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Manulife reports strong 2021 results with record net income of $7.1 billion and core earnings of $6.5 billion, with double-digit growth in APE sales and new business value; Global Wealth and Asset Management net inflows tripled to $27.9 billion

Today, Manulife announced its 2021 and fourth quarter of 2021 (“4Q21”) results. Key highlights include:

◾	Net income attributed to shareholders of $7.1 billion in 2021, up $1.2 billion from 2020, and $2.1 billion in 4Q21, up $304 million from the fourth quarter of 2020 (“4Q20”)

◾	Core earnings1 of $6.5 billion in 2021, up 26% on a constant exchange rate basis from 2020, and $1.7 billion in 4Q21, up 20% on a constant exchange rate basis from 4Q202

◾	Strong LICAT ratio3 of 142%

◾	Core ROE4 of 13.0% in 2021 and 12.7% in 4Q21, and ROE of 14.2% in 2021 and 15.6% in 4Q21

◾	NBV5 of $2.2 billion in 2021, up 31%6 from 2020, and $555 million in 4Q21, up 17% from 4Q20

◾	APE sales5 of $6.1 billion in 2021, up 13% from 2020, and $1.4 billion in 4Q21, up 5% from 4Q20

◾

Global Wealth and Asset Management (“Global WAM”) net inflows5 of $27.9 billion in 2021 compared with net inflows of $8.9 billion in 2020 and net inflows of $8.1 billion in 4Q21 compared with net inflows of $2.8 billion in 4Q20. A record year for our retail wealth business with net inflows of $29.2 billion

◾	Global WAM average AUMA5 increased by 20% in 2021

◾	Remittances5 were $4.4 billion in 2021 compared with $1.6 billion in 2020, an increase of $2.8 billion

◾	Quarterly common share dividend increased by 18% in 4Q21

◾	Launched a Normal Course Issuer Bid (“NCIB”) that permits repurchase of up to 5% of outstanding common shares

“Our ability to adapt and serve clients across the globe who are navigating a very uncertain environment continues to drive our operating results with record net income of $7.1 billion and core earnings of $6.5 billion in 2021 driven by our insurance businesses delivering double-digit growth in APE sales and NBV and Global WAM delivering strong net inflows of $27.9 billion,” said Manulife President & Chief Executive Officer Roy Gori.

“I am incredibly proud of the way our colleagues around the world have continued to make decisions easier and lives better for our customers. We are delivering on our strategic priorities, enhancing our organizational culture and ESG capabilities, and achieving top quartile employee engagement scores,” Mr. Gori continued. “We are scaling our business to grow across the diverse markets in Asia and in 2021 commenced a 16-year bancassurance partnership with VietinBank, one of the largest financial institutions in Vietnam, that enables a full suite of insurance, wealth and retirement solutions to be made available to customers in Vietnam. We also continued to make significant progress on our portfolio optimization commitments, as evidenced by the announcement of our U.S. variable annuity reinsurance transaction with Venerable Holdings Inc., which closed in early February.”

“We are pleased to have delivered strong financial performance in 2021 including Core ROE of 13% and ROE of 14.2%,” said Phil Witherington, Chief Financial Officer. “We progressed our capital deployment priorities by investing in our highest potential businesses, including an exclusive bancassurance transaction in Vietnam, and a common share dividend increase of 18%. We will also be buying back shares in 2022 to generate shareholder value and to neutralize the dilution impact on core EPS from the highly successful U.S. VA transaction. In addition, remittances increased by $2.8 billion to total $4.4 billion in 2021 with positive contributions across geographies including Asia, the U.S. and Canada,” Mr. Witherington continued.

“We take pride in our products and services, such as insurance protection, well-being offerings, and retirement and wealth management solutions, which positions us well to continue helping our customers live better, happier and healthier lives,” said Mr. Gori.

2021 BUSINESS HIGHLIGHTS:

In Asia, we continued to grow the scale of our business across the diverse markets in Asia.

•	We completed the acquisition of Aviva Vietnam, along with the beginning of a 16-year bancassurance partnership with VietinBank that enables a full suite of insurance, wealth and retirement solutions to be made available to VietinBank customers.

•	We increased the number of contracted agents to over 117,000 and our number of Million Dollar Round Table agents grew by 64% compared with 2020.

•	We continued to expand the reach of our agency force in China with the opening of our newest branch in Shaanxi province. We now operate in 52 cities across 15 provinces, providing access to over 60% of China’s population and which represents over 70% of GDP.

In Canada, we continued to offer a differentiated customer experience through our products.

•	We introduced Personalized Medicine, which provides access to advanced pharmacogenetics to help group benefit members and their health team find the most effective medication for their condition.

•	We expanded our Manulife Vitality program to reward customers who received their COVID-19 vaccine.

•	We launched the Manulife Vitality HealthyMind reward program to help our individual insurance customers improve their mental and emotional wellbeing.

In the U.S., we continued to execute on our portfolio optimization and made gains in behavioural insurance.

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We entered into an agreement to reinsure over 75% of the legacy variable annuity block, consisting primarily of policies with guaranteed minimum withdrawal benefits riders. The transaction, which closed on February 1, 2022, is estimated to release approximately $2.0 billion of additional capital reflecting approximately $1.3 billion of net LICAT required capital, and a one-time after-tax gain of approximately $750 million to net income attributed to shareholders.1

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We experienced sales momentum with sales ahead of the prior year in almost every major category and reported record sales in our international business. We achieved record full year sales of US$295 million, an increase of 34% compared with 2020, from products with the John Hancock Vitality PLUS feature. We believe our John Hancock Vitality feature is proving to be the right solution for these times as there is a heightened awareness around wellbeing highlighted by COVID-19.

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We also launched a preferred partnership with Allstate, which provides insurance to approximately 15 million customers, to be one of three carrier partners for its more than 11,000 agents and 1,000 life specialists. In time we expect this relationship, enabled by our digital submission capabilities, will drive significant life insurance sales.1

In Global WAM, we continued to diversify our offerings.

•

We expanded our sustainable investing products with the launch of investment strategies in Sustainable Asia Bond, Global Climate, and ESG Asian Multi-Asset Income. Additionally, Manulife Investment Management was accepted as a signatory to the UK Stewardship Code, which is recognized globally as a best practice benchmark in investment stewardship. Nearly 200 asset managers, pension funds and others applied but only 123 were accepted after a rigorous review by the Financial Reporting Council2.

•	We also secured an Alternative Investment Fund Managers ("AIFM") license to offer European Union (“EU”) private market funds in our key European markets, positioning us to drive the expansion and offering of our private market investment capabilities within the EU.

•	We expanded our retail product line-up beyond traditional mutual funds with new actively managed Exchange Traded Funds in both Canada and the U.S. and we furthered Separately Managed Accounts offerings in the U.S., with each category generating over $1 billion in net inflows in 2021.

Additionally, we continued to enhance our digital capabilities and rolled out numerous initiatives to advance our strategy to become a digital, customer leader.

•	In Asia, ePOS, our digital onboarding app, is enabling our agents with faster, error-free submissions with 82% of applications digitally submitted, representing a 22% year over year increase. 79% of submitted cases are auto-underwritten.

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In the U.S., we completed the iPipeline integration with the JH brokerage eApp. This integration provides 66% of our regular distribution partners with access to next-generation sales tools and decreases the overall cycle time for applications submitted via this preferred channel by 49% year over year. It also enabled access to over 250 firms, including a new partnership with Allstate and its more than 11,000 agents.

•	Aided by the above initiatives, overall new business applications submitted digitally increased by 15 percentage points in 2021 to 71%.

•

In Canada, we became the first Canadian company to use artificial intelligence (“AI”) in underwriting mortgage creditor insurance in our individual insurance business. Since its introduction, one-third of our applications have been approved using AI, resulting in auto adjudication of more than $1 billion of face amount in 2021.

•	In Global WAM, Asia Retail’s online investment platform, Manulife iFUNDS continued to show strong momentum in 2021 compared with 2020, with a 39% increase in gross flows3, a 29% increase in new accounts opened, and a 198% increase in monthly investment plans.

•

In U.S. Retirement, 88% of plan enrollees adopted our new digital express enrollment capability, that delivers a simple, fast and seamless way to enroll in their plan and benefit from access to personalized guidance. This resulted in an 11% increase in participation and six times the managed accounts conversion rate when compared to the previous enrollment process.

FINANCIAL HIGHLIGHTS:

(1)	This item is a non-GAAP ratio.

(2)	This item is a non-GAAP financial measure.

PROFITABILITY:

Reported net income attributed to shareholders of $7.1 billion in 2021, up $1.2 billion from 2020, and $2.1 billion in 4Q21, up $304 million from 4Q20

The $1.2 billion increase in net income attributed to shareholders in 2021 was driven by gains from investment-related experience (compared with losses in the prior year) and growth in core earnings. Investment-related experience gains reflected higher-than-expected returns (including fair value changes) on alternative long duration assets (“ALDA”) primarily driven by gains on private equity and infrastructure, strong credit experience and the favourable impact of fixed income reinvestment activities. Partially offsetting the gains was a net charge from the direct impacts of markets (compared with gains in the prior year). The net charge was primarily driven by a $532 million charge relating to the impact of updated ultimate reinvestment rate assumptions issued by the Canadian Actuarial Standards Board.

The $304 million increase in net income attributed to shareholders in 4Q21 compared with the prior year quarter was driven by growth in core earnings and gains from fixed income reinvestment rates assumed in the valuation of policy liabilities, a component of the direct impact of markets, compared with losses in the prior year quarter. Fixed income reinvestment rate gains were driven by the flattening of the yield curve in Canada and the U.S. and, to a lesser extent, widening corporate spreads in the U.S. These items were partially offset by lower investment-related experience gains in 4Q21. Investment-related experience in 4Q21 reflected higher-than-expected returns

(including fair value changes) on ALDA primarily driven by gains on private equity and infrastructure as well as strong credit experience, partially offset by the unfavourable impact of the acquisition of treasuries, which is a component of fixed income reinvestment activities.

Delivered core earnings of $6.5 billion in 2021, an increase of 26% compared with 2020, and $1.7 billion in 4Q21, an increase of 20% compared with 4Q20

The increase in core earnings in 2021 compared with 2020 was driven by the recognition of core investment gains¹ in 2021 (compared with nil core investment gains in 2020), higher new business gains in all segments, higher net fee income from higher average AUMA in Global WAM, which benefitted from the favourable impact of markets and net inflows, higher investment income in Corporate and Other which benefitted from higher net gains from available-for-sale equities and seed money investments in 2021, and in-force business growth in all segments. These items were partially offset by unfavourable policyholder experience and a charge in our Property and Casualty Reinsurance business for losses related to Hurricane Ida and the European floods.

The increase in core earnings in 4Q21 compared with 4Q20 was driven by the recognition of core investment gains in 2021 (compared with nil core investment gains in the prior year quarter), higher net fee income from higher average AUMA in Global WAM, which benefitted from the favourable impact of markets and net inflows, higher new business gains in the U.S. and Canada, and a decrease in Corporate and Other core losses which benefitted from a lower cost of debt and higher investment income partially offset by lower net gains on seed money investments in new segregated and mutual funds, and in-force business growth in Asia and Canada. These items were partially offset by unfavourable policyholder experience.

BUSINESS PERFORMANCE:

New business value (“NBV”) of $2.2 billion in 2021, an increase of 31% compared with 2020, and $555 million in 4Q21, an increase of 17% compared with 4Q20

NBV was $2.2 billion in 2021, an increase of 31% compared with 2020. In Asia, NBV of $1.7 billion increased 27% driven by higher sales volumes in Hong Kong, Singapore, mainland China, Vietnam and Other Emerging Markets², favourable product mix in Singapore and Vietnam and favourable interest rates and product management actions in Hong Kong; partially offset by a decline in Japan due to lower sales. In Canada, NBV of $307 million was up 20% from 2020, primarily due to higher margins in annuities and individual insurance. In the U.S., NBV of $270 million was up 80% primarily driven by higher sales volumes and improved margins, notably due to higher international sales.

NBV was $555 million in 4Q21, an increase of 17% compared with 4Q20. In Asia, NBV increased 11% to $391 million, reflecting higher sales volumes, favourable interest rates and expense management in Hong Kong, and favourable product mix in Asia Other³, partially offset by lower sales in Japan and lower Critical Illness sales in mainland China. In Canada, NBV of $82 million was up 26% from 4Q20, primarily due to higher margins in annuities and higher volumes in individual insurance. In the U.S., NBV of $82 million was up 51% from 4Q20, primarily driven by higher sales volumes and favourable product mix, notably due to higher international sales.

Annualized premium equivalent (“APE”) sales of $6.1 billion in 2021, an increase of 13% compared with 2020, and $1.4 billion in 4Q21, an increase of 5% compared with 4Q20

APE sales were $6.1 billion in 2021, an increase of 13% compared with 2020. In Asia, there continued to be varying degrees of adverse impacts on select markets across the region related to COVID-19. Asia APE sales increased 11% primarily as a result of strong APE sales in Hong Kong, Singapore, mainland China and Other Emerging Markets, partially offset by a decline in APE sales in Japan resulting from lower corporate-owned life insurance (“COLI”) product sales. In Hong Kong, APE sales increased 10%, reflecting strong growth in our bank channel, demand from mainland Chinese visitors through our Macau branch, and an expanded agency force. Singapore APE sales increased 51%, reflecting double-digit growth across agency, bank and broker channels. China APE sales increased 12%, primarily reflecting growth in our bank channel. Vietnam APE sales increased 7%, reflecting growth in agency and bank channels, partially offset by the impact of COVID-19 containment measures during the second half of the year. In Other Emerging Markets, APE sales increased 17%, despite the impact of COVID-19 containment measures in 2021. Japan APE sales decreased 26%, driven by lower COLI product sales. In Canada, APE sales increased 7% primarily driven by increased customer demand for our lower risk segregated fund products and higher individual insurance sales in participating products, partially offset by variability in the large-case group insurance market. In the U.S., APE sales increased 38%, due to strong international sales, which is reported as a part of the U.S. segment results, and our differentiated domestic product offerings which include the John Hancock Vitality feature and higher customer demand for insurance protection in the current COVID-19 environment of greater consumer interest in improving baseline health. APE sales of products with the John Hancock Vitality PLUS feature in 2021 increased 34% compared with the prior year.

APE sales were $1.4 billion in 4Q21, an increase of 5% compared with 4Q20. In Asia, APE sales decreased 6% as growth in Hong Kong was more than offset by lower COLI product sales in Japan. In Hong Kong, APE sales increased 11% despite the dampening effect of COVID-19 containment measures constraining cross-border travel between Hong Kong and mainland China, reflecting strong growth in our bank channel, and demand from mainland Chinese visitors through our Macau branch. Asia Other APE sales were in-line with 4Q20, as higher sales in bancassurance were offset by lower agency sales, which were adversely impacted by COVID-19 containment measures in markets such as Vietnam and the Philippines. In Japan, APE sales declined 44%, primarily due to a decrease in COLI product sales. In Canada, APE sales increased 20%, primarily driven by increased customer demand for our lower risk segregated fund products and higher individual insurance sales. In the U.S., APE sales increased 41%, due to strong international sales, which is reported as a part of the U.S. segment results, and our differentiated domestic product offerings which include the John Hancock Vitality feature and higher customer demand for insurance protection in the current COVID-19 environment of greater consumer interest in improving baseline health.

Reported Global Wealth and Asset Management net inflows of $27.9 billion in 2021, compared with 2020 net inflows of $8.9 billion, and net inflows of $8.1 billion in 4Q21 compared with net inflows of $2.8 billion in 4Q20

Net inflows were $27.9 billion in 2021, compared with net inflows of $8.9 billion in 2020. Net inflows in Retail were $29.2 billion compared with net inflows of $3.5 billion in the prior year, driven by double-digit growth in gross flows across all geographies amid increased investor demand and lower mutual fund redemption rates. Net outflows in Institutional Asset Management were $2.4 billion compared with net inflows of $3.8 billion in the prior year, driven by a $9.4 billion redemption in Asia in the first quarter of 2021, and the non-recurrence of a $6.9 billion sale in Canada in 2020. This was partially offset by the non-recurrence of a $5.0 billion redemption in Europe in 2020, lower redemptions in Asia and the U.S., and higher sales of infrastructure, timberland and real estate mandates. Net inflows in Retirement were $1.1 billion compared with net inflows of $1.6 billion in the prior year, reflecting the non-recurrence of a large-case plan sale in 2020 and higher member redemptions, partially offset by growth in member contributions.

Net inflows were $8.1 billion in 4Q21, compared with net inflows of $2.8 billion in 4Q20. Net inflows in Retail were $7.5 billion in 4Q21 compared with net inflows of $3.6 billion in 4Q20, reflecting higher gross flows, driven by strong intermediary sales and higher institutional model allocations in the U.S., as well as higher gross flows in Japan and China. Net inflows in Institutional Asset Management were $1.6 billion in 4Q21 compared with net inflows of $1.0 billion in 4Q20, driven by lower redemptions in timberland and real estate mandates, partially offset by lower gross flows in fixed income mandates. Net outflows in Retirement were $1.0 billion in 4Q21 compared with net outflows of $1.8 billion in 4Q20. The reduction in net outflows was driven by higher gross flows across all geographies, reflecting higher growth in new plan sales and member contributions, partially offset by higher plan redemptions.

QUARTERLY EARNINGS RESULTS CONFERENCE CALL 

Manulife Financial Corporation will host a Fourth Quarter 2021 Earnings Results Conference Call at 8:00 a.m. ET on February 10, 2022. For local and international locations, please call 416-340-2217 or toll free, North America 1-800-806-5484 (Passcode: 4624021#). Please call in 15 minutes before the call starts. You will be required to provide your name and organization to the operator. A replay of this call will be available by 11:00 a.m. ET on February 10, 2022 through May 14, 2022 by calling 905-694-9451 or 1-800-408-3053 (Passcode: 4133171#).

The Fourth Quarter 2021 Statistical Information Package is also available on the Manulife website at: www.manulife.com/en/investors/results-and-reports.

Media Inquiries Cheryl Holmes (416) 557-0945 Cheryl_Holmes@manulife.com

Investor Relations Hung Ko (416) 806-9921 Hung_Ko@manulife.com

EARNINGS:

The following table presents net income attributed to shareholders, consisting of core earnings and details of the items excluded from core earnings:

(1)	These items are disclosed under OSFI’s Source of Earnings Disclosure (Life Insurance Companies) guideline.

NON-GAAP AND OTHER FINANCIAL MEASURES:

The Company prepares its Consolidated Financial Statements in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. We use a number of non-GAAP and other financial measures to evaluate overall performance and to assess each of our businesses. This section includes information required by National Instrument 52-112 – Non-GAAP and Other Financial Measures Disclosure in respect of “specified financial measures” (as defined therein).

Non-GAAP financial measures include core earnings (loss); pre-tax core earnings; core earnings available to common shareholders; core general expenses; and assets under management and administration (“AUMA”).

Non-GAAP ratios include core return on common shareholders’ equity (“core ROE”); diluted core earnings per common share (“core EPS”); expense efficiency ratio; and percentage growth/decline on a constant exchange rate basis in any of the above non-GAAP financial measures.

Other specified financial measures include assets under administration; embedded value; NBV; APE sales; gross flows; net flows; average assets under management and administration (“average AUMA”); remittances and percentage growth/decline in such other financial measures.

Non-GAAP financial measures and non-GAAP ratios are not standardized financial measures under GAAP and, therefore, might not be comparable to similar financial measures disclosed by other issuers. Therefore, they should not be considered in isolation or as a substitute for any other financial information prepared in accordance with GAAP. For more information on non-GAAP financial measures, including those referred to above, see the section “Non-GAAP and Other Financial Measures” in our 2021 MD&A, which is incorporated by reference.

Reconciliation of core earnings to net income attributed to shareholders

(1)	These items are disclosed under OSFI’s Source of Earnings Disclosure (Life Insurance Companies) guideline.

Core earnings, CER basis

Reconciliation of core earnings to net income attributed to shareholders

(1)	These items are disclosed under OSFI’s Source of Earnings Disclosure (Life Insurance Companies) guideline.

Core earnings, CER basis

Reconciliation of core earnings to net income attributed to shareholders

(1)	These items are disclosed under OSFI’s Source of Earnings Disclosure (Life Insurance Companies) guideline.

Core earnings, CER basis

Reconciliation of core earnings to net income attributed to shareholders

		3Q21
(Canadian $ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)		Asia				Canada				U.S.				Global WAM				Corporate and Other				Total Company
Core earnings (post-tax)		$	533			$	311			$	490			$	351			$	(168	)		$	1,517
CER adjustment(1)			(2	)			-				-				(1	)			-				(3	)
Core earnings, CER basis (post-tax)		$	531			$	311			$	490			$	350			$	(168	)		$	1,514
Income tax on core earnings, CER basis(2)			51				109				80				66				(12	)			294
Core earnings, CER basis (pre-tax)		$	582			$	420			$	570			$	416			$	(180	)		$	1,808

Reconciliation of core earnings to net income attributed to shareholders

(1)	These items are disclosed under OSFI’s Source of Earnings Disclosure (Life Insurance Companies) guideline.

Core earnings, CER basis

Core earnings available to common shareholders

(1)	The impact of updating foreign exchange rates to that which was used in 4Q21.

Core ROE

Core EPS