Manulife Financial Corporation releases key aspects of its financial position


    TORONTO, Oct. 13 /CNW/ - In light of unprecedented market volatility,
Manulife Financial is releasing important information about key aspects of its
financial position to reassure its stakeholders.
    "Manulife remains conservatively reserved, has a high quality balance
sheet and strong and leading business franchises around the world," noted
Dominic D'Alessandro, President and Chief Executive Officer. "We are well
positioned to weather these difficult times and continue to build for the

    Variable Annuities and Segregated Funds
    Manulife Financial is a provider of variable annuities and segregated
funds in Canada, the United States and Asia. Typically, funds are deposited
for investment in a basket of pre-approved funds where the investor would
often receive a series of annual payments for a defined period. The bulk of
these payments would be expected to occur between the next 7 to 30 years and
the amounts paid prior to that period would be immaterial. In exchange for a
fee and provided the annuity is held for a specified period of time, Manulife
provides guaranteed benefits. These products are designed to provide consumers
with the equivalent of a private pension plan tailored to their individual
    At September 30, 2008, notwithstanding the steep decline of equity
markets, Manulife fully expects the fees collected on these contracts will
exceed the benefits payable over their lifetime. Despite this, at the end of
third quarter, Manulife held an actuarially determined reserve of $1.4 billion
in respect of any potential future shortfall. This reserve is recalculated
every quarter to reflect the passage of time and any change in the market
value of assets that may have occurred. Manulife reserves for these guarantees
at a high confidence level which, at the end of third quarter, is expected to
be at a level exceeding 90%. To the extent that any increase in reserve is
required in any period, this would decrease the earnings for that period. In
periods of rising market values, the converse would be the case.
    In addition to the high level of assurance provided by these reserves,
under Manulife's regulatory capital framework, the Company provides additional
capital to support these future obligations. At the end of the third quarter,
Manulife expects its MCCSR regulatory capital ratio to be within its targeted
operating range of 180% to 200%.
    Since quarter end, equity markets have deteriorated further which will
have an unfavourable impact on Manulife's capital ratios unless these markets
recover. The Company will continue to manage its regulatory capital, however,
it has no plans to issue common equity.

    Credit Losses - Fixed Income Securities
    Manulife has previously announced the major credit exposures to
noteworthy names affecting its third quarter earnings. Manulife expects that
the earnings impact of credit losses will be approximately $250 million in the
third quarter, including approximately $50 million due to reserve
strengthening as a result of credit downgrades.
    Despite these charges, Manulife's asset quality remains very high. Due to
generalized spread widening, the gross unrealized losses on fixed income
securities have expanded to approximately $6 billion, a relatively modest
amount given total invested assets of $165 billion at September 30, 2008.
Manulife has the ability to hold these securities until maturity, has provided
for the expected level of defaults in its actuarial reserves, and would expect
no significant earnings impact in respect of these gross unrealized losses.
    There has been an increased market scrutiny of a particular class of
assets, namely fixed income securities trading down 20% or more for at least
six months. Of the $6 billion mentioned above, Manulife has approximately
$200 million of exposure to fixed income securities trading down 20% or more
for at least six months, again a modest amount given the large size of its
overall portfolio.

    Securities Lending
    Manulife has insignificant credit, investment or counterparty risk related
to securities lending. Despite this, the Company has reduced its securities
lending activities in light of heightened market uncertainty. The total amount
of securities lending outstanding is now less than $1.5 billion. The
securities lending is backed by the highest-quality, liquid collateral and the
loans are to very creditworthy institutions.

    Manulife is fully self-funded, meaning our businesses generate enough
cash flow to sustain our operations without being dependent on the commercial
paper markets or other short-term funding arrangements. The Company has
consciously avoided businesses which give rise to immediate liquidity needs.
As a result, the Company has high levels of liquidity. Manulife holds over
$11 billion in cash and high grade short term assets, representing
approximately 7% of invested assets. The majority of the other fixed income
holdings are also liquid.

    Conference Call and Webcast
    Management will host a conference call and webcast on October 14, 2008 at
8:00a.m. ET. For local and international locations, please call 416-641-6110
and toll free in North America please call 866-226-1798. 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
calling (416) 695-5800 or 800-408-3053 (passcode No. 3273059).
    The webcast will be available through Manulife Financial's website on
October 14, 2008 at 8:00a.m. ET. You may access the webcast at: An archived version of the webcast will be
available later on the website at the same URL.

    About Manulife Financial
    Manulife Financial is a leading Canadian-based financial services group
serving millions of customers in 19 countries and territories worldwide.
Operating as Manulife Financial in Canada and Asia, and primarily through John
Hancock in the United States, the Company offers clients a diverse range of
financial protection products and wealth management services through its
extensive network of employees, agents and distribution partners. Funds under
management by Manulife Financial and its subsidiaries were Cdn$400 billion
(US$393 billion) as at June 30, 2008.
    Manulife Financial is one of two publicly traded life insurance companies
in the world whose rated life insurance subsidiaries hold Standard & Poor's
Rating Services' highest "AAA" rating.
    Manulife Financial Corporation trades as 'MFC' on the TSX, NYSE and PSE,
and under '0945' on the SEHK. Manulife Financial can be found on the Internet

    Caution Regarding Forward-Looking Statements
    This document contains forward-looking statements within the meaning of
the "safe harbour" provisions of Canadian provincial securities laws and the
U.S. Private Securities Litigation Reform Act of 1995. These forward-looking
statements relate to, among other things, our objectives, goals, strategies,
intentions, plans, beliefs, expectations and estimates, and can generally be
identified by the use of words such as "may", "will", "could", "should",
"would", "suspect", "outlook", "expect", "intend", "estimate", "anticipate",
"believe", "plan", "forecast", "objective" and "continue" (or the negative
thereof) and words and expressions of similar import, and include statements
concerning possible or assumed future results. Although we believe that the
expectations reflected in such forward-looking statements are reasonable, such
statements involve risks and uncertainties, and undue reliance should not be
placed on such statements. Certain material factors or assumptions are applied
in making forward-looking statements, and actual results may differ materially
from those expressed or implied in such statements. Important factors that
could cause actual results to differ materially from expectations include but
are not limited to: level of competition and consolidation, changes in laws
and regulations, general business and economic conditions, currency rates and
Company liquidity, accuracy of information received from counterparties and
the ability of counterparties to meet their obligations, accuracy of
accounting policies and actuarial methods used by the Company, ability to
maintain the Company's reputation, legal and regulatory proceedings, the
disruption of or changes to key elements of the Company's or to public
infrastructure systems, the ability to attract and retain key executives,
environmental concerns, the ability to complete acquisitions and execute
strategic plans, and the ability to adapt products and services to the
changing market. 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 Report, and elsewhere in our filings with Canadian
and U.S. securities regulators. We do not undertake to update any
forward-looking statements.

For further information:

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

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