UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

               {X} ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                            FOR THE FISCAL YEAR ENDED
                                DECEMBER 31, 2001
                           COMMISSION FILE NO. 1-15607

                      JOHN HANCOCK FINANCIAL SERVICES, INC.
             (Exact name of registrant as specified in its charter)

              DELAWARE                                           04-3483032
  (State or other jurisdiction of                             (I.R.S. Employer
   incorporation or organization)                            Identification No.)

                               John Hancock Place
                           Boston, Massachusetts 02117
                                 (617) 572-6000
               (Address, including zip code, and telephone number,
         including area code, of Registrant's principal executive offices)

<TABLE>
<CAPTION>
           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

<S>                                                 <C>
          Title of each class                           Name of each exchange on which registered
Common Stock, $0.01 par value                           New York Stock Exchange, Inc.
-------------------------------------------------   ---------------------------------------------
Series A Junior Preferred Stock purchase Rights         New York Stock Exchange, Inc.
-------------------------------------------------   ---------------------------------------------
</TABLE>

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                                     NONE
--------------------------------------------------------------------------------
                                (Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the December 31, 2001 JHFS
Form 10-K or any amendment to the December 31, 2001 JHFS Form 10-K [X].

As of February 28, 2002, there were outstanding 297 ,340,240 shares of Common
Stock, $0.01 par value per share of the registrant. The aggregate market value
of the shares of the registrant's common equity held by non-affiliates of the
registrant was $11,420,838,618 based on the closing price of $38.41 per share of
Common Stock on the New York Stock Exchange on February 28, 2002.

<TABLE>
<CAPTION>
                                   Documents Incorporated by Reference
                                   -----------------------------------

<S>                                                        <C>
Document                                                   Part of the Form 10-K into which incorporated
----------------------------------------------------------------------------------------------------------------------
Portions of John Hancock's 2001 Annual Report              Parts II and IV
----------------------------------------------------------------------------------------------------------------------
Portions of John Hancock's definitive Proxy                Part III
Statement to be filed on or about April 1, 2002,
for the Annual Meeting of Shareholders scheduled
to be held May 13, 2002
----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

<TABLE>
<CAPTION>
CONTENTS

<S>                                                                                                          <C>
   FORWARD-LOOKING STATEMENTS..........................................................................       3

PART I.................................................................................................       4

   ITEM 1. BUSINESS OF JOHN HANCOCK FINANCIAL SERVICES, INC............................................       4
   ITEM 1A. EXECUTIVE OFFICERS OF THE REGISTRANT.......................................................      32
   ITEM 2. PROPERTIES..................................................................................      33
   ITEM 3. LEGAL PROCEEDINGS...........................................................................      33
   ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.........................................      34

PART II................................................................................................      35

   ITEM 5. MARKET FOR JOHN HANCOCK FINANCIAL SERVICES, INC. COMMON STOCK AND RELATED
           SHAREHOLDER MATTERS.........................................................................      35
   ITEM 6. SELECTED FINANCIAL DATA.....................................................................      36
   ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.......      38
   ITEM 7A. QUANTITATIVE AND QUALITATIVE INFORMATION ABOUT MARKET RISK.................................      38
   ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.................................................      38
   ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE........      38

PART III...............................................................................................      39

   ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF JOHN HANCOCK FINANCIAL SERVICES, INC...................      39
   ITEM 11. EXECUTIVE COMPENSATION.....................................................................      39
   ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.............................      39
   ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............................................      39

PART IV................................................................................................      40

   ITEM 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K..........................      40
</TABLE>
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

   FORWARD-LOOKING STATEMENTS

      The statements, analyses, and other information contained herein relating
to trends in John Hancock Financial Services, Inc.'s, (the Company's) operations
and financial results, the markets for the Company's products, the future
development of the Company's business, and the contingencies and uncertainties
to which the Company may be subject, as well as other statements including words
such as "anticipate," "believe," "plan," "estimate," "expect," "intend," "will,"
"should," "may," and other similar expressions, are "forward-looking statements"
under the Private Securities Litigation Reform Act of 1995. Such statements are
made based upon management's current expectations and beliefs concerning future
events and their potential effects on the Company. Future events and their
effects on the Company may not be those anticipated by management. The Company's
actual results may differ materially from the results anticipated in these
forward-looking statements.

      These forward-looking statements are subject to risks and uncertainties
including, but not limited to, the risks that (1) a significant downgrade in our
ratings for claims-paying ability and financial strength may lead to policy and
contract withdrawals and materially harm our ability to market our products; (2)
changes to or elimination of Federal tax benefits for our products and other
changes in laws and regulations (including those relating to the Federal Estate
Tax Laws) which the Company expects would adversely affect sales of our
insurance and investment advisory products; (3) as a holding company, we depend
on dividends from our subsidiaries, Massachusetts insurance law, and similar
Canadian laws, may restrict the ability of John Hancock Life Insurance Company
and Maritime Life Assurance Company to pay dividends to us; (4) we face
increasing competition in our retail businesses from mutual fund companies,
banks and investment management firms as well as from other insurance companies;
(5) a decline or increased volatility in the securities markets, and other
economic factors, may adversely affect our business, particularly our variable
life insurance, mutual fund, variable annuity and investment business; (6) due
to acts of terrorism or other hostilities, there could be business disruption,
economic contraction, increased mortality, morbidity and liability risks,
generally, or investment losses that could adversely affect our business; (7)
our life insurance sales are highly dependent on a third party distribution
relationship; (8) customers may not be responsive to new or existing products or
distribution channels, (9) interest rate volatility may adversely affect our
profitability; (10) our net income and revenues will suffer if customers
surrender annuities and variable and universal life insurance policies or redeem
shares of our open-end mutual funds; (11) the independent directors of our
variable series trusts and of our mutual funds could reduce the compensation
paid to us or could terminate our contracts to manage the funds; (12) under our
Plan of Reorganization, we were required to establish the closed block, a
special arrangement for the benefit of a group of our policyholders. We may have
to fund deficiencies in our closed block, and any overfunding of the closed
block will benefit only the holders of policies included in the closed block,
not our shareholders; (13) there are a number of provisions in our Plan of
Reorganization, our Restated Certificate of Incorporation and by-laws, laws
applicable to us, agreements that we have entered into with our senior
management, and our shareholder rights plan, that will prevent or discourage
takeovers and business combinations that our shareholders might otherwise
consider to be in their best interests; (14) we will face losses if the claims
on our insurance products, or reductions in rates of mortality on our annuity
products, are greater than we projected; (15) we face investment and credit
losses relating to our investment portfolio (16) we may experience volatility in
net income due to changes in standards for accounting for derivatives and other
changes; (17) our United States insurance companies are subject to risk-based
capital requirements and possible guaranty fund assessments; (18) the National
Association of Insurance Commissioners' codification of statutory accounting
practices will adversely affect the statutory surplus of John Hancock Life
Insurance Company; (19) we may be unable to retain personnel who are key to our
business; (20) we may incur losses from assumed reinsurance business in respect
of personal accident insurance and the occupational accident component of
workers compensation insurance; (21) litigation and regulatory proceedings may
result in financial losses, harm our reputation and divert management resources,
and (22) we face unforeseen liabilities arising from our acquisitions and
dispositions of businesses.

      Readers are also directed to other risks and uncertainties discussed, as
well as to further discussion of the risks described above, in other documents
filed by the Company with the United States Securities and Exchange Commission.
The Company specifically disclaims any obligation to update or revise any
forward-looking information, whether as a result of new information, future
developments, or otherwise.


                                        3
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.
PART I

ITEM 1. Business of John Hancock Financial Services, Inc.

      John Hancock Financial Services, Inc. (John Hancock, JHFS or the Company)
is one of the nation's leading financial services companies, providing a broad
array of insurance and investment products and services to retail and
institutional customers, primarily in North America. Our principal executive
offices are located at John Hancock Place, Boston, Massachusetts 02117.

      The Board of Directors of John Hancock Mutual Life Insurance Company,
founded in 1862, unanimously adopted a Plan of Reorganization effective February
1, 2000 and John Hancock Mutual Life Insurance Company converted from a mutual
life insurance company to a stock life insurance company, John Hancock Life
Insurance Company (the Life Company), and became a wholly-owned subsidiary of
John Hancock Financial Services, Inc., a holding company. Also on February 1,
2000, John Hancock Financial Services, Inc. completed an initial public offering
of 102,000,000 shares of its common stock, par value $0.01 per share.

      We operate our business in five segments. Two segments primarily serve
retail customers, and two segments serve primarily institutional customers. Our
fifth segment is the Corporate and Other Segment.

      Our retail segments are the Protection Segment and the Asset Gathering
Segment. The Protection Segment offers variable life, universal life, whole
life, term life, and individual and group long-term care insurance products. The
Asset Gathering Segment offers variable and fixed, deferred and immediate
annuities, and mutual funds. Our retail business also includes our retail
distribution and customer service operations.

      According to the latest publicly available data, with respect to the
United States, the Company is the eighth largest writer of individual life
insurance based on new and recurring individual life sales, the third largest
writer of individual variable universal life insurance and the tenth largest
writer of individual universal life insurance. We believe we are the second
largest writer of individual long-term care insurance and the top provider of
group long-term care insurance based on total premiums in force. As of September
30, 2001, we were the 23rd largest writer of individual annuity contracts, based
on LIMRA sales data. Our mutual fund subsidiary ranked 17th among
non-proprietary broker-sold U.S. asset managers in terms of total long-term,
open-end assets under management as of December 31, 2001.

      Our institutional segments are the Guaranteed and Structured Financial
Products Segment and the Investment Management Segment. The Guaranteed and
Structured Financial Products Segment offers a wide variety of spread-based and
fee-based investment products and services. The spread-based products provide
the customer with some form of guaranteed return. The Investment Management
Segment consists of investment management services and products marketed to
institutions. This business is primarily fee-based and investment management
products generally do not offer guarantees.

      As of December 31, 2001 and 2000, respectively, our total assets under
management were $124.2 billion and $125.2 billion, which includes $29.3 billion
and $31.7 billion of assets invested in the Company's retail mutual funds. Total
shareholders' equity, excluding net unrealized capital gains on securities, was
$5.5 billion and $5.6 billion as of December 31, 2001 and 2000, respectively. In
addition, John Hancock generated $9.1 billion and $8.9 billion in revenues and
$618.7 million and $818.7 million in net income in 2001 and 2000, respectively.
The Company's return on shareholders' equity, excluding net unrealized capital
gains on securities, was 11.2% and 14.7% at December 31, 2001 and 2000,
respectively.


                                       4
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

Protection Segment

Overview

      Through our Protection Segment, we offer a variety of non-traditional and
traditional life insurance products and individual and group long-term care
insurance products. Our non-traditional life insurance products include variable
life and universal life insurance. Our traditional life insurance products
include whole life insurance and term life insurance.

      The Protection Segment has traditionally been our largest business
segment, contributing 36.2%, 35.6% and 38.2% of consolidated operating revenues
and 37.1%, 33.7% and 31.1% of consolidated segment after-tax operating income in
the years ended December 31, 2001, 2000 and 1999, respectively. The Protection
Segment generated revenues of $3,385.1 million, $3,148.2 million and $2,903.0
million and after-tax operating income of $298.7 million, $248.6 million and
$190.6 million in 2001, 2000, and 1999, respectively. The Protection Segment has
achieved the following financial results for the periods indicated:

<TABLE>
<CAPTION>
                                                                    As of or for the Years Ended December 31
                                                                     2001             2000              1999
                                                              ------------------------------------------------------
                                                                                  (in millions)

<S>                                                                <C>              <C>               <C>
Sales (new premiums and deposits):
Non-traditional life--excluding COLI and BOLI (1)
     Variable life........................................           $ 124.5          $ 152.5           $ 130.6
     Universal life.......................................              30.4             18.4              16.4
Traditional life--excluding COLI (1)......................
     Whole life...........................................               6.1              8.4              18.9
     Term life............................................              33.0             36.3              24.0
COLI and BOLI
     Variable life--COLI..................................              90.5             38.6              23.6
     Universal life--COLI.................................              22.1             14.8               3.3
     Whole life--COLI.....................................                --               --                --
     Universal life--BOLI.................................              12.2              0.8                --
Individual long-term care (2).............................             102.2            100.1              72.2
Group long-term care (3)..................................              16.8             11.5              13.7
                                                              ------------------------------------------------------
         Total............................................           $ 437.8          $ 381.4           $ 302.7
                                                              ======================================================
Assets:
Non-traditional life......................................         $11,163.2        $10,433.5         $10,195.5
Traditional life (4)......................................          14,190.4         13,903.3          13,716.7
Individual long-term care.................................           2,519.0          1,923.7           1,008.5
Group long-term care......................................             580.8            480.6             466.0
Other.....................................................              51.6             46.9              36.5
Intra-segment eliminations................................                --               --             (44.8)
                                                              ------------------------------------------------------
         Total............................................         $28,505.0        $26,788.0         $25,378.4
                                                              ======================================================
</TABLE>

(1)  Individual life insurance sales exclude (a) excess premiums, which are
     premiums that build cash value but do not purchase face amounts of
     insurance on variable life and universal life insurance products and (b)
     premiums on corporate owned life insurance (COLI) and bank owned life
     insurance (BOLI) policies covering more than 200 lives. Sales include 10%
     of single premium payments on universal and whole life insurance products.
(2)  Individual long-term care sales were revised for private label sales,
     including an additional $2.3 million and an additional $1.3 million in the
     years ended 2000 and 1999, respectively and Fortis Reinsurance premiums,
     including $23.9 million and $--, respectively, for the years ended 2000 and
     1999.
(3)  Group long-term care sales were revised to include new enrollments and
     coverage additions of $5.4 million and $7.4 million in 2000 and 1999,
     respectively.
(4)  The 2000 balance was adjusted to reflect the adoption of the provisions of
     Statement of Position (SOP) 00-3, "Accounting by Insurance Enterprises for
     Demutualization and Formations of Mutual Insurance Holding Companies and
     Certain Long-Duration Participating Contracts," as outlined in Note 1 to
     the consolidated financial statements. The result was $41.6 million
     additional assets for the traditional life product line as of December 31,
     2000.


                                        5
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

Products and Markets

      The trend in the individual life industry remains focused on the variable
life insurance products and away from traditional whole life products. This is
reflected in our life insurance sales growth, which has come principally from
sales of variable, universal and term life insurance, while sales of traditional
whole life insurance have declined. By diversifying from traditional whole life
insurance products to term life insurance products and investment-oriented
savings products demanded by today's consumer, we have generated strong business
and earnings growth. The Company's sales of individual life insurance in 2001
consisted of 68% variable life, 20% universal life and 12% traditional life. The
Company's sales of individual life insurance (excluding COLI and BOLI) in 2001
consisted of 64% variable life, 16% universal life and 20% traditional life.
Term life sales represented 84% of traditional life product sales for the year
ended December 31, 2001.

Individual Life Insurance. The attractive demographics of an aging population is
a key growth driver for our industry. The boomer generation is healthier,
wealthier, and living longer. They need products to manage wealth, provide a
stream of income, provide protection and manage longevity risk. They have a
complex set of needs that plays right into our portfolio of products.

o     Variable Life Insurance. Our primary variable life insurance product is
      variable universal life insurance. This product provides life insurance
      coverage and an investment return linked to an underlying portfolio of
      investments chosen by the policyholder. Our variable life insurance
      product portfolio includes joint (second-to-die) and corporate owned life
      insurance products, as well as single life policies. Second-to-die
      products are typically used for estate planning purposes and insure two
      lives rather than one, with the policy proceeds paid after the death of
      both insured individuals. Corporate owned life insurance products are sold
      to corporations for a variety of reasons, including, to fund special
      deferred compensation plans and benefit programs for key employees. We
      were among the first insurance companies to offer variable life insurance
      products, beginning in 1980, and we believe the length of our experience
      in this market is a competitive strength. In 2001, we introduced an
      innovative product feature that combined a variable life insurance policy
      with a long-term care feature.

o     Universal Life Insurance. Our universal life insurance products provide
      life insurance coverage and cash value that increases based on a credited
      interest rate which is periodically reset. These policies generally permit
      policyholders to use any increase in cash value to vary the amount of
      insurance coverage and the timing and amount of premium payments. Our
      universal life insurance product portfolio also includes corporate owned
      life insurance and bank owned life insurance products which are sold to
      banks to fund post-retirement employee benefit plan liabilities. We
      participate in the bank owned life insurance market selectively, as
      special sales opportunities arise.

o     Traditional Life Insurance Products. Our traditional life insurance
      products include single life and joint life (second-to-die) whole life
      insurance, and term life insurance. Participating whole life insurance
      combines a death benefit with a cash value that generally increases
      gradually in amount over a period of years, and typically pays a policy
      dividend. Term life insurance provides only a death benefit, does not
      build up cash value, and does not pay a dividend.

o     Long-Term Care Insurance. We entered the individual long-term care
      insurance (LTC) market in 1987 and the group long-term care insurance
      market in 1988 and acquired the long-term care insurance business of
      Fortis, Inc. (Fortis) in March 2000. Our long-term care insurance products
      provide protection against the large and escalating costs of home health
      care, assisted living, and nursing home care. With the aging population,
      the expected inability of government entitlement programs to meet
      retirement long-term care needs, and a growing public awareness of
      long-term care insurance, we believe there is excellent growth potential
      for the long-term care insurance market. Our long-term care insurance
      products are reimbursement products, which provide benefits only for
      documented nursing home, assisted living or home or health care expenses.
      These products are sold on a guaranteed renewable basis, meaning that we
      are required to renew the policies each year as long as the premium is
      paid. However, this also gives us the ability to reset the price of the
      product prospectively, if needed. Our claims history on these products has
      been favorable relative to our pricing assumptions.


                                        6
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

o     Individual Long-Term Care Insurance. Our individual long-term care
      insurance products are sold to pre-retired and retired customers. The
      insured typically pays the premium for this product. Throughout 2000 and
      2001, we introduced enhanced features in our product. In 2001, we
      continued to roll out a co-branded Fortis/John Hancock product, introduced
      a process to use immediate annuity income to pay long-term care premiums,
      re-joined the California Partnership program and introduced a new
      portfolio in that state.

o     Group Long-Term Care Insurance. Our group long-term care insurance
      products are sold through employer-sponsored plans to employees and
      retirees, and their eligible relatives. The insured, not the employer,
      generally pays the premium for this insurance although there is a growing
      trend among employers to purchase a "core" plan on behalf of their
      employees, with the option for those employees to "buy up" for additional
      amounts of coverage. Following selection of one of our plans by an
      employer, we market our products directly to the employee base. The
      principal market for our group long-term care insurance products is
      companies with over 4,000 employees and retirees. We also pursue smaller
      employers with 1,000 or more employees and retirees in selected
      industries. In 2001, the Company was selected in partnership with
      Metropolitan Life Insurance Company, (Met Life), as the providers to the
      Federal Long-Term Care Insurance Program, which is expected to be the
      largest LTC program in the country. The government's decision to provide
      access to LTC insurance is expected to increase awareness of the product
      among consumers and employers. The Company and Met Life, estimate that a
      total of about 300,000 individuals will enroll in the program in its first
      full year of operation, planned to begin later in 2002. Because of the
      start-up period, the Company does not expect the program to have an impact
      on earnings in 2002.

      The following table demonstrates total statutory premiums and deposits,
which is the premium we report on the annual statements we file with insurance
regulators, life insurance in force and GAAP reserves for our individual life
insurance and long-term care products. In addition to premium from sales of new
life and long-term care policies, which we refer to as "sales," statutory
premiums and deposits includes revenues from renewals of policies, 10% of single
premium payments, and premiums from reinsurance assumed by us. We deduct from
this measure the premiums that we cede to our reinsurers. Statutory premiums and
deposits differ from premiums based on accounting principles generally accepted
in the United States (or GAAP) because GAAP requires that premiums on variable
and universal life insurance products be accounted for using deposit accounting.
Deposit accounting excludes from revenue, the premiums received on these
products, and generally shows the fees earned from the products as revenues.

<TABLE>
<CAPTION>
                                       Selected Financial Data
                            Individual Life and Long-Term Care Insurance

                                                         As of or for the Years Ended December 31
                                                     2001                   2000               1999
                                                  ------------------------------------------------------
                                                                        (in millions)
<S>                                               <C>                    <C>                <C>
Total statutory premiums and deposits:
Variable life..................................   $    948.5             $    922.0         $    829.8
Universal life (1).............................        456.1                  173.5              117.9
Traditional life...............................        997.3                  965.5            1,043.6
Individual long-term care......................        562.6                  455.3              258.6
Group long-term care...........................         98.9                   89.8               78.4
                                                 ------------------------------------------------------
   Total.......................................   $  3,063.4             $  2,606.1         $  2,328.3
                                                 ======================================================
Life insurance in force:
Variable life..................................   $ 58,104.4             $ 57,716.2         $ 56,691.1
Universal life.................................     10,604.5                9,085.6            8,967.2
Traditional life...............................     71,166.0               66,989.3           57,284.8
                                                 ------------------------------------------------------
   Total.......................................   $139,874.9             $133,791.1         $122,943.1
                                                 ======================================================
GAAP Reserves:
Variable life..................................   $  6,479.9             $  6,517.1         $  6,560.0
Universal life.................................      2,758.1                2,268.7            2,065.7
Traditional life (2)...........................     10,632.2               10,104.8            9,786.3
Individual long-term care......................      1,717.2                1,317.3              658.0
Group long-term care...........................        474.8                  403.4              334.3
                                                 ------------------------------------------------------
   Total.......................................   $ 22,062.2             $ 20,611.3         $ 19,404.3
                                                 ======================================================
</TABLE>


                                        7
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

(1)  Includes bank owned life insurance premiums of $200.0 million and $52.5
     million for the years ended December 31, 2001 and 2000. There were no bank
     owned life insurance premiums for the year ended December 31, 1999.

(2)   The 2000 balance was adjusted to reflect the adoption of the provisions of
      SOP 00-3, "Accounting by Insurance Enterprises for Demutualization and
      Formations of Mutual Insurance Holding Companies and Certain Long-Duration
      Participating Contracts" as outlined in Note 1 to the consolidated
      financial statements. The result was $74.2 million additional reserves for
      the traditional life product line as of December 31, 2000.

Distribution

Protection products are distributed through multiple distribution channels
including Signator, M Financial Group, Banks, the Internet, and through Group
and private label relationships. Our strategy is to provide competitive products
and outstanding service.

      Signator. Signator, created in 1999, is a separate distribution
subsidiary. Signator is comprised of our Signator General Agency (GA) which
includes our Career Agents and Signator GA Brokerage, Direct Brokerage and
Broker/Dealers.

      The Signator General Agency system includes approximately 1,700 sales
personnel. We have transitioned our Career Agents to financial advisors by
providing them with highly tailored financial planning tools and market support,
as well as an open architecture system which enables them to sell other
companies' products. This structure has enabled us to recruit, develop and
retain top producers.

      The biggest opportunity exists in the brokerage arena. More agencies are
developing dedicated brokerage structures as part of their overall business
model. We have made significant strides to expand into the direct brokerage
channel, as well as into the regional Broker/Dealer channel, traditionally an
asset-oriented channel that is moving into the protection arena.

      M Financial Group. M Financial Group is a national producer group founded
in 1978 comprised of approximately 105 life insurance producing firms with
approximately 425 individual producers operating exclusively in the upper end of
the wealth transfer and executive benefit markets. We believe the Life Company
has been either the first or second largest provider of life insurance products
to the M Financial Group in each of the past three years, although the member
firms also sell the products of other prominent U.S. life insurance companies.
For the year 2001, we believe we were the largest provider.

      We have jointly developed a proprietary life insurance product line with M
Financial Group to meet the distinct requirements of its producers. We also
offer four proprietary investment options of M Fund, Inc. on all variable life
insurance products sold by M Financial Group members, in addition to the
investment options supported by the variable series trust (VST). In 2000, we
became the first provider to roll out Magnastar, M Group's proprietary private
placement life insurance product, co-manufactured by M Life, John Hancock Life
Insurance Company and John Hancock Variable Life Insurance Company.

      In addition to these proprietary products, we provide a number of
exclusive services to M Financial Group members, including a deferred
compensation plan, dedicated sales, underwriting and services teams and
participation in special marketing events, as well as M Financial Group
sponsored systems and technology initiatives. In addition, M Life Insurance
Company shares the insurance risk, through reinsurance, on 50% of most of our
policies that its members sell. These products and services and this reinsurance
arrangement serve to align M Financial Group producers' incentives with ours.

      During 2000, the Life Company was the only provider to extend debt
financing for M Financial Holdings, Inc.'s purchase of one of its own COLI
firms, to assist it in the first step of its long-term aggregation process.

      The business generated by M Financial Group producers has experienced
lower termination or non-renewal (referred to in the industry as "lapse") and
mortality rates than the industry average.


                                        8
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

      e-Business & Retail Partnerships. This unit, launched in 1996, complements
our traditional sales efforts. Through this unit, we sell our products over the
Internet and on the telephone directly to consumers. Consumers can call a
toll-free number or go directly to our web site to get information, obtain a
quote or start an application.

      This channel offers customers term life insurance, variable life
insurance, long-term care insurance and variable annuities. Additionally, we
distribute these products through several online partners and key aggregators.
To support our efforts we have built a call center and case management unit and
developed a streamlined application, payment and issue process.

      Banks. We offer a full line of life and individual long-term care
insurance products through banks that have established an insurance sales force.
Sales of insurance products in this channel build on our well developed sales of
fixed and variable annuity and mutual fund product sales in the bank channel.

      Group sales force. Group long-term care insurance products are marketed by
a dedicated sales force located in major cities around the country. The sales
force works closely with consultants, brokers, and other intermediaries to
generate sales and grow existing accounts.

      Private label arrangements. In 1999, we launched an individual long-term
care product which is being sold through another insurer under a private label
arrangement. We continue to explore private label arrangements with respect to
various other products.


                                        9
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

      The table below shows Protection Segment sales by distribution channel for
the periods indicated. Individual life insurance sales exclude excess premiums,
which are premiums that build cash value but do not purchase any additional face
amount of insurance, on variable life and universal life insurance products and
premiums on corporate owned life insurance and bank owned life insurance
policies covering more than 200 lives. Sales include 10% of single premium
payments on universal life and whole life insurance policies. Group long-term
care sales include (i) sales made to new employer groups initially effective in
the year, (ii) re-enrollments on existing accounts, (iii) sales constituting
increased coverage to existing insureds, (iv) and sales to non-employer groups
and new employees added to a group. COLI is sold only by Signator, M Financial
Group and through banks. BOLI is sold only by Signator and M Financial Group.

<TABLE>
<CAPTION>
                       Protection Segment Sales by Distribution Channel

                                                               For the Years Ended December 31
                                                               2001        2000          1999
                                                            ---------------------------------------
                                                                        (in millions)
<S>                                                           <C>          <C>           <C>

Signator: (1)
     Individual life--excluding COLI and BOLI (2).........    $137.7       $136.0        $125.1
     Individual life--COLI................................      74.2         23.7           8.5
     Individual life--BOLI................................      12.2          0.8            --
     Individual long-term care (3)........................      98.6         97.3          70.6
M Financial Group:
     Individual life--excluding COLI......................      45.9         59.9          55.8
     Individual life--COLI................................      38.4         29.7          18.4
     Individual long-term care............................       0.2          0.2           0.1
e-Business & Retail Partnerships:
     Individual life......................................      10.4         19.5           8.6
     Individual long term care............................       0.9           --            --
Dedicated Sales Force:
     Group long-term care (4).............................      16.8         11.5          13.7
Other:
     Individual life......................................        --          0.2           0.4
     Individual long-term care (5)........................       2.5          2.6           1.5
Total:
     Individual life--excluding COLI and BOLI.............     194.0        215.6         189.9
     Individual life--COLI and BOLI.......................     124.8         54.2          26.9
     Individual long-term care (6)........................     102.2        100.1          72.2
     Group long-term care.................................      16.8         11.5          13.7
</TABLE>

(1)   Signator includes sales by the Signator Financial Network as well as all
      insurance brokerage sales, including sales related to Fortis.
(2)   Revised to include broker/dealer and financial institution sales of $7.0
      million and $2.2 million for the years ended December 31, 2000 and 1999,
      respectively.
(3)   Revised to include broker/dealer sales of $7.3 million and $6.6 million,
      financial institution sales of $1.0 million and $0.7 million, e-business
      sales of $0.2 million and $--, and Fortis Reinsurance premiums of $23.9
      million and $--, respectively for the years ended December 31, 2000 and
      1999.
(4)   Revised to include new enrollments and coverage additions of $5.4 million
      and $7.4 million for the years ended December 31, 2000 and 1999,
      respectively.
(5)   Revised to include private label sales of $2.3 million and exclude
      e-business sales of $0.2 million in 2000.
(6)   Individual long-term care sales were revised for private label sales,
      including an additional $2.3 million and an additional $1.3 million in the
      years ended 2000 and 1999, respectively and Fortis Reinsurance premiums,
      including $23.9 million and $--, respectively, for the years ended 2000
      and 1999.


                                       10
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

Underwriting

      Insurance underwriting involves a determination of the type and amount of
risk that an insurer is willing to accept and the premium to be charged.
Underwriting also determines the amount and type of reinsurance levels
appropriate for a particular type of risk. By utilizing reinsurance, we can
limit our risk and improve product pricing.

      Our underwriting standards for life insurance are intended to result in
the issuance of policies that produce mortality experience consistent with the
assumptions used in product pricing. Our underwriting is based on our historical
mortality experience, as well as the experience of the insurance industry and of
the general population. We continually compare our underwriting standards
against the industry to mitigate our exposure to higher risk business and to
stay abreast of industry trends. For individual long-term care products, we use
separate but similar underwriting criteria appropriate to the morbidity risks
insured. Our overall profitability depends to a large extent on the degree to
which our mortality and/or morbidity experience matches our pricing assumptions.
Our life and long-term care insurance underwriters evaluate policy applications
on the basis of the information provided by the applicant and others. We
implemented new programs to improve our underwriting process. These include the
Telephone Interview Program, implemented in 1999, which permits eligible
long-term care clients to be interviewed over the telephone by trained nurses,
replacing the collection of a physician's statement in 50% of the cases, leading
to lower costs and faster cycle times, without any loss of required underwriting
information. We also implemented the STAR (System to Assess Risk) underwriting
system in 2000 to improve the risk assessment process through automation which
has resulted in a reduction of cycle times, improved productivity and a
reduction of total costs. We are hard at work on the next phase of our
underwriting automation projects including on-line conditional approval and
reflexive questioning through our tele-application unit to better set client
expectations regarding underwriting classification. These initiatives are
expected to further reduce our unit costs by streamlining our underwriting tools
and increasing policy taken rates.

      Group long-term care underwriting is conducted on both the employer group
level and the individual level. Our group long-term care corporate customers
generally offer their employees the opportunity to purchase coverage on a
"guaranteed-issue" basis, meaning that all employees are eligible for insurance
coverage, and offer individually underwritten coverage to family members. We
rely on our experience in underwriting large groups in order to set prices that
take into account the underwriting arrangements, the general health conditions
of the corporate customers' employees, the specifics of the negotiated plan
design, and other demographic and morbidity trends. Group products are written
on a guaranteed renewable basis, which permits repricing if necessary.

      Our corporate owned and bank owned life insurance policies covering
multiple lives are issued on a guaranteed issue basis, where the amount of
insurance issued per life on a guaranteed basis is related to the total number
of lives being covered and the particular need for which the product is being
purchased. Guaranteed issue underwriting applies to employees actively at work,
and product pricing reflects the additional guaranteed issue underwriting risk.

Reserves

      We establish and report liabilities for future policy benefits on our
balance sheet to meet the obligations under our insurance policies and
contracts. Our liability for variable life insurance and universal life
insurance policies and contracts is equal to the cumulative account balances.
Cumulative account balances include deposits plus credited interest less expense
and mortality fees and withdrawals. Future policy benefits for our traditional
life, individual long-term care and group long-term care insurance policies are
calculated based on a set of actuarial assumptions that we establish and
maintain throughout the lives of the policies. Our assumptions include
investment yields, mortality, morbidity and expenses.

Competition

      We face significant competition in all our retail protection businesses.
Our competitors include other large and highly rated insurance carriers as well
as certain banks, securities brokerage firms, investment advisors and other
financial intermediaries marketing annuities and mutual funds. Some of these
competitors have greater financial strength and resources and have penetrated
more markets. In particular, national banks may become more significant
competitors in the future for insurers who sell annuities as a result of
recently enacted legislation, the Gramm-Leach-Bliley Act, which permits
affiliations among banks, securities firms and insurance companies. For
additional information, see the Regulation section, included elsewhere in this
Form 10-K. In the e-commerce arena, we also face competition from internet
start-up companies and traditional competitors that have established internet
platforms.


                                       11
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

      We believe that we distinguish ourselves from our competitors through the
      combination of:

      o     our strong and reputable brand name;

      o     our strong financial ratings;

      o     our broad range of competitive and innovative products and our
            ability to create unique product combinations for various
            distribution channels;

      o     the depth of our experience as one of the first companies to offer
            variable life insurance, individual long-term care insurance and
            group long-term care insurance;

      o     our brand penetration within each channel of distribution;

      o     our dedication to customer service.

      Competition also exists for agents and other distributors of insurance
products. Much of this competition is based on the pricing of products and the
agent or distributor compensation structure. We believe that our competitive
strengths coupled with the advantages of our Signator network will enable us to
compete successfully to attract and retain top quality agents and distributors.

Reinsurance

      We reinsure portions of the risks we assume for our protection products.
The maximum amount of individual ordinary life insurance retained by us on any
life is $10 million under an individual policy and $20 million under a
second-to-die policy. As of January 1, 2001, we established additional
reinsurance programs, which limit our exposure to fluctuations in life claims
for individuals for whom the net amount at risk is $3 million or more. As of
January 1, 2001, the Company entered into an agreement with two reinsurers
covering 50% of its closed block business. The treaties are structured so they
will not affect policyholder dividends or any other financial items reported
within the closed block, which was established at the time of the Life Company's
demutualization to protect the reasonable dividend expectations of certain
participating life insurance policyholders.

      By entering into reinsurance agreements with a diverse group of highly
rated reinsurers, we seek to control our exposure to losses. Our reinsurance,
however, does not discharge our legal obligations to pay policy claims on the
policies reinsured. As a result, we enter into reinsurance agreements only with
highly rated reinsurers. Nevertheless, there can be no assurance that all our
reinsurers will pay the claims we make against them. Failure of a reinsurer to
pay a claim could adversely affect our business, financial condition or results
of operations.

      For a further description of operating results, see Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Protection Segment, included elsewhere in this Form 10-K.

Asset Gathering Segment

Overview

      Through our Asset Gathering Segment, we offer individual annuities, mutual
fund products and investment management services. Individual annuities include
variable and fixed annuities, both immediate and deferred. Mutual fund products
primarily consist of open-end mutual funds and closed-end funds. Our investment
management services include retirement services, and the management of
institutional accounts. In this segment, we also include the results of
Signator, John Hancock Signature Services, our servicing subsidiary, First
Signature Bank & Trust Company, our limited-service banking subsidiary, and
Essex Corporation, one of the nation's largest intermediaries between banks and
product manufacturers for annuities.


                                       12
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

      The Asset Gathering Segment contributed 12.3%, 13.5% and 13.9% of
consolidated operating revenues and 18.4%, 17.4% and 18.8% of consolidated
after-tax operating income in the years ended December 31, 2001, 2000 and 1999,
respectively. The Asset Gathering Segment generated operating revenues of
$1,155.0 million, $1,195.9 million and $1,057.3 million and after-tax operating
income of $148.3 million, $128.8 million and $115.1 million in 2001, 2000 and
1999, respectively. The Asset Gathering Segment has achieved the following
financial results for the periods indicated:

                                  As of or for the Years Ended December 31,
                                   2001             2000              1999
                            --------------------------------------------------
                                              (in millions)
Sales:
Variable annuities (1)....     $   639.6        $ 1,120.8         $   847.7
Fixed annuities (1).......       1,478.0            880.4             648.6
John Hancock Funds (2)....       5,001.4          5,307.0           3,899.6
                            --------------------------------------------------
     Total................     $ 7,119.0        $ 7,308.2         $ 5,395.9
                            ==================================================

Assets:
Variable annuities........     $ 6,750.0        $ 7,425.3         $ 7,877.6
Fixed annuities...........       7,428.2          5,988.4           5,693.0
John Hancock Funds........         338.4            410.5             442.9
Other.....................         223.9            243.0             283.7
                            --------------------------------------------------
     Total................     $14,740.5        $14,067.2         $14,297.2
                            ==================================================

Assets Under Management:
Variable annuities........     $ 6,357.1        $ 7,116.0         $ 7,598.1
Fixed annuities...........       6,876.6          5,640.8           5,255.0
John Hancock Funds (3)....      29,285.8         31,725.8          32,696.6

(1)   Represents statutory annual statement values. Statutory revenues include
      premiums and deposits on variable and fixed annuities. Statutory premiums
      and deposits differ from GAAP premiums because GAAP requires that variable
      and certain fixed annuity products be accounted for using deposit
      accounting. Deposit accounting excludes from revenue the premiums and
      deposits received on these products. Fixed annuity sales include
      considerations from supplemental contracts. Variable annuity sales in 2001
      and 2000 exclude $1,910.5 million and $25.0 million, respectively, in safe
      harbor internal exchanges.
(2)   Mutual fund and institutional asset sales are defined as new inflows of
      funds from investors into our investment products. Sales of mutual fund
      products are recorded on the trade date. Sales of institutional investment
      products are recorded on the date a firm commitment is established. Sales
      of retail money market products are included in the 1999 balances above.
      If sales of retail money market products had been excluded from mutual
      fund and institutional asset sales in 1999, sales would have been $3,728.5
      million for the year ended December 31, 1999.
(3)   Includes $3.6 billion, $2.9 billion and $2.3 billion of our general
      account assets and assets managed for certain John Hancock subsidiaries
      and assets managed for variable annuities as of December 31, 2001, 2000
      and 1999, respectively.

Products and Markets

Annuities

      We offer variable and fixed annuities, immediate and deferred, to a broad
range of consumers through multiple distribution channels. Annuities may be
deferred, where assets accumulate until the contract is surrendered, the
contractholder dies, or the contractholder begins receiving benefits under an
annuity payout option; or immediate, where payments begin within one year of
issue and continue for a fixed period of time or for life with or without a
period certain.

      Variable annuities are separate account products, where the contractholder
bears the investment risk and has the right to allocate their funds among
various separate investment subaccounts. Our major source of revenues from


                                       13
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

variable annuities is mortality and expense fees charged to the contractholder,
generally determined as a percentage of the market value of the underlying
assets under management. We introduced a new variable annuity product line, the
Revolution series, in 1999, and became the first in the industry to offer
assistance with the cost of long-term care, with no underwriting. Revolution is
targeted to the needs of aging consumers who want to accumulate funds for
retirement and provide a hedge against the cost of long-term care. Revolution
sales comprised 88% of total variable annuity sales for 2001.

      Fixed annuities are general account products, where we bear the investment
risk as funds are invested in our general account and a stated interest rate is
credited to the contractholders' accounts. Our major source of income from fixed
annuities is the spread between the investment income earned on the underlying
general account assets and the interest credited to contractholders' accounts.

      Investment management skills are critical to the growth and profitability
of our annuity business. In addition to variable annuity products that offer the
same fund choices as our variable life insurance products, we also offer
variable annuities that offer funds managed by our subsidiaries. Our variable
annuity assets are managed by John Hancock Funds, our mutual fund subsidiary,
and by Independence Investment LLC, our internal institutional equity manager.
All our fixed annuity assets are managed internally.

      The relative proportion of our total annuity sales represented by fixed
and variable annuities is generally driven by the relative performance of the
equity and fixed income markets. JHFS's total annuity deposits were comprised of
69.7% fixed annuity and 30.3% variable annuity for the year ended December 31,
2001 and 43.6% fixed annuity and 56.4% variable annuity for the year ended
December 31, 2000.

      The following table presents certain information regarding our annuity
      reserve activity for the periods indicated:

<TABLE>
<CAPTION>
                                            Annuity Reserve Activity

                                                                    As of or for the Years Ended December 31
                                                                     2001             2000              1999
                                                              ------------------------------------------------------
                                                                                  (in millions)
<S>                                                                <C>              <C>              <C>
Variable Annuities:
Reserves, beginning of year.................................       $ 7,182.8         $ 7,683.2        $ 6,660.4
     Deposits and other policy credits (1)..................           641.3           1,162.3            847.7
     Interest credited and investment performance...........          (570.9)           (538.3)           942.1
     Surrenders and benefits................................          (814.8)           (997.6)          (655.1)
     Product charges........................................          (115.3)           (126.8)          (111.9)
                                                              ------------------------------------------------------
Reserves, end of year.......................................       $ 6,323.1         $ 7,182.8        $ 7,683.2
                                                              ======================================================
Fixed Annuities:
Reserves, beginning of year.................................       $ 5,365.8         $ 4,946.4        $ 4,591.3
     Premiums, deposits and other policy credits (1)........         1,478.0             899.1            648.6
     Interest credited......................................           344.7             291.0            262.3
     Surrenders and benefits................................          (680.7)           (759.2)          (547.2)
     Product charges........................................           (10.4)            (11.5)            (8.6)
                                                              ------------------------------------------------------
Reserves, end of year.......................................       $ 6,497.4         $ 5,365.8        $ 4,946.4
                                                              ======================================================
Total Annuities:
Reserves, beginning of year.................................       $12,548.6         $12,629.6        $11,251.7
     Premiums, deposits and other policy credits (1) (2)....         2,119.3           2,061.4          1,496.3
     Interest credited and investment performance...........          (226.2)           (247.3)         1,204.4
     Surrenders and benefits................................        (1,495.5)         (1,756.8)        (1,202.3)
     Product charges........................................          (125.7)           (138.3)          (120.5)
                                                              ------------------------------------------------------
Reserves, end of year.......................................       $12,820.5         $12,548.6        $12,629.6
                                                              ======================================================
</TABLE>

(1)   Included in this line for the year ended December 31, 2000 are policy
      credits of $18.7 million for fixed annuity and $16.5 million for variable
      annuity which were added to annuity reserves as part of the
      demutualization.
(2)   Variable annuity deposits exclude internal exchanges as part of the safe
      harbor internal exchange program of $1,910.5 million for the year ending
      December 31, 2001. Variable annuity deposits include $25.0 million in safe
      harbor internal exchanges for the year ended December 31, 2000.


                                       14
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

John Hancock Funds

      We offer a variety of mutual fund products and related investment
management services through John Hancock Funds. We employ a team style in the
management of our funds. These teams manage portfolios in accordance with a
variety of specified strategies, which we believe gives us a competitive
advantage over competitors, many of whom deploy only one style across a family
of funds. As of December 31, 2001, our fixed income and equity research staffs
included over 59 portfolio managers and analysts with an average of 16 years of
experience. We are recruiting additional investment professionals to enhance our
capabilities across both fundamental and quantitative analysis and investment
styles. This ongoing commitment to investment research further enables us to
develop new products intended to strengthen our fund offerings, across a broad
array of investment styles. While this business includes primarily assets
managed for third-party retail clients, the investment professionals providing
these services also manage assets underlying our general account and separate
account products, as well as variable life, annuity products and Maritime.

o     Mutual Funds. John Hancock Funds offers a broad array of open-end mutual
      funds and closed-end funds to a broad base of consumers across varying
      income levels. Open-end mutual funds are subject to redemption at any time
      by investors. After their initial public offering, the shares of
      closed-end funds are not subject to redemption and, accordingly, represent
      a more stable base of assets than open-end funds. As of December 31, 2001,
      68.0% of our mutual fund assets under management were invested in open-end
      mutual funds. We also offer our mutual funds as investment options in
      variable annuities and variable life insurance products. Our product
      offerings cover both domestic and international equity and fixed-income
      markets. In 2001, the Company added a Biotechnology fund to its investment
      offerings.

o     Retirement Services. In 2000 and prior years, we offered mutual funds and
      record-keeping services to 401(k) plan sponsors, primarily small-and
      mid-size companies, on either a full-service or on an unbundled basis. In
      March 2001, we sold our full service 401(k) record-keeping business
      operated out of John Hancock Funds. We will continue to manage the assets
      of the business and the purchaser has assumed the record-keeping and
      support responsibilities. The business includes approximately 1,000 plans
      and 63,000 participants.

We    also offer traditional IRA programs and a complete line of retirement
      products, including: SIMPLE IRA and SIMPLE 401(k) plans for companies with
      no more than 100 eligible employees and no other qualified plan;
      Simplified Employee Pensions for companies of any size, including
      self-employed persons, partnerships and corporations; and Roth IRA plans
      for individuals.

o     Institutional Services. Through funds and private accounts, John Hancock
      Funds manages assets for public pension plans, high net-worth individuals,
      corporate pension plans, pooled separate accounts, union pension plans,
      foundations and endowments.


                                       15
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

      The following table presents certain information regarding the assets
under management by John Hancock Funds for the periods indicated:

<TABLE>
<CAPTION>
                                            Asset Flow Summary

                                                                For the Years Ended December 31
                                                             2001             2000              1999
                                                     ------------------------------------------------------
                                                                           (in millions)
<S>                                                        <C>               <C>              <C>
Retail Mutual Funds:
Assets under management, beginning of year.........        $26,541.4         $27,842.4        $29,248.7
     Deposits and reinvestments....................          3,958.7           5,333.6          3,565.5
     Redemptions and withdrawals...................         (4,300.8)         (5,394.1)        (5,393.3)
     Net money market funds........................           (205.5)            (90.9)          (201.0)
     Market appreciation (depreciation)............         (2,770.2)           (713.7)         1,051.4
     Fees..........................................           (347.5)           (435.9)          (428.9)
                                                     ------------------------------------------------------
Assets under management, end of year (1)...........        $22,876.1         $26,541.4        $27,842.4
                                                     ======================================================
Institutional Investment Management:
Assets under management, beginning of year.........        $ 5,184.4         $ 4,854.2        $ 5,696.5
     Deposits and reinvestments....................          1,924.4             677.1            494.3
     Redemptions and withdrawals...................           (822.3)           (571.2)        (1,561.1)
     Market appreciation (depreciation)............            137.2             237.3            240.3
     Fees..........................................            (14.0)            (13.0)           (15.8)
                                                     ------------------------------------------------------
Assets under management, end of year...............        $ 6,409.7         $ 5,184.4        $ 4,854.2
                                                     ======================================================
Total:
Assets under management, beginning of year.........        $31,725.8         $32,696.6        $34,945.2
     Deposits and reinvestments....................          5,883.1           6,010.7          4,059.8
     Redemptions and withdrawals...................         (5,123.1)         (5,965.2)        (6,954.4)
     Net money market funds........................           (205.5)            (90.9)          (201.0)
     Market appreciation (depreciation)............         (2,633.0)           (476.4)         1,291.7
     Fees..........................................           (361.5)           (448.9)          (444.7)
                                                     ------------------------------------------------------
Assets under management, end of year (1)...........        $29,285.8         $31,725.8        $32,696.6
                                                     ======================================================
</TABLE>

(1)   Retail mutual fund assets under management includes $3.7 billion, $5.3
      billion and $5.4 billion in retirement plan assets at December 31, 2001,
      2000 and 1999, respectively.

Distribution

      Asset Gathering products are distributed through Signator, independent
broker/dealers, banks, directly to state lottery commissions and, both directly
and through consultants to institutions and retirement plan sponsors.

      Signator. Signator, through its broker/dealer and insurance agency
subsidiaries, is the primary distribution channel for our variable annuities. We
also sell fixed annuities, mutual funds, 401(k) programs and other retirement
programs through these entities.

      Broker/Dealers. Broker/dealers, which include regional and national
brokerage firms and financial planners, are the primary distribution channel for
our mutual funds. Broker/dealers also sell our fixed and variable annuities. We
support this distribution channel with an internal network of wholesalers. These
wholesalers meet directly with broker/dealers and financial planners and are
supported by an extensive home office sales staff.

      Pension Consultants. We market investment management services to pension
consultants nationwide who provide advisory services to plan sponsors. Marketing
efforts are supported by dedicated client relationship officers who keep clients
updated on portfolio performance information.

      Banks. Starting with sales of fixed annuities, we have expanded our
offerings through banks to include mutual funds and variable annuities. Starting
in 1998, we added additional products to our bank offerings. We believe we


                                       16
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

are well positioned to take advantage of the growth opportunity we see for
multiple product offerings, coupled with added value marketing programs and
customized service support for banks.

      Essex Corporation. In January 1999, we purchased Essex Corporation, one of
the nation's largest intermediaries between banks and product manufacturers for
annuities. Essex Corporation also serves as an intermediary in the distribution
of mutual funds. Essex Corporation's primary source of income is commissions on
sales of these products.

      E-Business and Retail Partnerships. We are currently offering a variable
annuity product through the e-Business and Retail Partnerships channel where
customers may call a toll-free number and obtain an application to purchase the
product. In the fourth quarter of 2000, we also launched our e-variable annuity
product, which models our term product aggregator strategy, but in the annuity
market.

      The table below shows Asset Gathering Segment sales by distribution
      channel for the periods indicated:

<TABLE>
<CAPTION>
                   Asset Gathering Segment Sales by Distribution Channel

                                                     For the Years Ended December 31
                                                 2001             2000              1999
                                          ------------------------------------------------------
                                                              (in millions)
<S>                                             <C>               <C>              <C>
Broker/Dealers:
     Variable annuities (2).............        $  145.2          $  334.7         $  126.5
     Fixed annuities ...................            40.5               1.3             37.3
     Mutual funds.......................         2,816.6           3,930.3          2,639.2
Signator:
     Variable annuities (2).............           414.0             653.0            685.1
     Fixed annuities....................           131.9              80.6             71.2
     Mutual funds.......................           367.5             616.6            794.9
Pension Consultants:
     Mutual funds.......................         1,700.6             596.6            317.8
Banks:
     Variable annuities.................            45.7             130.0             25.7
     Fixed annuities ...................           539.4             189.7             54.4
     Mutual funds.......................           104.4             152.8            127.0
Essex:
     Variable annuities.................            14.3              24.7              6.9
     Fixed annuities....................           729.5             552.3            422.0
     Mutual funds.......................            12.3              10.7             20.7
e-Business and Retail Partnerships .....            19.2               0.7              3.5
Other (1)...............................            37.9              34.2             63.7
                                          ------------------------------------------------------
     Total..............................        $7,119.0          $7,308.2         $5,395.9
                                          ======================================================
</TABLE>

(1)   Other includes single premium immediate annuities, including
      lottery-related payout contracts, and supplemental contracts involving
      life contingencies.
(2)   Variable annuity deposits exclude internal exchanges as part of the safe
      harbor internal exchange program of $1,910.5 million and $25.0 million,
      respectively, for the years ending December 31, 2001 and 2000.

Reserves

     We establish and report liabilities for future policy benefits on our
balance sheet to meet the obligations under our annuity contracts. Our liability
for variable annuity contracts and deferred fixed annuity contracts is equal to
the cumulative account balances. Cumulative account balances include deposits
plus credited interest or change in investment value less expense and mortality
fees, as applicable, and withdrawals. Future policy benefits on our immediate
fixed annuity contracts are calculated based on a set of actuarial assumptions
that we establish and maintain throughout the lives of the contracts.


                                       17
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.
Competition

      We face substantial competition in all aspects of our asset gathering
business. The annuity business is highly competitive. We compete with a large
number of insurance companies, investment management firms, mutual fund
companies, banks and others in the sale of annuities. We compete for mutual fund
business with hundreds of fund companies. Many of our competitors in the mutual
fund industry are larger, have been established for a longer period of time,
offer less expensive products, have deeper penetration in key distribution
channels and have more resources than us.

      Competition in the asset gathering business is based on several factors.
These include investment performance and the ability to successfully penetrate
distribution channels, to offer effective service to intermediaries and
consumers, to develop products to meet the changing needs of various consumer
segments, to charge competitive fees and to control expenses.

      We believe the Asset Gathering Segment is well positioned to increase
assets under management in the face of this competition. Our competitive
strengths include our ability to:

o     deliver strong investment performance, and enhance this performance by
      expanding the depth and breadth of fundamental research, portfolio
      management teams, and investment professionals;

o     develop new products and expand into new markets; and

o     provide excellent service to investors and distributors.

Distribution and Service Organizations

      Within the Asset Gathering Segment, we also include our distribution
company, Signator, our servicing subsidiary, John Hancock Signature Services and
Hancock Partners.

      Signator is the holding company for Signator Investors, Inc. and several
insurance agencies. Signator Investors, Inc. representatives are able to offer
securities and financial advisory products and services including general
securities trading, wrap account products and other financial instruments to
their clients, including not only John Hancock mutual funds and variable
products, but also the products and services of other companies.

      John Hancock Signature Services combines and coordinates customer service
functions for life insurance, annuity and mutual fund customers. The services
provided by John Hancock Signature Services, Inc. include new business
processing underwriting, contract change services, claims processing, premium
collection and processing, billing, and preparation of annual or quarterly
statements. Through this subsidiary, we seek to provide an integrated and
comprehensive customer service function on a cost-effective basis. This system
permits a customer to have a single point of contact for most servicing needs.

      Hancock Partners is a distribution organization comprised of leading
independent U.S. financial services organizations serving the upscale and
business markets.

Banking Products and Services

      First Signature Bank & Trust Company is a limited-service bank, which
accepts demand deposits but does not make commercial loans. It provides consumer
banking products and services to our customers. First Signature Bank & Trust
Company had $156.5 million and $181.8 million in assets as of December 31, 2001
and 2000.

      For a further description of operating results, see Management's
Discussion and Analysis of Financial Condition and Results of Operations - Asset
Gathering Segment, included elsewhere in this Form 10-K.


                                       18
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

Guaranteed and Structured Financial Products Segment

Overview

      Through our Guaranteed and Structured Financial Products Segment (G&SFP),
we offer a variety of specialized products and services to qualified defined
benefit and defined contribution retirement plans, and other domestic and
international investors. Our products include non-guaranteed, partially
guaranteed and fully guaranteed general account and separate account investment
options. We distribute these products through home office and regional sales
representatives either directly to institutional buyers or indirectly through
financial intermediaries, consultants and brokers.

      The G&SFP Segment contributed 29.9%, 29.1% and 28.9% of consolidated
operating revenues and 30.3%, 28.7% and 33.0% of consolidated after-tax
operating income in the years ended December 31, 2001, 2000 and 1999,
respectively. The G&SFP Segment generated revenues of $2,793.1 million, $2,574.3
million and $2,194.0 million and after-tax operating income of $244.2 million,
$212.1 million and $202.4 million in 2001, 2000 and 1999, respectively. G&SFP
Segment financial information is summarized below:

<TABLE>
<CAPTION>
                                                                                As of December 31
                                                                      2001             2000              1999
                                                              ------------------------------------------------------
                                                                                  (in millions)
<S>                                                                <C>               <C>              <C>
Assets Under Management:
Spread-based products.......................................       $22,469.0         $19,514.6        $17,502.2
Fee-based products..........................................         8,476.3          10,846.1         11,862.8
                                                              ------------------------------------------------------
Total.......................................................       $30,945.3         $30,360.7        $29,365.0
                                                              ======================================================

Spread-based Statutory Premiums and Deposits:
Fund-type products
     General account GICs...................................       $ 1,462.6         $ 1,878.7        $ 2,442.2
     Funding agreements.....................................         3,256.2           2,578.6          2,775.2
Single premium annuities....................................           893.6             741.6            451.8
                                                              ------------------------------------------------------
     Total Spread-based Statutory Premiums and Deposits.....       $ 5,612.4         $ 5,198.9        $ 5,669.2
                                                              ======================================================

Fee-based Statutory Premiums and Deposits:
General account participating pension fund-type products
   and annuity contracts....................................       $   468.9         $   467.0        $   527.9
Structured separate accounts................................            77.4              50.3            615.7
Participating separate account annuities....................            66.9             (46.3)           (60.4)
Separate investment accounts................................            72.4             288.9            333.1
                                                               ------------------------------------------------------
     Total Fee-based Statutory Premiums and Deposits               $   685.6         $   759.9        $ 1,416.3
                                                               ======================================================
</TABLE>

      Statutory premiums and deposits differ from GAAP premiums because GAAP
requires that premiums on general account GICs, funding agreements, general
account participating pension products, separate account GICs, separate account
annuities and separate investment accounts be accounted for using deposit
accounting. Deposit accounting excludes the contributions and deposits received
from revenue and generally shows only the fees and investment income earned from
these products as revenues.

Products and Markets

      The G&SFP Segment offers spread-based products and fee-based products in a
variety of markets. Spread-based products serve the larger and faster growing
segment of the market. Fee-based products are typically niche products that have
less overall growth potential. The general account Guaranteed Investment
Contract (GIC) has been the predominant product issued in the qualified defined
contribution plan market. Single premium and separate account annuities are
primarily limited to qualified and non-qualified defined benefit plans. Funding
agreements are issued to non-qualified domestic and international institutional
investors. By working closely with our customers to develop customized
investment programs, we have built a leading market share in several important
markets, including general account GICs, funding agreements and single premium
annuities.


                                       19
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

      Spread-Based Products. Our spread-based products provide a guaranteed rate
of return to the customer. We derive earnings on these products primarily from
the difference between the investment returns on the supporting assets and the
guaranteed returns provided to customers. Our spread-based products include both
fund-type products and single premium annuities.

      o     Fund-type products. Our fund-type products consist of the following:

            General account GICs. GICs are annuity contracts that pay a
            guaranteed rate of return. GICs are primarily marketed to sponsors
            of tax-qualified retirement plans such as 401(k) plans. The
            guaranteed rate of return on GICs can be a fixed rate or a floating
            rate based on an external market index.

            Funding agreements. Funding agreements are investment contracts that
            pay a guaranteed rate of return. However, funding agreements
            generally are issued to corporations, mutual funds and other
            institutional investors and, unlike GICs, are not typically used to
            fund retirement plans. The guaranteed rate of return on funding
            agreements can be a fixed rate or a floating rate based on an
            external market index.

      o     Single premium annuities. Single premium annuities are immediate or
            deferred annuity contracts, which provide for payments of a
            guaranteed amount commencing at a specified time, typically at
            retirement. These annuities are sold primarily to defined benefit
            plan closeouts; they are also offered in the structured settlement
            market. The two most common types of annuities are the straight life
            annuity, which makes payments for the life of a retired annuitant,
            and the joint and survivor annuity, which continues to make payments
            to a spouse after the death of the annuitant.

      Fee-Based Products. Our fee-based products generally pass the investment
results of invested assets through to the contractholder with no, or minimal,
guarantees. We derive earnings on these products primarily from expense, risk,
and profit charges that are generally assessed on the basis of assets under
management. Fee-based businesses provide relatively stable revenues and have
lower capital requirements than our spread-based businesses. Our fee-based
products include:

      o     Participating general account fund-type products and annuity
            contracts. These products are funding vehicles for pension plans
            that pass investment results through to the contractholder, after
            risk and profit charges. Annuity guarantees for these products are
            supported by asset adequacy requirements under which assets must be
            maintained at levels at least 5% above the annuity reserve. If the
            level of assets held under the contract falls below this threshold,
            we may liquidate assets equal to the annuity reserve and apply the
            assets to purchase a fully guaranteed annuity.

      o     Structured Separate Accounts. These products pass the investment
            results of a separate account through to the contractholder and
            contain only minimal guarantees. Contractholders may select from
            among flexible investment options provided by our various investment
            managers. The structured separate account business leverages the
            strong marketing relationships developed in our general account GIC
            business.

      o     Participating separate account annuities. These products are funding
            vehicles for pension plans which offer customers an insured
            pension-funding program in conjunction with a broad range of
            investment options, including both equity and fixed-income
            investment classes. The risk associated with providing these
            annuities is mitigated by excess collateral maintenance
            requirements, which vary depending on the investment option
            selected. If the collateral falls below the maintenance
            requirements, we may liquidate assets equal to the annuity reserve
            and apply the assets to purchase a fully guaranteed annuity.

      o     Separate investment accounts. These are non-guaranteed group annuity
            contracts under which assets are held in a separate account. We
            typically use affiliated investment advisors to manage these assets.
            We may also use non-affiliated investment managers if the customer
            so requires. Because these products do not provide guarantees, most
            new sales of separate investment accounts are reported in the
            Investment Management Segment. Existing agreements, however,
            continue to be reported in and serviced by the Guaranteed and
            Structured Financial Products Segment because of customer
            relationships.

Distribution

      We distribute our guaranteed and structured financial products through a
variety of channels. General and separate account GICs are sold through our
regional representatives to plan sponsors, or to GIC managers who represent plan
sponsors. Funding agreements are sold either directly, through brokers, or
through investment banks


                                       20
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

in the form of medium-term notes. Annuities are sold through pension consultants
who represent defined benefit plan sponsors or through brokers who receive a
commission for sales of our products.

      We have an experienced sales staff that develop and maintain relationships
with target customers, consultants, and other financial intermediaries. We
believe that our consistent market presence over the past two decades has
created strong and valuable relationships with a large segment of the customer
base.

Spread-Based Products Risk Management

      Because of the significant guarantees provided as part of our spread-based
product offerings, risk management is particularly important in this line of
business. To facilitate risk management, we segregate and manage the assets
supporting our spread-based products separately from the rest of our general
account. Our risk management strategy incorporates a sophisticated
asset/liability matching system that is based on:

      o     Managing interest rate exposure by closely matching the relative
            sensitivity of asset and liability values to interest rate changes,
            i.e. controlling the "duration mismatch" of assets and liabilities.

      o     Using sophisticated systems and processes to project cash flows for
            each asset and each liability and to measure with precision the
            sensitivity of assets and liabilities to interest rate changes.

      o     Writing contracts that typically have a predictable maturity
            structure and do not have premature surrender or redemption
            provisions.

      o     Monitoring all contribution and withdrawal activity in each contract
            to anticipate deviations from expected cash flows.

      o     Establishing working groups with representatives from our various
            business units, to facilitate interaction among investment
            management, sales management, risk management, financial management
            and the pricing staff.

      For additional information, see Quantitative and Qualitative Information
about Market Risk, included elsewhere in this Form 10-K.

Underwriting

            Underwriting is most significant for the following products in this
            segment:

      o     General Account GICs. In developing pricing proposals for new
            contracts, our underwriters estimate both base-line cash flows and
            also likely variance from the base line due to plan participants
            reallocating assets from the "stable value" option of their defined
            contribution plan. Our underwriters utilize customized pricing
            models that generate plan-specific risk charges for each customer's
            book value payment provision. If these pricing models project the
            risk of losses exceeding customary thresholds, instead of rejecting
            the business, our underwriters can modify the proposal by suggesting
            the use of risk reduction techniques designed to shift some of the
            risk of redemptions back to the plan or to a third party.

      o     Single Premium Annuities. We underwrite immediate annuities using
            recent mortality experience and an assumption of continued
            improvement in annuitant longevity. We underwrite deferred annuities
            by analyzing not only mortality risk but also the expected time to
            retirement.

Reserves

      We establish and report liabilities for contractholders' funds and future
policy benefits to meet the obligations on our policies and contracts. Our
liability for general account GICs, funding agreements, and fee-based products
is equal to the cumulative account balances for these products. Cumulative
account balances include deposits plus credited interest or investment earnings
less expense charges and withdrawals. Future policy benefits for our single
premium annuity contracts are calculated based on a set of actuarial assumptions
that we establish and maintain throughout the lives of the contracts. Our
assumptions include investment yields, mortality and the expected time to
retirement.

Competition

      Our Guaranteed and Structured Financial Products Segment operates in a
variety of highly competitive institutional markets. Although a large number of
companies offer these products, the market is concentrated. Through the first
three quarters of 2001, five insurers, including the Life Company, issued
approximately 60% of


                                       21
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

total GICs and funding agreements issued by U.S. insurance companies reporting
to LIMRA; and five insurers, including the Life Company, issued more than 70% of
total single premium annuities. Our competitors include a variety of
well-recognized insurance companies, domestic and foreign banks and other
institutional investment advisors.

      We believe that we are able to compete successfully in our markets as a
result of our strong financial ratings, investment management expertise,
national distribution, flexible product design and competitive pricing.
Competition in this market is restricted almost exclusively to insurance
companies with superior or excellent financial ratings. The requirement for
strong financial ratings reduces pressure on margins by limiting the number of
potential competitors and by lowering our cost of funds.

      For a further description of operating results, see Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Guaranteed and Structured Financial Products Segment included elsewhere in this
Form 10-K.

Investment Management Segment

Overview

      Through our Investment Management Segment, we provide investment
management services to domestic and international institutions. While this
segment includes primarily assets managed for third-party institutional clients,
the investment professionals providing these services also manage assets
underlying our general account and separate account products, as well as
variable life and annuity and mutual fund products. The Investment Management
Segment attracts funds from corporate and public pension plan sponsors, banks,
insurance companies, mutual funds, and other domestic and international
institutions.

      The Investment Management Segment represented 23.3%, 26.5% and 31.6% of
our total assets under management as of December 31, 2001, 2000 and 1999, which
were $124.2 billion, $125.2 billion and $127.3 billion, respectively. Investment
Management Segment assets were $2,049.8 million, $3,124.5 million and $3,531.4
million as of December 31, 2001, 2000 and 1999, respectively. The Investment
Management Segment contributed $143.2 million, $212.0 million and $189.9 million
of consolidated operating revenues and $29.8 million, $46.8 million and $37.3
million of consolidated after-tax operating income in the years ended December
31, 2001, 2000 and 1999, respectively.

Products and Markets

      The Investment Management Segment is primarily a fee-based investment
advisory business in which we do not offer guarantees to our customers. We
provide a variety of investment structures, such as investment advisory client
portfolios, individually managed and pooled separate accounts, registered
investment company funds, bond and mortgage securitizations, and mutual fund
management capabilities.

      Our investment management expertise covers a wide range of private and
publicly-traded asset classes and is based on fundamental research and
disciplined, quantitatively-based analysis and asset-liability management. Our
private fixed income, equity, commercial mortgage and alternative asset
operations have strong credit analysis capabilities and deal origination
expertise. These operations enjoy broad networks of relationships with
intermediaries giving them early access to new investment opportunities.

      The capabilities of the Investment Management Segment include:

      Public Fixed Income and Equity Investments. Through Independence
Investment LLC. We provide active stock and bond management to pension funds,
endowments, and other institutions. We provide core, value, growth, medium-cap,
balanced and market neutral investment strategies. We also offer international
stock and bond management.

     In addition, we offer active, quantitative investment management services
in the high quality fixed income markets, with a special emphasis on structuring
and managing portfolios of mortgage-backed securities and Treasury securities
combined, when appropriate, with various derivative strategies. These portfolios
are either managed directly for investors or structured as collateralized debt
obligations (CDOs).

      Private Fixed Income, Equity and Alternative Asset Class Investments. We
manage funds for external institutional clients investing in private
fixed-income and equity securities and alternative asset classes. Our strength
is in private placement corporate securities, structured and innovative
transactions and niche investment opportunities. Our completed offerings include
a mezzanine fund investing primarily in subordinated debt with


                                       22
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

equity participation features and collateralized bond obligation funds, which
have been marketed domestically and internationally to banks, insurance
companies, brokers and other clients outside of the pension market.

      We are a leading domestic and international manager of equity timberland
for large tax-exempt institutional investors, and are among the largest managers
of equity farmland investments. This segment also originates, services and
securitizes commercial mortgages. In addition, we sponsor affordable housing
investments that qualify for Federal tax credits.

      The following tables present certain information regarding the assets
under management by the Investment Management Segment for the periods indicated:

<TABLE>
<CAPTION>
                             Total Assets Under Management By Asset Class

                                                                           As of December 31
                                                                   2001           2000          1999
                                                              --------------------------------------------
                                                                             (in millions)
<S>                                                               <C>           <C>           <C>
Assets Under Management: (1) (2)
Domestic equity and balanced.................................     $14,952.7     $19,099.3     $26,940.8
International equity and balanced............................       1,512.6       1,840.1       2,242.9
Domestic and international fixed income......................       9,385.7       8,469.3       6,879.6
Timber, farmland and independent power.......................       2,919.6       3,136.0       3,983.9
                                                              --------------------------------------------
     Total...................................................     $28,770.6     $32,544.7     $40,047.2
                                                              ============================================

                                           Asset Flow Summary

                                                                           As of December 31
                                                                   2001          2000          1999
                                                              --------------------------------------------
                                                                             (in millions)
Assets Under Management:
Assets under management, beginning of year (1) (3)...........     $32,544.7     $40,047.2     $39,549.6
Sales and reinvestments......................................       3,506.7       3,648.3       5,435.9
Redemptions and withdrawals..................................      (5,304.8)     (9,708.7)     (7,984.8)
Market (depreciation) appreciation...........................      (1,976.0)     (1,442.1)      3,046.5
                                                              --------------------------------------------
Assets under management, end of year (1) (2).................     $28,770.6     $32,544.7     $40,047.2
                                                              ============================================
</TABLE>

(1)   Includes $1,234.6 million, $1,120.1 million and $1,060.8 million of assets
      managed by subsidiaries for our general account for the year ended
      December 31, 2001, 2000 and 1999, respectively.
(2)   Does not include $151.3 million, $106.9 million and $164.5 million of
      general account cash and invested assets as of December 31, 2001, 2000 and
      1999, respectively.
(3)   Does not include $106.9 million, $164.5 million and $88.1 million of
      general account cash and invested assets as of January 1, 2001, 2000 and
      1999, respectively.

Distribution

      We sell our investment management products and services through multiple
distribution channels. Marketing to pension funds, endowments, foundations and
other institutional clients is conducted primarily by our experienced sales
professionals and dedicated marketing and client relationship staff. Products
are also offered through independent marketing specialists, consulting firms,
and investment banking firms.

Competition

      The institutional asset management industry is highly competitive. We
compete with other investment management firms, insurance companies, banks and
mutual fund companies, many of who are larger and have greater resources than
us. Consolidation activity in recent years has increased the concentration of
competitors within the industry.

      We believe the key bases for competition are investment performance and
customer service. Our competitive strategy focuses on attracting assets through
superior performance. Consistent with this strategy, we continually evaluate
opportunities to develop internally, acquire, or divest investment management
units and strive to improve


                                       23
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

our investment management products and services. In addition, we believe our
leading role in non-traditional asset classes helps to create a distinct and
competitively advantageous profile in the institutional asset management
marketplace.

Corporate and Other Segment

Overview

      Our Corporate and Other Segment consists primarily of our international
insurance operations, corporate operations, including the holding company, John
Hancock Financial Services (JHFS), and non-core businesses that are either in
the process of winding down (i.e., are in "run-off") or have been divested. This
segment contributed approximately 20.1%, 19.4% and 16.6% of consolidated
operating revenues and 10.5%, 13.9% and 11.1% of consolidated after-tax
operating income in the years ended December 31, 2001, 2000 and 1999,
respectively. The Corporate and Other Segment generated revenues of $1,884.9
million, $1,721.4 million and $1,260.6 million and after-tax operating income of
$84.7 million, $102.5 million and $67.8 million in 2001, 2000 and 1999,
respectively.

     The Corporate and Other Segment assets are summarized below:

                                            For the Years Ended December 31,
                                             2001         2000          1999
                                       -----------------------------------------
                                                    (in millions)
Assets:
International insurance operations..      $11,121.5    $ 9,703.8    $ 8,810.8
Corporate operations................        7,010.7      5,822.8      4,942.3
Non-core businesses.................        1,004.0      1,106.3      1,212.2
Intra-segment eliminations..........       (4,923.4)    (4,126.1)    (3,948.1)
                                       -----------------------------------------
     Total..........................      $14,212.8    $12,506.8    $11,107.2
                                       =========================================

International Insurance Operations

      Our international insurance operations include The Maritime Life Assurance
Company, (Maritime) the 8th largest Canadian life insurance company based on
total domestic assets under management at year-end 2000. Maritime distributes a
full range of individual life and health insurance products, investment products
and group life and health products through independent agencies, investment
brokerage firms, and employee benefit brokers and consultants.

      Our international insurance operations also offer individual life and
group insurance and pension products through local affiliates doing business in
five Southeast Asian countries. In addition, we have formed a joint venture life
insurance company in China which will provide us an early foothold in this
emerging economy with its vast population. The joint venture company's license
initially is restricted to operations in the city of Shanghai. All required
regulatory approvals were received during the fourth quarter of 2000, and
operations commenced in January 2001. As of December 31, 2001, the Company's net
investment in these Southeast Asian affiliates was $39.4 million.

      Working with an international network of 46 insurers, we also coordinate
and/or reinsure group life, health, disability and pension coverage for foreign
and globally mobile employees of multinational companies in 50 countries and
territories.

Corporate Operations

      Corporate operations consist principally of (1) revenues and expense of
the holding company, investment and treasury activities, and assets, investment
income, interest expense and other expenses not specifically allocated to
segments or the holding company level and (2) group life insurance operations.
Our group life insurance business generated $225.8 million, $240.6 million and
$226.2 million in premium in the years ended December 31, 2001, 2000, and 1999,
respectively.

Non-Core Businesses

      We have certain non-core businesses that have been divested or put in
run-off, reflecting a strategic decision to focus on our retail and investment
management businesses. Non-core businesses consist primarily of run-off property
and casualty insurance companies that were sold in 1999, a portion of our group
life and accident and health business and related subsidiaries that were sold in
1997, and other small subsidiaries in various stages of running-off their
operations.


                                       24
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

      For a further description of operating results, see Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Corporate and Other Segment, included elsewhere in this Form 10-K.

General Account Investments

General Account and Separate Accounts

      Our investments include assets held in our general account and assets held
in numerous separate accounts. We manage our general account assets in
investment segments that support specific classes of product liabilities. These
investment segments permit us to implement investment policies that both support
the financial characteristics of the underlying liabilities, and also provide
returns on our invested capital. The investment segments also enable us to gauge
the performance and profitability of our various business segments and product
lines.

      Separate account assets are managed in accordance with specific investment
contracts. We generally do not bear any investment risk on assets held in
separate accounts, but rather receive investment management fees based on levels
of assets under management, measured at fair value, as well as mortality fees,
policy administration fees and surrender charges. Generally, assets held in
separate accounts are not available to satisfy general account obligations.

      For a further description of our investments, see Management's Discussion
and Analysis of Financial Condition and Results of Operations - General Account
Investments, included elsewhere in this Form 10-K.

Ratings

      Insurance companies are rated by rating agencies based upon factors
relevant to policyholders. Ratings provide both industry participants and
insurance consumers meaningful information on specific insurance companies.
Ratings with respect to claims-paying ability and financial strength have become
an increasingly important factor in establishing the competitive position of
insurance companies. Higher ratings generally indicate financial stability and a
strong ability to pay claims. As of December 31, 2001, JHFS has been assigned an
A+ rating by Standard and Poor's and an A1 debt rating by Moody's. As of
December 31, 2001, John Hancock Life Insurance Company is rated A++ (Superior)
by A.M. Best, AAA (Highest) by Fitch IBCA, AA+ (second highest rating) by S&P,
and Aa2 (third highest rating) by Moody's.

      We believe that our strong ratings are an important factor in marketing
our products to our distributors and customers, since ratings information is
broadly disseminated and generally used throughout the industry. Our ratings
reflect each rating agency's current opinion of our financial strength,
operating performance and ability to meet our obligations to policyholders, and
are not evaluations directed toward the protection of investors. Such ratings
are neither a rating of securities nor a recommendation to buy, hold or sell any
security, including our common stock.

REGULATION

General

      Our business is subject to extensive regulation at both the state and
Federal level, including regulation under state insurance and Federal and state
securities laws.

State Insurance Regulation

      The Company and its insurance subsidiaries are subject to supervision and
regulation by the insurance authorities in each jurisdiction in which they
transact business. Currently, we are licensed to transact business in all fifty
states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam,
the Northern Mariana Islands, 5 Canadian provinces, and several Asian countries,
including one city in the People's Republic of China and therefore are subject
to regulation in all these jurisdictions. Most states have laws and regulations
governing such issues as: what lines of business a company may engage in;
underwriting practices, including a company's ability to request results of
applicants' genetic tests; what premium rates may be charged in various lines of
business; what products a company may sell; mandating certain insurance benefits
and policy forms; minimum rates for accumulation of cash values and maximum
rates for policy loans; licensing of insurance companies and agents; advertising
and marketing


                                       25
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

practices; statutory accounting and reporting requirements; reserve requirements
and solvency standards; admitted statutory assets; the appropriate mix of
investments; dividend payments; transactions with affiliates; and level of
ownership regarding acquisitions of control. State insurance departments
periodically review the business and operations of an insurance company by
examining its financial condition and how its agents sell its products. Our
insurance subsidiaries are also required to file various reports, relating to
their financial condition, including quarterly filings and detailed annual
financial statements. This is required in each jurisdiction where an insurance
business is licensed.

      State insurance regulatory authorities and other state law enforcement
agencies and attorneys general from time to time make inquiries concerning
whether our insurance businesses are in compliance with the regulations covering
their businesses. We reasonably and promptly respond to such inquiries and take
corrective action if warranted.

      The Illinois, California and Vermont insurance departments have ongoing
market conduct examinations involving John Hancock Life Insurance Company. The
Company believes that it conducts its business in accordance with all applicable
state regulations and does not expect that the outcome of these examinations
will have a material impact on our business, financial condition or results of
operations.

      State insurance regulators and the National Association of Insurance
Commissioners are continually re-examining existing laws and regulations. Among
other things, these laws and regulations may focus on insurance company
investments, financial reporting and solvency issues, risk-adjusted capital
guidelines, interpretations of existing laws, the development of new laws, the
implementation of non-statutory guidelines and the circumstances under which
dividends may be paid.

Regulation Governing Potential Acquisitions of Control

      We are subject to regulation under the insurance holding company statutes
of the states in which our insurance subsidiaries are organized, principally
Massachusetts, which is our state of domicile. The Massachusetts insurance law
contains provisions which, in general, provide that the acquisition or change of
"control" of a domestic insurer or of any person that controls a domestic
insurer cannot be consummated without the prior approval of the Massachusetts
Commissioner of Insurance. In general, a presumption of "control" arises from
the ownership, control, possession with the power to vote or possession of
proxies with respect to, 10% or more of the voting securities of an insurer or
of a person that controls an insurer. A person seeking to acquire control,
directly or indirectly, of a Massachusetts insurance company or of any person
controlling a Massachusetts insurance company must file an application for
approval of the acquisition of control with the Massachusetts Commissioner of
Insurance and obtain the approval of the Massachusetts Commissioner of Insurance
before consummating the acquisition.

      In addition, we may in the future become subject to New York insurance law
governing the activities of insurance holding companies. Delaware insurance
holding company laws and similar Canadian laws apply to us as well because we
have insurance subsidiaries organized in Delaware and Canada. Accordingly, any
direct or indirect acquisition of control of John Hancock Life Insurance Company
will be subject to the prior approval of the Delaware Commissioner of Insurance
and may also be subject to the prior approval of the New York Superintendent of
Insurance in the event John Hancock Life Insurance Company is deemed a New York
domestic insurer under the provisions of the New York insurance holding company
law. Moreover, any acquisition of JHFS, if the acquisition qualifies as an
"acquisition of control" or "control in fact" as those terms are defined by the
Insurance Companies Act of Canada, may also be subject to the prior approval of
the Office of the Superintendent of Financial Institutions of Canada.


                                       26
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

In addition to the restrictions under applicable insurance holding company
statutes, the Plan of Reorganization governing our reorganization also
prohibits:

o     any person, or persons acting in concert, from directly or indirectly
      acquiring or offering to acquire beneficial ownership of 10% or more of
      the outstanding shares of our common stock until February 1, 2002; and
o     without prior approval of the board of directors of JHFS and the
      Massachusetts Commissioner of Insurance, any person, or persons acting in
      concert, from directly or indirectly acquiring or offering to acquire
      beneficial ownership of 10% or more of the outstanding shares of our
      common stock until February 1, 2003.

By virtue of these provisions of the Plan of Reorganization, John Hancock Life
Insurance Company was not subject to an acquisition by another company during
the two years following the effective date of the reorganization and, until
February 1, 2003, may not be subject to acquisition without the prior approval
of the board of directors of JHFS and the Massachusetts Commissioner of
Insurance.

There is an exception to the foregoing prohibition for an acquisition by a
person that becomes a beneficial owner of 10% or more of our common stock as a
result of our issuance of such common stock to such person as consideration in
an acquisition of another entity that was initiated, by the authority of our
Board of Directors.

The restrictions described above may deter, delay or prevent a future
acquisition of control, including transactions that could be perceived as
advantageous to our sole shareholders.

Regulation of Dividends and Other Payments from Insurance Subsidiaries

      JHFS is a holding company and its primary assets are the outstanding
capital stock of John Hancock Life Insurance Company, along with Maritime and
several other international subsidiaries. As an insurance holding company, JHFS
depends primarily on dividends from John Hancock Life Insurance Company to pay
dividends to its shareholders, and pay operating expenses and implement its
capital management strategies. Any inability of John Hancock Life Insurance
Company to pay dividends to JHFS in the future in an amount sufficient for JHFS
to pay dividends to its shareholders, implement some of its capital management
plans and meet its cash obligations may materially adversely affect the market
price of its common stock and its business, financial condition or results of
operations.

      The Massachusetts insurance law limits how and when John Hancock Life
Insurance Company can pay dividends to JHFS. Under the Massachusetts insurance
law, no insurer may pay any shareholder dividend from any source other than
statutory unassigned funds without the prior approval of the Massachusetts
Commissioner of Insurance. The Massachusetts insurance holding company act
requires that a report be given to the Massachusetts Commissioner of Insurance
no later than five days following declaration, and at least ten days' prior to
payment, of any dividend or distribution by a Massachusetts insurance company.
Further, this act provides that no extraordinary dividend may be paid without
thirty days' prior written notice to the Massachusetts Commissioner of
Insurance, and only if the Massachusetts Commissioner of Insurance has not
disapproved, or has approved, the payment within the thirty day notice period.
An extraordinary dividend is any dividend or distribution of cash or other
property whose fair market value, together with other dividends or distributions
made within the preceding twelve months, exceeds the greater of (1) 10% of an
insurance company's surplus as regards policyholders as of the preceding
December 31, and (2) a life insurance company's statutory net gain from
operations for the twelve months ending on the preceding December 31. Although
not currently viewed as such, John Hancock Life Insurance Company, in the
future, could also be viewed as being commercially domiciled in New York and, if
so, dividend payments may also be subject to New York's insurance holding
company act as well as Massachusetts law.

Surplus and Capital Requirements

      Insurance regulators have the discretionary authority, in connection with
the ongoing licensing of our insurance businesses, to limit or prohibit the
ability to issue new policies if, in the regulators' judgment, the insurer is
not maintaining a minimum amount of surplus or is in hazardous financial
condition. Limits may also be established on the ability to issue new life
insurance policies and annuity contracts above an amount based upon the face
amount and premiums of policies of a similar type issued in the prior year.


                                       27
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

Risk-Based Capital

The National Association of Insurance Commissioners (NAIC) has established
risk-based capital (RBC) standards for life insurance companies as well as a
model act to apply such standards at the state level. The model act provides
that life insurance companies must submit an annual risk-based capital report to
state regulators reporting their risk-based capital based on five categories of
risk: asset risk-affiliates, asset risk-other, insurance risk, interest rate
risk and business risk. The formula is intended to be used by insurance
regulators as an early warning tool to identify possible weakly capitalized
companies for purposes of initiating further regulatory action.

In 2001, the NAIC changed the risked-based capital formula which resulted in RBC
charges or a higher risk-based capital ratio. The most significant change made
by NAIC is to tax effect the RBC, which is similar to reducing the risk factors
being applied to the different risk categories. One other change was the
creation of a common stock asset risk category and its treatment in the
covariance calculation. This change also lowered RBC. John Hancock took certain
actions to improve the risk-based capital ratio. The two most significant
actions were the partial reinsurance of the closed block and the upstreaming of
some of the Life Company's foreign insurance affiliates to JHFS. John Hancock
Life Insurance Company exceeded the level of risk-based capital that would
require it to propose actions to correct a deficiency by 151.2 percentage points
as of December 31, 2001.

Statutory Investment Valuation Reserves

      Life insurance companies are required to establish an asset valuation
reserve (AVR) consisting of two components: (i) a "default component," which
provides for future credit-related losses on fixed maturity investments, and
(ii) an "equity component," which provides for losses on all types of equity
investments, including equity securities and real estate. Insurers also are
required to establish an interest maintenance reserve (IMR) for net realized
capital gains and losses on fixed maturity securities, net of tax, related to
changes in interest rates. The IMR is required to be amortized into statutory
earnings on a basis reflecting the remaining period to maturity of the fixed
maturity securities sold. These reserves are required by state insurance
regulatory authorities to be established as a liability on a life insurer's
statutory financial statements, but do not affect our financial statements
prepared in accordance with GAAP. Although future additions to AVR will reduce
the future statutory capital and surplus of John Hancock Life Insurance Company,
we do not believe that the impact under current regulations of such reserve
requirements will materially affect the ability of John Hancock Life Insurance
Company to increase its statutory capital and surplus and pay future dividends
to John Hancock Financial Services, Inc.

IRIS Ratios

The National Association of Insurance Commissioners has developed a set of
financial tests known as the Insurance Regulatory Information System (IRIS) for
early identification of companies which may require special attention by
insurance regulators. Insurance companies submit data on an annual basis to the
National Association of Insurance Commissioners. This data is used to calculate
ratios covering various categories of financial data, with defined "usual
ranges" for each category. IRIS consists of 13 key financial ratios for life
insurance companies. An insurance company may fall out of the usual range with
respect to one or more ratios because of specific transactions that are in
themselves immaterial or eliminated at the consolidated level. Departure from
the usual range on four or more of the ratios may lead to inquiries from
individual states' insurance departments. During the five-year period ended
December 31, 2001, John Hancock Life Insurance Company was outside the usual
range for Net Change in Capital Surplus ratio for the year 2000, and the Change
in Product Mix and Change in Reserving ratios in 2001. The Change in Capital
Surplus ratio fell outside the usual range in 2000 because of the
demutualization transaction. Specifically, under the applicable statutory
accounting rules, the Company was required to exclude the proceeds from the
stock offering from surplus while the demutualization consideration paid in cash
was deducted from surplus, thereby distorting the ratio. This adjustment did not
recur in the year 2001 and it is not expected to occur in 2002. The unusual
ratios in 2001 were the result of the implementation of new statutory accounting
rules and are not expected to recur. During the same period, John Hancock
Variable Life Insurance Company and Investors Partner Life Insurance Company,
which are wholly owned direct and indirect subsidiaries of John Hancock Life
Insurance Company, respectively, had several ratios outside of the usual range.
John Hancock Variable Life Insurance Company had eight unusual ratios, all of
which resulted from growth in the business and the effect of reinsurance
contracts with John Hancock Life Insurance Company. Investors Partner Life
Insurance Company had ten unusual ratios due to the fact it writes no new
business.


                                       28
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

Regulation of Investments

Our insurance businesses are subject to state laws and regulations that require
diversification of their investment portfolios. Some of these laws and
regulations also limit the amount of investments in specified investment
categories, such as below investment grade fixed maturity securities, equity
real estate, other equity investments and derivatives. Failure to comply with
these laws and regulations would cause investments exceeding regulatory
limitations to be treated as nonadmitted assets for purposes of measuring
statutory surplus, in some instances, requiring divestiture. State regulatory
authorities from the domiciliary states of our insurance subsidiaries have not
indicated any non-compliance with any such regulations.

Valuation of Life Insurance Policies Model Regulation

The National Association of Insurance Commissioners has adopted a revision to
the Valuation of Life Insurance Policies Model Regulation (known as Revised
XXX). This model regulation established new minimum statutory reserve
requirements for certain individual life insurance policies written in the
future. Before the new reserve standards can become effective, individual states
must adopt the model regulation. Massachusetts adopted the Regulation effective
January 1, 2001 and JHFS established increased reserves to be consistent with
the new minimum standards with respect to policies issued after the effective
date of the regulation. In addition, JHFS revised its term life insurance
products with guaranteed premium periods and is in the process of revising and
expanding its universal life insurance products with no-lapse guarantees.

Federal Insurance Initiatives and Legislation

Although the Federal government generally does not directly regulate the
insurance business, federal initiatives often have an impact on our business.
Current and proposed measures that may significantly affect the insurance
business generally include limitations on anti-trust immunity, minimum solvency
requirements and health care reform.

On November 12, 1999, the Gramm-Leach-Bliley Act of 1999 became law,
implementing fundamental changes in the regulation of the financial services
industry in the United States. The act permits the transformation of the already
converging banking, insurance and securities industries by permitting mergers
that combine commercial banks, insurers and securities firms under one holding
company. Under the act, national banks retain their existing ability to sell
insurance products in some circumstances. In addition, bank holding companies
that qualify and elect to be treated as "financial holding companies" may engage
in activities, and acquire companies engaged in activities, that are "financial"
in nature or "incidental" or "complementary" to such financial activities,
including acting as principal, agent or broker in selling life, property and
casualty and other forms of insurance, including annuities. A financial holding
company can own any kind of insurance company or insurance broker or agent, but
its bank subsidiary cannot own the insurance company. Under state law, the
financial holding company would need to apply to the insurance commissioner in
the insurer's state of domicile for prior approval of the acquisition of the
insurer, and the act provides that the commissioner, in considering the
application, may not discriminate against the financial holding company because
it is affiliated with a bank. Under the act, no state may prevent or interfere
with affiliations between banks and insurers, insurance agents or brokers, or
the licensing of a bank or affiliate as an insurer or agent or broker.

On October 26, 2001, the International Money Laundering Abatement and
Anti-Terrorist Financing Act of 2001 was enacted into law as part of the USA
PATRIOT Act. Among its many provisions the law requires that financial
institutions adopt anti-money laundering programs that include policies,
procedures and controls to detect and prevent money laundering, designate a
compliance officer to oversee the program and provide for employee training, and
periodic audits in accordance with regulations to be issued by the U.S. Treasury
Department. The Company is actively developing a program in order to fully
comply with the applicable provisions of the Act and the related Treasury
Regulations.

Tax Legislation

Currently, under the Internal Revenue Code, holders of many life insurance and
annuity products, including both traditional and variable products, are entitled
to tax-favored treatment on these products. For example, income tax


                                       29
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

payable by policyholders on investment earnings under traditional and variable
life insurance and annuity products which are owned by natural persons is
deferred during the product's accumulation period and is payable, if at all,
only when the insurance or annuity benefits are actually paid or to be paid.
Also, for example, interest on loans up to $50,000 secured by the cash value of
life insurance policies owned by businesses on key employees is eligible for
deduction even though investment earnings during the accumulation period are
tax-deferred.

In the past, legislation has been proposed that would have curtailed the
tax-favored treatment of some of our insurance and annuity products. If any such
proposals were enacted, market demand for such products would be adversely
affected. In addition, the Economic Growth and Tax Relief Reconciliation Act of
2001 (EGTRRA), enacted by Congress in 2001, provides for the gradual reduction
and eventual elimination of Federal estate taxes by the year 2010. But EGTRRA
also contains a sunset provision which would reinstate Federal estate taxes in
the year 2011, based on the Internal Revenue Code in effect prior to the
enactment of EGTRRA. Many insurance products are designed and sold to help
policyholders reduce the effect of Federal estate taxation on their estates. The
enactment of EGTRRA has adversely affected sales of certain of our insurance and
investment advisory products, but this effect is mitigated somewhat by the
sunset provision. If the sunset provision of EGTRRA is eliminated in the future,
the adverse affect on the sales of these products could increase. In addition,
sales of split dollar life insurance products have been adversely affected by
proposed changes being considered by the Internal Revenue Service.

Securities Laws

Certain of our investment advisory activities are subject to federal and state
securities laws and regulations. Our mutual funds are registered under the
Securities Act of 1933, as amended (the "Securities Act"), and the Investment
Company Act. All of our separate investment accounts that fund retail variable
annuity contracts and retail variable life insurance products issued by us,
other than those which fund private placement investment options that are exempt
from registration or support fixed rate investment options that are also exempt
from registration, are registered both under the Securities Act and the
Investment Company Act. Institutional products such as group annuity contracts,
guaranteed investment contracts and funding agreements are sold to tax qualified
pension plans or are sold to other sophisticated investors as "private
placements," and are exempt from registration under both acts. Some of our
subsidiaries are registered as broker/dealers under the Securities Exchange Act
of 1934, as amended (the "Securities Exchange Act"), and with the National
Association of Securities Dealers, Inc., and a number are registered as
investment advisers under the Investment Advisers Act of 1940. One subsidiary is
registered as a commodity pool operator and as a commodity trading advisor under
the Commodity Exchange Act. Our insurance companies or other subsidiaries also
own or manage other investment vehicles that are exempt from registration under
the Securities Act and the Investment Company Act but may be subject to other
requirements of those laws, such as antifraud provisions and the terms of
applicable exemptions. We are also subject to similar laws and regulations in
the states and foreign countries in which we provide investment advisory
services, offer the products described above or non-variable life and annuity
products or conduct other securities and investment related activities.

Environmental Considerations

As owners and operators of real property, we are subject to extensive federal,
state and local environmental laws and regulations. Inherent in such ownership
and operation is the risk that there may be potential environmental liabilities
and costs in connection with any required remediation of such properties. When
deemed appropriate, we routinely conduct environmental assessments for real
estate being acquired for investment and before taking title to property
acquired through foreclosure or deed in lieu of foreclosure. Based on these
environmental assessments and compliance with our internal environmental
procedures, we believe that any costs associated with compliance with
environmental laws and regulations or any remediation of such properties would
not be material to our consolidated financial position or results of operations.
Furthermore, although we hold equity positions in subsidiaries and investments
that could potentially be subject to environmental liabilities, we believe,
based on our assessment of the business and properties of these companies and
our level of involvement in the operation and management of such companies, that
we would not be subject to any environmental liabilities with respect to these
investments which would have a material adverse effect on our business,
financial position or results of operations.


                                       30
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

ERISA Considerations

Certain of our lines of business, including our management of employee benefit
plan assets in our advisory capacity in separate accounts, are subject to the
requirements of ERISA. In addition, the Small Business Job Protection Act, which
we refer to as the SBJPA, offers insurers protection from potential litigation
exposure prompted by the 1993 U.S. Supreme Court decision in John Hancock Mutual
Life Insurance Company v. Harris Trust & Savings Bank, which we refer to as the
Harris Trust Decision, in which the Court held that, with respect to a portion
of the funds held under certain general account group annuity contracts, an
insurer is subject to the fiduciary requirements of ERISA. The pertinent SBJPA
provisions provide that insurers are protected from liability for breaches of
fiduciary duties under ERISA for past actions with respect to their general
account contracts. However, insurers remain subject to federal criminal law and
liable for actions brought by the U.S. Secretary of Labor alleging breaches of
fiduciary duties that also constitute a violation of federal or state criminal
law. The SBJPA also provides that contracts issued from an insurer's general
account on or before December 31, 1998, that are not guaranteed benefit
policies, will not be subject to ERISA's fiduciary requirements if they meet the
requirements of regulations issued by the United States Department of Labor. The
SBJPA further provides that contracts issued from an insurer's general account
after December 31, 1998, that are not guaranteed benefit policies will be
subject to ERISA. In January 2000, the Department of Labor published a
regulation pursuant to the SBJPA which provides, among other things, that if an
employee benefit plan acquired an insurance policy (other than a guaranteed
benefit policy) issued on or before December 31, 1998 that is supported by the
assets of the insurer's general account, the plan's assets for purposes of ERISA
will not be deemed to include any of the assets of the insurer's general
account, provided that the requirements of the regulation are met. Accordingly,
if those requirements are met, the insurer is not subject to the fiduciary
obligations of ERISA in connection with such an insurance policy. These
requirements include detailed disclosures to be made to the employee benefit
plan and the requirement that the insurer must permit the policyholder to
terminate the policy on 90 days' notice and receive without penalty, at the
policyholder's option, either (1) the accumulated fund balance (which may be
subject to market value adjustment) or (2) a book value payment of such amount
in annual installments with interest. John Hancock Life Insurance Company has
implemented procedures to comply with the requirements set forth therein to
secure the exemption provided by the regulations from the fiduciary obligations
of ERISA. However, John Hancock Life Insurance Company's exposure to
disintermediation risk could increase due to the termination options that it
would be required to provide to policyholders. Any such increase, however, would
not be material. Since there has been no final ruling in the Harris Trust case
(described under "Item 3. Legal Proceedings" in this Form 10-K), we are unable
at this time to determine the effects of the decision, and therefore cannot
compare the litigation risk to the disintermediation risk created by compliance
with the regulations. With respect to employee welfare benefit plans subject to
ERISA, Congress periodically has considered amendments to the law's Federal
preemption provision, which would expose John Hancock Life Insurance Company,
and the insurance industry generally, to state law causes of action, and
accompanying extra-contractual (e.g., punitive) damages in lawsuits involving,
for example, group life and group disability claims. To date, all such
amendments to ERISA have been defeated.

Employees

As of January 31, 2002, we employed approximately 8,355 people. We believe our
relations with our employees are satisfactory.


                                       31
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

 ITEM 1A.  Executive Officers of the Registrant

      The names of the executive officers of John Hancock Financial Services,
Inc. and their respective ages and positions, as of March 15, 2002:

<TABLE>
<CAPTION>
NAME                          AGE      POSITION

<S>                           <C>      <C>
David F. D'Alessandro         51       Chairman, President, Chief Executive Officer and Director
Michael A. Bell               46       Senior Executive Vice President
Wayne A. Budd                 60       Executive Vice President, General Counsel and Director
Derek Chilvers                62       Executive Vice President
John M. DeCiccio              53       Executive Vice President and Chief Investment Officer
Maureen R. Ford               46       Executive Vice President
Thomas E. Moloney             58       Senior Executive Vice President and Chief Financial Officer
Robert F. Walters             52       Executive Vice President and Chief Information Officer
</TABLE>

      David F. D'Alessandro, 51, has been the Chairman of John Hancock Financial
Services, Inc. and John Hancock Life Insurance Company since 2001, the President
and Chief Executive Officer and a director of the Company since 2000. He had
been President and Chief Operations Officer of John Hancock Life Insurance
Company since 1998 and a John Hancock Life Insurance Company director since
1990. From 1988 to 1997 he was Senior Executive Vice President of John Hancock
Life Insurance Company. He is Chairman of the Executive Committee of the board
of directors of John Hancock Financial Services, Inc., Chairman and Chief
Executive Officer of John Hancock Variable Life Insurance Company and Chairman
of John Hancock Subsidiaries, LLC and a director of The Berkeley Financial
Group, LLC. He is a director of Partners HealthCare System, Inc., an integrated
healthcare delivery system.

      Michael A. Bell, 46, has been a Senior Executive Vice President of John
Hancock Financial Services, Inc. since 2001. From 1983 to the present, Mr. Bell
has been a Managing Director of Monitor Company. From 1997 to the present, he
has been Managing Director of Monitor Clipper Partners, Inc. He is a director of
Partners HealthCare System, Inc., an integrated healthcare delivery system.

      Wayne A. Budd, 60, has been the Executive Vice President and General
Counsel and a director of John Hancock Financial Services, Inc. since 2000 and a
John Hancock Life Insurance Company director since 1998. He is a director of
John Hancock Subsidiaries, LLC. From 1996 to 2000, Mr. Budd was Group President
- New England for the Bell Atlantic Corporation (now Verizon Communications,
Inc.). Prior to his position with Bell Atlantic, Mr. Budd was a Senior Partner
in the law firm of Goodwin Procter LLP.

      Derek Chilvers, 62, has been an Executive Vice President of John Hancock
Financial Services, Inc. and John Hancock Life Insurance Company since 2001. He
was Senior Vice President of John Hancock Life Insurance Company from 1986 to
2001. He also has been Chairman and Chief Executive Officer of John Hancock
International Holdings, Inc. since 1999 and Chairman and Chief Executive Officer
of John Hancock International, Inc. since 2000. He has been a director of John
Hancock Subsidiaries, LLC since 2001.

      John M. DeCiccio, 53, has been the Executive Vice President of John
Hancock Financial Services, Inc. and Chief Investment Officer of John Hancock
Life Insurance Company since 2000. From 1994 through 2000, he was Senior Vice
President, Investment and Pension Sector, of John Hancock Mutual Life Insurance
Company. From 1997 through 2000, he led the demutualization project for John
Hancock Mutual Life Insurance Company. He is a director of John Hancock
Subsidiaries, LLC, Signator Investors, Inc., John Hancock Signature Services,
Inc., Independence Investment, LLC, and The Berkeley Financial Group, LLC.

      Maureen R. Ford, 46, has been an Executive Vice President of John Hancock
Financial Services, Inc. and a director of John Hancock Subsidiaries, LLC since
2001. She has been Chairman and Chief Executive Officer of The Berkeley
Financial Services Group, LLC (the John Hancock Funds' complex) since 2001. She
was Vice Chairman and Chief Executive Officer of John Hancock Funds, LLC from
1999 to 2001.


                                       32
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

      Thomas E. Moloney, 58, has been a Senior Executive Vice President of
John Hancock Financial Services, Inc. since 2001. He has also been Chief
Financial Officer of John Hancock Financial Services, Inc. since 1999 and of
John Hancock Life Insurance Company since 1992. He is the Chairman and a
director of John Hancock Management Company and John Hancock Reassurance Co.,
Ltd. He is Chairman of John Hancock Signature Services. He is Chief Financial
Officer of John Hancock Subsidiaries, LLC since 1992. He is a director of The
Berkeley Financial Group, LLC, John Hancock Realty Services Corp., The Maritime
Life Assurance Company and John Hancock Canadian Holdings Limited.

      Robert F. Walters, 52, has been the Executive Vice President and Chief
Information Officer of John Hancock Financial Services, Inc. and Executive Vice
President of John Hancock Life Insurance Company since 2001. He was Senior Vice
President and Chief Information Officer of John Hancock Life Insurance Company
from 1995 to 2001. He is a director of Essex Corporation.

ITEM 2. Properties

      Our home office consists of our 60-story landmark office tower and five
other buildings located in Boston, Massachusetts. We own this facility and
occupy approximately 44.0% of the 3.8 million gross square feet of space in
these buildings. The balance of the space in these buildings is rented to
commercial tenants. In addition, we lease office space throughout the United
States as needed for our operations, including for our sales force. We believe
that our current facilities are adequate for our current and expected needs.

ITEM 3. Legal Proceedings

 Sales Practice Class Action Settlement

      Over the past several years, companies engaged in the life insurance
business have faced extensive claims, including class-action lawsuits, alleging
improper marketing and sales of individual life insurance policies or annuities.
On December 31, 1997, the United States District Court for the District of
Massachusetts approved a settlement of a nationwide class action lawsuit
regarding sales practices against John Hancock Mutual Life Insurance Company,
John Hancock Variable Life Insurance Company and John Hancock Distributors,
Inc., captioned Duhaime, et al. v. John Hancock Mutual Life Insurance
                -----------------------------------------------------
Company, John Hancock Variable Life Insurance Company and John Hancock
----------------------------------------------------------------------
Distributors, Inc. With certain limited exceptions, the class that is bound by
------------------
the terms of the settlement includes persons and entities who at any time during
the class period (January 1, 1979 through December 31, 1996) had an ownership
interest in one or more of our whole life, universal life or variable life
insurance policies (and certain annuities and mutual funds) issued during the
class period.

      In conjunction with this settlement, we had a total reserve that stood at
$52.7 million and $224.0 million at December 31, 2001 and 2000, respectively. We
incurred settlement related costs of $30.0 million and $140.2 million in 2001
and 1999, respectively. No such costs were incurred in 2000. In 1999, the
Company updated its estimate of the cost of claims subject to alternative
dispute resolution (ADR) relief and revised its reserve estimate accordingly.
The reserve estimate was further evaluated quarterly, and was adjusted as noted
above in 2001. The adjustment to the reserve in 2001 was the result of the
Company being able to better estimate the cost of settling the remaining claims,
which on average tend to be the larger more complicated claims. The better
estimate is from experience with actual settlement of similar claims.

      Administration of the ADR component of the settlement continues to date.
Although some uncertainty remains as to the cost of claims in the final phase
(i.e. arbitration) of the ADR process, it is expected that the final cost of the
settlement will not differ materially from the amounts presently provided for by
the Company.

Harris Trust Litigation

      Since 1983, we have been involved in complex litigation known as Harris
Trust and Savings Bank, as Trustee of Sperry Master Retirement Trust No. 2 v.
John Hancock Mutual Life Insurance Company (S.D.N.Y. Civ. 83-5491). This lawsuit
originally raised only state law causes of action, but in 1984, the plaintiff
amended the Complaint to allege that John Hancock was a fiduciary and party in
interest under ERISA in rendering investment advice and exercising control over
plan assets. Plaintiff alleged that John Hancock breached its fiduciary duty in
failing to act for the exclusive benefit of plan participants by retaining
excess funds of the plan, by imposing arbitrary charges for a return of plan
funds, by failing to pay an appropriate rate of interest on plan funds, and by


                                       33
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

charging the plan excessive compensation. In 1989, the District Court dismissed
all of plaintiff's ERISA claims and, in 1991, also dismissed all of plaintiff's
state law claims. The plaintiff appealed to the Second Circuit Court of Appeals,
seeking reversal of several of the District Court's rulings, including two of
the rulings regarding the applicability of ERISA to the dispute. The District
Court's state law rulings were upheld, and the ERISA rulings were affirmed in
part and reversed in part. Specifically, the Second Circuit upheld the District
Court's conclusion that John Hancock was not a fiduciary under ERISA with
respect to the insurance policy as a contract. The Second Circuit, however,
reversed the District Court's determination that none of the assets, held by
John Hancock in its general account in connection with this contract were plan
assets, and held that "free funds" associated with this contract constitute plan
assets for ERISA purposes. This decision was appealed to the Supreme Court,
which affirmed the Second Circuit's ruling in 1993. The Department of Labor
filed an amicus brief in support of John Hancock's position on the merits before
the Supreme Court. The case was remanded to the District Court. The case was
tried to a Federal District Court judge in 1997, and the judge issued an opinion
in November 2000.

      In that opinion the judge determined that John Hancock should have allowed
the Trust to withdraw the free funds by means of an extracontractual payout. The
Court awarded the Trust approximately $13.8 million in relation to this claim
together with unspecified additional pre-judgment interest on this amount from
October 1988.

      The Court also determined that Hancock violated its fiduciary duty when it
failed to revalue the liabilities for guaranteed benefits, which had been
established at rates set out in the contract, on a basis which was more
favorable to the Trust. In addition, the Court concluded that certain of
Hancock's internal allocations of expenses and investment income violated ERISA.
Damages in the amount of approximately $5.7 million, together with unspecified
pre-judgment interest from December 1996, were awarded on these issues. As part
of the relief, the judge ordered the removal of Hancock as a fiduciary to the
plan. On April 11, 2001, the Court entered a judgment against John Hancock for
approximately $84.9 million which includes damages to plaintiff, pre-judgment
interest, attorney's fees and other costs.

      We believe that the underlying case was incorrectly decided and there are
promising grounds for challenging the District Court's decision. We have filed
an appeal and believe that it is probable that the Appeals Court will reverse
the lower court's decision. Notwithstanding what we believe to be the merits of
the Company's position in this case, if unsuccessful, our ultimate liability,
including fees, costs and interest could have a material adverse impact on net
income. However, we do not believe that any such liability would be material in
relation to our financial position or liquidity.

Other Legal and Regulatory Proceedings

      We are regularly involved in other litigation, both as a defendant and as
a plaintiff. The litigation naming us as a defendant ordinarily involves our
activities as a provider of insurance protection products, as well as an
investment adviser, employer and taxpayer. In addition, state regulatory bodies,
the United States Securities and Exchange Commission, the National Association
of Securities Dealers, Inc. and other regulatory bodies regularly make inquiries
and, from time to time conduct examinations concerning our compliance with,
among other things, insurance laws, securities laws, and laws governing the
activities of broker/dealers. We do not believe at this time that the ultimate
resolution of any of these legal or regulatory matters that are currently
pending, either individually or in the aggregate, will have a material adverse
effect on our financial condition or results of operations.

ITEM 4. Submission of Matters to a Vote of Security Holders

      No matter was submitted to a vote of security holders of John Hancock
Financial Services, Inc. during the fourth quarter of the fiscal year covered by
this report.


                                       34
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

PART II

ITEM 5. Market for John Hancock Financial Services, Inc. Common Stock and
Related Shareholder Matters

      JHFS's common stock began trading on the New York Stock Exchange (NYSE)
under the symbol "JHF" on January 27, 2000. Prior to such date, there was no
established public trading market for the common stock. As of February 28, 2001,
there were approximately 780,000 shareholders of record and 297.3 million shares
outstanding.

      The following table presents the high and low prices for the common stock
of John Hancock on the NYSE for the periods indicated and the dividends declared
per share during such periods.

                                               High          Low       Dividends
2001
First Quarter                                 $40.00       $31.50          --
Second Quarter                                 41.40        33.86          --
Third Quarter                                  41.70        33.15          --
Fourth Quarter                                 41.93        33.34        $0.31

2000
For the period from February 1,
      2001 through March 31, 2001              18.81        13.44          --
Second Quarter                                 24.63        16.38          --
Third Quarter                                  28.13        20.63          --
Fourth Quarter                                 38.25        25.63         0.30

JHFS paid annual cash dividends of $0.31 and $0.30 per common share on December
13, 2001 and December 14, 2000 to shareholders of record on the close of
business on November 16, 2001 and November 20, 2000, respectively. Future
dividend decisions will be based on, and affected by, a number of factors,
including the operating results and financial requirements of the Company and
the impact of regulatory restrictions. See Regulation and Management's
Discussion and Analysis - Liquidity and Capital Resources, included elsewhere in
this Form 10-K.


                                       35
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

ITEM 6. Selected Financial Data

      The following table sets forth certain selected historical consolidated
financial data. The selected income statement data for each of the years in the
three year period ended December 31, 2001 and balance sheet data as of December
31, 2001 and 2000 have been derived from our consolidated financial statements
and related notes, included elsewhere in this Form 10-K and should be read in
conjunction with those financial statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations, also included
elsewhere in this Form 10-K. The following selected income statement data for
the years ended December 31, 1998 and 1997 and balance sheet data as of December
31, 1999, 1998 and 1997 have been derived from our consolidated financial
statements not included herein. The following selected consolidated financial
data has been prepared in accordance with GAAP, except that the statutory data
presented below has been prepared in accordance with applicable statutory
accounting practices and was taken from our annual statements filed with
insurance regulatory authorities. Certain reclassifications to prior periods
have been made to conform to the current period presentations.

<TABLE>
<CAPTION>
                                                                    For the Years Ended December 31,
                                                                    --------------------------------
                                                         2001        2000         1999        1998        1997
                                                     ---------------------------------------------------------------
                                                                             (in millions)

<S>                                                    <C>          <C>         <C>         <C>          <C>
Income Statement Data: (1)
Revenues
Premiums.........................................      $3,851.3     $3,452.1    $2,717.5    $2,197.9     $2,473.6
Universal life and investment-type
    Product charges..............................         772.5        749.3       703.5       597.0        512.0
Net investment income............................       3,944.9      3,864.8     3,524.1     3,330.7      3,190.7
Net realized investment gains (losses), net of
   related amortization of deferred policy
   acquisition costs, amounts credited to
   participating pension contractholders and
   amounts credited to policyholder dividend
   obligation (2)................................        (249.1)        88.7       175.1       106.4        157.0
Investment management revenues, commissions and
   other fees....................................         602.9        764.8       680.9       659.7        554.7
Other revenue....................................         186.5         17.6         6.5        10.3         58.3
                                                     ---------------------------------------------------------------
       Total revenues............................       9,109.0      8,937.3     7,807.6     6,902.0      6,946.3
       Total benefits and expenses (3) (4).......       8,282.9      7,779.0     7,545.4     6,275.9      6,356.6
                                                     ---------------------------------------------------------------
Income before income taxes and cumulative
   effect of accounting changes..................         826.1      1,158.3       262.2       626.1        589.7
Income taxes.....................................         214.6        339.6        99.3       177.6        106.4
                                                     ---------------------------------------------------------------
 Income before cumulative effect of accounting
   changes.......................................         611.5        818.7       162.9       448.5        483.3
Cumulative effect of accounting changes..........           7.2           --        (9.7)         --           --
                                                     ---------------------------------------------------------------
       Net income................................       $ 618.7       $818.7      $153.2      $448.5       $483.3
                                                     ===============================================================
Basic earnings per common share (5)
   Income before cumulative effect of
     accounting changes..........................         $2.01        $2.60       $0.52
   Cumulative effect of accounting changes.......          0.02           --       (0.03)
                                                     --------------------------------------
       Net income................................         $2.03        $2.60       $0.49
                                                     ======================================
Diluted earnings per common share (5)
   Income before cumulative effect of
     accounting changes..........................         $1.99        $2.59       $0.52
   Cumulative effect of accounting changes.......          0.02           --       (0.03)
                                                     --------------------------------------
       Net income................................         $2.01        $2.59       $0.49
                                                     ======================================
Cash dividends paid per share....................         $0.31        $0.30          --
</TABLE>


                                       36
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

<TABLE>
<CAPTION>
                                                               As of or for the Years Ended December 31,
                                                               -----------------------------------------
                                                         2001        2000         1999        1998        1997
                                                     ---------------------------------------------------------------
                                                                             (in millions)

<S>                                                   <C>          <C>         <C>         <C>          <C>
Balance Sheet Data:
General account assets...........................     $68,425.7    $60,940.1   $56,408.1   $52,000.1    $49,906.4
Separate account assets..........................      22,718.5     26,454.8    28,047.6    24,966.6     21,511.1
Total assets.....................................      91,144.2     87,394.9    84,455.7    76,966.7     71,417.5
General account liabilities......................      61,079.3     54,557.1    50,986.6    46,416.9     44,667.7
Long-term debt...................................       1,359.1        534.0       536.9       602.7        543.3
Separate account liabilities.....................      22,718.5     26,454.8    28,047.6    24,966.6     21,511.1
Total liabilities................................      85,156.9     81,545.9    79,571.1    71,986.2     66,722.1

Minority interest................................         122.3         93.5        93.5        25.3         25.3

Shareholders' equity (6).........................       5,865.0      5,755.5     4,791.1     4,955.2      4,670.1
</TABLE>

      We evaluate segment performance and base management's incentives on
segment after-tax operating income. For a discussion of segment after-tax
operating income see Management's Discussion and Analysis of Financial Condition
and Results of Operations included elsewhere in this Form 10-K.

1)    In December 2000, the American Institute of Certified Public Accountants
      (AICPA) issued SOP 00-3, "Accounting by Insurance Enterprises for
      Demutualizations and Formations of Mutual Insurance Holding Companies and
      Certain Long-Duration Participating Contracts." The SOP, which was adopted
      with respect to accounting for demutualization expenses by the Company on
      December 31, 2000, requires that demutualization related expenses be
      classified as a single line item within income from continuing operations
      and should not be classified as an extraordinary item. The adoption of SOP
      00-3 resulted in the reclassification of demutualization expenses
      previously recorded as an extraordinary item in 1999 of $93.6 million (net
      of tax of $2.6 million). On October 1, 2001, the Company adopted the
      remaining provisions of SOP 00-3 which required the reclassification of
      $9,710.0 million and $12,035.9 million of closed block assets and
      liabilities, respectively at December 31, 2000, and $1,467.7 million and
      $1,343.6 million of closed block revenues, and benefits and expenses,
      respectively, for the period from February 1, 2000 (date of
      demutualization) to December 31, 2000, all of which were reclassified to
      other existing asset, liability, revenue, and benefit and expense
      accounts. The required implementation of SOP 00-3 also resulted in a
      reduction of net income of $20.2 million (net of tax of $6.6 million) or
      $0.06 diluted earnings per common share for the period from February 1,
      2000 to December 31, 2000 and $3.4 million (net of tax of $1.8) or $0.01
      diluted earnings per common share for the nine months ended September 30,
      2001. Finally, adoption also resulted in the recognition of a policyholder
      dividend obligation of $77.0 million at December 31, 2000, which
      represents cumulative actual closed block earnings in excess of expected
      periodic amounts calculated at the date of the demutualization. See Note 5
      to the consolidated financial statements for a summary description of the
      closed block assets, liabilities, revenues and expenses.
2)    Net realized investment and other gains (losses) have been reduced by: (1)
      amortization of deferred policy acquisition costs to the extent that such
      amortization results from net realized gains and losses, (2) the portion
      of net realized investments and other gains and losses credited to
      participating pension contractholder accounts, and (3) amounts credited to
      the policyholder dividend obligation. We believe presenting net realized
      investment and other gains and losses in this format provides information
      useful in evaluating our operating performance. This presentation may not
      be comparable to presentations made by other insurers. For a presentation
      of net realized investment and other gains and related amounts see
      Management's Discussion and Analysis of Financial Condition and Results of
      Segment Operations included elsewhere in this Form 10-K.
3)    Total benefits and expenses includes benefits to policyholders of $5,904.7
      million, $5,375.6 million, $5,368.5 million, $4,152.0 million, $4,303.1
      million for the years ended December 31, 2001, 2000, 1999, 1998 and 1997,
      respectively. Benefits to policyholders excludes amounts related to net
      realized investment and other gains credited to participating pension
      contractholders and policyholder dividend obligation of $25.3 million,
      $21.0 million, $35.3 million, $79.1 million and $29.3 million for the
      years ended December 31, 2001, 2000, 1999, 1998 and 1997, respectively.
4)    Total benefits and expenses includes amortization of deferred policy
      acquisition costs of $306.8 million, $242.0 million, $166.8 million,
      $249.7 million, and $312.0 million for the years ended December 31, 2001,
      2000, 1999, 1998 and 1997, respectively. Amortization of deferred policy
      acquisition costs excludes amounts related to net


                                       37
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

      realized investment and other gains (losses) of $(26.4) million, $(9.3)
      million, $50.5 million, $41.2 million and $31.2 million for the years
      ended December 31, 2001, 2000, 1999, 1998 and 1997, respectively.
5)    This is unaudited pro forma information which gives effect to the
      Reorganization and Initial Public Offering (IPO) of the Company referred
      to in Note 1 to our consolidated financial statements. Because the Company
      did not have outstanding common stock prior to its IPO on February 1,
      2000, the 1999 per share balances represent earnings per common share on a
      pro forma basis for the period January 1, 1999 through December 31, 1999
      using 314.8 million outstanding common shares for the basic and diluted
      calculations. The 2000 earnings per common share balances represent
      earnings per common share on a pro forma basis for the period from January
      1, 2000 through December 31, 2000 using 314.5 million and 316.2 million
      outstanding shares for the basic and diluted earnings per share
      calculations, respectively. Actual net income per common share for the
      period from February 1, 2000 through December 31, 2000 was $2.46 and $2.45
      for the basic and diluted calculations, respectively, after restatement
      for implementation of SOP 00-3 (see note 1 above). No cumulative effect of
      accounting change occurred in 2000. Pro forma earnings per share for the
      periods prior to 1999 are not presented, as it would not be meaningful.
6)    Includes adjustment under Statement of Financial Accounting Standards
      (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity
      Securities", and SFAS No. 133, "Accounting for Derivative Instruments and
      Hedging Activities", starting in 2001 Balances prior to 2000 are formerly
      referred to as policyholders' equity.

ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

      Management's Discussion and Analysis of Financial Condition and Results of
Operations is incorporated herein by reference to Management's Discussion and
Analysis of Financial Condition and Results of Operations, which is included in
Exhibit 13 to this Form 10-K.

ITEM 7A. Quantitative and Qualitative Information About Market Risk

      John Hancock Financial Services, Inc.'s exposure to market risk is
primarily related to credit risk and interest rate risk. Quantitative and
Qualitative Information About Market Risk resulting from credit issues and
interest rates are incorporated herein by reference to Quantitative and
Qualitative Information About Market Risk in Management's Discussion and
Analysis of Financial Condition and Results of Operations in our Annual Report
to Shareholders which is included in Exhibit 13 to this Form 10-K.

ITEM 8. Financial Statements and Supplementary Data

      The Company's Financial Statements and Supplementary Data, which are
included in Exhibit 13 to this Form 10-K, are incorporated herein by reference.

ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

      None.


                                       38
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

PART III

ITEM 10. Directors and Executive Officers of John Hancock Financial Services

      Certain of the information called for by Item 10 is set forth in the
definitive proxy statement for the 2002 annual meeting of shareholders (the
Proxy Statement) filed or to be filed by John Hancock Financial Services with
the United States Securities and Exchange Commission within 120 days after the
end of the fiscal year covered by this Form 10-K under the caption "Election of
Directors" and "The Board of Directors and Its Committees - General Information
and Committees," which information is incorporated herein by reference.
Additional information required by Item 10 regarding John Hancock Financial
Services' executive officers is set forth in Item 1A of this Form 10-K under the
caption "Executive Officers of the Registrant".

ITEM 11. Executive Compensation

      The information called for by Item 11 is set forth in the Proxy Statement
under the captions "Executive Compensation" and "The Board of Directors and Its
Committees - Compensation of Directors" and is incorporated herein by reference.

ITEM 12. Security Ownership of Certain Beneficial Owners and Management

      The information called for by Item 12 is set forth in the Proxy Statement
under the caption "Security Ownership" and is incorporated herein by reference.

ITEM 13. Certain Relationships and Related Transactions

      The information called for by Item 13 is set forth in the Proxy Statement
under the captions "The Board of Directors and Its Committees - Certain
Relationships" and "Executive Compensation - Stock Ownership Loan Program" and
is incorporated herein by reference.


                                       39
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

PART IV

ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)   Documents filed as part of this report.

1.    Financial Statements (See Item 8. Financial Statements and Supplementary
      Data)
      Report of Ernst & Young LLP, Independent Auditors
      Consolidated Financial Statements
         Balance Sheets
         Income Statements
         Statements of Shareholders' Equity and Comprehensive Income
         Statements of Cash Flows
         Notes to Financial Statements

2.    Financial Statement Schedules
      Schedule I - Summary of Investments - Other Than Investments in Related
         Parties
      Schedule II - Condensed Financial Information of Registrant (Parent only)
      Schedule III - Supplementary Insurance Information
      Schedule IV - Reinsurance

Note: All other financial statement schedules are omitted because they are
inapplicable.

3.    Exhibits.

Exhibit
Number                                  Description
-------                                 -----------

2.1      Plan of Reorganization*
3.1      Restated Certificate of Incorporation of John Hancock Financial
         Services, Inc.*
3.2      Amended and Restated By-Laws of John Hancock Financial Services, Inc.
         (As Adopted on February 11, 2002)**
10.1.1   Credit Agreement dated as of August 3, 2000, among John Hancock
         Financial Services, Inc., John Hancock Life Insurance Company, John
         Hancock Capital Corporation, the Banks listed therein, Fleet National
         Bank, as Co-Administrative Agent, The Chase Manhattan Bank, as
         Co-Administrative Agent, Citicorp USA, Inc., as Syndication Agent, and
         BankOne, NA as Documentation Agent, and FleetBoston Robertson Stephens,
         Inc., and Chase Securities, Inc., as Joint Book Managers and Joint Lead
         Arrangers.***
10.1.2   First Amendment dated as of July 27, 2001 to the Credit Agreement dated
         as of August 3, 2000 among John Hancock Financial Services, Inc., John
         Hancock Life Insurance Company, the Banks listed therein, Fleet
         National Bank, as Co-Administrative Agent, The Chase Manhattan Bank, as
         Co-Administrative Agent, Citicorp USA, Inc., as Syndication Agent,
         BankOne, NA as Documentation Agent (Multi-Year Revolver), The Bank of
         New York, as Co-Documentation Agent (364-Day Revolver) and The Bank of
         Nova


                                       40
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

         Scotia, as Co-Documentation Agent (364-Day Revolver) and Fleet
         Securities, Inc., and J.P. Morgan Securities, Inc., as Joint Book
         Managers and Joint Lead Arrangers.****
10.2.1   Employment Continuation Agreement between John Hancock Life Insurance
         Company, John Hancock Financial Services, Inc. and Michael A. Bell#+
10.2.2   Second Amended and Restated Employment Continuation Agreement between
         John Hancock Life Insurance Company, John Hancock Financial Services,
         Inc. and Thomas E. Moloney#+
10.2.3   Second Amended and Restated Employment Continuation Agreement between
         John Hancock Life Insurance Company, John Hancock Financial Services,
         Inc. and David F. D'Alessandro#+
10.2.4   Second Amended and Restated Employment Continuation Agreement between
         John Hancock Life Insurance Company, John Hancock Financial Services,
         Inc. and Derek Chilvers#+
10.2.5   Second Amended and Restated Employment Continuation Agreement between
         John Hancock Life Insurance Company, John Hancock Financial Services,
         Inc. and Maureen Ford#+
10.2.6   Second Amended and Restated Employment Continuation Agreement between
         John Hancock Life Insurance Company, John Hancock Financial Services,
         Inc. and Robert Walters#+
10.2.7   Amended and Restated Employment Continuation Agreement between John
         Hancock Life Insurance Company, John Hancock Financial Services, Inc.
         and John M. DeCiccio#+
10.2.8   Amended and Restated Employment Continuation Agreement between John
         Hancock Life Insurance Company, John Hancock Financial Services, Inc.
         and Wayne A. Budd#+
10.3     Fiscal Agency Agreement, dated as of February 25, 1994 by and between
         John Hancock Mutual Life Insurance Company, as Issuer, and First
         National Bank of Boston, as Fiscal Agent*
10.4     Reinsurance Agreement, dated as of July 30, 1992 by and between John
         Hancock Mutual Life Insurance Company and Provident Life and Accident
         Insurance Company*
10.5     Reinsurance Agreement, dated as of July 30, 1992 by and between John
         Hancock Mutual Life Insurance Company and Provident Life and Accident
         Insurance Company*
10.6     Coinsurance Agreement, dated as of March 1, 1997 by and between John
         Hancock Mutual Life Insurance Company and UNICARE Life & Health
         Insurance Company*
10.7     Letter of Credit Agreement, dated as of January 2, 1997 by and among
         John Hancock Mutual Life Insurance Company, Banks named therein and
         Morgan Guaranty Trust Company of New York as Issuing Bank and Agent*
10.8     Long-Term Incentive Plan for Senior Executives (as Amended and Restated
         Effective February 11, 2002)**+
10.9     Incentive Compensation Plan for Certain Senior Executives (as Amended
         and Restated Effective February 11, 2002)**+
10.10    Form of Shareholder Rights Agreement*


                                       41
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

10.10.1  Amendment No. 1 to the Rights Agreement (As Adopted on March 4,
         2002)**
10.11    1999 Long-Term Stock Incentive Plan (As Amended and Restated as of May
         14, 2001)##+
10.12    Form of Capitalized Interest Note for stock ownership Loan Program###+
10.12.1  Form of Promissory Note for stock ownership loan program**+
10.13    Deferred Compensation Plan for Non-Employee Directors###+
10.14    Non-Employee Directors' Long-Term Stock Incentive Plan##+
10.15    Deferred Compensation Plan for Executives####+
13       Portions of John Hancock Financial Services, Inc. 2001 Annual Report to
         Shareholders that are expressly incorporated herein by reference in
         this Form 10-K. Other sections of the Annual Report furnished for the
         information of the Commission are not deemed "filed" as part of this
         Form 10-K**
21.1     Subsidiaries of the Registrant**
23.1     Consent of Ernst & Young LLP**

----------
The principal amount of debt outstanding under each instrument (excepting those
listed above) defining the rights of holders of our long-term debt does not
exceed ten percent (10%) of our total assets on a consolidated basis. The
Company agrees to furnish the SEC, upon request, a copy of each instrument
defining the rights of holders of our long-term debt.

Any exhibit not included with this Form 10-K when furnished to any shareholder
of record will be furnished to such shareholder upon written request and payment
of up to $.25 per page plus postage (except no payment will be required for the
financial statements and schedules included in Exhibit 13 if not included). Such
requests should be directed to John Hancock Financial Services, Inc., Investor
Relations, John Hancock Place, Post Office Box 111, Boston, Massachusetts 02117.

*     Previously filed as an exhibit to John Hancock Financial Services, Inc.'s
      S-1 Registration Statement (file no. 333-87271), and incorporated by
      reference herein.
**    Filed herewith.
***   Previously filed as an exhibit to John Hancock Financial Services, Inc.'s
      quarterly report on Form 10-Q for the quarter ended June 30, 2000, and
      incorporated by reference herein.
****  Previously filed as an exhibit to John Hancock Financial Services, Inc.'s
      quarterly report on Form 10-Q for the quarter ended June 30, 2001, and
      incorporated by reference herein.
#     Previously filed as an exhibit to John Hancock Financial Services, Inc.'s
      quarterly report on Form 10-Q for the quarter ended September 30, 2001,
      and incorporated by reference herein.
##    Previously filed with John Hancock Financial Services, Inc. definitive
      proxy statement for the 2001 annual meeting of shareholders, and
      incorporated by reference herein.


                                       42
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

###   Previously filed as an exhibit to John Hancock Financial Services, Inc.'s
      annual report on Form 10-K for the year ended December 31, 2000, and
      incorporated by reference herein.
####  Previously filed as an exhibit to John Hancock Financial Services, Inc.'s
      S-8 Registration Statement (file no. 333-55064), and incorporated by
      reference herein.
+     Management contract or compensatory plan or arrangement.

(b)   Reports on Form 8-K.

During the Fourth Quarter of 2001 the Company filed the following Current
Reports on Form 8-K:

      On November 2, 2001, the Company filed a Current Report on Form 8-K, dated
November 1, 2001, reporting under Item 5 thereof the Company's operating results
for the third quarter of 2001.

      On November 6, 2001, the Company filed a Current Report on Form 8-K dated
November 5, 2001 reporting under Item 5 thereof that the Company's Board of
Directors had declared a dividend of $0.31 per common share to shareholders of
record at the close of business on November 16, 2001.

      On December 3, 2001, the Company filed a Current Report on Form 8-K, dated
November 29, 2001, reporting under Item 5 thereof the Company's execution of an
Underwriting Agreement relating to the sale of $500 million aggregate principal
amount of 5.625% Senior Notes due December 1, 2008; and that the Company
expected to take a fourth quarter 2001 after tax charge in connection with its
investment exposure to Enron Corporation.

      On December 5, 2001, the Company filed a Current Report on Form 8-K, dated
November 29, 2001, reporting under Items 5 and 7 thereof the filing of certain
documents relating to the sale of $500 million aggregate principal amount of
5.625% Senior Notes due December 1, 2008.

(c)   See Item 14 (a) 3.

(d)   See Item 14 (a) 2.


                                       43
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

                     SCHEDULE I -- SUMMARY OF INVESTMENTS --
                    OTHER THAN INVESTMENTS IN RELATED PARTIES
                             As of December 31, 2001
                                  (in millions)

<TABLE>
<CAPTION>
                         Column A                               Column B      Column C        Column D

                                                                                           AMOUNT AT WHICH
                                                                                            SHOWN IN THE
                                                                                            CONSOLIDATED
TYPE OF INVESTMENT                                              COST (2)        VALUE       BALANCE SHEET
------------------------------------------------------------------------------------------------------------
<S>                                                           <C>           <C>              <C>
Fixed maturity securities, available-for-sale:
Bonds:
United States government and government agencies
   and authorities                                            $   340.7     $   338.0        $   338.0
States, municipalities and political subdivisions                 220.9         225.2            225.2
Foreign governments                                             1,643.2       1,729.9          1,729.9
Public utilities                                                3,183.8       3,203.1          3,203.1
Convertibles and bonds with warrants attached                     496.7         503.5            503.5
All other corporate bonds                                      32,148.2      32,465.6         32,465.6
Certificates of deposits                                            0.0           0.0              0.0
Redeemable preferred stock                                        708.5         695.0            695.0
                                                           -------------------------------------------------
Total fixed maturity securities, available-for-sale           $38,742.0     $39,160.3        $39,160.3
                                                           -------------------------------------------------

Equity securities, available-for-sale:
Common stocks:
Public utilities                                              $     7.9     $     8.8        $     8.8
Banks, trust and insurance companies                               34.1          34.1             34.1
Industrial, miscellaneous and all other                           584.4         715.3            715.3
Non-redeemable preferred stock                                    125.9         128.6            128.6
                                                           -------------------------------------------------
Total equity securities, available-for-sale                   $   752.3     $   886.8        $   886.8
                                                           -------------------------------------------------

Fixed maturity securities, held-to-maturity:
Bonds
United States government and government agencies
   and authorities                                            $    25.8     $    27.2        $    25.8
States, municipalities and political subdivisions                 509.8         499.6            509.8
Foreign governments                                                 0.0           0.0              0.0
Public utilities                                                  140.2         140.1            140.2
Convertibles and bonds with warrants attached                       0.0           0.0              0.0
All other corporate bonds                                       1,175.6       1,170.3          1,175.6
Certificates of deposits                                           78.6          76.9             78.6
Redeemable preferred stock                                          0.0           0.0              0.0
                                                           -------------------------------------------------
Total fixed maturity securities, held-to-maturity             $ 1,930.0     $ 1,914.1        $ 1,930.0
                                                           -------------------------------------------------
</TABLE>

The condensed financial information should be read in conjunction with the
audited consolidated financial statements and notes thereto.


                                       44
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

                     SCHEDULE I -- SUMMARY OF INVESTMENTS --
            OTHER THAN INVESTMENTS IN RELATED PARTIES -- (CONTINUED)
                             As of December 31, 2001
                                  (in millions)

<TABLE>
<CAPTION>
                         Column A                             Column B      Column C          Column D

                                                                                           AMOUNT AT WHICH
                                                                                            SHOWN IN THE
                                                                                            CONSOLIDATED
TYPE OF INVESTMENT                                            COST (2)        VALUE         BALANCE SHEET
------------------------------------------------------------------------------------------------------------
<S>                                                         <C>           <C>             <C>
Fixed maturity securities, trading:
Bonds
All other corporate bonds                                   $    16.4     $    16.5       $    16.5
------------------------------------------------------------------------------------------------------------
Total fixed maturity securities, trading                    $    16.4     $    16.5       $    16.5
------------------------------------------------------------------------------------------------------------

Equity securities, trading:
Common stocks:
Public utilities                                            $     2.2     $     2.3       $     2.3
Banks, trust and insurance companies                              7.1           7.5             7.5
Industrial, miscellaneous and all other                         280.2         294.3           294.3
Non-redeemable preferred stock                                    0.0           0.0             0.0
                                                           -------------------------------------------------
Total equity securities, trading                            $   289.5     $   304.1       $   304.1
                                                           -------------------------------------------------
Mortgage loans on real estate, net (1)                      $11,106.9          XXXX       $10,993.2
Real estate, net:
Investment properties (1)                                       352.0          XXXX           315.3
Acquired in satisfaction of debt (1)                            174.0          XXXX           127.1
Policy loans                                                  2,008.2          XXXX         2,008.2
Other long-term investments (2)                               1,806.1          XXXX         1,786.1
Short-term investments                                          153.5          XXXX           153.5
                                                           -------------------------------------------------
     Total investments                                      $57,330.9     $42,281.8       $57,681.1
                                                           =================================================
</TABLE>

(1)   Difference between Column B and Column D is primarily due to valuation
      allowances due to impairments on mortgage loans on real estate and due to
      accumulated depreciation and valuation allowances due to impairments on
      real estate. See notes to the consolidated financial statements.
(2)   Difference between Column B and Column C is primarily due to operating
      gains (losses) of investments in limited partnerships.

The condensed financial information should be read in conjunction with the
audited consolidated financial statements and notes thereto.


                                       45
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

                 SCHEDULE II -- CONDENSED FINANCIAL INFORMATION
                           OF REGISTRANT (Parent Only)
                                  BALANCE SHEET
                                  (in millions)

<TABLE>
<CAPTION>
                                                                               December 31
                                                                      ---------------------------------
                                                                           2001              2000
                                                                      ---------------------------------
<S>                                                                       <C>               <C>
Assets
Investments:
Investment in unconsolidated subsidiaries                                 $6,197.5          $5,653.6
                                                                      ---------------------------------
     Total Investments                                                     6,197.5           5,653.6

Cash and cash equivalents                                                    109.4             106.5
Account receivable                                                            46.9               3.6
Income taxes receivable                                                       14.2               3.6
Other assets                                                                  13.3               5.3
                                                                      ---------------------------------
     Total Assets                                                         $6,381.3          $5,772.6
                                                                      =================================
Liabilities and Shareholders' Equity
Liabilities:
Interest payable                                                               1.9               --
Dividends payable to shareholders                                             15.8              17.1
Long-term debt                                                               498.6               --
                                                                      ---------------------------------
     Total Liabilities                                                       516.3              17.1
Shareholders' Equity
Common stock, $.01 par value; 2.0 billion shares authorized;
   315.8 million and 315.0 million shares issued, respectively                 3.2               3.2
Additional paid in capital                                                 5,099.3           5,086.4
Retained earnings                                                          1,206.7             680.4
Accumulated other comprehensive income                                       228.0              77.3
Treasury stock, at cost (18.5 million shares and
   3.0 million shares, respectively)                                        (672.2)            (91.8)
                                                                      ---------------------------------
     Total Shareholders' Equity                                            5,865.0           5,755.5

     Total Liabilities and Shareholders' Equity                           $6,381.3          $5,772.6
                                                                      =================================
</TABLE>

The condensed financial information should be read in conjunction with the
audited consolidated financial statements and notes thereto.


                                       46
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

                 SCHEDULE II -- CONDENSED FINANCIAL INFORMATION
                           OF REGISTRANT (Parent Only)
                               STATEMENT OF INCOME

<TABLE>
<CAPTION>
                                                                                                       For the Period
                                                                                    Year Ended        February 1 through
                                                                                 December 31, 2001    December 31, 2000
                                                                                ----------------------------------------
                                                                                              (in millions)
<S>                                                                                     <C>                  <C>
Revenues
   Net investment income                                                                $  5.4               $ 11.9
   Other revenue                                                                           0.1                  0.2
                                                                                ----------------------------------------
     Total revenues                                                                        5.5                 12.1

Benefits and expenses
   Other operating costs and expenses                                                     38.8                 31.7
                                                                                ----------------------------------------
     Total benefits and expenses                                                          38.8                 31.7
Loss before income taxes                                                                 (33.3)               (19.7)
Income taxes                                                                              14.4                  3.6
                                                                                ----------------------------------------
Net loss after taxes                                                                     (18.9)               (16.1)

Equity in the net income of unconsolidated subsidiaries                                  637.6                790.8
                                                                                ----------------------------------------

Net income                                                                              $618.7               $774.7
                                                                                ========================================
</TABLE>

The condensed financial information should be read in conjunction with the
audited consolidated financial statements and notes thereto.


                                       47
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

                 SCHEDULE II -- CONDENSED FINANCIAL INFORMATION
                           OF REGISTRANT (Parent Only)
                             STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                                  Year Ended
                                                                                      December 31, 2001   December 31, 2000
                                                                                      ------------------------------------
                                                                                                 (in millions)
<S>                                                                                        <C>                 <C>
Net income                                                                                 $  618.7             $ 774.7
   Adjustments to reconcile net income to net cash used in operating activities:
     Depreciation                                                                               0.3                 0.1
     Equity in the undistributed net income of unconsolidated subsidiaries                   (637.6)             (790.8)
     Amounts received from unconsolidated subsidiaries related to stock option plans           14.2                 3.5
     Decrease (increase) in accounts receivables                                              (43.3)               (3.6)
     Increase in other assets                                                                  (5.5)               (5.4)
     Increase in interest payable                                                               1.9                 -
     Decrease (increase) in dividend payable to shareholders                                   (1.4)               17.1
     Increase in income taxes                                                                 (10.6)               (3.6)
                                                                                      ------------------------------------
       Net cash used in operating activities                                                  (63.3)               (8.0)

Cash flows from investing activities:
   Capital contributed to unconsolidated subsidiaries                                          (6.8)           (1,823.1)
   Dividends received from unconsolidated subsidiaries                                        250.0               466.0
                                                                                      ------------------------------------

       Net cash provided by (used in) investing activities                                    243.2            (1,357.1)

Cash flows from financing activities
   Issuance of common stock                                                                      --             1,657.7
   Acquisition of treasury stock at cost                                                     (580.4)              (91.8)
   Dividends paid on common stock                                                             (92.4)              (94.3)
   Issuance of long term bond                                                                 495.8                  --
                                                                                      ------------------------------------
       Net cash (used in) provided by financing activities                                   (177.0)            1,471.6

       Net increase in cash and cash equivalents                                                2.9               106.5
                                                                                      ------------------------------------

Cash and cash equivalents at beginning of year                                                106.5                  --
                                                                                      ------------------------------------
Cash and cash equivalents at the end of the year                                           $  109.4             $ 106.5
                                                                                      ====================================
</TABLE>

The condensed financial information should be read in conjunction with the
audited consolidated financial statements and notes thereto.


                                       48
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

                     SCHEDULE III -- SUPPLEMENTARY INSURANCE
               INFORMATION As of December 31, 2001, 2000 and 1999
                      and for each of the years then ended
                                  (in millions)

<TABLE>
<CAPTION>
                                                   FUTURE                               OTHER
                                                   POLICY                              POLICY
                                                  BENEFITS,                            CLAIMS
                                 DEFERRED          LOSSES,                               AND
                                  POLICY         CLAIMS AND                           BENEFITS
                               ACQUISITION          LOSS            UNEARNED           PAYABLE          PREMIUM
          SEGMENT                 COSTS           EXPENSES        PREMIUMS (1)           (1)            REVENUE

<S>                              <C>             <C>                  <C>               <C>            <C>
2001:
Protection                       $2,743.2        $18,369.2            $280.4            $102.0         $1,688.1
Asset Gathering                     616.2          6,689.4                --               0.1             74.8
Guaranteed & Structured
  Financial Products                  8.8         24,401.7              65.7               4.9            899.8
Investment Management                  --               --                --                --               --
Corporate & Other                   349.2          6,819.3             463.2             155.7          1,188.6
                           -----------------------------------------------------------------------------------------
     Total                       $3,717.4        $56,279.6            $809.3            $262.7         $3,851.3
                           =========================================================================================

2000:
Protection                       $2,595.3        $16,671.2            $262.6             $89.9        $ 1,549.2
Asset Gathering                     558.2          5,619.9                --              (4.5)            63.4
Guaranteed & Structured
  Financial Products                  8.5         21,962.4              60.4               0.7            763.4
Investment Management                  --               --                --                --               --
Corporate & Other                   355.0          6,471.6             348.3             224.0          1,076.1
                           -----------------------------------------------------------------------------------------
     Total                       $3,517.0        $50,725.1            $671.3            $310.1         $3,452.1
                           =========================================================================================

1999:
Protection                       $2,383.8        $15,035.0            $217.4            $112.1         $1,431.7
Asset Gathering                     521.5          5,166.8                --               0.2             17.2
Guaranteed & Structured
  Financial Products                  8.4         20,310.4              56.1               0.5            463.7
Investment Management                  --               --                --                --               --
Corporate & Other                   321.2          6,629.1             216.7             246.1            804.9
                           -----------------------------------------------------------------------------------------
     Total                       $3,234.9        $47,141.3            $490.2            $358.9         $2,717.5
                           =========================================================================================
</TABLE>

The condensed financial information should be read in conjunction with the
audited consolidated financial statements and notes thereto.


                                       49
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

                     SCHEDULE III -- SUPPLEMENTARY INSURANCE
               INFORMATION -- (CONTINUED) As of December 31, 2001,
               2000 and 1999 and for each of the years then ended
                                  (in millions)

<TABLE>
<CAPTION>
                                                                         AMORTIZATION OF
                                                                         DEFERRED POLICY
                                                  BENEFITS,             ACQUISITION COSTS,
                                                   CLAIMS,              EXCLUDING AMOUNTS
                                   NET          LOSSES, AND          RELATED TO NET REALIZED            OTHER
                               INVESTMENT        SETTLEMENT            INVESTMENT AND OTHER            OPERATING
          SEGMENT                INCOME           EXPENSES                GAINS (LOSSES)               EXPENSES

<S>                              <C>              <C>                         <C>                      <C>
2001:
Protection                       $1,264.7         $1,882.2                    $ 182.2                  $  364.3
Asset Gathering                     498.5            441.6                       75.0                     452.4
Guaranteed & Structured
  Financial Products              1,835.6          2,328.7                        2.4                      61.9
Investment Management                28.7               --                         --                      97.9
Corporate & Other                   317.4          1,252.2                       47.2                     523.6
                           -----------------------------------------------------------------------------------------
     Total                       $3,944.9         $5,904.7                    $ 306.8                  $1,500.1
                           =========================================================================================

2000:
Protection                       $1,203.6         $1,752.7                    $ 113.8                    $454.6
Asset Gathering                     445.8            371.3                       78.8                     557.2
Guaranteed & Structured
  Financial Products              1,743.2          2,125.5                        2.6                      79.5
Investment Management                22.7               --                         --                     132.7
Corporate & Other                   449.5          1,126.1                       46.8                     362.4
                           -----------------------------------------------------------------------------------------
     Total                       $3,864.8         $5,375.6                    $ 242.0                  $1,586.4
                           =========================================================================================

1999:
Protection                       $1,107.3         $1,709.4                    $  71.8                  $  427.3
Asset Gathering                     388.6            299.3                       53.5                     542.1
Guaranteed & Structured
  Financial Products              1,681.4          2,130.9                        3.1                      88.3
Investment Management                45.9               --                         --                     127.2
Corporate & Other                   300.9          1,228.9                       38.4                     227.4
                           -----------------------------------------------------------------------------------------
     Total                       $3,524.1         $5,368.5                    $ 166.8                  $1,412.3
                           =========================================================================================
</TABLE>

(1)   Unearned premiums and other policy claims and benefits payable are
      included in Column C amounts.
(2)   Allocations of net investment income and certain operating expenses are
      based on a number of assumptions and estimates, and reported operating
      results would change by segment if different methods were applied.

The condensed financial information should be read in conjunction with the
audited consolidated financial statements and notes thereto.


                                       50
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

                           SCHEDULE IV -- REINSURANCE
  As of December 31, 2001, 2000 and 1999 and for each of the years then ended:
                                  (in millions)

<TABLE>
<CAPTION>
                                                                   ASSUMED                           PERCENTAGE
                                                 CEDED TO            FROM                            OF AMOUNT
                                 GROSS            OTHER             OTHER              NET           ASSUMED TO
                                AMOUNT          COMPANIES         COMPANIES          AMOUNT             NET
<S>                           <C>               <C>                <C>             <C>                  <C>
2001:
Life insurance in force       $397,486.1        $161,341.5         $27,940.6       $264,085.2            10.6%
                           =======================================================================
Premiums:
Life insurance                $  3,560.7        $    624.2         $   235.4       $  3,171.9             7.4%
Accident and health
  insurance                        529.7              44.8             194.5            679.4            28.6%
P&C                                   --                --                --               --             0.0%
                           -----------------------------------------------------------------------
     Total                    $  4,090.4        $    669.0         $   429.9       $  3,851.3            11.2%
                           =======================================================================

2000:
Life insurance in force       $416,109.7        $119,770.1         $28,126.1       $324,465.7             8.7%
                           =======================================================================
Premiums:
Life insurance                $  2,745.0        $    544.0         $   279.3       $  2,480.3            11.3%
Accident and health
  insurance                      1,338.6             554.3             187.5            971.8            19.3%
P&C                                   --                --                --               --             0.0%
                           -----------------------------------------------------------------------
     Total                    $  4,083.6        $  1,098.3         $   466.8       $  3,452.1            13.5%
                           =======================================================================

1999:
Life insurance in force       $380,019.3        $ 83,232.3         $29,214.6       $326,001.6             9.0%
                           =======================================================================
Premiums:
Life insurance                $  2,292.8        $    302.0         $   139.4       $  2,130.2             6.5%
Accident and health
  insurance                      1,142.4             728.5             173.1            587.0            29.5%
P&C                                   --                --               0.3              0.3           100.0%
                           -----------------------------------------------------------------------
     Total                    $  3,435.2        $  1,030.5         $   312.8       $  2,717.5            11.5%
                           =======================================================================
</TABLE>

Note: The life insurance caption represents principally premiums from
traditional life insurance and life-contingent immediate annuities and excludes
deposits on investment products and the universal life insurance products.

The condensed financial information should be read in conjunction with the
audited consolidated financial statements and notes thereto.


                                       51
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                               JOHN HANCOCK FINANCIAL SERVICES, INC.


                               By:    /s/ Thomas E. Moloney
                                      -----------------------------------
                                      Thomas E. Moloney
                                      Senior Executive Vice President and
                                      Chief Financial Officer
                               Date:  March 19, 2002

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons in the capacities and on the dates
indicated.

<TABLE>
<CAPTION>
           SIGNATURE                                TITLE                                 DATE
           ---------                                -----                                 ----

<S>                                  <C>                                             <C>
/s/ David F. D'Alessandro
-------------------------------
David F. D'Alessandro                Chairman, President, Chief Executive            March 19, 2002
                                     Officer and Director
                                     (Principal Executive Officer)

/s/ Thomas E. Moloney
-------------------------------
Thomas E. Moloney                    Senior Executive Vice President and             March 19, 2002
                                     Chief Financial Officer
                                     (Principal Financial and Accounting Officer)

/s/ Wayne A. Budd
-------------------------------
Wayne A. Budd                        Executive Vice President, General               March 19, 2002
                                     Counsel and Director

/s/ John M. Connors, Jr.
-------------------------------
John M. Connors, Jr.                          Director                               March 19, 2002

/s/ Robert E. Fast
-------------------------------
Robert E. Fast                                Director                               March 19, 2002

/s/ Kathleen Foley Feldstein
-------------------------------
Kathleen Foley Feldstein                      Director                               March 19, 2002

/s/ Nelson S. Gifford
-------------------------------
Nelson S. Gifford                             Director                               March 19, 2002

/s/ Thomas P. Glynn
-------------------------------
Thomas P. Glynn                               Director                               March 19, 2002

/s/ Michael C. Hawley
-------------------------------
Michael C. Hawley                             Director                               March 19, 2002

/s/ Edward H. Linde
-------------------------------
Edward H. Linde                               Director                               March 19, 2002

/s/ Judith A. McHale
-------------------------------
Judith A. McHale                              Director                               March 19, 2002

/s/ R. Robert Popeo
-------------------------------
R. Robert Popeo                               Director                               March 19, 2002
</TABLE>


                                       52
<PAGE>

                      JOHN HANCOCK FINANCIAL SERVICES, INC.

<TABLE>
<S>                                           <C>                                    <C>
/s/ Richard F. Syron
-------------------------------
Richard F. Syron                              Director                               March 19, 2002

/s/ Robert J. Tarr, Jr.
-------------------------------
Robert J. Tarr, Jr.                           Director                               March 19, 2002
</TABLE>


                                       53