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First Quarter Report to Shareholders Three months ended March 31, 2023 Manulife Financial Corporation

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Manulife reports 1Q23 net income attributed to shareholders of $1.4 billion, core earnings of $1.5 billion, strong core EPS growth and core ROE, and Global Wealth and Asset Management net inflows of $4.4 billion

Today, Manulife announced its first quarter of 2023 (“1Q23”) results. This marks the first quarter of reporting under IFRS 17 and IFRS 9 and the transition impacts on our results are consistent with the guidance that we provided previously. Key highlights of 1Q23 include:

“We reported strong operating results in the first quarter of 2023 despite continued market volatility, delivering core earnings of $1.5 billion, net income attributed to shareholders of $1.4 billion and core return on equity of 14.8%,” said Roy Gori, Manulife President & Chief Executive Officer. “We delivered core EPS growth of 11%, reflecting strong core earnings and the impact of our share buyback actions over the past year. The strength and global diversity of our franchise was again demonstrated this quarter with year-over-year core earnings growth in our North America insurance businesses. In Asia, we are encouraged by the sales momentum building progressively through the first quarter as the region continues to rebound from the global pandemic, which contributed to double-digit APE sales growth in Hong Kong compared with 1Q22. Global WAM generated net inflows of $4.4 billion with positive contributions from all business lines and geographies.”

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“As we report our first quarter of financial results under IFRS 17 and IFRS 9, I am pleased to confirm that the transition impacts are consistent with the guidance we provided previously,” said Phil Witherington, Chief Financial Officer. “Adjusted book value per common share, which reflects the intrinsic value of our insurance businesses, demonstrated stable growth throughout 2022 and increased 9% in 1Q23 compared with the first quarter of 2022. Our capital position remains strong with a LICAT ratio of 138%. We continue to execute on our share buyback program and repurchased 0.8% of our outstanding common shares for $0.4 billion in 1Q23. An important metric under IFRS 17 is the contractual service margin, or CSM. For the first quarter we reported $14.9 billion of post-tax CSM, reflecting $0.4 billion of CSM generated from new business in the quarter. While the pace of growth was impacted by lower sales volumes in an operating environment that continued to be challenging, we continue to view our target of growing CSM by eight to ten percent per year to be appropriate^.1 I am optimistic about the momentum we are seeing in our Asia business, and am confident that we are well positioned for the future as insurance markets across Asia continue to grow.”

“Our financial strength, robust risk management and diversified business portfolio continue to drive the performance for our global franchise,” added Mr. Gori.

BUSINESS HIGHLIGHTS:

In Asia, we continued to leverage our health and wellness platform, ManulifeMOVE, to drive incremental sales, with over 50% of our in-force eligible customers having activated the ManulifeMOVE app, of which 38% have made a subsequent insurance purchase. In Canada, we partnered with Cleveland Clinic Canada using their global healthcare expertise to enhance product offerings and services to our five million group benefits customers by providing industry research, thought leadership, and education materials. In the U.S., we continued to innovate our customer wellness offerings by expanding access to GRAIL’s Galleri^® multi-cancer early detection test to all eligible life insurance customers who have registered with the John Hancock Vitality PLUS program. This expanded access comes after a successful initial pilot when we became the first life insurance carrier to make the test available in September 2022. In Global WAM, our Hong Kong retirement business won a total of 19 awards in “The 2023 MPF Awards” organized by MPF Ratings, including the “MPF Gold Rating”, “Best Employer Experience”, “Environmentally Responsible”, “People’s Choice” and 15 Consistent Performer awards. Among these, we have been voted the “People’s Choice” for five consecutive years.

In addition, we continued to make progress on our digital journey in 1Q23. In Asia, we further accelerated user adoption of our customer website in Vietnam by implementing additional servicing features and user interface improvements to enhance the customer experience, with the proportion of active users increasing 29 percentage points from 1Q22 to 37% at the end of 1Q23, materially contributing to an increase of 10 percentage points in servicing straight-through-processing for the segment. In Canada, we enhanced our Manulife Vitality program with continued expansion of compatible devices and apps, enabling members to now earn points for activities recorded on additional wearable devices and mobile applications. In the U.S., we optimized the customer registration experience across our life and long-term-care insurance customer websites at the end of 2022 resulting in a 35% increase in online registrations in 1Q23 compared with 1Q22, contributing to a 13% improvement in unique website traffic. In Global WAM, we announced a strategic agreement with Fidelity Clearing Canada which will provide access to a leading advisory technology platform for our Canadian retail wealth channel. The agreement will bring a robust digital experience and powerful technology directly to advisors and clients as we continue to enhance and broaden our wealth planning and advice business.

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FINANCIAL HIGHLIGHTS:

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PROFITABILITY:

Reported net income attributed to shareholders of $1.4 billion in 1Q23, in line with 1Q22 transitional net income attributed to shareholders, and $2.6 billion higher than 1Q22 net loss attributed to shareholders

Net income attributed to shareholders in 1Q23 was in line with 1Q22 transitional net income attributed to shareholders, reflecting higher core earnings largely offset by charges from market experience (compared with a small gain in the prior year on a transitional basis). The net charge from market experience in 1Q23 was primarily driven by lower-than-expected returns (including fair value changes) on alternative long duration assets (“ALDA”) related to real estate and private equity, and a net realized loss from the sale of fixed income assets which are classified as fair value through other comprehensive income (“FVOCI”), partially offset by higher-than-expected returns on public equity, favourable foreign exchange impacts and a modest net gain from derivatives and hedge ineffectiveness. Net income attributed to shareholders in 1Q23 increased by $2.6 billion compared with 1Q22, driven by factors mentioned above and $2.5 billion of transitional impacts due to the application of IFRS 9 hedge accounting and ECL principles (transitional impacts are geography-related and do not impact total shareholders’ equity as the corresponding offset is in other comprehensive income).

Delivered core earnings of $1.5 billion in 1Q23, an increase of 6% compared with 1Q22

The increase in core earnings compared with 1Q22 was driven by the non-recurrence of excess mortality claims related to COVID-19 in 1Q22 in the U.S. life insurance business, an increase in expected investment earnings related to business growth and higher reinvestment yields, higher returns on surplus assets net of higher cost of debt financing and lower new insurance business losses related to onerous contracts driven by pricing actions. These were partially offset by an increase in the ECL provision primarily related to commercial mortgages, lower CSM recognized into earnings for service provided reflecting slower amortization of CSM for certain VFA¹ contracts and the impact of the U.S. variable annuity reinsurance transactions in 2022, and lower net fee income from lower average AUMA and higher general expenses in Global WAM.

BUSINESS PERFORMANCE:

Annualized premium equivalent (“APE”) sales of $1.6 billion in 1Q23, a decrease of 3% compared with 1Q22

In Asia, APE sales increased 5%, driven by growth in Hong Kong. APE sales in Japan and Asia Other² were in line with 1Q22. In Hong Kong, APE sales increased 26% reflecting strong growth in our broker and agency channels, primarily driven by a return of demand from mainland Chinese visitors (“MCV”) customers following the reopening of the border between Hong Kong and mainland China. In Japan, APE sales were in line with 1Q22, as higher other wealth sales were offset by lower sales in individual protection and corporate-owned life insurance products. Asia Other APE sales were in line with 1Q22, as lower agency sales in Vietnam and bancassurance sales in Singapore were offset by higher sales in mainland China and in our international high net worth business³. In Canada, APE sales decreased 19%, primarily due to the impact of market volatility on the demand for segregated fund products and variability in the large-case group insurance market, partially offset by higher participating life insurance sales. In the U.S., APE sales decreased 22% due to the adverse impact of higher short-term interest rates and equity market volatility on consumer sentiment. APE sales of products with the John Hancock Vitality PLUS feature in 1Q23 increased to 74% of overall U.S. sales compared with 70% in 1Q22.

New business value (“NBV”) of $509 million in 1Q23, a decrease of 5% compared with 1Q22

In Asia, NBV decreased 4% from 1Q22 driven by less favourable product mix partially offset by higher sales volumes. In Canada, NBV decreased 12% driven by lower volumes in Annuities and Group Insurance, partially offset by higher margins in Individual Insurance and Annuities. In the U.S., NBV increased 6% due to pricing actions and favourable mix, partially offset by lower sales volumes.

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New business CSM of $442 million in 1Q23, a decrease of 13% compared with 1Q22

In Asia, new business CSM decreased 9% from 1Q22 driven by less favourable product mix partially offset by higher sales volumes. In Canada, new business CSM decreased 25% due to lower segregated fund sales volumes and less favourable product mix in Individual Insurance. Under IFRS 17 the majority of group insurance and affinity products are classified as Premium Allocation Approach (“PAA”) and do not generate CSM. In the U.S., new business CSM decreased 20% consistent with lower sales volumes.

CSM net of NCI was $17,467 million as at March 31, 2023, an increase of $184 million compared with December 31, 2022

The $184 million increase in CSM net of NCI reflects an increase in total CSM movement of $223 million, net of an increase in NCI of $39 million. Organic CSM movement was an increase of $166 million in 1Q23 driven by the impact of new insurance business and expected movements related to finance income or expenses, partially offset by amounts recognized for service provided in current period earnings and a loss from insurance experience. Inorganic CSM movement was an increase of $57 million driven by the impact of movement in exchange rates and reinsurance related gains. Post-tax CSM net of NCI was $14,850 million as at March 31, 2023.

Reported Global Wealth and Asset Management net inflows of $4.4 billion in 1Q23, compared with 1Q22 net inflows of $6.8 billion

Net inflows in Retirement were $1.2 billion in 1Q23 compared with net inflows of $2.0 billion in 1Q22, driven by higher plan redemptions and lower new pension plan sales, partially offset by growth in member contributions and lower member withdrawals. Net inflows in Retail were $0.8 billion in 1Q23 compared with net inflows of $4.0 billion in 1Q22, reflecting lower investor demand amid continued market volatility and higher interest rates. Net inflows in Institutional Asset Management were $2.5 billion in 1Q23 compared with net inflows of $0.9 billion in 1Q22, driven by higher gross flows and new product launches in mainland China, partially offset by higher redemptions in mainland China.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

This Management’s Discussion and Analysis (“MD&A”) is current as of May 10, 2023, unless otherwise noted. This MD&A should be read in conjunction with our unaudited Interim Consolidated Financial Statements for the three months ended March 31, 2023 and the MD&A and audited Consolidated Financial Statements contained in our 2022 Annual Report.

For further information relating to our risk management practices and risk factors affecting the Company, see “Risk Management and Risk Factors” and “Critical Actuarial and Accounting Policies” in the MD&A in our 2022 Annual Report and the “Risk Management” note to the Consolidated Financial Statements in our most recent annual and interim reports.

In this MD&A, the terms “Company”, “Manulife”, “we” and “our” mean Manulife Financial Corporation (“MFC”) and its subsidiaries. All amounts are reported in Canadian dollars, unless otherwise indicated. Any information contained in, or otherwise accessible through, websites mentioned in this MD&A does not form a part of this document.

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Manulife adopted IFRS 17 “Insurance Contracts” and IFRS 9 “Financial Instruments” effective for years beginning on or after January 1, 2023, to be applied retrospectively. See “Future Accounting and Reporting Changes” in the MD&A in our 2022 Annual Report (“2022 MD&A”). Our quarterly 2022 results have been restated in accordance with IFRS 17, including the other comprehensive income option¹, and IFRS 9. Audited restated consolidated financial statements for the year ended December 31, 2022 will be included in our 2023 Annual Report.

The 2022 comparative results restated in this MD&A may not be fully representative of our market risk profile, as the transition of our general fund portfolio for asset-liability matching purposes under IFRS 17 and IFRS 9 was not completed until early 2023. Consequently, year-over-year variations between our 2023 results compared to the 2022 results should be viewed in this context.

In addition, our 2022 results are also not directly comparable to 2023 results because IFRS 9 hedge accounting and expected credit loss (“ECL”) principles are applied prospectively effective January 1, 2023. Accordingly, we have also presented comparative quarterly 2022 results as if IFRS had allowed such principles to be implemented for 2022 (the “IFRS 9 transitional impacts”). This presentation will only be reported in our MD&As for 2023 for certain 2022 comparative results.

These 2022 comparative results are non-GAAP and denoted as being “transitional” and include the financial measures noted below:

Adoption of IFRS 17 and IFRS 9 has also resulted in additional definitions and revisions to the following financial measures:

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Quarterly profitability

Manulife’s net income attributed to shareholders was $1,406 million in the first quarter of 2023 (“1Q23”) compared with a net loss attributed to shareholders of $1,220 million and transitional net income attributed to shareholders of $1,325 million in the first quarter of 2022 (“1Q22”). The 1Q22 transitional net income attributed to shareholders includes $2,545 million of IFRS 9 transitional impacts. Net income attributed to shareholders is comprised of core earnings (consisting of items we believe reflect the underlying earnings capacity of the business), which amounted to $1,531 million in 1Q23 compared with $1,393 million in 1Q22, and items excluded from core earnings, which amounted to a net charge of $125 million in 1Q23 compared with a net charge of $2,613 million in 1Q22. Items excluded from core earnings in 1Q22 on a transitional basis amounted to a net charge of $68 million. The effective tax rate on net income attributed to shareholders in 1Q23 was 17% compared with 26% in 1Q22, reflecting differences in the jurisdictional mix of pre-tax profits and losses.

Net income attributed to shareholders in 1Q23 was in line with 1Q22 transitional net income attributed to shareholders, reflecting higher core earnings largely offset by charges from market experience (compared with a small gain in 1Q22 on a transitional basis). The net charge from market experience in 1Q23 was primarily driven by lower-than-expected returns (including fair value changes) on alternative long duration assets (“ALDA”) related to real estate and private equity, and a net realized loss from the sale of fixed income assets which are classified as fair value through other comprehensive income (“FVOCI”), partially offset by higher-than-expected returns on public equity, favourable foreign exchange impacts and a modest net gain from derivatives and hedge ineffectiveness. Net income attributed to shareholders in 1Q23 increased by $2,626 million compared with 1Q22, driven by factors mentioned above and the $2,545 million of IFRS 9 transitional impacts (transitional impacts are geography-related and do not impact total shareholders’ equity as the corresponding offset is in other comprehensive income).

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Core earnings increased $138 million or 6% on a constant exchange rate basis¹ compared with 1Q22. The increase in core earnings compared with 1Q22 was driven by the non-recurrence of excess mortality claims related to COVID-19 in 1Q22 in the U.S. life insurance business, an increase in expected investment earnings related to business growth and higher reinvestment yields, higher returns on surplus assets net of higher cost of debt financing and lower new insurance business losses related to onerous contracts driven by pricing actions. These were partially offset by an increase in the ECL provision primarily related to commercial mortgages, lower CSM recognized into earnings for service provided reflecting slower amortization of CSM for certain variable fee approach (“VFA”) contracts and the impact of the U.S. variable annuity reinsurance transactions in 2022, and lower net fee income from lower average AUMA and higher general expenses in Global Wealth and Asset Management (“Global WAM”). Actions to improve the capital efficiency of our legacy business resulted in $29 million lower core earnings in 1Q23 compared with 1Q22.

Core earnings by segment is presented in the table below.

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The table below presents transitional net income attributed to shareholders and net income attributed to shareholders consisting of core earnings and items excluded from core earnings.

Transitional net income attributed to shareholders by segment and net income attributed to shareholders by segment are presented in the following tables.

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Expense efficiency ratio and expenditure efficiency ratio

We introduced our strategic priority of expense efficiency in 2018.

The expense efficiency ratio is a financial measure which we use to measure progress towards our objective of becoming more efficient. The expense efficiency ratio reflects only those expenses that flow directly through core earnings (“core expenses”). Due to changes introduced by IFRS 17, certain costs that are directly attributable to acquire new business are capitalized into the CSM instead of directly flowing through core earnings and are now excluded from the ratio.

To provide a reference point to our expense efficiency ratio prior to the adoption of IFRS 17, we are temporarily introducing an additional efficiency ratio, the expenditure efficiency ratio, for 2022 and 2023 only, which captures all expenses, including costs that are directly attributable to the acquisition of new business (“core expenditures”).

The expenditure efficiency ratio was 54.0% for 1Q23, compared with 53.4% in 1Q22. The 0.6 percentage point increase in the ratio compared with 1Q22 was driven by a 6% increase in pre-tax core earnings and a 10% increase in core expenditures. 1Q23 core expenditures reflected higher workforce, infrastructure and operations expenses and additional expenses related to the acquisition of Manulife TEDA Fund Management Co, LTD. Costs directly attributable to the acquisition of new business represented approximately 24% of total core expenditures in both 1Q23 and 1Q22.

The expense efficiency ratio was 47.1% for 1Q23, compared with 46.4% in 1Q22. The 0.7 percentage point increase in the ratio compared with 1Q22 was driven by the items noted above related to the increase in the core expenditures efficiency ratio but is net of costs directly attributable to the acquisition of new business.

Total general expenses increased 17% on an actual exchange rate basis and 12% on a constant exchange rate basis driven by the items noted above related to the increase in the expense efficiency ratio and items outside of core earnings which consist primarily of a true-up to an existing legal provision. However, general expenses are also net of directly attributable maintenance expenses and directly attributable acquisition expenses for products measured using the Premium Allocation approach (“PAA”) which are included in insurance service expenses on our financial statements. Directly attributable maintenance expenses and directly attributable acquisition expenses for products measured using the PAA increased 15% in 1Q23 compared to 1Q22.

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Annualized premium equivalent (“APE”) sales were $1.6 billion in 1Q23, a decrease of 3%² compared with 1Q22. In Asia, APE sales increased 5% compared with 1Q22, driven by growth in Hong Kong. APE sales in Japan and Asia Other³ were in line with 1Q22. In Hong Kong, APE sales increased 26% compared with 1Q22 reflecting strong growth in our broker and agency channels, primarily driven by a return of demand from mainland Chinese visitors (“MCV”) customers following the reopening of the border between Hong Kong and mainland China. In Japan, APE sales were in line with 1Q22, as higher other wealth sales were offset by lower sales in individual protection and corporate-owned life insurance (“COLI”) products. Asia Other APE sales were in line with 1Q22, as lower agency sales in Vietnam and bancassurance sales in Singapore were offset by higher sales in mainland China and in our international high net worth business. In Canada, APE sales decreased 19% compared with 1Q22, primarily due to the impact of market volatility on the demand for segregated fund products and variability in the large-case group insurance market, partially offset by higher participating life insurance sales. In the U.S., APE sales decreased 22% compared with 1Q22 due to the adverse impact of higher short-term interest rates and equity market volatility on consumer sentiment. APE sales of products with the John Hancock Vitality PLUS feature in 1Q23 increased to 74% of overall U.S. sales compared with 70% in 1Q22.

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New business value (“NBV”) was $509 million in 1Q23, a decrease of 5%¹ compared with 1Q22. In Asia, NBV decreased 4% compared with 1Q22 driven by less favourable product mix partially offset by higher sales volumes. In Canada, NBV decreased 12% compared with 1Q22 driven by lower volumes in Annuities and Group Insurance, partially offset by higher margins in Individual Insurance and Annuities. In the U.S., NBV increased 6% compared with 1Q22 due to pricing actions and favourable mix, partially offset by lower sales volumes.

New business contractual service margin (“New Business CSM”) was $442 million in 1Q23, a decrease of 13% compared with 1Q22. In Asia, new business CSM decreased 9% compared with 1Q22 driven by less favourable product mix partially offset by higher sales volumes. In Canada, new business CSM decreased 25% compared with 1Q22 due to lower segregated fund sales volumes and less favourable product mix in Individual Insurance. Under IFRS 17, the majority of group insurance and affinity products are classified as PAA and do not generate CSM. In the U.S., new business CSM decreased 20% compared with 1Q22 consistent with lower sales volumes.

The contractual service margin (“CSM”) net of NCI was $17,467 million as at March 31, 2023, an increase of $184 million compared with December 31, 2022. The increase in CSM net of NCI reflects an increase in total CSM movement of $223 million, net of an increase in NCI of $39 million. Organic CSM movement was an increase of $166 million in 1Q23 driven by the impact of new insurance business and expected movements related to finance income or expenses, partially offset by amounts recognized for service provided in current period earnings and a loss from insurance experience. Inorganic CSM movement was an increase of $57 million driven by the impact of movement in exchange rates and reinsurance related gains. Post-tax CSM net of NCI was $14,850 million as at March 31, 2023.

Global Wealth and Asset Management reported net inflows were $4.4 billion in 1Q23 compared with net inflows of $6.8 billion in 1Q22. Net inflows in Retirement were $1.2 billion in 1Q23 compared with net inflows of $2.0 billion in 1Q22, driven by higher plan redemptions and lower new pension plan sales, partially offset by growth in member contributions and lower member withdrawals. Net inflows in Retail were $0.8 billion in 1Q23 compared with net inflows of $4.0 billion in 1Q22, reflecting lower investor demand amid continued market volatility and higher interest rates. Net inflows in Institutional Asset Management were $2.5 billion in 1Q23 compared with net inflows of $0.9 billion in 1Q22, driven by higher gross flows and new product launches in mainland China, partially offset by higher redemptions in mainland China.

The Life Insurance Capital Adequacy Test (“LICAT”) ratio for The Manufacturers Life Insurance Company (“MLI”) as at March 31, 2023 was 138% compared with 131% as at December 31, 2022. The seven percentage point increase was driven by the transition to the IFRS 17 accounting basis and the positive impact of a capital issuance net of common share buybacks.

MFC’s LICAT ratio was 125% as at March 31, 2023 compared with 119% as at December 31, 2022 with the increase driven by similar factors that impacted the movement in MLI’s LICAT ratio. The difference between the MLI and MFC ratios as at March 31, 2023 was largely due to the $6.2 billion of MFC senior debt outstanding that

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does not qualify as available capital at the MFC level but, based on the form it was down-streamed, qualifies as regulatory capital for MLI.

MFC’s financial leverage ratio¹ as at March 31, 2023 was 26.0%, an increase of 0.9 percentage points from 25.1% as at December 31, 2022. The increase in the ratio was driven by the issuance of securities.²

MFC’s consolidated capital was $71.6 billion as at March 31, 2023, an increase of $2.0 billion compared with $69.6 billion as at December 31, 2022. The increase was primarily driven by the issuance of capital instruments and higher post-tax CSM.

Cash and cash equivalents and marketable securities³ was $250.0 billion as at March 31, 2023 compared with $241.0 billion as at December 31, 2022. The increase was primarily driven by the higher market value of fixed income instruments due to lower interest rates.

Book value per common share as at March 31, 2023 was $22.01, a 2% increase compared with $21.56 as at December 31, 2022. The number of common shares outstanding was 1,850 million as at March 31, 2023 and was 1,865 million as at December 31, 2022.

Adjusted book value per common share as at March 31, 2023 was $30.04, a 2% increase compared with $29.42 as at December 31, 2022.

AUMA as at March 31, 2023 was $1.3 trillion, an increase of 4% compared with December 31, 2022, primarily due to the favourable impact of markets and net inflows. Total invested assets and segregated funds net assets increased 3% and 4%, respectively, on an actual exchange rate basis primarily due to favourable impact of markets.

Changes in foreign currency exchange rates from 1Q22 to 1Q23 increased core earnings by $55 million in 1Q23, primarily due to a weaker Canadian dollar compared with the U.S. dollar. The impact of foreign currency exchange rates on items excluded from core earnings does not provide relevant information given the nature of those items.

In Asia, we continued to leverage our health and wellness platform, ManulifeMOVE, to drive incremental sales, with over 50% of our in-force eligible customers having activated the ManulifeMOVE app, of which 38% have made a subsequent insurance purchase. In Canada, we partnered with Cleveland Clinic Canada using their global healthcare expertise to enhance product offerings and services to our five million group benefits customers by providing industry research, thought leadership, and education materials. In the U.S., we continued to innovate our customer wellness offerings by expanding access to GRAIL’s Galleri^® multi-cancer early detection test to all eligible life insurance customers who have registered with the John Hancock Vitality PLUS program. This expanded access comes after a successful initial pilot when we became the first life insurance carrier to make the test available in September 2022. In Global WAM, our Hong Kong retirement business won a total of 19 awards in “The 2023 MPF Awards” organized by MPF Ratings, including the “MPF Gold Rating”, “Best Employer Experience”, “Environmentally Responsible”, “People’s Choice” and 15 Consistent Performer awards. Among these, we have been voted the “People’s Choice” for five consecutive years.

In addition, we continued to make progress on our digital journey in 1Q23. In Asia, we further accelerated user adoption of our customer website in Vietnam by implementing additional servicing features and user interface

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improvements to enhance the customer experience, with the proportion of active users increasing 29 percentage points from 1Q22 to 37% at the end of 1Q23, materially contributing to an increase of 10 percentage points in servicing straight-through-processing for the segment. In Canada, we enhanced our Manulife Vitality program with continued expansion of compatible devices and apps, enabling members to now earn points for activities recorded on additional wearable devices and mobile applications. In the U.S., we optimized the customer registration experience across our life and long-term care insurance customer websites at the end of 2022 resulting in a 35% increase in online registrations in 1Q23 compared with 1Q22, contributing to a 13% improvement in unique website traffic. In Global WAM, we announced a strategic agreement with Fidelity Clearing Canada which will provide access to a leading advisory technology platform for our Canadian retail wealth channel. The agreement will bring a robust digital experience and powerful technology directly to advisors and clients as we continue to enhance and broaden our wealth planning and advice business.

Embedded value was $63.9 billion or $34.29 per common share, as of December 31, 2022, compared with $64.8 billion or $33.35 per common share as of December 31, 2021. More information about embedded value can be found in our 2022 Embedded Value report, which is available on our website.

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Asia’s net income attributed to shareholders was $519 million in 1Q23 compared with net income attributed to shareholders of $139 million and transitional net income attributed to shareholders of $205 million in 1Q22. The 1Q22 transitional net income includes a $66 million gain from IFRS 9 transitional impacts. Net income attributed to shareholders is comprised of core earnings, which was $489 million in 1Q23 compared with $479 million in 1Q22, and items excluded from core earnings, which amounted to a net gain of $30 million in 1Q23 compared with a net charge of $340 million in 1Q22. Items excluded from core earnings in 1Q22 on a transitional basis amounted to a net charge of $274 million. See section E3 “Non-GAAP and other financial measures” below, for a reconciliation of quarterly core earnings and transitional net income (loss) attributed to shareholders to net income (loss) attributed to shareholders for 2022, and quarterly core earnings to net income (loss) attributed to shareholders for 1Q23. See section A2 “Profitability” above, for explanations of the items excluded from core earnings. The changes in core earnings expressed in Canadian dollars were due to the factors described below and additionally, reflected a net $15 million favourable impact due to changes in foreign currency exchange rates versus the Canadian dollar.

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Expressed in U.S. dollars, the presentation currency of the segment, net income attributed to shareholders was US$384 million in 1Q23 compared with net income attributed to shareholders of US$110 million and transitional net income attributed to shareholders of US$161 million in 1Q22. Core earnings were US$361 million in 1Q23 compared with US$378 million in 1Q22 and items excluded from core earnings were a net gain of US$23 million in 1Q23 compared with a net charge of US$268 million in 1Q22. Items excluded from core earnings in 1Q22 on a transitional basis were a net charge of US$217 million.

Core earnings in 1Q23 were in line with 1Q22 driven by lower CSM recognized into earnings for service provided reflecting slower amortization of CSM for certain VFA contracts and less favourable claims experience, offset by higher expected investment income due to higher yields and lower non-attributable maintenance expenses.

APE sales in 1Q23 were US$868 million, an increase of 5% compared with 1Q22, driven by growth in Hong Kong. 1Q23 APE sales in Japan and Asia Other were in line with 1Q22. NBV and new business CSM in 1Q23 were US$275 million and US$222 million, a decrease of 4% and 9%, respectively, compared with 1Q22 driven by less favourable product mix, partially offset by higher sales volumes. New business value margin (“NBV margin”)¹ was 37.3% in 1Q23 compared with 39.6% in 1Q22.

CSM net of non-controlling interests was US$7,156 million as at March 31, 2023, an increase of US$205 million compared with December 31, 2022. The increase reflects an increase in total CSM movement of US$234 million, net of an increase in CSM attributed to non-controlling interests of US$29 million. Organic CSM movement was an increase of US$96 million in 1Q23 driven by the impact of new insurance business and expected movements related to finance income or expenses partially offset by amounts recognized for service provided in current period earnings and a loss from insurance experience. Inorganic CSM movement was an increase of $138 million largely due to favourable market impacts from a reduction in interest rates and positive equity market performance.

Assets under management were US$119.9 billion as at March 31, 2023, an increase of US$4.8 billion or 4% compared with December 31, 2022, driven by the impact of market movements resulting from reduction in interest rates and positive equity market performance in 1Q23 on invested assets and segregated funds net assets.

Business highlights – In 1Q23, we:

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Hong Kong reached record APE sales in the month of March with momentum building progressively through the quarter;

Canada’s net income attributed to shareholders was $309 million in 1Q23 compared with a net loss attributed to shareholders of $672 million and transitional net income attributed to shareholders of $326 million in 1Q22. The 1Q22 transitional net income includes a $998 million gain from IFRS 9 transitional impacts. Net income attributed to shareholders is comprised of core earnings, which was $353 million in 1Q23 compared with $334 million in 1Q22, and items excluded from core earnings, which amounted to a net charge of $44 million in 1Q23 compared with a net charge of $1,006 million in 1Q22. Items excluded from core earnings in 1Q22 on a transitional basis amounted to a net charge of $8 million. See section E3 “Non-GAAP and other financial measures” below, for a reconciliation of quarterly core earnings and transitional net income (loss) attributed to shareholders to net income (loss) attributed to shareholders for 2022 and quarterly core earnings to net income (loss) attributed to shareholders for 1Q23. See section A2 “Profitability” above, for explanations of the items excluded from core earnings.

Core earnings in 1Q23 increased $19 million or 6% compared with 1Q22, primarily reflecting neutral insurance experience compared with losses in the prior year, higher expected investment spreads due to higher yields, and higher Manulife Bank earnings partially offset by lower CSM recognized into earnings in Annuities for service provided, reflecting slower amortization of CSM for certain VFA contracts, and an increase in the ECL provision from changes in credit ratings.

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APE sales of $293 million in 1Q23 decreased by $70 million or 19% compared with 1Q22.

CSM was $3,659 million as at March 31, 2023, a decrease of $16 million compared with December 31, 2022. Organic CSM movement was an increase of $8 million driven by the impact of new insurance business and expected movements related to finance income or expenses partially offset by amounts recognized for service provided in current period earnings. Inorganic CSM movement was a decrease of $24 million reflecting unfavourable market impacts, partially offset by an in-force reinsurance transaction in Individual insurance.

Manulife Bank average net lending assets for the quarter were $24.8 billion as at March 31, 2023, in line with December 31, 2022.

Assets under management were $143.9 billion as at March 31, 2023, an increase of $1.3 billion or 1% compared with December 31, 2022, due to higher total invested assets and segregated funds net assets, primarily reflecting the impact of lower interest rates and growth in equity markets.

Business highlights – In 1Q23, we:

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U.S.’s net income attributed to shareholders was $186 million in 1Q23 compared with a net loss attributed to shareholders of $599 million and transitional net income attributed to shareholders of $885 million in 1Q22. The 1Q22 transitional net income includes a $1,484 million gain from IFRS 9 transitional impacts. Net income attributed to shareholders is comprised of core earnings, which was $385 million in 1Q23 compared with $293 million in 1Q22, and items excluded from core earnings, which amounted to a net charge of $199 million in 1Q23 compared with a net charge of $892 million in 1Q22. Items excluded from core earnings in 1Q22 on a transitional basis amounted to a net gain of $592 million. See section E3 “Non-GAAP and other financial measures” below, for a reconciliation of quarterly core earnings and transitional net income (loss) attributed to shareholders to net income (loss) attributed to shareholders for 2022, and quarterly core earnings to net income (loss) attributed to shareholders for 1Q23. See section A2 “Profitability” above, for explanations of the items excluded from core earnings. The changes in core earnings expressed in Canadian dollars were due to the factors described below. The change in core earnings reflected a net $25 million favourable impact from the strengthening of the U.S. dollar compared with the Canadian dollar.

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Expressed in U.S. dollars, the functional currency of the segment, net income attributed to shareholders was

US$138 million in 1Q23 compared with a net loss attributed to shareholders of US$473 million and transitional net income attributed to shareholders of US$699 million in 1Q22. Core earnings were US$285 million in 1Q23 compared with US$232 million in 1Q22 and items excluded from core earnings were a net charge of US$147 million in 1Q23 compared with a net charge of US$705 million in 1Q22. Items excluded from core earnings on a transitional basis in 1Q22 were a net gain of US$467 million.

Core earnings increased US$53 million or 23% compared with 1Q22 reflecting the non-recurrence of excess mortality claims related to COVID-19 in 1Q22, increased expected investment earnings driven by higher yields, and lower new business losses from onerous contracts as a result of pricing improvements. These favourable drivers were partially offset by an increase in the ECL provision, mostly related to our commercial mortgages, and lower CSM recognized into earnings in variable annuities for service provided due to the reinsurance of a significant portion of the block in the prior year and slower amortization of CSM for certain VFA contracts. 1Q23 insurance experience included in core earnings was unfavourable as neutral policyholder expense was more than offset by unfavourable attributable maintenance expense experience.

APE sales in 1Q23 of US$99 million decreased 22% compared with 1Q22 due to the adverse impact of higher short-term interest rates and equity market volatility on customer sentiment. APE sales of products with the John Hancock Vitality PLUS feature in 1Q23 increased to 74% of overall U.S. sales compared with 70% in 1Q22.

CSM was US$3,016 million as at March 31, 2023, a decrease of US$37 million compared with December 31, 2022. Organic CSM movement was an increase of US$23 million in 1Q23 primarily due to the impact of new business partially offset by amounts recognized for service provided in current period earnings. Insurance experience in organic CSM movement was neutral as favourable long-term care and annuities claim experience was offset by unfavourable life insurance lapse experience. Inorganic CSM movement was a decrease of US$60 million from the impact of markets due to changes in interest rates.

Assets under management were US$151.0 billion as at March 31, 2023, an increase of US$4.0 billion or 3% compared with December 31, 2022. The increase in total invested assets and segregated funds net assets was primarily due to the impact from markets, reflecting a decrease in longer duration interest rates and an increase in equity markets.

Business highlights – In 1Q23, we:

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Global Wealth and Asset Management’s net income attributed to shareholders was $297 million in 1Q23 compared with $283 million in 1Q22. Net income attributed to shareholders is comprised of core earnings, which was $287 million in 1Q23 compared with $344 million in 1Q22, and items excluded from core earnings, which amounted to a net gain of $10 million in 1Q23 compared with a net charge of $61 million in 1Q22. See section E3 “Non-GAAP and other financial measures” below, for a reconciliation of quarterly core earnings and transitional net income (loss) attributed to shareholders to net income (loss) attributed to shareholders for 2022 and quarterly core earnings to net income (loss) attributed to shareholders for 1Q23. See section A2 “Profitability” above, for explanations of the items excluded from core earnings.

Core earnings in 1Q23 decreased $57 million or 20%, reflecting a decline in net fee income from lower average AUMA due to the impact of an overall increase in interest rates and equity market declines over the last 12 months, and higher general expenses from increase in workforce compensation. This was partially offset by higher fee spread on deposit products.

Core EBITDA was $393 million in 1Q23, a decrease of 20% compared with 1Q22, driven by similar factors as noted above for core earnings. Core EBITDA margin was 22.4% in 1Q23, a decrease of 590 basis points compared with 1Q22 driven by a decline in net fee income and higher general expenses as noted above. See section E3 “Non-GAAP and other financial measures” below, for additional information on core EBITDA and core EBITDA margin.

Gross flows were $38.8 billion in 1Q23, 3% lower than 1Q22. By business line, the results were:

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Net inflows were $4.4 billion in 1Q23 compared with net inflows of $6.8 billion in 1Q22. By business line, the results were:

Assets under management and administration of $814.5 billion as at March 31, 2023 increased 4% compared with December 31, 2022. The increase was driven by favourable year-to-date market impact and net inflows. As at March 31, 2023, Global WAM also managed $208.0 billion in assets for the Company’s non-WAM reporting segments. Including those managed assets, AUMA managed by Global WAM¹ was $1,022.5 billion compared with $984.3 billion as at December 31, 2022.

Segregated funds net assets were $235.6 billion for March 31, 2023, 5% higher compared with December 31, 2022 on an actual exchange rate basis, driven by favorable impact of markets. Total invested assets in our general fund form a small portion of Global WAM AUMA.

Business highlights – In 1Q23, we:

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Corporate and Other is composed of investment performance on assets backing capital, net of amounts allocated to operating segments; financing costs; costs incurred by the corporate office related to shareholder activities (not allocated to the operating segments); our Property and Casualty (“P&C”) Reinsurance business; as well as our run-off reinsurance operation including variable annuities and accident and health. In addition, for segment reporting purposes, consolidations and eliminations of transactions between operating segments are also included in Corporate and Other earnings.

Corporate and Other reported a net income attributed to shareholders of $95 million in 1Q23 compared with a net loss attributed to shareholders of $371 million and a transitional net loss attributed to shareholders of $374 million for 1Q22. The 1Q22 transitional net loss includes a $3 million loss from IFRS 9 transitional impacts. Net income attributed to shareholders is comprised of core earnings, which was $17 million in 1Q23 compared with a core loss of $57 million in 1Q22, and the items excluded from core earnings which amounted to a net gain of $78 million in 1Q23 compared with a net charge of $314 million in 1Q22. Items excluded from core earnings in 1Q22 on a transitional basis amounted to a charge of $317 million. See section E3 “Non-GAAP and other financial measures” below, for a reconciliation of quarterly core earnings and transitional net income (loss) attributed to shareholders to net income (loss) attributed to shareholders for 2022 and quarterly core earnings to net income (loss) attributed to shareholders for 1Q23. See section A2 “Profitability” above, for explanations of the items excluded from core earnings.

The $74 million increase in core earnings was primarily related to higher yields on fixed income investments net of higher cost of debt financing, and gains in our P&C Reinsurance business from updates to the provisions for estimated losses recorded in prior years. These gains were partially offset by higher core expenses and lower expected investment income from a reduced public equity portfolio.

This section provides an update to our risk management practices and risk factors outlined in the 2022 MD&A. Text and tables in this section of the MD&A represent our disclosure on insurance, market, and liquidity risk in accordance with IFRS 7 “Financial Instruments – Disclosures” and/or IFRS 17 “Insurance Contracts”. Disclosures in accordance with IFRS 7 and/or IFRS 17 are identified by a vertical line in the left margin of each page. The identified text and tables represent an integral part of our unaudited Interim Consolidated Financial Statements.

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Variable annuity and segregated fund guarantees, net of reinsurance

Market movements affect LICAT capital sensitivities through the available capital, surplus allowance and required capital components of the regulatory capital framework. The LICAT available capital component is primarily affected by total comprehensive income and the CSM.

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As outlined in our 2022 Annual Report, we have net exposure to equity risk through asset and liability mismatches; our variable annuity guarantee dynamic hedging strategy is not designed to completely offset the sensitivity of insurance contract liabilities to all risks associated with the guarantees embedded in these products. The macro hedging strategy is designed to mitigate public equity risk arising from variable annuity guarantees not dynamically hedged and from other unhedged exposures in our insurance contracts (see pages 60 of our 2022 Annual Report).

Changes in public equity prices may impact other items including, but not limited to, asset-based fees earned on assets under management and administration or policyholder account value, and estimated profits and amortization of deferred policy acquisition and other costs. These items are not hedged.

Changes in equity markets impact our available and required components of the LICAT ratio. The second set of tables shows the potential impact to MLI’s LICAT ratio resulting from changes in public equity market values.

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Potential immediate impact on net income attributed to shareholders arising from changes to public equity returns⁽¹⁾