Manulife Financial Corporation reports annual and quarterly results



    TSX/NYSE/PSE: MFC; SEHK: 945

    TORONTO, Feb. 12 /CNW/ - Manulife Financial Corporation ("MFC") today
reported shareholders' net income of $517 million for the year ended December
31, 2008, compared to net income of $4,302 million in 2007. Fully diluted
earnings per share were $0.32 compared to $2.78 in 2007. The Manufacturers
Life Insurance Company ("MLI") reported an MCCSR ratio of 233 per cent as at
December 31, 2008, up from 221 per cent last year.
    "As previously disclosed, our results have been negatively impacted by
the downturn in global equity markets, particularly in the fourth quarter,"
said Dominic D'Alessandro, President and Chief Executive Officer. "We have
reacted quickly by strengthening our capital base and ensuring that our
product strategies remain appropriate for the long term. Despite these very
challenging conditions, our core businesses continue to maintain or increase
market share and generated record levels of life insurance sales and new
business embedded value in 2008."
    As a result of the sharp declines in equity markets, balance sheet
reserves for segregated fund guarantees were increased to $5,783 million as at
December 31, 2008 compared with $526 million at the prior year end. The
Company's obligations under its segregated fund guarantees are substantially
payable over a thirty year period beginning in seven years. Over the long
term, should equity markets recover, portions of these reserves may reverse
into net income.
    The loss in the fourth quarter of 2008 amounted to $1,870 million or
$1.24 per share on a fully diluted basis and differed by $370 million from the
estimate of $1,500 million announced on December 2, 2008. A sharp drop in swap
interest rates which are used to value segregated fund guarantee liabilities
was the major reason for the higher reported loss. The fourth quarter results
include a number of non cash items totaling $2,727 million after tax,
including $2,407 million for segregated fund guarantees, other equity related
losses of $513 million, accruals for credit impairments and downgrades of $128
million, partially offset by changes in actuarial methods and assumptions.
    "Unfavourable movements in interest rates late in the quarter exacerbated
the impact of unprecedented declines in equity markets," noted Peter
Rubenovitch, Senior Executive Vice President and Chief Financial Officer.
"Even after this quarter's very sharp drops in equity markets and interest
rates, our balance sheet remains strong and our capital levels are amongst the
highest we have ever enjoyed."
    Cash provided by operating activities was $7.9 billion for the full year
2008 and was $2.6 billion for the fourth quarter. Both of these amounts
exceeded prior year comparatives and reflect the non cash nature of the
charges described above.
    During the quarter, the Company successfully raised $4,275 million of new
capital and finished the year with very strong capital ratios. MLI reported an
MCCSR ratio of 233 per cent as at December 31, 2008 while John Hancock Life
Insurance Company ("JHLICO") is estimated to finish the year with an RBC ratio
of around 400 per cent. Both ratios exceeded internal targets and were well
above regulatory requirements.
    Full year sales for 2008 were very strong. Record sales levels were
achieved in each of our life insurance businesses and despite the
unprecedented market volatility, wealth sales were in line with the strong
levels of the prior year.
    Premiums and deposits amounted to $70.0 billion for 2008, in line with
$69.4 billion reported in the prior year. Increased premiums arising from
higher sales of fixed wealth products, insurance business growth and a
stronger U.S. dollar were offset by the decline in variable wealth product
deposits because of the unsettled markets in the latter half of the year.
    New business embedded value reached a record level of $2,260 million in
2008, exceeding by ten per cent the previous record level achieved in 2007.
Consistent with sales, new business embedded value in the fourth quarter was
up from the third quarter, but down from the fourth quarter of last year.
    Total funds under management as at December 31, 2008 were $404.5 billion,
an increase of two per cent over the prior year. The increases from currency
movements of $64 billion, net policyholder cash flows of $18 billion and
investment income of $13 billion were overshadowed by a $90 billion decrease
due to market value declines.

    
    OPERATING HIGHLIGHTS

    Corporate

    -  During the quarter, the Company successfully raised $4,275 million of
       new capital, consisting of $2,275 million of common shares and
       $2,000 million of term loans. The common share issue included
       $1,125 million sold by way of private placement to eight existing
       institutional investors and $1,150 million, including a fully
       subscribed over-allotment of $150 million, sold to a syndicate of
       underwriters in a "bought deal" public offering. The five year term
       loan was provided by leading Canadian banks, is repayable at the
       Company's option at any time, without penalty, and is priced on a
       floating rate basis at one month BAs plus 380 bps.

    -  In a separate news release, the Company also announced today that the
       Board of Directors approved a quarterly shareholders' dividend of
       $0.26 per share on the common shares of the Company, payable on and
       after March 19, 2009 to shareholders of record at the close of
       business on February 25, 2009.

    United States

    -  John Hancock Life ranked No.1 in U.S. individual insurance sales for
       the fifth consecutive quarter(1) and ended 2008 with record sales
       volumes for the year. During the quarter, the business announced the
       launch of a new variable universal life product that offers superior
       cash value and retirement income potential to pre-retirees.

    -  John Hancock Long Term Care reported a 48 per cent increase in Group
       sales, driven by increased sales from existing groups including plan
       upgrades and re-enrollment programs. Retail sales declined as a result
       of changes in consumer behavior in light of economic uncertainty and
       our recent price increases to this product line.

    -  John Hancock Variable Products Group, including Retirement Plan
       Services, Mutual Funds and Variable Annuities, all experienced
       decreased fourth quarter sales volumes compared to the prior year.
       Consistent with overall industry trends, decreases were driven by
       volatile equity markets and economic uncertainty. Despite the
       volatility, John Hancock Mutual Funds sales for 2008 were 12 per cent
       higher than in 2007. Retirement Plan Services sales for 2008 were five
       percent lower than 2007 primarily reflecting the lower value of asset
       transfers due to declines in equity and fixed income market values.
       During the quarter, variable annuity sales were down 18 per cent
       compared to 2007 and in January product changes to reduce the risk
       profile of this line were initiated.

    -  John Hancock Fixed Products sales were strong both for the quarter and
       over the full year, exceeding the prior year's comparatives by over
       30 per cent. The high sales growth is attributed to a 'flight to
       safety' as equity market volatility and credit concerns prompted
       investors to exit equity markets and seek fixed return products from
       top rated firms.

       (1) Based on most recently available industry data per LIMRA
       International's sales survey results for respective categories.

    Canada

    -  Individual Insurance reported its second best sales quarter ever, just
       $1 million short of the previous quarterly record, ending the year
       with record sales up 12 per cent from 2007. While universal life
       continued to be the largest selling product, all product lines
       reported strong growth.

    -  Individual Wealth Management reported a record sales quarter and year.
       Segregated fund sales were up ten per cent in the quarter and
       18 per cent for the year. Sales of fixed products were also higher in
       the quarter as the diversified product portfolio met the needs of
       investors seeking fixed rate returns.

    -  Manulife Bank had another record lending quarter with new loan volumes
       exceeding the prior year by 45 per cent. New loan volumes of
       $4.8 billion for the year were driven by the continued success of
       Manulife One. The credit quality of the portfolio continues to be
       excellent.

    -  Group Businesses' sales growth slowed as companies deferred changes to
       their employee benefits and pension plans while they assessed the
       business impact of the slowing economy. Group Savings had its best
       sales quarter of 2008 driven by sales in the small case market. Group
       Benefits sales in the quarter were in line with the third quarter and,
       excluding an unusually large case sale in 2007, were up four per cent
       for the year.

    Asia and Japan

    -  Japan insurance sales for both the fourth quarter and full year were
       more than double those of the prior year, driven by new products and
       the newly established MGA channel. Products launched in the year
       include increasing term insurance and corporate owned medical and life
       insurance.

    -  Hong Kong insurance sales in 2008 were five per cent higher than in
       2007 and decreased in the fourth quarter consistent with overall
       industry trends.

    -  Other Asia insurance sales for the full year were 13 per cent higher
       than in 2007, with fourth quarter sales in line with the prior year.
       Sales growth in the year was driven by strong bancassurance and agency
       sales in Singapore and a growing distribution base in China. During
       the quarter, China also launched an income protector product which
       provides monthly income in the event of a claimable event. Taiwan
       successfully completed the previously announced acquisition of Fuhwa
       Securities Investment Trust, which added seven new retail funds and
       20 new bank and security firm distributors.

    Awards & Recognition

    Manulife Financial received recognition from several organizations in the
quarter, including the following:

    -  John Hancock Retirement Plan Services was recognized for
       communications excellence by the League of American Communications
       Professionals (LACP) with 14 awards.

    -  Canada Group Savings & Retirement Solutions received an "Excellent"
       rating for its new year-end plan member statement from Dalbar, a
       communications consultancy firm.

    -  Canada Individual Wealth Management was awarded Silver status for
       achievement of Level III certification of the Progressive Excellence
       Program of the National Quality Institute, recognizing excellence in
       administration.

    -  Hong Kong was designated "Best Company for Financial Planning
       Excellence" in the insurance sector for the second year by Institute
       of Financial Planners of Hong Kong and the South China Morning Post
       and also received two Six Sigma awards under the Projects and Leaders
       categories by the Six Sigma Institute.

    -  Manulife-Sinochem was awarded the Canada China Business Council's
       (CCBC) "Outstanding Achievement Award". The Company was also named as
       first runner up for the CCBC's Best Global Business Award.

    -  Manulife Global Investment Management U.S. teams managing the John
       Hancock Balanced Fund and the John Hancock Large Cap Equity Fund were
       ranked among the top 10 U.S. portfolio managers as reported by Forbes,
       according to "Lowell's TRS 100", a new research paper published by
       James Lowell, based on analysis of more than 8,000 managers quarterly.

    -  Five Manulife fixed income fund managers in Asia have been named among
       the "Most Astute Investors in Local Currency Bonds 2008" in The Asset
       magazine's Benchmark survey. Three fixed income specialists were also
       singled out for commendation by those surveyed.


    MANAGEMENT'S DISCUSSION AND ANALYSIS
    Financial Highlights
    (unaudited)
                                         Quarterly Results       Year Ended
                                        4Q08    3Q08    4Q07    2008    2007
                                        ----    ----    ----    ----    ----
    Shareholders' Net Income (Loss)
     (C$millions)                     (1,870)    510   1,144     517   4,302
    Diluted Earnings (Loss) per
     Common Share (C$)                 (1.24)   0.33    0.75    0.32    2.78
    Return on Common Shareholders'
     Equity (%, annualized)            (28.6)    8.2    20.5     2.0    18.4

    Premiums & Deposits
     (C$millions)                     18,468  16,444  17,414  69,952  69,438
    Funds under Management
     (C$billions)                      404.5   385.3   396.3
    Capital (C$billions)                31.1    28.5    27.5
    

    Net Income

    Shareholders' net loss for the fourth quarter of 2008 was $1,870 million,
after recognizing a number of non cash charges totaling $2,727 million. Net
income for the fourth quarter of 2007 was $1,144 million reflecting strong
investment performance and other factors.
    Continued declines in global equity markets reduced fourth quarter
earnings by $2,920 million, and also resulted in charges for credit related
impairments and downgrades of $128 million. In addition to these two items,
changes in actuarial methods and assumptions resulted in income of $321
million and the Company had two offsetting tax related items.
    Of the $2,920 million equity related loss, $2,407 million is due to the
post tax increase in segregated fund guarantee liabilities, comprised of
$1,805 million for the reduction in the market value of the funds being
guaranteed and $602 million because the sharp drop in swap interest rates
reduced the discount rates used in the measurement of the obligation. The
remaining $513 million of the equity related loss is on equity investments
supporting non-experience adjusted policy liabilities ($196 million), reduced
capitalized future fee income on equity-linked and variable universal life
products ($100 million), impairments on equity positions in the Corporate and
Other segment ($158 million) and lower fee income ($59 million).
    During the quarter, the Company increased tax related provisions on
investments in leveraged leases by $181 million and recognized gains of $181
million in Canada due to the impact on actuarial liabilities of expected
changes in Canadian tax law for insurance companies in connection with fair
value accounting.
    Full year shareholders' net income was $517 million compared to $4,302
million for 2007.

    
    Diluted Earnings (Loss) per Share and Return on Common Shareholders'
    Equity
    
    The fourth quarter diluted loss per common share was $1.24 compared to
earnings of $0.75 in 2007. The negative return on common shareholders' equity
was 28.6 per cent for the three months ended December 31, 2008 compared to a
positive return of 20.5 per cent for the three months ended December 31, 2007.
Return on common shareholders' equity is calculated excluding Accumulated
Other Comprehensive Income on available-for-sale securities and cash flow
hedges (see page 11 for discussion of non-GAAP measures).

    Premiums and Deposits

    Premiums and deposits as reported in Canadian dollars for the quarter
were $18.5 billion, an increase of six per cent from the $17.4 billion
reported a year earlier. On a constant currency basis, premiums and deposits
decreased by ten per cent due to lower deposits in the fee based and variable
annuity businesses as customers shied away from products exposed to volatile
equity markets. These declines were partially offset by in-force business
growth in our insurance businesses, and sales growth in Canadian Individual
Wealth Management and John Hancock Fixed Products.

    Funds under Management

    Funds under management were $404.5 billion as at December 31, 2008, up
$8.2 billion or two per cent, from 2007. On a constant currency basis, funds
under management declined by 14 per cent from last year, as business growth
was more than offset by the effects of declining equity markets and scheduled
maturities of John Hancock Fixed institutional products.

    Capital

    Total capital was $31.1 billion as at December 31, 2008, $3.6 billion
higher than $27.5 billion as at December 31, 2007. Increases in capital from
the issuance of $2,275 million of common shares, the strengthened U.S. dollar
and 12 months of earnings were partially offset by unrealized losses on
available-for-sale assets, $403 million of share buy backs and $1,524 million
of dividends over the last 12 months.
    Regulatory capital adequacy is primarily managed at the insurance
operating company level (MLI and JHLICO). MLI's Minimum Continuing Capital and
Surplus Requirements ("MCCSR") ratio of 233 as at December 31, 2008 has
increased by 40 points from 193 per cent as at September 30, 2008. The
increase in MLI's new capital, funded largely by MFC's common equity issuance
and $2 billion term loan, plus the changes OSFI made to the capital
requirements were in excess of the fourth quarter loss, dividends to its
parent MFC and capital increases in segregated fund guarantees as a result of
the equity market declines. JHLICO's Risk-Based Capital ("RBC") ratio is
calculated annually and is estimated to be 400 per cent at December 31, 2008
compared to a regulatory target of 200 per cent.
    On December 1, 2008, the Company repaid U.S. $500 million of maturing
5.625% senior notes that did not qualify as regulatory capital.

    PERFORMANCE BY DIVISION

    The volatile markets affected the fourth quarter results of all
divisions. All operating divisions incurred losses related to segregated fund
guarantees and/or reduced capitalized future fee income on equity-linked and
variable universal life products, reduced fees due to lower levels of assets
under management and shared in the credit losses. These market-driven impacts
overshadowed other business related results.
    Effective January 1, 2008, we changed our approach for allocating
investment gains and losses to be more aligned with how we manage invested
assets and related risk positions. Investment gains and losses are now
accumulated in two pools - insurance and wealth management, and then allocated
to the business units based on their respective policy liabilities. Prior to
2008, gains and losses were reported in the business units where the specific
assets giving rise to the gains and losses were located, and credit gains and
losses were reported in the Corporate and Other segment. Investment gains and
losses related to product features, such as segregated fund guarantees and
future fees assumed in variable universal life and equity-linked policy
liabilities, as well as investment gains and losses on full pass through
products, such as par insurance, are not included in the pools. Prior periods
have been restated to conform to this new presentation.

    
    U.S. Insurance

    Canadian dollars                      Quarterly Results      Year Ended
                                        4Q08    3Q08    4Q07    2008    2007
                                        ----    ----    ----    ----    ----
    Shareholders' Net Income
     (millions)                           36     311     194     779     781
    Premiums & Deposits (millions)     2,106   1,842   1,696   7,149   6,538
    Funds under Management (billions)   70.3    59.9    56.5

    U.S. dollars                          Quarterly Results      Year Ended
                                        4Q08    3Q08    4Q07    2008    2007
                                        ----    ----    ----    ----    ----
    Shareholders' Net Income
     (millions)                           30     298     198     757     732
    Premiums & Deposits (millions)     1,739   1,769   1,729   6,686   6,119
    Funds under Management (billions)   57.4    56.5    57.1
    

    U.S. Insurance recorded earnings of US$30 million for the fourth quarter
of 2008, compared with US$198 million reported a year earlier as a result of
less favourable investment experience and reduced capitalized future fees on
variable universal life products. Other experience was relatively unchanged,
as a small increase in new business strain was offset by increased claims
gains. Full year net income was US$757 million, compared with US$732 million
reported last year.
    Premiums and deposits for the quarter were US$1.7 billion, consistent
with the fourth quarter of 2007. In-force premium growth in both John Hancock
Life and John Hancock Long Term Care was offset by lower sales in Life.
    Funds under management were US$57.4 billion, consistent with a year ago
as business growth experienced in both Life and Long Term Care was offset by a
decrease in the market value of the variable life segregated fund assets.

    
    U.S. Wealth Management

    Canadian dollars                      Quarterly Results      Year Ended
                                        4Q08    3Q08    4Q07    2008    2007
                                        ----    ----    ----    ----    ----
    Shareholders' Net Income
     (Loss) (millions)                (1,314)    (27)    259    (921)  1,132
    Premiums & Deposits (millions)     9,217   8,367   8,335  35,412  35,314
    Funds under Management (billions)  163.9   164.1   176.0

    U.S. dollars                          Quarterly Results      Year Ended
                                        4Q08    3Q08    4Q07    2008    2007
                                        ----    ----    ----    ----    ----
    Shareholders' Net Income (Loss)
     (millions)                       (1,085)    (25)    264    (694)  1,054
    Premiums & Deposits (millions)     7,606   8,037   8,495  33,346  32,906
    Funds under Management (billions)  133.9   154.8   178.1
    

    U.S. Wealth Management recorded a loss of US$1,085 million for the fourth
quarter of 2008, compared with earnings of US$264 million reported a year
earlier. Earnings decreased significantly due to strengthened segregated fund
guarantee reserves, reduced fee income on lower funds under management, and
unfavourable investment results. The loss for the full year was US$694
million, compared with net income of US$1,054 million reported last year.
    Premiums and deposits for the quarter were US$7.6 billion, down ten per
cent from US$8.5 billion reported in the same quarter of 2007. Lower sales in
John Hancock Variable Annuities and John Hancock Mutual Funds, due to the
equity market downturn, were partially offset by increased sales of fixed
deferred annuities in John Hancock Fixed Products.
    Funds under management were US$133.9 billion, down 25 per cent from
US$178.1 billion at December 31, 2007. The decline was due to the cumulative
effect of unfavourable equity markets on segregated and mutual fund assets and
also from US$3.4 billion of scheduled maturities in Fixed Products over the
last twelve months, partially offset by net policyholder cash inflows of
US$8.1 billion.

    
    Canadian Division

    Canadian dollars                      Quarterly Results      Year Ended
                                        4Q08    3Q08    4Q07    2008    2007
                                        ----    ----    ----    ----    ----
    Shareholders' Net Income (Loss)
     (millions)                          (13)    113     287     656   1,110
    Premiums & Deposits (millions)     4,505   3,794   4,312  16,379  16,121
    Funds under Management (billions)   82.3    84.2    86.2
    

    Canadian Division recorded a loss of $13 million for the fourth quarter
of 2008 compared to earnings of $287 million reported a year earlier.
Increases from business growth, particularly in the insurance businesses and
Manulife Bank, lower expenses and the favourable impact on policy liabilities
of expected changes in Canadian tax law in connection with fair value
accounting were more than offset by segregated fund guarantee charges and less
favourable investment results. Full year shareholders' net income was $656
million, compared with $1,110 million in 2007.
    Premiums and deposits for the quarter were $4.5 billion, up four per cent
from $4.3 billion reported in the fourth quarter of 2007. The increase was due
to general fund premiums which rose nearly 12 per cent driven by growth in
insurance sales and fixed rate wealth management products.
    Funds under management decreased by five per cent, or $3.9 billion, to
$82.3 billion at December 31, 2008. The impact of equity market declines
outweighed the increase from positive net sales and a 24 per cent rise in
Manulife Bank's invested assets as a result of continued strong growth in
Manulife One mortgage lending assets.

    
    Asia and Japan Division

    Canadian dollars                      Quarterly Results      Year Ended
                                        4Q08    3Q08    4Q07    2008    2007
                                        ----    ----    ----    ----    ----
    Shareholders' Net Income (Loss)
     (millions)                         (440)    216     205     177     851
    Premiums & Deposits (millions)     2,320   2,169   2,831   9,749  10,406
    Funds under Management (billions)   50.0    42.6    43.3

    U.S. dollars                          Quarterly Results      Year Ended
                                        4Q08    3Q08    4Q07    2008    2007
                                        ----    ----    ----    ----    ----
    Shareholders' Net Income (Loss)
     (millions)                         (363)    208     209     243     794
    Premiums & Deposits (millions)     1,913   2,084   2,888   9,220   9,797
    Funds under Management (billions)   40.8    40.2    43.8
    

    Asia and Japan Division recorded a loss of US$363 million for the fourth
quarter of 2008 compared to earnings of US$209 million reported a year
earlier. Strengthened segregated fund guarantee reserves in Japan and lower
fee income across all wealth management businesses were only partially offset
by the growth in the business, expense reductions and gains on pricing actions
taken in Hong Kong. Full year shareholders' net income was US$243 million,
compared to US$794 million reported last year.
    Premiums and deposits for the quarter were US$1.9 billion, down 34 per
cent from US$2.9 billion reported in the same quarter of 2007. Lower wealth
management deposits due to volatile equity markets overshadowed the nine per
cent growth in insurance premiums generated from in-force business growth and
sales.
    Funds under management declined by seven per cent, or US$3.0 billion, to
US$40.8 billion at December 31, 2008. Net policyholder cash inflows of US$5.4
billion and the funds assumed through our newly acquired asset management
company in Taiwan were more than offset by the negative impact of declining
equity markets in the past twelve months.

    
    Reinsurance Division

    Canadian dollars                      Quarterly Results      Year Ended
                                        4Q08    3Q08    4Q07    2008    2007
                                        ----    ----    ----    ----    ----
    Shareholders' Net Income (Loss)
     (millions)                          (14)     49      57     154     238
    Premiums (millions)                  273     272     240   1,091   1,026

    U.S. dollars                          Quarterly Results      Year Ended
                                        4Q08    3Q08    4Q07    2008    2007
                                        ----    ----    ----    ----    ----
    Shareholders' Net Income (Loss)
     (millions)                          (11)     47      58     154     221
    Premiums (millions)                  225     261     245   1,028     956
    

    Reinsurance Division incurred a net loss of US$11 million for the fourth
quarter of 2008 compared to net income of US$58 million reported a year
earlier. The current quarter included losses attributable to the strengthened
segregated fund guarantee reserves and unfavourable investment results. The
increase in new business gains was offset by less favourable lapse and claims
experience. Full year net income was US$154 million, compared to US$221
million reported last year.
    Premiums for the quarter were US$225 million, down eight per cent from
US$245 million reported in the same quarter of 2007. The decrease was
primarily due to the impact of adjusting premium estimates accrued in prior
periods to match annual client reports for International Group Program
business.

    
    Corporate and Other

    Canadian dollars                      Quarterly Results      Year Ended
                                        4Q08    3Q08    4Q07    2008    2007
                                        ----    ----    ----    ----    ----
    Shareholders' Net Income (Loss)
     (millions)                         (125)   (152)    142    (328)    190
    Funds under Management (billions)   35.0    31.8    31.9
    

    Corporate and Other is comprised of the Investment Division's external
asset management business, earnings on residual capital (assets backing
capital, net of amount allocated to operating divisions), changes in actuarial
methods and assumptions, the John Hancock Accident and Health operation, which
primarily consists of contracts in dispute, and other non operating matters.
    Corporate and Other recorded a loss in the fourth quarter of 2008 of $125
million compared to net income of $142 million reported a year earlier. The
decrease of $267 million includes write downs of $158 million on our
available-for-sale equity portfolio, additional tax related provisions of $181
million on leveraged lease investments and the non recurrence of $78 million
of post tax gains on sales of equity securities in 2007, partially offset by
the $223 million positive impact on earnings from changes in actuarial methods
and assumptions compared to 2007. For the full year, the net loss was $328
million compared to net income of $190 million reported a year ago.
    Funds under management increased by ten per cent, or $3.1 billion, to
$35.0 billion as at December 31, 2008. This increase is driven by $ 2 billion
of new deposits in Investment Division's externally managed business, funds
received from the five year term loan and share capital financing and the
impact of the strengthening U.S. dollar. Partially offsetting these increases
were the market value declines in both the equity and bond portfolios.

    Contingencies

    The Company is an investor in leveraged leases and in prior years
established provisions in the amount of US$178 million after tax for possible
disallowance of the tax treatment and for interest on past due taxes. During
2008, we increased this provision by US$33 million after tax in the second
quarter and an additional US$152 million after tax in the fourth quarter. We
continue to believe that deductions originally claimed in relation to these
arrangements are appropriate. Although not expected to occur, should the tax
attributes of our leveraged leases be fully denied, the maximum after tax
exposure including interest would be an additional estimated US$280 million as
at December 31, 2008.

    Performance and Non-GAAP Measures

    We use a number of non-GAAP financial measures to measure overall
performance and to assess each of our businesses. Non-GAAP measures include
return on common shareholders' equity, premiums and deposits, funds under
management, constant currency and new business embedded value. Non-GAAP
financial measures are not defined terms under GAAP and, therefore, are
unlikely to be comparable to similar terms used by other issuers.
    Return on equity is a profitability measure that presents the net income
available to common shareholders as a percentage of the capital deployed to
earn the income. The 2007 implementation of Canadian Institute of Chartered
Accountants ("CICA") Handbook Section 3855 resulted in certain unrealized
gains and losses, which do not have an impact on reported income for the
period, being reflected in a new component of shareholders' equity called
Accumulated Other Comprehensive Income. Accordingly, the Company calculates
return on equity using average common shareholders' equity excluding
Accumulated Other Comprehensive Income on available-for-sale securities and
cash flow hedges.

    About Manulife Financial

    Manulife Financial is a leading Canadian-based financial services group
serving millions of customers in 19 countries and territories worldwide.
Operating as Manulife Financial in Canada and Asia, and primarily through John
Hancock in the United States, the Company offers clients a diverse range of
financial protection products and wealth management services through its
extensive network of employees, agents and distribution partners. Funds under
management by Manulife Financial and its subsidiaries were Cdn $404.5 billion
(US$330.3 billion) as at December 31, 2008. Manulife Financial Corporation
trades as 'MFC' on the TSX, NYSE and PSE, and under '945' on the SEHK.
Manulife Financial can be found on the Internet at www.manulife.com.

    Attachments: Financial Highlights, Consolidated Statements of Operations,
Consolidated Balance Sheets, Divisional Information.

    Notes:

    Manulife Financial Corporation will host a Fourth Quarter Earnings
Results Conference Call at 2:00 p.m. ET on February 12, 2009. For local and
international locations, please call (416) 340-2216 and toll free in North
America please call (866) 898-9626. Please call in ten minutes before the call
starts. You will be required to provide your name and organization to the
operator. A playback of this call will be available by 6:00 p.m. ET on
February 12, 2009 until February 26, 2009 by calling (416) 695-5800 or (800)
408-3053 (passcode 3274825No.).
    The conference call will also be webcast through Manulife Financial's
website at 2:00 p.m. ET on February 12, 2009. You may access the webcast at:
www.manulife.com/quarterlyreports. An archived version of the webcast will be
available at 4:00 p.m. ET on the website at the same URL as above.
    The Fourth Quarter 2008 Financial Statements and Statistical Information
Package are also available on the Manulife website at:
www.manulife.com/quarterlyreports. Each of these documents may be downloaded
before the webcast begins.

    Caution Regarding Forward-Looking Statements

    This document contains forward-looking statements within the meaning of
the "safe harbour" provisions of Canadian provincial securities laws and the
U.S. Private Securities Litigation Reform Act of 1995. These forward-looking
statements 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", "suspect", "outlook", "expect", "intend", "estimate", "anticipate",
"believe", "plan", "forecast", "objective", "continue" 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. Certain material factors or
assumptions are applied in making forward-looking statements, and actual
results may differ materially from those expressed or implied in such
statements. Important factors that could cause actual results to differ
materially from expectations include but are not limited to: general business
and economic conditions (including but not limited to performance of equity
markets, interest rate fluctuations, currency rates, investment losses and
defaults, movements in credit spreads, market liquidity and creditworthiness
of guarantors and counterparties); level of competition and consolidation;
changes in laws and regulations; Company liquidity, including the availability
of financing to satisfy existing financial liabilities on their expected
maturity dates when required; accuracy of information received from
counterparties and the ability of counterparties to meet their obligations;
accuracy of accounting policies and actuarial methods used by the Company; the
ability to maintain the Company's reputation; legal and regulatory
proceedings; the ability to adapt products and services to the changing
market; the ability to implement effective hedging strategies; the ability to
attract and retain key executives; the ability to complete acquisitions
including the availability of equity and debt financing for this purpose; the
ability to execute strategic plans; the disruption of or changes to key
elements of the Company's or public infrastructure systems; and environmental
concerns. Additional information about material factors that could cause
actual results to differ materially from expectations and about material
factors or assumptions applied in making forward-looking statements may be
found in the body of this document as well as under "Risk Factors" in our most
recent Annual Information Form, under "Risk Management" and "Critical
Accounting and Actuarial Policies" in the Management's Discussion and Analysis
in our most recent annual and interim reports, in the "Risk Management" note
to consolidated financial statements in our most recent annual and interim
reports and elsewhere in our filings with Canadian and U.S. securities
regulators. We do not undertake to update any forward-looking statements
except as required by law.

    
    Financial Highlights
    (Canadian $ in millions unless otherwise stated and per share
     information, unaudited)

                                         As at and for the three months ended
                                                     December 31
                                                2008        2007    % Change
    -------------------------------------------------------------------------
    Net income                             $  (1,869)  $   1,074
      Income (loss) attributed to
       participating policyholders                 1         (70)
    --------------------------------------------------------------
    Net income (loss) attributed to
     shareholders                          $  (1,870)  $   1,144
      Preferred share dividends                   (8)         (8)
    --------------------------------------------------------------
    Net income available to common
     shareholders                          $  (1,878)  $   1,136
    --------------------------------------------------------------
    --------------------------------------------------------------

    Premiums and deposits:
      Life and health insurance premiums   $   4,460   $   3,795          18
      Annuity and pension premiums             2,562       1,504          70
      Segregated fund deposits                 8,847       9,043          (2)
      Mutual fund deposits                     1,824       2,291         (20)
      ASO premium equivalents                    633         630           -
      Other fund deposits                        142         151          (6)
    -------------------------------------------------------------------------
    Total premiums and deposits            $  18,468   $  17,414           6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Funds under management:
      General fund                         $ 187,501   $ 161,300          16
      Segregated funds                       164,755     174,977          (6)
      Mutual funds                            25,629      32,948         (22)
      Other funds                             26,570      27,119          (2)
    -------------------------------------------------------------------------
    Total funds under management           $ 404,455   $ 396,344           2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Capital
      Liabilities for preferred shares
       and qualifying capital instruments  $   3,122   $   3,010           4
      Non-controlling interest in
       subsidiaries                              217         146          49

    Equity
      Participating policyholders' equity         62          82         (24)
      Shareholders' equity
        Preferred shares                         638         638           -
        Common shares                         16,157      14,000          15
        Contributed surplus                      160         140          14
        Retained earnings                     13,079      14,388          (9)
        Accumulated other comprehensive
         loss on AFS securities and
         translation of net foreign
         operations                           (2,324)     (4,877)        (52)
    -------------------------------------------------------------------------
    Total capital                          $  31,111   $  27,527          13
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Selected key performance measures:
      Basic earnings (loss) per
       common share                        $   (1.24)  $    0.76
      Diluted earnings (loss) per
       common share                        $   (1.24)  $    0.75
      Return on common shareholders'
       equity (annualized)(1)                 (28.6)%      20.5%
      Book value per common share          $    16.62  $   15.73
      Common shares outstanding
       (in millions)
        End of period                           1,610      1,501
        Weighted average - basic                1,519      1,502
        Weighted average - diluted              1,519      1,515

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



    Summary Consolidated Financial Statements

    Consolidated Statements of Operations
    (Canadian $ in millions except per share data, unaudited)

                                                   For the three months ended
                                                             December 31
                                                            2008        2007
    -------------------------------------------------------------------------
    Revenue
    Premium income                                     $   7,022   $   5,299
    Investment income
      Investment income                                    1,786       2,412
      Realized/unrealized gains on assets
       supporting policy liabilities and consumer notes    1,519       1,163
    Other revenue                                          1,323       1,404
    -------------------------------------------------------------------------
    Total revenue                                      $  11,650   $  10,278
    -------------------------------------------------------------------------
    Policy benefits and expenses
    To policyholders and beneficiaries
      Death, disability and other claims               $   1,760   $   1,454
      Maturity and surrender benefits(1)                   3,179       1,992
      Annuity payments                                       809         788
      Policyholder dividends and experience
       rating refunds                                        431         393
      Net transfers to segregated funds                      385         417
      Change in actuarial liabilities(1)                   4,957       1,250
    General expenses                                         907         866
    Investment expenses                                      248         248
    Commissions                                            1,096       1,154
    Interest expense                                         372         258
    Premium taxes                                             78          65
    Non-controlling interest in subsidiaries                  24          35
    -------------------------------------------------------------------------
    Total policy benefits and expenses                 $  14,246   $   8,920
    -------------------------------------------------------------------------
    Income (loss) before income taxes                  $  (2,596)  $   1,358
    Income taxes                                             727        (284)
    -------------------------------------------------------------------------
    Net income (loss)                                  $  (1,869)  $   1,074
      Income (loss) attributed to participating
       policyholders                                           1         (70)
    -------------------------------------------------------------------------
    Net income (loss) attributed to shareholders       $  (1,870)  $   1,144
      Preferred share dividends                               (8)         (8)
    -------------------------------------------------------------------------
    Net income (loss) available to common
     shareholders                                      $  (1,878)  $   1,136
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic earnings (loss) per common share             $   (1.24)  $    0.76
    Diluted earnings (loss) per common share           $   (1.24)  $    0.75

    (1) Includes impact of scheduled maturities in John Hancock Fixed
        Products institutional products of $1.5 billion in Q4 2008 and $0.6
        billion in Q4 2007.



    Consolidated Balance Sheets
    (Canadian $ in millions, unaudited)

                                                         As at December 31
    Assets                                                2008        2007
    -------------------------------------------------------------------------
    Invested assets
    Cash and short-term securities                     $  17,269   $  12,354
    Securities
      Bonds                                               83,148      72,831
      Stocks                                               8,354      11,134
    Loans
      Mortgages                                           30,963      26,061
      Private placements                                  25,705      21,591
      Policy loans                                         7,533       5,823
      Bank loans                                           2,384       2,182
    Real estate                                            7,274       5,727
    Other investments                                      4,871       3,597
    -------------------------------------------------------------------------
    Total invested assets                              $ 187,501   $ 161,300
    -------------------------------------------------------------------------
    Other assets
    Accrued investment income                          $   1,760   $   1,414
    Outstanding premiums                                     799         672
    Goodwill                                               7,929       6,721
    Intangible assets                                      1,866       1,573
    Derivatives                                            7,883       2,129
    Miscellaneous                                          3,287       2,649
    -------------------------------------------------------------------------
    Total other assets                                 $  23,524   $  15,158
    -------------------------------------------------------------------------
    Total assets                                       $ 211,025   $ 176,458
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Segregated funds net assets                        $ 165,380   $ 175,544
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and equity
    -------------------------------------------------------------------------
    Policy liabilities                                 $ 146,059   $ 124,422
    Deferred realized net gains                              127         107
    Bank deposits                                         12,210      10,008
    Consumer notes                                         1,876       2,085
    Long-term debt                                         3,689       1,820
    Future income tax liability                            1,969       2,456
    Derivatives                                            6,389       1,866
    Other liabilities                                      7,360       6,203
    -------------------------------------------------------------------------
                                                       $ 179,679   $ 148,967

    Liabilities for preferred shares and capital
     instruments                                           3,674       3,010
    Non-controlling interest in subsidiaries                 217         146

    Equity
      Participating policyholders' equity                     62          82
      Shareholders' equity
        Preferred shares                                     638         638
        Common shares                                     16,157      14,000
        Contributed surplus                                  160         140
        Retained earnings                                 13,079      14,388
        Accumulated other comprehensive loss              (2,641)     (4,913)
    -------------------------------------------------------------------------
    Total equity                                       $  27,455   $  24,335
    -------------------------------------------------------------------------
    Total liabilities and equity                       $ 211,025   $ 176,458
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Segregated funds net liabilities                   $ 165,380   $ 175,544
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Notes to Summary Consolidated Financial Statements
    (Canadian $ in millions, unaudited)

    Note 1: Divisional Information

                                   For the quarter ended December 31, 2008
                               ----------------------------------------------
                                              U.S.
                                  U.S.       Wealth                 Asia and
    Premiums and deposits      Insurance   Management   Canadian      Japan
    -------------------------------------------------------------------------
    General fund premiums      $   1,670   $   2,244   $   1,817   $   1,018
    Segregated fund deposits         436       5,271       1,960       1,133
    Mutual fund deposits               -       1,560          95         169
    ASO premium equivalents            -           -         633           -
    Other fund deposits                -         142           -           -
    -------------------------------------------------------------------------
    Total                      $   2,106   $   9,217   $   4,505   $   2,320
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net income (loss)          $      36   $  (1,314)  $     (11)  $    (441)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Funds under management                 As at December 31, 2008
    -------------------------------------------------------------------------
    General fund               $  59,967   $  39,581   $  52,314   $  21,406
    Segregated funds              10,342      99,133      27,628      24,541
    Mutual funds                       -      21,943       2,320       1,366
    Other funds                        -       3,279           -       2,658
    -------------------------------------------------------------------------
    Total                      $  70,309   $ 163,936   $  82,262   $  49,971
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                      For the quarter ended
                                        December 31, 2008
                               ----------------------------------
                                            Corporate
    Premiums and deposits      Reinsurance  and Other      Total
    -------------------------------------------------------------
    General fund premiums      $     273   $       -   $   7,022
    Segregated fund deposits           -          47       8,847
    Mutual fund deposits               -           -       1,824
    ASO premium equivalents            -           -         633
    Other fund deposits                -           -         142
    --------------------------------------------------------------
    Total                      $     273   $      47   $  18,468
    --------------------------------------------------------------
    --------------------------------------------------------------

    Net income (loss)          $     (14)  $    (125)  $  (1,869)
    --------------------------------------------------------------
    --------------------------------------------------------------

    Funds under management           As at December 31, 2008
    --------------------------------------------------------------
    General fund               $    2,935  $  11,298   $  187,501
    Segregated funds                    -      3,111      164,755
    Mutual funds                        -          -       25,629
    Other funds                         -     20,633       26,570
    --------------------------------------------------------------
    Total                      $    2,935  $  35,042   $  404,455
    --------------------------------------------------------------
    --------------------------------------------------------------



                                   For the quarter ended December 31, 2007
                               ----------------------------------------------
                                              U.S.
                                  U.S.       Wealth                 Asia and
    Premiums and deposits      Insurance   Management   Canadian      Japan
    -------------------------------------------------------------------------
    General fund premiums      $   1,377   $   1,330   $   1,624   $     728
    Segregated fund deposits         319       5,128       1,929       1,667
    Mutual fund deposits               -       1,726         129         436
    ASO premium equivalents            -           -         630           -
    Other fund deposits                -         151           -           -
    -------------------------------------------------------------------------
    Total                      $   1,696   $   8,335   $   4,312   $   2,831
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net income                 $     194   $     259   $     297   $     170
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Funds under management                     As at December 31, 2007
    -------------------------------------------------------------------------
    General fund               $  45,064   $  35,823   $  51,474   $  16,752
    Segregated funds              11,387     108,877      31,391      20,728
    Mutual funds                       -      27,585       3,286       2,077
    Other funds                        -       3,714           -       3,701
    -------------------------------------------------------------------------
    Total                      $  56,451   $ 175,999   $  86,151   $  43,258
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                      For the quarter ended
                                        December 31, 2007
                               ----------------------------------
                                             Corporate
    Premiums and deposits      Reinsurance   and Other     Total
    -------------------------------------------------------------
    General fund premiums      $     240   $       -   $   5,299
    Segregated fund deposits           -           -       9,043
    Mutual fund deposits               -           -       2,291
    ASO premium equivalents            -           -         630
    Other fund deposits                -           -         151
    -------------------------------------------------------------
    Total                      $     240   $       -   $  17,414
    -------------------------------------------------------------
    -------------------------------------------------------------

    Net income                 $      57   $      97   $   1,074
    -------------------------------------------------------------
    -------------------------------------------------------------

    Funds under management           As at December 31, 2007
    -------------------------------------------------------------
    General fund               $   2,581   $   9,606   $ 161,300
    Segregated funds                   -       2,594     174,977
    Mutual funds                       -           -      32,948
    Other funds                        -      19,704      27,119
    -------------------------------------------------------------
    Total                      $   2,581   $  31,904   $ 396,344
    -------------------------------------------------------------
    -------------------------------------------------------------


    Note 2: Comparatives

    Certain comparative amounts have been reclassified to conform with the
    current period's presentation.
    





For further information:

For further information: Media inquiries: Laurie Lupton, (416) 852-7792,
Laurie_Lupton@manulife.com; Investor Relations: Amir Gorgi, 1-800-795-9767,
investor_relations@manulife.com


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