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| Roy Gori President and Chief Executive Officer |
Philip Witherington Chief Financial Officer |
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129 |
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131 |
| Valuation of Insurance Contract Liabilities | ||
Description of the Matter |
The Company recorded insurance contract liabilities of $392.3 billion at December 31, 2021 on its consolidated statement of financial position. Insurance contract liabilities are reported gross of reinsurance ceded and represent management’s estimate of 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 insurance policies in-force. Insurance contract liabilities are determined using the Canadian Asset Liability Method (CALM), as required by the Canadian Institute of Actuaries (CIA). The valuation of insurance contract liabilities is based on an explicit projection of cash flows using current assumptions for each material cash flow item. Cash flows related to insurance contract liabilities have two major components: a best estimate assumption and a provision for adverse deviation. Best estimates are made with respect to key assumptions including mortality, morbidity, investment returns, policy termination rates, premium persistency, expenses, and taxes. A provision for adverse deviation is recorded to reflect the inherent uncertainty related to the timing and amount of the best estimate assumptions and is determined by including a margin of conservatism for each assumption. Disclosures on this matter are found in Note 1 ‘Nature of Operations and Significant Accounting Policies’ and Note 6 ‘Insurance Contract Liabilities and Reinsurance Assets’ of the consolidated financial statements.Auditing the valuation of insurance contract liabilities was complex and required the application of significant auditor judgement due to the complexity of the cash flow models, the selection and use of assumptions, and the interrelationship of these variables in measuring insurance contract liabilities. The audit effort involved professionals with specialized skill and knowledge to assist in evaluating the audit evidence obtained. | |
| |
133 |
| Valuation of Insurance Contract Liabilities | ||
How We Addressed the Matter in Our Audit |
We obtained an understanding, evaluated the design, and tested the operating effectiveness of management’s controls over the valuation of insurance contract liabilities. The controls we tested related to, among other areas, actuarial methodology, integrity of data used, controls over relevant information technology, and the assumption setting and implementation processes used by management. To test the valuation of insurance contract liabilities, our audit procedures included, among other procedures, involving our actuarial specialists to assess the methodology and assumptions with respect to compliance with the Company’s policies. We performed audit procedures over key assumptions, including the implementation of those assumptions into the models. These procedures included testing underlying support and documentation, including reviewing a sample of experience studies supporting specific assumptions, challenging the nature, timing, and completeness of changes recorded, assessing whether individual changes were errors or refinements of estimates, and comparing the level of margins for adverse deviation to suggested ranges established by the CIA. We also performed independent recalculation procedures on a sample of insurance policies to evaluate management’s recorded reserves. In addition, we assessed the adequacy of the disclosures provided in the notes to the consolidated financial statements. | |
| Valuation of Invested Assets with Significant Non-Observable Market Inputs | ||
| Description of the Matter |
The Company recorded invested assets of $17.8 billion at December 31, 2021 on its consolidated statement of financial position which are both (a) measured at fair value and (b) subject to a valuation estimate that includes significant non-observable market inputs. These invested assets are classified as level 3 within the Company’s hierarchy of fair value measurements and include real estate, timber and agriculture, high estimation uncertainty bonds, and private equities which are valued using internal models. There is increased measurement uncertainty in determining the fair value of these invested assets due to the impact of COVID-19 and the associated economic environment. These assets are valued based on internal models or third-party pricing sources that incorporate assumptions with a high-level of subjectivity. Examples of such assumptions include interest rates, yield curves, credit ratings and related spreads, expected future cash flows and transaction prices of comparable assets. Disclosures on this matter are found in Note 1 ‘Nature of Operations and Significant Accounting Policies’ and Note 3 ‘Invested Assets and Investment Income’ of the consolidated financial statements.Auditing the valuation of these invested assets was complex and required the application of significant auditor judgment in assessing the valuation methodologies and non-observable inputs used. The valuation of these assets is sensitive to the significant non-observable market inputs described above, which are inherently forward-looking and could be affected by future economic and market conditions. The audit effort involved professionals with specialized skill and knowledge to assist in evaluating the audit evidence obtained. | |
How We Addressed the Matter in Our Audit |
We obtained an understanding, evaluated the design, and tested the operating effectiveness of management’s controls over the investment valuation process. The controls we tested related to, among other areas, management’s determination and approval of assumptions and methodologies used in model-based valuations and management’s review of valuations provided by third-party pricing sources. To test the valuation of these invested assets, our audit procedures included, among other procedures, involving our valuation specialists to assess the methodologies and significant assumptions used by management. These procedures included assessing the valuation methodologies used with respect to the Company’s policies, valuation guidelines, and industry practice and comparing a sample of valuation assumptions used against benchmarks, including comparable transactions and independent pricing sources where available. We also performed independent investment valuations on a sample of investments with high estimation uncertainty to evaluate management’s recorded values. In addition, we assessed the adequacy of the disclosures provided in the notes to the consolidated financial statements. | |
| |
135 |
| As at December 31, (Canadian $ in millions) |
2021 |
2020 |
||||||
| Assets |
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|
|
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|
| ||
| Cash and short-term securities |
$ |
$ | ||||||
| Debt securities |
|
|||||||
| Public equities |
||||||||
| Mortgages |
||||||||
| Private placements |
||||||||
| Policy loans |
||||||||
| Loans to bank clients |
||||||||
| Real estate |
||||||||
| Other invested assets |
||||||||
| Total invested assets (note 3) |
||||||||
| Other assets |
|
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| ||
| Accrued investment income |
||||||||
| Outstanding premiums |
||||||||
| Derivatives (note 4) |
||||||||
| Reinsurance assets (notes 6 and 7) |
||||||||
| Deferred tax assets (note 16) |
||||||||
| Goodwill and intangible assets (note 5) |
||||||||
| Miscellaneous |
||||||||
| Total other assets |
||||||||
| Segregated funds net assets (note 22) |
||||||||
| Total assets |
$ |
$ | ||||||
| Liabilities and Equity |
|
|
|
|
|
| ||
| Liabilities |
|
|
|
|
|
| ||
| Insurance contract liabilities (note 6) |
$ |
$ | ||||||
| Investment contract liabilities (note 7) |
||||||||
| Deposits from bank clients |
||||||||
| Derivatives (note 4) |
||||||||
| Deferred tax liabilities (note 16) |
||||||||
| Other liabilities |
||||||||
| |
||||||||
| Long-term debt (note 9) |
||||||||
| Capital instruments (note 10) |
||||||||
| Segregated funds net liabilities (note 22) |
||||||||
| Total liabilities |
||||||||
| Equity |
|
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| ||
| Preferred shares and other equity (note 11) |
||||||||
| Common shares (note 11) |
||||||||
| Contributed surplus |
||||||||
| Shareholders’ and other equity holders’ retained earnings |
||||||||
| Shareholders’ accumulated other comprehensive income (loss): |
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|
|
|
|
| ||
| Pension and other post-employment plans |
( |
) |
( |
) | ||||
| Available-for-sale |
||||||||
| Cash flow hedges |
( |
) |
( |
) | ||||
| Real estate revaluation reserve |
||||||||
| Translation of foreign operations |
||||||||
| Total shareholders’ and other equity |
||||||||
| Participating policyholders’ equity |
( |
) |
( |
) | ||||
| Non-controlling interests |
||||||||
| Total equity |
||||||||
| Total liabilities and equity |
$ |
$ | ||||||
The accompanying notes are an integral part of these Consolidated Financial Statements. | ||||
| |
 | |
| Roy Gori President and Chief Executive Officer |
John Cassaday Chairman of the Board of Directors |
| For the years ended December 31, (Canadian $ in millions except per share amounts) |
2021 |
2020 | ||||||
| Revenue |
|
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| ||
| Premium income |
|
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| ||
| Gross premiums |
$ |
$ | |
|||||
| Premiums ceded to reinsurers |
( |
) |
( |
) | ||||
| Net premiums |
||||||||
| Investment income (note 3) |
|
|
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|
|
| ||
| Investment income |
||||||||
| Realized and unrealized gains (losses) on assets supporting insurance and investment contract liabilities and on the macro hedge program |
( |
) |
||||||
| Net investment income |
||||||||
| Other revenue (note 13) |
||||||||
| Total revenue |
||||||||
| Contract benefits and expenses |
|
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| ||
| To contract holders and beneficiaries |
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| Gross claims and benefits (note 6) |
||||||||
| Increase (decrease) in insurance contract liabilities (note 6) |
||||||||
| Increase (decrease) in investment contract liabilities (note 7) |
||||||||
| Benefits and expenses ceded to reinsurers |
( |
) |
( |
) | ||||
| (Increase) decrease in reinsurance assets (note 6) |
( |
) | ||||||
| Net benefits and claims |
||||||||
| General expenses |
||||||||
| Investment expenses (note 3) |
||||||||
| Commissions |
||||||||
| Interest expense |
||||||||
| Net premium taxes |
||||||||
| Total contract benefits and expenses |
||||||||
| Income before income taxes |
||||||||
| Income tax expense (note 16) |
( |
) |
( |
) | ||||
| Net income |
$ |
$ | ||||||
| Net income (loss) attributed to: |
|
|
|
|
|
| ||
| Non-controlling interests |
$ |
$ | ||||||
| Participating policyholders |
( |
) |
( |
) | ||||
| Shareholders and other equity holders |
||||||||
$ |
$ | |||||||
| Net income attributed to shareholders |
||||||||
| Preferred share dividends and other equity distributions |
( |
) |
( |
) | ||||
| Common shareholders’ net income |
$ |
$ | ||||||
| Earnings per share |
|
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| ||
| Basic earnings per common share (note 11) |
$ |
$ | ||||||
| Diluted earnings per common share (note 11) |
||||||||
| Dividends per common share |
||||||||
|
13 7 |
For the years ended December 31, (Canadian $ in millions) |
2021 |
2020 | ||||||
Net income |
$ |
$ | ||||||
Other comprehensive income (loss) (“OCI”), net of tax: |
||||||||
Items that may be subsequently reclassified to net income: |
||||||||
Foreign exchange gains (losses) on: |
||||||||
Translation of foreign operations |
( |
) |
( |
) | ||||
Net investment hedges |
||||||||
Available-for-sale |
||||||||
Unrealized gains (losses) arising during the year |
( |
) |
||||||
Reclassification of net realized (gains) losses and impairments to net income |
( |
) |
( |
) | ||||
Cash flow hedges: |
||||||||
Unrealized gains (losses) arising during the year |
( |
) | ||||||
Reclassification of realized gains (losses) to net income |
( |
) |
( |
) | ||||
Share of other comprehensive income (losses) of associates |
( |
) |
||||||
Total items that may be subsequently reclassified to net income |
( |
) |
( |
) | ||||
Items that will not be reclassified to net income: |
||||||||
Change in pension and other post-employment plans |
||||||||
Real estate revaluation reserve |
( |
) |
||||||
Total items that will not be reclassified to net income |
||||||||
Other comprehensive income (loss), net of tax |
( |
) |
( |
) | ||||
Total comprehensive income (loss), net of tax |
$ |
$ | |
|||||
Total comprehensive income (loss) attributed to: |
||||||||
Non-controlling interests |
$ |
$ | ||||||
Participating policyholders |
( |
) |
( |
) | ||||
Shareholders and other equity holders |
||||||||
For the years ended December 31, (Canadian $ in millions) |
2021 |
2020 | ||||||
Income tax expense (recovery) on: |
||||||||
Unrealized gains/losses on available-for-sale |
$ |
( |
) |
$ | |
|||
Reclassification of realized gains/losses and recoveries/impairments to net income on available-for-sale |
( |
) | ||||||
Unrealized gains/losses on cash flow hedges |
( |
) | ||||||
Reclassification of realized gains/losses to net income on cash flow hedges |
( |
) |
( |
) | ||||
Unrealized foreign exchange gains/losses on net investment hedges |
||||||||
Share of other comprehensive income (loss) of associates |
– |
( |
) | |||||
Change in pension and other post-employment plans |
||||||||
Real estate revaluation reserve |
– |
|||||||
Total income tax expense (recovery) |
$ |
( |
) |
$ | ( |
) | ||
| For the years ended December 31, (Canadian $ in millions) |
2021 |
2020 |
||||||
| Preferred shares and other equity |
|
|
|
|
|
| ||
| Balance, beginning of year |
$ |
$ | ||||||
| Issued (note 11) |
– | |||||||
| Redeemed (note 11) |
( |
) |
– | |||||
| Issuance costs, net of tax |
( |
) |
– | |||||
| Balance, end of year |
||||||||
| Common shares |
|
|
|
|
|
| ||
| Balance, beginning of year |
||||||||
| Repurchased (note 11) |
– |
( |
) | |||||
| Issued on exercise of stock options and deferred share units |
||||||||
| Balance, end of year |
||||||||
| Contributed surplus |
|
|
|
|
|
| ||
| Balance, beginning of year |
||||||||
| Exercise of stock options and deferred share units |
( |
) |
( |
) | ||||
| Stock option expense |
||||||||
| Balance, end of year |
||||||||
| Shareholders’ and other equity holders’ retained earnings |
|
|
|
|
|
| ||
| Balance, beginning of year |
|
|||||||
| Net income attributed to shareholders |
||||||||
| Common shares repurchased (note 11) |
– |
( |
) | |||||
| Preferred share dividends and other equity distributions |
( |
) |
( |
) | ||||
| Preferred shares redeemed (note 11) |
( |
) |
– | |||||
| Common share dividends |
( |
) |
( |
) | ||||
| Balance, end of year |
||||||||
| Shareholders’ accumulated other comprehensive income (loss) (“AOCI”) |
|
|
|
|
|
| ||
| Balance, beginning of year |
||||||||
| Change in unrealized foreign exchange gains (losses) of net foreign operations |
( |
) |
( |
) | ||||
| Change in actuarial gains (losses) on pension and other post-employment plans |
||||||||
| Change in unrealized gains (losses) on available-for-sale |
( |
) |
||||||
| Change in unrealized gains (losses) on derivative instruments designated as cash flow hedges |
( |
) | ||||||
| Change in real estate revaluation reserve |
( |
) |
||||||
| Share of other comprehensive income (losses) of associates |
( |
) |
||||||
| Balance, end of year |
||||||||
| Total shareholders’ equity, end of year |
||||||||
| Participating policyholders’ equity |
|
|
|
|
|
| ||
| Balance, beginning of year |
( |
) |
( |
) | ||||
| Net income (loss) attributed to participating policyholders |
( |
) |
( |
) | ||||
| Other comprehensive income (loss) attributed to policyholders |
( |
) |
||||||
| Balance, end of year |
( |
) |
( |
) | ||||
| Non-controlling interests |
|
|
|
|
|
| ||
| Balance, beginning of year |
||||||||
| Net income attributed to non-controlling interests |
||||||||
| Other comprehensive income (loss) attributed to non-controlling interests |
( |
) |
||||||
| Contributions (distributions/disposal), net |
( |
) |
( |
) | ||||
| Balance, end of year |
||||||||
| Total equity, end of year |
$ |
$ | ||||||
|
13 9 |
| For the years ended December 31, (Canadian $ in millions) |
2021 |
2020 | ||||||
| Operating activities |
|
|
|
|
|
| ||
| Net income |
$ |
$ | ||||||
| Adjustments: |
|
|
|
|
|
| ||
| Increase in insurance contract liabilities |
||||||||
| Increase in investment contract liabilities |
||||||||
| (Increase) decrease in reinsurance assets excluding coinsurance transactions (note 6) |
( |
) | ||||||
| Amortization of (premium) discount on invested assets |
||||||||
| Other amortization |
||||||||
| Net realized and unrealized (gains) losses and impairment on assets |
( |
) | ||||||
| Deferred income tax expense (recovery) |
( |
) |
||||||
| Stock option expense |
||||||||
| Cash provided by operating activities before undernoted items |
||||||||
| Changes in policy related and operating receivables and payables |
( |
) |
||||||
| Cash provided by (used in) operating activities |
|
|||||||
| Investing activities |
|
|
|
|
|
| ||
| Purchases and mortgage advances |
( |
) |
( |
) | ||||
| Disposals and repayments |
||||||||
| Change in investment broker net receivables and payables |
( |
) |
( |
) | ||||
| Net cash flows from acquisition and disposal of subsidiaries and businesses |
( |
) |
– | |||||
| Cash provided by (used in) investing activities |
( |
) |
( |
) | ||||
| Financing activities |
|
|
|
|
|
| ||
| Issue of long-term debt, net (note 9) |
– |
|||||||
| Redemption of long-term debt (note 9) |
( |
) |
( |
) | ||||
| Issue of capital instruments, net (note 10) |
– |
|||||||
| Redemption of capital instruments (note 10) |
( |
) |
( |
) | ||||
| Secured borrowings (note 3(f)) |
||||||||
| Change in repurchase agreements and securities sold but not yet purchased |
||||||||
| Changes in deposits from Bank clients, net |
( |
) |
( |
) | ||||
| Lease payments |
( |
) |
( |
) | ||||
| Shareholders’ dividends and other equity distributions |
( |
) |
( |
) | ||||
| Common shares repurchased (note 11) |
– |
( |
) | |||||
| Common shares issued, net (note 11) |
||||||||
| Preferred shares and other equity issued, net (note 11) |
– | |||||||
| Preferred shares redeemed, net (note 11) |
( |
) |
– | |||||
| Contributions from (distributions to) non-controlling interests, net |
( |
) |
( |
) | ||||
| Cash provided by (used in) financing activities |
( |
) |
||||||
| Cash and short-term securities |
|
|
|
|
|
| ||
| Increase (decrease) during the year |
( |
) |
||||||
| Effect of foreign exchange rate changes on cash and short-term securities |
( |
) |
( |
) | ||||
| Balance, beginning of year |
||||||||
| Balance, December 31 |
||||||||
| Cash and short-term securities |
|
|
|
|
|
| ||
| Beginning of year |
|
|
|
|
|
| ||
| Gross cash and short-term securities |
||||||||
| Net payments in transit, included in other liabilities |
( |
) |
( |
) | ||||
| Net cash and short-term securities, January 1 |
||||||||
| End of year |
|
|
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|
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| ||
| Gross cash and short-term securities |
||||||||
| Net payments in transit, included in other liabilities |
( |
) |
( |
) | ||||
| Net cash and short-term securities, December 31 |
$ |
$ | ||||||
| Supplemental disclosures on cash flow information |
|
|
|
|
|
| ||
| Interest received |
$ |
$ | ||||||
| Interest paid |
||||||||
| Income taxes paid |
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|
141 |
|
1 43 |
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1 45 |
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14 7 |
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1 49 |
• |
Under IFRS 17 the discount rate used to estimate the present value of insurance contract liabilities is based on the characteristics of the liability, whereas under CALM, the Company uses the rates of returns for current and projected assets supporting insurance contract liabilities to value the liabilities. The difference in the discount rate approach also impacts the timing of investment-related experience earnings emergence. Under CALM, investment-related experience includes the impact of investing activities. The impact of investing activities is directly related to the CALM methodology. Under IFRS 17, the impact of investing activities will emerge over the life of the asset and is independent of the liability measurement. |
• |
Under IFRS 17 the discount rate is not related to the expected return on ALDA and public equity assets, and as a result, the earnings sensitivity of a change in return assumptions for ALDA and public equity will be significantly reduced. |
• |
Under IFRS 17 the discount rate used to present value future cashflows is disconnected from the assets the Company holds to support its insurance contract liabilities. As a result, the Company is considering electing the other comprehensive income option under IFRS 17 for insurance contract liabilities and the fair value through other comprehensive income option under IFRS 9 for fixed income assets. |
• |
Under IFRS 17 new business gains are recorded on the Consolidated Statements of Financial Position (in the Contractual Service Margin component of the insurance contract liability) and amortized into income as services are provided. New business losses are recorded into income immediately. Under CALM, both new business gains and new business losses are recognized in income immediately. |
• |
The change in timing of recognition of earnings under IFRS 17 does not impact the cash flows generated by the business, and, hence, IFRS 17 does not impact the economics of the Company’s business. The value of new business will be recorded in the Contractual Service Margin on the Consolidated Statements of Financial Position. An increase in the Contractual Service Margin is indicative of growth in future earnings, all else being equal. |
|
1 51 |
As at December 31, 2021 |
FVTPL (1) |
AFS (2) |
Other (3) |
Total carrying value (4) |
Total fair value (5) |
|||||||||||||||
Cash and short-term securities (6) |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
Debt securities (3),(7),(8) |
||||||||||||||||||||
Canadian government and agency |
– |
|||||||||||||||||||
U.S. government and agency |
||||||||||||||||||||
Other government and agency |
– |
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Corporate |
||||||||||||||||||||
Mortgage/asset-backed securities |
– |
|||||||||||||||||||
Public equities (9) |
– |
|||||||||||||||||||
Mortgages |
– |
– |
||||||||||||||||||
Private placements (8) |
– |
– |
||||||||||||||||||
Policy loans |
– |
– |
||||||||||||||||||
Loans to Bank clients |
– |
– |
||||||||||||||||||
Real estate |
||||||||||||||||||||
Own use property (10) |
– |
– |
||||||||||||||||||
Investment property |
– |
– |
||||||||||||||||||
Other invested assets |
||||||||||||||||||||
Alternative long-duration assets (11) |
||||||||||||||||||||
Various other (12) |
– |
|||||||||||||||||||
Total invested assets |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
| As at December 31, 2020 | FVTPL (1) |
AFS (2) |
Other (3) |
Total carrying value (4) |
Total fair value (5) |
|||||||||||||||
Cash and short-term securities (6) |
$ | $ | $ | $ | $ | |||||||||||||||
Debt securities (7),(8) |
||||||||||||||||||||
Canadian government and agency |
– | |||||||||||||||||||
U.S. government and agency |
– | |||||||||||||||||||
Other government and agency |
– | |||||||||||||||||||
Corporate |
– | |||||||||||||||||||
Mortgage/asset-backed securities |
– | |||||||||||||||||||
Public equities (9) |
– | |||||||||||||||||||
Mortgages |
– | – | ||||||||||||||||||
Private placements (8) |
– | – | ||||||||||||||||||
Policy loans |
– | – | ||||||||||||||||||
Loans to Bank clients |
– | – | ||||||||||||||||||
Real estate |
||||||||||||||||||||
Own use property (10) |
– | – | ||||||||||||||||||
Investment property |
– | – | ||||||||||||||||||
Other invested assets |
||||||||||||||||||||
Alternative long-duration assets (11) |
||||||||||||||||||||
Various other (12) |
– | |||||||||||||||||||
Total invested assets |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||
(1) |
FVTPL classification was elected for securities backing insurance contract liabilities to substantially reduce any accounting mismatch arising from changes in the fair value of these assets and changes in the value of the related insurance contract liabilities. If this election had not been made and instead the available-for-sale |
(2) |
Securities that are designated as AFS are not actively traded by the Company but sales do occur as circumstances warrant. Such sales result in a reclassification of any accumulated unrealized gain (loss) in AOCI to net income as a realized gain (loss). |
(3) |
Primarily includes assets classified as loans and carried at amortized cost, own use properties, investment properties, equity method accounted investments, and leveraged leases. Also includes debt securities classified as held-to-maturity |
(4) |
Invested assets above include debt securities, mortgages, private placements and approximately $ |
(5) |
The methodologies used in determining fair values of invested assets are described in note 1(c) and note 3(g). |
(6) |
Includes short-term securities with maturities of less than one year at acquisition amounting to $ |
(7) |
Debt securities include securities which were acquired with maturities of less than one year and less than 90 days of $ |
(8) |
Floating rate invested assets above which are subject to interest rate benchmark reform, but have not yet transitioned to replacement reference rates, include debt securities benchmarked to CDOR and USD LIBOR of $ , respectively), and private placements benchmarked to USD LIBOR, AUD BBSW and NZD BKBM of $The interest rate benchmark reform is expected to have an impact on the valuation of invested assets whose value is tied to the affected interest rate benchmarks. The Company has assessed its exposure at the contract level, by benchmark and instrument type. The Company is monitoring market developments with respect to alternative reference rates and the time horizon during which they will evolve. As at December 31, 2021, the interest rate benchmark reform has not resulted in significant changes in the Company’s risk management strategy. |
(9) |
Includes $ - duration asset (“ALDA”) strategy. |
(10) |
Includes accumulated depreciation of $ |
(11) |
Alternative long-duration assets (“ALDA”) include investments in private equity of $ |
(12) |
Includes $ |
2021 |
2020 | |||||||||||||||||||
As at December 31, |
Carrying value |
% of total | Carrying value |
% of total | ||||||||||||||||
Leveraged leases |
$ |
$ | ||||||||||||||||||
Timber and agriculture |
||||||||||||||||||||
Real estate |
||||||||||||||||||||
Other |
||||||||||||||||||||
Total |
$ |
$ | |
|||||||||||||||||
|
1 53 |
For the year ended December 31, 2021 |
FVTPL | AFS | Other (1) |
Total | ||||||||||||
| Cash and short-term securities |
||||||||||||||||
| Interest income |
$ |
$ |
$ |
– |
$ |
|||||||||||
| Gains (losses) (2) |
( |
) |
– |
|||||||||||||
| Debt securities |
||||||||||||||||
| Interest income |
||||||||||||||||
| Gains (losses) (2) |
( |
) |
( |
) |
– |
( |
) | |||||||||
| Recovery (impairment loss), net |
– |
|||||||||||||||
| Public equities |
||||||||||||||||
| Dividend income |
– |
|||||||||||||||
| Gains (losses) (2) |
– |
|||||||||||||||
| Impairment loss, net |
– |
( |
) |
– |
( |
) | ||||||||||
| Mortgages |
||||||||||||||||
| Interest income |
– |
– |
||||||||||||||
| Gains (losses) (2) |
– |
– |
||||||||||||||
| Provision, net |
– |
– |
||||||||||||||
| Private placements |
||||||||||||||||
| Interest income |
– |
– |
||||||||||||||
| Gains (losses) (2) |
– |
– |
||||||||||||||
| Impairment loss, net |
– |
– |
||||||||||||||
| Policy loans |
– |
– |
||||||||||||||
| Loans to Bank clients |
||||||||||||||||
| Interest income |
– |
– |
||||||||||||||
| Provision, net |
– |
– |
( |
) |
( |
) | ||||||||||
| Real estate |
||||||||||||||||
| Rental income, net of depreciation (3) |
– |
– |
||||||||||||||
| Gains (losses) (2) |
– |
– |
||||||||||||||
| Derivatives |
||||||||||||||||
| Interest income, net |
– |
( |
) |
|||||||||||||
| Gains (losses) (2) |
( |
) |
– |
( |
) |
( |
) | |||||||||
| Other invested assets |
||||||||||||||||
| Interest income |
– |
– |
||||||||||||||
| Oil and gas, timber, agriculture and other income |
– |
– |
||||||||||||||
| Gains (losses) (2) |
||||||||||||||||
| Impairment loss, net |
– |
– |
( |
) |
( |
) | ||||||||||
| Total investment income |
$ |
$ |
$ |
$ |
||||||||||||
| Investment income |
||||||||||||||||
| Interest income |
$ |
$ |
$ |
$ |
||||||||||||
| Dividend, rental and other income |
||||||||||||||||
| Impairments, provisions and recoveries, net |
( |
) |
( |
) |
||||||||||||
| Other |
( |
) |
( |
) |
( |
) | ||||||||||
| Realized and unrealized gains (losses) on assets supporting insurance and investment contract liabilities and on the macro hedge program |
||||||||||||||||
| Debt securities |
( |
) |
– |
( |
) | |||||||||||
| Public equities |
– |
|||||||||||||||
| Mortgages |
– |
– |
||||||||||||||
| Private placements |
– |
– |
||||||||||||||
| Real estate |
– |
– |
||||||||||||||
| Other invested assets |
( |
) |
||||||||||||||
| Derivatives, including macro hedge program |
( |
) |
– |
( |
) |
( |
) | |||||||||
( |
) |
( |
) | |||||||||||||
| Total investment income |
$ |
$ |
$ |
$ |
||||||||||||
| For the year ended December 31, 2020 | FVTPL | AFS | Other (1) |
Total | ||||||||||||
| Cash and short-term securities |
||||||||||||||||
| Interest income |
$ | $ | $ | – | $ | |||||||||||
| Gains (losses) (2) |
( |
) | ( |
) | – | ( |
) | |||||||||
| Debt securities |
||||||||||||||||
| Interest income |
– | |||||||||||||||
| Gains (losses) (2) |
– | |||||||||||||||
| Impairment loss, net |
( |
) | ( |
) | – | ( |
) | |||||||||
| Public equities |
||||||||||||||||
| Dividend income |
– | |||||||||||||||
| Gains (losses) (2) |
– | |||||||||||||||
| Impairment loss, net |
– | ( |
) | – | ( |
) | ||||||||||
| Mortgages |
||||||||||||||||
| Interest income |
– | – | ||||||||||||||
| Gains (losses) (2) |
– | – | ||||||||||||||
| Provision, net |
– | – | ( |
) | ( |
) | ||||||||||
| Private placements |
||||||||||||||||
| Interest income |
– | – | ||||||||||||||
| Gains (losses) (2) |
– | – | ( |
) | ( |
) | ||||||||||
| Impairment loss, net |
– | – | ( |
) | ( |
) | ||||||||||
| Policy loans |
– | – | ||||||||||||||
| Loans to Bank clients |
||||||||||||||||
| Interest income |
– | – | ||||||||||||||
| Provision, net |
– | – | ( |
) | ( |
) | ||||||||||
| Real estate |
||||||||||||||||
| Rental income, net of depreciation (3) |
– | – | ||||||||||||||
| Gains (losses) (2) |
– | – | ( |
) | ( |
) | ||||||||||
| Derivatives |
||||||||||||||||
| Interest income, net |
– | ( |
) | |||||||||||||
| Gains (losses) (2) |
– | |||||||||||||||
| Other invested assets |
||||||||||||||||
| Interest income |
– | – | ||||||||||||||
| Oil and gas, timber, agriculture and other income |
– | – | ||||||||||||||
| Gains (losses) (2) |
( |
) | ( |
) | ||||||||||||
| Impairment loss, net |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Total investment income |
$ | $ | $ | $ | ||||||||||||
| Investment income |
||||||||||||||||
| Interest income |
$ | $ | $ | $ | ||||||||||||
| Dividend, rental and other income |
||||||||||||||||
| Impairments, provisions and recoveries, net |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Other |
( |
) | ||||||||||||||
| Realized and unrealized gains (losses) on assets supporting insurance and investment contract liabilities and on the macro hedge program |
||||||||||||||||
| Debt securities |
– | |||||||||||||||
| Public equities |
– | |||||||||||||||
| Mortgages |
– | – | ||||||||||||||
| Private placements |
– | – | ( |
) | ( |
) | ||||||||||
| Real estate |
– | – | ||||||||||||||
| Other invested assets |
( |
) | – | ( |
) | |||||||||||
| Derivatives, including macro hedge program |
– | |||||||||||||||
| Total investment income |
$ | |
$ | |
$ | |
$ | |
||||||||
(1) |
Primarily includes investment income on loans carried at amortized cost, own use properties, investment properties, derivative and hedging instruments in cash flow hedging relationships, equity method accounted investments, oil and gas investments, and leveraged leases. |
(2) |
Includes net realized and unrealized gains (losses) for financial instruments at FVTPL, real estate investment properties, and other invested assets measured at fair value. Also includes net realized gains (losses) for financial instruments at AFS and other invested assets carried at amortized cost. |
(3) |
Rental income from investment properties is net of direct operating expenses. |
|
1 55 |
For the years ended December 31, |
2021 |
2020 | ||||||
Related to invested assets |
$ |
$ | ||||||
Related to segregated, mutual and other funds |
||||||||
Total investment expenses |
$ |
$ | |
|||||
For the years ended December 31, |
2021 |
2020 | ||||||
Rental income from investment properties |
$ |
$ | ||||||
Direct operating expenses of rental investment properties |
( |
) |
( |
) | ||||
Total |
$ |
$ | ||||||
As at December 31, 2021 |
Securitized assets | |||||||||||||||
| Securitization program | Securitized mortgages |
Restricted cash and short-term securities |
Total | Secured borrowing liabilities (2) |
||||||||||||
HELOC securitization (1) |
$ |
$ |
$ |
$ |
||||||||||||
CMB securitization |
– |
|||||||||||||||
Total |
$ |
$ |
$ |
$ |
||||||||||||
| As at December 31, 2020 | Securitized assets | |||||||||||||||
| Securitization program | Securitized mortgages |
Restricted cash and short-term securities |
Total | Secured borrowing liabilities (2) |
||||||||||||
HELOC securitization (1) |
$ | $ | – | $ | $ | |||||||||||
CMB securitization |
– | |||||||||||||||
Total |
$ | |
$ | – | $ | |
$ | |
||||||||
(1) |
Manulife Bank, a subsidiary, securitizes a portion of its HELOC receivables through Platinum Canadian Mortgage Trust II (“PCMT II”). PCMT II funds the purchase of the co-ownership interests from Manulife Bank by issuing term notes collateralized by an underlying pool of uninsured HELOCs to institutional investors. The restricted cash balance for the HELOC securitization reflects a cash reserve fund established in relation to the transactions. The reserve will be drawn upon only in the event of insufficient cash flows from the underlying HELOCs to satisfy the secured borrowing liability. |
(2) |
The PCMT II notes payable have floating rates of interest and are secured by the PCMT II assets. Under the terms of the agreements, |
As at December 31, 2021 |
Total fair value | Level 1 | Level 2 | Level 3 | ||||||||||||
Cash and short-term securities |
||||||||||||||||
FVTPL |
$ |
$ |
– |
$ |
$ |
– |
||||||||||
AFS |
– |
– |
||||||||||||||
Other |
– |
– |
||||||||||||||
Debt securities |
||||||||||||||||
FVTPL |
||||||||||||||||
Canadian government and agency |
– |
– |
||||||||||||||
U.S. government and agency |
– |
– |
||||||||||||||
Other government and agency |
– |
– |
||||||||||||||
Corporate |
– |
|||||||||||||||
Residential mortgage-backed securities |
– |
– |
||||||||||||||
Commercial mortgage-backed securities |
– |
– |
||||||||||||||
Other asset-backed securities |
– |
|||||||||||||||
AFS |
||||||||||||||||
Canadian government and agency |
– |
– |
||||||||||||||
U.S. government and agency |
– |
– |
||||||||||||||
Other government and agency |
– |
– |
||||||||||||||
Corporate |
– |
|||||||||||||||
Residential mortgage-backed securities |
– |
– |
||||||||||||||
Commercial mortgage-backed securities |
– |
– |
||||||||||||||
Other asset-backed securities |
– |
– |
||||||||||||||
Public equities |
||||||||||||||||
FVTPL |
– |
– |
||||||||||||||
AFS |
– |
|||||||||||||||
Real estate – investment property (1) |
– |
– |
||||||||||||||
Other invested assets (2) |
– |
|||||||||||||||
Segregated funds net assets (3) |
||||||||||||||||
Total |
$ |
$ |
$ |
$ |
||||||||||||
| As at December 31, 2020 | Total fair value | Level 1 | Level 2 | Level 3 | ||||||||||||
Cash and short-term securities |
||||||||||||||||
FVTPL |
$ | $ | – | $ | $ | – | ||||||||||
AFS |
– | – | ||||||||||||||
Other |
– | – | ||||||||||||||
Debt securities |
||||||||||||||||
FVTPL |
||||||||||||||||
Canadian government and agency |
– | – | ||||||||||||||
U.S. government and agency |
– | – | ||||||||||||||
Other government and agency |
– | – | ||||||||||||||
Corporate |
– | |||||||||||||||
Residential mortgage-backed securities |
– | – | ||||||||||||||
Commercial mortgage-backed securities |
– | – | ||||||||||||||
Other asset-backed securities |
– | |||||||||||||||
AFS |
||||||||||||||||
Canadian government and agency |
– | – | ||||||||||||||
U.S. government and agency |
– | – | ||||||||||||||
Other government and agency |
– | – | ||||||||||||||
Corporate |
– | |||||||||||||||
Residential mortgage-backed securities |
– | – | ||||||||||||||
Commercial mortgage-backed securities |
– | – | ||||||||||||||
Other asset-backed securities |
– | – | ||||||||||||||
Public equities |
||||||||||||||||
FVTPL |
– | – | ||||||||||||||
AFS |
– | – | ||||||||||||||
Real estate – investment property (1) |
– | – | ||||||||||||||
Other invested assets (2) |
– | |||||||||||||||
Segregated funds net assets (3) |
||||||||||||||||
Total |
$ | |
$ | |
$ | |
$ | |
||||||||
|
1 57 |
(1) |
For real estate investment properties, the significant unobservable inputs are capitalization rates (ranging from n ging from |
(2) |
Other invested assets measured at fair value are held primarily in infrastructure and timber sectors. The significant inputs used in the valuation of the Company’s infrastructure investments are primarily future distributable cash flows, terminal values and discount rates. Holding other factors constant, an increase to future distributable cash flows or terminal values would tend to increase the fair value of an infrastructure investment, while an increase in the discount rate would have the opposite effect. Discount rates during the year ranged from |
(3) |
Segregated funds net assets are measured at fair value. The Company’s Level 3 segregated funds assets are predominantly in investment properties and timberland properties valued as described above. |
As at December 31, 2021 |
Carrying value | Fair value | Level 1 | Level 2 | Level 3 | |||||||||||||||
| Mortgages (1) |
$ |
$ |
$ |
– |
$ |
– |
$ |
|||||||||||||
| Private placements (2) |
– |
|||||||||||||||||||
| Policy loans (3) |
– |
– |
||||||||||||||||||
| Loans to Bank clients (4) |
– |
– |
||||||||||||||||||
| Real estate – own use property(5) |
– |
– |
||||||||||||||||||
| Public Bonds HTM |
– |
– |
||||||||||||||||||
| Other invested assets (6) |
– |
|||||||||||||||||||
| Total invested assets disclosed at fair value |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
| As at December 31, 2020 | Carrying value | Fair value | Level 1 | Level 2 | Level 3 | |||||||||||||||
| Mortgages (1) |
$ | $ | $ | – |
$ | – |
$ | |||||||||||||
| Private placements (2) |
– |
|||||||||||||||||||
| Policy loans (3) |
– |
– |
||||||||||||||||||
| Loans to Bank clients (4) |
– |
– |
||||||||||||||||||
| Real estate – own use property(5) |
– |
– |
||||||||||||||||||
| Other invested assets (6) |
– |
|||||||||||||||||||
| Total invested assets disclosed at fair value |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||
(1) |
Fair value of commercial mortgages is determined through an internal valuation methodology using both observable and unobservable inputs. Unobservable inputs include credit assumptions and liquidity spread adjustments. Fair value of fixed-rate residential mortgages is determined using the discounted cash flow method. Inputs used for valuation are primarily comprised of prevailing interest rates and prepayment rates, if applicable. Fair value of variable-rate residential mortgages is assumed to be their carrying value. |
(2) |
Fair value of private placements is determined through an internal valuation methodology using both observable and unobservable inputs. Unobservable inputs include credit assumptions and liquidity spread adjustments. Private placements are classified within Level 2 unless the liquidity adjustment constitutes a significant price impact, in which case the securities are classified as Level 3. |
(3) |
Fair value of policy loans is equal to their unpaid principal balances. |
(4) |
Fair value of fixed-rate loans to Bank clients is determined using the discounted cash flow method. Inputs used for valuation are primarily comprised of current interest rates. Fair value of variable-rate loans is assumed to be their carrying value. |
(5) |
Fair value of own use real estate and the fair value hierarchy are determined in accordance with the methodologies described for real estate – investment property in note 1. |
(6) |
Primarily include leveraged leases, oil and gas properties (disposed of during 2021) and equity method accounted other invested assets. Fair value of leveraged leases is disclosed at their carrying values as fair value is not routinely calculated on these investments. Fair value for oil and gas properties is determined using external appraisals based on discounted cash flow methodology. Inputs used in valuation are primarily comprised of forecasted price curves, planned production, as well as capital expenditures, and operating costs. Fair value of equity method accounted other invested assets is determined using a variety of valuation techniques including discounted cash flows and market comparable approaches. Inputs vary based on the specific investment. |
| For the year ended December 31, 2021 |
Balance, January 1, 2021 |
Total gains (losses) included in net income (1) |
Total gains (losses) included in AOCI (2) |
Purchases | Sales | Settlements | Transfer in (3) |
Transfer out (3) |
Currency movement |
Balance, December 31, 2021 |
Change in unrealized gains (losses) on assets still held |
|||||||||||||||||||||||||||||||||
| Debt securities |
||||||||||||||||||||||||||||||||||||||||||||
| FVTPL |
||||||||||||||||||||||||||||||||||||||||||||
| Corporate |
$ |
$ |
$ |
– |
$ |
$ |
( |
) |
$ |
– |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
( |
) | |||||||||||||||||||||||
| Other securitized assets |
– |
– |
( |
) |
( |
) |
– |
– |
( |
) | ||||||||||||||||||||||||||||||||||
| AFS |
||||||||||||||||||||||||||||||||||||||||||||
| Corporate |
– |
– |
( |
) |
– |
– |
– |
– |
– |
|||||||||||||||||||||||||||||||||||
| Public equities |
||||||||||||||||||||||||||||||||||||||||||||
| FVTPL |
– |
– |
– |
( |
) |
– |
– |
– |
– |
– |
– |
|||||||||||||||||||||||||||||||||
| Investment property |
– |
( |
) |
– |
– |
– |
( |
) |
||||||||||||||||||||||||||||||||||||
| Other invested assets |
( |
) |
( |
) |
– |
( |
) |
|||||||||||||||||||||||||||||||||||||
| Total invested assets |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||||||||||||||||||||||||||||||
| Derivatives |
( |
) |
– |
– |
( |
) |
– |
( |
) |
( |
) | |||||||||||||||||||||||||||||||||
| Segregated funds net assets |
– |
( |
) |
( |
) |
– |
– |
( |
) |
|||||||||||||||||||||||||||||||||||
| Total |
$ |
$ |
$ |
$ |
$ |
( |
$ |
( |
$ |
$ |
( |
$ |
( |
$ |
$ |
|||||||||||||||||||||||||||||
|
15 9 |
| For the year ended December 31, 2020 |
Balance, January 1, 2020 |
Total gains (losses) included in net income (1) |
Total gains (losses) included in AOCI (2) |
Purchases | Sales | Settlements | Transfer in (3) |
Transfer out (3) |
Currency movement |
Balance, December 31, 2020 |
Change in unrealized gains (losses) assets held |
|||||||||||||||||||||||||||||||||
| Debt securities |
||||||||||||||||||||||||||||||||||||||||||||
| FVTPL |
||||||||||||||||||||||||||||||||||||||||||||
| Corporate |
$ | $ | $ | – | $ | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||||||||
| Other securitized assets |
– | ( |
) | – | – | – | ( |
) | – | ( |
) | – | ||||||||||||||||||||||||||||||||
| AFS |
||||||||||||||||||||||||||||||||||||||||||||
| Corporate |
( |
) | – |
– |
– | ( |
) | – | – | |||||||||||||||||||||||||||||||||||
| Investment property |
( |
) | – | ( |
) | – | – | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||
| Other invested assets |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
| Total invested assets |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
| Derivatives |
( |
) | – | ( |
) | – | ( |
) | ||||||||||||||||||||||||||||||||||||
| Segregated funds net assets |
( |
) | – | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||
| Total |
$ | |
$ | |
$ | ( |
) | $ | |
$ | ( |
) | $ | ( |
) | $ | |
$ | |
$ | ( |
) | $ | |
$ | |
||||||||||||||||||
(1) |
These amounts are included in net investment income on the Consolidated Statements of Income except for the amount related to segregated funds net assets, where the amount is recorded in changes in segregated funds net assets, refer t notes 1(h) and 22. o |
(2) |
These amounts are included in AOCI on the Consolidated Statements of Financial Position. |
(3) |
The Company uses fair values of the assets at the beginning of the year for assets transferred into and out of Level 3 except for derivatives, where the Company uses fair value at the end of the year and at the beginning of the year, respectively. |
As at December 31, |
2021 |
2020 | ||||||||||||||||||||||||||||
| Notional amount |
Fair value | Notional amount |
Fair value | |||||||||||||||||||||||||||
Type of hedge |
Instrument type | Assets | Liabilities | Assets | Liabilities | |||||||||||||||||||||||||
| Qualifying hedge accounting relationships |
||||||||||||||||||||||||||||||
| Fair value hedges |
Interest rate swaps | $ |
– |
$ |
– |
$ |
– |
$ |
$ |
$ |
– |
|||||||||||||||||||
| Foreign currency swaps | – |
|||||||||||||||||||||||||||||
| Cash flow hedges |
Foreign currency swaps | |||||||||||||||||||||||||||||
| Equity contracts | – |
– |
||||||||||||||||||||||||||||
| Net investment hedges |
Forward contracts | – |
||||||||||||||||||||||||||||
| Total derivatives in qualifying hedge accounting relationships |
||||||||||||||||||||||||||||||
| Derivatives not designated in qualifying hedge accounting relationships |
||||||||||||||||||||||||||||||
| Interest rate swaps | ||||||||||||||||||||||||||||||
| Interest rate futures | – |
– |
– |
– |
||||||||||||||||||||||||||
| Interest rate options | – |
– |
||||||||||||||||||||||||||||
| Foreign currency swaps | ||||||||||||||||||||||||||||||
| Currency rate futures | – |
– |
– |
– |
||||||||||||||||||||||||||
| Forward contracts | ||||||||||||||||||||||||||||||
| Equity contracts | ||||||||||||||||||||||||||||||
| Credit default swaps | – |
– |
||||||||||||||||||||||||||||
| Equity futures | – |
– |
– |
– |
||||||||||||||||||||||||||
| Total derivatives not designated in qualifying hedge accounting relationships |
||||||||||||||||||||||||||||||
| Total derivatives |
$ |
$ |
$ |
$ | |
$ | |
$ | |
|||||||||||||||||||||
| Remaining term to maturity | ||||||||||||||||||||
As at December 31, 2021 |
Less than 1 year |
1 to 3 years |
3 to 5 years |
Over 5 years |
Total | |||||||||||||||
| Derivative assets |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
| Derivative liabilities |
||||||||||||||||||||
| Remaining term to maturity | ||||||||||||||||||||
| As at December 31, 2020 | Less than 1 year |
1 to 3 years |
3 to 5 years |
Over 5 years |
Total | |||||||||||||||
| Derivative assets |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||
| Derivative liabilities |
||||||||||||||||||||
|
1 61 |
| Remaining term to maturity (notional amounts) | Fair value | Capital requirement (2) |
||||||||||||||||||||||||||||||||||||||
As at December 31, 2021 |
Under 1 year |
1 to 5 years |
Over 5 years |
Total | Positive | Negative | Net | Credit equivalent amount (1) |
||||||||||||||||||||||||||||||||
| Interest rate contracts |
||||||||||||||||||||||||||||||||||||||||
| OTC swap contracts |
$ |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
$ |
$ |
|||||||||||||||||||||||||||||
| Cleared swap contracts |
( |
) |
( |
) |
– |
– |
||||||||||||||||||||||||||||||||||
| Forward contracts |
( |
) |
||||||||||||||||||||||||||||||||||||||
| Futures |
– |
– |
– |
– |
– |
– |
– |
|||||||||||||||||||||||||||||||||
| Options purchased |
– |
|||||||||||||||||||||||||||||||||||||||
| Subtotal |
( |
) |
||||||||||||||||||||||||||||||||||||||
| Foreign exchange |
||||||||||||||||||||||||||||||||||||||||
| Swap contracts |
( |
) |
( |
) |
||||||||||||||||||||||||||||||||||||
| Forward contracts |
– |
– |
( |
) |
( |
) |
– |
|||||||||||||||||||||||||||||||||
| Futures |
– |
– |
– |
– |
– |
– |
– |
|||||||||||||||||||||||||||||||||
| Credit derivatives |
– |
– |
– |
– |
||||||||||||||||||||||||||||||||||||
| Equity contracts |
||||||||||||||||||||||||||||||||||||||||
| Swap contracts |
– |
( |
) |
– |
||||||||||||||||||||||||||||||||||||
| Futures |
– |
– |
– |
– |
– |
– |
– |
|||||||||||||||||||||||||||||||||
| Options purchased |
( |
) |
||||||||||||||||||||||||||||||||||||||
| Subtotal including accrued interest |
( |
) |
||||||||||||||||||||||||||||||||||||||
| Less accrued interest |
– |
– |
– |
– |
( |
) |
( |
) |
– |
– |
||||||||||||||||||||||||||||||
| Total |
$ |
$ |
$ |
$ |
$ |
$ |
( |
$ |
$ |
$ |
||||||||||||||||||||||||||||||
| Remaining term to maturity (notional amounts) | Fair value | Capital requirement (2) |
||||||||||||||||||||||||||||||||||||||
| As at December 31, 2020 | Under 1 year |
1 to 5 years |
Over 5 years |
Total | Positive | Negative | Net | Credit equivalent amount (1) |
||||||||||||||||||||||||||||||||
| Interest rate contracts |
||||||||||||||||||||||||||||||||||||||||
| OTC swap contracts |
$ | $ | $ | $ | $ | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||||||||
| Cleared swap contracts |
( |
) | – | – | ||||||||||||||||||||||||||||||||||||
| Forward contracts |
( |
) | ||||||||||||||||||||||||||||||||||||||
| Futures |
– | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| Options purchased |
– | |||||||||||||||||||||||||||||||||||||||
| Subtotal |
( |
) | ||||||||||||||||||||||||||||||||||||||
| Foreign exchange |
||||||||||||||||||||||||||||||||||||||||
| Swap contracts |
( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||
| Forward contracts |
– | ( |
) | ( |
) | – | ||||||||||||||||||||||||||||||||||
| Futures |
– | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| Credit derivatives |
– | – | – | – | ||||||||||||||||||||||||||||||||||||
| Equity contracts |
||||||||||||||||||||||||||||||||||||||||
| Swap contracts |
– | ( |
) | ( |
) | – | ||||||||||||||||||||||||||||||||||
| Futures |
– | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| Options purchased |
– | ( |
) | |||||||||||||||||||||||||||||||||||||
| Subtotal including accrued interest |
( |
) | ||||||||||||||||||||||||||||||||||||||
| Less accrued interest |
– | – | – | – | ( |
) | ( |
) | – | – | ||||||||||||||||||||||||||||||
| Total |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | ( |
) | $ | |
$ | |
$ | |
|||||||||||||||||||||
(1) |
Credit equivalent amount is the sum of replacement cost and the potential future credit exposure less any collateral held. Replacement cost represents the current cost of replacing all contracts with a positive fair value. The amounts take into consideration legal contracts that permit offsetting of positions. The potential future credit exposure is calculated based on a formula prescribed by OSFI. |
(2) |
Capital requirement represents the credit equivalent amount, weighted according to the creditworthiness of the counterparty, as prescribed by OSFI. |
As at December 31, 2021 |
Fair value | Level 1 | Level 2 | Level 3 | ||||||||||||
| Derivative assets |
||||||||||||||||
| Interest rate contracts |
$ |
$ |
– |
$ |
$ |
|||||||||||
| Foreign exchange contracts |
– |
– |
||||||||||||||
| Equity contracts |
– |
|||||||||||||||
| Credit default swaps |
– |
– |
||||||||||||||
| Total derivative assets |
$ |
$ |
– |
$ |
$ |
|||||||||||
| Derivative liabilities |
||||||||||||||||
| Interest rate contracts |
$ |
$ |
– |
$ |
$ |
|||||||||||
| Foreign exchange contracts |
– |
|||||||||||||||
| Equity contracts |
– |
|||||||||||||||
| Total derivative liabilities |
$ |
$ |
– |
$ |
$ |
|||||||||||
| As at December 31, 2020 | Fair value | Level 1 | Level 2 | Level 3 | ||||||||||||
| Derivative assets |
||||||||||||||||
| Interest rate contracts |
$ | $ | – | $ | $ | |||||||||||
| Foreign exchange contracts |
– | – | ||||||||||||||
| Equity contracts |
– | |||||||||||||||
| Credit default swaps |
– | – | ||||||||||||||
| Total derivative assets |
$ | $ | – | $ | $ | |||||||||||
| Derivative liabilities |
||||||||||||||||
| Interest rate contracts |
$ | $ | – | $ | $ | |||||||||||
| Foreign exchange contracts |
– | |||||||||||||||
| Equity contracts |
– | |||||||||||||||
| Total derivative liabilities |
$ | |
$ | – | $ | |
$ | |
||||||||
For the year ended December 31, 2021 |
Hedged items in qualifying fair value hedging relationships |
Gains (losses) recognized on derivatives |
Gains (losses) recognized for hedged items |
Ineffectiveness recognized in investment income |
||||||||||
| Interest rate swaps |
Fixed rate liabilities |
$ |
– |
$ |
– |
$ |
– |
|||||||
| Foreign currency swaps |
Fixed rate assets |
( |
) |
|||||||||||
| Total |
$ |
$ |
( |
) |
$ |
|||||||||
| For the year ended December 31, 2020 | Hedged items in qualifying fair value hedging relationships |
Gains (losses) recognized on derivatives |
Gains (losses) recognized for hedged items |
Ineffectiveness recognized in investment income |
||||||||||
| Interest rate swaps |
Fixed rate liabilities |
$ | $ | ( |
) | $ | ||||||||
| Foreign currency swaps |
Fixed rate assets |
( |
) | |||||||||||
| Total |
$ | |
$ | |
$ | |
||||||||
|
1 63 |
For the year ended December 31, 2021 |
Hedged items in qualifying cash flow hedging relationships |
Gains (losses) deferred in AOCI on derivatives |
Gains (losses) reclassified from AOCI into investment income |
Ineffectiveness recognized in investment income |
||||||||||
| Foreign currency swaps |
Fixed rate assets |
$ |
( |
) |
$ |
( |
) |
$ |
– |
|||||
| Floating rate liabilities |
– |
|||||||||||||
| Fixed rate liabilities |
( |
) |
( |
) |
– |
|||||||||
| Equity contracts |
Stock-based compensation |
– |
||||||||||||
| Total |
$ |
$ |
( |
$ |
– |
|||||||||
| For the year ended December 31, 2020 | Hedged items in qualifying cash flow hedging relationships |
Gains (losses) deferred in AOCI on derivatives |
Gains (losses) reclassified from AOCI into investment income |
Ineffectiveness recognized in investment income |
||||||||||
| Foreign currency swaps |
Fixed rate assets |
$ | $ | – | $ | – | ||||||||
| Floating rate liabilities |
( |
) | – | |||||||||||
| Fixed rate liabilities |
( |
) | ( |
) | – | |||||||||
| Equity contracts |
Stock-based compensation |
( |
) | – | ||||||||||
| Total |
$ | ( |
) | $ | |
$ | – | |||||||
For the year ended December 31, 2021 |
Gains (losses) deferred in AOCI |
Gains (losses) reclassified from AOCI into investment income |
Ineffectiveness recognized in investment income |
|||||||||
| Non-functional currency denominated debt |
$ |
$ |
– |
$ |
– |
|||||||
| Forward contracts |
– |
– |
||||||||||
| Total |
$ |
$ |
– |
$ |
– |
|||||||
| For the year ended December 31, 2020 | Gains (losses) deferred in AOCI |
Gains (losses) reclassified from AOCI into investment income |
Ineffectiveness recognized in investment income |
|||||||||
| Non-functional currency denominated debt |
$ | $ | – | $ | – | |||||||
| Forward contracts |
( |
) | – | – | ||||||||
| Total |
$ | |
$ | – | $ | – | ||||||
For the years ended December 31, |
2021 |
2020 | ||||||
| Interest rate swaps |
$ |
( |
) |
$ | ||||
| Interest rate futures |
( |
) |
||||||
| Interest rate options |
( |
) |
||||||
| Foreign currency swaps |
( |
) |
( |
) | ||||
| Currency rate futures |
( |
) | ||||||
| Forward contracts |
( |
) |
||||||
| Equity futures |
( |
) |
( |
) | ||||
| Equity contracts |
||||||||
| Credit default swaps |
( |
) |
( |
) | ||||
| Total |
$ |
( |
$ | |
||||
|
1 65 |
As at December 31, 2021 |
Balance, January 1 |
Net additions/ (disposals) (1) |
Amortization expense |
Effect of changes in foreign exchange rates |
Balance, December 31 |
|||||||||||||||
| Goodwill |
$ |
$ |
( |
) |
$ |
n/a |
$ |
( |
) |
$ |
||||||||||
| Indefinite life intangible assets |
||||||||||||||||||||
| Brand |
– |
n/a |
( |
) |
||||||||||||||||
| Fund management contracts and other (2) |
( |
) |
n/a |
( |
) |
|||||||||||||||
( |
) |
n/a |
( |
) |
||||||||||||||||
| Finite life intangible assets (3) |
||||||||||||||||||||
| Distribution networks |
( |
) |
||||||||||||||||||
| Customer relationships |
( |
) |
( |
) |
||||||||||||||||
| Software |
( |
) |
||||||||||||||||||
| Other |
||||||||||||||||||||
( |
) |
|||||||||||||||||||
| Total intangible assets |
( |
) |
||||||||||||||||||
| Total goodwill and intangible assets |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||
| As at December 31, 2020 | Balance, January 1 |
Net additions/ (disposals) |
Amortization expense |
Effect of changes in foreign exchange rates |
Balance, December 31 |
|||||||||||||||
| Goodwill |
$ | $ | ( |
) | $ | n/a | $ | ( |
) | $ | ||||||||||
| Indefinite life intangible assets |
||||||||||||||||||||
| Brand |
– | n/a | ( |
) | ||||||||||||||||
| Fund management contracts and other (2) |
( |
) | n/a | ( |
) | |||||||||||||||
| ( |
) | n/a | ( |
) | ||||||||||||||||
| Finite life intangible assets (3) |
||||||||||||||||||||
| Distribution networks |
( |
) | ||||||||||||||||||
| Customer relationships |
– | ( |
) | |||||||||||||||||
| Software |
( |
) | ||||||||||||||||||
| Other |
( |
) | ||||||||||||||||||
| ( |
) | |||||||||||||||||||
| Total intangible assets |
( |
) | ||||||||||||||||||
| Total goodwill and intangible assets |
$ | |
$ | |
$ | |
$ | ( |
) | $ | |
|||||||||
(1) |
In December 2021, the Company purchased the Vietnamese operations of Aviva Plc including rights to an exclusive distribution agreement with VietinBank. |
(2) |
Fund management contracts are mostly allocated to Canada WAM and U.S. WAM CGUs with the carrying values of $ |
(3) |
Gross carrying amount of finite life intangible assets was $ |
As at December 31, 2021 CGU or group of CGUs |
Balance, January 1 |
Net additions/ (disposals) |
Effect of changes in foreign exchange rates |
Balance, December 31 |
||||||||||||
Asia |
||||||||||||||||
Asia Insurance (excluding Japan) |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
||||||||
Japan Insurance |
– |
( |
) |
|||||||||||||
Canada Insurance |
– |
– |
||||||||||||||
U.S. Insurance |
– |
( |
) |
|||||||||||||
Global Wealth and Asset Management |
||||||||||||||||
Asia WAM |
– |
( |
) |
|||||||||||||
Canada WAM |
– |
– |
||||||||||||||
U.S. WAM |
– |
( |
) |
|||||||||||||
Total |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
||||||||
As at December 31, 2020 CGU or group of CGUs |
Balance, January 1 |
Net additions/ (disposals) |
Effect of changes in foreign exchange rates |
Balance, December 31 |
||||||||||||
Asia |
||||||||||||||||
Asia Insurance (excluding Japan) |
$ | $ | – | $ | – | $ | ||||||||||
Japan Insurance |
– | |||||||||||||||
Canada Insurance |
|
– | ( |
) | ||||||||||||
U.S. Insurance |
( |
) | ( |
) | ||||||||||||
Global Wealth and Asset Management |
||||||||||||||||
Asia WAM |
– | ( |
) | |||||||||||||
Canada WAM |
– | – | ||||||||||||||
U.S. WAM |
– | ( |
) | |||||||||||||
Total |
$ | $ | ( |
$ | ( |
) | $ | |
||||||||
|
16 7 |
As at December 31, |
2021 |
2020 | ||||||
Insurance contract liabilities |
$ |
$ | ||||||
Benefits payable and provision for unreported claims |
||||||||
Policyholder amounts on deposit |
||||||||
Gross insurance contract liabilities |
||||||||
Reinsurance assets (1) |
( |
) |
( |
) | ||||
Net insurance contract liabilities |
$ |
$ | |
|||||
(1) |
Reinsurance assets of $ |
| Individual insurance | Annuities and |
Other insurance contract liabilities (1) |
Total, net of reinsurance ceded |
Total reinsurance ceded |
Total, gross of reinsurance ceded |
|||||||||||||||||||||||
As at December 31, 2021 |
Participating | Non- participating |
||||||||||||||||||||||||||
| Asia |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
| Canada |
||||||||||||||||||||||||||||
| U.S. |
||||||||||||||||||||||||||||
| Corporate and Other |
– |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||
| Total, net of reinsurance ceded |
$ |
$ |
||||||||||||||||||||||||||
| Total reinsurance ceded |
|
|
|
|
|
| ||||||||||||||||||||||
| Total, gross of reinsurance ceded |
$ |
$ |
$ |
$ |
$ |
|
|
|
|
|
| |||||||||||||||||
| Individual insurance | Annuities and |
Other insurance contract liabilities (1) |
Total, net of reinsurance ceded |
Total reinsurance ceded |
Total, gross of reinsurance ceded |
|||||||||||||||||||||||
| As at December 31, 2020 | Participating | Non- participating |
||||||||||||||||||||||||||
| Asia |
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Canada |
||||||||||||||||||||||||||||
| U.S. |
||||||||||||||||||||||||||||
| Corporate and Other |
– | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||
| Total, net of reinsurance ceded |
$ | |
$ | |
||||||||||||||||||||||||
| Total reinsurance ceded |
|
|
|
|
|
| ||||||||||||||||||||||
| Total, gross of reinsurance ceded |
$ | |
$ | |
$ | |
$ | |
$ | |
|
|
|
|
|
| ||||||||||||
(1) |
Other insurance contract liabilities include group insurance and individual and group health including long-term care insurance. |
|
16 9 |
| Individual insurance | Annuities and pensions |
Other insurance contract liabilities (1) |
Other liabilities (2) |
Capital (3) |
Total | |||||||||||||||||||||||
As at December 31, 2021 |
Participating | Non- participating |
||||||||||||||||||||||||||
| Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
| Debt securities |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
| Public equities |
||||||||||||||||||||||||||||
| Mortgages |
||||||||||||||||||||||||||||
| Private placements |
||||||||||||||||||||||||||||
| Real estate |
||||||||||||||||||||||||||||
| Other |
||||||||||||||||||||||||||||
| Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
| Individual insurance | Annuities and pensions |
Other insurance contract liabilities (1) |
Other liabilities (2) |
Capital (3) |
Total | |||||||||||||||||||||||
| As at December 31, 2020 | Participating | Non- participating |
||||||||||||||||||||||||||
| Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
| Debt securities |
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Public equities |
||||||||||||||||||||||||||||
| Mortgages |
||||||||||||||||||||||||||||
| Private placements |
||||||||||||||||||||||||||||
| Real estate |
||||||||||||||||||||||||||||
| Other |
||||||||||||||||||||||||||||
| Total |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||||||
(1) |
Other insurance contract liabilities include group insurance and individual and group health including long-term care insurance. |
(2) |
Other liabilities are non-insurance contract liabilities which include segregated funds, bank deposits, long-term debt, deferred tax liabilities, derivatives, investment contracts, embedded derivatives and other miscellaneous liabilities. |
(3) |
Capital is defined in note 12. |
| Nature of factor and assumption methodology |
Risk management | |||
| Mortality and morbidity |
Mortality relates to the occurrence of death. Mortality is a key assumption for life insurance and certain forms of annuities. Mortality assumptions are based on the Company’s internal experience as well as past and emerging industry experience. Assumptions are differentiated by sex, underwriting class, policy type and geographic market. Assumptions are made for future mortality improvements. Morbidity relates to the occurrence of accidents and sickness for insured risks. Morbidity is a key assumption for long-term care insurance, disability insurance, critical illness and other forms of individual and group health benefits. Morbidity assumptions are based on the Company’s internal experience as well as past and emerging industry experience and are established for each type of morbidity risk and geographic market. Assumptions are made for future morbidity improvements. |
The Company maintains underwriting standards to determine the insurability of applicants. Claim trends are monitored on an ongoing basis. Exposure to large claims is managed by establishing policy retention limits, which vary by market and geographic location. Policies in excess of the limits are reinsured with other companies. Mortality is monitored monthly and the overall 2021 experience was unfavourable (2020 – unfavourable) when compared to the Company’s assumptions. Morbidity is also monitored monthly and the overall 2021 experience was favourable (2020 – favourable) when compared to the Company’s assumptions. | ||
| Nature of factor and assumption methodology |
Risk management | |||
| Investment returns |
The Company segments assets to support liabilities by business segment and geographic market and establishes investment strategies for each liability segment. Projected cash flows from these assets are combined with projected cash flows from future asset purchases/sales to determine expected rates of return on these assets for future years. Investment strategies are based on the target investment policies for each segment and the reinvestment returns are derived from current and projected market rates for fixed income investments and a projected outlook for other alternative long-duration assets. Investment return assumptions include expected future credit losses on fixed income investments. Credit losses are projected based on past experience of the Company and industry as well as specific reviews of the current investment portfolio. Investment return assumptions for each asset class and geographic market also incorporate expected investment management expenses that are derived from internal cost studies. The costs are attributed to each asset class to develop unitized assumptions per dollar of asset for each asset class and geographic market. |
The Company’s policy of closely matching asset cash flows with those of the corresponding liabilities is designed to mitigate the Company’s exposure to future changes in interest rates. The interest rate risk positions in business segments are monitored on an ongoing basis. Under CALM, the reinvestment rate is developed using interest rate scenario testing and reflects the interest rate risk positions. In 2021, the movement in interest rates negatively (2020 – negatively) impacted the Company’s net income. This negative impact was primarily due to increase in risk-free interest rates and the overall steepening of the yield curve in the U.S. and Canada. The exposure to credit losses is managed against policies that limit concentrations by issuer, corporate connections, ratings, sectors and geographic regions. On participating policies and some non-participating policies, credit loss experience is passed back to policyholders through the investment return crediting formula. For other policies, premiums and benefits reflect the Company’s assumed level of future credit losses at contract inception or most recent contract adjustment date. The Company holds explicit provisions in actuarial liabilities for credit risk including provisions for adverse deviation.In 2021, credit loss experience on debt securities and mortgages was favourable (2020 – unfavourable) when compared to the Company’s assumptions. Equities, real estate and other alternative long-duration assets are used to support liabilities where investment return experience is passed back to policyholders through dividends or credited investment return adjustments. Equities, real estate, oil and gas and other alternative long-duration assets are also used to support long-dated obligations in the Company’s annuity and pension businesses and for long-dated insurance obligations on contracts where the investment return risk is borne by the Company. In 2021, investment experience on alternative long-duration assets backing policyholder liabilities was favourable (2020 – unfavourable) primarily due to gains in private equities and real estate properties, partially offset by losses in timber and agriculture properties. In 2021, alternative long-duration asset origination did not exceed (2020 – did not exceed) valuation requirements. In 2021, for the business that is dynamically hedged, segregated fund guarantee experience on residual, non-dynamically hedged market risks were unfavourable (2020 – unfavourable). For the business that is not dynamically hedged, experience on segregated fund guarantees due to changes in the market value of assets under management was also unfavourable (2020 – unfavourable). This excludes the experience on the macro equity hedges.In 2021, investment expense experience was unfavourable (2020 – unfavourable) when compared to the Company’s assumptions. | ||
|
1 71 |
| Nature of factor and assumption methodology |
Risk management | |||
| Policy termination and premium persistency |
Policies are terminated through lapses and surrenders, where lapses represent the termination of policies due to non-payment of premiums and surrenders represent the voluntary termination of policies by policyholders. Premium persistency represents the level of ongoing deposits on contracts where there is policyholder discretion as to the amount and timing of deposits. Policy termination and premium persistency assumptions are primarily based on the Company’s recent experience adjusted for expected future conditions. Assumptions reflect differences by type of contract within each geographic market. |
The Company seeks to design products that minimize financial exposure to lapse, surrender and premium persistency risk. The Company monitors lapse, surrender and persistency experience. In aggregate, 2021 policyholder termination and premium persistency experience was unfavourable (2020 – unfavourable) when compared to the Company’s assumptions used in the computation of actuarial liabilities. | ||
| Expenses and taxes |
Operating expense assumptions reflect the projected costs of maintaining and servicing in-force policies, including associated overhead expenses. The expenses are derived from internal cost studies projected into the future with an allowance for inflation. For some developing businesses, there is an expectation that unit costs will decline as these businesses grow.Taxes reflect assumptions for future premium taxes and other non-income related taxes. For income taxes, policy liabilities are adjusted only for temporary tax timing and permanent tax rate differences on the cash flows available to satisfy policy obligations. |
The Company prices its products to cover the expected costs of servicing and maintaining them. In addition, the Company monitors expenses monthly, including comparisons of actual expenses to expense levels allowed for in pricing and valuation. Maintenance expenses for 2021 were unfavourable (2020 – unfavourable) when compared to the Company’s assumptions used in the computation of actuarial liabilities. The Company prices its products to cover the expected cost of taxes. | ||
| Policyholder dividends, experience rating refunds, and other adjustable policy elements |
The best estimate projections for policyholder dividends and experience rating refunds, and other adjustable elements of policy benefits are determined to be consistent with management’s expectation of how these elements will be managed should experience emerge consistently with the best estimate assumptions used for mortality and morbidity, investment returns, rates of policy termination, operating expenses and taxes. |
The Company monitors policy experience and adjusts policy benefits and other adjustable elements to reflect this experience. Policyholder dividends are reviewed annually for all businesses under a framework of Board-approved policyholder dividend policies. | ||
| Foreign currency |
Foreign currency risk results from a mismatch of the currency of liabilities and the currency of the assets designated to support these obligations. Where a currency mismatch exists, the assumed rate of return on the assets supporting the liabilities is reduced to reflect the potential for adverse movements in foreign exchange rates. |
The Company generally matches the currency of its assets with the currency of the liabilities they support, with the objective of mitigating the risk of loss arising from movements in currency exchange rates. | ||
| Decrease in net income attributed to shareholders |
||||||||
As at December 31, |
2021 |
2020 | ||||||
| Policy related assumptions |
||||||||
| 2% adverse change in future mortality rates (2),(4) |
||||||||
| Products where an increase in rates increases insurance contract liabilities |
$ |
( |
) |
$ | ( |
) | ||
| Products where a decrease in rates increases insurance contract liabilities |
( |
) |
( |
) | ||||
| 5% adverse change in future morbidity rates (incidence and termination) (3),(4),(5) |
( |
) |
( |
) | ||||
| 10% adverse change in future policy termination rates (4) |
( |
) |
( |
) | ||||
| 5% increase in future expense levels |
( |
) |
( |
) | ||||
(1) |
The participating policy funds are largely self-supporting and generate no material impact on net income attributed to shareholders as a result of changes in non-economic assumptions. Experience gains or losses would generally result in changes to future dividends, with no direct impact to shareholders. |
(2) |
An increase in mortality rates will generally increase policy liabilities for life insurance contracts whereas a decrease in mortality rates will generally increase policy liabilities for policies with longevity risk such as payout annuities. |
(3) |
No amounts related to morbidity risk are included for policies where the policy liability provides only for claims costs expected over a short period, generally less than one year, such as Group Life and Health. |
(4) |
The impacts of the adverse sensitivities on LTC for morbidity, mortality and lapse do not assume any partial offsets from the Company’s ability to contractually raise premium rates in such events, subject to state regulatory approval. In practice, the Company would plan to file for rate increases equal to the amount of deterioration resulting from the sensitivities. |
(5) |
|
| Decrease in net income attributed to shareholders |
||||||||
As at December 31, |
2021 |
2020 | ||||||
| Policy related assumptions |
||||||||
| 2% adverse change in future mortality rates |
$ |
( |
) |
$ | ( |
) | ||
| 5% adverse change in future morbidity incidence rates |
( |
) |
( |
) | ||||
| 5% adverse change in future morbidity claims termination rates |
( |
) |
( |
) | ||||
| 10% adverse change in future policy termination rates |
( |
) |
( |
) | ||||
| 5% increase in future expense levels |
( |
) |
( |
) | ||||
(1) |
The impacts of the adverse sensitivities on LTC for morbidity, mortality and lapse do not assume any partial offsets from the Company’s ability to contractually raise premium rates in such events, subject to state regulatory approval. In practice, the Company would plan to file for rate increases equal to the amount of deterioration resulting from the sensitivities. |
(2) |
The impact of favourable changes to all the sensitivities is relatively symmetrical. |
|
1 73 |
For the year ended December 31, 2021 |
Net actuarial liabilities |
Other insurance contract liabilities (1) |
Net insurance contract liabilities |
Reinsurance assets |
Gross insurance contract liabilities |
|||||||||||||||
| Balance, January 1 |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
| New policies (2) |
– |
|||||||||||||||||||
| Normal in-force movement(2) |
( |
) |
||||||||||||||||||
| Changes in methods and assumptions (2) |
– |
|||||||||||||||||||
| Reinsurance transactions |
– |
– |
– |
– |
– |
|||||||||||||||
| Impact of changes in foreign exchange rates |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||
| Balance, December 31 |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
| For the year ended December 31, 2020 | Net actuarial liabilities |
Other insurance contract liabilities (1) |
Net insurance contract liabilities |
Reinsurance assets |
Gross insurance contract liabilities |
|||||||||||||||
| Balance, January 1 |
$ | $ | $ | $ | $ | |||||||||||||||
| New policies (3) |
– | |||||||||||||||||||
| Normal in-force movement(3) |
( |
) | ||||||||||||||||||
| Changes in methods and assumptions (3) |
– | |||||||||||||||||||
| Reinsurance transactions (4) |
( |
) | – | ( |
) | – | ||||||||||||||
| Impact of changes in foreign exchange rates |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||
| Balance, December 31 |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||
(1) |
Other insurance contract liabilities are comprised of benefits payable and provisions for unreported claims and policyholder amounts on deposit. |
(2) |
In 2021, the $ in-force movement, new policies and changes in methods and assumptions. These three items in the gross insurance contract liabilities were netted off by an increase of $ |
(3) |
In 2020, the $ in-force movement, new policies, associated embedded derivatives and changes in methods and assumptions. These three items in the gross insurance contract liabilities were netted off by an increase of $ |
(4) |
On September 30, 2020, the Company, through its subsidiary John Hancock Life Insurance Company (U.S.A.), entered into a reinsurance agreement with Global Atlantic Financial Group Ltd to reinsure a block of legacy U.S. bank owned life insurance (“BOLI”). Under the terms of the transaction, the Company will maintain responsibility for servicing the policies with no expected impact to the BOLI policyholders. The transaction was structured such that the Company ceded policyholder contract liabilities and transferred invested assets backing these liabilities. |
| Change in insurance contract liabilities, net of reinsurance |
||||||||||||||||
For the year ended December 31, 2021 |
Total | Attributed to participating policyholders’ account (1) |
Attributed to shareholders’ account |
Change in net income attributed to shareholders (post-tax) |
||||||||||||
| U.S. variable annuity product review |
$ |
$ |
– |
$ |
$ |
( |
) | |||||||||
| Mortality and morbidity updates |
– |
( |
) | |||||||||||||
| Lapses and policyholder behaviour updates |
( |
) | ||||||||||||||
| Expense updates |
( |
) |
( |
) |
( |
) |
||||||||||
| Investment related updates |
( |
) |
( |
) |
( |
) |
||||||||||
| Other updates |
( |
) |
||||||||||||||
| Net impact |
$ |
$ |
$ |
$ |
( |
) | ||||||||||
(1) |
The change in insurance contract liabilities, net of reinsurance, attributable to the participating policyholders’ account was primarily driven by a reduction in the expected long-term interest rates within the valuation models to reflect the low interest rate environment. |
|
1 75 |
| Change in insurance contract liabilities, net of reinsurance |
||||||||||||||||
| For the year ended December 31, 2020 | Total | Attributed to participating policyholders’ account (1) |
Attributed to shareholders’ account |
Change in net income attributed to shareholders (post-tax) |
||||||||||||
| Canada variable annuity product review |
$ | ( |
) | $ | |
$ | ( |
) | $ | |||||||
| Mortality and morbidity updates |
( |
) | ( |
) | ( |
) | ||||||||||
| Lapses and policyholder behaviour updates |
|
( |
) | |||||||||||||
| Investment related updates |
( |
) | ( |
) | ( |
) | |
|||||||||
| Other updates |
( |
) | ||||||||||||||
| Net impact |
$ | |
$ | $ | $ | ( |
) | |||||||||
(1) |
The change in insurance contract liabilities, net of reinsurance, attributable to the participating policyholders’ account was driven by refinements to the Company’s valuation models, primarily due to annual updates to reflect market movements in the first half of 2020. |
Payments due by period |
Less than 1 year |
1 to 3 years |
3 to 5 years |
Over 5 years | Total | |||||||||||||||
| Insurance contract liabilities (1) |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
(1) |
Insurance contract liability cash flows include estimates related to the timing and payment of death and disability claims, policy surrenders, policy maturities, annuity payments, minimum guarantees on segregated fund products, policyholder dividends, commissions and premium taxes offset by contractual future premiums on in-force contracts. These estimated cash flows are based on the best estimate assumptions used in the determination of insurance contract liabilities. These amounts are undiscounted and reflect recoveries from reinsurance agreements. Due to the use of assumptions, actual cash flows may differ from these estimates. Cash flows include embedded derivatives measured separately at fair value. |
For the years ended December 31, |
2021 |
2020 | ||||||
| Death, disability and other claims |
$ |
$ | ||||||
| Maturity and surrender benefits |
||||||||
| Annuity payments |
||||||||
| Policyholder dividends and experience rating refunds |
||||||||
| Net transfers from segregated funds |
( |
) |
( |
) | ||||
| Total |
$ |
$ | |
|||||
For the years ended December 31, |
2021 |
2020 | ||||||
| Balance, January 1 |
$ |
$ | ||||||
| New policies |
||||||||
| Changes in market conditions |
( |
) |
||||||
| Redemptions, surrenders and maturities |
( |
) |
( |
) | ||||
| Impact of changes in foreign exchange rates |
( |
) |
( |
) | ||||
| Balance, December 31 |
$ |
$ | |
|||||
|
17 7 |
2021 |
2020 | |||||||||||||||||||
As at December 31, |
Amortized cost, gross of reinsurance ceded (1) |
Fair value | Amortized cost, gross of reinsurance ceded (1) |
Fair value | ||||||||||||||||
| U.S. fixed annuity products |
$ |
$ |
$ | |
$ | |
||||||||||||||
| Canadian fixed annuity products |
||||||||||||||||||||
| Investment contract liabilities |
$ |
$ |
$ | |
$ | |||||||||||||||
(1) |
As at December 31, 2021, investment contract liabilities with the carrying value and fair value of $ |
For the years ended December 31, |
2021 |
2020 | ||||||
| Balance, January 1 |
$ |
$ | |
|||||
| Policy deposits |
||||||||
| Interest |
||||||||
| Withdrawals |
( |
) |
( |
) | ||||
| Fees |
( |
) |
( |
) | ||||
| Other |
( |
) |
– | |||||
| Impact of changes in foreign exchange rates |
( |
) |
( |
) | ||||
| Balance, December 31 |
$ |
$ | ||||||
Payments due by period |
Less than 1 year |
1 to 3 years |
3 to 5 years |
Over 5 years |
Total | |||||||||||||||
| Investment contract liabilities (1) |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
(1) |
Due to the nature of the products, the timing of net cash flows may be before contract maturity. Cash flows are undiscounted. |
As at December 31, |
2021 |
2020 | ||||||
| Debt securities |
||||||||
| FVTPL |
$ |
$ | ||||||
| AFS |
||||||||
| Other |
– | |||||||
| Mortgages |
||||||||
| Private placements |
||||||||
| Policy loans |
||||||||
| Loans to Bank clients |
||||||||
| Derivative assets |
||||||||
| Accrued investment income |
||||||||
| Reinsurance assets |
||||||||
| Other financial assets |
||||||||
| Total |
$ |
$ | |
|||||
|
17 9 |
As at December 31, 2021 |
AAA | AA | A | BBB | BB | B and lower | Total | |||||||||||||||||||||
| Commercial mortgages |
||||||||||||||||||||||||||||
| Retail |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
| Office |
||||||||||||||||||||||||||||
| Multi-family residential |
– |
|||||||||||||||||||||||||||
| Industrial |
– |
– |
||||||||||||||||||||||||||
| Other |
– |
|||||||||||||||||||||||||||
| Total commercial mortgages |
||||||||||||||||||||||||||||
| Agricultural mortgages |
– |
– |
– |
– |
||||||||||||||||||||||||
| Private placements |
||||||||||||||||||||||||||||
| Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
| As at December 31, 2020 | AAA | AA | A | BBB | BB | B and lower | Total | |||||||||||||||||||||
| Commercial mortgages |
||||||||||||||||||||||||||||
| Retail |
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Office |
||||||||||||||||||||||||||||
| Multi-family residential |
– | |||||||||||||||||||||||||||
| Industrial |
– | |||||||||||||||||||||||||||
| Other |
||||||||||||||||||||||||||||
| Total commercial mortgages |
||||||||||||||||||||||||||||
| Agricultural mortgages |
– | – | – | |||||||||||||||||||||||||
| Private placements |
||||||||||||||||||||||||||||
| Total |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||||||
| 2021 |
2020 |
|||||||||||||||||||||||||||
As at December 31, |
Insured |
Uninsured |
Total |
Insured |
Uninsured |
Total |
||||||||||||||||||||||
| Residential mortgages |
||||||||||||||||||||||||||||
| Performing |
$ |
$ |
$ |
$ | $ | $ | | |||||||||||||||||||||
| Non-performing (1) |
| |||||||||||||||||||||||||||
| Loans to Bank clients |
| |||||||||||||||||||||||||||
| Performing |
n/a |
n/a | | |||||||||||||||||||||||||
| Non-performing (1) |
n/a |
– |
– |
n/a | – | – | | |||||||||||||||||||||
| Total |
$ |
$ |
$ |
$ |
|
$ |
|
$ |
|
| ||||||||||||||||||
(1) |
Non-performing refers to payments that are 90 days or more past due. |
| Past due but not impaired | ||||||||||||||||
As at December 31, 2021 |
Less than 90 days |
90 days and greater |
Total | Total impaired |
||||||||||||
| Debt securities |
||||||||||||||||
| FVTPL |
$ |
$ |
– |
$ |
$ |
|||||||||||
| AFS |
– |
– |
– |
– |
||||||||||||
| Private placements |
– |
|||||||||||||||
| Mortgages and loans to Bank clients |
– |
|||||||||||||||
| Other financial assets |
– |
|||||||||||||||
| Total |
$ |
$ |
$ |
$ |
||||||||||||
| Past due but not impaired | ||||||||||||||||
| As at December 31, 2020 | Less than 90 days |
90 days and greater |
Total | Total impaired |
||||||||||||
| Debt securities |
||||||||||||||||
| FVTPL |
$ | – | $ | – | $ | – | $ | |||||||||
| AFS |
– | – | – | |||||||||||||
| Private placements |
– | |||||||||||||||
| Mortgages and loans to Bank clients |
– | |||||||||||||||
| Other financial assets |
||||||||||||||||
| Total |
$ | |
$ | |
$ | |
$ | |
||||||||
As at December 31, 2021 |
Gross carrying value |
Allowances for loan losses |
Net carrying value |
|||||||||
| Private placements |
$ |
$ |
$ |
|||||||||
| Mortgages and loans to Bank clients |
||||||||||||
| Total |
$ |
$ |
$ |
|||||||||
| As at December 31, 2020 | Gross carrying value |
Allowances for loan losses |
Net carrying value |
|||||||||
| Private placements |
$ | $ | $ | |||||||||
| Mortgages and loans to Bank clients |
||||||||||||
| Total |
$ | |
$ | |
$ | |
||||||
2021 |
2020 | |||||||||||||||||||||||||||
For the years ended December 31, |
Private placements |
Mortgages and loans to Bank clients |
Total | Private placements |
Mortgages and loans to Bank clients |
Total | ||||||||||||||||||||||
| Balance, January 1 |
$ |
$ |
$ |
$ | |
$ | |
$ | |
|||||||||||||||||||
| Provisions |
|
|||||||||||||||||||||||||||
| Recoveries |
( |
) |
( |
) |
( |
) |
( |
) | ( |
( |
) | |||||||||||||||||
| Write-offs (1) |
( |
) |
( |
) |
( |
) |
( |
) | ( |
) | ( |
) | ||||||||||||||||
| Balance, December 31 |
$ |
$ |
$ |
$ | $ | $ | |
|||||||||||||||||||||
(1) |
Includes disposals and impact of changes in foreign exchange rates. |
|
1 81 |
As at December 31, 2021 |
Notional amount (1) |
Fair value |
Weighted average maturity (in years) (2) |
|||||||||
| Single name CDS (3) – Corporate debt |
||||||||||||
| A |
$ |
$ |
– |
|||||||||
| BBB |
||||||||||||
| Total single name CDS |
$ |
$ |
||||||||||
| Total CDS protection sold |
$ |
$ |
||||||||||
| As at December 31, 2020 | Notional amount (1) |
Fair value | Weighted average maturity (in years) (2) |
|||||||||
| Single name CDS (3) – Corporate debt |
||||||||||||
| A |
$ | $ | ||||||||||
| BBB |
||||||||||||
| Total single name CDS |
$ | $ | ||||||||||
| Total CDS protection sold |
$ | |
$ | |
|
|||||||
(1) |
Notional amounts represent the maximum future payments the Company would have to pay its counterparties assuming a default of the underlying credit and zero recovery on the underlying issuer obligations. |
(2) |
The weighted average maturity of the CDS is weighted based on notional amounts. |
(3) |
Ratings are based on S&P where available followed by Moody’s, DBRS, and Fitch. If no rating is available from a rating agency, an internally developed rating is used. |
Related amounts not set off in the Consolidated Statements of Financial Position |
||||||||||||||||||||
As at December 31, 2021 |
Gross amounts of financial instruments (1) |
Amounts subject to an enforceable master netting arrangement or similar agreements |
Financial and cash collateral pledged (received) (2) |
Net amount including financing entities (3) |
Net amounts excluding financing entities |
|||||||||||||||
| Financial assets |
||||||||||||||||||||
| Derivative assets |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
|||||||||||
| Securities lending |
– |
( |
) |
– |
– |
|||||||||||||||
| Reverse repurchase agreements |
( |
) |
( |
) |
– |
– |
||||||||||||||
| Total financial assets |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
|||||||||||
| Financial liabilities |
||||||||||||||||||||
| Derivative liabilities |
$ |
( |
) |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||
| Repurchase agreements |
( |
) |
– |
– |
||||||||||||||||
| Total financial liabilities |
$ |
( |
) |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||
| Related amounts not set off in the Consolidated Statements of Financial Position |
||||||||||||||||||||
| As at December 31, 2020 | Gross amounts of financial instruments (1) |
Amounts subject to an enforceable master netting arrangement or similar agreements |
Financial and cash collateral pledged (received) (2) |
Net amount including financing entities (3) |
Net amounts excluding financing entities |
|||||||||||||||
| Financial assets |
||||||||||||||||||||
| Derivative assets |
$ | |
$ | ( |
) | $ | ( |
) | $ | $ | |
|||||||||
| Securities lending |
– | ( |
) | – | – | |||||||||||||||
| Reverse repurchase agreements |
– | ( |
) | |
||||||||||||||||
| Total financial assets |
$ | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||
| Financial liabilities |
||||||||||||||||||||
| Derivative liabilities |
$ | ( |
) | $ | $ | |
$ | ( |
) | $ | ( |
) | ||||||||
| Repurchase agreements |
( |
) | – | |||||||||||||||||
| Total financial liabilities |
$ | ( |
) | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||
(1) |
Financial assets and liabilities include accrued interest of $ |
(2) |
Financial and cash collateral exclude over-collateralization. As at December 31, 2021, the Company was over-collateralized on OTC derivative assets, OTC derivative liabilities, securities lending and reverse repurchase agreements and repurchase agreements in the amounts of $ collateral-in-transit |
(3) |
Includes derivative contracts entered between the Company and its financing entity which it does not consolidate. The Company does not exchange collateral on derivative contracts entered with this entity. Refer to note 17. |
|
1 83 |
As at December 31, 2021 |
Gross amounts of financial instruments |
Amounts subject to an enforceable netting arrangement |
Net amounts of financial instruments |
|||||||||
| Credit linked note (1) |
$ |
$ |
( |
) |
$ |
|||||||
| Variable surplus note |
( |
) |
||||||||||
| As at December 31, 2020 | Gross amounts of financial instruments |
Amounts subject to an enforceable netting arrangement |
Net amounts of financial instruments |
|||||||||
| Credit linked note (1) |
$ | |
$ | ( |
) | $ | – | |||||
| Variable surplus note |
( |
) | |
– | ||||||||
(1) |
As at December 31, 2021 and 2020, the Company had |
As at December 31, |
2021 |
2020 | ||||||
| Debt securities and private placements rated as investment grade BBB or higher (1) |
||||||||
| Government debt securities as a per cent of total debt securities |
||||||||
| Government private placements as a per cent of total private placements |
||||||||
| Highest exposure to a single non-government debt security and private placement issuer |
$ |
$ | ||||||
| Largest single issuer as a per cent of the total equity portfolio |
||||||||
| Income producing commercial office properties (2021 – |
$ |
$ | ||||||
| Largest concentration of mortgages and real estate (2) – Ontario, Canada (2021 – |
$ |
$ | |
|||||
(1) |
Investment grade debt securities and private placements include |
(2) |
Mortgages and real estate investments are diversified geographically and by property type. |
2021 |
2020 |
|||||||||||||||||||
As at December 31, |
Carrying value |
% of total |
Carrying value |
% of total |
||||||||||||||||
| Government and agency |
$ |
$ | ||||||||||||||||||
| Utilities |
||||||||||||||||||||
| Financial |
||||||||||||||||||||
| Consumer |
||||||||||||||||||||
| Energy |
||||||||||||||||||||
| Industrial |
||||||||||||||||||||
| Other |
||||||||||||||||||||
| Total |
$ |
$ |
|
|||||||||||||||||
As at December 31, 2021 |
Gross liabilities |
Reinsurance assets |
Net liabilities | |||||||||
| U.S. and Canada |
$ |
$ |
( |
) |
$ |
|||||||
| Asia and Other |
( |
) |
||||||||||
| Total |
$ |
$ |
( |
) |
$ |
|||||||
| As at December 31, 2020 | Gross liabilities |
Reinsurance assets |
Net liabilities | |||||||||
| U.S. and Canada |
$ | |
$ | ( |
$ | |||||||
| Asia and Other |
( |
) | ||||||||||
| Total |
$ | $ | ( |
) | $ | |
||||||
As at December 31, |
Issue date |
Maturity date |
Par value |
2021 |
2020 |
|||||||||
| 3.050% Senior notes (1),(2) |
|
|
US$ |
$ |
|
$ |
|
|||||||
| 4.70% Senior notes (1),(3) |
|
|
US$ |
– |
|
|||||||||
| 5.375% Senior notes (1),(4) |
|
|
US$ |
|
|
|||||||||
| 2.396% Senior notes (1),(4) |
|
|
US$ |
|
|
|||||||||
| 2.484% Senior notes (1),(4) |
|
|
US$ |
|
|
|||||||||
| 3.527% Senior notes (1),(4) |
|
|
US$ |
|
|
|||||||||
| 4.150% Senior notes (1),(4) |
|
|
US$ |
|
|
|||||||||
| Total |
|
|
|
$ |
$ |
|||||||||
(1) |
These U.S. dollar senior notes have been designated as hedges of the Company’s net investment in its U.S. operations which reduces the earnings volatility that would otherwise arise from the re-measurement of these senior notes into Canadian dollars. |
(2) |
MFC may redeem the notes in whole, but not in part, on August 27, 2025, and thereafter on every August 27 at a redemption price equal to par, together with accrued and unpaid interest. Issue costs are amortized to the earliest par redemption date. |
(3) |
The Company redeemed in full the |
(4) |
MFC may redeem the senior notes in whole or in part, at any time, at a redemption price equal to the greater of par and a price based on the yield of a corresponding U.S. Treasury bond, from redemption date to the respective maturity date, plus a specified number of basis points. The specified number of basis points is as follows: |
|
1 85 |
As at December 31 |
Less than 1 year |
1 to 3 years |
3 to 5 years |
Over 5 years |
Total | |||||||||||||||
| 2021 |
$ |
– |
$ |
– |
$ |
$ |
$ |
|||||||||||||
| 2020 |
– | – | – | |
||||||||||||||||
As at December 31 , |
Issuance date | Earliest par redemption date |
Maturity date | Par value | 2021 |
2020 | ||||||||||||||||||
| JHFC Subordinated notes (1),(2) |
n/a | $ | $ |
$ | ||||||||||||||||||||
| (1),(3) |
$ | |
||||||||||||||||||||||
| (1),(4),(5) |
US$ | |
||||||||||||||||||||||
| (1),(6) |
$ | |||||||||||||||||||||||
| (1),(7) |
S$ | |||||||||||||||||||||||
| (1),(8) |
$ | |||||||||||||||||||||||
| (1),(8) |
$ | |||||||||||||||||||||||
| (1),(9) |
$ | |||||||||||||||||||||||
| (10) |
S$ | – |
||||||||||||||||||||||
| (11) |
$ | – |
||||||||||||||||||||||
| (12) |
n/a | US$ | ||||||||||||||||||||||
| Total |
$ |
$ | |
|||||||||||||||||||||
(1) |
The Company is monitoring regulatory and market developments globally with respect to the interest rate benchmark reform. As these rates could potentially be discontinued in the future, the Company will take appropriate actions in due course to accomplish the necessary transitions or replacements. As at December 31, 2021, capital instruments of $ Mid-Swap r ate |
(2) |
Issued by Manulife Holdings (Delaware) LLC (“MHDLL”), now John Hancock Financial Corporation (“JHFC”), a wholly owned subsidiary of MFC, to Manulife Finance (Delaware) LLC (“MFLLC”), a subsidiary of Manulife Finance (Delaware) L.P. (“MFLP”). MFLP and its subsidiaries are wholly owned unconsolidated related parties of the Company. The notes bear interest at a floating rate equal to the 90-day Bankers’ Acceptance rate plus |
(3) |
Issued by MFC, interest is payable semi-annually. After May 13, 2030, the interest rate will reset to equal the 90-day Bankers’ Acceptance rate plus |
(4) |
On the earliest par redemption date, the interest rate will reset to equal the Mid-Swap Rate plus |
(5) |
Designated as a hedge of the Company’s net investment in its U.S. operations which reduces the earnings volatility that would otherwise arise from the re-measurement of the subordinated notes into Canadian dollars. |
(6) |
Issued by MFC, interest is payable semi-annually. After May 12, 2025, the interest rate will reset to equal the 90-day Bankers’ Acceptance rate plus |
(7) |
On the earliest par redemption date, the interest rate will reset to equal the |
(8) |
Interest is fixed for the period up to the earliest par redemption date, thereafter, the interest rate will reset to a floating rate equal to the 90-day Bankers’ Acceptance rate plus a specified number of basis points.3.049 % – bps, 3.317 % – bps. With regulatory approval, MFC may redeem the debentures, in whole or in part, on or after the earliest par redemption date, at a redemption price equal to par, together with accrued and unpaid interest. |
(9) |
Interest is fixed for the period up to the earliest par redemption date, thereafter the interest rate will reset to a floating rate equal to the 90-day Bankers’ Acceptance rate plus |
(10) |
MFC redeemed in full the |
(11) |
MLI redeemed in full the |
(12) |
Issued by John Hancock Mutual Life Insurance Company, now John Hancock Life Insurance Company (U.S.A.). Any payment of interest or principal on the surplus notes requires prior approval from the Department of Insurance and Financial Services of the State of Michigan. The carrying value of the surplus notes reflects an unamortized fair value increment of US$ |
| • | an unlimited number of common shares without nominal or par value; and |
| • | an unlimited number of Class A, Class B and Class 1 preferred shares without nominal or par value, issuable in series. |
| As at December 31, 2021 |
Issue date |
Annual dividend rate/ interest rate (1) |
Earliest redemption date (2),(3) |
Number of shares (in millions) |
Face amount |
Net amount (4) |
||||||||||||||||||
2021 |
2020 | |||||||||||||||||||||||
| Preferred shares |
||||||||||||||||||||||||
| Class A preferred shares |
||||||||||||||||||||||||
| Series 2 |
|
n/a |
$ | $ |
$ | |||||||||||||||||||
| Series 3 |
|
n/a |
||||||||||||||||||||||
| Class 1 preferred shares |
||||||||||||||||||||||||
| Series 3 (5),(6),(7) |
|
|
||||||||||||||||||||||
| Series 4 (7),(8) |
|
floating | |
|||||||||||||||||||||
| Series 5 (9) |
|
|
– |
|||||||||||||||||||||
| Series 7 (5),(6),(10) |
|
|
||||||||||||||||||||||
| Series 9 (5),(6) |
|
|
||||||||||||||||||||||
| Series 11 (5),(6) |
|
|
||||||||||||||||||||||
| Series 13 (5),(6) |
|
|
||||||||||||||||||||||
| Series 15 (5),(6) |
|
|
||||||||||||||||||||||
| Series 17 (5),(6) |
|
|
||||||||||||||||||||||
| Series 19 (5),(6) |
|
|
||||||||||||||||||||||
| Series 21 (11) |
|
|
– |
|||||||||||||||||||||
| Series 23 (5),(6),(10) |
|
|
||||||||||||||||||||||
| Series 25 (5),(6) |
|
|
||||||||||||||||||||||
| Other equity instruments |
||||||||||||||||||||||||
| Limited recourse capital notes |
||||||||||||||||||||||||
| Series 1 (12) |
|
|
n/a | – | ||||||||||||||||||||
| Series 2 (13) |
|
|
n/a | – | ||||||||||||||||||||
| Total |
$ | |
$ |
$ | |
|||||||||||||||||||
(1) |
Holders of Class A and Class 1 preferred shares are entitled to receive non-cumulative preferential cash dividends on a quarterly basis, as and when declared by the Board of Directors. Non-deferrable interest is payable to LRCN – Series 1 holders semi-annually at the Company’s discretion. |
(2) |
Redemption of all preferred shares is subject to regulatory approval. MFC may redeem each series, in whole or in part, at par, on the earliest redemption date or every five years thereafter, except for Class A Series 2, Class A Series 3 and Class 1 Series 4 preferred shares. Class A Series 2 and Series 3 preferred shares are past their respective earliest redemption date and MFC may redeem these shares, in whole or in part, at par at any time, subject to regulatory approval, as noted. MFC may redeem the Class 1 Series 4, in whole or in part, at any time, at $ |
(3) |
Redemption of all LRCN series is subject to regulatory approval. MFC may at its option redeem each series in whole or in part, at a redemption price equal to par, together with accrued and unpaid interest. The redemption period for Series 1 is every five years during the period from May 19 and including June 19, commencing in 2026. The redemption period for Series 2 is every five years during the period from February 19 and including March 19, commencing in 2027. |
(4) |
Net of after-tax issuance costs. |
(5) |
On the earliest redemption date and every five years thereafter, the annual dividend rate will be reset to the five-year Government of Canada bond yield plus a yield specified for each series. The specified yield for Class 1 preferred shares is: Series 3 – |
(6) |
On the earliest redemption date and every five years thereafter, Class 1 preferred shares are convertible at the option of the holder into a new series that is one number higher than their existing series, and the holders are entitled to non-cumulative preferential cash dividends, payable quarterly if and when declared by the Board of Directors, at a rate equal to the three-month Government of Canada Treasury bill yield plus the rate specified in footnote 5 above. |
|
18 7 |
(7) |
MFC did not exercise its right to redeem all or any of the outstanding Class 1 Shares Series 3 and Class 1 Shares Series 4 on June 19, 2021 (the earliest redemption date). After taking into account all election notices, one-for-one one-for-one |
(8) |
The floating dividend rate for the Class 1 Shares Series 4 equals the |
(9) |
MFC redeemed in full the Class 1 Series 5 at par, on |
(10) |
Subsequent to December 31, 2021, the Company announced its intention to redeem the Class 1 Series 7 and Class 1 Series 23 at par, on |
(11) |
MFC redeemed in full the Class 1 Shares Series 21 at par, on June 19, 2021, the earliest redemption date. |
(12) |
On February 19, 2021, MFC issued $ Non-deferrable interest is payable semi-annually on the LRCN – Series 1 at the Company’s discretion. Non-payment of interest or principal when due will result in a recourse event, with the noteholders’ sole remedy being receipt of their proportionate share of Class 1 Series 27 preferred shares held in a newly formed consolidated trust (the Limited Recourse Trust). All claims of the holders of LRCN – Series 1 against MFC will be extinguished upon receipt of the corresponding trust assets. The Class 1 Series 27 preferred shares are eliminated on the Company’s Consolidated Statements of Financial Position while being held within the Limited Recourse Trust. |
(13) |
On November 12, 2021, MFC issued $ preferred shares held in a newly formed consolidated trust (the Limited Recourse Trust). All claims of the holders of LRCN – Series 2 against MFC will be extinguished upon receipt of the corresponding trust assets. The Class 1 Series 28 preferred shares are eliminated on the Company’s Consolidated Statements of Financial Position while being held within the Limited Recourse Trust. |
2021 |
2020 | |||||||||||||||||||
For the years ended December 31, |
Number of shares (in millions) |
Amount | Number of shares (in millions) |
Amount | ||||||||||||||||
| Balance, January 1 |
$ |
$ | |
|||||||||||||||||
| Repurchased for cancellation |
– |
– |
( |
) | ( |
) | ||||||||||||||
| Issued on exercise of stock options and deferred share units |
||||||||||||||||||||
| Total |
$ |
$ | ||||||||||||||||||
For the years ended December 31, |
2021 |
2020 | ||||||
| Basic earnings per common share |
$ |
$ | |
|||||
| Diluted earnings per common share |
||||||||
For the years ended December 31, |
2021 |
2020 | ||||||
| Weighted average number of common shares (in millions) |
|
|||||||
| Dilutive stock-based awards (1) (in millions) |
||||||||
| Weighted average number of diluted common shares (in millions) |
||||||||
(1) |
The dilutive effect of stock-based awards was calculated using the treasury stock method. This method calculates the number of incremental shares by assuming the outstanding stock-based awards are (i) exercised and (ii) then reduced by the number of shares assumed to be repurchased from the issuance proceeds, using the average market price of MFC common shares for the year. Excluded from the calculation was a weighted average of |
| Class A Shares Series 2 – $ |
Class 1 Shares Series 13 – $ | |
| Class A Shares Series 3 – $ |
Class 1 Shares Series 15 – $ | |
| Class 1 Shares Series 3 – $ |
Class 1 Shares Series 17 – $ | |
| Class 1 Shares Series 4 – $ |
Class 1 Shares Series 19 – $ | |
| Class 1 Shares Series 7 – $ |
Class 1 Shares Series 23 – $ | |
| Class 1 Shares Series 9 – $ |
Class 1 Shares Series 25 – $ | |
| Class 1 Shares Series 11 – $ |
| • | Operating with sufficient capital to be able to honour all commitments to its policyholders and creditors with a high degree of confidence; |
| • | Retaining the ongoing confidence of regulators, policyholders, rating agencies, investors and other creditors in order to ensure access to capital markets; and |
| • | Optimizing return on capital to meet shareholders’ expectations subject to constraints and considerations of adequate levels of capital established to meet the first two objectives. |
As at December 31, |
2021 |
2020 | ||||||
| Total equity |
$ |
$ | ||||||
| Exclude AOCI gain/(loss) on cash flow hedges |
( |
) |
( |
) | ||||
| Total equity excluding AOCI on cash flow hedges |
||||||||
| Qualifying capital instruments |
||||||||
| Consolidated capital |
$ |
$ | |
|||||
|
18 9 |
For the year ended December 31, 2021 |
Asia | Canada | U.S. | Global WAM |
Corporate and Other |
Total | ||||||||||||||||||
| Investment management and other related fees |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||||
| Transaction processing, administration, and service fees |
( |
) |
||||||||||||||||||||||
| Distribution fees and other |
( |
) |
||||||||||||||||||||||
| Total included in other revenue |
( |
) |
||||||||||||||||||||||
| Revenue from non-service lines |
( |
) |
||||||||||||||||||||||
| Total other revenue |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||||
| Real estate management services included in net investment income |
$ |
$ |
$ |
$ |
– |
$ |
$ |
|||||||||||||||||
| For the year ended December 31, 2020 | Asia | Canada | U.S. | Global WAM |
Corporate and Other |
Total | ||||||||||||||||||
| Investment management and other related fees |
$ | |
$ | $ | |
$ | $ | ( |
$ | |||||||||||||||
| Transaction processing, administration, and service fees |
||||||||||||||||||||||||
| Distribution fees and other |
( |
) | ||||||||||||||||||||||
| Total included in other revenue |
( |
) | ||||||||||||||||||||||
| Revenue from non-service lines |
( |
) | ||||||||||||||||||||||
| Total other revenue |
$ | |
$ | |
$ | |
$ | |
$ | ( |
) | $ | |
|||||||||||
| Real estate management services included in net investment income |
$ | $ | $ | $ | – | $ | $ | |||||||||||||||||
2021 |
2020 | |||||||||||||||||||
For the years ended December 31, |
Number of options (in millions) |
Weighted average exercise price |
Number of options (in millions) |
Weighted average exercise price |
||||||||||||||||
| Outstanding, January 1 |
$ |
$ | |
|||||||||||||||||
| Granted |
– |
|||||||||||||||||||
| Exercised |
( |
) |
( |
) | ||||||||||||||||
| Expired |
– |
– | ||||||||||||||||||
| Forfeited |
– |
|||||||||||||||||||
| Outstanding, December 31 |
$ |
$ | ||||||||||||||||||
| Exercisable, December 31 |
$ |
$ | ||||||||||||||||||
Options outstanding |
Options exercisable |
|||||||||||||||||||||||||||
For the year ended December 31, 2021 |
Number of options (in millions) |
Weighted average exercise price |
Weighted average remaining contractual life (in years) |
Number of options (in millions) |
Weighted average exercise price |
Weighted average remaining contractual life (in years) |
||||||||||||||||||||||
| $12.64—$20.99 |
$ |
$ |
||||||||||||||||||||||||||
| $21.00—$24.83 |
$ |
$ |
||||||||||||||||||||||||||
| Total |
$ |
$ |
||||||||||||||||||||||||||
| For the years ended December 31, Number of DSUs (in thousands) |
2021 |
2020 | ||||||
| Outstanding, January 1 |
||||||||
| Issued |
||||||||
| Reinvested |
||||||||
| Redeemed |
( |
) |
( |
) | ||||
| Forfeitures and cancellations |
( |
) |
( |
) | ||||
| Outstanding, December 31 |
||||||||
|
1 91 |
| • | A decline in discount rates that increases the defined benefit obligations by more than the change in value of plan assets; |
| • | Lower than expected rates of mortality; and |
| • | For retiree welfare plans, higher than expected health care costs. |
| Pension plans | Retiree welfare plans | |||||||||||||||||||
For the years ended December 31, |
2021 |
2020 | 2021 |
2020 | ||||||||||||||||
| Changes in defined benefit obligation: |
||||||||||||||||||||
| Opening balance |
$ |
$ | |
$ |
$ | |||||||||||||||
| Current service cost |
– |
– | ||||||||||||||||||
| Interest cost |
||||||||||||||||||||
| Plan participants’ contributions |
– |
– | ||||||||||||||||||
| Actuarial losses (gains) due to: |
||||||||||||||||||||
| Experience |
– |
( |
) | |||||||||||||||||
| Demographic assumption changes |
( |
) | ( |
) | ||||||||||||||||
| Economic assumption changes |
( |
) |
( |
) |
||||||||||||||||
| Benefits paid |
( |
) |
( |
) | ( |
) |
( |
) | ||||||||||||
| Impact of changes in foreign exchange rates |
( |
) |
( |
) | ( |
) |
( |
) | ||||||||||||
| Defined benefit obligation, December 31 |
$ |
$ | $ |
$ | |
|||||||||||||||
| Pension plans | Retiree welfare plans | |||||||||||||||||||
For the years ended December 31, |
2021 |
2020 | 2021 |
2020 | ||||||||||||||||
| Change in plan assets: |
||||||||||||||||||||
| Fair value of plan assets, opening balance |
$ |
$ | $ |
$ | |
|||||||||||||||
| Interest income |
||||||||||||||||||||
| Return on plan assets (excluding interest income) |
( |
) |
||||||||||||||||||
| Employer contributions |
||||||||||||||||||||
| Plan participants’ contributions |
– |
– | ||||||||||||||||||
| Benefits paid |
( |
) |
( |
) | ( |
) |
( |
) | ||||||||||||
| Administration costs |
( |
) |
( |
) | ( |
) |
( |
) | ||||||||||||
| Impact of changes in foreign exchange rates |
( |
) |
( |
) | ( |
) |
( |
) | ||||||||||||
| Fair value of plan assets, December 31 |
$ |
$ | $ |
$ | |
|||||||||||||||
|
1 93 |
| Pension plans | Retiree welfare plans | |||||||||||||||||||
As at December 31, |
2021 |
2020 | 2021 |
2020 | ||||||||||||||||
| Development of net defined benefit liability |
||||||||||||||||||||
| Defined benefit obligation |
$ |
$ | |
$ |
$ | |
||||||||||||||
| Fair value of plan assets |
||||||||||||||||||||
| Deficit (surplus) |
( |
) |
||||||||||||||||||
| Effect of asset limit (1) |
– | – |
– | |||||||||||||||||
| Deficit (surplus) and net defined benefit liability (asset) |
( |
) |
||||||||||||||||||
| Deficit is comprised of: |
||||||||||||||||||||
| Funded or partially funded plans |
( |
) |
( |
) | ( |
) |
( |
) | ||||||||||||
| Unfunded plans |
||||||||||||||||||||
| Deficit (surplus) and net defined benefit liability (asset) |
$ |
$ | $ |
( |
) |
$ | ||||||||||||||
(1) |
In 2021, the Company recognized an impairment of $37 on the net defined benefit asset for one of its registered pension plans in Canada. This was due to strong investment returns causing the surplus in that plan to increase above the present value of economic benefits that can be derived by the Company through reductions in future contributions. For the other funded pension plans, the present value of the economic benefits available in the form of reductions in future contributions to the plans remains greater than the current surplus. |
| U.S. plans | Canadian plans | |||||||||||||||||||||||||||||||||||
| Pension plans | Retiree welfare plans | Pension plans | Retiree welfare plans | |||||||||||||||||||||||||||||||||
As at December 31, |
2021 |
2020 | 2021 |
2020 | 2021 |
2020 | 2021 |
2020 | ||||||||||||||||||||||||||||
| Active members |
$ |
$ | $ |
$ | $ |
$ | $ |
– |
$ | – | ||||||||||||||||||||||||||
| Inactive and retired members |
||||||||||||||||||||||||||||||||||||
| Total |
$ |
$ | |
$ |
$ | |
$ |
$ | |
$ |
$ | |
||||||||||||||||||||||||
| U.S. plans (1) |
Canadian plans (2) |
|||||||||||||||||||||||||||||||||||
| Pension plans | Retiree welfare plans | Pension plans | Retiree welfare plans | |||||||||||||||||||||||||||||||||
As at December 31, 2021 |
Fair value | % of total | Fair value | % of total | Fair value | % of total | Fair value | % of total | ||||||||||||||||||||||||||||
| Cash and cash equivalents |
$ |
$ |
$ |
$ |
– |
– |
||||||||||||||||||||||||||||||
| Public equity securities (3) |
– |
– |
||||||||||||||||||||||||||||||||||
| Public debt securities |
– |
– |
||||||||||||||||||||||||||||||||||
| Other investments (4) |
– |
– |
||||||||||||||||||||||||||||||||||
| Total |
$ |
$ |
$ |
$ |
– |
– |
||||||||||||||||||||||||||||||
| U.S. plans (1) |
Canadian plans (2) |
|||||||||||||||||||||||||||||||||||
| Pension plans | Retiree welfare plans | Pension plans | Retiree welfare plans | |||||||||||||||||||||||||||||||||
| As at December 31, 2020 | Fair value | % of total | Fair value | % of total | Fair value | % of total | Fair value | % of total | ||||||||||||||||||||||||||||
| Cash and cash equivalents |
$ | $ | $ | $ | – | – | ||||||||||||||||||||||||||||||
| Public equity securities (3) |
– | – | ||||||||||||||||||||||||||||||||||
| Public debt securities |
– | – | ||||||||||||||||||||||||||||||||||
| Other investments (4) |
– | – | ||||||||||||||||||||||||||||||||||
| Total |
$ | |
$ | $ | |
$ | – | – | ||||||||||||||||||||||||||||
(1) |
All the U.S. pension and retiree welfare plan assets have daily quoted prices in active markets, except for the private debt, infrastructure, private equity, timber and agriculture assets. In the aggregate, the latter assets represent approximately |
(2) |
All the Canadian pension plan assets have daily quoted prices in active markets, except for the group annuity contract assets that represent approximately |
(3) |
Equity securities include direct investments in MFC common shares of $ |
(4) |
Other U.S. plan assets include investment in REITs, private debt, infrastructure, private equity, timberland and agriculture, and managed futures. Other Canadian pension plan assets include investment in the group annuity contract. |
| Pension plans | Retiree welfare plans | |||||||||||||||||||
For the years ended December 31, |
2021 |
2020 | 2021 |
2020 | ||||||||||||||||
| Defined benefit current service cost |
$ |
$ | $ |
– |
$ | – | ||||||||||||||
| Defined benefit administrative expenses |
||||||||||||||||||||
| Service cost |
||||||||||||||||||||
| Interest on net defined benefit (asset) liability |
||||||||||||||||||||
| Defined benefit cost |
||||||||||||||||||||
| Defined contribution cost |
– |
– | ||||||||||||||||||
| Net benefit cost |
$ |
$ | |
$ |
$ | |
||||||||||||||
| Pension plans | Retiree welfare plans | |||||||||||||||||||
For the years ended December 31, |
2021 |
2020 | 2021 |
2020 | ||||||||||||||||
| Actuarial gains (losses) on defined benefit obligations due to: |
||||||||||||||||||||
| Experience |
$ |
( |
) |
$ | ( |
) | $ |
– |
$ | |||||||||||
| Demographic assumption changes |
( |
) |
( |
) |
||||||||||||||||
| Economic assumption changes |
( |
) | ( |
) | ||||||||||||||||
| Return on plan assets (excluding interest income) |
( |
) |
||||||||||||||||||
| Change in effect of asset limit |
( |
) |
– |
– | ||||||||||||||||
| Total re-measurement effects |
$ |
$ | |
$ |
$ | |
||||||||||||||
| U.S. Plans | Canadian Plans | |||||||||||||||||||||||||||||||||||
| Pension plans | Retiree welfare plans | Pension plans | Retiree welfare plans | |||||||||||||||||||||||||||||||||
For the years ended December 31, |
2021 |
2020 | 2021 |
2020 | 2021 |
2020 | 2021 |
2020 | ||||||||||||||||||||||||||||
| To determine the defined benefit obligation at end of year (1) : |
||||||||||||||||||||||||||||||||||||
| Discount rate |
||||||||||||||||||||||||||||||||||||
| Initial health care cost trend rate (2) |
n/a |
n/a | n/a |
n/a | ||||||||||||||||||||||||||||||||
| To determine the defined benefit cost for the year (1) : |
||||||||||||||||||||||||||||||||||||
| Discount rate |
||||||||||||||||||||||||||||||||||||
| Initial health care cost trend rate (2) |
n/a |
n/a | n/a |
n/a | ||||||||||||||||||||||||||||||||
(1) |
Inflation and salary increase assumptions are not shown as they do not materially affect obligations and cost. |
(2) |
The health care cost trend rate used to measure the U.S. based retiree welfare obligation was |
As at December 31, 2021 |
U.S. | Canada | ||||||
| Life expectancy (in years) for those currently age 65 |
||||||||
| Males |
||||||||
| Females |
||||||||
| Life expectancy (in years) at age 65 for those currently age 45 |
||||||||
| Males |
||||||||
| Females |
||||||||
|
1 95 |
As at December 31, 2021 |
Pension plans | Retiree welfare plans | ||||||
| Discount rate: |
||||||||
| Impact of a 1% increase |
$ |
( |
) |
$ |
( |
) | ||
| Impact of a 1% decrease |
||||||||
| Health care cost trend rate: |
||||||||
| Impact of a 1% increase |
n/a |
|||||||
| Impact of a 1% decrease |
n/a |
( |
) | |||||
| Mortality rates (1) |
||||||||
| Impact of a 10% decrease |
||||||||
(1) |
If the actuarial estimates of mortality are adjusted in the future to reflect unexpected decreases in mortality, the effect of a |
| Pension plans | Retiree welfare plans | |||||||||||||||||||
As at December 31, |
2021 |
2020 | 2021 |
2020 | ||||||||||||||||
| U.S. plans |
||||||||||||||||||||
| Canadian plans |
|
|
||||||||||||||||||
| Pension plans | Retiree welfare plans | |||||||||||||||||||
For the years ended December 31, |
2021 |
2020 | 2021 |
2020 | ||||||||||||||||
| Defined benefit plans |
$ |
$ | $ |
$ | ||||||||||||||||
| Defined contribution plans |
– |
– | ||||||||||||||||||
| Total |
$ |
$ | |
$ |
$ | |
||||||||||||||
For the years ended December 31, |
2021 |
2020 | ||||||
| Current tax |
||||||||
| Current year |
$ |
$ | ||||||
| Adjustments related to prior years |
( |
) |
( |
) | ||||
| Total current tax |
||||||||
| Deferred tax |
||||||||
| Change related to temporary differences |
( |
) |
||||||
| Effects of changes in tax rates |
( |
) |
||||||
| Total deferred tax |
( |
) |
||||||
| Income tax expense |
$ |
$ | |
|||||
For the years ended December 31, |
2021 |
2020 | ||||||
Recognized in other comprehensive income |
||||||||
Current income tax expense (recovery) |
$ |
( |
) |
$ | ( |
) | ||
Deferred income tax expense (recovery) |
( |
) |
||||||
Total recognized in other comprehensive income |
$ |
( |
) |
$ | ( |
) | ||
Recognized in equity, other than other comprehensive income |
||||||||
Current income tax expense (recovery) |
$ |
$ | ||||||
Deferred income tax expense (recovery) |
( |
) |
( |
) | ||||
Total income tax recognized directly in equity |
$ |
( |
) |
$ | – | |||
For the years ended December 31, |
2021 |
2020 | ||||||
Income before income taxes |
$ |
$ | ||||||
Income tax expense at Canadian statutory tax rate |
$ |
$ | ||||||
Increase (decrease) in income taxes due to: |
||||||||
Tax-exempt investment income |
( |
) |
( |
) | ||||
Differences in tax rate on income not subject to tax in Canada |
( |
) |
( |
) | ||||
Adjustments to taxes related to prior years |
( |
) |
( |
) | ||||
Tax losses and temporary differences not recognized as deferred taxes |
– | |||||||
Tax rate change |
( |
) |
||||||
Other differences |
||||||||
Income tax expense |
$ |
$ | |
|||||
As at December , |
2021 |
2020 | ||||||
Deferred tax assets |
$ |
$ | ||||||
Deferred tax liabilities |
( |
) |
( |
) | ||||
Net deferred tax assets (liabilities) |
$ |
$ | |
|||||
As at December 31, 2021 |
Balance, January 1, 2021 |
Disposals |
Recognized in Income Statement |
Recognized in Other Comprehensive Income |
Recognized in Equity |
Translation and Other |
Balance, December 31, 2021 |
|||||||||||||||||||||
Loss carryforwards |
$ |
$ |
( |
) |
$ |
$ |
– |
$ |
– |
$ |
$ |
|||||||||||||||||
Actuarial liabilities |
– |
( |
) |
– |
– |
( |
) |
|||||||||||||||||||||
Pensions and post-employment benefits |
– |
( |
) |
– |
– |
|||||||||||||||||||||||
Tax credits |
– |
– |
– |
|||||||||||||||||||||||||
Accrued interest |
– |
– |
– |
– |
– |
|||||||||||||||||||||||
Real estate |
( |
) |
– |
( |
) |
– |
– |
( |
) | |||||||||||||||||||
Securities and other investments |
( |
) |
– |
– |
( |
) | ||||||||||||||||||||||
Sale of investments |
( |
) |
– |
– |
– |
– |
( |
) | ||||||||||||||||||||
Goodwill and intangible assets |
( |
) |
– |
– |
– |
( |
) | |||||||||||||||||||||
Other |
( |
) |
( |
) |
||||||||||||||||||||||||
Total |
$ |
$ |
( |
) |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||
|
19 7 |
| As at December 31, 2020 | Balance, January 1, |
Disposals | Recognized in Income Statement |
Recognized in Other Comprehensive Income |
Recognized in Equity |
Translation and Other |
Balance, December 31, 2020 |
|||||||||||||||||||||
Loss carryforwards |
$ | $ | – | $ | ( |
) | $ | – | $ | – | $ | $ | ||||||||||||||||
Actuarial liabilities |
– | – | – | ( |
) | |||||||||||||||||||||||
Pensions and post-employment benefits |
– | – | ( |
) | – | ( |
) | |||||||||||||||||||||
Tax credits |
– | – | – | – | ||||||||||||||||||||||||
Accrued interest |
– | – | – | – | – | |||||||||||||||||||||||
Real estate |
( |
) | – | ( |
) | ( |
) | |||||||||||||||||||||
Securities and other investments |
( |
) | – | ( |
( |
) | ( |
) | ||||||||||||||||||||
Sale of investments |
( |
) | – | – | – | – | ( |
) | ||||||||||||||||||||
Goodwill and intangible assets |
( |
) | – | – | – | ( |
) | |||||||||||||||||||||
Other |
( |
) | – | ( |
) | ( |
) | |||||||||||||||||||||
Total |
$ | |
$ | – | $ | ( |
) | $ ( |
$ | |
$ | ( |
) |
$ | |
|||||||||||||
| Company’s investment (1) |
Company’s maximum exposure to loss (2) |
|||||||||||||||||||
As at December 31, |
2021 |
2020 | 2021 |
2020 | ||||||||||||||||
| Leveraged leases (3) |
$ |
$ | |
$ |
$ | |
||||||||||||||
| Timberland companies (4) |
||||||||||||||||||||
| Real estate companies (5) |
||||||||||||||||||||
| Total |
$ |
$ | $ |
$ | ||||||||||||||||
(1) |
The Company’s investments in these unconsolidated SEs are included in invested assets and the Company’s returns from them are included in net investment income and AOCI. |
(2) |
The Company’s maximum exposure to loss from each SE is limited to amounts invested in each, plus unfunded capital commitments, if any. The Company’s investment commitments are disclosed in note 18. The maximum loss is expected to occur only upon the entity’s bankruptcy/liquidation, or in case a natural disaster in the case of the timber companies. |
(3) |
These entities are statutory business trusts which use capital provided by the Company and senior debt provided by other parties to finance the acquisition of assets. These assets are leased to third-party lessees under long-term leases. The Company owns equity capital in these business trusts. The Company does not consolidate any of the trusts that are party to the lease arrangements because the Company does not have decision-making power over them. |
(4) |
These entities own and operate timberlands. The Company invests in their equity and debt. The Company’s returns include investment income, investment advisory fees, forestry management fees and performance advisory fees. The Company does not control these entities because it either does not have the power to govern their financial and operating policies or does not have significant variable returns from them, or both. |
(5) |
These entities, which include the Manulife U.S. REIT, own and manage commercial real estate. The Company invests in their equity. The Company’s returns include investment income, investment management fees, property management fees, acquisition/disposition fees and leasing fees. The Company does not control these entities because it either does not have the power to govern their financial and operating policies or does not have significant variable returns from them, or both. |
| Company’s interests (1) |
||||||||
As at December 31, |
2021 |
2020 | ||||||
| Manulife Finance (Delaware), L.P. (2) |
$ |
$ | ||||||
| Total |
$ |
$ | |
|||||
(1) |
The Company’s interests include amounts borrowed from the SE; the Company’s investment in its equity and subordinated capital; and foreign currency and interest rate swaps with it. |
(2) |
This entity is a wholly owned partnership used to facilitate the Company’s financing. Refer to notes 10 and 18. |
|
19 9 |
2021 |
2020 | |||||||||||||||||||||||
As at December 31, |
CMBS | RMBS | ABS | Total | Total | |||||||||||||||||||
| AAA |
$ |
$ |
$ |
$ |
$ | |||||||||||||||||||
| AA |
– |
– |
||||||||||||||||||||||
| A |
||||||||||||||||||||||||
| BBB |
– |
– |
||||||||||||||||||||||
| BB and below |
– |
– |
||||||||||||||||||||||
| Total company exposure |
$ |
$ |
$ |
$ |
$ | |
||||||||||||||||||
For the year ended December 31, 2021 |
MFC (Guarantor) |
MLI consolidated |
Other subsidiaries of MFC on a combined basis |
Consolidation adjustments |
Total consolidated amounts |
MFLP | ||||||||||||||||||||||
| Total revenue |
$ |
$ |
$ |
$ |
( |
$ |
$ |
|||||||||||||||||||||
| Net income (loss) attributed to shareholders and other equity holders |
( |
) |
( |
|||||||||||||||||||||||||
| For the year ended December 31, 2020 | MFC (Guarantor) |
MLI consolidated |
Other subsidiaries of MFC on a combined basis |
Consolidation adjustments |
Total consolidated amounts |
MFLP | ||||||||||||||||||||||
| Total revenue |
$ | $ | |
$ | |
$ | ( |
$ | |
$ | |
|||||||||||||||||
| Net income (loss) attributed to shareholders |
( |
) | ( |
( |
) | |||||||||||||||||||||||
As at December 31, 2021 |
MFC (Guarantor) |
MLI consolidated |
Other subsidiaries of MFC on a combined basis |
Consolidation adjustments |
Total consolidated amounts |
MFLP | ||||||||||||||||||||||
| Invested assets |
$ |
$ |
$ |
$ |
– |
$ |
$ |
|||||||||||||||||||||
| Total other assets |
( |
) |
||||||||||||||||||||||||||
| Segregated funds net assets |
– |
– |
– |
– |
||||||||||||||||||||||||
| Insurance contract liabilities |
– |
– |
– |
– |
||||||||||||||||||||||||
| Investment contract liabilities |
– |
– |
– |
– |
||||||||||||||||||||||||
| Segregated funds net liabilities |
– |
– |
– |
– |
||||||||||||||||||||||||
| Total other liabilities |
– |
( |
) |
|||||||||||||||||||||||||
| As at December 31, 2020 | MFC (Guarantor) |
MLI consolidated |
Other subsidiaries of MFC on a combined basis |
Consolidation adjustments |
Total consolidated amounts |
MFLP | ||||||||||||||||||||||
| Invested assets |
$ | $ | |
$ | |
$ | – | $ | |
$ | |
|||||||||||||||||
| Total other assets |
|
( |
|
|||||||||||||||||||||||||
| Segregated funds net assets |
– | – | – | – | ||||||||||||||||||||||||
| Insurance contract liabilities |
– | – | – | – | ||||||||||||||||||||||||
| Investment contract liabilities |
– | – | – | – | ||||||||||||||||||||||||
| Segregated funds net liabilities |
– | – | – | – | ||||||||||||||||||||||||
| Total other liabilities |
– | ( |
) | |||||||||||||||||||||||||
|
201 |
2021 |
2020 | |||||||||||||||||||
As at December 31, |
Debt securities | Other | Debt securities | Other | ||||||||||||||||
| In respect of: |
||||||||||||||||||||
| Derivatives |
$ |
$ |
$ | |
$ | |||||||||||||||
| Secured borrowings |
– |
– | ||||||||||||||||||
| Regulatory requirements |
||||||||||||||||||||
| Repurchase agreements |
– |
– | ||||||||||||||||||
| Non-registered retirement plans in trust |
– |
– | ||||||||||||||||||
| Other |
||||||||||||||||||||
| Total |
$ |
$ |
$ | $ | |
|||||||||||||||
As at and for the year ended December 31, 2021 |
Asia |
Canada |
U.S. |
Global WAM |
Corporate and Other |
Total |
||||||||||||||||||
| Revenue |
||||||||||||||||||||||||
| Life and health insurance |
$ |
$ |
$ |
$ |
– |
$ |
$ |
|||||||||||||||||
| Annuities and pensions |
– |
– |
||||||||||||||||||||||
| Net premium income |
– |
|||||||||||||||||||||||
| Net investment income (loss) |
||||||||||||||||||||||||
| Other revenue |
( |
) |
||||||||||||||||||||||
| Total revenue |
||||||||||||||||||||||||
| Contract benefits and expenses |
||||||||||||||||||||||||
| Life and health insurance |
– |
|||||||||||||||||||||||
| Annuities and pensions |
( |
) |
( |
) |
– |
( |
) | |||||||||||||||||
| Net benefits and claims |
||||||||||||||||||||||||
| Interest expense |
||||||||||||||||||||||||
| Other expenses |
||||||||||||||||||||||||
| Total contract benefits and expenses |
||||||||||||||||||||||||
| Income (loss) before income taxes |
( |
) |
||||||||||||||||||||||
| Income tax recovery (expense) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||
| Net income (loss) |
( |
) |
||||||||||||||||||||||
| Less net income (loss) attributed to: |
||||||||||||||||||||||||
| Non-controlling interests |
– |
– |
– |
|||||||||||||||||||||
| Participating policyholders |
( |
) |
– |
– |
( |
) | ||||||||||||||||||
| Net income (loss) attributed to shareholders and other equity holders |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||||
| Total assets |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
As at and for the year ended December 31, 2020 |
Asia | Canada | U.S. | Global WAM | Corporate and Other |
Total | ||||||||||||||||||
| Revenue |
||||||||||||||||||||||||
| Life and health insurance |
$ | $ | $ | $ | – | $ | $ | |||||||||||||||||
| Annuities and pensions (1) |
– | – | ||||||||||||||||||||||
| Net premium income |
– | |||||||||||||||||||||||
| Net investment income (loss) |
||||||||||||||||||||||||
| Other revenue |
( |
) | ||||||||||||||||||||||
| Total revenue |
||||||||||||||||||||||||
| Contract benefits and expenses |
||||||||||||||||||||||||
| Life and health insurance |
– | ( |
) | |||||||||||||||||||||
| Annuities and pensions |
– | |||||||||||||||||||||||
| Net benefits and claims |
( |
) | ||||||||||||||||||||||
| Interest expense |
||||||||||||||||||||||||
| Other expenses |
||||||||||||||||||||||||
| Total contract benefits and expenses |
||||||||||||||||||||||||
| Income (loss) before income taxes |
||||||||||||||||||||||||
| Income tax recovery (expense) |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| Net income (loss) |
||||||||||||||||||||||||
| Less net income (loss) attributed to: |
||||||||||||||||||||||||
| Non-controlling interests |
– | – | – | – | ||||||||||||||||||||
| Participating policyholders |
( |
) | – | – | – | ( |
) | |||||||||||||||||
| Net income (loss) attributed to shareholders |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Total assets |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||||
(1) |
In 2020, the Company ceded premiums to Global Atlantic Financial Group Ltd to reinsure a block of legacy U.S. BOLI business. Refer to note 6(k) for details. |
|
203 |
For the year ended December 31, 2021 |
Asia | Canada | U.S. | Other | Total | |||||||||||||||
| Revenue |
||||||||||||||||||||
| Life and health insurance |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
| Annuities and pensions |
– |
|||||||||||||||||||
| Net premium income |
||||||||||||||||||||
| Net investment income (loss) |
||||||||||||||||||||
| Other revenue |
( |
) |
||||||||||||||||||
| Total revenue |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
| For the year ended December 31, 2020 | Asia | Canada | U.S. | Other | Total | |||||||||||||||
| Revenue |
||||||||||||||||||||
| Life and health insurance |
$ | $ | $ | $ | $ | |||||||||||||||
| Annuities and pensions (1) |
– | |||||||||||||||||||
| Net premium income |
||||||||||||||||||||
| Net investment income (loss) |
||||||||||||||||||||
| Other revenue |
||||||||||||||||||||
| Total revenue |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||
(1) |
In 2020, the Company ceded premiums to Global Atlantic Financial Group Ltd to reinsure a block of legacy U.S. BOLI business. Refer to note 6(k) for details. |
For the years ended December 31, |
2021 |
2020 | ||||||
| Short-term employee benefits |
$ |
$ | ||||||
| Post-employment benefits |
||||||||
| Share-based payments |
||||||||
| Termination benefits |
– | |||||||
| Other long-term benefits |
||||||||
| Total |
$ |
$ | |
|||||
| As at December 31, 2021 (100% owned unless otherwise noted in brackets beside company name) |
Equity Interest |
Address | Description | |||
| |
$ |
|||||
| |
$ |
|||||
| |
||||||
| |
||||||
| |
| As at December 31, 2021 ( |
Equity Interest |
Address | Description | |||
| |
||||||
| |
||||||
| |
||||||
| |
||||||
| |
||||||
| |
||||||
| |
||||||
| |
||||||
| |
open-end mutual funds | |||||
| |
||||||
| |
||||||
| |
||||||
| |
||||||
| |
||||||
| |
$ |
|||||
| |
$ |
|||||
| |
||||||
| |
$ |
|||||
| |
$ |
|||||
| |
$ |
|||||
| |
||||||
| |
||||||
| |
||||||
| |
||||||
| |
||||||
| |
||||||
| |
||||||
| |
||||||
| |
||||||
| |
||||||
| |
||||||
| |
||||||
| |
||||||
| |
|
205 |
| As at December 31, 2021 (100% owned unless otherwise noted in brackets beside company name) |
Equity Interest |
Address | Description | |||
| |
||||||
| |
||||||
| |
||||||
| |
||||||
| |
||||||
| |
||||||
| |
||||||
| |
||||||
| |
||||||
| |
||||||
| |
$ |
|||||
| |
$ |
|||||
| |
$ |
|||||
| |
$ |
|||||
| |
||||||
| |
$ |
|||||
| |
$ |
| Ranges in per cent | ||||||||
Type of fund |
2021 |
2020 | ||||||
| Money market funds |
||||||||
| Fixed income funds |
||||||||
| Balanced funds |
||||||||
| Equity funds |
||||||||
As at December 31, |
2021 |
2020 | ||||||
| Investments at market value |
||||||||
| Cash and short-term securities |
$ |
$ | ||||||
| Debt securities |
||||||||
| Equities |
||||||||
| Mutual funds |
||||||||
| Other investments |
||||||||
| Accrued investment income |
||||||||
| Other assets and liabilities, net |
( |
) |
( |
) | ||||
| Total segregated funds net assets |
$ |
$ | ||||||
| Composition of segregated funds net assets |
||||||||
| Held by policyholders |
$ |
$ | ||||||
| Held by the Company |
||||||||
| Total segregated funds net assets |
$ |
$ | |
|||||
For the years ended December 31, |
2021 |
2020 | ||||||
| Net policyholder cash flow |
||||||||
| Deposits from policyholders |
$ |
$ | ||||||
| Net transfers to general fund |
( |
) |
( |
) | ||||
| Payments to policyholders |
( |
) |
( |
) | ||||
( |
) |
( |
) | |||||
| Investment related |
||||||||
| Interest and dividends |
||||||||
| Net realized and unrealized investment gains (losses) |
||||||||
| Other |
||||||||
| Management and administration fees |
( |
) |
( |
) | ||||
| Impact of changes in foreign exchange rates |
( |
) |
( |
) | ||||
( |
) |
( |
) | |||||
| Net additions (deductions) |
||||||||
| Segregated funds net assets, beginning of year |
||||||||
| Segregated funds net assets, end of year |
$ |
$ | |
|||||
|
20 7 |
As at December 31, 2021 |
MFC (Guarantor) |
JHUSA (Issuer) |
Other subsidiaries |
Consolidation adjustments |
Consolidated MFC |
|||||||||||||||
| Assets |
||||||||||||||||||||
| Invested assets |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||
| Investments in unconsolidated subsidiaries |
( |
) |
– |
|||||||||||||||||
| Reinsurance assets |
– |
( |
) |
|||||||||||||||||
| Other assets |
( |
) |
||||||||||||||||||
| Segregated funds net assets |
– |
( |
) |
|||||||||||||||||
| Total assets |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||
| Liabilities and equity |
||||||||||||||||||||
| Insurance contract liabilities |
$ |
– |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||
| Investment contract liabilities |
– |
– |
||||||||||||||||||
| Other liabilities |
( |
) |
||||||||||||||||||
| Long-term debt |
– |
– |
– |
|||||||||||||||||
| Capital instruments |
– |
|||||||||||||||||||
| Segregated funds net liabilities |
– |
( |
) |
|||||||||||||||||
| Shareholders’ and other equity holders’ equity |
( |
) |
||||||||||||||||||
| Participating policyholders’ equity |
– |
– |
( |
) |
– |
( |
) | |||||||||||||
| Non-controlling interests |
– |
– |
– |
|||||||||||||||||
| Total liabilities and equity |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||
| As at December 31, 2020 | MFC (Guarantor) |
JHUSA (Issuer) |
Other subsidiaries |
Consolidation adjustments |
Consolidated MFC |
|||||||||||||||
| Assets |
||||||||||||||||||||
| Invested assets |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||
| Investments in unconsolidated subsidiaries |
( |
) | – | |||||||||||||||||
| Reinsurance assets |
– | ( |
) | |||||||||||||||||
| Other assets |
( |
) | ||||||||||||||||||
| Segregated funds net assets |
– | ( |
) | |||||||||||||||||
| Total assets |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||
| Liabilities and equity |
||||||||||||||||||||
| Insurance contract liabilities |
$ | – | $ | $ | $ | ( |
) | $ | ||||||||||||
| Investment contract liabilities |
– | ( |
) | |||||||||||||||||
| Other liabilities |
( |
) | ||||||||||||||||||
| Long-term debt |
– | – | – | |||||||||||||||||
| Capital instruments |
– | |||||||||||||||||||
| Segregated funds net liabilities |
– | ( |
) | |||||||||||||||||
| Shareholders’ equity |
( |
) | ||||||||||||||||||
| Participating policyholders’ equity |
– | – | ( |
) | – | ( |
) | |||||||||||||
| Non-controlling interests |
– | – | – | |||||||||||||||||
| Total liabilities and equity |
$ | |
$ | |
$ | |
$ | ( |
) | $ | |
|||||||||
|
20 9 |
For the year ended December 31, 2021 |
MFC (Guarantor) |
JHUSA (Issuer) |
Other subsidiaries |
Consolidation adjustments |
Consolidated MFC |
|||||||||||||||
| Revenue |
||||||||||||||||||||
| Gross premiums |
$ |
– |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||
| Premiums ceded to reinsurers |
– |
( |
) |
( |
) |
( |
) | |||||||||||||
| Net premium income |
– |
( |
) |
|||||||||||||||||
| Net investment income (loss) |
( |
) |
||||||||||||||||||
| Other revenue |
( |
) |
||||||||||||||||||
| Total revenue |
( |
) |
||||||||||||||||||
| Contract benefits and expenses |
||||||||||||||||||||
| Net benefits and claims |
– |
|||||||||||||||||||
| Commissions, investment and general expenses |
( |
) |
||||||||||||||||||
| Other expenses |
( |
) |
||||||||||||||||||
| Total contract benefits and expenses |
( |
) |
||||||||||||||||||
| Income (loss) before income taxes |
– |
|||||||||||||||||||
| Income tax (expense) recovery |
( |
) |
( |
) |
– |
( |
) | |||||||||||||
| Income (loss) after income taxes |
– |
|||||||||||||||||||
| Equity in net income (loss) of unconsolidated subsidiaries |
( |
) |
– |
|||||||||||||||||
| Net income (loss) |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||
| Net income (loss) attributed to: |
||||||||||||||||||||
| Non-controlling interests |
$ |
– |
$ |
– |
$ |
$ |
– |
$ |
||||||||||||
| Participating policyholders |
– |
( |
) |
( |
) |
( |
) | |||||||||||||
| Shareholders and other equity holders |
( |
) |
||||||||||||||||||
$ |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||
| For the year ended December 31, 2020 | MFC (Guarantor) |
JHUSA (Issuer) |
Other subsidiaries |
Consolidation adjustments |
Consolidated MFC |
|||||||||||||||
| Revenue |
||||||||||||||||||||
| Gross premiums |
$ | – | $ | $ | $ | ( |
) | $ | |
|||||||||||
| Premiums ceded to reinsurers |
– | ( |
) | ( |
) | ( |
) | |||||||||||||
| Net premium income |
– | – | ||||||||||||||||||
| Net investment income (loss) |
( |
) | ||||||||||||||||||
| Other revenue |
( |
) | ||||||||||||||||||
| Total revenue |
|
|
( |
) | ||||||||||||||||
| Contract benefits and expenses |
||||||||||||||||||||
| Net benefits and claims |
– | ( |
) | |||||||||||||||||
| Commissions, investment and general expenses |
( |
) | ||||||||||||||||||
| Other expenses |
( |
) | ||||||||||||||||||
| Total contract benefits and expenses |
( |
) | |
|||||||||||||||||
| Income (loss) before income taxes |
– | |||||||||||||||||||
| Income tax (expense) recovery |
( |
) | ( |
) | – | ( |
) | |||||||||||||
| Income (loss) after income taxes |
– | |||||||||||||||||||
| Equity in net income (loss) of unconsolidated subsidiaries |
( |
) | – | |||||||||||||||||
| Net income (loss) |
$ | |
$ | $ | $ | ( |
) | $ | ||||||||||||
| Net income (loss) attributed to: |
||||||||||||||||||||
| Non-controlling interests |
$ | – | $ | – | $ | $ | – | $ | ||||||||||||
| Participating policyholders |
– | – | ( |
) | – | ( |
) | |||||||||||||
| Shareholders |
( |
) | ||||||||||||||||||
| $ | $ | $ | $ | ( |
) | $ | ||||||||||||||
For the year ended December 31, 2021 |
MFC (Guarantor) |
JHUSA (Issuer) |
Other subsidiaries |
Consolidation adjustments |
Consolidated MFC |
|||||||||||||||
| Operating activities |
||||||||||||||||||||
| Net income (loss) |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||
| Adjustments: |
||||||||||||||||||||
| Equity in net income of unconsolidated subsidiaries |
( |
) |
( |
) |
( |
) |
– |
|||||||||||||
| Increase (decrease) in insurance contract liabilities |
– |
( |
) |
– |
||||||||||||||||
| Increase (decrease) in investment contract liabilities |
– |
( |
) |
– |
||||||||||||||||
| (Increase) decrease in reinsurance assets excluding coinsurance transactions |
– |
( |
) |
– |
||||||||||||||||
| Amortization of (premium) discount on invested assets |
– |
– |
||||||||||||||||||
| Other amortization |
– |
|||||||||||||||||||
| Net realized and unrealized (gains) losses and impairment on assets |
– |
|||||||||||||||||||
| Deferred income tax expense (recovery) |
( |
) |
– |
( |
) | |||||||||||||||
| Stock option expense |
– |
( |
) |
– |
||||||||||||||||
| Cash provided by (used in) operating activities before undernoted items |
– |
|||||||||||||||||||
| Dividends from unconsolidated subsidiary |
( |
) |
– |
|||||||||||||||||
| Changes in policy related and operating receivables and payables |
( |
) |
( |
) |
– |
( |
) | |||||||||||||
| Cash provided by (used in) operating activities |
( |
) |
||||||||||||||||||
| Investing activities |
||||||||||||||||||||
| Purchases and mortgage advances |
– |
( |
) |
( |
) |
– |
( |
) | ||||||||||||
| Disposals and repayments |
– |
– |
||||||||||||||||||
| Changes in investment broker net receivables and payables |
– |
( |
) |
– |
( |
) | ||||||||||||||
| Investment in common shares of subsidiaries |
( |
) |
– |
– |
– |
|||||||||||||||
| Net cash flows from acquisition and disposal of subsidiaries and businesses |
– |
– |
( |
) |
– |
( |
) | |||||||||||||
| Capital contribution to unconsolidated subsidiaries |
– |
( |
) |
– |
– |
|||||||||||||||
| Return of capital from unconsolidated subsidiaries |
– |
– |
( |
) |
– |
|||||||||||||||
| Notes receivable from parent |
– |
– |
( |
) |
– |
|||||||||||||||
| Notes receivable from subsidiaries |
( |
) |
– |
– |
– |
|||||||||||||||
| Cash provided by (used in) investing activities |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
| Financing activities |
||||||||||||||||||||
| Redemption of long-term debt |
( |
) |
– |
– |
– |
( |
) | |||||||||||||
| Redemption of capital instruments |
( |
) |
– |
( |
) |
– |
( |
) | ||||||||||||
| Secured borrowings |
– |
– |
– |
|||||||||||||||||
| Change in repurchase agreements and securities sold but not yet purchased |
– |
– |
– |
|||||||||||||||||
| Changes in deposits from Bank clients, net |
– |
– |
( |
) |
– |
( |
) | |||||||||||||
| Lease payments |
– |
( |
) |
( |
) |
– |
( |
) | ||||||||||||
| Shareholders’ dividends and other equity distributions |
( |
) |
– |
– |
– |
( |
) | |||||||||||||
| Common shares issued, net |
– |
( |
) |
|||||||||||||||||
| Preferred shares and other equity issued, net |
– |
– |
– |
|||||||||||||||||
| Preferred shares redeemed, net |
( |
) |
– |
– |
– |
( |
) | |||||||||||||
| Contributions from (distributions to) non-controlling interests, net |
– |
– |
( |
) |
– |
( |
) | |||||||||||||
| Dividends paid to parent |
– |
( |
) |
( |
) |
– |
||||||||||||||
| Capital contributions by parent |
– |
– |
( |
) |
– |
|||||||||||||||
| Return of capital to parent |
– |
– |
( |
) |
– |
|||||||||||||||
| Notes payable to parent |
– |
– |
( |
) |
– |
|||||||||||||||
| Notes payable to subsidiaries |
– |
– |
( |
) |
– |
|||||||||||||||
| Cash provided by (used in) financing activities |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
| Cash and short-term securities |
||||||||||||||||||||
| Increase (decrease) during the year |
( |
) |
( |
) |
– |
( |
) | |||||||||||||
| Effect of foreign exchange rate changes on cash and short-term securities |
– |
( |
) |
( |
) |
– |
( |
) | ||||||||||||
| Balance, beginning of year |
– |
|||||||||||||||||||
| Balance, end of year |
– |
|||||||||||||||||||
| Cash and short-term securities |
||||||||||||||||||||
| Beginning of year |
||||||||||||||||||||
| Gross cash and short-term securities |
– |
|||||||||||||||||||
| Net payments in transit, included in other liabilities |
– |
( |
) |
( |
) |
– |
( |
) | ||||||||||||
| Net cash and short-term securities, beginning of year |
– |
|||||||||||||||||||
| End of year |
||||||||||||||||||||
| Gross cash and short-term securities |
– |
|||||||||||||||||||
| Net payments in transit, included in other liabilities |
– |
( |
) |
( |
) |
– |
( |
) | ||||||||||||
| Net cash and short-term securities, end of year |
$ |
$ |
$ |
$ |
– |
$ |
||||||||||||||
| Supplemental disclosures on cash flow information: |
||||||||||||||||||||
| Interest received |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||
| Interest paid |
( |
) |
||||||||||||||||||
| Income taxes paid (refund) |
– |
( |
) |
– |
||||||||||||||||
|
2 11 |
| For the year ended December 31, 2020 | MFC (Guarantor) |
JHUSA (Issuer) |
Other subsidiaries |
Consolidation adjustments |
Consolidated MFC |
|||||||||||||||
| Operating activities |
||||||||||||||||||||
| Net income (loss) |
$ | |
$ | |
$ | |
$ | ( |
) | $ | |
|||||||||
| Adjustments: |
||||||||||||||||||||
| Equity in net income of unconsolidated subsidiaries |
( |
) | ( |
) | ( |
) | |
– | ||||||||||||
| Increase (decrease) in insurance contract liabilities |
– | – | ||||||||||||||||||
| Increase (decrease) in investment contract liabilities |
– | – | ||||||||||||||||||
| (Increase) decrease in reinsurance assets excluding coinsurance transactions |
– | ( |
) | – | ( |
) | ||||||||||||||
| Amortization of (premium) discount on invested assets |
– | – | ||||||||||||||||||
| Other amortization |
– | |||||||||||||||||||
| Net realized and unrealized (gains) losses and impairment on assets |
( |
) | ( |
) | – | ( |
) | |||||||||||||
| Deferred income tax expense (recovery) |
( |
) | – | |||||||||||||||||
| Stock option expense |
– | – | ||||||||||||||||||
| Cash provided by (used in) operating activities before undernoted items |
( |
) | – | |||||||||||||||||
| Dividends from unconsolidated subsidiary |
( |
) | – | |||||||||||||||||
| Changes in policy related and operating receivables and payables |
( |
) | – | |||||||||||||||||
| Cash provided by (used in) operating activities |
( |
) | ||||||||||||||||||
| Investing activities |
||||||||||||||||||||
| Purchases and mortgage advances |
– | ( |
) | ( |
) | – | ( |
|||||||||||||
| Disposals and repayments |
– | – | ||||||||||||||||||
| Changes in investment broker net receivables and payables |
– | ( |
) | ( |
) | – | ( |
) | ||||||||||||
| Investment in common shares of subsidiaries |
( |
) | – | – | – | |||||||||||||||
| Capital contribution to unconsolidated subsidiaries |
– | ( |
) | – | – | |||||||||||||||
| Return of capital from unconsolidated subsidiaries |
– | – | ( |
) | – | |||||||||||||||
| Notes receivable from parent |
– | – | ( |
) | – | |||||||||||||||
| Notes receivable from subsidiaries |
– | – | ( |
) | – | |||||||||||||||
| Cash provided by (used in) investing activities |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| Financing activities |
||||||||||||||||||||
| Issue of long-term debt, net |
– | – | – | |||||||||||||||||
| Redemption of long-term debt |
( |
) | – | – | – | ( |
) | |||||||||||||
| Issue of capital instruments, net |
– | – | – | |||||||||||||||||
| Redemption of capital instruments |
– | – | ( |
) | – | ( |
) | |||||||||||||
| Secured borrowings |
– | – | ||||||||||||||||||
| Change in repurchase agreements and securities sold but not yet purchased |
– | – | – | |||||||||||||||||
| Changes in deposits from Bank clients, net |
– | – | ( |
) | – | ( |
) | |||||||||||||
| Lease payments |
– | ( |
) | ( |
) | – | ( |
) | ||||||||||||
| Shareholders’ dividends paid in cash |
( |
) | – | – | – | ( |
) | |||||||||||||
| Contributions from (distributions to) non-controlling interests, net |
– | – | ( |
) | – | ( |
) | |||||||||||||
| Common shares repurchased |
( |
) | – | – | – | ( |
) | |||||||||||||
| Common shares issued, net |
– | ( |
) | |||||||||||||||||
| Dividends paid to parent |
– | ( |
) | ( |
) | – | ||||||||||||||
| Capital contributions by parent |
– | – | ( |
) | – | |||||||||||||||
| Return of capital to parent |
– | – | ( |
) | – | |||||||||||||||
| Notes payable to parent |
– | – | ( |
) | – | |||||||||||||||
| Notes payable to subsidiaries |
( |
) | – | – | – | |||||||||||||||
| Cash provided by (used in) financing activities |
( |
) | ( |
) | ( |
) | ||||||||||||||
| Cash and short-term securities |
||||||||||||||||||||
| Increase (decrease) during the year |
( |
) | – | |||||||||||||||||
| Effect of foreign exchange rate changes on cash and short-term securities |
( |
) | ( |
) | – | ( |
) | |||||||||||||
| Balance, beginning of year |
– | |||||||||||||||||||
| Balance, end of year |
– | |||||||||||||||||||
| Cash and short-term securities |
||||||||||||||||||||
| Beginning of year |
||||||||||||||||||||
| Gross cash and short-term securities |
– | |||||||||||||||||||
| Net payments in transit, included in other liabilities |
– | ( |
) | ( |
) | – | ( |
) | ||||||||||||
| Net cash and short-term securities, beginning of year |
– | |||||||||||||||||||
| End of year |
||||||||||||||||||||
| Gross cash and short-term securities |
– | |||||||||||||||||||
| Net payments in transit, included in other liabilities |
– | ( |
) | ( |
) | – | ( |
) | ||||||||||||
| Net cash and short-term securities, end of year |
$ | $ | $ | $ | – | $ | ||||||||||||||
| Supplemental disclosures on cash flow information: |
||||||||||||||||||||
| Interest received |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||
| Interest paid |
( |
) | ||||||||||||||||||
| Income taxes paid (refund) |
( |
) | – | |||||||||||||||||
|
2 13 |
