N-4/A 1 b85493a1nv4za.txt JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H As filed with the Securities and Exchange Commission on March 30, 2011 Registration No. 333-172473 811-4113 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 PRE-EFFECTIVE AMENDMENT NO. 1 and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 AMENDMENT NO. 162 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H (formerly, The Manufacturers Life Insurance Company (U.S.A.) Separate Account H) (Exact name of Registrant) JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) (formerly, The Manufacturers Life Insurance Company (U.S.A.)) (Name of Depositor) 38500 Woodward Avenue Bloomfield Hills, Michigan 48304 (Address of Depositor's Principal Executive Offices) (617) 663-3000 (Depositor's Telephone Number Including Area Code) Thomas J. Loftus, Esquire John Hancock Life Insurance Company (U.S.A.) 601 Congress Street Boston, MA 02210-2805 (Name and Address of Agent for Service) Copy to: Approximate Date of Proposed Public Offering: June 1, 2011 The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that the Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Title of Securities Being Registered: Variable Annuity Insurance Contracts PART A INFORMATION REQUIRED IN A PROSPECTUS [Incorporated by reference to this Registration Statement, File No. 333-172473, filed on February 28, 2011] PART B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION [FILED HEREWITH] Statement of Additional Information dated June 1, 2011 (JOHN HANCOCK(R) LOGO) JOHN HANCOCK ANNUITIES Statement of Additional Information John Hancock Life Insurance Company (U.S.A.) Separate Account H THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS. This Statement of Additional Information should be read in conjunction with the Prospectus dated the same date as this Statement of Additional Information. This Statement of Additional Information describes additional information regarding the flexible purchase payment deferred variable annuity contracts (singly, a "Contract" and collectively, the "Contracts" issued by JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) ("John Hancock USA") in all jurisdictions except the state of New York as follows: CONTRACT ISSUED BY JOHN HANCOCK USA Venture(R) Frontier Variable AnnuitY [Venture(R) 7 Series Variable Annuity] [Venture(R) 4 Series Variable Annuity] You may obtain a copy of the Prospectus for the Contract or Contracts listed above by contacting us at the following addresses: JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) John Hancock Annuities Service Center Mailing Address 164 Corporate Drive Post Office Box 9505 Portsmouth, NH 03801-6815 Portsmouth, NH 03802-9505 (800) 344-1029 www.jhannuities.com JHUSA SEP ACCT H SAI Venture(R) Series Chassis 06/11 Table of Contents GENERAL INFORMATION AND HISTORY .......................................... 1 JOHN HANCOCK VARIABLE INSURANCE TRUST PORTFOLIO HOLDINGS CURRENTLY POSTED ON A WEBSITE ......................................... 1 ACCUMULATION UNIT VALUE TABLES ........................................... 1 SERVICES ................................................................. 1 Independent Registered Public Accounting Firm ......................... 2 Servicing Agent ....................................................... 2 Principal Underwriter ................................................. 2 Special Compensation and Reimbursement Arrangements .......................................................... 2 STATE VARIATIONS REGARDING RECOGNITION OF SAME-SEX COUPLES ............... 5 ADDITIONAL INFORMATION ABOUT THE PORTFOLIO STABILIZATION PROCESS ......... 6 QUALIFIED PLAN TYPES ..................................................... 8 LEGAL AND REGULATORY MATTERS ............................................. 13 APPENDIX A: AUDITED FINANCIAL STATEMENTS ................................. A-1
General Information and History John Hancock Life Insurance Company (U.S.A.) Separate Account H, (the "Separate Account") (formerly, The Manufacturers Life Insurance Company (U.S.A.) Separate Account H) is a separate investment account of John Hancock Life Insurance Company (U.S.A.), ("we," "us," "the Company," or "John Hancock USA") (formerly, The Manufacturers Life Insurance Company (U.S.A.)). We are a stock life insurance company organized under the laws of Delaware in 1979 and reorganized under the laws of Michigan in 1992. Our principal office is located at 38500 Woodward Avenue Bloomfield Hills, Michigan 48304. We also have an Annuities Service Center located at 164 Corporate Drive, Portsmouth, New Hampshire 03801-6815. Our ultimate parent is Manulife Financial Corporation ("MFC") based in Toronto, Canada. MFC is the holding company of The Manufacturers Life Insurance Company and its subsidiaries, collectively known as Manulife Financial. The Separate Account was established on August 24, 1984 as a separate account of The Manufacturers Life Insurance Company of North America ("Manulife North America"), another wholly-owned subsidiary of MFC which on January 1, 2002 merged into the Company. As a result of this merger, the Company became the owner of all of Manulife North America's assets, including the assets of the Separate Account and assumed all of Manulife North America's obligations under previously issued variable annuity contracts. Our financial statements which are included in this Statement of Additional Information should be considered only as bearing on our ability to meet our obligations under the Contracts. They should not be considered as bearing on the investment performance of the assets held in the Separate Account. John Hancock Variable Insurance Trust Portfolio Holdings Currently Posted on a Website Each of the John Hancock Variable Insurance Trust's Fund of Funds that are available under the Contracts invests in shares of other funds. The John Hancock Variable Insurance Trust has adopted a policy to post each of these Fund of Funds' holdings in other funds on a website within 30 days after each calendar quarter end and within 30 days after any material changes are made to the holdings of a Fund of Fund. In addition, the ten largest holdings of each fund will be posted to the website 30 days after each calendar quarter end. The information described above will remain on the website until the date the John Hancock Variable Insurance Trust files its Form N-CSR or Form N-Q with the SEC for the period that includes the date as of which the website information is current. John Hancock Variable Insurance Trust's Form N-CSR and Form N-Q will contain each fund's entire portfolio holdings as of the applicable calendar quarter end. You may access information on holdings for the Funds of Funds available under your Contract on the following website: http://www.jhannuities.com/Marketing/Portolios/ PortfoliosManagementTeamPage.aspx?globalNavID=21 We provide this information in connection with our Contracts, but the John Hancock Variable Insurance Trust is responsible for the accuracy and validity of the information on holdings for the Funds of Funds posted on the website. Accumulation Unit Value Tables The Accumulation Unit Value Tables are located in Appendix U of the product prospectus. Services Independent Registered Public Accounting Firm The consolidated financial statements of John Hancock Life Insurance Company (U.S.A.) at December 31, 2010 and 2009, and for each of the three years in the period ended December 31, 2010, and the financial statements of John Hancock Life Insurance Company (U.S.A.) Separate Account H at December 31, 2010, and for each of the two years in the period ended December 31, 2010, appearing in this Statement of Additional Information of the Registration Statement have been audited by Ernst & Young 1 LLP, independent registered public accounting firm, as set forth in their reports thereon appearing elsewhere herein, and are included in reliance upon such reports given on the authority of such firm as experts in accounting and auditing. Servicing Agent Computer Sciences Corporation Financial Services Group ("CSC FSG") provides to us a computerized data processing recordkeeping system for variable annuity administration. CSC FSG provides various daily, semimonthly, monthly, semiannual and annual reports including: - daily updates on accumulation unit values, variable annuity participants and transactions, and agent production and commissions; - semimonthly commission statements; - monthly summaries of agent production and daily transaction reports; - semiannual statements for Contract Owners; and - annual Contract Owner tax reports. We pay CSC FSG approximately $7.80 per Contract per year, plus certain other fees for the services provided. Principal Underwriter John Hancock Distributors, LLC, ("JH Distributors"), an indirect wholly owned subsidiary of MFC, serves as principal underwriter of the Contracts. Contracts are offered on a continuous basis. The aggregate dollar amounts of underwriting commissions paid to JH Distributors in 2010, 2009, and 2008 were $369,132,052, $421,625,749, and $597,650,909, respectively. Special Compensation and Reimbursement Arrangements The Contracts are primarily sold through selected firms. The Contracts' principal distributor, JH Distributors, and its affiliates (collectively, "JHD") pay compensation to broker-dealers (firms) for the promotion and sale of the Contracts. The compensation JHD pays may vary depending on each firm's selling agreement and the specific Contract(s) distributed by the firm, but compensation (inclusive of wholesaler overrides and expense allowances) paid to the firms for sale of the Contracts is not expected to exceed the standard compensation amounts referenced in the Prospectus for the applicable Contract. The amount and timing of this compensation may differ among firms. The registered representative through whom your Contract is sold will be compensated pursuant to that registered representative's own arrangement with his or her broker-dealer. The registered representative and the firm may have multiple options on how they wish to allocate their commissions and/or compensation. We are not involved in determining your registered representative's compensation. You are encouraged to ask your registered representative about the basis upon which he or she will be personally compensated for the advice or recommendations provided in connection with the sale of your Contract. Compensation to firms for the promotion and sale of the Contracts is not paid directly by Contract owners, but we expect to recoup it through the fees and charges imposed under the Contract. We may, directly or through JHD, make additional payments to firms, either from 12b-1 distribution fees received from the Contracts' underlying investment Portfolios or out of our own resources. These payments are sometimes referred to as "revenue sharing." Revenue sharing expenses are any payments made to broker-dealers or other intermediaries to either (i) compensate the intermediary for expenses incurred in connection with the promotion and/or sale of John Hancock investment products, or (ii) obtain promotional and/or distribution services for John Hancock investment products. Many firms that sell the Contracts receive one or more types of these cash payments. We are among several insurance companies that pay additional payments to certain firms to receive "preferred" or recommended status. These privileges include: additional or special access to sales staff; opportunities to provide and/or attend training and other conferences; advantageous placement of our products on customer lists ("shelf-space arrangements"); and other improvements in sales by featuring our products over others. Revenue sharing payments assist in our efforts to promote the sale of the Contracts and could be significant to a firm. Not all firms, however, receive additional compensation. We determine which firms to support and the extent of the payments we are willing to make, and generally choose to compensate firms that are willing to cooperate with our promotional efforts and have a strong capability to distribute the Contracts. We do not make an independent assessment of the cost of providing such services. Instead, we agree with the firm on the methods for calculating any additional compensation. The methods, which vary by firm and are further 2 described below, may include different categories to measure the amount of revenue sharing payments, such as the level of sales, assets attributable to the firm and the variable annuity contracts covered under the arrangement (including contracts issued by any of our affiliates). The categories of revenue sharing payments that we may provide to firms, directly or through JHD, are not mutually exclusive and may vary from Contract to Contract. We or our affiliates may make additional types of revenue sharing payments for other products, and may enter into new revenue sharing arrangements in the future. The following list includes the names of member firms of the Financial Industry Regulatory Authority ("FINRA,") (or their affiliated broker-dealers) that we are aware (as of December 31, 2010) received a revenue sharing payment of more than $5,000 with respect to annuity business during the latest calendar year: NAME OF FIRM [TO BE UPDATED BY AMENDMENT] DISTRIBUTOR 1st Global Capital Corp. AIG - SagePoint, Inc. AIG - FSC Securities Corporation AIG - Royal Alliance Associates, Inc. American Portfolios Financial Services AmTrust Investment Services, Inc. Banc of America Investment Services, Inc. BancWest Investment Services, Inc. Cadaret, Grant & Co., Inc. Cambridge Investment Research CapitalOne Investments, Inc. CapWest Securities, Inc. Centaurus Financial Citigroup Global Markets, Inc. CCO Investment Services Co. Comerica Securities Commonwealth Financial Network Crown Capital Securities, L.P. CUSO Financial Services, L.P. First Allied Securities Fifth Third Securities, Inc. Founders Financial Geneos Wealth Management, Inc. H.D. Vest Investment Services Harbour Investments, Inc. ING - Financial Network Investment Corp. ING Financial Partners ING - Multi-Financial Securities Corporation ING - PrimeVest Financial Services, Inc. InterSecurities Investacorp, Inc. Investment Professionals, Inc. Investors Capital, Inc. J.J.B. Hilliard, W.L. Lyons, LLC Janney Montgomery Scott, LLC John Hancock Financial Network Key Investments Services, LLC Lasalle St. Securities, LLC Lincoln Financial Advisors Corporation Lincoln Financial Securities Corp. LPL Financial Corp. LPL - Uvest Financial 3 DISTRIBUTOR M Holdings Securities, Inc. Merrill Lynch, Pierce, Fenner & Smith, Inc. MICG Investments, LLC MML Investors Services, Inc. Money Concepts Capital Corporation Morgan Keegan & Co., Inc. Morgan Stanley & Co., Inc. Next Financial NFP Securities NPH - Investment Center of America, Inc. NPH - Invest Financial Corporation NPH - National Planning Corp. NPH - SII Investments, Inc. PAC - United Planners Financial Services People's Securities, Inc. ProEquities, Inc. Prospera Financial Questar Capital Corporation Raymond James Associates Raymond James Financial Services RBC Dain Rauscher, Inc. Securities America, Inc. Sigma Financial Corporation Stifel, Nicolaus & Company, Inc. TFS Securities, Inc. The Huntington Investment Company The Investment Center, Inc. Tower Square Securities, Inc. Transamerica Financial Advisors, Inc. UBS Financial Services, Inc. Unionbanc Investment Services, LLC Walnut Street Securities, Inc. Wells Fargo Financial Advisors, LLC (ISG) Wells Fargo Financial Advisors, LLC (PCG) Wells Fargo Financial Network, LLC Wells Fargo Investments, LLC Woodbury Financial Services, Inc. Your registered representative can provide you with more information about the compensation arrangements that apply upon the sale of a variable annuity contract. Inclusion on this list does not imply that these sums necessarily constitute "special cash compensation" as defined by NASD Conduct Rule 2830(l)(4). We will endeavor to update this listing annually; interim arrangements may not be reflected. We assume no duty to notify any investor whether his or her registered representative is or should be included in any such listing. You are encouraged to review the prospectus for each Portfolio for any other compensation arrangements pertaining to the distribution of Portfolio shares. We may, directly or through JHD, also have arrangements with intermediaries that are not members of FINRA. Sales and Asset Based Payments. We may, directly or through JHD, make revenue sharing payments as incentives to certain firms to promote and sell the Contracts. We hope to benefit from revenue sharing by increasing Contract sales. In consideration for revenue sharing, a firm may feature the Contracts in its sales system or give us additional access to members of its sales force or management. In addition, a firm may agree to participate in our marketing efforts by allowing us to participate in conferences, seminars or other programs attended by the firm's sales force. Although a firm may seek revenue sharing payments to offset costs 4 incurred by the firm in servicing its clients that have purchased the Contracts, the firm may earn a profit on these payments. Revenue sharing payments may provide a firm with an incentive to favor the Contracts in its sales efforts. The revenue sharing payments we make may be calculated on sales of our products by the firm ("Sales-Based Payments"). These payments are based upon a percentage of the total amount of money received, or anticipated to be received, for sales through a firm of some or all of the insurance products that we and/or our affiliates offer. We make these payments on a periodic basis. Such payments also may be calculated based upon the "assets under management" attributable to a particular firm ("Asset-Based Payments"). These payments are based upon a percentage of the contract value of some or all of our (and/or our affiliates') insurance products that were sold through the firm. We make these payments on a periodic basis. Sales-Based Payments primarily create incentives to make new sales of our insurance products and Asset-Based Payments primarily create incentives to service and maintain previously sold Contracts. We may pay a firm either or both Sales-Based Payments and Asset-Based Payments. Administrative and Processing Support Payments. We may, directly or through JHD, also make payments to certain firms that sell our products for certain administrative services, including record keeping and sub-accounting Contract owner accounts, and in connection with account maintenance support, statement preparation and transaction processing. The types of payments that we may make under this category include, among others, payment of ticket charges per purchase or exchange order placed by a firm, payment of networking fees in connection with certain mutual fund trading systems, or one-time payments for ancillary services such as setting up funds on a firm's mutual fund trading system. Other Payments. We may, directly or through JHD, also provide, either from the 12b-1 distribution fees received from the Portfolios underlying the Contracts or out of our own resources, additional compensation to firms that sell or arrange for the sale of Contracts. Such compensation may include seminars for the public, advertising and sales campaigns regarding the Contracts to assist a firm in connection with its systems, operations and marketing expenses, or for other activities of a selling firm or wholesaler. We may contribute to, as well as sponsor, various educational programs, sales contests and/or promotions in which participating firms and their sales persons may receive prizes such as merchandise, cash, or other awards. Other compensation may be offered to the extent not prohibited by federal or state laws or any self-regulatory agency, such as FINRA. We make payments for entertainment events we deem appropriate, subject to our guidelines and applicable law. These payments may vary widely, depending upon the nature of the event or the relationship. We may make these payments upon the initiation of a relationship with a firm, and at any time thereafter. We may have other relationships with firms relating to the provisions of services to the Contracts, such as providing omnibus account services, transaction processing services, or effecting portfolio transactions for Portfolios. If a firm provides these services, we may compensate the firm for these services. In addition, a firm may have other compensated or uncompensated relationships with us that are not related to the Contracts. Signator Investors, Inc. may pay their respective registered representatives additional cash incentives in the form of bonus payments, expense payments, employment benefits or the waiver of overhead costs or expenses in connection with the sale of the Contracts that they would not receive in connection with the sale of contracts issued by unaffiliated companies. State Variations Regarding Recognition of Same-Sex Couples The federal Defense of Marriage Act ("DOMA") does not recognize civil unions or same-sex marriages. Therefore, the federal tax treatment available to spouses who fall within the definition of DOMA may not be available to civil union or same-sex marriage partners. However, the following table identifies the states that may, pursuant to state law, extend to civil union and same-sex marriage partners the same benefits (other than federal tax benefits) that are granted to spouses who fall within the definition of DOMA: [TO BE UPDATED BY AMENDMENT]
STATE TYPE OF JURISDICTION RELATED RULE -------------------- ----------------------------------- ----------------------------------------------------- California Domestic Partnership Colorado Designated Beneficiary Agreements May recognize spouses of civil unions from other
5
STATE TYPE OF JURISDICTION RELATED RULE -------------------- ----------------------------------- ----------------------------------------------------- jurisdictions Connecticut Civil Union, Same-Sex Marriage District of Columbia Domestic Partnership, Same-Sex Marriage Hawaii Reciprocal Beneficiary Relationship Iowa Same-Sex Marriage Maine Domestic Partnerships Maryland Domestic Partnership Also recognizes spouses of same-sex marriages who were married in another jurisdiction Massachusetts Same-Sex Marriage Nevada Domestic Partnership New Hampshire Same-Sex Marriage New Jersey Civil Union, Also recognizes spouses of civil unions who were Domestic Partnership married in another jurisdiction New York -- Recognizes spouses of civil unions and same-sex marriages who were married in another jurisdiction Oregon Domestic Partnership Rhode Island Domestic Partnership Recognizes spouses of civil unions and same-sex marriages who were married in another jurisdiction Vermont Same-Sex Marriage Washington Domestic Partnership Wisconsin Domestic Partnerships
The table above is current only as of the date of this Statement of Additional Information. Please consult with your own qualified tax advisor for information on: (1) how federal tax rules may affect Contracts where civil union or same-sex marriage partners either singularly or jointly own the Contract, or are designated Annuitant(s), Beneficiary(ies) and/or Covered Person(s); and (2) your state's regulations regarding civil unions and same-sex marriages. Additional Information about the Portfolio Stabilization Process Please read the applicable Prospectus for [Venture(R) Frontier Variable Annuity, Venture(R) 7 Series Variable Annuity or Venture 4 Series Variable Annuity] Contracts for general information on Contracts issued with an IPFL 6.11 Series Rider. We provide additional information in this section about the Portfolio Stabilization Process we use to monitor Contract Value and to make automatic transfers between the Lifestyle PS Subaccounts and the Bond PS Subaccount. Determination of Reference Value under STEP ONE of the Portfolio Stabilization Process Contract Inception The initial Reference Value is equal to the Contract Value on the Contract Date. Determination of Monthly Anniversary Dates The Reference Value will be adjusted on each Monthly Anniversary to equal the greater of (a) the current Reference Value or (b) the Contract Value on that day. Adjustments for Additional Purchase Payments Additional Purchase Payments that we accept on any Business Day prior to the Lifetime Income Date increase the Reference Value by the amount of the Additional Purchase Payment. Additional Purchase Payments that we accept on any Business Day coincident with or after the Lifetime Income Date increase the Reference Value by the excess, if any, of the Additional Payment over any withdrawal since the later of: (a) the Lifetime Income Date, or (b) the later of: (i) the date of an Additional Purchase Payment that increased the Reference Value, or 6 (ii) the date of a reduction in the Reference Value. Adjustments for Excess Withdrawals The Reference Value will not be adjusted for withdrawals that are less than or equal to the Lifetime Income Amount. Excess Withdrawals, including all withdrawals prior to the Lifetime Income Date, will reduce the Reference Value in the same proportion as the amount of the withdrawal divided by the Contract Value prior to the withdrawal. As an example, assume that you own a Contract with an IPFL 6.11 Series Rider on a Business Day, where: - the Business Day is after the Lifetime Income Date, - no withdrawal charges apply, - the Contract Value is $100,000, - the Lifetime Income Amount is $5,000, - the Reference Value is $120,000, and - you withdraw $15,000. Under these assumptions, the Portfolio Stabilization Process will adjust the Reference Value as follows: - the Excess Withdrawal amount is $15,000 - $5,000, or $10,000, - the Contract Value immediately before the Excess Withdrawal is $100,000 - $5,000, or $95,000, - the Contract Value immediately after the Excess Withdrawal is $95,000 - $10,000, or $85,000, and - the adjusted Reference Value is ($120,000 x ($85,000 / $95,000)), or $107,368. Review of Contract Value Allocation under STEP TWO of the Portfolio Stabilization Process The Portfolio Stabilization Process uses the term "Target Bond PS Subaccount Allocation" in connection with the review of Contract Value Allocation to describe the target amount required to be maintained in the Bond PS Subaccount, before adjustment to reflect Contract Value allocated to the Ultra Short Term Bond Subaccount, or any available DCA Fixed Investment Account. We define the term as follows: Target Bond PS Subaccount Allocation - The sum of (a) plus (b) minus (c) minus (d) where: (a) Is the minimum of the Contract Value and 80% of the Reference Value (b) Is the Reference Value Band multiplied by 2.5% of Reference Value (c) Is 20 divided by the weighted average AEAF ("WAEAF") multiplied by the minimum of the Contract Value and 80% of the Reference Value (d) Is the Reference Value Band multiplied by 2.5% of the Reference Value multiplied by F. For purposes of the Target Bond PS Subaccount Allocation, "F" is determined as follows: 32 x WAEAF - 540 + RV Band x (WAEAF - 20) F = ----------------------------------------- 5 x WAEAF Automatic Transfers under STEP THREE of the Portfolio Stabilization Process Whenever a Target Bond PS Subaccount Allocation is calculated, the Portfolio Stabilization Process will compare that amount to the combined Contract Value in the Bond PS Subaccount, the Ultra Short Term Bond Subaccount, and any available DCA Fixed Investment Option (the "Combined Contract PS Value"). A. TRANSFERS FROM THE LIFESTYLE PS SUBACCOUNTS. If there is an excess of the Target Bond PS Subaccount Allocation over the Combined Contract PS Value, the excess will be transferred automatically from the Lifestyle PS Subaccounts with current Contract Value to the Bond PS Subaccount. The excess will be transferred on a pro-rata basis from the Lifestyle PS Subaccounts, based on the Contract Value in each Lifestyle PS Subaccount before such transfer. B. TRANSFERS FROM THE BOND PS SUBACCOUNT TO THE LIFESTYLE PS SUBACCOUNTS. The Portfolio Stabilization Process will result in a transfer to the Lifestyle PS Subaccounts if: - the Combined Contract PS Value exceeds the Target Bond PS Subaccount Allocation, and - some or all of your Contract Value is currently allocated to the Bond PS Subaccount and any of the Lifestyle PS Subaccounts. 7 In such an event, your Contract Value allocated to the Bond PS Subaccount, up to the amount of the excess, will be transferred automatically from the Bond PS Subaccount to the Lifestyle PS Subaccounts. The transfer will be on a pro-rata basis into the Lifestyle PS Subaccounts based on the Contract Value in each Lifestyle PS Subaccount before such transfer. C. TRANSFERS FROM THE BOND PS SUBACCOUNT TO THE ULTRA SHORT TERM BOND SUBACCOUNT OR THE LIFESTYLE CONSERVATIVE PS SUBACCOUNT. The Portfolio Stabilization Process will result in a transfer to the Ultra Short Term Bond Subaccount or the Lifestyle Conservative PS Subaccount if: - the Combined Contract PS Value exceeds the Target Bond PS Subaccount Allocation, and - you have instructed us to allocate 100% of your available Contract Value to ONE OF the Ultra Short Term Bond Subaccount or the Lifestyle Conservative PS Subaccount, and - some of your Contract Value is currently allocated to the Bond PS Subaccount. In such an event, your Contract Value allocated to the Bond PS Subaccount, up to the amount of the excess, will be transferred automatically to the Subaccount you have instructed. The Portfolio Stabilization Process will result in a transfer to the Lifestyle Conservative PS Subaccount if: - the Combined Contract PS Value exceeds the Target Bond PS Subaccount Allocation. and - you have instructed us to allocate 100% of your available Contract Value to A COMBINATION of the Ultra Short Term Bond Subaccount or the Lifestyle Conservative PS Subaccount, and - some of your Contract Value is currently allocated to the Bond PS Subaccount. In such an event, your Contract Value allocated to the Bond PS Subaccount, up to the amount of the excess, will be transferred automatically to the Lifestyle Conservative PS Subaccount. Processing Transactions Before Performing the Portfolio Stabilization Process At the end of each Business Day, we will perform the Portfolio Stabilization Process after we process any other transactions under your Contract for that Business Day. The other transactions include any requests for withdrawals, transfers or other Contract benefits received before the end of that Business Day, Additional Purchase Payments received on that Business Day, and any Step-Ups, Credits, deduction of Contract fees and charges or other automated transactions scheduled for that Business Day. Qualified Plan Types TRADITIONAL IRAS Individual Retirement Annuities Section 408 of the Code permits eligible individuals to contribute to an individual retirement program known as an Individual Retirement Annuity or IRA (sometimes referred to as a traditional IRA to distinguish it from the Roth IRA discussed below). IRAs are subject to limits on the amounts that may be contributed and deducted, the persons who may be eligible and the time when distributions may commence. Also, distributions from certain other types of qualified retirement plans may be rolled over on a tax-deferred basis into an IRA. The Contract may not, however, be used in connection with an Education IRA under section 530 of the Code. The Contract may be issued with a death benefit or certain benefits provided by an optional Rider. The presence of such benefits may increase the amount of any required minimum distributions for IRAs and other Contracts subject to the required minimum distribution rules. Distributions In general, unless you have made non-deductible contributions to your IRA, all amounts paid out from a traditional IRA contract (in the form of an annuity, a single sum, death benefits or partial withdrawal), are taxable to the payee as ordinary income. As in the case of a Contract not purchased under a Qualified Plan, you may incur an additional 10% penalty tax if you make a surrender or withdrawal before you reach age 59 1/2 (unless certain exceptions apply as specified in section 72(t)) of the Code. If you have made any non-deductible contributions to an IRA contract, all or part of any withdrawal or surrender distribution, single sum death benefit or annuity payment, may be excluded from your taxable income when you receive the distribution. 8 The tax law requires that annuity payments or other distributions under a traditional IRA contract begin no later than April 1 of the year following the year in which the Owner attains age 70 1/2. The amount that must be distributed each year is computed on the basis of the Owner's age and the value of the Contract, taking into account both the account balance and, in 2006 and subsequent years, the actuarial present value of other benefits provided under the Contract. ROTH IRAS Section 408A of the Code permits eligible individuals to contribute to a type of IRA known as a Roth IRA. Roth IRAs are generally subject to the same rules as non-Roth IRAs, but they differ in certain significant respects. Among the differences are that contributions to a Roth IRA are not deductible and qualified distributions from a Roth IRA are excluded from income. A qualified distribution is a distribution that satisfies two requirements. First, the distribution must be made in a taxable year that is at least five years after the first taxable year for which a contribution to any Roth IRA established for the Owner was made. Second, the distribution must be: - made after the Owner attains age 59 1/2; - made after the Owner's death; - attributable to the Owner being disabled; or - a qualified first-time homebuyer distribution within the meaning of section 72(t) (2) (F) of the Code. In addition, distributions from Roth IRAs need not commence when the Owner attains age 70 1/2. Distributions must, however, begin after the Owner's death. A Roth IRA may (subject to constraints explained below under "Conversion or Direct Rollover to a Roth IRA") accept a "qualified rollover contribution" from another Roth IRA, a traditional IRA, a qualified retirement plan described in section 401(a) or 403(a) of the Code, a tax-sheltered annuity contract described in section 403(b) of the Code, or an eligible deferred compensation plan maintained by a governmental employer under section 457(b) of the Code. If the Contract is issued with certain death benefits or benefits provided by an optional Rider, the presence of these benefits may increase the amount of any required minimum distributions for IRAs (which include Roth IRAs) and other Contracts subject to the minimum distribution rules. Also, the state tax treatment of a Roth IRA may differ from the federal income tax treatment of a Roth IRA. YOU SHOULD SEEK INDEPENDENT TAX ADVICE IF YOU INTEND TO USE THE CONTRACT IN CONNECTION WITH A ROTH IRA. Conversion or Direct Rollover to a Roth IRA You can convert a traditional IRA to a Roth IRA or directly roll over distributions that you receive from a retirement plan described in sections 401(a), 403(a), or 403(b) of the Code or a governmental deferred compensation plan described in section 457(b) of the Code to a Roth IRA. The Roth IRA annual contribution limit does not apply to converted or rollover amounts. You must, however, pay tax on any portion of the converted or rollover amount that would have been taxed if you had not converted or rolled over to a Roth IRA. No similar limitations apply to rollovers to a Roth IRA from another Roth IRA or from a designated Roth account within a qualified retirement plan. Please note that the amount deemed to be the "converted amount" for tax purposes may be higher than the Contract Value because of the deemed value of guarantees. If the converted or rollover amount is held in an annuity contract issued by us, we may have to withhold (make a contract withdrawal and remit to the IRS) up to 20% of the taxable gain in the contract. This amount withheld could reduce the benefit value of any elected optional guarantee Rider, in a proportion determined by the Rider. You may find it advantageous to pay the tax due on the conversion from resources outside of the annuity contract in order to avoid any benefit reduction. YOU SHOULD SEEK INDEPENDENT TAX ADVICE IF YOU INTEND TO USE THE CONTRACT IN CONNECTION WITH A ROTH IRA. SIMPLE IRA PLANS In general, under section 408(p) of the Code a small business employer may establish a SIMPLE IRA retirement plan if the employer employed no more than 100 employees earning at least $5,000 during the preceding year. Under a SIMPLE IRA plan both employees and the employer make deductible contributions. SIMPLE IRAs are subject to various requirements, including limits on the amounts that may be contributed, the persons who may be eligible, and the time when distributions may commence. If the Contract is issued with certain death benefits or benefits provided by an optional Rider, the presence of these benefits may increase the amount of any required minimum distributions for IRAs (which would include SIMPLE IRAs) and other Contracts subject to the minimum distribution rules. The requirements for minimum distributions from a SIMPLE IRA retirement plan are generally the same as those discussed above for distributions from a traditional IRA. The rules on taxation of distributions are also similar to those that apply to a traditional IRA, except that (i) tax free rollovers may be made from a SIMPLE IRA plan only to another SIMPLE IRA plan 9 during the first two years of participation in the plan; and (ii) the penalty tax on early distribution from a SIMPLE IRA plan that occurs during the first two years of participation is 25%, instead of 10%. EMPLOYERS INTENDING TO USE THE CONTRACT IN CONNECTION WITH SUCH PLANS SHOULD SEEK INDEPENDENT TAX ADVICE. SIMPLIFIED EMPLOYEE PENSIONS (SEP-IRAS) Section 408(k) of the Code allows employers to establish simplified employee pension plans for their employees, using the employees' IRAs for such purposes, if certain criteria are met. Under these plans the employer may, within specified limits, make deductible contributions on behalf of the employees to IRAs. If the Contract is issued with certain death benefits or benefits provided by an optional Rider, the presence of these benefits may increase the amount of any required minimum distributions for IRAs (which would include SEP - IRAs) and other Contracts subject to the minimum distribution rules. The requirements for minimum distributions from a SEP - IRA, and rules on taxation of distributions from a SEP - IRA, are generally the same as those discussed above for distributions from a traditional IRA. SECTION 403(B) QUALIFIED PLANS OR TAX-SHELTERED ANNUITIES Section 403(b) of the Code permits public school employees and employees of certain types of tax-exempt organizations to have their employers purchase annuity contracts for them and, subject to certain limitations, to exclude the Purchase Payments from gross income for tax purposes. These Contracts are commonly referred to as "tax-sheltered annuities." PURCHASERS OF THE CONTRACTS FOR SUCH PURPOSES SHOULD SEEK INDEPENDENT ADVICE AS TO ELIGIBILITY, LIMITATIONS ON PURCHASE PAYMENTS, AND OTHER TAX CONSEQUENCES. In particular, purchasers should note that the Contract provides death benefit options that may exceed the greater of the Purchase Payments and Contract Value. It is possible that the presence of the death benefit could be characterized by the IRS as an "incidental death benefit" and result in currently taxable income to the Owner. There also are limits on the amount of incidental benefits that may be provided under a tax-sheltered annuity. If a Contract is issued with a death benefit or benefits provided by an optional Rider, the presence of these benefits may increase the amount of any required minimum distributions that must be made. Final regulations concerning tax sheltered annuity contracts became effective on July 26, 2007, but are generally applicable for tax years beginning after December 31, 2008. These regulations require the employer to adopt a written defined contribution plan which, in both form and operation, satisfies the requirements of the regulations. The regulations specify that any exchange of a 403(b) annuity contract for another 403(b) annuity contract occurring after September 24, 2007 will not be treated as a taxable distribution provided the employer and the company issuing the new contract have agreed to share information concerning the employee's employment status, hardship distributions and loans, if any. Restrictions on Section 403(b) Qualified Plans AVAILABILITY. We currently are not offering this Contract for use in a retirement plan intended to qualify as a section 403(b) Qualified Plan (a "Section 403(b) Qualified Plan" or the "Plan") unless (a) we (or an affiliate of ours) previously issued annuity contracts to that retirement plan, (b) the initial purchase payment for the new Contract is sent to us directly from the Section 403(b) Qualified Plan through your employer, the Plan's administrator, the Plan's sponsor or in the form of a transfer acceptable to us, (c) we have entered into an agreement with your Section 403(b) Qualified Plan concerning the sharing of information related to your Contract (an "Information Sharing Agreement"), and (d) unless contained in the Information Sharing Agreement, we have received a written determination by your employer, the Plan administrator or the Plan sponsor of your Section 403(b) Qualified Plan that the plan qualifies under Section 403(b) of the Code and complies with applicable Treasury regulations (a "Certificate of Compliance") (Information Sharing Agreement and Certificate of Compliance, together the "Required Documentation"). We may accept, reject or modify any of the terms of a proposed Information Sharing Agreement presented to us, and make no representation that we will enter into an Information Sharing Agreement with your Section 403(b) Qualified Plan. In the event that we do not receive the Required Documentation and you nonetheless direct us to proceed with a rollover transfer of initial Purchase Payment funds, the transfer may be treated as a taxable transaction. OWNERSHIP. You may not sell, assign, transfer, discount or pledge (as collateral for a loan or as security for the performance of an obligation, or for any other purpose) a 403(b) Qualified Contract or some or all of such a Contract's value to any person other than us without the consent of an employer, a Plan administrator or a Plan sponsor. A request to transfer ownership must be accompanied by the Required Documentation. In the event we do not receive the Required Documentation and you nonetheless direct us to proceed 10 with a transfer of ownership, the transfer may be treated as a taxable transaction and your Contract may no longer be qualified under section 403(b), which may result in additional adverse tax consequences to you. ADDITIONAL PURCHASE PAYMENTS. We will not accept Additional Purchase Payments in the form of salary reduction, matching or other similar contributions in the absence of the Required Documentation. Matching or other employer contributions to Contracts issued on or after January 1, 2009, will be subject to restrictions on withdrawals specified in the Section 403(b) Qualified Plan. We will not knowingly accept transfers, in the absence of the Required Documentation, from another existing annuity contract or other investment under a Section 403(b) Qualified Plan to a previously issued Contract used in a Section 403(b) Qualified Plan. Such transfers shall be made directly from a Plan through an employer, a Plan administrator or a Plan sponsor, or by a transfer acceptable to us. In the event that we do not receive the Required Documentation and you nonetheless direct us to proceed with the Additional Purchase Payments, the Additional Purchase Payment may be treated as a taxable transaction and your Contract may no longer be qualified under section 403(b), which may result in additional adverse tax consequences to you. WITHDRAWALS. Tax-sheltered annuity contracts must contain restrictions on withdrawals of: - contributions made pursuant to a salary reduction agreement in years beginning after December 31, 1988; - earnings on those contributions; and - earnings after 1988 on amounts attributable to salary reduction contributions (and earnings on those contributions) held as of the last day of 1988. These amounts can be paid only if the employee has reached age 59 1/2, separated from service, died, or become disabled (within the meaning of the tax law), or in the case of hardship (within the meaning of the tax law). Amounts permitted to be distributed in the event of hardship are limited to actual contributions for elective contributions made after 1988; earnings thereon cannot be distributed on account of hardship. Amounts subject to the withdrawal restrictions applicable to section 403(b)(7) custodial accounts may be subject to more stringent restrictions. Exercise of the withdrawal right for each withdrawal under the Contract may be subject to the terms of the Section 403(b) Qualified Plan and may require the consent of the employer, the Plan administrator or the Plan sponsor, as well as the participant's spouse, under section 403(b) of the Code and applicable Treasury Regulations. In the event that we do not receive the Required Documentation and you nonetheless direct us to proceed with the withdrawal, your Contract may no longer be qualified under section 403(b), which may result in additional adverse tax consequences to you. Employer consent is not required when we have received documentation in a form acceptable to us confirming that you have reached age 59 1/2, separated from service, died or become disabled. (These limitations on withdrawals do not apply to the extent we are directed to transfer some or all of the Contract Value to the issuer of another tax-sheltered annuity or into a section 403(b)(7) custodial account.) LOANS. Loans from Qualified Contracts intended for use under Section 403(b) Qualified Plans, where allowed, are subject to a variety of limitations, including restrictions as to the amount that may be borrowed, the duration of the loan and the manner in which the loan must be repaid. We currently offer a loan privilege to Owners of Contracts issued in connection with Section 403(b) Qualified Plans: (1) that were issued prior to January 1, 2009; (2) that are not subject to Title 1 of ERISA, and (3) that have not elected a guaranteed minimum withdrawal benefit Rider. We will not permit nor support loans from Contracts issued on or after January 1, 2009 in connection with Section 403(b) Qualified Plans. COLLECTING AND USING INFORMATION. Through your participation in a retirement plan intended to qualify under section 403(b), the Company, your employer, your Plan administrator, and your Plan sponsor collect various types of confidential information you provide in your agreements, such as your name and the name of any Beneficiary, Social Security Numbers, addresses, and occupation information. The Company, your employer, the Plan administrator, and your Plan sponsor also collect confidential information relating to your Plan transactions, such as contract values, purchase payments, withdrawals, transfers, loans and investments. In order to comply with IRS regulations and other applicable law in servicing your Contract, the Company, your employer, the Plan administrator and the Plan sponsor may be required to share such confidential information among themselves, other current, former or future providers under the Section 403(b) Qualified Plan, and among their employees. By applying for or purchasing a Contract for use in a Section 403(b) Qualified Plan or by intending to make an additional purchase payment, transfer of ownership, transfer, withdrawal or loan on an existing Contract for use in a Section 403(b) Qualified Plan, you consent to such sharing of confidential 11 information. The Company will not disclose any such confidential information to anyone, except as permitted by law or in accordance with your consent. If you are considering making a rollover transfer from a retirement plan described in section 403(b) of the Code to a traditional IRA or a Roth IRA, you should consult with a tax advisor regarding possible tax consequences. If you have a loan outstanding under the section 403(b) plan, the transfer may subject you to income taxation on the amount of the loan balance. Restrictions under the Texas Optional Retirement Program Section 830.105 of the Texas Government Code permits participants in the Texas Optional Retirement Program ("ORP") to withdraw their interest in a variable annuity contract issued under the ORP only upon: - termination of employment in all Texas public institutions of higher education; - retirement; - death; or - the participant's attainment of age 70 1/2. Accordingly, before you withdraw any amounts from the Contract, you must furnish proof to us that one of these four events has occurred. For these purposes a change of company providing ORP benefits or a participant's transfer between institutions of higher education is not a termination of employment. Consequently there is no termination of employment when a participant in the ORP transfers the Contract Value to another Contract or another qualified custodian during the period of participation in the ORP. CORPORATE AND SELF-EMPLOYED ("H.R. 10" AND "KEOGH") PENSION AND PROFIT-SHARING PLANS Sections 401(a) and 403(a) of the code permit corporate employers to establish various types of tax-deferred retirement plans for employees. The Self-Employed Individuals' Tax Retirement Act of 1962, as amended, commonly referred to as "H.R. - 10" or "Keogh," permits self-employed individuals to establish tax-favored retirement plans for themselves and their employees. Such retirement plans may permit the purchase of annuity contracts in order to provide benefits under the plans. The Contract provides death benefit options that in certain circumstances may exceed the greater of the Purchase Payments and Contract Value. It is possible that the presence of the death benefit could be characterized by the IRS as an "incidental death benefit" and result in currently taxable income to the participant. There also are limits on the amount of incidental benefits that may be provided under pension and profit sharing plans. If the Contract is issued with certain death benefits or benefits provided under an optional Rider, the presence of these benefits may increase the amount of any required minimum distributions that must be made. EMPLOYERS INTENDING TO USE THE CONTRACT IN CONNECTION WITH SUCH PLANS SHOULD SEEK INDEPENDENT ADVICE. Minimum distributions to the employee under an employer's pension and profit sharing plan qualified under section 401(a) of the Code must begin no later than April 1 of the year following the calendar year in which the employee reaches age 70 1/2 or, if later, retires. In the case of an employee who is a 5 percent Owner as defined in section 416 of the Code, the required beginning date is April 1 of the year following the calendar year in which employee reaches age 70 1/2. DEFERRED COMPENSATION PLANS OF STATE AND LOCAL GOVERNMENTS AND TAX-EXEMPT ORGANIZATIONS Section 457 of the Code permits employees of state and local governments and tax-exempt organizations to defer a portion of their compensation without paying current taxes. The employees must be participants in an eligible deferred compensation plan. Generally, a Contract purchased by a state or local government or a tax-exempt organization will not be treated as an annuity contract for federal income tax purposes. A section 457 plan must satisfy several conditions, including the requirement that it must not permit distributions prior to your separation from service (except in the case of an unforeseen emergency). When we make payments under your Contract, the payment is taxed as ordinary income. Minimum distributions under a section 457 plan must begin no later than April 1 of the year following the year in which the employee reaches age 70 1/2 or, if later, retires. 12 Legal and Regulatory Matters There are no legal proceedings to which we, the Separate Account or the principal underwriter is a party, or to which the assets of the Separate Account are subject, that are likely to have a material adverse effect on: - the Separate Account; or - the ability of the principal underwriter to perform its contract with the Separate Account; or - on our ability to meet our obligations under the variable annuity contracts funded through the Separate Account. On June 25, 2007, John Hancock Investment Management Services, LLC (the "Adviser") and John Hancock Distributors LLC (the "Distributor") and two of their affiliates (collectively, the "John Hancock Affiliates") reached a settlement with the Securities and Exchange Commission ("SEC") that resolved an investigation of certain practices relating to the John Hancock Affiliates' variable annuity and mutual fund operations involving directed brokerage and revenue sharing. Under the terms of the settlement, each John Hancock Affiliate was censured and agreed to pay a $500,000 civil penalty to the United States Treasury. In addition, the Adviser and the Distributor agreed to pay disgorgement of $14,838,943 and prejudgment interest of $2,001,999 to the John Hancock Trust Portfolios that participated in the Adviser's commission recapture program during the period from 2000 to April 2004. Collectively, all John Hancock Affiliates agreed to pay a total disgorgement of $16,926,420 and prejudgment interest of $2,361,460 to the entities advised or distributed by John Hancock Affiliates. The Adviser discontinued the use of directed brokerage in recognition of the sale of Portfolio shares in April 2004. 13 APPENDIX A: Audited Financial Statements [FILED HEREWITH] A-1 AUDITED CONSOLIDATED FINANCIAL STATEMENTS John Hancock Life Insurance Company (U.S.A.) For the Years Ended December 31, 2010, 2009, and 2008 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm.................. F-1 Audited Consolidated Financial Statements Consolidated Balance Sheets- As of December 31, 2010 and 2009................................... F-2 Consolidated Statements of Operations- For the Years Ended December 31, 2010, 2009, and 2008.............. F-4 Consolidated Statements of Changes in Shareholder's Equity and Comprehensive Income (Loss)- For the Years Ended December 31, 2010, 2009, and 2008.............. F-5 Consolidated Statements of Cash Flows- For the Years Ended December 31, 2010, 2009, and 2008.............. F-8 Notes to Consolidated Financial Statements............................ F-10
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors John Hancock Life Insurance Company (U.S.A.) We have audited the accompanying consolidated balance sheets of John Hancock Life Insurance Company (U.S.A.) (the Company) as of December 31, 2010 and 2009, and the related consolidated statements of operations, changes in shareholder's equity and comprehensive income (loss), and cash flows for each of the three years in the period ended December 31, 2010. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of John Hancock Life Insurance Company (U.S.A.) at December 31, 2010 and 2009, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2010, in conformity with U.S. generally accepted accounting principles. As discussed in Note 1 to the consolidated financial statements, in 2010 the Company changed their method of accounting and reporting for variable interest entities, in 2009 the Company changed their method of accounting and reporting for other-than-temporary impairments on debt securities, and in 2008 the Company changed their method of accounting and reporting for certain assets to a fair value measurement approach. /s/ Ernst & Young, LLP Boston, Massachusetts March 30, 2011 F-1 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) CONSOLIDATED BALANCE SHEETS
DECEMBER 31, ------------------- 2010 2009 -------- -------- (IN MILLIONS) ASSETS Investments Fixed maturities: Available-for-sale--at fair value (amortized cost: 2010--$60,956; 2009--$55,386) ........................ $ 62,402 $ 55,581 Held-for-trading--at fair value (cost: 2010--$1,616; 2009--$1,231) (includes variable interest entity assets, at fair value, of $401 and $0 at December 31, 2010 and 2009, respectively) ......................... 1,627 1,208 Equity securities: Available-for-sale--at fair value (cost: 2010--$486; 2009--$489) .......................................... 588 558 Mortgage loans on real estate .............................. 13,343 12,623 Investment real estate, agriculture, and timber ............ 3,610 3,084 Policy loans ............................................... 5,050 4,949 Short-term investments ..................................... 1,472 3,973 Other invested assets ...................................... 3,883 3,417 -------- -------- Total Investments .................................... 91,975 85,393 Cash and cash equivalents (includes variable interest entity assets of $44 and $0 at December 31, 2010 and 2009, respectively) ........................................... 2,772 4,915 Accrued investment income (includes variable interest entity assets of $6 and $0 at December 31, 2010 and 2009, respectively) ........................................... 974 896 Goodwill ................................................... 1,453 3,053 Value of business acquired ................................. 1,959 2,171 Deferred policy acquisition costs and deferred sales inducements ............................................. 10,006 9,565 Amounts due from and held for affiliates ................... 3,673 3,828 Intangible assets .......................................... 1,285 1,294 Reinsurance recoverable .................................... 10,910 10,171 Derivative asset ........................................... 2,975 2,142 Other assets ............................................... 2,044 2,035 Separate account assets (includes variable interest entity assets of $116 and $106 at December 31, 2010 and 2009, respectively) ........................................... 136,002 122,466 -------- -------- TOTAL ASSETS ......................................... $266,028 $247,929 ======== ========
The accompanying notes are an integral part of these consolidated financial statements. F-2 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) CONSOLIDATED BALANCE SHEETS -- (CONTINUED)
DECEMBER 31, ------------------- 2010 2009 -------- -------- (IN MILLIONS) LIABILITIES AND SHAREHOLDER'S EQUITY LIABILITIES Future policy benefits ..................................... $ 82,231 $ 78,478 Policyholders' funds ....................................... 8,308 9,125 Unearned revenue ........................................... 2,600 2,615 Unpaid claims and claim expense reserves ................... 1,292 1,303 Policyholder dividends payable ............................. 595 619 Amounts due to affiliates .................................. 2,290 3,714 Short-term debt ............................................ 7 6 Long-term debt (includes variable interest entity liabilities of $351 and $0 at December 31, 2010 and 2009, respectively) ............................................ 838 484 Consumer notes ............................................. 966 1,205 Current income tax payable ................................. 21 232 Deferred income tax liability .............................. 2,765 1,755 Coinsurance funds withheld ................................. 4,871 4,359 Derivative liability (includes variable interest entity liabilities of $10 and $0 at December 31, 2010 and 2009, respectively) ........................................... 3,404 2,629 Other liabilities (includes variable interest entity liabilities of $7 and $0 at December 31, 2010 and 2009, respectively) ........................................... 3,737 3,363 Separate account liabilities (includes variable interest entity liabilities of $116 and $106 at December 31, 2010 and 2009, respectively .................................. 136,002 122,466 -------- -------- Total Liabilities .................................... 249,927 232,353 COMMITMENTS, GUARANTEES, CONTINGENCIES, AND LEGAL PROCEEDINGS (NOTE 11) SHAREHOLDER'S EQUITY Preferred stock ($1.00 par value; 50,000,000 shares authorized; 100,000 shares issued and outstanding at December 31, 2010 and 2009) ............................. -- -- Common stock ($1.00 par value; 50,000,000 shares authorized; 4,728,939 and 4,728,938 shares issued and outstanding at December 31, 2010 and 2009, respectively) ............... 5 5 Additional paid-in capital ................................. 12,776 12,427 Retained earnings .......................................... 1,907 2,822 Accumulated other comprehensive income ..................... 1,168 129 -------- -------- Total John Hancock Life Insurance Company (U.S.A.) Shareholder's Equity ................................. 15,856 15,383 Noncontrolling interests ................................... 245 193 -------- -------- Total Shareholder's Equity .............................. 16,101 15,576 -------- -------- TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY .............. $266,028 $247,929 ======== ========
The accompanying notes are an integral part of these consolidated financial statements. F-3 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, --------------------------- 2010 2009 2008 ------- ------- ------- (IN MILLIONS) REVENUES Premiums ...................................................... $ 3,922 $ 3,946 $ 81 Fee income .................................................... 3,759 3,561 3,427 Net investment income ......................................... 4,567 4,346 4,441 Net realized investment and other gains (losses): Total other-than-temporary impairment losses ............... (178) (754) (1,767) Portion of loss recognized in other comprehensive income ... 57 91 -- ------- ------- ------- Net impairment losses recognized in earnings ............... (121) (663) (1,767) Other net realized investment and other gains (losses) ..... 502 (1,174) 1,544 ------- ------- ------- Total net realized investment and other gains (losses) ........ 381 (1,837) (223) Other revenue ................................................. 26 46 62 ------- ------- ------- Total revenues .......................................... 12,655 10,062 7,788 BENEFITS AND EXPENSES Benefits to policyholders ..................................... 6,887 4,558 4,771 Policyholder dividends ........................................ 846 918 939 Amortization of deferred policy acquisition costs, deferred sales inducements, and value of business acquired .......... 752 1,211 (336) Goodwill impairment ........................................... 1,600 -- -- Other operating costs and expenses ............................ 3,225 3,071 3,064 ------- ------- ------- Total benefits and expenses ............................. 13,310 9,758 8,438 ------- ------- ------- (Loss) income before income taxes ................................ (655) 304 (650) Income tax expense (benefit) ..................................... 222 (7) (339) ------- ------- ------- Net (loss) income ................................................ (877) 311 (311) Less: net income (loss) attributable to noncontrolling interests ..................................................... 36 (16) 16 ------- ------- ------- Net (loss) income attributable to John Hancock Life Insurance Company (U.S.A.) .............................................. $ (913) $ 327 $ (327) ======= ======= =======
The accompanying notes are an integral part of these consolidated financial statements. F-4 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY AND COMPREHENSIVE INCOME (LOSS)
TOTAL JOHN HANCOCK LIFE INSURANCE ACCUMULATED COMPANY ADDITIONAL OTHER (U.S.A.) TOTAL CAPITAL PAID-IN RETAINED COMPREHENSIVE SHAREHOLDER'S NONCONTROLLING SHAREHOLDER'S OUTSTANDING STOCK CAPITAL EARNINGS INCOME (LOSS) EQUITY INTERESTS EQUITY SHARES ------- ---------- -------- ------------- ------------- -------------- ------------- ----------- (IN MILLIONS, EXCEPT FOR OUTSTANDING SHARES) (IN THOUSANDS) BALANCE AT JANUARY 1, 2008 ................... $ 5 $11,926 $ 3,046 $ 1,083 $16,060 $143 $16,203 4,829 Comprehensive (loss) income: Net (loss) income ...... (327) (327) 16 (311) Other comprehensive loss, net of tax: Net unrealized investment losses.. (2,534) (2,534) (2,534) Foreign currency translation adjustment ....... (23) (23) (23) Pension and postretirement benefits: Change in prior service cost .. (1) (1) (1) Change in net actuarial loss .......... (666) (666) (666) Cash flow hedges .... 1,055 1,055 1,055 ------- ---- ------- Comprehensive (loss) income ................. (2,496) 16 (2,480) Adoption of ASC 825, fair value option for financial assets and financial liabilities .. 7 7 7 Adoption of ASC 715, accounting for endorsement split-dollar life insurance arrangements ........... (1) (1) (1) Share-based payments ...... 9 9 9 Contributions from noncontrolling interests .............. 62 62 Distributions to noncontrolling interests (38) (38) Capital contribution from Parent ................. 477 477 477 Dividends paid to Parent .. (960) (960) (960) --- ------- ------- ------- ------- ---- ------- ----- BALANCE AT DECEMBER 31, 2008 ...... $ 5 $12,412 $ 1,765 $(1,086) $13,096 $183 $13,279 4,829 === ======= ======= ======= ======= ==== ======= =====
The accompanying notes are an integral part of these consolidated financial statements. F-5 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY AND COMPREHENSIVE INCOME (LOSS) - (CONTINUED)
TOTAL JOHN HANCOCK LIFE INSURANCE ACCUMULATED COMPANY ADDITIONAL OTHER (U.S.A.) TOTAL CAPITAL PAID-IN RETAINED COMPREHENSIVE SHAREHOLDER'S NONCONTROLLING SHAREHOLDER'S OUTSTANDING STOCK CAPITAL EARNINGS INCOME (LOSS) EQUITY INTERESTS EQUITY SHARES ------- ---------- -------- ------------- ------------- -------------- ------------- ----------- (IN MILLIONS, EXCEPT FOR OUTSTANDING SHARES) (IN THOUSANDS) BALANCE AT JANUARY 1, 2009 ................... $5 $12,412 $1,765 $(1,086) $13,096 $183 $13,279 4,829 Comprehensive income (loss): Net income (loss) ...... 327 327 (16) 311 Other comprehensive income, net of tax: Net unrealized investment gains . 2,916 2,916 2,916 Foreign currency translation adjustment ....... 5 5 5 Pension and postretirement benefits: Change in prior service cost .. (2) (2) (2) Change in net actuarial loss 60 60 60 Net unrealized gain on split-dollar life insurance benefit ....... 2 2 2 Cash flow hedges .... (1,005) (1,005) (1,005) ------- ---- ------- Comprehensive income (loss) ................. 2,303 (16) 2,287 Adoption of ASC 320, recognition of other-than-temporary impairments ............ 730 (761) (31) (31) Share-based payments ...... 8 8 8 Contributions from noncontrolling interests .............. 39 39 Distributions to noncontrolling interests .............. (13) (13) Capital contribution from Parent ................. 7 7 7 -- ------- ------ ------- ------- ---- ------- ----- BALANCE AT DECEMBER 31, 2009 ................... $5 $12,427 $2,822 $ 129 $15,383 $193 $15,576 4,829 == ======= ====== ======= ======= ==== ======= =====
The accompanying notes are an integral part of these consolidated financial statements. F-6 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY AND COMPREHENSIVE INCOME (LOSS) - (CONTINUED)
TOTAL JOHN HANCOCK LIFE INSURANCE ACCUMULATED COMPANY ADDITIONAL OTHER (U.S.A.) TOTAL CAPITAL PAID-IN RETAINED COMPREHENSIVE SHAREHOLDER'S NONCONTROLLING SHAREHOLDER'S OUTSTANDING STOCK CAPITAL EARNINGS INCOME (LOSS) EQUITY INTERESTS EQUITY SHARES ------- ---------- -------- ------------- ------------- -------------- ------------- ----------- (IN MILLIONS, EXCEPT FOR OUTSTANDING SHARES) (IN THOUSANDS) BALANCE AT JANUARY 1, 2010 ........... $5 $12,427 $2,822 $ 129 $15,383 $ 193 $15,576 4,829 Comprehensive (loss) income: Net (loss) income ...... (913) (913) 36 (877) Other comprehensive income, net of tax: Net unrealized investment gains . 776 776 776 Foreign currency translation adjustment ....... (53) (53) (53) Pension and postretirement benefits: Change in prior service cost .. (2) (2) (2) Change in net actuarial loss 9 9 9 Net unrealized gain on split-dollar life insurance benefit ....... 2 2 2 Cash flow hedges .... (166) (166) (166) ----- ----- Comprehensive (loss) income ................. (347) 36 (311) Adoption of ASC 810, consolidation of variable interest entities ............... (2) (2) 45 43 Share-based payments ...... 12 12 12 Contributions from noncontrolling interests .............. 23 23 Distributions to noncontrolling interests .............. (52) (52) Transfer of certain pension and postretirement benefit plans to Parent ................. (13) 473 460 460 Capital contribution from Parent ................. 350 350 350 -- ------- ------ ------ ------- ----- ------- ----- BALANCE AT DECEMBER 31, 2010 ............... $5 $12,776 $1,907 $1,168 $15,856 $ 245 $16,101 4,829 == ======= ====== ====== ======= ===== ======= =====
The accompanying notes are an integral part of these consolidated financial statements. F-7 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31 ------------------------------ 2010 2009 2008 -------- -------- -------- (IN MILLIONS) CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income ..................................................... $ (877) $ 311 $ (311) Adjustments to reconcile net (loss) income to net cash provided by operating activities: Amortization of premiums and accretion of discounts associated with investments, net ........................................... 174 153 168 Net realized investment and other (gains) losses ................... (381) 1,837 223 Amortization of deferred policy acquisition costs, deferred sales inducements, and value of business acquired ............... 752 1,211 (336) Capitalization of deferred policy acquisition costs and deferred sales inducements ............................................... (1,240) (1,642) (2,009) Goodwill impairment ................................................ 1,600 -- -- Depreciation and amortization ...................................... 132 134 129 Net cash flows from trading securities ............................. 73 (151) 46 (Increase) decrease in accrued investment income ................... (78) 17 12 Decrease (increase) in other assets and other liabilities, net ..... 1,224 (885) 2,030 Increase (decrease) in policyholder liabilities and accruals, net .. 2,652 (143) 4,178 Increase in deferred income taxes .................................. 447 29 114 -------- -------- -------- Net cash provided by operating activities ............................. 4,478 871 4,244 CASH FLOWS FROM INVESTING ACTIVITIES: Sales of: Fixed maturities ................................................ 20,277 11,418 10,428 Equity securities ............................................... 1,153 1,022 422 Mortgage loans on real estate ................................... 961 1,782 1,771 Investment real estate, agriculture, and timber ................. 22 2 7 Other invested assets ........................................... 377 71 884 Maturities, prepayments, and scheduled redemptions of: Fixed maturities ................................................ 2,149 2,101 2,318 Mortgage loans on real estate ................................... 383 330 285 Other invested assets ........................................... 233 234 -- Purchases of: Fixed maturities ................................................ (27,481) (14,722) (12,491) Equity securities ............................................... (1,118) (733) (288) Investment real estate, agriculture, and timber ................. (602) (151) (233) Other invested assets ........................................... (1,031) (578) (1,056) Mortgage loans on real estate issued ............................... (2,117) (2,467) (2,627) Issuance of notes receivable to affiliates ......................... -- -- (755) Net redemptions (purchases) of short-term investments .............. 2,501 (303) (944) Other, net ......................................................... (783) 705 692 -------- -------- -------- Net cash used in investing activities ................................. (5,076) (1,289) (1,587)
The accompanying notes are an integral part of these consolidated financial statements. F-8 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) CONSOLIDATED STATEMENTS OF CASH FLOWS - (CONTINUED)
YEARS ENDED DECEMBER 31, --------------------------- 2010 2009 2008 ------- ------- ------- (IN MILLIONS) CASH FLOWS FROM FINANCING ACTIVITIES: Capital contribution from Parent ................................ $ 350 $ 7 $ 477 Dividends paid to Parent ........................................ -- -- (500) (Decrease) increase in amounts due to affiliates ................ (1,254) 1,425 (964) Universal life and investment-type contract deposits ............ 3,725 6,440 7,375 Universal life and investment-type contract maturities and withdrawals .................................................. (4,169) (5,287) (7,948) Net transfers from (to) separate accounts related to universal life and investment-type contracts ........................... 7 (1,486) (1,918) Excess tax benefits related to share-based payments ............. 5 8 2 Repayments of consumer notes, net ............................... (239) (395) (557) Issuance of short-term debt ..................................... 2 -- -- Repayments of short-term debt ................................... (1) -- -- Issuance of long-term debt ...................................... 2 1 2 Repayments of long-term debt .................................... (101) -- (6) Unearned revenue on financial reinsurance ....................... 112 (44) 1,592 Net reinsurance recoverable ..................................... (23) (186) (125) ------- ------- ------- Net cash (used in) provided by financing activities ................ (1,584) 483 (2,570) ------- ------- ------- Net (decrease) increase in cash and cash equivalents ............... (2,182) 65 87 Adoption of ASC 810, consolidation of variable interest entities ... 39 -- -- Cash and cash equivalents at beginning of year ..................... 4,915 4,850 4,763 ------- ------- ------- CASH AND CASH EQUIVALENTS AT END OF YEAR ........................... $ 2,772 $ 4,915 $ 4,850 ======= ======= ======= NON-CASH FINANCING ACTIVITIES DURING THE YEAR: Transfer of certain pension and postretirement benefit plans to Parent ....................................................... $ (13) $ -- $ -- Dividend of note receivable to Parent .............................. -- -- (460)
The accompanying notes are an integral part of these consolidated financial statements. F-9 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BUSINESS. John Hancock Life Insurance Company (U.S.A.) ("JHUSA" or the "Company") is a wholly-owned subsidiary of The Manufacturers Investment Corporation ("MIC"). MIC is a wholly-owned subsidiary of John Hancock Holdings (Delaware) LLC ("JHHLLC"), which is an indirect, wholly-owned subsidiary of The Manufacturers Life Insurance Company ("MLI"). MLI, in turn, is a wholly-owned subsidiary of Manulife Financial Corporation ("MFC"), a Canadian-based, publicly traded financial services holding company. The Company provides a wide range of insurance and investment products to both individual and institutional customers located primarily in the United States. These products, including individual life insurance, individual and group fixed and variable annuities, individual and group long-term care insurance, and mutual funds, are sold through an extensive network of agents, securities dealers, and other financial institutions. The Company also offers investment management services with respect to the Company's separate account assets and to mutual funds and institutional customers. The Company is licensed in 49 states. On December 31, 2009, John Hancock Life Insurance Company ("JHLICO"), which was a wholly-owned subsidiary of John Hancock Financial Services, Inc. ("JHFS"), and John Hancock Variable Life Insurance Company ("JHVLICO"), which was a wholly-owned subsidiary of JHLICO, merged with and into JHUSA. As a result of the merger, JHLICO and JHVLICO ceased to exist, and the companies' property and obligations became the property and obligations of JHUSA. On December 31, 2009, JHFS, which was a wholly-owned subsidiary of JHHLLC, merged with and into MIC. As a result of the merger, JHFS ceased to exist, and the company's property and obligations became the property and obligations of MIC. On December 31, 2009, Manulife Holdings (Delaware) LLC ("MHDLLC"), which was the parent company of MIC, merged with and into JHHLLC. As a result of the merger, MHDLLC ceased to exist, and the company's property and obligations became the property and obligations of JHHLLC. BASIS OF PRESENTATION. The accompanying consolidated financial statements of the Company give effect to the merger of JHUSA with JHLICO and JHVLICO, which was reflected in JHUSA's audited consolidated financial statements for the years ended December 31, 2009 and 2008, as a merger of entities under common control. These financial statements have been prepared in conformity with U.S. generally accepted accounting principles ("U.S. GAAP"), which requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. The accompanying consolidated financial statements include the accounts of the Company and its majority-owned and controlled subsidiaries and variable interest entities ("VIEs") in which the Company is the primary beneficiary. Partnerships, joint venture interests, and other equity investments in which the Company does not have a controlling financial interest, but has significant influence, are recorded using the equity method of accounting and are included in other invested assets. All significant intercompany transactions and balances have been eliminated. For further discussion regarding VIEs, see Note 3 - Relationships with Variable Interest Entities. RECLASSIFICATIONS. Certain prior year amounts have been reclassified to conform to the current year presentation. INVESTMENTS. The Company classifies its fixed maturity securities, other than leveraged leases, as either available-for-sale or held-for-trading and records these securities at fair value. Unrealized investment gains and losses related to available-for-sale securities are reflected in shareholder's equity, net of policyholder related amounts and deferred income taxes. Unrealized investment gains and losses related to held-for-trading securities are reflected in net realized investment and other gains (losses). Interest income is generally recognized on the accrual basis. The amortized cost of debt securities is adjusted for other-than-temporary impairments, amortization of premiums, and accretion of discounts to maturity. Amortization of premiums and accretion of discounts are included in net investment income. The Company recognizes an impairment loss only when management does not expect to recover the amortized cost of the security. The Company classifies its leveraged leases as fixed maturity securities and calculates their carrying value by accruing income at their expected internal rate of return. F-10 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) For mortgage-backed securities, the Company recognizes income using a constant effective yield based on anticipated prepayments and the estimated economic life of the securities. When actual prepayments differ significantly from anticipated prepayments, the effective yield is recalculated to reflect actual payments to date plus anticipated future payments, and any resulting adjustment is included in net investment income. Equity securities primarily include common stock. Equity securities that have readily determinable fair values are carried at fair value. For equity securities that the Company classifies as available-for-sale, unrealized investment gains and losses are reflected in shareholder's equity, as described above for available-for-sale fixed maturity securities. Equity securities that do not have readily determinable fair values are carried at cost and are included in other invested assets. The cost of equity securities is written down to fair value when a decline in value is considered to be other-than-temporary. The Company considers its intent and ability to hold a particular equity security for a period of time sufficient to allow for the recovery of its value. Dividends are recorded as income on the ex-dividend date. Mortgage loans on real estate are carried at unpaid principal balances and are adjusted for amortization of premiums or accretion of discounts, less an allowance for probable losses. Premiums or discounts are amortized over the life of the mortgage loan contract in a manner that results in a constant effective yield. Interest income and amortization amounts and other costs that are recognized as an adjustment of yield are included as components of net investment income. When contractual payments of mortgage investments are more than 90 days in arrears, interest is no longer accrued. Mortgage loans on real estate are evaluated periodically as part of the Company's loan review procedures and are considered impaired when it is probable that the Company will be unable to collect all amounts of principal and interest due according to the contractual terms of the mortgage loan agreement. The valuation allowance established as a result of impairment is based on the present value of the expected future cash flows, discounted at the loan's original effective interest rate, or is based on the collateral value of the loan if higher and the loan is collateral dependent. The Company estimates this level to be adequate to absorb estimated probable credit losses that exist at the balance sheet date. Any change to the valuation allowance for mortgage loans on real estate is reported as a component of net realized investment and other gains (losses). Interest received on impaired mortgage loans on real estate is applied to reduce the outstanding investment balance. If foreclosure becomes probable, the measurement method used is based on the collateral's fair value. Foreclosed real estate is recorded at the collateral's fair value at the date of foreclosure, which establishes a new cost basis. Investment real estate, agriculture, and timber, which the Company has the intent to hold for the production of income, is carried at depreciated cost, using the straight-line method of depreciation, less adjustments for impairments in value. In those cases where it is determined that the carrying amount of investment real estate, agriculture, and timber is not recoverable, an impairment loss is recognized based on the difference between the depreciated cost and fair value of the asset. The Company reports impairment losses as part of net realized investment and other gains (losses). Policy loans are carried at unpaid principal balances. Short-term investments, which include investments with remaining maturities of one year or less, but greater than three months, at the time of purchase, are reported at fair value. Net realized investment and other gains (losses), other than those related to separate accounts for which the Company does not bear the investment risk, are determined on a specific identification method and are reported net of amounts credited to participating contract holder accounts. DERIVATIVE FINANCIAL INSTRUMENTS. The Company uses derivative financial instruments ("derivatives") to manage exposures to foreign currency, interest rate, and other market risks arising from on-balance sheet financial instruments and selected anticipated transactions. Derivatives embedded in other financial instruments ("host instruments"), such as investment securities, reinsurance contracts, and certain benefit guarantees, are separately recorded as derivatives when their economic characteristics and risks are not closely related to those of the host instrument, the terms of the embedded derivative are the same as those of a stand-alone derivative, and the host instrument is not held-for-trading or carried at fair value. Derivatives are recorded at fair value. Derivatives with unrealized gains are reported as derivative assets and derivatives with unrealized losses are reported as derivative liabilities. F-11 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) A determination is made for each relationship as to whether hedge accounting can be applied. Where hedge accounting is not applied, changes in fair value of derivatives are recorded in net realized investment and other gains (losses). Where the Company has elected to use hedge accounting, a hedge relationship is designated and documented at inception. Hedge effectiveness is evaluated at inception and throughout the term of the hedge, and hedge accounting is only applied when the Company expects that each hedging instrument will be highly effective in achieving offsetting changes in fair value or changes in cash flows attributable to the risk being hedged. Hedge effectiveness is assessed quarterly using a variety of techniques, including regression analysis and cumulative dollar offset. When it is determined that the hedging relationship is no longer effective or the hedged item has been sold or terminated, the Company discontinues hedge accounting prospectively. In such cases, if the derivative hedging instruments are not sold or terminated, any subsequent changes in fair value of the derivative are recognized in net realized investment and other gains (losses). In a fair value hedging relationship, changes in the fair value of the hedging derivatives are recorded in net realized investment and other gains (losses), along with changes in fair value attributable to the hedged risk. The carrying value of the hedged item is adjusted for changes in fair value attributable to the hedged risk. To the extent the changes in the fair value of derivatives do not offset the changes in the fair value of the hedged item attributable to the hedged risk in net realized investment and other gains (losses), any ineffectiveness will remain in net realized investment and other gains (losses). When hedge accounting is discontinued, the carrying value of the hedged item is no longer adjusted and the cumulative fair value adjustments are amortized to investment income over the remaining term of the hedged item unless the hedged item is sold, at which time the balance is recognized immediately in net investment income. In a cash flow hedge relationship, the effective portion of the changes in the fair value of the hedging instrument is recorded in accumulated other comprehensive income, while the ineffective portion is recognized in net realized investment and other gains (losses). Gains and losses recorded in accumulated other comprehensive income are recognized in income during the same periods as the variability in the cash flows hedged or the hedged forecasted transactions are recognized. Gains and losses on cash flow hedges recorded in accumulated other comprehensive income are reclassified immediately to income when the hedged item is sold or forecasted transaction is no longer expected to occur. When a hedge is discontinued, but the hedged forecasted transaction remains highly probable to occur, the amounts recorded in accumulated other comprehensive income are reclassified to income in the periods during which variability in the cash flows hedged or the hedged forecasted transaction is recognized in income. CASH AND CASH EQUIVALENTS. Cash and cash equivalents include cash and all highly liquid debt investments with a remaining maturity of three months or less when purchased. GOODWILL, VALUE OF BUSINESS ACQUIRED, AND OTHER INTANGIBLE ASSETS. On April 28, 2004 (the "acquisition date"), MFC acquired JHFS and its subsidiaries, which was accounted for using the purchase method of accounting. The allocation of purchase consideration resulted in the recognition of goodwill, value of business acquired ("VOBA"), and other intangible assets as of the acquisition date. Goodwill recorded on the Company's Consolidated Balance Sheets represents primarily the excess of the cost over the fair value of identifiable net assets acquired by MFC. VOBA is the present value of estimated future profits of insurance policies in-force related to businesses acquired by MFC. The Company amortizes VOBA using the same methodology and assumptions used to amortize deferred policy acquisition costs ("DAC") and tests for recoverability at least annually. Other intangible assets include brand name, investment management contracts (fair value of the investment management relationships between the Company and the mutual funds managed by the Company), distribution networks, and other investment management contracts (institutional investment management contracts managed by the Company's investment management subsidiaries) recognized at the acquisition date. Brand name and investment management contracts are not subject to amortization. Distribution networks and other investment management contracts are amortized over their respective estimated lives in other operating costs and expenses. F-12 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) The Company tests goodwill and intangible assets not subject to amortization for impairment at least annually, or more frequently if circumstances indicate impairment may have occurred. Amortizing intangible assets are reviewed for impairment only upon the occurrence of certain triggering events. An impairment is recorded whenever an intangible asset's fair value is deemed to be less than its carrying value. For discussion regarding a goodwill impairment the Company recorded during 2010, see Note 15 -- Goodwill, Value of Business Acquired, and Other Intangible Assets. DEFERRED POLICY ACQUISITION COSTS AND DEFERRED SALES INDUCEMENTS. DAC are costs that vary with, and are related primarily to, the production of new business and have been deferred to the extent that they are deemed recoverable. Such costs include sales commissions, certain policy issuance and underwriting costs, and certain agency expenses. Similarly, any amounts assessed as initiation fees or front-end loads are recorded as unearned revenue. The Company tests the recoverability of DAC at least annually. DAC related to participating traditional life insurance is amortized over the life of the policies at a constant rate based on the present value of the estimated gross margin amounts expected to be realized over the lives of the policies. Estimated gross margin amounts include anticipated premiums and investment results less claims and administrative expenses, changes in the net level premium reserve, and expected annual policyholder dividends. For annuity, universal life insurance, and investment-type products, DAC and unearned revenue are amortized generally in proportion to the change in present value of expected gross profits arising principally from surrender charges, investment results, including realized gains (losses), and mortality and expense margins. DAC amortization is adjusted retrospectively when estimates are revised. For annuity, universal life insurance, and investment-type products, the DAC asset is adjusted for the impact of unrealized gains (losses) on investments as if these gains (losses) had been realized, with corresponding credits or charges included in accumulated other comprehensive income. DAC and unearned revenue related to non-participating traditional life insurance and DAC related to long-term care insurance are amortized over the premium-paying period of the related policies using assumptions consistent with those used in computing policy benefit reserves. The Company offers sales inducements, including enhanced crediting rates or bonus payments, to contract holders on certain of its individual and group annuity products. The Company defers sales inducements and amortizes them over the life of the underlying contracts using the same methodology and assumptions used to amortize DAC. REINSURANCE. Assets and liabilities related to reinsurance ceded contracts are reported on a gross basis. The accompanying Consolidated Statements of Operations reflect premiums, benefits, and settlement expenses net of reinsurance ceded. Reinsurance premiums, commissions, expense reimbursements, benefits, and reserves related to reinsured business are accounted for on a basis consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. The Company remains liable to its contract holders to the extent that counterparties to reinsurance ceded contracts do not meet their contractual obligations. SEPARATE ACCOUNT ASSETS AND LIABILITIES. Separate account assets and liabilities reported on the Company's Consolidated Balance Sheets represent funds that are administered and invested by the Company to meet specific investment objectives of contract holders. Net investment income and net realized investment and other gains (losses) generally accrue directly to such contract holders who bear the investment risk, subject, in some cases, to principal guarantees and minimum guaranteed rates of income. The assets of each separate account are legally segregated and are not subject to claims that arise out of any other business of the Company. Separate account assets are reported at fair value, and separate account liabilities are set equal to the fair value of the separate account assets. Deposits, surrenders, net investment income, net realized investment and other gains (losses), and the related liability changes of separate accounts are offset within the same line item in the Consolidated Statements of Operations. Fees charged to contract holders, principally mortality, policy administration, investment management, and surrender charges, are included in the revenues of the Company. F-13 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) FUTURE POLICY BENEFITS AND POLICYHOLDERS' FUNDS. Future policy benefits for participating traditional life insurance policies are based on the net level premium method. The net level premium reserve is calculated using the guaranteed mortality and dividend fund interest rates. The liability for annual dividends represents the accrual of annual dividends earned. Settlement dividends are accrued in proportion to gross margins over the life of the policies. Participating business represented 35% and 38% of the Company's traditional life net insurance in-force at December 31, 2010 and 2009, respectively, and 77%, 81%, and 85% of the Company's traditional life net insurance premiums for the years ended December 31, 2010, 2009, and 2008, respectively. Benefit liabilities for annuities during the accumulation period are equal to accumulated contract holders' fund balances and after annuitization are equal to the present value of expected future payments. For payout annuities in loss recognition, future policy benefits are computed using estimates of expected mortality, expenses, and investment yields as determined at the time these contracts first moved into loss recognition. Payout annuity reserves are adjusted for the impact of net realized investment and other gains (losses) associated with the underlying assets. Future policy benefits for long-term care insurance policies are based on the net level premium method. Assumptions established at policy issue as to mortality, morbidity, persistency, and interest and expenses, which include a margin for adverse deviation, are based on estimates developed by management. For non-participating traditional life insurance policies, future policy benefits are estimated using a net level premium method based upon actuarial assumptions as to mortality, persistency, interest, and expenses established at the policy issue or acquisition date. Assumptions established at policy issue as to mortality and persistency are based on the Company's experience, which, together with interest and expense assumptions, include a margin for adverse deviation. Policyholders' funds are generally equal to the total of the policyholder account values before surrender charges, additional reserves established to adjust for lower market interest rates as of the acquisition date, and additional reserves established on certain guarantees offered in certain investment-type products. Policyholder account values include deposits plus credited interest or change in investment value less expense and mortality fees, as applicable, and withdrawals. Policy benefits are charged to expense and include benefit claims incurred in the period in excess of related policy account balances and interest credited to policyholders' account balances. Components of policyholders' funds were as follows:
DECEMBER 31, --------------- 2010 2009 ------ ------ (IN MILLIONS) Participating pension contracts .......................... $1,799 $1,976 Funding agreements ....................................... 1,010 1,753 Guaranteed investment contracts .......................... 823 948 ------ ------ Total liabilities for investment-type products ........ 3,632 4,677 Individual and group annuities ........................... 2,225 2,124 Certain traditional life insurance policies and other .... 2,451 2,324 ------ ------ Total policyholders' funds ............................... $8,308 $9,125 ====== ======
Funding agreements are purchased from the Company by special purpose entities ("SPEs"), which in turn issue medium-term notes to global investors that are non-recourse to the Company. The SPEs are not consolidated in the Company's consolidated financial statements. Liabilities for unpaid claims and claim expenses include estimates of payments to be made on reported individual and group life, long-term care, and group accident and health insurance claims and estimates of incurred but not reported claims based on historical claims development patterns. Estimates of future policy benefit reserves, claim reserves, and expenses are reviewed on a regular basis and adjusted as necessary. Any changes in estimates are reflected in current earnings. F-14 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) POLICYHOLDER DIVIDENDS. Policyholder dividends for the closed blocks are approved annually by the Company's Board of Directors. The aggregate amount of policyholder dividends is calculated based upon actual interest, mortality, morbidity, persistency, and expense experience for the year as appropriate, as well as management's judgment as to the proper level of statutory surplus to be retained by the Company. For policies included in the JHUSA closed block, expense experience is included in determining policyholder dividends. Expense experience is not included for policies included in the JHLICO closed block. For additional information on the closed blocks, see Note 6 -- Closed Blocks. REVENUE RECOGNITION. Premiums from participating and non-participating traditional life insurance, annuity policies with life contingencies, and reinsurance contracts are recognized as revenue when due. When premiums are due over a significantly shorter period than the period over which benefits are provided, any excess profit is deferred and recognized into income in a constant relationship to insurance in-force or, for annuities, the amount of expected future benefit payments. Premiums from long-term care insurance contracts are recognized as income when due. Deposits related to universal life and investment-type products are credited to policyholders' account balances. Revenues from these contracts, as well as annuity contracts, consist of amounts assessed against policyholders' account balances for mortality, policy administration, and surrender charges and are recorded in fee income in the period in which the services are provided. Fee income also includes advisory fees, broker-dealer commissions and fees, and administration service fees. Such fees and commissions are recognized in the period in which the services are performed. Commissions related to security transactions and related expenses are recognized as income on the trade date. Contingent deferred selling charge commissions are recognized as income when received. Selling commissions paid to the selling broker-dealer for sales of mutual funds that do not have a front-end sales charge are deferred and amortized on a straight-line basis over periods ranging from one to six years. This is the approximate period of time expected to be benefited and during which fees earned pursuant to Rule 12b-1 distribution plans are received from the funds and contingent deferred sales charges are received from shareholders of the funds. SHARE-BASED PAYMENTS. The Company provides compensation to certain employees and directors in the form of stock options, deferred share units, restricted share units, and performance share units in MFC. The Company recognizes the costs resulting from share-based payment transactions with employees in its consolidated financial statements utilizing a fair value-based measurement method. Share-based compensation costs are recognized over the applicable vesting period, except where the employee is eligible to retire prior to a vesting date, in which case the cost is recognized over the period between the grant date and the date on which the employee is eligible to retire. The share-based payments are a legal obligation of MFC, but in accordance with U.S. GAAP, are recorded in the accounts of the Company in other operating costs and expenses. The Company reports the benefits of tax deductions in excess of recognized compensation cost as a financing cash flow item. INCOME TAXES. The provision for federal income taxes includes amounts currently payable or recoverable and deferred income taxes, computed under the liability method, resulting from temporary differences between the tax and financial statement bases of assets and liabilities. A valuation allowance is established for deferred tax assets when it is more likely than not that an amount will not be realized. Foreign subsidiaries and U.S. subsidiaries operating outside of the United States are taxed under applicable foreign statutory rates. FOREIGN CURRENCY. Assets and liabilities of foreign operations are translated into U.S. dollars using current exchange rates as of the balance sheet date. Revenues and expenses are translated using the average exchange rates during the year. The resulting net translation adjustments for each year are included in accumulated other comprehensive income. Gains or losses on foreign currency transactions are reflected in earnings. F-15 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) ADOPTION OF RECENT ACCOUNTING PRONOUNCEMENTS Financing Receivables Effective December 31, 2010, the Company adopted Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") No. 2010-20, "Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses," which amends FASB Accounting Standards Codification(TM) ("ASC") Topic 310, "Receivables." ASU No. 2010-20 requires enhanced disclosures related to the allowance for credit losses and the credit quality of financing receivables, such as aging information and credit quality indicators. Most of the requirements are effective for the Company on December 31, 2010 with certain additional disclosures effective on December 31, 2011. Adoption of this guidance resulted in expanded disclosures related to the Company's financing receivables, but had no impact on the Company's Consolidated Balance Sheets or Consolidated Statements of Operations. Derivative Instruments and Hedging Activities Effective July 1, 2010, the Company adopted ASU No. 2010-11, "Derivatives and Hedging- Scope Exception Related to Embedded Credit Derivatives," which amends ASC Topic 815, "Derivatives and Hedging" ("ASC 815"). ASU No. 2010-11 clarifies the scope exception for embedded credit derivative features related to the transfer of credit risk created by the subordination of one financial instrument to another. The amendments address how to determine which embedded credit derivative features, including those in collateralized debt obligations and synthetic collateralized debt obligations, are considered to be embedded derivatives that should not be analyzed for potential bifurcation and separate accounting at fair value. Adoption of this guidance had no impact on the Company's Consolidated Balance Sheets or Consolidated Statements of Operations. Effective January 1, 2009, the Company adopted Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities," which is now incorporated into ASC 815. This guidance provides extensively expanded disclosure requirements for derivative instruments and hedging activities and applies to all derivative instruments, including bifurcated derivative instruments and related hedged items. Adoption of this guidance resulted in expanded disclosures related to derivative instruments and hedging activities, but had no impact on the Company's Consolidated Balance Sheets or Consolidated Statements of Operations. Consolidated Financial Statements Effective January 1, 2010, the Company adopted ASU No. 2009-17, "Consolidation - Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities," which amends ASC Topic 810, "Consolidation" ("ASC 810"). The amendments revise the accounting principles for assessing consolidation of a VIE and include the following features: - A new concept of control - now defined as an entity's ability to make decisions that are most economically significant to the VIE coupled with economic exposure to the VIE's variability. This definition replaces the previous concept of "exposure to the majority of the VIE's variability" in determining when to consolidate another entity. - New guidance for determining which party, among parties with shared decision making powers over a VIE, makes the most significant decisions for the VIE. - A bright line test for removal rights over an entity's decision maker by its equity owners, whereby removal rights are disregarded as an element of control unless they can be exercised successfully by a single party. - Expanded guidance on whether fees charged to a VIE by its decision maker are variable interests, leading to consolidation by the decision maker. - Removal of the previous scope exception for qualifying special purpose entities. ASC 810 retains a scope exception for consolidation by investment companies of their investments. F-16 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) The Company also adopted ASU No. 2010-10, "Consolidation - Amendments for Certain Investment Funds," which amends ASC 810. This guidance was effective January 1, 2010 and deferred application of the amendments described above to certain entities that apply specialized accounting guidance for investment companies. Adoption of ASC 810 resulted in consolidation of certain collateralized debt obligations sponsored by the Company. The impact on the Company's Consolidated Balance Sheet at January 1, 2010 was an increase in assets of $518 million, an increase in liabilities of $475 million, an increase in noncontrolling interests of $45 million, and a decrease in retained earnings of $2 million, net of tax. Effective January 1, 2009, the Company adopted Statement of Financial Accounting Standards No. 160, "Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51," which is now incorporated into ASC 810. ASC 810 establishes accounting guidance for noncontrolling interests in a subsidiary and for deconsolidation of a subsidiary. Noncontrolling interests in subsidiaries are included as a separate component of shareholder's equity on the Consolidated Balance Sheets, net income attributable to both the Company's interest and the noncontrolling interests is presented separately on the Consolidated Statements of Operations, and any changes in the Company's ownership of a subsidiary, which do not result in deconsolidation, would be accounted for as transactions in the Company's own stock. Deconsolidation typically results in the recognition of a gain or loss, with any retained noncontrolling interest measured initially at fair value. This accounting guidance was applied prospectively, except for the presentation and disclosure requirements, which were applied retrospectively. Adoption of this guidance had no measurement impact on the Company's Consolidated Balance Sheets or Consolidated Statements of Operations. Effective December 31, 2008, the Company adopted FASB Staff Position ("FSP") No. FAS 140-4 and FIN 46(R)-8, "Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities," which is now incorporated into ASC 810. This guidance requires enhanced disclosures about transfers of financial assets and interests in VIEs. While the Company is not involved in securitizing financial assets, it does have significant relationships with VIEs. Adoption of this guidance resulted in expanded disclosures related to VIEs, but had no impact on the Company's Consolidated Balance Sheets or Consolidated Statements of Operations. Transfers of Financial Assets Effective January 1, 2010, the Company adopted ASU No. 2009-16, "Accounting for Transfers of Financial Assets," which amends ASC Topic 860, "Transfers and Servicing" ("ASC 860"). ASC 860 focuses on securitization activity, and these amendments affect the transferor's derecognition principles for assets transferred. Amendments to ASC 860 eliminate the concept of qualifying special purpose entities, removing their previous exemption from consolidation accounting by transferors of financial assets to them. Further, ASC 860 does not permit derecognition accounting for transfers of portions of financial assets when the portions transferred do not meet the definition of a participating interest. ASC 860 strengthens the requirement that transferred assets be legally isolated from the transferor and all of its consolidated affiliates in order for the transfer to be accounted for as a sale. ASC 860 requires that retained interests in transferred assets be recognized at fair value instead of amounts based on relative fair value allocations of the previous carrying value of assets transferred. These new requirements were applicable to transfers of financial assets occurring on or after January 1, 2010. Adoption of this guidance had no impact on the Company's Consolidated Balance Sheets or Consolidated Statements of Operations. Fair Value Measurements Effective January 1, 2010, the Company adopted ASU No. 2010-06, "Fair Value Measurements and Disclosures - Improving Disclosures about Fair Value Measurements," which amends ASC Topic 820, "Fair Value Measurements and Disclosures" ("ASC 820"). This guidance requires new disclosures about significant transfers between Level 1 and 2 measurement categories and clarifies existing fair value disclosures about the level of disaggregation and inputs and valuation techniques used to measure fair value. The guidance also requires separate disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements, which will be effective for the Company on January 1, 2011. Adoption of this guidance resulted in expanded disclosures related to fair value measurements, but had no impact on the Company's Consolidated Balance Sheets or Consolidated Statements of Operations. F-17 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) Effective December 31, 2009, the Company adopted ASU No. 2009-12, "Fair Value Measurements and Disclosures - Investment in Certain Entities That Calculate Net Asset per Share (or Its Equivalent)." This amendment to ASC 820 allows entities to use the net asset value of certain investments when determining fair value, provided certain criteria are met. Adoption of this guidance had no impact on the Company's Consolidated Balance Sheets or Consolidated Statements of Operations. Effective December 31, 2009, the Company adopted ASU No. 2009-05, "Measuring Liabilities at Fair Value." This amendment to ASC 820 simplifies, in certain instances, the assessment of fair value of a liability. This amendment, when applicable, allows the use of the fair value of the instrument associated with the liability when it is traded as an asset as a proxy for its fair value as a liability, given inherent difficulties in measuring the fair value of such liabilities directly. The fair value of the liability is not adjusted to reflect any restrictions on its transfer. Adoption of this guidance had no impact on the Company's Consolidated Balance Sheets or Consolidated Statements of Operations. Effective April 1, 2009, the Company adopted FSP No. FAS 157-4, "Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly," which is now incorporated into ASC 820. This accounting guidance carries forward and elaborates on previous fair value concepts. The fair value of an asset or liability continues to be the price that would be received to sell the asset or paid to transfer the liability in an orderly transaction between market participants at the measurement date under then current market conditions. ASC 820 provides indicators of when a transaction is considered disorderly and elaborates on how to determine the fair value of a financial instrument if such conditions exist. Adoption of this guidance had no impact on the Company's Consolidated Balance Sheets or Consolidated Statements of Operations. In October 2008, the FASB issued FSP No. FAS 157-3, "Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active," which is now incorporated into ASC 820. This pronouncement provided additional guidance on determining fair values of illiquid securities. This guidance was immediately effective, retroactive to prior reporting periods for which financial statements had not yet been issued. Adoption of this guidance had no impact on the Company's Consolidated Balance Sheets or Consolidated Statements of Operations. Effective January 1, 2008, the Company adopted FSP No. FAS 157-1, "Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13," which is now incorporated into ASC 820. This guidance provides a scope exception for applying Statement of Financial Accounting Standards No. 157, "Fair Value Measurements ("SFAS No. 157")," fair value methodologies to the evaluation criteria on lease classification or measurement. Adoption of this guidance had no impact on the Company's Consolidated Balance Sheets or Consolidated Statements of Operations. Effective January 1, 2008, the Company adopted SFAS No. 157, which is now incorporated into ASC 820. This guidance provides a single definition of fair value for accounting purposes, establishes a consistent framework for measuring fair value, and expands disclosure requirements about fair value measurements. ASC 820 requires, among other things, an exit value approach for valuing assets and liabilities, using the best available information about what a market would bear. The exit value approach focuses on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Exit values for liabilities should include margins for risk even if they are not observable. ASC 820 provides guidance on how to measure fair value when required under existing accounting standards. ASC 820 establishes a fair value hierarchy based on the observability of the inputs to valuation techniques used to measure fair value, sorted into three levels ("Level 1, 2, and 3") with the most observable input level being Level 1. The impact of changing valuation methods to comply with ASC 820 resulted in adjustments to actuarial liabilities, which were recorded as an increase in net income of $60 million, net of tax, on January 1, 2008. Pension and Postretirement Benefit Plans Effective December 31, 2009, the Company adopted FSP No. FAS 132(R)-1, "Employers' Disclosures about Postretirement Benefit Plan Assets," which is now incorporated into ASC Topic 715, "Compensation - Retirement Benefits" ("ASC 715"). This guidance requires enhanced disclosures of the assets of the Company's pension and other postretirement benefit plans in F-18 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) the Company's consolidated financial statements. ASC 715 requires a narrative description of investment policies and strategies for plan assets and discussion of long-term rate of return assumptions for plan assets. ASC 715 requires application of ASC 820 style disclosures to fair values of plan assets, including disclosure of fair values of plan assets sorted by asset category and valuation Levels 1, 2, and 3, with roll forward of Level 3 plan assets and discussion of valuation processes used. Adoption of this guidance resulted in expanded disclosures related to the Company's pension and postretirement benefit plans, but had no impact on the Company's Consolidated Balance Sheets or Consolidated Statements of Operations. Effective January 1, 2008, the Company adopted Emerging Issues Task Force ("EITF") Issue No. 06-10, "Accounting for Deferred Compensation and Postretirement Benefit Aspects of Collateral Assignment Split-Dollar Life Insurance Arrangements," which is now incorporated into ASC 715. This guidance requires employers to recognize a liability for the postretirement benefit related to collateral assignment split-dollar life insurance arrangements. ASC 715 also requires employers to recognize and measure an asset based on the nature and substance of the collateral assignment split-dollar life insurance arrangement. The impact of adoption of this guidance was recorded directly to the beginning balance of 2008 retained earnings and reported as a change in accounting principle. Adoption of this guidance did not have a material impact on the Company's Consolidated Balance Sheets or Consolidated Statements of Operations. Effective January 1, 2008, the Company adopted EITF Issue No. 06-4, "Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements," which is now incorporated into ASC 715. This guidance requires employers that enter into endorsement split-dollar life insurance arrangements that provide an employee with a postretirement benefit to recognize a liability for the future benefits promised based on the substantive agreement made with the employer. Whether the accrual is based on a death benefit or on the future cost of maintaining the insurance depends on what the employer has effectively agreed to provide during the employee's retirement. The purchase of an endorsement-type life insurance policy does not qualify as a settlement of the liability. The impact of adoption of this guidance was recorded directly to the beginning balance of 2008 retained earnings and reported as a change in accounting principle. Adoption of this guidance did not have a material impact on the Company's Consolidated Balance Sheets or Consolidated Statements of Operations. FASB Accounting Standards Codification Effective July 1, 2009, the Company adopted Statement of Financial Accounting Standards No. 168, "The FASB Accounting Standards Codification(TM) and the Hierarchy of Generally Accepted Accounting Principles - a Replacement of FASB Statement No. 162," and ASU No. 2009-01, "Topic 105- Generally Accepted Accounting Principles amendments based on Statement of Financial Accounting Standards No. 168 - The FASB Accounting Standards Codification(TM) and the Hierarchy of Generally Accepted Accounting Principles." ASC Topic 105 establishes the FASB Accounting Standards Codification(TM) as the single source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities and to supersede all previous U.S. GAAP literature. Adoption of the ASC had no impact on the Company's Consolidated Balance Sheets or Consolidated Statements of Operations, as it did not change U.S. GAAP principles. Subsequent Events Effective April 1, 2009, the Company adopted Statement of Financial Accounting Standards No. 165, "Subsequent Events," which is now incorporated into ASC Topic 855, "Subsequent Events." This guidance was retroactively amended by the FASB in February 2010 by issuance of ASU No. 2010-09, "Subsequent Events," which requires an entity which files or furnishes its financial statements with the U.S. Securities and Exchange Commission ("SEC") to evaluate subsequent events through the date that its financial statements are issued. Adoption of this guidance resulted in expanded disclosures related to subsequent events, but had no impact on the Company's Balance Sheets or Statements of Operations. F-19 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) Other-Than-Temporary Impairments Effective April 1, 2009, the Company adopted FSP No. FAS 115-2, "Recognition and Presentation of Other-Than-Temporary Impairments," which is now incorporated into ASC Topic 320, "Investments - Debt and Equity Securities" ("ASC 320"). This new guidance removes the concept of "intent and ability to hold until recovery of value" associated with other-than-temporary impairment of a debt security whose fair value is less than its cost. Impairment losses should be recorded in earnings on an available-for-sale debt security only when management does not expect to recover the amortized cost of the security. For additional information regarding the Company's impairment process, see Note 2 - Investments. The Company's adoption of this guidance required reassessment of previous impairment losses recorded on debt securities held at March 31, 2009, with any reversals of previous impairment losses recorded through retained earnings and offset to accumulated other comprehensive income for available-for-sale debt securities and other actuarial related amounts included in other comprehensive income, and related impact on deferred policy acquisition costs, as of April 1, 2009. As a result of adoption of ASC 320, the Company recognized an increase in retained earnings of $730 million, net of tax, on April 1, 2009, with a corresponding (decrease) increase in accumulated other comprehensive income of ($761) million, net of tax, attributable to (1) available-for-sale debt securities of ($898) million, (2) unearned revenue liability of ($5) million, (3) deferred policy acquisition costs and deferred sales inducements of $96 million, (4) value of business acquired of $30 million, and (5) future policy benefits of $16 million. Other balance sheet items were impacted as follows: value of business acquired decreased by $36 million, deferred policy acquisition costs and deferred sales inducements decreased by $11 million, deferred income tax liability decreased by $17 million, and future policy benefits increased by $1 million. Investments Effective December 31, 2008, the Company adopted FSP No. EITF 99-20-1, "Amendments to the Impairment Guidance EITF Issue No. 99-20," which is now incorporated into ASC Topic 325, "Investments - Other" ("ASC 325"). This guidance helps conform the impairment guidance in EITF Issue No. 99-20, "Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests That Continue to Be Held by a Transferor in Securitized Financial Assets," which is also now incorporated into ASC 325, to the impairment guidance of ASC 320. This impairment guidance applies to debt securities backed by securitized financial assets ("ABS"), which are of less than high credit quality and can be contractually prepaid in a way that the investor could lose part of its investment. These securities are categorized as available-for-sale and most have fair values below their carrying values. ASC 325 allows the Company to consider its own expectations about probabilities that the ABS can and will be held until the fair values recover, while assessing whether the ABS is other-than-temporarily impaired. Adoption of this guidance had no impact on the Company's Consolidated Balance Sheets or Consolidated Statements of Operations. Financial Instruments Effective January 1, 2008, the Company adopted Statement of Financial Accounting Standards No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities," which is now incorporated into ASC Topic 825, "Financial Instruments" ("ASC 825"). The objective of this guidance is to enable companies to mitigate the earnings volatility caused by measuring related assets and liabilities differently, without having to apply complex hedge accounting provisions. ASC 825 provides the option to use fair value accounting for most financial assets and financial liabilities, with changes in fair value reported in earnings. Selection of the fair value option is irrevocable and can be applied on an instrument-by-instrument basis. The Company elected to adopt ASC 825 for certain bonds classified as available-for-sale that support certain actuarial liabilities to participating policyholders. The book and market value for these bonds prior to this election were $1,307 million and $1,314 million, respectively. The amount of net unrealized gains reclassified from accumulated other comprehensive income on January 1, 2008 was $7 million. The actuarial liabilities in these products are recorded through earnings primarily based on fluctuations in the fair value of the underlying bonds. The bonds were classified as held-for-trading on the Consolidated Balance Sheet at December 31, 2008. The adoption of ASC 825 resulted in an adjustment to retained earnings of $7 million as of January 1, 2008. F-20 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) FUTURE ADOPTION OF RECENT ACCOUNTING PRONOUNCEMENTS Deferred Policy Acquisition Costs In October 2010, the FASB issued ASU No. 2010-26, "Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts," which amends ASC Topic 944, "Financial Services - Insurance" ("ASC 944"). ASU No. 2010-26 clarifies the costs that should be deferred when issuing and renewing insurance contracts and also specifies that only costs related directly to successful acquisition of new or renewal contracts can be capitalized. All other acquisition-related costs should be expensed as incurred. This guidance is to be applied prospectively upon the date of adoption, with retrospective application permitted, but not required. ASU No. 2010-26 will be effective for the Company on January 1, 2012. The Company is currently evaluating the impact the adoption of this guidance will have on the Company's Consolidated Balance Sheets and Consolidated Statements of Operations. Consolidated Financial Statements In April 2010, the FASB issued ASU No. 2010-15, "How Investments Held through Separate Accounts Affect an Insurer's Consolidation Analysis of Those Investments," which amends ASC 944. Under ASU No. 2010-15, an insurance entity should not consider the interests held through separate accounts for the benefit of policyholders in the insurer's evaluation of its economics in a VIE, unless the separate account contract holder is a related party. This guidance is to be applied retrospectively to all prior periods upon the date of adoption. ASU No. 2010-15 will be effective for the Company on January 1, 2011. Adoption of this guidance will result in deconsolidation of $983 million of separate account assets, offset by deconsolidation of $983 million of separate account liabilities on January 1, 2011. F-21 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 2 -- INVESTMENTS FIXED MATURITIES AND EQUITY SECURITIES The Company's investments in available-for-sale fixed maturities and equity securities are summarized below:
DECEMBER 31, 2010 -------------------------------------------------------------- OTHER- THAN- GROSS GROSS TEMPORARY AMORTIZED UNREALIZED UNREALIZED IMPAIRMENTS COST GAINS LOSSES FAIR VALUE IN AOCI (2) --------- ---------- ---------- ---------- ----------- (IN MILLIONS) FIXED MATURITIES AND EQUITY SECURITIES: Corporate debt securities .......................... $39,259 $2,503 $ 563 $41,199 $ (85) Commercial mortgage-backed securities .............. 4,211 156 120 4,247 -- Residential mortgage-backed securities ............. 684 2 226 460 (31) Collateralized debt obligations .................... 246 -- 110 136 -- Other asset-backed securities ...................... 970 68 9 1,029 (1) U.S. Treasury securities and obligations of U.S. government corporations and agencies ............ 8,176 55 390 7,841 -- Obligations of states and political subdivisions.... 4,079 60 112 4,027 -- Debt securities issued by foreign governments ...... 1,399 139 7 1,531 -- ------- ------ ------ ------- ----- Fixed maturities ................................... 59,024 2,983 1,537 60,470 (117) Other fixed maturities (1) ......................... 1,932 -- -- 1,932 -- ------- ------ ------ ------- ----- Total fixed maturities available-for-sale .......... 60,956 2,983 1,537 62,402 (117) Equity securities available-for-sale ............... 486 107 5 588 -- ------- ------ ------ ------- ----- Total fixed maturities and equity securities available-for-sale .............................. $61,442 $3,090 $1,542 $62,990 $(117) ======= ====== ====== ======= =====
(1) The Company classifies its leveraged leases as fixed maturities and calculates their carrying value by accruing income at their expected internal rate of return. (2) Represents the amount of other-than-temporary impairment losses in accumulated other comprehensive income ("AOCI"), which were not included in earnings. F-22 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 2 -- INVESTMENTS - (CONTINUED)
DECEMBER 31, 2009 -------------------------------------------------------------- OTHER- THAN- GROSS GROSS TEMPORARY AMORTIZED UNREALIZED UNREALIZED IMPAIRMENTS COST GAINS LOSSES FAIR VALUE IN AOCI (2) --------- ---------- ---------- ---------- ----------- (IN MILLIONS) FIXED MATURITIES AND EQUITY SECURITIES: Corporate debt securities .......................... $41,667 $1,803 $ 965 $42,505 $ (98) Commercial mortgage-backed securities .............. 4,643 69 238 4,474 (1) Residential mortgage-backed securities ............. 843 1 368 476 (8) Collateralized debt obligations .................... 291 -- 156 135 (1) Other asset-backed securities ...................... 1,238 41 37 1,242 -- U.S. Treasury securities and obligations of U.S. government corporations and agencies ............ 1,945 40 17 1,968 -- Obligations of states and political subdivisions.... 1,533 11 53 1,491 -- Debt securities issued by foreign governments ...... 1,214 98 34 1,278 -- ------- ------ ------ ------- ----- Fixed maturities ................................... 53,374 2,063 1,868 53,569 (108) Other fixed maturities (1) ......................... 2,012 -- -- 2,012 -- ------- ------ ------ ------- ----- Total fixed maturities available-for-sale .......... 55,386 2,063 1,868 55,581 (108) Equity securities available-for-sale ............... 489 77 8 558 -- ------- ------ ------ ------- ----- Total fixed maturities and equity securities available-for-sale .............................. $55,875 $2,140 $1,876 $56,139 $(108) ======= ====== ====== ======= =====
(1) The Company classifies its leveraged leases as fixed maturities and calculates their carrying value by accruing income at their expected internal rate of return. (2) Represents the amount of other-than-temporary impairment losses in AOCI, which from the date of adoption of ASC 320 on April 1, 2009 were not included in earnings. The amortized cost and fair value of available-for-sale fixed maturities at December 31, 2010, by contractual maturity, are shown below:
AMORTIZED FAIR COST VALUE --------- ------- (IN MILLIONS) FIXED MATURITIES: Due in one year or less ......................... $ 2,255 $ 2,280 Due after one year through five years ........... 10,788 11,237 Due after five years through ten years .......... 11,148 11,813 Due after ten years ............................. 28,722 29,268 ------- ------- 52,913 54,598 Asset-backed and mortgage-backed securities ..... 6,111 5,872 ------- ------- Total ........................................ $59,024 $60,470 ======= =======
Expected maturities may differ from contractual maturities because eligible borrowers may exercise their right to call or prepay obligations with or without call or prepayment penalties. Asset-backed and mortgage-backed securities are shown separately in the table above, as they are not due at a single maturity date. FIXED MATURITIES AND EQUITY SECURITIES IMPAIRMENT REVIEW The Company has a process in place to identify securities that could potentially have an impairment that is other-than-temporary. This process involves monitoring market events that could impact issuers' credit ratings, business climate, management changes, litigation and government actions, and other similar factors. This process also involves monitoring late payments, downgrades by rating agencies, key financial ratios, financial statements, revenue forecasts, and cash flow projections as indicators of credit issues. F-23 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 2 -- INVESTMENTS - (CONTINUED) At the end of each quarter, the MFC Loan Review Committee reviews all securities where market value is less than 80 percent of amortized cost for six months or more or if there is a significant unrealized loss at the balance sheet date to determine whether impairments need to be taken. The analysis focuses on each company's or project's ability to service its debts in a timely fashion and the length of time the security has been trading below amortized cost. The results of this analysis are reviewed by the Credit Committee at MFC. This committee includes MFC's Chief Financial Officer, Chief Investment Officer, Chief Risk Officer, Chief Credit Officer, and other senior management. This quarterly process includes a fresh assessment of the credit quality of each investment in the entire fixed maturities portfolio. The Company considers relevant facts and circumstances in evaluating whether the impairment of a security is other-than-temporary. Relevant facts and circumstances considered include (1) the length of time the fair value has been below cost; (2) the financial position of the issuer, including the current and future impact of any specific events; and (3) the Company's ability and intent to hold the security to maturity or until it recovers in value. If the Company intends to sell, or if it is more likely than not that it will be required to sell an impaired security prior to recovery of its cost basis, the security is considered other-than-temporarily impaired, and the Company records a charge to earnings for the full amount of impairment (the difference between the current carrying amount and fair value of the security). For those securities in an unrealized loss position where the Company does not intend to sell or is not more likely than not to be required to sell, the Company determines its ability to recover the amortized cost of the security by comparing the net present value of the projected future cash flows to the amortized cost of the security. If the net present value of the cash flow is less than the security's amortized cost, then the difference is recorded as a credit loss. The difference between the estimates of the credit loss and the overall unrealized loss on the security is the non-credit-related component. The credit loss portion is charged to net realized investment and other gains (losses) on the Consolidated Statements of Operations, while the non-credit loss is charged to accumulated other comprehensive income on the Consolidated Balance Sheets. The net present value used to determine the credit loss is calculated by discounting the Company's best estimate of projected future cash flows at the effective interest rate implicit in the debt security prior to impairment. The Company may use the estimated fair value of collateral as a proxy for the net present value if it believes that the security is dependent on the liquidation of collateral for recovery of its investment. The projection of future cash flows is subject to the same analysis the Company applies to its overall impairment evaluation process, as noted above, which incorporates security specific information such as late payments, downgrades by rating agencies, key financial ratios, financial statements, and fundamentals of the industry and geographic area in which the issuer operates, as well as overall macroeconomic conditions. The projections are estimated using assumptions regarding probability of default and estimates regarding timing and amount of recoveries associated with a default. For mortgage-backed and asset-backed securities, cash flow estimates, including prepayment assumptions, are based on data from third-party data sources or internal estimates and are driven by assumptions regarding the underlying collateral, including default rates, recoveries, and changes in value. There are a number of significant risks and uncertainties inherent in the process of monitoring impairments and determining if impairment is other-than-temporary. These risks and uncertainties include (1) the risk that the Company's assessment of an issuer's ability to meet all of its contractual obligations will change based on changes in the credit characteristics of that issuer; (2) the risk that the economic outlook will be worse than expected or have more of an impact on the issuer than anticipated; (3) the risk that fraudulent information could be provided to the Company's investment professionals who determine the fair value estimates and other-than-temporary impairments; and (4) the risk that new information obtained by the Company or changes in other facts and circumstances lead it to change its intent to hold the security to maturity or until it recovers in value. Any of these situations could result in a charge to earnings in a future period. The cost amounts for both fixed maturity securities and equity securities are net of other-than-temporary impairment charges. F-24 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 2 -- INVESTMENTS - (CONTINUED) The following table rolls forward the amount of credit losses recognized in earnings on available-for-sale fixed maturities for which a portion of the other-than-temporary impairment was also recognized in accumulated other comprehensive income: CREDIT LOSSES ON AVAILABLE-FOR-SALE FIXED MATURITIES: (IN MILLIONS) Balance at January 1, 2010 ............................................ $ 361 Additions: Credit losses for which an other-than-temporary impairment was not previously recognized .......................................... 93 Credit losses for which an other-than-temporary impairment was previously recognized .............................................. 10 Deletions: Amounts related to sold, matured, or paid down available-for-sale fixed maturities ................................................... (65) ----- Balance at December 31, 2010 .......................................... $ 399 ===== Balance at January 1, 2009 ............................................ $ -- Additions: Credit losses remaining in retained earnings related to adoption of new authoritative guidance on April 1, 2009 .................... 726 Credit losses for which an other-than-temporary impairment was not previously recognized .......................................... 159 Credit losses for which an other-than-temporary impairment was previously recognized .............................................. 15 Deletions: Amounts related to sold, matured, or paid down available-for-sale fixed maturities ................................................... (539) ----- Balance at December 31, 2009 .......................................... $ 361 =====
F-25 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 2 -- INVESTMENTS - (CONTINUED) The following table shows the carrying value and gross unrealized losses aggregated by investment category and length of time that individual available-for-sale fixed maturity securities and equity securities have been in a continuous unrealized loss position: UNREALIZED LOSSES ON AVAILABLE-FOR-SALE FIXED MATURITY SECURITIES AND EQUITY SECURITIES -- BY INVESTMENT AGE
YEAR ENDED DECEMBER 31, 2010 --------------------------------------------------------------------- LESS THAN 12 MONTHS 12 MONTHS OR MORE TOTAL --------------------- --------------------- --------------------- CARRYING UNREALIZED CARRYING UNREALIZED CARRYING UNREALIZED VALUE LOSSES VALUE LOSSES VALUE LOSSES -------- ---------- -------- ---------- -------- ---------- (IN MILLIONS) Corporate debt securities ............... $ 4,729 $173 $3,345 $390 $ 8,074 $ 563 Commercial mortgage-backed securities.... 269 15 448 105 717 120 Residential mortgage-backed securities... -- -- 409 226 409 226 Collateralized debt obligations ......... -- -- 135 110 135 110 Other asset-backed securities ........... 72 2 140 7 212 9 U.S. Treasury securities and obligations of U.S. government corporations and agencies ............ 5,924 390 -- -- 5,924 390 Obligations of states and political subdivisions ......................... 1,983 92 133 20 2,116 112 Debt securities issued by foreign governments .......................... 86 1 56 6 142 7 ------- ---- ------ ---- ------- ------ Total fixed maturities available-for- sale ................................. 13,063 673 4,666 864 17,729 1,537 Equity securities available-for-sale 70 3 28 2 98 5 ------- ---- ------ ---- ------- ------ Total ................................... $13,133 $676 $4,694 $866 $17,827 $1,542 ======= ==== ====== ==== ======= ======
YEAR ENDED DECEMBER 31, 2009 ------------------------------------------------------------------------ LESS THAN 12 MONTHS 12 MONTHS OR MORE TOTAL ------------------------ --------------------- --------------------- CARRYING UNREALIZED CARRYING UNREALIZED CARRYING UNREALIZED VALUE LOSSES VALUE LOSSES VALUE LOSSES -------- ---------- -------- ---------- -------- ---------- (IN MILLIONS) Corporate debt securities................ $ 6,358 $235 $6,167 $ 730 $12,525 $ 965 Commercial mortgage-backed securities.... 772 38 946 200 1,718 238 Residential mortgage-backed securities... 194 147 275 221 469 368 Collateralized debt obligations.......... 5 1 103 155 108 156 Other asset-backed securities............ 199 7 325 30 524 37 U.S. Treasury securities and obligations of U.S. government corporations and agencies............. 1,155 17 -- -- 1,155 17 Obligations of states and political subdivisions.......................... 1,148 50 23 3 1,171 53 Debt securities issued by foreign governments........................... 335 12 67 22 402 34 ------- ---- ------ ------ ------- ------ Total fixed maturities available-for- sale.................................. 10,166 507 7,906 1,361 18,072 1,868 Equity securities available-for-sale..... 40 3 58 5 98 8 ------- ---- ------ ------ ------- ------ Total.................................... $10,206 $510 $7,964 $1,366 $18,170 $1,876 ======= ==== ====== ====== ======= ======
F-26 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 2 -- INVESTMENTS - (CONTINUED) Unrealized losses can be created by rising interest rates or by rising credit concerns and hence widening credit spreads. Credit concerns are apt to play a larger role in the unrealized loss on below investment grade securities. Unrealized losses on investment grade securities principally relate to changes in interest rates or changes in credit spreads since the securities were acquired. Credit rating agencies' statistics indicate that investment grade securities have been found to be less likely to develop credit concerns. The gross unrealized loss on below investment grade available-for-sale fixed maturity securities decreased to $464 million at December 31, 2010 from $606 million at December 31, 2009. At December 31, 2010 and 2009, there were 1,138 and 1,545 available-for-sale fixed maturity securities with an aggregate gross unrealized loss of $1,537 million and $1,868 million, respectively, of which the single largest unrealized loss was $198 million and $24 million, respectively. The Company anticipates that these fixed maturity securities will perform in accordance with their contractual terms and currently has the ability and intent to hold these securities until they recover or mature. At December 31, 2010 and 2009, there were 88 and 141 equity securities with an aggregate gross unrealized loss of $5 million and $8 million, respectively, of which the single largest unrealized loss was $1 million and $2 million, respectively. The Company anticipates that these equity securities will recover in value in the near term. Available-for-sale securities with amortized cost of $436 million were non-income producing for the year ended December 31, 2010. Non-income producing assets represent investments that have not produced income for the 12 months preceding December 31, 2010. SECURITIES LENDING The Company participated in a securities lending program for the purpose of enhancing income on securities held in 2010 and 2009, but there were no securities on loan and no collateral held as of December 31, 2010 and 2009. The Company maintains collateral at a level of at least 102% of the loaned securities' market value and monitors the market value of the loaned securities on a daily basis. ASSETS ON DEPOSIT As of December 31, 2010 and 2009, fixed maturity securities with a fair value of $34 million and $50 million, respectively, were on deposit with government authorities as required by law. MORTGAGE LOANS ON REAL ESTATE At December 31, 2010, the mortgage portfolio was diversified by specific collateral property type and geographic region as displayed below:
COLLATERAL CARRYING PROPERTY TYPE AMOUNT ------------- ------------- (IN MILLIONS) Apartments.............................. $ 1,789 Industrial.............................. 1,828 Office buildings........................ 3,756 Retail.................................. 3,370 Mixed use............................... 174 Agricultural............................ 670 Agri business........................... 1,026 Other................................... 764 Provision for losses.................... (34) ------- Total................................... $13,343 =======
GEOGRAPHIC CARRYING CONCENTRATION AMOUNT ------------- ------------- (IN MILLIONS) East North Central...................... $ 1,296 East South Central...................... 211 Middle Atlantic......................... 2,304 Mountain................................ 898 New England............................. 1,026 Pacific................................. 3,492 South Atlantic.......................... 2,523 West North Central...................... 514 West South Central...................... 910 Canada/Other............................ 203 Provision for losses.................... (34) ------- Total................................... $13,343 =======
F-27 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 2 -- INVESTMENTS - (CONTINUED) At the end of each quarter, the MFC Loan Review Committee reviews all mortgage loans rated BB or lower, as determined by review of the underlying collateral, and decides whether an allowance for credit loss is needed. The Company considers collateral value, the borrower's ability to pay, normal historical credit loss levels, and future expectations in evaluating whether an allowance for credit losses is required for impaired loans. Changes in the allowance for probable losses on mortgage loans on real estate are summarized below:
BALANCE AT BALANCE AT BEGINNING CHARGE-OFFS AND END OF OF PERIOD ADDITIONS RECOVERIES DISPOSALS PERIOD --------- --------- ---------- --------------- ---------- (IN MILLIONS) Year ended December 31, 2010 ......... $42 $38 $ 5 $41 $34 Year ended December 31, 2009 ......... 29 36 -- 23 42 Year ended December 31, 2008 ......... 17 15 -- 3 29
A mortgage loan charge-off is recorded when the impaired loan is disposed or when an impaired loan is determined to be a full loss with no possibility of recovery. Mortgage loans with a carrying value of $81 million were non-income producing for the year ended December 31, 2010. Mortgage loans with a carrying value of $81 million were on nonaccrual status at December 31, 2010. At December 31, 2010, mortgage loans with a carrying value of $4 million were delinquent by less than 90 days and $4 million were delinquent by 90 days or more. The Company provides for credit risk on mortgage loans by establishing allowances against the carrying value of the impaired loans. The total recorded investment in mortgage loans that is considered to be impaired along with the related allowance for credit losses was as follows:
DECEMBER 31, --------------- 2010 2009 ---- ---- (IN MILLIONS) Impaired mortgage loans on real estate with provision for losses...... $115 $150 Allowance for credit losses........................................... (34) (42) ---- ---- Net impaired mortgage loans on real estate............................ $ 81 $108 ==== ====
The average recorded investment in impaired loans and the interest income recognized on impaired loans were as follows:
YEARS ENDED DECEMBER 31, -------------------------- 2010 2009 2008 ---- ---- ---- (IN MILLIONS) Average recorded investment in impaired loans......................... $130 $113 $60 Interest income recognized on impaired loans.......................... -- -- --
For mortgage loans, the Company develops an internal risk rating ("IRR") by utilizing the Mortgage Risk Rating System. The IRR is a designated grade that measures the riskiness of expected loss. These ratings are updated on a quarterly basis. F-28 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 2 -- INVESTMENTS - (CONTINUED) The carrying value of mortgage loans by IRR was as follows:
DECEMBER 31, ------------------ 2010 2009 ------- ------- (IN MILLIONS) AAA........................ $ 116 $ 93 AA......................... 1,335 1,502 A.......................... 2,523 2,435 BBB........................ 8,488 7,770 BB......................... 570 527 B & Lower and Unrated...... 311 296 ------- ------- Total...................... $13,343 $12,623 ======= =======
INVESTMENT REAL ESTATE, AGRICULTURE, AND TIMBER Investment real estate, agriculture, and timber of $128 million was non-income producing for the year ended December 31, 2010. Depreciation expense on investment real estate, agriculture, and timber was $63 million, $53 million, and $51 million in 2010, 2009, and 2008, respectively. Accumulated depreciation was $467 million and $413 million at December 31, 2010 and 2009, respectively. OTHER INVESTED ASSETS Other invested assets primarily consist of unconsolidated joint ventures, partnerships, and limited liability corporations, which are accounted for using the equity method of accounting. Equity method investments totaled $3,571 million and $3,059 million at December 31, 2010 and 2009, respectively. Net investment income (loss) on investments accounted for under the equity method totaled $199 million, $78 million, and $(4) million in 2010, 2009, and 2008, respectively. Total combined assets of such investments were $46,563 million and $34,412 million (consisting primarily of investments) and total combined liabilities were $14,546 million and $9,960 million (including $8,911 million and $6,539 million of debt) at December 31, 2010 and 2009, respectively. Total combined revenues and expenses of these investments in 2010 were $3,998 million and $4,895 million, respectively, resulting in $897 million of total combined loss from operations. Total combined revenues and expenses of these investments in 2009 were $4,199 million and $4,075 million, respectively, resulting in $124 million of total combined income from operations. Total combined revenues and expenses of these investments in 2008 were $3,071 million and $3,482 million, respectively, resulting in $411 million of total combined loss from operations. Depending on the timing of receipt of the audited financial statements of these other invested assets, the above investee level financial data may be up to one year in arrears. F-29 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 2 -- INVESTMENTS - (CONTINUED) NET INVESTMENT INCOME AND NET REALIZED INVESTMENT AND OTHER LOSSES The following information summarizes the components of net investment income and net realized investment and other losses:
YEARS ENDED DECEMBER 31, ----------------------------------- 2010 2009 2008 ---------- ---------- --------- (IN MILLIONS) NET INVESTMENT INCOME Fixed maturities...................................... $3,273 $3,333 $3,286 Equity securities..................................... 9 31 56 Mortgage loans on real estate......................... 766 739 714 Investment real estate, agriculture, and timber....... 171 146 155 Policy loans.......................................... 326 332 322 Short-term investments................................ 12 27 182 Equity method investments and other................... 279 15 (8) ------ ------ ------ Gross investment income............................... 4,836 4,623 4,707 Less investment expenses........................... 269 277 266 ------ ------ ------ Net investment income (1)................................ $4,567 $4,346 $4,441 ====== ====== ======
YEARS ENDED DECEMBER 31, ----------------------------------- 2010 2009 2008 ---------- ---------- --------- (IN MILLIONS) NET REALIZED INVESTMENT AND OTHER GAINS (LOSSES) Fixed maturities...................................... $ 821 $ (180) $(1,577) Equity securities..................................... 37 (59) (129) Mortgage loans on real estate......................... (62) (83) (23) Derivatives and other invested assets................. (332) (1,366) 1,317 Amounts credited to participating contract holders.... (83) (149) 189 ----- ------- ------- Net realized investment and other gains (losses) (1)..... $ 381 $(1,837) $ (223) ===== ======= =======
(1) Includes net investment income and net realized investment and other gains (losses) on assets held in trust on behalf of MRBL, which are included in amounts due from and held for affiliates on the Consolidated Balance Sheets. See Note 8 - Related Party Transactions for information on the associated MRBL reinsurance agreement. The change in net unrealized loss on fixed maturities classified as held-for-trading of $(18) million, $(107) million, and $216 million is included in net realized investment and other gains (losses) for the years ended December 31, 2010, 2009, and 2008, respectively. For 2010, 2009, and 2008, net investment income passed through to participating contract holders as interest credited to policyholders' account balances amounted to $106 million, $111 million, and $138 million, respectively. Gross gains were realized on the sale of available-for-sale securities of $774 million, $363 million, and $352 million for the years ended December 31, 2010, 2009, and 2008, respectively, and gross losses were realized on the sale of available-for-sale securities of $194 million, $131 million, and $30 million for the years ended December 31, 2010, 2009, and 2008, respectively. In addition, other-than-temporary impairments on available-for-sale securities of $115 million, $663 million, and $1,767 million for the years ended December 31, 2010, 2009, and 2008, respectively, were recognized in the Consolidated Statements of Operations. F-30 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 3 -- RELATIONSHIPS WITH VARIABLE INTEREST ENTITIES In its capacities as an investor and as an investment manager, the Company has relationships with various types of entities, some of which are considered variable interest entities ("VIEs"). The variable interest holder, if any, that has the power to direct the activities of the VIE that most significantly impact the entity's economic performance and the obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE is deemed to be the primary beneficiary and must consolidate the VIE. The Company's analysis to determine whether it is the primary beneficiary of a VIE includes review of the Company's contractual rights and responsibilities, fees received, and interests held. For the purpose of disclosing consolidated variable interest entities, the Company aggregates similar entities. If it is not considered to be the primary beneficiary, the Company assesses the materiality of its relationship with the VIE to determine if it holds a significant variable interest, which requires disclosure. This assessment considers the materiality of the VIE relationship to the Company as, among other factors, a percentage of total investments, percentage of total net investment income, and percentage of total funds under management. For purposes of assessing materiality and disclosing significant variable interests, the Company aggregates similar entities. CONSOLIDATED VARIABLE INTEREST ENTITIES The following table presents the total assets and total liabilities relating to VIEs for which the Company has concluded that it is the primary beneficiary, and which are consolidated in the Company's financial statements. The liabilities recognized as a result of consolidating the VIEs do not represent claims against the general assets of the Company. Conversely, the assets recognized as a result of consolidating the VIEs can only be used to settle the liabilities recognized as a result of consolidating the VIEs.
DECEMBER 31, ----------------------------------------------------- 2010 2009 ------------------------ -------------------------- TOTAL TOTAL TOTAL TOTAL ASSETS LIABILITIES ASSETS LIABILITIES ------ ----------- ------ ----------- (IN MILLIONS) Collateralized debt obligations (1).. $451 $368 $ -- $ -- Timber funds (2)..................... 116 116 106 106 ---- ---- ---- ---- Total................................ $567 $484 $106 $106 ==== ==== ==== ====
(1) As discussed in Note 1, upon adoption of ASC 810 effective January 1, 2010, the Company consolidated certain asset-backed investment vehicles, commonly known as collateralized debt obligations ("CDOs"), which were previously reported in the unconsolidated VIE table below. The Company is considered to be the primary beneficiary of the CDOs as it provides investment management services, earns a fee for those services, and also holds investments in the entities. At December 31, 2010, these entities held total assets of $451 million, consisting of $401 million of securities classified by the Company as held-for-trading fixed maturities, $44 million of cash, and $6 million of accrued investment income. These entities held total liabilities of $368 million, consisting of $351 million of long-term debt, $10 million of derivative liabilities, and $7 million of other liabilities. See the table below for further discussion regarding CDOs. (2) The Company's separate accounts are considered to be the primary beneficiary of certain timberland VIEs, as discussed further below. The Company consolidates the noncontrolling interests in these VIEs within separate account assets and separate account liabilities on the Consolidated Balance Sheets. SIGNIFICANT VARIABLE INTERESTS IN UNCONSOLIDATED VARIABLE INTEREST ENTITIES The following table presents the total assets of, investment in, and maximum exposure to loss relating to VIEs for which the Company has concluded that it holds significant variable interests, but it is not the primary beneficiary, and which have not been consolidated. The Company does not record any liabilities related to the unconsolidated VIEs. F-31 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 3 -- RELATIONSHIPS WITH VARIABLE INTEREST ENTITIES - (CONTINUED)
DECEMBER 31, ------------------------------------------ 2010 ------------------------------------------ MAXIMUM INVESTMENT EXPOSURE TO TOTAL ASSETS (1) LOSS (2) ------------ ---------- ----------- (IN MILLIONS) Collateralized debt obligations (3).. $1,033 $ -- $ -- Real estate limited partnerships (4).................. 1,307 441 455 Timber funds (5)..................... 1,748 106 143 ------ ---- ---- Total................................ $4,088 $547 $598 ====== ==== ====
DECEMBER 31, -------------------------------------------- 2009 -------------------------------------------- MAXIMUM INVESTMENT EXPOSURE TO TOTAL ASSETS (1) LOSS (2) ------------ ---------- ----------- (IN MILLIONS) Collateralized debt obligations (3).. $1,431 $ 27 $ 27 Real estate limited partnerships (4).................. 1,166 466 522 Timber funds (5)..................... 1,583 80 83 ------ ---- ---- Total................................ $4,180 $573 $632 ====== ==== ====
(1) The Company's investments in unconsolidated VIEs are included in available-for-sale fixed maturities and other invested assets on the Consolidated Balance Sheets. (2) The maximum exposure to loss related to CDOs is limited to the investment reported on the Company's Consolidated Balance Sheets. The maximum exposure to loss related to real estate limited partnerships and timber funds is limited to the Company's investment plus unfunded capital commitments. The maximum loss is expected to occur only upon bankruptcy of the issuer or investee or as a result of a natural disaster in the case of the timber funds. (3) The Company acts as an investment manager to certain CDOs for which it collects a management fee. In addition, the Company may invest in debt or equity securities issued by these CDOs or by CDOs managed by others. CDOs raise capital by issuing debt and equity securities and use the proceeds to purchase investments. (4) Real estate limited partnerships include partnerships established for the purpose of investing in real estate that qualifies for low income housing and/or historic tax credits. Limited partnerships are owned by a general partner, who manages the business, and by limited partners, who invest capital, but have limited liability and are not involved in the partnerships' management. The Company is typically the sole limited partner or investor member of each and is not a general partner or managing member. (5) The Company acts as investment manager for the VIEs owning the timberland properties (the "timber funds"), which the general account and institutional separate accounts invest in. Timber funds are investment vehicles used primarily by large institutional investors, such as public and corporate pension plans, whose primary source of return is derived from the growth and harvest of timber and long-term appreciation of the property. The primary risks of timberland investing include market uncertainty (fluctuation of timber and timberland investments), relative illiquidity (compared to stocks and other investment assets), and environmental risk (natural hazards or legislation related to threatened or endangered species). These risks are mitigated through effective investment management and geographic diversification of timberland investments. The Company collects an advisory fee from each timber fund and is also eligible for performance and forestry management fees. F-32 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 4 -- DERIVATIVES AND HEDGING INSTRUMENTS TYPES OF DERIVATIVES AND DERIVATIVE STRATEGIES INTEREST RATE CONTRACTS. The Company uses interest rate futures contracts, interest rate swap agreements, and cancelable interest rate swap agreements as part of its overall strategies of managing the duration of assets and liabilities or the average life of certain asset portfolios to specified targets. Interest rate futures contracts are contractual obligations to buy or sell a financial instrument, foreign currency, or other underlying commodity on a pre-determined future date at a specified price. Interest rate futures contracts are agreements with standard amounts and settlement dates that are traded on regulated exchanges. Interest rate swap agreements are contracts with counterparties to exchange interest rate payments of a differing character (i.e., fixed-rate payments exchanged for variable-rate payments) based on an underlying principal balance (notional principal). The net differential to be paid or received on interest rate swap agreements is accrued and recognized as a component of net investment income. The Company uses interest rate swap agreements to hedge the variable cash flows associated with future fixed income asset acquisitions, which will support the Company's long-term care and life insurance businesses. These agreements will reduce the impact of future interest rate changes on the cost of acquiring adequate assets to support the investment income assumptions used in pricing these products. During future periods when the acquired assets are held by the Company, the accumulated gain or loss will be amortized into investment income as a yield adjustment on the assets. The Company also uses interest rate swap agreements to hedge the variable cash flows associated with payments that it will receive on certain floating rate fixed income securities. The accumulated gain or loss will be amortized into investment income as a yield adjustment when the payments are made. The Company also enters into basis swaps to better match the cash flows from assets and related liabilities. Basis swaps are included in interest rate swaps for disclosure purposes. The Company utilizes basis swaps in non-qualifying hedging relationships. Inflation swaps are used to reduce inflation risk generated from inflation-indexed liabilities. Inflation swaps are classified within interest rate swaps for disclosure purposes. The Company utilizes inflation swaps in qualifying and non-qualifying hedging relationships. Forward and futures agreements are contractual obligations to buy or sell a financial instrument, foreign currency, or other underlying commodity on a predetermined future date at a specified price. Forward contracts are OTC contracts negotiated between counterparties, whereas futures agreements are contracts with standard amounts and settlement dates that are traded on regulated exchanges. The Company uses exchange-traded interest rate futures primarily to hedge mismatches between the duration of assets in a portfolio and the duration of liabilities supported by those assets, to hedge against changes in value of securities the Company owns or anticipates acquiring, and to hedge against changes in interest rates on anticipated liability issuances by replicating U.S. Treasury or swap curve performance. The Company utilizes exchange-traded interest rate futures in non-qualifying hedging relationships. Options are contractual agreements whereby the holder has the right, but not the obligation, to buy (call option) or sell (put option) a security, exchange rate, interest rate, or other financial instrument at a predetermined price/rate within a specified time. The Company also purchases interest rate caps and floors primarily to protect against interest rate exposure arising from mismatches between assets and liabilities (duration mismatches). The Company utilizes interest rate caps and floors in non-qualifying hedging relationships. FOREIGN CURRENCY CONTRACTS. Foreign currency derivatives, including foreign currency swaps and foreign currency forwards, are used by the Company to reduce the risk from fluctuations in foreign currency exchange rates associated with its assets and liabilities denominated in foreign currencies. Cross currency rate swap agreements are used to manage the Company's exposure to foreign exchange rate fluctuations, interest rate fluctuations, or both, on foreign currency financial instruments. Cross currency rate swap agreements are contracts to exchange the currencies of two different countries at the same rate of exchange at specified future dates. The net differential to be paid or received on cross currency rate swap agreements is accrued and recognized as a component of net investment income. F-33 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 4 -- DERIVATIVES AND HEDGING INSTRUMENTS - (CONTINUED) Under foreign currency forwards, the Company agrees with other parties to deliver a specified amount of an identified currency at a specified future date. Typically, the price is agreed upon at the time of the contract and payment for such a contract is made at the specified future date. The maturities of these forwards correspond with the future periods in which the foreign currency transactions are expected to occur. The Company utilizes currency forwards in qualifying and non-qualifying hedging relationships. EQUITY MARKET CONTRACTS. Total return swaps are contracts that involve the exchange of payments based on changes in the value of a reference asset, including any returns such as interest earned on these assets, in exchange for amounts based on reference rates specified in the contract. The Company utilizes total return swaps in qualifying and non-qualifying hedging relationships. Equity index futures contracts are contractual obligations to buy or sell a specified amount of an underlying equity index at an agreed contract price on a specified date. Equity index futures are contracts with standard amounts and settlement dates that are traded on regulated exchanges. The Company utilizes currency forwards in non-qualifying hedging relationships. The table below provides a summary of the gross notional amount and fair value of derivatives contracts by the underlying risk exposure for all derivatives in hedging and non-hedging relationships:
DECEMBER 31, 2010 DECEMBER 31, 2009 ---------------------------------- ------------------------------ FAIR FAIR FAIR FAIR NOTIONAL VALUE VALUE NOTIONAL VALUE VALUE AMOUNT ASSETS LIABILITIES AMOUNT ASSETS LIABILITIES -------- ------ ----------- -------- ------ ----------- (IN MILLIONS) QUALIFYING HEDGING RELATIONSHIPS Fair value hedges Interest rate swaps.................. $11,995 $ 433 $ 709 $14,922 $ 402 $ 752 Foreign currency swaps............... 1,017 53 223 883 -- 253 Cash flow hedges Interest rate swaps.................. 18,467 1,337 540 12,961 912 66 Foreign currency swaps............... 1,861 29 189 629 4 122 Foreign currency forwards............ 140 29 -- 266 43 -- Equity market contracts.............. 20 1 1 38 8 -- ------- ------ ------ ------- ------ ------ TOTAL DERIVATIVES IN HEDGING RELATIONSHIPS.............. $33,500 $1,882 $1,662 $29,699 $1,369 $1,193 ------- ------ ------ ------- ------ ------ NON-HEDGING RELATIONSHIPS Interest rate swaps.................. $38,111 $ 951 $ 915 $22,535 $ 526 $ 500 Interest rate futures................ 1,598 -- -- 407 -- -- Foreign currency swaps............... 1,660 128 166 4,461 238 319 Foreign currency forwards............ 134 4 -- 115 -- 1 Foreign currency futures............. 1,100 -- -- 278 -- -- Equity market contracts.............. 31 3 1 -- -- -- Equity index futures................. 4,954 -- -- 1,030 -- -- Interest rate options................ 181 -- -- 287 1 -- Embedded derivatives - fixed maturities........................ -- -- -- 86 -- 2 Embedded derivatives - reinsurance contracts......................... -- 7 660 -- 8 614 Embedded derivatives - participating pension contracts (1)............. -- -- 98 -- -- 71 Embedded derivatives - benefit guarantees (1).................... -- 1,497 456 -- 1,703 640 ------- ------ ------ ------- ------ ------ TOTAL DERIVATIVES IN NON-HEDGING RELATIONSHIPS.......... 47,769 2,590 2,296 29,199 2,476 2,147 ------- ------ ------ ------- ------ ------ TOTAL DERIVATIVES (2)................................... $81,269 $4,472 $3,958 $58,898 $3,845 $3,340 ======= ====== ====== ======= ====== ======
F-34 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 4 -- DERIVATIVES AND HEDGING INSTRUMENTS - (CONTINUED) (1) Embedded derivatives related to participating pension contracts are reported as part of future policy benefits and embedded derivatives related to benefit guarantees are reported as part of reinsurance recoverable or future policy benefits on the Consolidated Balance Sheets. (2) The fair values of all derivatives in an asset position are reported within derivative asset on the Consolidated Balance Sheets, and derivatives in a liability position are reported within derivative liability on the Consolidated Balance Sheets, excluding embedded derivatives related to participating pension contracts and benefit guarantees. HEDGING RELATIONSHIPS The Company uses derivatives for economic hedging purposes. In certain circumstances, these hedges also meet the requirements for hedge accounting. Hedging relationships eligible for hedge accounting are designated as either fair value hedges or cash flow hedges, as described below. FAIR VALUE HEDGES. The Company uses interest rate swaps to manage its exposure to changes in fair value of fixed-rate financial instruments caused by changes in interest rates. The Company also uses cross currency swaps to manage its exposure to foreign exchange rate fluctuations and interest rate fluctuations. The Company recognizes gains and losses on derivatives and the related hedged items in fair value hedges in net realized investment and other gains (losses). For the years ended December 31, 2010, 2009, and 2008, the Company did not recognize any gains or losses related to the portion of the hedging instruments that were excluded from the assessment of hedge effectiveness. At December 31, 2010, the Company had no hedges of firm commitments. The following table shows the investment gains (losses) recognized:
FOR THE YEAR ENDED DECEMBER 31, 2010 ----------------------------------------------------------------------------------------------------------- HEDGED ITEMS IN FAIR GAINS (LOSSES) GAINS (LOSSES) DERIVATIVES IN FAIR VALUE VALUE HEDGING RECOGNIZED ON RECOGNIZED FOR INEFFECTIVENESS HEDGING RELATIONSHIPS RELATIONSHIPS DERIVATIVES HEDGED ITEMS RECOGNIZED -------------------------- -------------------------- -------------- -------------- --------------- (IN MILLIONS) Interest rate swaps Fixed-rate assets......... $(70) $157 $ 87 Fixed-rate liabilities.... 62 (64) (2) Foreign currency swaps Fixed-rate assets......... (73) 111 38 ---- ---- ---- Total $(81) $204 $123 ==== ==== ====
FOR THE YEAR ENDED DECEMBER 31, 2009 ----------------------------------------------------------------------------------------------------------- HEDGED ITEMS IN FAIR GAINS (LOSSES) GAINS (LOSSES) DERIVATIVES IN FAIR VALUE VALUE HEDGING RECOGNIZED ON RECOGNIZED FOR INEFFECTIVENESS HEDGING RELATIONSHIPS RELATIONSHIPS DERIVATIVES HEDGED ITEMS RECOGNIZED -------------------------- -------------------------- -------------- -------------- --------------- (IN MILLIONS) Interest rate swaps Fixed-rate assets......... $ 470 $(348) $122 Fixed-rate liabilities.... (310) 263 (47) Foreign currency swaps Fixed-rate assets......... 90 (83) 7 ----- ----- ---- Total $ 250 $(168) $ 82 ===== ===== ====
F-35 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 4 -- DERIVATIVES AND HEDGING INSTRUMENTS - (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 2008 ----------------------------------------------------------------------------------------------------------- HEDGED ITEMS IN FAIR GAINS (LOSSES) GAINS (LOSSES) DERIVATIVES IN FAIR VALUE VALUE HEDGING RECOGNIZED ON RECOGNIZED FOR INEFFECTIVENESS HEDGING RELATIONSHIPS RELATIONSHIPS DERIVATIVES HEDGED ITEMS RECOGNIZED -------------------------- -------------------------- -------------- -------------- --------------- (IN MILLIONS) Interest rate swaps Fixed-rate assets......... $(657) $ 684 $ 27 Fixed-rate liabilities.... 220 (272) (52) Foreign currency swaps Fixed-rate assets......... (114) 92 (22) ----- ----- ---- Total $(551) $ 504 $(47) ===== ===== ====
CASH FLOW HEDGES. The Company uses interest rate swaps to hedge the variability in cash flows from variable rate financial instruments and forecasted transactions. The Company also uses cross currency swaps and forward agreements to hedge currency exposure on foreign currency financial instruments and foreign currency denominated expenses, respectively. Total return swaps are used to hedge the variability in cash flows associated with certain stock-based compensation awards. Inflation swaps are used to reduce inflation risk generated from inflation-indexed liabilities. For the years ended December 31, 2010 and 2009, all of the Company's hedged forecast transactions qualified as cash flow hedges. For the years ended December 31, 2010 and 2009, no cash flow hedges were discontinued because it was probable that the original forecasted transactions would not occur by the end of the originally specified time period documented at inception of the hedging relationship. The following table presents the effects of derivatives in cash flow hedging relationships on the Consolidated Statements of Operations and the Consolidated Statements of Changes in Shareholder's Equity:
FOR THE YEAR ENDED DECEMBER 31, 2010 ------------------------------------------------------------------------------------------------------------------------ GAINS RECLASSIFIED INEFFECTIVENESS FROM AOCI INTO NET RECOGNIZED IN NET GAINS (LOSSES) REALIZED INVESTMENT REALIZED DEFERRED IN AOCI ON AND OTHER GAINS INVESTMENT AND DERIVATIVES IN CASH FLOW HEDGED ITEMS IN CASH FLOW DERIVATIVES (NET OF (LOSSES) OTHER GAINS HEDGING RELATIONSHIPS HEDGING RELATIONSHIPS TAX) (NET OF TAX) (LOSSES) ------------------------- ---------------------------- ------------------- ------------------- ----------------- (IN MILLIONS) Interest rate swaps Forecasted fixed-rate assets...................... $ 48 $(129) $ 3 Inflation indexed liabilities................. (43) -- -- Foreign currency swaps Fixed-rate assets........... (25) -- -- Floating rate assets........ (4) -- -- Foreign currency forwards Forecasted expenses......... (9) -- -- Foreign currency assets..... (1) -- -- Equity market contracts Stock-based compensation ... (3) -- -- ---- ----- --- Total $(37) $(129) $ 3 ==== ===== ===
F-36 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 4 -- DERIVATIVES AND HEDGING INSTRUMENTS - (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 2009 ------------------------------------------------------------------------------------------------------------------------ GAINS RECLASSIFIED INEFFECTIVENESS FROM AOCI INTO NET RECOGNIZED IN NET GAINS (LOSSES) REALIZED INVESTMENT REALIZED DEFERRED IN AOCI ON AND OTHER GAINS INVESTMENT AND DERIVATIVES IN CASH FLOW HEDGED ITEMS IN CASH FLOW DERIVATIVES (NET OF (LOSSES) OTHER GAINS HEDGING RELATIONSHIPS HEDGING RELATIONSHIPS TAX) (NET OF TAX) (LOSSES) ------------------------- ---------------------------- ------------------- ------------------- ----------------- (IN MILLIONS) Interest rate swaps Floating rate assets........ $ (23) $-- $-- Forecasted fixed--rate assets...................... (1,082) (5) (17) Inflation indexed liabilities................. 108 -- -- Foreign currency swaps Fixed--rate assets.......... (35) -- -- Foreign currency forwards Forecasted expenses......... 28 -- -- Equity market contracts Stock--based compensation .. 4 -- -- ------- --- ---- Total $(1,000) $(5) $(17) ======= === ====
FOR THE YEAR ENDED DECEMBER 31, 2008 ------------------------------------------------------------------------------------------------------------------------ GAINS RECLASSIFIED INEFFECTIVENESS FROM AOCI INTO NET RECOGNIZED IN NET GAINS (LOSSES) REALIZED INVESTMENT REALIZED DEFERRED IN AOCI ON AND OTHER GAINS INVESTMENT AND DERIVATIVES IN CASH FLOW HEDGED ITEMS IN CASH FLOW DERIVATIVES (NET OF (LOSSES) OTHER GAINS HEDGING RELATIONSHIPS HEDGING RELATIONSHIPS TAX) (NET OF TAX) (LOSSES) ------------------------- ---------------------------- ------------------- ------------------- ----------------- (IN MILLIONS) Interest rate swaps Floating rate assets........ $ 37 $ -- $-- Forecasted fixed-rate assets...................... 1,118 (31) 30 Inflation indexed liabilities................. (73) -- -- Foreign currency swaps Fixed-rate assets........... 5 -- -- Equity market contracts Stock-based compensation ... (1) -- -- ------ ---- --- Total $1,086 $(31) $30 ====== ==== ===
The Company anticipates that pre-tax net gains of approximately $41 million will be reclassified from accumulated other comprehensive income to earnings within the next 12 months. The maximum time frame for which variable cash flows are hedged is 36 years. For a roll forward of the net accumulated gains (losses) on cash flow hedges see Note 12 - Shareholder's Equity. DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS. The Company enters into interest rate swap agreements, cancelable interest rate swap agreements, total return swap agreements, interest rate futures contracts, credit default swaps, and interest rate cap and floor agreements to manage exposure to interest rates without designating the derivatives as hedging instruments. Credit default swaps are contracts in which the buyer makes a series of payments to the seller and, in exchange, receives compensation if one of the events specified in the contract occurs. Interest rate cap agreements are contracts with counterparties which require the payment of a premium for the right to receive payments for the difference between the cap interest rate and a market interest rate on specified future dates based on an underlying principal balance (notional principal). F-37 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 4 -- DERIVATIVES AND HEDGING INSTRUMENTS - (CONTINUED) In addition, the Company uses interest rate floor agreements to hedge the interest rate risk associated with minimum interest rate guarantees in certain of its life insurance and annuity businesses, without designating the derivatives as hedging instruments. The Company offers certain variable annuity products with a guaranteed minimum withdrawal benefit ("GMWB") and guaranteed minimum death benefit ("GMDB"). These guarantees are effectively an embedded option on the basket of mutual funds offered to contract holders. Beginning in November 2007, for certain contracts, the Company implemented a hedging program to reduce its exposure to the GMWB and GMDB guarantees. This dynamic hedging program uses interest rate swap agreements, equity index futures (including but not limited to the Dow Jones Industrial, Standard & Poor's 500, Russell 2000, and Dow Jones Euro Stoxx 50 indices), U.S. Treasury futures, and foreign currency futures to match the sensitivities of the GMWB and GMDB liabilities to the market risk factors. Beginning in December 2010, the Company implemented a macro equity risk hedging program using equity and currency futures. This program is designed to reduce the Company's overall exposure to public equity markets arising from several sources including, but not limited to, variable annuity guarantees not dynamically hedged, separate account fees not associated with guarantees, and Company equity holdings. For the years ended December 31, 2010, 2009, and 2008, net losses of $709 million, net losses of $2,679 million, and net gains of $2,901 million, respectively, related to derivatives in a non-hedge relationship were recognized by the Company. These amounts were recorded in net realized investment and other gains (losses).
FOR THE YEARS ENDED DECEMBER 31, 2010 2009 2008 -------------------------------- ----- ------- ------- (IN MILLIONS) NON-HEDGING RELATIONSHIPS Investment (losses) gains: Interest rate swaps ............................ $ 145 $ (906) $ 818 Interest rate futures .......................... (56) 3 (28) Interest rate options .......................... (1) 4 -- Foreign currency swaps ......................... (68) (121) 31 Foreign currency forwards ...................... 22 18 (28) Foreign currency futures ....................... (18) (24) (2) Embedded derivatives ........................... (93) (1,390) 1,944 Equity market contracts ........................ 12 30 (25) Equity index futures ........................... (652) (293) 191 ----- ------- ------- TOTAL INVESTMENT (LOSSES) GAINS FROM DERIVATIVES IN NON-HEDGING RELATIONSHIPS ......................... $(709) $(2,679) $ 2,901 ===== ======= =======
EMBEDDED DERIVATIVES. The Company has certain embedded derivatives that are required to be separated from their host contracts and accounted for as derivatives. These host contracts include fixed maturities, reinsurance contracts, participating pension contracts, and certain benefit guarantees. For more details on the Company's embedded derivatives, see Note 14 - Fair Value of Financial Instruments. CREDIT RISK. The Company may be exposed to credit-related losses in the event of nonperformance by counterparties to the derivative financial instruments. The current credit exposure of the Company's derivative contracts is limited to the fair value in excess of the collateral held at the reporting date. F-38 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 4 -- DERIVATIVES AND HEDGING INSTRUMENTS - (CONTINUED) The Company manages its credit risk by entering into transactions with creditworthy counterparties, obtaining collateral where appropriate, and entering into master netting agreements that provide for a netting of payments and receipts with a single counterparty. The Company enters into credit support annexes with its over-the-counter derivative dealers in order to manage its credit exposure to those counterparties. As part of the terms and conditions of those agreements, the pledging and accepting of collateral in connection with the Company's derivative usage is required. As of December 31, 2010 and 2009, the Company had accepted collateral consisting of various securities with a fair value of $824 million and $861 million, respectively, which is held in separate custodial accounts. In addition, as of December 31, 2010 and 2009, the Company pledged collateral of $690 million and $598 million, respectively, which is included in available-for-sale fixed maturities on the Consolidated Balance Sheets. NOTE 5 -- INCOME TAXES Prior to 2010, the Company filed tax returns as part of two consolidated groups, MHDLLC and JHHLLC. MHDLLC included JHUSA and JHHLLC included JHLICO and JHVLICO. For the 2010 tax year, the Company is included in the consolidated federal income tax return of JHHLLC with the following affiliates and wholly-owned subsidiaries: MIC, Manulife Reinsurance Limited, Manulife Reinsurance (Bermuda) Limited, Manulife Service Corporation, John Hancock International Holdings, Inc., John Hancock Life Insurance Company of New York ("JHNY"), and John Hancock Subsidiaries LLC. In accordance with the income tax sharing agreements in effect for the applicable tax years, the income tax provision (or benefit) is computed as if each entity filed separate federal income tax returns. Intercompany settlements of income taxes are made through an increase or reduction to amounts due to or from affiliates. Such settlements occur on a periodic basis in accordance with the tax sharing agreements. Tax benefits from operating losses are provided at the U.S. statutory rate plus any tax credits attributable, provided the consolidated group utilizes such benefits currently. (Loss) income before income taxes includes the following:
YEARS ENDED DECEMBER 31, -------------------- 2010 2009 2008 ----- ---- ----- (IN MILLIONS) Domestic ........................... $(669) $290 $(670) Foreign ............................ 14 14 20 ----- ---- ----- (Loss) income before income taxes .. $(655) $304 $(650) ===== ==== =====
The components of income taxes were as follows:
YEARS ENDED DECEMBER 31, -------------------- 2010 2009 2008 ----- ---- ----- (IN MILLIONS) Current taxes: Federal .......................... $(230) $(45) $(462) Foreign .......................... 6 6 4 State ............................ -- 3 5 ----- ---- ------ Total ............................ (224) (36) (453) ----- ---- ------ Deferred taxes: Federal .......................... 450 31 111 Foreign .......................... (1) (1) 2 State ............................ (3) (1) 1 ----- ---- ------ Total ............................ 446 29 114 ----- ---- ------ Total income tax expense (benefit) .. $ 222 $ (7) $(339) ===== ==== =====
F-39 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 5 -- INCOME TAXES - (CONTINUED) A reconciliation of income taxes at the federal income tax rate to income tax expense charged to operations follows:
YEARS ENDED DECEMBER 31, -------------------- 2010 2009 2008 ----- ---- ----- (IN MILLIONS) Tax at 35% .......................... $(229) $106 $(227) Add (deduct): Prior year taxes ................. 47 14 26 Tax credits ...................... (65) (76) (72) Tax-exempt investment income ..... (119) (76) (92) Lease income ..................... (5) 63 3 Unrecognized tax benefits ........ 34 (44) 15 Goodwill impairment .............. 560 -- -- Other ............................ (1) 6 8 ----- ---- ----- Total income tax expense (benefit) .. $ 222 $ (7) $(339) ===== ==== =====
Deferred income tax assets and liabilities result from tax effecting the differences between the financial statement values and income tax values of assets and liabilities at each Consolidated Balance Sheet date. Deferred tax assets and liabilities consisted of the following:
DECEMBER 31, --------------- 2010 2009 ------ ------ (IN MILLIONS) DEFERRED TAX ASSETS: Policy reserves ............................ $1,309 $1,339 Net operating loss carryforwards ........... 725 384 Net capital loss carryforwards ............. 108 74 Tax credits ................................ 732 670 Unearned revenue ........................... 907 915 Deferred compensation ...................... 48 212 Federal interest deficiency ................ 381 307 Dividends payable to policyholders ......... 135 144 Securities and other investments ........... 805 1 Other ...................................... 97 245 ------ ------ Total deferred tax assets ............... 5,247 4,291 ------ ------ DEFERRED TAX LIABILITIES: Unrealized investment gains on securities .. 653 493 Deferred policy acquisition costs .......... 2,503 2,367 Intangibles ................................ 1,134 1,213 Premiums receivable ........................ 56 42 Deferred sales inducements ................. 124 132 Deferred gains ............................. 638 628 Securities and other investments ........... 2,648 1,091 Other ...................................... 256 80 ------ ------ Total deferred tax liabilities .......... 8,012 6,046 ------ ------ Net deferred tax liabilities ......... $2,765 $1,755 ====== ======
At December 31, 2010, the Company had $2,070 million of operating loss carryforwards, which will expire between 2022 and 2025, and $309 million of capital loss carryforwards, which will expire between 2013 and 2014. The Company believes that it will realize the full benefit of its deferred tax assets. F-40 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 5 -- INCOME TAXES - (CONTINUED) The Company received an income tax refund of $31 million in 2010 and made income tax payments of $4 million and $13 million in 2009 and 2008, respectively. The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state, or local income tax examinations by taxing authorities for years before 1996. For MHDLLC, the Internal Revenue Service ("IRS") completed its examinations and the appeals process for years 1998 through 2003, and the Company received income tax refunds for these years in April 2009 totaling $44 million, including interest. The IRS completed its examination of this group's income tax returns for the years 2004 and 2005 in July 2009. The Company filed protests with the IRS Appeals Division for various adjustments raised by the IRS in its examinations of these years. The IRS commenced an examination of this group's income tax returns for years 2006 and 2007 in November 2009. For JHHLLC, the IRS completed its examinations for years 1996 through 1998 in September 2003. The Company filed protests with the IRS Appeals Division for various adjustments raised by the IRS in its examinations of these years. In June 2008, the Company and the IRS Appeals Division agreed to compromise settlement on several issues that arose in the 1996 through 1998 examinations, and in December 2008, the IRS issued a statutory notice of deficiency covering the remaining issues. In March 2009, the Company filed a petition in U.S. Tax Court contesting the statutory notice of deficiency. The IRS completed its examinations of this group's income tax returns for the years 1999 through 2001 in October 2006. In August 2009, the Company and the IRS Appeals Division agreed to compromise settlement on several issues that arose in the examinations, and in December 2009, the IRS issued a statutory notice of deficiency covering the remaining issues. In March 2010, the Company filed a petition in U.S. Tax Court contesting the statutory notice of deficiency. The IRS completed its examination of this group's income tax returns for the years 2002 through 2004 in August 2009. The Company filed protests with the IRS Appeals Division for various adjustments raised by the IRS in its examinations of these years. The IRS examination for years 2005 and 2006 commenced in January 2010. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
DECEMBER 31 -------------- 2010 2009 ------ ----- (IN MILLIONS) Beginning balance ............................................. $2,161 $1,869 Additions based on tax positions related to the current year .. 202 182 Additions for tax positions of prior years .................... 177 349 Reductions for tax positions of prior years ................... (144) (239) ------ ------ Ending balance ................................................ $2,396 $2,161 ====== ======
Included in the balances as of December 31, 2010 and 2009, respectively, are $338 million and $356 million of unrecognized benefits that, if recognized, would affect the Company's effective tax rate. Included in the balances as of December 31, 2010 and 2009, respectively, are $2,058 million and $1,805 million of tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Because of the impact of deferred tax accounting, other than interest or penalties, the disallowance of the shorter deductibility period would not affect the annual effective tax rate, but would accelerate the payment of taxes to an earlier period. An estimate of the change in unrecognized tax benefits attributable to deductions for dividends received cannot be made at this time because there is no specific information available with respect to either the position that will be taken by the U.S. Treasury Department or the effective dates of the anticipated regulations. F-41 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 5 -- INCOME TAXES - (CONTINUED) The Company recognizes interest accrued related to unrecognized tax benefits in interest expense (part of other operating costs and expenses) and penalties in income tax expense. During the years ended December 31, 2010, 2009, and 2008, the Company recognized approximately $166 million, $224 million, and $195 million in interest expense, respectively. The Company had approximately $1,044 million and $878 million accrued for interest as of December 31, 2010 and 2009, respectively. The Company did not recognize any material amounts of penalties during the years ended December 31, 2010, 2009, and 2008. NOTE 6 -- CLOSED BLOCKS The Company operates two separate closed blocks for the benefit of certain classes of individual or joint traditional participating whole life insurance policies. The JHUSA closed block was established upon the demutualization of MLI for those designated participating policies that were in-force on September 23, 1999. The JHLICO closed block was established upon the demutualization of JHLICO for those designated participating policies that were in-force on February 1, 2000. Assets were allocated to the closed blocks in an amount that, together with anticipated revenues from policies included in the closed blocks, was reasonably expected to be sufficient to support such business, including provision for payment of benefits, direct asset acquisition and disposition costs, and taxes, and for continuation of dividend scales, assuming experience underlying such dividend scales continues. Assets allocated to the closed blocks inure solely to the benefit of the holders of the policies included in the closed blocks and will not revert to the benefit of the shareholder of the Company. No reallocation, transfer, borrowing, or lending of assets can be made between the closed blocks and other portions of the Company's general account, any of its separate accounts, or any affiliate of the Company without prior approval from the State of Michigan Office of Financial and Insurance Regulation. If, over time, the aggregate performance of the assets and policies of a closed block is better than was assumed in funding that closed block, dividends to policyholders for that closed block will be increased. If, over time, the aggregate performance of the assets and policies of a closed block is less favorable than was assumed in funding that closed block, dividends to policyholders for that closed block will be reduced. The assets and liabilities allocated to the closed blocks are recorded in the Company's Consolidated Balance Sheets and Statements of Operations on the same basis as other similar assets and liabilities. The carrying amount of the closed blocks' liabilities in excess of the carrying amount of the closed blocks' assets at the date the closed blocks were established (adjusted to eliminate the impact of related amounts in accumulated other comprehensive income) represents the maximum future earnings from the assets and liabilities designated to the closed blocks that can be recognized in income over the period the policies in the closed blocks remain in force. The Company has developed an actuarial calculation of the timing of such maximum future shareholder earnings, and this is the basis of the policyholder dividend obligation. If actual cumulative earnings of a closed block are greater than expected cumulative earnings of that block, only expected earnings will be recognized in that closed block's income. Actual cumulative earnings in excess of expected cumulative earnings of a closed block represent undistributed accumulated earnings attributable to policyholders, which are recorded as a policyholder dividend obligation because the excess will be paid to the policyholders of that closed block as an additional policyholder dividend unless otherwise offset by future closed block performance that is less favorable than originally expected. If actual cumulative performance of a closed block is less favorable than expected, expected earnings for that closed block will be recognized in net income, unless the policyholder dividend obligation has been reduced to zero, in which case actual earnings will be recognized in income. Actual experience within the JHLICO closed block, in particular realized and unrealized losses, resulted in a reduction of the remaining policyholder dividend obligation to zero during the year ended December 31, 2008. The policyholder dividend obligation for the JHUSA closed block remains zero at December 31, 2010 and 2009. F-42 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 6 -- CLOSED BLOCKS - (CONTINUED) For all closed block policies, the principal cash flow items that affect the amount of closed block assets and liabilities are premiums, net investment income, purchases and sales of investments, policyholders' benefits, policyholder dividends, premium taxes, guaranty fund assessments, and income taxes. For the JHLICO closed block policies, the principal income and expense items excluded from the closed block are management and maintenance expenses, commissions, and net investment income and realized investment gains and losses of investment assets outside the closed block that support the closed block business, all of which enter into the determination of total gross margins of closed block policies for the purpose of the amortization of deferred policy acquisition costs. There are no exclusions applicable to the JHUSA closed block. The amounts shown in the following tables for assets, liabilities, revenues, and expenses of the closed blocks are those that enter into the determination of amounts that are to be paid to policyholders. The following tables set forth certain summarized financial information relating to the closed blocks as of the dates indicated: JHUSA CLOSED BLOCK
DECEMBER 31, --------------- 2010 2009 ------ ------ (IN MILLIONS) LIABILITIES Future policy benefits ............................................................................... $8,443 $8,632 Policyholders' funds ................................................................................. 78 79 Policyholder dividends payable ....................................................................... 184 202 Other closed block liabilities ....................................................................... 587 526 ------ ------ Total closed block liabilities .............................................................. $9,292 $9,439 ====== ====== ASSETS Investments Fixed maturities: Available-for-sale--at fair value (amortized cost: 2010--$2,898; 2009--$3,084) ................. $3,094 $3,179 Mortgage loans on real estate ..................................................................... 643 652 Investment real estate ............................................................................ 655 656 Policy loans ...................................................................................... 1,550 1,619 Other invested assets ............................................................................. 5 3 ------ ------ Total investments ........................................................................... 5,947 6,109 Cash borrowings and cash equivalents ................................................................. (168) (244) Accrued investment income ............................................................................ 104 117 Amounts due from and held for affiliates ............................................................. 1,830 1,779 Other closed block assets ............................................................................ 642 667 ------ ------ Total assets designated to the closed block ................................................. $8,355 $8,428 ------ ------ Excess of closed block liabilities over assets designated to the closed block ........................ $ 937 $1,011 Portion of above representing accumulated other comprehensive income: Unrealized appreciation, net of deferred income tax expense of $199 million and $142 million, respectively .............................................................. 370 264 Adjustment for deferred policy acquisition costs, net of deferred income tax benefit of $64 million and $46 million, respectively ........................................ (119) (85) Foreign currency translation adjustment......................................................... (85) (67) ------ ------ Total amounts included in accumulated other comprehensive income ............................ 166 112 ------ ------ Maximum future earnings to be recognized from closed block assets and liabilities .................... $1,103 $1,123 ====== ======
F-43 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 6 -- CLOSED BLOCKS - (CONTINUED) JHUSA CLOSED BLOCK
YEARS ENDED DECEMBER 31, ------------------------ 2010 2009 2008 ------ ------ ------ (IN MILLIONS) REVENUES Premiums .................................................... $ 597 $ 624 $ 647 Net investment income ....................................... 415 455 473 Net realized investment and other gains (losses) ............ 97 (35) (9) ------ ------ ------ Total revenues ........................................... 1,109 1,044 1,111 BENEFITS AND EXPENSES Benefits to policyholders ................................... 713 734 782 Policyholder dividends ...................................... 367 392 411 Amortization of deferred policy acquisition costs ........... (28) (76) (218) Other closed block operating costs and expenses ............. 26 24 25 ------ ------ ------ Total benefits and expenses .............................. 1,078 1,074 1,000 Revenues, net of benefits and expenses before income taxes .. 31 (30) 111 Income tax expense (benefit) ................................ 11 (11) 39 ------ ------ ------ Revenues, net of benefits and expenses and income taxes ..... $ 20 $ (19) $ 72 ====== ====== ======
MAXIMUM FUTURE EARNINGS FROM CLOSED BLOCK ASSETS AND LIABILITIES:
YEARS ENDED DECEMBER 31, --------------- 2010 2009 ------ ------ (IN MILLIONS) Beginning of period ................................................... $1,123 $1,127 Revenues, net of benefits and expenses and income taxes ............... (20) 19 Adoption of ASC 320, recognition of other-than-temporary impairments .. -- (23) ------ ------ End of period ......................................................... $1,103 $1,123 ====== ======
F-44 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 6 -- CLOSED BLOCKS - (CONTINUED) JHLICO CLOSED BLOCK
DECEMBER 31, ----------------- 2010 2009 ------- ------- (IN MILLIONS) LIABILITIES Future policy benefits .................................. $10,798 $10,916 Policyholders' funds .................................... 1,501 1,511 Policyholder dividends payable .......................... 401 407 Other closed block liabilities .......................... 116 118 ------- ------- Total closed block liabilities ................. $12,816 $12,952 ======= ======= ASSETS Investments Fixed maturities: Available-for-sale--at fair value (amortized cost: 2010--$6,530; 2009--$6,378) .................... $ 6,766 $ 6,456 Equity securities: Available-for-sale--at fair value (cost: 2010--$9; 2009--$7) ...................................... 12 8 Mortgage loans on real estate ........................ 2,105 1,928 Policy loans ......................................... 1,500 1,533 Other invested assets ................................ 121 153 ------- ------- Total investments .............................. 10,504 10,078 Cash borrowings, cash, and cash equivalents ............. (38) 299 Accrued investment income ............................... 141 134 Other closed block assets ............................... 92 165 ------- ------- Total assets designated to the closed block .... $10,699 $10,676 ------- ------- Excess of closed block liabilities over assets designated to the closed block .................................. $ 2,117 $ 2,276 Portion of above representing accumulated other comprehensive income: Unrealized appreciation, net of deferred income tax expense of $98 million and $28 million, respectively ...................................... 183 53 ------- ------- Maximum future earnings to be recognized from closed block assets and liabilities ......................... $ 2,300 $ 2,329 ======= =======
F-45 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 6 -- CLOSED BLOCKS - (CONTINUED) JHLICO CLOSED BLOCK
YEARS ENDED DECEMBER 31, ------------------------ 2010 2009 2008 ------ ------ ------ (IN MILLIONS) REVENUES Premiums ..................................................... $ 621 $ 648 $ 699 Net investment income ........................................ 585 588 581 Net realized investment and other gains (losses) ............. 18 (12) (118) ------ ------ ------ Total revenues ............................................ 1,224 1,224 1,162 BENEFITS AND EXPENSES Benefits to policyholders .................................... 733 761 794 Policyholder dividends ....................................... 439 461 478 Change in the policyholder dividend obligation ............... -- -- (62) Other closed block operating costs and expenses .............. 11 3 2 ------ ------ ------ Total benefits and expenses ............................... 1,183 1,225 1,212 Revenues, net of benefits and expenses before income taxes ... 41 (1) (50) Income tax expense (benefit) ................................. 12 (2) (17) ------ ------ ------ Revenues, net of benefits and expenses and income taxes ...... $ 29 $ 1 $ (33) ====== ====== ======
MAXIMUM FUTURE EARNINGS FROM CLOSED BLOCK ASSETS AND LIABILITIES:
YEARS ENDED DECEMBER 31, --------------- 2010 2009 ------ ------ (IN MILLIONS) Beginning of period .......................................... $2,329 $2,372 Revenues, net of benefits and expenses and income taxes ...... (29) (1) Adoption of ASC 320, recognition of other-than-temporary impairments ............................................... -- (42) ------ ------ Change during period ......................................... $2,300 $2,329 ====== ======
F-46 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 7 -- DEBT AND LINE OF CREDIT External short-term and long-term debt consisted of the following:
DECEMBER 31, ------------- 2010 2009 ----- ------ (IN MILLIONS) SHORT-TERM DEBT: Current maturities of long-term debt ......................... $ 7 $ 6 LONG-TERM DEBT: Surplus notes, 7.38% maturing in 2024 (1) ................. 489 491 Variable rate notes payable, interest ranging from LIBOR plus 0.45% to LIBOR plus 3.15% due in varying amounts to 2019 (2) ............................................ 222 -- Fixed rate notes payable, interest ranging from 6.1% to 13.84% due in varying amounts to 2016 (2) .............. 149 15 Fair value adjustments related to interest rate swaps (1) .............................................. (15) (16) ---- ------ 845 490 Less current maturities of long-term debt .................... (7) (6) ---- ------ Total long-term debt ......................................... $838 $ 484 ==== ====== CONSUMER NOTES: Notes payable, interest ranging from 0.83% to 6.25% due in varying amounts to 2036 ............................. $966 $1,205 ==== ======
(1) As part of its interest rate management, the Company uses interest rate swaps to convert the interest expense on the surplus notes from fixed to variable. Under ASC 815, these swaps are designated as fair value hedges, which results in the carrying value of the notes being adjusted for changes in fair value. (2) As a result of the adoption of ASC 810 effective January 1, 2010, long-term debt at December 31, 2010 includes $222 million of variable rate notes and $129 million of fixed rate notes related to consolidated variable interest entities. For further information regarding the adoption of ASC 810, see Note 1 - Summary of Significant Accounting Policies. LONG-TERM DEBT Aggregate maturities of long-term debt are as follows: 2011--$7 million; 2012--$162 million; 2013--$0 million; 2014--$35 million; 2015--$12 million; and thereafter--$629 million. Interest expense on debt, included in other operating costs and expenses, was $47 million, $34 million, and $34 million in 2010, 2009, and 2008, respectively. Interest paid on debt was $47 million, $34 million, and $34 million in 2010, 2009, and 2008, respectively. Any payment of interest or principal on the surplus notes requires the prior approval of the Michigan Commissioner of Financial and Insurance Regulation (the "Commissioner"). CONSUMER NOTES The Company issues consumer notes through its SignatureNotes program. SignatureNotes is an investment product sold through a broker-dealer network to retail customers in the form of publicly traded fixed and/or floating rate securities. SignatureNotes have a variety of maturities, interest rates, and call provisions. Aggregate maturities of consumer notes, net of unamortized dealer fees, are as follows: 2011--$155 million; 2012--$109 million; 2013--$55 million; 2014--$233 million; 2015--$146 million; and thereafter--$268 million. F-47 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 7 -- DEBT AND LINE OF CREDIT - (CONTINUED) Interest expense on consumer notes, included in other operating costs and expenses, was $48 million, $47 million, and $104 million in 2010, 2009, and 2008, respectively. Interest paid amounted to $48 million, $50 million, and $104 million in 2010, 2009, and 2008, respectively. LINE OF CREDIT At December 31, 2010, the Company had a committed line of credit established by MFC totaling $1 billion pursuant to a 364-day revolving credit facility. MFC will commit, when requested, to loan funds at prevailing interest rates as determined in accordance with the line of credit agreement. Under the terms of the agreement, the Company is required to maintain a certain minimum level of net worth and comply with certain other covenants, which were met at December 31, 2010. At December 31, 2010, the Company had no outstanding borrowings under the agreement. At December 31, 2010, the Company, MFC, and other MFC subsidiaries had a committed line of credit through a group of banks totaling $500 million pursuant to a multi-year facility, which will expire in 2014. The banks will commit, when requested, to loan funds at prevailing interest rates as determined in accordance with the line of credit agreement. Under the terms of the agreement, MFC is required to maintain a certain minimum level of net worth, and MFC and the Company are required to comply with certain other covenants, which were met at December 31, 2010. At December 31, 2010, MFC and its subsidiaries, including the Company, had no outstanding borrowings under the agreement. NOTE 8 -- RELATED PARTY TRANSACTIONS REINSURANCE TRANSACTIONS Effective December 31, 2008, the Company entered into an amended and restated reinsurance agreement with an affiliate, John Hancock Reassurance Company Limited ("JHRECO"), to reinsure 20% of the risk related to payout annuity policies issued January 1, 2008 through September 30, 2008 and 65% of the risk related to payout annuity policies issued prior to January 1, 2008. The reinsurance agreement is written on a modified coinsurance basis where the assets supporting the reinsured policies remain invested with the Company. Under the terms of the agreement, the Company recorded a reduction of $3,640 million in premiums in the Consolidated Statements of Operations and recorded a modified coinsurance reserve adjustment of $3,640 million, which reduced benefits to policyholders in the Consolidated Statements of Operations for the year ended December 31, 2008. The Company reinsured certain portions of its long-term care insurance and group annuity contracts with JHRECO. The Company entered into these reinsurance contracts in order to facilitate its capital management process. These reinsurance contracts are written both on a funds withheld basis where the related financial assets remain invested at the Company and a modified coinsurance agreement. As of July 1, 2010, amendments were made to the contracts to update the calculation of investment income and the expense allowance to reflect current experience. The Company recorded a liability for coinsurance amounts withheld from JHRECO of $4,784 million and $4,147 million at December 31, 2010 and 2009, respectively, on the Company's Consolidated Balance Sheets and recorded a reinsurance recoverable from JHRECO of $5,414 million and $4,749 million at December 31, 2010 and 2009, respectively, which was included with reinsurance recoverable on the Company's Consolidated Balance Sheets. Premiums ceded to JHRECO were $625 million, $644 million, and $656 million during the years ended December 31, 2010, 2009, and 2008, respectively. Claims incurred ceded to JHRECO were $652 million, $603 million, and $538 million during the years ended December 31, 2010, 2009, and 2008, respectively. Effective October 1, 2008, the Company entered into a reinsurance agreement with an affiliate, Manulife Reinsurance (Bermuda) Limited ("MRBL"), to reinsure 75% of certain group annuity contracts in-force. The reinsurance agreement covers all contracts, excluding the guaranteed benefit rider, issued and in-force as of September 30, 2008. As the underlying contracts being reinsured are considered investment contracts, the agreement does not meet the criteria for reinsurance accounting and was classified as a financial instrument. Under the terms of the agreement, the Company received initial consideration of $1,495 million, which was classified as unearned revenue. Effective October 1, 2009, the original agreement was amended to increase the quota share percentage from 75% to 87%. Under the terms of the amended agreement, additional consideration of $250 million was due to the Company on December 31, 2009, which was paid by MRBL on March 31, 2010. The Company recorded this amount as a receivable as of December 31, 2009. As a result of the amendment, F-48 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 8 -- RELATED PARTY TRANSACTIONS - (CONTINUED) the unearned revenue of $250 million as of September 30, 2009 was included with the balance of unearned revenue related to the initial consideration. These amounts are being amortized into income through other operating costs and expenses on a basis consistent with the manner in which the deferred policy acquisition costs on the underlying reinsured contracts are recognized. The balance of the unearned revenue liability was $1,563 million and $1,705 million as of December 31, 2010 and 2009, respectively. Effective October 1, 2008, the Company entered into an amended and restated reinsurance agreement with MRBL to reinsure 90% of a significant block of variable annuity contracts in-force. All substantial risks, including all guaranteed benefits, related to certain specified policies not already reinsured to third parties, are reinsured under the agreement. The base contracts are reinsured on a modified coinsurance basis, while the guaranteed benefit reinsurance coverage is apportioned in accordance with the reinsurance agreement provisions between modified coinsurance and coinsurance funds withheld. The assets supporting the reinsured policies remain invested with the Company. As of November 15, 2010, the agreement was amended to update the calculation of investment income. As of December 31, 2010 and 2009, respectively, the Company reported a reinsurance recoverable for ceded reserves and cost of reinsurance of $1,595 million and $1,681 million and a liability for coinsurance funds withheld of $72 million and $194 million on the Consolidated Balance Sheets. As of December 31, 2010, the Company reported a reinsurance settlement receivable from MRBL of $180 million, which was included with amounts due from and held for affiliates, and as of December 31, 2009, the Company reported a reinsurance settlement payable to MRBL of $261 million, which was included with amounts due to affiliates on the Consolidated Balance Sheets. The net MRBL reinsurance recoverable includes the impact of ongoing reinsurance cash flows and is accounted for over the life of the underlying reinsured policies using assumptions consistent with those used to account for the underlying policies with changes to ceded reserves and cost of reinsurance recognized as a component of benefits to policyholders on the Consolidated Statements of Operations. Effective December 31, 2004, the Company entered into a reinsurance agreement with MRBL to reinsure 75% of the non-reinsured risk of the JHLICO closed block. The Company amended this treaty during 2008 to increase the portion of non-reinsured risk reinsured under this treaty to 90% and amended it during 2009 to provide additional surplus relief. The reinsurance agreement is written on a modified coinsurance basis where the related financial assets remain invested within the Company. As the reinsurance agreement does not subject the reinsurer to the reasonable possibility of significant loss, it was classified as financial reinsurance and given deposit-type accounting treatment with only the reinsurance risk fee being reported in other operating costs and expenses in the Consolidated Statements of Operations. Effective December 31, 2003, the Company entered into a reinsurance agreement with MRBL to reinsure 90% of the non-reinsured risk of the JHUSA closed block. As approximately 90% of the mortality risk is covered under previously existing contracts with third-party reinsurers and the resulting limited mortality risk is inherent in the new contract with MRBL, it was classified as financial reinsurance and given deposit-type accounting treatment. The Company retained title to the invested assets supporting this block of business. These invested assets are held in trust on behalf of MRBL and are included in amounts due from and held for affiliates on the Consolidated Balance Sheets. The amounts held at December 31, 2010 and 2009 were $2,394 million and $2,290 million, respectively, and are accounted for as fixed maturities available-for-sale. SERVICE AGREEMENTS The Company has formal service agreements with MFC and MLI, which can be terminated by either party upon two months notice. Under the various agreements, the Company will pay direct operating expenses incurred by MFC and MLI on behalf of the Company. Services provided under the agreements include legal, actuarial, investment, data processing, accounting, and certain other administrative services. Costs incurred under the agreements were $372 million, $394 million, and $374 million for the years ended December 31, 2010, 2009, and 2008, respectively. As of December 31, 2010 and 2009, the Company had amounts receivable from MFC and MLI of $1 million and amounts payable to MFC and MLI of $10 million, respectively. Management believes the allocation methods used are reasonable and appropriate in the circumstances; however, the Company's Consolidated Balance Sheets may not necessarily be indicative of the financial condition that would have existed if the Company operated as an unaffiliated entity. F-49 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 8 -- RELATED PARTY TRANSACTIONS - (CONTINUED) DEBT TRANSACTIONS Pursuant to a subordinated surplus note dated September 30, 2008, the Company borrowed $110 million from an affiliate, John Hancock Insurance Agency, Inc. ("JHIA") (formerly John Hancock Financial Holdings (Delaware), Inc.). The interest rate is fixed at 7%, and interest is payable semi-annually. The note matures on March 31, 2033. Interest expense was $8 million, $8 million, and $2 million for the years ended December 31, 2010, 2009, and 2008, respectively. Pursuant to a subordinated surplus note dated September 30, 2008, the Company borrowed $295 million from JHIA. The interest rate is fixed at 7%, and interest is payable semi-annually. The note matures on March 31, 2033. Interest expense was $21 million, $21 million, and $5 million for the years ended December 31, 2010, 2009, and 2008, respectively. On December 22, 2006, the Company issued a subordinated note to MHDLLC in the amount of $136 million due December 15, 2016 (the "Original Note"). Interest on the Original Note accrued at a variable rate equal to LIBOR plus 0.3% per annum calculated and reset quarterly on March 15, June 15, September 15, and December 15 and payable semi-annually on June 15 and December 15 of each year until December 15, 2011, and thereafter at a variable rate equal to LIBOR plus 1.3% per annum reset quarterly as aforesaid until payment in full. On September 30, 2008, the Original Note was converted to a subordinated surplus note on the same economic terms. Interest on the subordinated surplus note from October 1, 2008 until December 15, 2011 accrues at a variable rate equal to LIBOR plus 0.3% per annum calculated and reset quarterly on March 31, June 30, September 30, and December 31 and payable semi-annually on March 31 and September 30 of each year. Thereafter, interest accrues at a variable rate equal to LIBOR plus 1.3% per annum reset quarterly as aforementioned and payable semi-annually on June 15 and September 15 of each year until payment in full. Pursuant to the merger of MHDLLC into JHHLLC, as discussed in Note 1, MHDLLC ceased to exist, and the loan was transferred to JHHLLC effective December 31, 2009. Interest expense was $1 million, $2 million, and $5 million for the years ended December 31, 2010, 2009, and 2008, respectively. The issuance of the above surplus notes by the Company was approved by the Commissioner, and any payments of interest or principal on the surplus notes require the prior approval of the Commissioner. The surplus notes were included with amounts due to affiliates on the Consolidated Balance Sheets. Pursuant to a demand note dated September 30, 2008, the Company loaned $295 million to JHFS. The interest rate is calculated at a fluctuating rate equal to 3-month LIBOR plus 50 basis points. Pursuant to the merger of JHFS into MIC, as discussed in Note 1, JHFS ceased to exist, and the loan was transferred to MIC effective December 31, 2009. Interest income was $3 million, $4 million, and $3 million for the years ended December 31, 2010, 2009, and 2008, respectively. Pursuant to a senior promissory note dated March 1, 2007, the Company borrowed $477 million from MHDLLC. The note was repaid on September 30, 2008. Interest was calculated at a fluctuating rate equal to 3-month LIBOR plus 33.5 basis points. Interest expense was $13 million for the year ended December 31, 2008. CAPITAL STOCK TRANSACTIONS On December 16, 2010, the Company issued one share of common stock to MIC for $350 million in cash. On September 30, 2008, the Company issued two shares of common stock to MIC for $477 million in cash. OTHER On December 31, 2010, the Company issued a noncash dividend of $13 million to MIC as part of the transfer of certain pension and postretirement benefit plans. For additional information on the transfer, see Note 10 -- Pension and Other Postretirement Benefit Plans. On December 10, 2008, the Company issued a dividend in-kind of $460 million to JHFS as repayment on an outstanding loan. The Company, in the ordinary course of business, invests funds deposited by customers and manages the resulting invested assets for growth and income for customers. From time to time, successful investment strategies of the Company may attract F-50 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 8 -- RELATED PARTY TRANSACTIONS - (CONTINUED) deposits from affiliates of the Company. At December 31, 2010 and 2009, the Company managed approximately $7,233 million and $6,098 million of deposits from affiliates, respectively. The Company operates a liquidity pool in which affiliates can invest excess cash. Terms of operation and participation in the liquidity pool are set out in the Second Restated and Amended Liquidity Pool and Loan Facility Agreement effective January 1, 2010. The maximum aggregate amounts that the Company can accept into the Liquidity Pool are $5 billion in U.S. dollar deposits and $200 million in Canadian dollar deposits. Under the terms of the agreement, certain participants may receive advances from the Liquidity Pool up to certain predetermined limits. Interest payable on the funds will be reset daily to the one-month London Interbank Bid Rate. The following table details the affiliates and their participation in the Company's Liquidity Pool:
DECEMBER 31, ------------- 2010 2009 ---- ------ (IN MILLIONS) The Manufacturers Investment Corporation ........... $ 48 $ 84 John Hancock Holdings (Delaware) LLC ............... 102 40 Manulife Reinsurance Limited ....................... 22 197 Manulife Reinsurance (Bermuda) Limited ............. 281 949 Manulife Hungary Holdings KFT ...................... 51 62 John Hancock Life Insurance Company of Vermont ..... 25 52 John Hancock Reassurance Company Limited ........... 20 482 John Hancock Insurance Agency, Inc. ................ 69 6 ---- ------ Total ........................................... $618 $1,872 ==== ======
The balances above are reported on the Consolidated Balance Sheets as amounts due to affiliates. On July 15, 2009, MFC fully and unconditionally guaranteed payments from the guarantee periods of the accumulation phase of the Company's new market value adjusted deferred annuity contracts. On July 8, 2005, MFC fully and unconditionally guaranteed JHLICO's SignatureNotes, both those outstanding at that time and those to be issued subsequently. Pursuant to the merger of JHLICO into JHUSA, as discussed in Note 1, those SignatureNotes became obligations of the Company. MFC continues to guarantee the SignatureNotes originally issued by JHLICO. On December 9, 2009, MFC issued a guarantee of any new SignatureNotes to be issued by the Company. MFC's guarantees of the market value adjusted deferred annuity contracts and SignatureNotes are unsecured obligations of MFC and are subordinated in right of payment to the prior payment in full of all other obligations of MFC, except for other guarantees or obligations of MFC, which by their terms are designated as ranking equally in right of payment with or subordinate to MFC's guarantees of the market value adjusted deferred annuity contracts and SignatureNotes. As a result of the guarantees by MFC, the Company is exempt from filing quarterly and annual reports with the SEC pursuant to SEC Rule 12h-5, and in lieu thereof, MFC reports condensed consolidating financial information regarding the Company in its quarterly and annual reports. Effective March 31, 1996, MLI provides a claims paying guarantee to certain U.S. policyholders. The Claims Guarantee Agreement was revoked effective August 13, 2008, but still remains in effect with respect to policies issued by the Company prior to that date. F-51 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 9 -- REINSURANCE The effect of reinsurance on life, health, and annuity premiums earned was as follows:
DECEMBER 31, --------------------------- 2010 2009 2008 ------- ------- ------- (IN MILLIONS) Direct ............................ $ 5,897 $ 5,680 $ 5,677 Assumed ........................... 1,198 1,384 1,221 Ceded ............................. (3,173) (3,118) (6,817) ------- ------- ------- Net life, health, and annuity premiums earned ..... $ 3,922 $ 3,946 $ 81 ======= ======= =======
For the years ended December 31, 2010, 2009, and 2008, benefits to policyholders under life, health, and annuity ceded reinsurance contracts were $4,433 million, $3,442 million, and $2,964 million, respectively. The Company utilizes reinsurance agreements to provide for greater diversification of business, allowing management to control exposure to potential losses arising from large risks, and provide additional capacity for growth. Reinsurance ceded contracts do not relieve the Company from its obligations to policyholders. The Company remains liable to its policyholders for the portion reinsured to the extent that any reinsurer does not meet its obligations for reinsurance ceded to it under the reinsurance agreements. Failure of the reinsurers to honor their obligations could result in losses to the Company; consequently, estimates are established for amounts deemed or estimated to be uncollectible. To minimize its exposure to significant losses from reinsurance insolvencies, the Company evaluates the financial condition of its reinsurers and monitors concentration of credit risk arising from similar characteristics among the reinsurers. NOTE 10 -- PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS Prior to December 31, 2010, the Company accounted for its share of the qualified defined benefit plan, the non-qualified defined benefit plan, and the employee welfare plan as direct legal obligations of the Company and accounted for the corresponding plan obligations on its Consolidated Balance Sheets and Consolidated Statements of Operations. Effective December 31, 2010, the Company transferred the sponsorship of these plans to MIC, the Company's immediate parent, along with the associated net liabilities. The impact of the transfer on the Company's December 31, 2010 Consolidated Balance Sheet was a decrease in total liabilities of $460 million, a decrease in additional paid-in capital of $13 million, and an increase in accumulated other comprehensive income of $473 million, net of tax. As of the transfer date, the assets and liabilities of these plans became direct obligations of MIC, while JHUSA became a participating employer in the plans transferred. Prospectively, the Company will remain jointly and severally liable for the funding requirements of the plans and will recognize its required contributions as net periodic benefit cost in its consolidated financial statements. Prior to December 31, 2010, the Company sponsored a funded qualified defined benefit plan (the `Plan") that covers substantially all of its employees. Historically, pension benefits were calculated utilizing a traditional formula. Under the traditional formula, benefits were provided based upon length of service and final average compensation. As of January 1, 2002, all defined benefit pension plans were amended to a cash balance basis. Under the cash balance formula, participants are credited with benefits equal to a percentage of eligible pay, as well as interest. Certain grandfathered employees are eligible to receive benefits based upon the greater of the traditional formula or cash balance formula. In addition, early retirement benefits are subsidized for certain grandfathered employees. Prior to December 31, 2010, the Company's funding policy for its qualified defined benefit plan was to contribute annually an amount at least equal to the minimum annual contribution required under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and other applicable laws and generally not greater than the maximum amount that can be deducted for federal income tax purposes. In 2010, 2009, and 2008, no contributions were made to the qualified plan. Prior to December 31, 2010, the Company also sponsored an unfunded non-qualified defined benefit plan. This plan provides supplemental benefits in excess of the compensation limit outlined in the Internal Revenue Code for certain employees. F-52 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 10 -- PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS - (CONTINUED) Prior to December 31, 2010, the Company's funding policy for its non-qualified defined benefit plan was to contribute an amount equal to the plan's benefit payments made during the year. The contribution to the non-qualified plan was $31 million, $34 million, and $33 million in 2010, 2009, and 2008, respectively. Prior to December 31, 2010, the Company provided postretirement medical and life insurance benefits for its retired employees and their spouses through its sponsorship of the John Hancock Financial Services, Inc. Employee Welfare Plan. Effective January 1, 2010, the plan was renamed the John Hancock Employee Welfare Plan and plan sponsorship was transferred from JHFS to the Company. Certain employees hired prior to January 1, 2005 who meet age and service criteria may be eligible for these postretirement benefits in accordance with the plan's provisions. The majority of retirees contribute a portion of the total cost of postretirement medical benefits. Life insurance benefits are based on final compensation subject to the plan maximum. The welfare plan was amended effective January 1, 2007 whereby participants who had not reached a certain age and years of service with the Company were no longer eligible for such Company contributory benefits. Also, the number of years of service required to be eligible for the benefit was increased to 15 years for all participants. The future retiree life insurance coverage amount was frozen as of December 31, 2006. Prior to December 31, 2010, the Company's policy was to fund its other postretirement benefits in amounts at or below the annual tax qualified limits. The contribution for the other postretirement benefits was $48 million, $54 million, and $59 million in 2010, 2009, and 2008, respectively. The Company participates in a non-qualified defined contribution pension plan maintained by MFC, which was established as of January 1, 2008 with participant directed investment options. The expense for the plan was $8 million in 2010 and $7 million in both 2009 and 2008. The prior non-qualified defined benefit plan was frozen except for grandfathered participants as of January 1, 2008, and the benefits accrued under the prior plan continue to be subject to the prior plan provisions. The Company participates in qualified defined contribution plans for its employees who meet certain eligibility requirements. Sponsorship of these plans transferred from JHFS to the Company effective January 1, 2010. These plans include the Investment-Incentive Plan for John Hancock Employees and the John Hancock Savings and Investment Plan. The expense for the defined contribution plans was $18 million, $19 million, and $19 million in 2010, 2009, and 2008, respectively. The Company uses a December 31 measurement date to account for its pension and other postretirement benefit plans. F-53 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 10 -- PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS - (CONTINUED) OBLIGATIONS AND FUNDED STATUS OF DEFINED BENEFIT PLANS The amounts disclosed below represent the Company's share of the pension and other postretirement benefit plans described above:
YEARS ENDED DECEMBER 31, -------------------------------- OTHER POSTRETIREMENT PENSION BENEFITS BENEFITS ---------------- -------------- 2010 2009 2010 2009 ------- ------ ----- ----- (IN MILLIONS) CHANGE IN BENEFIT OBLIGATION: Benefit obligation at beginning of year ..................... $ 2,354 $2,237 $ 548 $ 573 Service cost ................................................ 32 30 1 1 Interest cost ............................................... 124 128 28 33 Participant contributions ................................... -- -- 4 5 Actuarial loss (gain) ....................................... 132 132 4 (8) Retiree drug subsidy ........................................ -- -- 3 3 Benefits paid ............................................... (175) (173) (52) (59) Transfer of certain pension and postretirement benefit plans to Parent ................................................ (2,467) -- (536) -- ------- ------ ----- ----- Benefit obligation at end of year ........................... $ -- $2,354 $ -- $ 548 ======= ====== ===== ===== CHANGE IN PLAN ASSETS: Fair value of plan assets at beginning of year .............. $ 1,843 $1,628 $ 306 $ 245 Actual return on plan assets ................................ 281 354 40 61 Employer contributions ...................................... 32 34 48 54 Participant contributions ................................... -- -- 4 5 Benefits paid ............................................... (175) (173) (52) (59) Transfer of certain pension and postretirement benefit plans to Parent ................................................ (1,981) -- (346) -- ------- ------ ----- ----- Fair value of plan assets at end of year .................... $ -- $1,843 $ -- $ 306 ======= ====== ===== ===== Funded status at end of year ................................ $ -- $ (511) $ -- $(242) ======= ====== ===== ===== AMOUNTS RECOGNIZED ON CONSOLIDATED BALANCE SHEETS: Assets ...................................................... $ -- $ -- $ -- $ -- Liabilities ................................................. -- (511) -- (242) ------- ------ ----- ----- Net amount recognized ....................................... $ -- $ (511) $ -- $(242) ======= ====== ===== ===== AMOUNTS RECOGNIZED IN ACCUMULATED OTHER COMPREHENSIVE INCOME: Prior service cost .......................................... $ (26) $ (29) $ -- $ -- Net actuarial loss .......................................... 735 739 19 29 Transfer of certain pension and postretirement benefit plans to Parent ................................................ (709) -- (19) -- ------- ------ ----- ----- Total ....................................................... $ -- $ 710 $ -- $ 29 ======= ====== ===== =====
The accumulated benefit obligation for all defined benefit plans was $0 million and $2,329 million at December 31, 2010 and 2009, respectively. The following table provides information for pension plans with accumulated benefit obligations in excess of plan assets:
DECEMBER 31, ------------- 2010 2009 ---- ------ (IN MILLIONS) Accumulated benefit obligation .... $-- $2,329 Projected benefit obligation ...... -- 2,354 Fair value of plan assets ......... -- 1,843
F-54 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 10 -- PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS - (CONTINUED) COMPONENTS OF NET PERIODIC BENEFIT COST
YEARS ENDED DECEMBER 31, ------------------------------------------ OTHER POSTRETIREMENT PENSION BENEFITS BENEFITS --------------------- ------------------ 2010 2009 2008 2010 2009 2008 ----- ----- ----- ---- ---- ---- (IN MILLIONS) Service cost ........................... $ 32 $ 30 $ 30 $ 1 $ 1 $ 1 Interest cost .......................... 124 128 129 28 33 34 Expected return on plan assets ......... (161) (175) (181) (26) (26) (26) Amortization of prior service cost ..... (3) (3) (3) -- -- -- Recognized actuarial loss .............. 15 4 5 -- -- -- ----- ----- ----- ---- ---- ---- Net periodic benefit cost (income) ..... $ 7 $ (16) $ (20) $ 3 $ 8 $ 9 ===== ===== ===== ==== ==== ====
ASSUMPTIONS Weighted-average assumptions used to determine benefit obligations were as follows:
YEARS ENDED DECEMBER 31, ---------------------------- OTHER PENSION POSTRETIREMENT BENEFITS BENEFITS ----------- -------------- 2010 2009 2010 2009 ---- ---- ---- ---- Discount rate .................................... N/A 5.50% N/A 5.50% Rate of compensation increase .................... N/A 4.35% N/A N/A Health care cost trend rate for following year ... N/A 8.50% Ultimate trend rate .............................. N/A 5.00% Year ultimate rate reached ....................... N/A 2028
Weighted-average assumptions used to determine net periodic benefit cost were as follows:
YEARS ENDED DECEMBER 31, --------------------------------------- OTHER POSTRETIREMENT PENSION BENEFITS BENEFITS ------------------ ------------------ 2010 2009 2008 2010 2009 2008 ---- ---- ---- ---- ---- ---- Discount rate..................................... 5.50% 6.00% 6.00% 5.50% 6.00% 6.00% Expected long-term return on plan assets.......... 7.75% 8.00% 8.00% 7.75% 8.00% 8.00% Rate of compensation increase..................... 4.35% 4.10% 5.10% N/A N/A N/A Health care cost trend rate for following year.... 8.50% 8.50% 9.00% Ultimate trend rate............................... 5.00% 5.00% 5.00% Year ultimate rate reached........................ 2028 2016 2016
The overall expected long-term rate of return on plan assets assumption reflects the Company's best estimate. The general approach used to develop the assumption takes into consideration the allocation of assets held on the measurement date, plus the target allocation of expected contributions to the plan for the upcoming fiscal year, net of investment expenses. The rate is calculated using historical weighted-average real returns for each significant class of plan assets including the effects of continuous reinvestment of earnings. In addition, the calculation includes a long-term expectation of general inflation. Current market conditions and published commentary are also considered when assessing the reasonableness of the overall expected long-term rate of return on plan assets assumption. F-55 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 10 -- PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS - (CONTINUED) Assumed health care cost trend rates have a significant effect on the amounts reported for the postretirement healthcare plans. A one-percentage point change in assumed health care cost trend rates would have the following effects:
ONE-PERCENTAGE ONE-PERCENTAGE POINT INCREASE POINT DECREASE -------------- -------------- (IN MILLIONS) Effect on total service and interest costs in 2010...................... $ 1 $ (1) Effect on postretirement benefit obligation as of December 31, 2010..... N/A N/A
PLAN ASSETS The Company's overall investment strategy was to achieve a mix of approximately 94% of investments for long-term growth and 6% for near-term benefit payments, with a wide diversification of asset types, fund strategies, and fund managers. The target allocations for plan assets are 52% equity securities, 35% fixed income securities, and 13% to all other types of investments. Equity securities primarily include investments in large-cap, mid-cap, and small-cap companies primarily located in the United States. Fixed income securities include corporate bonds of companies from a diverse range of industries, mortgage-backed securities, and U.S. Treasuries. Other types of investments include investments in private equity funds and timber and agriculture investments that follow several different strategies. Pension plan assets of $0 million and $702 million at December 31, 2010 and 2009, respectively, were investments managed by related parties. Welfare plan assets of $0 million and $185 million at December 31, 2010 and 2009, respectively, were investments in related parties. The plans did not own any of the Company's or MFC's common stock at December 31, 2010 and 2009. FAIR VALUE MEASUREMENTS Following ASC 820 guidance, the Company categorizes its fair value measurements of pension and other postretirement benefit plan assets according to a three-level hierarchy. The hierarchy prioritizes the inputs used by the plans' valuation techniques. A level is assigned to each fair value measurement based on the lowest level input significant to the fair value measurement in its entirety. For additional information regarding the valuation hierarchy and the Company's determination of fair value, see Note 14 - Fair Value of Financial Instruments. The following is a description of the valuation techniques used to measure fair value and the general classification of these instruments pursuant to the fair value hierarchy: CASH AND CASH EQUIVALENTS - The carrying values for cash and cash equivalents approximate fair value due to the short-term maturities of these instruments. Cash and cash equivalents are included in Level 1. DOMESTIC EQUITY - Includes investments in separate accounts and common/collective trusts. Separate account fair values are determined by the fair value of the underlying assets. Underlying domestic equity assets are valued based on observable quoted prices in active markets, and these separate account investments are included in Level 1. Collective trust fair values are determined monthly and bi-monthly based on observable quoted prices in an inactive market, and these investments are included in Level 2. INTERNATIONAL EQUITY - Includes investments in mutual funds and common/collective trusts. Mutual fund fair values are determined based upon observable net asset values ("NAV"), and these investments are included in Level 1. Collective trust fair values are determined monthly and bi-monthly based on observable quoted prices in an inactive market, and these investments are included in Level 2. F-56 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 10 -- PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS - (CONTINUED) DOMESTIC FIXED INCOME - Includes investments in mutual funds and separate accounts of the group annuity contract. Mutual fund fair values are determined based upon observable NAV, and these investments are included in Level 1. Fair values of investments in separate accounts of the group annuity contract are based upon the fair value of underlying assets. Underlying domestic fixed-income investments are valued based on observable quoted prices in active and inactive markets, as well as observable market inputs other than quoted prices. These investments are included in Level 2. INTERNATIONAL FIXED INCOME - Includes investments in mutual funds and separate accounts of the group annuity contract. Mutual fund fair values are determined based upon observable NAV, and these investments are included in Level 1. Fair values of investments in separate accounts of the group annuity contract are based upon the fair value of underlying assets. Underlying international fixed-income investments are valued based on observable quoted prices in active markets, as well as observable market inputs other than quoted prices. These investments are included in Level 2. PRIVATE EQUITY - Fair values are determined based upon market inputs other than quoted prices and significant unobservable assumptions. Private equity investments are included in Level 3. TIMBER/AGRICULTURE - Fair values are determined based upon market inputs other than quoted prices and significant unobservable assumptions. Timber/agriculture investments are included in Level 3. 401(H) ACCOUNT NET ASSETS - Fair values are determined based upon the fair values of the investments held in the Plan, as described above. The 401(h) account net assets are included in Level 1, Level 2, or Level 3. The fair value of the Company's pension plan assets at December 31, 2009, by asset category is as follows:
DECEMBER 31, 2009 ----------------------------------------- TOTAL FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 ----------- ------- ------- ------- (IN MILLIONS) ASSETS: Cash and cash equivalents ..... $ 26 $ 26 $ -- $ -- Equity Domestic ................... 783 331 452 -- International .............. 268 108 160 -- Fixed income Domestic (a) ............... 437 142 215 80 International (b) .......... 121 80 41 -- Other types of investments Private equity (c) ......... 129 -- -- 129 Timber / agriculture (d) .. 79 -- -- 79 ------ ---- ---- ---- TOTAL ASSETS AT FAIR VALUE ....... $1,843 $687 $868 $288 ====== ==== ==== ====
(a) This category consists of approximately 40% corporate bonds from U.S. issuers in diverse industries, 18% invested in the general account of the Company, 13% mortgage-backed securities, 13% U.S. Treasuries and other government debt, 9% cash and other domestic fixed income investments, and 7% sovereign debt. Investments in the general account of the Company consist primarily of domestic fixed income securities. (b) This category consists of approximately 95% sovereign debt, with the remaining 5% invested in foreign currency and other international fixed income investments. (c) This category consists of limited partnerships with buyout, mezzanine, and fund-of-fund private equity investments. (d) This category consists of limited partnerships with timber and agriculture investments. F-57 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 10 -- PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS - (CONTINUED) The changes in Level 3 assets measured at fair value on a recurring basis for the year ended December 31, 2009 are summarized as follows:
DOMESTIC PRIVATE TIMBER / FIXED INCOME EQUITY AGRICULTURE ------------ ------- ----------- (IN MILLIONS) Balance at January 1, 2009 ........................ $ 73 $ 150 $ 72 Actual return on plan assets: Relating to assets still held at the reporting date ........................... 18 (19) 6 Relating to assets sold during the period ... -- 5 2 Purchases, sales, and settlements (net) ........ (11) (7) (1) Transfers into and/or out of Level 3 ........... -- -- -- ---- ----- ---- Balance at December 31, 2009 ...................... $ 80 $ 129 $ 79 ==== ===== ====
The fair value of the Company's other postretirement benefit plan assets at December 31, 2009, by asset category is as follows:
DECEMBER 31, 2009 ---------------------------------------- TOTAL FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 ---------- ------- ------- ------- (IN MILLIONS) ASSETS: Cash and cash equivalents .... $ 23 $23 $ -- $-- Equity Domestic .................. 129 14 115 -- International ............. 22 11 11 -- Fixed income Domestic (a) .............. 124 24 98 2 International (b) ......... 3 2 1 -- Other types of investments Private equity (c) ........ 3 -- -- 3 Timber / agriculture (d) .. 2 -- -- 2 ---- --- ---- --- TOTAL ASSETS AT FAIR VALUE ...... $306 $74 $225 $ 7 ==== === ==== ===
(a) This category consists of approximately 44% corporate bonds from U.S. issuers in diverse industries, 27% mortgage-backed securities, 17% U.S. Treasuries and other government debt, 6% cash and other domestic fixed income investments, 4% sovereign debt, and 2% invested in the general account of the Company. Investments in the general account of the Company consist primarily of domestic fixed income securities. (b) This category consists of approximately 95% sovereign debt, with the remaining 5% invested in foreign currency and other international fixed income investments. (c) This category consists of limited partnerships with buyout, mezzanine, and fund-of-fund private equity investments. (d) This category consists of limited partnerships with timber and agriculture investments. The fair value of Level 3 assets measured on a recurring basis at December 31, 2009 was $7 million. F-58 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 10 -- PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS - (CONTINUED) RISK MANAGEMENT PRACTICES AND INVESTMENT GOALS Investment allocation decisions for plan assets were made in accordance with the criteria and limitations set forth in the most recent Statement of Investment Policies and Procedures (the "Statement"), as amended and restated effective November 17, 2009. The Company relies on the Statement to set forth guidelines for adopting and maintaining certain funding policies in accordance with the provisions of ERISA and to ensure that the Plan maintains sufficient amounts to meet the obligations of the Plan as they come due. The Company's board of directors had delegated the fiduciary oversight responsibility of the Plan to the U.S. Benefits Committee (the "Committee"), which in turn, established and actively monitors specialized subcommittees to ensure continued prudent and effective management of the Plan. One such subcommittee, the Investment Committee, is responsible for diversification of plan assets to achieve a suitable combination of investment risk and rate of return for the exclusive benefit of plan participants and beneficiaries. In order to satisfy the Plan's ongoing obligations and minimize the likelihood of a significant deterioration in the Plan's funded status resulting from capital market activity, the Investment Committee retained an Investment Advisor, John Hancock Investment Management Services LLC, a subsidiary of the Company, to assist in the overall strategic investment direction of the fund. INVESTMENT POLICIES AND STRATEGIES The overall investment policies and strategies of the Plan were based on the guiding principle of diversification. Plan investments were allocated primarily between the major asset classes of fixed income and equity, with a relatively smaller proportion of investments in alternative asset classes. These investments fall into two broad categories within the context of the current asset allocation policy. LIABILITY-HEDGING ASSETS - These assets consist primarily of fixed income investments, such as bonds, that generally have characteristics similar to pension liabilities, including predictable cash flows and comparable durations. In addition to capital preservation, the payment streams provided by liability-hedging assets are used to satisfy plan obligations as they become due. RETURN-SEEKING ASSETS - All non-fixed income investments, such as equities and certain alternative asset classes, fall into this category. In pursuing these investments, the Plan seeks to experience higher returns from appreciation in asset values. Historically, the long-term rate of return on equities has been higher than most investment grade fixed income securities. The increased yield comes at the expense of increased volatility and unpredictability in cash flows. PERMITTED AND PROHIBITED INVESTMENTS Plan investments were permitted to be made either directly, through pooled or mutual funds, or through insurance contracts, and both active and passive strategies have been used. In order to fulfill its fiduciary responsibility and to ensure that plan assets are invested prudently, the Committee has compiled a list of prohibited investments, as well as placed constraints on certain permitted investments. Moreover, the Plan was not permitted to borrow funds to acquire securities or otherwise deal in margin trading. Additional restrictions and constraints, by asset class, are outlined below. Fixed Income The Plan's fixed income exposure was achieved through investments in separate accounts or mutual funds. For securities held in separate accounts, the combined market value of any individual investments, as a percentage of the aggregate market value of all fixed income investments, was not to exceed the maximum quality limits outlined below. Each mutual fund investment was governed by its own prospectus, and therefore not subject to these quality limits.
INVESTMENT RATING MAXIMUM LIMIT ----------------- ------------- AAA 100% AA 90% A 75% BBB & Lower 50% BB & Lower 8%
F-59 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 10 -- PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS - (CONTINUED) Equities The Plan's domestic and international equity investments were required to be fully diversified across sectors and countries at all times. In addition, the Plan was prohibited from acquiring more than 7.5% of the outstanding securities of any one company. The Plan was also prohibited from holding greater than 10% of its assets in the form of MFC stock. Derivatives, Options, and Futures The use of derivatives was permitted for the purpose of hedging investment risks, including market, interest rate, credit, liquidity, and currency risks. Derivatives may also have been used to replicate direct investments, in instances where the Plan would benefit from lower costs or transactional ease. Conversely, the use of derivatives to create leverage for speculative purposes was prohibited. The Plan was also required to hold cash and cash equivalents equal to the underlying market exposure of derivatives, net of margin funds. The Plan was permitted to invest in options and futures on any securities that were not specifically prohibited by the Statement, but it was prohibited from selling derivatives on securities it did not own. Investments in Other Assets Pursuant to the asset allocation policy, the Plan was permitted to make investments in alternative asset classes. The Plan was permitted to invest in private equity, power and infrastructure equity, timber and agricultural investments, but hedge funds were prohibited. The Investment Committee was required to approve any proposed investments in other assets that were not specifically permitted above. NOTE 11 -- COMMITMENTS, GUARANTEES, CONTINGENCIES, AND LEGAL PROCEEDINGS COMMITMENTS. The Company has extended commitments to purchase U.S. private debt and to issue mortgage loans on real estate totaling $1,824 million and $130 million, respectively, at December 31, 2010. If funded, loans related to real estate mortgages would be fully collateralized by the mortgaged properties. The Company monitors the creditworthiness of borrowers under long-term bond commitments and requires collateral as deemed necessary. The majority of these commitments expire in 2011. The Company leases office space under non-cancelable operating lease agreements of various expiration dates. Rental expenses, net of sub-lease income, were $24 million, $26 million, and $22 million for the years ended December 31, 2010, 2009, and 2008, respectively. During 2001, the Company entered into an office ground lease agreement, which expires on September 20, 2096. The terms of the lease agreement provide for adjustments in future periods. The future minimum lease payments, by year and in the aggregate, under the remaining ground lease and other non-cancelable operating leases along with the associated sub-lease income are as follows:
NON- CANCELABLE OPERATING SUB-LEASE LEASES INCOME ---------- --------- (IN MILLIONS) 2011............. $ 48 $17 2012............. 42 17 2013............. 39 17 2014............. 29 14 2015............. 13 3 Thereafter....... 410 -- ---- --- Total............ $581 $68 ==== ===
GUARANTEES. In the course of business, the Company enters into guarantees which vary in nature and purpose and which are accounted for and disclosed under U.S. GAAP specific to the insurance industry. The Company had no guarantees outstanding outside the scope of insurance accounting at December 31, 2010. F-60 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 11 -- COMMITMENTS, GUARANTEES, CONTINGENCIES, AND LEGAL PROCEEDINGS - (CONTINUED) CONTINGENCIES. The Company is an investor in leveraged leases and has established provisions for possible disallowance of the tax treatment and for interest on past due taxes. During the years ended December 31, 2010 and 2009, the Company increased this provision by $94 million and $186 million, net of tax, respectively. The Company continues to believe that deductions originally claimed in relation to these arrangements are appropriate. Although not expected to occur, should the tax attributes of the leveraged leases be fully denied, the maximum after tax exposure including interest would be an additional estimated $218 million at December 31, 2010. The Company owns an 80% interest in Phipps Tower Associates LLC, a limited liability company formed for the purpose of development, construction, leasing, and operation of Phipps Tower, an office building located in Atlanta, Georgia. The construction of Phipps Tower was completed in February 2010 and is currently in the leasing phase. Under an LLC agreement entered into by the Company with its partner developer, both parties have rights to a one-time put/call option when the project has achieved its stabilization stage, defined as when 85% of the gross rentable area of the building has been leased and the tenants under such leases have accepted delivery of the premises. At that time, the Company may exercise its call option to purchase the partner developer's interest in the project, and the partner developer may exercise its put option and sell its interest to the Company. If on or before March 5, 2013 the stabilization stage has not been achieved, or stabilization has been achieved but options have not been exercised, the Company is obligated to purchase the partner developer's entire interest (20%) in the project for the greater of the project cost or 95% of market value at the time of the buyout. The current estimated minimum amount that the Company would be required to pay is $7 million. This estimate is 20% of the $108 million cost of construction, net of $73 million of related loans payable. LEGAL PROCEEDINGS. The Company is regularly involved in litigation, both as a defendant and as a plaintiff. The litigation naming the Company as a defendant ordinarily involves its activities as a provider of insurance protection and wealth management products, an employer, and a taxpayer. In addition, state regulatory bodies, state attorneys general, the SEC, the Financial Industry Regulatory Authority, and other government and regulatory bodies regularly make inquiries and, from time to time, require the production of information or conduct examinations concerning the Company's compliance with, among other things, insurance laws, securities laws, and laws governing the activities of broker-dealers. The Company does not believe that the conclusion of any current legal or regulatory matters, either individually or in the aggregate, will have a material adverse effect on its consolidated financial condition or results of operations. NOTE 12 -- SHAREHOLDER'S EQUITY CAPITAL STOCK The Company has two classes of capital stock, preferred stock and common stock. All of the outstanding preferred and common stock of the Company is owned by MIC, its parent. F-61 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 12 -- SHAREHOLDER'S EQUITY - (CONTINUED) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The components of accumulated other comprehensive income (loss) were as follows:
ADDITIONAL NET PENSION AND ACCUMULATED FOREIGN POSTRETIREMENT ACCUMULATED NET UNREALIZED GAIN (LOSS) CURRENCY UNRECOGNIZED OTHER INVESTMENT ON CASH TRANSLATION NET PERIODIC COMPREHENSIVE GAINS (LOSSES) FLOW HEDGES ADJUSTMENT BENEFIT COST INCOME (LOSS) -------------- ----------- ----------- -------------- ------------- (IN MILLIONS) BALANCE AT JANUARY 1, 2008 .......................... $ 577 $ 350 $ 27 $ 129 $ 1,083 Gross unrealized investment losses (net of deferred income tax benefit of $1,574 million) ... (2,932) -- -- -- (2,932) Reclassification adjustment for gains realized in net income (net of deferred income tax benefit of $101 million) ................................. (187) -- -- -- (187) Adjustment for policyholder liabilities (net of deferred income tax expense of $87 million) ...... 162 -- -- -- 162 Adjustment for deferred policy acquisition costs, deferred sales inducements, value of business acquired, and unearned revenue liability (net of deferred income tax expense of $216 million) .. 403 -- -- -- 403 Adjustment for policyholder dividend obligation (net of deferred income tax expense of $11 million) ..................................... 20 -- -- -- 20 ------- ------ ---- ----- ------- Net unrealized investment losses .................... (2,534) -- -- -- (2,534) Foreign currency translation adjustment ............. -- -- (23) -- (23) Pension and postretirement benefits: Change in prior service cost (net of deferred income tax benefit of $1 million) ............. -- -- -- (1) (1) Change in net actuarial loss (net of deferred income tax benefit of $359 million) ........... -- -- -- (666) (666) Net gains on the effective portion of the change in fair value of cash flow hedges (net of deferred income tax expense of $586 million) ..... -- 1,086 -- -- 1,086 Reclassification of net cash flow hedge gains to net income (net of deferred income tax benefit of $17 million) .................................. -- (31) -- -- (31) ------- ------ ---- ----- ------- BALANCE AT DECEMBER 31, 2008 ........................ $(1,957) $1,405 $ 4 $(538) $(1,086) ======= ====== ==== ===== =======
F-62 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 12 -- SHAREHOLDER'S EQUITY - (CONTINUED)
ADDITIONAL NET PENSION AND ACCUMULATED FOREIGN POSTRETIREMENT ACCUMULATED NET UNREALIZED GAIN (LOSS) CURRENCY UNRECOGNIZED OTHER INVESTMENT ON CASH TRANSLATION NET PERIODIC COMPREHENSIVE GAINS (LOSSES) FLOW HEDGES ADJUSTMENT BENEFIT COST INCOME (LOSS) -------------- ----------- ----------- -------------- ------------- (IN MILLIONS) BALANCE AT JANUARY 1, 2009 .......................... $(1,957) $ 1,405 $ 4 $(538) $(1,086) Gross unrealized investment gains (net of deferred income tax expense of $1,883 million) ......................................... 3,498 -- -- -- 3,498 Reclassification adjustment for losses realized in net income (net of deferred income tax expense of $109 million) .............. 202 -- -- -- 202 Adjustment for policyholder liabilities (net of deferred income tax benefit of $67 million) ..................................... (126) -- -- -- (126) Adjustment for deferred policy acquisition costs, deferred sales inducements, value of business acquired, and unearned revenue liability (net of deferred income tax benefit of $354 million) .............. (658) -- -- -- (658) ------- ------- --- ----- ------- Net unrealized investment gains ..................... 2,916 -- -- -- 2,916 Foreign currency translation adjustment ............. -- -- 5 -- 5 Pension and postretirement benefits: Change in prior service cost (net of deferred income tax benefit of $1 million) .... -- -- -- (2) (2) Change in net actuarial loss (net of deferred income tax expense of $31 million) ...................................... -- -- -- 60 60 Net unrealized gain on split-dollar life insurance benefit (net of deferred income tax expense of $1 million) ............. -- -- -- 2 2 Net losses on the effective portion of the change in fair value of cash flow hedges (net of deferred income tax benefit of $538 million) .................................... -- (1,000) -- -- (1,000) Reclassification of net cash flow hedge gains to net income (net of deferred income tax benefit of $3 million) ................ -- (5) -- -- (5) Adoption of ASC 320, recognition of other-than-temporary impairments (net of deferred income tax benefit of $410 million) ......................................... (761) -- -- -- (761) ------- ------- --- ----- ------- BALANCE AT DECEMBER 31, 2009 ........................ $ 198 $ 400 $ 9 $(478) $ 129 ======= ======= === ===== =======
F-63 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 12 -- SHAREHOLDER'S EQUITY - (CONTINUED)
ADDITIONAL NET PENSION AND ACCUMULATED FOREIGN POSTRETIREMENT ACCUMULATED NET UNREALIZED GAIN (LOSS) CURRENCY UNRECOGNIZED OTHER INVESTMENT ON CASH TRANSLATION NET PERIODIC COMPREHENSIVE GAINS (LOSSES) FLOW HEDGES ADJUSTMENT BENEFIT COST INCOME (LOSS) -------------- ----------- ----------- -------------- ------------- (IN MILLIONS) BALANCE AT JANUARY 1, 2010 .......................... $ 198 $ 400 $ 9 $(478) $ 129 Gross unrealized investment gains (net of deferred income tax expense of $808 million) ......................................... 1,501 -- -- -- 1,501 Reclassification adjustment for gains realized in net income (net of deferred income tax benefit of $313 million) .............. (582) -- -- -- (582) Adjustment for policyholder liabilities (net of deferred income tax expense of $23 million) ..................................... 42 -- -- -- 42 Adjustment for deferred policy acquisition costs, deferred sales inducements, value of business acquired, and unearned revenue liability (net of deferred income tax benefit of $100 million) .............. (185) -- -- -- (185) ------ ----- ---- ----- ------ Net unrealized investment gains ..................... 776 -- -- -- 776 Foreign currency translation adjustment ............. -- -- (53) -- (53) Pension and postretirement benefits: Change in prior service cost (net of deferred income tax benefit of $1 million) .... -- -- -- (2) (2) Change in net actuarial loss (net of deferred income tax expense of $5 million) ...................................... -- -- -- 9 9 Net unrealized gain on split-dollar life insurance benefit (net of deferred income tax expense of $1 million) ............. -- -- -- 2 2 Net losses on the effective portion of the change in fair value of cash flow hedges (net of deferred income tax benefit of $20 million) ..................................... -- (37) -- -- (37) Reclassification of net cash flow hedge gains to net income (net of deferred income tax benefit of $69 million) ............... -- (129) -- -- (129) Transfer of certain pension and postretirement benefit plans to Parent (net of deferred income tax expense of $255 million) .................................... -- -- -- 473 473 ------ ----- ---- ----- ------ BALANCE AT DECEMBER 31, 2010 ........................ $ 974 $ 234 $(44) $ 4 $1,168 ====== ===== ==== ===== ======
F-64 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 12 -- SHAREHOLDER'S EQUITY - (CONTINUED) Net unrealized investment gains (losses) included on the Company's Consolidated Balance Sheets as a component of shareholder's equity are summarized below:
DECEMBER 31, ------------------------- 2010 2009 2008 ------- ----- ------- (IN MILLIONS) Balance, end of year comprises: Unrealized investment gains (losses) on: Fixed maturities ...................................................... $ 1,852 $ 547 $(3,345) Equity securities ..................................................... 360 249 (79) Other investments ..................................................... (5) (3) (91) ------- ----- ------- Total (1) ................................................................ 2,207 793 (3,515) Amounts of unrealized investment gains (losses) attributable to: Deferred policy acquisition costs, deferred sales inducements, value of business acquired, and unearned revenue liability .................. (653) (368) 458 Policyholder liabilities .............................................. (56) (121) 49 Deferred income taxes ................................................. (524) (106) 1,051 ------- ----- ------- Total .................................................................... (1,233) (595) 1,558 ------- ----- ------- Net unrealized investment gains (losses) .................................... $ 974 $ 198 $(1,957) ======= ===== =======
(1) Includes unrealized investment gains (losses) on invested assets held in trust on behalf of MRBL, which are included in amounts due from and held for affiliates on the Consolidated Balance Sheets. See Note 8 -- Related Party Transactions, for information on the associated MRBL reinsurance agreement. STATUTORY RESULTS The Company and its wholly-owned subsidiaries, JHNY and John Hancock Life & Health Insurance Company, are required to prepare statutory financial statements in accordance with statutory accounting practices prescribed or permitted by the insurance departments of their states of domicile, which are Michigan, New York, and Massachusetts, respectively. At December 31, 2008, JHUSA, with the explicit permission of the Commissioner, used the implied forward rates from the rolling average of the swap rates that have been observed over the past three years instead of the implied forward rates from the swap curve observed at December 31, 2008 for purposes of its C-3 Phase II calculation. The impact of using this approach was a $53 million decrease in JHUSA's authorized control level risk-based capital as of December 31, 2008. This permitted practice was effective for reporting periods beginning on or after December 31, 2008 and ended September 30, 2009. At December 31, 2008, JHUSA, with the explicit permission of the Commissioner, recorded an increase in the net admitted deferred tax asset ("DTA") instead of the deferred tax calculation required by prescribed statutory accounting practices. If the net admitted DTA was reflected on the statutory balance sheet based on prescribed practices, the DTA and statutory surplus at December 31, 2008 would both be decreased by $84 million. The permitted practice had no effect on statutory net income. This permitted practice was effective for reporting periods beginning on or after December 31, 2008 and ended September 30, 2009. The Company's statutory net income (loss) for the years ended December 31, 2010, 2009, and 2008 was $35 million (unaudited), $(76) million, and $(2,407) million, respectively. The Company's statutory capital and surplus as of December 31, 2010 and 2009 was $5,093 million (unaudited) and $5,012 million, respectively. Unless approved by the Commissioner prior to payment, dividends to the shareholder shall be declared or paid only from the Company's earned surplus. Dividends to the shareholder that may be paid without prior approval of the Commissioner are limited by the laws of the State of Michigan. Such dividends are permissible if, together with other dividends or distributions made within the preceding 12 months, they do not exceed the greater of 10% of the Company's surplus as of December 31 of the preceding year, or the net gain from operations for the 12 month period ending December 31 of the immediately preceding year. F-65 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 13 -- SEGMENT INFORMATION The Company operates in the following three business segments: (1) Insurance and (2) Wealth Management, which primarily serve retail and institutional customers and (3) Corporate and Other, which includes the institutional advisory business, the remaining international insurance operations, the reinsurance operations, and the corporate account. The Company's reportable segments are strategic business units offering different products and services. The reportable segments are managed separately, as they focus on different products, markets, and distribution channels. INSURANCE SEGMENT. Offers a variety of individual life insurance products, including participating whole life, term life, universal life, and variable life insurance, and individual and group long-term care insurance. Products are distributed through multiple distribution channels, including insurance agents, brokers, banks, financial planners, and direct marketing. WEALTH MANAGEMENT SEGMENT. Offers individual and group annuities and mutual fund products and services. Individual annuities consist of fixed deferred annuities, fixed immediate annuities, and variable annuities. Mutual fund products and services primarily consist of open-end mutual funds, closed-end funds, institutional advisory accounts, and privately managed accounts. These products are distributed through multiple distribution channels, including insurance agents and brokers affiliated with the Company, securities brokerage firms, financial planners, pension plan sponsors, pension plan consultants, and banks. This segment also offers a variety of retirement products to qualified defined benefit plans, defined contribution plans, and non-qualified buyers, including guaranteed investment contracts, funding agreements, single premium annuities, and general account participating annuities and fund-type products. These contracts provide non-guaranteed, partially guaranteed, and fully guaranteed investment options through general and separate account products. These products are distributed through a combination of dedicated regional representatives, pension consultants, and investment professionals. The segment's consumer notes program is distributed primarily through brokers affiliated with the Company and securities brokerage firms. CORPORATE AND OTHER SEGMENT. Primarily consists of the Company's remaining international insurance operations, certain corporate operations, the institutional advisory business, reinsurance operations, and businesses that are either disposed or in run-off. Corporate operations primarily include certain financing activities, income on capital not specifically allocated to the reporting segments, and certain non-recurring expenses not allocated to the segments. Reinsurance refers to the transfer of all or part of certain risks related to policies issued by the Company to a reinsurer or to the assumption of risk from other insurers. The disposed business primarily consists of group health insurance and related group life insurance, property and casualty insurance, and selected broker-dealer operations. The accounting policies of the segments are the same as those described in Note 1 -- Summary of Significant Accounting Policies. Allocations of net investment income are based on the amount of assets allocated to each segment. Other costs and operating expenses are allocated to each segment based on a review of the nature of such costs, cost allocations utilizing time studies, and other relevant allocation methodologies. The following table summarizes selected financial information by segment for the periods indicated. Included in the Insurance Segment for all periods presented are the assets, liabilities, revenues, and expenses of the closed blocks. For additional information on the closed blocks, see Note 6 -- Closed Blocks. F-66 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 13 -- SEGMENT INFORMATION - (CONTINUED)
WEALTH CORPORATE INSURANCE MANAGEMENT AND OTHER TOTAL --------- ---------- --------- -------- (IN MILLIONS) 2010 Revenues from external customers ..................... $ 4,460 $ 2,765 $ 482 $ 7,707 Net investment income ................................ 2,619 1,710 238 4,567 Net realized investment and other gains (losses) ..... 381 (202) 202 381 Inter-segment revenues ............................... 3 -- (3) -- ------- -------- ------- -------- Revenues ............................................. $ 7,463 $ 4,273 $ 919 $ 12,655 ======= ======== ======= ======== Total net (loss) income .............................. $(1,486) $ 506 $ 103 $ (877) ======= ======== ======= ======== SUPPLEMENTAL INFORMATION: Equity in net income (loss) of investees accounted for under the equity method ........................... $ 158 $ 62 $ (21) $ 199 Carrying value of investments accounted for under the equity method ..................................... 2,157 1,129 285 3,571 Amortization of deferred policy acquisition costs, deferred sales inducements, and value of business acquired .......................................... 512 239 1 752 Goodwill impairment .................................. 1,600 -- -- 1,600 Interest expense ..................................... -- -- 47 47 Income tax expense ................................... 48 135 39 222 Segment assets ....................................... $82,106 $160,978 $22,944 $266,028
WEALTH CORPORATE INSURANCE MANAGEMENT AND OTHER TOTAL --------- ---------- --------- -------- (IN MILLIONS) 2009 Revenues from external customers ..................... $ 4,366 $ 2,652 $ 535 $ 7,553 Net investment income ............................... 2,265 1,624 457 4,346 Net realized investment and other losses ............ (732) (1,103) (2) (1,837) Inter-segment revenues .............................. -- 1 (1) -- ------- -------- ------- -------- Revenues ............................................ $ 5,899 $ 3,174 $ 989 $ 10,062 ======= ======== ======= ======== Total net (loss) income ............................. $ (258) $ 412 $ 157 $ 311 ======= ======== ======= ======== SUPPLEMENTAL INFORMATION: Equity in net income of investees accounted for under the equity method ................................. $ 28 $ 9 $ 41 $ 78 Carrying value of investments accounted for under the equity method ..................................... 1,622 1,123 314 3,059 Amortization of deferred policy acquisition costs, deferred sales inducements, and value of business acquired .......................................... 308 898 5 1,211 Interest expense .................................... -- -- 34 34 Income tax (benefit) expense ........................ (167) 63 97 (7) Segment assets ...................................... $75,509 $149,336 $23,084 $247,929
F-67 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 13 -- SEGMENT INFORMATION - (CONTINUED)
WEALTH CORPORATE INSURANCE MANAGEMENT AND OTHER TOTAL --------- ---------- --------- -------- (IN MILLIONS) 2008 Revenues from external customers .................... $3,407 $ (357) $ 520 $3,570 Net investment income ............................... 2,300 1,578 563 4,441 Net realized investment and other gains (losses) .... 120 102 (445) (223) Inter-segment revenues .............................. -- 1 (1) -- ------ ------ ----- ------ Revenues ............................................ $5,827 $1,324 $ 637 $7,788 ====== ====== ===== ====== Total net income (loss) ............................. $ 272 $ (360) $(223) $ (311) ====== ====== ===== ====== SUPPLEMENTAL INFORMATION: Equity in net income (loss) of investees accounted for under the equity method ....................... $ 8 $ 26 $ (38) $ (4) Carrying value of investments accounted for under the equity method ................................. 1,418 991 438 2,847 Amortization of deferred policy acquisition costs, deferred sales inducements, and value of business acquired .......................................... (362) 21 5 (336) Interest expense .................................... -- -- 34 34 Income tax expense (benefit) ........................ 137 (413) (63) (339)
The Company operates primarily in the United States and has no reportable major customers. The following table summarizes selected financial information by geographic location for or at the end of periods presented:
INCOME (LOSS) BEFORE LONG-LIVED LOCATION REVENUES INCOME TAXES ASSETS ASSETS -------- -------- ------------- ---------- -------- (IN MILLIONS) 2010 United States ................ $12,582 $(669) $173 $265,908 Foreign -- other ............. 73 14 -- 120 ------- ----- ---- -------- Total ........................ $12,655 $(655) $173 $266,028 ======= ===== ==== ======== 2009 United States ................ $10,004 $ 290 $198 $247,786 Foreign -- other ............. 58 14 -- 143 ------- ----- ---- -------- Total ........................ $10,062 $ 304 $198 $247,929 ======= ===== ==== ======== 2008 United States ................ $ 7,722 $(670) Foreign -- other ............. 66 20 ------- ----- Total ........................ $ 7,788 $(650) ======= =====
F-68 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 14 -- FAIR VALUE OF FINANCIAL INSTRUMENTS The following table presents the carrying amounts and estimated fair values of the Company's financial instruments. Fair values have been determined by using available market information and the valuation methodologies described below.
DECEMBER 31, ----------------------------------------- 2010 2009 ------------------- ------------------- CARRYING FAIR CARRYING FAIR VALUE VALUE VALUE VALUE -------- -------- -------- -------- (IN MILLIONS) ASSETS: Fixed maturities: Available-for-sale (1) ................. $ 60,470 $ 60,470 $ 53,569 $ 53,569 Held-for-trading ....................... 1,627 1,627 1,208 1,208 Equity securities: Available-for-sale ..................... 588 588 558 558 Mortgage loans on real estate ............. 13,343 14,301 12,623 13,252 Policy loans .............................. 5,050 5,050 4,949 4,949 Short-term investments .................... 1,472 1,472 3,973 3,973 Cash and cash equivalents ................. 2,772 2,772 4,915 4,915 Derivatives: Interest rate swaps .................... 2,721 2,721 1,840 1,840 Foreign currency swaps ................. 210 210 242 242 Foreign currency forwards .............. 33 33 43 43 Interest rate options .................. -- -- 1 1 Equity market contracts ................ 4 4 8 8 Embedded derivatives ................... 1,504 1,504 1,711 1,711 Assets held in trust ...................... 2,394 2,394 2,290 2,290 Separate account assets ................... 136,002 136,002 122,466 122,466 -------- -------- -------- -------- TOTAL ASSETS ................................. $228,190 $229,148 $210,396 $211,025 ======== ======== ======== ======== LIABILITIES: Consumer notes ............................ $ 966 $ 983 $ 1,205 $ 1,234 Debt ...................................... 845 839 490 463 Guaranteed investment contracts and funding agreements ............................. 1,833 1,850 2,701 2,760 Fixed-rate deferred and immediate annuities .............................. 8,971 8,866 9,255 8,696 Supplementary contracts without life contingencies .......................... 47 48 51 53 Derivatives: Interest rate swaps .................... 2,164 2,164 1,318 1,318 Foreign currency swaps ................. 578 578 694 694 Foreign currency forwards .............. -- -- 1 1 Equity market contracts ................ 2 2 -- -- Embedded derivatives ................... 1,214 1,214 1,327 1,327 -------- -------- -------- -------- TOTAL LIABILITIES ............................ $ 16,620 $ 16,544 $ 17,042 $ 16,546 ======== ======== ======== ========
(1) Fixed maturities available-for-sale exclude leveraged leases of $1,932 million and $2,012 million at December 31, 2010 and 2009, respectively. The Company calculates the carrying value of its leveraged leases by accruing income at their expected internal rate of return. ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; that is, an exit value. The exit value assumes the asset or liability is exchanged in an orderly transaction; it is not a forced liquidation or distressed sale. F-69 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 14 -- FAIR VALUE OF FINANCIAL INSTRUMENTS - (CONTINUED) ASC 820 created the following two primary categories for the purpose of fair value disclosure: Assets and Liabilities Measured at Fair Value and Reported in the Consolidated Balance Sheets - This category includes assets and liabilities measured at fair value on a recurring and nonrecurring basis. Financial instruments measured on a recurring basis include fixed maturities, equity securities, short-term investments, derivatives, and separate account assets. Assets measured at fair value on a nonrecurring basis include mortgage loans, joint ventures, limited partnership interests, and goodwill, which are reported at fair value only in the period in which an impairment is recognized. Other Assets and Liabilities Not Reported at Fair Value - This category includes assets and liabilities, which do not require the additional ASC 820 disclosures, as follows: MORTGAGE LOANS ON REAL ESTATE - The fair value of unimpaired mortgage loans is estimated using discounted cash flows and takes into account the contractual maturities and discount rates, which were based on current market rates for similar maturity ranges and adjusted for risk due to the property type. POLICY LOANS - These loans are carried at unpaid principal balances, which approximate their fair values. CASH AND CASH EQUIVALENTS - The carrying values for cash and cash equivalents approximate fair value due to the short-term maturities of these instruments. CONSUMER NOTES, GUARANTEED INVESTMENT CONTRACTS, AND FUNDING AGREEMENTS - The fair values associated with these financial instruments are determined by projecting cash flows and discounting at current corporate rates, defined as U.S. Treasury rates plus MFC's corporate spread. The fair value attributable to credit risk represents the present value of the spread. DEBT - The fair value of the Company's long-term debt is estimated using discounted cash flows based on the Company's incremental borrowing rates for similar type of borrowing arrangements. As a result of the adoption of ASC 810 effective January 1, 2010, long-term debt at December 31, 2010 includes variable and fixed rate notes related to consolidated variable interest entities. The carrying value of this debt approximates fair value at December 31, 2010. For further information regarding the adoption of ASC 810, see Note 1 - Summary of Significant Accounting Policies. The carrying values for commercial paper and short-term borrowings approximate fair value. FIXED-RATE DEFERRED AND IMMEDIATE ANNUITIES - The fair value of fixed-rate deferred annuities is estimated by projecting multiple stochastically generated interest rate scenarios under a risk neutral environment reflecting inputs (interest rates, volatility, etc.) observable at the valuation date. The fair value of fixed immediate annuities is determined by projecting cash flows and discounting at current corporate rates, defined as U.S. Treasury rates plus MFC's corporate spread. The fair value attributable to credit risk represents the present value of the spread. ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON THE CONSOLIDATED BALANCE SHEETS VALUATION HIERARCHY Following ASC 820 guidance, the Company categorizes its fair value measurements according to a three-level hierarchy. The hierarchy prioritizes the inputs used by the Company's valuation techniques. A level is assigned to each fair value measurement based on the lowest level input significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are defined as follows: Level 1 - Fair value measurements that reflect unadjusted, quoted prices in active markets for identical assets and liabilities that the Company has the ability to access at the measurement date. Valuations are based on quoted prices reflecting market transactions involving assets or liabilities identical to those being measured. Level 1 assets primarily include exchange traded equity securities and certain separate account assets. F-70 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 14 -- FAIR VALUE OF FINANCIAL INSTRUMENTS - (CONTINUED) Level 2 - Fair value measurements using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in inactive markets, inputs that are observable that are not prices (such as interest rates, credit risks, etc.), and inputs that are derived from or corroborated by observable market data. Most debt securities are classified within Level 2. Also included in the Level 2 category are derivative instruments that are priced using models with observable market inputs, including most derivative financial instruments and certain separate account assets. Level 3 - Fair value measurements using significant nonmarket observable inputs. These include valuations for assets and liabilities that are derived using data, some or all of which is not market observable data, including assumptions about risk. Level 3 securities include less liquid securities, such as structured asset-backed securities, commercial mortgage-backed securities, and other securities that have little or no price transparency. Embedded and complex derivative financial instruments and separate account investments in real estate are also included in Level 3. DETERMINATION OF FAIR VALUE The valuation methodologies used to determine the fair values of assets and liabilities under ASC 820 reflect market participant assumptions and are based on the application of the fair value hierarchy that prioritizes observable market inputs over unobservable inputs. When available, the Company uses quoted market prices to determine fair value and classifies such items within Level 1. If quoted market prices are not available, fair value is based upon valuation techniques, which discount expected cash flows utilizing independent market observable interest rates based on the credit quality and duration of the instrument. Items valued using models are classified according to the lowest level input that is significant to the valuation. Thus, an item may be classified in Level 3 even though significant market observable inputs are used. The following is a description of the valuation techniques used to measure fair value and the general classification of these instruments pursuant to the fair value hierarchy: FAIR VALUE MEASUREMENTS ON A RECURRING BASIS FIXED MATURITIES For fixed maturities, including corporate debt, U.S. Treasury, commercial and residential mortgage-backed securities, asset-backed securities, collateralized debt obligations, issuances by foreign governments, and obligations of state and political subdivisions, fair values are based on quoted market prices when available. When market prices are not available, fair value is generally estimated using discounted cash flow analyses, incorporating current market inputs for similar financial instruments with comparable terms and credit quality (matrix pricing). The significant inputs into these models include, but are not limited to, yield curves, credit risks and spreads, measures of volatility, and prepayment speeds. These fixed maturities are classified within Level 2. Fixed maturities with significant pricing inputs which are unobservable are classified within Level 3. EQUITY SECURITIES Equity securities are comprised of common stock and are classified within Level 1, as fair values are based on quoted market prices. SHORT-TERM INVESTMENTS Short-term investments are comprised of securities due to mature within one year of the date of purchase that are traded in active markets and are classified within Level 1, as fair values are based on quoted market prices. Securities such as commercial paper and discount notes are classified within Level 2 because these securities are typically not actively traded due to their short maturities and, as such, their cost generally approximates fair value. F-71 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 14 -- FAIR VALUE OF FINANCIAL INSTRUMENTS - (CONTINUED) DERIVATIVES The fair value of derivatives is determined through the use of quoted market prices for exchange-traded derivatives or through the use of pricing models for over-the-counter ("OTC") derivatives. The pricing models used are based on market standard valuation methodologies, and the inputs to these models are consistent with what a market participant would use when pricing the instruments. Derivative valuations can be affected by changes in interest rates, currency exchange rates, financial indices, credit spreads, default risk (including the counterparties to the contract), and volatility. The Company's derivatives are generally classified within Level 2 given the significant inputs to the pricing models for most OTC derivatives are observable or can be corroborated by observable market data. Inputs that are observable generally include interest rates, foreign currency exchange rates, and interest rate curves; however, certain OTC derivatives may rely on inputs that are significant to the fair value, but are unobservable in the market or cannot be derived principally from or corroborated by observable market data and would be classified within Level 3. Inputs that are unobservable generally include broker quotes, volatilities, and inputs that are outside of the observable portion of the interest rate curve or other relevant market measures. These unobservable inputs may involve significant management judgment or estimation. Even though unobservable, these inputs are based on assumptions deemed appropriate given the circumstances and consistent with what market participants would use when pricing such instruments. The credit risk of both the counterparty and the Company are considered in determining the fair value for all OTC derivatives after taking into account the effects of netting agreements and collateral arrangements. EMBEDDED DERIVATIVES As defined in ASC 815, the Company holds assets and liabilities classified as embedded derivatives on the Consolidated Balance Sheets. These assets include guaranteed minimum income benefits that are ceded under modified coinsurance reinsurance arrangements ("Reinsurance GMIB Assets"). Liabilities include policyholder benefits offered under variable annuity contracts such as guaranteed minimum withdrawal benefits with a term certain ("GMWB") and embedded reinsurance derivatives. Embedded derivatives are recorded on the Consolidated Balance Sheets at fair value, separately from their host contract, and the change in their fair value is reflected in net income. Many factors including, but not limited to, market conditions, credit ratings, variations in actuarial assumptions regarding policyholder liabilities, and risk margins related to non-capital market inputs may result in significant fluctuations in the fair value of these embedded derivatives that could materially affect net income. The fair value of embedded derivatives is estimated as the present value of future benefits less the present value of future fees. The fair value calculation includes assumptions for risk margins including nonperformance risk. Risk margins are established to capture the risks of the instrument which represent the additional compensation a market participant would require to assume the risks related to the uncertainties of such actuarial assumptions as annuitization, persistency, partial withdrawal, and surrenders. The establishment of these actuarial assumptions, risk margins, nonperformance risk, and other inputs requires the use of significant judgment. Nonperformance risk refers to the risk that the obligation will not be fulfilled and affects the value of the liability. The fair value measurement assumes that the nonperformance risk is the same before and after the transfer; therefore, fair value reflects the reporting entity's own credit risk. Nonperformance risk for liabilities held by the Company is based on MFC's own credit risk, which is determined by taking into consideration publicly available information relating to MFC's debt, as well as its claims paying ability. Nonperformance risk is also reflected in the Reinsurance GMIB Assets held by the Company. The credit risk of the reinsurance companies is most representative of the nonperformance risk for the Reinsurance GMIB Assets and is derived from publicly available information relating to the reinsurance companies' publicly issued debt. The fair value of embedded derivatives related to reinsurance agreements is determined based on a total return swap methodology. These total return swaps are reflected as assets or liabilities on the Consolidated Balance Sheets representing the difference between the statutory book value and fair value of the related modified coinsurance assets with ongoing changes in fair value recorded in net realized investment and other gains (losses). The fair value of the underlying assets is based on the valuation approach for similar assets described herein. F-72 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 14 -- FAIR VALUE OF FINANCIAL INSTRUMENTS - (CONTINUED) SEPARATE ACCOUNT ASSETS Separate account assets are reported at fair value and reported as a summarized total on the Consolidated Balance Sheets in accordance with SOP No. 03-1, "Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts," which is now incorporated into ASC 944. The fair value of separate account assets is based on the fair value of the underlying assets owned by the separate account. Assets owned by the Company's separate accounts primarily include investments in mutual funds, fixed maturity securities, equity securities, real estate, short-term investments, and cash and cash equivalents. The fair value of mutual fund investments is based upon quoted market prices or reported net asset values. Open-ended mutual fund investments that are traded in an active market and have a publicly available price are included in Level 1. The fair values of fixed maturity securities, equity securities, short-term investments, and cash equivalents held by separate accounts are determined on a basis consistent with the methodologies described herein for similar financial instruments held within the Company's general account. Separate account assets classified as Level 3 consist primarily of debt and equity investments in private companies, which own real estate and carry it at fair value. The values of the real estate investments are estimated using generally accepted valuation techniques. A comprehensive appraisal is performed shortly after initial purchase of properties and at two or three-year intervals thereafter, depending on the property. Appraisal updates are conducted according to client contracts, generally at one-year or six-month intervals. In the quarters in which an investment is not independently appraised or its valuation updated, the market value is reviewed by management. The valuation of a real estate investment is adjusted only if there has been a significant change in economic circumstances related to the investment since acquisition or the most recent independent valuation and upon the independent appraiser's review and concurrence with management. Further, these valuations are prepared giving consideration to the income, cost, and sales comparison approaches of estimating property value. These real estate investments are classified as Level 3 by the companies owning them. The equity investments in these companies are considered to be Level 3 by the Company. F-73 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 14 -- FAIR VALUE OF FINANCIAL INSTRUMENTS - (CONTINUED) The following tables present the Company's assets and liabilities that are measured at fair value on a recurring basis by fair value hierarchy level:
DECEMBER 31, 2010 ----------------------------------------- TOTAL FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 ---------- -------- ------- ------- (IN MILLIONS) ASSETS: Fixed maturities available-for-sale (1): Corporate debt securities ............................ $ 41,199 $ -- $37,898 $3,301 Commercial mortgage-backed securities ................ 4,247 -- 3,762 485 Residential mortgage-backed securities ............... 460 -- 10 450 Collateralized debt obligations ...................... 136 -- 33 103 Other asset-backed securities ........................ 1,029 -- 950 79 U.S. Treasury and agency securities .................. 7,841 -- 7,841 -- Obligations of states and political subdivisions ..... 4,027 -- 3,619 408 Debt securities issued by foreign governments ........ 1,531 -- 1,531 -- -------- -------- ------- ------ Total fixed maturities available-for-sale ............... 60,470 -- 55,644 4,826 Fixed maturities held-for-trading: Corporate debt securities ............................ 1,177 8 1,133 36 Commercial mortgage-backed securities ................ 224 -- 209 15 Residential mortgage-backed securities ............... 3 -- -- 3 Collateralized debt obligations ...................... 4 -- 1 3 Other asset-backed securities ........................ 66 -- 65 1 U.S. Treasury and agency securities .................. 101 -- 101 -- Obligations of states and political subdivisions ..... 51 -- 51 -- Debt securities issued by foreign governments ........ 1 -- 1 -- -------- -------- ------- ------ Total fixed maturities held-for-trading ................. 1,627 8 1,561 58 Equity securities available-for-sale .................... 588 588 -- -- Short-term investments .................................. 1,472 -- 1,472 -- Derivative assets (2): Interest rate swaps .................................. 2,721 -- 2,652 69 Foreign currency swaps ............................... 210 -- 210 -- Foreign currency forwards ............................ 33 -- 33 -- Equity market contracts .............................. 4 -- -- 4 Embedded derivatives (3): Reinsurance contracts ................................ 7 -- 7 -- Benefit guarantees ................................... 1,497 -- -- 1,497 Assets held in trust (4) ................................ 2,394 913 1,420 61 Separate account assets (5) ............................. 136,002 130,884 2,092 3,026 -------- -------- ------- ------ TOTAL ASSETS AT FAIR VALUE ................................. $207,025 $132,393 $65,091 $9,541 ======== ======== ======= ====== LIABILITIES: Derivative liabilities (2): Interest rate swaps .................................. $ 2,164 $ -- $ 2,156 $ 8 Foreign currency swaps ............................... 578 -- 534 44 Equity market contracts .............................. 2 -- -- 2 Embedded derivatives (3): Reinsurance contracts ................................ 660 -- 660 -- Participating pension contracts ...................... 98 -- 98 -- Benefit guarantees ................................... 456 -- -- 456 -------- -------- ------- ------ TOTAL LIABILITIES AT FAIR VALUE ............................ $ 3,958 $ -- $ 3,448 $ 510 ======== ======== ======= ======
F-74 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 14 -- FAIR VALUE OF FINANCIAL INSTRUMENTS - (CONTINUED)
DECEMBER 31, 2009 ----------------------------------------- TOTAL FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 ---------- -------- ------- ------- (IN MILLIONS) ASSETS: Fixed maturities available-for-sale (1): Corporate debt securities ............................ $ 42,505 $ -- $39,889 $2,616 Commercial mortgage-backed securities ................ 4,474 -- 4,039 435 Residential mortgage-backed securities ............... 476 -- 16 460 Collateralized debt obligations ...................... 135 -- 57 78 Other asset-backed securities ........................ 1,242 -- 1,151 91 U.S. Treasury and agency securities .................. 1,968 -- 1,968 -- Obligations of states and political subdivisions ..... 1,491 -- 1,261 230 Debt securities issued by foreign governments ........ 1,278 -- 1,213 65 -------- -------- ------- ------ Total fixed maturities available-for-sale ............... 53,569 -- 49,594 3,975 Fixed maturities held-for-trading: Corporate debt securities ............................ 898 -- 882 16 Commercial mortgage-backed securities ................ 216 -- 206 10 Residential mortgage-backed securities ............... 3 -- -- 3 Collateralized debt obligations ...................... 2 -- 1 1 Other asset-backed securities ........................ 21 -- 20 1 U.S. Treasury and agency securities .................. 29 -- 29 -- Obligations of states and political subdivisions ..... 26 -- 23 3 Debt securities issued by foreign governments ........ 13 -- -- 13 -------- -------- ------- ------ Total fixed maturities held-for-trading ................. 1,208 -- 1,161 47 Equity securities available-for-sale .................... 558 558 -- -- Short-term investments .................................. 3,973 -- 3,973 -- Derivative assets (2) ................................... 2,134 -- 2,074 60 Embedded derivatives (3) ................................ 1,711 -- 8 1,703 Assets held in trust (4) ................................ 2,290 624 1,666 -- Separate account assets (5) ............................. 122,466 116,875 2,494 3,097 -------- -------- ------- ------ TOTAL ASSETS AT FAIR VALUE ................................. $187,909 $118,057 $60,970 $8,882 ======== ======== ======= ====== LIABILITIES: Derivative liabilities (2) .............................. $ 2,013 $ -- $ 1,987 $ 26 Embedded derivatives (3) ................................ 1,327 -- 688 639 -------- -------- ------- ------ TOTAL LIABILITIES AT FAIR VALUE ............................ $ 3,340 $ -- $ 2,675 $ 665 ======== ======== ======= ======
(1) Fixed maturities available-for-sale exclude leveraged leases of $1,932 million and $2,012 million at December 31, 2010 and 2009, respectively. The Company calculates the carrying value of its leveraged leases by accruing income at their expected internal rate of return. (2) Derivative assets and liabilities are presented gross to reflect the presentation in the Consolidated Balance Sheets, but are presented net for purposes of the Level 3 rollforward in the following table. (3) Embedded derivatives related to fixed maturities and reinsurance contracts are reported as part of the derivative asset or liability on the Consolidated Balance Sheets. Embedded derivatives related to benefit guarantees are reported as part of the reinsurance recoverable or future policy benefits on the Consolidated Balance Sheets. Embedded derivatives related to participating pension contracts are reported as part of future policy benefits on the Consolidated Balance Sheets. (4) Represents the fair value of assets held in trust on behalf of MRBL, which are included in amounts due from and held for affiliates on the Consolidated Balance Sheets. See Note 8 -- Related Party Transactions for information on the associated MRBL reinsurance agreement. The fair value of the trust assets is determined on a basis consistent with the methodologies described herein for similar financial instruments. (5) Separate account assets are recorded at fair value. Investment performance related to separate account assets is fully offset by corresponding amounts credited to contract holders whose interest in the separate account assets is recorded by the Company as separate account liabilities. Separate account liabilities are set equal to the fair value of separate account assets. F-75 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 14 -- FAIR VALUE OF FINANCIAL INSTRUMENTS -- (CONTINUED) LEVEL 3 FINANCIAL INSTRUMENTS The changes in Level 3 financial instruments measured at fair value on a recurring basis for the years ended December 31, 2010 and 2009 are summarized as follows:
NET REALIZED/ UNREALIZED GAINS (LOSSES) INCLUDED IN: TRANSFERS ---------------- ---------------- CHANGE IN PURCHASES, UNREALIZED GAINS ISSUANCES, (LOSSES) INCLUDED BALANCE AT AND INTO OUT OF BALANCE AT IN EARNINGS ON JANUARY 1, EARNINGS AOCI SETTLEMENTS LEVEL 3 LEVEL 3 DECEMBER INSTRUMENTS STILL 2010 (1) (2) (NET) (3) (3) 31, 2010 HELD ---------- -------- ----- ----------- ------- ------- ---------- ----------------- (IN MILLIONS) Fixed maturities available-for-sale: Corporate debt securities .... $2,616 $(50) $ 223 $ 80 $ 733 $(301) $3,301 $-- Commercial mortgage-backed securities ................ 435 1 105 (54) -- (2) 485 -- Residential mortgage-backed securities ................ 460 (22) 131 (119) -- -- 450 -- Collateralized debt obligations ............... 78 (3) 39 (11) -- -- 103 -- Other asset-backed securities ................ 91 (4) 14 (22) -- -- 79 -- Obligations of states and political subdivisions .... 230 -- (6) 247 342 (405) 408 -- Debt securities issued by foreign governments ....... 65 -- (65) -- -- -- -- -- ------ ---- ----- ----- ------ ----- ------ ---- Total fixed maturities available-for-sale ........... 3,975 (78) 441 121 1,075 (708) 4,826 -- Fixed maturities held-for-trading: Corporate debt securities .... 16 15 -- 4 2 (1) 36 15 Commercial mortgage-backed securities ................ 10 5 -- -- -- -- 15 5 Residential mortgage-backed securities ................ 3 -- -- -- -- -- 3 1 Collateralized debt obligations ............... 1 2 -- -- -- -- 3 2 Other asset-backed securities ................ 1 -- -- -- -- -- 1 -- Obligations of states and political subdivisions .... 3 -- -- 3 -- (6) -- -- Debt securities issued by foreign governments ....... 13 (13) -- -- -- -- -- (13) ------ ---- ----- ----- ------ ----- ------ ---- Total fixed maturities held-for-trading ............. 47 9 -- 7 2 (7) 58 10 Net derivatives ................. 34 15 (30) -- -- -- 19 19 Net embedded derivatives ........ 1,064 (23)(4) -- -- -- -- 1,041 (23) Assets held in trust ............ -- 1 3 (10) 68 (1) 61 3 Separate account assets (5) ..... 3,097 (13) 5 (125) 62 -- 3,026 10 ------ ---- ----- ----- ------ ----- ------ ---- TOTAL $8,217 $(89) $ 419 $ (7) $1,207 $(716) $9,031 $ 19 ====== ==== ===== ===== ====== ===== ====== ====
F-76 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 14 -- FAIR VALUE OF FINANCIAL INSTRUMENTS - (CONTINUED)
NET REALIZED/ UNREALIZED GAINS (LOSSES) INCLUDED IN: ----------------- CHANGE IN UNREALIZED PURCHASES, NET GAINS (LOSSES) ISSUANCES, TRANSFERS INCLUDED IN BALANCE AT AND INTO AND OUT BALANCE AT EARNINGS ON JANUARY 1, EARNINGS AOCI SETTLEMENTS OF LEVEL 3 DECEMBER INSTRUMENTS 2009 (1) (2) (NET) (3) 31, 2009 STILL HELD ---------- -------- ----- ----------- ------------ ---------- -------------- (IN MILLIONS) Fixed maturities available-for-sale: Corporate debt securities .... $ 1,792 $ 80 $ 482 $ (67) $ 329 $2,616 $ -- Commercial mortgage-backed securities ................ 446 (2) 100 (90) (19) 435 -- Residential mortgage-backed securities ................ 624 (87) 149 (230) 4 460 -- Collateralized debt obligations ............... 88 (6) 6 (10) -- 78 -- Other asset-backed securities ................ 299 3 29 (252) 12 91 -- Obligations of states and political subdivisions .... 1 -- (6) 315 (80) 230 -- Debt securities issued by foreign governments ....... 62 -- 4 (1) -- 65 -- ------- ----- ----- ----- ----- ------ ----- Total fixed maturities available-for-sale ........... 3,312 (12) 764 (335) 246 3,975 -- Fixed maturities held-for-trading: Corporate debt securities .... 16 2 -- (2) -- 16 1 Commercial mortgage-backed securities ................ 7 3 -- -- -- 10 3 Residential mortgage-backed securities ................ 3 1 -- (1) -- 3 1 Collateralized debt obligations ............... 1 -- -- -- -- 1 -- Other asset-backed securities ................ 2 -- -- (1) -- 1 -- Obligations of states and political subdivisions .... -- (1) -- 4 -- 3 (1) Debt securities issued by foreign governments ....... 12 1 -- -- -- 13 1 ------- ----- ----- ----- ----- ------ ----- Total fixed maturities held-for-trading ............. 41 6 -- -- -- 47 5 Net derivatives ................. 195 (38) (12) -- (111) 34 (32) Net embedded derivatives ........ 1,516 (452)(4) -- -- -- 1,064 (452) Separate account assets (5) ..... 2,972 (493) (1) 619 -- 3,097 (389) ------- ----- ----- ----- ----- ------ ----- TOTAL ........................... $ 8,036 $(989) $ 751 $ 284 $ 135 $8,217 $(868) ======= ===== ===== ===== ===== ====== =====
(1) This amount is included in net realized investment and other gains (losses) on the Consolidated Statements of Operations. (2) This amount is included in accumulated other comprehensive income on the Consolidated Balance Sheets. (3) For financial assets that are transferred into and/or out of Level 3, the Company uses the fair value of the assets at the beginning of the reporting period. (4) This amount is included in benefits to policyholders on the Consolidated Statements of Operations. (5) Investment performance related to separate account assets is fully offset by corresponding amounts credited to contract holders whose liability is reflected within separate account liabilities. F-77 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 14 -- FAIR VALUE OF FINANCIAL INSTRUMENTS - (CONTINUED) The Company may hedge positions with offsetting positions that are classified in a different level. For example, the gains and losses for assets and liabilities in the Level 3 category presented in the tables above may not reflect the effect of offsetting gains and losses on hedging instruments that have been classified by the Company in the Level 1 and Level 2 categories. The transfers into Level 3 primarily result from securities that were impaired during the year or securities where a lack of observable market data (versus the previous year) resulted in reclassifying assets into Level 3. The transfers out of Level 3 primarily result from observable market data becoming available for that asset, thus eliminating the need to extrapolate market data beyond observable points. ASSETS MEASURED AT FAIR VALUE ON A NONRECURRING BASIS Certain assets are reported at fair value on a nonrecurring basis, including investments such as mortgage loans, joint ventures, and limited partnership interests, and goodwill, which are reported at fair value only in the period in which an impairment is recognized. The fair value is calculated using either models that are widely accepted in the financial services industry or the valuation of collateral underlying impaired mortgages. The Company recorded a goodwill impairment of $1,600 million during the year ended December 31, 2010, and the fair value measurement was classified as Level 3. For additional information regarding the impairment, see Note 15 -- Goodwill, Value of Business Acquired, and Other Intangible Assets. NOTE 15 -- GOODWILL, VALUE OF BUSINESS ACQUIRED, AND OTHER INTANGIBLE ASSETS The changes in the carrying value of goodwill by segment were as follows:
WEALTH CORPORATE AND INSURANCE MANAGEMENT OTHER TOTAL --------- ---------- ------------- ------- (IN MILLIONS) Balance at January 1, 2010 ..... $ 1,600 $1,307 $146 $ 3,053 Impairment ..................... (1,600) -- -- (1,600) ------- ------ ---- ------- Balance at December 31, 2010 ... $ -- $1,307 $146 $ 1,453 ======= ====== ==== =======
WEALTH CORPORATE AND INSURANCE MANAGEMENT OTHER TOTAL --------- ---------- ------------- ------- (IN MILLIONS) Balance at January 1, 2009 ..... $1,600 $1,307 $146 $3,053 Impairment ..................... -- -- -- -- ------ ------ ---- ------ Balance at December 31, 2009 ... $1,600 $1,307 $146 $3,053 ====== ====== ==== ======
The Company tests goodwill for impairment annually as of December 31 and more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit, which is defined as an operating segment or one level below an operating segment, below its carrying amount. In 2010, the Company impaired the entire $1,600 million of goodwill associated with the Insurance segment. The impairment was reflective of the decrease in the expected future earnings for this business. The fair value was determined primarily using an earnings-based approach, which incorporated the segment's in-force and new business embedded value using internal forecasts of revenue and expense. There were no impairments recorded in 2009, and there were no accumulated impairment losses at December 31, 2009. F-78 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 15 -- GOODWILL, VALUE OF BUSINESS ACQUIRED, AND OTHER INTANGIBLE ASSETS - (CONTINUED) VALUE OF BUSINESS ACQUIRED The balance of and changes in VOBA as of and for the years ended December 31, were as follows:
DECEMBER 31, --------------- 2010 2009 ------ ------- (IN MILLIONS) Balance, beginning of year .......................... $2,171 $2,564 Amortization ........................................ (66) (15) Change in unrealized investment gains and losses .... (146) (342) Adoption of ASC 320, recognition of other-than-temporary impairments ................. -- (36) ------ ------ Balance, end of year ................................ $1,959 $2,171 ====== ======
The following table provides estimated future amortization (net of tax) for the periods indicated:
VOBA AMORTIZATION ------------- (IN MILLIONS) 2011.......................... $94 2012.......................... 87 2013.......................... 82 2014.......................... 68 2015.......................... 67
OTHER INTANGIBLE ASSETS Other intangible asset balances were as follows:
GROSS ACCUMULATED NET CARRYING AMOUNT NET AMORTIZATION CARRYING AMOUNT --------------- ---------------- --------------- (IN MILLIONS) DECEMBER 31, 2010 Not subject to amortization: Brand name ............................... $ 600 $-- $ 600 Investment management contracts .......... 295 -- 295 Other .................................... 5 -- 5 Subject to amortization: Distribution networks .................... 397 48 349 Other investment management contracts .... 64 28 36 ------ --- ------ Total ....................................... $1,361 $76 $1,285 ====== === ====== DECEMBER 31, 2009 Not subject to amortization: Brand name ............................... $ 600 $-- $ 600 Investment management contracts .......... 295 -- 295 Subject to amortization: Distribution networks .................... 397 37 360 Other investment management contracts .... 64 25 39 ------ --- ------ Total ....................................... $1,356 $62 $1,294 ====== === ======
Amortization expense (net of tax) for other intangible assets was $9 million, $9 million, and $8 million for the years ended December 31, 2010, 2009, and 2008, respectively. Amortization expense (net of tax) for other intangible assets is expected to be approximately $10 million in 2011, $11 million in 2012, $11 million in 2013, $12 million in 2014, and $11 million in 2015. F-79 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 16 -- CERTAIN SEPARATE ACCOUNTS The Company issues variable annuity and variable life contracts through its separate accounts for which investment income and investment gains and losses accrue to, and investment risk is borne by, the contract holder. Most contracts contain certain guarantees, which are discussed more fully below. The assets supporting the variable portion of variable annuities are carried at fair value and reported on the Consolidated Balance Sheets as separate account assets with an equivalent amount reported for separate account liabilities. Amounts assessed against the contract holders for mortality, administrative, and other services are included in revenue, and changes in liabilities for minimum guarantees are included in benefits to policyholders in the Company's Consolidated Statements of Operations. For the years ended December 31, 2010 and 2009, there were no gains or losses on transfers of assets from the general account to the separate account. The deposits related to the variable life insurance contracts are invested in separate accounts, and the Company guarantees a specified death benefit on certain policies if specified premiums on these policies are paid by the policyholder, regardless of separate account performance. The following table reflects variable life insurance contracts with guarantees held by the Company:
DECEMBER 31, --------------- 2010 2009 ------ ------ (IN MILLIONS, EXCEPT FOR AGE) LIFE INSURANCE CONTRACTS WITH GUARANTEED BENEFITS In the event of death Account value................................. $7,648 $6,969 Net amount at risk related to deposits........ 156 208 Average attained age of contract holders...... 51 50
Many of the variable annuity contracts issued by the Company offer various guaranteed minimum death, income, and/or withdrawal benefits. Guaranteed Minimum Death Benefit ("GMDB") features guarantee the contract holder either (a) a return of no less than total deposits made to the contract less any partial withdrawals; (b) total deposits made to the contract less any partial withdrawals plus a minimum return; (c) the highest contract value on a specified anniversary date minus any withdrawals following the contract anniversary, or (d) a combination of (b) and (c) above. Contracts with Guaranteed Minimum Income Benefit ("GMIB") riders provide a guaranteed lifetime annuity, which may be elected by the contract holder after a stipulated waiting period (7 to 15 years), and which may be larger than what the contract account balance would purchase at then-current annuity purchase rates. Multiple variations of an optional Guaranteed Minimum Withdrawal Benefit ("GMWB") rider have also been offered by the Company. The GMWB rider provides contract holders a guaranteed annual withdrawal amount over a specified time period or in some cases for as long as they live. In general, guaranteed annual withdrawal amounts are based on deposits and may be reduced if withdrawals exceed allowed amounts. Guaranteed amounts may also be increased as a result of "step-up" provisions, which increase the benefit base to higher account values at specified intervals. Guaranteed amounts may also be increased if withdrawals are deferred over a specified period. In addition, certain versions of the GMWB rider extend lifetime guarantees to spouses. Unaffiliated and affiliated reinsurance has been utilized to mitigate risk related to some of the guarantee benefit riders. Hedging has also been utilized to mitigate risk related to some of the GMWB riders. For GMDB, the net amount at risk is defined as the current guaranteed minimum death benefit in excess of the current account balance. For GMIB, the net amount at risk is defined as the excess of the current annuitization income base over the current account value. For GMWB, the net amount at risk is defined as the current guaranteed withdrawal amount minus the current account value. For all the guarantees, the net amount at risk is floored at zero at the single contract level. The Company had the following variable annuity contracts with guarantees. Amounts at risk are shown net of reinsurance. Note that the Company's variable annuity contracts with guarantees may offer more than one type of guarantee in each contract; therefore, the amounts listed are not mutually exclusive. F-80 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 16 -- CERTAIN SEPARATE ACCOUNTS - (CONTINUED)
DECEMBER 31, ----------------- 2010 2009 ------- ------- (IN MILLIONS, EXCEPT FOR AGES AND PERCENTS) GUARANTEED MINIMUM DEATH BENEFIT Return of net deposits In the event of death Account value ................................... $25,630 $23,472 Net amount at risk- net of reinsurance .......... 140 312 Average attained age of contract holders ........ 65 64 Return of net deposits plus a minimum return In the event of death Account value ................................... $ 702 $ 744 Net amount at risk- net of reinsurance .......... 318 354 Average attained age of contract holders ........ 70 70 Guaranteed minimum return rate .................. 5% 5% Highest specified anniversary account value minus withdrawals post anniversary In the event of death Account value ................................... $29,399 $28,414 Net amount at risk- net of reinsurance .......... 485 843 Average attained age of contract holders ........ 65 64 GUARANTEED MINIMUM INCOME BENEFIT Account value ................................... $ 6,276 $ 6,293 Net amount at risk- net of reinsurance .......... 41 54 Average attained age of contract holders ........ 64 63 GUARANTEED MINIMUM WITHDRAWAL BENEFIT Account value ................................... $39,034 $35,595 Net amount at risk .............................. 782 1,012 Average attained age of contract holders ........ 64 63
Account balances of variable contracts with guarantees were invested in various separate accounts with the following characteristics:
DECEMBER 31, ------------ 2010 2009 ----- ---- (IN BILLIONS) TYPE OF FUND Equity ........ $30 $28 Balanced ...... 23 22 Bond .......... 7 7 Money Market .. 2 2 --- --- Total ...... $62 $59 === ===
F-81 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 16 -- CERTAIN SEPARATE ACCOUNTS - (CONTINUED) The following table summarizes the liabilities for guarantees on variable contracts reflected in the general account:
GUARANTEED GUARANTEED GUARANTEED MINIMUM MINIMUM MINIMUM DEATH INCOME WITHDRAWAL BENEFIT BENEFIT BENEFIT (GMDB) (GMIB) (GMWB) TOTAL ------------- ---------- ----------- ------- (IN MILLIONS) Balance at January 1, 2010 ........ $ 253 $ 209 $ 663 $ 1,125 Incurred guarantee benefits ....... (100) (60) -- (160) Other reserve changes ............. 72 28 (156) (56) ----- ------- ------- ------- Balance at December 31, 2010 ...... 225 177 507 909 Reinsurance recoverable ........... (78) (1,120) (421) (1,619) ----- ------- ------- ------- Net balance at December 31, 2010 .. $ 147 $ (943) $ 86 $ (710) ===== ======= ======= ======= Balance at January 1, 2009 ........ $ 454 $ 442 $ 2,890 $ 3,786 Incurred guarantee benefits ....... (153) (144) -- (297) Other reserve changes ............. (48) (89) (2,227) (2,364) ----- ------- ------- ------- Balance at December 31, 2009 ...... 253 209 663 1,125 Reinsurance recoverable ........... (104) (1,177) (548) (1,829) ----- ------- ------- ------- Net balance at December 31, 2009 .. $ 149 $ (968) $ 115 $ (704) ===== ======= ======= =======
The GMDB gross and ceded reserves, the GMIB gross reserves, and the life contingent portion of the GMWB reserves were determined in accordance with ASC 944, and the GMIB reinsurance recoverable and non-life contingent GMWB gross reserve were determined in accordance with ASC 815. The Company regularly evaluates estimates used and adjusts the additional liability balance, with a related charge or credit to benefits to policyholders, if actual experience or other evidence suggests that earlier assumptions should be revised. The following assumptions and methodology were used to determine the amounts above at December 31, 2010 and 2009: - Data used included 1,000 stochastically generated investment performance scenarios. For ASC 815 calculations, risk neutral scenarios were used. - For life products, reserves were established using stochastic modeling of future separate account returns and best estimate mortality, lapse, and premium persistency assumptions, which vary by product. - Mean return and volatility assumptions were determined by asset class. Market consistent observed volatilities were used where available for ASC 815 calculations. - Annuity mortality was based on the 1994 MGDB table multiplied by factors varied by rider types (living benefit/GMDB only) and qualified and non-qualified business. - Annuity base lapse rates vary by contract type, commission type, and by with or without living benefit or death benefit riders. The lapse rates range from 0.8% to 41.5% for GMDB and 0.3% to 41.5% for GMIB and GMWB. - The discount rates used in the ASC 944 calculations range from 6.4% to 7%. The discount rates used in the ASC 815 calculations were based on the term structure of swap curves with a credit spread based on the credit standing of MFC (for GMWB) and the reinsurers (for GMIB). F-82 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 17 -- DEFERRED POLICY ACQUISITION COSTS AND DEFERRED SALES INDUCEMENTS The balance of and changes in deferred policy acquisition costs as of and for the years ended December 31, were as follows:
DECEMBER 31, ---------------- 2010 2009 ------ ------- (IN MILLIONS) Balance, beginning of year ................................ $9,186 $ 9,419 Capitalization ............................................ 1,228 1,579 Amortization .............................................. (664) (1,119) Change in unrealized investment gains and losses .......... (98) (704) Adoption of ASC 320, recognition of other-than-temporary impairments ............................................ -- 11 ------ ------- Balance, end of year ...................................... $9,652 $ 9,186 ====== =======
The balance of and changes in deferred sales inducements as of and for the years ended December 31, were as follows:
DECEMBER 31, ------------ 2010 2009 ---- ----- (IN MILLIONS) Balance, beginning of year ................................ $379 $ 427 Capitalization ............................................ 12 63 Amortization .............................................. (22) (77) Change in unrealized investment gains and losses .......... (15) (12) Adoption of ASC 320, recognition of other-than-temporary impairments ............................................ -- (22) ---- ----- Balance, end of year ...................................... $354 $ 379 ==== =====
NOTE 18 -- SHARE-BASED PAYMENTS The Company participates in the stock compensation plans of MFC and uses the Black-Scholes option-pricing model to estimate the value of stock options granted to employees. The stock-based compensation is a legal obligation of MFC, but in accordance with U.S. GAAP, is recorded in the accounts of the Company in other operating costs and expenses. STOCK OPTIONS (ESOP) Under MFC's Executive Stock Option Plan ("ESOP"), stock options are granted to selected individuals. Options provide the holder with the right to purchase common shares at an exercise price equal to the higher of the prior day or prior five-day average closing market price of MFC's common shares on the Toronto Stock Exchange on the date the options were granted. The options vest over a period not exceeding four years and expire not more than 10 years from the grant date. A total of 73.6 million common shares have been reserved for issuance under the ESOP. MFC grants Deferred Share Units ("DSUs") to certain employees under the ESOP. These DSUs vest over a three-year period, and each DSU entitles the holder to receive one common share on retirement or termination of employment. When dividends are paid on MFC's common shares, holders of DSUs are deemed to receive dividends at the same rate, payable in the form of additional DSUs. In addition, for certain new employees and pursuant to the deferred compensation program, MFC grants DSUs under the ESOP, which entitle the holder to receive cash payment equal to the value of the same number of common shares plus credited dividends on retirement or termination of employment. In 2010, 17,000 DSUs were issued to certain new hires, which vest over a maximum period of five years. No such DSUs were issued in 2009 or 2008. In 2010, 2009, and 2008, 35,000, 56,000, and 217,000 DSUs, respectively, were issued to certain employees who elected to defer receipt of all or part of their annual bonus. These DSUs vested immediately upon grant. Also, in 2010 and 2008, 20,000 and 269,000 DSUs were issued to certain employees who elected to defer payment of all or part of their restricted share units and/or performance share units. In 2009, no DSUs were granted to certain employees to defer payment of all or part of their restricted share units since the restricted share units scheduled to vest in 2009 did so without any payment value. Restricted share units and performance share units are discussed below. These DSUs also vested immediately upon grant. F-83 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 18 -- SHARE-BASED PAYMENTS - (CONTINUED) Under the Stock Plan for Non-Employee Directors, each eligible director may elect to receive his or her annual director's retainer and fees in DSUs or common shares in lieu of cash. Upon termination of board service, an eligible director who has elected to receive DSUs will be entitled to receive cash equal to the value of the DSUs accumulated in his or her account or, at his or her direction, an equivalent number of common shares. A total of one million common shares of MFC have been reserved for issuance under the Stock Plan for Non-Employee Directors. The Company recorded compensation expense for stock options granted of $8 million, $9 million, and $9 million for the years ended December 31, 2010, 2009, and 2008, respectively. GLOBAL SHARE OWNERSHIP PLAN (GSOP) Effective January 1, 2001, MFC established the Global Share Ownership Plan ("GSOP") for its eligible employees. Under the GSOP, qualifying employees can choose to apply up to 5% of their annual base earnings toward the purchase of common shares of MFC. MFC matches a percentage of the employee's eligible contributions up to a maximum amount. MFC's contributions vest immediately. All contributions are used by the GSOP's trustee to purchase common shares in the open market. The Company's compensation expense related to the GSOP was $1 million for each of the three years ended December 31, 2010, 2009, and 2008. RESTRICTED SHARE UNIT PLAN (RSU) In 2003, MFC established the Restricted Share Unit ("RSU") Plan. For the years ended December 31, 2010, 2009, and 2008, 3.0 million, 3.8 million, and 1.8 million RSUs, respectively, were granted to certain eligible employees under this plan. For the year ended December 31, 2009, 0.6 million Special RSUs and for the years ended December 31, 2010 and 2009, 0.7 million and 1.5 million Performance Share Units ("PSUs"), respectively, were granted to eligible employees under this plan. There were no Special RSUs granted in 2010, and no Special RSUs or PSUs granted in 2008. Each RSU/Special RSU/PSU entitles the recipient to receive payment equal to the market value of one common share, plus credited dividends, at the time of vesting, subject to any performance conditions. For the years ended December 31, 2010, 2009, and 2008, the Company granted 1.4 million, 2.0 million, and 0.7 million RSUs, respectively, to certain eligible employees. RSUs granted in 2010 vest 25% on the first anniversary and 75% on the date that is 34 months from the grant date. RSUs granted in 2009 vest 25% on the first anniversary, 25% on the second anniversary, and 50% on the date that is 34 months from the grant date. RSUs granted prior to 2009 vest three years from the grant date. The related compensation expense is recognized over this period, except where the employee is eligible to retire prior to the vesting date, in which case the cost is recognized over the period between the grant date and the date on which the employee is eligible to retire. The Company's compensation expense related to RSUs was $22 million, $14 million, and $24 million for the years ended December 31, 2010, 2009, and 2008, respectively. For the year ended December 31, 2009, the Company granted 0.3 million Special RSUs to certain eligible employees. Special RSUs vest on the date that is 22 months from the grant date, and the related compensation expense is recognized over this period, except where the employee is eligible to retire prior to the vesting date, in which case the cost is recognized over the period between the grant date and the date on which the employee is eligible to retire. No Special RSUs were granted in 2010 or 2008. The Company's compensation expense related to Special RSUs was $2 million for each of the two years ended December 31, 2010 and 2009. For the years ended December 31, 2010 and 2009, the Company granted 0.2 million and 0.4 million PSUs, respectively, to certain eligible employees. PSUs granted in 2010 vest 25% on the first anniversary and 75% on the date that is 34 months from the grant date. PSUs granted in 2009 vest 25% on the first anniversary, 25% on the second anniversary, and 50% on the date that is 34 months from the grant date. Both grants are subject to performance conditions that are equally weighted over their respective performance periods, and the related compensation expense is recognized over these periods, except where the employee is eligible to retire prior to the vesting date, in which case the cost is recognized over the period between the grant date and the date on which the employee is eligible to retire. No PSUs were granted in 2008. The Company's compensation expense related to PSUs was $2 million and $3 million for the years ended December 31, 2010 and 2009, respectively. F-84 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 19 -- SUBSEQUENT EVENTS The Company evaluated the recognition and disclosure of subsequent events for its December 31, 2010 consolidated financial statements through the date on which the consolidated financial statements were issued. The Company did not have any subsequent events requiring disclosure. F-85 AUDITED FINANCIAL STATEMENTS John Hancock Life Insurance Company (U.S.A.) Separate Account H December 31, 2010 John Hancock Life Insurance Company (U.S.A.) Separate Account H Audited Financial Statements December 31, 2010 CONTENTS Report of Independent Registered Public Accounting Firm................. 1 Statements of Assets and Liabilities.................................... 4 Statements of Operations and Changes in Contract Owners' Equity......... 29 Notes to Financial Statements........................................... 82
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Contract Owners of John Hancock Life Insurance Company (U.S.A.) Separate Account H We have audited the accompanying statements of assets and liabilities of John Hancock Life Insurance Company (U.S.A.) Separate Account H ("the Account,") comprised of the following sub-accounts, 500 Index Fund B Series NAV 500 Index Series I 500 Index Series II 500 Index Series NAV Active Bond Series I Active Bond Series II All Cap Core Series I All Cap Core Series II All Cap Value Series I All Cap Value Series II American Asset Allocation Series I American Asset Allocation Series II American Asset Allocation Series III American Blue-Chip Income & Growth Series II American Blue-Chip Income & Growth Series III American Bond Series II American Bond Series III American Fundamental Holdings Series II American Fundamental Holdings Series III American Global Diversification Series II American Global Growth Series II American Global Growth Series III American Global Small Capitalization Series II American Global Small Capitalization Series III American Growth Series II American Growth Series III American Growth-Income Series I American Growth-Income Series II American Growth-Income Series III American High-Income Bond Series II American High-Income Bond Series III American International Series II American International Series III American New World Series II American New World Series III Balanced Series I Basic Value Blue Chip Growth Series I Blue Chip Growth Series II Capital Appreciation Series I Capital Appreciation Series II Capital Appreciation Value Series II Core Allocation Plus Series I Core Allocation Plus Series II Core Allocation Series I Core Allocation Series II Core Balanced Series I Core Balanced Series II Core Balanced Strategy Series NAV Core Bond Series II Core Disciplined Diversification Series II Core Fundamental Holdings Series II Core Fundamental Holdings Series III Core Global Diversification Series II Core Global Diversification Series III Core Strategy Series II Core Strategy Series NAV Disciplined Diversification Series II DWS Equity 500 Index Equity-Income Series I Equity-Income Series II Financial Services Series I Financial Services Series II Founding Allocation Series I Founding Allocation Series II Fundamental Value Series I Fundamental Value Series II Global Allocation Global Bond Series I Global Bond Series II Global Trust Series I Global Trust Series II Health Sciences Series I Health Sciences Series II High Income Series II High Yield Series I High Yield Series II International Core Series I International Core Series II International Equity Index A Series I International Equity Index A Series II International Equity Index Series NAV International Opportunities Series II International Small Company Series I International Small Company Series II International Value Series I A member firm of Ernst & Young Global Limited 1 (ERNST & YOUNG LOGO) ERNST & YOUNG LLP International Value Series II Investment Quality Bond Series I Investment Quality Bond Series II Large Cap Series I Large Cap Series II Large Cap Value Series I Large Cap Value Series II Lifestyle Aggressive Series I Lifestyle Aggressive Series II Lifestyle Balanced Series I Lifestyle Balanced Series II Lifestyle Conservative Series I Lifestyle Conservative Series II Lifestyle Growth Series I Lifestyle Growth Series II Lifestyle Moderate Series I Lifestyle Moderate Series II Mid Cap Index Series I Mid Cap Index Series II Mid Cap Stock Series I Mid Cap Stock Series II Mid Value Series I Mid Value Series II Money Market Series I Money Market Series II Money Market Trust B Series NAV Mutual Shares Series I Natural Resources Series II Optimized All Cap Series II Optimized Value Series II PIMCO All Asset Real Estate Securities Series I Real Estate Securities Series II Real Return Bond Series II Science & Technology Series I Science & Technology Series II Short Term Government Income Series I Short Term Government Income Series II Small Cap Growth Series I Small Cap Growth Series II Small Cap Index Series I Small Cap Index Series II Small Cap Opportunities Series I Small Cap Opportunities Series II Small Cap Value Series I Small Cap Value Series II Small Company Value Series I Small Company Value Series II Smaller Company Growth Series I Smaller Company Growth Series II Strategic Income Opportunities Series I Strategic Income Opportunities Series II Total Bond Market Trust A Series II Total Bond Market Trust A Series NAV Total Return Series I Total Return Series II Total Stock Market Index Series I Total Stock Market Index Series II Ultra Short Term Bond Series I Ultra Short Term Bond Series II Utilities Series I Utilities Series II Value Opportunities Value Series I Value Series II 2 (ERNST & YOUNG LOGO) ERNST & YOUNG LLP as of December 31, 2010, and the related statements of operations and changes in contract owners' equity for the above mentioned sub-accounts and for the All Cap Growth Series I, All Cap Growth Series II, CGTC Overseas Equity Series II, Pacific Rim Series I, Pacific Rim Series II, Strategic Bond Series I, Strategic Bond Series II, U.S. Government Securities Series I, U.S. Government Securities Series II, and U.S. High Yield Series II sub-accounts (the "closed sub-accounts") for each of the periods indicated therein. These financial statements are the responsibility of the Account's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Account's internal controls over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Account's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2010, by correspondence with the underlying portfolios. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of each of the above mentioned sub-accounts constituting John Hancock Life Insurance Company (U.S.A.) Separate Account H at December 31, 2010, and the results of their and the closed sub-accounts' operations and the changes in their contract owners' equity for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles. March 30, 2011 3 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2010
500 Index Fund B 500 Index 500 Index 500 Index Active Bond Active Bond Series NAV Series I Series II Series NAV Series I Series II ------------ ----------- ----------- ------------ ----------- ------------- TOTAL ASSETS Investments at fair value $50,458,534 $58,263,082 $45,975,780 $119,890,068 $61,015,971 $315,367,714 =========== =========== =========== ============ =========== ============ NET ASSETS Contracts in accumulation $50,453,485 $58,226,570 $45,975,780 $119,890,068 $60,895,220 $315,354,406 Contracts in payout (annuitization) 5,049 36,512 -- -- 120,751 13,308 ----------- ----------- ----------- ------------ ----------- ------------ Total net assets $50,458,534 $58,263,082 $45,975,780 $119,890,068 $61,015,971 $315,367,714 =========== =========== =========== ============ =========== ============ Units outstanding 4,739,633 5,409,423 3,263,175 6,829,358 3,774,999 19,948,130 Unit value $ 10.65 $ 10.77 $ 14.09 $ 17.56 $ 16.16 $ 15.81 Shares 3,211,874 5,291,833 4,191,047 11,049,776 6,283,828 32,445,238 Cost $56,636,418 $55,346,714 $43,396,086 $105,116,035 $58,984,478 $305,948,675
4 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2010
All Cap Core All Cap Core All Cap Value All Cap Value American Asset American Asset Series I Series II Series I Series II Allocation Series I Allocation Series II ------------ ------------ ------------- ------------- ------------------- -------------------- TOTAL ASSETS Investments at fair value $49,057,091 $7,783,465 $27,158,761 $28,706,450 $158,613,499 $1,311,936,504 =========== ========== =========== =========== ============ ============== NET ASSETS Contracts in accumulation $49,001,245 $7,783,465 $27,158,761 $28,706,450 $158,494,037 $1,311,936,504 Contracts in payout (annuitization) 55,846 -- -- -- 119,462 -- ----------- ---------- ----------- ----------- ------------ -------------- Total net assets $49,057,091 $7,783,465 $27,158,761 $28,706,450 $158,613,499 $1,311,936,504 =========== ========== =========== =========== ============ ============== Units outstanding 3,182,657 501,289 1,571,151 1,558,406 13,636,502 113,271,349 Unit value $ 15.41 $ 15.53 $ 17.29 $ 18.42 $ 11.63 $ 11.58 Shares 2,964,175 470,869 3,252,546 3,442,020 14,406,312 119,158,629 Cost $43,131,562 $8,715,429 $24,439,422 $26,897,986 $123,140,803 $1,203,591,538
5 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2010
American American Asset American American Blue-Chip Fundamental Allocation Series Blue-Chip Income Income & Growth American Bond American Bond Holdings III & Growth Series II Series III Series II Series III Series II ----------------- ------------------ ------------------ ------------- ------------- -------------- TOTAL ASSETS Investments at fair value $ 153,108,213 $ 72,210,373 $ 149,124,984 $ 669,120,976 $ 198,440,106 $1,041,331,846 ============= ============ ============= ============= ============= ============== NET ASSETS Contracts in accumulation $ 153,108,213 $ 72,112,042 $ 149,124,984 $ 669,120,976 $ 198,440,106 $1,041,331,846 Contracts in payout (annuitization) -- 98,331 -- -- -- -- ------------- ------------ ------------- ------------- ------------- -------------- Total net assets $ 153,108,213 $ 72,210,373 $ 149,124,984 $ 669,120,976 $ 198,440,106 $1,041,331,846 ============= ============ ============= ============= ============= ============== Units outstanding 12,111,973 4,252,265 12,453,177 49,794,966 15,087,396 89,990,632 Unit value $ 12.64 $ 16.98 $ 11.97 $ 13.44 $ 13.15 $ 11.57 Shares 13,918,928 6,362,148 13,161,958 55,390,809 16,454,403 100,611,773 Cost $ 120,912,965 $ 86,095,124 $ 119,286,760 $ 692,276,906 $ 191,014,973 $ 910,226,444
6 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2010
American American Global American Global Fundamental American Global Small Small Holdings Diversification American Global American Global Capitalization Capitalization Series III Series II Growth Series II Growth Series III Series II Series III ------------ --------------- ---------------- ----------------- --------------- --------------- TOTAL ASSETS Investments at fair value $62,807,730 $835,495,493 $185,111,914 $3,306,132 $ 73,719,025 $34,259,379 =========== ============ ============ ========== ============ =========== NET ASSETS Contracts in accumulation $62,807,730 $835,495,493 $185,111,914 $3,306,132 $ 73,696,845 $34,259,379 Contracts in payout (annuitization) -- -- -- -- 22,180 -- ----------- ------------ ------------ ---------- ------------ ----------- Total net assets $62,807,730 $835,495,493 $185,111,914 $3,306,132 $ 73,719,025 $34,259,379 =========== ============ ============ ========== ============ =========== Units outstanding 4,993,703 69,807,715 15,211,203 253,969 6,333,479 2,736,959 Unit value $ 12.58 $ 11.97 $ 12.17 $ 13.02 $ 11.64 $ 12.52 Shares 6,074,249 80,105,033 16,483,697 294,664 7,298,914 3,388,663 Cost $50,989,838 $746,702,930 $183,437,574 $2,643,203 $ 57,869,122 $22,455,592
7 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2010
American American American Growth American Growth Growth-Income Growth-Income Series II Series III Series I Series II -------------------- ------------------- -------------------- ------------------- TOTAL ASSETS Investments at fair value $1,000,428,219 $88,814,802 $155,150,297 $804,948,801 ============== =========== ============ ============ NET ASSETS Contracts in accumulation $1,000,307,794 $88,814,802 $154,911,015 $804,822,509 Contracts in payout (annuitization) 120,425 -- 239,282 126,292 -------------- ----------- ------------ ------------ Total net assets $1,000,428,219 $88,814,802 $155,150,297 $804,948,801 ============== =========== ============ ============ Units outstanding 54,531,045 7,318,175 9,001,189 50,327,529 Unit value $18.35 $12.14 $17.24 $15.99 Shares 64,171,149 5,704,226 10,419,765 54,132,401 Cost $1,046,702,845 $67,982,014 $114,212,320 $879,263,115 American American Growth-Income High-Income Bond Series III Series II -------------------- ------------------- TOTAL ASSETS Investments at fair value $79,059,574 $57,072,545 =========== =========== NET ASSETS Contracts in accumulation $79,059,574 $57,072,545 Contracts in payout (annuitization) -- -- ----------- ----------- Total net assets $79,059,574 $57,072,545 =========== =========== Units outstanding 6,612,997 4,169,615 Unit value $11.96 $13.69 Shares 5,320,294 5,221,642 Cost $61,265,142 $52,864,594
8 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2010
American American American High-Income Bond International International American New Series III Series II Series III World Series II -------------------- ------------------- -------------------- ------------------- TOTAL ASSETS Investments at fair value $41,956,986 $646,557,385 $32,941,468 $88,318,846 =========== ============ =========== =========== NET ASSETS Contracts in accumulation $41,956,986 $646,510,163 $32,941,468 $88,318,846 Contracts in payout (annuitization) -- 47,222 -- -- ----------- ------------ ----------- ----------- Total net assets $41,956,986 $646,557,385 $32,941,468 $88,318,846 =========== ============ =========== =========== Units outstanding 2,741,483 28,123,148 2,698,737 6,201,476 Unit value $15.30 $22.99 $12.21 $14.24 Shares 3,845,736 39,641,777 2,023,432 6,427,864 Cost $40,597,963 $714,436,628 $30,556,111 $72,983,091 American New World Series III Balanced Series I -------------------- -------------------- TOTAL ASSETS $2,680,931 $444,462 Investments at fair value ========== ======== NET ASSETS Contracts in accumulation $2,680,931 $444,462 Contracts in payout (annuitization) -- -- ---------- -------- Total net assets 2,680,931 $444,462 ========== ======== Units outstanding 198,213 26,947 Unit value $13.53 $16.49 Shares 195,403 27,201 Cost $2,071,904 $413,707
9 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2010
Capital Blue Chip Growth Blue Chip Growth Appreciation Basic Value Focus Series I Series II Series I -------------------- ------------------- -------------------- ------------------- TOTAL ASSETS Investments at fair value $ 8,946,215 $259,340,957 $118,730,598 $171,776,665 =========== ============ ============ ============ NET ASSETS Contracts in accumulation $ 8,946,215 $258,905,009 $118,730,598 $171,469,497 Contracts in payout (annuitization) -- 435,948 -- 307,168 ----------- ------------ ------------ ------------ Total net assets $ 8,946,215 $259,340,957 $118,730,598 $171,776,665 =========== ============ ============ ============ Units outstanding 381,772 12,612,101 7,825,611 17,221,010 Unit value $ 23.43 $ 20.56 $ 15.17 $ 9.97 Shares 751,152 12,806,961 5,892,337 17,281,355 Cost $10,549,356 $203,418,444 $104,416,447 $155,466,086 Capital Capital Appreciation Appreciation Value Core Allocation Core Allocation Series II Series II Plus Series I Plus Series II -------------------- -------------------- ----------------- ------------------- TOTAL ASSETS Investments at fair value $73,640,663 $312,548,497 $21,488,642 $152,253,507 =========== ============ =========== ============ NET ASSETS Contracts in accumulation $73,640,663 $312,548,497 $21,488,642 $152,253,507 Contracts in payout (annuitization) -- -- -- -- ----------- ------------ ----------- ------------ Total net assets $73,640,663 $312,548,497 $21,488,642 $152,253,507 ============ ============ =========== ============ Units outstanding 4,935,879 24,072,871 1,752,947 12,998,029 Unit value $ 14.92 $ 12.98 $ 12.26 $ 11.71 Shares 7,476,210 27,201,784 1,973,246 13,968,212 Cost $ 64,389,644 $259,170,719 $17,677,086 $120,783,131 Core Allocation Series I -------------------- TOTAL ASSETS Investments at fair value $10,233,844 =========== NET ASSETS Contracts in accumulation $10,233,844 Contracts in payout (annuitization) -- ----------- Total net assets $10,233,844 =========== Units outstanding 629,232 Unit value $ 16.26 Shares 642,426 Cost $ 9,597,340
10 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2010
Core Balanced Core Allocation Core Balanced Core Balanced Strategy Series Series II Series I Series II NAV -------------------- ------------------- -------------------- ------------------- TOTAL ASSETS Investments at fair value $68,382,212 $19,080,753 $125,983,980 $3,531,428 =========== =========== ============ ========== NET ASSETS Contracts in accumulation $68,382,212 $19,080,753 $125,983,980 $3,531,428 Contracts in payout (annuitization) -- -- -- -- ----------- ----------- ------------ ---------- Total net assets $68,382,212 $19,080,753 $125,983,980 $3,531,428 =========== =========== ============ ========== Units outstanding 4,170,840 1,163,837 7,593,444 236,823 Unit value $ 16.40 $ 16.39 $ 16.59 $ 14.91 Shares 4,292,669 1,162,752 7,667,923 240,889 Cost $64,605,617 $17,647,034 $116,202,520 $3,313,497 Core Disciplined Diversification Core Fundamental Core Fundamental Core Bond Series II Series II Holdings Series II Holdings Series III -------------------- ------------------- -------------------- -------------------- TOTAL ASSETS $12,759,623 $137,776,253 $207,376,559 $19,707,379 Investments at fair value =========== ============ ============ =========== NET ASSETS Contracts in accumulation $12,759,623 $137,776,253 $207,376,559 $19,707,379 Contracts in payout (annuitization) -- -- -- -- ----------- ------------ ------------- ------------ Total net assets $12,759,623 $137,776,253 $207,376,559 $ 19,707,379 =========== ============ ============= ============ Units outstanding 832,592 8,099,043 13,036,021 1,248,298 Unit value $ 15.33 $ 17.01 $ 15.91 $ 15.79 Shares 932,721 8,171,782 13,175,131 1,253,650 Cost $12,472,974 $127,311,596 $193,123,703 $ 18,323,648 Core Global Diversification Series II -------------------- TOTAL ASSETS Investments at fair value $256,911,318 ============ NET ASSETS Contracts in accumulation $256,911,318 Contracts in payout (annuitization) -- ------------ Total net assets $256,911,318 ============ Units outstanding 15,839,532 Unit value $16.22 Shares 16,036,911 Cost $244,776,360
11 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2010
Core Global Disciplined Diversification Core Strategy Core Strategy Diversification DWS Equity 500 Equity-Income Series III Series II Series NAV Series II Index Series I --------------- ------------- ------------- --------------- -------------- ------------- TOTAL ASSETS Investments at fair value $16,128,240 $623,297,898 $7,020,193 $231,251,430 $15,949,563 $263,326,216 =========== ============ ========== ============ =========== ============ NET ASSETS Contracts in accumulation $16,128,240 $623,288,054 $7,020,193 $231,251,430 $15,942,573 $262,753,228 Contracts in payout (annuitization) -- 9,844 -- -- 6,990 572,988 ----------- ------------ ---------- ------------ ----------- ------------ Total net assets $16,128,240 $623,297,898 $7,020,193 $231,251,430 $15,949,563 $263,326,216 =========== ============ ========== ============ =========== ============ Units outstanding 1,002,873 46,039,851 442,179 18,143,084 817,237 9,698,477 Unit value $ 16.08 $ 13.54 $ 15.88 $ 12.75 $ 19.52 $ 27.15 Shares 1,008,015 49,078,575 554,080 18,755,185 1,212,895 18,985,308 Cost $15,323,484 $563,994,712 $6,277,487 $169,688,956 $15,647,046 $292,360,484
12 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2010
Founding Founding Equity-Income Financial Financial Services Allocation Allocation Series Fundamental Value Series II Services Series I Series II Series I II Series I ------------- ----------------- ------------------ ----------- ----------------- ----------------- TOTAL ASSETS Investments at fair value $153,299,569 $15,858,482 $27,065,009 $46,365,557 $1,242,477,961 $350,229,792 ============ =========== =========== =========== ============== ============ NET ASSETS Contracts in accumulation $153,299,569 $15,858,482 $27,044,560 $46,365,557 $1,242,477,961 $349,584,376 Contracts in payout (annuitization) -- -- 20,449 -- -- 645,416 ------------ ----------- ----------- ----------- -------------- ------------ Total net assets $153,299,569 $15,858,482 $27,065,009 $46,365,557 $1,242,477,961 $350,229,792 ============ =========== =========== =========== ============== ============ Units outstanding 10,031,313 1,177,395 1,905,931 3,738,258 116,260,096 24,123,130 Unit value $ 15.28 $ 13.47 $ 14.20 $ 12.40 $ 10.69 $ 14.52 Shares 11,076,558 1,339,399 2,295,590 4,659,855 124,621,661 24,474,479 Cost $158,101,505 $13,785,568 $23,250,338 $37,571,592 $1,350,838,946 $261,687,490
13 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2010
Fundamental Value Global Bond Series Global Bond Global Trust Global Trust Series II Global Allocation I Series II Series I Series II ----------------- ----------------- ------------------ ------------ ------------ ------------ TOTAL ASSETS Investments at fair value $295,598,627 $1,042,369 $74,033,589 $176,267,228 $153,628,071 $28,926,453 ============ ========== =========== ============ ============ =========== NET ASSETS Contracts in accumulation $295,598,405 $1,042,369 $73,993,939 $176,224,794 $153,461,876 $28,845,521 Contracts in payout (annuitization) 222 -- 39,650 42,434 166,195 80,932 ------------ ---------- ----------- ------------ ------------ ----------- Total net assets $295,598,627 $1,042,369 $74,033,589 $176,267,228 $153,628,071 $28,926,453 ============ ========== =========== ============ ============ =========== Units outstanding 19,503,761 63,663 2,708,334 8,787,208 8,540,014 1,903,905 Unit value $ 15.16 $ 16.37 $ 27.34 $ 20.06 $ 17.99 $ 15.19 Shares 20,685,698 64,623 5,730,154 13,727,977 10,609,673 2,003,217 Cost $284,608,609 $ 804,436 $74,230,278 $177,656,632 $138,230,014 $34,117,648
14 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2010
Health Sciences Health Sciences High Income High Yield High Yield International Core Series I Series II Series II Series I Series II Series I --------------- --------------- ----------- ----------- ------------ ------------------ TOTAL ASSETS Investments at fair value $39,069,026 $50,728,339 $21,157,800 $61,746,763 $ 81,173,525 $35,235,824 =========== =========== =========== =========== ============ =========== NET ASSETS Contracts in accumulation $39,066,320 $50,728,036 $21,157,800 $61,662,969 $ 81,104,482 $35,143,570 Contracts in payout (annuitization) 2,706 303 -- 83,794 69,043 92,254 ----------- ----------- ----------- ----------- ------------ ----------- Total net assets $39,069,026 $50,728,339 $21,157,800 $61,746,763 $ 81,173,525 $35,235,824 =========== =========== =========== =========== ============ =========== Units outstanding 1,906,926 2,390,785 1,686,852 3,165,866 4,143,022 2,397,063 Unit value $ 20.49 $ 21.22 $ 12.54 $ 19.50 $ 19.59 $ 14.70 Shares 2,512,477 3,330,817 2,950,879 10,395,078 13,483,974 3,606,533 Cost $34,190,133 $42,848,869 $27,131,323 $75,882,187 $102,347,201 $44,091,229
15 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2010
International International International International International Core International Equity Equity Index A Equity Index Opportunities Small Series II Index A Series I Series II Series NAV Series II Company Series I ------------------ -------------------- -------------- ------------- ------------- ---------------- TOTAL ASSETS Investments at fair value $26,532,534 $31,951,350 $37,022,915 $23,430,507 $35,028,799 $46,828,834 =========== =========== =========== =========== =========== =========== NET ASSETS Contracts in accumulation $26,506,195 $31,907,841 $37,022,915 $23,408,362 $35,028,799 $46,811,646 Contracts in payout (annuitization) 26,339 43,509 -- 22,145 -- 17,188 ----------- ----------- ----------- ----------- ----------- ----------- Total net assets $26,532,534 $31,951,350 $37,022,915 $23,430,507 $35,028,799 $46,828,834 =========== =========== =========== =========== =========== =========== Units outstanding 1,664,456 1,662,444 1,997,980 2,165,506 2,260,528 3,157,022 Unit value $ 15.94 $ 19.22 $ 18.53 $ 10.82 $ 15.50 $ 14.83 Shares 2,693,658 2,886,301 3,341,418 1,470,842 2,773,460 4,459,889 Cost $31,090,732 $37,935,764 $43,717,400 $27,090,258 $31,798,120 $40,407,875
16 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2010
International Investment Small Company International International Investment Quality Quality Bond Series II Value Series I Value Series II Bond Series I Series II Large Cap Series I ------------- -------------- --------------- ------------------ ------------ ------------------ TOTAL ASSETS Investments at fair value $30,455,967 $123,081,173 $118,156,444 $175,113,209 $129,806,350 $125,850,072 =========== ============ ============ ============ ============ ============ NET ASSETS Contracts in accumulation $30,455,967 $122,953,410 $118,103,711 $174,759,320 $129,806,350 $125,627,143 Contracts in payout (annuitization) -- 127,763 52,733 353,889 -- 222,929 ----------- ------------ ------------ ------------ ------------ ------------ Total net assets $30,455,967 $123,081,173 $118,156,444 $175,113,209 $129,806,350 $125,850,072 =========== ============ ============ ============ ============ ============ Units outstanding 2,060,195 6,981,981 6,118,995 9,829,080 7,579,754 9,393,946 Unit value $ 14.78 $ 17.63 $ 19.31 $ 17.82 $ 17.13 $ 13.40 Shares 2,900,568 10,171,998 9,781,163 15,496,744 11,477,131 10,182,045 Cost $26,478,600 $151,118,306 $141,295,159 $171,485,852 $128,894,260 $155,309,987
17 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2010
Lifestyle Lifestyle Large Cap Large Cap Value Large Cap Value Aggressive Aggressive Lifestyle Balanced Series II Series I Series II Series I Series II Series I ----------- --------------- --------------- ------------ ------------ ------------------ TOTAL ASSETS Investments at fair value $ 9,264,372 $18,618,092 $20,765,263 $103,196,685 $188,589,090 $699,738,018 =========== =========== =========== ============ ============ ============ NET ASSETS Contracts in accumulation $ 9,264,155 $18,618,092 $20,763,442 $103,196,455 $188,589,090 $699,597,440 Contracts in payout (annuitization) 217 -- 1,821 230 -- 140,578 ----------- ----------- ----------- ------------ ------------ ------------ Total net assets $ 9,264,372 $18,618,092 $20,765,263 $103,196,685 $188,589,090 $699,738,018 =========== =========== =========== ============ ============ ============ Units outstanding 704,457 994,260 1,126,491 6,183,737 11,278,274 40,353,556 Unit value $ 13.15 $ 18.73 $ 18.43 $ 16.69 $ 16.72 $ 17.34 Shares 751,368 1,120,222 1,252,428 12,358,884 22,639,747 59,602,897 Cost $10,163,130 $21,600,883 $23,616,190 $109,826,500 $207,623,840 $687,379,182
18 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2010
Lifestyle Lifestyle Lifestyle Conservative Conservative Lifestyle Growth Lifestyle Growth Lifestyle Balanced Series II Series I Series II Series I Series II Moderate Series I ------------------ ------------ -------------- ---------------- ---------------- ----------------- TOTAL ASSETS Investments at fair value $ 9,859,909,037 $220,273,901 $2,342,621,033 $595,817,023 $12,206,252,598 $265,027,006 =============== ============ ============== ============ =============== ============ NET ASSETS Contracts in accumulation $ 9,859,254,997 $220,143,301 $2,342,621,033 $594,988,916 $12,206,181,454 $263,216,485 Contracts in payout (annuitization) 654,040 130,600 -- 828,107 71,144 1,810,521 --------------- ------------ -------------- ------------ --------------- ------------ Total net assets $ 9,859,909,037 $220,273,901 $2,342,621,033 $595,817,023 $12,206,252,598 $265,027,006 =============== ============ ============== ============ =============== ============ Units outstanding 606,988,062 11,547,707 141,829,250 36,719,632 778,123,464 14,331,890 Unit value $ 16.24 $ 19.08 $ 16.52 $ 16.23 $ 15.69 $ 18.49 Shares 843,448,164 17,523,779 187,259,875 52,173,119 1,070,723,912 22,067,195 Cost $10,277,872,583 $203,693,566 $2,143,399,810 $590,030,483 $13,223,808,783 $249,527,626
19 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2010
Lifestyle Moderate Mid Cap Index Mid Cap Index Mid Cap Stock Mid Cap Stock Mid Value Series II Series I Series II Series I Series II Series I ------------------ ------------- ------------- ------------- ------------- --------------- TOTAL ASSETS Investments at fair value $2,947,541,565 $41,948,523 $81,259,636 $183,428,550 $117,686,505 $82,548,250 ============== =========== =========== ============ ============ =========== NET ASSETS Contracts in accumulation $2,947,540,031 $41,938,452 $81,251,385 $183,391,755 $117,686,205 $82,468,267 Contracts in payout (annuitization) 1,534 10,071 8,251 36,795 300 79,983 -------------- ----------- ---------- ------------ ------------ ----------- Total net assets $2,947,541,565 $41,948,523 $81,259,636 $183,428,550 $117,686,505 $82,548,250 ============== =========== =========== ============ ============ =========== Units outstanding 182,150,799 1,987,088 4,171,865 10,955,501 5,660,485 4,753,528 Unit value $ 16.18 $ 21.11 $ 19.48 $ 16.74 $ 20.79 $ 17.37 Shares 246,449,964 2,364,629 4,590,940 12,981,497 8,503,360 7,423,404 Cost $2,845,586,930 $36,889,795 $71,447,716 $181,137,145 $111,466,063 $56,018,077
20 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2010
Money Market Natural Mid Value Money Market Money Market Trust B Mutual Shares Resources Series II Series I Series II Series NAV Series I Series II ------------------ ------------- ------------- ------------- ------------- --------------- TOTAL ASSETS Investments at fair value $93,543,848 $176,238,503 $826,856,225 $26,235,859 $172,165,587 $174,978,526 =========== ============ ============ =========== ============ ============ NET ASSETS: Contracts in accumulation $93,543,848 $176,054,820 $826,605,252 $26,235,859 $172,165,587 $174,802,273 Contracts in payout (annuitization) -- 183,683 250,973 -- -- 176,253 ----------- ------------ ------------ ----------- ------------ ------------ Total net assets $93,543,848 $176,238,503 $826,856,225 $26,235,859 $172,165,587 $174,978,526 =========== ============ ============ =========== ============ ============ Units outstanding 5,480,922 11,384,953 65,834,885 2,097,486 14,733,437 4,483,909 Unit value $ 17.07 $ 15.48 $ 12.56 $ 12.51 $ 11.69 $ 39.02 Shares 8,412,217 176,238,503 826,856,225 26,235,859 17,496,503 13,865,176 Cost $63,599,961 $176,238,503 $826,856,225 $26,235,859 $139,150,352 $113,464,741
21 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2010
Optimized Real Estate Real Estate Real Return Optimized All Cap Value PIMCO Securities Securities Bond Series II Series II All Asset Series I Series II Series II ------------------ ------------- ------------- ------------- ------------- ----------- TOTAL ASSETS Investments at fair value $63,655,323 $11,584,339 $31,946,884 $55,339,432 $72,145,442 $77,015,800 =========== =========== =========== =========== =========== =========== NET ASSETS: Contracts in accumulation $63,655,323 $11,578,833 $31,946,884 $55,247,680 $72,127,173 $76,995,605 Contracts in payout (annuitization) -- 5,506 -- 91,752 18,269 20,195 ----------- ----------- ----------- ----------- ----------- ----------- Total net assets $63,655,323 $11,584,339 $31,946,884 $55,339,432 $72,145,442 $77,015,800 =========== =========== =========== =========== =========== =========== Units outstanding 3,600,142 850,818 1,849,601 1,872,263 3,033,454 4,727,373 Unit value $ 17.68 $ 13.62 $ 17.27 $ 29.56 $ 23.78 $ 16.29 Shares 4,942,184 1,170,135 2,888,507 4,867,144 6,334,104 6,720,401 Cost $77,727,986 $15,391,016 $31,095,530 $50,073,761 $61,161,312 $81,564,499
22 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2010
Short Term Short Term Science & Science & Government Government Small Cap Small Cap Technology Technology Income Income Growth Growth Series I Series II Series I Series II Series I Series II ------------- ----------- ----------- ----------- ---------- ----------- TOTAL ASSETS Investments at fair value $113,407,716 $53,799,402 $81,022,325 $74,873,928 $203,460 $33,603,888 ============ =========== =========== =========== ======== =========== NET ASSETS: Contracts in accumulation $113,305,310 $53,798,668 $80,919,004 $74,817,860 $203,460 $33,603,888 Contracts in payout (annuitization) 102,406 734 103,321 56,068 -- -- ------------ ------------ ----------- ----------- -------- ----------- Total net assets $113,407,716 $53,799,402 $81,022,325 $74,873,928 $203,460 $33,603,888 ============ =========== =========== =========== ======== =========== Units outstanding 8,373,854 3,165,493 6,421,693 5,946,931 15,250 1,880,038 Unit value $ 13.54 $ 17.00 $ 12.62 $ 12.59 $ 13.34 $ 17.87 Shares 6,706,547 3,225,384 6,271,078 5,790,714 20,105 3,367,123 Cost $ 79,000,491 $39,665,172 $80,882,291 $74,770,134 $168,945 $25,099,222
23 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2010
Small Cap Small Cap Small Cap Index Small Cap Index Opportunities Opportunities Small Cap Value Small Cap Value Series I Series II Series I Series II Series I Series II --------------- --------------- ------------- ------------- --------------- --------------- TOTAL ASSETS Investments at fair value $18,602,242 $64,424,978 $33,857,311 $34,524,461 $416,303 $49,173,911 =========== =========== =========== =========== ======== =========== NET ASSETS: Contracts in accumulation $18,595,501 $64,399,401 $33,849,736 $34,524,461 $416,303 $49,172,210 Contracts in payout (annuitization) 6,741 25,577 7,575 -- -- 1,701 ----------- ----------- ----------- ----------- -------- ----------- Total net assets $18,602,242 $64,424,978 $33,857,311 $34,524,461 $416,303 $49,173,911 =========== =========== =========== =========== ======== =========== Units outstanding 1,068,443 3,569,664 1,570,258 1,696,568 26,807 2,769,478 Unit value $ 17.41 $ 18.05 $ 21.56 $ 20.35 $ 15.53 $ 17.76 Shares 1,327,783 4,611,666 1,729,178 1,775,950 22,027 2,607,312 Cost $17,650,849 $65,740,164 $32,476,529 $30,804,580 $290,886 $38,517,032
24 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2010
Strategic Income Strategic Income Small Company Small Company Smaller Company Smaller Company Opportunities Opportunities Value Series I Value Series II Growth Series I Growth Series II Series I Series II -------------- --------------- --------------- ---------------- ---------------- ---------------- TOTAL ASSETS Investments at fair value $77,464,248 $79,849,833 $38,475,742 $23,082,682 $74,817,907 $78,797,970 =========== =========== =========== =========== =========== =========== NET ASSETS: Contracts in accumulation $77,342,202 $79,849,833 $38,449,620 $23,082,682 $74,761,341 $78,797,970 Contracts in payout (annuitization) 122,046 -- 26,122 -- 56,566 -- ----------- ----------- ----------- ----------- ----------- ----------- Total net assets $77,464,248 $79,849,833 $38,475,742 $23,082,682 $74,817,907 $78,797,970 =========== =========== =========== =========== =========== =========== Units outstanding 3,137,803 3,907,714 2,377,741 1,432,916 4,069,460 4,425,957 Unit value $ 24.69 $ 20.43 $ 16.18 $ 16.11 $ 18.39 $ 17.80 Shares 4,538,034 4,716,470 2,187,364 1,315,253 5,344,136 5,620,397 Cost $77,242,307 $78,006,418 $30,027,630 $18,315,557 $78,914,409 $82,371,101
25 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2010
Total Stock Total Bond Market Total Bond Market Total Return Total Return Total Stock Market Market Index Trust A Series II Trust A Series NAV Series I Series II Index Series I Series II ----------------- ------------------ ------------ ------------ ------------------ ------------ TOTAL ASSETS Investments at fair value $40,747,472 $85,281,810 $234,958,922 $310,048,956 $13,294,922 $39,945,478 =========== =========== ============ ============ =========== =========== NET ASSETS: Contracts in accumulation $40,747,472 $85,281,810 $234,840,982 $309,891,623 $13,233,787 $39,880,643 Contracts in payout (annuitization) -- -- 117,940 157,333 61,135 64,835 ----------- ----------- ------------ ------------ ----------- ----------- Total net assets $40,747,472 $85,281,810 $234,958,922 $310,048,956 $13,294,922 $39,945,478 =========== =========== ============ ============ =========== =========== Units outstanding 3,043,431 6,261,790 11,096,418 17,037,465 1,104,523 2,546,504 Unit value $ 13.39 $ 13.62 $ 21.17 $ 18.20 $ 12.04 $ 15.69 Shares 2,948,442 6,179,841 16,260,133 21,471,534 1,135,348 3,419,990 Cost $41,886,420 $85,950,095 $226,054,228 $300,145,645 $12,837,750 $41,675,603
26 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2010
Ultra Short Ultra Short Term Term Utilities Utilities Value Value Bond Series I Bond Series II Series I Series II Series I Series II ------------- -------------- ----------- ----------- ------------ ----------- TOTAL ASSETS Investments at fair value $677,300 $35,417,887 $22,950,840 $26,637,339 $104,427,585 $31,318,089 ======== =========== =========== =========== ============ =========== NET ASSETS: Contracts in accumulation $677,300 $35,417,887 $22,939,579 $26,637,339 $104,221,028 $31,318,089 Contracts in payout (annuitization) -- -- 11,261 -- 206,557 -- -------- ----------- ----------- ----------- ------------ ----------- Total net assets $677,300 $35,417,887 $22,950,840 $26,637,339 $104,427,585 $31,318,089 ======== =========== =========== =========== ============ =========== Units outstanding 54,305 2,854,429 1,163,379 907,563 5,103,953 1,627,685 Unit value $ 12.47 $ 12.41 $ 19.73 $ 29.35 $ 20.46 $ 19.24 Shares 54,798 2,865,525 1,975,115 2,310,264 6,287,031 1,891,189 Cost $682,738 $35,723,253 $23,332,280 $27,128,965 $ 97,171,571 $26,640,225
27 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2010
Value Opportunities -------------- TOTAL ASSETS Investments at fair value $4,893,343 ========== NET ASSETS: Contracts in accumulation $4,893,343 Contracts in payout (annuitization) -- ---------- Total net assets $4,893,343 ========== Units outstanding 142,766 Unit value $ 34.28 Shares 277,715 Cost $5,478,854
28 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
500 Index Fund B Series NAV 500 Index Series I 500 Index Series II ------------------------ ------------------------- ------------------------ 2010 2009 2010 2009 2010 2009 ----------- ----------- ----------- ------------ ----------- ----------- Income: Dividend distributions received $ 838,831 $ 998,910 $ 712,647 $ 798,875 $ 520,250 $ 603,615 Expenses: Mortality and expense risk and administrative charges (760,459) (700,288) (778,909) (741,247) (718,132) (650,472) ----------- ----------- ----------- ------------ ----------- ----------- Net investment income (loss) 78,372 298,622 (66,262) 57,628 (197,882) (46,857) ----------- ----------- ----------- ------------ ----------- ----------- Realized gains (losses) on investments: Capital gain distributions received -- -- -- -- -- -- Net realized gain (loss) (2,599,082) (4,145,698) (622,386) (4,506,477) (34,566) (1,785,917) ----------- ----------- ----------- ------------ ----------- ----------- Realized gains (losses) (2,599,082) (4,145,698) (622,386) (4,506,477) (34,566) (1,785,917) ----------- ----------- ----------- ------------ ----------- ----------- Unrealized appreciation (depreciation) during the period 8,516,018 14,100,729 6,898,924 14,750,211 5,442,075 10,748,760 ----------- ----------- ----------- ------------ ----------- ----------- Net increase (decrease) in contract owners' equity from operations 5,995,308 10,253,653 6,210,276 10,301,362 5,209,627 8,915,986 ----------- ----------- ----------- ------------ ----------- ----------- Changes from principal transactions: Purchase payments 239,256 240,893 358,643 211,492 121,729 279,702 ----------- ----------- ----------- ------------ ----------- ----------- Transfers between sub-accounts and the company (2,081,827) (927,366) 4,795,947 (5,631,954) (1,296,032) (313,636) Withdrawals (4,249,603) (2,636,543) (5,465,486) (5,559,814) (3,779,084) (2,417,930) Annual contract fee (288,659) (308,144) (192,529) (215,712) (205,816) (217,443) ----------- ----------- ----------- ------------ ----------- ----------- Net increase (decrease) in contract owners' equity from principal transactions (6,380,833) (3,631,160) (503,425) (11,195,988) (5,159,203) (2,669,307) ----------- ----------- ----------- ------------ ----------- ----------- Total increase (decrease) in contract owners' equity (385,525) 6,622,493 5,706,851 (894,626) 50,424 6,246,679 Contract owners' equity at beginning of period 50,844,059 44,221,566 52,556,231 53,450,857 45,925,356 39,678,677 ----------- ----------- ----------- ------------ ----------- ----------- Contract owners' equity at end of period $50,458,534 $50,844,059 $58,263,082 $ 52,556,231 $45,975,780 $45,925,356 =========== =========== =========== ============ =========== ===========
2010 2009 2010 2009 2010 2009 ----------- ----------- ----------- ------------ ----------- ----------- Units, beginning of period 5,401,407 5,843,640 5,498,354 6,938,793 3,663,218 3,916,772 Units issued 93,957 333,966 851,694 700,589 143,192 514,540 Units redeemed 755,731 776,199 940,625 2,141,028 543,235 768,094 ----------- ----------- ----------- ------------ ----------- ----------- Units, end of period 4,739,633 5,401,407 5,409,423 5,498,354 3,263,175 3,663,218 =========== =========== =========== ============ =========== ===========
See accompanying notes. 29 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
500 Index Series NAV Active Bond Series I Active Bond Series II ------------------------- -------------------------- -------------------------- 2010 2009 2010 2009 2010 2009 ------------ ----------- ------------ ------------ ------------ ------------ Income: Dividend distributions received $ 1,656,401 $ 579,362 $ 4,535,404 $ 4,542,090 $ 21,507,470 $ 20,504,593 Expenses: Mortality and expense risk and administrative charges (739,998) (131,865) (945,422) (957,918) (5,056,034) (4,662,260) ------------ ----------- ------------ ------------ ------------ ------------ Net investment income (loss) 916,403 447,497 3,589,982 3,584,172 16,451,436 15,842,333 ------------ ----------- ------------ ------------ ------------ ------------ Realized gains (losses) on investments: Capital gain distributions received -- -- -- -- -- -- Net realized gain (loss) 2,156,905 193,582 382,045 (1,997,718) 1,185,687 (6,300,198) ------------ ----------- ------------ ------------ ------------ ------------ Realized gains (losses) 2,156,905 193,582 382,045 (1,997,718) 1,185,687 (6,300,198) ------------ ----------- ------------ ------------ ------------ ------------ Unrealized appreciation (depreciation) during the period 10,869,867 3,904,167 3,422,104 11,663,091 17,181,260 48,040,578 ------------ ----------- ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity from operations 13,943,175 4,545,246 7,394,131 13,249,545 34,818,383 57,582,713 ------------ ----------- ------------ ------------ ------------ ------------ Changes from principal transactions: Purchase payments 30,990,275 37,276,523 99,144 96,236 1,233,293 1,839,340 Transfers between sub-accounts and the company 30,778,523 7,470,843 (2,985,315) (1,473,096) (5,292,300) 5,720,051 Withdrawals (2,349,485) (43,257) (10,037,023) (10,011,733) (32,022,618) (21,363,978) Annual contract fee (1,543,904) (1,177,871) (104,966) (107,434) (1,211,209) (1,281,837) ------------ ----------- ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity from principal transactions 57,875,409 43,526,238 (13,028,160) (11,496,027) (37,292,834) (15,086,424) ------------ ----------- ------------ ------------ ------------ ------------ Total increase (decrease) in contract owners' equity 71,818,584 48,071,484 (5,634,029) 1,753,518 (2,474,451) 42,496,289 Contract owners' equity at beginning of period 48,071,484 -- 66,650,000 64,896,482 317,842,165 275,345,876 ------------ ----------- ------------ ------------ ------------ ------------ Contract owners' equity at end of period $119,890,068 $48,071,484 $ 61,015,971 $ 66,650,000 $315,367,714 $317,842,165 ============ =========== ============ ============ ============ ============
2010 2009 2010 2009 2010 2009 ------------ ----------- ------------ ------------ ------------ ------------ Units, beginning of period 3,111,404 -- 4,629,413 5,542,442 22,493,252 23,846,814 Units issued 4,244,472 3,191,284 382,702 322,366 2,103,112 2,179,147 Units redeemed 526,518 79,880 1,237,116 1,235,395 4,648,234 3,532,709 ------------ ----------- ------------ ------------ ------------ ------------ Units, end of period 6,829,358 3,111,404 3,774,999 4,629,413 19,948,130 22,493,252 ============ =========== ============ ============ ============ ============
See accompanying notes. 30 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
All Cap Core Series I All Cap Core Series II All Cap Growth Series I ------------------------ ------------------------ -------------------------- 2010 2009 2010 2009 2010 2009 ----------- ----------- ----------- ----------- ------------ ------------ Income: Dividend distributions received $ 487,384 $ 741,852 $ 60,669 $ 103,037 $ 150,479 $ 496,760 Expenses: Mortality and expense risk and administrative charges (703,161) (692,122) (120,042) (117,006) (358,393) (1,055,630) ----------- ----------- ----------- ----------- ------------ ------------ Net investment income (loss) (215,777) 49,730 (59,373) (13,969) (207,914) (558,870) ----------- ----------- ----------- ----------- ------------ ------------ Realized gains (losses) on investments: Capital gain distributions received -- -- -- -- -- -- Net realized gain (loss) 1,844,254 33,795 (460,694) (676,315) 4,860,094 (1,992,640) ----------- ----------- ----------- ----------- ------------ ------------ Realized gains (losses) 1,844,254 33,795 (460,694) (676,315) 4,860,094 (1,992,640) ----------- ----------- ----------- ----------- ------------ ------------ Unrealized appreciation (depreciation) during the period 3,468,174 11,082,174 1,270,654 2,451,116 (1,668,817) 15,009,820 ----------- ----------- ----------- ----------- ------------ ------------ Net increase (decrease) in contract owners' equity from operations 5,096,651 11,165,699 750,587 1,760,832 2,983,363 12,458,310 ----------- ----------- ----------- ----------- ------------ ------------ Changes from principal transactions: Purchase payments 160,273 167,076 35,023 32,117 112,291 335,793 Transfers between sub-accounts and the company (2,391,553) (3,335,426) (333,163) (404,536) (75,552,023) (6,213,835) Withdrawals (4,968,989) (4,971,067) (898,573) (621,068) (3,140,498) (7,276,749) Annual contract fee (116,785) (127,468) (40,365) (46,596) (69,449) (211,174) ----------- ----------- ----------- ----------- ------------ ------------ Net increase (decrease) in contract owners' equity from principal transactions (7,317,054) (8,266,885) (1,237,078) (1,040,083) (78,649,679) (13,365,965) ----------- ----------- ----------- ----------- ------------ ------------ Total increase (decrease) in contract owners' equity (2,220,403) 2,898,814 (486,491) 720,749 (75,666,316) (907,655) Contract owners' equity at beginning of period 51,277,494 48,378,680 8,269,956 7,549,207 75,666,316 76,573,971 ----------- ----------- ----------- ----------- ------------ ------------ Contract owners' equity at end of period $49,057,091 $51,277,494 $ 7,783,465 $ 8,269,956 $ -- $ 75,666,316 =========== =========== =========== =========== ============ ============
2010 2009 2010 2009 2010 2009 ----------- ----------- ----------- ----------- ------------ ------------ Units, beginning of period 3,691,104 4,404,983 591,460 681,898 5,758,773 6,912,443 Units issued 67,222 76,938 30,073 21,818 34,973 176,602 Units redeemed 575,669 790,817 120,244 112,256 5,793,746 1,330,272 ----------- ----------- ----------- ----------- ------------ ------------ Units, end of period 3,182,657 3,691,104 501,289 591,460 -- 5,758,773 =========== =========== =========== =========== ============ ============
See accompanying notes. 31 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
All Cap Growth Series II All Cap Value Series I All Cap Value Series II ------------------------- ------------------------ ------------------------ 2010 2009 2010 2009 2010 2009 ------------ ----------- ----------- ----------- ----------- ----------- Income: Dividend distributions received $ 12,665 $ 53,703 $ 94,675 $ 134,694 $ 41,212 $ 80,276 Expenses: Mortality and expense risk and administrative charges (58,734) (165,990) (397,680) (392,912) (439,882) (410,476) ------------ ----------- ----------- ----------- ----------- ----------- Net investment income (loss) (46,069) (112,287) (303,005) (258,218) (398,670) (330,200) ------------ ----------- ----------- ----------- ----------- ----------- Realized gains (losses) on investments: Capital gain distributions received -- -- -- -- -- -- Net realized gain (loss) (1,317,700) (533,998) (1,913,701) (7,804,102) (3,068,061) (6,565,923) ------------ ----------- ----------- ----------- ----------- ----------- Realized gains (losses) (1,317,700) (533,998) (1,913,701) (7,804,102) (3,068,061) (6,565,923) ------------ ----------- ----------- ----------- ----------- ----------- Unrealized appreciation (depreciation) during the period 1,817,389 2,506,818 6,263,750 13,744,172 7,603,668 12,569,912 ------------ ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity from operations 453,620 1,860,533 4,047,044 5,681,852 4,136,937 5,673,789 ------------ ----------- ----------- ----------- ----------- ----------- Changes from principal transactions: Purchase payments 25,125 81,048 233,481 495,901 147,738 140,676 Transfers between sub-accounts and the company (11,924,224) (328,131) (2,439,017) (1,606,556) (1,065,995) (1,056,837) Withdrawals (202,334) (654,475) (3,059,664) (2,771,987) (2,723,675) (1,876,276) Annual contract fee (16,277) (55,228) (88,840) (97,882) (109,496) (122,535) ------------ ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity from principal transactions (12,117,710) (956,786) (5,354,040) (3,980,524) (3,751,428) (2,914,972) ------------ ----------- ----------- ----------- ----------- ----------- Total increase (decrease) in contract owners' equity (11,664,090) 903,747 (1,306,996) 1,701,328 385,509 2,758,817 Contract owners' equity at beginning of period 11,664,090 10,760,343 28,465,757 26,764,429 28,320,941 25,562,124 ------------ ----------- ----------- ----------- ----------- ----------- Contract owners' equity at end of period $ -- $11,664,090 $27,158,761 $28,465,757 $28,706,450 $28,320,941 ============ =========== =========== =========== =========== ===========
2010 2009 2010 2009 2010 2009 ------------ ----------- ----------- ----------- ----------- ----------- Units, beginning of period 1,055,350 1,159,235 1,909,806 2,222,846 1,786,802 2,008,606 Units issued 5,241 82,583 114,738 243,752 119,576 185,228 Units redeemed 1,060,591 186,468 453,393 556,792 347,972 407,032 ------------ ----------- ----------- ----------- ----------- ----------- Units, end of period -- 1,055,350 1,571,151 1,909,806 1,558,406 1,786,802 ============ =========== =========== =========== =========== ===========
See accompanying notes. 32 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
American Asset American Asset American Asset Allocation Series I Allocation Series II Allocation Series III -------------------------- ------------------------------ --------------------------- 2010 2009 2010 2009 2010 2009 ------------ ------------ -------------- -------------- ------------ ------------ Income: Dividend distributions received $ 2,397,153 $ 2,973,753 $ 18,037,300 $ 21,212,688 $ 2,792,653 $ 3,071,490 Expenses: Mortality and expense risk and administrative charges (2,295,646) (1,559,309) (18,993,914) (16,073,485) (1,253,899) (861,232) ------------ ------------ -------------- -------------- ------------ ------------ Net investment income (loss) 101,507 1,414,444 (956,614) 5,139,203 1,538,754 2,210,258 ------------ ------------ -------------- -------------- ------------ ------------ Realized gains (losses) on investments: Capital gain distributions received 57,883 -- 465,475 25,200,552 52,532 2,031,254 Net realized gain (loss) 5,035,545 2,117,430 (28,011,105) (26,382,808) (1,563,796) (742,095) ------------ ------------ -------------- -------------- ------------ ------------ Realized gains (losses) 5,093,428 2,117,430 (27,545,630) (1,182,256) (1,511,264) 1,289,159 ------------ ------------ -------------- -------------- ------------ ------------ Unrealized appreciation (depreciation) during the period 10,105,123 25,367,574 151,470,441 228,325,765 15,881,882 22,139,091 ------------ ------------ -------------- -------------- ------------ ------------ Net increase (decrease) in contract owners' equity from operations 15,300,058 28,899,448 122,968,197 232,282,712 15,909,372 25,638,508 ------------ ------------ -------------- -------------- ------------ ------------ Changes from principal transactions: Purchase payments 351,991 189,712 32,571,132 186,857,383 4,113,553 31,406,784 Transfers between sub-accounts and the company (3,720,762) 140,304,932 (58,380,645) 125,433,782 (4,598,047) 54,802,810 Withdrawals (19,273,614) (2,992,233) (48,930,899) (37,895,039) (4,518,667) (1,642,627) Annual contract fee (265,405) (180,628) (8,351,638) (6,470,340) (879,116) (1,312,816) ------------ ------------ -------------- -------------- ------------ ------------ Net increase (decrease) in contract owners' equity from principal transactions (22,907,790) 137,321,783 (83,092,050) 267,925,786 (5,882,277) 83,254,151 ------------ ------------ -------------- -------------- ------------ ------------ Total increase (decrease) in contract owners' equity (7,607,732) 166,221,231 39,876,147 500,208,498 10,027,095 108,892,659 Contract owners' equity at beginning of period 166,221,231 -- 1,272,060,357 771,851,859 143,081,118 34,188,459 ------------ ------------ -------------- -------------- ------------ ------------ Contract owners' equity at end of period $158,613,499 $166,221,231 $1,311,936,504 $1,272,060,357 $153,108,213 $143,081,118 ============ ============ ============== ============== ============ ============
2010 2009 2010 2009 2010 2009 ------------ ------------ -------------- -------------- ------------ ------------ Units, beginning of period 15,780,832 -- 121,061,600 89,206,351 12,626,075 3,702,897 Units issued 301,046 17,890,867 2,682,915 39,567,417 474,094 9,197,582 Units redeemed 2,445,376 2,110,035 10,473,166 7,712,168 988,196 274,404 ------------ ------------ -------------- -------------- ------------ ------------ Units, end of period 13,636,502 15,780,832 113,271,349 121,061,600 12,111,973 12,626,075 ============ ============ ============== ============== ============ ============
See accompanying notes. 33 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
American Blue-Chip American Blue-Chip Income & Growth Series II Income & Growth Series III American Bond Series II ------------------------- -------------------------- -------------------------- 2010 2009 2010 2009 2010 2009 ----------- ------------ ------------ ------------ ------------ ------------ Income: Dividend distributions received $ 798,431 $ 924,739 $ 2,384,966 $ 1,865,479 $ 15,648,216 $ 16,054,618 Expenses: Mortality and expense risk and administrative charges (1,098,175) (1,017,489) (1,116,514) (552,826) (10,347,653) (9,660,820) ----------- ------------ ------------ ------------ ------------ ------------ Net investment income (loss) (299,744) (92,750) 1,268,452 1,312,653 5,300,563 6,393,798 ----------- ------------ ------------ ------------ ------------ ------------ Realized gains (losses) on investments: Capital gain distributions received -- 4,644,982 -- 3,298,963 -- -- Net realized gain (loss) (6,734,093) (11,410,776) 663,667 (1,523,682) (11,959,583) (13,665,534) ----------- ------------ ------------ ------------ ------------ ------------ Realized gains (losses) (6,734,093) (6,765,794) 663,667 1,775,281 (11,959,583) (13,665,534) ----------- ------------ ------------ ------------ ------------ ------------ Unrealized appreciation (depreciation) during the period 13,632,671 21,551,469 13,682,768 19,200,121 35,012,816 65,883,183 ----------- ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity from operations 6,598,834 14,692,925 15,614,887 22,288,055 28,353,796 58,611,447 ----------- ------------ ------------ ------------ ------------ ------------ Changes from principal transactions: Purchase payments 538,351 530,820 18,055,346 38,063,073 4,991,477 10,755,036 Transfers between sub-accounts and the company 600,132 (2,646,794) 15,123,604 31,993,214 4,292,648 66,548,906 Withdrawals (7,997,276) (6,280,604) (4,238,117) (686,951) (51,297,658) (31,351,372) Annual contract fee (224,976) (243,970) (1,209,320) (1,319,756) (3,466,997) (3,606,210) ----------- ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity from principal transactions (7,083,769) (8,640,548) 27,731,513 68,049,580 (45,480,530) 42,346,360 ----------- ------------ ------------ ------------ ------------ ------------ Total increase (decrease) in contract owners' equity (484,935) 6,052,377 43,346,400 90,337,635 (17,126,734) 100,957,807 Contract owners' equity at beginning of period 72,695,308 66,642,931 105,778,584 15,440,949 686,247,710 585,289,903 ----------- ------------ ------------ ------------ ------------ ------------ Contract owners' equity at end of period $72,210,373 $ 72,695,308 $149,124,984 $105,778,584 $669,120,976 $686,247,710 =========== ============ ============ ============ ============ ============
2010 2009 2010 2009 2010 2009 ----------- ------------ ------------ ------------ ------------ ------------ Units, beginning of period 4,709,739 5,409,736 9,829,728 1,817,222 53,291,427 50,087,972 Units issued 349,933 384,483 3,391,769 8,498,595 6,977,413 10,270,854 Units redeemed 807,407 1,084,480 768,320 486,089 10,473,874 7,067,399 ----------- ------------ ------------ ------------ ------------ ------------ Units, end of period 4,252,265 4,709,739 12,453,177 9,829,728 49,794,966 53,291,427 =========== ============ ============ ============ ============ ============
See accompanying notes. 34 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
American Fundamental American Fundamental American Bond Series III Holdings Series II Holdings Series III -------------------------- ------------------------------ ------------------------- 2010 2009 2010 2009 2010 2009 ------------ ------------ -------------- -------------- ----------- ----------- Income: Dividend distributions received $ 5,510,639 $ 3,822,969 $ 13,895,906 $ 14,007,495 $ 1,126,045 $ 1,037,490 Expenses: Mortality and expense risk and administrative charges (1,452,767) (688,785) (15,107,600) (12,632,627) (521,053) (342,442) ------------ ------------ -------------- -------------- ----------- ----------- Net investment income (loss) 4,057,872 3,134,184 (1,211,694) 1,374,868 604,992 695,048 ------------ ------------ -------------- -------------- ----------- ----------- Realized gains (losses) on investments: Capital gain distributions received -- -- -- -- -- -- Net realized gain (loss) 424,634 (149,227) (13,492,637) (15,227,178) (568,363) (295,940) ------------ ------------ -------------- -------------- ----------- ----------- Realized gains (losses) 424,634 (149,227) (13,492,637) (15,227,178) (568,363) (295,940) ------------ ------------ -------------- -------------- ----------- ----------- Unrealized appreciation (depreciation) during the period 3,378,051 5,716,335 97,379,866 219,712,451 5,507,922 9,945,251 ------------ ------------ -------------- -------------- ----------- ----------- Net increase (decrease) in contract owners' equity from operations 7,860,557 8,701,292 82,675,535 205,860,141 5,544,551 10,344,359 ------------ ------------ -------------- -------------- ----------- ----------- Changes from principal transactions: Purchase payments 25,854,952 48,871,060 24,214,244 191,558,004 1,938,049 12,729,835 Transfers between sub-accounts and the company 35,222,989 62,781,011 (35,065,136) 80,568,730 (611,111) 20,467,460 Withdrawals (5,741,850) (867,173) (33,416,125) (17,242,863) (721,902) (356,532) Annual contract fee (1,657,355) (1,686,604) (6,608,266) (4,684,788) (369,746) (476,000) ------------ ------------ -------------- -------------- ----------- ----------- Net increase (decrease) in contract owners' equity from principal transactions 53,678,736 109,098,294 (50,875,283) 250,199,083 235,290 32,364,763 ------------ ------------ -------------- -------------- ----------- ----------- Total increase (decrease) in contract owners' equity 61,539,293 117,799,586 31,800,252 456,059,224 5,779,841 42,709,122 Contract owners' equity at beginning of period 136,900,813 19,101,227 1,009,531,594 553,472,370 57,027,889 14,318,767 ------------ ------------ -------------- -------------- ----------- ----------- Contract owners' equity at end of period $198,440,106 $136,900,813 $1,041,331,846 $1,009,531,594 $62,807,730 $57,027,889 ============ ============ ============== ============== =========== ===========
2010 2009 2010 2009 2010 2009 ------------ ------------ -------------- -------------- ----------- ----------- Units, beginning of period 10,975,912 1,708,415 94,706,932 64,803,896 4,975,653 1,576,102 Units issued 5,227,837 9,347,192 1,457,568 34,168,950 274,318 3,489,771 Units redeemed 1,116,353 79,695 6,173,868 4,265,914 256,268 90,220 ------------ ------------ -------------- -------------- ----------- ----------- Units, end of period 15,087,396 10,975,912 89,990,632 94,706,932 4,993,703 4,975,653 ============ ============ ============== ============== =========== ===========
See accompanying notes. 35 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
American Global American Global American Global Diversification Series II Growth Series II Growth Series III -------------------------- -------------------------- ---------------------- 2010 2009 2010 2009 2010 2009 ------------ ------------ ------------ ------------ ---------- ---------- Income: Dividend distributions received $ 14,314,289 $ 12,192,249 $ 1,636,578 $ 1,368,011 $ 43,346 $ 27,161 Expenses: Mortality and expense risk and administrative charges (12,005,021) (10,235,102) (2,715,387) (2,405,886) (26,378) (11,676) ------------ ------------ ------------ ------------ ---------- ---------- Net investment income (loss) 2,309,268 1,957,147 (1,078,809) (1,037,875) 16,968 15,485 ------------ ------------ ------------ ------------ ---------- ---------- Realized gains (losses) on investments: Capital gain distributions received -- -- -- 9,028,175 -- 45,126 Net realized gain (loss) (12,986,887) (22,426,442) (9,547,530) (15,812,856) 15,098 (49,868) ------------ ------------ ------------ ------------ ---------- ---------- Realized gains (losses) (12,986,887) (22,426,442) (9,547,530) (6,784,681) 15,098 (4,742) ------------ ------------ ------------ ------------ ---------- ---------- Unrealized appreciation (depreciation) during the period 91,403,222 228,186,107 26,988,459 60,656,051 287,626 435,613 ------------ ------------ ------------ ------------ ---------- ---------- Net increase (decrease) in contract owners' equity from operations 80,725,603 207,716,812 16,362,120 52,833,495 319,692 446,356 ------------ ------------ ------------ ------------ ---------- ---------- Changes from principal transactions: Purchase payments 17,675,410 100,672,498 1,458,198 3,460,226 464,056 1,330,221 Transfers between sub-accounts and the company (37,521,729) 12,197,470 (2,604,650) (6,318,348) 278,340 360,679 Withdrawals (26,500,204) (14,004,326) (11,702,528) (6,025,063) (58,797) (57,044) Annual contract fee (5,239,515) (4,294,765) (1,047,485) (1,075,096) (12,356) (34,685) ------------ ------------ ------------ ------------ ---------- ---------- Net increase (decrease) in contract owners' equity from principal transactions (51,586,038) 94,570,877 (13,896,465) (9,958,281) 671,243 1,599,171 ------------ ------------ ------------ ------------ ---------- ---------- Total increase (decrease) in contract owners' equity 29,139,565 302,287,689 2,465,655 42,875,214 990,935 2,045,527 Contract owners' equity at beginning of period 806,355,928 504,068,239 182,646,259 139,771,045 2,315,197 269,670 ------------ ------------ ------------ ------------ ---------- ---------- Contract owners' equity at end of period $835,495,493 $806,355,928 $185,111,914 $182,646,259 $3,306,132 $2,315,197 ============ ============ ============ ============ ========== ==========
2010 2009 2010 2009 2010 2009 ------------ ------------ ------------ ------------ ---------- ---------- Units, beginning of period 74,544,095 62,575,683 16,434,740 17,516,452 196,896 32,316 Units issued 991,076 17,175,665 1,738,818 2,301,993 65,040 175,398 Units redeemed 5,727,456 5,207,253 2,962,355 3,383,705 7,967 10,818 ------------ ------------ ------------ ------------ ---------- ---------- Units, end of period 69,807,715 74,544,095 15,211,203 16,434,740 253,969 196,896 ============ ============ ============ ============ ========== ==========
See accompanying notes. 36 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
American Global Small American Global Small Capitalization Series II Capitalization Series III American Growth Series II ------------------------- ------------------------ ------------------------------ 2010 2009 2010 2009 2010 2009 ----------- ------------ ----------- ----------- -------------- -------------- Income: Dividend distributions received $ 750,866 $ 854 $ 505,658 $ 10,886 $ 1,825,584 $ 711,462 Expenses: Mortality and expense risk and administrative charges (1,027,062) (865,890) (286,372) (176,102) (15,363,840) (14,397,454) ----------- ------------ ----------- ----------- -------------- -------------- Net investment income (loss) (276,196) (865,036) 219,286 (165,216) (13,538,256) (13,685,992) ----------- ------------ ----------- ----------- -------------- -------------- Realized gains (losses) on investments: Capital gain distributions received 202,086 6,300,353 103,449 1,901,873 -- 153,589,405 Net realized gain (loss) (6,181,846) (18,905,249) 2,048,649 (865,764) (70,523,157) (85,838,335) ----------- ------------ ----------- ----------- -------------- -------------- Realized gains (losses) (5,979,760) (12,604,896) 2,152,098 1,036,109 (70,523,157) 67,751,070 ----------- ------------ ----------- ----------- -------------- -------------- Unrealized appreciation (depreciation) during the period 18,353,800 38,767,414 4,180,817 9,179,048 234,430,506 233,411,686 ----------- ------------ ----------- ----------- -------------- -------------- Net increase (decrease) in contract owners' equity from operations 12,097,844 25,297,482 6,552,201 10,049,941 150,369,093 287,476,764 ----------- ------------ ----------- ----------- -------------- -------------- Changes from principal transactions: Purchase payments 586,857 1,596,561 1,201,330 8,941,214 6,307,068 12,623,131 Transfers between sub-accounts and the company (2,286,560) 2,106,461 (2,918,837) 7,229,202 (76,522,578) (83,162,547) Withdrawals (5,999,366) (2,635,449) (1,075,417) (217,568) (89,039,776) (59,286,910) Annual contract fee (341,425) (340,024) (198,223) (321,756) (4,143,690) (4,395,722) ----------- ------------ ----------- ----------- -------------- -------------- Net increase (decrease) in contract owners' equity from principal transactions (8,040,494) 727,549 (2,991,147) 15,631,092 (163,398,976) (134,222,048) ----------- ------------ ----------- ----------- -------------- -------------- Total increase (decrease) in contract owners' equity 4,057,350 26,025,031 3,561,054 25,681,033 (13,029,883) 153,254,716 Contract owners' equity at beginning of period 69,661,675 43,636,644 30,698,325 5,017,292 1,013,458,102 860,203,386 ----------- ------------ ----------- ----------- -------------- -------------- Contract owners' equity at end of period $73,719,025 $ 69,661,675 $34,259,379 $30,698,325 $1,000,428,219 $1,013,458,102 =========== ============ =========== =========== ============== ==============
2010 2009 2010 2009 2010 2009 ----------- ------------ ----------- ----------- -------------- -------------- Units, beginning of period 7,182,756 7,111,095 2,977,421 777,248 64,065,633 74,067,311 Units issued 1,511,368 2,710,394 225,051 2,692,470 2,093,565 2,645,646 Units redeemed 2,360,645 2,638,733 465,513 492,297 11,628,153 12,647,324 ----------- ------------ ----------- ----------- -------------- -------------- Units, end of period 6,333,479 7,182,756 2,736,959 2,977,421 54,531,045 64,065,633 =========== ============ =========== =========== ============== ==============
See accompanying notes. 37 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
American Growth American Growth-Income American Growth-Income Series III Series I Series II ------------------------ -------------------------- --------------------------- 2010 2009 2010 2009 2010 2009 ----------- ----------- ------------ ------------ ------------ ------------- Income: Dividend distributions received $ 569,616 $ 327,176 $ 1,630,660 $ 1,780,650 $ 7,553,608 $ 7,910,402 Expenses: Mortality and expense risk and administrative charges (661,923) (318,530) (2,313,731) (1,615,885) (12,507,002) (11,889,988) ----------- ----------- ------------ ------------ ------------ ------------- Net investment income (loss) (92,307) 8,646 (683,071) 164,765 (4,953,394) (3,979,586) ----------- ----------- ------------ ------------ ------------ ------------- Realized gains (losses) on investments: Capital gain distributions received -- 4,427,316 -- -- -- 67,299,595 Net realized gain (loss) 734,983 (1,473,946) 7,066,190 3,233,486 (36,129,973) (71,280,878) ----------- ----------- ------------ ------------ ------------ ------------- Realized gains (losses) 734,983 2,953,370 7,066,190 3,233,486 (36,129,973) (3,981,283) ----------- ----------- ------------ ------------ ------------ ------------- Unrealized appreciation (depreciation) during the period 12,977,809 10,404,061 6,943,457 33,994,519 113,748,836 200,764,627 ----------- ----------- ------------ ------------ ------------ ------------- Net increase (decrease) in contract owners' equity from operations 13,620,485 13,366,077 13,326,576 37,392,770 72,665,469 192,803,758 ----------- ----------- ------------ ------------ ------------ ------------- Changes from principal transactions: Purchase payments 11,616,297 23,826,188 586,509 307,607 5,266,463 11,875,690 Transfers between sub-accounts and the company 5,083,817 16,113,380 (9,486,823) 143,198,451 (21,929,780) (68,159,032) Withdrawals (2,437,031) (448,506) (18,246,136) (11,174,967) (68,359,852) (46,686,242) Annual contract fee (717,445) (796,997) (436,865) (316,825) (3,562,810) (3,791,423) ----------- ----------- ------------ ------------ ------------ ------------- Net increase (decrease) in contract owners' equity from principal transactions 13,545,638 38,694,065 (27,583,315) 132,014,266 (88,585,979) (106,761,007) ----------- ----------- ------------ ------------ ------------ ------------- Total increase (decrease) in contract owners' equity 27,166,123 52,060,142 (14,256,739) 169,407,036 (15,920,510) 86,042,751 Contract owners' equity at beginning of period 61,648,679 9,588,537 169,407,036 -- 820,869,311 734,826,560 ----------- ----------- ------------ ------------ ------------ ------------- Contract owners' equity at end of period $88,814,802 $61,648,679 $155,150,297 $169,407,036 $804,948,801 $ 820,869,311 =========== =========== ============ ============ ============ =============
2010 2009 2010 2009 2010 2009 ----------- ----------- ------------ ------------ ------------ ------------- Units, beginning of period 5,974,669 1,283,084 10,752,046 -- 55,869,154 63,942,059 Units issued 2,025,826 4,945,734 231,184 13,403,391 3,013,396 4,381,486 Units redeemed 682,320 254,149 1,982,041 2,651,345 8,555,021 12,454,391 ----------- ----------- ------------ ------------ ------------ ------------- Units, end of period 7,318,175 5,974,669 9,001,189 10,752,046 50,327,529 55,869,154 =========== =========== ============ ============ ============ =============
See accompanying notes. 38 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
American Growth-Income American High-Income American High-Income Series III Bond Series II Bond Series III ------------------------ ------------------------- ------------------------ 2010 2009 2010 2009 2010 2009 ----------- ----------- ---------- ----------- ----------- ----------- Income: Dividend distributions received $ 1,109,819 $ 971,091 $ 3,689,940 $ 2,985,510 $ 2,874,730 $ 1,004,140 Expenses: Mortality and expense risk and administrative charges (650,772) (395,981) (795,156) (684,314) (289,781) (33,052) ----------- ----------- ----------- ----------- ----------- ----------- Net investment income (loss) 459,047 575,110 2,894,784 2,301,196 2,584,949 971,088 ----------- ----------- ----------- ----------- ----------- ----------- Realized gains (losses) on investments: Capital gain distributions received -- 2,966,602 -- -- -- -- Net realized gain (loss) (255,463) (945,300) 612,991 (3,959,288) 229,846 11,417 ----------- ----------- ----------- ----------- ----------- ----------- Realized gains (losses) (255,463) 2,021,302 612,991 (3,959,288) 229,846 11,417 ----------- ----------- ----------- ----------- ----------- ----------- Unrealized appreciation (depreciation) during the period 7,844,966 12,678,472 2,684,036 15,342,774 1,440,573 (69,201) ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity from operations 8,048,550 15,274,884 6,191,811 13,684,682 4,255,368 913,304 ----------- ----------- ----------- ----------- ----------- ----------- Changes from principal transactions: Purchase payments 3,421,036 20,923,690 356,499 1,940,607 11,167,911 13,854,817 Transfers between sub-accounts and the company 815,918 22,799,272 1,837,274 8,704,886 11,007,241 2,551,387 Withdrawals (2,457,034) (620,638) (4,678,177) (2,480,226) (912,146) 14,016 Annual contract fee (442,645) (731,717) (239,596) (243,439) (554,743) (443,099) ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity from principal transactions 1,337,275 42,370,607 (2,724,000) 7,921,828 20,708,263 15,977,121 ----------- ----------- ----------- ----------- ----------- ----------- Total increase (decrease) in contract owners' equity 9,385,825 57,645,491 3,467,811 21,606,510 24,963,631 16,890,425 Contract owners' equity at beginning of period 69,673,749 12,028,258 53,604,734 31,998,224 16,993,355 102,930 ----------- ----------- ----------- ----------- ----------- ----------- Contract owners' equity at end of period $79,059,574 $69,673,749 $57,072,545 $53,604,734 $41,956,986 $16,993,355 =========== =========== =========== =========== =========== ===========
2010 2009 2010 2009 2010 2009 ----------- ----------- ----------- ----------- ----------- ----------- Units, beginning of period 6,435,982 1,445,391 4,417,794 3,593,978 1,265,146 10,576 Units issued 785,293 5,230,712 1,403,096 2,273,849 1,620,319 1,263,567 Units redeemed 608,278 240,121 1,651,275 1,450,033 143,982 8,997 ----------- ----------- ----------- ----------- ----------- ----------- Units, end of period 6,612,997 6,435,982 4,169,615 4,417,794 2,741,483 1,265,146 =========== =========== =========== =========== =========== ===========
See accompanying notes. 39 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
American International American International American New World Series II Series III Series II -------------------------- ------------------------ ------------------------ 2010 2009 2010 2009 2010 2009 ------------ ------------ ----------- ----------- ----------- ----------- Income: Dividend distributions received $ 9,145,819 $ 5,551,239 $ 612,760 $ 126,488 $ 850,476 $ 622,729 Expenses: Mortality and expense risk and administrative charges (9,979,521) (9,603,910) (190,745) (23,769) (1,147,147) (803,349) ------------ ------------ ----------- ----------- ----------- ----------- Net investment income (loss) (833,702) (4,052,671) 422,015 102,719 (296,671) (180,620) ------------ ------------ ----------- ----------- ----------- ----------- Realized gains (losses) on investments: Capital gain distributions received -- 130,772,943 -- 143,620 -- 609,541 Net realized gain (loss) (58,109,656) (60,634,355) 217,544 (44,383) (742,378) (8,146,850) ------------ ------------ ----------- ----------- ----------- ----------- Realized gains (losses) (58,109,656) 70,138,588 217,544 99,237 (742,378) (7,537,309) ------------ ------------ ----------- ----------- ----------- ----------- Unrealized appreciation (depreciation) during the period 90,886,409 142,504,373 2,100,483 390,121 12,004,476 27,481,179 ------------ ------------ ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity from operations 31,943,051 208,590,290 2,740,042 592,077 10,965,427 19,763,250 ------------ ------------ ----------- ----------- ----------- ----------- Changes from principal transactions: Purchase payments 3,756,929 7,452,196 10,215,126 8,171,782 647,156 2,063,036 Transfers between sub-accounts and the company (10,054,963) (66,354,738) 10,796,360 1,556,976 11,291,607 16,797,602 Withdrawals (56,181,364) (36,632,901) (720,518) (17,142) (6,792,739) (4,607,494) Annual contract fee (2,707,316) (2,941,169) (421,555) (250,337) (271,988) (219,399) ------------ ------------ ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity from principal transactions (65,186,714) (98,476,612) 19,869,413 9,461,279 4,874,036 14,033,745 ------------ ------------ ----------- ----------- ----------- ----------- Total increase (decrease) in contract owners' equity (33,243,663) 110,113,678 22,609,455 10,053,356 15,839,463 33,796,995 Contract owners' equity at beginning of period 679,801,048 569,687,370 10,332,013 278,657 72,479,383 38,682,388 ------------ ------------ ----------- ----------- ----------- ----------- Contract owners' equity at end of period $646,557,385 $679,801,048 $32,941,468 $10,332,013 $88,318,846 $72,479,383 ============ ============ =========== =========== =========== ===========
2010 2009 2010 2009 2010 2009 ------------ ------------ ----------- ----------- ----------- ----------- Units, beginning of period 30,806,778 36,071,377 899,512 34,407 5,873,612 4,594,159 Units issued 2,787,206 1,848,822 1,971,903 873,379 2,579,671 2,935,951 Units redeemed 5,470,836 7,113,421 172,678 8,274 2,251,807 1,656,498 ------------ ------------ ----------- ----------- ----------- ----------- Units, end of period 28,123,148 30,806,778 2,698,737 899,512 6,201,476 5,873,612 ============ ============ =========== =========== =========== ===========
See accompanying notes. 40 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
American New World Series III Balanced Series I Basic Value ---------------------- ------------------ ------------------------ 2010 2009 2010 2009 2010 2009 ---------- ---------- -------- -------- ----------- ----------- Income: Dividend distributions received $ 37,654 $ 19,661 $ 3,365 $ 869 $ 123,919 $ 165,339 Expenses: Mortality and expense risk and administrative charges (20,130) (7,431) (2,638) (237) (132,123) (133,304) ---------- ---------- -------- -------- ----------- ----------- Net investment income (loss) 17,524 12,230 727 632 (8,204) 32,035 ---------- ---------- -------- -------- ----------- ----------- Realized gains (losses) on investments: Capital gain distributions received -- 6,394 3,885 1,513 -- -- Net realized gain (loss) 11,446 (9,317) 2,829 55 (333,517) (929,482) ---------- ---------- -------- -------- ----------- ----------- Realized gains (losses) 11,446 (2,923) 6,714 1,568 (333,517) (929,482) ---------- ---------- -------- -------- ----------- ----------- Unrealized appreciation (depreciation) during the period 333,825 304,211 28,125 2,628 1,251,800 3,192,776 ---------- ---------- -------- -------- ----------- ----------- Net increase (decrease) in contract owners' equity from operations 362,795 313,518 35,566 4,828 910,079 2,295,329 ---------- ---------- -------- -------- ----------- ----------- Changes from principal transactions: Purchase payments 520,852 725,846 185,558 96,109 1,164 1,604 Transfers between sub-accounts and the company 310,756 390,137 141,413 8,658 (506,357) (909,443) Withdrawals (27,916) 3,077 (18,398) 367 (1,037,239) (942,414) Annual contract fee (14,942) (17,822) (6,861) (2,778) (27,783) (32,212) ---------- ---------- -------- -------- ----------- ----------- Net increase (decrease) in contract owners' equity from principal transactions 788,750 1,101,238 301,712 102,356 (1,570,215) (1,882,465) ---------- ---------- -------- -------- ----------- ----------- Total increase (decrease) in contract owners' equity 1,151,545 1,414,756 337,278 107,184 (660,136) 412,864 Contract owners' equity at beginning of period 1,529,386 114,630 107,184 -- 9,606,351 9,193,487 ---------- ---------- -------- -------- ----------- ----------- Contract owners' equity at end of period $2,680,931 $1,529,386 $444,462 $107,184 $ 8,946,215 $ 9,606,351 ========== ========== ======== ======== =========== ===========
2010 2009 2010 2009 2010 2009 ---------- ---------- -------- -------- ----------- ----------- Units, beginning of period 131,950 14,645 7,249 -- 454,704 560,419 Units issued 71,306 120,019 21,165 7,739 5,059 3,666 Units redeemed 5,043 2,714 1,467 490 77,991 109,381 ---------- ---------- -------- -------- ----------- ----------- Units, end of period 198,213 131,950 26,947 7,249 381,772 454,704 ========== ========== ======== ======== =========== ===========
See accompanying notes. 41 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Blue Chip Growth Blue Chip Growth Capital Appreciation Series I Series II Series I -------------------------- -------------------------- -------------------------- 2010 2009 2010 2009 2010 2009 ------------ ------------ ------------ ------------ ------------ ------------ Income: Dividend distributions received $ 209,998 $ 343,907 $ 59,504 $ 92,107 $ 212,896 $ 241,058 Expenses: Mortality and expense risk and administrative charges (3,686,113) (3,502,832) (1,762,976) (1,577,487) (2,116,985) (1,412,368) ------------ ------------ ------------ ------------ ------------ ------------ Net investment income (loss) (3,476,115) (3,158,925) (1,703,472) (1,485,380) (1,904,089) (1,171,310) ------------ ------------ ------------ ------------ ------------ ------------ Realized gains (losses) on investments: Capital gain distributions received -- -- -- -- -- -- Net realized gain (loss) 9,610,820 (2,671,699) 1,540,875 (3,765,421) (227,506) (5,258,060) ------------ ------------ ------------ ------------ ------------ ------------ Realized gains (losses) 9,610,820 (2,671,699) 1,540,875 (3,765,421) (227,506) (5,258,060) ------------ ------------ ------------ ------------ ------------ ------------ Unrealized appreciation (depreciation) during the period 27,027,492 87,263,486 14,973,031 38,695,393 15,507,120 38,693,631 ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity from operations 33,162,197 81,432,862 14,810,434 33,444,592 13,375,525 32,264,261 ------------ ------------ ------------ ------------ ------------ ------------ Changes from principal transactions: Purchase payments 593,162 1,072,463 626,783 2,147,925 643,471 293,110 Transfers between sub-accounts and the company (9,401,345) (16,288,883) 543,377 (4,253,005) 68,089,013 (6,527,226) Withdrawals (30,190,885) (24,303,382) (10,595,697) (6,319,272) (15,708,180) (9,542,121) Annual contract fee (576,232) (641,328) (419,642) (437,333) (403,107) (317,933) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity from principal transactions (39,575,300) (40,161,130) (9,845,179) (8,861,685) 52,621,197 (16,094,170) ------------ ------------ ------------ ------------ ------------ ------------ Total increase (decrease) in contract owners' equity (6,413,103) 41,271,732 4,965,255 24,582,907 65,996,722 16,170,091 Contract owners' equity at beginning of period 265,754,060 224,482,328 113,765,343 89,182,436 105,779,943 89,609,852 ------------ ------------ ------------ ------------ ------------ ------------ Contract owners' equity at end of period $259,340,957 $265,754,060 $118,730,598 $113,765,343 $171,776,665 $105,779,943 ============ ============ ============ ============ ============ ============
2010 2009 2010 2009 2010 2009 ------------ ------------ ------------ ------------ ------------ ------------ Units, beginning of period 14,833,364 17,615,463 8,551,198 9,393,422 11,642,266 13,837,049 Units issued 355,590 558,669 974,158 1,254,099 8,571,709 603,059 Units redeemed 2,576,853 3,340,768 1,699,745 2,096,323 2,992,965 2,797,842 ------------ ------------ ------------ ------------ ------------ ------------ Units, end of period 12,612,101 14,833,364 7,825,611 8,551,198 17,221,010 11,642,266 ============ ============ ============ ============ ============ ============
See accompanying notes. 42 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Capital Appreciation Capital Appreciation CGTC Overseas Equity Series II Value Series II Series II ------------------------ -------------------------- ----------------------- 2010 2009 2010 2009 2010 2009 ----------- ----------- ------------ ------------ ----------- ---------- Income: Dividend distributions received $ 14,737 $ 28,235 $ 3,838,839 $ 5,304,684 $ 16,611 $ 55,969 Expenses: Mortality and expense risk and administrative charges (1,054,583) (842,589) (4,518,115) (3,782,798) (17,030) (47,208) ----------- ----------- ------------ ------------ ----------- ---------- Net investment income (loss) (1,039,846) (814,354) (679,276) 1,521,886 (419) 8,761 ----------- ----------- ------------ ------------ ----------- ---------- Realized gains (losses) on investments: Capital gain distributions received -- -- 33,307,897 1,429,388 -- -- Net realized gain (loss) (203,880) (2,368,018) 1,728,961 (4,608,807) (935,507) (941,991) ----------- ----------- ------------ ------------ ----------- ---------- Realized gains (losses) (203,880) (2,368,018) 35,036,858 (3,179,419) (935,507) (941,991) ----------- ----------- ------------ ------------ ----------- ---------- Unrealized appreciation (depreciation) during the period 7,025,083 21,300,742 482,838 71,870,119 886,766 1,680,199 ----------- ----------- ------------ ------------ ----------- ---------- Net increase (decrease) in contract owners' equity from operations 5,781,357 18,118,370 34,840,420 70,212,586 (49,160) 746,969 ----------- ----------- ------------ ------------ ----------- ---------- Changes from principal transactions: Purchase payments 431,889 712,544 8,641,189 71,605,264 4,833 14,917 Transfers between sub-accounts and the company 10,690,683 1,851,085 (32,062,885) 52,668,067 (3,223,000) (310,041) Withdrawals (5,876,621) (3,324,313) (12,562,245) (7,156,302) (94,667) (262,540) Annual contract fee (272,174) (252,098) (1,988,014) (1,209,817) (3,808) (9,459) ----------- ----------- ------------ ------------ ----------- ---------- Net increase (decrease) in contract owners' equity from principal transactions 4,973,777 (1,012,782) (37,971,955) 115,907,212 (3,316,642) (567,123) ----------- ----------- ------------ ------------ ----------- ---------- Total increase (decrease) in contract owners' equity 10,755,134 17,105,588 (3,131,535) 186,119,798 (3,365,802) 179,846 Contract owners' equity at beginning of period 62,885,529 45,779,941 315,680,032 129,560,234 3,365,802 3,185,956 ----------- ----------- ------------ ------------ ----------- ---------- Contract owners' equity at end of period $73,640,663 $62,885,529 $312,548,497 $315,680,032 $ -- $3,365,802 =========== =========== ============ ============ =========== ==========
2010 2009 2010 2009 2010 2009 ----------- ----------- ------------ ------------ ----------- ---------- Units, beginning of period 4,634,291 4,711,470 27,231,439 14,299,260 233,650 284,112 Units issued 1,406,705 813,424 657,410 15,832,862 16,317 49,076 Units redeemed 1,105,117 890,603 3,815,978 2,900,683 249,967 99,538 ----------- ----------- ------------ ------------ ----------- ---------- Units, end of period 4,935,879 4,634,291 24,072,871 27,231,439 -- 233,650 =========== =========== ============ ============ =========== ==========
See accompanying notes. 43 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Core Allocation Plus Core Allocation Plus Core Allocation Series I Series II Series I ------------------------ -------------------------- ----------------------- 2010 2009 2010 2009 2010 2009 ----------- ----------- ------------ ------------ ----------- ---------- Income: Dividend distributions received $ 228,276 $ 283,438 $ 1,336,666 $ 1,900,829 $ 219,307 $ 121,554 Expenses: Mortality and expense risk and administrative charges (180,269) (116,591) (2,189,468) (1,676,423) (59,216) (9,079) ----------- ----------- ------------ ------------ ----------- ---------- Net investment income (loss) 48,007 166,847 (852,802) 224,406 160,091 112,475 ----------- ----------- ------------ ------------ ----------- ---------- Realized gains (losses) on investments: Capital gain distributions received 327,402 644,770 2,403,701 4,926,244 45,609 -- Net realized gain (loss) (93,532) (139,442) 249,921 (1,789,414) 44,122 4,831 ----------- ----------- ------------ ------------ ----------- ---------- Realized gains (losses) 233,870 505,328 2,653,622 3,136,830 89,731 4,831 ----------- ----------- ------------ ------------ ----------- ---------- Unrealized appreciation (depreciation) during the period 1,593,693 2,723,788 10,375,671 25,467,435 545,721 90,783 ----------- ----------- ------------ ------------ ----------- ---------- Net increase (decrease) in contract owners' equity from operations 1,875,570 3,395,963 12,176,491 28,828,671 795,543 208,089 ----------- ----------- ------------ ------------ ----------- ---------- Changes from principal transactions: Purchase payments 837,289 5,026,174 3,570,698 38,839,498 2,773,093 2,621,520 Transfers between sub-accounts and the company 19,997 7,263,735 (6,558,293) 37,584,613 3,298,957 824,313 Withdrawals (687,651) (88,375) (4,596,731) (2,400,847) (53,506) (13,766) Annual contract fee (130,935) (169,845) (982,996) (502,560) (140,889) (79,510) ----------- ----------- ------------ ------------ ----------- ---------- Net increase (decrease) in contract owners' equity from principal transactions 38,700 12,031,689 (8,567,322) 73,520,704 5,877,655 3,352,557 ----------- ----------- ------------ ------------ ----------- ---------- Total increase (decrease) in contract owners' equity 1,914,270 15,427,652 3,609,169 102,349,375 6,673,198 3,560,646 Contract owners' equity at beginning of period 19,574,372 4,146,720 148,644,338 46,294,963 3,560,646 -- ----------- ----------- ------------ ------------ ----------- ---------- Contract owners' equity at end of period $21,488,642 $19,574,372 $152,253,507 $148,644,338 $10,233,844 $3,560,646 =========== =========== ============ ============ =========== ==========
2010 2009 2010 2009 2010 2009 ----------- ----------- ------------ ------------ ----------- ---------- Units, beginning of period 1,748,762 459,578 13,789,949 5,294,414 240,937 -- Units issued 145,582 1,342,944 443,421 9,488,321 407,364 246,854 Units redeemed 141,397 53,760 1,235,341 992,786 19,069 5,917 ----------- ----------- ------------ ------------ ----------- ---------- Units, end of period 1,752,947 1,748,762 12,998,029 13,789,949 629,232 240,937 =========== =========== ============ ============ =========== ==========
See accompanying notes. 44 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Core Allocation Core Balanced Core Balanced Series II Series I Series II ------------------------ ----------------------- ------------------------- 2010 2009 2010 2009 2010 2009 ----------- ----------- ----------- ---------- ------------ ----------- Income: Dividend distributions received $ 1,335,651 $ 902,264 $ 321,172 $ 80,917 $ 1,893,800 $ 636,623 Expenses: Mortality and expense risk and administrative charges (660,168) (141,016) (103,084) (13,022) (1,147,194) (225,014) ----------- ----------- ----------- ---------- ------------ ----------- Net investment income (loss) 675,483 761,248 218,088 67,895 746,606 411,609 ----------- ----------- ----------- ---------- ------------ ----------- Realized gains (losses) on investments: Capital gain distributions received 298,015 -- 41,838 -- 293,698 -- Net realized gain (loss) 921,451 286,216 88,520 7,983 1,682,090 304,942 ----------- ----------- ----------- ---------- ------------ ----------- Realized gains (losses) 1,219,466 286,216 130,358 7,983 1,975,788 304,942 ----------- ----------- ----------- ---------- ------------ ----------- Unrealized appreciation (depreciation) during the period 2,837,341 939,252 1,209,701 224,017 7,135,451 2,646,009 ----------- ----------- ----------- ---------- ------------ ----------- Net increase (decrease) in contract owners' equity from operations 4,732,290 1,986,716 1,558,147 299,895 9,857,845 3,362,560 ----------- ----------- ----------- ---------- ------------ ----------- Changes from principal transactions: Purchase payments 18,818,407 10,154,675 6,083,089 3,088,694 44,457,342 13,071,968 Transfers between sub-accounts and the company 20,122,370 15,941,950 6,931,427 1,796,569 30,874,182 28,452,907 Withdrawals (2,972,490) (84,700) (285,084) (15,462) (3,025,004) (579,353) Annual contract fee (268,048) (48,958) (268,082) (108,440) (418,616) (69,851) ----------- ----------- ----------- ---------- ------------ ----------- Net increase (decrease) in contract owners' equity from principal transactions 35,700,239 25,962,967 12,461,350 4,761,361 71,887,904 40,875,671 ----------- ----------- ----------- ---------- ------------ ----------- Total increase (decrease) in contract owners' equity 40,432,529 27,949,683 14,019,497 5,061,256 81,745,749 44,238,231 Contract owners' equity at beginning of period 27,949,683 -- 5,061,256 -- 44,238,231 -- ----------- ----------- ----------- ---------- ------------ ----------- Contract owners' equity at end of period $68,382,212 $27,949,683 $19,080,753 $5,061,256 $125,983,980 $44,238,231 =========== =========== =========== ========== ============ ===========
2010 2009 2010 2009 2010 2009 ----------- ----------- ----------- ---------- ------------ ----------- Units, beginning of period 1,858,723 -- 343,325 -- 2,944,076 -- Units issued 3,166,458 2,148,714 854,229 346,751 5,797,356 3,163,373 Units redeemed 854,341 289,991 33,717 3,426 1,147,988 219,297 ----------- ----------- ----------- ---------- ------------ ----------- Units, end of period 4,170,840 1,858,723 1,163,837 343,325 7,593,444 2,944,076 =========== =========== =========== ========== ============ ===========
See accompanying notes. 45 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Core Disciplined Core Balanced Strategy Diversification Series NAV Core Bond Series II Series II ---------------------- ------------------------ -------------------------- 2010 2009 2010 2009 2010 2009 ---------- ---------- ----------- ----------- ------------ ------------ Income: Dividend distributions received $ 87,134 $ 50,143 $ 319,807 $ 252,562 $ 2,177,871 $ 1,112,798 Expenses: Mortality and expense risk and administrative charges (52,917) (6,946) (201,348) (186,604) (1,319,865) (287,016) ---------- ---------- ----------- ----------- ------------ ------------ Net investment income (loss) 34,217 43,197 118,459 65,958 858,006 825,782 ---------- ---------- ----------- ----------- ------------ ------------ Realized gains (losses) on investments: Capital gain distributions received 4,333 -- 118,713 -- 299,869 -- Net realized gain (loss) 12,874 2,048 674,194 199,807 1,493,511 318,478 ---------- ---------- ----------- ----------- ------------ ------------ Realized gains (losses) 17,207 2,048 792,907 199,807 1,793,380 318,478 ---------- ---------- ----------- ----------- ------------ ------------ Unrealized appreciation (depreciation) during the period 233,060 (15,127) (258,221) 660,934 7,536,687 2,927,967 ---------- ---------- ----------- ----------- ------------ ------------ Net increase (decrease) in contract owners' equity from operations 284,484 30,118 653,145 926,699 10,188,073 4,072,227 ---------- ---------- ----------- ----------- ------------ ------------ Changes from principal transactions: Purchase payments 817,037 2,661,380 58,403 77,238 31,347,883 16,529,339 Transfers between sub-accounts and the company (3,374) 39,674 2,065,420 3,253,899 43,183,159 36,863,569 Withdrawals (308,739) 10,848 (1,506,844) (1,151,158) (3,582,674) (262,221) Annual contract fee -- (37,132) (40,004) (474,113) (88,989) ---------- ---------- ----------- ----------- ------------ ------------ Net increase (decrease) in contract owners' equity from principal transactions 504,924 2,711,902 579,847 2,139,975 70,474,255 53,041,698 ---------- ---------- ----------- ----------- ------------ ------------ Total increase (decrease) in contract owners' equity 789,408 2,742,020 1,232,992 3,066,674 80,662,328 57,113,925 Contract owners' equity at beginning of period 2,742,020 -- 11,526,631 8,459,957 57,113,925 -- ---------- ---------- ----------- ----------- ------------ ------------ Contract owners' equity at end of period $3,531,428 $2,742,020 $12,759,623 $11,526,631 $137,776,253 $ 57,113,925 ========== ========== =========== =========== ============ ============
2010 2009 2010 2009 2010 2009 ---------- ---------- ----------- ----------- ------------ ------------ Units, beginning of period 200,571 -- 792,126 628,118 3,711,559 -- Units issued 58,475 209,120 478,914 993,038 5,194,226 3,958,581 Units redeemed 22,223 8,549 438,448 829,030 806,742 247,022 ---------- ---------- ----------- ----------- ------------ ------------ Units, end of period 236,823 200,571 832,592 792,126 8,099,043 3,711,559 ========== ========== =========== =========== ============ ============
See accompanying notes. 46 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Core Fundamental Core Fundamental Core Global Holdings Series II Holdings Series III Diversification Series II ------------------------- ----------------------- -------------------------- 2010 2009 2010 2009 2010 2009 ------------ ----------- ----------- ---------- ------------ ------------ Income: Dividend distributions received $ 3,086,125 $ 1,380,210 $ 366,483 $ 170,302 $ 4,384,353 $ 1,484,407 Expenses: Mortality and expense risk and administrative charges (2,069,485) (445,943) (128,462) (27,623) (2,649,049) (497,401) ------------ ----------- ----------- ---------- ------------ ------------ Net investment income (loss) 1,016,640 934,267 238,021 142,679 1,735,304 987,006 ------------ ----------- ----------- ---------- ------------ ------------ Realized gains (losses) on investments: Capital gain distributions received 1,017,438 -- 96,037 -- 1,880,346 -- Net realized gain (loss) 2,281,820 203,492 146,742 49,360 2,167,234 441,722 ------------ ----------- ----------- ---------- ------------ ------------ Realized gains (losses) 3,299,258 203,492 242,779 49,360 4,047,580 441,722 ------------ ----------- ----------- ---------- ------------ ------------ Unrealized appreciation (depreciation) during the period 9,444,260 4,808,596 926,706 457,025 8,069,765 4,065,194 ------------ ----------- ----------- ---------- ------------ ------------ Net increase (decrease) in contract owners' equity from operations 13,760,158 5,946,355 1,407,506 649,064 13,852,649 5,493,922 ------------ ----------- ----------- ---------- ------------ ------------ Changes from principal transactions: Purchase payments 64,808,128 46,952,023 5,058,869 6,843,114 57,634,792 32,188,704 Transfers between sub-accounts and the company 38,396,420 45,147,167 4,353,834 2,140,451 78,572,177 78,176,784 Withdrawals (6,248,373) (453,360) (277,711) (3,194) (7,765,194) (76,869) Annual contract fee (847,454) (84,505) (260,480) (204,074) (1,024,644) (141,003) ------------ ----------- ----------- ---------- ------------ ------------ Net increase (decrease) in contract owners' equity from principal transactions 96,108,721 91,561,325 8,874,512 8,776,297 127,417,131 110,147,616 ------------ ----------- ----------- ---------- ------------ ------------ Total increase (decrease) in contract owners' equity 109,868,879 97,507,680 10,282,018 9,425,361 141,269,780 115,641,538 Contract owners' equity at beginning of period 97,507,680 -- 9,425,361 -- 115,641,538 -- ------------ ----------- ----------- ---------- ------------ ------------ Contract owners' equity at end of period $207,376,559 $97,507,680 $19,707,379 $9,425,361 $256,911,318 $115,641,538 ============ =========== =========== ========== ============ ============
2010 2009 2010 2009 2010 2009 ------------ ----------- ----------- ---------- ------------ ------------ Units, beginning of period 6,628,031 -- 651,197 -- 7,610,718 -- Units issued 7,776,407 6,850,775 664,700 681,445 10,140,364 8,065,506 Units redeemed 1,368,417 222,744 67,599 30,248 1,911,550 454,788 ------------ ----------- ----------- ---------- ------------ ------------ Units, end of period 13,036,021 6,628,031 1,248,298 651,197 15,839,532 7,610,718 ============ =========== =========== ========== ============ ============
See accompanying notes. 47 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Core Global Diversification Series III Core Strategy Series II Core Strategy Series NAV ----------------------- -------------------------- ------------------------ 2010 2009 2010 2009 2010 2009 ----------- ---------- ------------ ------------ ----------- ---------- Income: Dividend distributions received $ 335,087 $ 103,428 $ 12,307,651 $ 8,444,074 $ 154,717 $ 108,160 Expenses: Mortality and expense risk and administrative charges (103,584) (14,833) (8,505,482) (6,516,055) (79,809) (23,169) ----------- ---------- ------------ ------------ ----------- ---------- Net investment income (loss) 231,503 88,595 3,802,169 1,928,019 74,908 84,991 ----------- ---------- ------------ ------------ ----------- ---------- Realized gains (losses) on investments: Capital gain distributions received 130,267 -- -- 2,144,094 -- -- Net realized gain (loss) 145,485 8,541 (7,016,599) (11,815,215) 220,871 21,433 ----------- ---------- ------------ ------------ ----------- ---------- Realized gains (losses) 275,752 8,541 (7,016,599) (9,671,121) 220,871 21,433 ----------- ---------- ------------ ------------ ----------- ---------- Unrealized appreciation (depreciation) during the period 599,107 205,649 60,992,691 95,762,151 397,355 345,351 ----------- ---------- ------------ ------------ ----------- ---------- Net increase (decrease) in contract owners' equity from operations 1,106,362 302,785 57,778,261 88,019,049 693,134 451,775 ----------- ---------- ------------ ------------ ----------- ---------- Changes from principal transactions: Purchase payments 4,129,273 5,040,617 48,025,271 99,816,853 1,753,677 5,719,582 Transfers between sub-accounts and the company 4,994,245 1,015,126 7,535,037 43,059,801 139,878 67,630 Withdrawals (121,485) 14,403 (23,064,401) (9,773,169) (1,597,474) (90,350) Annual contract fee (203,048) (150,038) (3,821,225) (2,772,691) (14) (117,645) ----------- ---------- ------------ ------------ ----------- ---------- Net increase (decrease) in contract owners' equity from principal transactions 8,798,985 5,920,108 28,674,682 130,330,794 296,067 5,579,217 ----------- ---------- ------------ ------------ ----------- ---------- Total increase (decrease) in contract owners' equity 9,905,347 6,222,893 86,452,943 218,349,843 989,201 6,030,992 Contract owners' equity at beginning of period 6,222,893 -- 536,844,955 318,495,112 6,030,992 -- ----------- ---------- ------------ ------------ ----------- ---------- Contract owners' equity at end of period $16,128,240 $6,222,893 $623,297,898 $536,844,955 $ 7,020,193 $6,030,992 =========== ========== ============ ============ =========== ==========
2010 2009 2010 2009 2010 2009 ----------- ---------- ------------ ------------ ----------- ---------- Units, beginning of period 416,864 -- 43,900,932 31,256,689 422,492 -- Units issued 662,100 427,239 6,069,403 16,577,258 135,526 448,608 Units redeemed 76,091 10,375 3,930,484 3,933,015 115,839 26,116 ----------- ---------- ------------ ------------ ----------- ---------- Units, end of period 1,002,873 416,864 46,039,851 43,900,932 442,179 422,492 =========== ========== ============ ============ =========== ==========
See accompanying notes. 48 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Disciplined Diversification Series II DWS Equity 500 Index Equity-Income Series I -------------------------- ------------------------ -------------------------- 2010 2009 2010 2009 2010 2009 ------------ ------------ ----------- ----------- ------------ ------------ Income: Dividend distributions received $ 3,045,901 $ 3,681,538 $ 241,625 $ 381,049 $ 4,726,544 $ 5,177,813 Expenses: Mortality and expense risk and administrative charges (3,152,596) (2,474,616) (246,582) (238,223) (3,818,111) (3,637,080) ------------ ------------ ----------- ----------- ------------ ------------ Net investment income (loss) (106,695) 1,206,922 (4,957) 142,826 908,433 1,540,733 ------------ ------------ ----------- ----------- ------------ ------------ Realized gains (losses) on investments: Capital gain distributions received -- 1,420,130 -- -- -- -- Net realized gain (loss) 1,189,310 (2,814,369) (444,425) (1,200,548) (8,706,655) (26,074,328) ------------ ------------ ----------- ----------- ------------ ------------ Realized gains (losses) 1,189,310 (1,394,239) (444,425) (1,200,548) (8,706,655) (26,074,328) ------------ ------------ ----------- ----------- ------------ ------------ Unrealized appreciation (depreciation) during the period 23,077,659 47,780,437 2,219,056 4,287,047 39,884,690 76,895,466 ------------ ------------ ----------- ----------- ------------ ------------ Net increase (decrease) in contract owners' equity from operations 24,160,274 47,593,120 1,769,674 3,229,325 32,086,468 52,361,871 ------------ ------------ ----------- ----------- ------------ ------------ Changes from principal transactions: Purchase payments 7,513,339 64,123,251 127,682 92,858 588,119 714,010 Transfers between sub-accounts and the company (5,865,554) 27,089,454 (638,621) (1,504,970) (5,850,207) (16,321,131) Withdrawals (6,320,285) (4,001,160) (1,826,016) (866,064) (33,481,330) (27,507,607) Annual contract fee (1,399,431) (727,588) (99,164) (104,482) (478,941) (531,646) ------------ ------------ ----------- ----------- ------------ ------------ Net increase (decrease) in contract owners' equity from principal transactions (6,071,931) 86,483,957 (2,436,119) (2,382,658) (39,222,359) (43,646,374) ------------ ------------ ----------- ----------- ------------ ------------ Total increase (decrease) in contract owners' equity 18,088,343 134,077,077 (666,445) 846,667 (7,135,891) 8,715,497 Contract owners' equity at beginning of period 213,163,087 79,086,010 16,616,008 15,769,341 270,462,107 261,746,610 ------------ ------------ ----------- ----------- ------------ ------------ Contract owners' equity at end of period $231,251,430 $213,163,087 $15,949,563 $16,616,008 $263,326,216 $270,462,107 ============ ============ =========== =========== ============ ============
2010 2009 2010 2009 2010 2009 ------------ ------------ ----------- ----------- ------------ ------------ Units, beginning of period 18,658,677 8,663,009 956,770 1,125,518 11,371,365 13,650,160 Units issued 832,481 12,654,961 34,847 28,805 360,610 559,298 Units redeemed 1,348,074 2,659,293 174,380 197,553 2,033,498 2,838,093 ------------ ------------ ----------- ----------- ------------ ------------ Units, end of period 18,143,084 18,658,677 817,237 956,770 9,698,477 11,371,365 ============ ============ =========== =========== ============ ============
See accompanying notes. 49 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Financial Financial Equity-Income Series II Services Series I Services Series II -------------------------- ------------------------ ------------------------ 2010 2009 2010 2009 2010 2009 ------------ ------------ ----------- ----------- ----------- ----------- Income: Dividend distributions $ 2,430,801 $ 2,485,164 $ 47,727 $ 108,696 $ 33,908 $ 126,382 Expenses: Mortality and expense risk and administrative charges (2,300,414) (2,028,987) (243,651) (236,382) (415,878) (391,617) ------------ ------------ ----------- ----------- ----------- ----------- Net investment income (loss) 130,387 456,177 (195,924) (127,686) (381,970) (265,235) ------------ ------------ ----------- ----------- ----------- ----------- Realized gains (losses) on investments: Capital gain distributions -- -- -- -- -- -- Net realized gain (loss) (9,997,611) (18,603,395) (961,485) (5,718,619) (2,728,055) (8,977,439) ------------ ------------ ----------- ----------- ----------- ----------- Realized gains (losses) (9,997,611) (18,603,395) (961,485) (5,718,619) (2,728,055) (8,977,439) ------------ ------------ ----------- ----------- ----------- ----------- Unrealized appreciation (depreciation) during the period 27,660,513 45,914,588 2,634,114 11,014,382 5,543,249 17,427,696 ------------ ------------ ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity from operations 17,793,289 27,767,370 1,476,705 5,168,077 2,433,224 8,185,022 ------------ ------------ ----------- ----------- ----------- ----------- Changes from principal transactions: Purchase payments 1,234,120 2,926,683 46,399 59,167 195,834 701,805 Transfers between sub-accounts and the company 2,003,853 (19,476) (1,112,623) (354,811) (1,836,369) (691,847) Withdrawals (15,440,092) (8,336,987) (2,148,378) (1,338,218) (2,725,508) (2,198,104) Annual contract fee (513,387) (524,357) (65,333) (72,902) (98,338) (108,129) ------------ ------------ ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity from principal transactions (12,715,506) (5,954,137) (3,279,935) (1,706,764) (4,464,381) (2,296,275) ------------ ------------ ----------- ----------- ----------- ----------- Total increase (decrease) in contract owners' equity 5,077,783 21,813,233 (1,803,230) 3,461,313 (2,031,157) 5,888,747 Contract owners' equity at beginning of period 148,221,786 126,408,553 17,661,712 14,200,399 29,096,166 23,207,419 ------------ ------------ ----------- ----------- ----------- ----------- Contract owners' equity at end of period $153,299,569 $148,221,786 $ 15,858,482 $17,661,712 $27,065,009 $29,096,166 ============ ============ =========== =========== =========== ===========
2010 2009 2010 2009 2010 2009 ------------ ------------ ----------- ----------- ----------- ----------- Units, beginning of period 10,954,397 11,489,143 1,449,855 1,623,612 2,251,332 2,476,693 Units issued 1,244,991 1,960,438 111,913 480,142 238,668 698,450 Units redeemed 2,168,075 2,495,184 384,373 653,899 584,069 923,811 ------------ ------------ ----------- ----------- ----------- ----------- Units, end of period 10,031,313 10,954,397 1,177,395 1,449,855 1,905,931 2,251,332 ============ ============ =========== =========== =========== ===========
See accompanying notes. 50 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Founding Allocation Series I Founding Allocation Series II Fundamental Value Series I ------------------------ ------------------------------ -------------------------- 2010 2009 2010 2009 2010 2009 ----------- ----------- --------------- -------------- ------------ ------------ Income: Dividend distributions $ 1,682,661 $ 1,533,280 $ 42,813,509 $ 42,876,539 $ 3,723,819 $ 3,045,019 Expenses: Mortality and expense risk and administrative charges (386,504) (257,693) (18,621,581) (17,039,992) (5,084,350) (4,888,125) ----------- ----------- -------------- -------------- ------------ ------------ Net investment income (loss) 1,296,157 1,275,587 24,191,928 25,836,547 (1,360,531) (1,843,106) ----------- ----------- -------------- -------------- ------------ ------------ Realized gains (losses) on investments: Capital gain distributions -- -- -- -- -- -- Net realized gain (loss) (616,958) (476,896) (46,492,423) (65,403,100) 11,235,766 (17,878,279) ----------- ----------- -------------- -------------- ------------ ------------ Realized gains (losses) (616,958) (476,896) (46,492,423) (65,403,100) 11,235,766 (17,878,279) ----------- ----------- -------------- -------------- ------------ ------------ Unrealized appreciation (depreciation) during the period 3,372,042 8,641,751 122,831,559 331,376,127 26,643,780 106,925,088 ----------- ----------- -------------- -------------- ------------ ------------ Net increase (decrease) in contract owners' equity from operations 4,051,241 9,440,442 100,531,064 291,809,574 36,519,015 87,203,703 ----------- ----------- -------------- -------------- ------------ ------------ Changes from principal transactions: Purchase payments 2,197,064 10,055,361 12,551,345 22,059,006 1,016,772 1,515,185 Transfers between sub-accounts and the company (1,328,321) 12,402,570 (68,943,924) (43,223,208) (11,941,617) (18,761,576) Withdrawals (1,182,007) (262,817) (55,049,152) (35,913,109) (42,770,852) (37,214,221) Annual contract fee (275,172) (404,106) (8,497,049) (8,588,854) (702,989) (794,114) ----------- ----------- -------------- -------------- ------------ ------------ Net increase (decrease) in contract owners' equity from principal transactions (588,436) 21,791,008 (119,938,780) (65,666,165) (54,398,686) (55,254,726) ----------- ----------- -------------- -------------- ------------ ------------ Total increase (decrease) in contract owners' equity 3,462,805 31,231,450 (19,407,716) 226,143,409 (17,879,671) 31,948,977 Contract owners' equity at beginning of period 42,902,752 11,671,302 1,261,885,677 1,035,742,268 368,109,463 336,160,486 ----------- ----------- -------------- -------------- ------------ ------------ Contract owners' equity at end of period $46,365,557 $42,902,752 $1,242,477,961 $1,261,885,677 $350,229,792 $368,109,463 =========== =========== ============== ============== ============ ============
2010 2009 2010 2009 2010 2009 ----------- ----------- --------------- -------------- ------------ ------------ Units, beginning of period 3,793,835 1,344,727 128,398,406 136,082,295 28,241,296 33,466,331 Units issued 254,476 2,590,662 580,419 4,923,965 481,616 867,144 Units redeemed 310,053 141,554 12,718,729 12,607,854 4,599,782 6,092,179 ----------- ----------- -------------- -------------- ------------ ------------ Units, end of period 3,738,258 3,793,835 116,260,096 128,398,406 24,123,130 28,241,296 =========== =========== ============== ============== ============ ============
See accompanying notes. 51 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Fundamental Value Series II Global Allocation Global Bond Series I -------------------------- ---------------------- -------------------------- 2010 2009 2010 2009 2010 2009 ------------ ------------ ---------- ---------- ------------ ------------ Income: Dividend distributions $ 2,587,816 $ 1,950,053 $ 10,723 $ 18,153 $ 2,615,856 $ 9,304,604 Expenses: Mortality and expense risk and administrative charges (4,604,386) (4,251,494) (14,569) (14,534) (1,155,910) (1,130,728) ------------ ------------ ---------- ---------- ------------ ------------ Net investment income (loss) (2,016,570) (2,301,441) (3,846) 3,619 1,459,946 8,173,876 ------------ ------------ ---------- ---------- ------------ ------------ Realized gains (losses) on investments: Capital gain distributions -- -- 5,362 -- -- 10,390,495 Net realized gain (loss) (8,392,601) (17,604,679) 25,195 27,517 (4,146,575) (4,590,601) ------------ ------------ ---------- ---------- ------------ ------------ Realized gains (losses) (8,392,601) (17,604,679) 30,557 27,517 (4,146,575) 5,799,894 ------------ ------------ ---------- ---------- ------------ ------------ Unrealized appreciation (depreciation) during the period 41,356,915 92,153,695 53,208 148,636 9,160,409 (4,681,323) ------------ ------------ ---------- ---------- ------------ ------------ Net increase (decrease) in contract owners' equity from operations 30,947,744 72,247,575 79,919 179,772 6,473,780 9,292,447 ------------ ------------ ---------- ---------- ------------ ------------ Changes from principal transactions: Purchase payments 1,671,564 3,073,409 -- -- 1,076,388 564,417 Transfers between sub-accounts and the company (14,696,718) (3,881,052) (36,729) (86,524) (2,459,663) (154,571) Withdrawals (26,365,755) (16,179,716) (78,526) (47,557) (10,969,617) (10,939,594) Annual contract fee (1,245,407) (1,313,646) (2,563) (3,087) (170,035) (175,623) ------------ ------------ ---------- ---------- ------------ ------------ Net increase (decrease) in contract owners' equity from principal transactions (40,636,316) (18,301,005) (117,818) (137,168) (12,522,927) (10,705,371) ------------ ------------ ---------- ---------- ------------ ------------ Total increase (decrease) in contract owners' equity (9,688,572) 53,946,570 (37,899) 42,604 (6,049,147) (1,412,924) Contract owners' equity at beginning of period 305,287,199 251,340,629 1,080,268 1,037,664 80,082,736 81,495,660 ------------ ------------ ---------- ---------- ------------ ------------ Contract owners' equity at end of period $295,598,627 $305,287,199 $1,042,369 $1,080,268 $ 74,033,589 $ 80,082,736 ============ ============ ========== ========== ============ ============
2010 2009 2010 2009 2010 2009 ------------ ------------ ---------- ---------- ------------ ------------ Units, beginning of period 22,342,435 23,786,071 69,919 79,691 3,158,491 3,602,575 Units issued 892,300 2,514,162 109 255 536,868 654,845 Units redeemed 3,730,974 3,957,798 6,365 10,027 987,025 1,098,929 ------------ ------------ ---------- ---------- ------------ ------------ Units, end of period 19,503,761 22,342,435 63,663 69,919 2,708,334 3,158,491 ============ ============ ========== ========== ============ ============
See accompanying notes. 52 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Global Bond Series II Global Trust Series I Global Trust Series II -------------------------- -------------------------- ------------------------ 2010 2009 2010 2009 2010 2009 ------------ ------------ ------------ ------------ ----------- ----------- Income: Dividend distributions $ 5,581,573 $ 18,219,463 $ 2,287,749 $ 2,229,233 $ 367,753 $ 382,998 Expenses: Mortality and expense risk and administrative charges (2,782,077) (2,489,532) (1,889,755) (1,712,182) (442,835) (420,478) ------------ ------------ ------------ ------------ ----------- ----------- Net investment income (loss) 2,799,496 15,729,931 397,994 517,051 (75,082) (37,480) ------------ ------------ ------------ ------------ ----------- ----------- Realized gains (losses) on investments: Capital gain distributions -- 20,377,073 -- -- -- -- Net realized gain (loss) (7,226,497) (5,718,724) 797,255 (4,024,609) (1,781,711) (2,729,076) ------------ ------------ ------------ ------------ ----------- ----------- Realized gains (losses) (7,226,497) 14,658,349 797,255 (4,024,609) (1,781,711) (2,729,076) ------------ ------------ ------------ ------------ ----------- ----------- Unrealized appreciation (depreciation) during the period 18,150,692 (11,712,850) 8,206,707 40,425,172 3,316,759 9,667,640 ------------ ------------ ------------ ------------ ----------- ----------- Net increase (decrease) in contract owners' equity from operations 13,723,691 18,675,430 9,401,956 36,917,614 1,459,966 6,901,084 ------------ ------------ ------------ ------------ ----------- ----------- Changes from principal transactions: Purchase payments 1,197,234 4,616,448 1,813,686 13,557,475 119,550 129,062 Transfers between sub-accounts and the company 4,641,797 9,582,651 (1,763,834) 8,777,532 (291,866) (1,793,498) Withdrawals (18,727,611) (10,557,158) (12,645,470) (10,996,554) (2,739,859) (1,245,895) Annual contract fee (679,950) (701,115) (411,992) (625,659) (131,025) (146,223) ------------ ------------ ------------ ------------ ----------- ----------- Net increase (decrease) in contract owners' equity from principal transactions (13,568,530) 2,940,826 (13,007,610) 10,712,794 (3,043,200) (3,056,554) ------------ ------------ ------------ ------------ ----------- ----------- Total increase (decrease) in contract owners' equity 155,161 21,616,256 (3,605,654) 47,630,408 (1,583,234) 3,844,530 Contract owners' equity at beginning of period 176,112,067 154,495,811 157,233,725 109,603,317 30,509,687 26,665,157 ------------ ------------ ------------ ------------ ----------- ----------- Contract owners' equity at end of period $176,267,228 $176,112,067 $153,628,071 $157,233,725 $28,926,453 $30,509,687 ============ ============ ============ ============ =========== ===========
2010 2009 2010 2009 2010 2009 ------------ ------------ ------------ ------------ ----------- ----------- Units, beginning of period 9,499,821 9,374,175 9,049,797 6,778,204 2,125,503 2,397,618 Units issued 1,454,827 2,132,217 629,426 3,480,690 165,247 121,491 Units redeemed 2,167,440 2,006,571 1,139,209 1,209,097 386,845 393,606 ------------ ------------ ------------ ------------ ----------- ----------- Units, end of period 8,787,208 9,499,821 8,540,014 9,049,797 1,903,905 2,125,503 ============ ============ ============ ============ =========== ===========
See accompanying notes. 53 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Health Health Sciences Series I Sciences Series II High Income Series II ------------------------- ------------------------ ------------------------ 2010 2009 2010 2009 2010 2009 ----------- ----------- ----------- ----------- ----------- ----------- Income: Dividend distributions $ -- $ -- $ -- $ -- $ 6,981,184 $ 1,514,432 Expenses: Mortality and expense risk and administrative charges (583,907) (557,402) (765,618) (682,595) (294,113) (129,346) ----------- ----------- ----------- ----------- ----------- ----------- Net investment income (loss) (583,907) (557,402) (765,618) (682,595) 6,687,071 1,385,086 ----------- ----------- ----------- ----------- ----------- ----------- Realized gains (losses) on investments: Capital gain distributions -- 511,091 -- 622,631 -- -- Net realized gain (loss) (1,072,124) (4,548,913) (1,300,308) (6,844,947) 2,330,818 1,645,855 ----------- ----------- ----------- ----------- ----------- ----------- Realized gains (losses) (1,072,124) (4,037,822) (1,300,308) (6,222,316) 2,330,818 1,645,855 ----------- ----------- ----------- ----------- ----------- ----------- Unrealized appreciation (depreciation) during the period 6,469,642 13,941,033 7,993,467 17,554,746 (7,252,365) 1,832,614 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity from operations 4,813,611 9,345,809 5,927,541 10,649,835 1,765,524 4,863,555 ----------- ----------- ----------- ----------- ----------- ----------- Changes from principal transactions: Purchase payments 98,538 187,012 484,627 784,576 63,774 257,898 Transfers between sub-accounts and the company (1,656,690) (2,318,534) 1,293,558 (1,707,282) 3,960,096 12,980,097 Withdrawals (4,386,450) (3,740,396) (4,643,898) (3,449,180) (3,236,036) (907,363) Annual contract fee (144,694) (157,850) (190,320) (199,612) (45,117) (18,826) ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity from principal transactions (6,089,296) (6,029,768) (3,056,033) (4,571,498) 742,717 12,311,806 ----------- ----------- ----------- ----------- ----------- ----------- Total increase (decrease) in contract owners' equity (1,275,685) 3,316,041 2,871,508 6,078,337 2,508,241 17,175,361 Contract owners' equity at beginning of period 40,344,711 37,028,670 47,856,831 41,778,494 18,649,559 1,474,198 ----------- ----------- ----------- ----------- ----------- ----------- Contract owners' equity at end of period $39,069,026 $40,344,711 $50,728,339 $47,856,831 $21,157,800 $18,649,559 =========== =========== =========== =========== =========== ===========
2010 2009 2010 2009 2010 2009 ----------- ----------- ----------- ----------- ----------- ----------- Units, beginning of period 2,244,079 2,672,652 2,552,746 2,875,694 1,626,192 230,474 Units issued 224,265 378,859 513,581 730,985 2,279,211 2,854,287 Units redeemed 561,418 807,432 675,542 1,053,933 2,218,551 1,458,569 ----------- ----------- ----------- ----------- ----------- ----------- Units, end of period 1,906,926 2,244,079 2,390,785 2,552,746 1,686,852 1,626,192 =========== =========== =========== =========== =========== ===========
See accompanying notes. 54 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
International High Yield Series I High Yield Series II Core Series I -------------------------- ------------------------- ------------------------ 2010 2009 2010 2009 2010 2009 ------------ ------------ ------------ ----------- ----------- ----------- Income: Dividend distributions $ 21,933,330 $ 6,770,940 $ 29,589,869 $ 8,849,678 $ 626,444 $ 839,115 Expenses: Mortality and expense risk and administrative charges (904,269) (870,537) (1,169,639) (1,087,840) (511,968) (522,753) ------------ ------------ ------------ ----------- ----------- ----------- Net investment income (loss) 21,029,061 5,900,403 28,420,230 7,761,838 114,476 316,362 ------------ ------------ ------------ ----------- ----------- ----------- Realized gains (losses) on investments: Capital gain distributions -- -- -- -- -- 1,033,051 Net realized gain (loss) 7,993,291 (10,902,200) 8,102,139 (8,939,681) (3,897,329) (3,919,101) ------------ ------------ ------------ ----------- ----------- ----------- Realized gains (losses) 7,993,291 (10,902,200) 8,102,139 (8,939,681) (3,897,329) (2,886,050) ------------ ------------ ------------ ----------- ----------- ----------- Unrealized appreciation (depreciation) during the period (22,447,554) 29,275,029 (30,854,879) 29,241,046 6,218,614 7,753,557 ------------ ------------ ------------ ----------- ----------- ----------- Net increase (decrease) in contract owners' equity from operations 6,574,798 24,273,232 5,667,490 28,063,203 2,435,761 5,183,869 ------------ ------------ ------------ ----------- ----------- ----------- Changes from principal transactions: Purchase payments 338,931 213,626 588,381 2,534,810 114,123 85,565 Transfers between sub-accounts and the company (3,272,274) 5,045,751 (6,538,111) 15,379,193 (999,018) (1,699,868) Withdrawals (9,280,119) (8,016,651) (9,165,032) (5,583,203) (3,829,456) (3,526,692) Annual contract fee (105,991) (111,398) (180,887) (187,407) (94,064) (104,520) ------------ ------------ ------------ ----------- ----------- ----------- Net increase (decrease) in contract owners' equity from principal transactions (12,319,453) (2,868,672) (15,295,649) 12,143,393 (4,808,415) (5,245,515) ------------ ------------ ------------ ----------- ----------- ----------- Total increase (decrease) in contract owners' equity (5,744,655) 21,404,560 (9,628,159) 40,206,596 (2,372,654) (61,646) Contract owners' equity at beginning of period 67,491,418 46,086,858 90,801,684 50,595,088 37,608,478 37,670,124 ------------ ------------ ------------ ----------- ----------- ----------- Contract owners' equity at end of period $ 61,746,763 $ 67,491,418 $ 81,173,525 $90,801,684 $35,235,824 $37,608,478 ============ ============ ============ =========== =========== ===========
2010 2009 2010 2009 2010 2009 ------------ ------------ ------------ ----------- ----------- ----------- Units, beginning of period 3,881,038 4,032,014 5,173,978 4,362,481 2,759,093 3,231,431 Units issued 2,265,177 2,414,224 4,784,892 5,197,898 194,367 217,837 Units redeemed 2,980,349 2,565,200 5,815,848 4,386,401 556,397 690,175 ------------ ------------ ------------ ----------- ----------- ----------- Units, end of period 3,165,866 3,881,038 4,143,022 5,173,978 2,397,063 2,759,093 ============ ============ ============ =========== =========== ===========
See accompanying notes. 55 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
International International International Core Series II Equity Index A Series I Equity Index A Series II ------------------------ ------------------------ ------------------------ 2010 2009 2010 2009 2010 2009 ----------- ----------- ----------- ----------- ----------- ----------- Income: Dividend distributions $ 412,768 $ 510,010 $ 640,977 $ 1,712,786 $ 647,184 $ 2,001,628 Expenses: Mortality and expense risk and administrative charges (404,803) (379,865) (372,344) (192,916) (455,553) (228,273) ----------- ----------- ----------- ----------- ----------- ----------- Net investment income (loss) 7,965 130,145 268,633 1,519,870 191,631 1,773,355 ----------- ----------- ----------- ----------- ----------- ----------- Realized gains (losses) on investments: Capital gain distributions -- 669,029 8,834,542 -- 10,186,797 -- Net realized gain (loss) (3,476,984) (5,022,887) (4,268,501) (2,242,923) (5,000,501) (963,692) ----------- ----------- ----------- ----------- ----------- ----------- Realized gains (losses) (3,476,984) (4,353,858) 4,566,041 (2,242,923) 5,186,296 (963,692) ----------- ----------- ----------- ----------- ----------- ----------- Unrealized appreciation (depreciation) during the period 5,288,778 7,692,619 (2,360,063) 4,504,097 (2,855,060) 3,567,088 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity from operations 1,819,759 3,468,906 2,474,611 3,781,044 2,522,867 4,376,751 ----------- ----------- ----------- ----------- ----------- ----------- Changes from principal transactions: Purchase payments 151,920 596,119 87,318 28,923 386,925 58,564 Transfers between sub-accounts and the company (163,209) (717,388) 17,810,505 (399,337) 21,115,920 (561,878) Withdrawals (1,801,831) (1,452,436) (2,535,795) (1,655,497) (2,634,003) (755,883) Annual contract fee (92,325) (98,937) (79,442) (53,746) (121,492) (80,444) ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity from principal transactions (1,905,445) (1,672,642) 15,282,586 (2,079,657) 18,747,350 (1,339,641) ----------- ----------- ----------- ----------- ----------- ----------- Total increase (decrease) in contract owners' equity (85,686) 1,796,264 17,757,197 1,701,387 21,270,217 3,037,110 Contract owners' equity at beginning of period 26,618,220 24,821,956 14,194,153 12,492,766 15,752,698 12,715,588 ----------- ----------- ----------- ----------- ----------- ----------- Contract owners' equity at end of period $26,532,534 $26,618,220 $31,951,350 $14,194,153 $37,022,915 $15,752,698 =========== =========== =========== =========== =========== ===========
2010 2009 2010 2009 2010 2009 ----------- ----------- ----------- ----------- ----------- ----------- Units, beginning of period 1,799,491 1,971,098 806,351 964,039 911,711 996,311 Units issued 231,047 289,324 1,318,304 141,738 1,796,231 194,341 Units redeemed 366,082 460,931 462,211 299,426 709,962 278,941 ----------- ----------- ----------- ----------- ----------- ----------- Units, end of period 1,664,456 1,799,491 1,662,444 806,351 1,997,980 911,711 =========== =========== =========== =========== =========== ===========
See accompanying notes. 56 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
International International International Equity Index Series NAV Opportunities Series II Small Company Series I ------------------------ ------------------------- ------------------------ 2010 2009 2010 2009 2010 2009 ----------- ----------- ----------- ------------ ----------- ----------- Income: Dividend distributions $ 555,020 $ 794,530 $ 392,862 $ 244,123 $ 1,141,402 $ 388,795 Expenses: Mortality and expense risk and administrative charges (350,308) (331,837) (495,199) (459,877) (639,946) (96,398) ----------- ----------- ----------- ------------ ----------- ----------- Net investment income (loss) 204,712 462,693 (102,337) (215,754) 501,456 292,397 ----------- ----------- ----------- ------------ ----------- ----------- Realized gains (losses) on investments: Capital gain distributions -- 398,542 -- -- -- -- Net realized gain (loss) (1,657,710) (2,887,421) (5,975,655) (16,515,724) (7,524) (50,491) ----------- ----------- ----------- ------------ ----------- ----------- Realized gains (losses) (1,657,710) (2,488,879) (5,975,655) (16,515,724) (7,524) (50,491) ----------- ----------- ----------- ------------ ----------- ----------- Unrealized appreciation (depreciation) during the period 3,448,847 8,702,813 9,126,194 25,081,188 7,645,143 (1,224,185) ----------- ----------- ----------- ------------ ----------- ----------- Net increase (decrease) in contract owners' equity from operations 1,995,849 6,676,627 3,048,202 8,349,710 8,139,075 (982,279) ----------- ----------- ----------- ------------ ----------- ----------- Changes from principal transactions: Purchase payments 85,085 100,391 224,681 597,247 177,315 8,410 Transfers between sub-accounts and the company (697,291) (2,272,400) (61,110) (1,023,520) (4,690,226) 49,692,360 Withdrawals (1,798,514) (966,363) (2,981,816) (2,189,812) (4,957,003) (421,452) Annual contract fee (130,598) (145,009) (91,655) (93,349) (123,389) (13,977) ----------- ----------- ----------- ------------ ----------- ----------- Net increase (decrease) in contract owners' equity from principal transactions (2,541,318) (3,283,381) (2,909,900) (2,709,434) (9,593,303) 49,265,341 ----------- ----------- ----------- ------------ ----------- ----------- Total increase (decrease) in contract owners' equity (545,469) 3,393,246 138,302 5,640,276 (1,454,228) 48,283,062 Contract owners' equity at beginning of period 23,975,976 20,582,730 34,890,497 29,250,221 48,283,062 -- ----------- ----------- ----------- ------------ ----------- ----------- Contract owners' equity at end of period $23,430,507 $23,975,976 $35,028,799 $ 34,890,497 $46,828,834 $48,283,062 =========== =========== =========== ============ =========== ===========
2010 2009 2010 2009 2010 2009 ----------- ----------- ----------- ------------ ----------- ----------- Units, beginning of period 2,431,392 2,852,394 2,507,243 2,820,676 3,935,891 -- Units issued 99,175 54,112 790,271 1,040,539 242,998 4,234,181 Units redeemed 365,061 475,114 1,036,986 1,353,972 1,021,867 298,290 ----------- ----------- ----------- ------------ ----------- ----------- Units, end of period 2,165,506 2,431,392 2,260,528 2,507,243 3,157,022 3,935,891 =========== =========== =========== ============ =========== ===========
See accompanying notes. 57 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
International International International Company Series II Value Series I Value Series II ------------------------ -------------------------- -------------------------- 2010 2009 2010 2009 2010 2009 ----------- ----------- ------------ ------------ ------------ ------------ Income: Dividend distributions $ 675,075 $ 236,022 $ 2,294,407 $ 2,580,885 $ 1,951,841 $ 2,131,169 Expenses: Mortality and expense risk and administrative charges (423,372) (63,702) (1,796,089) (1,811,052) (1,816,469) (1,707,749) ----------- ----------- ------------ ------------ ------------ ------------ Net investment income (loss) 251,703 172,320 498,318 769,833 135,372 423,420 ----------- ----------- ------------ ------------ ------------ ------------ Realized gains (losses) on investments: Capital gain distributions -- -- -- 5,781,499 -- 5,068,168 Net realized gain (loss) 4,770 (69,515) (10,729,079) (17,902,429) (11,814,815) (15,773,701) ----------- ----------- ------------ ------------ ------------ ------------ Realized gains (losses) 4,770 (69,515) (10,729,079) (12,120,930) (11,814,815) (10,705,533) ----------- ----------- ------------ ------------ ------------ ------------ Unrealized appreciation (depreciation) during the period 4,699,152 (721,786) 16,983,064 46,257,734 18,126,687 41,428,323 ----------- ----------- ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity from operations 4,955,625 (618,981) 6,752,303 34,906,637 6,447,244 31,146,210 ----------- ----------- ------------ ------------ ------------ ------------ Changes from principal transactions: Purchase payments 181,953 84,641 716,407 785,652 645,146 1,519,445 Transfers between sub-accounts and the company (202,454) 29,340,823 (2,979,902) (12,934,416) (1,584,822) (6,946,012) Withdrawals (2,943,191) (233,393) (14,510,921) (13,266,342) (9,908,664) (7,210,238) Annual contract fee (93,130) (15,926) (305,505) (357,720) (447,316) (501,427) ----------- ----------- ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity from principal transactions (3,056,822) 29,176,145 (17,079,921) (25,772,826) (11,295,656) (13,138,232) ----------- ----------- ------------ ------------ ------------ ------------ Total increase (decrease) in contract owners' equity 1,898,803 28,557,164 (10,327,618) 9,133,811 (4,848,412) 18,007,978 Contract owners' equity at beginning of period 28,557,164 -- 133,408,791 124,274,980 123,004,856 104,996,878 ----------- ----------- ------------ ------------ ------------ ------------ Contract owners' equity at end of period $30,455,967 $28,557,164 $123,081,173 $133,408,791 $118,156,444 $123,004,856 =========== =========== ============ ============ ============ ============
2010 2009 2010 2009 2010 2009 ----------- ----------- ------------ ------------ ------------ ------------ Units, beginning of period 2,328,932 -- 8,033,229 9,996,172 6,733,805 7,623,148 Units issued 499,323 2,659,490 442,711 354,218 604,047 573,253 Units redeemed 768,060 330,558 1,493,959 2,317,161 1,218,857 1,462,596 ----------- ----------- ------------ ------------ ------------ ------------ Units, end of period 2,060,195 2,328,932 6,981,981 8,033,229 6,118,995 6,733,805 =========== =========== ============ ============ ============ ============
See accompanying notes. 58 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Investment Investment Quality Bond Series I Quality Bond Series II Large Cap Series I -------------------------- -------------------------- -------------------------- 2010 2009 2010 2009 2010 2009 ------------ ------------ ------------ ------------ ------------ ------------ Income: Dividend distributions $ 8,670,618 $ 6,962,949 $ 6,398,297 $ 5,599,584 $ 1,284,527 $ 2,212,728 Expenses: Mortality and expense risk and administrative charges (1,969,865) (1,695,350) (2,173,879) (1,586,017) (1,760,568) (1,657,962) ------------ ------------ ------------ ------------ ------------ ------------ Net investment income (loss) 6,700,753 5,267,599 4,224,418 4,013,567 (476,041) 554,766 ------------ ------------ ------------ ------------ ------------ ------------ Realized gains (losses) on investments: Capital gain distributions -- -- -- -- -- -- Net realized gain (loss) 638,844 (3,439,764) 729,252 (1,318,927) (8,369,597) (16,614,768) ------------ ------------ ------------ ------------ ------------ ------------ Realized gains (losses) 638,844 (3,439,764) 729,252 (1,318,927) (8,369,597) (16,614,768) ------------ ------------ ------------ ------------ ------------ ------------ Unrealized appreciation (depreciation) during the period 2,180,181 12,345,175 2,734,164 6,795,401 22,859,494 45,752,680 ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity from operations 9,519,778 14,173,010 7,687,834 9,490,041 14,013,856 29,692,678 ------------ ------------ ------------ ------------ ------------ ------------ Changes from principal transactions: Purchase payments 11,025,416 21,850,928 1,342,921 2,016,184 308,670 400,653 Transfers between sub-accounts and the company 16,638,303 33,608,110 1,971,053 43,104,013 (4,386,392) (7,108,282) Withdrawals (18,205,321) (14,818,333) (16,576,014) (10,597,578) (13,038,170) (11,354,931) Annual contract fee (859,052) (904,006) (586,129) (450,483) (219,671) (237,372) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity from principal transactions 8,599,346 39,736,699 (13,848,169) 34,072,136 (17,335,563) (18,299,932) ------------ ------------ ------------ ------------ ------------ ------------ Total increase (decrease) in contract owners' equity 18,119,124 53,909,709 (6,160,335) 43,562,177 (3,321,707) 11,392,746 Contract owners' equity at beginning of period 156,994,085 103,084,376 135,966,685 92,404,508 129,171,779 117,779,033 ------------ ------------ ------------ ------------ ------------ ------------ Contract owners' equity at end of period $175,113,209 $156,994,085 $129,806,350 $135,966,685 $125,850,072 $129,171,779 ============ ============ ============ ============ ============ ============
2010 2009 2010 2009 2010 2009 ------------ ------------ ------------ ------------ ------------ ------------ Units, beginning of period 8,810,880 5,071,248 8,375,031 6,301,640 10,813,548 12,717,322 Units issued 2,514,847 4,962,200 1,743,520 3,438,276 78,719 106,555 Units redeemed 1,496,647 1,222,568 2,538,797 1,364,885 1,498,321 2,010,329 ------------ ------------ ------------ ------------ ------------ ------------ Units, end of period 9,829,080 8,810,880 7,579,754 8,375,031 9,393,946 10,813,548 ============ ============ ============ ============ ============ ============
See accompanying notes. 59 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Large Large Cap Series II Large Cap Value Series I Cap Value Series II ------------------------ ------------------------ ------------------------ 2010 2009 2010 2009 2010 2009 ----------- ----------- ----------- ----------- ----------- ----------- Income: Dividend distributions $ 75,382 $ 138,398 $ 216,213 $ 307,734 $ 186,496 $ 251,194 Expenses: Mortality and expense risk and administrative charges (143,175) (128,612) (279,197) (294,510) (302,895) (285,665) ----------- ----------- ----------- ----------- ----------- ----------- Net investment income (loss) (67,793) 9,786 (62,984) 13,224 (116,399) (34,471) ----------- ----------- ----------- ----------- ----------- ----------- Realized gains (losses) on investments: Capital gain distributions -- -- -- -- -- -- Net realized gain (loss) (660,438) (1,787,570) (2,515,755) (4,978,721) (1,839,976) (2,868,641) ----------- ----------- ----------- ----------- ----------- ----------- Realized gains (losses) (660,438) (1,787,570) (2,515,755) (4,978,721) (1,839,976) (2,868,641) ----------- ----------- ----------- ----------- ----------- ----------- Unrealized appreciation (depreciation) during the period 1,718,232 3,769,832 3,977,899 6,286,412 3,349,785 4,303,625 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity from operations 990,001 1,992,048 1,399,160 1,320,915 1,393,410 1,400,513 ----------- ----------- ----------- ----------- ----------- ----------- Changes from principal transactions: Purchase payments 129,957 46,477 89,162 121,799 97,367 173,686 Transfers between sub-accounts and the company (160,389) (754,935) (450,476) (2,049,100) 1,567,256 (221,798) Withdrawals (944,676) (481,465) (2,371,485) (2,324,708) (1,576,186) (1,231,792) Annual contract fee (41,814) (43,893) (66,822) (77,591) (73,288) (80,003) ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity from principal transactions (1,016,922) (1,233,816) (2,799,621) (4,329,600) 15,149 (1,359,907) ----------- ----------- ----------- ----------- ----------- ----------- Total increase (decrease) in contract owners' equity (26,921) 758,232 (1,400,461) (3,008,685) 1,408,559 40,606 Contract owners' equity at beginning of period 9,291,293 8,533,061 20,018,553 23,027,238 19,356,704 19,316,098 ----------- ----------- ----------- ----------- ----------- ----------- Contract owners' equity at end of period $ 9,264,372 $ 9,291,293 $18,618,092 $20,018,553 $20,765,263 $19,356,704 =========== =========== =========== =========== =========== ===========
2010 2009 2010 2009 2010 2009 ----------- ----------- ----------- ----------- ----------- ----------- Units, beginning of period 789,704 932,080 1,157,609 1,450,254 1,133,545 1,228,957 Units issued 61,180 94,205 125,598 152,608 225,485 195,065 Units redeemed 146,427 236,581 288,947 445,253 232,539 290,477 ----------- ----------- ----------- ----------- ----------- ----------- Units, end of period 704,457 789,704 994,260 1,157,609 1,126,491 1,133,545 =========== =========== =========== =========== =========== ===========
See accompanying notes. 60 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Lifestyle Lifestyle Lifestyle Aggressive Series I Aggressive Series II Balanced Series I -------------------------- -------------------------- -------------------------- 2010 2009 2010 2009 2010 2009 ------------ ------------ ------------ ------------ ------------ ------------ Income: Dividend distributions $ 1,827,512 $ 844,497 $ 3,020,553 $ 1,277,771 $ 18,402,025 $ 25,581,960 Expenses: Mortality and expense risk and administrative charges (1,373,360) (1,217,687) (2,726,791) (2,366,017) (9,299,937) (7,890,860) ------------ ------------ ------------ ------------ ------------ ------------ Net investment income (loss) 454,152 (373,190) 293,762 (1,088,246) 9,102,088 17,691,100 ------------ ------------ ------------ ------------ ------------ ------------ Realized gains (losses) on investments: Capital gain distributions -- -- -- -- -- 420,228 Net realized gain (loss) (8,831,413) (13,188,324) (13,908,452) (19,188,518) (21,652,507) (55,036,545) ------------ ------------ ------------ ------------ ------------ ------------ Realized gains (losses) (8,831,413) (13,188,324) (13,908,452) (19,188,518) (21,652,507) (54,616,317) ------------ ------------ ------------ ------------ ------------ ------------ Unrealized appreciation (depreciation) during the period 21,524,186 37,735,888 37,289,043 64,428,074 77,986,924 175,122,440 ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity from operations 13,146,925 24,174,374 23,674,353 44,151,310 65,436,505 138,197,223 ------------ ------------ ------------ ------------ ------------ ------------ Changes from principal transactions: Purchase payments 678,277 741,381 3,174,869 4,830,193 28,391,458 39,673,754 Transfers between sub-accounts and the company 1,145,227 (1,794,331) (1,560,781) (2,907,807) 26,853,733 60,171,286 Withdrawals (6,703,546) (5,555,182) (14,426,040) (6,976,923) (80,520,060) (61,729,057) Annual contract fee (352,903) (361,039) (687,412) (714,155) (2,949,617) (2,603,072) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity from principal transactions (5,232,945) (6,969,171) (13,499,364) (5,768,692) (28,224,486) 35,512,911 ------------ ------------ ------------ ------------ ------------ ------------ Total increase (decrease) in contract owners' equity 7,913,980 17,205,203 10,174,989 38,382,618 37,212,019 173,710,134 Contract owners' equity at beginning of period 95,282,705 78,077,502 178,414,101 140,031,483 662,525,999 488,815,865 ------------ ------------ ------------ ------------ ------------ ------------ Contract owners' equity at end of period $103,196,685 $ 95,282,705 $188,589,090 $178,414,101 $699,738,018 $662,525,999 ============ ============ ============ ============ ============ ============
2010 2009 2010 2009 2010 2009 ------------ ------------ ------------ ------------ ------------ ------------ Units, beginning of period 6,570,279 7,208,200 12,202,049 12,730,138 40,029,522 35,215,875 Units issued 1,233,548 670,233 1,141,163 1,356,324 7,452,735 13,232,889 Units redeemed 1,620,090 1,308,154 2,064,938 1,884,413 7,128,701 8,419,242 ------------ ------------ ------------ ------------ ------------ ------------ Units, end of period 6,183,737 6,570,279 11,278,274 12,202,049 40,353,556 40,029,522 ============ ============ ============ ============ ============ ============
See accompanying notes. 61 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Lifestyle Balanced Lifestyle Conservative Lifestyle Conservative Series II Series I Series II ------------------------------ -------------------------- ------------------------------ 2010 2009 2010 2009 2010 2009 -------------- -------------- ------------ ------------ -------------- -------------- Income: Dividend distributions $ 241,978,957 $ 336,039,640 $ 5,787,292 $ 10,401,056 $ 57,711,107 $ 100,430,665 Expenses: Mortality and expense risk and administrative charges (144,676,449) (118,359,857) (3,018,917) (2,581,795) (35,723,695) (26,486,012) -------------- -------------- ------------ ------------ -------------- -------------- Net investment income (loss) 97,302,508 217,679,783 2,768,375 7,819,261 21,987,412 73,944,653 -------------- -------------- ------------ ------------ -------------- -------------- Realized gains (losses) on investments: Capital gain distributions -- 5,935,263 -- 439,381 -- 4,223,911 Net realized gain (loss) (138,384,962) (123,362,498) 2,186,456 (9,131,129) (15,200,726) (38,032,869) -------------- -------------- ------------ ------------ -------------- -------------- Realized gains (losses) (138,384,962) (117,427,235) 2,186,456 (8,691,748) (15,200,726) (33,808,958) -------------- -------------- ------------ ------------ -------------- -------------- Unrealized appreciation (depreciation) during the period 917,216,712 1,854,295,594 10,916,358 34,810,182 156,141,573 282,067,887 -------------- -------------- ------------ ------------ -------------- -------------- Net increase (decrease) in contract owners' equity from operations 876,134,258 1,954,548,142 15,871,189 33,937,695 162,928,259 322,203,582 -------------- -------------- ------------ ------------ -------------- -------------- Changes from principal transactions: Purchase payments 409,098,662 709,957,143 4,260,475 10,870,344 144,459,918 189,953,281 Transfers between sub-accounts and the company 119,524,423 502,193,695 27,790,584 48,595,822 178,337,623 521,162,288 Withdrawals (618,899,456) (357,374,676) (35,319,903) (28,035,261) (202,042,357) (124,863,818) Annual contract fee (49,217,857) (40,630,601) (777,513) (763,072) (12,363,984) (8,469,256) -------------- -------------- ------------ ------------ -------------- -------------- Net increase (decrease) in contract owners' equity from principal transactions (139,494,228) 814,145,561 (4,046,357) 30,667,833 108,391,200 577,782,495 -------------- -------------- ------------ ------------ -------------- -------------- Total increase (decrease) in contract owners' equity 736,640,030 2,768,693,703 11,824,832 64,605,528 271,319,459 899,986,077 Contract owners' equity at beginning of period 9,123,269,007 6,354,575,304 208,449,069 143,843,541 2,071,301,574 1,171,315,497 -------------- -------------- ------------ ------------ -------------- -------------- Contract owners' equity at end of period $9,859,909,037 $9,123,269,007 $220,273,901 $208,449,069 $2,342,621,033 $2,071,301,574 ============== ============== ============ ============ ============== ==============
2010 2009 2010 2009 2010 2009 -------------- -------------- ------------ ------------ -------------- -------------- Units, beginning of period 611,485,345 536,639,432 11,452,790 8,661,797 133,572,464 89,201,134 Units issued 36,123,426 99,521,532 4,137,883 6,659,874 38,173,707 61,536,157 Units redeemed 40,620,709 24,675,619 4,042,966 3,868,881 29,916,921 17,164,827 -------------- -------------- ------------ ------------ -------------- -------------- Units, end of period 606,988,062 611,485,345 11,547,707 11,452,790 141,829,250 133,572,464 ============== ============== ============ ============ ============== ==============
See accompanying notes. 62 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Lifestyle Moderate Lifestyle Growth Series I Lifestyle Growth Series II Series I -------------------------- -------------------------------- -------------------------- 2010 2009 2010 2009 2010 2009 ------------ ------------ --------------- --------------- ------------ ------------ Income: Dividend distributions $ 13,537,990 $ 15,675,017 $ 255,974,576 $ 305,362,798 $ 6,786,751 $ 10,465,334 Expenses: Mortality and expense risk and administrative charges (7,405,769) (6,479,986) (174,963,402) (147,155,688) (3,481,516) (3,079,669) ------------ ------------ --------------- --------------- ------------ ------------ Net investment income (loss) 6,132,221 9,195,031 81,011,174 158,207,110 3,305,235 7,385,665 ------------ ------------ --------------- --------------- ------------ ------------ Realized gains (losses) on investments: Capital gain distributions -- -- -- -- -- -- Net realized gain (loss) (21,756,160) (53,828,123) (211,027,896) (226,638,528) (4,298,289) (17,919,525) ------------ ------------ --------------- --------------- ------------ ------------ Realized gains (losses) (21,756,160) (53,828,123) (211,027,896) (226,638,528) (4,298,289) (17,919,525) ------------ ------------ --------------- --------------- ------------ ------------ Unrealized appreciation (depreciation) during the period 76,058,742 170,671,154 1,334,091,234 2,694,435,207 22,873,639 59,182,236 ------------ ------------ --------------- --------------- ------------ ------------ Net increase (decrease) in contract owners' equity from operations 60,434,803 126,038,062 1,204,074,512 2,626,003,789 21,880,585 48,648,376 ------------ ------------ --------------- --------------- ------------ ------------ Changes from principal transactions: Purchase payments 34,645,473 33,574,105 492,620,208 782,462,001 10,637,477 16,874,024 Transfers between sub-accounts and the company 17,543,631 2,366,864 (23,542,458) (50,512,147) 18,029,244 20,021,177 Withdrawals (48,679,740) (35,496,990) (551,303,826) (320,211,159) (30,117,067) (27,673,693) Annual contract fee (2,919,134) (2,450,379) (65,464,110) (58,308,241) (1,035,461) (1,011,711) ------------ ------------ --------------- --------------- ------------ ------------ Net increase (decrease) in contract owners' equity from principal transactions 590,230 (2,006,400) (147,690,186) 353,430,454 (2,485,807) 8,209,797 ------------ ------------ --------------- --------------- ------------ ------------ Total increase (decrease) in contract owners' equity 61,025,033 124,031,662 1,056,384,326 2,979,434,243 19,394,778 56,858,173 Contract owners' equity at beginning of period 534,791,990 410,760,328 11,149,868,272 8,170,434,029 245,632,228 188,774,055 ------------ ------------ --------------- --------------- ------------ ------------ Contract owners' equity at end of period $595,817,023 $534,791,990 $12,206,252,598 $11,149,868,272 $265,027,006 $245,632,228 ============ ============ =============== =============== ============ ============
2010 2009 2010 2009 2010 2009 ------------ ------------ --------------- --------------- ------------ ------------ Units, beginning of period 35,025,976 33,091,302 783,016,876 739,884,660 13,923,302 12,358,584 Units issued 7,228,803 10,202,492 43,625,212 82,615,947 3,424,283 5,334,629 Units redeemed 5,535,147 8,267,818 48,518,624 39,483,731 3,015,695 3,769,911 ------------ ------------ --------------- --------------- ------------ ------------ Units, end of period 36,719,632 35,025,976 778,123,464 783,016,876 14,331,890 13,923,302 ============ ============ =============== =============== ============ ============
See accompanying notes. 63 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Lifestyle Moderate Series II Mid Cap Index Series I Mid Cap Index Series II ------------------------------ ------------------------ ------------------------- 2010 2009 2010 2009 2010 2009 -------------- -------------- ----------- ----------- ----------- ------------ Income: Dividend distributions $ 70,352,043 $ 107,395,976 $ 396,845 $ 328,254 $ 628,892 $ 523,917 Expenses: Mortality and expense risk and administrative charges (42,831,483) (33,530,538) (570,654) (487,485) (1,201,970) (982,541) -------------- -------------- ----------- ----------- ----------- ------------ Net investment income (loss) 27,520,560 73,865,438 (173,809) (159,231) (573,078) (458,624) -------------- -------------- ----------- ----------- ----------- ------------ Realized gains (losses) on investments: Capital gain distributions -- -- -- 501,035 -- 964,101 Net realized gain (loss) (38,811,151) (45,838,195) (2,117,230) (6,280,133) (4,526,365) (10,156,599) -------------- -------------- ----------- ----------- ----------- ------------ Realized gains (losses) (38,811,151) (45,838,195) (2,117,230) (5,779,098) (4,526,365) (9,192,498) -------------- -------------- ----------- ----------- ----------- ------------ Unrealized appreciation (depreciation) during the period 244,567,000 470,538,240 10,441,592 15,406,931 21,026,599 28,262,332 -------------- -------------- ----------- ----------- ----------- ------------ Net increase (decrease) in contract owners' equity from operations 233,276,409 498,565,483 8,150,553 9,468,602 15,927,156 18,611,210 -------------- -------------- ----------- ----------- ----------- ------------ Changes from principal transactions: Purchase payments 173,360,760 270,578,951 160,324 149,366 427,554 1,097,024 Transfers between sub-accounts and the company 133,514,376 310,964,877 811,738 (2,008,966) (1,308,158) (695,759) Withdrawals (216,720,981) (120,696,131) (3,724,676) (3,019,282) (7,531,476) (4,039,798) Annual contract fee (14,528,969) (10,560,240) (117,513) (117,748) (358,319) (357,795) -------------- -------------- ----------- ----------- ----------- ------------ Net increase (decrease) in contract owners' equity from principal transactions 75,625,186 450,287,457 (2,870,127) (4,996,630) (8,770,399) (3,996,328) -------------- -------------- ----------- ----------- ----------- ------------ Total increase (decrease) in contract owners' equity 308,901,595 948,852,940 5,280,426 4,471,972 7,156,757 14,614,882 Contract owners' equity at beginning of period 2,638,639,970 1,689,787,030 36,668,097 32,196,125 74,102,879 59,487,997 -------------- -------------- ----------- ----------- ----------- ------------ Contract owners' equity at end of period $2,947,541,565 $2,638,639,970 $41,948,523 $36,668,097 $81,259,636 $ 74,102,879 ============== ============== =========== =========== =========== ============
2010 2009 2010 2009 2010 2009 -------------- -------------- ----------- ----------- ----------- ------------ Units, beginning of period 175,829,782 137,848,366 2,155,012 2,545,090 4,703,227 5,042,423 Units issued 24,269,020 48,762,461 293,921 323,095 709,082 806,801 Units redeemed 17,948,003 10,781,045 461,845 713,173 1,240,444 1,145,997 -------------- -------------- ----------- ----------- ----------- ------------ Units, end of period 182,150,799 175,829,782 1,987,088 2,155,012 4,171,865 4,703,227 ============== ============== =========== =========== =========== ============
See accompanying notes. 64 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Mid Cap Stock Series I Mid Cap Stock Series II Mid Value Series I -------------------------- -------------------------- ------------------------- 2010 2009 2010 2009 2010 2009 ------------ ------------ ------------ ------------ ------------ ----------- Income: Dividend distributions $ 138 $ -- $ -- $ -- $ 1,611,378 $ 353,732 Expenses: Mortality and expense risk and administrative charges (2,442,907) (2,172,286) (1,745,474) (1,494,538) (1,196,531) (781,106) ------------ ------------ ------------ ------------ ------------ ----------- Net investment income (loss) (2,442,769) (2,172,286) (1,745,474) (1,494,538) 414,847 (427,374) ------------ ------------ ------------ ------------ ------------ ----------- Realized gains (losses) on investments: Capital gain distributions -- -- -- -- 291,701 -- Net realized gain (loss) (6,322,476) (17,954,327) (7,302,169) (17,899,843) 4,734,985 1,873,824 ------------ ------------ ------------ ------------ ------------ ----------- Realized gains (losses) (6,322,476) (17,954,327) (7,302,169) (17,899,843) 5,026,686 1,873,824 ------------ ------------ ------------ ------------ ------------ ----------- Unrealized appreciation (depreciation) during the period 42,082,640 58,667,860 29,330,607 43,537,053 5,323,410 21,206,762 ------------ ------------ ------------ ------------ ------------ ----------- Net increase (decrease) in contract owners' equity from operations 33,317,395 38,541,247 20,282,964 24,142,672 10,764,943 22,653,212 ------------ ------------ ------------ ------------ ------------ ----------- Changes from principal transactions: Purchase payments 5,872,132 6,025,485 888,457 1,365,836 404,162 275,575 Transfers between sub-accounts and the company (3,963,283) (10,671,114) (584,996) (4,442,340) (3,005,842) 64,780,220 Withdrawals (18,260,366) (14,017,374) (10,127,552) (6,219,851) (9,917,525) (2,940,586) Annual contract fee (748,622) (721,656) (442,784) (448,195) (281,992) (183,917) ------------ ------------ ------------ ------------ ------------ ----------- Net increase (decrease) in contract owners' equity from principal transactions (17,100,139) (19,384,659) (10,266,875) (9,744,550) (12,801,197) 61,931,292 ------------ ------------ ------------ ------------ ------------ ----------- Total increase (decrease) in contract owners' equity 16,217,256 19,156,588 10,016,089 14,398,122 (2,036,254) 84,584,504 Contract owners' equity at beginning of period 167,211,294 148,054,706 107,670,416 93,272,294 84,584,504 -- ------------ ------------ ------------ ------------ ------------ ----------- Contract owners' equity at end of period $183,428,550 $167,211,294 $117,686,505 $107,670,416 $ 82,548,250 $84,584,504 ============ ============ ============ ============ ============ ===========
2010 2009 2010 2009 2010 2009 ------------ ------------ ------------ ------------ ------------ ----------- Units, beginning of period 11,821,904 13,282,484 6,241,071 6,953,618 5,577,843 -- Units issued 1,368,577 1,466,605 751,575 1,221,160 186,491 6,465,964 Units redeemed 2,234,980 2,927,185 1,332,161 1,933,707 1,010,806 888,121 ------------ ------------ ------------ ------------ ------------ ----------- Units, end of period 10,955,501 11,821,904 5,660,485 6,241,071 4,753,528 5,577,843 ============ ============ ============ ============ ============ ===========
See accompanying notes. 65 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Mid Value Series II Money Market Series I Money Market Series II ------------------------- --------------------------- ------------------------------ 2010 2009 2010 2009 2010 2009 ------------ ----------- ------------ ------------- -------------- -------------- Income: Dividend distributions $ 1,625,642 $ 205,767 $ -- $ 669,916 $ -- $ 1,110,291 Expenses: Mortality and expense risk and administrative charges (1,458,881) (948,228) (3,230,682) (4,558,821) (15,937,073) (21,513,511) ------------ ----------- ------------ ------------- -------------- -------------- Net investment income (loss) 166,761 (742,461) (3,230,682) (3,888,905) (15,937,073) (20,403,220) ------------ ----------- ------------ ------------- -------------- -------------- Realized gains (losses) on investments: Capital gain distributions 329,335 -- 2,178 -- 10,756 -- Net realized gain (loss) 4,280,013 (2,536,789) -- -- -- -- ------------ ----------- ------------ ------------- -------------- -------------- Realized gains (losses) 4,609,348 (2,536,789) 2,178 -- 10,756 -- ------------ ----------- ------------ ------------- -------------- -------------- Unrealized appreciation (depreciation) during the period 6,940,045 27,898,437 -- -- -- -- ------------ ----------- ------------ ------------- -------------- -------------- Net increase (decrease) in contract owners' equity from operations 11,716,154 24,619,187 (3,228,504) (3,888,905) (15,926,317) (20,403,220) ------------ ----------- ------------ ------------- -------------- -------------- Changes from principal transactions: Purchase payments 334,623 300,186 6,884,871 5,331,591 156,862,854 201,663,908 Transfers between sub-accounts and the company (2,506,505) 65,063,056 (81,436,767) 3,839,255 (154,563,324) (129,381,874) Withdrawals (7,665,497) (5,000,315) 14,556,991 (129,121,051) (287,133,245) (294,567,100) Annual contract fee (364,395) (278,087) (828,083) (872,136) (5,909,145) (6,810,431) ------------ ----------- ------------ ------------- -------------- -------------- Net increase (decrease) in contract owners' equity from principal transactions (10,201,774) 60,084,840 (60,822,988) (120,822,341) (290,742,860) (229,095,497) ------------ ----------- ------------ ------------- -------------- -------------- Total increase (decrease) in contract owners' equity 1,514,380 84,704,027 (64,051,492) (124,711,246) (306,669,177) (249,498,717) Contract owners' equity at beginning of period 92,029,468 7,325,441 240,289,995 365,001,241 1,133,525,402 1,383,024,119 ------------ ----------- ------------ ------------- -------------- -------------- Contract owners' equity at end of period $ 93,543,848 $92,029,468 $176,238,503 $ 240,289,995 $ 826,856,225 $1,133,525,402 ============ =========== ============ ============= ============== ==============
2010 2009 2010 2009 2010 2009 ------------ ----------- ------------ ------------- -------------- -------------- Units, beginning of period 6,142,311 700,153 15,261,241 22,608,467 88,916,938 107,096,820 Units issued 248,717 6,603,930 9,553,377 8,803,030 39,037,439 49,553,562 Units redeemed 910,106 1,161,772 13,429,665 16,150,256 62,119,492 67,733,444 ------------ ----------- ------------ ------------- -------------- -------------- Units, end of period 5,480,922 6,142,311 11,384,953 15,261,241 65,834,885 88,916,938 ============ =========== ============ ============= ============== ==============
See accompanying notes. 66 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Money Market Trust B Series NAV Mutual Shares Series I Natural Resources Series II ------------------------ -------------------------- --------------------------- 2010 2009 2010 2009 2010 2009 ----------- ----------- ------------ ------------ ------------ ------------- Income: Dividend distributions $ 14,946 $ 173,442 $ 4,307,323 $ 1,460,431 $ 657,134 $ 933,738 Expenses: Mortality and expense risk and administrative charges (446,948) (545,745) (1,290,053) (636,005) (2,424,919) (2,151,838) ----------- ----------- ------------ ------------ ------------ ------------- Net investment income (loss) (432,002) (372,303) 3,017,270 824,426 (1,767,785) (1,218,100) ----------- ----------- ------------ ------------ ------------ ------------- Realized gains (losses) on investments: Capital gain distributions -- -- -- -- -- 43,502,897 Net realized gain (loss) -- -- (210,177) (993,234) (32,424,468) (101,777,092) ----------- ----------- ------------ ------------ ------------ ------------- Realized gains (losses) -- -- (210,177) (993,234) (32,424,468) (58,274,195) ----------- ----------- ------------ ------------ ------------ ------------- Unrealized appreciation (depreciation) during the period -- -- 13,157,354 23,288,199 52,549,375 119,418,999 ----------- ----------- ------------ ------------ ------------ ------------- Net increase (decrease) in contract owners' equity from operations (432,002) (372,303) 15,964,447 23,119,391 18,357,122 59,926,704 ----------- ----------- ------------ ------------ ------------ ------------- Changes from principal transactions: Purchase payments 190,699 284,380 20,738,936 44,778,844 1,218,067 2,898,271 Transfers between sub-accounts and the company 845,874 1,216,171 19,034,364 38,793,049 (2,251,887) 16,831,445 Withdrawals (6,890,006) (6,451,918) (4,915,742) (779,906) (14,997,795) (9,243,768) Annual contract fee (170,359) (223,479) (1,391,954) (1,535,364) (505,013) (537,104) ----------- ----------- ------------ ------------ ------------ ------------- Net increase (decrease) in contract owners' equity from principal transactions (6,023,792) (5,174,846) 33,465,604 81,256,623 (16,536,628) 9,948,844 ----------- ----------- ------------ ------------ ------------ ------------- Total increase (decrease) in contract owners' equity (6,455,794) (5,547,149) 49,430,051 104,376,014 1,820,494 69,875,548 Contract owners' equity at beginning of period 32,691,653 38,238,802 122,735,536 18,359,522 173,158,032 103,282,484 ----------- ----------- ------------ ------------ ------------ ------------- Contract owners' equity at end of period $26,235,859 $32,691,653 $172,165,587 $122,735,536 $174,978,526 $ 173,158,032 =========== =========== ============ ============ ============ =============
2010 2009 2010 2009 2010 2009 ----------- ----------- ------------ ------------ ------------ ------------- Units, beginning of period 2,574,889 2,981,744 11,608,152 2,191,280 4,956,632 4,519,846 Units issued 757,557 1,086,155 3,581,353 9,731,411 914,539 2,152,880 Units redeemed 1,234,960 1,493,010 456,068 314,539 1,387,262 1,716,094 ----------- ----------- ------------ ------------ ------------ ------------- Units, end of period 2,097,486 2,574,889 14,733,437 11,608,152 4,483,909 4,956,632 =========== =========== ============ ============ ============ =============
See accompanying notes. 67 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Optimized Optimized All Cap Series II Value Series II Pacific Rim Series I ------------------------ ------------------------ ------------------------- 2010 2009 2010 2009 2010 2009 ----------- ----------- ----------- ----------- ------------ ----------- Income: Dividend distributions $ 558,147 $ 654,699 $ 193,101 $ 202,429 $ 87,997 $ 193,456 Expenses: Mortality and expense risk and administrative charges (946,379) (871,431) (175,461) (166,873) (98,139) (270,309) ----------- ----------- ----------- ----------- ------------ ----------- Net investment income (loss) (388,232) (216,732) 17,640 35,556 (10,142) (76,853) ----------- ----------- ----------- ----------- ------------ ----------- Realized gains (losses) on investments: Capital gain distributions -- -- -- -- -- -- Net realized gain (loss) (7,033,168) (8,901,313) (1,424,804) (1,858,050) (3,494,383) (6,234,242) ----------- ----------- ----------- ----------- ------------ ----------- Realized gains (losses) (7,033,168) (8,901,313) (1,424,804) (1,858,050) (3,494,383) (6,234,242) ----------- ----------- ----------- ----------- ------------ ----------- Unrealized appreciation (depreciation) during the period 17,262,245 22,354,688 2,603,370 4,036,830 3,771,807 11,127,878 ----------- ----------- ----------- ----------- ------------ ----------- Net increase (decrease) in contract owners' equity from operations 9,840,845 13,236,643 1,196,206 2,214,336 267,282 4,816,783 ----------- ----------- ----------- ----------- ------------ ----------- Changes from principal transactions: Purchase payments 347,791 314,369 53,000 38,463 32,150 137,444 Transfers between sub-accounts and the company (3,001,925) (4,553,888) (164,385) (676,769) (19,653,484) (1,023,110) Withdrawals (5,579,536) (3,222,158) (1,282,531) (696,623) (848,464) (1,820,119) Annual contract fee (358,749) (384,810) (63,926) (70,379) (25,076) (63,718) ----------- ----------- ----------- ----------- ------------ ----------- Net increase (decrease) in contract owners' equity from principal transactions (8,592,419) (7,846,487) (1,457,842) (1,405,308) (20,494,874) (2,769,503) ----------- ----------- ----------- ----------- ------------ ----------- Total increase (decrease) in contract owners' equity 1,248,426 5,390,156 (261,636) 809,028 (20,227,592) 2,047,280 Contract owners' equity at beginning of period 62,406,897 57,016,741 11,845,975 11,036,947 20,227,592 18,180,312 ----------- ----------- ----------- ----------- ------------ ----------- Contract owners' equity at end of period $63,655,323 $62,406,897 $11,584,339 $11,845,975 $ -- $20,227,592 =========== =========== =========== =========== ============ ===========
2010 2009 2010 2009 2010 2009 ----------- ----------- ----------- ----------- ------------ ----------- Units, beginning of period 4,142,487 4,770,992 969,174 1,107,167 1,716,569 2,021,114 Units issued 214,095 59,072 46,170 36,236 118,249 420,673 Units redeemed 756,440 687,577 164,526 174,229 1,834,818 725,218 ----------- ----------- ----------- ----------- ------------ ----------- Units, end of period 3,600,142 4,142,487 850,818 969,174 -- 1,716,569 =========== =========== =========== =========== ============ ===========
See accompanying notes. 68 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Real Estate Pacific Rim Series II PIMCO All Asset Securities Series I ------------------------- ------------------------ ------------------------- 2010 2009 2010 2009 2010 2009 ------------ ----------- ----------- ----------- ----------- ------------ Income: Dividend distributions $ 96,579 $ 150,142 $ 1,948,657 $ 1,406,392 $ 967,611 $ 1,361,709 Expenses: Mortality and expense risk and administrative charges (119,121) (277,019) (428,354) (320,510) (793,238) (609,288) ------------ ----------- ----------- ----------- ----------- ------------ Net investment income (loss) (22,542) (126,877) 1,520,303 1,085,882 174,373 752,421 ------------ ----------- ----------- ----------- ----------- ------------ Realized gains (losses) on investments: Capital gain distributions -- -- -- -- -- -- Net realized gain (loss) (142,839) (5,120,388) (645,282) (1,362,818) (9,137,009) (30,359,776) ------------ ----------- ----------- ----------- ----------- ------------ Realized gains (losses) (142,839) (5,120,388) (645,282) (1,362,818) (9,137,009) (30,359,776) ------------ ----------- ----------- ----------- ----------- ------------ Unrealized appreciation (depreciation) during the period 383,532 10,309,318 1,927,056 3,865,320 21,421,897 39,829,457 ------------ ----------- ----------- ----------- ----------- ------------ Net increase (decrease) in contract owners' equity from operations 218,151 5,062,053 2,802,077 3,588,384 12,459,261 10,222,102 ------------ ----------- ----------- ----------- ----------- ------------ Changes from principal transactions: Purchase payments 55,483 536,973 168,493 62,821 260,074 123,585 Transfers between sub-accounts and the company (20,688,462) 2,119,081 7,975,723 1,803,186 1,006,822 (3,521,340) Withdrawals (709,837) (941,637) (2,690,366) (1,714,518) (6,799,295) (4,964,352) Annual contract fee (22,075) (62,561) (82,612) (63,673) (136,821) (123,447) ------------ ----------- ----------- ----------- ----------- ------------ Net increase (decrease) in contract owners' equity from principal transactions (21,364,891) 1,651,856 5,371,238 87,816 (5,669,220) (8,485,554) ------------ ----------- ----------- ----------- ----------- ------------ Total increase (decrease) in contract owners' equity (21,146,740) 6,713,909 8,173,315 3,676,200 6,790,041 1,736,548 Contract owners' equity at beginning of period 21,146,740 14,432,831 23,773,569 20,097,369 48,549,391 46,812,843 ------------ ----------- ----------- ----------- ----------- ------------ Contract owners' equity at end of period $ -- $21,146,740 $31,946,884 $23,773,569 $55,339,432 $ 48,549,391 ============ =========== =========== =========== =========== ============
2010 2009 2010 2009 2010 2009 ------------ ----------- ----------- ----------- ----------- ------------ Units, beginning of period 1,249,439 1,096,257 1,526,486 1,541,751 2,091,375 2,583,952 Units issued 291,160 699,532 824,675 414,192 382,264 352,591 Units redeemed 1,540,599 546,350 501,560 429,457 601,376 845,168 ------------ ----------- ----------- ----------- ----------- ------------ Units, end of period -- 1,249,439 1,849,601 1,526,486 1,872,263 2,091,375 ============ =========== =========== =========== =========== ============
See accompanying notes. 69 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Real Estate Science & Securities Series II Real Return Bond Series II Technology Series I ------------------------- -------------------------- -------------------------- 2010 2009 2010 2009 2010 2009 ----------- ------------ ------------ ------------ ------------ ------------ Income: Dividend distributions $ 1,097,177 $ 1,617,967 $ 8,823,330 $ 7,055,246 $ 68 $ -- Expenses: Mortality and expense risk and administrative charges (1,053,551) (783,795) (1,292,125) (1,303,304) (1,534,886) (1,368,804) ----------- ------------ ------------ ------------ ------------ ------------ Net investment income (loss) 43,626 834,172 7,531,205 5,751,942 (1,534,818) (1,368,804) ----------- ------------ ------------ ------------ ------------ ------------ Realized gains (losses) on investments: Capital gain distributions -- -- -- 4,822,162 -- -- Net realized gain (loss) (9,571,385) (32,035,917) (3,351,599) (3,839,988) 6,594,720 2,053,092 ----------- ------------ ------------ ------------ ------------ ------------ Realized gains (losses) (9,571,385) (32,035,917) (3,351,599) 982,174 6,594,720 2,053,092 ----------- ------------ ------------ ------------ ------------ ------------ Unrealized appreciation (depreciation) during the period 25,150,963 45,162,341 1,471,447 6,349,694 16,297,297 43,698,526 ----------- ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity from operations 15,623,204 13,960,596 5,651,053 13,083,810 21,357,199 44,382,814 ----------- ------------ ------------ ------------ ------------ ------------ Changes from principal transactions: Purchase payments 534,242 2,164,971 215,479 379,433 568,294 784,000 Transfers between sub-accounts and the company 648,223 (3,531,730) (4,054,000) 4,640,939 (5,530,914) (5,218,177) Withdrawals (6,417,168) (3,999,341) (10,080,940) (10,077,603) (11,131,978) (8,474,471) Annual contract fee (242,954) (235,189) (217,641) (254,114) (349,910) (369,552) ----------- ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity from principal transactions (5,477,657) (5,601,289) (14,137,102) (5,311,345) (16,444,508) (13,278,200) ----------- ------------ ------------ ------------ ------------ ------------ Total increase (decrease) in contract owners' equity 10,145,547 8,359,307 (8,486,049) 7,772,465 4,912,691 31,104,614 Contract owners' equity at beginning of period 61,999,895 53,640,588 85,501,849 77,729,384 108,495,025 77,390,411 ----------- ------------ ------------ ------------ ------------ ------------ Contract owners' equity at end of period $72,145,442 $ 61,999,895 $ 77,015,800 $ 85,501,849 $113,407,716 $108,495,025 =========== ============ ============ ============ ============ ============
2010 2009 2010 2009 2010 2009 ----------- ------------ ------------ ------------ ------------ ------------ Units, beginning of period 3,296,683 3,569,226 5,613,322 5,990,033 9,846,551 11,304,471 Units issued 690,523 941,107 988,640 1,704,548 596,334 1,189,071 Units redeemed 953,752 1,213,650 1,874,589 2,081,259 2,069,031 2,646,991 ----------- ------------ ------------ ------------ ------------ ------------ Units, end of period 3,033,454 3,296,683 4,727,373 5,613,322 8,373,854 9,846,551 =========== ============ ============ ============ ============ ============
See accompanying notes. 70 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Short Term Short Term Government Government Science & Income Income Small Cap Technology Series II Series I Series II Growth Series I ------------------------- ------------------------- ----------------- 2010 2009 2010 2010 2010 2009 ----------- ------------ ------------ ----------- -------- ------- Income: Dividend distributions received $ -- $ -- $ 1,221,384 $ 982,139 $ -- $ -- Expenses: Mortality and expense risk and administrative charges (751,903) (606,867) (869,950) (852,026) (1,243) (318) ----------- ------------ ------------ ----------- -------- ------- Net investment income (loss) (751,903) (606,867) 351,434 130,113 (1,243) (318) ----------- ------------ ------------ ----------- -------- ------- Realized gains (losses) on investments: Capital gain distributions received -- -- 20,198 18,875 -- -- Net realized gain (loss) 1,323,782 (2,595,820) 299,075 275,448 3,985 (2) ----------- ------------ ------------ ----------- -------- ------- Realized gains (losses) 1,323,782 (2,595,820) 319,273 294,323 3,985 (2) ----------- ------------ ------------ ----------- -------- ------- Unrealized appreciation (depreciation) during the period 9,034,677 21,511,764 140,035 103,794 27,891 11,982 ----------- ------------ ------------ ----------- -------- ------- Net increase (decrease) in contract owners' equity from operations 9,606,556 18,309,077 810,742 528,230 30,633 11,662 ----------- ------------ ------------ ----------- -------- ------- Changes from principal transactions: Purchase payments 325,445 971,802 97,569 301,379 42,659 56,556 Transfers between sub-accounts and the company (2,209,303) 7,617,254 90,322,657 81,893,354 57,381 7,615 Withdrawals (5,110,516) (2,526,776) (10,102,334) (7,713,494) (11,691) (5,281) Annual contract fee (178,161) (170,751) (106,309) (135,541) (1,621) (1,679) ----------- ------------ ------------ ----------- -------- ------- Net increase (decrease) in contract owners' equity from principal transactions (7,172,535) 5,891,529 80,211,583 74,345,698 86,728 57,211 ----------- ------------ ------------ ----------- -------- ------- Total increase (decrease) in contract owners' equity 2,434,021 24,200,606 81,022,325 74,873,928 117,361 68,873 Contract owners' equity at beginning of period 51,365,381 27,164,775 -- -- 86,099 17,226 ----------- ------------ ------------ ----------- -------- ------- Contract owners' equity at end of period $53,799,402 $ 51,365,381 $ 81,022,325 $74,873,928 $203,460 $86,099 =========== ============ ============ =========== ======== =======
2010 2009 2010 2010 2010 2009 ----------- ------------ ------------ ----------- -------- ------- Units, beginning of period 3,708,685 3,148,519 -- -- 7,788 2,080 Units issued 773,611 1,857,677 7,847,614 7,327,353 10,498 6,331 Units redeemed 1,316,803 1,297,511 1,425,921 1,380,422 3,036 623 ----------- ------------ ------------ ----------- -------- ------- Units, end of period 3,165,493 3,708,685 6,421,693 5,946,931 15,250 7,788 =========== ============ ============ =========== ======== =======
See accompanying notes. 71 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Small Cap Small Cap Growth Series II Small Cap Index Series I Index Series II ------------------------ ------------------------ ------------------------ 2010 2009 2010 2009 2010 2009 ----------- ----------- ----------- ----------- ----------- ----------- Income: Dividend distributions received $ -- $ -- $ 82,900 $ 114,640 $ 169,498 $ 313,871 Expenses: Mortality and expense risk and administrative charges (496,715) (395,406) (250,886) (220,829) (951,202) (812,440) ----------- ----------- ----------- ----------- ----------- ----------- Net investment income (loss) (496,715) (395,406) (167,986) (106,189) (781,704) (498,569) ----------- ----------- ----------- ----------- ----------- ----------- Realized gains (losses) on investments: Capital gain distributions received -- -- -- 457,032 -- 1,613,250 Net realized gain (loss) (450,506) (6,712,524) (938,866) (2,231,538) (3,703,468) (5,818,924) ----------- ----------- ----------- ----------- ----------- ----------- Realized gains (losses) (450,506) (6,712,524) (938,866) (1,774,506) (3,703,468) (4,205,674) ----------- ----------- ----------- ----------- ----------- ----------- Unrealized appreciation (depreciation) during the period 6,549,984 14,336,850 4,781,483 5,075,791 17,541,729 16,231,422 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity from operations 5,602,763 7,228,920 3,674,631 3,195,096 13,056,557 11,527,179 ----------- ----------- ----------- ----------- ----------- ----------- Changes from principal transactions: Purchase payments 243,197 663,794 49,555 51,269 277,844 447,484 Transfers between sub-accounts and the company 632,747 (239,546) 492,952 (1,175,929) (2,852,894) (2,472,638) Withdrawals (3,451,075) (2,032,028) (1,371,681) (1,607,474) (4,704,856) (2,333,150) Annual contract fee (94,595) (86,830) (58,182) (58,055) (317,986) (323,532) ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity from principal transactions (2,669,726) (1,694,610) (887,356) (2,790,189) (7,597,892) (4,681,836) ----------- ----------- ----------- ----------- ----------- ----------- Total increase (decrease) in contract owners' equity 2,933,037 5,534,310 2,787,275 404,907 5,458,665 6,845,343 Contract owners' equity at beginning of period 30,670,851 25,136,541 15,814,967 15,410,060 58,966,313 52,120,970 ----------- ----------- ----------- ----------- ----------- ----------- Contract owners' equity at end of period $33,603,888 $30,670,851 $18,602,242 $15,814,967 $64,424,978 $58,966,313 =========== =========== =========== =========== =========== ===========
2010 2009 2010 2009 2010 2009 ----------- ----------- ----------- ----------- ----------- ----------- Units, beginning of period 2,052,359 2,215,159 1,130,357 1,374,591 4,052,504 4,455,488 Units issued 563,936 700,447 152,510 103,684 337,029 244,026 Units redeemed 736,257 863,247 214,424 347,918 819,869 647,010 ----------- ----------- ----------- ----------- ----------- ----------- Units, end of period 1,880,038 2,052,359 1,068,443 1,130,357 3,569,664 4,052,504 =========== =========== =========== =========== =========== ===========
See accompanying notes. 72 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Small Cap Small Cap Small Cap Opportunities Series I Opportunities Series II Value Series I ------------------------ ------------------------ ------------------- 2010 2009 2010 2009 2010 2009 ----------- ----------- ----------- ----------- -------- --------- Income: Dividend distributions received $ -- $ -- $ -- $ -- $ 1,273 $ 1,107 Expenses: Mortality and expense risk and administrative charges (453,115) (386,318) (482,249) (373,987) (3,127) (1,092) ----------- ----------- ----------- ----------- -------- -------- Net investment income (loss) (453,115) (386,318) (482,249) (373,987) (1,854) 15 ----------- ----------- ----------- ----------- -------- -------- Realized gains (losses) on investments: Capital gain distributions received -- -- -- -- -- -- Net realized gain (loss) (3,223,195) (4,933,476) (3,743,722) (4,273,827) 2,862 (12) ----------- ----------- ----------- ----------- -------- -------- Realized gains (losses) (3,223,195) (4,933,476) (3,743,722) (4,273,827) 2,862 (12) ----------- ----------- ----------- ----------- -------- -------- Unrealized appreciation (depreciation) during the period 10,810,979 12,360,752 11,108,338 11,136,901 74,674 51,288 ----------- ----------- ----------- ----------- -------- -------- Net increase (decrease) in contract owners' equity from operations 7,134,669 7,040,958 6,882,367 6,489,087 75,682 51,291 ----------- ----------- ----------- ----------- -------- -------- Changes from principal transactions: Purchase payments 125,315 93,861 175,633 468,323 81,781 155,599 Transfers between sub-accounts and the company 2,300,972 (2,206,473) 4,064,240 (585,584) 28,775 30,708 Withdrawals (4,077,123) (2,519,946) (3,337,054) (1,712,683) (8,185) (217) Annual contract fee (90,552) (89,406) (124,660) (115,897) (2,695) (4,476) ----------- ----------- ----------- ----------- -------- -------- Net increase (decrease) in contract owners' equity from principal transactions (1,741,388) (4,721,964) 778,159 (1,945,841) 99,676 181,614 ----------- ----------- ----------- ----------- -------- -------- Total increase (decrease) in contract owners' equity 5,393,281 2,318,994 7,660,526 4,543,246 175,358 232,905 Contract owners' equity at beginning of period 28,464,030 26,145,036 26,863,935 22,320,689 240,945 8,040 ----------- ----------- ----------- ----------- -------- -------- Contract owners' equity at end of period $33,857,311 $28,464,030 $34,524,461 $26,863,935 $416,303 $240,945 =========== =========== =========== =========== ======== ========
2010 2009 2010 2009 2010 2009 ----------- ----------- ----------- ----------- -------- --------- Units, beginning of period 1,685,652 2,041,130 1,671,563 1,804,827 19,366 823 Units issued 433,004 158,129 696,336 375,290 8,265 18,951 Units redeemed 548,398 513,607 671,331 508,554 824 408 ----------- ----------- ----------- ----------- -------- -------- Units, end of period 1,570,258 1,685,652 1,696,568 1,671,563 26,807 19,366 =========== =========== =========== =========== ======== ========
See accompanying notes. 73 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Small company Small company Small Cap Value Series II Value Series I Value Series II ------------------------- -------------------------- -------------------------- 2010 2009 2010 2009 2010 2009 ----------- ------------ ------------ ------------ ------------ ------------ Income: Dividend distributions received $ 64,121 $ 138,429 $ 1,012,758 $ 271,026 $ 886,695 $ 161,506 Expenses: Mortality and expense risk and administrative charges (662,837) (533,619) (1,142,682) (1,109,344) (1,215,884) (1,104,456) ----------- ------------ ------------ ------------ ------------ ------------ Net investment income (loss) (598,716) (395,190) (129,924) (838,318) (329,189) (942,950) ----------- ------------ ------------ ------------ ------------ ------------ Realized gains (losses) on investments: Capital gain distributions received -- -- -- 9,586,606 -- 9,006,578 Net realized gain (loss) 1,081,321 (16,800,952) (8,073,782) (15,418,958) (6,975,736) (12,374,254) ----------- ------------ ------------ ------------ ------------ ------------ Realized gains (losses) 1,081,321 (16,800,952) (8,073,782) (5,832,352) (6,975,736) (3,367,676) ----------- ------------ ------------ ------------ ------------ ------------ Unrealized appreciation (depreciation) during the period 8,041,429 23,349,738 21,578,460 22,993,202 20,633,152 20,149,057 ----------- ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity from operations 8,524,034 6,153,596 13,374,754 16,322,532 13,328,227 15,838,431 ----------- ------------ ------------ ------------ ------------ ------------ Changes from principal transactions: Purchase payments 298,336 757,504 223,405 321,382 507,683 1,104,826 Transfers between sub-accounts and the company 8,032,771 (11,669,901) (5,760,662) (7,179,699) (4,531,574) (4,544,083) Withdrawals (4,969,653) (2,986,852) (10,176,908) (8,588,700) (7,693,660) (4,827,419) Annual contract fee (125,197) (119,253) (218,386) (241,105) (292,990) (312,778) ----------- ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity from principal transactions 3,236,257 (14,018,502) (15,932,551) (15,688,122) (12,010,541) (8,579,454) ----------- ------------ ------------ ------------ ------------ ------------ Total increase (decrease) in contract owners' equity 11,760,291 (7,864,906) (2,557,797) 634,410 1,317,686 7,258,977 Contract owners' equity at beginning of period 37,413,620 45,278,526 80,022,045 79,387,635 78,532,147 71,273,170 ----------- ------------ ------------ ------------ ------------ ------------ Contract owners' equity at end of period $49,173,911 $ 37,413,620 $ 77,464,248 $ 80,022,045 $ 79,849,833 $ 78,532,147 =========== ============ ============ ============ ============ ============
2010 2009 2010 2009 2010 2009 ----------- ------------ ------------ ------------ ------------ ------------ Units, beginning of period 2,610,714 3,963,530 3,876,782 4,835,477 4,564,364 5,166,412 Units issued 1,352,961 1,100,449 107,705 242,545 230,762 539,643 Units redeemed 1,194,197 2,453,264 846,684 1,201,240 887,412 1,141,691 ----------- ------------ ------------ ------------ ------------ ------------ Units, end of period 2,769,478 2,610,714 3,137,803 3,876,782 3,907,714 4,564,364 =========== ============ ============ ============ ============ ============
See accompanying notes. 74 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Smaller company Smaller Company Growth Series I Growth Series II Strategic Bond Series I ------------------------ ------------------------ ------------------------- 2010 2009 2010 2009 2010 2009 ----------- ----------- ----------- ----------- ------------ ----------- Income: Dividend distributions received $ -- $ -- $ -- $ -- $ 6,950,621 $ 5,546,883 Expenses: Mortality and expense risk and administrative charges (534,335) (71,447) (346,683) (45,471) (929,320) (1,013,906) ----------- ----------- ----------- ----------- ------------ ----------- Net investment income (loss) (534,335) (71,447) (346,683) (45,471) 6,021,301 4,532,977 ----------- ----------- ----------- ----------- ------------ ----------- Realized gains (losses) on investments: Capital gain distributions received 557,346 -- 335,569 -- -- -- Net realized gain (loss) 852,848 20,275 604,733 14,523 (6,929,317) (4,810,959) ----------- ----------- ----------- ----------- ------------ ----------- Realized gains (losses) 1,410,194 20,275 940,302 14,523 (6,929,317) (4,810,959) ----------- ----------- ----------- ----------- ------------ ----------- Unrealized appreciation (depreciation) during the period 6,597,633 1,850,476 3,711,838 1,055,286 8,496,704 13,575,667 ----------- ----------- ----------- ----------- ------------ ----------- Net increase (decrease) in contract owners' equity from operations 7,473,492 1,799,304 4,305,457 1,024,338 7,588,688 13,297,685 ----------- ----------- ----------- ----------- ------------ ----------- Changes from principal transactions: Purchase payments 118,812 11,562 170,132 58,523 52,367 132,028 Transfers between sub-accounts and the company (2,235,116) 35,925,528 (703,971) 20,701,081 (72,003,029) 3,074,291 Withdrawals (4,154,094) (330,386) (2,213,904) (146,792) (9,439,855) (9,028,486) Annual contract fee (118,372) (14,988) (97,854) (14,328) (90,223) (105,841) ----------- ----------- ----------- ----------- ------------ ----------- Net increase (decrease) in contract owners' equity from principal transactions (6,388,770) 35,591,716 (2,845,597) 20,598,484 (81,480,740) (5,928,008) ----------- ----------- ----------- ----------- ------------ ----------- Total increase (decrease) in contract owners' equity 1,084,722 37,391,020 1,459,860 21,622,822 (73,892,052) 7,369,677 Contract owners' equity at beginning of period 37,391,020 -- 21,622,822 -- 73,892,052 66,522,375 ----------- ----------- ----------- ----------- ------------ ----------- Contract owners' equity at end of period $38,475,742 $37,391,020 $23,082,682 $21,622,822 $ -- $73,892,052 =========== =========== =========== =========== ============ ===========
2010 2009 2010 2009 2010 2009 ----------- ----------- ----------- ----------- ------------ ----------- Units, beginning of period 2,846,684 -- 1,648,670 -- 3,627,147 3,956,841 Units issued 164,711 2,923,245 306,452 1,701,272 295,053 547,842 Units redeemed 633,654 76,561 522,206 52,602 3,922,200 877,536 ----------- ----------- ----------- ----------- ------------ ----------- Units, end of period 2,377,741 2,846,684 1,432,916 1,648,670 -- 3,627,147 =========== =========== =========== =========== ============ ===========
See accompanying notes. 75 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Strategic Income Opportunities Strategic Income Strategic Bond Series II Series I Opportunities Series II ------------------------- ------------- ------------------------ 2010 2009 2010 2010 2009 ------------ ----------- ------------- ----------- ----------- Income: Dividend distributions received $ 6,739,351 $ 4,758,122 $ 5,461,644 $ 5,746,958 $ 671,982 Expenses: Mortality and expense risk and administrative charges (968,408) (951,893) (171,370) (365,568) (167,757) ------------ ----------- ----------- ----------- ----------- Net investment income (loss) 5,770,943 3,806,229 5,290,274 5,381,390 504,225 ------------ ----------- ----------- ----------- ----------- Realized gains (losses) on investments: Capital gain distributions received -- -- -- -- -- Net realized gain (loss) (3,380,005) (4,660,575) (44,841) 1,227,520 (358,748) ------------ ----------- ----------- ----------- ----------- Realized gains (losses) (3,380,005) (4,660,575) (44,841) 1,227,520 (358,748) ------------ ----------- ----------- ----------- ----------- Unrealized appreciation (depreciation) during the period 4,652,821 12,263,118 (4,096,503) (4,064,984) 2,185,320 ------------ ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity from operations 7,043,759 11,408,772 1,148,930 2,543,926 2,330,797 ------------ ----------- ----------- ----------- ----------- Changes from principal transactions: Purchase payments 405,933 1,268,992 7,663 156,271 93,794 Transfers between sub-accounts and the company (67,583,184) 9,130,065 75,898,532 66,631,706 1,710,190 Withdrawals (7,197,217) (5,400,240) (2,222,631) (2,772,211) (962,996) Annual contract fee (183,903) (218,812) (14,587) (66,888) (30,288) ------------ ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity from principal transactions (74,558,371) 4,780,005 73,668,977 63,948,878 810,700 ------------ ----------- ----------- ----------- ----------- Total increase (decrease) in contract owners' equity (67,514,612) 16,188,777 74,817,907 66,492,804 3,141,497 Contract owners' equity at beginning of period 67,514,612 51,325,835 -- 12,305,166 9,163,669 ------------ ----------- ----------- ----------- ----------- Contract owners' equity at end of period $ -- $67,514,612 $74,817,907 $78,797,970 $12,305,166 ============ =========== =========== =========== ===========
2010 2009 2010 2010 2009 ------------ ----------- ------------- ----------- ----------- Units, beginning of period 4,336,364 3,982,811 -- 767,713 711,330 Units issued 893,994 1,474,190 4,300,419 4,479,063 362,599 Units redeemed 5,230,358 1,120,637 230,959 820,819 306,216 ------------ ----------- ----------- ----------- ----------- Units, end of period -- 4,336,364 4,069,460 4,425,957 767,713 ============ =========== =========== =========== ===========
See accompanying notes. 76 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Total Bond Market Total Bond Market Trust A Series II Trust A Series NAV Total Return Series I ---------------------- ------------------------ -------------------------- 2010 2009 2010 2009 2010 2009 ----------- --------- ----------- ----------- ------------ ------------ Income: Dividend distributions received $ 961,037 $ 21,156 $ 2,370,143 $ 768,485 $ 6,024,933 $ 9,635,456 Expenses: Mortality and expense risk and administrative charges (191,994) (13,519) (502,017) (75,565) (3,832,504) (3,670,399) ----------- --------- ----------- ----------- ------------ ------------ Net investment income (loss) 769,043 7,637 1,868,126 692,920 2,192,429 5,965,057 ----------- --------- ----------- ----------- ------------ ------------ Realized gains (losses) on investments: Capital gain distributions received -- 8,148 -- -- 4,431,887 11,167,421 Net realized gain (loss) 56,081 31,754 300,937 2,742 4,715,820 (496,060) ----------- --------- ----------- ----------- ------------ ------------ Realized gains (losses) 56,081 39,902 300,937 2,742 9,147,707 10,671,361 ----------- --------- ----------- ----------- ------------ ------------ Unrealized appreciation (depreciation) during the period (1,136,738) (25,697) (180,410) (487,875) 3,829,451 10,313,046 ----------- --------- ----------- ----------- ------------ ------------ Net increase (decrease) in contract owners' equity from operations (311,614) 21,842 1,988,653 207,787 15,169,587 26,949,464 ----------- --------- ----------- ----------- ------------ ------------ Changes from principal transactions: Purchase payments 5,360,843 65,100 23,580,947 23,979,514 2,187,539 1,739,650 Transfers between sub-accounts and the company 37,552,113 9,854 32,095,606 7,234,238 9,164,154 20,143,471 Withdrawals (2,610,078) (127,575) (1,917,945) 1,160 (41,069,925) (35,555,312) Annual contract fee (112,587) (6,120) (1,120,478) (767,672) (624,438) (672,752) ----------- --------- ----------- ----------- ------------ ------------ Net increase (decrease) in contract owners' equity from principal transactions 40,190,291 (58,741) 52,638,130 30,447,240 (30,342,670) (14,344,943) ----------- --------- ----------- ----------- ------------ ------------ Total increase (decrease) in contract owners' equity 39,878,677 (36,899) 54,626,783 30,655,027 (15,173,083) 12,604,521 Contract owners' equity at beginning of period 868,795 905,694 30,655,027 -- 250,132,005 237,527,484 ----------- --------- ----------- ----------- ------------ ------------ Contract owners' equity at end of period $40,747,472 $ 868,795 $85,281,810 $30,655,027 $234,958,922 $250,132,005 =========== ========= =========== =========== ============ ============
2010 2009 2010 2009 2010 2009 ----------- --------- ----------- ----------- ------------ ------------ Units, beginning of period 64,240 67,335 2,360,787 -- 12,463,088 13,162,475 Units issued 3,876,657 112,789 4,292,037 2,367,658 2,251,147 2,437,991 Units redeemed 897,466 115,884 391,034 6,871 3,617,817 3,137,378 ----------- --------- ----------- ----------- ------------ ------------ Units, end of period 3,043,431 64,240 6,261,790 2,360,787 11,096,418 12,463,088 =========== ========= =========== =========== ============ ============
See accompanying notes. 77 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Total Stock Total Stock Total Return Series II Market Index Series I Market Index Series II -------------------------- ------------------------ ------------------------ 2010 2009 2010 2009 2010 2009 ------------ ------------ ----------- ----------- ----------- ----------- Income: Dividend distributions received $ 7,054,586 $ 10,760,521 $ 167,477 $ 184,927 $ 425,196 $ 502,747 Expenses: Mortality and expense risk and administrative charges (5,261,075) (4,368,230) (196,488) (176,225) (624,612) (559,246) ------------ ------------ ----------- ----------- ----------- ----------- Net investment income (loss) 1,793,511 6,392,291 (29,011) 8,702 (199,416) (56,499) ------------ ------------ ----------- ----------- ----------- ----------- Realized gains (losses) on investments: Capital gain distributions received 5,707,349 12,342,008 -- -- -- -- Net realized gain (loss) 7,306,637 (381,763) (17,149) (464,353) (1,298,845) (3,658,966) ------------ ------------ ----------- ----------- ----------- ----------- Realized gains (losses) 13,013,986 11,960,245 (17,149) (464,353) (1,298,845) (3,658,966) ------------ ------------ ----------- ----------- ----------- ----------- Unrealized appreciation (depreciation) during the period 3,777,579 11,727,453 1,883,392 3,246,122 6,975,838 12,225,649 ------------ ------------ ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity from operations 18,585,076 30,079,989 1,837,232 2,790,471 5,477,577 8,510,184 ------------ ------------ ----------- ----------- ----------- ----------- Changes from principal transactions: Purchase payments 2,296,271 11,328,858 29,898 38,523 272,208 234,528 Transfers between sub-accounts and the company 20,989,569 59,477,039 (762,360) (25,597) (3,594,688) (897,191) Withdrawals (37,123,758) (27,501,051) (1,198,856) (904,661) (3,676,531) (2,032,156) Annual contract fee (853,863) (816,124) (30,868) (33,607) (219,409) (232,706) ------------ ------------ ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity from principal transactions (14,691,781) 42,488,722 (1,962,186) (925,342) (7,218,420) (2,927,525) ------------ ------------ ----------- ----------- ----------- ----------- Total increase (decrease) in contract owners' equity 3,893,295 72,568,711 (124,954) 1,865,129 (1,740,843) 5,582,659 Contract owners' equity at beginning of period 306,155,661 233,586,950 13,419,876 11,554,747 41,686,321 36,103,662 ------------ ------------ ----------- ----------- ----------- ----------- Contract owners' equity at end of period $310,048,956 $306,155,661 $13,294,922 $13,419,876 $39,945,478 $41,686,321 ============ ============ =========== =========== =========== ===========
2010 2009 2010 2009 2010 2009 ------------ ------------ ----------- ----------- ----------- ----------- Units, beginning of period 17,775,787 15,079,563 1,288,506 1,405,412 3,055,658 3,347,656 Units issued 6,593,153 6,760,437 35,169 96,302 65,656 307,734 Units redeemed 7,331,475 4,064,213 219,152 213,208 574,810 599,732 ------------ ------------ ----------- ----------- ----------- ----------- Units, end of period 17,037,465 17,775,787 1,104,523 1,288,506 2,546,504 3,055,658 ============ ============ =========== =========== =========== ===========
See accompanying notes. 78 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Ultra Short Ultra Short Term Bond Term Bond U.S. Government Securities U.S. Government Securities Series I Series II Series I Series II ----------- ----------- -------------------------- -------------------------- 2010 2010 2010 2009 2010 2009 ----------- ----------- ------------ ------------ ------------ ------------ Income: Dividend distributions received $ 5,779 $ 313,582 $ 928,691 $ 2,986,794 $ 721,295 $ 2,453,158 Expenses: Mortality and expense risk and administrative charges (1,260) (180,062) (481,114) (1,528,685) (502,553) (1,355,560) --------- ----------- ------------ ------------ ------------ ------------ Net investment income (loss) 4,519 133,520 447,577 1,458,109 218,742 1,097,598 --------- ----------- ------------ ------------ ------------ ------------ Realized gains (losses) on investments: Capital gain distributions received -- -- 3,089,816 2,654,323 2,662,000 2,148,409 Net realized gain (loss) 489 (3,775) (3,759,805) (2,850,217) (1,522,789) (1,790,507) --------- ----------- ------------ ------------ ------------ ------------ Realized gains (losses) 489 (3,775) (669,989) (195,894) 1,139,211 357,902 --------- ----------- ------------ ------------ ------------ ------------ Unrealized appreciation (depreciation) during the period (5,439) (305,367) 1,914,506 5,414,438 (93,600) 3,852,348 --------- ----------- ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity from operations (431) (175,622) 1,692,094 6,676,653 1,264,353 5,307,848 --------- ----------- ------------ ------------ ------------ ------------ Changes from principal transactions: Purchase payments 343,032 8,077,839 153,347 817,587 212,961 3,655,380 Transfers between sub-accounts and the company 622,010 31,734,503 (91,959,684) 168,827 (84,656,713) 7,291,212 Withdrawals (277,761) (4,147,393) (5,691,526) (16,828,941) (3,764,533) (10,149,918) Annual contract fee (9,550) (71,440) (61,899) (194,053) (47,321) (209,895) --------- ----------- ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity from principal transactions 677,731 35,593,509 (97,559,762) (16,036,580) (88,255,606) 586,779 --------- ----------- ------------ ------------ ------------ ------------ Total increase (decrease) in contract owners' equity 677,300 35,417,887 (95,867,668) (9,359,927) (86,991,253) 5,894,627 Contract owners' equity at beginning of period -- -- 95,867,668 105,227,595 86,991,253 81,096,626 --------- ----------- ------------ ------------ ------------ ------------ Contract owners' equity at end of period $ 677,300 $35,417,887 $ -- $ 95,867,668 $ -- $ 86,991,253 ========= =========== ============ ============ ============ ============
2010 2010 2010 2009 2010 2009 ----------- ----------- ------------ ------------ ------------ ------------ Units, beginning of period -- -- 4,725,957 5,539,269 6,154,117 6,098,393 Units issued 103,024 3,839,229 421,022 1,020,113 1,815,231 2,808,451 Units redeemed 48,719 984,800 5,146,979 1,833,425 7,969,348 2,752,727 --------- ----------- ------------ ------------ ------------ ------------ Units, end of period 54,305 2,854,429 -- 4,725,957 -- 6,154,117 ========= =========== ============ ============ ============ ============
See accompanying notes. 79 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
U.S. High Yield Series II Utilities Series I Utilities Series II ----------------------- ------------------------ ------------------------ 2010 2009 2010 2009 2010 2009 ----------- ---------- ----------- ----------- ----------- ----------- Income: Dividend distributions received $ 2,535,070 $ 531,586 $ 505,422 $ 1,033,085 $ 546,273 $ 1,144,988 Expenses: Mortality and expense risk and administrative charges (83,986) (84,810) (346,070) (338,017) (416,385) (406,836) ----------- ---------- ----------- ----------- ----------- ----------- Net investment income (loss) 2,451,084 446,776 159,352 695,068 129,888 738,152 ----------- ---------- ----------- ----------- ----------- ----------- Realized gains (losses) on investments: Capital gain distributions received 2,120,571 -- -- -- -- -- Net realized gain (loss) (3,384,190) 385,585 (3,007,837) (4,922,815) (3,087,413) (5,794,512) ----------- ---------- ----------- ----------- ----------- ----------- Realized gains (losses) (1,263,619) 385,585 (3,007,837) (4,922,815) (3,087,413) (5,794,512) ----------- ---------- ----------- ----------- ----------- ----------- Unrealized appreciation (depreciation) during the period (699,369) 1,088,645 5,333,224 10,299,864 5,691,175 11,681,291 ----------- ---------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity from operations 488,096 1,921,006 2,484,739 6,072,117 2,733,650 6,624,931 ----------- ---------- ----------- ----------- ----------- ----------- Changes from principal transactions: Purchase payments 2,093 51,338 62,850 133,313 73,063 87,905 Transfers between sub-accounts and the company (6,243,094) 3,170,037 (1,310,782) (1,489,128) (1,749,674) (1,686,320) Withdrawals (628,495) (774,017) (3,003,168) (2,177,324) (2,807,341) (2,139,475) Annual contract fee (19,342) (22,399) (75,216) (85,207) (99,308) (114,273) ----------- ---------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity from principal transactions (6,888,838) 2,424,959 (4,326,316) (3,618,346) (4,583,260) (3,852,163) ----------- ---------- ----------- ----------- ----------- ----------- Total increase (decrease) in contract owners' equity (6,400,742) 4,345,965 (1,841,577) 2,453,771 (1,849,610) 2,772,768 Contract owners' equity at beginning of period 6,400,742 2,054,777 24,792,417 22,338,646 28,486,949 25,714,181 ----------- ---------- ----------- ----------- ----------- ----------- Contract owners' equity at end of period $ -- $6,400,742 $22,950,840 $24,792,417 $26,637,339 $28,486,949 =========== ========== =========== =========== =========== ===========
2010 2009 2010 2009 2010 2009 ----------- ---------- ----------- ----------- ----------- ----------- Units, beginning of period 407,858 188,712 1,410,049 1,674,898 1,086,877 1,289,627 Units issued 261,514 552,301 136,732 179,703 89,346 135,339 Units redeemed 669,372 333,155 383,402 444,552 268,660 338,089 ----------- ---------- ----------- ----------- ----------- ----------- Units, end of period -- 407,858 1,163,379 1,410,049 907,563 1,086,877 =========== ========== =========== =========== =========== ===========
See accompanying notes. 80 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
Value Opportunities Value Series I Value Series II ----------------------- -------------------------- ------------------------ 2010 2009 2010 2009 2010 2009 ---------- ----------- ------------ ------------ ----------- ----------- Income: Dividend distributions received $ 16,774 $ 21,385 $ 990,501 $ 1,097,906 $ 232,349 $ 281,656 Expenses: Mortality and expense risk and administrative charges (69,823) (65,068) (1,339,713) (1,107,624) (475,172) (397,487) ---------- ----------- ------------ ------------ ----------- ----------- Net investment income (loss) (53,049) (43,683) (349,212) (9,718) (242,823) (115,831) ---------- ----------- ------------ ------------ ----------- ----------- Realized gains (losses) on investments: Capital gain distributions received -- -- -- -- -- -- Net realized gain (loss) (536,789) (1,624,797) (4,504,896) (15,113,884) (2,478,538) (9,206,474) ---------- ----------- ------------ ------------ ----------- ----------- Realized gains (losses) (536,789) (1,624,797) (4,504,896) (15,113,884) (2,478,538) (9,206,474) ---------- ----------- ------------ ------------ ----------- ----------- Unrealized appreciation (depreciation) during the period 1,698,332 2,643,269 23,801,518 43,438,869 8,018,498 17,427,093 ---------- ----------- ------------ ------------ ----------- ----------- Net increase (decrease) in contract owners' equity from operations 1,108,494 974,789 18,947,410 28,315,267 5,297,137 8,104,788 ---------- ----------- ------------ ------------ ----------- ----------- Changes from principal transactions: Purchase payments 480 680 1,222,610 9,048,320 141,211 442,263 Transfers between sub-accounts and the company (279,138) (415,404) (4,952,287) 2,292,113 208,358 (1,231,109) Withdrawals (528,689) (769,509) (9,488,281) (8,115,551) (3,152,394) (2,317,353) Annual contract fee (18,045) (18,697) (344,854) (471,403) (97,766) (97,881) ---------- ----------- ------------ ------------ ----------- ----------- Net increase (decrease) in contract owners' equity from principal transactions (825,392) (1,202,930) (13,562,812) 2,753,479 (2,900,591) (3,204,080) ---------- ----------- ------------ ------------ ----------- ----------- Total increase (decrease) in contract owners' equity 283,102 (228,141) 5,384,598 31,068,746 2,396,546 4,900,708 Contract owners' equity at beginning of period 4,610,241 4,838,382 99,042,987 67,974,241 28,921,543 24,020,835 ---------- ----------- ------------ ------------ ----------- ----------- Contract owners' equity at end of period $4,893,343 $ 4,610,241 $104,427,585 $ 99,042,987 $31,318,089 $28,921,543 ========== =========== ============ ============ =========== ===========
2010 2009 2010 2009 2010 2009 ---------- ----------- ------------ ------------ ----------- ----------- Units, beginning of period 167,144 224,622 5,780,835 4,527,802 1,797,563 2,059,738 Units issued 1,187 2,910 334,770 2,586,942 375,080 469,607 Units redeemed 25,565 60,388 1,011,652 1,333,909 544,958 731,782 ---------- ----------- ------------ ------------ ----------- ----------- Units, end of period 142,766 167,144 5,103,953 5,780,835 1,627,685 1,797,563 ========== =========== ============ ============ =========== ===========
See accompanying notes. 81 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2010 1. ORGANIZATION John Hancock Life Insurance Company (U.S.A.) Separate Account H (the "Account") is a separate account established by John Hancock Life Insurance Company (U.S.A.) (the "Company"). The Company established the Account on August 24, 1984 as a separate account under Delaware law. The Account operates as a Unit Investment Trust under the Investment Company Act of 1940, as amended, and consists of 146 sub-accounts which are exclusively invested in corresponding portfolios of John Hancock Trust (the "Trust"), and 5 sub-accounts that are invested in portfolios of other Outside Trusts (the "Outside Trusts"). The Account is a funding vehicle for variable annuity contracts issued by the Company. The Account includes contracts issued for the following products: Venture, Vantage, Vision, Venture III, Venture IV, Wealthmark, and Wealthmark ML3. These products are distinguished principally by the level of expenses and surrender charges. Each sub-account holds shares of a particular series ("Portfolio") of a registered investment company. Sub-accounts that invest in Portfolios of the Trust may offer four classes of units to fund variable annuity contracts issued by the Company. These classes, Series I, Series II, Series III and Series NAV, respectively, represent an interest in the same Trust Portfolio, but in different classes of that Portfolio. Series I, Series II, Series III and Series NAV shares of the Trust Portfolio differ in the level of 12b-1 fees and other expenses assessed against the Portfolio's assets. The Company is an indirect, wholly owned subsidiary of The Manufacturers Life Insurance Company (MLI). MLI, in turn, is an indirect, wholly owned subsidiary of Manulife Financial Corporation (MFC), a Canadian-based publicly traded stock life insurance company. MFC and its subsidiaries are known collectively as Manulife Financial. In addition to the Account, certain contract owners may also allocate funds to the Fixed Account, which is part of the Company's general account. Because of exemptive and exclusionary provisions, interests in the Fixed Account have not been registered under the Securities Act of 1933, and the Company's general account has not been registered as an investment company under the Investment Company Act of 1940. Sub-accounts closed or opened in 2010 are as follows:
SUB-ACCOUNTS CLOSED 2010 ------------------- --------- U.S. Government Securities Series I 5/3/2010 U.S. Government Securities Series II 5/3/2010 All Cap Growth Series I 5/3/2010 All Cap Growth Series II 5/3/2010 Pacific Rim Series I 5/3/2010 Pacific Rim Series II 5/3/2010 CGTC Overseas Equity Series II 5/3/2010 U.S. High Yield Bond Series II 11/8/2010 Strategic Bond Series I 11/8/2010 Strategic Bond Series II 11/8/2010
SUB-ACCOUNTS OPENED 2010 ------------------- --------- Short Term Government Income Series I 5/3/2010 Short Term Government Income Series II 5/3/2010 Ultra Short Term Bond Series I 8/2/2010 Ultra Short Term Bond Series II 8/2/2010 Strategic Income Opportunities Series I 11/8/2010
82 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H NOTES TO FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 2010 2. SIGNIFICANT ACCOUNTING POLICIES ESTIMATES The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from reported results using those estimates. VALUATION OF INVESTMENTS Investments made in the Portfolios of the Trust and of the Outside Trusts are valued at fair value based on the reported net asset values of such Portfolios. Investment transactions are recorded on the trade date. Income from dividends, and gains from realized gain distributions are recorded on the ex-dividend date. Realized gains and losses on the sales of investments are computed on the basis of the identified cost of the investment sold. NET ASSETS IN PAYOUT (ANNUITIZATION) PERIOD A portion of net assets is allocated to annuity policies in the payout period. The liability for these policies is calculated using statutory accounting using mortality assumptions and an assumed interest rate. Mortality assumptions are based on the Individual Annuity Mortality Table in effect at the time of annuitization. The assumed interest rate is 3% to 4%, as regulated by the laws of the respective states. The mortality risk is borne entirely by the Company and may result in additional amounts being transferred into the variable annuity account by the Company to cover greater longevity of annuitants than expected. Conversely, if amounts allocated exceed amounts required, transfers may be made to the Company. EXPENSES The expense ratio represents the contract expenses of the Account for the period indicated and includes only those expenses that are charged through a reduction of the unit value. Included in this category are mortality and expense charges, and the cost of any riders the policy holder has elected. These fees range between 0.35% and 2.10% of net assets of the sub-account depending on the type of contract. In addition, annual contract charges of up to $30 per policy are made through redemption of units. AMOUNTS RECEIVABLE/PAYABLE Receivables/Payables from/to Portfolios/the Company are due to unsettled contract transactions (net of asset-based charges) and/or subsequent/preceding purchases/sales of the respective Portfolios' shares. The amounts are due from/to either the respective Portfolio and/or the Company for the benefit of contract owners. There are no unsettled policy transactions at December 31, 2010. 83 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H NOTES TO FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 2010 3. FEDERAL INCOME TAXES The Account does not file separate tax returns. The taxable income of the Account is consolidated with that of the Company within the consolidated federal tax return. Any tax contingencies arising from the taxable income generated by the Account is the responsibility of the Company and the Company holds any and all tax contingencies on its financial statements. The Account is not a party to the consolidated tax sharing agreement thus no amount of income taxes or tax contingencies are passed through to the Account. The legal form of the Account is not taxable in any state or foreign jurisdictions. The income taxes topic of the FASB Accounting Standard Codification establishes a minimum threshold for financial statement recognition of the benefit of positions taken, or expected to be taken, in filing tax returns (including whether the Account is taxable in certain jurisdictions). The topic requires the evaluation of tax positions taken or expected to be taken in the course of preparing John Hancock's tax returns to determine whether tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions deemed to meet more-than likely-than-not threshold would be recorded as tax expense. The Account complies with the provisions of FASB ASC Topic 740, Income Taxes. As of December 31, 2010, the Account did not have a liability for any uncertain tax positions. The Account recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statements of Operations. 4. TRANSACTIONS WITH AFFILIATES The Company has an administrative services agreement with Manulife Financial, whereby Manulife Financial or its designee, with the consent of the Company, performs certain services on behalf of the Company necessary for the operation of the Account. John Hancock Investment Management Services, LLC ("JHIMS"), a Delaware limited liability company controlled by the Company, serves as investment adviser for the Trust. 5. FAIR VALUE MEASUREMENTS Accounting Standards Codification 820 ("ASC 820") "Fair Value Measurements and Disclosures" provides a single definition of fair value for accounting purposes, establishes a consistent framework for measuring fair value, and expands disclosure requirements about fair value measurements. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; that is, an exit value. An exit value is not a forced liquidation or distressed sale. Following ASC 820 guidance, the Account has categorized its fair value measurements according to a three-level hierarchy. The hierarchy prioritizes the inputs used by the Account's valuation techniques. A level is assigned to each fair value measurement based on the lowest level input significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are defined as follows: Level 1 - Fair value measurements that reflect unadjusted, quoted prices in active markets for identical assets and liabilities that the Account has the ability to access at the measurement date. Level 2 - Fair value measurements using inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly. Level 3 - Fair value measurements using significant non market observable inputs. All of the Account's sub-accounts' investments in a Portfolio of the Trust and the Outside Trusts were valued at the reported net asset value of the Portfolio and categorized as Level 1 as of December 31, 2009 and December 31, 2010. 84 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H NOTES TO FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 2010 6. PURCHASES AND SALES OF INVESTMENTS The cost of purchases including reinvestment of dividend distributions and proceeds from the sales of investments in the Portfolios of the Trust and the Outside Trusts during 2010 were as follows:
Sub-account Purchases Sales ----------------------------------------------- ------------ ------------- 500 Index Fund B Series NAV $ 1,659,769 $ 7,962,230 500 Index Series I 9,236,381 9,806,068 500 Index Series II 2,254,302 7,611,386 500 Index Series NAV 67,704,216 8,912,403 Active Bond Series I 10,311,980 19,750,158 Active Bond Series II 53,357,635 74,199,032 All Cap Core Series I 1,309,522 8,842,354 All Cap Core Series II 486,832 1,783,284 All Cap Growth Series I 531,772 79,389,365 All Cap Growth Series II 65,293 12,229,072 All Cap Value Series I 1,778,830 7,435,875 All Cap Value Series II 1,948,356 6,098,455 American Asset Allocation Series I 5,571,979 28,320,380 American Asset Allocation Series II 43,338,099 126,921,289 American Asset Allocation Series III 7,737,477 12,028,468 American Blue-Chip Income & Growth Series II 6,044,793 13,428,305 American Blue-Chip Income & Growth Series III 37,876,906 8,876,941 American Bond Series II 107,665,129 147,845,097 American Bond Series III 72,309,304 14,572,696 American Fundamental Holdings Series II 26,069,331 78,156,307 American Fundamental Holdings Series III 4,103,281 3,262,998 American Global Diversification Series II 22,868,241 72,145,011 American Global Growth Series II 19,864,713 34,839,989 American Global Growth Series III 799,972 111,761 American Global Small Capitalization Series II 16,103,949 24,218,554 American Global Small Capitalization Series III 2,786,801 5,455,213 American Growth Series II 31,720,763 208,657,994 American Growth Series III 21,353,224 7,899,892 American Growth-Income Series I 5,053,974 33,320,360 American Growth-Income Series II 46,606,791 140,146,164 American Growth-Income Series III 8,894,868 7,098,546 American High-Income Bond Series II 21,512,579 21,341,794 American High-Income Bond Series III 25,347,571 2,054,359 American International Series II 63,244,283 129,264,698 American International Series III 22,301,299 2,009,870 American New World Series II 33,373,365 28,795,999 American New World Series III 880,258 73,984 Balanced Series I 331,564 25,240 Basic Value 216,062 1,794,481 Blue Chip Growth Series I 6,497,469 49,548,884 Blue Chip Growth Series II 12,598,854 24,147,506 Capital Appreciation Series I 79,376,412 28,659,305 Capital Appreciation Series II 19,382,218 15,448,287 Capital Appreciation Value Series II 43,902,081 49,245,418 CGTC Overseas Equity Series II 247,858 3,564,919 Core Allocation Plus Series I 2,127,664 1,713,554 Core Allocation Plus Series II 8,015,656 15,032,078 Core Allocation Series I 6,400,210 316,856
85 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H NOTES TO FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 2010 6. PURCHASES AND SALES OF INVESTMENTS-- (CONTINUED)
Sub-account Purchases Sales ----------------------------------------------- ------------ ------------- Core Allocation Series II 49,830,300 13,156,564 Core Balanced Series I 13,273,014 551,737 Core Balanced Series II 90,457,843 17,529,635 Core Balanced Strategy Series NAV 905,510 362,035 Core Bond Series II 7,611,930 6,794,913 Core Disciplined Diversification Series II 84,510,002 12,877,875 Core Fundamental Holdings Series II 119,026,117 20,883,318 Core Fundamental Holdings Series III 10,246,651 1,038,082 Core Global Diversification Series II 160,163,558 29,130,776 Core Global Diversification Series III 10,361,116 1,200,359 Core Strategy Series II 86,464,585 53,987,733 Core Strategy Series NAV 2,092,587 1,721,613 Disciplined Diversification Series II 11,760,812 17,939,438 DWS Equity 500 Index 845,733 3,286,809 Equity-Income Series I 12,590,878 50,904,805 Equity-Income Series II 18,789,880 31,375,001 Financial Services Series I 1,428,832 4,904,690 Financial Services Series II 3,078,074 7,924,423 Founding Allocation Series I 4,391,559 3,683,838 Founding Allocation Series II 47,365,127 143,111,978 Fundamental Value Series I 9,535,849 65,295,067 Fundamental Value Series II 13,656,543 56,309,429 Global Allocation 17,558 133,860 Global Bond Series I 14,550,212 25,613,192 Global Bond Series II 32,979,005 43,748,037 Global Trust Series I 9,115,005 21,724,621 Global Trust Series II 2,649,658 5,767,939 Health Sciences Series I 4,162,457 10,835,661 Health Sciences Series II 9,577,724 13,399,376 High Income Series II 34,867,119 27,437,331 High Yield Series I 63,263,817 54,554,208 High Yield Series II 117,591,280 104,466,699 International Core Series I 3,192,501 7,886,440 International Core Series II 3,748,589 5,646,068 International Equity Index A Series I 32,560,552 8,174,789 International Equity Index A Series II 41,060,779 11,935,002 International Equity Index Series NAV 1,480,386 3,816,993 International Opportunities Series II 11,661,369 14,673,605 International Small Company Series I 4,280,941 13,372,788 International Small Company Series II 7,094,730 9,899,849 International Value Series I 9,082,309 25,663,912 International Value Series II 12,216,495 23,376,780 Investment Quality Bond Series I 47,653,640 32,353,542 Investment Quality Bond Series II 35,201,472 44,825,223 Large Cap Series I 2,168,383 19,979,988 Large Cap Series II 797,298 1,882,014 Large Cap Value Series I 2,369,905 5,232,511 Large Cap Value Series II 4,063,447 4,164,697
86 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H NOTES TO FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 2010 6. PURCHASES AND SALES OF INVESTMENTS-- (CONTINUED)
Sub-account Purchases Sales ----------------------------------------------- ------------ ------------ Lifestyle Aggressive Series I 20,464,603 25,243,396 Lifestyle Aggressive Series II 19,438,814 32,644,416 Lifestyle Balanced Series I 117,637,859 136,760,257 Lifestyle Balanced Series II 700,293,768 742,485,489 Lifestyle Conservative Series I 79,471,750 80,749,732 Lifestyle Conservative Series II 632,394,649 502,016,036 Lifestyle Growth Series I 103,092,969 96,370,519 Lifestyle Growth Series II 783,214,549 849,893,560 Lifestyle Moderate Series I 59,815,040 58,995,610 Lifestyle Moderate Series II 408,307,111 305,161,365 Mid Cap Index Series I 5,845,646 8,889,581 Mid Cap Index Series II 12,513,793 21,857,269 Mid Cap Stock Series I 15,801,951 35,344,860 Mid Cap Stock Series II 13,116,671 25,129,020 Mid Value Series I 4,731,327 16,825,978 Mid Value Series II 5,419,269 15,124,947 Money Market Series I 139,879,845 203,931,337 Money Market Series II 481,241,657 787,910,834 Money Market Trust B Series NAV 9,437,882 15,893,675 Mutual Shares Series I 41,693,364 5,210,489 Natural Resources Series II 30,619,651 48,924,066 Optimized All Cap Series II 3,726,191 12,706,842 Optimized Value Series II 741,053 2,181,254 Pacific Rim Series I 1,773,181 22,278,195 Pacific Rim Series II 5,279,800 26,667,232 PIMCO All Asset 15,400,591 8,509,048 Real Estate Securities Series I 10,752,692 16,247,540 Real Estate Securities Series II 15,047,516 20,481,548 Real Return Bond Series II 24,117,202 30,723,099 Science & Technology Series I 6,556,118 24,535,444 Science & Technology Series II 11,084,520 19,008,960 Short Term Government Income Series I 99,336,775 18,753,559 Short Term Government Income Series II 92,582,526 18,087,840 Small Cap Growth Series I 121,517 36,032 Small Cap Growth Series II 8,883,887 12,050,326 Small Cap Index Series I 2,404,425 3,459,768 Small Cap Index Series II 5,467,225 13,846,821 Small Cap Opportunities Series I 8,177,324 10,371,826 Small Cap Opportunities Series II 12,394,174 12,098,263 Small Cap Value Series I 112,443 14,621 Small Cap Value Series II 21,069,971 18,432,429 Small Company Value Series I 3,223,877 19,286,352
87 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H NOTES TO FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 2010 6. PURCHASES AND SALES OF INVESTMENTS-- (CONTINUED)
Sub-account Purchases Sales ----------------------------------------------- ------------ ------------- Small Company Value Series II 4,831,781 17,171,511 Smaller Company Growth Series I 2,839,845 9,205,605 Smaller Company Growth Series II 4,536,385 7,393,096 Strategic Bond Series I 12,927,779 88,387,217 Strategic Bond Series II 21,083,379 89,870,807 Strategic Income Opportunities Series I 83,213,037 4,253,787 Strategic Income Opportunities Series II 83,637,216 14,306,946 Total Bond Market Trust A Series II 53,469,258 12,509,924 Total Bond Market Trust A Series NAV 59,826,018 5,319,761 Total Return Series I 55,600,705 79,319,059 Total Return Series II 127,095,873 134,286,795 Total Stock Market Index Series I 550,329 2,541,526 Total Stock Market Index Series II 1,311,416 8,729,251 Ultra Short Term Bond Series I 1,292,173 609,924 Ultra Short Term Bond Series II 47,938,285 12,211,257 U.S. Government Securities Series I 12,051,571 106,073,939 U.S. Government Securities Series II 29,306,239 114,681,104 U.S. High Yield Series II 8,904,129 11,221,314 Utilities Series I 2,878,627 7,045,593 Utilities Series II 2,787,656 7,241,026 Value Opportunities 50,661 929,101 Value Series I 6,804,754 20,716,779 Value Series II 6,647,843 9,791,256
88 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H NOTES TO FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 2010 7. UNIT VALUES A summary of unit values and units outstanding for variable annuity contracts and the expense and income ratios, excluding expenses of the underlying Portfolios, were as follows:
AT DECEMBER 31, FOR THE YEARS AND PERIODS ENDED DECEMBER 31, ------------------------------------- ------------------------------------------------------ UNITS UNIT FAIR VALUE ASSETS EXPENSE RATIO INVESTMENT TOTAL RETURN SUBACCOUNT YEAR (000S) HIGHEST TO LOWEST (000S) HIGHEST TO LOWEST* INCOME RATIO** HIGHEST TO LOWEST*** ---------------------------- ---- ------- ----------------- ----------- ------------------ -------------- -------------------- 500 Index Fund B Series NAV 2010 4,740 $10.71 to $10.45 $ 50,459 2.05% to 1.40% 1.71% 13.26% to 12.53% 2009 5,401 9.45 to 9.29 50,844 2.05 to 1.40 2.22 24.59 to 23.79 2008 5,844 7.59 to 7.50 44,222 2.05 to 1.40 2.04 (38.07) to (38.47) 2007 6,936 12.25 to 12.20 84,872 2.05 to 1.40 1.25 (2.01) to (2.43) 500 Index Series I 2010 5,409 12.37 to 11.78 58,263 1.90 to 0.45 1.39 14.07 to 12.43 2009 5,498 11.00 to 10.32 52,556 1.90 to 0.45 1.64 25.17 to 23.37 2008 6,939 8.91 to 8.25 53,451 1.90 to 0.45 0.68 (37.49) to (38.39) 2007 8,813 14.47 to 13.19 109,739 1.90 to 0.45 2.20 4.43 to 2.92 2006 11,610 14.21 to 11.66 139,913 1.90 to 0.45 0.98 14.74 to 13.09 500 Index Series II 2010 3,263 16.00 to 15.73 45,976 2.05 to 0.45 1.17 13.77 to 11.97 2009 3,663 14.29 to 13.83 45,925 2.05 to 0.45 1.49 25.03 to 23.04 2008 3,917 11.61 to 11.06 39,679 2.05 to 0.45 0.47 (37.68) to (38.68) 2007 4,687 18.94 to 17.75 76,993 2.05 to 0.45 1.92 4.25 to 2.59 2006 5,989 18.53 to 15.21 95,202 2.05 to 0.45 0.82 14.54 to 12.73 500 Index Series NAV 2010 6,829 17.58 to 17.36 119,890 1.55 to 0.80 1.98 13.73 to 12.88 2009 3,111 15.46 to 15.38 48,071 1.55 to 0.80 2.57 23.67 to 23.06 Active Bond Series I 2010 3,775 17.10 to 15.75 61,016 1.90 to 0.45 7.10 13.34 to 11.71 2009 4,629 15.08 to 14.09 66,650 1.90 to 0.45 7.05 24.24 to 22.46 2008 5,542 12.14 to 11.51 64,896 1.90 to 0.45 5.10 (10.94) to (12.23) 2007 7,222 13.63 to 13.11 95,921 1.90 to 0.45 8.52 3.58 to 2.08 2006 8,812 13.16 to 12.85 114,129 1.90 to 0.45 2.87 3.95 to 2.46 Active Bond Series II 2010 19,948 16.90 to 15.43 315,368 2.05 to 0.45 6.91 13.20 to 11.40 2009 22,493 14.93 to 13.85 317,842 2.05 to 0.45 7.15 23.82 to 21.86 2008 23,847 12.06 to 11.37 275,346 2.05 to 0.45 4.72 (11.05) to (12.47) 2007 37,399 13.56 to 12.99 491,157 2.05 to 0.45 7.95 3.31 to 1.66 2006 38,059 13.12 to 12.78 489,521 2.05 to 0.45 2.62 3.74 to 2.10 All Cap Core Series I 2010 3,183 12.99 to 12.70 49,057 1.90 to 0.45 1.02 12.53 to 10.91 2009 3,691 11.54 to 11.46 51,277 1.90 to 0.45 1.57 27.89 to 26.05 2008 4,405 9.09 to 9.02 48,379 1.90 to 0.45 1.57 (39.90) to (40.77) 2007 5,691 15.34 to 15.01 105,085 1.90 to 0.45 1.40 2.20 to 0.72 2006 7,796 20.83 to 9.21 143,933 1.90 to 0.45 0.72 14.23 to 12.59 All Cap Core Series II 2010 501 17.35 to 17.04 7,783 2.05 to 0.45 0.79 12.31 to 10.53 2009 591 15.45 to 15.42 8,270 2.05 to 0.45 1.38 27.68 to 25.66 2008 682 12.27 to 12.10 7,549 2.05 to 0.45 1.33 (40.02) to (40.98) 2007 876 20.79 to 20.17 16,332 2.05 to 0.45 0.75 1.95 to 0.32 2006 546 20.80 to 16.71 10,072 2.05 to 0.45 0.58 14.03 to 12.23 All Cap Growth Series I 2010 0 12.86 to 9.90 0 1.90 to 0.45 0.21 4.48 to 3.98 2009 5,759 12.31 to 9.52 75,666 1.90 to 0.45 0.69 20.55 to 18.81 2008 6,912 10.21 to 8.01 76,574 1.90 to 0.45 0.29 (42.21) to (43.04) 2007 8,855 17.67 to 14.07 171,682 1.90 to 0.45 0.04 11.55 to 9.94 2006 11,560 20.21 to 8.59 205,159 1.90 to 0.45 0.00 6.10 to 4.57 All Cap Growth Series II 2010 0 13.23 to 12.69 0 2.05 to 0.45 0.11 4.40 to 3.85 2009 1,055 12.74 to 12.15 11,664 2.05 to 0.45 0.51 20.33 to 18.42 2008 1,159 10.76 to 10.10 10,760 2.05 to 0.45 0.10 (42.32) to (43.24) 2007 1,505 18.96 to 17.51 24,474 2.05 to 0.45 0.00 11.32 to 9.55 2006 1,743 17.37 to 14.04 25,736 2.05 to 0.45 0.00 5.84 to 4.17
89 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H NOTES TO FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 2010 7. UNIT VALUES-- (CONTINUED)
AT DECEMBER 31, FOR THE YEARS AND PERIODS ENDED DECEMBER 31, ------------------------------------- ------------------------------------------------------ UNITS UNIT FAIR VALUE ASSETS EXPENSE RATIO INVESTMENT TOTAL RETURN SUBACCOUNT YEAR (000S) HIGHEST TO LOWEST (000S) HIGHEST TO LOWEST* INCOME RATIO** HIGHEST TO LOWEST*** ---------------------------- ---- ------- ----------------- ----------- ------------------ -------------- -------------------- All Cap Value Series I 2010 1,571 $19.43 to $17.01 $ 27,159 1.90% to 0.45% 0.36% 17.82% to 16.13% 2009 1,910 16.49 to 14.65 28,466 1.90 to 0.45 0.52 26.04 to 24.23 2008 2,223 13.08 to 11.79 26,764 1.90 to 0.45 0.78 (29.10) to (30.13) 2007 2,757 18.45 to 16.87 47,390 1.90 to 0.45 1.69 7.84 to 6.28 2006 3,603 17.11 to 15.85 58,058 1.90 to 0.45 0.99 13.20 to 11.58 All Cap Value Series II 2010 1,558 20.95 to 20.63 28,706 2.05 to 0.45 0.15 17.60 to 15.74 2009 1,787 18.10 to 17.54 28,321 2.05 to 0.45 0.31 25.84 to 23.84 2008 2,009 14.62 to 13.94 25,562 2.05 to 0.45 0.54 (29.19) to (30.32) 2007 2,483 20.97 to 19.69 45,032 2.05 to 0.45 1.34 7.55 to 5.84 2006 3,376 19.89 to 15.89 57,471 2.05 to 0.45 0.80 13.02 to 11.23 American Asset Allocation Series I 2010 13,637 12.07 to 11.44 158,613 1.90 to 0.45 1.53 11.55 to 9.95 2009 15,781 10.82 to 10.41 166,221 1.90 to 0.45 1.86 20.87 to 19.71 American Asset Allocation Series II 2010 113,271 12.03 to 11.35 1,311,937 2.05 to 0.45 1.44 11.40 to 9.63 2009 121,062 10.80 to 10.35 1,272,060 2.05 to 0.45 2.01 22.72 to 20.77 2008 89,206 8.80 to 8.57 771,852 2.05 to 0.45 3.11 (30.15) to (31.26) 2007 37,749 12.60 to 12.47 472,822 2.05 to 0.45 3.79 0.81 to (0.26) American Asset Allocation Series III 2010 12,112 12.67 to 12.40 153,108 1.55 to 0.80 1.96 11.64 to 10.81 2009 12,626 11.35 to 11.19 143,081 1.55 to 0.80 3.11 22.83 to 21.91 2008 3,703 9.24 to 9.18 34,188 1.55 to 0.80 8.47 (26.08) to (26.57) American Blue-Chip Income & Growth Series II 2010 4,252 18.49 to 16.36 72,210 2.05 to 0.45 1.15 11.25 to 9.49 2009 4,710 16.62 to 14.94 72,695 2.05 to 0.45 1.43 26.56 to 24.55 2008 5,410 13.13 to 11.99 66,643 2.05 to 0.45 3.81 (37.05) to (38.05) 2007 7,008 20.86 to 19.36 138,675 2.05 to 0.45 2.05 1.02 to (0.59) 2006 8,938 20.65 to 19.48 177,061 2.05 to 0.45 0.43 16.27 to 14.43 American Blue-Chip Income & Growth Series III 2010 12,453 12.01 to 11.75 149,125 1.55 to 0.80 1.90 11.39 to 10.56 2009 9,830 10.78 to 10.63 105,779 1.55 to 0.80 2.96 26.77 to 25.82 2008 1,817 8.50 to 8.45 15,441 1.55 to 0.80 10.53 (31.98) to (32.43) American Bond Series II 2010 49,795 14.27 to 13.08 669,121 2.05 to 0.45 2.36 5.49 to 3.82 2009 53,291 13.52 to 12.60 686,248 2.05 to 0.45 2.60 11.42 to 9.65 2008 50,088 12.14 to 11.49 585,290 2.05 to 0.45 9.01 (10.23) to (11.66) 2007 66,523 13.52 to 13.01 875,494 2.05 to 0.45 4.45 2.30 to 0.66 2006 36,600 13.22 to 12.92 475,934 2.05 to 0.45 0.00 6.01 to 4.33 American Bond Series III 2010 15,087 13.19 to 12.91 198,440 1.55 to 0.80 3.38 5.56 to 4.77 2009 10,976 12.49 to 12.32 136,901 1.55 to 0.80 4.89 11.67 to 10.83 2008 1,708 11.19 to 11.11 19,101 1.55 to 0.80 18.03 (10.49) to (11.08) American Fundamental Holdings Series II 2010 89,991 12.16 to 11.37 1,041,332 2.05 to 0.35 1.38 7.96 to 1.20 2009 94,707 12.01 to 10.54 1,009,532 2.05 to 0.35 1.67 26.24 to 24.11 2008 64,804 9.52 to 8.49 553,472 2.05 to 0.35 5.63 (23.87) to (32.37) 2007 4,219 12.58 to 12.55 53,003 2.05 to 0.45 2.84 0.65 to 0.43 American Fundamental Holdings Series III 2010 4,994 12.61 to 12.34 62,808 1.55 to 0.80 1.91 9.83 to 9.01 2009 4,976 11.48 to 11.32 57,028 1.55 to 0.80 2.67 26.26 to 25.32 2008 1,576 9.09 to 9.03 14,319 1.55 to 0.80 9.38 (27.26) to (27.74) American Global Diversification Series II 2010 69,808 12.65 to 11.77 835,495 2.05 to 0.35 1.80 10.02 to 0.89 2009 74,544 12.54 to 10.69 806,356 2.05 to 0.35 1.81 35.81 to 33.53 2008 62,576 9.23 to 8.01 504,068 2.05 to 0.35 4.62 (26.13) to (36.18) 2007 8,251 12.58 to 12.55 103,611 2.05 to 0.45 2.96 0.61 to 0.39
90 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H NOTES TO FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 2010 7. UNIT VALUES-- (CONTINUED)
AT DECEMBER 31, FOR THE YEARS AND PERIODS ENDED DECEMBER 31, ------------------------------------- ------------------------------------------------------ UNITS UNIT FAIR VALUE ASSETS EXPENSE RATIO INVESTMENT TOTAL RETURN SUBACCOUNT YEAR (000S) HIGHEST TO LOWEST (000S) HIGHEST TO LOWEST* INCOME RATIO** HIGHEST TO LOWEST*** ---------------------------- ---- ------- ----------------- ----------- ------------------ -------------- -------------------- American Global Growth Series II 2010 15,211 $12.66 to $11.94 $ 185,112 2.05% to 0.45% 0.92% 10.68% to 8.92% 2009 16,435 11.44 to 10.96 182,646 2.05 to 0.45 0.88 40.78 to 38.55 2008 17,516 8.13 to 7.91 139,771 2.05 to 0.45 2.33 (38.96) to (39.93) 2007 16,199 13.31 to 13.17 214,070 2.05 to 0.45 3.30 6.51 to 1.66 American Global Growth Series III 2010 254 13.08 to 12.80 3,306 1.55 to 0.80 1.59 10.91 to 10.08 2009 197 11.80 to 11.63 2,315 1.55 to 0.80 2.27 41.09 to 40.03 2008 32 8.36 to 8.30 270 1.55 to 0.80 11.31 (33.12) to (33.56) American Global Small Capitalization Series II 2010 6,333 12.11 to 11.42 73,719 2.05 to 0.45 1.12 21.30 to 19.38 2009 7,183 9.98 to 9.56 69,662 2.05 to 0.45 0.00 59.72 to 57.18 2008 7,111 6.25 to 6.09 43,637 2.05 to 0.45 1.24 (54.00) to (54.74) 2007 6,051 13.59 to 13.44 81,611 2.05 to 0.45 2.66 8.71 to 7.55 American Global Small Capitalization Series III 2010 2,737 12.55 to 12.28 34,259 1.55 to 0.80 1.57 21.52 to 20.62 2009 2,977 10.33 to 10.18 30,698 1.55 to 0.80 0.05 59.88 to 58.68 2008 777 6.46 to 6.42 5,017 1.55 to 0.80 7.92 (48.32) to (48.67) American Growth Series II 2010 54,531 21.54 to 19.05 1,000,428 2.05 to 0.45 0.19 17.61 to 15.74 2009 64,066 18.31 to 16.46 1,013,458 2.05 to 0.45 0.08 38.05 to 35.86 2008 74,067 13.27 to 12.12 860,203 2.05 to 0.45 1.68 (44.53) to (45.42) 2007 71,979 23.91 to 22.20 1,544,152 2.05 to 0.45 0.97 11.23 to 9.45 2006 65,701 21.50 to 12.85 1,324,518 2.05 to 0.45 0.17 9.15 to 2.77 American Growth Series III 2010 7,318 12.17 to 11.91 88,815 1.55 to 0.80 0.77 17.74 to 16.86 2009 5,975 10.34 to 10.19 61,649 1.55 to 0.80 0.90 38.21 to 37.18 2008 1,283 7.48 to 7.43 9,589 1.55 to 0.80 8.43 (40.17) to (40.57) American Growth-Income Series I 2010 9,001 18.65 to 16.69 155,150 1.90 to 0.45 1.06 10.56 to 8.97 2009 10,752 16.87 to 15.32 169,407 1.90 to 0.45 1.10 27.18 to 25.96 American Growth-Income Series II 2010 50,328 18.60 to 16.46 804,949 2.05 to 0.45 0.96 10.34 to 8.59 2009 55,869 16.86 to 15.16 820,869 2.05 to 0.45 1.06 30.08 to 28.01 2008 63,942 12.96 to 11.84 734,827 2.05 to 0.45 1.90 (38.45) to (39.43) 2007 66,656 21.06 to 19.55 1,269,653 2.05 to 0.45 2.82 4.00 to 2.35 2006 57,500 20.25 to 13.50 1,094,820 2.05 to 0.45 0.92 14.10 to 8.01 American Growth-Income Series III 2010 6,613 11.99 to 11.73 79,060 1.55 to 0.80 1.52 10.55 to 9.72 2009 6,436 10.84 to 10.69 69,674 1.55 to 0.80 2.16 30.22 to 29.24 2008 1,445 8.33 to 8.27 12,028 1.55 to 0.80 8.98 (33.38) to (33.82) American High-Income Bond Series II 2010 4,170 14.25 to 13.43 57,073 2.05 to 0.45 7.13 14.01 to 12.20 2009 4,418 12.50 to 11.97 53,605 2.05 to 0.45 6.75 37.80 to 35.61 2008 3,594 9.07 to 8.83 31,998 2.05 to 0.45 6.39 (24.73) to (25.93) 2007 3,619 12.05 to 11.92 43,281 2.05 to 0.45 13.20 (3.62) to (4.65) American High-Income Bond Series III 2010 2,741 15.34 to 15.02 41,957 1.55 to 0.80 8.73 14.06 to 13.21 2009 1,265 13.45 to 13.26 16,993 1.55 to 0.80 26.39 38.08 to 37.05 2008 11 9.74 to 9.68 103 1.55 to 0.80 37.68 (22.06) to (22.57) American International Series II 2010 28,123 28.52 to 25.23 646,557 2.05 to 0.45 1.44 6.20 to 4.52 2009 30,807 26.86 to 24.14 679,801 2.05 to 0.45 0.91 41.77 to 39.52 2008 36,071 18.95 to 17.30 569,687 2.05 to 0.45 3.67 (42.73) to (43.64) 2007 36,873 33.08 to 30.71 1,049,619 2.05 to 0.45 2.13 18.87 to 16.97 2006 33,554 27.83 to 13.23 856,032 2.05 to 0.45 0.72 17.79 to 5.84 American International Series III 2010 2,699 12.24 to 11.98 32,941 1.55 to 0.80 2.87 6.40 to 5.60 2009 900 11.51 to 11.35 10,332 1.55 to 0.80 4.68 42.00 to 40.94 2008 34 8.10 to 8.05 279 1.55 to 0.80 10.20 (35.17) to (35.60) American New World Series II 2010 6,201 14.82 to 13.97 88,319 2.05 to 0.45 1.14 16.66 to 14.81 2009 5,874 12.70 to 12.17 72,479 2.05 to 0.45 1.19 48.15 to 45.80 2008 4,594 8.58 to 8.35 38,682 2.05 to 0.45 2.18 (42.92) to (43.83) 2007 5,282 15.02 to 14.86 78,752 2.05 to 0.45 4.11 20.18 to 3.01
91 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H NOTES TO FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 2010 7. UNIT VALUES-- (CONTINUED)
AT DECEMBER 31, FOR THE YEARS AND PERIODS ENDED DECEMBER 31, ------------------------------------- ------------------------------------------------------ UNITS UNIT FAIR VALUE ASSETS EXPENSE RATIO INVESTMENT TOTAL RETURN SUBACCOUNT YEAR (000S) HIGHEST TO LOWEST (000S) HIGHEST TO LOWEST* INCOME RATIO** HIGHEST TO LOWEST*** ---------------------------- ---- ------- ----------------- ----------- ------------------ -------------- -------------------- American New World Series III 2010 198 $13.60 to $13.30 $ 2,681 1.55% to 0.80% 1.83% 16.90% to 16.03% 2009 132 11.63 to 11.47 1,529 1.55 to 0.80 2.57 48.36 to 47.25 2008 15 7.84 to 7.79 115 1.55 to 0.80 12.33 (37.28) to (37.70) Balanced Series I 2010 27 16.53 to 16.33 444 1.55 to 0.80 1.24 11.69 to 10.85 2009 7 14.80 to 14.73 107 1.55 to 0.80 2.26 18.42 to 17.84 Basic Value 2010 382 29.22 to 14.98 8,946 1.90 to 1.40 1.39 11.11 to 10.55 2009 455 26.30 to 13.55 9,606 1.90 to 1.40 1.84 29.09 to 28.45 2008 560 20.38 to 10.55 9,193 1.90 to 1.40 1.86 (37.72) to (38.03) 2007 771 32.71 to 17.02 20,420 1.90 to 1.40 1.15 0.22 to (0.28) 2006 1,058 32.64 to 16.86 28,247 1.90 to 1.40 1.32 19.98 to 19.38 Blue Chip Growth Series I 2010 12,612 17.49 to 13.57 259,341 1.90 to 0.45 0.08 15.63 to 13.97 2009 14,833 15.12 to 11.91 265,754 1.90 to 0.45 0.14 42.25 to 40.21 2008 17,615 10.63 to 8.49 224,482 1.90 to 0.45 0.31 (42.79) to (43.62) 2007 21,089 18.58 to 15.07 478,935 1.90 to 0.45 0.72 12.24 to 10.61 2006 26,907 24.22 to 10.96 554,434 1.90 to 0.45 0.21 9.09 to 5.59 Blue Chip Growth Series II 2010 7,826 17.13 to 17.04 118,731 2.05 to 0.45 0.05 15.42 to 13.59 2009 8,551 15.00 to 14.84 113,765 2.05 to 0.45 0.09 41.92 to 39.67 2008 9,393 10.74 to 10.46 89,182 2.05 to 0.45 0.14 (42.89) to (43.80) 2007 9,256 19.11 to 18.31 155,552 2.05 to 0.45 0.39 12.00 to 10.22 2006 10,160 17.40 to 13.18 154,585 2.05 to 0.45 0.03 8.82 to 5.44 Capital Appreciation Series I 2010 17,221 12.76 to 10.91 171,777 1.90 to 0.45 0.15 11.33 to 9.73 2009 11,642 11.62 to 9.80 105,780 1.90 to 0.45 0.25 41.65 to 39.61 2008 13,837 8.33 to 6.92 89,610 1.90 to 0.45 0.43 (37.50) to (38.41) 2007 17,486 13.52 to 11.07 182,898 1.90 to 0.45 0.27 11.11 to 9.50 2006 22,981 12.66 to 9.20 218,602 1.90 to 0.45 0.00 1.80 to 0.34 Capital Appreciation Series II 2010 4,936 18.03 to 16.83 73,641 2.05 to 0.45 0.02 11.08 to 9.31 2009 4,634 16.49 to 15.15 62,886 2.05 to 0.45 0.05 41.41 to 39.16 2008 4,711 11.85 to 10.71 45,780 2.05 to 0.45 0.22 (37.64) to (38.63) 2007 5,414 19.31 to 17.18 85,349 2.05 to 0.45 0.08 10.86 to 9.09 2006 6,969 17.77 to 12.63 100,281 2.05 to 0.45 0.00 1.61 to 0.00 Capital Appreciation Value Series II 2010 24,073 13.33 to 12.80 312,548 2.05 to 0.45 1.26 13.12 to 11.33 2009 27,231 11.78 to 11.49 315,680 2.05 to 0.45 2.10 29.25 to 27.20 2008 14,299 9.12 to 9.04 129,560 2.05 to 0.45 1.23 (27.08) to (27.71) CGTC Overseas Equity Series II 2010 0 14.99 to 13.83 0 2.05 to 0.45 0.50 (1.20) to (1.71) 2009 234 15.17 to 14.08 3,366 2.05 to 0.45 1.84 29.86 to 27.80 2008 284 11.68 to 11.01 3,186 2.05 to 0.45 1.58 (42.45) to (43.37) 2007 348 20.30 to 19.45 6,853 2.05 to 0.45 0.02 11.70 to 9.92 2006 382 18.17 to 17.69 6,821 2.05 to 0.45 0.44 19.10 to 17.22 Core Allocation Plus Series I 2010 1,753 12.29 to 12.03 21,489 1.55 to 0.80 1.14 9.62 to 8.80 2009 1,749 11.22 to 11.06 19,574 1.55 to 0.80 2.17 24.21 to 23.28 2008 460 9.03 to 8.97 4,147 1.55 to 0.80 1.98 (27.76) to (28.24) Core Allocation Plus Series II 2010 12,998 12.03 to 11.55 152,254 2.05 to 0.45 0.91 9.79 to 8.05 2009 13,790 10.95 to 10.69 148,644 2.05 to 0.45 1.69 24.54 to 22.56 2008 5,294 8.80 to 8.72 46,295 2.05 to 0.45 1.05 (29.64) to (30.25) Core Allocation Series I 2010 629 16.28 to 16.08 10,234 1.55 to 0.80 3.24 10.12 to 9.30 2009 241 14.79 to 14.71 3,561 1.55 to 080 7.68 18.30 to 17.71 Core Allocation Series II 2010 4,171 16.68 to 14.09 68,382 2.10 to 0.45 2.82 12.73 to 10.23 2009 1,859 15.13 to 14.97 27,950 2.05 to 0.45 6.06 21.06 to 19.77 Core Balanced Series I 2010 1,164 16.42 to 16.22 19,081 1.55 to 0.80 2.82 11.30 to 10.47 2009 343 14.75 to 14.68 5,061 1.55 to 0.80 3.83 18.04 to 17.46 Core Balanced Series II 2010 7,593 16.87 to 14.10 125,984 2.10 to 0.45 2.29 12.80 to 11.55 2009 2,944 15.12 to 14.96 44,238 2.05 to 0.45 2.72 21 to 19.71
92 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H NOTES TO FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 2010 7. UNIT VALUES-- (CONTINUED)
AT DECEMBER 31, FOR THE YEARS AND PERIODS ENDED DECEMBER 31, ------------------------------------- ------------------------------------------------------ UNITS UNIT FAIR VALUE ASSETS EXPENSE RATIO INVESTMENT TOTAL RETURN SUBACCOUNT YEAR (000S) HIGHEST TO LOWEST (000S) HIGHEST TO LOWEST* INCOME RATIO** HIGHEST TO LOWEST*** ---------------------------- ---- ------- ----------------- ----------- ------------------ -------------- -------------------- Core Balanced Strategy Series NAV 2010 237 $14.91 to $14.91 $ 3,531 1.60% to 1.60% 2.63 9.07% to 9.07% 2009 201 13.67 to 13.67 2,742 1.60 to 1.60 4.97 9.37 to 9.37 Core Bond Series II 2010 833 16.32 to 14.90 12,760 2.05 to 0.45 2.48 6.44 to 4.75 2009 792 15.33 to 14.23 11,527 2.05 to 0.45 2.12 9.12 to 7.38 2008 628 14.05 to 13.25 8,460 2.05 to 0.45 7.75 2.68 to 1.05 2007 273 13.68 to 13.11 3,624 2.05 to 0.45 7.22 5.58 to 3.90 2006 117 12.96 to 12.62 1,494 2.05 to 0.45 2.11 3.15 to 1.52 Core Disciplined Diversification Series II 2010 8,099 17.31 to 14.28 137,776 2.10 to 0.45 2.39 14.27 to 11.70 2009 3,712 15.49 to 15.33 57,114 2.05 to 0.45 3.81 23.95 to 22.63 Core Fundamental Holdings Series II 2010 13,036 13.85 to 13.48 207,377 2.10 to 0.35 2.03 10.81 to 7.87 2009 6,628 14.80 to 14.64 97,508 2.05 to 0.45 2.80 18.41 to 17.16 Core Fundamental Holdings Series III 2010 1,248 15.81 to 15.62 19,707 1.55 to 0.80 2.52 9.20 to 8.38 2009 651 14.48 to 14.41 9,425 1.55 to 0.80 3.53 15.85 to 15.28 Core Global Diversification Series II 2010 15,840 14.16 to 13.47 256,911 2.10 to 0.35 2.39 13.30 to 7.77 2009 7,611 15.30 to 15.14 115,642 2.05 to 0.45 2.94 22.4 to 21.10 Core Global Diversification Series III 2010 1,003 16.11 to 15.91 16,128 1.55 to 0.80 2.86 7.84 to 7.03 2009 417 14.94 to 14.86 6,223 1.55 to 0.80 4.00 19.48 to 18.90 Core Strategy Series II 2010 46,040 14.32 to 14.17 623,298 2.10 to 0.45 2.16 13.36 to 11.67 2009 43,901 12.82 to 12.05 536,845 2.05 to 0.45 1.96 21.11 to 19.18 2008 31,257 10.59 to 10.11 318,495 2.05 to 0.45 1.41 (26.80) to (27.97) 2007 21,010 14.46 to 14.03 295,947 2.05 to 0.45 4.07 6.07 to 4.38 2006 7,176 13.63 to 13.22 96,463 2.05 to 0.45 2.53 9.07 to 5.76 Core Strategy Series NAV 2010 442 15.88 to 15.88 7,020 1.20 to 1.20 2.32 14.16 to 11.22 2009 422 14.27 to 14.27 6,031 1.20 to 1.20 3.14 14.20 to 10.40 Disciplined Diversification Series II 2010 18,143 13.07 to 12.55 231,251 2.05 to 0.45 1.40 12.67 to 10.89 2009 18,659 11.60 to 11.32 213,163 2.05 to 0.45 2.18 26.39 to 24.39 2008 8,663 9.18 to 9.10 79,086 2.05 to 0.45 1.85 (26.55) to (27.19) DWS Equity 500 Index 2010 817 19.93 to 16.09 15,950 2.05 to 1.40 1.55 12.70 to 11.97 2009 957 17.68 to 14.37 16,616 2.05 to 1.40 2.53 24.04 to 23.24 2008 1,126 14.25 to 11.66 15,769 2.05 to 1.40 2.09 (38.24) to (38.64) 2007 1,253 23.08 to 19.00 28,468 2.05 to 1.40 1.20 3.38 to 2.71 2006 1,674 22.32 to 18.50 36,849 2.05 to 1.40 0.85 13.61 to 12.87 Equity-Income Series I 2010 9,698 20.55 to 15.15 263,326 1.90 to 0.45 1.83 14.60 to 12.95 2009 11,371 17.93 to 13.41 270,462 1.90 to 0.45 2.11 25.15 to 23.35 2008 13,650 14.33 to 10.87 261,747 1.90 to 0.45 2.24 (36.25) to (37.17) 2007 17,778 22.47 to 17.31 540,216 1.90 to 0.45 2.81 2.88 to 1.39 2006 22,179 36.09 to 13.77 662,231 1.90 to 0.45 1.55 18.49 to 10.17 Equity-Income Series II 2010 10,031 17.40 to 17.02 153,300 2.05 to 0.45 1.68 14.40 to 12.58 2009 10,954 15.46 to 14.88 148,222 2.05 to 0.45 1.95 24.98 to 23 2008 11,489 12.57 to 11.91 126,409 2.05 to 0.45 2.11 (36.45) to (37.46) 2007 13,765 20.10 to 18.74 241,867 2.05 to 0.45 2.48 2.70 to 1.06 2006 16,212 19.96 to 13.75 282,032 2.05 to 0.45 1.36 18.23 to 10.03
93 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H NOTES TO FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 2010 7. UNIT VALUES-- (CONTINUED)
AT DECEMBER 31, FOR THE YEARS AND PERIODS ENDED DECEMBER 31, ------------------------------------- ------------------------------------------------------ UNITS UNIT FAIR VALUE ASSETS EXPENSE RATIO INVESTMENT TOTAL RETURN SUBACCOUNT YEAR (000S) HIGHEST TO LOWEST (000S) HIGHEST TO LOWEST* INCOME RATIO** HIGHEST TO LOWEST*** ---------------------------- ---- ------- ----------------- ----------- ------------------ -------------- -------------------- Financial Services Series I 2010 1,177 $14.92 to $13.33 $ 15,858 1.90% to 0.45% 0.30% 11.75% to 10.14% 2009 1,450 13.35 to 12.10 17,662 1.90 to 0.45 0.70 40.77 to 38.74 2008 1,624 9.48 to 8.72 14,200 1.90 to 0.45 0.82 (44.90) to (45.70) 2007 1,792 17.21 to 16.06 28,749 1.90 to 0.45 1.20 (7.24) to (8.58) 2006 2,583 18.56 to 14.42 45,180 1.90 to 0.45 0.36 22.57 to 15.39 Financial Services Series II 2010 1,906 16.29 to 15.96 27,065 2.05 to 0.45 0.13 11.50 to 9.73 2009 2,251 14.85 to 14.32 29,096 2.05 to 0.45 0.51 40.35 to 38.12 2008 2,477 10.75 to 10.20 23,207 2.05 to 0.45 0.66 (45.00) to (45.88) 2007 2,222 19.86 to 18.55 38,360 2.05 to 0.45 0.87 (7.35) to (8.83) 2006 2,934 21.86 to 14.40 55,701 2.05 to 0.45 0.21 22.22 to 15.22 Founding Allocation Series I 2010 3,738 12.44 to 12.17 46,366 1.55 to 0.80 3.90 9.78 to 8.96 2009 3,794 11.33 to 11.17 42,903 1.55 to 0.80 5.28 30.42 to 29.45 2008 1,345 8.69 to 8.63 11,671 1.55 to 0.80 6.91 (30.51) to (30.97) Founding Allocation Series II 2010 116,260 18.99 to 10.48 1,242,478 2.05 to 0.35 3.52 10.05 to 8.20 2009 128,398 17.26 to 9.68 1,261,886 2.05 to 0.35 3.86 30.67 to 28.46 2008 136,082 13.21 to 7.54 1,035,742 2.05 to 0.35 2.91 5.67 to (36.87) 2007 88,895 12.07 to 11.94 1,067,048 2.05 to 0.45 0.97 (3.45) to (4.47) Fundamental Value Series I 2010 24,123 16.02 to 14.50 350,230 1.90 to 0.45 1.08 12.59 to 10.97 2009 28,241 14.23 to 13.07 368,109 1.90 to 0.45 0.92 31.19 to 29.3 2008 33,466 10.85 to 10.11 336,160 1.90 to 0.45 2.42 (39.59) to (40.47) 2007 8,886 17.95 to 16.97 148,942 1.90 to 0.45 1.57 3.57 to 2.07 2006 10,715 17.34 to 13.64 175,241 1.90 to 0.45 0.80 14.00 to 9.10 Fundamental Value Series II 2010 19,504 17.22 to 17.18 295,599 2.05 to 0.45 0.89 12.37 to 10.59 2009 22,342 15.57 to 15.29 305,287 2.05 to 0.45 0.73 31 to 28.92 2008 23,786 12.08 to 11.67 251,341 2.05 to 0.45 0.64 (39.73) to (40.69) 2007 22,520 20.36 to 19.37 399,581 2.05 to 0.45 1.21 3.41 to 1.75 2006 20,167 20.09 to 13.62 353,591 2.05 to 0.45 0.58 13.73 to 8.94 Global Allocation 2010 64 27.39 to 16.08 1,042 1.90 to 1.40 1.04 8.36 to 7.82 2009 69.918 25.40 to 14.84 1,080 1.90 to 1.40 1.78 19.37 to 18.77 2008 80 21.39 to 12.43 1,038 1.90 to 1.40 1.95 (20.69) to (21.09) 2007 91 27.10 to 15.67 1,520 1.90 to 1.40 2.46 15.19 to 14.61 2006 124 23.90 to 13.61 1,771 1.90 to 1.40 2.42 14.74 to 14.17 Global Bond Series I 2010 2,708 23.52 to 21.37 74,034 1.90 to 0.45 3.36 9.81 to 8.23 2009 3,158 21.42 to 19.75 80,083 1.90 to 0.45 12.24 14.87 to 13.22 2008 3,603 18.64 to 17.44 81,496 1.90 to 0.45 0.63 (4.91) to (6.28) 2007 3,988 19.61 to 18.61 97,298 1.90 to 0.45 7.40 9.14 to 7.56 2006 4,255 27.35 to 12.69 97,361 1.90 to 0.45 0.00 4.80 to 1.56 Global Bond Series II 2010 8,787 22.84 to 16.58 176,267 2.05 to 0.45 3.20 9.63 to 7.89 2009 9,500 20.84 to 15.37 176,112 2.05 to 0.45 11.74 14.62 to 12.8 2008 9,374 18.18 to 13.62 154,496 2.05 to 0.45 0.58 (5.09) to (6.60) 2007 12,099 19.15 to 14.58 212,896 2.05 to 0.45 7.11 8.85 to 7.29 2006 11,018 17.60 to 12.67 182,700 2.05 to 0.45 0.00 4.60 to 1.36
94 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H NOTES TO FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 2010 7. UNIT VALUES-- (CONTINUED)
AT DECEMBER 31, FOR THE YEARS AND PERIODS ENDED DECEMBER 31, ------------------------------------- ------------------------------------------------------ UNITS UNIT FAIR VALUE ASSETS EXPENSE RATIO INVESTMENT TOTAL RETURN SUBACCOUNT YEAR (000S) HIGHEST TO LOWEST (000S) HIGHEST TO LOWEST* INCOME RATIO** HIGHEST TO LOWEST*** ---------------------------- ---- ------- ----------------- ----------- ------------------ -------------- -------------------- Global Trust Series I 2010 8,540 $15.30 to $13.08 $ 153,628 1.90% to 0.45% 1.54% 7.28% to 5.73% 2009 9,050 14.26 to 12.37 157,234 1.90 to 0.45 1.71 30.78 to 28.90 2008 6,778 10.91 to 9.60 109,603 1.90 to 0.45 1.91 (39.82) to (40.69) 2007 7,318 18.12 to 16.18 212,666 1.90 to 0.45 2.29 0.88 to (0.58) 2006 8,922 33.14 to 15.13 260,712 1.90 to 0.45 1.35 19.78 to 18.06 Global Trust Series II 2010 1,904 17.06 to 16.69 28,926 2.05 to 0.45 1.30 7.07 to 5.37 2009 2,125 16.19 to 15.59 30,510 2.05 to 0.45 1.43 30.51 to 28.44 2008 2,398 12.61 to 11.95 26,665 2.05 to 0.45 1.61 (39.91) to (40.87) 2007 3,028 21.32 to 19.88 56,610 2.05 to 0.45 1.24 0.64 to (0.97) 2006 1,911 21.61 to 18.43 35,849 2.05 to 0.45 1.20 19.56 to 17.66 Health Sciences Series I 2010 1,907 22.75 to 19.49 39,069 1.90 to 0.45 0.00 15.18 to 13.52 2009 2,244 19.75 to 17.17 40,345 1.90 to 0.45 0.00 31.22 to 29.33 2008 2,673 15.05 to 13.28 37,029 1.90 to 0.45 0.00 (30.22) to (31.23) 2007 3,480 21.57 to 19.31 69,811 1.90 to 0.45 0.00 17.14 to 15.45 2006 4,163 18.41 to 13.39 72,020 1.90 to 0.45 0.00 7.89 to 6.34 Health Sciences Series II 2010 2,391 24.49 to 22.67 50,728 2.05 to 0.45 0.00 14.95 to 13.13 2009 2,553 21.31 to 20.04 47,857 2.05 to 0.45 0.00 30.96 to 28.89 2008 2,876 16.27 to 15.55 41,778 2.05 to 0.45 0.00 (30.37) to (31.48) 2007 3,394 23.36 to 22.69 71,855 2.05 to 0.45 0.00 16.91 to 15.05 2006 3,954 19.98 to 13.38 72,848 2.05 to 0.45 0.00 7.68 to 5.98 High Income Series II 2010 1,687 13.10 to 12.35 21,158 2.05 to 0.45 37.66 10.78 to 9.02 2009 1,626 11.82 to 11.33 18,650 2.05 to 0.45 18.43 80.46 to 77.6 2008 230 6.52 to 6.35 1,474 2.05 to 0.45 10.90 (43.84) to (44.73) 2007 93 11.61 to 11.49 1,071 2.05 to 0.45 1.46 (7.12) to (8.11) High Yield Series I 2010 3,166 19.91 to 18.73 61,747 1.90 to 0.45 36.88 13.27 to 11.64 2009 3,881 17.58 to 16.77 67,491 1.90 to 0.45 11.77 53.82 to 51.61 2008 4,032 11.43 to 11.06 46,087 1.90 to 0.45 8.15 (29.84) to (30.85) 2007 4,963 16.29 to 16.00 81,825 1.90 to 0.45 12.30 1.18 to (0.29) 2006 7,027 17.23 to 13.27 116,074 1.90 to 0.45 6.60 9.87 to 6.18 High Yield Series II 2010 4,143 22.33 to 18.78 81,174 2.05 to 0.45 40.90 13.03 to 11.23 2009 5,174 19.76 to 16.88 90,802 2.05 to 0.45 13.15 53.66 to 51.23 2008 4,362 12.86 to 11.16 50,595 2.05 to 0.45 8.02 (30.02) to (31.13) 2007 3,942 18.37 to 16.21 66,768 2.05 to 0.45 11.87 0.90 to (0.71) 2006 5,215 18.21 to 13.26 88,817 2.05 to 0.45 6.47 9.74 to 6.05 International Core Series I 2010 2,397 15.33 to 14.86 35,236 1.90 to 0.45 1.83 9.09 to 7.52 2009 2,759 14.05 to 13.82 37,608 1.90 to 0.45 2.41 18.11 to 16.41 2008 3,231 11.90 to 11.87 37,670 1.90 to 0.45 4.76 (38.90) to (39.78) 2007 4,161 19.72 to 19.47 80,318 1.90 to 0.45 2.14 10.92 to 9.31 2006 5,288 18.57 to 13.34 93,287 1.90 to 0.45 0.58 24.21 to 6.71
95 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H NOTES TO FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 2010 7. UNIT VALUES-- (CONTINUED)
AT DECEMBER 31, FOR THE YEARS AND PERIODS ENDED DECEMBER 31, ------------------------------------- ------------------------------------------------------ UNITS UNIT FAIR VALUE ASSETS EXPENSE RATIO INVESTMENT TOTAL RETURN SUBACCOUNT YEAR (000S) HIGHEST TO LOWEST (000S) HIGHEST TO LOWEST* INCOME RATIO** HIGHEST TO LOWEST*** ---------------------------- ---- ------- ----------------- ----------- ------------------ -------------- -------------------- International Core Series II 2010 1,664 $20.70 to $17.98 $ 26,533 2.05% to 0.45% 1.64% 8.89% to 7.16% 2009 1,799 19.32 to 16.51 26,618 2.05 to 0.45 2.16 17.99 to 16.12 2008 1,971 16.63 to 13.99 24,822 2.05 to 0.45 4.67 (39.05) to (40.02) 2007 2,356 27.73 to 22.96 49,951 2.05 to 0.45 1.84 10.63 to 8.87 2006 2,166 25.57 to 13.33 42,672 2.05 to 0.45 0.41 24.06 to 6.68 International Equity Index A Series I 2010 1,662 20.57 to 18.67 31,951 1.90 to 0.45 2.55 10.37 to 8.79 2009 806 18.64 to 17.17 14,194 1.90 to 0.45 13.38 37.24 to 35.26 2008 964 13.58 to 12.69 12,493 1.90 to 0.45 1.89 (44.80) to (45.59) 2007 1,307 24.60 to 23.33 30,978 1.90 to 0.45 3.65 14.90 to 13.24 2006 2,339 21.41 to 20.60 48,747 1.90 to 0.45 0.83 24.92 to 23.13 International Equity Index A Series II 2010 1,998 20.29 to 18.24 37,023 2.05 to 0.45 2.18 10.22 to 9.07 2009 912 18.41 to 16.82 15,753 2.05 to 0.45 13.97 36.87 to 34.69 2008 996 13.45 to 12.48 12,716 2.05 to 0.45 1.70 (44.89) to (45.77) 2007 1,301 24.41 to 23.02 30,453 2.05 to 0.45 3.43 14.65 to 12.81 2006 1,937 21.29 to 20.41 39,999 2.05 to 0.45 0.65 24.70 to 22.73 International Equity Index Series NAV 2010 2,166 10.86 to 10.62 23,431 2.05 to 1.40 2.47 9.89 to 9.18 2009 2,431 9.88 to 9.72 23,976 2.05 to 1.40 3.74 36.87 to 35.99 2008 2,852 7.22 to 7.15 20,583 2.05 to 1.40 2.60 (45.16) to (45.52) 2007 3,272 13.17 to 13.12 43,122 2.05 to 1.40 1.91 5.44 to 4.99 International Opportunities Series II 2010 2,261 17.23 to 15.74 35,029 2.05 to 0.45 1.21 12.88 to 11.09 2009 2,507 15.26 to 14.16 34,890 2.05 to 0.45 0.81 36.65 to 34.48 2008 2,821 11.17 to 10.53 29,250 2.05 to 0.45 0.90 (50.88) to (51.67) 2007 3,614 22.74 to 21.79 78,152 2.05 to 0.45 1.37 19.23 to 17.33 2006 2,220 19.07 to 13.33 40,997 2.05 to 0.45 0.33 23.35 to 6.62 International Small Company Series I 2010 3,157 15.00 to 14.76 46,829 1.90 to 0.45 2.62 22.15 to 20.40 2009 3,936 12.28 to 12.26 48,283 1.90 to 0.45 0.78 (1.76) to (1.95) International Small Company Series II 2010 2,060 14.97 to 14.70 30,456 2.05 to 0.45 2.50 21.90 to 19.97 2009 2,329 12.28 to 12.25 28,557 2.05 to 0.45 0.77 (1.76) to (1.97) International Value Series I 2010 6,982 20.45 to 19.23 123,081 1.90 to 0.45 1.90 7.50 to 5.95 2009 8,033 19.02 to 18.15 133,409 1.90 to 0.45 2.12 35.16 to 33.22 2008 9,996 14.07 to 13.62 124,275 1.90 to 0.45 3.17 (42.92) to (43.75) 2007 13,413 24.65 to 24.22 295,227 1.90 to 0.45 4.19 9.03 to 7.45 2006 17,751 22.78 to 14.14 361,944 1.90 to 0.45 1.87 29.01 to 13.12 International Value Series II 2010 6,119 23.68 to 21.72 118,156 2.05 to 0.45 1.70 7.28 to 5.58 2009 6,734 22.43 to 20.25 123,005 2.05 to 0.45 1.97 34.98 to 32.84 2008 7,623 16.88 to 15.00 104,997 2.05 to 0.45 3.07 (43.07) to (43.98) 2007 9,361 30.14 to 26.35 231,324 2.05 to 0.45 3.64 8.86 to 7.13 2006 9,830 28.23 to 14.11 228,099 2.05 to 0.45 1.69 28.69 to 12.92 Investment Quality Bond Series I 2010 9,829 23.79 to 17.46 175,113 1.90 to 0.45 5.30 6.97 to 5.43 2009 8,811 22.23 to 16.56 156,994 1.90 to 0.45 5.32 11.94 to 10.33 2008 5,071 19.86 to 15.01 103,084 1.90 to 0.45 6.59 (2.12) to (3.53) 2007 5,274 20.29 to 15.56 120,393 1.90 to 0.45 8.94 5.73 to 4.20 2006 6,261 30.98 to 13.03 136,834 1.90 to 0.45 6.21 4.34 to 1.62
96 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H NOTES TO FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 2010 7. UNIT VALUES-- (CONTINUED)
AT DECEMBER 31, FOR THE YEARS AND PERIODS ENDED DECEMBER 31, ------------------------------------- ------------------------------------------------------ UNITS UNIT FAIR VALUE ASSETS EXPENSE RATIO INVESTMENT TOTAL RETURN SUBACCOUNT YEAR (000S) HIGHEST TO LOWEST (000S) HIGHEST TO LOWEST* INCOME RATIO** HIGHEST TO LOWEST*** ---------------------------- ---- ------- ----------------- ----------- ------------------ -------------- -------------------- Investment Quality Bond Series II 2010 7,580 $19.20 to $15.22 $ 129,806 2.05% to 0.45% 4.63% 6.82% to 5.12% 2009 8,375 17.98 to 14.48 135,967 2.05 to 0.45 5.56 11.7 to 9.92 2008 6,302 16.09 to 13.17 92,405 2.05 to 0.45 5.85 (2.26) to (3.82) 2007 8,639 16.47 to 13.69 130,926 2.05 to 0.45 8.68 5.44 to 3.76 2006 7,917 15.62 to 13.00 115,907 2.05 to 0.45 5.20 4.16 to 1.27 Large Cap Series I 2010 9,394 14.14 to 13.02 125,850 1.90 to 0.45 1.05 13.23 to 11.61 2009 10,814 12.48 to 11.67 129,172 1.90 to 0.45 1.92 30.26 to 28.38 2008 12,717 9.58 to 9.09 117,779 1.90 to 0.45 1.31 (39.79) to (40.66) 2007 15,761 15.92 to 15.32 244,826 1.90 to 0.45 0.52 (5.24) to (6.17) Large Cap Series II 2010 704 14.03 to 12.81 9,264 2.05 to 0.45 0.84 13.03 to 11.24 2009 790 12.41 to 11.52 9,291 2.05 to 0.45 1.72 29.96 to 27.90 2008 932 9.55 to 9.01 8,533 2.05 to 0.45 1.09 (39.95) to (40.90) 2007 1,178 15.90 to 15.24 18,167 2.05 to 0.45 0.59 0.81 to (0.79) 2006 112 15.78 to 15.36 1,733 2.05 to 0.45 0.21 13.64 to 11.84 Large Cap Value Series I 2010 994 20.31 to 18.18 18,618 1.90 to 0.45 1.17 9.42 to 7.85 2009 1,158 18.56 to 16.85 20,019 1.90 to 0.45 1.58 10.14 to 8.56 2008 1,450 16.85 to 15.53 23,027 1.90 to 0.45 1.38 (36.20) to (37.12) 2007 2,039 26.42 to 24.69 51,302 1.90 to 0.45 0.93 3.91 to 2.40 2006 2,873 25.42 to 24.07 70,289 1.90 to 0.45 0.00 1.56 to 1.44 Large Cap Value Series II 2010 1,126 20.15 to 17.82 20,765 2.05 to 0.45 0.98 9.21 to 7.48 2009 1,134 18.45 to 16.58 19,357 2.05 to 0.45 1.42 9.86 to 8.12 2008 1,229 16.79 to 15.34 19,316 2.05 to 0.45 1.24 (36.31) to (37.32) 2007 1,608 26.36 to 24.47 40,131 2.05 to 0.45 0.61 3.71 to 2.06 2006 2,246 25.42 to 23.98 54,673 2.05 to 0.45 0.30 15.24 to 13.41 Lifestyle Aggressive Series I 2010 6,184 16.57 to 15.74 103,197 1.90 to 0.45 1.98 15.92 to 14.26 2009 6,570 14.29 to 13.77 95,283 1.90 to 0.45 1.03 35.02 to 33.08 2008 7,208 10.58 to 10.35 78,078 1.90 to 0.45 1.64 (42.25) to (43.09) 2007 9,206 18.33 to 18.19 175,525 1.90 to 0.45 9.29 8.06 to 6.50 2006 12,038 18.82 to 13.07 214,082 1.90 to 0.45 7.68 14.94 to 4.58 Lifestyle Aggressive Series II 2010 11,278 20.11 to 19.12 188,589 2.05 to 0.45 1.74 15.60 to 13.77 2009 12,202 17.67 to 16.54 178,414 2.05 to 0.45 0.85 34.85 to 32.71 2008 12,730 13.32 to 12.27 140,031 2.05 to 0.45 1.49 (42.41) to (43.33) 2007 14,689 23.50 to 21.30 285,280 2.05 to 0.45 9.17 7.92 to 6.20 2006 16,596 22.21 to 12.99 309,161 2.05 to 0.45 7.66 14.67 to 3.93 Lifestyle Balanced Series I 2010 40,354 20.69 to 16.77 699,738 1.90 to 0.45 2.74 11.24 to 9.64 2009 40,030 18.60 to 15.29 662,526 1.90 to 0.45 4.71 30.16 to 28.29 2008 35,216 14.29 to 11.92 488,816 1.90 to 0.45 2.92 (31.61) to (32.60) 2007 44,019 20.89 to 17.69 919,281 1.90 to 0.45 7.51 5.99 to 4.46 2006 49,450 21.97 to 13.28 985,780 1.90 to 0.45 5.35 12.23 to 6.23 Lifestyle Balanced Series II 2010 606,988 13.88 to 12.55 9,859,909 2.10 to 0.35 2.59 11.10 to 11.06 2009 611,485 16.63 to 11.30 9,123,269 2.05 to 0.35 4.44 30.02 to 27.83 2008 536,639 13.01 to 8.69 6,354,575 2.05 to 0.35 3.27 (30.48) to (32.84) 2007 485,069 20.05 to 19.37 8,669,581 2.05 to 0.45 7.41 5.78 to 4.10 2006 381,237 18.96 to 0.00 6,683,427 2.05 to 0.45 4.88 12.00 to 5.60 Lifestyle Conservative Series I 2010 11,548 23.32 to 17.12 220,274 1.90 to 0.45 2.68 8.63 to 7.07 2009 11,453 21.47 to 15.99 208,449 1.90 to 0.45 5.85 21.16 to 19.42 2008 8,662 17.72 to 13.39 143,844 1.90 to 0.45 4.40 (15.95) to (17.16) 2007 7,414 21.08 to 16.16 150,689 1.90 to 0.45 7.90 4.90 to 3.39 2006 7,446 21.39 to 13.18 146,048 1.90 to 0.45 4.48 7.95 to 5.48
97 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H NOTES TO FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 2010 7. UNIT VALUES-- (CONTINUED)
AT DECEMBER 31, FOR THE YEARS AND PERIODS ENDED DECEMBER 31, ------------------------------------- ------------------------------------------------------ UNITS UNIT FAIR VALUE ASSETS EXPENSE RATIO INVESTMENT TOTAL RETURN SUBACCOUNT YEAR (000S) HIGHEST TO LOWEST (000S) HIGHEST TO LOWEST* INCOME RATIO** HIGHEST TO LOWEST*** ---------------------------- ---- ------- ----------------- ----------- ------------------ -------------- -------------------- Lifestyle Conservative Series II 2010 141,829 $13.67 to $13.17 $ 2,342,621 2.10% to 0.35% 2.52% 8.49% to 5.39% 2009 133,572 15.23 to 12.60 2,071,302 2.05 to 0.35 5.98 21.01 to 18.98 2008 89,201 12.80 to 10.41 1,171,315 2.05 to 0.35 5.44 (16.69) to (17.39) 2007 40,759 17.39 to 15.49 653,822 2.05 to 0.45 7.84 4.70 to 3.03 2006 29,039 16.61 to 13.11 454,533 2.05 to 0.45 4.40 7.64 to 4.85 Lifestyle Growth Series I 2010 36,720 18.61 to 16.08 595,817 1.90 to 0.45 2.47 12.51 to 10.89 2009 35,026 16.54 to 14.50 534,792 1.90 to 0.45 3.45 32.70 to 30.79 2008 33,091 12.47 to 11.09 410,760 1.90 to 0.45 2.40 (36.89) to (37.80) 2007 38,655 19.75 to 17.82 781,228 1.90 to 0.45 7.68 7.04 to 5.49 2006 46,044 20.82 to 13.15 879,620 1.90 to 0.45 5.87 12.99 to 5.17 Lifestyle Growth Series II 2010 778,123 14.34 to 12.13 12,206,253 2.10 to 0.35 2.26 14.68 to 12.44 2009 783,017 17.07 to 10.78 11,149,868 2.05 to 0.35 3.24 32.48 to 30.25 2008 739,885 13.11 to 8.14 8,170,434 2.05 to 0.35 2.53 (34.88) to (37.96) 2007 667,867 20.56 to 21.12 12,027,024 2.05 to 0.45 7.35 6.77 to 5.07 2006 501,635 20.18 to 13.07 8,845,509 2.05 to 0.45 5.15 12.77 to 4.55 Lifestyle Moderate Series I 2010 14,332 21.82 to 16.81 265,027 1.90 to 0.45 2.70 10.06 to 8.47 2009 13,923 19.83 to 15.50 245,632 1.90 to 0.45 4.95 26.69 to 24.87 2008 12,359 15.65 to 12.41 188,774 1.90 to 0.45 3.72 (24.57) to (25.66) 2007 14,006 20.75 to 16.70 290,199 1.90 to 0.45 7.68 4.82 to 3.30 2006 15,205 21.79 to 13.22 303,646 1.90 to 0.45 4.56 9.92 to 5.73 Lifestyle Moderate Series II 2010 182,151 13.59 to 13.20 2,947,542 2.10 to 0.35 2.53 10.01 to 8.75 2009 175,830 15.75 to 12.00 2,638,640 2.05 to 0.35 5.00 26.42 to 24.29 2008 137,848 12.67 to 9.49 1,689,787 2.05 to 0.35 4.26 (24.06) to (25.90) 2007 108,763 18.46 to 17.10 1,817,725 2.05 to 0.45 7.55 4.61 to 2.94 2006 84,168 17.64 to 0.00 1,387,766 2.05 to 0.45 4.32 9.69 to 5.10 Mid Cap Index Series I 2010 1,987 24.01 to 19.85 41,949 1.90 to 0.45 1.06 25.42 to 23.61 2009 2,155 19.15 to 16.06 36,668 1.90 to 0.45 1.02 36.15 to 34.19 2008 2,545 14.06 to 11.97 32,196 1.90 to 0.45 0.93 (36.70) to (37.62) 2007 2,828 22.22 to 19.19 57,218 1.90 to 0.45 1.27 7.03 to 5.48 2006 3,648 20.76 to 12.72 69,718 1.90 to 0.45 0.65 9.22 to 1.72 Mid Cap Index Series II 2010 4,172 22.77 to 21.59 81,260 2.05 to 0.45 0.82 25.24 to 23.26 2009 4,703 18.47 to 17.24 74,103 2.05 to 0.45 0.84 35.77 to 33.61 2008 5,042 13.82 to 12.70 59,488 2.05 to 0.45 0.70 (36.81) to (37.82) 2007 4,747 22.23 to 20.09 89,771 2.05 to 0.45 0.85 6.85 to 5.14 2006 3,931 21.22 to 12.70 70,695 2.05 to 0.45 0.46 8.95 to (0.67) Mid Cap Stock Series I 2010 10,956 20.37 to 20.17 183,429 1.90 to 0.45 0.00 22.53 to 20.77 2009 11,822 16.70 to 16.62 167,211 1.90 to 0.45 0.00 30.76 to 28.88 2008 13,282 12.96 to 12.71 148,055 1.90 to 0.45 0.00 (44.02) to (44.83) 2007 14,502 23.49 to 22.71 292,411 1.90 to 0.45 0.00 23.01 to 21.24 2006 18,381 19.59 to 12.82 304,720 1.90 to 0.45 0.00 13.04 to 2.55 Mid Cap Stock Series II 2006 18,381 19.59 to 12.82 304,720 1.90 to 0.45 0.00 13.04 to 2.55 2009 6,241 19.57 to 19.35 107,670 2.05 to 0.45 0.00 30.46 to 28.39 2008 6,954 15.07 to 15.00 93,272 2.05 to 0.45 0.00 (44.12) to (45.01) 2007 7,457 27.41 to 26.84 182,162 2.05 to 0.45 0.00 22.80 to 20.84 2006 7,959 22.77 to 12.80 161,929 2.05 to 0.45 0.00 12.80 to 2.40 Mid Value Series I 2010 4,754 18.31 to 16.87 82,548 1.90 to 0.45 2.00 15.64 to 13.97 2009 5,578 15.84 to 14.80 84,585 1.90 to 0.45 0.45 35.03 to 33.73 Mid Value Series II 2010 5,481 18.24 to 16.66 93,544 2.05 to 0.45 1.80 15.27 to 13.44 2009 6,142 15.82 to 14.68 92,029 2.05 to 0.45 0.35 45.36 to 43.05 2008 700 10.89 to 10.26 7,325 2.05 to 0.45 0.92 (35.17) to (36.21) 2007 890 16.79 to 16.09 14,516 2.05 to 0.45 1.68 (0.15) to (1.74) 2006 938 16.82 to 16.38 15,484 2.05 to 0.45 0.06 19.51 to 17.62
98 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H NOTES TO FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 2010 7. UNIT VALUES-- (CONTINUED)
AT DECEMBER 31, FOR THE YEARS AND PERIODS ENDED DECEMBER 31, ------------------------------------- ------------------------------------------------------ UNITS UNIT FAIR VALUE ASSETS EXPENSE RATIO INVESTMENT TOTAL RETURN SUBACCOUNT YEAR (000S) HIGHEST TO LOWEST (000S) HIGHEST TO LOWEST* INCOME RATIO** HIGHEST TO LOWEST*** ---------------------------- ---- ------- ----------------- ----------- ------------------ -------------- -------------------- Money Market Series I 2010 11,385 $16.29 to $12.35 $ 176,239 2.10% to 0.45% 0.00% (0.45)% to (1.22)% 2009 15,261 16.36 to 12.61 240,290 1.90 to 0.45 0.22 (0.25) to (1.69) 2008 22,608 16.40 to 12.83 365,001 1.90 to 0.45 1.73 1.31 to (0.16) 2007 19,225 16.19 to 12.85 312,447 1.90 to 0.45 4.46 4.09 to 2.58 2006 19,705 19.67 to 12.53 311,440 1.90 to 0.45 4.36 3.97 to 2.18 Money Market Series II 2010 65,835 12.49 to 12.20 826,856 2.05 to 0.35 0.00 (0.35) to (2.03) 2009 88,917 12.53 to 12.45 1,133,525 2.05 to 0.35 0.08 (0.27) to (1.95) 2008 107,097 12.70 to 12.56 1,383,024 2.05 to 0.35 1.38 0.52 to (0.51) 2007 33,634 13.80 to 12.76 434,277 2.05 to 0.45 4.23 3.88 to 2.22 2006 24,354 13.28 to 12.42 305,880 2.05 to 0.45 4.20 3.77 to 2.04 Money Market Trust B Series NAV 2010 2,097 12.57 to 12.27 26,236 2.05 to 1.40 0.05 -1.34 to -1.98 2009 2,575 12.74 to 12.52 32,692 2.05 to 1.40 0.49 (0.92) to (1.56) 2008 2,982 12.86 to 12.72 38,239 2.05 to 1.40 2.10 0.69 to 0.04 2007 3,382 12.77 to 12.71 43,140 2.05 to 1.40 3.06 2.14 to 1.70 Mutual Shares Series I 2010 14,733 11.72 to 11.47 172,166 1.55 to 0.80 2.97 10.63 to 9.80 2009 11,608 10.59 to 10.44 122,736 1.55 to 0.80 2.01 26.32 to 25.38 2008 2,191 8.38 to 8.33 18,360 1.55 to 0.80 2.97 (32.93) to (33.37) Natural Resources Series II 2010 4,484 47.65 to 42.16 174,979 2.05 to 0.45 0.42 14.36 to 12.54 2009 4,957 41.67 to 37.46 173,158 2.05 to 0.45 0.68 58.18 to 55.67 2008 4,520 26.34 to 24.06 103,282 2.05 to 0.45 0.28 (51.93) to (52.70) 2007 5,633 54.80 to 50.87 279,654 2.05 to 0.45 0.82 39.80 to 37.57 2006 5,989 39.20 to 12.33 222,307 2.05 to 0.45 0.40 21.49 to (1.39) Optimized All Cap Series II 2010 3,600 19.24 to 17.02 63,655 2.05 to 0.45 0.92 18.68 to 16.80 2009 4,142 16.21 to 14.57 62,407 2.05 to 0.45 1.17 27.45 to 25.42 2008 4,771 12.72 to 11.62 57,017 2.05 to 0.45 0.62 (43.50) to (44.40) 2007 5,614 22.52 to 20.90 120,043 2.05 to 0.45 0.87 3.10 to 1.46 2006 157 21.84 to 20.60 3,294 2.05 to 0.45 0.78 14.39 to 12.58 Optimized Value Series II 2010 851 14.64 to 13.16 11,584 2.05 to 0.45 1.70 12.6 to 10.81 2009 969 13.00 to 11.87 11,846 2.05 to 0.45 1.88 23.95 to 21.98 2008 1,107 10.49 to 9.74 11,037 2.05 to 0.45 2.09 (41.63) to (42.56) 2007 1,358 17.97 to 16.95 23,442 2.05 to 0.45 1.02 (5.82) to (7.32) 2006 278 19.08 to 18.29 5,139 2.05 to 0.45 1.46 20.51 to 18.60 Pacific Rim Series I 2010 0 18.95 to 17.92 0 1.90 to 0.45 0.44 1.96 to 1.47 2009 1,717 18.59 to 17.66 20,228 1.90 to 0.45 1.05 31.73 to 29.83 2008 2,021 14.11 to 13.60 18,180 1.90 to 0.45 1.42 (40.28) to (41.15) 2007 2,850 23.63 to 23.12 43,926 1.90 to 0.45 1.79 8.65 to 7.08 2006 3,952 21.82 to 12.26 55,902 1.90 to 0.45 0.94 10.55 to (1.94) Pacific Rim Series II 2010 0 22.89 to 19.39 0 2.05 to 0.45 0.43 1.97 to 1.44 2009 1,249 22.56 to 19.01 21,147 2.05 to 0.45 0.86 31.35 to 29.27 2008 1,096 17.45 to 14.48 14,433 2.05 to 0.45 1.14 (40.36) to (41.31) 2007 1,748 29.74 to 24.27 39,753 2.05 to 0.45 1.49 8.35 to 6.62 2006 1,839 27.99 to 12.26 39,724 2.05 to 0.45 0.74 10.42 to (1.95) PIMCO All Asset 2010 1,850 18.60 to 16.72 31,947 2.05 to 0.45 7.07 12.20 to 10.42 2009 1,526 16.57 to 15.14 23,774 2.05 to 0.45 6.80 20.77 to 18.85 2008 1,542 13.72 to 12.74 20,097 2.05 to 0.45 5.31 (16.55) to (17.88) 2007 1,761 16.44 to 15.51 27,809 2.05 to 0.45 6.56 7.51 to 5.80 2006 2,705 15.30 to 14.66 40,167 2.05 to 0.45 4.68 3.89 to 2.25
99 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H NOTES TO FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 2010 7. UNIT VALUES-- (CONTINUED)
AT DECEMBER 31, FOR THE YEARS AND PERIODS ENDED DECEMBER 31, ------------------------------------- ------------------------------------------------------ UNITS UNIT FAIR VALUE ASSETS EXPENSE RATIO INVESTMENT TOTAL RETURN SUBACCOUNT YEAR (000S) HIGHEST TO LOWEST (000S) HIGHEST TO LOWEST* INCOME RATIO** HIGHEST TO LOWEST*** ---------------------------- ---- ------- ----------------- ----------- ------------------ -------------- -------------------- Real Estate Securities Series I 2010 1,872 $29.26 to $26.14 $ 55,339 1.90% to 0.45% 1.84% 28.62% to 26.77% 2009 2,091 22.75 to 20.62 48,549 1.90 to 0.45 3.38 29.59 to 27.72 2008 2,584 17.55 to 16.15 46,813 1.90 to 0.45 3.13 (39.70) to (40.57) 2007 3,404 29.11 to 27.17 103,497 1.90 to 0.45 2.61 (15.99) to (17.21) 2006 5,075 38.25 to 15.69 185,688 1.90 to 0.45 1.79 37.49 to 25.49 Real Estate Securities Series II 2010 3,033 27.62 to 23.49 72,145 2.05 to 0.45 1.63 28.29 to 26.26 2009 3,297 21.53 to 18.61 62,000 2.05 to 0.45 3.26 29.46 to 27.40 2008 3,569 16.63 to 14.60 53,641 2.05 to 0.45 2.88 (39.85) to (40.81) 2007 4,179 27.65 to 24.67 106,983 2.05 to 0.45 2.10 (16.15) to (17.49) 2006 4,890 33.50 to 15.66 153,620 2.05 to 0.45 1.58 37.20 to 25.32 Real Return Bond Series II 2010 4,727 17.77 to 15.72 77,016 2.05 to 0.45 10.80 8.18 to 6.46 2009 5,613 16.42 to 14.76 85,502 2.05 to 0.45 9% 18.69 to 16.81 2008 5,990 13.84 to 12.64 77,729 2.05 to 0.45 0.55 (11.94) to (13.34) 2007 5,983 15.71 to 14.58 89,176 2.05 to 0.45 6.36 10.59 to 8.83 2006 7,163 14.21 to 13.40 97,633 2.05 to 0.45 2.44 (0.26) to (1.83) Science & Technology Series I 2010 8,374 14.85 to 11.45 113,408 1.90 to 0.45 0.00 24.05 to 22.27 2009 9,847 11.97 to 9.36 108,495 1.90 to 0.45 0.00 63.75 to 61.39 2008 11,304 7.31 to 5.80 77,390 1.90 to 0.45 0.00 (44.70) to (45.50) 2007 14,544 13.22 to 10.64 183,287 1.90 to 0.45 0.00 19.03 to 17.30 2006 19,135 12.90 to 4.53 208,202 1.90 to 0.45 0.00 5.05 to 1.31 Science & Technology Series II 2010 3,165 20.46 to 19.86 53,799 2.05 to 0.45 0.00 23.83 to 21.86 2009 3,709 16.79 to 16.04 51,365 2.05 to 0.45 0.00 63.40 to 60.81 2008 3,149 10.44 to 9.81 27,165 2.05 to 0.45 0.00 (44.79) to (45.67) 2007 4,023 19.21 to 17.77 63,303 2.05 to 0.45 0.00 18.73 to 16.84 2006 4,062 16.51 to 11.23 54,950 2.05 to 0.45 0.00 4.90 to 1.16 Short Term Government Income Series I 2010 6,422 12.69 to 12.57 81,022 1.90 to 0.45 1.41 1.55 to 0.57 Short Term Government Income Series II 2010 5,947 12.68 to 12.54 74,874 2.05 to 0.45 1.24 1.43 to 0.34 Small Cap Growth Series I 2010 15 13.40 to 13.11 203 1.55 to 0.80 0.00 21.10 to 20.20 2009 8 11.07 to 10.91 86 1.55 to 0.80 0.00 33.51 to 32.51 2008 2 8.29 to 8.23 17 1.55 to 0.80 0.00 (33.69) to (34.13) Small Cap Growth Series II 2010 1,880 19.76 to 18.04 33,604 2.05 to 0.45 0.00 21.16 to 19.24 2009 2,052 16.31 to 15.13 30,671 2.05 to 0.45 0.00 33.82 to 31.70 2008 2,215 12.18 to 11.49 25,137 2.05 to 0.45 0.00 (40.07) to (41.03) 2007 1,950 20.33 to 19.48 37,591 2.05 to 0.45 0.00 13.26 to 11.45 2006 1,718 17.95 to 12.40 29,891 2.05 to 0.45 0.00 12.71 to (0.81) Small Cap Index Series I 2010 1,068 17.83 to 12.50 18,602 1.90 to 0.45 0.51 25.80 to 23.99 2009 1,130 14.38 to 12.50 15,815 1.90 to 0.45 0.80 26.08 to 24.26 2008 1,375 12.16 to 11.57 15,410 1.90 to 0.45 1.23 (34.01) to (34.96) 2007 1,722 17.80 to 12.50 29,608 1.90 to 0.45 1.63 (2.61) to (4.02) 2006 2,274 18.92 to 17.47 40,548 1.90 to 0.45 0.52 17.08 to 15.40
100 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H NOTES TO FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 2010 7. UNIT VALUES-- (CONTINUED)
AT DECEMBER 31, FOR THE YEARS AND PERIODS ENDED DECEMBER 31, ------------------------------------- ------------------------------------------------------ UNITS UNIT FAIR VALUE ASSETS EXPENSE RATIO INVESTMENT TOTAL RETURN SUBACCOUNT YEAR (000S) HIGHEST TO LOWEST (000S) HIGHEST TO LOWEST* INCOME RATIO** HIGHEST TO LOWEST*** ---------------------------- ---- ------- ----------------- ----------- ------------------ -------------- -------------------- Small Cap Index Series II 2010 3,570 $21.23 to $19.67 $ 64,425 2.05% to 0.45% 0.28% 25.53% to 23.54% 2009 4,053 17.19 to 15.67 58,966 2.05 to 0.45 0.61 25.78 to 23.78 2008 4,455 13.88 to 12.46 52,121 2.05 to 0.45 1.03 (34.13) to (35.18) 2007 5,338 21.42 to 18.91 95,874 2.05 to 0.45 0.90 (2.79) to (4.34) 2006 2,385 22.48 to 18.19 44,538 2.05 to 0.45 0.34 16.82 to 14.97 Small Cap Opportunities Series I 2010 1,570 23.39 to 20.93 33,857 1.90 to 0.45 0.00 29.09 to 27.23 2009 1,686 18.12 to 16.45 28,464 1.90 to 0.45 0.00 33.26 to 31.34 2008 2,041 13.60 to 12.53 26,145 1.90 to 0.45 2.31 (42.39) to (43.23) 2007 2,602 23.61 to 22.06 58,486 1.90 to 0.45 1.89 (8.08) to (9.41) 2006 3,561 25.68 to 24.35 88,037 1.90 to 0.45 0.73 9.96 to 8.38 Small Cap Opportunities Series II 2010 1,697 23.12 to 20.45 34,524 2.05 to 0.45 0.00 28.76 to 26.72 2009 1,672 17.95 to 16.14 26,864 2.05 to 0.45 0.00 33.00 to 30.89 2008 1,805 13.50 to 12.33 22,321 2.05 to 0.45 2.10 (42.51) to (43.43) 2007 2,158 23.48 to 21.79 47,273 2.05 to 0.45 1.53 (8.22) to (9.69) 2006 2,749 25.58 to 12.24 66,874 2.05 to 0.45 0.55 9.70 to (2.06) Small Cap Value Series I 2010 27 15.61 to 15.28 416 1.55 to 0.80 0.40 25.10 to 24.16 2009 19 12.48 to 12.30 241 1.55 to 0.80 0.95 27.63 to 26.67 2008 1 9.78 to 9.71 8 1.55 to 0.80 4.41 (21.77) to (22.29) Small Cap Value Series II 2010 2,769 19.28 to 17.61 49,174 2.05 to 0.45 0.15 25.36 to 23.38 2009 2,611 15.38 to 14.27 37,414 2.05 to 0.45 0.40 27.81 to 25.78 2008 3,964 12.03 to 11.35 45,279 2.05 to 0.45 1.00 (26.60) to (27.77) 2007 4,136 16.39 to 15.71 65,291 2.05 to 0.45 0.56 (3.57) to (5.11) 2006 4,012 17.00 to 13.58 66,826 2.05 to 0.45 0.00 18.50 to 8.65 Small Company Value Series I 2010 3,138 27.13 to 23.07 77,464 1.90 to 0.45 1.34 20.81 to 19.08 2009 3,877 22.46 to 19.37 80,022 1.90 to 0.45 0.37 27.11 to 25.28 2008 4,835 17.67 to 15.46 79,388 1.90 to 0.45 0.68 (27.38) to (28.43) 2007 6,599 24.33 to 21.61 150,842 1.90 to 0.45 0.15 (1.64) to (3.07) 2006 9,133 24.91 to 12.53 214,490 1.90 to 0.45 0.07 14.90 to 0.21 Small Company Value Series II 2010 3,908 22.59 to 22.53 79,850 2.05 to 0.45 1.16 20.61 to 18.70 2009 4,564 18.98 to 18.73 78,532 2.05 to 0.45 0.23 26.90 to 24.89 2008 5,166 15.20 to 14.76 71,273 2.05 to 0.45 0.47 (27.54) to (28.70) 2007 6,481 21.32 to 20.37 125,798 2.05 to 0.45 0.00 (1.85) to (3.42) 2006 8,527 22.15 to 12.51 172,275 2.05 to 0.45 0.00 14.69 to 0.07 Smaller Company Growth Series I 2010 2,378 16.36 to 16.10 38,476 1.90 to 0.45 0.00 24.48 to 22.69 2009 2,847 13.14 to 13.12 37,391 1.90 to 0.45 0.00 5.16 to 4.96 Smaller Company Growth Series II 2010 1,433 16.33 to 16.03 23,083 2.05 to 0.45 0.00 24.29 to 22.32 2009 1,649 13.14 to 13.11 21,623 2.05 to 0.45 0.00 5.09 to 4.87 Strategic Bond Series I 2010 0 22.61 to 17.92 0 1.90 to 0.45 9.47 11.81 to 10.45 2009 3,627 20.22 to 16.22 73,892 1.90 to 0.45 8.12 22.86 to 21.09 2008 3,957 16.46 to 13.40 66,522 1.90 to 0.45 6.35 (16.46) to (17.66) 2007 5,699 19.70 to 16.27 115,931 1.90 to 0.45 9.20 (0.61) to (2.04) 2006 6,540 21.83 to 13.31 135,033 1.90 to 0.45 6.82 6.60 to 5.05 Strategic Bond Series II 2010 0 19.21 to 15.09 0 2.05 to 0.45 9.56 11.67 to 10.17 2009 4,336 17.20 to 13.70 67,515 2.05 to 0.45 8.09 22.57 to 20.63 2008 3,983 14.03 to 11.36 51,326 2.05 to 0.45 6.51 (16.67) to (18.00) 2007 5,439 16.84 to 13.85 85,480 2.05 to 0.45 8.82 (0.71) to (2.29) 2006 6,041 16.96 to 13.29 97,092 2.05 to 0.45 6.78 6.42 to 4.70
101 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H NOTES TO FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 2010 7. UNIT VALUES-- (CONTINUED)
AT DECEMBER 31, FOR THE YEARS AND PERIODS ENDED DECEMBER 31, ------------------------------------- ------------------------------------------------------ UNITS UNIT FAIR VALUE ASSETS EXPENSE RATIO INVESTMENT TOTAL RETURN SUBACCOUNT YEAR (000S) HIGHEST TO LOWEST (000S) HIGHEST TO LOWEST* INCOME RATIO** HIGHEST TO LOWEST*** ---------------------------- ---- ------- ----------------- ----------- ------------------ -------------- -------------------- Strategic Income Opportunities Series 2010 4,069 $19.69 to $17.88 $ 74,818 1.90% to 0.45% 7.29% 1.76% to 1.53% Strategic Income Opportunities Series I 2010 4,426 19.68 to 17.69 78,798 2.05 to 0.45 20.62 15.00 to 13.18 2009 768 17.11 to 15.63 12,305 2.05 to 0.45 6.37 25.87 to 23.87 2008 711 13.59 to 12.62 9,164 2.05 to 0.45 9.38 (9.18) to (10.62) 2007 1,038 14.97 to 14.11 14,897 2.05 to 0.45 1.82 5.06 to 3.38 2006 1,264 14.25 to 13.65 17,467 2.05 to 0.45 2.95 3.40 to 1.77 Total Bond Market Trust A Series I 2010 3,043 12.63 to 12.46 40,747 2.10 to 0.45 3.56 1.01 to (0.32) 2009 64 13.63 to 12.35 869 2.05 to 1.20 2.31 2.10 to (1.19) 2008 67 13.49 to 13.35 906 2.05 to 1.40 2.29 4.05 to 3.37 2007 35 12.97 to 12.91 459 2.05 to 1.40 2.75 3.74 to 3.29 Total Bond Market Trust A - Series NAV 2010 6,262 13.64 to 13.47 85,282 1.55 to 0.80 4.17 4.99 to 4.20 2009 2,361 12.99 to 12.93 30,655 1.55 to 0.80 5.95 3.94 to 3.43 Total Return Series I 2010 11,096 24.66 to 18.81 234,959 1.90 to 0.45 2.38 7.16 to 5.62 2009 12,463 23.01 to 17.81 250,132 1.90 to 0.45 3.98 13.08 to 11.46 2008 13,162 20.35 to 15.98 237,527 1.90 to 0.45 4.71 2.30 to 0.83 2007 14,285 19.89 to 15.85 254,967 1.90 to 0.45 7.40 8.00 to 6.44 2006 17,147 18.42 to 12.93 286,638 1.90 to 0.45 3.54 3.58 to 1.65 Total Return Series II 2010 17,037 20.34 to 16.24 310,049 2.05 to 0.45 2.14 6.92 to 5.23 2009 17,776 19.02 to 15.43 306,156 2.05 to 0.45 3.94 12.85 to 11.06 2008 15,080 16.85 to 13.90 233,587 2.05 to 0.45 4.73 2.14 to 0.51 2007 13,300 16.50 to 13.83 204,912 2.05 to 0.45 7.15 7.79 to 6.07 2006 14,890 15.31 to 12.91 215,790 2.05 to 0.45 3.36 3.44 to 1.33 Total Stock Market Index Series I 2010 1,105 13.92 to 13.25 13,295 1.90 to 0.45 1.30 16.67 to 14.99 2009 1,289 12.11 to 11.36 13,420 1.90 to 0.45 1.60 28.29 to 26.44 2008 1,405 9.57 to 8.85 11,555 1.90 to 0.45 1.46 (37.48) to (38.39) 2007 1,875 15.54 to 14.16 24,997 1.90 to 0.45 2.16 4.70 to 3.19 2006 2,366 15.22 to 12.49 30,453 1.90 to 0.45 1.00 14.78 to 13.13 Total Stock Market Index Series II 2010 2,547 17.60 to 17.32 39,945 2.05 to 0.45 1.07 16.36 to 14.52 2009 3,056 15.37 to 14.88 41,686 2.05 to 0.45 1.40 27.95 to 25.92 2008 3,348 12.21 to 11.63 36,104 2.05 to 0.45 1.29 (37.57) to (38.57) 2007 4,118 19.87 to 18.63 71,822 2.05 to 0.45 1.16 4.51 to 2.84 2006 1,796 19.39 to 16.20 30,203 2.05 to 0.45 0.86 14.58 to 12.76
102 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H NOTES TO FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 2010 7. UNIT VALUES-- (CONTINUED)
AT DECEMBER 31, FOR THE YEARS AND PERIODS ENDED DECEMBER 31, ------------------------------------- ------------------------------------------------------ UNITS UNIT FAIR VALUE ASSETS EXPENSE RATIO INVESTMENT TOTAL RETURN SUBACCOUNT YEAR (000S) HIGHEST TO LOWEST (000S) HIGHEST TO LOWEST* INCOME RATIO** HIGHEST TO LOWEST*** ---------------------------- ---- ------- ----------------- ----------- ------------------ -------------- -------------------- Ultra Short Term Bond Series I 2010 54 $12.47 to $12.44 $ 677 1.55% to 0.80% 1.41% (0.20)% to (0.47)% Ultra Short Term Bond Series II 2010 2,854 12.47 to 12.38 35,418 2.10 to 0.35 1.17 (0.23) to (0.95) U.S. Government Securities Series I 2010 0 19.88 to 14.64 0 1.90 to 0.45 0.96 2.21 to 1.72 2009 4,726 19.45 to 14.39 95,868 1.90 to 0.45 2.93 7.90 to 6.35 2008 5,539 18.02 to 13.53 105,228 1.90 to 0.45 3.70 (1.85) to (3.27) 2007 6,153 18.36 to 13.99 120,828 1.90 to 0.45 8.16 2.68 to 1.20 2006 7,000 23.58 to 12.99 136,847 1.90 to 0.45 5.14 4.09 to 2.43 U.S. Government Securities Series II 2010 0 15.79 to 13.23 0 2.05 to 0.45 0.76 2.14 to 1.60 2009 6,154 15.46 to 13.02 86,991 2.05 to 0.45 2.89 7.74 to 6.03 2008 6,098 14.35 to 12.28 81,097 2.05 to 0.45 3.94 (2.08) to (3.64) 2007 5,108 14.66 to 12.75 70,264 2.05 to 0.45 7.87 2.46 to 0.83 2006 5,486 14.31 to 12.64 74,548 2.05 to 0.45 5.01 4.01 to 2.08 U.S. High Yield Series II 2010 0 18.08 to 16.56 0 2.05 to 0.45 41.02 9.37 to 7.90 2009 408 16.54 to 15.35 6,401 2.05 to 0.45 0.098 45.72 to 43.41 2008 189 11.35 to 10.70 2,055 2.05 to 0.45 6.50 (21.41) to (22.66) 2007 152 14.44 to 13.84 2,124 2.05 to 0.45 10.08 2.22 to 0.59 2006 183 14.12 to 13.75 2,539 2.05 to 0.45 3.30 8.97 to 7.25 Utilities Series I 2010 1,163 21.72 to 21.69 22,951 1.90 to 0.45 2.23 13.41 to 11.78 2009 1,410 19.40 to 19.15 24,792 1.90 to 0.45 4.66 33.17 to 31.25 2008 1,675 14.78 to 14.38 22,339 1.90 to 0.45 2.42 (38.92) to (39.81) 2007 2,640 24.56 to 23.54 58,247 1.90 to 0.45 1.91 26.83 to 24.99 2006 3,127 19.86 to 17.19 54,992 1.90 to 0.45 2.27 30.42 to 28.55 Utilities Series II 2010 908 32.99 to 30.27 26,637 2.05 to 0.45 2.11 13.11 to 11.32 2009 1,087 29.17 to 27.19 28,487 2.05 to 0.45 4.54 32.87 to 30.76 2008 1,290 21.95 to 20.79 25,714 2.05 to 0.45 2.18 (39.01) to (39.98) 2007 1,984 35.99 to 34.64 65,472 2.05 to 0.45 1.64 26.53 to 24.51 2006 2,219 28.45 to 24.79 58,597 2.05 to 0.45 2.10 30.18 to 28.12 Value Opportunities 2010 143 64.78 to 16.88 4,893 1.90 to 1.40 0.36 26.71 to 26.08 2009 167 51.13 to 13.39 4,610 1.90 to 1.40 0.49 26.46 to 25.83 2008 225 40.43 to 10.64 4,838 1.90 to 1.40 0.49 (41.03) to (41.33) 2007 299 68.56 to 18.13 11,280 1.90 to 1.40 0.12 (2.42) to (2.91) 2006 362 70.26 to 18.68 14,990 1.90 to 1.40 0.11 11.11 to 10.56 Value Series I 2010 5,104 24.50 to 18.68 104,428 1.90 to 0.45 0.98 21.67 to 19.92 2009 5,781 20.14 to 15.58 99,043 1.90 to 0.45 1.36 40.55 to 38.52 2008 4,528 14.33 to 11.25 67,974 1.90 to 0.45 1.00 (41.14) to (41.99) 2007 5,824 24.34 to 19.39 154,363 1.90 to 0.45 1.33 7.73 to 6.17 2006 7,252 27.46 to 13.65 180,671 1.90 to 0.45 0.38 20.50 to 9.20 Value Series II 2010 1,628 24.20 to 21.88 31,318 2.05 to 0.45 0.77 21.41 to 19.49 2009 1,798 20.25 to 18.02 28,922 2.05 to 0.45 1.12 40.16 to 37.94 2008 2,060 14.68 to 12.86 24,021 2.05 to 0.45 0.79 (41.22) to (42.16) 2007 2,511 25.39 to 21.87 50,705 2.05 to 0.45 1.00 7.52 to 5.80 2006 2,811 24.08 to 13.63 54,277 2.05 to 0.45 0.20 20.26 to 9.04
* These amounts represent the annualized contract expenses of the variable account, consisting primarily of mortality and expense charges, for each period indicated. The ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to policyholder accounts through the redemption of units and expenses of the underlying Portfolio are excluded. ** These ratios, which are not annualized, represent the distributions from net investment income received by the subaccount from the underlying Portfolio, net of management fees assessed by the portfolio manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense charges, that are assessed against policyholder accounts either through the reductions in the unit values or the redemptions of units. The recognition of investment income by the subaccount is affected by the timing of the declaration of dividends by the underlying Portfolio in which the subaccounts invest. *** These amounts represent the total return for the periods indicated, including changes in the value of the underlying Portfolio, and expenses assessed through the reduction of unit values. These ratios do not include any expenses assessed through the redemption of units. Investment options indicated in footnote 1 with a date notation, if any, denote the effective date of that investment option in the variable account. The total return is calculated for the period indicated or from the effective date through the end of the reporting period. For closed sub-accounts, the total return is calculated from the beginning of the reporting period to the date the sub-account closed. As the total return is presented as a range of minimum to maximum values, based on the product grouping representing the minimum and maximum expense ratio amounts, some individual contract total returns are not within the ranges presented. 103 JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H NOTES TO FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 2010 8. DIVERSIFICATION REQUIREMENTS Under the provisions of Section 817(h) of the Internal Revenue Code, a variable annuity contract, other than a contract issued in connection with certain types of employee benefits plans, will not be treated as an annuity contract for federal tax purposes for any period for which the investments of the segregated asset account on which the contract is based are not adequately diversified. The Code provides that the "adequately diversified" requirement may be met if the underlying investments satisfy either a statutory safe harbor test or diversification requirements set forth in regulations issued by the Secretary of Treasury. The Company believes that the Account satisfies the current requirements of the regulations, and it intends that the Account will continue to meet such requirements. 104 PART C OTHER INFORMATION Guide to Name Changes and Successions: NAME CHANGES
DATE OF CHANGE OLD NAME NEW NAME -------------- ---------------------------------------- ----------------------------------------------- October 1, 1997 NASL Variable Account The Manufacturers Life Insurance Company of North America Separate Account A October 1, 1997 North American Security Life Insurance The Manufacturers Life Insurance Company Company of North America November 1, 1997 NAWL Holding Co., Inc. Manulife-Wood Logan Holding Co., Inc. September 24, 1999 Wood Logan Associates, Inc. Manulife Wood Logan, Inc January 1, 2005 The Manufacturers Life Insurance Company John Hancock Life Insurance Company (U.S.A.) (U.S.A.) Separate Account A Separate Account A January 1, 2005 The Manufacturers Life Insurance Company John Hancock Life Insurance Company (U.S.A.) (U.S.A.) January 1, 2005 Manulife Financial Securities LLC John Hancock Distributors LLC January 1, 2005 Manufacturers Securities Services LLC John Hancock Investment Management Services LLC
On September 30, 1997, Manufacturers Securities Services, LLC succeeded to the business of NASL Financial Services, Inc. The following changes became effective January 1, 2002: (a) The Manufacturers Life Insurance Company of North America ("Manulife North America") merged into The Manufacturers Life Insurance Company (U.S.A.) with the latter becoming the owner of all of Manulife North America's assets; (b) Manulife Financial Securities LLC became the successor broker-dealer to Manufacturers Securities Services, LLC. * * * * * Item 24. Financial Statements and Exhibits (a) Financial Statements (1) Financial Statements of the Registrant, John Hancock Life Insurance Company (U.S.A.) Separate Account H. [FILED HEREWITH] (2) Financial Statements of the Depositor, John Hancock Life Insurance Company (U.S.A.). [FILED HEREWITH] (b) Exhibits (1) (i) Resolution of the Board of Directors of Manufacturers Life Insurance Company (U.S.A.) establishing The Manufacturers Life Insurance Company Separate Account H, incorporated by reference to Exhibit (1)(i) to Pre-Effective Amendment No. 1 to Registration Statement, File No. 333-70728, filed on January 2, 2002 (the "Pre-Effective Amendment"). (2) Agreements for custody of securities and similar investments - NOT APPLICABLE. (3) (i) Underwriting Agreement dated August 10, 1995, incorporated by reference to Exhibit (b)(3)(i) to Form N-4, File Number 033-76162, filed on February 25, 1998. (ii) Distribution and Servicing Agreement dated February 17, 2009, incorporated by reference to Exhibit 24 (b)(3)(ii) to Post-Effective Amendment No. 31 to Registration Statement, File No. 333-70728, filed on April 30, 2009. (iii) General Agent and Broker Dealer Selling Agreement, incorporated by reference to Exhibit 24(b)(3)(iii) to Post-Effective Amendment No. 31 to Registration Statement, File No. 333-70728, filed on April 30, 2009. (4) (a) (i) Form of Specimen Flexible Purchase Payment Individual Deferred Variable Annuity Contract (ICC11-VENTURE.11) - Incorporated by reference to Exhibit 24(b)(4)(a)(i) to this Registration Statement, File No. 333-172473, filed on February 28, 2011. (ii) Form of Specifications Page (ICC11-SP.VEN-L.11) - Incorporated by reference to Exhibit 24(b)(4)(a)(ii) to this Registration Statement, File No. 333-172473, filed on February 28, 2011. (b) (i) Form of Income Plus for Life 6.11 Rider - single life Qual (ICC11-BR001Q.11) - Incorporated by reference to Exhibit 24(b)(4)(b)(i) to this Registration Statement, File No. 333-172473, filed on February 28, 2011. (ii) Form of Income Plus for Life 6.11 Rider - single life NQ (ICC11-BR001NQ.11) - Incorporated by reference to Exhibit 24(b)(4)(b)(ii) to this Registration Statement, File No. 333-172473, filed on February 28, 2011. (iii) Form of Income Plus for Life 6.11 Rider - joint life Qual (ICC11-BR002Q.11) - Incorporated by reference to Exhibit 24(b)(4)(b)(iii) to this Registration Statement, File No. 333-172473, filed on February 28, 2011. (iv) Form of Income Plus for Life 6.11 Rider - joint life NQ (ICC11-BR002NQ.11) - Incorporated by reference to Exhibit 24(b)(4)(b)(iv) to this Registration Statement, File No. 333-172473, filed on February 28, 2011. (v) Form of Annual Step Death Benefit Rider (ICC11-BR010-R.11) - Incorporated by reference to Exhibit 24(b)(4)(b)(v) to this Registration Statement, File No. 333-172473, filed on February 28, 2011. (c) (i) Form of DCA Endorsement (ICC11-END002. 11) - Incorporated by reference to Exhibit 24(b)(4)(c)(i) to this Registration Statement, File No. 333-172473, filed on February 28, 2011. (ii) Form of Nursing Home Waiver Endorsement (ICC11-NSEND001.11) - Incorporated by reference to Exhibit 24(b)(4)(c)(ii) to this Registration Statement, File No. 333-172473, filed on February 28, 2011. (iii) Form of Endorsement for Section 401a Plans (ICC11-END401A.11) - Incorporated by reference to Exhibit 24(b)(4)(c)(iii) to this Registration Statement, File No. 333-172473, filed on February 28, 2011. (iv) Form of Endorsement for IRAs (ICC11-ENDIRA.11) - Incorporated by reference to Exhibit 24(b)(4)(c)(iv) to this Registration Statement, File No. 333-172473, filed on February 28, 2011. (v) Form of Endorsement for Roth IRAs (ICC11-ENDROTH.11) - Incorporated by reference to Exhibit 24(b)(4)(c)(v) to this Registration Statement, File No. 333-172473, filed on February 28, 2011. (vi) Form of Endorsement for SIMPLE IRAs (ICC11-ENDSIMPLE.11) - Incorporated by reference to Exhibit 24(b)(4)(c)(vi) to this Registration Statement, File No. 333-172473, filed on February 28, 2011. (5) (a) Form of Specimen Application for Annuity Contract (ICC11-APPVENL11) - Incorporated by reference to Exhibit 24(b)(5)(a) to this Registration Statement, File No. 333-172473, filed on February 28, 2011. (6) (i) Restated Articles of Redomestication of The Manufacturers Life Insurance Company (U.S.A.), incorporated by reference to Exhibit A(6) to Registration Statement on Form S-6, File No. 333-41814, filed on July 20, 2000. (ii) Certificate of Amendment to Certificate of Incorporation of the Company, Name Change July 1984, incorporated by reference to Exhibit (3)(i)(a) to Form 10Q of The Manufacturers Life Insurance Company of North America, filed on November 14, 1997. (iii) Certificate of Amendment to Certificate of Incorporation of the Company changing its name to John Hancock Life Insurance Company (U.S.A.) effective January 1, 2005, incorporated by reference to Exhibit (b)(6)(iii) to Post-Effective Amendment No. 20 to Registration Statement, File No. 333-70728, filed on May 1, 2007. (iv) By-laws of The Manufacturers Life Insurance Company (U.S.A.), incorporated by reference to Exhibit A(6)(b) to Registration Statement on Form S-6, File No. 333-41814, filed on July 20, 2000. (v) Amendment to By-Laws reflecting the Company's name change to John Hancock Life Insurance Company (U.S.A.) effective January 1, 2005, incorporated by reference to Exhibit (b)(6)(v) to Post-Effective Amendment No. 20 to Registration Statement, File No. 333-70728, filed on May 1, 2007. (vi) Amended and Restated By-Laws of John Hancock Life Insurance Company (U.S.A.) effective June 15, 2010, incorporated by reference to Exhibit 24(b)(6)(vi) to Post-Effective Amendment No. 35 to Registration Statement, File No. 333-70728, filed on November 8, 2010. (vii) Amended and Restated Articles of Redomestication and Articles of Incorporation of John Hancock Life Insurance Company (U.S.A.) effective July 26, 2010, incorporated by reference to Exhibit 24(b)(6)(vii) to Post-Effective Amendment No. 35 to Registration Statement, File No. 333-70728, filed on November 8, 2010. (7) Contracts of Reinsurance -- NOT APPLICABLE. (8) Other material contracts not made in the ordinary course of business which are to be performed in whole or in part on or after the date the registration statement is filed: (a) (i) CSC Customer Agreement dated June 30, 2004, incorporated by reference to Exhibit 24(b)(8)(a)(i) to Post-Effective Amendment No. 3 to Registration Statement, File No. 333-143073, filed on April 1, 2009. [Portions of this exhibit have been omitted pursuant to an Order Granting Confidential Treatment granted by the SEC on April 6, 2009.] (ii) Addendum No. 2 to the Remote Service Exhibit Number 1 dated July 1, 2006 with CSC, incorporated by reference to Exhibit 24(b)(8)a)(ii) to Post-Effective Amendment No. 3 to Registration Statement, File No. 333-143073, filed on April 1, 2009. [Portions of this exhibit have been omitted pursuant to an Order Granting Confidential Treatment granted by the SEC on April 6, 2009.] (b) (i) Merger Agreement with The Manufacturers Life Insurance Company (U.S.A.) and The Manufacturers Life Insurance Company of North America, incorporated by reference to Exhibit 24(b)(8)(b)(i) to Post-Effective Amendment No. 3 to Registration Statement, File No. 333-143073, filed on April 1, 2009. (c) (i) Participation Agreement among John Hancock Life Insurance Company (U.S.A.), John Hancock Life Insurance Company of New York, John Hancock Life Insurance Company, John Hancock Variable Life Insurance Company and John Hancock Trust dated April 20, 2005, incorporated by reference to Pre-Effective Amendment No. 1 to Registration Statement, File No. 333-126668, filed on October 12, 2005. (ii) Shareholder Information Agreement between John Hancock Life Insurance Company (U.S.A.), John Hancock Life Insurance Company of New York, John Hancock Life Insurance Company, John Hancock Variable Life Insurance, and John Hancock Trust portfolios (except American Funds Insurance Series) dated April 16, 2007, incorporated by reference to Post-Effective Amendment No. 9 to Registration Statement, File No. 333-85284, filed on April 30, 2007. (9) Opinion of Counsel and consent to its use as to the legality of the securities being registered, incorporated by reference to Exhibit 24(b)(9) to this Registration Statement, File No. 333-172473, filed on February 28, 2011. (10) Written consent of Ernst & Young LLP, independent registered public accounting firm. [FILED HEREWITH] (11) All financial statements omitted from Item 23, Financial Statements--Not Applicable. (12) Agreements in consideration for providing initial capital between or among Registrant, Depositor, Underwriter or initial contract owners -- Not Applicable. (13) Schedules of computation-- Incorporated by reference to Exhibit (b)(13) to Post-Effective Amendment No. 2 to Form N-4, File No. 33-76162, Filed on March 1, 1996. (14) Financial Data Schedule - Not Applicable. (15) Powers of Attorney for Thomas Borshoff, James R. Boyle, Steven Finch, Ruth Ann Fleming, James D. Gallagher, Scott S. Hartz, Rex Schlaybaugh, Jr., and John G. Vrysen, incorporated by reference to Exhibit 24(b)(15) to this Registration Statement, File No. 333-172473, filed on February 28, 2011. Item 25. Directors and Officers of the Depositor. OFFICERS AND DIRECTORS OF JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) EFFECTIVE AS OF JANUARY 13, 2011
NAME AND PRINCIPAL BUSINESS ADDRESS POSITION WITH DEPOSITOR ----------------------------------- ----------------------------------------------------------------------------------- James R. Boyle*** Chairman and President Jonathan Chiel* Executive Vice President and General Counsel Thomas Borshoff* Director Paul M. Connolly* Director Steven Finch*** Director and Executive Vice President Ruth Ann Fleming* Director James D. Gallagher* Director and Executive Vice President Scott S. Hartz*** Director, Executive Vice President, and Chief Investment Officer - U.S. Investments Rex Schlaybaugh, Jr.* Director John G. Vrysen* Director and Senior Vice President Marc Costantini* Executive Vice President Peter Levitt** Executive Vice President and Treasurer Katherine MacMillan** Executive Vice President Stephen R. McArthur** Executive Vice President Hugh McHaffie* Executive Vice President Bob Diefenbacher+ Senior Vice President Peter Gordon*** Senior Vice President Allan Hackney* Senior Vice President and Chief Information Officer Gregory Mack* Senior Vice President Ronald J. McHugh* Senior Vice President Lynne Patterson* Senior Vice President and Chief Financial Officer Craig R. Raymond* Senior Vice President, Chief Actuary, and Chief Risk Officer Diana L. Scott* Senior Vice President Alan R. Seghezzi*** Senior Vice President Bruce R. Speca* Senior Vice President Tony Teta*** Senior Vice President Brooks Tingle*** Senior Vice President Emanuel Alves* Vice President, Counsel, and Corporate Secretary John C. S. Anderson*** Vice President Roy V. Anderson* Vice President Arnold Bergman* Vice President Stephen J. Blewitt*** Vice President Robert Boyda* Vice President
OFFICERS AND DIRECTORS OF JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) EFFECTIVE AS OF JANUARY 13, 2011
NAME AND PRINCIPAL BUSINESS ADDRESS POSITION WITH DEPOSITOR ----------------------------------- ----------------------------------------------------------------------------------- John E. Brabazon*** Vice President and Chief Financial Office, Investments George H. Braun*** Vice President Thomas Bruns* Vice President Tyler Carr* Vice President Robert T. Cassato* Vice President Kevin J. Cloherty* Vice President Brian Collins+ Vice President Art Creel* Vice President George Cushnie** Vice President John J. Danello* Vice President Willma Davis*** Vice President Anthony J. Della Piana*** Vice President Brent Dennis*** Vice President Robert Donahue++ Vice President John Egbert* Vice President Edward Eng** Vice President Carol Nicholson Fulp* Vice President Paul Gallagher+++ Vice President Wayne A. Gates++ Vice President Ann Gencarella*** Vice President Richard Harris** Vice President and Appointed Actuary John Hatch* Vice President Kevin Hill*** Vice President E. Kendall Hines*** Vice President Eugene Xavier Hodge, Jr.*** Vice President James C. Hoodlet*** Vice President Roy Kapoor** Vice President Mitchell Karman*** Vice President, Chief Compliance Officer, and Counsel Frank Knox* Vice President, Chief Compliance Officer - Retail Funds/Separate Accounts Jonathan Kutrubes* Vice President Cynthia Lacasse*** Vice President Denise Lang** Vice President Robert Leach* Vice President David Longfritz* Vice President Nathaniel I. Margolis*** Vice President John Maynard+ Vice President Steven McCormick** Vice President Janis K. McDonough*** Vice President Scott A. McFetridge*** Vice President William McPadden*** Vice President Maureen Milet*** Vice President and Chief Compliance Officer - Investments Peter J. Mongeau+ Vice President Steven Moore** Vice President Curtis Morrison*** Vice President Tom Mullen* Vice President Scott Navin*** Vice President Nina Nicolosi* Vice President Frank O'Neill* Vice President Jacques Ouimet+ Vice President Gary M. Pelletier*** Vice President Steven Pinover* Vice President Krishna Ramdial** Vice President, Treasury S. Mark Ray*** Vice President Jill Rebman** Vice President Mark Rizza* Vice President
OFFICERS AND DIRECTORS OF JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) EFFECTIVE AS OF JANUARY 13, 2011
NAME AND PRINCIPAL BUSINESS ADDRESS POSITION WITH DEPOSITOR ----------------------------------- ----------------------------------------------------------------------------------- Ian R. Roke* Vice President Andrew Ross** Vice President Thomas Samoluk* Vice President Jonnie Smith**** Vice President Yiji S. Starr* Vice President Gaurav Upadhya** Vice President Simonetta Vendittelli++ Vice President Peter de Vries** Vice President Karen Walsh* Vice President Linda A. Watters* Vice President Joseph P. Welch+ Vice President Jeffery Whitehead* Vice President and Controller Henry Wong*** Vice President Randy Zipse*** Vice President
* Principal business office is 601 Congress Street, Boston, MA 02210 ** Principal business office is 200 Bloor Street, Toronto, Canada M4W 1E5 *** Principal business office is 197 Clarendon Street, Boston, MA 02117 **** Principal business office is 164 Corporate Drive Portsmouth, NH 03801 + Principal business office is 200 Berkeley Street, Boston, MA 02116 ++ Principal business office is 380 Stuart Street, Boston, MA 02116 +++ Principal business office is 200 Clarendon Street, Boston, MA 02116 Item 26. Persons Controlled by or Under Common Control with Depositor or Registrant. Registrant is a separate account of John Hancock Life Insurance Company (U.S.A.) (the "Company"), operated as a unit investment trust. Registrant supports benefits payable under the Company's variable annuity contracts by investing assets allocated to various investment options in shares of John Hancock Trust (the "Trust"), which is a "series" type of mutual fund registered under the Investment Company Act of 1940 (the "Act") as an open-end management investment company. The purchasers of variable annuity and variable life insurance contracts, in connection with which the Trust is used, will have the opportunity to instruct the Company with respect to the voting of the shares of the Series Fund held by Registrant as to certain matters. Subject to the voting instructions, the Company directly controls Registrant. On the effective date of this Pre-Effective Amendment to the Registration Statement, the Company and its affiliates are controlled by Manulife Financial Corporation ("MFC"). A list of other persons controlled by MFC as of December 31, 2010 appears below: MANULIFE FINANCIAL CORPORATION PRINCIPAL SUBSIDIARIES - DECEMBER 31, 2010 __________________ | | |Manulife Financial| | Corporation | | (Canada) | |__________________| | |........................................................ | . ________|_________ _____._______ | | | | | The Manufacturers| | John Hancock| | Life Insurance | | Reassurance | | Company | | Company Ltd.| | (Canada) | | (Bermuda) | |__________________| |_____________| | | |_________________________________________________________________ | | ______________________________________________________________|______________________ | | | | . | | | | | | . | | | | | | . | | | | ___________ | ____________ | ______________ . | _______________ | ____________ | | | | | | | | | | . | | | | | | | | | NAL | | | Manulife | | | Manulife | . | | Manulife | |__| MLI | | | | Resources | | | Asset | | | Insurance | . | | Holdings | | Resources | | |___|Management | |__| Management | | | (Thailand) | . |__| (Bermuda) | | Inc. | | | | Limited | | | (North | | | Public |... | Limited | | (Alberta) | | | | (Canada) | | | America) | | | Company |94.7%|__| (Bermuda) | |____________| | | |___________| | | Limited | | | Limited | | |_______________| . | | | | (Canada) | | | (Thailand) | | . | | | |____________| | |______________| | ...................... | | | | | | . . | | | | |99.9999% | . . 58.72% | | __________ | ____________ | ______|_______ | _______________ _____.______ ____.________ | | | | | | | | | | | | | | | | | | | | Manulife | | | MFC Global | | | Manulife | | | Manufacturers | | Manulife | | Manulife | | |___| Bank of | | | Fund | | | Asset | |__| P&C Limited | | Life | ____| Holdings | | | | Canada | |__| Management | | | Management | | | (Barbados) | | Insurance | | | Berhad* | | | | (Canada) | | | (Europe) | | | (Thailand) | | |_______________| | Company | | | (Malaysia) | | | |__________| | | Limited(2) | | | Company | | | (Japan) | | |_____________| | | | | (England) | | | Limited | | |____________| | | | | |____________| | | (Thailand) | | | | | | | | | |______________| | | | | | | | | | | | | __________ | _____|______ | ______________ | _______________ _____|______ | _____________ | | | | | | | | | | | | | | | | | | | | | Manulife | | | Manulife | | | Manulife | | | Manufacturers | | MFC Global | | | Manulife | | |___| Canada | | | Asset | |____| (Vietnam) | |__| Life | | Investment | |____| Insurance | | | | Ltd. | |__| Management | | | Limited | | | Reinsurance | | Management | | | Berhad | | | | (Canada) | | | (Europe) | | | (Vietnam) | | | Limited | | (Japan) | | | (Malaysia) | | | |__________| | | Limited | | |______________| | | (Barbados) | | Limited(3)| | |_____________| | | | | (England) | | | | |_______________| | (Japan) | | | | | |___________ | | | | |____________| | ______________ | | | | | | | | | | | | | | | | |Manulife Asset| | | ___________ | ____________ | ______|_______ | _______________ |____| Management | | | | | | | | | | | | | | | (Malaysia) | | | | First | | | Berkshire | | | Manulife | | | Manulife | | Sdn Bhd | | | | North | | | Insurance | | | Asset | | | International | | (Malaysia) | | |___| American | |__| Services | | | Management | |__| Holdings | |______________| | | | Insurance | | | Inc. | | | (Vietnam) | | Limited | | | | Company | | | (Ontario) | | | Company | | (Bermuda) | | | | (Canada) | | |____________| | | Ltd. | |_______________| | | |___________| | | | | (Vietnam) | | | | | | | |______________| |_____________________ | | | | | | | | | ___________ | _____|______ | _____________ ______|________ ______|______ | | | | | | | | | | | | | | | | | FNA | | | JH | | | Manulife | | Manulife | | Manulife | | |___| Financial | | | Investments| |____| (Singapore) | |(International)| | Asset | | | | Inc. | | | (Delaware) | | | Pte. Ltd. | | Limited | | Management | | | | (Canada) | | | LLC | | | (Singapore) | | (Bermuda) | |International| | | |___________| | | (Delaware) | | |______________| |_______________| | Holdings | | | | | |____________| | | | Limited | | | | | | | | (Barbados) | | | | | | | 51% |_____________| | | | | | | | | | _____|_____ | ____________ | ______________ ______|________ _____|_______ | | | | | | | | | | | | | | | | | Manulife | | | Manulife | | | Manulife | | Manulife- | | Manulife | | | | Asset | | | Securities | | | Asset | | Sinochem | | Asset | | | | Management| |__| Investment | | | Management | | Life | | Management | | | | Limited | | | Services | |____| (Singapore) | | Insurance Co. | | (Hong Kong)| | | | (Ontario) | | | Inc. | | | Pte. | | Ltd. (China) | | Limited | | | |___________| | | (Canada) | | | Ltd. | |_______________| | (Hong Kong)| | | | |____________| | | (Singapore) | |_____________| | | | | |______________| | | | | | | | | ___________ | ____________ | ______________ _____|_______ | | | | | | | | | | | | | | | EIS | | | Manulife | | | The | | Manulife | | | | Services | |__| Securities | | | Manufacturers| | Asset | | |___| (Bermuda) | |Incorporated| |____| Life | | Management | | | Limited | | (Ontario) | | | Insurance Co.| |(Taiwan) Co.,| | | (Bermuda) | |____________| | | (Phils.), | | Ltd. | | |___________| | | Inc. | | (Taiwan) | | | | (Philippines)| |_____________| | | |______________| | | | | _______________ | | | | | | | PT Asuransi | | |____| Jiwa Manulife | | 95%| Indonesia (1)| | | (Indonesia) | | |_______________| | . | . | _______._______ | | | | | PT Manulife | | | Aset | | | Manajemen | | | Indonesia | | | (Indonesia) | | |_______________| | | | | | | _________________________________________________________________________________________| | | _______|______ | | | Manulife | | Holdings | | (Alberta) | | Limited | | (Alberta) | |______________| | | ______|_______ | | | John Hancock | | Holdings | | (Delaware) | | LLC | | (Delaware) | |______________| | | ______|_______ | | | The | | Manufacturers| | Investment | | Corporation | | (Michigan) | |______________| | |____________________________________________________________________________ ______|_______ ____|______ _______|_________ | | | | | | | John Hancock | | Manulife | | John Hancock | | Life | |Reinsurance| |Insurance Agency,| _____| Insurance |_______________________ | Limited | | Inc. | | | Company | | | (Bermuda) | | (Delaware) | | | (U.S.A.) | | |___________| |_________________| | | (Michigan) | | | | |______________| | | | | _____|_____ | | | | | _______________ ________|_______ | Manulife | | | | | | |Reinsurance| | | John Hancock | | John Hancock | | (Bermuda) | | | Life & Health | ______|Subsidiaries LLC| | Limited | |_____| Insurance | | | (Delaware) | | (Bermuda) | | | Company | | |________________| |___________| | |(Massachusetts)| | | |_______________| | | | | | | ______________ | ________________ | | | | | | | | John Hancock | | | John Hancock | |_____| Distributors | |______| Financial | | | LLC | | | Network, Inc. | | | (Delaware) | | | (Massachusetts)| | |______________| | |________________| | | | | | ______________ | ________________ | | | | | | | | John Hancock | | | Hancock Natural| | | Life | |______| Resource Group,| |_____| Insurance | | | Inc. (Delaware)| | | Company | | |________________| | | of New York | | | | (New York) | | | |______________| | | | | | | 38% | | ______|_______ | ________________ | | | | | | | | John Hancock | | | Declaration | |_____| Investment | |______| Management & | 57% | Management | | | Research LLC | | Services, LLC| | | (Delaware) | | (Delaware) | | |________________| |______________| | /.\ | . | ________________ . | | | . | | The Berkeley | . |______| Financial | . | Group, LLC | .......................| (Delaware) | 5% |________________| . . _______.________ | | | John Hancock | | Advisers, LLC | | (Delaware) | |________________| . . _______.________ | | | John Hancock | | Funds, LLC | | (Delaware) | |________________|
....... Indirect Control _______ Direct Control (1) The remaining 5% equity of PT Asuransi Jiwa Manulife Indonesia is indirectly held by The Manufacturers Life Insurance Company (2) MFC Global Fund Management (Europe) Limited changed its name to Manulife Asset Management (Europe) Holdings Limited effective January 6, 2011. (3) MFC Global Investment Management (Japan) Limited changed its name to Manulife Asset Management (Japan) Limited effective January 11, 2011. This chart displays voting shares. All entities are 100% controlled unless otherwise indicated. Item 27. Number of Contract Owners. As of FEBRUARY 28, 2011, there were 0 qualified contracts and 0 non-qualified contracts of the series offered hereby outstanding. Item 28. Indemnification. Article XII of the Restated Articles of Redomestication of the Company provides as follows: No director of this Corporation shall be personally liable to the Corporation or its shareholders or policyholders for monetary damages for breach of the director's fiduciary duty, provided that the foregoing shall not eliminate or limit the liability of a director for any of the following: i) a breach of the director's duty or loyalty to the Corporation or its shareholders or policyholders; ii) acts or omissions not in good faith or that involve intentional misconduct or knowing violation of law; iii) a violation of Sections 5036, 5276 or 5280 of the Michigan Insurance Code, being MCLA 500.5036, 500.5276 and 500.5280; iv) a transaction from which the director derived an improper personal benefit; or v) an act or omission occurring on or before the date of filing of these Articles of Incorporation. If the Michigan Insurance Code is hereafter amended to authorize the further elimination or limitation of the liability of directors. then the liability of a director of the Corporation, in addition to the limitation on personal liability contained herein, shall be eliminated or limited to the fullest extent permitted by the Michigan Insurance Code as so amended. No amendment or repeal of this Article XII shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to the effective date of any such amendment or repeal. Notwithstanding the foregoing, Registrant hereby makes the following undertaking pursuant to Rule 484 under the Securities Act of 1933: Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Item 29. Principal Underwriters. (a) Set forth below is information concerning other investment companies for which John Hancock Distributors, LLC ("JHD LLC"), the principal underwriter of the contracts, acts as investment adviser or principal underwriter.
NAME OF INVESTMENT COMPANY CAPACITY IN WHICH ACTING -------------------------- ------------------------ John Hancock Life Insurance Company (U.S.A.) Separate Account H Principal Underwriter John Hancock Life Insurance Company (U.S.A.) Separate Account A Principal Underwriter John Hancock Life Insurance Company (U.S.A.) Separate Account N Principal Underwriter John Hancock Life Insurance Company (U.S.A.) Separate Account I Principal Underwriter John Hancock Life Insurance Company (U.S.A.) Separate Account L Principal Underwriter John Hancock Life Insurance Company (U.S.A.) Separate Account M Principal Underwriter John Hancock Life Insurance Company of New York Separate Account A Principal Underwriter John Hancock Life Insurance Company of New York Separate Account B Principal Underwriter John Hancock Life Insurance Company (U.S.A.) Separate Account Q Principal Underwriter John Hancock Life Insurance Company (U.S.A.) Separate Account W Principal Underwriter John Hancock Life Insurance Company (U.S.A.) Separate Account X Principal Underwriter John Hancock Variable Life Account UV Principal Underwriter John Hancock Life Insurance Company (U.S.A.) Separate Account R Principal Underwriter John Hancock Life Insurance Company (U.S.A.) Separate Account T Principal Underwriter John Hancock Variable Life Account S Principal Underwriter John Hancock Variable Life Account U Principal Underwriter John Hancock Variable Life Account V Principal Underwriter
(b) John Hancock Life Insurance Company (U.S.A.) is the sole member of John Hancock Distributors LLC (JHD LLC). The management of JHD LLC is vested in its board of managers (consisting of Edward Eng**, Steven A. Finch***, Lynne Patterson*, Christopher M. Walker**, and Karen Walsh*) who have authority to act on behalf of JHD LLC. * Principal business office is 601 Congress Street, Boston, MA 02210 ** Principal business office is 200 Bloor Street, Toronto, Canada M4W 1E5 *** Principal business office is 197 Clarendon St, Boston, MA 02116 (c) None. Item 30. Location of Accounts and Records. All books and records are maintained at 601 Congress Street, Boston, MA 02210. Item 31. Management Services. None. Item 32. Undertakings. (a) Representation of Insurer Pursuant to Section 26 of the Investment Company Act of 1940 John Hancock Life Insurance Company (U.S.A.) ("Company") hereby represents that the fees and charges deducted under the contracts issued pursuant to this registration statement, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by the Company. (b) Representation of Registrant Pursuant to Section 403(b) of the Internal Revenue Code of 1986, as amended Registrant is relying on a no-action letter issued in connection with funding vehicles for retirement plans meeting the requirements of Section 403(b) of the Internal Revenue Code of 1986, as amended, on November 28, 1988, SEC Reference No. IP-6-88, and is complying with the provisions of paragraphs 1-4 of such no action letter. (c) Undertakings Pursuant to Item 32 of Form N-4 (1) The Depositor and Registrant will file a post-effective amendment to this registration statement as frequently as is necessary to insure that the audited financial statements in the registration statement are never longer than 16 months old for so long as payments under the variable annuity contracts may be accepted; (2) The Depositor and Registrant will include either (1) as part of any application to purchase a contract offered by the prospectus, a space that an applicant can check to request a Statement of Additional Information, or (2) a post card or similar communication affixed to or included in the prospectus that the applicant can remove to send for a Statement of Additional Information; and (3) The Depositor and Registrant will deliver any Statement of Additional Information and any financial statements required to be made available under this form promptly upon written or oral request. SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant and the Depositor have caused this Pre-Effective Amendment to the Registration Statement to be signed on their behalf in the City of Boston, Massachusetts, on this 30th day of March, 2011. JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT H (Registrant) By: JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) (Depositor) By: /s/ James R. Boyle --------------------------------- James R. Boyle Chairman and President JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) By: /s/ James R. Boyle --------------------------------- James R. Boyle Chairman and President SIGNATURES As required by the Securities Act of 1933, this Pre-Effective Amendment to the Registration Statement has been signed by the following persons in their capacities with the Depositor on this 30th day of March, 2011.
Signature Title --------- ----------------------------------------------- /s/ James R. Boyle Chairman and President ------------------------------------- (Principal Executive Officer) James R. Boyle /s/ Lynne Patterson Senior Vice President & Chief Financial Officer ------------------------------------- (Principal Financial Officer) Lynne Patterson /s/ Jeffery J. Whitehead Vice President & Controller ------------------------------------- (Principal Accounting Officer) Jeffery J. Whitehead * Director ------------------------------------- Thomas Borshoff Director ------------------------------------- Paul M. Connolly * Director ------------------------------------- Steven Finch * Director ------------------------------------- Ruth Ann Fleming * Director ------------------------------------- James D. Gallagher * Director ------------------------------------- Scott S. Hartz * Director ------------------------------------- Rex Schlaybaugh, Jr. * Director ------------------------------------- John G. Vrysen */s/ Thomas J. Loftus Senior Counsel - Annuities ------------------------------------- Thomas J. Loftus Pursuant to Power of Attorney
EXHIBIT INDEX
ITEM NO. DESCRIPTION -------- ------------------------- 24(b)(10) Ernst & Young LLP Consent