40-F
MANULIFE FINANCIAL CORP (MFC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 40-F
(Check One)
| ☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES<br><br>EXCHANGE ACT OF 1934 |
|---|
OR
| ☑ | ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES<br><br>EXCHANGE ACT OF 1934 |
|---|
For the fiscal year ended December 31, 2025 Commission file number 1-14942
MANULIFE FINANCIAL CORPORATION
(Exact name of Registrant as specified in its charter)
Canada
(Province or other jurisdiction of incorporation or organization)
6311
(Primary Standard Industrial Classification Code Number (if applicable))
Not applicable
(I.R.S. Employer Identification Number (if applicable))
200 Bloor Street East, Toronto, Ontario, Canada M4W 1E5 (416) 926-3000
(Address and telephone number of Registrant’s principal executive offices)
Tracy Lannigan, John Hancock Life Insurance Company (U.S.A.), 197 Clarendon Street, Boston, MA 02116,
(617) 663-3000
(Name, address (including zip code) and telephone number (including area code)
of agent for service in the United States)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
| Title of each class | Trading<br><br>Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Shares | MFC | New York Stock Exchange |
Securities registered or to be registered pursuant to Section 12(g) of the Act. None
1 In connection with the issuance of C$2 billion principal amount of 3.375% Limited Recourse Capital Notes (LRCN) Series 1
(Subordinated Indebtedness) on February 19, 2021, the Registrant issued 2 million Class 1 Series 27 preferred shares (Series 27) at a
price of C$1,000 per Series 27 share. The Series 27 shares were issued to the limited recourse trustee of a consolidated trust to be held as
trust assets in connection with the LRCN structure.
2 In connection with the issuance of C$1.2 billion principal amount of 4.100% LRCN Series 2 (Subordinated Indebtedness) on
November 12, 2021, the Registrant issued 1.2 million Class 1 Series 28 preferred shares (Series 28) at a price of C$1,000 per Series 28
share. The Series 28 shares were issued to the limited recourse trustee of a consolidated trust to be held as trust assets in connection with
the LRCN structure.
3 In connection with the issuance of C$1 billion principal amount of 7.117% LRCN Series 3 (Subordinated Indebtedness) on June 16,
2022, the Registrant issued 1 million Class 1 Series 29 preferred shares (Series 29) at a price of $1,000 per Series 29 share. The Series 29
shares were issued to the limited recourse trustee of a consolidated trust to be held as trust assets in connection with the LRCN structure.
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act. 4.150% Senior Notes due 2026, 2.484% Senior
Notes due 2027, 3.703% Senior Notes due 2032, 5.375% Senior Notes due 2046, 4.986% Senior Notes due 2035 and 4.061%
Subordinated Notes due 2032
For annual reports, indicate by check mark the information filed with this Form:
☑ Annual Information Form☑ Audited Annual Financial Statements
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered
by the annual report:
| Common Shares | 1,677,180,680 |
|---|---|
| Class A Shares Series 2 | 14,000,000 |
| Class A Shares Series 3 | 12,000,000 |
| Class 1 Shares Series 3 | 6,537,903 |
| Class 1 Shares Series 4 | 1,462,097 |
| Class 1 Shares Series 9 | 10,000,000 |
| Class 1 Shares Series 11 | 8,000,000 |
| Class 1 Shares Series 13 | 8,000,000 |
| Class 1 Shares Series 15 | 8,000,000 |
| Class 1 Shares Series 17 | 14,000,000 |
| Class 1 Shares Series 19 | 10,000,000 |
| Class 1 Shares Series 25 | 10,000,000 |
| Class 1 Shares Series 271 | 2,000,000 |
| Class 1 Shares Series 282 | 1,200,000 |
| Class 1 Shares Series 293 | 1,000,000 |
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act
during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject
to such filing requirements for the past 90 days.
| Yes | ☑ | No | ☐ |
|---|
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant
was required to submit such files).
| Yes | ☑ | No | ☐ |
|---|
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.
Emerging Growth Company ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the
registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards†
provided pursuant to Section 13(a) of the Exchange Act. ☐
40-F 3
†The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board
to its Accounting Standards Codification after April 5, 2012.
Auditor Name: Ernst & Young LLPAuditor Location: Toronto, Ontario, Canada
The Public Company Accounting Oversight Board (United States) ID number for the Canadian firm of Ernst & Young LLP is 1263.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report. ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
40-F 4
Principal Documents
The following documents, filed as exhibits 99.1, 99.2, and 99.3 hereto, are hereby incorporated by reference into this Annual Report:
(a)Consolidated Financial Statements for the fiscal year ended December 31, 2025;
(b)Management’s Discussion and Analysis for the fiscal year ended December 31, 2025; and
(c)Annual Information Form dated February 11, 2026 for the fiscal year ended December 31, 2025.
40-F 5
Certifications and Disclosure Regarding Controls and Procedures.
(a)Certifications. The Certificates required by Rule 13a-14(a) and (b) are set forth in Exhibits 99.4, 99.5, 99.6 and 99.7 to this
Annual Report on Form 40-F.
(b)Disclosure Controls and Procedures. The conclusions of the principal executive and principal financial officers of Manulife
Financial Corporation (the “Company”) regarding the effectiveness of the Company’s disclosure controls and procedures as at
December 31, 2025 are set forth under the heading “Controls and Procedures – Disclosure Controls and Procedures” in the Company’s
Management’s Discussion and Analysis for the fiscal year ended December 31, 2025, filed as Exhibit 99.2 to this Annual Report on
Form 40-F.
(c)Management’s Annual Report on Internal Control over Financial Reporting. Management’s report on the Company’s internal
control over financial reporting is set forth under the heading “Controls and Procedures – Management’s Report on Internal Control over
Financial Reporting” in the Company’s Management’s Discussion and Analysis for the fiscal year ended December 31, 2025, filed as
Exhibit 99.2 to this Annual Report on Form 40-F.
(d)Attestation Report of the Registered Public Accounting Firm. Ernst & Young LLP’s attestation report on management’s
assessment of internal control over financial reporting is set forth under the heading “Report of Independent Registered Public
Accounting Firm to the Shareholders and Board of Directors of Manulife Financial Corporation – Opinion on Internal Control Over
Financial Reporting” in the Company’s Consolidated Financial Statements for the fiscal year ended December 31, 2025, filed as Exhibit
99.1 to this Annual Report on Form 40-F.
(e)Changes in Internal Control over Financial Reporting. Information regarding any changes in the Company’s internal control
over financial reporting is set forth under the heading “Controls and Procedures – Changes in Internal Control over Financial Reporting”
in the Company’s Management’s Discussion and Analysis for the fiscal year ended December 31, 2025, filed as Exhibit 99.2 to this
Annual Report on Form 40-F.
Audit Committee Financial Expert.
Information regarding audit committee financial experts is set forth under the heading “Audit Committee” in the Company’s Annual
Information Form (“AIF”) dated February 11, 2026 for the fiscal year ended December 31, 2025, filed as Exhibit 99.3 to this Annual
Report on Form 40-F.
Code of Business Conduct and Ethics.
The Company has adopted a Code of Business Conduct and Ethics (“Code”) that applies to all directors, officers and employees of the
Company and that qualifies as a “code of ethics” as that term is defined in Form 40-F.
The Code is posted on the corporate governance section of our website and is available for viewing at:
https://www.manulife.com/content/dam/corporate/global/en/documents/corporate-governance/MFC_COBC_EN.pdf. Any amendments
to the Code will be posted at our website at such internet address.
There were no waivers, including implied waivers, from any provision of the Code during 2025.
Principal Accountant Fees and Services.
Information regarding the fees billed by Ernst & Young LLP is set forth under the heading “Audit Committee – External Auditor Service
Fees” in the Company’s AIF dated February 11, 2026 for the fiscal year ended December 31, 2025, filed as Exhibit 99.3 to this Annual
Report on Form 40-F.
Pre-Approval Policies and Procedures.
Information regarding the pre-approval policies and procedures of the Company’s audit committee is set forth under the heading “Audit
Committee – Pre-Approval Policies and Procedures” in the Company’s AIF dated February 11, 2026 for the fiscal year ended December
31, 2025, filed as Exhibit 99.3 to this Annual Report on Form 40-F.
Hours Expended on Audit Attributed to Persons Other than the Principal Accountant’s Employees.
Not Applicable.
40-F 6
Off-Balance Sheet Arrangements.
Information regarding the Company’s off-balance sheet arrangements is set forth in the discussion of risk in the Company’s
Management’s Discussion and Analysis for the fiscal year ended December 31, 2025, filed as Exhibit 99.2 to this Annual Report on
Form 40-F. The notes to the Consolidated Financial Statements for the fiscal year ended December 31, 2025, filed as Exhibit 99.1 to this
Annual Report on Form 40-F include the following disclosures related to off-balance sheet arrangements:
| Note 8 | Risk Management - Securities Lending, Repurchase and Reverse Repurchase Transactions |
|---|---|
| Note 17 | Interests in Structured Entities |
| Note 18 | Commitments and Contingencies |
Tabular Disclosure of Contractual Obligations.
Information regarding the Company’s contractual obligations is set forth under the heading “Additional Disclosures – Contractual
Obligations” in the Company’s Management’s Discussion and Analysis for the fiscal year ended December 31, 2025, filed as Exhibit
99.2 to this Annual Report on Form 40-F.
Identification of the Audit Committee.
Information regarding the Audit Committee of the Company’s Board of Directors (the “Board”) is set forth under the heading “Audit
Committee – Composition of the Audit Committee” in the Company’s AIF dated February 11, 2026 for the fiscal year ended December
31, 2025, filed as Exhibit 99.3 to this Annual Report on Form 40-F.
Independence of Directors.
A majority of the directors and all members of the Board’s standing committees must be independent so that the Board operates
independently of management.
A director is independent if he or she does not have a direct or indirect relationship with the Company that could reasonably be expected
to interfere with the director’s ability to exercise independent judgment. The Company has established an independence policy for the
Board which is consistent with applicable legal and regulatory requirements, including those established under Canadian and U.S.
securities law, the Insurance Companies Act (Canada) and the rules of the New York Stock Exchange. The independence policy is
available on our website (www.manulife.com).
Each year the Board, with the assistance of the Corporate Governance and Nominating Committee, reviews the independence of each
director and has determined that 12 of the 13 directors serving on the Board as of December 31, 2025 are independent and that the
members of the Audit Committee and the Management Resources and Compensation Committee meet the additional independence
requirements for those committees. As CEO, Phil Witherington is not independent.
Presiding Director at Meetings of Non-Management Directors.
The independent directors meet regularly with senior executives and have an opportunity to meet privately without management present
during closed sessions held at each Board and committee meeting. They may also use these sessions to meet privately with members of
management or independent advisors.
In addition, the independent directors meet without the CEO present to review the performance and approve the compensation of the
CEO, to review the Board’s effectiveness assessments and to approve the Board’s objectives for the following year.
Communication with Non-Management Directors.
Shareholders wishing to contact non-management directors of the Company may write to the Chair of the Board, in care of the Corporate
Secretary, at the head office of the Company, 200 Bloor Street East, Toronto, Ontario, Canada, M4W 1E5.
Corporate Governance Guidelines.
The Company’s governance practices are consistent in all material respects with the requirements of the Insurance Companies Act
(Canada), the corporate governance guidelines established by the Office of the Superintendent of Financial Institutions (Canada) and by
the Canadian Securities Administrators, the New York Stock Exchange corporate governance rules for domestic issuers and the
40-F 7
applicable U.S. Securities and Exchange Commission rules and regulations. The Company’s statement of corporate governance practices
is posted on the corporate governance section of our website and is available at: https://www.manulife.com/en/about/corporate-
governance.html
Board Committee Charters.
The Board has established four standing committees to assist it in fulfilling its mandate: Corporate Governance and Nominating
Committee, Audit Committee, Risk Committee, and Management Resources and Compensation Committee.
All of the members of the standing committees are independent. Each committee reviews and, as necessary, updates its charter every
year and monitors compliance with its charter on a regular basis. Each committee chair reports to the Board on the committee’s
deliberations and any recommendations that require Board approval.
The committee charters and the position description for the committee chairs are posted on the corporate governance section of our
website and are available at: https://www.manulife.com/en/about/corporate-governance.html
40-F 8
UNDERTAKING AND CONSENT TO SERVICE OF PROCESS
A.Undertaking.
Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission
staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities registered
pursuant to Form 40-F; the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in
said securities.
B.Consent to Service of Process.
The Company has previously filed a Form F-X in connection with the class of securities in relation to which the obligation to file this
Annual Report arises.
Any change to the name or address of the Registrant’s agent for service of process shall be communicated promptly to the Commission
by amendment to the Form F-X referencing the file number of the Registrant.
SIGNATURES
Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F
and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereto duly authorized, on February 11, 2026.
| Manulife Financial Corporation | |
|---|---|
| By: | /s/ Michael F. Coyne |
| Name: | Michael F. Coyne |
| Title: | General Counsel |
EXHIBIT INDEX
| Exhibit | Description |
|---|---|
| 97.1 | Executive Officer Clawback Policy |
| 99.1 | Consolidated Financial Statements for the fiscal year ended December 31, 2025 |
| 99.2 | Management’s Discussion and Analysis for the fiscal year ended December 31, 2025 |
| 99.3 | Annual Information Form dated February 11, 2026 for the fiscal year ended December 31, 2025 |
| 99.4 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934 |
| 99.5 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934 |
| 99.6 | Section 1350 Certification of Chief Executive Officer |
| 99.7 | Section 1350 Certification of Chief Financial Officer |
| 99.8 | Consent of Independent Registered Public Accounting Firm |
| 99.9 | Consent of Appointed Actuary |
| 101 | Interactive Data File (formatted as Inline XBRL) |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
Exhibit 97-1 - Executive Officer Clawback Policy Exhibit 97.1
| EXECUTIVE OFFICER CLAWBACK POLICY |
|---|
The Board of Directors (the “Board”) of Manulife Financial Corporation (the “Company”)
believes that it is in the best interests of the Company and its shareholders to adopt this Clawback
Policy (the “Policy”), which provides for the recovery of certain incentive compensation in the
event of an Accounting Restatement (as defined below). This Policy is designed to comply with,
and shall be interpreted consistent with, Section 10D of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), Rule 10D-1 promulgated under the Exchange Act (“Rule
10D-1”) and Section 303A.14 of the New York Stock Exchange (“NYSE”) Listed Company
Manual (the “Listing Standards”).
This Policy is separate from, and in addition to, any other policy of the Company or any of its
subsidiaries now or hereafter in existence, that relates to the clawback of incentive awards or
other forms of compensation from directors, executive officers or employees of the Company or
its subsidiaries (any such other clawback policy being referred to herein as a “Discretionary
Clawback Policy”). In the event of any conflict or inconsistency between this Policy and any
Discretionary Clawback Policy, the terms and conditions of this Policy shall prevail.
1.Administration
Except as specifically set forth herein, this Policy shall be administered by the Management
Resources and Compensation Committee (the “MRCC”) of the Board (the “Administrator”).
The Administrator is authorized to interpret and construe this Policy and to make all
determinations necessary, appropriate, or advisable for the administration of this Policy. Any
determinations made by the Administrator shall be final and binding on all affected individuals
and need not be uniform with respect to each individual covered by the Policy. In the
administration of this Policy, the Administrator is authorized and directed to consult with the full
Board or such other committees of the Board, such as the Audit Committee or the Risk
Committee, as may be necessary or appropriate as to matters within the scope of such other
committee’s responsibility and authority. Subject to any limitation at applicable law, the
Administrator may authorize and empower any officer or employee of the Company to take any
and all actions necessary or appropriate to carry out the purpose and intent of this Policy (other
than with respect to any recovery under this Policy involving such officer or employee), and the
Administrator may retain the services of external consultants of other service providers if
determined to be necessary or appropriate.
2.Definitions
As used in this Policy, the following definitions shall apply:
•“Accounting Restatement” means an accounting restatement of the Company’s
financial statements due to the Company’s material noncompliance with any financial
reporting requirement under the securities laws, including any required accounting
2
restatement to correct an error in previously issued financial statements that is
material to the previously issued financial statements, or that would result in a
material misstatement if the error were corrected in the current period or left
uncorrected in the current period.
•“Administrator” has the meaning set forth in Section 1 hereof.
•“Applicable Period” means the three completed fiscal years immediately preceding
the date on which the Company is required to prepare an Accounting Restatement, as
well as any transition period (that results from a change in the Company’s fiscal year)
within or immediately following those three completed fiscal years (except that a
transition period that comprises a period of at least nine months shall count as a
completed fiscal year). The “date on which the Company is required to prepare an
Accounting Restatement” is the earlier to occur of (a) the date the Board concludes,
or reasonably should have concluded, that the Company is required to prepare an
Accounting Restatement, or (b) the date a court, regulator, or other legally authorized
body directs the Company to prepare an Accounting Restatement, in each case
regardless of if or when the restated financial statements are filed.
•“Covered Executives” means the Company’s current and former executive officers,
as determined by the Administrator in accordance with the definition of executive
officer set forth in Rule 10D-1 and the Listing Standards.
•“Erroneously Awarded Compensation” has the meaning set forth in Section 5 of
this Policy.
•A “Financial Reporting Measure” is any measure that is determined and presented
in accordance with the accounting principles used in preparing the Company’s
financial statements, and any measure that is derived wholly or in part from such
measure. A Financial Reporting Measure need not be presented within the
Company’s financial statements or included in a filing with the Securities Exchange
Commission.
•“Incentive-Based Compensation” means any compensation that is granted, earned,
or vested based wholly or in part upon the attainment of a Financial Reporting
Measure. Incentive-Based Compensation is “received” for purposes of this Policy in
the Company’s fiscal period during which the Financial Reporting Measure specified
in the Incentive-Based Compensation award is attained, even if the payment or grant
of such Incentive-Based Compensation occurs after the end of that period.
3.Covered Executives; Incentive-Based Compensation
Without limiting the terms and conditions of any Discretionary Clawback Policy, this Policy
applies to Incentive-Based Compensation received by a Covered Executive (a) after beginning
services as a Covered Executive; (b) if that person served as a Covered Executive at any time
3
during the performance period for such Incentive-Based Compensation; and (c) while the
Company had a listed class of securities on a national securities exchange.
4.Required Recoupment of Erroneously Awarded Compensation in the event of an
Accounting Restatement
In the event the Company is required to prepare an Accounting Restatement, the Company shall
promptly recoup the amount of any Erroneously Awarded Compensation received by any
Covered Executive, as calculated pursuant to Section 5 hereof, during the Applicable Period.
5.Erroneously Awarded Compensation: Amount Subject to Recovery
The amount of “Erroneously Awarded Compensation” subject to recovery under the Policy, as
determined by the Administrator, is the amount of Incentive-Based Compensation received by the
Covered Executive that exceeds the amount of Incentive-Based Compensation that would have
been received by the Covered Executive had it been determined based on the restated amounts.
Erroneously Awarded Compensation shall be computed by the Administrator without regard to any
taxes paid in any and all applicable jurisdictions by the Covered Executive in respect of the
Erroneously Awarded Compensation.
By way of example, with respect to any compensation plans or programs that take into account
Incentive-Based Compensation, the amount of Erroneously Awarded Compensation subject to
recovery hereunder includes, but is not limited to, the amount contributed to any notional
account based on Erroneously Awarded Compensation and any earnings accrued to date on that
notional amount.
For Incentive-Based Compensation based on stock price or total shareholder return (“TSR”): (a)
the Administrator shall determine the amount of Erroneously Awarded Compensation based on a
reasonable estimate of the effect of the Accounting Restatement on the stock price or TSR upon
which the Incentive-Based Compensation was received; and (b) the Company shall maintain
documentation of the determination of that reasonable estimate and provide such documentation
to NYSE.
6.Method of Recoupment
The Administrator shall determine, in its sole discretion, the timing and method for promptly
recouping Erroneously Awarded Compensation hereunder, which may include without limitation
(a) seeking reimbursement of all or part of any cash or equity-based award, (b) cancelling prior
cash or equity-based awards, whether vested or unvested or paid or unpaid, (c) canceling or
offsetting against any planned future cash or equity-based awards, (d) forfeiture of deferred
compensation, subject to compliance with Section 409A of the Internal Revenue Code and the
regulations promulgated thereunder, and (e) any other method authorized by applicable law or
contract. Subject to compliance with any applicable law, the Administrator may affect recovery
under this Policy from any amount otherwise payable to the Covered Executive, including
amounts payable to such individual under any otherwise applicable Company plan or program,
4
including base salary, bonuses or commissions and compensation previously deferred by the
Covered Executive.
The Company is authorized and directed pursuant to this Policy to recoup Erroneously Awarded
Compensation in compliance with this Policy unless the MRCC has determined that recovery
would be impracticable solely for the following limited reasons, and subject to the following
procedural and disclosure requirements:
•The direct expense paid to a third party to assist in enforcing the Policy would exceed the
amount to be recovered. Before concluding that it would be impracticable to recover any
amount of Erroneously Awarded Compensation based on expense of enforcement, the
Administrator must make a reasonable attempt to recover such erroneously awarded
compensation, document such reasonable attempt(s) to recover, and provide that
documentation to NYSE;
•Recovery would violate home country law of the issuer where that law was adopted prior
to November 28, 2022. Before concluding that it would be impracticable to recover any
amount of Erroneously Awarded Compensation based on violation of home country law
of the issuer, the Administrator must satisfy the applicable opinion and disclosure
requirements of Rule 10D-1 and the Listing Standards; or
•Recovery would likely cause an otherwise tax-qualified retirement plan, under which
benefits are broadly available to employees of the Company, to fail to meet the
requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder.
7.No Indemnification of Covered Executives
Notwithstanding the terms of any indemnification or insurance policy or any contractual
arrangement with any Covered Executive that may be interpreted to the contrary, the Company
shall not indemnify any Covered Executives against the loss of any Erroneously Awarded
Compensation, including any payment or reimbursement for the cost of third-party insurance
purchased by any Covered Executives to fund potential clawback obligations under this Policy.
8.Administrator Indemnification
Any members of the Administrator, and any other members of the Board who assist in the
administration of this Policy, shall not be personally liable for any action, determination or
interpretation made with respect to this Policy and shall be fully indemnified by the Company to
the fullest extent under applicable law and Company policy with respect to any such action,
determination or interpretation. The foregoing sentence shall not limit any other rights to
indemnification of the members of the Board under applicable law or Company policy.
9.Effective Date; Retroactive Application
This Policy shall be effective as of October 2, 2023 (the “Effective Date”). The terms of this
Policy shall apply to any Incentive-Based Compensation that is received by Covered Executives
on or after the Effective Date, even if such Incentive-Based Compensation was approved,
5
awarded, granted or paid to Covered Executives prior to the Effective Date. Without limiting the
generality of Section 6 hereof, and subject to applicable law, the Administrator may affect
recovery under this Policy from any amount of compensation approved, awarded, granted,
payable or paid to the Covered Executive prior to, on or after the Effective Date.
10.Amendment; Termination
The MRCC may amend, modify, supplement, rescind or replace all or any portion of this Policy
at any time and from time to time in its discretion, and shall amend this Policy as it deems
necessary to comply with applicable law or any rules or standards adopted by a national
securities exchange on which the Company’s securities are listed.
11.Other Recoupment Rights; Company Claims
The MRCC intends that this Policy shall be applied to the fullest extent of the law. Any right of
recoupment under this Policy is in addition to, and not in lieu of, any other remedies or rights of
recoupment that may be available to the Company under applicable law or pursuant to the terms
of any similar policy in any employment agreement, equity award agreement, or similar
agreement and any other legal remedies available to the Company.
Nothing contained in this Policy, and no recoupment or recovery as contemplated by this Policy,
shall limit any claims, damages or other legal remedies the Company or any of its affiliates may
have against a Covered Executive arising out of or resulting from any actions or omissions by the
Covered Executive.
12.Successors
This Policy shall be binding and enforceable against all Covered Executives and their
beneficiaries, heirs, executors, administrators or other legal representatives.
13.Exhibit Filing Requirement
A copy of this Policy and any amendments thereto shall be posted on the Company’s website and
filed as an exhibit to the Company’s annual report on Form 40-F.
mfc-20251231
Manulife Financial Corporation
Consolidated Financial Statements
For the year ended December 31, 2025
| 1 | 2025 Annual Report | Consolidated Financial Statements |
|---|
Responsibility for Financial Reporting
The accompanying consolidated financial statements of Manulife Financial Corporation are the responsibility of management and
have been approved by the Board of Directors.
The consolidated financial statements have been prepared by management in accordance with International Financial Reporting
Standards and the accounting requirements of the Office of the Superintendent of Financial Institutions, Canada. When
alternative accounting methods exist, or when estimates and judgment are required, management has selected those amounts
that present the Company’s financial position and results of operations in a manner most appropriate to the circumstances.
Appropriate systems of internal control, policies and procedures have been maintained to ensure that financial information is
both relevant and reliable. The systems of internal control are assessed on an ongoing basis by management and the
Company’s internal audit department.
The actuary appointed by the Board of Directors (the “Appointed Actuary”) is responsible for ensuring that assumptions and
methods used in the determination of policy liabilities are appropriate to the circumstances and that reserves will be adequate to
meet the Company’s future obligations under insurance and annuity contracts.
The Board of Directors is responsible for ensuring that management fulfills its responsibility for financial reporting and is
ultimately responsible for reviewing and approving the consolidated financial statements. These responsibilities are carried out
primarily through an Audit Committee of unrelated and independent directors appointed by the Board of Directors.
The Audit Committee meets periodically with management, the internal auditors, the peer reviewers, the external auditors and
the Appointed Actuary to discuss internal control over the financial reporting process, auditing matters and financial reporting
issues. The Audit Committee reviews the consolidated financial statements prepared by management, and then recommends
them to the Board of Directors for approval. The Audit Committee also recommends to the Board of Directors for approval the
appointment of external auditors and their fees.
The consolidated financial statements have been audited by the Company’s external auditors, Ernst & Young LLP, in accordance
with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board
(United States). Ernst & Young LLP has full and free access to management and the Audit Committee.
Phil WitheringtonColin Simpson
President and Chief Executive OfficerChief Financial Officer
Toronto, Canada
February 11, 2026
Appointed Actuary’s Report to the Policyholders and Shareholders
I have valued the policy liabilities of Manulife Financial Corporation for its Consolidated Statements of Financial Position as at
December 31, 2025 and 2024 and their change in the Consolidated Statements of Income for the years then ended in
accordance with International Financial Reporting Standards.
In my opinion, the amount of policy liabilities is appropriate for this purpose. The valuation conforms to accepted actuarial
practice in Canada and the Consolidated Financial Statements fairly present the results of the valuation.
Stephanie Fadous
Appointed Actuary
Toronto, Canada
February 11, 2026
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Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of Manulife Financial Corporation
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position of Manulife Financial Corporation (the
Company) as of December 31, 2025 and 2024, the related consolidated statements of income, consolidated statements of
comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows for the years
then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the
consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of
December 31, 2025 and 2024, its consolidated financial performance and its consolidated cash flows for the years then ended, in
conformity with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in
Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework) and our report dated February 11, 2026, expressed an unqualified opinion thereon.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial
statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or
disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate
opinions on the critical audit matters or on the accounts or disclosures to which they relate.
| 7 | 2025 Annual Report | Consolidated Financial Statements |
|---|---|---|
| Valuation of Insurance Contract Liabilities | ||
| --- | --- | |
| Description of<br><br>the matter | The Company recorded insurance contract liabilities of $541 billion at December 31, 2025 on its consolidated statement of<br><br>financial position, of which $398 billion as disclosed in Note 6 ‘Insurance and Reinsurance Contract Assets and Liabilities’ has<br><br>been measured under the variable fee approach (VFA) and the general measurement model (GMM). At initial recognition, the<br><br>Company measures a group of insurance contracts as the total of: (a) fulfilment cash flows, which comprise of estimates of future<br><br>cash flows, adjusted to reflect the time value of money and financial risks, and a risk adjustment for non-financial risk; and (b) a<br><br>contractual service margin (CSM), which represents the estimate of unearned profit the Company will recognize as it provides<br><br>service under the insurance contracts or the loss component when the contracts are onerous. When projecting future cash flows<br><br>for these insurance contract liabilities, the Company primarily uses deterministic projections using best estimate assumptions.<br><br>Key assumptions are subjective and complex and include mortality, morbidity, investment returns, policy termination rates,<br><br>premium persistency, directly attributable expenses, taxes, and policyholder dividends. Disclosures on this matter are found in<br><br>Note 1 ‘Nature of Operations and Material Accounting Policy Information’ and Note 6 ‘Insurance and Reinsurance Contract<br><br>Assets and Liabilities’ of the consolidated financial statements.<br><br>Auditing the valuation of these insurance contract liabilities was complex and required the application of significant auditor<br><br>judgment due to the complexity of the cash flow models, the selection and use of assumptions, and the interrelationship of these<br><br>variables in measuring insurance contract liabilities. The audit effort involved professionals with specialized skills and knowledge<br><br>to assist in evaluating the audit evidence obtained. | |
| How we<br><br>addressed the<br><br>matter in our<br><br>audit | We obtained an understanding, evaluated the design, and tested the operating effectiveness of management’s controls over the<br><br>valuation of insurance contract liabilities. The controls we tested related to, among other areas, actuarial methodology, integrity of<br><br>data used, controls over relevant information technology, and the assumption setting and implementation processes used by<br><br>management.<br><br>To test the valuation of insurance contract liabilities, our audit procedures included, among other procedures, involving our<br><br>actuarial specialists to assess the methodology and assumptions with respect to compliance with IFRS. We performed audit<br><br>procedures over key assumptions, including testing the implementation of those assumptions into the models. These procedures<br><br>included testing underlying support and documentation, including reviewing a sample of experience studies supporting specific<br><br>assumptions, challenging the nature, timing, and completeness of changes recorded, and assessing whether individual changes<br><br>were errors or refinements of estimates. We also tested the methodology and calculation of the insurance contract liabilities<br><br>through both review of the calculation logic within the models, and through calculating an independent recalculation of the<br><br>fulfillment cashflows for a sample of insurance contracts and comparing the results to those determined by the Company and to<br><br>industry and other external sources for benchmarking. Additionally, we have performed an independent calculation of the CSM for<br><br>a sample of groups of insurance contracts and compared the amounts to the Company’s results. We also assessed the<br><br>adequacy of the disclosures related to the valuation of insurance contract liabilities. | |
| Valuation of Invested Assets with Significant Non-Observable Market Inputs | ||
| Description of<br><br>the matter | The Company recorded invested assets of $95.3 billion, as disclosed in Note 3 ‘Invested Assets and Investment Income’ at<br><br>December 31, 2025 within its consolidated statement of financial position which are both (a) measured at fair value and (b)<br><br>classified as Level 3 within the Company’s hierarchy of fair value measurements. The Level 3 invested assets include private<br><br>placements, commercial mortgages, real estate, timber and agriculture, and private equities valued using internal models. There<br><br>is increased measurement uncertainty in determining the fair value of these invested assets due to volatility in the current<br><br>economic environment. Fair values are based on internal models or third-party appraisals that incorporate assumptions with a<br><br>high-level of subjectivity including discount rates, credit ratings and related spreads, expected future cash flows, and transaction<br><br>prices of comparable assets. Disclosures on this matter are found in Note 1 ‘Nature of Operations and Material Accounting Policy<br><br>Information’ and Note 3 ‘Invested Assets and Investment Income’ of the consolidated financial statements.<br><br>Auditing the valuation of these invested assets was complex and required the application of significant auditor judgment in<br><br>assessing the valuation methodologies and non-observable inputs used. The valuation is sensitive to the significant non-<br><br>observable market inputs described above, which are inherently forward-looking and could be affected by future economic and<br><br>market conditions. The audit effort involved professionals with specialized skills and knowledge to assist in evaluating the audit<br><br>evidence obtained. | |
| How we<br><br>addressed the<br><br>matter in our<br><br>audit | We obtained an understanding, evaluated the design, and tested the operating effectiveness of management’s controls over the<br><br>valuation processes. The controls we tested related to, among other areas, completeness and accuracy of data used and<br><br>management’s determination and approval of assumptions and methodologies used in model-based valuations. The controls we<br><br>tested also included controls over relevant information technology.<br><br>To test the valuation, our audit procedures included, among other procedures, involving our valuation specialists to assess the<br><br>methodologies and significant inputs and assumptions used by management. These procedures included assessing the valuation<br><br>methodologies used with respect to the Company’s policies, valuation guidelines, and industry practice and comparing a sample<br><br>of valuation assumptions used against benchmarks including comparable transactions where applicable. We also performed<br><br>independent investment valuations on a sample basis to evaluate management’s recorded values. In addition, we assessed the<br><br>adequacy of the disclosures related to the valuation of invested assets. | |
| 8 | ||
| --- | ||
| IFRS 9 Hedge Accounting | ||
| --- | --- | |
| Description of<br><br>the matter | The Company has designated hedge accounting relationships with the objective to reduce potential accounting mismatches<br><br>between changes in the fair value of derivatives in income and financial risk of insurance contract liabilities and financial assets in<br><br>other comprehensive income. Specifically, the Company has established relationships to hedge the fair value changes of certain<br><br>of the Company’s insurance contract liabilities and debt instruments attributable to interest rate risk. The Company has also<br><br>established relationships to hedge the risk of fair value changes of certain foreign currency denominated insurance contract<br><br>liabilities and debt instruments attributable to foreign currency and interest rate risk. Related to the application of these hedges,<br><br>the Company recognized changes in value of hedged assets of $338 million, and changes in value of hedged liabilities of $1,180<br><br>million, for the year ended December 31, 2025. Disclosures on this matter are found in Note 1 ‘Nature of Operations and Material<br><br>Accounting Policy Information’ and Note 4 ‘Derivative and Hedging Instruments’ of the consolidated financial statements.<br><br>Auditing the application of hedge accounting was complex and required the application of significant auditor judgement related to<br><br>the assessment of the ongoing economic relationship between the risk component of the hedged item and hedging instrument,<br><br>the assessment that the hedge ratio between the hedging instrument and the hedged item was consistent with the risk objectives,<br><br>and the determination of the resulting accumulated fair value adjustments. The audit effort involved professionals with specialized<br><br>skills and knowledge to assist in evaluating the audit evidence obtained. | |
| How we<br><br>addressed the<br><br>matter in our<br><br>audit | We obtained an understanding, evaluated the design, and tested the operating effectiveness of management’s controls over the<br><br>application and execution of those strategies, including the implementation of new strategies where applicable, and the<br><br>measurements of the accumulated fair value adjustments. The controls we tested included, among others, controls over the<br><br>review of the completeness, accuracy, and eligibility of the hedged items and hedging instruments included in the hedging<br><br>relationships, determination of the hedge ratio between the hedging instrument and the hedged item with reference to the risk<br><br>objectives, and the determination of the resulting accumulated fair value adjustments. The controls we tested also included<br><br>controls over relevant information technology.<br><br>To assess the Company’s application of these hedge accounting strategies under IFRS 9, our audit procedures included, among<br><br>other procedures, involving our hedge accounting and derivative specialists to support our independent testing of the application<br><br>of the hedge ratio by the Company and the valuation of a sample of the accumulated fair value adjustments. Other procedures<br><br>performed include testing over the completeness and accuracy of the hedged items and hedging instruments designated in these<br><br>relationships and the determination of the resulting accumulated fair value adjustments. In addition, we assessed the adequacy<br><br>of the disclosures related to hedge accounting. |
/s/ Ernst & Young LLP
Chartered Professional Accountants
Licensed Public Accountants
We have served as Manulife Financial Corporation’s auditor since 1905.
Toronto, Canada
February 11, 2026
| 9 | 2025 Annual Report | Consolidated Financial Statements |
|---|
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of Manulife Financial Corporation
Opinion on Internal Control over Financial Reporting
We have audited Manulife Financial Corporation’s internal control over financial reporting as of December 31, 2025, based on
criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Manulife Financial Corporation (the
Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based
on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated statements of financial position of the Company as of December 31, 2025 and 2024, and the related
consolidated statements of income, consolidated statements of comprehensive income, consolidated statements of changes in
equity and consolidated statements of cash flows for the years then ended, and the related notes and our report
dated February 11, 2026, expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in Management’s Report on Internal Control
Over Financial Reporting contained in the Management’s Discussion and Analysis. Our responsibility is to express an opinion on
the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk,
and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International
Financial Reporting Standards as issued by the International Accounting Standards Board. A company’s internal control over
financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
International Financial Reporting Standards as issued by the International Accounting Standards Board, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Chartered Professional Accountants
Licensed Public Accountants
Toronto, Canada
February 11, 2026
| 10 |
|---|
Consolidated Statements of Financial Position
| As at December 31, | 2024 |
|---|---|
| (Canadian in millions) | |
| Assets | |
| Cash and short-term securities | $25,789 |
| Debt securities | 210,621 |
| Public equities | 33,725 |
| Mortgages | 54,447 |
| Private placements | 49,668 |
| Loans to Bank clients | 2,310 |
| Real estate | 13,263 |
| Other invested assets | 52,674 |
| Total invested assets (note 3) | 442,497 |
| Other assets | |
| Accrued investment income | 2,969 |
| Derivatives (note 4) | 8,667 |
| Insurance contract assets (note 6) | 102 |
| Reinsurance contract held assets (note 6) | 59,015 |
| Deferred tax assets | 5,884 |
| Goodwill and intangible assets (note 5) | 11,052 |
| Miscellaneous | 12,644 |
| Total other assets | 100,333 |
| Segregated funds net assets (note 22) | 435,988 |
| Total assets | $978,818 |
| Liabilities and Equity | |
| Liabilities | |
| Insurance contract liabilities, excluding those for account of segregated fund holders (note 6) | $396,401 |
| Reinsurance contract held liabilities (note 6) | 2,669 |
| Investment contract liabilities (note 7) | 13,498 |
| Deposits from Bank clients | 22,063 |
| Derivatives (note 4) | 14,252 |
| Deferred tax liabilities | 1,890 |
| Other liabilities | 24,936 |
| Long-term debt (note 9) | 6,629 |
| Capital instruments (note 10) | 7,532 |
| Total liabilities, excluding those for account of segregated fund holders | 489,870 |
| Insurance contract liabilities for account of segregated fund holders (note 6) | 126,545 |
| Investment contract liabilities for account of segregated fund holders | 309,443 |
| Insurance and investment contract liabilities for account of segregated fund holders (note 22) | 435,988 |
| Total liabilities | 925,858 |
| Equity | |
| Preferred shares and other equity (note 11) | 6,660 |
| Common shares (note 11) | 20,681 |
| Contributed surplus | 204 |
| Shareholders and other equity holders’ retained earnings | 4,764 |
| Shareholders and other equity holders’ accumulated other comprehensive income (loss) (“AOCI”): | |
| Insurance finance income (expenses) | 37,999 |
| Reinsurance finance income (expenses) | (7,048) |
| Fair value through other comprehensive income (“OCI”) investments | (19,733) |
| Translation of foreign operations | 7,327 |
| Other | 118 |
| Total shareholders and other equity holders’ equity | 50,972 |
| Participating policyholders’ equity | 567 |
| Non-controlling interests | 1,421 |
| Total equity | 52,960 |
| Total liabilities and equity | $978,818 |
| The accompanying notes are an integral part of these Consolidated Financial Statements. |
All values are in US Dollars.
Phil Witherington
President and Chief Executive Officer
Don Lindsay
Chair of the Board of Directors
| 11 | 2025 Annual Report | Consolidated Financial Statements |
|---|
Consolidated Statements of Income
| For the years ended December 31, | ||
|---|---|---|
| (Canadian $ in millions except per share amounts) | 2025 | 2024 |
| Insurance service result | ||
| Insurance revenue (note 6) | $28,888 | $26,592 |
| Insurance service expenses (note 6) | (23,091) | (21,822) |
| Net expenses from reinsurance contracts held (note 6) | (1,271) | (769) |
| Total insurance service result | 4,526 | 4,001 |
| Investment result | ||
| Investment income (note 3) | ||
| Investment income | 19,014 | 18,249 |
| Realized and unrealized gains (losses) on assets supporting insurance and investment contract liabilities | 6,275 | 2,210 |
| Investment expenses | (1,342) | (1,348) |
| Net investment income (loss) | 23,947 | 19,111 |
| Insurance finance income (expenses) and effect of movement in foreign exchange rates (note 6) | (22,681) | (16,219) |
| Reinsurance finance income (expenses) and effect of movement in foreign exchange rates (note 6) | 1,694 | 1,133 |
| Decrease (increase) in investment contract liabilities (note 6) | (551) | (504) |
| 2,409 | 3,521 | |
| Segregated funds investment result (note 22) | ||
| Investment income related to segregated funds net assets | 57,909 | 52,870 |
| Financial changes related to insurance and investment contract liabilities for account of segregated fund<br><br>holders | (57,909) | (52,870) |
| Net segregated funds investment result | - | - |
| Total investment result | 2,409 | 3,521 |
| Other revenue (note 13) | 8,129 | 7,588 |
| General expenses | (4,901) | (4,859) |
| Commissions related to non-insurance contracts | (1,539) | (1,480) |
| Interest expenses | (1,530) | (1,681) |
| Net income (loss) before income taxes | 7,094 | 7,090 |
| Income tax (expenses) recoveries | (1,034) | (1,212) |
| Net income (loss) | $6,060 | $5,878 |
| Net income (loss) attributed to: | ||
| Non-controlling interests | $278 | $247 |
| Participating policyholders | 210 | 246 |
| Shareholders and other equity holders | 5,572 | 5,385 |
| $6,060 | $5,878 | |
| Net income (loss) attributed to shareholders | $5,572 | $5,385 |
| Preferred share dividends and other equity distributions | (321) | (311) |
| Common shareholders’ net income (loss) | $5,251 | $5,074 |
| Earnings per share | ||
| Basic earnings per common share (note 11) | $3.08 | $2.85 |
| Diluted earnings per common share (note 11) | 3.07 | 2.84 |
| Dividends per common share | 1.76 | 1.60 |
| The accompanying notes are an integral part of these Consolidated Financial Statements. | ||
| 12 | ||
| --- |
Consolidated Statements of Comprehensive Income
| For the years ended December 31, | ||
|---|---|---|
| (Canadian $ in millions) | 2025 | 2024 |
| Net income (loss) | $6,060 | $5,878 |
| Other comprehensive income (loss), net of tax: | ||
| Items that may be subsequently reclassified to net income: | ||
| Foreign exchange gains (losses) on: | ||
| Translation of foreign operations | (1,765) | 3,109 |
| Net investment hedges | 323 | (583) |
| Insurance finance income (expenses) | (2,531) | 6,462 |
| Reinsurance finance income (expenses) | 599 | (2,280) |
| Fair value through OCI investments: | ||
| Unrealized gains (losses) arising during the year on assets supporting insurance and investment contract<br><br>liabilities | 1,994 | (3,573) |
| Reclassification of net realized gains (losses) and provision for credit losses recognized in income | 850 | 1,314 |
| Other | (104) | 158 |
| Total items that may be subsequently reclassified to net income | (634) | 4,607 |
| Items that will not be reclassified to net income | 21 | 66 |
| Other comprehensive income (loss), net of tax | (613) | 4,673 |
| Total comprehensive income (loss), net of tax | $5,447 | $10,551 |
| Total comprehensive income (loss) attributed to: | ||
| Non-controlling interests | $134 | $4 |
| Participating policyholders | 269 | 310 |
| Shareholders and other equity holders | 5,044 | 10,237 |
Income Taxes included in Other Comprehensive Income
| For the years ended December 31, | ||
|---|---|---|
| (Canadian $ in millions) | 2025 | 2024 |
| Income tax expenses (recoveries) on: | ||
| Unrealized foreign exchange gains (losses) on translation of foreign operations | $(2) | $1 |
| Unrealized foreign exchange gains (losses) on net investment hedges | 38 | (37) |
| Insurance / reinsurance finance income (expenses) | (77) | 1,207 |
| Unrealized gains (losses) on fair value through OCI investments | 71 | (480) |
| Reclassification of net realized gains (losses) on fair value through OCI investments | 187 | 300 |
| Other | (45) | 68 |
| Total income tax expenses (recoveries) | $172 | $1,059 |
| The accompanying notes are an integral part of these Consolidated Financial Statements. | ||
| 13 | 2025 Annual Report | Consolidated Financial Statements |
| --- | --- | --- |
Consolidated Statements of Changes in Equity
| For the years ended December 31, | ||
|---|---|---|
| (Canadian $ in millions) | 2025 | 2024 |
| Preferred shares and other equity | ||
| Balance, beginning of year | $6,660 | $6,660 |
| Issued (note 11) | - | - |
| Redeemed (note 11) | - | - |
| Balance, end of year | 6,660 | 6,660 |
| Common shares | ||
| Balance, beginning of year | 20,681 | 21,527 |
| Repurchased (note 11) | (651) | (990) |
| Issued on exercise of stock options and deferred share units | 73 | 144 |
| Balance, end of year | 20,103 | 20,681 |
| Contributed surplus | ||
| Balance, beginning of year | 204 | 222 |
| Exercise of stock options and deferred share units | (5) | (18) |
| Balance, end of year | 199 | 204 |
| Shareholders and other equity holders’ retained earnings | ||
| Balance, beginning of year | 4,764 | 4,819 |
| Net income (loss) attributed to shareholders and other equity holders | 5,572 | 5,385 |
| Common shares repurchased (note 11) | (1,780) | (2,282) |
| Preferred share dividends and other equity distributions | (321) | (311) |
| Common share dividends | (2,984) | (2,848) |
| Other (note 24) | (227) | 1 |
| Balance, end of year | 5,024 | 4,764 |
| Shareholders and other equity holders’ accumulated other comprehensive income (loss) (“AOCI”) | ||
| Balance, beginning of year | 18,663 | 13,811 |
| Change in unrealized foreign exchange gains (losses) on net foreign operations | (1,442) | 2,526 |
| Changes in insurance / reinsurance finance income (expenses) | (2,222) | 5,575 |
| Change in unrealized gains (losses) on fair value through OCI investments | 3,220 | (3,471) |
| Other changes in OCI attributed to shareholders and other equity holders | (84) | 222 |
| Balance, end of year | 18,135 | 18,663 |
| Total shareholders and other equity holders’ equity, end of year | 50,121 | 50,972 |
| Participating policyholders’ equity | ||
| Balance, beginning of year | 567 | 257 |
| Net income (loss) attributed to participating policyholders | 210 | 246 |
| Other comprehensive income (losses) attributed to policyholders | 59 | 64 |
| Balance, end of year | 836 | 567 |
| Non-controlling interests | ||
| Balance, beginning of year | 1,421 | 1,431 |
| Net income (loss) attributed to non-controlling interests | 278 | 247 |
| Other comprehensive income (losses) attributed to non-controlling interests | (144) | (243) |
| Contributions (distributions and acquisitions), net | (24) | (14) |
| Balance, end of year | 1,531 | 1,421 |
| Total equity, end of year | $52,488 | $52,960 |
| The accompanying notes are an integral part of these Consolidated Financial Statements. | ||
| 14 | ||
| --- |
Consolidated Statements of Cash Flows
| For the years ended December 31, | ||
|---|---|---|
| (Canadian $ in millions) | 2025 | 2024 |
| Operating activities | ||
| Net income (loss) | $6,060 | $5,878 |
| Adjustments: | ||
| Increase (decrease) in insurance contract net liabilities (note 6) | 18,087 | 9,435 |
| Increase (decrease) in investment contract liabilities | 551 | 504 |
| (Increase) decrease in reinsurance contract assets, excluding reinsurance transactions noted below (note 6) | (1,226) | (613) |
| Amortization of (premium) discount on invested assets | (344) | (290) |
| Contractual service margin (“CSM”) amortization | (2,706) | (2,376) |
| Other amortization | 877 | 869 |
| Net realized and unrealized (gains) losses and impairment of assets | (6,120) | (860) |
| Deferred income tax expenses (recoveries) | (6) | 311 |
| Net loss on reinsurance transactions (pre-tax) (note 6) | (9) | 71 |
| Cash provided by operating activities before undernoted items | 15,164 | 12,929 |
| Changes in policy related and operating receivables and payables | 16,941 | 13,565 |
| Cash provided by (used in) operating activities | 32,105 | 26,494 |
| Investing activities | ||
| Purchases of invested assets and derivatives | (135,470) | (131,123) |
| Disposals and repayments | 108,592 | 112,671 |
| Changes in investment broker net receivables and payables | (210) | 290 |
| Net cash increase (decrease) from sale (purchase) of subsidiaries | (1,277) | (297) |
| Cash provided by (used in) investing activities | (28,365) | (18,459) |
| Financing activities | ||
| Changes in repurchase agreements | (473) | 460 |
| Issue of long-term debt, net (note 9) | 1,385 | - |
| Issue of capital instruments, net (note 10) | 497 | 2,591 |
| Redemption of capital instruments (note 10) | (1,000) | (1,886) |
| Secured borrowing from securitization transactions | 676 | 667 |
| Changes in deposits from Bank clients, net | 2,661 | 413 |
| Lease payments | (108) | (118) |
| Shareholders’ dividends and other equity distributions | (3,305) | (3,159) |
| Contributions from (distributions to) non-controlling interests, net | (24) | (14) |
| Common shares repurchased (note 11) | (2,431) | (3,272) |
| Common shares issued, net (note 11) | 73 | 144 |
| Cash provided by (used in) financing activities | (2,049) | (4,174) |
| Cash and short-term securities | ||
| Increase (decrease) during the year | 1,691 | 3,861 |
| Effect of foreign exchange rate changes on cash and short-term securities | (816) | 1,197 |
| Balance, beginning of year | 24,942 | 19,884 |
| Balance, end of year | 25,817 | 24,942 |
| Cash and short-term securities | ||
| Beginning of year | ||
| Gross cash and short-term securities | 25,789 | 20,338 |
| Net payments in transit, included in other liabilities | (847) | (454) |
| Net cash and short-term securities, beginning of year | 24,942 | 19,884 |
| End of year | ||
| Gross cash and short-term securities | 26,703 | 25,789 |
| Net payments in transit, included in other liabilities | (886) | (847) |
| Net cash and short-term securities, end of year | $25,817 | $24,942 |
| Supplemental disclosures on cash flow information | ||
| Interest received | $13,942 | $13,496 |
| Interest paid | 1,515 | 1,574 |
| Income taxes paid | 756 | 755 |
| The accompanying notes are an integral part of these Consolidated Financial Statements. | ||
| 15 | 2025 Annual Report | Consolidated Financial Statements |
| --- | --- | --- |
Notes to Consolidated Financial Statements
| Page Number | Note | |
|---|---|---|
| 16 | Note 1 | Nature of Operations and Material Accounting Policy Information |
| 31 | Note 2 | Accounting and Reporting Changes |
| 33 | Note 3 | Invested Assets and Investment Income |
| 45 | Note 4 | Derivative and Hedging Instruments |
| 55 | Note 5 | Goodwill and Intangible Assets |
| 58 | Note 6 | Insurance and Reinsurance Contract Assets and Liabilities |
| 83 | Note 7 | Investment Contract Liabilities |
| 84 | Note 8 | Risk Management |
| 101 | Note 9 | Long Term Debt |
| 102 | Note 10 | Capital Instruments |
| 103 | Note 11 | Equity Capital and Earnings Per Share |
| 105 | Note 12 | Capital Management |
| 106 | Note 13 | Revenue from Service Contracts |
| 107 | Note 14 | Stock-Based Compensation |
| 108 | Note 15 | Employee Future Benefits |
| 113 | Note 16 | Income Taxes |
| 116 | Note 17 | Interests in Structured Entities |
| 118 | Note 18 | Commitments and Contingencies |
| 120 | Note 19 | Segmented Information |
| 123 | Note 20 | Related Parties |
| 124 | Note 21 | Subsidiaries |
| 125 | Note 22 | Segregated Funds |
| 126 | Note 23 | Information Provided in Connection with Investments in Deferred Annuity Contracts and<br><br>SignatureNotes Issued or Assumed by John Hancock Life Insurance Company (U.S.A.) |
| 128 | Note 24 | Acquisitions |
| 16 | ||
| --- |
Notes to Consolidated Financial Statements
(Canadian $ in millions except per share amounts or unless otherwise stated)
Note 1 Nature of Operations and Material Accounting Policy Information
(a)Reporting Entity
Manulife Financial Corporation (“MFC”) is a publicly traded company and the holding company of The Manufacturers Life
Insurance Company (“MLI”), a Canadian life insurance company. MFC, including its subsidiaries (collectively, “Manulife” or the
“Company”) is a leading financial services group with principal operations in Asia, Canada and the United States. Manulife’s
international network of employees, agents and distribution partners offers financial protection and wealth management products
and services to personal and business clients as well as asset management services to institutional customers. The Company
operates as Manulife in Canada and Asia, and primarily as John Hancock in the United States.
MFC is domiciled in Canada and incorporated under the Insurance Companies Act (Canada) (“ICA”). These Consolidated
Financial Statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by
the International Accounting Standards Board (“IASB”).
These Consolidated Financial Statements as at and for the year ended December 31, 2025 were authorized for issue by MFC’s
Board of Directors on February 11, 2026.
(b)Basis of Preparation
The preparation of Consolidated Financial Statements in conformity with IFRS requires management to make judgments,
estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities,
and the disclosure of contingent assets and liabilities as at the date of the Consolidated Financial Statements, and the reported
amounts of insurance service result, investment result, and other revenue and expenses during the reporting periods. Actual
results may differ from these estimates. The most significant estimation processes relate to evaluating assumptions used in
measuring insurance and investment contract liabilities and reinsurance contracts held liabilities, assessing assets for
impairment, determining pension and other post-employment benefit obligation and expense assumptions, determining income
taxes and uncertain tax positions, and estimating fair values of certain invested assets. Estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimates are
revised and in any future years affected. Although some variability is inherent in these estimates, management believes that the
amounts recorded are appropriate. The material accounting policies used and the most significant judgments made by
management in applying these accounting policies in the preparation of these Consolidated Financial Statements are
summarized below.
The Company’s results and operations have been and may continue to be adversely impacted by the economic environment.
The adverse effects include but are not limited to recessionary economic trends in markets the Company operates in, significant
market volatility, increase in credit risk, strain on commodity markets and alternative long duration asset (“ALDA”) prices, foreign
currency exchange rate volatility, increases in insurance claims, persistency and redemptions, and disruption of business
operations. The breadth and depth of these events and their duration contribute additional uncertainty around estimates used in
determining the carrying value of certain assets and liabilities included in these Consolidated Financial Statements.
The Company has applied appropriate fair value measurement techniques using reasonable judgment and estimates from the
perspective of a market participant to reflect current economic conditions. The impact of these techniques has been reflected in
these Consolidated Financial Statements. Changes in the inputs used could materially impact the respective carrying values.
(c)Fair Value Measurement
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction (not
a forced liquidation or distress sale) between market participants at the measurement date; fair value is an exit value.
When available, quoted market prices are used to determine fair value. If quoted market prices are not available, fair value is
typically based upon alternative valuation techniques such as discounted cash flows, matrix pricing, consensus pricing services
and other techniques. Broker quotes are generally used when external public vendor prices are not available.
The Company has a valuation process in place that includes a review of price movements relative to the market, a comparison of
prices between vendors, and a comparison to internal matrix pricing which uses predominantly external observable data.
Judgment is applied in adjusting external observable data for items including liquidity and credit factors.
The Company categorizes its fair value measurement results according to a three-level hierarchy. The hierarchy prioritizes the
inputs used by the Company’s valuation techniques based on their reliability. A level is assigned to each fair value measurement
based on the lowest level input significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy
are defined as follows:
Level 1 – Fair value measurements that reflect unadjusted, quoted prices in active markets for identical assets and liabilities that
the Company can access at the measurement date, reflecting market transactions.
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Level 2 – Fair value measurements using inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly or indirectly. These include quoted prices for similar assets and liabilities in active markets, quoted
prices for identical or similar assets and liabilities in inactive markets, inputs that are observable that are not prices (such as
interest rates, credit risks, etc.) and inputs that are derived from or corroborated by observable market data. Most debt
investments are classified within Level 2. Also, included in the Level 2 category are derivative instruments that are priced using
models with observable market inputs, including interest rate swaps, equity swaps, credit default swaps and foreign currency
forward contracts.
Level 3 – Fair value measurements using significant unobservable inputs. These include valuations for assets and liabilities that
are derived using data, some or all of which is not market observable, including assumptions about risk. Level 3 security
valuations include less liquid investments such as other invested assets, mortgages, real estate, timber investments held within
segregated funds, certain private placements and other investments that have little or no price transparency. Certain derivative
financial instrument valuations are also included in Level 3.
(d)Basis of Consolidation
MFC consolidates the financial statements of all entities it controls, including certain structured entities. Subsidiaries are entities
controlled by the Company. The Company has control over an entity when the Company has the power to govern the financial
and operating policies of the entity and is exposed to variable returns from its activities which are significant in relation to the total
variable returns of the entity and the Company is able to use its power over the entity to affect the Company’s share of variable
returns of the entity. In assessing control, significant judgment is applied while considering all relevant facts and circumstances.
When assessing decision making power over an entity, the Company considers the extent of its rights relative to the
management of the entity, the level of voting rights held over the entity which are potentially or presently exercisable, the
existence of any contractual management agreements which may provide the Company with power over the entity’s financial
and operating policies, and to the extent of other parties’ ownership in the entity, if any, with the possibility of de facto control
being present. When assessing variable returns from an entity, the Company considers the significance of direct and indirect
financial and non-financial variable returns to the Company from the entity’s activities in addition to the proportionate significance
of such returns to the total variability of the entity. The Company also considers the degree to which its interests are aligned with
those of other parties investing in the entity and the degree to which the Company may act in its own interest while interacting
with the entity.
The financial statements of subsidiaries are included in the Company’s Consolidated Financial Statements from the date control
is established and are excluded from the date control ceases. The initial control assessment is performed at the inception of the
Company’s involvement with the entity and is reconsidered if the Company acquires or loses power over key operating and
financial policies of the entity; acquires additional interests or disposes of interests in the entity; the contractual arrangements of
the entity are amended such that the Company’s proportionate exposure to variable returns changes; or if the Company’s ability
to use its power to affect its variable returns from the entity changes. A change in control may lead to gains or losses on
derecognition of a subsidiary when losing control, or on derecognition of previous interests when gaining control in a subsidiary.
The Company’s Consolidated Financial Statements have been prepared using uniform accounting policies for like transactions
and events in similar circumstances. Intercompany balances, and revenue and expenses arising from intercompany transactions,
have been eliminated in preparing the Consolidated Financial Statements.
Non-controlling interests are interests of other parties in the equity of the Company’s subsidiaries and are presented within total
equity, separate from the equity of participating policyholders and shareholders. Non-controlling interests in the net income and
other comprehensive income (“OCI”) of the Company’s subsidiaries are included in total net income and total OCI, respectively.
An exception to this occurs where the subsidiary’s shares are either puttable by the other parties or are redeemable for cash on
a fixed or determinable date, in which case other parties’ interests in the subsidiary’s shares are presented as liabilities of the
Company and other parties’ interests in the subsidiary’s net income and OCI are presented as expenses of the Company.
The equity method of accounting is used to account for entities over which the Company has significant influence or joint control
(“associates” or “joint ventures”), whereby the Company records its share of the associate’s or joint venture’s net assets and
financial results using uniform accounting policies for similar transactions and events. Significant judgment is used to determine
whether voting rights, contractual management rights and other relationships with the entity, if any, provide the Company with
significant influence or joint control over the entity. Gains and losses on the sale of associates or joint ventures are included in
income when realized, while impairment losses are recognized immediately when there is objective evidence of impairment.
Investments in associates and joint ventures are included in other invested assets on the Company’s Consolidated Statements of
Financial Position.
(e)Invested Assets
Invested assets are recognized initially at fair value plus, in the case of investments not classified as fair value through profit or
loss (“FVTPL”), directly attributable transaction costs. Invested assets which are financial instruments are classified as fair value
through other comprehensive income (“FVOCI”), FVTPL or as amortized cost. The Company determines the classification of its
invested assets at initial recognition.
The classification of invested assets which are financial instruments depends on their contractual terms and the Company’s
business model for managing the assets.
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The Company assesses the contractual terms of the assets to determine whether their terms give rise on specified dates to cash
flows that are solely payments of principal and interest (“SPPI”) on the principal amount outstanding. Only debt instruments may
have SPPI cash flows. The most significant elements of interest within a lending arrangement are typically the consideration for
the time value of money and credit risk. To make the SPPI assessment, the Company applies judgement and considers relevant
factors such as prepayment and redemption rights, conversion features, and subordination of the instrument to other instruments
of the issuer. An asset with contractual terms that introduce a more than de minimis exposure to risks of not collecting principal or
interest would not meet the SPPI test.
Debt instruments which qualify as having SPPI cash flows are classified as amortized cost or FVOCI based on the business
model under which they are held. If held within a business model whose objective is to hold the assets in order to collect
contractual cash flows, they are classified as amortized cost. If held within a business model whose objective is achieved by both
collecting contractual cash flows and selling the assets, they are classified as FVOCI. In either case, the Company may
designate them as FVTPL in order to reduce accounting mismatches with FVTPL liabilities they support. Debt instruments which
fail the SPPI test are required to be measured at FVTPL. To identify the business model financial assets are held within,
considerations include the business purpose of the portfolio they are held within, the risks that are being managed and the
business activities which manage the risks, the basis on which performance of the portfolio is being evaluated, and the frequency
and significance of sales activity within the portfolio.
Realized and unrealized gains and losses on debt instruments classified as FVTPL and realized gains and losses on debt
instruments held at FVOCI or amortized cost are recognized in investment income immediately. Unrealized gains and losses on
FVOCI debt investments are recorded in OCI, except for unrealized gains and losses on foreign currency translation which are
included in income.
Investments in public and private equities which are accounted for as financial instruments are not subject to the SPPI test and
are classified as FVTPL.
Valuation methods for the Company’s invested assets are described above in note 1 (c). All fair value valuations are performed in
accordance with IFRS 13 “Fair Value Measurement”. Disclosure of financial instruments carried at fair value within the three
levels of the fair value hierarchy and disclosure of the fair value for financial instruments not carried at fair value on the
Consolidated Statements of Financial Position are presented in note 3. Fair value valuations are performed by the Company and
by third-party service providers. When third-party service providers are engaged, the Company performs a variety of procedures
to corroborate their pricing information. These procedures may include, but are not limited to, inquiry and review of valuation
techniques, and of inputs to the valuation and vendor controls reports.
Cash and short-term securities comprise cash, current operating accounts, overnight bank and term deposits, and debt
instruments held for meeting short-term cash commitments. Short-term securities are carried at fair value or at cost. Short-term
securities comprise investments due to mature within one year of the date of purchase. Short-term securities are classified as
Level 2 for fair value purposes because these instruments are typically not actively traded. Net payments in transit and overdraft
bank balances are included in other liabilities.
Debt securities are carried at fair value or amortized cost. Debt securities are generally valued by third-party pricing vendors
using proprietary pricing models incorporating current market inputs for similar investments with comparable terms and credit
quality (matrix pricing). The significant inputs include, but are not limited to, yield curves, credit risks and spreads, prepayment
rates and volatility of these inputs. Debt securities are classified as Level 2 but can be Level 3 if significant inputs are not market
observable.
Public equities comprise of common and preferred equities and shares or units of mutual funds and are carried at fair value.
Public equities are generally classified as Level 1, as fair values are normally based on quoted market prices. Realized and
unrealized gains and losses on equities designated as FVTPL are recognized in investment income immediately.
Mortgages are classified as Level 3 for fair value disclosure purposes due to the lack of market observability of certain significant
valuation inputs.
The Company accounts for insured and uninsured mortgage securitizations as secured financing transactions since the criteria
for sale accounting of securitized mortgages are not met. For these transactions, the Company continues to recognize the
mortgages and records a liability in other liabilities for the amounts owed at maturity. Interest income from these mortgages and
interest expense on the borrowings are recorded using the effective interest rate (“EIR”) method.
Private placements, which include corporate loans for which there is no active market, are generally classified as Level 2 for fair
value disclosure purposes or as Level 3 if significant inputs are not market observable.
Loans to Manulife Bank of Canada (“Manulife Bank” or “Bank”) clients are carried at amortized cost and are classified as Level 2
for fair value disclosure purposes.
Interest income is recognized on all debt instruments including securities, private placements, mortgages, and loans to Bank
clients as it accrues and is calculated using the EIR method. Premiums, discounts and transaction costs are amortized over the
life of the underlying investment using the effective yield method for all debt securities as well as private placements and
mortgages.
| 19 | 2025 Annual Report | Consolidated Financial Statements |
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The Company records purchases and sales of invested assets on a trade date basis. Loans originated by the Company are
recognized on a settlement date basis.
Real estate consists of both own use and investment properties. Own use real estate properties which are underlying items for
insurance contracts with direct participating features are measured at fair value as if they were investment properties, as
permitted by International Accounting Standards (“IAS”) 16 “Property, Plant and Equipment” which was amended by IFRS 17
“Insurance Contracts” (“IFRS 17”). Other own use property is carried at cost less accumulated depreciation and any accumulated
impairment losses, or at revalued amount which is the fair value as at the most recent revaluation date minus accumulated
amortization and any accumulated impairment losses. Depreciation is calculated based on the cost of an asset less its residual
value and is recognized in income on a straight-line basis over the estimated useful life ranging from 30 to 60 years. Impairment
losses are recorded in income to the extent the recoverable amount is less than the carrying amount. All own use real estate
property is classified as Level 3 for fair value disclosure purposes.
An investment property is a property held to earn rental income, for capital appreciation, or both. Investment properties are
measured at fair value, with changes in fair value recognized in income. Fair value of own use properties and investment
properties is determined using the same processes. Fair value for all properties is determined using external appraisals that are
based on the highest and best use of the property. The valuation techniques include discounted cash flows, the direct
capitalization method as well as comparable sales analysis and employ both observable and unobservable inputs. Inputs include
existing and assumed tenancies, market data from recent comparable transactions, future economic outlook and market risk
assumptions, capitalization rates and internal rates of return. Investment properties are classified as Level 3 for fair value
disclosure purposes.
When a property transfers from own use property to investment property, any gain or loss arising on the re-measurement of the
property and any associated leases to fair value as at the date of change in use is recognized in OCI, to the extent that it is not
reversing a previous impairment loss. Reversals of impairment losses are recognized in income. When a property changes from
investment property to own use property, the property’s deemed cost for subsequent accounting is its fair value as at the date of
change in use.
Other invested assets include private equity and debt investments and properties held in infrastructure, timber, agriculture and
energy sectors. Private equity investments which are associates or joint ventures are accounted for using the equity method (as
described in note 1 (d) above) or are classified as FVTPL and carried at fair value. Timber and agriculture properties which are
own use properties are carried at cost less accumulated depreciation and any accumulated impairment losses, except for their
biological assets which are measured at fair value. Timber and agriculture properties which are investment properties are
measured at fair value with changes in fair value recognized in income. The fair value of other invested assets is determined
using a variety of valuation techniques as described in note 3. Other invested assets that are measured or disclosed at fair value
are primarily classified as Level 3 for fair value disclosure purposes.
Other invested assets also include investments in leveraged leases, which are accounted for using the equity method. The
carrying value under the equity method reflects the amortized cost of the unconsolidated lease entities’ lease receivables and
related non-recourse debt using the effective yield method.
Expected Credit Loss Impairment
The expected credit loss (“ECL”) impairment allowance model applies to invested assets which are debt instruments and
measured at FVOCI or amortized cost. ECL allowances are measured under four probability-weighted macroeconomic
scenarios, which measure the difference between all contractual cash flows that are due to the Company in accordance with the
contract and all the cash flows that the Company expects to receive, discounted at the original EIR. This process includes
consideration of past events, current market conditions and reasonable supportable information about future economic
conditions. Forward-looking macroeconomic variables used within the estimation models represent variables that are the most
closely related with credit losses in the relevant portfolio.
The estimation and measurement of impairment losses requires significant judgement. These estimates are driven by many
elements, changes in which can result in different levels of allowances. Elements include the estimation of the amount and timing
of future cash flows, the Company’s criteria for assessing if there has been a significant increase in credit risk (“SICR”), the
selection of forward-looking macroeconomic scenarios and their probability weights, the application of expert credit judgment in
the development of the models, inputs and, when applicable, overlay adjustments. It is the Company’s practice to regularly
review its models in the context of actual loss experience and adjust when necessary. The Company has implemented formal
policies, procedures, and controls over all significant impairment processes.
The Company’s definitions of default and credit-impaired are based on quantitative and qualitative factors. A financial instrument
is considered to be in default when significant payments of interest, principal or fees are past due for more than 90 days, unless
remedial arrangements with the issuer are in place. A financial instrument may be credit-impaired as a result of one or more loss
events that occurred after the date of initial recognition of the instrument and the loss event has a negative impact on the
estimated future cash flows of the instrument. This includes events that indicate or include: significant financial difficulty of the
counterparty; a breach of contract; for economic or contractual reasons relating to the counterparty’s financial difficulty,
concessions are granted that would not otherwise be considered; it is becoming probable that the counterparty will enter
bankruptcy or other financial reorganization; the disappearance of an active market for that financial asset because of the
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counterparty’s financial difficulties; or the counterparty is considered to be in default by any of the major rating agencies such as
Standard and Poor’s (“S&P”), Moody’s and Fitch.
The ECL calculations include the following elements:
•Probability of default (“PD”) is an estimate of the likelihood of default over a given time horizon.
•Loss given default (“LGD”) is an estimate of the loss arising on a future default. This is based on the difference between the
contractual cash flows due and those that the Company expects to receive, including from collateral. It is based on credit
default studies performed based on internal credit experience.
•Exposure at default (“EAD”), is an estimate of the exposure at a future default date, considering both the period of exposure
and the amount of exposure at a given reporting date. The EADs are determined by modelling the range of possible
exposure outcomes at various points in time, corresponding to the multiple economic scenarios. The probabilities are then
assigned to each economic scenario based on the outcome of the models.
The Company measures ECLs using a three-stage approach:
•Stage 1 comprise all performing financial instruments that have not experienced a SICR since initial recognition. The
determination of SICR varies by instrument and considers the relative change in the risk of default since origination. 12-
month ECLs are recognized for all Stage 1 financial instruments. 12-month ECLs represent the portion of lifetime ECLs that
result from default events possible within 12 months of the reporting date. These expected 12-month default probabilities are
applied to a forecast EAD, multiplied by the expected LGD, and discounted by the original EIR. This calculation is made for
each of four macroeconomic scenarios.
•Stage 2 comprise all performing financial instruments that have experienced a SICR since original recognition or have
become 30 days in arrears for principal or interest payments, whichever happens first. When assets move to Stage 2, full
lifetime ECLs are recognized, which represent ECLs that result from all possible default events over the remaining lifetime of
the financial instrument. The mechanics are consistent with Stage 1, except PDs and LGDs are estimated over the
remaining lifetime of the instrument instead of over the coming year. In subsequent reporting periods, if the credit risk of a
financial instrument improves such that there is no longer a SICR compared to credit risk at initial recognition, the financial
instrument will migrate back to Stage 1 and 12-month ECLs will be recognized.
•Stage 3 comprise financial instruments identified as credit-impaired. Similar to Stage 2 assets, full lifetime ECLs are
recognized for Stage 3 financial instruments, but the PD is set at 100%. A Stage 3 ECL is calculated using the unpaid
principal balance multiplied by LGD which reflects the difference between the asset’s carrying amount and its discounted
expected future cash flows.
Interest income is calculated based on the gross carrying amount for both Stage 1 and 2 exposures. Interest income on Stage 3
financial instruments is determined by applying the EIR to the amortized cost of the instrument, which represents the gross
carrying amount adjusted for the credit loss allowance.
For Stage 1 and Stage 2 exposures, an ECL is generated for each individual exposure; however, the relevant parameters are
modelled on a collective basis with all collective parameters captured by the individual security level. The exposures are grouped
into smaller homogeneous portfolios, based on a combination of internal and external characteristics, such as origination details,
balance history, sector, geographic location, and credit history. Stage 3 ECLs are either individually or collectively assessed,
depending on the nature of the instrument and impairment.
In assessing whether credit risk has increased significantly, the risk of default occurring is compared over the remaining expected
life from the reporting date and as at the date of initial recognition. The assessment varies by instrument and risk segment. The
assessment incorporates internal credit risk ratings and a combination of security-specific and portfolio-level assessments,
including the incorporation of forward-looking macroeconomic data. The assessment of SICR considers both absolute and
relative thresholds. If contractual payments are more than 30 days past due, the credit risk is automatically deemed to have
increased significantly since initial recognition.
When estimating ECLs, the four probability-weighted macroeconomic scenarios are considered. Economic forward-looking
inputs vary by market. Depending on their usage in the models, macroeconomic inputs are projected at the country, province, or
more granular level. Each macroeconomic scenario used includes a projection of all relevant macroeconomic variables for a five-
year period, subsequently reverting to long-run averages. In order to achieve an unbiased estimate, economic data used in the
models is supplied by an external source. This information is compared to other publicly available forecasts, and the scenarios
are assigned a probability weighting based on statistical analysis and management judgment. Refer to note 8 (c).
The inputs and models used for calculating ECLs may not always capture all characteristics of the market at the date of the
Consolidated Financial Statements.
Changes in the required ECL allowance are recorded in the provision for credit losses within Investment income in the
Consolidated Statements of Income. Invested assets are written off, either partially or in full, against the related allowance for
credit losses when there is no realistic prospect of recovery in respect of those amounts. This is considered a partial or full
derecognition of the financial asset. In subsequent periods, any recoveries of amounts previously written off are credited to the
allowance for credit losses.
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(f)Goodwill and Intangible Assets
Goodwill represents the difference between the fair value of purchase consideration of an acquired business and the Company’s
proportionate share of the net identifiable assets acquired. It is initially recorded at cost and subsequently measured at cost less
any accumulated impairment.
Goodwill is tested for impairment at least annually and whenever events or changes in circumstances indicate that the carrying
amounts may not be recoverable at the cash generating unit (“CGU”) or group of CGUs level. The Company allocates goodwill to
CGUs or group of CGUs for impairment testing at the lowest level within the Company where the goodwill is monitored for
internal management purposes. The allocation is made to those CGUs or group of CGUs that are expected to benefit from the
business combination in which the goodwill arose. Any potential impairment of goodwill is identified by comparing the
recoverable amount with the carrying value of a CGU or group of CGUs. Goodwill is reduced by the amount of deficiency, if any.
If the deficiency exceeds the carrying amount of goodwill, the carrying values of the remaining assets in the CGU or group of
CGUs are subject to being reduced by the remaining deficiency on a pro-rata basis.
The recoverable amount of a CGU or group of CGUs is the higher of the estimated fair value less costs to sell or the value-in-use
of the CGU or group of CGUs. In assessing value-in-use, estimated future cash flows are discounted using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the CGU or group of CGUs. In
some cases, the most recent detailed calculation made in a prior period of a recoverable amount is used in the current period
impairment testing. This is the case only if there are no significant changes to the CGU or group of CGUs, the likelihood of
impairment is remote based on the analysis of current events and circumstances, and the most recently calculated recoverable
amount substantially exceeded the current carrying amount of the CGU or group of CGUs.
Intangible assets with indefinite useful lives include the John Hancock brand name, certain investment management contracts
and certain agricultural water rights. The indefinite useful life assessment for the John Hancock brand name is based on the
brand name being protected by indefinitely renewable trademarks in markets where branded products are sold, and for certain
investment management contracts based on the ability to renew these contracts indefinitely. In addition, there are no legal,
regulatory or contractual provisions that limit the useful lives of these intangible assets. Certain agricultural water rights are held
in perpetuity. An intangible asset with an indefinite useful life is not amortized but is subject to an annual impairment test which is
performed more frequently if an indication that it is not recoverable arises.
Intangible assets with finite useful lives include acquired distribution networks, customer relationships, capitalized software, and
certain investment management contracts and other contractual rights. Distribution networks, customer relationships, and other
finite life intangible assets are amortized over their estimated useful lives, six to 68 years, either based on the passage of time or
in relation to asset consumption metrics. Software intangible assets are amortized on a straight-line basis over their estimated
useful lives of three to 10 years. Amortization expense is recorded in General expenses. Finite life intangible assets are
assessed for indicators of impairment at each reporting period. If an indication of impairment arises, these assets are tested for
impairment.
(g)Miscellaneous Assets
Miscellaneous assets include company owned life insurance policies (“COLI”) assets with respect to unfunded defined benefit
obligations, defined benefit assets and capital assets. COLI assets are carried at their cash surrender value. Defined benefit
assets’ carrying value is explained in note 1 (o). Capital assets are carried at cost less accumulated amortization computed on a
straight-line basis over their estimated useful lives, which vary from two to 10 years.
(h)Segregated Funds
The Company manages segregated funds on behalf of policyholders, which are presented as segregated funds net assets with
offsetting insurance and investment contract liabilities for account of segregated fund holders in the amount of their account
balances. The investment returns on these funds are passed directly to policyholders. In some cases, the Company has provided
guarantees associated with these funds. Amounts invested by the Company in segregated funds for seed purposes are
presented within invested asset categories based on the nature of the underlying investments.
Segregated funds net assets are measured at fair value and include investments in mutual funds, debt securities, equities, cash,
short-term investments and other investments. With respect to the consolidation requirement of IFRS, in assessing the
Company’s degree of control over the underlying investments, the Company considers the scope of its decision-making rights,
the rights held by other parties, its remuneration as an investment manager and its exposure to variability of returns from the
investments. The Company has determined that it does not have control over the underlying investments as it acts as an agent
on behalf of segregated fund policyholders.
The methodology applied to determine the fair value of investments held in segregated funds is consistent with that applied to
invested assets held by the general fund, as described above in note 1 (e). Segregated funds liabilities are measured based on
the value of the segregated funds net assets. Investment returns on segregated funds assets are passed directly to policyholders
and the Company does not bear the risk associated with these assets outside of guarantees offered on certain variable life and
annuity products, for which the underlying investments are held within segregated funds.
Some of the Company’s liabilities for account of segregated fund holders arise from insurance contracts that it issues. These are
reported as Insurance contract liabilities for account of segregated fund holders, representing the Company’s obligation to pay
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the policyholder an amount equal to the fair value of the underlying items, and are measured at the aggregate of policyholder
account balances. Changes in fair value of these liabilities are reported as Financial changes related to insurance and
investment contract liabilities for account of segregated fund holders in the Consolidated Statements of Income. Other liabilities
associated with these insurance contracts, such as those associated with guarantees provided by the Company as a result of
certain variable life and annuity contracts, are included in Insurance contract assets or Insurance contract liabilities, excluding
those for account of segregated fund holders on the Consolidated Statements of Financial Position. The Company holds assets
supporting these guarantees in the general fund, which are included in invested assets according to their investment type.
The remaining liabilities for account of segregated fund holders do not arise from insurance contracts that the Company issues.
These are reported as Investment contract liabilities for account of segregated fund holders on the Consolidated Statements of
Financial Position. These are also measured at the aggregate of policyholder account balances and changes in fair value of
these liabilities are reported as Financial changes related to insurance and investment contract liabilities for account of
segregated fund holders in the Consolidated Statements of Income.
(i)Insurance Contract Liabilities and Reinsurance Contract Assets
Scope and Classification
Contracts issued by the Company are classified as insurance, investment, or service contracts at initial recognition. Insurance
contracts are contracts under which the Company accepts significant insurance risk from a policyholder. A contract is considered
to have significant insurance risk if an insured event could cause the Company to pay significant additional amounts in any single
scenario with commercial substance. The additional amounts refer to the present value of amounts that exceed those that would
be payable if no insured event had occurred.
Reinsurance contracts held are contracts held by the Company under which it transfers significant insurance risk related to
underlying insurance contracts to other parties, along with the associated premiums. The purpose of the reinsurance contracts
held is to mitigate the significant insurance risk that the Company may have from the underlying insurance contracts.
Both insurance and reinsurance contracts are accounted for in accordance with IFRS 17. Contracts under which the Company
does not accept significant insurance risk are either classified as investment contracts or considered service contracts and are
accounted for in accordance with IFRS 9 “Financial Instruments” (“IFRS 9”) or IFRS 15 “Revenue from Contracts with
Customers” (“IFRS 15”), respectively.
Insurance contracts are classified as direct participation contracts or contracts without direct participation features based on
specific criteria. Insurance contracts with direct participation features are insurance contracts that are substantially investment-
related service contracts under which the Company promises an investment return based on underlying items. They are viewed
as creating an obligation to pay policyholders an amount that is equal to the fair value of the underlying items, less a variable fee
for service.
Separation of components
At inception of insurance and reinsurance contracts held, the Company analyses whether they contain the following components
that are separated and accounted for under other IFRS standards:
•Derivatives embedded within insurance contracts which contain risks and characteristics that are not closely related to those
of the host contract unless the embedded derivative itself meets the definition of an insurance contract;
•Distinct investment components which represent cash flows paid (received) in all circumstances regardless of whether an
insured event has occurred or not. Investment components are distinct if they are not highly interrelated with insurance
component cash flows and if they could be issued on a stand-alone basis; and
•Distinct service components which are promises to transfer goods or non-insurance services if the policyholder can benefit
from them and either on its own or with other resources that are readily available to the policyholder. The service
components are distinct if they are not highly interrelated with the insurance components and the Company provides no
significant service in integrating the service component with the insurance component.
The Company applies IFRS 17 to all remaining components of the insurance and reinsurance contracts held.
Level of aggregation
Insurance contracts are aggregated into portfolios of insurance contracts which are managed together and are subject to similar
risks. The Company has defined portfolios by considering various factors such as the issuing subsidiary, measurement model,
major product line and type of insurance risk. The portfolios of insurance contracts are further grouped by:
•Date of issue: the period cannot be longer than one year. Most of the Company’s insurance contracts are aggregated into
annual cohorts; and
•Expected profitability at inception into one of three categories: onerous contracts, contracts with no significant risk of
becoming onerous and other remaining contracts. Onerous contracts are those contracts that at initial inception, the
Company expects to generate net outflow, without considering investment returns or the benefit of any reinsurance contracts
held.
The Company establishes the groups at initial recognition and may add contracts to the groups after the end of a reporting
period, however, the Company does not subsequently reassess the composition of the groups.
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For reinsurance contracts held, the portfolios align with the direct insurance contract portfolios. Groups of reinsurance contracts
typically comprise a single reinsurance contract, and similar to direct groups they do not contain contracts issued more than one
year apart.
Cash flows within the contract boundaries
The Company includes in the measurement of a group of insurance contracts and reinsurance contracts held, all future cash
flows within the boundary of the contracts in the group. Cash flows are within the boundary of an insurance contract (and a
reinsurance contract held) if they arise from substantive rights and obligations that exist in which the Company can compel the
policyholder to pay the premiums (or is compelled to pay amounts to a reinsurer) or has a substantive obligation to provide
services to the policyholder (or a substantive right to receive services from a reinsurer).
For insurance contracts, a substantive obligation to provide services ends when the Company has the practical ability to
reassess the risks and as a result, can set a new price or level of benefits that fully reflects those risks.
For reinsurance contracts held, a substantive right to receive services ends when the reinsurer has the practical ability to
reassess the risk transferred to it and can set a new price or level of benefits that fully reflects those risks, or the reinsurer can
terminate the coverage.
Measurement models
There are three measurement models for insurance contracts:
•Variable fee approach (“VFA”): The Company applies this approach to insurance contracts with direct participation features
such as participating life insurance contracts, unit-linked contracts and variable annuity contracts. The direct participating
feature is identified at inception, where the Company has the obligation to pay the policyholder an amount equal to the fair
value of the underlying items less a variable fee in exchange for investment services provided.
•Premium allocation approach (“PAA”): The Company applies this simplified approach for certain insurance contracts and
reinsurance contracts with a duration of typically one year or less, such as Canadian Group Benefit products, some
Canadian Affinity products, and some Asia short-term individual and group products.
•General measurement model (“GMM”): The Company applies this model to the remaining insurance contracts and
reinsurance contracts not measured using the VFA or the PAA.
Recognition of insurance contracts
The Company recognizes groups of insurance contracts that it issues from the earliest of the following:
•The beginning of the coverage period of the group of contracts,
•The date when the first payment from a policyholder in the group is due or when the first payment is received if there is no
due date, and
•For a group of onerous contracts, as soon as facts and circumstances indicate that the group is onerous.
Insurance contracts measured under the GMM and the VFA measurement model
Initial measurement
The measurement of insurance contracts at initial recognition is the same for GMM or VFA. At initial recognition, the Company
measures a group of insurance contracts as the total of: (a) fulfilment cash flows, and (b) a contractual service margin (“CSM”).
Fulfilment cash flows comprise estimates of future cash flows, adjusted to reflect the time value of money and financial risks, and
a risk adjustment for non-financial risk. In determining the fulfilment cash flows, the Company uses estimates and assumptions
considering a range of scenarios which have commercial substance and give a fair representation of possible outcomes.
If fulfilment cash flows generate a total of net cash inflows at initial recognition, a CSM is set up to fully offset the fulfilment cash
flows, and results in no impact on income at initial recognition. The CSM represents the unearned profit the Company will
recognize as it provides services under the insurance contracts. However, if fulfilment cash flows generate a total of net cash
outflows at initial recognition, a loss is recognized in Insurance service expenses immediately and the group of contracts is
considered to be onerous.
For contracts with fulfilment cash flows in multiple foreign currencies, the group of insurance contracts, including the CSM, is
considered to be denominated in a single currency. If a group of insurance contracts has cash flows in more than one currency,
on initial recognition the Company determines a single currency in which the multicurrency group of contracts is denominated.
The Company determines the single currency to be the currency of the predominant cash flows.
The unit of account for CSM or loss is on a group of contracts basis consistent with the level of aggregation specified above.
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Subsequent measurement of fulfilment cash flows
The fulfilment cash flows at each reporting date are measured using the current estimates of expected cash flows and current
discount rates. In the subsequent periods, the carrying amount of a group of insurance contracts at each reporting date is the
sum of:
•The liability for remaining coverage (“LRC”), which comprises the fulfilment cash flows that relate to services to be provided
in the future and any remaining CSM at that date; and
•The liability for incurred claims (“LIC”), which comprises the fulfilment cash flows for incurred claims and expenses that have
not yet been paid.
For onerous contracts, the LRC is further divided into a loss component, which represents the remaining net outflow for the
group of insurance contracts; and the LRC excluding the loss component, which represents the amount of liability with offsetting
inflows.
Premiums received increases the LRC. Where a third-party administrator is involved in the collection and remittance of
premiums, amounts receivable from the third party are included in the measurement of insurance contract liabilities until actual
cash is remitted to the Company.
Subsequent measurement of the CSM under the GMM measurement model
For contracts without direct participation features, when applying the GMM measurement model, the carrying amount of the CSM
at the end of reporting period is adjusted to reflect the following changes:
(a)effect of new contracts added to the group;
(b)interest accreted on the carrying amount of CSM, measured at the locked-in discount rate. The locked-in discount rate
is the weighted average of the rates applicable at the date of initial recognition of contracts that joined a group over a
12-month period, and is determined using the bottom up approach;
(c)changes in fulfilment cash flows that relate to future services such as:
•Experience differences between actual and expected premiums and related cash flows at the beginning of the
period measured at the locked-in rate.
•Non-financial changes in estimates of the present value of future cash flows measured at the locked-in rate.
•Changes in the risk adjustment for non-financial risk that relate to future service measured at the locked-in rate.
•Differences between actual and expected investment component that becomes payable in the period. The same
applies to a policyholder loan that becomes repayable;
(d)effect of any currency exchange differences on the CSM;
(e)CSM amortization, which is the recognition of unearned profit into Insurance revenue for services provided in the period.
The CSM is recognized into insurance revenue over the duration of the group of insurance contracts based on the
respective coverage units as insurance services are provided. The number of coverage units is the quantity of services
provided by the contracts in the group, determined by considering the quantity of benefits provided and its expected
coverage period. The coverage units are reviewed and updated at each reporting date. The Company allocates the
CSM equally to each coverage unit and recognizes the amount allocated to coverage units provided and expected to be
provided in each period.
When measuring the fulfilment cash flows, changes that relate to future services are measured using the current discount rate;
however, the CSM is adjusted for these changes using the locked-in rate at initial recognition. The application of the two different
discount rates gives rise to a gain or loss that is recognized as part of insurance finance income or expense.
Subsequent measurement of the CSM under the VFA measurement model
For contracts with direct participation features applying the VFA measurement model, subsequent measurement of the CSM is
similar to the GMM model with the following exceptions or modifications:
For changes in fulfilment cash flows that do not vary with the underlying items:
•Non-financial changes adjust the CSM at the current discount rate, there is no interest accretion on CSM at the locked-in
rate,
•Changes in the effect of time value of money and financial risks such as the effect of financial guarantees adjust the CSM,
however, income or expenses would be impacted if the risk mitigation option is elected.
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For changes in fulfilment cash flows that vary with the fair value of the underlying items:
•Changes in the shareholders’ share adjust the CSM, however, income or expenses would be impacted if the risk mitigation
option is elected,
•Changes in the policyholders’ share are recognized in income or expenses or OCI.
The Company uses derivatives, non-derivative financial instruments measured at fair value through profit or loss, and
reinsurance contracts to mitigate the financial risk arising from direct participation contracts applying the VFA measurement
model. The Company may elect the risk mitigation option to recognize some or all changes of financial guarantees and
shareholders’ share of the underlying items in income or expenses instead of adjusting CSM.
Groups of GMM or VFA insurance contracts with a CSM at initial recognition can subsequently become onerous when increases
in fulfilment cash flows that do not vary with the underlying items or declines in the shareholder’s share of the underlying items
exceed the carrying amount of the CSM. The excess establishes a loss which is recognized in Insurance service expenses
immediately, and the LRC is then divided into the loss component and the LRC excluding the loss component.
Subsequent measurement of the loss component
The loss component represents the net outflow attributable to each group of onerous insurance contracts (or contracts profitable
at inception that have subsequently become onerous), any subsequent decrease relating to future service in estimates of future
cash flows and risk adjustment for non-financial risk or any subsequent increase in the shareholders’ share of the fair value of
underlying items will reverse the loss component. Any remaining loss component will be reversed systematically as actual cash
flows are incurred.
When actual cash flows are incurred, the LIC is recognized and the LRC is derecognized accordingly. The Company uses the
proportion on initial recognition to determine the systematic allocation of LRC release between the loss component and the LRC
excluding the loss component, resulting in both components being equal to zero by the end of the coverage period.
Insurance contracts measured under the PAA measurement
The Company applies the PAA to all insurance contracts it issues if the coverage period of the contract is one year or less; or the
coverage period is longer than one year and the measurement of the LRC for the contracts under the PAA does not differ
materially from the measurement that would be produced applying the GMM approach under possible future scenarios.
The LRC is initially measured as the premium received at initial recognition minus any insurance acquisition cash flows at that
date. There is generally no allowance for the time value of money as the premiums are mostly received within one year of the
coverage period.
For acquisition cash flows allocated to recognized groups of contracts applying the PAA, the Company is permitted to defer and
amortize the amount over the coverage period or recognize the amount as an expense as incurred provided that the coverage
period of the contracts in the group is no more than one year. This election can be made at the level of each group of insurance
contracts. For the majority of the Company’s insurance contracts applying the PAA, such as Canadian Group Benefit products,
some Canadian Affinity products, and some Asia short-term individual and group products, the Company has elected to defer
directly attributable acquisition costs and recognize them in net income over the coverage period in a systematic way based on
the passage of time.
In these lines of business, directly attributable insurance acquisition cash flows paid are to acquire the current contract with an
expectation of a number of renewals over future years. As such, directly attributable insurance acquisition cash flows are
allocated to the group in which the current contract belongs to, as well as to future groups that will include expected renewals
applying a systematic methodology. If facts and circumstances indicate that there is an onerous group of contracts at initial
measurement, a loss is immediately recognized in the Insurance service expenses for the net outflow and a loss component of
the LRC is created for the group.
Subsequent measurement
Subsequently, the Company measures the carrying amount of the LRC at the end of each reporting period as:
•The LRC at the beginning of the period; plus
•Premium received in the period; minus
•Directly attributable acquisition costs net of related amortization (unless expensed as incurred); minus
•Amount recognized as insurance revenue for the period; minus
•Investment component paid or transferred to the LIC.
The amount recognized as insurance revenue for the period is typically based on the passage of time. For the Company’s
property and casualty reinsurance business, the expected pattern of release of risk during the coverage period differs
significantly from the passage of time, and as such the amount recognized as insurance revenue is on the basis of the expected
timing of incurred service expenses.
If at any time during the coverage period, facts and circumstances indicate that a group of contracts is onerous, the Company will
recognize a loss in Insurance service expenses and an increase in the LRC to the extent that the current estimate of the
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fulfilment cash flows that relate to remaining coverage (including the risk adjustment for non-financial risk) exceed the carrying
amount of the LRC.
The Company estimates the LIC as the fulfilment cash flows related to incurred claims. The Company does not adjust the future
cash flows for the time value of money, except when claims are expected to settle more than one year after the actual claim
occurs.
Assets for insurance acquisition cash flows
Insurance acquisition cash flows arise from the costs of selling, underwriting and starting a group of insurance contracts (issued
or expected to be issued) that are directly attributable to the portfolio of insurance contracts to which the group belongs.
Insurance acquisition cash flows paid or incurred before the recognition of the related group of contracts are recognized as an
asset within the portfolio of insurance contract liabilities in which the group of contracts is expected to be included. The Company
applies a systematic basis to allocate these costs, which includes:
•Insurance acquisition cash flows directly attributable to a group of contracts that will include future expected renewals of in-
force contracts; and
•Insurance acquisition cash flows directly attributable to a portfolio of insurance contracts, which will include future new
business.
When facts and circumstances indicate the assets for insurance acquisition cash flows might be impaired, the Company
conducts impairment tests. If an asset is impaired, an impairment loss will be recognized in Insurance service expenses, which
can be subsequently reversed when the impairment condition no longer exists.
Recognition of reinsurance contracts held
The Company recognizes a group of reinsurance contracts held from the earliest of the following:
•The beginning of the coverage period of the group of reinsurance contracts held. However, the Company delays the
recognition of a group of reinsurance contracts held that provide proportionate coverage until the date when any underlying
insurance contract is initially recognized, if that date is later than the beginning of the coverage period of the group of
reinsurance contracts held; and
•The date the Company recognizes an onerous group of underlying insurance contracts if the Company entered into the
related reinsurance contract held in the group of reinsurance contracts held at or before that date.
Reinsurance contracts held measured under the GMM model
Initial measurement
The measurement of reinsurance contracts held follows the same principles as the GMM for insurance contracts issued, with the
following exceptions or modifications specified in this section below. Reinsurance contracts held and assumed cannot use the
VFA measurement model.
At initial recognition, the Company recognizes any net gain or net cost as a CSM in the consolidated statement of financial
position, with some exceptions. If any net cost of obtaining reinsurance contracts held relates to insured events that occurred
before initial recognition of any insurance contracts, it is recognized immediately in Insurance service expenses. In addition, if the
underlying insurance contracts are in an onerous position, the Company is required to recognize a reinsurance gain immediately
in income for the portion of claims that the Company expects to recover from the reinsurance, if the reinsurance contract held
was entered into prior to or at the same time as the onerous contracts.
For contracts with fulfilment cash flows in multiple foreign currencies, the group is denominated in a single currency as defined
by the predominant cash flows.
Measurement of reinsurance contract cash flows is consistent with the underlying insurance contracts, but with an adjustment for
any risk of non-performance by the reinsurer. The risk adjustment for non-financial risk represents the amount of risk being
transferred by the Company to the reinsurer.
Subsequent measurement
Subsequently, the carrying amount of a group of reinsurance contracts held at each reporting date is the sum of:
•The asset for remaining coverage (“ARC”), which comprises the fulfilment cash flows that relate to services to be received
under the contracts in future periods, and any remaining CSM at that date; and
•The asset for incurred claims (“AIC”), which comprises the fulfilment cash flows for incurred claims and expenses that have
not yet been received.
If the underlying insurance contracts are onerous at inception and a reinsurance gain is recognized in income as described
above, the ARC is made up of a loss-recovery component and the ARC excluding the loss-recovery component. The loss-
recovery component reflects changes in the loss component of the underlying onerous insurance contracts and determines the
amounts that are subsequently presented in income or expenses as reversals of recoveries of losses from the reinsurance
contracts held and are excluded from the allocation of reinsurance premiums paid.
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The Company adjusts the carrying amount of the CSM of a group of reinsurance contracts held to reflect changes in the
fulfilment cash flows applying the same approach as for insurance contracts issued, except:
•Income recognized to cover the losses from onerous underlying contracts also adjusts the carrying amount of CSM;
•Reversals of the loss-recovery component, to the extent that those reversals are not changes in fulfilment cash flows of the
group of reinsurance contracts held, also adjust the carrying amount of CSM; and
•Changes in fulfilment cash flows related to future services also adjust the carrying amount of CSM provided that changes in
fulfilment cash flows related to the group of underlying insurance contracts also adjust the CSM.
Where a loss component has been set up subsequent to initial recognition of a group of underlying insurance contracts, the
reinsurance gain that has been recognized adjusts the loss-recovery component of the reinsurance asset for remaining
coverage. The carrying amount of the loss-recovery component must not exceed the portion of the carrying amount of the loss
component of the onerous group of underlying insurance contracts that the Company expects to recover from the group of
reinsurance contracts. On this basis, the loss-recovery component is reduced to zero when the loss component of underlying
insurance contracts is reduced to zero.
Reinsurance contracts held measured under the PAA model
Reinsurance contracts held may be classified and measured under the PAA model if they meet the eligibility requirements, which
are similar to the PAA requirements for direct insurance contracts.
For reinsurance contracts held applying the PAA model, the Company measures them on the same basis as insurance contracts
that it issues, adapted to reflect the features of reinsurance contracts held that differ from insurance contracts issued.
If a loss-recovery is created for a group of reinsurance contracts measured under the PAA model, the Company adjusts the
carrying amount of the ARC as there is no CSM to adjust under PAA.
Derecognition of insurance contracts
The Company derecognizes insurance contracts when the rights and obligations relating to the contract are extinguished (i.e.,
discharged, cancelled, or expired) or the contract is modified such that the modification results in a change in the measurement
model, or the applicable standard for measuring a component of the contract. In the case of modification, the Company
derecognizes the initial contract and recognizes the modified contract as a new contract.
Presentation and Disclosure
The Company has presented the carrying amount of portfolios of insurance contracts that are in a net asset or liability position,
and portfolios of reinsurance contracts that are in a net asset or liability position separately in the Consolidated Statements of
Financial Position.
The Company separately presents the insurance service result, which comprises insurance revenue and insurance service
expenses, from the investment result, which comprises insurance finance income or expenses in the Consolidated Statements of
Income. IFRS 17 provides an option to disaggregate the changes in risk adjustment between insurance service results and
insurance finance income. The Company disaggregates the change in risk adjustment for non-financial risk between the
insurance service expenses and insurance finance income or expenses.
Net insurance service result
The insurance revenue depicts the performance of insurance services and excludes investment components. For the GMM and
the VFA contracts, the insurance revenue represents the change in the LRC relating to insurance services for which the
Company expects to receive consideration. This insurance revenue comprises: (a) expected claims and other insurance
expenses including policyholder taxes where applicable; (b) changes in risk adjustment for non-financial risk; (c) release of CSM
based on coverage units; and (d) portion of premiums that relate to recovery of insurance acquisition cash flows. For contracts
measured under the PAA, the insurance revenue for each period is the amount of expected premium receipts for providing
insurance services in the period.
The insurance service expenses arising from insurance contracts are recognized in income or expenses generally as they are
incurred and exclude repayment of investment components. The insurance service expenses comprise: (a) incurred claims and
other insurance service expenses; (b) losses on onerous contracts and reversal of such losses; (c) adjustments to LIC; (d)
amortization of insurance acquisition cash flows; and (e) impairment losses on assets for insurance acquisition cash flows, if any,
and reversals of such impairment losses.
The amortization of insurance acquisition cash flows within insurance service expense is equal to the recovery of insurance
acquisition cash flows in insurance revenue for contracts measured under the GMM and VFA. For contracts measured under the
PAA with deferred acquisition cash flows, the Company amortizes insurance acquisition cash flows over the duration of the group
of insurance contracts based on the respective coverage units.
Net expenses from reinsurance contracts held comprise allocation of reinsurance premiums paid and the amounts expected to
be recovered from reinsurers. Reinsurance cash flows that are contingent on claims on the underlying contracts are treated as
part of the claims expected to be recovered from reinsurers, whereas reinsurance cash flows that are not contingent on claims
on the underlying contracts (for example, some types of ceding commissions) are treated as a reduction in reinsurance
premiums paid. For reinsurance contracts measured under the GMM, the allocation of reinsurance premiums paid represents the
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total of the changes in the asset for remaining coverage that relate to services for which the Company expects to pay
consideration. For reinsurance contracts measured under the PAA, the allocation of reinsurance premiums paid is the amount of
expected premium payments for receiving services in the period.
Insurance finance income or expenses
Insurance finance income or expenses comprise the change in the carrying amount of the group of insurance contracts arising
from: (a) the effect of the time value of money and changes in the time value of money; and (b) the effect of financial risk and
changes in financial risk.
The Company disaggregates insurance finance income or expenses on insurance contracts issued for most of its groups of
insurance contracts between income or expenses and OCI. The impact of changes in market interest rates on the value of the
life insurance and related reinsurance assets and liabilities are reflected in OCI in order to minimize accounting mismatches
between the accounting for insurance assets and liabilities and the supporting financial assets. The impacts from differences
between current period rates and locked-in rates are presented in OCI.
The Company’s invested assets which are debt instruments (including bonds, private placements, mortgages, and loans) are
predominantly measured at FVOCI. As a result, the effect of the time value of money for the groups of insurance contracts and
supporting fixed maturity assets is reflected in income or expenses and the effect of financial risk and changes in financial risk is
reflected in OCI.
The systematic allocation of expected total insurance finance income or expenses depends on whether changes in assumptions
that relate to financial risk have a substantial effect on the expected amounts paid to the policyholders.
•For groups of insurance contracts for which changes in assumptions that relate to financial risk do not have a substantial
effect on the amounts paid to the policyholders, the Company systematically allocates expected total insurance finance
income or expenses over the duration of the group of contracts to income or expenses using discount rates determined on
initial recognition of the group of contracts.
•For groups of insurance contracts for which changes in assumptions that relate to financial risk have a substantial effect on
the amounts paid to the policyholders, the Company systematically allocates expected total insurance finance income or
expenses over the duration of the group of contracts to income or expenses using either a constant rate, or an allocation
that is based on the amounts credited in the period and expected to be credited in future periods for fulfilment cash flows.
The CSM accretion rate would use the discount rates determined on initial recognition of the group of contracts for CSM.
In the event of a transfer of a group of insurance contracts or derecognition of an insurance contract, the Company reclassifies
any amounts that were previously recognized in OCI to income or expenses as insurance finance income or expense. There are
no changes in the basis of disaggregation of insurance finance income or expenses between income or expenses and OCI in the
period.
Transition methods
IFRS 17 became effective for years beginning on January 1, 2023. The Company has applied the full retrospective approach to
most contracts issued on or after January 1, 2021, except for participating insurance contracts and variable annuity contracts for
which the fair value approach was used. The Company has applied the fair value approach to all insurance contracts issued prior
to January 1, 2021, as obtaining reasonable and supportable information to apply the full retrospective approach was deemed
impracticable.
Under the fair value approach, the Company has determined the CSM of the GMM and VFA liabilities for remaining coverage at
the transition date as the difference between the fair value of the groups of insurance contracts and the fulfilment cash flows
measured at that date. In determining the fair value, the Company has applied the requirements of IFRS 13 “Fair Value
Measurement”, except for the demand deposit floor requirement. The Company used the income approach to determine the fair
value of the insurance contracts at the transition date, in which future cash flows are discounted to a single amount that reflects
current market expectations about those future amounts.
(j)Investment Contract Liabilities
Investment contract liabilities include contracts issued to retail and institutional investors that do not contain significant insurance
risk. Investment contract liabilities and deposits are measured at amortized cost or at fair value by election. The FVTPL election
is made when these liabilities, as well as the related assets are managed, and their performance is evaluated, on a fair value
basis or when doing so reduces the accounting mismatches between assets supporting these contracts and the related policy
liabilities. Investment contract liabilities are derecognized when the contracts expire, are discharged or are cancelled.
(k)Other Financial Instruments Accounted for as Liabilities
The Company issues a variety of other financial instruments classified as liabilities, including senior notes, subordinated notes
and surplus notes. These financial liabilities are measured at amortized cost, with issuance costs deferred and amortized using
the effective interest rate method.
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(l)Income Taxes
The provision for income taxes is calculated based on income tax laws and income tax rates substantively enacted as at the date
of the Consolidated Statements of Financial Position. The income tax provision is comprised of current income taxes and
deferred income taxes. Current and deferred income taxes relating to items recognized in OCI and directly in equity are similarly
recognized in OCI and directly in equity, respectively.
Current income taxes are amounts expected to be receivable or payable for the current year and any adjustments to taxes
payable in respect of previous years.
Deferred income taxes are provided for using the liability method and result from temporary differences between the carrying
values of assets and liabilities and their respective tax bases. Deferred income taxes are measured at the substantively enacted
tax rates that are expected to be applied to temporary differences when they reverse.
A deferred tax asset is recognized to the extent that future realization of the tax benefit is probable. Deferred tax assets are
reviewed at each reporting date and are reduced to the extent that it is no longer probable that the tax benefit will be realized.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax assets and liabilities and
they relate to income taxes levied by the same tax authority on the same taxable entity.
Deferred tax liabilities are recognized for all taxable temporary differences, except in respect of taxable temporary differences
associated with investments in subsidiaries, associates and joint ventures, where the timing of the reversal of the temporary
differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
The Company records liabilities for uncertain tax positions if it is probable that the Company will make a payment on tax
positions due to examinations by tax authorities. These provisions are measured at the Company’s best estimate of the amount
expected to be paid. Provisions are reversed to income in the period in which management assesses they are no longer required
or determined by statute.
The Company is subject to income tax laws in various jurisdictions. Tax laws are complex and potentially subject to different
interpretations by the taxpayer and the relevant tax authority. The provision for current income taxes and deferred income taxes
represents management’s interpretation of the relevant tax laws and its estimate of current and future income tax implications of
the transactions and events during the year. The Company may be required to change its provision for income taxes or deferred
income tax balances when the ultimate deductibility of certain items is successfully challenged by taxing authorities, or if
estimates used in determining the amount of deferred tax balances to recognize change significantly, or when receipt of new
information indicates the need for adjustment in the amount of deferred income taxes to be recognized. Additionally, future
events, such as changes in tax laws, tax regulations, or interpretations of such laws or regulations, could have an impact on the
provision for income taxes, deferred tax balances and the effective tax rate. Any such changes could materially affect the
amounts reported in the Consolidated Financial Statements in the period these changes occur.
(m) Foreign Currency Translation
Items included in the financial statements of each of the Company’s subsidiaries, joint ventures and associates are measured by
each entity using the currency of the primary economic environment in which the entity operates (the “functional currency”). If
their functional currency is other than the Canadian dollar, these entities are foreign operations of the Company.
Transactions in a foreign currency are translated to the functional currency at the exchange rate prevailing at the date of the
transaction. Assets and liabilities denominated in foreign currencies are translated to the functional currency at the exchange rate
in effect at the reporting date. Revenue and expenses denominated in foreign currencies are translated at the average exchange
rate prevailing during the period reported. Exchange gains and losses are recognized in income except for translation of net
investments in foreign operations and the results of hedging these positions, and for non-monetary items designated as
amortized cost or FVOCI. These foreign exchange gains and losses are recognized in OCI until such time that the foreign
operation or non-monetary item is disposed of or control or significant influence over it is lost, when they are reclassified to
income.
The Consolidated Financial Statements are presented in Canadian dollars. The financial statements of the Company’s foreign
operations are translated from their functional currencies to Canadian dollars; assets and liabilities are translated at the
exchange rate at the reporting date, and revenue and expenses are translated using the average exchange rates for the period.
(n)Stock-based Compensation
The Company provides stock-based compensation to certain employees and directors as described in note 14. Compensation
expense of equity instruments granted is accrued based on the best estimate of the number of instruments expected to vest, with
revisions made to that estimate if subsequent information indicates that actual forfeitures are likely to differ from initial forfeiture
estimates, unless forfeitures are due to market-based conditions.
Stock options are expensed with a corresponding increase in contributed surplus. Restricted share units and deferred share units
are expensed with a corresponding liability accrued based on the market value of MFC’s common shares at the end of each
quarter. Performance share units are expensed with a corresponding liability accrued based on specific performance conditions
and the market value of MFC’s common shares at the end of each quarter. The change in the value of the awards resulting from
| 30 |
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changes in the market value of MFC’s common shares or changes in the specific performance conditions and credited dividends
is recognized in income, offset by the impact of total return swaps used to manage the variability of the related liabilities.
Stock-based compensation cost is recognized over the applicable vesting period, unless the employee is eligible to retire at the
time of grant or will be eligible to retire during the vesting period. Compensation costs attributable to stock options, restricted
share units, and performance share units granted to employees who are eligible to retire on the grant date or who will become
eligible to retire during the vesting period, are recognized at the grant date or over the period from the grant date to the date of
retirement eligibility, respectively.
The Company’s contributions to the Global Share Ownership Plan (“GSOP”) (refer to note 14 (d)), are expensed as incurred.
Under the GSOP, subject to certain conditions, the Company will match a percentage of an employee’s eligible contributions to
certain maximums. All contributions are used by the plan’s trustee to purchase MFC common shares in the open market on
behalf of participating employees.
(o)Employee Future Benefits
The Company maintains defined contribution and defined benefit pension plans and other post-employment plans for employees
and agents including registered (tax qualified) pension plans that are typically funded as well as supplemental non-registered
(non-qualified) pension plans for executives, and retiree and disability welfare plans that are typically not funded.
The Company’s obligation in respect of defined benefit pension and other post-employment benefits is calculated for each plan
as the estimated present value of future benefits that eligible employees have earned in return for their service up to the
reporting date using the projected benefit method. The discount rate used is based on the yield, as at the reporting date, of high-
quality corporate debt securities that have approximately the same term as the benefit obligations and that are denominated in
the same currency in which the benefits are expected to be paid.
To determine the Company’s net defined benefit asset or liability, the defined benefit obligations are deducted from the fair value
of plan assets. When this calculation results in a surplus, the asset that can be recognized is limited to the present value of future
economic benefit available in the form of future refunds from the plan or reductions in future contributions to the plan (the asset
limit). Defined benefit assets are included in miscellaneous assets and defined benefit liabilities are included in other liabilities.
Changes in the net defined benefit asset or liability due to re-measurement of pension and retiree welfare plans are recorded in
OCI in the period in which they occur and are not reclassified to income in subsequent periods. They consist of actuarial gains
and losses, changes in the effect of the asset limit, if any, and the return on plan assets, excluding amounts included in net
interest income or expense. Changes in the net defined benefit asset or liability due to re-measurement of disability welfare plans
are recorded in income in the period in which they occur.
The cost of defined benefit pension plans is recognized over the employees’ years of service to retirement while the cost of
retiree welfare plans is recognized over the employees’ years of service to their date of full eligibility. The net benefit cost for the
year is recorded in income and is calculated as the sum of the service cost in respect of the fiscal year, the net interest income or
expense and any applicable administration expenses, plus past service costs or credits resulting from plan amendments or
curtailments. The net interest income or expense is determined by applying the discount rate to the net defined benefit asset or
liability. The current year cost of disability welfare plans is the year-over-year change in the defined benefit obligation, including
any actuarial gains or losses.
The cost of defined contribution plans is the contribution provided by the Company and is recorded in income in the periods
during which services are rendered by employees.
(p)Derivative and Hedging Instruments
The Company uses derivative financial instruments (“derivatives”) including swaps, forward and futures agreements, and options
to manage current and anticipated exposures to changes in interest rates, foreign exchange rates, commodity prices and equity
market prices, and to replicate exposure to different types of investments. Derivatives embedded in other financial instruments
are separately recorded as derivatives when their economic characteristics and risks are not closely related to those of the host
instrument, the terms of the embedded derivative are the same as those of a stand-alone derivative and the host instrument itself
is not recorded at FVTPL. Derivatives which are separate financial instruments are recorded at fair value, and those with
unrealized gains are reported as derivative assets and those with unrealized losses are reported as derivative liabilities.
A determination is made for each derivative as to whether to apply hedge accounting. Where hedge accounting is not applied,
changes in the fair value of derivatives are recorded in investment income.
Where the Company has elected to apply hedge accounting, a hedging relationship is designated and documented at inception.
Hedge effectiveness is evaluated at inception and throughout the term of the hedge. Hedge accounting is only applied when the
Company expects that the risk management objective will be met, and that the hedging relationship will qualify for hedge
accounting requirements both at inception and throughout the hedging period. The assessment of hedge effectiveness is
performed at the end of each reporting period prospectively. When it is determined that the risk management objective is no
longer met, a hedging relationship is no longer effective, or the hedging instrument or the hedged item ceases to exist, the
Company discontinues hedge accounting prospectively. In such cases, if the derivatives are not sold or terminated, any
subsequent changes in fair value of the derivatives are recognized in investment income.
| 31 | 2025 Annual Report | Consolidated Financial Statements |
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For derivatives that are designated as hedging instruments, changes in fair value are recorded according to the nature of the
risks being hedged, as discussed below.
In a fair value hedging relationship, changes in fair value of the hedging instruments are recorded in Total investment result,
offsetting changes in fair value of the hedged items attributable to the hedged risk, which would otherwise not be carried at fair
value through profit or loss. Hedge ineffectiveness is recognized in total investment result and arises from differences between
changes in the fair values of hedging instruments and hedged items. When hedge accounting is discontinued, the carrying value
of the hedged item is no longer adjusted and the cumulative fair value adjustments are amortized to total investment result over
the remaining term of the hedged item unless the hedged item ceases to exist, at which time the balance is recognized
immediately in total investment result.
In a cash flow hedging relationship, the effective portion of the change in the fair value of the hedging instrument is recorded in
OCI while the ineffective portion is recognized in total investment result. Gains and losses in AOCI are recognized in income
during the same periods that the variability in the hedged cash flows or the hedged forecasted transactions are recognized in
income. The reclassifications from AOCI are made to total investment result, except for total return swaps that hedge stock-
based compensation awards, which are reclassified to general expenses.
Gains and losses on cash flow hedges in AOCI are reclassified immediately to total investment result when the hedged item
ceases to exist or the forecasted transaction is no longer expected to occur. When a hedge is discontinued, but the hedged
forecasted transaction is expected to occur, the amounts in AOCI are reclassified to total investment result in the periods during
which variability in the cash flows hedged or the hedged forecasted transaction is recognized in income.
In a net investment in foreign operation hedging relationship, gains and losses relating to the effective portion of the hedge are
recorded in OCI. Gains and losses in AOCI are recognized in income during the periods when gains or losses on the underlying
hedged net investment in foreign operation are recognized in income upon disposal of the foreign operation or upon loss of
control or significant influence over it.
(q)Revenue from Service Contracts
The Company recognizes revenue from service contracts in accordance with IFRS 15. The Company’s service contracts
generally impose single performance obligations, each consisting of a series of similar related services for each
customer. Revenue is recorded as performance obligations are satisfied over time because the customers simultaneously
receive and consume the benefits of the services rendered, measured using an output method. Revenue for variable
consideration is recognized to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue
recognized will not occur when the uncertainty is subsequently resolved. Refer to note 13.
Note 2 Accounting and Reporting Changes
(a)Future Accounting and Reporting Changes
(I)Annual Improvements to IFRS Accounting Standards – Volume 11
Annual Improvements to IFRS Accounting Standards – Volume 11 was issued in July 2024 and is effective on or after January 1,
- The IASB issued eight minor amendments to different standards as part of the Annual Improvements process, to be
applied retrospectively except for amendments to IFRS 1 “First-Time Adoption of International Financial Reporting Standards” for
first time adopters and to IFRS 9 “Financial Instruments” (“IFRS 9”) for derecognition of lease liabilities. Adoption of these
amendments is not expected to have a significant impact on the Company’s Consolidated Financial Statements.
(II)Amendments to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9 and IFRS
7)
Amendments to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9 “Financial Instruments”
and IFRS 7 “Financial Instruments: Disclosures” (“IFRS 7”)) were issued in May 2024 to be effective for years beginning on
January 2026 and to be applied retrospectively. The amendments clarify guidance on timing of derecognition of financial
liabilities, on the assessment of cash flow characteristics and resulting classification and disclosure of financial assets with terms
referencing contingent events including environmental, social and corporate governance events, and of the treatment of non-
recourse assets and contractually linked instruments. Adoption of these amendments is not expected to have a significant impact
on the Company’s Consolidated Financial Statements.
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(III)IFRS 18 “Presentation and Disclosure in the Financial Statements”
IFRS 18 “Presentation and Disclosure in Financial Statements” (“IFRS 18”) was issued in April 2024 to be effective for years
beginning on January 1, 2027 and to be applied retrospectively. The standard replaces IAS 1 “Presentation of Financial
Statements” (“IAS 1”) while carrying forward many elements of IAS 1 unchanged. IFRS 18 introduces three sets of new
requirements for presentation of financial statements and disclosures within financial statements:
•Introduction of five defined categories of income and expenses: operating, investing, financing, income taxes and
discontinued operations, with defined subtotals and totals for “operating income (loss)”, “income or loss before financing and
income taxes” and “income (loss)”,
•disclosure within a note to financial statements of management-defined performance measures (“MPMs”) with a
reconciliation between MPMs and IFRS performance measures. MPMs are defined as subtotals of income and expenses
not specified by IFRS Accounting Standards, which are used in public communications outside financial statements to
communicate management’s view of the Company’s financial performance, and
•enhanced guidance on organizing information and determining whether to provide the information in the financial
statements or in the notes. IFRS 18 also requires enhanced disclosure of operating expenses based on their characteristics,
including their nature, function or both.
The Company is assessing the impact of this standard on the Company’s Consolidated Financial Statements.
(IV)Amendments to IAS 12 “Income Taxes”
Amendments to IAS 12 “Income Taxes” were issued in May 2023. The amendments relate to the Organization for Economic Co-
operation and Development’s International Pillar Two tax reform, which seeks to establish a global minimum income tax rate of
15% and addresses inter-jurisdictional base erosion and profit shifting, targeting larger international companies. Most
jurisdictions have agreed to participate and effective dates for Global Minimum Taxes (“GMT”) vary by jurisdiction based on local
legislation.
The amendments require that, effective for years beginning on or after January 1, 2023, disclosure of current tax expense or
recovery related to GMT is required along with, to the extent that GMT legislation is enacted or substantively enacted but not yet
in effect, disclosure of known or reasonably estimable information that helps users of financial statements understand the
Company’s exposure to GMT arising from that legislation.
The Company expects to pay GMT of $222 for the year ended December 31, 2025 arising from its operations in Barbados and
Hong Kong (2024 – $231).
The amendments also provide a temporary mandatory exception in IAS 12 from recognizing and disclosing deferred tax assets
and liabilities related to GMT. The Company has applied the temporary exception from accounting for deferred taxes in respect of
GMT.
| 33 | 2025 Annual Report | Consolidated Financial Statements |
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Note 3 Invested Assets and Investment Income
(a)Carrying Values and Fair Values of Invested Assets
| As at December 31, 2025 | FVTPL(1) | FVOCI(2) | Other(3) | Total carrying<br><br>value | Total fair<br><br>value(4) |
|---|---|---|---|---|---|
| Cash and short-term securities(5) | $- | $20,827 | $5,876 | $26,703 | $26,703 |
| Debt securities(6) | |||||
| Canadian government and agency | 966 | 17,708 | - | 18,674 | 18,674 |
| U.S. government and agency | 39 | 26,595 | 632 | 27,266 | 26,999 |
| Other government and agency | 63 | 37,419 | - | 37,482 | 37,482 |
| Corporate | 2,742 | 125,184 | 504 | 128,430 | 128,248 |
| Mortgage / asset-backed securities | 270 | 1,992 | - | 2,262 | 2,262 |
| Public equities (FVTPL mandatory) | 40,971 | - | - | 40,971 | 40,971 |
| Mortgages | 1,351 | 28,589 | 27,179 | 57,119 | 57,600 |
| Private placements | 953 | 50,829 | - | 51,782 | 51,782 |
| Loans to Bank clients | - | - | 2,735 | 2,735 | 2,699 |
| Real estate | |||||
| Own use property(7),(8) | - | - | 2,631 | 2,631 | 2,762 |
| Investment property | - | - | 10,051 | 10,051 | 10,051 |
| Other invested assets | |||||
| Alternative long-duration assets(9) | 35,101 | 383 | 13,545 | 49,029 | 50,132 |
| Various other(10) | 145 | - | 4,648 | 4,793 | 4,793 |
| Total invested assets | $82,601 | $309,526 | $67,801 | $459,928 | $461,158 |
(1)FVTPL classification was elected for debt instruments backing certain insurance contract liabilities to substantially reduce any accounting mismatch arising from
changes in the fair value of these assets, or changes in the carrying value of the related insurance contract liabilities.
(2)FVOCI classification for debt instruments backing certain insurance contract liabilities inherently reduces any accounting mismatch arising from changes in the fair
value of these assets, or changes in the carrying value of the related insurance contract liabilities.
(3)Other includes mortgages and loans to Bank clients held at amortized cost, own use properties held at fair value or cost, investment properties held at fair value,
and equity method accounted investments (including leveraged leases). Also includes debt securities, which qualify as having SPPI, are held to collect contractual
cash flows and are carried at amortized cost.
(4)Invested assets above include debt securities, mortgages, private placements and approximately $383 (2024 – $389) of other invested assets, which primarily
qualify as having SPPI qualifying cash flows. Invested assets which do not have SPPI qualifying cash flows as at December 31, 2025 include debt securities,
private placements and other invested assets with fair values of $nil, $98 and $552, respectively (2024 – $nil, $132 and $547, respectively). The change in the fair
value of these non-SPPI invested assets for the year ended December 31, 2025 was a decrease of $29 (2024 – an increase of $25). The methodologies used in
determining fair values of invested assets are described in note 1 (c) and note 3 (g).
(5)Includes short-term securities with maturities of less than one year at acquisition amounting to $11,791 (2024 – $10,121), cash equivalents with maturities of less
than 90 days at acquisition amounting to $9,135 (2024 – $9,813) and cash of $5,777 (2024 – $5,855).
(6)Debt securities include securities which were acquired with remaining maturities of less than one year and less than 90 days of $1,842 and $236, respectively
(2024 – $1,266 and $145, respectively).
(7)Includes accumulated depreciation of $66 (2024 – $65).
(8)Own use property of $2,466 as at December 31, 2025 (December 31, 2024 – $2,500), are underlying items for insurance contracts with direct participating
features and are measured at fair value as if they were investment properties, as permitted by IAS 16. Own use property of $165 (December 31, 2024 – $174) is
carried at cost less accumulated depreciation and any accumulated impairment losses.
(9)ALDA include investments in private equity of $18,466, infrastructure of $18,629, timber and agriculture of $6,012, energy of $1,658 and various other ALDA of
$4,264 (2024 – $18,343, $17,804, $5,917, $1,916 and $3,883, respectively).
(10)Includes $4,266 (2024 – $4,300) of leveraged leases. Refer to note 1 (e).
| 34 | |||||
|---|---|---|---|---|---|
| As at December 31, 2024 | FVTPL(1) | FVOCI(2) | Other(3) | Total carrying<br><br>value | Total fair<br><br>value(4) |
| --- | --- | --- | --- | --- | --- |
| Cash and short-term securities(5) | $25 | $19,909 | $5,855 | $25,789 | $25,789 |
| Debt securities(6) | |||||
| Canadian government and agency | 1,056 | 18,671 | - | 19,727 | 19,727 |
| U.S. government and agency | 58 | 27,628 | 968 | 28,654 | 28,366 |
| Other government and agency | 68 | 35,402 | - | 35,470 | 35,470 |
| Corporate | 2,761 | 121,674 | 527 | 124,962 | 124,762 |
| Mortgage / asset-backed securities | 17 | 1,791 | - | 1,808 | 1,808 |
| Public equities (FVTPL mandatory) | 33,725 | - | - | 33,725 | 33,725 |
| Mortgages | 1,239 | 28,792 | 24,416 | 54,447 | 54,812 |
| Private placements | 866 | 48,802 | - | 49,668 | 49,668 |
| Loans to Bank clients | - | - | 2,310 | 2,310 | 2,285 |
| Real estate | |||||
| Own use property(7),(8) | - | - | 2,674 | 2,674 | 2,798 |
| Investment property | - | - | 10,589 | 10,589 | 10,589 |
| Other invested assets | |||||
| Alternative long-duration assets(9) | 34,334 | 389 | 13,140 | 47,863 | 48,875 |
| Various other(10) | 140 | - | 4,671 | 4,811 | 4,811 |
| Total invested assets | $74,289 | $303,058 | $65,150 | $442,497 | $443,485 |
Note: For footnotes (1) to (10), refer to the “Carrying Values and Fair Values of Invested Assets” table for the year ended December 31, 2025 above.
| 35 | 2025 Annual Report | Consolidated Financial Statements |
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(b)Investment Income
| For the year ended December 31, 2025 | FVTPL | FVOCI | Other(1) | Total |
|---|---|---|---|---|
| Cash and short-term securities | ||||
| Interest income | $- | $896 | $- | $896 |
| Gains (losses)(2) | - | (25) | - | (25) |
| Debt securities | ||||
| Interest income | 165 | 8,160 | 28 | 8,353 |
| Gains (losses)(2) | (12) | 230 | - | 218 |
| Impairment (loss) / recovery, net | - | (4) | - | (4) |
| Public equities | ||||
| Dividend income | 853 | - | - | 853 |
| Gains (losses)(2) | 5,425 | - | - | 5,425 |
| Mortgages | ||||
| Interest income | 54 | 1,222 | 1,102 | 2,378 |
| Gains (losses)(2) | 24 | 30 | 7 | 61 |
| Impairment (loss) / recovery, net | - | (1) | (1) | (2) |
| Private placements | ||||
| Interest income | 40 | 2,575 | - | 2,615 |
| Gains (losses)(2) | 12 | 151 | - | 163 |
| Impairment (loss) / recovery, net | - | (87) | - | (87) |
| Loans to Bank clients | ||||
| Interest income | - | - | 141 | 141 |
| Impairment (loss) / recovery, net | - | - | (2) | (2) |
| Real estate | ||||
| Rental income, net of depreciation(3) | - | - | 471 | 471 |
| Gains (losses)(2) | - | - | (38) | (38) |
| Impairment (loss) / recovery, net | - | - | - | - |
| Derivatives | ||||
| Interest income, net | (201) | - | - | (201) |
| Gains (losses)(2) | 258 | - | - | 258 |
| Other invested assets | ||||
| Interest income | 21 | 7 | - | 28 |
| Timber, agriculture and other income | 2,538 | - | 1,008 | 3,546 |
| Gains (losses)(2) | 345 | - | (92) | 253 |
| Impairment (loss) / recovery, net | - | 1 | (12) | (11) |
| Total investment income (loss) | $9,522 | $13,155 | $2,612 | $25,289 |
| Investment income | ||||
| Interest income | $79 | $12,860 | $1,271 | $14,210 |
| Dividends, rental income and other income | 3,391 | - | 1,479 | 4,870 |
| Impairment (loss) / recovery, net | - | (91) | (15) | (106) |
| Other | 62 | (16) | (6) | 40 |
| 3,532 | 12,753 | 2,729 | 19,014 | |
| Realized and unrealized gains (losses) on assets supporting insurance and investment<br><br>contract liabilities | ||||
| Debt securities | (12) | 238 | - | 226 |
| Public equities | 5,231 | - | - | 5,231 |
| Mortgages | 24 | 30 | 7 | 61 |
| Private placements | 12 | 149 | - | 161 |
| Real estate | - | - | (29) | (29) |
| Other invested assets | 365 | (15) | (95) | 255 |
| Derivatives | 370 | - | - | 370 |
| 5,990 | 402 | (117) | 6,275 | |
| Total investment income (loss) | $9,522 | $13,155 | $2,612 | $25,289 |
| Investment expenses | (1,342) | |||
| Net investment income (loss) | $23,947 |
(1)Includes investment income on debt securities, mortgages and loans carried at amortized cost, own use real estate properties, investment real estate properties,
equity method accounted investments, energy investments and leveraged leases.
(2)Includes net realized and unrealized gains (losses) for financial instruments at FVTPL, investment real estate properties, and other invested assets measured at
fair value. Also includes net realized gains (losses) for financial instruments at FVOCI and other invested assets carried at amortized cost.
(3)Rental income from investment real estate properties is net of direct operating expenses.
| 36 | ||||
|---|---|---|---|---|
| For the year ended December 31, 2024 | FVTPL | FVOCI | Other(1) | Total |
| --- | --- | --- | --- | --- |
| Cash and short-term securities | ||||
| Interest income | $1 | $978 | $- | $979 |
| Gains (losses)(2) | - | 72 | - | 72 |
| Debt securities | ||||
| Interest income | 156 | 7,914 | 29 | 8,099 |
| Gains (losses)(2) | (44) | (1,621) | - | (1,665) |
| Impairment (loss) / recovery, net | - | 92 | - | 92 |
| Public equities | ||||
| Dividend income | 814 | - | - | 814 |
| Gains (losses)(2) | 4,324 | - | - | 4,324 |
| Mortgages | ||||
| Interest income | 47 | 1,203 | 1,154 | 2,404 |
| Gains (losses)(2) | 32 | (165) | 5 | (128) |
| Impairment (loss) / recovery, net | - | 104 | 1 | 105 |
| Private placements | ||||
| Interest income | 36 | 2,473 | - | 2,509 |
| Gains (losses)(2) | 25 | 284 | - | 309 |
| Impairment (loss) / recovery, net | - | (47) | - | (47) |
| Loans to Bank clients | ||||
| Interest income | - | - | 176 | 176 |
| Impairment (loss) / recovery, net | - | - | (3) | (3) |
| Real estate | ||||
| Rental income, net of depreciation(3) | - | - | 460 | 460 |
| Gains (losses)(2) | - | - | (596) | (596) |
| Impairment (loss) / recovery, net | - | - | - | - |
| Derivatives | ||||
| Interest income, net | (438) | - | - | (438) |
| Gains (losses)(2) | (675) | - | - | (675) |
| Other invested assets | ||||
| Interest income | 20 | 12 | - | 32 |
| Timber, agriculture and other income | 1,675 | - | 770 | 2,445 |
| Gains (losses)(2) | 1,098 | 8 | 123 | 1,229 |
| Impairment (loss) / recovery, net | - | (8) | (30) | (38) |
| Total investment income (loss) | $7,071 | $11,299 | $2,089 | $20,459 |
| Investment income | ||||
| Interest income | $(178) | $12,580 | $1,359 | $13,761 |
| Dividends, rental income and other income | 2,489 | - | 1,230 | 3,719 |
| Impairment (loss) / recovery, net | - | 141 | (32) | 109 |
| Other | 354 | 309 | (3) | 660 |
| 2,665 | 13,030 | 2,554 | 18,249 | |
| Realized and unrealized gains (losses) on assets supporting insurance and investment<br><br>contract liabilities | ||||
| Debt securities | (45) | (1,812) | - | (1,857) |
| Public equities | 4,178 | - | - | 4,178 |
| Mortgages | 32 | (188) | 5 | (151) |
| Private placements | 25 | 210 | - | 235 |
| Real estate | - | - | (592) | (592) |
| Other invested assets | 1,075 | 59 | 122 | 1,256 |
| Derivatives | (859) | - | - | (859) |
| 4,406 | (1,731) | (465) | 2,210 | |
| Total investment income (loss) | $7,071 | $11,299 | $2,089 | $20,459 |
| Investment expenses | (1,348) | |||
| Net investment income (loss) | $19,111 |
Note: For footnotes (1) to (3), refer to the “Investment Income” table for the year ended December 31, 2025 above.
| 37 | 2025 Annual Report | Consolidated Financial Statements |
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(c)Equity Method Accounted Invested Assets
Other invested assets include investments in associates and joint ventures which are accounted for using the equity method of
accounting as presented in the following table.
| 2025 | 2024 | |||
|---|---|---|---|---|
| As at December 31, | Carrying<br><br>value | % of total | Carrying<br><br>value | % of total |
| Leveraged leases | $4,266 | 33% | $4,300 | 34% |
| Infrastructure | 5,132 | 39% | 4,848 | 38% |
| Timber and agriculture | 847 | 6% | 837 | 7% |
| Real estate | 2,168 | 17% | 2,098 | 16% |
| Other | 644 | 5% | 673 | 5% |
| Total | $13,057 | 100% | $12,756 | 100% |
The Company recorded income of $738 (2024 – $398) for these equity method accounted invested assets for the year ended
December 31, 2025.
(d)Investment Expenses
The following table presents total investment expenses.
| For the years ended December 31, | 2025 | 2024 |
|---|---|---|
| Related to invested assets | $841 | $731 |
| Related to segregated, mutual and other funds | 501 | 617 |
| Total investment expenses | $1,342 | $1,348 |
(e)Investment Properties Rental Income
The following table presents the rental income and direct operating expenses of investment properties.
| For the years ended December 31, | 2025 | 2024 |
|---|---|---|
| Rental income from investment properties | $845 | $859 |
| Direct operating expenses of rental investment properties | (474) | (483) |
| Total | $371 | $376 |
(f)Mortgage Securitization
The Company securitizes uninsured Home Equity Lines of Credit (“HELOC”) mortgages through the Platinum Canadian
Mortgage Trust II (“PCMT”) program and participates in two Canada Housing and Mortgage Corporation (“CMHC”) residential
mortgage securitization programs: the National Housing Act Mortgage-Backed Securities (“NHA MBS”) program and the
Canadian Mortgage Bond (“CMB”) program.
HELOCs sold to Platinum Trust II, and securitized single family residential mortgages remain on the Company’s balance sheet
because prepayment and interest rate risk is retained, and notes payable are recognized, accounted for at amortized cost. 3rd
party originated multi-unit residential mortgages transferred to the NHA MBS program remain on the Company’s balance sheet
onto to the extent of the retained interests with gains or losses recognized on transfer. NHA MBS are also sold directly to the
market.
Benefits received from these securitizations include a source of fixed rate funding and interest spread between the securitized
assets and related secured borrowing liabilities. There is no credit exposure from securitized mortgages under the Canada
Mortgage and Housing Corporation (“CMHC”) sponsored CMB securitization program as they are insured by CMHC and other
third-party insurance programs against borrowers’ default.
Cash flows received from the underlying securitized mortgages are used to settle the related secured borrowing liabilities. For
CMB transactions, receipts of mortgage principal are deposited into a trust account for settlement of the related liabilities at time
of maturity. These securitized assets and their related cash flows cannot be further transferred or used for other purposes by the
Company. For HELOC transactions, investors are entitled to periodic interest payments, and the remaining cash receipts of
mortgage principal are allocated to the Company (the “Seller”) during the revolving periods of the transactions and are
accumulated for settlement during accumulation periods or repaid to the investors monthly during reduction periods, based on
the terms of the notes.
| 38 |
|---|
Securitized assets and secured borrowing liabilities
| As at December 31, 2025 | Securitized assets | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Securitization program | Securitized<br><br>mortgages | Restricted<br><br>cash and<br><br>short-term<br><br>securities | Total | Secured<br><br>borrowing<br><br>liabilities(1) | Net | |||||||
| HELOC securitization(2) | $3,664 | $9 | $3,673 | $3,500 | $173 | |||||||
| CMB securitization(3) | 3,358 | - | 3,358 | 3,366 | (8) | |||||||
| Total | $7,022 | $9 | $7,031 | $6,866 | $165 | As at December 31, 2024 | Securitized assets | |||||
| --- | --- | --- | --- | --- | --- | |||||||
| Securitization program | Securitized<br><br>mortgages | Restricted<br><br>cash and<br><br>short-term<br><br>securities | Total | Secured<br><br>borrowing<br><br>liabilities(1) | Net | |||||||
| HELOC securitization(2) | $3,141 | $22 | $3,163 | $3,000 | $163 | |||||||
| CMB securitization(3) | 3,274 | - | 3,274 | 3,217 | 57 | |||||||
| Total | $6,415 | $22 | $6,437 | $6,217 | $220 |
(1)The PCMT II notes payable have floating rates of interest and are secured by the PCMT II assets. Under the terms of the agreements, principal of $nil is expected
to be repaid within one year, $2,453 within 1-3 years, $1,047 within 3-5 years and $nil beyond 5 years (2024 – $nil, $1,036, $1,964 and $nil, respectively). There is
no specific maturity date for the contractual agreements. Under the terms of the notes, additional collateral must be provided to the series as added credit
protection and the Series Purchase Agreements govern the amount of over-collateralization for each of the term notes outstanding.
(2)Manulife Bank securitizes a portion of its HELOC receivables through 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 liabilities.
(3)Manulife Bank also securitizes insured amortizing mortgages under the NHA MBS program sponsored by CMHC. Manulife Bank participates in CMB programs by
selling NHA MBS securities to Canada Housing Trust (“CHT”) as well as to market, as a source of fixed-rate funding. CMB securitization included sales to CHT of
$2,984 in securitized assets and $2,989 in securitized borrowing liabilities (2024 – $3,274 and $3,217, respectively); and sales to the market of $374 in securitized
assets and $377 in secured borrowing liabilities (2024 – $nil and $nil, respectively).
As at December 31, 2025, the fair values of securitized assets and related liabilities were $7,137 and $6,855, respectively (2024
– $6,521 and $6,182, respectively).
| 39 | 2025 Annual Report | Consolidated Financial Statements |
|---|
(g)Fair Value Measurement
The following tables present fair values and the fair value hierarchy of invested assets and segregated funds net assets
measured at fair value in the Consolidated Statements of Financial Position.
| As at December 31, 2025 | Total fair<br><br>value | Level 1 | Level 2 | Level 3 |
|---|---|---|---|---|
| Cash and short-term securities | ||||
| FVOCI | $20,827 | $- | $20,827 | $- |
| FVTPL | - | - | - | - |
| Other | 5,777 | 5,777 | - | - |
| Debt securities | ||||
| FVOCI | ||||
| Canadian government and agency | 17,708 | - | 17,708 | - |
| U.S. government and agency | 26,595 | - | 26,595 | - |
| Other government and agency | 37,419 | - | 37,405 | 14 |
| Corporate | 125,184 | - | 125,090 | 94 |
| Residential mortgage-backed securities | 1 | - | 1 | - |
| Commercial mortgage-backed securities | 781 | - | 781 | - |
| Other asset-backed securities | 1,210 | - | 1,210 | - |
| FVTPL | ||||
| Canadian government and agency | 966 | - | 966 | - |
| U.S. government and agency | 39 | - | 39 | - |
| Other government and agency | 63 | - | 63 | - |
| Corporate | 2,742 | - | 2,742 | - |
| Commercial mortgage-backed securities | 5 | - | 5 | - |
| Other asset-backed securities | 265 | - | 255 | 10 |
| Private placements(1) | ||||
| FVOCI | 50,829 | - | 40,502 | 10,327 |
| FVTPL | 953 | - | 799 | 154 |
| Mortgages | ||||
| FVOCI | 28,589 | - | - | 28,589 |
| FVTPL | 1,351 | - | - | 1,351 |
| Public equities | ||||
| FVTPL | 40,971 | 40,900 | 71 | - |
| Real estate(2) | ||||
| Investment property | 10,051 | - | - | 10,051 |
| Own use property | 2,466 | - | - | 2,466 |
| Other invested assets(3) | 39,405 | 70 | - | 39,335 |
| Segregated funds net assets(4) | 461,254 | 423,407 | 34,949 | 2,898 |
| Total | $875,451 | $470,154 | $310,008 | $95,289 |
(1)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 spread adjustment constitutes a
significant price impact, in which case they are classified as Level 3.
(2)For real estate properties, the significant unobservable inputs are capitalization rates ranging from 3.20% to 11.00% during the year ended December 31, 2025
(2024 – ranging from 3.10% to 9.50%), terminal capitalization rates ranging from 3.25% to 10.00% during the year ended December 31, 2025 (2024 – ranging
from 3.10% to 10.00%) and discount rates ranging from 3.60% to 13.75% during the year ended December 31, 2025 (2024 – ranging from 3.60% to 13.75%).
Holding other factors constant, a lower capitalization or terminal capitalization rate will tend to increase the fair value of an investment property. Changes in fair
value based on variations in unobservable inputs generally cannot be extrapolated because the relationship between the directional changes of each input is not
usually linear.
(3)Other invested assets measured at fair value are held in infrastructure and timberland sectors and include fund investments of $32,804 (2024 – $31,435) recorded
at net asset value. 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 ended December 31, 2025
ranged from 7.87% to 20.00% (2024 – ranged from 7.42% to 20.00%). Disclosure of distributable cash flow and terminal value ranges are not meaningful given
the disparity in estimates by project. The significant inputs used in the valuation of the Company’s investments in timberland properties are timber prices and
discount rates. Holding other factors constant, an increase to timber prices would tend to increase the fair value of a timberland investment, while an increase in
the discount rates would have the opposite effect. Discount rates during the year ended December 31, 2025 ranged from 3.25% to 6.25% (2024 – ranged from
3.25% to 6.25%). A range of prices for timber is not meaningful as the market price depends on factors such as property location and proximity to markets and
export yards.
(4)Segregated funds net assets are measured at fair value. The Company’s Level 3 segregated funds underlying assets are predominantly investment properties and
timberland properties valued as described above.
| 40 | ||||
|---|---|---|---|---|
| As at December 31, 2024 | Total fair<br><br>value | Level 1 | Level 2 | Level 3 |
| --- | --- | --- | --- | --- |
| Cash and short-term securities | ||||
| FVOCI | $19,909 | $- | $19,909 | $- |
| FVTPL | 25 | - | 25 | - |
| Other | 5,855 | 5,855 | - | - |
| Debt securities | ||||
| FVOCI | ||||
| Canadian government and agency | 18,671 | - | 18,671 | - |
| U.S. government and agency | 27,628 | - | 27,628 | - |
| Other government and agency | 35,402 | - | 35,392 | 10 |
| Corporate | 121,674 | - | 121,630 | 44 |
| Residential mortgage-backed securities | 5 | - | 5 | - |
| Commercial mortgage-backed securities | 270 | - | 270 | - |
| Other asset-backed securities | 1,516 | - | 1,516 | - |
| FVTPL | ||||
| Canadian government and agency | 1,056 | - | 1,056 | - |
| U.S. government and agency | 58 | - | 58 | - |
| Other government and agency | 68 | - | 68 | - |
| Corporate | 2,761 | - | 2,761 | - |
| Commercial mortgage-backed securities | 2 | - | 2 | - |
| Other asset-backed securities | 15 | - | 15 | - |
| Private placements(1) | ||||
| FVOCI | 48,802 | - | 40,038 | 8,764 |
| FVTPL | 866 | - | 730 | 136 |
| Mortgages | ||||
| FVOCI | 28,792 | - | - | 28,792 |
| FVTPL | 1,239 | - | - | 1,239 |
| Public equities | ||||
| FVTPL | 33,725 | 33,650 | 75 | - |
| Real estate(2) | ||||
| Investment property | 10,589 | - | - | 10,589 |
| Own use property | 2,500 | - | - | 2,500 |
| Other invested assets(3) | 38,543 | 77 | - | 38,466 |
| Segregated funds net assets(4) | 435,988 | 399,043 | 33,611 | 3,334 |
| Total | $835,959 | $438,625 | $303,460 | $93,874 |
Note: For footnotes (1) to (4), refer to the “Fair Value Measurement” table as at December 31, 2025 above.
| 41 | 2025 Annual Report | Consolidated Financial Statements |
|---|
The following tables present fair value of invested assets not measured at fair value by the fair value hierarchy.
| As at December 31, 2025 | Carrying<br><br>value | Total fair<br><br>value | Level 1 | Level 2 | Level 3 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Short-term securities | $99 | $99 | $- | $- | $99 | |||||||
| Mortgages(1) | 27,179 | 27,660 | - | - | 27,660 | |||||||
| Loans to Bank clients(2) | 2,735 | 2,699 | - | 2,699 | - | |||||||
| Real estate - own use property(3) | 165 | 296 | - | - | 296 | |||||||
| Public bonds held at amortized cost | 1,136 | 687 | - | 687 | - | |||||||
| Other invested assets(4) | 14,417 | 15,520 | 564 | - | 14,956 | |||||||
| Total invested assets disclosed at fair value | $45,731 | $46,961 | $564 | $3,386 | $43,011 | As at December 31, 2024 | Carrying<br><br>value | Total fair<br><br>value | Level 1 | Level 2 | Level 3 | |
| --- | --- | --- | --- | --- | --- | |||||||
| Short-term securities | $- | $- | $- | $- | $- | |||||||
| Mortgages(1) | 24,416 | 24,781 | - | - | 24,781 | |||||||
| Loans to Bank clients(2) | 2,310 | 2,285 | - | 2,285 | - | |||||||
| Real estate - own use property(3) | 174 | 298 | - | - | 298 | |||||||
| Public bonds held at amortized cost | 1,495 | 1,007 | - | 1,007 | - | |||||||
| Other invested assets(4) | 14,131 | 15,143 | 542 | - | 14,601 | |||||||
| Total invested assets disclosed at fair value | $42,526 | $43,514 | $542 | $3,292 | $39,680 |
(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 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.
(3)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 (e).
(4)The carrying value of other invested assets includes leveraged leases of $4,266 (2024 – $4,300), other equity method accounted investments and other invested
assets of $10,151 (2024 – $9,831). Fair value of leveraged leases is disclosed at its carrying value as fair value is not routinely calculated on these investments.
Fair value of equity method accounted investments and 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.
Transfers between Level 1 and Level 2
The Company records transfers of assets and liabilities between Level 1 and Level 2 at their fair values as at the end of each
reporting period, consistent with the date of the determination of fair value. Assets are transferred out of Level 1 when they are
no longer transacted with sufficient frequency and volume in an active market. Conversely, assets are transferred from Level 2 to
Level 1 when transaction volume and frequency are indicative of an active market. During the year ended December 31, 2025,
the Company had $nil transfers between Level 1 and Level 2 (2024 – $nil).
For segregated funds net assets, during the year ended December 31, 2025, the Company had $nil transfers from Level 1 to
Level 2 (2024 – $nil). During the year ended December 31, 2025, the Company had $nil transfers from Level 2 to Level 1 (2024
– $nil).
| 42 |
|---|
Invested assets and segregated funds net assets measured at fair value using significant unobservable inputs (Level 3)
The Company classifies fair values of invested assets and segregated funds net assets as Level 3 if there are no observable
market inputs for these assets, or in the presence of active markets significant unobservable inputs are used to determine fair
value. The Company prioritizes the use of market-based inputs over unobservable inputs in determining Level 3 fair values. The
gains and losses in the table below include the changes in fair value due to both observable and unobservable factors.
The following tables present the movement in invested assets, net derivatives and segregated funds net assets measured at fair
value using significant unobservable inputs (Level 3) for the years ended December 31, 2025 and 2024.
| For the year ended<br><br>December 31, 2025 | Balance,<br><br>January<br><br>1, 2025 | Total<br><br>gains<br><br>(losses)<br><br>included<br><br>in net<br><br>income(1) | Total<br><br>gains<br><br>(losses)<br><br>included<br><br>in OCI(2) | Purchases | Sales | Settlements | Transfer<br><br>in(3) | Transfer<br><br>out(3)(4) | Currency<br><br>movement | Balance,<br><br>December<br><br>31, 2025 | Change in<br><br>unrealized<br><br>gains<br><br>(losses) on<br><br>assets still<br><br>held |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt securities | |||||||||||
| FVOCI | |||||||||||
| Other government &<br><br>agency | $10 | $- | $5 | $4 | $- | $(4) | $- | $- | $(1) | $14 | $- |
| Corporate | 44 | - | (1) | - | - | (3) | 57 | - | (3) | 94 | - |
| FVTPL | |||||||||||
| Other securitized<br><br>assets | - | - | - | 10 | - | - | - | - | - | 10 | - |
| Private placements | |||||||||||
| FVOCI | 8,764 | (74) | (181) | 3,405 | (370) | (1,046) | 382 | (277) | (276) | 10,327 | - |
| FVTPL | 136 | - | - | 74 | - | (43) | 74 | (89) | 2 | 154 | - |
| Mortgages | |||||||||||
| FVOCI | 28,792 | 34 | 858 | 2,779 | (2,187) | (776) | - | - | (911) | 28,589 | - |
| FVTPL | 1,239 | 14 | - | 205 | (54) | (51) | - | - | (2) | 1,351 | - |
| Investment<br><br>property | 10,589 | (91) | - | 140 | (330) | - | - | - | (257) | 10,051 | (105) |
| Own use property | 2,500 | (25) | - | 25 | (3) | - | - | - | (31) | 2,466 | (25) |
| Other invested<br><br>assets | 38,466 | 619 | 16 | 5,143 | (1,539) | (2,138) | - | - | (1,232) | 39,335 | 376 |
| Total invested<br><br>assets | 90,540 | 477 | 697 | 11,785 | (4,483) | (4,061) | 513 | (366) | (2,711) | 92,391 | 246 |
| Derivatives, net | (3,235) | 54 | (2) | - | - | (105) | - | 3,233 | 59 | 4 | (30) |
| Segregated funds<br><br>net assets | 3,334 | 214 | (292) | 48 | (381) | 50 | - | - | (75) | 2,898 | 26 |
| Total | $90,639 | $745 | $403 | $11,833 | $(4,864) | $(4,116) | $513 | $2,867 | $(2,727) | $95,293 | $242 |
(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 Investment income related to segregated funds net assets. Refer to note 1 (h).
(2)These amounts are included in OCI on the Consolidated Statements of Comprehensive Income.
(3)The Company uses fair value 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.
(4)The derivatives transferred from Level 3 to Level 2 amounting to $3,233 in the current period are related to derivative contracts that no longer have unobservable
inputs for determining fair values. Forward contracts and other derivatives which continue to have unobservable inputs are still classified as Level 3.
| 43 | 2025 Annual Report | Consolidated Financial Statements | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| For the year ended<br><br>December 31, 2024 | Balance,<br><br>January<br><br>1, 2024 | Total gains<br><br>(losses)<br><br>included in<br><br>net<br><br>income(1) | Total<br><br>gains<br><br>(losses)<br><br>included<br><br>in OCI(2) | Purchases | Sales | Settlements | Transfer<br><br>in(3) | Transfer<br><br>out(3) | Currency<br><br>movement | Balance,<br><br>December<br><br>31, 2024 | Change in<br><br>unrealized<br><br>gains<br><br>(losses) on<br><br>assets still<br><br>held |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Debt securities | |||||||||||
| FVOCI | |||||||||||
| Other government &<br><br>agency | $10 | $- | $- | $- | $- | $(5) | $4 | $- | $1 | $10 | $- |
| Corporate | 231 | - | (33) | - | - | (7) | - | (151) | 4 | 44 | - |
| Other securitized<br><br>assets | 21 | - | 33 | - | - | (22) | - | (33) | 1 | - | - |
| Public equities | |||||||||||
| FVTPL | 41 | (3) | - | - | (1) | - | - | (36) | (1) | - | (3) |
| Private placements | |||||||||||
| FVOCI | 7,682 | (47) | 50 | 3,039 | (1,115) | (1,040) | 254 | (624) | 565 | 8,764 | - |
| FVTPL | 79 | 1 | - | 49 | - | (13) | 29 | (14) | 5 | 136 | 1 |
| Mortgages | |||||||||||
| FVOCI | 28,473 | (73) | 109 | 2,243 | (2,834) | (763) | - | - | 1,637 | 28,792 | - |
| FVTPL | 1,055 | 32 | - | 339 | (152) | (38) | - | - | 3 | 1,239 | - |
| Investment<br><br>property | 10,458 | (504) | - | 222 | (66) | - | - | - | 479 | 10,589 | (514) |
| Own use property | 2,430 | (82) | - | 19 | - | - | - | - | 133 | 2,500 | (82) |
| Other invested<br><br>assets | 33,585 | 1,502 | 14 | 4,308 | (2,007) | (1,187) | - | - | 2,251 | 38,466 | 1,251 |
| Total invested<br><br>assets | 84,065 | 826 | 173 | 10,219 | (6,175) | (3,075) | 287 | (858) | 5,078 | 90,540 | 653 |
| Derivatives, net | (2,166) | (2,248) | - | - | - | (166) | - | 1,509 | (164) | (3,235) | (2,065) |
| Segregated funds<br><br>net assets | 3,492 | 119 | (67) | 148 | (527) | 17 | - | - | 152 | 3,334 | (76) |
| Total | $85,391 | $(1,303) | $106 | $10,367 | $(6,702) | $(3,224) | $287 | $651 | $5,066 | $90,639 | $(1,488) |
(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 Investment income related to segregated funds net assets. Refer to note 1 (h).
(2)These amounts are included in OCI on the Consolidated Statements of Comprehensive Income.
(3)The Company uses fair value 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.
Transfers into Level 3 primarily result where a lack of observable market data (versus the previous period) arises. Transfers from
Level 3 primarily result from observable market data becoming available for derivatives, or for the entire term structure of the
private placements.
| 44 |
|---|
(h)Remaining Term to Maturity
The following tables present remaining term to maturity for invested assets.
| Remaining term to maturity(1) | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| As at December 31, 2025 | Less than 1<br><br>year | 1 to 3 years | 3 to 5 years | 5 to 10 years | Over 10 years | With no<br><br>specific<br><br>maturity | Total | |||||||||
| Cash and short-term securities | $26,703 | $- | $- | $- | $- | $- | $26,703 | |||||||||
| Debt securities | ||||||||||||||||
| Canadian government and agency | 1,349 | 1,082 | 779 | 3,888 | 11,576 | - | 18,674 | |||||||||
| U.S. government and agency | 160 | 798 | 1,619 | 2,625 | 22,064 | - | 27,266 | |||||||||
| Other government and agency | 349 | 1,054 | 804 | 3,155 | 32,120 | - | 37,482 | |||||||||
| Corporate | 8,522 | 15,619 | 16,387 | 36,055 | 51,847 | - | 128,430 | |||||||||
| Mortgage / asset-backed securities | 121 | 212 | 215 | 388 | 1,326 | - | 2,262 | |||||||||
| Public equities | - | - | - | - | - | 40,971 | 40,971 | |||||||||
| Mortgages | 6,572 | 12,099 | 9,922 | 6,825 | 10,288 | 11,413 | 57,119 | |||||||||
| Private placements | 2,030 | 6,001 | 5,197 | 10,796 | 27,718 | 40 | 51,782 | |||||||||
| Loans to Bank clients | 46 | 9 | 4 | - | - | 2,676 | 2,735 | |||||||||
| Real estate | ||||||||||||||||
| Own use property | - | - | - | - | - | 2,631 | 2,631 | |||||||||
| Investment property | - | - | - | - | - | 10,051 | 10,051 | |||||||||
| Other invested assets | ||||||||||||||||
| Alternative long-duration assets | - | 18 | 104 | 287 | 504 | 48,116 | 49,029 | |||||||||
| Various other | 20 | - | - | 3,725 | 521 | 527 | 4,793 | |||||||||
| Total invested assets | $45,872 | $36,892 | $35,031 | $67,744 | $157,964 | $116,425 | $459,928 | Remaining term to maturity(1) | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | |||||||||
| As at December 31, 2024 | Less than 1<br><br>year | 1 to 3 years | 3 to 5 years | 5 to 10 years | Over 10 years | With no<br><br>specific<br><br>maturity | Total | |||||||||
| Cash and short-term securities | $25,789 | $- | $- | $- | $- | $- | $25,789 | |||||||||
| Debt securities | ||||||||||||||||
| Canadian government and agency | 543 | 2,282 | 678 | 3,339 | 12,885 | - | 19,727 | |||||||||
| U.S. government and agency | 644 | 640 | 1,473 | 4,699 | 21,198 | - | 28,654 | |||||||||
| Other government and agency | 372 | 1,208 | 1,056 | 3,566 | 29,268 | - | 35,470 | |||||||||
| Corporate | 7,810 | 15,763 | 15,817 | 33,818 | 51,754 | - | 124,962 | |||||||||
| Mortgage / asset-backed securities | 60 | 260 | 213 | 450 | 825 | - | 1,808 | |||||||||
| Public equities | - | - | - | - | - | 33,725 | 33,725 | |||||||||
| Mortgages | 4,741 | 11,944 | 10,478 | 7,617 | 9,876 | 9,791 | 54,447 | |||||||||
| Private placements | 1,534 | 5,093 | 4,986 | 10,463 | 27,500 | 92 | 49,668 | |||||||||
| Loans to Bank clients | 47 | 13 | 3 | - | - | 2,247 | 2,310 | |||||||||
| Real estate | ||||||||||||||||
| Own use property | - | - | - | - | - | 2,674 | 2,674 | |||||||||
| Investment property | - | - | - | - | - | 10,589 | 10,589 | |||||||||
| Other invested assets | ||||||||||||||||
| Alternative long-duration assets | 67 | - | 85 | 276 | 524 | 46,911 | 47,863 | |||||||||
| Various other | - | 20 | - | 3,623 | 657 | 511 | 4,811 | |||||||||
| Total invested assets | $41,607 | $37,223 | $34,789 | $67,851 | $154,487 | $106,540 | $442,497 |
(1)Represents contractual maturities. Actual maturities may differ due to prepayment privileges in the applicable contract.
| 45 | 2025 Annual Report | Consolidated Financial Statements |
|---|
Note 4 Derivative and Hedging Instruments
Derivatives are financial contracts whose value is derived from various factors described in note 4 (a). The Company uses
derivatives including swaps, forward and futures agreements, and options to manage current and anticipated exposures to
changes in interest rates, foreign exchange rates, commodity prices and equity market prices, and to replicate exposure to
different types of investments.
Swaps are contractual agreements between the Company and a third party to exchange a series of cash flows based upon rates
applied to a notional amount. For interest rate swaps, counterparties generally exchange fixed or floating interest rate payments
based on a notional value in a single currency. Cross-currency swaps involve the exchange of principal amounts between
parties, as well as the exchange of interest payments in one currency for the receipt of interest payments in another currency.
Total return swaps are contracts that involve the exchange of payments based on changes in the values of a reference asset,
including any returns such as interest earned on these assets, in return for amounts based on reference rates specified in the
contract.
Forward and futures agreements are contractual obligations to buy or sell a financial instrument, foreign currency or other
underlying commodity on a predetermined future date at a specified price. Forward contracts are over-the-counter (“OTC”)
contracts negotiated between counterparties, whereas futures agreements are contracts with standard amounts and settlement
dates that are traded on regulated exchanges.
Options are contractual agreements whereby the holder has the right, but not the obligation, to buy (call option) or sell (put
option) a security, exchange rate, interest rate, or other financial instrument at a predetermined price/rate within a specified time.
See variable annuity dynamic hedging strategy in note 8 (a) for an explanation of the Company’s dynamic hedging strategy for its
variable annuity product guarantees.
(a)Fair Value of Derivatives
The pricing models used to value derivatives are based on market-standard valuation methodologies, and the inputs to these
models are consistent with what a market participant would use when pricing the instruments. Derivative valuations can be
affected by changes in interest rates, foreign exchange rates, financial indices, commodity prices or indices, credit spreads,
default risk (including the counterparties to the contract), and market volatility.
The significant inputs to the pricing models for most derivatives are inputs that are observable or can be corroborated by
observable market data and are classified as Level 2. Inputs that are observable generally include interest rates, foreign
exchange rates and interest rate curves. However, certain derivatives may rely on inputs that are significant to the fair value that
are not observable in the market or cannot be derived principally from, or corroborated by, observable market data and these
derivatives are classified as Level 3. Inputs that are unobservable generally include broker quoted prices, volatilities and inputs
that are outside of the observable portion of the interest rate curve or other relevant market measures, such as repurchase rates.
These unobservable inputs may involve significant management judgment or estimation. Even though these inputs are
unobservable, they are based on assumptions deemed appropriate given the circumstances and consistent with what market
participants would use when pricing such instruments. The credit risk of both the counterparty and the Company are considered
in determining the fair value for all derivatives after considering the effects of netting agreements and collateral arrangements.
| 46 |
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The following table presents gross notional amount and fair value of derivative instruments by the underlying risk exposure.
| As at December 31, | 2025 | 2024 | |||||
|---|---|---|---|---|---|---|---|
| Notional<br><br>amount | Fair value | Notional<br><br>amount | Fair value | ||||
| Type of hedge | Instrument type | Assets | Liabilities | Assets | Liabilities | ||
| Qualifying hedge accounting relationships | |||||||
| Fair value hedges | Interest rate swaps | $196,158 | $2,793 | $3,826 | $206,181 | $2,734 | $3,533 |
| Foreign currency swaps | 16,383 | 71 | 2,385 | 14,121 | 145 | 2,114 | |
| Forward contracts | 25,324 | 30 | 2,730 | 25,692 | 74 | 3,420 | |
| Cash flow hedges | Interest rate swaps | 10,946 | 31 | 63 | 9,036 | 24 | 48 |
| Foreign currency swaps | 650 | - | 190 | 650 | - | 216 | |
| Forward contracts | - | - | - | - | - | - | |
| Equity contracts | 298 | - | - | 324 | 6 | - | |
| Net investment hedges | Forward contracts | 587 | 3 | 6 | 602 | 18 | - |
| Total derivatives in qualifying hedge accounting<br><br>relationships | 250,346 | 2,928 | 9,200 | 256,606 | 3,001 | 9,331 | |
| Derivatives not designated in qualifying hedge<br><br>accounting relationships | |||||||
| Interest rate swaps | 112,633 | 2,403 | 3,050 | 110,114 | 2,188 | 2,906 | |
| Interest rate futures | 21,483 | - | - | 9,054 | - | - | |
| Interest rate options | 4,876 | 8 | - | 5,633 | 16 | - | |
| Foreign currency swaps | 36,417 | 2,434 | 558 | 33,924 | 1,854 | 272 | |
| Currency rate futures | 2,242 | - | - | 2,238 | - | - | |
| Forward contracts | 55,555 | 848 | 1,511 | 52,044 | 882 | 1,675 | |
| Equity contracts | 23,995 | 1,006 | 28 | 25,290 | 724 | 63 | |
| Credit default swaps | 109 | 1 | - | 114 | 2 | - | |
| Equity futures | 5,354 | - | - | 4,004 | - | - | |
| Total derivatives not designated in qualifying hedge<br><br>accounting relationships | 262,664 | 6,700 | 5,147 | 242,415 | 5,666 | 4,916 | |
| Total derivatives | $513,010 | $9,628 | $14,347 | $499,021 | $8,667 | $14,247 |
The following tables present the fair values of the derivative instruments by the remaining term to maturity. Fair values disclosed
below do not incorporate the impact of master netting agreements (refer to note 8 (g)).
| Remaining term to maturity | |||||
|---|---|---|---|---|---|
| As at December 31, 2025 | Less than<br><br>1 year | 1 to 3<br><br>years | 3 to 5<br><br>years | Over 5<br><br>years | Total |
| Derivative assets | $970 | $842 | $809 | $7,007 | $9,628 |
| Derivative liabilities | 2,270 | 1,746 | 875 | 9,456 | 14,347 |
| Remaining term to maturity | |||||
| As at December 31, 2024 | Less than<br><br>1 year | 1 to 3<br><br>years | 3 to 5<br><br>years | Over 5<br><br>years | Total |
| Derivative assets | $1,171 | $578 | $635 | $6,283 | $8,667 |
| Derivative liabilities | 2,320 | 2,304 | 1,244 | 8,379 | 14,247 |
| 47 | 2025 Annual Report | Consolidated Financial Statements | |||
| --- | --- | --- |
The following tables present gross notional amount by the remaining term to maturity, total fair value (including accrued interest),
credit equivalent amount and capital requirement by contract type.
| Remaining term to maturity (notional amounts) | Fair value | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| As at December 31, 2025 | Less than<br><br>1 year | 1 to 5<br><br>years | Over<br><br>5 years | Total | Positive | Negative | Net | Credit<br><br>equivalent<br><br>amount(1) | Capital<br><br>requirement(2) |
| Interest rate contracts | |||||||||
| OTC swap contracts | $5,558 | $29,751 | $115,594 | $150,903 | $5,336 | $(7,275) | $(1,939) | $331 | $9 |
| Cleared swap contracts | 9,337 | 29,166 | 130,331 | 168,834 | 251 | (222) | 29 | - | - |
| Forward contracts | 18,825 | 23,142 | - | 41,967 | 168 | (3,427) | (3,259) | 44 | 1 |
| Futures | 21,483 | - | - | 21,483 | - | - | - | - | - |
| Options purchased | 453 | 1,206 | 3,217 | 4,876 | 8 | - | 8 | 15 | - |
| Subtotal | 55,656 | 83,265 | 249,142 | 388,063 | 5,763 | (10,924) | (5,161) | 390 | 10 |
| Foreign exchange | |||||||||
| Swap contracts | 2,554 | 14,023 | 36,873 | 53,450 | 2,473 | (3,253) | (780) | 1,172 | 19 |
| Forward contracts | 32,894 | 1,051 | 5,554 | 39,499 | 713 | (819) | (106) | 821 | 20 |
| Futures | 2,242 | - | - | 2,242 | - | - | - | - | - |
| Subtotal | 37,690 | 15,074 | 42,427 | 95,191 | 3,186 | (4,072) | (886) | 1,993 | 39 |
| Credit derivatives | 17 | 92 | - | 109 | 1 | - | 1 | - | - |
| Equity contracts | |||||||||
| Swap contracts | 1,435 | 704 | - | 2,139 | 5 | (15) | (10) | 19 | - |
| Futures | 5,354 | - | - | 5,354 | - | - | - | - | - |
| Options purchased | 18,246 | 3,908 | - | 22,154 | 1,000 | (13) | 987 | 252 | 2 |
| Subtotal | 25,052 | 4,704 | - | 29,756 | 1,006 | (28) | 978 | 271 | 2 |
| Subtotal including accrued<br><br>interest | 118,398 | 103,043 | 291,569 | 513,010 | 9,955 | (15,024) | (5,069) | 2,654 | 51 |
| Less accrued interest | - | - | - | - | 327 | (677) | (350) | - | - |
| Total | $118,398 | $103,043 | $291,569 | $513,010 | $9,628 | $(14,347) | $(4,719) | $2,654 | $51 |
| Remaining term to maturity (notional amounts) | Fair value | ||||||||
| As at December 31, 2024 | Less than<br><br>1 year | 1 to 5<br><br>years | Over<br><br>5 years | Total | Positive | Negative | Net | Credit<br><br>equivalent<br><br>amount(1) | Capital<br><br>requirement(2) |
| Interest rate contracts | |||||||||
| OTC swap contracts | $6,999 | $25,019 | $112,685 | $144,703 | $5,103 | $(6,976) | $(1,873) | $323 | $9 |
| Cleared swap contracts | 9,507 | 31,033 | 140,088 | 180,628 | 240 | (189) | 51 | - | - |
| Forward contracts | 20,661 | 21,028 | - | 41,689 | 231 | (4,467) | (4,236) | 36 | 1 |
| Futures | 9,054 | - | - | 9,054 | - | - | - | - | - |
| Options purchased | 863 | 1,086 | 3,684 | 5,633 | 16 | - | 16 | 17 | - |
| Subtotal | 47,084 | 78,166 | 256,457 | 381,707 | 5,590 | (11,632) | (6,042) | 376 | 10 |
| Foreign exchange | |||||||||
| Swap contracts | 2,044 | 13,733 | 32,918 | 48,695 | 1,983 | (2,709) | (726) | 1,028 | 19 |
| Forward contracts | 29,423 | 1,105 | 6,121 | 36,649 | 743 | (628) | 115 | 698 | 17 |
| Futures | 2,238 | - | - | 2,238 | - | - | - | - | - |
| Subtotal | 33,705 | 14,838 | 39,039 | 87,582 | 2,726 | (3,337) | (611) | 1,726 | 36 |
| Credit derivatives | - | 114 | - | 114 | 2 | - | 2 | - | - |
| Equity contracts | |||||||||
| Swap contracts | 1,926 | 762 | - | 2,688 | 31 | (14) | 17 | 27 | - |
| Futures | 4,004 | - | - | 4,004 | - | - | - | - | - |
| Options purchased | 19,437 | 3,489 | - | 22,926 | 699 | (43) | 656 | 375 | 3 |
| Subtotal | 25,367 | 4,365 | - | 29,732 | 732 | (57) | 675 | 402 | 3 |
| Subtotal including accrued<br><br>interest | 106,156 | 97,369 | 295,496 | 499,021 | 9,048 | (15,026) | (5,978) | 2,504 | 49 |
| Less accrued interest | - | - | - | - | 381 | (779) | (398) | - | - |
| Total | $106,156 | $97,369 | $295,496 | $499,021 | $8,667 | $(14,247) | $(5,580) | $2,504 | $49 |
(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 the Office of the Superintendent of Financial Institutions (“OSFI”).
(2)Capital requirement represents the credit equivalent amount, weighted according to the creditworthiness of the counterparty, as prescribed by OSFI.
| 48 |
|---|
The total notional amount of $513 billion (2024 – $499 billion) includes $94 billion (2024 – $90 billion) related to derivatives
utilized in the Company’s variable annuity guarantee dynamic hedging. Due to the Company’s variable annuity hedging
practices, many trades are in offsetting positions, resulting in materially lower net fair value exposure for the Company than what
the gross notional amount would suggest.
The following tables present the average rate of the hedging instruments in key hedge relationships that do not frequently reset.
| As at December 31, 2025 | Remaining term to maturity<br><br>(notional amounts) | Fair value | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Hedged item | Hedging instrument | Average rate | Less than<br><br>1 year | 1 to 5<br><br>years | Over 5<br><br>years | Total | Positive | Negative | Net |
| Inflation risk | |||||||||
| Inflation linked insurance<br><br>liabilities | Interest rate swaps | CPI rate: 297.02 | $107 | $606 | $10,233 | $10,946 | $31 | $(63) | $(32) |
| Foreign exchange risk | |||||||||
| Foreign currency assets | Foreign currency<br><br>swaps | CAD/EUR: 0.66285 | - | 213 | 1,463 | 1,676 | - | (80) | (80) |
| Foreign currency assets | Foreign currency<br><br>swaps | CAD/GBP: 0.55972 | - | 115 | 515 | 630 | - | (14) | (14) |
| Foreign currency assets | Foreign currency<br><br>swaps | CAD/USD: 0.72856 | 20 | 352 | 1,100 | 1,472 | 14 | (4) | 10 |
| Foreign currency assets | Foreign currency<br><br>swaps | JPY/EUR: 0.00603 | - | 281 | 481 | 762 | - | (100) | (100) |
| Foreign exchange and interest<br><br>rate risk | |||||||||
| Floating rate foreign currency<br><br>liabilities | Foreign currency<br><br>swaps | CAD/USD: 0.86655 | - | - | 650 | 650 | - | (190) | (190) |
| Debt securities at fair value<br><br>through OCI | Foreign currency<br><br>swaps | CAD/USD: 1.23451 | 8 | - | - | 8 | 1 | - | 1 |
| Equity risk | |||||||||
| Stock-based compensation | Equity contracts | MFC price: $38.39 | 26 | 272 | - | 298 | - | - | - |
| Total | $161 | $1,839 | $14,442 | $16,442 | $46 | $(451) | $(405) | ||
| As at December 31, 2024 | Remaining term to maturity<br><br>(notional amounts) | Fair value | |||||||
| Hedged item | Hedging instrument | Average rate | Less than<br><br>1 year | 1 to 5<br><br>years | Over 5<br><br>years | Total | Positive | Negative | Net |
| Inflation risk | |||||||||
| Inflation linked insurance<br><br>liabilities | Interest rate swaps | CPI rate: 290.22 | $92 | $568 | $8,376 | $9,036 | $24 | $(48) | $(24) |
| Foreign exchange risk | |||||||||
| Foreign currency assets | Foreign currency<br><br>swaps | CAD/EUR: 0.66703 | - | 160 | 1,311 | 1,471 | 16 | - | 16 |
| Foreign currency assets | Foreign currency<br><br>swaps | CAD/GBP: 0.56259 | - | 115 | 434 | 549 | 22 | - | 22 |
| Foreign currency assets | Foreign currency<br><br>swaps | CAD/USD: 0.73009 | 165 | 407 | 1,067 | 1,639 | 9 | (27) | (18) |
| Foreign exchange and interest<br><br>rate risk | |||||||||
| Floating rate foreign currency<br><br>liabilities | Foreign currency<br><br>swaps | CAD/USD: 0.86655 | - | - | 650 | 650 | - | (216) | (216) |
| Debt securities at fair value<br><br>through OCI | Foreign currency<br><br>swaps | CAD/USD: 1.22914 | 42 | 9 | - | 51 | 7 | - | 7 |
| Equity risk | |||||||||
| Stock-based compensation | Equity contracts | MFC price: $30.12 | 20 | 304 | - | 324 | 6 | - | 6 |
| Total | $319 | $1,563 | $11,838 | $13,720 | $84 | $(291) | $(207) | ||
| 49 | 2025 Annual Report | Consolidated Financial Statements | |||||||
| --- | --- | --- |
Fair value and the fair value hierarchy of derivative instruments
| As at December 31, 2025 | Fair value | Level 1 | Level 2 | Level 3 |
|---|---|---|---|---|
| Derivative assets | ||||
| Interest rate contracts | $5,403 | $- | $5,380 | $23 |
| Foreign exchange contracts | 3,218 | - | 3,218 | - |
| Equity contracts | 1,006 | - | 956 | 50 |
| Credit default swaps | 1 | - | 1 | - |
| Total derivative assets | $9,628 | $- | $9,555 | $73 |
| Derivative liabilities | ||||
| Interest rate contracts | $10,367 | $- | $10,307 | $60 |
| Foreign exchange contracts | 3,952 | - | 3,949 | 3 |
| Equity contracts | 28 | - | 22 | 6 |
| Total derivative liabilities | $14,347 | $- | $14,278 | $69 |
| As at December 31, 2024 | Fair value | Level 1 | Level 2 | Level 3 |
| Derivative assets | ||||
| Interest rate contracts | $5,193 | $- | $5,026 | $167 |
| Foreign exchange contracts | 2,742 | - | 2,742 | - |
| Equity contracts | 730 | - | 730 | - |
| Credit default swaps | 2 | - | 2 | - |
| Total derivative assets | $8,667 | $- | $8,500 | $167 |
| Derivative liabilities | ||||
| Interest rate contracts | $10,954 | $- | $7,571 | $3,383 |
| Foreign exchange contracts | 3,230 | - | 3,227 | 3 |
| Equity contracts | 63 | - | 47 | 16 |
| Total derivative liabilities | $14,247 | $- | $10,845 | $3,402 |
Movement in net derivatives measured at fair value using significant unobservable inputs (Level 3) is presented in note 3 (g).
(b)Hedging Relationships
The Company uses derivatives for economic hedging purposes. In certain circumstances, these derivatives meet the
requirements of hedge accounting and designating them in qualifying hedge accounting relationships achieves the desired IFRS
presentation. Risk management strategies eligible for hedge accounting are designated as fair value hedges, cash flow hedges
or net investment hedges.
At the inception of a hedge accounting relationship, the Company documents the relationship between the hedging instrument
and hedged item, its risk management objective, and its strategy for undertaking the hedge. At hedge inception and on an
ongoing basis, an assessment is performed and documented to demonstrate that the hedging relationship qualifies or continues
to qualify for hedge accounting. In order to qualify for hedge accounting, there has to be an economic relationship between the
hedging instrument and the hedged item, an assessment that the effect of credit risk does not dominate the economic
relationship, and the hedge ratio between the hedging instrument and the hedged item will be based on the approach used by
risk management, unless the hedge ratio used by risk management results in an imbalance that would create hedge
ineffectiveness that is inconsistent with the purpose of hedge accounting.
•The Company designates a specific risk component or a combination of risk components as the hedged risk, including
benchmark interest rate, foreign exchange rate, equity price and consumer price index components. All these risk
components are observable in the relevant market environment and the changes in fair value or variability in cash flows
attributable to these risk components can be reliably measured for hedged items. The hedged risk is generally the most
significant risk component of the overall changes in fair value or in cash flows. The Company acquires derivatives for
economic hedging purposes with underlying characteristics that offset the hedged risk based on the risk management
strategy.
•The Company executes hedging derivatives with counterparties with high credit quality and monitors the creditworthiness of
the counterparties to ensure they are expected to meet cash flow obligations on the hedging instruments as they come due,
and that the probability of counterparty default is remote. Further, changes in the Company’s own credit risk are immaterial
and have insignificant impact to the hedging relationships.
| 50 |
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•A hedge ratio is calculated as the ratio between the quantity of the hedged item that the Company hedges and the quantity
of the hedging instrument the Company uses to hedge that quantity of hedged item.
◦For group fair value hedges of foreign exchange and interest rate risk of insurance liabilities and group fair value
hedges of foreign exchange and interest rate risk of debt instruments, the Company constructs the hedge relationship
by comparing interest rate sensitivities of the group of hedging derivatives and the group of hedged items in the same
currency. Interest rate sensitivities are compared by estimating the change in the present value of cash flows of hedged
items and of hedging derivatives from an instantaneous shock to interest rates, assuming no rebalancing actions are
undertaken.
◦For the rest of the Company’s hedge accounting relationships, the Company generally constructs the hedge
relationships by comparing the notional amounts of the hedging derivatives with that of the hedged items.
Hedge ineffectiveness in various hedging relationships may still exist and potential sources of hedge ineffectiveness by risk
category are summarized below:
| Interest rate<br><br>risk | Foreign<br><br>currency<br><br>risk | Equity risk | Consumer<br><br>price index<br><br>risk | |
|---|---|---|---|---|
| Mismatches in some critical terms of hedging instrument and hedged item | ü | ü | ü | ü |
| Differences in valuation methodologies including discounting factor | ü | ü | ü | |
| Changes in timing and amount of forecasted hedged items | ü | ü | ||
| Differences due to the use of non-zero fair value hedging instruments | ü | ü |
Hedging relationships that frequently reset
The Company uses a portfolio of derivatives as a fair value hedge of foreign exchange rate and interest rate fluctuations of fixed-
rate debt instruments denominated in non-functional currencies, as well as interest rate fluctuations of guaranteed insurance
liabilities. The risk management objective is to hedge these foreign exchange and interest rate fluctuations with a hedge horizon
of three months. At the end of each hedge horizon, the hedging relationships mature; and new fair value hedging relationships
are designated with a newly designated pool of hedging instruments and hedged items.
| 51 | 2025 Annual Report | Consolidated Financial Statements |
|---|
Fair value hedges
The Company uses interest rate swaps to manage its exposure to changes in the fair value of fixed-rate financial instruments
and guaranteed insurance liabilities due to changes in interest rates. The Company also uses cross-currency swaps to manage
its exposure to foreign exchange rate fluctuations, interest rate fluctuations, or both.
The Company recognizes gains and losses on derivatives and the related hedged items in fair value hedges in total investment
result. These investment gains (losses) are shown in the following tables.
| For the year ended December 31, 2025 | Change in<br><br>value of the<br><br>hedged item for<br><br>ineffectiveness<br><br>measurement | Change in<br><br>value of the<br><br>hedging<br><br>instrument for<br><br>ineffectiveness<br><br>measurement | Ineffectiveness<br><br>recognized in<br><br>Total investment<br><br>result | Carrying<br><br>amount for<br><br>hedged items(1) | Accumulated<br><br>fair value<br><br>adjustments on<br><br>hedged items | Accumulated<br><br>fair value<br><br>adjustments on<br><br>de-designated<br><br>hedged items |
|---|---|---|---|---|---|---|
| Assets | ||||||
| Interest rate risk | ||||||
| Debt securities and others(2) at FVOCI | $269 | $917 | $1,186 | $51,430 | $(405) | $174 |
| Foreign currency risk | ||||||
| Debt securities and others at FVOCI | (321) | 321 | - | 6,370 | - | - |
| Foreign currency and interest rate risk | ||||||
| Debt securities and others at FVOCI | 390 | (483) | (93) | 10,715 | (106) | (109) |
| Total assets | $338 | $755 | $1,093 | $68,515 | $(511) | $65 |
| Liabilities | ||||||
| Interest rate risk | ||||||
| Insurance contract liabilities and others(3) | $1,304 | $(2,392) | $(1,088) | $51,642 | $1,025 | $3,591 |
| Foreign currency and interest rate risk | ||||||
| Insurance contract liabilities and others | (124) | 298 | 174 | 4,580 | 29 | 51 |
| Total liabilities | $1,180 | $(2,094) | $(914) | $56,222 | $1,054 | $3,642 |
| For the year ended December 31, 2024 | Change in<br><br>value of the<br><br>hedged item for<br><br>ineffectiveness<br><br>measurement | Change in<br><br>value of the<br><br>hedging<br><br>instrument for<br><br>ineffectiveness<br><br>measurement | Ineffectiveness<br><br>recognized in<br><br>Total investment<br><br>result | Carrying<br><br>amount for<br><br>hedged items(1) | Accumulated<br><br>fair value<br><br>adjustments on<br><br>hedged items | Accumulated<br><br>fair value<br><br>adjustments on<br><br>de-designated<br><br>hedged items |
| Assets | ||||||
| Interest rate risk | ||||||
| Debt securities at FVOCI | $(833) | $812 | $(21) | $117,538 | $(1) | $(601) |
| Foreign currency risk | ||||||
| Debt securities at FVOCI | (80) | 80 | - | 3,561 | - | - |
| Foreign currency and interest rate risk | ||||||
| Debt securities at FVOCI | 451 | (559) | (108) | 11,130 | (367) | 196 |
| Total assets | $(462) | $333 | $(129) | $132,229 | $(368) | $(405) |
| Liabilities | ||||||
| Interest rate risk | ||||||
| Insurance contract liabilities | $3,591 | $(3,329) | $262 | $47,747 | $3,386 | $237 |
| Foreign currency and interest rate risk | ||||||
| Insurance contract liabilities | 55 | (17) | 38 | 3,167 | 137 | - |
| Total liabilities | $3,646 | $(3,346) | $300 | $50,914 | $3,523 | $237 |
(1)The carrying amounts for hedged items presented are related to hedged items in active hedging relationships as at the reporting date.
(2)Includes hedge accounting results for a new hedge strategy designated in 2025 for hedging interest rate risk related to fixed rate residential mortgage with carrying
amount of $386 as at the reporting date with ineffectiveness during the year ended December 31, 2025 of $1.
(3)Includes hedge accounting results for a new hedge strategy designated in 2025 for hedging interest rate risk related to fixed rate term deposits with carrying
amount of $100 as at the reporting date with no ineffectiveness during the year ended December 31, 2025.
| 52 |
|---|
Cash flow hedges
The Company uses interest rate swaps to hedge the variability in cash flows from variable rate financial instruments and from
forecasted transactions. The Company also uses cross-currency swaps and foreign currency forward contracts to hedge the
variability from foreign currency financial instruments and foreign currency expenses. Total return swaps are used to hedge the
variability in cash flows associated with certain stock-based compensation awards. Inflation swaps are used to reduce inflation
risk generated from inflation-indexed liabilities.
The effects of derivatives in cash flow hedging relationships on the Consolidated Statements of Income and the Consolidated
Statements of Comprehensive Income are shown in the following tables. The effective portion of the change in fair value of
hedging instruments associated with the Consumer Price Index (“CPI”) cash flow hedge accounting program is presented in
AOCI – Insurance finance income (expenses), in the same line as the hedged item. The accumulated other comprehensive
income (loss) balances of $(54) as at December 31, 2025 (2024 – $10) were all related to continuing cash flow hedges, of which
$(60) (December 31, 2024 – $(42) related to CPI cash flow hedges that were reported in AOCI – Insurance finance income
(expenses). There was $nil balance in AOCI related to de-designated hedges as at December 31, 2025 (2024 – $nil).
| For the year ended<br><br>December 31, 2025 | Hedged items in qualifying cash flow hedging<br><br>relationships | Change in fair<br><br>value of<br><br>hedged items<br><br>for<br><br>ineffectiveness<br><br>measurement | Change in fair<br><br>value of<br><br>hedging<br><br>instruments for<br><br>ineffectiveness<br><br>measurement | Gains (losses)<br><br>deferred in<br><br>AOCI on<br><br>derivatives | Gains (losses)<br><br>reclassified<br><br>from AOCI into<br><br>Total<br><br>investment<br><br>result | Ineffectiveness<br><br>recognized in<br><br>Total<br><br>investment<br><br>result | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest rate risk | ||||||||||||||
| Treasury locks | Forecasted liability issuance | $- | $- | $- | $- | $- | ||||||||
| Foreign exchange risk | ||||||||||||||
| Foreign currency swaps | Fixed rate liabilities | - | - | - | - | - | ||||||||
| Interest and foreign<br><br>exchange risk | ||||||||||||||
| Foreign currency swaps | Floating rate liabilities | (8) | 8 | 8 | 17 | - | ||||||||
| Equity price risk | ||||||||||||||
| Equity contracts | Stock-based compensation | (50) | 50 | 50 | 87 | - | ||||||||
| CPI risk | ||||||||||||||
| Interest rate swaps(1) | Inflation linked insurance liabilities | (5) | 5 | 5 | 23 | - | ||||||||
| Total | $(63) | $63 | $63 | $127 | $- | For the year ended<br><br>December 31, 2024 | Hedged items in qualifying cash flow hedging<br><br>relationships | Change in fair<br><br>value of<br><br>hedged items<br><br>for<br><br>ineffectiveness<br><br>measurement | Change in fair<br><br>value of<br><br>hedging<br><br>instruments for<br><br>ineffectiveness<br><br>measurement | Gains (losses)<br><br>deferred in<br><br>AOCI on<br><br>derivatives | Gains (losses)<br><br>reclassified<br><br>from AOCI into<br><br>Total<br><br>investment<br><br>result | Ineffectiveness<br><br>recognized in<br><br>Total<br><br>investment<br><br>result | ||
| --- | --- | --- | --- | --- | --- | --- | ||||||||
| Interest rate risk | ||||||||||||||
| Treasury locks | Forecasted liability issuance | $3 | $(3) | $(3) | $- | $- | ||||||||
| Foreign exchange risk | ||||||||||||||
| Foreign currency swaps | Fixed rate liabilities | (23) | 23 | 23 | 26 | - | ||||||||
| Interest and foreign<br><br>exchange risk | ||||||||||||||
| Foreign currency swaps | Floating rate liabilities | 32 | (32) | (32) | (75) | - | ||||||||
| Equity price risk | ||||||||||||||
| Equity contracts | Stock-based compensation | (145) | 145 | 145 | 66 | - | ||||||||
| CPI risk | ||||||||||||||
| Interest rate swaps(1) | Inflation linked insurance liabilities | (60) | 60 | 60 | 17 | - | ||||||||
| Total | $(193) | $193 | $193 | $34 | $- |
(1)Gains (losses) deferred in AOCI on derivatives are presented in AOCI under Insurance finance income (expenses).
The Company anticipates that net losses of approximately $11 will be reclassified from AOCI to net income within the next 12
months. The maximum time frame for which variable cash flows are hedged is 11 years with exception to CPI hedge
relationships where the maximum time frame for which variable cash flows are hedged is 30 years.
The table below details the balances in the Company’s cash flow hedge reserve.
| As at December 31, | 2025 | 2024 |
|---|---|---|
| Balances in the cash flow hedge reserve for continuing hedges | $(54) | $10 |
| Balances remaining in the cash flow hedge reserve on de-designated hedges | - | - |
| Total | $(54) | $10 |
| 53 | 2025 Annual Report | Consolidated Financial Statements |
| --- | --- | --- |
Hedges of net investments in foreign operations
The Company uses non-functional currency denominated long-term debt (refer to note 9) and forward currency contracts to
mitigate the foreign exchange translation risk of net investments in foreign operations.
The effects of net investment hedging relationships on the Consolidated Statements of Income and the Consolidated Statements
of Other Comprehensive Income are shown in the following tables.
| For the year ended December 31, 2025 | Change in fair<br><br>value of<br><br>hedged items<br><br>for<br><br>ineffectiveness<br><br>measurement | Change in fair<br><br>value of<br><br>hedging<br><br>instruments for<br><br>ineffectiveness<br><br>measurement | Gains (losses)<br><br>deferred in<br><br>AOCI | Gains (losses)<br><br>reclassified<br><br>from AOCI into<br><br>Total<br><br>investment<br><br>result | Ineffectiveness<br><br>recognized in<br><br>Total<br><br>investment<br><br>result | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Non-functional currency denominated debt | $(368) | $368 | $368 | $- | $- | |||||||
| Forward currency contracts | 7 | (7) | (7) | - | - | |||||||
| Total | $(361) | $361 | $361 | $- | $- | For the year ended December 31, 2024 | Change in fair<br><br>value of<br><br>hedged items<br><br>for<br><br>ineffectiveness<br><br>measurement | Change in fair<br><br>value of<br><br>hedging<br><br>instruments for<br><br>ineffectiveness<br><br>measurement | Gains (losses)<br><br>deferred in<br><br>AOCI | Gains (losses)<br><br>reclassified<br><br>from AOCI into<br><br>Total<br><br>investment<br><br>result | Ineffectiveness<br><br>recognized in<br><br>Total<br><br>investment<br><br>result | |
| --- | --- | --- | --- | --- | --- | |||||||
| Non-functional currency denominated debt | $665 | $(665) | $(665) | $- | $- | |||||||
| Forward currency contracts | (45) | 45 | 45 | - | - | |||||||
| Total | $620 | $(620) | $(620) | $- | $- |
The table below details the balances in the Company’s net investment hedge reserve.
| As at December 31, | 2025 | 2024 |
|---|---|---|
| Balances in the foreign currency translation reserve for continuing hedges | $(200) | $(561) |
| Balances remaining in the net investment hedge reserve on de-designated hedges | - | - |
| Total | $(200) | $(561) |
Reconciliation of accumulated other comprehensive income (loss) related to cash flow hedges
| For the year ended December 31, 2025 | Accumulated other<br><br>comprehensive<br><br>income (loss),<br><br>beginning of year | Hedging gains<br><br>(losses)<br><br>recognized in<br><br>AOCI during the<br><br>year | Reclassification from AOCI to income | ||||
|---|---|---|---|---|---|---|---|
| Interest rate risk | $(2) | $- | - | (2) | - | $- | |
| Interest rate and foreign exchange risk | (64) | 8 | 17 | (73) | - | - | |
| Foreign exchange translation risk | - | - | - | - | - | - | |
| CPI risk | (42) | 5 | 23 | (60) | - | - | |
| Equity price risk | 118 | 50 | 87 | 81 | - | - | |
| Total | $10 | $63 | 127 | (54) | - | $- |
All values are in US Dollars.
| For the year ended December 31, 2024 | Accumulated other<br><br>comprehensive<br><br>income (loss),<br><br>beginning of year | Hedging gains<br><br>(losses)<br><br>recognized in<br><br>AOCI during the<br><br>year | Reclassification from AOCI to income | ||||
|---|---|---|---|---|---|---|---|
| Interest rate risk | $1 | $(3) | - | (2) | - | $- | |
| Interest rate and foreign exchange risk | (107) | (32) | (75) | (64) | - | - | |
| Foreign exchange translation risk | 3 | 23 | 26 | - | - | - | |
| CPI risk | (85) | 60 | 17 | (42) | - | - | |
| Equity price risk | 39 | 145 | 66 | 118 | - | - | |
| Total | $(149) | $193 | 34 | 10 | - | $- |
All values are in US Dollars.
| 54 |
|---|
Reconciliation of accumulated other comprehensive income (loss) related to net investment hedges
| For the year ended December 31, 2025 | Accumulated other<br><br>comprehensive<br><br>income (loss),<br><br>beginning of year | Hedging gains<br><br>(losses)<br><br>recognized in<br><br>AOCI during the<br><br>year | Reclassification from AOCI to income | ||||
|---|---|---|---|---|---|---|---|
| Foreign exchange translation risk | $(561) | $361 | - | (200) | - | $- |
All values are in US Dollars.
| For the year ended December 31, 2024 | Accumulated other<br><br>comprehensive<br><br>income (loss),<br><br>beginning of year | Hedging gains<br><br>(losses)<br><br>recognized in<br><br>AOCI during the<br><br>year | Reclassification from AOCI to income | ||||
|---|---|---|---|---|---|---|---|
| Foreign exchange translation risk | $59 | $(620) | - | (561) | - | $- |
All values are in US Dollars.
Cost of hedging
The Company has elected to apply IFRS 9’s cost of hedging guidance for certain hedging relationships. The excluded
components from hedging relationships related to forward elements and foreign currency basis spreads on time-period related
hedged items, are presented in AOCI as cost of hedging. The following table provides details of the movement in the cost of
hedging by hedged risk category.
| For the year ended December 31, | 2025 | 2024 |
|---|---|---|
| Foreign exchange risk | ||
| Balance, beginning of year | $111 | $- |
| Changes in fair value | (143) | 111 |
| Amount reclassified to profit or loss | (37) | - |
| Balance, end of year | $5 | $111 |
| Foreign exchange and interest rate risk | ||
| Balance, beginning of year | $8 | $18 |
| Changes in fair value | (3) | (10) |
| Amount reclassified to profit or loss | - | - |
| Balance, end of year | $5 | $8 |
(c)Derivatives Not Designated in Qualifying Hedge Accounting Relationships
The Company uses derivatives to economically hedge various financial risks, however, not all derivatives qualify for hedge
accounting and in some cases, the Company has not elected to apply hedge accounting. Below are the investment income
impacts of derivatives not designated in qualifying hedge accounting relationships.
Investment income (loss) on derivatives not designated in qualifying hedge accounting relationships
| For the years ended December 31, | 2025 | 2024 |
|---|---|---|
| Interest rate swaps | $4 | $(116) |
| Interest rate futures | 114 | 52 |
| Interest rate options | (9) | (20) |
| Foreign currency swaps | 144 | 108 |
| Currency rate futures | 15 | (137) |
| Forward contracts | (423) | (626) |
| Equity futures | (477) | (423) |
| Equity contracts | 766 | 437 |
| Credit default swaps | (1) | (1) |
| Total | $133 | $(726) |
(d)Embedded Derivatives
Certain insurance contracts contain features that are classified as embedded derivatives and are measured separately at
FVTPL, including reinsurance contracts related to guaranteed minimum income benefits and contracts containing certain credit
and interest rate features.
Certain reinsurance contracts with guaranteed minimum income benefits contain embedded derivatives requiring separate
measurement at FVTPL as the financial components contained in the reinsurance contracts do not contain significant insurance
risk. Claims expenses and claims paid on the reinsurance assumed offset claims recovered under reinsured contracts.
Reinsured contracts with guaranteed minimum income benefits had a fair value of $221 (2024 – $281) and reinsurance assumed
with guaranteed minimum income benefits had a fair value of $nil (2024 – $nil).
| 55 | 2025 Annual Report | Consolidated Financial Statements |
|---|
The Company’s credit and interest rate embedded derivatives promise to pay the returns on a portfolio of assets to the contract
holder. These embedded derivatives contain credit and interest rate risks that are financial risks embedded in the underlying
insurance and investment contract. As at December 31, 2025, these embedded derivative liabilities had a fair value of $277
(2024 – $265).
Other insurance contract features which are classified as embedded derivatives but are exempt from separate measurement at
fair value include variable universal life and variable life products’ minimum guaranteed credited rates, no lapse guarantees,
guaranteed annuitization options, Consumer Price Index (“CPI”) indexing of benefits, and segregated fund minimum guarantees
other than reinsurance ceded/assumed guaranteed minimum income benefits. These embedded derivatives are measured and
reported within insurance contract liabilities and are exempt from separate fair value measurement as they contain insurance risk
and / or are closely related to the insurance host contract.
Note 5 Goodwill and Intangible Assets
(a)Change in the Carrying Value of Goodwill and Intangible Assets
The following tables present the changes in carrying value of goodwill and intangible assets.
| For the year ended December 31, 2025 | Balance,<br><br>January 1,<br><br>2025 | Net additions/<br><br>(disposals)(1),(3) | Amortization<br><br>expense | Effect of<br><br>changes in<br><br>foreign<br><br>exchange<br><br>rates | Balance,<br><br>December 31,<br><br>2025 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Goodwill | $6,275 | $739 | $ n/a | $(137) | $6,877 | |||||||
| Indefinite life intangible assets | ||||||||||||
| Brand | 866 | 21 | n/a | (43) | 844 | |||||||
| Fund management contracts and other(4) | 1,258 | 175 | n/a | (34) | 1,399 | |||||||
| 2,124 | 196 | n/a | (77) | 2,243 | ||||||||
| Finite life intangible assets(5) | ||||||||||||
| Distribution networks | 840 | 59 | (69) | (38) | 792 | |||||||
| Customer relationships | 542 | 280 | (34) | (14) | 774 | |||||||
| Software | 1,212 | 385 | (254) | (32) | 1,311 | |||||||
| Fund management contracts and other | 59 | 277 | (7) | (2) | 327 | |||||||
| 2,653 | 1,001 | (364) | (86) | 3,204 | ||||||||
| Total intangible assets | 4,777 | 1,197 | (364) | (163) | 5,447 | |||||||
| Total goodwill and intangible assets | $11,052 | $1,936 | $(364) | $(300) | $12,324 | For the year ended December 31, 2024 | Balance,<br><br>January 1,<br><br>2024 | Net additions/<br><br>(disposals)(2) | Amortization<br><br>expense | Effect of<br><br>changes in<br><br>foreign<br><br>exchange<br><br>rates | Balance,<br><br>December 31,<br><br>2024 | |
| --- | --- | --- | --- | --- | --- | |||||||
| Goodwill | $5,919 | $150 | $ n/a | $206 | $6,275 | |||||||
| Indefinite life intangible assets | ||||||||||||
| Brand | 791 | 3 | n/a | 72 | 866 | |||||||
| Fund management contracts and other(4) | 1,034 | 156 | n/a | 68 | 1,258 | |||||||
| 1,825 | 159 | n/a | 140 | 2,124 | ||||||||
| Finite life intangible assets(5) | ||||||||||||
| Distribution networks | 834 | 13 | (56) | 49 | 840 | |||||||
| Customer relationships | 582 | - | (52) | 12 | 542 | |||||||
| Software | 1,102 | 329 | (257) | 38 | 1,212 | |||||||
| Fund management contracts and other | 48 | 7 | (9) | 13 | 59 | |||||||
| 2,566 | 349 | (374) | 112 | 2,653 | ||||||||
| Total intangible assets | 4,391 | 508 | (374) | 252 | 4,777 | |||||||
| Total goodwill and intangible assets | $10,310 | $658 | $(374) | $458 | $11,052 |
(1)In November 2025, the Company completed the acquisition of a 75% interest in Comvest Credit Partners. Goodwill, brand, indefinite life fund management
contracts, finite lived customer relationships and finite life fund management contracts and other of $739, $21, $144, $280 and $290, respectively, were
recognized. Refer to note 24.
(2)In April 2024, the Company acquired control of CQS Management Limited, the London-based alternative credit investment manager, through purchase of 100% of
its shares outstanding. The transaction included cash consideration of $334 and contingent consideration of $8. Goodwill, brand, indefinite lived and definite lived
management contracts of $150, $3, $153 and $7 were recognized.
(3)In August 2025, the Company acquired $15 of insurance licenses to operate across multiple U.S. states.
(4)Fund management contracts are primarily allocated to Canada WAM and U.S. WAM CGUs with carrying values of $273 (2024 – $273) and $545 (2024 – $421),
respectively.
(5)Gross carrying amount of finite life intangible assets was $3,703 for software, $1,611 for distribution networks, $1,417 for customer relationships and $434 for fund
management contracts and other (2024 – $3,408, $1,617, $1,156 and $156), respectively.
| 56 |
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(b)Goodwill Impairment Testing
The Company completed its annual goodwill impairment testing in the fourth quarter of 2025 by determining the recoverable
amounts of its CGUs using valuation techniques discussed below (refer to notes 1 (f) and 5 (c)). The testing resulted in $nil
impairment of goodwill in 2025 (2024 – $nil).
The following tables present the carrying value of goodwill by CGU or group of CGUs.
| For the year ended December 31, 2025 | Balance,<br><br>January 1,<br><br>2025 | ||||
|---|---|---|---|---|---|
| CGU or group of CGUs | |||||
| Asia | |||||
| Asia Insurance (excluding Japan) | 170 | - | (4) | 166 | |
| Japan Insurance | 321 | - | (14) | 307 | |
| Canada Insurance | 1,966 | - | (5) | 1,961 | |
| U.S. Insurance | 382 | - | (18) | 364 | |
| Global Wealth and Asset Management | |||||
| Asia WAM | 479 | - | (23) | 456 | |
| Canada WAM | 1,436 | - | - | 1,436 | |
| U.S. WAM | 1,521 | 739 | (73) | 2,187 | |
| Total | 6,275 | 739 | (137) | 6,877 |
All values are in US Dollars.
| For the year ended December 31, 2024 | Balance,<br><br>January 1,<br><br>2024 | ||||
|---|---|---|---|---|---|
| CGU or group of CGUs | |||||
| Asia | |||||
| Asia Insurance (excluding Japan) | 159 | - | 11 | 170 | |
| Japan Insurance | 328 | - | (7) | 321 | |
| Canada Insurance | 1,958 | - | 8 | 1,966 | |
| U.S. Insurance | 350 | - | 32 | 382 | |
| Global Wealth and Asset Management | |||||
| Asia WAM | 438 | - | 41 | 479 | |
| Canada WAM | 1,436 | - | - | 1,436 | |
| U.S. WAM | 1,250 | 150 | 121 | 1,521 | |
| Total | 5,919 | 150 | 206 | 6,275 |
All values are in US Dollars.
The valuation techniques, significant assumptions and sensitivities, where applicable, applied in the goodwill impairment testing
are described below.
(c)Valuation Techniques
When determining if a CGU is impaired, the Company determines whether its recoverable amount is greater than its carrying
value. Capital levels used are aligned with the Company’s internal reporting practices.
Fair value less costs to sell (FVLCS)
Under the FVLCS approach, the Company determines the fair value of the CGU or group of CGUs using an approach which
incorporates forecasted earnings, excluding interest and equity market impacts and normalized new business expenses
multiplied by an earnings multiple derived from the observable price-to-earnings multiples of comparable financial institutions.
Value-in-use (VIU)
VIU recoverable value for insurance CGUs is determined with a projection of future distributable earnings derived from both the
in-force business and future business, reflecting the economic value for the CGUs’ profit potential. This approach uses
assumptions including sales and revenue growth rates, capital requirements, interest rates, equity returns, mortality, morbidity,
policyholder behaviour, tax rates and discount rates.
For other CGUs, VIU recoverable value is determined based on discounted cash flow analysis which incorporates relevant
aspects of the embedded appraisal value approach.
| 57 | 2025 Annual Report | Consolidated Financial Statements |
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(d)Significant Assumptions
For FVLCS valuations, earnings multiples ranged from 5.9 to 16.7 (2024 – 6.7 to 13.6). The resulting valuations are categorized
as Level 3 of the fair value hierarchy (2024 – Level 3).
For VIU valuations based on future distributable earnings, projections are based on discounted projected earnings from in-force
contracts and the value of 80 years of new business, reflecting the long-duration nature of insurance businesses (2024 – Japan
Insurance, Canada Insurance and U.S. Insurance, 80 years). In arriving at its projections, the Company considered past
experience, economic trends such as interest rates, equity returns and product mix, as well as industry and market trends. For
VIU valuations based on discounted cash flow analysis, cash flow projections are based on the most recent budgets and
forecasts and generally cover a period of five years; a long-term growth rate is applied to project cash flows beyond the forecast
period. Long-term growth rates used for these extrapolations ranged from approximately 1.7 per cent to 4.5 per cent (2024 –
approximately 1.7 per cent to 8.0 per cent).
Interest rate assumptions are based on prevailing market rates at the valuation date. These interest rate assumptions are used
to estimate items such as investment yields and reinvestment returns within the cash flow projections. Discount rates assumed
were 9.8 per cent on an after-tax basis or 10.1 per cent on a pre-tax basis (2024 – 10.0 per cent to 13.0 per cent on an after-tax
basis or 12.5 per cent to 16.3 per cent on a pre-tax basis).
Tax rates applied to the projections include the impact of internal reinsurance treaties where applicable and were 28.0 per cent,
27.8 per cent and 21.0 per cent for the Japan, Canada and U.S. jurisdictions, respectively (2024 – 28.0 per cent, 27.8 per cent
and 21.0 per cent, respectively). Tax assumptions are sensitive to changes in tax laws as well as assumptions about the
jurisdictions in which profits are earned. It is possible that effective tax rates could differ from those assumed.
Key assumptions may change as economic and market conditions change, which could result in future impairment charges.
These changes could include adverse changes in discount rates (for example, due to changes in interest rates), changes in
growth-rate assumptions used in cash flow projections, or reductions in market-based earnings multiples.
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Note 6 Insurance and Reinsurance Contract Assets and Liabilities
(a)Composition
Portfolios of insurance contracts that are assets and those that are liabilities, and portfolios of reinsurance contracts that are
assets and those that are liabilities, are presented separately in the Consolidated Statements of Financial Position. The
components of net insurance and reinsurance contract liabilities are shown below. The composition of insurance contract assets
and liabilities, and reinsurance contract held assets and liabilities by the reporting segment is as follows.
Insurance contract assets and liabilities
| 2025 | 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| As at December 31, | Insurance<br><br>contract<br><br>assets | Insurance<br><br>contract<br><br>liabilities | Insurance<br><br>contract<br><br>liabilities for<br><br>account of<br><br>segregated<br><br>fund holders | Net<br><br>insurance<br><br>contract<br><br>liabilities | Insurance<br><br>contract<br><br>assets | Insurance<br><br>contract<br><br>liabilities | Insurance<br><br>contract<br><br>liabilities for<br><br>account of<br><br>segregated<br><br>fund holders | Net<br><br>insurance<br><br>contract<br><br>liabilities |
| Asia | $(161) | $170,754 | $29,895 | $200,488 | $(53) | $154,222 | $26,367 | $180,536 |
| Canada | (33) | 84,517 | 38,218 | 122,702 | (32) | 82,459 | 38,099 | 120,526 |
| U.S. | - | 157,867 | 60,893 | 218,760 | - | 161,484 | 62,079 | 223,563 |
| Corporate and Other | - | (908) | - | (908) | (6) | (897) | - | (903) |
| Insurance contract balances | (194) | 412,230 | 129,006 | 541,042 | (91) | 397,268 | 126,545 | 523,722 |
| Assets for insurance acquisition cash flows | - | (698) | - | (698) | (11) | (867) | - | (878) |
| Total | $(194) | $411,532 | $129,006 | $540,344 | $(102) | $396,401 | $126,545 | $522,844 |
Reinsurance contract held assets and liabilities
| 2025 | 2024 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| As at December 31, | Assets | Liabilities | Net<br><br>reinsurance<br><br>contract held<br><br>assets | Assets | Liabilities | Net<br><br>reinsurance<br><br>contract held<br><br>assets | ||||
| Asia | $8,959 | $(2,986) | $5,973 | $9,204 | $(2,394) | $6,810 | ||||
| Canada | 6,626 | (263) | 6,363 | 7,021 | (262) | 6,759 | ||||
| U.S. | 45,559 | (25) | 45,534 | 43,043 | (13) | 43,030 | ||||
| Corporate and Other | (263) | 1 | (262) | (253) | - | (253) | ||||
| Total | $60,881 | $(3,273) | $57,608 | $59,015 | $(2,669) | $56,346 | As at December 31, | 2025 | 2024 | |
| --- | --- | --- | ||||||||
| Net insurance contract held liabilities | $540,344 | $522,844 | ||||||||
| Net reinsurance contract held assets | (57,608) | (56,346) | ||||||||
| Net insurance and reinsurance contract held liabilities | $482,736 | $466,498 |
(b)Movements in Carrying Amounts of Insurance and Reinsurance Contracts
The following tables present the movements in the net carrying amounts of insurance contracts issued and reinsurance contracts
held during the year for the Company and for each reporting segment. The changes include amounts that are recognized in
income and OCI, and movements due to cash flows.
There are two types of tables presented:
•Tables which analyze movements in the net assets or liabilities for remaining coverage and for incurred claims separately
and reconcile them to the relevant Consolidated Statements of Income and Consolidated Statements of Comprehensive
Income line items.
•Tables which analyze movements of contracts by measurement components including estimates of the present value of
future cash flows, risk adjustment and CSM.
| 59 | 2025 Annual Report | Consolidated Financial Statements |
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(I)Total
Insurance contracts – Analysis by remaining coverage and incurred claims
The following tables present the movements in the net assets or liabilities for insurance contracts issued, showing the amounts
for remaining coverage and the amounts for incurred claims and assets for insurance acquisition cash flows for the years ended
December 31, 2025 and 2024.
| Liabilities for remaining<br><br>coverage | Liabilities for incurred claims | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Excluding loss<br><br>component | Loss<br><br>component | Products not<br><br>under PAA | PAA<br><br>Estimates of<br><br>PV of future<br><br>cash flows | PAA Risk<br><br>adjustment<br><br>for non-<br><br>financial risk | Assets for<br><br>insurance<br><br>acquisition<br><br>cash flows | Total | ||||
| Opening insurance contract assets | $(153) | $5 | $56 | $1 | $- | $(11) | $(102) | |||
| Opening insurance contract liabilities | 377,600 | 2,023 | 5,698 | 11,256 | 691 | (867) | 396,401 | |||
| Opening insurance contract liabilities for account of<br><br>segregated fund holders | 126,545 | - | - | - | - | - | 126,545 | |||
| Net opening balance, January 1, 2025 | 503,992 | 2,028 | 5,754 | 11,257 | 691 | (878) | 522,844 | |||
| Insurance revenue | ||||||||||
| Expected incurred claims and other insurance service<br><br>expenses | (15,284) | - | - | - | - | - | (15,284) | |||
| Change in risk adjustment for non-financial risk expired | (1,401) | - | - | - | - | - | (1,401) | |||
| CSM recognized for services provided | (3,130) | - | - | - | - | - | (3,130) | |||
| Recovery of insurance acquisition cash flows | (1,907) | - | - | - | - | - | (1,907) | |||
| Contracts under PAA | (7,166) | - | - | - | - | - | (7,166) | |||
| (28,888) | - | - | - | - | - | (28,888) | ||||
| Insurance service expense | ||||||||||
| Incurred claims and other insurance service expenses | - | (137) | 14,823 | 7,565 | 227 | - | 22,478 | |||
| Losses and reversal of losses on onerous contracts<br><br>(future service) | - | 393 | - | - | - | - | 393 | |||
| Changes to liabilities for incurred claims (past service) | - | - | 67 | (2,595) | (155) | - | (2,683) | |||
| Amortization of insurance acquisition cash flows | 2,903 | - | - | - | - | - | 2,903 | |||
| Net impairment of assets for insurance acquisition cash<br><br>flows | - | - | - | - | - | - | - | |||
| 2,903 | 256 | 14,890 | 4,970 | 72 | - | 23,091 | ||||
| Investment components and premium refunds | (20,812) | - | 18,071 | 2,741 | - | - | - | |||
| Insurance service result | (46,797) | 256 | 32,961 | 7,711 | 72 | - | (5,797) | |||
| Insurance finance (income) expenses | 22,608 | 58 | 176 | 546 | 24 | - | 23,412 | |||
| Effects of movements in foreign exchange rates | (13,914) | (85) | (185) | (32) | - | 14 | (14,202) | |||
| Total changes in income and OCI | (38,103) | 229 | 32,952 | 8,225 | 96 | 14 | 3,413 | |||
| Cash flows | ||||||||||
| Premiums and premium tax received | 61,722 | - | - | - | - | - | 61,722 | |||
| Claims and other insurance service expenses paid,<br><br>including investment components | - | - | (32,582) | (7,794) | - | - | (40,376) | |||
| Insurance acquisition cash flows | (9,749) | - | - | - | - | - | (9,749) | |||
| Total cash flows | 51,973 | - | (32,582) | (7,794) | - | - | 11,597 | |||
| Allocation from assets for insurance acquisition cash<br><br>flows to groups of insurance contracts | (137) | - | - | - | - | 137 | - | |||
| Acquisition cash flows incurred in the year | - | - | - | - | - | 29 | 29 | |||
| Movements related to insurance contract liabilities for<br><br>account of segregated fund holders | 2,461 | - | - | - | - | - | 2,461 | |||
| Net closing balance | 520,186 | 2,257 | 6,124 | 11,688 | 787 | (698) | 540,344 | |||
| Closing insurance contract assets | (259) | 9 | 56 | - | - | - | (194) | |||
| Closing insurance contract liabilities | 391,439 | 2,248 | 6,068 | 11,688 | 787 | (698) | 411,532 | |||
| Closing insurance contract liabilities for account of<br><br>segregated fund holders | 129,006 | - | - | - | - | - | 129,006 | |||
| Net closing balance, December 31, 2025 | $520,186 | $2,257 | $6,124 | $11,688 | $787 | $(698) | $540,344 | Insurance finance (income) expenses (“IFIE”) | ||
| --- | --- | |||||||||
| Insurance finance (income) expenses, per disclosure above | $23,412 | |||||||||
| Reclassification of derivative OCI to IFIE – cash flow hedges | (9) | |||||||||
| Reclassification of derivative (income) loss changes to IFIE – fair value hedge | 2,093 | |||||||||
| Insurance finance (income) expenses, per disclosure in note 6 (f) | $25,496 | |||||||||
| 60 | ||||||||||
| --- |
Insurance contracts – Analysis by remaining coverage and incurred claims (continued)
| Liabilities for remaining<br><br>coverage | Liabilities for incurred claims | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Excluding loss<br><br>component | Loss<br><br>component | Products not<br><br>under PAA | PAA<br><br>Estimates of<br><br>PV of future<br><br>cash flows | PAA Risk<br><br>adjustment<br><br>for non-<br><br>financial risk | Assets for<br><br>insurance<br><br>acquisition<br><br>cash flows | Total | ||||
| Opening insurance contract assets | $(201) | $- | $56 | $- | $- | $- | $(145) | |||
| Opening insurance contract liabilities | 351,045 | 1,092 | 5,609 | 10,445 | 625 | (820) | 367,996 | |||
| Opening insurance contract liabilities for account of<br><br>segregated fund holders | 114,143 | - | - | - | - | - | 114,143 | |||
| Net opening balance, January 1, 2024 | 464,987 | 1,092 | 5,665 | 10,445 | 625 | (820) | 481,994 | |||
| Insurance revenue | ||||||||||
| Expected incurred claims and other insurance service<br><br>expenses | (14,340) | - | - | - | - | - | (14,340) | |||
| Change in risk adjustment for non-financial risk expired | (1,414) | - | - | - | - | - | (1,414) | |||
| CSM recognized for services provided | (2,697) | - | - | - | - | - | (2,697) | |||
| Recovery of insurance acquisition cash flows | (1,351) | - | - | - | - | - | (1,351) | |||
| Contracts under PAA | (6,790) | - | - | - | - | - | (6,790) | |||
| (26,592) | - | - | - | - | - | (26,592) | ||||
| Insurance service expense | ||||||||||
| Incurred claims and other insurance service expenses | - | (105) | 13,855 | 7,423 | 224 | - | 21,397 | |||
| Losses and reversal of losses on onerous contracts<br><br>(future service) | - | 882 | - | - | - | - | 882 | |||
| Changes to liabilities for incurred claims (past service) | - | - | (12) | (2,391) | (202) | - | (2,605) | |||
| Amortization of insurance acquisition cash flows | 2,148 | - | - | - | - | - | 2,148 | |||
| Net impairment of assets for insurance acquisition cash<br><br>flows | - | - | - | - | - | - | - | |||
| 2,148 | 777 | 13,843 | 5,032 | 22 | - | 21,822 | ||||
| Investment components and premium refunds | (23,554) | - | 20,835 | 2,719 | - | - | - | |||
| Insurance service result | (47,998) | 777 | 34,678 | 7,751 | 22 | - | (4,770) | |||
| Insurance finance (income) expenses | 2,645 | 44 | (85) | 689 | 44 | - | 3,337 | |||
| Effects of movements in foreign exchange rates | 24,962 | 115 | 272 | 29 | - | (21) | 25,357 | |||
| Total changes in income and OCI | (20,391) | 936 | 34,865 | 8,469 | 66 | (21) | 23,924 | |||
| Cash flows | ||||||||||
| Premiums and premium tax received | 55,437 | - | - | - | - | - | 55,437 | |||
| Claims and other insurance service expenses paid,<br><br>including investment components | - | - | (34,776) | (7,657) | - | - | (42,433) | |||
| Insurance acquisition cash flows | (8,287) | - | - | - | - | - | (8,287) | |||
| Total cash flows | 47,150 | - | (34,776) | (7,657) | - | - | 4,717 | |||
| Allocation from assets for insurance acquisition cash<br><br>flows to groups of insurance contracts | (156) | - | - | - | - | 156 | - | |||
| Acquisition cash flows incurred in the year | - | - | - | - | - | (193) | (193) | |||
| Movements related to insurance contract liabilities for<br><br>account of segregated fund holders | 12,402 | - | - | - | - | - | 12,402 | |||
| Net closing balance | 503,992 | 2,028 | 5,754 | 11,257 | 691 | (878) | 522,844 | |||
| Closing insurance contract assets | (153) | 5 | 56 | 1 | - | (11) | (102) | |||
| Closing insurance contract liabilities | 377,600 | 2,023 | 5,698 | 11,256 | 691 | (867) | 396,401 | |||
| Closing insurance contract liabilities for account of<br><br>segregated fund holders | 126,545 | - | - | - | - | - | 126,545 | |||
| Net closing balance, December 31, 2024 | $503,992 | $2,028 | $5,754 | $11,257 | $691 | $(878) | $522,844 | Insurance finance (income) expenses | ||
| --- | --- | |||||||||
| Insurance finance (income) expenses, per disclosure above | $3,337 | |||||||||
| Reclassification of derivative OCI to IFIE – cash flow hedges | (52) | |||||||||
| Reclassification of derivative (income) loss changes to IFIE – fair value hedge | 3,346 | |||||||||
| Insurance finance (income) expenses, per disclosure in note 6 (f) | $6,631 | |||||||||
| 61 | 2025 Annual Report | Consolidated Financial Statements | ||||||||
| --- | --- | --- |
Insurance contracts – Analysis by measurement components
The following tables present the movements in the net assets or liabilities for insurance contracts issued, showing estimates of
the present value of future cash flows, risk adjustment, CSM and assets for insurance acquisition cash flows for the years ended
December 31, 2025 and 2024.
| CSM | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Estimates of<br><br>PV of future<br><br>cash flows | Risk<br><br>adjustment for<br><br>non-financial<br><br>risk | Fair value | Other | Assets for<br><br>insurance<br><br>acquisition<br><br>cash flows | Total | ||||
| Opening GMM and VFA insurance contract assets | $(490) | $144 | $100 | $148 | $- | $(98) | |||
| Opening GMM and VFA insurance contract liabilities | 334,706 | 22,160 | 18,907 | 7,610 | (61) | 383,322 | |||
| Opening PAA insurance contract net liabilities | 13,201 | 691 | - | - | (817) | 13,075 | |||
| Opening insurance contract liabilities for account of segregated<br><br>fund holders | 126,545 | - | - | - | - | 126,545 | |||
| Net opening balance, January 1, 2025 | 473,962 | 22,995 | 19,007 | 7,758 | (878) | 522,844 | |||
| CSM recognized for services provided | - | - | (2,175) | (955) | - | (3,130) | |||
| Change in risk adjustment for non-financial risk for risk expired | - | (1,418) | - | - | - | (1,418) | |||
| Experience adjustments | (551) | - | - | - | - | (551) | |||
| Changes that relate to current services | (551) | (1,418) | (2,175) | (955) | - | (5,099) | |||
| Contracts initially recognized during the year | (5,322) | 1,102 | 3 | 4,298 | - | 81 | |||
| Changes in estimates that adjust the CSM | (3,412) | 867 | 1,432 | 1,113 | - | - | |||
| Changes in estimates that relate to losses and reversal of losses<br><br>on onerous contracts | 329 | 3 | - | - | - | 332 | |||
| Changes that relate to future services | (8,405) | 1,972 | 1,435 | 5,411 | - | 413 | |||
| Adjustments to liabilities for incurred claims | 81 | (15) | - | - | - | 66 | |||
| Changes that relate to past services | 81 | (15) | - | - | - | 66 | |||
| Insurance service result | (8,875) | 539 | (740) | 4,456 | - | (4,620) | |||
| Insurance finance (income) expenses | 21,158 | 1,238 | 241 | 193 | - | 22,830 | |||
| Effects of movements in foreign exchange rates | (12,220) | (1,054) | (579) | (274) | - | (14,127) | |||
| Total changes in income and OCI | 63 | 723 | (1,078) | 4,375 | - | 4,083 | |||
| Total cash flows | 10,436 | - | - | - | - | 10,436 | |||
| Allocation from assets for insurance acquisition cash flows to<br><br>groups of insurance contracts | (6) | - | - | - | 6 | - | |||
| Acquisition cash flows incurred in the year | - | - | - | - | (5) | (5) | |||
| Change in PAA balance | 245 | 101 | - | - | 179 | 525 | |||
| Movements related to insurance contract liabilities for account of<br><br>segregated fund holders | 2,461 | - | - | - | - | 2,461 | |||
| Net closing balance | 487,161 | 23,819 | 17,929 | 12,133 | (698) | 540,344 | |||
| Closing GMM and VFA insurance contract assets | (474) | 92 | 87 | 100 | 1 | (194) | |||
| Closing GMM and VFA insurance contract liabilities | 345,183 | 22,935 | 17,842 | 12,033 | (61) | 397,932 | |||
| Closing PAA insurance contract net liabilities | 13,446 | 792 | - | - | (638) | 13,600 | |||
| Closing insurance contract liabilities for account of segregated<br><br>fund insurance holders | 129,006 | - | - | - | - | 129,006 | |||
| Net closing balance, December 31, 2025 | $487,161 | $23,819 | $17,929 | $12,133 | $(698) | $540,344 | Insurance finance (income) expenses | ||
| --- | --- | ||||||||
| Insurance finance (income) expenses, per disclosure above | $22,830 | ||||||||
| Reclassification of derivative OCI to IFIE – cash flow hedges | (9) | ||||||||
| Reclassification of derivative (income) loss changes to IFIE – fair value hedge | 1,908 | ||||||||
| PAA items: | |||||||||
| PAA IFIE | 582 | ||||||||
| PAA Reclassification of derivative OCI to IFIE – cash flow hedges | - | ||||||||
| PAA Reclassification of derivative (income) loss changes to IFIE – fair value hedge | 185 | ||||||||
| Insurance finance (income) expenses, per disclosure in note 6 (f) | $25,496 | ||||||||
| 62 | |||||||||
| --- |
Insurance contracts – Analysis by measurement components (continued)
| CSM | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Estimates of<br><br>PV of future<br><br>cash flows | Risk<br><br>adjustment<br><br>for non-<br><br>financial risk | Fair value | Other | Assets for<br><br>insurance<br><br>acquisition<br><br>cash flows | Total | ||||
| Opening GMM and VFA insurance contract assets | $(416) | $141 | $32 | $99 | $- | $(144) | |||
| Opening GMM and VFA insurance contract liabilities | 310,807 | 22,697 | 17,381 | 4,592 | (59) | 355,418 | |||
| Opening PAA insurance contract net liabilities | 12,712 | 626 | - | - | (761) | 12,577 | |||
| Opening insurance contract liabilities for account of segregated fund<br><br>holders | 114,143 | - | - | - | - | 114,143 | |||
| Net opening balance, January 1, 2024 | 437,246 | 23,464 | 17,413 | 4,691 | (820) | 481,994 | |||
| CSM recognized for services provided | - | - | (2,097) | (600) | - | (2,697) | |||
| Change in risk adjustment for non-financial risk for risk expired | - | (1,430) | - | - | - | (1,430) | |||
| Experience adjustments | (532) | - | - | - | - | (532) | |||
| Changes that relate to current services | (532) | (1,430) | (2,097) | (600) | - | (4,659) | |||
| Contracts initially recognized during the year | (4,043) | 952 | 2 | 3,193 | - | 104 | |||
| Changes in estimates that adjust the CSM | (459) | (1,866) | 2,388 | (63) | - | - | |||
| Changes in estimates that relate to losses and reversal of losses on<br><br>onerous contracts | 770 | 7 | - | - | - | 777 | |||
| Changes that relate to future services | (3,732) | (907) | 2,390 | 3,130 | - | 881 | |||
| Adjustments to liabilities for incurred claims | (8) | (4) | - | - | - | (12) | |||
| Changes that relate to past services | (8) | (4) | - | - | - | (12) | |||
| Insurance service result | (4,272) | (2,341) | 293 | 2,530 | - | (3,790) | |||
| Insurance finance (income) expenses | 2,317 | (59) | 233 | 121 | - | 2,612 | |||
| Effects of movements in foreign exchange rates | 21,946 | 1,866 | 1,068 | 416 | - | 25,296 | |||
| Total changes in income and OCI | 19,991 | (534) | 1,594 | 3,067 | - | 24,118 | |||
| Total cash flows | 3,840 | - | - | - | - | 3,840 | |||
| Allocation from assets for insurance acquisition cash flows to<br><br>groups of insurance contracts | (6) | - | - | - | 6 | - | |||
| Acquisition cash flows incurred in the year | - | - | - | - | (8) | (8) | |||
| Change in PAA balance | 489 | 65 | - | - | (56) | 498 | |||
| Movements related to insurance contract liabilities for account of<br><br>segregated fund holders | 12,402 | - | - | - | - | 12,402 | |||
| Net closing balance | 473,962 | 22,995 | 19,007 | 7,758 | (878) | 522,844 | |||
| Closing GMM and VFA insurance contract assets | (490) | 144 | 100 | 148 | - | (98) | |||
| Closing GMM and VFA insurance contract liabilities | 334,706 | 22,160 | 18,907 | 7,610 | (61) | 383,322 | |||
| Closing PAA insurance contract net liabilities | 13,201 | 691 | - | - | (817) | 13,075 | |||
| Closing insurance contract liabilities for account of segregated fund<br><br>insurance holders | 126,545 | - | - | - | - | 126,545 | |||
| Net closing balance, December 31, 2024 | $473,962 | $22,995 | $19,007 | $7,758 | $(878) | $522,844 | Insurance finance (income) expenses | ||
| --- | --- | ||||||||
| Insurance finance (income) expenses, per disclosure above | $2,612 | ||||||||
| Reclassification of derivative OCI to IFIE – cash flow hedges | (52) | ||||||||
| Reclassification of derivative (income) loss changes to IFIE – fair value hedge | 3,333 | ||||||||
| PAA items: | |||||||||
| PAA IFIE | 725 | ||||||||
| PAA Reclassification of derivative OCI to IFIE – cash flow hedges | - | ||||||||
| PAA Reclassification of derivative (income) loss changes to IFIE – fair value hedge | 13 | ||||||||
| Insurance finance (income) expenses, per disclosure in note 6 (f) | $6,631 | ||||||||
| 63 | 2025 Annual Report | Consolidated Financial Statements | |||||||
| --- | --- | --- |
Reinsurance contracts held – Analysis by remaining coverage and incurred claims
The following tables present the movements in the net assets or liabilities for reinsurance contracts held, showing assets for
remaining coverage and amounts recoverable on incurred claims arising from business ceded to reinsurers for the years ended
December 31, 2025 and 2024.
| Assets (liabilities) for<br><br>remaining coverage | Assets (liabilities) for incurred claims | |||||
|---|---|---|---|---|---|---|
| Excluding loss<br><br>recovery<br><br>component | Loss recovery<br><br>component | Products not<br><br>under PAA | PAA<br><br>Estimates of<br><br>PV of future<br><br>cash flows | PAA Risk<br><br>adjustment for<br><br>non-financial<br><br>risk | Total | |
| Opening reinsurance contract held assets | $50,723 | $631 | $7,395 | $252 | $14 | $59,015 |
| Opening reinsurance contract held liabilities | (2,692) | 5 | 44 | (26) | - | (2,669) |
| Net opening balance, January 1, 2025 | 48,031 | 636 | 7,439 | 226 | 14 | 56,346 |
| Changes in income and OCI | ||||||
| Allocation of reinsurance premium paid | (8,451) | - | - | - | - | (8,451) |
| Amounts recoverable from reinsurers | ||||||
| Recoveries of incurred claims and other insurance service<br><br>expenses | - | (41) | 6,397 | 623 | - | 6,979 |
| Recoveries and reversals of recoveries of losses on onerous<br><br>underlying contracts | - | 187 | - | - | - | 187 |
| Adjustments to assets for incurred claims | - | - | 31 | (16) | (1) | 14 |
| Insurance service result | (8,451) | 146 | 6,428 | 607 | (1) | (1,271) |
| Investment components and premium refunds | (1,815) | - | 1,815 | - | - | - |
| Net expenses from reinsurance contracts | (10,266) | 146 | 8,243 | 607 | (1) | (1,271) |
| Net finance (income) expenses from reinsurance contracts | 2,912 | 22 | (183) | 3 | 1 | 2,755 |
| Effect of changes in non-performance risk of reinsurers | 12 | - | - | - | - | 12 |
| Effects of movements in foreign exchange rates | (2,650) | (31) | (312) | - | - | (2,993) |
| Contracts measured under PAA | - | - | - | - | - | - |
| Total changes in income and OCI | (9,992) | 137 | 7,748 | 610 | - | (1,497) |
| Cash flows | ||||||
| Premiums paid(1) | 11,915 | - | - | - | - | 11,915 |
| Amounts received | - | - | (8,538) | (618) | - | (9,156) |
| Total cash flows | 11,915 | - | (8,538) | (618) | - | 2,759 |
| Net closing balance | 49,954 | 773 | 6,649 | 218 | 14 | 57,608 |
| Closing reinsurance contract held assets | 53,327 | 765 | 6,522 | 253 | 14 | 60,881 |
| Closing reinsurance contract held liabilities | (3,373) | 8 | 127 | (35) | - | (3,273) |
| Net closing balance, December 31, 2025 | $49,954 | $773 | $6,649 | $218 | $14 | $57,608 |
(1)The Company recorded $5.2 billion (2024 – $18.6 billion) reinsurance contract held assets from reinsurance transactions which closed during the year. Refer to
note 6 (m).
| 64 | ||||||
|---|---|---|---|---|---|---|
| Assets (liabilities) for<br><br>remaining coverage | Assets (liabilities) for incurred claims | |||||
| --- | --- | --- | --- | --- | --- | --- |
| Excluding loss<br><br>recovery<br><br>component | Loss recovery<br><br>component | Products not<br><br>under PAA | PAA<br><br>Estimates of<br><br>PV of future<br><br>cash flows | PAA Risk<br><br>adjustment for<br><br>non-financial<br><br>risk | Total | |
| Opening reinsurance contract held assets | $35,079 | $246 | $7,035 | $275 | $16 | $42,651 |
| Opening reinsurance contract held liabilities | (2,634) | 2 | (136) | (63) | - | (2,831) |
| Net opening balance, January 1, 2024 | 32,445 | 248 | 6,899 | 212 | 16 | 39,820 |
| Changes in income and OCI | ||||||
| Allocation of reinsurance premium paid | (7,709) | - | - | - | - | (7,709) |
| Amounts recoverable from reinsurers | ||||||
| Recoveries of incurred claims and other insurance service<br><br>expenses | - | (32) | 6,002 | 607 | 1 | 6,578 |
| Recoveries and reversals of recoveries of losses on onerous<br><br>underlying contracts | - | 372 | - | - | - | 372 |
| Adjustments to assets for incurred claims | - | - | 11 | (14) | (7) | (10) |
| Insurance service result | (7,709) | 340 | 6,013 | 593 | (6) | (769) |
| Investment components and premium refunds | (1,939) | - | 1,939 | - | - | - |
| Net expenses from reinsurance contracts | (9,648) | 340 | 7,952 | 593 | (6) | (769) |
| Net finance (income) expenses from reinsurance contracts | (1,859) | 12 | 4 | 3 | 4 | (1,836) |
| Effect of changes in non-performance risk of reinsurers | (58) | - | - | - | - | (58) |
| Effects of movements in foreign exchange rates | 4,021 | 36 | 575 | - | - | 4,632 |
| Contracts measured under PAA | - | - | - | - | - | - |
| Total changes in income and OCI | (7,544) | 388 | 8,531 | 596 | (2) | 1,969 |
| Cash flows | ||||||
| Premiums paid(1) | 23,130 | - | - | - | - | 23,130 |
| Amounts received | - | - | (7,991) | (582) | - | (8,573) |
| Total cash flows | 23,130 | - | (7,991) | (582) | - | 14,557 |
| Net closing balance | 48,031 | 636 | 7,439 | 226 | 14 | 56,346 |
| Closing reinsurance contract held assets | 50,723 | 631 | 7,395 | 252 | 14 | 59,015 |
| Closing reinsurance contract held liabilities | (2,692) | 5 | 44 | (26) | - | (2,669) |
| Net closing balance, December 31, 2024 | $48,031 | $636 | $7,439 | $226 | $14 | $56,346 |
(1)The Company recorded $5.2 billion (2024 – $18.6 billion) reinsurance contract held assets from reinsurance transactions which closed during the year. Refer to
note 6 (m).
| 65 | 2025 Annual Report | Consolidated Financial Statements |
|---|
Reinsurance contracts held – Analysis by measurement components
The following tables present the movements in the net assets or liabilities for reinsurance contracts held, showing estimates of
the present value of future cash flows, risk adjustment and CSM for the years ended December 31, 2025 and 2024.
| CSM | |||||
|---|---|---|---|---|---|
| Estimates of<br><br>PV of future<br><br>cash flows | Risk<br><br>adjustment for<br><br>non-financial<br><br>risk | Fair value | Other | Total | |
| Opening reinsurance contract held assets | $50,275 | $5,442 | $2,619 | $389 | $58,725 |
| Opening reinsurance contract held liabilities | (3,308) | 333 | (112) | 445 | (2,642) |
| Opening PAA reinsurance contract net assets | 249 | 14 | - | - | 263 |
| Net opening balance, January 1, 2025 | 47,216 | 5,789 | 2,507 | 834 | 56,346 |
| CSM recognized for services received | - | - | (216) | (208) | (424) |
| Change in risk adjustment for non-financial risk for risk expired | - | (515) | - | - | (515) |
| Experience adjustments | (497) | - | - | - | (497) |
| Changes that relate to current services | (497) | (515) | (216) | (208) | (1,436) |
| Contracts initially recognized during the year | (1,080) | 825 | (2) | 305 | 48 |
| Changes in recoveries of losses on onerous underlying contracts that adjust the<br><br>CSM | - | - | (9) | (19) | (28) |
| Changes in estimates that adjust the CSM | (253) | (26) | (201) | 480 | - |
| Changes in estimates that relate to losses and reversal of losses on onerous<br><br>contracts | 166 | - | - | - | 166 |
| Changes that relate to future services | (1,167) | 799 | (212) | 766 | 186 |
| Adjustments to liabilities for incurred claims | 31 | - | - | - | 31 |
| Changes that relate to past services | 31 | - | - | - | 31 |
| Insurance service result | (1,633) | 284 | (428) | 558 | (1,219) |
| Insurance finance (income) expenses from reinsurance contracts | 2,176 | 447 | 69 | 59 | 2,751 |
| Effects of changes in non-performance risk of reinsurers | 11 | - | - | - | 11 |
| Effects of movements in foreign exchange rates | (2,630) | (257) | (85) | (20) | (2,992) |
| Total changes in income and OCI | (2,076) | 474 | (444) | 597 | (1,449) |
| Total cash flows | 2,732 | - | - | - | 2,732 |
| Change in PAA balance | (21) | - | - | - | (21) |
| Net closing balance | 47,851 | 6,263 | 2,063 | 1,431 | 57,608 |
| Closing reinsurance contract held assets | 51,618 | 5,902 | 2,223 | 863 | 60,606 |
| Closing reinsurance contract held liabilities | (3,995) | 347 | (160) | 568 | (3,240) |
| Closing PAA reinsurance contract net assets | 228 | 14 | - | - | 242 |
| Net closing balance, December 31, 2025 | $47,851 | $6,263 | $2,063 | $1,431 | $57,608 |
| 66 | |||||
| --- | |||||
| CSM | |||||
| --- | --- | --- | --- | --- | --- |
| Estimates of<br><br>PV of future<br><br>cash flows | Risk<br><br>adjustment for<br><br>non-financial<br><br>risk | Fair value | Other | Total | |
| Opening reinsurance contract held assets | $38,156 | $3,685 | $565 | $(51) | $42,355 |
| Opening reinsurance contract held liabilities | (4,384) | 1,305 | 116 | 173 | (2,790) |
| Opening PAA reinsurance contract net assets | 239 | 16 | - | - | 255 |
| Net opening balance, January 1, 2024 | 34,011 | 5,006 | 681 | 122 | 39,820 |
| CSM recognized for services received | - | - | (62) | (259) | (321) |
| Change in risk adjustment for non-financial risk for risk expired | - | (536) | - | - | (536) |
| Experience adjustments | (265) | - | - | - | (265) |
| Changes that relate to current services | (265) | (536) | (62) | (259) | (1,122) |
| Contracts initially recognized during the year | (1,826) | 1,261 | 2 | 620 | 57 |
| Changes in recoveries of losses on onerous underlying contracts that adjust the<br><br>CSM | - | - | 110 | 32 | 142 |
| Changes in estimates that adjust the CSM | (1,577) | (290) | 1,657 | 210 | - |
| Changes in estimates that relate to losses and reversal of losses on onerous<br><br>contracts | 171 | 1 | - | - | 172 |
| Changes that relate to future services | (3,232) | 972 | 1,769 | 862 | 371 |
| Adjustments to liabilities for incurred claims | 11 | - | - | - | 11 |
| Changes that relate to past services | 11 | - | - | - | 11 |
| Insurance service result | (3,486) | 436 | 1,707 | 603 | (740) |
| Insurance finance (income) expenses from reinsurance contracts | (1,858) | (62) | 16 | 62 | (1,842) |
| Effects of changes in non-performance risk of reinsurers | (58) | - | - | - | (58) |
| Effects of movements in foreign exchange rates | 4,069 | 411 | 103 | 47 | 4,630 |
| Total changes in income and OCI | (1,333) | 785 | 1,826 | 712 | 1,990 |
| Total cash flows | 14,528 | - | - | - | 14,528 |
| Change in PAA balance | 10 | (2) | - | - | 8 |
| Net closing balance | 47,216 | 5,789 | 2,507 | 834 | 56,346 |
| Closing reinsurance contract held assets | 50,275 | 5,442 | 2,619 | 389 | 58,725 |
| Closing reinsurance contract held liabilities | (3,308) | 333 | (112) | 445 | (2,642) |
| Closing PAA reinsurance contract net assets | 249 | 14 | - | - | 263 |
| Net closing balance, December 31, 2024 | $47,216 | $5,789 | $2,507 | $834 | $56,346 |
| 67 | 2025 Annual Report | Consolidated Financial Statements | |||
| --- | --- | --- |
(II)Segment
Carrying balance by measurement components
The following tables present the carrying balances of net assets or liabilities for insurance contracts issued and reinsurance
contracts held by measurement components, by reporting segment for the years ended December 31, 2025 and 2024.
Insurance contracts issued
| Excluding contracts applying<br><br>the PAA | Contracts applying the PAA | CSM | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| As at December 31, 2025 | Estimates of<br><br>PV of future<br><br>cash flows | Risk<br><br>adjustment for<br><br>non-financial<br><br>risk | Estimates of<br><br>PV of future<br><br>cash flows | Risk<br><br>adjustment for<br><br>non-financial<br><br>risk | Fair value | Other | Assets for<br><br>insurance<br><br>acquisition<br><br>cash flows | Total insurance<br><br>contract<br><br>liabilities<br><br>(assets) | ||||||||||
| Asia | $169,388 | $9,352 | $1,295 | $4 | $10,892 | $9,557 | $(71) | $200,417 | ||||||||||
| Canada | 102,070 | 3,425 | 11,951 | 788 | 3,306 | 1,162 | (627) | 122,075 | ||||||||||
| U.S. | 203,209 | 10,263 | - | - | 3,874 | 1,414 | - | 218,760 | ||||||||||
| Corporate and Other | (952) | (13) | 200 | - | (143) | - | - | (908) | ||||||||||
| $473,715 | $23,027 | $13,446 | $792 | $17,929 | $12,133 | $(698) | $540,344 | Excluding contracts applying<br><br>the PAA | Contracts applying the PAA | CSM | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||
| As at December 31, 2024 | Estimates of<br><br>PV of future<br><br>cash flows | Risk<br><br>adjustment for<br><br>non-financial<br><br>risk | Estimates of<br><br>PV of future<br><br>cash flows | Risk<br><br>adjustment for<br><br>non-financial<br><br>risk | Fair value | Other | Assets for<br><br>insurance<br><br>acquisition<br><br>cash flows | Total insurance<br><br>contract<br><br>liabilities<br><br>(assets) | ||||||||||
| Asia | $153,801 | $7,630 | $1,497 | $3 | $11,338 | $6,267 | $(290) | $180,246 | ||||||||||
| Canada | 100,296 | 3,351 | 11,452 | 688 | 3,986 | 753 | (588) | 119,938 | ||||||||||
| U.S. | 207,665 | 11,337 | - | - | 3,823 | 738 | - | 223,563 | ||||||||||
| Corporate and Other | (1,001) | (14) | 252 | - | (140) | - | - | (903) | ||||||||||
| $460,761 | $22,304 | $13,201 | $691 | $19,007 | $7,758 | $(878) | $522,844 |
Reinsurance contracts held
| Excluding contracts applying<br><br>the PAA | Contracts applying the PAA | CSM | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| As at December 31, 2025 | Estimates of<br><br>PV of future<br><br>cash flows | Risk<br><br>adjustment for<br><br>non-financial<br><br>risk | Estimates of<br><br>PV of future<br><br>cash flows | Risk<br><br>adjustment for<br><br>non-financial<br><br>risk | Fair value | Other | Total<br><br>reinsurance<br><br>contract<br><br>liabilities<br><br>(assets) | |||||||||
| Asia | $3,282 | $1,598 | $(8) | $- | $687 | $414 | $5,973 | |||||||||
| Canada | 4,471 | 1,635 | 236 | 14 | (193) | 200 | 6,363 | |||||||||
| U.S. | 39,983 | 3,023 | - | - | 1,711 | 817 | 45,534 | |||||||||
| Corporate and Other | (113) | (7) | - | - | (142) | - | (262) | |||||||||
| $47,623 | $6,249 | $228 | $14 | $2,063 | $1,431 | $57,608 | Excluding contracts applying<br><br>the PAA | Contracts applying the PAA | CSM | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | |||||||||
| As at December 31, 2024 | Estimates of<br><br>PV of future<br><br>cash flows | Risk<br><br>adjustment for<br><br>non-financial<br><br>risk | Estimates of<br><br>PV of future<br><br>cash flows | Risk<br><br>adjustment for<br><br>non-financial<br><br>risk | Fair value | Other | Total<br><br>reinsurance<br><br>contract<br><br>liabilities<br><br>(assets) | |||||||||
| Asia | $4,462 | $1,580 | $- | $- | $627 | $141 | $6,810 | |||||||||
| Canada | 4,308 | 1,561 | 248 | 13 | 426 | 203 | 6,759 | |||||||||
| U.S. | 38,295 | 2,641 | - | 1 | 1,603 | 490 | 43,030 | |||||||||
| Corporate and Other | (98) | (7) | 1 | - | (149) | - | (253) | |||||||||
| $46,967 | $5,775 | $249 | $14 | $2,507 | $834 | $56,346 | ||||||||||
| 68 | ||||||||||||||||
| --- |
(c)Insurance Revenue by Transition Method
The following tables provide information as a supplement to the insurance revenue disclosures in note 6 (b).
| For the year ended December 31, 2025 | Asia | Canada | U.S. | Other | Total | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Contracts under the fair value method | $2,666 | $3,343 | $11,424 | $(14) | $17,419 | |||||||
| Contracts under the full retrospective method | 490 | 62 | 158 | - | 710 | |||||||
| Other contracts | 3,809 | 6,420 | 430 | 100 | 10,759 | |||||||
| Total | $6,965 | $9,825 | $12,012 | $86 | $28,888 | For the year ended December 31, 2024 | Asia | Canada | U.S. | Other | Total | |
| --- | --- | --- | --- | --- | --- | |||||||
| Contracts under the fair value method | $2,629 | $3,322 | $10,975 | $(14) | $16,912 | |||||||
| Contracts under the full retrospective method | 489 | 62 | 141 | - | 692 | |||||||
| Other contracts | 2,691 | 5,912 | 287 | 98 | 8,988 | |||||||
| Total | $5,809 | $9,296 | $11,403 | $84 | $26,592 |
(d)Effect of New Business Recognized in the Year
The following tables present components of new business for insurance contracts issued for the years presented.
| Asia | Canada | U.S. | Total | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| As at December 31, 2025 | Non-<br><br>Onerous | Onerous | Non-<br><br>Onerous | Onerous | Non-<br><br>Onerous | Onerous | Non-<br><br>Onerous | Onerous | ||||||||||
| New business insurance contracts | ||||||||||||||||||
| Estimates of present value of cash outflows | $32,414 | $554 | $7,075 | $86 | $5,181 | $569 | $44,670 | $1,209 | ||||||||||
| Insurance acquisition cash flows | 5,951 | 117 | 1,080 | 20 | 1,018 | 121 | 8,049 | 258 | ||||||||||
| Claims and other insurance service<br><br>expenses payable | 26,463 | 437 | 5,995 | 66 | 4,163 | 448 | 36,621 | 951 | ||||||||||
| Estimates of present value of cash inflows | (36,561) | (540) | (7,675) | (88) | (5,769) | (568) | (50,005) | (1,196) | ||||||||||
| Risk adjustment for non-financial risk | 741 | 26 | 147 | 14 | 146 | 28 | 1,034 | 68 | ||||||||||
| Contractual service margin | 3,406 | - | 453 | - | 442 | - | 4,301 | - | ||||||||||
| Amount included in insurance contract<br><br>liabilities for the year | $- | $40 | $- | $12 | $- | $29 | $- | $81 | Asia | Canada | U.S. | Total | ||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||
| As at December 31, 2024 | Non-<br><br>Onerous | Onerous | Non-<br><br>Onerous | Onerous | Non-<br><br>Onerous | Onerous | Non-<br><br>Onerous | Onerous | ||||||||||
| New business insurance contracts | ||||||||||||||||||
| Estimates of present value of cash outflows | $26,508 | $1,019 | $5,386 | $193 | $3,439 | $958 | $35,333 | $2,170 | ||||||||||
| Insurance acquisition cash flows | 4,764 | 147 | 860 | 40 | 802 | 211 | 6,426 | 398 | ||||||||||
| Claims and other insurance service<br><br>expenses payable | 21,744 | 872 | 4,526 | 153 | 2,637 | 747 | 28,907 | 1,772 | ||||||||||
| Estimates of present value of cash inflows | (29,664) | (1,002) | (5,876) | (203) | (3,841) | (960) | (39,381) | (2,165) | ||||||||||
| Risk adjustment for non-financial risk | 600 | 27 | 117 | 26 | 136 | 46 | 853 | 99 | ||||||||||
| Contractual service margin | 2,556 | - | 373 | - | 266 | - | 3,195 | - | ||||||||||
| Amount included in insurance contract<br><br>liabilities for the year | $- | $44 | $- | $16 | $- | $44 | $- | $104 |
The following tables present components of new business for reinsurance contracts held portfolios for the years presented.
| As at December 31, 2025 | Asia | Canada | U.S. | Total | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| New business reinsurance contracts | ||||||||||
| Estimates of present value of cash outflows | $(2,316) | $(713) | $(6,373) | $(9,402) | ||||||
| Estimates of present value of cash inflows | 2,032 | 626 | 5,664 | 8,322 | ||||||
| Risk adjustment for non-financial risk | 140 | 79 | 606 | 825 | ||||||
| Contractual service margin | 164 | 15 | 124 | 303 | ||||||
| Amount included in reinsurance assets for the year | $20 | $7 | $21 | $48 | As at December 31, 2024 | Asia | Canada | U.S. | Total | |
| --- | --- | --- | --- | --- | ||||||
| New business reinsurance contracts | ||||||||||
| Estimates of present value of cash outflows | $(7,144) | $(6,153) | $(7,519) | $(20,816) | ||||||
| Estimates of present value of cash inflows | 6,950 | 5,876 | 6,164 | 18,990 | ||||||
| Risk adjustment for non-financial risk | 189 | 68 | 1,004 | 1,261 | ||||||
| Contractual service margin | 21 | 217 | 384 | 622 | ||||||
| Amount included in reinsurance assets for the year | $16 | $8 | $33 | $57 | ||||||
| 69 | 2025 Annual Report | Consolidated Financial Statements | ||||||||
| --- | --- | --- |
(e)Expected Recognition of Contractual Service Margin
The following tables present expectations for the timing of recognition of CSM in income in future years.
| As at December 31, 2025 | Less than<br><br>1 year | 1 to 5<br><br>years | 5 to 10<br><br>years | 10 to 20<br><br>years | More than<br><br>20 years | Total | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Canada | ||||||||||||||
| Insurance contracts issued | $414 | $1,301 | $1,061 | $1,031 | $661 | $4,468 | ||||||||
| Reinsurance contracts held | 11 | 39 | 23 | 3 | (83) | (7) | ||||||||
| 425 | 1,340 | 1,084 | 1,034 | 578 | 4,461 | |||||||||
| U.S. | ||||||||||||||
| Insurance contracts issued | 548 | 1,736 | 1,370 | 1,180 | 454 | 5,288 | ||||||||
| Reinsurance contracts held | (315) | (961) | (708) | (533) | (11) | (2,528) | ||||||||
| 233 | 775 | 662 | 647 | 443 | 2,760 | |||||||||
| Asia | ||||||||||||||
| Insurance contracts issued | 1,978 | 6,370 | 4,944 | 4,592 | 2,565 | 20,449 | ||||||||
| Reinsurance contracts held | (101) | (416) | (305) | (166) | (113) | (1,101) | ||||||||
| 1,877 | 5,954 | 4,639 | 4,426 | 2,452 | 19,348 | |||||||||
| Corporate | ||||||||||||||
| Insurance contracts issued | (11) | (38) | (37) | (43) | (14) | (143) | ||||||||
| Reinsurance contracts held | 12 | 60 | 48 | 19 | 3 | 142 | ||||||||
| 1 | 22 | 11 | (24) | (11) | (1) | |||||||||
| Total | $2,536 | $8,091 | $6,396 | $6,083 | $3,462 | $26,568 | As at December 31, 2024 | Less than<br><br>1 year | 1 to 5<br><br>years | 5 to 10<br><br>years | 10 to 20<br><br>years | More than<br><br>20 years | Total | |
| --- | --- | --- | --- | --- | --- | --- | ||||||||
| Canada | ||||||||||||||
| Insurance contracts issued | $426 | $1,347 | $1,116 | $1,173 | $677 | $4,739 | ||||||||
| Reinsurance contracts held | (53) | (150) | (126) | (144) | (156) | (629) | ||||||||
| 373 | 1,197 | 990 | 1,029 | 521 | 4,110 | |||||||||
| U.S. | ||||||||||||||
| Insurance contracts issued | 474 | 1,510 | 1,194 | 1,023 | 360 | 4,561 | ||||||||
| Reinsurance contracts held | (278) | (835) | (569) | (381) | (30) | (2,093) | ||||||||
| 196 | 675 | 625 | 642 | 330 | 2,468 | |||||||||
| Asia | ||||||||||||||
| Insurance contracts issued | 1,527 | 5,006 | 2,861 | 2,815 | 5,396 | 17,605 | ||||||||
| Reinsurance contracts held | (72) | (295) | (194) | (58) | (149) | (768) | ||||||||
| 1,455 | 4,711 | 2,667 | 2,757 | 5,247 | 16,837 | |||||||||
| Corporate | ||||||||||||||
| Insurance contracts issued | (10) | (36) | (35) | (42) | (17) | (140) | ||||||||
| Reinsurance contracts held | 13 | 67 | 59 | 11 | (1) | 149 | ||||||||
| 3 | 31 | 24 | (31) | (18) | 9 | |||||||||
| Total | $2,027 | $6,614 | $4,306 | $4,397 | $6,080 | $23,424 | ||||||||
| 70 | ||||||||||||||
| --- |
(f)Investment Income and Insurance Finance Income and Expenses
| For the year ended December 31, 2025 | Insurance<br><br>contracts | Non-<br><br>insurance(1) | Total |
|---|---|---|---|
| Investment return | |||
| Investment-related income | $15,938 | $3,134 | $19,072 |
| Net gains (losses) on financial assets at FVTPL | 7,044 | 145 | 7,189 |
| Unrealized gains (losses) on FVOCI assets | 1,561 | 521 | 2,082 |
| Impairment and recovery (loss) on financial assets | (80) | (26) | (106) |
| Investment expenses | (633) | (709) | (1,342) |
| Interest on required surplus | 670 | (670) | - |
| Total investment return | 24,500 | 2,395 | 26,895 |
| Portion recognized in income (expenses) | 22,113 | 1,834 | 23,947 |
| Portion recognized in OCI | 2,387 | 561 | 2,948 |
| Insurance finance income (expenses) from insurance contracts issued and effect of<br><br>movement in exchange rates | |||
| Interest accreted to insurance contracts | (11,309) | 31 | (11,278) |
| Due to changes in interest rates and other financial assumptions | (3,596) | 20 | (3,576) |
| Changes in fair value of underlying items of direct participation contracts | (9,875) | - | (9,875) |
| Effects of risk mitigation option | 1,199 | - | 1,199 |
| Net foreign exchange income (expenses) | (147) | - | (147) |
| Hedge accounting offset from insurance contracts issued | 149 | - | 149 |
| Reclassification of derivative OCI to IFIE – cash flow hedges | 9 | - | 9 |
| Reclassification of derivative income (loss) changes to IFIE – fair value hedge | (2,093) | - | (2,093) |
| Other | 116 | - | 116 |
| Total insurance finance income (expenses) from insurance contracts issued | (25,547) | 51 | (25,496) |
| Effect of movements in foreign exchange rates | 156 | - | 156 |
| Total insurance finance income (expenses) from insurance contracts issued and effect of<br><br>movement in foreign exchange rates | (25,391) | 51 | (25,340) |
| Portion recognized in income (expenses), including effects of exchange rates | (22,710) | 29 | (22,681) |
| Portion recognized in OCI, including effects of exchange rates | (2,681) | 22 | (2,659) |
| Reinsurance finance income (expenses) from reinsurance contracts held and effect of<br><br>movement in foreign exchange rates | |||
| Interest accreted to insurance contracts | 2,370 | - | 2,370 |
| Due to changes in interest rates and other financial assumptions | 620 | (2) | 618 |
| Changes in risk of non-performance of reinsurers | 12 | - | 12 |
| Other | (234) | - | (234) |
| Total reinsurance finance income (expenses) from reinsurance contracts held | 2,768 | (2) | 2,766 |
| Effect of movements in foreign exchange rates | (422) | - | (422) |
| Total reinsurance finance income (expenses) from reinsurance contracts held and effect of<br><br>movement in foreign exchange rates | 2,346 | (2) | 2,344 |
| Portion recognized in income (expenses), including effects of foreign exchange rates | 1,694 | - | 1,694 |
| Portion recognized in OCI, including effects of exchange rates | 652 | (2) | 650 |
| Decrease (increase) in investment contract liabilities | (2) | (549) | (551) |
| Total net investment income (loss), insurance finance income (expenses) and reinsurance<br><br>finance income (expenses) | 1,453 | 1,895 | 3,348 |
| Amounts recognized in income (expenses) | 1,095 | 1,314 | 2,409 |
| Amounts recognized in OCI | 358 | 581 | 939 |
(1)Non-insurance includes consolidations and eliminations of transactions between operating segments.
| 71 | 2025 Annual Report | Consolidated Financial Statements | |
|---|---|---|---|
| For the year ended December 31, 2024 | Insurance<br><br>contracts | Non-<br><br>insurance(1) | Total |
| --- | --- | --- | --- |
| Investment return | |||
| Investment-related income | $14,214 | $3,268 | $17,482 |
| Net gains (losses) on financial assets at FVTPL | 1,788 | 63 | 1,851 |
| Unrealized gains (losses) on FVOCI assets | 5,590 | (6,803) | (1,213) |
| Impairment and recovery (loss) on financial assets | 137 | (28) | 109 |
| Investment expenses | (644) | (704) | (1,348) |
| Interest on required surplus | 672 | (672) | - |
| Total investment return | 21,757 | (4,876) | 16,881 |
| Portion recognized in income (expenses) | 16,489 | 2,622 | 19,111 |
| Portion recognized in OCI | 5,268 | (7,498) | (2,230) |
| Insurance finance income (expenses) from insurance contracts issued and effect of<br><br>movement in exchange rates | |||
| Interest accreted to insurance contracts | (10,283) | 26 | (10,257) |
| Due to changes in interest rates and other financial assumptions | 10,199 | (67) | 10,132 |
| Changes in fair value of underlying items of direct participation contracts | (5,231) | - | (5,231) |
| Effects of risk mitigation option | 1,755 | - | 1,755 |
| Net foreign exchange income (expenses) | (2) | - | (2) |
| Hedge accounting offset from insurance contracts issued | (128) | - | (128) |
| Reclassification of derivative OCI to IFIE – cash flow hedges | 52 | - | 52 |
| Reclassification of derivative income (loss) changes to IFIE – fair value hedge | (3,346) | - | (3,346) |
| Other | 394 | - | 394 |
| Total insurance finance income (expenses) from insurance contracts issued | (6,590) | (41) | (6,631) |
| Effect of movements in foreign exchange rates | (1,417) | - | (1,417) |
| Total insurance finance income (expenses) from insurance contracts issued and effect of<br><br>movement in foreign exchange rates | (8,007) | (41) | (8,048) |
| Portion recognized in income (expenses), including effects of exchange rates | (16,252) | 33 | (16,219) |
| Portion recognized in OCI, including effects of exchange rates | 8,245 | (74) | 8,171 |
| Reinsurance finance income (expenses) from reinsurance contracts held and effect of<br><br>movement in foreign exchange rates | |||
| Interest accreted to insurance contracts | 2,135 | - | 2,135 |
| Due to changes in interest rates and other financial assumptions | (3,886) | 4 | (3,882) |
| Changes in risk of non-performance of reinsurers | (57) | - | (57) |
| Other | (88) | - | (88) |
| Total reinsurance finance income (expenses) from reinsurance contracts held | (1,896) | 4 | (1,892) |
| Effect of movements in foreign exchange rates | 243 | - | 243 |
| Total reinsurance finance income (expenses) from reinsurance contracts held and effect of<br><br>movement in foreign exchange rates | (1,653) | 4 | (1,649) |
| Portion recognized in income (expenses), including effects of foreign exchange rates | 1,133 | - | 1,133 |
| Portion recognized in OCI, including effects of exchange rates | (2,786) | 4 | (2,782) |
| Decrease (increase) in investment contract liabilities | (6) | (498) | (504) |
| Total net investment income (loss), insurance finance income (expenses) and reinsurance<br><br>finance income (expenses) | 12,091 | (5,411) | 6,680 |
| Amounts recognized in income (expenses) | 1,364 | 2,157 | 3,521 |
| Amounts recognized in OCI | 10,727 | (7,568) | 3,159 |
(1)Non-insurance includes consolidations and eliminations of transactions between operating segments.
| 72 |
|---|
The following tables present Investment income and insurance finance income and expenses recognized in income or expenses
or other comprehensive income, by reporting segments for the years ended December 31, 2025 and December 31, 2024.
| Insurance and reinsurance contracts | ||||||
|---|---|---|---|---|---|---|
| For the year ended December 31, 2025 | Asia | Canada | U.S. | Corporate | Non-<br><br>insurance(1) | Total |
| Total investment return | ||||||
| Portion recognized in income (expenses) | $11,551 | $4,216 | $6,319 | $27 | $1,834 | $23,947 |
| Portion recognized in OCI | (21) | (52) | 2,461 | (1) | 561 | 2,948 |
| 11,530 | 4,164 | 8,780 | 26 | 2,395 | 26,895 | |
| Total insurance finance income (expenses) from insurance<br><br>contracts issued and effect of movement in foreign<br><br>exchange rates | ||||||
| Portion recognized in income (expenses), including effects of<br><br>exchange rates | (9,458) | (4,354) | (8,894) | (4) | 29 | (22,681) |
| Portion recognized in OCI, including effects of exchange rates | (168) | 1,009 | (3,522) | - | 22 | (2,659) |
| (9,626) | (3,345) | (12,416) | (4) | 51 | (25,340) | |
| Total reinsurance finance income (expenses) from<br><br>reinsurance contracts held and effect of movement in<br><br>foreign exchange rates | ||||||
| Portion recognized in income (expenses), including effects of<br><br>foreign exchange rates | (104) | 251 | 1,542 | 5 | - | 1,694 |
| Portion recognized in OCI, including effects of exchange rates | (305) | (463) | 1,420 | - | (2) | 650 |
| (409) | (212) | 2,962 | 5 | (2) | 2,344 |
(1)Non-insurance includes consolidations and eliminations of transactions between operating segments.
| Insurance and reinsurance contracts | ||||||
|---|---|---|---|---|---|---|
| For the year ended December 31, 2024 | Asia | Canada | U.S. | Corporate | Non-<br><br>insurance(1) | Total |
| Total investment return | ||||||
| Portion recognized in income (expenses) | $7,994 | $3,529 | $4,943 | $23 | $2,622 | $19,111 |
| Portion recognized in OCI | 801 | 5,876 | (1,411) | 2 | (7,498) | (2,230) |
| 8,795 | 9,405 | 3,532 | 25 | (4,876) | 16,881 | |
| Total insurance finance income (expenses) from insurance<br><br>contracts issued and effect of movement in foreign<br><br>exchange rates | ||||||
| Portion recognized in income (expenses), including effects of<br><br>exchange rates | (7,334) | (3,650) | (5,278) | 10 | 33 | (16,219) |
| Portion recognized in OCI, including effects of exchange rates | (977) | 473 | 8,749 | - | (74) | 8,171 |
| (8,311) | (3,177) | 3,471 | 10 | (41) | (8,048) | |
| Total reinsurance finance income (expenses) from<br><br>reinsurance contracts held and effect of movement in<br><br>foreign exchange rates | ||||||
| Portion recognized in income (expenses), including effects of<br><br>foreign exchange rates | 604 | 347 | 185 | (3) | - | 1,133 |
| Portion recognized in OCI, including effects of exchange rates | (168) | 59 | (2,677) | - | 4 | (2,782) |
| 436 | 406 | (2,492) | (3) | 4 | (1,649) |
(1)Non-insurance includes consolidations and eliminations of transactions between operating segments.
(g)Significant Judgements and Estimates
(I)Fulfilment Cash Flows
Fulfilment cash flows have three major components:
•Estimate of future cash flows
•An adjustment to reflect the time value of money and the financial risk related to future cash flows if not included in the
estimate of future cash flows
•A risk adjustment for non-financial risk
The determination of insurance fulfilment cash flows involves the use of estimates and assumptions. A comprehensive review of
valuation assumptions and methods is performed annually. The review reduces the Company’s exposure to uncertainty by
ensuring assumptions for liability risks remain appropriate. This is accomplished by monitoring experience and updating
assumptions which represent a best estimate of expected future experience and margins that are appropriate for the risks
assumed. While the assumptions selected represent the Company’s current best estimates and assessment of risk, the ongoing
monitoring of experience and the changes in the economic environment are likely to result in future changes to the actuarial
assumptions, which could materially impact the insurance contract liabilities.
| 73 | 2025 Annual Report | Consolidated Financial Statements |
|---|
Method used to measure insurance and reinsurance contract fulfilment cash flows
The Company primarily uses deterministic projections using best estimate assumptions to determine the present value of future
cash flows. For product features such as universal life minimum crediting rates guarantees, participating life zero dividend floor
implicit guarantees and variable annuities guarantees, the Company developed a stochastic approach to capture the asymmetry
of the risk.
Determination of assumptions used
For the deterministic projections, assumptions are made with respect to mortality, morbidity, rates of policy termination, operating
expenses and certain taxes. Actual experience is monitored to ensure that assumptions remain appropriate and assumptions are
changed as warranted. Assumptions are discussed in more detail in the following table.
| Nature of factors and assumption methodology | Risk management |
|---|
Mortality
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.
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 2025 experience was
unfavourable (2024 – favourable) when compared to the
Company’s assumptions.
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. Morbidity is
also monitored monthly and the overall 2025 experience
was favourable (2024 – favourable) when compared to the
Company’s assumptions.
Morbidity
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, 2025
policyholder termination and premium persistency
experience was unfavourable (2024 – unfavourable) when
compared to the Company’s assumptions used in the
computation of actuarial liabilities.
Directly
attributable
expenses
Directly attributable operating expense assumptions
reflect the projected costs of maintaining and servicing
in-force policies, including associated directly
attributable overhead expenses. The directly
attributable 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. Directly attributable acquisitions
expenses are derived from internal cost studies.
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
2025 were unfavourable (2024 – unfavourable) when
compared to the Company’s assumptions used in the
computation of actuarial liabilities.
| 74 | |
|---|---|
| Nature of factors and assumption methodology | Risk management |
| --- | --- |
Tax
Taxes reflect assumptions for future premium taxes and
other non-income related taxes.
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.
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.
The Company reviews actuarial methods and assumptions on an annual basis. If changes are made to non-economic
assumptions, the impact based on locked-in economic assumptions would adjust the contractual service margin for general
model and VFA contracts if there is any remaining contractual service margin for the group of policies where the change was
made. This amount would then be recognized in income over the period of service provided. Changes could also impact net
income and other comprehensive income to the extent that the contractual service margin has been depleted, or discount rates
are different than the locked-in rates used to quantify changes to the contractual service margin.
(II)Determination of Discretionary Changes
The terms of some contracts measured under the GMM give the Company discretion over the cash flows to be paid to the
policyholders, either in timing or amount. Changes in discretionary cash flows are regarded as relating to future service and
accordingly adjust the CSM if there is any remaining CSM for the group of policies where the change was made. The Company
determines how to identify a change in discretionary cash flows by specifying the basis on which it expects to determine its
commitment under the contract; for example, based on a fixed interest rate or on returns that vary based on specified asset
returns. This determination is specified at the inception of the contract.
(III)Discount Rates
Insurance contract cash flows for non-participating business are discounted using risk-free yield curves adjusted by an illiquidity
premium to reflect the liquidity characteristics of the liabilities. Cash flows that vary based on returns of underlying items are
adjusted to reflect their variability under these adjusted yield curves. Each yield curve is interpolated between the spot rate at the
last observable market data point and an ultimate spot rate, which reflects the long-term real interest rate plus inflation
expectations.
For participating business, insurance contract cash flows that vary based on the return of underlying items are discounted at
rates reflecting that variability.
For insurance contracts with cash flows that vary with the return of underlying items and where the present value is measured by
stochastic modelling, cash flows are both projected and discounted at scenario-specific rates, calibrated on average to be the
risk-free yield curves adjusted for liquidity.
| 75 | 2025 Annual Report | Consolidated Financial Statements |
|---|
The spot rates used for discounting liability cash flows are presented in the following tables and include illiquidity premiums
determined with reference to net asset spreads indicative of the liquidity characteristics of the liabilities by geography.
| December 31, 2025 | ||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Currency | Liquidity category | Observable<br><br>years | Ultimate year | 1 year | 5 years | 10 years | 20 years | 30 years | Ultimate | |||||||||||||
| Canada | CAD | Illiquid | 30 | 70 | 2.89% | 3.85% | 4.94% | 5.36% | 6.10% | 4.40% | ||||||||||||
| Somewhat liquid(1) | 30 | 70 | 2.87% | 3.82% | 4.85% | 5.39% | 6.05% | 4.40% | ||||||||||||||
| U.S. | USD | Illiquid | 30 | 70 | 3.74% | 4.37% | 5.65% | 6.47% | 6.41% | 5.15% | ||||||||||||
| Somewhat liquid(1) | 30 | 70 | 3.85% | 4.42% | 5.55% | 6.47% | 6.40% | 5.03% | ||||||||||||||
| Japan | JPY | Somewhat liquid(1) | 30 | 70 | 1.18% | 1.93% | 2.60% | 3.59% | 4.38% | 1.60% | ||||||||||||
| Hong Kong | HKD | Illiquid | 15 | 55 | 2.39% | 3.48% | 4.57% | 4.38% | 4.02% | 3.70% | December 31, 2024 | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||
| Currency | Liquidity category | Observable<br><br>years | Ultimate year | 1 year | 5 years | 10 years | 20 years | 30 years | Ultimate | |||||||||||||
| Canada | CAD | Illiquid | 30 | 70 | 3.46% | 3.93% | 4.86% | 5.00% | 5.32% | 4.40% | ||||||||||||
| Somewhat liquid(1) | 30 | 70 | 3.44% | 3.89% | 4.76% | 4.98% | 5.21% | 4.40% | ||||||||||||||
| U.S. | USD | Illiquid | 30 | 70 | 4.48% | 5.05% | 6.01% | 6.33% | 6.15% | 5.15% | ||||||||||||
| Somewhat liquid(1) | 30 | 70 | 4.56% | 5.09% | 5.91% | 6.33% | 6.14% | 5.03% | ||||||||||||||
| Japan | JPY | Somewhat liquid(1) | 30 | 70 | 0.82% | 1.17% | 1.55% | 2.33% | 2.97% | 1.60% | ||||||||||||
| Hong Kong | HKD | Illiquid | 15 | 55 | 3.73% | 4.36% | 5.23% | 4.70% | 4.17% | 3.70% |
(1)Somewhat liquid refers to liquidity level that is between liquid and illiquid. It is higher liquidity than illiquid and lower liquidity than liquid.
Amounts presented in income for policies where changes in assumptions that relate to financial risk do not have a substantial
impact on amounts paid to policyholders reflect discount rates locked in beginning with the adoption of IFRS 17 or locked in at
issue for later insurance contracts. These policies include term insurance, guaranteed whole life insurance, and health products
including critical illness and long-term care. For policies where changes in assumptions to financial risk have a substantial impact
on amounts paid to policyholders, discount rates are updated as future cash flows change due to changes in financial risk, so
that the amount presented in income from future changes in financial variables is $nil. These policies include adjustable universal
life contracts. Impacts from differences between current period rates and discount rates used to determine income are presented
in other comprehensive income.
(IV)Risk Adjustment and Confidence Level used to determine Risk Adjustment
Risk adjustment for non-financial risk represents the compensation the Company requires for bearing the uncertainty about the
amount and timing of the cash flows that arises from non-financial risk as the Company fulfils insurance contracts. The risk
adjustment process considers insurance, lapse and expense risks, includes both favourable and unfavourable outcomes, and
reflects diversification benefits from the insurance contracts issued.
The Company estimates the risk adjustment using a margin approach. This approach applies a margin for adverse deviation,
typically in terms of a percentage of best estimate assumptions, where future cash flows are uncertain. The resulting cash flows
are discounted at rates consistent with the best estimate cash flows to arrive at the total risk adjustment. The ranges for these
margins are set by the Company and reviewed periodically.
The risk adjustment for non-financial risk for insurance contracts corresponds to a 90 – 95% confidence level for all segments.
(V)Investment Component, Investment-return Service and Investment-related Service
The Company identifies the investment component, investment-return service (contract without direct participation features) and
investment-related service (contract with direct participation features) of a contract as part of the product governance process.
Investment components are amounts that are to be paid to the policyholder under all circumstances. Investment components are
excluded from insurance revenue and insurance service expenses.
Investment-return services and investment-related services are investment services rendered as part of an insurance contract
and are part of the insurance contract services provided to the policyholder.
(VI)Relative Weighting of the Benefit Provided by Insurance Coverage, Investment-return Service and Investment-
related Service
The contractual service margin is released into income, when insurance contract services are provided, by using coverage units.
Coverage units represent the quantity of service (insurance coverage, investment-return and investment-related services)
provided and are determined by considering the benefit provided under the contract and its expected coverage duration. When
the relative size of the investment-related service coverage or the investment-return service coverage unit is disproportionate
compared to the insurance service coverage unit, or vice versa, the Company must determine a relative weighting of the services
to reflect the delivery of each of those services. The Company identifies the coverage units as part of the product governance
process and did not identify contracts where such weighting was required.
| 76 |
|---|
(h)Sensitivity of Insurance Contract Liabilities to Changes in Non-economic Assumptions
The following tables present information on how reasonably possible changes in assumptions made by the Company on
insurance contracts’ non-economic risk variables and certain economic risk variables impact contractual service margin, net
income attributed to shareholders, other comprehensive income attributed to shareholders, and total comprehensive income
attributed to shareholders. For non-economic risk variables, the impacts are shown separately gross and net of the impacts of
reinsurance contracts held. The method used for deriving sensitivity information and significant assumptions made did not
change from the previous period.
The analysis is based on a simultaneous change in assumptions across all businesses and holds all other assumptions constant.
In practice, experience for each assumption will frequently vary by geographic market and business, and assumption updates
are specifically made on a business and geographic basis. Actual results can differ materially from these estimates for a variety
of reasons including the interaction among these factors when more than one changes, actual experience differing from the
assumptions, changes in business mix, effective tax rates, and the general limitations of the Company’s internal models.
Potential impact on contractual service margin, net income attributed to shareholders, other comprehensive income
attributed to shareholders, and total comprehensive income attributed to shareholders arising from changes to non-
economic assumptions(1)
| As at December 31, 2025 | CSM net of NCI | Net income attributed to<br><br>shareholders | Other comprehensive<br><br>income attributed to<br><br>shareholders | Total comprehensive<br><br>income attributed to<br><br>shareholders | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (post-tax except CSM) | Gross | Net | Gross | Net | Gross | Net | Gross | Net | ||||||||||
| Policy related assumptions | ||||||||||||||||||
| 2% adverse change in future mortality rates(2),(3),(5) | ||||||||||||||||||
| Portfolios where an increase in rates increases<br><br>insurance contract liabilities | $(700) | $(200) | $(700) | $(200) | $100 | $- | $(600) | $(200) | ||||||||||
| Portfolios where a decrease in rates increases<br><br>insurance contract liabilities | (300) | (400) | 200 | (100) | 100 | 100 | 300 | - | ||||||||||
| 5% adverse change in future morbidity rates(4),(5),(6)<br><br>(incidence and termination) | (2,200) | (1,800) | (3,000) | (2,500) | 600 | 500 | (2,400) | (2,000) | ||||||||||
| 10% change in future policy termination rates(3),(5) | ||||||||||||||||||
| Portfolios where an increase in rates increases<br><br>insurance contract liabilities | (900) | (800) | (100) | (100) | (200) | (200) | (300) | (300) | ||||||||||
| Portfolios where a decrease in rates increases<br><br>insurance contract liabilities | (800) | (600) | (700) | (400) | 500 | 300 | (200) | (100) | ||||||||||
| 5% increase in future expense levels | (600) | (600) | (100) | (100) | 100 | 100 | - | - | As at December 31, 2024 | CSM net of NCI | Net income attributed to<br><br>shareholders | Other comprehensive<br><br>income attributed to<br><br>shareholders | Total comprehensive<br><br>income attributed to<br><br>shareholders | |||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||
| (post-tax except CSM) | Gross | Net | Gross | Net | Gross | Net | Gross | Net | ||||||||||
| Policy related assumptions | ||||||||||||||||||
| 2% adverse change in future mortality rates(2),(3),(5) | ||||||||||||||||||
| Portfolios where an increase in rates increases<br><br>insurance contract liabilities | $(700) | $(200) | $(700) | $(300) | $200 | $100 | $(500) | $(200) | ||||||||||
| Portfolios where a decrease in rates increases<br><br>insurance contract liabilities | (100) | (600) | - | - | 100 | 200 | 100 | 200 | ||||||||||
| 5% adverse change in future morbidity rates(4),(5),(6)<br><br>(incidence and termination) | (2,200) | (1,800) | (3,000) | (2,700) | 700 | 600 | (2,300) | (2,100) | ||||||||||
| 10% change in future policy termination rates(3),(5) | ||||||||||||||||||
| Portfolios where an increase in rates increases<br><br>insurance contract liabilities | (700) | (600) | (100) | (100) | (200) | (200) | (300) | (300) | ||||||||||
| Portfolios where a decrease in rates increases<br><br>insurance contract liabilities | (900) | (700) | (700) | (400) | 400 | 300 | (300) | (100) | ||||||||||
| 5% increase in future expense levels | (600) | (600) | (100) | (100) | 100 | 100 | - | - |
(1)The participating policy funds are largely self-supporting and experience gains or losses would generally result in changes to future dividends reducing the direct
impact on the CSM and shareholder income.
(2)An increase in mortality rates will generally increase insurance contract liabilities for life insurance contracts, whereas a decrease in mortality rates will generally
increase insurance contract liabilities for policies with longevity risk such as payout annuities.
(3)The sensitivity is measured for each direct insurance portfolio net of the impacts of any reinsurance held on the policies within that portfolio to determine if the
overall insurance contract liabilities increased.
(4)No amounts related to morbidity risk are included for policies where the insurance contract liability provides only for claims costs expected over a short period,
generally less than one year, such as Group Life and Health.
(5)The impacts of the sensitivities on LTC for morbidity, mortality and lapse do not assume any 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 sensitivity.
(6)This includes a 5% deterioration in incidence rates and a 5% deterioration in claim termination rates.
| 77 | 2025 Annual Report | Consolidated Financial Statements |
|---|
Potential impact on contractual service margin, net income attributed to shareholders, other comprehensive income
attributed to shareholders, and total comprehensive income attributed to shareholders arising from changes to non-
economic assumptions on Long Term Care(1)
| As at December 31, 2025 | CSM net of NCI | Net income attributed<br><br>to shareholders | Other comprehensive<br><br>income attributed to<br><br>shareholders | Total comprehensive<br><br>income attributed to<br><br>shareholders | ||||
|---|---|---|---|---|---|---|---|---|
| (post-tax except CSM) | Gross | Net | Gross | Net | Gross | Net | Gross | Net |
| Policy related assumptions | ||||||||
| 2% adverse change in future mortality rates(2),(3) | $(300) | $(300) | $- | $- | $- | $- | $- | $- |
| 5% adverse change in future morbidity incidence rates(2),(3) | (1,500) | (1,300) | (400) | (300) | 200 | 200 | (200) | (100) |
| 5% adverse change in future morbidity claims termination<br><br>rates(2),(3) | (1,500) | (1,300) | (1,200) | (1,000) | 400 | 400 | (800) | (600) |
| 10% adverse change in future policy termination rates(2),(3) | (400) | (300) | - | - | - | - | - | - |
| 5% increase in future expense levels(3) | (100) | (100) | - | - | - | - | - | - |
| As at December 31, 2024 | CSM net of NCI | Net income attributed<br><br>to shareholders | Other comprehensive<br><br>income attributed to<br><br>shareholders | Total comprehensive<br><br>income attributed to<br><br>shareholders | ||||
| (post-tax except CSM) | Gross | Net | Gross | Net | Gross | Net | Gross | Net |
| Policy related assumptions | ||||||||
| 2% adverse change in future mortality rates(2),(3) | $(300) | $(300) | $- | $- | $- | $- | $- | $- |
| 5% adverse change in future morbidity incidence rates(2),(3) | (1,400) | (1,300) | (500) | (400) | 200 | 200 | (300) | (200) |
| 5% adverse change in future morbidity claims termination<br><br>rates(2),(3) | (1,400) | (1,300) | (1,300) | (1,100) | 500 | 400 | (800) | (700) |
| 10% adverse change in future policy termination rates(2),(3) | (400) | (400) | - | - | 100 | 100 | 100 | 100 |
| 5% increase in future expense levels(3) | (100) | (100) | - | - | - | - | - | - |
(1)The potential impacts on CSM were translated from US$ at 1.3707 (2024 – 1.4382) and the potential impacts on net income attributed to shareholders, OCI
attributed to shareholders and total comprehensive income attributed to shareholders were translated from US$ at 1.3939 (2024 – 1.3987).
(2)The impacts of the sensitivities on LTC for morbidity, mortality and lapse do not assume any 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.
(3)The impact of favourable changes to all the sensitivities is relatively symmetrical.
Potential impact on contractual service margin, net income attributed to shareholders, other comprehensive income
attributed to shareholders, and total comprehensive income attributed to shareholders arising from changes to certain
economic financial assumptions used in the determination of insurance contract liabilities(1)
| As at December 31, 2025<br><br>(post-tax except CSM) | CSM net of<br><br>NCI | Net income attributed to shareholders | ||
|---|---|---|---|---|
| Financial assumptions | ||||
| 10 basis point reduction in ultimate spot rate | $(300) | - | (200) | $(200) |
| 50 basis point increase in interest rate volatility(2) | (100) | - | - | - |
| 50 basis point increase in non-fixed income return volatility(2) | (100) | - | - | - |
| As at December 31, 2024<br><br>(post-tax except CSM) | CSM net of<br><br>NCI | Net income attributed to shareholders | ||
| Financial assumptions | ||||
| 10 basis point reduction in ultimate spot rate | $(300) | - | (200) | $(200) |
| 50 basis point increase in interest rate volatility(2) | (100) | - | - | - |
| 50 basis point increase in non-fixed income return volatility(2) | (100) | - | - | - |
All values are in US Dollars.
(1)Note that the impact of these assumptions is not linear.
(2)Used in the determination of insurance contract liabilities with financial guarantees. This includes universal life minimum crediting rate guarantees, participating life
zero dividend floor implicit guarantees, and variable annuities guarantees, where a stochastic approach is used to capture the asymmetry of the risk.
(i)Review of Actuarial Methods and Assumptions
The Company performs a comprehensive review of actuarial methods and assumptions annually. The review is designed to
reduce the Company’s exposure to uncertainty by ensuring assumptions for liability risks remain appropriate. This is
accomplished by monitoring experience and updating assumptions that represent a best estimate of expected future experience,
and maintaining a risk adjustment that is appropriate for the risks assumed. While the assumptions selected represent the
Company’s best estimates and assessment of risk, the ongoing monitoring of experience and changes in the economic
environment are likely to result in future changes to the actuarial assumptions, which could materially impact the insurance
contract liabilities. The changes implemented from the review are generally implemented in the third quarter of each year, though
updates may be made outside the third quarter in certain circumstances.
| 78 |
|---|
2025 Review of Actuarial Methods and Assumptions
The completion of the 2025 annual review of actuarial methods and assumptions resulted in a decrease in pre-tax fulfilment cash
flows of $605, excluding the portion related to non-controlling interests. These updates resulted in a decrease in pre-tax net
income attributed to shareholders of $244 ($216 post-tax), a decrease in pre-tax net income attributed to participating
policyholders of $88 ($67 post-tax), an increase in CSM of $1,080, a decrease in pre-tax other comprehensive income attributed
to shareholders of $52 ($73 post-tax), and a decrease in pre-tax other comprehensive income attributed to participating
policyholders of $91 ($70 post-tax).
Impact of updates to actuarial methods and assumptions on pre-tax fulfilment cash flows(1)
| For the year ended December 31, 2025 | Total |
|---|---|
| Hong Kong health insurance product reserving approach | $(463) |
| Methodology and other updates | (207) |
| Lapse and policyholder behaviour updates | 181 |
| Long-term care triennial review | (77) |
| Mortality and morbidity updates | (39) |
| Impact of updates to actuarial methods and assumptions, on pre-tax fulfilment cash flows | $(605) |
(1)Excludes the portion related to non-controlling interests of $116. The impact of updates to actuarial methods and assumptions on pre-tax fulfilment cash flows,
including the portion related to non-controlling interests, would be $(489).
Impact of updates to actuarial methods and assumptions on pre-tax net income attributed to shareholders, pre-tax net
income attributed to participating policyholders, OCI and CSM(1)
| For the year ended December 31, 2025 | Total |
|---|---|
| Portion recognized in pre-tax net income (loss) attributed to: | |
| Participating policyholders | $(88) |
| Shareholders | (244) |
| (332) | |
| Portion increasing (decreasing) CSM | 1,080 |
| Portion recognized in pre-tax OCI attributed to: | |
| Participating policyholders | (91) |
| Shareholders | (52) |
| (143) | |
| Impact of updates to actuarial methods and assumptions, pre-tax | $605 |
(1)Excludes the portion related to non-controlling interests of $(116). The impact of updates to actuarial methods and assumptions on pre-tax fulfilment cash flows,
including the portion related to non-controlling interests, would be $489.
Hong Kong health insurance product reserving approach
An update to the pricing philosophy on certain health insurance products in Hong Kong led to a change in the IFRS 17
measurement model from the Premium Allocation Approach to the General Measurement Model, which requires all future cash
flows to be included in the fulfilment cash flows, amounting to a decrease in pre-tax fulfilment cash flows of $463.
Methodology and other updates
Methodology and other updates resulted in a decrease in pre-tax fulfilment cash flows of $207.
The decrease was mainly driven by annual yield and parameter updates to the Company’s valuation models for participating
products in Asia and Canada. This was partially offset by various other valuation models updates in the U.S. to non-participating
products that netted to a residual increase in fulfilment cash flows.
Lapse and policyholder behaviour updates
Updates to lapses and policyholder behaviour assumptions resulted in an increase in pre-tax fulfilment cash flows of $181.
The increase was mainly driven by the review of lapse assumptions in Singapore as well as other smaller updates. The
Singapore update reflected higher lapse experience on the Company’s index-linked and universal life products. This was partially
offset by the impact of the lapse review on term insurance products in Canada.
Long-term care triennial review
U.S. Insurance completed a comprehensive long-term care (“LTC”) experience study. The review included all aspects of claim
assumptions, as well as the progress on future premium increases and approved premium increases in excess of prior
assumptions. The impact of the LTC review was a decrease in pre-tax fulfilment cash flows of $77.
1 The mortality rate of LTC policyholders who are currently not on claim.
| 79 | 2025 Annual Report | Consolidated Financial Statements |
|---|
The overall experience study led to a $1.9 billion (US$1.4 billion) increase in pre-tax fulfilment cash flows for claim costs
following a review of morbidity, mortality and lapse assumptions. This was mainly driven by higher utilization of benefits due to
the impact of higher inflation in the cost-of-care, and also reflects the benefit of in-force management initiatives related to fraud,
waste and abuse programs. The impact from utilization was partially offset by updates to reflect higher terminations. The impacts
of updating incidence, active life mortality1, lapse and other refinements were all relatively small.
The review of assumed future premium increases resulted in a $1.5 billion (US$1.1 billion) decrease in pre-tax fulfilment cash
flows. This reflects expected future net premium increases that are due to the outstanding amounts from prior state filings as well
as to the Company’s 2025 review of morbidity, mortality, and lapse assumptions. Since the last triennial review in 2022, the
Company has received actual premium increase approvals of $3.2 billion pre-tax (US$2.3 billion pre-tax) on a present value
basis. This exceeds the amount of premium increases the Company assumed in the pre-tax fulfilment cash flows by $0.5 billion
(US$0.3 billion) at that time.
Mortality and morbidity updates
Mortality and morbidity updates resulted in a decrease in pre-tax fulfilment cash flows of $39.
The decrease was mainly driven by a morbidity study of group long-term disability benefits in Canada related to claim
termination, partially offset by other items that netted to a modest residual increase in fulfilment cash flows.
Impact of updates to actuarial methods and assumptions on pre-tax fulfilment cash flows, net income attributed to
shareholders, CSM and OCI by segment
The impact of updates to actuarial methods and assumptions in Canada resulted in a decrease in pre-tax fulfilment cash flows of
$382. The decrease was primarily driven by the impact of annual updates to the Company’s valuation models for participating
products, the lapse review on term insurance products as well as the review of morbidity assumptions for group long-term
disability benefits. These updates resulted in an increase in pre-tax net income attributed to shareholders of $80 ($58 post-tax),
an increase in CSM of $348, and an increase in pre-tax other comprehensive income attributed to shareholders of $98 ($71 post-
tax).
The impact of updates to actuarial methods and assumptions in the U.S. resulted in an increase in pre-tax fulfilment cash flows
of $179. The increase was primarily driven by a number of valuation model updates, partially offset by the impact of the LTC
triennial review. These updates resulted in a decrease in pre-tax net income attributed to shareholders of $298 ($235 post-tax),
an increase in CSM of $43, and an increase in pre-tax other comprehensive income attributed to shareholders of $75 ($60 post-
tax).
The impact of updates to actuarial methods and assumptions in Asia resulted in a decrease in pre-tax fulfilment cash flows of
$418. The decrease was primarily driven by the impact of the change in the IFRS 17 measurement model on certain health
insurance products in Hong Kong and the impact of annual updates to the Company’s valuation models for participating
products, partly offset by a review of lapse assumptions for certain products in Singapore. These updates resulted in a decrease
in pre-tax net income attributed to shareholders of $26 ($39 post-tax), an increase in CSM of $704, and a decrease in pre-tax
other comprehensive income attributed to shareholders of $224 ($203 post-tax).
The impact of updates to actuarial methods and assumptions in Corporate and Other (which includes the Company’s property
and casualty reinsurance businesses, run-off insurance operations including variable annuities and health, and consolidation
adjustments including intercompany eliminations) resulted in an increase in pre-tax fulfilment cash flows of $16. These updates
resulted in no impact to pre-tax or post-tax net income attributed to shareholders, a decrease in CSM of $15 and a decrease in
pre-tax other comprehensive income attributed to shareholders of $1 ($1 post-tax).
2024 Review of Actuarial Methods and Assumptions
The completion of the 2024 annual review of actuarial methods and assumptions resulted in a decrease in pre-tax fulfilment cash
flows of $174, excluding the portion related to non-controlling interests. These updates resulted in a decrease in pre-tax net
income attributed to shareholders of $250 ($199 post-tax), an increase in pre-tax net income attributed to participating
policyholders of $29 ($21 post-tax), a decrease in CSM of $421, an increase in pre-tax other comprehensive income attributed to
shareholders of $771 ($632 post-tax), and an increase in pre-tax other comprehensive income attributed to participating
policyholders of $45 ($32 post-tax).
| 80 |
|---|
Impact of updates to actuarial methods and assumptions on pre-tax fulfilment cash flows(1)
| For the year ended December 31, 2024 | Total |
|---|---|
| Lapse and policyholder behaviour updates | $620 |
| Reinsurance contract and other risk adjustment review | 427 |
| Expense updates | (406) |
| Financial related updates | (386) |
| Mortality and morbidity updates | (273) |
| Methodology and other updates | (156) |
| Impact of updates to actuarial methods and assumptions, on pre-tax fulfilment cash flows | $(174) |
(1)Excludes the portion related to non-controlling interests of $(215) The impact of updates to actuarial methods and assumptions on pre-tax fulfilment cash flows,
including the portion related to non-controlling interests, would be $(389).
Impact of updates to actuarial methods and assumptions on pre-tax net income attributed to shareholders, pre-tax net
income attributed to participating policyholders, OCI and CSM(1)
| For the year ended December 31, 2024 | Total |
|---|---|
| Portion recognized in net income (loss) attributed to: | |
| Participating policyholders | $29 |
| Shareholders | (250) |
| (221) | |
| Portion increasing (decreasing) CSM | (421) |
| Portion recognized in OCI attributed to: | |
| Participating policyholders | 45 |
| Shareholders | 771 |
| 816 | |
| Impact of updates to actuarial methods and assumptions, pre-tax | $174 |
(1)Excludes the portion related to non-controlling interests of $215. The impact of updates to actuarial methods and assumptions on pre-tax fulfilment cash flows,
including the portion related to non-controlling interests, would be $389.
Lapse and policyholder behaviour updates
Updates to lapses and policyholder behaviour assumptions resulted in an increase in pre-tax fulfilment cash flows of $620.
The increase was primarily driven by a detailed review of the lapse assumptions for the Company’s non-participating products in
its U.S. life insurance business and its International High Net Worth business in Asia segment. For U.S. protection products,
lapse rates declined during the COVID-19 pandemic and continue to remain low, while for U.S. indexed universal life, U.S. bank-
owned life insurance, and Asia’s International High Net Worth business, lapse rates increased due to the impact of higher short-
term interest rates. The Company updated its lapse assumptions to reflect these experience trends. The ultimate lapse rates for
products with no-lapse guarantees were not changed.
Reinsurance contract and other risk adjustment review
The review of the Company’s reinsurance contracts and risk adjustment, excluding changes that were a direct result of other
assumption updates, resulted in an increase in pre-tax fulfilment cash flows of $427.
The increase was driven by updates to the Company’s reinsurance contract fulfilment cash flows to reflect current reinsurance
market conditions and the resulting expected cost on older U.S. mortality reinsurance, partially offset by updates to the
Company’s risk adjustment methodology in North America related to non-financial risk.
The Company’s overall risk adjustment continues to be within the 90 – 95% confidence level.
Expense updates
Expense updates resulted in a decrease in pre-tax fulfilment cash flows of $406.
The decrease was driven by a detailed review of the Company’s global expenses, including investment expenses. The Company
aligned them with its current cost structure and included the impact of changes in classification of certain expenses from directly
attributable to non-directly attributable.
Financial related updates
Financial related updates resulted in a decrease in pre-tax fulfilment cash flows of $386.
The decrease was driven by a review of the discount rates used in the valuation of the Company’s non-participating business,
which included increases to ultimate risk-free rates in the U.S. to align with historical averages, as well as updates to parameters
used to determine illiquidity premiums. This was partially offset by refinements to crediting rate projections on certain U.S.
universal life products.
| 81 | 2025 Annual Report | Consolidated Financial Statements |
|---|
Mortality and morbidity updates
Mortality and morbidity updates resulted in a decrease in pre-tax fulfilment cash flows of $273.
The decrease was driven by morbidity updates to health insurance products in Hong Kong to reflect lower hospital claims on
certain business that the Company accounts for under the general measurement model, partially offset by updates to mortality
and morbidity assumptions on critical illness products in Hong Kong to reflect emerging experience.
Methodology and other updates
Methodology and other updates resulted in a decrease in pre-tax fulfilment cash flows of $156.
The decrease was driven by the impact of annual updates to the Company’s valuation models for participating products in Asia
and Canada reflecting higher interest rates during the year, partially offset by various other smaller items that netted to an
increase in fulfilment cash flows.
Impact of updates to actuarial methods and assumptions on pre-tax fulfilment cash flows, net income attributed to
shareholders, CSM and OCI by segment
The impact of updates to actuarial methods and assumptions in Canada resulted in a decrease in pre-tax fulfilment cash flows of
$266. The decrease was primarily driven by updates to the risk adjustment methodology related to non-financial risks and the
review of the discount rates used in the valuation of non-participating business. These updates resulted in an increase in pre-tax
net income attributed to shareholders of $3 ($2 post-tax), an increase in CSM of $222, and a decrease in pre-tax other
comprehensive income attributed to shareholders of $15 ($10 post-tax).
The impact of updates to actuarial methods and assumptions in the U.S. resulted in an increase in pre-tax fulfilment cash flows
of $895. The increase was primarily driven by the net impact of updates to the Company’s reinsurance contract fulfilment cash
flows and risk adjustment methodology related to non-financial risks, a detailed review of the lapse assumptions in its life
insurance business, and refinements to its crediting rate projections on certain universal life products, partially offset by a review
of the discount rates used in the valuation of non-participating business. These updates resulted in a decrease in pre-tax net
income attributed to shareholders of $256 ($202 post-tax), a decrease in CSM of $1,228, and an increase in pre-tax other
comprehensive income attributed to shareholders of $589 ($466 post-tax).
The impact of updates to actuarial methods and assumptions in Asia resulted in a decrease in pre-tax fulfilment cash flows of
$818. The decrease was primarily driven by the impact of morbidity updates to certain health insurance products in Hong Kong
to reflect emerging experience, updates from the Company’s detailed review of global expenses, including investment expenses,
as well as the impact of annual updates to its valuation models for participating products, partially offset by a review of lapse
assumptions for the International High Net Worth business. These updates resulted in a decrease in pre-tax net income
attributed to shareholders of $4 ($5 post-tax), an increase in CSM of $591, and an increase in pre-tax other comprehensive
income attributed to shareholders of $213 ($190 post-tax).
The impact of updates to actuarial methods and assumptions in Corporate and Other (which includes the Company’s property
and casualty reinsurance businesses, run-off insurance operations including variable annuities and health, and consolidation
adjustments including intercompany eliminations) resulted in an increase in pre-tax fulfilment cash flows of $15. These updates
resulted in an increase in pre-tax net income attributed to shareholders of $7 ($6 post-tax), a decrease in CSM of $6, and a
decrease in pre-tax other comprehensive income attributed to shareholders of $16 ($14 post-tax).
(j)Composition of Underlying Items
The following sets out the composition and fair value of the underlying items supporting the Company’s liabilities for direct
participation contracts as at the dates presented.
Participating Policies
| As at December 31, | 2025 | 2024 |
|---|---|---|
| Underlying assets | ||
| Debt securities | $60,128 | $54,238 |
| Public equities | 26,460 | 19,846 |
| Mortgages | 4,934 | 4,535 |
| Private placements | 9,699 | 8,398 |
| Real estate | 5,179 | 4,525 |
| Other(1) | 33,070 | 31,952 |
| Total | $139,470 | $123,494 |
(1)Other for participating life insurance contracts include derivatives, reinsurance contract held assets, and other invested assets.
Variable Annuities and Unit-Linked
The Company also issues variable annuities and unit-linked contracts that are accounted for as insurance contracts with direct
participating features. The fair value of underlying assets is reported in insurance contract liabilities for the account of segregated
fund holders and includes investments in segregated funds of $69,473, and $25,264 (2024 – $72,061, and $18,771) for variable
annuities and unit-linked, respectively.
| 82 |
|---|
(k)Asset for Insurance Acquisition Cash Flow
The following table presents the expected future derecognition of asset for insurance acquisition cash flow as at the dates
presented.
| 2025 | 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| As at December 31, | Less than<br><br>1 year | 1 to 5<br><br>years | More than<br><br>5 years | Total | Less than<br><br>1 year | 1 to 5<br><br>years | More than<br><br>5 years | Total |
| Asia | $18 | $36 | $17 | $71 | $65 | $168 | $57 | $290 |
| Canada | 73 | 223 | 331 | 627 | 72 | 213 | 303 | 588 |
| Total | $91 | $259 | $348 | $698 | $137 | $381 | $360 | $878 |
(l)Insurance and Reinsurance Contracts Contractual Obligations – Maturity Analysis and Amounts Payable on
Demand
The tables below represent the maturities of the insurance contract and reinsurance contract held liabilities as at the dates
presented.
| As at December 31, 2025<br><br>Payments due by period | Less than 1<br><br>year | 1 to 2 years | 2 to 3 years | 3 to 4 years | 4 to 5 years | Over 5 years | Total | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Insurance contract liabilities(1) | $3,783 | $4,167 | $8,129 | $11,588 | $14,676 | $1,396,865 | $1,439,208 | |||||||||
| Reinsurance contract held liabilities(1) | 254 | 535 | 460 | 429 | 386 | (11,008) | (8,944) | As at December 31, 2024<br><br>Payments due by period | Less than 1<br><br>year | 1 to 2 years | 2 to 3 years | 3 to 4 years | 4 to 5 years | Over 5 years | Total | |
| --- | --- | --- | --- | --- | --- | --- | --- | |||||||||
| Insurance contract liabilities(1) | $4,223 | $3,711 | $6,266 | $8,741 | $12,644 | $1,348,354 | $1,383,939 | |||||||||
| Reinsurance contract held liabilities(1) | 250 | 395 | 530 | 419 | 373 | (11,450) | (9,483) |
(1)Insurance contract liabilities 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 and exclude amounts from insurance contract liabilities for account of segregated fund holders. These estimated cash flows are
based on the best estimate assumptions used in the determination of insurance contract liabilities. These amounts are undiscounted. Reinsurance contract held
liabilities cash flows include estimates related to the timing and payment of future reinsurance premiums offset by recoveries on in-force 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.
The amounts from insurance contract liabilities that are payable on demand are set out below as at the dates presented.
| 2025 | 2024 | |||
|---|---|---|---|---|
| As at December 31, | Amounts<br><br>payable on<br><br>demand | Carrying<br><br>amount | Amounts<br><br>payable on<br><br>demand | Carrying<br><br>amount |
| Asia | $133,552 | $163,678 | $121,197 | $131,829 |
| Canada | 34,530 | 55,492 | 31,100 | 53,224 |
| U.S. | 46,824 | 66,328 | 48,918 | 66,524 |
| Total | $214,906 | $285,498 | $201,215 | $251,577 |
The amounts payable on demand represent the policyholders’ cash and / or account values less applicable surrender fees as at
the time of the reporting date. Segregated fund insurance liabilities for account of segregated fund holders are excluded from the
amounts payable on demand and the carrying amount.
(m)Reinsurance Transactions
Agreement with Reinsurance Group of America
On November 20, 2024, the Company announced it entered into an agreement with Reinsurance Group of America,
Incorporated (“RGA”) to reinsure policies from the U.S. LTC and U.S. structured settlement legacy blocks. Under the terms of the
transaction, the Company retained responsibility for the administration of the policies, with no intended impact to policyholders.
The transaction was structured as a 75% quota share for both the LTC and structured settlements blocks.
The transaction closed on January 2, 2025, with an effective date of January 1, 2025, with the Company transferring invested
assets of $5.4 billion and reinsuring insurance contract liabilities of $5.2 billion. The Company recognized a reinsurance
contractual service margin of $201.
Agreement with RGA Life Reinsurance Company of Canada
On March 25, 2024, the Company announced it entered into an agreement with RGA Life Reinsurance Company of Canada
(“RGA Canada”) to reinsure policies from its Canadian universal life block. Under the terms of the transaction, the Company
retained responsibility for the administration of the policies, with no intended impact to policyholders. The transaction was
structured as coinsurance with a 100% quota share.
| 83 | 2025 Annual Report | Consolidated Financial Statements |
|---|
The transaction closed on April 2, 2024, with the Company transferring invested assets measured at FVOCI of $5.5 billion and
reinsuring insurance contract liabilities of $5.4 billion. The Company recognized a reinsurance contractual service margin of
$213.
Agreement with Global Atlantic Financial Group
On December 11, 2023, the Company announced it entered into agreements with Global Atlantic Financial Group Ltd. (“GA”) to
reinsure policies from the U.S. long-term care (“LTC”), U.S. structured settlements, and Japan whole life legacy blocks. Under
the terms of the transaction, the Company retained responsibility for the administration of the policies, with no intended impact to
policyholders. The transaction was structured as coinsurance of an 80% quota share for the LTC block and 100% quota shares
for the other blocks.
The transaction closed on February 22, 2024, with the Company transferring invested assets measured at FVOCI of $13.4 billion
and reinsuring insurance and investment contract net liabilities of $13.2 billion. The Company recognized a reinsurance
contractual service margin of $308 and financial assets of $134.
Note 7 Investment Contract Liabilities
Investment contract liabilities are contractual financial obligations of the Company that do not contain significant insurance risk.
Those contracts are subsequently measured either at fair value or at amortized cost.
(a)Investment Contract Liabilities Measured at Fair Value
Investment contract liabilities measured at fair value include certain investment savings and pension products which are
designated as FVTPL on initial recognition. The Company has no investment contract liabilities that are mandatorily designated
as FVTPL.
The following table presents the movement in investment contract liabilities measured at fair value.
| For the years ended December 31, | 2025 | 2024 |
|---|---|---|
| Balance, excluding those for account of segregated fund holders, January 1 | $808 | $749 |
| New contracts | 125 | 70 |
| Changes in market conditions | 177 | 67 |
| Redemptions, surrenders and maturities | (159) | (154) |
| Impact of changes in foreign exchange rates | (43) | 76 |
| Balance, excluding those for account of segregated fund holders, December 31 | 908 | 808 |
| Investment contract liabilities for account of segregated fund holders | 332,248 | 309,443 |
| Balance, December 31 | $333,156 | $310,251 |
The amount due to contract holders is contractually determined based on specified assets and therefore, the fair value of the
liabilities is subject to asset specific performance risk but not to the Company’s own credit risk, being fully collateralized by the
specified assets. The Company has determined that any residual credit risk is insignificant and has no significant impact on the
fair value of the liabilities.
(b)Investment Contract Liabilities Measured at Amortized Cost
Investment contract liabilities measured at amortized cost include fixed annuity products that provide guaranteed income
payments for contractually determined periods and are not contingent on survivorship.
The following table presents carrying and fair values of investment contract liabilities measured at amortized cost, by reporting
segment.
| 2025 | 2024 | |||
|---|---|---|---|---|
| As at December 31, | Amortized cost | Fair value | Amortized cost | Fair value |
| Asia | $229 | $222 | $325 | $315 |
| Canada | 7,320 | 7,287 | 7,571 | 7,548 |
| U.S. | 1,240 | 1,235 | 1,406 | 1,375 |
| GWAM | 4,440 | 4,807 | 3,388 | 3,557 |
| Investment contract liabilities | $13,229 | $13,551 | $12,690 | $12,795 |
| 84 | ||||
| --- |
The following table presents the movement in investment contract liabilities measured at amortized cost, by business activity.
| For the years ended December 31, | 2025 | 2024 |
|---|---|---|
| Balance, January 1 | $12,690 | $11,067 |
| Policy deposits | 2,887 | 3,218 |
| Interest | 337 | 316 |
| Withdrawals | (2,443) | (2,240) |
| Fees | (1) | - |
| Impact of changes in foreign exchange rates | (246) | 351 |
| Other | 5 | (22) |
| Balance, December 31 | $13,229 | $12,690 |
Carrying value reflects amortization at rates that exactly discount the projected cash flows to the net carrying amount of the
liabilities at the dates of issue.
Fair value is determined by projecting cash flows according to the contract terms and discounting the cash flows at current
market rates adjusted for the Company’s own credit standing. As at December 31, 2025 and 2024, the fair value of all investment
contract liabilities was determined using Level 2 valuation techniques.
(c)Investment Contracts Contractual Obligations
The following table presents the Company’s contractual obligations and commitments relating to investment contract liabilities
including those for account of segregated fund holders as at December 31, 2025 and 2024.
Investment contract liabilities(1)
| As at December 31,<br><br>Payments due by period | Less than 1<br><br>year(2) | 1 to 3 years | 3 to 5 years | Over 5<br><br>years | Total |
|---|---|---|---|---|---|
| 2025 | $340,567 | $2,372 | $1,183 | $3,375 | $347,497 |
| 2024 | 316,119 | 2,766 | 1,170 | 2,738 | 322,793 |
(1)Due to the nature of the products, the timing of net cash flows may be before contract maturity. Cash flows are undiscounted.
(2)Includes amounts which have no specific maturity, being payable on demand.
(d)Reinsurance Contract Assets Backing Investment Contract Liabilities
The Company holds reinsurance contracts backing investment contract liabilities described above. These reinsurance contracts
do not expose the reinsurer to significant insurance risk and are measured at FVOCI or amortized cost. There are no reinsurance
contract assets measured at FVTPL.
Fair value for all reinsurance contract assets backing investment contract liabilities is determined by projecting cash flows
according to the contract terms and discounting these cash flows at current market rates. As at December 31, 2025 and 2024,
the fair value of all reinsurance contract assets backing investment contract liabilities was determined using Level 2 valuation
techniques.
As at December 31, 2025, the fair value of reinsurance contract assets measured at FVOCI was $620 (2024 – $669). The fair
value and carrying value of reinsurance contract assets measured at amortized cost were $934 and $889, respectively (2024 –
$978 and $1,052, respectively).
For contracts measured at FVOCI, interest income of $28 was recorded in the Consolidated Statements of Income and changes
in fair value of $12 was recorded in OCI for the year ended December 31, 2025 (2024 – $29 and $24, respectively). There were
no amounts reclassified from AOCI to the Consolidated Statements of Income during the years presented.
For contracts measured at amortized cost, interest income of $40 was recorded in the Consolidated Statements of Income for
the year ended December 31, 2025 (2024 – $41).
Note 8 Risk Management
Manulife offers insurance, wealth and asset management products and other financial services, which subjects the Company to
a broad range of risks. Manulife manages these risks within an enterprise-wide risk management framework. Manulife’s goal in
managing risk is to strategically optimize risk taking and risk management to support long-term revenue, earnings and capital
growth. Manulife seeks to achieve this by capitalizing on business opportunities and strategies with appropriate risk/return
profiles; ensuring sufficient management expertise is in place to effectively execute strategies, and to identify, understand and
manage underlying inherent risks; ensuring strategies and activities align with its corporate and ethical standards and operational
capabilities; pursuing opportunities and risks that enhance diversification; and in making all risk taking decisions with analyses of
inherent risks, risk controls and mitigations, and risk/return trade-off. The following disclosures are in accordance with IFRS 7
“Financial Instruments: Disclosures”.
| 85 | 2025 Annual Report | Consolidated Financial Statements |
|---|
(a)Market and Liquidity Risk
Market risk is the risk of loss resulting from market price volatility, interest rate change, credit and swap spread changes, and
adverse foreign currency exchange rate movements. Market price volatility primarily relates to changes in prices of publicly
traded equities and alternative long-duration assets. The profitability of the Company’s insurance and annuity products, as well
as the fees the Company earns in its investment management business, are subject to market risk.
Liquidity risk is the risk of loss resulting from the inability to access sufficient funds or liquid assets to meet expected and
unexpected cash and collateral demands.
Please read below for details on factors that could impact the level of market and liquidity risk and the strategies used to manage
this risk:
Market and Liquidity Risk Management Strategy
Market and liquidity risk management strategy is governed by the Global Asset Liability Committee which oversees the market
and liquidity risk program. The Company’s overall strategy to manage its market and liquidity risks incorporates several
component strategies, each targeted to manage one or more of the market and liquidity risks arising from the Company’s
businesses. At an enterprise level, these strategies are designed to manage the Company’s aggregate exposures to market &
liquidity risks against limits associated with earnings and capital volatility.
The following table outlines the Company’s key market and liquidity risks and identifies the risk management strategies which
contribute to managing these risks.
| Risk Management Strategy | Key Market & Liquidity Risk | ||||
|---|---|---|---|---|---|
| Public<br><br>Equity Risk | Interest Rate<br><br>and Spread Risk | ALDA<br><br>Risk | Foreign Currency<br><br>Exchange Risk | Liquidity Risk | |
| Product design and pricing | ü | ü | ü | ü | ü |
| Dynamic hedging | ü | ü | ü | ü | |
| Macro equity risk hedging | ü | ü | ü | ||
| Asset liability management | ü | ü | ü | ü | ü |
| Foreign currency exchange management | ü | ü | |||
| Liquidity risk management | ü |
Product Design and Pricing Strategy
The Company’s policies, standards, and guidelines, with respect to product design and pricing, are designed with the objective of
aligning its product offerings with its risk taking philosophy and risk appetite, and in particular, ensuring that incremental risk
generated from new sales aligns with its strategic risk objectives and risk limits. The specific design features of Manulife’s
product offerings, including level of benefit guarantees, policyholder options, fund offerings and availability restrictions as well as
its associated investment strategies, help to mitigate the level of underlying risk. Manulife regularly reviews and modifies key
features within its product offerings, including premiums and fee charges with a goal of meeting profit targets and staying within
risk limits. Certain of the Company’s general fund adjustable benefit products have minimum rate guarantees. The rate
guarantees for any particular policy are set at the time the policy is issued and governed by insurance regulation in each
jurisdiction where the products are sold. The contractual provisions allow crediting rates to be reset at pre-established intervals
subject to the established minimum crediting rate guarantees. The Company may partially mitigate the interest rate exposure by
setting new rates on new business and by adjusting rates on in-force business where permitted. In addition, the Company
partially mitigates this interest rate risk through its asset liability management process, product design elements, and crediting
rate strategies.
Hedging Strategies for Public Equity Risks
The Company’s exposure to movement in public equity market values primarily arises from insurance contract liabilities related to
variable annuity guarantees and general fund public equity investments.
Manulife seeks to manage public equity risk arising from exposures in its insurance contract liabilities through the dynamic and
macro equity risk hedging strategy.
Variable Annuity Dynamic Hedging Strategy
The variable annuity dynamic hedging strategy is designed to hedge the sensitivity of variable annuity guarantee insurance
contract liabilities to fund performance (both public equity and bond funds) and interest rate movements. The objective of the
variable annuity dynamic hedging strategy is to offset, as closely as possible, the change in the economic value of guarantees
with the profit and loss from the hedge asset portfolio.
The Company’s variable annuity dynamic hedging program uses a variety of exchange-traded and over-the-counter (“OTC”)
derivative contracts to offset the change in value of variable annuity guarantees. The main derivative instruments used are equity
index futures, government bond futures, currency futures, interest rate swaps, total return swaps, equity options, and interest rate
swaptions. The hedge instruments’ positions against insurance contract liabilities are continuously monitored as market
conditions change. As necessary, the hedge asset positions will be dynamically rebalanced to stay within established limits. The
Company may also utilize other derivatives with the objective to improve hedge effectiveness opportunistically.
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The Company’s variable annuity guarantee dynamic hedging strategy is not designed to completely offset the sensitivity of
insurance contract liabilities to all risks associated with the guarantees embedded in these products. The profit (loss) on the
hedge instruments will not completely offset the underlying losses (gains) related to the guarantee liabilities hedged because:
•Policyholder behaviour and mortality experience are not hedged;
•Risk adjustment related to cost of guarantees in the insurance contract liabilities is largely hedged;
•A portion of interest rate risk is not hedged;
•Credit spreads may widen and actions might not be taken to adjust accordingly;
•Fund performance on a small portion of the underlying funds is not hedged due to lack of availability of effective exchange-
traded hedge instruments;
•Performance of the underlying funds hedged may differ from the performance of the corresponding hedge instruments;
•Correlations between interest rates and equity markets could lead to unfavourable material impacts;
•Unfavourable hedge rebalancing costs can be incurred during periods of high volatility from equity markets, bond markets,
and / or interest rates, which is magnified when these impacts occur concurrently; and
•Not all other risks are hedged.
Differences in the profit (loss) on the hedge instruments versus the underlying losses (gains) related to the guarantee liabilities
hedged are reported in CSM.
Manulife seeks to manage interest rate risk arising from the Company’s variable annuity business that is not dynamically hedged
through the Company's asset liability management strategy.
Macro Equity Risk Hedging Strategy
The objective of the macro equity risk hedging program is to maintain the Company’s overall earnings sensitivity to public equity
market movements within the Board approved risk appetite limits. The macro equity risk hedging program is designed to hedge
earnings sensitivity due to movements in public equity markets arising from all sources (outside of dynamically hedged
exposures). Sources of equity market sensitivity addressed by the macro equity risk hedging program include general fund equity
holdings backing guaranteed, and adjustable liabilities.
Asset Liability Management Strategy
Manulife’s asset liability management strategy is designed to help ensure that the market risks embedded in its assets and
liabilities held in the Company’s general fund are effectively managed and that risk exposures arising from these assets and
liabilities are maintained within risk limits. The embedded market risks include risks related to the level and movement of interest
rates and credit and swap spreads, public equity market performance, ALDA performance, and foreign currency exchange rate
movements.
General fund product liabilities are categorized into groups with similar characteristics in order to support them with a specific
asset strategy. The Company seeks to align the asset strategy for each group to the premium and benefit patterns, policyholder
options and guarantees, and crediting rate strategies of the products they support. The strategies are set using portfolio analysis
techniques intended to optimize returns, subject to considerations related to regulatory and economic capital requirements, and
risk tolerances. They are designed to achieve broad diversification across asset classes and individual investment risks while
being suitably aligned with the liabilities they support. The strategies encompass asset mix, quality rating, term profile, liquidity,
currency, and industry concentration targets.
Foreign Currency Exchange Risk Management Strategy
Manulife’s policy is to generally match the currency of its assets with the currency of the liabilities they support. Where assets
and liabilities are not currency matched, the Company seeks to hedge this exposure where appropriate to stabilize its earnings
and consolidated capital positions and remain within its enterprise foreign exchange risk limits.
Liquidity Risk Management Strategy
Global liquidity management policies and procedures are designed to provide adequate liquidity to cover cash and collateral
obligations as they come due, and to sustain and grow operations in both normal and stressed conditions. They consider legal,
regulatory, tax, operational or economic impediments to inter-entity funding. The asset mix of the Company’s balance sheet takes
into account the need to hold adequate unencumbered and appropriate liquid assets to satisfy the requirements arising under
stressed scenarios and to allow Manulife’s liquidity ratios to remain strong. Manulife manages liquidity centrally and closely
monitors the liquidity positions of its principal subsidiaries.
Manulife seeks to mitigate liquidity risk by diversifying its business across different products, markets, geographical regions, and
policyholders. The Company designs insurance products to encourage policyholders to maintain their policies in-force, to help
generate a diversified and stable flow of recurring premiums. The Company designs the policyholder termination features with
the goal of mitigating the financial exposure and liquidity risk related to unexpected policyholder terminations. The Company
establishes and implements investment strategies intended to match the term profile of the assets to the liabilities they support,
taking into account the potential for unexpected policyholder terminations and resulting liquidity needs. Liquid assets represent a
large portion of the Company’s total assets. Manulife aims to reduce liquidity risk in the Company’s businesses by diversifying its
funding sources and appropriately managing the term structure of its funding. The Company forecasts and monitors daily
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operating liquidity and cash movements in various individual entities and operations as well as centrally, aiming to ensure
liquidity is available and cash is employed optimally.
The Company also maintains centralized cash pools and access to other sources of liquidity and contingent liquidity such as
repurchase funding agreements. Manulife’s centralized cash pools consist of cash or near-cash, high quality short-term
investments that are continually monitored for their credit quality and market liquidity.
Manulife has established a variety of contingent liquidity sources. These include, among others, a
$500
committed unsecured
revolving credit facility with certain Canadian chartered banks available for the Company, and a
US$500
committed unsecured
revolving credit facility with certain U.S. banks available to the Company and certain of its U.S. subsidiaries. There were no
outstanding borrowings under these facilities as at December 31, 2025 (2024 – $nil). In addition, John Hancock Life Insurance
Company (U.S.A.) (“JHUSA”) is a member of the Federal Home Loan Bank of Indianapolis (“FHLBI”), which enables the
Company to obtain loans from FHLBI as an alternative source of liquidity that is collateralizable by qualifying mortgage loans,
mortgage-backed securities, municipal bonds, and U.S. Treasury and Agency securities. As at December 31, 2025, JHUSA had
an estimated maximum borrowing capacity of US$3.8 billion (
2024
– US$3.8 billion) based on regulatory limitations with an
outstanding balance of
US$500
(
2024
–
US$500
) under the FHLBI facility.
The following table outlines the maturity of the Company’s significant financial liabilities.
Maturity of financial liabilities
| As at December 31, 2025 | Less than<br><br>1 year | 1 to 3<br><br>years | 3 to 5<br><br>years | Over 5<br><br>years | Total |
|---|---|---|---|---|---|
| Long-term debt(1) | $1,741 | $958 | $- | $4,986 | $7,685 |
| Capital instruments(1) | - | - | - | 6,990 | 6,990 |
| Derivatives | 2,270 | 1,746 | 875 | 9,456 | 14,347 |
| Deposits from Bank clients(2) | 17,462 | 4,441 | 2,804 | - | 24,707 |
| Lease liabilities | 101 | 138 | 49 | 46 | 334 |
(1)The amounts shown above are net of the related unamortized deferred issue costs.
(2)Carrying value and fair value of deposits from Bank clients as at December 31, 2025 were $24,707 and $24,945, respectively (2024 – $22,063 and $22,270,
respectively). Fair value is determined by discounting contractual cash flows, using market interest rates currently offered for deposits with similar terms and
conditions. All deposits from Bank clients were categorized in Level 2 of the fair value hierarchy (2024 – Level 2).
Through the normal course of business, pledging of assets is required to comply with jurisdictional regulatory and other
requirements including collateral pledged to partially mitigate derivative counterparty credit risk, assets pledged to exchanges as
initial margin, and assets held as collateral for repurchase funding agreements. Total unencumbered assets were $537.4 billion
as at December 31, 2025 (2024 – $516.6 billion).
(b)Market Risk Sensitivities and Market Risk Exposure Measures
Variable Annuity and Segregated Fund Guarantees Sensitivities and Risk Exposure Measures
Guarantees on variable annuity products and segregated funds may include one or more of death, maturity, income and
withdrawal guarantees. Variable annuity and segregated fund guarantees are contingent and only payable upon the occurrence
of the relevant event, if fund values at that time are below guarantee values. Depending on future equity market levels, liabilities
on current in-force business are to expected to be recognized primarily within the next 20 years.
Manulife seeks to mitigate a portion of the risks embedded in the Company’s retained (i.e., net of reinsurance) variable annuity
and segregated fund guarantee business through the combination of dynamic and macro hedging strategies (see “Publicly
traded equity performance risk sensitivities and exposure measures” below).
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The table below shows selected information regarding the Company’s variable annuity and segregated fund investment-related
guarantees, gross and net of reinsurance.
Variable annuity and segregated fund guarantees, net of reinsurance
| 2025 | 2024 | |||||
|---|---|---|---|---|---|---|
| As at December 31, | Guarantee<br><br>value(1) | Fund value | Net amount at<br><br>risk(1),(2),(3) | Guarantee<br><br>value(1) | Fund value | Net amount at<br><br>risk(1),(2),(3) |
| Guaranteed minimum income benefit | $3,142 | $2,534 | $708 | $3,628 | $2,780 | $918 |
| Guaranteed minimum withdrawal benefit | 29,664 | 31,071 | 2,643 | 33,473 | 33,539 | 3,339 |
| Guaranteed minimum accumulation benefit | 18,908 | 19,208 | 55 | 18,987 | 19,097 | 70 |
| Gross living benefits(4) | 51,714 | 52,813 | 3,406 | 56,088 | 55,416 | 4,327 |
| Gross death benefits(5) | 7,892 | 19,924 | 486 | 8,612 | 19,851 | 644 |
| Total gross of reinsurance | 59,606 | 72,737 | 3,892 | 64,700 | 75,267 | 4,971 |
| Living benefits reinsured | 20,518 | 21,932 | 2,351 | 23,768 | 23,965 | 3,016 |
| Death benefits reinsured | 3,058 | 2,620 | 195 | 3,430 | 2,776 | 289 |
| Total reinsured | 23,576 | 24,552 | 2,546 | 27,198 | 26,741 | 3,305 |
| Total, net of reinsurance | $36,030 | $48,185 | $1,346 | $37,502 | $48,526 | $1,666 |
(1)Guarantee Value and Net Amount at Risk in respect of guaranteed minimum withdrawal business in Canada and the U.S. reflect the time value of money of these
claims.
(2)Amount at risk (in-the-money amount) is the excess of guarantee values over fund values on all policies where the guarantee value exceeds the fund value. For
guaranteed minimum death benefit, the amount at risk is defined as the current guaranteed minimum death benefit in excess of the current account balance and
assumes that all claims are immediately payable. In practice, guaranteed death benefits are contingent and only payable upon the eventual death of policyholders
if fund values remain below guarantee values. For guaranteed minimum withdrawal benefit, the amount at risk assumes that the benefit is paid as a lifetime
annuity commencing at the earliest contractual income start age. These benefits are also contingent and only payable at scheduled maturity/income start dates in
the future, if the policyholders are still living and have not terminated their policies and fund values remain below guarantee values. For all guarantees, the amount
at risk is floored at zero at the single contract level.
(3)The amount at risk net of reinsurance at December 31, 2025 was $1,346 (December 31, 2024 –
$1,666
) of which: US$244 (December 31, 2024 –
US$293
) was
on the Company’s U.S. business, $835 (December 31, 2024 –
$1,021
) was on the Company’s Canadian business, US$80 (December 31, 2024 –
US$100
) was on
the Company’s Japan business, and US$49 (December 31, 2024 –
US$56
) was related to Asia (other than Japan) and the Company’s run-off reinsurance
business.
(4)Where a policy includes both living and death benefits, the guarantee in excess of the living benefit is included in the death benefit category as outlined in footnote
5.
(5)Death benefits include stand-alone guarantees and guarantees in excess of living benefit guarantees where both death and living benefits are provided on a
policy.
Investment categories for variable contracts with guarantees
Variable contracts with guarantees, including variable annuities and variable life, are invested at the policyholder’s discretion
subject to contract limitations, in various fund types within the segregated fund accounts and other investments. The account
balances by investment category are set out below.
| As at December 31, | 2025 | 2024 |
|---|---|---|
| Investment category | ||
| Equity funds | $51,919 | $51,457 |
| Balanced funds | 36,889 | 37,381 |
| Bond funds | 8,528 | 9,017 |
| Money market funds | 1,794 | 1,712 |
| Other debt investments | 2,074 | 2,082 |
| Total | $101,204 | $101,649 |
Caution Related to Sensitivities
In the sections that follow, the Company provides sensitivities and risk exposure measures for certain risks. These include
sensitivities due to specific changes in market prices and interest rate levels projected using internal models as at a specific date,
and are measured relative to a starting level reflecting the Company’s assets and liabilities at that date. The risk exposures
measure the impact of changing one factor at a time and assume that all other factors remain unchanged. Actual results can
differ materially from these estimates for a variety of reasons including the interaction among these factors when more than one
changes; changes in liabilities from updates to non-economic assumptions, changes in business mix, effective tax rates and
other market factors; and the general limitations of the Company’s internal models. For these reasons, the sensitivities should
only be viewed as directional estimates of the underlying sensitivities for the respective factors based on the assumptions
outlined below. Given the nature of these calculations, the Company cannot provide assurance that the actual impact on
contractual service margin, net income attributed to shareholders, other comprehensive income attributed to shareholders, and
total comprehensive income attributed to shareholders will be as indicated.
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Publicly Traded Equity Performance Risk Sensitivities and Exposure Measures
The tables below include the potential impacts from an immediate
10%
,
20%
and
30%
change in market values of publicly traded
equities on net income attributed to shareholders, CSM, other comprehensive income attributed to shareholders, and total
comprehensive income attributed to shareholders. The potential impact is shown after taking into account the impact of the
change in markets on the hedge assets. While the Company cannot reliably estimate the amount of the change in dynamically
hedged guarantee liabilities that will not be offset by the change in the dynamic hedge assets, the Company makes certain
assumptions for the purposes of estimating the impact on net income attributed to shareholders.
This estimate assumes that the performance of the dynamic hedging program would not completely offset the gain/loss from the
dynamically hedged variable annuity and segregated fund guarantee liabilities. It assumes that the hedge assets are based on
the actual position at the period end, and that equity hedges in the dynamic program offset
95%
of the hedged variable annuity
liability movement that occurs as a result of market changes.
It is also important to note that these estimates are illustrative, and that the dynamic and macro hedging programs may
underperform these estimates, particularly during periods of high realized volatility and/or periods where both interest rates and
equity market movements are unfavourable. The method used for deriving sensitivity information and significant assumptions did
not change from the previous period.
Potential immediate impact on net income attributed to shareholders arising from changes to public equity returns(1)
| Net income attributed to shareholders | ||||||
|---|---|---|---|---|---|---|
| As at December 31, 2025 | -30% | -20% | -10% | +10% | +20% | +30% |
| Underlying sensitivity | ||||||
| Variable annuity and segregated fund guarantees(2) | $(1,790) | $(1,070) | $(490) | $400 | $750 | $1,050 |
| General fund equity investments(3) | (1,320) | (880) | (440) | 440 | 870 | 1,310 |
| Total underlying sensitivity before hedging | (3,110) | (1,950) | (930) | 840 | 1,620 | 2,360 |
| Impact of macro and dynamic hedge assets(4) | 650 | 390 | 170 | (130) | (240) | (330) |
| Net potential impact on net income attributed to<br><br>shareholders after impact of hedging and before impact<br><br>of reinsurance | (2,460) | (1,560) | (760) | 710 | 1,380 | 2,030 |
| Impact of reinsurance | 1,110 | 670 | 310 | (270) | (490) | (700) |
| Net potential impact on net income attributed to<br><br>shareholders after impact of hedging and<br><br>reinsurance | $(1,350) | $(890) | $(450) | $440 | $890 | $1,330 |
| Net income attributed to shareholders | ||||||
| As at December 31, 2024 | -30% | -20% | -10% | +10% | +20% | +30% |
| Underlying sensitivity | ||||||
| Variable annuity and segregated fund guarantees(2) | $(2,050) | $(1,240) | $(560) | $470 | $860 | $1,190 |
| General fund equity investments(3) | (1,240) | (820) | (400) | 390 | 780 | 1,180 |
| Total underlying sensitivity before hedging | (3,290) | (2,060) | (960) | 860 | 1,640 | 2,370 |
| Impact of macro and dynamic hedge assets(4) | 720 | 430 | 190 | (150) | (260) | (360) |
| Net potential impact on net income attributed to<br><br>shareholders after impact of hedging and before impact<br><br>of reinsurance | (2,570) | (1,630) | (770) | 710 | 1,380 | 2,010 |
| Impact of reinsurance | 1,320 | 810 | 370 | (320) | (590) | (830) |
| Net potential impact on net income attributed to<br><br>shareholders after impact of hedging and<br><br>reinsurance | $(1,250) | $(820) | $(400) | $390 | $790 | $1,180 |
(1)See “Caution related to sensitivities” above.
(2)For variable annuity contracts measured under the VFA approach, the impact of financial risk and changes in interest rates adjusts CSM, unless the risk mitigation
option applies. The Company has elected to apply risk mitigation and therefore, a portion of the impact is reported in net income attributed to shareholders instead
of adjusting the CSM. If the CSM for a group of variable annuity contracts is exhausted, the full impact is reported in net income attributed to shareholders.
(3)This impact for general fund equity investments includes general fund investments supporting the Company’s insurance contract liabilities, investment in seed
money investments (in segregated and mutual funds made by Global WAM segment), and the impact on insurance contract liabilities related to the projected
future fee income on variable universal life and other unit-linked products. The impact does not include any potential impact on public equity weightings. 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 equity
markets.
(4)Includes the impact of assumed rebalancing of equity hedges in the macro and dynamic hedging program. The impact of dynamic hedging represents the impact
of equity hedges offsetting 95% of the dynamically hedged variable annuity liability movement that occurs as a result of market changes, but does not include any
impact in respect of other sources of hedge accounting ineffectiveness (e.g., fund tracking, realized volatility and equity, and interest rate correlations different from
expected among other factors).
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Potential immediate impact on contractual service margin, other comprehensive income to shareholders and total
comprehensive income to shareholders from changes to public equity market values(1),(2)
| As at December 31, 2025 | -30% | -20% | -10% | +10% | +20% | +30% |
|---|---|---|---|---|---|---|
| Variable annuity and segregated fund guarantees<br><br>reported in CSM | $(2,970) | $(1,820) | $(840) | $730 | $1,390 | $1,980 |
| Impact of risk mitigation - hedging(3) | 870 | 510 | 220 | (180) | (320) | (430) |
| Impact of risk mitigation - reinsurance(3) | 1,400 | 850 | 390 | (330) | (630) | (890) |
| VA net of risk mitigation | (700) | (460) | (230) | 220 | 440 | 660 |
| General fund equity | (1,410) | (910) | (440) | 440 | 880 | 1,300 |
| Contractual service margin (pre-tax) | $(2,110) | $(1,370) | $(670) | $660 | $1,320 | $1,960 |
| Other comprehensive income attributed to<br><br>shareholders (post-tax)(4) | $(920) | $(620) | $(300) | $300 | $580 | $860 |
| Total comprehensive income attributed to<br><br>shareholders (post-tax) | $(2,270) | $(1,510) | $(750) | $740 | $1,470 | $2,190 |
| As at December 31, 2024 | -30% | -20% | -10% | +10% | +20% | +30% |
| Variable annuity and segregated fund guarantees<br><br>reported in CSM | $(3,420) | $(2,110) | $(970) | $840 | $1,580 | $2,250 |
| Impact of risk mitigation - hedging(3) | 940 | 560 | 250 | (190) | (350) | (470) |
| Impact of risk mitigation - reinsurance(3) | 1,670 | 1,020 | 470 | (400) | (740) | (1,050) |
| VA net of risk mitigation | (810) | (530) | (250) | 250 | 490 | 730 |
| General fund equity | (1,140) | (740) | (370) | 370 | 750 | 1,110 |
| Contractual service margin (pre-tax) | $(1,950) | $(1,270) | $(620) | $620 | $1,240 | $1,840 |
| Other comprehensive income attributed to<br><br>shareholders (post-tax)(4) | $(840) | $(560) | $(280) | $270 | $530 | $790 |
| Total comprehensive income attributed to<br><br>shareholders (post-tax) | $(2,090) | $(1,380) | $(680) | $660 | $1,320 | $1,970 |
(1)See “Caution related to sensitivities” above.
(2)This estimate assumes that the performance of the dynamic hedging program would not completely offset the gain/loss from the dynamically hedged variable
annuity and segregated fund guarantee liabilities. It assumes that the hedge assets are based on the actual position at the period end, and that equity hedges in
the dynamic program offset 95% of the hedged variable annuity liability movement that occurs as a result of market changes.
(3)For variable annuity contracts measured under VFA, the impact of financial risk and changes in interest rates adjusts CSM, unless the risk mitigation option
applies. The Company has elected to apply risk mitigation and therefore a portion of the impact is reported in net income attributed to shareholders instead of
adjusting the CSM. If the CSM for a group of variable annuity contracts is exhausted, the full impact is reported in net income attributed to shareholders.
(4)The impact of financial risk and changes to interest rates for variable annuity contracts is not expected to generate sensitivity in Other Comprehensive Income.
Interest Rate and Spread Risk Sensitivities and Exposure Measures
As at December 31, 2025, the Company estimated the sensitivity of net income attributed to shareholders to a 50 basis point
parallel decline in interest rates to be a benefit of $100, and to a 50 basis point parallel increase in interest rates to be a charge
of $100.
The table below shows the potential impacts from a 50 basis point parallel move in interest rates on CSM, net income attributed
to shareholders, other comprehensive income attributed to shareholders, and total comprehensive income attributed to
shareholders. This includes a change in current government, swap and corporate rates for all maturities across all markets with
no change in credit spreads between government, swap and corporate rates. Also shown separately are the potential impacts
from a 50 basis point parallel move in corporate spreads and a 20 basis point parallel move in swap spreads. The impacts reflect
the net impact of movements in asset values in liability and surplus segments and movements in the present value of cash flows
for insurance contracts including those with cash flows that vary with the returns of underlying items where the present value is
measured by stochastic modelling. The method used for deriving sensitivity information and significant assumptions did not
change from the previous period.
The disclosed interest rate sensitivities reflect the accounting designations of the Company’s financial assets and corresponding
insurance contract liabilities. In most cases these assets and liabilities are designated as FVOCI and as a result, impacts from
changes to interest rates are largely in other comprehensive income. There are also changes in interest rates that impact the
CSM for VFA contracts that relate to amounts that are not passed through to policyholders. In addition, changes in interest rates
impact net income as it relates to derivatives not in hedge accounting relationships and on VFA contracts where the CSM has
been exhausted.
The disclosed interest rate sensitivities assume no hedge accounting ineffectiveness, as the Company’s hedge accounting
programs are optimized for parallel movements in interest rates, leading to immaterial net income impacts under these shocks.
However, the actual hedge accounting ineffectiveness is sensitive to non-parallel interest rate movements and will depend on the
shape and magnitude of the interest rate movements which could materially impact net income attributed to shareholders.
The Company’s sensitivities vary across all regions in which the Company operates, and the impacts of yield curve changes will
vary depending upon the geography where the change occurs. Furthermore, the impacts from non-parallel movements may be
materially different from the estimated impacts of parallel movements.
1 Energy includes legacy oil and gas equity interests related to upstream and midstream assets that are in runoff, and energy transition private equity interests in
areas supportive of the transition to lower carbon forms of energy, such as wind, solar, and carbon sequestration.
| 91 | 2025 Annual Report | Consolidated Financial Statements |
|---|
The interest rate and spread risk sensitivities are determined in isolation of each other and therefore do not reflect the combined
impact of changes in government rates and credit spreads between government, swap and corporate rates occurring
simultaneously. As a result, the impact of the summation of each individual sensitivity may be materially different from the impact
of sensitivities to simultaneous changes in interest rate and spread risk.
The potential impacts also do not take into account other potential effects of changes in interest rate levels, for example, CSM at
recognition on the sale of new business or lower interest earned on future fixed income asset purchases.
The impacts do not reflect any potential effect of changing interest rates on the value of the Company’s ALDA. Rising interest
rates could negatively impact the value of the Company’s ALDA. More information on ALDA can be found below in the
“Alternative long-duration asset performance risk sensitivities and exposure measures” section.
Potential impacts on contractual service margin, net income attributed to shareholders, other comprehensive income
attributed to shareholders, and total comprehensive income attributed to shareholders of an immediate parallel change
in interest rates, corporate spreads or swap spreads relative to current rates(1),(2),(3)
| As at December 31, 2025 | Interest rates | Corporate spreads | Swap spreads | |||
|---|---|---|---|---|---|---|
| (post-tax except CSM) | -50bp | +50bp | -50bp | +50bp | -20bp | +20bp |
| CSM | $200 | $(300) | $(200) | $100 | $- | $- |
| Net income attributed to shareholders | 100 | (100) | - | - | 100 | (100) |
| Other comprehensive income attributed to shareholders | (100) | 100 | 100 | - | (300) | 300 |
| Total comprehensive income attributed to shareholders | - | - | 100 | - | (200) | 200 |
| As at December 31, 2024 | Interest rates | Corporate spreads | Swap spreads | |||
| (post-tax except CSM) | -50bp | +50bp | -50bp | +50bp | -20bp | +20bp |
| CSM | $100 | $(200) | $- | $(100) | $- | $- |
| Net income attributed to shareholders | 100 | (100) | 100 | (100) | 100 | (100) |
| Other comprehensive income attributed to shareholders | (100) | 200 | (200) | 300 | (100) | 100 |
| Total comprehensive income attributed to shareholders | - | 100 | (100) | 200 | - | - |
(1)See “Caution related to sensitivities” above.
(2)Estimates include changes to the net actuarial gains/losses with respect to the Company’s pension obligations as a result of changes in interest rates.
(3)Includes guaranteed insurance and annuity products, including variable annuity contracts as well as adjustable benefit products where benefits are generally
adjusted as interest rates and investment returns change, a portion of which have minimum credited rate guarantees. For adjustable benefit products subject to
minimum rate guarantees, the sensitivities are based on the assumption that credited rates will be floored at the minimum.
Alternative Long-Duration Asset Performance Risk Sensitivities and Exposure Measures
The following table shows the potential impact on CSM, net income attributed to shareholders, other comprehensive income
attributed to shareholders, and total comprehensive income attributed to shareholders resulting from an immediate 10% change
in market values of ALDA. The method used for deriving sensitivity information and significant assumptions made did not change
from the previous period.
ALDA used in this sensitivity analysis includes commercial real estate, private equity, infrastructure, timber and agriculture,
energy1 and other investments.
The impacts do not reflect any future potential changes to non-fixed income return volatility. Refer to “Publicly traded equity
performance risk sensitivities and exposure measures” above for more details.
Potential immediate impacts on contractual service margin, net income attributed to shareholders, other
comprehensive income attributed to shareholders, and total comprehensive income attributed to shareholders from
changes in ALDA market values(1)
| As at | December 31, 2025 | December 31, 2024 | ||
|---|---|---|---|---|
| (post-tax except CSM) | -10% | +10% | -10% | +10% |
| CSM excluding NCI | $(200) | $200 | $(200) | $200 |
| Net income attributed to shareholders(2) | (2,200) | 2,200 | (2,500) | 2,500 |
| Other comprehensive income attributed to shareholders | (200) | 200 | (200) | 200 |
| Total comprehensive income attributed to shareholders | (2,400) | 2,400 | (2,700) | 2,700 |
(1)See “Caution related to sensitivities” above.
(2)Net income attributed to shareholders includes core earnings and the items excluded from core earnings.
| 92 |
|---|
Foreign Exchange Risk Sensitivities and Exposure Measures
The Company generally matches the currency of its assets with the currency of the insurance and investment contract liabilities
they support. As at December 31, 2025, the Company did not have a material currency mismatch between assets and liabilities.
Liquidity Risk Exposure Strategy
Manulife manages liquidity levels of the consolidated group and key subsidiaries against established thresholds, which are based
on extreme but plausible liquidity stress scenarios over varying time horizons.
The Company’s use of derivatives for hedging purposes is a significant source of liquidity risk through collateral and cash
settlement requirements for OTC bilateral and centrally cleared derivatives under adverse market conditions. To assess these
potential liquidity needs, the Company regularly stress tests the market value of its derivative portfolio under various stress
scenarios and measures and monitors the contingent requirements against its liquid asset holdings. Additionally, the Company
maintains a liquidity contingency plan with diverse sources of contingent liquidity that can be utilized under severe stress
conditions.
(c)Credit Risk
Credit risk is the risk of loss due to inability or unwillingness of a borrower, or counterparty, to fulfill its payment obligations.
Worsening regional and global economic conditions, segment or industry sector challenges, or company specific factors could
result in defaults or downgrades and could lead to increased provisions or impairments related to the Company’s general fund
invested assets.
The Company’s exposure to credit risk is managed through risk management policies and procedures which include a defined
credit evaluation and adjudication process, delegated credit approval authorities and established exposure limits by borrower,
corporate connection, credit rating, industry and geographic region. The Company measures derivative counterparty exposure as
net potential credit exposure, which takes into consideration fair values of all transactions with each counterparty, net of any
collateral held, and an allowance to reflect future potential exposure. Reinsurance counterparty exposure is measured reflecting
the level of ceded liabilities. The Company also ensures where warranted, that mortgages, private placements and loans to Bank
clients are secured by collateral, the nature of which depends on the credit risk of the counterparty.
Credit risk associated with derivative counterparties is discussed in note 8 (f) and credit risk associated with reinsurance
counterparties is discussed in note 8 (k).
(I)Credit Quality
The following tables present financial instruments subject to credit exposure, without considering any collateral held or other
credit enhancements, and other significant credit risk exposures from loan commitments, with allowances, presenting separately
Stage 1, Stage 2, and Stage 3 credit risk profiles. For each asset type presented in the table, amortized cost and FVOCI financial
instruments are presented together. Amortized cost financial instruments are shown gross of the allowance for credit losses,
which is shown separately. FVOCI financial instruments are shown at fair value with the allowance for credit losses shown
separately.
| 93 | 2025 Annual Report | Consolidated Financial Statements | ||
|---|---|---|---|---|
| As at December 31, 2025 | Stage 1 | Stage 2 | Stage 3 | Total |
| --- | --- | --- | --- | --- |
| Debt securities, measured at FVOCI | ||||
| Investment grade | $203,241 | $1,187 | $- | $204,428 |
| Non-investment grade | 3,993 | 477 | - | 4,470 |
| Total carrying value | 207,234 | 1,664 | - | 208,898 |
| Allowance for credit losses | 221 | 43 | - | 264 |
| Debt securities, measured at amortized cost | ||||
| Investment grade | 1,137 | - | - | 1,137 |
| Non-investment grade | - | - | - | - |
| Total | 1,137 | - | - | 1,137 |
| Allowance for credit losses | 1 | - | - | 1 |
| Total carrying value, net of allowance | 1,136 | - | - | 1,136 |
| Private placements, measured at FVOCI | ||||
| Investment grade | 43,803 | 309 | - | 44,112 |
| Non-investment grade | 5,527 | 979 | 211 | 6,717 |
| Total carrying value | 49,330 | 1,288 | 211 | 50,829 |
| Allowance for credit losses | 108 | 82 | 194 | 384 |
| Commercial mortgages, measured at FVOCI | ||||
| AAA | 244 | - | - | 244 |
| AA | 7,961 | - | - | 7,961 |
| A | 13,720 | - | - | 13,720 |
| BBB | 5,106 | 645 | - | 5,751 |
| BB | 63 | 730 | - | 793 |
| B and lower | - | 20 | 100 | 120 |
| Total carrying value | 27,094 | 1,395 | 100 | 28,589 |
| Allowance for credit losses | 42 | 38 | 34 | 114 |
| Commercial mortgages, measured at amortized cost | ||||
| AAA | - | - | - | - |
| AA | - | - | - | - |
| A | 223 | - | - | 223 |
| BBB | - | - | - | - |
| BB | - | - | - | - |
| B and lower | 166 | 8 | 1 | 175 |
| Total | 389 | 8 | 1 | 398 |
| Allowance for credit losses | 1 | - | 1 | 2 |
| Total carrying value, net of allowance | 388 | 8 | - | 396 |
| Residential mortgages, measured at amortized cost | ||||
| Performing | 25,361 | 1,379 | - | 26,740 |
| Non-performing | - | - | 50 | 50 |
| Total | 25,361 | 1,379 | 50 | 26,790 |
| Allowance for credit losses | 4 | 2 | 1 | 7 |
| Total carrying value, net of allowance | 25,357 | 1,377 | 49 | 26,783 |
| Loans to Bank clients, measured at amortized cost | ||||
| Performing | 2,629 | 105 | - | 2,734 |
| Non-performing | - | - | 4 | 4 |
| Total | 2,629 | 105 | 4 | 2,738 |
| Allowance for credit losses | 1 | 1 | 1 | 3 |
| Total carrying value, net of allowance | 2,628 | 104 | 3 | 2,735 |
| Other invested assets, measured at FVOCI | ||||
| Investment grade | - | - | - | - |
| Non-investment grade | 383 | - | - | 383 |
| Total carrying value | 383 | - | - | 383 |
| Allowance for credit losses | 21 | - | - | 21 |
| Other invested assets, measured at amortized cost | ||||
| Investment grade | 4,266 | - | - | 4,266 |
| Non-investment grade | - | - | - | - |
| Total | 4,266 | - | - | 4,266 |
| Allowance for credit losses | 1 | - | - | 1 |
| Total carrying value, net of allowance | 4,265 | - | - | 4,265 |
| Loan commitments | ||||
| Allowance for credit losses | 10 | 1 | 1 | 12 |
| Total carrying value, net of allowance | $317,815 | $5,836 | $363 | $324,014 |
| 94 | ||||
| --- | ||||
| As at December 31, 2024 | Stage 1 | Stage 2 | Stage 3 | Total |
| --- | --- | --- | --- | --- |
| Debt securities, measured at FVOCI | ||||
| Investment grade | $197,840 | $1,338 | $- | $199,178 |
| Non-investment grade | 5,625 | 363 | - | 5,988 |
| Total carrying value | 203,465 | 1,701 | - | 205,166 |
| Allowance for credit losses | 228 | 42 | - | 270 |
| Debt securities, measured at amortized cost | ||||
| Investment grade | 1,496 | - | - | 1,496 |
| Non-investment grade | - | - | - | - |
| Total | 1,496 | - | - | 1,496 |
| Allowance for credit losses | 1 | - | - | 1 |
| Total carrying value, net of allowance | 1,495 | - | - | 1,495 |
| Private placements, measured at FVOCI | ||||
| Investment grade | 41,796 | 721 | - | 42,517 |
| Non-investment grade | 5,004 | 1,133 | 148 | 6,285 |
| Total carrying value | 46,800 | 1,854 | 148 | 48,802 |
| Allowance for credit losses | 126 | 127 | 123 | 376 |
| Commercial mortgages, measured at FVOCI | ||||
| AAA | 205 | - | - | 205 |
| AA | 7,234 | - | - | 7,234 |
| A | 14,035 | - | - | 14,035 |
| BBB | 5,679 | 873 | - | 6,552 |
| BB | 11 | 663 | - | 674 |
| B and lower | - | 21 | 71 | 92 |
| Total carrying value | 27,164 | 1,557 | 71 | 28,792 |
| Allowance for credit losses | 41 | 39 | 55 | 135 |
| Commercial mortgages, measured at amortized cost | ||||
| AAA | - | - | - | - |
| AA | - | - | - | - |
| A | 225 | 15 | - | 240 |
| BBB | - | - | - | - |
| BB | - | - | - | - |
| B and lower | 112 | 5 | 5 | 122 |
| Total | 337 | 20 | 5 | 362 |
| Allowance for credit losses | 1 | 1 | - | 2 |
| Total carrying value, net of allowance | 336 | 19 | 5 | 360 |
| Residential mortgages, measured at amortized cost | ||||
| Performing | 22,870 | 1,151 | - | 24,021 |
| Non-performing | - | - | 41 | 41 |
| Total | 22,870 | 1,151 | 41 | 24,062 |
| Allowance for credit losses | 3 | 2 | 1 | 6 |
| Total carrying value, net of allowance | 22,867 | 1,149 | 40 | 24,056 |
| Loans to Bank clients, measured at amortized cost | ||||
| Performing | 2,265 | 38 | - | 2,303 |
| Non-performing | - | - | 10 | 10 |
| Total | 2,265 | 38 | 10 | 2,313 |
| Allowance for credit losses | 1 | 1 | 1 | 3 |
| Total carrying value, net of allowance | 2,264 | 37 | 9 | 2,310 |
| Other invested assets, measured at FVOCI | ||||
| Investment grade | - | - | - | - |
| Non-investment grade | 389 | - | - | 389 |
| Total carrying value | 389 | - | - | 389 |
| Allowance for credit losses | 22 | - | - | 22 |
| Other invested assets, measured at amortized cost | ||||
| Investment grade | 4,302 | - | - | 4,302 |
| Non-investment grade | - | - | - | - |
| Total | 4,302 | - | - | 4,302 |
| Allowance for credit losses | 2 | - | - | 2 |
| Total carrying value, net of allowance | 4,300 | - | - | 4,300 |
| Loan commitments | ||||
| Allowance for credit losses | 9 | 1 | 1 | 11 |
| Total carrying value, net of allowance | $309,080 | $6,317 | $273 | $315,670 |
| 95 | 2025 Annual Report | Consolidated Financial Statements | ||
| --- | --- | --- |
(II)Allowance for Credit Losses
The following tables provide details on the allowance for credit losses by stage as at and for the years ended December 31, 2025
and 2024.
| As at December 31, 2025 | Stage 1 | Stage 2 | Stage 3 | Total | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Balance, beginning of year | $434 | $213 | $181 | $828 | ||||||
| Net re-measurement due to transfers | 4 | (31) | 27 | - | ||||||
| Transfer to stage 1 | 11 | (11) | - | - | ||||||
| Transfer to stage 2 | (7) | 7 | - | - | ||||||
| Transfer to stage 3 | - | (27) | 27 | - | ||||||
| Net originations, purchases, disposals and repayments | 59 | (11) | (97) | (49) | ||||||
| Changes to risk, parameters, and models | (72) | (1) | 117 | 44 | ||||||
| Foreign exchange and other adjustments | (15) | (3) | 4 | (14) | ||||||
| Balance, end of year | $410 | $167 | $232 | $809 | As at December 31, 2024 | Stage 1 | Stage 2 | Stage 3 | Total | |
| --- | --- | --- | --- | --- | ||||||
| Balance, beginning of year | $483 | $209 | $237 | $929 | ||||||
| Net re-measurement due to transfers | 4 | (22) | 18 | - | ||||||
| Transfer to stage 1 | 12 | (12) | - | - | ||||||
| Transfer to stage 2 | (7) | 7 | - | - | ||||||
| Transfer to stage 3 | (1) | (17) | 18 | - | ||||||
| Net originations, purchases, disposals and repayments | 36 | (8) | (159) | (131) | ||||||
| Changes to risk, parameters, and models | (107) | 21 | 81 | (5) | ||||||
| Foreign exchange and other adjustments | 18 | 13 | 4 | 35 | ||||||
| Balance, end of year | $434 | $213 | $181 | $828 |
(III)Significant Judgements and Estimates
The following tables show certain key macroeconomic variables used to estimate the ECL allowances by market. For the base
case, upside and downside scenarios, the projections are provided for the next 12 months and then for the remaining forecast
period, which represents a medium-term view.
| Base case scenario | Upside scenario | Downside scenario 1 | Downside scenario 2 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| As at December 31, 2025 | Current<br><br>quarter | Next 12<br><br>months | Ensuing 4<br><br>years | Next 12<br><br>months | Ensuing 4<br><br>years | Next 12<br><br>months | Ensuing 4<br><br>years | Next 12<br><br>months | Ensuing 4<br><br>years |
| Canada | |||||||||
| Gross Domestic Product (GDP), in<br><br>U.S. $ billions | $2,020 | 0.6% | 1.9% | 2.6% | 1.9% | (4.1)% | 2.2% | (7.2)% | 2.2% |
| Unemployment rate | 7.2% | 7.1% | 6.3% | 6.5% | 5.6% | 8.5% | 8.0% | 9.5% | 9.7% |
| NYMEX Light Sweet Crude Oil, in<br><br>U.S. dollars, per barrel | $61 | $62 | $66 | $67 | $67 | $47 | $60 | $39 | $54 |
| U.S. | |||||||||
| Gross Domestic Product (GDP), in<br><br>U.S. $ billions | $23,998 | 2.1% | 2.4% | 3.8% | 2.4% | (2.2)% | 2.7% | (4.1)% | 2.6% |
| Unemployment rate | 4.4% | 4.6% | 4.3% | 3.9% | 3.6% | 7.2% | 6.1% | 7.7% | 8.2% |
| 7-10 Year BBB U.S. Corporate Index | 5.3% | 5.9% | 6.1% | 5.7% | 6.0% | 6.4% | 5.8% | 7.0% | 5.7% |
| Japan | |||||||||
| Gross Domestic Product (GDP), in<br><br>JPY billions | ¥564,072 | 0.2% | 0.8% | 2.2% | 1.0% | (4.1)% | 1.1% | (7.4)% | 1.7% |
| Unemployment rate | 2.5% | 2.5% | 2.2% | 2.4% | 2.1% | 3.0% | 2.9% | 3.2% | 3.5% |
| Hong Kong | |||||||||
| Unemployment rate | 4.1% | 4.0% | 3.2% | 3.6% | 2.9% | 5.1% | 4.1% | 5.5% | 4.8% |
| Hang Seng Index | 26,454 | (1.3)% | 1.0% | 8.9% | 0.7% | (26.0)% | 6.7% | (41.9)% | 10.2% |
| China | |||||||||
| Gross Domestic Product (GDP), in<br><br>CNY billions | ¥119,732 | 4.7% | 4.1% | 7.2% | 4.3% | (2.3)% | 4.6% | (5.1)% | 3.9% |
| FTSE Xinhua A200 Index | 11,186 | 3.7% | 3.6% | 18.6% | 1.6% | (28.0)% | 10.3% | (37.8)% | 12.1% |
| 96 | |||||||||
| --- | |||||||||
| Base case scenario | Upside scenario | Downside scenario 1 | Downside scenario 2 | ||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| As at December 31, 2024 | Current<br><br>quarter | Next 12<br><br>months | Ensuing 4<br><br>years | Next 12<br><br>months | Ensuing 4<br><br>years | Next 12<br><br>months | Ensuing 4<br><br>years | Next 12<br><br>months | Ensuing 4<br><br>years |
| Canada | |||||||||
| Gross Domestic Product (GDP), in<br><br>U.S. $ billions | $1,983 | 1.8% | 2.0% | 3.3% | 2.3% | (2.0)% | 2.3% | (3.9)% | 2.2% |
| Unemployment rate | 6.7% | 6.8% | 6.3% | 6.5% | 5.8% | 8.1% | 8.2% | 8.5% | 10.0% |
| NYMEX Light Sweet Crude Oil, in<br><br>U.S. dollars, per barrel | $76 | $75 | $72 | $79 | $74 | $59 | $66 | $50 | $61 |
| U.S. | |||||||||
| Gross Domestic Product (GDP), in<br><br>U.S. $ billions | $23,534 | 2.1% | 2.2% | 3.6% | 2.3% | (2.0)% | 2.7% | (4.2)% | 2.5% |
| Unemployment rate | 4.2% | 4.1% | 4.0% | 3.3% | 3.3% | 7.3% | 6.1% | 7.8% | 8.1% |
| 7-10 Year BBB U.S. Corporate Index | 5.5% | 6.1% | 6.1% | 5.9% | 6.2% | 5.4% | 5.6% | 6.0% | 5.4% |
| Japan | |||||||||
| Gross Domestic Product (GDP), in<br><br>JPY billions | ¥563,281 | 0.9% | 0.7% | 2.8% | 0.8% | (3.6)% | 1.0% | (7.1)% | 1.6% |
| Unemployment rate | 2.5% | 2.5% | 2.2% | 2.4% | 2.1% | 3.1% | 2.9% | 3.2% | 3.5% |
| Hong Kong | |||||||||
| Unemployment rate | 3.0% | 2.9% | 3.0% | 2.5% | 2.7% | 4.1% | 3.8% | 4.6% | 4.6% |
| Hang Seng Index | 19,448 | 7.0% | 4.1% | 18.1% | 3.7% | (19.7)% | 9.9% | (37.0)% | 13.5% |
| China | |||||||||
| Gross Domestic Product (GDP), in<br><br>CNY billions | ¥114,931 | 4.0% | 4.1% | 6.5% | 4.3% | (3.0)% | 4.6% | (5.7)% | 3.9% |
| FTSE Xinhua A200 Index | 10,938 | (0.6)% | 4.8% | 13.8% | 2.8% | (31.1)% | 11.7% | (40.5)% | 13.5% |
(IV)Sensitivity to Changes in Economic Assumptions
The following table shows the ECL allowance balance which resulted from all four macroeconomic scenarios (including the more
heavily-weighted best estimate base case scenario, one upside and two downside scenarios) weighted by probability of
occurrence and shows an ECL allowance resulting from only the base case scenario.
| As at December 31, | 2025 | 2024 |
|---|---|---|
| Probability-weighted ECL | $809 | $828 |
| Baseline ECL | $611 | $629 |
| Difference – in amount | $198 | $199 |
| Difference – in percentage | 24.47% | 24.03% |
The Company’s probability-weighted ECL allowance balance which resulted from all four macroeconomic scenarios as at
December 31, 2025 was $809 (2024 – $828). ECL allowance balances indicated by the base case scenario, the upside scenario,
the downside scenario 1 and the downside scenario 2, as at December 31, 2025 were $611, $522, $1,434 and $1,798
respectively (2024 – $629, $536, $1,590 and $2,104, respectively).
(d)Securities Lending, Repurchase and Reverse Repurchase Transactions
The Company engages in securities lending to generate fee income. Collateral exceeding the market value of the loaned
securities is retained by the Company until the underlying security has been returned to the Company. The market value of the
loaned securities is monitored daily and additional collateral is obtained or refunded as the market value of the underlying loaned
securities fluctuates. As at December 31, 2025, the Company had loaned securities (which are included in invested assets) with
a market value of $1,800 (2024 – $1,021). The Company holds collateral with a current market value that exceeds the value of
securities lent in all cases.
The Company engages in reverse repurchase transactions to generate fee income to take possession of securities to cover short
positions in similar instruments and to meet short-term funding requirements. As at December 31, 2025, the Company had
outstanding reverse repurchase transactions of $957 (2024 – $1,594) which are recorded as short-term receivables. In addition,
the Company had outstanding repurchase transactions of $193 as at December 31, 2025 (2024 – $668) which are recorded as
payables.
(e)Credit Default Swaps
The Company replicates exposure to specific issuers by selling credit protection via credit default swaps (“CDS”) to complement
its cash debt securities investing. The Company does not write CDS protection more than its government bond holdings. A CDS
is a derivative instrument representing an agreement between two parties to exchange the credit risk of a single specified entity
or an index based on the credit risk of a group of entities (all commonly referred to as the “reference entity” or a portfolio of
“reference entities”), in return for a periodic premium. CDS contracts typically have a five-year term.
| 97 | 2025 Annual Report | Consolidated Financial Statements |
|---|
The following tables present details of the credit default swap protection sold by type of contract and external agency rating for
the underlying reference security.
| As at December 31, 2025 | Notional<br><br>amount(1) | Fair value | Weighted<br><br>average<br><br>maturity<br><br>(in years)(2) |
|---|---|---|---|
| Single name CDS(3),(4) – Corporate debt | |||
| AA | $22 | $- | 2 |
| A | 65 | 1 | 2 |
| BBB | 22 | - | 1 |
| Total single name CDS | $109 | $1 | 2 |
| Total CDS protection sold | $109 | $1 | 2 |
| As at December 31, 2024 | Notional<br><br>amount(1) | Fair value | Weighted<br><br>average<br><br>maturity<br><br>(in years)(2) |
| Single name CDS(3),(4) – Corporate debt | |||
| AA | $23 | $1 | 3 |
| A | 68 | 1 | 3 |
| BBB | 23 | - | 2 |
| Total single name CDS | $114 | $2 | 3 |
| Total CDS protection sold | $114 | $2 | 3 |
(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, Morningstar DBRS, and Fitch. If no rating is available from a rating agency, an internally
developed rating is used.
(4)The Company held no purchased credit protection as at December 31, 2025 and 2024.
(f)Derivatives
The Company’s point-in-time exposure to losses related to credit risk of a derivative counterparty is limited to the amount of any
net gains that may have accrued with the particular counterparty. Gross derivative counterparty exposure is measured as the
total fair value (including accrued interest) of all outstanding contracts in a gain position excluding any offsetting contracts in a
loss position and the impact of collateral on hand. The Company limits the risk of credit losses from derivative counterparties by:
using investment grade counterparties, entering into master netting arrangements which permit the offsetting of contracts in a
loss position in the case of a counterparty default and entering into Credit Support Annex agreements whereby collateral must be
provided when the exposure exceeds a certain threshold.
All contracts are held with or guaranteed by investment grade counterparties, the majority of whom are rated A- or higher. As at
December 31, 2025, the percentage of the Company’s derivative exposure with counterparties rated AA- or higher was 29 per
cent (2024 – 30 per cent). As at December 31, 2025, the largest single counterparty exposure, without taking into consideration
the impact of master netting agreements or the benefit of collateral held, was $1,386 (2024 – $1,319). The net exposure to this
counterparty, after taking into consideration master netting agreements and the fair value of collateral held, was $nil (2024 –
$nil).
(g)Offsetting Financial Assets and Financial Liabilities
Certain derivatives, securities lent and repurchase agreements have conditional offset rights. The Company does not offset these
financial instruments in the Consolidated Statements of Financial Position, as the rights of offset are conditional.
In the case of derivatives, collateral is collected from and pledged to counterparties and clearing houses to manage credit risk
exposure in accordance with Credit Support Annexes to swap agreements and clearing agreements. Under master netting
agreements, the Company has a right of offset in the event of default, insolvency, bankruptcy or other early termination.
In the case of reverse repurchase and repurchase transactions, additional collateral may be collected from or pledged to
counterparties to manage credit exposure according to bilateral reverse repurchase or repurchase agreements. In the event of
default by a reverse purchase transaction counterparty, the Company is entitled to liquidate the collateral held to offset against
the same counterparty’s obligation.
| 98 |
|---|
The following tables present the effect of conditional master netting and similar arrangements. Similar arrangements may include
global master repurchase agreements, global master securities lending agreements, and any related rights to financial collateral
pledged or received.
| As at December 31, 2025 | Gross amounts of financial instruments(1) | Financial and<br><br>cash collateral<br><br>pledged<br><br>(received)(2) | Net amounts<br><br>including<br><br>financing<br><br>entity(3) | Net amounts<br><br>excluding<br><br>financing<br><br>entity | |
| Financial assets | |||||
| Derivative assets | 9,955 | $(6,700) | $(2,694) | $561 | $561 |
| Securities lending | 1,800 | - | (1,800) | - | - |
| Reverse repurchase agreements | 957 | - | (957) | - | - |
| Total financial assets | 12,712 | $(6,700) | $(5,451) | $561 | $561 |
| Financial liabilities | |||||
| Derivative liabilities | (15,024) | $6,700 | $8,228 | $(96) | $(39) |
| Repurchase agreements | (193) | - | 193 | - | - |
| Total financial liabilities | (15,217) | $6,700 | $8,421 | $(96) | $(39) |
| As at December 31, 2024 | Gross amounts of financial instruments(1) | Financial and<br><br>cash collateral<br><br>pledged<br><br>(received)(2) | Net amounts<br><br>including<br><br>financing<br><br>entity(3) | Net amounts<br><br>excluding<br><br>financing<br><br>entity | |
| Financial assets | |||||
| Derivative assets | 9,048 | $(6,633) | $(1,986) | $429 | $429 |
| Securities lending | 1,021 | - | (1,021) | - | - |
| Reverse repurchase agreements | 1,594 | (569) | (1,025) | - | - |
| Total financial assets | 11,663 | $(7,202) | $(4,032) | $429 | $429 |
| Financial liabilities | |||||
| Derivative liabilities | (15,026) | $6,633 | $8,305 | $(88) | $(15) |
| Repurchase agreements | (668) | 569 | 99 | - | - |
| Total financial liabilities | (15,694) | $7,202 | $8,404 | $(88) | $(15) |
All values are in US Dollars.
(1)Financial assets and liabilities include accrued interest of $334 and $677 respectively (2024 – $388 and $779 respectively).
(2)Financial and cash collateral exclude over-collateralization. As at December 31, 2025, 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 $403, $1,699, $154 and $nil
respectively (2024 – $641, $2,472, $35 and $nil respectively). As at December 31, 2025, collateral pledged (received) does not include collateral-in-transit on OTC
instruments or initial margin on exchange-traded contracts or cleared contracts.
(3)Includes derivative contracts entered between the Company and its unconsolidated financing entity. The Company does not exchange collateral on derivative
contracts entered with this entity. Refer to note 17.
The Company also has certain credit linked note assets and variable surplus note liabilities which have unconditional offsetting
rights. Under the netting agreements, the Company has rights of offset including in the event of the Company’s default,
insolvency, or bankruptcy. These financial instruments are offset in the Consolidated Statements of Financial Position.
A credit linked note is a debt instrument the term of which, in this case, is linked to a variable surplus note. A surplus note is a
subordinated debt obligation that often qualifies as surplus (the U.S. statutory equivalent of equity) by some U.S. state insurance
regulators. Interest payments on surplus notes are made after all other contractual payments are made. The following tables
present the effect of unconditional netting.
| As at December 31, 2025 | Gross amounts of financial instruments | Net amounts of<br><br>financial<br><br>instruments | |
|---|---|---|---|
| Credit linked note(1) | 1,349 | $(1,349) | $- |
| Variable surplus note | (1,349) | 1,349 | - |
| As at December 31, 2024 | Gross amounts of financial instruments | Net amounts of<br><br>financial<br><br>instruments | |
| Credit linked note(1) | 1,392 | $(1,392) | $- |
| Variable surplus note | (1,392) | 1,392 | - |
All values are in US Dollars.
(1)As at December 31, 2025 and 2024, the Company had no fixed surplus notes outstanding. Refer to note 18 (g).
| 99 | 2025 Annual Report | Consolidated Financial Statements |
|---|
(h)Risk Concentrations
The Company defines enterprise-wide investment portfolio level targets and limits to ensure that portfolios are diversified across
asset classes and individual investment risks. The Company monitors actual investment positions and risk exposures for
concentration risk and reports its findings to the Executive Risk Committee and the Risk Committee of the Board of Directors.
| As at December 31, | 2025 | 2024 |
|---|---|---|
| Debt securities and private placements rated as investment grade BBB or higher(1) | 96% | 96% |
| Government debt securities as a per cent of total debt securities | 39% | 40% |
| Government private placements as a per cent of total private placements | 8% | 9% |
| Highest exposure to a single non-government debt security or private placement issuer | $1,033 | $1,121 |
| Largest single issuer as a per cent of the total equity portfolio | 2% | 2% |
| Income producing commercial office properties (2025 – 34% of real estate, 2024 – 35%) | $4,312 | $4,696 |
| Largest concentration of mortgages and real estate(2) – Ontario, Canada (2025 – 29%, 2024 – 28%) | $20,199 | $19,052 |
(1)Investment grade debt securities and private placements include 39% rated A, 24% rated AA and 7% rated AAA (2024 – 37%, 17% and 15%) investments based
on external ratings where available.
(2)Mortgages and real estate investments are diversified geographically and by property type.
The following table presents the Company’s debt securities and private placements portfolio by sector and industry.
| 2025 | 2024 | |||
|---|---|---|---|---|
| As at December 31, | Carrying<br><br>value | % of total | Carrying<br><br>value | % of total |
| Government and agency | $87,734 | 34% | $88,376 | 34% |
| Utilities | 45,795 | 17% | 45,812 | 18% |
| Financial | 39,342 | 15% | 38,656 | 15% |
| Consumer | 34,815 | 13% | 31,529 | 12% |
| Energy | 16,932 | 6% | 15,840 | 6% |
| Industrial | 24,840 | 9% | 24,233 | 9% |
| Other | 16,438 | 6% | 15,843 | 6% |
| Total | $265,896 | 100% | $260,289 | 100% |
(i)Insurance Risk
Insurance risk is the risk of loss due to actual experience for mortality and morbidity claims, policyholder behaviour and expenses
emerging differently than assumed when a product was designed and priced. A variety of assumptions are made related to these
experience factors, for reinsurance costs, and for sales levels when products are designed and priced, as well as in the
determination of policy liabilities. Assumptions for future claims are generally based on both Company and industry experience,
and assumptions for future policyholder behaviour and expenses are generally based on Company experience. Such
assumptions require significant professional judgment, and actual experience may be materially different than the assumptions
made by the Company. Claims may be impacted unexpectedly by changes in the prevalence of diseases or illnesses, medical
and technology advances, widespread lifestyle changes, natural disasters, large-scale man-made disasters and acts of terrorism.
Policyholder behaviour including premium payment patterns, policy renewals, lapse rates and withdrawal and surrender activities
are influenced by many factors including market and general economic conditions, and the availability and relative attractiveness
of other products in the marketplace. Some reinsurance rates are not guaranteed and may be changed unexpectedly.
Adjustments the Company seeks to make to Non-guaranteed elements to reflect changing experience factors may be challenged
by regulatory or legal action and the Company may be unable to implement them or may face delays in implementation.
The Company manages insurance risk through global policies, standards and best practices with respect to product design,
pricing, underwriting and claim adjudication, and a global underwriting manual. Each business unit establishes underwriting
policies and procedures, including criteria for approval of risks and claims adjudication policies and procedures. The current
global life retention limit is US$40 for individual policies (US$45 for survivorship life policies) and is shared across businesses.
Lower limits are applied in some markets and jurisdictions. The Company aims to further reduce exposure to claims
concentrations by applying geographical aggregate retention limits for certain covers. Enterprise-wide, the Company aims to
reduce the likelihood of high aggregate claims by operating globally, insuring a wide range of unrelated risk events, and
reinsuring some risk.
| 100 |
|---|
(j)Concentration Risk
The geographic concentration of the Company’s insurance and investment contract liabilities, including embedded derivatives, is
shown below. The disclosure is based on the countries in which the business is written.
| As at December 31, 2025 | Insurance<br><br>contract<br><br>liabilities | Investment<br><br>contract<br><br>liabilities | Reinsurance<br><br>assets | Net liabilities |
|---|---|---|---|---|
| U.S. and Canada | $339,534 | $327,754 | $(53,885) | $613,403 |
| Asia and Other | 200,810 | 18,631 | (5,497) | 213,944 |
| Total | $540,344 | $346,385 | $(59,382) | $827,347 |
| As at December 31, 2024 | Insurance<br><br>contract<br><br>liabilities | Investment<br><br>contract<br><br>liabilities | Reinsurance<br><br>assets | Net liabilities |
| U.S. and Canada | $342,146 | $305,563 | $(52,055) | $595,654 |
| Asia and Other | 180,698 | 17,378 | (6,294) | 191,782 |
| Total | $522,844 | $322,941 | $(58,349) | $787,436 |
(k)Reinsurance Risk
In the normal course of business, the Company limits the amount of loss on any one policy by reinsuring certain levels of risk
with other insurers. In addition, the Company accepts reinsurance from other reinsurers. Reinsurance ceded does not discharge
the Company’s liability as the primary insurer. Failure of reinsurers to honour their obligations could result in losses to the
Company; consequently, allowances are established for amounts deemed uncollectible. To minimize losses from reinsurer
insolvency, the Company monitors the concentration of credit risk both geographically and with any one reinsurer. In addition, the
Company selects reinsurers with high credit ratings.
As at December 31, 2025, the Company had $59,382 (2024 – $58,349) of reinsurance assets. Of this, 94 per cent (2024 – 93
per cent) were ceded to reinsurers with S&P ratings of A- or above. The Company’s exposure to credit risk was mitigated by
$43,193 fair value of collateral held as security as at December 31, 2025 (2024 – $40,753). Net exposure after considering
offsetting agreements and the benefit of the fair value of collateral held was $16,189 as at December 31, 2025 (2024 – $17,595).
| 101 | 2025 Annual Report | Consolidated Financial Statements |
|---|
Note 9 Long-Term Debt
(a)Carrying Value of Long-Term Debt Instruments
| As at December 31, | |||||
|---|---|---|---|---|---|
| Issue date | Maturity date | Par value | 2025 | 2024 | |
| 3.050% Senior notes(1),(2) | August 27, 2020 | August 27, 2060 | US$1,155 | $1,583 | $1,659 |
| 5.375% Senior notes(1),(3) | March 4, 2016 | March 4, 2046 | US$750 | 1,017 | 1,067 |
| 4.986% Senior notes(1),(4) | December 11, 2025 | December 11, 2035 | US$1,000 | 1,362 | - |
| 3.703% Senior notes(1),(4) | March 16, 2022 | March 16, 2032 | US$750 | 1,024 | 1,074 |
| 2.396% Senior notes(1),(5) | June 1, 2020 | June 1, 2027 | US$200 | 274 | 287 |
| 2.484% Senior notes(1),(5) | May 19, 2020 | May 19, 2027 | US$500 | 684 | 717 |
| 3.527% Senior notes(1),(3) | December 2, 2016 | December 2, 2026 | US$270 | 370 | 388 |
| 4.150% Senior notes(1),(3) | March 4, 2016 | March 4, 2026 | US$1,000 | 1,371 | 1,437 |
| Total | $7,685 | $6,629 |
(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. Issuance costs are amortized to the earliest par redemption date.
(3)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 comparable
U.S. Treasury bond with a tenor approximately equal to the period, from the redemption date to the respective maturity date, plus a specified number of basis
points, together with accrued and unpaid interest. The specified number of basis points is as follows: 5.375% notes – 40 bps, 3.527% notes – 20 bps, and 4.150%
notes – 35 bps. Issuance costs are amortized over the term of the debt.
(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 comparable
U.S. Treasury bond with a tenor approximately equal to the period, from the redemption date to three months before the respective maturity date, plus a specified
number of basis points, together with accrued and unpaid interest. The specified number of basis points is as follows: 3.703% notes – 25 bps, and 4.986% notes –
15 bps. For the period from three months before the respective maturity date, MFC may redeem the senior notes, in whole or in part, at a redemption price equal
to par, together with accrued and unpaid interest. Issuance costs are amortized over the term of the debt.
(5)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 comparable
U.S. Treasury bond with a tenor approximately equal to the period, from the redemption date to two months before the respective maturity date, plus a specified
number of basis points, together with accrued and unpaid interest. The specified number of basis points is as follows: 2.396% notes – 30 bps, and 2.484% notes –
30 bps. For the period from two months before the respective maturity date, MFC may redeem the senior notes, in whole or in part, at a redemption price equal to
par, together with accrued and unpaid interest. Issuance costs are amortized over the term of the debt.
The cash amount of interest paid on long-term debt during the year ended December 31, 2025 was $241 (2024 – $233).
(b)Fair Value Measurement
The Company measures its long-term debt at amortized cost in the Consolidated Statements of Financial Position. As at
December 31, 2025, the fair value of long-term debt was $6,962 (2024 – $5,741). The fair value of long-term debt was
determined using Level 2 valuation techniques (2024 – Level 2).
(c)Aggregate Maturities of Long-Term Debt
| As at December 31, | Less than 1<br><br>year | 1 to 3 years | 3 to 5 years | Over 5 years | Total |
|---|---|---|---|---|---|
| 2025 | $1,741 | $958 | $- | $4,986 | $7,685 |
| 2024 | - | 2,829 | - | 3,800 | 6,629 |
| 102 | |||||
| --- |
Note 10 Capital Instruments
(a)Carrying Value of Capital Instruments
| As at December 31, | ||||||
|---|---|---|---|---|---|---|
| Issuance date | Earliest par redemption<br><br>date | Maturity date | Par value | 2025 | 2024 | |
| JHFC Subordinated notes(1) | December 14, 2006 | December 15, 2036 | December 15, 2036 | $650 | $648 | $648 |
| 3.983% MFC Subordinated debentures(2) | May 23, 2025 | May 23, 2030 | May 23, 2035 | $500 | 497 | - |
| 2.818% MFC Subordinated debentures(3),(4) | May 12, 2020 | May 13, 2030 | May 13, 2035 | $1,000 | 997 | 997 |
| 4.064% MFC Subordinated debentures(5) | December 6, 2024 | December 6, 2029 | December 6, 2034 | $1,000 | 996 | 995 |
| 4.275% MFC Subordinated notes(6),(7) | June 19, 2024 | June 19, 2029 | June 19, 2034 | S$500 | 531 | 524 |
| 5.054% MFC Subordinated debentures(8) | February 23, 2024 | February 23, 2029 | February 23, 2034 | $1,100 | 1,096 | 1,095 |
| 5.409% MFC Subordinated debentures(9) | March 10, 2023 | March 10, 2028 | March 10, 2033 | $1,200 | 1,197 | 1,196 |
| 4.061% MFC Subordinated notes(3),(10),(11) | February 24, 2017 | February 24, 2027 | February 24, 2032 | US$750 | 1,028 | 1,077 |
| 2.237% MFC Subordinated debentures(12) | May 12, 2020 | May 12, 2025 | May 12, 2030 | $1,000 | - | 1,000 |
| Total | $6,990 | $7,532 |
(1)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. Effective July 1, 2024, the notes bear interest at a floating rate equal to Canadian Overnight Repo Rate Average (“CORRA”), plus
a spread adjustment of 0.32138%, plus 0.72%. With regulatory approval, JHFC may redeem the note, in whole or in part, at any time, at par, together with accrued
and unpaid interest. Refer to note 17.
(2)Issued by MFC, interest is payable semi-annually. After May 23, 2030, the interest rate will reset to equal the Daily Compounded CORRA plus 1.32%. With
regulatory approval, MFC may redeem the notes, in whole or in part, on or after May 23, 2030, at a redemption price equal to par, together with accrued and
unpaid interest to, but excluding, the date fixed for redemption.
(3)Capital instruments with interest rates resetting in the future that reference Canadian Dollar Offered Rate (“CDOR”) and the U.S. Dollar Mid-Swap rate (based on
London Interbank Offered Rate (LIBOR)) include the 2.818% subordinated debentures and 4.061% subordinated debentures, respectively. Future rate resets for
these capital instruments may rely on alternative reference rates such as CORRA, the alternative rate for CDOR, and the Secured Overnight Financing Rate
(SOFR) and the alternative rate for USD LIBOR. As at December 31, 2025, the interest rate benchmark reform has not resulted in material changes in the
Company's risk management strategy.
(4)After May 13, 2030, the interest rate will reset to equal 3-month CDOR plus 1.82%. With regulatory approval, MFC may redeem the debentures, in whole or in
part, on or after May 13, 2025, at a redemption price together with accrued and unpaid interest. If the redemption date is on or after May 13, 2025, but prior to May
13, 2030, the redemption price shall be the greater of: (i) the Canada yield price as defined in the prospectus; and (ii) par. If the redemption date is on or after May
13, 2030, the redemption price shall be equal to par.
(5)Issued by MFC, interest is payable semi-annually. After December 6, 2029, the interest rate will reset to equal the Daily Compounded CORRA plus 1.25%. With
regulatory approval, MFC may redeem the notes, in whole or in part, on or after December 6, 2029 at a redemption price equal to par, together with accrued and
unpaid interest to, but excluding, the date fixed for redemption.
(6)Designated as a hedge of the Company's net investment in its Singapore operations which reduces the earnings volatility that would otherwise arise from the re-
measurement of the subordinated notes into Canadian dollars.
(7)Issued by MFC, interest is payable semi-annually. After June 19, 2029, the interest rate will reset to equal the prevailing 5-year SORA Overnight Indexed Swap
(SORA OIS) Rate plus 1.201%. With regulatory approval, MFC may redeem the notes, in whole, but not in part, on June 19, 2029 and on any interest payment
date thereafter, at a redemption price equal to par, together with accrued and unpaid interest to, but excluding, the date fixed for redemption.
(8)Issued by MFC, interest is payable semi-annually. After February 23, 2029, the interest rate will reset to equal the Daily Compounded CORRA plus 1.44%. With
regulatory approval, MFC may redeem the debentures, in whole, but not in part, on or after February 23, 2029 at a redemption price equal to par, together with
accrued and unpaid interest to, but excluding, the date fixed for redemption.
(9)Issued by MFC, interest is payable semi-annually. After March 10, 2028, the interest rate will reset to equal the Daily Compounded CORRA plus 1.85%. With
regulatory approval, MFC may redeem the debentures, in whole or in part, on or after March 10, 2028, at a redemption price equal to par, together with accrued
and unpaid interest.
(10)On the earliest par redemption date, the interest rate will reset to equal the 5-Year U.S. Dollar Mid-Swap Rate plus 1.647%. With regulatory approval, MFC may
redeem the debentures, in whole, but not in part, on the earliest par redemption date, at a redemption price equal to par, together with accrued and unpaid
interest.
(11)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.
(12)The 2.237% MFC Subordinated notes were redeemed at par on May 12, 2025.
(b)Fair Value Measurement
The Company measures capital instruments at amortized cost in the Consolidated Statements of Financial Position. As at
December 31, 2025, the fair value of capital instruments was $7,121 (2024 – $7,575). The fair value of capital instruments was
determined using Level 2 valuation techniques (2024 – Level 2).
| 103 | 2025 Annual Report | Consolidated Financial Statements |
|---|
Note 11 Equity Capital and Earnings Per Share
The authorized capital of MFC consists of:
•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.
(a)Preferred Shares and Other Equity Instruments
The following table presents information about the outstanding preferred shares and other equity instruments as at December
31, 2025 and December 31, 2024.
| Annual dividend /<br><br>distribution rate(1) | Earliest redemption<br><br>date(2),(3) | Number of<br><br>shares<br><br>(in millions) | Faceamount | ||||
|---|---|---|---|---|---|---|---|
| Issue date | 2025 | 2024 | |||||
| Preferred shares | |||||||
| Class A preferred shares | |||||||
| Series 2 | February 18, 2005 | 4.650 % | n/a | 14 | 350 | $344 | $344 |
| Series 3 | January 3, 2006 | 4.500 % | n/a | 12 | 300 | 294 | 294 |
| Class 1 preferred shares | |||||||
| Series 3(5),(6) | March 11, 2011 | 2.348 % | June 19, 2026 | 7 | 163 | 160 | 160 |
| Series 4(7) | June 20, 2016 | floating | June 19, 2026 | 1 | 37 | 36 | 36 |
| Series 9(5),(6) | May 24, 2012 | 5.978 % | September 19, 2027 | 10 | 250 | 244 | 244 |
| Series 11(5),(6) | December 4, 2012 | 6.159 % | March 19, 2028 | 8 | 200 | 196 | 196 |
| Series 13(5),(6) | June 21, 2013 | 6.350 % | September 19, 2028 | 8 | 200 | 196 | 196 |
| Series 15(5),(6) | February 25, 2014 | 5.775 % | June 19, 2029 | 8 | 200 | 195 | 195 |
| Series 17(5),(6) | August 15, 2014 | 5.542 % | December 19, 2029 | 14 | 350 | 343 | 343 |
| Series 19(5),(6),(8) | December 3, 2014 | 5.169 % | March 19, 2030 | 10 | 250 | 246 | 246 |
| Series 25(5),(6) | February 20, 2018 | 5.942 % | June 19, 2028 | 10 | 250 | 245 | 245 |
| Other equity<br><br>instruments | |||||||
| Limited recourse capital<br><br>notes (LRCN)(9) | |||||||
| Series 1(10) | February 19, 2021 | 3.375 % | May 19, 2026 | n/a | 2,000 | 1,982 | 1,982 |
| Series 2(10) | November 12, 2021 | 4.100 % | February 19, 2027 | n/a | 1,200 | 1,189 | 1,189 |
| Series 3(10) | June 16, 2022 | 7.117 % | June 19, 2027 | n/a | 1,000 | 990 | 990 |
| Total | 6,750 | $6,660 | $6,660 |
All values are in US Dollars.
(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 distributions are payable to all LRCN 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 dates 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 preferred shares, in whole or in part, at par at any time, subject to regulatory
approval. MFC may redeem the Class 1 Series 4 preferred shares, in whole or in part, at any time, at $25.00 per share if redeemed on June 19, 2026 (the earliest
redemption date) and on June 19 every five years thereafter, or at $25.50 per share if redeemed on any other date after June 19, 2021, subject to regulatory
approval.
(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 to and including June 19,
commencing in 2026. The redemption period for Series 2 is every five years during the period from February 19 to and including March 19, commencing in 2027.
After the first redemption date, the redemption period for Series 3 is every five years during the period from May 19 to and including June 19, commencing in
2032.
(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 – 1.41%, Series 9 – 2.86%, Series 11 – 2.61%, Series 13 – 2.22%,
Series 15 – 2.16%, Series 17 – 2.36%, Series 19 – 2.30%, and Series 25 – 2.55%.
(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.
(7)The floating dividend rate for the Class 1 Series 4 shares equals the three-month Government of Canada Treasury bill yield plus 1.41%.
(8)MFC did not exercise its right to redeem the outstanding Class 1 Shares Series 19 on March 19, 2025, which was the earliest redemption date. The dividend rate
was reset as specified in footnote 5 above to an annual fixed rate of 5.169%, for a 5-year period commencing on March 20, 2025.
(9)Non-payment of distributions or principal on any LRCN series when due will result in a recourse event. The recourse of each noteholder will be limited to their
proportionate amount of the Limited Recourse Trust’s assets which comprise of Class 1 Series 27 preferred shares for LRCN Series 1, Class 1 Series 28 preferred
shares for LRCN Series 2, and Class 1 Series 29 preferred shares for LRCN Series 3. All claims of the holders of LRCN series against MFC will be extinguished
upon receipt of the corresponding trust assets. The Class 1 Series 27, Class 1 Series 28 and Class 1 Series 29 preferred shares are eliminated on consolidation
while being held in the Limited Recourse Trust.
(10)The LRCN Series 1 pay a distribution at a fixed rate of 3.375% payable semi-annually, until June 18, 2026; on June 19, 2026 and every five years thereafter until
June 19, 2076, the rate will be reset at a rate equal to the five-year Government of Canada yield as defined in the prospectus, plus 2.839%. The LRCN Series 2
pay a distribution at a fixed rate of 4.10% payable semi-annually, until March 18, 2027; on March 19, 2027 and every five years thereafter until March 19, 2077, the
rate will be reset at a rate equal to the five-year Government of Canada yield as defined in the prospectus, plus 2.704%. The LRCN Series 3 pay a distribution at a
fixed rate of 7.117% payable semi-annually, until June 18, 2027; on June 19, 2027 and every five years thereafter until June 19, 2077, the rate will be reset at a
rate equal to the five-year Government of Canada yield as defined in the prospectus, plus 3.95%.
| 104 |
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(b)Common Shares
As at December 31, 2025, there were 9 million outstanding stock options and deferred share units that entitle the holders to
receive common shares or payment in cash or common shares, at the option of the holders (2024 – 12 million).
The following table presents changes in common shares issued and outstanding.
| For the years ended December 31, | 2025 | 2024 | ||
|---|---|---|---|---|
| Number of<br><br>shares<br><br>(in millions) | Amount | Number of<br><br>shares<br><br>(in millions) | Amount | |
| Balance, beginning of year | 1,729 | $20,681 | 1,806 | $21,527 |
| Repurchased for cancellation | (54) | (651) | (83) | (990) |
| Issued on exercise of stock options and deferred share units | 2 | 73 | 6 | 144 |
| Balance, end of year | 1,677 | $20,103 | 1,729 | $20,681 |
Normal course issuer bid
On February 19, 2025, the Company received approval from the Toronto Stock Exchange (“TSX”) to launch a normal course
issuer bid (the “2025 NCIB”), permitting the purchase for cancellation of up to 51.5 million of its common shares, representing
approximately 3.0% of its common shares outstanding as at February 12, 2025. Purchases under the 2025 NCIB commenced on
February 24, 2025, and may continue until February 23, 2026, when the 2025 NCIB expires, or such earlier date as the
Company completes its purchases.
The Company’s 2024 NCIB was announced on February 20, 2024 and subsequently amended on May 7, 2024. The Company
received approval from the TSX to purchase for cancellation up to 90 million of its common shares, representing approximately
5% of its common shares outstanding as at February 12, 2024. The 2024 NCIB expired on February 22, 2025.
During the year ended December 31, 2025, the Company purchased for cancellation 54.4 million common shares (2024 –
82.8 million common shares) for a total cost of $2,386 pre-tax (2024 – $3,212 pre-tax), including 48.7 million common shares for
$2,138 pre-tax under the 2025 NCIB, and 5.7 million common shares for $248 pre-tax under the 2024 NCIB, and incurred $45
(2024 – $60) tax on net repurchases of equity. Of this, $651 was recorded in common shares and $1,780 was recorded in
retained earnings in the Consolidated Statements of Changes in Equity (2024 – $990 and $2,282, respectively).
On February 11, 2026, the Company announced that it is launching a normal course issuer bid (the “2026 NCIB”) permitting the
purchase for cancellation of up to 42 million common shares, representing approximately 2.5% of its common shares outstanding
as at January 31, 2026. The Company has received approval from OSFI for the 2026 NCIB on January 19, 2026. Purchases
under the 2026 NCIB are expected to commence in late February, subject to approval from the TSX.
(c)Earnings Per Share
The following table presents basic and diluted earnings per common share of the Company.
| For the years ended December 31, | 2025 | 2024 |
|---|---|---|
| Basic earnings per common share | $3.08 | $2.85 |
| Diluted earnings per common share | 3.07 | 2.84 |
The following is a reconciliation of the denominator (number of shares) in the calculation of basic and diluted earnings per
common share.
| For the years ended December 31, | 2025 | 2024 |
|---|---|---|
| Weighted average number of common shares (in millions) | 1,703 | 1,779 |
| Dilutive stock-based awards(1) (in millions) | 5 | 6 |
| Weighted average number of diluted common shares (in millions) | 1,708 | 1,785 |
(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 nil (2024 – nil) anti-dilutive stock-
based awards.
| 105 | 2025 Annual Report | Consolidated Financial Statements |
|---|
(d)Quarterly Dividend Declaration Subsequent to Year End
On February 11, 2026, the Company’s Board of Directors approved a quarterly dividend of $0.485 per share on the common
shares of MFC, payable on or after March 19, 2026 to shareholders of record at the close of business on February 25, 2026.
The Board also declared dividends on the following non-cumulative preferred shares, payable on or after March 19, 2026 to
shareholders of record at the close of business on February 25, 2026.
| Class A Shares Series 2 – 0.290630 per share |
|---|
| Class A Shares Series 3 – 0.281250 per share |
| Class 1 Shares Series 3 – 0.146750 per share |
| Class 1 Shares Series 4 – 0.223645 per share |
| Class 1 Shares Series 9 – 0.373625 per share |
| Class 1 Shares Series 11 – 0.384938 per share |
All values are in US Dollars.
Note 12 Capital Management
(a)Capital Management
The Company monitors and manages its consolidated capital in compliance with the Life Insurance Capital Adequacy Test
(“LICAT”) guideline, the capital framework issued by OSFI. Under the capital framework, the Company’s consolidated capital
resources, including available capital, surplus allowance, and eligible deposits, are measured against a base solvency buffer,
which is a risk based capital requirement determined in accordance with the guideline.
The Company’s operating activities are primarily conducted by MLI and its subsidiaries. MLI is also regulated by OSFI and is
therefore subject to consolidated risk based capital requirements using the OSFI LICAT framework.
The Company seeks to manage its capital with the objectives of:
•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.
Capital is managed and monitored in accordance with the Capital Management Policy. The policy is reviewed and approved by
the Board of Directors annually and is integrated with the Company’s risk and financial management frameworks. It establishes
guidelines regarding the quantity and quality of capital, internal capital mobility, and proactive management of ongoing and future
capital requirements.
The capital management framework considers the requirements of the Company as a whole as well as the needs of each of the
Company’s subsidiaries. Internal capital targets are set above regulatory requirements, and considers a number of factors,
including expectations of regulators and rating agencies, results of sensitivity and stress testing and the Company’s own risk
assessments. The Company monitors against these internal targets and initiates actions appropriate to achieving its business
objectives.
Consolidated capital, whose components are based on accounting standards, is presented in the table below. For regulatory
reporting purposes, under the LICAT framework, these items are adjusted for various additions or deductions to capital as
mandated by the OSFI guidelines.
Consolidated capital
| As at December 31, | 2025 | 2024 |
|---|---|---|
| Total equity | $52,488 | $52,960 |
| Exclude AOCI gain / (loss) on cash flow hedges | 87 | 119 |
| Total equity excluding AOCI on cash flow hedges | 52,401 | 52,841 |
| Post-tax CSM | 22,165 | 19,497 |
| Qualifying capital instruments | 6,990 | 7,532 |
| Consolidated capital | $81,556 | $79,870 |
(b)Restrictions on Dividends and Capital Distributions
Dividends and capital distributions are restricted under the Insurance Companies Act (“ICA”). These restrictions apply to both
MFC and its primary operating subsidiary MLI. The ICA prohibits the declaration or payment of any dividend on shares of an
insurance company if there are reasonable grounds for believing a company does not have adequate capital and adequate and
appropriate forms of liquidity or the declaration or payment of the dividend would cause the company to be in contravention of
| 106 |
|---|
any regulation made under the ICA respecting the maintenance of adequate capital and adequate and appropriate forms of
liquidity, or of any direction made to the company by OSFI. The ICA also requires an insurance company to notify OSFI of the
declaration of a dividend at least 15 days prior to the date fixed for its payment. Similarly, the ICA prohibits the purchase for
cancellation of any shares issued by an insurance company or the redemption of any redeemable shares or other similar capital
transactions, if there are reasonable grounds for believing that the company does not have adequate capital and adequate and
appropriate forms of liquidity or the payment would cause the company to be in contravention of any regulation made under the
ICA respecting the maintenance of adequate capital and adequate and appropriate forms of liquidity, or any direction made to the
company by OSFI. These latter transactions would require the prior approval of OSFI.
The ICA requires Canadian insurance companies to maintain adequate levels of capital at all times.
Since MFC is a holding company that conducts all of its operations through regulated insurance subsidiaries (or companies
owned directly or indirectly by these subsidiaries), its ability to pay future dividends will depend on the receipt of sufficient funds
from its regulated insurance subsidiaries. These subsidiaries are also subject to certain regulatory restrictions under laws of
Canada, the United States and certain other countries that may limit their ability to pay dividends or make other upstream
distributions.
Note 13 Revenue from Service Contracts
The Company provides investment management services, transaction processing and administrative services, and distribution
and related services to proprietary and third-party investment funds, retirement plans, group benefit plans, institutional investors
and other arrangements. The Company also provides real estate management services to tenants of its investment properties.
The Company’s service contracts generally impose single performance obligations, each consisting of a series of similar related
services for each customer.
The Company’s performance obligations within service arrangements are generally satisfied over time as the customer
simultaneously receives and consumes the benefits of the services rendered, measured using an output method. Fees typically
include variable consideration and the related revenue is recognized to the extent that it is highly probable that a significant
reversal in the amount of cumulative revenue recognized will not occur when the uncertainty is subsequently resolved.
Asset-based fees vary with the asset values of accounts under management, subject to market conditions and investor
behaviours beyond the Company’s control. Transaction processing and administrative fees vary with activity volumes, also
beyond the Company’s control. Some fees, including distribution fees, are based on account balances and transaction volumes.
Fees related to account balances and transaction volumes are measured daily. Real estate management service fees include
fixed portions plus recovery of variable costs of services rendered to tenants. Fees related to services provided are generally
recognized as services are rendered, which is when it becomes highly probable that no significant reversal of cumulative
revenue recognized will occur. The Company has determined that its service contracts have no significant financing components
because fees are collected monthly. The Company has no significant contract assets or contract liabilities.
The following tables present revenue from service contracts by service lines and reporting segments as disclosed in note 19.
| For the year ended December 31, 2025 | Global WAM | Asia,<br><br>Canada,<br><br>U.S., and<br><br>Corporate<br><br>and Other | Total | |||||
|---|---|---|---|---|---|---|---|---|
| Investment management and other related fees | $3,940 | $(442) | $3,498 | |||||
| Transaction processing, administration and service fees | 3,166 | 302 | 3,468 | |||||
| Distribution fees and other | 906 | 59 | 965 | |||||
| Total included in other revenue | 8,012 | (81) | 7,931 | |||||
| Revenue from non-service lines | 8 | 190 | 198 | |||||
| Total other revenue | $8,020 | $109 | $8,129 | |||||
| Real estate management services included in net investment income | $- | $276 | $276 | For the year ended December 31, 2024 | Global WAM | Asia,<br><br>Canada,<br><br>U.S., and<br><br>Corporate<br><br>and Other | Total | |
| --- | --- | --- | --- | |||||
| Investment management and other related fees | $3,612 | $(489) | $3,123 | |||||
| Transaction processing, administration and service fees | 2,908 | 298 | 3,206 | |||||
| Distribution fees and other | 918 | 46 | 964 | |||||
| Total included in other revenue | 7,438 | (145) | 7,293 | |||||
| Revenue from non-service lines | 1 | 294 | 295 | |||||
| Total other revenue | $7,439 | $149 | $7,588 | |||||
| Real estate management services included in net investment income | $- | $317 | $317 | |||||
| 107 | 2025 Annual Report | Consolidated Financial Statements | ||||||
| --- | --- | --- |
Note 14 Stock-Based Compensation
(a)Stock Options
The Company grants stock options under its Executive Stock Option Plan (“ESOP”) to selected individuals. The options provide
the holder the right to purchase MFC common shares at an exercise price equal to the higher of the prior day, prior five-day or
prior ten-day average closing market price of MFC common shares on the Toronto Stock Exchange on the date the options are
granted. The options vest over a period not exceeding four years and expire not more than ten years from the grant date.
Effective with the 2015 grant, options may only be exercised after the fifth-year anniversary. A total of 73,600,000 common
shares have been reserved for issuance under the ESOP.
Options outstanding
| For the years ended December 31, | 2025 | 2024 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Number of<br><br>options<br><br>(in millions) | Weighted<br><br>average<br><br>exercise price | Number of<br><br>options<br><br>(in millions) | Weighted<br><br>average<br><br>exercise price | |||||||||
| Outstanding, January 1 | 11 | $23.35 | 16 | $22.73 | ||||||||
| Exercised | (3) | 22.86 | (5) | 21.56 | ||||||||
| Outstanding, December 31 | 8 | $23.51 | 11 | $23.35 | ||||||||
| Exercisable, December 31 | 8 | $23.51 | 6 | $22.66 | Options outstanding | Options exercisable | ||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||
| For the year ended December 31, 2025 | Number of<br><br>options<br><br>(in millions) | Weighted<br><br>average<br><br>exercise price | Weighted<br><br>average<br><br>remaining<br><br>contractual<br><br>life (in years) | Number of<br><br>options<br><br>(in millions) | Weighted<br><br>average<br><br>exercise price | Weighted<br><br>average<br><br>remaining<br><br>contractual<br><br>life (in years) | ||||||
| $17.59 - $20.99 | 1 | $17.59 | 0.15 | 1 | $17.59 | 0.15 | ||||||
| $21.00 - $24.73 | 7 | $23.94 | 3.16 | 7 | $23.94 | 3.16 | ||||||
| Total | 8 | $23.51 | 2.96 | 8 | $23.51 | 2.96 |
No stock options were granted in 2025 or 2024.
Compensation expense related to stock options was $nil for the year ended December 31, 2025 (2024 – $nil).
(b)Deferred Share Units
In 2000, the Company granted deferred share units (“DSUs”) on a one-time basis to certain employees under the ESOP. These
DSUs vest over a three-year period and each DSU entitles the holder to receive one common share on retirement or termination
of employment. When dividends are paid on common shares, holders of DSUs are deemed to receive dividends at the same
rate, payable in the form of additional DSUs. The number of these DSUs outstanding was 45,000 as at December 31, 2025
(2024 – 149,000).
In addition, for certain employees and pursuant to the Company’s deferred compensation program, the Company grants DSUs
under the Restricted Share Units (“RSUs”) Plan which entitle the holder to receive payment in cash equal to the value of the
same number of common shares plus credited dividends on retirement or termination of employment. In 2025, the Company
granted 22,000 DSUs (2024 – 45,000) to certain employees which vest after 36 months. In 2025, 77,000 DSUs (2024 – 44,000)
were granted to certain employees who elected to defer receipt of all or part of their annual bonus, and these DSUs vested
immediately. In 2025, 16,000 DSUs (2024 – 19,000) were granted to certain employees who elected to defer payment of all or
part of their RSUs, and these DSUs also vested immediately.
Under the Stock Plan for Non-Employee Directors, each eligible director may elect to receive his or her annual director’s retainer
and fees in DSUs (which vest immediately) or common shares in lieu of cash. In 2025, 72,000 DSUs (2024 – 85,000) were
issued under this arrangement. Upon termination of their Board service, an eligible director who has elected to receive DSUs will
be entitled to receive cash equal to the value of the DSUs accumulated in their account, or at their direction, an equivalent
number of common shares. The Company is allowed to issue up to one million common shares under this plan, after which
awards may be settled using shares purchased in the open market.
| 108 |
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The fair value of 187,000 DSUs issued during the year was $49.84 per unit as at December 31, 2025 (2024 – 193,000 at $44.16
per unit).
| For the years ended December 31, | ||
|---|---|---|
| Number of DSUs (in thousands) | 2025 | 2024 |
| Outstanding, January 1 | 2,050 | 1,963 |
| Issued | 187 | 193 |
| Reinvested | 71 | 86 |
| Redeemed | (634) | (191) |
| Forfeitures and cancellations | (3) | (1) |
| Outstanding, December 31 | 1,671 | 2,050 |
Of the DSUs outstanding as at December 31, 2025, 45,000 (2024 – 149,000) entitle the holder to receive common shares,
957,000 (2024 – 867,000) entitle the holder to receive payment in cash and 669,000 (2024 – 1,034,000) entitle the holder to
receive payment in cash or common shares, at the option of the holder.
Compensation expense related to DSUs was $10 for the year ended December 31, 2025 (2024 – $10).
The carrying and fair value of the DSUs liability as at December 31, 2025 was $83 (2024 – $84) and was included in other
liabilities.
(c)Restricted Share Units and Performance Share Units
For the year ended December 31, 2025, 5.7 million RSUs (2024 – 6.7 million) and 1.2 million Performance Share Units (“PSUs”)
(2024 – 1.5 million) were granted to certain eligible employees under MFC’s Restricted Share Unit Plan. The fair value of the
RSUs and PSUs granted during the year was $49.84 per unit as at December 31, 2025 (2024 – $44.16 per unit). Each RSU and
PSU entitles the holder to receive payment equal to the market value of one common share, plus credited dividends, at the time
of vesting, subject to any performance conditions.
RSUs and PSUs granted in March 2025 will vest after 36 months from their grant date and the related compensation expense is
recognized over this period, unless the employee is eligible to retire at the time of grant or will be eligible to retire during the
vesting period, in which case the cost is recognized at the grant date or over the period between the grant date and the date on
which the employee is eligible to retire, respectively. Compensation expense related to RSUs and PSUs was $229 and $65,
respectively, for the year ended December 31, 2025 (2024 – $215 and $96, respectively).
The carrying and fair value of the RSUs and PSUs liability as at December 31, 2025 was $932 (2024 – $910) and was included
in other liabilities.
(d)Global Share Ownership Plan
The Company’s Global Share Ownership Plan allows qualifying employees to apply up to five per cent of their annual base
earnings toward the purchase of common shares. The Company matches a percentage of the employee’s eligible contributions
up to a maximum amount. The Company’s contributions vest immediately. All contributions are used to purchase common shares
in the open market on behalf of participating employees.
Note 15 Employee Future Benefits
The Company maintains defined contribution and defined benefit pension plans and other post-employment plans for employees
and agents including registered (tax-qualified) pension plans that are typically funded, as well as supplemental non-registered
(non-qualified) pension plans for executives, retiree welfare plans and disability welfare plans that are typically not funded.
(a)Plan Characteristics
The Company’s final average pay defined benefit pension plans and retiree welfare plans are closed to new members. All
employees may participate in capital accumulation plans including defined benefit cash balance plans, 401(k) plans and / or
defined contribution plans, depending on the country of employment.
All pension arrangements are governed by local pension committees or management or the Company’s Management Resources
and Compensation Committee.
The Company’s funding policy for defined benefit pension plans is to make the minimum annual contributions required by
regulations in the countries in which the plans are offered. Assumptions and methods prescribed for regulatory funding purposes
typically differ from those used for accounting purposes.
The Company’s remaining defined benefit pension and / or retiree welfare plans are in the U.S., Canada and Japan. There are
also disability welfare plans in the U.S. and Canada.
| 109 | 2025 Annual Report | Consolidated Financial Statements |
|---|
The largest defined benefit pension and retiree welfare plans are the primary plans for employees in the U.S. and Canada.
These are the material plans discussed in the balance of this note. The Company measures its defined benefit obligations and
fair value of plan assets for accounting purposes as at December 31 each year.
U.S. defined benefit pension and retiree welfare plans
The Company operates a qualified cash balance plan that is open to new members, a closed non-qualified cash balance plan,
and a closed retiree welfare plan.
Actuarial valuations to determine the Company’s minimum funding contributions for the qualified cash balance plan are required
annually. Deficits revealed in the funding valuations must generally be funded over a period of up to seven years. It is expected
that there will be no required funding for this plan in 2026. No assets are held in the non-qualified cash balance plan.
The retiree welfare plan subsidizes the cost of life insurance and medical benefits. The majority of those members who retired
after 1991 receive a fixed-dollar subsidy from the Company based on length of service. The plan was closed to employees hired
after 2004. While assets have been set aside in a qualified trust to pay future retiree welfare benefits, this funding is optional.
Retiree welfare benefits offered under the plan coordinate with the U.S. Medicare program to make optimal use of available
federal financial support.
The qualified pension and retiree welfare plans are governed by the U.S. Benefits Committee, while the non-qualified pension
plan is governed by the U.S. Non-Qualified Plans Subcommittee.
Canadian defined benefit pension and retiree welfare plans
The Company’s defined benefit plans in Canada include two registered final average pay pension plans, a non-registered
supplemental final average pay pension plan and a retiree welfare plan, all of which have been closed to new members.
Actuarial valuations to determine the Company’s minimum funding contributions for the registered pension plans are required at
least once every three years. Deficits revealed in the funding valuation must generally be funded over a period of ten years. For
2026, the required funding for these plans is expected to be $2. No assets are held in the non-registered supplemental pension
plan.
The retiree welfare plan subsidizes the cost of life insurance, medical and dental benefits. These subsidies are a fixed-dollar
amount for members who retired after April 30, 2013 and have been eliminated for members who retire after 2019. No assets are
held in this plan.
The registered pension plans are governed by Pension Committees, while the supplemental non-registered plan is governed by
the Management Resources and Compensation Committee. The retiree welfare plan is governed by management.
(b)Risks
In the final average pay pension plans and retiree welfare plans, the Company generally bears the material risks which include
interest rate, investment, longevity and health care cost inflation risks. In defined contribution plans, these risks are typically
borne by the employee. In cash balance plans, the interest rate, investment and longevity risks are partially transferred to the
employee.
Material sources of risk to the Company for all plans include:
•A decline in discount rates that increases the defined benefit obligations by more than the increase in value of plan assets;
•Lower than expected rates of mortality; and
•For retiree welfare plans, higher than expected health care costs.
The Company has managed these risks through plan design and eligibility changes that have limited the size and growth of the
defined benefit obligations. Investment risks for funded plans are managed by investing significantly in asset classes which are
highly correlated with the plans’ liabilities.
In the U.S., delegated committee representatives and management review the financial status of the qualified defined benefit
pension plan at least monthly, and steps are taken in accordance with an established dynamic investment policy to increase the
plan’s allocation to asset classes which are highly correlated with the plan’s liabilities and reduce investment risk as the funded
status improves. As at December 31, 2025, the target asset allocation for the plan was 30% return-seeking assets and 70%
liability-hedging assets (2024 – 30% and 70%, respectively).
In Canada, internal committees and management review the financial status of the registered defined benefit pension plans on at
least a quarterly basis. As at December 31, 2025, the target asset allocation for the plans was 17% return-seeking assets and
83% liability-hedging assets (2024 – 17% and 83%, respectively).
| 110 |
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(c)Pension and Retiree Welfare Plans
The following tables present the reconciliation of defined benefit obligation and fair value of plan assets for the pension plans and
retiree welfare plans.
| Pension plans | Retiree welfare plans | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| For the years ended December 31, | 2025 | 2024 | 2025 | 2024 | ||||||
| Changes in defined benefit obligation: | ||||||||||
| Opening balance, January 1 | $3,826 | $3,789 | $428 | $450 | ||||||
| Current service cost | 44 | 44 | - | - | ||||||
| Past service cost – amendment | - | - | - | - | ||||||
| Interest cost | 184 | 176 | 21 | 21 | ||||||
| Plan participants’ contributions | - | - | 2 | 2 | ||||||
| Actuarial losses (gains) due to: | ||||||||||
| Experience | (17) | 2 | (10) | (16) | ||||||
| Demographic assumption changes | (24) | - | (6) | - | ||||||
| Economic assumption changes | 19 | (101) | (3) | (19) | ||||||
| Benefits paid | (314) | (303) | (37) | (40) | ||||||
| Impact of changes in foreign exchange rates | (116) | 219 | (16) | 30 | ||||||
| Defined benefit obligation, December 31 | $3,602 | $3,826 | $379 | $428 | Pension plans | Retiree welfare plans | ||||
| --- | --- | --- | --- | --- | ||||||
| For the years ended December 31, | 2025 | 2024 | 2025 | 2024 | ||||||
| Changes in plan assets: | ||||||||||
| Fair value of plan assets, opening balance, January 1 | $3,820 | $3,706 | $553 | $526 | ||||||
| Interest income | 188 | 174 | 29 | 26 | ||||||
| Return on plan assets (excluding interest income) | 27 | (31) | 13 | (19) | ||||||
| Employer contributions | 55 | 57 | 13 | 12 | ||||||
| Plan participants’ contributions | - | - | 2 | 2 | ||||||
| Benefits paid | (314) | (303) | (37) | (40) | ||||||
| Administration costs | (10) | (8) | (2) | (2) | ||||||
| Impact of changes in foreign exchange rates | (123) | 225 | (26) | 48 | ||||||
| Fair value of plan assets, December 31 | $3,643 | $3,820 | $545 | $553 |
(d)Amounts Recognized in the Consolidated Statements of Financial Position
The following table presents the deficit (surplus) and net defined benefit liability (asset) for the pension plans and retiree welfare
plans.
| Pension plans | Retiree welfare plans | |||
|---|---|---|---|---|
| As at December 31, | 2025 | 2024 | 2025 | 2024 |
| Development of net defined benefit liability | ||||
| Defined benefit obligation | $3,602 | $3,826 | $379 | $428 |
| Fair value of plan assets | 3,643 | 3,820 | 545 | 553 |
| Deficit (surplus) | (41) | 6 | (166) | (125) |
| Effect of asset limit(1) | 46 | 44 | - | - |
| Deficit (surplus) and net defined benefit liability (asset) | 5 | 50 | (166) | (125) |
| Deficit (surplus) is comprised of: | ||||
| Funded or partially funded plans | (488) | (483) | (259) | (221) |
| Unfunded plans | 493 | 533 | 93 | 96 |
| Deficit (surplus) and net defined benefit liability (asset) | $5 | $50 | $(166) | $(125) |
(1)The asset limit relates to a registered pension plan in Canada. The surplus in that plan is above the present value of economic benefits that can be derived by the
Company through reductions in future contributions. For other funded pension plans in surplus position, 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.
| 111 | 2025 Annual Report | Consolidated Financial Statements |
|---|
(e)Disaggregation of Defined Benefit Obligation
The following table presents components of the defined benefit obligation between active members and inactive and retired
members.
| U.S. plans | Canadian plans | |||||||
|---|---|---|---|---|---|---|---|---|
| Pension plans | Retiree welfare plans | Pension plans | Retiree welfare plans | |||||
| As at December 31, | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 |
| Active members | $573 | $578 | $7 | $8 | $100 | $106 | $- | $- |
| Inactive and retired members | 1,765 | 1,922 | 279 | 324 | 1,164 | 1,220 | 93 | 96 |
| Total | $2,338 | $2,500 | $286 | $332 | $1,264 | $1,326 | $93 | $96 |
(f)Fair Value Measurements
The following tables present major categories of plan assets and the allocation to each category.
| U.S. plans(1) | Canadian plans(2) | |||||||
|---|---|---|---|---|---|---|---|---|
| Pension plans | Retiree welfare plans | Pension plans | Retiree welfare plans | |||||
| As at December 31, 2025 | Fair value | % of total | Fair value | % of total | Fair value | % of total | Fair value | % of total |
| Cash and cash equivalents | $33 | 1% | $13 | 2% | $11 | 1% | $- | -% |
| Public equity securities(3) | 326 | 14% | 48 | 9% | 200 | 17% | - | -% |
| Public debt securities | 1,423 | 57% | 472 | 87% | 954 | 82% | - | -% |
| Other investments(4) | 696 | 28% | 12 | 2% | 1 | -% | - | -% |
| Total | $2,478 | 100% | $545 | 100% | $1,166 | 100% | $- | -% |
(1)The U.S. pension and retiree welfare plan assets have daily quoted prices in active markets, except for the private debt, infrastructure, private equity, real estate,
timberland and agriculture assets. In the aggregate, the latter assets represent approximately 16% of all U.S. pension and retiree welfare plan assets as at
December 31, 2025 (2024 – 16%).
(2)All the Canadian pension plan assets have daily quoted prices in active markets, except for group annuity contract assets that represent approximately 0.1%
(approximately $1 (2024 – $1)) of all Canadian pension plan assets as at December 31, 2025 (2024 – 0.1%).
(3)Equity securities include direct investments in Manulife common shares of $2.4 (2024 – $2.1) in the U.S. retiree welfare plan.
(4)Other U.S. plan assets include investments in private debt, infrastructure, private equity, real estate, timberland and agriculture assets and managed futures. Other
Canadian pension plan assets include investments in the group annuity contracts.
| U.S. plans(1) | Canadian plans(2) | |||||||
|---|---|---|---|---|---|---|---|---|
| Pension plans | Retiree welfare plans | Pension plans | Retiree welfare plans | |||||
| As at December 31, 2024 | Fair value | % of total | Fair value | % of total | Fair value | % of total | Fair value | % of total |
| Cash and cash equivalents | $35 | 1% | $23 | 4% | $11 | 1% | $- | -% |
| Public equity securities(3) | 346 | 14% | 41 | 7% | 205 | 17% | - | -% |
| Public debt securities | 1,513 | 57% | 476 | 87% | 968 | 82% | - | -% |
| Other investments(4) | 741 | 28% | 13 | 2% | 1 | -% | - | -% |
| Total | $2,635 | 100% | $553 | 100% | $1,185 | 100% | $- | -% |
Note: For footnotes (1) to (4), refer to the “Fair value measurements” table as at December 31, 2025 above.
(g)Net Benefit Cost Recognized in the Consolidated Statements of Income
The following table presents components of the net benefit cost for the pension plans and retiree welfare plans.
| Pension plans | Retiree welfare plans | |||
|---|---|---|---|---|
| For the years ended December 31, | 2025 | 2024 | 2025 | 2024 |
| Defined benefit current service cost(1) | $44 | $44 | $- | $- |
| Defined benefit administrative expenses | 10 | 8 | 2 | 2 |
| Past service cost – plan amendments and curtailments | - | - | - | - |
| Service cost | 54 | 52 | 2 | 2 |
| Interest on net defined benefit (asset) liability | (1) | 4 | (8) | (5) |
| Defined benefit cost | 53 | 56 | (6) | (3) |
| Defined contribution cost | 101 | 97 | - | - |
| Net benefit cost | $154 | $153 | $(6) | $(3) |
(1)There are no significant current service costs for the retiree welfare plans as they are closed and mostly frozen. The re-measurement gain or loss on these plans is
due to the volatility of discount rates and investment returns.
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|---|
(h)Re-measurement Gain/Loss Recorded in Other Comprehensive Income
The following table presents components of the re-measurement gains/losses recognized in Other Comprehensive Income for
the pension plans and retiree welfare plans.
| Pension plans | Retiree welfare plans | |||
|---|---|---|---|---|
| For the years ended December 31, | 2025 | 2024 | 2025 | 2024 |
| Actuarial gains (losses) on defined benefit obligations due to: | ||||
| Experience | $17 | $(2) | $10 | $16 |
| Demographic assumption changes | 24 | - | 6 | - |
| Economic assumption changes | (19) | 101 | 3 | 19 |
| Return on plan assets (excluding interest income) | 27 | (31) | 13 | (19) |
| Change in effect of asset limit (excluding interest) | - | (1) | - | - |
| Total re-measurement gains (losses) recorded in OCI, net of tax | $49 | $67 | $32 | $16 |
(i)Assumptions
The following table presents key assumptions used by the Company to determine the defined benefit obligation and net benefit
cost for the defined benefit pension plans and retiree welfare plans.
| U.S. Plans | Canadian Plans | |||||||
|---|---|---|---|---|---|---|---|---|
| Pension plans | Retiree welfare plans | Pension plans | Retiree welfare plans | |||||
| For the years ended December 31, | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 |
| To determine the defined benefit<br><br>obligation at end of year(1): | ||||||||
| Discount rate | 5.2% | 5.5% | 5.1% | 5.4% | 4.8% | 4.6% | 4.9% | 4.7% |
| Initial health care cost trend rate(2) | n/a | n/a | 8.5% | 8.8% | n/a | n/a | 3.9% | 3.9% |
| To determine the net defined benefit<br><br>cost for the year(1): | ||||||||
| Discount rate | 5.5% | 4.8% | 5.4% | 4.8% | 4.6% | 4.6% | 4.7% | 4.7% |
| Initial health care cost trend rate(2) | n/a | n/a | 8.8% | 9.0% | n/a | n/a | 3.9% | 3.9% |
(1)Inflation and salary increase assumptions are not shown as they do not materially affect obligations and costs.
(2)The health care cost trend rate used to measure the U.S. based retiree welfare obligation was 8.5% grading to 4.8% for 2041 and years thereafter (2024 – 8.8%
grading to 4.8% for 2041 and years thereafter) and to measure the net benefit cost was 8.8% grading to 4.8% for 2041 and years thereafter (2024 – 9.0% grading
to 4.8% for 2041 and years thereafter). In Canada, the rate used to measure the retiree welfare obligation was 3.9% grading to 4.0% for 2029 and years thereafter
(2024 – 3.9% grading to 4.0% for 2029 and years thereafter) and to measure the net benefit cost was 3.9% grading to 4.0% for 2029 and years thereafter (2024 –
5.1% in 2023 and 3.9% in 2024, grading to 4.0% for 2029 and years thereafter).
Assumptions regarding future mortality are based on published statistics and mortality tables. The following table presents
current life expectancies underlying the values of the obligations in the defined benefit pension and retiree welfare plans.
| U.S. | Canada | |||
|---|---|---|---|---|
| As at December 31, | 2025 | 2024 | 2025 | 2024 |
| Life expectancy (in years) for those currently age 65 | ||||
| Males | 22.2 | 22.2 | 24.4 | 24.4 |
| Females | 23.6 | 23.7 | 26.3 | 26.2 |
| Life expectancy (in years) at age 65 for those currently age 45 | ||||
| Males | 23.6 | 23.6 | 25.3 | 25.3 |
| Females | 25.0 | 25.1 | 27.1 | 27.1 |
| 113 | 2025 Annual Report | Consolidated Financial Statements | ||
| --- | --- | --- |
(j)Sensitivity of Assumptions on Obligations
Assumptions used can have a significant effect on the obligations reported for defined benefit pension and retiree welfare plans.
The following table sets out the potential impact on the obligations arising from changes in the key assumptions. Each sensitivity
assumes that all other assumptions are held constant. In actuality, inter-relationships among assumptions may exist.
| Pension plans | Retiree welfare plans | |||
|---|---|---|---|---|
| As at December 31, | 2025 | 2024 | 2025 | 2024 |
| Discount rate: | ||||
| Impact of a 1% increase | $(238) | $(260) | $(30) | $(34) |
| Impact of a 1% decrease | 279 | 305 | 35 | 40 |
| Health care cost trend rate: | ||||
| Impact of a 1% increase | n/a | n/a | 8 | 9 |
| Impact of a 1% decrease | n/a | n/a | (7) | (8) |
| Mortality rates(1): | ||||
| Impact of a 10% decrease | 88 | 89 | 6 | 9 |
(1)If the actuarial estimates of mortality are adjusted in the future to reflect unexpected decreases in mortality, the effect of a 10% decrease in mortality rates at each
future age would be an increase in life expectancy at age 65 of 0.8 years for U.S. and Canadian males and females.
(k)Maturity Profile
The following table presents the weighted average duration (in years) of the defined benefit obligations.
| Pension plans | Retiree welfare plans | |||
|---|---|---|---|---|
| As at December 31, | 2025 | 2024 | 2025 | 2024 |
| U.S. plans | 8.0 | 8.0 | 7.5 | 7.7 |
| Canadian plans | 9.9 | 10.1 | 10.5 | 10.9 |
(l)Cash Flows – Contributions
The following table presents total cash payments for all employee future benefits, comprised of cash contributed by the Company
to fund defined benefit pension and retiree welfare plans, cash payments made directly to beneficiaries in respect of unfunded
pension and retiree welfare plans, and cash contributed to defined contribution pension plans.
| Pension plans | Retiree welfare plans | |||
|---|---|---|---|---|
| For the years ended December 31, | 2025 | 2024 | 2025 | 2024 |
| Defined benefit plans | $55 | $57 | $13 | $12 |
| Defined contribution plans | 101 | 97 | - | - |
| Total | $156 | $154 | $13 | $12 |
The Company’s best estimate of expected cash payments for employee future benefits for the year ending December 31, 2026 is
$57 for defined benefit pension plans, $117 for defined contribution pension plans and $18 for retiree welfare plans.
Note 16 Income Taxes
(a)Income Tax Expense
The following table presents income tax expenses (recoveries) recognized in the Consolidated Statements of Income.
| For the years ended December 31, | 2025 | 2024 |
|---|---|---|
| Current tax | ||
| Current year | $773 | $655 |
| Global Minimum Taxes | 222 | 231 |
| Adjustments related to prior years | 45 | 15 |
| Total current tax | 1,040 | 901 |
| Deferred tax | ||
| Origination and reversal of temporary differences | (43) | 424 |
| Adjustments related to prior years | 29 | (113) |
| Effects of change in tax rates | 8 | - |
| Total deferred tax | (6) | 311 |
| Income tax expenses (recoveries) | $1,034 | $1,212 |
| 114 | ||
| --- |
The following table discloses income tax expenses (recoveries) recognized directly in equity.
| For the years ended December 31, | 2025 | 2024 |
|---|---|---|
| Recognized in other comprehensive income | ||
| Current income tax expenses (recoveries) | $(11) | $174 |
| Deferred income tax expenses (recoveries) | 183 | 885 |
| Total recognized in other comprehensive income | $172 | $1,059 |
| Recognized in equity, other than other comprehensive income | ||
| Current income tax expenses (recoveries) | $4 | $4 |
| Deferred income tax expenses (recoveries) | (4) | (5) |
| Total income tax recognized directly in equity | $- | $(1) |
(b)Current Income Tax Receivable and Payable
As at December 31, 2025, the Company had approximately $999 of current income tax receivable included in other assets (2024
– $1,070) and a current income tax payable of $619 included in other liabilities (2024 – $453).
(c)Tax Reconciliation
The effective income tax rate reflected in the Consolidated Statements of Income varies from the Canadian tax rate of 27.80%
for the year ended December 31, 2025 (2024 – 27.80%) for the items outlined in the following table.
| For the years ended December 31, | 2025 | 2024 |
|---|---|---|
| Net income (loss) before income taxes | $7,094 | $7,090 |
| Income tax expenses (recoveries) at Canadian statutory tax rate | $1,972 | $1,971 |
| Increase (decrease) in income taxes due to: | ||
| Tax-exempt investment income | (291) | (306) |
| Differences in tax rate on income not subject to tax in Canada | (948) | (938) |
| Adjustments to taxes related to prior years | 74 | (98) |
| Tax losses and temporary differences not recognized as deferred taxes | - | 94 |
| Tax rate change | 8 | - |
| Global Minimum Taxes | 222 | 231 |
| Other differences | (3) | 258 |
| Income tax expenses (recoveries) | $1,034 | $1,212 |
(d)Deferred Tax Assets and Liabilities
The following table presents the Company’s deferred tax assets and liabilities reflected on the Consolidated Statements of
Financial Position.
| As at December 31, | 2025 | 2024 |
|---|---|---|
| Deferred tax assets | $5,741 | $5,884 |
| Deferred tax liabilities | (2,018) | (1,890) |
| Net deferred tax assets (liabilities) | $3,723 | $3,994 |
| 115 | 2025 Annual Report | Consolidated Financial Statements |
| --- | --- | --- |
The following tables present movement of deferred tax assets and liabilities.
| For the year ended<br><br>December 31, 2025 | Balance,<br><br>January 1,<br><br>2025 | Acquired in<br><br>business<br><br>combination | Disposals | Recognized<br><br>in income | Recognized in<br><br>other<br><br>comprehensive<br><br>income | Recognized in<br><br>equity | Translation<br><br>and other | Balance,<br><br>December 31,<br><br>2025 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Loss carryforwards | $851 | $- | $- | $525 | $(1) | $(11) | $(11) | $1,353 | ||||||||||
| Actuarial liabilities | 4,164 | - | - | (422) | 229 | - | (194) | 3,777 | ||||||||||
| Pensions and post-employment<br><br>benefits | 153 | - | - | 3 | (5) | - | (1) | 150 | ||||||||||
| Tax credits | 238 | - | - | 80 | - | - | (8) | 310 | ||||||||||
| Accrued interest | 5 | - | - | (15) | - | - | - | (10) | ||||||||||
| Real estate | (970) | - | - | (5) | - | - | 29 | (946) | ||||||||||
| Lease liability | 45 | - | - | - | - | - | - | 45 | ||||||||||
| Right of use asset and sublease<br><br>receivable | (43) | - | - | - | - | - | - | (43) | ||||||||||
| Securities and other investments | 390 | - | - | (150) | (397) | - | 22 | (135) | ||||||||||
| Sale of investments | (8) | - | - | 6 | - | - | - | (2) | ||||||||||
| Goodwill and intangible assets | (829) | - | - | (5) | - | - | 21 | (813) | ||||||||||
| Other | (2) | - | - | (11) | (9) | 15 | 44 | 37 | ||||||||||
| Total | $3,994 | $- | $- | $6 | $(183) | $4 | $(98) | $3,723 | For the year ended<br><br>December 31, 2024, | Balance,<br><br>January 1,<br><br>2024 | Acquired in<br><br>business<br><br>combination | Disposals | Recognized<br><br>in income | Recognized in<br><br>other<br><br>comprehensive<br><br>income | Recognized in<br><br>equity | Translation<br><br>and other | Balance,<br><br>December 31,<br><br>2024 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||
| Loss carryforwards | $670 | $- | $- | $180 | $- | $(13) | $14 | $851 | ||||||||||
| Actuarial liabilities | 5,813 | - | - | (972) | (1,059) | (1) | 383 | 4,164 | ||||||||||
| Pensions and post-employment<br><br>benefits | 171 | - | - | 1 | (20) | - | 1 | 153 | ||||||||||
| Tax credits | 122 | - | - | 109 | - | - | 7 | 238 | ||||||||||
| Accrued interest | 1 | - | - | 4 | - | - | - | 5 | ||||||||||
| Real estate | (1,135) | - | - | 214 | 1 | - | (50) | (970) | ||||||||||
| Lease liability | 38 | - | - | 7 | - | 1 | (1) | 45 | ||||||||||
| Right of use asset and sublease<br><br>receivable | (34) | - | - | (8) | - | (1) | - | (43) | ||||||||||
| Securities and other investments | 86 | - | - | 276 | 197 | 2 | (171) | 390 | ||||||||||
| Sale of investments | (18) | - | - | 10 | - | - | - | (8) | ||||||||||
| Goodwill and intangible assets | (822) | - | - | 24 | - | - | (31) | (829) | ||||||||||
| Other | 150 | 4 | - | (156) | (4) | 17 | (13) | (2) | ||||||||||
| Total | $5,042 | $4 | $- | $(311) | $(885) | $5 | $139 | $3,994 |
The total deferred tax assets as at December 31, 2025 of $5,741 (2024 – $5,884) includes $173 (2024 – $27) where the
Company has suffered losses in either the current or preceding year and where the recognition is dependent on future taxable
profits in the relevant jurisdictions and feasible management actions.
As at December 31, 2025, tax loss carryforwards available were approximately $8,152 (2024 – $4,837), of which $5,342 expire
between the years 2026 and 2045 while $2,810 have no expiry date, and capital loss carryforwards available were approximately
$16 (2024 – $27) and have no expiry date. A $1,353 (2024 – $851) tax benefit related to these tax loss carryforwards has been
recognized as a deferred tax asset as at December 31, 2025, and a benefit of $472 (2024 – $356) has not been recognized. The
Company has approximately $476 (2024 – $412) of tax credit carryforwards which will expire between the years 2026 and 2045
of which a benefit of $166 (2024 – $174) has not been recognized. In addition, the Company has not recognized a deferred tax
asset of $908 (2024 – $1,152) on other temporary differences of $4,116 (2024 – $5,341).
The total deferred tax liability as at December 31, 2025 was $2,018 (2024 – $1,890). This amount includes the deferred tax
liability of consolidated entities. The aggregate amount of taxable temporary differences associated with the Company’s own
investments in subsidiaries is not included in the Consolidated Financial Statements and was $11,709 (2024 – $14,955).
| 116 |
|---|
Note 17 Interests in Structured Entities
The Company is involved with both consolidated and unconsolidated structured entities (“SEs”) which are established to
generate investment and fee income. The Company is also involved with SEs that are used to facilitate financing for the
Company. These entities may have some or all of the following features: control is not readily identified based on voting rights;
restricted activities designed to achieve a narrow objective; high amount of leverage; and / or highly structured capital.
The Company only discloses its involvement in significant consolidated and unconsolidated SEs. In assessing the significance,
the Company considers the nature of its involvement with the SE, including whether it is sponsored by the Company (i.e., initially
organized and managed by the Company). Other factors considered include the Company’s investment in the SE as compared
to total invested assets, its returns from the SE as compared to total net investment income, the SE’s size as compared to total
funds under management, and its exposure to any other risks from its involvement with the SE.
The Company does not provide financial or other support to its SEs, when it does not have a contractual obligation to do so.
(a)Consolidated Structured Entities
(I)Investment SEs
The Company acts as an investment manager of timberlands and timber companies. The Company’s general fund and
segregated funds invest in many of these companies. The Company has control over one timberland company which it
manages, Hancock Victoria Plantations Holdings PTY Limited (“HVPH”). HVPH is a SE primarily because the Company’s
employees exercise voting rights over it on behalf of other investors. As at December 31, 2025, the Company’s consolidated
timber assets owned by HVPH were $1,509 (2024 – $1,273). The Company does not provide guarantees to other parties against
the risk of loss from their investments in HVPH.
(II)Financing SEs
The Company securitizes certain HELOC mortgages which are collateralized by residential properties. This activity is facilitated
by consolidated entities that are SEs because their operations are limited to issuing and servicing the Company’s funding.
Further information regarding the Company’s mortgage securitization program is included in note 3.
(b)Unconsolidated Structured Entities
Investment SEs
The following table presents the Company’s investments and maximum exposure to loss from significant unconsolidated
investment SEs, some of which are sponsored by the Company. The Company does not provide guarantees to other parties
against the risk of loss from their investments in these SEs.
| Company’s investment(1) | Company’s maximum<br><br>exposure to loss(2) | |||
|---|---|---|---|---|
| As at December 31, | 2025 | 2024 | 2025 | 2024 |
| Leveraged leases(3) | $4,266 | $4,300 | $4,266 | $4,300 |
| Infrastructure entities(4) | 3,477 | 3,282 | 4,471 | 4,174 |
| Timberland entities(5) | 716 | 759 | 716 | 759 |
| Real estate entities(6) | 609 | 601 | 609 | 601 |
| Total | $9,068 | $8,942 | $10,062 | $9,834 |
(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 OCI.
(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 from any SE is expected to occur only upon the SE’s bankruptcy/liquidation.
(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 by the trusts to third-party lessees under long-term leases. The Company owns equity capital in these trusts. The Company does
not consolidate any of these trusts because the Company does not have power to govern their financial and operating policies.
(4)These entities invest in infrastructure assets. The Company invests in their equity. The Company’s returns include investment income, investment management
fees, and performance 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 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.
(6)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.
| 117 | 2025 Annual Report | Consolidated Financial Statements |
|---|
Financing SEs
The Company’s interests in and maximum exposure to loss from significant unconsolidated financing SEs are as follows.
| Company’s interests(1) | ||
|---|---|---|
| As at December 31, | 2025 | 2024 |
| Manulife Finance (Delaware), L.P.(2) | $681 | $710 |
| Total | $681 | $710 |
(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 (a) and 18 (d).
(I)Other Invested Assets
The Company has investment relationships with a variety of other entities, which result from its direct investment in their debt
and / or equity and which have been assessed for control. These other entities’ investments include but are not limited to
investments in infrastructure, energy, private equity, real estate and agriculture, organized as limited partnerships and limited
liability companies. Most of these other entities are not sponsored by the Company. The Company’s involvement with these other
entities is not individually significant. As such, the Company neither provides summary financial data for these entities nor
individually assesses whether they are SEs. The Company’s maximum exposure to losses because of its involvement with these
other entities is limited to its investment in them and amounts committed to be invested but not yet funded. The Company
records its income from these entities in net investment income and AOCI. The Company does not provide guarantees to other
parties against the risk of loss from their investments in these other entities.
(II)Interest in Securitized Assets
The Company invests in mortgage/asset-backed securities issued by securitization vehicles sponsored by other parties,
including private issuers and government sponsored issuers, to generate investment income. The Company does not own a
controlling financial interest in any of the issuers. These securitization vehicles are SEs based on their narrow scope of activities
and highly leveraged capital structures. Investments in mortgage/asset-backed securities are reported on the Consolidated
Statements of Financial Position as debt securities and private placements, and their fair value and carrying value are disclosed
in note 3. The Company’s maximum loss from these investments is limited to amounts invested.
Commercial mortgage-backed securities (“CMBS”) are secured by commercial mortgages and residential mortgage backed
securities (“RMBS”) are secured by residential mortgages. Asset-backed securities (“ABS”) may be secured by various
underlying assets including credit card receivables, automobile loans and aviation leases. The mortgage/asset-backed securities
that the Company invests in primarily originate in North America.
The following table presents investments in securitized holdings by the type and asset quality.
| 2025 | 2024 | ||||
|---|---|---|---|---|---|
| As at December 31, | CMBS | RMBS | ABS | Total | Total |
| AAA | $787 | $1 | $820 | $1,608 | $1,181 |
| AA | - | - | 433 | 433 | 319 |
| A | - | - | 154 | 154 | 378 |
| BBB | - | - | 50 | 50 | 41 |
| BB and below | - | - | 128 | 128 | 53 |
| Total exposure | $787 | $1 | $1,585 | $2,373 | $1,972 |
(III)Mutual Funds
The Company sponsors and may invest in a range of public mutual funds with a broad range of investment styles. As sponsor,
the Company organizes mutual funds that implement investment strategies on behalf of current and future investors. The
Company earns fees which are at market rates for providing advisory and administrative services to these mutual funds.
Generally, the Company does not control its sponsored mutual funds because either the Company does not have power to
govern their financial and operating policies, or its returns in the form of fees and ownership interests are not significant, or both.
Certain mutual funds are SEs because their decision-making rights are not vested in voting equity interests and their investors
are provided with redemption rights.
The Company’s relationships with these mutual funds are not individually significant. As such, the Company neither provides
summary financial data for these mutual funds nor individually assesses whether they are SEs. The Company’s interest in mutual
funds is limited to its investment and fees earned, if any. The Company’s investments in mutual funds are recorded as part of its
investment in public equities within the Consolidated Statements of Financial Position. For information regarding the Company’s
invested assets, refer to note 3. The Company does not provide guarantees to other parties against the risk of loss from these
mutual funds.
As sponsor, the Company’s investment in (“seed”) startup capital of mutual funds as at December 31, 2025 was $1,239 (2024 –
$1,149). The Company’s retail mutual fund assets under management as at December 31, 2025 were $338,443 (2024 –
$333,598).
| 118 |
|---|
Note 18 Commitments and Contingencies
(a)Legal Proceedings
The Company is regularly involved in legal actions, both as a defendant and as a plaintiff. The legal actions where the Company
is a party ordinarily relate to its activities as a provider of insurance protection or wealth management products, reinsurance, or in
its capacity as an investment adviser, employer, or taxpayer. Other life insurers and asset managers, operating in the
jurisdictions in which the Company does business, have been subject to a wide variety of other types of actions, some of which
resulted in substantial judgments or settlements against the defendants; it is possible that the Company may become involved in
similar actions in the future. In addition, government and regulatory bodies in Canada, the United States, Asia and other
jurisdictions where the Company conducts business regularly make inquiries and, from time to time, require the production of
information or conduct examinations concerning the Company’s compliance with, among other things, insurance laws, securities
laws, and laws governing the activities of broker-dealers.
In September 2023, a lawsuit was initiated against the Company in the U.S. District Court of the Southern District of New York as
a putative class action on behalf of all current and former owners of universal life insurance policies issued by the Company that
state that “cost of insurance rates will be based on future expectations that include taxes.” The Plaintiff’s theory is that the
Company impermissibly failed to decrease the cost of insurance rates charged to these policy owners after the implementation of
the Tax Cuts and Jobs Act of 2018. It is too early in the litigation to offer any reliable opinion about the scope of the class policies
that may be at issue or the likely outcome.
(b)Investment Commitments
In the normal course of business, various investment commitments are outstanding which are not reflected in the Consolidated
Financial Statements. There were $16,879 (2024 – $15,367) of outstanding investment commitments as at December 31, 2025,
of which $1,619 (2024 – $1,143) mature in 30 days, $3,334 (2024 – $3,217) mature in 31 to 365 days and $11,926 (2024 –
$11,007) mature after one year.
(c)Letters of Credit
In the normal course of business, third-party relationship banks issue letters of credit on the Company’s behalf. The Company’s
businesses utilize letters of credit for which third parties are the beneficiaries, as well as for affiliate reinsurance transactions
between its subsidiaries. As at December 31, 2025, letters of credit for which third parties are beneficiaries, in the amount of
$251 (2024 – $271), were outstanding.
| 119 | 2025 Annual Report | Consolidated Financial Statements |
|---|
(d)Guarantees
(I)Guarantee regarding Manulife Finance (Delaware), L.P. (“MFLP”)
MFC has guaranteed the payment of amounts on the $650 subordinated debentures due on December 15, 2041 issued by
MFLP, a wholly owned unconsolidated financing entity.
The following tables present certain condensed consolidated financial information for MFC and MFLP.
Condensed Consolidated Statements of Income Information
| For the year ended December 31, 2025 | MFC<br><br>(Guarantor) | Subsidiaries<br><br>on a combined<br><br>basis | Consolidation<br><br>adjustments | Total<br><br>consolidated<br><br>amounts | MFLP | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Insurance service result | $- | $4,526 | $- | $4,526 | $- | |||||||
| Investment result | 757 | 3,206 | (1,554) | 2,409 | 50 | |||||||
| Other revenue | 24 | 8,116 | (11) | 8,129 | (12) | |||||||
| Net income (loss) attributed to shareholders and other equity holders | 5,572 | 5,172 | (5,172) | 5,572 | (1) | For the year ended December 31, 2024 | MFC<br><br>(Guarantor) | Subsidiaries<br><br>on a combined<br><br>basis | Consolidation<br><br>adjustments | Total<br><br>consolidated<br><br>amounts | MFLP | |
| --- | --- | --- | --- | --- | --- | |||||||
| Insurance service result | $- | $4,001 | $- | $4,001 | $- | |||||||
| Investment result | 871 | 4,329 | (1,679) | 3,521 | 52 | |||||||
| Other revenue | (34) | 7,620 | 2 | 7,588 | 20 | |||||||
| Net income (loss) attributed to shareholders and other equity holders | 5,385 | 4,910 | (4,910) | 5,385 | 26 |
Condensed Consolidated Statements of Financial Position
| As at December 31, 2025 | MFC<br><br>(Guarantor) | Subsidiaries<br><br>on a combined<br><br>basis | Consolidation<br><br>adjustments | Total<br><br>consolidated<br><br>amounts | MFLP | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Invested assets | $1,399 | $458,529 | $- | $459,928 | $20 | |||||||
| Insurance contract assets | - | 194 | - | 194 | - | |||||||
| Reinsurance contract held assets | - | 60,881 | - | 60,881 | - | |||||||
| Total other assets | 63,341 | 47,566 | (67,731) | 43,176 | 965 | |||||||
| Segregated funds net assets | - | 461,254 | - | 461,254 | - | |||||||
| Insurance contract liabilities, excluding those for account of segregated<br><br>fund holders | - | 411,532 | - | 411,532 | - | |||||||
| Reinsurance contract held liabilities | - | 3,273 | - | 3,273 | - | |||||||
| Investment contract liabilities | - | 14,137 | - | 14,137 | - | |||||||
| Total other liabilities | 14,618 | 68,845 | (714) | 82,749 | 701 | |||||||
| Insurance contract liabilities for account of segregated fund holders | - | 129,006 | - | 129,006 | - | |||||||
| Investment contract liabilities for account of segregated fund holders | - | 332,248 | - | 332,248 | - | As at December 31, 2024 | MFC<br><br>(Guarantor) | Subsidiaries<br><br>on a combined<br><br>basis | Consolidation<br><br>adjustments | Total<br><br>consolidated<br><br>amounts | MFLP | |
| --- | --- | --- | --- | --- | --- | |||||||
| Invested assets | $126 | $442,371 | $- | $442,497 | $16 | |||||||
| Insurance contract assets | - | 102 | - | 102 | - | |||||||
| Reinsurance contract held assets | - | 59,015 | - | 59,015 | - | |||||||
| Total other assets | 65,898 | 46,450 | (71,132) | 41,216 | 995 | |||||||
| Segregated funds net assets | - | 435,988 | - | 435,988 | - | |||||||
| Insurance contract liabilities, excluding those for account of segregated<br><br>fund holders | - | 396,401 | - | 396,401 | - | |||||||
| Reinsurance contract held liabilities | - | 2,669 | - | 2,669 | - | |||||||
| Investment contract liabilities | - | 13,498 | - | 13,498 | - | |||||||
| Total other liabilities | 15,052 | 63,825 | (1,575) | 77,302 | 726 | |||||||
| Insurance contract liabilities for account of segregated fund holders | - | 126,545 | - | 126,545 | - | |||||||
| Investment contract liabilities for account of segregated fund holders | - | 309,443 | - | 309,443 | - |
(II)Guarantees regarding John Hancock Life Insurance Company (U.S.A.) (“JHUSA”)
Details of guarantees regarding certain securities issued or to be issued by JHUSA are outlined in note 23.
| 120 |
|---|
(e)Pledged Assets
In the normal course of business, the Company pledges its assets in respect of liabilities incurred, strictly for providing collateral
to the counterparty. In the event of the Company’s default, the counterparty is entitled to apply the collateral to settle the liability.
Where pledged assets have been delivered to a counterparty, the pledged assets are returned to the Company if the underlying
transaction is terminated or, in the case of derivatives and Manulife Bank securitized mortgages, are partially returned if there is
a decrease in the net exposure due to market value changes.
The amounts pledged are as follows.
| 2025 | 2024 | |||
|---|---|---|---|---|
| As at December 31, | Debt securities | Other | Debt securities | Other |
| In respect of: | ||||
| Derivatives | $14,360 | $129 | $14,517 | $25 |
| Secured borrowings(1) | 786 | 331 | - | 2,216 |
| Regulatory requirements | 1,771 | 93 | 303 | 91 |
| Repurchase agreements | 193 | - | 658 | - |
| Mortgages on ALDA properties | - | 351 | - | 284 |
| Manulife Bank securitized mortgages(2) | - | 8,193 | - | 7,603 |
| Non-registered retirement plans in trust | - | 276 | - | 286 |
| Other | - | 262 | - | 289 |
| Total | $17,110 | $9,635 | $15,478 | $10,794 |
(1)During the year, the Company pledged debt securities of $786 (2024 – $nil) and mortgage loans of $331 (2024 – $2,216) to FHLBI totalling $1,117 (2024 –
$2,216). Of this amount, $788 (2024 – $1,098) is required collateral for the US$500 (2024 – US$500) outstanding borrowing to JHUSA under the FHLBI facility;
and $329 (2024 – $1,118) is excess collateral that can be called back by JHUSA at any time.
(2)Pledged assets under the Manulife Bank mortgage securitization program totaled $8,193 (2024 – $7,603), comprising CMB securitization of $2,984 (2024 –
$3,274), HELOC securitization of $3,673 (2024 – $3,163), additional encumbrances of mortgages and cash required by the securitization program's operations of
$1,162 (2024 – $1,166) and encumbrances on mortgages from mortgage backed securities sold to third parties of $374 (2024 – $nil).
(f)Participating Business
In some markets where the Company maintains participating accounts, there are regulatory restrictions on the amount of profit
that can be transferred to shareholders. Where applicable, these restrictions generally take the form of a fixed percentage of
policyholder dividends. For participating businesses operating as separate “closed blocks”, transfers are governed by the terms
of MLI’s and John Hancock Mutual Life Insurance Company’s plans of demutualization.
(g)Fixed Surplus Notes
A third party contractually provides standby financing arrangements for the Company’s U.S. operations under which, in certain
circumstances, funds may be provided in exchange for the issuance of fixed surplus notes. As at December 31, 2025 and 2024,
the Company had no fixed surplus notes outstanding.
Note 19 Segmented Information
The Company’s reporting segments are Asia, Canada, U.S., Global WAM and Corporate and Other. Each reporting segment is
responsible for managing its operating results, developing products, defining strategies for services and distribution based on the
profile and needs of its business and market. The Company’s significant product and service offerings by the reporting segments
are mentioned below.
Wealth and asset management businesses (Global WAM) – branded as Manulife Investment Management, provides
investment advice and innovative solutions to retirement, retail, and institutional clients. Products and services are distributed
through multiple distribution channels, including agents and brokers affiliated with the Company, independent securities
brokerage firms and financial advisors pension plan consultants and banks.
Insurance and annuity products (Asia, Canada and U.S.) – include a variety of individual life insurance, individual and group
long-term care insurance and guaranteed and partially guaranteed annuity products. Products are distributed through multiple
distribution channels, including insurance agents, brokers, banks, financial planners and direct marketing. Manulife Bank of
Canada offers a variety of deposit and credit products to Canadian customers.
Corporate and Other segment – comprised of investment performance of assets backing capital, net of amounts allocated to
operating segments; costs incurred by the corporate office related to shareholder activities (not allocated to the operating
segments); financing costs; Property and Casualty Reinsurance Business; and run-off reinsurance operations including variable
annuities and accident and health. In addition, consolidations and eliminations of transactions between operating segments are
also included.
| 121 | 2025 Annual Report | Consolidated Financial Statements |
|---|
(a)Reporting Segments
The following tables present results by reporting segments.
| For the year ended December 31, 2025 | Asia | Canada | U.S. | Global WAM | Corporate<br><br>and Other | Total |
|---|---|---|---|---|---|---|
| Insurance service result | ||||||
| Life, health and property and casualty insurance | $2,482 | $1,284 | $302 | $- | $100 | $4,168 |
| Annuities and pensions | 36 | 230 | 92 | - | - | 358 |
| Total insurance service result | 2,518 | 1,514 | 394 | - | 100 | 4,526 |
| Net investment income (loss) | 11,571 | 5,637 | 6,297 | (541) | 983 | 23,947 |
| Insurance finance income (expenses) | ||||||
| Life, health and property and casualty insurance | (8,703) | (4,617) | (8,337) | - | 26 | (21,631) |
| Annuities and pensions | (756) | 262 | (558) | 2 | - | (1,050) |
| Total insurance finance income (expenses) | (9,459) | (4,355) | (8,895) | 2 | 26 | (22,681) |
| Reinsurance finance income (expenses) | ||||||
| Life, health and property and casualty insurance | (294) | 251 | 1,454 | - | 5 | 1,416 |
| Annuities and pensions | 191 | (1) | 88 | - | - | 278 |
| Total reinsurance finance income (expenses) | (103) | 250 | 1,542 | - | 5 | 1,694 |
| Decrease (increase) in investment contract liabilities | (5) | (83) | (27) | (438) | 2 | (551) |
| Net segregated fund investment result | - | - | - | - | - | - |
| Total investment result | 2,004 | 1,449 | (1,083) | (977) | 1,016 | 2,409 |
| Other revenue | 13 | 301 | 160 | 8,020 | (365) | 8,129 |
| Other expenses | (363) | (686) | (165) | (4,788) | (438) | (6,440) |
| Interest expenses | (43) | (842) | (14) | (4) | (627) | (1,530) |
| Net income (loss) before income taxes | 4,129 | 1,736 | (708) | 2,251 | (314) | 7,094 |
| Income tax (expenses) recoveries | (716) | (384) | 181 | (341) | 226 | (1,034) |
| Net income (loss) | 3,413 | 1,352 | (527) | 1,910 | (88) | 6,060 |
| Less net income (loss) attributed to: | ||||||
| Non-controlling interests | 270 | - | - | 10 | (2) | 278 |
| Participating policyholders | 171 | 39 | - | - | - | 210 |
| Net income (loss) attributed to shareholders and other<br><br>equity holders | $2,972 | $1,313 | $(527) | $1,900 | $(86) | $5,572 |
| Total assets | $233,076 | $165,905 | $250,984 | $329,407 | $46,061 | $1,025,433 |
| 122 | ||||||
| --- | ||||||
| For the year ended December 31, 2024 | Asia | Canada | U.S. | Global WAM | Corporate<br><br>and Other | Total |
| --- | --- | --- | --- | --- | --- | --- |
| Insurance service result | ||||||
| Life, health and property and casualty insurance | $2,228 | $1,081 | $241 | $- | $164 | $3,714 |
| Annuities and pensions | (68) | 239 | 116 | - | - | 287 |
| Total insurance service result | 2,160 | 1,320 | 357 | - | 164 | 4,001 |
| Net investment income (loss) | 7,987 | 5,169 | 4,962 | (655) | 1,648 | 19,111 |
| Insurance finance income (expenses) | ||||||
| Life, health and property and casualty insurance | (5,495) | (3,846) | (5,450) | - | 43 | (14,748) |
| Annuities and pensions | (1,839) | 196 | 172 | - | - | (1,471) |
| Total insurance finance income (expenses) | (7,334) | (3,650) | (5,278) | - | 43 | (16,219) |
| Reinsurance finance income (expenses) | ||||||
| Life, health and property and casualty insurance | (65) | 347 | 705 | - | (2) | 985 |
| Annuities and pensions | 669 | (1) | (520) | - | - | 148 |
| Total reinsurance finance income (expenses) | 604 | 346 | 185 | - | (2) | 1,133 |
| Decrease (increase) in investment contract liabilities | (9) | (76) | (87) | (327) | (5) | (504) |
| Net segregated fund investment result | - | - | - | - | - | - |
| Total investment result | 1,248 | 1,789 | (218) | (982) | 1,684 | 3,521 |
| Other revenue | 155 | 294 | 137 | 7,439 | (437) | 7,588 |
| Other expenses | (338) | (677) | (131) | (4,703) | (490) | (6,339) |
| Interest expenses | (28) | (1,047) | (13) | (7) | (586) | (1,681) |
| Net income (loss) before income taxes | 3,197 | 1,679 | 132 | 1,747 | 335 | 7,090 |
| Income tax (expenses) recoveries | (460) | (353) | 3 | (148) | (254) | (1,212) |
| Net income (loss) | 2,737 | 1,326 | 135 | 1,599 | 81 | 5,878 |
| Less net income (loss) attributed to: | ||||||
| Non-controlling interests | 241 | - | - | 2 | 4 | 247 |
| Participating policyholders | 141 | 105 | - | - | - | 246 |
| Net income (loss) attributed to shareholders and other<br><br>equity holders | $2,355 | $1,221 | $135 | $1,597 | $77 | $5,385 |
| Total assets | $209,623 | $158,803 | $263,736 | $305,968 | $40,688 | $978,818 |
(b)Geographical Location
The results of the Company’s reporting segments differ from its results by geographical location primarily due to the allocation of
Global WAM and Corporate and Other segments into the geographical location to which its businesses relate.
The following tables present results by geographical location.
| For the year ended December 31, 2025 | Asia | Canada | U.S. | Other | Total |
|---|---|---|---|---|---|
| Insurance service result | |||||
| Life, health and property and casualty insurance | $2,484 | $1,273 | $283 | $128 | $4,168 |
| Annuities and pensions | 36 | 230 | 92 | - | 358 |
| Total insurance service result | 2,520 | 1,503 | 375 | 128 | 4,526 |
| Net investment income (loss) | 11,623 | 5,970 | 6,307 | 47 | 23,947 |
| Insurance finance income (expenses) | |||||
| Life, health and property and casualty insurance | (8,703) | (4,624) | (8,305) | 1 | (21,631) |
| Annuities and pensions | (755) | 262 | (557) | - | (1,050) |
| Total insurance finance income (expenses) | (9,458) | (4,362) | (8,862) | 1 | (22,681) |
| Reinsurance finance income (expenses) | |||||
| Life, health and property and casualty insurance | (294) | 256 | 1,454 | - | 1,416 |
| Annuities and pensions | 191 | (1) | 88 | - | 278 |
| Total reinsurance finance income (expenses) | (103) | 255 | 1,542 | - | 1,694 |
| Decrease (increase) in investment contract liabilities | (248) | (161) | (137) | (5) | (551) |
| Net segregated fund investment result | - | - | - | - | - |
| Total investment result | $1,814 | $1,702 | $(1,150) | $43 | $2,409 |
| Other revenue | $1,634 | $2,367 | $4,102 | $26 | $8,129 |
| 123 | 2025 Annual Report | Consolidated Financial Statements | |||
| --- | --- | --- | |||
| For the year ended December 31, 2024 | Asia | Canada | U.S. | Other | Total |
| --- | --- | --- | --- | --- | --- |
| Insurance service result | |||||
| Life, health and property and casualty insurance | $2,230 | $1,075 | $235 | $174 | $3,714 |
| Annuities and pensions | (68) | 239 | 116 | - | 287 |
| Total insurance service result | 2,162 | 1,314 | 351 | 174 | 4,001 |
| Net investment income (loss) | 8,052 | 5,882 | 5,118 | 59 | 19,111 |
| Insurance finance income (expenses) | |||||
| Life, health and property and casualty insurance | (5,495) | (3,844) | (5,409) | - | (14,748) |
| Annuities and pensions | (1,839) | 196 | 172 | - | (1,471) |
| Total insurance finance income (expenses) | (7,334) | (3,648) | (5,237) | - | (16,219) |
| Reinsurance finance income (expenses) | |||||
| Life, health and property and casualty insurance | (65) | 344 | 706 | - | 985 |
| Annuities and pensions | 669 | (1) | (520) | - | 148 |
| Total reinsurance finance income (expenses) | 604 | 343 | 186 | - | 1,133 |
| Decrease (increase) in investment contract liabilities | (187) | (163) | (149) | (5) | (504) |
| Net segregated fund investment result | - | - | - | - | - |
| Total investment result | $1,135 | $2,414 | $(82) | $54 | $3,521 |
| Other revenue | $1,790 | $2,325 | $3,616 | $(143) | $7,588 |
Note 20 Related Parties
The Company enters into transactions with related parties in the normal course of business and at terms that would exist in
arm’s-length transactions.
(a)Transactions with Certain Related Parties
Transactions with MFLP, a wholly owned unconsolidated partnership, are described in notes 10, 17 and 18.
(b)Compensation of Key Management Personnel
The Company’s key management personnel are those personnel who have the authority and responsibility for planning, directing
and controlling the activities of the Company. Directors (both executive and non-executive) and senior management are
considered key management personnel. A summary of compensation of key management personnel is as follows.
| For the years ended December 31, | 2025 | 2024 |
|---|---|---|
| Short-term employee benefits | $101 | $99 |
| Post-employment benefits | 8 | 7 |
| Share-based payments | 86 | 79 |
| Termination benefits | 1 | 2 |
| Other long-term benefits | 3 | 3 |
| Total | $199 | $190 |
| 124 | ||
| --- |
Note 21 Subsidiaries
The following is a list of Manulife’s directly and indirectly held major operating subsidiaries.
| As at December 31, 2025 | Equity | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (100% owned unless otherwise noted in brackets beside company name) | interest | Address | Description | ||||||||
| The Manufacturers Life Insurance Company | $62,796 | Toronto,<br><br>Canada | A leading financial services group with principal<br><br>operations in Asia, Canada and the United States<br><br>that offers a diverse range of financial protection<br><br>products and wealth management services | ||||||||
| Manulife Holdings (Alberta) Limited | $21,794 | Calgary,<br><br>Canada | Holding company | ||||||||
| John Hancock Financial Corporation | Boston, U.S.A. | Holding company | |||||||||
| The Manufacturers Investment Corporation | Boston, U.S.A. | Holding company | |||||||||
| John Hancock Reassurance Company Ltd. | Boston, U.S.A. | Captive insurance subsidiary that provides life,<br><br>annuity and long-term care reinsurance to affiliates | |||||||||
| John Hancock Life Insurance Company (U.S.A.) | Boston, U.S.A. | U.S. life insurance company licensed in all states,<br><br>except New York | |||||||||
| John Hancock Subsidiaries LLC | Boston, U.S.A. | Holding company | |||||||||
| Comvest Group Holdings LP (75%) | Boston, U.S.A. | Investment advisor | |||||||||
| John Hancock Financial Network, Inc. | Boston, U.S.A. | Financial services distribution organization | |||||||||
| John Hancock Investment Management LLC | Boston, U.S.A. | Investment advisor | |||||||||
| John Hancock Investment Management<br><br>Distributors LLC | Boston,<br><br>U.S.A. | Broker-dealer | |||||||||
| Manulife Investment Management (US) LLC | Boston, U.S.A. | Investment advisor | |||||||||
| Manulife Investment Management Timberland and<br><br>Agriculture Inc. | Boston, U.S.A. | Manager of globally diversified timberland and<br><br>agricultural portfolios | |||||||||
| John Hancock Life Insurance Company of New York | New York,<br><br>U.S.A. | U.S. life insurance company licensed in New York | |||||||||
| John Hancock Variable Trust Advisers LLC | Boston, U.S.A. | Investment advisor for open-end mutual funds | |||||||||
| John Hancock Life & Health Insurance Company | Boston, U.S.A. | U.S. life insurance company licensed in all states | |||||||||
| John Hancock Distributors LLC | Boston, U.S.A. | Broker-dealer | |||||||||
| John Hancock Insurance Agency, Inc. | Boston, U.S.A. | Insurance agency | |||||||||
| Manulife Reinsurance Limited | Hamilton,<br><br>Bermuda | Provides life and financial reinsurance to affiliates | |||||||||
| Manulife Reinsurance (Bermuda) Limited | Hamilton,<br><br>Bermuda | Provides life and financial reinsurance to affiliates | |||||||||
| Manulife Bank of Canada | $1,997 | Waterloo,<br><br>Canada | Provides integrated banking products and service<br><br>options not available from an insurance company | ||||||||
| Manulife Investment Management Holdings (Canada) Inc. | $1,388 | Toronto,<br><br>Canada | Holding company | ||||||||
| Manulife Investment Management Limited | Toronto,<br><br>Canada | Provides investment counseling, portfolio and<br><br>mutual fund management in Canada | |||||||||
| First North American Insurance Company | $9 | Toronto,<br><br>Canada | Property and casualty insurance company | ||||||||
| Manulife Holdings (Bermuda) Limited | $23,639 | Hamilton,<br><br>Bermuda | Holding company | ||||||||
| Manufacturers P&C Limited | St. Michael,<br><br>Barbados | Provides property and casualty reinsurance | |||||||||
| Manufacturers Life Reinsurance Limited | St. Michael,<br><br>Barbados | Provides life and annuity reinsurance to affiliates | |||||||||
| Manulife Financial Asia Limited | Hong Kong,<br><br>China | Holding company | |||||||||
| Manulife (Cambodia) PLC | Phnom Penh,<br><br>Cambodia | Life insurance company | |||||||||
| Manulife Myanmar Life Insurance Company Limited | Yangon,<br><br>Myanmar | Life insurance company | |||||||||
| Manulife (Vietnam) Limited | Ho Chi Minh<br><br>City,<br><br>Vietnam | Life insurance company | |||||||||
| Manulife Investment Fund Management (Vietnam)<br><br>Company Limited | Ho Chi Minh<br><br>City,<br><br>Vietnam | Fund management company | |||||||||
| Manulife International Holdings Limited | Hong Kong,<br><br>China | Holding company | |||||||||
| 125 | 2025 Annual Report | Consolidated Financial Statements | |||||||||
| --- | --- | --- | |||||||||
| As at December 31, 2025 | Equity | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||
| (100% owned unless otherwise noted in brackets beside company name) | interest | Address | Description | ||||||||
| Manulife (International) Limited | Hong Kong,<br><br>China | Life insurance company | |||||||||
| Manulife-Sinochem Life Insurance Co. Ltd. (51%) | Shanghai,<br><br>China | Life insurance company | |||||||||
| Manulife Investment Management International Holdings<br><br>Limited | Hong Kong,<br><br>China | Holding company | |||||||||
| Manulife Investment Management (Hong Kong)<br><br>Limited | Hong Kong,<br><br>China | Investment management and advisory company<br><br>marketing mutual funds | |||||||||
| Manulife Investment Management (Taiwan) Co.,<br><br>Ltd. | Taipei,<br><br>Taiwan (China) | Investment management company | |||||||||
| Manulife Life Insurance Company (Japan) | Tokyo,<br><br>Japan | Life insurance company | |||||||||
| Manulife Investment Management (Japan) Limited | Tokyo,<br><br>Japan | Investment management and advisory company<br><br>and mutual fund business | |||||||||
| Manulife Holdings Berhad (63.3%) | Kuala Lumpur,<br><br>Malaysia | Holding company | |||||||||
| Manulife Insurance Berhad (63.3%) | Kuala Lumpur,<br><br>Malaysia | Life insurance company | |||||||||
| Manulife Investment Management (Malaysia) Berhad<br><br>(63.3%) | Kuala Lumpur,<br><br>Malaysia | Asset management company | |||||||||
| Manulife (Singapore) Pte. Ltd. | Singapore | Life insurance company | |||||||||
| Manulife Investment Management (Singapore) Pte. Ltd. | Singapore | Asset management company | |||||||||
| Manulife Fund Management Co., Ltd. | Beijing,<br><br>China | Mutual fund company in China | |||||||||
| The Manufacturers Life Insurance Co. (Phils.), Inc. | Makati City,<br><br>Philippines | Life insurance company | |||||||||
| Manulife Chinabank Life Assurance Corporation (60%) | Makati City,<br><br>Philippines | Life insurance company | |||||||||
| PT Asuransi Jiwa Manulife Indonesia | Jakarta,<br><br>Indonesia | Life insurance company | |||||||||
| PT Manulife Aset Manajemen Indonesia | Jakarta,<br><br>Indonesia | Investment management and investment advisor | |||||||||
| Manulife Investment Management (Europe) Limited | $507 | London,<br><br>England | Investment management company providing<br><br>advisory services for Manulife Investment<br><br>Management’s funds, internationally | ||||||||
| Manulife Assurance Company of Canada | $55 | Toronto,<br><br>Canada | Life insurance company | ||||||||
| Berkshire Insurance Services Inc. | $2,818 | Toronto,<br><br>Canada | Investment holding company | ||||||||
| JH Investments (Delaware) LLC | Boston, U.S.A. | Investment holding company | |||||||||
| Manulife Wealth Inc. | $379 | Oakville,<br><br>Canada | Investment dealer |
Note 22 Segregated Funds
The Company manages a number of segregated funds on behalf of policyholders. Policyholders are provided with the
opportunity to invest in different categories of segregated funds that hold a range of underlying investments. The underlying
investments consist of both individual securities and mutual funds.
Segregated funds’ underlying investments may be exposed to a variety of financial and other risks. These risks are primarily
mitigated by investment guidelines that are actively monitored by professional and experienced portfolio advisors. The Company
is not exposed to these risks beyond the liabilities related to the guarantees associated with certain variable life and annuity
products included in segregated funds. Accordingly, the Company’s exposure to loss from segregated fund products is limited to
the value of these guarantees.
These guarantees are recorded within the Company’s insurance contract liabilities and amount to $1,266 (2024 – $1,886), of
which $423 are reinsured (2024 – $530). Assets supporting these guarantees, net of reinsurance, are recognized in invested
assets according to their investment type. Insurance contract liabilities for account of segregated fund holders on the
Consolidated Statements of Financial Position exclude these guarantees and are considered to be a non-distinct investment
component of insurance contract liabilities. Note 8 provides information regarding market risk sensitivities associated with
variable annuity and segregated fund guarantees.
| 126 |
|---|
Note 23 Information Provided in Connection with Investments in Deferred Annuity
Contracts and SignatureNotes Issued or Assumed by John Hancock Life Insurance
Company (U.S.A.)
The following summarized financial information, presented in accordance with IFRS, and the related disclosure have been
included in these Consolidated Financial Statements with respect to JHUSA pursuant to Rule 13-01 of Regulation S-X and Rule
12h-5 of the United States Securities and Exchange Commission (the “Commission”). These financial statements are
incorporated by reference in certain of the MFC and its subsidiaries registration statements that are described below and relate
to MFC’s guarantee of certain securities issued or to be issued by its subsidiaries.
JHUSA maintains a book of deferred annuity contracts that feature a market value adjustment, some of which are registered with
the Commission. The deferred annuity contracts may contain variable investment options along with fixed investment period
options, or may offer only fixed investment period options. The fixed investment period options enable the participant to invest
fixed amounts of money for fixed terms at fixed interest rates, subject to a market value adjustment if the participant desires to
terminate a fixed investment period before its maturity date. The annuity contract provides for the market value adjustment to
keep the parties whole with respect to the fixed interest bargain for the entire fixed investment period. These fixed investment
period options that contain a market value adjustment feature are referred to as “MVAs”.
JHUSA has sold medium-term notes to retail investors under its SignatureNotes program.
Effective December 31, 2009, John Hancock Variable Life Insurance Company (the “Variable Company”) and John Hancock Life
Insurance Company (the “Life Company”) merged with and into JHUSA. In connection with the mergers, JHUSA assumed the
Variable Company’s rights and obligations with respect to the MVAs issued by the Variable Company and the Life Company’s
rights and obligations with respect to the SignatureNotes issued by the Life Company.
MFC fully and unconditionally guaranteed the payment of JHUSA’s obligations under the MVAs and under the SignatureNotes
(including the MVAs and SignatureNotes assumed by JHUSA in the merger), and such MVAs and the SignatureNotes were
registered with the Commission. The SignatureNotes and MVAs assumed or issued by JHUSA are collectively referred to in this
note as the “Guaranteed Securities”. JHUSA is, and each of the Variable Company and the Life Company was, a wholly owned
subsidiary of MFC.
MFC’s guarantees of the Guaranteed Securities are unsecured obligations of MFC and are subordinated in right of payment to
the prior payment in full of all other obligations of MFC, except for other guarantees or obligations of MFC which by their terms
are designated as ranking equally in right of payment with or subordinate to MFC’s guarantees of the Guaranteed Securities.
The laws of the State of New York govern MFC’s guarantees of the SignatureNotes issued or assumed by JHUSA and the laws
of the Commonwealth of Massachusetts govern MFC’s guarantees of the MVAs issued or assumed by JHUSA. MFC has
consented to the jurisdiction of the courts of New York and Massachusetts. However, because a substantial portion of MFC’s
assets is located outside the United States, the assets of MFC located in the United States may not be sufficient to satisfy a
judgment given by a federal or state court in the United States to enforce the subordinate guarantees. In general, the federal
laws of Canada and the laws of the Province of Ontario, where MFC’s principal executive offices are located, permit an action to
be brought in Ontario to enforce such a judgment provided that such judgment is subsisting and unsatisfied for a fixed sum of
money and not void or voidable in the United States and a Canadian court will render a judgment against MFC in a certain dollar
amount, expressed in Canadian dollars, subject to customary qualifications regarding fraud, violations of public policy, laws
limiting the enforcement of creditor’s rights and applicable statutes of limitations on judgments. There is currently no public policy
in effect in the Province of Ontario that would support avoiding the recognition and enforcement in Ontario of a judgment of a
New York or Massachusetts court on MFC’s guarantees of the SignatureNotes issued or assumed by JHUSA or a
Massachusetts court on guarantees of the MVAs issued or assumed by JHUSA.
MFC is a holding company. MFC’s assets primarily consist of investments in its subsidiaries. MFC’s cash flows primarily consist
of dividends and interest payments from its operating subsidiaries, offset by expenses and shareholder dividends and MFC stock
repurchases. As a holding company, MFC’s ability to meet its cash requirements, including, but not limited to, paying any
amounts due under its guarantees, substantially depends upon dividends from its operating subsidiaries.
These subsidiaries are subject to certain regulatory restrictions under laws in Canada, the United States and certain other
countries, which may limit their ability to pay dividends or make contributions or loans to MFC. For example, some of MFC’s
subsidiaries are subject to restrictions prescribed by the ICA on their ability to declare and pay dividends. The restrictions related
to dividends imposed by the ICA are described in note 12.
In the United States, insurance laws in Michigan, New York, and Massachusetts, the jurisdictions in which certain of MFC’s U.S.
insurance company subsidiaries are domiciled, impose general limitations on the payment of dividends and other upstream
distributions or loans by these insurance subsidiaries.
In Asia, the insurance laws of the jurisdictions in which MFC operates either provide for specific restrictions on the payment of
dividends or other distributions or loans by subsidiaries or impose solvency or other financial tests, which could affect the ability
of subsidiaries to pay dividends or make other upstream distributions or loans in certain circumstances.
| 127 | 2025 Annual Report | Consolidated Financial Statements |
|---|
There can be no assurance that any current or future regulatory restrictions in Canada, the United States or Asia will not impair
MFC’s ability to meet its cash requirements, including, but not limited to, paying any amounts due under its guarantees.
The following tables present summarized financial information for JHUSA (Subsidiary Issuer) and MFC (Parent) on a combined
basis after elimination of (i) intercompany transactions and balances between JHUSA and MFC; (ii) equity in earnings among
JHUSA and MFC; (iii) intercompany dividend income among JHUSA and MFC; and (iv) investments in MFC’s subsidiaries other
than JHUSA (“non-guarantor subsidiaries”).
| As at | December<br><br>31, 2025 | December<br><br>31, 2024 |
|---|---|---|
| Assets | ||
| Total invested assets(1) | $107,703 | $112,570 |
| Reinsurance contract held assets(2) | 49,463 | 46,811 |
| Other assets(3) | 11,995 | 11,712 |
| Segregated funds net assets | 224,457 | 218,909 |
| Liabilities | ||
| Insurance contract liabilities, excluding those for account of segregated fund holders(4) | $146,300 | $148,828 |
| Investment contract liabilities(5) | 6,131 | 5,260 |
| Other liabilities(6) | 7,471 | 9,953 |
| Long-term debt | 7,685 | 6,629 |
| Capital instruments | 6,342 | 6,884 |
| Insurance contract liabilities for account of segregated fund holders | 57,115 | 58,137 |
| Investment contract liabilities for account of segregated fund holders | 167,341 | 160,772 |
(1)Includes $(908) (2024 – $(2,422)) cash loaned to (borrowed from) non-guarantor subsidiaries.
(2)Includes $9,542 (2024 – $9,689) reinsurance contract held assets from intercompany transactions with non-guarantor subsidiaries.
(3)Includes $3,866 (2024 – $3,227) due from non-guarantor subsidiaries.
(4)Includes $(22) (2024 – $(943)) insurance contract liabilities (assets) from intercompany transactions with non-guarantor subsidiaries.
(5)Includes $606 (2024 – $632) investment contract liabilities from intercompany transactions with non-guarantor subsidiaries.
(6)Includes $1,737 (2024 – $2,443) due to non-guarantor subsidiaries.
| For the year ended December 31, | 2025 | 2024 |
|---|---|---|
| Total insurance service result(1) | $433 | $212 |
| Total investment result(2) | (555) | 1,491 |
| Other revenue (expenses)(3) | (702) | (948) |
| Net income (loss) before income taxes | (824) | 755 |
| Income tax (expenses) recoveries | 345 | 22 |
| Net income (loss) after income taxes, before equity in net income (loss) of non-guarantor subsidiaries | (479) | 777 |
| Equity in net income (loss) of non-guarantor subsidiaries | 6,083 | 5,667 |
| Net income (loss) | $5,604 | $6,444 |
(1)Includes $53 intercompany insurance service result from non-guarantor subsidiaries for the year ended December 31, 2025 (2024 – $111).
(2)Includes $599 intercompany investment income (loss) to non-guarantor subsidiaries for the year ended December 31, 2025 (2024 – $926).
(3)Includes $441 other intercompany revenue (expenses) from non-guarantor subsidiaries for the year ended December 31, 2025 (2024 – $365).
| 128 |
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Note 24 Acquisitions
Comvest Credit Partners
On November 3, 2025, the Company purchased 75% of the partnership interests of Comvest Credit Partners (“Comvest”).
Consideration included $1,306 (US$938) in cash for the partnership interests and $22 (US$16) in cash for net working capital.
Comvest is a U.S. private credit manager with $17.5 billion of AUM as at the acquisition date. The acquisition is expected to
create a leading private credit asset management platform, co-branded as Manulife | Comvest, by aligning Comvest and
Manulife’s existing senior credit team. The acquisition of Comvest contributes to the Company’s expansion into the private credit
market and adds and supports Manulife’s global growth strategy for wealth and asset management businesses.
Comvest minority partners have options to sell their interests to the Company (the “put options”) in 2028 and 2031 and the
Company has call options to purchase the remaining interests in 2028 and 2031. The fair value of the put options liability was
recognized in other liabilities, then offset against the non-controlling interests with the difference recorded directly in retained
earnings. The following table presents the fair value of the consideration, identifiable assets and liabilities, and the offsetting of
the put options against equity.
| As at November 3, 2025 | Business<br><br>acquisition | Put options<br><br>adjustments | Total |
|---|---|---|---|
| Consideration | $(1,328) | $- | $(1,328) |
| Intangible assets | 735 | - | 735 |
| Goodwill(1) | 739 | - | 739 |
| Net assets | 58 | - | 58 |
| Total assets | 1,532 | - | 1,532 |
| Other liabilities - put options | - | 431 | 431 |
| Total liabilities | - | 431 | 431 |
| Non-controlling interests(2) | 204 | (204) | - |
| Shareholders and other equity holders’ retained earnings | - | (227) | (227) |
| Total equity | $204 | $(431) | $(227) |
(1)Goodwill will not be deductible for tax purposes.
(2)The Company measured non-controlling interests using the proportionate share of net assets method.
Due to the recent closing of the acquisition, the fair value determination and the purchase price accounting for this business
combination have not been finalized. The final allocation of the purchase price as at November 3, 2025 will be determined after
completing a comprehensive evaluation of the fair value of assets (including intangible assets) and liabilities acquired at that
date.
PT Schroder Investment Management Indonesia
On September 24, 2025, the Company announced that it has entered into an agreement to acquire PT Schroder Investment
Management Indonesia, (“Schroders Indonesia”) strengthening the Company’s position as the largest asset manager in
Indonesia. It will enable the Company to deliver enhanced value to clients and stakeholders by leveraging the firm’s local
expertise and client relationships. The transaction is subject to customary closing conditions and regulatory approvals.
2025 Annual MD&A Report
Manulife Financial Corporation
Management’s Discussion and Analysis
For the year ended December 31, 2025
| 1 | 2025 Annual Report | Management’s Discussion and Analysis |
|---|
Caution regarding forward-looking statements
From time to time, Manulife Financial Corporation (“MFC”) makes written and/or oral forward-looking statements, including in this
document. In addition, our representatives may make forward-looking statements orally to analysts, investors, the media and
others. All such statements are made pursuant to the “safe harbour” provisions of Canadian provincial securities laws and the
U.S. Private Securities Litigation Reform Act of 1995.
The forward-looking statements in this document include, but are not limited to, statements with respect to possible share
buybacks, the Company’s strategic priorities and targets, its medium-term financial and operating targets, the probability and
impact of the Life Insurance Capital Adequacy Test (“LICAT”) scenario switches, the anticipated benefits of the acquisitions of
Comvest Credit Partners (“Comvest”) and PT Schroder Investment Management Indonesia (“Schroders Indonesia”), our entry
into the Indian insurance market and its anticipated benefits, the anticipated benefits and value derived from the use of AI, future
premium increases, and exposure limit estimates for our property and casualty reinsurance business, and also relate to, among
other things, our objectives, goals, strategies, intentions, plans, beliefs, expectations and estimates, and can generally be
identified by the use of words such as “may”, “will”, “could”, “should”, “would”, “likely”, “suspect”, “outlook”, “expect”, “intend”,
“estimate”, “anticipate”, “believe”, “plan”, “forecast”, “objective”, “seek”, “aim”, “continue”, “goal”, “restore”, “embark” and
“endeavour” (or the negative of any thereof) and words and expressions of similar import, and include statements concerning
possible or assumed future results. Although we believe that the expectations reflected in such forward-looking statements are
reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements and
they should not be interpreted as confirming market or analysts’ expectations in any way.
Certain material factors or assumptions are applied in making forward-looking statements and actual results may differ materially
from those expressed or implied in such statements. Important factors that could cause actual results to differ materially from
expectations include, but are not limited to: general business and economic conditions (including but not limited to the
performance, volatility and correlation of equity markets, interest rates, credit and swap spreads, inflation rates, currency rates,
investment losses and defaults, market liquidity and creditworthiness of guarantors, reinsurers and counterparties); changes in
laws and regulations; changes in accounting standards applicable in any of the territories in which we operate; changes in
regulatory capital requirements; our ability to obtain premium rate increases on in-force policies; our ability to execute strategic
plans and changes to strategic plans; downgrades in our financial strength or credit ratings; our ability to maintain our reputation;
impairments of goodwill or intangible assets or the establishment of provisions against future tax assets; the accuracy of
estimates relating to morbidity, mortality and policyholder behaviour; the accuracy of other estimates used in applying accounting
policies, actuarial methods and embedded value methods; our ability to implement effective hedging strategies and unforeseen
consequences arising from such strategies; our ability to source appropriate assets to back our long-dated liabilities; level of
competition and consolidation; our ability to market and distribute products through current and future distribution channels;
unforeseen liabilities or asset impairments arising from acquisitions and dispositions of businesses; the realization of losses
arising from the sale of investments classified as fair value through other comprehensive income; our liquidity, including the
availability of financing to satisfy existing financial liabilities on expected maturity dates when required; obligations to pledge
additional collateral; the availability of letters of credit to provide capital management flexibility; accuracy of information received
from counterparties and the ability of counterparties to meet their obligations; the availability, affordability and adequacy of
reinsurance; legal and regulatory proceedings, including tax audits, tax litigation or similar proceedings; our ability to adapt
products and services to the changing market; our ability to attract and retain key executives, employees and agents; the
appropriate use and interpretation of complex models or deficiencies in models used; political, legal, operational and other risks
associated with our operations; geopolitical uncertainty, including international conflicts and trade disputes; acquisitions and our
ability to complete acquisitions including the availability of equity and debt financing for this purpose; the disruption of or changes
to key elements of the Company’s or public infrastructure systems; environmental concerns including climate change; our ability
to protect our intellectual property and exposure to claims of infringement; our inability to withdraw cash from subsidiaries; the
anticipated benefits of the Comvest Credit and Schroders Indonesia acquisitions; the receipt of regulatory approvals and
satisfaction of closing conditions for the Schroders Indonesia acquisition; the receipt of regulatory approvals for entering into the
Indian insurance market and the anticipated benefits of such entry; our ability to execute our digital plans and to deploy future
digital use cases and derive value from AI; receipt of regulatory approval from the Toronto Stock Exchange for our new normal
course issuer bid, and the fact that the amount and timing of any future common share repurchases will depend on the earnings,
cash requirements and financial condition of Manulife, market conditions, capital requirements (including under LICAT capital
standards), common share issuance requirements, applicable law and regulations (including Canadian and U.S. securities laws
and Canadian insurance company regulations), and other factors deemed relevant by Manulife, and may be subject to regulatory
approval or conditions.
Additional information about material risk factors that could cause actual results to differ materially from expectations and about
material factors or assumptions applied in making forward-looking statements may be found in this document under “Risk
Management and Risk Factors”, “Critical Actuarial and Accounting Policies” and in the “Risk Management” note to the Annual
Consolidated Financial Statements as well as elsewhere in our filings with Canadian and U.S. securities regulators.
The forward-looking statements in this document are, unless otherwise indicated, stated as of February 11, 2026 and are
presented for the purpose of assisting investors and others in understanding our financial position and results of operations, our
future operations, as well as our objectives and strategic priorities, and may not be appropriate for other purposes. We do not
undertake to update any forward-looking statements, except as required by law.
| 2 |
|---|
Contents
| Management's Discussion and Analysis | |
|---|---|
| 1. Manulife Financial Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 3 |
| 2. Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 19 |
| 3. Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 23 |
| 4. U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 26 |
| 5. Global Wealth and Asset Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 29 |
| 6. Corporate and Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 33 |
| 7. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 34 |
| 8. Fourth Quarter Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 39 |
| 9. Risk Management and Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 43 |
| 10. Capital Management Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 81 |
| 11. Critical Actuarial and Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 84 |
| 12. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 95 |
| 13. Non-GAAP and Other Financial Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 96 |
| 14. Additional Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 132 |
1 This item is a non-GAAP financial measure. See “Non-GAAP and Other Financial Measures” below for more information.
| 3 | 2025 Annual Report | Management’s Discussion and Analysis |
|---|
Management’s Discussion and Analysis
This Management’s Discussion and Analysis (“MD&A”) is current as of February 11, 2026.
1. Manulife Financial Corporation
Manulife Financial Corporation is a leading international financial services provider, headquartered in Toronto, Canada.
Anchored in our ambition to be the number one choice for customers, we operate as Manulife across Canada and Asia,
and primarily as John Hancock in the United States, providing financial advice and insurance for individuals, groups
and businesses. Through Manulife Wealth & Asset Management, the global brand for our Global Wealth and Asset
Management segment, we serve individuals, institutions and retirement plan members worldwide. At the end of 2025,
we had more than 37,000 employees, over 106,000 agents, and thousands of distribution partners, serving over 37
million customers with operations across 25 markets globally. At the end of 2025, we had $1.7 trillion (US$1.2 trillion) in
assets under management and administration1, including total invested assets of $0.5 trillion (US$0.3 trillion), and
segregated funds net assets of $0.5 trillion (US$0.3 trillion). We trade as ‘MFC’ on the Toronto, New York, and Philippine
stock exchanges, and under ‘945’ on the Hong Kong stock exchange.
Our reporting segments are:
•Asia – providing insurance products and insurance-based wealth accumulation products in Asia.
•Canada – providing insurance products, insurance-based wealth accumulation products, and banking services in Canada.
•U.S. – providing life insurance products and insurance-based wealth accumulation products as well as having an in-force
long-term care insurance business and an in-force annuity business.
•Global Wealth and Asset Management (“Global WAM”) – providing innovative investment solutions to our retail, retirement,
and institutional clients around the world under the Manulife Wealth & Asset Management brand.
•Corporate and Other – comprised of investment performance on assets backing capital, net of amounts allocated to
operating segments; financing costs; costs incurred by the corporate office related to shareholder activities (not allocated to
operating segments); our Property and Casualty (“P&C”) Reinsurance business; and run-off reinsurance operation.
In this document, the terms “Company”, “Manulife”, “we” and “our” mean Manulife Financial Corporation (“MFC”) and its
subsidiaries. The term “MLI” means The Manufacturers Life Insurance Company and its subsidiaries.
Enterprise Strategy
In November 2025, we announced our refreshed enterprise strategy as summarized below:
1 Based on the annual global employee engagement survey conducted by Gallup. Ranking is measured by the engagement grand mean as compared to Gallup’s
Finance and Insurance Company level database.
| 4 |
|---|
Strategic Priorities and Progress Update
We are well-positioned to make significant progress on our refreshed strategy to achieve sustainable long-term growth.
Throughout 2025, we undertook various initiatives that equipped us to deliver on our new and elevated strategic priorities as
outlined below.
| Winning Team and Culture |
|---|
| Champion a customer-first culture and invest in next generation skills.<br><br>Focus areas:<br><br>•Build a sustainable growth culture that drives customer focus, innovation and speed<br><br>•Elevate colleague experience where all colleagues can grow, lead and thrive<br><br>•Drive inclusion across our workplace<br><br>•Continue to strengthen our value proposition and position Manulife as a magnet for top talent |
Winning Team and Culture builds on the strong foundation of colleague engagement, performance, and inclusion, and supports
our priority to champion a customer-first culture and invest in next generation skills.
For the sixth year in a row, we have achieved a top quartile employee engagement rank.1
2025 Highlights
•Included for the first time in the TIME World’s Best Companies (2025) list, which encompassed 1,000 global organizations.
The assessment focused on three key dimensions: employee satisfaction, revenue growth, and sustainability transparency.
•Awarded the 2025 Gallup Exceptional Workplace Award for the third year in a row, which specifically recognized us for our
progressive policies, competitive compensation and benefits, training and career development opportunities, and a flexible
working approach that demonstrates our commitment to wellness.
•Recognized by Forbes as one of the World’s Best Employers for the sixth consecutive year, as one of the World’s Top
Companies for Women, and included on their list of the World’s Best Life Insurance Companies for the first time.
•Recognized globally across various markets by a number of leading organizations:
◦Winner of the “Best Companies to Work for in Asia Award” by HR Asia in seven of our Asia markets;
◦Recognized by MediaCorp as one of Canada’s Top 100 Employers, Greater Toronto’s Top Employers, and Canada’s
Top Employers for Young People for the fifth year in a row;
◦Named one of Canada’s Most Admired Corporate Cultures by Waterstone for the fifth time;
◦John Hancock was included on Fortune’s 2025 Change the World list for our industry-leading Vitality Program, marking
us as the only life insurer acknowledged; and
◦Won Gold in all three categories of the inaugural Racial D&I Employers Award Scheme from Hong Kong’s Equal
Opportunities Commission: Racial Equity in Hiring Award, Inclusive Workplace Award, and Community Engagement
Award.
| Diversified Business Portfolio |
|---|
| Drive a balanced, diversified business model that builds on our strong foundation to fuel high-quality, sustainable growth<br><br>across all our segments, through organic and inorganic opportunities.<br><br>Focus areas:<br><br>•In Asia, deliver distribution excellence and holistic customer solutions<br><br>•In Global WAM, deliver superior outcomes for customers<br><br>•In Canada, build on our momentum and deepen customer relationships across life, health, and wealth solutions<br><br>•In the U.S., strategically target high growth areas via our differentiated solutions |
We continue to drive a diversified business model that strives to deliver high quality sustainable growth across all segments. Asia
and Global WAM segments remain as high-growth businesses, but we also plan to invest in our Canada and U.S. segments,
having demonstrated our ability to deliver attractive new business performance in recent years. While the North American
markets are more mature, opportunities for profitable growth remain, which supports our goal of sustaining and growing scale in
these markets as a globally diversified organization.
1 Subject to the receipt of regulatory approvals. See “Caution regarding forward-looking statements” above.
2 Assets under management (“AUM”) is a non-GAAP financial measure. See “Non-GAAP and Other Financial Measures” below for more information.
3 See “Caution regarding forward looking statements” above.
4 Subject to the receipt of regulatory approvals and satisfaction of customary closing conditions. See “Caution regarding forward looking statements” above.
| 5 | 2025 Annual Report | Management’s Discussion and Analysis |
|---|
2025 Highlights
•In Asia, we continued to expand our geographical presence and strengthen our market reach:
◦Agreed to establish a 50:50 life insurance joint venture with Mahindra & Mahindra Ltd. (“Mahindra”), an existing partner
through our asset management joint venture, to enter the India insurance market.1 This partnership will expand our
global footprint and position us to grow across one of the world’s largest economies, delivering long-term value; and
◦Became the first international life insurer to establish an office in the Dubai International Financial Centre dedicated to
advising on and arranging life insurance contracts to high-net-worth (“HNW”) customers. This strategic move deepens
our presence in the Middle East and enhances our ability to address the growing wealth and protection needs of HNW
and ultra-HNW individuals in the region.
•In Global WAM, we executed several initiatives to drive sustainable growth opportunities and deliver comprehensive
investment solutions:
◦Acquired 75% of Comvest Credit Partners (“Comvest”), a U.S. private credit manager with $17.5 billion of AUM as at the
acquisition date.2 The acquisition will enhance our private credit capabilities and create a comprehensive platform by
aligning Comvest and Manulife’s existing senior credit team.3 By leveraging Comvest’s investment philosophy and
expertise, we can offer clients expanded access to differentiated private credit strategies;
◦Entered into an agreement to acquire PT Schroder Investment Management Indonesia (“Schroders Indonesia”),
strengthening our position as the largest asset manager in Indonesia. It will enable us to deliver enhanced value to our
clients and stakeholders by leveraging the firm’s local expertise and client relationships4; and
◦Successfully closed the Manulife Infrastructure Fund III, L.P., raising over US$5.5 billion from existing and new
investors. This milestone reflects the continued strength of our North American mid-market infrastructure strategy and
our commitment to meeting investor needs for alternative solutions through strategic expansion of our product offerings.
•In Canada, we expanded solutions for Canadians and their families to meet their wealth and protection needs:
◦Launched a simplified specialized lending suite of products in Manulife Bank to streamline the lending experience for
advisors serving HNW clients and business owners. This emphasizes our focus on removing friction, enhancing clarity,
and delivering smarter, faster, and more personalized solutions for advisors and customers; and
◦Introduced an enhanced online life and health insurance application form that reduces complexity, accelerates medical
data collection, and shortens processing times through adaptive questioning and streamlined workflows, transforming
the digital experience for advisors. These efficiencies strengthen our competitiveness in the mass market segment and
support our ambition of delivering scalable digital offerings.
•In the U.S., we delivered strong new business growth by strengthening our distribution model and diversifying our portfolio
with new offerings and enhancements, including:
◦An accumulation survivorship indexed universal life product, John Hancock’s first offering in this product category;
◦A new hybrid indexed universal life insurance solution offering more flexible living benefits and a streamlined digital
application process; and
◦A new variable universal life insurance solution with improved fund selection and index loans.
| Empowering Customer Health, Wealth, and Longevity |
|---|
| Become the most trusted partner in health, wealth, and financial well-being.<br><br>Focus areas:<br><br>•Through product innovation, digital solutions and partnerships, further enhance our differentiated value propositions and<br><br>generate sustained value for our customers, colleagues, and the communities where we live and work<br><br>•Continue to support global research, thought leadership, advocacy, and community investment, contributing to longer,<br><br>healthier, and more financially secure lives for our stakeholders |
With global megatrends, such as the widening retirement and health protection gaps as global populations live longer, there is
significant opportunity to create shared value solutions and drive positive outcomes across customer lifespans. Leveraging our
market-leading behavioural insurance capabilities in the U.S., we will expand our expertise globally to enhance customer
outcomes, as well as provide advice, guidance, and investment solutions to our wealth and asset management customers. In
Asia, we aim to provide innovative health solutions across the region, while in Canada, we intend to scale a digital health
ecosystem across our businesses, creating a unified platform for access to care. In the U.S., we seek to continue to leverage our
expertise in the wellness and longevity economy.
We launched the Manulife Longevity Institute, a global platform for research, thought leadership, innovation, advocacy and
community partnerships. Through this unified platform, we are investing $350 million through 2030 to help people live longer,
healthier, and more financially secure lives.
1 Maven Clinic, Meet Maven, 2024.
| 6 |
|---|
2025 Highlights
•We further leveraged our strategic partnership with GRAIL and launched various initiatives across our segments, including
expanded access to the Galleri® multi-cancer early detection test to eligible Manulife Vitality program members in Canada
and to eligible plan participants in U.S. Retirement.
•In Asia, we continued to enhance our health, wealth, and longevity propositions to meet the evolving needs of customers
seeking better health and wellness outcomes:
◦Agreed to establish a strategic collaboration with Bupa International Limited, a global healthcare company, to create a
more robust and integrated healthcare network for our customers. By combining the strengths of both organizations,
this collaboration in Hong Kong aims to expand customer access to high-quality care while enhancing convenience,
value, and affordability through integrated healthcare solutions and personalized support throughout their healthcare
journey;
◦Launched the enhanced ManulifeMOVE, our flagship lifestyle program, with initial rollout in Singapore and the
Philippines. ManulifeMOVE empowers customers to take charge of their health and well-being, with key enhancements
including differentiated and expanded benefits across preventive health services, medical and assistive care, cancer
care support, health and well-being coaching, fitness and wellness experiences, and community engagement;
◦Hosted Asia’s inaugural Manulife Longevity Symposium in Singapore and the Philippines, reinforcing our commitment to
advancing Asia’s longevity movement. The symposiums brought together over 1,400 healthcare experts, industry
leaders, academics, customers and partners to address the challenge of living not just longer, but better, covering topics
such as health and longevity innovations, and financial well-being; and
◦Delivered enhanced health service coverage and expanded access to cross-border healthcare in Hong Kong. We
launched a cross-border Cancer Drug Support Service through our partnership with one of the leading healthcare
service providers in the China Greater Bay Area. In addition, we broadened select Manulife Hong Kong and Macau
health insurance product coverage to over 38,000 hospitals in mainland China and introduced hospitalization credit
services at more than 800 hospitals in mainland China, enabling patients to receive treatment without upfront payments.
•In Global WAM, we released our second annual global Financial Resilience and Longevity study. With insights drawn from
retirement plan members across all regions, our report outlined tailored steps for each generation and highlighted how
retirement plan providers, sponsors, and advisors can support better financial outcomes across people’s lifespans.
•In Canada, we:
◦Enhanced the Manulife Vitality program and introduced additional resources and incentives for managing and
preventing diabetes, the extension of travel rewards to all members, the addition of ŌURA as a key rewards partner,
and new collaborations offering tools that span nutrition, fitness, mental health, and personalized medicine; and
◦Partnered with Maven Clinic, the world’s largest virtual clinic for women’s and family health1, to offer eligible Group
Benefits members 24/7 virtual access to personalized support during some of their most important stages of life,
including fertility, maternity, parenting, and menopause. This initiative addresses critical care gaps that impact women’s
health and workforce participation.
•In the U.S., we advanced our mission to help our customers live longer, healthier, and better lives:
◦Empowered eligible John Hancock Vitality members with early detection technology and resources to proactively
manage their health, including access to Function Health’s technology and health screening tools, and access to
continuous glucose monitoring technology and dietitian support; and
◦Released the first-of-its-kind Longevity Preparedness Index – developed in collaboration with the MIT AgeLab, to deliver
actionable insights on what it means to prepare well for living longer, and build on our brand awareness in the longevity
space.
| AI-powered Organization |
|---|
| Continuously deploy AI to improve experiences, reimagine how we work, and create value.<br><br>Focus areas:<br><br>Key to our strategy is the disciplined deployment of AI underpinned by our responsible AI principles. We will continue to drive<br><br>growth through three horizons:<br><br>•Operational efficiency: We are optimizing many of our manual processes to improve efficiency and enhance customer<br><br>experience<br><br>•Improved outcomes: We are delivering transformative new capabilities to drive further productivity, grow our top-line, and<br><br>accelerate decision making through new data sources and real time insights<br><br>•Enabling growth: We are exploring opportunities to innovate with AI-based products and business models, and new sources<br><br>of data |
Our AI transformation continued to deliver meaningful impact, as we embed AI across our businesses. As of December 31, 2025,
we had 91 use cases in production and another 121 in development. Notably, Manulife was ranked first among life insurers and
1 The Evident AI Index for Insurance assesses AI maturity across 30 of the most prominent insurance companies in North America and Europe, measuring progress
across four key categories: Talent, Innovation, Leadership, and Transparency.
2 Figure excludes mainland China. A refactored version of ChatMFC has been deployed and is available to all employees in our mainland China life insurance joint
venture.
| 7 | 2025 Annual Report | Management’s Discussion and Analysis |
|---|
top five overall in the inaugural Evident AI Insurance Index1, underscoring our leadership in AI maturity and responsible
innovation.
Building on this momentum, we are progressing toward a proprietary Agentic AI Platform – a foundational element of our
enterprise AI strategy. This approach seeks to make it easier to manage and coordinate AI tools across different systems by
enabling our teams to share ideas, work and code across markets, so we can roll out AI faster and more consistently.
Additionally, it includes automated checks to make sure all AI models meet strict safety and risk standards, streamlining parts of
our AI governance process and making it more effective.
2025 Highlights
•Enterprise-wide:
◦We deployed GenAI sales enablement solutions across nine markets and multiple business lines in all four operating
segments, delivering measurable results, accelerating information access and elevating client interactions. These
GenAI-powered solutions empowered agents, advisors and distribution partners with personalized engagement
insights, automated email drafting, and real-time coaching to drive sales performance; and
◦ChatMFC is a core productivity platform for Manulife, delivering enterprise-wide value since we achieved 100% global
workforce coverage2 including contingent workers. Throughout 2025, ChatMFC has seen major feature rollouts such as
integration with key knowledge bases, as well as implementation of document upload and end-to-end translation
capabilities. With strong adoption and continuous innovation, ChatMFC is driving cultural and operational transformation
across the organization, becoming a tool our colleagues lean on to make their work easier, better, and faster.
•In Asia, we:
◦Launched advanced AI-enabled agency tools across the region to enhance sales support and improve customer
experience. In Indonesia, Singapore and Japan, we rolled out AI assistants to provide faster access to product and
policy information and streamline administrative tasks. In Hong Kong, we launched AI Sales Pro – a GenAI-powered
tool that helps agents identify top sales opportunities, craft personalized customer solutions, and access critical know-
how to drive business performance; and
◦Rolled out VOICE in Singapore and Japan, a multi-signal dashboard that includes call trend analysis, net sentiment
scores, topic trends and deep dive insights from call center transcripts. VOICE utilizes GenAI to categorize data, find
correlations, and customize insights by analyzing near real-time trends from customer interactions. These insights help
us to better understand customer sentiment and key interests, enhance services, improve training, and identify
opportunities to better deliver value to our customers.
•In Global WAM, we:
◦Incorporated a suite of AI-powered research tools to enhance investment analysis for our public markets investment
research teams. By integrating internal and external data into actionable insights, we streamline our research process,
accelerate decision-making, and empower our investment professionals to focus on driving value for our clients;
◦Launched an AI-powered sales enablement solution in U.S. Retirement, delivering real-time insights and personalized
content to enhance our sales operations and productivity, improve our sales close ratio, and drive revenue growth. This
reduced the time spent on information searches and tripled the number of sales opportunities compared with 2024; and
◦Expanded our retirement plan offerings with the launch of FutureStepTM and FutureChoiceTM in the U.S., two fully digital
retirement plan solutions that enhance our capabilities and market presence. These new offerings improve user
experience by integrating AI and streamlining both client onboarding and participant access.
•In Canada, we:
◦Introduced an innovative GenAI tool in our Individual Insurance business that automatically generates personalized
communications to advisors by analyzing historical data and identifying available opportunities. This tool enables our
internal sales team to deliver timely, relevant, and actionable messages to drive meaningful interactions and enhance
collaboration with advisors; and
◦Launched a GenAI-powered coaching tool for Licensed Insurance Advisor (“LIA”) supervisors in our Affinity business
that evaluates customer service calls, generating insights that allow supervisors to provide LIAs with more effective,
timely, and targeted feedback to enhance customer service and sales outcomes.
•In the U.S., we:
◦Partnered with Munich Re Life US to enhance underwriting efficiency through alitheia, its AI-driven risk assessment
platform, raising instant underwriting decision eligibility from US$3 million to US$5 million, enabling more customers to
experience a streamlined life insurance application process; and
◦Deployed GenAI capabilities to improve outcomes in our in-force Long Term Care (“LTC”) insurance business, including
further enhancements to automated claims processing and predictive analytics to detect and reduce fraud, waste and
abuse.
1 MDRT membership awarded based on prior year production.
2 This refers to Asia agency annualized premium equivalent (“APE”) sales per active agents.
| 8 |
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| Superior Distribution |
| --- |
| Make it easier for customers to buy, advisors to sell, and partners to grow.<br><br>Focus areas:<br><br>•Expand our presence across distribution channels and invest in AI tools to help us reach more customers and deliver<br><br>frictionless experiences for our customers<br><br>•Further expand professional and digitally enabled agency force in applicable markets<br><br>•Enhance distribution partnerships with new and differentiated solutions |
In order to sustain a balanced portfolio and fuel sustainable growth, we will continue to invest in making it easier for customers to
buy and advisors to sell our products, and also expand our partnerships with new and differentiated solutions.
In Asia, we expect to further grow and enhance our agency and bank distribution channels, expand health offerings, and
accelerate our HNW leadership on the basis of continued structural trends that support long-term growth, driven by an aging
population, gaps in health, protection and retirement savings, and the rise of middle-income households.
In Global WAM, we have great momentum with a diversified investor base, a robust distribution network and strong capabilities,
and we are investing to continue delivering strong returns and positive experiences for our customers.
In Canada, we are accelerating our digital transformation that deepens our penetration in the mass market and further
strengthens our Group Benefits business.
In the U.S. we continue to leverage our strong brand and trusted relationships with distributors, to deliver sustained scale by
broadening our offerings and expanding our customer base, including within the U.S. HNW and mass affluent customer
segments.
In 2025, we continued to expand our reach through our diversified distribution platforms and advanced strategic partnerships,
such as the renewal of our bancassurance partnership with China Banking Corporation (“Chinabank”) in the Philippines and the
new partnership with Bank of China (Hong Kong) (“BOCHK”) with a flagship fund launch. In addition, we continued to integrate AI
and digital capabilities into our business solutions to more effectively reach our customers and improve their experience.
2025 Highlights
•In Asia, we continued to broaden our reach and leverage strategic partnerships through our diversified distribution platforms
to accelerate growth:
◦Renewed our bancassurance partnership in the Philippines with Chinabank, extending our exclusive partnership until
- This strategic partnership, which started in 2007, solidifies the two organizations’ shared commitment to providing
holistic life, wealth, and health solutions for the long-term financial security of Filipino families; and
◦Continued to build on our high-quality agency force at scale by improving agent capabilities and capacities across the
agency value chain. Our strategy is focused on quality recruitment, digital and AI tools, and robust learning and
development initiatives. This includes the launch of Manulife Business Academy, which collaborates with globally
accredited training partners to enhance skills in financial planning, recruitment, and leadership. These efforts have
contributed to a 23% year-over-year increase in our annual Million Dollar Round Table ("MDRT") membership1,
positioning us as having the third largest MDRT members globally, while agency productivity2 for 2025 rose by 17%
compared with 2024.
•In Global WAM, we:
◦Enhanced the Manulife iFUNDS platform, making it the first integrated digital wealth solution in Singapore that offers
advisors a unified view of clients’ Unit Trust and Investment-Linked Plan (“ILP”) holdings. By integrating these into a
single platform and incorporating AI-powered ILP analytics capabilities, the enhancements streamline portfolio
oversight, accelerate transaction execution, and empower advisors to deliver more personalized and insightful financial
guidance; and
◦Entered a strategic partnership with BOCHK to launch our flagship Global Multi-Asset Diversified Income Fund to
customers in Hong Kong and Malaysia. The collaboration leverages the firm’s distribution capabilities and our asset
management expertise to provide customers with comprehensive wealth management solutions.
•In Canada, we:
◦Partnered with M3 Financial Group (“M3”) to offer our Affinity Mortgage Protection Plan through M3’s Canada-wide
broker network, beginning with advisors in British Columbia. Our licensed advisors work directly with M3’s mortgage
clients to guide them through the process of purchasing the mortgage protection coverage they need, enabling M3’s
brokers to focus on servicing their core business. This initiative strengthens our position in mortgage protection by
offering more accessible, trusted protection in Canada’s housing market; and
◦Launched an end-to-end digital travel insurance platform that modernizes the distributor experience and simplifies the
purchasing process for Canadians and their families.
| 9 | 2025 Annual Report | Management’s Discussion and Analysis |
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•In the U.S., we enhanced our distribution footprint by expanding our wholesaling team, pursuing more targeted growth
strategies and accelerating our penetration within the U.S. HNW and mass affluent markets, contributing to the strong new
business growth in 2025.
Financial and Strategic Targets
Below is a summary of our 2025 results against our 2025, 2027 and medium-term targets:
| Targets(1) | |||
|---|---|---|---|
| 2025 | 2024 | 2027 | |
| Core return on common shareholders’ equity (“core ROE”)(2),(3) | 16.5% | 16.2% | 18%+ |
| Remittances ($ billions)(4) | $6.4 | $7.0 | 22+ cumulative |
| Diluted core earnings per common share (“core EPS”) growth(2),(3) | 8% | 10% | |
| Expense efficiency ratio(2) | 44.8% | 44.8% | |
| New business contractual service margin (“new business CSM”) growth(2) | 28% | 32% | |
| Contractual service margin (“CSM”) balance growth(2) | 16% | 3% | |
| Financial leverage ratio(2),(3) | 23.9% | 24.0% | |
| Common share core dividend payout ratio(2),(3) | 42% | 42% |
All values are in US Dollars.
| Targets(1) | |||||
|---|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2027 | Medium-term | |
| Core earnings contribution from highest potential businesses(2),(3),(5) | 75% | 68% | 75% | ||
| Core earnings contribution from LTC insurance and variable annuities<br><br>(“VA”) businesses(2),(3) | 9% | 10% | <15% | ||
| Straight-through-processing (“STP”)(6) | 90% | 89% | 88% | ||
| Net promoter score (“NPS”) | 27 | 27 | 37 | ||
| Core earnings contribution from Asia region(2),(3) | 47% | 41% | 50% | ||
| Employee engagement (quartile)(7) | 1st | 1st | 1st | ||
| 5-year Total Shareholder Return (quartile)(8) | 2nd | 1st | 1st | ||
| Corporate Sustainability Assessment (quartile)(9) | 1st | 1st | 1st |
(1)See “Caution regarding forward-looking statements” above.
(2)Core ROE, core EPS, expense efficiency ratio, financial leverage ratio, common share core dividend payout ratio, core earnings contribution from highest potential
businesses, core earnings contribution from LTC insurance and VA businesses, and core earnings contribution from Asia region are non-GAAP ratios. CSM and
new business CSM are net of non-controlling interest (“NCI”). Percentage growth / declines in CSM net of NCI, new business CSM, and core EPS are stated on a
constant exchange rate basis and are non-GAAP ratios. See “Non-GAAP and Other Financial Measures” below for more information.
(3)2024 metrics were updated to align with the presentation of Global Minimum Taxes in 2025. See the "Global Minimum Taxes" section below for more information.
(4)2024 to 2025 cumulative remittances were $13.4 billion, compared with our target of $22 billion+ for 2024 to 2027. For more information on this metric, see “Non-
GAAP and Other Financial Measures” below.
(5)Highest potential businesses include Asia segment, Global WAM segment, Canada Group Benefits and North American behavioural insurance products.
(6)Straight-through-processing represents customer interactions that are completely digital, and includes money movement.
(7)As compared to global financial services companies and insurance peers.
(8)As compared to our performance peer group. Refer to Manulife’s most recent Management Information Circular for information on our performance peer group.
Rankings as at December 31 of each respective year.
(9)Based on Standard & Poor’s Corporate Sustainability Assessment rating.
We have achieved our 2025 target on core earnings contribution from highest potential businesses, and exceeded the 2025
targets on core earnings contribution from LTC insurance and VA businesses, and STP.
In addition, we continued to make solid progress on our 2027 targets:
•We generated 47% in core earnings contribution from Asia region (a combination of our Asia segment and Asia wealth and
asset management) in 2025, and remain committed to meeting our 2027 target of delivering 50% in core earnings
contribution from the Asia region.
•We achieved an NPS score of 27, in line with 2024.
Details of our performance on the financial targets are provided below.
1 2024 items excluded from core earnings has been updated to align with the presentation of GMT in 2025. See the “Global Minimum Taxes” section below for more
information.
2 The reinsurance transaction with the Reinsurance Group of America, Incorporated (“RGA U.S. Reinsurance Transaction”) closed January 1, 2025. The reinsurance
transaction with Global Atlantic (“GA Reinsurance Transaction”) closed February 22, 2024, with an effective date of January 1, 2024. The reinsurance transaction
with the RGA Life Reinsurance Company of Canada (“RGA Canadian Reinsurance Transaction”) closed April 1, 2024.
3 Includes impacts from reinsurance transactions reported in core earnings and items excluded from core earnings.
4 There is an offsetting change in other comprehensive income (“OCI”) attributed to shareholders resulting in a neutral impact to book value.
5 Percentage growth/declines in core earnings, pre-tax core earnings, core earnings excluding the change in ECL, core expenses, general expenses, assets under
management and administration (“AUMA”), AUM, core earnings before interest, taxes, depreciation and amortization (“core EBITDA”), and Manulife Bank average
net lending assets are stated on a constant exchange rate basis, a non-GAAP ratio. See “Non-GAAP and Other Financial Measures” below for more information.
6 The increase in Global WAM net fee income is due to higher average assets under management and administration (“average AUMA”) reflecting the favourable
impact of markets and the acquisition of Comvest. For more information on average AUMA, see “Non-GAAP and Other Financial Measures” below.
| 10 |
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Profitability
Profitability
| As at and for the years ended December 31, | 2024 |
|---|---|
| ( millions, unless otherwise stated) | |
| Net income (loss) attributed to shareholders | $5,385 |
| Core earnings(1),(2) | $7,182 |
| Diluted earnings (loss) per common share () | $2.84 |
| Core EPS ()(2) | $3.85 |
| Return on common shareholders’ equity (“ROE”) | 12.0% |
| Core ROE | 16.2% |
| Expense efficiency ratio | 44.8% |
| General expenses | $4,859 |
| Core expenses(1) | $6,899 |
All values are in US Dollars.
(1)This item is a non-GAAP financial measure. See “Non-GAAP and Other Financial Measures” below for more information.
(2)2024 core earnings and core EPS have been updated to align with the presentation of Global Minimum Taxes (“GMT”) in 2025. See the “Global Minimum Taxes”
section below for more information.
Our net income attributed to shareholders was $5.6 billion in 2025 compared with $5.4 billion in 2024. Net income
attributed to shareholders is comprised of core earnings (consisting of items we believe reflect the underlying earnings capacity
of the business), which amounted to $7.5 billion in 2025 compared with $7.2 billion in 2024, and items excluded from core
earnings of $1.9 billion of net charges in 2025 compared with net charges of $1.8 billion1 in 2024. The effective tax rate on net
income (loss) attributed to shareholders was 14% in 2025 compared with 17% in 2024 primarily due to jurisdictional mix of
earnings coupled with one-time tax benefits and tax true-ups in both years.
Net income attributed to shareholders increased $0.2 billion in 2025 compared with 2024, primarily due to growth in core
earnings and the impact of reinsurance transactions in 2025 compared with 2024, partially offset by a higher charge from market
experience. The RGA U.S. Reinsurance Transaction2 resulted in a net loss attributed to shareholders of $0.7 billion3 in 2025
compared with a combined net loss attributed to shareholders of $0.9 billion3 in 2024 from the Global Atlantic Reinsurance
Transaction2 and the RGA Canadian Reinsurance Transaction2. The net loss on all three transactions was primarily related to
market experience from the sale of fair value through other comprehensive income (“FVOCI”) debt instruments.4 In addition, the
higher charge in market experience is due to a net charge from derivatives and hedge accounting ineffectiveness in 2025
compared with a net gain in 2024. Total market experience was a net charge of $1.7 billion in 2025, primarily related to lower-
than-expected returns on alternative long-duration assets (“ALDA”), largely related to real estate, private equity and timber
investments, net realized losses due to the sale of debt instruments primarily related to the RGA U.S. Reinsurance Transaction,
and a net charge related to derivatives and hedge accounting ineffectiveness, partially offset by higher-than-expected returns on
public equities.
Core earnings increased $0.3 billion, or 3%5, on a constant exchange rate basis compared with 2024. The increase was driven
by higher core earnings in Global WAM, largely reflecting an increase in net fee income6, higher performance fees in Institutional
Asset Management, and disciplined expense management, partially offset by lower favourable tax true-ups and tax benefits, the
impact of the eMPF transition in Hong Kong and lower fee spreads. In addition, growth in our insurance business, the net impact
of 2025 updates to actuarial methods and assumptions, an adjustment to the accrual for withholding taxes following the
announcement of the Comvest acquisition, and favourable insurance experience in Asia also contributed to higher core earnings.
These increases were partially offset by unfavourable insurance experience in our U.S. life insurance business, lower expected
investment earnings, a lower gain from updates to provisions for estimated losses in our P&C Reinsurance business, a larger
increase in the expected credit loss (“ECL”) provision in 2025 and less favourable insurance experience in Canada. The impact
of 2024 updates to actuarial methods and assumptions was net neutral. In addition, the RGA U.S. Reinsurance Transaction, the
RGA Canadian Reinsurance Transaction, and the GA Reinsurance Transaction reduced core earnings by $33 million, $19 million
and $11 million, respectively, in 2025 compared with 2024.
| 11 | 2025 Annual Report | Management’s Discussion and Analysis |
|---|
Additional information on the change in ECL is presented in the following table:
| For the years ended December 31, | ||
|---|---|---|
| ($ millions) | 2025 | 2024 |
| Change in ECL | ||
| Net new originations or purchases | $(16) | $(24) |
| Changes to risk, parameters and models | ||
| Credit migration | (111) | (111) |
| Parameter and model updates, and other | 35 | 105 |
| Total (increase) recovery in ECL, pre-tax | $(92) | $(30) |
| Total (increase) recovery in ECL, post-tax | $(75) | $(23) |
The increase in the ECL provision of $75 million post-tax in 2025 was primarily related to credit migration, partially offset by net
positive impact from parameter and model updates reflecting a favourable macro environment. The increase in the ECL provision
of $23 million post-tax in 2024 reflected credit migration, partially offset by positive parameter and model updates from a positive
macro environment, in particular, improved equity markets.
Core earnings by segment are presented in the following table. See Asia, Canada, U.S., Global WAM, and Corporate and Other
sections below.
| For the years ended December 31, | 2024 | % change(1)<br><br>2025 vs 2024 |
|---|---|---|
| ( millions) | ||
| Core earnings by segment(2) | ||
| Asia | $2,466 | 18% |
| Canada | 1,568 | 4% |
| U.S. | 1,690 | (30)% |
| Global Wealth and Asset Management | 1,673 | 14% |
| Corporate and Other | (215) | (2)% |
| Total core earnings | $7,182 | 3% |
All values are in US Dollars.
(1)Percentage change is on a constant exchange rate basis, a non-GAAP ratio. See “Non-GAAP and Other Financial Measures” below for more information.
(2)2024 core earnings by segment have been updated to align with the presentation of GMT in 2025. See the “Global Minimum Taxes” section below for more
information.
| 12 |
|---|
The following table presents 2025 and 2024 net income attributed to shareholders consisting of core earnings and items
excluded from core earnings.
| For the years ended December 31, | 2024 |
|---|---|
| ( millions) | |
| Core earnings | $7,182 |
| Items excluded from core earnings: | |
| Market experience gains (losses)(1) | $(1,450) |
| Realized gains (losses) on debt instruments | (962) |
| Derivatives and hedge accounting ineffectiveness | 132 |
| Actual less expected long-term returns on public equity | 312 |
| Actual less expected long-term returns on ALDA | (969) |
| Other investment results | 37 |
| Updates to actuarial methods and assumptions that flow directly through income(2) | (199) |
| Restructuring charge(3) | (72) |
| Amortization of acquisition-related intangible assets(4) | - |
| Reinsurance transactions, tax-related items and other(5) | (76) |
| Total items excluded from core earnings | (1,797) |
| Net income (loss) attributed to shareholders | $5,385 |
All values are in US Dollars.
(1)Market experience was a net charge of $1,662 million in 2025 primarily due to lower-than-expected returns on ALDA, largely related to real estate, private equity
and timber investments, net realized losses from the sale of debt instruments, of which $732 million was related to the transfer of assets with respect to the RGA
U.S. Reinsurance Transaction, which are classified as FVOCI, and a net charge from derivatives and hedge accounting ineffectiveness. These were partially offset
by higher-than-expected returns on public equity. Market experience was a net charge of $1,450 million in 2024 primarily due to lower-than-expected returns on
ALDA, driven by real estate and private equity investments, and net realized losses from the sale of debt instruments, of which $841 million was related to the
transfer of assets with respect to the GA Reinsurance Transaction and the RGA Canadian Reinsurance Transaction, which are classified as FVOCI. These were
partially offset by gains from higher-than-expected returns from public equity, a net gain from derivatives and hedge accounting ineffectiveness, and a gain from
other investment results.
(2)See “Critical Actuarial and Accounting Policies – Review of Actuarial Methods and Assumptions” section below for more information on the 2025 and 2024 net
charges.
(3)In 2025, we reported a restructuring charge of $12 million post-tax ($16 million pre-tax) in Global WAM and Canada. In 2024, we reported a restructuring charge of
$72 million post-tax ($92 million pre-tax) in Global WAM and Canada.
(4)This item is excluded from core earnings commencing in the third quarter of 2025 (“3Q25”). See “Non-GAAP and Other Financial Measures” below for more
information.
(5)In 2025, the net charge of $41 million included a charge of $45 million related to an accounting true-up in Asia, a $24 million charge for Comvest acquisition-
related costs, and a $10 million charge for an investment impairment in Global WAM, partially offset by a net gain of $36 million related to tax-related benefits and
true-ups. In 2024, the net charge of $76 million included a charge of $70 million from the GA Reinsurance Transaction in the U.S. and Japan, a charge of $60
million related to U.S. withholding taxes on remittances associated with the GA Reinsurance Transaction, a net charge of $43 million related to the acquisition of
CQS Investment Management (“CQS”), a charge of $25 million related to a reinsurance recapture in Asia, a charge of $23 million related to GMT (an additional
$208 million charge was recorded in core earnings, see the “Global Minimum Taxes” section below for more information) and an investment impairment charge of
$22 million in Global WAM. This was partially offset by tax-related benefits and true-ups of $125 million and a gain of $34 million related to the RGA Canadian
Reinsurance Transaction in Canada.
Net income attributed to shareholders by segment is presented in the following table. See Asia, Canada, U.S., Global WAM, and
Corporate and Other sections below.
| For the years ended December 31, | 2024 | % change(1)<br><br>2025 vs 2024 |
|---|---|---|
| ( millions) | ||
| Net income (loss) attributed to shareholders by segment | ||
| Asia | $2,355 | 26% |
| Canada | 1,221 | 8% |
| U.S. | 135 | – |
| Global Wealth and Asset Management | 1,597 | 19% |
| Corporate and Other | 77 | – |
| Total net income (loss) attributed to shareholders | $5,385 | 3% |
All values are in US Dollars.
(1)Percentage change is on an actual exchange rate basis.
Diluted earnings (loss) per common share (“EPS”) was $3.07 in 2025, compared with $2.84 in 2024 primarily related to the
impact of common share buybacks and the increase in net income attributed to common shareholders. Diluted core earnings per
common share was $4.21 in 2025, compared with $3.85 in 2024 primarily related to the increase in core earnings and the impact
of common share buybacks. The diluted weighted average common shares outstanding was 1,708 million in 2025 and 1,785
million in 2024.
ROE for 2025 of 12.0% was in line with 2024, reflecting higher net income attributed to common shareholders, offset by higher
average common shareholders’ equity. Core ROE was 16.5% in 2025 compared with 16.2% in 2024. The increase in 2025 core
ROE was primarily driven by an increase in core earnings.
1 This is a non-GAAP financial measure. See “Non-GAAP and Other Financial Measures" below for more information.
| 13 | 2025 Annual Report | Management’s Discussion and Analysis |
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Expense efficiency ratio
Expense efficiency is embedded in our culture and its focus has enabled us to drive the benefits of scale across our businesses.
We believe there are further opportunities to leverage our global scale and operating environment, streamline processes and
further digitize our business.
We use the expense efficiency ratio to measure our progress on our expense management initiatives. It reflects expenses that
flow directly through core earnings (“core expenses”), which include core general expenses, directly attributable maintenance
expenses and directly attributable acquisition expenses for products measured using the premium allocation approach (“PAA”)
and for other products without a CSM. Core expenses exclude certain expenses directly attributable to acquiring new business
that are capitalized into the CSM, instead of flowing directly through core earnings.
The expense efficiency ratio was 44.8% in 2025, in line with 2024, reflecting a 2% increase in both pre-tax core earnings1 and
core expenses. The increase in core expenses was driven by higher workforce-related costs, continued strategic investments in
digital transformation and AI, the inclusion of operating expenses related to our acquisitions of CQS and Comvest, and the eMPF
transition in Hong Kong. These were partially offset by disciplined expense management primarily in Global WAM.
Core general expenses are a component of core expenses. Total 2025 general expenses increased 1% on an actual exchange
rate basis and remained unchanged on a constant exchange rate basis compared with 2024. The increase was driven by the
items noted above related to the increase in core expenses, as well as a reallocation of expenses from directly attributable
maintenance to general expenses, partially offset by a reduction in expenses excluded from core earnings. Total general
expenses excluded from core earnings in 2025 consisted primarily of costs related to the acquisition of Comvest, the
amortization of acquisition-related intangible assets, and restructuring charges in Global WAM and Canada. In 2024, these
expenses primarily related to the restructuring charges in Global WAM and Canada and the acquisition of CQS.
1 Percentage growth/declines in APE sales and NBV are stated on a constant exchange rate basis.
2 For more information on this metric, see “Non-GAAP and Other Financial Measures” below. In addition, 2024 NBV margin was updated to include the impact of
GMT, consistent with 2025. See the “Global Minimum Taxes” section below for more information.
| 14 |
|---|
Business Performance
Business performance
| As at and for the years ended December 31, | 2024 |
|---|---|
| ( millions, unless otherwise stated) | |
| Asia APE sales | $6,073 |
| Canada APE sales | 1,689 |
| U.S. APE sales | 623 |
| Total APE sales(1) | 8,385 |
| Asia new business CSM(2) | 2,148 |
| Canada new business CSM | 357 |
| U.S. new business CSM | 382 |
| Total new business CSM(2) | 2,887 |
| Asia new business value(3) | 2,078 |
| Canada new business value | 627 |
| U.S. new business value | 241 |
| Total new business value(1),(3) | 2,946 |
| Asia CSM net of NCI | 15,540 |
| Canada CSM | 4,109 |
| U.S. CSM | 2,468 |
| Corporate and Other CSM | 10 |
| Total CSM net of NCI | 22,127 |
| Post-tax CSM net of NCI(3),(4) | 18,353 |
| Global WAM gross flows ( billions)(1) | 171.7 |
| Global WAM net flows ( billions)(1) | 13.3 |
| Global WAM assets under management and administration ( billions)(4),(5) | 1,031.1 |
| Global WAM total invested assets ( billions) | 9.7 |
| Global WAM segregated funds net assets ( billions)(5) | 291.9 |
| Total assets under management and administration ( billions) | 1,608.0 |
| Total invested assets ( billions) | 442.5 |
| Total net segregated funds net assets ( billions) | 436.0 |
All values are in US Dollars.
(1)For more information on this metric, see “Non-GAAP and Other Financial Measures” below.
(2)New business CSM is net of NCI.
(3)2024 new business value and post-tax CSM net of NCI have been updated to include the impact of GMT, consistent with 2025. See the “Global Minimum Taxes”
section below for more information.
(4)This item is a non-GAAP financial measure. See “Non-GAAP and Other Financial Measures” below for more information.
(5)The Global WAM portion of AUMA as at December 31, 2025 was $1,106.6 billion, an increase of 11% compared with December 31, 2024, driven by the favourable
impact of equity markets and interest rates, and the assets from the acquisition of Comvest in the fourth quarter of 2025 (“4Q25”), partially offset by net outflows.
The Global WAM segregated funds net assets were $313.6 billion as at December 31, 2025, an increase of 7% compared with December 31, 2024 on an actual
exchange rate basis driven by the favourable impact of equity markets partially offset by unfavorable foreign currency exchange rates.
Annualized premium equivalent (“APE”) sales were $9,717 million in 2025, an increase of 14%1 compared with 2024, new
business CSM was $3,775 million in 2025, an increase of 28% compared with 2024, and new business value (“NBV”) was
$3,533 million in 2025, an increase of 18%1 compared with 2024. New business results by segment were as follows:
•In Asia, APE sales, new business CSM, and NBV increased 18%, 27% and 20%, respectively, in 2025 compared with 2024,
reflecting strong 2025 performance across the region, led by Hong Kong, mainland China, Singapore and Japan. New
business value margin (“NBV margin”)2 improved to 39.5%.
•In Canada, APE sales decreased 6% in 2025 compared with 2024, as strong growth in Individual Insurance sales
throughout 2025 was more than offset by the non-recurrence of a significant Group Insurance large-case sale in the prior
year. New business CSM increased 22% in 2025 compared with 2024, driven by higher sales volumes in Individual
Insurance, and higher margins and sales volumes in Annuities, partially offset by net lower margins in Individual Insurance.
NBV increased 7% in 2025 compared with 2024, reflecting higher sales volumes in Individual Insurance and favourable
product mix in Group Insurance, partially offset by lower sales volumes in Group Insurance.
•In the U.S., APE sales increased 24% in 2025 compared with 2024, reflecting broad-based demand for our suite of products.
New business CSM increased 42% primarily driven by higher sales volumes and product mix. NBV increased 22% in 2025
compared with 2024, primarily driven by higher sales volumes.
1 Percentage growth/declines in organic CSM is stated on a constant exchange rate basis.
| 15 | 2025 Annual Report | Management’s Discussion and Analysis |
|---|
CSM net of NCI was $24,969 million as at December 31, 2025, an increase of $2,842 million or 16% compared with December
31, 2024. Organic CSM movement was an increase of $2,257 million in 2025, representing a 10% growth1, driven by the impact
of new business, interest accretion and net favourable insurance experience, partially offset by amortization recognized in core
earnings. Inorganic CSM movement was an increase of $585 million in 2025, primarily driven by the net impact of 2025 updates
to actuarial methods and assumptions and equity market performance, partially offset by the impacts of changes in foreign
currency exchange rates and reinsurance transactions.
Global WAM net outflows were $14.3 billion in 2025, compared with net inflows of $13.3 billion in 2024.
•Net outflows in Retirement were $9.4 billion in 2025, compared with net inflows of $0.7 billion in 2024, primarily driven by
higher retirement plan redemptions, and higher net member withdrawals reflecting higher account balances from market
growth. This was partially offset by higher new plan sales in Canada.
•Net outflows in Retail were $12.3 billion in 2025, compared with net inflows of $6.8 billion in 2024, driven by lower net sales
through third-party intermediaries in North America and our Canada retail wealth platform.
•Net inflows in Institutional Asset Management were $7.4 billion in 2025, compared with net inflows of $5.7 billion in 2024,
driven by higher net flows from fixed income mandates including strong contributions from our Manulife | CQS products, and
the impact of the acquisition of Comvest. This was partially offset by higher redemptions in equity mandates and lower
deployments in private markets.
Assets under Management and Administration
AUMA as at December 31, 2025 was $1.7 trillion, an increase of 9% compared with December 31, 2024, primarily due to the
favourable impact of equity markets and interest rates, partially offset by net outflows. Total invested assets increased 4% on an
actual exchange rate basis, primarily due to the impact of interest rates on debt instruments and the impact of equity markets,
partially offset by the transfer of invested assets related to the RGA U.S. Reinsurance Transaction. Segregated funds net assets
increased 6% on an actual exchange rate basis, primarily due to the impact of equity markets.
Assets under Management and Administration
| As at December 31, | 2024 |
|---|---|
| ( millions) | |
| Total invested assets | $442,497 |
| Segregated funds net assets(1) | 435,988 |
| Mutual funds, institutional asset management and other(1),(2) | 506,868 |
| Total assets under management | 1,385,353 |
| Other assets under administration | 222,614 |
| Total assets under management and administration | $1,607,967 |
All values are in US Dollars.
(1)These assets are not available to satisfy the liabilities of the Company’s general fund.
(2)Other funds represent pension funds, pooled funds, endowment funds and other institutional funds managed by the Company on behalf of others.
1 This item is a non-GAAP financial measure. See “Non-GAAP and Other Financial Measures” below for more information. Post-tax CSM and adjusted book value
have been updated to include the impact of GMT, consistent with 2025. See the “Global Minimum Taxes” section below for more information.
2 The net issuance of securities consists of the issuance of US$1.0 billion of senior debt in 4Q25 and the issuance of $0.5 billion of subordinated debt in the second
quarter of 2025 (“2Q25”), partially offset by the redemption of $1.0 billion of subordinated debt in 2Q25.
3 The net redemption of capital instruments consists of the redemption $1.0 billion of subordinated debt, partially offset by the issuance of $0.5 billion of subordinated
debt in 2Q25.
4 Includes cash and cash equivalents, comprised of cash on deposit, Canadian and U.S. Treasury Bills and high quality short-term investments, and marketable
assets, comprised of investment grade government and agency bonds, investment grade corporate bonds, investment grade securitized instruments, publicly
traded common stocks and preferred shares.
| 16 |
|---|
Financial Strength
Financial strength metrics
| 2025 | 2024 | |
|---|---|---|
| As at December 31, | ||
| MLI’s LICAT ratio(1) | 136% | 137% |
| Financial leverage ratio(2) | 23.9% | 24.0% |
| Consolidated capital ($ billions)(2),(3) | $81.6 | $79.9 |
| Book value per common share ($) | $25.91 | $25.63 |
| Adjusted book value per common share ($)(2),(4) | $38.27 | $36.25 |
(1)This item is disclosed under the Office of the Superintendent of Financial Institutions (“OSFI”) Life Insurance Capital Adequacy Test Public Disclosure
Requirements guideline.
(2)2024 consolidated capital and adjusted book value per common share have been updated to include the impact of GMT, consistent with 2025. See the “Global
Minimum Taxes” section below for more information.
(3)This item is a capital management measure. For more information on this metric, see “Non-GAAP and Other Financial Measures” below.
(4)This item is a non-GAAP ratio. See “Non-GAAP and Other Financial Measures” below for more information.
The Life Insurance Capital Adequacy Test (“LICAT”) ratio for MLI was 136% as at December 31, 2025, compared with 137%
as at December 31, 2024. The decrease in the ratio was driven by dividends and common share buybacks, the acquisition of
Comvest, the impact of the new segregated fund capital requirements effective January 1, 2025, as well as the net redemption of
subordinated debt. This was partially offset by the positive impact of earnings and the CSM, the RGA U.S. Reinsurance
Transaction and the net impact of updates to actuarial methods and assumptions.
MFC’s financial leverage ratio as at December 31, 2025 was 23.9%, a decrease of 0.1 percentage points from 24.0% as at
December 31, 2024. The decrease in the ratio was driven by a higher post-tax CSM1 and the impact of a stronger Canadian
dollar on foreign currency denominated debt, partially offset by the net issuance of securities2 and a decrease in total equity. The
decrease in total equity was driven by dividends and common share buybacks, partially offset by total comprehensive income,
which was unfavourably impacted by a stronger Canadian dollar relative to the U.S. dollar.
MFC’s consolidated capital was $81.6 billion as at December 31, 2025, an increase of $1.7 billion compared with $79.9 billion
as at December 31, 2024. The increase was primarily driven by a higher post-tax CSM, partially offset by the net redemption of
capital instruments3 and a decrease in total equity. The decrease in total equity was driven by dividends and common share
buybacks, partially offset by total comprehensive income, which was unfavourably impacted by a stronger Canadian dollar
relative to the U.S. dollar.
Remittances were $6.4 billion in 2025 of which Asia and U.S. operations delivered $2.1 billion and $1.7 billion, respectively.
Remittances in 2025 decreased by $0.6 billion compared with 2024 due to the favourable impact of market movements in 2024.
Refer to “Remittance of Capital” below for more information.
Cash and cash equivalents and marketable securities4 were $276.0 billion as at December 31, 2025 compared with $263.3
billion as at December 31, 2024. The increase of $12.7 billion was primarily driven by the growth in equity markets, and the
impact of lower interest rates, partially offset by the impact of changes in foreign currency exchange rates. Refer to “Liquidity
Risk Management Strategy” below for more information.
Book value per common share as at December 31, 2025 was $25.91, a 1% increase compared with $25.63 as at December
31, 2024. The number of common shares outstanding was 1,677 million as at December 31, 2025, a net decrease of 52 million
common shares from 1,729 million as at December 31, 2024, primarily due to common share buybacks.
Adjusted book value per common share as at December 31, 2025 was $38.27, a 6% increase compared with $36.25 as at
December 31, 2024, driven by an increase in the adjusted book value1 and a lower number of common shares outstanding.
Adjusted book value increased $1.5 billion due to an increase in post-tax CSM, net of NCI, partially offset by a decrease in total
common shareholders’ equity. The decrease in common shareholders’ equity reflects dividends and common share buybacks,
partially offset by total comprehensive income attributed to common shareholders, which was unfavourably impacted by a
stronger Canadian dollar relative to the U.S. dollar.
1 Includes MLI, John Hancock Life Insurance Company (U.S.A.), John Hancock Life & Health Insurance Company, and John Hancock Life Insurance Company of
New York.
| 17 | 2025 Annual Report | Management’s Discussion and Analysis |
|---|
Credit ratings - On September 19, 2025, Moody’s upgraded the financial strength rating to Aa3 from A1 for Manulife’s primary
insurance operating companies1. As indicated in Moody’s press release, the upgrade reflects improved profitability, strong
capital, and reduced exposure to lower ROE and legacy businesses.
Impact of Foreign Currency Exchange Rates
We have worldwide operations, including in Canada, the United States and various markets in Asia, and generate revenues and
incur expenses in local currencies in these jurisdictions, all of which are translated into Canadian dollars. The bulk of our
exposure to foreign currency exchange rates is to movements in the U.S. dollar.
Items impacting our Consolidated Statements of Income are translated to Canadian dollars using average exchange rates for the
respective quarterly period. For items impacting our Consolidated Statements of Financial Position, period end rates are used for
currency translation purposes. The following table provides the most relevant foreign currency exchange rates for 2025 and
2024.
| Quarterly | Full Year | ||||||
|---|---|---|---|---|---|---|---|
| Exchange rate | 4Q25 | 3Q25 | 2Q25 | 1Q25 | 4Q24 | 2025 | 2024 |
| Average(1) | |||||||
| U.S. dollar | 1.3939 | 1.3773 | 1.3837 | 1.4349 | 1.3987 | 1.3974 | 1.3698 |
| Japanese yen | 0.0090 | 0.0093 | 0.0096 | 0.0094 | 0.0092 | 0.0093 | 0.0090 |
| Hong Kong dollar | 0.1792 | 0.1761 | 0.1773 | 0.1844 | 0.1799 | 0.1793 | 0.1755 |
| Period end | |||||||
| U.S. dollar | 1.3707 | 1.3914 | 1.3645 | 1.4393 | 1.4382 | 1.3707 | 1.4382 |
| Japanese yen | 0.0087 | 0.0094 | 0.0094 | 0.0096 | 0.0092 | 0.0087 | 0.0092 |
| Hong Kong dollar | 0.1761 | 0.1788 | 0.1738 | 0.1850 | 0.1851 | 0.1761 | 0.1851 |
(1)Average rates for the quarter are from Bank of Canada which are applied against Consolidated Statements of Income items for each period. Average rate for the
full year is a 4-point average of the quarterly average rates.
Net income attributed to shareholders and core earnings from the Company’s foreign operations are translated to Canadian
dollars, and in general, our net income attributed to shareholders and core earnings benefit from a weakening Canadian dollar
and are adversely affected by a strengthening Canadian dollar. However, in a period of net losses in foreign operations, the
weakening of the Canadian dollar has the effect of increasing the losses. The relative impact of foreign currency exchange in any
given period is driven by the movement of currency rates as well as the proportion of earnings generated in our foreign
operations.
Changes in foreign currency exchange rates increased core earnings by $114 million in 2025 compared with the same period of
2024, primarily due to a weaker Canadian dollar compared with the U.S. dollar. The impact of foreign currency exchange rates
on items excluded from core earnings does not provide relevant information given the nature of these items.
Global Minimum Taxes
On June 20, 2024, the Canadian government passed the Global Minimum Tax Act into law. Canada’s GMT is applied
retroactively to fiscal periods commencing on or after December 31, 2023.
Impact of GMT on net income attributed to shareholders and core earnings
As additional local jurisdictions have enacted the GMT in 2025, GMT has been recognized in net income in the reporting
segments whose earnings are subject to this tax. GMT is reported in both core earnings and items excluded from core earnings
in line with our definition of core earnings in section 13 “Non-GAAP and Other Financial Measures” below. As items excluded
from core earnings are presented on a post-tax basis, each line includes the appropriate impact of GMT.
In 2024, the impact of GMT was recognized in the Corporate and Other segment. To improve the comparability of core earnings
between 2025 and 2024, we have updated 2024 core earnings to reallocate GMT from the Corporate and Other segment to the
segment whose core earnings are subject to this tax. This update includes a reallocation of the first quarter of 2024 (“1Q24”)
GMT, previously reported in the second quarter of 2024 (“2Q24”) items excluded from core earnings, to 1Q24 core earnings.
There is no impact to our 2024 quarterly net income attributed to shareholders by segment or reporting period. The impact of the
reallocation of GMT between segments and by quarter was offset by an equal amount in items excluded from core earnings in
the segments. This offset is reported in the reinsurance transaction, tax-related items and other line. In total, with these updates,
we continue to record total GMT expense of $231 million in 2024, however $208 million is now reported in core earnings and $23
million is now reported in items excluded from core earnings.
| 18 |
|---|
As a result of the update to core earnings, we have also updated the following 2024 non-GAAP measures:
•Core ROE
•Core EPS
•Core earnings available to common shareholders
•Common share dividend core payout ratio
•Highest potential businesses core earnings contribution
•Asia region core earnings contribution
•LTC and VA core earnings contribution
•Operating segment core earnings contribution
Impact of GMT on other financial measures
GMT also impacts additional metrics reported on a post-tax basis. In 2025, we have included the impact of GMT in these
measures and we have updated 2024 comparatives to include the impact of GMT.
The following non-GAAP financial measures and non-GAAP ratios have been updated:
•Post-tax CSM and post-tax CSM net of NCI
•Adjusted book value and Adjusted book value per common share
•Financial leverage ratio
The following other financial measures have been updated:
•Consolidated capital
•NBV and NBV margin
1 Based on APE sales.
2 Includes insurance customers, retail investment customers acquired through the agency channel, and retirement customers.
3 This represents our International High Net Worth business.
4 This item is a non-GAAP ratio. See “Non-GAAP and Other Financial Measures” below for more information.
| 19 | 2025 Annual Report | Management’s Discussion and Analysis |
|---|
2. Asia
Our Asia segment offers insurance and insurance-based wealth accumulation products, driven by a customer-centric
strategy, and leverages the asset management expertise of, and products managed by, our Global Wealth and Asset
Management segment. We are a top three pan-Asian life insurer1, with a history of over 125 years and more than 13
million customers2, focused on addressing the significant health and mortality protection gaps and low insurance
penetration rates across Asia.
With a broad geographic presence across 12 markets – Hong Kong, Macau, Japan, Bermuda3, mainland China,
Singapore, Vietnam, Indonesia, the Philippines, Malaysia, Cambodia, and Myanmar – and a robust diversified
distribution platform, we are well-positioned to create value for our customers, employees, and shareholders. We have
over 100,000 contracted agents and over 100 bank partnerships, of which our exclusive bancassurance partnerships
provide us access to over 35 million bank customers. This includes our regional exclusive bancassurance partnership
with DBS Bank across Singapore, Hong Kong, mainland China, and Indonesia. We also work with many independent
agents, financial advisors, and brokers.
Asia continues to be a core driver of growth for Manulife, as we execute our strategy to deliver high-quality sustainable
growth across a diversified business portfolio. This is supported by our robust, diversified distribution platform,
holistic solutions across health, wealth and longevity, and leading digital and AI capabilities that enhance customer and
distributor experience. Our growth is underpinned by Asia megatrends including fast growing economies, rising middle
class populations, and growing unmet health and protection needs driving continued demand for financial solutions.
In 2025, our Asia segment contributed 38%4 of the Company’s core earnings from operating segments and, as at December 31,
2025, accounted for 13%4 of the Company’s assets under management and administration. See section 1 “Strategic Priorities
and Progress Update” above, for information on the core earnings contributions from Asia segment and Asia operations in Global
WAM segment combined.
Profitability
Asia reported net income attributed to shareholders of $2,972 million in 2025 compared with $2,355 million in 2024. Net income
attributed to shareholders is comprised of core earnings, which were $2,969 million in 2025 compared with $2,466 million in
2024, and items excluded from core earnings, which amounted to a net gain of $3 million for 2025 compared with a net charge of
$111 million in 2024. See section 13 “Non-GAAP and Other Financial Measures” below, for a reconciliation of core earnings to
net income (loss) attributed to shareholders. The changes in net income attributed to shareholders and core earnings expressed
in Canadian dollars were due to the factors described below and, in addition, the change in core earnings reflected a net $61
million favourable impact due to changes in various foreign currency exchange rates versus the Canadian dollar.
Expressed in U.S. dollars, the presentation currency of the segment, net income attributed to shareholders was US$2,131 million
in 2025 compared with US$1,717 million in 2024. Core earnings were US$2,126 million in 2025 compared with US$1,799 million
in 2024 and items excluded from core earnings amounted to a net gain of US$5 million in 2025 compared with a net charge of
US$82 million in 2024. Items excluded from core earnings are outlined in the table below.
Core earnings in 2025 increased 18% compared with 2024, after adjusting for the impact of changes in foreign currency
exchange rates. The changes in core earnings by geography are primarily due to the items noted below and also include the
impact of higher investment income on allocated capital. Investment income on allocated capital increased core earnings by
US$60 million on a pre-tax basis in 2025 compared with 2024.
•Hong Kong increased 26% driven by an increase in expected earnings on insurance contracts and higher expected
investment earnings, both reflecting business growth. The increase in expected earnings on insurance contracts also
reflected the net impact of 2025 updates to actuarial methods and assumptions. In addition, Hong Kong had a lower
effective tax rate;
•Japan increased 8% reflecting higher expected investment earnings and an increase in expected earnings on insurance
contracts, both reflecting business growth, and improved insurance experience, partially offset by a higher effective tax rate.
In addition, the GA Reinsurance Transaction decreased core earnings by US$12 million in 2025 compared with 2024;
•International High Net Worth business increased 13% due to an increase in expected earnings on insurance contracts due
to business growth, partially offset by lower expected investment earnings;
•Mainland China increased 48% reflecting an improved impact of new business;
•Singapore increased 7% driven by an increase in expected earnings on insurance contracts due to business growth and
favourable insurance experience;
•Vietnam was in line with 2024, reflecting favourable insurance experience offset by lower expected earnings on insurance
contracts; and
| 20 |
|---|
•Other Emerging Markets increased 14% reflecting improved insurance experience.
The following table presents net income attributed to shareholders for Asia for 2025 and 2024 consisting of core earnings and
items excluded from core earnings.
| For the years ended December 31, | Canadian | US |
|---|---|---|
| ($ millions) | 2025 | 2025 |
| Core earnings | 2,969 | 2,126 |
| Items excluded from core earnings:(1) | ||
| Market experience gains (losses) | 136 | 101 |
| Realized gains (losses) on debt instruments | (40) | (28) |
| Derivatives and hedge accounting ineffectiveness | (40) | (30) |
| Actual less expected long-term returns on public equity | 150 | 113 |
| Actual less expected long-term returns on ALDA | 47 | 33 |
| Other investment results | 19 | 13 |
| Updates to actuarial methods and assumptions that flow directly through income | (39) | (28) |
| Reinsurance transactions, tax-related items and other | (94) | (68) |
| Total items excluded from core earnings | 3 | 5 |
| Net income (loss) attributed to shareholders | 2,972 | 2,131 |
All values are in US Dollars.
(1)For explanations of items excluded from core earnings, see “Items excluded from core earnings” table in the total Company “Profitability” section above.
Business Performance
(All percentages quoted are on a constant exchange rate basis)
APE sales were US$5,250 million in 2025, representing an increase of 18% compared with 2024, driven by broad-based growth
across most markets in Asia, partially offset by a decrease in Vietnam and the International High Net Worth business. New
business CSM of US$1,994 million and NBV of US$1,832 million in 2025 increased 27% and 20% compared with 2024,
respectively, driven by higher sales volumes and a more favourable business mix. NBV margin was 39.5% in 2025, an increase
of 1.2 percentage points compared with 2024.
•In Hong Kong, APE sales were US$1,965 million in 2025, a 21% increase compared with 2024, reflecting higher sales
across all channels, driven by strong growth in sales of savings, health and protection products. The increase reflected our
sales growth in both mainland Chinese visitor and domestic customers. New business CSM of US$811 million in 2025
increased 21% compared with 2024 driven by higher sales volumes. NBV of US$966 million in 2025 increased 31%
compared with 2024 due to higher sales volumes and product mix. NBV margin of 49.2% in 2025 increased 3.9 percentage
points compared with 2024.
•In Japan, APE sales were US$460 million in 2025, an increase of 17% compared with 2024, reflecting higher sales in the
broker channel, driven by strong growth in sales of wealth accumulation products. New business CSM of US$279 million in
2025 increased 30% compared with 2024, primarily driven by higher sales volume. NBV of US$165 million in 2025 was in
line with 2024, driven by higher sales volumes offset by product mix. NBV margin of 36.0% in 2025 decreased 6.0
percentage points compared with 2024.
•International High Net Worth business APE sales were US$155 million in 2025, a decrease of 9% compared with 2024,
reflecting lower sales in savings products. New business CSM of US$136 million and NBV of US$121 million in 2025 were
both in line with 2024, due to lower sales volumes, partially offset by product mix. NBV margin was 78.4%, an increase of
6.5 percentage points compared with 2024.
•In mainland China, APE sales were US$1,180 million in 2025, a 32% increase compared with 2024, reflecting higher sales
in the bancassurance and agency channels, driven by strong growth in participating savings products. New business CSM
of US$254 million in 2025 increased 28% compared with 2024, primarily driven by higher sales volumes. NBV of US$185
million in 2025 increased 11% compared with 2024 due to higher sales volumes partially offset by product mix. NBV margin
of 30.7% in 2025 decreased 5.7 percentage points compared with 2024.
•In Singapore, APE sales were US$1,118 million in 2025, a 14% increase compared with 2024, reflecting higher sales across
all channels driven by strong growth in sales of investment-linked products. New business CSM of US$443 million in 2025
increased 52% compared with 2024 due to higher sales volumes and product mix. NBV of US$342 million in 2025 increased
25% compared with 2024 due to higher sales volumes and product mix. NBV margin of 30.6% in 2025 increased 2.6
percentage points compared with 2024.
•In Vietnam, APE sales were US$69 million in 2025, a 24% decrease compared with 2024, reflecting lower sales in the
bancassurance channel following the cessation of the partnership agreement with Vietnam Technological and Commercial
Joint-Stock Bank in October 2024, partially offset by higher sales in the agency channel. New business CSM of US$16
million in 2025 increased 40% compared with 2024 due to product mix, partially offset by lower sales volumes. NBV of
negative US$3 million in 2025 improved by US$2 million compared with 2024 due to product mix partially offset by lower
sales volumes. NBV margin of negative 4.1% in 2025 improved 1.2 percentage points compared with 2024.
1 This item is a non-GAAP financial measure. See “Non-GAAP and Other Financial Measures” below for more information.
2 MDRT membership awarded based on prior year production.
3 Asia agency APE sales per active agents.
| 21 | 2025 Annual Report | Management’s Discussion and Analysis |
|---|
•In Other Emerging Markets, APE sales were US$303 million in 2025, a 3% increase compared with 2024, reflecting higher
sales in the bancassurance and agency channels. New business CSM was US$55 million, a 5% increase compared with
2024 primarily due to higher sales volumes. NBV was US$56 million, an 11% decrease compared with 2024 due to the
impact of a local regulatory update in Indonesia, partially offset by higher sales volumes. NBV margin was 20.6%, a
decrease of 3.1 percentage points compared with 2024.
CSM net of NCI was US$12,951 million as at December 31, 2025, an increase of US$2,144 million compared with December
31, 2024. Organic CSM movement was an increase of US$1,173 million in 2025 driven by the impact of new business, interest
accretion, and a net increase in insurance experience, partially offset by amortization recognized in core earnings. Inorganic
CSM movement was an increase of US$971 million in 2025 largely due to the net impact of 2025 updates to actuarial methods
and assumptions that adjust the CSM, the impact of equity market performance and interest rate movement, and the weakening
of the U.S. dollar against most Asian currencies.
Business Performance
| As at and for the years ended December 31, | Canadian | US |
|---|---|---|
| ($ millions) | 2025 | 2025 |
| APE sales | 7,340 | 5,250 |
| New business value | 2,560 | 1,832 |
| New business CSM(1) | 2,787 | 1,994 |
| CSM net of NCI | 17,750 | 12,951 |
All values are in US Dollars.
(1) New business CSM is net of NCI.
Assets under Management1 (“AUM”)
Asia’s assets under management were US$159.1 billion as at December 31, 2025, an increase of US$23.4 billion or 15%
compared with December 31, 2024. The increase was driven by business growth and the impact of favourable equity market
performance on invested assets and segregated funds net assets.
Assets under Management
| As at December 31, | Canadian | US |
|---|---|---|
| ($ millions) | 2025 | 2025 |
| Total invested assets | 185,848 | 135,597 |
| Segregated funds net assets | 32,245 | 23,527 |
| Total assets under management | 218,093 | 159,124 |
All values are in US Dollars.
Strategic Highlights
Asia continues to be a core driver of growth for Manulife, as we execute our strategy to deliver high-quality sustainable growth
across a diversified business portfolio. This is supported by our robust, diversified distribution platform, holistic solutions across
health, wealth and longevity, and leading digital and AI capabilities that enhance customer and distributor experience.
We continued to broaden our reach and leverage strategic partnerships through our diversified distribution platforms to
accelerate growth. In 2025, we:
•Renewed our bancassurance partnership in the Philippines with Chinabank, extending our exclusive partnership until 2039.
This strategic partnership, which started in 2007, solidifies the two organizations’ shared commitment to providing holistic
life, wealth, and health solutions for the long-term financial security of Filipino families; and
•Continued to build on our high-quality agency force at scale by improving agent capabilities and capacities across the
agency value chain. Our strategy is focused on quality recruitment, digital and AI tools, and robust learning and development
initiatives. This includes the launch of Manulife Business Academy, which collaborates with globally accredited training
partners to enhance skills in financial planning, recruitment, and leadership. These efforts have contributed to a 23% year-
over-year increase in our annual Million Dollar Round Table ("MDRT") membership2, positioning us as having the third
largest MDRT members globally, while agency productivity3 for 2025 rose by 17% compared with 2024.
We continued to enhance our health, wealth, and longevity propositions to meet the evolving needs of customers seeking better
health and wellness outcomes. In 2025, we:
•Agreed to establish a strategic collaboration with Bupa International Limited, a global healthcare company, to create a more
robust and integrated healthcare network for our customers. By combining the strengths of both organizations, this
1 Subject to the receipt of regulatory approvals. See “Caution regarding forward-looking statements” above.
| 22 |
|---|
collaboration in Hong Kong aims to expand customer access to high-quality care while enhancing convenience, value, and
affordability through integrated healthcare solutions and personalized support throughout their healthcare journey;
•Launched the enhanced ManulifeMOVE, our flagship lifestyle program, with initial rollout in Singapore and the Philippines.
ManulifeMOVE empowers customers to take charge of their health and well-being, with key enhancements including
differentiated and expanded benefits across preventive health services, medical and assistive care, cancer care support,
health and well-being coaching, fitness and wellness experiences, and community engagement;
•Hosted Asia’s inaugural Manulife Longevity Symposium in Singapore and the Philippines, reinforcing our commitment to
advancing Asia’s longevity movement. The symposiums brought together over 1,400 healthcare experts, industry leaders,
academics, customers and partners to address the challenge of living not just longer, but better, covering topics such as
health and longevity innovations, and financial well-being; and
•Delivered enhanced health service coverage and expanded access to cross-border healthcare in Hong Kong. We launched
a cross-border Cancer Drug Support Service through our partnership with one of the leading healthcare service providers in
the China Greater Bay Area. In addition, we broadened select Manulife Hong Kong and Macau health insurance product
coverage to over 38,000 hospitals in mainland China and introduced hospitalization credit services at more than 800
hospitals in mainland China, enabling patients to receive treatment without upfront payments.
We continued to expand our geographical presence and strengthen our market reach. In 2025, we:
•Agreed to establish a 50:50 life insurance joint venture with Mahindra, an existing partner through our asset management
joint venture, to enter the India insurance market.1 This partnership will expand our global footprint and position us to grow
across one of the world’s largest economies, delivering long-term value; and
•Became the first international life insurer to establish an office in the Dubai International Financial Centre dedicated to
advising on and arranging life insurance contracts to high-net-worth (“HNW”) customers. This strategic move deepens our
presence in the Middle East and enhances our ability to address the growing wealth and protection needs of HNW and ultra-
HNW individuals in the region.
We also continued to invest in our AI and digital capabilities to enhance the customer and distributor experience. In 2025, we:
•Launched advanced AI-enabled agency tools across Asia to enhance sales support and improve customer experience. In
Indonesia, Singapore and Japan, we rolled out AI assistants to provide faster access to product and policy information and
streamline administrative tasks. In Hong Kong, we launched AI Sales Pro – a GenAI-powered tool that helps agents identify
top sales opportunities, craft personalized customer solutions, and access critical know-how to drive business performance;
and
•Rolled out VOICE in Singapore and Japan, a multi-signal dashboard that includes call trend analysis, net sentiment scores,
topic trends and deep dive insights from call center transcripts. VOICE utilizes GenAI to categorize data, find correlations,
and customize insights by analyzing near real-time trends from customer interactions. These insights help us to better
understand customer sentiment and key interests, enhance services, improve training, and identify opportunities to better
deliver value to our customers.
We continued to maintain a diverse and engaged culture and make Manulife a great place to work. Manulife has been
recognized by HR Asia as one of the “Best Companies to Work for in Asia 2025” in seven of our markets.
1 Includes insurance customers and Global WAM customers.
| 23 | 2025 Annual Report | Management’s Discussion and Analysis |
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3. Canada
Our Canada segment has been committed to customers in our home market for over 135 years. We serve the needs of
over 7 million customers1 across the country, including members of approximately 27,000 businesses and
organizations in our group benefits business, through a diverse and competitive suite of financial and health-protection
offerings tailored to individuals, families, and business owners. We leverage the asset management expertise of, and
products managed by, our Global Wealth and Asset Management segment.
Our Canadian business lines are: group life, health, and disability insurance solutions for employers; individual
insurance and guaranteed investment products including life, critical illness, segregated funds, and annuities sold via
retail advisors; and Affinity insurance offerings including life, health, travel, disability, and creditor insurance solutions
sold through the Manulife CoverMe® brand, mortgage brokers, travel advisors, and sponsor groups and associations.
Through Manulife Bank, we offer flexible banking products and solutions to both individual customers and businesses.
We aim to be the leading life and health insurer in Canada, by focusing on four key areas: continuing to strengthen our
core operations; accelerating digital transformation; differentiating through health; and expanding distribution.
In 2025, our Canada segment contributed 21% of the Company’s core earnings from operating segments and, as at December
31, 2025, accounted for 9% of the Company’s assets under management and administration.
Profitability
Canada’s reported net income attributed to shareholders was $1,313 million in 2025 compared with $1,221 million in 2024. Net
income attributed to shareholders is comprised of core earnings, which were $1,634 million in 2025 compared with $1,568 million
in 2024, and items excluded from core earnings, which amounted to a net charge of $321 million in 2025 compared with a net
charge of $347 million in 2024. Items excluded from core earnings are outlined in the table below. See section 13 “Non-GAAP
and Other Financial Measures” below, for a reconciliation of core earnings to net income attributed to shareholders.
The $66 million, or 4%, increase in core earnings was driven by higher expected investment earnings, business growth in Group
Insurance, improved insurance experience in Individual Insurance, and an increase in CSM amortization, partially offset by less
favourable insurance experience in Group Insurance, and lower Manulife Bank earnings. Core earnings also included the net
favourable impact of 2025 updates to actuarial methods and assumptions. Investment income on allocated capital also reduced
core earnings by $29 million on a pre-tax basis compared with 2024. In addition, the RGA Canadian Reinsurance Transaction
reduced core earnings by $19 million in 2025 compared with 2024.
The following table presents net income attributed to shareholders for Canada for 2025 and 2024 consisting of core earnings and
items excluded from core earnings.
| For the years ended December 31, | 2024 |
|---|---|
| ( millions) | |
| Core earnings | $1,568 |
| Items excluded from core earnings:(1) | |
| Market experience gains (losses) | (384) |
| Realized gains (losses) on debt instruments | (328) |
| Derivatives and hedge accounting ineffectiveness | 109 |
| Actual less expected long-term returns on public equity | 65 |
| Actual less expected long-term returns on ALDA | (235) |
| Other investment results | 5 |
| Updates to actuarial methods and assumptions that flow directly through income | 2 |
| Restructuring charge | (6) |
| Reinsurance transactions, tax-related items and other | 41 |
| Total items excluded from core earnings | (347) |
| Net income (loss) attributed to shareholders | $1,221 |
All values are in US Dollars.
(1)For explanations of items excluded from core earnings, see “Items excluded from core earnings” table in the total Company “Profitability” section above.
Business Performance
APE sales were $1,593 million in 2025, a decrease of 6% compared with 2024.
•Individual Insurance APE sales of $630 million in 2025 increased 20% compared with 2024, primarily due to higher
participating life insurance sales.
1 This item is a non-GAAP financial measure. See “Non-GAAP and Other Financial Measures” below for more information.
2 Maven Clinic, Meet Maven, 2024.
| 24 |
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•Group Insurance APE sales of $702 million in 2025 decreased 24% compared with 2024, driven by the non-recurrence of a
significant large-case sale in 2Q24.
•Annuities APE sales of $261 million in 2025 increased 7% compared with 2024, primarily due to higher sales of segregated
fund products.
CSM was $4,459 million as at December 31, 2025, an increase of $350 million compared with December 31, 2024. Organic
CSM movement was an increase of $128 million in 2025, driven by the impact of new business and interest accretion, partially
offset by amortization recognized in core earnings. Inorganic CSM movement was an increase of $222 million in 2025, reflecting
the net impact of 2025 updates to actuarial methods and assumptions that adjust the CSM, favourable equity market experience,
and the impact of amendments to reinsurance treaties in 2Q25, partially offset by unfavourable impacts of interest rates.
Manulife Bank average net lending assets1 were $28.3 billion in 2025, an increase of $2.3 billion, or 9%, compared with 2024,
primarily due to growth in residential lending.
Business Performance
| As at and for the years ended December 31, | 2024 |
|---|---|
| ( millions) | |
| APE sales | $1,689 |
| Contractual service margin | $4,109 |
| Manulife Bank average net lending assets | $26,020 |
All values are in US Dollars.
Assets under Management
Canada’s assets under management of $152.7 billion as at December 31, 2025 increased $7.5 billion, or 5%, from $145.2 billion
as at December 31, 2024, driven by higher total invested assets from business growth and the net favourable impact from equity
markets and interest rates.
Assets under Management
| As at December 31, | 2024 |
|---|---|
| ( millions) | |
| Total invested assets | $107,141 |
| Segregated funds net assets | 38,099 |
| Total assets under management | $145,240 |
All values are in US Dollars.
Strategic Highlights
We continued to drive strong business growth by delivering tailored solutions that create value for customers and distributors,
supported by updates to the Manulife Vitality program and key partnerships, and advancing our digital capabilities through
GenAI-driven innovations, so that our customers can focus on improving their health, wealth and longevity. During 2025, we:
•Enhanced the Manulife Vitality program with offerings to assist members in meeting their health and wellness goals:
◦Became the first insurer in Canada to offer access to GRAIL’s Galleri® multi-cancer early detection test to eligible
Manulife Vitality program members at a discount in partnership with Medcan, a global leader in proactive health and
wellness services. This milestone reinforces Manulife’s commitment to proactive health solutions and complements
existing public screening programs, supporting earlier detection and improved outcomes for customers; and
◦Introduced additional resources and incentives for managing and preventing diabetes, the extension of travel rewards to
all members, the addition of ŌURA as a key rewards partner, and new collaborations offering tools that span nutrition,
fitness, mental health, and personalized medicine.
•Established strategic partnerships to support our customers’ health and well-being and grow our distribution network through
personalized and value-added solutions:
◦Partnered with Maven Clinic, the world’s largest virtual clinic for women’s and family health2, to offer eligible Group
Benefits members 24/7 virtual access to personalized support during some of their most important stages of life,
including fertility, maternity, parenting, and menopause. This initiative addresses critical care gaps that impact women’s
health and workforce participation; and
◦Partnered with M3 Financial Group (“M3”) to offer our Affinity Mortgage Protection Plan through M3’s Canada-wide
broker network, beginning with advisors in British Columbia. Our licensed advisors work directly with M3’s mortgage
clients to guide them through the process of purchasing the mortgage protection coverage they need, enabling M3’s
brokers to focus on servicing their core business. This initiative strengthens our position in mortgage protection by
offering more accessible, trusted protection in Canada’s housing market.
| 25 | 2025 Annual Report | Management’s Discussion and Analysis |
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•Advanced our digital capabilities through GenAI-driven innovations and modernized platforms to improve advisor and
customer experience:
◦Introduced an enhanced online life and health insurance application form that reduces complexity, accelerates medical
data collection, and shortens processing times through adaptive questioning and streamlined workflows, transforming
the digital experience for advisors. These efficiencies strengthen our competitiveness in the mass market segment and
support our ambition of delivering scalable digital offerings;
◦Introduced an innovative GenAI tool in our Individual Insurance business that automatically generates personalized
communications to advisors by analyzing historical data and identifying available opportunities. This tool enables our
internal sales team to deliver timely, relevant, and actionable messages to drive meaningful interactions and enhance
collaboration with advisors;
◦Launched a GenAI-powered coaching tool for Licensed Insurance Advisor (“LIA”) supervisors in our Affinity business
that evaluates customer service calls, generating insights that allow supervisors to provide LIAs with more effective,
timely, and targeted feedback to enhance customer service and sales outcomes; and
◦Launched an end-to-end digital travel insurance platform that modernizes the distributor experience and simplifies the
purchasing process for Canadians and their families.
•Expanded solutions for Canadians and their families to meet their wealth and protection needs:
◦Launched a simplified specialized lending suite of products in Manulife Bank to streamline the lending experience for
advisors serving HNW clients and business owners. This emphasizes our focus on removing friction, enhancing clarity,
and delivering smarter, faster, and more personalized solutions for advisors and customers.
| 26 |
|---|
4. U.S.
Our U.S. segment is committed to a future of dynamic growth by helping our customers live longer, healthier, better
lives through an array of life insurance and insurance-based wealth-accumulation solutions that meet a variety of
planning needs and offer a behavioural insurance component through the John Hancock Vitality Program.
We operate under the brand of John Hancock with more than 160 years of history in the U.S., where we have built
lifelong customer relationships and created a vast distribution network of licensed financial advisors who help us bring
the benefits of life insurance, wellness, and wealth planning to more individuals and their families. Our life insurance
solutions are designed to meet customers’ estate, business, income-protection, and wealth accumulation needs, while
also helping them prepare to spend more years in good health. We also leverage the expertise and solutions of our
Global Wealth and Asset Management segment.
We have integrated behavioural insurance across our suite of solutions, offering customers tools, resources,
education, and rewards through John Hancock Vitality to help them make more informed decisions about their overall
health. The program continuously evolves to include the latest advances in science and technology and is built on a
network of collaborators including GRAIL, Apple, Prenuvo, and the Massachusetts Institute of Technology (“MIT”)
AgeLab.
Additionally, we have in-force LTC and annuity businesses. Our proven record of organically managing our LTC blocks,
as well as our LTC, variable and fixed annuity reinsurance transactions over the last few years have been significant
contributors to the Company’s efforts to transform the business portfolio into one of higher returns and lower risk.
In 2025, our U.S. segment contributed 16% of the Company’s core earnings from operating segments and, as at December 31,
2025, accounted for 12% of the Company’s assets under management and administration.
Profitability
U.S. reported net loss attributed to shareholders of $527 million in 2025 compared with net income attributed to shareholders of
$135 million in 2024. Net income (loss) attributed to shareholders is comprised of core earnings, which was $1,206 million in
2025 compared with $1,690 million in 2024, and items excluded from core earnings, which amounted to a net charge of $1,733
million in 2025 compared with a net charge of $1,555 million in 2024. See section 13 “Non-GAAP and Other Financial Measures”
below, for a reconciliation of core earnings to net income (loss) attributed to shareholders. The changes in core earnings
expressed in Canadian dollars were due to the factors described below and additionally, reflected a $26 million favourable impact
from the strengthening of the U.S. dollar compared with the Canadian dollar.
Expressed in U.S. dollars, the functional currency of the segment, the net loss attributed to shareholders was US$367 million in
2025 compared with net income attributed to shareholders of US$96 million in 2024. Core earnings were US$862 million in 2025
compared with US$1,234 million in 2024 and items excluded from core earnings amounted to a net charge of US$1,229 million
in 2025 compared with a net charge of US$1,138 million in 2024. Items excluded from core earnings are outlined in the table
below.
The US$372 million, or 30%, decrease in core earnings was mainly due to a combination of factors, including unfavourable life
insurance claims experience in 2025 compared with favourable experience in 2024, lower expected investment earnings and the
net impact of the 2024 updates to actuarial methods and assumptions, which impacted expected investment earnings and
insurance service result. This was partially offset by favourable lapse experience in 2025 compared with unfavourable
experience in 2024. The net impact of the 2025 updates to actuarial methods and assumptions was slightly positive. Investment
income on allocated capital also reduced core earnings by US$54 million on a pre-tax basis in 2025 compared with 2024. The
RGA U.S. Reinsurance Transaction reduced core earnings by US$20 million in 2025 compared with 2024, attributable to the
impact on expected earnings on insurance contracts, the expected investment earnings and the change in ECL.
| 27 | 2025 Annual Report | Management’s Discussion and Analysis |
|---|
The following table presents net income attributed to shareholders for the U.S. for 2025 and 2024 consisting of core earnings
and items excluded from core earnings.
| For the years ended December 31, | Canadian | US |
|---|---|---|
| ($ millions) | 2025 | 2025 |
| Core earnings | 1,206 | 862 |
| Items excluded from core earnings:(1) | ||
| Market experience gains (losses) | (1,498) | (1,058) |
| Realized gains (losses) on debt instruments | (697) | (487) |
| Derivatives and hedge accounting ineffectiveness | 2 | 3 |
| Actual less expected long-term returns on public equity | (118) | (84) |
| Actual less expected long-term returns on ALDA | (719) | (514) |
| Other investment results | 34 | 24 |
| Updates to actuarial methods and assumptions that flow directly through income | (235) | (171) |
| Reinsurance transactions, tax-related items and other | - | - |
| Total items excluded from core earnings | (1,733) | (1,229) |
| Net income (loss) attributed to shareholders | (527) | (367) |
All values are in US Dollars.
(1)For explanations of items excluded from core earnings, see “Items excluded from core earnings” table in the total Company “Profitability” section above.
Business Performance
U.S. APE sales of US$561 million in 2025 increased 24% compared with 2024, reflecting broad-based demand for our suite of
products.
CSM was US$2,013 million as at December 31, 2025, an increase of US$298 million compared with December 31, 2024.
Organic CSM movement was an increase of US$345 million in 2025 driven by the impact of new business, interest accretion and
net favourable insurance experience, partially offset by amortization recognized in core earnings. The net favourable insurance
experience was mainly due to long-term care lapse and claims experience. Inorganic CSM movement was a decrease of US$47
million in 2025 due to the RGA U.S. Reinsurance Transaction in the first quarter of 2025, partially offset by favourable market
impacts from equity market experience and the net impact of 2025 updates to actuarial methods and assumptions that adjust the
CSM.
Business Performance
| As at and for the years ended December 31, | Canadian | US |
|---|---|---|
| ($ millions) | 2025 | 2025 |
| APE sales | 784 | 561 |
| Contractual service margin | 2,760 | 2,013 |
All values are in US Dollars.
Assets under Management
U.S. assets under management of US$145.8 billion as at December 31, 2025 decreased 2% compared with December 31, 2024.
The decrease was largely due to the transfer of invested assets related to the RGA U.S. Reinsurance Transaction, partially offset
by the net impact from interest rates and equity markets on both segregated funds net assets and total invested assets.
Assets under Management
| As at December 31, | Canadian | US |
|---|---|---|
| ($ millions) | 2025 | 2025 |
| Total invested assets | 122,591 | 89,434 |
| Segregated funds net assets | 77,272 | 56,372 |
| Total assets under management | 199,863 | 145,806 |
All values are in US Dollars.
Strategic Highlights
At John Hancock, we are focused on profitably growing our life insurance business to sustain a scaled presence in the U.S. by
diversifying and enhancing our product portfolio and deploying AI-driven solutions to transform the end-to-end purchase
experience for our customers. We are also focused on differentiating through behavioural insurance solutions to help our
customers live longer, healthier, better lives. In 2025, we:
Delivered strong new business growth by strengthening our distribution model and diversifying our portfolio with new offerings
and enhancements to our current solutions:
| 28 |
|---|
•Enhanced our distribution footprint by expanding our wholesaling team, pursuing more targeted growth strategies and
accelerating our penetration within the U.S. HNW and mass affluent markets;
•Expanded our suite of insurance solutions by introducing an accumulation survivorship indexed universal life product, John
Hancock’s first offering in this product category;
•Introduced a new hybrid indexed universal life insurance solution offering more flexible living benefits and a streamlined
digital application process; and
•Offered improved fund selection and index loans on our new variable universal life insurance solution.
Positioned ourselves as an AI-powered organization, leveraging GenAI capabilities to accelerate underwriting, improve the
customer experience, and detect and reduce fraud, waste, and abuse:
•Partnered with Munich Re Life US to enhance underwriting efficiency through alitheia, its AI-driven risk assessment platform,
raising instant underwriting decision eligibility from US$3 million to US$5 million, enabling more customers to experience a
streamlined life insurance application process; and
•Deployed GenAI capabilities to improve outcomes in our in-force Long Term Care (“LTC”) insurance business, including
further enhancements to automated claims processing and predictive analytics to detect and reduce fraud, waste and
abuse.
Advanced our mission to help our customers live longer, healthier, and better lives:
•Empowered eligible John Hancock Vitality members with early detection technology and resources to proactively manage
their health, including annual and recurring access to GRAIL’s Galleri® multi-cancer early detection test, access to Function
Health’s technology and health screening tools, and access to continuous glucose monitoring technology and dietitian
support; and
•Released the first-of-its-kind Longevity Preparedness Index – developed in collaboration with the MIT AgeLab, to deliver
actionable insights on what it means to prepare well for living longer, and build on our brand awareness in the longevity
space.
1 United States, Canada, Japan, Hong Kong, Singapore, Taiwan, Indonesia, Vietnam, Malaysia, India, the Philippines, Brazil, England, Ireland, Switzerland,
Germany, and mainland China. In addition, we have timberland/farmland operations in Australia, New Zealand, and Chile.
| 29 | 2025 Annual Report | Management’s Discussion and Analysis |
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5. Global Wealth and Asset Management
Our Global Wealth and Asset Management segment, branded Manulife Wealth & Asset Management, is defined by our
purpose: to be the number one choice for customers to make decisions easier and lives better by empowering
investors for a better tomorrow. We operate across 20 geographies, including 10 in Asia1, distributing innovative
investment solutions to both individual and institutional investors through three integrated and complementary
business lines.
Through our extensive team of investment professionals across public and private markets, including Manulife | CQS
Investment Management and Manulife | Comvest, we offer investment capabilities across a wide spectrum of asset
classes. Our philosophy across our entire platform is anchored on good stewardship, engaging with companies and
investors with a view to addressing material risks, which in turn allows us to deliver resilient, alpha-generating
investment solutions to our customers.
We distribute our investment capabilities and solutions through three global businesses:
Our Retirement business serves more than 9 million investors in North America and Asia through retirement plan
solutions, with investments managed by our internal teams and third-party managers. We offer financial guidance and
advice to investors to help them improve their financial preparedness, and also provide solutions to investors when
they retire or leave their employer plan.
Our Retail business serves individual investors through third-party intermediaries in North America and Asia, and
through an affiliated wealth management network in North America. Our product platform predominantly consists of
internally managed solutions. We also supplement our solutions by partnering with third-party managers through sub-
advisory agreements.
Our Institutional Asset Management business serves a broad range of clients around the world, including pension
plans, foundations, endowments, financial institutions, and other institutional investors as well as our own insurance
business.
We believe that the combination of our global footprint, broad investment expertise, and diversified distribution
channels position us strongly to capitalize on high-growth opportunities in the most attractive markets globally.
In 2025, our Global WAM segment contributed 25% of the Company’s core earnings from operating segments and, as at
December 31, 2025, represented 65% of the Company’s total assets under management and administration.
Profitability
Global WAM’s net income attributed to shareholders was $1,900 million in 2025 compared with $1,597 million in 2024. Net
income (loss) attributed to shareholders is comprised of core earnings, which was $1,932 million in 2025 compared with $1,673
million in 2024, and items excluded from core earnings, which amounted to a net charge of $32 million in 2025 compared with a
net charge of $76 million in 2024. See section 13 “Non-GAAP and Other Financial Measures” below, for a reconciliation of core
earnings to net income (loss) attributed to shareholders.
Core earnings increased $259 million, or 14%, compared with 2024 on a constant exchange rate basis, primarily driven by an
increase in net fee income from higher average AUMA, reflecting the favourable impact of markets and the acquisition of
Comvest, higher performance fees in Institutional Asset Management, as well as disciplined expense management. This
increase was partially offset by lower favourable tax true-ups and tax benefits, the impact of the eMPF transition in Hong Kong
and lower fee spreads.
1 This item is a non-GAAP financial measure. See “Non-GAAP and Other Financial Measures” below.
2 This item is a non-GAAP ratio. See “Non-GAAP and Other Financial Measures” below for more information.
| 30 |
|---|
The following table presents net income attributed to shareholders for the Global WAM segment for 2025 and 2024 consisting of
core earnings and items excluded from core earnings.
| For the years ended December 31, | 2024 |
|---|---|
| ( millions) | |
| Core earnings | |
| Retirement | $950 |
| Retail | 581 |
| Institutional | 142 |
| Core earnings | 1,673 |
| Items excluded from core earnings:(1) | |
| Market experience gains (losses) | 4 |
| Realized gains (losses) on debt instruments | - |
| Derivatives and hedge accounting ineffectiveness | - |
| Actual less expected long-term returns on public equity | 4 |
| Actual less expected long-term returns on ALDA | - |
| Other investment results | - |
| Restructuring charge | (66) |
| Amortization of acquisition-related intangible assets(2) | - |
| Reinsurance transactions, tax-related items and other | (14) |
| Total items excluded from core earnings | (76) |
| Net income (loss) attributed to shareholders | $1,597 |
All values are in US Dollars.
(1)For explanations of items excluded from core earnings, see “Items excluded from core earnings” table in the total Company “Profitability” section above.
(2)This item is excluded from core earnings commencing in 3Q25. See “Non-GAAP and Other Financial Measures” below for more information.
In 2025, core EBITDA1 was $2,571 million, $639 million higher than core earnings. In 2024, core EBITDA was $2,173 million,
$500 million higher than core earnings. Core EBITDA increased $398 million, or 17%, compared with 2024, driven by similar
factors impacting core earnings as mentioned above.
Core EBITDA margin2 was 29.7% in 2025 compared with 27.1% in 2024. The 260 basis point increase was primarily driven by
similar factors impacting core earnings as mentioned above.
Core EBITDA
| For the years ended December 31, | 2024 |
|---|---|
| ( millions) | |
| Core earnings | $1,673 |
| Amortization of deferred acquisition costs and other depreciation | 188 |
| Amortization of deferred sales commissions | 78 |
| Core income tax expenses (recoveries) | 234 |
| Core EBITDA | $2,173 |
| Core EBITDA margin (%) | 27.1% |
All values are in US Dollars.
Business Performance
Net outflows were $14.3 billion in 2025 compared with net inflows of $13.3 billion in 2024.
•Retirement net outflows were $9.4 billion in 2025 compared with net inflows of $0.7 billion in 2024, primarily driven by higher
retirement plan redemptions, and higher net member withdrawals reflecting higher account balances from market growth.
This was partially offset by higher new plan sales in Canada.
•Retail net outflows were $12.3 billion in 2025 compared with net inflows of $6.8 billion in 2024, driven by lower net sales
through third-party intermediaries in North America and our Canada retail wealth platform.
•Institutional Asset Management net inflows were $7.4 billion in 2025 compared with net inflows of $5.7 billion in 2024, driven
by higher net flows from fixed income mandates including strong contributions from our Manulife | CQS products, and the
impact of the acquisition of Comvest. This was partially offset by higher redemptions in equity mandates and lower
deployments in private markets.
1 This item is a non-GAAP financial measure. See “Non-GAAP and Other Financial Measures” below.
| 31 | 2025 Annual Report | Management’s Discussion and Analysis |
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Net Flows
| For the years ended December 31, | 2024 |
|---|---|
| ( millions) | |
| Net flows | $13,270 |
All values are in US Dollars.
Assets under Management and Administration
As at December 31, 2025, AUMA for our wealth and asset management businesses were $1,106.6 billion, an increase of 11%
compared with December 31, 2024, driven by the favourable impact of equity markets and interest rates, and the assets from the
acquisition of Comvest in 4Q25, partially offset by net outflows. As of December 31, 2025, Global WAM also managed 234.4
billion in assets for the Company’s other reporting segments. Including those assets, AUMA managed by Global WAM1 were
$1,341.0 billion compared with $1,257.8 billion as at December 31, 2024.
Segregated funds net assets were $313.6 billion as at December 31, 2025, an increase of 7% compared with December 31,
2024 on an actual exchange rate basis, driven by the favourable impact of equity markets partially offset by unfavorable foreign
currency exchange rates.
Changes in Assets under Management and Administration
| As at and for the years ended December 31, | 2024 |
|---|---|
| ( millions) | |
| Balance January 1, | $849,163 |
| Acquisitions / Dispositions(1) | 18,670 |
| Net flows | 13,270 |
| Investment income (loss) and other | 149,982 |
| Balance December 31, | $1,031,085 |
| Average assets under management and administration | $946,087 |
All values are in US Dollars.
(1)Includes $17.5 billion of AUM from the acquisition of Comvest in 2025 and $19.0 billion of AUM from the acquisition of CQS in 2024.
Assets under Management and Administration
| As at December 31, | 2024 |
|---|---|
| ( millions) | |
| Total invested assets | $9,743 |
| Segregated funds net assets(1) | 291,860 |
| Mutual funds, institutional asset management and other(2) | 506,868 |
| Total assets under management | 808,471 |
| Other assets under administration | 222,614 |
| Total assets under management and administration | $1,031,085 |
All values are in US Dollars.
(1)Segregated funds net assets are primarily comprised of AUM in our Retirement business, which mainly consists of fee-based products with little or no guarantees.
(2)Other funds represent pension funds, pooled funds, endowment funds and other institutional funds managed by the Company on behalf of others.
Managed Assets under Management and Administration
| As at December 31, | 2024 |
|---|---|
| ( millions) | |
| Assets under management and administration | $1,031,085 |
| AUM managed by Global WAM on behalf of Manulife’s other segments | 226,752 |
| Total managed assets under management and administration | $1,257,837 |
All values are in US Dollars.
Strategic Highlights
As one of Manulife’s highest potential businesses, we are focused on accelerating growth, achieving operational excellence, and
driving value for shareholders. Our strategy is anchored in delivering consistently strong risk-adjusted returns for investors;
offering differentiated products, solutions and experiences to drive better customer outcomes; expanding global distribution
capabilities; amplifying our partnerships with insurance affiliates; and maximizing the value of our vertically integrated model. Our
strategy is further powered by our winning talent and culture, our strong reputation and global brand, our technology and AI-
forward mindset, and our focus on financial and operational discipline.
1 See “Caution regarding forward looking statements” above.
2 Subject to the receipt of regulatory approvals and satisfaction of customary closing conditions. See “Caution regarding forward looking statements” above.
| 32 |
|---|
We continued to embrace a digital-first mindset and integrated AI-powered solutions to enhance the experiences for our
customers. In 2025, we:
•Incorporated a suite of AI-powered research tools to enhance investment analysis for our public markets investment
research teams. By integrating internal and external data into actionable insights, we streamline our research process,
accelerate decision-making, and empower our investment professionals to focus on driving value for our clients;
•Expanded our retirement plan offerings with the launch of FutureStepTM and FutureChoiceTM in the U.S., two fully digital
retirement plan solutions that enhance our capabilities and market presence. These new offerings improve user experience
by integrating AI and streamlining both client onboarding and participant access;
•Launched an AI-powered sales enablement solution in U.S. Retirement, delivering real-time insights and personalized
content to enhance our sales operations and productivity, improve our sales close ratio, and drive revenue growth. This
reduced the time spent on information searches and tripled the number of sales opportunities compared with 2024; and
•Enhanced the Manulife iFUNDS platform, making it the first integrated digital wealth solution in Singapore that offers
advisors a unified view of clients’ Unit Trust and Investment-Linked Plan (“ILP”) holdings. By integrating these into a single
platform and incorporating AI-powered ILP analytics capabilities, the enhancements streamline portfolio oversight,
accelerate transaction execution, and empower advisors to deliver more personalized and insightful financial guidance.
We executed several initiatives to drive sustainable growth opportunities and deliver comprehensive investment solutions. In
2025, we:
•Acquired 75% of Comvest Credit Partners (“Comvest”), a U.S. private credit manager with $17.5 billion of AUM as at the
acquisition date. The acquisition will enhance our private credit capabilities and create a comprehensive platform by aligning
Comvest and Manulife’s existing senior credit team.1 By leveraging Comvest’s investment philosophy and expertise, we can
offer clients expanded access to differentiated private credit strategies;
•Entered into an agreement to acquire PT Schroder Investment Management Indonesia (“Schroders Indonesia”),
strengthening our position as the largest asset manager in Indonesia. It will enable us to deliver enhanced value to our
clients and stakeholders by leveraging the firm’s local expertise and client relationships2;
•Successfully closed the Manulife Infrastructure Fund III, L.P., raising over US$5.5 billion from existing and new investors.
This milestone reflects the continued strength of our North American mid-market infrastructure strategy and our commitment
to meeting investor needs for alternative solutions through strategic expansion of our product offerings; and
•Entered a strategic partnership with BOCHK to launch our flagship Global Multi-Asset Diversified Income Fund to customers
in Hong Kong and Malaysia. The collaboration leverages the firm’s distribution capabilities and our asset management
expertise to provide customers with comprehensive wealth management solutions.
We continued to focus on educating and supporting our customers and advisors around the importance of health, wealth and
longevity. In 2025, we:
•Partnered with the U.S. segment to introduce exclusive health and wellness offers to more than 3 million plan participants in
U.S. Retirement, including access to GRAIL’s Galleri® multi-cancer early detection test to eligible participants. These
initiatives reinforce our commitment to longevity and helped participants address the financial preparedness gap; and
•Released our second annual global Financial Resilience and Longevity study. With insights drawn from retirement plan
members across all regions, our report outlined tailored steps for each generation and highlighted how retirement plan
providers, sponsors, and advisors can support better financial outcomes across people’s lifespans.
1 See “Caution regarding forward-looking statements” above.
| 33 | 2025 Annual Report | Management’s Discussion and Analysis |
|---|
6. Corporate and Other
Corporate and Other is comprised of investment performance on assets backing capital, net of amounts allocated to
the operating segments; financing costs; costs incurred by the corporate office related to shareholder activities (not
allocated to the operating segments); our P&C Reinsurance business; as well as our run-off reinsurance operation
including variable annuities and accident and health. In addition, for segment reporting purposes, consolidations and
eliminations of transactions between operating segments are also included in Corporate and Other earnings.
Profitability
Corporate and Other reported a net loss attributed to shareholders of $86 million in 2025 compared with net income attributed to
shareholders of $77 million in 2024. Net income (loss) attributed to shareholders is comprised of core earnings (loss) and items
excluded from core earnings (loss). Core loss was $220 million in 2025 compared with core loss of $215 million in 2024. Items
excluded from core earnings (loss) amounted to a net gain of $134 million in 2025 compared with a net gain of $292 million in
- Items excluded from core earnings (loss) are outlined in the table below. See section 13 “Non-GAAP and Other Financial
Measures” below, for a reconciliation of core earnings to net income (loss) attributed to shareholders.
The unfavourable variance in core loss of $5 million was primarily attributable to higher interest on capital allocated to operating
segments and lower gains from updates to provisions for estimated losses in our P&C Reinsurance business compared to prior
year, partially offset by an adjustment to the accrual for withholding taxes following the announcement of the Comvest acquisition
and higher investment income.
The following table presents net income attributed to shareholders for 2025 and 2024 consisting of core earnings (loss) and
items excluded from core earnings (loss).
| For the years ended December 31, | 2024 |
|---|---|
| ( millions) | |
| Core earnings (loss) | $(215) |
| Items excluded from core earnings (loss):(1) | |
| Market experience gains (losses) | 435 |
| Realized gains (losses) on debt instruments | 265 |
| Derivatives and hedge accounting ineffectiveness | 148 |
| Actual less expected long-term returns on public equity | 86 |
| Actual less expected long-term returns on ALDA | (4) |
| Other investment results | (60) |
| Updates to actuarial methods and assumptions that flow directly through income | 6 |
| Reinsurance transactions, tax-related items and other | (149) |
| Total items excluded from core earnings (loss) | 292 |
| Net income (loss) attributed to shareholders | $77 |
All values are in US Dollars.
(1)For explanations of items excluded from core earnings, see “Items excluded from core earnings” table in the total Company “Profitability” section above.
Strategic Highlights
Our P&C Reinsurance business provides substantial retrocessional capacity for a select clientele in the property and casualty
reinsurance market. The business is largely non-correlated to Manulife’s other businesses and helps diversify our overall
business mix. We manage the risk exposure of this business in relation to the total Company balance sheet risk and volatility as
well as the prevailing market pricing conditions. The business is renewable annually, and we currently estimate our exposure limit
in 2025 for a single event to be approximately US$250 million (net of reinstatement premiums) and for multiple events to be
approximately US$550 million (net of all premiums).1
| 34 |
|---|
7. Investments
Our investment philosophy for the general fund is to invest in an asset mix that optimizes our risk adjusted returns and matches
the characteristics of our underlying liabilities. We follow a bottom-up approach which combines our strong asset management
skills with an in-depth understanding of the characteristics of each investment. We invest in a diversified mix of assets and our
diversification strategy has historically produced superior risk adjusted returns while reducing overall risk. We use a disciplined
approach across all asset classes. Our risk management strategy is outlined in the “Risk Management and Risk Factors” section
below.
General Fund Assets
As at December 31, 2025, our general fund invested assets totaled $459.9 billion compared with $442.5 billion at the end of
- The following table shows the asset class composition as at December 31, 2025 and December 31, 2024.
| 2025 | 2024 | |||||
|---|---|---|---|---|---|---|
| As at December 31,<br><br>($ billions) | Carrying<br><br>value | % of total | Fair value | Carrying<br><br>value | % of total | Fair value |
| Cash and short-term securities | $26.7 | 6 | $26.7 | $25.8 | 6 | $25.8 |
| Debt securities and private placement debt | ||||||
| Government bonds | 83.4 | 18 | 83.1 | 83.9 | 19 | 83.6 |
| Corporate bonds | 128.4 | 28 | 128.2 | 125.0 | 28 | 124.8 |
| Mortgage / asset-backed securities | 2.3 | 1 | 2.3 | 1.8 | - | 1.8 |
| Private placement debt | 51.8 | 11 | 51.8 | 49.7 | 11 | 49.7 |
| Mortgages | 57.1 | 12 | 57.6 | 54.4 | 12 | 54.8 |
| Loans to Bank clients | 2.7 | 1 | 2.7 | 2.3 | 1 | 2.3 |
| Public equities | 41.0 | 9 | 41.0 | 33.7 | 8 | 33.7 |
| Alternative long-duration assets | ||||||
| Real estate | 12.7 | 3 | 12.8 | 13.3 | 3 | 13.4 |
| Infrastructure | 18.6 | 4 | 19.2 | 17.8 | 4 | 18.3 |
| Timber and agriculture | 6.0 | 1 | 6.5 | 5.9 | 1 | 6.5 |
| Private equity | 18.4 | 4 | 18.5 | 18.3 | 4 | 18.3 |
| Energy | 1.7 | - | 1.7 | 1.9 | 1 | 1.9 |
| Various other ALDA | 4.3 | 1 | 4.3 | 3.9 | 1 | 3.8 |
| Leveraged leases and other | 4.8 | 1 | 4.8 | 4.8 | 1 | 4.8 |
| Total general fund invested assets | $459.9 | 100 | $461.2 | $442.5 | 100 | $443.5 |
The carrying values for invested assets are generally equal to their fair values, however, residential mortgages and some
commercial mortgages are carried at amortized cost; company own use properties are mainly held at fair value; loans to Bank
clients are carried at amortized cost; and private equity investments, including infrastructure, energy, and timber, are accounted
for as associates using the equity method, or at fair value. Certain public bonds are classified as held to maturity and held at
amortized cost, with the remaining public and private bonds being classified as either “fair value through other comprehensive
income” or as “fair value through profit or loss”.
Shareholders’ accumulated other comprehensive pre-tax income (loss) as at December 31, 2025 consisted of a $15.8 billion loss
for bonds (2024 – loss of $17.5 billion), a $2.7 billion loss for private placements (2024 – loss of $3.2 billion), and a $0.9 billion
loss for mortgages (2024 – loss of $1.7 billion). Included in the losses for bonds, private placements and mortgages were gains
related to the fair value hedge basis adjustments attributable to the hedged risk of certain FVOCI bonds, FVOCI private
placements and FVOCI mortgages of $322 million, $112 million and $12 million, respectively (2024 – loss of $414 million, $235
million, and $124 million, respectively).
Debt Securities and Private Placement Debt
We manage our high-quality fixed income portfolio to optimize yield and quality while ensuring that asset portfolios remain
diversified by sector, industry, issuer, and geography. As at December 31, 2025, our fixed income portfolio of $265.9 billion (2024
– $260.3 billion) was 96% investment grade (rated BBB or better) and 70% was rated A or higher (2024 – 96% and 70%,
respectively). Our private placement debt holdings provide diversification benefits (issuer, industry, and geography) and, because
they often have stronger protective covenants and collateral than debt securities, they typically provide better credit protection
and potentially higher recoveries in the event of default. Geographically, our fixed income portfolio is well-diversified. 20% is
invested in Canada (2024 – 20%), 47% is invested in the U.S. (2024 – 48%), 7% is invested in Europe (2024 – 6%) and the
remaining 26% is invested in Asia and other geographic areas (2024 – 26%).
| 35 | 2025 Annual Report | Management’s Discussion and Analysis |
|---|
Debt Securities and Private Placement Debt – by Credit Quality(1)
| 2025 | 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| As at December 31,<br><br>($ billions) | Debt<br><br>securities | Private<br><br>placement<br><br>debt | Total | % of<br><br>Total | Debt<br><br>securities | Private<br><br>placement<br><br>debt | Total | % of<br><br>Total |
| AAA | $18.9 | $0.3 | $19.2 | 7 | $39.3 | $0.6 | $39.9 | 15 |
| AA | 55.1 | 7.9 | 63.0 | 24 | 36.2 | 7.5 | 43.7 | 17 |
| A | 83.8 | 18.6 | 102.4 | 39 | 80.9 | 17.5 | 98.4 | 38 |
| BBB | 51.8 | 18.2 | 70.0 | 26 | 48.6 | 17.8 | 66.4 | 26 |
| BB | 4.4 | 1.0 | 5.4 | 2 | 4.7 | 0.9 | 5.6 | 2 |
| B & lower, and unrated | 0.1 | 5.8 | 5.9 | 2 | 0.9 | 5.4 | 6.3 | 2 |
| Total carrying value | $214.1 | $51.8 | $265.9 | 100 | $210.6 | $49.7 | $260.3 | 100 |
(1)Reflects credit quality ratings as assigned by Nationally Recognized Statistical Rating Organizations (“NRSRO”) using the following priority sequence order: S&P
Global Ratings (“S&P”), Moody’s Investors Services (“Moody’s”), DBRS Limited and its affiliated entities (“Morningstar DBRS”), Fitch Ratings Inc. (“Fitch”), Rating
and Investment information, Japan Credit Rating, and Kroll Bond Rating Agency. For those assets where ratings by NRSRO are not available, disclosures are
based upon internal ratings as described in the “Risk Management and Risk Factors” section below.
Debt Securities and Private Placement Debt – by Sector
| 2025 | 2024 | |||||
|---|---|---|---|---|---|---|
| As at December 31,<br><br>(Per cent of carrying value, unless otherwise stated) | Debt<br><br>securities | Private<br><br>placement<br><br>debt | Total | Debt<br><br>securities | Private<br><br>placement<br><br>debt | Total |
| Government and agency | 39 | 8 | 33 | 40 | 9 | 34 |
| Utilities | 14 | 32 | 17 | 14 | 34 | 18 |
| Financial | 15 | 13 | 15 | 15 | 12 | 15 |
| Industrial | 8 | 15 | 9 | 8 | 15 | 9 |
| Consumer (non-cyclical) | 8 | 16 | 9 | 7 | 14 | 9 |
| Energy | 6 | 5 | 7 | 6 | 5 | 6 |
| Consumer (cyclical) | 3 | 6 | 4 | 3 | 5 | 3 |
| Securitized (MBS/ABS) | 1 | - | 1 | 1 | 1 | 1 |
| Telecommunications | 2 | 1 | 1 | 2 | 1 | 1 |
| Basic materials | 2 | 3 | 2 | 2 | 3 | 2 |
| Technology | 1 | 1 | 1 | 1 | - | 1 |
| Media and internet and other | 1 | - | 1 | 1 | 1 | 1 |
| Total per cent | 100 | 100 | 100 | 100 | 100 | 100 |
| Total carrying value ($ billions) | $214.1 | $51.8 | $265.9 | $210.6 | $49.7 | $260.3 |
As at December 31, 2025, gross unrealized losses on our fixed income holdings were $23.4 billion, or 8%, of the amortized cost
of these holdings (2024 – gross unrealized loss of $26.9 billion or 10%). Of this amount, $13.0 billion (2024 – $12.2 billion)
related to debt instruments trading below 80% of amortized cost for more than 6 months. Securitized assets represented $75.0
million of the gross unrealized losses and $0.2 million of the amounts traded below amortized cost for more than 6 months (2024
– gross unrealized loss of $111.0 million and $0.2 million, respectively). After adjusting for debt securities supporting participating
policyholder and pass-through products and the provisions for credit included in the insurance and investment contract liabilities,
the potential impact to shareholders’ pre-tax earnings for debt securities trading below 80% of amortized cost for greater than 6
months was approximately $10.6 billion as at December 31, 2025 (2024 – $10.2 billion).
Mortgages
As at December 31, 2025, our mortgage portfolio of $57.1 billion represented 12% of invested assets (2024 – $54.4 billion and
12%, respectively). Geographically, 70% of the portfolio is invested in Canada (2024 – 68%) and 30% is invested in the U.S.
(2024 – 32%). The overall portfolio is also diversified by geographic region, property type, and borrower. Of the total mortgage
portfolio, 15% is insured (2024 – 14%), primarily by the Canada Mortgage and Housing Corporation (“CMHC”) — Canada’s AAA
rated government-backed national housing agency, with 31% of residential mortgages insured (2024 – 31%) and 2% of
commercial mortgages insured (2024 – 1%).
| 36 | ||||
|---|---|---|---|---|
| As at December 31, | 2025 | 2024 | ||
| --- | --- | --- | --- | --- |
| ($ billions) | Carrying value | % of total | Carrying value | % of total |
| Commercial | ||||
| Retail | $7.9 | 14 | $8.0 | 15 |
| Office | 7.1 | 12 | 7.5 | 14 |
| Multi-family residential | 6.6 | 12 | 6.7 | 12 |
| Industrial | 6.1 | 11 | 5.5 | 10 |
| Other commercial | 2.3 | 4 | 2.4 | 4 |
| 30.0 | 53 | 30.1 | 55 | |
| Other mortgages | ||||
| Manulife Bank single-family residential | 26.8 | 46 | 24.0 | 44 |
| Agricultural | 0.3 | 1 | 0.3 | 1 |
| Total mortgages | $57.1 | 100 | $54.4 | 100 |
Our commercial mortgage loans are originated with a hold-for-investment philosophy. They have low loan-to-value ratios, high
debt-service coverage ratios, and as at December 31, 2025, there were 3 loans in arrears. Geographically, of the total
commercial mortgage loans, 44% are in Canada and 56% are in the U.S. (2024 – 43% and 57%, respectively). We are
diversified by property type and largely avoid market segments such as hotels, construction loans, and second liens.
Non-CMHC Insured Commercial Mortgages(1)
| As at December 31, | 2025 | 2024 | ||
|---|---|---|---|---|
| Canada | U.S. | Canada | U.S. | |
| Loan-to-Value ratio(2) | 59% | 57% | 61% | 59% |
| Debt-Service Coverage ratio(2) | 1.74x | 1.98x | 1.67x | 1.94x |
| Average duration (years) | 3.91 | 5.33 | 4.15 | 5.47 |
| Average loan size ($ millions) | $22.0 | $21.6 | $21.7 | $21.9 |
| Loans in arrears(3) | 0.03% | 0.36% | 0.00% | 0.00% |
(1)Excludes Manulife Bank commercial mortgage loans of $376 million (2024 – $350 million).
(2)Loan-to-Value and Debt-Service Coverage ratios are based on re-underwritten cash flows.
(3)Arrears defined as three or more missed monthly payments or in the process of foreclosure in Canada and two or more missed monthly payments or in the
process of foreclosure in the U.S.
Public Equities
As at December 31, 2025, public equity holdings of $41.0 billion represented 9% (2024 – $33.7 billion and 8%) of invested
assets and, when excluding assets supporting participating policyholder and pass-through products, represented 1% (2024 –
1%) of invested assets. The portfolio is diversified by industry sector and issuer. Geographically, 20% (2024 – 20%) is held in
Canada; 9% (2024 – 12%) is held in the U.S.; and the remaining 71% (2024 – 68%) is held in Asia, Europe, and other
geographic areas.
Public Equities – classified by type of product-line supported
| As at December 31, | 2025 | 2024 | ||
|---|---|---|---|---|
| ($ billions) | Carrying value | % of total | Carrying value | % of total |
| Participating policyholders | $27.3 | 67 | $20.8 | 62 |
| Non-participating products and pass-through products | 10.4 | 25 | 9.3 | 28 |
| Global Wealth and Asset Management(1) | 1.6 | 4 | 1.5 | 4 |
| Corporate and Other segment | 1.7 | 4 | 2.1 | 6 |
| Total public equities | $41.0 | 100 | $33.7 | 100 |
(1)Includes $1.2 billion of seed money investments in new segregated and mutual funds.
Alternative Long-Duration Assets
Our ALDA portfolio is comprised of a diverse range of asset classes with varying degrees of correlations. The portfolio typically
consists of private assets representing investments in varied sectors of the economy which act as a natural hedge against future
inflation and serve as an alternative source of asset supply to long-term corporate bonds. In addition to being a suitable match
for our long-duration liabilities, these assets provide enhanced long-term yields and diversification relative to traditional fixed
income markets. The majority of our ALDA are managed in-house.
1 Based on the global timber investment management organization ranking in the RISI International Timberland Ownership and Investment Database.
| 37 | 2025 Annual Report | Management’s Discussion and Analysis |
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As at December 31, 2025, carrying value of ALDA of $61.7 billion represented 13% (2024 – $61.1 billion and 14%) of invested
assets. The fair value of total ALDA was $62.9 billion as at December 31, 2025 (2024 – $62.3 billion). The carrying value and
corresponding fair value by sector and/or asset type are outlined above (see table in the section “General Fund Assets”).
Real Estate
Our real estate portfolio is diversified by geographic region; of the total fair value of this portfolio, 43% is located in the U.S., 38%
in Canada, and 19% in Asia and Other as at December 31, 2025 (2024 – 45%, 37%, and 18%, respectively). This high-quality
portfolio has very low leverage and is well-diversified by property type, including industrial, multi-family, urban office, suburban
office, and company own use buildings. The portfolio is well-positioned with an average occupancy rate of 82% (2024 – 84%)
and an average lease term of 5.5 years (2024 – 5.4 years). During 2025, one acquisition was executed representing $0.05 billion
market value of commercial real estate asset (2024 – no acquisitions). As part of ongoing portfolio management initiatives, 6
commercial real estate assets totaling $0.36 billion were sold during 2025 (2024 - 3 sales and $0.07 billion, respectively).
The composition of our real estate portfolio based on fair value is as follows:
| As at December 31, | 2025 | 2024 | ||
|---|---|---|---|---|
| ($ billions) | Fair value | % of total | Fair value | % of total |
| Company Own Use | $2.8 | 22 | $2.8 | 21 |
| Office – Downtown | 3.5 | 27 | 3.8 | 28 |
| Office – Suburban | 0.7 | 5 | 0.8 | 6 |
| Industrial | 2.5 | 20 | 2.6 | 19 |
| Residential | 2.5 | 20 | 2.5 | 19 |
| Retail | 0.3 | 2 | 0.3 | 2 |
| Other | 0.5 | 4 | 0.6 | 5 |
| Total real estate(1) | $12.8 | 100 | $13.4 | 100 |
(1)These figures represent the fair value of the real estate portfolio excluding real estate interests. The carrying value of the portfolio was $12.7 billion and
$13.3 billion as at December 31, 2025 and December 31, 2024, respectively.
Infrastructure
We invest both directly and through funds in a variety of industry specific asset classes, listed below. The portfolio is well-
diversified with over 700 portfolio companies. The portfolio is predominantly invested in the U.S. and Canada, but also in Europe,
Australia, Asia, and Latin America. Our power and infrastructure holdings are as follows:
| 2025 | 2024 | |||
|---|---|---|---|---|
| As at December 31,<br><br>($ billions) | Carrying<br><br>value | % of total | Carrying<br><br>value | % of total |
| Renewable power generation | $3.8 | 21 | $3.8 | 21 |
| Thermal power generation | 1.2 | 7 | 1.7 | 9 |
| Transportation (including roads, ports) | 4.8 | 26 | 4.5 | 25 |
| Electric and gas regulated utilities | 0.7 | 3 | 0.7 | 4 |
| Electricity transmission | - | - | 0.1 | 1 |
| Water distribution | 0.3 | 1 | 0.3 | 2 |
| Midstream gas infrastructure | 0.7 | 4 | 0.7 | 4 |
| Maintenance service, efficiency and social infrastructure | 1.7 | 9 | 1.3 | 7 |
| Digital infrastructure | 5.1 | 27 | 4.4 | 25 |
| Other infrastructure | 0.3 | 2 | 0.3 | 2 |
| Total infrastructure | $18.6 | 100 | $17.8 | 100 |
Timber and Agriculture
Our timber and agriculture assets of $6.0 billion as at December 31, 2025 (2024 – $5.9 billion) are managed by a proprietary
entity, Manulife Investment Management Timberland and Agriculture (“MIM Timberland and Agriculture”). In addition to being the
world’s largest timberland investment manager for institutional investors1, with timberland properties in the U.S., New Zealand,
Australia, Chile, Brazil, and Canada, MIM Timberland and Agriculture also manages farmland properties in the U.S., Australia,
Chile, and Canada. The general fund’s timber holdings comprised 21% of MIM’s total timberland AUM (2024 – 21%). The
farmland portfolio includes annual (row) crops, fruit crops, wine grapes, and nut crops. The general fund’s farmland holdings
comprised 41% of MIM’s total farmland AUM (2024 – 41%).
| 38 |
|---|
Private Equities
Our private equity portfolio of $18.5 billion (2024 – $18.3 billion) includes both directly held private equity and private equity
funds. Both are diversified across vintage years and industry sectors. The portfolio is largely invested in private market
companies across various sectors of the economy including: consumer, business, financial, healthcare and IT services, and
software.
Energy
This category is comprised of $1.7 billion (2024 – $1.9 billion), which includes legacy oil and gas equity interests related to
upstream and midstream assets that are in runoff, and energy transition private equity interests in areas supportive of the
transition to lower carbon forms of energy, such as wind, solar, and carbon sequestration.
Investment Income
| For the years ended December 31, | 2024 |
|---|---|
| ( millions) | |
| Interest income | $13,761 |
| Dividend, rental income and other income(1) | 3,719 |
| Impairments, provisions and recoveries, net | 109 |
| Other | 660 |
| 18,249 | |
| Realized and unrealized gains (losses) on assets supporting insurance and | |
| investment contract liabilities | |
| Debt securities | (1,857) |
| Public equities | 4,178 |
| Mortgages | (151) |
| Private placements | 235 |
| Real estate | (592) |
| Other invested assets | 1,256 |
| Derivatives | (859) |
| 2,210 | |
| Investment expenses | (1,348) |
| Total investment income (loss) | $19,111 |
All values are in US Dollars.
(1)Rental income from investment properties is net of direct operating expenses.
In 2025, the $23.9 billion of investment income (2024 – income of $19.1 billion) consisted of:
•$19.0 billion of investment income before net realized and unrealized gains on assets supporting insurance and investment
contract liabilities (2024 – income of $18.2 billion);
•$6.3 billion of net realized and unrealized gains on assets supporting insurance and investment contract liabilities (2024 –
gains of $2.2 billion); and
•$1.3 billion of investment expenses (2024 – $1.3 billion).
The $0.8 billion increase in net investment income before unrealized and realized gains was primarily driven by higher interest
income on private equity assets.
In 2025, net realized and unrealized gains on assets supporting insurance and investment contract liabilities were $6.3 billion
compared with gains of $2.2 billion in 2024. The 2025 gains were primarily driven by gains on equities resulting from higher
equity markets in the U.S., Canada, and Asia. The 2024 gains were primarily driven by gains on equities resulting from higher
equity markets in the U.S., Canada and Asia, partially offset by losses on fixed income assets resulting from higher interest rates
in the U.S. and Canada.
1 The increase in Global WAM net fee income was due to higher average AUMA resulting from the favourable impact of markets over the past 12 months and the
acquisition of Comvest.
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8. Fourth Quarter Financial Highlights
Profitability
| Quarterly Results | ||
|---|---|---|
| ($ millions, unless otherwise stated) | 4Q25 | 4Q24 |
| Net income (loss) attributed to shareholders | $1,499 | $1,638 |
| Core earnings(1) | $1,993 | $1,907 |
| Diluted earnings (loss) per common share ($) | $0.83 | $0.88 |
| Core EPS ($) | $1.12 | $1.03 |
| ROE | 12.7% | 14.0% |
| Core ROE | 17.1% | 16.5% |
| Expense efficiency ratio | 44.7% | 44.4% |
| General expenses | $1,327 | $1,328 |
| Core expenses | $1,873 | $1,797 |
(1)Impact of currency movement on the fourth quarter of 2025 (“4Q25”) core earnings compared with the fourth quarter of 2024 (“4Q24”) was a $7 million
unfavourable variance.
Manulife’s 4Q25 net income attributed to shareholders was $1,499 million compared with $1,638 million in 4Q24. Net
income attributed to shareholders is comprised of core earnings (consisting of items we believe reflect the underlying earnings
capacity of the business), which amounted to $1,993 million in 4Q25 compared with $1,907 million in 4Q24, and items excluded
from core earnings, which amounted to a net charge of $494 million in 4Q25 compared with a net charge of $269 million in 4Q24.
The effective tax rate on net income (loss) attributed to shareholders was 16% in 4Q25 compared with 19% in 4Q24, primarily
due to differences in the jurisdictional mix of earnings and the impact of tax true-ups.
Net income attributed to shareholders in 4Q25 decreased $139 million compared with 4Q24, primarily reflecting a higher charge
from market experience, partially offset by growth in core earnings. The net charge from market experience of $441 million in
4Q25 was primarily from lower-than-expected returns on ALDA, mainly related to infrastructure, private equity, and real estate
investments, as well as a net charge from derivatives and hedge accounting ineffectiveness.
The 5% increase in core earnings on a constant exchange rate basis compared with 4Q24 was driven by growth in our insurance
business, the net impact of 2025 updates to actuarial methods and assumptions and a net release in the provision for ECL in
4Q25. In addition, core earnings increased in Global WAM, reflecting higher net fee income1, as well as disciplined expense
management, partially offset by the impact of the eMPF transition in Hong Kong and lower performance fees in Institutional Asset
Management. These increases were partially offset by unfavourable insurance experience in our U.S. life insurance business,
lower expected investment earnings and less favourable insurance experience in Canada. In addition, the RGA U.S.
Reinsurance Transaction reduced core earnings by $6 million in 4Q25 compared with 4Q24.
Additional information on the change in ECL is presented in the following table:
| ($ millions) | 4Q25 | 4Q24 |
|---|---|---|
| Change in ECL | ||
| Net new originations or purchases | $1 | $(6) |
| Changes to risk, parameters and models | ||
| Credit migration | (36) | (9) |
| Parameter and model updates, and other | 47 | 10 |
| Total (increase) recovery in ECL, pre-tax | $12 | $(5) |
| Total (increase) recovery in ECL, post-tax | $11 | $(3) |
The reduction in the ECL provision of $11 million post-tax in 4Q25 was primarily related to a positive market environment and
parameter updates, partially offset by credit migration. The post-tax ECL provision was neutral in 4Q24, reflecting the positive
macro environment, offset by credit migration.
| 40 |
|---|
Core earnings by segment are presented in the following table for the periods presented.
| 4Q24 | |
|---|---|
| ( millions) | |
| Core earnings by segment | |
| Asia | $640 |
| Canada | 390 |
| U.S. | 412 |
| Global Wealth and Asset Management | 459 |
| Corporate and Other | 6 |
| Total core earnings | $1,907 |
All values are in US Dollars.
In Asia, core earnings were $785 million in 4Q25 compared with $640 million in 4Q24. The 24% increase on a constant
exchange rate basis was driven by an increase in expected earnings on insurance contracts and higher expected investment
earnings, both reflecting business growth. The increase in expected earnings on insurance contracts also reflected the net
impact of 2025 updates to actuarial methods and assumptions. Investment income on allocated capital also increased core
earnings by $21 million on a pre-tax basis in 4Q25 compared with 4Q24.
In Canada, core earnings were $413 million in 4Q25 compared with $390 million in 4Q24. The 6% increase primarily reflected
favourable insurance experience in Individual Insurance, higher expected investment earnings, business growth in Group
Insurance, and an increase in CSM amortization, partially offset by less favourable insurance experience in Group Insurance.
Core earnings also included the net favourable impact of 2025 updates to actuarial methods and assumptions. Investment
income on allocated capital reduced core earnings by $7 million on a pre-tax basis compared with 4Q24.
In the U.S., core earnings were $319 million in 4Q25 compared with $412 million in 4Q24. The 22% decrease on a constant
exchange rate basis reflected lower expected investment earnings and unfavourable life insurance claims experience in 4Q25
compared with favourable experience in 4Q24, partially offset by higher expected earnings on insurance contracts. Investment
income on allocated capital also reduced core earnings by $19 million on a pre-tax basis in 4Q25 compared with 4Q24. The RGA
U.S. Reinsurance Transaction reduced core earnings by $5 million in 4Q25 compared with 4Q24, attributable to the impact on
the expected earnings on insurance contracts and expected investment earnings.
Global WAM core earnings were $490 million in 4Q25 compared with $459 million in 4Q24. The 7% increase was driven by an
increase in net fee income from higher average AUMA resulting from the favourable impact of markets over the past 12 months
and the acquisition of Comvest, as well as disciplined expense management. This increase was partially offset by the impact of
the eMPF transition in Hong Kong and lower performance fees in Institutional Asset Management.
Corporate and Other core loss was $14 million in 4Q25 compared with core earnings of $6 million in 4Q24. The $20 million
decrease in core earnings was primarily related to higher interest on capital allocated to operating segments.
The following table presents net income attributed to shareholders consisting of core earnings and the items excluded from core
earnings.
| ($ millions) | 4Q25 | 4Q24 |
|---|---|---|
| Core earnings | $1,993 | $1,907 |
| Items excluded from core earnings: | ||
| Market experience gains (losses)(1) | (441) | (192) |
| Realized gains (losses) on debt instruments | 27 | (43) |
| Derivatives and hedge accounting ineffectiveness | (162) | 40 |
| Actual less expected long-term returns on public equity | (63) | (113) |
| Actual less expected long-term returns on ALDA | (232) | (97) |
| Other investment results | (11) | 21 |
| Updates to actuarial methods and assumptions that flow directly through income | - | - |
| Restructuring charge(2) | (12) | (52) |
| Amortization of acquisition-related intangible assets | (12) | - |
| Reinsurance transactions, tax-related items and other(3) | (29) | (25) |
| Total items excluded from core earnings | (494) | (269) |
| Net income (loss) attributed to shareholders | $1,499 | $1,638 |
(1)Market experience was a net charge of $441 million in 4Q25 primarily reflecting lower-than-expected returns on ALDA mainly related to infrastructure, private
equity, and real estate investments, a net charge from derivatives and hedge accounting ineffectiveness and lower-than-expected returns on public equity, partially
offset by realized gains from the sale of debt instruments which are classified as FVOCI. Market experience was a net charge of $192 million in 4Q24 primarily
reflecting lower-than-expected returns from public equity, lower-than-expected returns on ALDA driven by real estate investments, and net realized losses from the
sale of debt instruments which are classified as FVOCI. These were partially offset by a gain from derivatives and hedge accounting ineffectiveness and other
investment results.
(2)In 4Q25, we reported a restructuring charge of $12 million post-tax ($16 million pre-tax) in Global WAM and Canada. In 4Q24, we reported a restructuring charge
of $52 million post-tax ($67 million pre-tax) in Global WAM and Canada.
(3)The 4Q25 net charge of $29 million mainly included a charge for tax-related adjustments of $14 million, a $10 million charge for an investment impairment in
Global WAM and $7 million charge for Comvest acquisition related costs. The 4Q24 net charge of $25 million mainly included a $22 million charge for an
investment impairment in Global WAM.
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Net income attributed to shareholders by segment is presented in the following tables.
| Quarterly Results | ||
|---|---|---|
| ($ millions) | 4Q25 | 4Q24 |
| Asia | $623 | $583 |
| Canada | 252 | 439 |
| U.S. | 81 | 103 |
| Global Wealth and Asset Management | 452 | 384 |
| Corporate and Other | 91 | 129 |
| Total net income (loss) attributed to shareholders | $1,499 | $1,638 |
Expense efficiency ratio
The expense efficiency ratio was 44.7% in 4Q25, compared with 44.4% in 4Q24. The 0.3 percentage point increase in the ratio
compared with 4Q24 reflected a 4% increase in core expenses, partially offset by a 3% increase in pre-tax core earnings. The
increase in core expenses was driven by higher strategic investments in digital transformation and AI, higher workforce-related
costs, the acquisition of Comvest, and the impact of the eMPF transition in Hong Kong. These were partially offset by disciplined
expense management primarily in Global WAM.
Core general expenses are a component of core expenses. Total general expenses in 4Q25 were consistent with 4Q24 on both
an actual and constant exchange rate basis, driven by items noted above for the increase in core expenses, offset by a reduction
in general expenses excluded from core earnings. General expenses excluded from core earnings in 4Q25 consisted primarily of
restructuring charges in Global WAM and Canada, the amortization of acquisition related intangible assets, and the acquisition of
Comvest. In 4Q24, these expenses were primarily related to restructuring charges in Global WAM and Canada and the
acquisition of CQS.
Business Performance
| As at and for the quarters ended December 31, | 2024 |
|---|---|
| ( millions, unless otherwise stated) | |
| Asia APE sales | $1,661 |
| Canada APE sales | 376 |
| U.S. APE sales | 211 |
| Total APE sales | 2,248 |
| Asia new business CSM | 586 |
| Canada new business CSM | 116 |
| U.S. new business CSM | 140 |
| Total new business CSM | 842 |
| Asia new business value | 551 |
| Canada new business value | 168 |
| U.S. new business value | 89 |
| Total new business value | 808 |
| Asia CSM net of NCI | 15,540 |
| Canada CSM | 4,109 |
| U.S. CSM | 2,468 |
| Corporate and Other CSM | 10 |
| Total CSM net of NCI | 22,127 |
| Post-tax CSM net of NCI | 18,353 |
| Global WAM gross flows ( billions) | 43.5 |
| Global WAM net flows ( billions) | 1.2 |
| Global WAM assets under management and administration ( billions) | 1,031.1 |
| Global WAM total invested assets ( billions) | 9.7 |
| Global WAM segregated funds net assets ( billions) | 291.9 |
| Total assets under management and administration ( billions) | 1,608.0 |
| Total invested assets ( billions) | 442.5 |
| Total net segregated funds net assets ( billions) | 436.0 |
All values are in US Dollars.
1 Asia Other excludes Hong Kong and Japan.
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APE sales were $2,222 million in 4Q25, in line with 4Q24, New business CSM was $1,020 million in 4Q25, an increase of 21%
compared with 4Q24, and NBV was $874 million in 4Q25, an increase of 8% compared with 4Q24.
•In Asia, APE sales decreased 3% in 4Q25 compared with 4Q24, as growth in Japan and Asia Other1 was more than offset
by lower sales in Hong Kong. New business CSM and NBV increased 19% and 10% respectively in 4Q25 compared with
4Q24, due to business mix partially offset by lower sales volumes. NBV margin improved to 41.2%.
•In Canada, APE sales increased 2% in 4Q25 compared with 4Q24, reflecting higher sales in Individual Insurance and
Annuities, partially offset by lower sales in Group Insurance. New business CSM increased 16% in 4Q25 compared with
4Q24, driven by higher sales volumes and margins in Individual Insurance, and higher sales volumes in Annuities. NBV
increased 4% in 4Q25 compared with 4Q24, driven by higher sales volumes and margins in Individual Insurance and
Annuities, partially offset by lower sales volumes in Group Insurance.
•U.S. APE sales increased 9% in 4Q25 compared with 4Q24, reflecting broad-based demand for our suite of products. New
business CSM increased 34% compared with 4Q24 primarily driven by higher sales volumes and product mix. NBV
increased 8% compared with 4Q24, primarily driven by higher sales volumes.
Global WAM net outflows were $9.5 billion in 4Q25 compared with net inflows of $1.2 billion in 4Q24.
•Net outflows in Retirement were $7.2 billion in 4Q25 compared with net outflows of $1.9 billion in 4Q24, primarily driven by
higher retirement plan redemptions, and higher net member withdrawals reflecting higher account balances from market
growth. This was partially offset by higher new plan sales across all geographies.
•Net outflows in Retail were $5.6 billion in 4Q25 compared with net inflows of $1.3 billion in 4Q24, due to lower net sales
through third-party intermediaries in North America and our Canada retail wealth platform.
•Net inflows in Institutional Asset Management were $3.4 billion in 4Q25 compared with net inflows of $1.8 billion in 4Q24,
due to higher net flows from fixed income mandates, primarily driven by our Manulife | CQS products, and money market
mandates, as well as the impact of the acquisition of Comvest. This was partially offset by higher redemptions in equity
mandates and lower deployments in private markets.
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9. Risk Management and Risk Factors
This section provides an overview of our overall risk management approach along with detailed description of specific risks.
Enterprise Risk Management Framework
Our approach to risk management is governed by our Enterprise Risk Management (“ERM”) Framework. The ERM Framework is
a foundational, holistic, integrated, and adaptive approach to understanding and managing risk while balancing the need to
remain competitive. This structure is designed to provide guardrails on our risk profile while optimizing risk-adjusted returns
without compromising our ability to meet our commitments to customers and all stakeholders.
The ERM Framework is comprised of five interrelated components: Risk Taxonomy, Risk Appetite, Risk Governance, Risk
Process, and Risk Culture.
Risk Taxonomy
Our businesses and operations expose Manulife to a broad range of potentially material risks. The Risk Taxonomy categorizes
and defines these risks. It creates a common risk language and provides reasonable assurance that risks are consistently
understood and managed.
In this document, the risks are categorized in six overarching categories (known collectively as “Principal Risks”): Strategic Risk,
Market & Liquidity Risk, Credit & Investment Risk, Insurance Risk, Operational Risk and Technology & Cyber Risk. The Principal
Risks are further subdivided into subcategories, with increasing levels of granularity as appropriate.
The Risk Taxonomy is a core element of the ERM Framework, supporting all other components. It provides the basis for policy
and committee coverage (Risk Governance), enables risk identification (Risk Process), reasonably assures that Risk Appetite
Statements and Limits are established for material risks (Risk Appetite), and clarifies who is accountable for managing each risk
(Risk Culture).
The following sections of the MD&A describe the risk management strategies and risk factors for each Principal Risk category.
Additional risks not presently known to us or that are currently immaterial could impair our businesses, operations and financial
condition in the future. If any such risks should occur, the trading price of our securities, including common shares, preferred
shares and debt securities, could decline, and investors may lose all or part of their investment.
Risk Appetite
The Risk Appetite Framework (“RAF”) guides the level of risk, for each risk category that we are prepared to accept in pursuit of
our strategic priorities, as well as how much additional risk we can tolerate.
The RAF creates a balanced view of risk and return that promotes sustainable growth and resilience, supports informed
decision-making, and fosters prudent Risk Culture. The RAF is integral to the Board and management discussions and decision-
making. They receive regular reports on the RAF’s effectiveness and compliance, including comparisons of actual results versus
stated RAF measures, and notification of any limit breaches and corresponding action plans. Risk Appetite Statements are
designed to provide guardrails on our appetite for identified risks. Qualitative Risk Appetite Statements regarding our Principal
Risks are summarized as follows:
•Strategic – Manulife accepts a total level of risk that provides a very high level of confidence to meeting customer
obligations while targeting an appropriate overall return to shareholders over time.
•Market & Liquidity – Market risks are acceptable when they are managed within specific risk limits and tolerances.
•Credit & Investment – Manulife believes a diversified investment portfolio reduces overall risk and enhances returns;
therefore, it accepts credit and ALDA-related risks as part of its investment strategy.
•Insurance – Manulife pursues insurance risks that add customer and shareholder value where we have competence to
assess and monitor them, and for which we receive appropriate compensation.
•Operational – Manulife accepts that operational risks, as well as Technology & Cyber risks below, are an inherent part of
the business and are managed by implementing appropriate controls that provide reasonable assurance that we are within
our risk thresholds and tolerances. Management will protect its business and customers’ assets through cost-effective
operational risk mitigation.
•Technology & Cyber – Manulife manages technology risk by prioritizing activities that support a stable, scalable and
resilient technology environment guided by formal technology governance processes. Manulife manages cybersecurity risk
by maintaining the confidentiality, integrity and availability of our technology assets supported by layered and intelligence
driven defenses.
Quantitative Risk Appetite Statements (“RAS Metric”), Risk Tolerance and Board-approved Limits establish the aggregate level of
each type of risk the Company may take. Depending on the risk being quantified, different measures are used; these include
1 The Chief Actuary and the Actuarial function are considered to have accountability for both the First Line and Second Line duties.
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Earnings at Risk (“EaR”), Economic Capital (“EC”), LICAT, measures of liquidity risk, and measures pertaining to derivative
usage.
Risk Governance
Risk Governance is intended to provide an organized approach to risk management oversight. It is articulated in policies and
executed through a Three Lines Operating Model that is supported by a risk committee structure. Requirements, limits, and
decisions are cascaded top-down; issues, escalations, and reporting are raised bottom-up.
Risk Committee Structure
The Board governs oversight of risk management and is supported by a dedicated Board Risk Committee (“BRC”).
Management has established an Executive Risk Committee (“ERC”), which strategically manages our global risk profile, and
shapes our Risk Management Principles, Risk Appetite, and Risk Culture.
The ERC is supported by Risk Oversight Committees including Global Asset Liability Committee, Credit Committee, Product
Oversight Committee, Operational Risk and Resilience Oversight Committee, Technology and Cyber Risk Committee,
Reinsurance Risk Oversight Committee, and Capital Outlook Committee.
Segment Risk Committees have also been established, each with mandates similar to the ERC with a focus on the applicable
segment (Asia, Canada, U.S., and Global WAM). All functional and segment risk oversight committees oversee our risks with
independent chairs. These committees may further delegate oversight activities to various subcommittees.
Three Lines Operating Model
Management has established an operating model that separates duties between risk taking, risk oversight, and independent
assurance as follows:
The First Line consists of the CEO, General Managers for the Segments and Business Units (“Business Management”), Group
Function Heads (“Group Functions”), and their respective teams. Business Management and Group Functions are accountable
for maintaining an effective control environment, managing risks arising from everyday operations, and overseeing the execution
of the business strategy. They have a responsibility to identify, assess, manage, monitor, and report on their risk exposures, and
to sufficiently document these activities.
The Second Line consists of oversight functions, which provide objective assessments to the Board, BRC and Audit Committee.
These include the Chief Risk Officer (“CRO”) who leads the Global Risk Management (“GRM”) function, the Global Compliance
Chief who leads the Global Compliance function, and the Chief Actuary who leads the Actuarial function1. Collectively, these
oversight functions design and implement policies and procedures to independently identify, assess, monitor, and report on risks.
They have a responsibility to oversee and objectively challenge the effectiveness of First Line risk management and internal
controls; to determine whether operations, results and risk exposures are consistent with Risk Appetite; and to sufficiently
document their activities.
The Third Line consists of the Chief Auditor and the Audit & Advisory Services team, which provides independent assurance to
the Board and management on the effectiveness of internal controls, risk management, and governance processes.
Risk Process
The Risk Process involves the First Line managing risk in alignment with the RAF and within Risk Limits, and the Second Line
overseeing risk management and providing objective challenges. It entails the First Line and the Second Line independently
identifying, assessing, monitoring, and reporting on our current risk profile and our risk profile under stressed conditions, with
appropriate controls and documentation.
Risk Identification
Risk identification is the first step in the Risk Process. Given the constantly evolving operating environment, risk identification is
an ongoing process conducted using a risk based approach that considers risk exposure size, likelihood of the risk occurring,
and its impact.
Risks within the Company’s strategic and business plans are identified and assessed for alignment with Risk Appetite at least
annually.
Risk identification distinguishes between the identification of risk events, their drivers, and their impacts. Multiple different drivers
can contribute to or result in the same risk event. One risk event can result in multiple different impacts.
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Risk Assessment
Risk assessment involves granular understanding of the probability of a risk event occurring as well as the potential impacts it
may have. Risk assessment must be current, timely, and of sufficient granularity and quality to support decision-making. It can
leverage both quantitative approaches and qualitative perspectives. On a Company-wide basis, multiple approaches are used to
assess risk individually and in aggregate.
Risk Management
Risks are effectively managed to an acceptable level. The First Line establishes processes and controls for managing risks
arising from their activities within stated Risk Appetite, which can include risk avoidance, risk acceptance, risk mitigation, and risk
transfer techniques. The Second Line provides an independent oversight and objective challenge.
Risk Monitoring
Risk exposures fluctuate over time. We monitor risk exposures on an ongoing basis and take appropriate action to keep
exposures within the Risk Appetite. At times, risk exposures may move beyond Risk Appetite into the tolerance range; in those
circumstances, we act to further mitigate or transfer the risk to avoid a breach of our Risk Limits.
Risk Reporting
The Company produces Risk Reporting that is accurate, timely, comprehensive and of sufficient quality, clarity, and granularity so
that it can be relied upon for decision-making.
Risk Profile and Stress Testing
Regular and timely stress testing, including sensitivity testing and scenario testing, is designed to facilitate risk identification and
assessment, which contributes to the establishment of risk mitigation plans and control. Stress testing supports strategic
decision-making and assesses the impact of severe but plausible events on our risk profile. Subject to the specific stress test, it
can inform:
•Evaluation of implications on earnings and capital;
•Evaluation of the Company’s liquidity profile;
•Identification of potential portfolio vulnerabilities, sensitivities, and concentrations;
•The establishment of the Company’s internal capital target ratios; and
•Validation of contingency plans.
A range of stress tests are regularly considered. On a regular basis, the Second Line establishes the parameters of stress testing
with the involvement of the First Line to determine appropriate scenario definitions and assumptions. Ad hoc stress testing is
often developed in response to changes in the environment or to aid management, BRC and the Board in decision-making. For
key exposures, stress testing is performed at least annually.
Risk Culture
The Company is committed to a set of shared values, which reflect our culture, inform our behaviours, actions, and decisions,
and help define how we work together. Refer to “Enterprise Strategy” above for more information on our values.
Risk Culture is a subset of the Company’s culture; it reflects norms of behaviours, actions, and decisions in relation to risk
awareness, risk taking, and risk oversight. A sound Risk Culture balances risk-return to remain within Risk Appetite and in
alignment with the ERM Framework. It emphasizes the importance of maintaining an effective control environment. It promptly
detects and remediates policy/limit breaches and operational incidents, and then follows up to understand root causes, enhances
preventative and detective controls, and takes appropriate disciplinary action if warranted.
We foster a sound Risk Culture that promotes integrity and risk awareness. We balance the level of risk with obligations to our
stakeholders. We incentivize behaviours, actions and decisions that achieve consistent and sustainable performance over the
long-term. Our values support our Risk Culture by creating an environment where we communicate openly, raise issues
proactively, take accountability, and make decisions that align to the ERM Framework.
Culture Risk is the risk that arises when there is misalignment between an organization’s desired culture and its actual culture
and the behaviours, decisions, and practices that are demonstrated and reinforced across the Company. Such misalignment can
undermine strategic objectives, regulatory compliance, ethical conduct, and effective risk management. Common drivers include
inconsistent leadership tone, unclear accountability, ineffective communication, or incentives that conflict with risk principles.
To manage Culture Risk effectively, the Company embeds cultural expectations into core business and talent practices, among
others, through:
•Enterprise-wide communication of our values;
•Performance assessment ratings that assess behaviours (‘how’) alongside outcomes (‘what’);
•Appropriate incentive compensation structures that do not encourage unnecessary risk-taking; and
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•Confidential reporting channels such as an ethics hotline to support a speak-up culture.
Culture alignment is reinforced through recruitment, onboarding, training, and leadership development, while governance
structures and escalation processes further strengthen accountability and cultural integrity.
Strategic Risk
Strategic risk is the risk of loss resulting from the inability to adequately plan or implement an appropriate business strategy that
allows us to effectively compete in the markets in which we operate, or to adapt to change in the external business, economic,
geopolitical, or regulatory environment.
Customer acquisition, loyalty and retention, and access to distributors are important to the Company’s success and are
influenced by many factors, including product features, prices, our distribution practices and regulations, service levels including
digital capabilities, investment performance, and our financial strength ratings and reputation. Our ability to effectively compete is
highly dependent upon being quick to react and adapt to changes from the external environment while continuing to proactively
drive innovation.
Strategic Risk Management Strategy
While the Board approves the overall strategy of the Company, the CEO and Executive Leadership Team establish and oversee
execution of business strategies and have accountability to understand and manage the risks embedded in these strategies.
They are supported by several processes:
•Strategic business, financial, and capital planning that is prepared by Executive Leadership Team and reviewed with the
Board;
•Performance and risk reviews of all key businesses with the CEO and annual reviews with the Board;
•Risk based capital allocation designed to encourage a consistent decision-making framework across the organization; and
•Review and approval of significant acquisitions and divestitures by the CEO and Deal Committee and, where appropriate,
the Board.
Reputation Risk
Our reputation is among our most valuable assets. Our Risk Management Principles compel us to protect our reputation and
brand.
Reputation risk is the risk that the Company’s corporate reputation may be eroded by adverse publicity, real or perceived, as a
result of business practices of the Company or its representatives, potentially resulting in damage to the Company’s franchise
value.
Reputation risk may arise from both internal and external drivers. This transverse nature of reputation risk, which can be a causal
risk driver, a risk event, or an impact arising from other risks, means that understanding and managing it cannot be done in
isolation. Reputation risk identification, assessment and monitoring processes and practices are embedded in:
•Business operations and management decisions;
•Governance and mitigation/control processes, including within the Crisis Management Standard, and risk monitoring
processes;
•Impact analysis of changes in society, social media, and political and regulatory factors;
•Regular amendments to the Code of Business Conduct and Ethics for review and sign off, as well as disclosure of conflicts
of interest by employees and directors; and
•Explicit discussion of corporate reputation as a valued asset within training materials.
Environmental, Social and Governance Framework
Sustainability issues may impact Manulife’s investments, underwriting, and operations. These impacts could lead to adverse
financial, operational, legal, reputational, or brand value risks for Manulife, due to Manulife’s actual or perceived actions or
inaction in relation to sustainability issues.
The Board’s Corporate Governance and Nominating Committee (“CGNC”) oversees Manulife’s environmental, social, and
governance (“ESG”) framework, including matters related to climate change strategy and disclosures. On a regular basis, the
CGNC is updated on relevant sustainability matters, including Manulife’s progress against the commitments set out in Manulife’s
Climate Action Plan. In addition to regular internal sessions, members of the CGNC participate in at least one externally
facilitated sustainability-related education session every two years.
The CGNC’s oversight complements the work of Manulife’s Executive Sustainability Council (“ESC”), which is composed of
senior executives, including the CEO, the Chief Sustainability Officer (“CSO”), and other functional and business leaders. The
ESC may rotate its Chair at the election of its members and is currently chaired by the General Counsel. The ESC generally
convenes on a monthly basis and is responsible for establishing the enterprise’s sustainability ambition, guiding the development
and execution of our sustainability strategy, and providing recommendations and direction on sustainability matters. The CSO
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chairs Manulife’s Sustainability Centre of Expertise (“CoE”), which consists of corporate function and business unit leads tasked
with leading the development and implementation of Manulife’s sustainability strategy and the integration of sustainability into
business unit strategies, policies, and procedures. The CoE is supported by a network of committees and working groups that
convene regularly to provide decision-making oversight and enable coordinated action across a range of sustainability topics.
Additionally, our Global Inclusion Strategy is led by our Global Chief Inclusion Officer, alongside the Global Inclusion Team and
Global Inclusion Council. The Council, chaired by our CEO and Chief People Officer, includes executive leaders who champion
inclusion within their business functions and turn strategy into action. Council members meet quarterly to champion initiatives
tailored to their respective functions, influencing inclusion around people, customer experience, and product design.
Climate Risk Management Strategy
Consistent with the International Sustainability Standards Board’s (“ISSB”) IFRS S2 “Climate-related Disclosures” standard,
which leverages the Taskforce on Climate-Related Financial Disclosures framework, Manulife defines climate-related risks as the
potential negative impacts from climate change on Manulife’s business model, strategy, and financial and operational resilience.
These may be experienced directly (e.g., through financial loss) and/or indirectly (e.g., through reputational harm), resulting from
the physical impacts of climate change or the transition to a low-carbon economy.
Climate-related risks are viewed as transverse risks that manifest across a diverse set of pathways, with the potential to affect
any of Manulife’s principal risks, including Strategic Risk (including Reputational), Market & Liquidity Risk, Credit & Investment
Risk, Insurance Risk, Operational Risk (including Legal) , and Technology & Cyber Risk. Failure to adequately prepare for the
potential impacts of climate change could result in material adverse impacts on Manulife’s balance sheet and/or Manulife’s ability
to operate effectively.
In response, we have enhanced the integration of climate-related risk into Manulife’s ERM Framework, with an aim of ensuring
that they are managed in alignment with Manulife’s overall risk management approach. Manulife’s Environmental Risk Policy,
and other relevant policies and standards, guide business operations in identifying and assessing climate-related risks. GRM
continues to enhance risk management practices to account for potential climate impacts across key areas, including in
Manulife’s investment decision-making processes, life insurance underwriting due diligence, and assessment of operational risks
and controls.
For details on our strategy to address climate change, please see Manulife’s “Climate Action Implementation Plan Report”. For
details on the management of material sustainability matters and performance data, please see Manulife’s annual “Sustainability
Report”, published in the second quarter of each year.
Strategic Risk Factors
We may not be successful in executing our business strategies or these strategies may not achieve our objectives.
•The global environment has a significant impact on our financial plans and ability to implement our business strategy.
•Our business strategy and associated financial plans are developed by considering forecasts of economic growth. Actual
economic growth can be significantly impacted by the macroeconomic environment and can deviate significantly from
forecasts, thus impacting our financial results and the ability to implement our business strategy.
•Operations in new markets may achieve low margins or may be unprofitable, and expansion in existing markets may be
affected by local economic and market conditions.
•Changes in the global environment can also have a significant impact on financial markets, including movements in interest
rates, spreads on fixed income assets, and returns on public equity and ALDA investments. Our financial plan, including
income, balance sheet, and capital projections are based on certain assumptions with respect to future interest rates and
spreads on fixed income assets, and future returns from our public equity and ALDA investments. Actual experience is highly
variable and can deviate significantly from our assumptions, thus impacting our financial results. For example, for changes
to interest rates, please refer to the risk factor “Prolonged changes in market interest rates may impact our net income
attributed to shareholders and capital ratios”.
•The spending and savings patterns of our customers can evolve, impacting the products and services we offer to our
customers.
•Customer behaviour and emergence of claims on our liabilities can change. For example, a prolonged period of economic
weakness in certain markets may adversely impact policyholders’ behaviour (such as higher withdrawals, lapses, lower
premium deposits, and lower policy persistency than anticipated), increase expenses and cost of funding, along with other
adverse impacts from continued uncertainty in our operating environment as noted in the Market & Liquidity Risk Factors
section below.
•A rise in geopolitical tensions and political risk either within or outside of jurisdictions in which we operate can trigger
changes in the global environment, overall regulatory landscape, and consumer behaviour, which can have various impacts
across our business. For example, economic sanctions imposed on a country could adversely impact our ability to achieve
specific business objectives. Military conflicts could drive financial and economic dislocations across global capital markets,
supply chains, or commodity markets. See also “Operational Risk Factors – Our operations face political, legal, operational,
and other risks that could negatively affect those operations or our results of operations and financial condition.”
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Adverse publicity, litigation or regulatory action resulting from our business practices or actions by our employees,
representatives and/or business partners could erode our corporate image and damage our franchise value and/or
create losses.
•Harm to a company’s reputation is often a consequence of risk control failure. Manulife’s reputation could also be harmed by
the actions of third parties with whom we do business. Our representatives include affiliated broker-dealers, agents,
wholesalers, and independent distributors, such as broker-dealers and banks, on whose services and representations our
customers rely. Business partners include, among others, joint venture partners and third parties to whom we outsource
certain functions and that we rely on to fulfill various obligations.
•If any of these representatives or business partners fail to adequately perform their responsibilities or monitor their own
risks, these failures could affect our business reputation and operations. While we seek to maintain adequate internal risk
management policies and procedures and protect against performance failures, events may occur involving our
representatives or our business partners. Such events could cause us to lose customers or cause us or our representatives
or business partners to become subject to legal, regulatory, economic or trade sanctions, which could have a material
adverse effect on our reputation, our business and our results of operations. For further discussion of government regulation
and legal proceedings, refer to “Government Regulation” in MFC’s Annual Information Form dated February 11, 2026, and
note 18 of the 2025 Annual Consolidated Financial Statements.
Our businesses are heavily regulated, and changes in regulation or laws – or in the interpretation or enforcement
thereof – may reduce our profitability and limit our growth.
•Our operations are subject to a wide variety of insurance and other laws and regulations including with respect to financial
crimes (which include, but are not limited to, money laundering, bribery and economic or trade sanctions), privacy, market
conduct, consumer protection, business conduct, prudential and other generally applicable non-financial requirements.
Legislators, regulators and self-regulatory or government authorities in Canada, the United States, Asia and other
jurisdictions regularly re-examine existing laws, regulations, rules and standards applicable to insurance companies,
investment advisors, broker-dealers and their products. Compliance with applicable laws and regulations is time consuming
and personnel-intensive, and changes in these laws and regulations, or in the interpretation or enforcement thereof, may
materially increase our direct and indirect compliance costs and other expenses of doing business, thus having a material
adverse effect on our results of operations and financial condition.
•Future regulatory capital, actuarial and accounting changes, including changes with a retroactive impact, could have a
material adverse effect on the Company’s consolidated financial condition, results of operations and regulatory capital both
on transition and going forward. In addition, such changes could have a material adverse effect on the Company’s position
relative to that of other Canadian and international financial institutions with which Manulife competes for business and
capital.
•In Canada, MFC and its principal operating subsidiary, MLI, are governed by the Insurance Companies Act (Canada)
(“ICA”). The ICA is administered, and the activities of the Company are supervised, by the Office of the Superintendent of
Financial Institutions (“OSFI”). MLI is also subject to regulation and supervision under the insurance laws of each of the
provinces and territories of Canada. Regulatory oversight is vested in various governmental agencies having broad
administrative power with respect to, among other things, dividend payments, capital adequacy and risk-based capital
requirements, asset and reserve valuation requirements, permitted investments and the sale and marketing of insurance
contracts. OSFI has an expanded mandate to supervise institutions to determine whether they have adequate policies and
procedures to protect against threats to integrity and security, including foreign interference. In general, OSFI has increased
their supervisory focus on other non-financial risks, which has led to new or enhanced regulations, including conduct risk,
third-party risk, cybersecurity, and operational resilience. These regulations focus on protecting policyholders, beneficiaries,
and the stability of the Canadian financial system, rather than investors, and may adversely impact shareholder value.
•Some recent examples of regulatory and professional standard developments, which could impact our net income attributed
to shareholders and/or capital position, are provided below.
◦A new Segregated Fund Guarantees LICAT capital framework became effective on January 1, 2025. The new
framework includes adjustments to the available capital calculation, adjustments to the Base Solvency Buffer and the
inclusion of transition measures. We continue to meet OSFI’s requirements and maintain capital in excess of regulatory
expectations.
◦The International Association of Insurance Supervisors (“IAIS”) announced the adoption of a new global Insurance
Capital Standard (“ICS”) at their annual conference in December 2024. LICAT continues to provide an appropriate risk-
based measure of group capital in Canada and we do not expect any impact from the adoption of ICS by IAIS.
◦The National Association of Insurance Commissioners (“NAIC”) continues to review and revise reserving and capital
methodologies as well as the overall risk management framework as required to keep pace with an evolving landscape.
These reviews will affect U.S. life insurers, including John Hancock, and could lead to increased reserving and/or capital
requirements for our business in the U.S. Additionally, in December 2020 the NAIC adopted a group capital calculation
(“GCC”) which included exemptions for certain insurance holding groups, including John Hancock and Manulife, from
the requirements of the GCC. Michigan, the lead state for NAIC regulation of John Hancock, amended its regulations in
March 2023 to adopt the NAIC GCC model language and the Michigan Department of Insurance and Financial Services
(“DIFS”) has promulgated implementing rules. As the Canadian group-wide supervisor, OSFI was determined to be a
“Recognize and Accept Jurisdiction” by the NAIC on December 18, 2024, providing mutual recognition and treatment of
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the Canadian group supervision and regulatory framework. Mutual recognition avoids redundant group oversight at the
John Hancock level by U.S. regulators, and Manulife and John Hancock have taken a leadership role to ensure the
NAIC developed a process that accommodates what OSFI would undertake. NAIC’s recognition of OSFI also eliminated
the need for John Hancock to file annual GCC filing waiver requests with the Michigan DIFS.
◦The use of asset-intensive reinsurance, where investment risk is transferred to the reinsurer along with insurance risk,
has been the subject of increased focus by insurance authorities in several jurisdictions. NAIC has adopted additional
guidelines regarding the use of asset-intensive reinsurance, however, we do not expect these changes will impact our
existing treaties; NAIC or other insurance regulatory authorities, may in the future impose additional rules or standards.
New guidelines or regulatory requirements may impact the reinsurance market and limit the availability of asset-
intensive reinsurance, increase its cost, or reduce the capital or risk management benefits of such reinsurance in a
manner that could have a material impact on Manulife.
◦Regulators in various jurisdictions in which we operate continue to reform their respective capital regulations. We
continue to closely monitor developments.
•Increasingly, global financial regulators are promulgating guidance and rules related to climate change and its potential
impacts on financial services firms. OSFI and several regulators across Asia have been engaging with industry to assess the
impacts of climate change and to set expectations on establishing climate transition plans, including ensuring effective risk
management and governance structures to manage climate change-related risks, and have begun releasing guidance and
disclosure requirements. There are also increasing expectations from investors, regulators, and other stakeholders to
provide comparable, decision-useful data and reporting on climate change-related risks and opportunities, including
performance metrics such as an organization’s Scope 1, 2 and 3 greenhouse gas emissions, alongside other indicators of
climate resilience and transition progress. Regulatory disclosure requirements are guided by private-sector bodies, where
there is a convergence in the industry around sustainability reporting frameworks. The IFRS Foundation’s ISSB is one such
body and has published standards for a comprehensive global baseline of sustainability disclosures for capital markets.
•In the United States, state insurance laws regulate most aspects of our business, and our U.S. insurance subsidiaries are
regulated by the insurance departments of the states in which they are domiciled and the states in which they are licensed.
State laws grant insurance regulatory authorities broad administrative powers with respect to, among other things: licensing
companies and agents to transact business; calculating the value of assets to determine compliance with statutory
requirements; mandating certain insurance benefits; regulating certain premium rates; reviewing and approving policy forms;
regulating unfair trade and claims practices, including through the imposition of restrictions on marketing and sales
practices, distribution arrangements, and payment of inducements; regulating advertising; protecting privacy; establishing
statutory capital and reserve requirements and solvency standards; fixing maximum interest rates on insurance policy loans
and minimum rates for guaranteed crediting rates on life insurance policies and annuity contracts; approving changes in
control of insurance companies; restricting the payment of dividends and other transactions between affiliates; and
regulating the types, amounts and valuation of investments. Changes in any such laws and regulations, or in the
interpretation or enforcement thereof by regulators, could significantly affect our business, results of operations and financial
condition.
•Currently, the U.S. federal government does not directly regulate the business of insurance. However, federal legislation and
administrative policies in several areas can significantly and adversely affect state-regulated insurance companies. These
areas include financial services regulation, securities regulation, pension regulation, privacy, tort reform legislation, and
taxation. In addition, under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), the U.S. Board
of Governors of the Federal Reserve has supervisory powers over non-bank financial companies that are determined to be
systemically important.
•Insurance guaranty associations in Canada and the United States have the right to assess insurance companies doing
business in their jurisdiction for funds to help pay the obligations of insolvent insurance companies to policyholders and
claimants. Typically, an insurer is assessed an amount related to its proportionate share of the line of business written by all
insurers in the relevant jurisdiction. Because the amount and timing of an assessment is beyond our control, the liabilities
that we have currently established for these potential liabilities may not be adequate, particularly if there is an increase in the
number of insolvent insurers, or if the insolvent insurers operated in the same lines of business and in the same jurisdictions
in which we operate.
•Manulife operates in numerous jurisdictions in Asia. These operations are subject to the regulations and laws in each local
jurisdiction, with the structure or model for oversight of insurance differing by jurisdiction. We are encouraged to see further
regional economic and trade integration in Asia, with most jurisdictions supportive of foreign investment, and the increasing
willingness of many regulators to benchmark domestic law and regulation against international standards and best practices.
However, the increasing geopolitical complexity, rising political and regulatory uncertainty, and regulatory tightening in some
jurisdictions have created heightened complexity and risk for Manulife to mitigate and navigate, which may adversely impact
shareholder value.
•While many of the laws and regulations to which we are subject are intended to protect policyholders, beneficiaries,
depositors and investors in our products and services, others also set standards and requirements for the governance of our
operations. Failure to comply with applicable laws or regulations could result in financial penalties or sanctions, which could
damage our reputation.
•All aspects of Manulife’s Global WAM businesses are subject to various laws and regulations around the world. These laws
and regulations are primarily intended to protect investment advisory clients, investors in registered and unregistered funds,
1 See “Caution regarding forward-looking statements” above.
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and clients of Manulife’s global retirement businesses. Agencies that regulate investment advisors, investment funds, and
retirement plan products and services have broad administrative powers, including the power to limit, restrict, or prohibit the
regulated entity or person from carrying on business if it fails to comply with such laws and regulations. Possible sanctions
for significant compliance failures include the suspension of individual employees, limitations on engaging in certain lines of
business for specified periods of time, revocation of investment advisor, and other registrations and censures and fines both
for individuals and Manulife, along with the resulting damage to our reputation.
•From time to time, regulators raise issues during examinations or audits of Manulife that could have a material adverse
impact on us. We cannot predict whether or when regulatory actions may be taken that could adversely affect our
operations. Our failure to comply with existing and evolving regulatory requirements could also result in regulatory sanctions
and could affect our relationships with regulatory authorities and our ability to execute our business strategies and plans. For
further discussion of government regulation and legal proceedings, refer to “Government Regulation” in MFC’s Annual
Information Form dated February 11, 2026, and note 18 of the 2025 Annual Consolidated Financial Statements. See also
“Operational Risk Factors – Our operations face political, legal, operational and other risks that could negatively affect those
operations or our results of operations and financial condition” for further discussion on the impact to our operations.
Changes in tax laws, tax regulations, or interpretations of such laws or regulations could make some of our products
less attractive to consumers, could increase our corporate taxes or cause us to change the value of our deferred tax
assets and liabilities as well as our tax assumptions included in the valuation of our insurance and investment contract
liabilities. This could have a material adverse effect on our business, results of operations and financial condition1.
•Many of the products that the Company sells benefit from one or more forms of preferred tax treatment under current
income tax regimes. For example, the Company sells life insurance policies that benefit from the deferral or elimination of
taxation on earnings accrued under the policy, as well as permanent exclusion of certain death benefits that may be paid to
policyholders’ beneficiaries. We also sell annuity contracts that allow the policyholders to defer the recognition of taxable
income earned within the contract. Other products that the Company sells, such as certain employer-paid health and dental
plans, also enjoy similar, as well as other, types of tax advantages. The Company also benefits from certain tax benefits,
including tax-exempt interest, dividends-received deductions, tax credits (such as foreign tax credits), and favourable tax
rates and/or income measurement rules for tax purposes.
•There is risk that tax legislation could be enacted that would lessen or eliminate some or all of the tax advantages currently
benefiting the Company, its policyholders, or its other clients. This could occur in the context of deficit reduction or other tax
reforms. The effects of any such changes could result in materially lower product sales, lapses of policies currently held,
and/or our incurrence of materially higher corporate taxes, any of which could have a material adverse effect on our
business, results of operations and financial condition.
•Additionally, the Company may be required to change its provision for income taxes or carrying amount of deferred tax
assets or liabilities if the characterization of certain items is successfully challenged by taxing authorities or if future
transactions or events, which could include changes in tax laws, tax regulations or interpretations of such laws or
regulations, occur. Any such changes could significantly affect the amounts reported in the consolidated financial statements
in the year these changes occur.
•In July 2025, the United States enacted significant tax legislation commonly referred to as the One Big Beautiful Bill Act
("OBBBA"). The OBBBA makes permanent many provisions of the Tax Cuts and Jobs Act of 2017 and introduces additional
changes affecting individuals and businesses. The key business related provisions include the permanent restoration of
100% bonus depreciation, full deductibility of domestic research & development expenses, modification of the deduction for
interest expense, restructuring the tax on global intangible low-taxed income (GILTI) and the deduction for foreign-derived
intangible income (FDII). The federal income tax rate of 21% was left unchanged. We have reviewed the OBBBA and
continue to monitor and model its potential impact on our operations and effective tax rate. Most provisions that represent
substantive changes to existing law took effect in 2025 or are scheduled to take effect in 2026. Based on our current
analysis of the provisions applicable to the Company, we do not expect any material impact.
•In November 2025, Canada introduced a federal budget that included several income tax items, including proposed
amendments to the foreign affiliate rules that are intended to specifically target certain foreign investments of Canadian
insurance companies, starting in 2026. Based on the stated scope of these proposed amendments, they are not expected to
have a material impact. We will continue to monitor the progress of these proposals for any further refinements before
enactment or additional interpretive guidance from the Department of Finance that may affect our analysis.
Access to capital may be negatively impacted by market conditions.
•Disruptions, uncertainty, or volatility in the financial markets may limit or delay our access to the capital markets to raise
capital required to operate our business, satisfy regulatory capital requirements, or meet our refinancing needs. Under
extreme conditions, we may be forced, among other things, to delay raising capital, issue different types of capital than we
would otherwise under normal conditions, issue shorter-term securities than we prefer, or issue securities that bear an
unattractive cost of capital which could decrease our financial flexibility, profitability, and/or dilute our existing shareholders.
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As a holding company, MFC depends on the ability of its subsidiaries to transfer funds to MFC to meet its obligations
and pay dividends. Subsidiaries’ remittance of capital depends on subsidiaries’ earnings, regulatory requirements and
restrictions, and macroeconomic and market conditions.
•MFC is a holding company and relies on dividends and interest payments from our insurance and other subsidiaries as the
principal source of cash flow to meet MFC’s obligations and pay dividends. As a result, MFC’s cash flows and ability to
service its obligations are dependent upon the earnings of its subsidiaries and the distribution of those earnings and other
funds by its subsidiaries to MFC. Substantially all of MFC’s business is currently conducted through its subsidiaries.
•The ability of MFC’s insurance subsidiaries to pay dividends to MFC in the future will depend on their earnings,
macroeconomic and market conditions, and their respective local regulatory requirements and restrictions, including capital
adequacy and requirements, exchange controls and economic or trade sanctions.
•MFC’s insurance subsidiaries are subject to a variety of insurance and other laws and regulations that vary by jurisdiction
and are intended to protect policyholders and beneficiaries in that jurisdiction first and foremost, rather than investors. These
subsidiaries are generally required to maintain solvency and capital standards as set by their local regulators and may also
be subject to other regulatory restrictions, all of which may limit the ability of subsidiary companies to pay dividends or make
distributions to MFC.
•Potential changes to regulatory capital and actuarial and accounting standards could also limit the ability of the insurance
subsidiaries to pay dividends or make distributions and could have a material adverse effect on internal capital mobility. We
may be required to raise additional capital, which could be dilutive to existing shareholders, or to limit the new business we
write, or to pursue actions that would support capital needs but adversely impact our subsequent earnings potential. In
addition, the timing and outcome of these initiatives could have a significantly adverse impact on our competitive position
relative to that of other Canadian and international financial institutions with which we compete for business and capital.
•The Company seeks to maintain capital in its regulated subsidiaries in excess of the minimum required in all jurisdictions in
which the Company does business. The minimum requirements in each jurisdiction may increase due to regulatory changes
and we may decide to maintain additional capital in our operating subsidiaries for competitive reasons, to fund expected
growth of the business or to deal with changes in the risk profile of such subsidiaries. Any such increases in the level of
capital may reduce the ability of the operating companies to pay dividends.
•The payment of dividends to MFC by MLI is subject to restrictions set out in the ICA. The ICA prohibits the declaration or
payment of any dividend on shares of an insurance company if there are reasonable grounds for believing: (i) the company
does not have adequate capital and adequate and appropriate forms of liquidity; or (ii) the declaration or the payment of the
dividend would cause the company to be in contravention of any regulation made under the ICA respecting the maintenance
of adequate capital and adequate and appropriate forms of liquidity, or of any order made to the company by the
Superintendent. All of our U.S. and Asian operating life insurance companies are subsidiaries of MLI. Accordingly, a
restriction on dividends from MLI would restrict MFC’s ability to obtain dividends from its U.S. and Asian businesses.
•Certain of MFC’s U.S. insurance subsidiaries also are subject to insurance laws in Michigan, New York and Massachusetts,
the jurisdictions in which these subsidiaries are domiciled, which impose general limitations on the payment of dividends and
other upstream distributions by these subsidiaries to MLI.
•Our Asian insurance subsidiaries are also subject to restrictions in the jurisdictions in which these subsidiaries are domiciled
which could affect their ability to pay dividends to MLI in certain circumstances.
The declaration and payment of dividends and the amount thereof is subject to change.
•The holders of common shares are entitled to receive dividends as and when declared by the Board, subject to the
preference of the holders of Class A Shares, Class B Shares, Class 1 Shares (collectively, the “Preferred Shares”) and any
other shares ranking senior to the common shares with respect to priority in payment of dividends. The declaration and
payment of dividends and the amount thereof is subject to the discretion of the Board of MFC and is dependent upon the
results of operations, financial condition, cash requirements and future prospects of, and regulatory and contractual
restrictions on the payment of dividends by MFC and other factors deemed relevant by the Board of MFC. Although MFC has
historically declared quarterly cash dividends on the common shares, MFC is not required to do so and the Board of MFC
may reduce, defer, or eliminate MFC’s common share dividend in the future.
•The foregoing risk disclosure in respect of the declaration and payment of dividends on the common shares applies equally in
respect of the declaration and payment of dividends on the Preferred Shares.
•See “Government Regulation” and “Dividends” in MFC’s Annual Information Form dated February 11, 2026 for a summary of
additional statutory and contractual restrictions concerning the declaration of dividends by MFC.
We may experience downgrades in our financial strength or credit ratings, which may materially adversely impact our
financial condition and results of operations.
•Credit rating agencies publish financial strength ratings on life insurance companies that are indicators of an insurance
company’s ability to meet contract holder and policyholder obligations. Credit rating agencies also assign credit ratings,
which are indicators of an issuer’s ability to meet the terms of its obligations in a timely manner and are important factors in
a company’s overall funding profile and ability to access external capital. Ratings reflect the views held by each credit
agency, which are subject to change based on various factors that may be within or beyond a company’s control.
•Ratings are important factors in establishing the competitive position of insurance companies, maintaining public confidence
in products being offered, and determining the cost of capital. A ratings downgrade, or the potential for such a downgrade,
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could adversely affect our operations and financial condition. A downgrade could, among other things, increase our cost of
capital and limit our access to the capital and loan markets; cause some of our existing liabilities to be subject to
acceleration, additional collateral support, changes in terms, or additional financial obligations; result in the termination of
our relationships with broker-dealers, banks, agents, wholesalers and other distributors of our products and services;
increase our cost of hedging; unfavourably impact our ability to execute on our hedging strategies; materially increase the
number of surrenders, for all or a portion of the net cash values, by the owners of policies and contracts we have issued;
impact our ability to obtain reinsurance at reasonable prices or at all; and materially increase the number of withdrawals by
policyholders of cash values from their policies and reduce new sales.
Competitive factors may adversely affect our market share and profitability.
•The insurance, wealth and asset management, and banking industries are highly competitive. Our competitors include other
insurers, securities firms, investment advisors, asset managers, banks and other financial institutions. The rapid
advancement of new technologies, such as blockchain, AI (e.g., generative AI) and advanced analytics, may enable other
non-traditional firms (e.g., big technology competitors providing financial products and services) to compete directly in the
industry space, or offer services to our traditional competitors to enhance their value propositions. The rapid growth and
availability of AI and generative AI technologies presents significant opportunities to enhance customer experience, improve
business decisions, manage risk and drive operational efficiencies, however, there can be no assurances that the use of AI
and generative AI technologies will have their intended effects, appropriately or sufficiently replicate certain outcomes, or
accurately predict future events or exposures. The use of AI and generative AI technologies presents complex challenges,
including balancing and mitigating potential risks posed by the development or deployment of AI technologies, such as the
risk of biased results or unreliable outputs from AI resulting from incomplete or biased data sets. Additionally, future legislation
may restrict certain usage of AI models or technologies or data that feed into AI models or technologies, which could impact
our ability to effectively use such models or technology.
•The impact from technological disruption may result in our competitors improving their customer experience, product offerings
and business costs. Our competitors compete with us for customers, access to distribution channels such as brokers and
independent agents, and for employees. In some cases, competitors may be subject to less onerous regulatory requirements,
have lower operating costs or have the ability to absorb greater risk while maintaining their financial strength ratings, thereby
allowing them to price their products more competitively or offer features that make their products more attractive. These
competitive pressures could result in lower new business volumes and increased pricing pressures on a number of our
products and services that may harm our ability to maintain or increase our profitability. Due to the highly competitive nature
of the financial services industry, there can be no assurance that we will continue to effectively compete with our traditional
and non-traditional industry rivals, and competitive pressure may have a material adverse effect on our business, results of
operations and financial condition.
We are exposed to investors trying to profit from short positions in our stock.
•Short sellers may seek to profit from a decline in the price of our common shares. Their actions and public statements,
including encouraging others to take short positions in our shares, could contribute to downward pressure on our share price
from which they seek to profit. The existence of such short positions and the related publicity could lead to increased
volatility in our common share price.
Industry trends could adversely affect the profitability of our businesses.
•Our business segments continue to be influenced by a variety of trends that affect our business and the financial services
industry in general. The impact of the volatility and instability of the financial markets on our business is difficult to predict and
the results of operations and our financial condition may be significantly impacted by general business and economic trends
in the geographies in which we operate. These conditions include, but are not limited to, market factors, such as public equity,
foreign currency, interest rate and other market risks, demographic shifts, consumer behaviours, and governmental policies
(e.g., fiscal, monetary, and global trade). In addition, the future of global trade remains uncertain, as companies and countries
look to decrease reliance on global supply chains, and countries implement increased protectionist measures, including
through protectionist trade policies and tariffs. Such policies and measures, and increasing economic nationalism could
reshape global alliances and impact the economies in which we operate. The Company’s business plans, results of
operations, and financial condition have been negatively impacted in the past and may be negatively affected in the future.
We may face unforeseen liabilities or asset impairments arising from possible mergers with, or acquisitions and
dispositions of, or strategic investments in, businesses or difficulties integrating acquired businesses.
•We have engaged in mergers with, acquisitions and dispositions of, or strategic investments in, businesses in the past and
expect to continue to do so in the future as we may deem appropriate. There could be unforeseen liabilities or asset
impairments, including goodwill impairments that arise in connection with the businesses that we may sell, have acquired, or
may acquire in the future. In addition, there may be liabilities or asset impairments that we fail, or are unable, to discover in
the course of performing due diligence investigations on acquisition targets. Furthermore, the use of our own funds as
consideration in any acquisition would consume capital resources that would no longer be available for other corporate
purposes.
•Our ability to achieve some or all of the benefits we anticipate from any mergers with, acquisitions and dispositions of, or
strategic investments in, businesses will depend in large part upon our ability to successfully integrate the businesses in an
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efficient and effective manner. We may not be able to integrate the businesses smoothly or successfully, and the process
may take longer than expected. The integration of operations may require the dedication of significant management
resources, which may distract management’s attention from our day-to-day business. Mergers with, acquisitions and
dispositions of, or strategic investments in, operations outside of North America, especially any acquisition in a jurisdiction in
which we do not currently operate, may be particularly challenging or costly to integrate. If we are unable to successfully
integrate the operations of any acquired businesses, we may be unable to realize the benefits we expect to achieve as a
result of the acquisitions, and the results of operations may be less than expected.
If our businesses do not perform well, or if the outlook for our businesses is significantly lower than historical trends,
we may be required to recognize an impairment of goodwill or intangible assets or to establish a valuation allowance
against our deferred tax assets, which could have a material adverse effect on our results of operations and financial
condition.
•Goodwill represents the excess of the amounts we paid to acquire subsidiaries and other businesses over the fair value of
their net identifiable assets at the date of acquisition. Intangible assets represent assets that are separately identifiable at
the time of an acquisition and provide future benefits such as the John Hancock brand.
•As outlined below under “Critical Actuarial and Accounting Policies – Goodwill and Intangible Assets”, goodwill and intangible
assets with indefinite lives are tested at least annually for impairment at the cash generating unit (“CGU”) or group of CGUs
level, representing the smallest group of assets that is capable of generating largely independent cash flows. As a result of
the impact of economic conditions and changes in product mix and the granular level of goodwill testing under IFRS,
additional impairment charges could occur in the future. Any impairment in goodwill would not affect LICAT capital.
•If market conditions deteriorate in the future and, in particular, if MFC’s common share price is low relative to book value per
share, if the Company’s actions to limit risk associated with its products or investments cause a significant change in any
one CGU’s recoverable amount, or if the outlook for a CGU’s results deteriorate, the Company may need to reassess the
value of goodwill and/or intangible assets which could have a material adverse effect on our results of operations and
financial condition.
•Deferred income tax balances represent the expected future tax effects of the differences between the book and tax basis of
assets and liabilities, loss carry forwards and tax credits. Deferred tax assets are recorded when the Company expects to
claim deductions on tax returns in the future for expenses that have already been recorded in the financial statements.
•The availability of those deductions is dependent on future taxable income against which the deductions can be made.
Deferred tax assets are assessed periodically by management to determine if they are realizable.
•Factors in management’s determination include the performance of the business including the ability to generate gains from
a variety of sources and tax planning strategies. If, based on information available at the time of the assessment, it is
determined that the deferred tax asset will not be realized, then the deferred tax asset is reduced to the extent that it is no
longer probable that the tax benefit will be realized.
We may not be able to protect our intellectual property and may be subject to infringement claims.
•We rely on a combination of registrations, contractual rights and copyright, trademark, patent, and trade secret laws to
establish and protect our intellectual property. In particular, we have invested considerable resources in promoting and
protecting the brand names “Manulife” and “John Hancock” and expect to continue to do so. Although we use a broad range
of measures to protect our intellectual property rights, third parties may infringe or misappropriate our intellectual property.
As the occurrence of potential infringements or misappropriations against our intellectual property increases, we may have
to litigate more often to enforce and protect our copyrights, trademarks, patents, trade secrets and know-how or to
determine their scope, validity, or enforceability, which represents a diversion of resources that may be significant in amount
and may not prove successful. The loss of intellectual property protection or the inability to secure or enforce the protection
of our intellectual property assets could have a material adverse effect on our business and our ability to compete.
•We also may be subject to costly litigation in the event that another party alleges our operations or activities infringe upon its
intellectual property rights. Third parties may have, or may eventually be issued, patents that could be infringed by our
products, methods, processes, or services. Any party that holds such a patent could make a claim of infringement against
us. We may also be subject to claims by third parties for breach of copyright, trademark, trade secret or license usage rights.
Any such claims and any resulting litigation could result in significant liability for damages. If we were found to have infringed
a third-party patent or other intellectual property rights, we could incur substantial liability, and in some circumstances could
be enjoined from providing certain products or services to our customers, or utilizing and benefiting from certain methods,
processes, copyrights, trademarks, trade secrets, or licenses, or alternatively could be required to enter into costly licensing
arrangements with third parties, all of which could have a material adverse effect on our business, results of operations and
financial condition.
Applicable laws may discourage takeovers and business combinations that common shareholders of MFC might
consider in their best interests.
•The ICA contains restrictions on the purchase or other acquisition, issue, transfer and voting of the shares of an insurance
company. In addition, under applicable U.S. insurance laws and regulations in states where certain of our insurance
company subsidiaries are domiciled, no person may acquire control of MFC without obtaining prior approval of those states’
insurance regulatory authorities. These restrictions may delay, defer, prevent, or render more difficult a takeover attempt that
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common shareholders of MFC might consider in their best interests. For instance, they may prevent shareholders of MFC
from receiving the benefit from any premium to the market price of MFC’s common shares offered by a bidder in a takeover
context. Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing
market price of MFC’s common shares if they are viewed as discouraging takeover attempts in the future.
Entities within the MFC group are interconnected which may make separation difficult.
•MFC operates in local markets through subsidiaries and branches of subsidiaries. These local operations are financially and
operationally interconnected to lessen expenses, share and reduce risk, and efficiently utilize financial resources. In general,
external capital required for companies in the Manulife group has been raised at the MFC level in recent years and then
transferred to other entities primarily as equity or debt capital as appropriate. Other linkages include policyholder and other
creditor guarantees and other forms of internal support between various entities, loans, capital maintenance agreements,
derivatives, shared services and affiliate reinsurance treaties. Accordingly, the risks undertaken by a subsidiary may be
transferred to or shared by affiliates through financial and operational linkages. Some of the consequences of this are:
◦Financial difficulties at a subsidiary may not be isolated and could cause material adverse effects on affiliates and the
group as a whole.
◦Linkages may make it difficult to dispose of or separate a subsidiary or business within the group by way of a spin-off or
similar transaction, and the disposition or separation of a subsidiary or business may not fully eliminate the liability of
the Company and its remaining subsidiaries for shared risks. Issues raised by such a transaction could include: (i) the
Company cannot terminate, without policyholder consent, and in certain jurisdictions regulator consent, parental
guarantees on in-force policies and therefore would continue to have residual risk under any such non-terminated
guarantees; (ii) internal capital mobility and efficiency could be limited; (iii) significant potential tax consequences; (iv)
uncertainty about the accounting and regulatory outcomes of such a transaction; (v) obtaining any other required
approvals; (vi) there may be a requirement for significant capital injections; and (vii) the transaction may result in
increased sensitivity of net income attributed to shareholders and capital of MFC and its remaining subsidiaries to
market declines.
We may not be able to meet the evolving expectations of clients, shareholders, or regulators as they pertain to our
sustainability commitments, and/or stewardship practices, and may not be able to achieve certain stated sustainability
commitments.
•Manulife continues to advance its sustainability commitments, including climate-related commitments, in alignment with our
business priorities, stakeholder expectations, and evolving regulatory requirements. These commitments are supported by
policies and processes designed to manage associated risks and opportunities across operations, investments, and
products. Failure to achieve stated commitments may result in reputational, operational, and/or legal consequences.
•Internal or external factors, including, but not limited to, aspects such as shifts to regulatory priorities, changes in market
conditions and conflicting stakeholder sentiment, may affect Manulife’s ability to meet some or all of its sustainability
commitments. In particular, assumptions underlying forward-looking sustainability commitments, including commitments in
line with net-zero scenarios, are subject to change and sensitive to market and regulatory conditions outside of Manulife’s
control and influence. Manulife monitors regulatory and market developments and engages stakeholders to seek to ensure
its sustainability strategy remains aligned with evolving expectations. However, different stakeholder groups may have
divergent views on sustainability matters. This divergence increases the risk that action, or inaction, on sustainability matters
will be perceived negatively by at least some stakeholders thereby potentially adversely impacting our business or
reputation. Additionally, because Manulife operates in multiple jurisdictions, it may be subject to differing or competing
regulatory requirements and expectations, which may create operational and compliance challenges.
•Manulife annually discloses its sustainability priorities and performance informed by widely accepted frameworks (e.g., the
IFRS Foundation’s ISSB standards). Stakeholders relying, in full or in part, on sustainability performance data in their
evaluation of Manulife for investment, employment and/or product selection purposes may rely on criteria that deviate from
Manulife’s understanding and prioritization of material sustainability issues.
•Manulife seeks to incorporate sustainability factors, where appropriate, into investment practices of its General Account, in
line with efforts to achieve positive risk-adjusted returns. We seek to address material financial risks and opportunities that
we believe may arise from systemic global challenges such as climate change and have therefore made commitments to
address transition risks associated with global efforts to limit greenhouse gas emissions. The integration of sustainability
risks, in appropriate balance with reasonable economic and market scenarios, can influence asset pricing, portfolio
alignment and performance, and erode our ability to achieve climate commitments, if transition risks fail to materialize in line
with expectations.
•In our third-party asset management business, success is judged by how well we meet clients’ needs and objectives. We
integrate sustainability factors into investment practices where appropriate and in alignment with our fiduciary
responsibilities. Active management and ongoing investment stewardship practices, such as direct company engagement,
do not guarantee specific outcomes with respect to environmental or social practices of investees. If stewardship efforts do
not evolve in line with client expectations or market developments, Manulife may be exposed to additional reputational,
operational, and/or legal risk and financial loss.
•As regulatory scrutiny increases globally, including around sustainability-related disclosures and investment practices, the
risk of enforcement actions or litigation is growing, particularly in relation to perceived misstatements and “greenwashing”.
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The availability and reliability of third-party sustainability data, along with the ongoing evolution of commonly accepted
accounting standards (e.g., Corporate Greenhouse Gas Protocol, Partnership for Carbon Accounting in Finance), and
target-setting frameworks, may impact the consistency and reliability of Manulife’s performance against key sustainability
metrics and targets, which remain subject to change. Incomplete, inconsistent, or unavailable data may lead to restatements
or revisions in reported performance and could create the perception of misstatements and “greenwashing”, potentially
resulting in litigation. Manulife continues to monitor and adapt to these developments to mitigate potential compliance and
reputational risks and has established controls to strengthen the reliability and quality of statements related to environmental
and social outcomes.
Market & Liquidity Risk
Market risk is the risk of loss resulting from market price volatility, interest rate change, credit and swap spread changes, and
adverse foreign currency exchange rate movements. Market price volatility primarily relates to changes in prices of publicly
traded equities and alternative long-duration assets. The profitability of our insurance and annuity products, as well as the fees
we earn in our investment management business, are subject to market risk.
Liquidity risk is the risk of loss resulting from the inability to access sufficient funds or liquid assets to meet expected and
unexpected cash and collateral demands.
IFRS 7 Disclosures
Text and tables in this and the following section (“Market Risk Sensitivities and Market Risk Exposure Measures”) include
disclosures on market and liquidity risk in accordance with IFRS 7 “Financial Instruments – Disclosures”, and discussions on how
we measure risk and our objectives, policies and methodologies for managing them. Disclosures in accordance with IFRS 7 are
identified by a vertical line in the left margin of each page. The identified text and tables represent an integral part of our audited
2025 Annual Consolidated Financial Statements. The fact that certain text and tables are considered an integral part of the 2025
Annual Consolidated Financial Statements does not imply that the disclosures are of any greater importance than the sections
not part of the disclosures. Accordingly, the “Risk Management and Risk Factors” should be read in its entirety.
Market & Liquidity Risk Management Strategy
Market & liquidity risk management strategy is governed by the Global Asset Liability Committee which oversees the market and
liquidity risk program. Our overall strategy to manage our market & liquidity risks incorporates several component strategies,
each targeted to manage one or more of the market & liquidity risks arising from our businesses. At an enterprise level, these
strategies are designed to manage our aggregate exposures to market & liquidity risks against limits associated with earnings
and capital volatility.
The following table outlines our key market & liquidity risks and identifies the risk management strategies which contribute to
managing these risks.
| Risk Management Strategy | Key Market & Liquidity Risk | ||||
|---|---|---|---|---|---|
| Public Equity<br><br>Risk | Interest Rate<br><br>and Spread Risk | ALDA<br><br>Risk | Foreign Currency<br><br>Exchange Risk | Liquidity<br><br>Risk | |
| Product design and pricing | ü | ü | ü | ü | ü |
| Dynamic hedging | ü | ü | ü | ü | |
| Macro equity risk hedging | ü | ü | ü | ||
| Asset liability management | ü | ü | ü | ü | ü |
| Foreign currency exchange management | ü | ü | |||
| Liquidity risk management | ü |
Public Equity Risk – To manage public equity risk from our insurance and annuity businesses, we primarily use a dynamic
hedging strategy which is complemented by a general macro equity risk hedging strategy, in addition to asset liability
management strategies. Our strategies employed for dynamic hedging and macro equity risk hedging expose the Company to
additional risks. See “Market & Liquidity Risk Factors” below for more information.
Interest Rate and Spread Risk – To manage interest rate and spread risk, we primarily employ asset liability management
strategies to manage the duration of our fixed income investments and execute interest rate hedges.
ALDA Risk – We seek to limit concentration risk associated with ALDA performance by investing in a diversified basket of assets
including commercial real estate, timber, farmland, private equities, infrastructure, and energy assets. We further diversify risk by
managing investments against established investment and risk limits.
Foreign Currency Exchange Risk – Our policy is to generally match the currency of our assets with the currency of the
liabilities they support. Where assets and liabilities are not currency matched, we seek to hedge this exposure where appropriate
to stabilize our consolidated capital positions and remain within our enterprise foreign exchange risk limits.
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Liquidity Risk – In the operating companies, cash and collateral demands arise day-to-day to fund policyholder benefits,
customer withdrawals, reinsurance settlements, derivative instrument settlements/collateral pledging, expenses, and investment
activities. Under stressed conditions, additional cash and collateral demands could arise from changes to policyholder
termination or policy renewal rates, withdrawals of customer deposit balances, loan extensions, derivative settlements or
collateral demands, and reinsurance settlements.
Our liquidity risk management framework is designed to provide adequate liquidity to cover cash and collateral obligations as
they come due, and to sustain and grow operations in both normal and stressed conditions. See “Liquidity Risk Management
Strategy” below for more information.
Product Design and Pricing Strategy
Our policies, standards, and guidelines, with respect to product design and pricing, are designed with the objective of aligning
our product offerings with our risk taking philosophy and risk appetite, and in particular, ensuring that incremental risk generated
from new sales aligns with our strategic risk objectives and risk limits. The specific design features of our product offerings,
including level of benefit guarantees, policyholder options, fund offerings and availability restrictions as well as our associated
investment strategies, help to mitigate the level of underlying risk. We regularly review and modify key features within our product
offerings, including premiums and fee charges with a goal of meeting profit targets and staying within risk limits. Certain of our
general fund adjustable benefit products have minimum rate guarantees. The rate guarantees for any particular policy are set at
the time the policy is issued and governed by insurance regulation in each jurisdiction where the products are sold. The
contractual provisions allow crediting rates to be reset at pre-established intervals subject to the established minimum crediting
rate guarantees. The Company may partially mitigate the interest rate exposure by setting new rates on new business and by
adjusting rates on in-force business where permitted. In addition, the Company partially mitigates this interest rate risk through its
asset liability management process, product design elements, and crediting rate strategies.
Hedging Strategies for Public Equity Risks
The Company’s exposure to movement in public equity market values primarily arises from insurance contract liabilities related to
variable annuity guarantees and general fund public equity investments.
We seek to manage public equity risk arising from exposures in our insurance contract liabilities through our dynamic and macro
equity risk hedging strategy.
Variable Annuity Dynamic Hedging Strategy
The variable annuity dynamic hedging strategy is designed to hedge the sensitivity of variable annuity guarantee insurance
contract liabilities to fund performance (both public equity and bond funds) and interest rate movements. The objective of the
variable annuity dynamic hedging strategy is to offset, as closely as possible, the change in the economic value of guarantees
with the profit and loss from our hedge asset portfolio.
Our variable annuity dynamic hedging program uses a variety of exchange-traded and over-the-counter (“OTC”) derivative
contracts to offset the change in value of variable annuity guarantees. The main derivative instruments used are equity index
futures, government bond futures, currency futures, interest rate swaps, total return swaps, equity options, and interest rate
swaptions. The hedge instruments’ positions against insurance contract liabilities are continuously monitored as market
conditions change. As necessary, the hedge asset positions will be dynamically rebalanced to stay within established limits. We
may also utilize other derivatives with the objective to improve hedge effectiveness opportunistically.
Our variable annuity guarantee dynamic hedging strategy is not designed to completely offset the sensitivity of insurance
contract liabilities to all risks associated with the guarantees embedded in these products. The profit (loss) on the hedge
instruments will not completely offset the underlying losses (gains) related to the guarantee liabilities hedged because:
•Policyholder behaviour and mortality experience are not hedged;
•Risk adjustment related to cost of guarantees in the insurance contract liabilities is largely hedged;
•A portion of interest rate risk is not hedged;
•Credit spreads may widen and actions might not be taken to adjust accordingly;
•Fund performance on a small portion of the underlying funds is not hedged due to lack of availability of effective exchange-
traded hedge instruments;
•Performance of the underlying funds hedged may differ from the performance of the corresponding hedge instruments;
•Correlations between interest rates and equity markets could lead to unfavourable material impacts;
•Unfavourable hedge rebalancing costs can be incurred during periods of high volatility from equity markets, bond markets,
and / or interest rates, which is magnified when these impacts occur concurrently; and
•Not all other risks are hedged.
Differences in the profit (loss) on the hedge instruments versus the underlying losses (gains) related to the guarantee liabilities
hedged are reported in CSM.
We seek to manage interest rate risk arising from our variable annuity business that is not dynamically hedged through our asset
liability management strategy.
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Macro Equity Risk Hedging Strategy
The objective of the macro equity risk hedging program is to maintain our overall earnings sensitivity to public equity market
movements within our Board approved risk appetite limits. The macro equity risk hedging program is designed to hedge earnings
sensitivity due to movements in public equity markets arising from all sources (outside of dynamically hedged exposures).
Sources of equity market sensitivity addressed by the macro equity risk hedging program include general fund equity holdings
backing guaranteed, and adjustable liabilities.
Asset Liability Management Strategy
Our asset liability management strategy is designed to help ensure that the market risks embedded in our assets and liabilities
held in the Company’s general fund are effectively managed and that risk exposures arising from these assets and liabilities are
maintained within risk limits. The embedded market risks include risks related to the level and movement of interest rates and
credit and swap spreads, public equity market performance, ALDA performance, and foreign currency exchange rate
movements.
General fund product liabilities are categorized into groups with similar characteristics in order to support them with a specific
asset strategy. We seek to align the asset strategy for each group to the premium and benefit patterns, policyholder options and
guarantees, and crediting rate strategies of the products they support. The strategies are set using portfolio analysis techniques
intended to optimize returns, subject to considerations related to regulatory and economic capital requirements, and risk
tolerances. They are designed to achieve broad diversification across asset classes and individual investment risks while being
suitably aligned with the liabilities they support. The strategies encompass asset mix, quality rating, term profile, liquidity,
currency, and industry concentration targets.
Products which feature guaranteed liability cash flows (i.e., where the projected net flows remain largely unaffected by economic
scenarios) are managed according to a target return investment strategy. The products backed by this asset group include:
•Accumulation annuities (other than annuities with pass-through features), which are primarily short-to-medium-term
obligations and offer interest rate guarantees for specified terms on single premiums. Withdrawals may or may not have
market value adjustments;
•Payout annuities, which have no surrender options and include predictable and very long-dated obligations; and
•Insurance products, with recurring premiums extending many years in the future, and which also include a significant
component of very long-dated obligations.
We seek to manage the assets backing these long-dated benefits to achieve a target return sufficient to support the obligations
over their lifetime, subject to established risk tolerances and the impact of regulatory and economic capital requirements. Fixed
income assets are managed to a benchmark developed to minimize interest rate risk against the liability cash flows. Utilizing
ALDA and public equity investments provide a suitable match for long-duration liabilities that also enhances long-term investment
returns and reduces aggregate risk through diversification.
For insurance and annuity products where significant pass-through features exist, a total return strategy approach is used,
generally combining fixed income with ALDA and public equity investments. ALDA and public equity may be included to enhance
long-term investment returns and reduce aggregate risk through diversification. Target investment strategies are established
using portfolio analysis techniques that seek to optimize long-term investment returns while considering the risks related to
embedded product guarantees and policyholder withdrawal options, the impact of regulatory and economic capital requirements
and considering management tolerances with respect to short-term income volatility and long-term tail risk exposure. For these
pass-through products such as participating insurance and universal life insurance, the investment performance of assets
supporting the liabilities will be largely passed through to policyholders as changes in the amounts of dividends declared or rates
of interest credited, subject to embedded minimum guarantees. Shorter duration liabilities such as fixed deferred annuities do not
incorporate ALDA and public equity investments into their target asset mixes. Authority to manage our investment portfolios is
delegated to investment professionals who manage to benchmarks derived from the target investment strategies established for
each group, including interest rate risk tolerances.
Our asset liability management strategy incorporates a wide variety of risk measurement, risk mitigation and risk management,
and hedging processes. The liabilities and risks to which the Company is exposed, however, cannot be completely matched or
hedged due to both limitations on instruments available in investment markets and uncertainty of impact on liability cash flows
from policyholder experience/behaviour.
Foreign Currency Exchange Risk Management Strategy
Our policy is to generally match the currency of our assets with the currency of the liabilities they support. Where assets and
liabilities are not currency matched, we seek to hedge this exposure where appropriate to stabilize our earnings and consolidated
capital positions and remain within our enterprise foreign exchange risk limits.
Risk from small balance sheet mismatches is accepted if managed within set risk limits. Risk exposures are measured in terms
of potential changes in earnings and capital ratios, due to foreign currency exchange rate movements, determined to represent a
specified likelihood of occurrence based on internal models.
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Liquidity Risk Management Strategy
Global liquidity management policies and procedures are designed to provide adequate liquidity to cover cash and collateral
obligations as they come due, and to sustain and grow operations in both normal and stressed conditions. They consider legal,
regulatory, tax, operational or economic impediments to inter-entity funding. The asset mix of our balance sheet takes into
account the need to hold adequate unencumbered and appropriate liquid assets to satisfy the requirements arising under
stressed scenarios and to allow our liquidity ratios to remain strong. We manage liquidity centrally and closely monitor the
liquidity positions of our principal subsidiaries.
We seek to mitigate liquidity risk by diversifying our business across different products, markets, geographical regions, and
policyholders. We design insurance products to encourage policyholders to maintain their policies in-force, to help generate a
diversified and stable flow of recurring premiums. We design the policyholder termination features with the goal of mitigating the
financial exposure and liquidity risk related to unexpected policyholder terminations. We establish and implement investment
strategies intended to match the term profile of the assets to the liabilities they support, taking into account the potential for
unexpected policyholder terminations and resulting liquidity needs. Liquid assets represent a large portion of our total assets. We
aim to reduce liquidity risk in our businesses by diversifying our funding sources and appropriately managing the term structure
of our funding. We forecast and monitor daily operating liquidity and cash movements in various individual entities and
operations as well as centrally, aiming to ensure liquidity is available and cash is employed optimally.
We also maintain centralized cash pools and access to other sources of liquidity and contingent liquidity such as repurchase
funding agreements. Our centralized cash pools consist of cash or near-cash, high quality short-term investments that are
continually monitored for their credit quality and market liquidity.
As at December 31, 2025, the Company held $276.0 billion in cash and cash equivalents, comprised of cash on deposit,
Canadian and U.S. Treasury Bills and high quality short-term investments, and marketable securities comprised of investment
grade government and agency bonds, investment grade corporate bonds, investment grade securitized instruments, publicly
traded common stocks and preferred shares, compared with $263.3 billion as at December 31, 2024 as noted in the table below.
| As at December 31, | 2024 |
|---|---|
| ( millions, unless otherwise stated) | |
| Cash and cash equivalents | $25,789 |
| Marketable securities | |
| Government bonds (investment grade) | 80,891 |
| Corporate bonds (investment grade) | 122,324 |
| Securitized – ABS, CMBS, RMBS (investment grade) | 1,758 |
| Public equities | 32,576 |
| Total marketable assets | 237,549 |
| Total cash and cash equivalents and marketable securities(1) | $263,338 |
All values are in US Dollars.
(1)Including $17.3 billion encumbered cash and cash equivalents and marketable securities as at December 31, 2025 (2024 – $15.6 billion).
We have established a variety of contingent liquidity sources. These include, among others, a $500 million committed unsecured
revolving credit facility with certain Canadian chartered banks available for MFC, and a US$500 million committed unsecured
revolving credit facility with certain U.S. banks available for MFC and certain of its U.S. subsidiaries. There were no outstanding
borrowings under these facilities as at December 31, 2025 (2024 – $nil). In addition, John Hancock Life Insurance Company
(U.S.A.) (“JHUSA”) is a member of the Federal Home Loan Bank of Indianapolis (“FHLBI”), which enables the Company to
obtain loans from FHLBI as an alternative source of liquidity that is collateralizable by qualifying mortgage loans, mortgage-
backed securities, municipal bonds, and U.S. Treasury and Agency securities. As at December 31, 2025, JHUSA had an
estimated maximum borrowing capacity of US$3.8 billion (2024 – US$3.8 billion) based on regulatory limitations with an
outstanding balance of US$500 million (2024 – US$500 million) under the FHLBI facility.
The following table outlines the maturity of the Company’s significant financial liabilities.
Maturity of financial liabilities
| As at December 31, 2025 | 1 to 3<br><br>years | 3 to 5<br><br>years | Over 5<br><br>years | Total |
|---|---|---|---|---|
| ( millions) | ||||
| Long-term debt(1) | $958 | $- | $4,986 | $7,685 |
| Capital instruments(1) | - | - | 6,990 | 6,990 |
| Derivatives | 1,746 | 875 | 9,456 | 14,347 |
| Deposits from Bank clients(2) | 4,441 | 2,804 | - | 24,707 |
| Lease liabilities | 138 | 49 | 46 | 334 |
All values are in US Dollars.
(1)The amounts shown above are net of the related unamortized deferred issue costs.
(2)Carrying value and fair value of deposits from Bank clients as at December 31, 2025 were $24,707 million and $24,945 million, respectively (2024 – $22,063
million and $22,270 million, respectively). Fair value is determined by discounting contractual cash flows, using market interest rates currently offered for deposits
with similar terms and conditions. All deposits from Bank clients were categorized in Level 2 of the fair value hierarchy (2024 – Level 2).
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Through the normal course of business, pledging of assets is required to comply with jurisdictional regulatory and other
requirements including collateral pledged to partially mitigate derivative counterparty credit risk, assets pledged to exchanges as
initial margin, and assets held as collateral for repurchase funding agreements. Total unencumbered assets were $537.4 billion
as at December 31, 2025 (2024 – $516.6 billion).
Market Risk Sensitivities and Market Risk Exposure Measures
Variable Annuity and Segregated Fund Guarantees Sensitivities and Risk Exposure Measures
Guarantees on variable annuity products and segregated funds may include one or more of death, maturity, income and
withdrawal guarantees. Variable annuity and segregated fund guarantees are contingent and only payable upon the occurrence
of the relevant event, if fund values at that time are below guarantee values. Depending on future equity market levels, liabilities
on current in-force business are to expected to be recognized primarily within the next 20 years.
We seek to mitigate a portion of the risks embedded in our retained (i.e., net of reinsurance) variable annuity and segregated
fund guarantee business through the combination of our dynamic and macro hedging strategies (see “Publicly Traded Equity
Performance Risk” below).
The table below shows selected information regarding the Company’s variable annuity and segregated fund investment-related
guarantees, gross and net of reinsurance.
Variable annuity and segregated fund guarantees, net of reinsurance
| 2025 | 2024 | |||||
|---|---|---|---|---|---|---|
| As at December 31,<br><br>($ millions) | Guarantee<br><br>value(1) | Fund value | Net amount<br><br>at risk(1),(2),(3) | Guarantee<br><br>value(1) | Fund value | Net amount<br><br>at risk(1),(2),(3) |
| Guaranteed minimum income benefit | $3,142 | $2,534 | $708 | $3,628 | $2,780 | $918 |
| Guaranteed minimum withdrawal benefit | 29,664 | 31,071 | 2,643 | 33,473 | 33,539 | 3,339 |
| Guaranteed minimum accumulation benefit | 18,908 | 19,208 | 55 | 18,987 | 19,097 | 70 |
| Gross living benefits(4) | 51,714 | 52,813 | 3,406 | 56,088 | 55,416 | 4,327 |
| Gross death benefits(5) | 7,892 | 19,924 | 486 | 8,612 | 19,851 | 644 |
| Total gross of reinsurance | 59,606 | 72,737 | 3,892 | 64,700 | 75,267 | 4,971 |
| Living benefits reinsured | 20,518 | 21,932 | 2,351 | 23,768 | 23,965 | 3,016 |
| Death benefits reinsured | 3,058 | 2,620 | 195 | 3,430 | 2,776 | 289 |
| Total reinsured | 23,576 | 24,552 | 2,546 | 27,198 | 26,741 | 3,305 |
| Total, net of reinsurance | $36,030 | $48,185 | $1,346 | $37,502 | $48,526 | $1,666 |
(1)Guarantee Value and Net Amount at Risk in respect of guaranteed minimum withdrawal business in Canada and the U.S. reflect the time value of money of these
claims.
(2)Amount at risk (in-the-money amount) is the excess of guarantee values over fund values on all policies where the guarantee value exceeds the fund value. For
guaranteed minimum death benefit, the amount at risk is defined as the current guaranteed minimum death benefit in excess of the current account balance and
assumes that all claims are immediately payable. In practice, guaranteed death benefits are contingent and only payable upon the eventual death of policyholders
if fund values remain below guarantee values. For guaranteed minimum withdrawal benefit, the amount at risk assumes that the benefit is paid as a lifetime
annuity commencing at the earliest contractual income start age. These benefits are also contingent and only payable at scheduled maturity/income start dates in
the future, if the policyholders are still living and have not terminated their policies and fund values remain below guarantee values. For all guarantees, the amount
at risk is floored at zero at the single contract level.
(3)The amount at risk net of reinsurance at December 31, 2025 was $1,346 million (December 31, 2024 – $1,666 million) of which: US$244 million (December 31,
2024 – US$293 million) was on our U.S. business, $835 million (December 31, 2024 – $1,021 million) was on our Canadian business, US$80 million (December
31, 2024 – US$100 million) was on our Japan business, and US$49 million (December 31, 2024 – US$56 million) was related to Asia (other than Japan) and our
run-off reinsurance business.
(4)Where a policy includes both living and death benefits, the guarantee in excess of the living benefit is included in the death benefit category as outlined in footnote
5.
(5)Death benefits include stand-alone guarantees and guarantees in excess of living benefit guarantees where both death and living benefits are provided on a
policy.
Investment categories for variable contracts with guarantees
Variable contracts with guarantees, including variable annuities and variable life, are invested at the policyholder’s discretion
subject to contract limitations, in various fund types within the segregated fund accounts and other investments. The account
balances by investment category are set out below.
| 60 | ||
|---|---|---|
| As at December 31, | ||
| --- | --- | --- |
| ($ millions) | 2025 | 2024 |
| Investment category | ||
| Equity funds | $51,919 | $51,457 |
| Balanced funds | 36,889 | 37,381 |
| Bond funds | 8,528 | 9,017 |
| Money market funds | 1,794 | 1,712 |
| Other debt investments | 2,074 | 2,082 |
| Total | $101,204 | $101,649 |
Caution Related to Sensitivities
In the sections that follow, we provide sensitivities and risk exposure measures for certain risks. These include sensitivities due
to specific changes in market prices and interest rate levels projected using internal models as at a specific date, and are
measured relative to a starting level reflecting the Company’s assets and liabilities at that date. The risk exposures measure the
impact of changing one factor at a time and assume that all other factors remain unchanged. Actual results can differ materially
from these estimates for a variety of reasons including the interaction among these factors when more than one changes;
changes in liabilities from updates to non-economic assumptions, changes in business mix, effective tax rates and other market
factors; and the general limitations of our internal models. For these reasons, the sensitivities should only be viewed as
directional estimates of the underlying sensitivities for the respective factors based on the assumptions outlined below. Given the
nature of these calculations, we cannot provide assurance that the actual impact on contractual service margin, net income
attributed to shareholders, other comprehensive income attributed to shareholders, and total comprehensive income attributed to
shareholders or on MLI’s LICAT ratio will be as indicated.
Market movements affect LICAT capital sensitivities through the available capital, surplus allowance and required capital
components of the regulatory capital framework. The LICAT available capital component is primarily affected by total
comprehensive income and the CSM.
Publicly Traded Equity Performance Risk Sensitivities and Exposure Measures
As outlined above, we have net exposure to equity risk through asset and liability mismatches; our guarantee dynamic hedging
strategy is not designed to completely offset the sensitivity of insurance contract liabilities to all risks associated with the
guarantees embedded in these products. The macro hedging strategy is designed to mitigate public equity risk arising from
guarantees not dynamically hedged, and from other unhedged exposures in our insurance contracts.
Changes in public equity prices may impact other items including, but not limited to, asset-based fees earned on assets under
management and administration or policyholder account value, and estimated profits and amortization of deferred policy
acquisition and other costs. These items are not hedged.
The tables below include the potential impacts from an immediate 10%, 20% and 30% change in market values of publicly traded
equities on net income attributed to shareholders, CSM, other comprehensive income attributed to shareholders, and total
comprehensive income attributed to shareholders. The potential impact is shown after taking into account the impact of the
change in markets on the hedge assets. While we cannot reliably estimate the amount of the change in dynamically hedged
guarantee liabilities that will not be offset by the change in the dynamic hedge assets, we make certain assumptions for the
purposes of estimating the impact on net income attributed to shareholders.
This estimate assumes that the performance of the dynamic hedging program would not completely offset the gain/loss from the
dynamically hedged variable annuity and segregated fund guarantee liabilities. It assumes that the hedge assets are based on
the actual position at the period end, and that equity hedges in the dynamic program offset 95% of the hedged variable annuity
liability movement that occurs as a result of market changes.
It is also important to note that these estimates are illustrative, and that the dynamic and macro hedging programs may
underperform these estimates, particularly during periods of high realized volatility and/or periods where both interest rates and
equity market movements are unfavourable. The method used for deriving sensitivity information and significant assumptions did
not change from the previous period.
Changes in equity markets impact our available and required components of the LICAT ratio. The second set of tables shows the
potential impact to MLI’s LICAT ratio resulting from changes in public equity market values.
| 61 | 2025 Annual Report | Management’s Discussion and Analysis |
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Potential immediate impact on net income attributed to shareholders arising from changes to public equity returns(1)
| As at December 31, 2025 | Net income attributed to shareholders | |||||
|---|---|---|---|---|---|---|
| ($ millions) | -30% | -20% | -10% | +10% | +20% | +30% |
| Underlying sensitivity | ||||||
| Variable annuity and segregated fund guarantees(2) | $(1,790) | $(1,070) | $(490) | $400 | $750 | $1,050 |
| General fund equity investments(3) | (1,320) | (880) | (440) | 440 | 870 | 1,310 |
| Total underlying sensitivity before hedging | (3,110) | (1,950) | (930) | 840 | 1,620 | 2,360 |
| Impact of macro and dynamic hedge assets(4) | 650 | 390 | 170 | (130) | (240) | (330) |
| Net potential impact on net income attributed to shareholders after<br><br>impact of hedging and before impact of reinsurance | (2,460) | (1,560) | (760) | 710 | 1,380 | 2,030 |
| Impact of reinsurance | 1,110 | 670 | 310 | (270) | (490) | (700) |
| Net potential impact on net income attributed to shareholders<br><br>after impact of hedging and reinsurance | $(1,350) | $(890) | $(450) | $440 | $890 | $1,330 |
| As at December 31, 2024 | Net income attributed to shareholders | |||||
| ($ millions) | -30% | -20% | -10% | +10% | +20% | +30% |
| Underlying sensitivity | ||||||
| Variable annuity and segregated fund guarantees(2) | $(2,050) | $(1,240) | $(560) | $470 | $860 | $1,190 |
| General fund equity investments(3) | (1,240) | (820) | (400) | 390 | 780 | 1,180 |
| Total underlying sensitivity before hedging | (3,290) | (2,060) | (960) | 860 | 1,640 | 2,370 |
| Impact of macro and dynamic hedge assets(4) | 720 | 430 | 190 | (150) | (260) | (360) |
| Net potential impact on net income attributed to shareholders after<br><br>impact of hedging and before impact of reinsurance | (2,570) | (1,630) | (770) | 710 | 1,380 | 2,010 |
| Impact of reinsurance | 1,320 | 810 | 370 | (320) | (590) | (830) |
| Net potential impact on net income attributed to shareholders<br><br>after impact of hedging and reinsurance | $(1,250) | $(820) | $(400) | $390 | $790 | $1,180 |
(1)See “Caution related to sensitivities” above.
(2)For variable annuity contracts measured under the variable fee approach (“VFA”), the impact of financial risk and changes in interest rates adjusts CSM, unless
the risk mitigation option applies. The Company has elected to apply risk mitigation and therefore, a portion of the impact is reported in net income attributed to
shareholders instead of adjusting the CSM. If the CSM for a group of variable annuity contracts is exhausted, the full impact is reported in net income attributed to
shareholders.
(3)This impact for general fund equity investments includes general fund investments supporting our insurance contract liabilities, investment in seed money
investments (in segregated and mutual funds made by Global WAM segment), and the impact on insurance contract liabilities related to the projected future fee
income on variable universal life and other unit-linked products. The impact does not include any potential impact on public equity weightings. 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 equity markets.
(4)Includes the impact of assumed rebalancing of equity hedges in the macro and dynamic hedging program. The impact of dynamic hedging represents the impact
of equity hedges offsetting 95% of the dynamically hedged variable annuity liability movement that occurs as a result of market changes, but does not include any
impact in respect of other sources of hedge accounting ineffectiveness (e.g., fund tracking, realized volatility and equity, and interest rate correlations different from
expected among other factors).
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Potential immediate impact on contractual service margin, other comprehensive income to shareholders, total
comprehensive income to shareholders and MLI’s LICAT ratio from changes to public equity market values(1),(2)
| As at December 31, 2025 | ||||||
|---|---|---|---|---|---|---|
| ($ millions) | -30% | -20% | -10% | +10% | +20% | +30% |
| Variable annuity and segregated fund guarantees<br><br>reported in CSM | $(2,970) | $(1,820) | $(840) | $730 | $1,390 | $1,980 |
| Impact of risk mitigation – hedging(3) | 870 | 510 | 220 | (180) | (320) | (430) |
| Impact of risk mitigation – reinsurance(3) | 1,400 | 850 | 390 | (330) | (630) | (890) |
| VA net of risk mitigation | (700) | (460) | (230) | 220 | 440 | 660 |
| General fund equity | (1,410) | (910) | (440) | 440 | 880 | 1,300 |
| Contractual service margin ($ millions, pre-tax) | $(2,110) | $(1,370) | $(670) | $660 | $1,320 | $1,960 |
| Other comprehensive income attributed to<br><br>shareholders ($ millions, post-tax)(4) | $(920) | $(620) | $(300) | $300 | $580 | $860 |
| Total comprehensive income attributed to<br><br>shareholders ($ millions, post-tax) | $(2,270) | $(1,510) | $(750) | $740 | $1,470 | $2,190 |
| MLI’s LICAT ratio (change in percentage points) | (2) | (1) | (1) | 1 | 1 | 2 |
| As at December 31, 2024 | ||||||
| ($ millions) | -30% | -20% | -10% | +10% | +20% | +30% |
| Variable annuity and segregated fund guarantees<br><br>reported in CSM | $(3,420) | $(2,110) | $(970) | $840 | $1,580 | $2,250 |
| Impact of risk mitigation – hedging(3) | 940 | 560 | 250 | (190) | (350) | (470) |
| Impact of risk mitigation – reinsurance(3) | 1,670 | 1,020 | 470 | (400) | (740) | (1,050) |
| VA net of risk mitigation | (810) | (530) | (250) | 250 | 490 | 730 |
| General fund equity | (1,140) | (740) | (370) | 370 | 750 | 1,110 |
| Contractual service margin ($ millions, pre-tax) | $(1,950) | $(1,270) | $(620) | $620 | $1,240 | $1,840 |
| Other comprehensive income attributed to<br><br>shareholders ($ millions, post-tax)(4) | $(840) | $(560) | $(280) | $270 | $530 | $790 |
| Total comprehensive income attributed to<br><br>shareholders ($ millions, post-tax) | $(2,090) | $(1,380) | $(680) | $660 | $1,320 | $1,970 |
| MLI’s LICAT ratio (change in percentage points) | (1) | (1) | - | 1 | 1 | 1 |
(1)See “Caution related to sensitivities” above.
(2)This estimate assumes that the performance of the dynamic hedging program would not completely offset the gain/loss from the dynamically hedged variable
annuity and segregated fund guarantee liabilities. It assumes that the hedge assets are based on the actual position at the period end, and that equity hedges in
the dynamic program offset 95% of the hedged variable annuity liability movement that occurs as a result of market changes.
(3)For variable annuity contracts measured under VFA, the impact of financial risk and changes in interest rates adjusts CSM, unless the risk mitigation option
applies. The Company has elected to apply risk mitigation and therefore a portion of the impact is reported in net income attributed to shareholders instead of
adjusting the CSM. If the CSM for a group of variable annuity contracts is exhausted, the full impact is reported in net income attributed to shareholders.
(4)The impact of financial risk and changes to interest rates for variable annuity contracts is not expected to generate sensitivity in Other Comprehensive Income.
Interest Rate and Spread Risk Sensitivities and Exposure Measures
As at December 31, 2025, we estimated the sensitivity of our net income attributed to shareholders to a 50 basis point parallel
decline in interest rates to be a benefit of $100 million, and to a 50 basis point parallel increase in interest rates to be a charge of
$100 million.
The table below shows the potential impacts from a 50 basis point parallel move in interest rates on CSM, net income attributed
to shareholders, other comprehensive income attributed to shareholders, and total comprehensive income attributed to
shareholders. This includes a change in current government, swap and corporate rates for all maturities across all markets with
no change in credit spreads between government, swap and corporate rates. Also shown separately are the potential impacts
from a 50 basis point parallel move in corporate spreads and a 20 basis point parallel move in swap spreads. The impacts reflect
the net impact of movements in asset values in liability and surplus segments and movements in the present value of cash flows
for insurance contracts including those with cash flows that vary with the returns of underlying items where the present value is
measured by stochastic modelling. The method used for deriving sensitivity information and significant assumptions did not
change from the previous period.
The disclosed interest rate sensitivities reflect the accounting designations of our financial assets and corresponding insurance
contract liabilities. In most cases these assets and liabilities are designated as fair value through other comprehensive income
and as a result, impacts from changes to interest rates are largely in other comprehensive income. There are also changes in
interest rates that impact the CSM for VFA contracts that relate to amounts that are not passed through to policyholders. In
addition, changes in interest rates impact net income as it relates to derivatives not in hedge accounting relationships and on
VFA contracts where the CSM has been exhausted.
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The disclosed interest rate sensitivities assume no hedge accounting ineffectiveness, as our hedge accounting programs are
optimized for parallel movements in interest rates, leading to immaterial net income impacts under these shocks. However, the
actual hedge accounting ineffectiveness is sensitive to non-parallel interest rate movements and will depend on the shape and
magnitude of the interest rate movements which could materially impact net income attributed to shareholders.
Our sensitivities vary across all regions in which we operate, and the impacts of yield curve changes will vary depending upon
the geography where the change occurs. Furthermore, the impacts from non-parallel movements may be materially different
from the estimated impacts of parallel movements.
The interest rate and spread risk sensitivities are determined in isolation of each other and therefore do not reflect the combined
impact of changes in government rates and credit spreads between government, swap and corporate rates occurring
simultaneously. As a result, the impact of the summation of each individual sensitivity may be materially different from the impact
of sensitivities to simultaneous changes in interest rate and spread risk.
The potential impacts also do not take into account other potential effects of changes in interest rate levels, for example, CSM at
recognition on the sale of new business or lower interest earned on future fixed income asset purchases.
The impacts do not reflect any potential effect of changing interest rates on the value of our ALDA. Rising interest rates could
negatively impact the value of our ALDA (see “Critical Actuarial and Accounting Policies – Fair Value of Invested Assets”, below).
More information on ALDA can be found below in the “Alternative Long-Duration Asset Performance Risk Sensitivities and
Exposure Measures” section.
The impact to the LICAT ratio from a change in interest rates reflects the impacts on total comprehensive income, the LICAT
adjustments to earnings for the CSM, the surplus allowance and required capital components of the regulatory capital
framework.
Potential impacts on contractual service margin, net income attributed to shareholders, other comprehensive income
attributed to shareholders, and total comprehensive income attributed to shareholders of an immediate parallel change
in interest rates, corporate spreads or swap spreads relative to current rates(1),(2),(3)
| As at December 31, 2025 | Interest rates | Corporate spreads | Swap spreads | |||
|---|---|---|---|---|---|---|
| ($ millions, post-tax except CSM) | -50bp | +50bp | -50bp | +50bp | -20bp | +20bp |
| CSM | $200 | $(300) | $(200) | $100 | $- | $- |
| Net income attributed to shareholders | 100 | (100) | - | - | 100 | (100) |
| Other comprehensive income attributed to shareholders | (100) | 100 | 100 | - | (300) | 300 |
| Total comprehensive income attributed to shareholders | - | - | 100 | - | (200) | 200 |
| As at December 31, 2024 | Interest rates | Corporate spreads | Swap spreads | |||
| ($ millions, post-tax except CSM) | -50bp | +50bp | -50bp | +50bp | -20bp | +20bp |
| CSM | $100 | $(200) | $- | $(100) | $- | $- |
| Net income attributed to shareholders | 100 | (100) | 100 | (100) | 100 | (100) |
| Other comprehensive income attributed to shareholders | (100) | 200 | (200) | 300 | (100) | 100 |
| Total comprehensive income attributed to shareholders | - | 100 | (100) | 200 | - | - |
(1)See “Caution related to sensitivities” above.
(2)Estimates include changes to the net actuarial gains/losses with respect to the Company’s pension obligations as a result of changes in interest rates.
(3)Includes guaranteed insurance and annuity products, including variable annuity contracts as well as adjustable benefit products where benefits are generally
adjusted as interest rates and investment returns change, a portion of which have minimum credited rate guarantees. For adjustable benefit products subject to
minimum rate guarantees, the sensitivities are based on the assumption that credited rates will be floored at the minimum.
Potential impact on MLI’s LICAT ratio of an immediate parallel change in interest rates, corporate spreads or swap
spreads relative to current rates(1),(2),(3),(4),(5)
| As at December 31, 2025 | Interest rates | Corporate spreads | Swap spreads | |||
|---|---|---|---|---|---|---|
| (change in percentage points) | -50bp | +50bp | -50bp | +50bp | -20bp | +20bp |
| MLI’s LICAT ratio | (1) | - | (3) | 3 | - | - |
| As at December 31, 2024 | Interest rates | Corporate spreads | Swap spreads | |||
| (change in percentage points) | -50bp | +50bp | -50bp | +50bp | -20bp | +20bp |
| MLI’s LICAT ratio | - | - | (3) | 3 | - | - |
(1)See “Caution related to sensitivities” above.
(2)Estimates include changes to the net actuarial gains/losses with respect to the Company’s pension obligations as a result of changes in interest rates.
(3)Includes guaranteed insurance and annuity products, including variable annuity contracts as well as adjustable benefit products where benefits are generally
adjusted as interest rates and investment returns change, a portion of which have minimum credited rate guarantees. For adjustable benefit products subject to
minimum rate guarantees, the sensitivities are based on the assumption that credited rates will be floored at the minimum.
(4)LICAT impacts reflect the impact of anticipated scenario switches.
(5)Under LICAT, spread movements are determined from a selection of investment grade bond indices with BBB and better bonds for each jurisdiction. For LICAT, we
use the following indices: FTSE TMX Canada All Corporate Bond Index, Barclays USD Liquid Investment Grade Corporate Index, and Nomura-BPI (Japan). LICAT
impacts presented for corporate spreads reflect the impact of anticipated scenario switches.
1 LICAT geographic locations to determine the most adverse scenario include North America, the United Kingdom, Europe, Japan and Other Region.
2 See “Caution regarding forward-looking statements” above.
3 Energy includes legacy oil and gas equity interests related to upstream and midstream assets that are in runoff, and energy transition private equity interests in
areas supportive of the transition to lower carbon forms of energy, such as wind, solar, and carbon sequestration.
| 64 |
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LICAT Scenario Switch
When interest rates change past a certain threshold, reflecting the combined movement in risk-free rates and corporate spreads,
a different prescribed interest rate stress scenario needs to be taken into account in the LICAT ratio calculation in accordance
with OSFI’s LICAT guideline.
The LICAT guideline specifies four stress scenarios for interest rates and prescribes the methodology to determine the most
adverse scenario to apply for each LICAT geographic region1 based on current market inputs and the Company’s Consolidated
Statements of Financial Position.
With the current level of interest rates in 2025, the probability of a scenario switch that could materially impact our LICAT ratio is
low2. Should the future interest rate movements differ from those presented above, a scenario switch, if applicable, may cause
the impact to the LICAT ratio to be different from the disclosed values. Should a scenario switch be triggered in a LICAT
geographic region, the full impact would be reflected immediately for non-participating products while the impact for participating
products would be reflected over six quarters using a rolling average of interest rate risk capital, in line with the smoothing
approach prescribed in the LICAT guideline. The LICAT interest rate, corporate spread and swap spread sensitivities presented
above reflect the impact of scenario switches, if any, for each disclosed sensitivity.
The level of interest rates and corporate spreads that would trigger a switch in the scenarios is dependent on market conditions
and movements in the Company’s asset and liability position. The scenario switch, if triggered, could reverse in response to
subsequent changes in interest rates and/or corporate spreads.
Alternative Long-Duration Asset Performance Risk Sensitivities and Exposure Measures
The following table shows the potential impact on CSM, net income attributed to shareholders, other comprehensive income
attributed to shareholders, and total comprehensive income attributed to shareholders resulting from an immediate 10% change
in market values of ALDA. The method used for deriving sensitivity information and significant assumptions made did not change
from the previous period.
ALDA used in this sensitivity analysis includes commercial real estate, private equity, infrastructure, timber and agriculture,
energy3 and other investments.
The impacts do not reflect any future potential changes to non-fixed income return volatility. Refer to “Publicly traded equity
performance risk sensitivities and exposure measures” above for more details.
Potential immediate impacts on contractual service margin, net income attributed to shareholders, other
comprehensive income attributed to shareholders, and total comprehensive income attributed to shareholders from
changes in ALDA market values(1)
| As at | December 31, 2025 | December 31, 2024 | ||
|---|---|---|---|---|
| ($ millions, post-tax except CSM) | -10% | +10% | -10% | +10% |
| CSM excluding NCI | $(200) | $200 | $(200) | $200 |
| Net income attributed to shareholders(2) | (2,200) | 2,200 | (2,500) | 2,500 |
| Other comprehensive income attributed to shareholders | (200) | 200 | (200) | 200 |
| Total comprehensive income attributed to shareholders | (2,400) | 2,400 | (2,700) | 2,700 |
(1)See “Caution related to sensitivities” above.
(2)Net income attributed to shareholders includes core earnings and the items excluded from core earnings.
Potential immediate impact on MLI LICAT ratio arising from changes in ALDA market values(1)
| As at | December 31, 2025 | December 31, 2024 | ||
|---|---|---|---|---|
| (change in percentage points) | -10% | +10% | -10% | +10% |
| MLI’s LICAT ratio | (1) | - | (1) | 1 |
(1)See “Caution Related to Sensitivities” above.
Foreign Exchange Risk Sensitivities and Exposure Measures
We generally match the currency of our assets with the currency of the insurance and investment contract liabilities they support.
As at December 31, 2025, we did not have a material unmatched currency exposure.
The following table shows the potential impact on core earnings of a 10% change in the value of the Canadian dollar relative to
our other key operating currencies. Note that the impact of foreign currency exchange rates on items excluded from core
earnings does not provide relevant information given the nature of these items.
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Potential impact on core earnings of changes in foreign exchange rates(1)
| December 31, 2025 | December 31, 2024 | |||
|---|---|---|---|---|
| As at<br><br>($ millions) | +10%<br><br>strengthening | -10%<br><br>weakening | +10%<br><br>strengthening | -10%<br><br>weakening |
| 10% change in the Canadian dollar relative to the U.S. dollar and the Hong Kong<br><br>dollar | $(430) | $430 | $(450) | $450 |
| 10% change in the Canadian dollar relative to the Japanese yen | (60) | 60 | (50) | 50 |
(1)See “Caution Related to Sensitivities” above.
LICAT regulatory ratios are also sensitive to the fluctuations in the Canadian dollar relative to our other key operating currencies.
The direction and materiality of this sensitivity varies across various capital metrics.
Liquidity Risk Exposure Strategy
We manage liquidity levels of the consolidated group and key subsidiaries against established thresholds, which are based on
extreme but plausible liquidity stress scenarios over varying time horizons.
Our use of derivatives for hedging purposes is a significant source of liquidity risk through collateral and cash settlement
requirements for OTC bilateral and centrally cleared derivatives under adverse market conditions. To assess these potential
liquidity needs, we regularly stress test the market value of our derivative portfolio under various stress scenarios and measure
and monitor the contingent requirements against our liquid asset holdings. Additionally, we maintain a liquidity contingency plan
with diverse sources of contingent liquidity that can be utilized under severe stress conditions.
Manulife Bank (the “Bank”) has a stand-alone liquidity risk management framework. The framework includes daily monitoring of
liquidity levels, liquidity forecasting and stress testing, and a liquidity contingency plan. The Bank maintains an unencumbered,
high-quality liquidity buffer and has established a diversified funding program to meet its funding and liquidity requirements. The
Bank’s funding program includes retail demand deposits and GICs, wholesale term funding, and a well-established program to
securitize residential mortgage assets. The Bank models extreme but plausible stress scenarios that demonstrate the Bank has
sufficient liquid marketable securities and sufficient contingent liquidity to manage its requirements during periods of elevated
market stress.
Similarly, Global WAM has a stand-alone liquidity risk management framework for the businesses managing assets or
manufacturing investment products for third-party clients. We maintain fiduciary standards designed to ensure that client and
regulatory expectations are met in relation to the liquidity risks taken within each investment. Additionally, we regularly monitor
and review the liquidity of our investment products as part of our ongoing risk management practices.
Market & Liquidity Risk Factors
Our most significant source of publicly traded equity risk arises from equity-linked products with guarantees, where the
guarantees are linked to the performance of the underlying funds.
•The reported public equity risk sensitivity primarily arises from insurance exposures, including guarantees associated with
equity-linked investments such as variable annuity and segregated fund products, general fund investments in publicly
traded equities and mutual funds backing general fund product liabilities.
•Market conditions resulting in reductions in the asset value we manage have an adverse effect on the revenues and
profitability of our investment management business, which depends on fees related primarily to the values of assets under
management and administration.
•Guaranteed benefits of variable annuity and segregated funds are contingent and payable upon death, maturity, permitted
withdrawal or annuitization. If equity markets decline or even if they increase by an amount lower than the risk-free rate plus
an adjustment for product illiquidity assumed in our actuarial valuation, additional liabilities may need to be established to
cover the contingent liabilities, resulting in reductions that could impact net income attributed to shareholders, the
contractual service margin, and regulatory capital ratios. Further, if equity markets do not recover to the amount of the
guarantees, by the dates the liabilities are due, the accrued liabilities will need to be paid out in cash. In addition, sustained
flat or declining public equity markets would likely reduce asset-based fee revenues related to variable annuities and
segregated funds with guarantees, unit-linked products, and other wealth and insurance products.
•Where publicly traded equity investments are used to support general fund product liabilities, adverse public equity returns
and associated impacts to insurance contract liabilities from certain product features such as universal life minimum
crediting rate guarantees, or participating product zero dividend floor implicit guarantees, could result in a reduction to the
contractual services margin or total comprehensive income.
We experience interest rate and spread risk within the general fund primarily due to differences in how our assets and
liabilities respond to changes in these variables.
•Interest rate and spread risk arises from differences in the movements of our assets and liabilities due to changes in these
variables. For our assets, changes in value from movements in interest rates and spreads would vary by asset and would be
impacted by factors such as duration and credit rating. For insurance contract liabilities, which are discounted using risk-free
yields adjusted by an illiquidity premium, changes in the value would be impacted by factors such as the duration of the
| 66 |
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liability, and the spread exposure through the illiquidity premium. To the extent that there are mismatches between the
assets and liabilities such as through differences in duration, or differences in spread exposure, interest rate or spread
movements could result in a reduction in the contractual service margin or total comprehensive income.
•The Company’s disclosed estimated impact from interest rate movements reflects a parallel increase and decrease in
interest rates of specific amounts. The impact from non-parallel movements may be different from the estimated impact of
parallel movements. For further information on interest rate scenarios refer to “Interest Rate and Spread Risk Sensitivities
and Exposure Measures”.
We experience foreign exchange risk as a substantial portion of our business is transacted in currencies other than
Canadian dollars.
•Our financial results are reported in Canadian dollars. A substantial portion of our business is transacted in currencies other
than Canadian dollars, mainly U.S. dollars, Hong Kong dollars and Japanese yen. If the Canadian dollar strengthens relative
to these currencies, net income attributed to shareholders would decline and our reported shareholders’ equity would
decline. A weakening of the Canadian dollar against the foreign currencies in which we do business would have the opposite
effect and would increase net income attributed to shareholders and shareholders’ equity.
The Company’s hedging strategies will not fully reduce the market risks related to the product guarantees and fees
being hedged, hedging costs may increase and the hedging strategies expose the Company to additional risks.
•Our hedging strategies rely on the execution of derivative transactions in a timely manner. Market conditions can limit
availability of hedging instruments, requiring us to post additional collateral, and can further increase the costs of executing
derivative transactions. Therefore, hedging costs and the effectiveness of the strategy may be negatively impacted if
markets for these instruments become illiquid. The Company is subject to the risk of increased funding and collateral
demands which may become significant as equity markets and interest rates increase.
•The Company is also subject to counterparty risks arising from the derivative instruments and to the risk of increased
funding and collateral demands which may become significant as equity markets and interest rates increase. The strategies
are highly dependent on complex systems and mathematical models that are subject to error and rely on forward-looking
long-term assumptions that may prove inaccurate, and which rely on sophisticated infrastructure and personnel which may
fail or be unavailable at critical times. Due to the complexity of the strategies, there may be additional unidentified risks that
may negatively impact our business and future financial results. For further information pertaining to counterparty risks, refer
to the risk factor “If a counterparty fails to fulfill its obligations, we may be exposed to risks we had sought to mitigate”.
•Under certain market conditions, which include a sustained increase in realized equity and interest rate volatilities, a decline
in interest rates, or an increase in the correlation between equity returns and interest rates, our dynamic hedging strategy
will not fully offset the changes in liabilities.
•The level of guarantee claims returns or other benefits ultimately paid will be impacted by policyholder longevity and
policyholder behaviour including the timing and amount of withdrawals, lapses, fund transfers, and contributions. The
sensitivity of liability values to equity market and interest rate movements that we hedge are based on long-term
expectations for longevity and policyholder behaviour since the impact of actual policyholder longevity and policyholder
behaviour variances cannot be hedged using capital markets instruments. The efficiency of our market risk hedging is
directly affected by accuracy of the assumptions related to policyholder longevity and policyholder behaviour.
•Policy liability guarantees for certain products use long-term forward-looking estimates of volatilities. These long-term
forward-looking volatilities assumed for policy liabilities meet the Canadian Institute of Actuaries calibration standards. To the
extent that realized equity or interest rate volatilities in any quarter exceed the assumed long-term volatilities, or correlations
between interest rate changes and equity returns are higher, there is a risk that rebalancing will be greater and more
frequent, resulting in higher hedging costs.
Prolonged changes in market interest rates may impact our net income attributed to shareholders and capital ratios.
•A prolonged low or negative (nominal or real) interest rate environment may result in lower net investment results and a
decrease in new business CSM until products are repositioned for the lower rate environment. Other potential
consequences of low interest rates include:
◦Negative impact on sales and reduced new business profitability;
◦Increased cost of hedging and as a result, the offering of guarantees could become uneconomic;
◦Reinvestment of cash flows into low yielding bonds could result in lower future earnings due to lower returns on surplus
and general fund assets supporting in-force liabilities, and due to guarantees embedded in products including minimum
guaranteed rates in participating and adjustable products;
◦Negative impacts to other macroeconomic factors including unfavourable economic growth and lower returns on other
asset classes;
◦Potential impairments of goodwill;
◦Lower expected earnings on in-force policies;
◦Potential risk of lowering the ultimate spot rate within our discount rates that would increase our liabilities;
◦A switch in the prescribed interest stress scenario that impacts LICAT capital. See “LICAT Scenario Switch” above; and
◦Reduced ability of MFC’s insurance subsidiaries to pay dividends to MFC.
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•While higher interest rates are generally good for our business, there are some associated risks. A rapid rise in interest rate
or a prolonged high-rate environment may result in material changes in policyholder behaviour such as higher surrenders,
withdrawals, changes in fund contributions or fund transfers. Other potential consequences of a rapid rise in or prolonged
high interest rates include:
◦Decrease in value of existing fixed income assets supporting general account surplus and liabilities, including the
employee benefit plans;
◦Losses attributable to early liquidation of fixed income instruments supporting contractual surrender benefits;
◦Decline in value of some of our ALDA investments, particularly those with fixed contractual cash flows such as long-
leased real estate and certain infrastructure investments;
◦Increase in collateral demands, especially for our interest rate hedging book which incurs market-to-market losses in a
rising rate environment;
◦Adverse effect on the local solvency ratio for some countries in which we operate;
◦A switch in the prescribed interest stress scenario that impacts LICAT capital. See “LICAT Scenario Switch” above;
◦Shift in new sales mix from competitive pressure on wealth products that are less attractive on a yield basis;
◦Increase in funding costs on repurchase agreements (i.e., repo transactions); and
◦Increase in borrowing costs as we refinance our debt.
Liquidity risk is impacted by various factors, including but not limited to, capital and credit market conditions, repricing
risk on letters of credit, collateral pledging obligations, and reliance on deposits sensitive to confidence or broad
macroeconomic factors.
•Adverse market conditions may significantly affect our liquidity risk.
◦Reduced asset liquidity may restrict our ability to sell certain types of assets for cash without taking significant losses. If
providers of credit preserve their capital, our access to borrowing from banks and others or access to other types of
credit, such as letters of credit, may be reduced. If investors have a negative perception of our creditworthiness, this
may reduce access to the debt capital markets or increase borrowing costs.
◦Liquid assets are required to pledge as collateral and to cover cash settlements for variation margin to support activities
such as the use of derivatives for hedging purposes.
◦The principal sources of our liquidity are cash, insurance and annuity premiums, fee income earned on AUM, cash flow
from our investment portfolios, and our assets that are readily convertible into cash, including money market securities.
The issuance of long-term debt, common and preferred shares, and other capital securities may also increase our
available liquid assets or be required to replace certain maturing or callable liabilities. In the event we seek additional
financing, the availability and terms of such financing will depend on a variety of factors including market conditions, the
availability of credit to the financial services industry, our credit ratings and credit capacity, as well as the possibility that
customers, lenders, or investors could develop a negative perception of our long-term or short-term financial prospects
if we incur large financial losses or if the level of our business activity decreases due to a significant market downturn.
•Increased cleared derivative transactions, combined with margin rules on non-cleared derivatives, could adversely impact
our liquidity risk.
◦Over time our existing over-the-counter derivatives will migrate to clearing houses, or the Company and its
counterparties may have the right to cancel derivative contracts after specific dates or in certain situations such as a
ratings downgrade, which could accelerate the transition to clearing houses. Cleared derivatives are subject to both
initial and variation margin requirements, and a more restrictive set of eligible collateral than non-cleared derivatives.
◦In addition, initial margin rules for new non-cleared derivatives further increase our liquidity needs.
•We are exposed to repricing risk on letters of credit.
◦In the normal course of business, third-party banks issue letters of credit on our behalf. In lieu of posting collateral, our
businesses utilize letters of credit for which third parties are the beneficiaries, as well as for affiliate reinsurance
transactions between subsidiaries of MFC. Letters of credit and letters of credit facilities must be renewed periodically.
At time of renewal, the Company is exposed to repricing risk and under adverse conditions, increases in costs may be
realized. In the most extreme scenarios, letters of credit capacity could become constrained due to non-renewals which
would restrict our flexibility to manage capital. This could negatively impact our ability to meet local capital requirements
or our sales of products in jurisdictions in which our operating companies have been affected. As at December 31,
2025, letters of credit for which third parties are beneficiaries, in the amount of $251 million, were outstanding (2024 –
$271 million). There were no assets pledged against these outstanding letters of credit as at December 31, 2025.
•Our obligations to pledge collateral or make payments related to declines in value of specified assets may adversely affect
our liquidity.
◦In the normal course of business, we are obligated to pledge assets to comply with jurisdictional regulatory and other
requirements including collateral pledged in relation to derivative contracts and assets held as collateral for repurchase
funding agreements. The amount of collateral we may be required to post under these agreements, and the payments
we are required to make to our counterparties, may increase under certain circumstances, including a sustained or
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continued decline in the value of our derivative contracts. Such additional collateral requirements and payments could
have an adverse effect on our liquidity. As at December 31, 2025, total pledged assets were $26,745 million, compared
with $26,272 million as at December 31, 2024.
•Our bank subsidiary relies on deposits sensitive to confidence as well as macroeconomic conditions.
◦The Bank is a wholly owned subsidiary of our Canadian life insurance operating company, MLI. Retail deposits are a
significant part of the funding base of the Bank. A real or perceived problem with the Bank or its parent company could
result in a loss of confidence in the Bank’s ability to meet its obligations, which in turn may trigger a significant
withdrawal of deposit funds. Depositors are protected through the Bank’s membership in the Canada Deposit Insurance
Corporation (“CDIC”) which insures demand deposits up to $100,000 per eligible depositor. Insured demand deposits
are less susceptible to runoff and a significant proportion of the Bank’s deposits are CDIC insured. The Bank also
protects depositors through mitigation strategies outlined in the Bank’s liquidity contingency plan and the Bank may
elect to sell or securitize assets with third parties to increase liquidity. The Bank may consider the use of Bank of
Canada facilities to generate short term liquidity to pay depositors; however, access to these facilities is at the sole
discretion of the Bank of Canada.
•Our investments in predominately-investment-grade private placements and below-investment-grade private credit do not
have readily observable market prices and may be less liquid than other investments.
◦We mitigate these risks by rigorous approval and oversight processes for all private assets, by employing third-party
valuation services to value most private credit assets, and through our liquidity risk framework, which assumes private
fixed income assets have limited liquidity in a stress scenario.
Credit & Investment Risk
Credit risk is the risk of loss due to the inability or unwillingness of a borrower or counterparty to fulfill its payment obligations.
Investment risk, such as those pertaining to market fluctuations (e.g., interest rates, foreign exchange) or operating performance,
that can affect both fixed income and ALDA valuations, are covered under the Market & Liquidity section above.
Credit Risk Management Strategy
Credit risk is governed by the Credit Committee which oversees the overall credit risk management program. The Company has
established objectives for overall quality and diversification of our general fund investment portfolio and criteria for the selection
of counterparties, including derivative counterparties, reinsurers, and insurance providers. Our policies establish exposure limits
by borrower, corporate connection, quality rating, industry, and geographic region, and govern the usage of credit derivatives.
Corporate connection limits vary according to risk rating. Our general fund fixed income investments are primarily public and
private investment grade bonds and commercial mortgages. We have a program for selling Credit Default Swaps (“CDS”) that
employs a highly selective, diversified, and conservative approach. CDS decisions follow the same underwriting standards as our
cash bond portfolio. Our credit granting units follow a defined evaluation process that provides an objective assessment of credit
proposals. We assign a risk rating, based on a standardized 22-point scale consistent with those of external rating agencies,
following a detailed examination of the borrower that includes a review of business strategy, market competitiveness, industry
trends, financial strength, access to funds, and other risks facing the counterparty. We assess and update risk ratings regularly.
For additional input to the process, we also assess credit risks using a variety of industry standard market-based tools and
metrics. We map our risk ratings to pre-established probabilities of default and loss given defaults, based on historical industry
and Company experience, and to resulting default costs.
We establish delegated credit approval authorities and make credit decisions on a case-by-case basis at a management level
appropriate to the size and risk level of the transaction, based on the delegated authorities that vary according to risk rating.
Major credit decisions are approved by the Credit Committee and the largest decisions are approved by the CEO and, in certain
cases, by the Board.
We limit the types of authorized derivatives and applications and require pre-approval of all derivative application strategies and
regular monitoring of the effectiveness of derivative strategies. Derivative counterparty exposure limits are established based on
a minimum acceptable counterparty credit rating (generally A- from internationally recognized rating agencies). We measure both
bilateral and exchange-traded derivative counterparty exposure as net potential credit exposure. The measurement takes into
consideration the replacement cost, which reflects mark-to-market values of the exposure adjusted for the effects of net
collateral, and the potential future exposure, which reflects the potential increase in exposure until the closure or replacement of
the transactions. Credit risk arising from reinsurance counterparties is included in the valuation models for reinsurance contract
assets. Reinsurance counterparty exposure is measured reflecting the level of ceded liabilities on a best estimate basis net of
collateral held. The creditworthiness of all reinsurance counterparties is reviewed internally on a regular basis.
Regular reviews of credits within the various portfolios are undertaken with the goal of prompt identification of changes to credit
quality and, where appropriate, taking corrective action.
Our credit policies, procedures and investment strategies are established under a strong governance framework and are
designed to ensure that risks are identified, measured, and monitored consistent with our risk appetite. We seek to actively
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manage credit exposure in our investment portfolio to reduce risk and minimize losses, and derivative counterparty exposure is
managed proactively. However, we could experience volatility on a quarterly basis and losses could potentially arise as a result.
Credit Risk Exposure Measures
We use the Expected Credit Loss (“ECL”) impairment allowance model in accordance with IFRS to establish and maintain
allowances on our invested assets which are debt instruments measured at FVOCI or amortized cost. ECL allowances are
measured on a probability-weighted basis, based on four macroeconomic scenarios, and incorporate consideration of past
events, current market conditions, and reasonable supportable information about future economic conditions.
We measure ECL allowances using a three-stage approach. We recognize ECL on performing financial instruments that have
not experienced significant increases in credit risk (“SICR”) since acquisition to the extent of losses expected to result from
defaults occurring within 12 months of the reporting date (Stage 1). Full lifetime ECLs are recognized for financial instruments
experiencing SICR since acquisition or having become 30 days in arrears in principal or interest payments (Stage 2). Full lifetime
ECLs are also recognized for financial instruments which have become credit-impaired (Stage 3), with a probability of default set
at 100%. Interest income on Stage 3 financial instruments is determined based on the carrying amount of the asset, net of any
credit loss allowance.
We establish ECL allowances for investments in debt instruments which are measured at FVOCI or amortized cost. On an
ongoing basis, these ECL allowances are monitored and adjusted for changes in credit quality and conditions. Credit risk arising
from reinsurance counterparties is included in the valuation models for reinsurance contract assets. There is no assurance that
the ECL allowances or valuation results will be adequate to cover future potential losses.
For more information on our ECL allowances, refer to notes 1 and 8 of the 2025 Annual Consolidated Financial Statements.
Credit & Investment Risk Factors
Borrower or counterparty defaults or downgrades could adversely impact our earnings.
•Worsening regional and global economic conditions could result in borrower or counterparty defaults or downgrades and
could lead to increased allowances or impairments related to our general fund invested assets and derivative financial
instruments, and an increase in the credit risk factored into modeling of our reinsurance contract assets and insurance
contract liabilities.
•Our invested assets subject to credit risk primarily include investment grade bonds, private placements, commercial and
residential mortgages, asset-backed securities, and consumer loans. These assets are generally carried at FVOCI, and as a
result, changes in the required ECL allowance would be recorded in the provision for credit losses in the Consolidated
Statements of Income. The return cash inflow assumptions incorporated in actuarial liabilities include an expected level of
future asset impairments. There is a risk that actual impairments will exceed the assumed level of impairments in the future
and earnings could be adversely impacted.
•Volatility may arise from defaults and downgrade charges on our invested assets, and as a result, losses could potentially
rise above long-term expected levels. The ECL impairment allowance was $809 million, representing 0.18% of total general
fund invested assets as at December 31, 2025, compared with $828 million, representing 0.19% of total general fund
invested assets as at December 31, 2024.
If a counterparty fails to fulfill its obligations, we may be exposed to risks we had sought to mitigate.
•The Company uses derivative financial instruments to mitigate exposures to public equity, foreign currency, interest rate and
other market risks arising from on-balance sheet financial instruments, guarantees related to variable annuity products,
selected anticipated transactions and certain other guarantees. The Company may be exposed to counterparty risk if a
counterparty fails to pay amounts owed to us or otherwise perform its obligations to us. Counterparty risk increases during
economic downturns because the probability of default increases for most counterparties. If any of these counterparties
default, we may not be able to recover the amounts due from that counterparty. As at December 31, 2025, the largest single
counterparty exposure, without taking into account the impact of master netting agreements or the benefit of collateral held,
was $1,386 million (2024 – $1,319 million). The net exposure to this counterparty, after taking into account master netting
agreements and the fair value of collateral held, was $nil (2024 – $nil). As at December 31, 2025, the total maximum credit
exposure related to derivatives across all counterparties, without taking into account the impact of master netting
agreements and the benefit of collateral held, was $9,955 million (2024 – $9,048 million) compared with $561 million after
taking into account master netting agreements and the benefit of fair value of collateral held (2024 – $429 million). The
exposure to any counterparty would grow if, upon the counterparty’s default, markets moved such that our derivatives with
that counterparty gain in value. Until we are able to replace those derivatives with another counterparty, the gain on the
derivatives subsequent to the counterparty’s default would not be backed by collateral.
•The Company reinsures a portion of the insurance policies it sells, which also includes the use of reinsurance to effectively
sell blocks of business to third parties. Unless the policies are novated to the reinsurer, the Company remains directly liable
to policyholders to fulfill obligations under these policies. The Company is reimbursed by the reinsurer for payments made to
policyholders on the reinsured policies. To mitigate credit risk to the reinsurer, the Company may require reinsurers to
provide collateral for their reinsurance obligations. In the event that a reinsurer fails to fulfill its contractual obligations to the
Company under the reinsurance contract, a proportional decrease to the value of the reinsurance asset would be
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acknowledged with a consequent negative impact to any net income attributed to shareholders and capital position. Such
negative impact would be offset to the extent the amount of collateral provided by the reinsurer is sufficient to cover the
reinsurer’s obligations.
•We participate in a securities lending program whereby blocks of securities are loaned to third parties, primarily major
brokerage firms and commercial banks. Collateral, which exceeds the market value of the loaned securities, is retained by
the Company until the underlying security has been returned. If any of our securities lending counterparties default and the
value of the collateral is insufficient, we would incur losses. As at December 31, 2025, the Company had loaned securities
(which are included in invested assets) valued at approximately $1,800 million, compared with $1,021 million as at
December 31, 2024.
The determination of loss allowances and impairments on our investments is subjective and changes could materially
impact our results of operations or financial position.
•The determination of impairment losses on debt investments measured at FVOCI or amortized cost is based upon the ECL
model which is applied quarterly. ECL allowances are estimated as the differences between all contractual cash flows due in
accordance with the contract and all the cash flows that we expect to receive, discounted at the original effective interest
rates of the contracts. This process includes consideration of past events, current market conditions, and reasonable and
supportable information about future economic conditions. Forward-looking macroeconomic variables used within the
estimation models represent variables that are the most closely related with credit loss expectations for the relevant
issuance.
•The estimation and measurement of ECL impairment losses requires significant judgment. These estimates are driven by
many elements, changes in which can result in different levels of allowances. Elements include the estimation of the amount
and timing of future cash flows, our criteria for assessing if there has been a significant increase in credit risk (“SICR”), the
selection of forward-looking macroeconomic scenarios and their probability weights, the application of expert credit judgment
in the development of the models, inputs and, when applicable, overlay adjustments. It is our process to regularly review our
models in the context of actual loss experience and adjust when necessary. We have implemented formal policies,
procedures, and controls over all significant impairment processes.
•Such evaluations and assessments are revised as conditions change and new information becomes available. We update
our evaluations regularly and reflect changes in allowances and impairments as such evaluations warrant. The evaluations
are inherently subjective and incorporate only those risk factors known to us at the time the evaluation is made. There can
be no assurance that management has accurately assessed the level of impairments that have occurred. Additional
impairments will likely need to be taken or allowances provided for in the future as conditions evolve. Historical trends may
not be indicative of future impairments or allowances.
We experience ALDA performance risk from the risk of low returns, including lower valuations.
•ALDA performance risk arises from general fund investments in directly-owned real estate, timber properties, farmland
properties, infrastructure, private equities, and energy assets.
•Difficult economic conditions could result in higher vacancy, lower rental rates, and lower demand for real estate
investments, all of which would adversely impact the value of our diversified real estate investments. Continual advances in
the digitization of work and the transformation of physical retail may have further negative impact to our commercial real
estate investments. Difficult economic conditions could also prevent companies in which we have made private equity
investments from achieving their business plans and could cause the value of these investments to fall, or even cause the
companies to fail. Sustained declines in valuation multiples in the public equity market would also likely cause values to
decline in our private equity portfolio. The timing and amount of investment income from private equity investments is difficult
to predict, and investment income from these investments can vary from quarter to quarter.
•Our timberland and farmland holdings are exposed to natural risks, such as prolonged drought, wildfires, insects,
windstorms, flooding, and climate change. We are generally not insured for these types of risks but seek to proactively
mitigate their impact through portfolio diversification and prudent operating practices.
•The value of energy assets, including oil and gas, could be adversely affected by declines in energy prices as well as by a
number of other factors including production declines, difficult economic conditions, changes in consumer preferences to
transition to a low-carbon economy, and geopolitical events. Changes in government regulation, including environmental
regulation could also adversely affect the value of our investments in both renewable and non-renewable energy assets.
•Higher interest rates, in combination with uncertain economic environments, could precipitate higher ALDA discount rates as
buyers demand higher current returns to invest in ALDA. Since ALDA cash flows may, to some degree, be fixed in the near
to medium-term, some ALDA values may initially decline in order for the asset returns to meet the desired higher discount
rates in future periods, resulting in lowered current portfolio returns.
•The negative impact of changes in market or economic factors can take time to be fully reflected in the valuations of private
investments, including ALDA, especially if the change is large and rapid, as market participants endeavor to adjust their
forecasts and better understand the potential medium to long-term impact of such changes. As a result, valuation changes in
any given period may reflect the delayed impact of events that occurred in prior periods. Our real estate valuations are
based on external appraisals and these appraisals may lag behind current market transactions.
•We rely on a diversified portfolio of ALDA to generate relatively stable investment returns. Diversification benefits may be
reduced at times, especially during a period of economic stress, which would adversely affect portfolio returns.
1 Global WAM product-related risks (e.g. strategic, operational, etc.) are managed by First Line Local / Regional Product Committees and working groups and the
Global Investment Product Committee. Notable products which could introduce new and material risks are reviewed and approved by the Global WAM Risk
Committee prior to launch.
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Insurance Risk
Insurance risk is the risk of loss due to actual insurance experience emerging differently than assumed when a product was
designed and priced. Assumptions for future claims are generally based on both Company and industry experience, and
assumptions for future policyholder behaviour and expenses are generally based on Company experience.
Insurance Risk Management Strategy
The Product Oversight Committee1 oversees the overall insurance risk management program. The Product Oversight Committee
has established a broad framework for managing insurance risk under a set of policies, standards, and guidelines, designed to
ensure that our product offerings align with our risk taking philosophy and risk limits, and achieve acceptable profit margins.
These cover:
| •product design features<br><br>•use of reinsurance<br><br>•pricing models and software<br><br>•internal risk based capital allocations<br><br>•target profit objectives | •pricing methods and assumption setting<br><br>•stochastic and stress scenario testing<br><br>•required documentation<br><br>•review and approval processes<br><br>•experience monitoring programs |
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In each business unit that sells insurance, we designate individual pricing officers who are accountable for pricing activities, chief
underwriters who are accountable for underwriting activities, and chief claims risk managers who are accountable for claims
activities. Both the pricing officer and the general manager of each business unit approve the design and pricing of each product,
including key claims, policyholder behaviour, investment return and expense assumptions, in accordance with global policies and
standards. Risk management functions provide additional oversight, review and approval of material product and pricing
initiatives, as well as material underwriting initiatives. Actuarial functions provide oversight review and approval of insurance and
investment contract liability valuation methods and assumptions. In addition, both risk and actuarial functions review and approve
new reinsurance arrangements. We perform annual risk and compliance self-assessments of the product development, pricing,
underwriting and claims activities of all insurance businesses. To leverage best practices, we facilitate knowledge transfer
between staff working with similar businesses in different geographies.
We utilize an internally developed global underwriting manual, supplemented with reinsurers’ manuals in certain jurisdictions and
for certain coverages. This is intended to ensure insurance underwriting practices for direct written life business are consistent
across the organization while reflecting local conditions. Each business unit establishes underwriting policies and procedures,
including criteria for approval of risks and claims adjudication policies and procedures.
We apply retention limits per insured life that are intended to reduce our exposure to individual large claims which are monitored
in each business unit. These retention limits vary by market and jurisdiction. We reinsure exposure in excess of these limits with
other companies (see “Risk Management and Risk Factors – Insurance Risk Factors – External market conditions determine the
availability, terms and cost of reinsurance protection” below). Enterprise-wide, we aim to reduce the likelihood of high aggregate
claims by operating globally, insuring a wide range of unrelated risk events, and reinsuring some risks. We seek to actively
manage the Company’s aggregate exposure to each of policyholder behaviour risk and claims risk against enterprise-wide
economic capital limits. Policyholder behaviour risk limits cover the combined risk arising from policy lapses and surrenders,
withdrawals, and other policyholder driven activity. The claims risk limits cover the risks arising from mortality, longevity, and
morbidity.
Internal experience studies, as well as trends in our experience and that of the industry, are monitored to update current and
projected claims and policyholder behaviour assumptions, resulting in updates to insurance contract liabilities as appropriate.
Insurance Risk Factors
Losses may result should actual experience be materially different than that assumed in the valuation of insurance
contract liabilities.
•Such losses could have a significant adverse effect on our results of operations and financial condition. In addition, we
periodically review the assumptions we make in determining our insurance contract liabilities and the review may result in an
increase in insurance contract liabilities and a decrease in net income attributed to shareholders. Such assumptions require
significant professional judgment, and actual experience may be materially different than the assumptions we make. See
“Critical Actuarial and Accounting Policies” below.
•Policyholder behaviour including premium payment patterns, policy renewals, lapse rates and withdrawal, and surrender
activity are influenced by many factors including market and general economic conditions, and the availability and relative
attractiveness of other products in the marketplace. For example, a weak or declining economic environment could increase
the value of guarantees associated with variable annuities or other embedded guarantees and contribute to adverse
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policyholder behaviour experience, or a rapid rise in interest rates could increase the attractiveness of alternatives for
customers holding products that offer contractual surrender benefits that are not market value adjusted, which could also
contribute to adverse policyholder behaviour experience. If premium persistency or lapse rates are significantly different
from our expectations, it could have a material adverse effect on our business, financial condition, results of operations, and
cash flows.
We may be unable to implement necessary price increases on our in-force businesses or may face delays in
implementation.
•We continue to seek state regulatory approvals for price increases on existing long-term care business in the United States.
We cannot be certain whether or when each approval will be granted. For some in-force business, regulatory approval for
price increases may not be required. However, regulators or policyholders may nonetheless seek to challenge our authority
to implement such increases. Our insurance contract liabilities reflect our estimates of the impact of these price increases,
but should we be less successful than anticipated in obtaining them, then insurance contract liabilities could increase
accordingly and reduce net income attributed to shareholders.
Evolving legislation related to genetic testing could adversely impact our underwriting abilities.
•Current or future legislation in jurisdictions where Manulife operates may restrict its right to underwrite based on access to
genetic test results. Without the obligation of disclosure, the asymmetry of information shared between applicant and insurer
could increase anti-selection in both new business and in-force policyholder behaviour. The impact of restricting insurers’
access to this information and the associated problems of anti-selection becomes more acute where genetic technology
leads to advancements in diagnosis of life-threatening conditions that are not matched by improvements in treatment. We
cannot predict the potential financial impact that this would have on the Company or the industry as a whole. In addition,
there may be further unforeseen implications as genetic testing continues to evolve and becomes more established in
mainstream medical practice.
Evolving AI models could adversely impact our underwriting and claims abilities.
•The rapid growth and availability of AI and generative AI technologies presents significant opportunities to enhance
underwriting and claims activities, together with certain risks and challenges. AI models have been implemented in some
geographies to enhance underwriting and claims processes. These new technologies carry risks that may not be fully
understood. The Company puts in place guardrails that seek to limit the scope of exposure and monitors closely the
experience to mitigate any emerging risks, but the Company can make no assurances that these efforts will be successful.
•Future legislation may restrict certain usage of AI models or data that feed into the AI models, which could adversely impact
our underwriting and claims abilities.
Life and health insurance claims may be impacted unexpectedly by changes in the prevalence of diseases or illnesses,
medical and technology advances, widespread lifestyle changes, natural disasters, large-scale human-made disasters
and acts of terrorism.
•Claims resulting from catastrophic events could cause substantial volatility in our financial results in any period and could
materially reduce our profitability or harm our financial condition. Large-scale catastrophic events may also reduce the
overall level of economic activity, which could hurt our business and our ability to write new business. It is possible that
geographic concentration of insured individuals could increase the severity of claims we receive from future catastrophic
events. The effectiveness of external parties, including governmental and non-governmental organizations, in combating the
severity of such an event is outside of our control and could have a material impact on the losses we experience.
Additionally, catastrophic events could harm our reinsurers’ financial condition, resulting in reinsurance defaults.
•The cost of health insurance benefits may be impacted by unforeseen trends in the incidence, termination and severity rates
of claims. The ultimate level of lifetime benefits paid to policyholders may be increased by an unexpected increase in life
expectancy. For example, advances in technology could lead to longer lives through better medical treatment or better
disease prevention. As well, adverse claims experience could result from systematic anti-selection, which could arise from
anti-selective lapse behaviour, underwriting process failures, anti-selective policyholder behaviour due to greater consumer
accessibility to home-based medical screening, or other factors.
External market conditions determine the availability, terms and cost of reinsurance protection which could impact our
financial position and our ability to write new policies.
•As part of our overall risk and capital management strategy, we purchase reinsurance protection on certain risks
underwritten or assumed by our various insurance businesses. As the global reinsurance industry continues to review their
business models, certain of our reinsurers have attempted to increase rates on our existing reinsurance contracts. The
ability of our reinsurers to increase rates depends upon the terms of each reinsurance contract. Typically, a reinsurer’s ability
to raise rates is restricted by terms in our reinsurance contracts, which we seek to enforce. Over the past several years, we
have received rate increase requests from some of our reinsurers. Thus far, dealing with those requests has not had a
material adverse effect on our results of operation or financial condition. Consistent with past practice, we dispute requested
increases and, if necessary, we can pursue legal action in order to protect our contractual rights. While possible outcomes
remain unknown and there can be no assurance that the outcome of any one or more of these disputes would not have a
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material adverse effect on our results of operation or financial condition for a particular reporting period, we believe that our
reserves, inclusive of reinsurance provisions, are appropriate overall.
•In addition, an increase in the cost of reinsurance could also adversely affect our ability to write future new business or result
in the assumption of more risk with respect to policies we issue. Premium rates charged on new policies we write are based,
in part, on the assumption that reinsurance will be available at a certain cost. Certain reinsurers may attempt to increase
rates they charge us for new policies we write, and for competitive reasons, we may not be able to raise the premium rates
we charge for newly written policies to offset the increase in reinsurance rates. If the cost of reinsurance were to increase, or
if reinsurance were to become unavailable and if alternatives to reinsurance were not available, our ability to write new
policies at competitive premium rates could be adversely affected.
Operational Risk
Operational risk is naturally present in all of our business activities and encompasses a broad range of risks, including business
disruptions, damage to physical assets, human resource management failures, processing errors, modelling errors, business
integration, theft and fraud, as well as regulatory compliance failures or legal disputes.
Operational risk is also embedded in all the practices we use to manage other risks; therefore, if not managed effectively,
operational risk can impact our ability to manage other key risks such as credit & investment risk, market & liquidity risk,
insurance risk, and technology and cyber risk.
Operational risk is inherently on the rise as we expand our ecosystem to include more third parties and adopt newer technologies
to drive better customer outcomes and efficiencies. In such cases, an operational risk can arise from outside of Manulife’s
immediate span of direct control and have material consequences for Manulife, our customers, and other key stakeholders. If left
unmitigated, these risks can be amplified across multiple business units and processes resulting in significant exposures.
Exposures can take the form of financial losses, regulatory sanctions, loss of competitive positioning, or damage to our brand
and reputation. As such, there are higher expectations from Manulife’s management, our customers and other key stakeholders,
including regulators, on our ability to ensure continued operations of our most critical operations and services in a face of
disruption.
Furthermore, Manulife has strengthened its operational risk management program by identifying its critical operations, defining
impact tolerances and establishing effective mitigations against severe but plausible disruptions, and has been embedded into
our Operational Risk Frameworks and risk management practices.
Operational Risk and Resilience Management Strategy
Our corporate governance practices, corporate values, and integrated enterprise-wide approach to managing risk set the
foundation for mitigating operational risks. This base is further strengthened by internal controls and systems, compensation
programs, and talent management throughout the organization. We align compensation programs with business strategy, long-
term shareholder value and good governance practices, and we benchmark these compensation practices against peer
companies.
We have our enterprise operational risk management framework that sets out the processes we use to identify, assess, manage,
mitigate, and report on significant operational risk exposures. Complementary to this, we have our operational resilience
framework which outlines Manulife’s approach to resilience including our ability to adapt to, recover from and withstand
disruption of our most critical operations. Operational resilience entails a sound understanding of critical operations and services
end to end and their delivery through severe but plausible circumstances within tolerance for disruption. Overall, the execution of
our operational risk management strategy supports the drive towards a focus on the effective management of our key global
operational risks and operational resilience. Our Operational Risk and Segment Risk Committees oversee all operational risk and
resilience matters, including operational risk strategy, management, and governance. We have enterprise-wide risk management
programs for specific operational risks that could materially impact our ability to do business or impact our reputation.
Business Continuity Risk Management Strategy
Effective business continuity management is an important capability to help ensure the resilience of a firm’s most critical
operations and services. However it has traditionally focused on the ‘recovery after’ rather than the ‘continued operation through’
disruption. At Manulife, we connect our business continuity with other key disciplines such as third-party risk management,
technology risk and disaster recovery, and change risk and data risk management through the lens of critical operations and
seek to ensure that resilience is embedded into the design of processes and technologies to reduce the likelihood of failure in the
first instance.
We manage business continuity risk through its lifecycle in accordance with regulatory requirements, our business continuity risk
management standard, and industry best practices. Management develops and owns the business continuity plans (BCPs) and
processes that seek to minimize the impact of, and continue to operate through disruptions resulting from internal or external
factors. BCPs are developed with a level of detail and comprehensiveness commensurate with the criticality of the business
process and address business strategy and requirements, incorporate inputs from key stakeholders, and details upstream and
downstream dependencies. The BCPs are updated through regular monitoring and testing, recalibrating them to meet the
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evolving environment conditions and business requirements. Oversight and challenge are provided by the risk teams at all
stages of the business continuity management lifecycle, helping to ensure the requirements set out in the standard are being met
and that our plans are up to date and actionable.
Third-Party Risk Management Strategy
Our operations and strategic initiatives depend on a diverse set of third-party relationships—including distributors, independent
contractors, outsourcing providers, and suppliers—that deliver essential services and capabilities. While these relationships are
critical to our business model, they also introduce risks that may affect profitability, regulatory compliance, and reputation if third
parties fail to meet performance expectations, contractual obligations, or legal requirements.
We manage third-party risk through a comprehensive framework that governs the full lifecycle of these relationships. This
includes due diligence during onboarding, clear contractual arrangements, ongoing performance monitoring, and structured
processes for renewal or termination. The framework is designed to be adaptable across various third-party types and is aligned
with applicable regulatory expectations.
Additional oversight is applied to third parties deemed critical to our operations, with enhanced requirements focused on service
continuity, exit planning, and disruption response. Third-party risk is assessed in coordination with broader enterprise risk
domains—including operational, cyber, compliance, and reputational risk—to ensure a holistic view of exposures. These
practices help ensure accountability, resilience, and responsiveness to evolving regulatory expectations.
Change Risk Management Strategy
We seek to ensure that significant changes are practical and meet company objectives, and are successfully implemented and
monitored by management. Our practices are enforced through our framework, policies and standards which are benchmarked
against leading practices and regulatory requirements.
Legal and Regulatory Compliance Program Risk Management Strategy
Compliance oversees our Regulatory Compliance Management program and function. For our centralized programs, support is
provided by our designated Segment Chief Compliance Officers and Compliance Functional leads as instructed by the Global
Chief Compliance Officer. Programs supported include Regulatory Governance, Financial Crimes Compliance, Privacy
Compliance, the Global Ethics Office, and Distribution Compliance.
The program is designed to promote compliance with regulatory obligations worldwide and to assist in making the Company’s
employees aware of the laws and regulations that affect it, along with the risks associated with failing to comply. Compliance
monitors emerging legal and regulatory developments and prepares the Company to address any changes related to new or
existing requirements or obligations.
Compliance seeks to ensure significant issues are escalated and proactively mitigated. Compliance also independently assesses
and monitors the effectiveness of a broad range of regulatory compliance processes and business practices against potential
legal, regulatory, fraud, and reputation risks. These processes and business practices include Privacy, Sales and Marketing
practices, Sales conduct (including compensation practices, product design, suitability and fiduciary responsibilities), Asset
Management practices, the Ethics Hotline, and Regulatory filings. In addition, the Company has standards, policies, processes
and controls in place to help protect the Company, our customers and relevant third parties from acts of fraud, and from risks
associated with money laundering and terrorist financing. Audit Services and Compliance personnel independently assess the
effectiveness of the system of internal controls supporting Compliance. For further discussion of government regulation and legal
proceedings, refer to “Government Regulation” in MFC’s Annual Information Form dated February 11, 2026 and note 18 of the
2025 Annual Consolidated Financial Statements.
Global Privacy Risk Management Framework
In addition to the Regulatory Compliance program above, we also have a global framework for managing the Company’s privacy
risk which is overseen by our Global Chief Privacy Officer and includes policies and standards and ongoing monitoring of
emerging privacy legislation. Processes have been established to provide guidance on handling personal information and for
reporting privacy incidents and issues to appropriate management for response and resolution. Additional controls from both
business and technology functions are in place to support compliance with legal and regulatory expectations. Furthermore, a
network of privacy, compliance and risk officers support implementation across the enterprise, seeking to ensure compliance with
a wide range of global privacy laws and regulations. As privacy legislation continues to evolve, particularly with more stringent
requirements around incident reporting and data subject rights, we remain focused on maintaining compliance and minimizing
associated risks.
Human Resource Risk Management Strategy
We have multiple human resource policies, practices and programs in place that seek to manage the risks associated with
attracting and retaining top talent. These include recruiting programs at every level of the organization, training and development
programs for our individual contributors and people leaders, initiatives to foster inclusion, employee engagement surveys, and
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competitive compensation programs that are designed to attract, motivate, and retain high performing and high potential
employees.
Communications Risk Management Strategy
Our Communications team is responsible for both protecting and managing our reputation and the risk associated with
distributing communications – internally and externally. Our Media and Social Media policies help ensure that proper reviews of
content are taking place ahead of distribution. We also use tools to listen for what others are saying about Manulife as a way to
proactively understand and respond to inherent risk. We have teams that are able to distribute communications in response to a
crisis should we need to.
Marketing Risk Management Strategy
We have policies, processes and controls in place across media channels and forums globally which seek to ensure Manulife's
brands, trademarks, advertising, other marketing-related materials and all communications are presented accurately.
Model Risk Management Strategy
We have designated Model Risk Management teams working closely with model owners and users that seek to manage model
risk. Our model risk oversight program includes processes intended to ensure that our critical business models are conceptually
sound, implemented and performed as expected, and used as intended.
For AI models our Model Risk Management teams will also work closely with other critical control functions in Manulife, including
but not limited to compliance and legal, data governance and privacy offices, IT and Cybersecurity, and other risk management
functions, aiming to ensure responsible development and adoption of AI. Generative AI models, such as Large Language Models
(LLMs), introduce unique challenges in ensuring they operate with acceptable outcomes, particularly concerning risks like model
drift and hallucinations. To mitigate these risks, we employ techniques such as continuous monitoring, fine-tuning, and retraining,
along with human-in-the-loop systems for oversight. Despite these measures, AI models may not perform within an acceptable
range of outcomes.
AI Operational Risk
We currently use, and expect to continue using AI in support of our products, services, and critical business functions, either
through technology we develop or technology developed and maintained by third parties.
The use of AI can accelerate Operational Risks as AI performs tasks previously performed by humans. AI may be susceptible to
manipulation, increasing the potential for fraud, privacy issues, litigation, and other issues. AI itself is prone to errors such as
hallucinations which can lead to incorrect outcomes in, and disruption to, our business processes, including where AI is used to
support the execution of our critical operations and services. The Company strives to put in place appropriate guardrails to
mitigate such risks.
Operational Risk Factors
Competition for the best people is intense and an inability to recruit qualified individuals may negatively impact our
ability to execute on business strategies, conduct our operations or to meet the rapid changes in external environments
such as demographics and regulatory landscape.
•Market fluctuations aside, the competition for top talent and key capabilities continues to be fierce. Our ability to attract
external talent while developing our own internal capabilities is core to our high performing team ambitions. Our industry
continues to require specific core capabilities and in meeting those talent needs we compete against other insurance
companies, financial institutions, and wealth management organizations to attract talent. We compete against organizations
across many industries for digital talent, functional experts, leaders, and sales talent. We also monitor and react to rapid
changes in regulations across the globe. These regulations are often complex and may have a significant impact to our
operations. To find the talent we need to deliver on our strategic objectives and maintain our competitive advantage, our
core approach is focused on building enhanced talent networks to entice top candidates in the market. The risk of other
organizations both inside and outside of our geographic footprint targeting our employees is heightened as companies
maintain flexible remote working arrangements. Additionally, we are in an environment where pay levels have been
increasing more quickly than in recent years due to the competitive talent market, inflation, and other factors. We help
ensure that our value proposition remains competitive and current through offerings such as flexible work arrangements,
learning investments, wellbeing, recognition & incentive programs, and a culture that strives to be recognized as a top
employer within the markets we operate.
If we are not able to attract, motivate and retain agency leaders and individual agents, our competitive position, growth
and profitability will suffer.
•The attraction and motivation of productive and engaged sales representatives (agents) is critical to achieving our financial
targets and a positive customer experience and brand. We compete with other financial services companies for sales
representatives primarily based on the opportunity available, our brand and culture, support services, compensation and
product features. Negative changes to any of these factors, or falling below market competitive levels, could impact our
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ability to attract, retain and engage sufficient sales representatives which could pose a risk to our business objectives and
ambitions and could have a material adverse effect on our business, results of operations and financial condition.
If we are unable to manage the risk of significant changes to our business in accordance with our standards, our
business strategies and plans, and operations may be impaired.
•We must successfully deliver several significant changes to our business to implement our business strategies and
successfully achieve our plans. If we are unable to manage risk imposed by significant changes in accordance with our risk
appetite and in order to capture the projected benefits and outcomes of such changes, there could be a material adverse
effect on our business and financial condition.
Key business processes may fail, causing material loss events and impacting our customers and reputation.
•Our institution processes a substantial volume of complex transactions both internally and through third-party relationships.
This complexity introduces a risk that errors could have material impact on our customers or result in financial loss for the
organization. To mitigate these risks, we have instituted controls that seek to ensure timely and accurate processing for our
most significant business processes. Furthermore, we have established necessary monitoring, escalation and reporting
processes to promptly address errors that may arise.
The interconnectedness of our operations and risk management strategies could expose us to risk if all factors are not
appropriately considered and communicated.
•Our business operations, including strategies and operations related to risk management, asset liability management and
liquidity management, are interconnected and complex. Changes in one area may have a secondary impact in another area
of our operations. For example, risk management actions, such as the increased use of interest rate swaps, could have
implications for liquidity risk management, as this strategy could result in the need to post additional amounts of collateral.
Failure to appropriately consider these inter-relationships, or effectively communicate changes in strategies or activities
across our operations, could have a negative impact on the strategic objectives or operations of another group.
Our risk management policies, procedures and strategies may leave us exposed to unidentified or unanticipated risks,
which could negatively affect our business, results of operations and financial condition.
•We devote significant resources to develop our risk management policies, procedures, and strategies. Nonetheless, there is
a risk that our policies, procedures, and strategies may not be comprehensive. Many of our methods for measuring and
managing risk exposures are based upon the use of observed historical market behaviour or statistics based on historical
models. Future behaviour may differ from past behaviour. Furthermore, data or models we use may not always be accurate,
complete, up-to-date, or properly evaluated or reported.
We are subject to tax audits, tax litigation or similar proceedings, and as a result we may owe additional taxes, interest
and penalties in amounts that may be material.
•We are subject to income and other taxes in the jurisdictions in which we do business. In determining our provisions for
income taxes and our accounting for tax-related matters in general, we are required to exercise judgment. We regularly
make estimates where the ultimate tax determination is uncertain. There can be no assurance that the final determination of
any tax audit, appeal of the decision of a taxing authority, tax litigation or similar proceedings will not be materially different
from that reflected in our historical financial statements. The assessment of additional taxes, interest and penalties could be
materially adverse to our current and future results of operations and financial condition.
Our operations face political, legal, operational and other risks that could negatively affect those operations or our
results of operations and financial condition.
•Our operations face the risk of discriminatory regulation, political and economic instability, the imposition of economic or
trade sanctions, isolationist foreign policies, armed conflicts, civil unrest or disobedience, government policies or regulations
adopted in response to political or social pressures and rising populism and/or nationalism, limited protection for, or
increased costs to protect intellectual property rights, inability to protect and/or enforce contractual or legal rights,
nationalization or expropriation of assets, price controls and exchange controls or other restrictions that prevent us from
transferring funds out of the countries in which we operate and disruptions in global supply chains. In addition, as political
tensions and populism and/or nationalism rise in a number of locations, compliance with laws and regulations by global
financial institutions may become challenging as complying with the requirements in one jurisdiction may be contrary to the
requirements of another.
•A substantial portion of our revenue and net income attributed to shareholders is derived from our operations outside of
North America, primarily in Asian markets. Some of these markets are developing and are rapidly growing countries where
these risks may be heightened.
•There is tension between mainland China and Canada, the U.S. and their allies over a number of issues, including trade,
technology and human rights resulting in the imposition of sanctions and trade restrictions on companies and individuals.
Mainland China and the Hong Kong SAR are important markets for Manulife and tensions may create a more challenging
operating environment for Manulife. In addition, the military conflicts in the Middle East and in Ukraine may negatively impact
regional and global financial markets and economies.
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•These risks could result in disruptions to our operations, unanticipated costs, increased market volatility and inflation, a
contraction of business activity and recession, diminished investor and consumer confidence, lower investment growth,
insurance sales and fees earned on managed assets, the loss of assets or a reduction in their value and reduced
remittances. Failure to manage these risks could have a significant negative impact on our operations and profitability
globally.
We are regularly involved in litigation.
•We are regularly involved in litigation, either as a plaintiff or defendant. These cases could result in an unfavourable
resolution and could have a material adverse effect on our results of operations and financial condition. For further
discussion of legal proceedings refer to note 18 of the 2025 Annual Consolidated Financial Statements.
We may experience difficulty in marketing and distributing products through our current and future distribution
channels.
•We distribute our insurance and wealth management products through a variety of distribution channels, including brokers,
independent agents, broker-dealers, banks, wholesalers, affinity partners, other third-party organizations and our own sales
force in Asia. We generate a significant portion of our business through individual third-party arrangements. We periodically
negotiate provisions and renewals of these relationships, and there can be no assurance that such terms will remain
acceptable to us or relevant third parties. An interruption in our continuing relationship with certain of these third parties could
significantly affect our ability to market our products and could have a material adverse effect on our business, results of
operations and financial condition.
Model risk may arise from the inappropriate use or interpretation of models or their output, or the use of deficient
models, data or assumptions.
•We rely on highly complex models to support the various operations such as underwriting, pricing, valuation, risk
measurement, and for input on decision-making. Consequently, the risk of inappropriate use or interpretation of our models
or their output, or the use of deficient or outdated models, could have a material adverse effect on our business.
Fraud risks may arise from incidents caused by many internal and external threats.
•As a major financial institution, Manulife is subject to fraud risk stemming from internal and external threats. It is impossible
to eliminate all fraud risk; however, having an effective company-wide Anti-Fraud Program to guide the organization on
minimum required controls, as outlined by the Global Anti-Fraud Standard, will maximize the likelihood that fraud will be
prevented or detected in a timely manner and will create a strong deterrent to fraudulent activities such as account takeover,
bank, claims, distribution, underwriting, and others. The Anti-Fraud Office within Compliance is responsible for Second Line
governance and oversight of global fraud risks. Despite these efforts, Manulife may not be successful in preventing or timely
detecting fraud, which could result in business disruption or financial losses, either due to the fraud itself, or from measures
Manulife adopts to mitigate fraudulent activity. In addition to the risk of loss, Manulife could face legal actions and the loss of
customer and market confidence from fraud events.
Contracted third parties may fail to deliver against contracted activities.
•We rely on third parties to perform a variety of activities on our behalf, and failure of our most significant third parties to meet
their contracted obligations may impact our ability to meet our strategic objectives or may directly impact our customers.
Third-party governance processes are in place that seek to ensure that appropriate due diligence is conducted at time of
contracting, and ongoing third-party monitoring activities are in place that seek to ensure that the contracted services are
being fulfilled to satisfaction but we may nevertheless be unable to mitigate all possible failures.
Damage to the natural environment may arise related to our business operations, owned property or commercial
mortgage loan portfolio.
•Environmental risk may originate from investment properties that are subject to natural or human-made environmental risk.
Real estate assets may be owned, leased and/or managed, as well as mortgaged by Manulife and we might enter into the
chain of liability due to foreclosure ownership when in default.
•Liability under environmental protection laws resulting from our commercial mortgage loan portfolio and owned property
(including commercial real estate, timberland and farmland properties) may adversely impact our reputation, results of
operations and financial condition. Under applicable laws, contamination of a property with hazardous materials or
substances may give rise to a lien on the property to secure recovery of the costs of cleanup. In some instances, this lien
has priority over the lien of an existing mortgage encumbering the property. The environmental risk may result from on-site
or off-site (adjacent) due to migration of regulated pollutants or contaminants with financial or reputational environmental risk
and liability consequences by virtue of strict liability. Environmental risk could also arise from natural disasters (e.g., climate
change, weather, fire, earthquake, floods, and pests) or human activities (use of chemicals or pesticides) conducted within
the site or when impacted from adjacent sites.
•Additionally, as lender, we may incur environmental liability (including without limitation liability for cleanup, remediation and
damages incurred by third parties) similar to that of an owner or operator of the property, if we or our agents exercise
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sufficient control over the operations at the property. We may also have liability as the owner and/or operator of real estate
for environmental conditions or contamination that exist or occur on the property or affecting other property.
•Across our portfolio of investment properties, we seek to ensure appropriate levels of insurance are maintained in line with
industry standards. These policies often include protections against physical and/or operational damage related to various
environmental risks. Should the availability of such insurance policies become more limited or not reasonably commercially
available, there may be an increased risk of loss for environmental related damages on our portfolio.
Pandemics, epidemics or infectious disease outbreaks, and the economic, legal, regulatory, tax and other responses to
such pandemics, epidemics, or infectious disease outbreaks, could have a material adverse effect on our business,
results of operations and financial condition.
•We purchase reinsurance protection on certain risks underwritten or assumed by our various insurance businesses. As
either a direct or indirect result of a pandemic, epidemic or infectious disease outbreaks, we may find reinsurance more
difficult or costly to obtain.
•In pricing or repricing of new business, the impact of any pandemic, epidemic or infectious disease outbreaks related
changes may be compounded with or offset by other pricing inputs. These inputs include assumption changes (e.g.,
reinsurance, interest rates, morbidity, mortality, expense, lapse, and surrender changes), business considerations related to
retaining specific market share or client business and regulatory restrictions impacting the approval process for price
changes.
•Market volatility and stressed conditions resulting from pandemic, epidemic or infectious disease outbreaks could result in
additional cash and collateral demands primarily from changes to policyholder termination or renewal rates, withdrawals of
customer deposit balances, borrowers renewing or extending their loans when they mature, derivative settlements or
collateral demands, reinsurance settlements or collateral demands, and our willingness to support the local solvency
position of our subsidiaries. Such an environment could also limit our access to capital markets. Sustained global economic
uncertainty could also result in adverse credit rating changes which in turn could result in more costly or limited access to
funding sources. While we currently have a variety of sources of liquidity including cash balances, short-term investments,
government and highly rated corporate bonds, and access to contingent liquidity facilities, there can be no assurance that
these sources will provide us with sufficient liquidity on commercially reasonable terms in the future.
•Pandemics, epidemics, or infectious disease outbreaks may result in further increases in the risks outlined in the “Risk
Management and Risk Factors” section of this document, including strategic, market, liquidity, insurance, model, business
continuity, legal, regulatory, reputational, operational, and technology and cyber risks.
Technology & Cyber Risk
Technology & cyber risk refers to the potential for loss or disruption arising from failures in technology systems or from
unauthorized access, misuse, or attacks on information assets. These risks encompass system outages, data breaches, and
operational disruptions caused by factors such as hardware or software failures, human error, cyber-attacks, or vulnerabilities in
third-party services. As we rely on secure and resilient technology to support our insurance and investment operations, protect
customer and policyholder information, and deliver consistent service, any significant disruption or compromise could affect our
ability to operate effectively, safeguard sensitive information, and maintain customer trust. The evolving nature of cyber threats,
including the use of advanced techniques and emerging technologies, adds complexity to managing these risks and requires
ongoing investment in security controls, monitoring, and resilience measures.
Technology and Cyber Risk Management Strategy
Our global framework for managing technology and cyber risks is supported by enterprise-wide programs that establish
governance, policies, standards, and controls to protect our information assets and systems. These programs are guided by
dedicated leadership, including the Chief Information Security Officer, Chief Technology Officer, Chief Information Risk Officer,
and Chief Privacy Officer, who provide strategic direction and oversight.
Risk is managed collaboratively across business, technology, and oversight teams. This includes identifying, monitoring, and
reporting critical exposures; maintaining risk profiles and dashboards; advising on emerging threats and regulatory
developments; and embedding sound practices into sourcing, outsourcing, and vendor management.
Technology risk management focuses on ensuring the availability, performance, recovery, capacity, and integrity of new and
existing systems that support our core business operations. This includes proactive monitoring, incident response planning, and
infrastructure safeguards to minimize disruption and maintain operational resilience.
Cybersecurity activities focus on managing confidentiality, integrity, and availability risks through access control, system security,
vulnerability management, and operational safeguards. These efforts are supported by ongoing security awareness training for
all employees. As emerging technologies such as artificial intelligence and automation advance, we continue to strengthen our
resilience and adapt our risk management practices to proactively address new and emerging threats.
The Board’s Risk Committee regularly reviews the effectiveness of these programs and engages in discussions to ensure the
Company is well-positioned to identify and respond to technology and cybersecurity risks.
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Technology and Cyber Risk Factors
A cybersecurity breach involving our systems or those of a third party could result in unauthorized access to sensitive
information, disruption of operations, financial loss, regulatory exposure, and reputational harm.
•We and our vendors, like other commercial entities, have been, and will likely continue to be, subject to a variety of forms of
cyberattacks with the objective of gaining unauthorized access to our systems and data, or disrupting our operations.
•The Company may not always be able to anticipate or implement effective measures to prevent all disruptions from privacy
and security breaches. Threat actors continue to evolve in both sophistication and scale, employing techniques such as
malware, phishing, denial-of-service, and social engineering. These attacks may originate from criminal organizations,
activist groups, or state-sponsored entities, and the increasing use of AI technologies will add velocity and complexity to the
threat landscape. Such incidents can target our systems directly or exploit vulnerabilities in third-party services to gain
access or cause disruption.
•We manage these risks through layered security controls, threat intelligence, proactive monitoring, incident response
planning, and infrastructure safeguards. Our enterprise-wide Information Risk Management Program provides governance
and oversight, supported by dedicated leadership. While we believe our defenses are strong, there can be no assurance
that these countermeasures will be successful in every instance. We also maintain cyber risk insurance; however, coverage
may not extend to all costs associated with the financial, operational, and reputational consequences of personal,
confidential, or proprietary information being compromised.
Technology system failures, outages, or disruptions to facilities may impact business operations and continuity.
•Technology is embedded in nearly every aspect of our business and is central to our strategy for serving customers.
Disruptions caused by system failures, human error, or external events such as natural disasters, pandemics, or
infrastructure outages (including electric grids, undersea cables, and satellite communications), may impair our ability to
operate effectively and maintain business continuity. Although our facilities and operations are distributed globally, such
events can restrict access to key locations and disrupt the ability of employees, partners, and vendors to support critical
functions.
•We support operational resilience through redundancy in critical systems, proactive monitoring, incident response planning,
infrastructure safeguards, and regular testing of recovery capabilities. These measures enable us to operate through, and
recover from, unpredictable events. An interruption to our operations may subject us to regulatory sanctions and legal
claims, lead to a loss of customers, assets and revenues, or otherwise adversely affect us from a financial, operational and
reputational perspective.
Changes in cybersecurity or privacy regulations may increase our compliance costs, limit our liability to gain insight
from data and lead to increased scrutiny.
•We collect, process, store, share, disclose and use personal information from and about our customers, employees and plan
participants as well as our website, mobile and application users. Any actual or perceived failure by us or our service
providers to comply with our privacy policies, privacy-related obligations to customers, employees or third parties, data
disclosure consent obligations and data protection obligations may result in governmental enforcement actions, litigation or
public statements critical of us. Such actual or perceived failures could also cause our customers, suppliers and employees
to lose trust in us, which may have an adverse effect on our business.
•Restrictions on data collection and use may limit opportunities to gain business insights useful to running our business and
offering innovative products and services. We are subject to numerous regulations regarding the privacy and security of
personal information. These laws vary widely by jurisdiction. Ongoing global developments in AI regulation will continue to
increase and require attention and investments. These regulations, which are designed to protect privacy and prevent
misuse of personal information, are complex and change frequently. The public, consumer and privacy advocates,
legislatures and regulators are increasingly concerned about the collection, use, sharing and cross-border transfer of
personal data, especially personal information that may be deemed sensitive, such as financial information, behavioral data,
biometric data and health data. Additional legislative or regulatory action could further regulate our collection, use, sharing
and other processing of personal data. Changes in existing cybersecurity and privacy regulations or the enactment of new
regulations may increase our compliance costs and failure to comply with these regulations may lead to reputational
damage, fines or civil damages and increased regulatory scrutiny and oversight.
Our use of artificial intelligence is subject to the same risks inherent in other technology systems.
•We intend to avail ourselves of the benefits, insights and efficiencies that are available through the use of AI. To this end, we
may pay and bear expenses and fees associated with developing, using and maintaining such technology.
•Our use of AI may yield inaccurate, incomplete, or ineffective results, which could lead to operational and reputational harm
to the extent that we rely on such results. We test for hallucinations and monitor outcomes but given the highly flexible
nature of AI it is impossible to prevent all unexpected outcomes. In the event of unexpected outcomes with AI we have
processes to respond to those failures and incidents.
•AI is a new and rapidly evolving technology so we may implement it incorrectly or embed it into business processes that are
not well suited for digitization resulting in processing errors or other failures. Our investments in AI may not produce the
value expected and we may experience delays in implementing AI technology due to insufficient talent, non-performant
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technology or other factors; our vendors may not be able to provide us with the solutions required to achieve our AI
objectives. We have established a governance framework, AI councils and related processes to govern our use of AI, and
manage risks related thereto.
Evolving Risks
The identification and assessment of our external environment for evolving risks is an important aspect of our ERM Framework,
as these risks could have the potential to have a material adverse impact on our operations and/or business strategies.
Our evolving risk framework facilitates the ongoing identification, assessment and monitoring of evolving risks, and includes:
maintaining a process for the ongoing discussion and evaluation of such risks with management; reviewing and validating
evolving risks with the ERC; developing and executing on responses to each evolving risk based on materiality and prioritization;
and monitoring and reporting on evolving risks on a regular basis to the Board’s Risk Committee.
Additional Risk Factors That May Affect Future Results
Other factors that may affect future results include changes in government trade policy; monetary policy or fiscal policy, including
interest rates policy from central banks; geopolitical conditions and developments in or affecting the countries in which we
operate; technological changes; public infrastructure disruptions; changes in consumer spending and saving habits; the possible
impact on local, national or global economies from public health or natural disaster emergencies; and international conflicts and
other developments including those relating to terrorist activities. Although we take steps to anticipate and minimize risks in
general, unforeseen future events may have a negative impact on our business, financial condition and results of operations.
We caution that the preceding discussion of risks that may affect future results is not exhaustive. When relying on our forward-
looking statements to make decisions with respect to our Company, investors and others should carefully consider the foregoing
risks, as well as other uncertainties and potential events, and other external and company-specific risks that may adversely affect
the future business, financial condition or results of operations of our Company.
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10. Capital Management Framework
Manulife seeks to manage its capital with the objectives of:
•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.
Capital is managed and monitored in accordance with the Capital Management Policy. The Policy is reviewed and approved by
the Board annually and is integrated with the Company’s risk and financial management frameworks. It establishes guidelines
regarding the quantity and quality of capital, internal capital mobility, and proactive management of ongoing and future capital
requirements.
Our capital management framework takes into account the requirements of the Company as a whole, as well as the needs of
each of our subsidiaries. Internal capital targets are set above regulatory requirements, and consider a number of factors,
including results of sensitivity and stress testing and our own risk assessments, as well as business needs. We monitor against
these internal targets and initiate actions appropriate to achieving our business objectives.
We periodically assess the strength of our capital position under various stress scenarios. The annual Financial Condition Testing
(“FCT”) typically quantifies the financial impact of economic events arising from shocks in public equity and other markets,
interest rates and credit, amongst others. Our 2025 FCT results demonstrate that we would have sufficient assets, under the
various adverse scenarios tested, to discharge our insurance and investment contract liabilities. This conclusion was also
supported by a variety of other stress tests conducted by the Company.
We use an Economic Capital (“EC”) framework to inform our internal view of the level of required capital and available capital.
The EC framework is a key component of the Own Risk and Solvency Assessment process, which is an internal assessment of
an insurer’s risks, capital needs and solvency position, and is used for setting Internal Capital Targets.
Capital management is also integrated into our product planning and performance management practices.
The composition of capital between equity and other capital instruments impacts the financial leverage ratio which is an
important consideration in determining the Company’s financial strength and credit ratings. The Company monitors and
rebalances its capital mix through capital issuances and redemptions.
Financing Activities
Securities Transactions
During 2025, we raised a total of $1.9 billion of debt securities in Canada and the U.S., and $1.0 billion of subordinated debt was
redeemed at par.
| ($ millions) | Par value | Issued(1) | Redeemed/<br><br>Matured(1) |
|---|---|---|---|
| 3.983% MFC Subordinated debenture, issued on May 23, 2025 | $500 | $497 | $- |
| 4.986% MFC Senior notes, issued on Dec 11, 2025 | US$1,000 | 1,362 | |
| 2.237% MFC Subordinated debenture, redeemed on May 12, 2025 | $1,000 | - | 1,000 |
| Total | $1,859 | $1,000 |
(1)Represents carrying value, net of issuance costs.
Normal Course Issuer Bid
On February 19, 2025, we received approval from the Toronto Stock Exchange (“TSX”) to launch a normal course issuer bid (the
“2025 NCIB”), permitting the purchase for cancellation of up to 51.5 million common shares, representing approximately 3.0% of
common shares outstanding as at February 12, 2025. Purchases under the 2025 NCIB commenced on February 24, 2025, and
may continue until February 23, 2026, when the 2025 NCIB expires, or such earlier date as we complete our purchases.
The 2024 NCIB was announced on February 20, 2024 and subsequently amended on May 7, 2024. We received approval from
the TSX to purchase for cancellation up to 90 million of common shares, representing approximately 5.0% of common shares
outstanding as at February 12, 2024. The 2024 NCIB expired on February 22, 2025.
During the year ended December 31, 2025, we purchased for cancellation 54.4 million common shares for a total cost of $2.4
billion pre-tax, including 48.7 million common shares for a total cost of $2.1 billion pre-tax under the 2025 NCIB, and 5.7 million
common shares for a total cost of $0.2 billion pre-tax under the 2024 NCIB.
1 See “Caution regarding forward looking statements” above.
2 The net redemption of capital instruments consists of the redemption $1.0 billion of subordinated debt, partially offset by the issuance of $0.5 billion of subordinated
debt in 2Q25.
3 The net issuance of securities consists of the issuance of US$1.0 billion senior debt in 4Q25 and the issuance of $0.5 billion subordinated debt in 2Q25, partially
offset by the redemption of $1.0 billion subordinated debt in 2Q25.
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On February 11, 2026, we announced that we are launching a normal course issuer bid (the “2026 NCIB”) permitting the
purchase for cancellation of up to 42 million common shares, representing approximately 2.5% of common shares outstanding
as at January 31, 2026. We have received approval from OSFI for the 2026 NCIB on January 19, 2026. Purchases under the
2026 NCIB are expected to commence in late February, subject to approval from the TSX.1
Consolidated Capital
| As at December 31, | 2024 |
|---|---|
| ( millions) | |
| Non-controlling interests | $1,421 |
| Participating policyholders’ equity | 567 |
| Preferred shares and other equity | 6,660 |
| Common shareholders’ equity(1) | 44,312 |
| Total equity | 52,960 |
| Exclude the accumulated other comprehensive gain/(loss) on cash flow hedges | 119 |
| Total equity excluding accumulated other comprehensive gain/(loss) on cash flow hedges | 52,841 |
| Post-tax CSM | 19,497 |
| Qualifying capital instruments | 7,532 |
| Consolidated capital(2) | $79,870 |
All values are in US Dollars.
(1)Common shareholders’ equity is equal to total shareholders’ equity less preferred shares and other equity.
(2)Consolidated capital does not include $7.7 billion (2024 – $6.6 billion) of MFC senior debt as this form of financing does not meet OSFI’s definition of regulatory
capital at the MFC level. The Company has down-streamed the proceeds from this financing into operating entities in a form that qualifies as regulatory capital at
the subsidiary level.
MFC’s consolidated capital was $81.6 billion as at December 31, 2025, an increase of $1.7 billion compared with $79.9 billion as
at December 31, 2024. The increase was primarily driven by a higher post-tax CSM, partially offset by the net redemption of
capital instruments2 and a decrease in total equity. The decrease in total equity was driven by dividends and common share
buybacks, partially offset by total comprehensive income, which was unfavourably impacted by a stronger Canadian dollar
relative to the U.S. dollar.
Remittance of Capital
As part of its capital management, Manulife promotes internal capital mobility so that MFC has access to funds to meet its
obligations and to optimize capital deployment. Remittances is defined as the cash remitted or made available for distribution to
MFC from its subsidiaries, prior to payment of financing costs, dividends, and other capital deployments. It is a key metric used
by management to evaluate our financial flexibility. In 2025, MFC subsidiaries delivered $6.4 billion in remittances of which Asia
and U.S. operations delivered $2.1 billion and $1.7 billion, respectively. Remittances were $0.6 billion lower than 2024 due to the
favourable impact of market movements in 2024.
Financial Leverage Ratio
MFC’s financial leverage ratio as at December 31, 2025 was 23.9%, a decrease of 0.1 percentage points from 24.0% as at
December 31, 2024. The decrease in the ratio was driven by a higher post-tax CSM and the impact of a stronger Canadian dollar
on foreign currency denominated debt, partially offset by the net issuance of securities3 and a decrease in total equity.
Common Shareholder Dividends
The declaration and payment of shareholder dividends and the amount thereof are at the discretion of the Board and depend
upon various factors, including the results of operations, financial conditions, future prospects of the Company, dividend payout
ratio, and taking into account regulatory restrictions on the payment of shareholder dividends.
Common Shareholder Dividends Paid
| For the years ended December 31, | 2024 |
|---|---|
| per share | |
| Dividends paid | $1.60 |
All values are in US Dollars.
1 Includes MLI, John Hancock Life Insurance Company (U.S.A.), John Hancock Life & Health Insurance Company, and John Hancock Life Insurance Company of
New York.
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The Company offers a Dividend Reinvestment Program (“DRIP”) whereby shareholders may elect to automatically reinvest
dividends in the form of MFC common shares instead of receiving cash. The offering of the program and its terms of execution
are subject to the Board’s discretion.
During 2025, the required common shares in connection with the DRIP were purchased on the open market with no applicable
discount.
Regulatory Capital Position
MFC and MLI are regulated by OSFI and are subject to consolidated risk based capital requirements. Manulife monitors and
manages its consolidated capital in compliance with the OSFI LICAT guideline. Under this regime, our available capital and other
eligible capital resources are measured against a required amount of risk capital determined in accordance with the guideline.
For regulatory reporting purposes under the LICAT framework, consolidated capital is adjusted for various additions or
deductions to capital as mandated by the guidelines defined by OSFI.
Manulife’s operating activities are conducted within MLI and its subsidiaries. MLI’s LICAT ratio was 136% as at December 31,
2025, compared with 137% as at December 31, 2024. The decrease in the ratio was driven by dividends and common share
buybacks, the acquisition of Comvest, the impact of the new segregated fund capital requirements effective January 1, 2025, as
well as the net redemption of subordinated debt, partially offset by the positive impact of earnings and the CSM, the RGA U.S.
Reinsurance Transaction and the net impact of updates to actuarial methods and assumptions.
MFC’s LICAT ratio was 125% as at December 31, 2025, compared with 124% as at December 31, 2024, with the change driven
by similar factors that impacted the movement in MLI’s LICAT ratio. The difference between the MLI and MFC ratios is largely
due to $6.3 billion (2024 – $6.6 billion) of MFC senior debt outstanding that does not qualify as available capital at the MFC level,
but based on the form it was down-streamed to MLI, it qualifies as regulatory capital at the MLI level.
The LICAT ratios as at December 31, 2025, resulted in excess capital of $24.1 billion over OSFI’s supervisory target ratio of
100% for MLI, and $23.7 billion over OSFI’s regulatory minimum target ratio of 90% for MFC (no supervisory target is applicable
to MFC). In addition, all MLI’s subsidiaries maintain capital levels in excess of local requirements.
Credit Ratings
Manulife’s operating companies have strong financial strength ratings from credit rating agencies. These ratings are important
factors in establishing the competitive position of insurance companies and maintaining public confidence in products being
offered. Maintaining strong ratings on debt and capital instruments issued by MFC and its subsidiaries allows us to access
capital markets at competitive pricing levels. Should these credit ratings decrease materially, our cost of financing may increase
and our access to funding and capital through capital markets could be reduced.
During 2025, S&P, Morningstar DBRS, Fitch, and AM Best Company (“AM Best”) maintained their assigned ratings of MFC and
its primary insurance operating companies. On September 19, 2025, Moody’s upgraded the financial strength ratings for
Manulife’s primary insurance operating companies1 to Aa3 from A1. As indicated in Moody’s press release, the upgrade reflects
improved profitability, strong capital, and reduced exposure to lower ROE and legacy businesses.
The following table summarizes the financial strength ratings of MLI and certain of its subsidiaries as at January 31, 2026.
Financial Strength Ratings
| Subsidiary | Jurisdiction | S&P | Moody’s | Morningstar DBRS | Fitch | AM Best |
|---|---|---|---|---|---|---|
| The Manufacturers Life Insurance Company | Canada | AA- | Aa3 | AA | AA | A+<br><br>(Superior) |
| John Hancock Life Insurance Company (U.S.A.) | United States | AA- | Aa3 | Not Rated | AA | A+<br><br>(Superior) |
| Manulife (International) Limited | Hong Kong | AA- | Not Rated | Not Rated | Not Rated | Not Rated |
| Manulife Life Insurance Company | Japan | A+ | Not Rated | Not Rated | Not Rated | Not Rated |
| Manulife (Singapore) Pte. Ltd. | Singapore | AA- | Not Rated | Not Rated | Not Rated | Not Rated |
As at January 31, 2026, S&P, Moody’s, Morningstar DBRS, Fitch, and AM Best had a stable outlook on these ratings. The S&P
rating and outlook for Manulife Life Insurance Company are constrained by the sovereign rating on Japan (A+/Stable).
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11. Critical Actuarial and Accounting Policies
The preparation of Consolidated Financial Statements in conformity with IFRS requires management to make judgments,
estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities,
and the disclosure of contingent assets and liabilities as at the date of the Consolidated Financial Statements, and the reported
amounts of insurance service, investment result, and other revenues and expenses during the reporting periods. Actual results
may differ from these estimates. The most significant estimation processes relate to evaluating assumptions used in measuring
insurance and investment contract liabilities and reinsurance contract held liabilities, assessing assets for impairment,
determining of pension and other post-employment benefit obligation and expense assumptions, determining income taxes and
uncertain tax positions, and estimating fair values of certain invested assets. Estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimates are revised
and in any future years affected. Although some variability is inherent in these estimates, management believes that the amounts
recorded are appropriate. The material accounting policies used and the most significant judgments made by management in
applying these accounting policies in the preparation of the 2025 Annual Consolidated Financial Statements are described in
note 1 to the Consolidated Financial Statements.
Critical Actuarial Policies – Insurance and Investment Contract Liabilities
Insurance contract liabilities are determined under IFRS 17 “Insurance Contracts”, which establishes principles for the
recognition, measurement, presentation and disclosure of insurance contracts within the scope of the Standard. The objective of
IFRS 17 is to ensure that an entity provides relevant information that faithfully represents those contracts. This information
provides a basis for users of financial statements to assess the effect that insurance contracts have on the entity’s financial
position, financial performance, and cash flows.
Insurance contract liabilities include the fulfilment cash flows and the contractual service margin. The fulfilment cash flows
comprise:
•An estimate of future cash flows
•An adjustment to reflect the time value of money and the financial risk related to the future cash flows if not included in the
estimate of future cash flows
•A risk adjustment for non-financial risk
Estimates of future cash flows including any adjustments to reflect the time value of money and financial risk represent the
estimated value of future policyholder benefits and settlement obligations to be paid over the term remaining on in-force policies,
including costs of servicing the policies, reduced by any future amounts paid by policyholders to the Company for their policies.
The determination of estimates of future cash flows involves the use of estimates and assumptions. To determine the best
estimate amount, assumptions must be made for several key factors, including future mortality and morbidity rates, rates of
policy termination and premium persistency, operating expenses, and certain taxes (other than income taxes). Further
information on best estimate assumptions is provided in the “Best Estimate Assumptions” section below.
To reflect the time value of money and financial risk, estimates of future cash flows are generally discounted using risk-free yield
curves adjusted by an illiquidity premium to reflect the liquidity characteristics of the liabilities. The Company primarily uses a
deterministic projection using best estimate assumptions to determine the present value of future cash flows. However, where
there are financial guarantees such as universal life minimum crediting rates guarantees, participating life zero dividend floor
implicit guarantees and variable annuities guarantees, a stochastic approach to capture the asymmetry of the risk is used. For
the stochastic approach the cash flows are both projected and discounted at scenario specific rates calibrated on average to be
the risk-free yield curves adjusted for illiquidity. The Company disaggregates insurance finance income or expenses on insurance
contracts issued for most of its group of insurance contracts between profit or loss and other comprehensive income (“OCI”). The
impact of changes in market interest rates on the value of the life insurance and related reinsurance assets and liabilities is
reflected in OCI to minimize accounting mismatches between the accounting for insurance assets and liabilities and supporting
financial assets.
Risk adjustments for non-financial risk represent the compensation an entity requires for bearing the uncertainty about the
amount and timing of the cash flows that arises from non-financial risk as the entity fulfills insurance contracts. The risk
adjustment considers insurance, lapse and expense risks, includes both favourable and unfavourable outcomes, and reflects
diversification benefits from the insurance contracts issued. The Company has estimated the risk adjustment using a margin
approach. This approach applies a margin for adverse deviation, typically in terms of a percentage of best estimate assumptions,
where future cash flows are uncertain. The resulting cash flows are discounted at rates consistent with the best estimate cash
flows to arrive at the total risk adjustment. The ranges of these margins are set by the Company and reviewed periodically. The
risk adjustment for non-financial risk for insurance contracts corresponds to a 90% – 95% confidence level for all segments. The
risk adjustment for non-financial risk leads to higher insurance contract liabilities, but increases the income recognized in later
periods as the risk adjustment releases as the non-financial risk on policies decreases.
The contractual service margin represents the present value of unearned profits the entity will recognize as services are provided
in the future.
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Total net insurance contract liabilities were $540.3 billion as at December 31, 2025 (December 31, 2024 – $522.8 billion),
reflecting business growth and foreign exchange impacts.
Best Estimate Assumptions
We follow established processes to determine the assumptions used in the determination of insurance contract liabilities. The
nature of each risk factor and the process for setting the assumptions used in the determination are discussed below.
Mortality
Mortality relates to the occurrence of death. Mortality assumptions are based on our internal as well as industry past and
emerging experience and are differentiated by sex, underwriting class, policy type and geographic market. We make
assumptions about future mortality improvements using historical experience derived from population data. Reinsurance is used
to offset some of our direct mortality exposure on in-force life insurance policies with the impact of the reinsurance separately
accounted for in our reinsurance contract assets or liabilities. Actual mortality experience is monitored against these assumptions
separately for each business. The results are favourable where mortality rates are lower than assumed for life insurance and
where mortality rates are higher than assumed for payout annuities and long-term care. Overall 2025 experience was
unfavourable (2024 – favourable) when compared with our assumptions.
Morbidity
Morbidity relates to the occurrence of accidents and sickness for the insured risks. Morbidity assumptions are based on our
internal as well as industry past and emerging experience and are established for each type of morbidity risk and geographic
market. For our John Hancock Long Term Care business we make assumptions about future morbidity changes. Actual morbidity
experience is monitored against these assumptions separately for each business. Our morbidity risk exposure relates to future
expected claims costs for long-term care insurance, as well as for group benefits and certain individual health insurance products
we offer. Overall 2025 experience was favourable (2024 – favourable) when compared with our assumptions.
Policy Termination and Premium Persistency
Policy termination includes 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 our recent experience adjusted for expected future
conditions. Assumptions reflect differences by type of contract within each geographic market and actual experience is monitored
against these assumptions separately for each business. Overall 2025 experience was unfavourable (2024 – unfavourable)
when compared with our assumptions.
Directly Attributable Expenses and Taxes
Directly attributable operating expense assumptions reflect the projected costs of maintaining and servicing in-force policies,
including associated directly attributable overhead expenses. The expenses are derived from internal cost studies and are
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 mature. Actual expenses are monitored against assumptions separately for each business.
Overall maintenance expenses for 2025 were unfavourable (2024 – unfavourable) when compared with our assumptions. Taxes
reflect assumptions for future premium taxes and other non-income related taxes.
Experience Adjusted Products
Where policies have features that allow the impact of changes in experience to be passed on to policyholders through policy
dividends, experience rating refunds, credited rates or other adjustable features, the projected policyholder benefits are adjusted
to reflect the projected experience. Minimum contractual guarantees and other market considerations are considered in
determining the policy adjustments.
Sensitivity of Earnings to Changes in Assumptions
The following tables present information on how reasonably possible changes in assumptions made by the Company on
insurance contracts’ non-economic risk variables and certain economic risk variables impact contractual service margin, net
income attributed to shareholders, other comprehensive income attributed to shareholders, and total comprehensive income
attributed to shareholders. For non-economic risk variables, the impacts are shown separately gross and net of the impacts of
reinsurance contracts held. The method used for deriving sensitivity information and significant assumptions made did not
change from the previous period.
The analysis is based on a simultaneous change in assumptions across all businesses and holds all other assumptions constant.
In practice, experience for each assumption will frequently vary by geographic market and business, and assumption updates
are specifically made on a business and geographic basis. Actual results can differ materially from these estimates for a variety
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of reasons including the interaction among these factors when more than one changes, actual experience differing from the
assumptions, changes in business mix, effective tax rates, and the general limitations of our internal models.
Potential impact on contractual service margin, net income attributed to shareholders, other comprehensive income
attributed to shareholders, and total comprehensive income attributed to shareholders arising from changes to non-
economic assumptions(1)
| As at December 31, 2025 | CSM net of NCI | Net income attributed to<br><br>shareholders | Other comprehensive<br><br>income attributed to<br><br>shareholders | Total comprehensive<br><br>income attributed to<br><br>shareholders | ||||
|---|---|---|---|---|---|---|---|---|
| ($ millions, post-tax except CSM) | Gross | Net | Gross | Net | Gross | Net | Gross | Net |
| Policy related assumptions | ||||||||
| 2% adverse change in future mortality rates(2),(3),(5) | ||||||||
| Portfolios where an increase in rates increases<br><br>insurance contract liabilities | $(700) | $(200) | $(700) | $(200) | $100 | $- | $(600) | $(200) |
| Portfolios where a decrease in rates increases<br><br>insurance contract liabilities | (300) | (400) | 200 | (100) | 100 | 100 | 300 | - |
| 5% adverse change in future morbidity rates(4),(5),(6)<br><br>(incidence and termination) | (2,200) | (1,800) | (3,000) | (2,500) | 600 | 500 | (2,400) | (2,000) |
| 10% change in future policy termination rates(3),(5) | ||||||||
| Portfolios where an increase in rates increases<br><br>insurance contract liabilities | (900) | (800) | (100) | (100) | (200) | (200) | (300) | (300) |
| Portfolios where a decrease in rates increases<br><br>insurance contract liabilities | (800) | (600) | (700) | (400) | 500 | 300 | (200) | (100) |
| 5% increase in future expense levels | (600) | (600) | (100) | (100) | 100 | 100 | - | - |
| As at December 31, 2024 | CSM net of NCI | Net income attributed to<br><br>shareholders | Other comprehensive<br><br>income attributed to<br><br>shareholders | Total comprehensive<br><br>income attributed to<br><br>shareholders | ||||
| ($ millions, post-tax except CSM) | Gross | Net | Gross | Net | Gross | Net | Gross | Net |
| Policy related assumptions | ||||||||
| 2% adverse change in future mortality rates(2),(3),(5) | ||||||||
| Portfolios where an increase in rates increases<br><br>insurance contract liabilities | $(700) | $(200) | $(700) | $(300) | $200 | $100 | $(500) | $(200) |
| Portfolios where a decrease in rates increases<br><br>insurance contract liabilities | (100) | (600) | - | - | 100 | 200 | 100 | 200 |
| 5% adverse change in future morbidity rates(4),(5),(6)<br><br>(incidence and termination) | (2,200) | (1,800) | (3,000) | (2,700) | 700 | 600 | (2,300) | (2,100) |
| 10% change in future policy termination rates(3),(5) | ||||||||
| Portfolios where an increase in rates increases<br><br>insurance contract liabilities | (700) | (600) | (100) | (100) | (200) | (200) | (300) | (300) |
| Portfolios where a decrease in rates increases<br><br>insurance contract liabilities | (900) | (700) | (700) | (400) | 400 | 300 | (300) | (100) |
| 5% increase in future expense levels | (600) | (600) | (100) | (100) | 100 | 100 | - | - |
(1)The participating policy funds are largely self-supporting and experience gains or losses would generally result in changes to future dividends reducing the direct
impact on the CSM and shareholder income.
(2)An increase in mortality rates will generally increase insurance contract liabilities for life insurance contracts, whereas a decrease in mortality rates will generally
increase insurance contract liabilities for policies with longevity risk such as payout annuities.
(3)The sensitivity is measured for each direct insurance portfolio net of the impacts of any reinsurance held on the policies within that portfolio to determine if the
overall insurance contract liabilities increased.
(4)No amounts related to morbidity risk are included for policies where the insurance contract liability provides only for claims costs expected over a short period,
generally less than one year, such as Group Life and Health.
(5)The impacts of the sensitivities on LTC for morbidity, mortality and lapse do not assume any offsets from the Company’s ability to contractually raise premium rates
in such events, subject to state regulatory approval. In practice, we would plan to file for rate increases equal to the amount of deterioration resulting from the
sensitivity.
(6)This includes a 5% deterioration in incidence rates and a 5% deterioration in claim termination rates.
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Potential impact on contractual service margin, net income attributed to shareholders, other comprehensive income
attributed to shareholders, and total comprehensive income attributed to shareholders arising from changes to non-
economic assumptions on Long Term Care(1)
| As at December 31, 2025 | CSM net of NCI | Net income attributed to<br><br>shareholders | Other comprehensive<br><br>income attributed to<br><br>shareholders | Total comprehensive<br><br>income attributed to<br><br>shareholders | ||||
|---|---|---|---|---|---|---|---|---|
| ($ millions, post-tax except CSM) | Gross | Net | Gross | Net | Gross | Net | Gross | Net |
| Policy related assumptions | ||||||||
| 2% adverse change in future mortality rates(2),(3) | $(300) | $(300) | $- | $- | $- | $- | $- | $- |
| 5% adverse change in future morbidity incidence<br><br>rates(2),(3) | (1,500) | (1,300) | (400) | (300) | 200 | 200 | (200) | (100) |
| 5% adverse change in future morbidity claims<br><br>termination rates(2),(3) | (1,500) | (1,300) | (1,200) | (1,000) | 400 | 400 | (800) | (600) |
| 10% adverse change in future policy termination<br><br>rates(2),(3) | (400) | (300) | - | - | - | - | - | - |
| 5% increase in future expense levels(3) | (100) | (100) | - | - | - | - | - | - |
| As at December 31, 2024 | CSM net of NCI | Net income attributed to<br><br>shareholders | Other comprehensive<br><br>income attributed to<br><br>shareholders | Total comprehensive<br><br>income attributed to<br><br>shareholders | ||||
| ($ millions, post-tax except CSM) | Gross | Net | Gross | Net | Gross | Net | Gross | Net |
| Policy related assumptions | ||||||||
| 2% adverse change in future mortality rates(2),(3) | $(300) | $(300) | $- | $- | $- | $- | $- | $- |
| 5% adverse change in future morbidity incidence<br><br>rates(2),(3) | (1,400) | (1,300) | (500) | (400) | 200 | 200 | (300) | (200) |
| 5% adverse change in future morbidity claims<br><br>termination rates(2),(3) | (1,400) | (1,300) | (1,300) | (1,100) | 500 | 400 | (800) | (700) |
| 10% adverse change in future policy termination<br><br>rates(2),(3) | (400) | (400) | - | - | 100 | 100 | 100 | 100 |
| 5% increase in future expense levels(3) | (100) | (100) | - | - | - | - | - | - |
(1)The potential impacts on CSM were translated from US$ at 1.3707 (2024 – 1.4382) and the potential impacts on net income attributed to shareholders, OCI
attributed to shareholders and total comprehensive income attributed to shareholders were translated from US$ at 1.3939 (2024 – 1.3987).
(2)The impacts of the sensitivities on LTC for morbidity, mortality and lapse do not assume any offsets from the Company’s ability to contractually raise premium rates
in such events, subject to state regulatory approval. In practice, we would plan to file for rate increases equal to the amount of deterioration resulting from the
sensitivities.
(3)The impact of favourable changes to all the sensitivities is relatively symmetrical.
Potential impact on contractual service margin, net income attributed to shareholders, other comprehensive income
attributed to shareholders, and total comprehensive income attributed to shareholders arising from changes to certain
economic financial assumptions used in the determination of insurance contract liabilities(1)
| As at December 31, 2025<br><br>($ millions, post-tax except CSM) | CSM net of NCI | ||||
|---|---|---|---|---|---|
| Financial assumptions | |||||
| 10 basis point reduction in ultimate spot rate | (300) | - | (200) | $(200) | |
| 50 basis point increase in interest rate volatility(2) | (100) | - | - | - | |
| 50 basis point increase in non-fixed income return volatility(2) | (100) | - | - | - | |
| As at December 31, 2024<br><br>($ millions, post-tax except CSM) | CSM net of NCI | ||||
| Financial assumptions | |||||
| 10 basis point reduction in ultimate spot rate | (300) | - | (200) | $(200) | |
| 50 basis point increase in interest rate volatility(2) | (100) | - | - | - | |
| 50 basis point increase in non-fixed income return volatility(2) | (100) | - | - | - |
All values are in US Dollars.
(1)Note that the impact of these assumptions is not linear.
(2)Used in the determination of insurance contract liabilities with financial guarantees. This includes universal life minimum crediting rate guarantees, participating life
zero dividend floor implicit guarantees, and variable annuities guarantees, where a stochastic approach is used to capture the asymmetry of the risk.
Review of Actuarial Methods and Assumptions
The Company performs a comprehensive review of actuarial methods and assumptions annually. The review is designed to
reduce the Company’s exposure to uncertainty by ensuring assumptions for liability risks remain appropriate. This is
accomplished by monitoring experience and updating assumptions that represent a best estimate of expected future experience,
1 Fulfilment cash inflows include an estimate of future cash flows; an adjustment to reflect the time value of money and the financial risk related to future cash flows if
not included in the estimate of future cash flows; and a risk adjustment for non-financial risk. Additional information on fulfilment cash flows can be found in note 6
of our 2025 Annual Consolidated Financial Statements.
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and maintaining a risk adjustment that is appropriate for the risks assumed. While the assumptions selected represent the
Company’s best estimates and assessment of risk, the ongoing monitoring of experience and changes in the economic
environment are likely to result in future changes to the actuarial assumptions, which could materially impact the insurance
contract liabilities. The changes implemented from the review are generally implemented in the third quarter of each year, though
updates may be made outside the third quarter in certain circumstances.
2025 Review of Actuarial Methods and Assumptions
The completion of the 2025 annual review of actuarial methods and assumptions resulted in a decrease in pre-tax fulfilment cash
flows1 of $605 million, excluding the portion related to non-controlling interests. These updates resulted in a decrease in pre-tax
net income attributed to shareholders of $244 million ($216 million post-tax), a decrease in pre-tax net income attributed to
participating policyholders of $88 million ($67 million post-tax), an increase in CSM of $1,080 million, a decrease in pre-tax other
comprehensive income attributed to shareholders of $52 million ($73 million post-tax), and a decrease in pre-tax other
comprehensive income attributed to participating policyholders of $91 million ($70 million post-tax).
Impact of updates to actuarial methods and assumptions on pre-tax fulfilment cash flows(1)
| For the year ended December 31, 2025 | |
|---|---|
| ($ millions) | Total |
| Hong Kong health insurance product reserving approach | $(463) |
| Methodology and other updates | (207) |
| Lapse and policyholder behaviour updates | 181 |
| Long-term care triennial review | (77) |
| Mortality and morbidity updates | (39) |
| Impact of updates to actuarial methods and assumptions, on pre-tax fulfilment cash flows | $(605) |
(1)Excludes the portion related to non-controlling interests of $116 million. The impact of updates to actuarial methods and assumptions on pre-tax fulfilment cash
flows, including the portion related to non-controlling interests, would be $(489) million.
Impact of updates to actuarial methods and assumptions on pre-tax net income attributed to shareholders, pre-tax net
income attributed to participating policyholders, OCI and CSM(1)
| For the year ended December 31, 2025 | |
|---|---|
| ($ millions) | Total |
| Portion recognized in pre-tax net income (loss) attributed to: | |
| Participating policyholders | $(88) |
| Shareholders | (244) |
| (332) | |
| Portion increasing (decreasing) CSM | 1,080 |
| Portion recognized in pre-tax OCI attributed to: | |
| Participating policyholders | (91) |
| Shareholders | (52) |
| (143) | |
| Impact of updates to actuarial methods and assumptions, pre-tax | $605 |
(1)Excludes the portion related to non-controlling interests of $(116) million. The impact of updates to actuarial methods and assumptions on pre-tax fulfilment cash
flows, including the portion related to non-controlling interests, would be $489 million.
Hong Kong health insurance product reserving approach
An update to the pricing philosophy on certain health insurance products in Hong Kong led to a change in the IFRS 17
measurement model from the Premium Allocation Approach to the General Measurement Model, which requires all future cash
flows to be included in the fulfilment cash flows, amounting to a decrease in pre-tax fulfilment cash flows of $463 million.
Methodology and other updates
Methodology and other updates resulted in a decrease in pre-tax fulfilment cash flows of $207 million.
The decrease was mainly driven by annual yield and parameter updates to our valuation models for participating products in Asia
and Canada. This was partially offset by various other valuation models updates in the U.S. to non-participating products that
netted to a residual increase in fulfilment cash flows.
1 The mortality rate of LTC policyholders who are currently not on claim.
2 Our actual experience obtaining premium increases could be materially different than what we have assumed, resulting in further increases or decreases in pre-tax
fulfilment cash flows, which could be material. See “Caution regarding forward-looking statements” above.
3 Our review of actuarial methods and assumptions also impacts net income attributed to participating policyholders. The total company impact can be found in the
above table.
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Lapse and policyholder behaviour updates
Updates to lapses and policyholder behaviour assumptions resulted in an increase in pre-tax fulfilment cash flows of
$181 million.
The increase was mainly driven by the review of lapse assumptions in Singapore as well as other smaller updates. The
Singapore update reflected higher lapse experience on our index-linked and universal life products. This was partially offset by
the impact of the lapse review on term insurance products in Canada.
Long-term care triennial review
U.S. Insurance completed a comprehensive long-term care (“LTC”) experience study. The review included all aspects of claim
assumptions, as well as the progress on future premium increases and approved premium increases in excess of prior
assumptions. The impact of the LTC review was a decrease in pre-tax fulfilment cash flows of $77 million.
The overall experience study led to a $1.9 billion (US$1.4 billion) increase in pre-tax fulfilment cash flows for claim costs
following a review of morbidity, mortality and lapse assumptions. This was mainly driven by higher utilization of benefits due to
the impact of higher inflation in the cost-of-care, and also reflects the benefit of in-force management initiatives related to fraud,
waste and abuse programs. The impact from utilization was partially offset by updates to reflect higher terminations. The impacts
of updating incidence, active life mortality1, lapse and other refinements were all relatively small.
The review of assumed future premium increases resulted in a $1.5 billion (US$1.1 billion) decrease in pre-tax fulfilment cash
flows. This reflects expected future net premium increases that are due to the outstanding amounts from prior state filings as well
as to our 2025 review of morbidity, mortality, and lapse assumptions. Since the last triennial review in 2022, we have received
actual premium increase approvals of $3.2 billion pre-tax (US$2.3 billion pre-tax) on a present value basis. This exceeds the
amount of premium increases we assumed in our pre-tax fulfilment cash flows by $0.5 billion (US$0.3 billion) at that time, and
demonstrates our continued strong track record of securing premium rate increases.2
Mortality and morbidity updates
Mortality and morbidity updates resulted in a decrease in pre-tax fulfilment cash flows of $39 million.
The decrease was mainly driven by a morbidity study of group long-term disability benefits in Canada related to claim
termination, partially offset by other items that netted to a modest residual increase in fulfilment cash flows.
Impact of updates to actuarial methods and assumptions on pre-tax fulfilment cash flows, net income attributed to
shareholders, CSM and OCI by segment3
The impact of updates to actuarial methods and assumptions in Canada resulted in a decrease in pre-tax fulfilment cash flows of
$382 million. The decrease was primarily driven by the impact of annual updates to our valuation models for participating
products, the lapse review on term insurance products as well as the review of morbidity assumptions for group long-term
disability benefits. These updates resulted in an increase in pre-tax net income attributed to shareholders of $80 million
($58 million post-tax), an increase in CSM of $348 million, and an increase in pre-tax other comprehensive income attributed to
shareholders of $98 million ($71 million post-tax).
The impact of updates to actuarial methods and assumptions in the U.S. resulted in an increase in pre-tax fulfilment cash flows
of $179 million. The increase was primarily driven by a number of valuation model updates, partially offset by the impact of the
LTC triennial review. These updates resulted in a decrease in pre-tax net income attributed to shareholders of $298 million
($235 million post-tax), an increase in CSM of $43 million, and an increase in pre-tax other comprehensive income attributed to
shareholders of $75 million ($60 million post-tax).
The impact of updates to actuarial methods and assumptions in Asia resulted in a decrease in pre-tax fulfilment cash flows of
$418 million. The decrease was primarily driven by the impact of the change in the IFRS 17 measurement model on certain
health insurance products in Hong Kong and the impact of annual updates to our valuation models for participating products,
partly offset by a review of lapse assumptions for certain products in Singapore. These updates resulted in a decrease in pre-tax
net income attributed to shareholders of $26 million ($39 million post-tax), an increase in CSM of $704 million, and a decrease in
pre-tax other comprehensive income attributed to shareholders of $224 million ($203 million post-tax).
The impact of updates to actuarial methods and assumptions in Corporate and Other (which includes our property and casualty
reinsurance businesses, run-off insurance operations including variable annuities and health, and consolidation adjustments
including intercompany eliminations) resulted in an increase in pre-tax fulfilment cash flows of $16 million. These updates
resulted in no impact to pre-tax or post-tax net income attributed to shareholders, a decrease in CSM of $15 million and a
decrease in pre-tax other comprehensive income attributed to shareholders of $1 million ($1 million post-tax).
1 Fulfilment cash flows include an estimate of future cash flows; an adjustment to reflect the time value of money and the financial risk related to future cash flows if
not included in the estimate of future cash flows; and a risk adjustment for non-financial risk. Additional information on fulfilment cash flows can be found in note 6
of our 2025 Annual Consolidated Financial Statements.
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2024 Review of Actuarial Methods and Assumptions
The completion of the 2024 annual review of actuarial methods and assumptions resulted in a decrease in pre-tax fulfilment cash
flows1 of $174 million, excluding the portion related to non-controlling interests. These updates resulted in a decrease in pre-tax
net income attributed to shareholders of $250 million ($199 million post-tax), an increase in pre-tax net income attributed to
participating policyholders of $29 million ($21 million post-tax), a decrease in CSM of $421 million, an increase in pre-tax other
comprehensive income attributed to shareholders of $771 million ($632 million post-tax), and an increase in pre-tax other
comprehensive income attributed to participating policyholders of $45 million ($32 million post-tax).
Impact of updates to actuarial methods and assumptions on pre-tax fulfilment cash flows(1)
| For the year ended December 31, 2024 |
|---|
| ( millions) |
| Lapse and policyholder behaviour updates |
| Reinsurance contract and other risk adjustment review |
| Expense updates |
| Financial related updates |
| Mortality and morbidity updates |
| Methodology and other updates |
| Impact of updates to actuarial methods and assumptions on pre-tax fulfilment cash flows |
All values are in US Dollars.
(1)Excludes the portion related to non-controlling interests of $(215) million. The impact of updates to actuarial methods and assumptions on pre-tax fulfilment cash
flows, including the portion related to non-controlling interests, would be $(389) million.
Impact of updates to actuarial methods and assumptions on pre-tax net income attributed to shareholders, pre-tax net
income attributed to participating policyholders, OCI and CSM(1)
| For the year ended December 31, 2024 |
|---|
| ( millions) |
| Portion recognized in net income (loss) attributed to: |
| Participating policyholders |
| Shareholders |
| Portion increasing (decreasing) CSM |
| Portion recognized in OCI attributed to: |
| Participating policyholders |
| Shareholders |
| Impact of updates to actuarial methods and assumptions, pre-tax |
All values are in US Dollars.
(1)Excludes the portion related to non-controlling interests of $215 million. The impact of updates to actuarial methods and assumptions on pre-tax fulfilment cash
flows, including the portion related to non-controlling interests, would be $389 million.
Lapse and policyholder behaviour updates
Updates to lapses and policyholder behaviour assumptions resulted in an increase in pre-tax fulfilment cash flows of
$620 million.
The increase was primarily driven by a detailed review of the lapse assumptions for our non-participating products in our U.S. life
insurance business and our International High Net Worth business in Asia segment. For U.S. protection products, lapse rates
declined during the COVID-19 pandemic and continue to remain low, while for U.S. indexed universal life, U.S. bank-owned life
insurance, and Asia’s International High Net Worth business, lapse rates increased due to the impact of higher short-term
interest rates. We updated our lapse assumptions to reflect these experience trends. The ultimate lapse rates for products with
no-lapse guarantees were not changed.
Reinsurance contract and other risk adjustment review
The review of our reinsurance contracts and risk adjustment, excluding changes that were a direct result of other assumption
updates, resulted in an increase in pre-tax fulfilment cash flows of $427 million.
1 Our annual update of actuarial methods and assumptions also impacts net income and other comprehensive income attributed to participating policyholders. The
total company impact of these metrics can be found in the above table.
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The increase was driven by updates to our reinsurance contract fulfilment cash flows to reflect current reinsurance market
conditions and the resulting expected cost on older U.S. mortality reinsurance, partially offset by updates to our risk adjustment
methodology in North America related to non-financial risk.
Our overall risk adjustment continues to be within the 90 – 95% confidence level.
Expense updates
Expense updates resulted in a decrease in pre-tax fulfilment cash flows of $406 million.
The decrease was driven by a detailed review of our global expenses, including investment expenses. We aligned them with our
current cost structure and included the impact of changes in classification of certain expenses from directly attributable to non-
directly attributable.
Financial related updates
Financial related updates resulted in a decrease in pre-tax fulfilment cash flows of $386 million.
The decrease was driven by a review of the discount rates used in the valuation of our non-participating business, which
included increases to ultimate risk-free rates in the U.S. to align with historical averages, as well as updates to parameters used
to determine illiquidity premiums. This was partially offset by refinements to crediting rate projections on certain U.S. universal life
products.
Mortality and morbidity updates
Mortality and morbidity updates resulted in a decrease in pre-tax fulfilment cash flows of $273 million.
The decrease was driven by morbidity updates to health insurance products in Hong Kong to reflect lower hospital claims on
certain business that we account for under the general measurement model, partially offset by updates to mortality and morbidity
assumptions on critical illness products in Hong Kong to reflect emerging experience.
Methodology and other updates
Methodology and other updates resulted in a decrease in pre-tax fulfilment cash flows of $156 million.
The decrease was driven by the impact of annual updates to our valuation models for participating products in Asia and Canada
reflecting higher interest rates during the year, partially offset by various other smaller items that netted to an increase in
fulfilment cash flows.
Impact of updates to actuarial methods and assumptions on pre-tax fulfilment cash flows, net income attributed to
shareholders, CSM and OCI by segment1
The impact of updates to actuarial methods and assumptions in Canada resulted in a decrease in pre-tax fulfilment cash flows of
$266 million. The decrease was primarily driven by updates to the risk adjustment methodology related to non-financial risks and
the review of the discount rates used in the valuation of non-participating business. These updates resulted in an increase in pre-
tax net income attributed to shareholders of $3 million ($2 million post-tax), an increase in CSM of $222 million, and a decrease
in pre-tax other comprehensive income attributed to shareholders of $15 million ($10 million post-tax).
The impact of updates to actuarial methods and assumptions in the U.S. resulted in an increase in pre-tax fulfilment cash flows
of $895 million. The increase was primarily driven by the net impact of updates to our reinsurance contract fulfilment cash flows
and risk adjustment methodology related to non-financial risks, a detailed review of the lapse assumptions in our life insurance
business, and refinements to our crediting rate projections on certain universal life products, partially offset by a review of the
discount rates used in the valuation of non-participating business. These updates resulted in a decrease in pre-tax net income
attributed to shareholders of $256 million ($202 million post-tax), a decrease in CSM of $1,228 million, and an increase in pre-tax
other comprehensive income attributed to shareholders of $589 million ($466 million post-tax).
The impact of updates to actuarial methods and assumptions in Asia resulted in a decrease in pre-tax fulfilment cash flows of
$818 million. The decrease was primarily driven by the impact of morbidity updates to certain health insurance products in Hong
Kong to reflect emerging experience, updates from our detailed review of global expenses, including investment expenses, as
well as the impact of annual updates to our valuation models for participating products, partially offset by a review of lapse
assumptions for the International High Net Worth business. These updates resulted in a decrease in pre-tax net income
attributed to shareholders of $4 million ($5 million post-tax), an increase in CSM of $591 million, and an increase in pre-tax other
comprehensive income attributed to shareholders of $213 million ($190 million post-tax).
The impact of updates to actuarial methods and assumptions in Corporate and Other (which includes our property and casualty
reinsurance businesses, run-off insurance operations including variable annuities and health, and consolidation adjustments
including intercompany eliminations) resulted in an increase in pre-tax fulfilment cash flows of $15 million. These updates
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resulted in an increase in pre-tax net income attributed to shareholders of $7 million ($6 million post-tax), a decrease in CSM of
$6 million, and a decrease in pre-tax other comprehensive income attributed to shareholders of $16 million ($14 million post-tax).
Critical Accounting Policies
Consolidation
The Company is required to consolidate the financial position and results of the entities it controls. Control exists when the
Company:
•Has the power to govern the financial and operating policies of the entity;
•Is exposed to a significant portion of the entity’s variable returns; and
•Is able to use its power to influence variable returns from the entity.
The Company uses the same principles to assess control over any entity it is involved with. In evaluating control, potential factors
assessed include the effects of:
•Substantive voting rights that are potentially or currently exercisable;
•Contractual management relationships with the entity;
•Rights and obligations resulting from policyholders to manage investments on their behalf;
•The extent of other parties’ involvement in the entity, if any, the possibility for de facto control being present; and
•The effect of any legal or contractual restraints on the Company from using its power to affect its variable returns from the
entity.
An assessment of control is based on arrangements in place and the assessed risk exposures at inception of the relationship.
Initial evaluations are reconsidered at a later date if:
•The contractual arrangements of the entity are amended such that the Company’s involvement with the entity changes;
•The Company acquires or loses power over the financial and operating policies of the entity;
•The Company acquires additional interests in the entity or its interests in an entity are diluted; or
•The Company’s ability to use its power to affect its variable returns from the entity changes.
Subsidiaries are consolidated from the date on which control is obtained by the Company and cease to be consolidated from the
date that control ceases. A change in control may lead to gains or losses on derecognition of a subsidiary when losing control, or
on derecognition of previous interests in a subsidiary when gaining control.
Fair Value of Invested Assets
A large portion of the Company’s invested assets are recorded at fair value. Refer to note 1 of the 2025 Annual Consolidated
Financial Statements for a description of the methods used in determining fair values. When quoted prices in active markets are
not available for a particular investment, significant judgment is required to determine an estimated fair value based on market
standard valuation methodologies including discounted cash flow methodologies, matrix pricing, consensus pricing services, or
other similar techniques. The inputs to these standard valuation methodologies include: current interest rates or yields for similar
instruments, credit rating of the issuer or counterparty, industry sector of the issuer, coupon rate, call provisions, sinking fund
requirements, tenor (or expected tenor) of the instrument, management’s assumptions regarding liquidity, volatilities and
estimated future cash flows. Accordingly, the estimated fair values are based on available market information and management’s
judgments about the key market factors impacting these financial instruments. Financial markets are susceptible to severe
events evidenced by rapid depreciation in asset values accompanied by a reduction in asset liquidity. The Company’s ability to
sell assets, or the price ultimately realized for these assets, depends upon the demand and liquidity in the market which affect
the use of judgment in determining the estimated fair value of certain assets.
Evaluation of Invested Asset Impairment
FVOCI debt investments are carried at fair market value, with changes in fair value recorded in OCI with the exception of
unrealized gains and losses on foreign currency translation of foreign currency denominated FVOCI debt investments which are
included in net income.
Debt investments classified as FVOCI or amortized cost are reviewed on a regular basis for expected credit loss (“ECL”)
impairment allowances. ECL impairment allowances are measured as the difference between amounts due according to the
contractual terms of the debt security and the discounted value of cash flows that the Company expects to receive. Changes in
ECL impairment allowances are recorded in the provision for credit losses included in net income.
Significant judgment is required in assessing ECL impairment allowances and fair values and recoverable values. Key matters
considered include macroeconomic factors, industry specific developments, and specific issues with respect to single issuers
and borrowers.
Changes in circumstances may cause future assessments of invested asset ECL impairment allowances to be materially
different from current assessments, which could require additional provisions for impairment. Additional information on the
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process and methodology for determining the allowance for expected credit losses is included in the discussion of credit risk in
notes 1 & 8 to the 2025 Annual Consolidated Financial Statements.
Derivative Financial Instruments
The Company uses derivative financial instruments (“derivatives”) including swaps, forwards and futures agreements, and
options to help manage current and anticipated exposures to changes in interest rates, foreign exchange rates, commodity
prices and equity market prices, and to replicate different types of investments. Refer to note 4 to the 2025 Annual Consolidated
Financial Statements for a description of the methods used to determine the fair value of derivatives.
The accounting for derivatives is complex and interpretations of the primary accounting guidance continue to evolve in practice.
Judgment is applied in determining the availability and application of hedge accounting designations and the appropriate
accounting treatment under such accounting guidance. Differences in judgment as to the availability and application of hedge
accounting designations and the appropriate accounting treatment may result in a differing impact on the Consolidated Financial
Statements of the Company from previous periods. Assessments of hedge effectiveness and measurements of ineffectiveness of
hedging relationships are also subject to interpretations and estimations.
Hedge Accounting
The Company applies hedge accounting principles under IFRS 9 to certain economic hedge transactions that qualify for hedge
accounting. The Company evaluates the economic relationship between the hedged item and the hedging instrument, assesses
the effect of credit risk on the economic relationship, and determines the hedge ratio between the hedged item and hedging
instrument to identify qualifying hedge accounting relationships.
The Company designates fair value hedges to hedge interest rate exposure on fixed rate assets and liabilities. In certain
instances, the Company hedges fair value exposure due to both foreign exchange and interest rate risk using cross currency
swaps.
The Company designates interest rate derivatives under cash flow hedges to hedge interest rate exposure in variable rate
financial instruments. In addition, the Company may use non-functional currency denominated long-term debt, forward currency
contracts, and cross currency swaps to mitigate the foreign exchange translation risk of net investments in foreign operations.
The Company applies the cost of hedging option for certain hedge accounting relationships, as such changes in forward points
and foreign currency basis spreads are excluded from the hedge accounting relationships and are accounted for as a separate
component in equity.
Employee Future Benefits
The Company maintains defined contribution and defined benefit pension plans, and other post-employment plans for employees
and agents, including registered (tax qualified) pension plans that are typically funded, as well as supplemental non-registered
(non-qualified) pension plans for executives, retiree welfare plans and disability welfare plans that are typically not funded. The
largest defined benefit pension and retiree welfare plans in the U.S. and Canada are the material plans that are discussed herein
and in note 15 to the 2025 Annual Consolidated Financial Statements.
Due to the long-term nature of defined benefit pension and retiree welfare plans, the calculation of the defined benefit obligation
and net benefit cost depends on various assumptions such as discount rates, salary increase rates, cash balance interest
crediting rates, health care cost trend rates and rates of mortality. These assumptions are determined by management and are
reviewed annually. The key assumptions, as well as the sensitivity of the defined benefit obligation to changes in these
assumptions, are presented in note 15 to the 2025 Annual Consolidated Financial Statements.
Changes in assumptions and differences between actual and expected experience give rise to actuarial gains and losses that
affect the amount of the defined benefit obligation and OCI. For 2025, the amount recorded in OCI was a gain of $49 million
(2024 – gain of $67 million) for the defined benefit pension plans and a gain of $32 million (2024 – gain of $16 million) for the
retiree welfare plans.
Contributions to the registered (tax qualified) defined benefit pension plans are made in accordance with the applicable U.S. and
Canadian regulations. During 2025, the Company contributed $2 million (2024 – $2 million) to these plans. As at December 31,
2025, the difference between the fair value of assets and the defined benefit obligation for these plans was a surplus of
$488 million (2024 – surplus of $483 million). For 2026, the contributions to the plans are expected to be approximately $2
million.
The Company’s supplemental pension plans for executives are not funded; benefits under these plans are paid as they become
due. During 2025, the Company paid benefits of $53 million (2024 – $55 million) under these plans. As at December 31, 2025,
the defined benefit obligation for these plans, which is reflected as a liability in the balance sheet, amounted to $493 million
(2024 – $533 million).
The Company’s retiree welfare plans are partially funded, although there are no regulations or laws governing or requiring the
funding of these plans. As at December 31, 2025, the difference between the fair value of plan assets and the defined benefit
obligation for these plans was a surplus of $166 million (2024 – surplus of $125 million).
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Income Taxes
The Company is subject to income tax laws in various jurisdictions. Tax laws are complex and potentially subject to different
interpretations by the taxpayer and the relevant tax authority. The provision for income taxes represents management’s
interpretation of the relevant tax laws and its estimate of current and future income tax implications of the transactions and
events during the period. A deferred tax asset or liability results from temporary differences between carrying values of assets
and liabilities and their respective tax basis. Deferred tax assets and liabilities are recorded based on expected future tax rates
and management’s assumptions regarding the expected timing of the reversal of such temporary differences. The realization of
deferred tax assets depends upon the existence of sufficient taxable income within the carryback or carryforward periods under
the tax law in the applicable tax jurisdiction. A deferred tax asset is recognized to the extent that future realization of the tax
benefit is probable. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer
probable that the tax benefit will be realized. At December 31, 2025, we had $5,741 million of deferred tax assets (December 31,
2024 – $5,884 million). Factors in management’s determination include, among others, the following:
•Future taxable income exclusive of reversing temporary differences and carryforwards;
•Future reversals of existing taxable temporary differences;
•Taxable income in prior carryback years; and
•Tax planning strategies.
The Company may be required to change its provision for income taxes if the ultimate deductibility of certain items is
successfully challenged by taxing authorities, or if estimates used in determining the amount of deferred tax assets to recognize
change significantly, or when receipt of new information indicates the need for adjustment in the recognition of deferred tax
assets. Additionally, future events, such as changes in tax laws, tax regulations, or interpretations of such laws or regulations,
could have an impact on the provision for income tax, deferred tax balances, actuarial liabilities (see Critical Actuarial and
Accounting Policies – Directly Attributable Expenses and Taxes above) and the effective tax rate. Any such changes could
significantly affect the amounts reported in the Consolidated Financial Statements in the year these changes occur.
Goodwill and Intangible Assets
At December 31, 2025, under IFRS we had $6,877 million of goodwill (December 31, 2024 – $6,275 million) and $5,447 million
of intangible assets ($2,243 million of which are intangible assets with indefinite lives) (December 31, 2024 – $4,777 million and
$2,124 million, respectively). Goodwill and intangible assets with indefinite lives are tested for impairment at the cash generating
unit level (“CGU”) or group of CGUs level. A CGU comprises the smallest group of assets that are capable of generating largely
independent cash flows and is either a business segment or a level below. The tests performed in 2025 demonstrated that there
was $nil impairment of goodwill or intangible assets with indefinite lives (2024 – $nil). Changes in discount rates and cash flow
projections used in the determination of recoverable values or reductions in market-based earnings multiples may result in
impairment charges in the future, which could be material.
Impairment charges could occur in the future as a result of changes in economic conditions. The goodwill testing for 2026 will be
updated based on the conditions that exist in 2026 and may result in impairment charges, which could be material.
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12. Controls and Procedures
Disclosure Controls and Procedures
Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed
by us is recorded, processed, summarized, and reported accurately and completely and within the time periods specified under
Canadian and U.S. securities laws. Our process includes controls and procedures that are designed to ensure that information is
accumulated and communicated to management, including the CEO and CFO, to allow timely decisions regarding required
disclosure.
As of December 31, 2025, management evaluated the effectiveness of its disclosure controls and procedures as defined under
the rules adopted by the U.S. Securities and Exchange Commission and the Canadian securities regulatory authorities. This
evaluation was performed under the supervision of the Audit Committee, the CEO and CFO. Based on that evaluation, the CEO
and CFO concluded that our disclosure controls and procedures were effective as of December 31, 2025.
MFC’s Audit Committee has reviewed this MD&A and the 2025 Consolidated Financial Statements and MFC’s Board approved
these reports prior to their release.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s
internal control system was designed to provide reasonable assurance to management and the Board regarding the preparation
and fair presentation of published financial statements in accordance with generally accepted accounting principles. All internal
control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be
effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Management maintains a comprehensive system of controls intended to ensure that transactions are executed in accordance
with management’s authorization, assets are safeguarded, and financial records are reliable. Management also takes steps to
ensure that information and communication flows are effective and to monitor performance, including performance of internal
control procedures.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025
based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission 2013 framework in
Internal Control – Integrated Framework. Based on this assessment, management believes that, as of December 31, 2025, the
Company’s internal control over financial reporting is effective.
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2025 has been audited by Ernst
& Young LLP, the Company’s independent registered public accounting firm that also audited the Consolidated Financial
Statements of the Company for the year ended December 31, 2025. Their report expressed an unqualified opinion on the
effectiveness of the Company’s internal control over financial reporting as of December 31, 2025.
Changes in Internal Control over Financial Reporting
No changes were made in our internal control over financial reporting during the year ended December 31, 2025 that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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13. 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 earnings before interest, taxes, depreciation, and amortization (“core EBITDA”); total expenses; core
expenses; core Drivers of Earnings (“DOE”) line items for core net insurance service result, core net investment result, other core
earnings, and core income tax (expenses) recoveries; post-tax contractual service margin (“post-tax CSM”); post-tax contractual
service margin net of NCI (“post-tax CSM net of NCI”); Manulife Bank net lending assets; Manulife Bank average net lending
assets; assets under management (“AUM”); assets under management and administration (“AUMA”); Global WAM managed
AUMA; core revenue; adjusted book value; and net annualized fee income. In addition, non-GAAP financial measures include
the following stated on a constant exchange rate (“CER”) basis: any of the foregoing non-GAAP financial measures; net income
attributed to shareholders; common shareholders’ net income; and new business CSM.
Non-GAAP ratios include core return on common shareholders’ equity (“core ROE”); diluted core earnings per common share
(“core EPS”); core earnings contributions from highest potential businesses; core earnings contribution from Asia region; core
earnings contribution from LTC and VA businesses; financial leverage ratio; adjusted book value per common share; common
share core dividend payout ratio (“dividend payout ratio”); expense efficiency ratio; core EBITDA margin; effective tax rate on
core earnings; operating segment core earnings contribution; segment share of the total Company AUMA; and net annualized
fee income yield on average AUMA. In addition, non-GAAP ratios include the percentage growth/decline on a CER basis in any
of the above non-GAAP financial measures and non-GAAP ratios; net income attributed to shareholders; common shareholders’
net income; pre-tax net income attributed to shareholders; general expenses; CSM; CSM net of NCI; impact of new insurance
business net of NCI; new business CSM; basic earnings per common share (“basic EPS”); and diluted earnings per common
share (“diluted EPS”).
Other specified financial measures include assets under administration (“AUA”); consolidated capital; new business value
(“NBV”); new business value margin (“NBV margin”); sales; annualized premium equivalent (“APE”) sales; gross flows; net flows;
average assets under management and administration (“average AUMA”); Global WAM average managed AUMA; average
assets under administration; remittances; any of the foregoing specified financial measures stated on a CER basis; and
percentage growth/decline in any of the foregoing specified financial measures on a CER basis. In addition, we provide an
explanation below of the components of core DOE line items other than the change in expected credit loss, the items that
comprise certain items excluded from core earnings (on a pre-tax and post-tax basis), and the components of CSM movement
other than the new business CSM.
Our reporting currency for the Company is Canadian dollars and U.S. dollars is the functional currency for Asia and U.S.
segment results. Financial measures presented in U.S. dollars are calculated in the same manner as the Canadian dollar
measures. These amounts are translated to U.S. dollars using the period end rate of exchange for financial measures such as
AUMA and the CSM balance and the average rates of exchange for the respective quarter for periodic financial measures such
as our Consolidated Statements of Income, core earnings and items excluded from core earnings, and line items in our CSM
movement schedule and DOE. Year-to-date or full year periodic financial measures presented in U.S. dollars are calculated as
the sum of the quarterly results translated to U.S. dollars. See section 1 “Impact of Foreign Currency Exchange Rates” of the
MD&A above for the Canadian to U.S. dollar quarterly and full year rates of exchange.
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.
Core earnings (loss) is a financial measure which we believe aids investors in better understanding the long-term earnings
capacity and valuation of the business. Core earnings allows investors to focus on the Company’s operating performance by
excluding the impact of market related gains or losses, and certain items such as the net impact of updates to actuarial methods
and assumptions that flow directly through income as well as other items, outlined below, that we believe are material, but do not
reflect the underlying earnings capacity of the business. For example, due to the long-term nature of our business, the mark-to-
market movements in equity markets, interest rates including impacts on hedge accounting ineffectiveness, foreign currency
exchange rates and commodity prices as well as the change in the fair value of ALDA from period-to-period can, and frequently
do, have a substantial impact on the reported amounts of our assets, insurance contract liabilities and net income attributed to
shareholders. These reported amounts may not be realized if markets move in the opposite direction in a subsequent period.
This makes it very difficult for investors to evaluate how our businesses are performing from period-to-period and to compare our
performance with other issuers.
We believe that core earnings better reflect the underlying earnings capacity and valuation of our business. We use core
earnings and core EPS as key metrics in our short-term incentive plans at the total Company and operating segment level. We
also base our mid- and long-term strategic priorities on core earnings.
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Core earnings include the expected return on our invested assets and any other gains (charges) from market experience are
included in net income but excluded from core earnings. The expected return for fixed income assets is based on the related
book yields. For ALDA and public equities, the expected return reflects our long-term view of asset class performance. These
returns for ALDA and public equities vary by asset class and range from 3.25% to 11.5%, leading to an average return of
between 9.0% to 9.5% on these assets as of December 31, 2025.
While core earnings are relevant to how we manage our business and offer a consistent methodology, it is not insulated from
macroeconomic factors which can have a significant impact. See below for a reconciliation of core earnings to net income
attributed to shareholders and income before income taxes. Net income attributed to shareholders excludes net income
attributed to participating policyholders and non-controlling interests.
Any future changes to the core earnings definition referred to below, will be disclosed.
Items included in core earnings:
1.Expected insurance service result on in-force policies, including expected release of the risk adjustment, CSM recognized
for service provided, and expected earnings from short-term products measured under the premium allocation approach
(“PAA”).
2.Impacts from the initial recognition of new contracts (onerous contracts, including the impact of the associated reinsurance
contracts).
3.Insurance experience gains or losses that flow directly through net income.
4.Operating and investment expenses compared with expense assumptions used in the measurement of insurance and
investment contract liabilities.
5.Expected investment earnings, which is the difference between expected return on our invested assets and the associated
finance income or expense from the insurance contract liabilities.
6.Net provision for ECL on FVOCI and amortized cost debt instruments.
7.Expected asset returns on surplus investments.
8.All earnings for the Global WAM segment, except for applicable net income items excluded from core earnings as noted
below.
9.All earnings for the Manulife Bank business, except for applicable net income items excluded from core earnings as noted
below.
10.Routine legal settlements.
11.All other items not specifically excluded.
12.Tax on the above items.
13.All tax-related items except the impact of enacted or substantively enacted income tax rate changes and taxes on items
excluded from core earnings.
Net income items excluded from core earnings:
1.Market experience gains (losses) including the items listed below:
•Gains (charges) on general fund public equity and ALDA investments from returns being different than expected.
•Gains (charges) on derivatives not in hedging relationships, or gains (charges) resulting from hedge accounting
ineffectiveness.
•Realized gains (charges) from the sale of FVOCI debt instruments.
•Market related gains (charges) on onerous contracts measured using the variable fee approach (e.g., variable annuities,
unit-linked, participating insurance) net of the performance on any related hedging instruments.
•Gains (charges) related to certain changes in foreign exchange rates.
2.Updates to actuarial methods and assumptions used in the measurement of insurance contract liabilities that flow directly
through income. The Company reviews actuarial methods and assumptions annually, and this process is designed to reduce
the Company’s exposure to uncertainty by ensuring assumptions remain appropriate. This is accomplished by monitoring
experience and selecting assumptions which represent a current view of expected future experience and ensuring that the
risk adjustment is appropriate for the risks assumed.
3.Amortization and impairment of intangible assets acquired in a business combination, except for amortization of software
and distribution agreements. Commencing 3Q25, this item is now excluded from core earnings to better represent the
underlying earnings capacity of acquired businesses, consistent with our definition of core earnings, and to better align with
industry practice. Prior periods have not been restated as these amounts are not considered material, and use the definition
of core earnings in effect for those periods.
4.The impact on the measurement of insurance and investment contract assets and liabilities and reinsurance contract held
assets and liabilities from changes in product features and new or changes to in-force reinsurance contracts.
5.The fair value changes in long-term investment plan obligations for Global WAM investment management.
6.Goodwill impairment charges.
7.Gains or losses on acquisition and disposition of a business.
8.One-time only adjustments, including highly unusual/extraordinary legal settlements and restructuring charges, or other
items that are exceptional in nature.
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9.Tax on the above items.
10.Net income (loss) attributed to participating shareholders and non-controlling interests.
11.Impact of enacted or substantively enacted income tax rate changes.
Reconciliation of core earnings to net income attributed to shareholders – 2025
($ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| 2025 | ||||||
|---|---|---|---|---|---|---|
| Asia | Canada | U.S. | Global WAM | Corporate<br><br>and Other | Total | |
| Income (loss) before income taxes | $4,129 | $1,736 | $(708) | $2,251 | $(314) | $7,094 |
| Income tax (expenses) recoveries | ||||||
| Core earnings | (389) | (429) | (275) | (350) | 204 | (1,239) |
| Items excluded from core earnings | (327) | 45 | 456 | 9 | 22 | 205 |
| Income tax (expenses) recoveries | (716) | (384) | 181 | (341) | 226 | (1,034) |
| Net income (post-tax) | 3,413 | 1,352 | (527) | 1,910 | (88) | 6,060 |
| Less: Net income (post-tax) attributed to | ||||||
| Non-controlling interests | 270 | - | - | 10 | (2) | 278 |
| Participating policyholders | 171 | 39 | - | - | - | 210 |
| Net income (loss) attributed to shareholders (post-tax) | 2,972 | 1,313 | (527) | 1,900 | (86) | 5,572 |
| Less: Items excluded from core earnings (post-tax) | ||||||
| Market experience gains (losses) | 136 | (374) | (1,498) | 22 | 52 | (1,662) |
| Updates to actuarial methods and assumptions that flow<br><br>directly through income | (39) | 58 | (235) | - | - | (216) |
| Restructuring charge | - | (3) | - | (9) | - | (12) |
| Amortization of acquisition-related intangible assets | - | - | - | (18) | - | (18) |
| Reinsurance transactions, tax-related items and other | (94) | (2) | - | (27) | 82 | (41) |
| Core earnings (post-tax) | $2,969 | $1,634 | $1,206 | $1,932 | $(220) | $7,521 |
| Income tax on core earnings (see above) | 389 | 429 | 275 | 350 | (204) | 1,239 |
| Core earnings (pre-tax) | $3,358 | $2,063 | $1,481 | $2,282 | $(424) | $8,760 |
Core earnings, CER basis and U.S. dollars – 2025
($ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| 2025 | ||||
|---|---|---|---|---|
| Asia | U.S. | Corporate<br><br>and Other | Total | |
| Core earnings (post-tax) | 2,969 | 1,206 | $(220) | $7,521 |
| CER adjustment(1) | (20) | (5) | 1 | (28) |
| Core earnings, CER basis (post-tax) | 2,949 | 1,201 | $(219) | $7,493 |
| Income tax on core earnings, CER basis(2) | 386 | 274 | (203) | 1,235 |
| Core earnings, CER basis (pre-tax) | 3,335 | 1,475 | $(422) | $8,728 |
| Core earnings (U.S. dollars) – Asia and U.S. segments | ||||
| Core earnings (post-tax)(3), US $ | 2,126 | 862 | ||
| CER adjustment US $(1) | (11) | - | ||
| Core earnings, CER basis (post-tax), US $ | 2,115 | 862 |
All values are in US Dollars.
(1)The impact of updating foreign exchange rates to that which was used in 4Q25.
(2)Income tax on core earnings adjusted to reflect the foreign exchange rates for the Statement of Income in effect for 4Q25.
(3)Core earnings (post-tax) in Canadian $ are translated to US $ using the US $ Statement of Income exchange rate for the four respective quarters that make up
2025 core earnings.
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Reconciliation of core earnings to net income attributed to shareholders – 2024(1)
($ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| 2024 | ||||||
|---|---|---|---|---|---|---|
| Asia | Canada | U.S. | Global WAM | Corporate<br><br>and Other | Total | |
| Income (loss) before income taxes | $3,197 | $1,679 | $132 | $1,747 | $335 | $7,090 |
| Income tax (expenses) recoveries | ||||||
| Core earnings | (390) | (399) | (408) | (234) | 121 | (1,310) |
| Items excluded from core earnings | (70) | 46 | 411 | 86 | (375) | 98 |
| Income tax (expenses) recoveries | (460) | (353) | 3 | (148) | (254) | (1,212) |
| Net income (post-tax) | 2,737 | 1,326 | 135 | 1,599 | 81 | 5,878 |
| Less: Net income (post-tax) attributed to | ||||||
| Non-controlling interests | 241 | - | - | 2 | 4 | 247 |
| Participating policyholders | 141 | 105 | - | - | - | 246 |
| Net income (loss) attributed to shareholders (post-tax) | 2,355 | 1,221 | 135 | 1,597 | 77 | 5,385 |
| Less: Items excluded from core earnings (post-tax) | ||||||
| Market experience gains (losses) | (178) | (384) | (1,327) | 4 | 435 | (1,450) |
| Updates to actuarial methods and assumptions that flow<br><br>directly through income | (5) | 2 | (202) | - | 6 | (199) |
| Restructuring charge | - | (6) | - | (66) | - | (72) |
| Amortization of acquisition-related intangible assets | - | - | - | - | - | - |
| Reinsurance transactions, tax-related items and other | 72 | 41 | (26) | (14) | (149) | (76) |
| Core earnings (post-tax) | $2,466 | $1,568 | $1,690 | $1,673 | $(215) | $7,182 |
| Income tax on core earnings (see above) | 390 | 399 | 408 | 234 | (121) | 1,310 |
| Core earnings (pre-tax) | $2,856 | $1,967 | $2,098 | $1,907 | $(336) | $8,492 |
(1)This reconciliation and related core earnings reconciliation below have been updated to align with the presentation of GMT in 2025. See the “Global Minimum
Taxes” section above for more information.
Core earnings, CER basis and U.S. dollars – 2024
($ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| 2024 | ||||
|---|---|---|---|---|
| Asia | U.S. | Corporate<br><br>and Other | Total | |
| Core earnings (post-tax) | 2,466 | 1,690 | $(215) | $7,182 |
| CER adjustment(1) | 32 | 31 | 3 | 86 |
| Core earnings, CER basis (post-tax) | 2,498 | 1,721 | $(212) | $7,268 |
| Income tax on core earnings, CER basis(2) | 397 | 415 | (121) | 1,325 |
| Core earnings, CER basis (pre-tax) | 2,895 | 2,136 | $(333) | $8,593 |
| Core earnings (U.S. dollars) – Asia and U.S. segments | ||||
| Core earnings (post-tax)(3), US $ | 1,799 | 1,234 | ||
| CER adjustment US $(1) | (7) | - | ||
| Core earnings, CER basis (post-tax), US $ | 1,792 | 1,234 |
All values are in US Dollars.
(1)The impact of updating foreign exchange rates to that which was used in 4Q25.
(2)Income tax on core earnings adjusted to reflect the foreign exchange rates for the Statement of Income in effect for 4Q25.
(3)Core earnings (post-tax) in Canadian $ are translated to US $ using the US $ Statement of Income exchange rate for the four respective quarters that make up
2024 core earnings.
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Reconciliation of core earnings to net income attributed to shareholders – 4Q25
($ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| 4Q25 | ||||||
|---|---|---|---|---|---|---|
| Asia | Canada | U.S. | Global WAM | Corporate<br><br>and Other | Total | |
| Income (loss) before income taxes | $899 | $354 | $101 | $542 | $9 | $1,905 |
| Income tax (expenses) recoveries | ||||||
| Core earnings | (101) | (111) | (75) | (93) | 52 | (328) |
| Items excluded from core earnings | (102) | 25 | 55 | 10 | 30 | 18 |
| Income tax (expenses) recoveries | (203) | (86) | (20) | (83) | 82 | (310) |
| Net income (post-tax) | 696 | 268 | 81 | 459 | 91 | 1,595 |
| Less: Net income (post-tax) attributed to | ||||||
| Non-controlling interests | 26 | - | - | 7 | - | 33 |
| Participating policyholders | 47 | 16 | - | - | - | 63 |
| Net income (loss) attributed to shareholders (post-tax) | 623 | 252 | 81 | 452 | 91 | 1,499 |
| Less: Items excluded from core earnings (post-tax) | ||||||
| Market experience gains (losses) | (121) | (158) | (238) | (1) | 77 | (441) |
| Updates to actuarial methods and assumptions that flow<br><br>directly through income | - | - | - | - | - | - |
| Restructuring charge | - | (3) | - | (9) | - | (12) |
| Amortization of acquisition-related intangible assets | - | - | - | (12) | - | (12) |
| Reinsurance transactions, tax-related items and other | (41) | - | - | (16) | 28 | (29) |
| Core earnings (post-tax) | $785 | $413 | $319 | $490 | $(14) | $1,993 |
| Income tax on core earnings (see above) | 101 | 111 | 75 | 93 | (52) | 328 |
| Core earnings (pre-tax) | $886 | $524 | $394 | $583 | $(66) | $2,321 |
Core earnings, CER basis and U.S. dollars – 4Q25
($ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| 4Q25 | ||||
|---|---|---|---|---|
| Asia | U.S. | Corporate<br><br>and Other | Total | |
| Core earnings (post-tax) | 785 | 319 | $(14) | $1,993 |
| CER adjustment(1) | - | - | - | - |
| Core earnings, CER basis (post-tax) | 785 | 319 | $(14) | $1,993 |
| Income tax on core earnings, CER basis(2) | 101 | 75 | (52) | 328 |
| Core earnings, CER basis (pre-tax) | 886 | 394 | $(66) | $2,321 |
| Core earnings (U.S. dollars) – Asia and U.S. segments | ||||
| Core earnings (post-tax)(3), US $ | 564 | 229 | ||
| CER adjustment US $(1) | - | - | ||
| Core earnings, CER basis (post-tax), US $ | 564 | 229 |
All values are in US Dollars.
(1)The impact of updating foreign exchange rates to that which was used in 4Q25.
(2)Income tax on core earnings adjusted to reflect the foreign exchange rates for the Statement of Income in effect for 4Q25.
(3)Core earnings (post-tax) in Canadian $ are translated to US $ using the US $ Statement of Income exchange rate for 4Q25.
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Reconciliation of core earnings to net income attributed to shareholders – 3Q25
($ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| 3Q25 | ||||||
|---|---|---|---|---|---|---|
| Asia | Canada | U.S. | Global WAM | Corporate<br><br>and Other | Total | |
| Income (loss) before income taxes | $1,268 | $551 | $(109) | $606 | $(87) | $2,229 |
| Income tax (expenses) recoveries | ||||||
| Core earnings | (93) | (119) | (79) | (82) | 91 | (282) |
| Items excluded from core earnings | (140) | (5) | 113 | 1 | 3 | (28) |
| Income tax (expenses) recoveries | (233) | (124) | 34 | (81) | 94 | (310) |
| Net income (post-tax) | 1,035 | 427 | (75) | 525 | 7 | 1,919 |
| Less: Net income (post-tax) attributed to | ||||||
| Non-controlling interests | 128 | - | - | 2 | - | 130 |
| Participating policyholders | 12 | (22) | - | - | - | (10) |
| Net income (loss) attributed to shareholders (post-tax) | 895 | 449 | (75) | 523 | 7 | 1,799 |
| Less: Items excluded from core earnings (post-tax) | ||||||
| Market experience gains (losses) | 173 | (37) | (172) | 18 | 16 | (2) |
| Updates to actuarial methods and assumptions that flow<br><br>directly through income | (39) | 58 | (235) | - | - | (216) |
| Restructuring charge | - | - | - | - | - | - |
| Amortization of acquisition-related intangible assets | - | - | - | (6) | - | (6) |
| Reinsurance transactions, tax-related items and other | 2 | - | - | (14) | - | (12) |
| Core earnings (post-tax) | $759 | $428 | $332 | $525 | $(9) | $2,035 |
| Income tax on core earnings (see above) | 93 | 119 | 79 | 82 | (91) | 282 |
| Core earnings (pre-tax) | $852 | $547 | $411 | $607 | $(100) | $2,317 |
Core earnings, CER basis and U.S. dollars – 3Q25
($ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| 3Q25 | ||||
|---|---|---|---|---|
| Asia | U.S. | Corporate<br><br>and Other | Total | |
| Core earnings (post-tax) | 759 | 332 | $(9) | $2,035 |
| CER adjustment(1) | 2 | 4 | 1 | 10 |
| Core earnings, CER basis (post-tax) | 761 | 336 | $(8) | $2,045 |
| Income tax on core earnings, CER basis(2) | 94 | 79 | (90) | 284 |
| Core earnings, CER basis (pre-tax) | 855 | 415 | $(98) | $2,329 |
| Core earnings (U.S. dollars) – Asia and U.S. segments | ||||
| Core earnings (post-tax)(3), US $ | 550 | 241 | ||
| CER adjustment US $(1) | (5) | - | ||
| Core earnings, CER basis (post-tax), US $ | 545 | 241 |
All values are in US Dollars.
(1)The impact of updating foreign exchange rates to that which was used in 4Q25.
(2)Income tax on core earnings adjusted to reflect the foreign exchange rates for the Statement of Income in effect for 4Q25.
(3)Core earnings (post-tax) in Canadian $ are translated to US $ using the US $ Statement of Income exchange rate for 3Q25.
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Reconciliation of core earnings to net income attributed to shareholders – 2Q25
($ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| 2Q25 | ||||||
|---|---|---|---|---|---|---|
| Asia | Canada | U.S. | Global WAM | Corporate<br><br>and Other | Total | |
| Income (loss) before income taxes | $1,092 | $526 | $31 | $575 | $37 | $2,261 |
| Income tax (expenses) recoveries | ||||||
| Core earnings | (94) | (110) | (37) | (89) | 32 | (298) |
| Items excluded from core earnings | (55) | (5) | 42 | (4) | (18) | (40) |
| Income tax (expenses) recoveries | (149) | (115) | 5 | (93) | 14 | (338) |
| Net income (post-tax) | 943 | 411 | 36 | 482 | 51 | 1,923 |
| Less: Net income (post-tax) attributed to | ||||||
| Non-controlling interests | 49 | - | - | - | - | 49 |
| Participating policyholders | 64 | 21 | - | - | - | 85 |
| Net income (loss) attributed to shareholders (post-tax) | 830 | 390 | 36 | 482 | 51 | 1,789 |
| Less: Items excluded from core earnings (post-tax) | ||||||
| Market experience gains (losses) | 161 | (27) | (158) | 16 | 121 | 113 |
| Updates to actuarial methods and assumptions that flow<br><br>directly through income | - | - | - | - | - | - |
| Restructuring charge | - | - | - | - | - | - |
| Amortization of acquisition-related intangible assets | - | - | - | - | - | - |
| Reinsurance transactions, tax-related items and other | (51) | (2) | - | 3 | - | (50) |
| Core earnings (post-tax) | $720 | $419 | $194 | $463 | $(70) | $1,726 |
| Income tax on core earnings (see above) | 94 | 110 | 37 | 89 | (32) | 298 |
| Core earnings (pre-tax) | $814 | $529 | $231 | $552 | $(102) | $2,024 |
Core earnings, CER basis and U.S. dollars – 2Q25
($ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| 2Q25 | ||||
|---|---|---|---|---|
| Asia | U.S. | Corporate<br><br>and Other | Total | |
| Core earnings (post-tax) | 720 | 194 | $(70) | $1,726 |
| CER adjustment(1) | (3) | 1 | - | 1 |
| Core earnings, CER basis (post-tax) | 717 | 195 | $(70) | $1,727 |
| Income tax on core earnings, CER basis(2) | 94 | 39 | (33) | 299 |
| Core earnings, CER basis (pre-tax) | 811 | 234 | $(103) | $2,026 |
| Core earnings (U.S. dollars) – Asia and U.S. segments | ||||
| Core earnings (post-tax)(3), US $ | 520 | 141 | ||
| CER adjustment US $(1) | (6) | - | ||
| Core earnings, CER basis (post-tax), US $ | 514 | 141 |
All values are in US Dollars.
(1)The impact of updating foreign exchange rates to that which was used in 4Q25.
(2)Income tax on core earnings adjusted to reflect the foreign exchange rates for the Statement of Income in effect for 4Q25.
(3)Core earnings (post-tax) in Canadian $ are translated to US $ using the US $ Statement of Income exchange rate for 2Q25.
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Reconciliation of core earnings to net income attributed to shareholders – 1Q25
($ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| 1Q25 | ||||||
|---|---|---|---|---|---|---|
| Asia | Canada | U.S. | Global WAM | Corporate<br><br>and Other | Total | |
| Income (loss) before income taxes | $870 | $305 | $(731) | $528 | $(273) | $699 |
| Income tax (expenses) recoveries | ||||||
| Core earnings | (101) | (89) | (84) | (86) | 29 | (331) |
| Items excluded from core earnings | (30) | 30 | 246 | 2 | 7 | 255 |
| Income tax (expenses) recoveries | (131) | (59) | 162 | (84) | 36 | (76) |
| Net income (post-tax) | 739 | 246 | (569) | 444 | (237) | 623 |
| Less: Net income (post-tax) attributed to | ||||||
| Non-controlling interests | 67 | - | - | 1 | (2) | 66 |
| Participating policyholders | 48 | 24 | - | - | - | 72 |
| Net income (loss) attributed to shareholders (post-tax) | 624 | 222 | (569) | 443 | (235) | 485 |
| Less: Items excluded from core earnings (post-tax) | ||||||
| Market experience gains (losses) | (77) | (152) | (930) | (11) | (162) | (1,332) |
| Updates to actuarial methods and assumptions that flow<br><br>directly through income | - | - | - | - | - | - |
| Restructuring charge | - | - | - | - | - | - |
| Amortization of acquisition-related intangible assets | - | - | - | - | - | - |
| Reinsurance transactions, tax-related items and other | (4) | - | - | - | 54 | 50 |
| Core earnings (post-tax) | $705 | $374 | $361 | $454 | $(127) | $1,767 |
| Income tax on core earnings (see above) | 101 | 89 | 84 | 86 | (29) | 331 |
| Core earnings (pre-tax) | $806 | $463 | $445 | $540 | $(156) | $2,098 |
Core earnings, CER basis and U.S. dollars – 1Q25
($ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| 1Q25 | ||||
|---|---|---|---|---|
| Asia | U.S. | Corporate<br><br>and Other | Total | |
| Core earnings (post-tax) | 705 | 361 | $(127) | $1,767 |
| CER adjustment(1) | (19) | (10) | - | (39) |
| Core earnings, CER basis (post-tax) | 686 | 351 | $(127) | $1,728 |
| Income tax on core earnings, CER basis(2) | 97 | 81 | (28) | 324 |
| Core earnings, CER basis (pre-tax) | 783 | 432 | $(155) | $2,052 |
| Core earnings (U.S. dollars) – Asia and U.S. segments | ||||
| Core earnings (post-tax)(3), US $ | 492 | 251 | ||
| CER adjustment US $(1) | - | - | ||
| Core earnings, CER basis (post-tax), US $ | 492 | 251 |
All values are in US Dollars.
(1)The impact of updating foreign exchange rates to that which was used in 4Q25.
(2)Income tax on core earnings adjusted to reflect the foreign exchange rates for the Statement of Income in effect for 4Q25.
(3)Core earnings (post-tax) in Canadian $ are translated to US $ using the US $ Statement of Income exchange rate for 1Q25.
| 104 |
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Reconciliation of core earnings to net income attributed to shareholders – 4Q24(1)
($ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| 4Q24 | ||||||
|---|---|---|---|---|---|---|
| Asia | Canada | U.S. | Global WAM | Corporate<br><br>and Other | Total | |
| Income (loss) before income taxes | $781 | $579 | $112 | $419 | $222 | $2,113 |
| Income tax (expenses) recoveries | ||||||
| Core earnings | (97) | (97) | (98) | (83) | 30 | (345) |
| Items excluded from core earnings | (59) | (20) | 89 | 48 | (119) | (61) |
| Income tax (expenses) recoveries | (156) | (117) | (9) | (35) | (89) | (406) |
| Net income (post-tax) | 625 | 462 | 103 | 384 | 133 | 1,707 |
| Less: Net income (post-tax) attributed to | ||||||
| Non-controlling interests | 18 | - | - | - | 4 | 22 |
| Participating policyholders | 24 | 23 | - | - | - | 47 |
| Net income (loss) attributed to shareholders (post-tax) | 583 | 439 | 103 | 384 | 129 | 1,638 |
| Less: Items excluded from core earnings (post-tax) | ||||||
| Market experience gains (losses) | (83) | 55 | (309) | (23) | 168 | (192) |
| Updates to actuarial methods and assumptions that flow<br><br>directly through income | - | - | - | - | - | - |
| Restructuring charge | - | (6) | - | (46) | - | (52) |
| Amortization of acquisition-related intangible assets | - | - | - | - | - | - |
| Reinsurance transactions, tax-related items and other | 26 | - | - | (6) | (45) | (25) |
| Core earnings (post-tax) | $640 | $390 | $412 | $459 | $6 | $1,907 |
| Income tax on core earnings (see above) | 97 | 97 | 98 | 83 | (30) | 345 |
| Core earnings (pre-tax) | $737 | $487 | $510 | $542 | $(24) | $2,252 |
(1)This reconciliation and related core earnings reconciliation below have been updated to align with the presentation of GMT in 2025. See the “Global Minimum
Taxes” section above for more information.
Core earnings, CER basis and U.S. dollars – 4Q24
($ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| 4Q24 | ||||
|---|---|---|---|---|
| Asia | U.S. | Corporate<br><br>and Other | Total | |
| Core earnings (post-tax) | 640 | 412 | $6 | $1,907 |
| CER adjustment(1) | (4) | (2) | - | (7) |
| Core earnings, CER basis (post-tax) | 636 | 410 | $6 | $1,900 |
| Income tax on core earnings, CER basis(2) | 98 | 97 | (31) | 344 |
| Core earnings, CER basis (pre-tax) | 734 | 507 | $(25) | $2,244 |
| Core earnings (U.S. dollars) – Asia and U.S. segments | ||||
| Core earnings (post-tax)(3), US $ | 457 | 294 | ||
| CER adjustment US $(1) | (1) | - | ||
| Core earnings, CER basis (post-tax), US $ | 456 | 294 |
All values are in US Dollars.
(1)The impact of updating foreign exchange rates to that which was used in 4Q25.
(2)Income tax on core earnings adjusted to reflect the foreign exchange rates for the Statement of Income in effect for 4Q25.
(3)Core earnings (post-tax) in Canadian $ are translated to US $ using the US $ Statement of Income exchange rate for 4Q24.
1 2024 core earnings in this section has been updated to align with the presentation of the GMT in 2025. See the “Global Minimum Taxes” section above for more
information.
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Segment core earnings by business line or geographic source1
($ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
Asia
| Quarterly Results | Full Year Results | ||||||
|---|---|---|---|---|---|---|---|
| (US $ millions) | 4Q25 | 3Q25 | 2Q25 | 1Q25 | 4Q24 | 2025 | 2024 |
| Hong Kong | $318 | $298 | $259 | $256 | $230 | $1,131 | $901 |
| Japan | 108 | 103 | 97 | 87 | 87 | 395 | 362 |
| Asia Other(1) | 164 | 157 | 159 | 149 | 151 | 629 | 570 |
| International High Net Worth | 129 | 114 | |||||
| Mainland China | 61 | 41 | |||||
| Singapore | 238 | 216 | |||||
| Vietnam | 121 | 126 | |||||
| Other Emerging Markets(2) | 80 | 73 | |||||
| Regional Office | (26) | (8) | 5 | - | (11) | (29) | (34) |
| Total Asia core earnings | $564 | $550 | $520 | $492 | $457 | $2,126 | $1,799 |
(1)Core earnings for Asia Other is reported by country annually, on a full year basis.
(2)Other Emerging Markets includes Indonesia, the Philippines, Malaysia, Thailand, Cambodia and Myanmar.
| Quarterly Results | Full Year Results | ||||||
|---|---|---|---|---|---|---|---|
| (US $ millions), CER basis(1) | 4Q25 | 3Q25 | 2Q25 | 1Q25 | 4Q24 | 2025 | 2024 |
| Hong Kong | $318 | $298 | $259 | $256 | $231 | $1,131 | $901 |
| Japan | 108 | 99 | 91 | 86 | 86 | 384 | 357 |
| Asia Other(2) | 164 | 156 | 159 | 150 | 150 | 629 | 568 |
| International High Net Worth | 129 | 114 | |||||
| Mainland China | 62 | 42 | |||||
| Singapore | 239 | 223 | |||||
| Vietnam | 120 | 120 | |||||
| Other Emerging Markets(3) | 79 | 69 | |||||
| Regional Office | (26) | (8) | 5 | - | (11) | (29) | (34) |
| Total Asia core earnings, CER basis | $564 | $545 | $514 | $492 | $456 | $2,115 | $1,792 |
(1)Core earnings adjusted to reflect the foreign exchange rates for the Statement of Income in effect for 4Q25.
(2)Core earnings for Asia Other are reported by country annually, on a full year basis.
(3)Other Emerging Markets includes Indonesia, the Philippines, Malaysia, Thailand, Cambodia and Myanmar.
Canada
| Quarterly Results | Full Year Results | ||||||
|---|---|---|---|---|---|---|---|
| (Canadian $ in millions) | 4Q25 | 3Q25 | 2Q25 | 1Q25 | 4Q24 | 2025 | 2024 |
| Insurance | $320 | $326 | $326 | $280 | $295 | $1,252 | $1,188 |
| Annuities | 57 | 62 | 56 | 58 | 51 | 233 | 210 |
| Manulife Bank | 36 | 40 | 37 | 36 | 44 | 149 | 170 |
| Total Canada core earnings | $413 | $428 | $419 | $374 | $390 | $1,634 | $1,568 |
U.S.
| Quarterly Results | Full Year Results | ||||||
|---|---|---|---|---|---|---|---|
| (US $ in millions) | 4Q25 | 3Q25 | 2Q25 | 1Q25 | 4Q24 | 2025 | 2024 |
| U.S. Insurance | $200 | $218 | $114 | $229 | $256 | $761 | $1,064 |
| U.S. Annuities | 29 | 23 | 27 | 22 | 38 | 101 | 170 |
| Total U.S. core earnings | $229 | $241 | $141 | $251 | $294 | $862 | $1,234 |
| 106 | |||||||
| --- |
Global WAM by business line
| Quarterly Results | Full Year Results | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Canadian $ in millions) | 4Q25 | 3Q25 | 2Q25 | 1Q25 | 4Q24 | 2025 | 2024 | |||||||||
| Retirement | $268 | $305 | $265 | $263 | $259 | $1,101 | $950 | |||||||||
| Retail | 155 | 154 | 145 | 141 | 161 | 595 | 581 | |||||||||
| Institutional asset management | 67 | 66 | 53 | 50 | 39 | 236 | 142 | |||||||||
| Total Global WAM core earnings | $490 | $525 | $463 | $454 | $459 | $1,932 | $1,673 | Quarterly Results | Full Year Results | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | |||||||||
| (Canadian $ in millions), CER basis(1) | 4Q25 | 3Q25 | 2Q25 | 1Q25 | 4Q24 | 2025 | 2024 | |||||||||
| Retirement | $268 | $307 | $267 | $257 | $259 | $1,099 | $963 | |||||||||
| Retail | 155 | 154 | 146 | 139 | 160 | 594 | 586 | |||||||||
| Institutional asset management | 67 | 67 | 53 | 48 | 39 | 235 | 144 | |||||||||
| Total Global WAM core earnings, CER basis | $490 | $528 | $466 | $444 | $458 | $1,928 | $1,693 |
(1)Core earnings adjusted to reflect the foreign exchange rates for the Statement of Income in effect for 4Q25.
Global WAM by geographic source
| Quarterly Results | Full Year Results | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Canadian $ in millions) | 4Q25 | 3Q25 | 2Q25 | 1Q25 | 4Q24 | 2025 | 2024 | |||||||||
| Asia | $116 | $149 | $126 | $138 | $135 | $529 | $497 | |||||||||
| Canada | 117 | 124 | 109 | 110 | 108 | 460 | 390 | |||||||||
| U.S. | 257 | 252 | 228 | 206 | 216 | 943 | 786 | |||||||||
| Total Global WAM core earnings | $490 | $525 | $463 | $454 | $459 | $1,932 | $1,673 | Quarterly Results | Full Year Results | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | |||||||||
| (Canadian $ in millions), CER basis(1) | 4Q25 | 3Q25 | 2Q25 | 1Q25 | 4Q24 | 2025 | 2024 | |||||||||
| Asia | $116 | $149 | $127 | $134 | $134 | $526 | $504 | |||||||||
| Canada | 117 | 124 | 109 | 110 | 108 | 460 | 390 | |||||||||
| U.S. | 257 | 255 | 230 | 200 | 216 | 942 | 799 | |||||||||
| Total Global WAM core earnings, CER basis | $490 | $528 | $466 | $444 | $458 | $1,928 | $1,693 |
(1)Core earnings adjusted to reflect the foreign exchange rates for the Statement of Income in effect for 4Q25.
Core earnings available to common shareholders is a financial measure that is used in the calculation of core ROE and core
EPS. It is calculated as core earnings (post-tax) less preferred share dividends and other equity distributions.
| Quarterly Results | Full Year Results | ||||||
|---|---|---|---|---|---|---|---|
| ($ millions, post-tax and based on actual foreign exchange<br><br>rates in effect in the applicable reporting period, unless<br><br>otherwise stated) | 4Q25 | 3Q25 | 2Q25 | 1Q25 | 4Q24 | 2025 | 2024 |
| Core earnings(1) | $1,993 | $2,035 | $1,726 | $1,767 | $1,907 | $7,521 | $7,182 |
| Less: Preferred share dividends and other equity<br><br>distributions(2) | 103 | 58 | 103 | 57 | 101 | 321 | 311 |
| Core earnings available to common shareholders | 1,890 | 1,977 | 1,623 | 1,710 | 1,806 | 7,200 | 6,871 |
| CER adjustment(3) | - | 10 | 1 | (39) | (7) | (28) | 86 |
| Core earnings available to common shareholders,<br><br>CER basis | $1,890 | $1,987 | $1,624 | $1,671 | $1,799 | $7,172 | $6,957 |
(1)2024 core earnings and core earnings available to common shareholders have been updated to align with the presentation of GMT in 2025. See the “Global
Minimum Taxes” section above for more information.
(2)Preferred share dividends and other equity distributions are recorded in the Corporate and Other segment. As a result, core earnings and core earnings available
to common shareholders are the same figure for Asia, Canada, U.S. and Global WAM segments. Core earnings for Corporate and Other segment is reduced by
preferred shares and other equity distributions to arrive at core earnings available to common shareholders. See above for the reconciliation of core earnings to
net income attributed to shareholders for each segment.
(3)The impact of updating foreign exchange rates to that which was used in 4Q25.
| 107 | 2025 Annual Report | Management’s Discussion and Analysis |
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Core ROE measures profitability using core earnings available to common shareholders as a percentage of the capital deployed
to earn the core earnings. The Company calculates core ROE using average common shareholders’ equity quarterly, as the
average of common shareholders’ equity at the start and end of the quarter, and annually, as the average of the quarterly
average common shareholders’ equity for the year.
| Quarterly Results | Full Year Results | ||||||
|---|---|---|---|---|---|---|---|
| ($ millions, unless otherwise stated) | 4Q25 | 3Q25 | 2Q25 | 1Q25 | 4Q24 | 2025 | 2024 |
| Core earnings available to common shareholders(1) | $1,890 | $1,977 | $1,623 | $1,710 | $1,806 | $7,200 | $6,871 |
| Annualized core earnings available to common<br><br>shareholders (post-tax) | $7,498 | $7,844 | $6,510 | $6,935 | $7,185 | $7,200 | $6,871 |
| Average common shareholders’ equity (see<br><br>below) | $43,759 | $43,238 | $43,448 | $44,394 | $43,613 | $43,709 | $42,288 |
| Core ROE (annualized) (%)(1) | 17.1% | 18.1% | 15.0% | 15.6% | 16.5% | 16.5% | 16.2% |
| Average common shareholders’ equity | |||||||
| Total shareholders’ and other equity | $50,121 | $50,716 | $49,080 | $51,135 | $50,972 | $50,121 | $50,972 |
| Less: Preferred shares and other equity | 6,660 | 6,660 | 6,660 | 6,660 | 6,660 | 6,660 | 6,660 |
| Common shareholders’ equity | $43,461 | $44,056 | $42,420 | $44,475 | $44,312 | $43,461 | $44,312 |
| Average common shareholders’ equity | $43,759 | $43,238 | $43,448 | $44,394 | $43,613 | $43,709 | $42,288 |
(1)2024 core earnings available to common shareholders and core ROE have been updated to align with the presentation of GMT in 2025. See the “Global Minimum
Taxes” section above for more information.
Core EPS is equal to core earnings available to common shareholders divided by diluted weighted average common shares
outstanding.
Core earnings related to Financial and Strategic Targets
The Company measures its progress on certain 2025 and 2027 financial and strategic targets using core earnings, including core
earnings from highest potential businesses, core earnings from Asia region and core earnings from LTC and VA businesses. The
core earnings for these businesses is calculated consistent with our definition of core earnings and expressed as a percentage of
total core earnings.
Highest potential businesses
| For the years ended December 31, | ||
|---|---|---|
| ($ millions and post-tax, unless otherwise stated)(1) | 2025 | 2024 |
| Core earnings highest potential businesses(2) | $5,649 | $4,898 |
| Core earnings - all other businesses | 1,872 | 2,284 |
| Core earnings | 7,521 | 7,182 |
| Items excluded from core earnings | (1,949) | (1,797) |
| Net income (loss) attributed to shareholders | $5,572 | $5,385 |
| Highest potential businesses core earnings contribution | 75% | 68% |
(1)2024 core earnings, items excluded from core earnings and core earnings contribution have been updated to align with the presentation of GMT in 2025. See the
“Global Minimum Taxes” section above for more information.
(2)Includes core earnings from Asia and Global WAM segments, Canada Group Benefits, and North American behavioural insurance products.
Asia region
| For the years ended December 31, | ||
|---|---|---|
| ($ millions and post-tax, unless otherwise stated)(1) | 2025 | 2024 |
| Core earnings of Asia region(2) | $3,498 | $2,963 |
| Core earnings - all other businesses | 4,023 | 4,219 |
| Core earnings | 7,521 | 7,182 |
| Items excluded from core earnings | (1,949) | (1,797) |
| Net income (loss) attributed to shareholders | $5,572 | $5,385 |
| Asia region core earnings contribution(2) | 47% | 41% |
(1)2024 core earnings, items excluded from core earnings and core earnings contribution have been updated to align with the presentation of GMT in 2025. See the
“Global Minimum Taxes” section above for more information.
(2)Includes core earnings from Asia segment and Global WAM’s business in Asia.
| 108 |
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LTC and VA businesses
| For the years ended December 31, | ||
|---|---|---|
| ($ millions and post-tax, unless otherwise stated)(1) | 2025 | 2024 |
| Core earnings of LTC and VA businesses(2) | $702 | $744 |
| Core earnings - all other businesses | 6,819 | 6,438 |
| Core earnings | 7,521 | 7,182 |
| Items excluded from core earnings | (1,949) | (1,797) |
| Net income (loss) attributed to shareholders | $5,572 | $5,385 |
| LTC and VA businesses core earnings contribution | 9% | 10% |
(1)2024 core earnings, items excluded from core earnings and core earnings contribution have been updated to align with the presentation of GMT in 2025. See the
“Global Minimum Taxes” section above for more information.
(2)Includes core earnings from U.S. long-term care and Asia, Canada and U.S. variable annuities businesses.
The effective tax rate on core earnings is equal to income tax on core earnings divided by pre-tax core earnings.
The operating segment core earnings contribution measures the core earnings contribution from each operating segment,
expressed as a percentage. The operating segments are Asia, Canada, U.S. and Global WAM. For each operating segment, the
percentage is calculated as the core earnings from that segment divided by the sum of core earnings from all four of the
operating segments. As of December 31, 2025, Asia, Canada, U.S. and Global WAM operating core earnings contributions were
38%, 21%, 16% and 25%, respectively (December 31, 2024 – 33%, 21%, 23% and 23%, respectively, after updating our 2024
core earnings by segment to align with the presentation of GMT in 2025. See “Global Minimum Taxes” above for more
information).
| 109 | 2025 Annual Report | Management’s Discussion and Analysis |
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Drivers of Earnings (“DOE”) is used to identify the primary sources of gains or losses in each reporting period. It is one of the
key tools we use to understand and manage our business. The DOE line items are comprised of amounts that have been
included in our financial statements. The core DOE shows the sources of core earnings and the items excluded from core
earnings, reconciled to net income attributed to shareholders. The elements of the core earnings DOE are described below:
Net Insurance Service Result represents the core earnings associated with providing insurance service to policyholders within
the period including:
•Expected earnings on insurance contracts which includes the release of risk adjustment for expired non-financial risk, the
CSM recognized for service provided, and expected earnings on short-term PAA insurance business.
•Impact of new insurance business relates to income at initial recognition from new insurance contracts. Losses would
occur if the group of new insurance contracts was onerous at initial recognition. If reinsurance contracts provide coverage for
the direct insurance contracts, then the loss is offset by a corresponding gain on reinsurance contracts held.
•Insurance experience gains (losses) arise from items such as claims, persistency, and expenses, where the actual
experience in the current period differs from the expected results assumed in the insurance and investment contract
liabilities. Generally, this line would be driven by claims and expenses, as persistency experience relates to future service
and would be offset by changes to the carrying amount of the contractual service margin unless the group is onerous, in
which case the impact of persistency experience would be included in core earnings.
•Other represents pre-tax net income on residual items in the insurance result section.
Net Investment Result represents the core earnings associated with investment results within the period. Note that results
associated with Global WAM and Manulife Bank are shown on separate DOE lines. However within the Consolidated Statements
of Income, the results associated with these businesses would impact the total investment result. This section includes:
•Expected investment earnings, which is the difference between expected asset returns and the associated finance income
or expense from insurance and investment contract liabilities, net of investment expenses.
•Change in expected credit loss, which is the gain or charge to net income attributed to shareholders for credit losses to
bring the allowance for credit losses to a level management considers adequate for expected credit-related losses on its
portfolio.
•Expected earnings on surplus reflects the expected investment return on surplus assets.
•Other represents pre-tax net income on residual items in the investment result section.
Global WAM is the pre-tax net income from the Global Wealth and Asset Management segment, adjusted for applicable items
excluded from core earnings as noted in the core earnings (loss) section above.
Manulife Bank is the pre-tax net income from Manulife Bank, adjusted for applicable items excluded from core earnings as
noted in the core earnings (loss) section above.
Other represents net income associated with items outside of the net insurance service result, net investment result, Global
WAM and Manulife Bank. Other includes lines attributed to core earnings such as:
•Non-directly attributable expenses are expenses incurred by the Company which are not directly attributable to fulfilling
insurance contracts. Non-directly attributable expenses exclude non-directly attributable investment expenses as they are
included in the net investment result.
•Other represents pre-tax net income on residual items in the Other section. Most notably this would include the cost of
financing debt issued by Manulife.
Net income attributed to shareholders includes the following items excluded from core earnings:
•Market experience gains (losses) related to items excluded from core earnings that relate to changes in market variables.
•Updates to actuarial methods and assumptions that flow directly through income related to updates in the methods
and assumptions used to value insurance contract liabilities.
•Restructuring charges includes a charge taken to reorganize operations.
•Amortization and impairment of intangible assets acquired in a business combination, except for amortization of
software and distribution agreements. As noted above, this item is now excluded from core earnings commencing in 3Q25 to
better represent the underlying earnings capacity of acquired businesses, consistent with our definition of core earnings, and
to better align with industry practice. Prior periods have not been restated as these amounts are not considered material,
and use the definition of core earnings in effect for those periods.
•Reinsurance transactions, tax-related items and other include the impacts of new or changes to in-force reinsurance
contracts, the impact of enacted or substantively enacted income tax rate changes and other amounts defined as items
excluded from core earnings not specifically captured in the lines above.
All of the above items are discussed in more detail in our definition of items excluded from core earnings.
| 110 |
|---|
DOE Reconciliation – 2025
($ millions, pre-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| 2025 | ||||||
|---|---|---|---|---|---|---|
| Asia | Canada | U.S. | Global<br><br>WAM | Corporate<br><br>and Other | Total | |
| Net insurance service result reconciliation | ||||||
| Total insurance service result - financial statements | $2,518 | $1,514 | $394 | $- | $100 | $4,526 |
| Less: Insurance service result attributed to: | ||||||
| Items excluded from core earnings | (79) | 81 | 88 | - | (1) | 89 |
| NCI | 85 | - | - | - | - | 85 |
| Participating policyholders | 257 | 90 | - | - | - | 347 |
| Core net insurance service result | 2,255 | 1,343 | 306 | - | 101 | 4,005 |
| Core net insurance service result, CER adjustment(1) | (13) | - | (3) | - | 2 | (14) |
| Core net insurance service result, CER basis | $2,242 | $1,343 | $303 | $- | $103 | $3,991 |
| Total investment result reconciliation | ||||||
| Total investment result per financial statements | $2,004 | $1,449 | $(1,083) | $(977) | $1,016 | $2,409 |
| Less: Reclassify Manulife Bank(2) and Global WAM to their own DOE lines | - | 1,338 | - | (977) | - | 361 |
| Add: Consolidation and other adjustments from Other DOE line | - | 3 | 80 | - | (682) | (599) |
| Less: Net investment result attributed to: | ||||||
| Items excluded from core earnings | 364 | (429) | (2,275) | (1) | (21) | (2,362) |
| NCI | 253 | - | - | 1 | (2) | 252 |
| Participating policyholders | 22 | (62) | - | - | - | (40) |
| Core net investment result | 1,365 | 605 | 1,272 | - | 357 | 3,599 |
| Core net investment result, CER adjustment(1) | (13) | - | (3) | - | - | (16) |
| Core net investment result, CER basis | $1,352 | $605 | $1,269 | $- | $357 | $3,583 |
| Manulife Bank and Global WAM by DOE line reconciliation | ||||||
| Manulife Bank and Global WAM net income attributed to shareholders | $- | $211 | $- | $2,245 | $- | $2,456 |
| Less: Manulife Bank and Global WAM attributed to: | ||||||
| Items excluded from core earnings | - | 3 | - | (37) | - | (34) |
| Core earnings in Manulife Bank and Global WAM | - | 208 | - | 2,282 | - | 2,490 |
| Core earnings in Manulife Bank and Global WAM, CER adjustment(1) | - | - | - | (5) | - | (5) |
| Core earnings in Manulife Bank and Global WAM, CER basis | $- | $208 | $- | $2,277 | $- | $2,485 |
| Other reconciliation | ||||||
| Other revenue per financial statements | $13 | $301 | $160 | $8,020 | $(365) | $8,129 |
| General expenses per financial statements | (366) | (617) | (181) | (3,260) | (477) | (4,901) |
| Commissions related to non-insurance contracts | 3 | (69) | 16 | (1,528) | 39 | (1,539) |
| Interest expenses per financial statements | (43) | (842) | (14) | (3) | (628) | (1,530) |
| Total financial statements values included in Other | (393) | (1,227) | (19) | 3,229 | (1,431) | 159 |
| Less: Reclassifications: | ||||||
| Manulife Bank and Global WAM to their own DOE lines | - | (1,127) | - | 3,222 | - | 2,095 |
| Consolidation and other adjustments to net investment result DOE line | - | 3 | 80 | - | (683) | (600) |
| Less: Other attributed to: | ||||||
| Items excluded from core earnings | (84) | 3 | (2) | (2) | 135 | 50 |
| NCI | 13 | 1 | - | 9 | (1) | 22 |
| Participating policyholders | (12) | - | - | - | - | (12) |
| Add: Participating policyholders’ earnings transfer to shareholders | 48 | 14 | - | - | - | 62 |
| Other core earnings | (262) | (93) | (97) | - | (882) | (1,334) |
| Other core earnings, CER adjustment(1) | 3 | - | - | - | - | 3 |
| Other core earnings, CER basis | $(259) | $(93) | $(97) | $- | $(882) | $(1,331) |
| Income tax (expenses) recoveries reconciliation | ||||||
| Income tax (expenses) recoveries per financial statements | $(716) | $(384) | $181 | $(341) | $226 | $(1,034) |
| Less: Income tax (expenses) recoveries attributed to: | ||||||
| Items excluded from core earnings | (198) | 21 | 456 | 9 | 21 | 309 |
| NCI | (81) | (1) | - | - | 1 | (81) |
| Participating policyholders | (48) | 25 | - | - | - | (23) |
| Core income tax (expenses) recoveries | (389) | (429) | (275) | (350) | 204 | (1,239) |
| Core income tax (expenses) recoveries, CER adjustment(1) | 3 | - | 1 | 1 | (1) | 4 |
| Core income tax (expenses) recoveries, CER basis | $(386) | $(429) | $(274) | $(349) | $203 | $(1,235) |
(1)The impact of updating foreign exchange rates to that which was used in 4Q25.
(2)Manulife Bank is part of Canada segment.
| 111 | 2025 Annual Report | Management’s Discussion and Analysis |
|---|
DOE Reconciliation – 2024(1)
($ millions, pre-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| 2024 | ||||||
|---|---|---|---|---|---|---|
| Asia | Canada | U.S. | Global<br><br>WAM | Corporate<br><br>and Other | Total | |
| Net insurance service result reconciliation | ||||||
| Total insurance service result - financial statements | $2,160 | $1,320 | $357 | $- | $164 | $4,001 |
| Less: Insurance service result attributed to: | ||||||
| Items excluded from core earnings | (11) | (5) | (205) | - | 1 | (220) |
| NCI | 101 | - | - | - | - | 101 |
| Participating policyholders | 201 | 71 | - | - | - | 272 |
| Core net insurance service result | 1,869 | 1,254 | 562 | - | 163 | 3,848 |
| Core net insurance service result, CER adjustment(2) | 27 | - | 9 | - | 3 | 39 |
| Core net insurance service result, CER basis | $1,896 | $1,254 | $571 | $- | $166 | $3,887 |
| Total investment result reconciliation | ||||||
| Total investment result per financial statements | $1,248 | $1,789 | $(218) | $(982) | $1,684 | $3,521 |
| Less: Reclassify Manulife Bank(3) and Global WAM to their own DOE lines | - | 1,547 | - | (982) | - | 565 |
| Add: Consolidation and other adjustments from Other DOE line | - | - | - | - | (656) | (656) |
| Less: Net investment result attributed to: | ||||||
| Items excluded from core earnings | (212) | (397) | (1,809) | - | 612 | (1,806) |
| NCI | 202 | - | - | - | 4 | 206 |
| Participating policyholders | 24 | 57 | - | - | - | 81 |
| Core net investment result | 1,234 | 582 | 1,591 | - | 412 | 3,819 |
| Core net investment result, CER adjustment(2) | 15 | - | 29 | - | - | 44 |
| Core net investment result, CER basis | $1,249 | $582 | $1,620 | $- | $412 | $3,863 |
| Manulife Bank and Global WAM by DOE line reconciliation | ||||||
| Manulife Bank and Global WAM net income attributed to shareholders | $- | $235 | $- | $1,747 | $- | $1,982 |
| Less: Manulife Bank and Global WAM attributed to: | ||||||
| Items excluded from core earnings | - | - | - | (160) | - | (160) |
| Core earnings in Manulife Bank and Global WAM | - | 235 | - | 1,907 | - | 2,142 |
| Core earnings in Manulife Bank and Global WAM, CER adjustment(2) | - | - | - | 21 | - | 21 |
| Core earnings in Manulife Bank and Global WAM, CER basis | $- | $235 | $- | $1,928 | $- | $2,163 |
| Other reconciliation | ||||||
| Other revenue per financial statements | $155 | $294 | $137 | $7,439 | $(437) | $7,588 |
| General expenses per financial statements | (330) | (613) | (139) | (3,249) | (528) | (4,859) |
| Commissions related to non-insurance contracts | (8) | (64) | 8 | (1,454) | 38 | (1,480) |
| Interest expenses per financial statements | (28) | (1,047) | (13) | (7) | (586) | (1,681) |
| Total financial statements values included in Other | (211) | (1,430) | (7) | 2,729 | (1,513) | (432) |
| Less: Reclassifications: | ||||||
| Manulife Bank and Global WAM to their own DOE lines | - | (1,311) | - | 2,729 | - | 1,418 |
| Consolidation and other adjustments to net investment result DOE line | - | (1) | - | - | (656) | (657) |
| Less: Other attributed to: | ||||||
| Items excluded from core earnings | 80 | 2 | 48 | (2) | 54 | 182 |
| NCI | (1) | - | - | 2 | - | 1 |
| Participating policyholders | (7) | (5) | - | - | - | (12) |
| Add: Participating policyholders’ earnings transfer to shareholders | 36 | 11 | - | - | - | 47 |
| Other core earnings | (247) | (104) | (55) | - | (911) | (1,317) |
| Other core earnings, CER adjustment(2) | (3) | - | - | - | - | (3) |
| Other core earnings, CER basis | $(250) | $(104) | $(55) | $- | $(911) | $(1,320) |
| Income tax (expenses) recoveries reconciliation | ||||||
| Income tax (expenses) recoveries per financial statements | $(460) | $(353) | $3 | $(148) | $(254) | $(1,212) |
| Less: Income tax (expenses) recoveries attributed to: | ||||||
| Items excluded from core earnings | 32 | 53 | 411 | 86 | (375) | 207 |
| NCI | (61) | - | - | - | - | (61) |
| Participating policyholders | (41) | (7) | - | - | - | (48) |
| Core income tax (expenses) recoveries | (390) | (399) | (408) | (234) | 121 | (1,310) |
| Core income tax (expenses) recoveries, CER adjustment(2) | (7) | - | (7) | (1) | - | (15) |
| Core income tax (expenses) recoveries, CER basis | $(397) | $(399) | $(415) | $(235) | $121 | $(1,325) |
(1)This reconciliation has been updated to align with the presentation of GMT in 2025. See the “Global Minimum Taxes” section for more information.
(2)The impact of updating foreign exchange rates to that which was used in 4Q25.
(3)Manulife Bank is part of Canada segment.
| 112 |
|---|
DOE Reconciliation – 4Q25
($ millions, pre-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| 4Q25 | ||||||
|---|---|---|---|---|---|---|
| Asia | Canada | U.S. | Global<br><br>WAM | Corporate<br><br>and Other | Total | |
| Net insurance service result reconciliation | ||||||
| Total insurance service result - financial statements | $692 | $362 | $136 | $- | $66 | $1,256 |
| Less: Insurance service result attributed to: | ||||||
| Items excluded from core earnings | (4) | (2) | 23 | - | (2) | 15 |
| NCI | 20 | - | - | - | - | 20 |
| Participating policyholders | 70 | 25 | - | - | - | 95 |
| Core net insurance service result | 606 | 339 | 113 | - | 68 | 1,126 |
| Core net insurance service result, CER adjustment(1) | - | - | - | - | - | - |
| Core net insurance service result, CER basis | $606 | $339 | $113 | $- | $68 | $1,126 |
| Total investment result reconciliation | ||||||
| Total investment result per financial statements | $322 | $316 | $(38) | $(287) | $325 | $638 |
| Less: Reclassify Manulife Bank(2) and Global WAM to their own DOE lines | - | 341 | - | (287) | - | 54 |
| Add: Consolidation and other adjustments from Other DOE line | 1 | (1) | 27 | - | (181) | (154) |
| Less: Net investment result attributed to: | ||||||
| Items excluded from core earnings | (63) | (175) | (309) | - | 53 | (494) |
| NCI | 8 | - | - | - | - | 8 |
| Participating policyholders | 6 | (7) | - | - | - | (1) |
| Core net investment result | 372 | 156 | 298 | - | 91 | 917 |
| Core net investment result, CER adjustment(1) | - | - | - | - | - | - |
| Core net investment result, CER basis | $372 | $156 | $298 | $- | $91 | $917 |
| Manulife Bank and Global WAM by DOE line reconciliation | ||||||
| Manulife Bank and Global WAM net income attributed to shareholders | $- | $50 | $- | $536 | $- | $586 |
| Less: Manulife Bank and Global WAM attributed to: | ||||||
| Items excluded from core earnings | - | (1) | - | (47) | - | (48) |
| Core earnings in Manulife Bank and Global WAM | - | 51 | - | 583 | - | 634 |
| Core earnings in Manulife Bank and Global WAM, CER adjustment(1) | - | - | - | - | - | - |
| Core earnings in Manulife Bank and Global WAM, CER basis | $- | $51 | $- | $583 | $- | $634 |
| Other reconciliation | ||||||
| Other revenue per financial statements | $31 | $70 | $39 | $2,119 | $(112) | $2,147 |
| General expenses per financial statements | (119) | (159) | (39) | (889) | (121) | (1,327) |
| Commissions related to non-insurance contracts | (1) | (18) | 6 | (399) | 8 | (404) |
| Interest expenses per financial statements | (26) | (217) | (3) | (1) | (158) | (405) |
| Total financial statements values included in Other | (115) | (324) | 3 | 830 | (383) | 11 |
| Less: Reclassifications: | ||||||
| Manulife Bank and Global WAM to their own DOE lines | - | (291) | - | 823 | - | 532 |
| Consolidation and other adjustments to net investment result DOE line | 1 | (1) | 27 | - | (182) | (155) |
| Less: Other attributed to: | ||||||
| Items excluded from core earnings | (11) | (8) | (7) | - | 24 | (2) |
| NCI | 4 | - | - | 7 | - | 11 |
| Participating policyholders | (2) | 3 | - | - | - | 1 |
| Add: Participating policyholders’ earnings transfer to shareholders | 15 | 5 | - | - | - | 20 |
| Other core earnings | (92) | (22) | (17) | - | (225) | (356) |
| Other core earnings, CER adjustment(1) | - | - | - | - | - | - |
| Other core earnings, CER basis | $(92) | $(22) | $(17) | $- | $(225) | $(356) |
| Income tax (expenses) recoveries reconciliation | ||||||
| Income tax (expenses) recoveries per financial statements | $(203) | $(86) | $(20) | $(83) | $82 | $(310) |
| Less: Income tax (expenses) recoveries attributed to: | ||||||
| Items excluded from core earnings | (84) | 25 | 55 | 10 | 30 | 36 |
| NCI | (6) | - | - | - | - | (6) |
| Participating policyholders | (12) | - | - | - | - | (12) |
| Core income tax (expenses) recoveries | (101) | (111) | (75) | (93) | 52 | (328) |
| Core income tax (expenses) recoveries, CER adjustment(1) | - | - | - | - | - | - |
| Core income tax (expenses) recoveries, CER basis | $(101) | $(111) | $(75) | $(93) | $52 | $(328) |
(1)The impact of updating foreign exchange rates to that which was used in 4Q25.
(2)Manulife Bank is part of Canada segment.
| 113 | 2025 Annual Report | Management’s Discussion and Analysis |
|---|
DOE Reconciliation – 3Q25
($ millions, pre-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| 3Q25 | ||||||
|---|---|---|---|---|---|---|
| Asia | Canada | U.S. | Global<br><br>WAM | Corporate<br><br>and Other | Total | |
| Net insurance service result reconciliation | ||||||
| Total insurance service result - financial statements | $641 | $465 | $72 | $- | $43 | $1,221 |
| Less: Insurance service result attributed to: | ||||||
| Items excluded from core earnings | (19) | 88 | 4 | - | 1 | 74 |
| NCI | 22 | - | - | - | - | 22 |
| Participating policyholders | 60 | 26 | - | - | - | 86 |
| Core net insurance service result | 578 | 351 | 68 | - | 42 | 1,039 |
| Core net insurance service result, CER adjustment(1) | 3 | - | - | - | 1 | 4 |
| Core net insurance service result, CER basis | $581 | $351 | $68 | $- | $43 | $1,043 |
| Total investment result reconciliation | ||||||
| Total investment result per financial statements | $653 | $402 | $(205) | $(210) | $229 | $869 |
| Less: Reclassify Manulife Bank(2) and Global WAM to their own DOE lines | - | 353 | - | (210) | - | 143 |
| Add: Consolidation and other adjustments from Other DOE line | (2) | 1 | 25 | - | (173) | (149) |
| Less: Net investment result attributed to: | ||||||
| Items excluded from core earnings | 202 | (48) | (548) | (1) | (30) | (425) |
| NCI | 134 | - | - | 1 | - | 135 |
| Participating policyholders | (16) | (67) | - | - | - | (83) |
| Core net investment result | 331 | 165 | 368 | - | 86 | 950 |
| Core net investment result, CER adjustment(1) | 1 | - | 4 | - | - | 5 |
| Core net investment result, CER basis | $332 | $165 | $372 | $- | $86 | $955 |
| Manulife Bank and Global WAM by DOE line reconciliation | ||||||
| Manulife Bank and Global WAM net income attributed to shareholders | $- | $58 | $- | $607 | $- | $665 |
| Less: Manulife Bank and Global WAM attributed to: | ||||||
| Items excluded from core earnings | - | 4 | - | - | - | 4 |
| Core earnings in Manulife Bank and Global WAM | - | 54 | - | 607 | - | 661 |
| Core earnings in Manulife Bank and Global WAM, CER adjustment(1) | - | - | - | 3 | - | 3 |
| Core earnings in Manulife Bank and Global WAM, CER basis | $- | $54 | $- | $610 | $- | $664 |
| Other reconciliation | ||||||
| Other revenue per financial statements | $73 | $72 | $63 | $2,024 | $(87) | $2,145 |
| General expenses per financial statements | (94) | (152) | (43) | (818) | (125) | (1,232) |
| Commissions related to non-insurance contracts | (1) | (15) | 7 | (390) | 13 | (386) |
| Interest expenses per financial statements | (4) | (221) | (3) | - | (160) | (388) |
| Total financial statements values included in Other | (26) | (316) | 24 | 816 | (359) | 139 |
| Less: Reclassifications: | ||||||
| Manulife Bank and Global WAM to their own DOE lines | - | (295) | - | 816 | - | 521 |
| Consolidation and other adjustments to net investment result DOE line | (2) | 1 | 25 | 1 | (173) | (148) |
| Less: Other attributed to: | ||||||
| Items excluded from core earnings | 41 | 6 | 24 | (2) | 43 | 112 |
| NCI | 7 | 1 | - | 1 | (1) | 8 |
| Participating policyholders | (2) | (3) | - | - | - | (5) |
| Add: Participating policyholders’ earnings transfer to shareholders | 13 | 3 | - | - | - | 16 |
| Other core earnings | (57) | (23) | (25) | - | (228) | (333) |
| Other core earnings, CER adjustment(1) | (1) | - | - | - | 1 | - |
| Other core earnings, CER basis | $(58) | $(23) | $(25) | $- | $(227) | $(333) |
| Income tax (expenses) recoveries reconciliation | ||||||
| Income tax (expenses) recoveries per financial statements | $(233) | $(124) | $34 | $(81) | $94 | $(310) |
| Less: Income tax (expenses) recoveries attributed to: | ||||||
| Items excluded from core earnings | (88) | (29) | 113 | 1 | 2 | (1) |
| NCI | (35) | (1) | - | - | 1 | (35) |
| Participating policyholders | (17) | 25 | - | - | - | 8 |
| Core income tax (expenses) recoveries | (93) | (119) | (79) | (82) | 91 | (282) |
| Core income tax (expenses) recoveries, CER adjustment(1) | (1) | - | - | - | (1) | (2) |
| Core income tax (expenses) recoveries, CER basis | $(94) | $(119) | $(79) | $(82) | $90 | $(284) |
(1)The impact of updating foreign exchange rates to that which was used in 4Q25.
(2)Manulife Bank is part of Canada segment.
| 114 |
|---|
DOE Reconciliation – 2Q25
($ millions, pre-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| 2Q25 | ||||||
|---|---|---|---|---|---|---|
| Asia | Canada | U.S. | Global<br><br>WAM | Corporate<br><br>and Other | Total | |
| Net insurance service result reconciliation | ||||||
| Total insurance service result - financial statements | $571 | $370 | $39 | $- | $26 | $1,006 |
| Less: Insurance service result attributed to: | ||||||
| Items excluded from core earnings | (43) | - | 28 | - | - | (15) |
| NCI | 16 | - | - | - | - | 16 |
| Participating policyholders | 65 | 25 | - | - | - | 90 |
| Core net insurance service result | 533 | 345 | 11 | - | 26 | 915 |
| Core net insurance service result, CER adjustment(1) | (1) | - | - | - | - | (1) |
| Core net insurance service result, CER basis | $532 | $345 | $11 | $- | $26 | $914 |
| Total investment result reconciliation | ||||||
| Total investment result per financial statements | $685 | $433 | $10 | $(208) | $346 | $1,266 |
| Less: Reclassify Manulife Bank(2) and Global WAM to their own DOE lines | - | 312 | - | (208) | - | 104 |
| Add: Consolidation and other adjustments from Other DOE line | 1 | 3 | 28 | - | (157) | (125) |
| Less: Net investment result attributed to: | ||||||
| Items excluded from core earnings | 275 | (27) | (208) | - | 105 | 145 |
| NCI | 51 | - | - | - | - | 51 |
| Participating policyholders | 24 | (2) | - | - | - | 22 |
| Core net investment result | 336 | 153 | 246 | - | 84 | 819 |
| Core net investment result, CER adjustment(1) | (4) | - | 3 | - | - | (1) |
| Core net investment result, CER basis | $332 | $153 | $249 | $- | $84 | $818 |
| Manulife Bank and Global WAM by DOE line reconciliation | ||||||
| Manulife Bank and Global WAM net income attributed to shareholders | $- | $53 | $- | $575 | $- | $628 |
| Less: Manulife Bank and Global WAM attributed to: | ||||||
| Items excluded from core earnings | - | - | - | 23 | - | 23 |
| Core earnings in Manulife Bank and Global WAM | - | 53 | - | 552 | - | 605 |
| Core earnings in Manulife Bank and Global WAM, CER adjustment(1) | - | - | - | 3 | - | 3 |
| Core earnings in Manulife Bank and Global WAM, CER basis | $- | $53 | $- | $555 | $- | $608 |
| Other reconciliation | ||||||
| Other revenue per financial statements | $(92) | $85 | $33 | $1,902 | $(77) | $1,851 |
| General expenses per financial statements | (73) | (154) | (47) | (756) | (110) | (1,140) |
| Commissions related to non-insurance contracts | 7 | (18) | 1 | (362) | 8 | (364) |
| Interest expenses per financial statements | (6) | (190) | (5) | (1) | (156) | (358) |
| Total financial statements values included in Other | (164) | (277) | (18) | 783 | (335) | (11) |
| Less: Reclassifications: | ||||||
| Manulife Bank and Global WAM to their own DOE lines | - | (259) | - | 783 | - | 524 |
| Consolidation and other adjustments to net investment result DOE line | 1 | 3 | 28 | - | (157) | (125) |
| Less: Other attributed to: | ||||||
| Items excluded from core earnings | (97) | 3 | (20) | - | 34 | (80) |
| NCI | 1 | - | - | - | - | 1 |
| Participating policyholders | (5) | 1 | - | - | - | (4) |
| Add: Participating policyholders’ earnings transfer to shareholders | 9 | 3 | - | - | - | 12 |
| Other core earnings | (55) | (22) | (26) | - | (212) | (315) |
| Other core earnings, CER adjustment(1) | 2 | - | - | - | (1) | 1 |
| Other core earnings, CER basis | $(53) | $(22) | $(26) | $- | $(213) | $(314) |
| Income tax (expenses) recoveries reconciliation | ||||||
| Income tax (expenses) recoveries per financial statements | $(149) | $(115) | $5 | $(94) | $15 | $(338) |
| Less: Income tax (expenses) recoveries attributed to: | ||||||
| Items excluded from core earnings | (25) | (5) | 42 | (5) | (17) | (10) |
| NCI | (19) | - | - | - | - | (19) |
| Participating policyholders | (11) | - | - | - | - | (11) |
| Core income tax (expenses) recoveries | (94) | (110) | (37) | (89) | 32 | (298) |
| Core income tax (expenses) recoveries, CER adjustment(1) | - | - | (2) | - | 1 | (1) |
| Core income tax (expenses) recoveries, CER basis | $(94) | $(110) | $(39) | $(89) | $33 | $(299) |
(1)The impact of updating foreign exchange rates to that which was used in 4Q25.
(2)Manulife Bank is part of Canada segment.
| 115 | 2025 Annual Report | Management’s Discussion and Analysis |
|---|
DOE Reconciliation – 1Q25
($ millions, pre-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| 1Q25 | ||||||
|---|---|---|---|---|---|---|
| Asia | Canada | U.S. | Global<br><br>WAM | Corporate<br><br>and Other | Total | |
| Net insurance service result reconciliation | ||||||
| Total insurance service result - financial statements | $614 | $317 | $147 | $- | $(35) | $1,043 |
| Less: Insurance service result attributed to: | ||||||
| Items excluded from core earnings | (13) | (5) | 33 | - | - | 15 |
| NCI | 27 | - | - | - | - | 27 |
| Participating policyholders | 62 | 14 | - | - | - | 76 |
| Core net insurance service result | 538 | 308 | 114 | - | (35) | 925 |
| Core net insurance service result, CER adjustment(1) | (15) | - | (3) | - | 1 | (17) |
| Core net insurance service result, CER basis | $523 | $308 | $111 | $- | $(34) | $908 |
| Total investment result reconciliation | ||||||
| Total investment result per financial statements | $344 | $298 | $(850) | $(272) | $116 | $(364) |
| Less: Reclassify Manulife Bank(2) and Global WAM to their own DOE lines | - | 332 | - | (272) | - | 60 |
| Add: Consolidation and other adjustments from Other DOE line | - | - | - | - | (171) | (171) |
| Less: Net investment result attributed to: | ||||||
| Items excluded from core earnings | (50) | (179) | (1,210) | - | (149) | (1,588) |
| NCI | 60 | - | - | - | (2) | 58 |
| Participating policyholders | 8 | 14 | - | - | - | 22 |
| Core net investment result | 326 | 131 | 360 | - | 96 | 913 |
| Core net investment result, CER adjustment(1) | (10) | - | (10) | - | - | (20) |
| Core net investment result, CER basis | $316 | $131 | $350 | $- | $96 | $893 |
| Manulife Bank and Global WAM by DOE line reconciliation | ||||||
| Manulife Bank and Global WAM net income attributed to shareholders | $- | $50 | $- | $527 | $- | $577 |
| Less: Manulife Bank and Global WAM attributed to: | ||||||
| Items excluded from core earnings | - | - | - | (13) | - | (13) |
| Core earnings in Manulife Bank and Global WAM | - | 50 | - | 540 | - | 590 |
| Core earnings in Manulife Bank and Global WAM, CER adjustment(1) | - | - | - | (11) | - | (11) |
| Core earnings in Manulife Bank and Global WAM, CER basis | $- | $50 | $- | $529 | $- | $579 |
| Other reconciliation | ||||||
| Other revenue per financial statements | $1 | $74 | $25 | $1,975 | $(89) | $1,986 |
| General expenses per financial statements | (80) | (152) | (52) | (797) | (121) | (1,202) |
| Commissions related to non-insurance contracts | (2) | (18) | 2 | (377) | 10 | (385) |
| Interest expenses per financial statements | (7) | (214) | (3) | (1) | (154) | (379) |
| Total financial statements values included in Other | (88) | (310) | (28) | 800 | (354) | 20 |
| Less: Reclassifications: | ||||||
| Manulife Bank and Global WAM to their own DOE lines | - | (282) | - | 800 | - | 518 |
| Consolidation and other adjustments to net investment result DOE line | - | - | - | (1) | (171) | (172) |
| Less: Other attributed to: | ||||||
| Items excluded from core earnings | (17) | 2 | 1 | - | 34 | 20 |
| NCI | 1 | - | - | 1 | - | 2 |
| Participating policyholders | (3) | (1) | - | - | - | (4) |
| Add: Participating policyholders’ earnings transfer to shareholders | 11 | 3 | - | - | - | 14 |
| Other core earnings | (58) | (26) | (29) | - | (217) | (330) |
| Other core earnings, CER adjustment(1) | 2 | - | - | - | - | 2 |
| Other core earnings, CER basis | $(56) | $(26) | $(29) | $- | $(217) | $(328) |
| Income tax (expenses) recoveries reconciliation | ||||||
| Income tax (expenses) recoveries per financial statements | $(131) | $(59) | $162 | $(83) | $35 | $(76) |
| Less: Income tax (expenses) recoveries attributed to: | ||||||
| Items excluded from core earnings | (1) | 30 | 246 | 3 | 6 | 284 |
| NCI | (21) | - | - | - | - | (21) |
| Participating policyholders | (8) | - | - | - | - | (8) |
| Core income tax (expenses) recoveries | (101) | (89) | (84) | (86) | 29 | (331) |
| Core income tax (expenses) recoveries, CER adjustment(1) | 4 | - | 3 | 1 | (1) | 7 |
| Core income tax (expenses) recoveries, CER basis | $(97) | $(89) | $(81) | $(85) | $28 | $(324) |
(1)The impact of updating foreign exchange rates to that which was used in 4Q25.
(2)Manulife Bank is part of Canada segment.
| 116 |
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DOE Reconciliation – 4Q24(1)
($ millions, pre-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| 4Q24 | ||||||
|---|---|---|---|---|---|---|
| Asia | Canada | U.S. | Global<br><br>WAM | Corporate<br><br>and Other | Total | |
| Net insurance service result reconciliation | ||||||
| Total insurance service result - financial statements | $545 | $330 | $(257) | $- | $71 | $689 |
| Less: Insurance service result attributed to: | ||||||
| Items excluded from core earnings | (6) | (3) | (408) | - | 1 | (416) |
| NCI | 18 | - | - | - | - | 18 |
| Participating policyholders | 51 | 7 | - | - | - | 58 |
| Core net insurance service result | 482 | 326 | 151 | - | 70 | 1,029 |
| Core net insurance service result, CER adjustment(2) | (2) | - | (1) | - | - | (3) |
| Core net insurance service result, CER basis | $480 | $326 | $150 | $- | $70 | $1,026 |
| Total investment result reconciliation | ||||||
| Total investment result per financial statements | $279 | $612 | $369 | $(316) | $615 | $1,559 |
| Less: Reclassify Manulife Bank(3) and Global WAM to their own DOE lines | - | 382 | - | (316) | - | 66 |
| Add: Consolidation and other adjustments from Other DOE line | 1 | 1 | - | - | (198) | (196) |
| Less: Net investment result attributed to: | ||||||
| Items excluded from core earnings | (56) | 85 | (16) | - | 287 | 300 |
| NCI | 14 | - | - | - | 4 | 18 |
| Participating policyholders | (3) | 15 | - | - | - | 12 |
| Core net investment result | 325 | 131 | 385 | - | 126 | 967 |
| Core net investment result, CER adjustment(2) | (1) | - | (2) | - | - | (3) |
| Core net investment result, CER basis | $324 | $131 | $383 | $- | $126 | $964 |
| Manulife Bank and Global WAM by DOE line reconciliation | ||||||
| Manulife Bank and Global WAM net income attributed to shareholders | $- | $53 | $- | $420 | $- | $473 |
| Less: Manulife Bank and Global WAM attributed to: | ||||||
| Items excluded from core earnings | - | (7) | - | (122) | - | (129) |
| Core earnings in Manulife Bank and Global WAM | - | 60 | - | 542 | - | 602 |
| Core earnings in Manulife Bank and Global WAM, CER adjustment(2) | - | - | - | (1) | - | (1) |
| Core earnings in Manulife Bank and Global WAM, CER basis | $- | $60 | $- | $541 | $- | $601 |
| Other reconciliation | ||||||
| Other revenue per financial statements | $79 | $72 | $45 | $2,005 | $(198) | $2,003 |
| General expenses per financial statements | (112) | (162) | (45) | (883) | (126) | (1,328) |
| Commissions related to non-insurance contracts | (1) | (16) | 2 | (385) | 10 | (390) |
| Interest expenses per financial statements | (9) | (257) | (2) | (2) | (150) | (420) |
| Total financial statements values included in Other | (43) | (363) | - | 735 | (464) | (135) |
| Less: Reclassifications: | ||||||
| Manulife Bank and Global WAM to their own DOE lines | - | (328) | - | 735 | - | 407 |
| Consolidation and other adjustments to net investment result DOE line | 1 | - | - | 1 | (198) | (196) |
| Less: Other attributed to: | ||||||
| Items excluded from core earnings | 40 | - | 26 | (1) | (46) | 19 |
| NCI | 1 | - | - | - | - | 1 |
| Participating policyholders | - | (2) | - | - | - | (2) |
| Add: Participating policyholders’ earnings transfer to shareholders | 15 | 3 | - | - | - | 18 |
| Other core earnings | (70) | (30) | (26) | - | (220) | (346) |
| Other core earnings, CER adjustment(2) | - | - | - | - | (1) | (1) |
| Other core earnings, CER basis | $(70) | $(30) | $(26) | $- | $(221) | $(347) |
| Income tax (expenses) recoveries reconciliation | ||||||
| Income tax (expenses) recoveries per financial statements | $(156) | $(117) | $(9) | $(35) | $(89) | $(406) |
| Less: Income tax (expenses) recoveries attributed to: | ||||||
| Items excluded from core earnings | (35) | (26) | 89 | 48 | (119) | (43) |
| NCI | (15) | - | - | - | - | (15) |
| Participating policyholders | (9) | 6 | - | - | - | (3) |
| Core income tax (expenses) recoveries | (97) | (97) | (98) | (83) | 30 | (345) |
| Core income tax (expenses) recoveries, CER adjustment(2) | (1) | - | 1 | - | 1 | 1 |
| Core income tax (expenses) recoveries, CER basis | $(98) | $(97) | $(97) | $(83) | $31 | $(344) |
(1)This reconciliation has been updated to align with the presentation of GMT in 2025. See the “Global Minimum Taxes” section for more information.
(2)The impact of updating foreign exchange rates to that which was used in 4Q25.
(3)Manulife Bank is part of Canada segment.
| 117 | 2025 Annual Report | Management’s Discussion and Analysis |
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Common share core dividend payout ratio is a ratio that measures the percentage of core earnings paid to common
shareholders as dividends. It is calculated as dividends per common share divided by core EPS.
| Quarterly Results | Full Year Results | ||||||
|---|---|---|---|---|---|---|---|
| 4Q25 | 3Q25 | 2Q25 | 1Q25 | 4Q24 | 2025 | 2024 | |
| Per share dividend | $0.44 | $0.44 | $0.44 | $0.44 | $0.40 | $1.76 | $1.60 |
| Core EPS | $1.12 | $1.16 | $0.95 | $0.99 | $1.03 | $4.21 | $3.85 |
| Common share core dividend payout ratio(1) | 39% | 38% | 46% | 44% | 39% | 42% | 42% |
(1)2024 core EPS and common share core dividend ratio have been updated to align with the presentation of GMT in 2025. See the “Global Minimum Taxes” section
above for more information.
The contractual service margin (“CSM”) is a liability that represents future unearned profits on insurance contracts written. It is
a component of insurance and reinsurance contract liabilities on the Statement of Financial Position and includes amounts
attributed to common shareholders, participating policyholders and NCI.
Our reporting of CSM is net of NCI. Changes in the CSM net of NCI are classified as organic and inorganic. CSM growth is the
percentage change in the CSM net of NCI compared with a prior period on a constant exchange rate basis.
Changes in CSM net of NCI that are classified as organic include the following impacts:
•Impact of new insurance business (“impact of new business” or “new business CSM”) is the impact from insurance
contracts initially recognized in the period and includes acquisition expense related gains (losses) which impact the CSM in
the period. It excludes the impact from entering into new in-force reinsurance contracts which would generally be considered
a management action;
•Expected movement related to finance income or expenses (“interest accretion”) includes interest accreted on the CSM
net of NCI during the period and the expected change on VFA contracts if returns are as expected;
•CSM recognized for service provided (“CSM amortization”) is the portion of the CSM net of NCI that is recognized in net
income for service provided in the period; and
•Insurance experience gains (losses) and other is primarily the change from experience variances that relate to future
periods. This includes persistency experience and changes in future period cash flows caused by other current period
experience.
Changes in CSM net of NCI that are classified as inorganic include the following impacts:
•Updates to actuarial methods and assumptions that adjust the CSM;
•Effect of movement in exchange rates over the reporting period;
•Impact of markets; and
•Reinsurance transactions, tax-related and other items that reflect the impact related to future cash flows from items such
as gains or losses on disposition of a business, the impact of enacted or substantively enacted income tax rate changes,
material adjustments that are exceptional in nature and other amounts not specifically captured in the previous inorganic
items.
Post-tax CSM is used in the definition of financial leverage ratio and consolidated capital and is calculated as the CSM adjusted
for the marginal income tax rate in the jurisdictions that report a CSM balance. Post-tax CSM net of NCI is used in the adjusted
book value per share calculation and is calculated as the CSM net of NCI adjusted for the marginal income tax rate in the
jurisdictions that report this balance.
New business CSM growth is the percentage change in the new business CSM compared with a prior period on a constant
exchange rate basis.
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CSM and post-tax CSM information
($ millions pre-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| As at | Dec 31, 2025 | Sept 30, 2025 | June 30, 2025 | Mar 31, 2025 | Dec 31, 2024 |
|---|---|---|---|---|---|
| CSM | $26,568 | $26,283 | $23,722 | $23,713 | $23,425 |
| Less: CSM for NCI | 1,599 | 1,565 | 1,406 | 1,417 | 1,298 |
| CSM, net of NCI | $24,969 | $24,718 | $22,316 | $22,296 | $22,127 |
| CER adjustment(1) | - | (387) | (93) | (834) | (684) |
| CSM, net of NCI, CER basis | $24,969 | $24,331 | $22,223 | $21,462 | $21,443 |
| CSM by segment | |||||
| Asia | $17,750 | $17,580 | $15,786 | $15,904 | $15,540 |
| Asia NCI | 1,599 | 1,565 | 1,406 | 1,417 | 1,298 |
| Canada | 4,459 | 4,490 | 4,133 | 4,052 | 4,109 |
| U.S. | 2,760 | 2,649 | 2,386 | 2,329 | 2,468 |
| Corporate and Other | - | (1) | 11 | 11 | 10 |
| CSM | $26,568 | $26,283 | $23,722 | $23,713 | $23,425 |
| CSM, CER adjustment(1) | |||||
| Asia | $- | $(348) | $(104) | $(724) | $(566) |
| Asia NCI | - | 5 | 40 | (16) | (5) |
| Canada | - | - | - | - | - |
| U.S. | - | (39) | 11 | (111) | (118) |
| Corporate and Other | - | - | 1 | - | - |
| Total | $- | $(382) | $(52) | $(851) | $(689) |
| CSM, CER basis | |||||
| Asia | $17,750 | $17,232 | $15,682 | $15,180 | $14,974 |
| Asia NCI | 1,599 | 1,570 | 1,446 | 1,401 | 1,293 |
| Canada | 4,459 | 4,490 | 4,133 | 4,052 | 4,109 |
| U.S. | 2,760 | 2,610 | 2,397 | 2,218 | 2,350 |
| Corporate and Other | - | (1) | 12 | 11 | 10 |
| Total CSM, CER basis | $26,568 | $25,901 | $23,670 | $22,862 | $22,736 |
| Post-tax CSM | |||||
| CSM | $26,568 | $26,283 | $23,722 | $23,713 | $23,425 |
| Marginal tax rate on CSM | (4,403) | (4,347) | (3,940) | (3,929) | (3,928) |
| Post-tax CSM(2) | $22,165 | $21,936 | $19,782 | $19,784 | $19,497 |
| CSM, net of NCI | $24,969 | $24,718 | $22,316 | $22,296 | $22,127 |
| Marginal tax rate on CSM net of NCI | (4,236) | (4,181) | (3,789) | (3,772) | (3,774) |
| Post-tax CSM net of NCI(2) | $20,733 | $20,537 | $18,527 | $18,524 | $18,353 |
(1)The impact of reflecting CSM and CSM net of NCI using the foreign exchange rates for the Statement of Financial Position in effect for 4Q25.
(2)2024 post-tax CSM and post-tax CSM, net of NCI have been updated to align with the presentation of GMT in 2025. See the “Global Minimum Taxes” section for
more information.
| 119 | 2025 Annual Report | Management’s Discussion and Analysis |
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New business CSM(1) detail, CER basis
($ millions pre-tax, and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| Quarterly Results | Full Year Results | ||||||
|---|---|---|---|---|---|---|---|
| 4Q25 | 3Q25 | 2Q25 | 1Q25 | 4Q24 | 2025 | 2024 | |
| New business CSM | |||||||
| Hong Kong | $244 | $287 | $286 | $316 | $299 | $1,133 | $921 |
| Japan | 159 | 76 | 74 | 81 | 66 | 390 | 290 |
| Asia Other | 294 | 349 | 303 | 318 | 221 | 1,264 | 937 |
| International High Net Worth | 189 | 187 | |||||
| Mainland China | 356 | 270 | |||||
| Singapore | 619 | 391 | |||||
| Vietnam | 22 | 17 | |||||
| Other Emerging Markets | 78 | 72 | |||||
| Asia | 697 | 712 | 663 | 715 | 586 | 2,787 | 2,148 |
| Canada | 135 | 109 | 100 | 91 | 116 | 435 | 357 |
| U.S. | 188 | 145 | 119 | 101 | 140 | 553 | 382 |
| Total new business CSM | $1,020 | $966 | $882 | $907 | $842 | $3,775 | $2,887 |
| New business CSM, CER adjustment(2),(3) | |||||||
| Hong Kong | $- | $4 | $2 | $(8) | $(1) | $(2) | $13 |
| Japan | - | (3) | (4) | (3) | (1) | (10) | 2 |
| Asia Other | - | 3 | 3 | (1) | 2 | 5 | 32 |
| International High Net Worth | 1 | 4 | |||||
| Mainland China | 2 | 10 | |||||
| Singapore | 3 | 19 | |||||
| Vietnam | - | (1) | |||||
| Other Emerging Markets | (1) | - | |||||
| Asia | - | 4 | 1 | (12) | - | (7) | 47 |
| Canada | - | - | - | - | - | - | - |
| U.S. | - | 2 | 1 | (3) | - | - | 6 |
| Total new business CSM | $- | $6 | $2 | $(15) | $- | $(7) | $53 |
| New business CSM, CER basis | |||||||
| Hong Kong | $244 | $291 | $288 | $308 | $298 | $1,131 | $934 |
| Japan | 159 | 73 | 70 | 78 | 65 | 380 | 292 |
| Asia Other | 294 | 352 | 306 | 317 | 223 | 1,269 | 969 |
| International High Net Worth | 190 | 191 | |||||
| Mainland China | 358 | 280 | |||||
| Singapore | 622 | 410 | |||||
| Vietnam | 22 | 16 | |||||
| Other Emerging Markets | 77 | 72 | |||||
| Asia | 697 | 716 | 664 | 703 | 586 | 2,780 | 2,195 |
| Canada | 135 | 109 | 100 | 91 | 116 | 435 | 357 |
| U.S. | 188 | 147 | 120 | 98 | 140 | 553 | 388 |
| Total new business CSM, CER basis | $1,020 | $972 | $884 | $892 | $842 | $3,768 | $2,940 |
(1)New business CSM is net of NCI.
(2)The impact of updating foreign exchange rates to that which was used in 4Q25.
(3)New business CSM for Asia Other is reported by country annually, on a full year basis. Other Emerging Markets within Asia Other include Indonesia, the
Philippines, Malaysia, Thailand, Cambodia and Myanmar.
The Company also uses financial performance measures that are prepared on a constant exchange rate basis, which exclude
the impact of currency fluctuations (from local currency to Canadian dollars at a total Company level and from local currency to
U.S. dollars in Asia). Such financial measures may be stated on a constant exchange rate basis or the percentage growth/
decline in the financial measure on a constant exchange rate basis, using the income statement and balance sheet exchange
rates effective for the fourth quarter of 2025.
Information supporting constant exchange rate basis for GAAP and non-GAAP financial measures is presented below and
throughout this section.
Basic EPS and diluted EPS, CER basis is equal to common shareholders’ net income on a CER basis divided by the weighted
average common shares outstanding and diluted weighted common shares outstanding, respectively.
| 120 |
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General expenses, CER basis
($ millions, and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| Quarterly Results | Full Year Results | ||||||
|---|---|---|---|---|---|---|---|
| 4Q25 | 3Q25 | 2Q25 | 1Q25 | 4Q24 | 2025 | 2024 | |
| General expenses | $1,327 | $1,232 | $1,140 | $1,202 | $1,328 | $4,901 | $4,859 |
| CER adjustment(1) | - | 6 | 3 | (17) | (2) | (8) | 52 |
| General expenses, CER basis | $1,327 | $1,238 | $1,143 | $1,185 | $1,326 | $4,893 | $4,911 |
(1)The impact of updating foreign exchange rates to that which was used in 4Q25.
Net income financial measures on a CER basis
(Canadian $ in millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| Quarterly Results | Full Year Results | ||||||
|---|---|---|---|---|---|---|---|
| 4Q25 | 3Q25 | 2Q25 | 1Q25 | 4Q24 | 2025 | 2024 | |
| Net income (loss) attributed to shareholders: | |||||||
| Asia | $623 | $895 | $830 | $624 | $583 | $2,972 | $2,355 |
| Canada | 252 | 449 | 390 | 222 | 439 | 1,313 | 1,221 |
| U.S. | 81 | (75) | 36 | (569) | 103 | (527) | 135 |
| Global WAM | 452 | 523 | 482 | 443 | 384 | 1,900 | 1,597 |
| Corporate and Other | 91 | 7 | 51 | (235) | 129 | (86) | 77 |
| Total net income (loss) attributed to shareholders | 1,499 | 1,799 | 1,789 | 485 | 1,638 | 5,572 | 5,385 |
| Preferred share dividends and other equity distributions | (103) | (58) | (103) | (57) | (101) | (321) | (311) |
| Common shareholders’ net income (loss) | $1,396 | $1,741 | $1,686 | $428 | $1,537 | $5,251 | $5,074 |
| CER adjustment(1) | |||||||
| Asia | $- | $18 | $6 | $(28) | $12 | $(4) | $71 |
| Canada | - | - | - | - | - | - | 11 |
| U.S. | - | 1 | - | 15 | (2) | 16 | 10 |
| Global WAM | - | 7 | 3 | (13) | (1) | (3) | 22 |
| Corporate and Other | - | - | 4 | 6 | - | 10 | - |
| Total net income (loss) attributed to shareholders | - | 26 | 13 | (20) | 9 | 19 | 114 |
| Preferred share dividends and other equity distributions | - | - | - | - | - | - | - |
| Common shareholders’ net income (loss) | $- | $26 | $13 | $(20) | $9 | $19 | $114 |
| Net income (loss) attributed to shareholders, CER basis | |||||||
| Asia | $623 | $913 | $836 | $596 | $595 | $2,968 | $2,426 |
| Canada | 252 | 449 | 390 | 222 | 439 | 1,313 | 1,232 |
| U.S. | 81 | (74) | 36 | (554) | 101 | (511) | 145 |
| Global WAM | 452 | 530 | 485 | 430 | 383 | 1,897 | 1,619 |
| Corporate and Other | 91 | 7 | 55 | (229) | 129 | (76) | 77 |
| Total net income (loss) attributed to shareholders, CER<br><br>basis | 1,499 | 1,825 | 1,802 | 465 | 1,647 | 5,591 | 5,499 |
| Preferred share dividends and other equity distributions, CER<br><br>basis | (103) | (58) | (103) | (57) | (101) | (321) | (311) |
| Common shareholders’ net income (loss), CER basis | $1,396 | $1,767 | $1,699 | $408 | $1,546 | $5,270 | $5,188 |
| Asia net income attributed to shareholders, U.S. dollars | |||||||
| Asia net income (loss) attributed to shareholders, US $(2) | $447 | $649 | $600 | $435 | $417 | $2,131 | $1,717 |
| CER adjustment, US $(1) | - | 6 | 1 | (9) | 9 | (2) | 23 |
| Asia net income (loss) attributed to shareholders, U.S. $,<br><br>CER basis(1) | $447 | $655 | $601 | $426 | $426 | $2,129 | $1,740 |
| Net income (loss) attributed to shareholders (pre-tax) | |||||||
| Net income (loss) attributed to shareholders (post-tax) | $1,499 | $1,799 | $1,789 | $485 | $1,638 | $5,572 | $5,385 |
| Tax on net income attributed to shareholders | 292 | 283 | 307 | 47 | 388 | 929 | 1,102 |
| Net income (loss) attributed to shareholders (pre-tax) | 1,791 | 2,082 | 2,096 | 532 | 2,026 | 6,501 | 6,487 |
| CER adjustment(1) | - | 5 | 1 | (11) | (2) | (5) | 75 |
| Net income (loss) attributed to shareholders (pre-tax), CER<br><br>basis | $1,791 | $2,087 | $2,097 | $521 | $2,024 | $6,496 | $6,562 |
(1)The impact of updating foreign exchange rates to that which was used in 4Q25.
(2)Asia net income attributed to shareholders (post-tax) in Canadian dollars is translated to U.S. dollars using the U.S. dollar Statement of Income rate for the
respective reporting period.
| 121 | 2025 Annual Report | Management’s Discussion and Analysis |
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AUMA is a financial measure of the size of the Company. It is comprised of AUM and AUA. AUM includes assets of the General
Account, consisting of total invested assets and segregated funds net assets, and external client assets for which we provide
investment management services, consisting of mutual fund, institutional asset management and other fund net assets. AUA are
assets for which we provide administrative services only. Assets under management and administration is a common industry
metric for wealth and asset management businesses.
Our Global WAM business also manages assets on behalf of other segments of the Company. Global WAM-managed AUMA is
a financial measure equal to the sum of Global WAM’s AUMA and assets managed by Global WAM on behalf of other segments.
It is an important measure of the assets managed by Global WAM.
Segment share of total Company AUMA is a measure of the relative AUMA from each segment, expressed as a percentage. It is
calculated as the AUMA in that segment divided by the total Company AUMA. This measure is reported for our operating
segments and as at December 31, 2025, the segment share of total Company AUMA for Asia, Canada, U.S. and Global WAM
was 13%, 9%, 12% and 65%, respectively (as at December 31, 2024 – 12%, 9%, 13% and 64%, respectively).
AUM and AUMA reconciliations
(Canadian $ in millions, and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| As at | U.S. | Global WAM | Total |
| Total invested assets | |||
| Manulife Bank(1) | $- | - | 29,896 |
| Derivative reclassification(2) | - | - | 4,737 |
| Other | 122,591 | 9,787 | 425,295 |
| Total | 122,591 | 9,787 | 459,928 |
| Segregated funds net assets | |||
| Institutional | - | 3,075 | 3,075 |
| Other(3) | 77,272 | 310,491 | 458,179 |
| Total | 77,272 | 313,566 | 461,254 |
| AUM per financial statements | 199,863 | 323,353 | 921,182 |
| Mutual funds | - | 338,443 | 338,443 |
| Institutional asset management(4) | - | 176,402 | 176,402 |
| Other funds | - | 22,371 | 22,371 |
| Total AUM | 199,863 | 860,569 | 1,458,398 |
| Assets under administration | - | 246,021 | 246,021 |
| Total AUMA | $199,863 | 1,106,590 | 1,704,419 |
| Total AUMA, US (5) | 1,243,422 | ||
| Total AUMA | $199,863 | 1,106,590 | 1,704,419 |
| CER adjustment(6) | - | - | - |
| Total AUMA, CER basis | $199,863 | 1,106,590 | 1,704,419 |
| Global WAM Managed AUMA | |||
| Global WAM AUMA | 1,106,590 | ||
| AUM managed by Global WAM for Manulife’s other segments | 234,370 | ||
| Total | 1,340,960 |
All values are in US Dollars.
(1)Represents net lending assets.
(2)Corporate and Other consolidation amount is related to net derivative assets reclassified from total invested assets to other lines on the Statement of Financial
Position.
(3)Corporate and Other segregated funds net assets represent elimination of amounts held by the Company.
(4)Institutional asset management excludes Institutional segregated funds net assets.
(5)US $ AUMA is calculated as total AUMA in Canadian $ divided by the US $ exchange rate in effect at the end of the quarter.
(6)The impact of updating foreign exchange rates to that which was used in 4Q25.
| 122 |
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AUM and AUMA reconciliations
(Canadian $ in millions, and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| As at | U.S. | Global WAM | Total |
| Total invested assets | |||
| Manulife Bank(1) | $- | - | 29,112 |
| Derivative reclassification(2) | - | - | 3,308 |
| Other | 124,710 | 10,999 | 426,547 |
| Total | 124,710 | 10,999 | 458,967 |
| Segregated funds net assets | |||
| Institutional | - | 3,106 | 3,106 |
| Other(3) | 78,304 | 311,195 | 459,748 |
| Total | 78,304 | 314,301 | 462,854 |
| AUM per financial statements | 203,014 | 325,300 | 921,821 |
| Mutual funds | - | 350,545 | 350,545 |
| Institutional asset management(4) | - | 159,321 | 159,321 |
| Other funds | - | 21,518 | 21,518 |
| Total AUM | 203,014 | 856,684 | 1,453,205 |
| Assets under administration | - | 241,359 | 241,359 |
| Total AUMA | $203,014 | 1,098,043 | 1,694,564 |
| Total AUMA, US (5) | 1,217,884 | ||
| Total AUMA | $203,014 | 1,098,043 | 1,694,564 |
| CER adjustment(6) | (3,008) | (12,907) | (19,485) |
| Total AUMA, CER basis | $200,006 | 1,085,136 | 1,675,079 |
| Global WAM Managed AUMA | |||
| Global WAM AUMA | 1,098,043 | ||
| AUM managed by Global WAM for Manulife’s other segments | 233,702 | ||
| Total | 1,331,745 |
All values are in US Dollars.
Note: For footnotes (1) to (6), refer to the “AUM and AUMA reconciliation” table as at December 31, 2025 above.
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AUM and AUMA reconciliations
(Canadian $ in millions, and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| As at | U.S. | Global WAM | Total |
| Total invested assets | |||
| Manulife Bank(1) | $- | - | 28,138 |
| Derivative reclassification(2) | - | - | 4,531 |
| Other | 119,981 | 10,352 | 405,797 |
| Total | 119,981 | 10,352 | 438,466 |
| Segregated funds net assets | |||
| Institutional | - | 3,045 | 3,045 |
| Other(3) | 74,322 | 292,416 | 433,513 |
| Total | 74,322 | 295,461 | 436,558 |
| AUM per financial statements | 194,303 | 305,813 | 875,024 |
| Mutual funds | - | 331,290 | 331,290 |
| Institutional asset management(4) | - | 156,878 | 156,878 |
| Other funds | - | 19,697 | 19,697 |
| Total AUM | 194,303 | 813,678 | 1,382,889 |
| Assets under administration | - | 225,360 | 225,360 |
| Total AUMA | $194,303 | 1,039,038 | 1,608,249 |
| Total AUMA, US (5) | 1,178,636 | ||
| Total AUMA | $194,303 | 1,039,038 | 1,608,249 |
| CER adjustment(6) | 902 | 2,266 | 2,996 |
| Total AUMA, CER basis | $195,205 | 1,041,304 | 1,611,245 |
| Global WAM Managed AUMA | |||
| Global WAM AUMA | 1,039,038 | ||
| AUM managed by Global WAM for Manulife’s other segments | 222,676 | ||
| Total | 1,261,714 |
All values are in US Dollars.
Note: For footnotes (1) to (6), refer to the “AUM and AUMA reconciliation” table as at December 31, 2025 above.
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AUM and AUMA reconciliations
(Canadian $ in millions, and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| As at | U.S. | Global WAM | Total |
| Total invested assets | |||
| Manulife Bank(1) | $- | - | 27,135 |
| Derivative reclassification(2) | - | - | 4,541 |
| Other | 125,793 | 9,983 | 414,061 |
| Total | 125,793 | 9,983 | 445,737 |
| Segregated funds net assets | |||
| Institutional | - | 3,199 | 3,199 |
| Other(3) | 75,103 | 284,407 | 425,411 |
| Total | 75,103 | 287,606 | 428,610 |
| AUM per financial statements | 200,896 | 297,589 | 874,347 |
| Mutual funds | - | 334,612 | 334,612 |
| Institutional asset management(4) | - | 156,560 | 156,560 |
| Other funds | - | 19,057 | 19,057 |
| Total AUM | 200,896 | 807,818 | 1,384,576 |
| Assets under administration | - | 218,501 | 218,501 |
| Total AUMA | $200,896 | 1,026,319 | 1,603,077 |
| Total AUMA, US (5) | 1,113,827 | ||
| Total AUMA | $200,896 | 1,026,319 | 1,603,077 |
| CER adjustment(6) | (9,496) | (36,044) | (53,087) |
| Total AUMA, CER basis | $191,400 | 990,275 | 1,549,990 |
| Global WAM Managed AUMA | |||
| Global WAM AUMA | 1,026,319 | ||
| AUM managed by Global WAM for Manulife’s other segments | 225,108 | ||
| Total | 1,251,427 |
All values are in US Dollars.
Note: For footnotes (1) to (6), refer to the “AUM and AUMA reconciliation” table as at December 31, 2025 above.
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AUM and AUMA reconciliations
(Canadian $ in millions, and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| As at | U.S. | Global WAM | Total |
| Total invested assets | |||
| Manulife Bank(1) | $- | - | 26,718 |
| Derivative reclassification(2) | - | - | 5,600 |
| Other | 136,833 | 9,743 | 410,179 |
| Total | 136,833 | 9,743 | 442,497 |
| Segregated funds net assets | |||
| Institutional | - | 3,393 | 3,393 |
| Other(3) | 77,440 | 288,467 | 432,595 |
| Total | 77,440 | 291,860 | 435,988 |
| AUM per financial statements | 214,273 | 301,603 | 878,485 |
| Mutual funds | - | 333,598 | 333,598 |
| Institutional asset management(4) | - | 154,096 | 154,096 |
| Other funds | - | 19,174 | 19,174 |
| Total AUM | 214,273 | 808,471 | 1,385,353 |
| Assets under administration | - | 222,614 | 222,614 |
| Total AUMA | $214,273 | 1,031,085 | 1,607,967 |
| Total AUMA, US (5) | 1,118,042 | ||
| Total AUMA | $214,273 | 1,031,085 | 1,607,967 |
| CER adjustment(6) | (9,974) | (34,744) | (50,527) |
| Total AUMA, CER basis | $204,299 | 996,341 | 1,557,440 |
| Global WAM Managed AUMA | |||
| Global WAM AUMA | 1,031,085 | ||
| AUM managed by Global WAM for Manulife’s other segments | 226,752 | ||
| Total | 1,257,837 |
All values are in US Dollars.
Note: For footnotes (1) to (6), refer to the “AUM and AUMA reconciliation” table as at December 31, 2025 above.
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Global WAM AUMA and Managed AUMA by business line and geographic source
($ millions, and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| As at | Dec 31, 2025 | Sept 30, 2025 | June 30, 2025 | Mar 31, 2025 | Dec 31, 2024 |
|---|---|---|---|---|---|
| Global WAM AUMA by business line | |||||
| Retirement | $572,613 | $575,220 | $536,639 | $522,751 | $521,979 |
| Retail | 350,180 | 356,419 | 338,616 | 339,653 | 348,938 |
| Institutional asset management | 183,797 | 166,404 | 163,783 | 163,915 | 160,168 |
| Total | $1,106,590 | $1,098,043 | $1,039,038 | $1,026,319 | $1,031,085 |
| Global WAM AUMA by business line, CER basis(1) | |||||
| Retirement | $572,613 | $568,533 | $538,621 | $503,175 | $502,657 |
| Retail | 350,180 | 352,529 | 339,109 | 328,858 | 338,246 |
| Institutional asset management | 183,797 | 164,074 | 163,574 | 158,242 | 155,438 |
| Total | $1,106,590 | $1,085,136 | $1,041,304 | $990,275 | $996,341 |
| Global WAM AUMA by geographic source | |||||
| Asia | $156,030 | $153,921 | $143,573 | $144,660 | $141,098 |
| Canada | 273,978 | 275,486 | 266,913 | 259,446 | 260,651 |
| U.S. | 676,582 | 668,636 | 628,552 | 622,213 | 629,336 |
| Total | $1,106,590 | $1,098,043 | $1,039,038 | $1,026,319 | $1,031,085 |
| Global WAM AUMA by geographic source, CER basis(1) | |||||
| Asia | $156,030 | $150,560 | $142,575 | $137,824 | $135,823 |
| Canada | 273,978 | 275,486 | 266,913 | 259,446 | 260,651 |
| U.S. | 676,582 | 659,090 | 631,816 | 593,005 | 599,867 |
| Total | $1,106,590 | $1,085,136 | $1,041,304 | $990,275 | $996,341 |
| Global WAM Managed AUMA by business line | |||||
| Retirement | $572,613 | $575,220 | $536,639 | $522,751 | $521,979 |
| Retail | 432,834 | 440,149 | 419,133 | 419,844 | 431,047 |
| Institutional asset management | 335,513 | 316,376 | 305,942 | 308,832 | 304,811 |
| Total | $1,340,960 | $1,331,745 | $1,261,714 | $1,251,427 | $1,257,837 |
| Global WAM Managed AUMA by business line, CER basis(1) | |||||
| Retirement | $572,613 | $568,533 | $538,621 | $503,175 | $502,657 |
| Retail | 432,834 | 429,822 | 414,068 | 400,754 | 417,933 |
| Institutional asset management | 335,513 | 312,164 | 306,296 | 297,308 | 294,316 |
| Total | $1,340,960 | $1,310,519 | $1,258,985 | $1,201,237 | $1,214,906 |
| Global WAM Managed AUMA by geographic source | |||||
| Asia | $248,228 | $242,968 | $227,797 | $228,948 | $225,325 |
| Canada | 327,177 | 328,891 | 317,864 | 311,252 | 312,816 |
| U.S. | 765,555 | 759,886 | 716,053 | 711,227 | 719,696 |
| Total | $1,340,960 | $1,331,745 | $1,261,714 | $1,251,427 | $1,257,837 |
| Global WAM Managed AUMA by geographic source, CER basis(1) | |||||
| Asia | $248,228 | $238,193 | $226,941 | $218,091 | $216,102 |
| Canada | 327,177 | 328,891 | 317,864 | 311,252 | 312,816 |
| U.S. | 765,555 | 743,435 | 714,180 | 671,894 | 685,988 |
| Total | $1,340,960 | $1,310,519 | $1,258,985 | $1,201,237 | $1,214,906 |
(1)AUMA adjusted to reflect the foreign exchange rates for the Statement of Financial Position in effect for 4Q25.
Average assets under management and administration (“average AUMA”) is the average of Global WAM’s AUMA during
the reporting period. It is a measure used in analyzing and explaining fee income and earnings of our Global WAM segment. It is
calculated as the average of the opening balance of AUMA and the ending balance of AUMA using daily balances where
available and month-end or quarter-end averages when daily averages are unavailable. Similarly, Global WAM average
managed AUMA and average AUA are the average of Global WAM’s managed AUMA and AUA, respectively, and are
calculated in a manner consistent with average AUMA. Manulife Bank net lending assets is a financial measure equal to the
sum of Manulife Bank’s loans and mortgages, net of allowances. Manulife Bank average net lending assets is a financial
measure which is calculated as the quarter-end average of the opening and the ending balance of net lending assets. Both of
these financial measures are a measure of the size of Manulife Bank’s portfolio of loans and mortgages and are used to analyze
and explain its earnings.
| 127 | 2025 Annual Report | Management’s Discussion and Analysis | ||
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| As at<br><br>($ millions) | Dec 31, 2025 | June 30, 2025 | Mar 31, 2025 | Dec 31, 2024 |
| --- | --- | --- | --- | --- |
| Mortgages | 57,119 | $55,479 | $55,105 | $54,447 |
| Less: mortgages not held by Manulife Bank | 29,958 | 29,847 | 30,352 | 30,039 |
| Total mortgages held by Manulife Bank | 27,161 | 25,632 | 24,753 | 24,408 |
| Loans to Bank clients | 2,735 | 2,506 | 2,382 | 2,310 |
| Manulife Bank net lending assets | 29,896 | $28,138 | $27,135 | $26,718 |
| Manulife Bank average net lending assets | ||||
| Beginning of period | 29,112 | $27,135 | $26,718 | $26,371 |
| End of period | 29,896 | 28,138 | 27,135 | 26,718 |
| Manulife Bank average net lending assets by quarter | 29,504 | $27,637 | $26,927 | $26,545 |
| Manulife Bank average net lending assets – full year | 28,307 | $26,020 |
All values are in US Dollars.
Financial leverage ratio is calculated as the sum of long-term debt, capital instruments and preferred shares and other equity
instruments, divided by the sum of long-term debt, capital instruments, equity and post-tax CSM.
Adjusted book value is the sum of common shareholders’ equity and post-tax CSM net of NCI. It is an important measure for
monitoring growth and measuring insurance businesses’ value. Adjusted book value per common share is calculated by
dividing adjusted book value by the number of common shares outstanding at the end of the period.
| As at<br><br>($ millions) | Dec 31, 2025 | Sept 30, 2025 | June 30, 2025 | Mar 31, 2025 | Dec 31, 2024 |
|---|---|---|---|---|---|
| Common shareholders’ equity | $43,461 | $44,056 | $42,420 | $44,475 | $44,312 |
| Post-tax CSM, net of NCI(1) | 20,733 | 20,537 | 18,527 | 18,524 | 18,353 |
| Adjusted book value | $64,194 | $64,593 | $60,947 | $62,999 | $62,665 |
(1)2024 quarterly post-tax CSM, net of NCI has been updated to align with the presentation of GMT in 2025. See the “Global Minimum Taxes” section for more
information.
Consolidated capital serves as a foundation of our capital management activities at the MFC level. Consolidated capital is
calculated as the sum of: (i) total equity excluding accumulated other comprehensive income (“AOCI”) on cash flow hedges; (ii)
post-tax CSM; and (iii) certain other capital instruments that qualify as regulatory capital. For regulatory reporting purposes under
the LICAT framework, the numbers are further adjusted for various additions or deductions to capital as mandated by the
guidelines defined by OSFI.
| As at<br><br>($ millions) | Dec 31, 2025 | Sept 30, 2025 | June 30, 2025 | Mar 31, 2025 | Dec 31, 2024 |
|---|---|---|---|---|---|
| Total equity | $52,488 | $52,991 | $51,253 | $53,164 | $52,960 |
| Less: AOCI gain/(loss) on cash flow hedges | 87 | 58 | 68 | 89 | 119 |
| Total equity excluding AOCI on cash flow hedges | 52,401 | 52,933 | 51,185 | 53,075 | 52,841 |
| Post-tax CSM(1) | 22,165 | 21,936 | 19,782 | 19,784 | 19,497 |
| Qualifying capital instruments | 6,990 | 7,011 | 6,985 | 7,542 | 7,532 |
| Consolidated capital | $81,556 | $81,880 | $77,952 | $80,401 | $79,870 |
(1)2024 quarterly post-tax CSM has been updated to align with the presentation of GMT in 2025. See the “Global Minimum Taxes” section for more information.
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Core EBITDA is a financial measure which Manulife uses to better understand the long-term earnings capacity and valuation of
our Global WAM business on a basis more comparable to how the profitability of global asset managers is generally measured.
Core EBITDA presents core earnings before the impact of interest, taxes, depreciation, and amortization. Core EBITDA excludes
certain acquisition expenses related to insurance contracts in our retirement businesses which are deferred and amortized over
the expected lifetime of the customer relationship. Core EBITDA was selected as a key performance indicator for our Global
WAM business, as EBITDA is widely used among asset management peers, and core earnings is a primary profitability metric for
the Company overall.
Reconciliation of Global WAM core earnings to core EBITDA and Global WAM core EBITDA by business line and
geographic source
($ millions, pre-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated)
| Quarterly Results | Full Year Results | ||||||
|---|---|---|---|---|---|---|---|
| 4Q25 | 3Q25 | 2Q25 | 1Q25 | 4Q24 | 2025 | 2024 | |
| Global WAM core earnings (post-tax) | $490 | $525 | $463 | $454 | $459 | $1,932 | $1,673 |
| Add back taxes, acquisition costs, other expenses and deferred<br><br>sales commissions | |||||||
| Core income tax (expenses) recoveries (see above) | 93 | 82 | 89 | 86 | 83 | 350 | 234 |
| Amortization of deferred acquisition costs and other<br><br>depreciation | 61 | 44 | 51 | 46 | 49 | 202 | 188 |
| Amortization of deferred sales commissions | 24 | 21 | 20 | 22 | 20 | 87 | 78 |
| Core EBITDA | $668 | $672 | $623 | $608 | $611 | $2,571 | $2,173 |
| CER adjustment(1) | - | 6 | 3 | (13) | (2) | (4) | 24 |
| Core EBITDA, CER basis | $668 | $678 | $626 | $595 | $609 | $2,567 | $2,197 |
| Core EBITDA by business line | |||||||
| Retirement | $373 | $387 | $358 | $351 | $330 | $1,469 | $1,199 |
| Retail | 210 | 204 | 191 | 190 | 214 | 795 | 773 |
| Institutional asset management | 85 | 81 | 74 | 67 | 67 | 307 | 201 |
| Total | $668 | $672 | $623 | $608 | $611 | $2,571 | $2,173 |
| Core EBITDA by geographic source | |||||||
| Asia | $153 | $185 | $170 | $186 | $167 | $694 | $607 |
| Canada | 174 | 180 | 161 | 164 | 160 | 679 | 589 |
| U.S. | 341 | 307 | 292 | 258 | 284 | 1,198 | 977 |
| Total | $668 | $672 | $623 | $608 | $611 | $2,571 | $2,173 |
| Core EBITDA by business line, CER basis(2) | |||||||
| Retirement | $373 | $391 | $360 | $343 | $330 | $1,467 | $1,213 |
| Retail | 210 | 205 | 192 | 187 | 213 | 794 | 780 |
| Institutional asset management | 85 | 82 | 74 | 65 | 66 | 306 | 204 |
| Total, CER basis | $668 | $678 | $626 | $595 | $609 | $2,567 | $2,197 |
| Core EBITDA by geographic source, CER basis(2) | |||||||
| Asia | $153 | $187 | $171 | $180 | $166 | $691 | $615 |
| Canada | 174 | 180 | 161 | 164 | 160 | 679 | 589 |
| U.S. | 341 | 311 | 294 | 251 | 283 | 1,197 | 993 |
| Total, CER basis | $668 | $678 | $626 | $595 | $609 | $2,567 | $2,197 |
(1)The impact of updating foreign exchange rates to that which was used in 4Q25.
(2)Core EBITDA adjusted to reflect the foreign exchange rates for the Statement of Income in effect for 4Q25.
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Core EBITDA margin is a financial measure which Manulife uses to better understand the long-term profitability of our Global
WAM business on a more comparable basis to how profitability of global asset managers are measured. Core EBITDA margin
presents core earnings before the impact of interest, taxes, depreciation, and amortization divided by core revenue from these
businesses. Core revenue is used to calculate our core EBITDA margin, and is equal to the sum of pre-tax other revenue and
investment income in Global WAM included in core EBITDA, and it excludes such items as revenue related to integration and
acquisitions and market experience gains (losses). Core EBITDA margin was selected as a key performance indicator for our
Global WAM business, as EBITDA margin is widely used among asset management peers, and core earnings is a primary
profitability metric for the Company overall.
| Quarterly Results | Full Year Results | ||||||
|---|---|---|---|---|---|---|---|
| ($ millions, unless otherwise stated) | 4Q25 | 3Q25 | 2Q25 | 1Q25 | 4Q24 | 2025 | 2024 |
| Core EBITDA margin | |||||||
| Core EBITDA | $668 | $672 | $623 | $608 | $611 | $2,571 | $2,173 |
| Core revenue | $2,285 | $2,175 | $2,069 | $2,140 | $2,140 | $8,669 | $8,016 |
| Core EBITDA margin | 29.2% | 30.9% | 30.1% | 28.4% | 28.6% | 29.7% | 27.1% |
| Global WAM core revenue | |||||||
| Other revenue per financial statements | $2,147 | $2,145 | $1,851 | $1,986 | $2,003 | $8,129 | $7,588 |
| Less: Other revenue in segments other than Global WAM | 28 | 121 | (53) | 11 | (2) | 107 | 149 |
| Other revenue in Global WAM (fee income) | $2,119 | $2,024 | $1,904 | $1,975 | $2,005 | $8,022 | $7,439 |
| Investment income per financial statements | $5,358 | $4,682 | $4,740 | $4,234 | $5,250 | $19,014 | $18,249 |
| Realized and unrealized gains (losses) on assets supporting<br><br>insurance and investment contract liabilities per financial<br><br>statements | 1,106 | 3,784 | 2,377 | (992) | (622) | 6,275 | 2,210 |
| Total investment income | 6,464 | 8,466 | 7,117 | 3,242 | 4,628 | 25,289 | 20,459 |
| Less: Investment income in segments other than Global WAM | 6,300 | 8,275 | 6,924 | 3,089 | 4,550 | 24,588 | 19,877 |
| Investment income in Global WAM | $164 | $191 | $193 | $153 | $78 | $701 | $582 |
| Total other revenue and investment income in Global WAM | $2,283 | $2,215 | $2,097 | $2,128 | $2,083 | $8,723 | $8,021 |
| Less: Total revenue reported in items excluded from core<br><br>earnings | |||||||
| Market experience gains (losses) | (1) | 24 | 20 | (14) | (28) | 29 | 4 |
| Revenue related to integration and acquisitions | (1) | 16 | 8 | 2 | (29) | 25 | 1 |
| Global WAM core revenue | $2,285 | $2,175 | $2,069 | $2,140 | $2,140 | $8,669 | $8,016 |
Core expenses is used to calculate our expense efficiency ratio and is equal to total expenses that are included in core earnings
and excludes such items as legal provisions for settlements, restructuring charges, amortization of acquisition-related intangible
assets and expenses related to integration and acquisitions, that have been excluded from core earnings. Consistent with our
definition of core earnings, amortization and impairment of intangible assets acquired in a business combination, except for
amortization of software and distribution agreements, is now excluded from core expenses commencing in 3Q25. For more
information, please see above for details of our definition of core earnings.
Total expenses include the following amounts from our financial statements:
1.General expenses that flow directly through income;
2.Directly attributable maintenance expenses, which are reported in insurance service expenses and flow directly through
income; and
3.Directly attributable acquisition expenses for contracts measured using the PAA method and for other products without a
CSM, both of which are reported in insurance service expenses, and flow directly through income.
| 130 | |||||||
|---|---|---|---|---|---|---|---|
| Quarterly Results | Full Year Results | ||||||
| --- | --- | --- | --- | --- | --- | --- | --- |
| ($ millions, and based on actual foreign exchange rates in effect in the<br><br>applicable reporting period, unless otherwise stated) | 4Q25 | 3Q25 | 2Q25 | 1Q25 | 4Q24 | 2025 | 2024 |
| Core expenses | |||||||
| General expenses - Statements of Income | $1,327 | $1,232 | $1,140 | $1,202 | $1,328 | $4,901 | $4,859 |
| Directly attributable acquisition expense for contracts<br><br>measured using the PAA method and for other products<br><br>without a CSM(1) | 48 | 42 | 40 | 42 | 43 | 172 | 156 |
| Directly attributable maintenance expense(1) | 542 | 524 | 514 | 532 | 517 | 2,112 | 2,074 |
| Total expenses | 1,917 | 1,798 | 1,694 | 1,776 | 1,888 | 7,185 | 7,089 |
| Less: General expenses included in items excluded from core<br><br>earnings | |||||||
| Restructuring charge | 16 | - | - | - | 67 | 16 | 92 |
| Amortization of acquisition-related intangible assets | 16 | 8 | - | - | - | 24 | - |
| Integration and acquisition | 7 | 22 | - | - | - | 29 | 57 |
| Legal provisions and Other expenses | 5 | 10 | 5 | - | 24 | 20 | 41 |
| Total | 44 | 40 | 5 | - | 91 | 89 | 190 |
| Core expenses | $1,873 | $1,758 | $1,689 | $1,776 | $1,797 | $7,096 | $6,899 |
| CER adjustment(2) | - | 10 | 2 | (24) | - | (12) | 75 |
| Core expenses, CER basis | $1,873 | $1,768 | $1,691 | $1,752 | $1,797 | $7,084 | $6,974 |
| Total expenses | $1,917 | $1,798 | $1,694 | $1,776 | $1,888 | $7,185 | $7,089 |
| CER adjustment(2) | - | 10 | 3 | (25) | (1) | (12) | 77 |
| Total expenses, CER basis | $1,917 | $1,808 | $1,697 | $1,751 | $1,887 | $7,173 | $7,166 |
(1)Expenses are components of insurance service expenses on the Statements of Income that flow directly through income.
(2)The impact of updating foreign exchange rates to that which was used in 4Q25.
Expense efficiency ratio is a financial measure which Manulife uses to measure progress towards our target to be more
efficient. It is defined as core expenses divided by the sum of core earnings before income taxes (“pre-tax core earnings”) and
core expenses.
Net annualized fee income yield on average AUMA (“Net fee income yield”) is a financial measure that represents the net
annualized fee income from Global WAM channels over average AUMA. This measure provides information on Global WAM’s
adjusted return generated from managing AUMA.
Net annualized fee income is a financial measure that represents Global WAM income before income taxes, adjusted to
exclude items unrelated to net fee income, including general expenses, investment income, non-AUMA related net benefits and
claims, and net premium taxes. It also excludes the components of Global WAM net fee income from managing assets on behalf
of other segments. This measure is annualized based on the number of days in the year divided by the number of days in the
reporting period.
Reconciliation of income before income taxes to net fee income yield
| Quarterly Results | Full Year Results | ||||||
|---|---|---|---|---|---|---|---|
| ($ millions, unless otherwise stated) | 4Q25 | 3Q25 | 2Q25 | 1Q25 | 4Q24 | 2025 | 2024 |
| Income before income taxes | $1,905 | $2,229 | $2,261 | $699 | $2,113 | $7,094 | $7,090 |
| Less: Income before income taxes for segments<br><br>other than Global WAM | 1,363 | 1,623 | 1,686 | 171 | 1,694 | 4,843 | 5,343 |
| Global WAM income before income taxes | 542 | 606 | 575 | 528 | 419 | 2,251 | 1,747 |
| Items unrelated to net fee income | 834 | 715 | 667 | 739 | 882 | 2,955 | 2,995 |
| Global WAM net fee income | 1,376 | 1,321 | 1,242 | 1,267 | 1,301 | 5,206 | 4,742 |
| Less: Net fee income from other segments | 196 | 176 | 171 | 170 | 181 | 713 | 674 |
| Global WAM net fee income excluding net fee<br><br>income from other segments | 1,180 | 1,145 | 1,071 | 1,097 | 1,120 | 4,493 | 4,068 |
| Net annualized fee income | $4,682 | $4,543 | $4,297 | $4,451 | $4,455 | $4,492 | $4,068 |
| Average Assets under Management and<br><br>Administration | $1,115,108 | $1,065,832 | $1,005,290 | $1,041,116 | $1,015,454 | $1,070,839 | $946,087 |
| Net fee income yield (bps) | 42.0 | 42.6 | 42.7 | 42.7 | 43.9 | 41.9 | 43.0 |
| 131 | 2025 Annual Report | Management’s Discussion and Analysis | |||||
| --- | --- | --- |
New business value (“NBV”) is calculated as the present value of shareholders’ interests in expected future distributable
earnings, after the cost of capital calculated under the LICAT framework in Canada and the International High Net Worth
business, and the local capital requirements in Asia and the U.S., on actual new business sold in the period using assumptions
with respect to future experience. NBV excludes businesses with immaterial insurance risks, Global WAM, Manulife Bank, and
the P&C Reinsurance business. NBV is a useful metric to evaluate the value created by the Company’s new business franchise.
New business value margin (“NBV margin”) is calculated as NBV divided by APE sales excluding NCI. APE sales are
calculated as 100% of regular premiums and deposits sales and 10% of single premiums and deposits sales. NBV margin is a
useful metric to help understand the profitability of our new business.
Sales are measured according to product type:
For individual insurance, sales include 100% of new annualized premiums and 10% of both excess and single premiums. For
individual insurance, new annualized premiums reflect the annualized premium expected in the first year of a policy that requires
premium payments for more than one year. Single premium is the lump sum premium from the sale of a single premium product,
e.g., travel insurance. Sales are reported gross before the impact of reinsurance.
For group insurance, sales include new annualized premiums and administrative services only premium equivalents on new
cases, as well as the addition of new coverages and amendments to contracts, excluding rate increases.
Insurance-based wealth accumulation product sales include all new deposits into variable and fixed annuity contracts. As we
discontinued sales of new variable annuity contracts in the U.S. in the first quarter of 2013, subsequent deposits into existing
U.S. variable annuity contracts are not reported as sales. Asia variable annuity deposits are included in APE sales.
APE sales are comprised of 100% of regular premiums and deposits and 10% of excess and single premiums and deposits for
both insurance and insurance-based wealth accumulation products.
Gross flows is a new business measure presented for our Global WAM business and includes all deposits into mutual funds,
group pension/retirement savings products, private wealth and institutional asset management products. Gross flows is a
common industry metric for WAM businesses as it provides a measure of how successful the businesses are at attracting assets.
Net flows is presented for our Global WAM business and includes gross flows less redemptions for mutual funds, group pension/
retirement savings products, private wealth and institutional asset management products. In addition, net flows include the net
flows of exchange traded funds and non-proprietary products sold by Manulife Securities. Net flows is a common industry metric
for WAM businesses as it provides a measure of how successful the businesses are at attracting and retaining assets. When net
flows are positive, they are referred to as net inflows. Conversely, negative net flows are referred to as net outflows.
Remittances is defined as the cash remitted or made available for distribution to Manulife Financial Corporation from its
subsidiaries, prior to payment of financing costs, dividends, and other capital deployments. It is a key metric used by
management to evaluate our financial flexibility.
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14. Additional Disclosures
Contractual Obligations
In the normal course of business, the Company enters into contracts that give rise to obligations fixed by agreement as to the
timing and dollar amount of payment.
As at December 31, 2025, the Company’s contractual obligations and commitments were as follows:
| Payments due by period<br><br>($ millions) | Total | Less than<br><br>1 year | 1 to 3<br><br>years | 3 to 5<br><br>years | Over<br><br>5 years |
|---|---|---|---|---|---|
| Long-term debt(1) | $11,541 | $2,016 | $1,391 | $420 | $7,714 |
| Liabilities for capital instruments(1) | 9,430 | 295 | 616 | 568 | 7,951 |
| Investment commitments | 16,879 | 4,952 | 5,322 | 4,447 | 2,158 |
| Lease liabilities | 334 | 101 | 138 | 49 | 46 |
| Insurance contract liabilities(2) | 1,439,208 | 3,783 | 12,296 | 26,264 | 1,396,865 |
| Reinsurance contract held liabilities(2) | (8,944) | 254 | 995 | 815 | (11,008) |
| Investment contract liabilities(3) | 347,497 | 340,567 | 2,372 | 1,183 | 3,375 |
| Deposits from Bank clients | 24,707 | 17,462 | 4,441 | 2,804 | - |
| Other | 7,703 | 2,885 | 2,926 | 1,829 | 63 |
| Total contractual obligations | $1,848,355 | $372,315 | $30,497 | $38,379 | $1,407,164 |
(1)The contractual payments include principal and interest, and reflect the amounts payable up to and including the final contractual maturity date. The contractual
payments reflect the amounts payable from January 1, 2026 up to and including the final contractual maturity date. In the case of floating rate obligations, the
floating rate index is based on the interest rates as at December 31, 2025 and is assumed to remain constant to the final contractual maturity date. For the 4.061%
MFC Subordinated notes, the reset rate is equal to the Secured Overnight Financing Rate (“SOFR”) Swap Rate as at December 31, 2025, plus a spread
adjustment of 0.26161%, plus 1.647%. For the 2.818% MFC Subordinated notes, the reset rate is equal to the Canadian Overnight Repo Rate Average
(“CORRA”) as at December 31, 2025, plus a spread adjustment of 0.32138%, plus 1.82%. The Company may have the contractual right to redeem or repay
obligations prior to maturity and if such right is exercised, total contractual obligations paid and the timing of payment could vary significantly from the amounts and
timing included in the table.
(2)Insurance contract liabilities 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 and exclude amounts from insurance contract liabilities for account of segregated fund holders. These estimated cash flows are
based on the best estimate assumptions used in the determination of insurance contract liabilities. These amounts are undiscounted. Reinsurance contract held
liabilities cash flows include estimates related to the timing and payment of future reinsurance premiums offset by recoveries on in-force 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.
(3)Due to the nature of the products, the timing of net cash flows may be before contract maturity. Cash flows are undiscounted.
Legal and Regulatory Proceedings
We are regularly involved in legal actions, both as a defendant and as a plaintiff. Information on legal and regulatory proceedings
can be found in note 18 of the 2025 Annual Consolidated Financial Statements.
| 133 | 2025 Annual Report | Management’s Discussion and Analysis |
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Quarterly Financial Information
The following table provides summary information related to our eight most recently completed quarters.
| As at and for the three months ended | Sept 30,<br><br>2025 | June 30,<br><br>2025 | Mar 31,<br><br>2025 | Dec 31,<br><br>2024 | Sept 30,<br><br>2024 | June 30,<br><br>2024 | Mar 31,<br><br>2024 |
|---|---|---|---|---|---|---|---|
| ( millions, except per share amounts or otherwise stated) | |||||||
| Revenue | |||||||
| Insurance revenue | $7,422 | $6,990 | $7,062 | $6,834 | $6,746 | $6,515 | $6,497 |
| Net investment result | 8,197 | 6,796 | 2,946 | 4,194 | 5,912 | 4,512 | 4,493 |
| Other revenue | 2,145 | 1,851 | 1,986 | 2,003 | 1,928 | 1,849 | 1,808 |
| Total revenue | $17,764 | $15,637 | $11,994 | $13,031 | $14,586 | $12,876 | $12,798 |
| Income (loss) before income taxes | $2,229 | $2,261 | $699 | $2,113 | $2,341 | $1,384 | $1,252 |
| Income tax (expense) recovery | (310) | (338) | (76) | (406) | (274) | (252) | (280) |
| Net income (loss) | $1,919 | $1,923 | $623 | $1,707 | $2,067 | $1,132 | $972 |
| Net income (loss) attributed to shareholders | $1,799 | $1,789 | $485 | $1,638 | $1,839 | $1,042 | $866 |
| Basic earnings (loss) per common share | $1.03 | $0.99 | $0.25 | $0.88 | $1.01 | $0.53 | $0.45 |
| Diluted earnings (loss) per common share | $1.02 | $0.98 | $0.25 | $0.88 | $1.00 | $0.52 | $0.45 |
| Segregated funds deposits | $12,860 | $12,408 | $14,409 | $11,927 | $11,545 | $11,324 | $12,206 |
| Total assets (in billions) | $1,027 | $977 | $981 | $979 | $953 | $915 | $907 |
| Weighted average common shares (in millions) | 1,697 | 1,710 | 1,723 | 1,746 | 1,774 | 1,793 | 1,805 |
| Diluted weighted average common shares (in millions) | 1,701 | 1,715 | 1,729 | 1,752 | 1,780 | 1,799 | 1,810 |
| Dividends per common share | $0.440 | $0.440 | $0.440 | $0.400 | $0.400 | $0.400 | $0.400 |
| CDN to US1 - Statement of Financial Position | 1.3914 | 1.3645 | 1.4393 | 1.4382 | 1.3510 | 1.3684 | 1.3533 |
| CDN to US1 - Statement of Income | 1.3773 | 1.3837 | 1.4349 | 1.3987 | 1.3639 | 1.3682 | 1.3485 |
All values are in US Dollars.
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Selected Annual Financial Information
The following table provides selected annual financial information related to our three most recently completed years.
| As at and for the years ended December 31, | 2024 | 2023 |
|---|---|---|
| ( millions, except per share amounts) | ||
| Revenue | ||
| Asia | $13,641 | $11,996 |
| Canada | 14,624 | 13,793 |
| U.S. | 16,279 | 15,322 |
| Global Wealth and Asset Management | 6,698 | 5,896 |
| Corporate and Other | 2,049 | 1,732 |
| Total revenue | $53,291 | $48,739 |
| Total assets | $978,818 | $875,574 |
| Long-term financial liabilities | ||
| Long-term debt | $6,629 | $6,071 |
| Capital instruments | 7,532 | 6,667 |
| Total financial liabilities | $14,161 | $12,738 |
| Dividend per common share | $1.60 | $1.46 |
| Cash dividend per Class A Share, Series 2 | 1.1625 | 1.1625 |
| Cash dividend per Class A Share, Series 3 | 1.125 | 1.125 |
| Cash dividend per Class 1 Share, Series 3 | 0.5870 | 0.5870 |
| Cash dividend per Class 1 Share, Series 4 | 1.5578 | 1.4946 |
| Cash dividend per Class 1 Share, Series 9 | 1.4945 | 1.4945 |
| Cash dividend per Class 1 Share, Series 11 | 1.5398 | 1.4505 |
| Cash dividend per Class 1 Share, Series 13 | 1.5875 | 1.2245 |
| Cash dividend per Class 1 Share, Series 15 | 1.1951 | 0.9465 |
| Cash dividend per Class 1 Share, Series 17 | 0.950 | 0.950 |
| Cash dividend per Class 1 Share, Series 19 | 0.9188 | 0.9188 |
| Cash dividend per Class 1 Share, Series 25 | 1.4855 | 1.3303 |
All values are in US Dollars.
Revenue
Total revenue in 4Q25 was $15.6 billion compared with $13.0 billion in 4Q24. The increase in total revenue of $2.6 billion was
due to higher net investment income, insurance revenue and other revenue.
By segment, the increase in total revenue in 4Q25 compared to 4Q24 reflected higher net investment income primarily in Asia,
the U.S., Global WAM and Canada, partially offset by lower investment income in Corporate and Other, higher insurance
revenue in Asia, Canada and the U.S., and higher other revenue in Global WAM and Corporate and Other.
On a full year basis, total revenue in 2025 was $61.0 billion compared with $53.3 billion in 2024. The increase in total revenue of
$7.7 billion was due to higher net investment income, insurance revenue and other revenue.
By segment, the increase in total revenue in 2025 compared with 2024 reflected higher net investment income primarily in Asia,
the U.S., Canada and Global WAM, partially offset lower investment income in Corporate and Other, higher insurance revenue in
Asia, the U.S and Canada, and higher other revenue in Global WAM, partially offset by lower other revenue in Asia.
| 135 | 2025 Annual Report | Management’s Discussion and Analysis |
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Revenue
| Quarterly Results | Full Year Results | |||
|---|---|---|---|---|
| ($ millions) | 4Q25 | 4Q24 | 2025 | 2024 |
| Insurance revenue | $7,414 | $6,834 | $28,888 | $26,592 |
| Net investment income | 6,008 | 4,194 | 23,947 | 19,111 |
| Other revenue | 2,147 | 2,003 | 8,129 | 7,588 |
| Total revenue | $15,569 | $13,031 | $60,964 | $53,291 |
| Asia | $4,385 | $2,927 | $18,148 | $13,641 |
| Canada | 3,919 | 3,682 | 15,657 | 14,624 |
| U.S. | 4,918 | 4,055 | 18,317 | 16,279 |
| Global Wealth and Asset Management | 1,935 | 1,738 | 7,395 | 6,698 |
| Corporate and Other | 412 | 629 | 1,447 | 2,049 |
| Total revenue | $15,569 | $13,031 | $60,964 | $53,291 |
Outstanding Common Shares
As at January 31, 2026, MFC had 1,676,743,043 common shares outstanding.
Additional Information Available
Additional information relating to Manulife, including MFC’s Annual Information Form, is available on the Company’s website at
www.manulife.com and on the SEDAR+ website at www.sedarplus.ca.
AIF February 2026
Manulife Financial Corporation
Annual Information Form
February 11, 2026
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Table of Contents
| TABLE OF CONTENTS | Annual<br><br>Information Form | Management's<br><br>Discussion & Analysis<br><br>Reference |
|---|---|---|
| CORPORATE STRUCTURE | 4 | |
| GENERAL DEVELOPMENT OF THE BUSINESS | 4 | 3-13 |
| BUSINESS OPERATIONS | 5 | 3-38 |
| RISK MANAGEMENT | 8 | 43-80 |
| GOVERNMENT REGULATION | 8 | |
| GENERAL DESCRIPTION OF CAPITAL STRUCTURE | 16 | |
| DIVIDENDS | 20 | |
| CONSTRAINTS ON OWNERSHIP OF SHARES | 21 | |
| RATINGS | 21 | |
| MARKET FOR SECURITIES | 24 | |
| ESCROWED SECURITIES AND SECURITIES SUBJECT TO<br><br>CONTRACTUAL RESTRICTION ON TRANSFER | 27 | |
| DIRECTORS AND EXECUTIVE OFFICERS | 28 | |
| LEGAL PROCEEDINGS AND REGULATORY ACTIONS | 31 | |
| TRANSFER AGENT AND REGISTRAR | 31 | |
| INTERESTS OF EXPERTS | 32 | |
| AUDIT COMMITTEE | 33 | |
| ADDITIONAL INFORMATION | 34 | |
| SCHEDULE 1 - AUDIT COMMITTEE CHARTER | 35 | |
| Page | 3 | |
| --- |
Presentation of Information
In this annual information form (“AIF”), unless otherwise indicated or unless the context otherwise requires:
•all references to “MFC” and “MLI” refer to Manulife Financial Corporation and The Manufacturers Life
Insurance Company, respectively, not including their subsidiaries;
•MFC and its subsidiaries, including MLI, are collectively referred to as “Manulife”;
•references to “Company”, “we”, “us” and “our” refer to Manulife;
•references to “$” or “C$” are to Canadian dollars; and
•information is as at December 31, 2025.
Documents Incorporated by Reference
The following documents are incorporated by reference in and form part of this AIF:
•MFC’s Management’s Discussion and Analysis for the year ended December 31, 2025 (our “2025 MD&A”);
and
•MFC’s audited annual consolidated financial statements and accompanying notes as at and for the year
ended December 31, 2025 (our “2025 Consolidated Financial Statements”).
These documents have been filed with securities regulators in Canada and may be accessed at the System for
Electronic Document Analysis and Retrieval + (“SEDAR+”), found at www.sedarplus.ca. They have also been filed
with the U.S. Securities and Exchange Commission (the “SEC”) and may be found at www.sec.gov.
Any website address included in this AIF is an inactive textual reference only and information appearing on such
website is not part of, and is not incorporated by reference in, this AIF.
Caution Regarding Forward-Looking Statements
From time to time, the Company makes written and/or oral forward-looking statements, including in this document
and the documents incorporated by reference in this document. In addition, the Company’s representatives may
make forward-looking statements orally to analysts, investors, the media and others. All such statements are made
pursuant to the “safe harbour” provisions of Canadian provincial securities laws and the U.S. Private Securities
Litigation Reform Act of 1995.
The forward-looking statements in this document and the documents incorporated by reference in this document
include, but are not limited to, the Company's possible or assumed future results set out under "General
Development of the Business, "Business Operations" and "Government Regulation", statements with respect to
possible share buybacks, the Company’s strategic priorities and targets, its medium-term financial and operating
targets, the probability and impact of the Life Insurance Capital Adequacy Test scenario switches, the anticipated
benefits of the acquisitions of Comvest Credit Partners and PT Schroder Investment Management Indonesia, our
entry into the Indian insurance market and its anticipated benefits, the anticipated benefits and value derived from the
use of AI, future premium increases, and exposure limit estimates for our property and casualty reinsurance
business, and also relate to, among other things, our objectives, goals, strategies, intentions, plans, beliefs,
expectations and estimates, and can generally be identified by the use of words such as “may”, “will”, “could”,
“should”, “would”, “likely”, “suspect”, “outlook”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “plan”, “forecast”,
“objective”, “seek”, “aim”, “continue”, “goal”, “restore”, “embark” and “endeavour” (or the negative thereof) and words
and expressions of similar import, and include statements concerning possible or assumed future results. Although
we believe that the expectations reflected in such forward-looking statements are reasonable, such statements
involve risks and uncertainties, and undue reliance should not be placed on such statements and they should not be
interpreted as confirming market or analysts’ expectations in any way.
Certain material factors or assumptions are applied in making forward-looking statements, and actual results may
differ materially from those expressed or implied in such statements. Important factors that could cause actual
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results to differ materially from expectations include, but are not limited to, the factors identified under “Caution
regarding forward-looking statements” in our 2025 MD&A. Additional information about material risk factors that
could cause actual results to differ materially from expectations and about material factors or assumptions applied in
making forward-looking statements may be found under “Risk Management and Risk Factors” and “Critical Actuarial
and Accounting Policies” in our 2025 MD&A, in the “Risk Management” note to our 2025 Consolidated Financial
Statements and elsewhere in MFC’s filings with Canadian and U.S. securities regulators.
The forward-looking statements in this document or in the documents incorporated by reference in this document are,
unless otherwise indicated, stated as of the date hereof or the date of the document incorporated by reference, as the
case may be, and are presented for the purpose of assisting investors and others in understanding the Company’s
financial position and results of operations, our future operations, as well as the Company’s objectives and strategic
priorities, and may not be appropriate for other purposes. The Company does not undertake to update any forward-
looking statements, except as required by law.
CORPORATE STRUCTURE
Name, Address and Incorporation
Manulife Financial Corporation is a life insurance company incorporated under the Insurance Companies Act
(Canada) (the “ICA”) on April 26, 1999 for the purpose of becoming the holding company of MLI following its
demutualization. MLI was incorporated on June 23, 1887, by a Special Act of Parliament of the Dominion of Canada
and was converted into a mutual life insurance company in 1968. Pursuant to Letters Patent of Conversion, effective
September 23, 1999, MLI implemented a plan of demutualization under the ICA and converted to a life insurance
company with common shares and became the wholly owned subsidiary of MFC.
MFC’s head office and registered office is located at 200 Bloor Street East, Toronto, Canada, M4W 1E5.
Intercorporate Relationships
The major operating subsidiaries of MFC, including direct and indirect subsidiaries, and MFC’s direct and indirect
voting interest therein, are listed in Note 21 (Subsidiaries) to our 2025 Consolidated Financial Statements. These
companies are incorporated in the jurisdiction in which their head office or registered office is located.
GENERAL DEVELOPMENT OF THE BUSINESS
Three Year History
In 2025, we sustained our momentum and delivered solid operating and financial results across the business. We
introduced a refreshed ambition underpinned by five new strategic priorities to build on our strong foundation and
meet the demands of a fast-changing world. We announced new milestones to strengthen our presence in the world's
largest economies and augment our capabilities to deliver differentiated products and solutions for our customers.
We progressed our digital and AI agenda, focusing on scaling use cases piloted in 2024 while accelerating the
development of the next wave of AI capabilities. We remain on track to deliver on our medium-term targets set at our
2024 Investor Day. Further highlights on our new strategic priorities, recent transactions, and financial targets are
outlined in our 2025 MD&A. The following changes were made or announced in 2025 to the executive leadership
team: Steve Finch was appointed CEO, Asia Segment, succeeding Phil Witherington after his appointment to
President and CEO, effective May 2025; Stephanie Fadous was appointed Chief Actuary succeeding Steve Finch,
effective May 2025; Mike Coyne was appointed General Counsel, effective September 2025, succeeding Jim
Gallagher after his retirement; and Marc Costantini, Global Head of Strategy and Inforce Management, resigned, with
his mandate redistributed across Colin Simpson, Chief Financial Officer, and Naveed Irshad, CEO, Canada Segment.
In 2024, we continued our momentum with disciplined execution against our prior strategic priorities and delivered
strong results across the business despite a persistently uncertain economic and geopolitical environment. We
achieved further milestones with the execution of two more reinsurance transactions, made significant progress
1 This represents our International High Net Worth business.
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against our digital agenda, and raised the bar with bold new targets announced at our Investor Day in June 2024.
Further highlights with respect to our then applicable strategic priorities and financial targets are outlined in our 2024
MD&A. The following changes were made or announced in 2024 to the executive leadership team: Roy Gori,
President and Chief Executive Officer, announced his retirement effective May 2025, with Phil Witherington
appointed as his successor; Pam Kimmet, Chief Human Resources Officer, announced her retirement effective May
2025, and was succeeded by Pragashini Fox, Chief People Officer; and Trevor Kreel was appointed Chief Investment
Officer, effective August 2024, succeeding Scott Hartz after his retirement.
In 2023, despite a challenging operating environment with persistent macroeconomic and geopolitical uncertainty, our
business proved resilient, and we stayed committed to our strategic priorities. We successfully closed a milestone
reinsurance transaction, reported our first full year of financial results prepared under IFRS 17, gained momentum on
our post-pandemic recovery in Asia and tracked well on our digital transformation journey. Further highlights with
respect to our then applicable strategic priorities are outlined in our 2023 MD&A. The following changes were made
in 2023 to the executive leadership team: Colin Simpson was appointed Chief Financial Officer succeeding Phil
Witherington who was appointed CEO, Asia Segment; Halina von dem Hagen was appointed Chief Risk Officer;
Rahim Hirji was appointed Chief Auditor and Head of Advisory Services; and Brooks Tingle was appointed CEO, US
Segment.
Additional information about our business can be found in the “Business Operations” section below, and in MFC’s
2025 MD&A, on pages 3 to 38 inclusive.
BUSINESS OPERATIONS
Information about our business and operating segments, our strategy, products, and investment activities, is included
in MFC’s 2025 MD&A, on pages 3 to 38 inclusive.
DISTRIBUTION METHODS
The Company has a multi-channel distribution network in all the segments in which it operates, with different
emphasis depending on the product line and geography. Our four operating segments are: Asia, Canada, U.S., and
Global Wealth and Asset Management.
Asia We have insurance operations in 12 markets across Asia. We are a leading provider of insurance and
insurance-based wealth accumulation products, driven by a customer-centric strategy, and we leverage the asset
management expertise and products managed by our Global Wealth and Asset Management segment. Our portfolio
includes a broad array of health, protection, savings, investment, term and whole life products.
Our diversified multi-channel distribution network in Asia includes contracted agents, bank partnerships and
independent agents, financial advisors, and brokers. We have exclusive bancassurance partnerships that give us
access to over 35 million bank customers, including our regional exclusive bancassurance partnership with DBS
Bank Ltd. in Singapore, Hong Kong, mainland China and Indonesia. In November 2025 we announced our intention
to establish a new insurance joint venture in India with Mahindra and Mahindra, subject to regulatory approval.
In Hong Kong and Macau, our insurance products are marketed and sold through the Company’s agency,
bancassurance partnerships, and independent broker channels. In Japan, product offerings are marketed through
proprietary sales agents, independent agencies or managing general agents and bancassurance partners. In
Bermuda1, Singapore, mainland China, Vietnam, Indonesia, the Philippines, Malaysia, Cambodia and Myanmar,
products are primarily marketed and sold through agents, bank channels (including exclusive partnerships), brokers,
and independent financial advisors.
Canada Our Canada segment has been committed to customers in our home market for over 135 years. Together
with our Global Wealth and Asset Management segment, we support more than 7 million customers in Canada,
2 United States, Canada, Japan, Hong Kong, Singapore, Taiwan, Indonesia, Vietnam, Malaysia, India, the Philippines, Brazil, England, Ireland,
Switzerland, Germany, and mainland China. In addition, we have timberland/farmland operations in Australia, New Zealand, and Chile.
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including members of approximately 27,000 businesses and organizations in our group benefits business, through a
diverse and competitive suite of financial and health-protection offerings tailored to individuals, families, and business
owners.
Our Canadian business lines are: group life, health, and disability insurance solutions for employers; individual
insurance and guaranteed investment products including life, critical illness, segregated funds, and annuities sold via
retail advisors; and Affinity group insurance offerings including life, health, travel, disability, and creditor insurance
solutions sold through the Manulife CoverMe® brand, mortgage brokers, travel advisors, and sponsor groups and
associations. Through Manulife Bank, we offer flexible banking products and solutions to both individual customers
and businesses.
We aim to be the leading life and health insurer in Canada, by focusing on four key areas: continuing to strengthen
our core operations; accelerating digital transformation; differentiating through health; and expanding distribution.
U.S. Our U.S. segment is committed to a future of dynamic growth by helping our customers live longer, healthier,
better lives through an array of life insurance and insurance-based wealth accumulation solutions that meet a variety
of their planning needs and offer a behavioural insurance component through the John Hancock Vitality Program.
We operate under the brand of John Hancock with more than 160 years of history in the U.S., where we have built
lifelong customer relationships and created a vast distribution network of licensed financial advisors who help us
bring the benefits of life insurance, wellness, and wealth planning to more individuals and their families. Our life
insurance solutions are designed to meet customers’ estate, business, income-protection, and wealth accumulation
needs, while also helping them prepare to spend more years in good health. We also leverage the expertise and
solutions of our Global Wealth and Asset Management segment.
Over the past decade, we have transitioned from being a passive claims payer to actively rewarding our customers
for taking small, everyday steps toward better long-term health. We have integrated behavioural insurance across our
suite of solutions, offering customers tools, resources, education, and rewards through John Hancock Vitality to help
them make more informed decisions about their overall health. The program continuously evolves to include the
latest advances in science and technology and is built on a network of collaborators including GRAIL, Apple,
Prenuvo, and the Massachusetts Institute of Technology (“MIT”) AgeLab.
Additionally, we have in-force LTC and annuity businesses. Our proven record of organically managing our LTC
blocks as well as our LTC, variable and fixed annuity reinsurance transactions over the last few years have been
significant contributors to the Company’s efforts to transform the business portfolio to one of higher returns and lower
risk.
Global Wealth and Asset Management Our Global Wealth and Asset Management segment, branded Manulife
Wealth & Asset Management, is defined by our purpose: to make decisions easier and lives better by empowering
investors for a better tomorrow. We operate across 20 geographies2, including 10 in Asia, distributing innovative
investment solutions to both individual and institutional investors through three integrated and complementary
business lines. We offer capabilities across a wide spectrum of public and private asset classes, leveraging the
expertise of our team of over 700 investment professionals worldwide, including Manulife | CQS Investment
Management and Manulife | Comvest credit partners.
Our philosophy across our entire platform is anchored on good stewardship, engaging with companies and investors
with a view to addressing material risks, which in turn allows us to deliver resilient, alpha-generating investment
solutions to our customers.
3 Based on annualized premium equivalent ("APE") sales. For more information about APE sales, see "Non-GAAP and other financial
measures" in our 2025 MD&A.
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Our Retirement business serves more than 9 million investors in North America and Asia through retirement plan
solutions, with investments managed by our internal teams and third-party managers. We offer financial guidance
and advice to investors to help improve financial preparedness and also provide solutions for investors when they
retire or leave their employer plan.
Our Retail business serves more than 11 million investors through third-party intermediaries in North America and
Asia, and through an affiliated wealth management network in North America. Our product platform consists
predominantly of internally managed solutions. We also supplement our solutions by partnering with third-party
managers through sub-advisory agreements.
Our Institutional Asset Management business serves more than 650 clients around the world, including pension
plans, foundations, endowments, financial institutions, and other institutional investors as well as our own insurance
business. We believe that the combination of our global footprint, broad investment expertise, and diversified
distribution channels position us strongly to capitalize on high-growth opportunities in the most attractive markets
globally.
COMPETITION
We operate in highly competitive markets and compete for customers with other insurance companies, securities
firms, investment advisors, asset managers, banks and other financial institutions. Customer loyalty and retention,
and access to distributors, are important to the Company’s success and are influenced by many factors, including our
distribution practices, regulations, product features, service levels, prices, and our financial strength ratings and
reputation.
Key trends that are increasing competitive pressures in all our markets include (i) digital solutions to enhance the
customer experience, (ii) simplified and innovative product offerings, and (iii) an accelerated use of artificial
intelligence across all areas of business operations. Both traditional and non-traditional competitors are evolving their
strategies to respond to these trends.
Asia With over 125 years of continuous operations in Asia, we are a top three pan-Asian life insurer3 and one of the
few foreign insurance companies with scale, diversified distribution and a broad Asian footprint across developed and
emerging insurance markets. We believe that the Company is well positioned to benefit from the potential of the
region.
Canada The financial protection market remains dominated by three large Canadian insurance providers, of which
we are one, while certain regional or smaller carriers focused on specialty products or niche segments are extremely
competitive in some markets.
U.S. Competition in the U.S. is primarily with other large insurance firms, as well as mutual insurance companies,
that distribute comparable products through similar channels.
Global Wealth and Asset Management In North America, the wealth and asset management market is increasingly
dominated by large firms. Across our Asian markets, we operate in very competitive and fragmented markets
comprised of global, pan-Asian, and regional wealth and asset managers.
SUSTAINABILITY REPORT AND PUBLIC ACCOUNTABILITY STATEMENT
We report on the environmental, social and governance dimensions of our operations, products and services, as well
as our community partnerships, in Manulife’s annual Sustainability Report and Public Accountability Statement.
These reports provide information on priorities and performance and can be found on the Sustainability section of the
Company’s website at www.manulife.com/sustainability.
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In connection with our sustainability efforts, we actively engage with various internationally recognized initiatives and
frameworks. Our 2025 MD&A includes disclosures on sustainability matters in the “Strategic Risk - ESG framework"
section, including Manulife’s approach to climate risk. Please also refer to our Sustainability Report, published in the
second quarter of each year, for detailed climate risk disclosure and our sustainability performance.
RISK MANAGEMENT
A categorization and explanation of the broad risks facing the Company, Manulife’s risk management strategies for
each category, and a discussion of the specific risks and uncertainties to which our business operations and financial
condition are subject can be found in the section entitled “Risk Management and Risk Factors” in our 2025 MD&A.
As noted under “Caution Regarding Forward-Looking Statements”, forward-looking statements involve risks and
uncertainties and actual results may differ materially from those expressed or implied in such statements. Strategic
risk, market & liquidity risk, credit & investment risk, insurance risk, operational risk, and technology & cyber risk are
the six principal categories of risk described in our 2025 MD&A. These risk factors should be considered in
conjunction with the other information in this AIF and the documents incorporated by reference herein.
GOVERNMENT REGULATION
As an insurance company, Manulife is subject to regulation and supervision by governmental authorities in the
jurisdictions in which it does business. In Canada, the Company is subject to both federal and provincial regulation. In
the United States, the Company is primarily regulated by each of the states in which it conducts business and by
federal securities laws. The Company’s Asia operations are similarly subject to a variety of regulatory and
supervisory regimes in each of the Asian jurisdictions in which the Company operates, which vary in degree of
regulation and supervision.
CANADA
Manulife is governed by the ICA. The ICA is administered by, and activities of the Company are supervised by, the
Office of the Superintendent of Financial Institutions (Canada) (“OSFI”), the primary regulator of federal financial
institutions. The ICA permits insurance companies to offer, directly or through subsidiaries or through networking
arrangements, a broad range of financial services, including banking, investment counseling and portfolio
management, mutual funds, trust services, real property brokerage and appraisal, information processing and
merchant banking services.
The ICA requires the filing of annual and other reports on the financial condition of the Company, provides for
periodic examinations of the Company’s affairs, imposes restrictions on transactions with related parties, and sets
forth requirements governing reserves for actuarial liabilities and the safekeeping of assets and other matters. OSFI
supervises Manulife on a consolidated basis (including capital adequacy) to ensure that OSFI has an overview of the
group’s activities. This includes the ability to review both insurance and non-insurance activities conducted by
subsidiaries of Manulife with supervisory power to bring about corrective action.
Capital Requirements
The ICA requires Canadian insurance companies to maintain adequate levels of capital at all times.
Capital requirements for MFC and MLI are governed by the Life Insurance Capital Adequacy Test (“LICAT”)
guideline, with LICAT ratios prepared on a consolidated basis. LICAT uses a risk-based approach to measure and
aggregate specified risks to calculate the amount of regulatory capital required to support these risks. It measures the
capital adequacy of a life insurer and is one of several indicators used by OSFI to assess a life insurer’s financial
condition. The LICAT ratio compares capital resources to the Base Solvency Buffer, the latter being the risk-based
capital requirement determined in accordance with the guideline.
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Capital resources include Available Capital, as well as a Surplus Allowance (equal to the net risk adjustment reported
in the financial statements in respect of all insurance contracts other than risk adjustments arising from segregated
fund contracts with guarantee risks) and Eligible Deposits (collateral and letters of credit from unregistered
reinsurers). Available Capital includes adjusted retained earnings (which as defined in the LICAT guideline includes
the contractual service margin), as well as common equity, qualifying preferred shares, qualifying innovative tier 1
instruments, limited recourse capital notes, subordinated debt, contributed surplus, adjusted Accumulated Other
Comprehensive Income (“AOCI”) and the participating account. Under LICAT, certain deductions are made from
Available Capital, including, but not limited to, goodwill, intangible assets, a portion of deferred tax assets, and
controlling interests in non-life financial corporations.
The Base Solvency Buffer is equal to the aggregated capital requirements, net of credits for diversification and
qualifying participating and adjustable products. The capital requirements cover the following five risk components:
market risk, credit risk, insurance risk, operational risk and segregated funds guarantee risk.
The minimum regulatory LICAT ratio is 90% for MFC and MLI; in addition, MLI is subject to an industry-wide
supervisory target of 100%. OSFI expects each insurance company to establish an internal target capital level that
provides a cushion above the regulatory requirements. This cushion allows for coping with volatility in markets and
economic conditions, and enhances flexibility in capital management to consider aspects such as innovations in the
industry, consolidation trends and international developments. OSFI may require that a higher amount of capital be
available, taking into account such factors as operating experience and diversification of asset or insurance portfolios.
MFC endeavours to manage its business such that LICAT ratios for both MFC and MLI are above their internal
targets. See the section entitled “Capital Management Framework – Regulatory Capital Position” in our 2025 MD&A
for our LICAT ratios.
The ICA provides a wide range of discretionary intervention powers that allow OSFI to intervene to address concerns
that may arise with companies. Capital requirements may be adjusted by OSFI as experience develops, the risk
profile of Canadian life insurers changes, or to reflect other risks.
See the section entitled “Risk Management and Risk Factors” in our 2025 MD&A for information about regulatory
initiatives and other developments that could impact MFC’s capital position.
Regulated subsidiaries of MFC must maintain minimum levels of capital, which are based on the local capital regime
and the statutory accounting basis in each jurisdiction. The Company seeks to maintain capital in excess of the
minimum required in all foreign jurisdictions in which the Company does business.
Investment Powers
Under the ICA, Manulife must maintain a prudent portfolio of investments and loans, subject to certain overall
limitations on the amount it may invest in certain classes of investments, unless otherwise exempted.
The Canadian federal government’s Bill C-15 An Act to implement certain provisions of the budget tabled in
Parliament on November 4, 2025 proposes to amend the ICA (the “Amendments”) to repeal overall limits on real
property, equities and commercial loans and replace these provisions with a new provision that permits OSFI to direct
an insurance company to reduce the aggregate value of its interests in real property, equities (other than where the
insurance company has a substantial investment (as defined in the ICA)) and commercial loans. OSFI will be
permitted to make such an order on the basis of prudential considerations that it considers relevant. The
Amendments are not yet in force.
Additional restrictions (and in some cases, the need for regulatory approvals) limit the types of investments that the
Company can make in excess of 10% of the voting rights or 25% of the equity of a body corporate, or in excess of
25% of the ownership interests of an unincorporated entity, subject to certain available exceptions under the ICA.
4 Accepted actuarial practices means Canadian accepted actuarial practices as established by the Actuarial Standards Board.
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Restrictions on Shareholder Dividends and Capital Transactions
The ICA prohibits the declaration or payment of any dividend on shares of an insurance company if there are
reasonable grounds for believing an insurance company does not have adequate capital and adequate and
appropriate forms of liquidity, or the declaration or the payment of the dividend would cause the insurance company
to be in contravention of any regulation made under the ICA respecting the maintenance of adequate capital and
adequate and appropriate forms of liquidity, or any direction made to the company by the Superintendent of Financial
Institutions (Canada) (the “Superintendent”). The ICA also requires an insurance company to notify the
Superintendent of the declaration of a dividend at least 15 days prior to the date fixed for its payment. Similarly, the
ICA prohibits the purchase for cancellation of any shares issued by an insurance company, or the redemption of any
redeemable shares or other similar capital transactions, if there are reasonable grounds for believing that the
company does not have adequate capital and adequate and appropriate forms of liquidity, or the purchase or the
payment would cause the company to be, in contravention of any regulation made under the ICA respecting the
maintenance of adequate capital and adequate and appropriate forms of liquidity, or any direction made to the
company by the Superintendent. These latter transactions would require the prior approval of the Superintendent.
There is currently no direction against MFC or MLI paying a dividend or redeeming or purchasing their shares for
cancellation.
Chief Actuary
In accordance with the ICA, the Board of Directors of MFC (the “Board”) has appointed the Chief Actuary who must
be a Fellow of the Canadian Institute of Actuaries. The Chief Actuary is required to value the policy liabilities of
Manulife as at the end of each financial year in accordance with accepted actuarial practices4 with such changes as
may be determined by the Superintendent and any direction that may be made by the Superintendent, including
selection of appropriate assumptions and methods. The Chief Actuary must make a report in the prescribed form on
the valuation including providing an opinion as to whether the consolidated financial statements fairly present the
results of the valuation. At least once in each financial year, the Chief Actuary must meet with the Board, or the Audit
Committee, to report, in accordance with accepted actuarial practice and any direction that may be made by the
Superintendent, on the current and expected future financial condition of the Company. The Chief Actuary is also
required to report to the President and Chief Executive Officer and the Chief Financial Officer of the Company if the
Chief Actuary identifies any matters that, in the Chief Actuary’s opinion, have material adverse effects on the financial
condition of the Company and require rectification.
Prescribed Supervisory Information
The Supervisory Information (Insurance Companies) Regulations made under the ICA prohibit regulated insurance
companies, such as MFC and MLI, from disclosing, directly or indirectly, “prescribed supervisory information”, as
defined in those regulations. Prescribed supervisory information includes assessments, recommendations, ratings
and reports concerning the Company made by or at the request of the Superintendent, orders of the Superintendent
with respect to capital and liquidity, certain regulatory actions taken with respect to the Company, prudential
agreements between the Company and the Superintendent, and directions of the Superintendent that we cease or
refrain from committing, or remedy, unsafe or unsound practices in conducting our business.
Provincial Insurance Regulation
The Company is also subject to provincial regulation and supervision in each province and territory of Canada in
which it carries on business. While mainly subject to direct governance by provincial insurance regulation, which is
concerned primarily with the form of insurance contracts and the sale and marketing of insurance and annuity
products, including the licensing and supervision of insurance agents, the Company is also subject to other provincial
regulatory regimes governing general commercial conduct, such as consumer protection and privacy. Insurance
sales and agent compensation are also subject to guidelines established by the Canadian Insurance Services
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Regulatory Organization, which have been incorporated into the criteria by which provincial insurance regulators
undertake supervision. Individual variable insurance contracts and the underlying segregated funds to which they
relate are also subject to guidelines established by the Canadian Life and Health Insurance Association Inc. which
have been incorporated into regulation in Ontario, are consistent with guidelines in Quebec adopted under the
authority of Québec insurance legislation, and are generally followed by the regulators of all other provinces. These
guidelines govern a number of matters relating to the sale of these products and the administration of the underlying
segregated funds. MLI is licensed to transact business in all provinces and territories of Canada.
Provincial/Territorial Securities Laws
The Company’s Canadian investment fund, dealer and asset management businesses are subject to Canadian
provincial and territorial securities laws. Manulife Investment Management Limited (“MIML”) is registered as a
portfolio manager with the securities commissions in all Canadian provinces and territories, as an investment fund
manager in the provinces of Ontario, Newfoundland and Labrador and Québec, as a commodity trading manager in
Ontario, and as a derivatives portfolio manager in Québec. Manulife Investment Management Distributors Inc.
(“MIMDI”) is registered as an exempt market dealer with the securities commissions in all Canadian provinces and
territories. MIML and MIMDI are subject to regulation by the applicable provincial securities regulators. Manulife
Wealth Inc. (“MWI”) is registered under provincial and territorial securities laws to sell investments across Canada
and is subject to regulation by the applicable provincial and territorial securities regulators. MWI is regulated by the
Canadian Investment Regulatory Organization. MWI is also registered as a derivatives dealer in Québec.
Consumer Protection for Financial Institution Failure
Assuris was created by the life and health insurance industry in Canada in 1990 to provide Canadian policyholders
with protection in the event of the insolvency of their insurance company. Assuris is funded by its member insurance
companies, including MLI and Manulife Assurance Company of Canada. Member companies of Assuris are
assessed to build and maintain a liquidity fund at a minimum level of $100 million. Members are then primarily subject
to assessment on an “as needed” basis. The assessment base for member companies is calculated using each
member’s solvency buffer, subject to adjustments where the member operates in foreign jurisdictions.
The Canadian Investor Protection Fund (“CIPF”) has been created to provide clients with protection, within defined
limits, in the event of the insolvency of their investment dealer or their mutual fund dealer. The CIPF is funded by its
member investment dealers and mutual fund dealers, including MWI.
The Canada Deposit Insurance Corporation (“CDIC”) is a federal crown corporation created by parliament in 1967 to
protect deposits made with member financial institutions in case of their failure. CDIC member institutions, including
Manulife Bank and its subsidiary Manulife Trust Company, fund deposit insurance through premiums paid on the
insured deposits that they hold.
UNITED STATES
General Regulation at the State Level
The various states in the United States have laws regulating transactions between insurers and other members of
insurance holding company systems. Transactions between the Company’s U.S. domiciled insurance subsidiaries
and their affiliates are subject to regulation by the states in which such insurance subsidiaries are domiciled and, for
certain limited matters, states in which they transact business. Most states have enacted legislation that requires
each insurance holding company and each insurance subsidiary in an insurance holding company system to register
with, and be subject to regulation by, the insurance regulatory authority of the insurance subsidiary’s state of
domicile. The Company’s principal U.S. life insurance subsidiaries are John Hancock Life Insurance Company
(U.S.A.) (“JHUSA”), John Hancock Life Insurance Company of New York (“JHNY”) and John Hancock Life & Health
Insurance Company (“JHLH”). They are domiciled in Michigan, New York and Massachusetts, respectively. Under
such laws, the insurance subsidiaries are required to annually furnish financial and related information concerning the
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operations of companies within the holding company system that may materially affect the operations, management
or financial condition of insurers within the system. These reports are also filed with other insurance departments on
request. In addition, such laws provide that all transactions within an insurance holding company system must be fair
and equitable, and following any such transactions, each insurer’s policyholder surplus must be both reasonable in
relation to its outstanding liabilities and adequate for its needs.
The laws of the various states also establish regulatory agencies with broad administrative powers, such as the
power to approve policy forms, grant and revoke licenses to transact business, regulate trade practices, license
agents, require financial statements and prescribe the type and amount of investment permitted. State insurance
regulatory authorities regularly make inquiries, hold investigations and administer market conduct examinations with
respect to an insurer’s compliance with applicable insurance laws and regulations.
Insurance companies are required to file detailed annual statements with state insurance regulators in each of the
states in which they do business and their business and accounts are subject to examination by such regulators at
any time. Quarterly statements must also be filed with the state insurance regulator in the insurer’s state of domicile
and with the insurance departments of many of the states in which the insurer does business. Insurance regulators
may periodically examine an insurer’s financial condition, adherence to statutory accounting practices and
compliance with insurance department rules and regulations.
State insurance departments, as part of their routine oversight process, conduct detailed examinations of the books,
records and accounts of insurance companies domiciled in their states. These examinations are generally conducted
in accordance with the examining state’s laws and the guidelines promulgated by the National Association of
Insurance Commissioners (the “NAIC”), an association of the chief insurance supervisory officials of each state,
territory or possession of the United States. Each of the Company’s principal U.S. domiciled insurance subsidiaries is
subject to periodic examinations by its respective domiciliary state insurance regulators. The latest published
examination reports issued by each such insurance department did not raise any material issues or adjustments.
Investment Powers
The Company’s U.S. domiciled insurance subsidiaries are subject to laws and regulations that require diversification
of their investment portfolios and limit the amount of investments in certain investment categories such as below
investment grade bonds and real estate. Failure to comply with these laws and regulations may cause investments
exceeding regulatory limitations to be treated as non-admitted assets for the purposes of measuring statutory surplus
and in some circumstances would require divestiture of the non-qualifying assets.
Minimum Statutory Surplus and Capital
The Company’s U.S. domiciled life insurance subsidiaries are required to have minimum statutory surplus and capital
of various amounts depending on the state in which they are licensed and the types of business they transact.
NAIC IRIS Ratios
The NAIC uses a set of financial relationships or “tests,” known as the Insurance Regulatory Information System
(“IRIS”), which are designed for the early identification of insurance companies which might warrant special attention
by insurance regulatory authorities. Insurance companies submit data annually to the NAIC, which in turn analyzes
the data utilizing 12 ratios, each with defined “usual ranges.” Having ratios that fall outside the usual range does not
necessarily indicate that a company experienced unfavourable results. An insurance company may fall out of the
usual range for one or more ratios because of transactions that are favourable (such as large increases in surplus) or
are immaterial or eliminated at the consolidated level. Each company’s ratios are reviewed annually and are assigned
a ranking by a team of examiners and financial analysts at the NAIC for the purpose of identifying companies that
require immediate regulatory attention. The rankings are not reported to the companies and are only available to
regulators.
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Risk-Based Capital Requirements
In order to enhance the regulation of insurer solvency, state regulators have adopted the NAIC model law
implementing Risk-Based Capital (“RBC”) requirements for life insurance companies. The requirements are designed
to monitor capital adequacy and to raise the level of protection that statutory surplus provides for policyholders. The
model law measures four major areas of risk facing life insurers: (i) the risk of loss from asset defaults and asset
fluctuation; (ii) the risk of loss from adverse mortality and morbidity experience; (iii) the risk of loss from mismatching
of asset and liability cash flows due to changing interest rates; and (iv) general business risk. Insurers having less
statutory surplus than required by the RBC model formula are subject to varying degrees of regulatory action
depending on the level of capital inadequacy. Based on the formula adopted by the NAIC, each of the Company’s
U.S. domiciled insurance company subsidiaries exceeded the RBC capital requirements as at December 31, 2025.
Regulation of Shareholder Dividends and Other Payments from Insurance Subsidiaries
Manulife’s ability to meet debt service obligations and pay operating expenses and shareholder dividends depends
on the receipt of sufficient funds from its operating subsidiaries. Our U.S. operating subsidiaries are indirectly owned
by MLI. The payment of dividends by JHUSA is subject to restrictions set forth in the insurance laws of Michigan, its
domiciliary state. Similarly, the payment of dividends by JHNY and JHLH is regulated by New York and
Massachusetts insurance laws, respectively. In all three states, regulatory approval is required if proposed
shareholder dividend distributions exceed certain thresholds. In addition, general regulations relating to an insurer’s
financial condition and solvency may also preclude or restrict the amount of dividends that may be paid by the
Company’s U.S. domiciled insurance subsidiaries.
Federal Securities and Commodity Laws
Certain of the Company’s subsidiaries and certain investment funds, policies and contracts offered by them are
subject to regulation under federal securities laws administered by the SEC and under certain state securities laws.
Certain segregated funds of the Company’s insurance subsidiaries are registered as investment companies under
the Investment Company Act of 1940, as are certain other funds managed by subsidiaries of the Company. Interests
in segregated funds under certain variable annuity contracts and variable insurance policies issued by the Company’s
insurance subsidiaries are also registered under the U.S. Securities Act of 1933. Each of John Hancock Distributors
LLC, John Hancock Investment Management Distributors LLC and Manulife John Hancock Brokerage Services LLC
is registered as a broker-dealer under the U.S. Securities Exchange Act of 1934 and each is a member of, and
subject to regulation by, the Financial Industry Regulatory Authority.
Each of John Hancock Investment Management LLC, Manulife Investment Management (US) LLC, Manulife
Investment Management Timberland and Agriculture Inc., Manulife Investment Management Private Markets (US)
LLC, John Hancock Variable Trust Advisers LLC, Manulife Investment Management (North America) Limited, John
Hancock Personal Financial Services, LLC and Comvest Credit Advisors, LLC is an investment adviser registered
under the U.S. Investment Advisers Act of 1940. Certain investment companies advised or managed by these
subsidiaries are registered with the SEC under the Investment Company Act of 1940 and the shares of certain of
these entities are qualified for sale in certain states in the United States and the District of Columbia. All aspects of
the investment advisory activities of the Company’s subsidiaries are subject to various federal and state laws and
regulations in jurisdictions in which they conduct business. These laws and regulations are primarily intended to
benefit investment advisory clients and investment company shareholders and generally grant supervisory agencies
broad administrative powers, including the power to limit or restrict the carrying on of business for failure to comply
with such laws and regulations. In such event, the possible sanctions that may be imposed include the suspension of
individual employees, limitations on the activities in which the investment advisor may engage, suspension or
revocation of the investment advisor’s registration as an advisor, censure and fines.
The Commodity Exchange Act may regulate certain of the Company’s segregated funds and registered funds as a
“commodity pool”, and certain of the Company’s registered advisers as a “commodity pool operator” or a “commodity
trading advisor”.
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State Guaranty Funds
All states of the United States have insurance guaranty fund laws requiring life insurance companies doing business
in the state to participate in a guaranty association which, like Assuris in Canada, is organized to protect
policyholders against loss of benefits in the event of an insolvency or wind-up of a member insurer. These
associations levy assessments (up to prescribed limits) on the basis of the proportionate share of premiums written
by member insurers in the lines of business in which the impaired or insolvent insurer is engaged. Assessments
levied against the Company in each of the past five years have not been material.
Employee Retirement Income Security Act of 1974 (“ERISA”) Considerations
Employee benefit plans are governed by ERISA and are subject to regulation by the U.S. Department of Labor. As
service providers to employee benefit plans, the Company and its subsidiaries may be “parties in interest”, as such
term is defined in ERISA and the Internal Revenue Code of 1986, as amended (the “Code”), with respect to such
plans. Certain transactions between parties in interest and those plans are prohibited by ERISA and the Code. If it is
determined that the Company or subsidiary is not in compliance with an applicable statutory or administrative
exemption, severe penalties and excise taxes could be imposed under ERISA and the Code.
In addition, ERISA imposes duties on fiduciaries to employee benefit plans covered by that law. The Company’s
subsidiaries that provide investment management or investment advisory services with respect to plan assets may be
deemed to be fiduciaries under ERISA. Accordingly, the applicable subsidiary must comply with both the fiduciary
duty and prohibited transaction rules of ERISA and the Code. If it is determined that the Company subsidiary has
breached its fiduciary duties in providing investment management or advice to a plan, then the Company subsidiary
could be liable for restoring any losses to the applicable plan(s).
ASIA
In Asia, local insurance authorities supervise and monitor the Company’s business and financial condition in each of
the markets in which the Company operates. The Company is also required to meet specific minimum working and
regulatory capital requirements and is subject to regulations governing the investment of such capital in each of these
jurisdictions. Hong Kong Special Administrative Region (“Hong Kong”) and Japan are the regulatory jurisdictions
governing Manulife’s most significant operations in Asia.
Hong Kong
In Hong Kong, the authority and responsibility for supervision of the insurance industry is vested in the Insurance
Authority (“IA”) under the Insurance Ordinance, Cap. 41 (the “Insurance Ordinance”).
The Chief Executive of the Government of Hong Kong appoints the members of the IA pursuant to the Insurance
Ordinance. The Insurance Ordinance provides that no person shall carry on any insurance business in or from Hong
Kong except a company authorized to do so by the IA, Lloyd’s of the United Kingdom or an association of
underwriters approved by the IA. The Insurance Ordinance stipulates certain requirements for authorized insurers,
including robust corporate governance, enhanced “fit and proper person” requirements for directors, controllers and
several key persons in control functions such as financial control, compliance, risk management, intermediary
management, actuary and internal audit, minimum capital and solvency margin requirements, adequate reinsurance
arrangement requirements and statutory reporting requirements. The Insurance Ordinance also confers powers of
inspection, investigation and intervention on the IA for the protection of policyholders and potential policyholders.
The IA has residual power to appoint an advisor or a manager to any authorized insurer if the IA considers such
appointment to be desirable for the protection of policyholders or potential policyholders against the risk that the
insurer may be unable to meet its liabilities or to fulfill the reasonable expectations of policyholders or potential
policyholders and that, in the IA’s opinion, the exercise of other interventionary powers conferred by the Insurance
Ordinance would not be appropriate to safeguard the interests of policyholders or potential policyholders. In such
circumstances, the advisor or manager appointed by the IA will have management control of the insurer.
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In Hong Kong, the Company’s life insurance business was until recently conducted through a branch of a wholly
owned Bermuda subsidiary, Manulife (International) Limited ("MIL"). MIL was authorized to carry on the business of
“long-term” insurance by the IA and the Bermuda Monetary Authority. On December 5, 2025, MIL, pursuant to the
newly introduced re-domiciliation regime in Hong Kong and upon obtaining all requisite approvals from the respective
governments and regulatory bodies, discontinued in Bermuda and re-domiciled to Hong Kong as a Hong Kong
company. Upon re-domiciliation, MIL is no longer under supervision of the Bermuda Monetary Authority, and its
status as a wholly owned indirect subsidiary of MFC and an authorized insurer under the regulatory remit of the IA
remains unchanged. MIL continues to be authorized by the IA to carry on the business of "long-term" insurance.
Long-term insurance companies are required under the Insurance Ordinance to maintain certain capital
requirements. The prescribed capital amount is based on the risk capital amounts for its risk exposures to market
risk, life insurance risk, counterparty default risk, operational risk and other risk(s) if applicable, as prescribed under
the Insurance (Valuation and Capital) Rules (Cap.41R), enacted pursuant to the Insurance Ordinance. For a long-
term insurance company, the value of its assets must not be less than the amount of its liabilities by the prescribed
capital amount, subject to a minimum of Hong Kong $20 million. Compliance with the capital requirements is reported
quarterly to the IA. Currently, all capital requirements are being met.
Investment managers and distributors in Hong Kong, including Manulife Investment Management (Hong Kong)
Limited (entity and staff)(“MIMHK”), and the sale of mutual funds and the issuance of advertisements, invitations or
documents in relation to collective investment schemes which contain an invitation to acquire an interest (products
and selling) are highly regulated and are subject to Hong Kong securities laws as administered by the Securities and
Futures Commission (“SFC”). The promotion and sale of pension schemes fund products is undertaken by MIL as the
scheme sponsor (known as MPF Scheme Provider), with Manulife Provident Funds Trust Company Limited as the
MPF approved trustee, and all such activities are subject to the supervision of the Mandatory Provident Fund
Schemes Authority (“MPFA”) and the IA. Management of the relevant pension funds is undertaken by MIMHK as
investment manager, which is subject to the supervision of the MPFA and the SFC. The sales of long term insurance
policies, investment-linked assurance, group life and health products and Qualifying Deferred Annuity Products are
subject to the supervision of the IA. Investment-linked assurance is also subject to supervision by the SFC. The sale
of Voluntary Health Insurance Scheme products is subject to the regulatory scrutiny of the Food and Health Bureau
of the Hong Kong Government. MIL also conducts long term insurance business and pension business in the Macau
Special Administrative Region and is regulated by the Monetary Authority of Macau.
Japan
Life insurance companies in Japan, including Manulife Life Insurance Company (“Manulife Japan”), are governed by
the Insurance Business Law and the regulations issued thereunder (the “IB Law”). The IB Law sets out a
comprehensive regulatory regime for Japanese life insurers, including such matters as capital and solvency
requirements, powers of regulatory intervention, new insurance products and restrictions on shareholder dividends
and distributions. The administration and application of the IB Law is supervised by the Financial Services Agency
(“FSA”). The IB Law provides for certain rules with respect to the approval of new insurance products and the setting
of premium levels.
The IB Law includes obligations relating to sales of insurance products such as understanding customers’ intentions
and provision of relevant information to customers, as well as agencies’ obligation to develop their own control
frameworks including the non-exclusive agencies’ obligation to recommend a product based on a comparison with
similar products.
The FSA published Principles for Customer-Oriented Business Operations that recommend financial institutions,
including insurers, among others, take the following actions:
(i) develop and make public a policy for a customer-oriented business; (ii) provide thorough disclosure of detailed
fees and expenses of financial products to customers; (iii) provide important information in an easy to understand
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manner; and (iv) provide services suited to each customer. Manulife Japan established a policy known as a
“Customer Promise” and made it public on its website.
Investment managers in Japan, including Manulife Investment Management (Japan) Limited, are governed by the
Financial Instruments and Exchange Act (Japan), and the regulations issued thereunder (the “FIEA”). The FIEA sets
out a comprehensive regulatory regime for investment managers that do business in Japan, including the registration
requirement for investment managers, filing requirements for public offerings of investment trusts, behaviour
regulations and other matters. Persons who conduct investment management business in Japan (management of
investment trusts and/or discretionary investment management business) must be registered with the FSA under the
FIEA. The registered investment managers are supervised by the FSA or local financial bureaus. The Investment
Trust and Investment Corporation Act (Japan) provides structural requirements for investment trust funds organized
within Japan and also governs managers of such domestic investment trusts.
Restrictions on Shareholder Dividends
In Asia, insurance and company laws in the jurisdictions in which the Company operates provide for specific
restrictions on the payment of shareholder dividends and other distributions by the Company’s subsidiaries, or
impose solvency or other financial tests, which could affect the ability of these subsidiaries to pay dividends in certain
circumstances.
GENERAL DESCRIPTION OF CAPITAL STRUCTURE
The following summarizes certain provisions of MFC’s common shares, preferred shares and limited recourse capital
notes. This summary is qualified in its entirety by MFC’s by-laws and the actual terms and conditions of such
securities.
MFC has authorized share capital consisting of an unlimited number of common shares (“Common Shares”), an
unlimited number of Class A Shares (“Class A Shares”), an unlimited number of Class B Shares (“Class B Shares”)
and an unlimited number of Class 1 Shares (“Class 1 Shares”) (collectively, the Class A Shares, Class B Shares and
Class 1 Shares are “Preferred Shares”).
5On February 17, 2021, 2,000,000 Non-Cumulative Fixed Rate Reset Class 1 Shares Series 27 were issued to the Limited Recourse
Trustee, Computershare Trust Company of Canada, in connection with MFC’s Limited Recourse Capital Notes Series 1. These shares are
not listed on the Toronto Stock Exchange (the “TSX”).
6 On November 10, 2021, 1,200,000 Non-Cumulative Fixed Rate Reset Class 1 Shares Series 28 were issued to the Limited Recourse
Trustee, Computershare Trust Company of Canada, in connection with MFC’s Limited Recourse Capital Notes Series 2. These shares are
not listed on the TSX.
7 On June 14, 2022, 1,000,000 Non-Cumulative Fixed Rate Reset Class 1 Shares Series 29 were issued to the Limited Recourse Trustee,
Computershare Trust Company of Canada, in connection with MFC’s Limited Recourse Capital Notes Series 3. These shares are not listed
on the TSX.
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As of December 31, 2025, MFC had the following Common Shares, Class A Shares and Class 1 Shares issued:
| Common Shares | 1,677,180,680 |
|---|---|
| Class A Shares Series 2 | 14,000,000 |
| Class A Shares Series 3 | 12,000,000 |
| Class 1 Shares Series 3 | 6,537,903 |
| Class 1 Shares Series 4 | 1,462,097 |
| Class 1 Shares Series 9 | 10,000,000 |
| Class 1 Shares Series 11 | 8,000,000 |
| Class 1 Shares Series 13 | 8,000,000 |
| Class 1 Shares Series 15 | 8,000,000 |
| Class 1 Shares Series 17 | 14,000,000 |
| Class 1 Shares Series 19 | 10,000,000 |
| Class 1 Shares Series 25 | 10,000,000 |
| Class 1 Shares Series 275 | 2,000,000 |
| Class 1 Shares Series 286 | 1,200,000 |
| Class 1 Shares Series 297 | 1,000,000 |
MFC has authorized but not issued Class 1 Shares Series 10, Class 1 Shares Series 12, Class 1 Shares Series 14,
Class 1 Shares Series 16, Class 1 Shares Series 18, Class 1 Shares Series 20, and Class 1 Shares Series 26.
Certain Provisions of the Class A Shares as a Class
The following is a summary of certain provisions attaching to the Class A Shares as a class.
Priority
Each series of Class A Shares ranks on a parity with every other series of Class A Shares and every series of
Class 1 Shares with respect to dividends and return of capital. The Class A Shares shall be entitled to a preference
over the Class B Shares, the Common Shares and any other shares ranking junior to the Class A Shares with
respect to priority in payment of dividends and in the distribution of assets in the event of the liquidation, dissolution
or winding-up of MFC, whether voluntary or involuntary, or any other distribution of the assets of MFC among its
shareholders for the specific purpose of winding up its affairs.
Certain Provisions of the Class B Shares as a Class
The following is a summary of certain provisions attaching to the Class B Shares as a class.
Priority
Each series of Class B Shares ranks on a parity with every other series of Class B Shares with respect to dividends
and return of capital. The Class B Shares shall rank junior to the Class A Shares and the Class 1 Shares with respect
to priority in payment of dividends and in the distribution of assets in the event of the liquidation, dissolution or
winding-up of MFC, whether voluntary or involuntary, or any other distribution of the assets of MFC among its
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shareholders for the specific purpose of winding up its affairs, but the Class B Shares shall be entitled to a preference
over the Common Shares and any other shares ranking junior to the Class B Shares with respect to priority in
payment of dividends and the distribution of assets in the event of the liquidation, dissolution or winding-up of MFC,
whether voluntary or involuntary, or any other distribution of the assets of MFC among its shareholders for the
specific purpose of winding up its affairs.
Certain Provisions of the Class 1 Shares as a Class
The following is a summary of certain provisions attaching to the Class 1 Shares as a class.
Priority
Each series of Class 1 Shares ranks on a parity with every other series of Class 1 Shares and every series of
Class A Shares with respect to dividends and return of capital. The Class 1 Shares shall be entitled to a preference
over the Class B Shares, the Common Shares and any other shares ranking junior to the Class 1 Shares with respect
to priority in payment of dividends and in the distribution of assets in the event of the liquidation, dissolution or
winding-up of MFC, whether voluntary or involuntary, or any other distribution of the assets of MFC among its
shareholders for the specific purpose of winding up its affairs.
Certain Provisions Common to the Class A Shares, Class B Shares and Class 1 Shares
The following is a summary of certain provisions attaching to the Class A Shares as a class, to the Class B Shares as
a class and to the Class 1 Shares as a class.
Directors’ Right to Issue in One or More Series
The Class A Shares, Class B Shares and Class 1 Shares may be issued at any time and from time to time in one or
more series. Before any shares of a series are issued, the Board shall fix the number of shares that will form such
series, if any, and shall, subject to any limitations set out in the by-laws of MFC or in the ICA, determine the
designation, rights, privileges, restrictions and conditions to be attached to the Class A Shares, Class B Shares or
Class 1 Shares as the case may be, of such series, the whole subject to the filing with OSFI of the particulars of such
series, including the rights, privileges, restrictions and conditions determined by the Board.
Summaries of the terms for each series of the Class A Shares and Class 1 Shares that have been issued or
authorized for issuance are contained in the prospectuses relating to such shares, which are available on SEDAR+.
Voting Rights of Preferred Shares
Except as hereinafter referred to or as required by law or as specified in the rights, privileges, restrictions and
conditions attached from time to time to any series of Class A Shares, Class B Shares or Class 1 Shares, the holders
of such Class A Shares, Class B Shares or Class 1 Shares as a class shall not be entitled as such to receive notice
of, to attend or to vote at any meeting of the shareholders of MFC.
Amendment with Approval of Holders of Preferred Shares
The rights, privileges, restrictions and conditions attached to each of the Class A Shares, Class B Shares and Class
1 Shares as a class may be added to, changed or removed but only with the approval of the holders of such class of
Preferred Shares given as hereinafter specified.
Approval of Holders of Preferred Shares
The approval of the holders of a class of Preferred Shares to add to, change or remove any right, privilege, restriction
or condition attaching to such class of Preferred Shares as a class or in respect of any other matter requiring the
consent of the holders of such class of Preferred Shares may be given in such manner as may then be required by
law, subject to a minimum requirement that such approval be given by resolution signed by all the holders of such
class of Preferred Shares or passed by the affirmative vote of at least two-thirds (2/3) of the votes cast at a meeting
of the holders of such class of Preferred Shares duly called for that purpose. Notwithstanding any other condition or
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provision of any class of Preferred Shares, the approval of the holders of any class, voting separately as a class or
series, is not required on a proposal to amend the by-laws of MFC to:
(i)increase or decrease the maximum number of authorized Class A Shares, Class B Shares or Class 1
Shares, as the case may be, or increase the maximum number of authorized shares of a class of shares
having rights or privileges equal or superior to such class of Preferred Shares;
(ii)effect the exchange, reclassification or cancellation of all or any part of the Class A Shares, Class B Shares
or Class 1 Shares, as the case may be; or
(iii)create a new class of shares equal to or superior to the Class A Shares, the Class B Shares or the Class 1
Shares, as the case may be.
The formalities to be observed with respect to the giving of notice of any such meeting or any adjourned meeting, the
quorum required therefor and the conduct thereof shall be those from time to time required by the ICA as in force at
the time of the meeting and those, if any, prescribed by the by-laws or the administrative resolutions of MFC with
respect to meetings of shareholders. On every poll taken at every meeting of the holders of a class of Preferred
Shares as a class, or at any joint meeting of the holders of two or more series of a class of Preferred Shares, each
holder of such class of Preferred Shares entitled to vote thereat shall have one vote in respect of each relevant
Preferred Share held.
Certain Provisions of the Common Shares as a Class
The authorized common share capital of MFC consists of an unlimited number of Common Shares without nominal or
par value. Each holder of Common Shares is entitled to receive notice of and to attend all meetings of the
shareholders of MFC and is entitled to one vote for each share held except for meetings at which only holders of
another specified class or series of shares of MFC are entitled to vote separately as a class or series. The holders of
Common Shares are entitled to receive dividends as and when declared by the Board, subject to the preference of
the holders of Class A Shares, Class B Shares, Class 1 Shares and any other shares ranking senior to the Common
Shares with respect to priority in payment of dividends. After payment to the holders of Class A Shares, Class B
Shares, Class 1 Shares and any other shares ranking senior to Common Shares with respect to priority in the
distribution of assets in the event of the liquidation, dissolution or winding-up of MFC, the holders of Common Shares
shall be entitled to receive prorated the net assets of MFC remaining, after the payment of all creditors and liquidation
preferences, if any, that pertain to shareholders.
Description of the Limited Recourse Capital Notes
MFC has outstanding $2,000,000,000 of 3.375% Limited Recourse Capital Notes Series 1 (Subordinated
Indebtedness) due June 19, 2081 (the “Series 1 Notes”); $1,200,000,000 of 4.10% Limited Recourse Capital Notes
Series 2 (Subordinated Indebtedness) due March 19, 2082 (the “Series 2 Notes”); and $1,000,000,000 of 7.117%
Limited Recourse Capital Notes Series 3 (Subordinated Indebtedness) due June 19, 2082 (the “Series 3 Notes” and
collectively with the Series 1 Notes and the Series 2 Notes, the “Notes”) which are classified as equity in our 2025
Consolidated Financial Statements.
Certain Provisions of the Limited Recourse Capital Notes
The following is a summary of certain provisions attaching to the Notes as a class.
Priority
The Notes are direct, subordinated, unsecured indebtedness of MFC and will rank subordinate to all of MFC’s policy
liabilities and all other indebtedness (including all of MFC’s other unsecured and subordinated indebtedness) from
time to time issued and outstanding, except for such indebtedness which by its terms ranks equally in right of
payment with, or is subordinate to, the Notes.
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Limited Recourse
In the event of non-payment by MFC of the principal amount of, interest on, or redemption price for, the Notes when
due, the sole recourse of each holder of the Notes shall be limited to the assets held in respect of the Notes by
Computershare Trust Company of Canada, as trustee (the “Limited Recourse Trustee”) of Manulife LRCN Limited
Recourse Trust (the “Limited Recourse Trust”) from time to time (“Corresponding Trust Assets”). As of the date
hereof, the Corresponding Trust Assets in respect of the Series 1 Notes consist of 2,000,000 Class 1 Shares Series
27, the Corresponding Trust Assets in respect of the Series 2 Notes consist of 1,200,000 Class 1 Shares Series 28
and the Corresponding Trust Assets in respect of the Series 3 Notes consist of 1,000,000 Class 1 Shares Series 29.
DIVIDENDS
The declaration and payment of dividends and the amount thereof is subject to the discretion of the Board and is
dependent upon the results of operations, financial condition, cash requirements and future prospects of, and
regulatory restrictions on the payment of dividends by, the Company and other factors deemed relevant by the Board.
Since MFC is a holding company that conducts all of its operations through regulated insurance subsidiaries (or
companies owned directly or indirectly by these subsidiaries), its ability to pay future dividends will depend on the
receipt of sufficient funds from its regulated insurance subsidiaries. These subsidiaries are also subject to certain
regulatory restrictions under laws in Canada, the United States and certain other countries that may limit their ability
to pay dividends or make other upstream distributions. MFC has paid the following cash dividends in the period from
January 1, 2023 to December 31, 2025:
| Type of Shares | 2025 | 2024 | 2023 |
|---|---|---|---|
| Common Shares | $1.7600 | $1.6000 | $1.4600 |
| Preferred Shares | |||
| Class A Shares Series 2 | $1.1625 | $1.1625 | $1.1625 |
| Class A Shares Series 3 | $1.1250 | $1.1250 | $1.1250 |
| Class 1 Shares Series 3 | $0.5870 | $0.5870 | $0.5870 |
| Class 1 Shares Series 4 | $1.0010 | $1.5578 | $1.4946 |
| Class 1 Shares Series 9 | $1.4945 | $1.4945 | $1.4945 |
| Class 1 Shares Series 11 | $1.5398 | $1.5398 | $1.4505 |
| Class 1 Shares Series 13 | $1.5875 | $1.5875 | $1.2245 |
| Class 1 Shares Series 15 | $1.4438 | $1.1951 | $0.9465 |
| Class 1 Shares Series 17 | $1.3855 | $0.9500 | $0.9500 |
| Class 1 Shares Series 19 | $1.2923 | $0.9188 | $0.9188 |
| Class 1 Shares Series 25 | $1.4855 | $1.4855 | $1.3303 |
| Class 1 Shares Series 27 | - | - | - |
| Class 1 Shares Series 28 | - | - | - |
| Class 1 Shares Series 29 | - | - | - |
Until revoked, the Limited Recourse Trustee of the Limited Recourse Trust has waived its right to receive any and all
dividends on the Class 1 Shares Series 27, the Class 1 Shares Series 28, and the Class 1 Shares Series 29. Until
such waiver is revoked by the Limited Recourse Trustee of the Limited Recourse Trust, no dividends are expected to
be declared or paid on the Class 1 Shares Series 27, the Class 1 Shares Series 28 or the Class 1 Shares Series 29.
The 2025, 2024 and 2023 dividends on the Common Shares, the Class A Shares and the Class 1 Shares were paid
quarterly in March, June, September and December.
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CONSTRAINTS ON OWNERSHIP OF SHARES
The ICA contains restrictions on the purchase or other acquisition, issue, transfer and voting of the shares of MFC.
Pursuant to these restrictions, no person is permitted to acquire any shares of MFC if the acquisition would cause the
person to have a “significant interest” in any class of shares of MFC, unless the prior approval of the Minister of
Finance (Canada) is obtained. The restrictions also prohibit any person from becoming a “major shareholder” of
MFC. In addition, MFC is not permitted to record in its securities register any transfer or issue of shares if the transfer
or issue would cause the person to breach the ownership restrictions. For these purposes, a person has a significant
interest in a class of shares of MFC where the aggregate of any shares of that class beneficially owned by that
person, any entity controlled by that person and by any person associated or acting jointly or in concert with that
person exceeds 10% of all the outstanding shares of that class of shares of MFC. A person is a major shareholder if
the aggregate of any shares in a class of voting shares held by that person and by any entity controlled by that
person exceeds 20% of the outstanding shares of that class, or, for a class of non-voting shares, a holding exceeds
30% of that class. If a person contravenes any of these restrictions, the Minister of Finance (Canada) may, by order,
direct such person to dispose of all or any portion of those shares. In addition, the ICA prohibits life insurance
companies, including MFC, from recording in their securities register a transfer or issue of any share to His Majesty in
right of Canada or of a province, an agent or agency of His Majesty, a foreign government or an agent or agency of a
foreign government and provides further that no person may exercise the voting rights attached to those shares of an
insurance company. The ICA exempts from such constraints certain foreign financial institutions which are controlled
by foreign governments and eligible agents provided certain conditions are satisfied.
Under applicable insurance laws and regulations in Michigan, New York and Massachusetts, no person may acquire
control of any of the Company’s insurance company subsidiaries domiciled in any such state without obtaining prior
approval of such state’s insurance regulatory authority. Under applicable laws and regulations, any person acquiring,
directly or indirectly, 10% or more of the voting securities of any other person is presumed to have acquired “control”
of such person. Thus, any person seeking to acquire 10% or more of the voting securities of MFC must obtain the
prior approval of the insurance regulatory authorities in certain states including Michigan, Massachusetts and New
York, or must demonstrate to the relevant insurance regulator’s satisfaction that the acquisition of such securities will
not give them control of MFC. Under state law, the failure to obtain such prior approval would entitle MFC or the
insurance regulatory authorities to seek judicial injunctive relief, including enjoining the proposed acquisition or the
voting of the acquired securities at any meeting of shareholders.
RATINGS
Credit rating agencies publish credit ratings, which are indicators of an issuer’s ability to meet the terms of its
obligations in a timely manner and are important factors in a company’s overall funding profile and ability to access
external capital.
Ratings are important factors in establishing the competitive position of insurance companies, maintaining public
confidence in products being offered, and determining the cost of capital. A ratings downgrade, or the potential for
such a downgrade, could adversely affect our operations and financial condition. Some effects of a downgrade
include an increase in our cost of capital and limit in our access to the capital markets, causing some of our existing
liabilities to be subject to acceleration, additional collateral support, changes in terms or additional financial
obligations, the termination of our relationships with broker-dealers, banks, agents, wholesalers and other distributors
of our products and services, an unfavourable impact on our ability to execute on our hedging strategy, a material
increase in the number of surrenders, for all or a portion of the net cash values, by the owners of policies and
contracts we have issued, and a material increase in the number of withdrawals by policyholders of cash values from
their policies, and a reduction in new sales.
The following table summarizes, by type of securities, the ratings and ranking that MFC has received from select
independent rating organizations as at February 5, 2026. Note that some of the rating organizations may not have
assigned ratings to all classes or series of instruments under each security type.
| Page | 22 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| AM Best Company<br><br>(“AM Best”) | DBRS Limited &<br><br>affiliated entities<br><br>(“Morningstar DBRS”) | Fitch Ratings Inc.<br><br>(“Fitch”) | S&P Global Ratings<br><br>(“S&P”) | ||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Securities | Rating | Rank | Rating | Rank | Rating | Rank | Rating | Rank | |
| Medium Term<br><br>Notes and<br><br>Senior Debt | a- | 7 of 21 | A (high) | 5 of 22 | A | 6 of 21 | A | 6 of 22 | |
| Subordinated<br><br>Debt | bbb+ | 8 of 21 | A | 6 of 22 | A- | 7 of 21 | A- | 7 of 22 | |
| Limited<br><br>Recourse<br><br>Capital Notes | bbb+ | 8 of 21 | A (low) | 7 of 22 | BBB | 9 of 21 | BBB+ | 8 of 22 | |
| Preferred<br><br>Shares | bbb | 9 of 21 | Pfd-2 (high) | 4 of 16 | BBB | 9 of 21 | P-2 (High) /<br><br>BBB+ | 4 of<br><br>18,<br><br>6 of 20 |
The security ratings accorded by the rating organizations are not a recommendation to purchase, hold or sell these
securities and may be subject to revision or withdrawal at any time by the rating organizations. Security ratings are
intended to provide investors with an independent measure of the credit quality of an issue of securities. The
Company provides certain rating agencies with confidential, in-depth information in support of the rating process.
The Company has paid customary rating fees to Morningstar DBRS, Fitch and S&P in connection with some or all of
the above-mentioned ratings. In addition, the Company has made customary payments in respect of certain other
services provided to MFC by each of AM Best, Morningstar DBRS, Fitch, and S&P during the last two years.
The descriptions of the ratings below are sourced from public information as disclosed by each rating agency.
AM Best Ratings
AM Best assigns ratings for debt and preferred shares in a range from “aaa” to “c”. These ratings provide an opinion
of an entity’s ability to meet ongoing financial obligations to security holders when due, and reflects the risk that an
issuer may not meet its contractual obligations. The modifiers plus (+) or minus (-) may be appended to a rating to
denote a gradation within the category to indicate whether credit quality is near the top or bottom of a particular rating
category. The company’s rating outlooks may be positive, stable, or negative, indicating the potential future direction
a rating may move over a 36-month period. The Company’s current rating outlook is stable.
MFC’s Medium Term Notes and Senior Debt have been assigned an “a-” rating, which denotes an excellent ability to
meet the terms of the obligation.
MFC’s Subordinated Debt and Limited Recourse Capital Notes have been assigned a “bbb+” rating, which denotes a
good ability to meet the terms of the obligation; however, the issue is more susceptible to changes in economic or
other conditions.
MFC’s Class A Shares and Class 1 Shares have been assigned a “bbb” rating, which denotes a good ability to meet
the terms of the obligation; however, the issue is more susceptible to changes in economic or other conditions.
Morningstar DBRS Ratings
Morningstar DBRS assigns ratings for long-term obligations in a range from “AAA” to “D”. The scale provides an
opinion on the risk that an issuer will fail to satisfy its financial obligations in accordance with the terms under which
an obligation has been issued. Morningstar DBRS assigns ratings for preferred shares in a range from “Pfd-1” to “D”.
The Morningstar DBRS preferred share rating scale is used in the Canadian securities market and is meant to give
an indication of the risk that a borrower will not fulfill its full obligations with respect to both dividend and principal
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commitments. Every Morningstar DBRS rating is based on quantitative and qualitative considerations relevant to the
borrowing entity. Some rating categories are denoted by the subcategories “high” and “low”. The absence of either a
“high” or “low” designation indicates the rating is in the middle of the category. The company’s rating is appended
with one of three rating trends: “Positive”, “Stable”, or “Negative”. The Company’s current rating trend is stable.
MFC’s Medium Term Notes and Senior Debt have been assigned an “A (high)” rating, while MFC’s Subordinated
Debt has been assigned an “A” rating and MFC’s Limited Recourse Capital Notes have been assigned an “A (low)”
rating. An obligation rated “A (high)”, “A” or “A (low)” is of good credit quality, where the capacity for the payment of
financial obligations is substantial, but of lesser credit quality than “AA”. The Company may be vulnerable to future
events, but qualifying negative factors are considered manageable.
MFC’s Class A Shares and Class 1 Shares have been assigned a “Pfd-2 (high)” rating as they are considered to be
of good credit quality. Protection of dividends and principal is still substantial, but earnings, the balance sheet and
coverage ratios are not as strong as “Pfd-1” rated companies.
Fitch Ratings
Fitch assigns ratings for debt and preferred shares in a range from “AAA” to “C” and these ratings provide an opinion
on the relative ability of an entity to meet its financial commitments. These ratings are used by investors as
indications of the likelihood of receiving the money owed to them in accordance with the terms on which they
invested. These ratings do not directly address any risk other than credit risk. In particular, ratings do not deal with
the risk of a market value loss on a rated security due to changes in interest rates, liquidity and other market
considerations. The modifiers “+” or “-” may be appended to a rating to denote relative status within major rating
categories. The company’s rating outlook indicates the direction a rating is likely to move over a one- to two-year
period. Rating outlooks may be positive, stable, negative or evolving. The Company’s current rating outlook is stable.
MFC’s Medium Term Notes and Senior Debt have been assigned an “A” rating, while MFC's Subordinated Debt has
been assigned an "A-" rating. These ratings denote expectations of low credit risk. The capacity for payment of
financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to adverse
business or economic conditions than is the case for higher ratings.
MFC’s Limited Recourse Capital Notes and MFC’s Class A Shares and Class 1 Shares have been assigned a “BBB”
rating. This rating indicates that expectations of credit risk are currently low. The capacity for payment of financial
commitments is considered adequate but adverse business or economic conditions are more likely to impair this
capacity.
S&P Ratings
S&P assigns ratings for long-term obligations in a range from “AAA” to “D”. These ratings provide a forward-looking
opinion about the creditworthiness of an obligor with respect to a specific financial obligation, a specific class of
financial obligations, or a specific financial program (including ratings on medium-term note programs and
commercial paper programs). S&P’s long-term issue credit ratings may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within the major rating categories.
S&P assigns ratings for Canadian preferred shares in a range from “P-1” to “D” and these ratings are a forward-
looking opinion about the creditworthiness of an obligor with respect to a specific preferred share obligation issued in
the Canadian market, relative to preferred shares issued by other issuers in the Canadian market. There is a direct
correspondence between the specific ratings assigned on the Canadian preferred share scale and the various rating
levels on the global debt rating scale of S&P. It is the practice of S&P to present an issuer’s preferred share ratings
on both the global ratings scale and the Canadian national scale when listing the ratings for a particular issuer.
S&P’s Canadian scale preferred share ratings may be modified by the addition of “High” or “Low” to show relative
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standing within the major rating categories. S&P’s global scale preferred share ratings may be modified by the
addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories.
The company’s rating outlook may be positive, negative, stable, or developing. The Company’s current rating outlook
is stable.
MFC’s Medium Term Notes and Senior Debt have been assigned an “A” rating, while its Subordinated Debt has been
assigned an “A-” rating. An obligation rated “A” or “A-” is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in higher-rated categories, however, the
obligor’s capacity to meet its financial commitment on the obligation is still strong.
MFC’s Limited Recourse Capital Notes have been assigned a “BBB+” rating while MFC’s Class A Shares and Class
1 Shares have been assigned a “P-2 (High)” rating on the Canadian scale (which corresponds to a “BBB+” rating on
the global scale). Obligations rated “BBB+” or “P-2 (High)” exhibit adequate protection parameters; however, adverse
economic conditions or changing circumstances are more likely to weaken the obligor's capacity to meet its financial
commitment on the obligation.
MARKET FOR SECURITIES
MFC’s Common Shares are listed for trading under the symbol “MFC” on the Toronto Stock Exchange (“TSX”), the
New York Stock Exchange (“NYSE”), and the Philippine Stock Exchange and under “0945” on The Stock Exchange
of Hong Kong Limited. The Class A Shares Series 2 and Class A Shares Series 3 preferred shares are listed for
trading on the TSX under the symbols “MFC.PR.B” and “MFC.PR.C”, respectively. The Class 1 Shares Series 3,
Class 1 Shares Series 4, Class 1 Shares Series 9, Class 1 Shares Series 11, Class 1 Shares Series 13, Class 1
Shares Series 15, Class 1 Shares Series 17, Class 1 Shares Series 19 and Class 1 Shares Series 25 preferred
shares are listed for trading on the TSX under the symbols “MFC.PR.F”, “MFC.PR.P”, “MFC.PR.I”, “MFC.PR.J”,
“MFC.PR.K”, “MFC.PR.L”, “MFC.PR.M”, “MFC.PR.N” and “MFC.PR.Q”, respectively.
Trading Price and Volume
The following table sets out the intra-day price range and trading volume of the Common Shares on the TSX and the
NYSE for the period indicated.
| 2025 | TSX | NYSE | ||||
|---|---|---|---|---|---|---|
| High<br><br>(C$) | Low<br><br>(C$) | Volume<br><br>(000s) | High<br><br>(U.S.$) | Low<br><br>(U.S.$) | Volume<br><br>(000s) | |
| January | 44.80 | 42.38 | 73,451 | 31.22 | 29.43 | 7,971 |
| February | 46.01 | 41.06 | 162,513 | 32.42 | 28.10 | 9,533 |
| March | 45.46 | 40.77 | 193,494 | 31.76 | 28.18 | 11,397 |
| April | 46.37 | 36.93 | 140,881 | 32.38 | 25.92 | 14,727 |
| May | 44.99 | 41.88 | 247,621 | 32.17 | 30.24 | 10,544 |
| June | 44.50 | 41.52 | 179,936 | 32.51 | 30.42 | 11,136 |
| July | 43.61 | 41.14 | 110,542 | 32.09 | 30.05 | 10,871 |
| August | 43.14 | 41.08 | 166,850 | 31.39 | 29.70 | 10,746 |
| September | 44.54 | 41.64 | 126,780 | 32.35 | 30.20 | 9,012 |
| October | 46.24 | 43.05 | 107,240 | 33.04 | 30.92 | 9,365 |
| November | 49.85 | 45.32 | 147,207 | 35.50 | 32.24 | 10,155 |
| December | 50.50 | 48.25 | 119,464 | 36.91 | 34.82 | 12,245 |
| Page | 25 | |||||
| --- |
The following tables set out the intra-day price range and trading volume of the Class A Shares Series 2 and Series 3
preferred shares and the Class 1 Shares Series 3, Series 4, Series 9, Series 11, Series 13, Series 15, Series 17,
Series 19, and Series 25 preferred shares on the TSX for the period indicated.
| 2025 | TSX – Class A Shares Series 2 | TSX – Class A Shares Series 3 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| High<br><br>(C$) | Low<br><br>(C$) | Volume<br><br>(000s) | High<br><br>(C$) | Low<br><br>(C$) | Volume<br><br>(000s) | |||||||||
| January | 20.92 | 19.76 | 203 | 20.40 | 19.69 | 202 | ||||||||
| February | 21.55 | 20.67 | 78 | 21.41 | 20.09 | 188 | ||||||||
| March | 21.55 | 20.24 | 147 | 21.28 | 20.11 | 132 | ||||||||
| April | 20.78 | 19.35 | 115 | 20.46 | 19.07 | 83 | ||||||||
| May | 20.93 | 19.97 | 130 | 20.53 | 19.33 | 107 | ||||||||
| June | 20.96 | 20.30 | 67 | 20.55 | 19.85 | 188 | ||||||||
| July | 22.30 | 20.51 | 116 | 21.78 | 20.00 | 307 | ||||||||
| August | 22.22 | 21.52 | 192 | 21.98 | 21.20 | 116 | ||||||||
| September | 22.18 | 21.49 | 60 | 21.85 | 21.16 | 49 | ||||||||
| October | 22.77 | 21.50 | 77 | 22.71 | 21.28 | 60 | ||||||||
| November | 22.76 | 21.65 | 131 | 22.69 | 21.31 | 47 | ||||||||
| December | 22.78 | 21.75 | 143 | 22.94 | 21.63 | 80 | 2025 | TSX – Class 1 Shares Series 3 | TSX – Class 1 Shares Series 4 | |||||
| --- | --- | --- | --- | --- | --- | --- | ||||||||
| High<br><br>(C$) | Low<br><br>(C$) | Volume<br><br>(000s) | High<br><br>(C$) | Low<br><br>(C$) | Volume<br><br>(000s) | |||||||||
| January | 18.38 | 16.85 | 168 | 18.84 | 17.00 | 37 | ||||||||
| February | 17.98 | 17.31 | 129 | 18.70 | 17.45 | 16 | ||||||||
| March | 17.30 | 16.35 | 66 | 18.20 | 16.86 | 10 | ||||||||
| April | 16.45 | 14.91 | 56 | 17.49 | 15.55 | 16 | ||||||||
| May | 16.98 | 15.40 | 67 | 17.25 | 16.00 | 15 | ||||||||
| June | 17.93 | 16.93 | 48 | 18.07 | 17.25 | 3 | ||||||||
| July | 19.46 | 17.57 | 133 | 18.67 | 18.00 | 22 | ||||||||
| August | 18.51 | 18.02 | 118 | 19.20 | 18.10 | 5 | ||||||||
| September | 18.43 | 17.87 | 100 | 18.60 | 18.00 | 4 | ||||||||
| October | 18.46 | 17.92 | 55 | 18.45 | 18.00 | 3 | ||||||||
| November | 18.46 | 17.88 | 63 | 18.30 | 18.00 | 15 | ||||||||
| December | 19.06 | 18.40 | 63 | 19.00 | 18.10 | 9 | ||||||||
| Page | 26 | |||||||||||||
| --- | ||||||||||||||
| 2025 | TSX – Class 1 Shares Series 9 | TSX – Class 1 Shares Series 11 | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||||
| High<br><br>(C$) | Low<br><br>(C$) | Volume<br><br>(000s) | High<br><br>(C$) | Low<br><br>(C$) | Volume<br><br>(000s) | |||||||||
| January | 25.09 | 24.61 | 98 | 25.10 | 24.56 | 84 | ||||||||
| February | 24.95 | 24.60 | 87 | 25.02 | 24.35 | 76 | ||||||||
| March | 25.10 | 24.54 | 149 | 24.80 | 24.27 | 143 | ||||||||
| April | 25.11 | 22.75 | 98 | 24.75 | 22.55 | 175 | ||||||||
| May | 24.95 | 24.16 | 233 | 25.04 | 24.26 | 81 | ||||||||
| June | 25.18 | 24.60 | 85 | 25.25 | 24.78 | 41 | ||||||||
| July | 25.70 | 25.18 | 97 | 25.85 | 25.20 | 55 | ||||||||
| August | 26.21 | 25.10 | 64 | 25.60 | 25.07 | 29 | ||||||||
| September | 25.55 | 25.19 | 42 | 25.53 | 25.13 | 79 | ||||||||
| October | 25.94 | 25.30 | 75 | 25.72 | 25.25 | 116 | ||||||||
| November | 25.93 | 25.24 | 151 | 25.72 | 24.82 | 72 | ||||||||
| December | 25.74 | 25.27 | 102 | 25.68 | 24.98 | 75 | 2025 | TSX – Class 1 Shares Series 13 | TSX – Class 1 Shares Series 15 | |||||
| --- | --- | --- | --- | --- | --- | --- | ||||||||
| High<br><br>(C$) | Low<br><br>(C$) | Volume<br><br>(000s) | High<br><br>(C$) | Low<br><br>(C$) | Volume<br><br>(000s) | |||||||||
| January | 24.64 | 24.20 | 172 | 23.40 | 22.97 | 181 | ||||||||
| February | 24.30 | 24.06 | 124 | 23.37 | 22.90 | 114 | ||||||||
| March | 24.20 | 23.35 | 119 | 23.45 | 22.48 | 139 | ||||||||
| April | 23.90 | 22.51 | 177 | 22.70 | 19.91 | 76 | ||||||||
| May | 24.50 | 23.69 | 172 | 22.85 | 21.60 | 95 | ||||||||
| June | 24.88 | 24.20 | 52 | 24.49 | 22.60 | 85 | ||||||||
| July | 25.15 | 24.85 | 99 | 24.65 | 23.68 | 127 | ||||||||
| August | 25.00 | 24.52 | 80 | 24.50 | 23.75 | 124 | ||||||||
| September | 25.19 | 24.54 | 107 | 24.20 | 24.00 | 35 | ||||||||
| October | 25.15 | 24.76 | 203 | 24.63 | 23.89 | 69 | ||||||||
| November | 25.43 | 24.81 | 132 | 24.99 | 24.18 | 304 | ||||||||
| December | 25.99 | 25.00 | 41 | 24.92 | 24.38 | 170 | ||||||||
| Page | 27 | |||||||||||||
| --- | ||||||||||||||
| 2025 | TSX – Class 1 Shares Series 17 | TSX – Class 1 Shares Series 19 | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||||
| High<br><br>(C$) | Low<br><br>(C$) | Volume<br><br>(000s) | High<br><br>(C$) | Low<br><br>(C$) | Volume<br><br>(000s) | |||||||||
| January | 23.44 | 22.71 | 175 | 23.17 | 21.61 | 196 | ||||||||
| February | 23.04 | 22.77 | 66 | 22.59 | 21.53 | 227 | ||||||||
| March | 23.59 | 22.47 | 150 | 22.45 | 21.81 | 79 | ||||||||
| April | 23.30 | 20.75 | 95 | 22.58 | 20.00 | 55 | ||||||||
| May | 23.30 | 21.80 | 321 | 21.98 | 20.95 | 18 | ||||||||
| June | 23.75 | 22.80 | 134 | 22.74 | 21.68 | 105 | ||||||||
| July | 25.08 | 23.49 | 111 | 24.49 | 22.66 | 170 | ||||||||
| August | 24.68 | 23.68 | 128 | 24.33 | 23.34 | 245 | ||||||||
| September | 24.38 | 23.79 | 169 | 23.87 | 23.49 | 209 | ||||||||
| October | 24.61 | 23.74 | 179 | 24.28 | 23.60 | 91 | ||||||||
| November | 24.90 | 24.08 | 323 | 24.52 | 23.96 | 210 | ||||||||
| December | 25.00 | 24.65 | 132 | 24.74 | 24.18 | 210 | 2025 | TSX – Class 1 Shares Series 25 | ||||||
| --- | --- | --- | --- | |||||||||||
| High<br><br>(C$) | Low<br><br>(C$) | Volume<br><br>(000s) | ||||||||||||
| January | 24.79 | 24.32 | 116 | |||||||||||
| February | 24.47 | 24.02 | 89 | |||||||||||
| March | 25.00 | 23.76 | 75 | |||||||||||
| April | 24.60 | 22.20 | 65 | |||||||||||
| May | 24.59 | 23.23 | 47 | |||||||||||
| June | 25.00 | 24.20 | 194 | |||||||||||
| July | 25.55 | 24.97 | 96 | |||||||||||
| August | 25.64 | 24.91 | 115 | |||||||||||
| September | 25.25 | 24.75 | 72 | |||||||||||
| October | 25.55 | 25.00 | 109 | |||||||||||
| November | 25.65 | 25.05 | 40 | |||||||||||
| December | 26.14 | 25.33 | 76 |
ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTION ON TRANSFER
In connection with the issuances of the Series 1 Notes, Series 2 Notes and the Series 3 Notes, the Class 1 Shares
Series 27, Class 1 Shares Series 28 and the Class 1 Shares Series 29, respectively, were issued to and are held in
the Limited Recourse Trust and are restricted from being transferred, except to holders of the Series 1 Notes, the
Series 2 Notes or the Series 3 Notes, respectively, in respect of certain events. See “General Description of Capital
Structure – Certain Provisions of the Limited Recourse Capital Notes” above.
| Page | 28 | |
|---|---|---|
| Designation of class | Number of securities held in<br><br>escrow or that are subject to a<br><br>contractual restriction on transfer | Percentage of class |
| --- | --- | --- |
| Class 1 Shares Series 27 | 2,000,000 | 2.49% |
| Class 1 Shares Series 28 | 1,200,000 | 1.50% |
| Class 1 Shares Series 29 | 1,000,000 | 1.25% |
DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS
The by-laws of MFC provide that the Board shall consist of a minimum of seven and a maximum of 30 Directors, with
the exact number of Directors to be elected at any annual meeting of MFC to be fixed by the Directors prior to such
annual meeting.
The following table sets forth the Directors of MFC, as of January 1, 2026, and for each Director, their place of
residence, principal occupation, years as a director and membership on Board committees.
Each Director is elected for a term of one year, expiring at the close of the next annual meeting of the Company. The
next annual meeting will occur on May 14, 2026.
| Page | 29 | ||
|---|---|---|---|
| Name and<br><br>Residence | Principal Occupation | Director Since | Board<br><br>Committee<br><br>Membership (1) |
| --- | --- | --- | --- |
| Donald R. Lindsay<br><br>British Columbia, Canada | Chair of the Board, MFC and MLI (2) | August 2010 | CGNC(3) |
| Philip J. Witherington<br><br>Ontario, Canada | President and Chief Executive<br><br>Officer, MFC and MLI (4) | May 2025 | N/A (4) |
| Nicole S. Arnaboldi<br><br>Connecticut, United States | Partner, Oak Hill Capital Management, LLC (private<br><br>equity company) (5) | June 2020 | MRCC (Chair)<br><br>Risk |
| Guy L.T. Bainbridge<br><br>Edinburgh, UK | Corporate Director | August 2019 | Audit (Chair)<br><br>CGNC |
| Nancy J. Carroll<br><br>Ontario, Canada | Corporate Director (6) | February 2025 | Audit<br><br>CGNC |
| Julie E. Dickson<br><br>Ontario, Canada | Corporate Director | August 2019 | MRCC<br><br>Risk (Chair) |
| J. Michael Durland<br><br>Ontario, Canada | Chief Executive Officer, Melancthon Capital<br><br>Corporation (venture capital firm) | March 2024 | Audit<br><br>CGNC |
| Donald P. Kanak<br><br>Washington, United States | Corporate Director (7) | March 2024 | MRCC<br><br>Risk |
| Anna Manning<br><br>Ontario, Canada | Corporate Director (8) | August 2024 | MRCC<br><br>Risk |
| John S. Montalbano<br><br>British Columbia, Canada | Principal of Tower Beach Capital Ltd. (a private<br><br>enterprise focused on venture capital investments) | February 2025 | MRCC<br><br>Risk |
| May Tan<br><br>Hong Kong, People’s<br><br>Republic of China | Corporate Director | December 2021 | Audit<br><br>CGNC (Chair) |
| Leagh E. Turner<br><br>Ontario, Canada | CEO, Coupa Software Inc. (software company) (9) | November 2020 | MRCC<br><br>Risk |
| John W. P-K. Wong<br><br>Hong Kong, People’s<br><br>Republic of China | Corporate Director (10) | May 2024 | Audit<br><br>CGNC |
Notes
(1)In this table, Audit means Audit Committee, CGNC means Corporate Governance and Nominating Committee, MRCC means
Management Resources and Compensation Committee, and Risk means Risk Committee.
(2)Donald Lindsay was appointed Chair of the Board effective February 15, 2023. Mr. Lindsay held the position of Vice-Chair of the Board
from November 2022 to February 2023. Prior to October 2022, Mr. Lindsay was President and Chief Executive Officer, Teck Resources
Limited.
(3)Mr. Lindsay is a member of the CGNC; however, in his capacity as Chair of the Board, Mr. Lindsay attends the meetings of all committees
whenever possible.
(4)From July 2023 to May 2025, Philip Witherington was the President and Chief Executive Officer, Manulife Asia. Prior to July 2023, Mr.
Witherington was the Chief Financial Officer of Manulife. He is not a member of any committee but attends committee meetings at the
invitation of the Chair.
(5)Prior to May 2021, Nicole Arnaboldi was a corporate director.
(6)Prior to February 2025, Nancy Carroll was a partner in the Financial Services Group and head of the National Insurance and Reinsurance
Group at McCarthy Tetrault LLP.
| Page | 30 |
|---|
(7)From April 2022 to December 2022, Donald Kanak was a private equity business advisor at Hillhouse Investment Management Ltd. From
November 2020 to October 2022, Mr. Kanak was the Chairman, Insurance Growth Markets at Prudential Holdings Ltd. Prior to October
2022, Mr. Kanak was the Chairman, Prudence Foundation at Prudential Holdings Ltd.
(8)Prior to December 2023, Anna Manning was the President and Chief Executive Officer of Reinsurance Group of America.
(9)From February 2022 to November 2023, Leagh Turner was Co-Chief Executive Officer, Ceridian HCM, Inc. Prior to February 2022,
Ms.Turner was President and Chief Operating Officer at Ceridian HCM, Inc.
(10)Prior to June 2023, John Wong was a Senior Partner and Managing Director of Boston Consulting Group.
EXECUTIVE OFFICERS
The name, place of residence, and position of each of the executive officers of Manulife are set forth in the following
table as of January 1, 2026.
| Name and Residence | Position with Manulife |
|---|---|
| Philip J. Witherington<br><br>Ontario, Canada | President and Chief Executive Officer (1) |
| Michael F. Coyne<br><br>New York, United States | General Counsel (2) |
| Stephanie Fadous<br><br>Ontario, Canada | Chief Actuary (3) |
| Steven A. Finch<br><br>Hong Kong, People’s Republic of China | President and Chief Executive Officer Asia (4) |
| Pragashini N. Fox<br><br>Ontario, Canada | Chief People Officer (5) |
| Rahim Hirji<br><br>Ontario, Canada | Chief Auditor and Head of Advisory Services (6) |
| Naveed Irshad<br><br>Ontario, Canada | President and Chief Executive Officer, Manulife Canada (7) |
| Rahul M. Joshi<br><br>Texas, United States | Chief Operations Officer |
| Trevor Kreel<br><br>Ontario, Canada | Chief Investment Officer (8) |
| Karen A. Leggett<br><br>Ontario, Canada | Chief Marketing Officer |
| Paul R. Lorentz<br><br>Ontario, Canada | President and Chief Executive Officer, Global Wealth and Asset<br><br>Management |
| Colin L. Simpson<br><br>Ontario, Canada | Chief Financial Officer (9) |
| Brooks E. Tingle<br><br>Massachusetts, United States | President and Chief Executive Officer, John Hancock (10) |
| Halina K. von dem Hagen<br><br>Ontario, Canada | Chief Risk Officer (11) |
| Shamus E. Weiland<br><br>New York, United States | Chief Information Officer |
Notes
(1)From July 2023 to May 2025, Philip Witherington was President and Chief Executive Officer, Manulife Asia. Prior to July 2023, Mr.
Witherington was the Chief Financial Officer of Manulife.
| Page | 31 |
|---|
(2)From November 2024 to September 2025, Michael Coyne was the Senior Fellow, Litigation Strategy Advisor at the Bank Policy Institute.
Prior to November 2024, Mr. Coyne was the Executive Officer & General Counsel for the Americas at Mitsubishi UFJ Financial Group Ltd.
(3)From June 2023 to May 2025, Stephanie Fadous was the Global Treasurer and Head of Capital Management. Prior to June 2023, Ms.
Fadous was Head of IFRS 17 Implementation.
(4)Prior to May 2025, Steven Finch was the Chief Actuary.
(5)From January 2025 to June 2025, Pragashini Fox was the Interim Chief People Officer of Manulife. Prior to January 2025, Ms. Fox was
Head of HR, Product and Head of Talent & Diversity (Talent COE) at Thomson Reuters.
(6)Prior to June 2023, Rahim Hirji was Chief Risk Officer.
(7)From November 2021 to June 2022, Naveed Irshad was Global Head of Inforce Management. Prior to November 2021, Mr. Irshad was
Head of North American Legacy Business.
(8)Prior to August 2024, Trevor Kreel was Global Head of Portfolio Management.
(9)From November 2022 to July 2023, Colin Simpson was Chief Financial Officer, US Segment. Prior to November 2022, Mr. Simpson was
Chief Financial Officer, Aviva Canada.
(10)Prior to April 2023, Brooks Tingle was President and Chief Executive Officer, John Hancock Insurance.
(11)Prior to June 2023, Halina von dem Hagen was Global Treasurer and Head of Capital Management.
SHARE OWNERSHIP
The number of Common Shares held by the Directors and executive officers of MFC as at December 31, 2025 was
880,122, which represented less than 1% of the outstanding Common Shares.
LEGAL PROCEEDINGS AND REGULATORY ACTIONS
A description of certain legal proceedings to which the Company is a party can be found in the section entitled “Legal
Proceedings” in Note 18 to our 2025 Consolidated Financial Statements.
Since January 1, 2025, (i) there have been no penalties or sanctions imposed against us by a Canadian securities
regulatory authority, other than nominal late filing fees, or by a court relating to Canadian securities legislation, (ii)
there have been no other penalties or sanctions imposed by a court or regulatory body against us that would likely be
considered important to a reasonable investor in making an investment decision, and (iii) we have not entered into
any settlement agreements before a court relating to Canadian securities legislation or with a Canadian securities
regulatory authority.
TRANSFER AGENT AND REGISTRAR
TSX Trust Company is the principal transfer agent and registrar for MFC’s Common and Preferred shares. MFC’s
transfer agents and co-transfer agents are as follows (opposite their applicable jurisdictions):
| Page | 32 |
|---|---|
| Transfer Agent | |
| --- | --- |
| Canada: | TSX Trust Company<br><br>301-100 Adelaide Street West<br><br>Toronto, ON M5H 4H1<br><br>Toll Free: 1-800-783-9495<br><br>www.tsxtrust.com<br><br>www.tsxtrust.com/fr |
| Co-Transfer Agents | |
| United States: | Equiniti Trust Company, LLC<br><br>P.O. Box 500<br><br>Newark, NJ 07101<br><br>Toll Free: 1-800-249-7702<br><br>https://equiniti.com/us/ast-access |
| Philippines: | RCBC Stock Transfer<br><br>Ground Floor, West Wing<br><br>GPL (Grepalife) Building<br><br>221 Senator Gil Puyat Avenue<br><br>Makati City, Philippines<br><br>Telephone: 632 5318 8567 or 632 8894 9909<br><br>www.rcbc.com |
| Hong Kong: | Tricor Investor Services Limited<br><br>17/F, Far East Finance Centre<br><br>16 Harcourt Road<br><br>Hong Kong<br><br>Telephone: 852 2980-1333<br><br>www.vistra.com |
INTERESTS OF EXPERTS
Ernst & Young LLP, Chartered Professional Accountants, Licensed Public Accountants, Toronto, Canada, is the
external auditor who prepared the Reports of Independent Registered Public Accounting Firm to the Shareholders
and Board of Directors on the audited consolidated financial statements of the Company, and the Report of
Independent Registered Public Accounting Firm to the Shareholders and Board of Directors on Internal Control over
Financial Reporting under Standards of the Public Company Accounting Oversight Board (United States). Ernst &
Young LLP is independent with respect to the Company within the meaning of the CPA Code of Professional
Conduct of the Chartered Professional Accountants of Ontario, United States federal securities laws and the rules
and regulations thereunder, including the independence rules adopted by the SEC pursuant to the Sarbanes-Oxley
Act of 2002 (“SOX”) and is in compliance with Rule 3520 of the Public Company Accounting Oversight Board (United
States). Under Hong Kong’s Financial Reporting Council Ordinance, Ernst & Young LLP is a Recognised Public
Interest Entity Auditor.
Stephanie Fadous is the Appointed Actuary of the Company who prepared the Appointed Actuary’s Report to the
Shareholders of the Company. The number of Common Shares of MFC held by Stephanie Fadous as at December
31, 2025 represented less than 1% of the outstanding Common Shares.
| Page | 33 |
|---|
AUDIT COMMITTEE
Audit Committee Charter
The Audit Committee has adopted a formal Charter that describes the Audit Committee’s role and responsibilities.
The Charter is set out in the attached Schedule 1.
The Audit Committee is responsible for assisting the Board in its oversight role with respect to the quality and integrity
of financial information, the effectiveness of the Company’s internal control over financial reporting, the effectiveness
of the Company’s risk management and compliance practices, the performance, qualifications and independence of
the independent auditor, the Company’s compliance with legal and regulatory requirements, the performance of the
Company’s finance, actuarial, internal audit and global compliance functions, and the procedures relating to conflicts
of interest, confidential information, related party transactions, and customer complaints.
Composition of the Audit Committee
MFC’s Audit Committee was composed of the following members as at December 31, 2025: Guy Bainbridge (Chair
of the Audit Committee), Nancy Carroll, Michael Durland, May Tan and John Wong. The Board has reviewed the
committee membership and determined that all members are financially literate as required by the NYSE Listed
Company Manual and the applicable instruments of the Canadian Securities Administrators. All committee members
are independent, pursuant to applicable regulatory and stock exchange requirements. The Board has also
determined that Guy Bainbridge and May Tan have the necessary qualifications to be designated as audit committee
financial experts under SOX.
Relevant Education and Experience
In addition to the general business experience of each member of MFC’s Audit Committee, each member of the Audit
Committee in 2025 had relevant education and experience. Guy Bainbridge is a member of the Institute of Chartered
Accountants in England and Wales and holds an MA from the University of Cambridge. Mr. Bainbridge is a former
partner of KPMG LLP. Nancy Carroll holds a JD from the University of Toronto and an MA from Queen’s University,
and is a former partner in the Financial Services Group and head of the National Insurance and Reinsurance Group
of McCarthy Tétrault LLP. Michael Durland holds a Ph.D. in Management from Queen’s University and a B. Comm.
from Saint Mary’s University, and is the former Group Head and CEO, Global Banking and Markets, The Bank of
Nova Scotia. May Tan holds a B.A. in Economics and Accounting from the University of Sheffield, is a member of the
Institute of Chartered Accountants in England and Wales and is a Certified Public Accountant in Hong Kong. John
Wong holds an MBA from Harvard University and is a former Senior Partner and Chairman of Greater China, Boston
Consulting Group.
Pre-Approval Policies and Procedures
Our auditor independence policy requires the Audit Committee to pre-approve all audit and permitted non-audit
services (including the fees and conditions) the external auditor provides. If a new service is proposed during the
year that is outside the pre-approved categories or budget, it must be pre-approved by the Audit Committee Chair.
All audit and permitted non-audit services provided by Ernst & Young LLP have been pre-approved by the Audit
Committee.
External Auditor Service Fees
The table below lists the services Ernst & Young LLP provided to Manulife and its subsidiaries in the last two fiscal
years and the fees they charged each year.
| Page | 34 | |
|---|---|---|
| Fees | 2025 | 2024 |
| --- | --- | --- |
| ($ in millions) | ($ in millions) | |
| Audit Fees: | 45.6 | 39.5 |
| Includes the audit of our financial statements as well as the financial<br><br>statements of our subsidiaries, segregated funds, audits of statutory filings,<br><br>prospectus services, report on internal controls, reviews of quarterly<br><br>reports and regulatory filings. | ||
| Audit-Related Fees: | 3.9 | 3.1 |
| Includes consultation concerning financial accounting and reporting<br><br>standards not classified as audit, due diligence in connection with<br><br>proposed or consummated transactions and assurance services to report<br><br>on internal controls for third parties. | ||
| Tax Fees: | 0.7 | 0.4 |
| Includes tax compliance, tax planning and tax advice services. | ||
| All Other Fees: | 0.7 | 0.2 |
| Includes other advisory services. | ||
| Total | 50.8 | 43.2 |
Note: Total fees above exclude fees of $19.6 million in 2025 and $17.7 million in 2024 for professional services provided by Ernst & Young
LLP to certain investment funds managed by subsidiaries of MFC. For certain funds, these fees are paid directly by the funds. For other funds,
in addition to other administrative costs, the subsidiaries are responsible for the auditor’s fees for professional services, in return for a fixed
administration fee.
ADDITIONAL INFORMATION
Additional information with respect to the Company, including directors’ and officers’ remuneration and indebtedness,
principal holders of MFC’s securities, and securities authorized for issuance under MFC’s equity compensation plans,
where applicable, is contained in MFC’s Management Information Circular for its most recent annual meeting of
security holders that involved the election of directors. Additional financial information is provided in our 2025
Consolidated Financial Statements and our 2025 MD&A. Copies of these documents and additional information
relating to the Company may be found on SEDAR+ at www.sedarplus.ca and is accessible at the Company’s
website, www.manulife.com.
| Page | 35 |
|---|
Schedule 1
Manulife Financial Corporation (the “Company”)
Audit Committee Charter
1.Overall Role and Responsibility
1.1The Audit Committee (“Committee”) shall:
(a)assist the Board of Directors in its oversight role with respect to:
(i)the quality and integrity of financial information;
(ii)the effectiveness of the Company’s internal control over financial reporting;
(iii)the effectiveness of the Company’s risk management and compliance practices;
(iv)the independent auditor’s performance, qualifications and independence;
(v)the Company’s compliance with legal and regulatory requirements;
(vi)the Finance, Actuarial, Internal Audit and Global Compliance functions;
(vii)conflicts of interest and confidential information;
(viii)related party transactions; and
(ix)complaints of customers relating to obligations under the Insurance Companies Act (Canada)
(the “Act”), and accounting, internal accounting controls and audit matters.
(b)prepare such reports of the Committee required to be included in the Proxy Circular in accordance
with applicable laws or the rules of applicable securities regulatory authorities.
1.2The Committee will also act as the conduct review committee of the Company.
2.Composition
2.1The Committee shall consist of five or more Directors appointed by the Board of Directors on the
recommendation of the Corporate Governance and Nominating Committee.
2.2No member of the Committee shall be an officer or employee of the Company, its subsidiaries or affiliates.
Members of the Committee will not be affiliated with the Company as such term is defined in the Act.
2.3Each member of the Committee shall satisfy the applicable independence and experience requirements of
the laws governing the Company, the applicable stock exchanges on which the Company’s securities are
listed and applicable securities regulatory authorities.
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2.4The Board of Directors shall designate one member of the Committee as the Committee Chair.
2.5Members of the Committee shall serve at the pleasure of the Board of Directors for such term or terms as
the Board of Directors may determine.
2.6Each member of the Committee shall be financially literate as such qualification is defined by applicable law
and interpreted by the Board of Directors in its business judgment.
2.7The Board of Directors shall determine whether and how many members of the Committee qualify as a
financial expert as defined by applicable law. At least one member must be an audit committee financial
expert, as defined in applicable laws and regulations.
2.8As necessary, the Committee shall consider whether members of the Committee who serve on the audit
committee of more than three public companies (including the Committee) have the ability to effectively
serve on the Committee and, if it is determined that such member is able to continue serving, the Committee
shall record the reasons for such a decision.
3.Structure, Operations and Assessment
3.1The Committee shall meet quarterly or more frequently as the Committee may determine. The Committee
shall report to the Board of Directors on its activities after each of its meetings.
3.2The affirmative vote of a majority of the members of the Committee participating in any meeting of the
Committee is necessary for the adoption of any resolution.
3.3The Committee may create one or more subcommittees and may delegate, in its discretion, all or a portion
of its duties and responsibilities to such subcommittees.
3.4The Committee shall, on an annual basis:
(a)review and assess the adequacy of this Charter and, where necessary, recommend changes to the
Board of Directors for its approval;
(b)undertake a performance evaluation of the Committee comparing the performance of the Committee
with the requirements of this Charter; and
(c)report the results of the performance evaluation to the Board of Directors.
The performance evaluation by the Committee shall be conducted in such manner as the Committee deems
appropriate. The report to the Board of Directors may take the form of an oral report by the Committee
Chair or any other member of the Committee designated by the Committee to make this report.
3.5The Committee is expected to establish and maintain free and open communication with management,
including the Chief Financial Officer, the Chief Actuary, the Chief Audit Executive and the Global Chief
Compliance Officer, and the independent auditor, and shall periodically meet separately with each of them.
4.Specific Duties
The Committee will carry out the following specific duties:
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4.1Oversight of the Independent Auditor
(a)Recommend to the Board of Directors for approval the appointment and, when considered
appropriate, the dismissal or removal of the independent auditor for the purpose of preparing or
issuing an auditor’s report or performing other audit, review or attest services for the Company
(subject to shareholder ratification).
(b)Review and approve, and recommend to the Board of Directors for approval, the scope and terms of
each audit engagement, including the engagement letter and the compensation of the independent
auditor.
(c)Oversee the work of the independent auditor engaged for the purpose of preparing or issuing an audit
report or performing other audit, review or attest services (including resolution of disagreements
between management and the independent auditor regarding financial reporting). The independent
auditor shall report directly to the Committee.
(d)Pre-approve all audit services and permitted non-audit services (including the fees, terms and
conditions for the performance of such services) to be provided by the independent auditor.
(e)When appropriate, the Committee may delegate to one or more members the authority to grant
preapprovals of audit and permitted non-audit services and the full Committee shall be informed of
each non-audit service.
(f)Review the decisions of such delegates under subsection (e) above, which shall be presented to the
full Committee at its next scheduled meeting.
(g)Evaluate the qualifications, performance and independence of the independent auditor, including:
(i)reviewing and evaluating the lead partner on the independent auditor’s engagement with the
Company;
(ii)considering whether the auditor’s quality controls are adequate and the provision of permitted
non-audit services are compatible with maintaining the auditor’s independence; and
(iii)addressing any concerns raised by regulatory authorities or other stakeholders regarding the
auditor’s independence.
(h)Present its conclusions with respect to the independent auditor to the Board of Directors and, if so
determined by the Committee, recommend that the Board of Directors take additional action to satisfy
itself of the qualifications, performance and independence of the independent auditor.
(i)Obtain and review a report from the independent auditor at least annually regarding:
(i)the independent auditor’s internal quality-control procedures;
(ii)any material issues raised by the most recent independent auditor's internal quality-control
review, or peer review, of the firm, or by any inquiry or investigation by governmental or
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professional authorities within the preceding five years respecting one or more independent
audits carried out by the firm;
(iii)any steps taken to deal with any such issues; and
(iv)all relationships between the independent auditor and the Company.
(j)At least annually, review and approve the audit plan (including any significant changes to the audit
plan) and, as part of this review, satisfy itself that the audit plan is risk-based and addresses all
the relevant activities over a measurable cycle and that the work of the independent auditor and
the Internal Audit function is coordinated.
(k)Ensure the rotation of the lead (or coordinating) audit partner having primary responsibility for the
audit and the audit partner responsible for reviewing the audit as required by law.
(l)Review and approve policies for the Company’s hiring of partners and employees or former partners
and employees of the independent auditor.
4.2Financial Reporting
(a)Review and discuss with management and the independent auditor the Company's annual and
quarterly financial disclosures, prior to the approval by the Board of Directors and the publication of
earnings, including:
(i)management's discussion and analysis;
(ii)financial statements;
(iii)earnings press releases;
(iv)the results of the independent auditor's review of the quarterly financial statements;
(v)the results of the independent auditor's audit of the annual financial statements;
(vi)any changes to the audit scope or strategy;
(vii)the annual report of the auditors on the financial statements and any other returns or
transactions required to be reviewed by the Committee and report to the Board of
Directors; and
(viii)any matters required to be communicated by the independent auditor under
applicable audit/review standards.
(b)Approve any reports for inclusion in the Company's Annual Report, as required by applicable
legislation and make a recommendation thereon to the Board of Directors.
(c)Review such returns of the Company as the Superintendent of Financial Institutions (Canada) (the
“Superintendent”) may specify.
(d)Review the Company’s disclosure policy, which governs the release of information about the
Company and requires timely, accurate and fair disclosure of such information in compliance with all
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legal and regulatory requirements, and periodically assess the adequacy of procedures regarding
disclosure of financial information.
(e)Require management to implement and maintain appropriate internal control procedures.
(f)Oversee systems of internal control and meet with the heads of the oversight functions, management
and the independent auditor to assess the adequacy and effectiveness of these systems and to
obtain reasonable assurance that the controls are effective.
(g)Review and discuss with management and the independent auditor management’s report on its
assessment of internal controls over financial reporting and the independent auditor’s attestation
report on management’s assessment.
(h)Review, evaluate and approve the procedures established under s. 4.2(e).
(i)Review such investments and transactions that could adversely affect the well-being of the Company
as the auditor or any officer of the Company may bring to the attention of the Committee.
(j)Review and discuss with management and the independent auditor at least annually significant
financial reporting issues and judgments made in connection with the preparation of the Company’s
financial statements, including:
(i)key areas of risk for material misstatement of the financial statements, including critical
accounting estimates or areas of measurement uncertainty;
(ii)whether the auditor considers estimates to be within an acceptable range and the rationale for
the final decision and whether it is consistent with industry practice;
(iii)any significant changes in the Company’s selection or application of accounting or actuarial
principles;
(iv)any major issues as to the adequacy of the Company’s internal controls;
(v)any special steps adopted in light of material control deficiencies, if any; and
(vi)the role of any other audit firms.
(k)Review and discuss with management and the independent auditor at least annually reports from the
independent auditor on:
(i)critical accounting policies and practices to be used;
(ii)significant financial reporting issues, estimates and judgments made in connection with the
preparation of the financial statements;
(iii)alternative treatments of financial information within generally accepted accounting principles
that have been discussed with management, ramifications of the use of such alternative
disclosures and treatments, and the treatment preferred by the independent auditor; and
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(iv)other material written communications between the independent auditor and management,
such as any management letter or schedule of unadjusted differences.
(l)Discuss with the independent auditor at least annually any “management” or “internal control” letters
issued or proposed to be issued by the independent auditor to the Company and review all material
correspondence between the independent auditor and management related to audit findings.
(m)Review and discuss with management and the independent auditor at least annually any significant
changes to the Company’s accounting and actuarial principles and practices suggested by the
independent auditor, internal audit personnel or management and assess whether the Company’s
accounting and actuarial practices are appropriate and within the boundaries of acceptable practice.
(n)Require management to implement and maintain adequate procedures for the review of the
Company’s public disclosure of financial information (other than the financial statements, MD&A and
annual and interim earnings press releases, which are reviewed in accordance with s. 4.2(a))
extracted or derived from the Company's financial statements and periodically assess the adequacy
of such procedures.
(o)Discuss with management the types of financial information and presentations to be made to rating
agencies and analysts, including relating to earnings guidance.
(p)Review and discuss with management and the independent auditor at least annually the effect of
regulatory and accounting initiatives as well as off-balance-sheet structures on the Company’s
financial statements.
(q)Discuss with the independent auditor matters required to be discussed by Public Company
Accounting Oversight Board on Auditing Standards No. 1300 relating to the conduct of the audit,
including any difficulties encountered in the course of the audit work, any restrictions on the scope of
activities or access to requested information and any significant disagreements with management.
(r)Review and discuss with the Chief Executive Officer and the Chief Financial Officer the procedures
undertaken in connection with the Chief Executive Officer and Chief Financial Officer certifications for
the annual and interim filings with applicable securities regulatory authorities, including disclosure
made by the Chief Executive Officer and Chief Financial Officer about:
(i)any significant deficiencies in the design or operation of internal controls which could
adversely affect the Company’s ability to record, process, summarize and report financial
data or any material weaknesses in the internal controls; and
(ii)any fraud involving management or other employees who have a significant role in the
Company’s internal controls.
(s)Meet with the Chief Actuary of the Company at least annually to receive and review reports, opinions
and recommendations prepared by the Chief Actuary in accordance with the Act, including the parts
of the annual financial statement and the annual return filed under s. 665 of the Act, prepared by the
Chief Actuary, and such other matters as the Committee may direct, including the report on the
Financial Condition Testing, which is also reviewed by the Risk Committee.
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(t)Receive reports from the Chief Actuary regarding material capital model modifications and new
capital model applications.
(u)Discuss with the Company’s General Counsel at least annually any legal matters that may have a
material impact on the financial statements, operations, assets or compliance policies and any
material reports or inquiries received by the Company or any of its subsidiaries from regulators or
governmental agencies.
(v)Meet with the Chief Audit Executive and with management to discuss the effectiveness of the internal
control procedure established pursuant to s. 4.2(e).
(w)Receive reports that highlight key areas of disclosure judgement considered by the Executive
Disclosure Committee.
4.3Oversight of the Finance Function
(a)At least annually review and approve the mandate of the Chief Financial Officer and the Finance
function.
(b)At least annually, review and approve the budget, structure, skills and resources of the Finance
function.
(c)At least annually, review the performance evaluation of the Chief Financial Officer, with the input of
the Management Resources and Compensation Committee, and assess the effectiveness of the
Chief Financial Officer and the Finance function.
(d)Recommend to the Board of Directors for approval the appointment and, when considered
appropriate, the dismissal of the Chief Financial Officer, who shall have direct access to the
Committee.
(e)Review the results of periodic independent reviews of the Finance function.
4.4Oversight of the Actuarial Function
(a)At least annually, review and approve the mandate for the Chief Actuary and the Actuarial function.
(b)At least annually, review and approve the budget, structure, skills and resources of the Actuarial
function.
(c)At least annually, review the performance evaluation of the Chief Actuary, with the input of the
Management Resources and Compensation Committee, and assess the effectiveness of the Chief
Actuary and the Actuarial function.
(d)Recommend to the Board of Directors for approval the appointment and, when considered
appropriate, the dismissal of the Chief Actuary, who shall have direct access to the Committee.
(e)Review the results of periodic independent reviews of the Actuarial function.
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4.5Oversight of the Internal Audit Function
(a)At least annually, review and approve the Internal Audit Charter, which includes the mandate of the
Chief Audit Executive and the Internal Audit function and the scope and types of internal audit
services.
(b)At least annually, review and approve the budget, structure, skills, resources, independence and
qualifications of the Internal Audit function.
(c)At least annually, review and approve the audit plan of the Internal Audit function (including any
significant changes to the audit plan) and, as part of this review, satisfy itself that the audit plan is
risk-based and addresses all the relevant activities over a measurable cycle.
(d)Review the periodic reports of the internal audit department on internal audit activities, including audit
issues, recommendations and progress in meeting the annual audit plan (including the impact of any
access, authority, scope or resource limitations).
(e)Determine the qualifications and competencies the Company expects in a Chief Audit Executive. At
least annually, review the performance and compensation of the Chief Audit Executive, with the input
of the Management Resources and Compensation Committee.
(f)Recommend to the Board of Directors for approval the appointment and, when considered
appropriate, the dismissal of the Chief Audit Executive, who shall have unrestricted and direct access
to the Committee, including private meetings without Executive Leadership Team present.
(g)Ensure that a Quality Assurance and Improvement Program (QAIP), including both internal and
external assessments, has been established. Periodically review the Internal Audit Strategy and
approve the performance objectives for the Internal Audit function at least annually.
(h)At least annually, assess the effectiveness and efficiency of the Internal Audit function. Review the
QAIP results, including Internal Audit function's conformance with the Global Internal Audit
Standards, achievement of performance objectives, alignment to the expectations of the Internal
Audit function with OSFI's Supervisory Framework, and action plans to address any deficiencies and
opportunities for improvement, if applicable.
(i)Review and approve the Chief Audit Executive's External Quality Assessment (EQA) plan (at least
once every 5 years) ensuring satisfaction with the scope, frequency, competency and independence
of the external assessor or assessment team. Additionally, approve the action plans, including
timelines to address any identified deficiencies or opportunities for improvement, if applicable, and
monitor progress.
4.6Risk Management Oversight
(a)Review reports from the Risk Committee respecting the Company’s processes for assessing and
managing risk.
4.7Oversight of Regulatory Compliance and Complaint Handling
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(a)Establish procedures for the receipt, retention and treatment of reports received by the Company
regarding accounting, internal accounting controls or auditing matters, and the confidential,
anonymous submission by employees of concerns regarding questionable accounting or auditing
matters.
(b)Discuss with management and the independent auditor at least annually any correspondence with
regulators or governmental agencies and any published reports which raise material issues regarding
the Company’s financial statements or accounting.
(c)Review at least annually with the Global Chief Compliance Officer, covering the function customarily
associated with the Chief Compliance Officer role for the Company (the "Global Chief Compliance
Officer"), the Company’s compliance with applicable laws and regulations, and correspondence from
regulators.
4.8Oversight of the Global Compliance Function
(a)At least annually, review and approve the mandate for the Global Chief Compliance Officer and
the Global Compliance function.
(b)At least annually, review and approve the budget, structure, skills and resources of the Global
Compliance function.
(c)At least annually, review the performance evaluation of the Global Chief Compliance Officer, with
the input of the Management Resources and Compensation Committee, and assess the
effectiveness of the Global Chief Compliance Officer and the Global Compliance function.
(d)Recommend to the Board of Directors for approval, the appointment and, when considered
appropriate, the dismissal of the Global Chief Compliance Officer, who shall have direct access to
the Committee.
(e)Review the results of periodic independent reviews of the Global Compliance function.
4.9Oversight of the Anti-Money Laundering and Anti-Terrorist Financing Program
(a)Review the Company’s Anti-Money Laundering ("AML") and Anti-Terrorist Financing ("ATF")
Policy.
(b)Meet with the Chief Anti-Money Laundering Officer as necessary to review the AML/ATF
Program.
(c)The Committee shall meet with the Chief Audit Executive as necessary to review results of testing
of the effectiveness of the AML/ATF Program.
4.10Review of Ethical Standards
(a)Annual review of the Company’s Code of Business Conduct and Ethics.
(b)Establish procedures to receive and process any request from executive officer(s) and Director(s)
for waiver of the Company’s Code of Business Conduct and Ethics.
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(c)Grant any waiver of the Company’s Code of Business Conduct and Ethics to executive officer(s)
and Director(s) as the Committee may in its sole discretion deem appropriate and arrange for any
such waiver to be promptly disclosed to the shareholders in accordance with applicable laws or
the rules of applicable securities regulatory authorities.
(d)Annual review and assessment of procedures established by the Board of Directors to resolve
conflicts of interest, including techniques for identification of potential conflict situations.
(e)Review and assessment of procedures established by the Board of Directors for restricting the
use of confidential information.
4.11Self Dealing and Disclosure Requirements
(a)Require management to establish procedures for complying with Part XI (Self-Dealing) of the Act
(the “Related Party Standards”).
(b)Establish criteria for the determination of materiality of a transaction with a related party.
(c)Annual review of the Related Party Standards and their effectiveness in ensuring that the
Company is complying with Part XI of the Act and the Sarbanes-Oxley Act.
(d)Review the practices of the Company to ensure that any transactions with related parties of the
Company that may have a material effect on the stability or solvency of the Company are
identified.
(e)Ensure that, within 90 days after the end of each financial year of the Company, the Committee
will report to the Superintendent on its activities of the previous year respecting conduct review,
undertaken in carrying out its responsibilities under the Act (and, in particular, in respect of (a),
(c), and (d) above).
(f)Report to the Superintendent on its mandate respecting conduct review and responsibilities of the
Committee and the procedures referred to in (a) above.
(g)Review and assessment of the procedures established by the Board of Directors to disclose
information to customers of the Company under the Act, if applicable, and of the procedures for
dealing with complaints of customers of the Company to satisfy itself that the applicable
procedures are being followed.
4.12Proxy Circular
(a)Prepare a report on its activities on an annual basis to be included in the Proxy Circular, as may
be required by applicable laws or rules of applicable securities regulatory authorities.
4.13Duties and Responsibilities Delegated by the Board of Directors
(a)Exercise such other powers and perform such other duties and responsibilities as are incidental to
the purposes, duties and responsibilities specified herein and as may from time to time be
delegated to the Committee by the Board of Directors.
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5.Funding for the Independent Auditor and Retention of External Advisors
The Company shall provide for appropriate funding, as determined by the Committee, for payment of compensation
to the independent auditor for the purpose of issuing an audit report and to any advisors retained by the Committee.
The Committee shall have the authority to retain such external advisors as it may from time to time deem necessary
or advisable for its purposes and to set the terms of the retainer. The expenses related to any such engagement
shall also be funded by the Company.
Exhibit 99-4 - CEO Certification of Annual Filings Exhibit 99.4
Certification of Annual Filings
Manulife Financial Corporation
I, Phil Witherington, certify that:
1.I have reviewed this annual report on Form 40-F of Manulife Financial Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods
presented in this report;
4.The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the issuer, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to
be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
(c)Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(d)Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the
period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the
issuer’s internal control over financial reporting; and
5.The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons
performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and
report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in
the issuer’s internal control over financial reporting.
Date: February 11, 2026
/s/ Phil Witherington
Phil Witherington
President and Chief Executive Officer
Exhibit 99-5 - CFO Certification of Annual Filings Exhibit 99.5
Certification of Annual Filings
Manulife Financial Corporation
I, Colin Simpson, certify that:
1.I have reviewed this annual report on Form 40-F of Manulife Financial Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods
presented in this report;
4.The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the issuer, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to
be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
(c)Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(d)Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the
period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the
issuer’s internal control over financial reporting; and
5.The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons
performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and
report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in
the issuer’s internal control over financial reporting.
Date: February 11, 2026
/s/ Colin Simpson
Colin Simpson
Chief Financial Officer
Exhibit 99-6 - CEO SOX Certification Exhibit 99.6
CERTIFICATION
Pursuant to 18 United States Code s. 1350
As adopted pursuant to
Section 906 of the Sarbanes–Oxley Act of 2002
In connection with the Annual Report on Form 40-F of Manulife Financial Corporation (the “Company”) for the year
ended December 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the
undersigned officer of the Company certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that to his knowledge:
1.The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934,
as amended; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results
of operations of the Company.
Date:February 11, 2026
/s/ Phil Witherington
Name:Phil Witherington
Title:President and Chief Executive Officer
Exhibit 99-7 - CFO SOX Certification Exhibit 99.7
CERTIFICATION
Pursuant to 18 United States Code s. 1350
As adopted pursuant to
Section 906 of the Sarbanes–Oxley Act of 2002
In connection with the Annual Report on Form 40-F of Manulife Financial Corporation (the “Company”) for the year
ended December 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the
undersigned officer of the Company certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that to his knowledge:
1.The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934,
as amended; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results
of operations of the Company.
Date:February 11, 2026
/s/ Colin Simpson
Name:Colin Simpson
Title:Chief Financial Officer
Exhibit 99-8 - Consent of Independent Registered Public Accountant Exhibit 99.8
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the reference to our firm under the caption “Interests of Experts”, which appears in the Annual
Information Form of Manulife Financial Corporation (the Company) in Exhibit 99.3, and to the use in this Annual
Report on Form 40-F of our reports dated February 11, 2026, with respect to the consolidated statements of financial
position as at December 31, 2025 and December 31, 2024 and the consolidated statements of income, consolidated
statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of
cash flows for the years then ended, and the related notes, and the effectiveness of internal control over financial
reporting of the Company as of December 31, 2025, filed with the Securities and Exchange Commission.
We also consent to the incorporation by reference of our reports dated February 11, 2026 in the following
Registration Statements of the Company, filed with the Securities and Exchange Commission:
• Registration Statement (Form S-8 No. 333-12610) of Manulife Financial Corporation pertaining to the Manulife
Financial Corporation Stock Plan for Non-Employee Directors and Executive Stock Option Plan;
• Registration Statement (Form S-8 No. 333-13072) of Manulife Financial Corporation pertaining to the Manulife
Financial Corporation Global Share Ownership Plan;
• Registration Statement (Form S-8 No. 333-157326) of Manulife Financial Corporation pertaining to the Stock Plan
for Non-Employee Directors, Executive Stock Option Plan and Global Share Ownership Plan;
• Registration Statement (Form S-8 No. 333-114951) of Manulife Financial Corporation pertaining to the John
Hancock Financial Services, Inc. 1999 Long-Term Stock Incentive Plan, as amended and the John Hancock
Financial Services, Inc. Non-Employee Directors’ Long-Term Stock Incentive Plan;
• Registration Statement (Form S-8 No. 333-129430) of Manulife Financial Corporation pertaining to the Deferred
Compensation Plan for Certain Employees of John Hancock and the Deferred Compensation Plan of the John
Hancock Financial Network;
• Registration Statement (Form S-8 No. 333-211366) of Manulife Financial Corporation pertaining to the Deferred
Compensation Plan for Certain Employees of John Hancock and the Deferred Compensation Plan for the John
Hancock Financial Network;
• Registration Statement (Form S-8 No. 333-272672) of Manulife Financial Corporation pertaining to the Deferred
Compensation Plan for Certain Employees of John Hancock and the Deferred Compensation Plan for the John
Hancock Financial Network;
• Registration Statement (Form S-8 No. 333-277446) of Manulife Financial Corporation pertaining to the Stock Plan
for Non-Employee Directors, Executive Stock Option Plan and Global Share Ownership Plan;
• Registration Statement (Form F-10 No. 333-290499) of Manulife Financial Corporation pertaining to Manulife
Financial Corporation’s shelf prospectus offering Debt Securities, Preferred Shares, Common Shares, Subscription
Receipts, Warrants, Share Purchase Contracts and Units; and,
• Registration Statement (Form F-3D No. 333-159176) of Manulife Financial Corporation pertaining to the Manulife
Financial Corporation Dividend Reinvestment and Share Purchase Plan for U.S. Shareholder of Manulife Financial
Corporation (the “Company”).
/s/ Ernst & Young LLP
Toronto, Canada
February 11, 2026
Exhibit 99-9 - Consent of Appointed Actuary Exhibit 99.9
CONSENT OF APPOINTED ACTUARY
I hereby consent to the use and incorporation by reference in this Annual Report on
Form 40-F of Manulife Financial Corporation (the “Company”) for the year ended
December 31, 2025 of my Appointed Actuary’s Report to the Policyholders and
Shareholders dated February 11, 2026 (the “report”), relating to the valuation of the
policy liabilities of the Company for its Consolidated Statements of Financial Position as
at December 31, 2025 and 2024 and their change in the Consolidated Statements of
Income for the years then ended.
/s/ Stephanie Fadous
Stephanie Fadous
Chief Actuary
Fellow, Canadian Institute of Actuaries
Toronto, Canada
Date: February 11, 2026