<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

                             ANNUAL REPORT PURSUANT
                            TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF l934

                   for the fiscal year ended December 31, 1998

                        Commission File Number: 33-57020

                             THE MANUFACTURERS LIFE
                          INSURANCE COMPANY OF AMERICA
             (Exact name of registrant as specified in its charter)
                                    MICHIGAN
         (State or other jurisdiction of incorporation or organization)
                                   23-2030787
                      (I.R.S. Employer Identification No.)

                             500 N. Woodward Avenue
                        Bloomfield Hills, Michigan 48304
                    (Address of Principal executive offices)
                                 (416) 926-6700
              (Registrant's telephone number, including area code)

   Securities registered pursuant to Section 12(b) or 12(g) of the Act: None.

Indicate by check mark whether the registrant (1) has filed reports  required to
be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

     [X] Yes      [ ] No

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K (section 229.405 of this chapter) is not contained herein, and
will not be  contained,  to the best of  registrant's  knowledge,  in definitive
proxy or  information  statements  incorporated  by reference in Part II of this
Form 10-K or any amendment to this Form 10-K. [X]

     No shares of voting stock are held by nonaffiliates of the Registrant.

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

The number of shares  outstanding of the issuer's sole class of common stock, as
of December 31, 1998 is 4,501,861


                       DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part
of the Form 10-K  (e.g.,  Part I, Part II,  etc.)  into  which the  document  is
incorporated:  (1) Any  annual  report  to  security  holders;  (2) Any proxy or
information  statement;  and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the  Securities Act of 1933.  The listed  documents  should be clearly
described for identification  purposes (e.g.,  annual report to security holders
for fiscal year ended December 24, 1980).

None.


                                       1

<PAGE>   2


                                     PART I


Item 1. - Business

Description of Company, Reportable Segments and Products

The Registrant, also referred to as the "Company", is a direct wholly-owned U.S.
subsidiary of The  Manufacturers  Life Insurance  Company  (U.S.A.)  ("ManUSA"),
which in turn is a direct  wholly-owned  subsidiary of the Manulife  Reinsurance
Corporation  (U.S.A.) ("MRC"). MRC is an indirectly  wholly-owned  subsidiary of
The Manufacturers  Life Insurance  Company  ("Manulife  Financial"),  a Canadian
mutual insurance company.

Manulife  Financial and its subsidiaries  have consistently  received  excellent
ratings from  Standard & Poor's  Insurance  Rating  Service,  A.M. Best Company,
Moody's Investors Service Inc. and Duff & Phelps Credit Rating Co.

The Company reports two business  segments:  Traditional  Life Insurance sold in
Taiwan and Variable Life  Insurance and Annuities sold in the U.S. The Company's
reportable  segments have been  determined  based on geography,  differences  in
product features,  and  distribution;  the segments are also consistent with the
Company's management structure.

Variable Products

During the last five  years the  Company  has grown  significantly  through  the
successful growth in variable insurance sales. This growth reflects:

   a) continuing shift in consumer preference as they seek greater control
      over their investment decision making,

   b) more active marketing and sales practices by the Company,

   c) increased product lines,

   d) expanded offering of investment portfolios. 


                                       2

<PAGE>   3


The  recently  launched Survivorship Variable Universal Life (SVUL) product  and
the  Corporate-owned  Variable  Life  (COLI) product launched in 1997,  together
with  an  expanded  offering  of 36 investment portfolios, have been  positively
received.

The  deposit  growth  for  VUL  is  consistent with the Company's commitment  to
develop variable products as core "estate/business planning products".

The broad range of high-profile external fund managers permits the policyholders
to take advantage of an investment approach known as managing to the  "Efficient
Frontier"  in  which  investors'  assets  are  allocated  among  a broad mix  of
investment choices consistent with their risk-tolerance levels. We are confident
the combination of both products and investment platform form the foundation  of
future growth and profitability.

The Company has de-emphasized the sale of variable annuities and concentrated on
the sale of estate planning variable life products which is more consistent with
its  client  and  producer  base.  Variable  annuities  for  Manulife  Financial
are  currently  being marketed through an affiliated company, The  Manufacturers
Life Insurance Company of North America.

Taiwan

The  Company  entered  Taiwan in 1992 as a start-up venture to sell  traditional
insurance products through its Taiwan branch. During 1995 the Company  commenced
full  operations that resulted in significant expenditures on agent  recruitment
and training. In 1996, Taiwan's operating losses increased as a result of  costs
associated  with recruitment and training. Although management expected  losses,
the  magnitude  was  not  acceptable.  In  late 1996, a new General Manager  was
appointed  and  transferred to Taiwan with the mandate to slow growth and  focus
more selectively on strategic opportunities. Improvements were seen in 1997  and
1998  with  decreases  in  the  net  losses  reported. The Company continues  to
anticipate a large potential for this market.


Regulation

The Company is subject to the laws of the state of Michigan governing  insurance
companies  and to  the  regulation  of the  Michigan  Insurance  Department.  In
addition, the Company is subject to regulation under the insurance laws of other
jurisdictions  in which  the  Company  operates.  Regulation  by each  insurance
department  includes  periodic  examination to determine the Company's  contract
liabilities and reserves so that each insurance department may verify that these
items are correct.  Regulation by  supervisory  agencies  includes  licensing to
transact  business,  overseeing trade  practices,  licensing  agents,  approving
policy forms,  establishing reserve requirements,  fixing maximum interest rates
on life insurance  policy loans and minimum rates for  accumulation of surrender
values,  prescribing the form and content of required  financial  statements and
regulation of the type and amounts of investments permitted. The Company's books
and  accounts  are  subject  to review by each  insurance  department  and other
supervisory  agencies at all times, and the Company files annual statements with
these  agencies.  A full  examination  of the Company's  operations is conducted
periodically  by the  Michigan  Insurance  Department.  Under  Michigan  holding
company  laws and other laws and  regulations,  intercompany  transactions,  and
transfers of assets may be subject to prior  notification or approval  depending
upon the size of such  transfers  and  payments  in  relation  to the  financial
positions of the companies.

                                       3


<PAGE>   4

Under  insurance  guaranty  fund laws in most states,  insurers  doing  business
therein can be  assessed  (up to  prescribed  limits)  for  policyholder  losses
incurred by insolvent  companies.  The amount of any future  assessments  on the
Company under these laws cannot be reasonably  estimated.  Most of these laws do
provide,  however,  that an  assessment  may be excused or  deferred if it would
threaten an insurer's own financial strength.

Although  the  federal  government  generally  does not  directly  regulate  the
business of insurance,  federal initiatives often have an impact on the business
in a variety of ways. Federal legislation that removed barriers preventing banks
from engaging in the insurance  business or that changed the Federal  income tax
treatment  of  insurance  companies,  insurance  company  products,  or employee
benefit plans could significantly affect the insurance business.

On January 20, 1998, the Board of Directors of Manulife Financial announced that
it had  asked  the  management  of  Manulife  Financial  to  prepare  a plan for
conversion  from  a  mutual  life  insurance   company  to  an   investor-owned,
publicly-traded  stock company.  Any demutualization plan for Manulife Financial
is subject to the approval of its Board of Directors and policyholders,  as well
as regulatory approval.


Forward-Looking Information

Certain information included herein is forward-looking within the meaning of the
Private Securities Litigation Reform Act of 1995, including, but not limited to,
statements concerning anticipated operating results, financial resources, growth
in  existing  markets  and the  impact of the year  2000.  Such  forward-looking
information  involves important risks and uncertainties that could significantly
affect  actual  results and cause them to differ  materially  from  expectations
expressed  herein.  These  risks and  uncertainties  include  changes in general
economic  conditions,  the effect of regulatory,  tax and competitive changes in
the environment in which the Company  operates,  fluctuations in interest rates,
performance  of  financial   markets  and  the  Company's   ability  to  achieve
anticipated levels of earnings.

Item 2.  -  Properties

The Registrant owns no property.

Item 3.  -  Legal Proceedings

Nothing to report.


Item 4.  -  Submission of Matters to a Vote of Security Holders 

Nothing to report.

                                       4


<PAGE>   5


                                                                PART II

Item 5.  -  Market for Registrants Common Equity and Related Stockholder Matters

Since the Registrant is a wholly-owned  subsidiary of ManUSA,  which is the sole
record holder of the Registrant's  shares, there is no public trading market for
the Registrant's  common stock. The Registrant has declared no cash dividends on
its common stock at any time during the two most recent fiscal years.

Item 6.  -  Selected Financial Data 

<TABLE>
<CAPTION>
                                                             For the Years Ended December 31
                                     ----------------- --------------- --------------- --------------- ---------------
                                                 1998            1997            1996            1995            1994
                                                 ----            ----            ----            ----            ----
                                                       (in thousands)
<S>                                          <C>             <C>             <C>              <C>            <C>
Under Generally Accepted Accounting Principles:

Total Revenues                               $ 29,866        $ 56,226        $ 73,532         $62,174         $60,322

Net Loss                                          754           3,636           8,407           6,846           6,726

Total Assets                                1,363,810       1,166,611       1,062,603         854,814         654,968

Long Term Obligations                               -          41,500           8,500         167,390         159,019

Capital and Surplus                           203,197         106,769         116,630         110,520         101,839
</TABLE>

                                       5





<PAGE>   6


Item 7. -  Management's Discussion and Analysis of Financial Condition and
           Results of Operation

OVERVIEW


The following  analysis of the consolidated  results of operations and financial
condition of The  Manufacturers  Life Insurance  Company of America,  (hereafter
referred to as "ManAmerica" or the "Company") should be read in conjunction with
the  Consolidated  Financial  Statements  and the related Notes to  Consolidated
Financial Statements.


REVIEW OF CONSOLIDATED OPERATING RESULTS
<TABLE>
<CAPTION>

 ----------------------------------------------------------- ------------------- ------------------ ---------------
 Financial Summary (In `000's)                                        1998                1997               1996
 ----------------------------------------------------------- ------------------- ------------------ ---------------

<S>                                                                 <C>               <C>              <C>       
 Premiums                                                           $9,290            $  8,607         $   12,898
 Consideration paid on reinsurance terminated                     (40,975)                   -                  -
 Fee Income                                                         54,547              38,682             40,434
 Net Investment Income                                               6,128               8,275             19,651
 Other Revenues                                                      1,082                 544                668
 Realized Investment Gains (Losses)                                  (206)                 118              (119)
 ----------------------------------------------------------- ------------------- ------------------ ---------------
 TOTAL REVENUES                                                    $29,866             $56,226          $  73,532
 ----------------------------------------------------------- ------------------- ------------------ ---------------

 Policyholder Benefits and Claims                                $  16,541            $  6,733          $  14,473
 Reduction of reserves on reinsurance terminated                  (40,975)                   -                  -
 Operating Costs and Expenses, including Commissions                44,237              44,580             45,012
 Amortization of Deferred Acquisition Costs                          9,266               4,860             13,240
 ----------------------------------------------------------- ------------------- ------------------ ---------------
 Loss Before Income Taxes                                          (1,146)             (4,113)           (12,316)
 Income Tax Benefit                                                    392                 477              3,909
 Net Loss                                                            (754)             (3,636)            (8,407)
 ----------------------------------------------------------- ------------------- ------------------ ---------------
 General Account Assets                                            288,579             269,567            394,509
 Separate Account Assets                                         1,075,231             897,044            668,094
 ----------------------------------------------------------- ------------------- ------------------ ---------------
 TOTAL ASSETS                                                    1,363,810           1,166,611         $1,062,603
 ----------------------------------------------------------- ------------------- ------------------ ---------------
 General Account Liabilities                                        85,382             162,798        $   277,879
 Separate Account Liabilities                                    1,075,231             897,044            668,094
 ----------------------------------------------------------- ------------------- ------------------ ---------------
 CAPITAL AND SURPLUS                                              $203,197            $106,769           $116,630
 ----------------------------------------------------------- ------------------- ------------------ ---------------
</TABLE>



NET LOSS

The Company reported a consolidated  net loss in 1998 of $0.8 million,  compared
to the 1997 net loss of $3.6 million ($8.4  million net loss in 1996).  The main
contributors to these losses were as follows:


<TABLE>
<CAPTION>

  (In millions)                                                       1998              1997               1996
  ----------------------------------------------------------- ------------------ ------------------ ---------------
<S>                                                                   <C>              <C>               <C>    
  US Operations                                                       $1.5             $(0.8)            $   9.1
  Taiwan Operations                                                   (2.3)             (2.8)              (17.5)
  ----------------------------------------------------------- ------------------ ------------------ ---------------
  NET LOSS                                                           $(0.8)          $  (3.6)            $ ( 8.4)
  ----------------------------------------------------------- ------------------ ------------------ ---------------
</TABLE>


The net income from U.S.  operations  in 1998 of $1.5 million  compared to a net
loss in 1997 of $0.8  million  was  primarily a result of  increased  fee income
earned in 1998  compared to 1997.  The higher net 

                                       6

<PAGE>   7

loss in 1997 compared to 1996 was directly  attributable  to new business strain
on  dramatically  increased  variable  universal  life contract  sales for which
deposits increased 28% over 1996 levels.

The net loss from Taiwan operations  decreased to $2.3 million in 1998 from $2.8
million in 1997 (a $17.5  million net loss in 1996).  The lower net loss in 1998
was a result of higher  premiums and lower  operating costs which were partially
offset by higher  policyholder  benefits  due to  increased  business  and lower
surrenders.  The  increased  net loss in 1997  compared  to 1996 was a result of
significant  start-up costs  incurred in Taiwan,  particularly  associated  with
producer recruitment.  In 1997, as discussed earlier,  improvements were made in
the Taiwan  branch  operations to  rationalize  the  operations,  slow the sales
growth and related  production  costs, and to instead focus on strategic growth.
Lower  sales in 1998 and 1997  compared to 1996 have  significantly  reduced the
level of commissions and expenses incurred.

PREMIUMS

Premium  revenue  for 1998 was $9.3  million  compared  to $8.6  million in 1997
($12.9 million in 1996). Of the total,  premiums related to sales of traditional
life  insurance  contracts in Taiwan in 1998,  1997 and 1996 were $9.2  million,
$8.1 million and $12.2 million respectively. The increase in premiums for Taiwan
in 1998 compared to 1997 reflects the focused growth strategy adopted in 1997 as
discussed  previously.  The  decrease in  premiums  for Taiwan in 1997 from 1996
reflects  this same shift in strategy.  In 1998,  $0.1 million of premiums  were
reported for U.S. operations,  compared to $0.5 million in 1997 and $0.7 million
in 1996.  The U.S.  premiums  relate solely to a block of  Corporate-owned  life
insurance  business assumed from ManUSA for which the initial premium assumed of
$25.4 million was received in 1994,  with very little renewal  premium  received
thereafter.  On December 31, 1998, this agreement was terminated and the Company
transferred  premiums and reserves  totaling $41.0 million related to this block
of business to ManUSA.  This  transaction is reported as  consideration  paid on
reinsurance terminated of $41.0 million along with a corresponding  reduction of
reserves on reinsurance terminated.

Total  general  account and separate  account  deposits not included in premiums
above were as follows:

<TABLE>
<CAPTION>

  (In 000's)                                                          1998                1997             1996
  ----------------------------------------------------------- -------------------- --------------- -----------------
<S>                                                               <C>                  <C>              <C>     
  Variable Life Insurance                                         $207,401             $185,355         $144,438
  Variable Annuities                                                 2,640               11,598           36,130
  ----------------------------------------------------------- -------------------- --------------- -----------------
  TOTAL                                                           $210,041             $196,953         $180,568
  ----------------------------------------------------------- -------------------- --------------- -----------------
</TABLE>


The growth in variable life insurance  deposits  continued  while single premium
variable  annuity  premiums  continued to decrease in 1998 and 1997. The deposit
growth for variable life is consistent with the Company's  commitment to develop
variable core  "estate/business  planning products".  Sales of the COLI variable
universal  life product  launched in 1997  continued  to grow in 1998.  With the
merger of Manulife  Financial and North American Life Assurance Company in 1996,
the sale of variable  annuities in the Company was de-emphasized in October 1997
and all variable  annuity  sales are made  through an  affiliated  company,  The
Manufacturers Life Insurance Company of North America.

FEE INCOME

Fee income for 1998 was $54.5 million,  compared to $38.7 million in 1997 ($40.4
million in 1996).  The  increase  in fee income in 1998 is  attributable  to: i)
higher  cost of  insurance  charges  resulting  from a larger  inforce  block of
business in 1998 compared to 1997 and 1996; ii) increased mortality and  expense
risk  charges  earned  as a  percentage  of the value of invested  assets in the
separate  account  portfolios  which  have grown  significantly in 1998 and 1997
compared  to  1996  due  to continued strong investment  performance,  and; iii)
higher  surrender  charges  earned  due  mainly  to  a  larger  inforce block of
business.  Cost of  insurance  charges  for  1998,  1997  and  1996  were  $28.3
million,  $21.3  million  and $19.3 million, respectively; mortality and expense
risk charges earned on separate  account  assets  for 1998,  1997  and 1996 were
$8.5  million,  $7.0  million  and $5.2 million,  respectively,  and;  surrender
charges  for  1998,  1997  and  1996  were  $5.1  million, $3.2 million and $3.0
million,  respectively.   The  variable  universal  life  and  annuity  business
accounted for 81% of the fee income earned  by the 


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<PAGE>   8
Company in 1998  compared to 82% in 1997 and 85% in 1996.  The  remainder of
the fee income is primarily  derived through asset-based distribution fees which
have increased  to $7.6 million in 1998 compared to $5.1 million in 1997 ($1.6
million in 1996).

NET INVESTMENT INCOME

Net investment  income was $6.1 million in 1998 compared to $8.3 million in 1997
($19.7 million in 1996). Included in the 1997 investment income is approximately
$2.5 million of interest earned on the  Manufacturers  Life Mortgage  Securities
Corporation  ("MLMSC") bonds which were repaid on March 1, 1997. The decrease in
net investment income from 1996 to 1997 is due to the maturity of the MLMSC
bonds in March 1997 on which interest of approximately $13.2 million was
reported in 1996.


POLICYHOLDER BENEFITS AND CLAIMS

Policyholder  benefits  increased  to $16.5  million in 1998,  compared  to $6.7
million in 1997 ($14.5  million in 1996).  The  increase in 1998 is  primarily a
result of increased  reserves for the Taiwan  business due to new business and a
much slower run-off of reserves as lower surrenders were experienced compared to
1997.

OPERATING COSTS AND EXPENSES, INCLUDING COMMISSIONS

Operating costs and expenses, including commissions, were $85.5 million for 1998
compared  to $77.9  million for 1997 before  deferral  of  acquisition  expenses
($81.0 million for 1996). Net of deferred  acquisition  costs,  these costs were
$44.2  million for 1998  compared to $44.6  million for 1997 ($45.0  million for
1996). The increase in expenses before deferral of acquisition  expenses in 1998
is primarily  attributable to higher variable expenses  resulting from increased
sales of variable  insurance  products  compared to 1997.  A greater  portion of
these expenses have been deferred in 1998 compared to 1997 as they relate to the
acquisition of new business.

AMORTIZATION OF DEFERRED ACQUISITION COSTS

The DAC amortization  expense was $9.3 million for 1998 compared to $4.9 million
for 1997 ($13.2 million for 1996). In 1997,  there was significant DAC unlocking
due to  assumption  changes  in the DAC model and  re-pricing  of the  Company's
variable products.  This was partially offset by amounts written-off relating to
DAC in the Taiwan operations due to high reported lapses in 1997.

                                       8

<PAGE>   9



REVIEW OF CONSOLIDATED FINANCIAL CONDITION


The  Company had total  consolidated  assets of $1,364  million at December  31,
1998, an increase of $197 million or 16.9% from 1997. This change is principally
a result  of  separate  account  asset  growth  of $178  million  due to  strong
investment  performance of the underlying  investment funds,  continued consumer
preference for participation in the stock market through separate accounts,  and
the additional product offerings and investment options introduced in 1998.


INVESTMENTS

The following table outlines,  by type of investment,  the carrying value of the
general account investment portfolio of the Company:


<TABLE>
<CAPTION>

------------------------------------------------------------------ ----------------------- ----------------------
<S>                                                                                 <C>                     <C> 
Investment Type  (In `000's)                                                        1998                    1997
------------------------------------------------------------------ ----------------------- ----------------------
Fixed maturities                                                               $  49,254               $  67,893
Equities                                                                          20,524                  19,460
Policy Loans                                                                      19,320                  14,673
Short-Term Investments                                                               459                   2,130
 ----------------------------------------------------------------- ----------------------- ----------------------
 TOTAL INVESTMENTS                                                             $  89,557               $ 104,156
 ----------------------------------------------------------------- ----------------------- ----------------------
</TABLE>


General  account  investments  decreased by $14.6 million or 14% from 1997. This
change is due to a decrease in fixed maturities of $18.6 million, an increase in
policy loans of $4.6 million and a decrease in  short-term  investments  of $1.7
million.  The Company manages its investment  portfolio to provide  liquidity to
meet new business strain on increased variable life insurance sales.



FIXED MATURITIES

The Company's  fixed maturity bond portfolio of $49.3 million  represents 55% of
investments at the end of 1998, compared to 65% at the end of 1997.

As at December 31, 1998, 91% of the bond portfolio was rated "A" or higher,  and
100% was rated investment grade, "BBB" or higher. The corresponding  percentages
at the end of 1997 were 97.5% and 100%.


<TABLE>
<CAPTION>

---------------------------------------------------- --------------------------------- ------------------------------
Fixed maturities by Investment Grade
 (In `000's)                                                        1998                            1997
---------------------------------------------------- --------------------------------- ------------------------------
<S>                                                      <C>                 <C>           <C>              <C>  
AAA                                                      $29,927             60.8%         $52,496          77.3%
AA                                                           544              1.1%             516           1.0%
A                                                         14,459             29.3%          13,167          19.3%
BBB                                                        4,324              8.8%           1,714           2.5%
 --------------------------------------------------- ----------------- --------------- -------------- ---------------
 TOTAL FIXED MATURITIES                                  $49,254            100.0%         $67,893         100.0%
 --------------------------------------------------- ----------------- --------------- -------------- ---------------
</TABLE>

                                       9


<PAGE>   10


EQUITY SECURITIES

The Company's equity portfolio of $20.5 million represents 23% of investments at
the end of  1998,  compared  to 19% at the end of  1997.  The  equities  consist
entirely of investments in the portfolios of the MIT.

POLICY LOANS

Policy loans  represented  22% of investments at December 31, 1998,  compared to
12% in 1997.  Most  individual  life insurance  policies  provide the individual
policyholder with the right to obtain a policy loan from the Company. Such loans
are made in accordance with the terms of the respective policies, are carried at
the unpaid  balance,  and are fully secured by the cash  surrender  value of the
policies on which the respective loans are made.

IMPAIRED ASSETS

Allowances for losses on investments are established  when an asset or portfolio
of assets becomes impaired as a result of deterioration in credit quality to the
extent that there is no longer  assurance of timely  realization of the carrying
value of assets and related investment income. The carrying value of an impaired
asset  is  reduced  to the net  realizable  value  of the  asset  at the time of
recognition of impairment.

The Company had no provisions for impairments as at December 31, 1998 and 1997.

DEFERRED ACQUISITION COSTS (DAC)

DAC increased from $130.4 million at the end of 1997 to $163.5 million as at the
end of 1998.  This  increase  is due  mainly  to  deferrable  acquisition  costs
associated with the sale of the COLI product introduced in 1997.

POLICYHOLDER LIABILITIES

The following  table shows the  distribution  of  Policyholder  Liabilities  and
Separate Account Liabilities by line of business at December 31:


<TABLE>
<CAPTION>
Policyholder Liabilities  (In '000's)                                                   1998                  1997
------------------------------------------------------------------------ ------------------------ --------------------
<S>                                                                               <C>                    <C>
Life Insurance:
     Taiwan                                                                       $   18,383                  $13,291
     Reinsurance                                                                           -                   40,975
     Variable Life                                                                    42,447                   40,211
------------------------------------------------------------------------ ------------------------ --------------------
TOTAL                                                                             $   60,830               $   94,477
------------------------------------------------------------------------ ------------------------ --------------------

Separate Account Liabilities (In '000's)                                                1998                     1997
------------------------------------------------------------------------ ------------------------ --------------------

Variable Life Insurance                                                           $  811,959               $  603,732
Variable Annuities                                                                   263,272                  293,312
------------------------------------------------------------------------ ------------------------ --------------------
TOTAL                                                                             $1,075,231               $  897,044
------------------------------------------------------------------------ ------------------------ --------------------
</TABLE>

Separate account  liabilities are $1,075 million,  an increase of 20% over 1997.
This reflects the growing popularity of variable products in the marketplace and
the increase in existing  fund values due to the increase in the stock market in
1998 and sales of the COLI product.

The decrease in reinsurance reserves reflects the transfer of reserves to ManUSA
resulting from the  termination  of the  reinsurance  agreement  between the two
companies discussed previously.

Taiwan reserves increased in 1998 due to increased business and lower lapses and
surrenders.

                                       10
<PAGE>   11


LIQUIDITY AND CAPITAL REQUIREMENTS

The general account liabilities consist of traditional insurance whose liquidity
requirements do not fluctuate significantly from one year to the next. The
majority of the Company's cash flows arise from policyholder transactions
related to the separate accounts, and, as such, the assets and liabilities of
these products are exactly matched.

The Company maintains a prudent amount invested in cash and short term
investments. At the end of 1998, this amounted to $24 million or 21% of total
investments, including cash and cash equivalents, compared to $22 million in
1997 or 17.7%. In addition, the Company's liquidity is managed by maintaining an
easily marketable portfolio of fixed maturities. Because of the excess of
expense over income, which arises from the cost of new policy issues, the
continued success in generating sales will not only result in losses in the
results from operations, but will create a cash flow strain as well. The
Company's consolidated statements of cash flows indicate this in that operating
activities used cash of $69.3 million and $24.7 million in 1998 and 1997,
respectively, compared to $20.5 million in 1996. Included in the 1998 total for
cash used in operating activities is the consideration paid of $41.0 million on
the termination of the reinsurance agreement with ManUSA. As a result, the
Company looks to its parent, ManUSA, for the necessary capital to support its
operations. In 1996, a $15 million contribution of capital was made to the
Company by ManUSA to provide further liquidity. In 1998, the surplus debenture
for $8.5 million issued to the Company from ManUSA in 1995 was discharged and
recorded as a capital contribution. Also in 1998, the promissory note in the
amount of $33 million issued by the Company to ManUSA in 1997 was discharged and
the amount of $34.3 million ($33 million plus interest of $1.3 million) was
recorded as a capital contribution. In addition, in 1998, a further $51.7
million contribution of capital was made to the Company by ManUSA to offset the
payment of $41.0 million made by the Company to ManUSA on the termination of the
reinsurance agreement between the two companies discussed previously. The 
Company and Manulife Financial have entered into an agreement whereby Manulife 
Financial provides a claims paying guarantee to the Company's U.S. 
policyholders. This claims paying guarantee does not apply to the Company's 
separate account contract holders. 

The Company has no material commitments for capital expenditures.

CAPITAL REQUIREMENTS AND SOLVENCY PROTECTION

In order to enhance the regulation of insurer solvency, the NAIC enforces
minimum Risk Based Capital (RBC) requirements. The requirements are designed to
monitor capital adequacy and to raise the level of protection that statutory
surplus provides for policyholders. The RBC model law required that life
insurance companies report on a formula-based RBC standard which is calculated
by applying factors to various assets, premium and reserve items. The formula
takes into account risk characteristics of the life insurer, including asset
risk, insurance risk, interest risk and business risk. If an insurer's ratio
falls below certain thresholds, regulators will be authorized, and in some
circumstance required, to take regulatory action.

The Company's policy is to maintain capital and surplus balances well in excess
of the minimums required under government regulations in all jurisdictions in
which the Company does business.


                                       11







<PAGE>   12


RISK MANAGEMENT PRACTICES AND PROCEDURES


Risk management is a fundamental component in the Company's financial strength
and stability, and is essential to its continuing success. The Company is
committed to comprehensive risk management policies and procedures which measure
and control risk in all of its business activities and allow for periodic
reviews by internal and external auditors and regulators.

The key risks faced by the Company and how they are managed is explained in the
following sections.



INTEREST RATE RISK

Interest rate risk is the risk that the Company will incur economic losses due
to adverse changes in interest rates. The Company manages its interest rate risk
through an asset/liability management program. The Company has established a
target portfolio mix which takes into account the risk attributes of the
liabilities supported by the assets, expectations of market performance, and a
generally conservative investment philosophy. Preservation of capital and
maintenance of income flows are key objectives of this program.

Based upon the Company's investment strategy and its asset-liability management
process, management estimates that a 100 basis point immediate, parallel
increase in interest rates for the entire year of 1999 would decrease the fair
value of its fixed maturity securities by approximately $2.6 million. The
Company's liabilities are comprised primarily of separate account liabilities
for which contract holders bear the risk of fluctuations in interest rates.


EQUITY RISK

The Company earns asset based fees based on the asset levels invested in the
separate accounts. As a result, the Company is subject to equity risk and the
effect changes in equity market levels will have on the amounts invested in the
separate accounts. The Company estimates that the effect of a 10% decline in
equity fair values in force at December 31, 1998 would adversely affect the
Company's asset based fees by $2.0 million if applicable over the entire year of
1999.


CURRENCY RISK

The Company's policy of matching assets with related liabilities by currency
limits its exposure to foreign currency movements to a minimal level. The
currency exposure on surplus is proportional to the underlying liabilities, thus
insulating the Company's "surplus to liability" ratios from changes in foreign
currency exchange rates.

As a result of the Company's foreign currency policy, the impact of the current
foreign exchange crisis in Asia on the Company's earnings was minimal although
the Company recognizes that the economic value of the Taiwan branch was affected
by the economic and currency developments in these markets.

CREDIT RISK

Credit risk is the risk that a party to a financial instrument will fail to
fully honor its financial obligations to the Company. Senior management within
the Investments operations establishes policies and procedures for the
management of credit risk which limits concentration by issuer, connections,
rating sector and geographic region. Limits are placed on all personnel in terms
of ability to commit the Company to credit instruments. Credit and commitment
exposures are monitored using a rigorous reporting process and are subject to a
formal quarterly review.


                                       12

<PAGE>   13


CLAIMS RISK

The Company is always subject to the risk of change in the life expectancy of
the population. Claims trends are therefore monitored on an ongoing basis. The
Company uses both its own and industry experience to develop estimates of future
claims.

The management of ongoing claims risk for an insurer includes establishing
appropriate criteria to determine the insurability of applicants as well as
managing the exposure to large dollar claims. Underwriting standards have been
established to manage the insurability of applicants. Management performs
periodic reviews to ensure compliance with standards.

Exposure to large claims is managed by establishing policy retention limits.
Policies in excess of the limits are reinsured with MRC. Underwriting standards
and policy retention limits are reviewed on a periodic basis.

PRICING RISK

The process of pricing products includes the estimation of many factors
including future investment yields, mortality and morbidity experience,
expenses, rates of policy surrender, and taxes. Pricing risk is the risk that
actual experience in the future will not develop as estimated in pricing. Some
products are designed such that adjustments to premiums or benefits can be made
for experience variations, while for other products no such changes are
possible.

The Company manages pricing risks by setting standards and guidelines for
pricing. These standards and guidelines cover pricing methods and assumption
setting, profit margin objectives, required scenario analysis, and
documentation. They also address the areas of pricing software, approved pricing
personnel, and pricing approvals. These standards and guidelines ensure that an
appropriate level of risk is borne by the Company and that an appropriate return
is provided to the policyholders.

BUSINESS RISK

Business risk comprises operating risk as well as other risks. Operating risk is
the exposure to inadequate internal controls, including inadequate control of
risk management. Other risks include legal, political, competitive and
environmental risks. Business risks expose the Company to potential loss of
earnings.

The Company manages operating risks by establishing appropriate internal control
policies and procedures. The Company centrally manages business risk using risk
identification and compliance monitoring processes. Diversification of
businesses is an integral part of the Company's business risk management
strategy.

A controllership function has been established in each operation and is
responsible for day-to-day management of operating risk including compliance
with Company control policies.

The Company has coordinated its operational compliance departments under the
supervision of its corporate legal function. This structure ensures compliance
with all legal and regulatory requirements in all jurisdictions in which the
Company does business. All customer-related communications, product brochures
and selling tools, and procedures for compliance therewith, are subject to
review by the compliance function. Compliance is monitored on an ongoing basis.


                                       13





<PAGE>   14


IMPACT OF YEAR 2000

The Company makes extensive use of information systems in the operations of its
various businesses, including for the exchange of financial data and other
information with customers, suppliers and other counterparties. The Company also
uses software and information systems provided by third parties in its
accounting, business and investment systems.

The Year 2000 risk, as it is commonly known, is the result of computer programs
being written using two digits, rather than four, to define the applicable year.
Any of the Company's computer programs that have date-sensitive software may
recognize a date using "00" as the year 1900 rather than the Year 2000. This
could result in systems failures or miscalculations causing disruptions of
operations, including among other things, a temporary inability to process
transactions, send premium billing notices, make claims payments or engage in
other normal business activities.

The systems used by the Company have been assessed as part of a comprehensive
written plan conducted by The Manufacturers Life Insurance Company (collectively
with its subsidiaries "Manufacturers Life"), to ensure that computer systems and
processes of Manufacturers Life and its subsidiaries and affiliates, including
the Company, will continue to perform through the end of this century and in the
next. In 1996, in order to make Manufacturers Life's systems Year 2000
compliant, a program was instituted to modify or replace both Manufacturers
Life's information technology systems ("IT systems") and embedded technology
systems ("Non-IT systems"). The phases of this program include (i) an inventory
and assessment of all systems to determine which are critical, (ii) planning and
designing the required modifications and replacements, (iii) making these
modifications and replacements, (iv) testing modified or replaced systems, (v)
redeploying modified or replaced systems and (vi) final management review and
certification. For most IT and non-IT systems identified as critical,
certification has been completed for the Company. Of those systems classified as
critical, management believes that over 99% were Year 2000 compliant at the end
of 1998. Management continues to focus attention on the remaining 1% of critical
systems. Those that affect the Company are expected to be compliant by the end
of the second quarter in 1999. Management believes that the Company's
non-critical systems will be Year 2000 compliant by the end of the first quarter
1999.

In addition to efforts directed at Manufacturers Life's own systems,
Manufacturers Life is presently consulting vendors, customers, and other third
parties with which it deals in an effort to ensure that no material aspect of
Manufacturers Life's operations will be hindered by Year 2000 problems of these
third parties. This process includes providing third parties with questionnaires
regarding the state of their Year 2000 readiness and, where possible or where
appropriate, conducting further due diligence activities. Manufacturers Life
recognizes the importance of preparing for the change to the Year 2000 and, in
January 1999, commenced preparation of contingency plans, in the event that
Manufacturers Life's Year 2000 program has not fully resolved its Year 2000
issues. The Year 2000 Project Management Office for Manufacturers Life's U.S.
Division is coordinating the preparation of the Year 2000 contingency plan on
behalf of U.S. Division affiliates and subsidiaries. Contingency planning is
targeted for completion by mid-1999.

Management currently believes that, with modifications to existing software and
conversions to new software, the Year 2000 risk will not pose significant
operational problems for Manufacturers Life's computer systems. As part of the
Year 2000 program, critical systems were "time-shift" tested in the Year 2000
and beyond to confirm that they will continue to function properly before,
during and after the change to the Year 2000. However, there can be no assurance
that Manufacturers Life's Year 2000 program, including consulting third parties
and its contingency planning, will avoid any material adverse effect on
Manufacturers Life's operations, customer relations or financial condition.
Manufacturers Life estimates the total cost of its Year 2000 program will be
approximately $59 million, of which $49.5 million has been incurred through
December 31, 1998; however, there can be no assurance that the actual cost
incurred will not be materially higher than such estimate. Most costs will be
expensed as incurred; however, those costs attributed to the purchase of new
software and hardware will generally be 

                                       14


<PAGE>   15

capitalized. The total cost of the Year 2000 program is not expected to have a
material effect on Manufacturers Life's net operating income.


Item 7A.  Quantitative And Qualitative Disclosure About Market Risk

See item 7 "Risk Management Practices and Procedures".

Item 8.   Financial Statements And Supplementary Data

See Following Page.

                                       15

<PAGE>   16



                 CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
                        THE MANUFACTURERS LIFE INSURANCE
                               COMPANY OF AMERICA

                  YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
                       WITH REPORT OF INDEPENDENT AUDITORS

                                    CONTENTS



Report of Independent Auditors............................................. 17
Audited Consolidated Financial Statements.................................. 18
     Consolidated Balance Sheets........................................... 18
     Consolidated Statements of Income..................................... 19
     Consolidated Statements of Changes in Capital And Surplus............. 20
     Consolidated Statements of Cash Flows................................. 21
Notes to Consolidated Financial Statements................................. 22


                                       16


<PAGE>   17



                         REPORT OF INDEPENDENT AUDITORS


The Board of Directors
The Manufacturers Life Insurance Company of America


We have audited the accompanying consolidated balance sheets of The
Manufacturers Life Insurance Company of America as of December 31, 1998 and
1997, and the related consolidated statements of income, changes in capital and
surplus and cash flows for each of the three years in the period ended December
31, 1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of The Manufacturers
Life Insurance Company of America at December 31, 1998 and 1997, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended December 31, 1998 in conformity with generally
accepted accounting principles.



Philadelphia, Pennsylvania
March 15, 1999                                            Ernst & Young LLP


                                       17



<PAGE>   18



THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA

CONSOLIDATED BALANCE SHEETS


   As at December 31 ($  thousands)

<TABLE>
<CAPTION>
ASSETS                                                                            1998             1997
                                                                              -----------      -----------
<S>                                                                           <C>              <C>        
INVESTMENTS:
Securities available-for-sale, at fair value: (note 3)
   Fixed maturity (amortized cost: 1998 $45,248; 1997 $66,565) ..........     $    49,254      $    67,893
   Equity (cost: 1998 $ 19,219;  1997 $20,153) ..........................          20,524           19,460
Short-term investments ..................................................             459            2,130
Policy loans ............................................................          19,320           14,673
                                                                              -----------      -----------
TOTAL INVESTMENTS .......................................................     $    89,557      $   104,156
                                                                              -----------      -----------
Cash and cash equivalents ...............................................     $    23,789      $    19,882
Deferred acquisition costs (note 5) .....................................         163,506          130,355
Income taxes recoverable ................................................           2,665            5,679
Other assets ............................................................           9,062            9,495
Separate account assets .................................................       1,075,231          897,044
                                                                              -----------      -----------
TOTAL ASSETS ............................................................     $ 1,363,810      $ 1,166,611
                                                                              ===========      ===========


LIABILITIES, CAPITAL AND SURPLUS                                                  1998             1997
                                                                              -----------      -----------
LIABILITIES:
Policyholder liabilities and accruals ...................................     $    60,830      $    94,477
Notes payable (note 7) ..................................................            --             41,500
Due to affiliates .......................................................           5,133           13,943
Deferred income taxes (note 6) ..........................................             763            1,174
Other liabilities .......................................................          18,656           11,704
Separate account liabilities ............................................       1,075,231          897,044
                                                                              -----------      -----------
TOTAL LIABILITIES .......................................................     $ 1,160,613      $ 1,059,842
                                                                              -----------      -----------
CAPITAL AND SURPLUS:
Common shares (note 8) ..................................................     $     4,502      $     4,502
Preferred shares (note 8) ...............................................          10,500           10,500
Contributed surplus .....................................................         193,096           98,569
Retained earnings (deficit) .............................................          (2,664)          (1,910)
Accumulated other comprehensive income (loss) ...........................          (2,237)          (4,892)
                                                                              -----------      -----------
TOTAL CAPITAL AND SURPLUS ...............................................     $   203,197      $   106,769
                                                                              -----------      -----------
TOTAL LIABILITIES, CAPITAL AND SURPLUS ..................................     $ 1,363,810      $ 1,166,611
                                                                              ===========      ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                       18







<PAGE>   19



THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA

CONSOLIDATED STATEMENTS OF INCOME


<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
($ thousands)                                                                     1998          1997           1996
                                                                               --------      --------      --------
<S>                                                                            <C>           <C>           <C>     
REVENUE:
     Premiums ............................................................     $  9,290      $  8,607      $ 12,898
     Consideration paid on reinsurance terminated (note 10) ..............      (40,975)         --            --
     Fee income ..........................................................       54,547        38,682        40,434
     Net investment income (note 3) ......................................        6,128         8,275        19,651
     Realized investment gains (losses) ..................................         (206)          118          (119)
     Other ...............................................................        1,082           544           668
                                                                               --------      --------      --------
TOTAL REVENUE ............................................................     $ 29,866      $ 56,226      $ 73,532
                                                                               --------      --------      --------

BENEFITS AND EXPENSES:
     Policyholder benefits and claims ....................................     $ 16,541      $  6,733      $ 14,473
     Reduction of reserves on reinsurance terminated (note 10) ...........      (40,975)         --            --
     Operating costs and expenses ........................................       41,676        41,742        34,581
     Commissions .........................................................        2,561         2,838        10,431
     Amortization of deferred acquisition costs (note 5) .................        9,266         4,860        13,240
     Interest expense ....................................................        1,722         2,750        12,251
     Policyholder dividends ..............................................          221         1,416           872
                                                                               --------      --------      --------
TOTAL BENEFITS AND EXPENSES ..............................................       31,012        60,339        85,848
                                                                               --------      --------      --------
LOSS BEFORE INCOME TAXES .................................................       (1,146)       (4,113)      (12,316)
                                                                               --------      --------      --------
INCOME TAX BENEFIT (NOTE 6) ..............................................          392           477         3,909
                                                                               --------      --------      --------
NET LOSS .................................................................     $   (754)     $ (3,636)     $ (8,407)
                                                                               --------      --------      --------
</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.



                                       19

<PAGE>   20
\


THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA

CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS



<TABLE>
<CAPTION>
                                                                                      ACCUMULATED
                                                                        RETAINED         OTHER           TOTAL
  FOR THE YEARS ENDED DECEMBER 31          CAPITAL     CONTRIBUTED      EARNINGS     COMPREHENSIVE    CAPITAL AND
  ($ thousands)                             STOCK        SURPLUS       (DEFICIT)     INCOME (LOSS)      SURPLUS
                                           -------     -----------     ----------    -------------    -----------
<S>                                        <C>           <C>            <C>             <C>            <C>      
Balance at January 1, 1996 .........       $15,002       $ 83,569       $ 10,133        $ 1,816        $ 110,520
Issuance of shares .................          --           15,000           --             --             15,000
Comprehensive income (loss) (note 2)          --             --           (8,407)          (483)          (8,890)
                                           -------       --------       --------        -------        ---------
BALANCE, DECEMBER 31, 1996 .........       $15,002       $ 98,569       $  1,726        $ 1,333        $ 116,630
Comprehensive income (loss) (note 2)          --             --           (3,636)        (6,225)          (9,861)
                                           -------       --------       --------        -------        ---------
BALANCE, DECEMBER 31, 1997 .........       $15,002       $ 98,569       $ (1,910)       $(4,892)       $ 106,769
Capital contribution (note 8) ......          --           94,527           --             --             94,527
Comprehensive income (loss) (note 2)          --             --             (754)         2,655            1,901
                                           -------       --------       --------        -------        ---------
BALANCE, DECEMBER 31, 1998 .........       $15,002       $193,096       $ (2,664)       $(2,237)       $ 203,197
                                           =======       ========       ========        =======        =========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                       20


<PAGE>   21



THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA

CONSOLIDATED STATEMENTS OF CASH FLOWS




<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
($ thousands)                                                                     1998           1997          1996
                                                                                --------      ---------      ---------
<S>                                                                             <C>           <C>            <C>       
OPERATING ACTIVITIES:
Net Loss ..................................................................     $   (754)     $  (3,636)     $  (8,407)
Adjustments to reconcile net loss to net cash used in operating
activities:
     Additions (deductions)  to policy liabilities and accruals ...........      (36,217)        (2,147)         3,287
     Deferred acquisition costs ...........................................      (43,065)       (33,544)       (36,024)
     Amortization of deferred acquisition costs ...........................        9,266          4,860         13,240
     Realized (gains) losses on investments ...............................          206           (118)           119
     Decreases (increases) to deferred  income taxes ......................       (1,796)         2,730            777
     Other ................................................................        3,067          7,144          6,540
                                                                                --------      ---------      ---------
Net cash used in operating activities .....................................     $(69,293)     $ (24,711)     $ (20,468)
                                                                                --------      ---------      ---------
INVESTING ACTIVITIES:
Fixed maturity securities sold ............................................     $ 27,852      $  73,772      $ 120,234
Fixed maturity securities purchased .......................................       (6,429)       (89,763)      (108,401)
Equity securities sold ....................................................        8,555         10,586         25,505
Equity securities purchased ...............................................       (8,082)       (11,289)       (22,203)
Mortgage loans repaid .....................................................         --              514          6,669
Net change in short-term investments ......................................        1,671          4,558         (2,992)
Net policy loans advanced .................................................       (4,647)        (4,851)        (2,867)
Guaranteed annuity contracts ..............................................         --          171,691        (16,356)
                                                                                --------      ---------      ---------
Cash provided by investing activities .....................................     $ 18,920      $ 155,218      $   2,581
                                                                                --------      ---------      ---------
FINANCING ACTIVITIES:
Receipts from variable life and annuity policies
     credited to policyholder account balances ............................     $  7,981      $   7,582      $   5,493
Withdrawals of policyholder account balances on
     variable life and annuity policies ...................................       (5,410)        (3,252)        (2,994)
Bonds payable repaid ......................................................         --         (158,760)          --
Issuance of shares ........................................................         --             --           15,000
Issuance of promissory note ...............................................         --           33,000           --
Capital Contribution ......................................................       51,709           --             --
                                                                                --------      ---------      ---------
Cash provided by (used in) financing activities ...........................     $ 54,280      $(121,430)     $  17,499
                                                                                --------      ---------      ---------
CASH AND CASH EQUIVALENTS:
Increase (decrease) during the year .......................................        3,907          9,077         (3,380)
Balance, beginning of year ................................................       19,882         10,805         14,185
                                                                                --------      ---------      ---------
BALANCE, END OF YEAR ......................................................     $ 23,789      $  19,882      $  10,805
                                                                                --------      ---------      ---------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                       21


<PAGE>   22



               THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1998
                            (IN THOUSANDS OF DOLLARS)


1.       ORGANIZATION

         The Manufacturers Life Insurance Company of America (the "Company") is
         a wholly-owned subsidiary of The Manufacturers Life Insurance Company
         (U.S.A.) ("ManUSA"), which is in turn an indirectly wholly-owned
         subsidiary of The Manufacturers Life Insurance Company ("Manulife
         Financial"), a Canadian-based mutual life insurance company. The
         Company markets variable annuity and variable life products in the
         United States and traditional insurance products in Taiwan.

         On December 31, 1996, ManUSA transferred to the Company all of the
         common and preferred shares of Manulife Holding Corporation ("Holdco"),
         an investment holding company. The Company then transferred all the
         common and preferred shares of Manufacturers Adviser Corporation
         ("MAC") to Holdco for two shares of $1 common stock of Holdco. Holdco
         has primarily three wholly-owned subsidiaries, ManEquity Inc., a
         registered broker/dealer, MAC, an investment fund management company,
         and Manulife Capital Corporation ("MCC"), an investment holding
         company.

         In October 1997, the Manufacturers Life Mortgage Securities Corporation
         ("MLMSC"), a subsidiary of Holdco, was absorbed into Holdco subsequent
         to the maturity and repayment of the mortgage-backed US dollar bonds.
         All assets and liabilities of MLMSC were transferred to Holdco at their
         respective book values.

         These transfers have been accounted for using the pooling-of-interests
         method of accounting. Under this method, the assets, liabilities,
         capital and surplus, revenues and expenses of each separate entity are
         combined retroactively at their historical carrying values to form the
         financial statements of the Company for all periods presented to give
         effect to the reorganization as if the structure in place at December
         31, 1996 had been in place as of the earliest period presented in these
         consolidated financial statements. The accounts of all subsidiary
         companies are therefore combined and all significant intercompany
         balances and transactions are eliminated on combination. In addition,
         the capital and surplus of the Company has been restated retroactively
         to reflect the capital structure in place at December 31, 1996.


                                       22

<PAGE>   23


         The revenues and net income reported by the separate entities and the
         combined amounts presented in the accompanying consolidated financial
         statements are as follows:


<TABLE>
<CAPTION>
         FOR THE YEAR ENDED DECEMBER 31
         ($ thousands)                                             1996
                                                                 --------
<S>                                                              <C>     
         Revenue:
           ManAmerica ..................................         $ 54,404
           Holdco ......................................           15,543
           MAC .........................................            3,585
                                                                 --------
         TOTAL REVENUE .................................         $ 73,532
                                                                 --------
         Net Income (loss):
           ManAmerica ..................................         $ (8,676)
           Holdco ......................................             (670)
           MAC .........................................              939
                                                                 --------
         TOTAL NET LOSS ................................         $ (8,407)
                                                                 --------
</TABLE>


2.       SIGNIFICANT ACCOUNTING POLICIES

      A) BASIS OF PRESENTATION

         The accompanying consolidated financial statements of the Company have
         been prepared in conformity with generally accepted accounting
         principles ("GAAP").

         The preparation of financial statements in conformity with GAAP
         requires management to make estimates and assumptions that affect the
         amounts reported in the financial statements and accompanying notes.
         Actual results could differ from reported results using those
         estimates.

         Certain reclassifications have been made to 1997 and 1996 financial
         information to conform to the 1998 presentation.

      B) RECENT ACCOUNTING STANDARDS

      i) During 1998, the Company adopted Statement of Financial Accounting
         Standards (SFAS) No. 130, "Reporting Comprehensive Income". SFAS No.
         130 establishes standards for reporting and displaying comprehensive
         income and its components in a full set of general-purpose annual
         financial statements. Comprehensive income includes all changes in
         shareholder's equity during a period except those resulting from
         investments by and distributions to shareholders. The adoption of SFAS
         No. 130 resulted in revised and additional disclosures but had no
         effect on the financial position, results of operations, or liquidity
         of the Company.

                                       23


<PAGE>   24


         Total comprehensive income was as follows:


<TABLE>
<CAPTION>
            FOR THE YEARS ENDED DECEMBER 31
            ($ thousands)                                                      1998          1997         1996
                                                                             -------       -------       -------
         <S>                                                                 <C>           <C>           <C>     
         NET INCOME (LOSS) ............................................      $  (754)      $(3,636)      $(8,407)
                                                                             -------       -------       -------
         OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
           Unrealized holding gains (losses) arising during the period         2,435        (1,030)         (560)
           Foreign currency translation ...............................           86        (5,272)         --
            Reclassification  adjustment  for realized  gains (losses)
         included in net income .......................................         (134)           77           (77)
                                                                             -------       -------       -------
         Other comprehensive income (loss) ............................        2,655        (6,225)         (483)
                                                                             -------       -------       -------
         COMPREHENSIVE INCOME (LOSS) ..................................      $ 1,901       $(9,861)      $(8,890)
                                                                             -------       -------       -------
</TABLE>

         Other comprehensive income (loss) is reported net of tax expense
         (benefit) of $1,430, $(513), and $260 for 1998, 1997, and 1996,
         respectively.

          Accumulated other comprehensive income is comprised of the following:


<TABLE>
<CAPTION>
           AS AT DECEMBER 31
           ($ thousands)                                                                 1998          1997
                                                                                       -------       -------
         <S>                                                                           <C>           <C>
         UNREALIZED GAINS (LOSSES):
              Beginning balance .................................................      $   380       $ 1,333
              Current period change .............................................        2,569          (953)
                                                                                       -------       -------
              Ending balance ....................................................      $ 2,949       $   380
                                                                                       -------       -------
         FOREIGN CURRENCY:
              Beginning balance .................................................      $(5,272)      $  --
              Current period change .............................................           86        (5,272)
                                                                                       -------       -------
              Ending balance ....................................................      $(5,186)      $(5,272)
                                                                                       -------       -------
         ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ..........................      $(2,237)      $(4,892)
                                                                                       -------       -------
</TABLE>


      ii) During 1998, the Company adopted SFAS No. 131, "Disclosures about
          Segments of an Enterprise and Related Information". SFAS No. 131
          establishes standards for the disclosure of information about the
          Company's operating segments, including disclosures about products and
          services, geographic areas, and major customers. The adoption of SFAS
          No. 131 did not affect results of operations or financial position,
          nor did it affect the manner in which the Company defines its
          operating segments. The Company reports two business segments:
          Traditional Life Insurance sold in Taiwan and Variable Life and
          Annuities sold in the U.S. Refer to Note 12 for additional segment
          information.

     C)  INVESTMENTS

         The Company classifies all of its fixed maturity and equity securities
         as available-for-sale and records these securities at fair value.
         Realized gains and losses on sales of securities classified as
         available-for-sale are recognized in net income using the specific
         identification method. Changes in the fair value of securities
         available-for-sale are reflected directly in accumulated other
         comprehensive income after adjustments for deferred taxes and deferred
         acquisition costs. Discounts and premiums on investments are amortized
         using the effective interest method.

         Policy loans are reported at aggregate unpaid balances which
         approximate fair value.

                                       24
<PAGE>   25

         Short-term investments include investments with maturities of less than
         one year at the date of acquisition.

     D)  CASH EQUIVALENTS

         The Company considers all highly liquid debt instruments purchased with
         an original maturity date of three months or less to be cash
         equivalents. Cash equivalents are stated at cost plus accrued interest,
         which approximates fair value.

     E)  DEFERRED ACQUISITION COSTS (DAC)

         Commissions and other expenses which vary with and are primarily
         related to the production of new business are deferred to the extent
         recoverable and included as an asset. DAC associated with variable
         annuity and variable life insurance contracts is charged to expense in
         relation to the estimated gross profits of those contracts. The
         amortization is adjusted retrospectively when estimates of current or
         future gross profits are revised. DAC associated with traditional life
         insurance policies is charged to expense over the premium paying period
         of the related policies. DAC is adjusted for the impact on estimated
         future gross profits assuming the unrealized gains or losses on
         securities had been realized at year-end. The impact of any such
         adjustments is included in net unrealized gains (losses) in accumulated
         other comprehensive income. DAC is reviewed annually to determine
         recoverability from future income and, if not recoverable, it is
         immediately expensed.

     F)  POLICYHOLDER LIABILITIES

         For variable annuity and variable life contracts, reserves equal the
         policyholder account value. Account values are increased for deposits
         received and interest credited and are reduced by withdrawals,
         mortality charges and administrative expenses charged to the
         policyholders. Policy charges which compensate the Company for future
         services are deferred and recognized in income over the period earned,
         using the same assumptions used to amortize DAC.

         Policyholder liabilities for traditional life insurance policies sold
         in Taiwan are computed using the net level premium method and are based
         upon estimates as to future mortality, persistency, maintenance expense
         and interest rate yields that were established in the year of issue.

     G)  SEPARATE ACCOUNTS

         Separate account assets and liabilities represent funds that are
         separately administered, principally for variable annuity and variable
         life contracts, and for which the contract holder, rather than the
         Company, bears the investment risk Separate account assets are recorded
         at market value. Operations of the separate accounts are not included
         in the accompanying financial statements.

     H)  REVENUE RECOGNITION

         Fee income from variable annuity and variable life insurance policies
         consists of policy charges for the cost of insurance, expenses and
         surrender charges that have been assessed against the policy account
         balances. Policy charges that are designed to compensate the company
         for future services are deferred and recognized in income over the
         period benefited, using the same assumptions used to amortize DAC.
         Premiums on long-duration life insurance contracts are recognized as
         revenue when due. Investment income is recorded when due.

                                       25
<PAGE>   26

     I)  EXPENSES

         Expenses for variable annuity and variable life insurance policies
         include interest credited to policy account balances and benefit claims
         incurred during the period in excess of policy account balances.

     J)  REINSURANCE

         The Company is routinely involved in reinsurance transactions in order
         to minimize exposure to large risks. Life reinsurance is accomplished
         through various plans including yearly renewable term, co-insurance and
         modified co-insurance. Reinsurance premiums, policy charges for cost of
         insurance and claims are accounted for on a basis consistent with that
         used in accounting for the original policies issued and the terms of
         the reinsurance contracts. Premiums, fees and claims are reported net
         of reinsured amounts. Amounts paid with respect to ceded reinsurance
         contracts are reported as reinsurance receivables in other assets.

     K)  FOREIGN EXCHANGE

         The Company's Taiwanese branch balance sheet and statement of income
         are translated at the current exchange and average exchange rates for
         the year respectively. The resultant translation adjustments are
         included in accumulated other comprehensive income.

     L)  INCOME TAX

         Income taxes have been provided for in accordance with SFAS No. 109
         "Accounting for Income Taxes." The Company joins ManUSA, Manulife
         Reinsurance Corporation ("MRC") and Manulife Reinsurance Limited
         ("MRL") in filing a U.S. consolidated income tax return as a life
         insurance group under provisions of the Internal Revenue Code. In
         accordance with an income tax sharing agreement, the Company's income
         tax provision (or benefit) is computed as if the Company filed a
         separate income tax return. Tax benefits from operating losses are
         provided at the U.S. statutory rate plus any tax credits attributable
         to the Company, provided the consolidated group utilizes such benefits
         currently. Deferred income taxes result from temporary differences
         between the tax basis of assets and liabilities and their recorded
         amounts for financial reporting purposes. Income taxes recoverable
         represents amounts due from ManUSA in connection with the consolidated
         return.

                                       26


<PAGE>   27


3.       INVESTMENTS AND INVESTMENT INCOME

     A)  FIXED MATURITY AND EQUITY SECURITIES

         At December 31, 1998, all fixed maturity and equity securities have
         been classified as available-for-sale and reported at fair value. The
         amortized cost and fair value is summarized as follows:

<TABLE>
<CAPTION>
                                                                 GROSS               GROSS
                                          AMORTIZED COST    UNREALIZED GAINS   UNREALIZED LOSSES       FAIR VALUE
           AS AT DECEMBER 31,           -----------------   ----------------  ------------------    -----------------
          ($ thousands)                    1998      1997     1998     1997      1998      1997       1998      1997
                                        -------   -------   ------   ------   -------    -------    -------   -------
         <S>                            <C>       <C>       <C>      <C>      <C>        <C>        <C>       <C>    
         FIXED MATURITY SECURITIES:
         U.S. government ............   $27,349   $51,694   $2,578   $  937   $  --      $  (135)   $29,927   $52,496
         Foreign governments ........     9,353     6,922      709      203      --          (14)    10,062     7,111
         Corporate ..................     8,546     7,949      719      415      --          (78)     9,265     8,286
                                        -------   -------   ------   ------   -------    -------    -------   -------
         Total fixed maturity 
         securities..................   $45,248   $66,565   $4,006   $1,555   $  --      $  (227)   $49,254   $67,893

         Equity securities ..........   $19,219   $20,153   $3,217   $1,496   $(1,912)   $(2,189)   $20,524   $19,460
                                        -------   -------   ------   ------   -------    -------    -------   -------
</TABLE>

         Proceeds from sales of fixed maturity securities during 1998 were
         $27,852 (1997 $73,772; 1996 $120,234). Gross gains of $362 and gross
         losses of $107 were realized on those sales (1997 $955 and $837; 1996
         $1,858 and $1,837 respectively).

         Proceeds from sale of equity securities during 1998 were $8,555 (1997
         $10,586; 1996 $25,505). Gross gains of $16 and gross losses of $477
         were realized on those sales (1997 $NIL and $NIL; 1996 $NIL and $140
         respectively).

         The contractual maturities of fixed maturity securities at December 31,
         1998 are shown below. Expected maturities may differ from contractual
         maturities because borrowers may have the right to call or prepay
         obligations with or without prepayment penalties. Corporate
         requirements and investment strategies may result in the sale of
         investments before maturity.



<TABLE>
<CAPTION>
           ($ thousands)                                                     AMORTIZED COST    FAIR VALUE
                                                                             --------------    ----------
              <S>                                                                <C>             <C>    
         Fixed maturity securities
              One year or less .........................................         $ 1,174         $ 1,179
              Greater than 1; up to 5 years ............................           7,792           8,081
              Greater than 5; up to 10 years...........................           24,422          26,395
              Due after 10 years .......................................          11,860          13,599
                                                                                 -------         -------
         TOTAL FIXED MATURITY SECURITIES ...............................         $45,248         $49,254
                                                                                 =======         =======
</TABLE>

                                       27


<PAGE>   28


     B)  INVESTMENT INCOME

         Income by type of investment was as follows:

<TABLE>
<CAPTION>
           FOR THE YEARS ENDED DECEMBER 31
           ($ thousands)                                                             1998               1997              1996
                                                                                    ------             ------            -------

         <S>                                                                        <C>                <C>               <C>    
         Fixed maturity securities .....................................            $4,675             $4,545            $ 4,447
         Equity securities .............................................               227                331                671
         Guaranteed annuity contracts ..................................              --                2,796             13,196
         Other investments .............................................             1,485                772              1,697
                                                                                    ------             ------            -------
         Gross investment income .......................................             6,387              8,444             20,011
                                                                                    ------             ------            -------
         Investment expenses ...........................................               259                169                360
                                                                                    ------             ------            -------
         NET INVESTMENT INCOME .........................................            $6,128             $8,275            $19,651
                                                                                    ======             ======            =======
</TABLE>

4.       GUARANTEED ANNUITY CONTRACTS AND BONDS PAYABLE

         The Company's wholly-owned subsidiary, Manufacturers Life Mortgage
         Securities Corporation, has historically invested amounts received as
         repayments of mortgage loans in annuities issued by ManUSA. These
         annuities were collateral for the 8 1/4 % mortgage-backed bonds
         payable. On March 1, 1997 the annuities matured and the proceeds were
         used to repay the bonds payable.

         In October 1997, MLMSC was absorbed into Manulife Holding Corporation.

5.      DEFERRED ACQUISITION COSTS

         The components of the change in DAC were as follows:

<TABLE>
<CAPTION>
         FOR THE YEARS ENDED DECEMBER 31
           ($ thousands)                                                           1998               1997               1996
                                                                                 ---------          ---------          ---------
         <S>                                                                     <C>                <C>                <C>      
         Balance at January 1, .........................................         $ 130,355          $ 102,610          $  78,829
         Capitalization ................................................            43,065             33,544             36,024
         Accretion of interest .........................................            11,417              9,357              6,344
         Amortization ..................................................           (20,683)           (14,217)           (19,583)
         Effect of net unrealized gains (losses)
              on securities available for sale .........................              (784)             1,268                996
         Currency ......................................................               136             (2,207)                --
                                                                                 ---------          ---------          ---------
         BALANCE AT DECEMBER 31 ........................................         $ 163,506          $ 130,355          $ 102,610
                                                                                 =========          =========          =========
</TABLE>


6.       INCOME TAXES

        Components of income tax expense (benefit) were as follows:

<TABLE>
<CAPTION>
         FOR THE YEARS ENDED DECEMBER 31
           ($ thousands)                                                            1998               1997               1996
                                                                                   -------            -------            -------
         <S>                                                                       <C>                <C>                <C>     
         Current expense (benefit) .....................................           $ 1,404            $(3,207)           $(4,686)
         Deferred expense (benefit) ....................................            (1,796)             2,730                777
                                                                                   -------            -------            -------
         TOTAL EXPENSE (BENEFIT) .......................................           $  (392)           $  (477)           $(3,909)
                                                                                   =======            =======            =======
</TABLE>

                                       28




<PAGE>   29


         The Company's deferred income tax liability, which results from tax
         effecting the differences between financial statement values and tax
         values of assets and liabilities at each balance sheet date, relates to
         the following:

<TABLE>
<CAPTION>
           AS AT DECEMBER 31
           ($ thousands)                                                                    1998              1997
                                                                                         --------          --------
         <S>                                                                                <C>               <C>
         DEFERRED TAX ASSETS:
              Differences in computing policy reserves ..........................         $ 38,888          $ 34,291
              Policyholder dividends payable ....................................               --               240
              Investments .......................................................              708               793
              Other deferred tax assets .........................................              333                --
                                                                                          --------          --------
         Deferred tax assets ....................................................         $ 39,929          $ 35,324
                                                                                          --------          --------
         DEFERRED TAX LIABILITIES:
              Deferred acquisition costs ........................................         $ 38,778          $ 30,682
              Investments .......................................................            1,859               166
              Policyholder dividends payable ....................................               55                --
              Other deferred tax liabilities ....................................               --             5,650
                                                                                          --------          --------
         Deferred tax liabilities ...............................................         $ 40,692          $ 36,498
                                                                                          --------          --------
         NET DEFERRED TAX LIABILITIES ...........................................         $   (763)         $ (1,174)
                                                                                          ========          ========
</TABLE>


         At December 31, 1998, the consolidated group has utilized all available
         operating loss carryforwards and net capital loss carryforwards. The
         losses of the Company, MRC and ManUSA may be used to offset the
         ordinary and capital gain income of MRL. However, losses of MRL may not
         be used to offset the income of the other members of the consolidated
         group.

7.       NOTES PAYABLE

         a)       On June 15, 1998, the outstanding promissory note in the
                  amount of $33,000 plus interest at 6.95% issued on December 5,
                  1997 payable to ManUSA was discharged and the amount due of
                  $34,318 ($33,000 plus interest of $1,318) was recorded as a
                  capital contribution.

         b)       On December 31, 1998, the surplus debenture in the amount of
                  $8,500 plus interest at 6.7% issued on December 31, 1995 to
                  ManUSA was discharged and the amount due of $8,500 was
                  recorded as a capital contribution.

8.   CAPITAL AND SURPLUS

         The Company has two classes of capital stock, as follows:

<TABLE>
<CAPTION>
            AS AT DECEMBER 31:
            ($ thousands, except per share amounts)                   1998            1997
                                                                    -------         -------
         <S>                                                        <C>             <C>    
         AUTHORIZED:
             5,000,000 Common shares, Par value $1
             5,000,000 Preferred shares, Par value $100
         ISSUED AND OUTSTANDING:
             4,501,861 Common shares ......................         $ 4,502         $ 4,502
             105,000 Preferred shares .....................          10,500          10,500
                                                                    -------         -------
         TOTAL ............................................         $15,002         $15,002
                                                                    =======         =======
</TABLE>

                                       29

<PAGE>   30

         During 1996, the Company issued two common shares to its Parent Company
         in return for a capital contribution of $15,000.

         In 1998, the outstanding promissory note payable referred to in note
         7(a) above, totaling $34,318, was discharged and recorded as a capital
         contribution.

         On December 31, 1998, the Company issued one common share to ManUSA in
         exchange for a capital contribution of $60,209. Included in this
         capital contribution was the discharge of the surplus debenture in the
         amount of $8,500 referred to in note 7(b) above.

         The Company is subject to statutory limitations on the payment of
         dividends to its Parent. Under Michigan Insurance Law, the payment of
         dividends to shareholders is restricted to the surplus earnings of the
         Company, unless prior approval is obtained from the Michigan Insurance
         Bureau.

         The aggregate statutory capital and surplus of the Company at December
         31, 1998 was $121,799 (1997 $56,598). The aggregate statutory net loss
         of the Company for the year ended 1998 was $23,491 (1997 $2,550; 1996
         $5,961). State regulatory authorities prescribe statutory accounting
         practices that differ in certain respects from generally accepted
         accounting principles followed by stock life insurance companies. The
         significant differences relate to investments, deferred acquisition
         costs, deferred income taxes, non-admitted asset balances and reserve
         calculation assumptions.

9.   FAIR VALUE OF FINANCIAL INSTRUMENTS

         The carrying values and the estimated fair values of certain of the
         Company's financial instruments at December 31, 1998 were as follows:

<TABLE>
<CAPTION>
                                                                                ESTIMATED
         ($ thousands)                                        CARRYING VALUE   FAIR VALUE
                                                              --------------   ----------
         <S>                                                     <C>             <C>    
         ASSETS:
             Fixed maturity and equity securities ......         $69,778         $69,778
             Short-term investments ....................             459             459
             Policy loans ..............................          19,320          19,320
             Cash and cash equivalents .................          23,789          23,789
                                                                 -------         -------
</TABLE>

         The following methods and assumptions were used to estimate the fair
         values of the above financial instruments:

         FIXED MATURITY AND EQUITY SECURITIES: Fair values of fixed maturity and
         equity securities were based on quoted market prices, where available.
         Fair values were estimated using values obtained from independent
         pricing services.

         SHORT-TERM INVESTMENTS AND CASH AND CASH EQUIVALENTS: Carrying values
         approximate fair values.

         POLICY LOANS:   Carrying values approximate fair values.


                                       30
<PAGE>   31
10.      RELATED  PARTY TRANSACTIONS

         The Company has formal service  agreements with Manulife  Financial and
         ManUSA which can be  terminated  by any party upon two months'  notice.
         Under the agreements,  the Company will pay direct  operating  expenses
         incurred  each year by  Manulife  Financial  and ManUSA on its  behalf.
         Services  provided  under  the  agreement  include  legal,   actuarial,
         investment,  data processing and certain other administrative services.
         Costs incurred under these agreements were $34,070, $32,733 and $29,384
         in 1998, 1997 and 1996 respectively.  In addition,  there were $12,817,
         $11,249 and $6,934 of agents  bonuses  allocated to the Company  during
         1998,  1997 and 1996,  respectively,  which are  included  in  deferred
         acquisition costs.

         The  Company  has  several   reinsurance   agreements  with  affiliated
         companies which may be terminated  upon the specified  notice by either
         party. These agreements are summarized as follows:

         (a)  On December 31, 1998,  the  coinsurance  treaties  under which the
              Company  had  assumed  two blocks of  insurance  from  ManUSA were
              terminated. The Company's risk under these treaties was limited to
              $100,000 of initial face amount per claim plus a pro-rata share of
              any increase in face amount. Upon the termination of the treaties,
              the  Company  paid  consideration  in the amount of  approximately
              $41.0 million to ManUSA and policyholder  reserves  totaling $41.0
              million were  recaptured by ManUSA.  No gain or loss resulted from
              the termination of these treaties.

         (b)  The  Company  cedes the risk in excess of $25,000  per life to MRC
              under the terms of an automatic reinsurance agreement

         (c)  The  Company  cedes  a  substantial  portion  of its  risk  on its
              Flexible  Premium Variable Life policies to MRC under the terms of
              a stop loss reinsurance agreement.

         Selected  amounts  relating  to the  above  treaties  reflected  in the
         financial statements are as follows:

<TABLE>
<CAPTION>
         For the years ended December 31
         ($ thousands)                                                           1998          1997            1996
         ---------------------------------------------------------------- ------------- --------------- ------------

<S>                                                                           <C>          <C>               <C>   
         Life and annuity premiums assumed                                    $    48      $    509          $  724
         Life and annuity premiums ceded                                           76            69              99
         Policy reserves assumed                                                    -        40,975          44,497
         Policy reserves ceded                                                    145           130             304
         ---------------------------------------------------------------- ------------- --------------- ------------
</TABLE>

         Reinsurance  recoveries  on ceded  reinsurance  contracts to affiliates
         were $NIL, $3,972 and $NIL during 1998, 1997 and 1996 respectively.

          The Company and Manulife Financial have entered into an agreement
          whereby Manulife Financial provides a claims paying guarantee to the
          Company's U.S. policyholders. This claims paying guarantee does not
          apply to the Company's separate account contract holders.

                                       31


<PAGE>   32


11.      REINSURANCE

         In the  normal  course  of  business,  the  Company  assumes  and cedes
         reinsurance  as a party to  several  reinsurance  treaties  with  major
         unrelated insurance  companies.  The Company remains liable for amounts
         ceded in the event that reinsurers do not meet their obligations.

         The effects of reinsurance on premiums were as follows:

<TABLE>
<CAPTION>
         For the years ended December 31
         ($ thousands)                                                          1998            1997         1996
         ---------------------------------------------------------------- -------------- ------------- -------------
<S>                                                                           <C>            <C>           <C>    
         Direct premiums                                                      $9,723         $8,607        $12,949
         Reinsurance ceded                                                       405            440            676
         ---------------------------------------------------------------- -------------- ------------- -------------
         TOTAL PREMIUMS                                                       $9,318         $8,167        $12,273
         ---------------------------------------------------------------- -------------- ------------- -------------
</TABLE>

         Reinsurance  recoveries on ceded  reinsurance  contracts with unrelated
         insurance  companies were $1,362,  $909 and $357 during 1998,  1997 and
         1996 respectively.

12.      SEGMENT DISCLOSURES

         The Company reports two business  segments:  Traditional Life Insurance
         sold in Taiwan and  Variable  Life and  Annuities  sold in the U.S. The
         Company's  reportable segments have been determined based on geography,
         differences in product  features,  and  distribution;  the segments are
         also  consistent  with the Company's  management  structure.  Segmented
         information for the Company is as follows:

<TABLE>
<CAPTION>

         As at December 31,
         ($ thousands)                                                              Taiwan         U.S.        Total
         ----------------------------------------------------------------- ---------------- ------------ ------------
<S>                                                                                <C>         <C>          <C> 
         1998
         Premiums and fee income                                                   $ 9,243     $ 54,594     $ 63,837
         Interest expense                                                                -        1,722        1,722
         Income taxes (benefit)                                                    (1,219)          827        (392)
         Net income (loss)                                                         (2,265)        1,511        (754)
         Total assets excluding separate account assets                            $30,268     $258,311     $288,579
         ----------------------------------------------------------------- ---------------- ------------ ------------
         1997
         Premiums and fee income                                                    $8,099     $ 39,190     $ 47,289
         Interest expense                                                                -        2,750        2,750
         Income taxes (benefit)                                                    (1,526)        1,049        (477)
         Net income (loss)                                                         (2,835)        (801)      (3,636)
         Total assets excluding separate account assets                            $25,401     $244,166     $269,567
         ----------------------------------------------------------------- ---------------- ------------ ------------
         1996
         Premiums and fee income                                                   $12,200     $ 41,132     $ 53,332
         Interest expense                                                                -       12,251       12,251
         Income taxes (benefit)                                                    (6,125)        2,216      (3,909)
         Net income (loss)                                                        (17,500)        9,093      (8,407)
         Total assets excluding separate account assets                            $15,268     $379,241     $394,509
         ----------------------------------------------------------------- ---------------- ------------ ------------
</TABLE>

         The  accounting  policies for each segment  above are the same as those
         described  in the  summary  of  significant  accounting  policies.  The
         Company  has  no  intersegment   revenues  and  no  significant   major
         customers.

                                       32
<PAGE>   33


13.      CONTINGENCIES

         The  Company is subject to  various  lawsuits  that have  arisen in the
         course of its business. Contingent liabilities arising from litigation,
         income taxes and other matters are not considered  material in relation
         to the financial position of the Company.


14.      UNCERTAINTY DUE TO THE YEAR 2000 RISK (UNAUDITED)

         The Year 2000 risk is the result of  computer  programs  being  written
         using two digits,  rather than four, to define the applicable year. Any
         of the Company's  computer programs that have  date-sensitive  software
         may  recognize  a date using "00" as the year 1900 rather than the year
         2000. The effects of the Year 2000 risk may be experienced  before, on,
         or after January 1, 2000 and, if not addressed, could result in systems
         failures or  miscalculations  causing  disruptions  of normal  business
         operations.  It is not possible to be certain that the  Company's  Year
         2000  program  will fully  resolve  all  aspects of the Year 2000 risk,
         including those related to third parties.

         A full  discussion  of the  Company's  Year 2000  program and Year 2000
         review will be contained in the  Company's  Management  Discussion  and
         Analysis.

                                       33


<PAGE>   34


FINANCIAL STATEMENT SCHEDULES


                                       34

<PAGE>   35



                         REPORT OF INDEPENDENT AUDITORS
                        ON FINANCIAL STATEMENT SCHEDULES


The Board Of Directors
The Manufacturers Life Insurance Company Of America



We have audited the financial  statements of The  Manufacturers  Life  Insurance
Company of America as of December 31, 1998 and 1997 and 1996 and for each of the
three  years in the period  ended  December  31, 1998 and have issued our report
thereon dated March 15, 1999  (included  elsewhere in this Annual Report on Form
10-K). Our audits also included the financial statement schedules listed in this
Annual  Report on Form  10-K.  These  schedules  are the  responsibility  of the
Company's  management.  Our responsibility is to express an opinion based on our
audits.

In our  opinion,  the  financial  statement  schedules  referred to above,  when
considered  in  relation  to the basic  financial  statements  taken as a whole,
present fairly, in all material respects, the information set forth therein.


Philadelphia, Pennsylvania                                   Ernst & Young LLP
March 15, 1999


                                       35


<PAGE>   36




                        THE MANUFACTURERS LIFE INSURANCE
                               COMPANY OF AMERICA
                      SCHEDULE I -- SUMMARY OF INVESTMENTS
                    OTHER THAN INVESTMENTS IN RELATED PARTIES

                        THE MANUFACTURERS LIFE INSURANCE
                               COMPANY OF AMERICA

                      SCHEDULE I -- SUMMARY OF INVESTMENTS
                    OTHER THAN INVESTMENTS IN RELATED PARTIES

                                DECEMBER 31, 1998
                                  ($THOUSANDS)


<TABLE>
<CAPTION>

                                                                                                 Amount
                                                                        Market                   Shown in the
Type of Investment                               Cost                   Value                    Balance Sheet
------------------------------------------------------------------------------------------------------------------------ 
<S>                                                  <C>                     <C>                      <C>

Fixed maturities:
    United States Government                         $ 27,349                $ 29,927                 $ 29,927
    Foreign Governments                                 9,353                  10,062                   10,062
    Corporate                                           8,546                   9,265                    9,265

------------------------------------------------------------------------------------------------------------------------
TOTAL FIXED MATURITIES                               $ 45,248                $ 49,254                 $ 49,254
------------------------------------------------------------------------------------------------------------------------

Equity Securities:
    Common stocks - other                              19,219                  20,524                  20,524
Policy loans                                           19,320                  19,320                  19,320
Short Term Investments                                    459                     459                     459
Cash on Hand and on Deposit                            23,789                  23,789                  23,789

========================================================================================================================
TOTAL INVESTMENTS                                    $108,035               $ 113,346                $113,346
========================================================================================================================
</TABLE>

                                       36

<PAGE>   37


              +THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
               SCHEDULE III -- SUPPLEMENTARY INSURANCE INFORMATION
                                  ($ THOUSANDS)

<TABLE>
<CAPTION>
                                        Future
                                        Policy                       Other
                                        Benefits                     Policy                   
                           Deferred     Losses, Claims               Claims                   
                           Acquisition  and               Unearned   and          Premium     
Segment                    Costs        Loss Expenses     Premiums   Benefits     Revenue     
                                                                        Payable               
-------------------------- ------------ ----------------- ---------- ------------ ------------
<S>                         <C>                <C>          <C>         <C>         <C>       

1998:
    Life Insurance and      $  163,506         $ 57,353     $ 1,994    $1,483       $   9,290 
annuities                                                                           
    Other (incl. non-life            -                -           -         -               - 
subsidiaries)
========================== ============ ================= ========== ============ ============
Total                       $  163,506         $ 57,353     $ 1,994    $1,483       $   9,290 
========================== ============ ================= ========== ============ ============

1997:
    Life Insurance and      $  130,355         $ 91,994     $   674    $1,809       $   8,607 
annuities
    Other (incl. non-life            -                -           -         -               - 
subsidiaries)
========================== ============ ================= ========== ============ ============
Total                       $  130,355         $ 91,994     $   674    $1,809       $   8,607 
========================== ============ ================= ========== ============ ============

1996:
    Life Insurance and      $  102,610         $ 91,915     $   635    $  379       $  12,898 
annuities
    Other (incl. non-life            -                -           -         -               - 
subsidiaries)
========================== ============ ================= ========== ============ ============
Total                       $  102,610         $ 91,915     $   635    $  379       $  12,898 
========================== ============ ================= ========== ============ ============
                           
                                         Benefits,
                           Net           Claims           Other
                           Investment    Losses and       Operating
Segment                    Income        Settlement       Expenses
                                            Expenses
-------------------------- ------------- ---------------- -------------
<S>                          <C>               <C>           <C>

1998:
    Life Insurance and       $   5,442         $  16,541    $  49,257
annuities                  
    Other (incl. non-life          686                 -        4,246
subsidiaries)
========================== ============= ================ =============
Total                        $   6,128         $  16,541    $  53,503
========================== ============= ================ =============

1997:
    Life Insurance and       $   5,103         $   6,733    $  46,968
annuities
    Other (incl. non-life        3,172                 -        2,472
subsidiaries)
========================== ============= ================ =============
Total                        $   8,275         $   6,733    $  49,440
========================== ============= ================ =============

1996:
    Life Insurance and       $   6,141         $  14,473    $  52,067
annuities
    Other (incl. non-life       13,510                 -        6,185
subsidiaries)
========================== ============= ================ =============
Total                        $  19,651         $  14,473    $  58,252
========================== ============= ================ =============
</TABLE>

                                       37


<PAGE>   38


               THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
                           SCHEDULE IV -- REINSURANCE
                                  ($ THOUSANDS)



<TABLE>
<CAPTION>

Col. A                             Col. B           Col. C            Col. D               Col. E             Col. F
---------------------------------- ---------------- ----------------- -------------------- ------------------ -----------------
                                   Gross            Ceded to          Assumed                                 Percentage of
                                   Amount           Other             from Other           Net                Amount
                                                    Companies         Companies            Amount             Assumed to Net
                                   ================ ================= ==================== ================== =================
<S>                                 <C>                <C>             <C>                    <C>               <C>  
Year ended December 31, 1998:
    Life insurance in force          $  12,728,348      $ 2,797,498         $        0         $  9,930,850              0%
                                   ================ ================= ==================== ================== =================

Insurance Premiums:
    Life                             $       9,723      $       481         $       48         $      9,290            .52%
                                   ================ ================= ==================== ================== =================

Year ended December 31, 1997:
    Life insurance in force          $   9,834,590      $ 2,083,344         $   84,172         $  7,835,418           1.07%
                                   ================ ================= ==================== ================== =================

Insurance Premiums:
    Life                             $       8,607      $       509         $      509         $      8,607           5.91%
                                   ================ ================= ==================== ================== =================

Year ended December 31, 1996:
    Life insurance in force          $   7,700,816      $   552,986         $   98,741         $  7,246,571           1.36%
                                   ================ ================= ==================== ================== =================

Insurance Premiums:
    Life                             $      12,949      $       775         $      724         $     12,898           5.61%
                                   ================ ================= ==================== ================== =================
</TABLE>

                                       38





<PAGE>   39


Item 9. - Changes  In And  Disagreements  With  Accountants  On  Accounting  And
          Financial Disclosure

Nothing to Report


                                       39

<PAGE>   40



                                    PART III

Item 10 -  Directors And Executive Officers Of Registrant

         The directors and executive officers of the Company, together with
their principal occupations during the past five years, are as follows:

<TABLE>
<CAPTION>
Name (Age)                      Position with Manufacturers Life      Principal Occupation
                                of America
------------------------------- -----------------------------------   ------------------------------------------------------------
<S>                             <C>                                   <C>
Sandra M. Cotter (36)           Director (since December 1992)        Attorney, Dykema, Gossett, PLLC, 1989 to present.

James D. Gallagher (44)         Director (since May 1996),            Vice President, Secretary and General Counsel,
                                Secretary and General Counsel         The Manufacturers Life Insurance Company (USA),
                                                                      January 1997 to present; Secretary and General
                                                                      Counsel, Manufacturers Adviser Corporation,
                                                                      January 1997 to present; Vice President, Legal Services
                                                                      U.S. Operations, The Manufacturers Life Insurance Company,
                                                                      January 1996 to present; Vice President, Secretary and General
                                                                      Counsel, The Manufacturers Life Insurance Company of North
                                                                      America, 1994 to present; Vice President and Associate General
                                                                      Counsel, The Prudential Insurance Company of America, 1991
                                                                      to 1994.

Donald A. Guloien (41)          Director (since August 1990) and      Executive Vice President, Business Development,
                                President                             The Manufacturers Life Insurance Company, January 1999 to
                                                                      present; Senior Vice President, Business Development, The
                                                                      Manufacturers Life Insurance Company, 1994 to December 1998;
                                                                      Vice President, U.S. Individual Business, The Manufacturers
                                                                      Life Insurance Company, 1990 to 1994.

Theodore Kilkuskie (43)         Director (since May 1996) and         Senior Vice President, U.S. Annuities, The Manufacturers Life
                                Vice President, US Individual         Insurance Company, January 1999 to present; President,
                                Insurance                             The Manufacturers Life Insurance Company of North America,
                                                                      January 1999 to present; Senior Vice President, U.S.
                                                                      Individual Insurance, The Manufacturers Life Insurance
                                                                      Company, August 1998 to December 1998; Vice President,
                                                                      U.S. Individual Insurance, The Manufacturers Life Insurance
                                                                      Company, June 1995 to February 1998; Executive Vice President,
                                                                      Mutual Fund Sales & Marketing, State Street Research &
                                                                      Management, March 1994 to June 1995.

James O'Malley (52)             Director (since November 1998)        Senior Vice President, U.S. Pensions, The Manufacturers Life
                                                                      Insurance Company, January 1999 to present; Vice President,
                                                                      Systems New Business Pensions, The Manufacturers Life
                                                                      Insurance Company, 1984 to December 1998.
</TABLE>

                                                                 40


<PAGE>   41
<TABLE>
<CAPTION>
Name (Age)                      Position with Manufacturers Life      Principal Occupation
                                of America
------------------------------- -----------------------------------   ------------------------------------------------------------
<S>                             <C>                                   <C>
Joseph J. Pietroski (60)        Director (since July 1992)            Senior Vice President, General Counsel and Corporate
                                                                      Secretary, The Manufacturers Life Insurance Company,
                                                                      1988 to present.

John D. Richardson (61)         Chairman and Director (since          Senior Executive Vice President, The Manufacturers
                                January 1995)                         Life Insurance Company, January 1999 to present;
                                                                      Executive Vice President, U.S. Operations, The
                                                                      Manufacturers Life Insurance Company, November 1997
                                                                      to December 1998; Senior Vice President and General
                                                                      Manager, U.S. Operations, The Manufacturers Life
                                                                      Insurance Company, January 1995 to October 1997;
                                                                      Senior Vice President and General Manager, Canadian
                                                                      Operations, The Manufacturers Life Insurance
                                                                      Company, June 1992 to December 1994.

Victor Apps (51)                Vice President, Asia                  Executive Vice President, Asia Operations, The
                                                                      Manufacturers Life Insurance Company, November 1997
                                                                      to present; Senior Vice President and General
                                                                      Manager, Greater China Division, The Manufacturers
                                                                      Life Insurance Company, 1995 to 1997; Vice President
                                                                      and General Manager, Greater China Division, The
                                                                      Manufacturers Life Insurance Company, 1993 to 1995;
                                                                      International Vice President, Asia Pacific Division,
                                                                      The Manufacturers Life Insurance Company,  1988
                                                                      to-1993.

Felix Chee (52)                 Vice President, Investments           Executive Vice President, The Manufacturers Life
                                                                      Insurance Company, November 1997 to present; Chief
                                                                      Investment Officer, The Manufacturers Life Insurance
                                                                      Company, June 1997 to present; Senior Vice President
                                                                      and Treasurer, The Manufacturers Life Insurance
                                                                      Company, August 1994 to May 1997; Vice President and
                                                                      Treasurer, The Manufacturers Life Insurance Company,
                                                                      October 1993 to July 1994.

Robert A. Cook (44)             Vice President, Marketing             Senior Vice President, US Individual Insurance,
                                                                      The Manufacturers Life Insurance Company, January
                                                                      1999 to present; Vice President, Product Management,
                                                                      The Manufacturers Life Insurance Company, 1996 to
                                                                      December 1998; Sales and Marketing Director, U.K.
                                                                      Division, The Manufacturers Life Insurance Company,
                                                                      1994 to-1995.

Hugh McHaffie (40)              Vice President                        Vice President, Product Development, US Annuities,
                                                                      The Manufacturers Life Insurance Company, January
                                                                      1996 to present; Vice President, US Annuities, The
                                                                      Manufacturers Life Insurance Company of North
                                                                      America, September 1996 to present, Vice President,
                                                                      Product Actuary, The Manufacturers Life Insurance
                                                                      Company of North America, August 1994 to September
                                                                      1996; Product Development Executive, The
                                                                      Manufacturers Life Insurance Company of North
                                                                      America, August 1990 to August 1994.

Douglas H. Myers (44)           Vice President, Finance and           President, ManEquity, Inc., April 1994 to 
                                Compliance, Controller                present; Assistant Vice President and Controller,
                                                                      U.S. Operations, The Manufacturers  Life Insurance
                                                                      Company, 1988 to present.
</TABLE>
                                       41


<PAGE>   42
<TABLE>
<CAPTION>
Name (Age)                      Position with Manufacturers Life      Principal Occupation
                                of America
------------------------------- -----------------------------------   ------------------------------------------------------------
<S>                             <C>                                   <C>
John G. Vrysen (43)             Vice President and Appointed          Chief Financial Officer and Treasurer, Manulife-Wood 
                                Actuary                               Logan Holding Co., Inc., January
                                                                      1996 to present; Vice President and Chief Financial
                                                                      Officer, U.S. Operations, The Manufacturers Life
                                                                      Insurance Company, January 1996 to present; Vice
                                                                      President and Chief Actuary, The Manufacturers Life
                                                                      Insurance Company of New York, March 1992 to
                                                                      present; Vice President and Chief Actuary, The
                                                                      Manufacturers  Life Insurance Company of North
                                                                      America, January 1986 to present.

Jean Wong (35)                  Vice President and Treasurer          Vice President and Chief Accountant, US Division,
                                                                      The Manufacturers Life Insurance Company, May 1998
                                                                      to present; Chief  Accountant, US Division, The
                                                                      Manufacturers Life Insurance Company, July 1996 to
                                                                      May 1998; Director, Finance and Administration, Star
                                                                      Data Systems Inc., December 1995 to July 1996; Vice
                                                                      President and Chief Financial Officer, Primerica
                                                                      Financial Services, June 1993 to December 1995.
</TABLE>


Item 11 - EXECUTIVE COMPENSATION

The  Company's  executive  officers may also serve as officers of one or more of
Manulife Financial's affiliates. Allocations have been made as to such officers'
time devoted to duties as executive officers of the Company. The following table
shows the allocated  compensation  paid or awarded to or earned by the Company's
Chief Executive Officer for services provided to the Company. No other executive
officer had allocated cash compensation in excess of $100,000.

Summary Compensation Table
<TABLE>
<CAPTION>

-------------------- ------- ---------- ---------- -------------- ------------- -------------- ------------ ---------------
Name and Principal   Year    Salary     Bonus 1    Other Annual   Restricted    Securities     LTIP         All Other
Position                                           Compensation 2 Stock         Underlying     Payouts      Compensation 3
                                                                  Award(s)      Options/SARs
-------------------- ------- ---------- ---------- -------------- ------------- -------------- ------------ ---------------
<S>                  <C>     <C>        <C>        <C>           <C>            <C>            <C>          <C>
Don A. Guloien,      1998    $8,875     $4,800     $1,100         N/A           N/A            $1,303       $12
President
</TABLE>

1 Bonus for 1997 performance paid in 1998.

2 Does not include group health  insurance  since the plans are the same for all
  salaried employees.

3 Other Compensation  includes the value of term life insurance premiums paid by
  Manulife Financial for the benefit of the executive officer.


The Management  Resources and  Compensation  Committee (the  "Committee") of the
Board of  Directors is comprised  of six  external  directors.  The  Committee's
principal mandate is to approve the appointment,  succession and remuneration of
Manulife  Financial's  Executive  Vice  Presidents  and Senior Vice  Presidents,
including the Named  Executive  Officers.  For the President and Chief Executive
Officer of Manulife Financial, the Committee makes compensation  recommendations
that are then  approved by the entire  Board.  The  Committee  also approves the
compensation programs for all other officers as well as the annual review of the
Annual  Incentive  Plan  awards  and  Long-Term  Incentive  Plan  grants for all
officers of Manulife Financial and it's subsidiaries.

                                       42


<PAGE>   43

In addition to the annual reviews,  the Committee  approves any major changes to
all  policies  which are  designed to  attract,  retain,  develop  and  motivate
employees and all pension plans of Manulife Financial and it's subsidiaries.

Manulife Financial's  executive  compensation policies are designed to recognize
and  reward  individual  performance  as well as  provide  a total  compensation
package which is competitive with the median of Manulife Financial's  comparator
group,  which  is  comprised  of  Schedule  I banks  and  major  life  insurance
companies.  Further, Manulife Financial ensures that its compensation levels are
competitive within local markets outside of Canada.

Manulife  Financial's  executive  compensation program is comprised of three key
components; base salary, annual incentives and long-term incentives. Officers of
the  Company  participate  in  the  following  Manulife  Financial  compensation
programs.

SALARY

The Committee  approves the salary ranges and salary  increase levels for all of
Manulife Financial's Executive and Senior Vice Presidents individually,  and all
Vice Presidents as a group,  based on competitive  industry data for all markets
in which Manulife Financial operates.  Salary increases for Manulife Financial's
officers have been consistent with the salary increase programs approved for all
employees.

In establishing Manulife Financial's  competitive position and developing annual
salary  increase  programs,  Manulife  Financial  uses several annual surveys as
prepared by independent compensation consulting firms with reference to publicly
disclosed information.


                                       43

<PAGE>   44

ANNUAL INCENTIVE PLAN

Manulife Financial's Annual Incentive Plan ("AIP") provides executive officers
of Manulife Financial with the opportunity to earn incentive bonuses based on
the achievement of pre-established corporate and divisional earnings objectives
and divisional and individual performance objectives.

The Committee and management periodically review the design of the incentive
plan to ensure that it:

(i)     is competitive with Manulife Financial's comparator groups;

(ii)    supports, and aligns, with Manulife Financial's strategic objectives;
        and

(iii)   recognizes and rewards individual contributions and value creation.

In conducting these reviews, Manulife Financial obtains advice from independent,
external consultants.

The AIP uses earnings and performance measures to determine awards with
predetermined thresholds for each component as approved by the Committee
annually. Incentive awards are established for each participant based on
organizational level. Incentive award levels range from 12% to 60% of base
salary assuming achievement of targeted performance objectives. When corporate
and divisional performance objectives are significantly exceeded, a participant
can receive incentive awards ranging from 30% to 150% of base salary. If
corporate and divisional performance objectives are below targeted performance,
the incentive awards are adjusted downward according to plan guidelines. The
Named Executive Officers participate in the AIP on the same basis as all other
officers.

LONG TERM INCENTIVE PLAN

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
                                                                   Estimated Future Payouts Under
                                                              Non-Securities-Price-Based Plans (US $)3
                                                             -------------------------------------------
       Name           Securities Units or    Performance or   Threshold   Target ($ or #)4   Maximum
                       Other Rights (#)1      Other Period    ($ or #)                       ($ or #)
                                                 Until
                                              Maturation or
                                                 Payout2
--------------------------------------------------------------------------------------------------------

    <S>                      <C>             <C>               <C>            <C>                <C>
    Don Guloien ..........   672             Jan. 1, 2002       N/A           $4,588              N/A
--------------------------------------------------------------------------------------------------------
</TABLE>


Notes:

1 Each grant has two components: Cash Appreciation Rights and Retirement
Appreciation Rights.

2 The appreciation in the value of Cash Appreciation Rights are redeemed four
years following the grant date. Retirement Appreciation Rights are only redeemed
upon retirement or cessation of employment with Manulife.

3 Canadian dollars converted to US dollars using a book rate of 1.50.

4 The target is calculated assuming Cash Appreciation Rights are exercised in
the fourth year. At that time 50% of the target is redeemed in cash and the
balance continues to appreciate until redeemed upon retirement or cessation of
employment.

Manulife Financial's Board of Directors approved the implementation of a
Long-Term Incentive Plan ("LTIP") effective April 1, 1994. All employees at the
Vice President level and above are eligible to participate in the LTIP.

The purpose of the LTIP is to encourage executive officers to act in the
long-term interests of Manulife Financial and to provide an opportunity to share
in value creation as measured by changes in Manulife Financial's statutory
surplus. The LTIP is an appreciation rights plan which requires that a
substantial portion of any accumulated gain remain invested with Manulife
Financial during the participant's career with Manulife Financial.

The Committee reviews the LTIP on an annual basis having regard to Manulife
Financial's performance, targeted growth and competitive position. The Committee
approves grants on a prospective basis considering management's recommendations
for participation, size and terms of grant.

Grants of appreciation rights are generally made to participants in the LTIP
each year. The number of appreciation rights granted to participants is
determined based on the net present value of the potential payout represented by
the appreciation rights, assuming that Manulife Financial's surplus grows at a
targeted rate. Appreciation rights are granted such that this net present value
represents between 20% and 115% of the participant's salary level on the date of
grant


                                       44


<PAGE>   45

PERQUISITES

In addition to cash compensation, all officers are entitled to a standard
benefit package including medical, dental, basic and dependent life insurance,
long and short-term disability coverage and defined contribution or defined
benefit plan.

US domiciled officers at the Vice President levels and above are provided with
an automobile and parking benefit, cellular telephone and computer. The
automobile benefit covers insurance and maintenance. There are no other benefit
packages which currently enhance overall compensation by more than 10%.

Canadian domiciled officers at the Vice President levels and above are eligible
to receive the Executive Flexible Spending Account. The objective of the program
is to assist and encourage the executive officers to represent the interests and
high standards of Manulife Financial, both from a business and a personal
perspective. The program's flexibility allows use of the allowance for benefit
choices from a comprehensive list of options, including: car, mortgage subsidy
and club memberships.

US RETIREMENT PLANS

With the integration of the Manulife Financial and North American Life
operations, a review of the retirement programs for the employees in the United
States was conducted in 1998. As a result of this review, effective July 1,
1998, (i) the two defined benefit pension plans (The Manulife Financial United
States Salaried Employees Pension Plan and the North American Life Staff Pension
Fund 1948 for United States Members) were merged and converted to a Cash Balance
Plan, entitled "The Manulife Financial U.S. Cash Balance Plan"; (ii) the
Supplemental Pension Plan for United States Salaried Employees of Manufacturers
Life Insurance Company was converted into a Cash Balance Supplemental Plan,
entitled "The Manulife Financial U.S. Supplemental Cash Balance Plan"; and,
(iii) the two 401(k) plans (The Manulife Financial 401(k) Savings Plan and the
North American Security Life 401(k) Savings Plans) were merged and restated into
The Manulife Financial U.S. 401(k) Savings Plan.

The executives of Manufacturers Life of America are eligible to participate in
the three restated retirement plans as sponsored by The Manufacturer's Life
Insurance Company (U.S.A.).

The Manulife Financial Cash Balance Plan

To implement the conversion to the Cash Balance Plan, participants in the two
former defined benefit plans were provided with opening account balances equal
to the value of their accrued benefit under their respective prior plan
participation as at June 30, 1998, using interest rate assumption equal to the
Pension Benefit Guaranty Corporation (PBGC) rate for 1998.

Under this plan, which is a defined benefit plan, a separate account is
established for each participant. The account receives company contribution
credits based on vesting service and earnings as outlined in the table below.
The account earns semi-annual interest credits based on the yield of one-year
Treasury bills plus half a percentage point, subject to a minimum interest
credit of 5.25%. The yearly maximum amount of eligible pay allowed under the
qualified plan is $160,000 for 1998. Employees are vested after 3 years of
vesting service. Normal retirement age is 65. Pension benefits are provided to
those who terminate after three years of vesting service, and the normal
retirement benefit is actuarially equivalent to the cash balance account at
normal retirement date. Early benefits are actuarially equivalent to the normal
retirement benefits but are subsidized for participants who were age 45 and 5 or
more years of vesting service on July 1, 1998 and who terminate employment after
attaining age 50 and completing 10 years of service. For these grandfathered
participants, the prior early retirement factors under the Manulife Financial
Plan apply. The normal form of payment under the Cash Balance Plan is a life
annuity, with various optional forms available, including a lump sum equal to
the cash balance account.


                                       45

<PAGE>   46

                          Company Contribution Credits

Years of Vesting Service                             Percentage of Eligible Pay
------------------------                             --------------------------
Less than 6                                                       4%
6, but less than 11                                               5%
11, but less than 16                                              7%
16, but less than 21                                              9%
21 or more                                                       11%

Projected Cash Balance Plan pension benefits at age 65 payable as an annual life
annuity.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                                         Years of Service
--------------------------------------------------------------------------------
Renumeration ($)          15          20          25           30          35
--------------------------------------------------------------------------------
                           $           $           $           $            $
--------------------------------------------------------------------------------
      <S>               <C>         <C>         <C>          <C>         <C>    
      $150,000          16,960      30,178      49,664       76,018      111,659
--------------------------------------------------------------------------------
       175,000          18,090      32,190      52,975       81,086      119,103
--------------------------------------------------------------------------------
       200,000          18,090      32,190      52,975       81,086      119,103
--------------------------------------------------------------------------------
       225,000          18,090      32,190      52,975       81,086      119,103
--------------------------------------------------------------------------------
       250,000          18,090      32,190      52,975       81,086      119,103
--------------------------------------------------------------------------------
       300,000          18,090      32,190      52,975       81,086      119,103
--------------------------------------------------------------------------------
       400,000          18,090      32,190      52,975       81,086      119,103
--------------------------------------------------------------------------------
       500,000          18,090      32,190      52,975       81,086      119,103
--------------------------------------------------------------------------------
</TABLE>

The Manulife Financial U.S. Supplemental Cash Balance Plan

In addition to their pension plan benefits, executives are eligible for benefits
under The Manulife Financial U.S. Supplemental Cash Balance Plan. This is a
non-contributory, non-qualified plan, the purpose of which is to provide the
executives with the same level of retirement benefits they would have been
entitled to but for the limitations prescribed for qualified plans under the
Internal Revenue Code. Opening account balances were established using the same
method as The Manulife Financial U.S. Cash Balance Plan. During the period of an
executive's active participation in the plan, annual company contributions are
made with respect to the portion of the executives earnings which is in excess
of $160,000 for 1998 as outlined below with interest credited under this plan at
the same rate as provided under the Cash Balance Plan. In addition, a one time
contribution may be made for a participant if it is determined at the time of
their termination of employment, that the participant's pension benefit under
the Cash Balance Plan is limited by Internal Revenue Code Section 415. Together,
these contributions serve to restore to the participant the benefit that they
would have been entitled to under the Cash Balance Plan's benefit formula but
for the limitations, in Internal Revenue Code Sections 401(a) (17) and 415.
Benefits are provided to those who terminate after three years. The default form
of payment under the plan is a lump sum, although participants may elect to
receive payment in the form of an annuity provided that such election is made
within the time period prescribed in the plan.

<TABLE>
<CAPTION>
Complete Years of Cash
Balance Service Credits as of            Percentage of Eligible Pay          Percentage of Eligible Pay
December 31st                                   up to $200,000                      over $200,000
------------------------------           --------------------------          --------------------------
<S>                                      <C>                                 <C>
Less than 6 ..................                      4%                                  4%
6, but less than 11...........                      5%                                  5%
11, but less than 16 .........                      7%                                  5%
16, but less than 21 .........                      9%                                  5%
21 or more ...................                     11%                                  5%
</TABLE>


                                       46

<PAGE>   47
Projected Supplemental pension benefits at age 65 payable as an annual life
annuity

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                                           Years of Service
--------------------------------------------------------------------------------
Renumeration ($)          15          20          25           30          35
--------------------------------------------------------------------------------
                           $           $           $           $            $
--------------------------------------------------------------------------------
      <S>               <C>         <C>         <C>          <C>         <C>    
      $150,000             0           0           0           0            0
--------------------------------------------------------------------------------
       175,000           1,696       3,018       4,966       7,602       11,166
--------------------------------------------------------------------------------
       200,000           4,523       8,048      13,244       20,271      29,776
--------------------------------------------------------------------------------
       225,000           7,081      12,178      19,501       29,404      42,797
--------------------------------------------------------------------------------
       250,000           9,639      16,309      25,757       38,536      55,818
--------------------------------------------------------------------------------
       300,000          14,756      24,570      38,271       56,801      81,861
--------------------------------------------------------------------------------
       400,000          24,990      41,092      63,298       93,330      133,946
--------------------------------------------------------------------------------
       500,000          35,224      57,615      88,325      129,859      186,031
--------------------------------------------------------------------------------
</TABLE>

Projected Cash Balance and Supplemental pension benefits at age 65 payable as an
annual annuity.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                                          Years of Service
--------------------------------------------------------------------------------
Renumeration ($)          15          20          25           30          35
--------------------------------------------------------------------------------
                           $           $           $           $            $
--------------------------------------------------------------------------------
      <S>               <C>         <C>         <C>          <C>         <C>    
      $150,000          16,960      30,178      49,664       76,018      111,659
--------------------------------------------------------------------------------
       175,000          19,786      35,208      57,941       88,688      130,269
--------------------------------------------------------------------------------
       200,000          22,613      40,238      66,219      101,357      148,879
--------------------------------------------------------------------------------
       225,000          25,171      44,368      72,476      110,490      161,900
--------------------------------------------------------------------------------
       250,000          27,729      48,499      78,732      119,622      174,921
--------------------------------------------------------------------------------
       300,000          32,846      56,760      91,246      137,887      200,964
--------------------------------------------------------------------------------
       400,000          43,080      73,282      116,273     174,416      253,049
--------------------------------------------------------------------------------
       500,000          53,314      89,805      141,300     210,945      305,134
--------------------------------------------------------------------------------
</TABLE>
The Manulife Financial U.S. 401(k) Savings Plan

In addition to the above plans a 401(k) Savings Plan is also offered. The plan
allows employees of the Company to contribute on a pre-tax basis 1% to 15% of
their earnings up to the yearly limit of $160,000 for 1998. The yearly maximum
an employee can contribute is $10,000 for 1998. The company matches 50% of the
first 6% of contributions. Employees become 100% vested in the employer matching
contributions as outlined in the vesting schedule below. Additionally they
become 100% vested if they retire on or after age 65, become disabled or die.

Years of Vesting Service                             Vested Percentage
------------------------                             -----------------
         Less than 2 years                                    0%
         2 years but less than 3                             50%
         3 years and thereafter                             100%

CANADIAN RETIREMENT PLANS

Executive officers domiciled in Canada, and certain executive officers formerly
domiciled in Canada, are eligible to participate in Manulife Financial's
Canadian Staff Pension Plan and to receive supplemental pension benefits under
Manulife Financial's supplemental retirement income program. Under these plans,
income is payable for the life of the executive officer, with a guarantee of a
minimum of 120 monthly payments. If the executive officer is married, the income
is actuarially adjusted to a joint and survivor pension which pays a set amount
during the life of the executive officer. Upon the death of the executive
officer, this amount is reduced by one-third and is payable for the life of the
spouse (provided that in no event is this amount reduced prior to 60 months from
the date of retirement).

Pensionable earnings for this purpose are calculated as the highest average of
the base earnings and bonuses earned over any 36 consecutive months. The pension
benefit is determined by years of service multiplied by the sum of 

                                       47


<PAGE>   48

1.3% of pensionable earnings up to the average of the last three years maximum
pensionable earnings ("YMPE") plus 2.0% of the excess of pensionable earnings
over the average YMPE, without regard to the maximum pension limit for
registered pension plans imposed by Revenue Canada.

Employees hired after the age of 40 who become executive officers at the vice
president level and above within one year of hire may also receive additional
service credits equal to their actual period of service, to a maximum of 10
years.

The following table sets forth the aggregate standard annual benefits payable to
executive officers under Manulife Financial's Canadian Staff Pension Plan and
supplemental retirement income program.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
                                                                          Years of Service
                           ------------------------------------------------------------------------
         Remuneration        15               20              25              30              35
---------------------------------------------------------------------------------------------------
              $               $                $               $              $                $
---------------------------------------------------------------------------------------------------
           <S>             <C>             <C>             <C>             <C>              <C>   
           125,000          34,978          46,637          58,296          69,955           81,615
---------------------------------------------------------------------------------------------------
           150,000          42,478          56,637          70,796          84,955           99,115
---------------------------------------------------------------------------------------------------
           175,000          49,978          66,637          83,296          99,955          116,615
---------------------------------------------------------------------------------------------------
           200,000          57,478          76,637          95,796         114,955          134,115
---------------------------------------------------------------------------------------------------
           225,000          64,978          86,637         108,296         129,955          151,615
---------------------------------------------------------------------------------------------------
           250,000          72,478          96,637         120,796         144,955          169,115
---------------------------------------------------------------------------------------------------
           300,000          87,478         116,637         145,796         174,955          204,115
---------------------------------------------------------------------------------------------------
           400,000         117,478         156,637         195,796         234,955          274,115
---------------------------------------------------------------------------------------------------
           450,000         132,478         176,637         220,796         264,955          309,115
---------------------------------------------------------------------------------------------------
           500,000         147,478         196,637         245,796         294,955          344,115
---------------------------------------------------------------------------------------------------
           600,000         177,478         236,637         295,796         354,955          414,115
---------------------------------------------------------------------------------------------------
           700,000         207,478         276,637         345,796         414,955          484,115
---------------------------------------------------------------------------------------------------
           800,000         237,478         316,637         395,796         474,955          554,115
---------------------------------------------------------------------------------------------------
           900,000         267,478         356,637         445,796         534,955          624,115
---------------------------------------------------------------------------------------------------
         1,000,000         297,478         396,637         495,796         594,955          694,115
---------------------------------------------------------------------------------------------------
</TABLE>

Mr. Guloien had 17.8 years of credited service as at December 31, 1998.


Item 12  - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a)

<TABLE>
<CAPTION>
                              Name & Address of             Amount & Nature of 
Title of Class                Beneficial Owner              Beneficial Ownership         Percent of Class
--------------                ------------------            --------------------         ----------------
<S>                           <C>                           <C>                                <C> 
Common                        The Manufacturers Life        4,501,861 shares                   100%
                              Insurance Company (U.S.A.)

Preferred                     The Manufacturers Life        105,000                            100%
                              Insurance Company (U.S.A.)
</TABLE>

(b) Nothing to report.

(c) Nothing to report.


                                       48

<PAGE>   49


Item 13  -  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Certain officers and/or directors of the Company are also officers and/or
directors of ManEquity, Inc., an affiliated broker/dealer. ManEquity, Inc.
received, in 1998, compensation for the sale of variable products issued by the
Company in the amount of $35,330,465.

Legal fees were paid to the firm of Dykema Gossett during the Company's last
fiscal year. A director of the Company is associated with that firm; however,
legal fees so paid did not exceed 5% of Dykema Gossett's consolidated gross
revenues during its last full fiscal year.


                                       49

<PAGE>   50

                                     PART IV




Item 14.  -  EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON FORM 8-K.

(a) Financial Statements and Exhibits

(1) The following financial statements of the Registrant are filed as part of
    this report:

a.  Report of Independent Auditors dated March 15, 1999.

b.  Balance Sheets at December 31, 1998 and 1997.

c.  Statements of Income for the Years ended December 31, 1998, 1997 and 1996.

d.  Statements of Changes in Capital and Surplus for the Years ended December 
    31, 1998, 1997 and 1996.

e.  Statements of Cash Flows for the Years Ended December 31, 1998, 1997 and
    1996.

f.  Notes to Financial Statement - December 31, 1998.


(2) Financial Statement Schedules:

a.  Report of Independent Auditors dated March 15, 1999 on financial statement
    schedules.

b.  Schedule I - Summary of Investments - other than Investment in Related 
    Parties.

c.  Schedule III - Supplemental Insurance Information.

d.  Schedule IV - Reinsurance.

All other schedules are omitted because they are not required or the required
information is shown in the financial statements as notes thereto.

(b). The following exhibits are filed as part of this report by incorporation by
     reference as indicated below.


<TABLE>
<CAPTION>
                                                            PAGE IN SEQUENTIAL
                                                            NUMBERING SYSTEM
                                                              WHERE EXHIBIT
EXHIBIT NO.                  DESCRIPTION                         LOCATED
-----------                  -----------                    ------------------
<S>                          <C>                            <C>
 (1)                                                          Not applicable

 (2)                            None
</TABLE>



                                       50

<PAGE>   51



<TABLE>
<CAPTION>

                                                            PAGE IN SEQUENTIAL
                                                            NUMBERING SYSTEM
                                                              WHERE EXHIBIT
EXHIBIT NO.                  DESCRIPTION                         LOCATED
-----------                  -----------                    ------------------
<S>                         <C>                           <C>
(3) (a) (i)                 Restated Articles of          Filed as Exhibit 3
                            Redomestication of The        (A) (i) to Post-
                            Manufacturers Life            Effective Amendment
                            Insurance Company of          No. 6 on Form S-1
                            America**                     filed by The
                                                          Manufacturers Life
                                                          Insurance Company of
                                                          America on December
                                                          9, 1996 (File No.
                                                          33-57020)

(3) (b) (i)                 By-Laws of The                Filed as Exhibit 3
                            Manufacturers Life            (b) (i) to Post-
                            Insurance Company of          Effective Amendment
                            America**                     No. 6 on Form S-1
                                                          filed by The
                                                          Manufacturers Life
                                                          Insurance Company of
                                                          America on December
                                                          9, 1996 (File No.
                                                          33-57020)

(4)(a)                      Form of Multi-Account         Incorporated by reference
                            Flexible Variable Annuity     to Exhibit (4)(a) to
                            Policy                        Pre-Effective Amendment
                                                          No. 1 on Form S-1 filed by The
                                                          Manufacturers Life Insurance
                                                          Company of America on February
                                                          10, 1994 (File No. 33-57020).

 (4)(b)(i)                  Individual Retirement         Incorporated by reference
                            Annuity Rider                 to Exhibit (4)(b)(i)
                                                          to Pre-Effective Amendment No. 1
                                                          on Form S-1 filed by The
                                                          Manufacturers Life Insurance
                                                          Company of America on February
                                                          10, 1994 (File No. 33-57020).

 (4)(b)(i)(a)               Trustee-Owned Policies        Incorporated by reference
                            Annuity Rider                 to Exhibit (4)(b)(i)(a)
                                                          to Pre-Effective Amendment No.1
                                                          on Form S-1 filed by The
                                                          Manufacturers Life Insurance
                                                          Company of America on February
                                                          10, 1994 (File No. 33-57020).
</TABLE>


                                       51


<PAGE>   52


<TABLE>
<CAPTION>
                                                            PAGE IN SEQUENTIAL
                                                            NUMBERING SYSTEM
                                                              WHERE EXHIBIT
EXHIBIT NO.                  DESCRIPTION                         LOCATED
-----------                  -----------                    ------------------
<S>                         <C>                           <C>
(4)(b)(ii)                  Unisex Endorsement            Incorporated by reference to
                                                          Exhibit (4)(b)(ii) to the
                                                          registration statement on Form
                                                          N-4 filed by The Manufacturers
                                                          Life Insurance Company of
                                                          America on January 13, 1993
                                                          (File No. 33-57018).

(4) (b) (iii)               Endorsement 0646              Filed as Exhibit (4) (b) (iii) to
                                                          Form  10Q by The  Manufacturers  Life  Insurance
                                                          Company  America  on August  14,  1997 (File No.
                                                          33-57020)
(5)                         Not Applicable

(6)                         Not Applicable

(7)                         Not Applicable

(8)                         Not Applicable

(9)                         Not Applicable

(10)(a)                     Reinsurance Agreement         Incorporated by reference
                                                          to Exhibit (10)(a) to
                                                          Pre-Effective Amendment No. 1 on
                                                          Form S-1 filed by The
                                                          Manufacturers Life Insurance
                                                          Company of America on February
                                                          10, 1994 (File No. 33-57020).

(10)(b)(i)                  Service Agreement between     Incorporated by reference
                            Manufacturers Life of         to Exhibit (8)(a)
                            America and The Manu-         to the registration state-
                            facturers Life                ment on Form N-4 filed by
                            Insurance Company             The Manufacturers Life
                                                          Insurance Company of America on
                                                          January 13, 1993 (File No.
                                                          33-57018).

 (10)(b)(ii)                Amendment to Service          Incorporated by reference
                            Agreement                     to Exhibit (8)(b)
                                                          to the registration statement
                                                          on Form N-4 filed by The
                                                          Manufacturers Life Insurance
                                                          Company of America on January
                                                          13, 1993 (File No. 33-57018).
</TABLE>

                                       52

<PAGE>   53


<TABLE>
<CAPTION>
                                                            PAGE IN SEQUENTIAL
                                                            NUMBERING SYSTEM
                                                              WHERE EXHIBIT
EXHIBIT NO.                  DESCRIPTION                         LOCATED
-----------                  -----------                    ------------------
<S>                         <C>                           <C>
(10)(b)(iii)                Second Amendment to           Incorporated by reference
                            Service Agreement             to Exhibit (10)(b)(iii)
                                                          to the registration statement
                                                          on Form N-4 filed by The
                                                          Manufacturers Life Insurance
                                                          Company of America on April 29,
                                                          1994 (File No. 33-57018).

(10)(b)(iv)                 Service Agreement between     Incorporated by reference
                             The Manufacturers Life       to Exhibit (10)(b)(iv)
                            Insurance Company and         to the registration state-
                            ManEquity, Inc. dated         ment on Form N-4 filed by
                            January 2, 1991 as amended    The Manufacturers Life
                            March 1, 1994                 Insurance Company of
                                                          America on April 29, 1994
                                                          (File No. 33-57018).

(10)(c)                     Specimen Agreement between    Incorporated by reference
                            ManEquity, Inc. and           to Exhibit (3)(b)
                            registered representatives    (i) to the registration
                                                          statement on Form N-4 filed by
                                                           The Manufacturers Life Insurance
                                                          Company of America on January
                                                          13, 1993 (File No. 33-57018).

(10)(d)                     Specimen Agreement between    Incorporated by reference
                            ManEquity, Inc. and Dealers   to Exhibit (3)(b)
                                                          (ii) to the
                                                          registration
                                                          statement on Form
                                                          N-4 filed by The
                                                          Manufacturers Life
                                                          Insurance Company of
                                                          America on January
                                                          13, 1993 (File No.
                                                          33-57018). 
(11)                        None

(12)                        Not Applicable

(13)                        Not Applicable

(14)                        Not Applicable

(15)                        None

(16)                        Not Applicable

(17)                        Not Applicable

(18)                        None
</TABLE>

                                       53

<PAGE>   54


<TABLE>
<CAPTION>
                                                            PAGE IN SEQUENTIAL
                                                            NUMBERING SYSTEM
                                                              WHERE EXHIBIT
EXHIBIT NO.                  DESCRIPTION                         LOCATED
-----------                  -----------                    ------------------
<S>                         <C>                           <C>
(19)                         None

(20)                         Not Applicable

(21)                         Not Applicable

(22)                         None

(23)(a)                      None

(23)(c)                      None

(24)                         Power of Attorney            Incorporated   by   reference  to
                                                          Exhibit   12  to   post-effective
                                                          amendment    No.    10   to   the
                                                          registration  statement  on  Form
                                                          S-6  filed  by The  Manufacturers
                                                          Life    Insurance    Company   of
                                                          America  on  February   28,  1997
                                                          (File No. 33-52310)

(25)                         Not Applicable

(26)                         Not Applicable

(27)                         Financial Data Schedule          Filed herewith

(28)                         Not Applicable
</TABLE>

(b)  Reports on Form 8-K

No reports on Form 8-K were filed during the quarter.

Supplemental Information to be Furnished with Reports Filed Pursuant to Section
15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to
Section 12 of the Act.

No Annual Report covering the Registrant's last fiscal year or proxy material
has been or will be sent to Registrant's security holders.


                                       54

<PAGE>   55


                                   SIGNATURES

Pursuant to the requirements of Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

                                               THE MANUFACTURERS LIFE INSURANCE
                                               COMPANY OF AMERICA
                                               (Registrant)


March 29, 1999                                 By: /s/ Donald A. Guloien
---------------                                -------------------------
Date                                           DONALD A. GULOIEN
                                               President & Director
                                               (Principal Executive Officer)


Attest
/s/  James D. Gallagher
-----------------------
JAMES D. GALLAGHER
Secretary


                                       55

<PAGE>   56


                                   SIGNATURES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
on Form 10-K has been signed by the following persons in the capacities
indicated on this 29th day of March, 1999.

Signature                                     Title
---------                                     -----

*
-------------------------                     Chairman and Director
JOHN D. RICHARDSON

*
-------------------------                     President and Director
DONALD A. GULOIEN                             (Principal Executive Officer)

*
-------------------------                     Director
SANDRA M. COTTER


/s/  James D. Gallagher
-------------------------                     Director
JAMES D. GALLAGHER


-------------------------                     Director
JAMES O'MALLEY

      *
-------------------------                     Director
JOSEPH J. PIETROSKI

      *
-------------------------                     Director
THEODORE KILKUSKIE, JR.

      *
-------------------------                     Vice President, Finance
DOUGLAS H. MYERS                              (Principal Financial and
                                              Accounting Officer)



*/s/ James D. Gallagher
-------------------------
JAMES D. GALLAGHER
Pursuant to Power of Attorney

                                       56


<PAGE>   57


                                  EXHIBIT INDEX

Exhibit No.       Description
----------        -----------

27                Financial data schedule for year ended December 31, 1998



                                       57