news release q1 2023

News

Release

C$ unless otherwise stated	TSX/NYSE/PSE: MFC	SEHK: 945
May 10, 2023

This earnings news release for Manulife Financial Corporation ("Manulife" or the "Company") should be read in conjunction with the Company's First Quarter 2023 Report to Shareholders, including our unaudited interim Consolidated Financial Statements for the three months ended March 31, 2023, prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"), which are available on our website at www.manulife.com/en/investors/results-and-reports.The Company's Management's Discussion & Analysis ("MD&A") and additional information relating to the Company is available on the SEDAR website at http://www.sedar.comand on the U.S. Securities and Exchange Commission's ("SEC") website at http://www.sec.gov.

Manulife adopted IFRS 17 "Insurance Contracts" and IFRS 9 "Financial Instruments" effective for years beginning on January 1, 2023, to be applied retrospectively. Our quarterly 2022 results have been restated in accordance with IFRS 17 and IFRS 9.

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

In addition, our restated 2022 results are also not directly comparable to 2023 results because IFRS 9 hedge accounting and expected credit loss ("ECL") principles are applied prospectively effective January 1, 2023. Accordingly, we have also presented comparative quarterly 2022 results as if IFRS had allowed such principles to be implemented for 2022. Such results are denoted as being "transitional" throughout this news release and include the transitional net income attributed to shareholders for 2022. For a complete list of transitional financial measures, please see section A1 "Implementation of IFRS 17" of the First Quarter 2023 MD&A.

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

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

• Net income attributed to shareholders of $1.4 billion in 1Q23, up $0.1 billion compared with transitional net income attributed to shareholders1 for the first quarter of 2022 ("1Q22"), and up $2.6 billion compared with 1Q22 net income attributed to shareholders
• Core earnings1 of $1.5 billion in 1Q23, up 6% on a constant exchange rate basis2 from 1Q22
• Core EPS3 of $0.79 in 1Q23, up 11%2 compared with 1Q22, and diluted earnings per common share ("EPS") of $0.73 in 1Q23, up 4% compared with transitional EPS3 of $0.66 in 1Q22, and up $1.39 compared with EPS of -$0.66 in 1Q22
• Core ROE3 of 14.8% and ROE of 13.6% in 1Q23
• APE sales4 of $1.6 billion in 1Q23, down 3%4 from 1Q22
• NBV4 of $509 million in 1Q23, down 5% from 1Q22
• New business contractual service margin ("CSM")5 of $442 million in 1Q23, down 13%2 from 1Q22
• CSM balance net of NCI of $17.5 billion and post-tax CSM net of NCI1 of $14.9 billion as at March 31, 2023

1. Transitional net income attributed to shareholders, core earnings and post-tax CSM net of NCI ("post-tax CSM") are non-GAAP financial measures. For more information on non-GAAP and other financial measures, see "Non-GAAP and other financial measures" below and in our 1Q23 MD&A.
2. Percentage growth / declines in core earnings, core EPS and new business CSM net of NCI stated on a constant exchange rate basis are non-GAAP ratios.
3. Diluted core earnings per common share ("Core EPS"), transitional EPS and core retuon common shareholders' equity ("Core ROE") are non-GAAP ratios.
4. For more information on new business value ("NBV") and annualized premium equivalent ("APE") sales, see "Non-GAAP and other financial measures" below. In this news release, percentage growth / declines in NBV and APE sales are stated on a constant exchange rate basis.
5. New business contractual service margin is net of non-controlling interests ("NCI").

• Global Wealth and Asset Management ("Global WAM") net inflows1 of $4.4 billion in 1Q23, compared with net inflows of $6.8 billion in 1Q22
• LICAT ratio2 of 138%
• Purchased for cancellation 0.8% of common shares outstanding, or approximately 15.6 million common shares, for $0.4 billion in 1Q233
• Adjusted book value per common share4 of $30.04 as of March 31, 2023, an increase of $2.51 from March 31, 2022, and book value per common share of $22.01 as at March 31, 2023, an increase of $1.90 from March 31, 2022
• Embedded value1 of $63.9 billion or $34.29 per common share, as of December 31, 2022, compared with $64.8 billion or $33.35 per common share as of December 31, 2021

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

"As we report our first quarter of financial results under IFRS 17 and IFRS 9, I am pleased to confirm that the transition impacts are consistent with the guidance we provided previously," said Phil Witherington, Chief Financial Officer. "Adjusted book value per common share, which reflects the intrinsic value of our insurance businesses, demonstrated stable growth throughout 2022 and increased 9% in 1Q23 compared with the first quarter of 2022. Our capital position remains strong with a LICAT ratio of 138%. We continue to execute on our share buyback program and repurchased 0.8% of our outstanding common shares for $0.4 billion in 1Q23. An important metric under IFRS 17 is the contractual service margin, or CSM. For the first quarter we reported $14.9 billion of post-tax CSM, reflecting $0.4 billion of CSM generated from new business in the quarter. While the pace of growth was impacted by lower sales volumes in an operating environment that continued to be challenging, we continue to view our target of growing CSM by eight to ten percent per year to be appropriate.5 I am optimistic about the momentum we are seeing in our Asia business, and am confident that we are well positioned for the future as insurance markets across Asia continue to grow."

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

BUSINESS HIGHLIGHTS:

In Asia, we continued to leverage our health and wellness platform, ManulifeMOVE, to drive incremental sales, with over 50% of our in-force eligible customers having activated the ManulifeMOVE app, of which 38% have made a subsequent insurance purchase. In Canada, we partnered with Cleveland Clinic Canada using their global healthcare expertise to enhance product offerings and services to our five million group benefits customers by providing industry research, thought leadership, and education materials. In the U.S., we continued to innovate our customer wellness offerings by expanding access to GRAIL's Galleri® multi-cancer early detection test to all eligible life insurance customers who have registered with the John Hancock Vitality PLUS program. This

1. For more information on net flows and embedded value, see "Non-GAAP and other financial measures" below.
2. Life Insurance Capital Adequacy Test ("LICAT") ratio of The Manufacturers Life Insurance Company ("MLI"). LICAT ratio is disclosed under the Office of the Superintendent of Financial Institutions Canada's ("OSFI's") Life Insurance Capital Adequacy Test Public Disclosure Requirements guideline.
3. 8.7 million shares were repurchased under the current Normal Course Issuer Bid ("NCIB") commenced on February 23, 2023, and 6.9 million shares were repurchased under the previous NCIB that expired on February 2, 2023.
4. Adjusted book value per common share is a non-GAAP ratio.
5. See "Caution regarding forward-looking statements" below.

expanded access comes after a successful initial pilot when we became the first life insurance carrier to make the test available in September 2022. In Global WAM, our Hong Kong retirement business won a total of 19 awards in "The 2023 MPF Awards" organized by MPF Ratings, including the "MPF Gold Rating", "Best Employer Experience", "Environmentally Responsible", "People's Choice" and 15 Consistent Performer awards. Among these, we have been voted the "People's Choice" for five consecutive years.

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

FINANCIAL HIGHLIGHTS:

1. 2022 results for transitional net income attributed to shareholders, transitional EPS and transitional ROE, a non-GAAP ratio, are adjusted to include IFRS 9 hedge accounting and expected credit loss principles ("IFRS 9 transitional impacts"). See 1Q23 MD&A for more information. For 2023, there are no IFRS 9 transitional adjustments as ECL and hedge accounting is effective January 1, 2023 and therefore the impact is included in net income attributed to shareholders.
2. This item is a non-GAAP financial measure. See "Non-GAAP and other financial measures" below and in our 1Q23 MD&A for additional information.
3. This item is a non-GAAP ratio.
4. For more information on gross flows, see "Non-GAAP and other financial measures" below and in our 1Q23 MD&A.

PROFITABILITY:

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

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

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

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

BUSINESS PERFORMANCE:

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

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

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

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

1. Variable fee approach ("VFA").
2. Asia Other excludes Hong Kong and Japan.
3. Effective January 1, 2023, international high net worth business was reclassified from the U.S. segment to the Asia segment. Prior period comparative information has been restated to reflect the change in segment reporting.