Total invested assets (note 4) |
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Other assets |
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Accrued investment income |
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Derivatives (note 5) |
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Insurance contract assets (note 7) |
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Reinsurance contract held assets (note 7) |
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Deferred tax assets |
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Goodwill and intangible assets (note 6) |
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Miscellaneous |
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Total other assets |
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Segregated funds net assets (note 23) |
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Total assets |
$ |
$ | |
$ | |
|||||||
Liabilities and Equity |
||||||||||||
Liabilities |
||||||||||||
Insurance contract liabilities, excluding those for account of segregated fund holders (note 7) |
$ |
$ | $ | |||||||||
Reinsurance contract held liabilities (note 7) |
||||||||||||
Investment contract liabilities (note 8) |
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Deposits from Bank clients |
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Derivatives (note 5) |
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Deferred tax liabilities |
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Other liabilities |
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Long-term debt (note 10) |
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Capital instruments (note 11) |
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Total liabilities, excluding those for account of segregated fund holders |
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Insurance contract liabilities for account of segregated fund holders (note 7) |
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Investment contract liabilities for account of segregated fund holders |
||||||||||||
Insurance and investment contract liabilities for account of segregated fund holders (note 23) |
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Total liabilities |
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Equity |
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Preferred shares and other equity (note 12) |
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Common shares (note 12) |
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Contributed surplus |
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Shareholders and other equity holders’ retained earnings |
||||||||||||
Shareholders and other equity holders’ accumulated other comprehensive income (loss) (“AOCI”): |
||||||||||||
Insurance finance income (expenses) |
( |
) | ||||||||||
Reinsurance finance income (expenses) |
( |
) |
( |
) | ||||||||
Fair value through other comprehensive income (“OCI”) investments |
( |
) |
( |
) | ||||||||
Translation of foreign operations |
||||||||||||
Other |
( |
) |
( |
) |
( |
) | ||||||
Total shareholders and other equity holders’ equity |
||||||||||||
Participating policyholders’ equity |
( |
) | ||||||||||
Non-controlling interests |
||||||||||||
Total equity |
||||||||||||
Total liabilities and equity |
$ |
$ | $ | |||||||||
Roy Gori President and Chief Executive Officer |
 Don Lindsay Chair of the Board of Directors |
| For the years ended December 31, (Canadian $ in millions except per share amounts) |
2023 |
Restated (note 2) 2022 |
||||||
| Insurance service result |
|
|
|
|
|
| ||
| Insurance revenue (note 7) |
$ |
$ | |
|||||
| Insurance service expenses (note 7) |
( |
) |
( |
) | ||||
| Net expenses from reinsurance contracts held (note 7) |
( |
) |
( |
) | ||||
| Total insurance service result |
||||||||
| Investment result |
|
|
|
|
|
| ||
| Investment income (note 4) |
|
|
|
|
|
| ||
| Investment income |
||||||||
| Realized and unrealized gains (losses) on assets supporting insurance and investment contract liabilities |
( |
) | ||||||
| Investment expenses |
( |
) |
( |
) | ||||
| Net investment income (loss) |
||||||||
| Insurance finance income (expenses) and effect of movement in foreign exchange rates (note 7) |
( |
) |
( |
) | ||||
| Reinsurance finance income (expenses) and effect of movement in foreign exchange rates (note 7) |
( |
) |
||||||
| Decrease (increase) in investment contract liabilities |
( |
) |
( |
) | ||||
| ( |
) | |||||||
| Segregated funds investment result (note 23) |
|
|
|
|
|
| ||
| Investment income related to segregated funds net assets |
( |
) | ||||||
| Financial changes related to insurance and investment contract liabilities for account of segregated fund holders |
( |
) |
||||||
| Net segregated funds investment result |
||||||||
| Total investment result |
( |
) | ||||||
| Other revenue (note 14) |
||||||||
| General expenses |
( |
) |
( |
) | ||||
| Commissions related to non-insurance contracts |
( |
) |
( |
) | ||||
| Interest expenses |
( |
) |
( |
) | ||||
| Net income (loss) before income taxes |
( |
) | ||||||
| Income tax recoveries (expenses) |
( |
) |
||||||
| Net income (loss) |
$ |
$ | ( |
) | ||||
| Net income (loss) attributed to: |
|
|
|
|
|
| ||
| Non-controlling interests |
$ |
$ | ||||||
| Participating policyholders |
( |
) | ||||||
| Shareholders and other equity holders |
( |
) | ||||||
$ |
$ | ( |
) | |||||
| Net income (loss) attributed to shareholders |
$ |
$ | ( |
) | ||||
| Preferred share dividends and other equity distributions |
( |
) |
( |
) | ||||
| Common shareholders’ net income (loss) |
$ |
$ | ( |
) | ||||
| Earnings per share |
|
|
|
|
|
| ||
| Basic earnings per common share (note 12) |
$ |
$ | ( |
) | ||||
| Diluted earnings per common share (note 12) |
( |
) | ||||||
| Dividends per common share |
||||||||
| |
1 65 |
| For the years ended December 31, (Canadian $ in millions) |
2023 |
Restated (note 2) 2022 |
||||||
| Net income (loss) |
$ |
$ | ( |
) | ||||
| 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 |
( |
) |
||||||
| Net investment hedges |
( |
) | ||||||
| Insurance finance income (expenses) |
( |
) |
|
|||||
| Reinsurance finance income (expenses) |
( |
) | ||||||
| Fair value through OCI investments: |
|
|
|
|
|
| ||
| Unrealized gains (losses) arising during the year on assets supporting insurance and investment contract liabilities |
( |
) | ||||||
| Reclassification of net realized gains (losses) and provision for credit losses recognized in income |
||||||||
| Other |
||||||||
| |
|
|
|
|
|
|
|
|
| Total items that may be subsequently reclassified to net income |
( |
) |
||||||
| Items that will not be reclassified to net income |
( |
) |
||||||
| Other comprehensive income (loss), net of tax |
( |
) |
||||||
| Total comprehensive income (loss), net of tax |
$ |
$ | ||||||
| Total comprehensive income (loss) attributed to: |
|
|
|
|
|
| ||
| Non-controlling interests |
$ |
$ | ||||||
| Participating policyholders |
( |
) | ||||||
| Shareholders and other equity holders |
||||||||
| For the years ended December 31, (Canadian $ in millions) |
2023 |
Restated (note 2) 2022 |
||||||
| Income tax expenses (recoveries) on: |
|
|
|
|
|
| ||
| Unrealized foreign exchange gains (losses) on translation of foreign operations |
$ |
( |
) |
$ | ||||
| Unrealized foreign exchange gains (losses) on net investment hedges |
( |
) | ||||||
| Insurance / reinsurance finance income (expenses) |
( |
) |
|
|||||
| Unrealized gains (losses) on fair value through OCI investments |
( |
) | ||||||
| Reclassification of net realized gains (losses) on fair value through OCI investments |
( |
) |
||||||
| Other |
( |
) |
||||||
| Total income tax expenses (recoveries) |
$ |
( |
) |
$ | ||||
| For the years ended December 31, (Canadian $ in millions) |
2023 |
Restated (note 2) 2022 |
||||||
| Preferred shares and other equity |
|
|
|
|
|
| ||
| Balance, beginning of year |
$ |
$ | ||||||
| Issued (note 12) |
||||||||
| Redeemed (note 12) |
– |
( |
) | |||||
| Issuance costs, net of tax |
– |
( |
) | |||||
| Balance, end of year |
||||||||
| Common shares |
|
|
|
|
|
| ||
| Balance, beginning of year |
|
|||||||
| Repurchased (note 12) |
( |
) |
( |
) | ||||
| Issued on exercise of stock options and deferred share units |
||||||||
| Balance, end of year |
||||||||
| Contributed surplus |
|
|
|
|
|
| ||
| Balance, beginning of year |
||||||||
| Exercise of stock options and deferred share units |
( |
) |
( |
) | ||||
| Stock option expense |
||||||||
| Acquisition of non-controlling interest |
– |
( |
) | |||||
| Balance, end of year |
||||||||
| Shareholders’ and other equity holders’ retained earnings |
|
|
|
|
|
| ||
| Balance, beginning of year |
||||||||
| Opening adjustment of insurance contracts at adoption of IFRS 17 |
– |
( |
) | |||||
| Opening adjustment of financial assets at adoption of IFRS 9 / IFRS 17 |
( |
) |
( |
) | ||||
| Restated balance, beginning of year |
||||||||
| Net income (loss) attributed to shareholders and other equity holders |
( |
) | ||||||
| Common shares repurchased (note 12) |
( |
) |
( |
) | ||||
| Preferred share dividends and other equity distributions |
( |
) |
( |
) | ||||
| Preferred shares redeemed (note 12) |
– |
( |
) | |||||
| Common share dividends |
( |
) |
( |
) | ||||
| Acquisition of non-controlling interest |
– |
( |
) | |||||
| Balance, end of year |
||||||||
| Shareholders’ and other equity holders’ accumulated other comprehensive income (loss) (“AOCI”) |
|
|
|
|
|
| ||
| Balance, beginning of year |
||||||||
| Opening adjustment of insurance contracts at adoption of IFRS 17 |
– |
( |
) | |||||
| Opening adjustment of financial assets at adoption of IFRS 9 / IFRS 17 |
||||||||
| Restated balance, beginning of year |
||||||||
| Change in unrealized foreign exchange gains (losses) on net foreign operations |
( |
) |
||||||
| Changes in insurance / reinsurance finance income (expenses) |
( |
) |
||||||
| Change in unrealized gains (losses) on fair value through OCI investments |
( |
) | ||||||
| Other changes in OCI attributed to shareholders and other equity holders |
( |
) |
||||||
| Balance, end of year |
||||||||
| Total shareholders’ and other equity holders’ equity, end of year |
||||||||
| Participating policyholders’ equity |
|
|
|
|
|
| ||
| Balance, beginning of year |
( |
) |
( |
) | ||||
| Opening adjustment of insurance contracts at adoption of IFRS 17 |
– |
|||||||
| Opening adjustment of financial assets at adoption of IFRS 9 / IFRS 17 |
– |
|||||||
| Restated balance, beginning of year |
( |
) |
||||||
| Net income (loss) attributed to participating policyholders |
( |
) | ||||||
| Other comprehensive income (losses) attributed to policyholders |
( |
) |
( |
) | ||||
| Balance, end of year |
( |
) | ||||||
| Non-controlling interests |
|
|
|
|
|
| ||
| Balance, beginning of year |
||||||||
| Opening adjustment of insurance contracts at adoption of IFRS 17 |
– |
( |
) | |||||
| Opening adjustment of financial assets at adoption of IFRS 9 / IFRS 17 |
– |
– | ||||||
| Restated balance, beginning of year |
||||||||
| Net income (loss) attributed to non-controlling interests |
||||||||
| Other comprehensive income (losses) attributed to non-controlling interests |
( |
) |
( |
) | ||||
| Contributions (distributions and acquisition), net |
( |
) |
( |
) | ||||
| Balance, end of year |
||||||||
| Total equity, end of year |
$ |
$ | ||||||
| |
1 67 |
| For the years ended December 31, (Canadian $ in millions) |
2023 |
Restated (note 2) 2022 |
||||||
| Operating activities |
|
|
|
|
|
| ||
| Net income (loss) |
$ |
$ | ( |
|||||
| Adjustments: |
|
|
|
|
|
| ||
| Increase (decrease) in net insurance contract liabilities (note 7) |
||||||||
| Increase (decrease) in investment contract liabilities |
||||||||
| (Increase) decrease in reinsurance contract assets, excluding reinsurance transaction noted below (note 7) |
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| Amortization of (premium) discount on invested assets |
( |
) |
( |
) | ||||
| |
|
|
|
|
|
|
|
|
| Contractual service margin (“CSM”) amortization |
( |
) |
( |
) | ||||
| Other amortization |
||||||||
| Net realized and unrealized (gains) losses and impairment on assets |
( |
) |
||||||
| Deferred income tax expenses (recoveries) |
( |
) | ||||||
| Stock option expense |
||||||||
| Gain on U.S. variable annuity reinsurance transaction (pre-tax) (note 7) |
– |
( |
) | |||||
| Gain on derecognition of joint venture interest during Manulife Fund Management Co., Ltd. acquisition (pre-tax) (notes 3 & 6) |
– |
( |
) | |||||
| Cash provided by operating activities before undernoted items |
||||||||
| Changes in policy related and operating receivables and payables |
||||||||
| Cash decrease due to U.S. variable annuity reinsurance transaction (note 7) |
– |
( |
) | |||||
| Cash provided by (used in) operating activities |
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| Investing activities |
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|
|
|
|
| ||
| Purchases and mortgage advances |
( |
) |
( |
) | ||||
| Disposals and repayments |
||||||||
| Change in investment broker net receivables and payables |
( |
) | ||||||
| Net cash increase (decrease) from sale (purchase) of subsidiaries |
( |
) |
( |
) | ||||
| Cash provided by (used in) investing activities |
( |
) |
( |
) | ||||
| Financing activities |
|
|
|
|
|
| ||
| Change in repurchase agreements and securities sold but not yet purchased |
( |
) |
||||||
| Issue of long-term debt (note 10) |
– |
|||||||
| Issue of capital instruments, net (note 11) |
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| |
|
|
|
|
|
|
|
|
| Redemption of capital instruments (note 11) |
( |
) |
( |
) | ||||
| Secured borrowing from securitization transactions |
|
|
||||||
| Change in deposits from Bank clients, net |
( |
) |
||||||
| Lease payments |
( |
) |
( |
) | ||||
| Shareholders’ dividends and other equity distributions |
( |
) |
( |
) | ||||
| Contributions from (distributions to) non-controlling interests, net |
( |
) |
( |
) | ||||
| Common shares repurchased (note 12) |
( |
) |
( |
) | ||||
| Common shares issued, net (note 12) |
||||||||
| Preferred shares and other equity issued, net (note 12) |
– |
|||||||
| Preferred shares redeemed, net (note 12) |
– |
( |
) | |||||
| Cash provided by (used in) financing activities |
( |
) |
( |
) | ||||
| Cash and short-term securities |
|
|
|
|
|
| ||
| Increase (decrease) during the year |
( |
) | ||||||
| Effect of foreign exchange rate changes on cash and short-term securities |
( |
) |
||||||
| Balance, beginning of year |
||||||||
| Balance, end of year |
||||||||
| Cash and short-term securities |
|
|
|
|
|
| ||
| Beginning of year |
|
|
|
|
|
| ||
| Gross cash and short-term securities |
||||||||
| Net payments in transit, included in other liabilities |
( |
) |
( |
) | ||||
| Net cash and short-term securities, beginning of year |
||||||||
| End of year |
|
|
|
|
|
| ||
| Gross cash and short-term securities |
||||||||
| Net payments in transit, included in other liabilities |
( |
) |
( |
) | ||||
| Net cash and short-term securities, end of year |
$ |
$ | ||||||
| Supplemental disclosures on cash flow information |
|
|
|
|
|
| ||
| Interest received |
$ |
$ | ||||||
| Interest paid |
||||||||
| Income taxes paid |
||||||||
Page Number |
Note |
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170 |
Note 1 |
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184 |
Note 2 |
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187 |
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196 |
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205 |
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207 |
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229 |
Note 8 |
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230 |
Note 9 |
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243 |
Note 10 |
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244 |
Note 11 |
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246 |
Note 12 |
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248 |
Note 13 |
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249 |
Note 14 |
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250 |
Note 15 |
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251 |
Note 16 |
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256 |
Note 17 |
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258 |
Note 18 |
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260 |
Note 19 |
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262 |
Note 20 |
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264 |
Note 21 |
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265 |
Note 22 |
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266 |
Note 23 |
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266 |
Note 24 |
|||
272 |
Note 25 |
|||
276 |
Note 26 |
| |
169 |
| |
1 71 |
| • | Probability of default (“PD”) is an estimate of the likelihood of default over a given time horizon. |
| • | Loss given default (“LGD”), is an estimate of the loss arising on a future default. This is based on the difference between the contractual cash flows due and those that the Company expects to receive, including from collateral. It is based on credit default studies performed based on internal credit experience. |
| |
1 73 |
| • | Exposure at default (“EAD”), is an estimate of the exposure at a future default date, considering both the period of exposure and the amount of exposure at a given reporting date. The EADs are determined by modelling the range of possible exposure outcomes at various points in time, corresponding to the multiple economic scenarios. The probabilities are then assigned to each economic scenario based on the outcome of the models. |
| • | Stage 1 comprise all performing financial instruments that have not experienced a SICR since initial recognition. The determination of SICR varies by instrument and considers the relative change in the risk of default since origination. 12-month ECLs are recognized for all Stage 1 financial instruments. 12-month ECLs represent the portion of lifetime ECLs that result from default events possible within 12 months of the reporting date. These expected 12-month default probabilities are applied to a forecast EAD, multiplied by the expected LGD, and discounted by the original EIR. This calculation is made for each of four macroeconomic scenarios. |
| • | Stage 2 comprise all performing financial instruments that have experienced a SICR since original recognition or have become 30 days in arrears for principal or interest payments, whichever happens first. When assets move to Stage 2, full lifetime ECLs are recognized, which represent ECLs that result from all possible default events over the remaining lifetime of the financial instrument. The mechanics are consistent with Stage 1, except PDs and LGDs are estimated over the remaining lifetime of the instrument instead of over the coming year. In subsequent reporting periods, if the credit risk of a financial instrument improves such that there is no longer a SICR compared to credit risk at initial recognition, the financial instrument will migrate back to Stage 1 and 12-month ECLs will be recognized. |
| • | Stage 3 comprise financial instruments identified as credit-impaired. Similar to Stage 2 assets, full lifetime ECLs are recognized for Stage 3 financial instruments, but the PD is set at |
| |
1 75 |
• |
Derivatives embedded within insurance contracts which contains risks and characteristics that are not closely related to those of the host contract, unless the embedded derivative itself meets the definition of an insurance contract; |
• |
Distinct investment components which represent cash flows paid (received) in all circumstances regardless of whether an insured event has occurred or not. Investment components are distinct if they are not highly interrelated with insurance component cash flows and if they could be issued on a standalone basis; and |
• |
Distinct service components which are promises to transfer goods or non-insurance services if the policyholder can benefit from it either on its own or with other resources that are readily available to the policyholder. The service components are distinct if they are not highly interrelated with the insurance components and the Company provides no significant service in integrating the service component with the insurance component. |
• |
Date of issue: the period cannot be longer than one year. Most of the Company’s insurance contracts are aggregated into annual cohorts; and |
• |
Expected profitability at inception into one of three categories: onerous contracts, contracts with no significant risk of becoming onerous and other remaining contracts. Onerous contracts are those contracts that at initial inception, the Company expects to generate net outflow, without considering investment returns or the benefit of any reinsurance contracts held. |
| • | Variable fee approach (“VFA”): The Company applies this approach to insurance contracts with direct participation features such as participating life insurance contracts, unit linked contracts, and variable annuity contracts. The direct participating feature is identified at inception, where the Company has the obligation to pay the policyholder an amount equal to the fair value of the underlying items less a variable fee in exchange for investment services provided. |
| • | Premium allocation approach (“PAA”): The Company applies this simplified approach for certain insurance contracts and reinsurance contracts with duration of typically one year or less, such as Canadian Group Benefit products, some Canadian Affinity products, and some Asia short-term individual and group products. |
| • | General measurement model (“GMM”): The Company applies this model to the remaining insurance contracts and reinsurance contracts not measured using the VFA or the PAA. |
| • | The beginning of the coverage period of the group of contracts, |
| • | The date when the first payment from a policyholder in the group is due or when the first payment is received if there is no due date, and |
| • | For a group of onerous contracts, as soon as facts and circumstances indicate that the group is onerous. |
| • | The liability for remaining coverage (“LRC”), which comprise the fulfilment cash flows that relate to services to be provided in the future and any remaining CSM at that date; and |
| • | The liability for incurred claims (“LIC”), which comprise the fulfilment cash flows for incurred claims and expenses that have not yet been paid. |
| (a) | effect of new contracts added to the group; |
| (b) | interest accreted on the carrying amount of CSM, measured at the locked-in discount rate. The locked-in discount rate is the weighted average of the rates applicable at the date of initial recognition of contracts that joined a group over a 12-month period, and is determined using the bottom-up approach; |
| |
177 |
| (c) | changes in fulfilment cash flows that relate to future services such as: |
| • | Experience differences between actual and expected premiums and related cash flows at the beginning of the period measured at the locked-in rate. |
| • | Non-financial changes in estimates of the present value of future cash flows measured at the locked-in rate. |
| • | Changes in the risk adjustment for non-financial risk that relate to future service measured at the locked-in rate. |
| • | Differences between actual and expected investment component that becomes payable in the period. The same applies to a policyholder loan that becomes repayable; |
| (d) | effect of any currency exchange differences on the CSM; |
| (e) | CSM amortization, which is the recognition of unearned profit into insurance revenue for services provided in the period. The CSM is recognized into insurance revenue over the duration of the group of insurance contracts based on the respective coverage units as insurance services are provided. The number of coverage units is the quantity of services provided by the contracts in the group, determined by considering the quantity of benefits provided and its expected coverage period. The coverage units are reviewed and updated at each reporting date. The Company allocates the CSM equally to each coverage unit and recognizes the amount allocated to coverage units provided and expected to be provided in each period. |
| • | Non-financial changes adjust the CSM at the current discount rate, there is no interest accretion on CSM at the locked-in rate, |
| • | Changes in the effect of the time value of money and financial risks such as the effect of financial guarantees adjust the CSM, however, income or expenses would be impacted if the risk mitigation option is elected. |
| • | Changes in the shareholders’ share adjust the CSM, however, income or expenses would be impacted if the risk mitigation option is elected, |
| • | Changes in the policyholders’ share are recognized in income or expenses or OCI. |
| • | The LRC at beginning of the period; plus |
| • | Premium received in the period; minus |
| • | Directly attributable acquisition costs net of related amortization (unless expensed as incurred); minus |
| • | Amount recognized as insurance revenue for the period; minus |
| • | Investment component paid or transferred to the LIC. |
| • | Insurance acquisition cash flows directly attributable to a group of contracts that will include future expected renewals of in-force contracts; and |
| • | Insurance acquisition cash flows directly attributable to a portfolio of insurance contracts, which will include future new business. |
| • | The beginning of the coverage period of the group of reinsurance contracts held. However, the Company delays the recognition of a group of reinsurance contracts held that provide proportionate coverage until the date when any underlying insurance contract is initially recognized, if that date is later than the beginning of the coverage period of the group of reinsurance contracts held, and |
| • | The date the Company recognizes an onerous group of underlying insurance contracts if the Company entered into the related reinsurance contract held in the group of reinsurance contracts held at or before that date. |
| |
179 |
| • | The asset for remaining coverage (“ARC”), which comprise the fulfilment cash flows that relate to services to be received under the contracts in future periods, and any remaining CSM at that date; and |
| • | The asset for incurred claims (“AIC”), which comprise the fulfilment cash flows for incurred claims and expenses that have not yet been received. |
| • | Income recognized to cover the losses from onerous underlying contracts also adjusts the carrying amount of CSM; |
| • | Reversals of the loss-recovery component, to the extent that those reversals are not changes in fulfilment cash flows of the group of reinsurance contract held, also adjusts the carrying amount of CSM; and |
| • | Changes in fulfilment cash flows related to future services also adjusts the carrying amount of CSM provided that changes in fulfillment cash flows related to the group of underlying insurance contracts also adjust the CSM. |
• |
For groups of insurance contracts for which changes in assumptions that relate to financial risk do not have a substantial effect on the amounts paid to the policyholders, the Company systematically allocates expected total insurance finance income or expenses over the duration of the group of contracts to income or expenses using discount rates determined on initial recognition of the group of contracts. |
• |
For groups of insurance contracts for which changes in assumptions that relate to financial risk have a substantial effect on the amounts paid to the policyholders, the Company systematically allocates expected total insurance finance income or expenses over the duration of the group of contracts to income or expenses using either a constant rate, or an allocation that is based on the amounts credited in the period and expected to be credited in future periods for fulfillment cash flows. The CSM accretion rate would use the discount rates determined on initial recognition of the group of contracts for contractual service margin. |
| |
181 |
| |
18 3 |
| • | Effects from applying IFRS 17 asset classification changes among FVTPL, AFS and amortized cost under IAS 39 to FVOCI and FVTPL under IFRS 9 resulted in a reduction in retained earnings of $ |
| • | The adoption of IFRS 9 resulted in recognition of ECL of $ |
| • | The impact of adopting IFRS 9’s ECL impairment methodology resulted in a reduction to retained earnings of $ |
| • | As at January 1, 2023, the retrospective application of IFRS 9 to the cost of hedging for currency basis spread resulted with a net $ |
| • | The impact of changes made as at January 1, 2023 were presented under line items labeled “Opening adjustment of financial assets at adoption of IFRS 9 / IFRS 17” in the Consolidated Statements of Changes in Equity. |
| |
18 5 |
| December 31, 2022 IAS 39 Impairment allowance |
January 1, 2023 IFRS 9 ECL allowance |
|||||||
| Debt securities at FVOCI under IFRS 9 |
$ |
– |
$ |
|||||
| Private placements at FVOCI under IFRS 9 |
– |
|||||||
| Private placements at amortized cost under IAS 39 |
– |
|||||||
| Mortgages at FVOCI under IFRS 9 |
– |
|||||||
| Mortgages at amortized cost under IAS 39 |
– |
|||||||
| Other invested assets at FVOCI under IFRS 9 |
– |
|||||||
| Financial assets at amortized cost under IFRS 9 |
– |
|||||||
| Mortgages at amortized cost under IAS 39 |
– |
|||||||
| Loans to Bank clients under IAS 39 |
– |
|||||||
| Total on-balance sheet exposures |
||||||||
| Allowance for credit losses on off-balance sheet exposures |
– |
|||||||
| Total |
$ |
$ |
||||||
| Measurement category |
December 31, 2022 IAS 39 Total carrying value |
Impact of classification and measurement changes (1),(2) |
January 1, 2023 IFRS 9 Total carrying value |
|||||||||||||
| Investment contract liabilities |
FVTPL | $ |
$ |
$ |
||||||||||||
| Amortized cost | ||||||||||||||||
| Deposits from Bank clients |
Amortized cost | – |
||||||||||||||
| Derivative liabilities |
FVTPL | – |
||||||||||||||
| Other liabilities |
Amortized cost | |||||||||||||||
| Long-term debt |
Amortized cost | – |
||||||||||||||
| Capital instruments |
Amortized cost | – |
||||||||||||||
| Total in-scope financial liabilities |
$ |
$ |
$ |
|||||||||||||
(1) |
Investment contract liabilities held at amortized cost of $ |
(2) |
Other liabilities include amounts not in scope of IFRS 9, for example pension obligations. Other liabilities of $ |
As at December 31, 2023 |
FVTPL (1) |
FVOCI (2) |
Other (3) |
Total carrying value |
Total fair value (4) |
|||||||||||||||
| Cash and short-term securities (5) |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
| Debt securities (6),(7) |
||||||||||||||||||||
| Canadian government and agency |
– |
|||||||||||||||||||
| U.S. government and agency |
||||||||||||||||||||
| Other government and agency |
– |
|||||||||||||||||||
| Corporate |
||||||||||||||||||||
| Mortgage / asset-backed securities |
– |
|||||||||||||||||||
| Public equities (FVTPL mandatory) |
– |
– |
||||||||||||||||||
| Mortgages |
||||||||||||||||||||
| Private placements (7) |
– |
|||||||||||||||||||
| Loans to Bank clients |
– |
– |
||||||||||||||||||
| Real estate |
||||||||||||||||||||
| Own use property (8),(9) |
– |
– |
||||||||||||||||||
| Investment property |
– |
– |
||||||||||||||||||
| Other invested assets |
||||||||||||||||||||
| Alternative long-duration assets (10) |
||||||||||||||||||||
| Various other (11) |
– |
|||||||||||||||||||
| Total invested assets |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
| |
1 87 |
| As at December 31, 2022 | FVTPL (1) |
FVOCI (2) |
Other (3) |
Total carrying value |
Total fair value (4) |
|||||||||||||||
| Cash and short-term securities (5) |
$ | – | $ | $ | $ | $ | ||||||||||||||
| Debt securities (6),(7) |
||||||||||||||||||||
| Canadian government and agency |
– | |||||||||||||||||||
| U.S. government and agency |
||||||||||||||||||||
| Other government and agency |
– | |||||||||||||||||||
| Corporate |
||||||||||||||||||||
| Mortgage / asset-backed securities |
– | |||||||||||||||||||
| Public equities (FVTPL mandatory) |
– | – | ||||||||||||||||||
| Mortgages |
||||||||||||||||||||
| Private placements (7) |
– | |||||||||||||||||||
| Loans to Bank clients |
– | – | ||||||||||||||||||
| Real estate |
||||||||||||||||||||
| Own use property (8),(9) |
– | – | ||||||||||||||||||
| Investment property |
– | – | ||||||||||||||||||
| Other invested assets |
||||||||||||||||||||
| Alternative long-duration assets (10) |
||||||||||||||||||||
| Various other (11) |
– | |||||||||||||||||||
| Total invested assets |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||
(1) |
FVTPL classification was elected for debt instruments backing certain insurance contract liabilities to substantially reduce any accounting mismatch arising from changes in the fair value of these assets, or changes in the carrying value of the related insurance contract liabilities. |
(2) |
FVOCI classification for debt instruments backing certain insurance contract liabilities inherently reduces any accounting mismatch arising from changes in the fair value of these assets, or changes in the carrying value of the related insurance contract liabilities. |
(3) |
Other includes mortgages and loans to Bank clients held at amortized cost, own use properties, investment properties, equity method accounted investments, and leveraged leases. Also includes debt securities, which qualify as having SPPI, are held to collect contractual cash flows and are carried at amortized cost. |
(4) |
Invested assets above include debt securities, mortgages, private placements and approximately $ 2 2 – $ |
(5) |
Includes short-term securities with maturities of less than one year at acquisition amounting to $ |
(6) |
Debt securities include securities which were acquired with maturities of less than one year and less than 90 days of $ |
(7) |
Floating rate invested assets above which are subject to interest rate benchmark reform, but have not yet transitioned to replacement reference rates, include debt securities benchmarked to CDOR and AUD BBSW of $ , respectively (2022 – $, respectively (2022 – $ |
(8) |
Includes accumulated depreciation of $57 (2022 – $411). |
( 9 ) |
Own use property of $ |
(1 0 ) |
ALDA include investments in private equity of $ |
(1 1 ) |
Includes $ |
2023 |
2022 |
|||||||||||||||||||
As at December 31, |
Carrying value |
% of total |
Carrying value |
% of total |
||||||||||||||||
| Leveraged leases |
$ |
$ | ||||||||||||||||||
| Infrastructure |
||||||||||||||||||||
| Timber and agriculture |
||||||||||||||||||||
| Real estate |
||||||||||||||||||||
| Other |
||||||||||||||||||||
| Total |
$ |
$ | |
|||||||||||||||||
For the year ended December 31, 2023 |
FVTPL |
FVOCI |
Other (1) |
Total |
||||||||||||
Cash and short-term securities |
||||||||||||||||
Interest income |
$ |
– |
$ |
$ |
– |
$ |
||||||||||
Gains (losses) (2) |
– |
– |
||||||||||||||
Debt securities |
||||||||||||||||
Interest income |
||||||||||||||||
Gains (losses) (2) |
– |
|||||||||||||||
Impairment loss, net (3) |
– |
( |
) |
– |
( |
) | ||||||||||
Public equities |
||||||||||||||||
Dividend income |
– |
– |
||||||||||||||
Gains (losses) (2) |
– |
– |
||||||||||||||
Impairment loss, net (3) |
– |
– |
– |
|||||||||||||
Mortgages |
||||||||||||||||
Interest income |
– |
– |
||||||||||||||
Gains (losses) (2) |
– |
– |
||||||||||||||
Provision, net |
– |
– |
( |
) |
( |
) | ||||||||||
Private placements |
||||||||||||||||
Interest income |
– |
– |
||||||||||||||
Gains (losses) (2) |
– |
|||||||||||||||
Impairment loss, net (3) |
– |
( |
) |
– |
( |
) | ||||||||||
Loans to Bank clients |
||||||||||||||||
Interest income |
– |
– |
||||||||||||||
Provision, net |
– |
– |
( |
) |
( |
) | ||||||||||
Real estate |
||||||||||||||||
Rental income, net of depreciation (4) |
– |
– |
||||||||||||||
Gains (losses) (2) |
– |
– |
( |
) |
( |
) | ||||||||||
Impairment loss, net (3) |
– |
– |
– |
– |
||||||||||||
Derivatives |
||||||||||||||||
Interest income, net |
( |
) |
– |
– |
( |
) | ||||||||||
Gains (losses) (2) |
– |
– |
||||||||||||||
Other invested assets |
||||||||||||||||
Interest income |
– |
|||||||||||||||
Energy, timber, agriculture and other income |
– |
– |
||||||||||||||
Gains (losses) (2) |
– |
|||||||||||||||
Impairment loss, net (3) |
( |
) |
– |
( |
) |
( |
) | |||||||||
Total investment income (loss) |
$ |
$ |
$ |
( |
) |
$ |
||||||||||
Investment income |
||||||||||||||||
Interest income |
$ |
( |
) |
$ |
$ |
$ |
||||||||||
Dividends, rental income and other income |
– |
|||||||||||||||
Impairments, provisions and recoveries, net (3) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||
Other |
( |
) |
||||||||||||||
Realized and unrealized gains (losses) on assets supporting insurance and investment contract liabilities |
||||||||||||||||
Debt securities |
– |
|||||||||||||||
Public equities |
– |
– |
||||||||||||||
Mortgages |
– |
– |
||||||||||||||
Private placements |
– |
|||||||||||||||
Real estate |
– |
– |
( |
) |
( |
) | ||||||||||
Other invested assets |
– |
|||||||||||||||
Derivatives |
– |
– |
||||||||||||||
( |
) |
|||||||||||||||
Total investment income (loss) |
$ |
$ |
$ |
( |
) |
$ |
||||||||||
Investment expenses |
( |
) | ||||||||||||||
Net investment income (loss) |
$ |
|||||||||||||||
(1) |
Primarily includes investment income on loans carried at amortized cost, own use real estate properties, investment real estate properties, derivative and hedging instruments in cash flow hedging relationships, equity method accounted investments, energy investments and leveraged leases. |
(2) |
Includes net realized and unrealized gains (losses) for financial instruments at FVTPL, investment real estate properties, and other invested assets measured at fair value. Also includes net realized gains (losses) for financial instruments at FVOCI and other invested assets carried at amortized cost. |
(3) |
The Company adopted IFRS 9’s ECL impairment requirements as at January 1, 2023 without restating the comparative period. Impairments for 2023 are based on IFRS 9’s ECL requirements and impairments for 2022 are based on IAS 39’s incurred loss impairment requirements. |
(4) |
Rental income from investment real estate properties is net of direct operating expenses. |
| |
1 89 |
For the year ended December 31, 2022 |
FVTPL |
FVOCI |
Other (1) |
Total |
||||||||||||
Cash and short-term securities |
||||||||||||||||
Interest income |
$ |
– | $ | $ | – |
$ | ||||||||||
Gains (losses) (2) |
– | – |
||||||||||||||
Debt securities |
||||||||||||||||
Interest income |
||||||||||||||||
Gains (losses) (2) |
– | ( |
) |
– |
( |
) | ||||||||||
Impairment loss, net (3) |
– | – |
– |
– | ||||||||||||
Public equities |
||||||||||||||||
Dividend income |
– |
– |
||||||||||||||
Gains (losses) (2) |
( |
) |
– |
– |
( |
) | ||||||||||
Impairment loss, net (3) |
– |
– |
– |
– | ||||||||||||
Mortgages |
||||||||||||||||
Interest income |
– |
– |
||||||||||||||
Gains (losses) (2) |
– |
( |
) |
– |
( |
) | ||||||||||
Provision, net |
– |
|||||||||||||||
Private placements |
||||||||||||||||
Interest income |
– |
– |
||||||||||||||
Gains (losses) (2) |
– |
– |
||||||||||||||
Impairment loss, net (3) |
– |
– |
– |
– | ||||||||||||
Loans to Bank clients |
||||||||||||||||
Interest income |
– |
|||||||||||||||
Provision, net |
– |
( |
) |
( |
) | |||||||||||
Real estate |
||||||||||||||||
Rental income, net of depreciation (4) |
– |
|||||||||||||||
Gains (losses) (2) |
– |
( |
) |
( |
) | |||||||||||
Impairment loss, net (3) |
– |
– |
– |
– | ||||||||||||
Derivatives |
||||||||||||||||
Interest income, net |
– |
– |
||||||||||||||
Gains (losses) (2) |
( |
) |
– |
– |
( |
) | ||||||||||
Other invested assets |
||||||||||||||||
Interest income |
– |
|||||||||||||||
Energy, timber, agriculture and other income |
– |
– |
||||||||||||||
Gains (losses) (2) |
– |
|||||||||||||||
Impairment loss, net (3) |
( |
) |
– |
– |
( |
) | ||||||||||
Total investment income (loss) |
$ |
( |
) | $ |
$ |
$ |
||||||||||
Investment income |
||||||||||||||||
Interest income |
$ |
$ |
$ |
$ |
||||||||||||
Dividend, rental and other income |
– |
|||||||||||||||
Impairments, provisions and recoveries, net (3) |
( |
) |
( |
) |
( |
) | ||||||||||
Other |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||
Realized and unrealized gains (losses) on assets supporting insurance and investment contract liabilities |
||||||||||||||||
Debt securities |
– |
( |
) |
– | ( |
) | ||||||||||
Public equities |
( |
) |
– |
– | ( |
) | ||||||||||
Mortgages |
– |
( |
) |
– | ( |
) | ||||||||||
Private placements |
– |
– | ||||||||||||||
Real estate |
– |
( |
) |
( |
) | |||||||||||
Other invested assets |
||||||||||||||||
Derivatives |
( |
) |
– |
( |
) | |||||||||||
| ( |
) | ( |
) | ( |
) |
( |
) | |||||||||
Total investment income (loss) |
$ | ( |
) | $ | $ | |
$ |
|||||||||
Investment expenses |
( |
) | ||||||||||||||
Net investment income (loss) |
$ | |||||||||||||||
For the years ended December 31, |
2023 |
2022 |
||||||
| Related to invested assets |
$ |
$ | ||||||
| Related to segregated, mutual and other funds |
||||||||
| Total investment expenses |
$ |
$ | |
|||||
For the years ended December 31, |
2023 |
2022 |
||||||
| Rental income from investment properties |
$ |
$ | ||||||
| Direct operating expenses of rental investment properties |
( |
) |
( |
) | ||||
| Total |
$ |
$ | |
|||||
As at December 31, 2023 |
Securitized assets |
|||||||||||||||||||
Securitization program |
Securitized mortgages |
Restricted cash and short-term securities |
Total |
Secured borrowing liabilities (2) |
Net |
|||||||||||||||
| HELOC securitization (1) |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
| CMB securitization (3) |
– |
|||||||||||||||||||
| Total |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
| As at December 31, 2022 | Securitized assets | |||||||||||||||||||
| Securitization program | Securitized mortgages |
Restricted cash and short-term securities |
Total | Secured borrowing liabilities (2) |
Net | |||||||||||||||
| HELOC securitization (1) |
$ | $ | $ | $ | $ | |||||||||||||||
| CMB securitization (3) |
– | |||||||||||||||||||
| Total |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||
(1) |
Manulife Bank, a subsidiary, securitizes a portion of its HELOC receivables through PCMT II. PCMT II funds the purchase of the co-ownership interests from Manulife Bank by issuing term notes collateralized by an underlying pool of uninsured HELOCs to institutional investors. The restricted cash balance for the HELOC securitization reflects a cash reserve fund established in relation to the transactions. The reserve will be drawn upon only in the event of insufficient cash flows from the underlying HELOCs to satisfy the secured borrowing liabilities. |
(2) |
The PCMT II notes payable have floating rates of interest and are secured by the PCMT II assets. Under the terms of the agreements, of $ is expected to be repaid within one year, $beyond 5 years , respectively (2022 – $ , r |
(3) |
Manulife Bank also securitizes insured amortizing mortgages under the National Housing Act Mortgage-Backed Securities (“NHA MBS”) program sponsored by CMHC. Manulife Bank participates in CMB programs by selling NHA MBS securities to Canada Housing Trust (“CHT”), as a source of fixed rate funding. |
| |
1 91 |
As at December 31, 2023 |
Total fair value |
Level 1 |
Level 2 |
Level 3 |
||||||||||||
| Cash and short-term securities |
||||||||||||||||
| FVOCI |
$ |
$ |
– |
$ |
$ |
– |
||||||||||
| FVTPL |
– |
– |
||||||||||||||
| Other |
– |
– |
||||||||||||||
| Debt securities |
||||||||||||||||
| FVOCI |
||||||||||||||||
| Canadian government and agency |
– |
– |
||||||||||||||
| U.S. government and agency |
– |
– |
||||||||||||||
| Other government and agency |
– |
|||||||||||||||
| Corporate |
– |
|||||||||||||||
| Residential mortgage-backed securities |
– |
– |
||||||||||||||
| Commercial mortgage-backed securities |
– |
– |
||||||||||||||
| Other asset-backed securities |
– |
|||||||||||||||
| FVTPL |
||||||||||||||||
| Canadian government and agency |
– |
– |
||||||||||||||
| U.S. government and agency |
– |
– |
||||||||||||||
| Other government and agency |
– |
– |
||||||||||||||
| Corporate |
– |
– |
||||||||||||||
| Commercial mortgage-backed securities |
– |
– |
||||||||||||||
| Other asset-backed securities |
– |
– |
||||||||||||||
| Private placements (1) |
||||||||||||||||
| FVOCI |
– |
|||||||||||||||
| FVTPL |
– |
|||||||||||||||
| Mortgages |
||||||||||||||||
| FVOCI |
– |
– |
||||||||||||||
| FVTPL |
– |
– |
||||||||||||||
| Public equities |
||||||||||||||||
| FVTPL |
||||||||||||||||
| Real estate (2) |
||||||||||||||||
| Investment property |
– |
– |
||||||||||||||
| Own use property |
– |
– |
||||||||||||||
| Other invested assets (3) |
– |
|||||||||||||||
| Segregated funds net assets (4) |
||||||||||||||||
| Total |
$ |
$ |
$ |
$ |
||||||||||||
(1) |
Fair value of private placements is determined through an internal valuation methodology using both observable and non-market observable inputs. Non-market observable inputs include credit assumptions and liquidity spread adjustments. Private placements are classified within Level 2 unless the liquidity adjustment constitutes a significant price impact, in which case the securities are classified as Level 3. |
(2) |
For real estate properties, the significant non-market observable inputs are capitalization rates (2022 – ranging from %), terminal capitalization rates2023 (2022 – ranging from %) and discount rates(2022 – ranging from %). Holding other factors constant, a lower capitalization or terminal capitalization rate will tend to increase the fair value of an investment property. Changes in fair value based on variations in non-market observable inputs generally cannot be extrapolated because the relationship between the directional changes of each input is not usually linear. |
(3) |
Other invested assets measured at fair value are held in infrastructure and timber sectors and include fund investments of $ 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 year ended December 31, 2023 ranged from |
(4) |
Segregated funds net assets are measured at fair value. The Company’s Level 3 segregated funds underlying assets are predominantly investment properties and timberland properties valued as described above. |
| As at December 31, 2022 | Total fair value | Level 1 | Level 2 | Level 3 | ||||||||||||
| Cash and short-term securities |
||||||||||||||||
| FVOCI |
$ | $ | – | $ | $ | – | ||||||||||
| Other |
– | – | ||||||||||||||
| Debt securities |
||||||||||||||||
| FVOCI |
||||||||||||||||
| Canadian government and agency |
– | – | ||||||||||||||
| U.S. government and agency |
– | – | ||||||||||||||
| Other government and agency |
– | |||||||||||||||
| Corporate |
– | |||||||||||||||
| Residential mortgage-backed securities |
– | – | ||||||||||||||
| Commercial mortgage-backed securities |
– | – | ||||||||||||||
| Other asset-backed securities |
– | |||||||||||||||
| FVTPL |
||||||||||||||||
| Canadian government and agency |
– | – | ||||||||||||||
| U.S. government and agency |
– | – | ||||||||||||||
| Other government and agency |
– | – | ||||||||||||||
| Corporate |
– | – | ||||||||||||||
| Commercial mortgage-backed securities |
– | – | ||||||||||||||
| Other asset-backed securities |
– | – | ||||||||||||||
| Private placements (1) |
||||||||||||||||
| FVOCI |
– | |||||||||||||||
| FVTPL |
– | |||||||||||||||
| Mortgages |
||||||||||||||||
| FVOCI |
– | – | ||||||||||||||
| FVTPL |
– | – | ||||||||||||||
| Public equities |
||||||||||||||||
| FVTPL |
– | |||||||||||||||
| Real estate (2) |
||||||||||||||||
| Investment property |
– | – | ||||||||||||||
| Own use property |
– | – | ||||||||||||||
| Other invested assets (3) |
– | |||||||||||||||
| Segregated funds net assets (4) |
||||||||||||||||
| Total |
$ | |
$ | |
$ | |
$ | |
||||||||
As at December 31, 2023 |
Carrying value |
Total fair value |
Level 1 |
Level 2 |
Level 3 |
|||||||||||||||
| Short-term securities |
$ |
$ |
$ |
– |
$ |
$ |
– |
|||||||||||||
| Mortgages (1) |
– |
– |
||||||||||||||||||
| Loans to Bank clients (2) |
– |
– |
||||||||||||||||||
| Real estate – own use property (3) |
– |
– |
||||||||||||||||||
| Public bonds held at amortized cost |
– |
– |
||||||||||||||||||
| Other invested assets (4) |
– |
|||||||||||||||||||
| Total invested assets disclosed at fair value |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
| As at December 31, 2022 | Carrying value | Total fair value | Level 1 | Level 2 | Level 3 | |||||||||||||||
| Mortgages (1) |
$ |
$ |
$ |
– | $ |
– | $ |
|||||||||||||
| Loans to Bank clients (2) |
– | – | ||||||||||||||||||
| Real estate – own use property (3) |
– | – | ||||||||||||||||||
| Public bonds held at amortized cost |
– | – | ||||||||||||||||||
| Other invested assets(4) |
– | |||||||||||||||||||
| Total invested assets disclosed at fair value |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||
(1) |
Fair value of commercial mortgages is determined through an internal valuation methodology using both observable and non-market observable inputs. Non-market observable inputs include credit assumptions and liquidity spread adjustments. Fair value of fixed-rate residential mortgages is determined using the discounted cash flow method. Inputs used for valuation are primarily comprised of prevailing interest rates and prepayment rates, if applicable. Fair value of variable-rate residential mortgages is assumed to be their carrying value. |
(2) |
Fair value of fixed-rate loans to Bank clients is determined using the discounted cash flow method. Inputs used for valuation are primarily comprised of current interest rates. Fair value of variable-rate loans is assumed to be their carrying value. |
(3) |
Fair value of own use real estate and the fair value hierarchy are determined in accordance with the methodologies described for real estate – investment property in note 1(e). |
(4) |
Primarily includes leveraged leases of $ ), and equity method accounted other invested assets. Fair value of leveraged leases is disclosed at their carrying values as fair value is not routinely calculated on these investments. Fair value for energy properties is determined using external appraisals based on discounted cash flow methodology. Inputs used in valuation are primarily comprised of forecasted price curves, planned production, as well as capital expenditures, and operating costs. Fair value of equity method accounted other invested assets is determined using a variety of valuation techniques including discounted cash flows and market comparable approaches. Inputs vary based on the specific investment. |
| |
19 3 |
| For the year ended December 31, 2023 |
Balance, January 1, 2023 |
Total gains (losses) included in net income (1) |
Total gains (losses) included in AOCI (2) |
Purchases |
Sales |
Settlements |
Transfer in (3) |
Transfer out (3),(4) |
Currency movement |
Balance, December 31, 2023 |
Change in unrealized gains (losses) on assets still held |
|||||||||||||||||||||||||||||||||
| Debt instruments |
||||||||||||||||||||||||||||||||||||||||||||
| FVOCI |
||||||||||||||||||||||||||||||||||||||||||||
| Other government & agency |
$ |
$ |
– |
$ |
– |
$ |
$ |
– |
$ |
– |
$ |
– |
$ |
– |
$ |
( |
) |
$ |
$ |
– |
||||||||||||||||||||||||
| Corporate |
– |
– |
( |
) |
– |
– |
– |
|||||||||||||||||||||||||||||||||||||
| Other securitized assets |
– |
– |
– |
( |
) |
– |
– |
( |
) |
– |
||||||||||||||||||||||||||||||||||
| Public equities |
||||||||||||||||||||||||||||||||||||||||||||
| FVTPL |
– |
– |
– |
– |
– |
( |
) |
– |
– |
|||||||||||||||||||||||||||||||||||
| Private placements |
||||||||||||||||||||||||||||||||||||||||||||
| FVOCI |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
– |
|||||||||||||||||||||||||||||||||
| FVTPL |
– |
– |
( |
) |
( |
) |
||||||||||||||||||||||||||||||||||||||
| Mortgages |
||||||||||||||||||||||||||||||||||||||||||||
| FVOCI |
( |
) |
( |
) |
– |
– |
( |
) |
– |
|||||||||||||||||||||||||||||||||||
| FVTPL |
– |
( |
) |
( |
) |
– |
– |
( |
) |
– |
||||||||||||||||||||||||||||||||||
| Investment property |
( |
) |
– |
( |
) |
– |
– |
– |
( |
) |
( |
) | ||||||||||||||||||||||||||||||||
| Own use property |
( |
) |
– |
– |
– |
– |
– |
( |
) |
( |
) | |||||||||||||||||||||||||||||||||
| Other invested assets |
( |
) |
( |
) |
– |
( |
) |
( |
) |
|||||||||||||||||||||||||||||||||||
| Total invested assets |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||||||||||||||||||||
| Derivatives, net |
( |
) |
( |
) |
– |
– |
– |
– |
( |
) |
||||||||||||||||||||||||||||||||||
| Segregated funds net assets |
( |
) |
– |
( |
) |
– |
( |
) |
( |
) |
||||||||||||||||||||||||||||||||||
| Total |
$ |
$ |
( |
) |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
( |
) | |||||||||||||||||||||
(1) |
These amounts are included in net investment income on the Consolidated Statements of Income except for the amount related to segregated funds net assets, where the amount is recorded in Investment income related to segregated funds net assets. Refer to notes 1 (h) and 23. |
(2) |
These amounts are included in AOCI on the Consolidated Statements of Financial Position. |
(3) |
The Company uses fair values of the assets at the beginning of the year for assets transferred into and out of Level 3 except for derivatives, where the Company uses fair value at the end of the year and at the beginning of the year, respectively. |
(4) |
Private placement bonds of $ |
For the year ended December 31, 2022 |
Balance, January 1, 2022 |
Total gains (losses) included in net income (1) |
Total gains (losses) included in AOCI (2) |
Purchases |
Sales |
Settlements |
Transfer in (3) |
Transfer out (3) |
Currency movement |
Balance, December 31, 2022 |
Change in unrealized gains (losses) on assets still held |
|||||||||||||||||||||||||||||||||
Debt instruments |
||||||||||||||||||||||||||||||||||||||||||||
FVOCI |
||||||||||||||||||||||||||||||||||||||||||||
Other government & agency |
$ | – | $ | – | $ | – | $ | – | $ | – | $ | – | $ | $ | – | $ | – | $ | $ | – | ||||||||||||||||||||||||
Corporate |
– | ( |
) |
– | ( |
) | ( |
) | – | |||||||||||||||||||||||||||||||||||
Other securitized assets |
– | – |
– | ( |
) | – | – |
– |
– | |||||||||||||||||||||||||||||||||||
Public equities |
||||||||||||||||||||||||||||||||||||||||||||
FVTPL |
– | ( |
) |
– |
( |
) |
– | – |
( |
) | ||||||||||||||||||||||||||||||||||
Private placements |
||||||||||||||||||||||||||||||||||||||||||||
FVOCI |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
– | |||||||||||||||||||||||||||||||||
FVTPL |
( |
) |
– |
– |
– |
( |
) |
– |
– |
( |
) | |||||||||||||||||||||||||||||||||
Mortgages |
||||||||||||||||||||||||||||||||||||||||||||
FVOCI |
( |
) |
( |
) |
( |
) |
( |
) |
– |
– |
– | |||||||||||||||||||||||||||||||||
FVTPL |
( |
) |
– |
( |
) |
( |
) |
– |
– |
– | ||||||||||||||||||||||||||||||||||
Investment property |
( |
) | – |
( |
) | – |
– |
( |
) | |||||||||||||||||||||||||||||||||||
Own use property |
( |
) |
– |
– | – |
( |
) |
– |
( |
) | ||||||||||||||||||||||||||||||||||
Other invested assets |
( |
) | ( |
) | – |
|||||||||||||||||||||||||||||||||||||||
Total invested assets |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||
Derivatives, net |
( |
) | ( |
) | ( |
) | – | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||
Segregated funds net assets |
– | ( |
) | ( |
) | – | ( |
) | ||||||||||||||||||||||||||||||||||||
Total |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
$ |
( |
) | $ | ( |
) | $ | |
$ | ( |
) | $ | |
$ | |
$ | ( |
) | ||||||||||||||||
Remaining terms to maturities (1) |
||||||||||||||||||||||||||||
As at December 31, 2023 |
Less than 1 year |
1 to 3 years |
3 to 5 years |
5 to 10 years |
Over 10 years |
With no specific maturity |
Total |
|||||||||||||||||||||
Cash and short-term securities |
$ |
$ |
– |
$ |
– |
$ |
– |
$ |
– |
$ |
– |
$ |
||||||||||||||||
Debt securities |
||||||||||||||||||||||||||||
Canadian government and agency |
– |
|||||||||||||||||||||||||||
U.S. government and agency |
– |
|||||||||||||||||||||||||||
Other government and agency |
– |
|||||||||||||||||||||||||||
Corporate |
||||||||||||||||||||||||||||
Mortgage / asset-backed securities |
– |
|||||||||||||||||||||||||||
Public equities |
||||||||||||||||||||||||||||
Mortgages |
||||||||||||||||||||||||||||
Private placements |
||||||||||||||||||||||||||||
Loans to Bank clients |
||||||||||||||||||||||||||||
Real estate |
||||||||||||||||||||||||||||
Own use property |
– |
– |
– |
– |
– |
|||||||||||||||||||||||
Investment property |
– |
– |
– |
– |
– |
|||||||||||||||||||||||
Other invested assets |
||||||||||||||||||||||||||||
Alternative long-duration assets |
– |
|||||||||||||||||||||||||||
Various other (2) |
– |
– |
||||||||||||||||||||||||||
Total invested assets |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
(1) |
Represents contractual maturities. Actual maturities may differ due to prepayment privileges in the applicable contract. |
(2) |
Primarily includes equity method accounted investments and leveraged leases. |
| |
1 95 |
Remaining terms to maturities (1) |
||||||||||||||||||||||||||||
As at December 31, 2022 |
Less than 1 year |
1 to 3 years |
3 to 5 years |
5 to 10 years |
Over 10 years |
With no specific maturity |
Total |
|||||||||||||||||||||
Cash and short-term securities |
$ | $ | – | $ | – | $ | – | $ | – | $ | – |
$ | ||||||||||||||||
Debt securities |
||||||||||||||||||||||||||||
Canadian government and agency |
– | |||||||||||||||||||||||||||
U.S. government and agency |
– | |||||||||||||||||||||||||||
Other government and agency |
– | |||||||||||||||||||||||||||
Corporate |
||||||||||||||||||||||||||||
Mortgage / asset-backed securities |
– | |||||||||||||||||||||||||||
Public equities |
– | – | – | – | – | |||||||||||||||||||||||
Mortgages |
||||||||||||||||||||||||||||
Private placements |
||||||||||||||||||||||||||||
Loans to Bank clients |
– | |||||||||||||||||||||||||||
Real estate |
||||||||||||||||||||||||||||
Own use property |
– | – | – | – | – | |||||||||||||||||||||||
Investment property |
– | – | – | – | – | |||||||||||||||||||||||
Other invested assets |
||||||||||||||||||||||||||||
Alternative long-duration assets |
||||||||||||||||||||||||||||
Various other (2) |
– | |||||||||||||||||||||||||||
Total invested assets |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||||||
As at December 31, |
2023 |
2022 |
||||||||||||||||||||||||||||
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 | $ |
$ |
$ |
$ |
– |
$ |
– |
$ |
– |
||||||||||||||||||||
| Foreign currency swaps | – |
|||||||||||||||||||||||||||||
| Forward contracts | – |
– |
– |
|||||||||||||||||||||||||||
Cash flow hedges |
Interest rate swaps | – |
– |
– |
||||||||||||||||||||||||||
| Foreign currency swaps | ||||||||||||||||||||||||||||||
Forward contracts |
– |
– |
– |
– |
– |
– |
||||||||||||||||||||||||
| Equity contracts | – |
– |
||||||||||||||||||||||||||||
Net investment hedges |
Forward contracts | – |
– |
|||||||||||||||||||||||||||
Total derivatives in qualifying hedge accounting relationships |
||||||||||||||||||||||||||||||
Derivatives not designated in qualifying hedge accounting relationships |
||||||||||||||||||||||||||||||
| Interest rate swaps | ||||||||||||||||||||||||||||||
| Interest rate futures | – |
– |
– |
– |
||||||||||||||||||||||||||
| Interest rate options | – |
– |
||||||||||||||||||||||||||||
| Foreign currency swaps | ||||||||||||||||||||||||||||||
| Currency rate futures | – |
– |
– |
– |
||||||||||||||||||||||||||
| Forward contracts | ||||||||||||||||||||||||||||||
| Equity contracts | ||||||||||||||||||||||||||||||
| Credit default swaps | – |
– |
||||||||||||||||||||||||||||
| Equity futures | – |
– |
– |
– |
||||||||||||||||||||||||||
Total derivatives not designated in qualifying hedge accounting relationships |
||||||||||||||||||||||||||||||
Total derivatives |
$ |
$ |
$ |
$ | |
$ | |
$ | |
|||||||||||||||||||||
Remaining term to maturity |
||||||||||||||||||||
As at December 31, 2023 |
Less than 1 year |
1 to 3 years |
3 to 5 years |
Over 5 years |
Total |
|||||||||||||||
Derivative assets |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
Derivative liabilities |
||||||||||||||||||||
Remaining term to maturity |
||||||||||||||||||||
As at December 31, 2022 |
Less than 1 year |
1 to 3 years |
3 to 5 years |
Over 5 years |
Total |
|||||||||||||||
Derivative assets |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
Derivative liabilities |
||||||||||||||||||||
| |
197 |
Remaining term to maturity (notional amounts) |
Fair value |
Capital requirement (2) |
||||||||||||||||||||||||||||||||||||||
As at December 31, 2023 |
Under 1 year |
1 to 5 years |
Over 5 years |
Total |
Positive |
Negative |
Net |
Credit equivalent amount (1) |
||||||||||||||||||||||||||||||||
Interest rate contracts |
||||||||||||||||||||||||||||||||||||||||
OTC swap contracts |
$ |
$ |
$ |
106,445 |
$ |
132,013 |
$ |
$ |
( |
) |
$ |
(1,555 |
) |
$ |
$ |
|||||||||||||||||||||||||
Cleared swap contracts |
( |
) |
– |
– |
||||||||||||||||||||||||||||||||||||
Forward contracts |
– |
( |
) |
( |
) |
– |
– |
|||||||||||||||||||||||||||||||||
Futures |
– |
– |
– |
– |
– |
– |
– |
|||||||||||||||||||||||||||||||||
Options purchased |
– |
– |
||||||||||||||||||||||||||||||||||||||
Subtotal |
( |
) |
( |
) |
||||||||||||||||||||||||||||||||||||
Foreign exchange |
||||||||||||||||||||||||||||||||||||||||
Swap contracts |
( |
) |
( |
) |
||||||||||||||||||||||||||||||||||||
Forward contracts |
– |
– |
( |
) |
( |
) |
– |
|||||||||||||||||||||||||||||||||
Futures |
– |
– |
– |
– |
– |
– |
– |
|||||||||||||||||||||||||||||||||
Subtotal |
( |
) |
( |
) |
||||||||||||||||||||||||||||||||||||
Credit derivatives |
– |
– |
– |
– |
||||||||||||||||||||||||||||||||||||
Equity contracts |
||||||||||||||||||||||||||||||||||||||||
Swap contracts |
– |
( |
) |
( |
) |
– |
||||||||||||||||||||||||||||||||||
Futures |
– |
– |
– |
– |
– |
– |
– |
|||||||||||||||||||||||||||||||||
Options purchased |
– |
( |
) |
|||||||||||||||||||||||||||||||||||||
Subtotal |
– |
( |
) |
|||||||||||||||||||||||||||||||||||||
Subtotal including accrued interest |
( |
) |
( |
) |
||||||||||||||||||||||||||||||||||||
Less accrued interest |
– |
– |
– |
– |
( |
) |
( |
) |
– |
– |
||||||||||||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
|||||||||||||||||||||||||||
| Remaining term to maturity (notional amounts) | Fair value | Capital requirement (2) |
||||||||||||||||||||||||||||||||||||||
| As at December 31, 2022 | Under 1 year |
1 to 5 years |
Over 5 years |
Total | Positive | Negative | Net | Credit equivalent amount (1) |
||||||||||||||||||||||||||||||||
Interest rate contracts |
||||||||||||||||||||||||||||||||||||||||
OTC swap contracts |
$ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||||||||||||||||||
Cleared swap contracts |
( |
) | – | – | ||||||||||||||||||||||||||||||||||||
Forward contracts |
( |
) | ( |
) | – | |||||||||||||||||||||||||||||||||||
Futures |
– | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
Options purchased |
– | |||||||||||||||||||||||||||||||||||||||
Subtotal |
( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||
Foreign exchange |
||||||||||||||||||||||||||||||||||||||||
Swap contracts |
( |
) | ||||||||||||||||||||||||||||||||||||||
Forward contracts |
– | – | ( |
) | ( |
) | – | |||||||||||||||||||||||||||||||||
Futures |
– | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
Subtotal |
( |
) | ||||||||||||||||||||||||||||||||||||||
Credit derivatives |
– | – | – | – | ||||||||||||||||||||||||||||||||||||
Equity contracts |
||||||||||||||||||||||||||||||||||||||||
Swap contracts |
– | ( |
) | – | ||||||||||||||||||||||||||||||||||||
Futures |
– | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
Options purchased |
– | ( |
) | |||||||||||||||||||||||||||||||||||||
Subtotal |
– | ( |
) | |||||||||||||||||||||||||||||||||||||
Subtotal including accrued interest |
( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||
Less accrued interest |
– | – | – | – | ( |
) | ( |
) | – | – | ||||||||||||||||||||||||||||||
Total |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
$ | |
||||||||||||||||||||
(1) |
Credit equivalent amount is the sum of replacement cost and the potential future credit exposure less any collateral held. Replacement cost represents the current cost of replacing all contracts with a positive fair value. The amounts take into consideration legal contracts that permit offsetting of positions. The potential future credit exposure is calculated based on a formula prescribed by the Office of the Superintendent of Financial Institutions (“OSFI”). |
(2) |
Capital requirement represents the credit equivalent amount, weighted according to the creditworthiness of the counterparty, as prescribed by OSFI. |
As at December 31, 2023 |
Remaining term to maturity (notional amounts) |
Fair value |
||||||||||||||||||||||||||||||||||||||
Hedged item |
Hedging instrument |
Average rate |
Under 1 year |
1 to 5 years |
Over 5 years |
Total |
Positive |
Negative |
Net |
|||||||||||||||||||||||||||||||
Inflation risk |
||||||||||||||||||||||||||||||||||||||||
Inflation linked insurance liabilities |
Interest rate swaps | CPI rate: |
$ |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||||||||||
Foreign exchange risk |
||||||||||||||||||||||||||||||||||||||||
Fixed rate liabilities |
Foreign currency swaps | SGD/CAD: |
– |
– |
– |
|||||||||||||||||||||||||||||||||||
Foreign exchange and interest rate risk |
||||||||||||||||||||||||||||||||||||||||
Floating rate foreign currency liabilities |
Foreign currency swaps | CAD/USD: |
– |
– |
– |
( |
) |
( |
) | |||||||||||||||||||||||||||||||
Debt securities at fair value through OCI |
Foreign currency swaps | CAD/USD: |
– |
– |
– |
|||||||||||||||||||||||||||||||||||
Equity risk |
||||||||||||||||||||||||||||||||||||||||
Stock-based compensation |
Equity contracts | MFC price: $ |
– |
– |
||||||||||||||||||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||||||||||||
As at December 31, 2022 |
Remaining term to maturity (notional amounts) |
Fair value |
||||||||||||||||||||||||||||||||||||||
Hedged item |
Hedging instrument |
Average rate |
Under 1 year |
1 to 5 years |
Over 5 years |
Total |
Positive |
Negative |
Net |
|||||||||||||||||||||||||||||||
Foreign exchange risk |
||||||||||||||||||||||||||||||||||||||||
Fixed rate liabilities |
Foreign currency swaps | SGD/CAD: |
$ | – | $ | $ | – | $ | $ | $ | – | $ | ||||||||||||||||||||||||||||
Foreign exchange and interest rate risk |
||||||||||||||||||||||||||||||||||||||||
Floating rate foreign currency liabilities |
Foreign currency swaps | CAD/USD: |
– | – | – | ( |
) | ( |
) | |||||||||||||||||||||||||||||||
Debt securities at fair value through OCI |
Foreign currency swaps | CAD/USD: |
– | – | – | |||||||||||||||||||||||||||||||||||
Equity risk |
||||||||||||||||||||||||||||||||||||||||
Stock-based compensation |
Equity contracts | MFC price: $ |
– | – | ||||||||||||||||||||||||||||||||||||
Total |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||
As at December 31, 2023 |
Fair value |
Level 1 |
Level 2 |
Level 3 |
||||||||||||
Derivative assets |
||||||||||||||||
Interest rate contracts |
$ |
$ |
– |
$ |
$ |
|||||||||||
Foreign exchange contracts |
– |
– |
||||||||||||||
Equity contracts |
– |
|||||||||||||||
Credit default swaps |
– |
– |
||||||||||||||
Total derivative assets |
$ |
$ |
– |
$ |
$ |
|||||||||||
Derivative liabilities |
||||||||||||||||
Interest rate contracts |
$ |
$ |
– |
$ |
$ |
|||||||||||
Foreign exchange contracts |
– |
|||||||||||||||
Equity contracts |
– |
|||||||||||||||
Total derivative liabilities |
$ |
$ |
– |
$ |
$ |
|||||||||||
| |
1 99 |
As at December 31, 2022 |
Fair value | Level 1 | Level 2 | Level 3 | ||||||||||||
Derivative assets |
||||||||||||||||
Interest rate contracts |
$ | $ | – | $ | $ | |||||||||||
Foreign exchange contracts |
– | |||||||||||||||
Equity contracts |
– | |||||||||||||||
Credit default swaps |
– | – | ||||||||||||||
Total derivative assets |
$ | $ | – | $ | $ | |||||||||||
Derivative liabilities |
||||||||||||||||
Interest rate contracts |
$ | $ | – | $ | $ | |||||||||||
Foreign exchange contracts |
– | |||||||||||||||
Equity contracts |
– | |||||||||||||||
Total derivative liabilities |
$ | |
$ | – | $ | |
$ | |
||||||||
• |
The Company designates a specific risk component or a combination of risk components as the hedged risk, including benchmark interest rate, foreign exchange rate, equity price and consumer price index components. All these risk components are observable in the relevant market environment and the changes in fair value or variability in cash flows attributable to these risk components can be reliably measured for hedged items. The hedged risk is generally the most significant risk component of the overall changes in fair value or in cash flows. The Company acquires derivatives for economic hedging purposes with underlying characteristics that offset the hedged risk based on the risk management strategy. |
• |
The Company executes hedging derivatives with counterparties with high credit quality and monitors the creditworthiness of the counterparties to ensure they are expected to meet cash flow obligations on the hedging instruments as they come due, and that the probability of counterparty default is remote. Further, changes in the Company’s own credit risk are immaterial and have insignificant impact to the hedging relationships. |
• |
A hedge ratio is calculated as the ratio between the quantity of the hedged item that the Company hedges and the quantity of the hedging instrument the Company uses to hedge that quantity of hedged item. |
¡ |
For group fair value hedges of interest rate risk of insurance liabilities and group fair value hedges of foreign exchange and interest rate risk of foreign currency denominated debt instruments, the Company constructs the hedge relationship by comparing interest rate sensitivities of the group of hedging derivatives and the group of hedged items in the same currency. Interest rate sensitivities are compared by estimating the change in the present value of cash flows of hedged items and of hedging derivatives from an instantaneous shock to interest rates, assuming no rebalancing actions are undertaken. |
¡ |
For the rest of the Company’s hedge accounting relationships, the Company generally constructs the hedge relationships by comparing the notional amounts of the hedging derivatives with that of the hedged items. |
| Interest rate risk |
Foreign currency risk |
Equity risk |
Consumer price index risk |
|||||||||||||
Mismatches in some critical terms of hedging instrument and hedged item |
✓ |
✓ |
✓ |
✓ |
||||||||||||
Differences in valuation methodologies including discounting factor |
✓ |
✓ |
✓ |
|||||||||||||
Changes in timing and amount of forecasted hedged items |
✓ |
✓ |
||||||||||||||
Differences due to the use of non-zero fair value hedging instruments |
✓ |
✓ |
||||||||||||||
| For the year ended December 31, 2023 |
Change in value of the hedged item for ineffectiveness measurement |
Change in value of the hedging instrument for ineffectiveness measurement |
Ineffectiveness recognized in Total investment result |
Carrying amount for hedged items (1) |
Accumulated fair value adjustments on hedged items |
Accumulated fair value adjustments on de-designated hedged items |
||||||||||||||||||
| Assets |
||||||||||||||||||||||||
| Interest rate risk |
||||||||||||||||||||||||
| Debt securities at FVOCI |
$ |
– |
$ |
– |
$ |
– |
$ |
– |
$ |
– |
$ |
|||||||||||||
| Foreign currency and interest rate risk |
||||||||||||||||||||||||
| Debt securities at FVOCI |
( |
) |
( |
) |
( |
) | ||||||||||||||||||
| Total assets |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
$ |
( |
) | ||||||||||||
| Liabilities |
||||||||||||||||||||||||
| Interest rate risk |
||||||||||||||||||||||||
| Insurance contract liabilities |
$ |
( |
) |
$ |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||
| Total liabilities |
$ |
( |
) |
$ |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||
| For the year ended December 31, 2022 |
Change in value of the hedged item for ineffectiveness measurement |
Change in value of the hedging instrument for ineffectiveness measurement |
Ineffectiveness recognized in Total investment result |
Carrying amount for hedged items |
Accumulated fair value adjustments on hedged items |
Accumulated fair value adjustments on de-designated hedged items |
||||||||||||||||||
| Assets (2) |
||||||||||||||||||||||||
| Interest rate risk |
||||||||||||||||||||||||
| Debt securities at FVOCI |
$ | – | $ | – | $ | – | $ | – | $ | – | $ | |||||||||||||
| Foreign currency and interest rate risk |
||||||||||||||||||||||||
| Debt securities at FVOCI |
( |
) | – | |||||||||||||||||||||
| Total assets |
$ | |
$ | ( |
) | $ | |
$ | |
$ | |
$ | |
|||||||||||
| Total liabilities |
$ | – | $ | – | $ | – | $ | – | $ | – | $ | – | ||||||||||||
(1) |
The carrying amounts for hedged items presented are related to hedged items in active hedging relationships as at the reporting date. Out of the $ , no amounts related to these new hedge relationships are presented for the comparative period. Further, $, no amounts related to these new hedge relationships are presented for the comparative period. |
(2) |
Represents hedge relationships previously designated under IAS 39. |
| |
201 |
| For the year ended December 31, 2023 |
Hedged items in qualifying cash flow hedging relationships |
Change in fair value of hedged items for ineffectiveness measurement |
Change in fair value of hedging instruments for ineffectiveness measurement |
Gains (losses) deferred in AOCI on derivatives |
Gains (losses) reclassified from AOCI into Total investment result |
Ineffectiveness recognized in Total investment result |
||||||||||||||||
| Interest rate risk |
||||||||||||||||||||||
| Treasury locks |
Forecasted liability issuance |
$ |
( |
) |
$ |
$ |
$ |
– |
$ |
– |
||||||||||||
| Foreign exchange risk |
||||||||||||||||||||||
| Foreign currency swaps |
Fixed rate liabilities |
( |
) |
( |
) |
( |
) |
– |
||||||||||||||
| Interest and foreign exchange risk |
||||||||||||||||||||||
| Foreign currency swaps |
Floating rate liabilities |
( |
) |
– |
||||||||||||||||||
| Equity price risk |
||||||||||||||||||||||
| Equity contracts |
Stock-based compensation |
( |
) |
– |
||||||||||||||||||
| CPI risk |
||||||||||||||||||||||
| Interest rate swaps (1) |
Inflation linked insurance liabilities |
( |
) |
( |
) |
– |
||||||||||||||||
| Total |
$ |
( |
) |
$ |
$ |
$ |
$ |
– |
||||||||||||||
| For the year ended December 31, 2022 |
Hedged items in qualifying cash flow hedging relationships |
Change in fair value of hedged items for ineffectiveness measurement |
Change in fair value of hedging instruments for ineffectiveness measurement |
Gains (losses) deferred in AOCI on derivatives |
Gains (losses) reclassified from AOCI into Total investment result |
Ineffectiveness recognized in Total investment result |
||||||||||||||||
| Foreign exchange risk |
||||||||||||||||||||||
| Foreign currency swaps |
Fixed rate assets |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | – | |||||||||
| Fixed rate liabilities |
( |
) | – | |||||||||||||||||||
| Interest and foreign exchange risk |
||||||||||||||||||||||
| Foreign currency swaps |
Floating rate liabilities |
( |
) | ( |
) | – | ||||||||||||||||
| Equity price risk |
||||||||||||||||||||||
| Equity contracts |
Stock-based compensation |
( |
) | – | ||||||||||||||||||
| Total |
$ | ( |
) | $ | |
$ | |
$ | ( |
) | $ | – | ||||||||||
(1) |
Gains (losses) deferred in AOCI on derivatives are presented in AOCI under Insurance finance income (expense s ). |
As at December 31, |
2023 |
2022 |
||||||
| Balances in the cash flow hedge reserve for continuing hedges |
$ |
( |
) |
$ | ( |
) | ||
| Balances remaining in the cash flow hedge reserve on de-designated hedges |
– |
– |
||||||
| Total |
$ |
( |
) |
$ | ( |
) | ||
For the year ended December 31, 2023 |
Change in fair value of hedged items for ineffectiveness measurement |
Change in fair value of hedging instruments for ineffectiveness measurement |
Gains (losses) deferred in AOCI |
Gains (losses) reclassified from AOCI into Total investment result |
Ineffectiveness recognized in Total investment result |
|||||||||||||||
| Non-functional currency denominated debt |
$ |
( |
) |
$ |
$ |
$ |
– |
$ |
– |
|||||||||||
| Forward currency contracts |
( |
) |
– |
– |
||||||||||||||||
| Total |
$ |
( |
) |
$ |
$ |
$ |
– |
$ |
– |
|||||||||||
| For the year ended December 31, 2022 | Change in fair value of hedged items for ineffectiveness measurement |
Change in fair value of hedging instruments for ineffectiveness measurement |
Gains (losses) deferred in AOCI |
Gains (losses) reclassified from AOCI into Total investment result |
Ineffectiveness recognized in Total investment result |
|||||||||||||||
| Non-functional currency denominated debt |
$ | $ | ( |
) | $ | ( |
) | $ | – | $ | – | |||||||||
| Forward currency contracts |
( |
) | – | – | ||||||||||||||||
| Total |
$ | |
$ | ( |
) | $ | ( |
) | $ | – | $ | – | ||||||||
As at December 31, |
2023 |
2022 |
||||||
| Balances in the foreign currency translation reserve for continuing hedges |
$ |
$ | ( |
) | ||||
| Balances remaining in the net investment hedge reserve on de-designated hedges |
– |
– | ||||||
| Total |
$ |
$ | ( |
) | ||||
For the year ended December 31, 2023 |
Accumulated other comprehensive income (loss), beginning of the year |
Hedging gains (losses) recognized in AOCI during the year |
Reclassification from AOCI to income |
Accumulated other comprehensive income (loss), end of the year |
Reclassification adjustment related to de-designated hedges as hedged item affects income |
Reclassification adjustment related to items for which the hedged future cash flows are no longer expected to occur |
||||||||||||||||||
| Interest rate risk |
$ |
– |
$ |
$ |
– |
$ |
$ |
– |
$ |
– |
||||||||||||||
| Interest rate and foreign exchange risk |
( |
) |
( |
) |
– |
– |
||||||||||||||||||
| Foreign exchange translation risk |
( |
) |
( |
) |
– |
– |
||||||||||||||||||
| CPI risk |
– |
( |
) |
( |
) |
– |
– |
|||||||||||||||||
| Equity price risk |
– |
– |
||||||||||||||||||||||
| Total |
$ |
( |
) |
$ |
$ |
$ |
( |
) |
$ |
– |
$ |
– |
||||||||||||
| For the year ended December 31, 2022 | Accumulated other comprehensive income (loss), beginning of the year |
Hedging gains (losses) recognized in AOCI during the year |
Reclassification from AOCI to income |
Accumulated other comprehensive income (loss), end of the year |
Reclassification adjustment related to de-designated hedges as hedged item affects income |
Reclassification adjustment related to items for which the hedged future cash flows are no longer expected to occur |
||||||||||||||||||
| Interest rate risk |
$ | – | $ | – | $ | – | $ | – | $ | – | $ | – | ||||||||||||
| Interest rate and foreign exchange risk |
( |
) | ( |
) | ( |
) | – | – | ||||||||||||||||
| Foreign exchange translation risk |
– | – | ||||||||||||||||||||||
| CPI risk |
– | – | – | – | – | – | ||||||||||||||||||
| Equity price risk |
– | – | ||||||||||||||||||||||
| Total |
$ | ( |
) | $ | |
$ | ( |
) | $ | ( |
) | $ | – | $ | – | |||||||||
| |
203 |
For the year ended December 31, 2023 |
Accumulated other comprehensive income (loss), beginning of the year |
Hedging gains (losses) recognized in AOCI during the year |
Reclassification from AOCI to income |
Accumulated other comprehensive income (loss), end of the year |
Reclassification adjustment related to de- designated hedges as hedged item affects income |
Reclassification adjustment related to items for which the hedged future cash flows are no longer expected to occur |
||||||||||||||||||
| Foreign exchange translation risk |
$ |
( |
) |
$ |
$ |
– |
$ |
$ |
– |
$ |
– |
|||||||||||||
| For the year ended December 31, 2022 | Accumulated other comprehensive income (loss), beginning of the year |
Hedging gains (losses) recognized in AOCI during the year |
Reclassification from AOCI to income |
Accumulated other comprehensive income (loss), end of the year |
Reclassification adjustment related to de- designated hedges as hedged item affects income |
Reclassification adjustment related to items for which the hedged future cash flows are no longer expected to occur |
||||||||||||||||||
| Foreign exchange translation risk |
$ | |
$ | ( |
) | $ | – | $ | ( |
) | $ | – | $ | – | ||||||||||
For the year ended December 31, 2023 |
||||
| Foreign exchange risk |
||||
| Balance, beginning of year |
$ |
( |
) | |
| Changes in fair value |
||||
| Amount reclassified to profit or loss |
||||
| Balance, end of year |
$ |
|||
| Foreign exchange and interest rate risk |
||||
| Balance, beginning of year |
$ |
|||
| Changes in fair value |
( |
) | ||
| Amount reclassified to profit or loss |
( |
) | ||
| Balance, end of year |
$ |
|||
For the years ended December 31, |
2023 |
2022 |
||||||
| Interest rate swaps |
$ |
$ | ( |
) | ||||
| Interest rate futures |
( |
) | ||||||
| Interest rate options |
( |
) |
( |
) | ||||
| Foreign currency swaps |
( |
) |
||||||
| Currency rate futures |
( |
) |
( |
) | ||||
| Forward contracts |
( |
) | ||||||
| Equity futures |
( |
) |
||||||
| Equity contracts |
( |
) | ||||||
| Total |
$ |
$ | ( |
) | ||||
For the year ended December 31, 2023 |
Balance, January 1, 2023 |
Net additions/ (disposals) |
Amortization expense |
Effect of changes in foreign exchange rates |
Balance, December 31, 2023 |
|||||||||||||||
Goodwill |
$ |
$ |
– |
$ |
n/a |
$ |
( |
) |
$ |
|||||||||||
Indefinite life intangible assets |
||||||||||||||||||||
Brand |
– |
n/a |
( |
) |
||||||||||||||||
Fund management contracts and other (1) |
– |
n/a |
( |
) |
||||||||||||||||
– |
n/a |
( |
) |
|||||||||||||||||
Finite life intangible assets (2) |
||||||||||||||||||||
Distribution networks |
( |
) |
( |
) |
||||||||||||||||
Customer relationships |
( |
) |
( |
) |
( |
) |
||||||||||||||
Software |
( |
) |
( |
) |
||||||||||||||||
Other |
( |
) |
( |
) |
||||||||||||||||
( |
) |
( |
) |
|||||||||||||||||
Total intangible assets |
( |
) |
( |
) |
||||||||||||||||
Total goodwill and intangible assets |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
|||||||||||
| For the year ended December 31, 2022 | Balance, January 1, 2022 |
Net additions/ (disposals) (3),(4) |
Amortization expense |
Effect of changes in foreign exchange rates |
Balance, December 31, 2022 |
|||||||||||||||
Goodwill |
$ | $ | $ | n/a | $ | $ | ||||||||||||||
Indefinite life intangible assets |
||||||||||||||||||||
Brand |
– | n/a | ||||||||||||||||||
Fund management contracts and other (1) |
n/a | |||||||||||||||||||
| n/a | ||||||||||||||||||||
Finite life intangible assets (2) |
||||||||||||||||||||
Distribution networks |
( |
) | ||||||||||||||||||
Customer relationships |
– | ( |
) | |||||||||||||||||
Software |
( |
) | ||||||||||||||||||
Other |
( |
) | ||||||||||||||||||
| ( |
) | |||||||||||||||||||
Total intangible assets |
( |
) | ||||||||||||||||||
Total goodwill and intangible assets |
$ | $ | |
$ | ( |
) | $ | |
$ | |
||||||||||
(1) |
Fund management contracts are mostly allocated to Canada WAM and U.S. WAM CGUs with carrying values of $ |
(2) |
Gross carrying amount of finite life intangible assets was $ |
(3) |
In November 2022, the Company acquired control of Manulife Fund Management Co., Ltd., formerly known as Manulife TEDA Fund Management Co., Ltd, through the purchase of the remaining , included in Other, of $ |
(4) |
In January 2022, the Company paid $ 256 |
| |
205 |
For the year ended December 31, 2023 CGU or group of CGUs |
Balance, January 1, 2023 |
Net additions/ (disposals) |
Effect of changes in foreign exchange rates |
Balance, December 31, 2023 |
||||||||||||
Asia |
||||||||||||||||
Asia Insurance (excluding Japan) |
$ |
$ |
– |
$ |
( |
) |
$ |
|||||||||
Japan Insurance |
– |
( |
) |
|||||||||||||
Canada Insurance |
– |
( |
) |
|||||||||||||
U.S. Insurance |
– |
( |
) |
|||||||||||||
Global Wealth and Asset Management |
||||||||||||||||
Asia WAM |
– |
( |
) |
|||||||||||||
Canada WAM |
– |
|||||||||||||||
U.S. WAM |
– |
( |
) |
|||||||||||||
Total |
$ |
$ |
– |
$ |
( |
) |
$ |
|||||||||
For the year ended December 31, 2022 CGU or group of CGUs |
Balance, January 1, 2022 |
Net additions/ (disposals) |
Effect of changes in foreign exchange rates |
Balance, December 31, 2022 |
||||||||||||
Asia |
||||||||||||||||
Asia Insurance (excluding Japan) |
$ | $ | – | $ | $ | |||||||||||
Japan Insurance |
– | ( |
) |
|||||||||||||
Canada Insurance |
– | |||||||||||||||
U.S. Insurance |
– | |||||||||||||||
Global Wealth and Asset Management |
||||||||||||||||
Asia WAM |
||||||||||||||||
Canada WAM |
– | – | ||||||||||||||
U.S. WAM |
– |
|||||||||||||||
Total |
$ | $ | $ | $ | ||||||||||||
As at December 31, |
2023 |
2022 |
||||||||||||||||||||||||||||||||||
Insurance contract assets |
Insurance contract liabilities |
Insurance contract liabilities for account of segregated fund holders |
Net insurance contract liabilities |
Insurance contract assets |
Insurance contract liabilities |
Insurance contract liabilities for account of segregated fund holders |
Net insurance contract liabilities |
|||||||||||||||||||||||||||||
| Asia |
$ |
( |
) |
$ |
$ |
$ |
|
|
|
$ | ( |
) | $ | $ | $ | |||||||||||||||||||||
| Canada |
( |
) |
|
|
|
( |
) | |||||||||||||||||||||||||||||
| U.S. |
– |
|
|
|
( |
) | ||||||||||||||||||||||||||||||
| Corporate and Other |
( |
) |
( |
) |
– |
( |
) |
|
|
|
– | – | ||||||||||||||||||||||||
| Insurance contract balances |
( |
) |
( |
) | ||||||||||||||||||||||||||||||||
| Assets for insurance acquisition cash flows |
– |
( |
) |
– |
( |
) |
|
|
|
( |
) | ( |
) | – | ( |
) | ||||||||||||||||||||
| Total |
$ |
( |
) |
$ |
$ |
$ |
|
|
|
$ | ( |
) | $ | |
$ | |
$ | |
||||||||||||||||||
2023 |
2022 |
|||||||||||||||||||||||||||
As at December 31, |
Assets |
Liabilities |
Net reinsurance contract held assets |
Assets |
Liabilities |
Net reinsurance contract held assets |
||||||||||||||||||||||
| Asia |
$ |
$ |
( |
) |
$ |
$ | $ | ( |
) | $ | ||||||||||||||||||
| Canada |
( |
) |
( |
) | ||||||||||||||||||||||||
| U.S. |
( |
) |
( |
) | ||||||||||||||||||||||||
| Corporate and Other |
( |
) |
( |
) |
– | |||||||||||||||||||||||
| Total |
$ |
$ |
( |
) |
$ |
$ | |
$ | ( |
) | $ | |
||||||||||||||||
As at December 31, |
2023 |
2022 |
||||||
| Net insurance contract held liabilities |
$ |
$ | ||||||
| Net reinsurance contract held assets |
( |
) |
( |
) | ||||
| Net insurance and reinsurance contract held liabilities |
$ |
$ | |
|||||
• |
Tables which analyze movements in the net assets or liabilities for remaining coverage and for incurred claims separately and reconcile them to the relevant Consolidated Statements of Income and Consolidated Statements of Comprehensive Income line items. |
• |
Tables which analyze movements of contracts by measurement components including estimates of the present value of future cash flows, risk adjustment and CSM for portfolios. |
| |
207 |
Liabilities for remaining coverage |
Liabilities for incurred claims |
|||||||||||||||||||||||||||||||
Excluding loss component |
Loss component |
Products not under PAA |
PAA Estimates of PV of future cash flows |
PAA Risk adjustment for non-financial risk |
Assets for insurance acquisition cash flows |
Total |
||||||||||||||||||||||||||
| Opening insurance contract assets |
$ |
( |
) |
$ |
$ |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||
| Opening insurance contract liabilities |
( |
) |
||||||||||||||||||||||||||||||
| Opening insurance contract liabilities for account of segregated fund holders |
||||||||||||||||||||||||||||||||
| Net opening balance, January 1, 2023 |
( |
) |
||||||||||||||||||||||||||||||
| Insurance revenue |
||||||||||||||||||||||||||||||||
| Expected incurred claims and other insurance service result |
( |
) |
( |
) | ||||||||||||||||||||||||||||
| Change in risk adjustment for non-financial risk expired |
( |
) |
( |
) | ||||||||||||||||||||||||||||
| CSM recognized for services provided |
( |
) |
( |
) | ||||||||||||||||||||||||||||
| Recovery of insurance acquisition cash flows |
( |
) |
( |
) | ||||||||||||||||||||||||||||
| Contracts under PAA |
( |
) |
( |
) | ||||||||||||||||||||||||||||
( |
) |
( |
) | |||||||||||||||||||||||||||||
| Insurance service expense |
||||||||||||||||||||||||||||||||
| Incurred claims and other insurance service expenses |
( |
) |
||||||||||||||||||||||||||||||
| Losses and reversal of losses on onerous contracts (future service) |
||||||||||||||||||||||||||||||||
| Changes to liabilities for incurred claims (past service) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||||||||||||
| Amortization of insurance acquisition cash flows |
||||||||||||||||||||||||||||||||
| Net impairment of assets for insurance acquisition cash flows |
||||||||||||||||||||||||||||||||
( |
) |
|||||||||||||||||||||||||||||||
| Investment components and premium refunds |
( |
) |
||||||||||||||||||||||||||||||
| Insurance service result |
( |
) |
( |
) |
( |
) | ||||||||||||||||||||||||||
| Insurance finance (income) expenses |
||||||||||||||||||||||||||||||||
| Effects of movements in foreign exchange rates |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||||||||||
| Total changes in income and OCI |
( |
) |
( |
) |
||||||||||||||||||||||||||||
| Cash flows |
||||||||||||||||||||||||||||||||
| Premiums and premium tax received |
||||||||||||||||||||||||||||||||
| Claims and other insurance service expenses paid, including investment components |
( |
) |
( |
) |
( |
) | ||||||||||||||||||||||||||
| Insurance acquisition cash flows |
( |
) |
( |
) | ||||||||||||||||||||||||||||
| Total cash flows |
( |
) |
( |
) |
||||||||||||||||||||||||||||
| Allocation from assets for insurance acquisition cash flows to groups of insurance contracts |
( |
) |
||||||||||||||||||||||||||||||
| Acquisition cash flows incurred in the year |
( |
) |
( |
) | ||||||||||||||||||||||||||||
| Movements related to insurance contract liabilities for account of segregated fund holders |
||||||||||||||||||||||||||||||||
| Net closing balance |
( |
) |
||||||||||||||||||||||||||||||
| Closing insurance contract assets |
( |
) |
( |
) | ||||||||||||||||||||||||||||
| Closing insurance contract liabilities |
( |
) |
||||||||||||||||||||||||||||||
| Closing insurance contract liabilities for account of segregated fund holders |
||||||||||||||||||||||||||||||||
| Net closing balance, December 31, 2023 |
$ |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||||||||||||
| Insurance finance (income) expenses (“IFIE”) |
||||||||||||||||||||||||||||||||
| Insurance finance (income) expenses, per disclosure above |
$ |
|||||||||||||||||||||||||||||||
| Reclassification of derivative OCI to IFIE – cash flow hedges |
|
|||||||||||||||||||||||||||||||
| Reclassification of derivative (income) loss changes to IFIE – fair value hedge |
|
( |
) | |||||||||||||||||||||||||||||
| Insurance finance (income) expenses, per disclosure in note 7 (f) |
|
$ |
||||||||||||||||||||||||||||||
Liabilities for remaining coverage |
Liabilities for incurred claims |
|||||||||||||||||||||||||||||||
Excluding loss component |
Loss component |
Products not under PAA |
PAA Estimates of PV of future cash flows |
PAA Risk adjustment for non-financial risk |
Assets for insurance acquisition cash flows |
Total |
||||||||||||||||||||||||||
| Opening insurance contract assets |
$ | ( |
) | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||||||
| Opening insurance contract liabilities |
|
( |
) | |||||||||||||||||||||||||||||
| Opening insurance contract liabilities for account of segregated fund holders |
||||||||||||||||||||||||||||||||
| Net opening balance, January 1, 2022 |
( |
) | ||||||||||||||||||||||||||||||
| Insurance revenue |
||||||||||||||||||||||||||||||||
| Expected incurred claims and other insurance service result |
( |
) | ( |
) | ||||||||||||||||||||||||||||
| Change in risk adjustment for non-financial risk expired |
( |
) | ( |
) | ||||||||||||||||||||||||||||
| CSM recognized for service provided |
( |
) | ( |
) | ||||||||||||||||||||||||||||
| Recovery of insurance acquisition cash flows |
( |
) | ( |
) | ||||||||||||||||||||||||||||
| Contracts under PAA |
( |
) | ( |
) | ||||||||||||||||||||||||||||
| ( |
) | ( |
) | |||||||||||||||||||||||||||||
| Insurance service expense |
||||||||||||||||||||||||||||||||
| Incurred claims and other insurance service expenses |
||||||||||||||||||||||||||||||||
| Losses and reversal of losses on onerous contracts (future service) |
||||||||||||||||||||||||||||||||
| Changes to liabilities for incurred claims (past service) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||
| Amortization of insurance acquisition cash flows |
||||||||||||||||||||||||||||||||
| Net impairment of assets for insurance acquisition cash flows |
||||||||||||||||||||||||||||||||
| ( |
) | |||||||||||||||||||||||||||||||
| Investment components and premium refunds |
( |
) | ||||||||||||||||||||||||||||||
| Insurance service result |
( |
) | |
( |
) | ( |
) | |||||||||||||||||||||||||
| Insurance finance (income) expenses |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Effects of movements in foreign exchange rates |
( |
) | ||||||||||||||||||||||||||||||
| Total changes in income and OCI |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||
| Cash flows |
||||||||||||||||||||||||||||||||
| Premiums and premium tax received |
||||||||||||||||||||||||||||||||
| Claims and other insurance service expenses paid, including investment components |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Insurance acquisition cash flows |
( |
) | ( |
) | ||||||||||||||||||||||||||||
| Total cash flows |
( |
) | ( |
) | ||||||||||||||||||||||||||||
| Allocation from assets for insurance acquisition cash flows to groups of insurance contracts |
( |
) | ||||||||||||||||||||||||||||||
| Acquisition cash flows incurred in the year |
( |
) | ( |
) | ||||||||||||||||||||||||||||
| Movements related to insurance contract liabilities for account of segregated fund holders |
( |
) | ( |
) | ||||||||||||||||||||||||||||
| Net closing balance |
( |
) | ||||||||||||||||||||||||||||||
| Closing insurance contract assets |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||
| Closing insurance contract liabilities |
( |
) | ||||||||||||||||||||||||||||||
| Closing insurance contract liabilities for account of segregated fund holders |
||||||||||||||||||||||||||||||||
| Net closing balance, December 31, 2022 |
$ | |
$ | |
$ | $ | |
$ | |
$ | ( |
) | $ | |
||||||||||||||||||
| Insurance finance (income) expenses |
||||||||||||||||||||||||||||||||
| Insurance finance (income) expenses, per disclosure above |
$ | ( |
) | |||||||||||||||||||||||||||||
| Reclassification of derivative OCI to IFIE – cash flow hedges |
|
|||||||||||||||||||||||||||||||
| Reclassification of derivative (income) loss changes to IFIE – fair value hedge |
|
|||||||||||||||||||||||||||||||
| Insurance finance (income) expenses, per disclosure in note 7 (f) |
|
$ | ( |
) | ||||||||||||||||||||||||||||
| |
209 |
CSM |
||||||||||||||||||||||||
Estimates of PV of future cash flows |
Risk adjustment for non-financial risk |
Fair value |
Other |
Assets for insurance acquisition cash flows |
Total |
|||||||||||||||||||
| Opening GMM and VFA insurance contract assets |
$ |
( |
) |
$ |
$ |
$ |
$ |
$ |
( |
) | ||||||||||||||
| Opening GMM and VFA insurance contract liabilities |
( |
) |
||||||||||||||||||||||
| Opening PAA insurance contract net liabilities |
( |
) |
||||||||||||||||||||||
| Opening insurance contract liabilities for account of segregated fund holders |
||||||||||||||||||||||||
| Net opening balance, January 1, 2023 |
( |
) |
||||||||||||||||||||||
| CSM recognized for services provided |
( |
) |
( |
) |
( |
) | ||||||||||||||||||
| Change in risk adjustment for non-financial risk for risk expired |
( |
) |
( |
) | ||||||||||||||||||||
| Experience adjustments |
||||||||||||||||||||||||
| Changes that relate to current services |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||||
| Contracts initially recognized during the year |
( |
) |
||||||||||||||||||||||
| Changes in estimates that adjust the CSM |
( |
) |
||||||||||||||||||||||
| Changes in estimates that relate to losses and reversal of losses on onerous contracts |
( |
) |
( |
) | ||||||||||||||||||||
| Changes that relate to future services |
( |
) |
( |
) |
||||||||||||||||||||
| Adjustments to liabilities for incurred claims |
( |
) |
( |
) |
( |
) | ||||||||||||||||||
| Changes that relate to past services |
( |
) |
( |
) |
( |
) | ||||||||||||||||||
| Insurance service result |
( |
) |
( |
) |
( |
) | ||||||||||||||||||
| Insurance finance (income) expenses |
||||||||||||||||||||||||
| Effects of movements in foreign exchange rates |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||
| Total changes in income and OCI |
( |
) |
||||||||||||||||||||||
| Total cash flows |
||||||||||||||||||||||||
| Allocation from assets for insurance acquisition cash flows to groups of insurance contracts |
( |
) |
||||||||||||||||||||||
| Acquisition cash flows incurred in the year |
( |
) |
( |
) | ||||||||||||||||||||
| Change in PAA balance |
( |
) |
||||||||||||||||||||||
| Movements related to insurance contract liabilities for account of segregated fund holders |
||||||||||||||||||||||||
| Net closing balance |
( |
) |
||||||||||||||||||||||
| Closing GMM and VFA insurance contract assets |
( |
) |
( |
) | ||||||||||||||||||||
| Closing GMM and VFA insurance contract liabilities |
( |
) |
||||||||||||||||||||||
| Closing PAA insurance contract net liabilities |
( |
) |
||||||||||||||||||||||
| Closing insurance contract liabilities for account of segregated fund insurance holders |
||||||||||||||||||||||||
| Net closing balance, December 31, 2023 |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||||
| Insurance finance (income) expenses |
||||||||||||||||||||||||
| Insurance finance (income) expenses, per disclosure above |
$ |
|||||||||||||||||||||||
| Reclassification of derivative OCI to IFIE – cash flow hedges |
||||||||||||||||||||||||
| Reclassification of derivative (income) loss changes to IFIE – fair value hedge |
( |
) | ||||||||||||||||||||||
| PAA items: |
||||||||||||||||||||||||
| PAA IFIE per disclosure |
||||||||||||||||||||||||
| PAA Reclassification of derivative OCI to IFIE – cash flow hedges |
|
|||||||||||||||||||||||
| PAA Reclassification of derivative (income) loss changes to IFIE – fair value hedge |
|
( |
) | |||||||||||||||||||||
| Insurance finance (income) expenses, per disclosure in note 7 (f) |
|
$ |
||||||||||||||||||||||
CSM |
||||||||||||||||||||||||
Estimates of PV of future cash flows |
Risk adjustment for non-financial risk |
Fair value |
Other |
Assets for insurance acquisition cash flows |
Total |
|||||||||||||||||||
| Opening GMM and VFA insurance contract assets |
$ | ( |
) | $ | $ | $ | $ | – | $ | ( |
) | |||||||||||||
| Opening GMM and VFA insurance contract liabilities |
( |
) | ||||||||||||||||||||||
| Opening PAA insurance contract net liabilities |
– | – | ( |
) | ||||||||||||||||||||
| Opening insurance contract liabilities for account of segregated fund holders |
– | – | – | – | ||||||||||||||||||||
Net opening balance, January 1, 2022 |
|
|
|
|
( |
) | |
|||||||||||||||||
| CSM recognized for services provided |
– | – | ( |
) | ( |
) | – | ( |
) | |||||||||||||||
| Change in risk adjustment for non-financial risk for risk expired |
– | ( |
) | – | – | – | ( |
) | ||||||||||||||||
| Experience adjustments |
– | – | – | – | ||||||||||||||||||||
| Changes that relate to current services |
( |
) | ( |
) | ( |
) | – | ( |
) | |||||||||||||||
| Contracts initially recognized during the year |
( |
) | – | |||||||||||||||||||||
| Changes in estimates that adjust the CSM |
( |
) | ( |
) | ( |
) | – | – | ||||||||||||||||
| Changes in estimates that relate to losses and reversal of losses on onerous contracts |
( |
) | – | – | – | |||||||||||||||||||
| Changes that relate to future services |
( |
) | – | |||||||||||||||||||||
| Adjustments to liabilities for incurred claims |
( |
) | ( |
) | – | – | – | ( |
) | |||||||||||||||
| Changes that relate to past services |
( |
) | ( |
) | – | – | – | ( |
) | |||||||||||||||
| Insurance service result |
( |
) | ( |
) | – | ( |
) | |||||||||||||||||
| Insurance finance (income) expenses |
( |
) | ( |
) | – | ( |
) | |||||||||||||||||
| Effects of movements in foreign exchange rates |
– | |||||||||||||||||||||||
| Total changes in income and OCI |
( |
) | ( |
) | ( |
) | – | ( |
) | |||||||||||||||
| Total cash flows |
– | – | – | – | ||||||||||||||||||||
| Allocation from assets for insurance acquisition cash flows to groups of insurance contracts |
( |
) | – | – | – | – | ||||||||||||||||||
| Acquisition cash flows incurred in the year |
– | – | – | – | ( |
) | ( |
) | ||||||||||||||||
| Change in PAA balance |
( |
) | ( |
) | – | – | ( |
) | ( |
) | ||||||||||||||
| Movements related to insurance contract liabilities for account of segregated fund holders |
( |
) | – | – | – | – | ( |
) | ||||||||||||||||
| Net closing balance |
( |
) | ||||||||||||||||||||||
| Closing GMM and VFA insurance contract assets |
( |
) | – | ( |
) | |||||||||||||||||||
| Closing GMM and VFA insurance contract liabilities |
( |
) | ||||||||||||||||||||||
| Closing PAA insurance contract net liabilities |
– | – | ( |
) | ||||||||||||||||||||
| Closing insurance contract liabilities for account of segregated fund insurance holders |
– | – | – | – | ||||||||||||||||||||
| Net closing balance, December 31, 2022 |
$ | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||
| Insurance finance (income) expenses |
||||||||||||||||||||||||
| Insurance finance (income) expenses, per disclosure above |
$ | ( |
) | |||||||||||||||||||||
| Reclassification of derivative OCI to IFIE – cash flow hedges |
– | |||||||||||||||||||||||
| Reclassification of derivative (income) loss changes to IFIE – fair value hedge |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
– |
| |||||||
| PAA items: |
||||||||||||||||||||||||
| PAA IFIE per disclosure |
( |
) | ||||||||||||||||||||||
| PAA Reclassification of derivative OCI to IFIE – cash flow hedges |
|
– | ||||||||||||||||||||||
| PAA Reclassification of derivative (income) loss changes to IFIE – fair value hedge |
|
– | ||||||||||||||||||||||
| Insurance finance (income) expenses, per disclosure in note 7 (f) |
|
$ | ( |
) | ||||||||||||||||||||
| |
21 1 |
Assets (liabilities) for remaining coverage |
Assets (liabilities) for incurred claims |
|||||||||||||||||||||||||||
Excluding loss recovery component |
Loss recovery component |
Products not under PAA |
PAA Estimates of PV of future cash flows |
PAA Risk adjustment for non-financial risk |
Total |
|||||||||||||||||||||||
| Opening reinsurance contract held assets |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||||||
| Opening reinsurance contract held liabilities |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||||||||
| Net opening balance, January 1, 2023 |
||||||||||||||||||||||||||||
| Changes in income and OCI |
||||||||||||||||||||||||||||
| Allocation of reinsurance premium paid |
( |
) |
( |
) | ||||||||||||||||||||||||
| Amounts recoverable from reinsurers |
||||||||||||||||||||||||||||
| Recoveries of incurred claims and other insurance service |
( |
) |
||||||||||||||||||||||||||
| Recoveries and reversals of recoveries of losses on onerous underlying contracts |
||||||||||||||||||||||||||||
| Adjustments to assets for incurred claims |
( |
) |
( |
) | ||||||||||||||||||||||||
| Insurance service result |
( |
) |
( |
) | ||||||||||||||||||||||||
| Investment components and premium refunds |
( |
) |
||||||||||||||||||||||||||
| Net expenses from reinsurance contracts |
( |
) |
( |
) | ||||||||||||||||||||||||
| Net finance (income) expenses from reinsurance contracts |
( |
) |
||||||||||||||||||||||||||
| Effect of changes in non-performance risk of reinsurers |
( |
) |
( |
) | ||||||||||||||||||||||||
| Effects of movements in foreign exchange rates |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||||||||
| Contracts measured under PAA |
||||||||||||||||||||||||||||
| Total changes in income and OCI |
( |
) |
( |
) | ||||||||||||||||||||||||
| Cash flows |
||||||||||||||||||||||||||||
| Premiums paid |
||||||||||||||||||||||||||||
| Amounts received |
( |
) |
( |
) |
( |
) | ||||||||||||||||||||||
| Total cash flows |
( |
) |
( |
) |
( |
) | ||||||||||||||||||||||
| Net closing balance |
||||||||||||||||||||||||||||
| Closing reinsurance contract held assets |
||||||||||||||||||||||||||||
| Closing reinsurance contract held liabilities |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||||||||
| Net closing balance, December 31, 2023 |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||||||
Assets (liabilities) for remaining coverage |
Assets (liabilities) for incurred claims |
|||||||||||||||||||||||||||
Excluding loss recovery component |
Loss recovery component |
Products not under PAA |
PAA Estimates of PV of future cash flows |
PAA Risk adjustment for non-financial risk |
Total |
|||||||||||||||||||||||
| Opening reinsurance contract held assets |
$ | |
$ | $ | $ | $ | $ | |||||||||||||||||||||
| Opening reinsurance contract held liabilities |
( |
) | ( |
) | ( |
) | – | ( |
) | |||||||||||||||||||
| Net opening balance, January 1, 2022 |
||||||||||||||||||||||||||||
| Changes in income and OCI |
||||||||||||||||||||||||||||
| Allocation of reinsurance premium paid |
( |
) | – | – | – | – | ( |
) | ||||||||||||||||||||
| Amounts recoverable from reinsurers |
||||||||||||||||||||||||||||
| Recoveries of incurred claims and other insurance service expenses |
– | ( |
) | ( |
) | |||||||||||||||||||||||
| Recoveries and reversals of recoveries of losses on onerous underlying contracts |
– | – | – | – | ||||||||||||||||||||||||
| Adjustments to assets for incurred claims |
– | – | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||
| Insurance service result |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
| Investment components and premium refunds |
( |
) | – | – | – | – | ||||||||||||||||||||||
| Net expenses from reinsurance contracts |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
| Net finance (income) expenses from reinsurance contracts |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
| Effect of changes in non-performance risk of reinsurers |
– | – | – | – | ||||||||||||||||||||||||
| Effects of movements in foreign exchange rates |
– | – | ||||||||||||||||||||||||||
| Contracts measured under PAA |
– | – | – | – | – | – | ||||||||||||||||||||||
| Total changes in income and OCI |
( |
) | – | ( |
) | |||||||||||||||||||||||
| Cash flows |
||||||||||||||||||||||||||||
| Premiums paid |
– | – | – | – | ||||||||||||||||||||||||
| Amounts received |
– | – | ( |
) | ( |
) | – | ( |
) | |||||||||||||||||||
| Total cash flows |
– | ( |
) | ( |
) | – | ( |
) | ||||||||||||||||||||
| Net closing balance |
||||||||||||||||||||||||||||
| Closing reinsurance contract held assets |
||||||||||||||||||||||||||||
| Closing reinsurance contract held liabilities |
( |
) | ( |
) | ( |
) | – | ( |
) | |||||||||||||||||||
| Net closing balance, December 31, 2022 |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
| |
213 |
CSM |
||||||||||||||||||||
Estimates of PV of future cash flows |
Risk adjustment for non-financial risk |
Fair value |
Other |
Total |
||||||||||||||||
| Opening reinsurance contract held assets |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
| Opening reinsurance contract held liabilities |
( |
) |
( |
) |
( |
) | ||||||||||||||
| Opening PAA reinsurance contract net assets |
– |
– |
||||||||||||||||||
| Net opening balance, January 1, 2023 |
||||||||||||||||||||
| CSM recognized for services received |
– |
– |
( |
) |
( |
) | ||||||||||||||
| Change in risk adjustment for non-financial risk for risk expired |
– |
( |
) |
– |
– |
( |
) | |||||||||||||
| Experience adjustments |
( |
) |
– |
– |
( |
) | ||||||||||||||
| Changes that relate to current services |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
| Contracts initially recognized during the year |
( |
) |
– |
( |
) |
|||||||||||||||
| Changes in recoveries of losses on onerous underlying contracts that adjust the CSM |
– |
– |
( |
) |
( |
) | ||||||||||||||
| Changes in estimates that adjust the CSM |
( |
) |
( |
) |
– |
|||||||||||||||
| Changes in estimates that relate to losses and reversal of losses on onerous contracts |
( |
) |
– |
– |
||||||||||||||||
| Changes that relate to future services |
( |
) |
( |
) |
( |
) |
||||||||||||||
| Adjustments to liabilities for incurred claims |
– |
– |
– |
|||||||||||||||||
| Changes that relate to past services |
– |
– |
– |
|||||||||||||||||
| Insurance service result |
( |
) |
( |
) |
( |
) | ||||||||||||||
| Insurance finance (income) expenses from reinsurance contracts |
( |
) |
||||||||||||||||||
| Effects of changes in non-performance risk of reinsurers |
( |
) |
– |
– |
– |
( |
) | |||||||||||||
| Effects of movements in foreign exchange rates |
( |
) |
( |
) |
( |
) |
– |
( |
) | |||||||||||
| Total changes in income and OCI |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
| Total cash flows |
( |
) |
– |
– |
– |
( |
) | |||||||||||||
| Change in PAA balance |
( |
) |
– |
– |
||||||||||||||||
| Net closing balance |
||||||||||||||||||||
| Closing reinsurance contract held assets |
( |
) |
||||||||||||||||||
| Closing reinsurance contract held liabilities |
( |
) |
( |
) | ||||||||||||||||
| Closing PAA reinsurance contract net assets |
– |
– |
||||||||||||||||||
| Net closing balance, December 31, 2023 |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
| CSM | ||||||||||||||||||||
| Estimates of PV of future cash flows |
Risk adjustment for non-financial risk |
Fair value | Other | Total | ||||||||||||||||
Opening reinsurance contract held assets |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||
Opening reinsurance contract held liabilities |
( |
) | ( |
) | ||||||||||||||||
Opening PAA reinsurance contract net assets |
||||||||||||||||||||
Net opening balance, January 1, 2022 |
( |
) | ||||||||||||||||||
CSM recognized for services received |
( |
) | ( |
) | ( |
) | ||||||||||||||
Change in risk adjustment for non-financial risk for risk expired |
( |
) | ( |
) | ||||||||||||||||
Experience adjustments |
||||||||||||||||||||
Changes that relate to current services |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
Contracts initially recognized during the year |
( |
) | ( |
) | ||||||||||||||||
Changes in recoveries of losses on onerous underlying contracts that adjust the CSM |
( |
) | ( |
) | ( |
) | ||||||||||||||
Changes in estimates that adjust the CSM |
( |
) | ( |
) | ||||||||||||||||
Changes in estimates that relate to losses and reversal of losses on onerous contracts |
( |
) | ||||||||||||||||||
Changes that relate to future services |
( |
) | ||||||||||||||||||
Adjustments to liabilities for incurred claims |
||||||||||||||||||||
Changes that relate to past services |
||||||||||||||||||||
Insurance service result |
( |
) | ( |
) | ||||||||||||||||
Insurance finance (income) expenses from reinsurance contracts |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
Effects of changes in non-performance risk of reinsurers |
||||||||||||||||||||
Effects of movements in foreign exchange rates |
||||||||||||||||||||
Total changes in income and OCI |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
Total cash flows |
( |
) | ( |
) | ||||||||||||||||
Change in PAA balance |
( |
) | ( |
) | ||||||||||||||||
Net closing balance |
||||||||||||||||||||
Closing reinsurance contract held assets |
||||||||||||||||||||
Closing reinsurance contract held liabilities |
( |
) | ( |
) | ( |
) | ||||||||||||||
Closing PAA reinsurance contract net assets |
||||||||||||||||||||
Net closing balance, December 31, 2022 |
$ | $ | $ | $ | $ | |||||||||||||||
| |
215 |
Excluding contracts applying the PAA |
Contracts applying the PAA |
CSM |
||||||||||||||||||||||||||||||
As at December 31, 2023 |
Estimates of PV of future cash flows |
Risk adjustment for non-financial risk |
Estimates of PV of future cash flows |
Risk adjustment for non-financial risk |
Fair value |
Other |
Assets for insurance acquisition cash flows |
Total insurance contract liabilities (assets) |
||||||||||||||||||||||||
Asia |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||||||||||
Canada |
( |
) |
||||||||||||||||||||||||||||||
U.S. |
– |
– |
– |
|||||||||||||||||||||||||||||
Corporate and Other |
( |
) |
( |
) |
– |
( |
) |
– |
– |
( |
) | |||||||||||||||||||||
$ |
$ |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||||||||||||
Excluding contracts applying the PAA |
Contracts applying the PAA |
CSM |
||||||||||||||||||||||||||||||
As at December 31, 2022 |
Estimates of PV of future cash flows |
Risk adjustment for non-financial risk |
Estimates of PV of future cash flows |
Risk adjustment for non-financial risk |
Fair value |
Other |
Assets for insurance acquisition cash flows |
Total insurance contract liabilities (assets) |
||||||||||||||||||||||||
Asia |
$ | |
$ | |
$ | |
$ | |
$ |
|
$ | |
$ | ( |
) | $ | |
|||||||||||||||
Canada |
( |
) | ||||||||||||||||||||||||||||||
U.S. |
– | – | – | |||||||||||||||||||||||||||||
Corporate and Other |
( |
) | ( |
) | – | ( |
) | – | – | |||||||||||||||||||||||
$ |
$ |
$ |
$ |
$ |
$ |
$ |
( |
) | $ |
|||||||||||||||||||||||
Excluding contracts applying the PAA |
Contracts applying the PAA |
CSM |
||||||||||||||||||||||||||
As at December 31, 2023 |
Estimates of PV of future cash flows |
Risk adjustment for non-financial risk |
Estimates of PV of future cash flows |
Risk adjustment for non-financial risk |
Fair value |
Other |
Total reinsurance contract liabilities (assets) |
|||||||||||||||||||||
Asia |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
– |
$ |
$ |
$ |
||||||||||||||||
Canada |
( |
) |
( |
) |
||||||||||||||||||||||||
U.S. |
– |
– |
( |
) |
||||||||||||||||||||||||
Corporate and Other |
( |
) |
( |
) |
– |
( |
) |
– |
( |
) | ||||||||||||||||||
$ |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||||||
Excluding contracts applying the PAA |
Contracts applying the PAA |
CSM |
||||||||||||||||||||||||||
As at December 31, 2022 |
Estimates of PV of future cash flows |
Risk adjustment for non-financial risk |
Estimates of PV of future cash flows |
Risk adjustment for non-financial risk |
Fair value |
Other |
Total reinsurance contract liabilities (assets) |
|||||||||||||||||||||
Asia |
$ | ( |
) | $ | |
$ | ( |
) | $ | – | $ | |
$ | ( |
) | $ | |
|||||||||||
Canada |
( |
) | ( |
) | ||||||||||||||||||||||||
U.S. |
– | – | ||||||||||||||||||||||||||
Corporate and Other |
( |
) | – | ( |
) | – | ||||||||||||||||||||||
$ |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||||||
For the year ended December 31, 2023 |
Asia |
Canada |
U.S. |
Other |
Total |
|||||||||||||||
Contracts under the fair value method |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||
Contracts under the full retrospective method |
– |
|||||||||||||||||||
Other contracts |
( |
) |
||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
| For the year ended December 31, 2022 | Asia | Canada | U.S. | Other | Total | |||||||||||||||
Contracts under the fair value method |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||
Contracts under the full retrospective method |
– | |||||||||||||||||||
Other contracts |
|
|||||||||||||||||||
Total |
$ | |
$ | |
$ | |
$ | $ | |
|||||||||||
Asia |
Canada |
U.S. |
Total |
|||||||||||||||||||||||||||||
As at December 31, 2023 |
Non-Onerous |
Onerous |
Non-Onerous |
Onerous |
Non-Onerous |
Onerous |
Non-Onerous |
Onerous |
||||||||||||||||||||||||
New business insurance contracts |
||||||||||||||||||||||||||||||||
Estimates of present value of cash outflows |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||||||||
Insurance acquisition cash flows |
||||||||||||||||||||||||||||||||
Claims and other insurance service expenses payable |
||||||||||||||||||||||||||||||||
Estimates of present value of cash inflows |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||||
Risk adjustment for non-financial risk |
||||||||||||||||||||||||||||||||
Contractual service margin |
– |
– |
– |
– |
||||||||||||||||||||||||||||
Amount included in insurance contract liabilities for the year |
$ |
– |
$ |
$ |
– |
$ |
$ |
– |
$ |
$ |
– |
$ |
||||||||||||||||||||
| Asia | Canada | U.S. | Total | |||||||||||||||||||||||||||||
| As at December 31, 2022 |
Non-Onerous | Onerous | Non-Onerous | Onerous | Non-Onerous | Onerous | Non-Onerous | Onerous | ||||||||||||||||||||||||
New business insurance contracts |
||||||||||||||||||||||||||||||||
Estimates of present value of cash outflows |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||||||||
Insurance acquisition cash flows |
||||||||||||||||||||||||||||||||
Claims and other insurance service expenses payable |
||||||||||||||||||||||||||||||||
Estimates of present value of cash inflows |
( |
) |
( |
) | ( |
) | ( |
) |
( |
) |
( |
) | ( |
) | ( |
) | ||||||||||||||||
Risk adjustment for non-financial risk |
||||||||||||||||||||||||||||||||
Contractual service margin |
– | – |
– | – | ||||||||||||||||||||||||||||
Amount included in insurance contract liabilities for the year |
$ | – | $ | $ | – | $ | $ | – | $ | $ | – | $ | ||||||||||||||||||||
As at December 31, 2023 |
Asia |
Canada |
U.S. |
Total |
||||||||||||
New business reinsurance contracts |
||||||||||||||||
Estimates of present value of cash outflows |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||
Estimates of present value of cash inflows |
||||||||||||||||
Risk adjustment for non-financial risk |
||||||||||||||||
Contractual service margin |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||
Amount included in reinsurance assets for the year |
$ |
$ |
$ |
$ |
||||||||||||
| As at December 31, 2022 | Asia | Canada | U.S. | Total | ||||||||||||
New business reinsurance contracts |
||||||||||||||||
Estimates of present value of cash outflows |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Estimates of present value of cash inflows |
|
|
|
|||||||||||||
Risk adjustment for non-financial risk |
|
|||||||||||||||
Contractual service margin |
( |
) | ( |
) | ||||||||||||
Amount included in reinsurance assets for the year |
$ | $ | $ | $ | ||||||||||||
As at December 31, 2023 |
Less than 1 year |
1 to 5 years |
5 to 10 years |
10 to 20 years |
More than 20 years |
Total |
||||||||||||||||||
| Canada |
||||||||||||||||||||||||
| Insurance contracts issued |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
| Reinsurance contracts held |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
| U.S. |
||||||||||||||||||||||||
| Insurance contracts issued |
||||||||||||||||||||||||
| Reinsurance contracts held |
( |
) |
( |
) |
( |
) |
||||||||||||||||||
| Asia |
||||||||||||||||||||||||
| Insurance contracts issued |
||||||||||||||||||||||||
| Reinsurance contracts held |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
| Corporate |
||||||||||||||||||||||||
| Insurance contracts issued |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
| Reinsurance contracts held |
||||||||||||||||||||||||
( |
) |
( |
) |
|||||||||||||||||||||
| Total |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
As at December 31, 2022 |
Less than 1 year |
1 to 5 years |
5 to 10 years |
10 to 20 years |
More than 20 years |
Total |
||||||||||||||||||
| Canada |
||||||||||||||||||||||||
| Insurance contracts issued |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
| Reinsurance contracts held |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
| U.S. |
||||||||||||||||||||||||
| Insurance contracts issued |
||||||||||||||||||||||||
| Reinsurance contracts held |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
| Asia |
||||||||||||||||||||||||
| Insurance contracts issued |
||||||||||||||||||||||||
| Reinsurance contracts held |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||||
| Corporate |
||||||||||||||||||||||||
| Insurance contracts issued |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
| Reinsurance contracts held |
||||||||||||||||||||||||
| Total |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
For the year ended December 31, 202 3 |
Insurance contracts |
Non-insurance (1) |
Total | |||||||||
| Investment return |
||||||||||||
| Investment related income |
$ |
$ |
$ |
|||||||||
| Net gains (losses) on financial assets at FVTPL |
||||||||||||
| Unrealized gains (losses) on FVOCI assets |
||||||||||||
| Impairment loss on financial assets |
( |
) |
( |
) |
( |
) | ||||||
| Investment expenses |
( |
) |
( |
) |
( |
) | ||||||
| Interest on required surplus |
( |
) |
||||||||||
| Total investment return |
||||||||||||
| Portion recognized in income (expenses) |
||||||||||||
| Portion recognized in OCI |
||||||||||||
| Insurance finance income (expenses) from insurance contracts issued and effect of movement in exchange rates |
||||||||||||
| Interest accreted to insurance contracts using locked-in rate |
( |
) |
( |
) | ||||||||
| Due to changes in interest rates and other financial assumptions |
( |
) |
( |
) | ||||||||
| Changes in fair value of underlying items of direct participation contracts |
( |
) |
( |
) | ||||||||
| Effects of risk mitigation option |
||||||||||||
| Net foreign exchange income (expenses) |
( |
) |
( |
) | ||||||||
| Hedge accounting offset from insurance contracts issued |
( |
) |
( |
) | ||||||||
| Reclassification of derivative OCI to IFIE – cash flow hedges |
( |
) |
( |
) | ||||||||
| Reclassification of derivative income (loss) changes to IFIE – fair value hedge |
||||||||||||
| Other |
||||||||||||
| Total insurance finance income (expenses) from insurance contracts issued |
( |
) |
( |
) | ||||||||
| Effect of movements in foreign exchange rates |
( |
) |
( |
) | ||||||||
| Total insurance finance income (expenses) from insurance contracts issued and effect of movement in foreign exchange rates |
( |
) |
( |
) | ||||||||
| Portion recognized in income (expenses), including effects of exchange rates |
( |
) |
( |
) | ||||||||
| Portion recognized in OCI, including effects of exchange rates |
( |
) |
( |
) | ||||||||
| Reinsurance finance income (expenses) from reinsurance contracts held and effect of movement in foreign exchange rates |
||||||||||||
| Interest accreted to insurance contracts using locked-in rate |
( |
) |
||||||||||
| Due to changes in interest rates and other financial assumptions |
( |
) |
||||||||||
| Changes in risk of non-performance of reinsurer |
( |
) |
( |
) | ||||||||
| Other |
( |
) |
( |
) | ||||||||
| Total reinsurance finance income (expenses) from reinsurance contracts held |
( |
) |
||||||||||
| Effect of movements in foreign exchange rates |
( |
) |
( |
) | ||||||||
| Total reinsurance finance income (expenses) from reinsurance contracts held and effect of movement in foreign exchange rates |
( |
) |
||||||||||
| Portion recognized in income (expenses), including effects of foreign exchange rates |
( |
) |
( |
) |
( |
) | ||||||
| Portion recognized in OCI, including effects of exchange rates |
( |
) |
||||||||||
| Decrease (increase) in investment contract liabilities |
( |
) |
( |
) |
( |
) | ||||||
| Total net investment income (loss), insurance finance income (expenses) and reinsurance finance income (expenses) |
||||||||||||
| Amounts recognized in income (expenses) |
||||||||||||
| Amounts recognized in OCI |
( |
) |
||||||||||
(1) |
Non-insurance includes consolidations and eliminations of transactions between operating segments. |
|
219 |
For the year ended December 31, 2022 |
Insurance contracts |
Non-insurance (1) |
Total |
|||||||||
| Investment return |
||||||||||||
| Investment related income |
$ | $ | |
$ | ||||||||
| Net gains (losses) on financial assets at FVTPL |
( |
) | ( |
) | ( |
) | ||||||
| Unrealized gains (losses) on FVOCI assets |
( |
) | ( |
) | ( |
) | ||||||
| Impairment loss on financial assets |
( |
) | ( |
) | ( |
) | ||||||
| Investment expenses |
( |
) | ( |
) | ( |
) | ||||||
| Interest on required surplus |
( |
) | ||||||||||
| Total investment return |
( |
) | ( |
) | ( |
) | ||||||
| Portion recognized in income (expenses) |
( |
) | ||||||||||
| Portion recognized in OCI |
( |
) | ( |
) | ( |
) | ||||||
| Insurance finance income (expenses) from insurance contracts issued and effect of movement in exchange rates |
||||||||||||
| Interest accreted to insurance contracts using locked-in rate |
( |
) | ( |
) | ||||||||
| Due to changes in interest rates and other financial assumptions |
( |
) | ||||||||||
| Changes in fair value of underlying items of direct participation contracts |
||||||||||||
| Effects of risk mitigation option |
||||||||||||
| Net foreign exchange income (expenses) |
( |
) | ( |
) | ||||||||
| Hedge accounting offset from insurance contracts issued |
||||||||||||
| Reclassification of derivative OCI to IFIE – cash flow hedges |
||||||||||||
| Reclassification of derivative income (loss) changes to IFIE – fair value hedge |
||||||||||||
| Other |
( |
) | ||||||||||
| Total insurance finance income (expenses) from insurance contracts issued |
( |
) | ||||||||||
| Effect of movements in foreign exchange rates |
( |
) | ( |
) | ( |
) | ||||||
| Total insurance finance income (expenses) from insurance contracts issued and effect of movement in foreign exchange rates |
( |
) | ||||||||||
| Portion recognized in income (expenses), including effects of exchange rates |
( |
) | ( |
) | ( |
) | ||||||
| Portion recognized in OCI, including effects of exchange rates |
( |
) | ||||||||||
| Reinsurance finance income (expenses) from reinsurance contracts held and effect of movement in foreign exchange rates |
||||||||||||
| Interest accreted to insurance contracts using locked-in rate |
( |
) | ||||||||||
| Due to changes in interest rates and other financial assumptions |
( |
) | ( |
) | ||||||||
| Changes in risk of non-performance of reinsurer |
||||||||||||
| Other |
||||||||||||
| Total reinsurance finance income (expenses) from reinsurance contracts held |
( |
) |
|
( |
) | |||||||
| Effect of movements in foreign exchange rates |
( |
) | ( |
) | ||||||||
| Total reinsurance finance income (expenses) from reinsurance contracts held and effect of movement in foreign exchange rates |
( |
) | ( |
) | ||||||||
| Portion recognized in income (expenses), including effects of foreign exchange rates |
( |
) | ||||||||||
| Portion recognized in OCI, including effects of exchange rates |
( |
) | ( |
) | ||||||||
| Decrease (increase) in investment contract liabilities |
( |
) | ( |
) | ( |
) | ||||||
| Total net investment income (loss), insurance finance income (expenses) and reinsurance finance income (expenses) |
( |
) | ||||||||||
| Amounts recognized in income (expenses) |
( |
) | ( |
) | ( |
) | ||||||
| Amounts recognized in OCI |
( |
) | ||||||||||
(1) |
Non-insurance includes consolidations and eliminations of transactions between operating segments. |
Insurance and reinsurance contracts |
||||||||||||||||||||||||
For the year ended December 31, 2023 |
Asia |
Canada |
U.S. |
Corporate |
Non-insurance (1) |
Total |
||||||||||||||||||
| Total investment return |
||||||||||||||||||||||||
| Portion recognized in income (expenses) |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
| Portion recognized in OCI |
||||||||||||||||||||||||
| Total insurance finance income (expenses) from insurance contracts issued and effect of movement in foreign exchange rates |
||||||||||||||||||||||||
| Portion recognized in income (expenses), including effects of exchange rates |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||||
| Portion recognized in OCI, including effects of exchange rates |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||||
( |
) |
( |
) |
( |
) |
( |
) | |||||||||||||||||
| Total reinsurance finance income (expenses) from reinsurance contracts held and effect of movement in foreign exchange rates |
||||||||||||||||||||||||
| Portion recognized in income (expenses), including effects of foreign exchange rates |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||||
| Portion recognized in OCI, including effects of exchange rates |
( |
) |
||||||||||||||||||||||
( |
) |
( |
) |
|||||||||||||||||||||
| (1) Non-insurance includes consolidations and eliminations of transactions between operating segments. |
| |||||||||||||||||||||||
Insurance and reinsurance contracts |
||||||||||||||||||||||||
For the year ended December 31, 2022 |
Asia |
Canada |
U.S. |
Corporate |
Non-insurance (1) |
Total |
||||||||||||||||||
| Total investment return |
||||||||||||||||||||||||
| Portion recognized in income (expenses) |
$ |
$ |
( |
) |
$ |
$ |
$ ( |
) |
$ |
|||||||||||||||
| Portion recognized in OCI |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | |||||||||||||
| Total insurance finance income (expenses) from insurance contracts issued and effect of movement in foreign exchange rates |
||||||||||||||||||||||||
| Portion recognized in income (expenses), including effects of exchange rates |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||
| Portion recognized in OCI, including effects of exchange rates |
( |
) |
( |
) |
||||||||||||||||||||
( |
) |
|||||||||||||||||||||||
| Total reinsurance finance income (expenses) from reinsurance contracts held and effect of movement in foreign exchange rates |
||||||||||||||||||||||||
| Portion recognized in income (expenses), including effects of foreign exchange rates |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||||||||||
| Portion recognized in OCI, including effects of exchange rates |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||||
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | |||||||||||||||
(1) |
Non-insurance includes consolidations and eliminations of transactions between operating segments. |
• |
Estimate of future cash flows |
• |
An adjustment to reflect the time value of money and the financial risk related to future cash flows if not included in the estimate of future cash flows |
• |
A risk adjustment for non-financial risk |
|
221 |
| Nature of factors and assumption methodology |
Risk management | |||
Mortality |
Mortality relates to the occurrence of death. Mortality is a key assumption for life insurance and certain forms of annuities. Mortality assumptions are based on the Company’s internal experience as well as past and emerging industry experience. Assumptions are differentiated by sex, underwriting class, policy type and geographic market. Assumptions are made for future mortality improvements. |
The Company maintains underwriting standards to determine the insurability of applicants. Claim trends are monitored on an ongoing basis. Exposure to large claims is managed by establishing policy retention limits, which vary by market and geographic location. Policies in excess of the limits are reinsured with other companies. Mortality is monitored monthly and the overall 2023 experience was favourable (2022 – unfavourable) when compared to the Company’s assumptions. | ||
Morbidity |
Morbidity relates to the occurrence of accidents and sickness for insured risks. Morbidity is a key assumption for long-term care insurance, disability insurance, critical illness and other forms of individual and group health benefits. Morbidity assumptions are based on the Company’s internal experience as well as past and emerging industry experience and are established for each type of morbidity risk and geographic market. Assumptions are made for future morbidity improvements. |
The Company maintains underwriting standards to determine the insurability of applicants. Claim trends are monitored on an ongoing basis. Exposure to large claims is managed by establishing policy retention limits, which vary by market and geographic location. Policies in excess of the limits are reinsured with other companies. Morbidity is also monitored monthly and the overall 2023 experience was favourable (2022 – favourable) when compared to the Company’s assumptions. | ||
Policy termination and premium persistency |
Policies are terminated through lapses and surrenders, where lapses represent the termination of policies due to non-payment of premiums and surrenders represent the voluntary termination of policies by policyholders. Premium persistency represents the level of ongoing deposits on contracts where there is policyholder discretion as to the amount and timing of deposits. Policy termination and premium persistency assumptions are primarily based on the Company’s recent experience adjusted for expected future conditions. Assumptions reflect differences by type of contract within each geographic market. |
The Company seeks to design products that minimize financial exposure to lapse, surrender and premium persistency risk. The Company monitors lapse, surrender and persistency experience. In aggregate, 2023 policyholder termination and premium persistency experience was unfavourable (2022 – unfavourable) when compared to the Company’s assumptions used in the computation of actuarial liabilities. | ||
Directly attributable expenses |
Directly attributable operating expense assumptions reflect the projected costs of maintaining and servicing in-force policies, including associated directly attributable overhead expenses. The directly attributable expenses are derived from internal cost studies projected into the future with an allowance for inflation. For some developing businesses, there is an expectation that unit costs will decline as these businesses grow. Directly attributable acquisitions expenses are derived from internal cost studies. |
The Company prices its products to cover the expected costs of servicing and maintaining them. In addition, the Company monitors expenses monthly, including comparisons of actual expenses to expense levels allowed for in pricing and valuation. Maintenance expenses for 2023 were unfavourable (2022 – unfavourable) when compared to the Company’s assumptions used in the computation of actuarial liabilities. | ||
Tax |
Taxes reflect assumptions for future premium taxes and other non-income related taxes. |
The Company prices its products to cover the expected cost of taxes. | ||
Policyholder dividends, experience rating refunds, and other adjustable policy elements |
The best estimate projections for policyholder dividends and experience rating refunds, and other adjustable elements of policy benefits are determined to be consistent with management’s expectation of how these elements will be managed should experience emerge consistently with the best estimate assumptions. |
The Company monitors policy experience and adjusts policy benefits and other adjustable elements to reflect this experience. Policyholder dividends are reviewed annually for all businesses under a framework of Board-approved policyholder dividend policies. | ||
December 31, 2023 |
|||||||||||||||||||||||||||||||||||||
Currency |
Liquidity category |
Observable years |
Ultimate year |
1 year |
5 years |
10 years |
20 years |
30 years |
Ultimate |
||||||||||||||||||||||||||||
| Canada |
CAD |
Illiquid |
|||||||||||||||||||||||||||||||||||
More liquid |
|||||||||||||||||||||||||||||||||||||
| U.S. |
USD |
Illiquid |
|||||||||||||||||||||||||||||||||||
More liquid |
|||||||||||||||||||||||||||||||||||||
| Japan |
JPY |
Mixed |
|||||||||||||||||||||||||||||||||||
| Hong Kong |
HKD |
Illiquid |
|||||||||||||||||||||||||||||||||||
| December 31, 2022 | |||||||||||||||||||||||||||||||||||||
Currency |
Liquidity category |
Observable years |
Ultimate year |
1 year | 5 years | 10 years | 20 years | 30 years | Ultimate | ||||||||||||||||||||||||||||
| Canada |
CAD | Illiquid | |||||||||||||||||||||||||||||||||||
| More liquid | |||||||||||||||||||||||||||||||||||||
| U.S. |
USD | Illiquid | |||||||||||||||||||||||||||||||||||
| More liquid | |||||||||||||||||||||||||||||||||||||
| Japan |
JPY | Mixed | |||||||||||||||||||||||||||||||||||
| Hong Kong |
HKD | Illiquid | |||||||||||||||||||||||||||||||||||
| |
223 |
2023 |
2022 |
|||||||||||||||||||||||||||
As at December 31, |
Participating |
Variable annuity |
Unit linked |
Participating |
Variable annuity |
Unit linked |
||||||||||||||||||||||
| Underlying assets |
||||||||||||||||||||||||||||
| Debt securities |
$ |
$ |
$ |
$ | |
$ | $ | |||||||||||||||||||||
| Public equities |
||||||||||||||||||||||||||||
| Mortgages |
||||||||||||||||||||||||||||
| Private placements |
||||||||||||||||||||||||||||
| Real estate |
||||||||||||||||||||||||||||
| Other |
||||||||||||||||||||||||||||
| Total |
$ |
$ |
$ |
$ | $ | |
$ | |
||||||||||||||||||||
2023 |
2022 |
|||||||||||||||||||||||||||||||||||
As at December 31, |
Less than 1 year |
1-5 years |
More than 5 years |
Total |
Less than 1 year |
1-5 years |
More than 5 years |
Total |
||||||||||||||||||||||||||||
| Asia |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||||||||||||
| Canada |
||||||||||||||||||||||||||||||||||||
| Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||||||||||||
As at December 31, 2023 |
||||||||||||||||||||||||||||
Payments due by period |
Less than 1 year |
1 to 2 years |
2 to 3 years |
3 to 4 years |
4 to 5 years |
Over 5 years |
Total |
|||||||||||||||||||||
| Insurance contract liabilities (1) |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
| Reinsurance contract held liabilities (1) |
||||||||||||||||||||||||||||
| As at December 31, 2022 | ||||||||||||||||||||||||||||
Payments due by period |
Less than 1 year |
1 to 2 years |
2 to 3 years |
3 to 4 years |
4 to 5 years |
Over 5 years |
Total | |||||||||||||||||||||
| Insurance contract liabilities (1) |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||||||
| Reinsurance contract held liabilities (1) |
||||||||||||||||||||||||||||
(1) |
Insurance contract liabilities cash flows include estimates related to the timing and payment of death and disability claims, policy surrenders, policy maturities, annuity payments, minimum guarantees on segregated fund products, policyholder dividends, commissions and premium taxes offset by contractual future premiums on in-force contracts and exclude amounts from insurance contract liabilities for account of segregated fund holders. These estimated cash flows are based on the best estimate assumptions used in the determination of insurance contract liabilities. These amounts are undiscounted. Reinsurance contract held liabilities cash flows include estimates related to the timing and payment of future reinsurance premiums offset by recoveries on in-force reinsurance agreements. Due to the use of assumptions, actual cash flows may differ from these estimates. Cash flows include embedded derivatives measured separately at fair value. |
2023 |
2022 |
|||||||||||||||||||
As at December 31, |
Amounts payable on demand |
Carrying amount |
Amounts payable on demand |
Carrying amount |
||||||||||||||||
| Asia |
$ |
$ |
$ |
$ |
||||||||||||||||
| Canada |
||||||||||||||||||||
| U.S. |
||||||||||||||||||||
| Total |
$ |
$ |
$ |
$ |
||||||||||||||||
For the three and nine months ended September 30, 2023 |
For the three months ended December 31, 2023 |
For the year ended December 31, 2023 |
||||||||||
| Canada variable annuity product review |
$ |
( |
) |
$ |
$ |
( |
) | |||||
| Mortality and morbidity updates |
||||||||||||
| Lapse and policyholder behaviour updates |
||||||||||||
| Methodology and other updates |
( |
) |
( |
) |
( |
) | ||||||
| Impact of changes in actuarial methods and assumptions, pre-tax |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | |||
(1) |
Excludes the portion related to non-controlling interests of $ for the three and nine months ended September 30, 2023, and $for the three months ended December 31, 2023, respectively. |
|
2 25 |
For the three and nine months ended September 30, 2023 |
For the three months ended December 31, 2023 |
For the year ended December 31, 2023 |
||||||||||
| Portion recognized in net income (loss) attributed to: |
||||||||||||
| Participating policyholders |
$ |
$ |
$ |
|||||||||
| Shareholders and other equity holders |
||||||||||||
| Portion recognized in OCI attributed to: |
||||||||||||
| Participating policyholders |
( |
) |
( |
) | ||||||||
| Shareholders and other equity holders |
( |
) |
||||||||||
( |
) |
|||||||||||
| Portion recognized in CSM |
||||||||||||
| Impact of changes in actuarial methods and assumptions, pre-tax |
$ |
$ |
$ |
|||||||||
(1) |
Excludes the portion related to non-controlling interests, of which $ |
| For the year ended December 31, 2022 | Total | |||
| Long-term care triennial review |
$ | |||
| Mortality and morbidity updates |
||||
| Lapse and policyholder behaviour updates |
||||
| Methodology and other updates |
( |
) | ||
| Impact of changes in actuarial methods and assumptions, pre-tax |
$ | |
||
(1) |
Excludes the portion related to non-controlling interests of $ |
For the year ended December 31, 2022 |
Total |
|||
| Portion recognized in net income (loss) attributed to: |
||||
| Participating policyholders |
$ | ( |
) | |
| Shareholders and other equity holders |
||||
| ( |
) | |||
| Portion recognized in OCI attributed to: |
||||
| Participating policyholders |
– | |||
| Shareholders and other equity holders |
||||
| Portion recognized in CSM |
( |
) | ||
| Impact of changes in actuarial methods and assumptions, pre-tax |
$ |
( |
) | |
(1) |
Excludes the portion related to non-controlling interests, of which $ |
|
2 27 |
1 |
First generation policies issued prior to 2002. |
2 |
Second generation policies with an average issue date of 2007 and Group policies with an average issue date of 2003. |
3 |
The mortality rate of LTC policyholders who are currently not on claim. |
4 |
Actual experience obtaining premium increases could be materially different than what the Company has assumed, resulting in further increases or decreases in insurance contract liabilities, which could be material. See “Caution regarding forward-looking statements” above. |
For the years ended December 31, |
2023 |
2022 |
||||||
Balance, excluding those for account of segregated fund holders, January 1 |
$ |
$ | |
|||||
New contracts |
||||||||
Changes in market conditions |
( |
) | ||||||
Redemptions, surrenders and maturities |
( |
) |
( |
) | ||||
Impact of changes in foreign exchange rates |
( |
) |
||||||
Balance, excluding those for account of segregated fund holders, December 31 |
||||||||
Investment contract liabilities for account of segregated fund holders |
||||||||
Balance, December 31 |
$ |
$ | ||||||
2023 |
2022 |
|||||||||||||||||||
As at December 31, |
Amortized cost, gross of reinsurance ceded (1) |
Fair value |
Amortized cost, gross of reinsurance ceded (1) |
Fair value |
||||||||||||||||
Asia |
$ |
$ |
$ | |
$ | |
||||||||||||||
Canada |
||||||||||||||||||||
U.S. |
||||||||||||||||||||
GWAM |
||||||||||||||||||||
Investment contract liabilities |
$ |
$ |
$ | $ | ||||||||||||||||
(1) |
As at December 31, 2023, investment contract liabilities with carrying value and fair value of $ ). |
| |
2 2 9 |
For the years ended December 31, |
2023 |
2022 |
||||||
Balance, January 1 |
$ |
$ | |
|||||
Policy deposits |
||||||||
Interest |
|
|||||||
Withdrawals |
( |
) |
( |
) | ||||
Fees |
||||||||
Impact of changes in foreign exchange rates |
( |
) |
|
|||||
Other |
( |
) |
||||||
Balance, December 31 |
$ |
$ | ||||||
As at December 31, Payments due by period |
Less than 1 year |
1 to 3 years |
3 to 5 years |
Over 5 years |
Total |
|||||||||||||||
2023 |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
2022 |
||||||||||||||||||||
(1) |
Due to the nature of the products, the timing of net cash flows may be before contract maturity. Cash flows are undiscounted. |
Market risk management strategy is governed by the Global Asset Liability Committee which oversees the overall market and liquidity risk program. The Company’s overall strategy to manage its market risks incorporates several component strategies, each targeted to manage one or more of the market risks arising from the Company’s businesses. At an enterprise level, these strategies are designed to manage the Company’s aggregate exposures to market risks against limits associated with earnings and capital volatility. | ||||||||||
The following table outlines the Company’s key market risks and identifies the risk management strategies which contribute to managing these risks. | ||||||||||
Risk Management Strategy |
Key Market Risk | |||||||||
Public Equity Risk |
Interest Rate and Spread Risk |
ALDA Risk |
Foreign Currency Exchange Risk |
Liquidity Risk | ||||||
Product design and pricing |
✓ |
✓ |
✓ |
✓ |
✓ | |||||
Variable annuity guarantee dynamic hedging |
✓ |
✓ |
✓ |
✓ | ||||||
Macro equity risk hedging |
✓ |
✓ |
✓ | |||||||
Asset liability management |
✓ |
✓ |
✓ |
✓ |
✓ | |||||
Foreign currency exchange management |
✓ |
✓ | ||||||||
Liquidity risk management |
✓ | |||||||||
The Company’s policies, standards, and guidelines with respect to product design and pricing are designed with the objective of aligning its product offerings with its risk taking philosophy and risk appetite, and in particular, ensuring that incremental risk generated from new sales aligns with its strategic risk objectives and risk limits. The specific design features of Manulife’s product offerings, including level of benefit guarantees, policyholder options, fund offerings and availability restrictions as well as its associated investment strategies, help to mitigate the level of underlying risk. Manulife regularly reviews and modifies key features within its product offerings, including premiums and fee charges with a goal of meeting profit targets and staying within risk limits. Certain of the Company’s general fund adjustable benefit products have minimum rate guarantees. The rate guarantees for any particular policy are set at the time the policy is issued and governed by insurance regulation in each jurisdiction where the products are sold. The contractual provisions allow crediting rates to be re-set at pre-established intervals subject to the established minimum crediting rate guarantees. The Company may partially mitigate the interest rate exposure by setting new rates on new business and by adjusting rates on in-force business where permitted. In addition, the Company partially mitigates this interest rate risk through its asset liability management process, product design elements, and crediting rate strategies. All material new product, reinsurance and underwriting initiatives must be reviewed and approved by the Chief Risk Officer or key individuals within risk management functions. |
The Company’s exposure to movement in public equity market values primarily arises from insurance contract liabilities related to variable annuity guarantees and general fund public equity investments. Dynamic hedging is the primary hedging strategy for variable annuity market risks. Dynamic hedging is employed for new variable annuity guarantees business when written or as soon as practical thereafter. Manulife seeks to manage public equity risk arising from unhedged exposures in its insurance contract liabilities through the macro equity risk hedging strategy. The Company seeks to manage interest rate risk arising from variable annuity business not dynamically hedged through its asset liability management strategy. |
The variable annuity dynamic hedging strategy is designed to hedge the sensitivity of variable annuity guarantee insurance contract liabilities to fund performance (both public equity and bond funds) and interest rate movements. The objective of the variable annuity dynamic hedging strategy is to offset, as closely as possible, the change in the economic value of guarantees with the profit and loss from the hedge asset portfolio. The Company’s variable annuity hedging program uses a variety of exchange-traded and over-the-counter The Company’s variable annuity guarantee dynamic hedging strategy is not designed to completely offset the sensitivity of insurance contract liabilities to all risks associated with the guarantees embedded in these products. The profit (loss) on the hedge instruments will not completely offset the underlying losses (gains) related to the guarantee liabilities hedged because: • Policyholder behaviour and mortality experience are not hedged; • Risk adjustment related to cost of guarantees in the insurance contract liabilities is largely hedged; • A portion of interest rate risk is not hedged; • Credit spreads may widen and actions might not be taken to adjust accordingly; • Fund performance on a small portion of the underlying funds is not hedged due to lack of availability of effective exchange-traded hedge instruments; • Performance of the underlying funds hedged may differ from the performance of the corresponding hedge instruments; • Correlations between interest rates and equity markets could lead to unfavourable material impacts; • Unfavourable hedge rebalancing costs can be incurred during periods of high volatility from equity markets, bond markets and/or interest rates. The impact is magnified when these impacts occur concurrently; and • Not all other risks are hedged. |
|
2 31 |
The objective of the macro equity risk hedging program is to maintain the Company’s overall earnings sensitivity to public equity market movements within the Board approved risk appetite limits. The macro equity risk hedging program is designed to hedge earnings sensitivity due to movements in public equity markets arising from all sources (outside of dynamically hedged exposures). Sources of equity market sensitivity addressed by the macro equity risk hedging program include: • Residual equity and currency exposure from variable annuity guarantees not dynamically hedged; • General fund equity holdings backing guaranteed, adjustable liabilities and variable universal life; and • Host contract fees related to variable annuity guarantees are not dynamically hedged. |
Manulife’s asset liability management strategy is designed to help ensure that the market risks embedded in its assets and liabilities held in the Company’s general fund are effectively managed and that risk exposures arising from these assets and liabilities are maintained within risk limits. The embedded market risks include risks related to the level and movement of interest rates and credit and swap spreads, public equity market performance, ALDA performance and foreign currency exchange rate movements. General fund product liabilities are categorized into groups with similar characteristics in order to support them with a specific asset strategy. The Company seeks to align the asset strategy for each group to the premium and benefit patterns, policyholder options and guarantees, and crediting rate strategies of the products they support. The strategies are set using portfolio analysis techniques intended to optimize returns, subject to considerations related to regulatory and economic capital requirements, and risk tolerances. They are designed to achieve broad diversification across asset classes and individual investment risks while being suitably aligned with the liabilities they support. The strategies encompass asset mix, quality rating, term profile, liquidity, currency and industry concentration targets. |
Manulife’s policy is to generally match the currency of its assets with the currency of the liabilities they support. Where assets and liabilities are not currency matched, the Company seeks to hedge this exposure where appropriate to stabilize its earnings and capital positions and remain within its enterprise foreign exchange risk limits. |
Global liquidity management policies and procedures are designed to provide adequate liquidity to cover cash and collateral obligations as they come due, and to sustain and grow operations in both normal and stressed conditions. They consider legal, regulatory, tax, operational or economic impediments to inter-entity funding. The asset mix of the Company’s balance sheet takes into account the need to hold adequate unencumbered and appropriate liquid assets to satisfy the requirements arising under stressed scenarios and to allow Manulife’s liquidity ratios to remain strong. Manulife manages liquidity centrally and closely monitors the liquidity positions of its principal subsidiaries. Manulife seeks to mitigate liquidity risk by diversifying its business across different products, markets, geographical regions and policyholders. The Company designs insurance products to encourage policyholders to maintain their policies in-force, to help generate a diversified and stable flow of recurring premiums. The Company designs the policyholder termination features with the goal of mitigating the financial exposure and liquidity risk related to unexpected policyholder terminations. The Company establishes and implements investment strategies intended to match the term profile of the assets to the liabilities they support, taking into account the potential for unexpected policyholder terminations and resulting liquidity needs. Liquid assets represent a large portion of the Company’s total assets. Manulife aims to reduce liquidity risk in the Company’s businesses by diversifying its funding sources and appropriately managing the term structure of its funding. The Company forecasts and monitors daily operating liquidity and cash movements in various individual entities and operations as well as centrally, aiming to ensure liquidity is available and cash is employed optimally. The Company also maintains centralized cash pools and access to other sources of liquidity and contingent liquidity such as repurchase funding agreements. Manulife’s centralized cash pools consist of cash or near-cash, high quality short-term investments that are continually monitored for their credit quality and market liquidity. Manulife has established a variety of contingent liquidity sources. These include, among others, a $ $ |
As at December 31, 2023 |
Less than 1 year |
1 to 3 years |
3 to 5 years |
Over 5 years |
Total |
|||||||||||||||
Long-term debt |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
Capital instruments |
||||||||||||||||||||
Derivatives |
||||||||||||||||||||
Deposits from Bank clients (2) |
||||||||||||||||||||
Lease liabilities |
||||||||||||||||||||
(1) The amounts shown above are net of the related unamortized deferred issue costs.(2) Carrying value and fair value of deposits from Bank clients as at December 31, 2023 was $ |
||||||||||||||||||||
Guarantees on variable annuity products and segregated funds may include one or more of death, maturity, income and withdrawal guarantees. Variable annuity and segregated fund guarantees are contingent and only payable upon the occurrence of the relevant event, if fund values at that time are below guarantee values. Depending on future equity market levels, liabilities on current in-force business would be due primarily in the period from 2023 to 2043.Manulife seeks to mitigate a portion of the risks embedded in its retained (i.e., net of reinsurance) variable annuity and segregated fund guarantee business through the combination of dynamic and macro hedging strategies (see “Publicly traded equity performance risk sensitivities and exposure measures” below). |
The table below shows selected information regarding the Company’s variable annuity and segregated fund investment-related guarantees gross and net of reinsurance. |
2023 |
2022 |
|||||||||||||||||||||||||||
As at December 31, |
Guarantee value (1) |
Fund value |
Net amount at risk (1),(2),(3) |
Guarantee value (1) |
Fund value |
Net amount at risk (1),(2),(3) |
||||||||||||||||||||||
Guaranteed minimum income benefit |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||||||
Guaranteed minimum withdrawal benefit |
||||||||||||||||||||||||||||
Guaranteed minimum accumulation benefit |
||||||||||||||||||||||||||||
Gross living benefits (4) |
||||||||||||||||||||||||||||
Gross death benefits (5) |
||||||||||||||||||||||||||||
Total gross of reinsurance |
||||||||||||||||||||||||||||
Living benefits reinsured |
||||||||||||||||||||||||||||
Death benefits reinsured |
||||||||||||||||||||||||||||
Total reinsured |
||||||||||||||||||||||||||||
Total, net of reinsurance |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||||||
(1) (2) Amount at risk (in-the-money (3) The amount at risk net of reinsurance at December 31, 2023 was $the Company’s Canadian business, US$the Company’s Japan business and US$the Company’s run-off reinsurance business.(4) Where a policy includes both living and death benefits, the guarantee in excess of the living benefit is included in the death benefit category as outlined in footnote 5.(5) Death benefits include standalone guarantees and guarantees in excess of living benefit guarantees where both death and living benefits are provided on a policy. | ||||||||||||||
| |
2 33 |
Variable contracts with guarantees, including variable annuities and variable life, are invested, at the policyholder’s discretion subject to contract limitations, in various fund types within the segregated fund accounts and other investments. The account balances by investment category are set out below. | ||||
As at December 31, Investment category |
2023 |
2022 | ||||||
| Equity funds | $ |
$ | ||||||
Balanced funds |
||||||||
Bond funds |
||||||||
Money market funds |
||||||||
Other fixed interest rate investments |
||||||||
Total |
$ |
$ | |
|||||
In the sections that follow, the Company provides sensitivities and risk exposure measures for certain risks. These include sensitivities due to specific changes in market prices and interest rate levels projected using internal models as at a specific date , and are measured relative to a starting level reflecting the Company’s assets and liabilities at that date. The risk exposures measure the impact of changing one factor at a time and assume that all other factors remain unchanged. Actual results can differ significantly from these estimates for a variety of reasons including the interaction among these factors when more than one changes; changes in liabilities from updates to non-economic assumptions, changes in business mix, effective tax rates and other market factors; and the general limitations of the Company’s internal models. For these reasons, the sensitivities should only be viewed as directional estimates of the underlying sensitivities for the respective factors based on the assumptions outlined below. Given the nature of these calculations, the Company cannot provide assurance that the actual impact on CSM, net income attributed to shareholders, other comprehensive income attributed to shareholders, and total comprehensive income attributed to shareholders will be as indicated. |
Net income attributed to shareholders |
||||||||||||||||||||||||
As at December 31, 2023 |
-30% |
-20% |
-10% |
+10% |
+20% |
+30% |
||||||||||||||||||
Underlying sensitivity |
||||||||||||||||||||||||
Variable annuity guarantees (2) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
$ |
||||||||||||
General fund equity investments (3) |
( |
) |
( |
) |
( |
) |
||||||||||||||||||
Total underlying sensitivity before hedging |
( |
) |
( |
) |
( |
) |
||||||||||||||||||
Impact of macro and dynamic hedge assets (4) |
( |
) |
( |
) |
( |
) | ||||||||||||||||||
Net potential impact on net income attributed to shareholders after impact of hedging and before impact of reinsurance |
( |
) |
( |
) |
( |
) |
||||||||||||||||||
Impact of reinsurance |
( |
) |
( |
) |
( |
) | ||||||||||||||||||
Net potential impact on net income attributed to shareholders after impact of hedging and reinsurance |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
$ |
||||||||||||
Net income attributed to shareholders |
||||||||||||||||||||||||
As at December 31, 2022 |
-30% |
-20% |
-10% |
+10% |
+20% |
+30% |
||||||||||||||||||
Underlying sensitivity |
||||||||||||||||||||||||
Variable annuity guarantees (2) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
$ |
||||||||||||
General fund equity investments (3) |
( |
) |
( |
) |
( |
) |
||||||||||||||||||
Total underlying sensitivity before hedging |
( |
) |
( |
) |
( |
) |
||||||||||||||||||
Impact of macro and dynamic hedge assets (4) |
( |
) |
( |
) |
( |
) | ||||||||||||||||||
Net potential impact on net income attributed to shareholders after impact of hedging and before impact of reinsurance |
( |
) |
( |
) |
( |
) |
||||||||||||||||||
Impact of reinsurance |
( |
) |
( |
) |
( |
) | ||||||||||||||||||
Net potential impact on net income attributed to shareholders after impact of hedging and reinsurance |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
$ |
||||||||||||
(1) |
See “Caution related to sensitivities” above. |
(2) |
For variable annuity contracts measured under VFA the impact of financial risk and changes in interest rates adjusts CSM, unless the risk mitigation option applies. The Company has elected to apply risk mitigation and therefore a portion of the impact is reported in net income attributed to shareholders instead of adjusting the CSM. If the CSM for a group of variable annuity contracts is exhausted the full impact is reported in net income attributed to shareholders. |
(3) |
This impact for general fund equity investments includes general fund investments supporting the Company’s insurance contract liabilities, investment in seed money investments (in segregated and mutual funds made by Global WAM segment) and the impact on insurance contract liabilities related to the projected future fee income on variable universal life and other unit linked products. The impact does not include any potential impact on public equity weightings. The participating policy funds are largely self-supporting and generate no material impact on net income attributed to shareholders as a result of changes in equity markets. |
(4) |
Includes the impact of assumed rebalancing of equity hedges in the macro and dynamic hedging program. The impact of dynamic hedge represents the impact of equity hedges offsetting , fund tracking, realized volatility and equity, interest rate correlations different from expected among other factors). |
As at December 31, 2023 |
-30% |
-20% |
-10% |
+10% |
+20% |
+30% |
||||||||||||||||||
| Variable annuity guarantees reported in CSM |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
$ |
||||||||||||
| Impact of risk mitigation—hedging (4) |
( |
) |
( |
) |
( |
) | ||||||||||||||||||
| Impact of risk mitigation—reinsurance (4) |
( |
) |
( |
) |
( |
) | ||||||||||||||||||
| VA net of risk mitigation |
( |
) |
( |
) |
( |
) |
||||||||||||||||||
| General fund equity |
( |
) |
( |
) |
( |
) |
||||||||||||||||||
| Contractual service margin (pre-tax) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
$ |
||||||||||||
| Other comprehensive income attributed to shareholders (post-tax) (5) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
$ |
||||||||||||
| Total comprehensive income attributed to shareholders (post-tax) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
$ |
||||||||||||
As at December 31, 2022 |
-30% |
-20% | -10% | +10% | +20% | +30% | ||||||||||||||||||
| Variable annuity guarantees reported in CSM |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | $ | ||||||||||||
| Impact of risk mitigation—hedging (4) |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
| Impact of risk mitigation—reinsurance (4) |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
| VA net of risk mitigation |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
| General fund equity |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
| Contractual service margin (pre-tax) |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | $ | ||||||||||||
| Other comprehensive income attributed to shareholders (post-tax) (5) |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | $ | ||||||||||||
| Total comprehensive income attributed to shareholders (post-tax) |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | $ | ||||||||||||
(1) |
See “Caution related to sensitivities” above. |
(2) |
This estimate assumes that the performance of the dynamic hedging program would not completely offset the gain/loss from the dynamically hedged variable annuity guarantee liabilities. It assumes that the hedge assets are based on the actual position at the period end, and that equity hedges in the dynamic program offset |
(3) |
OSFI rules for segregated fund guarantees reflect full capital impacts of shocks over 20 quarters within a prescribed range. As such, the deterioration in equity markets could lead to further increases in capital requirements after the initial shock. |
(4) |
For variable annuity contracts measured under VFA the impact of financial risk and changes in interest rates adjusts CSM, unless the risk mitigation option applies. The Company has elected to apply risk mitigation and therefore a portion of the impact is reported in net income attributed to shareholders instead of adjusting the CSM. If the CSM for a group of variable annuity contracts is exhausted the full impact is reported in net income attributed to shareholders. |
(5) |
The impact of financial risk and changes to interest rates for variable annuity contracts is not expected to generate sensitivity in Other Comprehensive Income. |
| |
235 |
| As at December 31, 2023, the Company estimated the sensitivity of net income attributed to shareholders to a basis point parallel decline in interest rates to be a benefit of $charge of $ |
| The table below shows the potential impacts from a 50 basis point parallel move in interest rates on CSM, net income attributed to shareholders, other comprehensive income attributed to shareholders, and total comprehensive income attributed to shareholders. This includes a change in current government, swap and corporate rates for all maturities across all markets with no change in credit spreads between government, swap and corporate rates. Also shown separately are the potential impacts from a 50 basis point parallel move in corporate spreads and a 20 basis point parallel move in swap spreads. The impacts reflect the net impact of movements in asset values in liability and surplus segments and movements in the present value of cash flows for insurance contracts including those with cash flows that vary with the returns of underlying items where the present value is measured by stochastic modelling. The method used for deriving sensitivity information and significant assumptions made did not change from the previous period. The disclosed interest rate sensitivities reflect the accounting designations of the Company’s financial assets and corresponding insurance contract liabilities. In most cases these assets and liabilities are designated as FVOCI and as a result, impacts from changes to interest rates are largely in other comprehensive income. There are also changes in interest rates that impact the CSM for VFA contracts that relate to amounts that are not passed through to policyholders. In addition, changes in interest rates impact net income as it relates to derivatives not in hedge accounting relationships and on VFA contracts where the CSM has been exhausted. The disclosed interest rate sensitivities assume no hedge accounting ineffectiveness, as the Company’s hedge accounting programs are optimized for parallel movements in interest rates, leading to immaterial net income impacts under these shocks. However, the actual hedge accounting ineffectiveness is sensitive to non-parallel interest rate movements and will depend on the shape and magnitude of the interest rate movements which could lead to variations in the impact to net income attributed to shareholders.The Company’s sensitivities vary across all regions in which it operates, and the impacts of yield curve changes will vary depending upon the geography where the change occurs. Furthermore, the impacts from non-parallel movements may be materially different from the estimated impacts of parallel movements.The interest rate and spread risk sensitivities are determined in isolation of each other and therefore do not reflect the combined impact of changes in government rates and credit spreads between government, swap and corporate rates occurring simultaneously. As a result, the impact of the summation of each individual sensitivity may be materially different from the impact of sensitivities to simultaneous changes in interest rate and spread risk. The potential impacts also do not take into account other potential effects of changes in interest rate levels, for example, CSM at recognition on the sale of new business or lower interest earned on future fixed income asset purchases. The impacts do not reflect any potential effect of changing interest rates on the value of the Company’s ALDA. Rising interest rates could negatively impact the value of the Company’s ALDA. More information on ALDA can be found below under “Alternative long-duration asset performance risk sensitivities and exposure measures”. |
As at December 31, 2023 |
Interest rates |
Corporate spreads |
Swap spreads |
|||||||||||||||||||||||||||||||
(post-tax except CSM) |
-50bp |
+50bp |
-50bp |
+50bp |
-20bp |
+20bp |
||||||||||||||||||||||||||||
| CSM |
$ |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
$ |
||||||||||||||||||||||||
| Net income attributed to shareholders |
( |
) |
( |
) | ||||||||||||||||||||||||||||||
| Other comprehensive income attributed to shareholders |
( |
) |
( |
) |
( |
) |
||||||||||||||||||||||||||||
| Total comprehensive income attributed to shareholders |
( |
) |
( |
) |
||||||||||||||||||||||||||||||
As at December 31, 2022 |
Interest rates | Corporate spreads | Swap spreads | |||||||||||||||||||||||||||||||
( post-tax except CSM) |
-50bp | +50bp | -50bp | +50bp | -20bp | +20bp | ||||||||||||||||||||||||||||
| CSM |
$ | ( |
) | $ | – | $ | ( |
) | $ | – | $ | – | $ | – | ||||||||||||||||||||
| Net income attributed to shareholders |
( |
) | – | – | ||||||||||||||||||||||||||||||
| Other comprehensive income attributed to shareholders |
( |
) | – | – | ||||||||||||||||||||||||||||||
| Total comprehensive income attributed to shareholders |
( |
) | – | – | – | – | ||||||||||||||||||||||||||||
(1) |
See “Caution related to sensitivities” above. |
(2) |
Estimates include changes to the net actuarial gains/losses with respect to the Company’s pension obligations as a result of changes in interest rates. |
(3) |
Includes guaranteed insurance and annuity products, including variable annuity contracts as well as adjustable benefit products where benefits are generally adjusted as interest rates and investment returns change, a portion of which have minimum credited rate guarantees. For adjustable benefit products subject to minimum rate guarantees, the sensitivities are based on the assumption that credited rates will be floored at the minimum. |
(4) |
The Company adopted IFRS 9 hedge accounting prospectively from January 1, 2023, as such the sensitivity results for 2023 and 2022 are based on different accounting basis in which 2023 includes the impacts of hedge accounting and 2022 does not. |
As at |
December 31, 2023 |
December 31, 2022 |
||||||||||||||||||||||
(post-tax except CSM) |
-10% |
+10% |
-10% |
+10% |
||||||||||||||||||||
| CSM excluding NCI |
|
|
|
$ |
( |
) |
$ |
|
|
|
|
$ | ( |
) | $ | |||||||||
| Net income attributed to shareholders |
|
|
|
|
( |
) |
|
|
|
|
( |
) | ||||||||||||
| Other comprehensive income attributed to shareholders |
|
|
|
|
( |
) |
|
|
|
|
( |
) | ||||||||||||
| Total comprehensive income attributed to shareholders |
|
|
|
|
( |
) |
|
|
|
|
( |
) | ||||||||||||
(1) |
See “Caution related to sensitivities” above. |
1 |
Energy includes legacy oil and gas equity interests related to upstream and midstream assets that are in runoff, and Energy Transition private equity interests in areas supportive of the transition to lower carbon forms of energy, such as wind, solar, batteries and magnets. |
|
237 |
As at December 31, 2023 |
Stage 1 |
Stage 2 |
Stage 3 |
Total |
||||||||||||
Debt securities |
||||||||||||||||
Investment grade |
$ |
$ |
$ |
$ |
||||||||||||
Non-investment grade |
||||||||||||||||
Default |
||||||||||||||||
Total |
||||||||||||||||
Allowance for credit losses on assets measured at amortized cost |
||||||||||||||||
Net of allowance |
||||||||||||||||
Allowance for credit losses on assets measured at FVOCI |
||||||||||||||||
Private placements |
||||||||||||||||
Investment grade |
||||||||||||||||
Non-investment grade |
||||||||||||||||
Total |
||||||||||||||||
Allowance for credit losses on assets measured at amortized cost |
||||||||||||||||
Net of allowance |
||||||||||||||||
Allowance for credit losses on assets measured at FVOCI |
||||||||||||||||
Commercial mortgages |
||||||||||||||||
AAA |
||||||||||||||||
AA |
||||||||||||||||
A |
||||||||||||||||
BBB |
||||||||||||||||
BB |
||||||||||||||||
B and lower |
||||||||||||||||
Total |
||||||||||||||||
Allowance for credit losses on assets measured at amortized cost |
||||||||||||||||
Net of allowance |
||||||||||||||||
Allowance for credit losses on assets measured at FVOCI |
||||||||||||||||
Residential mortgages |
||||||||||||||||
Performing |
||||||||||||||||
Non-performing |
||||||||||||||||
Total |
||||||||||||||||
Allowance for credit losses on assets measured at amortized cost |
||||||||||||||||
Net of allowance |
||||||||||||||||
Allowance for credit losses on assets measured at FVOCI |
||||||||||||||||
Loans to Bank clients |
||||||||||||||||
Performing |
||||||||||||||||
Non-performing |
||||||||||||||||
Total |
||||||||||||||||
Allowance for credit losses on assets measured at amortized cost |
||||||||||||||||
Net of allowance |
||||||||||||||||
Allowance for credit losses on assets measured at FVOCI |
||||||||||||||||
Other invested assets |
||||||||||||||||
Investment grade |
||||||||||||||||
Below investment grade |
||||||||||||||||
Default |
||||||||||||||||
Total |
||||||||||||||||
Allowance for credit losses on assets measured at amortized cost |
||||||||||||||||
Net of allowance |
||||||||||||||||
Allowance for credit losses on assets measured at FVOCI |
||||||||||||||||
Loan commitments |
||||||||||||||||
Allowance for credit losses |
||||||||||||||||
Net of allowance, total |
$ |
$ |
$ |
$ |
||||||||||||
As at December 31, 2023 |
Stage 1 |
Stage 2 |
Stage 3 |
Total |
||||||||||||
| Balance, beginning of year |
$ |
$ |
$ |
$ |
||||||||||||
| Net re - measurement due to transfers |
( |
) |
||||||||||||||
| Transfer to stage 1 |
( |
) |
( |
) |
||||||||||||
| Transfer to stage 2 |
( |
) |
( |
) |
||||||||||||
| Transfer to stage 3 |
( |
) |
( |
) |
||||||||||||
| Net originations, purchases and disposals |
( |
) |
||||||||||||||
| Repayments |
||||||||||||||||
| Changes to risk, parameters, and models |
( |
) |
||||||||||||||
| Foreign exchange and other adjustments |
( |
) |
( |
) |
( |
) | ||||||||||
| Balance, end of year |
$ |
$ |
$ |
$ |
||||||||||||
| Past due but not impaired | ||||||||||||||||
| As at December 31, 2022 | Less than 90 days |
90 days and greater |
Total | Total impaired |
||||||||||||
| Debt securities (1),(2) |
||||||||||||||||
| FVTPL |
$ | $ | $ | $ | ||||||||||||
| AFS |
||||||||||||||||
| Private placements (1) |
||||||||||||||||
| Mortgages and loans to Bank clients |
||||||||||||||||
| Other financial assets |
||||||||||||||||
| Total |
$ | |
$ | |
$ | |
$ | |
||||||||
(1) |
Payments of $ |
(2) |
Payments of $ |
Base case scenario |
Upside scenario |
Downside scenario 1 |
Downside scenario 2 |
|||||||||||||||||||||||||||||||||||||||||||||
As at December 31, 2023 |
Current quarter |
Next 12 months |
Ensuing 4 years |
Next 12 months |
Ensuing 4 years |
Next 12 months |
Ensuing 4 years |
Next 12 months |
Ensuing 4 years |
|||||||||||||||||||||||||||||||||||||||
| Canada |
||||||||||||||||||||||||||||||||||||||||||||||||
| Gross Domestic Product (GDP), in U.S. $ billions |
$ |
( |
( |
|||||||||||||||||||||||||||||||||||||||||||||
| Unemployment rate |
||||||||||||||||||||||||||||||||||||||||||||||||
| NYMEX Light Sweet Crude Oil (in U.S. dollars, per barrel) |
$ |
|||||||||||||||||||||||||||||||||||||||||||||||
| U.S. |
||||||||||||||||||||||||||||||||||||||||||||||||
| Gross Domestic Product (GDP), in U.S. $ billions |
$ |
( |
( |
|||||||||||||||||||||||||||||||||||||||||||||
| Unemployment rate |
||||||||||||||||||||||||||||||||||||||||||||||||
| 7-10 Year BBB U.S. Corporate Index |
||||||||||||||||||||||||||||||||||||||||||||||||
| Japan |
||||||||||||||||||||||||||||||||||||||||||||||||
| Gross Domestic Product (GDP), in JPY billions |
¥ |
( |
( |
|||||||||||||||||||||||||||||||||||||||||||||
| Unemployment rate |
||||||||||||||||||||||||||||||||||||||||||||||||
| Hong Kong |
||||||||||||||||||||||||||||||||||||||||||||||||
| Unemployment rate |
||||||||||||||||||||||||||||||||||||||||||||||||
| Hang Seng Index |
( |
( |
||||||||||||||||||||||||||||||||||||||||||||||
| China |
||||||||||||||||||||||||||||||||||||||||||||||||
| Gross Domestic Product (GDP), in CNY billions |
$ |
( |
( |
|||||||||||||||||||||||||||||||||||||||||||||
| FTSE Xinhua A200 Index |
( |
( |
||||||||||||||||||||||||||||||||||||||||||||||
| |
239 |
As at |
December 31, 2023 |
|||
| Probability-weighted ECLs |
$ |
|||
| Base ECLs |
$ |
|||
| Difference – in amount |
$ |
|||
| Difference – in percentage |
% | |||
As at December 31, 2023 |
Notional amount (1) |
Fair value | Weighted average maturity (in years) (2) |
|||||||||
| Single name CDS (3),(4) |
||||||||||||
| AA |
$ |
$ |
||||||||||
| A |
||||||||||||
| BBB |
||||||||||||
| Total single name CDS |
$ |
$ |
||||||||||
| Total CDS protection sold |
$ |
$ |
||||||||||
| As at December 31, 2022 | Notional amount (1) |
Fair value | Weighted average maturity (in years) (2) |
|||||||||
| Single name CDS (3),(4) – Corporate debt |
||||||||||||
| AA |
$ | – | $ | – | – | |||||||
| A |
||||||||||||
| BBB |
– | |||||||||||
| Total single name CDS |
$ | |
$ | |||||||||
| Total CDS protection sold |
$ | $ | ||||||||||
(1) |
Notional amounts represent the maximum future payments the Company would have to pay its counterparties assuming a default of the underlying credit and zero recovery on the underlying issuer obligations. |
(2) |
The weighted average maturity of the CDS is weighted based on notional amounts. |
(3) |
Ratings are based on S&P where available followed by Moody’s, DBRS, and Fitch. If no rating is available from a rating agency, an internally developed rating is used. |
(4) |
The Company held |
| Related amounts not set off in the Consolidated Statements of Financial Position |
||||||||||||||||||||
As at December 31, 2023 |
Gross amounts of financial instruments (1) |
Amounts subject to an enforceable master netting arrangement or similar agreements |
Financial and cash collateral pledged (received) (2) |
Net amounts including financing entity (3) |
Net amounts excluding financing entity |
|||||||||||||||
Financial assets |
||||||||||||||||||||
Derivative assets |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
|||||||||||
Securities lending |
( |
) |
||||||||||||||||||
Reverse repurchase agreements |
( |
) |
( |
) |
||||||||||||||||
Total financial assets |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
|||||||||||
Financial liabilities |
||||||||||||||||||||
Derivative liabilities |
$ |
( |
) |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||
Repurchase agreements |
( |
) |
||||||||||||||||||
Total financial liabilities |
$ |
( |
) |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||
| Related amounts not set off in the Consolidated Statements of Financial Position |
||||||||||||||||||||
| As at December 31, 2022 | 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 amounts including financing entity (3) |
Net amounts excluding financing entity |
|||||||||||||||
Financial assets |
||||||||||||||||||||
Derivative assets |
$ | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||
Securities lending |
– | ( |
) | – | – | |||||||||||||||
Reverse repurchase agreements |
( |
) | ( |
) | – | – | ||||||||||||||
Total financial assets |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
$ | |
||||||||
Financial liabilities |
||||||||||||||||||||
Derivative liabilities |
$ | ( |
) | $ | |
$ | |
$ | ( |
) | $ | ( |
) | |||||||
Repurchase agreements |
( |
) | – | – | ||||||||||||||||
Total financial liabilities |
$ | ( |
) | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||
(1) |
Financial assets and liabilities include accrued interest of $ |
(2) |
Financial and cash collateral exclude over-collateralization. As at December 31, 2023, the Company was over-collateralized on OTC derivative assets, OTC derivative liabilities, securities lending and reverse repurchase agreements and repurchase agreements in the amounts of $ , $and $ respectively (2022 – $ |
(3) |
Includes derivative contracts entered between the Company and its unconsolidated financing entity. The Company does not exchange collateral on derivative contracts entered with this entity. Refer to note 18. |
|
241 |
As at December 31, 2023 |
Gross amounts of financial instruments |
Amounts subject to an enforceable netting arrangement |
Net amounts of financial instruments |
|||||||||
Credit linked note (1) |
$ |
$ |
( |
) |
$ |
|||||||
Variable surplus note |
( |
) |
||||||||||
| As at December 31, 2022 | Gross amounts of financial instruments |
Amounts subject to an enforceable netting arrangement |
Net amounts of financial instruments |
|||||||||
Credit linked note (1) |
$ | $ ( |
) | $ | – | |||||||
Variable surplus note |
( |
) | – | |||||||||
(1) |
As at December 31, 2023 and 2022, the Company had . R efer to note 19 (g |
As at December 31, |
2023 |
2022 |
||||||
Debt securities and private placements rated as investment grade BBB or higher (1) |
||||||||
Government debt securities as a per cent of total debt securities |
||||||||
Government private placements as a per cent of total private placements |
||||||||
Highest exposure to a single non-government debt security and private placement issuer |
$ |
$ | ||||||
Largest single issuer as a per cent of the total equity portfolio |
||||||||
Income producing commercial office properties (2023 – |
$ |
$ | ||||||
Largest concentration of mortgages and real estate (2) – Ontario Canada (2023 – |
$ |
$ | |
|||||
(1) |
Investment grade debt securities and private placements include |
(2) |
Mortgages and real estate investments are diversified geographically and by property type. |
2023 |
2022 |
|||||||||||||||||||
As at December 31, |
Carrying value |
% of total |
Carrying value |
% of total |
||||||||||||||||
Government and agency |
$ |
$ | ||||||||||||||||||
Utilities |
||||||||||||||||||||
Financial |
||||||||||||||||||||
Consumer |
||||||||||||||||||||
Energy |
||||||||||||||||||||
Industrial |
||||||||||||||||||||
Other |
||||||||||||||||||||
Total |
$ |
$ | |
|||||||||||||||||
As at December 31, 2023 |
Insurance contract liabilities |
Investment contract liabilities |
Reinsurance assets |
Net liabilities |
||||||||||||
U.S. and Canada |
$ |
$ |
$ |
( |
) |
$ |
||||||||||
Asia and Other |
( |
) |
||||||||||||||
Total |
$ |
$ |
$ |
( |
) |
$ |
||||||||||
As at December 31, 2022 |
Insurance contract liabilities |
Investment contract liabilities |
Reinsurance assets |
Net liabilities |
||||||||||||
U.S. and Canada |
$ | $ | $ | ( |
) | $ | ||||||||||
Asia and Other |
( |
) | ||||||||||||||
Total |
$ | |
$ | $ | ( |
) |
$ | |
||||||||
As at December 31, |
Issue date |
Maturity date |
Par value |
2023 |
2022 |
|||||||||
3.050% Senior notes (1),(2) |
US$ |
$ |
$ | |||||||||||
5.375% Senior notes (1),(3) |
US$ |
|||||||||||||
3.703% Senior notes (1),(4) |
US$ |
|||||||||||||
2.396% Senior notes (1),(5) |
US$ |
|||||||||||||
2.484% Senior notes (1),(5) |
US$ |
|||||||||||||
3.527% Senior notes (1),(3) |
US$ |
|||||||||||||
4.150% Senior notes (1),(3) |
US$ |
|||||||||||||
Total |
$ |
$ | |
|||||||||||
(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) |
MFC may redeem the notes 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. Issuance costs are amortized to the earliest par redemption date. |
(3) |
MFC may redeem the senior notes in whole or in part, at any time, at a redemption price equal to the greater of par and a price based on the yield of a comparable U.S. Treasury bond with a tenor approximately equal to the period, from the redemption date to the respective maturity date, plus a specified number of basis points, together with accrued and unpaid interest. The specified number of basis points is as follows: Issuance costs are amortized over the term of the debt. |
(4) |
MFC may redeem the senior notes in whole or in part, at any time, at a redemption price equal to the greater of par and a price based on the yield of a comparable U.S. Treasury bond with a tenor approximately equal to the period, from the redemption date to December 16, 2031, plus 25 bps, together with accrued and unpaid interest. Issuance costs are amortized over the term of the debt. |
(5) |
MFC may redeem the senior notes in whole or in part, at any time, at a redemption price equal to the greater of par and a price based on the yield of a comparable U.S. Treasury bond with a tenor approximately equal to the period, from the redemption date to two months before the respective maturity date, plus a specified number of basis points, together with accrued and unpaid interest. The specified number of basis points is as follows: For the period from two months before the respective maturity date, MFC may redeem the senior notes, in whole or in part, at a redemption price equal to par, together with accrued and unpaid interest. Issuance costs are amortized over the term of the debt. |
| |
243 |
As at December 31, |
Less than 1 year |
1 to 3 years |
3 to 5 years |
Over 5 years |
Total |
|||||||||||||||
2023 |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
2022 |
|
|
|
|||||||||||||||||
As at December 31, |
Issuance date |
Earliest par redemption date |
Maturity date |
Par value |
2023 |
2022 |
||||||||||||||||||
JHFC Subordinated notes (1),(2) |
n/a | $ | $ |
$ | ||||||||||||||||||||
(1),(3) |
$ | |
||||||||||||||||||||||
(1),(4) |
$ | – | ||||||||||||||||||||||
(1),(5),(6) |
US$ | |||||||||||||||||||||||
(1),(7) |
$ | |||||||||||||||||||||||
(1),(8) |
S$ | |||||||||||||||||||||||
(1),(9) |
$ | |||||||||||||||||||||||
(10) |
n/a | US$ | ||||||||||||||||||||||
(1),(11) |
$ | – |
||||||||||||||||||||||
Total |
$ |
$ | |
|||||||||||||||||||||
(1) |
The Company is monitoring regulatory and market developments globally with respect to the interest rate benchmark reform. The Company will take appropriate actions in due course to accomplish any necessary transitions or replacements. As at December 31, 2023, capital instruments of $have an interest rate referencing CDOR. In addition, capital instruments of $and respectively) have interest rate resets in the future referencing CDOR, the US Dollar Mid-Swap rate (based on LIBOR), and the Singapore Dollar Swap Offer rate, respectively. Future rate resets for these capital instruments may rely on alternative reference rates such as the Canadian Overnight Repo Rate Average (CORRA), the alternative rate for CDOR, the Secured Overnight Financing Rate (SOFR), the alternative rate for USD LIBOR, and the Singapore Overnight Rate Average (SORA), the alternative rate for the Singapore Swap Offer Rate (SOR). |
(2) |
Issued by Manulife Holdings (Delaware) LLC (“MHDLL”), now John Hancock Financial Corporation (“JHFC”), a wholly owned subsidiary of MFC, to Manulife Finance (Delaware) LLC (“MFLLC”), a subsidiary of Manulife Finance (Delaware) L.P. (“MFLP”). MFLP and its subsidiaries are wholly owned unconsolidated related parties of the Company. The notes bear interest at a floating rate equal to the |
(3) |
After May 13, 2030, the interest rate will reset to equal 3-month CDOR plus |
(4) |
Issued by MFC during the first quarter of 2023, interest is payable semi-annually. After March 10, 2028, the interest rate will reset to equal the Daily Compounded CORRA plus equa together with accrued and unpaid interest. l to par , |
(5) |
On the earliest par redemption date, the interest rate will reset to equal the |
(6) |
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. |
(7) |
Issued by MFC, interest is payable semi-annually. After May 12, 2025, the interest rate will reset to equal 3-month CDOR plus |
(8) |
On the earliest par redemption date, the interest rate will reset to equal the |
(9) |
Interest is fixed for the period up to the earliest par redemption date, thereafter, the interest rate will reset to a floating rate equal to 3-month CDOR plus With regulatory approval, MFC may redeem the debentures, in whole or in part, on or after the earliest par redemption date, at a redemption price equal to par, together with accrued and unpaid interest. |
(10) |
Issued by John Hancock Mutual Life Insurance Company, now John Hancock Life Insurance Company (U.S.A.). Any payment of interest or principal on the surplus notes requires prior approval from the Department of Insurance and Financial Services of the State of Michigan. The carrying value of the surplus notes reflects an unamortized fair value increment of US$ |
(11) |
MFC redeemed in full the |
| |
24 5 |
| • | an unlimited number of common shares without nominal or par value; and |
| • | an unlimited number of Class A, Class B and Class 1 preferred shares without nominal or par value, issuable in series. |
| As at December 31, 2023 |
Issue date |
Annual dividend / distribution rate (1) |
Earliest redemption date (2),(3) |
Number of shares (in millions) |
Face amount |
Net amount (4) |
||||||||||||||||||
2023 |
2022 |
|||||||||||||||||||||||
| Preferred shares |
||||||||||||||||||||||||
| Class A preferred shares |
||||||||||||||||||||||||
| Series 2 |
|
n/a |
$ | $ |
$ | |||||||||||||||||||
| Series 3 |
|
n/a |
||||||||||||||||||||||
| Class 1 preferred shares |
||||||||||||||||||||||||
| Series 3 (5),(6) |
|
|
||||||||||||||||||||||
| Series 4 (7) |
|
floating | |
|||||||||||||||||||||
| Series 9 (5),(6) |
|
|
||||||||||||||||||||||
| Series 11 (5),(6),(8) |
|
|
||||||||||||||||||||||
| Series 13 (5),(6),(9) |
|
|
||||||||||||||||||||||
| Series 15 (5),(6) |
|
|
||||||||||||||||||||||
| Series 17 (5),(6) |
|
|
||||||||||||||||||||||
| Series 19 (5),(6) |
|
|
||||||||||||||||||||||
| Series 25 (5),(6),(10) |
|
|
||||||||||||||||||||||
| Other equity instruments |
||||||||||||||||||||||||
| Limited recourse capital notes ( LRCN )(11) |
||||||||||||||||||||||||
| Series 1 (12) |
|
|
n/a | |||||||||||||||||||||
| Series 2 (12) |
|
|
n/a | |||||||||||||||||||||
| Series 3 (12) |
|
|
n/a | |||||||||||||||||||||
| Total |
$ | |
$ |
$ | |
|||||||||||||||||||
(1) |
Holders of Class A and Class 1 preferred shares are entitled to receive non-cumulative preferential cash dividends on a quarterly basis, as and when declared by the Board of Directors. Non-deferrable distributions are payable to all LRCN holders semi-annually at the Company’s discretion. |
(2) |
Redemption of all preferred shares is subject to regulatory approval. MFC may redeem each series, in whole or in part, at par, on the earliest redemption date or every five years thereafter, except for Class A Series 2, Class A Series 3 and Class 1 Series 4 preferred shares. Class A Series 2 and Series 3 preferred shares are past their respective earliest redemption date and MFC may redeem these preferred shares, in whole or in part, at par at any time, subject to regulatory approval, as noted. MFC may redeem the Class 1 Series 4 preferred shares, in whole or in part, at any time, at $ |
(3) |
Redemption of all LRCN series is subject to regulatory approval. MFC may at its option redeem each series in whole or in part, at a redemption price equal to par, together with accrued and unpaid interest. The redemption period for Series 1 is every five years during the period from May 19 and including June 19, commencing in 2026. The redemption period for Series 2 is every five years during the period from February 19 and including March 19, commencing in 2027. After the first redemption date, the redemption period for Series 3 is every five years during the period from May 19 to and including June 19, commencing in 2032. |
(4) |
Net of after-tax issuance costs. |
(5) |
On the earliest redemption date and every five years thereafter, the annual dividend rate will be reset to the five-year Government of Canada bond yield plus a yield specified for each series. The specified yield for Class 1 preferred shares is: Series 3 – |
(6) |
On the earliest redemption date and every five years thereafter, Class 1 preferred shares are convertible at the option of the holder into a new series that is one number higher than their existing series, and the holders are entitled to non-cumulative preferential cash dividends, payable quarterly if and when declared by the Board of Directors, at a rate equal to the three-month Government of Canada Treasury bill yield plus the rate specified in footnote 5 above. |
(7) |
The floating dividend rate for the Class 1 Series 4 shares equals the |
(8) |
MFC did not exercise its right to redeem the outstanding Class 1 Shares Series 11 on 023. |
(9) |
MFC did not exercise its right to redeem the outstanding Class 1 Shares Series 13 on September 19, 2023, which was the earliest redemption date. The dividend rate was reset as specified in footnote 5 above to an annual fixed rate of |
(10) |
MFC did not exercise its right to redeem the outstanding Class 1 Shares Series 25 on June 19, 2023, which was the earliest redemption date. The dividend rate was reset as specified in footnote 5 above to an annual fixed rate of |
(11) |
Non-payment of distributions or principal on any LRCN series when due will result in a recourse event. The recourse of each noteholder will be limited to their proportionate amount of the Limited Recourse Trust’s assets which comprise of Class 1 Series 27 preferred shares for LRCN Series 1, Class 1 Series 28 preferred shares for LRCN Series 2, and Class 1 Series 29 preferred shares for LRCN Series 3. All claims of the holders of LRCN series against MFC will be extinguished upon receipt of the corresponding trust assets. The Class 1 Series 27, Class 1 Series 28, and Class 1 Series 29 preferred shares are eliminated on consolidation while being held in the Limited Recourse Trust. |
(12) |
The LRCN Series 1 distribute at a fixed rate of |
2023 |
2022 |
|||||||||||||||||||
For the years ended December 31, |
Number of shares (in millions) |
Amount |
Number of shares (in millions) |
Amount |
||||||||||||||||
| Balance, beginning of year |
$ |
$ |
||||||||||||||||||
| Repurchased for cancellation |
( |
) |
( |
) |
( |
) | ( |
) | ||||||||||||
| Issued on exercise of stock options and deferred share units |
||||||||||||||||||||
| Balance, end of year |
$ |
$ |
|
|||||||||||||||||
For the years ended December 31, |
2023 |
2022 | ||||||
| Basic earnings per common share |
$ |
$ |
( |
) | ||||
| Diluted earnings per common share |
( |
) | ||||||
For the years ended December 31, |
2023 |
2022 |
||||||
| Weighted average number of common shares (in millions) |
||||||||
| Dilutive stock-based awards (1) (in millions) |
||||||||
| Weighted average number of diluted common shares (in millions) |
||||||||
(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 year. Excluded from the calculation was a weighted average of |
| |
247 |
| Class A Shares Series 2 – $ |
Class 1 Shares Series 13 – $ | |
| Class A Shares Series 3 – $ |
Class 1 Shares Series 15 – $ | |
| Class 1 Shares Series 3 – $ |
Class 1 Shares Series 17 – $ | |
| Class 1 Shares Series 4 – $ |
Class 1 Shares Series 19 – $ | |
| Class 1 Shares Series 9 – $ |
Class 1 Shares Series 25 – $ | |
| Class 1 Shares Series 11 – $ |
• |
Operating with sufficient capital to be able to honour all commitments to its policyholders and creditors with a high degree of confidence; |
• |
Retaining the ongoing confidence of regulators, policyholders, rating agencies, investors and other creditors in order to ensure access to capital markets; and |
• |
Optimizing return on capital to meet shareholders’ expectations subject to constraints and considerations of adequate levels of capital established to meet the first two objectives. |
As at December 31, |
2023 |
2022 |
||||||
| Total equity |
$ |
$ | ||||||
| Exclude AOCI gain |
||||||||
| Total equity excluding AOCI on cash flow hedges |
||||||||
| Post-tax CSM |
||||||||
| Qualifying capital instruments |
||||||||
| Consolidated capital |
$ |
$ | |
|||||
| 248 2023 Annual Report | Notes to Consolidated Financial Statements |
For the year ended December 31, 2023 |
Global WAM |
Asia, Canada, U.S., and Corporate and Other |
Total |
|||||||||
| Investment management and other related fees |
$ |
$ |
( |
) |
$ |
|||||||
| Transaction processing, administration, and service fees |
||||||||||||
| Distribution fees and other |
||||||||||||
| Total included in other revenue |
( |
) |
||||||||||
| Revenue from non-service lines |
||||||||||||
| Total other revenue |
$ |
$ |
$ |
|||||||||
| Real estate management services included in net investment income |
$ |
$ |
$ |
|||||||||
| For the year ended December 31, 2022 | Global WAM |
Asia, Canada, U.S., and Corporate and Other |
Total | |||||||||
| Investment management and other related fees |
$ | |
$ | ( |
) | $ | ||||||
| Transaction processing, administration, and service fees |
||||||||||||
| Distribution fees and other |
||||||||||||
| Total included in other revenue |
||||||||||||
| Revenue from non-service lines |
( |
) | ( |
) | ( |
) | ||||||
| Total other revenue |
$ | $ | ( |
) | $ | |
||||||
| Real estate management services included in net investment income |
$ | |
$ | $ |
||||||||
| |
24 9 |
2023 |
2022 |
|||||||||||||||||||
For the years ended December 31, |
Number of options (in millions) |
Weighted average exercise price |
Number of options (in millions) |
Weighted average exercise price |
||||||||||||||||
| Outstanding, January 1 |
$ |
$ |
||||||||||||||||||
| Exercised |
( |
) |
( |
) |
||||||||||||||||
| Expired |
||||||||||||||||||||
| Forfeited |
||||||||||||||||||||
| Outstanding, December 31 |
$ |
$ |
||||||||||||||||||
| Exercisable, December 31 |
$ |
$ |
||||||||||||||||||
Options outstanding |
Options exercisable |
|||||||||||||||||||||||||||
For the year ended December 31, 2023 |
Number of options (in millions) |
Weighted average exercise price |
Weighted average remaining contractual life (in years) |
Number of options (in millions) |
Weighted average exercise price |
Weighted average remaining contractual life (in years) |
||||||||||||||||||||||
| $17.59 - $20.99 |
$ |
$ |
||||||||||||||||||||||||||
| $21.00 - $24.73 |
$ |
$ |
||||||||||||||||||||||||||
| Total |
$ |
$ |
||||||||||||||||||||||||||
| For the years ended December 31, Number of DSUs (in thousands) |
2023 |
2022 |
||||||
| Outstanding, January 1 |
||||||||
| Issued |
||||||||
| Reinvested |
||||||||
| Redeemed |
( |
) |
( |
) | ||||
| Forfeitures and cancellations |
( |
) |
( |
) | ||||
| Outstanding, December 31 |
||||||||
| 250 2023 Annual Report | Notes to Consolidated Financial Statements |
| |
2 51 |
| • | A decline in discount rates that increases the defined benefit obligations by more than the change in value of plan assets; |
| • | Lower than expected rates of mortality; and |
| • | For retiree welfare plans, higher than expected health care costs. |
Pension plans |
Retiree welfare plans |
|||||||||||||||||||
For the years ended December 31, |
2023 |
2022 |
2023 |
2022 |
||||||||||||||||
Changes in defined benefit obligation: |
||||||||||||||||||||
Opening balance |
$ |
$ | $ |
$ | ||||||||||||||||
Current service cost |
– |
– | ||||||||||||||||||
Past service cost - amendment |
( |
) | – |
– | ||||||||||||||||
Interest cost |
||||||||||||||||||||
Plan participants’ contributions |
– | |||||||||||||||||||
Actuarial losses (gains) due to: |
||||||||||||||||||||
Experience |
( |
) |
( |
) | ||||||||||||||||
Demographic assumption changes |
||||||||||||||||||||
Economic assumption changes |
( |
) | ( |
) | ||||||||||||||||
Benefits paid |
( |
) |
( |
) | ( |
) |
( |
) | ||||||||||||
Impact of changes in foreign exchange rates |
( |
) |
( |
) |
||||||||||||||||
Defined benefit obligation, December 31 |
$ |
$ | |
$ |
$ | |
||||||||||||||
Pension plans |
Retiree welfare plans |
|||||||||||||||||||
For the years ended December 31, |
2023 |
2022 |
2023 |
2022 |
||||||||||||||||
Change in plan assets: |
||||||||||||||||||||
Fair value of plan assets, opening balance |
$ |
$ | $ |
$ | ||||||||||||||||
Interest income |
||||||||||||||||||||
Return on plan assets (excluding interest income) |
( |
) | ( |
) | ||||||||||||||||
Employer contributions |
||||||||||||||||||||
Plan participants’ contributions |
– | |||||||||||||||||||
Benefits paid |
( |
) |
( |
) | ( |
) |
( |
) | ||||||||||||
Administration costs |
( |
) |
( |
) | ( |
) |
( |
) | ||||||||||||
Impact of changes in foreign exchange rates |
( |
) |
( |
) |
||||||||||||||||
Fair value of plan assets, December 31 |
$ |
$ | |
$ |
$ | |
||||||||||||||
Pension plans |
Retiree welfare plans |
|||||||||||||||||||
As at December 31, |
2023 |
2022 |
2023 |
2022 |
||||||||||||||||
Development of net defined benefit liability |
||||||||||||||||||||
Defined benefit obligation |
$ |
$ | |
$ |
$ | |
||||||||||||||
Fair value of plan assets |
||||||||||||||||||||
Deficit (surplus) |
( |
) |
( |
) | ||||||||||||||||
Effect of asset limit (1) |
– |
|||||||||||||||||||
Deficit (surplus) and net defined benefit liability (asset) |
( |
) |
( |
) | ||||||||||||||||
Deficit is comprised of: |
||||||||||||||||||||
Funded or partially funded plans |
( |
) |
( |
) | ( |
) |
( |
) | ||||||||||||
Unfunded plans |
||||||||||||||||||||
Deficit (surplus) and net defined benefit liability (asset) |
$ |
$ | $ |
( |
) |
$ | ( |
) | ||||||||||||
(1) |
The asset limit relates to a registered pension plan in Canada. The surplus in that plan is above the present value of economic benefits that can be derived by the Company through reductions in future contributions. For other funded pension plans in surplus position, the present value of the economic benefits available in the form of reductions in future contributions to the plans r emains greater than the current surplus. |
U.S. plans |
Canadian plans |
|||||||||||||||||||||||||||||||||||
Pension plans |
Retiree welfare plans |
Pension plans |
Retiree welfare plans |
|||||||||||||||||||||||||||||||||
As at December 31, |
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
||||||||||||||||||||||||||||
| Active members |
$ |
$ | $ |
$ | $ |
$ | $ |
$ | ||||||||||||||||||||||||||||
| Inactive and retired members |
||||||||||||||||||||||||||||||||||||
| Total |
$ |
$ | |
$ |
$ | |
$ |
$ | |
$ |
$ | |
||||||||||||||||||||||||
| |
2 53 |
U.S. plans (1) |
Canadian plans (2) |
|||||||||||||||||||||||||||||||||||
Pension plans |
Retiree welfare plans |
Pension plans |
Retiree welfare plans |
|||||||||||||||||||||||||||||||||
As at December 31, 2023 |
Fair value |
% of total |
Fair value |
% of total |
Fair value |
% of total |
Fair value |
% of total |
||||||||||||||||||||||||||||
| Cash and cash equivalents |
$ |
$ |
$ |
$ |
– |
– |
||||||||||||||||||||||||||||||
| Public equity securities (3) |
|
– |
– |
|||||||||||||||||||||||||||||||||
| Public debt securities |
– |
– |
||||||||||||||||||||||||||||||||||
| Other investments (4) |
– |
– |
||||||||||||||||||||||||||||||||||
| Total |
$ |
$ |
$ |
$ |
– |
– |
||||||||||||||||||||||||||||||
U.S. plans (1) |
Canadian plans (2) |
|||||||||||||||||||||||||||||||||||
Pension plans |
Retiree welfare plans |
Pension plans |
Retiree welfare plans |
|||||||||||||||||||||||||||||||||
As at December 31, 2022 |
Fair value |
% of total |
Fair value |
% of total |
Fair value |
% of total |
Fair value |
% of total |
||||||||||||||||||||||||||||
| Cash and cash equivalents |
$ | $ | $ | $ | – | – | ||||||||||||||||||||||||||||||
| Public equity securities (3) |
– | – | ||||||||||||||||||||||||||||||||||
| Public debt securities |
– | – | ||||||||||||||||||||||||||||||||||
| Other investments (4) |
– | – | ||||||||||||||||||||||||||||||||||
| Total |
$ | |
$ | |
$ | |
$ | – | – | |||||||||||||||||||||||||||
(1) |
The U.S. pension and retiree welfare plan assets have daily quoted prices in active markets, except for the private debt, infrastructure, private equity, real estate, timber and agriculture assets. In the aggregate, the latter assets represent approximately |
(2) |
All the Canadian pension plan assets have daily quoted prices in active markets, except for the group annuity contract assets that represent approximately |
(3) |
Equity securities include direct investments in MFC common shares of $ . |
(4) |
Other U.S. plan assets include investment in real estate, private debt, infrastructure, private equity, timberland and agriculture and managed futures. Other Canadian pension plan assets include investment in the group annuity contract. |
Pension plans |
Retiree welfare plans |
|||||||||||||||||||
For the years ended December 31, |
2023 |
2022 |
2023 |
2022 |
||||||||||||||||
| Defined benefit current service cost (1) |
$ |
$ | $ |
$ | – | |||||||||||||||
| Defined benefit administrative expenses |
||||||||||||||||||||
| Past service cost - plan amendments and curtailments |
( |
) | – | |||||||||||||||||
| Service cost |
||||||||||||||||||||
| Interest on net defined benefit (asset) liability |
( |
) |
– | |||||||||||||||||
| Defined benefit cost |
( |
) |
||||||||||||||||||
| Defined contribution cost |
– | |||||||||||||||||||
| Net benefit cost |
$ |
$ | |
$ |
( |
) |
$ | |
||||||||||||
(1) |
There are no significant current service costs for the retiree welfare plans as they are closed and mostly frozen. The re-measurement gain or loss on these plans is due to the volatility of discount rates and investment returns. |
Pension plans |
Retiree welfare plans |
|||||||||||||||||||
For the years ended December 31, |
2023 |
2022 |
2023 |
2022 |
||||||||||||||||
| Actuarial gains (losses) on defined benefit obligations due to: |
||||||||||||||||||||
| Experience |
$ |
( |
) |
$ | ( |
) | $ |
$ | ||||||||||||
| Demographic assumption changes |
( |
) |
– | ( |
) |
– | ||||||||||||||
| Economic assumption changes |
( |
) |
|
( |
) |
|
||||||||||||||
| Return on plan assets (excluding interest income) |
( |
) | ( |
) | ||||||||||||||||
| Change in effect of asset limit (excluding interest) |
( |
) | – |
– | ||||||||||||||||
| Total re-measurement effects |
$ |
( |
$ | ( |
) | $ |
$ | |||||||||||||
U.S. Plans |
Canadian Plans |
|||||||||||||||||||||||||||||||||||
Pension plans |
Retiree welfare plans |
Pension plans |
Retiree welfare plans |
|||||||||||||||||||||||||||||||||
For the years ended December 31, |
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
||||||||||||||||||||||||||||
| To determine the defined benefit obligation at end of year (1) : |
||||||||||||||||||||||||||||||||||||
| Discount rate |
||||||||||||||||||||||||||||||||||||
| Initial health care cost trend rate (2) |
n/a |
n/a | n/a |
n/a | ||||||||||||||||||||||||||||||||
| To determine the defined benefit cost for the year (1) : |
||||||||||||||||||||||||||||||||||||
| Discount rate |
||||||||||||||||||||||||||||||||||||
| Initial health care cost trend rate (2) |
n/a |
n/a | n/a |
n/a | ||||||||||||||||||||||||||||||||
(1) |
Inflation and salary increase assumptions are not shown as they do not materially affect obligations and cost. |
(2) |
The health care cost trend rate used to measure the U.S. based retiree welfare obligation was 41 and years thereafter ) and to measure the net benefit cost was 35 and years thereafter (2022 – and years thereafter). In Canada, the rate used to measure the retiree welfare obligation was in grading to 2023 and 3.9% in 2024, 29 and years thereafter (2022 – and years thereafter ) and to measure the net benefit cost was 26 and years thereafter (2022 – and years thereafter ). |
As at December 31, 2023 |
U.S. |
Canada |
||||||
| Life expectancy (in years) for those currently age 65 |
||||||||
| Males |
||||||||
| Females |
||||||||
| Life expectancy (in years) at age 65 for those currently age 45 |
||||||||
| Males |
||||||||
| Females |
||||||||
As at December 31, 2023 |
Pension plans |
Retiree welfare plans |
||||||
| Discount rate: |
||||||||
| Impact of a 1% increase |
$ |
( |
) |
$ |
( |
) | ||
| Impact of a 1% decrease |
||||||||
| Health care cost trend rate: |
||||||||
| Impact of a 1% increase |
n/a |
|||||||
| Impact of a 1% decrease |
n/a |
( |
) | |||||
| Mortality rates (1) |
||||||||
| Impact of a 10% decrease |
||||||||
(1) |
If the actuarial estimates of mortality are adjusted in the future to reflect unexpected decreases in mortality, the effect of a and males and femalesCanadian . |
Pension plans |
Retiree welfare plans |
|||||||||||||||||||
As at December 31, |
2023 |
2022 |
2023 |
2022 |
||||||||||||||||
U.S. plans |
||||||||||||||||||||
Canadian plans |
||||||||||||||||||||
| |
2 55 |
Pension plans |
Retiree welfare plans |
|||||||||||||||||||
For the years ended December 31, |
2023 |
2022 |
2023 |
2022 |
||||||||||||||||
Defined benefit plans |
$ |
$ | $ |
$ | ||||||||||||||||
Defined contribution plans |
||||||||||||||||||||
Total |
$ |
$ | |
$ |
$ | |
||||||||||||||
For the years ended December 31, |
2023 |
2022 |
||||||
Current tax |
||||||||
Current year |
$ |
$ | ||||||
Adjustments related to prior years |
( |
) |
( |
) | ||||
Total current tax |
||||||||
Deferred tax |
||||||||
Change related to temporary differences |
( |
) | ||||||
Adjustments related to prior years |
( |
) |
||||||
Effects of change in tax rates in Canada |
( |
) | ||||||
Total deferred tax |
( |
) | ||||||
Income tax expenses (recoveries) |
$ |
$ | ( |
) | ||||
For the years ended December 31, |
2023 |
2022 |
||||||
Recognized in other comprehensive income |
||||||||
Current income tax expenses (recoveries) |
$ |
$ | ( |
) | ||||
Deferred income tax expenses (recoveries) |
( |
) |
|
|||||
Total recognized in other comprehensive income |
$ |
( |
) |
$ | ||||
Recognized in equity, other than other comprehensive income |
||||||||
Current income tax expenses (recoveries) |
$ |
$ | ||||||
Deferred income tax expenses (recoveries) |
( |
) |
( |
) | ||||
Total income tax recognized directly in equity |
$ |
$ | ( |
) | ||||
For the years ended December 31, |
2023 |
2022 |
||||||
Net income (loss) before income taxes |
$ |
$ | ( |
) | ||||
Income tax expenses (recoveries) at Canadian statutory tax rate |
$ |
$ | ( |
) | ||||
Increase (decrease) in income taxes due to: |
||||||||
Tax-exempt investment income |
( |
) |
( |
) | ||||
Differences in tax rate on income not subject to tax in Canada |
( |
) |
||||||
Adjustments to taxes related to prior years |
( |
) |
( |
) | ||||
Tax losses and temporary differences not recognized as deferred taxes |
( |
) |
||||||
Tax rate change in Canada |
( |
) | ||||||
Other differences |
( |
) | ||||||
Income tax expenses (recoveries) |
$ |
$ | ( |
) | ||||
As at December 31, |
2023 |
2022 |
||||||
Deferred tax assets |
$ |
$ | ||||||
Deferred tax liabilities |
( |
) |
( |
) | ||||
Net deferred tax assets (liabilities) |
$ |
$ | ||||||
For the year ended December 31, |
Balance, January 1, 2023 |
Disposals |
Recognized in income |
Recognized in other comprehensive income |
Recognized in equity |
Translation and other |
Balance, December 31, 2023 |
|||||||||||||||||||||
Loss carryforwards |
$ |
$ |
– |
$ |
( |
) |
$ |
– |
$ |
( |
) |
$ |
( |
) |
$ |
|||||||||||||
Actuarial liabilities |
– |
– |
( |
) |
||||||||||||||||||||||||
Pensions and post-employment benefits |
– |
– |
( |
) |
||||||||||||||||||||||||
Tax credits |
– |
– |
– |
( |
) |
|||||||||||||||||||||||
Accrued interest |
– |
– |
– |
– |
– |
|||||||||||||||||||||||
Real estate |
( |
) |
– |
– |
– |
( |
) | |||||||||||||||||||||
Lease liability |
– |
( |
) |
– |
– |
( |
) |
|||||||||||||||||||||
Right of use asset and sublease receivable |
( |
) |
– |
– |
– |
– |
( |
) | ||||||||||||||||||||
Securities and other investments |
– |
( |
) |
( |
) |
|||||||||||||||||||||||
Sale of investments |
( |
) |
– |
– |
– |
– |
( |
) | ||||||||||||||||||||
Goodwill and intangible assets |
( |
) |
– |
( |
) |
– |
– |
( |
) | |||||||||||||||||||
Other |
– |
( |
) |
|||||||||||||||||||||||||
Total |
$ |
$ |
– |
$ |
( |
) |
$ |
$ |
$ |
$ |
||||||||||||||||||
For the year ended December 31, |
Balance, January 1, 2022 |
Disposals | Recognized in income |
Recognized in other comprehensive income |
Recognized in equity |
Translation and other |
Balance, December 31, 2022 |
|||||||||||||||||||||
Loss carryforwards |
$ | $ | – | $ | $ | – | $ | – | $ | – | $ | |||||||||||||||||
Actuarial liabilities |
– | ( |
) | |||||||||||||||||||||||||
Pensions and post-employment benefits |
– | ( |
) | ( |
) | – | – | |||||||||||||||||||||
Tax credits |
– | – | – | – | ||||||||||||||||||||||||
Accrued interest |
– | – | – | – | – | |||||||||||||||||||||||
Real estate |
( |
) | – | ( |
) | – | ( |
) | ( |
) | ||||||||||||||||||
Lease liability |
– | – | ||||||||||||||||||||||||||
Right of use asset and sublease receivable |
( |
) | – | ( |
) | – | ( |
) | ( |
) | ||||||||||||||||||
Securities and other investments |
( |
) | – | ( |
) | ( |
) | ( |
) | |||||||||||||||||||
Sale o f inv estments |
( |
) | – | – | – | – | ( |
) | ||||||||||||||||||||
Goodwill and intangible assets |
( |
) | – | ( |
) | – | – | ( |
) | ( |
) | |||||||||||||||||
Other |
– | ( |
) | |||||||||||||||||||||||||
Total |
$ | |
$ | – | $ | |
$ ( |
) | $ | |
$ | |
$ | |
||||||||||||||
| |
2 57 |
Company’s investment (1) |
Company’s maximum exposure to loss (2) |
|||||||||||||||||||
As at December 31, |
2023 |
2022 |
2023 |
2022 |
||||||||||||||||
| Leveraged leases (3) |
$ |
$ | $ |
$ | ||||||||||||||||
| Infrastructure companies (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Timberland companies (5) |
||||||||||||||||||||
| Real estate companies (6) |
||||||||||||||||||||
| Total |
$ |
$ | |
$ |
$ | |
||||||||||||||
(1) |
The Company’s investments in these unconsolidated SEs are included in invested assets and the Company’s returns from them are included in net investment income and OCI. |
(2) |
The Company’s maximum exposure to loss from each SE is limited to amounts invested in each, plus unfunded capital commitments, if any. The Company’s investment commitments are disclosed in note 19. The maximum loss is expected to occur only upon the entity’s bankruptcy/liquidation. |
(3) |
These entities are statutory business trusts which use capital provided by the Company and senior debt provided by other parties to finance the acquisition of assets. These assets are leased to third-party lessees under long-term leases. The Company owns equity capital in these business trusts. The Company does not consolidate any of the trusts that are party to the lease arrangements because the Company does not have decision-making power over them. |
(4) |
These entities invest in infrastructure assets. The Company invests in their equity. The Company’s returns include investment income, investment management fees, and performance fees. The Company does not control these entities because it either does not have the power to govern their financial and operating policies or does not have significant variable returns from them, or both. |
(5) |
These entities own and operate timberlands. The Company invests in their equity and debt. The Company’s returns include investment income, investment advisory fees, forestry management fees and performance advisory fees. The Company does not control these entities because it either does not have the power to govern their financial and operating policies or does not have significant variable returns from them, or both. |
(6) |
These entities, which include the Manulife U.S. REIT, own and manage commercial real estate. The Company invests in their equity. The Company’s returns include investment income, investment management fees, property management fees, acquisition/disposition fees and leasing fees. The Company does not control these entities because it either does not have the power to govern their financial and operating policies or does not have significant variable returns from them, or both. |
Company’s interests (1) |
||||||||
As at December 31, |
2023 |
2022 |
||||||
| Manulife Finance (Delaware), L.P. (2) |
$ |
$ | ||||||
| Total |
$ |
$ | |
|||||
(1) |
The Company’s interests include amounts borrowed from the SE; the Company’s investment in its equity and subordinated capital; and foreign currency and interest rate swaps with it. |
(2) |
This entity is a wholly owned partnership used to facilitate the Company’s financing. Refer to notes 11 and 19. |
2023 |
2022 | |||||||||||||||||||||||
As at December 31, |
CMBS | RMBS | ABS | Total | Total | |||||||||||||||||||
AAA |
$ |
$ |
$ |
$ |
$ | |||||||||||||||||||
AA |
||||||||||||||||||||||||
A |
||||||||||||||||||||||||
BBB |
||||||||||||||||||||||||
BB and below |
||||||||||||||||||||||||
Total exposure |
$ |
$ |
$ |
$ |
$ | |
||||||||||||||||||
| |
2 59 |
For the year ended December 31, 2023 |
MFC (Guarantor) |
Other subsidiaries on a combined basis |
Consolidation adjustments |
Total consolidated amounts |
MFLP |
|||||||||||||||||||
Insurance service result |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||
Investment result |
( |
|||||||||||||||||||||||
Other revenue |
( |
( |
) | |||||||||||||||||||||
Net income (loss) attributed to shareholders and other equity holders |
( |
|||||||||||||||||||||||
For the year ended December 31, 2022 |
MFC (Guarantor) |
Other subsidiaries on a combined basis |
Consolidation adjustments |
Total consolidated amounts |
MFLP |
|||||||||||||||||||
Insurance service result |
$ |
– |
$ |
$ |
– |
$ |
$ |
– |
||||||||||||||||
Investment result |
( |
) |
( |
) |
( |
) |
||||||||||||||||||
Other revenue |
( |
) |
( |
) |
||||||||||||||||||||
Net income (loss) attributed to shareholders and other equity holders |
( |
) |
( |
) |
( |
) |
||||||||||||||||||
As at December 31, 2023 |
MFC (Guarantor) |
Other subsidiaries on a combined basis |
Consolidation adjustments |
Total consolidated amounts |
MFLP | |||||||||||||||||||
Invested assets |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||
Insurance contract assets |
||||||||||||||||||||||||
Reinsurance contract held assets |
||||||||||||||||||||||||
Total other assets |
( |
) |
||||||||||||||||||||||
Segregated funds net assets |
||||||||||||||||||||||||
Insurance contract liabilities, excluding those for account of segregated fund holders |
||||||||||||||||||||||||
Reinsurance contract held liabilities |
||||||||||||||||||||||||
Investment contract liabilities |
||||||||||||||||||||||||
Total other liabilities |
( |
) |
||||||||||||||||||||||
Insurance contract liabilities for account of segregated fund holders |
||||||||||||||||||||||||
Investment contract liabilities for account of segregated fund holders |
||||||||||||||||||||||||
As at December 31, 2022 |
MFC (Guarantor) |
Other subsidiaries on a combined basis |
Consolidation adjustments |
Total consolidated amounts |
MFLP |
|||||||||||||||||||
Invested assets |
$ | $ | |
$ | – | $ | |
$ | |
|||||||||||||||
Insurance contract assets |
– | – | – | |||||||||||||||||||||
Reinsurance contract held assets |
– | – | – | |||||||||||||||||||||
Total other assets |
|
( |
) | |||||||||||||||||||||
Segregated funds net assets |
– | – | – | |||||||||||||||||||||
Insurance contract liabilities, excluding those for account of segregated fund holders |
– | – | – | |||||||||||||||||||||
Reinsurance contract held liabilities |
– | – | – | |||||||||||||||||||||
Investment contract liabilities |
– | – | – | |||||||||||||||||||||
Total other liabilities |
( |
) | ||||||||||||||||||||||
Insurance contract liabilities for account of segregated fund holders |
– | – | – | |||||||||||||||||||||
Investment contract liabilities for account of segregated fund holders |
– | – | – | |||||||||||||||||||||
2023 |
2022 |
|||||||||||||||||||
As at December 31, |
Debt securities |
Other |
Debt securities |
Other |
||||||||||||||||
| In respect of: |
||||||||||||||||||||
| Derivatives |
$ |
$ |
$ | |
$ | |
||||||||||||||
| Secured borrowings |
||||||||||||||||||||
| Regulatory requirements |
||||||||||||||||||||
| Repurchase agreements |
||||||||||||||||||||
| Non-registered retirement plans in trust |
||||||||||||||||||||
| Other |
||||||||||||||||||||
| Total |
$ |
$ |
$ | $ |
||||||||||||||||
| |
2 61 |
For the year ended December 31, 2023 |
Asia |
Canada |
U.S. |
Global WAM |
Corporate and Other |
Total |
||||||||||||||||||
| Insurance service result |
||||||||||||||||||||||||
| Life, health and property and casualty insurance |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
| Annuities and pensions |
( |
) |
||||||||||||||||||||||
| Total insurance service result |
||||||||||||||||||||||||
| Net investment income (loss) |
( |
) |
||||||||||||||||||||||
| Insurance finance income (expenses) |
||||||||||||||||||||||||
| Life, health and property and casualty insurance |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||||
| Annuities and pensions |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||||
| Total insurance finance income (expenses) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||||
| Reinsurance finance income (expenses) |
||||||||||||||||||||||||
| Life, health and property and casualty insurance |
( |
) |
( |
) |
( |
) | ||||||||||||||||||
| Annuities and pensions |
( |
) |
( |
) |
( |
) | ||||||||||||||||||
| Total reinsurance finance income (expenses) |
( |
) |
( |
) |
( |
) | ||||||||||||||||||
| Decrease (increase) in investment contract liabilities |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
| Net segregated fund investment result |
||||||||||||||||||||||||
| Total investment result |
( |
) |
||||||||||||||||||||||
| Other revenue |
( |
) |
||||||||||||||||||||||
| Other expenses |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
| Interest expenses |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
| Net income (loss) before income taxes |
||||||||||||||||||||||||
| Income tax reco ve ries (expenses) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||
| Net income (loss) |
||||||||||||||||||||||||
| Less net income (loss) attributed to: |
||||||||||||||||||||||||
| Non-controlling interests |
||||||||||||||||||||||||
| Participating policyholders |
||||||||||||||||||||||||
| Net income (loss) attributed to shareholders and other equity holders |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
| Total assets |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
For the year ended December 31, 2022 |
Asia |
Canada |
U.S. |
Global WAM |
Corporate and Other |
Total |
||||||||||||||||||
| Insurance service result |
||||||||||||||||||||||||
| Life, health and property and casualty insurance |
$ | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||
| Annuities and pensions |
( |
) | ||||||||||||||||||||||
| Total insurance service result |
( |
) | ||||||||||||||||||||||
| Net investment income (loss) |
( |
) | ( |
) | ||||||||||||||||||||
| Insurance finance income (expenses) |
||||||||||||||||||||||||
| Life, health and property and casualty insurance |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
| Annuities and pensions |
( |
) | ( |
) | ||||||||||||||||||||
| Total insurance finance income (expenses) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
| Reinsurance finance income (expenses) |
||||||||||||||||||||||||
| Life, health and property and casualty insurance |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
| Annuities and pensions |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
| Total reinsurance finance income (expenses) |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
| Decrease (increase) in investment contract liabilities |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||
| Net segregated fund investment result |
||||||||||||||||||||||||
| Total investment result |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| Other revenue |
( |
) | ||||||||||||||||||||||
| Other expenses |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| Interest expenses |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| Net income (loss) before income taxes |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
| Income tax recoveries (expenses) |
( |
) | ( |
) | ||||||||||||||||||||
| Net income (loss) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
| Less net income (loss) attributed to: |
||||||||||||||||||||||||
| Non-controlling interests |
||||||||||||||||||||||||
| Participating policyholders |
( |
) | ( |
) | ||||||||||||||||||||
| Net income (loss) attributed to shareholders and other equity holders |
$ | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | ||||||||||
| Total assets |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||||
For the year ended December 31, 2023 |
Asia |
Canada |
U.S. |
Other |
Total |
|||||||||||||||
Insurance service result |
||||||||||||||||||||
Life, health and property and casualty insurance |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
Annuities and pensions |
( |
) |
||||||||||||||||||
Total insurance service result |
||||||||||||||||||||
Net investment income (loss) |
||||||||||||||||||||
Insurance finance income (expenses) |
||||||||||||||||||||
Life, health and property and casualty insurance |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
Annuities and pensions |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
Total insurance finance income (expenses) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
Reinsurance finance income (expenses) |
||||||||||||||||||||
Life, health and property and casualty insurance |
( |
) |
( |
) |
( |
) | ||||||||||||||
Annuities and pensions |
( |
) |
( |
) |
( |
) | ||||||||||||||
Total reinsurance finance income (expenses) |
( |
) |
( |
) |
( |
) | ||||||||||||||
Decrease (increase) in investment contract liabilities |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||
Net segregated fund investment result |
||||||||||||||||||||
Total investment result |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
Other revenue |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
| |
2 63 |
For the year ended December 31, 2022 |
Asia |
Canada |
U.S. |
Other |
Total |
|||||||||||||||
Insurance service result |
||||||||||||||||||||
Life, health and property and casualty insurance |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||
Annuities and pensions |
( |
) | ||||||||||||||||||
Total insurance service result |
( |
) | ||||||||||||||||||
Net investment income (loss) |
( |
) | ( |
) | ||||||||||||||||
Insurance finance income (expenses) |
||||||||||||||||||||
Life, health and property and casualty insurance |
( |
) | ( |
) | ( |
) | ||||||||||||||
Annuities and pensions |
( |
) | ( |
) | ||||||||||||||||
Total insurance finance income (expenses) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
Reinsurance finance income (expenses) |
||||||||||||||||||||
Life, health and property and casualty insurance |
( |
) | ( |
) | ||||||||||||||||
Annuities and pensions |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
Total reinsurance finance income (expenses) |
( |
) | ( |
) | ||||||||||||||||
Decrease (increase) in investment contract liabilities |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
Net segregated fund investment result |
||||||||||||||||||||
Total investment result |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | |||||||
Other revenue |
$ | |
$ | |
$ | |
$ | ( |
) | $ | |
|||||||||
For the years ended December 31, |
2023 |
2022 | ||||||
Short-term employee benefits |
$ |
$ |
||||||
Post-employment benefits |
||||||||
Share-based payments |
||||||||
Termination benefits |
||||||||
Other long-term benefits |
||||||||
Total |
$ |
$ | |
|||||
As at December 31, 2023 ( |
Equity interest |
Address |
Description | |||||
$ |
||||||||
$ |
||||||||
$ |
||||||||
$ |
||||||||
$ |
||||||||
$ |
||||||||
$ |
||||||||
| |
2 65 |
| As at December 31, 2023 ( |
Equity interest |
Address |
Description | |||||
| |
||||||||
| |
||||||||
| |
|
|||||||
| |
||||||||
| |
||||||||
| |
||||||||
| |
||||||||
| |
||||||||
| |
||||||||
| |
||||||||
| |
||||||||
| |
||||||||
| |
||||||||
| |
$ |
|||||||
| |
$ |
|||||||
| |
$ |
|||||||
| |
$ |
|||||||
| |
||||||||
| |
$ |
|||||||
| |
$ |
|||||||
| |
2 67 |
As at December 31, 2023 |
MFC (Guarantor) |
JHUSA (Issuer) |
Other subsidiaries |
Consolidation adjustments |
Consolidated MFC |
|||||||||||||||
| Assets |
||||||||||||||||||||
| Invested assets |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||
| Investments in unconsolidated subsidiaries |
( |
) |
||||||||||||||||||
| Insurance contract assets |
( |
) |
||||||||||||||||||
| Reinsurance contract held assets |
( |
) |
||||||||||||||||||
| Other assets |
( |
) |
||||||||||||||||||
| Segregated funds net assets |
( |
) |
||||||||||||||||||
| Total assets |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||
| Liabilities and equity |
||||||||||||||||||||
| Insurance contract liabilities, excluding those for account of segregated fund holders |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||
| Reinsurance contract held liabilities |
||||||||||||||||||||
| Investment contract liabilities |
( |
) |
||||||||||||||||||
| Other liabilities |
( |
) |
||||||||||||||||||
| Long-term debt |
||||||||||||||||||||
| Capital instruments |
||||||||||||||||||||
| Insurance contract liabilities for account of segregated fund holders |
||||||||||||||||||||
| Investment contract liabilities for account of segregated fund holders |
( |
) |
||||||||||||||||||
| Shareholders’ and other equity |
( |
) |
||||||||||||||||||
| Participating policyholders’ equity |
( |
) |
||||||||||||||||||
| Non-controlling interests |
||||||||||||||||||||
| Total liabilities and equity |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||
| Restated (note 2) | ||||||||||||||||||||
| As at December 31, 2022 | MFC (Guarantor) |
JHUSA (Issuer) |
Other subsidiaries |
Consolidation adjustments |
Consolidated MFC |
|||||||||||||||
| Assets |
||||||||||||||||||||
| Invested assets |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||
| Investments in unconsolidated subsidiaries |
( |
) | – | |||||||||||||||||
| Insurance contract assets |
– | – | ( |
) | ||||||||||||||||
| Reinsurance contract held assets |
– | ( |
) | |||||||||||||||||
| Other assets |
( |
) | ||||||||||||||||||
| Segregated funds net assets |
– | ( |
) | |||||||||||||||||
| Total assets |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||
| Liabilities and equity |
||||||||||||||||||||
| Insurance contract liabilities, excluding those for account of segregated fund holders |
$ | – | $ | $ | $ | ( |
) | $ | ||||||||||||
| Reinsurance contract held liabilities |
– | – | – | |||||||||||||||||
| Investment contract liabilities |
– | ( |
) | |||||||||||||||||
| Other liabilities |
( |
) | ||||||||||||||||||
| Long-term debt |
– | – | – | |||||||||||||||||
| Capital instruments |
– | |||||||||||||||||||
| Insurance contract liabilities for account of segregated fund holders |
– | – | ||||||||||||||||||
| Investment contract liabilities for account of segregated fund holders |
– | ( |
) | |||||||||||||||||
| Shareholders’ and other equity |
( |
) | ||||||||||||||||||
| Participating policyholders’ equity |
– | ( |
) | ( |
) | – | ( |
) | ||||||||||||
| Non-controlling interests |
– | – | – | |||||||||||||||||
| Total liabilities and equity |
$ | |
$ | |
$ | |
$ | ( |
) | $ | |
|||||||||
For the year ended December 31, 2023 |
MFC (Guarantor) |
JHUSA (Issuer) |
Other subsidiaries |
Consolidation adjustments |
Consolidated MFC |
|||||||||||||||
| Insurance service result |
||||||||||||||||||||
| Insurance revenue |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||
| Insurance service expenses |
( |
) |
( |
) |
( |
) | ||||||||||||||
| Net expenses from reinsurance contracts held |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
| Total insurance service result |
( |
) |
||||||||||||||||||
| Investment result |
||||||||||||||||||||
| Net investment income (loss) |
( |
) |
||||||||||||||||||
| Insurance / reinsurance finance income (expenses) |
( |
) |
( |
) |
( |
) | ||||||||||||||
| Other investment result |
( |
) |
( |
) |
( |
) | ||||||||||||||
| Total investment result |
( |
) |
( |
) |
||||||||||||||||
| Other revenue |
( |
) |
||||||||||||||||||
| Other expenses |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
| Interest expenses |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
| Net income (loss) before income taxes |
( |
) |
||||||||||||||||||
| Income tax (expenses) recoveries |
( |
) |
( |
) | ||||||||||||||||
| Net income (loss) after income taxes |
( |
) |
||||||||||||||||||
| Equity in net income (loss) of unconsolidated subsidiaries |
( |
) |
||||||||||||||||||
| Net income (loss) |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||
| Net income (loss) attributed to: |
||||||||||||||||||||
| Non-controlling interests |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
| Participating policyholders |
( |
) |
||||||||||||||||||
| Shareholders and other equity holders |
( |
) |
||||||||||||||||||
$ |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||
Restated (note 2) |
||||||||||||||||||||
For the year ended December 31, 2022 |
MFC (Guarantor) |
JHUSA (Issuer) |
Other subsidiaries |
Consolidation adjustments |
Consolidated MFC |
|||||||||||||||
| Insurance service result |
||||||||||||||||||||
| Insurance revenue |
$ | – | $ | $ | $ | ( |
) | $ | |
|||||||||||
| Insurance service expenses |
– | ( |
) |
( |
) | ( |
) | |||||||||||||
| Net expenses from reinsurance contracts held |
– | ( |
) |
( |
) | ( |
) | |||||||||||||
| Total insurance service result |
– | ( |
) |
|||||||||||||||||
| Investment result |
||||||||||||||||||||
| Net investment income (loss) |
( |
) |
( |
) | ||||||||||||||||
| Insurance / reinsurance finance income (expenses) |
– | ( |
) |
( |
) | ( |
) | ( |
) | |||||||||||
| Other investment result |
– | ( |
) | ( |
) | ( |
) | |||||||||||||
| Total investment result |
( |
) |
( |
) | ( |
) | ( |
) | ||||||||||||
| Other revenue |
( |
) | ( |
) | ||||||||||||||||
| Other expenses |
( |
) | ( |
) |
( |
) | ( |
) | ||||||||||||
| Interest expenses |
( |
) | ( |
) |
( |
) | ( |
) | ||||||||||||
| Net income (loss) before income taxes |
( |
) |
( |
) | – | ( |
) | |||||||||||||
| Income tax (expenses) recoveries |
– | |||||||||||||||||||
| Net income (loss) after income taxes |
( |
) |
( |
) | – | ( |
) | |||||||||||||
| Equity in net income (loss) of unconsolidated subsidiaries |
( |
) | ( |
) | – | |||||||||||||||
| Net income (loss) |
$ | ( |
) | $ | ( |
) |
$ | ( |
) | $ | $ | ( |
) | |||||||
| Net income (loss) attributed to: |
||||||||||||||||||||
| Non-controlling interests |
$ | – | $ | – | $ | $ | – | $ | ||||||||||||
| Participating policyholders |
– | ( |
) |
( |
) | |||||||||||||||
| Shareholde rs a nd other equity holders |
( |
) | ( |
) |
( |
) | ( |
) | ||||||||||||
| $ | ( |
) | $ | ( |
) |
$ | ( |
) | $ | |
$ | ( |
) | |||||||
| |
2 69 |
For the year ended December 31, 2023 |
MFC (Guarantor) |
JHUSA (Issuer) |
Other subsidiaries |
Consolidation adjustments |
Consolidated MFC |
|||||||||||||||
| Operating activities |
||||||||||||||||||||
| Net income (loss) |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||
| Adjustments: |
||||||||||||||||||||
| Equity in net income of unconsolidated subsidiaries |
( |
) |
( |
) |
( |
) |
||||||||||||||
| Increase (decrease) in net insurance contract liabilities |
||||||||||||||||||||
| Increase (decrease) in investment contract liabilities |
( |
) |
||||||||||||||||||
| (Increase) decrease in reinsurance contract assets, excluding reinsurance transactions |
||||||||||||||||||||
| Amortization of (premium) discount on invested assets |
( |
) |
( |
) | ||||||||||||||||
| Contractual service margin (“CSM”) amortization |
( |
) |
( |
) |
( |
) | ||||||||||||||
| Other amortization |
||||||||||||||||||||
| Net realized and unrealized (gains) losses and impairment on assets |
( |
) |
( |
) | ||||||||||||||||
| Deferred income tax expenses (recoveries) |
( |
) |
( |
) |
||||||||||||||||
| Stock option expense |
( |
) |
||||||||||||||||||
| Cash provided by (used in) operating activities before undernoted items |
||||||||||||||||||||
| Dividends from unconsolidated subsidiaries |
( |
) |
( |
) |
||||||||||||||||
| Changes in policy related and operating receivables and payables |
( |
) |
( |
) |
||||||||||||||||
| Cash provided by (used in) operating activities |
( |
) |
||||||||||||||||||
| Investing activities |
||||||||||||||||||||
| Purchases and mortgage advances |
( |
) |
( |
) |
( |
) | ||||||||||||||
| Disposals and repayments |
||||||||||||||||||||
| Changes in investment broker net receivables and payables |
||||||||||||||||||||
| Net cash increase (decrease) from sale (purchase) of subsidiaries |
( |
) |
( |
) | ||||||||||||||||
| Investment in common shares of subsidiaries |
( |
) |
||||||||||||||||||
| Capital contribution to unconsolidated subsidiaries |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
| Return of capital from unconsolidated subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
| Notes receivable from parent |
( |
) |
||||||||||||||||||
| Notes receivable from subsidiaries |
( |
) |
||||||||||||||||||
| Cash provided by (used in) investing activities |
( |
) |
( |
) |
( |
) | ||||||||||||||
| Financing activities |
||||||||||||||||||||
| Change in repurchase agreements and securities sold but not yet purchased |
( |
) |
( |
) | ||||||||||||||||
| Issue of capital instruments, net |
||||||||||||||||||||
| Redemption of capital instruments |
( |
) |
( |
) | ||||||||||||||||
| Secured borrowing from securitization transactions |
||||||||||||||||||||
| Changes in deposits from Bank clients, net |
( |
) |
( |
) | ||||||||||||||||
| Lease payments |
( |
) |
( |
) |
( |
) | ||||||||||||||
| Shareholders’ dividends and other equity distributions |
( |
) |
( |
) | ||||||||||||||||
| Common shares repurchased |
( |
) |
( |
) | ||||||||||||||||
| Common shares issued, net |
( |
) |
||||||||||||||||||
| Contributions from (distributions to) non-controlling interests, net |
( |
) |
( |
) | ||||||||||||||||
| Dividends paid to parent |
( |
) |
||||||||||||||||||
| Capital contributions by parent |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
| Return of capital to parent |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
| Notes payable to parent |
( |
) |
||||||||||||||||||
| Notes payable to subsidiaries |
( |
) |
||||||||||||||||||
| Cash provided by (used in) financing activities |
( |
) |
( |
) |
( |
) | ||||||||||||||
| Cash and short-term securities |
||||||||||||||||||||
| Increase (decrease) during the year |
( |
) |
||||||||||||||||||
| Effect of foreign exchange rate changes on cash and short-term securities |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
| Balance, beginning of year |
||||||||||||||||||||
| Balance, end of year |
||||||||||||||||||||
| Cash and short-term securities |
||||||||||||||||||||
| Beginning of year |
||||||||||||||||||||
| Gross cash and short-term securities |
||||||||||||||||||||
| Net payments in transit, included in other liabilities |
( |
) |
( |
) |
( |
) | ||||||||||||||
| Net cash and short-term securities, beginning of year |
||||||||||||||||||||
| End of year |
||||||||||||||||||||
| Gross cash and short-term securities |
||||||||||||||||||||
| Net payments in transit, included in other liabilities |
( |
) |
( |
) |
( |
) | ||||||||||||||
| Net cash and short-term securities, end of year |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
| Supplemental disclosures on cash flow information: |
||||||||||||||||||||
| Interest received |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||
| Interest paid |
( |
) |
||||||||||||||||||
| Income taxes paid (refund) |
( |
) |
||||||||||||||||||
Restated (note 2) |
||||||||||||||||||||
For the year ended December 31, 2022 |
MFC (Guarantor) |
JHUSA (Issuer) |
Other subsidiaries |
Consolidation adjustments |
Consolidated MFC |
|||||||||||||||
| Operating activities |
||||||||||||||||||||
| Net income (loss) |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | |||||||
| Adjustments: |
||||||||||||||||||||
| Equity in net income of unconsolidated subsidiaries |
( |
) | ( |
) | – | |||||||||||||||
| Increase (decrease) in net insurance contract liabilities |
– | – | ||||||||||||||||||
| Increase (decrease) in investment contract liabilities |
– | ( |
) | – | ||||||||||||||||
| (Increase) decrease in reinsurance contract assets, excluding reinsurance transactions |
– | – | ||||||||||||||||||
| Amortization of (premium) discount on invested assets |
– | ( |
) | – | ( |
) | ||||||||||||||
| Contractual service margin (“CSM”) amortization |
– | ( |
) | ( |
) | – | ( |
) | ||||||||||||
| Other amortization |
– | |||||||||||||||||||
| Net realized and unrealized (gains) losses and impairment on assets |
( |
) | – | |||||||||||||||||
| Gain on U.S. variable annuity reinsurance transaction (pre-tax) |
– | ( |
) | ( |
) | – | ( |
) | ||||||||||||
| Gain on derecognition of Joint Venture interest during Manulife TEDA acquisition (pre-tax) |
– | – | ( |
) | – | ( |
) | |||||||||||||
| Deferred income tax expenses (recoveries) |
( |
) | ( |
) | ( |
) | – | ( |
) | |||||||||||
| Stock option expense |
– | ( |
) | – | ||||||||||||||||
| Cash provided by (used in) operating activities before undernoted items |
– | |||||||||||||||||||
| Dividends from unconsolidated subsidiaries |
( |
) | – | |||||||||||||||||
| Changes in policy related and operating receivables and payables |
– | |||||||||||||||||||
| Cash decrease due to U.S. variable annuity reinsurance transaction |
– | ( |
) | ( |
) | – | ( |
) | ||||||||||||
| Cash provided by (used in) operating activities |
( |
) | ||||||||||||||||||
| Investing activities |
||||||||||||||||||||
| Purchases and mortgage advances |
– | ( |
) | ( |
) | – | ( |
) | ||||||||||||
| Disposals and repayments |
– | |||||||||||||||||||
| Changes in investment broker net receivables and payables |
– | ( |
) | ( |
) | – | ( |
) | ||||||||||||
| Net cash increase (decrease) from sale (purchase) of subsidiaries |
– | – | ( |
) | – | ( |
) | |||||||||||||
| Investment in common shares of subsidiaries |
( |
) | – | – | – | |||||||||||||||
| Capital contribution to unconsolidated subsidiaries |
– | ( |
) | – | – | |||||||||||||||
| Return of capital from unconsolidated subsidiaries |
– | – | ( |
) | – | |||||||||||||||
| Notes receivable from parent |
– | – | ( |
) | – | |||||||||||||||
| Notes receivable from subsidiaries |
( |
) | – | ( |
) | – | ||||||||||||||
| Cash provided by (used in) investing activities |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| Financing activities |
||||||||||||||||||||
| Change in repurchase agreements and securities sold but not yet purchased |
– | – | – | |||||||||||||||||
| Issue of long-term debt, net |
– | – | – | |||||||||||||||||
| Redemption of capital instruments |
– | – | ( |
) | – | ( |
) | |||||||||||||
| Secured borrowing from securitization transactions |
– | – | – | |||||||||||||||||
| Changes in deposits from Bank clients, net |
– | – | – | |||||||||||||||||
| Lease payments |
– | ( |
) | ( |
) | – | ( |
) | ||||||||||||
| Shareholders’ dividends and other equity distributions |
( |
) | – | – | – | ( |
) | |||||||||||||
| Common shares repurchased |
( |
) | – | – | – | ( |
) | |||||||||||||
| Common shares issued, net |
– | ( |
) | |||||||||||||||||
| Preferred shares and other equity issued, net |
– | – | – | |||||||||||||||||
| Preferred shares redeemed, net |
( |
) | – | – | – | ( |
) | |||||||||||||
| Contributions from (distributions to) non-controlling interests, net |
– | – | ( |
) | – | ( |
) | |||||||||||||
| Dividends paid to parent |
– | ( |
) | ( |
) | – | ||||||||||||||
| Capital contributions by parent |
– | – | ( |
) | – | |||||||||||||||
| Return of capital to parent |
– | – | ( |
) | – | |||||||||||||||
| Notes payable to parent |
– | – | ( |
) | – | |||||||||||||||
| Notes payable to subsidiaries |
( |
) | – | – | ||||||||||||||||
| Cash provided by (used in) financing activities |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| Cash and short-term securities |
||||||||||||||||||||
| Increase (decrease) during the year |
( |
) | ( |
) | ( |
) | – | ( |
) | |||||||||||
| Effect of foreign exchange rate changes on cash and short-term securities |
– | |||||||||||||||||||
| Balance, beginning of year |
– | |||||||||||||||||||
| Balance, end of year |
– | |||||||||||||||||||
| Cash and short-term securities |
||||||||||||||||||||
| Beginning of ye ar |
||||||||||||||||||||
| Gross cash and short-term securities |
– | |||||||||||||||||||
| Net payments in transit, included in other liabilities |
– | ( |
) | ( |
) | – | ( |
) | ||||||||||||
| Net cash and short-term securities, beginning of year |
– | |||||||||||||||||||
| End of year |
||||||||||||||||||||
| Gross cash and short-term securities |
– | |||||||||||||||||||
| Net payments in transit, included in other liabilities |
– | ( |
) | ( |
) | – | ( |
) | ||||||||||||
| Net cash and short-term securities, end of year |
$ | $ | $ | $ | – | $ | ||||||||||||||
| Supplemental disclosures on cash flow information: |
||||||||||||||||||||
| Interest received |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||
| Interest paid |
( |
) | ||||||||||||||||||
| Income taxes paid (refund) |
– | – | ||||||||||||||||||
| |
2 71 |
| • | Identified, recognized, and measured each group of contracts as if IFRS 17 had always applied, unless it was impracticable (see Full Retrospective Approach and Fair Value Approach below); |
| • | Identified, recognized, and measured assets for insurance acquisition cash flows as if IFRS 17 had always applied, unless it was impracticable. However, no recoverability assessment was performed before the transition date; |
| • | Derecognized any balances that would not exist had IFRS 17 always applied; |
| • | Measured own use real estate properties that were underlying items of insurance contracts with direct participation features at fair value; and |
| • | Recognized any resulting net difference in equity. |
| • | Identify groups of insurance contracts; |
| • | Determine whether an insurance contract meets the definition of an insurance contract with direct participation features; |
| • | Identify discretionary cash flows for insurance contracts without direct participation features; and |
| • | Determine whether an investment contract meets the definition of an investment contract with discretionary participation features. |
| • | For some GMM and PAA groups of contracts where the fair value approach was applied, the cumulative OCI was set retrospectively only if reasonable and supportable information was available, otherwise it was set to zero at the transition date. |
| • | For GMM groups of contracts where the full retrospective approach was applied, the cumulative balance was calculated as if the Company had been applying the OCI option since inception of the contracts. |
| • | For VFA contracts, the cumulative OCI at transition was set equal to the difference between the market value and carrying value of the underlying items. |
| |
273 |
December 31, 2021 |
Impact of IFRS 17 amendments |
January 1, 2022 |
||||||||||||||||||||||||||||||||||||||
IAS 39 Measurement category |
Total carrying value |
Measurement differences |
Presentation differences |
Total carrying value |
Measurement category |
|||||||||||||||||||||||||||||||||||
Cash and short-term securities |
$ |
$ |
– |
$ |
$ |
(1) |
||||||||||||||||||||||||||||||||||
– |
( |
) |
– |
(2) |
||||||||||||||||||||||||||||||||||||
– |
– |
(3) |
||||||||||||||||||||||||||||||||||||||
– |
– |
|||||||||||||||||||||||||||||||||||||||
Debt securities |
– |
(1) |
||||||||||||||||||||||||||||||||||||||
– |
( |
) |
(2) |
|||||||||||||||||||||||||||||||||||||
– |
– |
(3) |
||||||||||||||||||||||||||||||||||||||
– |
– |
|||||||||||||||||||||||||||||||||||||||
Public equities |
– |
( |
) |
– |
||||||||||||||||||||||||||||||||||||
– |
(2) |
|||||||||||||||||||||||||||||||||||||||
– |
– |
|||||||||||||||||||||||||||||||||||||||
Mortgages |
– |
( 1) |
||||||||||||||||||||||||||||||||||||||
– |
(2) |
|||||||||||||||||||||||||||||||||||||||
– |
( |
) |
(3) |
|||||||||||||||||||||||||||||||||||||
– |
||||||||||||||||||||||||||||||||||||||||
Private placements |
– |
( 1) |
||||||||||||||||||||||||||||||||||||||
– |
(2) |
|||||||||||||||||||||||||||||||||||||||
– |
( |
) |
– |
(3) |
||||||||||||||||||||||||||||||||||||
– |
||||||||||||||||||||||||||||||||||||||||
Policy loans |
– |
( |
) |
– |
N/A (4) |
|||||||||||||||||||||||||||||||||||
Loans to Bank clients |
– |
– |
(3) |
|||||||||||||||||||||||||||||||||||||
Other invested assets |
( |
) |
( 1) |
|||||||||||||||||||||||||||||||||||||
( |
) |
(2) |
||||||||||||||||||||||||||||||||||||||
( |
) |
– |
(3) |
|||||||||||||||||||||||||||||||||||||
( |
) |
– |
||||||||||||||||||||||||||||||||||||||
Total in-scope invested assets |
( |
) |
||||||||||||||||||||||||||||||||||||||
Out-of-scope (5) |
– |
(5) |
||||||||||||||||||||||||||||||||||||||
Total Invested Assets |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||||||||||||||||||||||
(1) |
The reclassification of unrealized gains (losses), net of tax, of $ |
(2) |
The reclassification of unrealized gains (losses), net of tax, of $ |
(3) |
The re-measurement of debt securities from amortized cost to FVOCI or FVTPL resulted in an increase in carrying value of $ |
(4) |
Policy loans were reclassified from invested assets to insurance contract liabilities under IFRS 17 with no re-measurement and no impact to equity. |
(5) |
Own use real estate properties which are underlying items for insurance contracts with direct participating features were remeasured to fair value as if they were investment properties, as permitted by IFRS 17. This re-measurement resulted in an increase of carrying value of $ |
| 274 2023 Annual Report | Notes to Consolidated Financial Statements |
IFRS 4 & IAS 39 December 31, 2021 |
Opening IFRS balance sheet adjustments |
IFRS 17 & IAS 39 January 1, 2022 |
||||||||||||||||||
Measurement differences |
||||||||||||||||||||
Transition CSM |
Contract measurement |
Presentation differences |
||||||||||||||||||
Assets |
||||||||||||||||||||
Total invested assets |
$ |
$ |
– |
$ |
$ |
( |
) |
$ |
||||||||||||
Total other assets |
||||||||||||||||||||
Segregated funds net assets |
– |
– |
– |
|||||||||||||||||
Total assets |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||
Liabilities and Equity |
||||||||||||||||||||
Insurance contract liabilities, excluding those for account of segregated fund holders |
$ |
$ |
(1) |
$ |
$ |
( |
) |
$ |
||||||||||||
Investment contract liabilities |
– |
– |
||||||||||||||||||
Other liabilities |
( |
) |
( |
) |
||||||||||||||||
Insurance contract liabilities for account of segregated fund holders |
– |
– |
– |
|||||||||||||||||
Investment contract liabilities for account of segregated fund holders |
– |
– |
– |
|||||||||||||||||
Segregated funds net liabilities |
– |
– |
( |
) |
– |
|||||||||||||||
Total liabilities |
( |
) |
||||||||||||||||||
Equity |
||||||||||||||||||||
Shareholders and other equity holders’ retained earnings |
( |
) |
( |
) |
– |
|||||||||||||||
Shareholders’ accumulated other comprehensive income (loss) |
||||||||||||||||||||
Insurance finance income (expenses) |
– |
– |
( |
) |
– |
( |
) | |||||||||||||
Reinsurance finance income (expenses) |
– |
– |
– |
|||||||||||||||||
FVOCI investments |
– |
– |
||||||||||||||||||
Other equity items |
– |
– |
– |
|||||||||||||||||
Total shareholders’ equity |
( |
) |
– |
|||||||||||||||||
Participating policyholders’ equity |
( |
) |
( |
) (1) |
– |
|||||||||||||||
Non-controlling interests |
( |
) (1) |
– |
|||||||||||||||||
Total equity |
( |
) |
– |
|||||||||||||||||
Total liabilities and equity |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||
(1) |
The post-tax CSM in the participating policyholders’ fund of $ |
| |
2 75 |
| Measurement Differences |
Description | |
| Transition CSM |
Contractual Service Margin (CSM) is a new liability that represents future unearned profits on insurance contracts written. For this measurement step, the amount recognized as at the transition date, January 1, 2022, was $ | |
| Contract Measurement |
Under IFRS 17 other components of insurance contracts, aside from the CSM, are also remeasured. This measurement step includes the following changes: Risk Adjustment (+ billion to equity) (1) : non-economic risk on application of the IFRS 17 standard;Discount Rates (- billion to equity) (1) : Other Revaluation Changes (+ billion to equity): | |
| Participating and Non-Controlling Interest Equity |
In previous steps all impacts to equity were shown in shareholders’ equity. This step shows the geography of the impacts between shareholders’ equity, participating policyholders’ equity and non-controlling interests. | |
(1) |
Excluding impacts on variable annuity guarantee contracts. |
| • | Policy loans invested assets |
| • | Contract classification |
| • | Insurance receivables & payables |
| • | Embedded derivatives |
| • | Reinsurance funds withheld |
| • | Deferred acquisition cost |
| • | Insurance and investment contract liabilities for account of segregated fund holders |
| 276 2023 Annual Report | Notes to Consolidated Financial Statements |