Mfc 4 q12_slides

Fourth Quarter and Year End 2012Financial & Operating Results

February 7, 2013

2

Caution regarding forward-looking statements

This presentation contains forward-looking statements within the meaning of the “safe harbour” provisions of Canadian provincial securities laws and the U.S. Private Securities Litigation Reform Act of 1995. The forward-looking statements in this presentation include, but are not limited to, statements with respect to our 2016 management objectives for core earnings and core ROE, potential future charges related to URR assumptions if current low interest rates persist, changes in MLI’s MCCSR ratio and additional risks regarding entities within the MFC group that are interconnected which may make separation difficult. The forward-looking statements in this presentation also relate to, among other things, our objectives, goals, strategies, intentions, plans, beliefs, expectations and estimates, and can generally be identified by the use of words such as “may”, “will”, “could”, “should”, “would”, “likely”, “suspect”, “outlook”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “plan”, “forecast”, “objective”, “seek”, “aim”, “continue”, “goal”, “restore”, “embark” and “endeavour” (or the negative thereof) and words and expressions of similar import, and include statements concerning possible or assumed future results. Although we believe that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements and they should not be interpreted as confirming market or analysts’ expectations in any way. Certain material factors or assumptions are applied in making forward-looking statements, including in the case of our 2016 management objectives for core earnings and core ROE, the assumptions described under “Key Planning Assumptions and Uncertainties” in our fourth quarter 2012 press release and actual results may differ materially from those expressed or implied in such statements. Important factors that could cause actual results to differ materially from expectations include but are not limited to: the factors identified in “Key Planning Assumptions and Uncertainties” in our fourth quarter 2012 press release; general business and economic conditions (including but not limited to the performance, volatility and correlation of equity markets, interest rates, credit and swap spreads, currency rates, investment losses and defaults, market liquidity and creditworthiness of guarantors, reinsurers and counterparties); changes in laws and regulations; changes in accounting standards; our ability to execute strategic plans and changes to strategic plans; downgrades in our financial strength or credit ratings; our ability to maintain our reputation; impairments of goodwill or intangible assets or the establishment of provisions against future tax assets; the accuracy of estimates relating to morbidity, mortality and policyholder behavior; the accuracy of other estimates used in applying accounting policies and actuarial methods; our ability to implement effective hedging strategies and unforeseen consequences arising from such strategies; our ability to source appropriate assets to back our long dated liabilities; level of competition and consolidation; our ability to market and distribute products through current and future distribution channels; unforeseen liabilities or asset impairments arising from acquisitions and dispositions of businesses; the realization of losses arising from the sale of investments classified as available for sale; our liquidity, including the availability of financing to satisfy existing financial liabilities on their expected maturity dates when required; obligations to pledge additional collateral; the availability of letters of credit to provide capital management flexibility; accuracy of information received from counterparties and the ability of counterparties to meet their obligations; the availability, affordability and adequacy of reinsurance; legal and regulatory proceedings, including tax audits, tax litigation or similar proceedings; our ability to adapt products and services to the changing market; our ability to attract and retain key executives, employees and agents; the appropriate use and interpretation of complex models or deficiencies in models used; political, legal, operational and other risks associated with our non-North American operations; acquisitions and our ability to complete acquisitions including the availability of equity and debt financing for this purpose; the disruption of or changes to key elements of the Company’s or public infrastructure systems; environmental concerns; and our ability to protect our intellectual property and exposure to claims of infringement. Additional information about material factors that could cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements may be found in the body of this presentation as well as under “Risk Factors” in our most recent Annual Information Form, under “Risk Management”, “Risk Management and Risk Factors” and “Critical Accounting and Actuarial Policies” in the Management’s Discussion and Analysis in our most recent annual report, under “Risk Management”, “Risk Management and Risk Factors Update” and “Critical Accounting and Actuarial Policies” in the Management’s Discussion and Analysis in our most recent interim report, in the “Risk Management” note to consolidated financial statements in our most recent annual and interim reports and elsewhere in our filings with Canadian and U.S. securities regulators. We do not undertake to update any forward-looking statements except as required by law.

3333

Donald GuloienPresident & Chief Executive Officer

CEO’s remarks

3

4

2012 strategic highlights

1 Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below.2 Wealth sales were a record excluding variable annuities.

Substantive progress made on our strategic priorities: Developing our Asian opportunity to the fullest

Growing our wealth and asset management businesses in Asia, Canada and the U.S.

Continuing to build our balanced Canadian franchise

Continuing to grow higher ROE, lower risk U.S. businesses

Delivered strong financial results: Delivered core earnings1 of $2.2 billion in-line with 2011, despite

additional hedging costs

Generated record2 annual insurance and wealth sales1 in 2012

Strengthened MLI’s MCCSR to 211%, a seven point improvement over 3Q12

Reported record funds under management1 of $532 billion

Achieved our 2014 hedging objectives two years ahead of schedule

129

2010

(1,663)

1,736

2011 2012

Net Income (loss) Attributed to Shareholders(C$ million)

5555

Steve RoderSenior Executive Vice President & Chief Financial Officer

CFO’s remarks

6

4Q12 financial highlights

Reported net income attributed to shareholders of $1,057 million

Delivered core earnings1 of $537 million, slightly below 3Q12

Increased insurance sales1 by 49%2 and delivered a 31% increase in wealth sales over 4Q11

Generated new business embedded value1 (“NBEV”) of $245 million, and increase of 71% over 4Q11

Continued to generate strong investment gains of $368 million, $50 million of which is included in core earnings

Reported in-force embedded value1 of $38 billion as at December 31, 2012, an increase of $1.9 billion over the prior year

1 Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below. 2 All sales growth (decline) figures stated on a constant currency basis, a Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below.

7

Full year 2012 reported earnings of $1.7 billion up significantly versus 2011

1 Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below.

4Q12 core earnings of $537 million, representing:

+ An increase of over $160 million from 4Q11, reflecting increased fee income on higher FUM as well as a significant improvement in new business strain

- A decline of $19 million from 3Q12

Full year 2012 core earnings of $2.2 billion, in-line with 2011:

+ Improved new business strain, increased fee income, and the non-recurrence of P&C reinsurance claims

- Additional macro hedging costs and amortization of unrealized pension losses

4Q12 net income attributed to shareholders of $1.1 billion, versus 4Q11 net loss of $69 million

2012 net income attributed to shareholders of $1.7 billion, up $1.6 billion from 2011

1,206

Core Earnings1

(C$ million)

1,206

Net Income (loss) attributed to shareholders(C$ million)

537

4Q11

373

+44%

4Q12

2,169

+1%

2012

2,187

2011

(69)

n.m.

4Q12

1,057

4Q11

129

2012

1,736

2011

n.m.

8

Core earnings impacted by higher strain on wealth sales and other expenses in AsiaCore Earnings1

(C$ million)

1 Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below. See also “Earnings reconciliation history below for a reconciliation of core earnings to net income.

Asia Division core earnings were negatively impacted by increased expenses related to higher sales incentives and systems costs and higher new business strain in the fourth quarter

Canadian Division reported favourable policyholder experience partially offset by modestly higher new business strain

U.S. Division's core earnings included claims experience, tax items partly offset by higher new business strain related to new business mix and higher wealth sales

Corporate and Other core earnings increase largely reflected a $44 million gain related to the release of P&C Reinsurance provisions for the Japan earthquake & tsunami, partly offset by a provision for Hurricane Sandy

Expected macro hedging costs increased reflecting higher notional values

54

4Q12 Core earnings

537

Expected macro hedge costs

(16)

Corporate & Other

38

U.S.CanadaAsia

(50)

3Q12 Core earnings

556

99

Net income benefited from strong investment gains and non-recurring tax items in 4Q12


(C$ millions) 4Q12

Core earnings1 $537

Investment related gains in excess of amount included in core earnings 318

Core earnings plus investment related gains above $855

Impact of the following items excluded from core earnings:

Material and exceptional tax related items 264

Income on variable annuity guarantee liabilities that are dynamically hedged 100

Change in actuarial methods and assumptions (87)

Restructuring charge related to organizational design (57)

Direct impact of equity markets & interest rates (18)

Net Income (loss) attributed to shareholders $1,057

Preferred share dividends (29)

Common shareholders’ net income (loss) $1,028

10

New business strain reflects strong growth in wealth sales and a change in new business mix

Expected Profit on In-Force increased 2%2 largely due to higher fee income, partly offset by lower expected earnings on variable annuity businesses

Impact of New Business deteriorated largely due to higher wealth sales volumes driving higher non-deferrable acquisition expenses and a change in new business mix

Experience Gains reflect favourable investment-related gains and VA experience, the release of Japan earthquake provisions, partly offset by experience losses on macro hedge program

Mgmt Actions and Chgs in Assumptions largely reflect expected macro hedge costs and a systems conversion which refines the modeling of policy liabilities

Earnings on Surplus:

Core pre-tax Earnings on Surplus of $149 million increased by $33 million driven primarily by a release of tax-related interest provisions. This benefit was substantially offset by one-time tax adjustments recorded in income taxes on core earnings

Non-core pre-tax Earnings on Surplus of $2 million declined by $34 million. Non-core items are primarily mark-to-market gains other than AFS equities and seed money

Income Taxes reflect income earned in low tax jurisdictions and material and exceptional tax items

1 The Source of Earnings (SOE) analysis is prepared following OSFI regulatory guidelines and draft guidelines of the Canadian Institute of Actuaries. The SOE is used to identify the primary sources of gains or losses in each reporting period. Per OSFI instructions, SOE amounts denominated in foreign currencies are translated at the prior quarter's balance sheet exchange rates, with the difference between those rates and the average rates used in the Statement of Income included in Experience gains (losses).

2 Constant currency basis is a Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below.

3Q12 4Q12

Expected Profit on In-Force 882 871

Impact of New Business (117) (146)

Experience Gains (Losses) 290 537

Mgmt Actions & Chgs in Assumptions (1,740) (331)

Earnings on Surplus Funds 152 151

Other (61) (47)

Income Before Taxes (594) 1,035

Income Taxes 367 22

Net Income (Loss) (227) 1,057

Preferred Dividends (31) (29)

Common Shareholders’ Net Income (Loss) (258) 1,028

Currency Adjusted2 Expected Profit on In-force 856 871

Source of Earnings1

(C$ millions)

11

Record insurance sales for 2012 exceeded $3.3 billion, an increase of 33% over 2011Insurance Sales1,2

(C$ millions)

1 Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below.2 All sales growth (decline) figures stated on a constant currency basis, a Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below.

4Q12 insurance sales of $929 million, up 49%versus 4Q11:

+ Asia sales were up 20% vs. 4Q11, driven largely by record sales in Indonesia and sales of the Increasing Term product in Japan ahead of pricing changes

+ Sales in Canada were more than twice 4Q11 levels driven by Group Benefits, partially offset by lower, yet more profitable sales in Individual Insurance

+ U.S. sales were up 13% vs. 4Q11, driven by strong new product offerings with favourable risk characteristics

Record full year 2012 insurance sales of $3.3 billion, up 33% compared to 2011 largely due to:

+ Record sales in Asia, with strong contributions from most territories

+ Record Group Benefits and Affinity Markets sales in Canada

3,115

1,328

+49%

4Q12

929

172

399

358

4Q11

640

156

172

312

+33%

2012

3,349

599

1,310

1,440

2011

2,507

619

658

1,230

U.S.

Canada

Asia

12

Wealth sales up 31% versus 4Q11 largely due to strong sales growth in Asia and the U.S.Wealth Sales1,2

(C$ millions)

1 Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below.2 All sales growth (decline) figures stated on a constant currency basis, a Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below.

4Q12 wealth sales were $10.4 billion, up 31% versus 4Q11:

+ Record Asia wealth sales (ex. variable annuities) were more than double 4Q11 levels, with contributions from all territories

- In Canada, record mutual fund sales and strong Group Retirement Solutions sales were more than offset by lower annuity sales and lower new loan volumes at Manulife Bank

+ U.S. wealth sales increased 31% over 4Q11 driven by record sales in both our Retirement Plan Services and mutual fund businesses

Full year 2012 wealth sales were $36 billion, up 4% versus 2011:

+ Record wealth sales (ex. variable annuities)

+ Record performance in Asia, driven by strong mutual fund sales in Japan, Indonesia and Taiwan

+ Record U.S. mutual fund sales and Retirement Plan Services sales

- Record mutual funds sales in Canada outweighed by actions to moderate variable annuity sales

+31%

4Q12

10,439

5,818

2,507

2,114

4Q11

8,141

4,578

2,624

939

+4%

2012

35,940

20,193

10,057

5,690

2011

34,298

19,383

10,784

4,131

U.S.

Canada

Asia

13

Premiums & deposits increased 55% in 4Q12 on strong wealth deposits & growth of in-force business Premiums & Deposits1,2

(C$ millions)

Premiums and Deposits of $24.1 billion in 4Q12, were 55% higher than 4Q11:

+ Wealth P&D of $17.5 billion increased 76% vs. 4Q11 driven by strong growth in mutual fund and pension deposits and an institutional investment mandate awarded to Manulife Asset Management

+ Insurance P&D of $6.6 billion, were up 18% vs. 4Q11 due to growth in Asia and strong Group Benefits results

Premiums and Deposits of $75.5 billion in 2012, were 14% higher than 2011

1 Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below.2 All P&D growth (decline) figures stated on a constant currency basis, a Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below.

+55%

4Q12

24,128

17,499

6,629

4Q11

15,917

10,168

5,749

+14%

2012

75,501

51,280

24,221

2011

66,061

43,783

22,278

Wealth products

Insurance products

14

Substantial increase in 4Q12 NBEV driven by strong sales and actions taken to improve marginsNew Business Embedded Value1

(C$ million)


+71%

4Q124Q11

143

73

70

245

129

116

20122011

954

465

489

1,024

648

376

+7%

Wealth products

Insurance products

4Q12 New Business Embedded Value (NBEV) of $245 million, up 71% vs. 4Q11:

+ Insurance NBEV increased 84%, reflecting actions taken to improve profitability in U.S. Insurance, business mix shift and higher sales in Japan Insurance

+ Wealth NBEV increased 59%, due to repricing of segregated fund rider fees in Canada and higher wealth sales

2012 NBEV of $1.0 billion, up 7% vs. 2011

+ Full Year Insurance NBEV increased 33%, reflecting repricing actions on insurance businesses and higher sales partially offset by lower investment yields

- Full Year Wealth NBEV decreased 19%, reflecting higher cost of hedging for variable annuities due to lower interest rates and lower expected bank spreads

In-force embedded value increased to $38 billion as at December 31, 2012

38.0

36.1

39.7(1.2)

+0.3

(0.5)

+1.0+3.1

(0.8)

EmbeddedValue (12/31/11)

Interest onEmbedded

Value

New Business Experience &Review ofActuarial

Assumptions

EV beforeDiscount rates,FX and Capital

Discount RateChanges

Currency ShareholderDividends and

Other

EmbeddedValue (12/31/12)

(C$ billions)


In-force embedded value/share of $20.79, up 4% from the prior year:+ Interest on embedded value and the value of new business

- Partly offset by unfavourable currency impact and shareholder dividends

15

16

Asia wealth sales more than doubled 4Q11, driven by new products & strong pension/mutual fund sales

Core earnings1 of US$182 million in 4Q12, down 21% from 3Q12, and down 13% vs. 4Q11

Insurance sales1 of US$362 million, up 20% vs. 4Q11:+ Record Indonesian insurance sales driven by strong

sales in both the agency and bank channels

+ Sales increase partially driven by higher sales of Increasing Term product prior to re-pricing in Japan

Record full year insurance sales in 2012 with strong contributions from most territories

Wealth sales2 of US$2.1 billion more than doubled 4Q11 levels:+ Record Indonesian wealth sales, up almost 300%

+ Japan wealth sales more than quadrupled on the launch of the Strategic Income Fund

+ Strong pension sales in Hong Kong due to successful efforts to capture transfers resulting from the new Employee Choice arrangement

Record full year wealth sales (ex. VA) in 2012

APE2 of US$607 million, up 46% vs. 4Q11 driven by strong wealth sales

TWPI2 of US$2.4 billion, up 42% vs. 4Q11, driven by sales growth and strong persistency

1 Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below. See also “Segment Reconciliation” below. 2 Excludes variable annuities.3 All sales, TWPI, APE growth (decline) figures stated on a constant currency basis, a Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below.

Asia Annualized Premiums Equivalent (APE)1,3

(US$ million, excludes variable annuities)

Asia Total Weighted Premium Income (TWPI)1,3

(US$ million, excludes variable annuities)

+46%

4Q12

607

4Q11

422

+21%

2012

2,061

2011

1,704

+42%

4Q12

2,414

4Q11

1,725

+23%

2012

8,160

2011

6,655

16

17

Group Benefits continued to lead the Canadian industry in sales

Group Benefits Sales(C$ million)

3,115

1 Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below. See also “Segment Reconciliation” below. 2 Through 3Q12, Source: LIMRA.

+270%

4Q12

333

4Q11

90

+188%

2012

1,026

2011

356

+17%

2012

1,100

2011

937

Group Retirement Solutions (GRS) Sales(C$ million)

+45%

4Q12

223

4Q11

154

Core earnings1 of $233 million in 4Q12, up 2% from 3Q12 and up 64% from 4Q11

Insurance sales1 of $399 million in 4Q12 were more than twice 4Q11 levels:+ Group Benefits sales increased 270% vs. 4Q11

- Continued to slow sales of guaranteed long duration products, in line with business plans

Full year insurance sales were twice 2011 levels, driven by record sales in Group Benefits and Affinity Markets

Wealth sales of $2.5 billion in 4Q12 down 4% vs. 4Q11:+ Record mutual fund sales and strong GRS sales

- Segregated fund product sales down 56% from 4Q11, reflecting actions taken to moderate sales

On a full year 2012 basis, wealth sales were down 7% versus 2011

Manulife Mutual Funds delivered record full year sales of $2.1 billion and record AUM exceeding $20 billion

GRS led the industry in Defined Contribution sales for 11 consecutive quarters2

Record assets in Manulife Bank exceeded $21 billion. Stable new loan volumes year-over-year

18

Record wealth sales in U.S. Division, driven by mutual funds and Retirement Plan Services

U.S. Wealth Sales(US$ million)

Core earnings1 of US$297 million in 4Q12, up 3% from 3Q12 and 61% from 4Q11

Wealth sales1 of US$5.9 billion in 4Q12 increased 31% vs. 4Q11:+ Record mutual fund sales of $3.7 billion, up 54% over

4Q11

+ Net mutual fund sales of $1.2 billion in 4Q12, and $3.9 billion for 2012, up 36% over 2011

+ Record Retirement Plan Services sales of $2.0 billion, 44% higher vs. 4Q11

- Annuity sales declined 78%, consistent with our exit from the variable annuity and fixed annuity markets

Full year wealth sales increase of 3% was impacted by a decline in Annuity sales

Added new mutual funds to platforms at key firms

Insurance sales1 of US$173 million in 4Q12 increased 13% vs. 4Q11:+ JH Life sales of $163 million up 18% over 4Q11, driven

by successful new product offerings

- LTC sales down 33% vs. 4Q11, reflecting the continued impact of new business price increases

Life insurance sales increased 12% on a full year basis

3,115

1,328

1 Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below. See also “Segment Reconciliation” below.

152

+31%

4Q12

5,867

3,720

1,995

4Q11

4,473

2,413

1,383

677

+3%

2012

20,213

13,011

6,044

1,158

2011

19,609

12,097

4,737

2,775

JH Mutual Funds

JH Retirement Plan Services

JH Annuities

19

Record Funds under Management achieved in 4Q12

1 Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below.2 Excludes Administrative Services Only premium equivalents and Group Benefits ceded premiums.

Funds Under Management1

(C$ billions)

Record funds under management of $532 billion as at Dec. 31, 2012, up $17 billion from Sept. 30, 2012:

+ Net policy cash flows of $7 billion

+ Investment income of $9 billion

1

FUM (12/31/2012)

532

Currency & Other

Investment Income

9

Policy Payments

(15)

P&D

22

FUM (9/30/2012)

515

2

20

1 Net Exposure excludes par and pass-through and reflects the impact of downgrades on reserves. Presented based on location of issuer.

Diversified, high quality portfolio: 87% of the total portfolio is Fixed Income, of which

96% is Investment Grade

8% Alternative Long-Duration Assets including Real Estate; well diversified by asset class and geography; majority of the assets are managed in-house

5% Stocks, diversified by industry and geography, primarily backing participating or pass-through liabilities

Limited Net Exposure1 to Greece, Italy, Ireland, Portugal, and Spain: No direct sovereign or financial sector exposure to

Greece, Portugal or Spain

Banks and financials (C$18 million)

Sovereign debt (C$13 million)

Diversified high quality asset mix avoids risk concentrationsTotal Invested Assets(C$230 billion, Carrying value as at December 31, 2012)

Private Placement Debt9%

Mortgages15%

Cash & Short-Term Securities6%

Bank Loans1%

Corporate Bonds25%

Government Bonds25%

Stocks5%

Other Alternative Long-Duration Assets4%

Policy Loans3%

Securitized MBS/ABS2%

Real Estate4%

Other1%

Fixed Income & Other

StocksAlternative Long-Duration Assets

21

Favourable credit experience reflects the strength of our underwriting

(C$ millions, post-tax)

Credit recoveries 15

Credit downgrades (20)

Total Credit Impacts $(5)

Assumed in policy liabilities 31

Net Credit Experience Gain $ 26

Net Credit Experience (C$ millions)

Impact on 4Q12 Earnings:

0

(3)

4Q12

26

3Q122Q121Q12

9

4Q11

(32)

17%(2.2)

(1.8)

(1.0)

(0.4)

2009 2010 2011 2012

22

Added to macro and dynamic hedging programs in 4Q12

Equity Market Sensitivity1

(% of underlying sensitivity)

1 Earnings sensitivity to equity markets is defined by the impact of a 10 per cent decline in the market value of equity funds on the net income attributed to shareholders. Earnings sensitivity to interest rates is defined by the impact of a one per cent parallel decline in interest rates on the net income attributed to shareholders. Please refer to “Caution related to sensitivities” in section D of the fourth quarter 2012 press release.

Estimated impact of 10% equity market decline: Range of $(310) million to $(500) million to earnings (5) pts to MLI’s MCCSR ratio

72% - 83% of underlying earnings sensitivity to equity market changes now hedged: Achieved our 2014 goal to hedge 75% two years ahead

of schedule

Interest Rate Sensitivity1

(C$ billions)

Estimated impact of 1% parallel decline in interest rates (excluding AFS bond offset): $(400) million impact to earnings (16) pts to MLI’s MCCSR ratio

Achieved our 2014 goal of reducing interest rate sensitivity to $1.1 billion more than two years ahead of schedule

2014 goal: >75% hedged

83% hedged

83%

Offset by hedging programs

Net unhedged

2014 goal:< $1.1 billion

23

Strengthened MCCSR ratio in the quarter, by seven points over 3Q12

MLI ended 4Q12 with an MCCSR ratio of 211%, largely reflecting:

+ Fourth quarter 2012 earnings

+ Reinsurance of a portion of the Japanese life business

+ $200 million preferred share issuance

Risk sensitivity of our capital position is mitigated by our significant hedging programs

Estimated impact to MCCSR ratio as of January 1, 2013, reflective of 2013 OSFI MCCSR Guidelines:

+ MCCSR ratio increase of 4 points due to OSFI amendments to lapse risk capital requirements

- MCCSR ratio decrease of 5 points by December 31, 2014 due to OSFI's alignment of capital rules with the new pension accounting standard (IAS 19R); Impact to be amortized on straight-line basis over 8 quarters, with ~1 point decline at 1Q13

Minimum Continuing Capital and Surplus Requirements Ratio (MLI)1

(%)

1 MLI refers to The Manufacturers Life Insurance Company.

3Q12

211

4Q12

216

4Q11

225

1Q12

213

2Q12

204

24

Key questions

New business strain

Equity hedging

25

Summary

In 2012, Manulife:

Made substantive progress against its strategic priorities

Enjoyed positive progression in earnings since 2010 and improved 2012 net income by $1.6 billion as compared to 2011

Delivered core earnings1 of $2.2 billion, in-line with 2011

Generated record2 annual insurance and wealth sales1 in 2012

Ended the year with strong MLI MCCSR ratio of 211%, a seven point improvement over 3Q12

Reported record funds under management1 of $532 billion

Achieved our 2014 hedging targets two years ahead of schedule

1 Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below.2 Wealth sales were a record excluding variable annuities.

26262626

Question & Answer Session

26

27272727

Appendix Segment Reconciliation Risk Disclosures Investment-related gains C-IFRS vs. U.S. GAAP differences

27

28

Segment Reconciliation

(C$ millions) Asia Canadian U.S. Corp & Other3

MFC Total

Core earnings (losses)1 $180 $233 $293 $(169) $537Investment related gains (losses) in excess of core investment gains

33 (31) 365 (49) 318

Core earnings plus investment related gains in excess of core investment gains

$213 $202 $658 $(218) $855

Other items to reconcile core earnings to net income (loss) attributed to shareholders

Income on variable annuity guarantee liabilities that are dynamically hedged

9 45 46 - 100

Impact of major reinsurance transactions - - - - -

Direct impact of equity markets and interest rates 460 4 (150) (332) (18)

Changes in actuarial methods and assumptions, excl URR - - - (87) (87)

Goodwill impairment charge - - - - -

Gain (loss) on sale of Retrocession Business - - - - -Tax items and restructuring charge related to organizational design

- - 170 37 207

Net income (loss) attributed to shareholders $682 $251 $724 $(600) $1,057

4Q12 reconciliation of core earnings to net income by division1,2

1 Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below.2 Please refer to “Performance by Division” in section C of the fourth quarter 2012 press release for Asia Division and U.S. Division results on a U.S. dollar basis.3 Corporate & Other segment includes Reinsurance business and $50 million of core investment gains.

29

Segment Reconciliation

2012 reconciliation of core earnings to net income by division1,2

1 Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below.2 Please refer to “Performance by Division” in section C of the fourth quarter 2012 press release for Asia Division and U.S. Division results on a U.S. dollar basis.3 Corporate & Other segment includes Reinsurance business and $200 million of core investment gains.

(C$ millions) Asia Canadian U.S. Corp & Other3

MFC Total

Core earnings (losses)1 $963 $835 $1,085 $(696) $2,187Investment related gains (losses) in excess of core investment gains

55 (10) 1,018 (126) 937

Core earnings plus investment related gains in excess of core investment gains

$1,018 $825 $2,103 $(822) $3,124


Income on variable annuity guarantee liabilities that are dynamically hedged

5 50 121 - 176

Impact of major reinsurance transactions, in-force product changes

- 259 1 - 260

Direct impact of equity markets and interest rates 906 35 (484) (1,215) (758)

Changes in actuarial methods and assumptions, excl. URR - - - (1,081) (1,081)

Goodwill impairment charge - - - (200) (200)

Gain (loss) on sale of Retrocession Business - - - (50) (50)Tax items and restructuring charge related to organizational design

40 - 170 55 265

Net income (loss) attributed to shareholders $1,969 $1,169 $1,911 $(3,313) $1,736

30

(C$ millions, unless otherwise stated) 1Q11 2Q11 3Q11 4Q11 2011 1Q12 2Q12 3Q12 4Q12 2012

Asia Division 252 253 220 213 938 267 286 230 180 963

Canadian Division 215 233 259 142 849 172 201 229 233 835

U.S. Division 290 266 260 189 1,005 257 247 288 293 1,085

Corporate & Other1 (225) (8) (58) (124) (415) (128) (83) (117) (79) (407)

Expected cost of macro equity hedges (100) (104) (107) (97) (408) (107) (118) (124) (140) (489)

Core Investment gains 50 50 50 50 200 50 50 50 50 200

Core earnings2 482 690 624 373 2,169 511 583 556 537 2,187Diluted core earnings per share $0.26 $0.37 $0.33 $0.19 $1.14 $0.26 $0.30 $0.29 $0.28 $1.12

Core ROE1 8.1% 11.5% 10.4% 6.1% 9.1% 8.5% 9.6% 9.3% 9.0% 9.1%

Investment related gains in excess of core investment gains 470 323 236 261 1,290 205 51 363 318 937

Core earnings plus investment related gains in excess of core investment gains $952 $1,013 $860 $634 $3,459 $716 $634 $919 $855 $3,124


Income (charges) on VA dynamically hedged (8) (52) (900) (193) (1,153) 223 (269) 122 100 176

Actuarial methods/assumptions (ex. URR changes) (70) (32) (651) 2 (751) 12 - (1,006) (87) (1,081)

Goodwill impairment charges - - - (665) (665) - - (200) - (200)

Impact of reinsurance transactions, product changes, dispositions & other - - 303 - 303 180 62 26 207 475

Total direct impact of equity markets and interest rates 111 (439) (889) 153 (1,064) 75 (727) (88) (18) (758)

Net income (loss) attributed to shareholders 985 490 (1,277) (69) 129 1,206 (300) (227) 1,057 1,736

Preferred share dividends (20) (22) (22) (21) (85) (24) (28) (31) (29) (112)

Common shareholders’ net income (loss) 965 468 (1,299) (90) 44 1,182 (328) (258) 1,028 1,624

1 Corporate & Other segment includes Reinsurance business. 2 Non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below.

Earnings reconciliation history

3131

Changes in interest rates could impact multiple areas of our balance sheet and income statement

Potential impacts of flat or declining rates Potential impacts of an increase in rates

Initial Reinvestment Rate

(“IRR”)

Reserves would be strengthened to reflect lower rates, but realized gains on AFS bonds may offset the impact

Reserves would be released to reflect higher rates, but realized losses on AFS bonds may mitigate the benefit

Ultimate Reinvestment Rate

(“URR”)

Further declines in interest rates would likely result in higher cumulative URR charges over the next 10 years

An immediate and sustained increase in rates would likely reduce, but not eliminate, the cumulative URR charges over the next 10 years

MCCSR

Available capital would likely decline reflecting charges from declining rates; while required capital is pro-cyclical, resulting in higher required capital when interest rates decline

Available capital would likely rise reflect gains from rising interest rates; while required capital is pro-cyclical, resulting in lower required capital when interest rates rise

New Business Strain

Higher new business strain, until products are re-priced Lower new business strain

Reserve ScenariosPotential for reserves to be valued on an alternate interest rate scenario which results in higher earnings sensitivity to further declines in rates

No change expected to booking scenarios

Hedging Costs Increase to expected dynamic and macro hedging costs

Lower expected hedging costs; easier to add more in-force blocks to the dynamic hedging program at higher interest rates

Earnings on Surplus

Re-investment of cash flows into lower yielding bonds could result in declining earnings on surplus over time

The re-investment of cash flows into higher yielding bonds could result in improved earnings on surplus over time

Economic Environment

Could be correlated with unfavourable economic growth and lower returns on other asset classes

May be correlated with favourable economic growth and higher returns on other asset classes

32

Reduced sensitivities to changes in interest rates, credit spreads and swap spreads in 4Q12

Potential Impact1 of an immediate parallel change in “all rates”: 4Q12 3Q12

(C$ millions) -100 bps +100 bps -100 bps +100 bps

Excluding change in market value of AFS bonds held in the surplus $(400) $200 $(600) $200

From fair value changes in AFS bonds held in surplus, if realized2 $800 $(700) $900 $(800)

MCCSR Impact:

- Excluding change in market value of AFS bonds held in surplus (16) pts +10 pts (17) pts +9 pts

- From fair value changes in AFS bonds held in surplus, if realized 5 pts (5) pts +5 pts (5) pts

Potential Impact1 of a parallel change in corporate bond spreads: 4Q12 3Q12


Corporate Spreads $(1,000) $500 $(1,200) $600

Potential Impact1 of a parallel change in swap spreads: 4Q12 3Q12


Swap Spreads $600 $(600) $700 $(700)

1 All estimated sensitivities are approximate and based on a single parameter. No simple formula can accurately estimate ultimate future impact.2 The amount of gain or loss that can be realized on AFS fixed income assets held in the surplus segment will depend on the amount of unrealized gain or loss. The table above

only shows the change in the unrealized position, as the total unrealized position will depend upon the unrealized position at the beginning of the period.

Earnings impact from potential changes to the Fixed Income Ultimate Reinvestment Rate

33

(C$ millions, post-tax)

Next 5 years

Subsequent 5 years

Total over 10 years

Risk free rates remain at current levels $(1,600) $(300) $(1,900)

Risk free rates rise 50 bp immediately from their current levels and then remain at those new levels thereafter $(900) $0 $(900)

Risk free rates fall 50 bp immediately from their current levels and then remain at those new levels thereafter $(2,200) $(500) $(2,700)

Potential cumulative impact on net income attributed to shareholders arising from potential changes to the fixed income ultimate reinvestment rates (URR)1

As at December 31, 2012

1 Excludes potential fair value changes in AFS bonds held in surplus, if realized.

34

Financial results benefited from Japan public equity market gains in 4Q12(C$ millions)

388

48

412

517

556

(18)

(399)

(292)

VA guaranteeliabilities not

dynamically hedged

General fundequities & asset

based fees

Other Hedged VAImpacts

Experience gain onhedged VA block

Loss on dynamichedge assets

Experience loss onmacro hedge

assets

Earnings impact ofunhedged items &

ineffectiveness

Absent hedging programs, changes in equity markets and VA-related risks would have increased earnings by $1,103 million in 4Q12

Hedging programs offset $691 million of the benefit of equity markets and VA-risks in 4Q12

The dynamic hedging program result of 123% vs. experience gains on the hedged VA block

$100 million income from dynamically hedged VA

35

Exposure by market

(C$ millions)3Q12 4Q12

S&P (160) (130)

TSX (70) (60)

TOPIX (110) (60)

Europe, Australasia & Far East (ex. Japan) (70) (60)

Net income impact assuming full hedge offset (410) (310)

Assumed partial hedge offset (210) (190)

Net income impact assuming partial hedge offset (620) (500)

MLI MCCSR ratio impact (6) pts (5) pts

Achieved equity risk reduction goal two years ahead of schedule

After the impact of dynamic and macro hedging programs, we remain most sensitive to changes in the S&P

Potential impact on net income attributed to shareholders arising from a 10% decline in public equity returns1,2

1 All estimated sensitivities are approximate and based on a single parameter. No simple formula can accurately estimate ultimate future impact.2 Please note the Company’s disclosures which describe risk factors for hedging and reinsurance strategies.

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Notional hedging exposures

Exposure Index

Notional Value (C$ billions)

Approximate Long-Term

Annual Return Assumption3Q12 4Q12

U.S. Equities S&P 500 $(4.0) $(4.0) ~9.5%

Canadian Equities S&P/TSX (0.3) (0.3) ~9.5%

Japanese Equities TOPIX (1.4) (1.7) ~6.25%

Europe & Other Equities Various (1.6) (1.8) ~7.75-9.75%

Macro hedges $(7.3) $(7.8)

Dynamic hedges (9.8) (9.5)

Notional value of hedges $(17.1) $(17.3)

Continued progress in managing sensitivity of earnings to equity markets in 4Q12: Added approximately $250 million of equity futures to the macro hedging program

Added ~$700 million of in-force guarantee value to our dynamic hedging program

Macro hedging costs will vary depending on a number of factors, including: Notional amount of futures sold short, including changes during the period

Swap and currency rates

Tax rates of legal entities

37

Net Income in accordance with IFRS and U.S. GAAP

(2.0)

(1.0)

0.0

1.0

2.0

3.0

4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12

IFRS

U.S. GAAP

Net income(C$ billions)

IFRS net income is typically more volatile compared to U.S. GAAP in periods of market dislocation due to more extensive use of mark-to-market accounting

Because our hedging strategies for equity risk (dynamic and macro) are more closely aligned with the exposure as measured by IFRS, we are over hedged on a U.S. GAAP accounting basis. Therefore: On a U.S. GAAP basis, in rising equity markets we will likely incur losses on our variable annuity book Conversely, in declining equity markets we will likely report gains on our VA book on a U.S. GAAP basis

(1)

1 Net income in accordance with U.S. GAAP is a non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below.

38

Equity (Book Value)(C$ billions)

Total equity in accordance with U.S. GAAP is $15.8 billon higher than under IFRS basis

“Mark-to-market" accounting approach of IFRS, which recognizes the current low interest rates and updated actuarial assumptions, is not generally reflected in U.S. GAAP results

Differences in accounting methods result in C$15.8 billion higher equity under U.S. GAAP than IFRS for 4Q12

1 Total equity in accordance with U.S. GAAP is a non-GAAP measure. See “Note to Users – Performance and Non-GAAP Measures” below.

(1)

1Q12

25.0

2Q12

42.7

26.1

42.2

3Q12 4Q12

38.0

25.8

4Q11

39.6

24.9

3Q11

39.8

25.3

2Q11

31.4

25.4

1Q11

30.0

25.1

4Q10

32.2

24.7

41.9

26.1

IFRS Equity

U.S. GAAP Equity

39

Note to users -Performance and Non-GAAP MeasuresWe use a number of non-GAAP financial measures to measure overall performance and to assess each of our businesses. A financial measure is considered a non-GAAP measure for Canadian securities law purposes if it is presented other than in accordance with generally accepted accounting principles used for the Company’s audited historical financial statements which is prior Canadian GAAP for 2010 and earlier and IFRS for 2011 and beyond. Non-GAAP measures include: Core Earnings (Losses); Core return on common shareholders’ equity (“Core ROE”); Core Earnings Per Share; In-Force Embedded Value; Net Income in Accordance with U.S. GAAP; Total Equity in Accordance with U.S. GAAP; Constant Currency Basis; Total Weighted Premium Income (TWPI); Premiums and Deposits; Funds under Management; New Business Embedded Value; Total Annual Premium Equivalent (APE) Sales and Sales. Non-GAAP financial measures are not defined terms under GAAP and, therefore, with the exception of Net Income in Accordance with U.S. GAAP (which is comparable to the equivalent measure of issuers whose financial statements are prepared in accordance with U.S. GAAP), are unlikely to be comparable to similar terms used by other issuers. Therefore, they should not be considered in isolation or as a substitute for any other financial information prepared in accordance with GAAP. Core earnings (losses) is a non-GAAP measure we use to better understand the long-term earnings capacity and valuation of the business. Core earnings excludes the direct impact of equity markets and interest rates as well as a number of other items that are considered material and exceptional in nature. While this metric is relevant to how we manage our business and offers a consistent methodology, it is not insulated from macro-economic factors which can have a significant impact. Core ROE is a non-GAAP profitability measure that presents core earnings available to common shareholders as a percentage of the capitaldeployed to earn the core earnings. The Company calculates core ROE using average common shareholders’ equity. Core earnings per share is core earnings available to common shareholders expressed per weighted average common share outstanding. In-force embedded value is calculated as tangible shareholders' equity plus the value of in-force business, where the value of in-force business is the present value of expected future earnings on in-force business less the present value cost of holding capital required to support the in-force business. In-force embedded value is a measure of the shareholder value embedded in the current balance sheet of the Company, excluding any value associated with future new business. The change in In-force embedded value between reporting periods, excluding changes due to discount rates, foreign exchange rates and capital, is used as a measure of the value created by the year’s operations. Net income in accordance with U.S. GAAP is a non-GAAP profitability measure. It shows what the net income would have been if the Company had applied U.S. GAAP as its primary financial reporting basis. We consider this to be a relevant profitability measure given our large U.S. domiciled investor base and for comparability to our U.S. peers who report under U.S. GAAP. Total equity in accordance with U.S. GAAP is a non-GAAP measure. It shows what the total equity would have been if the Company had applied U.S. GAAP as its primary financial reporting basis. We consider this to be a relevant measure given our large U.S. domiciled investor base and for comparability to our U.S. peers who report under U.S. GAAP. The Company uses financial performance measures that are prepared on a constant currency basis, which exclude the impact of currency fluctuations and which are non-GAAP measures. Quarterly amounts stated on a constant currency basis in this presentation are calculated, as appropriate, using the income statement and balance sheet exchange rates effective for the fourth quarter of 2012. Total Weighted Premium Income (TWPI) includes 10 percent of single premiums/deposits, plus 100 percent of first year and renewal premiums/deposits. This applies to general funds, segregated funds and Mutual Funds. Premiums and deposits is a non-GAAP measure of top line growth. The Company calculates premiums and deposits as the aggregate of (i) general fund premiums, net of reinsurance, reported as premiums on the Consolidated Statement of Income, (ii) adding back the premiums ceded related to FDA coinsurance, (iii) premium equivalents for administration only group benefit contracts, (iv) premiums in the Canadian Group Benefits reinsurance ceded agreement, (v) segregated fund deposits, excluding seed money, (vi) mutual fund deposits, (vii) deposits into institutional advisory accounts, and (viii) other deposits in other managed funds. Funds under management is a non-GAAP measure of the size of the Company. It represents the total of the invested asset base that the Company and its customers invest in. New business embedded value (“NBEV”)is the change in shareholders’ economic value as a result of sales in the reporting period. NBEV is calculated as the present value of expected future earnings, after the cost of capital, on actual new business sold in the period using future mortality, morbidity, policyholder behaviour, expense and investment assumptions that are consistent with the assumptions used in the valuation of our policy liabilities. Total APE Sales comprise of 100 per cent of regular premiums and 10 per cent of single premiums, for both insurance and wealth management products. Sales are measured according to product type. (i) For total individual insurance, sales include 100 per cent of new annualized premiums and 10 per cent of both excess and single premiums. For individual insurance, new annualized premiums reflect the annualized premium expected in the first year of a policy that requires premium payments for more than one year. Sales are reported gross before the impact of reinsurance. Single premium is the lump sum premium from the sale of a single premium product, e.g. travel insurance. (ii) For group insurance, sales include new annualized premiums and administrative services only premium equivalents on new cases, as well as the addition of new coverages and amendments to contracts, excluding rate increases. (iii) For individual wealth management contracts, all new deposits are reported as sales. This includes individual annuities, both fixed and variable; mutual funds; college savings 529 plans; and authorized bank loans and mortgages. (iv) For group pensions/retirement savings, sales of new regular premiums and deposits reflect an estimate of expected deposits in the first year of the plan with the Company. Single premium sales reflect the assets transferred from the previous plan provider. Sales include the impact of the addition of a new division or of a new product to an existing client. Total sales include both new regular and single premiums and deposits. For further information regarding these subjects, see our press release announcing our 2012 fourth quarter results.

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Steven Moore, MBA, FCSI, CGA, CFA, CFPSenior Vice President, Treasurer & Head of Investor Relations

[email protected](416) 926-6495

Anique Asher, MBA, CAVice President


Robert Veloso, MBA, CFAAssistant Vice President


Investor Relations contacts

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