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Exhibit 99.1





MANULIFE FINANCIAL CORPORATION



ANNUAL INFORMATION
FORM

March 23, 2012



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Table of Contents



|                                                            |  |  |    | 
|----------------------------------------------------------- |  |  | -- | 
|GLOSSARY                                                    |  |  | 4  | 
|                                                            | 
|FINANCIAL PRESENTATION AND EXCHANGE RATE INFORMATION        |  |  | 5  | 
|                                                            | 
|DOCUMENTS INCORPORATED BY REFERENCE                         |  |  | 6  | 
|                                                            | 
|CAUTION REGARDING FORWARD-LOOKING STATEMENTS                |  |  | 6  | 
|                                                            | 
|CORPORATE STRUCTURE                                         |  |  | 7  | 
|                                                            | 
|HISTORY AND
INCORPORATION                                   |  |  | 7  | 
|INTERCORPORATE RELATIONSHIPS                                |  |  | 7  | 
|                                                            | 
|CORPORATE STRATEGY                                          |  |  | 7  | 
|                                                            | 
|GENERAL DEVELOPMENT OF THE BUSINESS                         |  |  | 8  | 
|                                                            | 
|BUSINESS OPERATIONS                                         |  |  | 8  | 
|                                                            | 
|SELECTED FINANCIAL STATISTICS BY DIVISION/REPORTING SEGMENT |  |  | 9  | 
|ASIA DIVISION                                               |  |  | 9  | 
|CANADIAN DIVISION                                           |  |  | 12 | 
|U.S. DIVISION                                               |  |  | 16 | 
|INVESTMENT DIVISION                                         |  |  | 19 | 
|                                                            | 
|RISK FACTORS                                                |  |  | 20 | 
|                                                            | 
|GENERAL  FINANCIAL MARKETS AND ECONOMY                     |  |  | 21 | 
|STRATEGIC RISK                                              |  |  | 21 | 
|MARKET RISK                                                 |  |  | 28 | 
|LIQUIDITY RISK                                              |  |  | 32 | 
|CREDIT RISK                                                 |  |  | 35 | 
|INSURANCE RISK                                              |  |  | 36 | 
|OPERATIONAL RISK                                            |  |  | 37 | 
|ADDITIONAL RISKS                                            |  |  | 39 | 
|                                                            | 
|GOVERNMENT REGULATION                                       |  |  | 41 | 
|                                                            | 
|CANADA                                                      |  |  | 41 | 
|UNITED STATES                                               |  |  | 44 | 
|ASIA                                                        |  |  | 47 | 
|                                                            | 
|GENERAL DESCRIPTION OF CAPITAL STRUCTURE                    |  |  | 48 | 
|                                                            | 
|DIVIDENDS                                                   |  |  | 50 | 
|                                                            | 
|CONSTRAINTS ON OWNERSHIP OF SHARES                          |  |  | 51 | 
|                                                            | 
|RATINGS                                                     |  |  | 52 | 
|                                                            | 
|MARKET FOR SECURITIES                                       |  |  | 54 | 
|                                                            | 
|LEGAL PROCEEDINGS                                           |  |  | 55 | 
|                                                            | 
|DIRECTORS AND EXECUTIVE OFFICERS                            |  |  | 56 | 
|                                                            | 
|DIRECTORS                                                   |  |  | 56 | 
|EXECUTIVE OFFICERS                                          |  |  | 57 | 
|SHARE OWNERSHIP                                             |  |  | 58 | 
|                                                            | 
|TRANSFER AGENT AND REGISTRAR                                |  |  | 58 | 
|                                                            | 
|MATERIAL CONTRACTS                                          |  |  | 58 | 



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|                                     |  |  |    | 
|------------------------------------ |  |  | -- | 
|                                     | 
|INTERESTS OF EXPERTS                 |  |  | 60 | 
|                                     | 
|AUDIT COMMITTEE                      |  |  | 60 | 
|                                     | 
|PERFORMANCE AND NON-GAAP MEASURES    |  |  | 61 | 
|                                     | 
|ADDITIONAL INFORMATION               |  |  | 61 | 
|                                     | 
|SCHEDULE 1  AUDIT COMMITTEE CHARTER |  |  | 62 | 



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GLOSSARY

For the purpose of this annual information form (Annual Information Form), the terms Company, Manulife Financial,
we and our refer, at all times prior to September 23, 1999, to The Manufacturers Life Insurance Company (Manufacturers Life) and its subsidiaries, and at all times on or after September 23, 1999, to
Manulife Financial Corporation (MFC) and its subsidiaries, including Manufacturers Life.

The following are brief explanations of
certain terms as used in this Annual Information Form.

accepted actuarial practices Canadian accepted actuarial practices as
promulgated by the Canadian Institute of Actuaries.

annuities  contracts that provide income payments at regular
intervals, usually for a specified period (an annuity certain) or for the lifetime of the annuitant (a life annuity). Annuity contracts are offered on both an immediate and a deferred basis. Under immediate annuities, the payment of income commences
at, or very shortly after, the date of issue of the contract. Under deferred annuity contracts, the payment of income commences on some specified future date, such as five years after the contract is issued. Contracts can be fixed or variable.

bancassurance the sale of insurance and similar products through a banks distribution channels.

Canadian GAAP  Canadian generally accepted accounting principles as promulgated by The Canadian Institute of Chartered Accountants.

cash value  the gross value for which an in-force policy can be surrendered.

COLI (corporate owned life insurance)  a specialized insurance product which provides tax-efficient funding vehicles for employee deferred
compensation programs.

endowment insurance  life insurance policy which pays the face value at earlier of death or maturity date.

Fraser Group Universe Report  an annual report on pricing, profitability and market share in the Canadian group insurance
industry, published by the Fraser Group, an independent Canadian consulting firm.

general fund  those assets and liabilities
which a life insurance company reports on its consolidated statement of financial position and for which a life insurance company bears the investment risk. Products treated as part of the general fund include participating whole life insurance,
universal life insurance, term life insurance, group life and health insurance and fixed-rate insurance, annuity and pension products, as well as reinsurance.

GIC  guaranteed interest contract (except where used in the context of products offered by Manulife Bank of Canada and Manulife Trust Company where GIC means guaranteed investment
certificate)  investment guaranteed to receive a set interest rate over a predetermined term.

group life and health
insurance  insurance which insures the lives of a group of people (group life) or provides coverage for medical and dental costs, and income replacement for disabilities to a group of people (group health) under a master contract.
Typically used by employers to provide coverage for their employees.

ICA the Insurance Companies Act(Canada), as
amended, including the regulations thereunder which apply to insurance companies that are incorporated under Canadian federal law and to foreign insurance companies that operate in Canada on a branch basis.

IFRS International Financial Reporting Standards as promulgated by the International Accounting Standards Board.

in-force an insurance or annuity contract which has not expired or otherwise been terminated.

individual life insurance insurance which pays a stipulated sum in the event of the death of a named individual.

Letters Patent of Conversion the letters patent issued under the ICA to effect the conversion proposal of Manufacturers Life from a mutual
company to a company with common shares effective September 23, 1999.

LIMRA(Life Insurance Marketing Research Association) 
an association which supports and enhances the marketing functions of life insurance companies through original research, products and services.

MCCSR(Minimum Continuing Capital and Surplus Requirements)  capital and liquidity requirements imposed by OSFI for Canadian federally
regulated life insurance companies.

Minister of Finance the Minister of Finance (Canada) or any Minister of State who has been
delegated any of the Ministers powers, duties and functions under the ICA.

morbidity risk  the risk relating to the
occurrence of accidents and sickness for an insured person.



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mortality risk  the risk arising from an insured persons death.

NAIC(National Association of Insurance Commissioners)  an association of the chief insurance supervisory officials of each state, territory
or possession of the United States.

OSFI  the Office of the Superintendent of Financial Institutions (Canada), the primary
regulator of federal financial institutions and federal pension plans.

policy loan  a loan made to a policyholder based on the
security of the cash value of a policy.

policyholder  the person who owns an insurance or annuity policy. Although the
policyholder is usually the insured, in the case of group insurance the policyholder is usually the employer rather than the employee.

producer group  groups of agents and brokers who deal collectively with insurance companies in the areas of products, underwriting and
compensation. A producer group also offers marketing and sales support to its members, as well as continuing education.

reinsurance
 the acceptance by one or more insurers, called reinsurers, of a portion of the risk underwritten by another insurer which has directly contracted to provide the coverage. The legal rights of the policyholder are not affected by the
reinsurance transaction and the insurer issuing the insurance contract remains primarily liable to the policyholder for payment of policy benefits.

retrocession  a form of reinsurance that involves the assumption of risk from a reinsurer rather than the direct writer of the policy or policies.

SEDAR  the System for Electronic Document Analysis and Retrieval, found at www.sedar.com.

segregated fund  a fund, having its own portfolio of investments, kept separate from the general fund of a life insurance company in
connection with one or more insurance policies or annuity contracts under which the companys liability to the policyholders varies with the performance of the fund.

Superintendent  the Superintendent of Financial Institutions (Canada).

surplus  the excess of assets over liabilities and other obligations in an insurance companys financial statements calculated in
accordance with applicable accounting principles.

term life insurance  a life insurance policy which pays a stipulated sum on the
death of the individual life insured, provided that death occurs within a specified number of years. There is usually no cash value.

third
party administrator  a company that provides administrative support, including regulatory compliance, reporting and document processing, to sponsors of group plans.

underwriting  the process by which an insurance company assesses the risk inherent in an application for insurance prior to acceptance and issuance of a policy.

universal life insurance  a life insurance policy in which premiums, less expense charges, are credited to a policy account from which
periodic charges for life insurance are deducted and to which interest and investment income are credited. Universal life insurance accumulates a cash value.

variable product  an insurance, annuity or pension product contract for which the reserves and/or benefits may vary in amount with the market value of a specified group of assets held in a
segregated fund.

whole life insurance  a life insurance policy payable upon the death of the insured, with a fixed premium and
accumulating cash values.

FINANCIAL PRESENTATION AND EXCHANGE RATE INFORMATION

The Company maintains its financial books and records in Canadian dollars and presents its financial statements in accordance with IFRS as applied to
life insurance enterprises in Canada and the accounting requirements of the Superintendent. None of the accounting requirements of the Superintendent is an exception to IFRS.



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Unless otherwise indicated, references in this Annual Information Form to $,
Cdn.$ or dollars are to Canadian dollars. Exchange rates used for currency conversion to Canadian dollars for financial statements in this Annual Information Form are summarized in the following table:



|                                |  |                                         |          |  |      |  |          |      |  |  |          | 
|------------------------------- |  | --------------------------------------- | -------- |  | ---- |  | -------- | ---- |  |  | -------- | 
|                                |  | As at and for the year endedDecember 31 |         
|U.S. dollar                     |  | 2011                                    |          |  | 2010 |  |          | 2009 | 
|Statement of financial position |  |                                         | 1.0170   |  |      |  | 0.9946   |      |  |  | 1.0466   | 
|Statement of income             |  |                                         | 0.9893   |  |      |  | 1.0299   |      |  |  | 1.1416   | 
|                                |  |                                         |         
|Japanese yen                    |  |                                         |          |  |      |  |          |      | 
|Statement of financial position |  |                                         | 0.013210 |  |      |  | 0.012260 |      |  |  | 0.011240 | 
|Statement of income             |  |                                         | 0.012432 |  |      |  | 0.011761 |      |  |  | 0.012201 | 



|Notes: | (1) Rates shown are the Canadian dollar price per U.S. dollar and Japanese yen. In accordance with IFRS, statement of financial position amounts are converted at rates
on the dates indicated, while statement of income amounts are converted using the average rate for each quarter. The rate of exchange disclosed above for the annual Statement of Income is based on the rates in each quarters Statement of
Income. The annual rate is approximated as the average of the quarterly rates.
|------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) Rates are based upon noon rates of exchange published by the Bank of Canada.
| | --------------------------------------------------------------------------------

We do business in various jurisdictions outside Canada. Fluctuations between the Canadian dollar and foreign currencies have the
effect of increasing or decreasing amounts presented in our financial statements. We present certain financial performance measures on a constant currency basis1to exclude the effect of fluctuations in these currencies versus the Canadian dollar. Amounts stated in this Annual
Information Form on a constant currency basis are calculated, as appropriate, using the balance sheet exchange rates effective for December 31, 2011 and the 2011 quarterly income statement rates in effect for each respective quarter.

DOCUMENTS INCORPORATED BY REFERENCE

The following documents are incorporated by reference in and form part of this AIF:



| |  |  | MFCs Managements Discussion and Analysis for the year ended December 31, 2011, and
| | - |  | ------------------------------------------------------------------------------------

| |  |  | MFCs consolidated financial statements and accompanying notes for the year ended December 31, 2011.
| | - |  | ----------------------------------------------------------------------------------------------------

These documents have been filed with securities regulators in Canada and with the United States Securities and Exchange Commission and may be accessed at
www.sedar.com and www.sec.gov, respectively.

CAUTION REGARDING FORWARD-LOOKING
STATEMENTS

This document contains forward-looking statements within the meaning of the safe harbour provisions of Canadian
provincial securities laws and the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements with respect to the Companys possible or assumed future results set
out under Corporate Strategy and Business Operations. The forward-looking statements in this document also relate to, among other things, the Companys objectives, goals, strategies, intentions, plans, beliefs,
expectations and estimates, and can generally be identified by the use of words such as may, will, could, should, would, likely, suspect, outlook,
expect, intend, estimate, anticipate, believe, plan, forecast, objective, seek, aim, continue, goal,
restore, embark and endeavour (or the negative thereof) and words and expressions of similar import, and include statements concerning possible or assumed future results. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements and they should not be interpreted as confirming market or
analysts expectations in any way. Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. Information about material
factors that could cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements may be found in this document under Risk Factors, as well as under
Risk Management and Risk Factors and Critical Accounting and Actuarial Policies in MFCs Managements Discussion and Analysis for the year ended December 31, 2011, in the Risk Management note to
MFCs consolidated financial statements for the year ended December 31, 2011 and elsewhere in MFCs filings with Canadian and U.S. securities regulators. The Company does not undertake to update any forward-looking statements except
as required by law.





|1 | Constant currency basis is a non-GAAP measure. See Performance and Non-GAAP Measures below.
|- | ---------------------------------------------------------------------------------------------



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CORPORATE STRUCTURE

History and Incorporation

Manulife Financial Corporation is a life insurance company incorporated under the ICA. MFC was incorporated under the ICA on April 26, 1999 for the purpose of becoming the holding company of
Manufacturers Life following its demutualization. Manufacturers Life was incorporated on June 23, 1887, by a Special Act of Parliament of the Dominion of Canada. Pursuant to the provisions of the Canadian and British Insurance Companies
Act (Canada), the predecessor legislation to the ICA, Manufacturers Life undertook a plan of mutualization and became a mutual life insurance company on December 19, 1968. As a mutual life insurance company, Manufacturers Life had no common
shareholders and its board of directors was elected by its participating policyholders in accordance with the ICA. Pursuant to Letters Patent of Conversion, effective September 23, 1999, Manufacturers Life implemented a plan of demutualization
under the ICA and converted to a life insurance company with common shares and became the wholly owned subsidiary of MFC. Following completion of MFCs merger with John Hancock Financial Services, Inc. (JHFS) on April 28, 2004,
Manufacturers Life and JHFS became sister companies. MFC owns all of the outstanding common shares of Manufacturers Life and, following the merger with JHFS, MFC indirectly owned all of the outstanding shares of common stock of JHFS.

On December 31, 2009, MFC consolidated its U.S. operating life insurance company subsidiaries and merged JHFS into The Manufacturers Investment
Corporation (MIC), an indirect wholly owned subsidiary of Manufacturers Life. Also on December 31, 2009, John Hancock Life Insurance Company (John Hancock Life) and John Hancock Variable Life Insurance Company, both
Massachusetts domiciled insurers and subsidiaries of JHFS, merged into John Hancock Life Insurance Company (U.S.A)(John Hancock USA), an indirect wholly owned subsidiary of Manufacturers Life.

MFCs head office and registered office is located at 200 Bloor Street East, Toronto, Canada, M4W 1E5.

Intercorporate Relationships

The Company conducts its business activities through subsidiary companies in Canada, the United States, Japan, the Philippines, Singapore, Indonesia, Thailand and Vietnam. The Company operates through
branches of subsidiaries in Hong Kong, Taiwan, Macau, Barbados and Bermuda. In China, the Company operates through a joint venture established with a local company. In Malaysia, the Company operates through a publicly traded corporation, which is
approximately 59% owned by the Company.

On January 25, 2011, Manulife Financial Asia Limited (MFAL) was incorporated under
the laws of Hong Kong as an indirect subsidiary of MFC. In 2011, the Company implemented an internal reorganization that resulted in MFAL becoming the holding company for most of the Companys Asia Division subsidiaries.

The significant subsidiaries of MFC, including direct and indirect subsidiaries, are listed in Note 22 (Subsidiaries) of MFCs consolidated
financial statements for the year ended December 31, 2011, which Note is incorporated herein by reference. These companies are incorporated in the jurisdiction in which their head office or registered office is located.

CORPORATE STRATEGY

Manulife Financials global corporate strategy has six key facets:



|1. | Accelerate Growth: The Company seeks to accelerate growth of businesses and products which are characterized by favourable return on capital and superior potential
outcomes under various economic conditions and policyholder behaviour scenarios.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|2. | Diversify Business Mix: The Company seeks to build a balanced portfolio of high quality products and services with strong growth prospects and complementary risk and
return profiles, across our core businesses and geographies.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. | Re-Balance Products with Unfavourable Risk Profiles: The Company seeks to eliminate, or decelerate the growth of, products and services that under certain economic
conditions and policyholder behaviour scenarios, could give rise to exceptional economic or capital risk, earnings sensitivity, or produce low return on capital employed.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|4. | Actively Manage and Promote Brand: The Company seeks to drive stakeholders perceptions and understanding of the Company, and build long-term franchise value
through the use of effective branding.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. | Systematically Hedge Interest Rate and Equity Exposure: The Company seeks to reduce its risk profile by systematically reducing exposure to changes in interest rates
and equity markets though the use of both time-based and market-based triggers to execute hedges.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|6. | Manage Capital: The Company seeks to maintain capital levels that are adequate to meet policyholder obligations and to support financial strength ratings.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------

The Company operates under a decentralized business model; however, the strategies of each operating division and the
initiatives of each business unit and product line are directly aligned with the global corporate strategy.

GENERAL DEVELOPMENT OF THE BUSINESS

Three Year History

Over the last three years, we have witnessed significant global uncertainty and market volatility. Throughout this time, we focused on maintaining a strong capital position, building on solid risk
management practices and strategic repositioning to accelerate the growth of selected business franchises while at the same time pulling back or eliminating products that give rise to equity or interest rate risk or produce low returns on capital
employed. In 2011, the Company achieved its product mix repositioning.

In 2009, the challenging macroeconomic environment, including the
volatile equity markets and depressed interest rates, impacted the Companys financial results. Despite these challenges, the Companys franchises remained strong. Manulife Financial took a number of steps in 2009 to strengthen its capital
base and manage its funding. We raised $5.9 billion consisting of common shares of $2.5 billion and $3.4 billion of other funding that included innovative capital, preferred shares and medium term notes. The Company also reduced its common share
dividend by 50% which, coupled with an enhanced dividend reinvestment plan, preserved approximately $1 billion of capital annually. In September 2009, the Company broadened its wealth management reach and added significant scale and presence in the
Canadian retail investment fund market through the acquisition of AIC Canadian retail investment funds.

In 2010, the economic conditions
continued to be strained. Interest rates fell to historically low levels and equity markets continued to experience volatility. Financial results were impacted by these factors and also by a strengthening of actuarial liabilities arising from the
Companys comprehensive annual review of actuarial assumptions. The Companys franchises remained strong and significant progress was made against strategic objectives and risk reduction targets. In addition, the Company completed the
purchase of Manulife TEDA Fund Management to expand its presence in the fast growing asset management industry in China. In 2010, the Company issued $900 million of medium term notes in Canada, and US$1.1 billion of senior notes in a U.S. public
offering, with the proceeds being used to strengthen the capital base of the Companys operating subsidiaries.

In the first half of
2011, the Company expanded its equity market and interest rate hedging programs, thereby reducing its earnings and capital sensitivity. These programs mitigated most of the equity market and interest rate risk in the second half of the year as
financial markets became increasingly volatile. As a result of actions taken over the last three years, the Company has achieved its product mix repositioning and the products we targeted to constrain now represent a small part of the total new
business portfolio. In 2011, the Company issued $550 million of subordinated debentures and $400 million of preferred shares and redeemed $550 million of subordinated debt. The Company sold its life retrocession business in the third quarter of
2011.

During 2012, the Company will continue to focus on implementing its global corporate strategy. See Corporate Strategy in
this Annual Information Form.

BUSINESS OPERATIONS

The Company is a leading global provider of financial protection and wealth management products and services, including individual life insurance, group
life and health insurance, long-term care insurance, pension products, annuities and mutual funds. These services are provided to individual and group customers in Asia, Canada and the United States. Manulife Financial also provides investment
management services with respect to the Companys general fund assets, segregated fund assets, mutual funds, and to institutional customers. The Company also offers specialized property and aviation catastrophe risk reinsurance products.



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As at December 31, 2011, the Company had more than 26,000 employees and operated in more than 20
countries and territories worldwide. The Companys business is organized into three major operating divisions: Asia Division, Canadian Division and U.S. Division. In addition, asset management services are provided by the Companys
Investment Division, operating as Manulife Asset Management. Each division has profit and loss responsibility and develops products, services, distribution and marketing strategies based on the profile of its business and the needs of its market.
The U.S. Division is comprised of two reporting segments: U.S. Insurance and U.S. Wealth Management. The external asset management business of the Investment Division is included under the Corporate and Other reporting segment. Following the sale of
the Companys life retrocession business line in 2011, the Companys property and casualty reinsurance business line is reported under the Corporate and Other reporting segment. The property and casualty reinsurance business line is a
leader in the highly specialized property and aviation catastrophe retrocession market.

The approximate number of employees for each of the
Companys divisions and reporting segments as at December 31, 2011 was as follows:



|                       |  |  |       | 
|---------------------- |  |  | ----- | 
|Asia Division          |  |  | 7,407 | 
|Canadian Division      |  |  | 8,612 | 
|U.S. Insurance         |  |  | 2,670 | 
|U.S. Wealth Management |  |  | 2,691 | 
|Corporate and Other    |  |  | 5,020 | 

SELECTED FINANCIAL STATISTICS BY DIVISION/REPORTING SEGMENT

The following charts provide a breakdown by operating division and reporting segment of the Companys total shareholders net income
(loss), net income (loss) excluding the direct impact of equity markets and interest rates, premiums and deposits and funds under management2as at and for the years ended December 31, 2011 and December 31, 2010.



|                                        |      |                               |        |      |                                                                                |  |        |                      |  |      |                       |   |      |  |        |      |  |  |        |  |  |      |        |  |  |  |         |  |  |  |         | 
|--------------------------------------- | ---- | ----------------------------- | ------ | ---- | ------------------------------------------------------------------------------ |  | ------ | -------------------- |  | ---- | --------------------- | - | ---- |  | ------ | ---- |  |  | ------ |  |  | ---- | ------ |  |  |  | ------- |  |  |  | ------- | 
|Division/Reporting Segment
($ millions) |      | ShareholdersNet
Income(Loss) |        |      | Net income (loss)excluding thedirect impact ofequity marketsand interest
rates |  |        | Premiums andDeposits |  |      | Funds UnderManagement |  
|                                        | 2011 |                               |        | 2010 |                                                                                |  | 2011   |                      |  | 2010 |                       |   | 2011 |  |        | 2010 |  |  | 2011   |  |  | 2010 |       
|Asia Division                           |      |                               | (48    | )    |                                                                                |  | 712    |                      |  |      | 1,111                 |   |      |  | 954    |      |  |  | 10,303 |  |  |      | 9,879  |  |  |  | 71,390  |  |  |  | 67,660  | 
|                                        |      |                               |        |      |                                                                                |  |        |                      |  |      |                       |   |      |  |        |      |  |  |        |  |  |      |        |  |  |  |         |  |  |  |         | 
|Canadian Division                       |      |                               | 910    |      |                                                                                |  | 1,085  |                      |  |      | 898                   |   |      |  | 1,244  |      |  |  | 17,338 |  |  |      | 16,586 |  |  |  | 122,058 |  |  |  | 114,394 | 
|                                        |      |                               |        |      |                                                                                |  |        |                      |  |      |                       |   |      |  |        |      |  |  |        |  |  |      |        |  |  |  |         |  |  |  |         | 
|U.S. Insurance                          |      |                               | 1,085  |      |                                                                                |  | (281   | )                    |  |      | 1,204                 |   |      |  | 632    |      |  |  | 7,477  |  |  |      | 7,717  |  |  |  | 91,604  |  |  |  | 73,903  | 
|U.S. Wealth Management                  |      |                               | (447   | )    |                                                                                |  | 882    |                      |  |      | (169                  | ) |      |  | 746    |      |  |  | 27,764 |  |  |      | 27,658 |  |  |  | 189,281 |  |  |  | 187,054 | 
|                                        |      |                               |        |      |                                                                                |  |        |                      |  |      |                       |   |      |  |        |      |  |  |        |  |  |      |        |  |  |  |         |  |  |  |         | 
|U.S. Division                           |      |                               | 638    |      |                                                                                |  | 601    |                      |  |      | 1,035                 |   |      |  | 1,378  |      |  |  | 35,241 |  |  |      | 35,375 |  |  |  | 280,885 |  |  |  | 260,957 | 
|                                        |      |                               |        |      |                                                                                |  |        |                      |  |      |                       |   |      |  |        |      |  |  |        |  |  |      |        |  |  |  |         |  |  |  |         | 
|Corporate and Other                     |      |                               | (1,371 | )    |                                                                                |  | (4,061 | )                    |  |      | (1,851                | ) |      |  | (4,236 | )    |  |  | 3,179  |  |  |      | 3,266  |  |  |  | 25,319  |  |  |  | 33,946  | 
|                                        |      |                               |        |      |                                                                                |  |        |                      |  |      |                       |   |      |  |        |      |  |  |        |  |  |      |        |  |  |  |         |  |  |  |         | 
|Total                                   |      |                               | 129    |      |                                                                                |  | (1,663 | )                    |  |      | 1,193                 |   |      |  | (660   | )    |  |  | 66,061 |  |  |      | 65,106 |  |  |  | 499,652 |  |  |  | 476,957 | 
|                                        |      |                               |        |      |                                                                                |  |        |                      |  |      |                       |   |      |  |        |      |  |  |        |  |  |      |        |  |  |  |         |  |  |  |         | 

ASIA DIVISION

Manulife Financial has operated in Asia since 1897, beginning in Hong Kong. Today, a pan-Asian insurer, we have insurance and wealth management operations in ten markets. In addition to Hong Kong, we
operate in the Philippines, Singapore, Indonesia, Taiwan, China, Japan, Vietnam, Malaysia, and Thailand. The Company also recently received an approval in principle to begin operations in Cambodia making this our eleventh country in Asia.

The Company operates through subsidiaries in the Philippines, Singapore, Indonesia, Japan, Vietnam and Thailand and through branches of a
subsidiary in Hong Kong, Macau and Taiwan. Since the Macau operations are managed in Hong Kong, they are reported as part of the Hong Kong operations. In China, the Company operates through a joint venture. In Malaysia, the Company operates through
a publicly traded corporation with an ownership stake of approximately 59%. In 2011, we established a new holding company, Manulife Financial Asia Limited, as parent to a significant part of our Asia operations.



|2 | Net income (loss) excluding the direct impact of equity markets and interest rates, Premiums and Deposits and Funds Under Management
are non-GAAP measures. See Performance and Non-GAAP Measures below.
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We offer a diverse portfolio of protection, savings and wealth management products and services to meet the
needs of individuals and corporate customers. To reach our customers, we distribute our products through a multi-channel network, including more than 50,000 tied agents, bank partners, independent agents, and financial advisors, serving over six
million customers.

Hong Kong

In Hong Kong, we market individual life and health insurance, group life and health insurance, group pension products and wealth management products, as
well as Company-sponsored mutual funds.

Individual Operations

Hong Kongs Individual Operations provides a comprehensive range of life insurance, living benefits and wealth accumulation plans that can be tailored to meet customers medium and long-term
financial planning needs. Based on statistics from the Hong Kong Office of the Commissioner of Insurance, as of September 30, 2011, the Company was the seventh largest provider of individual life and health insurance products in Hong Kong with
an in-force market share of 7.8%.

Insurance products are primarily marketed through agents who sell the Companys products exclusively.
These agents develop and manage a client base with the objective of creating long-term relationships with customers. As at December 31, 2011, the Company had over 5,000 agents in Hong Kong. In this market, an exclusive agency force continues to
be the primary distribution channel for the Company to serve its target markets. Along with continued growth in the agency channel, management is also actively expanding other distribution channels such as brokers, independent financial advisors and
bancassurance. During the year, the Company extended and expanded our bancassurance strategic partnership with CITIC Bank International.

Group Operations

Hong
Kongs Group Operations provide life and health insurance and pension products, mainly to small and medium-sized businesses. Group insurance products include group term life insurance, major medical and outpatient plans, disability income plans
and defined contribution pension plans. Group products are distributed through the Companys exclusive agents as well as through brokers.

Hong Kongs Group Pension business launched the Mandatory Provident Fund (MPF) business line in 2000 and the Company continues to expand
its MPF customer base, at both group and individual levels. The Company is the second largest provider in the MPF market, with our share of assets under management (AUM) at 17.2% as at September 30, 20113. The Group Pension business is built primarily on service rendered by
the tied agency force and a fund spectrum built on a multi-manager platform. The Group Pension business comprehensive e-administrative service suite has also contributed to its strong market position amongst small to medium-size employers;
while its focused marketing to individual MPF accounts continues to attract substantial net cash flow. The Company intends to proactively seek opportunities to further increase the MPF AUM market share from the regulatory change to the Mandatory
Provident Fund system which, if enacted, will introduce member choice of MPF provider.

Wealth Management Operations

Leveraging the global strength and investment expertise of the Company and working closely with specially appointed investment experts, Wealth Management
Operations provides a comprehensive fund suite to investors with diverse risk appetites, geographical, sector and asset class preferences.

Wealth management products are currently marketed through banks, brokers and our agency force. The Company continues to focus on maintaining and
strengthening existing distribution relationships and capitalizing on new distribution opportunities.



|3 | Percentage calculated by the Company using Company data and data contained in the Mandatory Provident Fund Schemes Authority Statistical Digest, September 2011.
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Japan

The Japanese market, characterized by an aging population, is a mature insurance market with a significant number of major international and domestic competitors. In order to pursue growth in this market,
the Company continues to execute a strategy of diversifying product offerings and broadening our distribution capabilities.

Insurance
products are primarily marketed through our Plan Right Advisor (PA) channel, Managing General Agent (MGA) channel and banks. Since launching in 2007, the MGA channel has grown to annual sales4of $388 million fueled by a successful expansion in the retail market
and continued strong sales in the corporate market. Sales in PA, the Companys captive agency channel, were ahead of 2010 despite activities being affected by the Great East Japan Earthquake in March 2011. A number of our continued sales
initiatives in this channel have yielded benefits in the form of increased productivity and persistency.

The Company continues to expand its
wealth product line up and distribution relationships beyond the bank channel. Overall sales of wealth products have declined in 2011 compared to the prior year, primarily due to lower variable annuity sales in line with our de-risking strategy.

Other Markets

In the
Philippines, Singapore, Indonesia, Taiwan, China, Vietnam, Malaysia and Thailand (collectively, Other Asia Territories), the Company distributes a range of individual life and health insurance and wealth management products. Group life
and health insurance and pension products are also sold in some of these territories. Universal variable life insurance is sold in most markets while mutual funds are sold in Indonesia, Singapore, Malaysia, Thailand and Taiwan. Products are
primarily marketed through exclusive agents. However, bank distribution represents a material portion of sales in Indonesia, Singapore, Taiwan and the Philippines.

Other Asia Territories is becoming an increasingly important contributor to the Companys overall results, a trend that management expects to continue. Strong insurance sales growth in 2011 was
mainly attributed to the success of new strategic initiatives to accelerate agency growth and increase the scale of our partnership distribution, as well as new product launches which strengthened our line up of traditional savings and protection
products.

The Company continues to invest in its core strength of professional agency distribution. Consistent with a multi-channel
distribution strategy, we also continue to diversify and seek new partnership distribution opportunities that offer significant opportunities for growth. Across the Other Asia Territories, we are deepening our existing relationships with key
distribution partners and exploring other new distribution channels. In Other Asia Territories, the total number of professionally trained agents in our agency distribution network grew to approximately 42,000 at the end of 2011, an increase of 21%
over prior year, with growth across most territories. In Vietnam, the number of agents in our agency distribution network exceeded 10,000 for the first time. In the Philippines, we have expanded our footprint in the provinces with the opening of new
branches outside metro Manila. In China, we had close to 15,000 agents and we were licensed to operate in 49 cities, the broadest geographic footprint of any of the foreign joint venture companies at the end of 2011.

In Indonesia the signing of a distribution partnership with PT Bank Danamon Indonesia in 2011 was a significant strategic achievement. In 2011, Manulife
Sinochem signed two nationwide bancassurance distribution agreements as part of our growth strategy to venture into alternative distribution.

Building our brand in the Asian territories is one of our strategic objectives. We conducted major branding campaigns in 2011 and with our brand
advertised on buildings, public transport and billboards including our ubiquitous Manulife cube in key locations across the region.

In
addition, wealth management sales, excluding variable annuity sales, remain important to our business and were driven by Indonesia, Singapore and Philippines bancassurance single premium unit-linked sales, as well as the launch of new mutual funds
in Taiwan.



|4 | Sales is a non-GAAP measure. See Performance and Non-GAAP Measures below.
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Wealth management sales, excluding variable annuities, in Other Asia Territories grew by 23% in 2011
compared to 2010, in part due to sales growth in our 49% owned joint venture asset management company in China branded as Manulife-TEDA. We plan to explore cross selling opportunities with Manulife Taiwan.

Management View

Over the five years
ended December 31, 2011, our insurance sales and wealth sales in Asia have achieved a compounded annual growth rate of 23% and 16%, respectively, on a constant currency basis. Given this performance, management believes that our Asian business
will be an increasingly larger contributor to overall Company results. Future growth prospects are positive given the growing middle class, rapid economic growth over recent years, high savings rate, under-penetrated insurance markets and increasing
savings and wealth management opportunities. Management believes that its strategy of being an early entrant in Asian markets, together with distribution through an exclusive agency force, will drive the Companys anticipated growth in each
territory.

Competition

The
Asian life insurance industry has become more competitive as foreign insurers continue to enter and/or expand their Asian footprints and large Asian-based insurers look for growth opportunities beyond their home markets. Most of the territories that
we operate in are very concentrated markets with top three players having over 50% market share, based on total premium income. The Company is well positioned to become one of the leading pan-Asian life insurers given our footprint and scale in both
developed insurance markets (i.e., Hong Kong and Japan) and developing insurance markets (i.e., Other Asia Territories). The Companys competitive advantages include: consistent long term commitment to Asia, large and growing proprietary agency
force, growing distribution relationships with leading banks and strong customer focus.

CANADIAN DIVISION

Serving one in five Canadians, our Canadian Division is one of the leading financial services organizations in Canada. Our portfolio
includes a full range of protection and savings products and services available through a diversified distribution base, to meet the needs of a broad marketplace. Our individual life and living benefits insurance products are aimed at middle and
upper-income individuals and business owners. Our Affinity Markets business offers life, health and specialty products, such as travel insurance, through alternative distribution channels, as well as direct to customer marketing. Group life, health,
disability and retirement products and services are marketed to Canadian employers. Our individual wealth management product offerings include mutual funds, fixed and variable annuities, GICs and high interest savings accounts. In addition, through
Manulife Bank of Canada (Manulife Bank) and Manulife Trust Company (Manulife Trust), we offer a variety of lending and deposit products including fixed and variable rate mortgages, most notably our innovative Manulife One
product, as well as investment loans, GICs and Investment Savings Accounts.

Canadian Division comprises three main businesses: Individual
Insurance, Individual Wealth Management and Group Businesses, which in 2011 accounted for 16%, 30% and 54%, respectively, of Canadian Divisions premiums and deposits.

The Division continues to work collaboratively across its business units to leverage its large customer base, strong advisor/broker relationships, and diverse insurance, wealth management and banking
product offerings to respond to needs of the Canadian market. Sales were strong in 2011, despite significant interest rate declines and equity market volatility. Mutual Funds sales in 2011 were up 45% from the prior year driven by strong
demand for funds in fixed income and balanced fund categories. Sales of fixed rate products declined as investors sought higher yielding products. In Manulife Bank, our Manulife One product continues to be popular, driving record lending volumes and
asset levels. Despite reduced activity across the industry, Group Retirement Solutions sales were consistent with 2010 and we maintained our number one market ranking for defined contribution sales in Canada based on LIMRA statistics for 2011.
Sales of traditional Individual Insurance and Group Benefits products were consistent with 2010 levels, although sales in the small case segment for Group Benefits were at record levels. Affinity Markets also had record travel insurance sales for
2011. Underlying our sales growth, we continued our focus on managing product risks and returns including market- and investment-related risks.



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Individual Insurance

Individual Insurance offers a range of insurance solutions including universal life, term life, whole life and living benefits products. Individual Insurance focuses on a combination of competitive
products, professional advice and quality customer service to increase market share in the middle- and upper-income individual, family and business-owner markets. Individual Insurance encompasses the Individual Insurance Centre and Affinity Markets.

Individual Insurance Centre

The Companys strategy is to offer a wide range of products tailored to specific markets. According to data published by LIMRA, the Company has
consistently ranked second in individual life insurance sales in each of the past six years as measured by new premiums on life insurance policies sold in Canada. The Company also markets a portfolio of living benefits products. These products
include critical illness, disability coverage and long-term care, providing a suite of living benefit options for a growing market.

In June
2011, the Company launched a new product called Synergy. This product combines life insurance, critical illness insurance and disability insurance within a single policy, and is the first of its kind in the Canadian insurance marketplace. Synergy is
designed to cater to the younger family risk protection market providing customers with affordable, easy to manage insurance protection against typical, everyday risks.

Individual insurance products are distributed by the Company primarily through independent advisors paid by commission, who customarily sell the Companys products and those of other life insurance
companies. The Company does not have a career agency distribution channel in Canada. Approximately 5,000 independent advisors as well as 23,300 general agency brokers and 14,000 stockbrokers/financial advisors are licensed to sell Manulife
Financials individual insurance products. A network of regional offices provides product, marketing and sales support, tax and estate planning expertise and financial planning tools to support advisors across Canada.

Affinity Markets

The Company is a
leading provider of life, living benefits, health and travel insurance to affinity organizations in Canada. These products are marketed to members of professional, alumni and retiree associations, financial and retail institutions, and direct to
customers. Affinity Markets currently insures over one million customers. For affinity groups, customers are accessed through the endorsement of the sponsoring organization and marketed through direct mail, response advertising and the internet. For
the direct-to-customer business, customers are accessed through direct mail, television advertising, response advertising, the internet and brokers.

Managements strategy for Affinity Markets is to maintain and enhance its strong market position by expertly servicing and cross selling its block of long standing in-force clients and expanding its
specialized products and distribution channels, while continually launching innovative products and marketing ideas. In 2011, the business launched a travel insurance program for travelers in the United States.

Individual Wealth Management

Individual
Wealth Managements (IWM) savings and retirement products and services include annuities, guaranteed investment accounts, mutual funds and structured products, as well as deposit and lending solutions through Manulife Bank and
Manulife Trust.

The target market for IWM is middle- and upper-income individuals in the pre-retirement and retirement years. In 2011, the
Company continued to rank as the number one provider of individual fixed and variable annuities in Canada as measured by total assets, according to a survey of major insurance companies published by LIMRA.

Under the Manulife Investments brand, IWM offers mutual funds, annuities, guaranteed investment accounts and structured products. Manulife Mutual Funds
offers 116 mutual funds with assets under management (AUM) of $17.7 billion as at December 31, 2011. Our objective is to continue to aggressively grow our mutual fund business through improved fund selection and performance, and by expanding
our distribution partnerships. Annuities include fixed rate products and variable products. Fixed products such as immediate annuities and guaranteed investment accounts are designed to provide individuals with a regular retirement income stream
from funds deposited to their accounts. The Companys variable annuity offerings allow investors to build customized portfolios to meet financial goals through a series of flexible options for income, estate planning and investment needs with
an investment line-up that includes 114 funds. There are a number of offerings under the structured products portfolio totaling $214 million in AUM as at December 31, 2011. Our plan is to grow this product line by taking advantage of market
opportunities through launches of additional closed-end funds and structured products.



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Guaranteed investment accounts and annuity products are distributed through independent advisors, advisors
in general agencies and licensed representatives in full service brokerage firms. Mutual funds are sold through advisors regulated by the Mutual Fund Dealers Association (MFDA) or the Investment Industry Regulatory Organization of Canada
(IIROC). Structured products are sold by full service brokers who are regulated by IIROC. The Company has relationships with approximately 5,000 independent advisors, as well as 23,300 general agency brokers and more than 36,000 full
service brokers with investment dealer firms as at December 31, 2011. This includes advisors licensed through the Manulife Securities dealership organization, which supports approximately 1,250 independent advisors regulated by either the MFDA
or IIROC.

Banking products and services are offered through Manulife Bank, which, according to information released by OSFI, is Canadas
eighth largest domestic bank with $20 billion in assets at December 31, 2011. Manulife Bank is a leader in banking solutions offered exclusively through financial advisors, including savings and chequing accounts, GICs, lines of credit,
investment loans, mortgages and other specialized lending programs. Its flagship product, Manulife One, enables customers to consolidate their personal finances into a single all-in-one financial account. This account combines savings/chequing with
a traditional mortgage and a home equity line of credit, offering customers the potential to pay down their debts more quickly and generate additional cash flow. Manulife Banks regional distribution network consists of a team of highly trained
regional sales directors, wholesalers and banking consultants who support advisors in providing customers with access to solutions-based banking products as part of a comprehensive financial planning strategy.

Manulife Trust began operations in 2010. As a wholly-owned subsidiary of Manulife Bank, Manulife Trust offers fixed rate mortgages, nominee name GICs and
Investment Savings Account products through the Banks distribution network. Total assets of Manulife Trust were $2.7 billion as at December 31, 2011.

Group Businesses

The Group Businesses, comprising Group Benefits and Group Retirement
Solutions (Group Retirement), offer a wide range of health, life and retirement solutions to Canadian businesses.

Group
Benefits

Group Benefits offers a range of group life and health insurance products and services to more than 17,000 Canadian businesses of
all sizes. Group Benefits helps protect the health and well-being of more than eight million Canadians, offering traditional and flexible benefit programs that include features such as absence management solutions, short-term and long-term
disability protection, critical illness, dental coverage, supplementary health and hospital coverage, drug plan coverage and accidental death and dismemberment protection. Based on data published in the 2010 Fraser Group Universe Report, Group
Benefits was the third largest provider of group benefits in Canada with 20.4% market share, less than 2 percentage points behind the market leader. In 2011, premiums and deposits generated by Group Benefits exceeded $6.3 billion and Manulife
Financial placed second in sales market share according to 2011 full year data published by LIMRA.

Marketing, product and distribution are
focused on four market segments: large, medium and small businesses and trusteed plans. Group Benefits products are distributed through a number of distribution channels, including a national network of regional offices that serves major
centres across Canada providing local services to clients and distribution partners. Effective client relationship management is key to building customer satisfaction and loyalty, and the distribution model for Group Benefits is aligned to meet this
objective. Account executives work with a network of consultants, brokers and advisors who have been contracted by client companies to analyze and recommend an appropriate benefits solution and provider. Client managers, supported by service
representatives in each regional office, facilitate the implementation of new business and are responsible for ongoing relationship management.

Group Benefits focuses on delivering benefit solutions to meet the needs of its customers. For many employers, this means balancing the objective of
providing their employees with highly valued benefits plans with the cost of those benefits. This is achieved by providing flexible, customized solutions that address employer concerns while improving the health and productivity of employees. Group
Benefits strategies to further grow market share include: targeting the small- and medium-sized market segments with affordable products in an easy to do business with manner; developing regions with lower market share; expanding
distribution reach by leveraging Managing General Agents, National Accounts and other alternate channels; product innovation such as Health Management Services launched in 2011 which includes new products, integrated health data reporting and
wellness program consulting services; and cross selling with Group Retirement and other Canadian Division businesses.



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Group Retirement

Group Retirement offers a broad variety of flexible retirement savings products for Canadian employers and organizations, including defined contribution pension plans, deferred profit sharing plans,
non-registered savings plans, employee share ownership plans, group annuities, and investment-only services for defined benefit plans. Group Retirement provides a comprehensive range of services to support these offerings, including a
well-diversified choice of investment managers and funds that includes multi-manager mandates; an array of reports and automated tools targeted at helping plan sponsors manage their programs easily while fulfilling governance requirements; and
robust education, information and reporting tools for individual members. In 2011, Group Retirement generated over $3 billion of premiums and deposits from activity across the small-, mid-, large- and jumbo-sized case markets.

Group Retirement works with a network of market sources, typically brokers and consultants, to meet the needs of clients across the marketplace. Brokers
concentrate on small and mid-sized enterprises, but occasionally present to larger customers, while consultants focus on large and jumbo-sized client companies almost exclusively.

For brokers, the combination of a diverse fund line-up, internet resources and strong governance support makes Group Retirement a competitive presence in a growing market. Strong support and education
helps position advisors to address customers needs effectively. Information delivered to these advisors through the broker website facilitates smooth management of their overall business portfolio. For consultants, flexible plan design
supported by a growing number of automated services and a proven implementation approach with custom education programs, distinguishes Group Retirement from its competitors.

Retirement savings are a key focus for employers, legislators and individuals and with the changing demographics of the Canadian marketplace and the aging of the baby boomer generation, retiring plan
members are an increasingly important target market. The business is focused on the development and enhancement of products to support the accumulation of retirement assets, and uses those assets to provide income in retirement.

The federal government has introduced legislation (Bill C-25) which will permit defined contribution Pooled Registered Pension Plans (PRPPs)
across Canada. The goal is to provide Canadians with a new, low-cost, accessible vehicle to meet their retirement objectives, particularly for those who do not have the benefit of an employer-sponsored pension plan. The legislation will allow
private sector financial institutions to administer PRPPs, relieving small businesses and self-employed individuals of the burden and costs associated with providing traditional pension plans. While regulations and provincial participation remain as
key outstanding variables, PRPPs have the potential to expand the market in which Group Retirement operates, allowing for access to a segment of the market currently not served by group retirement providers.

Competition

The Canadian life and
health insurance industry is led by the larger insurance companies. Smaller competitors and niche players keep pressure on prices in the more commodity-like products as they attempt to gain market share. Some of the products offered by Canadian
Division contain an investment component that places them in competition with products offered not only by other life insurance companies but also by banks, mutual fund companies and investment dealers. The wealth market continues to be led by
larger companies, with almost 70% of the mutual fund market controlled by the top ten companies, according to information released by the Investment Funds Institute of Canada (IFIC). Similarly, the top five companies in the variable
annuity segregated fund market administer over 90% of assets, according to information released by LIMRA.

Individual Insurances primary
competitors include Canadian insurance companies and branches of non-Canadian insurance companies, with growing competition from banks. In the group benefits marketplace, the major competitors are the large insurance companies. Regional carriers are
also extremely competitive in some parts of the country, and small carriers that specialize in a particular niche product or segment and third party administrators have increased their presence in the marketplace. Key competitors for wealth
management products and services (including Manulife Bank) are other Canadian insurance companies, as well as mutual fund companies and banks.



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U.S. DIVISION

U.S. Division consists of U.S. Insurance and U.S. Wealth Management reporting segments. U.S. Insurance, which consists of JH Life and JH Long-Term Care businesses, offers life, wealth accumulation and
long-term care insurance solutions to select markets. Additionally the International Group Program offers international employee benefits management to multinational corporations. U.S. Wealth Management, which consists of JH Wealth Asset Management
and JH Annuities businesses, provides clients with a wide selection of wealth management solutions for their personal, family and business needs.

In this section of this Annual Information Form, John Hancock means, collectively, those U.S. Division business units that offer products and services under the John Hancock brand, with
operations in some of the Companys U.S. subsidiaries. John Hancock offers life and long-term care insurance, annuities, 401(k) group annuities and mutual fund products.

In addition to utilizing a wide variety of distribution channels and networks, U.S. Division offers its products and services through a recognized and established proprietary retail network, John Hancock
Financial Network (JHFN). JHFN is a nationally recognized distribution system comprising financial representatives offering insurance and wealth management solutions to individuals, families and businesses. The network provides access to
a variety of proprietary and non-proprietary products and services to facilitate the sale of wealth accumulation and insurance oriented products.

U.S. Insurance

U.S. Insurance provides life and long-term care insurance products and
services to select markets using a multi-channel distribution network, including JHFN.

In response to continued low levels of interest rates
and current economic conditions, U.S. Insurance has repositioned its product portfolio to reduce earnings sensitivity and improve risk profiles through product re-design and re-pricing.

JH Life

JH Life has established a reputation for innovative and competitive
products, service excellence and expert underwriting of mortality risk, benefiting from a broad based multi-channel distribution network. The business continues its core strategy of focusing on execution in these key areas. JH Life focuses on high
net-worth and emerging affluent markets by providing estate, business planning and other solutions with an array of protection and accumulation oriented life insurance products. The business has capacity to place large individual insurance policies
due to large retention limits of US$30 million for single lives and US$35 million on survivorship cases.

JH Life primarily offers single and
survivorship universal life and variable universal life products, as well as specialized COLI products. The rate of investment return on universal life insurance policies may change from time to time due to factors such as the investment performance
of the universal life asset portfolio, but is subject to minimum guaranteed rates. Variable universal life insurance products offer clients an opportunity to participate in the equity market by investing in segregated funds.

JH Lifes strategy is to focus on adapting and innovating its product portfolio in response to the low interest rate environment. The business has
introduced new universal life products that are intended to perform well for customers in the current markets and have an improved risk profile for the Company. The products are positioned to highlight the value of flexibility and liquidity through
policy cash values as well as the potential for improved performance if investment returns increase over time. In addition, a new indexed universal life product was introduced at the end of 2011. This product offers customers the opportunity to
participate in positive returns of the S&P 500 while providing a minimum policy crediting rate of zero on an annual basis. The Companys policy is to fully hedge the annual risk related to a negative S&P 500 return. The Company can
adjust annually and prospectively a withheld portion of the positive return to effectively pass changes in the annual hedging cost to the policyholders. Sales of universal life products with lifetime low cost guarantees have been de-emphasized
through pricing action and are expected to represent less than 15% of total U.S. life insurance sales going forward.



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Products are sold through a multi-channel distribution strategy that includes JHFN as well as third-party
producers. Third-party channels include independent agents, brokerage general agents, producer groups, broker-dealers and banks. The business actively develops and maintains its relationships with these distributors by providing technical support,
delivery of competitive products, product education, and advance marketing and sales support. Over the years, the business has solidified its strong shelf-space position with key distributors and broadened its distribution channels by establishing
new relationships with broker-dealers, producer groups and banks.

International Group Program (IGP)

The Company reinsures a portion of the group insurance contracts issued to subsidiaries and affiliates of multinational organizations through IGPs
global network of life insurance companies, called Network Partners. IGP pools the profit and loss experience of these contracts for its multinational clients. Management expects IGP to maintain its leading position in the North American
market while growing in Europe and Asia.

JH Long-Term Care

JH Long-Term Care provides insurance to individuals and groups to cover the costs of long-term care services including nursing homes, assisted living care facilities, adult day care and at-home care when
an insured is no longer able to perform the ordinary activities of daily living or is cognitively impaired. The business also administers long-term care benefits for employees of the United States federal government.

JH Long-Term Care has a leadership position in the long-term care market in the United States. It has expertise in all aspects of long-term care
operations, from product development to claims processing. Its products are sold to individuals through a multi-channel strategy that includes traditional independent agents, general agents, producer groups, broker-dealers and wirehouses. JHFN is a
major distributor for the business.

JH Long-Term Cares focus continues to be the repricing of the in-force business in response to the
comprehensive morbidity experience study that was conducted in 2010. Applications have been filed with state regulators for price increases of approximately 40% on average on approximately 75% of the in-force policies. We cannot be certain whether
or when each approval will be granted. However, approvals were granted by more than half of the states at year end 2011. The long-term care industry continues to be challenged with in-force rate increases and the departure of carriers from the
industry, signaling a need to reassess product offerings. A key focus for the business will be to reshape the products to better meet the needs of the consumer, while balancing the Companys appetite for risk. During this transition period, the
business will concentrate efforts on maintaining and strengthening current distribution relationships that are critical to the success of our future product direction.

U.S. Wealth Management

U.S. Wealth Management provides a variety of personal and
family-oriented wealth management products and services to select individual and business markets. U.S. Wealth Management is focused on growth of its higher return fee-based businesses. It will seek to accomplish this by capitalizing on our strong
brand name, innovative and broad product offerings, expanding distribution opportunities, superior customer service, while maintaining strong financial discipline and risk management in the products we offer.

For those customers who want a simplified approach to investing, U.S. Wealth Management provides Lifestyle and Target Date Portfolios, which are
pre-packaged, diversified funds-of-funds. The Lifestyle Portfolios are target-risk funds that are designed to match the needs and risk tolerance of a wide range of customers, from conservative to aggressive. The Target Date Portfolios are
target-date funds that are designed to automatically adjust to more conservative investments as a customers expected retirement date approaches. Two Target Date portfolio options are available, Retirement Living and Retirement Choices.
Retirement Living portfolios are designed to allow investors to stay in the same portfolio through their retirement years. Retirement Choices portfolios are designed to take participants to retirement and accommodate the participant who
wishes to select another investment strategy at time of retirement. The Lifestyle and Target Date Portfolios are constructed using a multi-step process that draws on the expertise of our diverse multi- manager investment platform combined with our
asset allocation expertise.

JH Wealth Asset Management

The JH Wealth Asset Management business includes the operations of both JH Retirement Plan Services and JH Mutual Funds.



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| | ¡ |  | JH Retirement Plan Services
| | - |  | ---------------------------

JH Retirement Plan Services offers small- and medium-sized businesses, consisting of companies with five to 500 employees, 401(k) group annuity contracts designed for tax-qualified pension plans. JH
Retirement Plan Services 401(k) group annuity product includes investment, communication and record-keeping services with plan administration provided through third party administrators. JH Retirement Plan Services offers the Guaranteed Income
for Life Select rider to provide participants with an option to receive lifetime income benefits.

JH Retirement Plan Services products
are marketed by sales account executives mainly to third party administrators, broker-dealers and independent financial planners. The business provides support to third party administrators in the form of direct data links, training, marketing,
educational programs, and access to e-commerce functionality. JH Retirement Plan Services also has an established advisory council of third party administrators that provides feedback on product development and marketing strategies. As part of its
commitment to the growing broker-dealer and financial planner channels, JH Retirement Plan Services offers on-line marketing, educational and client/broker-dealer administrative support through its broker website.

JH Retirement Plan Services strategy is to seek to continue its strong market presence in the small plan market segment and expand its presence
into the mid-market through its extensive distribution network with the launch of a new mutual fund based product. Assisting clients to save for retirement is a highly competitive market requiring excellent service, quality products, strong
recognized financial strength and brand in order to retain and attract new customers. Balancing the value proposition of our services rendered with the cost expectations of clients is the key success factor for JH Retirement Plan Services attaining
its goals.



| | ¡ |  | JH Mutual Funds
| | - |  | ---------------

The JH Mutual Funds business is structured around three business lines covering key components of the asset management industry: open-end and closed-end mutual funds and the 529 Plan market. JH Mutual
Funds offers open-end funds and closed-end funds, which are sponsored by John Hancock and offer a multi-manager investment platform sub-advised by both our affiliated John Hancock Asset Management investment unit and various external investment
management firms. We offer the mutual funds through wirehouses, regional brokerage firms, planners, financial institutions and insurance broker-dealers. The 529 Plans are offered by the Educational Trust of Alaska and administered by T. Rowe Price
Group to help middle-income and high net-worth clients to save for post-secondary education by offering a multi-managed product platform with various flexible investment options.

Achieving strong long-term performance, among a large diversified investment management platform is a key element in the ongoing retention of clients. Managements goal is for JH Mutual Funds to be a
top-tier provider of a diverse line of mutual funds managed by world-class institutional asset managers that helps customers realize their financial goals. To achieve this goal, management is focused on product manufacturing, marketing, distribution
and service. Its product portfolio consists of an extensive selection of open-end equity and fixed-income funds, a suite of Lifestyle and Target Date asset allocation funds, a number of closed-end funds and separate account strategies. Distribution
resources have been expanded to support critical new sales channels such Edward Jones and banks, as well as opportunities within the institutional, registered investment advisers and defined contribution investment only channels.

JH Annuities

Over the last few
years, in response to increased equity market volatility and declines in interest rates, we have reduced the equity and interest rate risk of our fixed and variable annuity products through product re-design and re-pricing. Given our dampened sales
expectations for both retail fixed and variable annuities, the distribution of these product lines was combined with JH Mutual Funds in late 2011. Distribution focus going forward will have an emphasis on JHFN and a select few broker-dealer firms
and insurance distributors. Structured settlement annuities are offered through brokers specializing in dispute resolution.

Variable annuity
products help customers achieve their personal and family financial goals. These products, sold mainly to middle- and upper-income individuals, provide a tax-efficient way to save for retirement, generate retirement income, or preserve wealth.
Earnings on these products are subject to taxation only when withdrawn. Several different base products have been offered in the past with varying front-end sales loads, surrender charge rates and periods, and up front payment enhancements. The vast
majority of customers purchasing variable annuity products over the past several years also purchased a guaranteed minimum withdrawal benefit (GMWB) rider which provides the policyholder a minimum level of guaranteed periodic withdrawals
over a specified period or life even if policyholder account values have been depleted.



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Other annuity products consist of payout annuities, fixed deferred annuities, spread-based products and
fee-based products. Payout annuitiesare designed to meet the needs of corporate-sponsored and individual retirement plans, defined benefit pension plan terminations and retail purchasers of immediate annuities. These single premium annuities
shift investment and longevity risk from individuals to the Company and one specific category, structured settlements, provides a stream of periodic payments to individuals who receive awards or settlements in personal physical injury disputes.
Sales of corporate-sponsored plans have been discontinued in light of the current low interest rate environment. Fixed deferred annuity contracts consist of Market Value Adjusted (MVA) and book value (Book Value)
annuities. Given the low interest rate environment any new sales are the MVA annuity product with sales of Book Value annuities discontinued. The MVA annuity products are single premium contracts offering interest rate guarantee periods ranging from
three to ten years from the date of purchase. Principal and interest are guaranteed if held for the length of the guarantee period and premiums earn a guaranteed interest rate during the guarantee period. Withdrawals made prior to the end of the
guarantee period, in excess of the interest credited over the previous twelve months, may be subject to a market value adjustment. Spread-based products are offered opportunistically, when market conditions allow, for sale at attractive rates
of return on capital. Fee-based products generally pass investment results through to the contract holder with no, or minimal, guarantees. The Company no longer actively markets fee-based products, but does receive renewal deposits into
existing contracts.

Competition

Each of the markets in which U.S. Division operates is highly competitive. Competitors in the U.S. life and long-term care insurance markets vary across product lines, but are primarily other large
insurance companies that distribute comparable products through similar channels. Competitive advantage is based on the ability to develop flexible product features to meet individual customer needs, and to develop and service a variety of
distribution channels. U.S. Insurances competitive strengths include product innovation, underwriting expertise, access to multiple distribution channels, and high quality customer service. Its competitive position is also enhanced by its
scale as a leader in both the life and long-term care insurance markets and the strength of the John Hancock brand.

U.S. Wealth
Managements competitive strengths include strong brand recognition, product innovation, multiple distribution channels, high quality customer service and wholesaling excellence. In JH Wealth Asset Management, competitors in the JH Retirement
Plan Services operation are insurance companies, mutual fund firms and payroll companies that compete on investment options/performance, service quality/product platform, the ability to add value for customers and price. Competition for the JH
Mutual Funds operation includes mutual fund and insurance companies that compete based on fund performance and distribution capability. JH Annuities business environment is characterized by strong competition from both insurance and mutual
fund companies, on aspects such as product offerings, fund performance, investment/interest rates, customer service, and financial strength. In the institutional market for payout annuities, fee-based and spread-based fixed products, although a
large number of companies offer these products, the market is concentrated because it demands issuers of high financial quality and competition has become restricted to insurance companies with superior financial ratings.

Management believes that it will be able to compete successfully in chosen markets as a result of the John Hancock brand name, national distribution,
product design and competitive pricing.

INVESTMENT DIVISION

The Investment Division has two major mandates  managing the invested assets of the Companys general fund and Manulife Asset Management, a
leading global asset management business.

General Fund Assets

The Investment Division manages the Companys general fund assets with an emphasis on high credit quality and diversification across asset classes and individual investment risks. Our investment
philosophy for the general fund is rooted in a bottom-up approach to developing an asset mix that matches the needs of our policyholder liabilities. The general fund assets of the Company are invested primarily in investment grade bonds, private
placements and commercial mortgages. We also invest in public and private equities, real estate, oil and gas, infrastructure, timberland and farmland properties.



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Total invested assets in the general fund, as at December 31, 2011, were $226.5 billion (2010 
$201.2 billion). In addition, derivative assets were $15.5 billion (2010  $4.0 billion) and derivative liabilities were $7.6 billion (2010  $3.3 billion). During 2011, the Companys investing activities included $82.8 billion of
purchases and mortgage advances and $71.9 billion of disposals and repayments.

Further information on the invested assets and the Asset
Liability Management Strategy can be found in MFCs Managements Discussion and Analysis for the year ended December 31, 2011, which is incorporated herein by reference.

Manulife Asset Management

Manulife Asset Management is a key component of the
Companys overall growth strategy. As the asset management arm of the Company, our mission is to manage comprehensive investment strategies and deliver strong investment performance to retail and institutional investors. We partner with
Manulife Financials and John Hancocks Wealth Management groups to deliver superior products to retail investors in all of the markets in which we operate. We also leverage our long term performance records, extensive footprint and global
infrastructure to distribute our investment solutions directly to institutional clients, such as pension plans, foundations, endowments and financial institutions. Operating a global network in 17 countries and territories, with more than
300 investment professionals, our business model combines the asset manager empowerment of a boutique environment with the resources and risk management rigour of a global asset manager backed by a financial services leader.

Assets managed for external clients by Manulife Asset Management totaled $178 billion5as at December 31, 2011. In total, Manulife Asset Management
managed $211 billion for internal and external clients as at December 31, 2011.

RISK
FACTORS

Manulife Financial is a financial institution offering insurance, wealth and asset management products and services, which
subjects the Company to a broad range of risks. We manage these risks within an enterprise-wide risk management framework. Our goal is to strategically optimize risk taking and risk management to support long-term revenue, earnings and capital
growth. We seek to achieve this by capitalizing on business opportunities that are aligned with the Companys risk taking philosophy, risk appetite and return expectations; by identifying, measuring and monitoring key risks taken; and by
executing risk control and mitigation programs.

An explanation of Manulife Financials risk management approach, and the accounting and
actuarial assumptions and estimates used by Manulife Financial in the preparation of its financial statements, can be found in the sections entitled Risk Management and Risk Factors and Critical Accounting and Actuarial
Policies in MFCs Managements Discussion and Analysis for the year ended December 31, 2011 and in Note 10 (Risk Management) to MFCs consolidated financial statements for the year ended December 31, 2011, available on
SEDAR at www.sedar.com, which sections and Note are incorporated herein by reference.

As noted under Caution Regarding Forward-Looking
Statements, forward-looking statements involve risks and uncertainties and actual results may differ materially from those expressed or implied in such statements. Strategic risk, market risk, liquidity risk, credit risk, insurance risk and
operational risk are the major categories of risk described in the sections of MFCs Managements Discussion and Analysis referred to above. These risk factors should be considered in conjunction with the other information in this Annual
Information Form and the documents incorporated by reference herein.

Management has identified the following risks and uncertainties to which
our business, operations and financial condition are subject. Additional risks and uncertainties not currently known to us or that we currently believe are not reasonably likely to materially affect us may also impair our business, results of
operations and financial condition.





|5 | An additional $4 billion in assets were managed for external clients by Investment Division affiliates in addition to the Manulife Asset Management
assets as at December 31, 2011.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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General  Financial Markets and Economy

Changes in financial markets or general economic conditions may adversely impact our business results

Over the past few years, financial markets have been dominated by ongoing uncertainty surrounding the macro environment. In 2011 we saw substantial
declines in equity markets and interest rate levels, exceptional equity market volatility and monetary policy actions that lowered long-term treasury rates in the U.S. and interest rates elsewhere, including in Canada and Asia. Under the Canadian
insurance accounting and regulatory capital regimes, current market conditions are largely reflected in our current period results.

Continued
poor or worsening economic conditions could result in further material charges to income and reductions in our capital position. Typically a reduction in net income adversely impacts regulatory capital ratios. As well, our results of operations and
financial condition would likely be adversely impacted by higher financing and transaction costs associated with less liquid markets and lower credit ratings and higher levels of asset impairment. Examples of the direct and indirect impacts the
economic conditions have had, and may continue to have, on the Company include:



| |  |  | MFCs common share price has fallen, impacting our ability to raise capital and make acquisitions, and affecting the perceived strength of our
franchise.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Company is exposed to fluctuations in equity markets, particularly as a result of potential costs relating to certain variable annuity products
with guarantees that are tied to the value of public equity markets. As a result of the substantial public equity market movements since the latter half of 2008, MFC has had to make significant changes to the reserves and the capital it holds to
support variable annuity guarantees, resulting in increased earnings volatility.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Company is exposed to interest rate risk, primarily due to the uncertainty of future returns on investments to be made as assets mature and as
recurring premiums are received and are reinvested. As a result of movements in interest rates during 2009, 2010 and 2011, the Company was required to increase policy liabilities resulting in non-cash charges against income.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Companys exposure to equity markets and interest rates necessitated changes in the design and pricing of certain of our products and
modifications to our risk reduction plans including expansion of our hedging strategies. These actions contributed to reduced sales and higher costs and expose the Company to additional risks.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Strategic Risk

Strategic risk is the risk of loss resulting from the inability to adequately plan or implement an appropriate business strategy, or to adapt to change in the external business, political or regulatory
environment.

We may not be successful in executing our business strategies or these strategies may not achieve our objectives

The economic environment may remain volatile and our regulatory environment, particularly in Canada, will continue to evolve, potentially
with higher capital requirements which would materially impact our competitiveness. Further, the attractiveness of our product offerings relative to our competitors will be influenced by competitor actions as well as our own, and the requirements of
the regulatory regimes we and they operate under. For these and other reasons, there is no certainty that we will be successful in implementing our business strategies or that these strategies will achieve the objectives we target.

Further, we recognize that additional headwinds may result in an inability to achieve business strategies and plans. Of note, economic factors such as
flat or declining equity markets, equity market volatility, or a period of prolonged low interest rates could impact our ability to achieve business objectives. Other headwinds include management actions taken to bolster capital and reduce the
Companys risk profile, including additional third party reinsurance and the sale of our life retrocession business in 2011, and additional actions that the Company may take to bolster near-term regulatory capital or accelerate plans to reduce
exposure to equity markets and interest rates.



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We have implemented hedging strategies to reduce our exposure to public equity markets. We intend to
continue to dynamically hedge virtually all new variable annuity and segregated fund guarantees written in the future. There can be no assurance that the Companys exposure to public equity markets will be reduced to within the year-end 2014
target, or that our exposure to movements in interest rates will remain below the year-end 2014 target. We may be unable to hedge our existing unhedged business as contemplated in our risk reduction plans, or if we do so, we may be required to
record a charge to income when we initiate hedging. Under certain market conditions, which include a sustained increase in realized equity and interest rate volatilities, a decline in interest rates, or an increase in the correlation between equity
returns and interest rate declines, the costs of hedging the benefit guarantees provided in variable annuities may increase or become uneconomic, in which case we may reduce or discontinue sales of certain of these products. In addition, there can
be no assurance that our dynamic hedging strategy will fully offset the risks arising from the variable annuities being hedged.

Our
insurance businesses are heavily regulated, and changes in regulation may reduce our profitability and limit our growth

Our insurance
operations are subject to a wide variety of insurance and other laws and regulations. As a result of the global financial crisis, financial authorities and regulators in many countries are reviewing their capital requirements and considering
potential changes. Future regulatory capital, actuarial and accounting changes could have a material adverse effect on the Companys consolidated financial condition, results of operations and regulatory capital both on transition and going
forward.

In Canada, MFC and its principal operating subsidiary, Manufacturers Life, are governed by the ICA. The ICA is administered, and the
activities of the Company are supervised, by OSFI. Manufacturers Life is also subject to regulation and supervision under the insurance laws of each of the provinces and territories of Canada. Regulatory oversight is vested in various governmental
agencies having broad administrative power with respect to, among other things, dividend payments, capital adequacy and risk-based capital requirements, asset and reserve valuation requirements, permitted investments and the sale and marketing of
insurance contracts. These regulations are intended to protect policyholders and beneficiaries rather than investors and may adversely impact shareholder value.

In Canada, OSFI has been considering several initiatives that could materially impact capital requirements. OSFI has been continuing its work on capital requirements for segregated fund guarantees and on
the development of the new risk-sensitive and market-consistent solvency regime. OSFI continues to consider updates to its regulatory guidance for non-operating insurance companies acting as holding companies, such as MFC, and to its methodology for
evaluating stand-alone capital adequacy for Canadian operating life insurance companies, such as Manufacturers Life. OSFI has indicated that MCCSR and internal target capital ratio guidelines, which have not yet been determined, are expected to
become applicable to MFC by 2016. Changes in regulatory capital guidelines for banks under the Basel accord (Basel III) may have implications for insurers operating in Canada. Changes to the International Financial Reporting Standards
for pension plans effective January 1, 2013, could have an adverse impact on regulatory capital ratios, depending on the final regulatory guidance and market conditions existing at the date of adoption. Furthermore, new IFRS standards for the
valuation of insurance contracts, which are still under development, could have a materially adverse impact on capital adequacy calculations. Although this is not expected to occur before 2015, the draft rules continue to evolve and implications for
the Companys capital position are highly uncertain. Other elements of the MCCSR required capital formula are also being reviewed on an ongoing basis. The outcome of these initiatives is uncertain and could have a material adverse impact on the
Company or on its position relative to that of other Canadian and international financial institutions with which it competes for business and capital.

Some recent examples of regulatory and professional standard developments which could impact our capital position include the following.



| |  |  | Until the new IFRS standard for insurance contracts is completed and effective, our policyholder liabilities continue to be valued under standards
established by the Canadian Institute of Actuaries (CIA). The CIA has published a new research paper updating the equity calibration parameters for guaranteed variable annuities and segregated funds. The Canadian Actuarial Standards
Board is expected to adopt these revised calibration parameters for valuations on or after October 15, 2012. The CIA is also expecting to publish calibration criteria for fixed income funds in 2012 as well as guidance on the modeling of future
realized volatility where a hedging program is in place. Once effective, the new calibration standards will apply both to the determination of actuarial liabilities and required capital and may result in a reduction in Manufacturers Lifes
MCCSR ratio and the Companys net income.
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| |  |  | In a development concerning U.S. statutory accounting practices potentially affecting U.S. life insurers, including John Hancock, the National
Association of Insurance Commissioners (NAIC) created a commissioner level working group in the fall of 2011 for the purpose of reviewing a change to actuarial standards for certain universal life (UL) products pursuant to
Actuarial Guideline 38 (AG38). On February 21, 2012 this working group agreed to a bifurcated approach for establishing valuation standards for in-force versus business issued after a yet to be determined date. While this action is
viewed as a significant step forward in the effort to resolve the AG38 issue, additional details, questions, and approvals remain outstanding. The Company is unable at this time to determine the nature or extent of potential changes or the impact of
any such changes to AG38. However, based on our information to date, it appears that any changes applied retroactively will likely not have a material adverse impact on John Hancocks statutory capital position.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In the United States, state insurance laws regulate most aspects of our business, and our U.S. insurance subsidiaries are regulated by the insurance
departments of the states in which they are domiciled and the states in which they are licensed. State laws grant insurance regulatory authorities broad administrative powers with respect to, among other things: licensing companies and agents to
transact business; calculating the value of assets to determine compliance with statutory requirements; mandating certain insurance benefits; regulating certain premium rates; reviewing and approving policy forms; regulating unfair trade and claims
practices, including through the imposition of restrictions on marketing and sales practices, distribution arrangements and payment of inducements; regulating advertising; protecting privacy; establishing statutory capital and reserve requirements
and solvency standards; fixing maximum interest rates on insurance policy loans and minimum rates for guaranteed crediting rates on life insurance policies and annuity contracts; approving changes in control of insurance companies; restricting the
payment of dividends and other transactions between affiliates; and regulating the types, amounts and valuation of investments.

Currently,
the U.S. federal government does not directly regulate the business of insurance. However, federal legislation and administrative policies in several areas can significantly and adversely affect insurance companies. These areas include financial
services regulation, securities regulation, pension regulation, privacy, tort reform legislation and taxation. In addition, various forms of direct federal regulation of insurance have been proposed, including the National Insurance Act of 2007. The
Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) contains several provisions that may impact the business of Manulife Financial and other large insurers acting in the United States. See the risk factor entitled
Dodd-Frank could adversely impact our results of operations and our liquidity. In view of recent events involving certain financial institutions, it is possible that the U.S. federal government will heighten its oversight of insurers
such as Manulife Financial, including possibly through a federal system of insurance regulation. We cannot predict whether this or other proposals will be adopted, or what impact, if any, such proposals or laws could have on our business, results of
operations and financial condition.

Insurance guaranty associations in Canada and the United States have the right to assess insurance
companies doing business in their jurisdiction for funds to help pay the obligations of insolvent insurance companies to policyholders and claimants. Because the amount and timing of an assessment is beyond our control, the liabilities that we have
currently established for these potential liabilities may not be adequate.

Our international operations are subject to regulation in the
jurisdictions in which they operate. Many of our independent sales intermediaries also operate in regulated environments. Insurance regulators in Canada, the United States and Asia regularly re-examine existing laws and regulations applicable to
insurance companies and their products. Changes in these laws and regulations, or in interpretations thereof, are often made for the benefit of the consumer at the expense of the insurer and, thus, could have a material adverse effect on our results
of operations and financial condition.

Compliance with applicable laws and regulations is time consuming and personnel-intensive, and changes
in these laws and regulations may materially increase our direct and indirect compliance costs and other expenses of doing business, thus having a material adverse effect on our results of operations and financial condition.

From time to time, regulators raise issues during examinations or audits of Manulife Financial that could have a material adverse impact on us. We cannot
predict whether or when regulatory actions may be taken that could adversely affect our operations. In addition, the interpretations of regulations by regulators may change and statutes may be enacted with retroactive impact, particularly in areas
such as accounting or statutory reserve requirements. For further discussion of government regulation and legal proceedings refer to Government Regulation and Legal Proceedings.



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Our capital position could be negatively impacted by market conditions, the results of operations, or due
to changes in regulatory requirements, inclusive of the impacts of changing financial accounting standards

Our capital ratios are
sensitive to equity markets and interest rate movements. Further, potential changes related to IFRS and considerations underway by OSFI may result in a reduction in our capital ratios or more onerous capital requirements. As a result, Manulife
Financial may be required to issue additional capital, which could increase costs and negatively impact our financial strength or credit ratings. See the risk factor entitled We may experience future downgrades in our financial strength or
credit ratings, which may materially adversely impact our financial condition and results of operations.

MFC and its principal Canadian
operating company, Manufacturers Life, is regulated by the Superintendent. Manufacturers Life is subject to the Superintendents MCCSR. The supervisory target ratio for MCCSR is set at 150%. MFC endeavours to manage its affairs so that
Manufacturers Life has a MCCSR ratio that is materially above the supervisory target and that allows margins for equity market and interest rate declines and takes into account other conceivable factors that could adversely impact the capital
position in the foreseeable future. However, there can be no guarantee that Manufacturers Lifes MCCSR ratio can be maintained at or above targeted levels.

In addition to OSFIs capital requirements for our consolidated operations, each subsidiary must comply with regulatory guidelines applicable to a jurisdiction in which it operates, in accordance
with capital definitions and measures defined by a local regulator. In the United States, the Companys U.S. life insurance subsidiaries are subject to minimum regulatory capital requirements known as Risk Based Capital (RBC)
requirements. Such amounts of capital are based on the local statutory accounting basis in each jurisdiction. The Company seeks to maintain capital in excess of the minimum required in each jurisdiction.

Access to capital may be negatively impacted by market conditions

Disruptions, uncertainty or volatility in the financial markets may limit our access to capital required to operate our business. Such market conditions may limit our ability to satisfy regulatory capital
requirements and to access the capital necessary to grow our business. As such, we may be forced to delay raising capital, issue different types of capital than we would otherwise, less effectively deploy such capital, issue shorter term securities
than we prefer, or securities that bear an unattractive cost of capital which could decrease our profitability and significantly reduce our financial flexibility.

Changes in accounting standards may adversely affect our financial statements

Our
consolidated financial statements are prepared in accordance with IFRS, which we adopted as a replacement of prior Canadian GAAP effective January 1, 2011. From time to time, we are required to adopt revised or new accounting standards issued
by recognized authoritative bodies. Market conditions have prompted these bodies to issue new guidance which further interprets or seeks to revise accounting pronouncements including those related to financial instruments and hedging, fair value
measurements, consolidation of structures or transactions and new standards that expand disclosures. In addition, future accounting standards we are required to adopt could change the current accounting treatment that we apply to our consolidated
financial statements and such changes could have a material adverse effect on our financial condition and results of operations.

The
international financial reporting standard that addresses the measurement of insurance contracts is currently being developed and is not expected to be effective until at least 2015. Until this standard is completed and becomes effective, the
current Canadian GAAP requirements for the valuation of insurance liabilities under the Canadian Asset Liability Method (CALM) will be maintained. Under CALM, the measurement of actuarial liabilities is based on projected liability cash
flows, together with estimated future premiums and net investment income generated from assets held to support those liabilities. In 2010, the International Accounting Standards Board (IASB) issued its Insurance Contracts (Phase II)
Exposure Draft and the U.S. Financial Accounting Standards Board (FASB) issued its Insurance Contract Discussion paper. The insurance contract project is considered a joint project whereby the IASB and FASB discuss common
research papers. A due process step for joint projects also involves assessing differences reached by the two Boards and determining if they can be resolved. Since 2010, the Boards have redeliberated significant issues based on feedback received on
the IASB Exposure Draft and FASB Discussion Paper. In 2012, the IASB expects to issue a Review Draft or a revised Exposure Draft and the FASB expects to issue an Exposure Draft.



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The regulatory capital framework in Canada is aligned with Canadian GAAP, and unless regulatory changes are
made, the capital framework will be aligned with the IFRS standard for insurance contracts currently in the process of being developed. Therefore, the standard as proposed and if implemented may lead to a large initial increase in reported insurance
liabilities and potentially our required regulatory capital upon adoption, and may create significant ongoing volatility in our reported results and potentially our regulatory capital particularly for long duration guaranteed products. This mismatch
between the underlying economics of our business and reported results and potentially our capital requirements could have significant unintended negative consequences on our business model which would potentially affect our customers, shareholders
and the capital markets.

We believe the accounting rules under discussion, if applied to regulatory capital, could put Canadian insurers at a
significant disadvantage relative to their U.S. and global peers, and also to the banking sector in Canada.

The amendments to IAS 19
Employee Benefits effective January 1, 2013 are expected to result in a material reduction in accumulated other comprehensive income (AOCI), a component of equity, upon adoption. As at December 31, 2011, the
consolidated pre-tax unrecognized net actuarial losses for the Companys pension and post-employment benefits were $1,011 million and $58 million, respectively, which if persisted at the date of adoption is expected to result in a material
reduction to our capital ratios and could result in significant ongoing volatility in available capital, if regulatory capital includes this component of AOCI in the future. The actual impact to the Company will be based on actuarial estimates,
market conditions and capital requirements that exist at the date of transition.

Dodd-Frank could adversely impact our results of
operations and our liquidity

Dodd-Frank Title VII creates a new framework for regulation of over-the-counter (OTC) derivatives
which could affect those activities of the Company which use derivatives for various purposes, including hedging equity market, interest rate and foreign currency exposures. Dodd-Frank will require certain types of OTC derivative transactions to be
executed through a centralized exchange or regulated facility and be cleared through a regulated clearinghouse. The legislation could also potentially impose additional costs, including new capital requirements, and additional regulation on the
Company. Derivative transactions executed through exchanges or regulated facilities will attract new incremental margin requirements to fund initial margin, and will require variation margin to be cash settled on a daily basis which increases
liquidity risk for the Company. The increase in margin requirements combined with a more restricted list of securities that qualify as eligible collateral could require us to hold larger positions in cash and treasuries, which would reduce income.
Conversely, transactions executed through exchanges largely eliminate OTC counterparty credit risk but increase our exposure to the risk of an exchange or clearinghouse defaulting, and increased capital or margin requirements imposed on our OTC
derivative counterparties could reduce our exposure to the counterparties default. In force derivative transactions will be grandfathered and could migrate to exchanges over time, or the Company may elect to accelerate the migration. We cannot
predict the effect of the legislation on our hedging costs, our hedging strategy or its implementation, or whether Dodd-Frank will lead to an increase or decrease in or change in composition of the risks we hedge.

In addition, pursuant to Dodd-Frank, in October 2011, the Financial Stability Oversight Council (FSOC) released its second notice of proposed
rulemaking outlining the proposed criteria that will inform the FSOCs designation of non-bank financial institutions as systemically important and the procedures the FSOC will use in the designation process. If designated, the
largest, most interconnected and highly-leveraged companies would face stricter prudential regulation, including higher capital requirements and more robust consolidated supervision. While the proposed rules specify various quantitative thresholds
for use in determining which non-bank financial institutions may be designated, FSOC has left open the possibility that a non-bank financial institution can be below the thresholds and still become subject to a designation as systemically important.
The comment period on the FSOC second notice of proposed rulemaking has closed, and FSOC is now reviewing submitted comments. At this stage, OSFI has not announced similar rules. We cannot predict the outcome of this regulatory initiative.

We may experience future downgrades in our financial strength or credit ratings, which may materially adversely impact our financial
condition and results of operations

Credit rating agencies publish financial strength ratings on life insurance companies that are
indicators of an insurance companys ability to meet contract holder and policyholder obligations. Credit rating agencies also assign credit ratings, which are indicators of an issuers ability to meet the terms of debt, preferred share
and Tier 1 hybrid capital obligations in a timely manner, and are important factors in a companys overall funding profile and ability to access external capital.



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Ratings are important factors in establishing the competitive position of insurance companies, maintaining
public confidence in products being offered, and determining the cost of capital. A ratings downgrade, or the potential for such a downgrade could, among other things: increase our cost of capital and limit our access to the capital markets; cause
some of our existing liabilities to be subject to acceleration, additional collateral support, changes in terms, or result in additional financial obligations; result in the termination of our relationships with broker-dealers, banks, agents,
wholesalers and other distributors of our products and services; materially increase the number of surrenders, for all or a portion of the net cash values, by the owners of policies, contracts and general account GICs we have issued, and materially
increase the number of withdrawals by policyholders of cash values from their policies; and reduce new sales, particularly with respect to general account GICs and funding agreements purchased by pension plans and other institutions. Any of these
consequences could adversely affect our results of operations and financial condition.

During 2011, the financial strength and credit ratings
of our insurance operating companies were affirmed by Standard & Poors Rating Services, a division of The McGraw-Hill Companies Inc. (S&P), Fitch Ratings Ltd. (Fitch), A.M. Best Company (A.M.
Best) and DBRS Limited (DBRS). There were no rating actions undertaken by Moodys Investors Service, a subsidiary of Moodys Corporation (Moodys). Our insurance operating companies are currently rated
AA- by S&P, A1 by Moodys, AA- by Fitch Ratings, A+ (Superior) by A.M. Best and IC-1 by DBRS for financial strength. Furthermore, A.M. Best revised their outlook from negative to stable. At December 31, 2011, all five rating
agencies had a stable outlook on the ratings of our insurance operating companies. In February 2012, Fitch affirmed the financial strength ratings of our insurance operating companies and credit ratings and revised the outlook from stable to
negative. Credit rating agencies remain concerned with: the Companys reduced financial flexibility associated with increased financial leverage and weak earnings coverage metrics; capital and net earnings volatility associated with fair-value
accounting; net exposures to equity markets and lower interest rates; potential failure to complete the hedging program targets; lower prospective earnings contribution from the U.S. operations and challenges associated with long term care and UL
products. There can be no guarantee that downgrades will not occur.

It is possible that there will be changes in the benchmarks for capital,
liquidity, earnings and other factors used by these credit rating agencies that are important to a ratings assignment at a particular rating level. Any such changes could have a negative impact on our ratings, which could adversely impact our
results of operations and financial condition.

Competitive factors may adversely affect our market share and profitability

The insurance, wealth and asset management industries are highly competitive. Our competitors include other insurers, securities firms, investment
advisers, mutual funds, banks and other financial institutions. Our competitors compete with us for customers, access to distribution channels such as brokers and independent agents, and for employees. In some cases, competitors may be subject to
less onerous regulatory requirements, have lower operating costs or have the ability to absorb greater risk while maintaining their financial strength ratings, thereby allowing them to price their products more competitively or offer features that
make their products more attractive. These competitive pressures could result in increased pricing pressures on a number of our products and services and may harm our ability to maintain or increase our profitability. Because of the highly
competitive nature of the financial services industry, there can be no assurance that we will continue to effectively compete with our industry rivals and competitive pressure may have a material adverse effect on our business, results of operations
and financial condition.

We may experience difficulty in marketing and distributing products through our current and future distribution
channels

We distribute our insurance and wealth management products through a variety of distribution channels, including brokers,
independent agents, broker-dealers, banks, wholesalers, affinity partners, other third-party organizations and our own sales force in Asia. We generate a significant portion of our business through individual third party arrangements. We
periodically negotiate provisions and renewals of these relationships, and there can be no assurance that such terms will remain acceptable to us or relevant third parties. An interruption in our continuing relationship with certain of these third
parties could significantly affect our ability to market our products and could have a material adverse effect on our business, results of operations and financial condition.

Industry trends could adversely affect the profitability of our businesses

Our business
segments continue to be influenced by a variety of trends that affect our business and the financial services industry in general. The impact of the volatility and instability of the financial markets on our business is difficult to predict. The
Companys business plans, financial condition and results of operations have been and may continue to be negatively impacted or affected. The financial services industry has been particularly impacted by the downturn in the financial markets
and general economic conditions and is subject to a high degree of government regulation. Regulators may refine capital requirements and introduce new reserving standards. Furthermore, regulators have undertaken market and sales practices reviews of
several markets or products, including variable annuities and group products. The current market environment may also lead to changes in regulation that may disadvantage us relative to some of our competitors.



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We may face unforeseen liabilities or asset impairments arising from possible acquisitions and
dispositions of businesses or difficulties integrating acquired businesses

We have engaged in acquisitions and dispositions of businesses
in the past, and expect to continue to do so in the future as we may deem appropriate. There could be unforeseen liabilities or asset impairments, including goodwill impairments, that arise in connection with the businesses that we may sell, have
acquired, or may acquire in the future. In addition, there may be liabilities or asset impairments that we fail, or are unable, to discover in the course of performing due diligence investigations on acquisition targets. Furthermore, the use of our
own funds as consideration in any acquisition would consume capital resources that would no longer be available for other corporate purposes.

Our ability to achieve certain benefits we anticipate from any acquisitions of businesses will depend in large part upon our ability to successfully
integrate the businesses in an efficient and effective manner. We may not be able to integrate the businesses smoothly or successfully, and the process may take longer than expected. The integration of operations may require the dedication of
significant management resources, which may distract managements attention from our day-to-day business. Acquisitions of operations outside of North America, especially any acquisition in a jurisdiction in which we do not currently operate,
may be particularly challenging or costly to integrate. See the risk factor entitled Our non-North American operations face political, legal, operational and other risks that could negatively affect those operations or our profitability.
If we are unable to successfully integrate the operations of any acquired businesses, we may be unable to realize the benefits we expect to achieve as a result of the acquisitions and the results of operations may be less than expected.

If our businesses do not perform well, or if the outlook for our businesses is significantly lower than historical trends, we may be required to
recognize an impairment of goodwill or intangible assets or to establish a valuation allowance against our future tax assets, which could have a material adverse effect on our results of operations and financial condition

Goodwill represents the excess of the amounts we paid to acquire subsidiaries and other businesses over the fair value of their net identifiable assets at
the date of acquisition. Intangible assets represent assets that are separately identifiable at the time of an acquisition and provide future benefits such as the John Hancock brand.

Goodwill and intangible assets with indefinite lives are tested at least annually for impairment. Goodwill is tested at the cash generating unit (CGU) or group of CGUs level, representing the
smallest group of assets that is capable of generating largely independent cash flows. In the fourth quarter of 2011, as a result of the current economic environment including persistent low interest rates, the Company recorded a goodwill impairment
charge of $665 million (US$650 million) attributable to our U.S. life insurance CGU. The impairment charge, which has been recorded in our Corporate and Other segment, is a non-cash item and does not affect our ongoing operations or our regulatory
capital ratios. The tests performed in 2011 demonstrated that there was no impairment of intangible assets with indefinite lives. Going forward, the impact of economic conditions and changes in product mix suggest a lower margin of recoverable value
in excess of carrying value attributable to our Canadian Individual Insurance cash generating unit. As a result of these factors and the granular level of goodwill testing under IFRS, additional impairment charges could occur in the future. The
goodwill testing for 2012 will be updated based on the conditions that exist in 2012 and may result in further impairment charges, which could be material. See the risk factor entitled Changes in accounting standards may adversely affect our
financial statements.

At December 31, 2011, under IFRS we had $3,404 million of goodwill and $2,038 million of intangible assets.

If market conditions deteriorate in the future and, in particular, if MFCs common share price is low relative to book value per share,
if the Companys actions to limit risk associated with its products or investments cause a significant change in any one cash generating units recoverable amount, or if the outlook for a cash generating units results deteriorate,
the Company may need to reassess the value of goodwill and/or intangible assets which could result in impairments during 2012 or subsequent periods. Such impairments could have a material adverse effect on our results of operations and financial
condition.



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Future income tax balances represent the expected future tax effects of the differences between the book and
tax basis of assets and liabilities. Future tax assets are recorded when the Company expects to claim deductions on tax returns in the future for expenses that have already been recorded in the financial statements. The availability of those
deductions is dependent on future taxable income against which the deductions can be made. Future tax assets are assessed periodically by management to determine if they are realizable. Factors in managements determination include the
performance of the business including the ability to generate gains from a variety of sources and tax planning strategies. If based on information available at the time of the assessment, it is more likely than not that the future tax asset will not
be realized, then a valuation allowance must be established with a corresponding charge to net income. The establishment of valuation allowances against our future tax assets could have a material adverse effect on our results of operations and
financial condition. At December 31, 2011, we had $1,757 million of future tax assets.

Changes in tax laws, tax regulations, or
interpretations of such laws or regulations could make some of our products less attractive to consumers, could increase our corporate taxes or cause us to change our provision for income taxes which could have a material adverse effect on our
business,results of operations and financial condition

Many of the products that the Company sells benefit from one or more forms of
preferred tax treatment under current income tax regimes. For example, the Company sells life insurance policies that benefit from the deferral or elimination of taxation on earnings accrued under the policy, as well as permanent exclusion of
certain death benefits that may be paid to policyholders beneficiaries. We also sell annuity contracts that allow the policyholders to defer the recognition of taxable income earned within the contract. Other products that the Company sells
also enjoy similar, as well as other, types of tax advantages. The Company also benefits from certain tax benefits, including but not limited to tax-exempt interest, dividends-received deductions, tax credits (such as foreign tax credits), and
favourable tax rates and/or income measurement rules for tax purposes.

There is risk that tax legislation could be enacted that would lessen
or eliminate some or all of the tax advantages currently benefiting the Company or its policyholders. This could occur in the context of deficit reduction or other tax reforms. The effects of any such changes could result in materially lower product
sales, lapses of policies currently held, and/or our incurrence of materially higher corporate taxes, any of which could have a material adverse effect on our business, results of operations and financial condition.

Additionally, the Company may be required to change its provision for income taxes or carrying amount of deferred tax assets or liabilities if the
ultimate deductibility of certain items is successfully challenged by taxing authorities or if future transactions or events, which could include changes in tax laws, tax regulations or interpretations of such laws or regulations, occur. Any such
changes could significantly affect the amounts reported in the consolidated financial statements in the year these changes occur.

Market Risk

Market risk is the risk of loss resulting from market price volatility, interest rate changes, credit and swap spread
changes, and from adverse foreign currency rate movements. Market price volatility primarily relates to changes in prices of publicly traded equities and alternative non-fixed income investments.

Changes to public equity markets have had, and could continue to have, an adverse impact on our earnings and capital ratios

Publicly traded equity performance risk arises from a variety of sources, including guarantees associated with certain variable annuity and segregated
fund products, asset based fees, and investments in publicly traded equities supporting both our general fund products and our surplus segment.

Our most significant source of equity risk arises from variable annuity and segregated funds with guarantees, where the guarantees are linked to the
performance of the underlying funds. Guaranteed benefits are contingent and only payable upon death, maturity, permitted withdrawal or annuitization. If equity markets decline or even if they increase by an amount lower than that assumed in our
actuarial valuation, additional liabilities may need to be established to cover the contingent liabilities, resulting in a reduction in shareholders net income and regulatory capital ratios. Further, if equity markets do not recover to the
amount of the guarantees by the dates the liabilities are due, the accrued liabilities will need to be paid out in cash. In addition, a sustained flat or a decline in public equity markets would likely reduce asset based fee revenues related to
variable annuities and segregated funds with guarantees and related to other wealth and insurance products. As at December 31, 2011, net of amounts reinsured, the market value of the funds underlying the guarantees was $88,904 million and the
amount of the guarantees was $102,033 million. The policy liability established for these benefits was $10,021 million at December 31, 2011 compared to $3,101 million at December 31, 2010.



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Where publicly traded equity investments are used to support policy liabilities, the policy valuation
incorporates projected investment returns on these assets. If actual returns are lower than the expected returns, the Companys policy liabilities will increase, reducing net income attributed to shareholders.

Further, for products where the investment strategy applied to future cash flows in the policy valuation includes investing a specified portion of future
cash flows in publicly traded equities, a decline in the value of publicly traded equities relative to other assets could require us to change the investment mix assumed for future cash flows, increasing policy liabilities and reducing net income
attributed to shareholders. In addition, a reduction in the outlook for expected future returns for publicly traded equities, which could result from a fundamental change in future expected economic growth, would increase policy liabilities and
reduce net income attributed to shareholders. Also, to the extent publicly traded equities are held as available for sale, other than temporary impairments that arise will reduce net income attributed to shareholders.

Expected long-term annual market growth assumptions for public equities pre-dividends are based on long-term historical observed experience and are
7.6% per annum in Canada, 8.0% per annum in the U.S., 5.2% per annum in Japan and 9.5% per annum in Hong Kong. Explicit margins for adverse deviation are applied to these assumptions, or implicit margins are determined through
stochastic valuation processes, each of which results in lower net yields used in the valuation.

As a result of the effect of equity market
movements on the liabilities for segregated fund guarantees, fee income, general fund equity investments supporting policy liabilities, the macro equity hedge and other than temporary impairments, MFCs net earnings were negatively impacted by
$1,870 million in 2011, compared to a negative impact of $155 million in 2010.

For further discussion of specific risks related to our market
risk hedging strategies refer to the risk factor entitled The Companys market risk hedging strategies will not fully reduce the market risks related to the product guarantees and fees being hedged, hedging costs may increase and the
hedging strategies expose the Company to additional risks.

Changes in market interest rates may continue to impact our earnings and
capital ratios

Interest rate and spread risk arises from general fund guaranteed benefit products, general fund adjustable benefit
products with minimum rate guarantees, general fund products with guaranteed surrender values, segregated fund products with minimum benefit guarantees and from surplus fixed income investments.

Interest rate and spread risk arises within the general fund primarily due to the uncertainty of future returns on investments to be made as assets
mature and as recurring premiums are received and must be re-invested to support longer dated liabilities. Interest rate risk also arises due to minimum rate guarantees and guaranteed surrender values on products where investment returns are
generally passed through to policyholders.

A general decline in interest rates, without a change in corporate bond spreads and swap spreads,
will reduce the assumed yield on future investments used in the valuation of policy liabilities, resulting in an increase in policy liabilities and a reduction in net income. A general increase in interest rates, without a change in corporate bond
spreads and swap spreads, will result in a decrease in policy liabilities and an increase in net income. In addition, decreases in corporate bond spreads and increases in swap spreads will result in an increase in policy liabilities and a reduction
in net income. An increase in corporate bond spreads and a decrease in swap spreads will have the opposite impact. The impact of changes in interest rates and in spreads may be partially offset by changes to credited rates on adjustable products
that pass through investment returns to policyholders.

For segregated fund and variable annuity products, a sustained increase in interest
rate volatility or a decline in interest rates would also likely increase the costs of hedging the benefit guarantees provided.



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A prolonged low interest environment would result in charges related to lower fixed income ultimate
re-investment rates and higher new business strain. Other potential consequences of low interest rates include:



| |  |  | Low interest rates could negatively impact sales;
| | - |  | -------------------------------------------------



| |  |  | Lower risk free rates tend to increase the equity hedging costs and under certain market conditions the costs of hedging the benefit guarantees
provided in variable annuities may increase or become uneconomical;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The re-investment of cash flows into low yielding available for sale bonds could result in lower future earnings on surplus; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



| |  |  | Lower interest rates could contribute to potential impairments of goodwill.
| | - |  | ---------------------------------------------------------------------------

Changes in the market value of fixed income assets held in our surplus segment may provide a partial natural economic offset to the interest rate risk arising from our product liabilities. In order for
there to also be an accounting offset, the Company would need to sell available for sale fixed income securities with appropriate unrealized gains or losses in order to realize the gain or loss. It is not certain we would crystallize any of the
unrealized gains or losses available.As at December 31, 2011 the available for sale fixed income assets held in the surplus segment were in a net after tax unrealized gain position of $131 million. In 2011, the Company realized net
gains of $324 million on the sale of bonds classified as available for sale and interest rate swaps held in our surplus segment. These net gains are included in the impact of interest rates below.

As a result of interest rate movements, MFC reported gains which positively impacted net earnings by $43 million in 2011 compared to a $749 million
reduction in 2010.

The Companys hedging strategies will not fully reduce the market risks related to the product guarantees and fees
being hedged, hedging costs may increase and the hedging strategies expose the Company to additional risks

The Companys market risk
hedging strategies include a variable annuity guarantee dynamic hedging strategy and a macro equity risk hedging strategy. The variable annuity dynamic hedging strategy is designed to hedge the sensitivity of variable annuity guarantee policy
liabilities and available capital, to both public equity and bond fund performance and interest rate movements. The Company expanded the variable annuity guarantee dynamic hedging strategy during 2011. The total amount of guarantee value dynamically
hedged increased to $60,655 million as at December 31, 2011 from $49,291 million as at December 31, 2010. The macro equity risk hedging strategy is designed to hedge a portion of our earnings sensitivity to public equity market movements
arising from variable annuity guarantees not dynamically hedged, directly held exposures, and from other products and fees. Some of the limitations and risks associated with each strategy are described below.

Our current variable annuity guarantee dynamic hedging approach is to short exchange-traded equity index and government bond futures and execute currency
futures and lengthening interest rate swaps to hedge sensitivity of policy liabilities to fund performance and interest rate movements arising from variable annuity guarantees. We dynamically rebalance these hedge instruments as market conditions
change, in order to maintain the hedged position within established limits. We may consider the use of additional hedge instruments opportunistically in the future.

Our variable annuity guarantee dynamic hedging strategy is not designed to completely offset the sensitivity of policy liabilities to all risks associated with the guarantees embedded in these products.
The profit (loss) on the hedge instruments will not completely offset the underlying losses (gains) related to the guarantee liabilities hedged because:



| |  |  | Policyholder behaviour and mortality experience are not hedged;
| | - |  | ---------------------------------------------------------------



| |  |  | Provisions for adverse deviation in the policy liabilities are not hedged;
| | - |  | --------------------------------------------------------------------------



| |  |  | A portion of interest rate risk is not hedged;
| | - |  | ----------------------------------------------



| |  |  | Fund performance on a small portion of the underlying funds is not hedged due to lack of availability of effective exchange-traded hedge instruments;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Performance of the underlying funds hedged may differ from the performance of the corresponding hedge instruments;
| | - |  | ------------------------------------------------------------------------------------------------------------------



| |  |  | Correlations between interest rates and equity markets could lead to unfavourable material second order impacts;
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | Unfavourable hedge rebalancing costs can be incurred during periods of high volatility from equity markets, bond markets and/or interest rates. The
impact is magnified when these impacts occur concurrently; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Not all other risks are hedged.
| | - |  | -------------------------------



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The variable annuity guarantee dynamic hedging strategy relies on the execution of derivative transactions
in a timely manner. Therefore, hedging costs and the effectiveness of the strategy may be negatively impacted if markets for these instruments become illiquid. The Company is also subject to counterparty risks arising from the derivative instruments
and to the risk of increased funding and collateral demands which may become significant as equity markets and interest rates increase. The dynamic hedging strategy is highly dependent on complex systems and mathematical models that are subject to
error, which rely on forward-looking long-term assumptions that may prove inaccurate, and which rely on sophisticated infrastructure and personnel which may fail or be unavailable at critical times. Due to the complexity of the dynamic hedging
strategy there may be additional, unidentified risks that may negatively impact our business and future financial results.

The macro equity
risk hedging strategy exposes the Company to risks. The strategy relies on the execution of derivative transactions and the ability to execute may be negatively impacted if markets for these instruments become illiquid. The Company is also subject
to the risk of increased funding and collateral demands which may become significant as equity markets increase.

Policy liabilities and MCCSR
required capital for variable annuity guarantees are determined using long-term forward-looking estimates of volatilities. These long-term forward-looking volatilities assumed for policy liabilities and required capital meet the Canadian Institute
of Actuaries and OSFI calibration standards. To the extent that realized equity or interest rate volatilities in any quarter exceed the assumed long-term volatilities, or correlations between interest rate changes and equity returns are higher,
there is a risk that rebalancing will be greater and more frequent, resulting in higher hedging costs.

The level of guarantee claims
ultimately paid will be impacted by policyholder longevity and policyholder activity including the timing and amount of withdrawals, lapses and fund transfers. The sensitivity of liability values to equity market and interest rate movements that we
hedge are based on long-term expectations for longevity and policyholder activity, since the impact of actual longevity and policyholder experience variances cannot be hedged using capital markets instruments.

A deterioration in financial markets or general economic conditions could adversely impact our alternative non-fixed income investments

Alternative non-fixed income asset performance risk arises from general fund investments in commercial real estate, timberland and
farmland properties, oil and gas properties, power and infrastructure assets and private equities.

Where these assets are used to support
policy liabilities, the policy valuation incorporates projected investment returns on these assets. Non-fixed income assumptions vary by asset class and generally have a similar impact on policy liabilities as public equities would. If actual
returns are lower than the expected returns, the Companys policy liabilities will increase, reducing net income attributed to shareholders. Further, for products where the investment strategy applied to future cash flows in the policy
valuation includes investing a specified portion of future policy cash flows in alternative non-fixed income assets, a decline in the value of these assets relative to other assets could require us to change the investment mix assumed for future
cash flows, increasing policy liabilities and reducing net income attributed to shareholders. In addition, a reduction in the outlook for expected future returns for alternative non-fixed income assets, which could result from a fundamental change
in future expected economic growth, would increase policy liabilities and reduce net income attributed to shareholders.

Difficult economic
conditions could result in higher vacancy, lower rental rates and lower demand for real estate investments, all of which would negatively impact the value of our investments. Difficult economic conditions could also prevent companies in which we
have made private equity investments from achieving their business plans and could cause the value of these investments to fall, or even cause the companies to fail entirely. The timing and amount of income from private equity investments is
difficult to predict, and investment income from these investments can vary from quarter to quarter.

The value of oil and gas assets could be
negatively impacted by a number of factors including, but not limited to changes in energy prices, production declines, adverse operating results, the impact of weather conditions on seasonal demand, our ability to execute on capital programs,
incorrect assessments of the value of acquisitions, uncertainties associated with estimating oil and natural gas reserves, and difficult economic conditions. Changes in government regulation of the oil and gas industry, including environmental
regulation and changes in the royalty rates resulting from provincial royalty reviews, could also adversely affect the value of our oil and gas investments.



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In 2011, the valuations of our investments in commercial real estate, timberland and farmland properties and
other sectors were generally stable. However, given economic uncertainties, valuations may decline which would adversely affect our results of operations and financial condition. We continue to monitor all asset classes.

Available for sale investments are recorded at fair value, but losses arising on those investments may not have been recorded in income

Some of our investments are classified as available for sale. Available for sale assets are recorded at fair value, but unrealized gains
and losses are recorded in a separate component of equity and are not charged to income. Unrealized gains are recorded in income when the related asset is sold. Unrealized losses are recorded in income either when the related asset is sold or when
the related asset is considered impaired and the impairment is not considered to be temporary. Should market levels decline, impairments may be judged to be other than temporary and part or all of any unrealized losses may be charged against future
income as a result. As at December 31, 2011, $104 million of net unrealized gains were recorded in accumulated other comprehensive income (loss) on available for sale securities compared to $333 million of net unrealized gains as at
December 31, 2010.

Our valuation of certain financial instruments may include methodologies, estimations and assumptions which are
subjective in nature. Changes to investment valuations may arise in the future which materially adversely affect our results of operationsandfinancial condition

The fair value for certain of our investments that are not actively traded is determined using models and other valuation techniques. These values therefore incorporate considerable judgment and involve
making estimates including those related to the timing and amounts of expected future cash flows and the credit standing of the issuer or counterparty. The use of different methodologies and assumptions may have a material effect on the estimated
fair value amounts.

The recent economic downturn has resulted in significant market disruption, including rapidly widening credit spreads and
illiquidity, volatile markets and for some instruments significantly reduced trading activity. It has been, and may continue to be, difficult to value certain of our securities if trading is less active and/or market data is harder to observe.
Consequently, valuations may include inputs and assumptions that are less observable or require greater estimation thereby resulting in values which may differ materially from the value at which the investments may be ultimately sold. Further,
rapidly changing credit and equity market conditions could materially impact the valuation of securities as reported within our consolidated financial statements and the period-to-period changes in value could vary significantly. Decreases in value
that become recognizable in future periods could have a material adverse effect on our results of operations and financial condition.

Fluctuations in foreign currency exchange rates and foreign securities markets could negatively affect our profitability or regulatory capital ratios

Our financial results are reported in Canadian dollars. A substantial portion of our business is transacted in currencies other than
Canadian dollars, mainly U.S. dollars, Hong Kong dollars and Japanese yen. If the Canadian dollar strengthens, reported earnings would decline and our reported shareholders equity would decline. Further, to the extent that the resultant change
in available capital is not offset by a change in required capital, our regulatory capital ratios would be reduced. A weakening of the Canadian dollar against the foreign currencies in which we do business would have the opposite effect, and would
increase reported Canadian dollar earnings and shareholders equity, and would potentially increase our regulatory capital ratios.

In
2011, the movements of the Canadian dollar relative to our key operating currencies had a positive impact of $89 million on our net income attributed to shareholders.

Liquidity Risk

Liquidity risk is the risk of not having
access to sufficient funds or liquid assets to meet both expected and unexpected cash and collateral demands.

Adverse capital and
credit market conditions may significantly affect our liquidity risk

During the financial crisis, extreme disruption in the capital and
credit markets exerted downward pressure on availability of liquidity and credit capacity. Reduced asset liquidity may restrict our ability to sell certain types of assets for cash without taking significant losses. If providers of credit preserve
their capital, our access to borrowing from banks and others or access to other types of credit such as letters of credit, may be reduced. If investors have a negative perception of our creditworthiness, this may reduce access to wholesale borrowing
in the debt capital markets, or increase borrowing costs. Should large and unexpected cash outflows occur, exceeding our worst case stress testing, we may be forced to sell assets at a loss or raise additional funds at significant cost in order to
meet our liquidity needs.



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We are dependent on cash flow from operations, a pool of highly liquid money market securities and holdings
of sovereign bonds, near-sovereign bonds and other liquid marketable securities to provide liquidity. We need liquidity to meet our payment obligations including those related to insurance and annuity benefits, cashable liabilities, our operating
expenses, interest on our debt, dividends on our equity capital, and to replace certain maturing liabilities. Liquid assets are also required to pledge as collateral to support activities such as the use of derivatives for hedging purposes and to
cover cash settlement with exchanges related to the use of derivatives for hedging purposes that are settled on exchanges. The implementation of Dodd-Frank Title VII in the United States, expected by the end of 2012, will increase the amount of
derivatives executed through centralized exchanges and cleared through regulated clearinghouses and therefore increase related liquidity risk. The principal sources of our liquidity are cash and our assets that are readily convertible into cash,
including insurance and annuity premiums, fee income earned on assets under management, money market securities, and cash flow from our investment portfolio. The issuance of long-term debt, common and preferred shares and other capital securities
may also increase our available liquid assets or be required to replace certain maturing liabilities.

In the event we seek additional
financing, the availability and terms of such financing will depend on a variety of factors including market conditions, the availability of credit to the financial services industry, our credit ratings and credit capacity, as well as the
possibility that customers, lenders or investors could develop a negative perception of our long-term or short-term financial prospects if we incur large financial losses or if the level of our business activity decreases further due to a
significant market downturn.

Our banking subsidiary relies on confidence sensitive deposits and this increases our liquidity risk

Manulife Bank is a wholly owned subsidiary of our Canadian life insurance operating company, Manufacturers Life. The bank is principally
funded by retail deposits and a real or perceived problem with the bank or its parent companies could result in a loss of confidence in the banks ability to meet its obligations, which in turn may trigger a significant withdrawal of deposit
funds. A substantial portion of the banks deposits are demand deposits that can be withdrawn at any time, while the majority of the banks assets are first residential mortgages in the form of home equity lines of credit, which represent
long term funding obligations. The bank models extreme stress scenarios that demonstrate that the bank has a sufficient pool of highly liquid money market securities and holdings of sovereign bonds, near-sovereign bonds and other liquid marketable
securities, which when combined with the banks capacity to securitize residential mortgage assets provides sufficient liquidity to meet potential requirements under these stress scenarios. If deposit run-off speeds exceed these extreme stress
test assumptions the bank may be forced to sell assets at a loss to third parties or the bank may request support from Manufacturers Life.

Our obligations to pledge collateral or make payments related to declines in value of specified assets may adversely affect our liquidity

In the normal course of business, we are obligated to pledge assets to comply with jurisdictional regulatory and other requirements
including collateral pledged in relation to derivative contracts and assets held as collateral for repurchase funding agreements. The amount of collateral we may be required to post under these agreements, and the amount of payments we are required
to make to our counterparties, may increase under certain circumstances, including a sustained or continued decline in the value of our derivative contracts. Such additional collateral requirements and payments could have an adverse effect on our
liquidity. The implementation of Dodd-Frank Title VII in the United States, expected by the end of 2012, will require certain derivatives to be executed through centralized exchanges and cleared through regulated clearinghouses, and this is expected
to increase liquidity requirements to support these contracts. As at December 31, 2011, total pledged assets were $4,233 million, compared to $3,030 million in 2010, primarily due to an increase in derivative collateral requirements and
repurchase funding agreements. Assets pledged as collateral are not available to support our liquidity needs.

The Companys ability
to obtain letters of credit could be become constrained, limiting our ability to use affiliate reinsurance to manage local capital ratios

In the normal course of business, third party banks issue letters of credit on our behalf. In lieu of posting collateral, our businesses utilize letters
of credit for which third parties are the beneficiaries, as well as for affiliate reinsurance transactions between subsidiaries of MFC. Letters of credit and letters of credit facilities must be renewed periodically. At time of renewal, the Company
is exposed to repricing risk and under adverse conditions increases in costs will be realized. In the most extreme scenarios, letters of credit capacity could become constrained due to non-renewals which would restrict our flexibility to manage
capital at the operating company level. This could negatively impact our ability to meet local capital requirements or our sales of products in jurisdictions in which our operating companies have been affected. Although the Company did not
experience any material change in aggregate capacity during the financial crisis of the past four years, changes in prices and conditions were adverse during the market turbulence. There were no assets pledged against these outstanding letters of
credit as at December 31, 2011.



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As a holding company, MFC depends on the ability of its subsidiaries to transfer funds to it to meet
MFCs obligations and pay dividends

MFC is a holding company and we rely on dividends and interest payments from our insurance and
other subsidiaries as the principal source of cash flow to meet MFCs obligations and pay dividends. As a result, MFCs cash flows and ability to service its obligations are dependent upon the earnings of its subsidiaries and the
distribution of those earnings and other funds by its subsidiaries to MFC. Substantially all of MFCs business is currently conducted through its subsidiaries, and MFC expects this to continue.

The ability of MFCs insurance subsidiaries to pay dividends to MFC in the future will depend on their earnings and regulatory restrictions. These
subsidiaries are subject to a wide variety of insurance and other laws and regulations that vary by jurisdiction and are intended to protect policyholders and beneficiaries first and foremost, rather than investors. These laws and regulations
include regulatory restrictions which may limit the ability of subsidiary companies to pay dividends or make distributions to MFC.

Future
regulatory capital, actuarial and accounting changes could have a material adverse effect on the Companys consolidated financial statements and regulatory capital both on transition and going forward. While the impact of these changes remains
uncertain, we anticipate that regulators, rating agencies and investors will expect higher levels of capital going forward. These changes could further limit the ability of the insurance subsidiaries to pay dividends or make distributions and could
have a significantly adverse effect on MFCs capital mobility, including its ability to pay dividends to shareholders, buy back shares and service debt. We may be required to raise additional capital, which could be dilutive to existing
shareholders, or to limit the new business we write.

In the operating companies, expected cash and collateral demands arise day-to-day to
fund anticipated policyholder benefits, withdrawals of customer deposit balances, reinsurance settlements, derivative instrument settlements/collateral pledging, expenses, investment and hedging activities. Under stressed conditions, unexpected cash
and collateral demands could arise primarily from an increase in the level of policyholders either terminating policies with large cash surrender values or not renewing them when they mature, withdrawals of customer deposit balances, borrowers
renewing or extending their loans when they mature, derivative settlements or collateral demands, and reinsurance settlements or collateral demands. The implementation of Dodd-Frank Title VII in the United States, expected in 2012, will require
certain derivatives to be executed through centralized exchanges and cleared through regulated clearinghouses, and this is expected to increase liquidity requirements to support these contracts. The ability of our holding company to fund its cash
requirements depends upon it receiving dividends, distributions and other payments from our operating subsidiaries. These subsidiaries are generally required to maintain solvency and capital standards imposed by their local regulators and, as a
result, may have restrictions on payments which they may make to MFC.

The payment of dividends to MFC by Manufacturers Life is subject to
restrictions set out in the ICA. The ICA prohibits the declaration or payment of any dividend on shares of an insurance company if there are reasonable grounds for believing: (i) the company does not have adequate capital and adequate and
appropriate forms of liquidity; or (ii) the declaration or the payment of the dividend would cause the company to be in contravention of any regulation made under the ICA respecting the maintenance of adequate capital and adequate and
appropriate forms of liquidity, or of any direction made to the company by the Superintendent. As a result of the restructuring of our subsidiaries on December 31, 2009, all of our U.S. operating life insurance companies are now subsidiaries of
Manufacturers Life.

Certain of MFCs U.S. insurance subsidiaries also are subject to insurance laws in Michigan, New York,
Massachusetts, and Vermont, the jurisdictions in which these subsidiaries are domiciled, which impose general limitations on the payment of dividends and other upstream distributions by these subsidiaries to Manufacturers Life.

Our Asian insurance subsidiaries are also subject to restrictions which could affect their ability to pay dividends to Manufacturers Life in certain
circumstances.

In addition, the payment of other upstream distributions by our insurance subsidiaries is limited under the insurance laws in
the jurisdictions where those subsidiaries are domiciled and in which they conduct operations. Limits on the ability of our insurance subsidiaries to pay dividends or make distributions could have a material adverse effect on MFCs liquidity,
including its ability to pay dividends to shareholders and service its debt.



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Credit Risk

Credit risk is the risk of loss due to the inability or unwillingness of a borrower or counterparty to fulfill its payment obligations.

Worsening or continued poor economic conditions could result in borrower or counterparty defaults or downgrades, and could lead to increased provisions or impairments related to our general fund
invested assets and off-balance sheet derivative financial instruments, and an increase in provisions for future credit impairments to be included in our policy liabilities

Our invested assets primarily include investment grade bonds, private placements, commercial mortgages, asset backed securities, and consumer loans. These assets are generally carried at fair value, but
changes in value that arise from a credit related impairment are recorded as a charge against income. The return assumptions incorporated in actuarial liabilities include an expected level of future asset impairments. There is a risk that actual
impairments will exceed the assumed level of impairments in the future and earnings could be adversely impacted.

Defaults and downgrade
charges were generally below the historical average in 2011, however, we still expect volatility on a quarterly basis and losses could potentially rise above long-term expected levels. Net impaired fixed income assets were $486 million, representing
0.2% of total general fund invested assets as at December 31, 2011, compared to $536 million, representing 0.3% of total general fund invested assets as at December 31, 2010.

If a counterparty fails to fulfill its obligations we may be exposed to risks we had sought to mitigate

The Company uses derivative financial instruments to mitigate exposures to foreign currency, interest rate and other market risks arising from on-balance sheet financial instruments, guarantees related to
variable annuity products, selected anticipated transactions and certain other guarantees. The Company may be exposed to counterparty risk if a counterparty fails to pay amounts owed to us or otherwise perform its obligations to us. Counterparty
risk increases during economic downturns because the probability of default increases for most counterparties. Most of the counterparties in our derivative transactions are financial institutions, which have been adversely affected by the recent
downturn. If any of these counterparties default, we may not be able to recover the amounts due from that counterparty. As at December 31, 2011, the largest single counterparty exposure without taking into account the impact of master netting
agreements or the benefit of collateral held, was $3,029 million (2010  $954 million) compared with $7 million after taking into account master netting agreements and the fair value of collateral held (2010  $31 million). As at
December 31, 2011, the total maximum credit exposure related to derivatives across all counterparties, without taking into account the impact of master netting agreements and the benefit of collateral held, was $15,924 million (2010 
$4,195 million) compared with $293 million after taking into account master netting agreements and the benefit of fair value of collateral held (2010  $239 million). The exposure to any counterparty would grow if, upon the counterpartys
default, markets moved such that our derivatives with that counterparty gain in value. Until we are able to replace that derivative with another counterparty, the gain on the derivatives subsequent to the counterpartys default would not be
backed by collateral. This is often called Potential Future Exposure.

The Companys hedging strategies continue to expand and our
counterparty risk will increase as we increase the use of derivatives under these strategies. For further discussion of specific risks related to our market risk hedging strategies refer to the risk factor entitled The Companys market
risk hedging strategies will not fully reduce the market risks related to the product guarantees and fees being hedged, hedging costs may increase and the hedging strategies expose the Company to additional risks.

The Company reinsures a portion of the business we enter into; however, we remain legally liable for contracts that we have reinsured. In the event that
any of our reinsurance providers were unable or unwilling to fulfill their contractual obligations related to the liabilities we cede to them, we would need to increase actuarial reserves (approximately one third of the business we reinsure is with
three large reinsurers). In addition, the Company has over time sold certain blocks of business to third party purchasers using reinsurance. To the extent that the reinsured contracts are not subsequently novated to the purchasers, we remain legally
liable to the insureds. Should the purchasers be unable or unwilling to fulfill their contractual obligations under the reinsurance agreement, we would need to increase policy liabilities resulting in a charge to net income attributed to
shareholders. To reduce credit risk, the Company may require purchasers to provide collateral for their reinsurance liabilities.



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We participate in a securities lending program whereby blocks of securities are loaned to third parties,
primarily major brokerage firms and commercial banks. Collateral, which exceeds the market value of the loaned securities, is retained by the Company until the underlying security has been returned. If any of our securities lending counterparties
default and the value of the collateral is insufficient, we would incur losses. As at December 31, 2011, the Company had loaned securities (which are included in invested assets) valued at approximately $1,274 million, compared to $1,650
million at December 31, 2010.

The determination of allowances and impairments on our investments is subjective and changes could
materially impact our results of operations or financial position

The determination of allowances and impairments is based upon a periodic
evaluation of known and inherent risks associated with the respective security. Management considers a wide range of factors about the security and uses its best judgment in evaluating the cause of the decline in estimating the appropriate value for
the security and in assessing the prospects for near-term recovery. Inherent in managements evaluation of the security are assumptions and estimates about the operations of the issuer and its future earnings potential. Considerations in the
impairment evaluation process include, but are not limited to: (i) the severity of the impairment; (ii) the length of time and the extent to which the market value of a security has been below its carrying value; (iii) the financial
condition of the issuer; (iv) the potential for impairments in an entire industry sector or sub-sector; (v) the potential for impairments in certain economically depressed geographic locations; (vi) the potential for impairments of
securities where the issuer, series of issuers or industry has suffered a catastrophic type of loss or has exhausted natural resources; (vii) our ability and intent to hold the security for a period of time sufficient to allow for the recovery
of its value to an amount equal to or greater than cost or amortized cost; (viii) unfavorable changes in forecasted cash flows on mortgage-backed and asset-backed securities; and (ix) other subjective factors, including concentrations and
information obtained from regulators and rating agencies.

Such evaluations and assessments are revised as conditions change and new
information becomes available. We update our evaluations regularly and reflect changes in allowances and impairments as such evaluations warrant. The evaluations are inherently subjective, and incorporate only those risk factors known to us at the
time the evaluation is made. There can be no assurance that management has accurately assessed the level of impairments that have occurred. Additional impairments will likely need to be taken or allowances provided for in the future as conditions
evolve. Historical trends may not be indicative of future impairments or allowances.

Insurance Risk

Insurance risk is the risk of loss due to actual experience emerging differently than assumed when a product was designed and priced
with respect to mortality and morbidity claims, policyholder behaviour and expenses.

Actual experience may differ from assumptions
with respect to claims, policyholder behaviour and expenses

We make a variety of assumptions related to the future level of claims,
policyholder behaviour, expenses and sales levels when we design and price products, and when we establish policy liabilities. Assumptions for future claims are based on both Company and industry experience and predictive models and assumptions for
future policyholder behavior are based on Company experience and predictive models. Assumptions for future policyholder behaviour include assumptions related to the retention rates for insurance and wealth products. Losses may result should actual
experience be materially different than that assumed in the design, pricing and sale of products. Such losses could have a significant adverse effect on our operations and financial condition. In addition, we periodically review the assumptions we
make in determining our policy liabilities and the review may result in an increase in policy liabilities and a decrease in net income attributed to shareholders. Such assumptions require significant professional judgment, and actual experience may
be materially different than the assumptions we make.

Life and health insurance claims may be impacted by the unusual onset of disease or
illness, natural disasters, large-scale manmade disasters and acts of terrorism. The ultimate level of lifetime benefits paid to policyholders may be impacted by unexpected changes in life expectancy. Policyholder behaviour including premium payment
patterns, policy renewals, lapse rates, and withdrawal and surrender activity are influenced by many factors including market and general economic conditions, and the availability and relative attractiveness of other products in the marketplace. For
example, a weak or declining economic environment could increase the value of guarantees associated with variable annuities or other embedded guarantees and contribute to adverse policyholder behaviour experience. As well, adverse claims experience
could result from systematic anti-selection, which could arise from the development of investor owned and secondary markets for life insurance policies, underwriting process failures, or other factors.



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We may be unable to obtain necessary price increases on our in-force long-term care business, or may face
delays in implementation

We continue to seek state regulatory approvals for price increases on existing long-term care business in the
United States. We cannot be certain whether or when each approval will be granted. Our policy liabilities reflect our estimates of the impact of these price increases, but should we be less successful than anticipated in obtaining them, then policy
liabilities would increase accordingly. For further discussion see Business Operations  U.S. Division  U.S. Insurance  JH Long-Term Care.

Reinsurance may not be available, affordable or adequate to protect us against losses

We
purchase reinsurance protection on certain risks underwritten by our various business segments. External market conditions determine the availability, terms and cost of the reinsurance protection for new business and, in certain circumstances, the
cost of reinsurance for business already reinsured. Accordingly, we may be forced to incur additional costs for reinsurance or may not be able to obtain sufficient reinsurance on acceptable terms, which could adversely affect our ability to write
future business or result in the assumption of more risk with respect to those policies we issue.

Operational Risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes, risk management policies and procedures, systems failures, human performance failures or from external
events.

Adverse publicity, litigation or regulatory action resulting from our business practices or actions by our employees,
representatives and business partners, could erode our corporate image and damage our franchise value

Manulife Financials reputation
is one of its most valuable assets. Harm to a companys reputation is often a consequence of risk control failure, whether associated with complex financial transactions or relatively routine operational activities. Manulife Financials
reputation could also be harmed by the actions of third parties with whom we do business. Our representatives include affiliated broker-dealers, agents, wholesalers and independent distributors, such as broker-dealers and banks, whose services and
representations our customers rely on. Business partners include, among others, third parties to whom we outsource administrative functions and that we rely on to fulfill various obligations.

If any of these representatives or business partners fails to adequately perform their responsibilities, or monitor their own risk, these failures could affect our business reputation and operations.
While we seek to maintain adequate internal risk management policies and procedures and protect against performance failures, events may occur that could cause us to lose customers or suffer legal or regulatory sanctions, which could have a material
adverse effect on our reputation and our business. For further discussion of government regulation and legal proceedings refer to Government Regulation and Legal Proceedings.

We rely on third party service providers in several areas of our operations and disruptions in their services could have a negative impact on our
operations or our reputation

We may outsource certain technology and business functions to third parties from time to time and expect to
continue to do so in the future. If we do not effectively manage these third party providers, the third party providers do not perform as contracted for or we face disruptive problems with a transition of services to/from a vendor, we may experience
operational difficulties, increased costs, a loss of business and/or an adverse impact on our business reputation.

Interruptions relating
to our technology and information security could significantly disrupt our business, impede our ability to conduct business and adversely impact our business, results of operations and financial condition

Technology is used in virtually all aspects of our business and operations including the creation and support of new products and services. Our technology
infrastructure, information services and applications are governed and managed according to operational integrity, resiliency, data integrity and information security policies, standards and controls. Disruption to information services operations
due to system failure, security breach, or global crisis can have negative consequences for our businesses. We have business continuity and disaster recovery, information security, technology risk and other policies, plans and procedures in place
designed to minimize the impact of business disruptions, comply with laws and regulations and protect confidential/personal information; however, these may not be completely effective at avoiding impact to the business. Disruptions, breaches or
violations caused by errors, natural disasters, man-made disasters, criminal activity, fraud, cyber attacks, pandemics, or other events beyond our control, could prevent us from effectively operating our business, or could adversely impact us from a
financial, operational and reputational perspective.



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We may not be able to retain and attract qualified individuals which could impact our ability to execute
on our business strategies

We compete with other insurance companies and financial institutions for qualified executives, employees and
agents. Competition for the best people is intense and an inability to recruit qualified individuals may negatively impact our ability to execute on business strategies or to conduct our operations. Further, we depend on key management and
actuarial, information technology, investment management, underwriting, sales staff and other personnel, and our business would suffer if we lose their services and are unable to adequately replace them. In addition, our future growth plans may
require us to increase the number of such personnel and we may be constrained from doing so due to intense competition for the best talent.

If we are not able to attract, motivate and retain agency leaders and individual agents, our competitive position, growth and profitability will
suffer

We must attract and retain sales representatives to sell our products. Strong competition exists among financial services companies
for efficient and effective sales representatives. We compete with other financial services companies for sales representatives primarily on the basis of our financial position, brand, support services and compensation and product features. Any of
these factors could change either because we change the Company or our products, or because our competitors change theirs and we are unable or unwilling to adapt. If we are unable to attract and retain sufficient sales representatives to sell our
products, our ability to compete and revenues from new sales would suffer, which could have a material adverse effect on our business, results of operations and financial condition.

The use of complex models could expose us to risk if the models are used inappropriately, interpreted incorrectly or are deficient

Our reliance on highly complex models for pricing, valuation and risk measurement, and for input to decision making, is increasing. Consequently, the risk of inappropriate use or interpretation of our
models or their output, or the use of deficient models, data or assumptions is growing. There can be no assurance that all business critical models have been independently vetted and that all potential issues have been identified and adequately
addressed.

The inter-connectedness of our operations and risk management strategies could expose us to risk if all factors are not
appropriately considered and communicated

Our business operations, including strategies and operations related to risk management, asset
liability management and liquidity management, are interconnected and increasingly complex. Changes in one area may have a secondary impact in another area of our operations. For example, risk management actions, such as the increased use of
interest rate swaps, could have implications for the Companys Investment Division or its Treasury function, as this strategy could result in the need to post additional amounts of collateral. Failure to appropriately consider these
inter-relationships, or effectively communicate changes in strategies or activities across our operations, could have a negative impact on the strategic objectives or operations of another group. Further, failure to consider these
inter-relationships in our modeling and financial and strategic decision making processes could have a negative impact on our operations.

Our risk management policies, procedures and strategies may leave us exposed to unidentified or unanticipated risks, which could negatively affect our
business, results of operations and financial condition

We have devoted significant resources to develop our risk management policies,
procedures and strategies and expect to continue to do so in the future. Nonetheless, our policies, procedures and strategies may not be comprehensive. Many of our methods for measuring and managing risk and exposures are based upon the use of
observed historical market behaviour or statistics based on historical models. As a result, these methods may not fully predict future exposures, which can be significantly greater than our historical measures indicate. Other risk management methods
depend upon the evaluation of information regarding markets, clients, catastrophe occurrence or other matters publicly available or otherwise accessible to us. This information may not always be accurate, complete, up-to-date or properly evaluated.



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We are subject to tax audits, tax litigation or similar proceedings, and as a result we may owe
additional taxes, interest and penalties in amounts that may be material

We are subject to income taxes in Canada and the United States as
well as many other jurisdictions. In determining our provisions for income taxes and our accounting for tax-related matters in general, we are required to exercise judgment. We regularly make estimates where the ultimate tax determination is
uncertain. There can be no assurance that the final determination of any tax audit, appeal of the decision of a taxing authority, tax litigation or similar proceedings will not be materially different from that reflected in our historical financial
statements. The assessment of additional taxes, interest and penalties could be materially adverse to our current and future results of operations and financial condition.

Our non-North American operations face political, legal, operational and other risks that could negatively affect those operations or our results of operations and financial condition

We have significant operations outside of North America, primarily in Asia. These businesses face political, legal, operational and other risks that we do
not face in our operations in Canada or the United States. We face the risk of discriminatory regulation, nationalization or expropriation of assets, price controls and exchange controls or other restrictions that prevent us from transferring funds
from these operations out of the countries in which they operate or converting local currencies we hold into Canadian or U.S. dollars. Some of our international businesses are, and are likely to continue to be, in emerging or potentially volatile
markets. In addition, we rely on local staff, including local sales forces, in these countries where there is a risk that we may encounter labour problems, especially in countries where workers associations and trade unions are strong.

We are currently planning to expand our international operations in markets where we operate and potentially in new markets. This may require
considerable management time, as well as start-up expenses for market development before any significant revenues and earnings are generated. Operations in new foreign markets may achieve low margins or may be unprofitable, and expansion in existing
markets may be affected by local economic and market conditions.

Additional Risks

The declaration and payment of dividends and the amount thereof is subject to change

The holders of Common Shares are entitled to receive dividends as and when declared by the Board of Directors of MFC, subject to the preference of the holders of Class A Shares, Class 1 Shares, Class
B Shares (collectively, the Preferred Shares) and any other shares ranking senior to the Common Shares with respect to priority in payment of dividends. The ICA prohibits the declaration or payment of any dividend on shares of an
insurance company if there are reasonable grounds for believing a company does not have adequate capital and adequate and appropriate forms of liquidity, or the declaration or the payment of the dividend would cause the company to be in
contravention of any regulation made under the ICA respecting the maintenance of adequate capital and adequate and appropriate forms of liquidity, or of any direction made to the company by the Superintendent. The declaration and payment of
dividends and the amount thereof is subject to the discretion of the Board of Directors of MFC and is dependent upon the results of operations, financial condition, cash requirements and future prospects of, and regulatory restrictions on the
payment of dividends by MFC and other factors deemed relevant by the Board of Directors of MFC. Although MFC has historically declared quarterly cash dividends on the Common Shares, MFC is not required to do so and the Board of Directors of MFC may
reduce, defer or eliminate MFCs Common Share dividend in the future.

The foregoing risk disclosure in respect of the declaration and
payment of dividends on the Common Shares applies equally in respect of the declaration and payment of dividends on the Preferred Shares, notwithstanding that the Preferred Shares have a fixed rate of dividend.

See Government Regulation and Dividends for a summary of additional statutory and contractual restrictions concerning the
declaration of dividends by MFC.



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Environmental risk may arise related to our commercial mortgage loan portfolio and owned property or from
our business operations

Liability under environmental protection laws resulting from our commercial mortgage loan portfolio and owned
property (including commercial real estate, oil and gas, timber and agricultural properties) may adversely impact our reputation, results of operations and financial condition. Under applicable laws, contamination of a property with hazardous
materials or substances may give rise to a lien on the property to secure recovery of the costs of cleanup. In some instances, this lien has priority over the lien of an existing mortgage encumbering the property. Additionally, as lender, we may
incur environmental liability (including without limitation liability for clean-up, remediation and damages incurred by third parties) similar to that of an owner or operator of the property, if we or our agents exercise sufficient control over the
operations at the property. We may also have liability as the owner and/or operator of real estate for environmental conditions or contamination that exist or occur on the property, or affecting other property.

In addition, failure to adequately prepare for the potential impacts of climate change may have a negative impact on our financial position or our
ability to operate. Potential impacts may be direct or indirect and may include business losses or disruption resulting from extreme weather conditions; the impact of changes in legal or regulatory framework made to address climate change; or
increased mortality or morbidity resulting from environmental damage or climate change.

Applicable laws may discourage takeovers and
business combinations that common shareholders of MFC might consider in their best interests

The ICA contains restrictions on the purchase
or other acquisition, issue, transfer and voting of the shares of an insurance company. In addition, under applicable U.S. insurance laws and regulations in states where certain of our insurance company subsidiaries are domiciled, no person may
acquire control of MFC without obtaining prior approval of those states insurance regulatory authorities. These restrictions may delay, defer, prevent, or render more difficult a takeover attempt that common shareholders of MFC might consider
in their best interests. For instance, they may prevent shareholders of MFC from receiving the benefit from any premium to the market price of MFCs common shares offered by a bidder in a takeover context. Even in the absence of a takeover
attempt, the existence of these provisions may adversely affect the prevailing market price of MFCs common shares if they are viewed as discouraging takeover attempts in the future.

See Constraints On Ownership of Shares for a summary of the restrictions concerning the ownership of shares of MFC and certain of its subsidiaries.

We may not be able to protect our intellectual property and may be subject to infringement claims

We rely on a combination of contractual rights and copyright, trademark, patent and trade secret laws to establish and protect our intellectual property.
In particular we have invested considerable resources in promoting the brand names Manulife Financial and John Hancock and expect to continue to do so. Although we use a broad range of measures to protect our intellectual
property rights, third parties may infringe or misappropriate our intellectual property. We may have to litigate to enforce and protect our copyrights, trademarks, patents, trade secrets and know-how or to determine their scope, validity or
enforceability, which represents a diversion of resources that may be significant in amount and may not prove successful. The loss of intellectual property protection or the inability to secure or enforce the protection of our intellectual property
assets could have a material adverse effect on our business and our ability to compete.

We also may be subject to costly litigation in the
event that another party alleges our operations or activities infringe upon its intellectual property rights. Third parties may have, or may eventually be issued, patents that could be infringed by our products, methods, processes or services. Any
party that holds such a patent could make a claim of infringement against us. We may also be subject to claims by third parties for breach of copyright, trademark, trade secret or license usage rights. Any such claims and any resulting litigation
could result in significant liability for damages. If we were found to have infringed a third-party patent or other intellectual property rights, we could incur substantial liability, and in some circumstances could be enjoined from providing
certain products or services to our customers or utilizing and benefiting from certain methods, processes, copyrights, trademarks, trade secrets or licenses, or alternatively could be required to enter into costly licensing arrangements with third
parties, all of which could have a material adverse effect on our business, results of operations and financial condition.



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Entities within the MFC Group are interconnected which may make separation difficult

MFC operates in local markets through subsidiaries and branches of subsidiaries. These local operations are financially and operationally interconnected
to lessen expenses, share and reduce risk, and efficiently utilize financial resources. In general, external capital required for companies in the Manulife Financial group has been raised at the MFC or Manufacturers Life level and then transferred
to other entities as equity or debt capital as appropriate. Other linkages include the use of loans, guarantees, capital maintenance agreements, derivatives, shared services and reinsurance. Accordingly, the risks undertaken by a subsidiary may be
transferred to or shared by affiliates through financial and operational linkages. Some of the consequences of this are:



| |  |  | Financial difficulties at a subsidiary may not be isolated and could cause material adverse effects on affiliates and the group as a whole.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Linkages may make it difficult to dispose of or separate a subsidiary within the group by way of spin-off or similar transaction and the disposition or
separation of a subsidiary may not fully eliminate the liability of MFC and its remaining subsidiaries for shared risks. For example, some analysts and shareholders have asked whether a spin-off of the U.S. Division would avoid what is considered to
be onerous Canadian regulatory oversight. Without analyzing the long term strategic implications of such a transaction which may be negative, such a transaction would be very difficult to accomplish as a result of a number of factors, including,
(i) MFC and its remaining subsidiaries would continue to have a significant amount of residual risk under guarantees and reinsurance arrangements that could not be terminated; (ii) capital mobility and efficiency would be considerably
limited; (iii) significant potential tax consequences; and (iv) highly uncertain accounting and regulatory outcomes.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

GOVERNMENT REGULATION

As an insurance company, Manulife
Financial is subject to regulation and supervision by governmental authorities in the jurisdictions in which it does business. In Canada, the Company is subject to both federal and provincial regulation. In the United States, the Company is
primarily regulated by each of the states in which it conducts business and by federal securities laws. The Companys Asian operations are similarly subject to a variety of regulatory and supervisory regimes in each of the Asian jurisdictions
in which the Company operates, which vary in degree of regulation and supervision.

CANADA

Manulife Financial is governed by the ICA. The ICA is administered, and activities of the Company are supervised, by OSFI. The ICA permits insurance
companies to offer, directly or through subsidiaries or through networking arrangements, a broad range of financial services, including banking, investment counseling and portfolio management, mutual funds, trust services, real property brokerage
and appraisal, information processing and merchant banking services.

The ICA requires the filing of annual and other reports on the financial
condition of the Company, provides for periodic examinations of the Companys affairs, imposes restrictions on transactions with related parties, and sets forth requirements governing reserves for actuarial liabilities and the safekeeping of
assets and other matters. OSFI supervises Manulife Financial on a consolidated basis (including capital adequacy) to ensure that OSFI has an overview of the groups activities. This includes the ability to review both insurance and
non-insurance activities conducted by subsidiaries of Manulife Financial with supervisory power to bring about corrective action.

Investment Powers

Under the ICA,
Manulife Financial must maintain a prudent portfolio of investments and loans, subject to certain overall limitations on the amount it may invest in certain classes of investments, such as commercial loans. Additional restrictions (and in some
cases, the need for regulatory approvals) limit the type of investment that the Company can make in excess of 10% of the voting rights or 25% of the equity of any entity.

Capital Requirements

The ICA requires Canadian non-operating insurance companies, such as
MFC, to maintain, at all times, adequate levels of capital which is assessed by comparing capital available to a risk metric in accordance with the Capital Regime for Regulated Insurance Holding Companies and Non-Operating Life Companies. OSFI
expects holding companies to manage their capital in a manner commensurate with the group risk profile and control environment. Regulated subsidiaries of MFC must maintain minimum levels of capital. Such amounts of capital are based on the local
capital regime and the statutory accounting basis in each jurisdiction. The most significant of these are the MCCSR for Manufacturers Life and the RBC requirements for MFCs U.S. life insurance subsidiaries.



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Capital requirements for Manufacturers Life are governed by the MCCSR. The MCCSR ratio is prepared on a
consolidated basis. It compares capital available to capital required. Capital available includes instruments such as common equity, qualifying preferred shares, qualifying innovative tier 1 instruments, the participating account, hybrid capital
instruments and subordinated debt. Certain deductions are made from capital available including deductions for goodwill, controlling interests in non-life financial corporations and non-controlled substantial investments. Capital required is
determined by applying factors to specified risks or using models to determine capital requirements for a given risk. Capital is held for asset default risks, mortality/morbidity/lapse risks, changes in the interest rate risk environment, segregated
funds risk, off balance sheet activities and foreign exchange risk.

The minimum regulatory MCCSR ratio is 120% with a supervisory target
ratio of 150%. OSFI may require that a higher amount of capital be available, taking into account such factors as operating experience and diversification of asset or insurance portfolios. OSFI expects each insurance company to establish a target
capital level that provides a cushion above minimum requirements. This cushion allows for coping with volatility in markets and economic conditions, innovations in the industry, consolidation trends and international developments. MFC endeavours to
manage its affairs so that Manufacturers Life has a MCCSR ratio that is materially above the supervisory target and that allows margins for equity market and interest rate declines. At December 31, 2011, Manufacturers Life had an MCCSR ratio of
216%.

OSFI may intervene and assume control of a Canadian life insurance company if it deems the amount of available capital insufficient.
Capital requirements may be adjusted by OSFI as experience develops, the risk profile of Canadian life insurers changes, or to reflect other risks. In 2011, OSFI made a number of changes to the regulatory guidelines for capital determination
(MCCSR), in particular, revisions to accommodate accounting changes arising from the initial adoption of IFRS. Other revisions included the treatment of reinsurance, and changes to reverse out the beneficial impacts, if any, due to
recognition of future mortality improvement under the changes to the Canadian Institute of Actuaries Standards of Practice effective in 2011. OSFI also issued new rules regarding the determination of required capital for segregated fund guarantees
on new business issued on or after January 1, 2011.

OSFI also made changes to the MCCSR for 2012 reporting, including a revision of the
asset default capital charge for investments in mutual funds. Among other changes, the 2012 changes also clarified the concept of retained loss position in reinsurance arrangements.

See the risk factor entitled Our insurance businesses are heavily regulated, and changes in regulation may reduce our profitability and limit our growth for information about regulatory
initiatives and other developments which could impact MFCs capital position.

The Company maintains capital in excess of the minimum
required in all foreign jurisdictions in which the Company does business.

Restrictions on Shareholder Dividends and Capital Transactions

The ICA prohibits the declaration or payment of any dividend on shares of an insurance company if there are reasonable grounds for
believing an insurance company does not have adequate capital and adequate and appropriate forms of liquidity, or declaration or the payment of the dividend would cause the insurance company to be in contravention of any regulation made under the
ICA respecting the maintenance of adequate capital and adequate and appropriate forms of liquidity, or any direction made to the company by the Superintendent. The ICA also requires an insurance company to notify the Superintendent of the
declaration of a dividend at least 15 days prior to the date fixed for its payment. Similarly, the ICA prohibits the purchase for cancellation of any shares issued by an insurance company or the redemption of any redeemable shares or other similar
capital transactions, if there are reasonable grounds for believing that the company does not have adequate capital and adequate and appropriate forms of liquidity, or the purchase or the payment would cause the company to be, in contravention of
any regulation made under the ICA respecting the maintenance of adequate capital and adequate and appropriate forms of liquidity, or any direction made to the company by the Superintendent. These latter transactions would require the prior approval
of the Superintendent. There is currently no direction against MFC or Manufacturers Life paying a dividend or redeeming or purchasing their shares for cancellation.



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Appointed Actuary

In accordance with the ICA, the Board of Directors of the Company has appointed the Appointed Actuary who by law must be a Fellow of the Canadian Institute of Actuaries. The Appointed Actuary is required
to value the policy liabilities of Manulife Financial as at the end of each financial year in accordance with accepted actuarial practices with such changes as may be determined by the Superintendent and any direction that may be made by the
Superintendent, including selection of appropriate assumptions and methods, and provide an opinion as to whether the amount of policy liabilities makes appropriate provision for all policyholder obligations and whether the valuation of policy
liabilities is fairly presented in the consolidated financial statements. At least once in each financial year, the Appointed Actuary must meet with the Board of Directors, or the Audit Committee, to report, in accordance with accepted actuarial
practice with such changes as may be determined by the Superintendent and any direction that may be made by the Superintendent, on the current and expected future financial condition of the Company. The Appointed Actuary is also required to report
to the President and Chief Executive Officer and the Chief Financial Officer of the Company if the Appointed Actuary identifies any matters that, in the Appointed Actuarys opinion, have material adverse effects on the financial condition of
the Company and require rectification.

Prescribed Supervisory Information

The Supervisory Information (Insurance Companies) Regulations made under the ICA (the Supervisory Information Regulations) prohibit the Company from disclosing, directly or indirectly, any
prescribed supervisory information relating to it or its affiliates, with certain limited exceptions. The Supervisory Information Regulations define prescribed supervisory information broadly in terms of assessments,
recommendations, ratings and reports concerning the Company that are made by or at the request of the Superintendent and certain regulatory actions taken with respect to the Company, including: (i) any rating assigned to assess the financial
condition of the Company or similar ratings; (ii) any report prepared by or at the request of the Superintendent or any recommendation made by the Superintendent as a result of an examination or other supervisory review of the Company;
(iii) any categorization of the Company as being at a stage of intervention during which the Superintendent may exercise additional supervisory powers over the Company that vary with the stage (from stage 0  no significant problem/normal
activities to stage 4  non-viability/insolvency imminent); (iv) any order of the Superintendent that the Company increase its capital or provide additional liquidity; (v) any prudential agreement to implement any measure designed to
maintain or improve the Companys safety or soundness entered into between the Superintendent and the Company; and (vi) any direction of the Superintendent that the Company cease or refrain from committing, or remedy, unsafe or unsound
practices in conducting its business.

The Supervisory Information Regulations permit the Company to disclose, to the public or otherwise, an
order, prudential agreement or direction described in (iv), (v) and (vi) above if the Company considers it to contain a material fact or material change that is required to be disclosed under applicable securities law. The Supervisory
Information Regulations also permit the Company to disclose prescribed supervisory information to underwriters in a public or private offering of securities if the Company ensures that the information remains confidential. The Supervisory
Information Regulations do not prohibit or restrict the Company from disclosing, publicly or otherwise, any facts relating to the business, operations or capital of the Company, provided that the Company does not indirectly disclose any prescribed
supervisory information.

Provincial Insurance Regulation

The Company is also subject to provincial regulation and supervision in each province and territory of Canada in which it carries on business. Provincial insurance regulation is concerned primarily with
the form of insurance contracts and the sale and marketing of insurance and annuity products, including the licensing and supervision of insurance producers. Individual variable insurance and annuity products and the underlying segregated funds to
which they relate are subject to guidelines adopted by the Canadian Council of Insurance Regulators which guidelines are generally incorporated by reference into provincial insurance regulations. These guidelines govern a number of matters relating
to the sale of these products and the administration of the underlying segregated funds. Manufacturers Life is licensed to transact business in all provinces and territories of Canada.

Provincial/Territorial Securities Laws

The Companys Canadian mutual fund and
investment management businesses are subject to Canadian provincial and territorial securities laws. Manulife Asset Management Limited is registered as a portfolio manager with the securities commissions in all Canadian provinces. Manulife Asset
Management Limited is also registered as an exempt market dealer and mutual fund dealer in the provinces of Ontario and Newfoundland and as an investment fund manager and a commodity trading manager in the province of Ontario. Manulife Asset
Management Limited is subject to regulation by the applicable provincial securities regulators. Manulife Securities Investment Services Inc. (MSISI) is registered under provincial and territorial securities laws (except Nunavut) to sell
mutual funds across Canada and is subject to regulation by the applicable provincial and territorial securities regulators as well as the Mutual Fund Dealers Association of Canada, a self-regulatory organization. Manulife Securities Inc.
(MSI) is registered under provincial and territorial securities laws to sell investments across Canada and is subject to regulation by the provincial and territorial securities regulators as well as the Investment Industry Regulatory
Organization of Canada, a self-regulatory organization.



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Consumer Protection for Financial Institution Failure

Assuris (formerly called CompCorp) was created by the life and health insurance industry in Canada in 1990 to provide Canadian policyholders with
protection in the event of the insolvency of their insurance company. Assuris is funded by its member insurance companies, including Manufacturers Life. Member companies of Assuris are assessed to build and maintain a liquidity fund at a minimum
level of $100 million. Members are then primarily subject to assessment on an as needed basis. Assessments are calculated based on each members MCCSR, subject to adjustments where the member operates in foreign jurisdictions.

The Canadian Investor Protection Fund (CIPF) has been created to provide clients with protection, within defined limits, in the
event of the insolvency of their investment dealer. The CIPF is funded by its member investment dealers, including MSI.

The MFDA Investor
Protection Corporation (IPC) has been created to provide clients with protection, within defined limits, in the event of the insolvency of their mutual fund dealer. The IPC is funded by its member mutual fund dealers, including MSISI.

The Canada Deposit Insurance Corporation (CDIC) is a federal crown corporation created by parliament in 1967 to protect deposits
made with member financial institutions in case of their failure. CDIC member institutions, including Manulife Bank and its subsidiary Manulife Trust, fund deposit insurance through premiums paid on the insured deposits that they hold.

UNITED STATES

General Regulation at the State Level

The various states in the United States have laws
regulating transactions between insurers and other members of insurance holding company systems. Transactions between the Companys U.S. insurers and their affiliates are subject to regulation by the states in which such insurance subsidiaries
are domiciled and for certain limited matters, states in which they transact business. Most states have enacted legislation that requires each insurance holding company and each insurance subsidiary in an insurance holding company system to register
with, and be subject to regulation by, the insurance regulatory authority of the insurance subsidiarys state of domicile. The Companys principal U.S. life insurance subsidiaries are John Hancock USA, John Hancock New York and JHLH. They
are domiciled in Michigan, New York and Massachusetts, respectively. Under such laws, the insurance subsidiaries are required to furnish annually their financial and other information concerning the operations of companies within the holding company
system that may materially affect the operations, management or financial condition of insurers within the system. These reports are also filed with other insurance departments on request. In addition, such laws provide that all transactions within
an insurance holding company system must be fair and equitable, and following any such transactions, each insurers policyholder surplus must be both reasonable in relation to its outstanding liabilities and adequate for its needs.

The laws of the various states also establish regulatory agencies with broad administrative powers, such as the power to approve policy forms, grant and
revoke licenses to transact business, regulate trade practices, license agents, require financial statements and prescribe the type and amount of investment permitted. State insurance regulatory authorities regularly make inquiries, hold
investigations and administer market conduct examinations with respect to an insurers compliance with applicable insurance laws and regulations.

Insurance companies are required to file detailed annual statements with state insurance regulators in each of the states in which they do business and their business and accounts are subject to
examination by such regulators at any time. Quarterly statements must also be filed with the state insurance regulator in the insurers state of domicile and with the insurance departments of many of the states in which the insurer does
business. Insurance regulators may periodically examine an insurers financial condition, adherence to statutory accounting practices and compliance with insurance department rules and regulations.



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State insurance departments, as part of their routine oversight process, conduct detailed examinations of
the books, records and accounts of insurance companies domiciled in their states. These examinations are generally conducted in accordance with the examining states laws and the guidelines promulgated by the NAIC. Each of the Companys
principal U.S. domiciled insurance subsidiaries is subject to periodic examinations by its respective domiciliary state insurance regulators. The latest published examination reports issued by each such insurance department did not raise any
material issues or adjustments.

In addition, state regulatory authorities, industry groups and rating agencies have developed several
initiatives regarding market conduct. For example, the NAIC has adopted the NAIC Life Insurance Illustrations Model Regulation, which applies to group and individual life insurance policies and certificates (other than variable policies and
certificates), and the Market Conduct Handbook. More than 35 states have adopted all or major segments of the model. However, the Market Conduct Handbook can be used by all state regulators in conducting market conduct examinations.

Investment Powers

The Companys
U.S. insurance subsidiaries are subject to laws and regulations that require diversification of their investment portfolios and limit the amount of investments in certain investment categories such as below investment grade bonds and real estate.
Failure to comply with these laws and regulations may cause investments exceeding regulatory limitations to be treated as non-admitted assets for the purposes of measuring statutory surplus and in some circumstances would require divestiture of the
non-qualifying assets.

Minimum Statutory Surplus and Capital

U.S. domiciled life insurance subsidiaries of the Company are required to have minimum statutory surplus and capital of various amounts, depending on the state in which they are licensed and the types of
business they transact.

NAIC IRIS Ratios

In the 1970s, the NAIC developed a set of financial relationships or tests, known as the Insurance Regulatory Information System (IRIS), which were designed for the early
identification of insurance companies which might warrant special attention by insurance regulatory authorities. Insurance companies submit data annually to the NAIC, which in turn analyzes the data utilizing 13 ratios, each with defined usual
ranges. Having ratios that fall outside the usual range does not necessarily indicate that a company experienced unfavourable results. An insurance company may fall out of the usual range for one or more ratios because of transactions that are
favourable (such as large increases in surplus) or are immaterial or eliminated at the consolidated level. Each companys ratios are reviewed annually and are assigned a ranking by a team of examiners and financial analysts at the NAIC for the
purpose of identifying companies that require immediate regulatory attention. The rankings are not reported to the companies and are only available to regulators.

Risk-Based Capital Requirements

In order to enhance the regulation of insurer solvency,
state regulators have adopted the NAIC model law implementing RBC requirements for life insurance companies. The requirements are designed to monitor capital adequacy and to raise the level of protection that statutory surplus provides for
policyholders. The model law measures four major areas of risk facing life insurers: (i) the risk of loss from asset defaults and asset fluctuation; (ii) the risk of loss from adverse mortality and morbidity experience; (iii) the risk
of loss from mismatching of asset and liability cash flows due to changing interest rates; and (iv) general business risk. Insurers having less statutory surplus than required by the RBC model formula are subject to varying degrees of
regulatory action depending on the level of capital inadequacy. Based on the formula adopted by the NAIC, each of the Companys U.S. insurance company subsidiaries exceeded the RBC capital requirements as at December 31, 2011.

Regulation of Shareholder Dividends and Other Payments from Insurance Subsidiaries

Manulife Financials ability to meet any debt service obligations and pay operating expenses and shareholder dividends depends on the receipt of sufficient funds from its operating subsidiaries. As a
result of the reorganization of our U.S. subsidiaries, our U.S. operating subsidiaries are indirectly owned by Manufacturers Life. The payment of dividends by John Hancock USA is subject to restrictions set forth in the insurance laws of Michigan,
its domiciliary state. Similarly, the payment of dividends by John Hancock New York and JHLH is regulated by New York and Massachusetts insurance laws, respectively. In all three states, regulatory approval is required if a shareholder dividend
distribution is made from any source other than earned surplus or unassigned funds. Regulatory approval is also required if the dividend (together with other distributions made during the preceding 12 months, or in the case of New York the calendar
year) exceeds the greater of an insurers prior years net gain from operations or 10% of its surplus, measured at the end of the previous calendar year. The determination must be made in accordance with statutory accounting principles.
Approval is deemed to have occurred if notice of a dividend within the above limits is filed with the regulators and it is not disapproved during a 30-day notice period.



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Securities Law

Certain of the Companys subsidiaries and certain investment funds, policies and contracts offered by them are subject to regulation under federal securities laws administered by the U.S. Securities
and Exchange Commission (SEC) and under certain state securities laws. Certain segregated funds of the Companys insurance subsidiaries are registered as investment companies under the Investment Company Act of 1940, as are
certain other funds managed by subsidiaries of the Company. Interests in segregated funds under certain variable annuity contracts and variable insurance policies issued by the Companys insurance subsidiaries are also registered under the U.S.
Securities Act of 1933. Each of John Hancock Distributors LLC, Signator Investors, Inc. and John Hancock Funds, LLC is registered as a broker-dealer under the U.S. Securities Exchange Act of 1934 and each is a member of, and subject to
regulation by, the Financial Industry Regulatory Authority.

Each of John Hancock Advisers, LLC, Manulife Asset Management (U.S.) LLC, Hancock
Natural Resource Group, Inc., Hancock Venture Partners, Inc., Hancock Capital Investment Management, LLC, Signator Investors, Inc., Declaration Management & Research LLC, John Hancock Investment Management Services, LLC and Manulife Asset
Management (North America) Limited is an investment adviser registered under the U.S. Investment Advisers Act of 1940. Certain investment companies advised or managed by these subsidiaries are registered with the SEC under the Investment
Company Act of 1940 and the shares of certain of these entities are qualified for sale in certain states in the United States and the District of Columbia. All aspects of the investment advisory activities of the Companys subsidiaries are
subject to various federal and state laws and regulations in jurisdictions in which they conduct business. These laws and regulations are primarily intended to benefit investment advisory clients and investment company shareholders and generally
grant supervisory agencies broad administrative powers, including the power to limit or restrict the carrying on of business for failure to comply with such laws and regulations. In such event, the possible sanctions that may be imposed include the
suspension of individual employees, limitations on the activities in which the investment advisor may engage, suspension or revocation of the investment advisors registration as an advisor, censure and fines.

State Guaranty Funds

All states of the
United States have insurance guaranty fund laws requiring life insurance companies doing business in the state to participate in a guaranty association which, like Assuris in Canada, is organized to protect policyholders against loss of benefits in
the event of an insolvency or wind-up of a member insurer. These associations levy assessments (up to prescribed limits) on the basis of the proportionate share of premiums written by member insurers in the lines of business in which the impaired or
insolvent insurer is engaged. Assessments levied against the Company in each of the past five years have not been material. While the amount of any future assessments by guaranty funds cannot be predicted with certainty, the Company believes, based
upon a review of the current significant insolvency proceedings of insurers located in states where the Company conducts business, that future guaranty association assessments for insurer insolvencies will not have a material adverse effect on the
Companys liquidity and capital resources.

Employee Retirement Income Security Act of 1974 (ERISA) Considerations

Fiduciaries of employee benefit plans that are governed by ERISA are subject to regulation by the U.S. Department of Labor. ERISA
regulates the activities of a fiduciary of an employee benefit plan covered by that law, including an investment manager or advisor with respect to the plans assets. Severe penalties are imposed by ERISA on fiduciaries that breach their duties
to ERISA covered plans. The Companys subsidiaries issue insurance and annuity contracts for investment of employee benefit plans and provide a variety of other services to such plans. The provision of such services may cause the Company and
its subsidiaries to be a party in interest, as such term is defined in ERISA and the Internal Revenue Code of 1986, as amended (the Code), with respect to such plans. Unless a statutory or administrative exemption is
available, certain transactions between parties in interest and those plans are prohibited by ERISA and the Code.



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ASIA

In Asia, local insurance authorities supervise and monitor the Companys business and financial condition in each of the countries in which the Company operates. The Company is also required to meet
specific minimum working and regulatory capital requirements and is subject to regulations governing the investment of such capital in each of these jurisdictions. Hong Kong and Japan are the regulatory jurisdictions governing Manulife
Financials most significant operations in Asia.

Hong Kong

In Hong Kong, the authority and responsibility for supervision of the insurance industry is vested in the Insurance Authority under theInsurance Companies Ordinance, Cap. 41(the Insurance
Companies Ordinance). The Chief Executive of the Government of the Hong Kong Special Administrative Region has appointed the Commissioner of Insurance to be the Insurance Authority for the purposes of the Insurance Companies Ordinance. The
Insurance Companies Ordinance provides that no person shall carry on any insurance business in or from Hong Kong except a company authorized to do so by the Insurance Authority, Lloyds of the United Kingdom or an association of underwriters
approved by the Insurance Authority. The Insurance Companies Ordinance stipulates certain requirements for authorized insurers, including with regard to the fit and proper person requirement for directors and controllers, minimum capital
and solvency margin requirements, adequate reinsurance arrangement requirements and statutory reporting requirements. The Insurance Companies Ordinance also confers powers of investigation and intervention on the Insurance Authority for the
protection of policyholders.

The Insurance Authority has residual power to appoint an advisor or a manager to any authorized insurer if the
Insurance Authority considers such appointment to be desirable for the protection of policyholders or potential policyholders against the risk that the insurer may be unable to meet its liabilities or to fulfill the reasonable expectations of
policyholders or potential policyholders and that, in the Insurance Authoritys opinion, the exercise of other interventionary powers conferred by the Insurance Companies Ordinance would not be appropriate to safeguard the interests of
policyholders or potential policyholders. In such circumstances, the advisor or manager appointed by the Insurance Authority will have management control of the insurer.

In Hong Kong, the Companys life insurance business is conducted through a wholly owned subsidiary, Manulife (International) Limited, which is licensed to carry on the business of
long-term insurance. Long-term insurance companies are required under the Insurance Companies Ordinance to maintain certain solvency margins. The required solvency margin is the aggregate of two components  a percentage of the
mathematical reserves and a percentage of the capital at risk as prescribed under the Insurance Companies (Margin of Solvency) Regulation (Cap.41F), enacted pursuant to the Insurance Companies Ordinance. For a long-term insurance company, the value
of its assets must not be less than the amount of its liabilities by the required solvency margin, subject to a minimum of Hong Kong $2 million. Compliance with the solvency margin requirements is reported annually to the Insurance Authority.
Currently, all solvency margin requirements are being met.

The sale of mutual funds and investment-linked assurance products are subject to
Hong Kong securities laws administered by the Securities and Futures Commission. The sale of mandatory provident (pension) fund products is subject to provident fund laws administered by the Mandatory Provident Fund Schemes Authority.

Japan

Life insurance companies in
Japan, including Manulife Japan, are governed by the Insurance Business Law (Japan) and the regulations issued thereunder (the IB Law). The IB Law sets out a comprehensive regulatory regime for Japanese life insurers, including
such matters as capital and solvency requirements, powers of regulatory intervention, new insurance products and restrictions on shareholder dividends and distributions. The administration and application of the IB Law is supervised by the Financial
Services Agency (FSA). The IB Law provides for certain rules with respect to the approval of new insurance products and the setting of premium levels. Deregulation of sales of insurance products through bank channels became effective on
December 23, 2007 and all life insurance products are now able to be sold through the bank channel.

The new Insurance Law, a
comprehensive body of substantive laws covering insurance contracts which replaces the Insurance Chapter of the Commercial Code enacted more than 100 years ago, was fully implemented on April 1, 2010. The Insurance Law includes
significant changes to the Commercial Code including expansion of its scope to cover co-operative agreements, introduction of provisions on accident and sickness insurance, and enhancement of protection of policyholders, among other
things. It requires substantial amendments to the general terms of insurance policies and such amendments must be approved by the FSA.



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From the end of March 2012 (the end of local financial year 2011), the FSA will introduce new standards for
the Solvency Margin Ratio. The Solvency Margin Ratio is a criteria referred to by the authorities in supervising insurance companies when observing their financial strength. The respective insurance companies have applied the new standard to their
financial statements as of the March 2011 point of time, and have disclosed the calculated outcome to provide reference information.

The new
Solvency Margin Standards put more weight on investment risks. As a result of Manulife Japans strong risk management policy as well as prudent investment strategy, the new standards have little impact on Manulife Japans Solvency Margin
Ratio and its competitive position in terms of financial strength. Manulife Japan remains one of the highest Solvency Margin Ratio companies in Japan.

Deregulation allowed banks to begin selling insurance products over the counter in 2007. However, to prevent banks from taking advantage of their superior position in selling insurance products, some
regulations such as the Measure to prevent abuse were kept to be enforced so that banks could not sell insurance products to employees of small to mid-size companies which were borrowers from the bank at the same time. The FSA will
deregulate some of these rules beginning in April 2012.

Banks will be allowed to sell insurance products to borrowers as long as the loans
these borrowers have taken out are mortgage loans and not loans directly used for business purposes. Banks will no longer be prohibited from selling savings type products such as single premium whole life insurance or endowment
insurance to employees working at small to mid-size companies to whom the bank has loaned money.

Restrictions on Shareholder
Dividends

In Asia, insurance and company laws in the jurisdictions in which the Company operates provide for specific restrictions on the
payment of shareholder dividends and other distributions by the Companys subsidiaries, or impose solvency or other financial tests, which could affect the ability of these subsidiaries to pay dividends in certain circumstances.

GENERAL DESCRIPTION OF CAPITAL STRUCTURE

MFC has authorized share capital consisting of an unlimited number of common shares (Common Shares), an unlimited number of Class A Shares (Class A Shares), an unlimited
number of Class B Shares (Class B Shares) and an unlimited number of Class 1 Shares (Class 1 Shares) (collectively, the Class A Shares, Class B Shares and Class 1 Shares are Preferred Shares). As of
December 31, 2011, MFC had 1,801,113,056 Common Shares, 14 million Class A Shares Series 1, 14 million Class A Shares Series 2, 12 million Class A Shares Series 3, 18 million Class A Shares Series 4,
14 million Class 1 Shares Series 1, 8 million Class 1 Shares Series 3, and 8 million Class 1 Shares Series 5 issued and outstanding. On February 22, 2012, MFC issued 10 million Class 1 Shares Series 7. MFC has authorized but
not issued Class A Shares Series 5, Class 1 Shares Series 2, Class 1 Shares Series 4, Class 1 Shares Series 6 and Class 1 Shares Series 8.

Certain Provisions of the Class A Shares as a Class

The following is a summary of certain provisions attaching to the Class A Shares as a class.

Priority

Each series of Class A
Shares ranks on a parity with every other series of Class A Shares and every series of Class 1 Shares with respect to dividends and return of capital. The Class A Shares shall be entitled to a preference over the Class B Shares,
the Common Shares and any other shares ranking junior to the Class A Shares with respect to priority in payment of dividends and in the distribution of assets in the event of the liquidation, dissolution or winding-up of MFC, whether voluntary
or involuntary, or any other distribution of the assets of MFC among its shareholders for the specific purpose of winding up its affairs.



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Certain Provisions of the Class B Shares as a Class

The following is a summary of certain provisions attaching to the Class B Shares as a class.

Priority

Each series of Class B Shares ranks on a parity with every other series of
Class B Shares with respect to dividends and return of capital. The Class B Shares shall rank junior to the Class A Shares and the Class 1 Shares with respect to priority in payment of dividends and in the distribution of assets in
the event of the liquidation, dissolution or winding up of MFC, whether voluntary or involuntary, or any other distribution of the assets of MFC among its shareholders for the specific purpose of winding up its affairs, but the Class B Shares
shall be entitled to a preference over the Common Shares and any other shares ranking junior to the Class B Shares with respect to priority in payment of dividends and the distribution of assets in the event of the liquidation, dissolution or
winding up of MFC, whether voluntary or involuntary, or any other distribution of the assets of MFC among its shareholders for the specific purpose of winding up its affairs.

Certain Provisions of the Class 1 Shares as a Class

The following is a summary of certain
provisions attaching to the Class 1 Shares as a class.

Priority

Each series of Class 1 Shares ranks on a parity with every other series of Class 1 Shares and every series of Class A Shares with respect to dividends and return of capital. The Class 1 Shares shall
be entitled to a preference over the Class B Shares, the Common Shares and any other shares ranking junior to the Class 1 Shares with respect to priority in payment of dividends and in the distribution of assets in the event of the liquidation,
dissolution or winding-up of MFC, whether voluntary or involuntary, or any other distribution of the assets of MFC among its shareholders for the specific purpose of winding up its affairs.

Certain Provisions Common to the Class A Shares, Class B Shares and Class 1 Shares

The following is a summary of certain provisions attaching to the Class A Shares as a class, to the Class B Shares as a class and to the Class 1
Shares as a class.

Directors Right to Issue in One or More Series

The Class A Shares, Class B Shares and Class 1 Shares may be issued at any time and from time to time in one or more series. Before any shares of a series are issued, the Board of Directors of
MFC shall fix the number of shares that will form such series, if any, and shall, subject to any limitations set out in the by-laws of MFC or in the ICA, determine the designation, rights, privileges, restrictions and conditions to be attached to
the Class A Shares, Class B Shares or Class 1 Shares as the case may be, of such series, the whole subject to the filing with the Superintendent of the particulars of such series, including the rights, privileges, restrictions and
conditions determined by the Board of Directors of MFC.

Summaries of the terms for each series of the Class A Shares and Class 1 Shares
that have been issued or authorized for issuance are contained in the prospectuses relating to such shares, which are available on SEDAR.

Voting Rights of Preferred Shares

Except as hereinafter referred to or as required by law or as specified in the rights, privileges, restrictions and conditions attached from time to time
to any series of Class A Shares, Class B Shares or Class 1 Shares, the holders of such Class A Shares, Class B Shares or Class 1 Shares as a class shall not be entitled as such to receive notice of, to attend or to vote at any
meeting of the shareholders of MFC.

Amendment with Approval of Holders of Preferred Shares

The rights, privileges, restrictions and conditions attached to each of the Class A Shares, Class B Shares and Class 1 Shares as a class may be
added to, changed or removed but only with the approval of the holders of such class of Preferred Shares given as hereinafter specified.



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Approval of Holders of Preferred Shares

The approval of the holders of a class of Preferred Shares to add to, change or remove any right, privilege, restriction or condition attaching to such class of Preferred Shares as a class or in respect
of any other matter requiring the consent of the holders of such class of Preferred Shares may be given in such manner as may then be required by law, subject to a minimum requirement that such approval be given by resolution signed by all the
holders of such class of Preferred Shares or passed by the affirmative vote of at least two-thirds (2/3) of the votes cast at a meeting of the holders of such class of Preferred Shares duly called for that purpose.

Notwithstanding any other condition or provision of any class of Preferred Shares, the approval of the holders of any class, voting separately as a class
or series, is not required on a proposal to amend the by-laws of MFC to:



|(i) | increase or decrease the maximum number of authorized Class A Shares, Class B Shares or Class 1 Shares, as the case may be, or increase the maximum number of
authorized shares of a class of shares having rights or privileges equal or superior to such class of Preferred Shares;
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(ii) | effect the exchange, reclassification or cancellation of all or any part of the Class A Shares, Class B Shares or Class 1 Shares, as the case may be; or
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------



|(iii) | create a new class of shares equal to or superior to the Class A Shares, the Class B Shares or the Class 1 Shares, as the case may be.
|----- | --------------------------------------------------------------------------------------------------------------------------------------

The formalities to be observed with respect to the giving of notice of any such meeting or any adjourned meeting, the quorum
required therefor and the conduct thereof shall be those from time to time required by the ICA as in force at the time of the meeting and those, if any, prescribed by the by-laws or the administrative resolutions of MFC with respect to meetings of
shareholders. On every poll taken at every meeting of the holders of a class of Preferred Shares as a class, or at any joint meeting of the holders of two or more series of a class of Preferred Shares, each holder of such class of Preferred Shares
entitled to vote thereat shall have one vote in respect of each relevant Preferred Share held.

Certain Provisions of the Common Shares as
a Class

The authorized common share capital of MFC consists of an unlimited number of Common Shares without nominal or par value. Each
holder of Common Shares is entitled to receive notice of and to attend all meetings of the shareholders of MFC and is entitled to one vote for each share held except meetings at which only holders of a specified class or series of shares of MFC are
entitled to vote separately as a class or series. The holders of Common Shares are entitled to receive dividends as and when declared by the Board of Directors of MFC, subject to the preference of the holders of Class A Shares, Class B
Shares, Class 1 Shares and any other shares ranking senior to the Common Shares with respect to priority in payment of dividends. After payment to the holders of Class A Shares, Class B Shares, Class 1 Shares and any other shares ranking
senior to Common Shares with respect to priority in the distribution of assets in the event of the liquidation, dissolution or winding up of MFC, the holders of Common Shares shall be entitled to receive prorated the net assets of MFC remaining,
after the payment of all creditors and liquidation preferences, if any, that pertains to shareholders.

DIVIDENDS

The declaration and payment of dividends and the amount thereof is subject to the discretion of the Board of Directors and
is dependent upon the results of operations, financial condition, cash requirements and future prospects of, and regulatory restrictions on the payment of dividends by, the Company and other factors deemed relevant by the Board of Directors.

Since MFC is a holding company that conducts all of its operations through regulated insurance subsidiaries (or companies owned directly or
indirectly by these subsidiaries), its ability to pay future dividends will depend on the receipt of sufficient funds from its regulated insurance subsidiaries. These subsidiaries are also subject to certain regulatory restrictions under laws in
Canada, the United States and certain other countries that may limit their ability to pay dividends or make other upstream distributions.



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Pursuant to agreements made between MFC, Manufacturers Life, The Canada Trust Company and Manulife Financial
Capital Trust (a subsidiary of Manufacturers Life) (the Trust), MFC and Manufacturers Life have covenanted for the benefit of holders of the outstanding Trust Capital Securities of the Trust (the MaCS) that, if the Trust
fails to pay in full a required distribution on any series of MaCS, Manufacturers Life will not declare or pay cash dividends of any kind on its MLI Public Preferred Shares (as defined below), if any are outstanding, and if no MLI Public Preferred
Shares are outstanding, MFC will not declare or pay cash dividends on its Preferred Shares and Common Shares, in each case, until the twelfth month following the Trusts failure to pay the required distribution in full, unless the Trust first
pays the required distribution (or the unpaid portion thereof) to the respective holders of MaCS. MLI Public Preferred Shares means, at any time, preferred shares of Manufacturers Life which at that time: (a) have been issued to the
public (excluding any preferred shares of Manufacturers Life held beneficially by affiliates of Manufacturers Life); (b) are listed on a recognized stock exchange; and (c) have an aggregate liquidation entitlement of at least $200 million,
provided however, if at any time, there is more than one class of MLI Public Preferred Shares outstanding, then the most senior class or classes of outstanding MLI Public Preferred Shares shall, for all purposes, be the MLI Public Preferred Shares.

Pursuant to an agreement made between MFC, Manufacturers Life, CIBC Mellon Trust Company and Manulife Financial Capital Trust II (a
subsidiary of Manufacturers Life) (the Trust II), MFC and Manufacturers Life have covenanted for the benefit of holders of the outstanding Manulife Financial Capital Trust II notes  Series I (the Notes) that, if
interest is not paid in full in cash on the Notes on any interest payment date or if Manufacturers Life elects that holders of Notes invest interest payable on the Notes on any interest payment date in a new series of Manufacturers Life Class 1
Shares, Manufacturers Life will not declare or pay cash dividends on any MLI Public Preferred Shares, if any are outstanding, and if no MLI Public Preferred Shares are outstanding, MFC will not declare or pay cash dividends on its Preferred Shares
and Common Shares, in each case, until the sixth month following the relevant Other Deferral Event date.

MFC has paid the following cash
dividends in the period from January 1, 2009 to December 31, 2011:



| | I. | On the Common Shares, (i) a dividend of $0.26 per share was paid on March 19, 2009 and June 19, 2009, and (ii) a dividend of $0.13 per share was
paid on September 21, 2009, December 21, 2009, March 19, 2010, June 21, 2010, September 20, 2010, December 20, 2010, March 21, 2011, June 20, 2011, September 19, 2011 and December 19, 2011;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | II. | On the Class A Shares Series 1, a dividend of $0.25625 per share was paid on the 19thday, or the first business day thereafter, of March, June, September and December in each year;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | III. | On the Class A Shares Series 2, a dividend of $0.29063 per share was paid on the 19thday, or the first business day thereafter, of March, June, September and December in each year;
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | IV. | On the Class A Shares Series 3, a dividend of $0.28125 per share was paid on the 19thday, or the first business day thereafter, of March, June, September and December in each year;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | V. | On the Class A Shares Series 4, (i) a dividend of $0.4837 per share was paid on June 19, 2009, and (ii) a dividend of $0.4125 per
share was paid on September 19, 2009, December 19, 2009, and on the 19thday, or the first business day thereafter, of March, June, September and December in each year;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | VI. | On the Class 1 Shares Series 1, (i) a dividend of $0.41425 per share was paid on September 19, 2009, and (ii) a dividend of $0.35 per
share was paid on December 19, 2009 and on the 19thday, or the first business day thereafter, of March, June, September and December in the years 2010 and 2011; and
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | VII. | On the Class 1 Shares Series 3, (i) a dividend of $0.28767 per share was paid on June 19, 2011, and (ii) a dividend of $0.2625 per share was paid on
September 19, 2011 and December 19, 2011.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

CONSTRAINTS ON OWNERSHIP OF
SHARES

The ICA contains restrictions on the purchase or other acquisition, issue, transfer and voting of the shares of MFC. Pursuant to
these restrictions, no person is permitted to acquire any shares of MFC if the acquisition would cause the person to have a significant interest in any class of shares of MFC, unless the prior approval of the Minister of Finance is
obtained. The restrictions also prohibit any person from becoming a major shareholder of MFC. In addition, MFC is not permitted to record in its securities register any transfer or issue of shares if the transfer or issue would cause the
person to breach the ownership restrictions. For these purposes, a person has a significant interest in a class of shares of MFC where the aggregate of any shares of that class beneficially owned by that person, any entity controlled by that person
and by any person associated or acting jointly or in concert with that person exceeds 10% of all the outstanding shares of that class of shares of MFC. A person is a major shareholder if the aggregate of any shares in a class of voting shares held
by that person and by any entity controlled by that person exceeds 20% of the outstanding shares of that class, or, for a class of non-voting shares, a holding exceeds 30% of that class. If a person contravenes any of these restrictions, the
Minister of Finance may, by order, direct such person to dispose of all or any portion of those shares. In addition, the ICA prohibits life insurance companies, including MFC, from recording in its securities register a transfer or issue of any
share to Her Majesty in right of Canada or of a province, an agent or agency of Her Majesty, a foreign government or an agent or agency of a foreign government and provides further that no person may exercise the voting rights attached to those
shares of an insurance company. Proposed changes to the ICA would exempt from such constraints foreign financial institutions which are controlled by foreign governments or their agents.



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Under applicable insurance laws and regulations in Michigan, New York, Massachusetts, and Vermont, no person
may acquire control of any of the Companys insurance company subsidiaries domiciled in any such state without obtaining prior approval of such states insurance regulatory authority. Under applicable laws and regulations, any person
acquiring, directly or indirectly, 10% or more of the voting securities of any other person is presumed to have acquired control of such person. Thus, any person seeking to acquire 10% or more of the voting securities of MFC must obtain
the prior approval of the insurance regulatory authorities in certain states including Michigan, Massachusetts, Vermont and New York, or must demonstrate to the relevant insurance commissioners satisfaction that the acquisition of such
securities will not give them control of MFC. Under U.S. law, the failure to obtain such prior approval would entitle MFC or the insurance regulatory authorities to seek injunctive relief, including enjoining any proposed acquisition, the voting of
such securities at any meeting of the holders of Common Shares, or seizing shares owned by such person, and such shares may not be entitled to be voted at any meeting of the holders of Common Shares.

RATINGS

Credit rating agencies publish financial strength ratings on life insurance companies that are indicators of an insurance companys ability to meet contract holder and policyholder obligations.
Credit rating agencies also assign credit ratings, which are indicators of an issuers ability to meet the terms of debt, preferred share and Tier 1 hybrid capital obligations in a timely manner, and are important factors in a companys
overall funding profile and ability to access external capital.

Ratings are important factors in establishing the competitive position of
insurance companies, maintaining public confidence in products being offered, and determining the cost of capital. A ratings downgrade, or the potential for such a downgrade, could, among other things: increase our cost of capital and limit our
access to the capital markets; cause some of our existing liabilities to be subject to acceleration, additional collateral support, changes in terms, or result in additional financial obligations; result in the termination of our relationships with
broker-dealers, banks, agents, wholesalers and other distributors of our products and services; materially increase the number of surrenders, for all or a portion of the net cash values, by the owners of policies, contracts and general account GICs
we have issued, and materially increase the number of withdrawals by policyholders of cash values from their policies; and reduce new sales, particularly with respect to general account GICs and funding agreements purchased by pension plans and
other institutions. Any of these consequences could adversely affect our results of operations and financial condition.

The following table
summarizes the security ratings that MFC has received from approved rating organizations on its outstanding securities as at the date of this Annual Information Form.



|                  |  |                     |  |                |  |                   
|----------------- |  | ------------------- |  | -------------- |  | ------------------
|                  |  | DBRS                |  | Fitch          |  | S&P               
|                  |  |                     | 
|Class A Series 1  |  | Pfd-2(high)/Stable  |  | BBB / Negative |  | P-2 / BBB / Stable
|                  |  |                     | 
|Class A Series 2  |  | Pfd-2(high)/ Stable |  | BBB / Negative |  | P-2 / BBB / Stable
|                  |  |                     | 
|Class A Series 3  |  | Pfd-2(high)/ Stable |  | BBB / Negative |  | P-2 / BBB / Stable
|                  |  |                     | 
|Class A Series 4  |  | Pfd-2(high)/ Stable |  | BBB / Negative |  | P-2 / BBB / Stable
|                  |  |                     | 
|Class 1 Series 1  |  | Pfd-2(high)/ Stable |  | BBB / Negative |  | P-2 / BBB / Stable
|                  |  |                     | 
|Class 1 Series 3  |  | Pfd-2(high)/ Stable |  | BBB / Negative |  | P-2 / BBB / Stable
|                  |  |                     | 
|Class 1 Series 5  |  | Pfd-2(high)/ Stable |  | BBB / Negative |  | P-2 / BBB / Stable
|                  |  |                     | 
|Class 1 Series 7  |  | Pfd-2(high)/ Stable |  | Not rated      |  | P-2 / BBB / Stable
|                  |  |                     | 
|Medium Term Notes |  | A (high)/ Stable    |  | A- / Negative  |  | A- / Stable       

The security ratings accorded by the rating organizations are not a recommendation to purchase, hold or sell these
securities and may be subject to revision or withdrawal at any time by the rating organizations. Security ratings are intended to provide investors with an independent measure of the credit quality of an issue of securities. The Company provides
certain rating agencies with confidential, in-depth information in support of the rating process. The issuance of additional debt, hybrid securities, or preferred shares could put pressure on these ratings. If, in the view of the rating
organizations, there is deterioration in capital flexibility, operating performance, or the risk profile of the Company, this could also put pressure on these ratings.



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##### Table of Contents

DBRS Ratings

DBRS assigns ratings for preferred shares in a range from Pfd-1 to D. These ratings are meant to give an indication of the risk that an issuer will not fulfill its full obligations in a timely manner.
Every DBRS rating is based on quantitative and qualitative considerations relevant to the issuing entity. Each rating category is denoted by the subcategories high and low. The absence of either a high or
low designation indicates the rating is in the middle of the category. These ratings are appended with one of three rating trends  Positive, Stable, or Negative. The ratings trend helps to give
investors an understanding of DBRS opinion regarding the outlook for the rating in question.

MFCs Class A Shares Series 1,
Series 2, Series 3 and Series 4, as well as MFCs Class 1 Shares Series 1, Series 3, Series 5 and Series 7 have been assigned a Pfd-2(high) rating, fourth out of 16 preferred share ratings on the respective ratings scale, as they are considered
to be of satisfactory credit quality. Protection of dividends and principal is still substantial, but earnings, the balance sheet and coverage ratios are not as strong as Pfd-1 rated companies. The stable trend assigned by DBRS indicates that the
rating is not expected to change.

MFCs Medium Term Notes have been assigned an A (high) rating, the fifth out of 26 long-term
obligations ratings, reflecting good credit quality. The capacity for payment of financial obligations is considered substantial, but of lesser credit quality than that of AA rated entities. The Company may be vulnerable to future events, but
qualifying negative factors are considered manageable.

Fitch Ratings

Fitch assigns ratings for preferred shares in a range from AAA to D and these ratings provide an opinion on the relative ability of an entity to meet financial commitments, such as
interest, preferred dividends, repayment of principal, insurance claims or counterparty obligations. These ratings are used as indications of the likelihood of repayment in accordance with the terms of the security and imply no specific prediction
of default probability. These ratings do not directly address any risk other than credit risk. A + or - may be appended to a rating to denote its relative status within major rating categories. A rating outlook indicates the
direction a rating is likely to move over a predetermined period of time. Rating outlooks may be positive, stable, negative or evolving.

MFCs Class A Shares Series 1, Series 2, Series 3 and Series 4, as well as MFCs Class 1 Shares Series 1, Series 3 and Series 5 have been
assigned a BBB rating, ninth out of 21 preferred share ratings on the respective rating scale, denoting that expectations of credit risk are currently low. The Companys capacity for payment of financial commitments is considered to
be adequate, but adverse business or economic conditions are more likely to impair this capacity.

MFCs Medium Term Notes have been
assigned an A- rating, the seventh out of 21 long-term ratings on the respective rating scale, reflecting high credit quality. This rating denotes expectations of low credit risk and indicates a strong capacity for payment of financial
commitments. This capacity may, nevertheless, be more vulnerable to adverse business or economic conditions than is the case for higher ratings.

The negative outlook assigned to these ratings reflects Fitchs concerns about negative trends in adjusted earnings and the Companys financial leverage, which exceeds Fitchs expectation.

S&Ps Ratings

S&P assigns ratings for Canadian preferred shares in a range from P-1 to D and these ratings are a forward-looking opinion
about the creditworthiness of an obligor with respect to a specific preferred share obligation issued in the Canadian market, relative to preferred shares issued by other issuers in the Canadian market. There is a direct correspondence between the
specific ratings assigned on the Canadian preferred share scale and the various rating levels on the global debt rating scale of S&P. It is the practice of S&P to present an issuers preferred share ratings on both the global rating
scale and on the Canadian national scale when listing the ratings for a particular issuer. S&P Canadian preferred share scale ratings may be modified by the addition of High or Low to show relative standing within the
major rating categories. S&P global debt rating scale ratings may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories.

MFCs Class A Shares Series 1, Series 2, Series 3 and Series 4, as well as MFCs Class 1 Shares Series 1, Series 3, Series 5 and Series 7
have been assigned a P-2 rating on the Canadian scale, which corresponds to a BBB rating on the global scale. The P-2 rating ranks fifth out of 18 preferred share ratings on the respective ratings scale, and denotes that the specific
obligation exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.



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MFCs Medium Term Notes have been assigned an A- rating, seventh out of 22 long-term issue credit
ratings, reflecting strong credit quality. An obligation rated A- is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rated categories, but nonetheless
demonstrates that the obligors capacity to meet its financial commitment on the obligation is still considered as strong.

The stable
outlook assigned to these ratings reflects S&Ps expectations that the Company will sustain its competitive advantages globally, and that its capitalization remains sufficient to withstand significant market volatility.

MARKET FOR SECURITIES

MFCs Common Shares are listed for trading under the symbol MFC on the Toronto Stock Exchange (TSX), the New York Stock Exchange (NYSE), and the Philippine Stock
Exchange and under 0945 on The Stock Exchange of Hong Kong. The Class A Shares Series 1, Class A Shares Series 2, Class A Shares Series 3, and Class A Shares Series 4 are listed for trading on the TSX under the symbol
MFC.PR.A, MFC.PR.B, MFC.PR.C and MFC.PR.D, respectively. The Class 1 Shares Series 1, Class 1 Shares Series 3, Class 1 Shares Series 5 and Class 1 Shares Series 7 are listed for trading on the TSX
under the symbol MFC.PR.E, MFC.PR.F, MFC.PR.G and MFC.PR.H respectively.

Trading Price and
Volume

The following table sets out the intra-day price range and trading volume of the Common Shares on the TSX and the NYSE for the
period indicated.



|          |  |          |       |  |         |   |       |        |  |  |             |  |  |            |       |  |              |   |       |  |  |  |             | 
|--------- |  | -------- | ----- |  | ------- | - | ----- | ------ |  |  | ----------- |  |  | ---------- | ----- |  | ------------ | - | ----- |  |  |  | ----------- | 
|          |  | TSX      |       |  | NYSE    |  
|2011      |  | High(C$) |       |  | Low(C$) |   |       | Volume |  |  | High(U.S.$) |  |  | Low(U.S.$) |       |  | Volume(000s) |  
|January   |  | $        | 18.07 |  |         | $ | 17.03 |        |  |  | 83,298,776  |  |  | $          | 18.12 |  |              | $ | 17.08 |  |  |  | 39,653,112  | 
|February  |  | $        | 19.29 |  |         | $ | 17.45 |        |  |  | 111,335,040 |  |  | $          | 19.50 |  |              | $ | 17.52 |  |  |  | 58,975,720  | 
|March     |  | $        | 18.70 |  |         | $ | 15.61 |        |  |  | 125,083,424 |  |  | $          | 19.25 |  |              | $ | 15.82 |  |  |  | 73,021,432  | 
|April     |  | $        | 17.48 |  |         | $ | 16.03 |        |  |  | 66,125,096  |  |  | $          | 18.08 |  |              | $ | 16.59 |  |  |  | 35,768,808  | 
|May       |  | $        | 17.93 |  |         | $ | 16.59 |        |  |  | 97,216,064  |  |  | $          | 18.68 |  |              | $ | 17.15 |  |  |  | 61,387,544  | 
|June      |  | $        | 17.29 |  |         | $ | 15.52 |        |  |  | 90,853,792  |  |  | $          | 17.82 |  |              | $ | 15.86 |  |  |  | 57,076,204  | 
|July      |  | $        | 17.23 |  |         | $ | 15.02 |        |  |  | 57,844,528  |  |  | $          | 18.07 |  |              | $ | 15.69 |  |  |  | 47,075,132  | 
|August    |  | $        | 15.23 |  |         | $ | 12.21 |        |  |  | 145,830,080 |  |  | $          | 16.30 |  |              | $ | 12.32 |  |  |  | 113,729,056 | 
|September |  | $        | 13.52 |  |         | $ | 10.95 |        |  |  | 132,831,888 |  |  | $          | 13.83 |  |              | $ | 10.63 |  |  |  | 82,986,056  | 
|October   |  | $        | 14.05 |  |         | $ | 10.91 |        |  |  | 98,365,016  |  |  | $          | 14.14 |  |              | $ | 10.25 |  |  |  | 83,729,496  | 
|November  |  | $        | 13.11 |  |         | $ | 10.69 |        |  |  | 129,093,352 |  |  | $          | 13.01 |  |              | $ | 10.24 |  |  |  | 80,540,552  | 
|December  |  | $        | 11.92 |  |         | $ | 10.18 |        |  |  | 130,451,472 |  |  | $          | 11.75 |  |              | $ | 9.82  |  |  |  | 62,979,856  | 

The following tables set out the intra-day price range and trading volume of the Class A Shares Series 1, Series 2,
Series 3, Series 4 and Class 1 Shares Series 1, Series 3 and Series 5 on the TSX for the period indicated.



|          |  |                               |       |  |                               |   |       |              |  |  |           |  |  |         |       |  |              |   |       |  |  |  |         | 
|--------- |  | ----------------------------- | ----- |  | ----------------------------- | - | ----- | ------------ |  |  | --------- |  |  | ------- | ----- |  | ------------ | - | ----- |  |  |  | ------- | 
|          |  | TSX  Class A Shares Series 1 |       |  | TSX  Class A Shares Series 2 |  
|2011      |  | High(C$)                      |       |  | Low(C$)                       |   |       | Volume(000s) |  |  | High(C$)  |  |  | Low(C$) |       |  | Volume(000s) |  
|January   |  | $                             | 26.00 |  |                               | $ | 25.51 |              |  |  | 1,128,864 |  |  | $       | 22.98 |  |              | $ | 21.25 |  |  |  | 368,496 | 
|February  |  | $                             | 25.95 |  |                               | $ | 25.59 |              |  |  | 167,031   |  |  | $       | 23.24 |  |              | $ | 22.30 |  |  |  | 249,541 | 
|March     |  | $                             | 25.94 |  |                               | $ | 25.40 |              |  |  | 238,896   |  |  | $       | 22.78 |  |              | $ | 21.75 |  |  |  | 409,936 | 
|April     |  | $                             | 25.90 |  |                               | $ | 25.50 |              |  |  | 165,487   |  |  | $       | 21.95 |  |              | $ | 21.01 |  |  |  | 262,848 | 
|May       |  | $                             | 25.90 |  |                               | $ | 25.40 |              |  |  | 343,340   |  |  | $       | 22.90 |  |              | $ | 21.65 |  |  |  | 344,745 | 
|June      |  | $                             | 25.79 |  |                               | $ | 25.30 |              |  |  | 127,540   |  |  | $       | 23.40 |  |              | $ | 22.21 |  |  |  | 246,913 | 
|July      |  | $                             | 25.70 |  |                               | $ | 25.39 |              |  |  | 353,138   |  |  | $       | 22.95 |  |              | $ | 22.40 |  |  |  | 333,122 | 
|August    |  | $                             | 25.96 |  |                               | $ | 25.00 |              |  |  | 726,551   |  |  | $       | 22.91 |  |              | $ | 21.08 |  |  |  | 469,638 | 
|September |  | $                             | 25.60 |  |                               | $ | 24.60 |              |  |  | 222,432   |  |  | $       | 22.60 |  |              | $ | 21.63 |  |  |  | 242,240 | 
|October   |  | $                             | 25.50 |  |                               | $ | 24.41 |              |  |  | 466,188   |  |  | $       | 22.39 |  |              | $ | 20.76 |  |  |  | 305,325 | 
|November  |  | $                             | 25.50 |  |                               | $ | 25.03 |              |  |  | 310,304   |  |  | $       | 22.50 |  |              | $ | 21.69 |  |  |  | 280,348 | 
|December  |  | $                             | 25.63 |  |                               | $ | 24.82 |              |  |  | 411,726   |  |  | $       | 22.19 |  |              | $ | 20.39 |  |  |  | 277,388 | 



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|          |  |                               |       |  |                               |   |       |              |  |  |          |  |  |         |       |  |              |   |       |  |  |  |         | 
|--------- |  | ----------------------------- | ----- |  | ----------------------------- | - | ----- | ------------ |  |  | -------- |  |  | ------- | ----- |  | ------------ | - | ----- |  |  |  | ------- | 
|          |  | TSX  Class A Shares Series 3 |       |  | TSX  Class A Shares Series 4 |  
|2011      |  | High(C$)                      |       |  | Low(C$)                       |   |       | Volume(000s) |  |  | High(C$) |  |  | Low(C$) |       |  | Volume(000s) |  
|January   |  | $                             | 22.11 |  |                               | $ | 20.59 |              |  |  | 449,596  |  |  | $       | 27.50 |  |              | $ | 27.20 |  |  |  | 351,343 | 
|February  |  | $                             | 22.72 |  |                               | $ | 21.66 |              |  |  | 349,987  |  |  | $       | 27.50 |  |              | $ | 26.89 |  |  |  | 456,698 | 
|March     |  | $                             | 22.22 |  |                               | $ | 21.02 |              |  |  | 304,495  |  |  | $       | 27.55 |  |              | $ | 27.05 |  |  |  | 568,200 | 
|April     |  | $                             | 21.48 |  |                               | $ | 20.60 |              |  |  | 254,500  |  |  | $       | 27.60 |  |              | $ | 27.28 |  |  |  | 666,952 | 
|May       |  | $                             | 22.49 |  |                               | $ | 21.10 |              |  |  | 352,827  |  |  | $       | 27.61 |  |              | $ | 27.06 |  |  |  | 590,903 | 
|June      |  | $                             | 23.16 |  |                               | $ | 22.03 |              |  |  | 292,933  |  |  | $       | 27.50 |  |              | $ | 27.00 |  |  |  | 328,181 | 
|July      |  | $                             | 22.37 |  |                               | $ | 21.69 |              |  |  | 291,075  |  |  | $       | 27.54 |  |              | $ | 27.12 |  |  |  | 516,113 | 
|August    |  | $                             | 22.64 |  |                               | $ | 20.75 |              |  |  | 574,607  |  |  | $       | 27.47 |  |              | $ | 26.75 |  |  |  | 695,844 | 
|September |  | $                             | 22.25 |  |                               | $ | 21.25 |              |  |  | 157,025  |  |  | $       | 27.25 |  |              | $ | 26.34 |  |  |  | 320,267 | 
|October   |  | $                             | 21.81 |  |                               | $ | 20.40 |              |  |  | 222,886  |  |  | $       | 26.95 |  |              | $ | 25.47 |  |  |  | 288,806 | 
|November  |  | $                             | 21.68 |  |                               | $ | 21.00 |              |  |  | 298,895  |  |  | $       | 27.25 |  |              | $ | 26.30 |  |  |  | 259,145 | 
|December  |  | $                             | 21.84 |  |                               | $ | 20.01 |              |  |  | 253,268  |  |  | $       | 27.04 |  |              | $ | 26.30 |  |  |  | 323,064 | 



|          |  |                               |       |  |                                |   |       |              |  |  |          |  |  |         |       |  |              |   |       |  |  |  |         | 
|--------- |  | ----------------------------- | ----- |  | ------------------------------ | - | ----- | ------------ |  |  | -------- |  |  | ------- | ----- |  | ------------ | - | ----- |  |  |  | ------- | 
|          |  | TSX  Class 1 Shares Series 1 |       |  | TSX  Class 1 Shares Series
36 |  
|2011      |  | High(C$)                      |       |  | Low(C$)                        |   |       | Volume(000s) |  |  | High(C$) |  |  | Low(C$) |       |  | Volume(000s) |  
|January   |  | $                             | 26.99 |  |                                | $ | 26.42 |              |  |  | 302,803  |  |  |         |       |  |              |   |       |  |  |  |         | 
|February  |  | $                             | 27.00 |  |                                | $ | 26.02 |              |  |  | 292,572  |  |  |         |       |  |              |   |       |  |  |  |         | 
|March     |  | $                             | 26.80 |  |                                | $ | 26.22 |              |  |  | 294,960  |  |  | $       | 24.97 |  |              | $ | 24.60 |  |  |  | 871,398 | 
|April     |  | $                             | 26.90 |  |                                | $ | 26.50 |              |  |  | 271,064  |  |  | $       | 25.24 |  |              | $ | 24.90 |  |  |  | 650,239 | 
|May       |  | $                             | 27.06 |  |                                | $ | 26.37 |              |  |  | 210,089  |  |  | $       | 25.25 |  |              | $ | 24.73 |  |  |  | 257,463 | 
|June      |  | $                             | 26.93 |  |                                | $ | 26.32 |              |  |  | 179,645  |  |  | $       | 25.25 |  |              | $ | 24.60 |  |  |  | 212,643 | 
|July      |  | $                             | 27.03 |  |                                | $ | 26.30 |              |  |  | 120,359  |  |  | $       | 25.17 |  |              | $ | 24.83 |  |  |  | 307,819 | 
|August    |  | $                             | 26.99 |  |                                | $ | 25.76 |              |  |  | 156,719  |  |  | $       | 25.10 |  |              | $ | 23.62 |  |  |  | 354,980 | 
|September |  | $                             | 26.62 |  |                                | $ | 25.60 |              |  |  | 155,275  |  |  | $       | 25.10 |  |              | $ | 24.57 |  |  |  | 228,045 | 
|October   |  | $                             | 26.28 |  |                                | $ | 25.00 |              |  |  | 367,012  |  |  | $       | 25.00 |  |              | $ | 23.82 |  |  |  | 195,463 | 
|November  |  | $                             | 26.47 |  |                                | $ | 25.51 |              |  |  | 173,065  |  |  | $       | 24.69 |  |              | $ | 23.89 |  |  |  | 263,994 | 
|December  |  | $                             | 26.19 |  |                                | $ | 25.10 |              |  |  | 379,287  |  |  | $       | 24.29 |  |              | $ | 22.76 |  |  |  | 218,063 | 



|          |  |                                |       |  |         |   |       |              |  |  |           | 
|--------- |  | ------------------------------ | ----- |  | ------- | - | ----- | ------------ |  |  | --------- | 
|          |  | TSX  Class 1 Shares Series
57 |      
|2011      |  | High(C$)                       |       |  | Low(C$) |   |       | Volume(000s) | 
|January   |  |                                |       |  |         |   |       |              |  |  |           | 
|February  |  |                                |       |  |         |   |       |              |  |  |           | 
|March     |  |                                |       |  |         |   |       |              |  |  |           | 
|April     |  |                                |       |  |         |   |       |              |  |  |           | 
|May       |  |                                |       |  |         |   |       |              |  |  |           | 
|June      |  |                                |       |  |         |   |       |              |  |  |           | 
|July      |  |                                |       |  |         |   |       |              |  |  |           | 
|August    |  |                                |       |  |         |   |       |              |  |  |           | 
|September |  |                                |       |  |         |   |       |              |  |  |           | 
|October   |  |                                |       |  |         |   |       |              |  |  |           | 
|November  |  |                                |       |  |         |   |       |              |  |  |           | 
|December  |  | $                              | 24.56 |  |         | $ | 23.90 |              |  |  | 1,548,909 | 

LEGAL PROCEEDINGS

The Company is regularly involved in legal actions, both as a defendant and as a plaintiff. The legal actions naming the Company as a defendant ordinarily
involve its activities as a provider of insurance protection and wealth management products, as well as an investment adviser, employer and taxpayer. In addition, government and regulatory bodies that oversee the Companys operations in the
various jurisdictions in which the Company operates regularly make inquiries and, from time to time, require the production of information or conduct examinations concerning the Companys compliance with, among other things, insurance laws,
securities laws, and laws governing the activities of broker-dealers.





|6 | Issued March 11, 2011.
|- | ----------------------

|7 | Issued December 6, 2011.
|- | ------------------------



55



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The Company announced on June 19, 2009 that it had received an enforcement notice from staff of the
Ontario Securities Commission (OSC) relating to its disclosure before March 2009 of risks related to its variable annuity guarantee and segregated funds business. The notice indicated that it was the preliminary conclusion of OSC staff
that the Company failed to meet its continuous disclosure obligations related to its exposure to market price risk in its segregated funds and variable annuity guaranteed products. The Company announced on April 21, 2011 that it had been
informed by staff of the OSC that staff would not seek any orders from the OSC in connection with the enforcement notice delivered by staff in June 2009.

A class action covering Quebec residents only is pending in Quebec against the Company and proposed class action lawsuits against the Company have been filed in Ontario and the United States, on behalf of
investors in Canada (except Quebec residents) and the United States, respectively. These proceedings are based on allegations that the Company failed to meet its disclosure obligations related to its exposure to market price risk in its segregated
funds and variable annuity guaranteed products. The Company may become subject to other similar lawsuits by investors. The Company believes that its disclosure satisfied applicable disclosure requirements and intends to vigorously defend itself
against any claims based on these allegations.

Plaintiffs in class action and other lawsuits against the Company may seek very large or
indeterminate amounts, including punitive and treble damages, and the damages claimed and the amount of any probable and estimable liability, if any, may remain unknown for substantial periods of time. A substantial legal liability or a significant
regulatory action could have a material adverse effect on the Companys business, results of operations, financial condition and capital position and adversely affect its reputation. Even if the Company ultimately prevails in the litigation,
regulatory action or investigation, it could suffer reputational harm, which could have an adverse effect on its business, results of operations, financial condition and capital position, including its ability to attract new customers, retain
current customers and recruit and retain employees.

DIRECTORS AND EXECUTIVE OFFICERS

DIRECTORS

The by-laws of MFC provide that the Board of Directors shall consist of a minimum of seven and a maximum of 30 Directors, with the exact number of Directors to be elected at any annual meeting of MFC to
be fixed by the Directors prior to such annual meeting.

The following table sets forth for each of the Directors of MFC, their province or
state and country of residence, position with Manulife Financial and their principal occupation as at March 13, 2012. Additional information on each Director can be found at the section entitled Nominees for the Board of Directors
in MFCs Proxy Circular dated March 13, 2012 filed on SEDAR, which section is incorporated herein by reference.

Each director is
elected for a term of one year, expiring at the next annual meeting of the Company. The next annual meeting will occur on May 3, 2012.



|                                                |  |                                                 |  |                                                                                                                   
|----------------------------------------------- |  | ----------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------
|Name and
Residence                              |  | Position with
Manulife Financial                |  | Principal Occupation                                                                                              
|                                                |  |                                                
|Dr. Gail C.A. Cook-Bennett
Ontario, Canada      |  | Chair of the Board(1)                           |  | Chair of the Board Manulife Financial                                                                             
|                                                |  |                                                
|Donald A. Guloien
Ontario, Canada               |  | President and Chief Executive Officer, Director |  | President and Chief Executive Officer, Manulife Financial                                                         
|                                                |  |                                                
|Linda B. Bammann
Florida, United States         |  | Director                                        |  | Corporate Director                                                                                                
|                                                |  |                                                
|Joseph P. Caron
British Columbia, Canada        |  | Director                                        |  | President, Joseph Caron Incorporated (consulting
firm)(2)                                                         
|                                                |  |                                                
|John M. Cassaday
Ontario, Canada                |  | Director                                        |  | President and Chief Executive Officer, Corus Entertainment Inc. (broadcasting company)                            
|                                                |  |                                                
|Thomas P. dAquino
Ontario, Canada              |  | Director                                        |  | Chairman and Chief Executive, Intercounsel Ltd. (management consulting firm)(3)                                   
|                                                |  |                                                
|Richard B. DeWolfe
Massachusetts, United States |  | Director                                        |  | Managing Partner, DeWolfe & Company LLC (consulting firm)                                                         
|                                                |  |                                                
|Robert E. Dineen, Jr.
New York, United States   |  | Director                                        |  | Attorney at Law(4)                                                                                                
|                                                |  |                                                
|Sheila S. Fraser
Ontario, Canada                |  | Director                                        |  | Corporate Director(5)                                                                                             
|                                                |  |                                                
|Scott M. Hand
Ontario, Canada                   |  | Director                                        |  | Chair, Royal Nickel Corporation (nickel development company)(6)                                                   
|                                                |  |                                                
|Robert J. Harding
Ontario, Canada               |  | Director                                        |  | Chair, Brookfield Infrastructure Global Advisory Board (an advisory board to the Brookfield Group of Companies)(7)
|                                                |  |                                                
|Luther S. Helms
Arizona, United States          |  | Director                                        |  | Managing Director, Sonata Capital Group (investment advice firm)                                                  
|                                                |  |                                                
|Tsun-yan Hsieh
Singapore                        |  | Director                                        |  | Chairman, LinHart Group Pte Ltd. (consulting
firm)(8)                                                             
|                                                |  |                                                
|Donald R. Lindsay
British Columbia, Canada      |  | Director                                        |  | President and Chief Executive Officer, Teck Resources Limited (diversified resources company)                     
|                                                |  |                                                
|Dr. Lorna R. Marsden
Ontario, Canada            |  | Director                                        |  | President Emerita and Professor,
York University(9)                                                               
|                                                |  |                                                
|John R.V. Palmer
Ontario, Canada                |  | Director                                        |  | Consultant(10)                                                                                                    
|                                                |  |                                                
|Andrea S. Rosen
Ontario, Canada                 |  | Director                                        |  | Corporate Director                                                                                                
|                                                |  |                                                
|Hugh W. Sloan, Jr.
Michigan, United States      |  | Director                                        |  | Chair, Spartan Motors Inc. (manufacturer of specialty vehicles)(11)                                               



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|(1) | Dr. Cook-Bennett was appointed Chair of the Board effective October 2, 2008. Prior to October 2008, Dr. Cook-Bennett was Chair of the Canada Pension Plan
Investment Board.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Prior to September 2010, Joseph Caron was Canadas High Commissioner to India and Ambassador to Nepal and Bhutan. Prior to August 2008, Mr. Caron was
Canadas Ambassador to Japan.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Prior to January 2010, Thomas dAquino was Chief Executive and President, Canadian Counsel of Chief Executives.
|--- | ---------------------------------------------------------------------------------------------------------------

|(4) | Prior to January 2009, Robert Dineen was Of Counsel to Shearman & Sterling LLP.
|--- | -------------------------------------------------------------------------------

|(5) | Prior to June 2011, Sheila Fraser served as Auditor General of Canada.
|--- | ----------------------------------------------------------------------

|(6) | Since September 2009, Scott Hand has been the Chair of Royal Nickel Corporation. Prior to January 2007, Scott Hand was CEO of Inco Limited.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Prior to August 2010, Robert Harding was Chair, Brookfield Assessment Management Inc.
|--- | -------------------------------------------------------------------------------------

|(8) | Prior to June 2008, Tsun-yan Hsieh was Director of McKinsey & Company.
|--- | ----------------------------------------------------------------------

|(9) | Prior to July 2007, Lorna Marsden was President and Vice Chancellor, York University.
|--- | -------------------------------------------------------------------------------------

|(10) | Since June 2005, John Palmer has been the Chair of the Toronto International Leadership Centre for Financial Sector Supervision.
|---- | --------------------------------------------------------------------------------------------------------------------------------

|(11) | Prior to August 19, 2008, Hugh Sloan was Deputy Chairman, Woodbridge Foam Corporation.
|---- | --------------------------------------------------------------------------------------

EXECUTIVE OFFICERS

The name, province or state and country
of residence, and position of each of the executive officers of Manulife Financial are set forth in the following table as of December 31, 2011.



|                                                                 |  |                                                                           
|---------------------------------------------------------------- |  | --------------------------------------------------------------------------
|Name and Residence                                               |  | Position with Manulife Financial                                          
|                                                                 | 
|Donald A. Guloien
Ontario, Canada                                |  | President and Chief Executive Officer(1)                                  
|                                                                 | 
|Michael W. Bell
Ontario, Canada                                  |  | Senior Executive Vice President and Chief Financial Officer(2)            
|                                                                 | 
|Jean-Paul Bisnaire
Ontario, Canada                               |  | Senior Executive Vice President, Corporate Development and General Counsel
|                                                                 | 
|James R. Boyle
Massachusetts, United States                      |  | Senior Executive Vice President, U.S.
Division(3)                         
|                                                                 | 
|Robert A. Cook
Hong Kong, Special Administrative Region of China |  | Senior Executive Vice President and General Manager,
Asia(4)              
|                                                                 | 
|Cindy L. Forbes
Ontario, Canada                                  |  | Executive Vice President and Chief
Actuary(5)                             
|                                                                 | 
|Scott S. Hartz
Massachusetts, United States                      |  | Executive Vice President, General Account
Investments(6)                  
|                                                                 | 
|Rahim Hirji
Ontario, Canada                                      |  | Executive Vice President and Chief Risk
Officer(7)                        
|                                                                 | 
|Stephani E. Kingsmill
Ontario, Canada                            |  | Executive Vice President, Human
Resources(8)                              
|                                                                 | 
|Beverly S. Margolian
Ontario, Canada                             |  | Executive Vice President and Chief Strategy
Officer(9)                    
|                                                                 | 
|Paul L. Rooney
Ontario, Canada                                   |  | Senior Executive Vice President and General Manager, Canada(10)           
|                                                                 | 
|Warren A. Thomson
Ontario, Canada                                |  | Senior Executive Vice President and Chief Investment Officer(11)          



57



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|(1) | Prior to May 2009, Donald Guloien was Senior Executive Vice President and Chief Investment Officer.
|--- | ---------------------------------------------------------------------------------------------------

|(2) | Prior to June 2009, Michael Bell was Executive Vice President and Chief Financial Officer of CIGNA Corporation.
|--- | ---------------------------------------------------------------------------------------------------------------

|(3) | Prior to May 2009, James Boyle was Executive Vice President, U.S. Insurance. Prior to January 2007, Mr. Boyle was Executive Vice President, Annuities, John
Hancock.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Prior to January 2007, Robert Cook was Executive Vice President, Life Insurance, John Hancock.
|--- | ----------------------------------------------------------------------------------------------

|(5) | Prior to August 6, 2010, Cindy Forbes was Senior Vice President and Chief Financial Officer, Asia.
|--- | --------------------------------------------------------------------------------------------------

|(6) | Prior to May 2009, Scott Hartz was Executive Vice President, U.S. Investments.
|--- | ------------------------------------------------------------------------------

|(7) | Prior to August 11, 2011, Rahim Hirji was Senior Vice President and Chief Financial Officer, Canadian Division.
|--- | ---------------------------------------------------------------------------------------------------------------

|(8) | Prior to May 2010, Stephani Kingsmill was Senior Vice President and General Manager, Real Estate.
|--- | -------------------------------------------------------------------------------------------------

|(9) | Prior to August 11, 2011, Beverly Margolian was Executive Vice President and Chief Risk Officer.
|--- | ------------------------------------------------------------------------------------------------

|(10) | Prior to March 2007, Paul Rooney was Executive Vice President, Individual Insurance and Chief Financial Officer, Canadian Division.
|---- | -----------------------------------------------------------------------------------------------------------------------------------

|(11) | Prior to May 2009, Warren Thomson was Executive Vice President, U.S. Investments and Global Investment Management.
|---- | ------------------------------------------------------------------------------------------------------------------

SHARE OWNERSHIP

The number of Common Shares held by Directors and executive officers of MFC as at December 31, 2011 was 485,384, which represented less than 1% of the outstanding Common Shares.

TRANSFER AGENT AND REGISTRAR

The transfer agents for MFCs Common Shares are as follows:



|                                |  |                                                                                                                                     |  |                       |  |                                                                                                                       
|------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------- |  | --------------------- |  | ----------------------------------------------------------------------------------------------------------------------
|In Canada:                      |  | CIBC Mellon Trust Company
P.O. Box 7010, Adelaide Street Postal Station
Toronto, Ontario, Canada, M5C 2W9
Toll Free: 1-800-783-9495 |  | In the United States: |  | Computershare Shareowner Services LLC P.O. Box 358015 Pittsburgh, Pennsylvania, U.S.A. 15252
Toll Free: 1-800-249-7702
|                                | 
|www.cibcmellon.com/investor     |  | www.computershare.com                                                                                                              
|www.cibcmellon.com/investisseur |  |                                                                                                                                    

The transfer agent for MFCs Class A Shares and Class 1 Shares is CIBC Mellon
Trust Company.

MATERIAL CONTRACTS

MFC entered into a trust indenture dated May 19, 2005 with CIBC Mellon Trust Company (CIBC Mellon)(as amended, the Trust
Indenture) setting out the terms of debentures that may be issued by MFC under a prospectus supplement to a short form base shelf prospectus, as filed with applicable securities regulators from time to time. MFC has entered into supplemental
indentures to the Trust Indenture with CIBC Mellon dated May 19, 2005, March 28, 2006, June 26, 2008, April 8, 2009, June 2, 2009 and August 20, 2010 setting out the terms of Medium Term Notes that
may be issued by MFC under a Medium Term Note Program Prospectus Supplement, as filed with applicable securities regulators from time to time. Under the terms of the Trust Indenture, an aggregate maximum of $5.0 billion of Medium Term Notes are
currently issuable. As at December 31, 2011, an aggregate principal amount of $3.8 billion in Medium Term Notes are issued and outstanding.



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Manufacturers Life entered into an amended and restated trust indenture dated November 18, 2011 with
BNY Trust Company of Canada (BNY Mellon Trust) (amending and restating an indenture dated November 8, 2002) setting out the terms of debentures that may be issued by Manufacturers Life under a prospectus supplement to a short form
base shelf prospectus, as filed with applicable securities regulators from time to time. Manufacturers Life entered into a first supplemental indenture with BNY Mellon Trust on November 18, 2011 setting out the terms of $550 million principal
amount of 4.21% fixed/floating subordinated debentures of Manufacturers Life due November 18, 2021. MFC entered into a subordinated guarantee dated November 18, 2011, whereby MFC fully and unconditionally guaranteed on a subordinated basis
the payment of principal, premium, if any, interest and redemption price, if any, of the Manufacturers Life 4.21% fixed/floating subordinated debentures. Manufacturers Life entered into a second supplemental indenture with BNY Mellon Trust on
February 17, 2012 setting out the terms of $500 million principal amount of 4.165% fixed/floating subordinated debentures of Manufacturers Life due June 1, 2022. MFC entered into a subordinated guarantee dated February 17, 2012,
whereby MFC fully and unconditionally guaranteed on a subordinated basis the payment of principal, premium, if any, interest and redemption price, if any, of the Manufacturers Life 4.165% fixed/floating subordinated debentures. More information
about MFCs guarantee of the Manufacturers Life 4.21% fixed/floating subordinated debentures can be found at Note 19 (d) of MFCs consolidated financial statements for the year ended December 31, 2011 filed on SEDAR. More
information about MFCs guarantee of the Manufacturers Life 4.165% fixed/floating subordinated debentures can be found at Note 26 of MFCs consolidated financial statements for the year ended December 31, 2011 filed on SEDAR.

MFC entered into a trust indenture dated September 17, 2010 with The Bank of New York Mellon (BNY Mellon) (the U.S.
Indenture) setting out the terms of debentures that may be issued by MFC under a short form base shelf prospectus filed in Canada and the United States via registration statement on Form F-10 pursuant to the Multijurisdictional Disclosure
System. MFC entered into a first supplemental indenture with BNY Mellon on September 17, 2010 setting out the terms of two series of senior notes issued by MFC on September 17, 2010 by prospectus supplement to the short form base shelf
prospectus.

On December 9, 2009, the SEC declared effective a joint registration statement filed in the United States by MFC and John
Hancock USA relating to medium term notes to be offered by John Hancock USA to retail investors under the SignatureNotes program, the payment of which is fully and unconditionally guaranteed by MFC. MFC has also fully and unconditionally
guaranteed the SignatureNotes previously sold by John Hancock Life. The obligation to pay the SignatureNotes issued by John Hancock Life was assumed by John Hancock USA when John Hancock Life merged with and into John Hancock USA on
December 31, 2009. MFCs guarantees of the SignatureNotes are unsecured obligations of MFC, and are subordinated in right of payment to the prior payment in full of all other obligations of MFC, except for other guarantees or
obligations of MFC which by their terms are designated as ranking equally in right of payment with or subordinate to MFCs guarantees of the SignatureNotes. As of December 31, 2011, John Hancock USA had approximately U.S. $0.79
billion principal amount of SignatureNotes outstanding (which amount includes SignatureNotes issued by John Hancock Life and assumed by John Hancock USA), with capacity to issue a further U.S. $1.985 billion principal amount under the
terms of issuance program governing the SignatureNotes as at that date. More information about MFCs guarantee of the SignatureNotes can be found at Note 24 of MFCs consolidated financial statements for the year ended
December 31, 2011 filed on SEDAR.

On July 20, 2009, the SEC declared effective a joint registration statement filed in the United
States by MFC and John Hancock USA relating to single payment modified guarantee deferred annuity contracts with market value adjustment interests (MVA Contracts), the payment of which is fully and unconditionally guaranteed by MFC.
MFCs guarantees of the MVA Contracts are unsecured obligations of MFC, and are subordinated in right of payment to the prior payment in full of all other obligations of MFC, except for other guarantees or obligations of MFC which by their
terms are designed as ranking equally in right of payment with or subordinate to MFCs guarantees of the MVA Contracts. As of December 31, 2011, John Hancock USA had approximately U.S. $0.51 billion in account value of MVA Contracts
outstanding with capacity to issue a further U.S. $2.47 billion principal amount under the terms of issuance program governing the MVA Contracts as at that date. More information about MFCs guarantee of the MVA Contracts can be found at Note
24 of MFCs consolidated financial statements for the year ended December 31, 2011 filed on SEDAR.

MFC entered into a trust
indenture dated December 14, 2006 (the MFLP Indenture) with CIBC Mellon and Manulife Finance (Delaware), L.P. (MFLP) as a guarantor of the debentures of MFLP issued under the MFLP Indenture. Under the terms of the MFLP
Indenture, MFC unconditionally and irrevocably guaranteed on a senior basis the payment of principal, premium, if any, interest and redemption price in respect of $550 million principal amount of 4.448% fixed/floating senior debentures of MFLP due
December 15, 2026. MFC also unconditionally and irrevocably guaranteed on a subordinated basis the payment of principal, premium, if any, interest and redemption price in respect of $650 million principal amount of 5.059% fixed/floating
subordinated debentures of MFLP due December 15, 2041. More information about MFCs guarantee of the debentures issued by MFLP can be found at Note 19(d) of MFCs consolidated financial statements for the year ended December 31,
2011 filed on SEDAR.



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MFC entered into a subordinated guarantee dated January 29, 2007 of Class A and Class B preferred
shares of Manufacturers Life and any other class of preferred shares that rank on a parity with Class A Shares or Class B Shares of Manufacturers Life. As a result of this guarantee, Manufacturers Life has received an exemption from the
requirements to file certain continuous disclosure materials with the Canadian securities regulatory authorities.

INTERESTS OF EXPERTS

Ernst & Young LLP, Chartered Accountants, Licensed Public Accountants, Toronto, Ontario, is the
external auditor who prepared the Independent Auditors Report of Registered Public Accounting Firm to the Shareholders and the Independent Auditors Report on Internal Controls under Standards of the Public Company Accounting Oversight
Board (United States). Ernst & Young LLP is independent with respect to the Company within the meaning of the Rules of Professional Conduct of the Institute of Chartered Accountants of Ontario, United States federal securities laws and the
rules and regulations thereunder, including the independence rules adopted by the Securities and Exchange Commission pursuant to the Sarbanes-Oxley Act of 2002 and is in compliance with Rule 3520 of the Public Company Accounting Oversight Board.

AUDIT COMMITTEE

Audit Committee Charter

The Audit Committee has adopted a formal Charter that describes
the Audit Committees role and responsibilities. The Charter is set out in the attached Schedule 1.

The Audit Committee is responsible
for assisting the Board in its oversight role with respect to the quality and integrity of financial information, the effectiveness of the Companys internal control over financial reporting, the effectiveness of the Companys risk
management and compliance practices, the performance, qualifications and independence of the independent auditor, and the performance of the Companys internal audit function.

Composition of The Audit Committee

Messrs. Richard B. DeWolfe, Robert E. Dineen Jr.,
Sheila S. Fraser (appointed November 2, 2011), Robert J. Harding, Luther S. Helms, John R. V. Palmer and Andrea S. Rosen (appointed November 2, 2011) are the members of MFCs Audit Committee. Mr. DeWolfe became the Chair of the
Audit Committee effective January 1, 2007 and was previously Co-Chair of the Audit Committee with Mr. Kierans from May 4, 2006 to December 31, 2006. The Board has reviewed the committee membership and determined that all members
are financially literate as required by the New York Stock Exchange Listed Company Manual and the applicable instruments of the Canadian Securities Administrators. All committee members are independent, pursuant to the independence requirements
prescribed by applicable securities and other regulators which regulate the Company and by the stock exchanges on which the Companys securities are listed. The Board has also determined that all current members have the necessary
qualifications to be designated as audit committee financial experts under SOX.

Relevant Education and Experience

In addition to the general business experience of each member of the Audit Committee, the relevant education and experience of each member of MFCs
Audit Committee in 2011 is as follows: Richard DeWolfe holds a BAS, Marketing and Finance from Boston University and is the former Chairman and Chief Executive Officer of The DeWolfe Companies, Inc., a publicly listed home ownership organization
prior to being acquired by Cendant Corp. Robert Dineen holds a BA from Brown University and a LLB from Syracuse University, and is a former securities law partner at Shearman & Sterling LLP. Sheila Fraser holds a B. Comm from McGill
University and is a Chartered Accountant. Robert Harding holds a B. Mathematics from the University of Waterloo, is a Chartered Accountant, and is Chairman of Brookfield Infrastructure Global Advisory Board, an advisory board to the Brookfield Group
of Companies. Luther Helms holds a BA from the University of Arizona and an MBA from the University of Santa Clara and is Managing Director of Sonata Capital Group. Previously, Mr. Helms was Vice Chairman of KeyBank West and Vice Chairman of
Bank of America Corporation. John Palmer holds a BA from the University of British Columbia, is a Chartered Accountant and is the former Deputy Chairman and Managing Partner of KPMG LLP (Canada) and the former Superintendent of OSFI, the principal
regulator of financial institutions in Canada. Andrea Rosen holds an LLB from Osgoode Hall Law School, an MBA from Schulich School of Business at York University and a BA from Yale University.



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Pre-Approval Policies and Procedures

A description of the pre-approval policies and procedures of the Audit Committee can be found in the Companys Statement of Corporate Governance Practices, located at Schedule A of MFCs Proxy
Circular dated March 13, 2012 filed on SEDAR, which Schedule is incorporated herein by reference, and on the Companys web site at www.manulife.com.

External Auditor Service Fees

A description of the fees billed by the external auditor to
the Company can be found at the section entitled Business of the Meeting in MFCs Proxy Circular dated March 13, 2012 filed on SEDAR, which section is incorporated herein by reference.

PERFORMANCE AND NON-GAAP MEASURES

We use a number of non-GAAP financial measures to measure overall performance and to assess each of our businesses. A financial measure is considered a non-GAAP measure for Canadian securities law
purposes if it is presented other than in accordance with generally accepted accounting principles used for the Companys audited historical financial statements, which is prior Canadian GAAP for 2010 and earlier and IFRS for 2011 and beyond.
Non-GAAP measures referenced in this Annual Information Form include: Net Income (Loss) Excluding the Direct Impact of Equity Markets and Interest Rates; Sales; Constant Currency Basis; Premiums and Deposits; and Funds under Management. Non-GAAP
financial measures are not defined terms under GAAP and, therefore, are unlikely to be comparable to similar terms used by other issuers. Therefore, they should not be considered in isolation or as a substitute for any other financial information
prepared in accordance with GAAP.

For definitions of the non-GAAP financial measures referred to above and reconciliations from certain
non-GAAP financial measures to the most directly comparable measure calculated in accordance with GAAP, see Performance and Non-GAAP Measures in our most recent Managements Discussion and Analysis.

ADDITIONAL INFORMATION

Additional information with respect to the Company, including directors and officers remuneration and indebtedness, principal holders of securities, and securities authorized for issuance
under MFCs equity compensation plans, where applicable, is contained in MFCs Proxy Circular dated March 13, 2012 filed on SEDAR. Additional financial information is provided in the Companys consolidated financial statements
and the Companys Managements Discussion and Analysis for the most recently completed financial year. Additional information relating to the Company may be found on SEDAR at www.sedar.com and is accessible at the Companys
website, www.manulife.com. Requests for materials may be sent to the Investor Relations Department of Manulife Financial at 200 Bloor Street East, NT-7, Toronto, Canada M4W 1E5.



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SCHEDULE 1  AUDIT COMMITTEE CHARTER

Manulife Financial Corporation (the Company)

Audit Committee Charter (February 2012)



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |                                                                      |  |                                                                                                                                                                                     
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.  |  | Overall Role and Responsibility                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | 
|1.1 |  | The Audit Committee (Committee) shall:                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |  | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | assist the Board of Directors in its oversight role with respect to:
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | (i)                                                                  |  | the quality and integrity of financial information;                                                                                                                                 
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | (ii)                                                                 |  | the effectiveness of the Companys internal control over financial reporting;                                                                                                       
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | (iii)                                                                |  | the effectiveness of the Companys risk management and compliance practices;                                                                                                        
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | (iv)                                                                 |  | the independent auditors performance, qualifications and independence;                                                                                                             
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | (v)                                                                  |  | the performance of the Companys internal audit function;                                                                                                                           
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | (vi)                                                                 |  | the Companys compliance with legal and regulatory requirements; and                                                                                                                
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 
|    |  | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |                                                                      |  | prepare such reports of the Committee required to be included in the Proxy Circular in accordance with applicable laws or the rules of applicable securities regulatory
authorities.
|    | 
|2.  |  | Structure and Composition                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | 
|2.1 |  | The Committee shall consist of five or more Directors appointed by the Board of Directors on the recommendation of the Corporate Governance and Nominating
Committee.                                                                                                                                                                                                                                                                                     
|    | 
|2.2 |  | No member of the Committee shall be an officer or employee of the Company, its subsidiaries or affiliates. Members of the Committee will not be affiliated with the
Company as such term is defined in the Insurance Companies Act (Canada) (the Act).                                                                                                                                                                                                  
|    | 
|2.3 |  | A majority of the Committee members will be resident Canadians.                                                                                                                                                                                                                                                                                                                                                                                           
|    | 
|2.4 |  | Each member of the Committee shall satisfy the applicable independence and experience requirements of the laws governing the Company, the applicable stock exchanges on
which the Companys securities are listed and applicable securities regulatory authorities.                                                                                                                                                                                       
|    | 
|2.5 |  | The Board of Directors shall designate one member of the Committee as the Committee Chair.                                                                                                                                                                                                                                                                                                                                                                
|    | 
|2.6 |  | Members of the Committee shall serve at the pleasure of the Board of Directors for such term or terms as the Board of Directors may determine.                                                                                                                                                                                                                                                                                                            
|    | 
|2.7 |  | Each member of the Committee shall be financially literate as such qualification is defined by applicable law and interpreted by the Board of Directors in its business
judgment.                                                                                                                                                                                                                                                                         
|    | 
|2.8 |  | The Board of Directors shall determine whether and how many members of the Committee qualify as a financial expert as defined by applicable law. At least one member must
be an audit committee financial expert.                                                                                                                                                                                                                                         
|    | 
|2.9 |  | The Committee shall annually determine whether any of its members serve on the audit committee of more than three public companies (including the Committee). If any of
the Committee members fall into this category, the Committee shall consider the ability of such members to effectively serve on the Committee and, if it is determined that such members are able to continue serving, the Committee shall record the
reasons for such a decision.
|    | 
|3.  |  | Structure, Operations and Assessment                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | 
|3.1 |  | The Committee shall meet quarterly or more frequently as the Committee may determine. The Committee shall report to the Board of Directors on its activities after each
of its meetings.                                                                                                                                                                                                                                                                  



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|----------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.2                                                         |  | The affirmative vote of a majority of the members of the Committee participating in any meeting of the Committee is necessary for the adoption of any
resolution.                                                                                                                                             
|                                                            | 
|3.3                                                         |  | The Committee may create one or more subcommittees and may delegate, in its discretion, all or a portion of its duties and responsibilities to such
subcommittees.                                                                                                                                            
|                                                            | 
|3.4                                                         |  | The Committee shall, on an annual basis:                                                                                                                                                                                                                                                                      
|                                                            |  |                                                                                                                                                                                                                                                                                                               
|                                                            |  | (a)                                                                                                                                                                                                                                                                                                            |  | review and assess the adequacy of this Charter and, where necessary, recommend changes to the Board of Directors for its approval;                                                                                                                                                                                                                                     
|                                                            |  |                                                                                                                                                                                                                                                                                                               
|                                                            |  | (b)                                                                                                                                                                                                                                                                                                            |  | undertake a performance evaluation of the Committee comparing the performance of the Committee with the requirements of this Charter; and                                                                                                                                                                                                                              
|                                                            |  |                                                                                                                                                                                                                                                                                                               
|                                                            |  | (c)                                                                                                                                                                                                                                                                                                            |  | report the results of the performance evaluation to the Board of Directors.                                                                                                                                                                                                                                                                                            
|                                                            | 
|                                                            |  | The performance evaluation by the Committee shall be conducted in such manner as the Committee deems appropriate. The report to the Board of Directors may take the form
of an oral report by the chair of the Committee or any other member of the Committee designated by the Committee to make this report.
|                                                            | 
|3.5                                                         |  | The Committee is expected to establish and maintain free and open communication with management, the independent auditor, the internal auditor and the Appointed Actuary
and shall periodically meet separately with each of them.                                                                            
|                                                            | 
|4.                                                          |  | Specific Duties                                                                                                                                                                                                                                                                                               
|                                                           
|The Committee will carry out the following specific duties:
|                                                            | 
|4.1                                                         |  | Oversight of the Independent Auditor                                                                                                                                                                                                                                                                          
|                                                            |  |                                                                                                                                                                                                                                                                                                               
|                                                            |  | (a)                                                                                                                                                                                                                                                                                                            |  | Recommend to the Board that the independent auditor be nominated for the purpose of preparing or issuing an auditors report or performing other audit, review or
attest services for the issuer (subject to shareholder ratification).                                                                                                                                
|                                                            |  |                                                                                                                                                                                                                                                                                                               
|                                                            |  | (b)                                                                                                                                                                                                                                                                                                            |  | Recommend to the Board the compensation of the independent auditor.                                                                                                                                                                                                                                                                                                    
|                                                            |  |                                                                                                                                                                                                                                                                                                               
|                                                            |  | (c)                                                                                                                                                                                                                                                                                                            |  | Provide the oversight of the work of the independent auditor engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest
services (including resolution of disagreements between management and the independent auditor regarding financial reporting). The independent auditor shall report directly to the Committee.
|                                                            |  |                                                                                                                                                                                                                                                                                                               
|                                                            |  | (d)                                                                                                                                                                                                                                                                                                            |  | Preapprove all audit services and permitted non-audit services (including the fees, terms and conditions for the performance of such services) to be provided by the
independent auditor.                                                                                                                                                                              
|                                                            |  |                                                                                                                                                                                                                                                                                                               
|                                                            |  | (e)                                                                                                                                                                                                                                                                                                            |  | When appropriate, the Committee may delegate to one or more members the authority to grant preapprovals of audit and permitted non-audit services and the full Committee
shall be informed of each non-audit service.                                                                                                                                                  
|                                                            |  |                                                                                                                                                                                                                                                                                                               
|                                                            |  | (f)                                                                                                                                                                                                                                                                                                            |  | Review the decisions of such delegates under subsection (e) above, which shall be presented to the full Committee at its next scheduled meeting.                                                                                                                                                                                                                       
|                                                            |  |                                                                                                                                                                                                                                                                                                               
|                                                            |  | (g)                                                                                                                                                                                                                                                                                                            |  | Evaluate the qualifications, performance and independence of the independent auditor, including:                                                                                                                                                                                                                                                                       
|                                                            |  |                                                                                                                                                                                                                                                                                                                | 
|                                                            |  |                                                                                                                                                                                                                                                                                                                |  | (i)                                                                                                                                                                                                                                                                                                                                                                     |  | reviewing and evaluating the lead partner on the independent auditors engagement with the Company; and                                                                      
|                                                            |  |                                                                                                                                                                                                                                                                                                                | 
|                                                            |  |                                                                                                                                                                                                                                                                                                                |  | (ii)                                                                                                                                                                                                                                                                                                                                                                    |  | considering whether the auditors quality controls are adequate and the provision of permitted non-audit services are compatible with maintaining the auditors
independence.



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|--- |  | ------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  |                    
|    |  | (h)                 |  | Present its conclusions with respect to the independent auditor to the Board of Directors and, if so determined by the Committee, recommend that the Board of Directors
take additional action to satisfy itself of the qualifications, performance and independence of the independent auditor.       
|    |  |                    
|    |  | (i)                 |  | Obtain and review a report from the independent auditor at least annually regarding:                                                                                                                                                                                                                   
|    |  |                     | 
|    |  |                     |  | (i)                                                                                                                                                                                                                                                                                                     |  | the independent auditors internal quality-control procedures;                                                                                                                                                                                                                               
|    |  |                     | 
|    |  |                     |  | (ii)                                                                                                                                                                                                                                                                                                    |  | any material issues raised by the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional
authorities within the preceding five years respecting one or more independent audits carried out by the firm;
|    |  |                     | 
|    |  |                     |  | (iii)                                                                                                                                                                                                                                                                                                   |  | any steps taken to deal with any such issues; and                                                                                                                                                                                                                                            
|    |  |                     | 
|    |  |                     |  | (iv)                                                                                                                                                                                                                                                                                                    |  | all relationships between the independent auditor and the Company.                                                                                                                                                                                                                           
|    |  |                    
|    |  | (j)                 |  | Review and discuss with management and the independent auditor prior to the annual audit the scope, planning and staffing of the annual audit.                                                                                                                                                         
|    |  |                    
|    |  | (k)                 |  | Ensure the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as
required by law.                                                                                                              
|    |  |                    
|    |  | (l)                 |  | Review and approve policies for the Companys hiring of partners and employees or former partners and employees of the independent auditor.                                                                                                                                                            
|    | 
|4.2 |  | Financial Reporting
|    |  |                    
|    |  | (a)                 |  | Review and discuss with management and the independent auditor the annual audited financial statements and any other returns or transactions required to be reviewed by
the Committee and report to the Board of Directors prior to approval by the Board of Directors and the publication of earnings.
|    |  |                    
|    |  | (b)                 |  | Review such returns of the Company as the Superintendent of Financial Institutions may specify.                                                                                                                                                                                                        
|    |  |                    
|    |  | (c)                 |  | Review the Companys annual and quarterly disclosures made in managements discussion and analysis. The Committee shall approve any reports for inclusion in
the Companys Annual Report, as required by applicable legislation and make a recommendation thereon to the Board.                        
|    |  |                    
|    |  | (d)                 |  | Review the Companys Disclosure Policy and Standards and periodically assess the adequacy of procedures regarding disclosure of financial
information.                                                                                                                                                 
|    |  |                    
|    |  | (e)                 |  | Require management to implement and maintain appropriate internal control procedures.                                                                                                                                                                                                                  
|    |  |                    
|    |  | (f)                 |  | Review and discuss with management and the independent auditor managements report on its assessment of internal controls over financial reporting and the
independent auditors attestation report on managements assessment.                                                                        
|    |  |                    
|    |  | (g)                 |  | Review, evaluate and approve the procedures established under s. 4.2(d).                                                                                                                                                                                                                               
|    |  |                    
|    |  | (h)                 |  | Review such investments and transactions that could adversely affect the well-being of the Company as the auditor or any officer of the Company may bring to the
attention of the Committee.                                                                                                           
|    |  |                    
|    |  | (i)                 |  | Review and discuss with management and the independent auditor the Companys quarterly financial statements prior to the publication of earnings,
including:                                                                                                                                           
|    |  |                     | 
|    |  |                     |  | (i)                                                                                                                                                                                                                                                                                                     |  | the results of the independent auditors review of the quarterly financial statements; and                                                                                                                                                                                                   
|    |  |                     | 
|    |  |                     |  | (ii)                                                                                                                                                                                                                                                                                                    |  | any matters required to be communicated by the independent auditor under applicable review standards.                                                                                                                                                                                        
|    |  |                    
|    |  | (j)                 |  | Review and discuss with management and the independent auditor at least annually significant financial reporting issues and judgments made in connection with the
preparation of the Companys financial statements, including:                                                                        
|    |  |                     | 
|    |  |                     |  | (i)                                                                                                                                                                                                                                                                                                     |  | any significant changes in the Companys selection or application of accounting principles;                                                                                                                                                                                                  



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|    |  |     | 
|    |  |     |  | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | any major issues as to the adequacy of the Companys internal controls; and                                                                                                                                                                                                   
|    |  |     | 
|    |  |     |  | (iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | any special steps adopted in light of material control deficiencies.                                                                                                                                                                                                          
|    |  |    
|    |  | (k) |  | Review and discuss with management and the independent auditor at least annually reports from the independent auditor on:                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |  |     | 
|2.2 |  |     |  | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  | critical accounting policies and practices to be used;                                                                                                                                                                                                                        
|    |  |     | 
|    |  |     |  | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | significant financial reporting issues, estimates and judgments made in connection with the preparation of the financial statements;                                                                                                                                          
|    |  |     | 
|    |  |     |  | (iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, ramifications of the use of such
alternative disclosures and treatments, and the treatment preferred by the independent auditor; and
|    |  |     | 
|    |  |     |  | (iv)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | other material written communications between the independent auditor and management, such as any management letter or schedule of unadjusted differences.                                                                                                                    
|    |  |    
|    |  | (l) |  | Meet with the independent auditor to discuss the annual financial statements and any investments or transactions that may adversely affect the well-being of the
Company.                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |  |    
|    |  | (m) |  | Discuss with the independent auditor at least annually any management or internal control letters issued or proposed to be issued by the
independent auditor to the Company.                                                                                                                                                                                                                                                                                                                                                                                                            
|    |  |    
|    |  | (n) |  | Review and discuss with management and the independent auditor at least annually any significant changes to the Companys accounting principles and practices
suggested by the independent auditor, internal audit personnel or management.                                                                                                                                                                                                                                                                                                                                                 
|    |  |    
|    |  | (o) |  | Discuss with management and approve the Companys earnings press releases, the release of earnings projections, forecast or guidance and the use of non-GAAP
financial measures (if any), and the financial information provided to analysts and rating agencies.                                                                                                                                                                                                                                                                                                                           
|    |  |    
|    |  | (p) |  | Review and discuss with management and the independent auditor at least annually the effect of regulatory and accounting initiatives as well as off-balance-sheet
structures on the Companys financial statements.                                                                                                                                                                                                                                                                                                                                                                         
|    |  |    
|    |  | (q) |  | Discuss with the independent auditor matters required to be discussed by American Institute of Certified Public Accountants Statement on Auditing Standards No. 61
relating to the conduct of the audit, including any difficulties encountered in the course of the audit work, any restrictions on the scope of activities or access to requested information and any significant disagreements with
management.                                                                                                                                                                          
|    |  |    
|    |  | (r) |  | Review and discuss with the Chief Executive Officer and the Chief Financial Officer the procedures undertaken in connection with the Chief Executive Officer and Chief
Financial Officer certifications for the annual and interim filings with applicable securities regulatory authorities.                                                                                                                                                                                                                                                                                               
|    |  |    
|    |  | (s) |  | Review disclosures made by the Companys Chief Executive Officer and Chief Financial Officer during their certification process for the annual and interim filing
with applicable securities regulatory authorities about any significant deficiencies in the design or operation of internal controls which could adversely affect the Companys ability to record, process, summarize and report financial data or
any material weaknesses in the internal controls, and any fraud involving management or other employees who have a significant role in the Companys internal controls.
|    |  |    
|    |  | (t) |  | Meet with the Appointed Actuary of the Company at least annually to receive and review reports, opinions and recommendations prepared by the Appointed Actuary in
accordance with the Act, including the parts of the annual financial statement and the annual return filed under s. 665 of the Act, prepared by the actuary, and such other matters as the Committee may direct, and excluding the report on Dynamic
Capital Adequacy Testing, which is reviewed by the Risk Committee.                                                                                                   
|    |  |    
|    |  | (u) |  | Discuss with the Companys General Counsel at least annually any legal matters that may have a material impact on the financial statements, operations, assets or
compliance policies and any material reports or inquiries received by the Company or any of its subsidiaries from regulators or governmental agencies.                                                                                                                                                                                                                                                                    



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|--- |  | --------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | 
|    |  |                                                                            
|    |  | (v)                                                                         |  | Meet with the Chief Internal Auditor and with management to discuss the effectiveness of the internal control procedure established pursuant to
s.4.2(d).                                                                                                                                             
|    | 
|4.3 |  | Oversight of the Companys Internal Audit Function                         
|    |  |                                                                            
|    |  | (a)                                                                         |  | Review with the Chief Auditor, the independent auditor and management at least annually the mandate, independence, qualifications, staffing and budget of the internal
audit department and its annual work plan.                                                                                     
|    |  |                                                                            
|    |  | (b)                                                                         |  | Review the periodic reports of the internal audit department on internal audit activities and the results of its audits.                                                                                                                                                                              
|    |  |                                                                            
|    |  | (c)                                                                         |  | Review and concur in the appointment, replacement, reassignment or dismissal of the internal auditor who shall have direct access to the Committee.                                                                                                                                                   
|    | 
|4.4 |  | Risk Management Oversight                                                  
|    |  |                                                                            
|    |  | (a)                                                                         |  | Review reports from the Risk Committee respecting the Companys processes for assessing and managing risk.                                                                                                                                                                                            
|    |  |                                                                            
|    |  | (b)                                                                         |  | The Committee will receive reports from the General Counsel as Chair of the Disclosure Committee.                                                                                                                                                                                                     
|    | 
|4.5 |  | Oversight of Regulatory Compliance and Complaint Handling                  
|    |  |                                                                            
|    |  | (a)                                                                         |  | Establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing
matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.
|    |  |                                                                            
|    |  | (b)                                                                         |  | Discuss with management and the independent auditor at least annually any correspondence with regulators or governmental agencies and any published reports which raise
material issues regarding the Companys financial statements or accounting.                                                   
|    |  |                                                                            
|    |  | (c)                                                                         |  | Review at least annually with the Global Compliance Chief the Companys compliance with applicable laws and regulations, and correspondence from
regulators.                                                                                                                                          
|    | 
|4.6 |  | Oversight of the Anti-Money Laundering and Anti-Terrorist Financing Program
|    |  |                                                                            
|    |  | (a)                                                                         |  | The Committee shall approve the Companys Anti-Money Laundering and Anti-Terrorist Financing Policy and any material amendments.                                                                                                                                                                      
|    |  |                                                                            
|    |  | (b)                                                                         |  | The Committee shall meet with the Chief Anti-Money Laundering Officer (CAMLO) at least annually to receive and review the CAMLOs report on the AML/ATF
Program, which will include a report on the effectiveness of the AML/ATF Program and the Companys compliance with the Policy.              
|    |  |                                                                            
|    |  | (c)                                                                         |  | The Committee shall meet with the Chief Auditor at least annually to receive and review the Chief Auditors report on the results of the testing of the
effectiveness of the AML/ATF Program.                                                                                                         
|    | 
|4.7 |  | Proxy Circular                                                             
|    |  |                                                                            
|    |  | (a)                                                                         |  | The Committee shall prepare a report on its activities on an annual basis to be included in the Proxy Circular, as may be required by applicable laws or rules of
applicable securities regulatory authorities.                                                                                       
|    | 
|4.8 |  | Oversight of Executive Compensation                                        
|    |  |                                                                            
|    |  | (a)                                                                         |  | The Committee or a designate member will review the annual executive compensation recommendations of the Management Resources and Compensation Committee prior to
approval by the Board of Directors.                                                                                                 



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|    |  |                                                                           |  |                                                                                                                                                                                                                                                     |  | 
|--- |  | ------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|    | 
|4.9 |  | Duties and Responsibilities Delegated by the Board                       
|    |  |                                                                          
|    |  | (a)                                                                       |  | Exercise such other powers and perform such other duties and responsibilities as are incidental to the purposes, duties and responsibilities specified herein and as may
from time to time be delegated to the Committee by the Board of Directors.
|    | 
|5.  |  | Funding for the Independent Auditor and Retention of Independent
Advisors

The Company shall provide for appropriate funding, as determined by the Committee, for payment of compensation to the
independent auditor for the purpose of issuing an audit report and to any advisors retained by the Committee. The Committee shall have the authority to retain such independent advisors as it may from time to time deem necessary or advisable for its
purposes and to set the terms of the retainer. The expenses related to any such engagement shall also be funded by the Company.



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