Manulife Financial Corporation Reports First Quarter Results

    
    -   Net income in excess of $1.1 billion
    -   Strong capital levels - MLI MCCSR ratio of 250 per cent at quarter
        end
    -   Solid growth in high return businesses - continued focus on strong
        margin products and services
    -   Strong year over year sales growth along with a change in mix to
        higher margin products resulted in a substantial increase in new
        business embedded value
    -   Asia insurance sales increased 35 per cent, mutual fund sales in U.S.
        and Canada increased 105 per cent and 267 per cent respectively
    -   Continued to improve equity risk profile through expanded hedging of
        variable product guarantees
    -   Strong investment credit experience relative to market conditions

    C$ unless otherwise stated

    TSX/NYSE/PSE: MFC     SEHK: 945
    

TORONTO, May 6 /CNW/ - Manulife Financial Corporation ("MFC") today reported net income attributed to shareholders of $1,140 million for the first quarter ended March 31, 2010, equating to fully diluted earnings per share of $0.64 and a return on common shareholders' equity(1) of 16.8 per cent. In the first quarter of 2009, MFC reported a net loss of $1,068 million or $0.67 per share.

In its 2009 annual report, the Company included a forward-looking statement that estimated adjusted earnings from operations(2) to be between $700 million and $800 million per quarter in 2010. The first quarter's adjusted earnings from operations under this definition were $742 million.

Chief Executive Officer Donald A. Guloien stated, "This was a highly satisfactory quarter. We delivered sales growth in our targeted business lines, managed expenses effectively, maintained strong capital, reduced risk, and achieved strong earnings and ROE for our shareholders. We have focused our executives and employees on delivering long term sustainable value, and they are delivering. We are very pleased with the strong results driven by confirmed strength in Canada and Asia, a recovering U.S. economy, and strong investment experience relative to overall market conditions. Manulife is well positioned for both organic and strategic growth opportunities going forward."

    
    -------------------------
    (1) Return on common shareholders' equity is a non-GAAP measure. See
        "Performance and Non-GAAP Measures" below.
    (2) Adjusted earnings from operations is a non-GAAP measure. See
        "Performance and Non-GAAP Measures" below.
    

FINANCIAL RESULTS

Chief Financial Officer Michael W. Bell said, "The first quarter results included both strong top line growth and net income results. Improving economic confidence and growth across our key markets contributed to strong sales of our higher return insurance and wealth products. Our earnings benefited from positive equity markets and attractive fixed income investing activities as well as solid underlying earnings. Although additional hedging of our in-force variable annuity business tempered adjusted earnings from operations, it further reduced our equity exposure. Our capital position remains strong and our financial strength remains the foundation of our strong brand."

Earnings in the first quarter of 2010 reflected gains related to increases in equity markets, the positive impact on the policy liability valuation of fixed income investing activities and other investment related items. These were partially offset by a previously disclosed tax related charge on leveraged lease investments, unfavourable policyholder experience, higher new business strain and the impact of a stronger Canadian dollar.

Gains of $328 million were reported on our variable annuity business as a result of the overall positive equity market performance and the performance of our variable annuity guarantee hedging program. In addition, gains of $23 million resulted from the impact of the improved equity markets on capitalized variable universal life fees and equities supporting policy liabilities.

Fixed income investing activities had a favourable impact on the valuation of policy liabilities, and were the primary driver of additional net investment related gains of $227 million recorded in the quarter. The small movement in interest rates during the quarter did not have a material impact on the valuation of our policy liabilities or our net income.

The Company's fixed income portfolio continued to perform very well relative to overall market conditions. Net credit impairments were limited to $17 million, while actuarial charges related to credit downgrades were $15 million. These amounts were only slightly higher than the expected credit losses assumed in the valuation of policy liabilities.

Policyholder experience, primarily morbidity experience in John Hancock Long Term Care and lapse experience in John Hancock Life, was unfavourable relative to the expected experience levels and reduced earnings by $31 million.

During the quarter, the Company further improved its equity risk profile by opportunistically hedging an additional $15.2 billion of in-force variable annuity guarantee value. This brought the percentage of guarantee value hedged or reinsured to approximately 51 per cent as at March 31, 2010 as compared to 35 per cent of guarantee value hedged or reinsured as at December 31, 2009 and 23 per cent as at March 31, 2009. As a result of hedging activities and increases in equity markets during the quarter, the net amount at risk, related to unhedged and unreinsured variable annuity products was $8.1 billion as at March 31, 2010, down from $11.6 billion at December 31, 2009 and from $28.3 billion at March 31, 2009.

The Manufacturers Life Insurance Company reported an MCCSR ratio of 250 per cent as at March 31, 2010, up from 240 per cent in the prior quarter, driven by retained earnings and equity market increases. The Company's capital sensitivity to market declines continued to decrease as a result of the reduction in the net amount at risk related to variable annuity guarantees.

SALES AND BUSINESS GROWTH

Michael W. Bell said, "Insurance sales increased 20 per cent overall with particularly strong growth in Hong Kong, Japan, Taiwan and China. Wealth sales excluding variable annuities increased 21 per cent across the Company with especially strong mutual fund and retirement sales in Canada and the U.S. Variable annuity sales were in line with our focus on rebalancing our business mix and reducing equity exposure. Our strong brands and powerful distribution networks position us well for continued growth."

Total insurance sales increased by 20 per cent, on a constant currency basis, over the first quarter of 2009. Improving economic conditions across geographic markets fueled sales growth across all divisions, led by advances in Asia, which increased 35 per cent over the prior year on a constant currency(3) basis. New business embedded value ("NBEV")(4) for the insurance businesses increased by approximately 21 per cent over the first quarter of 2009, driven by the increase in sales as well as actions taken to improve product margins.

Total wealth sales excluding variable annuity products increased by 21 per cent on a constant currency basis over the first quarter of 2009. Sales of retail variable products and group retirement savings grew by 51 per cent as a result of the stronger equity markets and our marketing and distribution efforts. This growth was partially offset by a decline in demand for fixed products in the U.S and Canada. NBEV for the wealth businesses excluding variable annuities, increased by approximately 17 per cent over the first quarter of 2009, consistent with the overall increase in sales.

Consistent with the Company's on-going risk management initiatives, sales of variable annuity products in the first quarter declined by 39 per cent compared to the prior year on a constant currency basis. Sales declines in the U.S. and Canada were partially offset by an increase in Japan, where sales increased in advance of April 1, 2010 tax changes. NBEV for the variable annuity business increased by approximately 37 per cent over the first quarter of 2009 driven by product changes and higher long-term interest rates achieved as we hedged the business.

Premiums and deposits for the insurance businesses amounted to $5.2 billion for the first quarter of 2010, representing an increase of seven per cent over the prior year, on a constant currency basis, reflecting growth of the in-force business.

Premiums and deposits for the wealth businesses excluding variable annuities amounted to $9.8 billion for the first quarter of 2010, representing an increase of 13 per cent over the prior year, on a constant currency basis. The stronger equity markets contributed to deposit growth in mutual funds and retirement savings, which was partially offset by lower fixed product sales in both the U.S. and Canada.

Variable annuity premiums and deposits amounted to $2.2 billion for the first quarter of 2010, a decrease of 40 per cent from the prior year, on a constant currency basis, consistent with the decline in sales as a result of on-going risk management initiatives.

Total funds under management as at March 31, 2010 were $446 billion, an increase of $7 billion over December 31, 2009. In the quarter, positive policyholder net cash flows of $5 billion, investment income of $11 billion and acquisitions of $2 billion more than offset unfavourable currency movements and expenses of $11 billion. Total funds under management, as at March 31, 2010, include $115 billion of assets managed by MFC Global Investment Management ("MFC GIM") for external parties.

    
    -------------------------
    (3) Constant currency basis is a non-GAAP measure. See "Performance and
        Non-GAAP measures" below.
    (4) NBEV is a non-GAAP measure. See "Performance and Non-GAAP measures"
        below.
    

OPERATING HIGHLIGHTS

Insurance

    
    -   Insurance sales grew by 20 per cent over the prior year on a constant
        currency basis, led by advances in Asia. Improving economic
        conditions across geographic markets fueled sales growth across all
        of our divisions.

    -   In the U.S., insurance sales were up by 17 per cent over the prior
        year on a U.S. dollar basis. John Hancock Life experienced a six per
        cent increase over the prior year, reflecting the gradual economic
        recovery, and tempered by actions to increase margins. LTC sales grew
        by 50 per cent, attributable to a combination of increased Federal
        Long Term Care Insurance Program sales, where John Hancock is now the
        sole carrier, and increased retail sales driven in part by consumer
        flight to quality.

    -   In Canada, insurance sales increased by nine per cent from 2009
        levels with growth across all businesses. Improved consumer
        confidence drove a seven per cent rise in individual insurance sales,
        reflecting strong growth in sales of permanent life products and a
        return to larger case size. Group Benefits had a good start to the
        year with strong results in the large case segment, up 13 per cent
        from a year ago.

    -   In Asia, first quarter insurance sales on a constant currency basis
        grew by 35 per cent over the prior year, bolstered by increases in
        Hong Kong individual life and Japan where sales were up 69 per cent
        and 37 per cent, respectively. In Hong Kong, the growth in sales
        resulted from a combination of a new product launch, more agents and
        improved agent productivity. In Japan, Increasing Term sales doubled
        from the prior year, corporate owned life and medical sales continued
        their strong momentum and a new whole life product was launched in
        the quarter. Combined China and Taiwan insurance sales were up by
        45 per cent over the prior year on a constant currency basis. In
        Taiwan, sales were more than twice prior year levels with strong
        whole life product sales while growth in China was fueled by an
        increase in the number of our agents, as well as a new product
        launched in March. During the quarter, new products were also
        launched in Hong Kong, Singapore, the Philippines, and Indonesia.
        Manulife-Sinochem received two new licenses in the quarter plus one
        in April, and is now licensed in 42 cities in China, which are home
        to more than 300 million individuals.
    

Wealth Management, excluding variable annuities

    
    -   Wealth sales, excluding variable annuities, for the first quarter of
        2010 increased by 21 per cent over the prior year on a constant
        currency basis. Sales of retail variable products and group
        retirement savings increased by 51 per cent as a result of the
        stronger equity markets and focused marketing and distribution
        efforts. They were partially offset by a decline in demand for fixed
        products.

    -   In the U.S., first quarter wealth sales, excluding variable
        annuities, increased by 53 per cent on a U.S. dollar basis. The
        overall increase was due to growth in John Hancock Mutual Funds and
        Retirement Plan Services which were up over the prior year by 105 per
        cent and 66 per cent, respectively, more than offsetting a decline in
        Fixed Products of 45 per cent. The significant advances in these
        business lines were attributable to the equity market recovery,
        competitive fund performance on a broad offering of funds and the
        strong distribution relationships built over the last few years. The
        strong results in Mutual Funds and Retirement Plan Services also
        drove increased net sales, up by US$1.2 billion compared to the prior
        year. The first quarter marked the fourth consecutive quarter of
        positive and increasing net sales in Mutual Funds, and strong sales
        to the end of March resulted in improved market share and ranking.

    -   In Canada, first quarter wealth sales, excluding variable annuities,
        were one per cent higher than the prior year. Manulife Mutual Funds
        enjoyed one of its best quarters in the last decade as a focused
        business strategy, in combination with increasing consumer confidence
        and equity market improvement, led to an almost four-fold increase in
        gross sales. Group Savings and Retirement Solutions sales increased
        by ten per cent, in part due to successfully leveraging Manulife
        customer relationships developed by Group Benefits. Fixed rate
        product sales were down 38 per cent from record levels in 2009 and
        Manulife Bank loan volumes were down ten per cent reflecting real
        estate market declines and competitive pressures. During the quarter,
        Manulife continued to expand its North American distribution
        relationship with Edward Jones, formalizing an association which
        allows Edward Jones advisors to integrate Manulife's innovative
        debt-management and banking solutions into their clients' financial
        plans.

    -   In Asia, overall first quarter wealth sales, excluding variable
        annuities, experienced a 51 per cent decline over the prior year on a
        constant currency basis. In the first quarter of 2009, sales included
        a one-time top up of pension funds by the Hong Kong government, and
        strong money market mutual funds sales in Taiwan. During the quarter,
        new wealth products were launched in Japan, Malaysia, Indonesia and
        Taiwan.

    -   During the quarter, MFC completed its purchase of Fortis Bank SA/NV's
        49 per cent stake in ABN AMRO TEDA Fund Management Co. Ltd. The
        combined organization is now called Manulife TEDA Fund Management
        Company Limited ("Manulife TEDA"). With the completion of the deal,
        MFC has dedicated asset management businesses in nine Asian locations
        and offices in a total of 16 countries and territories worldwide.
        Assets under management in Asia as at March 31, 2010 were
        US$58 billion.

    -   MFC Global Investment Management ("MFC GIM") ended the first quarter
        with assets under management for external parties of $115.0 billion,
        an increase of $5.1 billion from the end of the fourth quarter of
        2009. Assets under management were driven higher by the addition of
        49 per cent of Manulife TEDA's funds and by positive net sales and
        market performance, partially offset by the impact of the
        strengthening of the Canadian dollar.
    

Wealth Management - variable annuities

    
    -   Lower variable annuity sales continue to reflect the Company's
        on-going initiatives to balance its risk profile across all
        geographies. First quarter variable annuity sales decreased by 39 per
        cent versus the prior year on a constant currency basis. Sales
        declines in the U.S. and Canada were partially offset by an increase
        in Japan, where sales increased in advance of April 1, 2010 tax
        changes.

    -   With favourable equity markets and interest rates, the Company
        opportunistically hedged additional in-force variable annuity
        business with a total of $15.2 billion of guarantee value
        ($4.2 billion in Canada and $11.0 billion in the U.S.), bringing the
        percentage of guarantee value hedged or reinsured to approximately
        51 per cent as at March 31, 2010. Substantially all new variable
        annuity business in the U.S., Canada and Japan continues to be
        hedged.
    

Corporate

    
    -   During the quarter, Manulife's Board of Directors announced the
        establishment of separate Audit and Risk Committees. As a result of
        the increased volatility in the financial markets since September
        2008 and the changing risk environment, the Board of Directors has
        increased, and intends to continue to increase, its focus on risk
        oversight.

    -   In a separate news release today, the Company has also announced that
        the Board of Directors approved a quarterly shareholders' dividend of
        $0.13 per share on the common shares of the Company, payable on and
        after June 21, 2010 to shareholders of record at the close of
        business on May 18, 2010.
    

Executive Changes

    
    -   Manulife Financial Corporation (MFC) today announced that Chief
        Operating Officer John D. DesPrez III is leaving the Company. John is
        a 19-year veteran of Manulife John Hancock. He held a wide range of
        senior positions in our Company and the Company appreciates the very
        useful role he played in assisting the Chief Executive Officer in his
        first year as CEO. The Chief Operating Officer role will be
        eliminated and all Divisional leaders will report directly to the
        President and Chief Executive Officer.

    -   After seven years as Executive Vice President and Chief Actuary,
        Simon Curtis has decided to further develop his career at Manulife
        and will head up our Corporate Development Area as Executive Vice
        President. The change will be effective following the Second Quarter
        report and the Board of Directors meeting on August 5, 2010. Mr.
        Curtis has a strong background in Merger & Acquisition work at
        Manulife in Corporate Development and played important roles in the
        John Hancock merger and the acquisition of Manulife's Japanese
        business. In his new role, he will be responsible for acquisitions,
        industry research and corporate strategy. He will report to J-P.
        Bisnaire, Senior Executive Vice President, Corporate Development &
        General Counsel.

    -   Effective August 6, 2010, Simon Curtis will be succeeded as Executive
        Vice President and Chief Actuary by Ms. Cindy Forbes (FSA, FCIA) who
        is returning to Canada after six years in Asia with Manulife.
        Currently, Ms. Forbes is Chief Financial Officer for Manulife's Asia
        Division and prior to that, was CFO for the Company's Japanese
        business. Before her assignment to Asia, she was CFO of Reinsurance
        and she worked in Manulife's Investment and U.S. Pensions divisions.
        Ms. Forbes will work closely with Mr. Curtis during the transition
        period. Her replacement as CFO in Asia will be announced at a later
        date. She will report to Michael Bell, Senior Executive Vice
        President and Chief Financial Officer.

    -   Diane Bean, Executive Vice President, Corporate Affairs and Human
        Resources will retire after 35 successful years in corporate and
        operational roles at Manulife. Ms. Bean is succeeded as Executive
        Vice President, Human Resources by Stephani Kingsmill, who is
        currently Senior Vice President and General Manager Real Estate,
        managing Manulife's successful $6 billion real estate organization.
        Both Ms. Bean and Ms. Kingsmill have been recognized as being among
        the Top 100 most influential women in Canada. Mr. Kevin Adolphe will
        assume responsibility for Real Estate in addition to his current role
        as Chief Operating Officer in Manulife's Investments Division. He is
        appointed Executive Vice President and will continue to report to
        Warren Thomson, Senior Executive Vice President and Chief Investment
        Officer of Manulife Financial Corporation.
    

Awards & Recognition

    
    -   In Canada, Manulife Mutual Funds was recognized for excellence in the
        investment industry winning five Lipper awards. The winning funds
        were the Manulife Monthly High Income Fund, Manulife Strategic Income
        Fund, Manulife Canadian Bond Plus Fund, AIC Global Real Estate Fund
        and the Value Leaders Balanced Income Portfolio.

    -   John Hancock Funds won three awards in the Web Marketing
        Association's 2010 Internet Advertising Competition Awards, in the
        categories of: Best Financial Services Interactive Application, for
        Roth IRA Conversion Calculator; Best Financial Service Online Video,
        for Volatility E-mercial; and Best Financial Email Message, for
        Portfolio Insight. In addition, John Hancock Funds advanced 23 spots
        in Barron's 2009 Mutual Fund Family Ranks to take the eighth spot for
        the year out of 61 fund families.

    -   In China, Manulife-Sinochem was ranked as the most competitive of all
        foreign-invested joint venture life insurers in China by a major
        newspaper for a second year and received an "Excellent Organization"
        award from the State Council National Economic Census Commission -
        the only foreign insurance joint venture to receive this honour this
        year. It was also recognized for "Outstanding Brand Building" by a
        major media group at the 2009 Finance China Forum held in Beijing.

    -   MFC Global Investment Management earned the "Best of Best" award for
        the most innovative product in Taiwan in 2009 and "Best of Best"
        regional award for CEO of the year from Asia Asset Management.
    

Notes:

Manulife Financial Corporation will host a First Quarter Earnings Results Conference Call at 2:00 p.m. ET on May 6, 2010. 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 May 6, 2010 until May 21, 2010 by calling (416) 695-5800 or (800) 408-3053 (passcode 3274828 followed by the number sign).

The conference call will also be webcast through Manulife Financial's website at 2:00 p.m. ET on May 6, 2010. You may access the webcast at: www.manulife.com/quarterlyreports. An archived version of the webcast will be available at 4:30 p.m. ET on the website at the same URL as above.

The First Quarter 2010 Statistical Information Package is also available on the Manulife website at: www.manulife.com/quarterlyreports. The document may be downloaded before the webcast begins.

MANAGEMENT'S DISCUSSION AND ANALYSIS ("MD&A")

    
    FINANCIAL HIGHLIGHTS
    (unaudited)
                                                        Quarterly Results
                                                    -------------------------
                                                      1Q10     4Q09     1Q09
    -------------------------------------------------------------------------
    Net Income (Loss) Attributed to Shareholders
     (C$ millions)                                   1,140      868   (1,068)
    Net Income (Loss) Available to Common
     Shareholders (C$ millions)                      1,120      848   (1,075)
    Diluted Earnings (Loss) per Common Share (C$)     0.64     0.51    (0.67)
    Return on Common Shareholders' Equity(1)
     (%, annualized)                                  16.8     13.1    (16.2)
    Premiums and Deposits(1) - Insurance
     businesses (C$ millions)                        5,204    6,541    5,351
    Premiums and Deposits(1) - Wealth excluding
     variable annuities (C$ millions)                9,745    8,128    9,882
    Premiums and Deposits(1) - Variable annuities
     (C$ millions)                                   2,189    1,866    4,068
    Funds under Management(1) (C$ billions)          446.5    439.6    405.4
    Capital(1)  (C$ billions)                         33.6     33.2     30.2
    -------------------------------------------------------------------------
    (1) This item is a non-GAAP measure. For a discussion of our use of
        non-GAAP measures, see "Performance and Non-GAAP Measures" below.
    

Net Income

The Company's net income attributed to shareholders was $1,140 million for the first quarter of 2010, in contrast to a loss of $1,068 million for the first quarter of 2009. Earnings in the first quarter of 2010 include gains of $546 million related to increases in the equity markets, the favourable impact on the policy liability valuation of fixed income investing activities and other investment related items. These were partially offset by a tax related charge on leveraged lease investments of $99 million, unfavourable policyholder experience of $31 million and the impact of a stronger Canadian dollar. The results of the first quarters of 2010 and 2009 are expanded on below.

First quarter of 2010:

Of the $546 million of gains referred to above, gains of $328 million were reported on our variable annuity business as a result of the overall positive equity market performance and the performance of our variable annuity guarantee hedging program. In addition, gains of $23 million resulted from the impact of the improved equity markets on capitalized variable universal life fees and equities supporting policy liabilities.

Gains on oil and gas investments and private equity investments of $83 million arose from fair market value increases in excess of the returns assumed in the valuation of policy liabilities. These were mostly offset by fair market value losses of $67 million on real estate, timber and agriculture property.

The Company's fixed income portfolio continued to perform very well relative to overall market conditions. Net credit impairments were limited to $17 million, and actuarial charges related to credit downgrades were $15 million. These amounts were only slightly higher than the expected credit losses assumed in the valuation of policy liabilities.

The remaining $211 million of gains referred to above primarily related to the favourable impact that the fixed income investing activities in the quarter had on the valuation of policy liabilities. The small movement in interest rates during the quarter did not have a material impact on the valuation of our policy liabilities or our net income.

Policyholder experience was unfavourable in the first quarter and reduced earnings by $31 million largely due to claims and lapse experience in the U.S. Insurance business. Recent long-term care morbidity experience has been unfavourable relative to expected levels. A comprehensive morbidity experience study will be completed in 2010 and if the recent level of experience is expected to continue, price increases and policy liability increases would be required.

As previously reported, we increased our tax related provisions on leveraged lease investments by $99 million during the quarter. This charge was partly offset by a release of $24 million in tax provisions related to the closure of prior year issues.

First quarter of 2009:

The net loss attributed to shareholders of $1,068 million for the first quarter of 2009 included charges as a result of the declines in the global equity markets of $1,361 million, unrealized losses on alternative investment asset classes of $277 million, credit related impairments of $121 million and downgrades of $72 million.

The equity market declines resulted in charges of $1,361 million, consisting of $1,106 million for variable annuity guarantees, $128 million of other than temporary impairments on equity positions in the Corporate and Other segment, $63 million on equity investments supporting non-experience adjusted policy liabilities and $64 million relating to reduced capitalized future fee income on variable universal life products and other fee income.

The unrealized losses on alternative investments related to our commercial real estate and private equities and resulted in a strengthening of policy liabilities.

In addition, there were two largely offsetting items, both primarily related to the Japan Variable Annuity business: a charge of $268 million related to changes in actuarial methods and assumptions and a tax gain of $208 million.

Adjusted Earnings from Operations

In our 2009 Annual Report we provided forward-looking information for "Adjusted Earnings from Operations", which is a non-GAAP measure. We estimated adjusted earnings from operations to be between $700 million and $800 million per quarter for 2010, based on exchange rates in effect at June 30, 2009.

Our estimate of adjusted earnings from operations for the first quarter ended March 31, 2010 excluded the following items, the net effect of which we are unable to reliably predict: equity related gains and losses (to the extent actual gains and losses are different from those assumed in our estimates as described in footnote 2 to the "First Quarter Actual Adjusted Earnings from Operations and Reconciliation with GAAP Measure" table below); other than realized gains on our available-for-sale ("AFS") equity portfolio; interest and other investment related gains and losses; credit, other than temporary impairments ("OTTI") and downgrades; policyholder experience gains and losses; tax related provisions on leveraged lease investments; other tax items such as the outcomes of tax appeals and changes in tax rates; and changes in actuarial methods and assumptions. We adjust for these items because they affect the comparability of our financial results and could potentially distort the analysis of trends in business performance. We are unable to reliably predict the net effect of these items and adjusting for these items does not imply they are non-recurring.

First Quarter Actual Adjusted Earnings from Operations and Reconciliation with GAAP Measure

Adjusted earnings from operations for the first quarter of 2010 were $742 million, which is within our prior estimate of between $700 million and $800 million for each of the quarters of 2010.

The following table reconciles adjusted earnings from operations to our reported net earnings for the first quarter:

    
    (Canadian $ millions)
    -------------------------------------------------------------------------
    Net income attributed to shareholders reported                   $ 1,140
    -------------------------------------------------------------------------
    Items excluded from adjusted earnings from operations:
    Corporate and Other segment net impairment - OTTI
     ($5 million) and credit impairments ($3 million)                     (8)
    Experience gains (losses) due to equity, interest rate,
     credit and other non-fixed income returns different from
     our best estimate policy liability assumptions(1)
      Equity market appreciation, primarily related to variable
       annuity guarantee policy liabilities(2)                           351
      Actual credit experience. Net credit charge of $14 million
       and credit downgrade charges of $15 million(3)                    (29)
      Expected credit experience assumed in the valuation of
       policy liabilities                                                 28
      Oil & gas and private equities - changes in fair value
       relative to policy liability assumptions                           83
      Real estate, timber and agriculture properties - change in
       fair value relative to policy liability assumptions               (67)
      Other(4)                                                           188
    Net policyholder experience losses(5)                                (31)
    Provisions on leveraged lease investments ($99 million) net
     of tax items related to closed tax years ($24 million)              (75)
    Currency rates(6)                                                    (42)
    -------------------------------------------------------------------------
    Total excluded items                                             $   398
    -------------------------------------------------------------------------
    Adjusted earnings from operations                                $   742
    -------------------------------------------------------------------------
    (1) As outlined in our accounting policies, policy liabilities represent
        the amount which, together with estimated future premiums and net
        investment income, will be sufficient to pay estimated future
        benefits, policyholder dividends and refunds, taxes (other than
        income taxes) and expenses on policies in-force. Under Canadian GAAP,
        the determination of policy liabilities is based on an explicit
        projection of cash flows using current best estimate assumptions for
        each material cash flow item and contingency. Investment returns are
        projected using the current asset portfolios and projected
        re-investment strategies. Each assumption is adjusted by a margin for
        adverse deviation. As a result of this methodology, experience gains
        (losses) arise when equity, interest rate, credit and other non-fixed
        income returns differ from our best estimate policy liability
        assumptions.
    (2) Adjusted earnings from operations excludes the earnings impact from
        equity market changes that differ from our best estimate assumptions
        of growth of 7.25% per annum in Canada, 8.0% per annum in the U.S.,
        5.0% per annum in Japan and 9.5% per annum in Hong Kong. For
        actuarial valuation purposes, these returns are reduced by margins
        for adverse deviation to determine net yields used in valuation.
    (3) The actual credit and downgrade charge in the liability segments
        excludes the impact on earnings of the reduction in policy
        liabilities for the expected experience. The expected credit
        experience is included in the line labeled "Expected credit
        experience assumed in the valuation of policy liabilities".
    (4) Other gains of $188 million include the favourable impact in the
        quarter of fixed income investing activities that improved the match
        between investments and the policy liability cash flows reflected in
        the valuation of policy liabilities. The small movement in interest
        rates during the quarter did not have a material impact on earnings.
        The difference between the $188 million in this table and the
        $211 million referred in under the section "Net Income" above, is due
        to the classification of the $5 million OTTI in the Corporate and
        Other segment and the classification of the $28 million expected
        credit experience assumed in the valuation of policy liabilities.
    (5) Policyholder experience was unfavourable in the first quarter and
        reduced earnings by $31 million largely due to claims and lapse
        experience in the U.S. Insurance business.
    (6) Adjusted earnings from operations excludes the impact of changes in
        currency exchange rates from those in effect at June 30, 2009 when we
        originally provided our estimate of this amount. Since that time, the
        Canadian dollar has strengthened and the Canadian dollar equivalent
        of one U.S. dollar has declined from $1.1625 as at June 30, 2009 to
        $1.0156 as at March 31, 2010. The average daily exchange rate for the
        quarter was $1.0401. This decline has reduced reported net income by
        $42 million during the quarter.
    

Estimated Adjusted Earnings from Operations for the remaining quarters of 2010

Given the current economic conditions including the volatility of equity markets, interest rates, the impact of current economic conditions on credit and other factors, we are providing forward-looking information for financial periods for all future quarters in 2010 for adjusted earnings from operations. We estimate adjusted earnings from operations to be between $700 million and $800 million per quarter based on exchange rates in effect at June 30, 2009. As noted in the "First Quarter Actual Adjusted Earnings from Operations and Reconciliation with GAAP Measure" table above, in the first quarter the Canadian dollar strengthened compared to the June 30, 2009 assumption, the impact of which was to reduce net income attributed to shareholders by $42 million compared with adjusted earnings from operations. However we cannot reliably estimate what exchange rates will be for the rest of 2010 and have therefore continued to use exchange rates in effect at June 30, 2009 in providing our estimate of adjusted earnings from operations for the remaining quarters for 2010. If we had used the exchange rates in effect as at March 31, 2010, our estimate of adjusted earnings from operations per quarter for 2010 would have been between $650 million and $750 million. Credit losses in the first quarter exceeded our long-term assumptions by only $1 million, and changes in the fair value of our non-fixed income assets exceeded the investment assumptions for the policy liabilities and resulted in a net gain. We cannot reliably predict the impact of credit or non-fixed income returns for the remainder of 2010 and have therefore continued to use our long-term assumptions in the estimated adjusted earnings from operations for the remainder of 2010. Estimated adjusted earnings from operations would imply a return on common shareholders' equity of approximately ten per cent.

The information in this section is forward-looking information and should be read in conjunction with the section below entitled "Caution Regarding Forward-Looking Statements". This discussion should not be considered earnings guidance, particularly as it is not possible to predict near term market conditions and because adjusted earnings from operations excludes items that are included in GAAP net income or loss. Estimated adjusted earnings from operations are based on assumptions that include our book of business, equity market growth as described in footnote (2) to the "First Quarter Actual Adjusted Earnings from Operations and Reconciliation with GAAP Measure" table above, foreign currency rates that are consistent with levels as at June 30, 2009, and other investment returns and policyholder experience consistent with our current best estimate actuarial assumptions. As a result, it would exclude items such as: experience gains (losses) because equity, interest rate, credit and other non-fixed income returns differ from our best estimate policy liability assumptions (the assumptions for equity investments are described in footnote (2) to the "First Quarter Actual Adjusted Earnings from Operations and Reconciliation with GAAP Measure" table above); credit and OTTI losses on assets in the Corporate and Other segment; policyholder experience gains and losses; tax related provisions on leveraged lease investments; resolution of uncertain tax positions as a result of settlements or closing of tax years; changes in tax rates; changes in accounting policies; and changes in actuarial methods and assumptions. It would, however, include gains, but not net losses or other impairments, realized on AFS assets. We adjust for these items because they affect the comparability of our financial results and could potentially distort the analysis of trends in business performance. We are unable to reliably predict the net effect of these items and adjusting for these items does not imply they are non-recurring.

Actual reported quarterly results will differ from estimated adjusted earnings from operations as a result of any changes in the factors outlined above. See also "Risk Factors" in our most recent Annual Information Form, "Risk Management" and "Critical Accounting and Actuarial Policies" in the Management's Discussion and Analysis in our most recent annual and interim reports, and the "Risk Management" note to the consolidated financial statements in our most recent annual and interim reports for other factors that could impact adjusted earnings from operations and actual reported results.

Earnings per Share and Return on Common Shareholders' Equity(5)

Earnings per common share on a fully diluted basis for the first quarter of 2010 were $0.64 compared to a loss per share of $0.67 for the first quarter in 2009. Return on common shareholders' equity was 16.8 per cent for the first quarter of 2010 (minus 16.2 per cent for the first quarter of 2009).

Premiums and Deposits(6)

Premiums and deposits for the insurance businesses amounted to $5.2 billion for the first quarter of 2010, representing an increase of seven per cent over the prior year, on a constant currency basis. The increase is attributed to growth in the in-force business.

Premiums and deposits for the wealth businesses excluding variable annuities amounted to $9.7 billion for the first quarter of 2010, representing an increase of 13 per cent on a constant currency basis. The stronger equity markets contributed to the mutual fund deposit growth, which was partially offset by lower fixed product sales in both U.S. and Canada.

Premiums and deposits for variable annuity products were $2.2 billion, a decrease of 40 per cent from the prior year on a constant currency basis, consistent with the decline in sales.

Funds under Management(7)

Total funds under management as at March 31, 2010 were $446 billion, an increase of $41 billion over March 31, 2009. Contributing to the increase were $21 billion of net positive policyholder cash flows, $85 billion related to investment returns, $3.8 billion related to the acquisition of AIC Limited's retail investment fund business, $1.8 billion or 49 per cent of ABN AMRO TEDA Fund Management Co. Ltd.'s ("Manulife TEDA") assets under management, $3.9 billion of capital issuances and $1.6 billion of medium term notes issued. The stronger Canadian dollar reduced funds under management by approximately $77 billion and the repayment of the credit facility reduced funds under management by $2.0 billion.

Capital(8)

Total capital was $33.6 billion as at March 31, 2010, $3.4 billion higher than $30.2 billion as at March 31, 2009. Capital issuances totaled $3.9 billion - $2.5 billion of common shares, $0.4 billion of preference shares and $1.0 billion of Innovative Tier 1 notes. Capital also increased as a result of $1.3 billion of net unrealized gains on AFS assets and $3.5 billion of net income. These increases were partially offset by the $4.5 billion negative impact of the strengthened Canadian dollar and $0.9 billion of shareholder dividends paid in cash.

The Manufacturers Life Insurance Company's ("MLI") consolidated regulatory capital ratio, Minimum Continuing Capital and Surplus Requirements ("MCCSR"), was 250 per cent as at March 31, 2010, an increase of ten points from 240 per cent as at December 31, 2009. The ten point increase was because net income during the quarter increased available capital and the improvements in the equity market reduced the required capital to support variable annuity guarantees.

    
    -------------------------
    (5) Return on common shareholders' equity is a non-GAAP measure. See
        "Performance and Non-GAAP Measures" below.
    (6) Premiums and deposits is a non-GAAP measure. See "Performance and
        Non-GAAP Measures" below.
    (7) Funds under management is a non-GAAP measure. See "Performance and
        Non-GAAP Measures" below.
    (8) Capital is a non-GAAP measure. See "Performance and Non-GAAP
        Measures" below.
    

PERFORMANCE BY DIVISION

U.S. Insurance

    
                                                        Quarterly Results
    Canadian dollars                                  1Q10     4Q09     1Q09
    -------------------------------------------------------------------------
    Net Income (Loss) Attributed to Shareholders
     (millions)                                        131     (117)     (92)
    Premiums and Deposits (millions)                 1,702    3,034    1,893
    Funds under Management (billions)                 70.0     66.6     71.0
    -------------------------------------------------------------------------

    U.S. dollars
    -------------------------------------------------------------------------
    Net Income (Loss) Attributed to Shareholders
     (millions)                                        126     (111)     (74)
    Premiums and Deposits (millions)                 1,636    2,874    1,520
    Funds under Management (billions)                 68.9     63.6     56.3
    -------------------------------------------------------------------------
    

U.S. Insurance reported net income attributed to shareholders of US$126 million for the first quarter of 2010, compared with a net loss of US$74 million a year earlier. Included in the first quarter of 2010 are net experience gains of US$97 million (2009 - losses of US$129 million) as a result of equity, interest rate, credit and other non-fixed income returns differing from our best estimate policy liability assumptions. Excluding these items from both quarters, net income declined US$26 million primarily due to higher new business strain and unfavourable long-term care morbidity experience. A comprehensive morbidity experience study will be completed in 2010 and if the recent level of experience is expected to continue, price increases and policy liability increases would be required. In both the first quarter of 2010 and 2009, John Hancock Life has reported losses with respect to policyholder lapses. On a Canadian dollar basis the net income attributed to shareholders for the first quarter of 2010 was $131 million compared with a net loss of $92 million in 2009.

Premiums and deposits for the quarter were US$1.6 billion, an increase of eight per cent over the first quarter of 2009 primarily due to the combination of higher Federal Long Term Care Insurance Program deposits, where John Hancock is now the sole carrier, and increased universal life premiums.

Funds under management were US$68.9 billion, up 22 per cent from March 31, 2009 due to business growth over the last 12 months, an increase in the market value of funds under management and the deposit received in the fourth quarter of 2009 related to the Federal Long Term Care Insurance Program.

U.S. Wealth Management

    
                                                        Quarterly Results
    Canadian dollars                                  1Q10     4Q09     1Q09
    -------------------------------------------------------------------------
    Net Income (Loss) Attributed to Shareholders
     (millions)                                        350      671     (629)
    Premiums and Deposits (millions)                 7,440    6,727    8,660
    Funds under Management (billions)                178.3    177.4    164.1
    -------------------------------------------------------------------------

    U.S. dollars
    -------------------------------------------------------------------------
    Net Income (Loss) Attributed to Shareholders
     (millions)                                        336      635     (505)
    Premiums and Deposits (millions)                 7,153    6,370    6,952
    Funds under Management (billions)                175.6    169.5    130.2
    -------------------------------------------------------------------------
    

U.S. Wealth Management reported net income attributed to shareholders of US$336 million for the first quarter of 2010, compared with a net loss of US$505 million a year earlier. Included in the first quarter of 2010 are net experience gains of US$169 million (2009 - losses of US$715 million) as a result of equity, interest rate, credit and other non-fixed income returns differing from our best estimate policy liability assumptions. Excluding these items from both quarters, net income declined US$43 million due to the lower expected release of variable annuity guarantee reserves as a result of lower policy liabilities, the non-recurrence of tax benefits received in 2009 as a result of the successful outcome of certain tax appeals and the costs associated with hedging new, and a portion of the prior years' in-force, variable annuity business. Increased fee income from higher average assets under management partially offset these decreases in earnings. On a Canadian dollar basis, net income attributed to shareholders for the first quarter of 2010 was $350 million, compared with a net loss of $629 million reported a year earlier.

Premiums and deposits, excluding variable annuities, for the quarter were US$6.5 billion, up 32 per cent from US$4.9 billion for the first quarter of 2009. Higher sales in John Hancock Wealth Asset Management driven by the equity market recovery and increased consumer confidence were partially offset by a decline in John Hancock Fixed Products sales. Premiums and deposits of variable annuities were US$0.7 billion, down significantly from the US$2.1 billion in the first quarter of 2009 as a result of ongoing risk management initiatives.

Funds under management were US$175.6 billion, up 35 per cent from March 31, 2009. The increase was driven by a combination of strong investment returns and net policyholder cash flows partially offset by US$1.4 billion of scheduled maturities in John Hancock Fixed Products over the last twelve months.

Canadian Division

    
                                                        Quarterly Results
    Canadian dollars                                  1Q10     4Q09     1Q09
    -------------------------------------------------------------------------
    Net Income (Loss) Attributed to Shareholders
     (millions)                                        301      384      (88)
    Premiums and Deposits (millions)                 4,480    4,096    4,430
    Funds under Management (billions)                104.4    102.7     83.8
    -------------------------------------------------------------------------
    

Canadian Division reported net income attributed to shareholders of $301 million for the first quarter of 2010 compared to a net loss of $88 million a year earlier. Net income for the first quarter of 2010 included net experience gains of $84 million (2009 - losses of $284 million) as a result of equity, interest rate, credit and other non-fixed income returns differing from best estimate policy liability assumptions. Excluding these items from both quarters, shareholders' net income increased by $21 million driven by growth in asset levels in our wealth management and Manulife Bank operations, partially offset by the costs associated with hedging variable annuity guarantees and lower allocated interest on surplus. Net income also included a release of $14 million in tax provisions related to the closure of prior year issues.

Premiums and deposits, excluding variable annuities, for the quarter were $3.8 billion, up six per cent from $3.6 billion reported in the first quarter of 2009. Premiums and premium equivalents in the insurance businesses were $2.2 billion, consistent with the first quarter of 2009. Retail mutual fund deposits of $355 million were more than triple first quarter 2009 levels, reflecting the Company's increased focus on its mutual fund platform and improving fund performance in a more stable economic environment. Strong sales in the retirement savings market also contributed to the year over year increase. Sales of retail fixed rate products were down from the record levels of a year ago when consumers sought the safety of fixed returns in a volatile investment market. Deposits for variable annuity products for the quarter were $0.7 billion, compared to $0.9 billion a year ago.

Funds under management were $104.4 billion as at March 31, 2010, an increase of 25 per cent from a year ago. Positive net sales of wealth products excluding variable annuities, combined with the favourable impact of market appreciation and the 2009 acquisition of the retail investment funds of AIC Limited, were key contributors to the increase. In addition, continued growth in Manulife One drove a 14 per cent rise in Manulife Bank invested assets.

Asia and Japan Division

    
                                                        Quarterly Results
    Canadian dollars                                  1Q10     4Q09     1Q09
    -------------------------------------------------------------------------
    Net Income Attributed to Shareholders
     (millions)                                        427      291      146
    Premiums and Deposits (millions)                 2,423    2,036    2,846
    Funds under Management (billions)                 58.8     57.2     53.6
    -------------------------------------------------------------------------

    U.S. dollars
    -------------------------------------------------------------------------
    Net Income Attributed to Shareholders
     (millions)                                        412      274      118
    Premiums and Deposits (millions)                 2,330    1,926    2,286
    Funds under Management (billions)                 57.9     54.7     42.5
    -------------------------------------------------------------------------
    

Asia and Japan Division recorded net income attributed to shareholders of US$412 million for the first quarter of 2010 compared to US$118 million a year earlier. Included in the first quarter of 2010 were net experience gains of US$184 million (2009 - losses of US$238 million) as a result of equity, interest rate, credit and other non-fixed income returns differing from our best estimate policy assumptions. Excluding these experience gains from both quarters and a one-time tax benefit recorded in the first quarter of 2009 related to variable annuities, shareholders' net income improved by US$39 million driven by new business and growth in in-force business.

Premiums and deposits, excluding variable annuities, for the quarter were US$1.6 billion, down 10 per cent from US$1.8 billion reported in the first quarter of 2009. Strong insurance premiums growth contributed by all the territories as a result of new product launches and larger in-force business was more than offset by lower money market fund sales in Taiwan and the non- recurrence of the one-time top up of pension funds by the Hong Kong government in the first quarter of 2009. Premiums and deposits for variable annuity products for the quarter were US$0.7 billion, up 43 per cent from US$0.5 billion reported in the first quarter of 2009. Variable annuity sales in Japan increased in advance of April 1, 2010 tax changes.

Funds under management as at March 31, 2010 were US$57.9 billion, up US$15.4 billion from March 31, 2009. Growth was driven by the positive impact of improving equity market performance across the territories in the past twelve months together with net policyholder cash inflows of US$3.6 billion and US$1.8 billion representing 49 per cent of Manulife TEDA's assets under management.

Reinsurance Division

    
                                                        Quarterly Results
    Canadian dollars                                  1Q10     4Q09     1Q09
    -------------------------------------------------------------------------
    Net Income Attributed to Shareholders (millions)    54       92       59
    Premiums and Deposits (millions)                   246      279      285
    -------------------------------------------------------------------------

    U.S. dollars
    -------------------------------------------------------------------------
    Net Income Attributed to Shareholders (millions)    51       87       48
    Premiums and Deposits (millions)                   237      265      229
    -------------------------------------------------------------------------
    

Reinsurance Division's net income attributed to shareholders for the first quarter of 2010 was US$51 million compared to US$48 million a year earlier. The increase was primarily due to the favourable impact of the increase in the U.S. equity markets on the change in variable annuity guarantee reserves as well as improved investment results. These increases were largely offset by unfavourable claims experience in Life Reinsurance resulting from higher claims and experience refund provisions.

Premiums for the quarter were US$237 million, up three per cent from US$229 million reported in the same quarter of 2009. The increase in International Group Program premiums arising from an increase in volumes and the impact of the strengthening of the Euro against the U.S. dollar was partially offset by higher experience refunds in Life Reinsurance.

Corporate and Other

    
                                                        Quarterly Results
    Canadian dollars                                  1Q10     4Q09     1Q09
    -------------------------------------------------------------------------
    Net Loss Attributed to Shareholders (millions)    (123)    (453)    (464)
    Funds under Management (billions)                 32.6     33.0     30.2
    -------------------------------------------------------------------------
    

Corporate and Other is comprised of the earnings on assets backing capital, net of amounts allocated to operating divisions, changes in actuarial methods and assumptions, Investment Division's external asset management business, the John Hancock Accident and Health operation, which primarily consists of contracts in dispute, and other non operating items.

Corporate and Other reported a net loss attributed to shareholders of $123 million in the first quarter of 2010 compared to a net loss of $464 million a year earlier. The current quarter loss includes realized gains of $44 million on the AFS equity portfolio. It also includes a tax related provision of $99 million on leveraged lease investments. Earnings in the first quarter of 2009 included charges of $268 million for changes in actuarial methods and assumptions and $128 million for other than temporary equity impairments.

Funds under management as at March 31, 2010 were $32.6 billion, up eight per cent from March 31, 2009. Funds under management include assets managed by MFC GIM on behalf of institutional clients of $23.1 billion as at March 31, 2010 compared to $24.2 billion as at March 31, 2009. The increase due to equity market appreciation and net sales was more than offset by the impact of the stronger Canadian dollar. The Company's own funds were $9.6 billion at March 31, 2010, up $3.4 billion compared to the prior year, largely due to funds received from debt and share capital issuances in the past twelve months. MFC GIM also manages $91.9 billion of assets that are included in the segregated funds, mutual funds and other managed funds of the operating divisions.

RISK MANAGEMENT

Overview

Manulife Financial is a financial institution offering insurance, wealth and asset management products and services, which subjects the Company to a broad range of risks. We manage these risks within an enterprise-wide risk management framework.

For further information relating to our risk management practices and risk factors affecting the Company, see "Risk Factors" in our most recent Annual Information Form, "Risk Management" and "Critical Accounting and Actuarial Policies" in Management's Discussion and Analysis ("MD&A") in our 2009 Annual Report and the "Risk Management" note to consolidated financial statements in our most recent annual and interim reports.

Caution related to risk exposures

The risk exposure measures expressed below primarily include the sensitivity of shareholders' economic value and net income attributed to shareholders. These risk exposures include the sensitivity due to specific changes in market prices projected using internal models as at a specific date, and are measured relative to a starting level reflecting our assets and liabilities at that date and the actuarial factors, investment returns and investment activity we assume in the future. The risk exposures measure the impact of changing one factor at a time and assume that all other factors remain unchanged. Actual results can differ materially from these estimates for a variety of reasons including the interaction among these factors when more than one changes, changes in actuarial and investment return and future investment activity assumptions, actual experience differing from the assumptions, changes in business mix, effective tax rates and other market factors, and the general limitations of our internal models.

Off-Balance Sheet Products and General Fund Equity Market Risk Exposure Measures

i) Variable annuity investment related guarantees

Of the variable annuity investment related guarantees, 51 per cent of the guarantee value was either hedged or reinsured at March 31, 2010 compared to 35 per cent at December 31, 2009.

The table below shows selected information regarding the Company's variable annuity investment related guarantees:

    
    As at                          March 31, 2010          December 31, 2009
                      -------------------------------------------------------
                                          Amount                      Amount
    (Canadian $       Guarantee    Fund       at  Guarantee    Fund       at
     millions)            value   value   risk(3)     value   value   risk(3)
    -------------------------------------------------------------------------
    Gross living
     benefits(1)        $91,531  $84,521  $11,135  $92,183  $83,693  $12,710
    Gross death
     benefits(2)         17,572   12,964    3,842   18,455   13,282    4,414
    -------------------------------------------------------------------------
    Total gross
     benefits          $109,103  $97,485  $14,977 $110,638  $96,975  $17,124
    -------------------------------------------------------------------------
    Living benefits
     reinsured           $7,653   $5,703   $1,957   $8,012   $5,818   $2,200
    Death benefits
     reinsured            5,619    4,467    1,373    5,985    4,639    1,577
    -------------------------------------------------------------------------
    Total reinsured     $13,272  $10,170   $3,330  $13,997  $10,457   $3,777
    -------------------------------------------------------------------------
    Total, net of
     reinsurance        $95,831  $87,315  $11,647  $96,641  $86,518  $13,347
    -------------------------------------------------------------------------
    Living benefits
     hedged             $38,766  $38,116   $3,080  $24,399  $24,137   $1,782
    Death benefits
     hedged               3,511    2,067      436      481      317       10
    -------------------------------------------------------------------------
    Total hedged        $42,277  $40,183   $3,516  $24,880  $24,454   $1,792
    -------------------------------------------------------------------------
    Living benefits
     retained           $45,112  $40,702   $6,098  $59,772  $53,738   $8,728
    Death benefits
     retained             8,442    6,430    2,033   11,989    8,326    2,827
    -------------------------------------------------------------------------
    Total, net of
     reinsurance
     and hedging        $53,554  $47,132   $8,131  $71,761  $62,064  $11,555
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Living benefits include maturity/income/withdrawal/long-term care
        benefits. Where a policy also includes a death benefit, the guarantee
        in excess of the living benefit is included in the death benefit
        category as outlined in footnote (2).
    (2) Death benefits include stand-alone guarantees and guarantees in
        excess of living benefit guarantees where both death and living
        benefits are provided on a policy.
    (3) Amount at risk (in-the-money amount) is the excess of guarantee
        values over fund values on all policies where the guarantee value
        exceeds the fund value. This amount is not currently payable.
    

Variable annuity guarantees are contingent and only payable upon death, maturity, withdrawal or annuitization, if fund values remain below guaranteed values. If markets do not recover, liabilities on current in-force business would be due primarily in the period from 2015 to 2038. The policy liability established for these benefits was $1,125 million at March 31, 2010 (December 31, 2009 - $1,671 million). The reduction is due primarily to the impact of improved equity markets reducing the current and projected in-the-money exposures.

ii) Impact on shareholders' economic value arising from variable products and other managed assets public equity market price risk

The impact on shareholders' economic value from changes in the market value of equities within the segregated funds of variable products, mutual funds and institutional asset management operations is calculated as the change in net present value of expected future after-tax cash flows related to managing these assets and/or providing guarantees, including fee income, expense and benefit payments, discounted at market yields. The present value of expected future after-tax cash flows related to variable product guarantees is the average, across all investment return scenarios, of the net present value of projected future guaranteed benefit payments, reinsurance settlements and fee income allocated to support the guarantees, as well as the asset portfolio, including derivatives, assigned to hedge the guarantees.

The asset portfolio designed to hedge the guarantees consists of cash and derivatives. We short exchange traded equity index and government bond futures and execute lengthening interest rate swaps in order to manage the sensitivity of policy liabilities to fund performance and interest rate movements arising from variable annuity guarantees. We dynamically rebalance these hedge instruments as market conditions change in order to maintain the hedged position within internally established limits. The profit (loss) on the hedge instruments may not fully offset the (losses) gains related to the guarantee liabilities hedged because:

    
    (a) the performance of the underlying funds hedged may differ from the
        performance of the derivatives held within the hedge portfolio;
    (b) the performance on a small portion of the underlying funds is not
        hedged due to lack of availability of exchange traded derivatives
        that would provide an effective hedge;
    (c) a portion of interest rate risk is not hedged;
    (d) policy liabilities embed some provisions for adverse deviation which
        are not hedged; and
    (e) not all other risks are hedged (see MD&A in the 2009 Annual Report).
    

In determining the risk exposure measures related to a change in market value of equity funds we have applied the following assumptions for the effectiveness of the hedging program portion. For a ten, 20 and 30 per cent decrease in the market value of equities within the segregated funds of variable annuities, the profit from the hedge portfolio is assumed to offset 90, 85 and 80 per cent, respectively, of the loss arising from the change in policy liabilities of the hedged guarantees. For a ten, 20 and 30 per cent increase in the market value of equities within the segregated funds of variable annuities, the loss from the hedge portfolio is assumed to be ten, 15 and 20 per cent greater, respectively, than the gain arising from the change in policy liabilities of the hedged guarantees. These assumptions are included in the table below and the tables under iii), iv) and v) below. Actual experience may vary from these assumptions.

The table below shows the potential impact on shareholders' economic value of an immediate ten, 20 and 30 per cent change in the market value of equities within the variable products and other managed assets.

    
    As at
    (Canadian $ in millions)    March 31, 2010         December 31, 2009
    -------------------------------------------------------------------------
    Decrease in market
     value of equity
     funds(1)               10%      20%      30%      10%      20%      30%
                       ------------------------------------------------------
    Market-based fees   $  (460) $  (940) $(1,430) $  (470) $  (960) $(1,480)
    Variable product
     guarantees            (320)    (810)  (1,480)    (450)  (1,080)  (1,930)
    -------------------------------------------------------------------------
    Total               $  (780) $(1,750) $(2,910) $  (920) $(2,040) $(3,410)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Increase in market
     value of equity
     funds(1)               10%      20%      30%      10%      20%      30%
                       ------------------------------------------------------
    Market-based fees   $   480  $   980  $ 1,480  $   490  $ 1,000  $ 1,520
    Variable product
     guarantees             210      340      410      290      490      600
    -------------------------------------------------------------------------
    Total               $   690  $ 1,320  $ 1,890  $   780  $ 1,490  $ 2,120
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) See "Caution related to risk exposures" above.
    

iii) Impact on net income attributed to shareholders arising from variable products public equity market price risk

The following table shows the potential impact on annual net income attributed to shareholders arising from variable products, including the impact on segregated fund fee income, of an immediate ten, 20 and 30 per cent decline and a ten per cent increase in the market values of equities within the segregated funds followed by a return to normal market growth assumptions. The assumptions with respect to performance of the variable annuity hedging program are outlined in section ii) above (Impact on shareholders' economic value arising from variable products and other managed assets public equity market price risk).

    
    Change in market value of equity funds(1)
                                                        As at          As at
                                                     March 31,   December 31,
    (Canadian $ millions)                                2010           2009
    -------------------------------------------------------------------------
    10% decline                                       $(1,000)       $(1,100)
    20% decline                                        (2,200)        (2,600)
    30% decline                                        (3,600)        (4,400)
    10% increase                                          800            900
    -------------------------------------------------------------------------
    (1) See "Caution related to risk exposures" above.
    

iv) Impact on net income attributed to shareholders arising from both variable product and from the general fund market price risk for public equities

The following table adds the sensitivities to a change in market value of public traded equities on policy liabilities for other than variable products, to the sensitivities in table iii) above ("Impact on net income attributed to shareholders arising from variable products public equity market price risk").

    
    Change in market value of equity funds(1)
                                                        As at          As at
                                                     March 31,   December 31,
    (Canadian $ millions)                                2010           2009
    -------------------------------------------------------------------------
    10% decline                                       $(1,100)       $(1,200)
    20% decline                                        (2,400)        (2,800)
    30% decline                                        (3,900)        (4,600)
    10% increase                                          900          1,000
    -------------------------------------------------------------------------
    (1) See "Caution related to risk exposures" above.
    

v) Impact on MLI's MCCSR ratio from general fund and variable products public equity market price risk

Changes in equity markets also impact our available and required components of the MCCSR calculation. The following table shows the potential impact to MLI's MCCSR ratio of an immediate ten, 20 and 30 per cent decline and a ten per cent increase in public equity market values.

    
    Change in market value of equity funds(1)
                                                        As at          As at
                                                     March 31,   December 31,
                                                         2010           2009
                                                  (percentage    (percentage
                                                       points)        points)
    -------------------------------------------------------------------------
    10% decline                                           (10)           (11)
    20% decline                                           (23)           (25)
    30% decline                                           (39)           (42)
    10% increase                                            9             13
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) See "Caution related to risk exposures" above.
    

TAX RELATED CONTINGENCY

The Company is an investor in leveraged leases and has established provisions for possible disallowance of the tax treatment and for interest on past due taxes. During the three months ended March 31, 2010, we recorded additional charges of $99 million after tax related to these provisions. We continue to believe that deductions originally claimed in relation to these arrangements are appropriate and the Company has filed a case challenging the IRS in United States Tax Court. Should the tax attributes of all our leveraged leases be fully denied, the maximum after-tax exposure including interest is estimated to be an additional US$193 million as at March 31, 2010.

ACCOUNTING MATTERS AND CONTROLS

Critical Accounting and Actuarial Policies

Our significant accounting policies are described in note 1 to the annual consolidated financial statements on pages 81 to 85 of our 2009 Annual Report. Significant estimation processes relate to the determination of policy liabilities, evaluation of invested asset impairment, assessment of variable interest entities, determination of pension and other post-employment benefit obligations and expenses, income taxes and valuation of goodwill and intangible assets as described on pages 56 to 63 of our 2009 Annual Report. In addition, in the determination of the fair values of financial instruments, where observable market data is not available, management applies judgment in the selection of valuation models.

Future Accounting and Reporting Changes

Transition to International Financial Reporting Standards ("IFRS")

Publicly accountable enterprises in Canada are required to adopt IFRS for periods beginning on or after January 1, 2011. The Company will adopt IFRS in its quarterly and annual reports starting with the first quarter of 2011 and will provide corresponding comparative financial information for 2010.

Throughout the first quarter of 2010, we continued to manage the implementation of IFRS through the completion of activities and deliverables in accordance with our overall transition plan which currently remains on- track. The Company has not yet finalized its accounting policy decisions and first time adoption elections but expects to complete this exercise later this year. Until this process is complete, the impact of adopting IFRS on the Company's future financial position and future results cannot be determined.

Based on our current analysis of the identified differences between Canadian accounting requirements and IFRS effective January 1, 2011, with the exception of the potential impairment of goodwill upon transition, we do not expect these accounting differences to have a significant impact on the financial statements in 2011. The requirement to perform goodwill impairment testing at the cash generating unit level under IFRS, a more granular level than a reporting unit level under Canadian GAAP, may result in an impairment charge to be reflected in opening retained earnings upon adoption of IFRS in 2011, which could be material.

Please refer to our 2009 Annual Report for additional information on IFRS, including potential impacts on regulatory capital for potential IFRS changes beyond 2011.

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: Adjusted Earnings from Operations; Return on Common Shareholders' Equity; Constant Currency Basis; Premiums and Deposits; Premiums and Premium Equivalents; Funds under Management; Capital; Sales; New Business Embedded Value and Impact on Shareholders' Economic 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. Therefore, they should not be considered in isolation or as a substitute for any other financial information prepared in accordance with GAAP.

In our 2009 Annual Report in the section entitled "Estimated Adjusted Earnings from Operations for 2010", the Company estimated Adjusted Earnings from Operations for all quarters in 2010, which constitutes forward-looking information, in accordance with the methods outlined under "Financial Highlights - Adjusted Earnings from Operations" above. In this report, we have compared our estimate of adjusted earnings from operations with the adjusted earnings from operations for the first quarter excluding specified items that were excluded in arriving at our estimate of adjusted earnings from operations. The Company believes these measures are useful to investors given the current economic conditions including the volatility of equity markets, interest rates and other factors.

Return on common shareholders' 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 Company calculates return on common shareholders' equity using average common shareholders' equity excluding Accumulated Other Comprehensive Income (Loss) ("AOCI") on AFS securities and cash flow hedges.

    
    Return on Equity
    ----------------
    (Canadian $ millions)                               Quarterly Results
                                                      1Q10     4Q09     1Q09
    -------------------------------------------------------------------------
    Net income (loss) available to common
     shareholders per Consolidated Statements
     of Operations                                   1,120      848   (1,075)
    -------------------------------------------------------------------------

    Opening total equity available to common
     shareholders                                   27,405   24,812   26,496
    Closing total equity available to common
     shareholders                                   27,816   27,405   25,442
    -------------------------------------------------------------------------
    Weighted average total equity available to
     common shareholders                            27,610   26,108   25,969
    -------------------------------------------------------------------------
    Opening AOCI on AFS securities and cash flow
     hedges per Consolidated Balance Sheets            564      442     (846)
    Closing AOCI on AFS securities and cash flow
     hedges per Consolidated Balance Sheets            633      564     (917)
    -------------------------------------------------------------------------
    Adjustment for average AOCI                       (598)    (503)     882
    -------------------------------------------------------------------------
    Weighted average total equity available to
     common shareholders excluding average
     AOCI adjustment                                27,012   25,605   26,851
    -------------------------------------------------------------------------

    ROE based on weighted average total equity
     available to common shareholders (annualized)   16.5%    12.9%  (16.8)%
    ROE based on weighted average total equity
     available to common shareholders excluding
     average AOCI adjustment (annualized)            16.8%    13.1%  (16.2)%
    -------------------------------------------------------------------------
    

The Company also 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 report are calculated, as appropriate, using the income statement and balance sheet exchange rates effective for the first quarter of 2009.

Premiums and deposits is a measure of top line growth. The Company calculates premiums and deposits as the aggregate of (i) premiums and premium equivalents (see below), (ii) segregated fund deposits, excluding seed money, (iii) mutual fund deposits, (iv) deposits into institutional advisory accounts, and (v) other deposits in other managed funds.

Premiums and premium equivalents are part of premiums and deposits. The Company calculates premiums and premium equivalents as the aggregate of (i) general fund premiums net of reinsurance, reported as premiums on the Consolidated Statement of Operations, (ii) premium equivalents for administration only group benefit contracts and (iii) premiums in the Canadian Group Benefit's reinsurance ceded agreement.

    
    Premiums and Deposits
    ---------------------
    (Canadian $ millions)                               Quarterly Results
                                                   --------------------------
                                                      1Q10     4Q09     1Q09
    -------------------------------------------------------------------------
    Premium income per Consolidated Statements
     of Operations                                   4,395    4,731    6,972
    Deposits from Policyholders per Consolidated
     Statements of Segregated Funds Changes in
     Net Assets                                      7,204    7,343    8,259
    -------------------------------------------------------------------------
    Premiums and deposits per financial
     statements                                     11,599   12,074   15,231
    Mutual fund deposits                             2,966    2,378    2,096
    Institutional advisory account deposits            847      363    1,181
    ASO premium equivalents                            676      663      669
    Group Benefits ceded premiums                      906      919        -
    Other fund deposits                                144      138      124
    -------------------------------------------------------------------------
    Total premiums and deposits                     17,138   16,535   19,301
    Currency impact                                  2,310    2,059        -
    -------------------------------------------------------------------------
    Constant currency premiums and deposits         19,448   18,594   19,301
    -------------------------------------------------------------------------
    

Funds under management is a measure of the size of the Company. It represents the total of the invested asset base that the Company and its customers invest in.

    
    Funds Under Management
    ----------------------
    (Canadian $ millions)                               Quarterly Results
                                                   --------------------------
                                                      1Q10     4Q09     1Q09
    -------------------------------------------------------------------------
    Total invested assets per Consolidated
     Balance Sheets                                188,308  187,470  191,132
    Total segregated funds net assets held by
     the Company per Consolidated Statements of
     Segregated Funds                              193,103  190,665  163,879
    -------------------------------------------------------------------------
    Funds under management per financial
     statements                                    381,411  378,135  355,011
    Mutual funds                                    36,766   33,370   24,001
    Institutional advisory accounts (excluding
     segregated funds)                              20,866   20,906   20,798
    Other funds                                      7,419    7,206    5,597
    -------------------------------------------------------------------------
    Total funds under management                   446,462  439,617  405,407
    Currency impact                                 76,572   63,636        -
    -------------------------------------------------------------------------
    Constant currency funds under management       523,034  503,253  405,407
    -------------------------------------------------------------------------
    

The definition we use for capital serves as a foundation of our capital management activities at the MFC level. For regulatory reporting purposes, the numbers are further adjusted for various additions or deductions to capital as mandated by the guidelines used by OSFI. Capital is calculated as the sum of: total equity excluding AOCI on cash flow hedges; non-controlling interest in subsidiaries; and liabilities for preferred shares and qualifying capital instruments.

    
    Capital
    -------
    (Canadian $ millions)                               Quarterly Results
                                                   --------------------------
                                                      1Q10     4Q09     1Q09
    -------------------------------------------------------------------------
    Total equity per Consolidated Balance Sheets    29,326   28,907   26,581
    Less AOCI (loss) on cash flow hedges per
     Consolidated Balance Sheets                       (54)     (48)    (272)
    Add liabilities for preferred shares and
     qualifying capital instruments                  4,022    4,037    3,139
    Add non-controlling interest in subsidiaries       246      202      222
    -------------------------------------------------------------------------
    Total capital                                   33,648   33,194   30,214
    -------------------------------------------------------------------------
    

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; variable annuity products; 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.
    

New business embedded value ("NBEV") is the change in shareholders' economic value as a result of sales in the period. NBEV is calculated as the present value of expected future earnings after the cost of capital on new business using future mortality, morbidity, policyholder behavior assumptions, expense and investment assumptions used in the pricing of the products sold. The investment assumptions for long duration products are based on the long- term investment assumptions typically determined during the annual planning cycle. For variable annuity products, the interest rates used in the calculation of NBEV are based on the interest rates at the time the business is issued. The principal economic assumptions used in the NBEV calculations in 2010 were based on January 1, 2010 markets and were as follows:

    
    -------------------------------------------------------------------------
                                     Canada       U.S.  Hong Kong      Japan
    -------------------------------------------------------------------------
    MCCSR ratio                        150%       150%       150%       150%
    Discount rate                     7.75%      8.00%      8.50%      6.50%
    Inflation                          2.0%       2.0%       2.0%       0.0%
    Income tax rate                     26%        35%      16.5%        36%
    Foreign exchange rate               n/a     1.0466     0.1350     0.0112
    -------------------------------------------------------------------------
    

Impact on shareholders' economic value is one of the measures we use to describe the potential impact of changes in equity markets and interest rates. Our method of calculating the impact on shareholders' economic value is set out in the relevant sections above where the impact is disclosed.

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 include, but are not limited to, statements with respect to our estimated adjusted earnings from operations referred to above under "Financial Highlights - Adjusted Earnings from Operations". The forward-looking statements in this document 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", "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, 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 and movements in credit spreads, currency rates, investment losses and defaults, market liquidity and creditworthiness of guarantors, reinsurers and counterparties); the ability to execute strategic plans and changes to strategic plans; changes in laws and regulations; changes in accounting standards; downgrades in our financial strength or credit ratings; the ability to maintain the Company's reputation; level of competition and consolidation; the ability to market and distribute products through current and future distribution channels; unforeseen liabilities or asset impairments arising from acquisitions and dispositions of businesses; impairments of goodwill or intangible assets or the establishment of valuation allowances against future tax assets; the ability to implement effective hedging strategies; the ability to source appropriate non-fixed income assets to back the Company's long dated liabilities; the realization of losses arising from the sale of investments classified as available for sale; the accuracy of estimates used in applying accounting policies and actuarial methods used by the Company; Company 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 or adequacy of reinsurance; legal and regulatory proceedings, including tax audits, tax litigation or similar proceedings; the ability to adapt products and services to the changing market; the 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 the Company's non-North American operations; acquisitions and the 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 the ability of the Company to protect its 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 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.

About Manulife Financial

Manulife Financial is a leading Canadian-based financial services group serving millions of customers in 22 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$446 billion (US$440 billion) as at March 31, 2010. 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.

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

                                                    As at and for the
                                                    three months ended
                                                         March 31
                                                  2010       2009   % Change
    -------------------------------------------------------------------------

    Net income (loss)                         $  1,148   $ (1,071)         -
      Net income (loss) attributed to
       participating policyholders                   8         (3)         -
    -------------------------------------------------------------------------
    Net income (loss) attributed to
     shareholders                             $  1,140   $ (1,068)         -
      Preferred share dividends                    (20)        (7)       186
    -------------------------------------------------------------------------
    Net income (loss) available to common
     shareholders                             $  1,120   $ (1,075)         -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Premiums and deposits:
      Life and health insurance premiums(1)   $  3,269   $  4,278        (24)
      Annuity and pension premiums
       excluding variable annuities              1,058      1,778        (40)
      Segregated fund deposits excluding
       variable annuities                        5,083      5,107         (0)
      Mutual fund deposits                       2,966      2,096         42
      Institutional advisory account
       deposits                                    847      1,181        (28)
      ASO premium equivalents                      676        669          1
      Group Benefits ceded(1)                      906          -          -
      Other fund deposits                          144        124         16
    -------------------------------------------------------------------------
    Premiums and deposits excluding
     variable annuities                       $ 14,949   $ 15,233         (2)
      Variable annuities premium and
       deposits                                  2,189      4,068        (46)
    -------------------------------------------------------------------------
    Total premiums and deposits               $ 17,138   $ 19,301        (11)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Funds under management:
      General fund                            $188,308   $191,132         (1)
      Segregated funds excluding
       institutional advisory accounts         190,895    160,507         19
      Mutual funds                              36,766     24,001         53
      Institutional advisory accounts           23,074     24,170         (5)
      Other funds                                7,419      5,597         33
    -------------------------------------------------------------------------
    Total funds under management              $446,462   $405,407         10
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Capital
      Liabilities for preferred shares and
       qualifying capital instruments         $  4,022   $  3,139         28
      Non-controlling interest in
       subsidiaries                                246        222         11
      Equity
        Participating policyholders' equity         88         59         49
        Shareholders' equity
          Preferred shares                       1,422      1,080         32
          Common shares                         19,005     16,177         17
          Contributed surplus                      190        161         18
          Retained earnings                     13,760     11,302         22
          Accumulated other comprehensive
           income (loss) on AFS securities
           and translation of net foreign
           operations                           (5,085)    (1,926)       164
    -------------------------------------------------------------------------
    Total capital                             $ 33,648   $ 30,214         11
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Selected key performance measures:
      Basic earnings (loss) per common share  $   0.64   $  (0.67)
      Diluted earnings (loss) per common
       share                                  $   0.64   $  (0.67)
      Return on common shareholders' equity
       (annualized)(2)                           16.8%    (16.2)%
      Book value per common share             $  15.79   $  15.79
      Common shares outstanding (in millions)
          End of period                          1,761      1,611
          Weighted average - basic               1,758      1,610
          Weighted average - diluted             1,763      1,610

    (1) At the end of the first quarter of 2009, Canadian Group Benefits
        entered into an external reinsurance agreement which resulted in a
        substantial reduction in net premium revenue reported in the income
        statement. The Company continues to retain certain benefits and
        certain risks on this business and the associated direct premiums
        continue to be included in the overall premiums and deposits metric
        as "Group Benefits ceded".
    (2) Return on common shareholders' equity is net income (loss) available
        to common shareholders divided by average common shareholders' equity
        excluding accumulated other comprehensive income (loss) on AFS
        securities and cash flow hedges.



    Summary Consolidated Financial Statements

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

                                                  For the three months ended
                                                           March 31
                                                             2010       2009
    -------------------------------------------------------------------------
    Revenue
    Premium income(1)                                    $  4,395   $  6,972
    Investment income
      Investment income                                     2,042      1,837
      Realized/ unrealized gain (losses) on assets
       supporting policy liabilities and consumer notes     1,149     (2,103)
    Other revenue                                           1,579      1,293
    -------------------------------------------------------------------------
    Total revenue                                        $  9,165   $  7,999
    -------------------------------------------------------------------------
    Policy benefits and expenses
    To policyholders and beneficiaries
      Death, disability and other claims(1)              $  1,126   $  1,835
      Maturity and surrender benefits(2)                    1,062      2,591
      Annuity payments                                        788        882
      Policyholder dividends and experience rating
       refunds                                                283        420
      Net transfers to segregated funds                       185        636
      Change in actuarial liabilities(2)                    1,961      1,329
    General expenses                                          883        924
    Investment expenses                                       238        232
    Commissions                                               909        978
    Interest expense                                          297        218
    Premium taxes                                              73         73
    Non-controlling interest in subsidiaries                    5          8
    -------------------------------------------------------------------------
    Total policy benefits and expenses                   $  7,810   $ 10,126
    -------------------------------------------------------------------------
    Income (loss) before income taxes                    $  1,355   $ (2,127)
    Income tax (expense) recovery                            (207)     1,056
    -------------------------------------------------------------------------
    Net income (loss)                                    $  1,148   $ (1,071)
      Net income (loss) attributed to participating
       policyholders                                            8         (3)
    -------------------------------------------------------------------------
    Net income (loss) attributed to shareholders         $  1,140   $ (1,068)
      Preferred share dividends                               (20)        (7)
    -------------------------------------------------------------------------
    Net income (loss) available to common shareholders   $  1,120   $ (1,075)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic earnings (loss) per common share               $   0.64   $  (0.67)
    Diluted earnings (loss) per common share             $   0.64   $  (0.67)

    (1) At the end of the first quarter of 2009, Canadian Group Benefits
        entered into an external reinsurance agreement which resulted in a
        substantial reduction in net premium revenue reported in the income
        statement. The Company continues to retain certain benefits and
        certain risks on this business.
    (2) The change in actuarial liabilities includes the impact of scheduled
        maturities in John Hancock Fixed Products institutional annuity
        contracts of $33 million in Q1 2010 and $1,197 million in Q1 2009.



    Consolidated Balance Sheets
    (Canadian $ in millions, unaudited)

                                                            As at March 31
    Assets                                                   2010       2009
    -------------------------------------------------------------------------
    Invested assets
    Cash and short-term securities                       $ 17,289   $ 18,062
    Securities
      Bonds                                                88,090     84,295
      Stocks                                                9,967      7,946
    Loans
      Mortgages                                            30,605     31,795
      Private placements                                   22,123     26,235
      Policy loans                                          6,495      7,746
      Bank loans                                            2,468      2,439
    Real estate                                             5,798      6,491
    Other investments                                       5,473      6,123
    -------------------------------------------------------------------------
    Total invested assets                                $188,308   $191,132
    -------------------------------------------------------------------------
    Other assets
    Accrued investment income                            $  1,663   $  1,792
    Outstanding premiums                                      734        751
    Goodwill                                                6,973      8,055
    Intangible assets                                       1,957      2,160
    Derivatives                                             2,646      6,590
    Miscellaneous                                           3,654      3,575
    -------------------------------------------------------------------------
    Total other assets                                   $ 17,627   $ 22,923
    -------------------------------------------------------------------------
    Total assets                                         $205,935   $214,055
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Segregated funds net assets                          $194,149   $164,464
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and equity
    -------------------------------------------------------------------------
    Policy liabilities                                   $140,916   $150,268
    Deferred realized net gains                               103        120
    Bank deposits                                          15,303     13,481
    Consumer notes                                          1,225      1,642
    Long-term debt                                          3,307      3,602
    Future income tax liability                             1,305      1,184
    Derivatives                                             2,548      5,657
    Other liabilities                                       7,087      7,615
    -------------------------------------------------------------------------
                                                         $171,794   $183,569

    Liabilities for preferred shares and capital
     instruments                                            4,569      3,683
    Non-controlling interest in subsidiaries                  246        222

    Equity
      Participating policyholders' equity                      88         59
      Shareholders' equity
        Preferred shares                                    1,422      1,080
        Common shares                                      19,005     16,177
        Contributed surplus                                   190        161
        Retained earnings                                  13,760     11,302
        Accumulated other comprehensive loss               (5,139)    (2,198)
    -------------------------------------------------------------------------
    Total equity                                         $ 29,326   $ 26,581
    -------------------------------------------------------------------------
    Total liabilities and equity                         $205,935   $214,055
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Segregated funds net liabilities                     $194,149   $164,464
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

    Note 1: Divisional Information

                                     For the quarter ended March 31, 2010
                                  -------------------------------------------
                                                U.S.                 Asia
                                     U.S.      Wealth                 and
    Premiums and deposits         Insurance  Management  Canadian    Japan
    -------------------------------------------------------------------------
    General fund premiums
     excluding variable
     annuities(1)                 $   1,399  $     605  $   1,034  $   1,043
    Segregated fund deposits
     excluding variable annuities       303      3,520        802        458
    Mutual fund deposits                  -      2,441        355        170
    Institutional advisory
     account deposits                     -          -          -          -
    ASO premium equivalents               -          -        676          -
    Group Benefits ceded(1)               -          -        906          -
    Other fund deposits                   -        144          -          -
    Variable annuities premiums
     and deposits                         -        730        707        752
    -------------------------------------------------------------------------
    Total                         $   1,702  $   7,440  $   4,480  $   2,423
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net income (loss)             $     131  $     350  $     305  $     431
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Funds under management                   As at March 31, 2010
    -------------------------------------------------------------------------
    General fund                  $  58,526  $  33,404  $  60,314  $  24,050
    Segregated funds excluding
     institutional advisory
     accounts                        11,461    114,708     37,483     27,365
    Mutual funds                          -     26,649      6,611      3,506
    Institutional advisory
     accounts                             -          -          -          -
    Other funds                           -      3,569          -      3,850
    -------------------------------------------------------------------------
    Total                         $  69,987  $ 178,330  $ 104,408  $  58,771
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                      For the quarter ended
                                          March 31, 2010
                                 ---------------------------------
                                             Corporate
                                                and
    Premiums and deposits        Reinsurance   Other       Total
    --------------------------------------------------------------
    General fund premiums
     excluding variable
     annuities(1)                 $     246  $       -  $   4,327
    Segregated fund deposits
     excluding variable annuities         -          -      5,083
    Mutual fund deposits                  -          -      2,966
    Institutional advisory
     account deposits                     -        847        847
    ASO premium equivalents               -          -        676
    Group Benefits ceded(1)               -          -        906
    Other fund deposits                   -          -        144
    Variable annuities premiums
     and deposits                         -          -      2,189
    --------------------------------------------------------------
    Total                         $     246  $     847  $  17,138
    --------------------------------------------------------------
    --------------------------------------------------------------

    Net income (loss)             $      54  $    (123) $   1,148
    --------------------------------------------------------------
    --------------------------------------------------------------

    Funds under management               As at March 31, 2010
    --------------------------------------------------------------
    General fund                  $   2,395  $   9,619  $ 188,308
    Segregated funds excluding
     institutional advisory
     accounts                             -       (122)   190,895
    Mutual funds                          -          -     36,766
    Institutional advisory
     accounts                             -     23,074     23,074
    Other funds                           -          -      7,419
    --------------------------------------------------------------
    Total                         $   2,395  $  32,571  $ 446,462
    --------------------------------------------------------------
    --------------------------------------------------------------



                                     For the quarter ended March 31, 2009
                                  -------------------------------------------
                                                U.S.                 Asia
                                     U.S.      Wealth                 and
    Premiums and deposits         Insurance  Management  Canadian    Japan
    -------------------------------------------------------------------------
    General fund premiums
     excluding variable
     annuities                    $   1,535  $   1,141  $   2,112  $     983
    Segregated fund deposits
     excluding variable annuities       358      3,444        677        622
    Mutual fund deposits                  -      1,386         97        613
    Institutional advisory
     account deposits                     -          -          -          -
    ASO premium equivalents               -          -        669          -
    Other fund deposits                   -        124          -          -
    Variable annuities premiums
     and deposits                         -      2,565        875        628
    -------------------------------------------------------------------------
    Total                         $   1,893  $   8,660  $   4,430  $   2,846
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net income (loss)             $     (92) $    (629) $     (87) $     142
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Funds under management                     As at March 31, 2009
    -------------------------------------------------------------------------
    General fund                  $  60,969  $  41,829  $  53,711  $  25,633
    Segregated funds excluding
     institutional advisory
     accounts                        10,008     98,918     27,879     23,923
    Mutual funds                          -     20,223      2,244      1,534
    Institutional advisory
     accounts                             -          -          -          -
    Other funds                           -      3,087          -      2,510
    -------------------------------------------------------------------------
    Total                         $  70,977  $ 164,057  $  83,834  $  53,600
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                      For the quarter ended
                                          March 31, 2009
                                 ---------------------------------
                                             Corporate
                                                and
    Premiums and deposits        Reinsurance   Other       Total
    --------------------------------------------------------------
    General fund premiums
     excluding variable
     annuities                    $     285  $       -  $   6,056
    Segregated fund deposits
     excluding variable annuities         -          6      5,107
    Mutual fund deposits                  -          -      2,096
    Institutional advisory
     account deposits                     -      1,181      1,181
    ASO premium equivalents               -          -        669
    Other fund deposits                   -          -        124
    Variable annuities premiums
     and deposits                         -          -      4,068
    --------------------------------------------------------------
    Total                         $     285  $   1,187  $  19,301
    --------------------------------------------------------------
    --------------------------------------------------------------

    Net income (loss)             $      59  $    (464) $  (1,071)
    --------------------------------------------------------------
    --------------------------------------------------------------

    Funds under management              As at March 31, 2009
    --------------------------------------------------------------
    General fund                  $   2,776  $   6,214  $ 191,132
    Segregated funds excluding
     institutional advisory
     accounts                             -       (221)   160,507
    Mutual funds                          -          -     24,001
    Institutional advisory
     accounts                             -     24,170     24,170
    Other funds                           -          -      5,597
    --------------------------------------------------------------
    Total                         $   2,776  $  30,163  $ 405,407
    --------------------------------------------------------------
    --------------------------------------------------------------
    (1) At the end of the first quarter of 2009, Canadian Group Benefits
        entered into an external reinsurance agreement which resulted in a
        substantial reduction in net premium revenue reported in the income
        statement. The Company continues to retain certain benefits and
        certain risks on this business and the associated direct premiums
        continue to be included in the overall premiums and deposits metric
        as "Group Benefits ceded".

    Note 2: Comparatives

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

SOURCE Manulife Financial Corporation

For further information: For further information: Media inquiries: David Paterson, (416) 852-8899, david_paterson@manulife.com; Laurie Lupton, (416) 852-7792, laurie_lupton@manulife.com; Investor Relations: Amir Gorgi, (416) 852-8311, amir_gorgi@manulife.com


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