# EDGAR Filing Document

**Accession Number:** 0001086888
**File Stem:** 0001193125-23-078625
**Filing Date:** 2023-3
**Character Count:** 1095691
**Document Hash:** b3c36245b3b0321cd03ffec324570364
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001193125-23-078625.hdr.sgml**: 20230324

**ACCESSION NUMBER**: 0001193125-23-078625

**CONFORMED SUBMISSION TYPE**: 6-K

**PUBLIC DOCUMENT COUNT**: 78

**CONFORMED PERIOD OF REPORT**: 20230324

**FILED AS OF DATE**: 20230324

**DATE AS OF CHANGE**: 20230324

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** MANULIFE FINANCIAL CORP
- **CENTRAL INDEX KEY:** 0001086888
- **STANDARD INDUSTRIAL CLASSIFICATION:** LIFE INSURANCE [6311]
- **IRS NUMBER:** 889897526
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 6-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-14942
- **FILM NUMBER:** 23757768

**BUSINESS ADDRESS:**
- **STREET 1:** 200 BLOOR ST EAST, NT-10
- **CITY:** TORONTO
- **STATE:** A6
- **ZIP:** M4W1E5
- **BUSINESS PHONE:** 416-926-3000

**MAIL ADDRESS:**
- **STREET 1:** 200 BLOOR ST EAST, NT-10
- **CITY:** TORONTO
- **STATE:** A6
- **ZIP:** M4W1E5

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**UNITED STATES** 

**SECURITIES AND EXCHANGE COMMISSION** 

**Washington, D.C. 20549** 

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**Form 6-K** 

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**REPORT OF FOREIGN PRIVATE ISSUER** 

**PURSUANT TO RULE 13a-16 OR 15d-16** 

**UNDER THE SECURITIES EXCHANGE ACT OF 1934** 

**For the month of <u>March, 2023</u>** 

**Commission File Number: 1-14942** 

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## MANULIFE FINANCIAL CORPORATION
**(Translation of registrant's name into English)** 

------

**200 Bloor Street East** 

**North Tower 10** 

**Toronto, Ontario, Canada M4W 1E5** 

**(416) 926-3000** 

**(Address of principal executive office)** 

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Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☐ Form 40-F ☑

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**DOCUMENTS FILED AS PART OF THIS FORM 6-K** 

The following documents, filed as exhibits to this Form 6-K, are incorporated by reference as part of this Form 6-K:

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| | |
|:---|:---|
| **Exhibit** | **Description of Exhibit** |
| 99.1 | 2022 Annual Report |
| 99.2 | Notice of Annual Meeting of Shareholders |
| 99.3 | Management Information Circular |
| 99.4 | Shareholder Proxy Form |
| 99.5 | Notice of Availability of Management Information Circular |

---

**SIGNATURES** 

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

---

| | |
|:---|:---|
| MANULIFE FINANCIAL CORPORATION | MANULIFE FINANCIAL CORPORATION |
| By: | */s/ James D. Gallagher* |
| Name: | James D. Gallagher |
| Title: | General Counsel |

---

Date: March 24, 2023

## Exhibit 99.2

**Exhibit 99.2**<br>&nbsp;&nbsp;&nbsp;&nbsp;Notice of *annual meeting of*<br> *common shareholders*<br>

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;You're invited to attend our 2023 annual meeting<br> &nbsp;&nbsp;&nbsp;&nbsp;of common shareholders | &nbsp;&nbsp;&nbsp;&nbsp;You're invited to attend our 2023 annual meeting<br> &nbsp;&nbsp;&nbsp;&nbsp;of common shareholders |
| &nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;**When**<br> &nbsp;&nbsp;&nbsp;&nbsp;May 11, 2023<br> &nbsp;&nbsp;&nbsp;&nbsp;11 a.m. (Eastern time)<br>&nbsp;&nbsp;&nbsp;&nbsp;**Where**<br> &nbsp;&nbsp;&nbsp;&nbsp;Manulife Head Office<br> &nbsp;&nbsp;&nbsp;&nbsp;200 Bloor Street East<br> &nbsp;&nbsp;&nbsp;&nbsp;Toronto, Canada<br>&nbsp;&nbsp;&nbsp;&nbsp;**How to attend**<br> &nbsp;&nbsp;&nbsp;&nbsp;Our 2023 annual<br> &nbsp;&nbsp;&nbsp;&nbsp;meeting will be held <br> &nbsp;&nbsp;&nbsp;&nbsp;in person at the address<br> &nbsp;&nbsp;&nbsp;&nbsp;above and by live<br> &nbsp;&nbsp;&nbsp;&nbsp;webcast online at <br> **https://<br>web.lumiagm.com/<br>467771061** <br>&nbsp;&nbsp;&nbsp;&nbsp;Please read the voting<br> &nbsp;&nbsp;&nbsp;&nbsp;section starting on<br> &nbsp;&nbsp;&nbsp;&nbsp;page 6 for detailed<br> &nbsp;&nbsp;&nbsp;&nbsp;information about how to<br> &nbsp;&nbsp;&nbsp;&nbsp;attend the meeting, vote<br> &nbsp;&nbsp;&nbsp;&nbsp;and ask questions. More<br> &nbsp;&nbsp;&nbsp;&nbsp;information and updates<br> &nbsp;&nbsp;&nbsp;&nbsp;on how to attend the<br> &nbsp;&nbsp;&nbsp;&nbsp;meeting will be made<br> &nbsp;&nbsp;&nbsp;&nbsp;available on our website<br> **(https://**<br> **www.manulife.com/en/**<br> **investors/annual-**<br> **meeting.html).** | **Four items of business**<br> • Receiving the consolidated financial statements and auditors' reports for the year ended December 31, 2022<br> • Electing directors<br> • Appointing the auditors<br> • Having a say on executive pay |
| &nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;**When**<br> &nbsp;&nbsp;&nbsp;&nbsp;May 11, 2023<br> &nbsp;&nbsp;&nbsp;&nbsp;11 a.m. (Eastern time)<br>&nbsp;&nbsp;&nbsp;&nbsp;**Where**<br> &nbsp;&nbsp;&nbsp;&nbsp;Manulife Head Office<br> &nbsp;&nbsp;&nbsp;&nbsp;200 Bloor Street East<br> &nbsp;&nbsp;&nbsp;&nbsp;Toronto, Canada<br>&nbsp;&nbsp;&nbsp;&nbsp;**How to attend**<br> &nbsp;&nbsp;&nbsp;&nbsp;Our 2023 annual<br> &nbsp;&nbsp;&nbsp;&nbsp;meeting will be held <br> &nbsp;&nbsp;&nbsp;&nbsp;in person at the address<br> &nbsp;&nbsp;&nbsp;&nbsp;above and by live<br> &nbsp;&nbsp;&nbsp;&nbsp;webcast online at <br> **https://<br>web.lumiagm.com/<br>467771061** <br>&nbsp;&nbsp;&nbsp;&nbsp;Please read the voting<br> &nbsp;&nbsp;&nbsp;&nbsp;section starting on<br> &nbsp;&nbsp;&nbsp;&nbsp;page 6 for detailed<br> &nbsp;&nbsp;&nbsp;&nbsp;information about how to<br> &nbsp;&nbsp;&nbsp;&nbsp;attend the meeting, vote<br> &nbsp;&nbsp;&nbsp;&nbsp;and ask questions. More<br> &nbsp;&nbsp;&nbsp;&nbsp;information and updates<br> &nbsp;&nbsp;&nbsp;&nbsp;on how to attend the<br> &nbsp;&nbsp;&nbsp;&nbsp;meeting will be made<br> &nbsp;&nbsp;&nbsp;&nbsp;available on our website<br> **(https://**<br> **www.manulife.com/en/**<br> **investors/annual-**<br> **meeting.html).** | Other matters that are properly brought before the meeting will be considered, but we are not aware of any at this time. The annual meeting for The Manufacturers Life Insurance Company will be held at the same time and will also be held in person and by live webcast. |
| &nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;**When**<br> &nbsp;&nbsp;&nbsp;&nbsp;May 11, 2023<br> &nbsp;&nbsp;&nbsp;&nbsp;11 a.m. (Eastern time)<br>&nbsp;&nbsp;&nbsp;&nbsp;**Where**<br> &nbsp;&nbsp;&nbsp;&nbsp;Manulife Head Office<br> &nbsp;&nbsp;&nbsp;&nbsp;200 Bloor Street East<br> &nbsp;&nbsp;&nbsp;&nbsp;Toronto, Canada<br>&nbsp;&nbsp;&nbsp;&nbsp;**How to attend**<br> &nbsp;&nbsp;&nbsp;&nbsp;Our 2023 annual<br> &nbsp;&nbsp;&nbsp;&nbsp;meeting will be held <br> &nbsp;&nbsp;&nbsp;&nbsp;in person at the address<br> &nbsp;&nbsp;&nbsp;&nbsp;above and by live<br> &nbsp;&nbsp;&nbsp;&nbsp;webcast online at <br> **https://<br>web.lumiagm.com/<br>467771061** <br>&nbsp;&nbsp;&nbsp;&nbsp;Please read the voting<br> &nbsp;&nbsp;&nbsp;&nbsp;section starting on<br> &nbsp;&nbsp;&nbsp;&nbsp;page 6 for detailed<br> &nbsp;&nbsp;&nbsp;&nbsp;information about how to<br> &nbsp;&nbsp;&nbsp;&nbsp;attend the meeting, vote<br> &nbsp;&nbsp;&nbsp;&nbsp;and ask questions. More<br> &nbsp;&nbsp;&nbsp;&nbsp;information and updates<br> &nbsp;&nbsp;&nbsp;&nbsp;on how to attend the<br> &nbsp;&nbsp;&nbsp;&nbsp;meeting will be made<br> &nbsp;&nbsp;&nbsp;&nbsp;available on our website<br> **(https://**<br> **www.manulife.com/en/**<br> **investors/annual-**<br> **meeting.html).** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Anyone can attend the meeting, but you need to register as a shareholder or proxyholder to vote or ask questions. |
| &nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;**When**<br> &nbsp;&nbsp;&nbsp;&nbsp;May 11, 2023<br> &nbsp;&nbsp;&nbsp;&nbsp;11 a.m. (Eastern time)<br>&nbsp;&nbsp;&nbsp;&nbsp;**Where**<br> &nbsp;&nbsp;&nbsp;&nbsp;Manulife Head Office<br> &nbsp;&nbsp;&nbsp;&nbsp;200 Bloor Street East<br> &nbsp;&nbsp;&nbsp;&nbsp;Toronto, Canada<br>&nbsp;&nbsp;&nbsp;&nbsp;**How to attend**<br> &nbsp;&nbsp;&nbsp;&nbsp;Our 2023 annual<br> &nbsp;&nbsp;&nbsp;&nbsp;meeting will be held <br> &nbsp;&nbsp;&nbsp;&nbsp;in person at the address<br> &nbsp;&nbsp;&nbsp;&nbsp;above and by live<br> &nbsp;&nbsp;&nbsp;&nbsp;webcast online at <br> **https://<br>web.lumiagm.com/<br>467771061** <br>&nbsp;&nbsp;&nbsp;&nbsp;Please read the voting<br> &nbsp;&nbsp;&nbsp;&nbsp;section starting on<br> &nbsp;&nbsp;&nbsp;&nbsp;page 6 for detailed<br> &nbsp;&nbsp;&nbsp;&nbsp;information about how to<br> &nbsp;&nbsp;&nbsp;&nbsp;attend the meeting, vote<br> &nbsp;&nbsp;&nbsp;&nbsp;and ask questions. More<br> &nbsp;&nbsp;&nbsp;&nbsp;information and updates<br> &nbsp;&nbsp;&nbsp;&nbsp;on how to attend the<br> &nbsp;&nbsp;&nbsp;&nbsp;meeting will be made<br> &nbsp;&nbsp;&nbsp;&nbsp;available on our website<br> **(https://**<br> **www.manulife.com/en/**<br> **investors/annual-**<br> **meeting.html).** | <br> By order of the board of directors,<br>![LOGO](g408227g21n74.jpg) <br> Antonella Deo<br> Corporate Secretary<br>March 15, 2023<br>|

---

## Exhibit 99.3

**Exhibit 99.3**![LOGO](g408227dsp002.jpg)

Manulife 2023 Management information circular Manulife Financial Corporation Annual Meeting May 11, 2023 Notice of annual meeting of shareholders Your participation is important. Please read this document and vote.

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&nbsp;&nbsp;&nbsp;&nbsp;Notice of *annual meeting of* *common shareholders*

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;You're invited to attend our 2023 annual meeting<br> &nbsp;&nbsp;&nbsp;&nbsp;of common shareholders | &nbsp;&nbsp;&nbsp;&nbsp;You're invited to attend our 2023 annual meeting<br> &nbsp;&nbsp;&nbsp;&nbsp;of common shareholders |
| &nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;**When**<br> &nbsp;&nbsp;&nbsp;&nbsp;May 11, 2023<br> &nbsp;&nbsp;&nbsp;&nbsp;11 a.m. (Eastern time)<br>&nbsp;&nbsp;&nbsp;&nbsp;**Where**<br> &nbsp;&nbsp;&nbsp;&nbsp;Manulife Head Office<br> &nbsp;&nbsp;&nbsp;&nbsp;200 Bloor Street East<br> &nbsp;&nbsp;&nbsp;&nbsp;Toronto, Canada<br>&nbsp;&nbsp;&nbsp;&nbsp;**How to attend**<br> &nbsp;&nbsp;&nbsp;&nbsp;Our 2023 annual<br> &nbsp;&nbsp;&nbsp;&nbsp;meeting will be held <br> &nbsp;&nbsp;&nbsp;&nbsp;in person at the address<br> &nbsp;&nbsp;&nbsp;&nbsp;above and by live<br> &nbsp;&nbsp;&nbsp;&nbsp;webcast online at <br> **https://<br>web.lumiagm.com/<br>467771061** <br>&nbsp;&nbsp;&nbsp;&nbsp;Please read the voting<br> &nbsp;&nbsp;&nbsp;&nbsp;section starting on<br> &nbsp;&nbsp;&nbsp;&nbsp;page 6 for detailed<br> &nbsp;&nbsp;&nbsp;&nbsp;information about how to<br> &nbsp;&nbsp;&nbsp;&nbsp;attend the meeting, vote<br> &nbsp;&nbsp;&nbsp;&nbsp;and ask questions. More<br> &nbsp;&nbsp;&nbsp;&nbsp;information and updates<br> &nbsp;&nbsp;&nbsp;&nbsp;on how to attend the<br> &nbsp;&nbsp;&nbsp;&nbsp;meeting will be made<br> &nbsp;&nbsp;&nbsp;&nbsp;available on our website<br> **(https://**<br> **www.manulife.com/en/**<br> **investors/annual-**<br> **meeting.html).** | **Four items of business**<br> • Receiving the consolidated financial statements and auditors' reports for the year ended December 31, 2022<br> • Electing directors<br> • Appointing the auditors<br> • Having a say on executive pay |
| &nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;**When**<br> &nbsp;&nbsp;&nbsp;&nbsp;May 11, 2023<br> &nbsp;&nbsp;&nbsp;&nbsp;11 a.m. (Eastern time)<br>&nbsp;&nbsp;&nbsp;&nbsp;**Where**<br> &nbsp;&nbsp;&nbsp;&nbsp;Manulife Head Office<br> &nbsp;&nbsp;&nbsp;&nbsp;200 Bloor Street East<br> &nbsp;&nbsp;&nbsp;&nbsp;Toronto, Canada<br>&nbsp;&nbsp;&nbsp;&nbsp;**How to attend**<br> &nbsp;&nbsp;&nbsp;&nbsp;Our 2023 annual<br> &nbsp;&nbsp;&nbsp;&nbsp;meeting will be held <br> &nbsp;&nbsp;&nbsp;&nbsp;in person at the address<br> &nbsp;&nbsp;&nbsp;&nbsp;above and by live<br> &nbsp;&nbsp;&nbsp;&nbsp;webcast online at <br> **https://<br>web.lumiagm.com/<br>467771061** <br>&nbsp;&nbsp;&nbsp;&nbsp;Please read the voting<br> &nbsp;&nbsp;&nbsp;&nbsp;section starting on<br> &nbsp;&nbsp;&nbsp;&nbsp;page 6 for detailed<br> &nbsp;&nbsp;&nbsp;&nbsp;information about how to<br> &nbsp;&nbsp;&nbsp;&nbsp;attend the meeting, vote<br> &nbsp;&nbsp;&nbsp;&nbsp;and ask questions. More<br> &nbsp;&nbsp;&nbsp;&nbsp;information and updates<br> &nbsp;&nbsp;&nbsp;&nbsp;on how to attend the<br> &nbsp;&nbsp;&nbsp;&nbsp;meeting will be made<br> &nbsp;&nbsp;&nbsp;&nbsp;available on our website<br> **(https://**<br> **www.manulife.com/en/**<br> **investors/annual-**<br> **meeting.html).** | Other matters that are properly brought before the meeting will be considered, but we are not aware of any at this time. The annual meeting for The Manufacturers Life Insurance Company will be held at the same time and will also be held in person and by live webcast. |
| &nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;**When**<br> &nbsp;&nbsp;&nbsp;&nbsp;May 11, 2023<br> &nbsp;&nbsp;&nbsp;&nbsp;11 a.m. (Eastern time)<br>&nbsp;&nbsp;&nbsp;&nbsp;**Where**<br> &nbsp;&nbsp;&nbsp;&nbsp;Manulife Head Office<br> &nbsp;&nbsp;&nbsp;&nbsp;200 Bloor Street East<br> &nbsp;&nbsp;&nbsp;&nbsp;Toronto, Canada<br>&nbsp;&nbsp;&nbsp;&nbsp;**How to attend**<br> &nbsp;&nbsp;&nbsp;&nbsp;Our 2023 annual<br> &nbsp;&nbsp;&nbsp;&nbsp;meeting will be held <br> &nbsp;&nbsp;&nbsp;&nbsp;in person at the address<br> &nbsp;&nbsp;&nbsp;&nbsp;above and by live<br> &nbsp;&nbsp;&nbsp;&nbsp;webcast online at <br> **https://<br>web.lumiagm.com/<br>467771061** <br>&nbsp;&nbsp;&nbsp;&nbsp;Please read the voting<br> &nbsp;&nbsp;&nbsp;&nbsp;section starting on<br> &nbsp;&nbsp;&nbsp;&nbsp;page 6 for detailed<br> &nbsp;&nbsp;&nbsp;&nbsp;information about how to<br> &nbsp;&nbsp;&nbsp;&nbsp;attend the meeting, vote<br> &nbsp;&nbsp;&nbsp;&nbsp;and ask questions. More<br> &nbsp;&nbsp;&nbsp;&nbsp;information and updates<br> &nbsp;&nbsp;&nbsp;&nbsp;on how to attend the<br> &nbsp;&nbsp;&nbsp;&nbsp;meeting will be made<br> &nbsp;&nbsp;&nbsp;&nbsp;available on our website<br> **(https://**<br> **www.manulife.com/en/**<br> **investors/annual-**<br> **meeting.html).** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Anyone can attend the meeting, but you need to register as a shareholder or proxyholder to vote or ask questions. |
| &nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;**When**<br> &nbsp;&nbsp;&nbsp;&nbsp;May 11, 2023<br> &nbsp;&nbsp;&nbsp;&nbsp;11 a.m. (Eastern time)<br>&nbsp;&nbsp;&nbsp;&nbsp;**Where**<br> &nbsp;&nbsp;&nbsp;&nbsp;Manulife Head Office<br> &nbsp;&nbsp;&nbsp;&nbsp;200 Bloor Street East<br> &nbsp;&nbsp;&nbsp;&nbsp;Toronto, Canada<br>&nbsp;&nbsp;&nbsp;&nbsp;**How to attend**<br> &nbsp;&nbsp;&nbsp;&nbsp;Our 2023 annual<br> &nbsp;&nbsp;&nbsp;&nbsp;meeting will be held <br> &nbsp;&nbsp;&nbsp;&nbsp;in person at the address<br> &nbsp;&nbsp;&nbsp;&nbsp;above and by live<br> &nbsp;&nbsp;&nbsp;&nbsp;webcast online at <br> **https://<br>web.lumiagm.com/<br>467771061** <br>&nbsp;&nbsp;&nbsp;&nbsp;Please read the voting<br> &nbsp;&nbsp;&nbsp;&nbsp;section starting on<br> &nbsp;&nbsp;&nbsp;&nbsp;page 6 for detailed<br> &nbsp;&nbsp;&nbsp;&nbsp;information about how to<br> &nbsp;&nbsp;&nbsp;&nbsp;attend the meeting, vote<br> &nbsp;&nbsp;&nbsp;&nbsp;and ask questions. More<br> &nbsp;&nbsp;&nbsp;&nbsp;information and updates<br> &nbsp;&nbsp;&nbsp;&nbsp;on how to attend the<br> &nbsp;&nbsp;&nbsp;&nbsp;meeting will be made<br> &nbsp;&nbsp;&nbsp;&nbsp;available on our website<br> **(https://**<br> **www.manulife.com/en/**<br> **investors/annual-**<br> **meeting.html).** | <br> By order of the board of directors,<br>![LOGO](g427878g21n74.jpg) <br> Antonella Deo<br> Corporate Secretary<br>March 15, 2023<br>|

---

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Message to shareholders

---

| | |
|:---|:---|
| ![LOGO](g427878g42h96.jpg) | **Don Lindsay**<br>Chair of the Board |

---

**Dear fellow shareholders,** 

On behalf of the board of directors, we are pleased to invite you to the annual meeting of common shareholders of Manulife Financial Corporation on May 11, 2023. As a holder of common shares, you have the right to receive our financial statements and vote your shares at the meeting.

Our 2023 management information circular, which starts on page 2, includes important information about the business of the meeting and the items you will be voting on, as well as information about our corporate governance practices and executive compensation program. Please read the circular before you vote your shares.

Manulife continues to accelerate growth, leveraging the solid foundation that we have built for future success. Over the past several years, Roy Gori and the executive leadership team have continued to show steadfast leadership, anchored always in our values. Their commitment, ownership and spirit have driven resilient results despite the challenges and impacts presented by an unpredictable macroeconomic environment and an unprecedented global pandemic. With their leadership, and the strength of Manulife's global team, the company has delivered on key commitments made to shareholders, and achieved record net income in 2022.

Your Board has remained focused on providing oversight and guidance to the leadership team to ensure effective oversight of the company given its current operations and strategy. After nearly two years of virtual meetings, the opportunity to adopt a hybrid meeting schedule has enabled optimal participation from our directors and enhanced our ability to attract talented directors from around the globe.

We have also continued our focus on board succession and diversity. You can read more about our progress on these matters and others throughout the circular, including that women represent seven of the 11 independent directors nominated for election.

On behalf of the Board and Manulife's shareholders, customers, and colleagues, I would like to offer our sincere thanks to John Cassaday for his 30 years of service. We have marked many milestones during that time, and we are grateful for his unwavering leadership and many contributions to the Company. John's sense of duty, grace, insight, and wisdom have served the Company well, and he will be missed. We wish him the very best in his future endeavours. We would also like to thank Joseph Caron, whose term as director will end at the close of our 2023 annual meeting, for his 12 years of service and dedication. His many contributions to Manulife are greatly appreciated. Looking to the future, I appreciate the trust you have placed in me and I am humbled to serve as the Chair of your Board as we work together to achieve our bold ambition.

You can read about Manulife's accomplishments in 2022 and their impact on our executive pay beginning on page 40. You will also find a more detailed discussion of the year's performance and Manulife's strategic progress in our 2022 annual report - available at manulife.com.

**Please read the circular and vote your shares** 

The meeting will be held in person and by live webcast on May 11, 2023 at 11:00 a.m. (Eastern time). You can find information about how to attend the meeting on page 6.

Your vote is important to us – we encourage you to consider the information set out in the circular and exercise your voting rights. See page 7 for details about how to vote.

The meeting will cover four items of business: (1) receiving our financial statements; (2) voting to elect directors; (3) voting to appoint the auditors; and (4) voting to have a 'say on executive pay'. You will vote on all items except for the financial statements. The board recommends you vote FOR items 2 to 4.

We look forward to welcoming you at the meeting.

![LOGO](g427878g89r37.jpg)

Don Lindsay

Chair of the Board

March 15, 2023

2023 Management information circular<sub>1</sub>

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## About this Management

## Information Circular
This management information circular is being made available to you because you owned common shares of Manulife Financial Corporation as of the close of business on March 15, 2023. It includes important information about the meeting, the items of business to be covered and how to vote your shares.

You're entitled to receive notice of, and vote these shares at, our 2023 annual meeting of common shareholders.

Management is soliciting your proxy for the meeting, which means we're contacting you to encourage you to vote. This will be done mainly by mail, but you may also be contacted by phone, including in connection with the use of the Broadridge QuickVote<sup>™</sup> service. We have retained Kingsdale Advisors (Kingsdale), and they may assist us with this process. We pay the costs of the engagement with Kingsdale, which we expect to be approximately $47,250.

**In this document:** 

• *we, us, our, company* and *Manulife* mean Manulife Financial Corporation

• *you, your* and *shareholder* refer to holders of Manulife common shares

• *circular* means this management information circular

• *meeting* means our annual meeting of common shareholders on May 11, 2023

• *common shares* or *shares* means common shares of Manulife Financial Corporation

• *Manufacturers Life* means The Manufacturers Life Insurance Company

Information in this circular is as at February 28, 2023 and in Canadian dollars, unless indicated otherwise. Any information contained in, or otherwise accessible through, websites mentioned in this circular does not form a part of this document.

**For more information** 

You can find financial information about Manulife in our 2022 annual report, which includes our audited consolidated financial statements and management's discussion and analysis (MD&A) for the year ended December 31, 2022. The audit committee section of our annual information form has information about the audit committee, including the committee charter.

These documents are available on manulife.com, on SEDAR (sedar.com), and on EDGAR (sec.gov/edgar). You can also ask us for a copy of our 2022 annual report – simply email us at shareholder_services@manulife.com.

**Important information about your shares** 

Third parties may contact you with unsolicited offers to buy your shares, often at prices below market value. Securities administrators in Canada and the U.S. have expressed serious concerns about these types of offers, including the possibility that investors might tender to such offers without understanding the offer price relative to the actual market price of their securities. Investors should exercise caution with these types of offers.

**Manulife is not associated with these offers and does not endorse or approve them.** If you are contacted with an offer to buy your Manulife shares or have any questions about your shares, please speak with your investment advisor or contact TSX Trust at 1-800-783-9495 (Canadian residents), 1-800-249-7702 (U.S. residents) or 416-682-3864.

---

| | |
|:---|:---|
| **2** | Manulife Financial Corporation |

---

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**Delivery of the 2023 management information circular** 

As permitted by the Canadian Securities Administrators and pursuant to an exemption from the proxy solicitation requirement received from the Office of the Superintendent of Financial Institutions Canada, we are using notice and access to deliver this circular to both our registered and non-registered (beneficial) shareholders.

**What is notice and access?** 

Instead of receiving a paper copy of the circular, a package was sent to shareholders with a notice explaining how to access the circular online and how to request a paper copy. A form of proxy for registered shareholders and ownership statement holders, or a voting instruction form for non-registered (beneficial) shareholders, was included with the notice with instructions so you can vote your shares.

**How to access the circular online** 

**Our website:** https://www.manulife.com/en/investors/annual-meeting.html

**Our transfer agent's website:** www.meetingdocuments.com/TSXT/MFC

**On SEDAR:** www.sedar.com

**How to request a paper copy of the circular** 

Shareholders may request a paper copy of the circular up to one year from the date the circular was filed on SEDAR. If you would like to receive a paper copy prior to the meeting, please follow the instructions provided in the notice or make a request by going to www.meetingdocuments.com/TSXT/MFC or contacting our transfer agent, TSX Trust Company (TSX Trust), via telephone at 1-888-433-6443 (toll free in Canada and the United States) or 416-682-3801, or via email at tsxt-fulfilment@tmx.com.

If you have questions about notice and access please call TSX Trust at 1-800-783-9495 (Canadian residents), 1-800-249-7702 (U.S. residents) or 416-682-3864.

&nbsp;&nbsp;&nbsp;&nbsp; **Sign up for e-delivery**<br>We want to provide you with information the way you want to receive it. You can choose to receive<br>your shareholder materials online instead of in the mail.<br>*Non-registered (beneficial) shareholders*<br> Visit proxyvote.com and enter the control number from your voting instruction form. Select "sign up"<br>to go paperless.<br>*Registered shareholders and non-registered ownership statement holders*<br> Visit tsxtrust.com/MFCdigital and follow the instructions.<br>

2023 Management information circular<sub>3</sub>

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&nbsp;&nbsp; **![LOGO](g427878g61v06.jpg) Where to find it**<br>

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp; **About the meeting** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Who can vote](#tx427878_1) | 6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [How to vote](#tx427878_2) | 7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [What the meeting will cover](#tx427878_3) | 12 |
| &nbsp;&nbsp;&nbsp;&nbsp; **About the directors** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Key things about the board](#tx427878_4) | 16 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Director profiles](#tx427878_5) | 18 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [2022 board committee reports](#tx427878_6) | 30 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [How we pay our directors](#tx427878_7) | 35 |
| &nbsp;&nbsp;&nbsp;&nbsp; **Executive compensation** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [**Message from the Chair**](#tx427878_8) | 40 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [**Compensation discussion and Analysis**](#tx427878_9) | 42 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Executive summary](#tx427878_10) | 42 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Our compensation philosophy](#tx427878_11) | 48 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Benchmarking against our peers](#tx427878_12) | 50 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Our compensation program and 2022 performance](#tx427878_13) | 52 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Compensation of the named executives](#tx427878_14) | 67 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Share performance](#tx427878_15) | 84 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **[Executive compensation details](#tx427878_16)** | **86** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Summary compensation table](#tx427878_17) | 86 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Equity compensation](#tx427878_18) | 88 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Retirement benefits](#tx427878_19) | 92 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Termination and change in control benefits](#tx427878_20) | 98 |

---

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| | |
|:---|:---|
| [**Compensation oversight**](#tx427878_21) | **103** |
| [How the board oversees executive compensation](#tx427878_22) | 103 |
| [Managing compensation risk](#tx427878_23) | 105 |
| [The decision-making process](#tx427878_24) | 108 |
| [Compensation of employees who have a material impact on risk](#tx427878_25) | 110 |
| **Governance at Manulife** |  |
| **[About the Manulife board](#tx427878_26)** | **115** |
| [Board committees](#tx427878_27) | 118 |
| [Board roles and responsibilities](#tx427878_28) | 118 |
| [Subsidiary governance](#tx427878_39) | 126 |
| **[Serving as a director](#tx427878_29)** | **127** |
| [Serving on other boards](#tx427878_30) | 127 |
| [Integrity](#tx427878_31) | 127 |
| [Equity ownership](#tx427878_32) | 127 |
| [Term limits](#tx427878_33) | 127 |
| [Independence](#tx427878_34) | 128 |
| [Board succession and diversity](#tx427878_35) | 129 |
| [Skills and experience](#tx427878_36) | 130 |
| [Director development](#tx427878_37) | 132 |
| [Assessment](#tx427878_38) | 133 |
| **Other information** |  |
| [ESG at Manulife](#tx427878_40) | 135 |
| [Liability insurance](#tx427878_41) | 136 |
| [Loans to directors and officers](#tx427878_42) | 136 |
| [Directors' approval](#tx427878_43) | 136 |

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| | |
|:---|:---|
| ![LOGO](g427878g61v06.jpg) | &nbsp;&nbsp;&nbsp;&nbsp;**This symbol tells you where**<br> &nbsp;&nbsp;&nbsp;&nbsp;**you can find more information** |

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| | |
|:---|:---|
| **4** | Manulife Financial Corporation |

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## About the meeting
This year's annual meeting is on May 11, 2023.

Read this section to find out who can vote, how you can vote and what you will be voting on.

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| | |
|:---|:---|
| **Questions?**<br>Call our transfer agent in your region if you have any questions about the meeting. Registered holders can also call our transfer agent to get information on options for managing your share account. | **Questions?**<br>Call our transfer agent in your region if you have any questions about the meeting. Registered holders can also call our transfer agent to get information on options for managing your share account. |
| **Canada** | 1-800-783-9495 |
| **United States** | 1-800-249-7702 |
| **Hong Kong** | 852-2980-1333 |
| **Philippines** | 632-5318-8567 |

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp; **![LOGO](g427878g09w29.jpg) Where to find it** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Who can vote](#tx427878_44) | 6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [How to vote](#tx427878_45) | 7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [What the meeting will cover](#tx427878_46) | 12 |

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2023 Management information circular<sub>5</sub>

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Who can vote

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| | |
|:---|:---|
| If you held Manulife common shares as of 5 p.m. (Eastern time) on March 15, 2023 (the record date), you're entitled to receive notice of, and vote at, our 2023 annual meeting. We had 1,858,297,688 common shares outstanding as of this date and each share carries one vote. |  |
| If you held Manulife common shares as of 5 p.m. (Eastern time) on March 15, 2023 (the record date), you're entitled to receive notice of, and vote at, our 2023 annual meeting. We had 1,858,297,688 common shares outstanding as of this date and each share carries one vote. | &nbsp;&nbsp;&nbsp;&nbsp; **About quorum**<br> Before the meeting can go ahead, at least two shareholders have to be present at the meeting, in person or by proxy. |
| If you held Manulife common shares as of 5 p.m. (Eastern time) on March 15, 2023 (the record date), you're entitled to receive notice of, and vote at, our 2023 annual meeting. We had 1,858,297,688 common shares outstanding as of this date and each share carries one vote. |  |

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We must receive a simple majority of votes cast for an item to be approved.

**Voting restrictions** 

Shares beneficially owned by the following entities and persons cannot be voted (except in circumstances approved by the Minister of Finance (Canada)):

• the Government of Canada or any of its political subdivisions or agencies

• the government of a province or any of its political subdivisions or agencies

• the government of a foreign country or any foreign government's political subdivisions or agencies

• any person who has acquired more than 10% of any class of shares of Manulife.

Also, if any person, an entity controlled by any person, or any person together with an entity that person controls, beneficially owns more than 20% of the shares that can be voted, that person or entity cannot vote unless the Minister of Finance (Canada) allows it.

We are not aware of any person who beneficially owns or exercises control or direction (directly or indirectly) over more than 10% of the voting rights attached to Manulife common shares.

**How to attend the meeting** 

*In person*

The meeting will be held at our head office in Toronto at 200 Bloor Street East on May 11, 2023 at 11:00 a.m. (Eastern time). Please register with our transfer agent when you arrive.

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| | |
|:---|:---|
| *Online as a shareholder*<br> 1. Log in: **https://web.lumiagm.com/467771061**. The link will be accessible one hour before the meeting start time to allow you to test your connection<br>2. Click "I have a control number"<br>3. Enter your control number (see pages 7 to 11 for more information)<br> 4. Enter your password: "manulife2023" (case sensitive)<br>*Online as a guest*<br> 1. Log in: **https://web.lumiagm.com/467771061**.<br> 2. Click "I am a guest" and then complete the required fields. | &nbsp;&nbsp;&nbsp;&nbsp; Shareholders and their duly appointed proxyholders will be able to ask questions and vote during the meeting. For more information about how to vote during the meeting and ask questions, please see pages 7 to 10. Additional instructions will be provided at the meeting, as necessary. Questions should be of interest to all shareholders, not personal in nature. If your question relates to a personal matter, we will contact you after the meeting to follow up on your question. If we cannot answer a question during the meeting because of timing or technical limitations, we will follow up with you as soon as practicable after the meeting.<br>Anyone can attend the meeting as a guest, but guests cannot vote or ask questions.<br>More information and updates on how to attend the meeting will be available on our website (**https://www.manulife.com/en/investors/annual-meeting.html**). |

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| | |
|:---|:---|
| **6** | Manulife Financial Corporation |

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About the Meeting

**Please make sure your browser is compatible *before* you try to access the meeting online** 

To access the meeting online either as a shareholder or a guest you will need the latest versions of Chrome, Safari, Edge or Firefox. Please do not use Internet Explorer. You should log in early to make sure your browser is compatible. Internal network security protocols including firewalls and virtual private network (VPN) connections may block access. If you are experiencing any difficulty connecting or watching the meeting, ensure your VPN setting is disabled or use a computer on a network not restricted by the security settings of your organization. In the event of difficulties during the registration process or with accessing and attending the meeting, please contact TSX Trust at 1-800-783-9495 (Canadian residents), 1-800-249-7702 (U.S. residents) or 416-682-3864 (rest of world).

How to vote

There are two ways to vote – by proxy before the meeting, or during the meeting. How you vote depends on whether you're a registered shareholder, an ownership statement holder or a non-registered (beneficial) shareholder.

Shareholders are encouraged to vote their shares and submit proxies before the meeting.

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| | |
|:---|:---|
| <br> **See page 11 for important details about voting by proxy.** | **Registered shareholders and non-registered ownership statement holders**<br> (your package includes a proxy form)<br>You're a *registered shareholder* if you have a share certificate in your name or your shares are recorded electronically in the Direct Registration System (DRS) maintained by our transfer agent.<br>You're an *ownership statement holder* if you hold a share ownership statement that was issued when Manufacturers Life demutualized. |

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| | | | |
|:---|:---|:---|:---|
| **Vote by proxy**<br> You or your authorized representative must complete the proxy form. If you're a corporation or other legal entity, your authorized representative must complete the form. | ![LOGO](g427878g59w80.jpg)  | You can vote your shares in one of four ways: | You can vote your shares in one of four ways: |
| **Vote by proxy**<br> You or your authorized representative must complete the proxy form. If you're a corporation or other legal entity, your authorized representative must complete the form. | ![LOGO](g427878g59w80.jpg)  | ![LOGO](g427878g48j66.jpg) | **On the internet** – Go to the website indicated on your proxy form. You will need the personal identification/control number on the form. |
| **Vote by proxy**<br> You or your authorized representative must complete the proxy form. If you're a corporation or other legal entity, your authorized representative must complete the form. | ![LOGO](g427878g59w80.jpg)  | ![LOGO](g427878g90e51.jpg) | **By phone (Canada and U.S. only)** – Call the toll-free number on the proxy form and follow the instructions. You will need the personal identification/control number on the form. |
| **Vote by proxy**<br> You or your authorized representative must complete the proxy form. If you're a corporation or other legal entity, your authorized representative must complete the form. | ![LOGO](g427878g59w80.jpg)  | ![LOGO](g427878g55p24.jpg) | **By mail** – Complete your proxy form and return it in the envelope provided. |
| **Vote by proxy**<br> You or your authorized representative must complete the proxy form. If you're a corporation or other legal entity, your authorized representative must complete the form. | ![LOGO](g427878g59w80.jpg)  | ![LOGO](g427878g71r68.jpg) | **On your smartphone** – Use the QR code found on your proxy form. |
|  | ![LOGO](g427878g59w80.jpg)  | Your proxy must be received by **5 p.m. (Eastern time) on May 9, 2023** for your vote to be counted. If you're mailing your proxy form, be sure to allow enough time for the envelope to be delivered. The deadline for the deposit of proxies can be waived by the Chair of the Board at his discretion, without notice.<br>If the meeting is adjourned, your proxy must be received by **5 p.m. (Eastern time) two business days before the meeting is reconvened.** | Your proxy must be received by **5 p.m. (Eastern time) on May 9, 2023** for your vote to be counted. If you're mailing your proxy form, be sure to allow enough time for the envelope to be delivered. The deadline for the deposit of proxies can be waived by the Chair of the Board at his discretion, without notice.<br>If the meeting is adjourned, your proxy must be received by **5 p.m. (Eastern time) two business days before the meeting is reconvened.** |
| **Vote in person at the meeting**<br> You will need to bring photo identification with you to the meeting. | <br> ![LOGO](g427878g59w80.jpg)  | Check in with our transfer agent when you arrive at the meeting.<br>Do not complete the proxy form before the meeting because you'll vote in person at the meeting. | Check in with our transfer agent when you arrive at the meeting.<br>Do not complete the proxy form before the meeting because you'll vote in person at the meeting. |

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2023 Management information circular<sub>7</sub>

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| | | |
|:---|:---|:---|
|  |  | **Registered shareholders and non-registered ownership statement holders** (continued) |
| **Vote online during the meeting**<br> You will find your control number on the proxy form included with your meeting materials.<br>You will need your control number to be able to vote or ask questions at the meeting. | ![LOGO](g427878g59w80.jpg)  | On the day of the meeting:<br> 1. Log in: **https://web.lumiagm.com/467771061**. The link will be accessible one hour before the meeting start time to allow you to test your connection<br> 2. Click "I have a control number"<br> 3. Enter your control number (on the proxy form included with the meeting materials)<br> 4. Enter your password: "manulife2023" (case sensitive)<br> 5. Follow the instructions to cast your vote.<br>If you have already voted by proxy, your vote at the meeting, if properly cast, will automatically revoke your previous vote. |

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| | | |
|:---|:---|:---|
| **Changing your vote**<br> You can revoke your proxy form if you change your mind about how you want to vote your shares. | ![LOGO](g427878g59w80.jpg)  | Sending new voting instructions with a later date will revoke the instructions you previously submitted.<br>You can send a new proxy on the internet, by phone or by mail, by following the instructions above. Or send a notice in writing, signed by you or your authorized representative to: Corporate Secretary, Manulife Financial Corporation, 200 Bloor Street East, Toronto, Canada M4W 1E5.<br>Your new proxy must be received by **5 p.m. (Eastern time) on May 9, 2023** for your vote to be counted. If you're mailing your new proxy form, be sure to allow enough time for the envelope to be delivered.<br>If the meeting is adjourned, your proxy must be received by **5 p.m. (Eastern time) two business days before the meeting is reconvened.** <br>If you miss the deadline, you can only revoke your proxy by giving a notice in writing to the Chair of the Board before the meeting begins. The notice must be signed by you or your authorized representative. |

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| | |
|:---|:---|
| **8** | Manulife Financial Corporation |

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About the Meeting

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| | |
|:---|:---|
| **See page 11 for important details about voting by proxy.** | **Non-registered (beneficial) shareholders**<br> (your package includes a voting instruction form)<br>You're a *non-registered shareholder* if you hold your shares through an intermediary (a bank, trust company, securities broker or other financial institution). This means the shares are registered in your intermediary's name and you're the beneficial shareholder. |

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| | | | |
|:---|:---|:---|:---|
| **Vote by proxy**<br> You or your authorized representative must complete the voting instruction form. If you're a corporation or other legal entity, your authorized representative must complete the form. | ![LOGO](g427878g59w80.jpg)  | You can vote your shares in one of four ways: | You can vote your shares in one of four ways: |
| **Vote by proxy**<br> You or your authorized representative must complete the voting instruction form. If you're a corporation or other legal entity, your authorized representative must complete the form. | ![LOGO](g427878g59w80.jpg)  | ![LOGO](g427878g48j66.jpg) | **On the internet** – Go to the website indicated on your voting instruction form and follow the instructions on screen. |
| **Vote by proxy**<br> You or your authorized representative must complete the voting instruction form. If you're a corporation or other legal entity, your authorized representative must complete the form. | ![LOGO](g427878g59w80.jpg)  | ![LOGO](g427878g90e51.jpg) | **By phone (Canada and U.S. only)** – Call the toll-free number on your voting instruction form and follow the instructions. |
| **Vote by proxy**<br> You or your authorized representative must complete the voting instruction form. If you're a corporation or other legal entity, your authorized representative must complete the form. | ![LOGO](g427878g59w80.jpg)  | ![LOGO](g427878g55p24.jpg) | **By mail** – Complete your voting instruction form and return it in the envelope provided. |
| **Vote by proxy**<br> You or your authorized representative must complete the voting instruction form. If you're a corporation or other legal entity, your authorized representative must complete the form. | ![LOGO](g427878g59w80.jpg)  |  | **On your smartphone** – Use the QR code found on your voting instruction form. |
|  |  | Your intermediary must receive your voting instructions with enough time to act on your instructions. Check the form for the deadline for submitting your voting instructions. If you're mailing your voting instruction form, be sure to allow enough time for the envelope to be delivered. The deadline for the deposit of proxies can be waived by the Chair of the Board at his discretion, without notice. | Your intermediary must receive your voting instructions with enough time to act on your instructions. Check the form for the deadline for submitting your voting instructions. If you're mailing your voting instruction form, be sure to allow enough time for the envelope to be delivered. The deadline for the deposit of proxies can be waived by the Chair of the Board at his discretion, without notice. |
| **Vote in person at the meeting**<br> You must appoint yourself (or another person) as proxyholder.<br>Then you or the person you appoint need to bring photo identification with you to the meeting. | <br> ![LOGO](g427878g59w80.jpg)  | First, appoint yourself as proxyholder by printing your name in the space provided on the voting instruction form. You can also appoint someone else to be your proxyholder (see page 11 for more information). You can do this in one of two ways:<br> • sign and return the form in the envelope provided but do not fill in your voting instructions because you will vote during the meeting (check the form for the deadline for submitting it, and make sure you allow enough time for the envelope to be delivered), *or*<br> • go to the website indicated on the voting instruction form and follow the instructions.<br>Then, when you arrive at the meeting, check in with our transfer agent. | First, appoint yourself as proxyholder by printing your name in the space provided on the voting instruction form. You can also appoint someone else to be your proxyholder (see page 11 for more information). You can do this in one of two ways:<br> • sign and return the form in the envelope provided but do not fill in your voting instructions because you will vote during the meeting (check the form for the deadline for submitting it, and make sure you allow enough time for the envelope to be delivered), *or*<br> • go to the website indicated on the voting instruction form and follow the instructions.<br>Then, when you arrive at the meeting, check in with our transfer agent. |
|  | <br> ![LOGO](g427878g59w80.jpg)  |  |  |

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2023 Management information circular<sub>9</sub>

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| | | |
|:---|:---|:---|
| | | **Non-registered (beneficial) shareholders**<br> (continued) |
| **Vote online during the meeting**<br> You must appoint yourself (or another person) as proxyholder.<br>Then you or the person you appoint must contact TSX Trust to get a control number.<br>You need a control number to be able to vote or ask questions at the meeting. | ![LOGO](g427878g59w80.jpg)  | First, appoint yourself as proxyholder by printing your name in the space provided on the voting instruction form. You can also appoint someone else to be your proxyholder (see page 11 for more information). You can do this in one of two ways:<br> • sign and return the form in the envelope provided but do not fill in your voting instructions because you will vote online during the meeting (check the form for the deadline for submitting it, and make sure you allow enough time for the envelope to be delivered), or <br> • go to the website indicated on the voting instruction form and follow the instructions.<br>Then get a control number by contacting TSX Trust by no later than **5 p.m. (Eastern time) on May 9, 2023.** You can do this in one of two ways:<br> • call 1-866-751-6315 (within North America) or 647-252-9650 (outside of North America), or<br> • go online at **www.tsxtrust.com/control-number-request**<br>If you appointed someone else to be your proxyholder, that person must contact TSX Trust to get a control number.<br>On the day of the meeting:<br> 1. Log in: **https://web.lumiagm.com/467771061**. The link will be accessible one hour before the meeting start time to allow you to test your connection<br> 2. Click "I have a control number"<br> 3. Enter your control number<br> 4. Enter your password: "manulife2023" (case sensitive)<br> 5. Follow the instructions to cast your vote. If you have already voted by proxy, your vote at the meeting, if properly cast, will automatically revoke your previous vote. |
| **Changing your vote**<br> You can revoke your voting instruction form if you change your mind about how you want to vote your shares. | ![LOGO](g427878g59w80.jpg)  | Follow the instructions on your voting instruction form, or contact your intermediary for more information.<br>Your intermediary must receive your voting instructions with enough time to act on your instructions. Check the form for the deadline for submitting your voting instructions. If you're mailing your voting instruction form, be sure to allow enough time for the envelope to be delivered. The deadline for the deposit of proxies may be waived or extended by the Chair of the Board at his discretion, without notice. |

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| | |
|:---|:---|
| **10** | Manulife Financial Corporation |

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About the Meeting

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| | |
|:---|:---|
| **More about voting by proxy**<br>|  |
| Voting by proxy is the easiest way to vote. It means you're giving someone else (your proxyholder) the authority to attend the meeting and vote for you according to your instructions.<br>Roy Gori, President and Chief Executive Officer or, in his place, Donald R. Lindsay, Chair of the Board (with full power of substitution) have agreed to act as Manulife proxyholders to vote your shares at the meeting according to your instructions. If you do not name a different proxyholder when you complete your form, you | &nbsp;&nbsp;&nbsp;&nbsp; **About confidentiality and voting results**<br> Our transfer agent independently counts and tabulates the votes to maintain confidentiality. A proxy form or voting instruction form is only referred to us if it's clear that a shareholder wants to communicate with the board or management, the validity of the form is in question, or the law requires it.<br>After the meeting the voting results will be posted on manulife.com, on SEDAR (sedar.com), and on EDGAR (sec.gov/edgar). |
| are authorizing Mr. Gori or Mr. Lindsay to act as<br>your proxyholder to vote for you at the meeting according to your instructions.<br>If you do not indicate on the form how you want to vote your shares, Mr. Gori or Mr. Lindsay will vote: | are authorizing Mr. Gori or Mr. Lindsay to act as<br>your proxyholder to vote for you at the meeting according to your instructions.<br>If you do not indicate on the form how you want to vote your shares, Mr. Gori or Mr. Lindsay will vote: |

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• FOR the election of each of the nominated directors in this circular

• FOR the appointment of Ernst & Young LLP as auditors

• FOR the advisory vote on our approach to executive compensation

**You can also appoint someone else to be your proxyholder – that individual does not need to be a Manulife shareholder. To do so, print the person's name in the blank space on the proxy form or voting instruction form, sign and return the form in the envelope provided but do not fill in your voting instructions because your proxyholder will vote during the meeting (check the form for the deadline for submitting it, and make sure you allow enough time for the envelope to be delivered), or go to the website indicated on the proxy form or voting instruction form and follow the instructions. Once your intermediary receives your instructions your proxyholder needs to either attend the meeting in person (please have your proxyholder bring photo ID to the meeting) or get a control number to attend the meeting online by contacting TSX Trust by no later than 5 p.m. (Eastern time) on May 9, 2023. They can do this in one of two ways:** 

• call 1-866-751-6315 (within North America) or 647-252-9650 (outside of North America), or

• go online at www.tsxtrust.com/control-number-request.

If there are amendments to the items to be voted on or any other matters that are properly brought before the meeting or any adjournment, your proxyholder can vote your shares as they see fit.

&nbsp;&nbsp;&nbsp;&nbsp; **Questions?**<br>Call the transfer agent in your region if you have any questions or to ask for a new proxy form (see page 5 for details).<br>

2023 Management information circular<sub>11</sub>

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What the meeting will cover

The meeting will cover four items of business.

**1. Financial statements** (manulife.com)

Our 2022 consolidated financial statements and the auditors' reports on those financial statements will be presented at the meeting. You can find a copy in our 2022 annual report on manulife.com.

**2. Electing directors** (see page 15)

You will elect 12 directors to serve on our board until either the end of next year's annual meeting of shareholders, or earlier if they leave the board. All nominated directors were elected at our 2022 meeting. You can read about the nominated directors beginning on page 15. The board recommends that you vote FOR the election of each nominated director.

**3. Appointing the auditors** 

Ernst & Young LLP (Ernst & Young) (or a predecessor) have acted as external auditors to Manulife or an entity within the Manulife group of entities since 1905. The audit committee has recommended that the board re-appoint them as our auditors for fiscal 2023 to serve until the end of our next annual meeting. We plan to initiate a tendering process for the audit engagement in 2024 once the adoption of IFRS 17 (Insurance Contracts) (IFRS 17) and first annual audit cycle is complete. Given the complexities associated with IFRS 17, the audit committee does not think it would be prudent to initiate a tendering process before the first annual audit cycle is complete.

We maintain independence from the external auditors through audit committee oversight, a robust regulatory framework in Canada, including the requirement to rotate the lead audit partner at least every five years, and Ernst & Young's own internal independence procedures. The audit committee also conducts a formal review of the external auditors every year and a more comprehensive review every five years. The next comprehensive review is scheduled for 2024.

The table below lists the services Ernst & Young provided to Manulife and its subsidiaries in the last two fiscal years and the fees they charged each year:

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| | | |
|:---|:---|:---|
| (in millions) | 2022 | 2021 |
| **Audit fees** | **$44.5** | $31.7 |
| Includes the audit of our financial statements as well as the financial statements of our subsidiaries, segregated funds, audits of statutory filings, prospectus services, report on internal controls, reviews of quarterly reports and regulatory filings | **$44.5** | $31.7 |
| **Audit-related fees** | **$3.6** | $3.1 |
| Includes consultation concerning financial accounting and reporting standards not classified as audit, due diligence in connection with proposed or consummated transactions and assurance services to report on internal controls for third parties | **$3.6** | $3.1 |
| **Tax fees** | **$0.1**  | $0.6  |
| Includes tax compliance, tax planning and tax advice services | **$0.1**  | $0.6  |
| **All other fees** | **$0.2**  | $0.2  |
| Includes other advisory services | **$0.2**  | $0.2  |
| **Total** | **$48.4** | $35.6 |

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Note: Total fees above exclude fees of $10.5 million in 2022 and $9.7 million in 2021 for professional services provided by Ernst & Young LLP to certain investment funds managed by subsidiaries of Manulife. For certain funds, these fees are paid directly by the funds. For other funds, in addition to other administrative costs, the subsidiaries are responsible for the auditor's fees for professional services, in return for a fixed administration fee. Audit fees for 2022 above also include one-time fees for special projects related to the implementation of IFRS 17 and IFRS 9 Financial Instruments of $10.9M.

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| | |
|:---|:---|
| **12** | Manulife Financial Corporation |

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About the Meeting

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| | |
|:---|:---|
| Our auditor independence policy requires the audit committee to pre-approve all audit and permitted non-audit services (including the fees and conditions) the external auditor provides.<br>If a new service is proposed during the year that is outside the pre-approved categories or budget, it must be pre-approved by the audit committee, or by a member that the committee has appointed to act on its behalf.<br>The board recommends that you vote FOR the appointment of Ernst & Young as auditors.<br>**4. Having a say on executive pay**<br>(see page 39)<br> The board believes that executive compensation programs must be sound, fair and competitive with the market and support our strategy and progress.<br>The board recognizes the increased scrutiny of executive compensation generally and believes that shareholders should have the opportunity to fully understand our compensation objectives, | &nbsp;&nbsp;&nbsp;&nbsp; **Audit committee review**<br> The audit committee conducts a formal review of the external auditors every year, and a more comprehensive review every five years. These reviews are based on recommendations by the Chartered Professional Accountants of Canada (CPA Canada) and the Canadian Public Accountability Board to assist the audit committee in their oversight duties.<br>A comprehensive review was conducted in 2019, covering the five-year period ended December 31, 2018. The 2022 review included an evaluation of the engagement partner and team, their independence, objectivity and the quality of communication and audit work performed. In 2022, the lead partner completed his term and a new lead partner was appointed.<br>We plan to initiate a tendering process for the audit engagement in 2024 once the adoption of IFRS 17 and first annual audit cycle is complete.<br>|
| Our auditor independence policy requires the audit committee to pre-approve all audit and permitted non-audit services (including the fees and conditions) the external auditor provides.<br>If a new service is proposed during the year that is outside the pre-approved categories or budget, it must be pre-approved by the audit committee, or by a member that the committee has appointed to act on its behalf.<br>The board recommends that you vote FOR the appointment of Ernst & Young as auditors.<br>**4. Having a say on executive pay**<br>(see page 39)<br> The board believes that executive compensation programs must be sound, fair and competitive with the market and support our strategy and progress.<br>The board recognizes the increased scrutiny of executive compensation generally and believes that shareholders should have the opportunity to fully understand our compensation objectives, |  |

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philosophy and principles, and have a say on our approach to executive compensation. As a result, we're asking you to vote on the following resolution:

*Resolved, on an advisory basis and not to diminish the role and responsibilities of the board of directors, that the shareholders accept the approach to executive compensation disclosed in the management information circular delivered in advance of the 2023 annual meeting of common shareholders of Manulife Financial Corporation.* 

This is an advisory vote, so the results are not binding. The board will, however, take the results into account, together with feedback received from other shareholder engagement activities, when making decisions about compensation policies, procedures and executive pay in the future.

We discuss our executive compensation program and the impact our performance had on executive compensation for 2022 in detail starting on page 40. This disclosure has been approved by the board on the recommendation of the management resources and compensation committee.

The board recommends that you vote FOR our approach to executive compensation.

2023 Management information circular<sub>13</sub>

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Last year shareholders voted 91.71% in favour of our approach to executive compensation. If a significant number of shareholders oppose the resolution, the board will engage with shareholders (especially those who are known to have voted against it) to understand their concerns and will continue to review our approach to executive compensation in the context of those concerns.

We encourage any shareholders who are thinking of voting against the resolution to contact the board to discuss their specific issues or concerns (see page 116 for details about how to contact the board and page 125 for details about our shareholder engagement activities).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> **About shareholder proposals and proxy access**<br>*Shareholder proposals*<br> We must receive shareholder proposals or nominations under our proxy access policy for our 2024 annual meeting by 5 p.m. (Eastern time) on December 15, 2023 to consider including them in next year's management information circular. Shareholder proposal submissions must be in writing and meet the requirements of the Insurance Companies Act (Canada), which you can find online at https://laws-lois.justice.gc.ca/eng/acts/I-11.8/index.html. See page 126 for more information on our proxy access policy.<br>Send your proposal or nomination notice to:<br> Corporate Secretary<br> Manulife Financial Corporation<br> 200 Bloor Street East<br> Toronto, Ontario M4W 1E5<br> Canada<br> email: corporate_governance@manulife.com<br>

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| | |
|:---|:---|
| **14** | Manulife Financial Corporation |

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## About the directors
Read about the nominated directors before you vote your shares.

This year, 12 directors have been nominated for election to the board for a one-year term. They were all elected at our 2022 meeting. John Cassaday retired from the board on February 15, 2023 as he neared the end of his 5-year term as Chair of the Board. Joseph Caron is also reaching the end of his 12-year director term and will not stand for re-election.

This group of directors has the mix of skills, experience and qualifications necessary for proper oversight and effective decision-making in the context of a complex, publicly-traded organization.

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| | |
|:---|:---|
| **Appropriate size** | **Independent** |
| <br> **12** | <br> **All** |
| directors is within an appropriate range for | directors are independent, except the CEO, and |
| healthy debate end effective decision-making<br>| all board committee members are independent<br>|
| **Qualified and financially literate** | **Age** |
| <br> **All** | <br> **63** |
| directors bring a mix of the competencies and experience necessary for effective oversight, and all are financially literate<br>| is the average age of the nominated directors |

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| | |
|:---|:---|
| **Diverse** |  |
| <br> **7** | <br> **3** |
| of the nominated independent directors **(64%)** are women<br>| of the nominated independent directors **(27%)** have self-identified as members of a visible minority as defined in the Employment Equity Act (Canada).<br>|

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| | |
|:---|:---|
| **Balanced tenure**<br>| ![LOGO](g427878g48a01.jpg)  |
| **6.4** | ![LOGO](g427878g48a01.jpg)  |
| <br> years is the average tenure of the nominated<br>independent directors | ![LOGO](g427878g48a01.jpg)  |

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The board has a 12-year term limit. The Chair of the Board can serve a term of five years, regardless of the number of years served as a director.

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| | | | |
|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp; **![LOGO](g427878g09w29.jpg) Where to find it** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Key things about the board](#tx427878_47) | 16 | [2022 board committee reports](#tx427878_49) | 30 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Director profiles](#tx427878_48) | 18 | [How we pay our directors](#tx427878_50) | 35 |

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| | |
|:---|:---|
| 2023 Management information circular | **15** |

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Key things about the board

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| | |
|:---|:---|
| **Diversity**<br>Our board recognizes the importance of diversity and is committed to fostering diversity at all levels of the organization. The board has a long history of promoting diversity and believes that having highly qualified directors from diverse backgrounds brings different perspectives and experiences to the boardroom, generating healthy discussion and debate and more effective decision-making. See page 129 for more about diversity. | ![LOGO](g427878g00p01.jpg) |
| &nbsp;&nbsp;&nbsp; 7 of the nominated independent directors (64%) are women<br>3 of the nominated independent directors (27%) have self-identified as members of a visible minority as defined in the Employment Equity Act (Canada). | ![LOGO](g427878g00p01.jpg) |
| <br> **Oversight**<br>Our board continued to provide effective oversight and guidance to management throughout the past year and maintained a clear line of sight into significant areas of focus through regular interactions, including the following:<br> • board and committee meetings, meetings with management, written updates and informal communications, and update calls in months that did not have a regularly scheduled meeting<br> • expanded the use of board focus groups as a means of taking deep dives on key topics<br> • leveraged technology to continue to interact with each other and management during board sessions, and gather ongoing feedback to confirm that all directors' voices were heard<br> • continued focus on board succession with a comprehensive succession process for the Chair of the Board to achieve an orderly transition, resulting in the appointment of Don Lindsay as Chair of the Board on February 15, 2023 | ![LOGO](g427878g00p01.jpg) |
| • reviewed committee membership in light of the Chair of the Board succession process, implementing changes to reflect changing circumstances while maintaining effective oversight<br> • implemented a hybrid meeting schedule with both in-person and virtual meetings to balance the importance of in-person interactions and the flexibility of virtual meetings given the global nature of the board to achieve optimal participation from all directors and to help attract talented directors from across the globe.<br>1 as defined in the Employment Equity Act (Canada). | • reviewed committee membership in light of the Chair of the Board succession process, implementing changes to reflect changing circumstances while maintaining effective oversight<br> • implemented a hybrid meeting schedule with both in-person and virtual meetings to balance the importance of in-person interactions and the flexibility of virtual meetings given the global nature of the board to achieve optimal participation from all directors and to help attract talented directors from across the globe.<br>1 as defined in the Employment Equity Act (Canada). |

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| | |
|:---|:---|
| **16** | Manulife Financial Corporation |

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About the Directors

**Majority voting** 

Shareholders can vote for, or withhold their vote from, each director. Directors who receive more withhold than for votes must submit their resignation.

The corporate governance and nominating committee will review the details surrounding the resignation and report to the board. The board will accept the resignation unless there are exceptional circumstances. The board will decide whether to accept the resignation within 90 days of the meeting and a news release will be issued disclosing the resignation or the reasons why the resignation was not accepted. The director will not participate in these deliberations. The resignation will be effective when it is accepted by the board.

This policy applies only in uncontested elections, where the number of nominated directors is the same as the number of directors to be elected.

**2022 attendance** 

The table below shows the number of board and committee meetings held in 2022 and overall attendance. Quorum for board meetings is a majority of the directors and directors are expected to attend all meetings of the board and the committees they're members of unless there are extenuating circumstances.

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| | | |
|:---|:---|:---|
|  | Number of<br>meetings | Overall meeting<br>attendance |
| Board | 8 | 100% |
| Audit committee | 5 | 100% |
| Corporate governance and nominating committee | 5 | 98% |
| Management resources and compensation committee | 5 | 100% |
| Risk committee | 5 | 100% |

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**Equity ownership** 

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| | |
|:---|:---|
| The director profiles that follow include the value of each director's equity ownership. We calculated the value of equity ownership by multiplying the number of their common shares and deferred share units (DSUs) by $26.98, the closing price of our common shares on the TSX on February 28, 2023. | In 2022, our independent directors were required to receive at least 50% of the annual board retainer in equity. This increased to US$127,500 (or approximately 55%) on January 1, 2023.The director equity ownership requirement is six times the mandatory equity portion of the annual board retainer. |
| <br> We require all directors except Mr. Gori to own common shares, preferred shares and/or DSUs with a total market value of at least six times the mandatory equity portion of the annual board retainer. Mr. Gori has separate equity ownership requirements as President and CEO, which he meets (see page 107). | <br> We require all directors except Mr. Gori to own common shares, preferred shares and/or DSUs with a total market value of at least six times the mandatory equity portion of the annual board retainer. Mr. Gori has separate equity ownership requirements as President and CEO, which he meets (see page 107). |

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In 2022, the mandatory equity portion of the annual board retainer was US$102,500. The corporate governance and nominating committee worked with an independent consultant to review director compensation again in 2022, and recommended that the board approve a 12% increase to director compensation to align with companies of similar complexity, received entirely in equity, and increasing the mandatory equity portion of the retainer to $127,500 (approximately 55% of the board retainer). This change went into effect January 1, 2023.

Directors are expected to meet their equity ownership requirements within six years of joining the board. The minimum equity ownership requirement under the new model and as of February 28, 2023 was $1,041,089 (US$765,000, using an exchange rate of US$1.00 = $1.3609). Fluctuations in foreign exchange rates will cause variances in the minimum ownership requirements.

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| | |
|:---|:---|
| 2023 Management information circular | **17** |

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Director profiles

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| | |
|:---|:---|
| ![LOGO](g427878g18k66.jpg) | **Donald R. Lindsay** (Chair)<br>Vancouver, BC, Canada/Age 64/Independent |

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| | |
|:---|:---|
| **Key competencies and experience** |  |
| • Finance/Accounting<br> • Risk management<br> • Talent management/Executive compensation | • Technology/Operations<br> • Asia experience<br> • Public company executive/Director |
| <br> Mr. Lindsay's CEO and international business experience and nearly two decades of experience in senior executive roles in investment and corporate banking and global financial services qualify him to serve as the Chair of the Board and as chair of the corporate governance and nominating committee. Mr. Lindsay also has extensive ESG experience which will be valuable as Manulife seeks to implement its Impact Agenda and drive sustained social and environmental impact through our business and our interactions with customers, communities and the environments in which we operate. | <br> Mr. Lindsay's CEO and international business experience and nearly two decades of experience in senior executive roles in investment and corporate banking and global financial services qualify him to serve as the Chair of the Board and as chair of the corporate governance and nominating committee. Mr. Lindsay also has extensive ESG experience which will be valuable as Manulife seeks to implement its Impact Agenda and drive sustained social and environmental impact through our business and our interactions with customers, communities and the environments in which we operate. |

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| | | | |
|:---|:---|:---|:---|
| Don Lindsay was appointed as Chair of the Board on February 15, 2023.<br>Mr. Lindsay was previously President and CEO of Teck Resources Limited, Canada's largest diversified mining, mineral processing and metallurgical company, a position he held since 2005 where he led Teck to achieve top rankings from ESG rating agencies such as S&P Global, MSCI and ISS ESG. His experience also includes almost two decades with CIBC World Markets Inc., where he ultimately served as President after periods as Head of Investment and Corporate Banking and Head of the Asia Pacific Region.<br>Mr. Lindsay currently serves on the Board of Directors for BC Children's Hospital Foundation, Alpine Canada, York House School, and is an Honorary Governor of the Royal Ontario Museum. He was Chair of the International Council on Mining and Metals, Chair of the Board of Governors for Mining and Metals at the World Economic Forum, and recently completed his three-year term as Chair of the Business Council of Canada.<br>Mr. Lindsay earned a Bachelor of Science in Mining Engineering from Queen's University and holds an MBA from Harvard Business School, and has been the recipient of an Honorary Doctor of Laws from the University of Windsor and Honorary Doctorate of Technology from the British Columbia Institute of Technology.<br>**2022 meeting attendance** | Don Lindsay was appointed as Chair of the Board on February 15, 2023.<br>Mr. Lindsay was previously President and CEO of Teck Resources Limited, Canada's largest diversified mining, mineral processing and metallurgical company, a position he held since 2005 where he led Teck to achieve top rankings from ESG rating agencies such as S&P Global, MSCI and ISS ESG. His experience also includes almost two decades with CIBC World Markets Inc., where he ultimately served as President after periods as Head of Investment and Corporate Banking and Head of the Asia Pacific Region.<br>Mr. Lindsay currently serves on the Board of Directors for BC Children's Hospital Foundation, Alpine Canada, York House School, and is an Honorary Governor of the Royal Ontario Museum. He was Chair of the International Council on Mining and Metals, Chair of the Board of Governors for Mining and Metals at the World Economic Forum, and recently completed his three-year term as Chair of the Business Council of Canada.<br>Mr. Lindsay earned a Bachelor of Science in Mining Engineering from Queen's University and holds an MBA from Harvard Business School, and has been the recipient of an Honorary Doctor of Laws from the University of Windsor and Honorary Doctorate of Technology from the British Columbia Institute of Technology.<br>**2022 meeting attendance** | Don Lindsay was appointed as Chair of the Board on February 15, 2023.<br>Mr. Lindsay was previously President and CEO of Teck Resources Limited, Canada's largest diversified mining, mineral processing and metallurgical company, a position he held since 2005 where he led Teck to achieve top rankings from ESG rating agencies such as S&P Global, MSCI and ISS ESG. His experience also includes almost two decades with CIBC World Markets Inc., where he ultimately served as President after periods as Head of Investment and Corporate Banking and Head of the Asia Pacific Region.<br>Mr. Lindsay currently serves on the Board of Directors for BC Children's Hospital Foundation, Alpine Canada, York House School, and is an Honorary Governor of the Royal Ontario Museum. He was Chair of the International Council on Mining and Metals, Chair of the Board of Governors for Mining and Metals at the World Economic Forum, and recently completed his three-year term as Chair of the Business Council of Canada.<br>Mr. Lindsay earned a Bachelor of Science in Mining Engineering from Queen's University and holds an MBA from Harvard Business School, and has been the recipient of an Honorary Doctor of Laws from the University of Windsor and Honorary Doctorate of Technology from the British Columbia Institute of Technology.<br>**2022 meeting attendance** | Director since<br> August 2010<br>Term limit:<br> 2028<br>2022 votes *for*: 97.52%<br>**Public company boards** (last five years)<br>• Teck Resources Limited, 2005-2022 |
| <br> **Board** | <br> 8 of 8 | <br> 100%  | Director since<br> August 2010<br>Term limit:<br> 2028<br>2022 votes *for*: 97.52%<br>**Public company boards** (last five years)<br>• Teck Resources Limited, 2005-2022 |
| <br> **Board committees** |  |  | Director since<br> August 2010<br>Term limit:<br> 2028<br>2022 votes *for*: 97.52%<br>**Public company boards** (last five years)<br>• Teck Resources Limited, 2005-2022 |
| • Management resources and compensation (chair) | 5 of 5 | 100% | Director since<br> August 2010<br>Term limit:<br> 2028<br>2022 votes *for*: 97.52%<br>**Public company boards** (last five years)<br>• Teck Resources Limited, 2005-2022 |
| • Risk | 5 of 5 | 100% | Director since<br> August 2010<br>Term limit:<br> 2028<br>2022 votes *for*: 97.52%<br>**Public company boards** (last five years)<br>• Teck Resources Limited, 2005-2022 |
| <br> On February 15, 2023, Don Lindsay joined the corporate governance and nominating committee, also becoming committee chair, and resigned from the risk committee and management resources and compensation committee. | <br> On February 15, 2023, Don Lindsay joined the corporate governance and nominating committee, also becoming committee chair, and resigned from the risk committee and management resources and compensation committee. | <br> On February 15, 2023, Don Lindsay joined the corporate governance and nominating committee, also becoming committee chair, and resigned from the risk committee and management resources and compensation committee. |  |

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**Equity ownership** (as at February 28, 2023<sup>1</sup> and February 28, 2022)

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Year** | **Common<br>shares** | **DSUs** | **Total common<br>shares and DSUs** | **Total value** | **Total value as a<br>multiple of equity<br>ownership guideline** |
| 2023 | 20000 | 108672 | 128672 | $3471571 | 3.3x |
| 2022 | 20000 | 96046 | 116046 | $2980061 | 3.8x |
| Change | 0 | 12626 | 12626 |  |  |
|  <br> 1 As of March 15, 2023, Mr. Lindsay increased his personal MFC common share holdings to 120,000 shares, bringing his total equity holdings to 228, 672. The total value of his holdings, based on the closing price of our common shares on the TSX on February 28, 2023, was $6,169,570.<br>With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> 1 As of March 15, 2023, Mr. Lindsay increased his personal MFC common share holdings to 120,000 shares, bringing his total equity holdings to 228, 672. The total value of his holdings, based on the closing price of our common shares on the TSX on February 28, 2023, was $6,169,570.<br>With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> 1 As of March 15, 2023, Mr. Lindsay increased his personal MFC common share holdings to 120,000 shares, bringing his total equity holdings to 228, 672. The total value of his holdings, based on the closing price of our common shares on the TSX on February 28, 2023, was $6,169,570.<br>With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> 1 As of March 15, 2023, Mr. Lindsay increased his personal MFC common share holdings to 120,000 shares, bringing his total equity holdings to 228, 672. The total value of his holdings, based on the closing price of our common shares on the TSX on February 28, 2023, was $6,169,570.<br>With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> 1 As of March 15, 2023, Mr. Lindsay increased his personal MFC common share holdings to 120,000 shares, bringing his total equity holdings to 228, 672. The total value of his holdings, based on the closing price of our common shares on the TSX on February 28, 2023, was $6,169,570.<br>With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> 1 As of March 15, 2023, Mr. Lindsay increased his personal MFC common share holdings to 120,000 shares, bringing his total equity holdings to 228, 672. The total value of his holdings, based on the closing price of our common shares on the TSX on February 28, 2023, was $6,169,570.<br>With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. |
| <br> ![LOGO](g427878g09w29.jpg)  | <br> ![LOGO](g427878g09w29.jpg)  | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** |

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| | |
|:---|:---|
| **18** | Manulife Financial Corporation |

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About the Directors

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| | |
|:---|:---|
| ![LOGO](g427878g01a77.jpg) | **Nicole S. Arnaboldi**<br>Greenwich, CT, U.S.A./Age 64/Independent |

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| | |
|:---|:---|
| **Key competencies and experience** |  |
| • Finance/Accounting | • Talent management/Executive compensation  |
| • Insurance/Reinsurance/Investment management  | • Asia experience |
| • Risk management | • Public company executive/Director  |
| <br> Ms. Arnaboldi's extensive experience at a major financial institution, specifically in the asset management field, qualifies her to serve on our board, as a member of the risk committee and as chair of the management resources and compensation committee. | <br> Ms. Arnaboldi's extensive experience at a major financial institution, specifically in the asset management field, qualifies her to serve on our board, as a member of the risk committee and as chair of the management resources and compensation committee. |

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| | | | |
|:---|:---|:---|:---|
| Nicole Arnaboldi is a partner at Oak Hill Capital Management, a private equity firm. She is a former senior executive at Credit Suisse, a global financial services company, and its predecessor Donaldson, Lufkin and Jenrette Securities Corporation, holding a number of senior roles in their wealth and asset management businesses, including Senior Advisor, and prior to that, Vice Chairman, Credit Suisse Asset Management.<br>Ms. Arnaboldi is a member of the boards of Commonfund and Merit Hill Capital (non-public companies). She also serves on various Harvard University advisory boards, including for HarvardX and Harvard Law School.<br>Ms. Arnaboldi holds a Bachelor of Arts from Harvard College, and a JD and an MBA from Harvard University.<br>**2022 meeting attendance** | Nicole Arnaboldi is a partner at Oak Hill Capital Management, a private equity firm. She is a former senior executive at Credit Suisse, a global financial services company, and its predecessor Donaldson, Lufkin and Jenrette Securities Corporation, holding a number of senior roles in their wealth and asset management businesses, including Senior Advisor, and prior to that, Vice Chairman, Credit Suisse Asset Management.<br>Ms. Arnaboldi is a member of the boards of Commonfund and Merit Hill Capital (non-public companies). She also serves on various Harvard University advisory boards, including for HarvardX and Harvard Law School.<br>Ms. Arnaboldi holds a Bachelor of Arts from Harvard College, and a JD and an MBA from Harvard University.<br>**2022 meeting attendance** | Nicole Arnaboldi is a partner at Oak Hill Capital Management, a private equity firm. She is a former senior executive at Credit Suisse, a global financial services company, and its predecessor Donaldson, Lufkin and Jenrette Securities Corporation, holding a number of senior roles in their wealth and asset management businesses, including Senior Advisor, and prior to that, Vice Chairman, Credit Suisse Asset Management.<br>Ms. Arnaboldi is a member of the boards of Commonfund and Merit Hill Capital (non-public companies). She also serves on various Harvard University advisory boards, including for HarvardX and Harvard Law School.<br>Ms. Arnaboldi holds a Bachelor of Arts from Harvard College, and a JD and an MBA from Harvard University.<br>**2022 meeting attendance** | Director since<br> June 2020<br>Term limit:<br> 2033<br>2022 votes *for*: 99.24%<br>**Public company boards** (last five years)<br>• NextEra Energy, Inc., 2022-present |
| **Board** | 8 of 8 | 100% | Director since<br> June 2020<br>Term limit:<br> 2033<br>2022 votes *for*: 99.24%<br>**Public company boards** (last five years)<br>• NextEra Energy, Inc., 2022-present |
| <br> **Board committees** |  |  | Director since<br> June 2020<br>Term limit:<br> 2033<br>2022 votes *for*: 99.24%<br>**Public company boards** (last five years)<br>• NextEra Energy, Inc., 2022-present |
| • Audit | 5 of 5 | 100% | Director since<br> June 2020<br>Term limit:<br> 2033<br>2022 votes *for*: 99.24%<br>**Public company boards** (last five years)<br>• NextEra Energy, Inc., 2022-present |
| • Corporate governance and nominating | 5 of 5 | 100% | Director since<br> June 2020<br>Term limit:<br> 2033<br>2022 votes *for*: 99.24%<br>**Public company boards** (last five years)<br>• NextEra Energy, Inc., 2022-present |
| <br> On February 15, 2023, Nicole Arnaboldi joined the management resources and compensation committee and became committee chair, joined the risk committee, and resigned from the corporate governance and nominating committee and audit committee. | <br> On February 15, 2023, Nicole Arnaboldi joined the management resources and compensation committee and became committee chair, joined the risk committee, and resigned from the corporate governance and nominating committee and audit committee. | <br> On February 15, 2023, Nicole Arnaboldi joined the management resources and compensation committee and became committee chair, joined the risk committee, and resigned from the corporate governance and nominating committee and audit committee. |  |

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**Equity ownership** (as at February 28, 2023 and February 28, 2022)

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Year** | **Common**<br> **shares** | **DSUs** | **Total common**<br> **shares and DSUs** | **Total value** | **Total value as a<br>multiple of equity<br>ownership guideline** |
| 2023 | 6500 | 31157 | 37657 | $1015986 | 0.98x |
| 2022 | 6500 | 18478 | 24978 | $641435 | 0.8x |
| Change | 0 | 12679 | 12679 |  |  |
| <br> Ms. Arnaboldi joined the board on June 9, 2020. Under the director equity ownership requirements, she is expected to meet the equity ownership requirements within six years of joining the board. With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> Ms. Arnaboldi joined the board on June 9, 2020. Under the director equity ownership requirements, she is expected to meet the equity ownership requirements within six years of joining the board. With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> Ms. Arnaboldi joined the board on June 9, 2020. Under the director equity ownership requirements, she is expected to meet the equity ownership requirements within six years of joining the board. With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> Ms. Arnaboldi joined the board on June 9, 2020. Under the director equity ownership requirements, she is expected to meet the equity ownership requirements within six years of joining the board. With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> Ms. Arnaboldi joined the board on June 9, 2020. Under the director equity ownership requirements, she is expected to meet the equity ownership requirements within six years of joining the board. With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> Ms. Arnaboldi joined the board on June 9, 2020. Under the director equity ownership requirements, she is expected to meet the equity ownership requirements within six years of joining the board. With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. |
| <br> ![LOGO](g427878g09w29.jpg)  | <br> ![LOGO](g427878g09w29.jpg)  | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** |

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| | |
|:---|:---|
| 2023 Management information circular | **19** |

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|:---|:---|
| ![LOGO](g427878g10y60.jpg) | **Guy L.T. Bainbridge**<br>Edinburgh, Midlothian, United Kingdom/Age 62/Independent |

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| | |
|:---|:---|
| **Key competencies and experience** |  |
| • Finance/Accounting | • Asia experience |
| • Insurance/Reinsurance/Investment management | • Public company executive/Director |
| • Risk management |  |
| <br> Mr. Bainbridge's extensive financial and audit experience qualifies him to serve on our board, as a member of the corporate governance and nominating committee and as chair of the audit committee. | <br> Mr. Bainbridge's extensive financial and audit experience qualifies him to serve on our board, as a member of the corporate governance and nominating committee and as chair of the audit committee. |

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| | | | |
|:---|:---|:---|:---|
| Guy Bainbridge is a former partner with KPMG LLP. He has acted as the key audit leader of several of the UK and world's largest financial institutions and served on KPMG's UK and Europe boards.<br>Mr. Bainbridge also serves as the audit committee chair of each of Yorkshire Building Society and ICE Clear Europe Limited (non-public companies). Mr. Bainbridge is a member of the Institute of Chartered Accountants in England and Wales and holds a Master of Arts from the University of Cambridge.<br>**2022 meeting attendance** | Guy Bainbridge is a former partner with KPMG LLP. He has acted as the key audit leader of several of the UK and world's largest financial institutions and served on KPMG's UK and Europe boards.<br>Mr. Bainbridge also serves as the audit committee chair of each of Yorkshire Building Society and ICE Clear Europe Limited (non-public companies). Mr. Bainbridge is a member of the Institute of Chartered Accountants in England and Wales and holds a Master of Arts from the University of Cambridge.<br>**2022 meeting attendance** | Guy Bainbridge is a former partner with KPMG LLP. He has acted as the key audit leader of several of the UK and world's largest financial institutions and served on KPMG's UK and Europe boards.<br>Mr. Bainbridge also serves as the audit committee chair of each of Yorkshire Building Society and ICE Clear Europe Limited (non-public companies). Mr. Bainbridge is a member of the Institute of Chartered Accountants in England and Wales and holds a Master of Arts from the University of Cambridge.<br>**2022 meeting attendance** | Director since<br> August 2019<br>Term limit:<br> 2032<br>2022 votes *for*: 98.33%<br>**Public company boards** (last five years)<br>• None |
| **Board** | 8 of 8 | 100% | Director since<br> August 2019<br>Term limit:<br> 2032<br>2022 votes *for*: 98.33%<br>**Public company boards** (last five years)<br>• None |
|  <br> **Board committees** |  |  | Director since<br> August 2019<br>Term limit:<br> 2032<br>2022 votes *for*: 98.33%<br>**Public company boards** (last five years)<br>• None |
| • Audit (chair) | 5 of 5 | 100% | Director since<br> August 2019<br>Term limit:<br> 2032<br>2022 votes *for*: 98.33%<br>**Public company boards** (last five years)<br>• None |
| • Corporate governance and nominating | 4 of 5 | 80% | Director since<br> August 2019<br>Term limit:<br> 2032<br>2022 votes *for*: 98.33%<br>**Public company boards** (last five years)<br>• None |

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**Equity ownership** (as at February 28, 2023 and February 28, 2022)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Year** | **Common<br>shares** | **DSUs** | **Total common<br>shares and DSUs** | **Total value** | **Total value as a**<br> **multiple of equity<br>ownership guideline** |
| 2023 | 0 | 23970 | 23970 | $646711 | 0.6x |
| 2022 | 0 | 16105 | 16105 | $413576 | 0.5x |
| Change | 0 | 7865 | 7865 |  |  |
| <br> Mr. Bainbridge joined the board on August 7, 2019. Under the director equity ownership requirements, he is expected to meet the equity ownership requirements within six years of joining the board. With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> Mr. Bainbridge joined the board on August 7, 2019. Under the director equity ownership requirements, he is expected to meet the equity ownership requirements within six years of joining the board. With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> Mr. Bainbridge joined the board on August 7, 2019. Under the director equity ownership requirements, he is expected to meet the equity ownership requirements within six years of joining the board. With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> Mr. Bainbridge joined the board on August 7, 2019. Under the director equity ownership requirements, he is expected to meet the equity ownership requirements within six years of joining the board. With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> Mr. Bainbridge joined the board on August 7, 2019. Under the director equity ownership requirements, he is expected to meet the equity ownership requirements within six years of joining the board. With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> Mr. Bainbridge joined the board on August 7, 2019. Under the director equity ownership requirements, he is expected to meet the equity ownership requirements within six years of joining the board. With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. |
| <br> ![LOGO](g427878g09w29.jpg)  | <br> ![LOGO](g427878g09w29.jpg)  | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** |

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| | |
|:---|:---|
| **20** | Manulife Financial Corporation |

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About the Directors

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| | |
|:---|:---|
| ![LOGO](g427878g69e07.jpg) | **Susan F. Dabarno**<br>Bracebridge, ON, Canada/Age 70/Independent |

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| | |
|:---|:---|
| **Key competencies and experience** |  |
| • Finance/Accounting | • Asia experience |
| • Insurance/Reinsurance/Investment management | • Public company executive/Director |
| • Talent management/Executive compensation | • Digital transformation/Sales/Marketing |
| • Technology/Operations |  |
| <br> Ms. Dabarno brings extensive global wealth management and financial services experience to the board, and her roles in various executive capacities and accounting background qualify her to serve on our board and as a member of the risk committee and the management resources and compensation committee. | <br> Ms. Dabarno brings extensive global wealth management and financial services experience to the board, and her roles in various executive capacities and accounting background qualify her to serve on our board and as a member of the risk committee and the management resources and compensation committee. |

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| | | | |
|:---|:---|:---|:---|
| Susan Dabarno has been a corporate director since 2011. She has extensive wealth management and distribution expertise and served from 2009 to 2010 as Executive Chair, and from 2003 to 2009 as President and Chief Executive Officer, of Richardson Partners Financial Limited, an independent wealth management services firm. Before joining Richardson Partners Financial Limited, Ms. Dabarno was President and Chief Operating Officer at Merrill Lynch Canada Inc.<br>She is a former director of the Toronto Waterfront Revitalization Corporation (government funded organization) and Bridgepoint Health Foundation (not-for-profit).<br>Ms. Dabarno is a Fellow of Chartered Professional Accountants (FCPA) and holds a Class II Diploma from McGill University.<br>**2022 meeting attendance** | Susan Dabarno has been a corporate director since 2011. She has extensive wealth management and distribution expertise and served from 2009 to 2010 as Executive Chair, and from 2003 to 2009 as President and Chief Executive Officer, of Richardson Partners Financial Limited, an independent wealth management services firm. Before joining Richardson Partners Financial Limited, Ms. Dabarno was President and Chief Operating Officer at Merrill Lynch Canada Inc.<br>She is a former director of the Toronto Waterfront Revitalization Corporation (government funded organization) and Bridgepoint Health Foundation (not-for-profit).<br>Ms. Dabarno is a Fellow of Chartered Professional Accountants (FCPA) and holds a Class II Diploma from McGill University.<br>**2022 meeting attendance** | Susan Dabarno has been a corporate director since 2011. She has extensive wealth management and distribution expertise and served from 2009 to 2010 as Executive Chair, and from 2003 to 2009 as President and Chief Executive Officer, of Richardson Partners Financial Limited, an independent wealth management services firm. Before joining Richardson Partners Financial Limited, Ms. Dabarno was President and Chief Operating Officer at Merrill Lynch Canada Inc.<br>She is a former director of the Toronto Waterfront Revitalization Corporation (government funded organization) and Bridgepoint Health Foundation (not-for-profit).<br>Ms. Dabarno is a Fellow of Chartered Professional Accountants (FCPA) and holds a Class II Diploma from McGill University.<br>**2022 meeting attendance** | Director since<br> March 2013<br>Term limit:<br> 2025<br>2022 votes *for*: 99.62%<br>**Public company boards** (last five years)<br>• Cenovus Energy Inc., 2017-2021 |
| **Board** | 8 of 8 | 100% | Director since<br> March 2013<br>Term limit:<br> 2025<br>2022 votes *for*: 99.62%<br>**Public company boards** (last five years)<br>• Cenovus Energy Inc., 2017-2021 |
| <br> **Board committees** |  |  | Director since<br> March 2013<br>Term limit:<br> 2025<br>2022 votes *for*: 99.62%<br>**Public company boards** (last five years)<br>• Cenovus Energy Inc., 2017-2021 |
| • Management resources and compensation | 5 of 5 | 100% | Director since<br> March 2013<br>Term limit:<br> 2025<br>2022 votes *for*: 99.62%<br>**Public company boards** (last five years)<br>• Cenovus Energy Inc., 2017-2021 |
| • Risk | 5 of 5 | 100% | Director since<br> March 2013<br>Term limit:<br> 2025<br>2022 votes *for*: 99.62%<br>**Public company boards** (last five years)<br>• Cenovus Energy Inc., 2017-2021 |

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**Equity ownership** (as at February 28, 2023 and February 28, 2022)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Year** | **Common**<br> **shares** | **DSUs** | **Total common**<br> **shares and DSUs** | **Total value** | **Total value as a<br>multiple of equity<br>ownership guideline** |
| 2023 | 45250 | 33952 | 79202 | $2136870 | 2.1x |
| 2022 | 45250 | 26621 | 71871 | $1845647 | 2.4x |
| Change | 0 | 7331 | 7331 |  |  |
| With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. |
| <br> ![LOGO](g427878g09w29.jpg)  | <br> ![LOGO](g427878g09w29.jpg)  | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** |

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| | |
|:---|:---|
| 2023 Management information circular | **21** |

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| | |
|:---|:---|
| ![LOGO](g427878g15e20.jpg) | **Julie E. Dickson**<br>Ottawa, ON, Canada/Age 65/Independent |

---

---

| | |
|:---|:---|
| **Key competencies and experience** |  |
| • Finance/Accounting | • Government relations/Public policy/Regulatory |
| • Insurance/Reinsurance/Investment management | • Public company executive/Director |
| • Risk management |  |
| <br> Ms. Dickson's extensive financial, risk and regulatory experience qualifies her to serve on our board and as a member of the risk committee and the management resources and compensation committee. | <br> Ms. Dickson's extensive financial, risk and regulatory experience qualifies her to serve on our board and as a member of the risk committee and the management resources and compensation committee. |

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| | | | |
|:---|:---|:---|:---|
| Julie Dickson is a former Superintendent of Financial Institutions, Canada, Canada's main financial services regulator. She currently serves on the Canadian Public Accountability Board, and the boards of the Dubai Financial Services Authority and the Global Risk Institute.<br>Ms. Dickson is an Officer of the Order of Canada and holds a Bachelor of Arts from the University of New Brunswick and a Masters of Economics from Queen's University.<br>**2022 meeting attendance** | Julie Dickson is a former Superintendent of Financial Institutions, Canada, Canada's main financial services regulator. She currently serves on the Canadian Public Accountability Board, and the boards of the Dubai Financial Services Authority and the Global Risk Institute.<br>Ms. Dickson is an Officer of the Order of Canada and holds a Bachelor of Arts from the University of New Brunswick and a Masters of Economics from Queen's University.<br>**2022 meeting attendance** | Julie Dickson is a former Superintendent of Financial Institutions, Canada, Canada's main financial services regulator. She currently serves on the Canadian Public Accountability Board, and the boards of the Dubai Financial Services Authority and the Global Risk Institute.<br>Ms. Dickson is an Officer of the Order of Canada and holds a Bachelor of Arts from the University of New Brunswick and a Masters of Economics from Queen's University.<br>**2022 meeting attendance** | Director since August 2019<br>Term limit:<br> 2032<br>2022 votes *for*: 99.58%<br>**Public company boards** (last five years)<br>• None |
| **Board** | 8 of 8 | 100% | Director since August 2019<br>Term limit:<br> 2032<br>2022 votes *for*: 99.58%<br>**Public company boards** (last five years)<br>• None |
| <br> **Board committees** |  |  | Director since August 2019<br>Term limit:<br> 2032<br>2022 votes *for*: 99.58%<br>**Public company boards** (last five years)<br>• None |
| • Management resources and compensation | 5 of 5 | 100% | Director since August 2019<br>Term limit:<br> 2032<br>2022 votes *for*: 99.58%<br>**Public company boards** (last five years)<br>• None |
| • Risk | 5 of 5 | 100% | Director since August 2019<br>Term limit:<br> 2032<br>2022 votes *for*: 99.58%<br>**Public company boards** (last five years)<br>• None |

---

**Equity ownership** (as at February 28, 2023 and February 28, 2022)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Year** | **Common<br>shares** | **DSUs** | **Total common<br>shares and DSUs** | **Total value** | **Total value as a<br>multiple of equity<br>ownership guideline** |
| 2023 | 0 | 44420 | 44420 | $1198452 | 1.2x |
| 2022 | 0 | 31025 | 31025 | $796722 | 1.0x |
| Change | 0 | 13395 | 13395 |  |  |
| <br> With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. |
| <br> ![LOGO](g427878g09w29.jpg)  | <br> ![LOGO](g427878g09w29.jpg)  | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** |

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| | |
|:---|:---|
| **22** | Manulife Financial Corporation |

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About the Directors

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| | |
|:---|:---|
| ![LOGO](g427878g51e95.jpg) | **Roy Gori** (President and Chief Executive Officer)<br>Toronto, ON, Canada/Age 53/Not independent (management) |

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| | |
|:---|:---|
| **Key competencies and experience** |  |
| • Finance/Accounting | • Technology/Operations |
| • Insurance/Reinsurance/Investment management | • Asia experience |
| • Risk management | • Public company executive/Director |
| • Talent management/Executive compensation | • Digital transformation/Sales/Marketing |
| <br> Roy Gori is the President and Chief Executive Officer of Manulife, Canada's largest insurance company, and one of the largest insurance and asset management companies in the world. Appointed in 2017, Mr. Gori's tenure as CEO has been marked by the introduction of a clear strategy and values that build on Manulife's strong foundations to include sharper focus on the customer and a shift to digital innovation, in line with the company's mission to make customers' decisions easier, and lives better. | <br> Roy Gori is the President and Chief Executive Officer of Manulife, Canada's largest insurance company, and one of the largest insurance and asset management companies in the world. Appointed in 2017, Mr. Gori's tenure as CEO has been marked by the introduction of a clear strategy and values that build on Manulife's strong foundations to include sharper focus on the customer and a shift to digital innovation, in line with the company's mission to make customers' decisions easier, and lives better. |

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| | |
|:---|:---|
| As a champion of diversity, equity and inclusion, Mr. Gori is the Chair of Manulife's DEI Council. He is also a passionate advocate for health and wellness, promoting the benefits of behavioural insurance through award-winning products like Manulife Vitality and Manulife MOVE.<br>Mr. Gori joined Manulife as President and Chief Executive Officer for Asia in 2015. In that role, he was responsible for operations in 12 markets across Asia, driving Manulife's rapidly growing business in the region. Mr. Gori started his career at Citibank in 1989, where he held progressively senior roles and was finally responsible for the company's Asia Pacific retail business, which included its insurance and wealth management business.<br>Mr. Gori holds a Bachelor of Economics and Finance from The University of New South Wales, and an MBA from the University of Technology, Sydney. He is a member and on the Board of Directors of the Business Council of Canada, and is a member of the U.S. Business Council, the Geneva Association, and the Mayor of Shanghai's International Business Leaders' Advisory Council. A native Australian, Mr. Gori has worked and lived in Sydney, Singapore, Thailand, and Hong Kong, and is now based in Toronto. | Director since<br> October 2017<br>Term limit:<br> applies to independent directors only<br>2022 votes *for*: 99.39%<br>**Public company boards** (last five years)<br>• None |

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**2022 meeting attendance** 

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| | | | |
|:---|:---|:---|:---|
| **Board** | 8 of 8 | 100 | % |
| <br> **Board committees** |  |  |  |
| Mr. Gori is not a member of any of the board committees but attends at the invitation of the Chair of the Board and/or committee chair | Mr. Gori is not a member of any of the board committees but attends at the invitation of the Chair of the Board and/or committee chair |  |  |

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**Equity ownership** 

As CEO, Mr. Gori has separate equity ownership requirements, which he meets.

You can read more about this on page 107.

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| | |
|:---|:---|
| 2023 Management information circular | **23** |

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| | |
|:---|:---|
| ![LOGO](g427878g59z95.jpg) | **Tsun-yan Hsieh**<br>Singapore, Singapore/Age 70/Independent |

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| | | |
|:---|:---|:---|
| **Key competencies and experience** |  |  |
| • Finance/Accounting<br> • Talent management/Executive compensation<br> • Technology/Operations<br> • Asia experience | • Government relations/Public policy/Regulatory<br> • Public company executive/Director<br> • Digital transformation/Sales/Marketing |  |
| • Finance/Accounting<br> • Talent management/Executive compensation<br> • Technology/Operations<br> • Asia experience | • Government relations/Public policy/Regulatory<br> • Public company executive/Director<br> • Digital transformation/Sales/Marketing | <br> Mr. Hsieh's extensive management leadership, management consulting and academic experience, combined with his Asia perspective, qualifies him to serve on our board, and as a member of the audit committee and the corporate governance and nominating committee. |
| • Finance/Accounting<br> • Talent management/Executive compensation<br> • Technology/Operations<br> • Asia experience | • Government relations/Public policy/Regulatory<br> • Public company executive/Director<br> • Digital transformation/Sales/Marketing |  |

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| | | | |
|:---|:---|:---|:---|
| Tsun-yan Hsieh is Chairman of LinHart Group PTE Ltd., a firm he founded in 2010 to provide leadership services internationally.<br>Mr. Hsieh, a resident of Singapore, has extensive consulting experience in business strategy, leadership development and corporate transformation. Mr. Hsieh joined McKinsey & Company in 1980 and was elected a director from 1990 to 2008, when he retired. During his tenure, he served as Managing Director of Canada and ASEAN practices and led McKinsey's Organization and Leadership Practice globally.<br>Mr. Hsieh is a director on the following non-public boards: LinHart Group PTE Ltd. and Singapore Health Services Pte. Ltd. He also serves as Provost Chair Professor at the NUS Business School and the Lee Kuan Yew School of Public Policy.<br>Mr. Hsieh has a Bachelor of Science in Mechanical Engineering from the University of Alberta and an MBA from Harvard Business School.<br>**2022 meeting attendance** | Tsun-yan Hsieh is Chairman of LinHart Group PTE Ltd., a firm he founded in 2010 to provide leadership services internationally.<br>Mr. Hsieh, a resident of Singapore, has extensive consulting experience in business strategy, leadership development and corporate transformation. Mr. Hsieh joined McKinsey & Company in 1980 and was elected a director from 1990 to 2008, when he retired. During his tenure, he served as Managing Director of Canada and ASEAN practices and led McKinsey's Organization and Leadership Practice globally.<br>Mr. Hsieh is a director on the following non-public boards: LinHart Group PTE Ltd. and Singapore Health Services Pte. Ltd. He also serves as Provost Chair Professor at the NUS Business School and the Lee Kuan Yew School of Public Policy.<br>Mr. Hsieh has a Bachelor of Science in Mechanical Engineering from the University of Alberta and an MBA from Harvard Business School.<br>**2022 meeting attendance** | Tsun-yan Hsieh is Chairman of LinHart Group PTE Ltd., a firm he founded in 2010 to provide leadership services internationally.<br>Mr. Hsieh, a resident of Singapore, has extensive consulting experience in business strategy, leadership development and corporate transformation. Mr. Hsieh joined McKinsey & Company in 1980 and was elected a director from 1990 to 2008, when he retired. During his tenure, he served as Managing Director of Canada and ASEAN practices and led McKinsey's Organization and Leadership Practice globally.<br>Mr. Hsieh is a director on the following non-public boards: LinHart Group PTE Ltd. and Singapore Health Services Pte. Ltd. He also serves as Provost Chair Professor at the NUS Business School and the Lee Kuan Yew School of Public Policy.<br>Mr. Hsieh has a Bachelor of Science in Mechanical Engineering from the University of Alberta and an MBA from Harvard Business School.<br>**2022 meeting attendance** | Director since October 2011<br>Term limit:<br> 2024<br>2022 votes *for*: 98.83%<br>**Public company boards** (last five years)<br>• Singapore Airlines,<br>2012-present |
| **Board** | 8 of 8 | 100% | Director since October 2011<br>Term limit:<br> 2024<br>2022 votes *for*: 98.83%<br>**Public company boards** (last five years)<br>• Singapore Airlines,<br>2012-present |
| <br> **Board committees** |  |  | Director since October 2011<br>Term limit:<br> 2024<br>2022 votes *for*: 98.83%<br>**Public company boards** (last five years)<br>• Singapore Airlines,<br>2012-present |
| • Audit | 5 of 5 | 100% | Director since October 2011<br>Term limit:<br> 2024<br>2022 votes *for*: 98.83%<br>**Public company boards** (last five years)<br>• Singapore Airlines,<br>2012-present |
| • Corporate governance and nominating | 5 of 5 | 100% | Director since October 2011<br>Term limit:<br> 2024<br>2022 votes *for*: 98.83%<br>**Public company boards** (last five years)<br>• Singapore Airlines,<br>2012-present |

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**Equity ownership** (as at February 28, 2023 and February 28, 2022)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Year** | **Common**<br> **shares** | **DSUs** | **Total common**<br> **shares and DSUs** | **Total value** | **Total value as a<br>multiple of equity<br>ownership guideline** |
| 2023 | 0 | 164168 | 164168 | $4429253 | 4.3x |
| 2022 | 0 | 144311 | 144311 | $3705906 | 4.7x |
| Change | 0 | 19856 | 19856 |  |  |
| <br> With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. |
| <br> ![LOGO](g427878g09w29.jpg)  | <br> ![LOGO](g427878g09w29.jpg)  | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** |

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| | |
|:---|:---|
| **24** | Manulife Financial Corporation |

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About the Directors

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| | |
|:---|:---|
| ![LOGO](g427878g10a01.jpg) | **Vanessa Kanu**<br>Ottawa, ON/Age 45/Independent |

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| | |
|:---|:---|
| **Key competencies and experience** |  |
| • Finance/Accounting | • Technology/Operations |
| • Risk management | • Asia experience |
| • Talent management/Executive compensation | • Public company executive/Director  |
| <br> Ms. Kanu's expertise in public company finance and her extensive leadership experience qualify her to serve on our board and as a member of the audit committee and corporate governance and nominating committee. | <br> Ms. Kanu's expertise in public company finance and her extensive leadership experience qualify her to serve on our board and as a member of the audit committee and corporate governance and nominating committee. |

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| | | | |
|:---|:---|:---|:---|
| Vanessa Kanu is a seasoned finance professional with over 20 years of business experience. Ms. Kanu currently serves as global CFO at TELUS International, responsible for finance operations, including accounting, treasury, taxation, planning and analysis and reporting.<br>Ms. Kanu currently sits on the board of the Ottawa Hospital Foundation.<br>Ms. Kanu is a Chartered Accountant in Canada, a Certified Public Accountant in the United States (Illinois), and a member of the Institute of Chartered Accountants of England and Wales. She holds a Bachelor of Science degree in International and Financial Economics from the University of Hull, UK.<br>**2022 meeting attendance** | Vanessa Kanu is a seasoned finance professional with over 20 years of business experience. Ms. Kanu currently serves as global CFO at TELUS International, responsible for finance operations, including accounting, treasury, taxation, planning and analysis and reporting.<br>Ms. Kanu currently sits on the board of the Ottawa Hospital Foundation.<br>Ms. Kanu is a Chartered Accountant in Canada, a Certified Public Accountant in the United States (Illinois), and a member of the Institute of Chartered Accountants of England and Wales. She holds a Bachelor of Science degree in International and Financial Economics from the University of Hull, UK.<br>**2022 meeting attendance** | Vanessa Kanu is a seasoned finance professional with over 20 years of business experience. Ms. Kanu currently serves as global CFO at TELUS International, responsible for finance operations, including accounting, treasury, taxation, planning and analysis and reporting.<br>Ms. Kanu currently sits on the board of the Ottawa Hospital Foundation.<br>Ms. Kanu is a Chartered Accountant in Canada, a Certified Public Accountant in the United States (Illinois), and a member of the Institute of Chartered Accountants of England and Wales. She holds a Bachelor of Science degree in International and Financial Economics from the University of Hull, UK.<br>**2022 meeting attendance** | Director since<br> February 2022<br>Term limit:<br> 2034<br>2022 votes *for*: 98.85%<br>**Public company boards** (last five years)<br>• None |
| **Board** | 6 of 6 | 100% | Director since<br> February 2022<br>Term limit:<br> 2034<br>2022 votes *for*: 98.85%<br>**Public company boards** (last five years)<br>• None |
| <br> **Board committees**  |  |  | Director since<br> February 2022<br>Term limit:<br> 2034<br>2022 votes *for*: 98.85%<br>**Public company boards** (last five years)<br>• None |
| • Audit | 4 of 4 | 100% | Director since<br> February 2022<br>Term limit:<br> 2034<br>2022 votes *for*: 98.85%<br>**Public company boards** (last five years)<br>• None |
| • Corporate governance and nominating | 4 of 4 | 100% | Director since<br> February 2022<br>Term limit:<br> 2034<br>2022 votes *for*: 98.85%<br>**Public company boards** (last five years)<br>• None |

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**Equity ownership** (as at February 28, 2023 and February 28, 2022)

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Year** | **Common**<br> **shares** | **DSUs** | **Total common**<br> **shares and DSUs** | **Total<br>value** | **Total value as a<br>multiple of equity<br>ownership guideline** |
| 2023 | 0 | 4988 | 4988 | $134576 | 0.1x |
| 2022 | 0 | 0 | 0 | $&nbsp;&nbsp;&nbsp;&nbsp;0 | N/A |
| Change | 0 | 4988 | 4988 |  |  |
| <br> Ms. Kanu joined the board on February 28, 2022. Under the director equity ownership requirements, she is expected to meet the equity ownership requirements within six years of joining the board. With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> Ms. Kanu joined the board on February 28, 2022. Under the director equity ownership requirements, she is expected to meet the equity ownership requirements within six years of joining the board. With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> Ms. Kanu joined the board on February 28, 2022. Under the director equity ownership requirements, she is expected to meet the equity ownership requirements within six years of joining the board. With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> Ms. Kanu joined the board on February 28, 2022. Under the director equity ownership requirements, she is expected to meet the equity ownership requirements within six years of joining the board. With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> Ms. Kanu joined the board on February 28, 2022. Under the director equity ownership requirements, she is expected to meet the equity ownership requirements within six years of joining the board. With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> Ms. Kanu joined the board on February 28, 2022. Under the director equity ownership requirements, she is expected to meet the equity ownership requirements within six years of joining the board. With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. |
| <br> ![LOGO](g427878g09w29.jpg)  | <br> ![LOGO](g427878g09w29.jpg)  | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** |

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| | |
|:---|:---|
| 2023 Management information circular | **25** |

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| | |
|:---|:---|
| ![LOGO](g427878g41h04.jpg) | **C. James Prieur**<br>Chicago, IL, U.S.A./Age 71/Independent |

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| | |
|:---|:---|
| **Key competencies and experience** |  |
| • Finance/Accounting<br> • Insurance/Reinsurance/Investment management<br> • Risk management<br> • Talent management/Executive compensation | • Technology/Operations<br> • Asia experience<br> • Public company executive/Director |
| <br> Mr. Prieur's strong financial background and his wealth of senior executive experience in the insurance business in Canada, the U.S. and globally qualify him to serve on our board, as a member of the management resources and compensation committee and as chair of the risk committee. | <br> Mr. Prieur's strong financial background and his wealth of senior executive experience in the insurance business in Canada, the U.S. and globally qualify him to serve on our board, as a member of the management resources and compensation committee and as chair of the risk committee. |

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| | | | |
|:---|:---|:---|:---|
| James Prieur has been a corporate director since 2011 and, prior to that time, Mr. Prieur served as Chief Executive Officer and director of CNO Financial Group, Inc. from 2006 until his retirement in 2011. CNO Financial Group is a life insurance holding company focused on the senior middle income market in the U.S. Prior to joining CNO Financial Group, Mr. Prieur was President and Chief Operating Officer of Sun Life Financial, Inc. from 1999 to 2006 where he had previously led operations in Asia, Canada, U.S., and the UK.<br>He is a member of the President's Circle of the Chicago Council on Global Affairs, a not-for-profit organization.<br>Mr. Prieur is a Chartered Financial Analyst and holds an MBA from the Richard Ivey School at Western University and a Bachelor of Arts from the Royal Military College of Canada.<br>**2022 meeting attendance** | James Prieur has been a corporate director since 2011 and, prior to that time, Mr. Prieur served as Chief Executive Officer and director of CNO Financial Group, Inc. from 2006 until his retirement in 2011. CNO Financial Group is a life insurance holding company focused on the senior middle income market in the U.S. Prior to joining CNO Financial Group, Mr. Prieur was President and Chief Operating Officer of Sun Life Financial, Inc. from 1999 to 2006 where he had previously led operations in Asia, Canada, U.S., and the UK.<br>He is a member of the President's Circle of the Chicago Council on Global Affairs, a not-for-profit organization.<br>Mr. Prieur is a Chartered Financial Analyst and holds an MBA from the Richard Ivey School at Western University and a Bachelor of Arts from the Royal Military College of Canada.<br>**2022 meeting attendance** | James Prieur has been a corporate director since 2011 and, prior to that time, Mr. Prieur served as Chief Executive Officer and director of CNO Financial Group, Inc. from 2006 until his retirement in 2011. CNO Financial Group is a life insurance holding company focused on the senior middle income market in the U.S. Prior to joining CNO Financial Group, Mr. Prieur was President and Chief Operating Officer of Sun Life Financial, Inc. from 1999 to 2006 where he had previously led operations in Asia, Canada, U.S., and the UK.<br>He is a member of the President's Circle of the Chicago Council on Global Affairs, a not-for-profit organization.<br>Mr. Prieur is a Chartered Financial Analyst and holds an MBA from the Richard Ivey School at Western University and a Bachelor of Arts from the Royal Military College of Canada.<br>**2022 meeting attendance** | Director since <br>January 2013<br>Term limit:<br> 2025<br>2022 votes *for*: 99.60%<br>**Public company boards** (last five years)<br>• Ambac Financial Group, Inc., 2016-2023 |
| **Board** | 8 of 8 | 100% | Director since <br>January 2013<br>Term limit:<br> 2025<br>2022 votes *for*: 99.60%<br>**Public company boards** (last five years)<br>• Ambac Financial Group, Inc., 2016-2023 |
| **Board committees** |  |  | Director since <br>January 2013<br>Term limit:<br> 2025<br>2022 votes *for*: 99.60%<br>**Public company boards** (last five years)<br>• Ambac Financial Group, Inc., 2016-2023 |
| • Management resources and compensation | 5 of 5 | 100% | Director since <br>January 2013<br>Term limit:<br> 2025<br>2022 votes *for*: 99.60%<br>**Public company boards** (last five years)<br>• Ambac Financial Group, Inc., 2016-2023 |
| • Risk (chair) | 5 of 5 | 100% | Director since <br>January 2013<br>Term limit:<br> 2025<br>2022 votes *for*: 99.60%<br>**Public company boards** (last five years)<br>• Ambac Financial Group, Inc., 2016-2023 |

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**Equity ownership** (as at February 28, 2023 and February 28, 2022)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Year** | **Common**<br> **shares** | **DSUs** | **Total common**<br> **shares and DSUs** | **Total value** | **Total value as a<br>multiple of equity<br>ownership guideline** |
| 2023 | 200000 | 149604 | 349604 | $9432316 | 9.1x |
| 2022 | 145000 | 128387 | 273387 | $7020578 | 9.0x |
| Change | 55000 | 21217 | 76217 |  |  |
| <br> With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. |
| <br> ![LOGO](g427878g09w29.jpg)  | <br> ![LOGO](g427878g09w29.jpg)  | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** |

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| | |
|:---|:---|
| **26** | Manulife Financial Corporation |

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About the Directors

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| | |
|:---|:---|
| ![LOGO](g427878g30t84.jpg) | **Andrea S. Rosen**<br>Toronto, ON, Canada/Age 68/Independent |

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| | |
|:---|:---|
| **Key competencies and experience** |  |
| • Finance/Accounting<br> • Risk management<br> • Insurance/Reinsurance/Investment management | • Talent management/Executive compensation<br> • Public company executive/Director |
| <br> Ms. Rosen's experience as a global financial services executive with particular experience in investment banking, wholesale and retail banking, risk management, human resources management and executive compensation qualifies her to serve on our board and as a member of the audit committee and corporate governance and nominating committee. | <br> Ms. Rosen's experience as a global financial services executive with particular experience in investment banking, wholesale and retail banking, risk management, human resources management and executive compensation qualifies her to serve on our board and as a member of the audit committee and corporate governance and nominating committee. |

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| | | | |
|:---|:---|:---|:---|
| Andrea Rosen has been a corporate director since 2006. Prior to January 2005, her experience includes more than a decade with TD Bank Financial Group, where she ultimately served as Vice Chair, TD Bank Financial Group and President of TD Canada Trust. Earlier in her career, she held progressively senior positions at Wood Gundy Inc. and was Vice President at Varity Corporation.<br>She serves on the board of the Institute of Corporate Directors (not-for-profit).<br>Ms. Rosen has an LLB from Osgoode Hall Law School, an MBA from the Schulich School of Business at York University and a Bachelor of Arts from Yale University.<br>**2022 meeting attendance** | Andrea Rosen has been a corporate director since 2006. Prior to January 2005, her experience includes more than a decade with TD Bank Financial Group, where she ultimately served as Vice Chair, TD Bank Financial Group and President of TD Canada Trust. Earlier in her career, she held progressively senior positions at Wood Gundy Inc. and was Vice President at Varity Corporation.<br>She serves on the board of the Institute of Corporate Directors (not-for-profit).<br>Ms. Rosen has an LLB from Osgoode Hall Law School, an MBA from the Schulich School of Business at York University and a Bachelor of Arts from Yale University.<br>**2022 meeting attendance** | Andrea Rosen has been a corporate director since 2006. Prior to January 2005, her experience includes more than a decade with TD Bank Financial Group, where she ultimately served as Vice Chair, TD Bank Financial Group and President of TD Canada Trust. Earlier in her career, she held progressively senior positions at Wood Gundy Inc. and was Vice President at Varity Corporation.<br>She serves on the board of the Institute of Corporate Directors (not-for-profit).<br>Ms. Rosen has an LLB from Osgoode Hall Law School, an MBA from the Schulich School of Business at York University and a Bachelor of Arts from Yale University.<br>**2022 meeting attendance** | Director since<br> August 2011<br>Term limit:<br> 2024<br>2022 votes *for*: 98.49%<br>**Public company boards** (last five years)<br>• Ceridian HCM Holding Inc., 2018-present<br> • Element Fleet Management Corp., 2019-present<br> • Emera Inc.,<br>2007-present |
| **Board** | 8 of 8 | 100% | Director since<br> August 2011<br>Term limit:<br> 2024<br>2022 votes *for*: 98.49%<br>**Public company boards** (last five years)<br>• Ceridian HCM Holding Inc., 2018-present<br> • Element Fleet Management Corp., 2019-present<br> • Emera Inc.,<br>2007-present |
| <br> **Board committees** |  |  | Director since<br> August 2011<br>Term limit:<br> 2024<br>2022 votes *for*: 98.49%<br>**Public company boards** (last five years)<br>• Ceridian HCM Holding Inc., 2018-present<br> • Element Fleet Management Corp., 2019-present<br> • Emera Inc.,<br>2007-present |
| • Audit | 5 of 5 | 100% | Director since<br> August 2011<br>Term limit:<br> 2024<br>2022 votes *for*: 98.49%<br>**Public company boards** (last five years)<br>• Ceridian HCM Holding Inc., 2018-present<br> • Element Fleet Management Corp., 2019-present<br> • Emera Inc.,<br>2007-present |
| • Corporate governance and nominating (chair) | 5 of 5 | 100% | Director since<br> August 2011<br>Term limit:<br> 2024<br>2022 votes *for*: 98.49%<br>**Public company boards** (last five years)<br>• Ceridian HCM Holding Inc., 2018-present<br> • Element Fleet Management Corp., 2019-present<br> • Emera Inc.,<br>2007-present |
| <br> On February 15, 2023, Andrea Rosen resigned as chair of the corporate governance and nominating committee. | <br> On February 15, 2023, Andrea Rosen resigned as chair of the corporate governance and nominating committee. | <br> On February 15, 2023, Andrea Rosen resigned as chair of the corporate governance and nominating committee. | Director since<br> August 2011<br>Term limit:<br> 2024<br>2022 votes *for*: 98.49%<br>**Public company boards** (last five years)<br>• Ceridian HCM Holding Inc., 2018-present<br> • Element Fleet Management Corp., 2019-present<br> • Emera Inc.,<br>2007-present |
|  |  |  | Director since<br> August 2011<br>Term limit:<br> 2024<br>2022 votes *for*: 98.49%<br>**Public company boards** (last five years)<br>• Ceridian HCM Holding Inc., 2018-present<br> • Element Fleet Management Corp., 2019-present<br> • Emera Inc.,<br>2007-present |
|  |  |  | Director since<br> August 2011<br>Term limit:<br> 2024<br>2022 votes *for*: 98.49%<br>**Public company boards** (last five years)<br>• Ceridian HCM Holding Inc., 2018-present<br> • Element Fleet Management Corp., 2019-present<br> • Emera Inc.,<br>2007-present |

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**Equity ownership** (as at February 28, 2023 and February 28, 2022)

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Year** | **Common<br>shares** | **DSUs** | **Total common<br>shares and DSUs** | **Total value** | **Total value as a<br>multiple of equity<br>ownership guideline** |
| 2023 | 11500 | 169932 | 181432 | $4895035 | 4.7x |
| 2022 | 11500 | 147618 | 159118 | $4086150 | 5.2x |
| Change | 0 | 22313 | 22313 |  |  |
| <br> With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. |
| <br> ![LOGO](g427878g09w29.jpg)  | <br> ![LOGO](g427878g09w29.jpg)  | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** |

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| | |
|:---|:---|
| 2023 Management information circular | **27** |

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| | |
|:---|:---|
| ![LOGO](g427878g10a02.jpg) | **May Tan**<br>Hong Kong/Age 67/Independent |

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| | |
|:---|:---|
| **Key competencies and experience** |  |
| • Finance/Accounting<br> • Insurance/Reinsurance/Investment management<br> • Risk management | • Talent management/Executive compensation<br> • Asia experience<br> • Public company executive/Director |
| <br> Ms. Tan's extensive leadership experience in financial services and her deep knowledge of the industry in Asia qualify her to serve on our board and as a member of the corporate governance and nominating committee and audit committee. | <br> Ms. Tan's extensive leadership experience in financial services and her deep knowledge of the industry in Asia qualify her to serve on our board and as a member of the corporate governance and nominating committee and audit committee. |

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| | | | |
|:---|:---|:---|:---|
| May Tan is a senior financial services executive who has held a number of senior roles at Standard Chartered Bank, including the position of Chief Executive Officer, Standard Chartered Bank (Hong Kong). She has over 30 years of experience in corporate finance, banking, and capital markets in Asia. She holds the Fellow Chartered Accountant designation from the Institute of Chartered Accountants in England and Wales and the Certified Public Accountant (Fellow) designation from the Hong Kong Institute of Certified Public Accountants.<br>Ms. Tan is a director on the following non-public boards: Anticimex New TopHolding AB, MSIG Insurance (Hong Kong) Limited, Shanghai Guardian Limited and 701 Limited. Ms. Tan is also a council member of the Asian Corporate Governance Association.<br>Ms. Tan received a B.A. in Economics and Accounting from the University of Sheffield.<br>**2022 meeting attendance** | May Tan is a senior financial services executive who has held a number of senior roles at Standard Chartered Bank, including the position of Chief Executive Officer, Standard Chartered Bank (Hong Kong). She has over 30 years of experience in corporate finance, banking, and capital markets in Asia. She holds the Fellow Chartered Accountant designation from the Institute of Chartered Accountants in England and Wales and the Certified Public Accountant (Fellow) designation from the Hong Kong Institute of Certified Public Accountants.<br>Ms. Tan is a director on the following non-public boards: Anticimex New TopHolding AB, MSIG Insurance (Hong Kong) Limited, Shanghai Guardian Limited and 701 Limited. Ms. Tan is also a council member of the Asian Corporate Governance Association.<br>Ms. Tan received a B.A. in Economics and Accounting from the University of Sheffield.<br>**2022 meeting attendance** | May Tan is a senior financial services executive who has held a number of senior roles at Standard Chartered Bank, including the position of Chief Executive Officer, Standard Chartered Bank (Hong Kong). She has over 30 years of experience in corporate finance, banking, and capital markets in Asia. She holds the Fellow Chartered Accountant designation from the Institute of Chartered Accountants in England and Wales and the Certified Public Accountant (Fellow) designation from the Hong Kong Institute of Certified Public Accountants.<br>Ms. Tan is a director on the following non-public boards: Anticimex New TopHolding AB, MSIG Insurance (Hong Kong) Limited, Shanghai Guardian Limited and 701 Limited. Ms. Tan is also a council member of the Asian Corporate Governance Association.<br>Ms. Tan received a B.A. in Economics and Accounting from the University of Sheffield.<br>**2022 meeting attendance** | Director since<br> December 2021<br>Term limit:<br> 2034<br>2022 votes *for*: 99.74%<br>**Public company boards** (last five years)<br>• CLP Holdings Limited 2018-present<br> • JP Morgan China Growth & Income PLC 2021-present<br> • Link Management Limited/Link REIT<br>2013-2022 |
| **Board** | 8 of 8 | 100% | Director since<br> December 2021<br>Term limit:<br> 2034<br>2022 votes *for*: 99.74%<br>**Public company boards** (last five years)<br>• CLP Holdings Limited 2018-present<br> • JP Morgan China Growth & Income PLC 2021-present<br> • Link Management Limited/Link REIT<br>2013-2022 |
| <br> **Board committees** |  |  | Director since<br> December 2021<br>Term limit:<br> 2034<br>2022 votes *for*: 99.74%<br>**Public company boards** (last five years)<br>• CLP Holdings Limited 2018-present<br> • JP Morgan China Growth & Income PLC 2021-present<br> • Link Management Limited/Link REIT<br>2013-2022 |
| • Management resources and compensation | 5 of 5 | 100% | Director since<br> December 2021<br>Term limit:<br> 2034<br>2022 votes *for*: 99.74%<br>**Public company boards** (last five years)<br>• CLP Holdings Limited 2018-present<br> • JP Morgan China Growth & Income PLC 2021-present<br> • Link Management Limited/Link REIT<br>2013-2022 |
| • Risk | 5 of 5 | 100% | Director since<br> December 2021<br>Term limit:<br> 2034<br>2022 votes *for*: 99.74%<br>**Public company boards** (last five years)<br>• CLP Holdings Limited 2018-present<br> • JP Morgan China Growth & Income PLC 2021-present<br> • Link Management Limited/Link REIT<br>2013-2022 |
| <br> On February 15, 2023, May Tan joined the corporate governance and nominating committee and audit committee, and resigned from the management resources and compensation committee and risk committee. | <br> On February 15, 2023, May Tan joined the corporate governance and nominating committee and audit committee, and resigned from the management resources and compensation committee and risk committee. | <br> On February 15, 2023, May Tan joined the corporate governance and nominating committee and audit committee, and resigned from the management resources and compensation committee and risk committee. | Director since<br> December 2021<br>Term limit:<br> 2034<br>2022 votes *for*: 99.74%<br>**Public company boards** (last five years)<br>• CLP Holdings Limited 2018-present<br> • JP Morgan China Growth & Income PLC 2021-present<br> • Link Management Limited/Link REIT<br>2013-2022 |
|  |  |  | Director since<br> December 2021<br>Term limit:<br> 2034<br>2022 votes *for*: 99.74%<br>**Public company boards** (last five years)<br>• CLP Holdings Limited 2018-present<br> • JP Morgan China Growth & Income PLC 2021-present<br> • Link Management Limited/Link REIT<br>2013-2022 |
|  |  |  | Director since<br> December 2021<br>Term limit:<br> 2034<br>2022 votes *for*: 99.74%<br>**Public company boards** (last five years)<br>• CLP Holdings Limited 2018-present<br> • JP Morgan China Growth & Income PLC 2021-present<br> • Link Management Limited/Link REIT<br>2013-2022 |

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**Equity ownership** (as at February 28, 2023 and February 28, 2022)

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Year** | **Common<br>shares** | **DSUs** | **Total common<br>shares and DSUs** | **Total value** | **Total value as a<br>multiple of equity<br>ownership guideline** |
| 2023 | 0 | 6287 | 6287 | $169623 | 0.2x |
| 2022 | 0 | 449 | 449 | $11530 | 0.0x |
| Change | 0 | 5838 | 5838 |  |  |
| <br> Ms. Tan joined the board on December 1, 2021. Under the director equity ownership requirements, she is expected to meet the equity ownership requirements within six years of joining the board. With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> Ms. Tan joined the board on December 1, 2021. Under the director equity ownership requirements, she is expected to meet the equity ownership requirements within six years of joining the board. With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> Ms. Tan joined the board on December 1, 2021. Under the director equity ownership requirements, she is expected to meet the equity ownership requirements within six years of joining the board. With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> Ms. Tan joined the board on December 1, 2021. Under the director equity ownership requirements, she is expected to meet the equity ownership requirements within six years of joining the board. With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> Ms. Tan joined the board on December 1, 2021. Under the director equity ownership requirements, she is expected to meet the equity ownership requirements within six years of joining the board. With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> Ms. Tan joined the board on December 1, 2021. Under the director equity ownership requirements, she is expected to meet the equity ownership requirements within six years of joining the board. With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. |
| <br> ![LOGO](g427878g09w29.jpg)  | <br> ![LOGO](g427878g09w29.jpg)  | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** |

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|:---|:---|
| **28** | Manulife Financial Corporation |

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About the Directors

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|:---|:---|
| ![LOGO](g427878g02b88.jpg) | **Leagh E. Turner**<br>Toronto, ON, Canada/Age 51/Independent |

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| | |
|:---|:---|
| **Key competencies and experience** |  |
| • Risk management<br> • Talent management/Executive compensation <br> • Technology/Operations | • Asia experience<br> • Public company executive/Director<br> • Digital transformation/Sales/Marketing |
| <br> Ms. Turner's extensive executive experience in the technology sector and leadership expertise leveraging people, process and technology to drive organizational transformation qualify her to serve on our board and as a member of the risk committee and the management resources and compensation committee. | <br> Ms. Turner's extensive executive experience in the technology sector and leadership expertise leveraging people, process and technology to drive organizational transformation qualify her to serve on our board and as a member of the risk committee and the management resources and compensation committee. |

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| | | | |
|:---|:---|:---|:---|
| Leagh Turner is a seasoned global executive in the technology sector currently holding the position of Co-CEO for Ceridian HCM Holding Inc., a global human capital management software company. She also serves as a director of Plan International Canada. Ms. Turner is a strong advocate for the advancement of women in leadership and has been recognized twice on the WXN (Women's Executive Network) Canada's Top 100 Most Powerful Women list.<br>Ms. Turner holds a Bachelor of Arts from the University of Western Ontario.<br>**2022 meeting attendance** | Leagh Turner is a seasoned global executive in the technology sector currently holding the position of Co-CEO for Ceridian HCM Holding Inc., a global human capital management software company. She also serves as a director of Plan International Canada. Ms. Turner is a strong advocate for the advancement of women in leadership and has been recognized twice on the WXN (Women's Executive Network) Canada's Top 100 Most Powerful Women list.<br>Ms. Turner holds a Bachelor of Arts from the University of Western Ontario.<br>**2022 meeting attendance** | Leagh Turner is a seasoned global executive in the technology sector currently holding the position of Co-CEO for Ceridian HCM Holding Inc., a global human capital management software company. She also serves as a director of Plan International Canada. Ms. Turner is a strong advocate for the advancement of women in leadership and has been recognized twice on the WXN (Women's Executive Network) Canada's Top 100 Most Powerful Women list.<br>Ms. Turner holds a Bachelor of Arts from the University of Western Ontario.<br>**2022 meeting attendance** | Director since November 2020<br>Term limit:<br> 2033<br>2022 votes *for*: 99.32%<br>**Public company boards** (last five years)<br>• Ceridian HCM Holding Inc., 2022-present |
| **Board** | 8 of 8 | 100% | Director since November 2020<br>Term limit:<br> 2033<br>2022 votes *for*: 99.32%<br>**Public company boards** (last five years)<br>• Ceridian HCM Holding Inc., 2022-present |
| <br> **Board committees** |  |  | Director since November 2020<br>Term limit:<br> 2033<br>2022 votes *for*: 99.32%<br>**Public company boards** (last five years)<br>• Ceridian HCM Holding Inc., 2022-present |
| • Management resources and compensation | 5 of 5 | 100% | Director since November 2020<br>Term limit:<br> 2033<br>2022 votes *for*: 99.32%<br>**Public company boards** (last five years)<br>• Ceridian HCM Holding Inc., 2022-present |
| • Risk committee | 5 of 5 | 100% | Director since November 2020<br>Term limit:<br> 2033<br>2022 votes *for*: 99.32%<br>**Public company boards** (last five years)<br>• Ceridian HCM Holding Inc., 2022-present |
|  |  |  | Director since November 2020<br>Term limit:<br> 2033<br>2022 votes *for*: 99.32%<br>**Public company boards** (last five years)<br>• Ceridian HCM Holding Inc., 2022-present |

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**Equity ownership** (as at February 28, 2023 and February 28, 2022)

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Year** | **Common**<br> **shares** | **DSUs** | **Total common**<br> **shares and DSUs** | **Total<br>value** | **Total value as a<br>multiple of equity<br>ownership guideline** |
| 2023 | 0 | 12279 | 12279 | $331287 | 0.3x |
| 2022 | 0 | 6117 | 6117 | $157085 | 0.2x |
| Change | 0 | 6161 | 6161 |  |  |
| <br> Ms. Turner joined the board on November 10, 2020. Under the director equity ownership requirements, she is expected to meet the equity ownership requirements within six years of joining the board. With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> Ms. Turner joined the board on November 10, 2020. Under the director equity ownership requirements, she is expected to meet the equity ownership requirements within six years of joining the board. With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> Ms. Turner joined the board on November 10, 2020. Under the director equity ownership requirements, she is expected to meet the equity ownership requirements within six years of joining the board. With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> Ms. Turner joined the board on November 10, 2020. Under the director equity ownership requirements, she is expected to meet the equity ownership requirements within six years of joining the board. With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> Ms. Turner joined the board on November 10, 2020. Under the director equity ownership requirements, she is expected to meet the equity ownership requirements within six years of joining the board. With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. | <br> Ms. Turner joined the board on November 10, 2020. Under the director equity ownership requirements, she is expected to meet the equity ownership requirements within six years of joining the board. With the changes to director compensation that went into effect January 1, 2023, the equity ownership requirement increased to $1,041,089 (US$765,000). The total value as a multiple of equity ownership guideline shown above relates to the guideline in effect for each respective year. |
| <br> ![LOGO](g427878g09w29.jpg)  | <br> ![LOGO](g427878g09w29.jpg)  | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** | **See page 35 for information about equity ownership** |

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|:---|:---|
| 2023 Management information circular | **29** |

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2022 board committee reports

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|:---|:---|
| <br> **Corporate governance and nominating committee** | <br> **Corporate governance and nominating committee** |
| **Membership as of December 31, 2022**:\* Andrea S. Rosen – Chair<br>Nicole S. Arnaboldi<br>Guy L.T. Bainbridge<br>Joseph P. Caron<br>John M. Cassaday<br>Tsun-yan Hsieh<br>Vanessa Kanu | All members of the corporate governance and nominating committee are independent. The Chair of the Board is also a member. There is cross-membership between the corporate governance and nominating committee and the audit committee.<br>The committee met five times in 2022. It has approved this report and is satisfied that it has carried out all of the responsibilities required by the committee charter. |

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\* On February 15, 2023, Don Lindsay joined the committee and became committee chair, May Tan joined the committee, and Nicole Arnaboldi and John Cassaday resigned from the committee.

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| | |
|:---|:---|
| **Key responsibilities** | **Key activities** |
| Managing board renewal and succession, including identifying the necessary competencies, expertise, skills, background and personal qualities for potential candidates, identifying qualified candidates, maintaining an evergreen list of qualified candidates and reviewing committee membership | • Continued oversight and focus on board succession and diversity strategy.<br> • Worked with independent recruitment firm to assist in identifying and recruiting potential candidates based on criteria established by the committee, including a diverse slate of candidates as mandated by the board diversity policy.<br> • Maintained and regularly refined the evergreen list of potential director candidates.<br> • Led searches to identify new director candidates in line with the board's overall needs and diversity policy, and led the vetting process.<br> • Reviewed the characteristics, experience and expertise necessary for prospective directors to align with Manulife's ambitions for the future.<br> • Considered board diversity in the context of director succession planning and reviewed the board's diversity policy. Enhanced board diversity policy to provide for gender balance and to reinforce the board's commitment to diversity beyond gender.<br> • Reviewed committee membership and recommended committee appointments for new director. |
| Developing effective corporate governance policies and procedures, including subsidiary governance and environmental, social and governance (ESG) issues | • Oversaw the company's ESG framework, including matters related to climate change. On a regular basis, the committee is updated on relevant climate topics, including our progress against the commitments set out in Manulife's Climate Action Plan.<br> • Reviewed reports on ESG strategy, trends, risks and opportunities.<br> • Reviewed ESG reporting, including the company's 2021 Sustainability Report and key performance indicators, and reviewed stakeholder feedback on the report.<br> • Reviewed updates on the company's sustainability strategy, including the company's Impact Agenda and direction and areas of focus for the company in this area.<br> • Reviewed the details of, and compliance with, board and committee charters and mandates of board and committee chairs, directors and the CEO.<br> • Considered all significant changes in director status and confirmed no adverse impact.<br> • Monitored and received reports on corporate governance developments, assessing current practices against emerging best practices and other requirements, and enhancing practices where relevant.<br> • Reviewed reports on the company's virtual annual meeting of shareholders, designed to allow shareholder participation in the pandemic environment.<br> • Reviewed reports on subsidiary governance and the company's subsidiary governance framework.<br> • Reviewed reports on shareholder feedback. |

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| **30** | Manulife Financial Corporation |

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About the Directors

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| | |
|:---|:---|
| **Key responsibilities** | **Key activities** |
| Developing and overseeing the processes for assessing board, committee, Chair of the Board, committee chair and individual director effectiveness, including director peer assessments | • Implemented the assessment process for the board, the committees and chairs of each committee, including peer assessments. Typically, the board also engages in a review to assess the performance and effectiveness of the Chair of the Board in carrying out his mandate. In 2022, in light of the planned transition of the Chair of the Board, the board chair assessment consisted of a deep dive on the attributes and priorities required of the next Chair of the Board to support Manulife in achieving its strategic objectives.<br> • Reviewed the director independence policy and recommended updates to the board for approval.<br> • Reviewed and recommended that the board confirm the independence of the directors.<br> • Assessed the board's relationship with management. |
| Overseeing the director orientation and education program | • Oversaw the director orientation program, facilitating efficient onboarding of directors to allow for effective oversight.<br> • Oversaw the director education agenda and enhanced the director education program with the addition of a requirement that members of the risk committee and corporate governance and nominating committee take at least one externally facilitated session or course on cybersecurity and ESG, respectively, every two years. |
| Overseeing director<br> compensation | • Continued review, involving an independent consultant, of director compensation, including an overview of best practices, industry trends and peer benchmarking.<br> • Recommended the approval of a slight increase to the annual retainer in 2023, to be received entirely in equity, to align with market |

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The committee meets without management present at each meeting.

The committee worked with an independent consultant, Meridian Compensation Partners, to conduct a comprehensive review of director compensation. Meridian's fees were $32,954 in 2022 and $23,303 in 2021. Following the review, the committee recommended, and the board approved, an increase of US$25,000 in the directors' annual retainer, to be received entirely in equity, to align with market (see page 35 for details).

**Audit committee** 

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|:---|:---|
| **Membership as of December 31, 2022:**\*<br>Guy L.T. Bainbridge – Chair<br>Nicole S. Arnaboldi<br>Joseph P. Caron<br>Tsun-yan Hsieh<br>Vanessa Kanu<br>Andrea S. Rosen | The audit committee and the board have determined that all members of the committee in 2022 are independent, financially literate and that Guy Bainbridge, Nicole Arnaboldi, Tsun-yan Hsieh, Vanessa Kanu and Andrea Rosen qualify as audit committee financial experts under the Sarbanes-Oxley Act of 2002. All of the members also meet additional independence standards for audit committees under applicable U.S. and Canadian laws and securities exchange rules. The committee also serves as the company's conduct review committee. There is cross-membership between the audit committee and the corporate governance and nominating committee, and the committee holds a joint meeting with the risk committee at least once a year.<br>The committee met five times in 2022, including one joint meeting with the risk committee. It has approved this report and is satisfied that it has carried out all of the responsibilities required by the committee charter. |

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\* On February 15, 2023, May Tan joined the committee and Nicole Arnaboldi resigned from the committee. The audit committee and the board have determined that Ms. Tan is independent, financially literate, that she qualifies as an audit committee financial expert under the Sarbanes-Oxley Act of 2002, and that she also meets additional independence standards for audit committees under applicable U.S. and Canadian laws and securities exchange rules. 

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| | |
|:---|:---|
| **Key responsibilities** | **Key activities** |
| Overseeing the quality and integrity of financial information, including the effectiveness of our systems of internal control over financial reporting | • Reviewed significant accounting and actuarial practices and policies (and areas where judgment was applied), financial disclosure (and recommended them to the board for approval), and management's report on the effectiveness of internal controls over financial reporting.<br> • Received frequent updates and reviewed key matters related to the implementation of IFRS 17.<br> • Reviewed critical audit matters and key audit matters communicated by the external auditors. |

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| | |
|:---|:---|
| 2023 Management information circular | **31** |

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|:---|:---|
| **Key responsibilities** | **Key activities** |
| Overseeing the performance, qualifications and independence of our external auditors | • Considered auditor tenure and the engagement of the external auditors, including the planned initiation of a tendering process for the external audit engagement once the adoption of IFRS 17 and first annual audit cycle is complete.<br> • Conducted the annual review of Ernst & Young, including the engagement partner and audit team, their independence, objectivity and quality of audit work performed, and recommended their reappointment as auditors to the board for approval.<br> • Reviewed and approved or pre-approved the auditor independence policy, the scope of the annual audit plan and all related services and fees, recurring audit and non-audit services for the coming year, and audit and non-audit services proposed during the year outside of previous approvals. |
| Overseeing our compliance program, including compliance with legal and regulatory requirements and the effectiveness of our compliance practices | • Oversaw compliance with applicable laws and regulations, including the anti-money laundering/anti-terrorist financing program.<br> • Reviewed reports and received frequent updates on litigation and legislative and regulatory developments. |
| Overseeing our internal audit program, including the effectiveness of our internal audit practices | • Oversaw the internal audit program, including budget, structure, skills, resources, independence, qualifications, and annual risk-based audit plan of the internal audit function.<br> • Reviewed and approved the internal audit plan and reviewed periodic reports on internal audit activities and audit results. |
| Overseeing our finance, actuarial, internal audit and global compliance functions | • Reviewed reports, opinions and recommendations from the Chief Actuary, Chief Financial Officer (CFO), Chief Auditor and Global Compliance Chief.<br> • Reviewed the annual report of the independent actuarial peer reviewer.<br> • Reviewed reports on capital matters, including the company's capital position, capital initiatives, capital targets and ratios.<br> • Reviewed reports on treasury matters, including dividend recommendations, funding plans, liquidity position and ratios.<br> • Reviewed and approved the mandates of the Global Compliance Chief, Chief Auditor, CFO and Chief Actuary and the global compliance, internal audit, finance and actuarial functions, and reviewed the performance evaluation and assessed the effectiveness of each. |
| Developing our ethical standards and policies on managing conflicts of interest, protecting confidential information and monitoring customer complaints | • Reviewed the code of business conduct and ethics and the procedures relating to conflicts of interest and restricting the use of confidential information.<br> • Reviewed reports on compliance with the code and Ethics Hotline activities.<br> • Oversaw procedures for handling complaints. |
| Monitoring arrangements<br> with related parties and<br> transactions that could have<br> a material impact on our<br> stability or solvency | • Provided oversight of transactions with related parties, a group that includes directors and senior officers as defined by the Insurance Companies Act (Canada), including through the committee-approved related party transactions policy, which includes established procedures to ensure the disclosure and review of related party transactions and that apply to a broad range of transactions with related parties, from the provision of products or services to a related party to the purchase of assets or services from a related party.<br> • Reviewed reports on the company's related party procedures and effectiveness of the procedures to identify material related party transactions and ensure any related party transactions comply with all requirements. |

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The committee meets without management present at each meeting. The committee also met in private with Ernst & Young, the independent actuarial peer reviewer, CFO, Chief Risk Officer, Chief Actuary, Chief Auditor and Global Compliance Chief throughout the year.

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|:---|:---|
| **32** | Manulife Financial Corporation |

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About the Directors

**Management resources and compensation committee** 

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|:---|:---|
| **Membership as of December 31, 2022:**\*<br>Donald R. Lindsay – Chair<br>Susan F. Dabarno<br>Julie E. Dickson<br>C. James Prieur<br>May Tan<br>Leagh E. Turner | All members of the management resources and compensation committee in 2022 are independent and meet the additional independence standards set out in our director independence policy in compliance with applicable securities exchange rules. A majority of the members have finance, talent management and executive compensation, and risk management experience. There is cross-membership between the management resources and compensation committee and the risk committee.<br>The committee met five times in 2022. It has approved this report and is satisfied that it has carried out all of the responsibilities required by the committee charter. |

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\* On February 15, 2023, Nicole Arnaboldi joined the committee and became committee chair, and Don Lindsay and May Tan resigned from the committee. Ms. Arnaboldi meets the additional independence standards set out in our director independence policy in compliance with applicable securities exchange rules. 

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| | |
|:---|:---|
| **Key responsibilities** | **Key activities** |
| Overseeing global human resources strategy, policies and programs | • Reviewed the 2022 compensation program and recommended the 2023 compensation program to the board for approval.<br> • Monitored employee engagement, including the results of the global employee engagement survey.<br> • Reviewed the compensation programs, including base pay, incentives, pension and benefit plans, and made recommendations to the board.<br> • Received frequent updates on the company's response to the pandemic in relation to the health and well-being of employees.<br> • Reviewed reports on talent management and diversity.<br> • Reviewed updates to the global compensation policy and reports on compensation plans.<br> • Oversaw the review of compensation of employees who have a material impact on our risk exposure. |
| Developing and maintaining succession plans for the CEO and other senior executives | • Completed succession planning reviews of the CEO and senior executive roles. |
| Reviewing senior executive appointments before recommending them to the board for approval | • Provided oversight of the vetting process for executive appointments. |
| Reviewing and recommending compensation performance goals and objectives for the CEO and other senior executives, assessing the performance of the CEO and other senior executives in light of their performance goals and objectives and recommending their compensation | • Reviewed and approved the CEO's annual objectives, assessed the CEO's performance and integrity and made compensation recommendations for approval by the board.<br> • Reviewed the performance assessment, compensation recommendations and assessment of integrity for the members of the executive leadership team and the head of each oversight function and approved their annual objectives.<br> • Reviewed the company's compensation peer group.<br> • Considered the feedback from shareholder engagement meetings regarding compensation programs. |
| Overseeing compensation plans and ensuring the compensation program aligns with risk management policies and practices and corporate strategy | • Reviewed reports of the independent consultant on compensation matters.<br> • Reviewed the performance and independence of the independent consultant.<br> • Reviewed reports on the alignment of compensation programs with sound risk management principles and established risk appetite.<br> • Reviewed reports on compensation for employees who have a material impact on our risk exposure. |
| Overseeing governance of employee pension plans | • Oversaw the company's global retirement and global benefits programs. |

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The committee meets without management present at each meeting. The committee also works with a consulting firm to receive independent advice on compensation matters, and has retained Korn Ferry Hay Group, Inc. (Korn Ferry) as its independent consultant since November 2019. The committee chair approves all work carried out by the independent consultant. The committee met in private with Korn Ferry throughout the year. Please see page 103 for more about the independent consultant.

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|:---|:---|
| 2023 Management information circular | **33** |

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**Risk committee** 

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|:---|:---|
| **Membership as of December 31, 2022:**\*<br>C. James Prieur – Chair<br>Susan F. Dabarno<br>Julie E. Dickson<br>Donald R. Lindsay<br>May Tan<br>Leagh E. Turner | All members of the risk committee are independent and a majority are knowledgeable about risk management and risk disciplines. There is cross-membership between the risk committee and the management resources and compensation committee, and the committee holds a joint meeting with the audit committee at least once a year.<br>The committee met five times in 2022, including one joint meeting with the audit committee. It has approved this report and is satisfied that it has carried out all of the responsibilities required by the committee charter. |

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\* On February 15, 2023, Nicole Arnaboldi joined the committee, and May Tan and Don Lindsay resigned from the committee.

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| | |
|:---|:---|
| **Key responsibilities** | **Key activities** |
| Identifying and assessing our principal risks and overseeing the programs, procedures and controls in place to manage them | • Reviewed reports from the Chief Risk Officer on risk appetite, risk limits, principal risk exposures, stress tests and emerging risks and policies, procedures and controls in place to manage principal risks.<br> • Reviewed reports from the Chief Auditor on the adequacy and effectiveness of the procedures and controls to manage the principal risks.<br> • Reviewed reports on capital targets and ratios.<br> • Reviewed the company's information services risk management program, including reports at each meeting on cyber security risks, mitigation and resilience, and engaged in discussions regarding the effectiveness of the program and controls for identifying and addressing the related risks.<br> • Monitored updates from business segments on the key risks and risk management strategies. |
| Developing, overseeing and reviewing our enterprise risk management framework, risk appetite and risk limits | • Considered the appropriate balance of risk and return, and reviewed the risk appetite and risk limits and recommended to the board for approval. |
| Reviewing the risk impact of the business plan and new business initiatives, including consistency with our risk appetite and related risk management and controls | • Reviewed the risk impact of the strategic plan, including consistency with the approved risk appetite and related risk management and controls. |
| Aligning our compensation programs with sound risk management principles and our established risk appetite | • Reviewed reports on the alignment of compensation programs with sound governance principles and established risk appetite. |
| Overseeing the risk management function | • Reviewed and approved the mandates of the Chief Risk Officer and the risk management function, and reviewed the performance evaluation and assessed the effectiveness of each.<br> • Reviewed and approved the budget, structure, skills and resources of the risk management function. |
| Overseeing our compliance with risk management policies | • Reviewed and approved changes to the risk policy framework and related enterprise policies. |

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The committee meets without management present at each meeting. The committee also met in private with the Chief Risk Officer, Chief Information Officer, Chief Information Risk Officer, Chief Auditor and the Global Compliance Chief throughout the year.

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|:---|:---|
| **34** | Manulife Financial Corporation |

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About the Directors

How we pay our directors

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|:---|:---|
| We structure director compensation with three goals in mind:<br> • to reflect directors' responsibilities, time commitment and expected contribution<br> • to align directors' interests with those of our shareholders<br> • to be competitive with global financial institutions that are comparable to us in scope and complexity.<br>The table on page 36 shows the director fee schedule for services provided to Manulife and Manufacturers Life in 2022. Fees are divided equally between the two companies.<br>Directors do not receive stock options, perquisites, severance, pension or retirement benefits or participate in an equity-based compensation plan, other than receiving deferred share units or common shares in lieu of cash compensation. Mr. Gori does not receive director compensation because he is compensated in the role of President and CEO. | Key features of the director compensation structure:<br> • Directors and the Chair of the Board are paid a single annual retainer. No meeting fees or travel allowances are provided.<br> • Committee chairs receive an additional retainer to recognize the additional responsibilities and workload required by this leadership role.<br> • For 2022, directors were required to receive at least 50% (US$102,500) of their board retainer in equity, even after they had met their equity ownership requirement. This increased to US$127,500 (approximately 55% of the board retainer) on January 1, 2023.<br> • The director equity ownership requirement is six times the mandatory equity portion of the annual board retainer. Directors are expected to meet this requirement within six years of joining the board. |
| We structure director compensation with three goals in mind:<br> • to reflect directors' responsibilities, time commitment and expected contribution<br> • to align directors' interests with those of our shareholders<br> • to be competitive with global financial institutions that are comparable to us in scope and complexity.<br>The table on page 36 shows the director fee schedule for services provided to Manulife and Manufacturers Life in 2022. Fees are divided equally between the two companies.<br>Directors do not receive stock options, perquisites, severance, pension or retirement benefits or participate in an equity-based compensation plan, other than receiving deferred share units or common shares in lieu of cash compensation. Mr. Gori does not receive director compensation because he is compensated in the role of President and CEO. |  |

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In 2019, the board introduced a flat fee structure and enhanced director equity ownership requirements to align with best practices and reduce compensation volatility and complexity. The corporate governance and nominating committee worked with an independent consultant to review director compensation again in 2022, and recommended that the board approve a 12% increase to director compensation to align with companies of similar complexity. The increase is received entirely in equity, raising the mandatory equity portion of the board retainer to US$127,500 (approximately 55% of the board retainer). This change went into effect January 1, 2023. The corporate governance and nominating committee will continue to monitor director compensation so that it continues to achieve the three goals above.

**About equity ownership** 

Directors are required to own equity in Manulife so their interests are aligned with the interests of our shareholders. Directors can count Manulife common shares, preferred shares or deferred share units towards meeting the ownership guidelines. Directors can beneficially own the shares or exercise control or direction over them.

We require all directors except Mr. Gori to own common shares, preferred shares and/or deferred share units with a total market value of at least six times the mandatory equity portion of the annual board retainer. Until January 1, 2023, this equaled US$615,000, and thereafter equals US$765,000. Mr. Gori has separate equity ownership requirements as President and CEO, which he meets. You can read more about this on page 107.

See pages 18 to 29 for information about each nominated director's equity ownership. Until January 1, 2023 directors were required to receive at least 50% (US$102,500) of their board retainer in equity. This increased to US$127,500, or approximately 55% on January 1, 2023.

Directors are expected to meet their equity ownership requirements within six years of joining the board. All directors who have served six years or more meet or exceed their equity ownership requirement.

**About deferred share units** 

Deferred share units are notional shares that have the same value as Manulife common shares and earn additional units as dividend equivalents at the same rate as dividends paid on our common shares.

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|:---|:---|
| 2023 Management information circular | **35** |

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Deferred share units vest in full on the grant date, but directors can only redeem their deferred share units for cash or shares after they leave the board (on the anniversary of their departure for U.S. directors or within one year of leaving the board for all other directors). Deferred share units can only be transferred when a director dies.

We calculate the number of deferred share units to be granted by dividing the dollar value to be received by the closing price of our common shares on the TSX on the last trading day before the grant date. Directors receive additional units as dividend equivalents when dividends are paid on our common shares. Deferred share units are granted to directors under the stock plan for non-employee directors – please see page 91 for more information.

**Outstanding share-based awards** 

The table below shows the market value of deferred share units that have vested but not paid out as at December 31, 2022. Directors received these deferred share units as part of their compensation. These are valued using the closing price of our common shares on the TSX on December 31, 2022.

---

| | | | |
|:---|:---|:---|:---|
| (as at December 31, 2022) | Share-based<br>awards held | Share price | Market or payout value of<br> vested share-based awards<br> not paid out or distributed |
| Nicole Arnaboldi | 31157 | $24.15 | $752442 |
| Guy Bainbridge | 23970 | $24.15 | $578876 |
| Joseph Caron | 84336 | $24.15 | $2036714 |
| John Cassaday | 266642 | $24.15 | $6439404 |
| Susan Dabarno | 33952 | $24.15 | $819941 |
| Julie Dickson | 44420 | $24.15 | $1072743 |
| Tsun-yan Hsieh | 164168 | $24.15 | $3964657 |
| Vanessa Kanu | 4988 | $24.15 | $120460 |
| Donald Lindsay | 108672 | $24.15 | $2624429 |
| John Palmer | 129502 | $24.15 | $3127473 |
| James Prieur | 149604 | $24.15 | $3612937 |
| Andrea Rosen | 169932 | $24.15 | $4103858 |
| May Tan | 6287 | $24.15 | $151831 |
| Leagh Turner | 12279 | $24.15 | $296538 |

---

**Director compensation** 

**DIRECTOR FEES** 

---

| | | |
|:---|:---|:---|
| (US$) |  |  |
| **Annual retainers** | **2022** | **Effective<br>January 1, 2023** |
| Board member | $205000 | $230000 |
| Chair of the Board | $400000 | $425000 |
| Vice Chair of the board<sup>1</sup> (paid in addition to the annual board member retainer and any other retainers that apply) | $50000 | $50000 |
| Observer to subsidiary board (requested from time to time, may be paid an additional retainer and/or meeting fee at the board's discretion) | Variable | Variable |
| **Committee chair retainers** |  |  |
| • Audit committee<br> • Management resources and compensation committee<br> • Risk committee<br> • Corporate governance and nominating committee | 40000<br> 40000<br> 40000<br> 40000 | 40000<br> 40000<br> 40000<br> 40000 |

---

1 Don Lindsay was Vice Chair of the board from November 9, 2022 to February 15, 2023.

---

| | |
|:---|:---|
| **36** | Manulife Financial Corporation |

---

------

About the Directors

**2022 DIRECTOR COMPENSATION** 

The table below shows the compensation paid to the independent directors in 2022 for services provided to Manulife, Manufacturers Life and any Manulife subsidiary. Amounts are paid in U.S. dollars and were converted to Canadian dollars for the table using the BNN Bloomberg exchange rate on the morning of the business day before each quarterly payment date:

• US$1.00 = $1.2443 on March 30, 2022

• US$1.00 = $1.2857 on June 29, 2022

• US$1.00 = $1.3697 on September 29, 2022

• US$1.00 = $1.3564 on December 29, 2022.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Annual fees** | **Annual fees** | **Annual fees** | **All other<br>compensation** | **Total<br>compensation** | **Allocation of <br>annual fees** | **Allocation of <br>annual fees** |
|  | Annual<br>retainer | Committee<br>chair<br>retainer | Subsidiary<br> board fees |  |  | Fees<br>earned<br> (cash) | Share-<br>based<br> awards |
| Nicole Arnaboldi | $269375 | $0 | – |  | **$269375** | $0 | $269375 |
| Guy Bainbridge | $269375 | $52561 | – |  | **$321936** | $160968 | $169968 |
| Joseph Caron | $269375 | $0 | – |  | **$269375** | $134688 | $134688 |
| John Cassaday | $525610 | $0 | – |  | **$525610** | $262805 | $262805 |
| Susan Dabarno | $269375 | $0 | – |  | **$269375** | $134688 | $134688 |
| Julie Dickson | $269375 | $0 | – |  | **$269375** | $0 | $269375 |
| Tsun-yan Hsieh | $269375 | $0 | $77086 |  | **$346461** | $77086 | $269375 |
| Vanessa Kanu | $226862 | $0 |  |  | **$226862** | $113431 | $113431 |
| Donald Lindsay | $279171 | $52561 | – |  | **$331732** | $165866 | $165866 |
| John Palmer | $94237 | $0 | – | $5000 | **$99237** | $52118 | $47118 |
| James Prieur | $269375 | $52561 | – |  | **$321936** | $0 | $321936 |
| Andrea Rosen | $269375 | $52561 | – |  | **$321936** | $0 | $321936 |
| May Tan | $269375 | $0 | – |  | **$269375** | $134688 | $134688 |
| Leagh Turner | $269375 | $0 | – |  | **$269375** | $134688 | $134688 |
|  |  |  |  | **TOTAL** | **$4111960** |  |  |

---

Total director compensation is capped at US$4 million ($5,205,200): US$2 million ($2,602,600) each for Manulife and Manufacturers Life. Canadian amounts have been calculated using the Bank of Canada annual exchange rate for 2022 of US$1.00 = $1.3013. Total compensation paid in 2022 was below the capped amount.

**Pro-rated fees** 

Fees in the 2022 director compensation table are pro-rated for the following directors:

• Vanessa Kanu joined the board on February 28, 2022.

• Don Lindsay was appointed Vice Chair of the board effective November 9, 2022.

• John Palmer retired from the board on May 12, 2022.

---

| | |
|:---|:---|
| 2023 Management information circular | **37** |

---

------

**Subsidiary board fees** 

The following director received fees for services provided to a subsidiary in 2022 through our subsidiary governance oversight program:

• Tsun-yan Hsieh served on the board of Manulife US Real Estate Management Pte Ltd.
and received fees for his services as shown in the table above. Mr. Hsieh's term on the Manulife US Real Estate Management Pte Ltd. board ended on September 30, 2022.

**Allocation of annual fees** 

Directors must decide, before the start of the new fiscal year, if they want to receive all or part of their compensation in equity instead of cash:

*•* *Fees earned is the amount received in cash.* 

*•* *Share-based awards is the amount received as equity.* 

---

| | |
|:---|:---|
| **38** | Manulife Financial Corporation |

---

------

## Executive compensation
Executive compensation is designed to contribute to our long-term sustainable growth by rewarding executives for strong performance in executing our business strategy.

---

| | |
|:---|:---|
| <br> ![LOGO](g427878g09w29.jpg)  | <br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Where to find it** |

---

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **[Message from the Chair](#tx427878_51)** | **40** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **[Compensation discussion and analysis](#tx427878_52)** | **42** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Executive summary](#tx427878_53) | 42 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Our executive compensation philosophy](#tx427878_54) | 48 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Benchmarking against our peers](#tx427878_55) | 50 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Our executive compensation program and 2022 performance](#tx427878_56) | 52 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Compensation of the named executives](#tx427878_57) | 67 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Share performance](#tx427878_58) | 84 |

---

---

| | |
|:---|:---|
| **[Executive compensation details](#tx427878_59)** | **86** |
| [Summary compensation table](#tx427878_60) | 86 |
| [Equity compensation](#tx427878_61) | 88 |
| [Retirement benefits](#tx427878_62) | 92 |
| [Termination and change in control](#tx427878_63) | 98 |
| **[Compensation oversight](#tx427878_64)** | **103** |
| [How the board oversees executive compensation](#tx427878_65) | 103 |
| [Managing compensation risk](#tx427878_66) | 105 |
| [The decision-making process](#tx427878_67) | 108 |
| [Compensation of employees who have a material impact on risk](#tx427878_68) | 110 |

---

---

| | |
|:---|:---|
| 2023 Management information circular | **39** |

---

------

Message from the Chair

---

| | |
|:---|:---|
| ![LOGO](g427878g42h96.jpg) <br>| **Don Lindsay**<br>Chair of the Management Resources and Compensation Committee<br>The board is encouraged by Manulife's resilience in 2022. Despite difficult market conditions that, in particular, had an impact on our Global WAM and Asia businesses, we continued to make progress on our strategic priorities, reduced |

---

our go-forward risk profile and significantly expanded our environmental, social and governance (ESG) investment offerings. While our overall financial performance fell short of the ambitious targets we set out at the beginning of 2022, we delivered solid financial results and our 2022 total shareholder return (TSR) was in line with our performance peers and higher than the S&P/TSX Composite and Composite Financials indices. We recognize that our longer term TSR has fallen short of our expectations. Overall, the committee is pleased with the alignment between our executive compensation outcomes and our company's performance in 2022 and over the longer-term.

&nbsp;&nbsp;&nbsp;&nbsp; **Compensation highlights**<br> • The 2022 annual incentive was funded at 87% for the named executives, reflecting challenging macroeconomic conditions (see page 57)<br> • The 2020 performance share unit awards vested in March 2023 at 78% of target (see page 65)<br>

**Business performance and compensation outcomes** 

The 2022 annual incentive was funded at 87% for the executive leadership team, including our named executives, reflecting lower than target core earnings and new business value. We delivered record net income for 2022 and our performance against the objectives in our strategic priorities exceeded target, particularly for portfolio optimization and high performing team with the strong progress made against our ESG commitments covering diversity, equity and inclusion, employee engagement and climate action.

The 2020 performance share unit (PSU) awards vested in March 2023 at 78%, reflecting solid performance in our book value per share metric, but below target performance in our core ROE and relative TSR metrics. The performance criteria for these awards were established before the pandemic in late 2019 and were not adjusted in any way for the impact of COVID-19. We continue to believe that our executive compensation program provides appropriate incentive for our executive leadership team to take actions that will drive strong business performance, and ultimately create long-term shareholder value.

**Evolving our executive compensation program and reflecting IFRS 17** 

We did not make any changes to our executive compensation program for 2022, and have not made any substantial changes to our annual incentive plan since 2017. However, as I shared in my letter in last year's proxy circular, in 2022 we spent significant time reviewing our compensation plans with the goal of simplifying the design, responding to shareholder feedback, ensuring that the measures were driving the desired actions by our senior executives, and adapting to changes as a result of IFRS 17 (an accounting standard change for 2023). We approved the following weightings for our annual incentive program scorecard for 2023:

• 40% weighting on core earnings per share, tying our executives to a key financial measure of operating performance

• 30% weighting on new business value, ensuring that growing our business continues to be a priority

• 10% weighting on customer metrics (net promoter score and straight-through processing), to drive an even greater focus on
our ambition of being the most digital, customer-centric global company in our industry

• 20% continued weighting on performance against our five strategic priorities and ESG commitments.

---

| | |
|:---|:---|
| **40** | Manulife Financial Corporation |

---

------

Executive Compensation

We are also introducing a change to the scorecard used to assess PSU performance to align with the IFRS 17 accounting standard change. Beginning with the 2023 awards, we will replace the book value per share metric with book value per share plus after-tax total CSM (contractual service margin balance) per share. This change will ensure that we are continuing to capture the full value of our outstanding policies while also ensuring that events that impact CSM have an appropriate impact on management compensation. The core ROE metric and the relative TSR modifier will remain unchanged. Finally, for 2023 we will increase the maximum payout opportunity from 180% to 200% (including the impact of the relative TSR modifier), in tandem with the introduction of higher performance hurdles. This will reward greater outperformance, consistent with market practice. See page 44 for more information about these changes.

**Shareholder engagement and chair transition** 

I would like to thank our investors for their continued engagement on topics including executive compensation, ESG topics, and our strategic direction. In January of this year, members of our board met with institutional shareholders accounting for approximately 28% of Manulife's outstanding institutional shares. We appreciate your candid and thoughtful feedback on all topics and will use your inputs to aid in our decision-making processes.

In February of this year, I transitioned to the role of Chair of the Board. It has been a privilege to serve in the role of chair of the management resources and compensation committee, and I look forward to continuing to work closely with this committee on its important objectives. I would like to thank Nicole Arnaboldi for agreeing to take over as chair of the committee. Nicole has been a board member since 2020 and previously served as a member of this committee. Her deep, global expertise as a former senior executive in the wealth and asset management industry makes her an ideal successor as we continue to focus on growing our highest potential businesses.

![LOGO](g427878g89r37.jpg)

Don Lindsay

Chair of the Management Resources and Compensation Committee

---

| | |
|:---|:---|
| 2023 Management information circular | **41** |

---

------

**Compensation discussion & analysis** 

Executive summary

**2022 BUSINESS PERFORMANCE IMPACT ON COMPENSATION** 

Manulife's executive compensation program is designed to reward our named executives for the successful execution of our business strategy each year to promote sustainable growth, and the achievement of longer-term strategic initiatives to transform Manulife into the most digital, customer-centric global company in our industry. Total direct compensation for our named executives is structured with a significant portion "at risk" (or variable) each year and dependent on company performance and the returns we provide to our shareholders. This keeps the interests of our executives closely aligned with the interests of our shareholders.

For 2022, annual incentives for the executive leadership team, including our named executives, were funded with a company performance score of 87%. In line with principles the management and resources committee established several years ago regarding the treatment of any charges in our P&C Reinsurance business, approximately $80 million (out of $256 million) of the P&C Reinsurance claims provision incurred for Hurricane Ian was excluded from the determination of the company performance score. The exclusion was considered because the loss was outside of management's control, while the amount of the adjustment considered the cumulative return on capital for this business. The adjustment increased the overall performance score by 2 points.

Performance criteria for funding were based on a board-approved plan that was established in 2021 with an optimistic outlook of the challenges associated with COVID-19. While our North American businesses were largely not affected, in Asia there continued to be varying degrees of adverse impacts in certain markets across the region related to COVID-19 containment measures throughout 2022. We made no adjustments to the performance scores to offset the impact of the COVID-19 pandemic to our Asia business or the impact of interest rates and equity markets on our Global Wealth and Asset Management (Global WAM) business.

The performance share unit (PSU) awards granted in 2020 vested in March 2023 at 78%, reflecting solid performance in our book value per share metric, but below target performance in our core ROE and relative TSR measures. The performance criteria were set in late 2019 and were not subsequently adjusted for the impact of COVID-19 nor for the P&C Reinsurance charge. In calculating the performance factor, the board excluded the impact of the 2019 and 2021 charges related to updating the ultimate reinvestment rate (URR) assumptions issued by the Canadian Actuarial Standards Board, and the impact of the restructuring charges taken in 2021. These adjustments increased the score by 3 points.

**CEO COMPENSATION** 

Mr. Gori's leadership continues to be a strength for Manulife. In recognition of the continued momentum the company has achieved under his direction, especially with the ongoing prevalence of COVID-19 in 2022, the board awarded Mr. Gori an annual incentive of US$2,923,200 for 2022. This award is a direct result of his exceptional personal performance highlighted by Manulife's demonstrated resilience in the face of difficult market conditions.

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| | |
|:---|:---|
| **42** | Manulife Financial Corporation |

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Executive Compensation

**CEO total direct compensation** (US$)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | 2018 | 2019 | 2020 | 2021 | 2022 |
| Base salary | $1100000 | $1100000 | $1200000 | $1200000 | $1200000 |
| Annual incentive<sup>1</sup> | $3088800 | $3700000 | $2822400 | $4600800 | $2923200 |
| Equity-based incentives<sup>1</sup> | $5200000 | $5600000 | $6325000 | $6825000 | $8200000 |
| Total direct compensation | $9388800 | $10400000 | $10347400 | $12625800 | $12323200 |

---

1 Timing of awards: the 2022 column includes the annual incentive awarded for 2022 and paid in February 2023 and the equity-based incentives granted in March 2022.

For 2023, the board increased Mr. Gori's base salary to US$1,300,000 and maintained his annual incentive target at 200% of salary. He was granted an equity-based incentive award of US$8,500,000 in March 2023.

**EXECUTIVE COMPENSATION AND ESG** 

As part of our ESG strategy, Manulife sets board-approved enterprise goals for ESG-related measures that are key to our business strategy and that factor into annual incentives for the named executives in two ways:

• The strategic focus component of the company performance score is based in part on an assessment of performance against
goals linked to diversity, equity and inclusion, climate action, employee engagement and customer satisfaction.

• The individual performance goals for each named executive also include goals linked to diversity, equity and inclusion,
climate action, employee engagement and leadership accountability, as well as risk goals related to cybersecurity and ethical business conduct (see the executive profiles starting on page 67).

You can learn more about Manulife's ESG strategy on our website at manulife.com/sustainability and in our annual ESG Report (the 2022 report will be published in the second quarter of 2023).

**LINKING CEO PAY TO SHAREHOLDER VALUE** 

We look at pay for performance from different perspectives to ensure there is strong alignment between what our CEO earns and our total shareholder return (TSR).

The CEO lookback table, on the following page, compares total direct compensation awarded to the CEO in each of the last five years to the actual value of that compensation as of December 31, 2022, illustrating how our share price affects what the CEO actually earns over time.

The analysis also shows the actual value as of December 31, 2022 for each $100 of compensation awarded each year, and compares it to the value earned by shareholders over the same period. We have indexed these values at $100 to provide a meaningful comparison.

---

| | |
|:---|:---|
| 2023 Management information circular | **43** |

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The table illustrates that the actual value of CEO compensation is closely aligned with the shareholder experience. This is consistent with our emphasis on aligning executive compensation with the longer-term success of Manulife.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| (in CAD$) | Total direct<br>compensation<br>awarded | Actual value<br> on December 31,<br>2022 | Value of $100 | Value of $100 | Value of $100 |
| (in CAD$) | Total direct<br>compensation<br>awarded | Actual value<br> on December 31,<br>2022 | Period | Manulife<br>CEO | Manulife<br>shareholders |
| 2018 | $12081371 | $10395423 | Jan 1, 2018 to Dec 31, 2022 | $86.05 | $116.91 |
| 2019 | $13757207 | $13185077 | Jan 1, 2019 to Dec 31, 2022 | $95.84 | $152.34 |
| 2020 | $13576368 | $11910863 | Jan 1, 2020 to Dec 31, 2022 | $87.73 | $107.27 |
| 2021 | $15978085 | $16440659 | Jan 1, 2021 to Dec 31, 2022 | $102.90 | $118.14 |
| 2022 | $15872059 | $15347900 | Jan 1, 2022 to Dec 31, 2022 | $96.70 | $105.86 |

---

![LOGO](g427878g09a09.jpg)

*Total direct compensation awarded* includes base salary, annual incentive, and equity-based incentives, as reported in the summary compensation table each year.

*Actual value (realized and realizable*) represents the actual value to the CEO of compensation awarded each year, realized between grant and December 31, 2022 or still realizable on December 31, 2022.

*Value of $100 for CEO* represents the *actual value* as of December 31, 2022 for each $100 of *total direct compensation awarded* in each year.

*Value of $100 for Manulife shareholders* represents the cumulative value of a $100 investment in common shares made on the first trading day of each period, assuming reinvestment of dividends.

Our pay-for-performance alignment review also includes a five-year lookback of our CEO's compensation compared to our TSR performance against our peers and against various indices (see page 71).

Details about the 2022 compensation decisions for our other named executives begin on page 72.

**CHANGES TO THE EXECUTIVE COMPENSATION PROGRAM FOR 2023** 

In 2022, we conducted a comprehensive review of our executive compensation program with the goals of simplifying the program design, responding to shareholder feedback, ensuring that the measures were driving the desired actions by executives, and adapting to changes as a result of IFRS 17 (a new accounting standard that replaced IFRS 4 on accounting for insurance contracts). Following this review, we implemented the adjustments noted on the next page.

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| | |
|:---|:---|
| **44** | Manulife Financial Corporation |

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Executive Compensation

**Changes to the 2023 performance criteria for our annual incentive** 

---

| | | | |
|:---|:---|:---|:---|
| | **Current** | **2023** | **Understanding the changes**<br>|
| &nbsp;&nbsp;&nbsp;&nbsp;**Earnings** | • Net income attributed to shareholders (25%)<br> • Core earnings excluding core investment gains (25%) | • Core earnings per share excluding credit losses and loss reversals (40%)  | • Defining core earnings on a per share basis to strengthen the alignment with the interests of shareholders<br> • Simplifying to a single earnings measure, to focus on the measure that better reflects the underlying earnings power of the business<br> • Reducing the weighting of the earnings category by 10% to increase our emphasis on our customers (see *Strategic focus*, on the following page) |
| &nbsp;&nbsp;&nbsp;&nbsp;**Growth** | • New business value (15%)<br> • Global Wealth and Asset Management (Global WAM) core earnings (15%) | • New business value (30%) | • Removing Global WAM core earnings as it is captured under the core earnings per share measure<br> • Increasing the weighting of new business value to retain our emphasis on sustainable growth<br> • Tightening the performance range to respond to historical performance and volatility (see page 56 for additional details) |
| &nbsp;&nbsp;&nbsp;&nbsp;**Customer** | • Prior to 2023, these metrics were included as part of the index of measures under Strategic focus | • Relationship net promoter score (rNPS) (5%)<br> • Straight-through processing (STP) (5%) | • Highlighting two equally weighted customer measures related to customer experience and digital transformation. Performance for these measures is quantitatively determined based on targets in line with the board-approved business plan set at the beginning of each year |

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| | |
|:---|:---|
| 2023 Management information circular | **45** |

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| | | | |
|:---|:---|:---|:---|
| | **Current** | **2023** | **Understanding the changes**<br>|
| &nbsp;&nbsp;&nbsp;&nbsp;**Strategic focus** | • Represents an index of measures used to track performance against our ESG commitments and our five strategic priorities: Accelerate Growth, Digital Customer Leader, Portfolio Optimization, Expense Efficiency, and High Performing Team. Includes quantifiable goals, subject to a qualitative overlay, that are established at the beginning of the year and approved by the management resources and compensation committee (20%) | • No change (20%) | • Continues to measure progress against our five strategic priorities |
| <br> **Changes to the 2023 performance criteria for our PSU plan**<br> For 2023, we have updated our PSU plan to reflect the transition to IFRS 17. We adjusted the book value per share metric to also include the after-tax total CSM per share. We believe CSM is an important financial measure for shareholders to focus on because it represents a store of potential future profits, is treated as available capital under the LICAT regulatory capital regime, will measure of our ability to write profitable insurance sales, and is a key component of two of our externally disclosed medium-term growth targets. | <br> **Changes to the 2023 performance criteria for our PSU plan**<br> For 2023, we have updated our PSU plan to reflect the transition to IFRS 17. We adjusted the book value per share metric to also include the after-tax total CSM per share. We believe CSM is an important financial measure for shareholders to focus on because it represents a store of potential future profits, is treated as available capital under the LICAT regulatory capital regime, will measure of our ability to write profitable insurance sales, and is a key component of two of our externally disclosed medium-term growth targets. | <br> **Changes to the 2023 performance criteria for our PSU plan**<br> For 2023, we have updated our PSU plan to reflect the transition to IFRS 17. We adjusted the book value per share metric to also include the after-tax total CSM per share. We believe CSM is an important financial measure for shareholders to focus on because it represents a store of potential future profits, is treated as available capital under the LICAT regulatory capital regime, will measure of our ability to write profitable insurance sales, and is a key component of two of our externally disclosed medium-term growth targets. | <br> **Changes to the 2023 performance criteria for our PSU plan**<br> For 2023, we have updated our PSU plan to reflect the transition to IFRS 17. We adjusted the book value per share metric to also include the after-tax total CSM per share. We believe CSM is an important financial measure for shareholders to focus on because it represents a store of potential future profits, is treated as available capital under the LICAT regulatory capital regime, will measure of our ability to write profitable insurance sales, and is a key component of two of our externally disclosed medium-term growth targets. |
|  | **Current** | **2023** | **Understanding the changes**<br>|
| &nbsp;&nbsp;&nbsp;**Measures** | • Book value per share excluding AOCI (50%)<br> • Core return on equity (50%)<br> • Relative TSR modifier (+/-20% compared to Manulife's performance peer group) | • Book value per share (excluding translation of foreign operations) *plus* after-tax total CSM (contractual service margin balance) per share (50%)<br> • Core return on equity (50%)<br> • Relative TSR modifier (+/-20% compared to Manulife's performance peer group) | • Redefining book value per share metric to be more meaningful under IFRS 17. Including after-tax total CSM (contractual service margin balance), as it is a fundamental concept of IFRS 17 and represents the unearned profits we expect to amortize into earnings. We exclude translation of foreign operations because currency impacts can be volatile and distort results |

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---

| | |
|:---|:---|
| **46** | Manulife Financial Corporation |

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Executive Compensation

---

| | | | |
|:---|:---|:---|:---|
| | **Current** | **2023** | **Understanding the changes**<br>|
| **Payout range** | • 0 to 180%<br>(including impact of the relative TSR modifier) | • 0 to 200% <br>(including impact of the relative TSR modifier) | • Aligning with typical market practice<br> • While this change increases the overall opportunity for higher future payouts, there is a corresponding requirement for higher performance |

---

**Changes related to IFRS 17** 

As noted in last year's circular, IFRS 17 will have a significant impact on how we measure and present our financial results. IFRS 17 is the new insurance contract accounting standard, effective January 1, 2023. This change in accounting standard does not impact the fundamentals and economics of our business. However, it does impact where, when and how specific items are recognized on our financial statements. A fundamental concept of IFRS 17 is the contractual service margin balance (CSM) which defers the recognition of new business gains over the lifetime of the insurance contract. CSM represents the unearned profits that are expected to amortize into income over time.

---

| | |
|:---|:---|
| 2023 Management information circular | **47** |

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------

Our executive compensation philosophy

Our executive compensation program is designed to contribute to our long-term sustainable growth by rewarding executives for strong performance in executing our business strategy and achieving strategic initiatives.

Pay for performance is at the core of our approach to executive compensation. Most of what our executives earn is variable, tied to performance, and not guaranteed. In practice, executives earn more when performance is strong and earn less when performance is mixed.

The board also has the discretion to adjust annual incentive and PSU payouts when significant events outside management's control impact performance that make payouts unreasonable, unrepresentative, or inappropriate.

**Five principles guide every compensation decision**![LOGO](g427878g09r34.jpg)

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| | |
|:---|:---|
| **48** | Manulife Financial Corporation |

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Executive Compensation

---

| | |
|:---|:---|
| **What we do** | **What we do** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> ![LOGO](g427878checkmark.jpg)  | **Compensation aligned with long-term shareholder value** |
|  | • most executive compensation is directly affected by our share price and the value of our performance share units is based in part on relative TSR |
|  | • the annual incentive plan incorporates measures tied to our future success |
|  | • equity ownership guidelines, clawback provisions, stock option exercise restrictions and our code of business conduct and ethics discourages executives from taking undue risk |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> ![LOGO](g427878checkmark.jpg)  | **Compensation aligned with business strategy** |
|  | • incentive compensation is tied to the achievement of key performance measures, prudently balancing time horizons and performance perspectives |
|  | • performance measures are tied directly to our business strategy, environmental, social and governance objectives and shareholder value |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> ![LOGO](g427878checkmark.jpg)  | **Compensation and performance benchmarked against peer companies** |
|  | • executive pay is benchmarked against our compensation peer group |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> ![LOGO](g427878checkmark.jpg)  | **Compensation aligned with good governance practices** |
|  | • compensation is aligned with the Financial Stability Board's Principles for Sound Compensation Practices |
|  | • employees must annually certify compliance with our code of business conduct and ethics |
|  | • management resources and compensation committee receives independent advice |
|  | • shareholders have a say on executive pay |
|  | • we engage with shareholders about our executive compensation program |
|  | • employee engagement and diversity and inclusion initiatives have an impact on compensation |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> ![LOGO](g427878checkmark.jpg)  | **Compensation aligned with risk management objectives** |
|  | • incentive compensation for heads of control functions is based on measures that are not directly linked to the business they oversee |
|  | • we stress test compensation plan designs |
|  | • the CEO and CFO must hold Manulife equity for one year after leaving Manulife |
|  | • executive compensation clawed back for wrongdoing, even when a financial restatement is not required |
|  | • the CRO and the risk committee review the alignment of compensation plans with risk management objectives |
|  | • incentive compensation for material risk takers considers feedback from internal audit, compliance and risk management |
| &nbsp;&nbsp; **What we don't do** | &nbsp;&nbsp; **What we don't do** |
| &nbsp;&nbsp; ![LOGO](g427878g63z46.jpg)  | **No grossing up of perquisites** |
| &nbsp;&nbsp; ![LOGO](g427878g63z46.jpg)  | **No repricing or backdating of stock options** |
| &nbsp;&nbsp; ![LOGO](g427878g63z46.jpg)  | **No hedging or monetizing of equity awards** |
| &nbsp;&nbsp; ![LOGO](g427878g63z46.jpg)  | **No multi-year guarantees in employment agreements** |
| &nbsp;&nbsp; ![LOGO](g427878g63z46.jpg)  | **No severance of more than two years on termination following a change in control** |
| &nbsp;&nbsp; ![LOGO](g427878g63z46.jpg)  | **No single-trigger change in control** |

---

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| | |
|:---|:---|
| 2023 Management information circular | **49** |

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Benchmarking against our peers

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Manulife is made up of many related but distinct businesses that need people who have unique skills and capabilities. This makes it difficult to identify direct public company peers that are relevant for both compensation benchmarking and meaningful TSR performance comparisons. Accordingly, we use two peer groups: a compensation peer group and a performance peer group. The management resources and compensation committee regularly reviews our peers to ensure the groups remain an appropriate comparator for Manulife. The committee made no changes to the peer groups in 2022.<br>

**Compensation peer group** 

While we are headquartered and based out of Toronto, we operate on a global scale with the majority of our earnings derived from markets outside of Canada. Accordingly, we draw on and compete for talent with other global businesses, including those who compensate talent according to local practices.

We use a compensation peer group to assess the competitiveness of our compensation practices, and to set total direct compensation levels, including each discrete element. This helps us attract and retain high caliber executive talent capable of achieving our ambitious goals.

The compensation peer group for our named executives includes companies that publicly disclose compensation data for roles that are comparable in size and scope to the roles of our named executives, and that are considered competitors for executive talent. For named executives whose roles are not directly comparable with roles in the compensation peer group, we supplement the information used in determining compensation with data from the Financial Services Executive Compensation Survey conducted by Korn Ferry and the Diversified Insurance Study of Executive Compensation conducted by Willis Towers Watson.

We generally seek to align target total direct compensation for our named executives with the market median and may adjust the pay positioning of a named executive's target total direct compensation above or below the market median depending on the importance of the role, the named executive's performance, experience, or for other reasons.

Total direct compensation is denominated in U.S. dollars for a majority of our named executives because we draw from an international talent pool for executives, where the U.S. dollar is the most common currency basis for setting compensation.

---

| |
|:---|
| &nbsp;&nbsp;&nbsp;**2022 compensation peer group** |
| &nbsp;&nbsp;&nbsp;&nbsp; AIA Group Limited |
| &nbsp;&nbsp;&nbsp;&nbsp; Bank of Montreal |
| &nbsp;&nbsp;&nbsp;&nbsp; Bank of Nova Scotia |
| &nbsp;&nbsp;&nbsp;&nbsp; MetLife, Inc. |
| &nbsp;&nbsp;&nbsp;&nbsp; Power Corporation |
| &nbsp;&nbsp;&nbsp;&nbsp; Principal Financial Group Inc. |
| &nbsp;&nbsp;&nbsp;&nbsp; Prudential Financial, Inc. |
| &nbsp;&nbsp;&nbsp;&nbsp; Prudential plc |
| &nbsp;&nbsp;&nbsp;&nbsp; Royal Bank of Canada |
| &nbsp;&nbsp;&nbsp;&nbsp; Sun Life Financial Inc. |
| &nbsp;&nbsp;&nbsp;&nbsp; Toronto-Dominion Bank |

---

Global insurance companies

Canadian banks

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| | |
|:---|:---|
| **50** | Manulife Financial Corporation |

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Executive Compensation

**Performance peer group** 

We measured our 2022 TSR performance against the 2022 performance of a group of insurance companies with a global presence, comparable lines of business, and similar exposure to the same macroeconomic conditions as Manulife.

---

| |
|:---|
| &nbsp;&nbsp;&nbsp;**2022 performance peer group** |
| &nbsp;&nbsp;&nbsp;&nbsp; AIA Group Limited |
| &nbsp;&nbsp;&nbsp;&nbsp; Allianz SE |
| &nbsp;&nbsp;&nbsp;&nbsp; Assicurazioni Generali S.p.A. |
| &nbsp;&nbsp;&nbsp;&nbsp; Aviva plc |
| &nbsp;&nbsp;&nbsp;&nbsp; AXA SA |
| &nbsp;&nbsp;&nbsp;&nbsp; Brighthouse Financial |
| &nbsp;&nbsp;&nbsp;&nbsp; Dai-ichi Life |
| &nbsp;&nbsp;&nbsp;&nbsp; MetLife, Inc. |
| &nbsp;&nbsp;&nbsp;&nbsp; Power Corporation |
| &nbsp;&nbsp;&nbsp;&nbsp; Principal Financial Group Inc. |
| &nbsp;&nbsp;&nbsp;&nbsp; Prudential Financial, Inc. |
| &nbsp;&nbsp;&nbsp;&nbsp; Prudential plc |
| &nbsp;&nbsp;&nbsp;&nbsp; Sun Life Financial Inc. |
| &nbsp;&nbsp;&nbsp;&nbsp; Unum Group |
| &nbsp;&nbsp;&nbsp;&nbsp; Zurich Insurance Group |

---

Included in our compensation peer group

**Where we rank against our peers** 

The table below shows how we rank against our peers. We compare our total assets and market capitalization with the compensation peer group, using the most recently reported figures in U.S. dollars. This illustrates why this group is appropriate in size as a benchmark for compensation.

We compare our one, three and five-year TSR against the performance peer group. Manulife's TSR is based on the price of Manulife's common shares on the TSX for the periods ended December 31, 2022. Peer TSR is based on their primary stock exchange and on local currencies.

---

| | | | |
|:---|:---|:---|:---|
| (US$) | Median | Manulife | Manulife<br>percentile |
| **Compensation peer group** |  |  |  |
| Total assets | $666.6 billion | $679.2 billion | 55<sup>th</sup> |
| Market capitalization | $56.4 billion | $36.3 billion | 27<sup>th</sup> |
| **Performance peer group** |  |  |  |
| One-year TSR | 6.2% | 5.9% | 47<sup>th</sup> |
| Three-year TSR | 23.6% | 7.4% | 7<sup>th</sup> |
| Five-year TSR | 39.0% | 17.1% | 27<sup>th</sup> |

---

(source: Bloomberg)

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| | |
|:---|:---|
| 2023 Management information circular | **51** |

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Our executive compensation program and

2022 performance

Our executive compensation program for our named executives includes base salary, annual and equity-based incentives, and other elements such as pension, benefits and wellness, and perquisites.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Element** | | **Form** | | **Performance criteria** | | **Key characteristics** |
| **Base salary** | <br> ![LOGO](g427878g59w80.jpg)  | **Cash** | <br> ![LOGO](g427878g59w80.jpg)  |  |  | • Fixed compensation based on role, performance, qualifications, and experience |
| **Annual incentive** | <br> ![LOGO](g427878g59w80.jpg)  | **Cash and<br>equity** | <br> ![LOGO](g427878g59w80.jpg)  | Key measures:<br> • Net income attributed to shareholders (25%)<br> • Core earnings excluding core investment gains (25%)<br> • New business value (15%)<br> • Global Wealth and Asset Management (Global WAM) core earnings (15%)<br> • Strategic focus (20%) | <br> ![LOGO](g427878g59w80.jpg)  | • Variable compensation based on company objectives and individual performance goals<br> • Individual performance objectives are tied to financial performance and contribution to Manulife's strategic priorities, including performance goals linked to diversity, equity and inclusion, employee engagement, leadership accountability and Manulife's Climate Action Plan<br> • 10% of annual incentives are delivered in Manulife common shares |
| **Equity-based incentives** | <br> ![LOGO](g427878g59w80.jpg)  | **Performance share units (PSUs) (60%)** | <br> ![LOGO](g427878g59w80.jpg)  | 3-year vesting period<br> Key measures:<br> • Book value per share excluding AOCI (50%)<br> • Core return on equity (50%)<br> • Relative TSR modifier (+/- 20%) compared to Manulife's performance peer group | <br> ![LOGO](g427878g59w80.jpg)  | • Ties compensation to company and share price performance over both the medium and long term<br> • Strengthens retention and reinforces alignment with shareholder value<br> • 10% of the vesting value of RSUs and PSUs is delivered in Manulife common shares |
|  |  | **Restricted share units (RSUs) (40%)** | <br> ![LOGO](g427878g59w80.jpg)  | 3-year vesting period |  |  |

---

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| | |
|:---|:---|
| **52** | Manulife Financial Corporation |

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Executive Compensation

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| | | |
|:---|:---|:---|
| **Element** | **Form** | **Key characteristics** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Other** | <br> ![LOGO](g427878g59w80.jpg)  | **Pension** | <br> ![LOGO](g427878g59w80.jpg)  | • Includes defined contribution, cash balance and 401(k) plans<br> • Varies by country |
| **Other** |  | **Benefits and wellness** | <br> ![LOGO](g427878g59w80.jpg)  | • Protects and invests in the health and well-being of our executives<br> • Includes health, dental, mental health, group life, disability, and wellness (Vitality)<br> • Varies by country |
| **Other** |  | **Perquisites** | <br> ![LOGO](g427878g59w80.jpg)  | • Varies by country |

---

**2022 Target total direct compensation mix** 

The charts below show the mix of components that make up target total direct compensation for our named executives, and how those components pay out over time.

Most of a named executive's total direct compensation is variable (or at risk) with a significant portion tied to our share price. The mix in variable pay of both annual and equity-based incentives ensures named executives consider both the short and longer-term impact of their decisions.

The board believes this combination of incentives and time horizons helps to drive sustained performance, aligns named executives' interests with those of shareholders, provides for competitive pay opportunities and encourages retention.

**Chief Executive Officer**![LOGO](g427878g50c50.jpg)

**Other named executives (average)**![LOGO](g427878g51v00.jpg)

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| | |
|:---|:---|
| 2023 Management information circular | **53** |

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About base salaries

Base salaries are set in February of each year and any changes go into effect on March 1. Each named executive's salary depends on several considerations, including qualifications, experience in the role, performance, career progression, salaries paid for comparable roles at peer companies and salaries of comparable roles within Manulife.

We benchmark salaries at least once a year against comparable roles at peer companies.

About our annual incentive

Our annual incentive rewards named executives for achieving company objectives and individual performance goals each year. The annual incentive for a named executive is more heavily influenced by overall company results, while the emphasis at less senior levels in the organization is more on segment, business unit or functional goals, with some links to global results to foster collaboration and a business owner mentality.

Performance measures and weightings are:

• recommended by senior management and reviewed and approved by the board

• linked to our strategy with targets that are consistent with our board-approved plan

• stress and back tested to make sure potential performance is aligned with award outcomes and does not encourage
inappropriate risk-taking.

**How we calculate the award for named executives** 

Each named executive has a target annual incentive equal to a percentage of their base salary and can range from zero to a maximum of 2.5 times target. Their actual annual incentive award depends on both the company performance score, which can range from 0% to 200%, and individual performance.

We assess individual performance against goals that are tied to a named executive's annual business plan, and their contribution to Manulife as a whole, including their impact on our risk culture and their behaviour as a reflection of our values.

The annual incentive award is calculated as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;**Base salary** | ![LOGO](g427878g73n11.jpg) | **Annual incentive target**<br> % of base salary | ![LOGO](g427878g73n11.jpg) | **Company performance score**<br> Range:<br>0% - 200%<br>| ![LOGO](g427878g28h10.jpg) | **Adjustment for individual performance** | ![LOGO](g427878g22n75.jpg) | **Annual incentive award** |

---

**Linking to our ESG strategy** 

As part of our ESG strategy, Manulife sets board-approved enterprise goals for ESG-related measures that are key to our business strategy and that factor into annual incentives for named executives in two ways:

&nbsp;&nbsp;&nbsp;&nbsp;• The strategic focus component of the company performance score is based in part on an assessment of performance against
goals linked to diversity, equity and inclusion, climate action, employee engagement and customer satisfaction

&nbsp;&nbsp;&nbsp;&nbsp;• The individual performance goals for each named executive also include goals linked to diversity, equity and inclusion,
climate action, employee engagement and leadership accountability, as well as risk goals related to cybersecurity and ethical business conduct (see the named executive profiles starting on page 67).

We review the ESG-related goals every year to make sure executive compensation continues to support Manulife's ESG priorities and ensure leadership accountability to drive positive change.

---

| | |
|:---|:---|
| **54** | Manulife Financial Corporation |

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Executive Compensation

**Performance criteria and weighting for the 2022 awards** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Aligns compensation with shareholder experience | Aligns compensation with shareholder experience | Aligns compensation with shareholder experience | Aligns compensation with shareholder experience | <br> ![LOGO](g427878g59w80.jpg)  | **Net income attributed to shareholders**<br> 25% |
|  | Threshold | Target | Maximum | <br> ![LOGO](g427878g59w80.jpg)  | **Net income attributed to shareholders**<br> 25% |
| score | 25\* | 100 | 200 | <br> ![LOGO](g427878g59w80.jpg)  | **Net income attributed to shareholders**<br> 25% |
| performance | 30% below target | at target | 40% above target | <br> ![LOGO](g427878g59w80.jpg)  | **Net income attributed to shareholders**<br> 25% |
|  | <br> \*Below threshold performance results in a score of zero. | <br> \*Below threshold performance results in a score of zero. | <br> \*Below threshold performance results in a score of zero. | <br> ![LOGO](g427878g59w80.jpg)  | **Net income attributed to shareholders**<br> 25% |
| Reflects the underlying earnings capacity and is an important factor in valuing Manulife's share price | Reflects the underlying earnings capacity and is an important factor in valuing Manulife's share price | Reflects the underlying earnings capacity and is an important factor in valuing Manulife's share price | Reflects the underlying earnings capacity and is an important factor in valuing Manulife's share price | <br> ![LOGO](g427878g59w80.jpg)  | **Core earnings excluding core investment gains** <br> 25% |
|  | Threshold | Target | Maximum | <br> ![LOGO](g427878g59w80.jpg)  | **Core earnings excluding core investment gains** <br> 25% |
| score | 0 | 100 | 200 | <br> ![LOGO](g427878g59w80.jpg)  | **Core earnings excluding core investment gains** <br> 25% |
| performance | 25% below target | at target | 25% above target | <br> ![LOGO](g427878g59w80.jpg)  | **Core earnings excluding core investment gains** <br> 25% |
| Measures profitable growth in new business across our portfolio, including:<br> • New business value for insurance businesses<br> • Global WAM core earnings | Measures profitable growth in new business across our portfolio, including:<br> • New business value for insurance businesses<br> • Global WAM core earnings | Measures profitable growth in new business across our portfolio, including:<br> • New business value for insurance businesses<br> • Global WAM core earnings | Measures profitable growth in new business across our portfolio, including:<br> • New business value for insurance businesses<br> • Global WAM core earnings | <br> ![LOGO](g427878g59w80.jpg)  | **New business profitability**<br> 30% |
|  | Threshold | Target | Maximum | <br> ![LOGO](g427878g59w80.jpg)  | **New business profitability**<br> 30% |
| score | 0 | 100 | 200 | <br> ![LOGO](g427878g59w80.jpg)  | **New business profitability**<br> 30% |
| performance | 50% below target | at target | 50% above target | <br> ![LOGO](g427878g59w80.jpg)  | **New business profitability**<br> 30% |
| Represents an index of measures used to track performance against our ESG commitments and our five strategic priorities: Accelerate Growth, Digital Customer Leader, Portfolio Optimization, Expense Efficiency, and High Performing Team. Includes quantifiable goals, subject to a qualitative overlay, that are established at the beginning of the year and approved by the management resources and compensation committee | Represents an index of measures used to track performance against our ESG commitments and our five strategic priorities: Accelerate Growth, Digital Customer Leader, Portfolio Optimization, Expense Efficiency, and High Performing Team. Includes quantifiable goals, subject to a qualitative overlay, that are established at the beginning of the year and approved by the management resources and compensation committee | Represents an index of measures used to track performance against our ESG commitments and our five strategic priorities: Accelerate Growth, Digital Customer Leader, Portfolio Optimization, Expense Efficiency, and High Performing Team. Includes quantifiable goals, subject to a qualitative overlay, that are established at the beginning of the year and approved by the management resources and compensation committee | Represents an index of measures used to track performance against our ESG commitments and our five strategic priorities: Accelerate Growth, Digital Customer Leader, Portfolio Optimization, Expense Efficiency, and High Performing Team. Includes quantifiable goals, subject to a qualitative overlay, that are established at the beginning of the year and approved by the management resources and compensation committee | <br> ![LOGO](g427878g59w80.jpg)  | **Strategic focus**<br> 20% |

---

**How the financial measures are defined** 

*Net income attributed to shareholders*: as disclosed in our annual report, available at manulife.com.

*Core earnings excluding core investment gains*: core earnings measures the underlying earnings capacity of our businesses. For our annual incentive, we exclude core investment gains to align with operational performance.

*New business profitability*: measures profitable growth in new business across our portfolio. Includes the following measures:

• *New business value* for insurance businesses represents the change in shareholders' economic value as a result
of sales in the period. Calculated as the present value of shareholders' interest in expected future distributable earnings, after the cost of capital, on actual new business sold in the period.

• *Global WAM core earnings*: core earnings of our Global WAM segment, which provides fee-based wealth and asset management solutions to our retail, retirement and institutional customers around the world.

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| | |
|:---|:---|
| 2023 Management information circular | **55** |

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**Performance criteria and weighting for awards starting in 2023** 

In 2022, we went through a comprehensive review of our executive compensation program and made some changes to the annual incentive plan to strengthen the alignment with shareholder interests, increase focus on the customer, and address reporting changes resulting from our implementation of IFRS 17 in 2023 (see page 44 for more information).

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Core earnings per share** (excluding credit losses and loss reversals)<br> Reflects underlying earnings capacity and is an important factor in valuing Manulife's share price  | **Core earnings per share** (excluding credit losses and loss reversals)<br> Reflects underlying earnings capacity and is an important factor in valuing Manulife's share price  | **Core earnings per share** (excluding credit losses and loss reversals)<br> Reflects underlying earnings capacity and is an important factor in valuing Manulife's share price  | **Core earnings per share** (excluding credit losses and loss reversals)<br> Reflects underlying earnings capacity and is an important factor in valuing Manulife's share price  | <br> ![LOGO](g427878g59w80.jpg)  | **Earnings**<br> 40% |
|  | Threshold | Target | Maximum | <br> ![LOGO](g427878g59w80.jpg)  | **Earnings**<br> 40% |
| score | 0 | 100 | 200 | <br> ![LOGO](g427878g59w80.jpg)  | **Earnings**<br> 40% |
| performance | 25% below target | at target | 25% above target | <br> ![LOGO](g427878g59w80.jpg)  | **Earnings**<br> 40% |
|  |  |  |  | <br> ![LOGO](g427878g59w80.jpg)  | **Earnings**<br> 40% |
| **New business value**<br> Measures profitable growth in new business across our insurance segments | **New business value**<br> Measures profitable growth in new business across our insurance segments | **New business value**<br> Measures profitable growth in new business across our insurance segments | **New business value**<br> Measures profitable growth in new business across our insurance segments | <br> ![LOGO](g427878g59w80.jpg)  | **Growth**<br> 30% |
|  | Threshold | Target | Maximum | <br> ![LOGO](g427878g59w80.jpg)  | **Growth**<br> 30% |
| score | 0 | 100 | 200 | <br> ![LOGO](g427878g59w80.jpg)  | **Growth**<br> 30% |
| performance | 40% below target | at target | 40% above target | <br> ![LOGO](g427878g59w80.jpg)  | **Growth**<br> 30% |
| **Relationship net promoter score (rNPS)**<br> Measures improvement in customer loyalty and advocacy | **Relationship net promoter score (rNPS)**<br> Measures improvement in customer loyalty and advocacy | **Relationship net promoter score (rNPS)**<br> Measures improvement in customer loyalty and advocacy | **Relationship net promoter score (rNPS)**<br> Measures improvement in customer loyalty and advocacy | <br> ![LOGO](g427878g59w80.jpg)  | **Customer**<br> 10% |
|  | Threshold | Target | Maximum | <br> ![LOGO](g427878g59w80.jpg)  | **Customer**<br> 10% |
| score | 0 | 100 | 200 | <br> ![LOGO](g427878g59w80.jpg)  | **Customer**<br> 10% |
| performance | 10 pts below target | at target | 10 pts above target | <br> ![LOGO](g427878g59w80.jpg)  | **Customer**<br> 10% |
| <br> **Straight-through processing (STP)**<br> Measures improvement in Manulife's processing time for customers | <br> **Straight-through processing (STP)**<br> Measures improvement in Manulife's processing time for customers | <br> **Straight-through processing (STP)**<br> Measures improvement in Manulife's processing time for customers | <br> **Straight-through processing (STP)**<br> Measures improvement in Manulife's processing time for customers |  |  |
|  | Threshold | Target | Maximum |  |  |
| score | 0 | 100 | 200 |  |  |
| performance | 3 percentage points<br>below target | at target | 3 percentage points<br> above target |  |  |
| Represents an index of measures used to track performance against our ESG commitments and our five strategic priorities: Accelerate Growth, Digital Customer Leader, Portfolio Optimization, Expense Efficiency, and High Performing Team. Includes quantifiable goals, subject to a qualitative overlay, that are established at the beginning of the year and approved by the management resources and compensation committee. | Represents an index of measures used to track performance against our ESG commitments and our five strategic priorities: Accelerate Growth, Digital Customer Leader, Portfolio Optimization, Expense Efficiency, and High Performing Team. Includes quantifiable goals, subject to a qualitative overlay, that are established at the beginning of the year and approved by the management resources and compensation committee. | Represents an index of measures used to track performance against our ESG commitments and our five strategic priorities: Accelerate Growth, Digital Customer Leader, Portfolio Optimization, Expense Efficiency, and High Performing Team. Includes quantifiable goals, subject to a qualitative overlay, that are established at the beginning of the year and approved by the management resources and compensation committee. | Represents an index of measures used to track performance against our ESG commitments and our five strategic priorities: Accelerate Growth, Digital Customer Leader, Portfolio Optimization, Expense Efficiency, and High Performing Team. Includes quantifiable goals, subject to a qualitative overlay, that are established at the beginning of the year and approved by the management resources and compensation committee. | <br> ![LOGO](g427878g59w80.jpg)  | **Strategic focus**<br> 20% |

---

**How the measures are defined** 

*Core earnings per share* is defined as core earnings available to common shareholders divided by diluted weighted average common shares outstanding. Measures the underlying earnings capacity of our businesses on a per share basis, and is an important factor in valuing our share price. For our annual incentive, core earnings for the company exclude credit losses and loss reversals to minimize annual volatility under IFRS 17 and 9.

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| | |
|:---|:---|
| **56** | Manulife Financial Corporation |

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Executive Compensation

*New business value*: measures the change in shareholders' economic value as a result of sales in the period. Calculated as the present value of shareholders' interest in expected future distributable earnings, after the cost of capital, on actual new business sold in the period.

*Relationship net promoter score (rNPS)* gauges customer loyalty and advocacy based on the response customers provide when asked how likely are they to recommend Manulife to family, friends, or colleagues. rNPS is measured by a third-party market research study of customers.

*Straight-through processing (STP)* is defined as customer interactions, including money processing, that are completely digital within Manulife as a proportion of total customer interactions.

**Non-GAAP and other financial measures** 

The company prepares our Consolidated Financial Statements in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. We use a number of non-GAAP and other financial measures to evaluate overall performance and to assess each of our businesses. This section includes information required by National Instrument 52-112 – *Non-GAAP and Other Financial Measures Disclosure in respect of "specified financial measures*" (as defined therein).

*Non-GAAP financial measures* include core earnings (loss); core earnings available to common shareholders; core earnings before income taxes; core general expenses; assets under management (AUM); assets under management and administration (AUMA); and Global WAM managed AUMA. In addition, non-GAAP financial measures include any of the foregoing non-GAAP financial measures; net income attributed to shareholders; and common shareholders' net income.

*Non-GAAP ratios* include core ROE; diluted core earnings per common share (core EPS); and expense efficiency ratio. In addition, non-GAAP ratios include the percentage growth/decline on a CER basis in any of the above non-GAAP financial measures; general expenses; basic earnings per common share; and diluted earnings per common share.

*Other specified financial measures* include assets under administration (AUA); new business value (NBV); annualized premium equivalent (APE) sales; net flows; remittances; any of the foregoing specified financial measures stated on a CER basis; and percentage growth/decline in any of the foregoing specified financial measures on a CER basis.

Non-GAAP financial measures and non-GAAP ratios are not standardized financial measures under GAAP and, therefore, might not be comparable to similar financial measures disclosed by other issuers. Therefore, they should not be considered in isolation or as a substitute for any other financial information prepared in accordance with GAAP. For more information about non-GAAP and other financial measures, see that section in our 2022 Management's Discussion and Analysis which is incorporated by reference and can be found on the company's website at www.manulife.com/en/investors/results-and-reports.

**2022 annual incentive** 

While we achieved record net income and posted above-target performance on our strategic initiatives, the company performance score for the 2022 annual incentive award was 87% for the named executives because core earnings, new business value and Global WAM core earnings fell below the ambitious targets set for the year. Please see the table on the next page for additional details.

These targets, along with our performance ranges, are set each November, align with our board-approved business plan, and are influenced by the macro environment at the time when they are established. In particular, the following context is important when assessing the difficulty of the 2022 targets:

• The plan considered that the U.S. variable annuity transactions would reduce the core earnings and net income of the
company by approximately $200 million per year.

• The targets were set prior to the end of the 2021, which had an exceptionally strong finish.

Taking into consideration the above, at the time the goals were set, the targeted net income and core earnings growth for 2022 was approximately 10%. In addition, the plan did not anticipate the prolonged impact the COVID-19 pandemic continued to have on our Asia business for most of 2022.

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| | |
|:---|:---|
| 2023 Management information circular | **57** |

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The committee did not make any adjustment to the targets for the unanticipated disruptions to our Asia business due to COVID-19 challenges, or to address changes experienced in the macro-economic environment. In line with principles the committee had established several years ago regarding the treatment of any changes in our P&C Reinsurance business, approximately $80 million (out of $256 million) of the P&C Reinsurance claims provision incurred for Hurricane Ian was excluded from the determination of the annual incentive award score. This adjustment increased the overall performance score by 2 points.

For more information about each named executive's annual incentive award, and a discussion of their performance against their individual goals, see the named executive profiles starting on page 67. Our plan design includes an adjustment for individual performance to determine each named executive's final payout.

**Company performance score for 2022** 

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Funding range | Funding range | Funding range |  |  |  |  |  | **Performance criteria** <br> and weighting |
| Threshold<br> 0 | Target<br> 100 | Maximum<br> 200 | **Results** | **Score** | **Weighted<br>score** | 2021<br>actual<sup>1</sup> |  | **Performance criteria** <br> and weighting |
| $5137 | $7339 | $10275 | $7294 | 101%<sup>2</sup> | 25%<sup>2</sup> | $7105 | <br> ![LOGO](g427878g59w80.jpg)  | **Net income attributed to<br>shareholders<sup>3</sup>** <br> ($ millions) <br> **25%** |
| $4684 | $6245 | $7806 | $5782 | 75%<sup>2</sup> | 19%<sup>2</sup> | $6136 | <br> ![LOGO](g427878g59w80.jpg)  | **Core earnings excluding core<br>investment gains** <br> ($ millions)<br> **25%** |
|  |  |  |  |  |  |  | <br> ![LOGO](g427878g59w80.jpg)  | **New business profitability**<br> ($ millions) <br> **30%** |
| $1250 | $2500 | $3750 | $2063 | 65% | 10% | $2243 |  | New business value (15%) |
| $787 | $1573 | $2360 | $1241 | 58% | 9% | $1406 |  | Global WAM core earnings (15%) |
|  |  |  |  | 120% | 24% | 115% | <br> ![LOGO](g427878g59w80.jpg)  | **Strategic focus<sup>4</sup>**<br> Customer, employee and<br>strategic initiatives including<br>ESG<br> **20%** |
|  |  |  |  |  | 87%<sup>3</sup> |  | <br> ![LOGO](g427878g59w80.jpg)  | **2022 company performance<br>score** |

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| | |
|:---|:---|
| 1 | This column shows the 2021 actual results for reference. The 2021 company performance score was 142%.  |

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| | |
|:---|:---|
| 2 | The board approved an adjustment of $80 million to partly offset the $256 million charge in P&C Reinsurance related to Hurricane Ian. This amount was determined by applying an approach previously agreed to by the committee that allows for an adjustment to the extent that average return on capital for the P&C Reinsurance business exceeds a specified target. The adjustment had a 3 and 5 point positive impact on the net income and core earnings scores, respectively, and increased the final 2022 company performance score by 2 points. While a full adjustment for Hurricane Ida and European floods would have been allowed in the prior year, the board did not make any adjustment to 2021 scores.  |

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| | |
|:---|:---|
| 3 | Performance at threshold results in a performance score of 25%. Performance below threshold results in a performance score of zero.  |

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4 Performance is assessed against predetermined goals established in our business plan.

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| | |
|:---|:---|
| **58** | Manulife Financial Corporation |

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Executive Compensation

**Financial measures** 

Despite difficult market conditions, Manulife demonstrated its resilience by delivering solid financial results in 2022:

• Record net income attributed to shareholders of $7,294 million in 2022; up $189 million from 2021

• Core earnings<sup>1</sup> before core investment gains of $5,782 million in 2022
compared to $6,136 million in 2021; supported by strong Canada and resilient Asia results

• New business value (NBV) of $2,063 million in 2022 compared to $2,243 million in 2021; driven by strong growth in the U.S.
and Canada, 25% and 18% respectively, but negatively impacted by the challenging operating environment in Asia

• Global WAM core earnings of $1,241 million in 2022 compared to $1,406 million in 2021; primarily due to lower net fee
income from lower average assets under management and administration

• Delivered $6.9B in remittances in 2022, the highest in our company's history

**Understanding the strategic focus score** 

We made strong progress on our strategic priorities. For more information about our financial results and our progress on our strategic priorities, please see our 2022 annual report at manulife.com. Highlights from 2022 include:

*Accelerate growth:* 

• Achieved net inflows in Global WAM versus industry outflows in North America, showcasing positive net flows in 12 out of
13 past years. We also drove double-digit growth rates in Canada on net income, core earnings and NBV in 2022

• Generated 63% of core earnings from highest potential businesses (Asia segment, Global WAM, Canada Group Benefits, and
behavioral insurance products), up 9 percentage points from our 2017 baseline and in line with 2021

• Further bolstered our presence in high-growth attractive markets by acquiring control of our mainland Chinese asset
management joint venture, Manulife TEDA Fund Management Co., Ltd (MTEDA), through the purchase of the remaining 51% of shares from our joint venture partner, making us the first global wealth and asset manager to acquire a 100% stake in a fully
operating public fund management company in mainland China

*Digital, customer leader:* 

• With $1 billion invested since 2018 in digital capabilities driving continued efficiencies, our relationship NPS (rNPS)
score of +20 marked a significant 19-point improvement from our 2017 baseline ![LOGO](g427878g00m72.jpg)

• Achieved straight-through-processing (STP) of 83%, representing a 15 percentage point improvement from our 2018 baseline
due to improvement in app releases and increased digital capabilities ![LOGO](g427878g00m72.jpg)

• Increased adoption of electronic point of sale (ePOS) in Asia, our proprietary digital onboarding app, by 15 percentage
points to 89%. Accelerated the utilization of our digital claims platform in Canada and reduced Group Benefits claims processing times by 60%

• Became the first insurer in Vietnam to offer health insurance on Vietnam's most popular digital e-wallet with a 31
million user base

*Expense efficiency:* 

• Maintained general expenses and core general expenses in line with 2021 and our 2022 expense efficiency ratio<sup>1</sup> was 50.9% despite the inflationary environment, reflecting our strategic focus on digitalization and efficiency, and the value of our disciplined approach to managing operating expenses

• Delivered on our 2022 target of $1 billion in expense efficiencies in 2020, 2 years ahead of schedule

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| | |
|:---|:---|
|  <br> 1 Core earnings and expense efficiency ratio are non-GAAP measures. See Non-GAAP and other financial measures on page 57 for more information. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The items marked with a ![LOGO](g427878g00m72.jpg) are directly linked to enterprise goals for ESG-related measures that are key to our business strategy. |

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| | |
|:---|:---|
| 2023 Management information circular | **59** |

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*Portfolio optimization:* 

• Completed two transactions in 2022 to reinsure over 80% of our legacy U.S. variable annuity block and released $2.45
billion of capital, significantly reducing our risk, and creating a cumulative one-time after-tax net gain of $806 million<sup>2</sup>

• Delivered a total of $9 billion of cumulative capital benefits since 2018

• Our long term care (LTC) and variable annuity core earnings<sup>3</sup>
contribution reduced to 18%, compared with 25% in 2020<sup>4</sup>

*High performing team:* 

• Ranked in the top 6th percentile<sup>5</sup> amongst global financial services
and insurance companies on our 2022 employee engagement survey, up from top 14th percentile in 2021 ![LOGO](g427878g00m72.jpg)

• Recognized as one of the World's Best Employers by Forbes for the third consecutive year ![LOGO](g427878g00m72.jpg)

• Named to Bloomberg's 2022 Gender-Equality Index for the fourth consecutive year, highlighting our commitment to
support gender equality through policy development, representation, and transparency ![LOGO](g427878g00m72.jpg)

*ESG:* 

• Achieved net zero operational scope 1 and scope 2 greenhouse gas emissions. Our S&P Dow Jones Sustainability Index
score improved by 10 points (Top 10% of our industry peers globally) and received AA MSCI ESG Rating ![LOGO](g427878g00m72.jpg)

• Established interim science-aligned financed emissions targets within our General Account investment portfolio. Targets
will be published in Manulife's 2022 ESG Report in the second quarter of 2023 ![LOGO](g427878g00m72.jpg)

• Launched the Global Climate Action Strategy in Europe and Asia, and the Manulife Forest Climate strategy in the U.S.,
which will promote climate change mitigation by investing in sustainably managed forests that prioritize carbon sequestration ![LOGO](g427878g00m72.jpg)

For more information about core earnings, assets under management and administration, NBV, and net flows, see Non-GAAP and other financial measures on page 57. For more information about our financial results and our progress on our strategic priorities, please see our 2022 annual report at manulife.com.

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| | |
|:---|:---|
| 2 | Consists of a net gain of $846 million in 2022 and a $40 million loss recognized in 2021.  |

---

3 Includes core earnings from U.S. long term care and Asia, Canada, and U.S. variable annuities businesses.

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| | |
|:---|:---|
| 4 | 2020 impact normalized for COVID-19-related LTC gains and $400 million of core investment gains. For the reconciliation of 2020 core earnings see "Non-GAAP and Other Financial Measures" in our 2022 Management's Discussions and Analysis, which is incorporated by reference.  |

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| | |
|:---|:---|
| 5 | Percentile ranking based on the Gallup global financial services and insurance database.  |

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About the equity-based incentives

We grant a competitive mix of equity-based incentives every year, which may include restricted share units (RSUs), performance share units (PSUs) and stock options depending on the officer's position.

The proportion of equity-based incentives allocated to performance share units and restricted share units remained the same as the previous year. Stock options have not been granted since 2020. Heads of control functions do not receive performance share units, to ensure their compensation is not tied to the performance of businesses they oversee.

The table below shows the mix of equity-based incentives for 2022 and 2023.

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| | | | |
|:---|:---|:---|:---|
|  | PSUs | RSUs | Stock options |
| Chief Executive Officer | 60% | 40% | 0% |
| Other named executives | 60% | 40% | 0% |
| Chief Risk Officer, Chief Actuary, Global Compliance Chief, Chief Auditor | 0% | 100% | 0% |

---

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| | |
|:---|:---|
| **60** | Manulife Financial Corporation |

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Executive Compensation

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| | | | |
|:---|:---|:---|:---|
|  | **Equity-based incentives**<br>|  |  |
|  | Restricted share units | Performance share units | Stock options |
| <br> &nbsp;&nbsp;&nbsp;&nbsp;**What they**<br> &nbsp;&nbsp;&nbsp;&nbsp;**are** | <br> Notional shares that pay out based on the price of Manulife common shares | <br> Notional shares that pay out based on our performance and on the price of Manulife common shares | <br> Rights to buy Manulife common shares in the future at a specified price |
| <br> &nbsp;&nbsp;&nbsp;&nbsp;**Vesting and**<br> &nbsp;&nbsp;&nbsp;&nbsp;**payout** | <br> Vest and pay out within three years <br>The payout value is equal to the average closing price of Manulife common shares on the TSX for the 10 trading days before the day they vest multiplied by the number of restricted share units<br>90% of the payout value delivered in cash and remaining 10% of payout value delivered in Manulife common shares purchased on the open market | <br> Vest and pay out within three years. The number of units that vest depends on our performance against absolute and relative performance conditions that are set at the grant date, aligned with our strategy and approved by the board<br>The payout value is equal to the average closing price of Manulife common shares on the TSX for the 10 trading days before the day they vest, multiplied by the number of performance share units, the performance factor and beginning with the 2021 grants, the relative TSR modifier<br>90% of the payout value delivered in cash and remaining 10% of payout value delivered in Manulife common shares purchased on the open market <br>| <br> Vest 25% every year for four years from the grant date<br>Stock options granted from 2015 to 2020 cannot be exercised until five years from the grant date except under extenuating circumstances<br>The exercise price is equal to the grant price<br>The value is the difference between the exercise price and the price of Manulife common shares on the TSX when stock options are exercised<br>Stock options expire at the end of 10 years and are only transferable upon death |
|  |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br>![LOGO](g427878g09w29.jpg) <br>See page 62 for details about the performance conditions for the PSUs awarded for 2022<br>| <br> Vest 25% every year for four years from the grant date<br>Stock options granted from 2015 to 2020 cannot be exercised until five years from the grant date except under extenuating circumstances<br>The exercise price is equal to the grant price<br>The value is the difference between the exercise price and the price of Manulife common shares on the TSX when stock options are exercised<br>Stock options expire at the end of 10 years and are only transferable upon death |

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| | |
|:---|:---|
| 2023 Management information circular | **61** |

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| | | | |
|:---|:---|:---|:---|
|  | **Equity-based incentives**<br>|  |  |
|  | Restricted share units | Performance share units | Stock options |
| <br> &nbsp;&nbsp;&nbsp;&nbsp;**Dividend equivalents** | <br> Credited as additional units at the same rate as dividends paid on Manulife common shares and subject to the same vesting conditions as the underlying grant | <br> Credited as additional units at the same rate as dividends paid on Manulife common shares and subject to the same vesting conditions as the underlying grant | <br> Do not earn dividend equivalents |
| **Grants** | The grant price is the average closing price for the 10 trading days before the grant date <br>The grant value of stock options is calculated using the Black-Scholes methodology | The grant price is the average closing price for the 10 trading days before the grant date <br>The grant value of stock options is calculated using the Black-Scholes methodology | The grant price is the average closing price for the 10 trading days before the grant date <br>The grant value of stock options is calculated using the Black-Scholes methodology |
| **Notice of retirement** | For awards granted in 2015 and after, named executives have to provide three months' notice before leaving Manulife or they will lose their post-termination retirement benefits and all outstanding grants will be forfeited | For awards granted in 2015 and after, named executives have to provide three months' notice before leaving Manulife or they will lose their post-termination retirement benefits and all outstanding grants will be forfeited | For awards granted in 2015 and after, named executives have to provide three months' notice before leaving Manulife or they will lose their post-termination retirement benefits and all outstanding grants will be forfeited |
| &nbsp;&nbsp;&nbsp;&nbsp;**Closed trading**<br> &nbsp;&nbsp;&nbsp;&nbsp;**windows** | Equity-based incentives are not granted when our insiders are prohibited from trading. Annual awards are normally granted 10 or more trading days following the end of the closed trading window after our year-end financial results are announced. Awards can also be made to select new executives at the time of hire. If the hire date falls within a closed trading window the grant is delayed until after the end of the closed trading window. The company has an automatic stock option exercise program that allows insiders to elect in advance to have their expiring stock options exercised through the program, which may occur within a closed trading window. | Equity-based incentives are not granted when our insiders are prohibited from trading. Annual awards are normally granted 10 or more trading days following the end of the closed trading window after our year-end financial results are announced. Awards can also be made to select new executives at the time of hire. If the hire date falls within a closed trading window the grant is delayed until after the end of the closed trading window. The company has an automatic stock option exercise program that allows insiders to elect in advance to have their expiring stock options exercised through the program, which may occur within a closed trading window. | Equity-based incentives are not granted when our insiders are prohibited from trading. Annual awards are normally granted 10 or more trading days following the end of the closed trading window after our year-end financial results are announced. Awards can also be made to select new executives at the time of hire. If the hire date falls within a closed trading window the grant is delayed until after the end of the closed trading window. The company has an automatic stock option exercise program that allows insiders to elect in advance to have their expiring stock options exercised through the program, which may occur within a closed trading window. |

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**How we calculate the payout for performance share units** 

Performance share units granted in 2021 and 2022 will vest and pay out based on the formula below.

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Number of PSUs**<br>Performance share units awarded *and* received as dividend equivalents during the three-year period<br>| ![LOGO](g427878g73n11.jpg) | &nbsp;&nbsp;&nbsp;&nbsp; **Performance factor**<br>range: 0-150<br>**Book value per share** (excluding AOCI)<br> • weighting: 50%<br> • threshold: 10%<br> below target<br> • maximum: 8% above target<br>**Core return on equity**<br> • weighting: 50%<br> • threshold: 40%<br> below target<br> • maximum: 32% above target<br>| ![LOGO](g427878g73n11.jpg) | **Relative TSR multiplier**<br>+/-20%<br>**Compared to our performance peer group** as measured on the New York Stock Exchange (NYSE)<br>Top quartile = +20%<br> 2nd or 3rd quartile = +0%<br> Bottom quartile = -20%<br>| ![LOGO](g427878g73n11.jpg) | **Share price at the time of vesting**<br>Calculated using the average closing price of Manulife common shares on the TSX for the 10 trading days before the day the award vests  | ![LOGO](g427878g22n75.jpg) | **PSU payout** |

---

Performance is determined as an average of performance relative to the threshold, target and maximum targets set at the beginning of each of the three years in the performance period. The targets are tied to the board-approved budgets and consistent with our external guidance.

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| | |
|:---|:---|
| **62** | Manulife Financial Corporation |

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Executive Compensation

Relative TSR uses a three-year performance period but is used to adjust the performance factor rather than a separate performance condition. This emphasizes conditions that are more directly controllable by management while continuing to have TSR and our share price meaningfully affect the payout value over a three-year period.

The board can modify the calculated result when significant events outside management's control make awards unreasonable, unrepresentative or inappropriate. The board also believes management should not be penalized for making decisions that are in the long-term best interests of shareholders.

The performance factors for 2022 grants are determined as an average of performance relative to the threshold, target and maximum targets set at the beginning of each of the three years in the performance period, instead of based on performance measured against targets set for the cumulative three-year period. This change was introduced in 2021 in response to significant industry uncertainties, including the IFRS accounting standard change coming in 2023, which affect our ability to set meaningful, appropriate targets three years in advance. The targets are tied to the board-approved budgets and consistent with our external guidance. The management resources and compensation committee views this change as temporary.

We disclose targets for PSUs at payout, when we compare our target performance to actual results. Disclosing this information before the end of the performance period would seriously prejudice Manulife's interests because it could potentially relay confidential information about our strategy, initiatives and business plan to our competitors or be inappropriately interpreted as earnings guidance.

**How the measures are defined** 

*Book value per share excluding accumulated other comprehensive income (AOCI):* Calculated by dividing total common shareholders' equity less AOCI by the number of common shares outstanding at the end of the period. We exclude AOCI because it includes items such as currency impacts, which can be volatile and distort results.

*Core return on equity (core ROE):* Calculated as core earnings available to common shareholders as a percentage of the capital deployed to earn the core earnings. Calculated using average common shareholders' equity. Core ROE is a non-GAAP ratio. For more information, see Non-GAAP and other financial measures on page 57.

*Relative TSR:* TSR is a measure of the performance of common shares held by investors over the performance period. This is calculated by combining the price appreciation or depreciation, plus the value of dividends paid to shareholders (assuming dividends are reinvested in additional shares). Relative TSR is calculated by comparing the TSR of Manulife common shares traded on the NYSE with the TSR of our performance peer group over the performance period. To minimize distortions, the 20-day average share price is used for the opening and closing share price in the calculation of TSR for both Manulife and our performance peers.

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| | |
|:---|:---|
| 2023 Management information circular | **63** |

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**Performance factor starting in 2023** 

In 2022, we made some changes to the PSU plan to address reporting changes resulting from our implementation of IFRS 17 in 2023, keep performance targets on a constant-currency basis, and bring the plan more in line with the market. The maximum payout opportunity (including the impact of the TSR modifier) will be 200%, corresponding with the introduction of higher performance hurdles that reward greater outperformance, consistent with market practice. See page 46 for more information.

&nbsp;&nbsp;&nbsp;&nbsp; **Performance factor for 2023 PSU awards**<br>**Book value per share** <br> (excluding translation of foreign operations) <br> **+**<br> **After-tax total CSM per share**<br> • weighting: 50%<br>• threshold: 10% below target<br>• maximum: 10% above target<br>**Core return on equity**<br> • weighting: 50%<br>• threshold: 40% below target<br>• maximum: 40% above target<br>

**How the measures are defined** 

*Book value per share (excluding translation of foreign operations):* Calculated by dividing total common shareholders' equity *(excluding translation of foreign operations)* by the number of common shares outstanding at the end of the period. We exclude translation of foreign operations because it represents currency impacts, which can be volatile and distort results.

*After-tax total CSM (contractual service margin balance) per share:* Calculated by taking the after-tax CSM for the company and dividing by the number of common shares outstanding at the end of the period.

*Core return on equity (core ROE):* Calculated as core earnings available to common shareholders as a percentage of the capital deployed to earn the core earnings. Calculated using average common shareholders' equity. Core ROE is a non-GAAP ratio. For more information, see Non-GAAP and other financial measures on page 57.

*Relative TSR:* TSR is a measure of the performance of common shares held by investors over the performance period. Calculated by combining the price appreciation or depreciation, plus the value of dividends paid to shareholders (assuming dividends are reinvested in additional shares). Relative TSR is calculated by comparing the TSR of Manulife common shares traded on the NYSE with the TSR of our performance peer group over the performance period. To minimize distortions, the 20-day average share price is used for the opening and closing share price in the calculation of TSR for both Manulife and our performance peers.

**Payout of the equity-based incentives that were awarded in 2020** 

Restricted share units awarded in 2020 vested on March 3, 2023. Performance share units awarded in 2020 vested on March 3, 2023. The amounts in the table below include reinvested dividends.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Vesting<br> date | Grant date <br>price | Performance <br>factor | Vesting date <br>price | Payout as a % <br>of grant value |
| 2020 RSUs | Mar 3, 2023 | $24.38 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;– | $27.285 | 129% |
| 2020 PSUs | Mar 3, 2023 | $24.38 | 78% | $27.285 | 101% |

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| | |
|:---|:---|
| **64** | Manulife Financial Corporation |

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Executive Compensation

The performance factor for the 2020 PSUs was 78%. Performance was assessed using performance conditions and goals that were set prior to 2020, at the time of the grant, in line with our board-approved business plan. See the table below for a detailed breakdown of how this score was calculated.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp; **Number of**<br> **PSUs**<br> Performance share units awarded *and* received as dividend equivalents during the three-year period<br>| ![LOGO](g427878g73n11.jpg)  | **Performance**<br> **factor**<br> 78% | ![LOGO](g427878g73n11.jpg)  | **Share price at the time of vesting** | ![LOGO](g427878g22n75.jpg)  | **PSU payout** |

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | | | | | | | | As a<br>percentage<br>of original<br>award |
| <br> Roy Gori | <br> 199512 | <br> x | <br> 78% | <br> x | <br> $27.285 | <br> = | <br> $4246064 | <br> 101% |
| <br> Phil Witherington | <br> 59301 | <br> x | <br> 78% | <br> x | <br> $27.285 | <br> = | <br> $1262068 | <br> 101% |
| <br> Marc Costantini | <br> — | <br> x | <br> — | <br> x | <br> — | <br> = | <br> — | <br> — |
| <br> Marianne Harrison | <br> 82012 | <br> x | <br> 78% | <br> x | <br> $27.285 | <br> = | <br> $1745421 | <br> 101% |
| <br> Scott Hartz | <br> 63087 | <br> x | <br> 78% | <br> x | <br> $27.285 | <br> = | <br> $1342640 | <br> 101% |

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**Performance factor** 

The 2020 PSU grant was based on a cumulative three-year performance period.

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| Performance range | Performance range | Performance range |  |  |  |  |  |
| Threshold<br> 0 | Target<br> 100 | Maximum<br> 180 | Actual<sup>1</sup><br>| Score<br>| Weighted<br>score<br>|  | Performance criteria<br> and weighting |
| $21.75 | $24.16 | $26.10 | $24.24 | 103% | 35% | <br> ![LOGO](g427878g59w80.jpg)  | **Book value**<br> **per share**<br> **excluding AOCI**<br> ($ millions) <br> **33%** |
| 7.7% | 12.9% | 17.0% | 11.9% | 80% | 26% | <br> ![LOGO](g427878g59w80.jpg)  | **Core return on**<br> **equity** (%)<br> **33%** |
| 30 percentage<br>points below<br>median | Median | 24 percentage<br>points above<br>median | 6.7% vs<br>21.7%<br> (median) | 50% | 17% | <br> ![LOGO](g427878g59w80.jpg)  | **Relative TSR**<br> **34%** |
|  |  |  |  |  | 78% |  | **2020 PSU<br>performance factor** |

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1 Book value per share excluding AOCI and core return on equity results have been adjusted to exclude the impacts of restructuring charge and URR charge taken in 2021 as approved by the board

The performance factor of 78% is based on our performance against targets for the performance conditions across the three-year performance period. Book value per share excluding AOCI was slightly above target and core return on equity finished below target due to the impacts of COVID-19 on our business.

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| | |
|:---|:---|
| 2023 Management information circular | **65** |

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The performance criteria were set in late 2019 and were not subsequently adjusted for the impact of COVID-19 or for any P&C hurricane claim losses. In calculating the performance factor, the board excluded the impact of the 2019 and 2021 charges related to updating the URR assumptions issued by the Canadian Actuarial Standards Board, and the impact of the restructuring charge taken in 2021. These adjustments increased the performance factor by 3 points.

The board adjusted for the impact of these items because we believe compensation should be aligned with long-term shareholder value: senior executives should not be penalized when they take actions that are in the long-term best interest of shareholders even though there may be short term effects on core ROE or book value per share, or where there are legislative or regulatory changes outside our control.

Relative TSR is calculated by comparing the TSR of Manulife common shares traded on the NYSE compared with the TSR of our performance peer group across the performance period. To minimize distortions, we use the 20-day average share price for the opening and closing share price in the calculation of TSR for both Manulife and our performance peers. Relative TSR during the three-year period was 15 percentage points below the median TSR of the performance peer group.

---

| | |
|:---|:---|
| **66** | Manulife Financial Corporation |

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Executive Compensation

Compensation of the named executives

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| | |
|:---|:---|
| <br> ![LOGO](g427878g51e95.jpg)  | **Roy Gori**<br>President and CEO |

---

Mr. Gori is President and CEO and a member of the board of directors. He has overall responsibility for Manulife's strategy, operations, and performance. Mr. Gori joined Manulife in 2015 as President and CEO, Manulife Asia, and was promoted to his current role in 2017.

Mr. Gori led Manulife to solid 2022 results, demonstrating the resilience and strength of our diverse, global franchise. Under his leadership, we continued to make progress on the strategic priorities that we set in 2018, improved on our already top quartile employee engagement scores, expanded our environmental, social and governance investment offerings, and delivered solid financial results despite difficult market conditions that impacted our Global WAM results and a challenging operating environment in Asia due to the ongoing prevalence of COVID-19. The information below describes the company's financial results and other factors that went into determining his compensation for 2022.

**2022 FINANCIAL MEASURES** 

• Record net income attributed to shareholders was $7.3 billion, up $0.2 billion from 2021

• ROE was 14.1% and core ROE<sup>1</sup> was 11.9% (compared with 13.0% and 14.2%
in 2021 respectively)

• Core earnings were $6.2 billion, down 7%<sup>2</sup> from 2021

• NBV was $2.1 billion, down 9%<sup>2</sup>from 2021

• APE sales were $5.7 billion, down 7%<sup>2</sup>from 2021

• Global WAM net inflows were $3.3 billion

• TSR on the TSX for 2022 was 5.9%, in line with our performance peers and above that of the S&P/TSX Composite and
Composite Financials indices (see page 51 for a list of our performance peers)

**PROGRESS AGAINST MANULIFE'S FIVE STRATEGIC PRIORITIES** 

**Accelerate growth** 

• Generated 63% of core earnings from our highest potential businesses, an improvement of 9 percentage points from the
2017 baseline

• Achieved net inflows in Global WAM, compared to outflows for most North American peers in 2022

• Drove 25% and 18% NBV growth in the U.S. and Canada, respectively, and double-digit growth achieved in net income and core
earnings in Canada for 2022

• Completed the acquisition of the remaining 51% stake in MTEDA, making Manulife the first foreign firm to take full control
of a funds joint venture in China

**Digital, customer leader** 

• Improved relationship net promotor score (rNPS) (+20) by 19 points from the 2017 baseline and a 1-point reduction from 2021 ![LOGO](g427878g00p51.jpg)

• Launched digital roadmap and accelerated initiatives to make measurable progress towards digital customer leadership

• Increased straight-through processing to 83% (vs. 68% in 2018) ![LOGO](g427878g00p51.jpg)

• Accelerated electronic point of sale (ePOS) case adoption in Asia to 89%, a 15% increase over 2021

• Reduced Group Benefits claims processing times by 60% through the acceleration of our digital claims platform in Canada

• Gained access to 31 million users through Vietnam's most popular digital e-wallet to offer health insurance

---

| | |
|:---|:---|
|  1 Core ROE is a non-GAAP ratio. See Non-GAAP and other financial measures on page 57 for more information.<br> 2 Percentage growth in core earnings, NBV, and APE sales is stated on a constant exchange rate basis. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The items marked with a are directly linked to enterprise goals for ESG-related measures that are key to our business strategy. |

---

---

| | |
|:---|:---|
| 2023 Management information circular | **67** |

---

------

**Portfolio optimization** 

• Delivered $9 billion of cumulative freed-up capital since 2018

• Executed on two legacy U.S. variable annuity transactions; collectively these two transactions freed up approximately
$2.45 billion in capital

• Reduced our long term care and variable annuity core earnings contribution from 25% in 2020 to 18%

• Bought back 4.1% of common shares in 2022 for $1.9 billion

• Dividend increased at 10% compound annual growth rate in the 5-year period from 2017 to 2022; including 3.5 cents or 11%
increase in quarterly dividend for the first quarter 2023

**Expense efficiency** 

• Delivered expense efficiency ratio of 50.9%, with expenses maintained in line with 2021 despite the inflationary
environment, but 0.9 percentage points above our target for 2022, as lower expenses were offset by lower core earnings

• Achieved our 2022 target expense efficiencies of $1 billion in 2020, two years ahead of schedule

**High performing team** 

• Ranked in the top 6<sup>th</sup> percentile<sup>3</sup> amongst global financial services and insurance companies on our 2022 employee engagement survey, up from top 14<sup>th</sup> percentile in 2021 ![LOGO](g427878g00p51.jpg)

• Named a World's Best Employer by Forbes for the third consecutive year ![LOGO](g427878g00m72.jpg)

• Increased total company gender diversity of women at the Vice President level and above to 32%, exceeding our target and
building on the positive trend from 2021 ![LOGO](g427878g00p51.jpg)

• Recognized on Bloomberg's Gender-Equality Index for the fourth year in a row ![LOGO](g427878g00p51.jpg)

**ESG** 

• Prioritized ESG as a key competitive differentiator and accelerated progress on our global impact agenda, including the
launch of the Global Climate Action strategy in Europe and Asia and Manulife Forest Climate strategy in the U.S. ![LOGO](g427878g00p51.jpg)

• Named again to the S&P Dow Jones Sustainability North America Index, one of only seven insurers across North America
to be included, placing us within the top ten percent of our industry peers globally ![LOGO](g427878g00p51.jpg)

• Achieved net zero operational scope 1 and scope 2 greenhouse gas emissions ![LOGO](g427878g00p51.jpg)

• Engaged with regulators and policymakers on pressing ESG matters, including proposed mandatory climate disclosures by the
Office of the Superintendent of Financial Institutions, the U.S. Securities and Exchange Commission, Monetary Authority of Singapore and Bermuda Monetary Authority ![LOGO](g427878g00p51.jpg)

• Established science-aligned interim financed emission targets within our General Account investment portfolio ![LOGO](g427878g00p51.jpg)

---

| | |
|:---|:---|
|  3 Percentile ranking based on the Gallup global financial services and insurance database. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The items marked with a are directly linked to enterprise goals for ESG-related measures that are key to our business strategy. |

---

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| | |
|:---|:---|
| **68** | Manulife Financial Corporation |

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Executive Compensation

**TOTAL DIRECT COMPENSATION** 

Mr. Gori's 2022 target total direct compensation takes into consideration the global scope and complexity of his role as President and CEO, what our global peers pay for similar roles (see page 50 for our compensation peer group), and what other senior executives at Manulife are paid.

The management resources and compensation committee received advice and additional research and analysis from its independent advisor when developing Mr. Gori's compensation package. The board believes that Mr. Gori's target compensation should be appropriately aligned against a global peer group, that it should reflect his performance, and that the pay mix should emphasize the focus on Manulife's long-term performance and alignment with the shareholder experience.

The table below shows the total direct compensation the board approved for Mr. Gori for 2022, and his base salary and equity-based incentives for 2023, based on the recommendation of the management resources and compensation committee.

---

| | | | | |
|:---|:---|:---|:---|:---|
| (US$) | 2020 | 2021 | 2022 | 2023 |
| Base salary | $1200000 | $1200000 | **$1200000** | $1300000 |
| Annual incentive<sup>1</sup> | $2822400 | $4600800 | **$2923200** | $2,600,000 (target) |
| Equity-based incentives<sup>1</sup> |  |  |  |  |
| • PSUs | $3162500 | $4095000 | **$4920000** | $5100000 |
| • RSUs | $1265000 | $2730000 | **$3280000** | $3400000 |
| • stock options | $1897500 | $0 | **$0** | $0 |
| Total direct compensation | $10347400 | $12625800 | **$12323200** | $12400000 |

---

1 Timing of awards: the 2022 column includes the annual incentive awarded for 2022 and paid in February 2023 and the equity- based incentives granted in March 2022.

**2022 compensation mix**![LOGO](g427878g15x49.jpg)

**2023 target compensation mix**![LOGO](g427878g52s10.jpg)

---

| | |
|:---|:---|
| 2023 Management information circular | **69** |

---

------

**Base salary** 

Mr. Gori's base salary of US$1,200,000 has not changed since 2020. The board approved an increase to US$1,300,000 effective March 1, 2023.

**Annual incentive** 

Mr. Gori's 2022 annual incentive award was approved and paid in February 2023. It was paid out at 122% of his target and was 36% lower than his 2021 award. Consistent with its standard practice, the committee combined the annual corporate performance score of 87% with its assessment of Mr. Gori's personal performance and contributions across the company's five strategic priorities (described in detail on page 67). The committee determined that Mr. Gori's personal performance was exceptional in 2022, given Manulife's demonstrated resilience in the face of difficult market conditions.

10% of the award was delivered in Manulife common shares purchased on the open market.

You can read about the annual incentive plan and our performance for the year starting on page 54.

**Equity-based incentives** 

Mr. Gori's 2022 equity-based incentive awards totaled US$8,200,000. The awards, made in March 2022, were based on his performance, the competitive position of his compensation compared with our global compensation peer group (see page 50) and the board's focus on aligning executive pay with the interests of our shareholders.

You can read about the performance criteria for the performance share units starting on page 62.

The board approved US$8,500,000 in equity-based incentives for 2023 and allocated 60% to performance share units and 40% to restricted share units. These awards are intended to be forward-looking. The actual amount Mr. Gori realizes will be greater or less than the theoretical grant date amount based on our share price at the time of vesting and Manulife's financial performance over the next three years.

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| | |
|:---|:---|
| **70** | Manulife Financial Corporation |

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Executive Compensation

**PAY FOR PERFORMANCE LINKAGE** 

To ensure the effectiveness of our executive compensation program and its alignment to our core principle of paying for performance, we conduct analyses from a variety of perspectives. In addition to the analysis shown in the executive summary on page 43, another view of pay for performance is illustrated in the graph below which compares Manulife's TSR to the performance of the S&P/TSX Composite Financials Index and to the median of our performance peer group. It also shows the CEO's realized and realizable pay over the same period and how it aligns with our share price. When TSR has been lower, CEO pay has decreased; and when TSR has been higher, the CEO's pay has increased. This alignment occurs because a significant portion of the CEO's pay is equity-based.

![LOGO](g427878g50e01.jpg)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | 2018 | 2019 | 2020 | 2021 | 2022 |
| Manulife TSR (on the TSX) | (23.3%) | 42.0% | (9.2%) | 11.6% | 5.9% |
| Median of our performance peer group | (20.1%) | 29.8% | (5.1%) | 37.3% | 6.2% |
| S&P/TSX Composite Financials Index | (9.3%) | 21.4% | 1.6% | 36.5% | (9.4%) |
| Realized and realizable pay for the CEO<sup>1</sup> | $1.7M | $23.8M | $4.2M | $18.2M | $16.0M |

---

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| | |
|:---|:---|
| 1 | Realized and realizable pay for Mr. Gori. Equity is valued based on $24.15, the closing prices of Manulife common shares on the TSX as at December 31 for each year. For 2022, reflects $11.5 million received in cash (realized pay), and an increase of $4.5 million in outstanding equity awards that have not yet been realized (change in realizable pay).  |

---

**Realized and realizable pay** 

• cash compensation paid for a given year, including salary, annual incentive (earned for the year shown but paid the
following year),

• payouts of restricted share units and performance share units upon vesting and gains realized from exercising stock
options, and

• the change in value of outstanding restricted share units, performance share units, stock options, deferred share units
and shares held in escrow on December 31 of a given year compared to December 31 of the previous year, based on our share price on the TSX as at each of those dates.

**Total shareholder return** 

TSR is the change in value of an investment between January 1 and December 31 of a given year,

assuming dividends are reinvested. For Manulife, TSR reflects the value of our common shares on the TSX.

---

| | |
|:---|:---|
| 2023 Management information circular | **71** |

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| | |
|:---|:---|
| ![LOGO](g427878g03c99.jpg) | **Phil Witherington**<br>Chief Financial Officer |

---

Mr. Witherington is responsible for managing Manulife's financial affairs, including financial accounting and reporting; planning and analysis; taxation; investor relations; treasury; capital management and financial regulation, while also overseeing the strategy, transformation and corporate development functions, and our property and casualty reinsurance operations. He is a member of Manulife's executive leadership team.

In 2022, Mr. Witherington delivered several standout milestones, especially in terms of operational delivery and financial discipline, and made significant contributions to the company's achievement of a wide range of strategic objectives. Mr. Witherington played a key role in optimizing our legacy portfolio, as demonstrated by two transactions to reinsure over 80% of Manulife's U.S. variable annuity block. He contributed to all aspects of enterprise-wide strategic planning, resource prioritization and initiative governance, with a continued focus on supporting the growth of our highest potential businesses, and our digital and customer priorities. Under Mr. Witherington's financial leadership, the Company is well-prepared to adopt IFRS 17 and continued to be an industry leader in IFRS 17 implementation and communication of related impacts to external stakeholders. Mr. Witherington delivered on a broad range of capital deployment actions, leading to common share buy-backs and a common share dividend increase, enabled by a strong capital position and record remittances. In leading the Global Finance function, he drove finance transformation by continuing to modernize management information systems as well as reporting and forecasting capabilities and led our global culture of expense discipline. These accomplishments were enabled by an outstanding global team with further improved top quartile employee engagement.

The information below describes the company's financial results and other factors that went into determining his compensation for 2022.

**2022 FINANCIAL MEASURES** 

• Record net income attributed to shareholders was $7.3 billion, up $0.2 billion from 2021

• ROE was 14.1% and core ROE 11.9% (compared with 13.0% and 14.2% in 2021 respectively)

• Core earnings were $6.2 billion, down 7%<sup>1</sup> from 2021

• Remittances<sup>2</sup> were $6.9 billion, an increase of $2.5 billion over 2021

• The Manufacturers Life Insurance Company's Life Insurance Capital Adequacy Test (LICAT) total ratio<sup>3</sup>was 131% as at December 31, 2022

• Capital deployment actions include deploying a portion of excess capital to buy-back 4.1% of common shares in 2022 and an
11% increase in quarterly dividend for the first quarter of 2023

**CONTRIBUTION TO THE DELIVERY OF MANULIFE'S FIVE STRATEGIC PRIORITIES** 

• Delivered strong core earnings lower new business in Asia and a challenging macroeconomic environment

• Continued to support the growth of our highest potential businesses with a targeted allocation of capital and internal
resources to initiatives in our Asia and Global WAM segments resulting in 63% of core earnings from our highest-potential businesses in 2022, a notable improvement of 9 percentage points from the 2017 baseline of 54%

---

| | |
|:---|:---|
|  1 Percentage growth in core earnings is stated on a constant exchange rate basis.<br> 2 For more information on this metric, see non-GAAP and other financial measures on page 57. <br> 3 LICAT ratio is disclosed under the Office of the Superintendent of Financial Institutions Canada's ("OSFI's") Life Insurance Capital Adequacy Test Public Disclosure. |  |
|  1 Percentage growth in core earnings is stated on a constant exchange rate basis.<br> 2 For more information on this metric, see non-GAAP and other financial measures on page 57. <br> 3 LICAT ratio is disclosed under the Office of the Superintendent of Financial Institutions Canada's ("OSFI's") Life Insurance Capital Adequacy Test Public Disclosure. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The items marked with a ![LOGO](g427878g00m72.jpg) are directly linked to board-approved enterprise goals for ESG-related measures that are key to our business strategy. |

---

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|:---|:---|
| **72** | Manulife Financial Corporation |

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Executive Compensation

• Delivered an expense efficiency ratio of 50.9% and maintained general expenses in line with 2021 despite the inflationary
environment but 0.9 percentage points above our target for 2022, as lower expenses were offset by lower core earnings

• Delivered on our 2022 target of $1 billion in expense efficiencies in 2020, two years ahead of schedule

• Delivered industry leading IFRS 17 communication and educational materials to our shareholders including a joint
publication on IFRS 17 with Canadian peers, updated targets and KPIs, and the Opening Balance Sheet published in the 2022 financial statement notes

• Further transformed Finance in the areas of expense planning and forecasting, management reporting, treasury, and
strategic cost management

• Closed two transactions to reinsure over 80% of Manulife's legacy U.S. variable annuity block, releasing $2.45
billion of capital and significantly reducing our risk

• Increased employee engagement score for Finance, improving on already top quartile results<sup>4</sup>

• Continued to upgrade talent in key roles and build a more diverse Finance team through internal appointments, external
appointments, and ongoing talent development

• Advanced the DEI strategy for Finance by establishing a global committee to drive geographically-focused actions

• Continued to serve as the executive sponsor of the PROUD Employee Resource Group and as the executive leadership
team's mental health ambassador

4 Quartile ranking based on the Gallup overall global multi-industry database.

**TOTAL DIRECT COMPENSATION** 

The table below shows the total direct compensation the board approved for Mr. Witherington for 2022, and his base salary and equity-based incentives for 2023, based on the recommendation of the CEO and the management resources and compensation committee.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | 2020 | 2021 | 2022 | 2023 |
| **Base salary** | $915000 | $915000 | **$950000** | $975000 |
| **Annual incentive<sup>1</sup>** | $1453000 | $2280000 | **$1562000** | $1,462,500 (target) |
| **Equity-based incentives<sup>1</sup>** |  |  |  |  |
| • PSUs | $1250000 | $1620000 | **$1680000** | $2400000 |
| • RSUs | $500000 | $1080000 | **$1120000** | $1600000 |
| • stock options | $750000 | $0 | **$0** | $0 |
| **Total direct compensation** | $4868000 | $5895000 | **$5312000** | $6437500 |

---

1 Timing of awards: the 2022 column includes the annual incentive awarded for 2022 and paid in February 2023 and the equity-based incentives granted in March 2022

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| | |
|:---|:---|
| 2023 Management information circular | **73** |

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**2022 compensation mix**![LOGO](g427878g49l90.jpg)

**2023 target compensation mix**![LOGO](g427878g56w01.jpg)

**Base salary** 

Mr. Witherington's salary was $950,000 in 2022 and was increased to $975,000 effective March 1, 2023.

**Annual incentive** 

Mr. Witherington's 2022 annual incentive award was approved and paid in February 2023. It was 122% of his target and 31% lower than his 2021 award. 10% of the award was delivered in Manulife common shares purchased on the open market. For 2023, Mr. Witherington's annual incentive target was increased from 135% to 150% of base salary.

**Equity-based incentives** 

Mr. Witherington's 2022 equity-based incentive awards totaled $2,800,000. The awards, granted in March 2022, were based on his performance, the competitive position of his compensation compared to our compensation peer group and the board's focus on aligning executive pay with the interests of our shareholders.

In February 2023, the board approved $4,000,000 in equity-based incentives for Mr. Witherington and allocated 60% to performance share units and 40% to restricted share units. These awards are intended to be forward-looking. The actual amount Mr. Witherington realizes will be greater or less than the theoretical grant date amount based on our share price at the time of vesting and Manulife's financial performance over the next three years.

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| | |
|:---|:---|
| **74** | Manulife Financial Corporation |

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Executive Compensation

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|:---|:---|
| ![LOGO](g427878g00m81.jpg)  | **Marc Costantini**<br>Global Head of Inforce Management |

---

&nbsp;&nbsp;&nbsp;Mr. Costantini was appointed Global Head of Inforce Management on June 13, 2022 and is responsible for leading all initiatives to improve the profitability and risk profile of Manulife's Inforce business. He is a member of Manulife's executive leadership team. Mr. Costantini previously worked with Manulife from 1990 to 2014, holding a variety of executive leadership roles in Corporate Strategy, Corporate Development, Finance, and the operating businesses. Prior to rejoining the company, he was President & CEO, Corporate Development, Strategy and Digital Solutions for Munich Re's North America Life & Health business.

Since rejoining Manulife, Mr. Costantini has rapidly integrated himself into the company, building strong partnerships with peers and other colleagues, immediately making an impact on our company's Inforce Management activities, and ensuring the transition to his leadership was seamless. In his role, Mr. Costantini is responsible for delivery of portfolio optimization as a key strategic priority. He is also committed to driving greater diversity within his own team and the company more broadly. The information below describes the company's financial results and other factors that went into determining his compensation for 2022.

**2022 FINANCIAL MEASURES** 

• Executed two transactions in 2022 to reinsure over 80% of our legacy U.S. variable annuity business and released $2.45
billion of capital

• Delivered $9 billion of cumulative capital benefits from our legacy businesses since 2017, exceeding the portfolio
optimization target by $4 billion and showcased significant reduction to market sensitivities

• Delivered reduction in long term care and variable annuity core earnings contributions from 25% in 2020 to 18%

**CONTRIBUTION TO THE DELIVERY OF MANULIFE'S STRATEGIC PRIORITIES** 

• Launched a comprehensive care concierge wellness program in the United States, a refined service model for Inforce
customers in Canada, and improved Inforce analytics across Asia ![LOGO](g427878g00m72.jpg)

• Achieved long term care 2019 program-to-date premium rate adjustment approvals of $2 billion from U.S. regulatory
authorities

• Fully incorporated considerations related to the new IFRS 17 accounting standard into the Inforce Strategy

• Leveraged advanced analytics to develop fraud models to detect and prevent potential fraud instances and to accelerate
auto adjudication time and consistency in U.S. long term care claim management

• Increased employee engagement score for Inforce, resulting in top quartile positioning<sup>1</sup> ![LOGO](g427878g00m72.jpg)

• Contributed to achieving increased black, Indigenous and people of color (BIPOC) representation across the organization,
as well as advancing diversity, equity and inclusion efforts ![LOGO](g427878g00m72.jpg)

 <br> <sup>1</sup>Quartile ranking based on the Gallup overall global multi-industry database. The items marked with a are directly linked to enterprise goals for ESG-related measures that are key to our business strategy.

---

| | |
|:---|:---|
| 2023 Management information circular | **75** |

---

------

**TOTAL DIRECT COMPENSATION** 

The table below shows the total direct compensation the board approved for Mr. Costantini for 2022, and his base salary and equity-based incentives for 2023, based on the recommendation of the CEO and the management resources and compensation committee.

---

| | | |
|:---|:---|:---|
| (US$) | 2022 | 2023 |
| **Base salary<sup>1</sup>** | **$720000** | $740000 |
| **Annual incentive<sup>2</sup>** | **$1057000** | $999,000 (target) |
| **Equity-based incentives<sup>2</sup>** |  |  |
| • PSUs | **$1050000** | $1110000 |
| • RSUs | **$700000** | $740000 |
| • stock options | **$0** | $0 |
| **Total direct compensation** | **$3527000** | $3589000 |

---

1 Mr. Costantini was rehired in June 2022. Represents a full year salary.

2 Timing of awards: the 2022 column includes an annual incentive awarded for 2022 and paid in February 2023, and the equity-based incentives granted in August 2022

**2022 compensation mix**![LOGO](g427878g61h01.jpg)

**2023 target compensation mix**![LOGO](g427878g61h02.jpg)

---

| | |
|:---|:---|
| **76** | Manulife Financial Corporation |

---

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Executive Compensation

**Base salary** 

Mr. Costantini's salary was US$720,000 in 2022 and was increased to US$740,000 effective March 1, 2023.

**Annual incentive** 

Mr. Costantini's 2022 annual incentive award was approved and paid in February 2023, at 109% of his target. 10% of the award was delivered in Manulife common shares purchased on the open market.

**Equity-based incentives** 

Mr. Costantini's 2022 equity-based incentive awards totaled US$1,750,000. The awards, made in August 2022, were based on his anticipated future contributions to Manulife, the competitive position of his compensation compared to our compensation peer group, and the board's focus on aligning executive pay with the interests of our shareholders. Additionally, Mr. Costantini received one-time equity awards to replace compensation of a similar value and vesting terms that he forfeited from his previous employer. Please see the summary compensation table on page 86 for additional details.

The board approved US$1,850,000 in equity-based incentives for 2023 and allocated 60% to performance share units and 40% to restricted share units. These awards are intended to be forward-looking. The actual amount Mr. Costantini realizes will be greater or less than the theoretical grant date amount based on our share price at the time of vesting and Manulife's financial performance over the next three years.

---

| | |
|:---|:---|
| 2023 Management information circular | **77** |

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| | |
|:---|:---|
| <br> ![LOGO](g427878g04d44.jpg)  | **Marianne Harrison**<br>President and CEO, John Hancock |

---

Ms. Harrison is responsible for all aspects of the company's U.S. segment, including providing life insurance products and administering inforce long term care and insurance-based wealth accumulation products. She also operates as a matrix leader to the U.S. Mutual Fund business and the U.S. Retirement Plan Services business, which have primary accountability to the Global WAM segment. She is a member of Manulife's executive leadership team.

In 2022, Ms. Harrison led her team to achieve another year of solid results despite equity market volatility and other macroeconomic factors. Under her leadership, the U.S. segment achieved strong product profitability with pricing and reinsurance actions and continued to deliver strong results in the High-Net Worth business. Ms. Harrison continued to actively drive diversity and inclusion initiatives and placed enhanced focus on engaging, developing and connecting with our employees. The information below describes the U.S. segment's financial results and other factors that went into determining her compensation for 2022.

**2022 FINANCIAL MEASURES** 

• U.S. segment net income attributed to shareholders was US$3,077 million compared with US$1,667 million in 2021

• Contributed 26% of the company's core earnings from operating segments in 2022

• New business value of US$270 million, an increase of 25%<sup>1</sup> compared
with 2021, driven by reinsurance actions and improved margins by 26%<sup>1</sup>

• APE sales of US$633 million

**CONTRIBUTION TO THE DELIVERY OF MANULIFE'S FIVE STRATEGIC PRIORITIES** 

• Increased sales by 28% in our High Net Worth business through new product offerings and digital enablement resulting in
record APE sales in our international business

• Demonstrated continued innovation around our John Hancock Vitality program with the Grail partnership enabling cancer
screening for a portion of our policyholders

• John Hancock advanced 10 spots to #8 in customer satisfaction for J.D. Power's 2021 US Life Insurance study and was
credited with the "most improved website"

• Reduced the average time to complete background checks for new producers within our digital brokerage and traditional
brokerage channels by over 90% via automation

• Increased employee engagement score, resulting in top quartile
positioning<sup>2</sup> ![LOGO](g427878g00m72.jpg)

• Surpassed our diversity and inclusion targets, including women at the VP level and above and percentage of BIPOC new
graduates ![LOGO](g427878g00m72.jpg)

• Recognized as a "Best Place to Work for LGBTQ+ Equality" for the 8th year in a row

• Executed an effective return to office and saw low voluntary attrition compared to the industry and market

---

| | |
|:---|:---|
|  <br> 1 Percentage growth in new business value is stated on a constant exchange rate basis.<br> 2 Quartile ranking based on the Gallup overall workgroup level global/multi-industry database. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The items marked with a are directly linked to enterprise goals for ESG-related measures that are key to our business strategy. |

---

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| | |
|:---|:---|
| **78** | Manulife Financial Corporation |

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Executive Compensation

**TOTAL DIRECT COMPENSATION** 

The table below shows the total direct compensation the board approved for Ms. Harrison for 2022 and for her base salary and equity-based incentives for 2023, based on the recommendation of the CEO and the management resources and compensation committee.

---

| | | | | |
|:---|:---|:---|:---|:---|
| <br> (US$)<br>| <br> 2020 | <br> 2021 | <br> 2022 | <br> 2023 |
| <br> **Base salary**<br>| <br> $740000<br>| <br> $740000<br>| <br> **$755000**<br>| <br> $775000<br>|
| <br> **Annual incentive<sup>1</sup>**<br>| <br> $965000<br>| <br> $1702000<br>| <br> **$1064000**<br>| <br> $1,046,250 (target)<br>|
| <br> **Equity-based incentives<sup>1</sup>**<br>|  |  |  |  |
| <br> • PSUs<br>| <br> $1300000<br>| <br> $1560000<br>| <br> **$1620000**<br>| <br> $1560000<br>|
| <br> • RSUs<br>| <br> $520000<br>| <br> $1040000<br>| <br> **$1080000**<br>| <br> $1040000<br>|
| <br> • stock options<br>| <br> $780000<br>| <br> $0<br>| <br> **$0**<br>| <br> $0<br>|
| <br> **Total direct compensation**<br>| <br> $4305000<br>| <br> $5042000<br>| <br> **$4519000**<br>| <br> $4421250<br>|

---

1 Timing of awards: the 2022 column includes the annual incentive awarded for 2022 and paid in February 2023 and the equity-based incentives granted in March 2022

**2022 compensation mix**![LOGO](g427878g34t44.jpg)

**2023 target compensation mix**![LOGO](g427878g61h00.jpg)

---

| | |
|:---|:---|
| 2023 Management information circular | **79** |

---

------

**Base salary** 

Ms. Harrison's salary was US$755,000 in 2022 and was increased to US$775,000 effective March 1, 2023.

**Annual incentive** 

Ms. Harrison's 2022 annual incentive award was approved and paid in February 2023. It was 104% of her target and 37% lower than her 2021 award. 10% of the award was delivered in Manulife common shares purchased on the open market.

**Equity-based incentives** 

Ms. Harrison's 2022 equity-based incentive awards totaled US$2,700,000. The awards, granted in March 2022, were based on her performance, her anticipated future contributions, the competitive position of her compensation compared to our compensation peer group, and the board's focus on aligning executive pay with the interests of our shareholders.

The board approved US$2,600,000 in equity-based incentives for 2023 and allocated 60% to performance share units and 40% to restricted share units. These awards are intended to be forward-looking. The actual amount Ms. Harrison realizes will be greater or less than the theoretical grant date amount based on our share price at the time of vesting and Manulife's financial performance over the next three years.

---

| | |
|:---|:---|
| **80** | Manulife Financial Corporation |

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Executive Compensation

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| | |
|:---|:---|
| ![LOGO](g427878g06f66.jpg) | **Scott Hartz**<br>Chief Investment Officer |

---

Mr. Hartz is Chief Investment Officer for Manulife. He oversees all of Manulife's General Account investments in Canada, the United States, Asia and Europe. Mr. Hartz is also the Chief Investment Officer for John Hancock Life Insurance Company (U.S.A.), a wholly owned subsidiary of Manulife. He is a member of Manulife's executive leadership team.

In 2022, under the leadership of Mr. Hartz, the General Account function has had strong results with investment related experience. Mr. Hartz's decisiveness, depth of investment experience, and measured approach helped us navigate a year of exceptional market volatility. He seeks to be proactive in outlook, brings a value-added perspective to a range of issues, and optimizes actions given what is in the best interests of the company, customers, and shareholders. The information below describes the company's financial results, general fund performance and other factors that went into determining his compensation for 2022.

**2022 FINANCIAL MEASURES** 

• Delivered solid investment experience over the last year, with 2022 total gain of $1.2 billion. This was driven by strong
credit experience, gains from fixed income reinvestment activities, and higher-than-expected returns (including fair value changes) on alternative long duration assets (ALDA)

• General fund invested assets were $414 billion as at December 31, 2022

• The carrying value of ALDA of $51.7 billion represented 12% (2021 – $44.4 billion and 10%) of the General fund
invested assets

• Investments in renewable energy and energy projects had a carrying value of $13.6 billion as at December 31,
2022 (2021 – $13.1 billion). ![LOGO](g427878g00m72.jpg)

• A net charge of $840 million for the direct impact of markets, primarily from the impact of unfavourable equity market
performance and losses from the sale of available-for-sale bonds, partially offset by gains due to fixed income reinvestments rates resulting from the flattening of the yield curve in the U.S. and Canada

**CONTRIBUTION TO THE DELIVERY OF MANULIFE'S FIVE STRATEGIC PRIORITIES** 

• Delivered strong performance, with investment returns in the ALDA portfolio being particularly strong, exceeding long term
assumptions

• Maintained a high-quality fixed income portfolio throughout 2022, which was 96% investment grade with 71% rated A or
higher

• Sustained our excellent credit experience through a robust risk management framework leading to $252 million of investment
gains in 2022

• Streamlined our commercial mortgage origination processes following an end-to-end review, resulting in a 10% reduction in
expenses

• Redesigned the credit review process for publicly rated bonds to be more efficient and effective with the expected
long-term benefit of improving our credit experience

• Invested in timberland where harvesting is curtailed to produce carbon credits ![LOGO](g427878g00m72.jpg)

• Allocated $500 million in private equity investments focused on the energy transition away from fossil fuels ![LOGO](g427878g00m72.jpg)

• Maintained top quartile<sup>1</sup> employee engagement ![LOGO](g427878g00m72.jpg)

 <br> 1 Quartile ranking based on the Gallup overall workgroup level global/multi-industry database. The items marked with a are directly linked to enterprise goals for ESG-related measures that are key to our business strategy.

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| | |
|:---|:---|
| 2023 Management information circular | **81** |

---

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• Increased DEI representation of our front office staff to approximately 30% ![LOGO](g427878g00m72.jpg)

• Achieved our black, Indigenous, and people of color (BIPOC) representation goal of 18% in North America ![LOGO](g427878g00m72.jpg)

• Committed to steering our investment portfolio to net zero carbon by 2050 and led an initiative to evaluate each
investment with respect to ESG ![LOGO](g427878g00m72.jpg)

**TOTAL DIRECT COMPENSATION** 

The table below shows the total direct compensation the board approved for Mr. Hartz for 2022, and his base salary and equity-based incentives for 2023, based on the recommendation of the CEO and the management resources and compensation committee.

---

| | | | | |
|:---|:---|:---|:---|:---|
| (US$) | 2020 | 2021 | 2022 | 2023 |
| **Base salary** | $700000 | $700000 | **$715000** | $750000 |
| **Annual incentive<sup>1</sup>** | $1191000 | $1864000 | **$1306000** | $1,125,000 (target) |
| **Equity-based incentives<sup>1</sup>** |  |  |  |  |
| • PSUs | $1000000 | $1200000 | **$1260000** | $1380000 |
| • RSUs | $400000 | $800000 | **$840000** | $920000 |
| • stock options | $600000 | $0 | **$0** | $0 |
| **Total direct compensation** | $3891000 | $4564000 | **$4121000** | $4175000 |

---

1 Timing of awards: the 2022 column includes the annual incentive awarded for 2022 and paid in February 2023 and the equity-based incentives granted in March 2022

**2022 compensation mix**![LOGO](g427878g51p95.jpg)

**2023 target compensation mix**![LOGO](g427878g01p02.jpg)

---

| | |
|:---|:---|
| **82** | Manulife Financial Corporation |

---

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Executive Compensation

**Base salary** 

Mr. Hartz's salary was US$715,000 in 2022 and was increased to US$750,000 effective March 1, 2023.

**Annual incentive** 

Mr. Hartz's 2022 annual incentive award was approved and paid in February 2023. It was 122% of his target and 30% lower than his 2021 award. 10% of the award was delivered in Manulife common shares purchased on the open market.

**Equity-based incentives** 

Mr. Hartz's 2022 equity-based incentive awards totaled US$2,100,000. The awards, granted in March 2022, were based on his performance, the competitive position of his compensation compared to our compensation peer group and the board's focus on aligning executive pay with the interests of our shareholders.

The board approved US$2,300,000 in equity-based incentives for 2023 and allocated 60% to performance share units and 40% to restricted share units. These awards are intended to be forward-looking. The actual amount Mr. Hartz realizes will be greater or less than the theoretical grant date amount based on our share price at the time of vesting and Manulife's financial performance over the next three years.

---

| | |
|:---|:---|
| 2023 Management information circular | **83** |

---

------

Share performance

The graph below compares the cumulative value of $100 invested in Manulife common shares for a five-year period beginning on December 31, 2017 with the value of $100 invested in each of two major market indices and an "index" of our performance peers for the same period assuming dividends were reinvested.

Manulife's share price performance compared to peers and other relevant indices is one lens the board reviews when establishing executive pay levels.

![LOGO](g427878g80h90.jpg)

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Year ended December 31 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 |
| Manulife | $100.00 | $76.75 | $108.99 | $98.96 | $110.44 | $116.91 |
| S&P/TSX Composite Index | $100.00 | $91.12 | $111.93 | $118.20 | $147.85 | $139.22 |
| S&P/TSX Composite Financials Index | $100.00 | $90.68 | $110.04 | $111.83 | $152.64 | $138.33 |
| Performance Peer Group Index<sup>1</sup> | $100.00 | $79.91 | $103.72 | $98.48 | $135.26 | $143.69 |

---

---

| | |
|:---|:---|
| 1 | Annual return is the value of a $100 investment on December 31, 2017 over a five-year period assuming investment had achieved the median shareholder return of our performance peer group each year (see page 51 for a listing of these peers). The value shown here is different from the median five-year TSR for the performance peer group shown on page 51, because that page uses a cumulative five-year period.  |

---

---

| | |
|:---|:---|
| **84** | Manulife Financial Corporation |

---

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Executive Compensation

**Cost of management ratio** 

The table below shows that total compensation for Manulife's named executives has remained consistently below 1.0% of net income attributed to shareholders and constant at 0.6% for the last three years. The table provides total compensation awarded to our named executives, as reported in the summary compensation table in each of the previous five years.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | 2018 | 2019 | 2020 | 2021 | 2022 |
| Total compensation reported for the named executives ($ thousands) | $35909 | $38492 | $36828 | $41839 | $41647 |
| Net income attributed to shareholders ($ millions) | $4800 | $5602 | $5871 | $7105 | $7294 |
| Cost of management ratio | 0.7% | 0.7% | 0.6% | 0.6% | 0.6% |

---

*Cost of management ratio* 

Total compensation paid to the named executives divided by net income attributed to shareholders, expressed as a percentage.

*Named executives each year* 

2022: Roy Gori, Phil Witherington, Marc Costantini, Marianne Harrison, Scott Hartz

2021: Roy Gori, Phil Witherington, Marianne Harrison, Anil Wadhwani, Scott Hartz

2020: Roy Gori, Phil Witherington, Marianne Harrison, Anil Wadhwani, Scott Hartz

2019: Roy Gori, Phil Witherington, Rahul Joshi, Marianne Harrison, Anil Wadhwani

2018: Roy Gori, Phil Witherington, Warren Thomson, Marianne Harrison, Anil Wadhwani

---

| | |
|:---|:---|
| 2023 Management information circular | **85** |

---

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**Executive compensation details** 

Summary compensation table

The table below shows the total compensation awarded to each named executive for our last three fiscal years. For each named executive, the 2022 row reflects the annual incentive paid in February 2023 and equity-based incentive awards granted in 2022. We set compensation for the majority of the named executives in U.S. dollars, and have converted the amounts below to Canadian dollars consistent with our financial statements. Fluctuations in currency exchange rates can contribute to changes in the compensation amounts reported from year to year. Please see the named executive profiles starting on page 67 for a discussion of their 2022 total direct compensation

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | | | | | Non-equity<br>incentive<br>compensation | | | |
| |<br>Year |<br>Salary |<br>Share-<br>based<br>awards |<br>Option-<br> based<br>awards | Annual<br> Incentive |<br>Pension<br>value |<br>All other<br>compensation |<br>**Total<br>compensation** |
|  **Roy Gori**<br> President and CEO | 2022<br> 2021<br> 2020 | $1515205<br> $1518805<br> $1584887 | $10436550<br> $8622705<br> $5887690 | $0<br> $0<br> $2523296 | $3920304<br> $5836575<br> $3580497 | $1074738<br> $747457<br> $951902 | $131737<br> $134644<br> $168816 | **$17078534**<br> **$16860186**<br> **$14697088** |
|  **Phil Witherington**<br> Chief Financial Officer | 2022<br> 2021<br> 2020 | $944166<br> $915000<br> $907000 | $2800000<br> $2700000<br> $1750000 | $0<br> $0<br> $750000 | $1562000<br> $2280000<br> $1453000 | $311775<br> $226284<br> $258281 | $53679<br> $53627<br> $53532 | **$5671620**<br> **$6174911**<br> **$5171813** |
|  **Marc Costantini**<br> Global Head of Inforce Management | 2022 | $522603 | $4209400 | $0 | $1417543 | $31626 | $976125 | **$7157297** |
|  **Marianne Harrison**<br> President and CEO, John Hancock | 2022<br> 2021<br> 2020 | $979554<br> $931232<br> $989024 | $3436425<br> $3284840<br> $2420236 | $0<br> $0<br> $1037244 | $1426930<br> $2159157<br> $1224199 | $261856<br> $177510<br> $226444 | $8189<br> $7416<br> $7416 | **$6112954**<br> **$6560155**<br> **$5904563** |
|  **Scott Hartz**<br> Chief Investment Officer | 2022<br> 2021<br> 2020 | $927494<br> $877520<br> $935767 | $2672775<br> $2526800<br> $1861720 | $0<br> $0<br> $797880 | $1751477<br> $2364670<br> $1510903 | $274480<br> $195812<br> $247359 | $0<br> $0<br> $0 | **$5626226**<br> **$5964802**<br> **$5353629** |

---

**Base salary** 

Mr. Gori's salary is set in U.S. dollars but paid semi-monthly in Canadian dollars using the Bank of Canada closing exchange rate. Mr. Witherington's salary is set and paid in Canadian dollars. Messrs. Costantini's and Hartz's and Ms. Harrison's salaries are set and paid in U.S. dollars. For executives who are paid in U.S. dollars, we used the average annual exchange rates outlined in the table below to convert to Canadian dollars.

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| | |
|:---|:---|
| | Exchange rate for<br>U.S. dollars |
| 2022 | US$1.00 = $1.3015 |
| 2021 | US$1.00 = $1.2536 |
| 2020 | US$1.00 = $1.3407 |

---

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| | | |
|:---|:---|:---|
| <br> **Supplementary table: total**<br> **compensation in U.S. dollars**<br> This table shows total<br>compensation for the named<br>executives in U.S. dollars for<br>convenience. Amounts paid in<br>Canadian dollars were converted to<br>U.S. dollars consistent with our<br>financial statements. | <br> **Supplementary table: total**<br> **compensation in U.S. dollars**<br> This table shows total<br>compensation for the named<br>executives in U.S. dollars for<br>convenience. Amounts paid in<br>Canadian dollars were converted to<br>U.S. dollars consistent with our<br>financial statements. | <br> **Supplementary table: total**<br> **compensation in U.S. dollars**<br> This table shows total<br>compensation for the named<br>executives in U.S. dollars for<br>convenience. Amounts paid in<br>Canadian dollars were converted to<br>U.S. dollars consistent with our<br>financial statements. |
|  |  | (US$) |
| Roy Gori | 2022<br> 2021<br> 2020 | &nbsp;&nbsp;&nbsp;&nbsp;13214387<br> 13341009<br> 11165453 |
| Phil Witherington | 2022<br> 2021<br> 2020 | 4370915<br> 4887531<br> 3934427 |
| Marc Costantini | 2022 | $5482839 |
| Marianne Harrison | 2022<br> 2021<br> 2020 | 4724122<br> 5192362<br> 4477124 |
| Scott Hartz | 2022<br> 2021<br> 2020 | 4329530<br> 4720200<br> 4073469 |

---

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| | |
|:---|:---|
| **86** | Manulife Financial Corporation |

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Executive Compensation

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Share-based awards**<br> The grant date fair value of performance<br>share units, restricted share units and<br>deferred share units awarded to the named<br>executives is shown in the table to the right. |  | Grant date | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Share price | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Share price | Exchange rate for<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;awards in U.S. dollars |
| **Share-based awards**<br> The grant date fair value of performance<br>share units, restricted share units and<br>deferred share units awarded to the named<br>executives is shown in the table to the right. | 2022 | March 1 | $| &nbsp;&nbsp;&nbsp;&nbsp;26.54 | US$1.00 = $1.2728 |
| **Share-based awards**<br> The grant date fair value of performance<br>share units, restricted share units and<br>deferred share units awarded to the named<br>executives is shown in the table to the right. |  | August 29 | $| 23.80 | US$1.00 = $1.2952 |
| **Share-based awards**<br> The grant date fair value of performance<br>share units, restricted share units and<br>deferred share units awarded to the named<br>executives is shown in the table to the right. | 2021 | March 2 | $| 25.15 | US$1.00 = $1.2634 |
| **Share-based awards**<br> The grant date fair value of performance<br>share units, restricted share units and<br>deferred share units awarded to the named<br>executives is shown in the table to the right. | 2020  | March 3<br>| $ | 24.38  | US$1.00 = $1.3298  |
| <br> For 2022 and 2021 share-based award grants, the grant price is the average closing price for the 10 trading days before the grant date. For the 2020 shared-based award grant, the grant date fair value is the closing price of a Manulife common share on the TSX on the last trading day before the grant date or the average closing price for the last 10 trading days before the grant date (whichever is higher).<br>Mr. Costantini's amount for 2022 includes a one-time award of US$1,500,000 in restricted share units, granted on August 29, 2022, to replace compensation of similar value and with similar vesting conditions that he forfeited from his previous employer. The restricted share units vest 50% on August 29, 2023 and 50% on August 29, 2024. | <br> For 2022 and 2021 share-based award grants, the grant price is the average closing price for the 10 trading days before the grant date. For the 2020 shared-based award grant, the grant date fair value is the closing price of a Manulife common share on the TSX on the last trading day before the grant date or the average closing price for the last 10 trading days before the grant date (whichever is higher).<br>Mr. Costantini's amount for 2022 includes a one-time award of US$1,500,000 in restricted share units, granted on August 29, 2022, to replace compensation of similar value and with similar vesting conditions that he forfeited from his previous employer. The restricted share units vest 50% on August 29, 2023 and 50% on August 29, 2024. | <br> For 2022 and 2021 share-based award grants, the grant price is the average closing price for the 10 trading days before the grant date. For the 2020 shared-based award grant, the grant date fair value is the closing price of a Manulife common share on the TSX on the last trading day before the grant date or the average closing price for the last 10 trading days before the grant date (whichever is higher).<br>Mr. Costantini's amount for 2022 includes a one-time award of US$1,500,000 in restricted share units, granted on August 29, 2022, to replace compensation of similar value and with similar vesting conditions that he forfeited from his previous employer. The restricted share units vest 50% on August 29, 2023 and 50% on August 29, 2024. | <br> For 2022 and 2021 share-based award grants, the grant price is the average closing price for the 10 trading days before the grant date. For the 2020 shared-based award grant, the grant date fair value is the closing price of a Manulife common share on the TSX on the last trading day before the grant date or the average closing price for the last 10 trading days before the grant date (whichever is higher).<br>Mr. Costantini's amount for 2022 includes a one-time award of US$1,500,000 in restricted share units, granted on August 29, 2022, to replace compensation of similar value and with similar vesting conditions that he forfeited from his previous employer. The restricted share units vest 50% on August 29, 2023 and 50% on August 29, 2024. | <br> For 2022 and 2021 share-based award grants, the grant price is the average closing price for the 10 trading days before the grant date. For the 2020 shared-based award grant, the grant date fair value is the closing price of a Manulife common share on the TSX on the last trading day before the grant date or the average closing price for the last 10 trading days before the grant date (whichever is higher).<br>Mr. Costantini's amount for 2022 includes a one-time award of US$1,500,000 in restricted share units, granted on August 29, 2022, to replace compensation of similar value and with similar vesting conditions that he forfeited from his previous employer. The restricted share units vest 50% on August 29, 2023 and 50% on August 29, 2024. | <br> For 2022 and 2021 share-based award grants, the grant price is the average closing price for the 10 trading days before the grant date. For the 2020 shared-based award grant, the grant date fair value is the closing price of a Manulife common share on the TSX on the last trading day before the grant date or the average closing price for the last 10 trading days before the grant date (whichever is higher).<br>Mr. Costantini's amount for 2022 includes a one-time award of US$1,500,000 in restricted share units, granted on August 29, 2022, to replace compensation of similar value and with similar vesting conditions that he forfeited from his previous employer. The restricted share units vest 50% on August 29, 2023 and 50% on August 29, 2024. |

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| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Option-based awards**<br> We have not awarded stock options since 2020.<br>The grant date fair value of stock options awarded<br>to the named executives was calculated using the<br>data in the table to the right. |  | Grant date | Exercise<br>price | Fair value<br> factor | Exchange rate<br> for awards in<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S. dollars | Exchange rate<br> for awards in<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S. dollars |  |  |  |  |  |
| **Option-based awards**<br> We have not awarded stock options since 2020.<br>The grant date fair value of stock options awarded<br>to the named executives was calculated using the<br>data in the table to the right. | 2020  | March 3<br>| $24.38  | 15.0%  | US$  | 1.00 = $1.3298  |  |  |  |  |  |
| We used the Black-Scholes methodology to determine the fair value of the stock option awards (using the same assumptions we use for accounting purposes): |  | Expected life <br>(years) | Expected<br>volatility | Risk-free <br>interest rate |  | Expected <br>dividend yield |  |  |  |  |  |
| We used the Black-Scholes methodology to determine the fair value of the stock option awards (using the same assumptions we use for accounting purposes): |  | Expected life <br>(years) | Expected<br>volatility | Risk-free <br>interest rate |  | Expected <br>dividend yield | 2020  | 8.0<br>| 23.0%  | 1.50%  | 3.50%  |
| We used the Black-Scholes methodology to determine the fair value of the stock option awards (using the same assumptions we use for accounting purposes): |  |  |  |  |  |  |  |  |  |  |  |

---

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| | | |
|:---|:---|:---|
| **Annual incentive**<br> Paid in cash in the year following the fiscal year in which the award was earned. The<br>U.S. dollar amounts were converted to Canadian dollars using the exchange rates<br>that applied on the previous pay dates. | Exchange rate for <br>awards in U.S. dollars | Exchange rate for <br>awards in U.S. dollars |
| **Annual incentive**<br> Paid in cash in the year following the fiscal year in which the award was earned. The<br>U.S. dollar amounts were converted to Canadian dollars using the exchange rates<br>that applied on the previous pay dates. | 2022<br> 2021<br> 2020<br>| US$1.00 = $1.3411<br> US$1.00 = $1.2686<br> US$1.00 = $1.2686<br>|

---

**Pension value** 

The sum of the amounts under compensatory change for each named executive in the pension tables on pages 93 and 94.

**All other compensation** 

Mr. Gori's amount includes:

• 2022: $27,035 for club membership fees and a $100,000 flexible spending account allowance.

• 2021: $31,139 for club membership fees and a $100,000 flexible spending account allowance.

• 2020: $23,249 for club membership fees, $43,557 reimbursement for a disallowed tax credit related to his relocation to
Canada in 2017 and a $100,000 flexible spending account allowance.

Mr. Witherington's amount includes:

• 2022: a $50,000 flexible spending account allowance.

• 2021: a $50,000 flexible spending account allowance.

• 2020: a $50,000 flexible spending account allowance.

Mr. Costantini's amount includes:

• 2022: a one-time payment of US$750,000 to replace compensation forfeited from his previous employer.

Ms. Harrison's amount includes:

• 2022: $8,189 in total perquisites.

• 2021: $7,416 in total perquisites.

• 2020: $7,416 in total perquisites.

---

| | |
|:---|:---|
| 2023 Management information circular | **87** |

---

------

Equity compensation

**Outstanding equity-based incentive awards** (as at December 31, 2022)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | | Option-based awards | Option-based awards | Option-based awards | Option-based awards |
| | <br>Grant date | Number of<br> securities<br> underlying<br> unexercised<br> options | Option<br> exercise<br> price | Option<br> expiration<br> date | Value of<br> unexercised<br> in-the-money<br> options |
| Roy Gori | Mar 2, 2015 | 260931 | $21.81 | Mar 2, 2025 | $610579 |
|  | Feb 23, 2016 | 436301 | $17.59 | Feb 23, 2026 | $2862135 |
|  | Feb 28, 2017 | 243473 | $24.61 | Feb 28, 2027 | $0 |
|  | Jun 8, 2017 | 167872 | $23.51 | June 8, 2027 | $107438 |
|  | Feb 27, 2018 | 395962 | $24.73 | Feb 27, 2028 | $0 |
|  | Mar 5, 2019 | 485894 | $22.60 | Mar 5, 2029 | $753136 |
|  | Mar 3, 2020 | 689991 | $24.38 | Mar 5, 2030 | $0 |
| Phil Witherington | Feb 24, 2015 | 30896 | $22.02 | Feb 24, 2025 | $65808 |
|  | Feb 23, 2016 | 43462 | $17.59 | Feb 23, 2026 | $285111 |
|  | Feb 28, 2017 | 34315 | $24.61 | Feb 28, 2027 | $0 |
|  | Feb 27, 2018 | 120707 | $24.73 | Feb 27, 2028 | $0 |
|  | Mar 5, 2019 | 144572 | $22.60 | Mar 5, 2029 | $224087 |
|  | Mar 3, 2020 | 205086 | $24.38 | Mar 5, 2030 | $0 |
| Marc Costantini | – | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;– |
| Marianne Harrison | Feb 19, 2013 | 147980 | $15.52 | Feb 19, 2023 | $1277067 |
|  | Feb 25, 2014 | 124131 | $21.20 | Feb 25, 2024 | $366186 |
|  | Feb 24, 2015 | 140368 | $22.02 | Feb 24, 2025 | $298984 |
|  | Feb 23, 2016 | 290867 | $17.59 | Feb 23, 2026 | $1908088 |
|  | Feb 28, 2017 | 197822 | $24.61 | Feb 28, 2027 | $0 |
|  | Feb 27, 2018 | 197981 | $24.73 | Feb 27, 2028 | $0 |
|  | Mar 5, 2019 | 225594 | $22.60 | Mar 5, 2029 | $349671 |
|  | Mar 3, 2020 | 283632 | $24.38 | Mar 5, 2030 | $0 |
| Scott Hartz | Feb 19, 2013 | 102123 | $15.52 | Feb 19, 2023 | $881321 |
|  | Feb 25, 2014 | 75495 | $21.20 | Feb 25, 2024 | $222710 |
|  | Feb 24, 2015 | 85054 | $22.02 | Feb 24, 2025 | $181165 |
|  | Feb 23, 2016 | 119983 | $17.59 | Feb 23, 2026 | $787088 |
|  | Feb 28, 2017 | 98911 | $24.61 | Feb 28, 2027 | $0 |
|  | Feb 27, 2018 | 102798 | $24.73 | Feb 27, 2028 | $0 |
|  | Mar 5, 2019 | 130150 | $22.60 | Mar 5, 2029 | $201733 |
|  | Mar 3, 2020 | 218179 | $24.38 | Mar 5, 2030 | $0 |

---

---

| | |
|:---|:---|
| **88** | Manulife Financial Corporation |

---

------

Executive Compensation

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | Share based awards | Share based awards | Share based awards | Share based awards | Share based awards |
| | Grant date | Type of share<br>based award | Number of<br>shares or<br>units of<br>shares<br>that have<br>not vested | Market or<br>payout value of<br>vested share<br>based awards<br>that have not<br>vested | Market or payout<br>value of vested<br>share based<br>awards not<br> paid out or<br>distributed |
| Roy Gori | Mar 3, 2020 | PSU | 199512 | $4818204 |  |
|  |  | RSU | 79804 | $1927276 |  |
|  | Mar 2, 2021 | PSU | 225722 | $5451178 |  |
|  |  | RSU | 150480 | $3634101 |  |
|  | Mar 1, 2022 | PSU | 246270 | $5947425 |  |
|  |  | RSU | 164181 | $3964967 |  |
|  |  | MFC Shares<sup>1</sup> (2015) | 131930 |  | $3186110 |
| Phil Witherington | Mar 3, 2020 | PSU | 59301 | $1432126 |  |
|  |  | RSU | 23721 | $572856 |  |
|  | Mar 2, 2021 | PSU | 70680 | $1706920 |  |
|  |  | RSU | 47119 | $1137929 |  |
|  | Mar 1, 2022 | PSU | 66069 | $1595570 |  |
|  |  | RSU | 44045 | $1063697 |  |
| Marc Costantini | Aug 29, 2022 | PSU | 57930 | $1399001 |  |
|  |  | RSU | 121376 | $2931240 |  |
| Marianne Harrison | Mar 3, 2020 | PSU | 82012 | $1980598 |  |
|  |  | RSU | 32805 | $792234 |  |
|  | Mar 2, 2021 | PSU | 85989 | $2076637 |  |
|  |  | RSU | 57326 | $1384424 |  |
|  | Mar 1, 2022 | PSU | 81089 | $1958311 |  |
|  |  | RSU | 54059 | $1305524 |  |
|  |  | DSU |  |  | $167989 |
|  Scott Hartz | Mar 3, 2020 | PSU | 63087 | $1523548 |  |
|  |  | RSU | 25235 | $609419 |  |
|  | Mar 2, 2021 | PSU | 66146 | $1597425 |  |
|  |  | RSU | 44097 | $1064950 |  |
|  | Mar 1, 2022 | PSU | 63069 | $1523128 |  |
|  |  | RSU | 42047 | $1015427 |  |

---

1 Represents the remaining balance of the escrow account established as part of the arrangement provided to Mr. Gori when he relocated to Toronto in 2017. See page 86 of our 2018 management information circular, which is available at manulife.com.

In the tables above:

• the value of unexercised in-the-money stock options is the difference between the exercise price of the stock options and $24.15, the closing price of Manulife common shares on the TSX on December 31, 2022. The amount is zero if the exercise price is higher than our year-end closing share price

• the market or payout values of the share-based awards are based on $24.15, the closing price of Manulife common shares on
the TSX on December 31, 2022

• the value of performance share units and performance deferred share units that have not yet vested is calculated using a
performance factor of 100%

• restricted share units (RSUs), performance share units (PSUs) and deferred share units (DSUs) are paid out in cash.
Starting with 2019 awards, 10% of RSU and PSU payments are delivered in Manulife common shares purchased on the open market.

---

| | |
|:---|:---|
| 2023 Management information circular | **89** |

---

------

**Incentive plan awards – value vested or earned during the year** 

The table below shows, for each named executive:

• the value of stock options that vested in 2022 is the amount that would have been realized if they had been exercised on
the vesting date, based on the closing price of Manulife common shares on the TSX

• the value of stock options that was received in 2022 is the actual gain realized by named executives who have exercised
options

• the value of share-based awards that vested and were paid in 2022

• the annual cash bonus earned for 2022.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Option-based awards | Option-based awards | Share-based<br>awards | Annual incentive |
|  | Value vested<br>during the year | Value received<br>during the year | Value vested<br>during the year | Value earned<br>during the year |
| Roy Gori | $548602 | $0 | $6068645 | $3920304 |
| Phil Witherington | $163858 | $0 | $1805658 | $1562000 |
| Marc Costantini | $0 | $0 | $0 | $1417543 |
| Marianne Harrison | $247969 | $1151140 | $2817576 | $1426930 |
| Scott Hartz | $155346 | $1156268 | $1625495 | $1751477 |

---

**Stock options exercised in 2022** 

Ms. Harrison and Mr. Hartz exercised stock options in 2022 under our automatic stock option exercise program (see below):

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Grant date | Number of options | Exercise price ($) | Gain ($) |
| Marianne Harrison | Feb 21, 2012 | 19270 | $12.64 | $276230 |
|  | Feb 19, 2013 | 110985 | $15.52 | $874910 |
| Scott Hartz | Feb 21, 2012 | 38541 | $12.64 | $552475 |
|  | Feb 19, 2013 | 76593 | $15.52 | $603793 |

---

**Automatic stock option exercise program** 

Executives with outstanding stock options are given the opportunity to elect to have their vested stock options automatically exercised prior to expiration. This program is designed to protect executives from having stock options expire in-the-money if they were unable to exercise due to a black out period, or if they were in possession of material non-public information. Elections were made during a time when they were not in possession of any material non-public information and are irrevocable. If an executive leaves Manulife, any elections under the program will terminate.

**About deferred share units** 

In 2022, executives in Canada and the U.S. were given the opportunity to exchange some or all of their annual incentive award, vested restricted share units and vested performance share units for deferred share units, subject to local tax rules and rulings. We may also grant deferred share units to some new hires and to other executives in special situations.

Deferred share units are notional shares that track the value of Manulife common shares and earn dividend equivalents at the same rate as dividends paid on the common shares. They can only be redeemed for cash when the executive retires or leaves Manulife. For each unit redeemed, the executive will receive the market value of a Manulife common share at the time of redemption. Vesting conditions are specific to each grant, however deferred share units received in exchange for other vested awards, as described above, vest immediately. Deferred share units align executives with the long-term interests of shareholders and are only transferable if the executive dies.

---

| | |
|:---|:---|
| **90** | Manulife Financial Corporation |

---

------

Executive Compensation

Canadian executives can no longer exchange restricted share units and performance share units that are granted after 2015, in accordance with a change in Canadian tax rulings. Instead, to promote longer term equity ownership, Canadian executives can choose to receive deferred share units instead of restricted share units as long as they make this choice prior to the grant.

**About the deferred compensation account** 

Some U.S. executives can defer up to 90% of their base salary and some or all of their annual incentive and vested restricted share units into a deferred compensation account. The money must remain in the account for at least three years and is adjusted as though the funds had been invested in one or more investment options designated by Manulife and selected by the executive. On withdrawal, the executive can take the cash either in a lump sum or in annual instalments.

**Securities authorized for issue under equity compensation plans** 

The table below shows the total number of securities to be issued and available for issue under our equity compensation plans as at December 31, 2022:

---

| | | | |
|:---|:---|:---|:---|
|  | Number of securities to<br>be issued upon exercise<br>of outstanding options,<br>warrants and rights | Weighted average<br>of exercise price of<br>outstanding options,<br>warrants and rights | Number of securities<br>remaining available for<br>future issuance under<br>equity plans |
| Equity compensation plans approved by security holders | 20196742 | 22.42 | 6475414 |

---

This table tells you about our plans and their status as at December 31, 2022:

---

| | |
|:---|:---|
| **Executive stock option plan** |  |
| The executive stock option plan was approved by shareholders at the 2000 annual and special meeting. Deferred share units, share appreciation rights, restricted shares and performance awards can also be granted under the executive stock option plan. We need shareholder approval to make changes to the plan. | The executive stock option plan was approved by shareholders at the 2000 annual and special meeting. Deferred share units, share appreciation rights, restricted shares and performance awards can also be granted under the executive stock option plan. We need shareholder approval to make changes to the plan. |
| Maximum number of common shares that may be issued | 73600000 |
| • as a % of common shares outstanding<br>| 3.9% |
| Maximum number of common shares that may be issued (% of outstanding common shares that cannot be exceeded) | Maximum number of common shares that may be issued (% of outstanding common shares that cannot be exceeded) |
| • to any one participant, or | 5% |
| • to insiders as a whole<br>| 10% |
| Total number of common shares that have been issued in respect of stock options and deferred share units | 47199528 |
| • as a % of common shares outstanding<br>| 2.5% |

---

**Stock plan for non-employee directors** 

The stock plan for non-employee directors was approved by shareholders at the 2001 annual and special meeting. Deferred share units can also be granted under the stock plan. We need shareholder approval to make changes to the plan.

---

| | |
|:---|:---|
| Maximum number of common shares that may be issued | 1000000 |
| • as a % of common shares outstanding<br>| less than 0.1% |
| Maximum number of common shares that may be issued (% of outstanding common shares that cannot be exceeded) |  |
| • to any one participant, or | 5% |
| • to insiders as a whole<br>| 10% |
| Total number of common shares that have been issued in respect of deferred share units | 728316 |
| • as a % of common shares outstanding<br>| less than 0.1% |

---

---

| | |
|:---|:---|
| 2023 Management information circular | **91** |

---

------

We did not grant stock options to named executives in 2022. The table below shows the total number of stock options, share-settled deferred share units outstanding, and securities available for future grant under the plans:

---

| | | | | |
|:---|:---|:---|:---|:---|
| (as at December 31, 2022) | Stock options/<br>DSUs outstanding | Stock options/<br>DSUs outstanding | Securities available for future issue | Securities available for future issue |
| (as at December 31, 2022) | Number | As a % of diluted<br> common shares | Number | As a % of diluted<br>common shares |
| Stock plan for non-employee directors | 271684 | 0.01% | 6475414 | 0.34% |
| Stock options | 19759198 | 1.03% |  |  |
| Deferred share units | 165860 | 0.01% |  |  |
| Total | 20196742 | 1.06% | 6475414 | 0.34% |

---

**Overhang, dilution and burn rate** 

---

| | | | |
|:---|:---|:---|:---|
| (as at December 31) | 2020 | 2021 | 2022 |
| **Overhang** | 1.56% | 1.44% | 1.40% |
| the total number of common shares reserved for issue to employees and directors, less the number of stock options and share-settled deferred share units redeemed, expressed as a percentage of the weighted average number of securities outstanding in the year<br>|  |  |  |
| **Dilution** | 1.24% | 1.15% | 1.11% |
| the total number of stock options and share-settled deferred share units outstanding, expressed as a percentage of the weighted average number of securities outstanding in the year<br>|  |  |  |
| **Burn rate** |  |  |  |
| the number of stock options and share-settled deferred share units granted annually, expressed as a percentage of the weighted average number of securities outstanding in the year |  |  |  |
| • Executive stock option plan | 0.25% | 0.00% | **0.00%** |
| • Stock plan for non-employee directors<br>| 0.01%  | 0.01%  | **0.01%**  |

---

Retirement benefits

Our named executives along with our employees in the United States participate in a defined benefit cash balance plan, a 401k plan and a defined contribution supplemental plan, and a 401k savings plan. In Canada, our named executives along with our employees participate in a defined contribution pension plan and a defined contribution supplemental plan.

Our supplemental retirement arrangements are offered to officers in Canada and all employees United States when tax rules limit the benefits that would otherwise be provided by our registered (or tax qualified) pension plans. These supplemental arrangements are not tax qualified and are typically unfunded.

To receive the benefits from our supplemental defined contribution arrangements, our named executives generally must comply with several conditions after they leave our employment:

• non-solicit: all executives, other than the few in traditional defined benefit supplemental arrangements, have a
non-solicit provision for 24 months after their employment ends

• non-compete:

– 24 months for all executives in traditional defined benefit supplemental arrangements

– between 12 and 24 months for Senior Officers in capital accumulation supplemental arrangements.

• if an executive breaches the non-compete provision in their traditional defined benefit supplemental arrangement, the
benefits are reduced by one-third

• if an executive breaches any of the post-employment conditions attached to all or a part of their capital accumulation
supplemental arrangements, those benefits are fully forfeited.

---

| | |
|:---|:---|
| **92** | Manulife Financial Corporation |

---

------

Executive Compensation

**DEFINED BENEFIT PENSION PLAN TABLE** 

Messrs. Costantini and Hartz and Ms. Harrison participate in the John Hancock Cash Balance Plan. Mr. Costantini had earned cash balance benefits for the periods he previously worked for Manulife in the U.S. from September 2000 to January 2014 and has been earning cash balance benefits since rejoining us in June 2022. Ms. Harrison has earned cash balance benefits since October 2017 and from March 2008 to December 2012 when she previously worked in the U.S. Mr. Hartz earned final average pay benefits until December 31, 2011 under our legacy plan provisions and defined benefit supplemental arrangement and has been earning cash balance benefits thereafter.

The table below shows the defined benefit pension plan obligations for our three named executives in the United States:

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Number of<br>years of<br> credited<br>service | Number of<br>years of<br> credited<br>service | Annual<br> benefits<br> payable | Annual<br> benefits<br> payable | Opening<br> present<br>value of<br>defined<br>benefit<br>obligation | Compensatory<br>change | Compensatory<br>change | Non-<br> compensatory<br>change | Closing<br> present<br>value of<br> defined<br>benefit<br>obligation |
| | Dec 31,<br>2022 | Age<br>65 | Dec 31,<br> 2022 | Age 65 | Opening<br> present<br>value of<br>defined<br>benefit<br>obligation | Service<br> cost | Other | Non-<br> compensatory<br>change | Closing<br> present<br>value of<br> defined<br>benefit<br>obligation |
| Marc Costantini<sup>1</sup> | 24.2 | 35.8 | $85200 | $116900 | $642800 | $21600 | $0 | ($56600) | $607800 |
| Marianne Harrison | 10.1 | 16.1 | $27500 | $41900 | $223400 | $22100 | $0 | $14000 | $259500 |
| Scott Hartz | 39.5 | 42.7 | $737600 | $744700 | $10427500 | $22100 | $0 | ($2149000) | $8300600 |

---

<sup>1</sup> Excludes distributions that Mr. Costantini received after his departure from Manulife in January 2014.

**Annual benefits payable** 

Based on current pensionable earnings as of December 31, 2022 and the noted credited service, payable from age 65.

**Opening and closing defined benefit obligation** 

Value of the projected pension for service to December 31, 2021 and December 31, 2022 respectively, using the actuarial assumptions used to determine the defined benefit obligations at those dates, as disclosed in Note 16 of our 2022 consolidated financial statements.

**Service cost** 

Value of the projected pension earned for service in 2022, using the actuarial assumptions used to determine the defined benefit obligations on December 31, 2022, as disclosed in Note 16 of our 2022 consolidated financial statements.

**Other** 

The impact of any plan amendments and differences between the actual and assumed compensation.

**Non-compensatory change**

Includes the impact of interest accruing on the opening defined benefit obligation, changes in the actuarial assumptions, experience gains and losses and any amounts due to currency fluctuations.

**Exchange rates** 

Closing present value of defined benefit obligations for Ms. Harrison, Mr. Hartz and Mr. Costantini have been converted using the December 31 exchange rate of US$1.00 = $1.3549 for 2022 and US$1.00 = $1.2678 for 2021. The other amounts have been converted using the average 2022 exchange rate of US$1.00 = $1.3015.

---

| | |
|:---|:---|
| 2023 Management information circular | **93** |

---

------

**DEFINED CONTRIBUTION PENSION PLAN TABLE** 

Mr. Gori has participated in the Manulife defined contribution plan and supplemental arrangement in Canada since June 2017. Mr. Gori had participated in the Manulife Mandatory Provident Fund Top-up in Hong Kong from March 2015 to May 2017 prior to becoming President and CEO.

Mr. Witherington has participated in the Manulife defined contribution plan and supplemental arrangement in Canada since January 2018. Mr. Witherington had participated in the Manulife Mandatory Provident Fund Top-up in Hong Kong from May 2014 to December 2017 prior to becoming Chief Financial Officer.

Mr. Costantini participates in the John Hancock 401(k) plan and the defined contribution supplemental arrangement in the U.S. Mr. Costantini has benefits remaining from his prior employment in the Manulife supplemental arrangement in Canada from when he worked in Canada between July 1990 and September 2000 and in the John Hancock 401(k) plan from when he worked in the U.S. between September 2000 and January 2014.

Ms. Harrison has participated in the John Hancock 401(k) savings plan and the defined contribution supplemental arrangement since October 2017 and from March 2008 to December 2012, when she worked in the U.S. She previously participated in the Manulife defined contribution plan and supplemental defined contribution arrangement in Canada from January 2013 to September 2017 and September 2002 to February 2008, when she worked in Canada.

Mr. Hartz participate in the John Hancock 401(k) plan and the defined contribution supplemental arrangement in the U.S.

The table below is a reconciliation of the account balances from December 31, 2021 to December 31, 2022:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | Opening<br> accumulated<br> value | Compensatory change | Compensatory change | Non-<br> compensatory<br> change | Closing<br> accumulated<br> value |
| | Opening<br> accumulated<br> value | <br> Service cost | Other | Non-<br> compensatory<br> change | Closing<br> accumulated<br> value |
| Roy Gori | $4863500 | $1074700 | $0 | ($559700) | $5378500 |
| Phil Witherington | $1748400 | $311800 | $0 | ($231000) | $1829200 |
| Marc Costantini<sup>1</sup> | $1008900 | $10000 | $0 | ($84700) | $934200 |
| Marianne Harrison | $4234400 | $239700 | $0 | ($408500) | $4065600 |
| Scott Hartz | $4164600 | $252400 | $0 | ($308300) | $4108700 |

---

<sup>1</sup> Excludes distributions that Mr. Costantini received after his departure from Manulife in January 2014.

**Service cost** 

The total amount contributed and/or notionally credited to each named executive in 2022 by Manulife or John Hancock under their respective plans.

**Other** 

The impact of any plan amendments.

**Non-compensatory change** 

Includes any contributions made by the named executives, all investment income credited during the year and any amounts due to currency fluctuations.

---

| | |
|:---|:---|
| **94** | Manulife Financial Corporation |

---

------

Executive Compensation

**Exchange rates** 

Closing accumulated value amounts for Mr. Gori and Mr. Witherington have been converted using the December 31 exchange rate of HK$1.00 = $0.1736 for 2022 and HK$1.00 = $0.1626 for 2021. Other amounts have been converted using the average 2022 exchange rate of HK$1.00 = $0.1662.

Closing accumulated value amounts for Messrs. Costantini and Hartz and Ms. Harrison, have been converted using the December 31 exchange rate of US$1.00 = $1.3549 for 2022 and US$1.00 = $1.2678 for 2021. Other amounts have been converted using the average 2022 exchange rate of US$1.00 = $1.3015.

**Canada** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | Closed defined benefit pension plan |  | Defined contribution pension plan |
| <br> **Who participates** | <br> ![LOGO](g427878g59w80.jpg)  | <br> Canadian-based employees who were hired before January 1, 1999. The plan is closed to new participants<br>None of the current named executives participate in this plan | <br> ![LOGO](g427878g59w80.jpg)  | <br> Canadian-based employees who were hired after January 1, 1999 |
| <br> &nbsp;&nbsp;&nbsp;&nbsp;**Terms** | <br> ![LOGO](g427878g59w80.jpg)  |  | <br> ![LOGO](g427878g59w80.jpg) <br>| <br> Participants contribute 2% of pensionable earnings<br>Participants can make voluntary contributions ranging from 0.5% to 5% of pensionable earnings<br>Pensionable earnings are limited to $246,240 for 2022 and are calculated as base salary (plus the annual incentive for officers)<br>Participants choose from a range of options to invest their account |
| <br> **Annual pension formula** | <br> ![LOGO](g427878g59w80.jpg)  |  | <br> ![LOGO](g427878g59w80.jpg)  | <br> We contribute 3% of pensionable earnings and a 50% match on participant voluntary contributions after the first year of employment<br>Our contributions and participant contributions combined are limited to the defined contribution maximum under the *Income Tax Act* ($30,780 in 2022)<br>Our contributions vest immediately |
| <br> &nbsp;&nbsp;&nbsp;&nbsp;**Retirement** | <br> ![LOGO](g427878g59w80.jpg)  |  | <br> ![LOGO](g427878g59w80.jpg)  | <br> When they leave employment, participants can transfer the value of their account to a locked-in retirement vehicle, or purchase a life annuity<br>|

---

---

| | |
|:---|:---|
| 2023 Management information circular | **95** |

---

------

---

| | | |
|:---|:---|:---|
|  | Closed defined benefit<br>supplemental arrangement | Defined contribution<br> supplemental arrangement |
| <br> ![LOGO](g427878g59w80.jpg)  | These arrangements have not been offered since January 1, 1999<br>None of the current named executives have these arrangements, and there are no employees remaining with one of these arrangements | Officers who were hired after January 1, 1999 and employees who were promoted to an officer level after this date are eligible<br>|
|  | These arrangements have not been offered since January 1, 1999<br>None of the current named executives have these arrangements, and there are no employees remaining with one of these arrangements | We credit 10% of pensionable earnings (15% for Mr. Gori) above the pensionable earnings maximum to a notional account for each participant<br>Pensionable earnings are calculated as base salary and the annual incentive, including the amount taken as deferred share units<br>Investment income credits are based on the investment options selected by the participant<br>Participants can take the value of their account in instalments at retirement, or withdraw it as a lump sum with our consent |

---

**United States** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | Defined benefit pension plan<br>(cash balance) |  | 401(k) plan |
| **Who participates** | <br> ![LOGO](g427878g59w80.jpg)  | All U.S. employees | <br> ![LOGO](g427878g59w80.jpg)  | Participation is voluntary for all U.S. employees |
| **Terms** | <br> ![LOGO](g427878g59w80.jpg)  | Participants do not contribute<br>Participants receive contribution credits in a notional account that earns interest credits<br>Interest credits are based on the average annual yield of 10-year Treasury Constant Maturities in effect on each business day during the two months ending September 30 of the preceding calendar year<br>For the benefits earned by Mr. Costantini from September 2000 to December 2007 under legacy plan provisions, a minimum interest crediting rate of 5.00% (compounded daily) applies | <br> ![LOGO](g427878g59w80.jpg) <br>| Participants may contribute up to 50% of their eligible salary to the IRS maximum (US$20,500 in 2022)<br>Eligible salary is limited to the IRS maximum (US$305,000 in 2022)<br>Participants choose from a range of options to invest their account |
| **Pension formula** | <br> ![LOGO](g427878g59w80.jpg)  | We credit participant accounts with 4% of eligible compensation up to the Social Security Wage Base, plus 8% of eligible compensation that exceeds this base<br>Eligible compensation is limited to the IRS maximum (US$305,000 in 2022), and is calculated as base salary plus the annual incentive received<br>Our contributions vest after three years of service<br>| <br> ![LOGO](g427878g59w80.jpg) <br>| We contribute a 100% match on participant contributions to a maximum of 4% of eligible salary<br>Our contributions and participant contributions combined are limited to the IRS maximum (US$61,000 in 2022)<br>Our contributions vest immediately |

---

---

| | |
|:---|:---|
| **96** | Manulife Financial Corporation |

---

------

Executive Compensation

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| | | | | |
|:---|:---|:---|:---|:---|
|  |  | Defined benefit pension plan<br>(cash balance) |  | 401(k) plan |
| **Retirement** | <br> ![LOGO](g427878g59w80.jpg)  | Normal retirement is 65, but benefits can be paid at any retirement age based on the value of the participant's account on the date their pension begins<br>Payments are normally made as a life annuity, but participants can choose a lump sum or other payment option | <br> ![LOGO](g427878g59w80.jpg) <br>| Participants receive the value of their account when they leave employment or if they become permanently disabled |
|  |  | <br> Closed defined benefit pension plan (final average pay) and defined benefit supplemental arrangement |  | Defined contribution supplemental arrangement |
|  | <br> ![LOGO](g427878g59w80.jpg) <br>| <br> Mr. Hartz earned final average pay benefits in these plans until December 31, 2011. None of the other named executives participate in these plans.<br>The final average pay benefit is the sum of the following:<br>i) 1.43% of average compensation (highest 3 years) up to the average Social Security Wage Base (SSWB) for each year of pre-2012 service up to 30 years,<br>ii) 1.80% of average compensation in excess of the average SSWB for each year of pre-2012 service up to 30 years, and<br>iii)1.00% of the sum of (i) and (ii) for each year of pre-2012 service in excess of 30 years. | <br> ![LOGO](g427878g59w80.jpg)  | We credit 8% of eligible compensation above the IRS maximum to a notional account for each participant<br>Eligible compensation is calculated as base salary and the annual incentive, including the amount taken as deferred share units<br>Our notional contributions vest after three years of service<br>Investment income credits are based on the investment options selected by the participant<br>Participants receive the value of their account in 18 monthly instalments beginning the seventh month after leaving employment |

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**Hong Kong** 

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| | | |
|:---|:---|:---|
|  |  | Defined contribution plan<br> (Manulife Mandatory Provident Fund (MPF) Top-up)<br>|
| **Who participates** | <br>![LOGO](g427878g59w80.jpg)  | All Hong Kong permanent employees |
| **Terms** | <br>![LOGO](g427878g59w80.jpg)  | Participants contribute 5% of annual salary<br>Contributions on salary up to the MPF maximum (HK$360,000 in 2022) go to the mandatory account. Contributions on salary above the MPF maximum go to the voluntary account<br>Participants choose from a range of options to invest their account |
| <br> **Pension formula** | <br>![LOGO](g427878g59w80.jpg)  | <br> We contribute based on length of service as follows:<br>**Less than 5 years**<br> 5% of annual salary<br>**5 to 10 years**<br> 7.5% of annual salary<br>**More than 10 years**<br> 10% of annual salary<br>All our contributions, other than the first 5% of annual salary up to the MPF maximum, go to the voluntary account<br>Our contributions to the mandatory account vest immediately<br>Our contributions to the voluntary account vest on a sliding scale based on length of service that grades by 10% per year starting at 30% after three years to 100% after 10 years |
| **Retirement** | <br>![LOGO](g427878g59w80.jpg)  | Participants can receive the value of the voluntary account at any time but can receive the value of the mandatory account only after age 60 |

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| | |
|:---|:---|
| 2023 Management information circular | **97** |

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Termination and change in control

The table below shows the estimated amounts that would be provided to each named executive if employment is terminated under five different scenarios, assuming the scenario took place on December 31, 2022.

The actual amounts will depend on our share price at the time as well as other variables, such as the named executive's age and years of service. The information below is shown in Canadian dollars. Amounts for our named executives compensated in U.S. dollars have been converted using the average 2022 exchange rate of US$1.00 = $1.3015.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | Type of payment | Retirement<br>(early or<br>normal) | Resignation | Termination<br>with<br> cause | Termination<br>without cause | Change in<br>control |
| <br> Roy Gori | <br> Severance | <br> – |  |  | $9370800 | $12669734 |
|  | Additional vesting of RSUs, PSUs and stock options |  |  |  | $25389278 | $25931433 |
|  | Pension<br>| –  | –  |  | – | –  |
|  | Total value<br>| –  | –  |  | $34760078 | $38601167 |
| <br> Phil Witherington | Severance |  |  |  | $3348750 |  |
|  | Additional vesting of RSUs, PSUs and stock options |  |  |  | $4426876 |  |
|  | Pension<br>| –  | –  |  | – | – |
|  | <br> Total value<br>| <br> –<br>| <br> –<br>|  | $7775626 | – |
| <br> Marc Costantini | Severance |  |  |  | $2202138 |  |
|  | Additional vesting of RSUs, PSUs and stock options |  |  |  | $830116 |  |
|  | Pension<br>| –  | –  |  | – | – |
|  | <br> Total value<br>| <br> –<br>| <br> –<br>|  | $3032254 | – |
| Marianne Harrison | Severance |  |  |  | $3463780 |  |
|  | Additional vesting of RSUs, PSUs and stock options | $9057565 | (1) |  | $9057565 |  |
|  | Pension<br>| –  | –  |  | – | – |
|  | <br> Total value<br>| $9057565  | –  |  | $12521345 | – |
| Scott Hartz | Severance |  |  |  | $3489647 |  |
|  | Additional vesting of RSUs, PSUs and stock options | $6973987 | (1) |  | $6973987 |  |
|  | Pension<br>| –  | –  |  | – | – |
|  | <br> Total value<br>| <br> $6973987<br>| <br> –<br>|  | $10463634 | – |

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(1) Ms. Harrison and Mr. Hartz have met certain age and service criteria for additional vesting of equity upon a resignation
with prescribed advanced written notice. For purposes of this disclosure, such resignations are referred to as "Retirement".

Equity-based awards are treated according to the terms and conditions of the award agreements and plan documents unless the named executive has entered into an agreement that indicates otherwise. See the next page for information about Mr. Gori's change in control agreement and employment agreement.

The amount shown for additional vesting of RSUs, PSUs and stock options is the estimated value that would be payable under each termination scenario, and is based on $24.15, the closing price of Manulife common shares on the TSX on December 31, 2022. The value of performance share units is calculated assuming a performance factor of 100%.

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| | |
|:---|:---|
| **98** | Manulife Financial Corporation |

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Executive Compensation

**Resignation and retirement** 

No severance is paid if the named executive resigns or retires.

Messrs. Gori, Witherington and Costantini were not eligible for either early or normal retirement. Ms. Harrison and Mr. Hartz have met certain age and service criteria for additional vesting of equity upon a resignation with prescribed advanced written notice.

**Termination with cause** 

If Manulife terminates a named executive's employment with cause, employment ends immediately, no severance is paid and performance share units, restricted share units, stock options and the supplemental retirement benefit are forfeited.

**Termination without cause** 

Messrs. Gori and Witherington and Ms. Harrison have employment agreements that specify their entitlements if they are terminated without cause. Mr. Costantini has an employment agreement that does not specifically address entitlement if he is terminated without cause. These are outlined in the table below, and are conditional on the executive signing a full and final release and remaining bound by covenants in their employment agreements relating to:

• protection of confidential information (indefinitely)

• company ownership of our intellectual property (indefinitely)

• non-solicitation (24 months for Mr. Gori, Mr. Witherington and
Ms. Harrison; 12 months for Mr. Costantini)

• non-competition (12 months for Mr. Gori and Mr. Costantini; 18 months for
Mr. Witherington; 24 months for Ms. Harrison)

• non-disparagement (24 months for Mr. Gori, Mr. Costantini and
Ms. Harrison; indefinitely for Mr. Witherington).

Breaches of any of the covenants entitle Manulife to seek a court injunction, in addition to pursuing any other available rights and remedies. The named executives are also bound by the above covenants in the case of voluntary resignation or retirement.

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| | |
|:---|:---|
| <br> **Roy Gori** | Mr. Gori is entitled to:<br> • 24 months of compensation in lieu of notice comprised of base salary and target annual incentive<br> • an annual incentive payment calculated at target for the year in which his active employment ends, pro-rated based on the end date<br> • continued vesting and exercisability of share-based awards and stock options for 24 months following his termination date<br> • continued participation in the group benefits plan for 24 months (excluding life, short-term, and long-term disability insurance)<br>If he commences new employment during the severance period:<br> • he will no longer participate in the group benefits plans<br>If, after June 5, 2023, he and Manulife agree to a mutual separation:<br> • he is entitled to normal retirement treatment for purposes of his share-based awards and stock options<br>|

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| | |
|:---|:---|
| 2023 Management information circular | **99** |

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| | |
|:---|:---|
| <br> **Phil Witherington** | Mr. Witherington is entitled to:<br> • 18 months of compensation in lieu of notice comprised of base salary and target annual incentive<br> • an annual incentive payment calculated at target for the year in which his active employment ends, pro-rated based on the end date<br> • continuation of group benefits for 18 months (excluding life, short-term and long-term disability insurance)<br> • reimbursement of the costs for his relocation to Hong Kong, provided the relocation occurs within 10 months of his termination date<br>If he commences new employment or self-employment during the severance period:<br> • he will no longer participate in the group benefits plans<br> • severance payments will cease and he will be entitled to a lump sum payment of 50% of the remaining severance payments<br>|
| <br> **Marianne Harrison** | Ms. Harrison is entitled to:<br> • 18 months of compensation comprised of base salary and target annual incentive<br> • continuation of group benefits for 18 months (excluding life, short-term and long-term disability insurance). If she becomes ineligible for COBRA coverage during the severance period, she will no longer participate in the group benefits plan.<br>If she commences new employment or self-employment during the severance period, the severance payments that remain will be reduced by 50.0%<br>|

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Messrs. Costantini and Hartz do not have employment agreements that specify their entitlements if terminated without cause and, therefore, if they are terminated without cause, they may be eligible for severance under the terms and conditions of the John Hancock Officer Severance Pay Plan. The John Hancock Severance Pay Plan provides severance pay (inclusive of annual base salary and annual incentive bonus at target) and benefits continuation to eligible officers at the VP+ level based upon length of service, subject to a 52-week minimum and 78-week maximum severance period. To be eligible for severance under the John Hancock Officer Severance Pay Plan, the officer must (i) have a separation from service due to a reduction in staff, the elimination of the officer's position, a reorganization or restructuring, a substantial decrease in the duties or responsibilities of the officer's position, or John Hancock determined that the officer's qualifications no longer meet the business needs of the Company, (ii) sign a written agreement in a form prescribed by John Hancock, including a release of claims and certain post-employment restrictions, and (iii) satisfy all other terms and conditions as set forth in the John Hancock Officer Severance Pay Plan. The figures in the chart above showing the anticipated severance for Mr. Hartz and Mr. Costantini upon a termination without cause are calculated as of December 31, 2022 and assume, for purposes of this disclosure, that such terminations without cause satisfied all other criteria for eligibility under the John Hancock Officer Severance Pay Plan.

**Change in control** 

Mr. Gori is the only named executive who has a change in control agreement that protects him from losing employment benefits if there is a change in control. He entered into a change in control agreement when he was appointed President.

If there is a change in control and Mr. Gori's employment is terminated without cause or for good reason within a protection period that starts 90 days before a change in control and ends 24 months after the change in control, he is entitled to:

• two times his annual salary and two times his average annual incentive awarded in the prior three years

• full vesting and payment of outstanding awards, including those granted within the past year, while performance share
units remain subject to applicable performance conditions

• continuation of his group benefits for up to two years (excluding life and disability insurance)

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| | |
|:---|:---|
| **100** | Manulife Financial Corporation |

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Executive Compensation

• eligibility for relocation benefits in accordance with our customary relocation practices in effect in the named
executive's jurisdiction of residency until the earlier of the protection period (90 days before a change in control and ends 24 months after the change in control has ended) or six months following the date of his termination.

• extension of the period to exercise stock options to one year after the date of termination or the date specified in the
award (whichever is later, however it cannot be later than the actual option expiry date).

Mr. Gori's existing equity-based incentive awards will have accelerated vesting if, following a change in control, the successor employer does not assume or honour the awards, or offer equivalent awards under new substitute plans.

Change in control is described as any of the following:

• the incumbent directors no longer constitute at least a majority of the board

• any party becomes a beneficial owner holding directly or indirectly 35% of our voting shares

• our shareholders approve a merger, amalgamation, consolidation, statutory share exchange or a similar transaction
requiring the approval of shareholders, unless immediately following the transaction our shareholders retain majority voting control, no person would beneficially own 35% or more of our voting shares, and the incumbent directors constitute a
majority of the board

• our shareholders approve the complete liquidation or dissolution of Manulife or the sale of our assets, unless immediately
following the transaction pre-existing beneficial owners retain majority voting control, no person would beneficially own 35% or more of our voting shares, and the incumbent directors constitute a majority of
the board management of Manulife is transferred to a non-affiliated party.

Good reason is described as any of the following events during the protection period:

• we diminish Mr. Gori's position, authority or scope or scale of duties or responsibilities

• we require him to be based at a location more than 40 km from his current work location or to travel to a significantly
greater extent

• we reduce his annual base salary or do not increase it in line with adjustments to the base salary of other executives

• we reduce his target incentive awards

• we do not either continue or provide an alternative to Manulife's welfare benefit plans or programs for benefits,
perquisites and expense reimbursements

• we do not maintain reasonable and adequate indemnification for his services as an officer of Manulife.

**How a change in employment status affects equity compensation** 

The chart on the following page summarizes the treatment under the terms and conditions of the award agreements and plan documents of restricted share units (RSUs), performance share units (PSUs), stock options and deferred share units (DSUs) when a named executive retires, resigns, is terminated without cause or dies:

• treatment of the award on resignation or termination may be specified in the named executives' employment agreements
(see pages 99 and 100)

• if a named executive reaches normal or early retirement during the severance period that follows a termination without
cause, certain vested options may be exercised until the end of the severance period

• awards that have not vested may be forfeited if the executive breaches post-employment conditions. The named executives
are subject to non-competition and non-solicitation conditions for two years

• awards may be clawed back as the board can recoup or cancel the incentive awards if the named executive is involved in
fraud or a serious misconduct

• awards are forfeited if the named executive is terminated with cause

• restricted share units, performance share units, stock options, deferred share units and performance deferred share units
may be transferred to a beneficiary or an estate when a named executive dies.

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| | |
|:---|:---|
| 2023 Management information circular | **101** |

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | **Early retirement<sup>1, 2</sup>**<br> • 55 years old and<br>age plus<br>continuous service<br>totals at least 65 | **Normal<br>retirement<sup>1, 2</sup>**<br> • 65 years old, or<br>• 55 years old and<br>age plus<br>continuous service<br>totals at least 70 | **Resignation or<br>termination<br>without cause** | **Death** |
| <br> **RSUs/PSUs** | <br> ![LOGO](g427878g59w80.jpg)  | <br> Number is pro-rated<br>Payment on the scheduled payout date, subject to any performance conditions | <br> Number is pro-rated for grants within the first anniversary of the grant date<br>Vest in full for grants beyond the first anniversary of the grant date<br>Payment on the scheduled payout date, subject to any performance conditions<br>| <br> Forfeited on resignation<br>Number is pro-rated based on service from the date of grant on termination without cause | <br> Vest in full<br>Payment as of the date of death<br>Performance conditions are waived |
| <br> **Stock options** | <br> ![LOGO](g427878g59w80.jpg)  | <br> Unvested options terminate<br>Vested options can be exercised until the end of the term | <br> Unvested options are pro-rated for grants made in the previous 12 months<br>Unvested options continue to vest in full according to the vesting schedule<br>Vested options<br> can be exercised until the end of the<br> term | <br> Unvested options are forfeited upon resignation and continue to vest for 90 days upon termination without cause<br>Vested options can be exercised for a 90-day period beginning one year after resignation or termination without cause | <br> Unvested options vest<br>Vested options can be exercised within one year of the date of death |
| <br> **DSUs** | <br> ![LOGO](g427878g59w80.jpg)  | <br> Canadian executives must redeem vested awards by December 15 of the following year<br>U.S. executives can redeem vested awards on the date they've designated on their deferral election form | <br> Canadian executives must redeem vested awards by December 15 of the following year<br>U.S. executives can redeem vested awards on the date they've designated on their deferral election form | <br> Canadian executives must redeem vested awards by December 15 of the following year<br>U.S. executives can redeem vested awards on the date they've designated on their deferral election form | <br> Canadian executives must redeem vested awards by December 15 of the following year<br>U.S. executives can redeem vested awards on the date they've designated on their deferral election form |

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1 Named executive must notify us three months before retiring. Vested stock options that were granted up to and including in 2014 can be exercised for up to three years following retirement (defined as 55 years old and 10 years continuous service, while normal retirement is defined as 65 years old).

2 We changed our definitions of early and normal retirement effective January 27, 2020, to ensure award terms for mid- and later- career hires are competitive:

• early retirement: 55 years old and age plus continuous service totals at least 60

• normal retirement: 55 years old and age plus continuous services totals at least 65.

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| | |
|:---|:---|
| **102** | Manulife Financial Corporation |

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Executive Compensation

**Compensation oversight** 

How the board oversees executive compensation

&nbsp;&nbsp;&nbsp;&nbsp; The table on the following page explains the respective roles of Manulife's board, management and outside advisors in designing and awarding executive compensation.<br>We make sure Manulife's executive compensation program follows good governance practices by aligning it with the Financial Stability Board's (FSB) Principles for Sound Compensation Practices, the FSB's Implementation Standards and other governance best practices related to compensation.<br>We conduct an internal audit of the executive compensation program every year to confirm alignment with the FSB's Principles and Implementation Standards.<br>

**Independent advisor to the board** 

The management resources and compensation committee has retained Korn Ferry, a global consulting firm that provides independent advice on executive compensation. The committee began its relationship with Korn Ferry in November 2019.

As our independent advisor, Korn Ferry provides advisory services related to compensation decisions, insights into compensation trends and practices, and attends committee meetings.

The table below shows fees for services rendered by Korn Ferry for the past two years. Korn Ferry meets the requirements of an independent advisor and does not engage directly with Manulife without the committee's prior approval.

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| | | |
|:---|:---|:---|
|  | 2021 | 2022 |
| Executive compensation-related fees | $272710 | $425725 |
| All other fees | $1801806 | $3257579 |

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In 2022, Korn Ferry's advisory services to the committee also included a review of our peer groups and a thorough review of our annual and long-term incentive plan designs in the context of our implementation of IFRS 17. All other fees in 2022 were for benchmarking surveys, executive search services, and implementation of an executive development program.

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| | |
|:---|:---|
| 2023 Management information circular | **103** |

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| | | |
|:---|:---|:---|
| **Board of directors**<br>Oversees our overall approach to compensation, including alignment with sound risk management principles and Manulife's risk appetite<br>Approves:<br> • overall financial plans and strategy upon which the targets for our incentive programs are based<br> • major compensation decisions, including compensation for the CEO and other senior executives | **Board of directors**<br>Oversees our overall approach to compensation, including alignment with sound risk management principles and Manulife's risk appetite<br>Approves:<br> • overall financial plans and strategy upon which the targets for our incentive programs are based<br> • major compensation decisions, including compensation for the CEO and other senior executives | **Board of directors**<br>Oversees our overall approach to compensation, including alignment with sound risk management principles and Manulife's risk appetite<br>Approves:<br> • overall financial plans and strategy upon which the targets for our incentive programs are based<br> • major compensation decisions, including compensation for the CEO and other senior executives |
| **Board committees**<br>The board carries out its compensation-related responsibilities with the help of two board committees: the management resources and compensation committee and the risk committee<br>All board committee members are independent | <br> ![LOGO](g427878g09w29.jpg)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> See page 128 for<br>information about<br>director<br>independence |
| **Board committees**<br>The board carries out its compensation-related responsibilities with the help of two board committees: the management resources and compensation committee and the risk committee<br>All board committee members are independent | <br> ![LOGO](g427878g09w29.jpg)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> See page 128 for<br>information about<br>director<br>independence |

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| | |
|:---|:---|
| <br> You'll find more about each committee's members and responsibilities starting on page 30 | <br> You'll find more about each committee's members and responsibilities starting on page 30 |
| **Management resources and compensation committee**<br> • oversees our approach to human resources, including the executive compensation program<br> • recommends major compensation decisions to the board<br> • all members are knowledgeable, senior leaders with broad experience as a senior officer or board member of a major organization (public, private or not-for-profit), and the majority have experience in executive compensation<br> • there is cross-membership with the risk committee | **Risk committee**<br> • reviews the alignment of our incentive compensation plans with sound risk management principles and practices and our risk appetite<br> • the majority of members have knowledge of risk management, as well as technical knowledge of relevant risk principles<br> • there is cross-membership with the management resources and compensation committee |
| **Management's executive compensation committee**<br> • includes the Chief Risk Officer, the Chief Financial Officer and the Chief Human Resources Officer<br> • reviews incentive plan business performance measures, targets, weightings and results for alignment with our business strategy and risk management objectives<br> • monitors the incentive program designs of our peers<br> • reviews compensation program changes for alignment with our risk management objectives | **Chief Risk Officer**<br> • participates in management resources and compensation committee meetings where recommendations for the design of the compensation program are reviewed and approved to ensure there is informed discussion of the associated risks<br> • reviews the incentive compensation oversight process<br> • reviews changes to the compensation program with the risk committee to make sure they are in line with our risk management objectives<br> • is a member of management's executive compensation committee<br>|

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| | |
|:---|:---|
| **104** | Manulife Financial Corporation |

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Executive Compensation

Managing compensation risk

&nbsp;&nbsp;&nbsp;&nbsp; Compensation is aligned with the company's risk appetite and risk management objectives, and discourages inappropriate risk taking.<br>We use a compensation risk framework to structure how we manage the risks associated with the compensation program and the design features that mitigate these risks. The framework includes four categories, which shape the development of our compensation program. We assess our compensation program against the framework every year.<br>

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| | | | | |
|:---|:---|:---|:---|:---|
| **Business risk**<br>Business risk has two aspects:<br> • the risk that our compensation program encourages behaviour that is not in line with our business strategy, our risk appetite statement and our goal of generating long-term shareholder value<br> • the risk that the compensation program discourages the taking of healthy risks<br>We seek to manage both aspects of business risk by including performance measures in our incentive plans that align compensation with our business strategy and reflect the impact employees have on performance | **Talent risk**<br>Talent risk is the risk that our compensation program will not attract and retain talented employees<br>We seek to manage this risk by designing our compensation program to be competitive and appealing to the talent we want to attract | **Talent risk**<br>Talent risk is the risk that our compensation program will not attract and retain talented employees<br>We seek to manage this risk by designing our compensation program to be competitive and appealing to the talent we want to attract | **Performance risk**<br>Performance risk is the risk that our compensation program will not motivate employees to maintain high performance standards<br>We seek to manage this risk by including appropriate links between pay and performance and designing compensation to encourage executives to achieve performance objectives without taking undue risk | **Compliance and ethical risk**<br>Compliance and ethical risk is the risk that our compensation program will encourage employees to engage in questionable, unethical or illegal behaviour<br>We seek to manage this risk through strong oversight and control mechanisms, and by structuring our compensation program in a way that minimizes the potential incentive to breach compliance and ethical guidelines |
| **Business risk**<br>Business risk has two aspects:<br> • the risk that our compensation program encourages behaviour that is not in line with our business strategy, our risk appetite statement and our goal of generating long-term shareholder value<br> • the risk that the compensation program discourages the taking of healthy risks<br>We seek to manage both aspects of business risk by including performance measures in our incentive plans that align compensation with our business strategy and reflect the impact employees have on performance |  |  |  |  |
| **Business risk**<br>Business risk has two aspects:<br> • the risk that our compensation program encourages behaviour that is not in line with our business strategy, our risk appetite statement and our goal of generating long-term shareholder value<br> • the risk that the compensation program discourages the taking of healthy risks<br>We seek to manage both aspects of business risk by including performance measures in our incentive plans that align compensation with our business strategy and reflect the impact employees have on performance | <br>![LOGO](g427878g09w29.jpg)  | <br>See page 119 for information about our risk appetite and our enterprise risk management framework | <br>See page 119 for information about our risk appetite and our enterprise risk management framework | <br>See page 119 for information about our risk appetite and our enterprise risk management framework |

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|:---|:---|
| 2023 Management information circular | **105** |

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**Mitigating compensation risk** 

We seek to manage potential risk through our risk management policies, the design of our executive compensation program and proper oversight of our incentive plans. We also integrate our risk appetite into our incentive plans and performance assessments.

**Program design** 

• compensation award horizons are appropriately balanced between short and longer term

• incentive plans include several performance objectives, combining various performance scenarios

• incentive plan awards depend on both company performance and TSR, which links our strategy and risk appetite with
improving shareholder outcomes and capital strength

• performance share unit awards balance efficient use of capital and long-term equity growth

• compensation for the Chief Risk Officer, Global Compliance Chief, Chief Auditor, and Chief Actuary is not linked to our
business performance to promote unbiased oversight and advice to senior management and the board

• annual incentives for segment control function heads providing oversight are not directly linked to the performance of
businesses they oversee

**Incentive plan oversight** 

• the management resources and compensation committee oversees all incentive plans, including payout distribution, control
and monitoring processes and the potential impact they may have on business risk

• segment heads, with the support of their associated risk officers, human resources heads, and compliance officers, review
and approve significant changes to material segment incentive compensation plans, and attest annually that they do not generate inappropriate levels of business risk for the segment and for Manulife as a whole

• we stress test and back test compensation plan designs to make sure payouts under different scenarios are appropriate and
in line with our business performance

• the Chief Risk Officer and the risk committee also review the alignment of compensation plans with risk management
objectives

**Risk perspective in performance assessment** 

• individual risk management objectives are included in annual goals for all senior leaders

• we assess employees against risk management criteria to make sure they are mindful of the risks inherent in their jobs and
are working within the boundaries of our policies and practices, while still providing appropriate incentives for material risk takers to achieve our objectives

• performance assessments are expected to reflect how the employee contributed to managing our risk profile within our risk
appetite and also take into account any reports from internal audit, compliance or risk management highlighting inappropriate actions

• incentive compensation for material risk takers is adjusted for risk and considers reports from internal audit, compliance
and risk management. Any adjustments made are reported to the management resources and compensation committee

**Risk management policies** 

• **Clawbacks** – if a vice president or above commits fraud, theft, embezzlement or serious misconduct, whether or
not there is a financial restatement, the board can, at its discretion, cancel some or all of the executive's vested or unvested incentive awards, and require repayment of all or a portion of the incentive awards that have already been paid

• **Equity ownership requirements** – all executives are required to meet equity ownership requirements. The CEO and
CFO are required to maintain their equity ownership for one year after leaving Manulife

• **Share retention requirements** – the CEO and CFO must hold at least 50% of the net realized gains from the
exercise of stock options in common shares during their employment and for one year after leaving the company, to the extent they do not otherwise meet their equity ownership requirements

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|:---|:---|
| **106** | Manulife Financial Corporation |

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Executive Compensation

• **No hedging** – executives and directors are not allowed to use strategies (for example, short selling, or buying
or selling a call or put option or other derivatives) to hedge or offset a change in price of Manulife securities. This policy is incorporated into our code of business conduct and ethics. All employees and directors are required to certify
compliance with the code every year

**Equity ownership guidelines** 

Executives are required to own Manulife securities to align their interests with those of our shareholders.

Executives have five years from the date they are appointed or promoted to the position to meet the requirement. All of the named executives meet or exceed the equity ownership guidelines.

Deferred share units (DSUs), restricted share units (RSUs), performance share units (PSUs), common shares and preferred shares that executives own personally all qualify to meet the guideline, but stock options do not. We use the grant price or the current market price (whichever is higher) to calculate the value of awards and assume a performance factor of 100% for PSUs. Shares held personally are valued at the current market price.

The following table shows equity ownership for each named executive as at March 7, 2023

We calculated the value using a share price of the greater of $27.11, the closing price of Manulife common shares on the TSX on March 7, 2023, and the grant price. Salaries were converted to Canadian dollars using the exchange rate of US$1.00 = $1.3717 on that date.

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|  | Time at<br>level | Required<br>ownership<br>as multiple<br>of base<br> salary | RSUs | PSUs | DSUs | Personal<br>shareholdings | Total<br>holdings | Equity<br>ownership<br> as multiple<br> of base<br> salary |
| Roy Gori | 5.4 | 7.0 | $15336847 | $23978845 |  | $14189453 | $53505145 | 30.0 |
| Phil Witherington | 5.2 | 4.0 | $4722843 | $7373705 |  | $1272489 | $13369037 | 13.7 |
| Marc Costantini | 0.7 | 4.0 | $4301012 | $3086247 |  | $299052 | $7686311 | 7.6 |
| Marianne Harrison | 10.2 | 4.0 | $5329168 | $8393966 | $188579 | $1306315 | $15218028 | 14.3 |
| Scott Hartz | 4.0 | 4.0 | $4275781 | $6721523 |  | $3374066 | $14371370 | 14.0 |

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**Roy Gori** 

The total value of his personal shareholdings, including the 131,930 shares that remain in escrow, was $14,189,453, based on a share price of $27.11, the closing price of Manulife common shares on the TSX on Mar 7, 2023. The escrow account was established as part of the arrangement provided to Mr. Gori when he relocated to Toronto in 2017. See page 86 of our 2018 management information circular, which is available at manulife.com.

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| 2023 Management information circular | **107** |

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The decision-making process

&nbsp;&nbsp;&nbsp;We use the following process to determine compensation for the CEO, all executive leadership team members including the named executives, and heads of control functions. The executive leadership team is made up of our most senior leaders who have responsibility for setting our strategy. Base salaries are set in February of each year and any changes generally go into effect on March 1. Annual incentive funding is approved and awards are finalized in February of each year after the end of the prior fiscal year. Equity-based incentives are granted in February or March of each year following the release of our financial results.

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|:---|:---|:---|:---|
| <br>**Review plan design** | <br>**Review plan design** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br>![LOGO](g427878g59w80.jpg) <br>| Management presents its initial recommendations for compensation structure and supporting rationale for the upcoming year to the management resources and compensation committee. This includes:<br>• compensation components<br> • compensation mix<br> • performance measures<br>The management resources and compensation committee discusses the recommendations and provides feedback to management. The committee seeks advice and guidance about compensation issues from its independent compensation advisor, and may seek feedback from shareholders and proxy advisory firms<br>The risk committee reviews the risk management aspects of the program<br>Once the recommendations are finalized, the management resources and compensation committee recommends the compensation program and structure to the board for approval |
| <br>![LOGO](g427878g09w29.jpg) <br>| <br> See page 52 for this<br>year's compensation<br>program<br>|  | Management presents its initial recommendations for compensation structure and supporting rationale for the upcoming year to the management resources and compensation committee. This includes:<br>• compensation components<br> • compensation mix<br> • performance measures<br>The management resources and compensation committee discusses the recommendations and provides feedback to management. The committee seeks advice and guidance about compensation issues from its independent compensation advisor, and may seek feedback from shareholders and proxy advisory firms<br>The risk committee reviews the risk management aspects of the program<br>Once the recommendations are finalized, the management resources and compensation committee recommends the compensation program and structure to the board for approval |
|  |  |  | Management presents its initial recommendations for compensation structure and supporting rationale for the upcoming year to the management resources and compensation committee. This includes:<br>• compensation components<br> • compensation mix<br> • performance measures<br>The management resources and compensation committee discusses the recommendations and provides feedback to management. The committee seeks advice and guidance about compensation issues from its independent compensation advisor, and may seek feedback from shareholders and proxy advisory firms<br>The risk committee reviews the risk management aspects of the program<br>Once the recommendations are finalized, the management resources and compensation committee recommends the compensation program and structure to the board for approval |
|  |  |  | Management presents its initial recommendations for compensation structure and supporting rationale for the upcoming year to the management resources and compensation committee. This includes:<br>• compensation components<br> • compensation mix<br> • performance measures<br>The management resources and compensation committee discusses the recommendations and provides feedback to management. The committee seeks advice and guidance about compensation issues from its independent compensation advisor, and may seek feedback from shareholders and proxy advisory firms<br>The risk committee reviews the risk management aspects of the program<br>Once the recommendations are finalized, the management resources and compensation committee recommends the compensation program and structure to the board for approval |
|  |  |  | Management presents its initial recommendations for compensation structure and supporting rationale for the upcoming year to the management resources and compensation committee. This includes:<br>• compensation components<br> • compensation mix<br> • performance measures<br>The management resources and compensation committee discusses the recommendations and provides feedback to management. The committee seeks advice and guidance about compensation issues from its independent compensation advisor, and may seek feedback from shareholders and proxy advisory firms<br>The risk committee reviews the risk management aspects of the program<br>Once the recommendations are finalized, the management resources and compensation committee recommends the compensation program and structure to the board for approval |
|  |  |  | Management presents its initial recommendations for compensation structure and supporting rationale for the upcoming year to the management resources and compensation committee. This includes:<br>• compensation components<br> • compensation mix<br> • performance measures<br>The management resources and compensation committee discusses the recommendations and provides feedback to management. The committee seeks advice and guidance about compensation issues from its independent compensation advisor, and may seek feedback from shareholders and proxy advisory firms<br>The risk committee reviews the risk management aspects of the program<br>Once the recommendations are finalized, the management resources and compensation committee recommends the compensation program and structure to the board for approval |
|  |  |  | Management presents its initial recommendations for compensation structure and supporting rationale for the upcoming year to the management resources and compensation committee. This includes:<br>• compensation components<br> • compensation mix<br> • performance measures<br>The management resources and compensation committee discusses the recommendations and provides feedback to management. The committee seeks advice and guidance about compensation issues from its independent compensation advisor, and may seek feedback from shareholders and proxy advisory firms<br>The risk committee reviews the risk management aspects of the program<br>Once the recommendations are finalized, the management resources and compensation committee recommends the compensation program and structure to the board for approval |
|  |  |  | Management presents its initial recommendations for compensation structure and supporting rationale for the upcoming year to the management resources and compensation committee. This includes:<br>• compensation components<br> • compensation mix<br> • performance measures<br>The management resources and compensation committee discusses the recommendations and provides feedback to management. The committee seeks advice and guidance about compensation issues from its independent compensation advisor, and may seek feedback from shareholders and proxy advisory firms<br>The risk committee reviews the risk management aspects of the program<br>Once the recommendations are finalized, the management resources and compensation committee recommends the compensation program and structure to the board for approval |
|  |  |  | Management presents its initial recommendations for compensation structure and supporting rationale for the upcoming year to the management resources and compensation committee. This includes:<br>• compensation components<br> • compensation mix<br> • performance measures<br>The management resources and compensation committee discusses the recommendations and provides feedback to management. The committee seeks advice and guidance about compensation issues from its independent compensation advisor, and may seek feedback from shareholders and proxy advisory firms<br>The risk committee reviews the risk management aspects of the program<br>Once the recommendations are finalized, the management resources and compensation committee recommends the compensation program and structure to the board for approval |
|  |  |  | Management presents its initial recommendations for compensation structure and supporting rationale for the upcoming year to the management resources and compensation committee. This includes:<br>• compensation components<br> • compensation mix<br> • performance measures<br>The management resources and compensation committee discusses the recommendations and provides feedback to management. The committee seeks advice and guidance about compensation issues from its independent compensation advisor, and may seek feedback from shareholders and proxy advisory firms<br>The risk committee reviews the risk management aspects of the program<br>Once the recommendations are finalized, the management resources and compensation committee recommends the compensation program and structure to the board for approval |
|  |  |  | Management presents its initial recommendations for compensation structure and supporting rationale for the upcoming year to the management resources and compensation committee. This includes:<br>• compensation components<br> • compensation mix<br> • performance measures<br>The management resources and compensation committee discusses the recommendations and provides feedback to management. The committee seeks advice and guidance about compensation issues from its independent compensation advisor, and may seek feedback from shareholders and proxy advisory firms<br>The risk committee reviews the risk management aspects of the program<br>Once the recommendations are finalized, the management resources and compensation committee recommends the compensation program and structure to the board for approval |
|  |  |  | Management presents its initial recommendations for compensation structure and supporting rationale for the upcoming year to the management resources and compensation committee. This includes:<br>• compensation components<br> • compensation mix<br> • performance measures<br>The management resources and compensation committee discusses the recommendations and provides feedback to management. The committee seeks advice and guidance about compensation issues from its independent compensation advisor, and may seek feedback from shareholders and proxy advisory firms<br>The risk committee reviews the risk management aspects of the program<br>Once the recommendations are finalized, the management resources and compensation committee recommends the compensation program and structure to the board for approval |
|  |  |  | Management presents its initial recommendations for compensation structure and supporting rationale for the upcoming year to the management resources and compensation committee. This includes:<br>• compensation components<br> • compensation mix<br> • performance measures<br>The management resources and compensation committee discusses the recommendations and provides feedback to management. The committee seeks advice and guidance about compensation issues from its independent compensation advisor, and may seek feedback from shareholders and proxy advisory firms<br>The risk committee reviews the risk management aspects of the program<br>Once the recommendations are finalized, the management resources and compensation committee recommends the compensation program and structure to the board for approval |
|  |  |  | Management presents its initial recommendations for compensation structure and supporting rationale for the upcoming year to the management resources and compensation committee. This includes:<br>• compensation components<br> • compensation mix<br> • performance measures<br>The management resources and compensation committee discusses the recommendations and provides feedback to management. The committee seeks advice and guidance about compensation issues from its independent compensation advisor, and may seek feedback from shareholders and proxy advisory firms<br>The risk committee reviews the risk management aspects of the program<br>Once the recommendations are finalized, the management resources and compensation committee recommends the compensation program and structure to the board for approval |
|  |  |  | Management presents its initial recommendations for compensation structure and supporting rationale for the upcoming year to the management resources and compensation committee. This includes:<br>• compensation components<br> • compensation mix<br> • performance measures<br>The management resources and compensation committee discusses the recommendations and provides feedback to management. The committee seeks advice and guidance about compensation issues from its independent compensation advisor, and may seek feedback from shareholders and proxy advisory firms<br>The risk committee reviews the risk management aspects of the program<br>Once the recommendations are finalized, the management resources and compensation committee recommends the compensation program and structure to the board for approval |
|  |  |  | Management presents its initial recommendations for compensation structure and supporting rationale for the upcoming year to the management resources and compensation committee. This includes:<br>• compensation components<br> • compensation mix<br> • performance measures<br>The management resources and compensation committee discusses the recommendations and provides feedback to management. The committee seeks advice and guidance about compensation issues from its independent compensation advisor, and may seek feedback from shareholders and proxy advisory firms<br>The risk committee reviews the risk management aspects of the program<br>Once the recommendations are finalized, the management resources and compensation committee recommends the compensation program and structure to the board for approval |
| <br> **Set performance goals** | <br> **Set performance goals** | <br> ![LOGO](g427878g59w80.jpg)  | The board approves the individual performance goals of the CEO and other senior executives<br>The management resources and compensation committee:<br>• reviews, approves and recommends to the board the individual performance goals of the executive leadership team and heads of control functions<br> • reviews, approves and recommends to the board the business performance measures and financial targets for incentive plan purposes. Targets are aligned with the board-approved plans and are intended to be achievable yet provide a performance "stretch"<br> • reviews stress tests of different scenarios to set appropriate financial targets, performance peer group composition and plan changes |
| <br>![LOGO](g427878g09w29.jpg) <br>| <br> See pages 55 and 62<br>for this year's<br>performance goals<br>|  | The board approves the individual performance goals of the CEO and other senior executives<br>The management resources and compensation committee:<br>• reviews, approves and recommends to the board the individual performance goals of the executive leadership team and heads of control functions<br> • reviews, approves and recommends to the board the business performance measures and financial targets for incentive plan purposes. Targets are aligned with the board-approved plans and are intended to be achievable yet provide a performance "stretch"<br> • reviews stress tests of different scenarios to set appropriate financial targets, performance peer group composition and plan changes |
|  |  |  | The board approves the individual performance goals of the CEO and other senior executives<br>The management resources and compensation committee:<br>• reviews, approves and recommends to the board the individual performance goals of the executive leadership team and heads of control functions<br> • reviews, approves and recommends to the board the business performance measures and financial targets for incentive plan purposes. Targets are aligned with the board-approved plans and are intended to be achievable yet provide a performance "stretch"<br> • reviews stress tests of different scenarios to set appropriate financial targets, performance peer group composition and plan changes |
|  |  |  | The board approves the individual performance goals of the CEO and other senior executives<br>The management resources and compensation committee:<br>• reviews, approves and recommends to the board the individual performance goals of the executive leadership team and heads of control functions<br> • reviews, approves and recommends to the board the business performance measures and financial targets for incentive plan purposes. Targets are aligned with the board-approved plans and are intended to be achievable yet provide a performance "stretch"<br> • reviews stress tests of different scenarios to set appropriate financial targets, performance peer group composition and plan changes |
|  |  |  | The board approves the individual performance goals of the CEO and other senior executives<br>The management resources and compensation committee:<br>• reviews, approves and recommends to the board the individual performance goals of the executive leadership team and heads of control functions<br> • reviews, approves and recommends to the board the business performance measures and financial targets for incentive plan purposes. Targets are aligned with the board-approved plans and are intended to be achievable yet provide a performance "stretch"<br> • reviews stress tests of different scenarios to set appropriate financial targets, performance peer group composition and plan changes |
|  |  |  | The board approves the individual performance goals of the CEO and other senior executives<br>The management resources and compensation committee:<br>• reviews, approves and recommends to the board the individual performance goals of the executive leadership team and heads of control functions<br> • reviews, approves and recommends to the board the business performance measures and financial targets for incentive plan purposes. Targets are aligned with the board-approved plans and are intended to be achievable yet provide a performance "stretch"<br> • reviews stress tests of different scenarios to set appropriate financial targets, performance peer group composition and plan changes |
|  |  |  | The board approves the individual performance goals of the CEO and other senior executives<br>The management resources and compensation committee:<br>• reviews, approves and recommends to the board the individual performance goals of the executive leadership team and heads of control functions<br> • reviews, approves and recommends to the board the business performance measures and financial targets for incentive plan purposes. Targets are aligned with the board-approved plans and are intended to be achievable yet provide a performance "stretch"<br> • reviews stress tests of different scenarios to set appropriate financial targets, performance peer group composition and plan changes |
|  |  |  | The board approves the individual performance goals of the CEO and other senior executives<br>The management resources and compensation committee:<br>• reviews, approves and recommends to the board the individual performance goals of the executive leadership team and heads of control functions<br> • reviews, approves and recommends to the board the business performance measures and financial targets for incentive plan purposes. Targets are aligned with the board-approved plans and are intended to be achievable yet provide a performance "stretch"<br> • reviews stress tests of different scenarios to set appropriate financial targets, performance peer group composition and plan changes |
|  |  |  | The board approves the individual performance goals of the CEO and other senior executives<br>The management resources and compensation committee:<br>• reviews, approves and recommends to the board the individual performance goals of the executive leadership team and heads of control functions<br> • reviews, approves and recommends to the board the business performance measures and financial targets for incentive plan purposes. Targets are aligned with the board-approved plans and are intended to be achievable yet provide a performance "stretch"<br> • reviews stress tests of different scenarios to set appropriate financial targets, performance peer group composition and plan changes |
|  |  |  | The board approves the individual performance goals of the CEO and other senior executives<br>The management resources and compensation committee:<br>• reviews, approves and recommends to the board the individual performance goals of the executive leadership team and heads of control functions<br> • reviews, approves and recommends to the board the business performance measures and financial targets for incentive plan purposes. Targets are aligned with the board-approved plans and are intended to be achievable yet provide a performance "stretch"<br> • reviews stress tests of different scenarios to set appropriate financial targets, performance peer group composition and plan changes |
|  |  |  | The board approves the individual performance goals of the CEO and other senior executives<br>The management resources and compensation committee:<br>• reviews, approves and recommends to the board the individual performance goals of the executive leadership team and heads of control functions<br> • reviews, approves and recommends to the board the business performance measures and financial targets for incentive plan purposes. Targets are aligned with the board-approved plans and are intended to be achievable yet provide a performance "stretch"<br> • reviews stress tests of different scenarios to set appropriate financial targets, performance peer group composition and plan changes |
| <br>**Ongoing review of**<br> **market and trends**<br>|  | <br>![LOGO](g427878g59w80.jpg) <br>| The management resources and compensation committee:<br>• reviews and approves changes to the composition of the compensation and performance peer groups<br> • reviews the competitive positioning of target compensation against desired market positioning<br> • reviews ongoing trends |
| <br>![LOGO](g427878g09w29.jpg) <br>| <br> See page 50 for more<br>about compensation<br>benchmarking<br>|  | The management resources and compensation committee:<br>• reviews and approves changes to the composition of the compensation and performance peer groups<br> • reviews the competitive positioning of target compensation against desired market positioning<br> • reviews ongoing trends |
|  |  |  | The management resources and compensation committee:<br>• reviews and approves changes to the composition of the compensation and performance peer groups<br> • reviews the competitive positioning of target compensation against desired market positioning<br> • reviews ongoing trends |

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| **108** | Manulife Financial Corporation |

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Executive Compensation

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|:---|:---|:---|:---|
| <br> **Assess**<br> **performance** | <br> **Assess**<br> **performance** | <br> ![LOGO](g427878g59w80.jpg)  | The CFO presents and discusses the business performance results with the management resources and compensation committee<br>The independent advisor provides their perspective on the soundness of performance measures and standards used for the incentive plans<br>The management resources and compensation committee reviews the performance factors for the annual incentive plan and performance share units<br>The board reviews the performance results and assesses circumstances that might result in a discretionary adjustment, and then approves the performance factors<br>Management presents to the management resources and compensation committee a summary of any adjustments to incentive compensation for material risk takers resulting from reports from internal audit, compliance or risk management |
| <br>![LOGO](g427878g09w29.jpg)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br>See pages 58 and 65 for this year's performance results<br>|  | The CFO presents and discusses the business performance results with the management resources and compensation committee<br>The independent advisor provides their perspective on the soundness of performance measures and standards used for the incentive plans<br>The management resources and compensation committee reviews the performance factors for the annual incentive plan and performance share units<br>The board reviews the performance results and assesses circumstances that might result in a discretionary adjustment, and then approves the performance factors<br>Management presents to the management resources and compensation committee a summary of any adjustments to incentive compensation for material risk takers resulting from reports from internal audit, compliance or risk management |
|  |  |  | The CFO presents and discusses the business performance results with the management resources and compensation committee<br>The independent advisor provides their perspective on the soundness of performance measures and standards used for the incentive plans<br>The management resources and compensation committee reviews the performance factors for the annual incentive plan and performance share units<br>The board reviews the performance results and assesses circumstances that might result in a discretionary adjustment, and then approves the performance factors<br>Management presents to the management resources and compensation committee a summary of any adjustments to incentive compensation for material risk takers resulting from reports from internal audit, compliance or risk management |
|  |  |  | The CFO presents and discusses the business performance results with the management resources and compensation committee<br>The independent advisor provides their perspective on the soundness of performance measures and standards used for the incentive plans<br>The management resources and compensation committee reviews the performance factors for the annual incentive plan and performance share units<br>The board reviews the performance results and assesses circumstances that might result in a discretionary adjustment, and then approves the performance factors<br>Management presents to the management resources and compensation committee a summary of any adjustments to incentive compensation for material risk takers resulting from reports from internal audit, compliance or risk management |
|  |  |  | The CFO presents and discusses the business performance results with the management resources and compensation committee<br>The independent advisor provides their perspective on the soundness of performance measures and standards used for the incentive plans<br>The management resources and compensation committee reviews the performance factors for the annual incentive plan and performance share units<br>The board reviews the performance results and assesses circumstances that might result in a discretionary adjustment, and then approves the performance factors<br>Management presents to the management resources and compensation committee a summary of any adjustments to incentive compensation for material risk takers resulting from reports from internal audit, compliance or risk management |
|  |  |  | The CFO presents and discusses the business performance results with the management resources and compensation committee<br>The independent advisor provides their perspective on the soundness of performance measures and standards used for the incentive plans<br>The management resources and compensation committee reviews the performance factors for the annual incentive plan and performance share units<br>The board reviews the performance results and assesses circumstances that might result in a discretionary adjustment, and then approves the performance factors<br>Management presents to the management resources and compensation committee a summary of any adjustments to incentive compensation for material risk takers resulting from reports from internal audit, compliance or risk management |
|  |  |  | The CFO presents and discusses the business performance results with the management resources and compensation committee<br>The independent advisor provides their perspective on the soundness of performance measures and standards used for the incentive plans<br>The management resources and compensation committee reviews the performance factors for the annual incentive plan and performance share units<br>The board reviews the performance results and assesses circumstances that might result in a discretionary adjustment, and then approves the performance factors<br>Management presents to the management resources and compensation committee a summary of any adjustments to incentive compensation for material risk takers resulting from reports from internal audit, compliance or risk management |
|  |  |  | The CFO presents and discusses the business performance results with the management resources and compensation committee<br>The independent advisor provides their perspective on the soundness of performance measures and standards used for the incentive plans<br>The management resources and compensation committee reviews the performance factors for the annual incentive plan and performance share units<br>The board reviews the performance results and assesses circumstances that might result in a discretionary adjustment, and then approves the performance factors<br>Management presents to the management resources and compensation committee a summary of any adjustments to incentive compensation for material risk takers resulting from reports from internal audit, compliance or risk management |
|  |  |  | The CFO presents and discusses the business performance results with the management resources and compensation committee<br>The independent advisor provides their perspective on the soundness of performance measures and standards used for the incentive plans<br>The management resources and compensation committee reviews the performance factors for the annual incentive plan and performance share units<br>The board reviews the performance results and assesses circumstances that might result in a discretionary adjustment, and then approves the performance factors<br>Management presents to the management resources and compensation committee a summary of any adjustments to incentive compensation for material risk takers resulting from reports from internal audit, compliance or risk management |
|  |  |  | The CFO presents and discusses the business performance results with the management resources and compensation committee<br>The independent advisor provides their perspective on the soundness of performance measures and standards used for the incentive plans<br>The management resources and compensation committee reviews the performance factors for the annual incentive plan and performance share units<br>The board reviews the performance results and assesses circumstances that might result in a discretionary adjustment, and then approves the performance factors<br>Management presents to the management resources and compensation committee a summary of any adjustments to incentive compensation for material risk takers resulting from reports from internal audit, compliance or risk management |
|  |  |  | The CFO presents and discusses the business performance results with the management resources and compensation committee<br>The independent advisor provides their perspective on the soundness of performance measures and standards used for the incentive plans<br>The management resources and compensation committee reviews the performance factors for the annual incentive plan and performance share units<br>The board reviews the performance results and assesses circumstances that might result in a discretionary adjustment, and then approves the performance factors<br>Management presents to the management resources and compensation committee a summary of any adjustments to incentive compensation for material risk takers resulting from reports from internal audit, compliance or risk management |
|  |  |  | The CFO presents and discusses the business performance results with the management resources and compensation committee<br>The independent advisor provides their perspective on the soundness of performance measures and standards used for the incentive plans<br>The management resources and compensation committee reviews the performance factors for the annual incentive plan and performance share units<br>The board reviews the performance results and assesses circumstances that might result in a discretionary adjustment, and then approves the performance factors<br>Management presents to the management resources and compensation committee a summary of any adjustments to incentive compensation for material risk takers resulting from reports from internal audit, compliance or risk management |
|  |  |  | The CFO presents and discusses the business performance results with the management resources and compensation committee<br>The independent advisor provides their perspective on the soundness of performance measures and standards used for the incentive plans<br>The management resources and compensation committee reviews the performance factors for the annual incentive plan and performance share units<br>The board reviews the performance results and assesses circumstances that might result in a discretionary adjustment, and then approves the performance factors<br>Management presents to the management resources and compensation committee a summary of any adjustments to incentive compensation for material risk takers resulting from reports from internal audit, compliance or risk management |
| <br> **Finalize**<br> **Compensation** | <br> **Finalize**<br> **Compensation** | <br> ![LOGO](g427878g59w80.jpg)  | <br> The CEO discusses and approves the individual performance and compensation recommendations for all executive leadership team members and heads of control functions with the management resources and compensation committee<br>During sessions held without management, the management resources and compensation committee and the board discuss compensation for the CEO, all executive leadership team members and heads of control functions<br>The board exercises independent judgment when making final compensation decisions |
| <br>![LOGO](g427878g09w29.jpg) <br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br>See the named executive profiles starting on page 67 for details about their compensation this year<br>|  | <br> The CEO discusses and approves the individual performance and compensation recommendations for all executive leadership team members and heads of control functions with the management resources and compensation committee<br>During sessions held without management, the management resources and compensation committee and the board discuss compensation for the CEO, all executive leadership team members and heads of control functions<br>The board exercises independent judgment when making final compensation decisions |
|  |  |  | <br> The CEO discusses and approves the individual performance and compensation recommendations for all executive leadership team members and heads of control functions with the management resources and compensation committee<br>During sessions held without management, the management resources and compensation committee and the board discuss compensation for the CEO, all executive leadership team members and heads of control functions<br>The board exercises independent judgment when making final compensation decisions |
|  |  |  | <br> The CEO discusses and approves the individual performance and compensation recommendations for all executive leadership team members and heads of control functions with the management resources and compensation committee<br>During sessions held without management, the management resources and compensation committee and the board discuss compensation for the CEO, all executive leadership team members and heads of control functions<br>The board exercises independent judgment when making final compensation decisions |
|  |  |  | <br> The CEO discusses and approves the individual performance and compensation recommendations for all executive leadership team members and heads of control functions with the management resources and compensation committee<br>During sessions held without management, the management resources and compensation committee and the board discuss compensation for the CEO, all executive leadership team members and heads of control functions<br>The board exercises independent judgment when making final compensation decisions |
|  |  |  | <br> The CEO discusses and approves the individual performance and compensation recommendations for all executive leadership team members and heads of control functions with the management resources and compensation committee<br>During sessions held without management, the management resources and compensation committee and the board discuss compensation for the CEO, all executive leadership team members and heads of control functions<br>The board exercises independent judgment when making final compensation decisions |

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|:---|:---|
| 2023 Management information circular | **109** |

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Compensation of employees who have a material impact on risk

We are committed to ensuring our compensation program is aligned with the Financial Stability Board's (FSB) Principles for Sound Compensation Practices, the Financial Stability Board's Implementation Standards and other governance practices related to compensation. Our internal auditors conduct an annual independent review of the executive compensation program. The last audit was finalized in March 2022 and confirmed that we continued to be aligned with the FSB Principles and Standards. See page 103 for more information about our compensation governance practices.

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| ![LOGO](g427878g09w29.jpg) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; You can read about the management resources and compensation committee's composition and mandate in its report on page 33, and the compensation decision-making process and program design beginning on page 108 |

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**FSB PRINCIPLES AND BASEL COMMISSION FOR BANKING SUPERVISION** 

**PILLAR 3 REQUIREMENTS** 

The tables below show the breakdown of 2022 compensation for employees who have a material impact on our risk exposure (material employees). Material employees include:

• all executives including named executive officers who were members of the executive leadership team at any point in 2022,
and

• employees who have:

– authority and responsibility for policy-setting and implementation of controls, or

– significant influence, oversight and approval authority on general account assets, or

– oversight of a significant business unit that could have a material impact on our risk exposure.

Compensation awarded in U.S. dollars was converted to Canadian dollars using the exchange rates we used for the summary compensation table (see page 86).

**2022 compensation** 

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|:---|:---|:---|:---|:---|:---|:---|:---|
|  | ($ thousands)  | ($ thousands)  | ($ thousands)  | ($ thousands)  | ($ thousands)  | ($ thousands)  | ($ thousands)  |
| Number of<br> material<br> employees<br>| Total<br> compensation | Fixed<br> compensation | Variable compensation | Variable compensation | Non-deferred<br> compensation | Deferred<br>variable<br> compensation | Severance<br> payments |
| 44<br>| <br> $143128<br>| $32546 <br>| <br> Annual incentive plan<br>| $36434 <br>| $69015 <br>| $73663 <br>| $450 <br>|
|  |  |  | <br> Special awards<br>| $35 <br>|  |  |  |
|  |  |  | <br> RSUs<br>| $37634 <br>|  |  |  |
|  |  |  | <br> PSUs<br>| $32274 <br>|  |  |  |
|  |  |  | <br> Other medium-term<br>incentives<br>| $3755 |  |  |  |
|  |  |  | <br> Stock options<br>| <br> $0<br>|  |  |  |
|  |  |  | <br> Total<br>| <br> $110132<br>|  |  |  |

---

Manulife provided $1,937,500 sign-on bonuses to material employees in 2022. Sign-on bonuses, when provided, replace compensation employees forfeit when they leave their previous employer.

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| | |
|:---|:---|
| **110** | Manulife Financial Corporation |

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Executive Compensation

**Variable compensation** 

The annual incentive and grant values of restricted share units, performance share units and stock options awarded for 2022. With the exception of one retiree who left the company, all material employees received incentive awards for 2022.

**Deferred variable compensation** 

The total value of restricted share units, performance share units, deferred share units and stock options awarded for 2022.

**Severance payments** 

In 2022, severance payments were made to material employees as indicated above. Total severance amounts of $3.36 million were agreed to for these material employees. To protect employee privacy, we have provided information about the highest single severance amount agreed to in 2022 for a material employee to the Office of the Superintendent of Financial Institutions (OSFI) on a confidential basis. The number of terminations each year fluctuates depending on circumstances.

**DEFERRED COMPENSATION OUTSTANDING** 

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | ($ thousands) | ($ thousands) | ($ thousands) | ($ thousands) | ($ thousands) | ($ thousands) | ($ thousands) | ($ thousands) |
| Number of<br>material<br> employees | RSUs/PSUs/DSUs | RSUs/PSUs/DSUs | Stock options | Stock options | Total value of<br>deferred<br>compensation<br>outstanding<br>at year-end | Deferred<br>compensation<br>paid out<br>in 2022 | Value of<br>deferred<br>compensation<br>granted<br>in 2022 | Implicit<br>change in<br>deferred<br>compensation<br>value |
| Number of<br>material<br> employees | Outstanding<br>vested | Outstanding<br>unvested | Outstanding<br>vested | Outstanding<br>unvested | Total value of<br>deferred<br>compensation<br>outstanding<br>at year-end | Deferred<br>compensation<br>paid out<br>in 2022 | Value of<br>deferred<br>compensation<br>granted<br>in 2022 | Implicit<br>change in<br>deferred<br>compensation<br>value |
| 44 | $10121 | $163078 | $18165 | $865 | $192229 | $48101 | $73663 | $(10242) |

---

**Restricted share units, performance share units and deferred share units** 

Amounts are based on $24.15, the closing price of Manulife common shares on the TSX on December 31, 2022.

**Vested and unvested, unexercised in-the-money stock options** 

Amounts are the difference between the exercise price of the stock options and $24.15, the closing price of Manulife common shares on the TSX on December 31, 2022.

**Other medium-term incentives** 

Some material risk takers participate in medium-term incentive plans outside of our RSU/PSU/stock option plans. These plans are based on an internal book value of a business or the market value of funds managed.

**Deferred compensation paid out in 2022** 

The total value of restricted share units and performance share units vested and paid out and any gains from stock options exercised in 2022.

**Implicit change in deferred compensation value** 

The increase (or decrease) in value of deferred compensation due to any change in share price and performance vesting conditions.

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| | |
|:---|:---|
| 2023 Management information circular | **111** |

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## Governance at Manulife
We believe that excellent corporate governance is critical to our long-term success – for us, our shareholders and our customers. Our board of directors sets the tone at the top, promoting a strong culture of integrity and ethical behaviour throughout our entire organization.

Our governance policies and practices are consistent in all material respects with the various rules and requirements that apply to us, including:

• Insurance Companies Act (Canada)

• corporate governance guidelines established by OSFI and the Canadian Securities Administrators

• U.S. Securities and Exchange Commission rules and regulations

• TSX corporate governance guidelines

• New York Stock Exchange corporate governance rules for domestic issuers.

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| | |
|:---|:---|
| ![LOGO](g427878g09w29.jpg) | **Where to find it** |

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **[About the Manulife board](#tx427878_69)** | **115** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board committees](#tx427878_70) | 118 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board roles and responsibilities](#tx427878_71) | 118 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Promoting a culture of integrity and ethical behaviour](#tx427878_72) | 118 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Strategic planning](#tx427878_73) | 119 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Risk oversight](#tx427878_74) | 119 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Leadership development and succession](#tx427878_75) | 121 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Communications and shareholder engagement](#tx427878_76) | 124 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Subsidiary governance](#tx427878_77) | 126 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **[Serving as a director](#tx427878_78)** | **127** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Serving on other boards](#tx427878_79) | 127 |

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Integrity](#tx427878_80) | 127 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Equity ownership](#tx427878_81) | 127 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Term limits](#tx427878_82) | 127 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Independence](#tx427878_83) | 128 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Board succession and diversity](#tx427878_84) | 129 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Skills and experience](#tx427878_85) | 130 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Director development](#tx427878_86) | 132 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Assessment](#tx427878_87) | 133 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **[Other information](#tx427878_88)** | **135** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Sustainability and ESG](#tx427878_89) | 135 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Liability insurance](#tx427878_90) | 136 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Loans to directors and officers](#tx427878_91) | 136 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Directors' approval](#tx427878_92) | 136 |

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| | |
|:---|:---|
| **112** | Manulife Financial Corporation |

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Governance at Manulife

**What we do** 

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> ![LOGO](g427878g81t59.jpg)  | **Independence**<br> • All our directors are independent (except for the CEO) and all members of the board's committees are independent<br> • Board committees can retain independent advisors<br> • The roles of Chair of the Board and CEO are separate<br> • We have an annual strategic planning meeting separate from regular board meetings<br> • In camera sessions are held at every board and committee meeting |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> ![LOGO](g427878g81t59.jpg)  | **Ethics and integrity**<br> • We promote a strong culture of integrity and ethical behavior, and have an Ethics Hotline where anyone, including employees or third parties, can file a confidential report on ethics matters<br> • We require all directors to certify compliance with our code of business conduct and ethics every year |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> ![LOGO](g427878g81t59.jpg)  | **Leadership and development**<br> • We provide directors with an orientation program as well as continuing education<br> • We require members of the risk committee and corporate governance and nominating committee to take at least one externally facilitated session or course on cybersecurity and ESG, respectively, every two years<br> • The board has a formal annual self-assessment process<br> • We continuously monitor board succession requirements and director candidates, maintain a skills matrix for directors and, where appropriate, use an independent search firm to assist in board recruiting |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> ![LOGO](g427878g81t59.jpg)  | **Diversity and succession**<br> • We have a board diversity policy (including, among other characteristics that may be identified from time to time, gender, age, race, ethnicity, culture, disability, sexual orientation and geographic representation)<br> • The board strives to maintain parity between men and women among the independent directors, and has established a specific objective that at least 40% of the independent directors are women, recognizing that board composition may fluctuate from time to time during periods of transition. To maintain an appropriate gender balance, no more than 60% of the independent directors will be from any one gender, subject to temporary fluctuations during periods of transition.<br> • We have an ongoing process to identify board succession candidates whose skills align with the key competencies and experience necessary to support our operations as well as promote the diversity objectives of the board diversity policy<br> • Search firms must identify and present diverse and balanced slates of potential director candidates, including those from underrepresented groups such as women, members of a visible minority as defined in the Employment Equity Act (Canada), Indigenous peoples, people with disabilities and members of the 2SLGBTQ+ community<br> • Diversity and inclusion is embedded in our global talent management, talent acquisition and leadership programs<br> • Shareholders elect individual directors annually<br> • We have a majority voting policy and director term limits |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> ![LOGO](g427878g81t59.jpg)  | **Shareholder engagement and alignment**<br> • We have a robust shareholder engagement program with publicly available shareholder engagement principles<br> • We require directors and executives to meet equity ownership guidelines<br> • We have a proxy access policy |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> ![LOGO](g427878g81t59.jpg)  | **Risk oversight**<br> • We have strong risk oversight, carried out by the board and supported by the risk committee<br> • The audit and risk committees have joint meetings at least once a year |

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| | |
|:---|:---|
| 2023 Management information circular | **113** |

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| | |
|:---|:---|
| &nbsp;&nbsp; **What we don't do** | &nbsp;&nbsp; **What we don't do** |
| &nbsp;&nbsp; ![LOGO](g427878g63z46.jpg)  | **No hedging of Manulife securities**<br> • No director, executive or employee can monetize or hedge Manulife common shares or equity awards |
| &nbsp;&nbsp; ![LOGO](g427878g63z46.jpg)  | **No stock options, perquisites, severance, pension or retirement benefits or participation in an equity-based compensation plan, other than receiving deferred share units or common shares in lieu of cash compensation, for non-executive directors** |
| &nbsp;&nbsp; ![LOGO](g427878g63z46.jpg)  | **No slate voting for directors**<br> • Shareholders can vote for or withhold their vote from individual directors |
| &nbsp;&nbsp; ![LOGO](g427878g63z46.jpg)  | **No staggered voting for directors**<br> • We have annual elections for all directors |
| &nbsp;&nbsp; ![LOGO](g427878g63z46.jpg)  | **No unequal voting structure**<br> • We do not have dual-class or subordinate voting shares |
| &nbsp;&nbsp; ![LOGO](g427878g63z46.jpg)  | **No tie-breaking vote**<br> • Our Chair of the Board does not have a deciding vote in the event of a tie at the board |

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|:---|:---|
| **114** | Manulife Financial Corporation |

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Governance at Manulife

About the Manulife board

The board is responsible for overseeing our business and affairs as set out in the board's mandate. You can read about the board's responsibilities in more detail beginning on page 118, and you will find a copy of the board's mandate on manulife.com as well as on SEDAR (sedar.com). The board carries out its responsibilities directly and through its four committees, which you can read about beginning on page 117.

Other than the CEO, all of our directors are independent, and all members of the board's committees are independent. This ensures the board and committees can effectively oversee all aspects of our business and act in Manulife's best interests.

The board needs a mix of certain competencies, experience and personal qualities for proper oversight and effective decision-making, and sets its size and composition accordingly. The board routinely reviews its size and make-up with the corporate governance and nominating committee, and may appoint new directors to the board between annual meetings. You can read more about board diversity and the competencies and experience of our directors beginning on page 129.

The board and each of its committees set aside time at each meeting to meet without management present.

The board holds monthly update calls to keep directors informed between regularly scheduled meetings.

The corporate governance and nominating committee reviews the board mandate annually. The board mandate, committee charters and position descriptions for the Chair of the Board, committee chairs, individual directors and the CEO are posted on manulife.com.

**Year in review**<br> The board continued to enhance its governance practices in the past year:<br> • in anticipation of John Cassaday reaching his term limit in 2023, completed a comprehensive succession process for the Chair of the Board, led by a group of independent directors and facilitated by a former independent board member, with significant involvement from all members of the board, resulting in Don Lindsay's unanimous appointment as Chair of the Board effective February 15, 2023<br> • reviewed committee membership in light of the Chair of the Board succession process, implementing changes to ensure continued effective oversight<br> • continued focus on board succession and renewal, incorporating diversity objectives and focus on skills in areas critical to Manulife's ongoing growth and ambitions for the future<br> • continued to enhance the new director orientation and education programs, including an in-depth review of our director education program in light of evolving trends and introduced an additional requirement that directors take specialized education programs in key areas of focus based on committee membership. Starting in 2023, members of the corporate governance and nominating committee must take at least one externally facilitated ESG-related education session and members of the risk committee must take at least one externally facilitated cybersecurity-related education session every two years. <br> • expanded the use of board focus groups to delve more deeply into key topics<br> • increased board focus on, and engagement in respect of, ESG matters<br> • implemented a hybrid meeting schedule (in-person vs. virtual) given the global nature of board to ensure optimal participation from all directors and to help attract talented directors from across the globe.<br> • completed, with the assistance of an independent consultant, a review of director compensation resulting in a 12% increase, to align with companies of similar complexity. The increase is received entirely in equity, raising the mandatory equity portion of the board retainer to $127,500 (approximately 55% of the board retainer).<br>

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| | |
|:---|:---|
| 2023 Management information circular | **115** |

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**Contacting the board** 

Our board of directors values regular and constructive engagement with shareholders, and encourages shareholders to express their views on governance matters directly to the board. If you have questions about our governance practices, you can send them to the Chair of the Board at the following address:

Chair of the Board

Manulife Financial Corporation

200 Bloor Street East

Toronto, Ontario M4W 1E5

Canada

Email: corporate_governance@manulife.com

If your question relates to a board committee matter, please address your note to the chair of the appropriate committee.

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|:---|:---|
| **116** | Manulife Financial Corporation |

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Governance at Manulife

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| | | | | |
|:---|:---|:---|:---|:---|
| <br> **Chair of the Board**<br> provides independent board leadership and oversight | <br> **Chair of the Board**<br> provides independent board leadership and oversight | <br> **Chair of the Board**<br> provides independent board leadership and oversight | <br> **Chair of the Board**<br> provides independent board leadership and oversight | <br> **Chair of the Board**<br> provides independent board leadership and oversight |
| <br> **Board of directors**<br> oversees:<br> • culture of integrity and ethics<br> • strategic planning<br> • risk management<br> • leadership development and succession planning | <br> **Board of directors**<br> oversees:<br> • culture of integrity and ethics<br> • strategic planning<br> • risk management<br> • leadership development and succession planning | <br> **Board of directors**<br> oversees:<br> • culture of integrity and ethics<br> • strategic planning<br> • risk management<br> • leadership development and succession planning | <br> • corporate governance<br> • internal controls<br> • communications and public disclosure | <br> • corporate governance<br> • internal controls<br> • communications and public disclosure |
| <br> **Audit committee**<br> • oversees the external auditors, internal control over financial reporting and our finance, actuarial, internal audit and global compliance functions<br> • serves as the conduct review committee<br> • reviews our compliance with legal and regulatory requirements |  | <br> **Corporate governance and nominating committee**<br> • develops our governance policies, practices and procedures<br> • develops and oversees the approach to director succession and development, including approach to diversity<br> • develops and oversees the process for assessing effectiveness of the board, its committees and individual directors<br> • oversees director compensation<br> • oversees the company's ESG framework, including matters related to climate change<br>| <br> **Management resources and compensation committee**<br> oversees:<br> • our global human resources strategy, policies and programs<br> • management succession<br> • executive compensation<br> • pension plan governance | <br> **Risk committee**<br> oversees:<br> • the management of our principal risks<br> • our programs and procedures to manage those risks |
| <br> **Management**<br> • reports to the committees and the board<br> • control functions such as finance, risk, compliance and internal audit operate independently of the business units | <br> **Management**<br> • reports to the committees and the board<br> • control functions such as finance, risk, compliance and internal audit operate independently of the business units | <br> **Management**<br> • reports to the committees and the board<br> • control functions such as finance, risk, compliance and internal audit operate independently of the business units | <br> **Management**<br> • reports to the committees and the board<br> • control functions such as finance, risk, compliance and internal audit operate independently of the business units | <br> **Management**<br> • reports to the committees and the board<br> • control functions such as finance, risk, compliance and internal audit operate independently of the business units |

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| | |
|:---|:---|
| 2023 Management information circular | **117** |

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**Board committees** 

The board has four committees to help carry out its mandate:

• audit committee

• corporate governance and nominating committee

• management resources and compensation committee

• risk committee

Each committee is made up entirely of independent directors and has a committee charter. Committees set aside time at each meeting to meet in camera (without management present) and may also use part of this time to meet with independent advisors and individual members of management.

Committee chairs report to the board, providing updates on the committee's deliberations and any recommendations that require the board's approval.

Committees review their charter every year and update it as necessary. They also conduct an assessment of the committee's performance and effectiveness in carrying out the responsibilities set out in its charter. Each committee considers the results when developing its priorities and work plan for the coming year.

The corporate governance and nominating committee reviews committee composition at least once a year and adjusts committee membership as appropriate. The CEO is not involved in any of these decisions.

You can access the committee charters and position description for each committee chair on manulife.com and read the 2022 committee reports beginning on page 30.

**Independent advice** 

The board and committees may retain outside advisors to receive independent advice, and we pay for the cost of these services.

**Board roles and responsibilities** 

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| |
|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **The board and ESG**<br> ESG (environment, social and governance) crosses several aspects of the board's roles, including culture, strategic planning, risk oversight, leadership and compensation, diversity and disclosure. The corporate governance and nominating committee oversees Manulife's ESG framework, including matters related to climate change. On a regular basis, the corporate governance and nominating committee is updated on relevant climate topics, including our progress against the commitments set out in Manulife's Climate Action Plan. Starting in 2023, members of the corporate governance and nominating committee must take at least one externally facilitated ESG-related education session every two years.  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; You can read more about the board's activities on the following pages, and in our 2022 ESG Report (published in the second quarter of 2023). |

---

Among other things, the board is responsible for approving our strategy, risk oversight, leadership development, and succession planning. It reviews and approves our financial statements, significant investments, the raising of capital and other significant matters such as significant mergers, acquisitions and divestitures.

**1 — PROMOTING A CULTURE OF INTEGRITY AND ETHICAL BEHAVIOUR**

The board and management promote a strong culture of integrity and ethical behaviour.

Our code of business conduct and ethics applies to all directors, officers and employees and sets out the importance of Manulife's values, ethics in the workplace and our business relationships, avoiding conflicts of interest, protecting our assets, and prompt reporting of illegal or unethical behaviour.

All Manulife directors, officers and employees have a duty to comply with the code and to report an incident if they suspect fraud or other unethical behaviour or wrongdoing, including a

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|:---|:---|
| **118** | Manulife Financial Corporation |

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Governance at Manulife

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Anyone, including third parties, can contact our Global Compliance Office, or file a confidential report by contacting our Ethics Hotline, 24 hours a day, 7 days a week.<br>Reports can be made anonymously. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Anyone, including third parties, can contact our Global Compliance Office, or file a confidential report by contacting our Ethics Hotline, 24 hours a day, 7 days a week.<br>Reports can be made anonymously. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Online<br> By phone | manulifeethics.com<br> 1-866-294-9534<br> (toll free in North America)<br>|

---

breach relating to accounting, auditing or internal controls. The code makes it clear that an individual can report suspected or potential illegal or unethical behavior without fear of retaliation for any report made in good faith.

Each year everyone subject to the code must <br>complete annual training and confirm that they <br>have read and comply with the code. The audit <br>committee monitors compliance with the code <br>and reviews the code every year.

Some limited aspects of the code can be waived for directors and senior executives in exceptional situations if approved by the board on the recommendation of the audit committee, and promptly disclosed. To date, the board has not waived any aspect of the code. You can access a copy of the code on manulife.com.

**2 — STRATEGIC PLANNING** 

The board and senior management hold an annual strategic planning meeting, separate from regular board meetings, where board members and management review Manulife's strategy and discuss emerging trends, the competitive environment, risk issues and any significant business issues or products as important context for our strategic direction. The strategic planning meeting focuses on key areas of importance to the company's strategy, such as key businesses and break-out growth areas, culture and talent, and enterprise initiatives, and whether any changes to the current strategy are required.

Management develops strategic, financial and capital plans, our risk appetite and allocation of resources. The strategic business plans include the strategy and related opportunities and risks for Manulife and each of our business segments.

The board reviews the plans, risk appetite and resource allocation, consults further with management and considers any other key issues before it approves them.

The board monitors management's progress on strategic plans throughout the year. It receives regular updates from the CEO and management on strategic developments and our performance against the strategic plan, and oversees adjustments management makes to the plans to reflect new conditions or environmental factors.

The strategic planning meeting is often held outside Canada to give the board an opportunity to visit our global operations and meet with employees in those operations. The 2022 meeting was held in New York City.

**3 — RISK OVERSIGHT** 

The company's strategic direction drives our overall risk appetite. All risk-taking activities are managed within Manulife's risk appetite framework, which defines the amount and types of risks the company is willing to assume in pursuit of its objectives.

The company's risk appetite has three components: risk-taking philosophy, risk appetite statements, and risk limits and tolerances.

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| | |
|:---|:---|
| 2023 Management information circular | **119** |

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| | |
|:---|:---|
| The activities required to achieve our strategy are guided by our values and involve elements of risk-taking. When making decisions about risk-taking and risk management, we place a priority on the following risk management objectives:<br> • to safeguard the commitments and expectations established with our customers, creditors, shareholders and employees<br> • to support the successful design and delivery of customer solutions through the development of innovative product solutions, and through providing customer-centric digital experiences<br> • to prudently and effectively deploy the capital invested in the company by shareholders with appropriate risk/return profiles<br> • to invest wealth and asset management's customer assets consistent with their objectives<br> • to achieve and maintain a high level of operational resilience<br> • to safeguard the well-being of our employees, and promote a diverse, equitable and inclusive business environment<br> • to protect and/or enhance our reputation and brand<br> • to maintain the company's targeted financial strength rating.<br>While we pursue risks that we believe we can appropriately analyze and monitor, we also manage risks that arise outside of our direct influence. We recognize that risk exposures change over time. If exposures materially increase, we will activate management actions designed to bring exposures back to desired levels. As an integrated component of our business model, risk management assists the company in achieving our objectives and in reaching higher levels of operational excellence, while encouraging transparency and organizational learning. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Managing climate-related risks and opportunities**<br> As part of its ESG oversight responsibilities, the corporate governance and nominating committee oversees matters related to climate change, and receives regular reports on relevant climate topics, including our progress against the commitments set out in Manulife's Climate Action Plan (see page 135).<br>The Executive Risk Committee and the board's risk committee consider climate-related risks and opportunities through the ongoing monitoring and reporting of emerging risks. The identification and assessment of climate-related risks is guided by our Environmental Risk Policy, which sets out an enterprise-wide framework for the management of environmental risks within our business activities.<br>In 2022, we continued to monitor climate-related risk and opportunities within our business strategy over short (1-5 year), medium (5-15 year), and long term (more than 15 year) time horizons to better assess the relative significance of potential impacts and how and when actions are required to address them. Our 2022 management's discussion and analysis includes disclosures related to our climate risk governance, risk management, strategy, and targets. Please also refer to the 2022 ESG Report (published in the second quarter of 2023), for detailed disclosure of the Financial Stability Board's Task Force on Climate-related Financial Disclosures (TCFD) recommendations and our performance. |

---

We categorize the risks we face into five principal areas, to identify, measure, assess and manage our risk profile: strategic, market, credit, product, and operational.

The board looks to the audit committee, risk committee and management resources and compensation committee to assist in overseeing certain areas of risk:

• audit committee

– oversees compliance with legal and regulatory requirements

– oversees policies and internal control systems for effectiveness to mitigate our exposure to financial reporting risk

– reviews our quarterly and annual financial statements and related disclosure before recommending them to the board for their review and approval

• risk committee

– reviews and assesses our principal risks, including our overall risk profile and reviewing our risk appetite

– reviews and assesses our evolving risks

– reviews the risk impact of the business plan and new business initiatives

– oversees the risk management function

– oversees our compliance with risk management policies

– evaluates the company's risk culture

• management resources and compensation committee and risk committee

– reviews our executive compensation program to ensure alignment against our risk management principles and our risk appetite

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| | |
|:---|:---|
| **120** | Manulife Financial Corporation |

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Governance at Manulife

Each director, other than the Chair of the Board, sits on two committees. There is cross-membership between the management resources and compensation committee and the risk committee, and the corporate governance and nominating committee and the audit committee, which adds depth to committee deliberations. The audit committee and risk committee have at least one joint meeting every year.

The board meets directly with OSFI, our principal regulator, every year, and there are regular meetings between the Chair of the Board and OSFI throughout the year.

**Enterprise risk management (ERM) framework** 

Our ERM framework provides a structured approach to risk-taking and risk management activities across the enterprise, supporting our long-term revenue, earnings, and capital growth strategy. It is communicated through risk policies and standards, which are intended to enable consistent design and execution of strategies across the organization. We have a common approach to managing all risks we are exposed to, and to evaluating potential directly comparable risk-adjusted returns on contemplated business activities.

Our risk management practices are influenced and impacted by external and internal factors (such as economic conditions, political environments, technology and risk culture), which can significantly impact the levels and types of risks we might face in pursuit of strategically optimized risk-taking and risk management. Our ERM framework incorporates relevant impacts and mitigating actions as appropriate.

As part of our ERM framework, we have a compensation risk framework in place to support the governance and design of controls for the risks associated with the compensation program. Our compensation programs are assessed against this framework every year.

The enterprise-wide information security program, which is overseen by the Chief Information Risk Officer, seeks to mitigate information security risks. This program establishes the information and cyber security framework for the company, including governance, policies and standards, and appropriate controls to protect information and computer systems. We also have ongoing security awareness training sessions for all employees.

**Compliance and reporting** 

Management oversees the principal risks and implementation of controls to manage risk, and regularly assesses whether there are any material deficiencies. They update the board on our principal risks at least quarterly.

**Controls and certifications** 

We update our risk policies, risk management processes, internal controls and management information systems regularly to make sure they match our risk profile and comply with regulatory requirements. We also perform stress testing on an ongoing basis to support the way we identify, assess and mitigate risk.

The CEO and CFO certify our disclosure controls and procedures, annual financial statements and quarterly financial statements, among other things, to meet legal and regulatory requirements.

**4 — LEADERSHIP DEVELOPMENT AND SUCCESSION** 

The management resources and compensation committee reviews our approach to human resources, talent management, compensation and the succession planning process for senior executives.

**Diversity** 

We value a high performing workforce that reflects the diversity of our customers and the communities where we operate. We believe that a diverse workforce, especially in leadership roles, can enhance performance, foster innovation and improve business results.

We are committed to developing a more diverse and inclusive workforce that is more representative of our customer base and has more women and Black, Indigenous, and People of Colour (BIPOC) in leadership positions.

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Roy Gori has signed the Catalyst Accord 2022, committing to increase the percentage of women in executive positions in Canada to 30% or greater by 2022. We have established action plans to drive accountability for greater diversity in our workforce.

We are increasing our efforts in hiring, supporting and creating awareness of people with disabilities (PWD) through various initiatives globally to attract and hire PWDs. In 2022, we provided additional sensitivity training to our recruiters and hiring managers, as well as improving efforts to make us more accessible in physical and system accommodations.

In 2020, we announced leadership and recruitment goals to increase the representation of BIPOC employees across our North American businesses. This includes increasing BIPOC representation in leadership roles (director level and above) by 30% by 2025 and annually hiring at least 25% BIPOC talent into new graduate program positions across our businesses and functions. In addition to these commitments, we have signed on to a pledge with the BlackNorth Initiative in Canada, as well as the CEO Action for Diversity and Inclusion pledge in the U.S. Both of these efforts align with our objective of advancing diversity and inclusion in the workplace.

Our global executive Diversity, Equity and Inclusion (DEI) Council guides, supports and facilitates the implementation of our DEI strategy. Chaired by our CEO, the DEI Council is made up of executive leaders who are passionate about DEI. There are 13 employee resource groups (ERG) with 39 chapters and more than 13,000 members. Open to all employees, ERGs support local employee engagement, champion our larger DEI initiatives and provide opportunities for personal and professional development.

The table below shows the number of women in leadership positions at Manulife and our subsidiaries:

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| | | |
|:---|:---|:---|
| (as at February 28, 2023) |  |  |
| Women in senior leadership roles (vice president and higher) | 170 of 523 | 33% |
| Women in senior officer roles (senior vice president and higher) | 24 of 100 | 24% |
| Women on the executive leadership team | 3 of 15 | 20% |

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Increasing the representation of women and BIPOC leaders is a priority in our corporate strategy. We have made headway in Asia by increasing representation of people with disabilities, and we've made other tangible progress in the following areas:

*Recruiting* 

• building representation of BIPOC professionals through focused recruitment efforts from diverse post-secondary schools
across North America

• incorporating diversity into the ongoing review and discussion of our succession candidates

• continuing to enhance sourcing, assessment and selection of potential employees. We follow a formal recruitment process
where all vacancies are posted internally and externally, and all executive search vendors must ensure their slate of candidates is diverse and includes a focus on women

• implementing diverse slate requirements internally to increase hire and promotion rates of diverse candidates. To support
diverse candidate slates, we introduced the use of technology in our hiring process that reduces biased job posting language and hired two dedicated diverse candidate recruiters. All recruiters are trained in inclusive hiring practices

*Development and training* 

• accelerating development program opportunities for mid-career BIPOC leaders and
leaders of our ERGs

• offering internal and external training and development programs for members of diverse employee groups

• providing unconscious bias training for all employees

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Governance at Manulife

• providing programs designed to educate and train all employees that go beyond our mandatory unconscious bias training,
including regular listening forums to foster conversations and build inclusion across our global team, allyship resources and targeted training for all managers on leading inclusively. We partnered with Accenture to launch two learning platforms for
all leaders in late 2020: All Against Racism (North America) and Inclusive Leadership (Asia). Through PURSUIT, our internal learning platform, we have curated various learning modules covering different aspects of DEI including disabilities,
cultural awareness and DEI essentials

• communicating transparently to employees about diversity and profiling leaders who demonstrate authenticity

• continuing to provide dedicated support and development of our internal employee communities for women and BIPOC employees
that focus on professional development and networking. This includes our GWA (Global Women's Alliance), VIBE (Valuing the Inclusion of Black Experiences), IPTA (Indigenous Peoples and Their Allies), AMP US (Association of Multicultural
Professionals), PACES (Pan-Asian Community for Employee Success), Ability (Disabilities) and EMBRACE (cultural inclusion) ERGs. Each chapter has an executive sponsor (vice president or higher, and country
general manager level in some cases) to increase exposure and impact

• adding more external partnerships with leading networks that support the advancement of women and BIPOC employees,
creating awareness of 2SLGBTQ+ and disabled communities, and providing opportunities to share best practices and attend events and educational sessions that encourage leadership across the organization. Organizations include Catalyst, Women in
Capital Markets, Career Edge, ICON Talent Partners, Onyx; and in Asia with Sensational Foundation, The Women's Foundation, Community Business, The Zubin Foundation, Pink Dot, and many more.

*Management* 

• embedding diversity practices in our global talent management programs and including diversity results in workforce
reporting to senior management and the board

• implementing annual DEI plans for each business segment and function

• introducing diversity dashboard quarterly reviews with the executive leadership team

• formally including diversity goals in all people leader's goals

• internally and externally celebrating and promoting the history, culture, and contributions of diverse communities,
including annual celebrations of International Women's Day, Black History Month, Martin Luther King Jr. Day, Juneteenth, National Indigenous Peoples Day, Orange Shirt Day, Pacific Heritage Month, South Asian Celebration, International Day of
Pink, PRIDE, Ally Week, Mental Health Awareness Month, National Disability Employment Awareness Month, Autism awareness day, International Day of Persons with Disabilities and many more

• revising workforce policies around flexible work arrangements and increasing our parental leave to better accommodate and
retain employees. We increased maternity and paternity leave benefits in Canada to a market leading position in 2021

• enhancing the collection of applicant and employee diversity data across the organization.

We may also establish other measurable objectives for increasing diversity in leadership as we continue to develop our overall approach to diversity globally.

**Management development and assessment** 

The management resources and compensation committee oversees our human resources strategy and our talent management program globally.

*Management development* 

We integrate our talent and succession planning process for senior management with the primary objective of having high performing individuals in critical roles across the organization.

We're focusing on several areas to ensure we have depth of talent and diverse leadership to fill critical roles in the future:

• acquiring and retaining high performing, high potential talent

• selective external hiring of exceptional, seasoned executives

• increasing our diversity to better reflect the global markets where we operate

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| 2023 Management information circular | **123** |

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• identifying early high performing, high potential employees, with a focus on growing our pipeline of women in senior
roles, developing their skills and providing regular assessments

• engaging our talent and driving high performance, including a board review of the 2021 employee engagement survey results
and overseeing management actions to continuously improve employee engagement

• significantly investing in the development of our top talent both on the job and through formal development programs.

High potential employees participate in development programs that combine formal training in specific areas and practical work experience that is meaningful and varied. The program may include roles in different divisions or an international assignment, among other things.

We have adapted our hiring and onboarding practices to support all employees in remote work environments due to the pandemic. We have also added personal communications from senior leaders to incoming employees to enhance connection with the organization in a challenging situation. As the pandemic continues globally, especially in our Asia markets, the implementation of our Working Better guidelines in partnership with our technology teams have made it possible for our employees to work remotely, while still being able to spend more time with their loved ones. These efforts helped Manulife win a number of best employer awards in 2022 across our different geographies. You can find more information in our 2022 annual report available on manulife.com.

*Assessment* 

We have a formal assessment process that is based on corporate and individual performance. The independent directors assess the CEO's performance every year and the board approves the CEO's objectives for the following year. The management resources and compensation committee reviews assessments of the performance of senior executives every year, based on business performance, including risk-related aspects, and individual performance. The board also approves compensation decisions for the CEO and other senior executives based on these assessments.

The audit committee assesses the effectiveness of the heads of our oversight functions, including the CFO, Chief Auditor, Chief Actuary and Global Compliance Chief. The risk committee assesses the effectiveness of the Chief Risk Officer. The management resources and compensation committee and the board approve all senior executive appointments.

**Management succession planning** 

Our succession strategy is based on promoting talented individuals within the organization and hiring from outside to strengthen our capabilities where appropriate and to build diverse perspectives and fresh thinking.

The board and committees review the succession plans for senior management and the heads of our key oversight functions. The board develops the CEO's succession plan, and the management resources and compensation committee monitors succession plans for senior executives. The management resources and compensation committee, with the assistance of the audit committee and risk committee where appropriate, also monitors succession plans for the heads of our oversight functions.

Management devotes its attention to developing talent below the senior executive level to ensure there is a well-trained, high performing pool of executives that is representative of our customer base and the communities where we operate, and that has a broad range of business and functional experience that can contribute to a common culture and values for building a sustainable, high performing company. Developing our people helps retention and ensures orderly transitions.

The management resources and compensation committee conducts regular reviews of senior executive succession planning.

**5 — COMMUNICATIONS AND SHAREHOLDER ENGAGEMENT** 

**Disclosure policy and practices** 

The board has established policies and standards for the disclosure of material information to ensure it is timely, accurate and balanced.

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Governance at Manulife

The executive disclosure committee is responsible for overseeing and monitoring our disclosure processes and practices, including the review, from time to time, of Manulife's disclosure policy. It is made up of members of senior management and reports to the audit committee on disclosure matters. The executive disclosure committee reviews all material information in disclosure documents before the audit committee and board review.

A cross-functional group that includes members of senior management, as well as employees from our legal, investor relations and corporate communications groups, and others as required, reviews information and developments to assess materiality in compliance with our disclosure policies.

The board reviews and approves our financial statements, management's discussion and analysis (MD&A) and earnings releases, annual information form, management information circular and other material disclosure based on the review and recommendation of the audit committee. The audit committee also reviews and approves our disclosure policy.

**Engagement** 

We have a longstanding practice of engaging with our stakeholders, as we believe that engaging and communicating directly with shareholders and other stakeholders is important for receiving timely and meaningful feedback. Our shareholder engagement principles help shareholders understand how the board engages with shareholders and how they can contact the board. These are available on manulife.com.

The board's shareholder engagement outreach program facilitated by our investor relations group includes:

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| • an annual shareholder engagement outreach program to generate dialogue and feedback on a variety of topics in which the Chair of the Board and at least one other director participate each year<br> • ongoing communication, which is an important part of creating an open, candid and productive dialogue. Directors make themselves available throughout the year to engage and respond to questions from shareholders<br> • encouraging shareholders to participate at the annual meeting, because it offers a valuable opportunity to discuss Manulife, our corporate governance practices and other topics.<br>*Say on executive pay*<br> This year shareholders will again have an opportunity to have a say on our approach to executive pay. This is an advisory vote, so the results are not binding. The board will, however, take the results into account together with feedback received from other shareholder engagement activities, when making decisions about compensation policies, procedures and executive pay in the future. You can read more about this on page 13.<br>*Shareholder proposals*<br> Shareholders can submit proposals to be considered at an annual meeting and included in our circular. The corporate governance and nominating committee oversees this process. See page 14 for more information. We did not receive any proposals to be considered at the 2023 annual meeting. | As part of the annual Shareholder Outreach Program, Don Lindsay, Nicole Arnaboldi and James Prieur met with investors who collectively own approximately 28% of Manulife's outstanding institutional shares. A broad range of matters were discussed, including:<br> • governance – Manulife's approach to governance, including board composition, board and executive succession planning, and auditor independence<br> • strategic priorities – Manulife's progress on executing against its priorities, including optimization of legacy business, growth of highest potential businesses, and capital deployment<br> • ESG – Manulife's strategy and approach on ESG matters, including our Impact Agenda, Climate Action Plan, emission targets, diversity and inclusion, and how our shareholders are integrating ESG factors into their investment decision-making<br> • risk management – views on emerging risks and approach to risk management, including geopolitical and cyber risks<br> • accounting – topics related to the implementation of IFRS 17, including oversight, readiness and potential impacts<br> • executive compensation – potential refinements to our compensation plan design, incorporation of ESG metrics, and target setting |
| • an annual shareholder engagement outreach program to generate dialogue and feedback on a variety of topics in which the Chair of the Board and at least one other director participate each year<br> • ongoing communication, which is an important part of creating an open, candid and productive dialogue. Directors make themselves available throughout the year to engage and respond to questions from shareholders<br> • encouraging shareholders to participate at the annual meeting, because it offers a valuable opportunity to discuss Manulife, our corporate governance practices and other topics.<br>*Say on executive pay*<br> This year shareholders will again have an opportunity to have a say on our approach to executive pay. This is an advisory vote, so the results are not binding. The board will, however, take the results into account together with feedback received from other shareholder engagement activities, when making decisions about compensation policies, procedures and executive pay in the future. You can read more about this on page 13.<br>*Shareholder proposals*<br> Shareholders can submit proposals to be considered at an annual meeting and included in our circular. The corporate governance and nominating committee oversees this process. See page 14 for more information. We did not receive any proposals to be considered at the 2023 annual meeting. |  |
| • an annual shareholder engagement outreach program to generate dialogue and feedback on a variety of topics in which the Chair of the Board and at least one other director participate each year<br> • ongoing communication, which is an important part of creating an open, candid and productive dialogue. Directors make themselves available throughout the year to engage and respond to questions from shareholders<br> • encouraging shareholders to participate at the annual meeting, because it offers a valuable opportunity to discuss Manulife, our corporate governance practices and other topics.<br>*Say on executive pay*<br> This year shareholders will again have an opportunity to have a say on our approach to executive pay. This is an advisory vote, so the results are not binding. The board will, however, take the results into account together with feedback received from other shareholder engagement activities, when making decisions about compensation policies, procedures and executive pay in the future. You can read more about this on page 13.<br>*Shareholder proposals*<br> Shareholders can submit proposals to be considered at an annual meeting and included in our circular. The corporate governance and nominating committee oversees this process. See page 14 for more information. We did not receive any proposals to be considered at the 2023 annual meeting. |  |

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| 2023 Management information circular | **125** |

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*Proxy access* 

The board understands that proxy access is important to shareholders and has a proxy access policy that allows shareholders to nominate directors for election at the next annual meeting.

Eligible shareholders (or a group of up to 20 eligible shareholders) who have held full voting and economic rights in at least 5% of the outstanding common shares for at least three years as of the date of the nomination, may nominate up to 20% of the number of directors to be elected at the next annual meeting. Nominations must be made in compliance with the proxy access policy and nominees must meet the eligibility criteria described in the policy. See page 14 for more information on submitting nominations under the proxy access policy.

You can find our proxy access policy at manulife.com.

*For more information* 

You can find more information about Manulife on manulife.com, including webcasts of the quarterly investor conference calls and senior management's presentations to the investment community, our annual reports and other investor information.

**SUBSIDIARY GOVERNANCE** 

The corporate governance and nominating committee is responsible for reviewing the adequacy and effectiveness of the board's governance policies, practices, and procedures, including supporting the board's oversight of the activities of our subsidiaries globally**.** 

Our global subsidiary governance policy and standard establish a subsidiary governance framework that supports the board in its oversight of our subsidiaries. We use a risk-based approach to subsidiary governance, categorizing our subsidiaries according to size, regulatory status, minority interests and other factors, and aligning our governance practices to each subsidiary's risk categorization.

The boards of most of our significant subsidiaries include both internal (i.e., employee) directors and external (i.e., non-employee) directors. Internal directors bring industry experience and knowledge, and external directors can contribute different experience, expertise and independence and add a diverse perspective to subsidiary boards. Advancing the diversity of our subsidiary boards is a key priority for the board and our subsidiaries**,** and each of our significant subsidiary boards has adopted a board diversity policy.

A global operating approach to subsidiary governance allows us to balance global oversight and transparency with local execution. This hybrid approach includes:

• a central team that focuses on driving subsidiary governance best practices and consistency (wherever possible),
supporting an enterprise-wide view of subsidiary governance, and

• local centres-of-excellence that have day-to-day accountability for governance matters.

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Governance at Manulife

Serving as a director

We and the board expect directors to conduct themselves professionally, with integrity and always in the best interests of Manulife.

A director must commit the necessary time to their duties as a director and is expected to attend all meetings except in extenuating circumstances. We compensate directors appropriately and our fee schedule is competitive with the market (see page 35 for details).

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| If a director is contemplating joining another public company board, changes employment or country of residence, or there is any other significant change in his or her status, the director must notify the chair of the corporate governance and nominating committee. The | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Directors who receive more *withheld* votes than *for* votes in an uncontested election have to submit their resignation. See page 17 for more about our majority voting policy |
| If a director is contemplating joining another public company board, changes employment or country of residence, or there is any other significant change in his or her status, the director must notify the chair of the corporate governance and nominating committee. The |  |

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chair will review the matter and consider an appropriate course of action including, in the case of a public company appointment, seeking the approval of the committee. As part of its review, the committee considers whether there are circumstances that could impair the director's ability to exercise independent judgment or create a conflict of interest, as well as whether the proposed appointment would impede the director's ability to devote the time and commitment necessary. We expect the director to resign if the change creates a conflict of interest, or affects our ability to comply with legal or regulatory requirements or our own internal policies.

**SERVING ON OTHER BOARDS** 

We have not set a limit for the number of public company boards our directors can serve on, however, as noted above, the corporate governance and nominating committee must review and approve a proposed appointment to another public company board to ensure the additional commitment does not create a conflict of interest or affect the director's independence or ability to devote appropriate time to Manulife. Two of our directors, Andrea Rosen and Leagh Turner, currently serve together on the board of Ceridian HCM Holding Inc.

**INTEGRITY** 

In addition to complying with our code of business conduct and ethics, directors are required to follow rules established to ensure they exercise independent judgment and avoid conflicts of interest.

**EQUITY OWNERSHIP** 

We require directors to hold equity in Manulife to help align their interests with those of our shareholders. All independent directors must hold at least six times the mandatory equity portion of the annual board member retainer. Directors are expected to meet their equity ownership requirements within six years of joining the board. To facilitate equity ownership, all directors receive at least US$127,500, or approximately 55%, of the annual board retainer in deferred shared units. Mr. Gori has separate equity ownership requirements as President and CEO, which he meets. See pages 17 and 107 for details.

**TERM LIMITS** 

Independent directors can serve up to 12 years on our board, to balance the benefits of experience with the need for board renewal and new perspectives.

A director who has served the maximum term will only be nominated for election in exceptional circumstances. The board does, however, have discretion to nominate a director again for up to three years if the director's specific expertise meets the needs of the board at that time.

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The Chair of the Board may serve up to five years in that role regardless of the number of years that individual has served as a director. Mr. Lindsay's maximum term as Chair of the Board will end at the 2028 meeting.

**INDEPENDENCE** 

We have a board independence policy that complies with all applicable legal, regulatory and securities exchange requirements and which is available on manulife.com. The policy is reviewed every year in determining the independence of the company's directors.

A director is independent if the individual doesn't have a direct or indirect relationship with Manulife that could reasonably be expected to interfere with the director's ability to exercise independent judgment. Other than the CEO, who must be a member of the board under the Insurance Companies Act (Canada), all of the nominated directors are independent. Members of the audit committee and the management resources and compensation committee also meet the additional independence requirements applicable to those committees.

**Independent Chair of the Board** 

The Chair of the Board must be an independent director. The Chair of the Board is appointed each year by the directors and can serve up to five years in the role. Following the completion of a comprehensive board chair succession process, the board appointed Don Lindsay to the role of Chair of the Board effective February 15, 2023. Mr. Lindsay has never been a Manulife employee. In accordance with our term limits policy, Mr. Lindsay's maximum term as Chair of the Board will end at the 2028 meeting.

The Chair of the Board is responsible for providing leadership to the board, encouraging open discussion and debate, overseeing performance and guiding deliberations on strategic and policy matters. The Chair of the Board has frequent discussions with senior management and one-on-one sessions with board members, sets the meeting agendas and attends all committee meetings whenever possible. The Chair of the Board also has frequent interactions with Manulife's primary regulator, OSFI, to facilitate direct and open communication and works closely with the corporate governance and nominating committee on all governance matters. The Chair of the Board's mandate is available on manulife.com.

**Independent directors** 

The independent directors meet regularly with senior management, and meet without management present at each board and committee meeting to facilitate open and candid discussion.

The independent directors also meet in a closed session at least once every year to review the performance of the CEO and approve his compensation, review the board's own performance assessments and approve the board's objectives for the following year.

They also regularly have closed sessions with our external auditors, other independent advisors, heads of our control functions and other members of management.

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Governance at Manulife

**BOARD SUCCESSION** 

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| The corporate governance and nominating committee oversees the board succession process and manages board succession in light of the board's overall needs, term limits and retirements. In doing so, the committee takes a long-term, strategic view of board succession and diversity is an important consideration. In accordance with the board's diversity policy, the committee will consider the following when | Changes in board membership:<br> • John Cassaday completed a 5-year term as Chair of the Board and retired from the board on February 15, 2023.<br> • Joseph Caron's 12-year term as a director ends in 2023 and he is not standing for re-election. |
| The corporate governance and nominating committee oversees the board succession process and manages board succession in light of the board's overall needs, term limits and retirements. In doing so, the committee takes a long-term, strategic view of board succession and diversity is an important consideration. In accordance with the board's diversity policy, the committee will consider the following when |  |

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identifying candidates for nomination to the board:

• qualifications, including skills, expertise, competencies and experience, and other qualities the board identifies from
time to time as being necessary for effective oversight given the global nature of the company's operations and strategy, and the rapidly evolving global economic environment

• characteristics that will foster a board culture that welcomes multiple perspectives and is free of conscious or
unconscious bias and discrimination

• characteristics that contribute to board diversity, including gender, age, race, ethnicity, culture, disability, sexual
orientation and geographic representation, as well as any other characteristics that may be identified from time to time

• legal and regulatory requirements, such as those relating to residency and independence

The corporate governance and nominating committee engages independent advisors to assist in identifying candidates. The committee is committed to equitable and inclusive recruitment practices and will require search firms to identify and present diverse and balanced slates of potential director candidates, including those from underrepresented groups such as women, members of a visible minority as defined in the Employment Equity Act (Canada), Indigenous peoples, people with disabilities and members of the 2SLGBTQ+ community. It also maintains a list of prospective candidates who meet established criteria and diversity objectives. In 2022 the committee worked with an independent strategic advisor to assist with the long-term board succession plan.

The Chair of the Board, committee chairs and other directors interview suitable candidates, management undertakes a review of potential appointees, and an independent firm conducts background checks. The committee considers input from all of these sources before it recommends a candidate for the board's review and approval for nomination or appointment to the board.

**DIVERSITY** 

The board recognizes the importance of diversity and is committed to fostering diversity at all levels of the organization, including within its own ranks. The board has a history of promoting diversity and believes that having highly qualified directors from diverse backgrounds brings different perspectives and experiences to the boardroom, generating healthy discussion and debate and more effective decision-making. This commitment is reflected in the board's long-standing diversity policy (which you can access on manulife.com), and in the board succession practices described below which include considering characteristics that contribute to board diversity and inclusion.

With respect to gender in particular, the board strives to maintain parity between men and women among the independent directors and has established a specific objective that at least 40% of the independent directors are women, recognizing that board composition may fluctuate from time to time during periods of transition. To maintain an appropriate gender balance, no more than 60% of the independent directors will be from any one gender, subject to temporary fluctuations during periods of transition.

The table below shows the number of women and directors who are members of a visible minority (as defined in the Employment Equity Act (Canada)) currently on the board. No directors have self-identified as Indigenous peoples, people with disabilities or members of the 2SLGBTQ+ community. You can read about management diversity on page 121.

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| (nominated directors as at February 28, 2023) |  |  |
| Female directors (as a percentage of total directors) | 7 of 12 | 58% |
| Female directors (as a percentage of independent directors) | 7 of 11 | 64% |
| Directors who have self-identified as members of a visible minority<sup>1</sup> (as a percentage of total directors) | 3 of 12 | 25% |
| Directors who have self-identified as members of a visible minority<sup>1</sup> (as a percentage of independent directors) | 3 of 11 | 27% |

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<sup>1</sup> As defined in the Employment Equity Act (Canada).

The corporate governance and nominating committee reviews the board diversity policy and specific objectives annually and may recommend changes to the policy and the objectives as appropriate. The board and committee's effectiveness at implementing the policy is taken into account during annual performance evaluations.

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| **SKILLS AND EXPERIENCE**<br> The corporate governance and nominating committee helps determine the necessary qualities, skills and experience for a member of the board of a global financial services company and Manulife in particular. The committee maintains a skills matrix to identify any gaps or emerging areas of importance in the board's overall skill set. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Starting in 2023, members of the corporate governance and nominating committee will participate in at least one externally facilitated ESG-related education session every two years. The sessions may be external courses or externally facilitated sessions tailored to cover issues relevant to Manulife and open to all board members. |
| **SKILLS AND EXPERIENCE**<br> The corporate governance and nominating committee helps determine the necessary qualities, skills and experience for a member of the board of a global financial services company and Manulife in particular. The committee maintains a skills matrix to identify any gaps or emerging areas of importance in the board's overall skill set. |  |

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Directors must possess six core attributes:

• a reputation for integrity and ethical behaviour

• a demonstrated ability to exercise judgment and communicate effectively

• financial knowledge

• prominence in their area of expertise

• experience relevant to our operations

• sufficient time to dedicate to board and committee work.

In addition to the core attributes, all members of the board have considerable senior executive experience, operations/governance experience in one or more of Asia, Canada and the U.S., and are financially literate within the meaning of applicable securities laws.

The table on the following page shows the diverse experience of the board and individual nominees in areas identified as necessary for effective oversight of the company given its current operations and strategy. These qualifications are considered in reviewing board succession and evaluating potential board members.

Experience in and an understanding of ESG matters are also considered essential characteristics because of the importance of ESG to Manulife and the board's role in overseeing Manulife's ESG framework. Directors are expected to have a significant knowledge and understanding of ESG issues relevant to and based on their respective experiences in their professional careers or as a corporate director. In addition to considering appropriate ESG experience possessed by potential director candidates, directors gain ESG experience through ongoing education sessions and reports on ESG strategy, trends, risks and opportunities and all directors are encouraged to attend sessions on ESG matters at meetings of the corporate governance and nominating committee.

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| **130** | Manulife Financial Corporation |

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Governance at Manulife

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| **Key competencies** | ![LOGO](g427878g10g10.jpg) | ![LOGO](g427878g20b02.jpg) | ![LOGO](g427878g50n01.jpg) | ![LOGO](g427878g60m04.jpg) | ![LOGO](g427878g80m01.jpg) | ![LOGO](g427878g90m01.jpg) | ![LOGO](g427878g90k01.jpg) | ![LOGO](g427878g91v07.jpg) | ![LOGO](g427878g93n02.jpg) | ![LOGO](g427878g94b01.jpg) | ![LOGO](g427878g90k02.jpg) | ![LOGO](g427878g95m01.jpg) |
| &nbsp;&nbsp;&nbsp;&nbsp; **Finance/Accounting**<br> We operate in a financial environment with complex accounting, actuarial and capital management issues | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) |  |
| &nbsp;&nbsp;&nbsp;&nbsp; **Insurance/Reinsurance/Investment management**<br> We value industry expertise as it provides insight into operations, strategy, and market factors | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) |  |  |  | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) |  |
| &nbsp;&nbsp;&nbsp;&nbsp; **Risk management**<br> We operate in a complex risk environment and experience in risk disciplines provides us with expertise to effectively manage our principal risks | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) |  | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) |  | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) |
| &nbsp;&nbsp;&nbsp;&nbsp; **Talent management/Executive compensation**<br> We want to attract, develop and retain the best talent globally as we focus on transforming our business | ![LOGO](g427878checkmark.jpg) |  | ![LOGO](g427878checkmark.jpg) |  | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) |
| &nbsp;&nbsp;&nbsp;&nbsp; **Technology/Operations**<br> We value technology expertise as we focus on transforming our business by using technology to become a digital, customer leader |  |  | ![LOGO](g427878checkmark.jpg) |  | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) |  |  | ![LOGO](g427878checkmark.jpg) |
|  **Key experience** | **Key experience** | **Key experience** | **Key experience** | **Key experience** | **Key experience** | **Key experience** | **Key experience** | **Key experience** | **Key experience** | **Key experience** | **Key experience** | **Key experience** |
| &nbsp;&nbsp;&nbsp;&nbsp; **Asia experience**<br> Business and cultural experience in regions in which we operate, particularly in those regions where we are focusing on accelerating growth, is essential to providing oversight in the best long-term interests of the company | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) |  | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) |  | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) |
| &nbsp;&nbsp;&nbsp;&nbsp; **Government relations/Public policy/Regulatory**<br> Experience with governmental agencies provides valuable insight into government processes and actions, and knowledge of the regulatory environments across our geographical footprint is essential to understanding the threats and opportunities of our long-term strategy |  |  |  | ![LOGO](g427878checkmark.jpg) |  | ![LOGO](g427878checkmark.jpg) |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; **Public company executive/Director**<br> Public company experience provides practical insights on the operations and governance of a complex, publicly-traded organization | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) |
| &nbsp;&nbsp;&nbsp;&nbsp; **Digital transformation/Sales/Marketing**<br> Experience in sales and marketing provides valuable market and consumer insights as we focus on transforming our business and becoming a digital, customer leader |  |  | ![LOGO](g427878checkmark.jpg) |  | ![LOGO](g427878checkmark.jpg) | ![LOGO](g427878checkmark.jpg) |  |  |  |  |  | ![LOGO](g427878checkmark.jpg) |

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| | |
|:---|:---|
| 2023 Management information circular | **131** |

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**DIRECTOR DEVELOPMENT** 

Directors receive ongoing education to keep them up to date in their knowledge and understanding of our businesses and market and regulatory environment so they can carry out their responsibilities effectively.

**Orientation** 

We are able to attract qualified and experienced directors from various backgrounds with a diverse range of skills. New directors participate in a comprehensive orientation program to increase their knowledge of Manulife and matters that are important to our operations. The program is tailored to each director's knowledge, skills and experience. It was enhanced in 2021 and again in 2022 to take advantage of the virtual environment to create a more flexible program tailored to individual director needs.

Directors receive information about Manulife, the board and board committees and their duties as a director. The Chair of the Board and committee chairs meet with new directors to discuss the role of the board and committees and to give them an opportunity to have a candid discussion and ask questions.

We also arrange sessions with senior management on a wide variety of relevant subjects to help new directors gain a deeper understanding of our strategic priorities, businesses and challenges.

All directors have a standing invitation to attend committee meetings whether or not they are a member, and new directors are encouraged to do so as part of their orientation.

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|:---|:---|
| **Continuing education**<br> We run a continuing education program for all directors and the corporate governance and nominating committee coordinates the program agenda.<br>The program includes regular presentations by senior executives about emerging issues and topics relevant to our business and operations and the regulatory environment, as well as information packages developed to enhance the director's understanding of the subject matter. External experts are also invited from time to time to speak on various topics.<br>In typical years we also organize site visits and virtual events where directors can engage with employees across the enterprise to gain additional insights into various aspects of our business and our global operations. In 2022, | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; In 2022 the corporate governance and nominating committee led an in-depth review of our director education program in light of evolving trends, and introduced an additional requirement that directors take specialized education programs in key areas of focus based on committee membership. Starting in 2023, members of the corporate governance and nominating committee must take at least one externally facilitated ESG-related education session, and members of the risk committee must take at least one externally facilitated cybersecurity-related education session every two years. The sessions may be external courses or externally facilitated sessions tailored to cover issues relevant to Manulife and open to all board members. |
| **Continuing education**<br> We run a continuing education program for all directors and the corporate governance and nominating committee coordinates the program agenda.<br>The program includes regular presentations by senior executives about emerging issues and topics relevant to our business and operations and the regulatory environment, as well as information packages developed to enhance the director's understanding of the subject matter. External experts are also invited from time to time to speak on various topics.<br>In typical years we also organize site visits and virtual events where directors can engage with employees across the enterprise to gain additional insights into various aspects of our business and our global operations. In 2022, |  |
| members of the board engaged with Manulife employees at several events, both in person and virtually. | members of the board engaged with Manulife employees at several events, both in person and virtually. |

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Committee chairs may also coordinate education sessions on specific topics for their committee members.

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|:---|:---|
| **132** | Manulife Financial Corporation |

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Governance at Manulife

The table below provides highlights of our continuing education program for directors in 2022:

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| | | |
|:---|:---|:---|
| Topic | Date | Attendees |
| **Business and operations** |  |  |
| Global Wealth & Asset Management Overview | February 2022 | board |
| Asia Overview | May 2022 | board |
| U.S. Overview | June 2022 | board |
| Canada Overview | November 2022 | board |
| **Market trends and regulatory updates** |  |  |
| ESG | February 2022<br> May 2022<br> December 2022 | board |
| Cybersecurity | February 2022<br> May 2022<br> August 2022<br> November 2022 | risk<br>committee |
| Transition to IFRS 17 | May 2022<br> June 2022 | board |
| Impact of Inflation and Interest Rates | June 2022 | board |
| Innovation Strategy | June 2022 | board |
| Future of Long Term Care | September 2022 | board |
| Future Trends in Digital Customer Needs | September 2022 | board |
| Global Geo-politics | September 2022 | board |
| Macroeconomic Environment and Global Outlook | September 2022 | board |
| Updates in Corporate Governance | December 2022 | board |

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We also encourage directors to participate in outside professional development programs. We pay for these expenses so long as the program is approved in advance according to established procedures.

All of our directors are members of the Institute of Corporate Directors (ICD) and the National Association of Corporate Directors (NACD), which provide continuing education for directors through publications, seminars and conferences. They are also provided with corporate subscriptions to certain relevant industry publications.

**ASSESSMENT** 

The board carries out an annual self-assessment which is tailored each year to address the board's current priorities.

The self-assessment process includes an assessment of the performance and effectiveness of:

• the board and the board chair vis-à-vis the board's objectives

• the committees and the chairs of those committees vis-à-vis the committee objectives

• themselves and their peers

• the board's relationship with management (including feedback from management where appropriate).

The results of the board's self-assessment and of the assessment of the Chair of the Board are reviewed by the corporate governance and nominating committee and the Chair of that committee reports on those results to the full board. The board meets in camera to discuss the feedback and agree on its objectives for the coming year. The Chair of the Board shares peer feedback with individual directors as appropriate.

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| | |
|:---|:---|
| 2023 Management information circular | **133** |

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|:---|:---|
| Each year the board also engages in a review to assess the performance and effectiveness of the Chair of the Board in carrying out his mandate.<br>Each of the committee chairs solicits feedback from committee members on their respective | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; In 2022 the board chair assessment consisted of a deep dive on the attributes and priorities required of the next Chair of the Board to support Manulife in achieving its strategic objectives.  |
| Each year the board also engages in a review to assess the performance and effectiveness of the Chair of the Board in carrying out his mandate.<br>Each of the committee chairs solicits feedback from committee members on their respective |  |

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committee's performance against the prior year objectives and proposed objectives for the following year. Each committee also meets in camera to discuss the assessment and to review and assess the adequacy of their respective committee charters and confirm all requirements of the charter were met during the year.

An independent consultant facilitated the self-assessment process in 2021.

In 2022, in light of the planned retirement of Mr. Cassaday at the end of his term, the board conducted the self-assessment in tandem with the chair succession process that included extensive feedback from all board members on, among other things, the attributes and priorities required of the next Chair of the Board to support Manulife in achieving its strategic objectives. This review included extensive interviews of each board member conducted by a subcommittee of the board to solicit feedback. The process included one-on-one interviews between the incoming Chair of the Board and each director to obtain feedback on the performance of the board, committees, committee chairs and individual directors and to aid in developing the board's objectives for the following year.

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|:---|:---|
| **134** | Manulife Financial Corporation |

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Other Information

**ESG at Manulife** 

We report on the economic, environmental and social dimensions of our products and services, operations and community activities in our annual ESG Report and Public Accountability Statement. These two reports provide information on priorities and performance and can be found on the Sustainability section of the company's website at manulife.com/sustainability. You can read more about the board's oversight of ESG in our annual ESG Report.

In 2022, we launched our Impact Agenda, which outlines our key focus areas to drive sustained social and environmental impact through our business and our interactions with customers, communities and the environments in which we operate. There are three key areas of focus: empowering sustained health and well-being, driving inclusive economic opportunity and accelerating a sustainable future.

To ensure our sustainability efforts make an impact beyond our business, we actively engage with recognized international initiatives and frameworks to help drive progress across industries and geographies. Since 2017, Manulife has been a supporter of the Financial Stability Board's Task Force on Climate-related Financial Disclosures (TCFD) recommendations. In alignment with the TCFD recommendations, our 2022 Management's Discussion and Analysis includes disclosures related to our climate risk governance, risk management, strategy, metrics, and targets in the Strategic Risk section, under Environmental, Social and Governance Risks. Please see our annual ESG Report, which will be published in the second quarter of 2023, for detailed disclosure about how Manulife is implementing the TCFD recommendations.

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|:---|:---|
| **Oversight of ESG strategy**<br> Manulife's sustainability governance framework (our ESG framework) is designed to help us achieve our sustainability objectives across the enterprise by facilitating strategic decision-making within the context of our business objectives.<br>Oversight of the ESG framework, including matters related to climate change, is included in the corporate governance and nominating committee's mandate. The committee receives regular updates on relevant ESG topics, including Manulife's Impact Agenda and climate action plan. Manulife's Executive Sustainability Council, which includes members of the Executive Leadership Team and the Chief Sustainability Officer, is responsible for ESG-related strategy and disclosures. It meets monthly and provides quarterly updates to the committee. The Executive Sustainability Council is supported by an ESG Centre of Expertise that consists of representatives from multiple businesses and functional areas and includes a Climate Change Taskforce.<br>You can read more about the board's oversight of sustainability and ESG initiatives on page 30.<br>**Executive compensation linked to ESG**<br> As part of our ESG strategy, Manulife sets enterprise goals for ESG-related measures that are key to our business strategy. These factor into executive compensation in two ways:<br> • The strategic focus component of the company performance score includes goals linked to diversity, equity and inclusion, climate action, employee engagement and customer satisfaction (see page 46) | **Climate Action Plan**<br> We recognize the link between environmental and financial stewardship, and have established a climate action plan to support the transition to a net zero economy. We are actively incorporating climate change considerations into our decision-making, including how we manage our operations, how we make investment decisions, and how we develop and offer financial products and services. Although addressing climate change and achieving net zero will require a global effort, we hope to contribute to this effort by:<br> • **Operations**: reducing Manulife's scope 1 and 2 emissions by 35% by 2035 relative to our 2019 emissions<br> • **Investments**: achieving net zero in our General Account's investment portfolio by 2050 and actively investing our own assets in sustainable investments, such as in renewable energy and sustainably managed timberland, agriculture and real estate<br> • **Products and services**: developing innovative client solutions that contribute to climate change mitigation and resilience<br>You can read more about these commitments and the challenges we are navigating as we work towards them at http://manulife.com/climate. |
| **Oversight of ESG strategy**<br> Manulife's sustainability governance framework (our ESG framework) is designed to help us achieve our sustainability objectives across the enterprise by facilitating strategic decision-making within the context of our business objectives.<br>Oversight of the ESG framework, including matters related to climate change, is included in the corporate governance and nominating committee's mandate. The committee receives regular updates on relevant ESG topics, including Manulife's Impact Agenda and climate action plan. Manulife's Executive Sustainability Council, which includes members of the Executive Leadership Team and the Chief Sustainability Officer, is responsible for ESG-related strategy and disclosures. It meets monthly and provides quarterly updates to the committee. The Executive Sustainability Council is supported by an ESG Centre of Expertise that consists of representatives from multiple businesses and functional areas and includes a Climate Change Taskforce.<br>You can read more about the board's oversight of sustainability and ESG initiatives on page 30.<br>**Executive compensation linked to ESG**<br> As part of our ESG strategy, Manulife sets enterprise goals for ESG-related measures that are key to our business strategy. These factor into executive compensation in two ways:<br> • The strategic focus component of the company performance score includes goals linked to diversity, equity and inclusion, climate action, employee engagement and customer satisfaction (see page 46) |  |

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| | |
|:---|:---|
| 2023 Management information circular | **135** |

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• Individual performance goals for each named executive (which help determine final awards each year), also include goals
linked to diversity, equity and inclusion, climate action, employee engagement and leadership accountability, as well as risk goals such as cybersecurity and ethical business conduct (see the executive profiles starting on page 67).

**2022 sustainability highlights** 

You can read about our sustainability initiatives and performance on our sustainability website (manulife.com/sustainability), and in our most recent ESG Report and Public Accountability Statement (published in the second quarter of 2023). These disclosures are informed by voluntary reporting frameworks, including the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB) and the TCFD. The report also discusses our membership of several global sustainability networks, including the Principles for Responsible Investment (PRI) and Climate Action 100+.

**Liability insurance** 

We have liability insurance to protect our directors and officers against liabilities they may incur as directors and officers of Manulife and our subsidiaries in circumstances where we cannot indemnify them. Our current policy provides approximately US$500 million in coverage and will be reviewed in September 2023.

**Loans to directors and officers** 

We may grant loans to our directors, officers and other employees in the regular course of business as long as the loans are in compliance with legal and regulatory requirements and are on market terms, and therefore on the same terms as loans we make to customers with similar creditworthiness.

As at February 28, 2023 the total indebtedness to Manulife or any of our subsidiaries of all officers, directors and employees and former officers, directors and employees of Manulife or our subsidiaries, excluding routine indebtedness under applicable Canadian securities laws, was $455,713.

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| | | | |
|:---|:---|:---|:---|
| Name and principal position | Involvement of<br>company or<br>subsidiary | Largest amount<br>outstanding during<br>financial year ended<br>December 31, 2022<sup>1</sup><br> ($) | Amount<br>outstanding as at<br>February 28, 2023<sup>1</sup><br> ($) |
| Paul Lorentz, President and CEO, Global Wealth and Asset Management | Manulife Bank as Mortgagee | $612251 | $455713 |

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| | |
|:---|:---|
| 1 | Amount represents a Manulife One Account secured against a secondary residence of the borrower. As at December 31, 2022, the facility had a balance of $462,275 in a sub account with a fixed rate of 2.04% per annum and a 5 year term and a revolving balance of $149,976 at the Manulife One variable base rate of 6.95% per annum. As at February 28, 2023, the facility had a balance of $442,765 in the sub account and a revolving balance of $12,948 at the Manulife One variable base rate of 7.20%.  |

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**Directors' approval** 

The board of directors has approved the contents of this circular and authorized us to distribute it to all shareholders of record.

![LOGO](g427878g86k94.jpg)

Antonella Deo

Corporate Secretary

March 15, 2023

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|:---|:---|
| **136** | Manulife Financial Corporation |

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![LOGO](g408227dsp003.jpg)

Manulife Our registered office Manulife Financial Corporation 200 Bloor Street East Toronto, Ontario M4W 1E5 Canada manulife.com IR3834E FSCwww.fsc.org MIX Paper from responsible sources FSC®C1132107

## Exhibit 99.4

**Exhibit 99.4** 

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|:---|
| **MANULIFE FINANCIAL CORPORATION**<br>|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> **Proxy Voting Information**<br> **We offer you four ways to vote your shares** |

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp; **MAIL**<br>| Complete, sign, date and mail this proxy form in the envelope provided. |
| &nbsp;&nbsp;&nbsp; **INTERNET**<br>| Go to the website:<br><u>www.meeting-vote.com</u><br>Follow the instructions on the screen.<br>You will need the Control Number located on this proxy form. |
| &nbsp;&nbsp;&nbsp; **TELEPHONE**<br>| Call toll free **1-888-489-7352** in Canada or the United States from any touch-tone telephone and follow the instructions. You will need the Control Number located on this proxy form. |
| &nbsp;&nbsp;&nbsp; **SMARTPHONE**<br>**Scan QR Code**<br>| <br> ![LOGO](g421818g92s89.jpg) <br>|

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> **Proxy Form – Annual Meeting of Common Shareholders**<br>

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|:---|
|  <br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Proxy Information**  |
| &nbsp;&nbsp;&nbsp;&nbsp; <br> This proxy confers discretionary authority on the proxy named herein to vote in respect of any amendments or variations to the matters identified in the notice of meeting or any other matter which may properly come before the meeting in such manner as such proxy in his or her judgment may determine.<br>**A shareholder has the right to appoint a person to represent him or her at the meeting other than the management representatives designated in this proxy.** Such right may be exercised by filling in the name of the other person in the blank space provided; such other person need not be a shareholder. |
|  <br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Notes** |
| <br> &nbsp;&nbsp;&nbsp;&nbsp;• This proxy must be signed by a shareholder or his or her attorney duly authorized in writing. If you are an individual, please sign exactly as your shares are registered. If the shareholder is a corporation, a duly authorized officer or attorney of the corporation must sign this proxy, and if the corporation has a corporate seal, its corporate seal should be affixed.<br>&nbsp;&nbsp;&nbsp;&nbsp;• Signatories on behalf of a trust, estate or under a power of attorney or similar authority should specify the capacity in which they sign. Documentation may be required evidencing authority.<br>&nbsp;&nbsp;&nbsp;&nbsp;• If the shares are held by two or more persons, then all those persons should sign this proxy.<br>&nbsp;&nbsp;&nbsp;&nbsp;• This proxy should be read in conjunction with the accompanying Management Information Circular and Notice of Annual Meeting of Common Shareholders.<br>&nbsp;&nbsp;&nbsp;&nbsp;• If not dated, this proxy is deemed to bear the date on which it was mailed on behalf of management of the Company.<br>&nbsp;&nbsp;&nbsp;&nbsp;• For your proxy vote to be counted, this proxy must be completed and delivered in accordance with the Voting Instructions above. |

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|:---|
|  <br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Request for Financial Statements**  |
| &nbsp;&nbsp;&nbsp;&nbsp; <br> **If you wish to receive the financial statements and MD&A for the next year by mail, you must check the appropriate box below.** |

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|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; I wish to receive the Interim Financial Statements and MD&A ☐ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; I wish to receive the Annual Financial Statements and MD&A ☐ |
| **You may also make your request online at tsxtrust.com/financialstatements. Our Company code number is 4658A.** |

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***Save paper – reduce mail – to receive documents electronically rather than via the mail,***

***sign up for e-delivery after casting your vote at <u>www.meeting-vote.com</u>***

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|:---|:---|
| ![LOGO](g421818g08u62.jpg) | <br> **MANULIFE FINANCIAL CORPORATION**<br> Annual Meeting of Common Shareholders<br> May 11, 2023 |

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 <br> **PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE** ☒<br>

**This proxy is solicited on behalf of management of Manulife Financial Corporation (the "Company").** 

The undersigned shareholder of the Company hereby appoints Roy Gori, President and Chief Executive Officer, or failing him, Donald R. Lindsay, Chair of the Board, with full power of substitution, or instead of any of them,<u> </u>, as proxy of the undersigned, to attend, vote and act for and on behalf of the undersigned at the Annual Meeting of Common Shareholders of the Company to be held at 11:00 a.m. Eastern Time on Thursday, May 11, 2023, and at all adjournments thereof, and are specifically directed to vote the common shares represented by this proxy upon the following matters.

**Information on the following can be found in the Management Information Circular and Notice of Annual Meeting of Common Shareholders dated March 15, 2023.** 

**The directors and management recommend shareholders vote FOR items 1, 2 and 3. Where no choice is specified, the proxyholders designated by management intend to vote FOR items 1, 2 and 3.** 

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| | | | |
|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> &nbsp;&nbsp;&nbsp;&nbsp;**1. Election of Directors** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> &nbsp;&nbsp;&nbsp;&nbsp;**1. Election of Directors** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> &nbsp;&nbsp;&nbsp;&nbsp;**1. Election of Directors** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> &nbsp;&nbsp;&nbsp;&nbsp;**1. Election of Directors** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> &nbsp;&nbsp;&nbsp;&nbsp;**The proposed nominees are:** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> &nbsp;&nbsp;&nbsp;&nbsp;**The proposed nominees are:** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> &nbsp;&nbsp;&nbsp;&nbsp;**The proposed nominees are:** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> &nbsp;&nbsp;&nbsp;&nbsp;**The proposed nominees are:** |
|  |  | **FOR** | **WITHHOLD** |
| &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;01 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Nicole S. Arnaboldi | ☐ | ☐ |
| &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;02 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Guy L.T. Bainbridge | ☐ | ☐ |
| &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;03 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Susan F. Dabarno | ☐ | ☐ |
| &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;04 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Julie E. Dickson | ☐ | ☐ |
| &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;05 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Roy Gori | ☐ | ☐ |
| &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;06 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tsun-yan Hsieh | ☐ | ☐ |
| &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;07 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Vanessa Kanu | ☐ | ☐ |
| &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;08 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Donald R. Lindsay | ☐ | ☐ |
| &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;09 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. James Prieur | ☐ | ☐ |
| &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;10 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Andrea S. Rosen | ☐ | ☐ |
| &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;11 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;May Tan | ☐ | ☐ |
| &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;12 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Leagh E. Turner | ☐ | ☐ |

---

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> &nbsp;&nbsp;&nbsp;&nbsp;**2. Appointment of Auditors** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> &nbsp;&nbsp;&nbsp;&nbsp;**2. Appointment of Auditors** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> &nbsp;&nbsp;&nbsp;&nbsp;**2. Appointment of Auditors** |
|  | <br> &nbsp;&nbsp;&nbsp;&nbsp;**FOR**  | **WITHHOLD** |
| &nbsp;&nbsp;&nbsp; Appointment of Ernst & Young LLP as Auditors<br>| ☐  | ☐  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> &nbsp;&nbsp;&nbsp;&nbsp;**3. Advisory Resolution Accepting Approach to Executive Compensation** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> &nbsp;&nbsp;&nbsp;&nbsp;**3. Advisory Resolution Accepting Approach to Executive Compensation** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br> &nbsp;&nbsp;&nbsp;&nbsp;**3. Advisory Resolution Accepting Approach to Executive Compensation** |
|  | <br> &nbsp;&nbsp;&nbsp;&nbsp;**FOR**  | <br> &nbsp;&nbsp;&nbsp;&nbsp;**AGAINST**  |
| &nbsp;&nbsp;&nbsp; Advisory resolution accepting approach to executive compensation<br>| ☐  | ☐  |

---

 <br> &nbsp;&nbsp;&nbsp;&nbsp;**Please Sign and Return this Proxy Form** <br>

To be valid, this proxy must be signed and received by the Company's transfer agent, TSX Trust Company, P.O. Box 721, Agincourt, Ontario, Canada, M1S 0A1, no later than 5:00 p.m. Eastern Time on Tuesday, May 9, 2023 or, if the meeting is adjourned, no later than 5:00 p.m. Eastern Time on the second business day preceding the day to which the meeting is adjourned. This proxy revokes and supersedes all proxies of earlier dates.

**Please see the Notes on the reverse side of this form for instructions on how to complete this proxy and vote your shares.** 

**Dated this<u> </u> day of<u> </u>, 2023.** 

Signature of Shareholder/Authorized Officer Name of Shareholder (Please PRINT clearly)

## Exhibit 99.5

**Exhibit 99.5**![LOGO](g408227dsp004.jpg)

Manulife Manulife Financial Corporation 2023 Annual Meeting of Shareholders Notice of availability of Management Information Circular You're invited to attend our 2023 annual meeting of common shareholders. When: May 11, 2023 11 a.m. (Eastern time) Where: Our 2023 annual meeting will be held at Manulife Head Office, 200 Bloor Street East, Toronto, Canada, and as a live webcast at https://web.lumiagm.com/467771061. Items of business at the meeting Receiving the consolidated financial statements and auditors' reports for the year ended December 31, 2022 (see page 12 of the circular) Electing directors (see page 15 of the circular) Appointing the auditors (see page 12 of the circular) Having a say on executive pay (see page 39 of the circular) Notice-and-access Pursuant to an exemption from the proxy solicitation requirement granted by the Office of the Superintendent of Financial Institutions (Canada), and as permitted by the Canadian Securities Administrators, we are using notice-and-access to deliver our management information circular ("circular") to our registered and non-registered shareholders. Instead of receving a printed copy of the circular, you are receiving this notice which tells you how to access our circular online. The circular contains information about the meeting, as well as information about our corporate governance practices and executive compensation program. We encourage you to read the circular before voting your shares. If you require a printed version, a copy can be requested from our transfer agent by following the instructions on the reverse side. As a global financial services company, we are taking steps to reduce our environmental footprint, support the transition to a low carbon economy, and invest in climate change mitigation and resilience. Notice-and-access greatly reduces the amount of paper sent to shareholders and aligns with our focus on sustainability.

------

![LOGO](g408227dsp005.jpg)

Manulife How to access the circular online Our website:www.manulife.com/en/investors/annual-meeting.html Our transfer agent's website:www.meetingdocuments.com/TSXT/MFC On SEDAR:www.sedar.com How to request a paper copy of the circular Go to www.meetingdocuments.com/TSXT/MFC or call our transfer agent, TSX Trust Company ("TSX"), at 1-888 433-6443 (toll free in Canada and the United States) or 416-682-3801 or via email at tsxt-fulfilment@tmx.com. In order to receive the circular in advance of the voting deadline and meeting date, TSX must receive your request no later than 5:00 p.m. (Eastern time) on Thursday, April 27, 2023. The circular will be mailed within 3 business days of receiving your request. If you submit your request after the meeting, the circular will be mailed within 10 calendar days of receiving your request. If you have questions about notice-and-access please call TSX at 1-800-783-9495 (Canadian residents), 1-800-249-7702 (US residents) or (416)-682-3864. How to vote There are two ways to vote – by proxy before the meeting, or during the meeting. Shareholders are encouraged to vote their shares by proxy before the meeting by following the instructions on the proxy form or voting information form included with this notice. The deadline for submitting your vote before the meeting is 5:00 p.m. (Eastern time) on Tuesday, May 9, 2023. If you wish to attend and vote online at the meeting, there are additional steps you must take. Please refer to page 7 of the circular for more information on how to vote. Go Digital We want to provide you with information the way you want to receive it. You can choose to receive Manulife Financial Corporation's meeting materials online instead of in the mail. If you received a proxy form, visit www.tsxtrust.com/MFCdigital to enrol for electronic delivery. If you received a voting instruction form, visit www.proxyvote.com and use the control number provided on your voting instruction form to enrol for electronic delivery. Manulife, Manulife & Stylized M Design, and Stylized M Design are trademarks of The Manufacturers Life Insurance Company and are used by it, and by its affiliates, including Manulife Financial Corporation, under license. MP2879033E 03/23

### Attached PDF Documents

**Attachment 1:** `d408227dex991.pdf`

Exhibit 99.1

Manulife

Manulife Financial Corporation

# Annual Report

20

22

![img-0.jpeg](img-0.jpeg)

![img-1.jpeg](img-1.jpeg)

![img-2.jpeg](img-2.jpeg)

![img-3.jpeg](img-3.jpeg)

![img-4.jpeg](img-4.jpeg)

![img-5.jpeg](img-5.jpeg)

![img-6.jpeg](img-6.jpeg)

In 2022, we created in-office experiences and activities for our colleagues globally to encourage and nurture connection and collaboration, and to drive innovation.

## Decisions made *easier*.
Lives made *better*.

“We want to be the digital, customer leader in our industry, which is why we remain focused on providing *simple, intuitive* and *innovative* experiences across our business.”

**Roy Gori**, President and Chief Executive Officer

# Manulife by the *numbers*

Net Income Attributed to Shareholders

**$7.3 billion**

Net income attributed to shareholders increased $0.2 billion from 2021.

![img-7.jpeg](img-7.jpeg)

Core Earnings

**$6.2 billion**

Core earnings decreased 7% versus 2021.

![img-8.jpeg](img-8.jpeg)

New Business Value

**$2.1 billion**

New business value decreased 9% compared with 2021.

![img-9.jpeg](img-9.jpeg)

Common Share Dividend

**$1.32/share**

Common share dividend increased 13% versus 2021.

![img-10.jpeg](img-10.jpeg)

Assets Under Management and Administration
$1.3 trillion

- Total invested assets: $414 billion
- Segregated funds net assets: $349 billion
- Mutual funds: $258 billion
- Institutional asset management: $110 billion
- Other funds: $14 billion
- Assets under administration: $170 billion

![img-11.jpeg](img-11.jpeg)

Note: Core earnings and assets under management and administration are non-GAAP financial measures and percentage change in core earnings on a constant exchange rate basis is a non-GAAP ratio. Percentage change in new business value is also on a constant exchange rate basis. For more information on non-GAAP and other specified financial measures used in this report, see the section "Non-GAAP and Other Financial Measures" in our 2022 Management's Discussion and Analysis below.

Manulife

1

![img-12.jpeg](img-12.jpeg)

## Don Lindsay

Chair of the Board

## John Cassaday

Chairman Emeritus

### Fellow shareholders,

Five years ago, in my first letter on behalf of your Board, I highlighted Manulife’s shared values as the common thread uniting our globally diverse Company and the foundation enabling us to achieve the bold ambition we set for transforming and growing our business.

Each year since, I have focused in this letter on one of our core values and how it has come to life and guided our work. With my retirement from the Board, I thought it was fitting in this letter to shine a light on the ways our winning global team has *owned it* not only in 2022, but also over the past several years, driving resilient performance and consistently strong results.

Thanks to our team’s spirit of ownership and commitment to delivering on our bold ambition, Manulife today is meaningfully different than it was in 2017. Together, they have delivered on the key commitments made to shareholders, and in 2022 achieved record net income of $7.3 billion as compared to $2.1 billion in 2017. In Asia, we’ve grown from being within the top six pan-Asian insurers, to being the fastest growing of the top three pan-Asian insurers between 2017 and 2021, and our global wealth and asset management business is thriving, having achieved net inflows in 10 of the last 12 quarters. We’ve taken cost out of the business, having met our expense efficiency target two years ahead of schedule in 2020, and we’ve bolstered our capital position, achieving a Life Insurance Capital Adequacy Test (LICAT) ratio of 131% for 2022, more than $20 billion above our supervisory target. We have also delivered for customers, as reflected in the significant improvement in our Net Promoter Score (NPS) of 19 points

2 | 2022 Annual Report

against the 2017 baseline, and at the same time expanded our customer base from 26 million to 34 million customers worldwide. These results have been delivered thanks to the efforts of our 40,000 colleagues around the globe, who have taken accountability for meeting and achieving our targets, year in and year out, and who together have built solid foundations for future success.

## Your Board's activities in 2022

Your Board has remained focused on providing oversight and guidance to the leadership team, and we were also energized by the opportunity to incorporate in-person sessions into our meeting cadence, having met virtually for most of the previous two years. As hoped last year, our hybrid meeting schedule has not only enabled optimal participation from our directors, but also enhanced our ability to attract talented directors from around the globe.

We continued to make progress towards greater diversity on your Board, and we are proud to have increased our representation of Asia-domiciled directors in view of the importance of the region to our future growth ambitions. We are also proud to have maintained our aspiration of gender parity among independent directors, with women representing seven of the 11 independent directors nominated for election at our upcoming annual meeting of shareholders.

Reflecting these efforts, we were pleased to be ranked in the top four by the Globe and Mail's Report on Business Board Games rankings for board governance in Canada.

We are also proud of our robust succession planning, including the appointment of Don Lindsay as your

new Chair of the Board, which became effective in February 2023, in tandem with my retirement from Manulife. It has been my pleasure and privilege to serve as a member of your Board for the past 30 years and as Chairman for the past five. Reflecting on all we have accomplished in that time, I am very proud of our team and deeply grateful for the opportunity to represent you. I'm honoured to have passed the gavel to Don, under whose leadership I know the Board, and indeed our Company, will continue to thrive.

## Thank you

With that in mind, and as Don has taken over in February, we wanted to offer some shared words of thanks in closing.

First, we would like to thank Joseph Caron, whose term as director will end as of the end of our 2023 annual meeting, for his 12 years of dedicated service. We very much appreciate his many contributions to Manulife.

We would also like to recognize Roy Gori and the Executive Leadership Team for their steadfast leadership,

anchored always in our values. The past several years have brought many challenges, from an unpredictable macroeconomic environment to an unprecedented global pandemic and its many impacts. They have navigated each of these challenges with characteristic energy and focus and continued to drive resilient results.

We are also grateful to each of our 40,000 winning team members at Manulife, whose commitment to our customers, our values, and to each other remains an inspiration.

We would also like to thank you, our fellow shareholders, for your trust, support, and candid feedback. While the past few years have been challenging, the Company's ability to deliver through such times is proof positive that we have the right strategy, the right team, and the right to win.

**John Cassaday**
Chairman Emeritus

**Don Lindsay**
Chair of the Board

On behalf of the Board and Manulife's shareholders, customers, and colleagues, I would like to offer our sincere thanks to John for his 30 years of service. We have marked many milestones during that time, and we are grateful for his unwavering leadership and many contributions to the Company. John's sense of duty, grace, insight, and wisdom have served the Company well, and he will be missed. We wish him the very best in his future endeavours. Looking to the future, I appreciate the trust you have placed in me and I am humbled to serve as the Chair of your Board as we work together to achieve our bold ambition.

**Don Lindsay**
Chair of the Board

Manulife

3

![img-13.jpeg](img-13.jpeg)

# Roy Gori

President and Chief Executive Officer

**Dear fellow shareholders,**
Looking back on all we've accomplished over the past year, I'm tremendously proud of the way our colleagues once again showed their creativity, resilience, and innovative spirit.

With the pandemic continuing to impact many of our markets through much of the year, our team focused on supporting our existing customers-and reaching new ones-knowing how important our products are to ensuring their well-being and financial future. Our colleagues also adapted to new ways of working, as we reopened our offices and migrated to our new Working Better approach. With international travel resuming, I had the privilege of visiting many of our teams for the first time since 2020, and it was wonderful to connect and re-connect in person after such a long time away. For me, it underscored the value of the time we spend together, and I've come away from each interaction feeling energized and optimistic about our future.

The end of 2022 marked five years since we embarked on our journey to become the most digital, customer-centric global company in our industry. At that time, we set out five strategic priorities-accelerate growth; digital, customer leader; expense efficiency; portfolio optimization; and high performing team-essential to achieving our bold ambition. Today, thanks to our disciplined approach, we've delivered record net income and remittances, significantly improved our Net Promoter Score (NPS), industry-leading team and culture, and strong market leadership positions across attractive markets and businesses. In Asia, we are not only at scale as a top three pan-Asian insurer, but we are well positioned to benefit from the

4 | 2022 Annual Report

significant growth opportunities in the region. In Global Wealth and Asset Management (Global WAM), we are a global leader in retirement, a top 10 global retail multi-manager, and one of the largest natural resource asset managers for institutional investors globally. We are a leading life insurer in Canada, and we are a global leader in behavioural insurance.

We continue to believe in the growing need for health, wealth, and retirement solutions, which have been amplified by the pandemic, and we are well positioned to capitalize on global megatrends. The global growth of household wealth remains a compelling opportunity. This is especially true in Asia, where the middle class is expected to grow 75% to 3.5 billion people by 2030. The size and proportion of an aging population globally is growing rapidly with one in six people expected to be over the age of 60 by 2030. And, as digitization continues to accelerate globally, success will be defined by those who are able to provide extraordinary experiences.

We are uniquely positioned to meet these opportunities with a diversified, scaled business, and have demonstrated that we have the right strategy to win, anchored in our five strategic priorities.

## Accelerating growth

In 2022, our diversified Global WAM business recorded net inflows of $3.3 billion globally, against an industry backdrop of net outflows in North America. This performance extended our remarkable track record of delivering positive net flows in 12 of the past 13 years.

Our Global WAM and Asia results contributed to delivering 63% of our core earnings from our highest potential businesses against a

baseline of 54% in 2017. We will continue to drive this momentum through our growing agency force, successful bancassurance partnerships, transformational digital offerings, and strategic expansion into high growth markets in the Asia region where, by 2025, we aim to generate 50% of our core earnings.

We're bringing our growth ambitions to life in the most attractive high growth markets through partnerships like our 16-year exclusive bancassurance partnership with VietinBank in Vietnam, which has already shown strong momentum in its first year. We also became the first global wealth and asset manager to acquire a 100% stake in a fully operating public fund management company in mainland China through our investment in Manulife TEDA Fund Management Co., Ltd.

## Delivering for our customers

We want to be the digital, customer leader in our industry, which is why we remain focused on providing simple, intuitive and innovative experiences across our business. Through those efforts, we've

improved our NPS from +1 in 2017, to +20 in 2022, and improved our straight-through-processing (STP) rate from 68% in 2018 to 83% in 2022. We have also invested almost $1 billion to enhance our digital capabilities since 2018.

We're proud of our leading suite and continued expansion of behavioural insurance offerings. In the United States, we achieved our highest ever full year domestic life insurance sales with the John Hancock Vitality PLUS feature, reflecting the increasing attractiveness of the Vitality feature as an option for health-focused life insurance consumers.

We're continuing to innovate to provide our customers with unique wellness offerings. In 2022, we entered into a partnership with GRAIL, a healthcare company, offering access to Galleri®, their leading edge, multi-cancer early detection test to a pilot group of customers through John Hancock Vitality. We are the first life insurance carrier to make GRAIL's Galleri® test available, enabling eligible customers to take proactive steps to better understand and make more informed choices about their health.

> “We continue to believe in the growing need for *health, wealth, and retirement* solutions, which have been amplified by the pandemic, and we are well positioned to capitalize on global megatrends underpinning our strategy.”

Manulife

5

## Driving expense efficiency

We continue to foster a culture of expense efficiency and prioritize our resources where they will be most effective. This focus has allowed us to contain the growth of our general expenses to less than 8% and improve our expense efficiency ratio from 55.4% in 2017 to 50.9% in 2022, with a commitment to our target of below 50%. We're achieving this through digitization, simplifying and standardizing our processes, optimizing our structure, and careful management of our expenditures, embedding a culture of disciplined spending to enable growth.

## Optimizing our portfolio

By the end of 2022, we freed up $9.0 billion of capital from our legacy portfolio, having previously achieved our 2022 target to release $5.0 billion of capital three years ahead of schedule in 2019. We have also made progress towards our business mix targets for long-term care insurance and variable annuities to contribute less than 15% of core earnings by 2025. We created value for our shareholders, executing two reinsurance transactions of our U.S. variable annuity block in 2022, releasing $2.5 billion of capital and buying back 4.1% of our common shares in 2022. Portfolio optimization remains a high priority as we continue to explore opportunities to reduce risk and release capital from our legacy businesses.

## Our winning team and culture

None of this would be possible without the efforts and dedication of our high-performing team, and I'm very pleased that we achieved

top quartile employee engagement scores in 2020, 2021, and 2022. Since 2017, we've seen continued improvement each year, and in 2022, we ranked in the top six percent amongst global finance and insurance companies. In addition, we have been consistently recognized as an employer of choice, including as one of the World's Best Employers by Forbes for the third consecutive year.

We've continued to invest in robust learning and development, leadership, and recognition programmes, and we've enjoyed the opportunities for in-person collaboration that have emerged through our return to offices during 2022. These investments will be critical to providing us with a long-term, sustainable competitive advantage.

## Our commitment to a healthier planet and community

As a health and wealth company, sustainability is about creating economic return while also addressing the world's societal and environmental challenges. Whilst we are already net zero in our scope 1 and scope 2 operational greenhouse gas emissions, we are committed to further reducing our absolute emissions by 35% by 2035, and to achieving net zero scope 3 financed emissions in our General Account by 2050.

In 2022, we shared our Impact Agenda, an articulation of our long-standing commitment to empowering health and wellbeing, driving inclusive economic opportunities, and accelerating a sustainable future. Staying true to our Mission through our Impact Agenda is how

we will create long-term value for our business, our communities, and the planet. It's how we all win.

In recognition of our continued and strengthening commitment to sustainability performance, we were once again named to the S&P Dow Jones Sustainability North America Index, one of only seven insurers across North America to be included, and within the top 10% of our industry peers globally.

I'm tremendously proud of the progress our winning team has made: we've driven great change, delivered for our customers and shareholders, and bolstered a great culture in which all of our colleagues can thrive.

Our disciplined approach helped us remain resilient throughout the pandemic, while delivering record net income in 2022, a testament to our strong focus on delivering shareholder value as a team.

## Thank you

I am honoured to lead our winning team and want to acknowledge each of my Manulife colleagues around the world for their contributions to our shared achievements. Thank you.

I have the privilege of acknowledging our outgoing Chairman, John Cassaday, and of thanking him on behalf of our team for his 30 years of service as a member of our Board of Directors, including the past five as Chairman. During this time, he has made invaluable contributions to our growth, and in helping us to become the Company we are today. On a personal note, I have appreciated his support and wise counsel throughout my tenure. Thank you, John.

6 | 2022 Annual Report

“I’m tremendously proud of the progress our winning team has made: we’ve driven *great change*, delivered for our customers and shareholders, and bolstered a *great culture* in which all of our colleagues can thrive.”

With John’s departure, I also have the privilege of welcoming our incoming Chair of the Board, Don Lindsay. As a long-standing member of our Board, Don has a deep knowledge of our business and I look forward to working even more closely with him in his new role.

In closing, I’d like to thank you, my fellow shareholders and customers, for the trust you have extended to me, and to our team. Our team is confident that our all-weather

strategy, diverse business model, and considerable financial strength and flexibility position us well to win and deliver in 2023 and beyond. We will continue to work diligently to execute against our strategic priorities as we build the future of insurance and asset management, always keeping our mission-Decisions made *easier*. Lives made *better*,-at the heart of all we do.

Sincerely,

**Roy Gori**

President and Chief Executive Officer

Manulife

7

# Caution regarding forward-looking statements

From time to time, Manulife Financial Corporation (“MFC”) makes written and/or oral forward-looking statements, including in this document. In addition, our representatives may make forward-looking statements orally to analysts, investors, the media and others. All such statements are made pursuant to the “safe harbour” provisions of Canadian provincial securities laws and the U.S. Private Securities Litigation Reform Act of 1995.

The forward-looking statements in this document include, but are not limited to, statements with respect to possible share buybacks under our normal course issuer bid, expected expense savings in 2023 related to actions taken in 2021, the Company’s strategic priorities and 2025 targets for its highest potential businesses, net promoter score, straight-through-processing, ongoing expense efficiency, portfolio optimization, employee engagement, its medium-term financial and operating targets, its ability to achieve our financed emissions and absolute scope 1 and 2 emissions targets, its ability to manage its long-term care and variable annuity blocks of business to maturity and its ability to secure future premium rate increases in respect of its long-term care policies and also relate to, among other things, our objectives, goals, strategies, intentions, plans, beliefs, expectations and estimates, and can generally be identified by the use of words such as “may”, “will”, “could”, “should”, “would”, “likely”, “suspect”, “outlook”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “plan”, “forecast”, “objective”, “seek”, “aim”, “continue”, “goal”, “restore”, “embark” and “endeavour” (or the negative thereof) and words and expressions of similar import, and include statements concerning possible or assumed future results. Although we believe that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements and they should not be interpreted as confirming market or analysts’ expectations in any way.

Certain material factors or assumptions are applied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements. Important factors that could cause actual results to differ materially from expectations include but are not limited to: general business and economic conditions (including but not limited to the performance, volatility and correlation of equity markets, interest rates, credit and swap spreads, inflation rates, currency rates, investment losses and defaults, market liquidity and creditworthiness of guarantors, reinsurers and counterparties); the ongoing prevalence of COVID-19, including any variants, as well as actions that have been, or may be taken by governmental authorities in response to COVID-19, including the impacts of any variants; changes in laws and regulations; changes in accounting standards applicable in any of the territories in which we operate; changes in regulatory capital requirements; our ability to obtain premium rate increases on in-force policies; our ability to execute strategic plans and changes to strategic plans; downgrades in our financial strength or credit ratings; our ability to maintain our reputation; impairments of goodwill or intangible assets or the establishment of provisions against future tax assets; the accuracy of estimates relating to morbidity, mortality and policyholder behaviour; the accuracy of other estimates used in applying accounting policies, actuarial methods and embedded value methods; our ability to implement effective hedging strategies and unforeseen consequences arising from such strategies; our ability to source appropriate assets to back our long-dated liabilities; level of competition and consolidation; our ability to market and distribute products through current and future distribution channels; unforeseen liabilities or asset impairments arising from acquisitions and dispositions of businesses; the realization of losses arising from the sale of investments classified as available-for-sale; our liquidity, including the availability of financing to satisfy existing financial liabilities on expected maturity dates when required;

obligations to pledge additional collateral; the availability of letters of credit to provide capital management flexibility; accuracy of information received from counterparties and the ability of counterparties to meet their obligations; the availability, affordability and adequacy of reinsurance; legal and regulatory proceedings, including tax audits, tax litigation or similar proceedings; our ability to adapt products and services to the changing market; our ability to attract and retain key executives, employees and agents; the appropriate use and interpretation of complex models or deficiencies in models used; political, legal, operational and other risks associated with our non-North American operations; geopolitical uncertainty, including international conflicts; acquisitions and our ability to complete acquisitions including the availability of equity and debt financing for this purpose; the disruption of or changes to key elements of the Company’s or public infrastructure systems; environmental concerns including climate change; our ability to protect our intellectual property and exposure to claims of infringement; and our inability to withdraw cash from subsidiaries.

Additional information about material risk factors that could cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements may be found in this document under “Risk Management and Risk Factors” and “Critical Actuarial and Accounting Policies” and in the “Risk Management” note to the Consolidated Financial Statements as well as elsewhere in our filings with Canadian and U.S. securities regulators. The forward-looking statements in this document are, unless otherwise indicated, stated as of the date hereof and are presented for the purpose of assisting investors and others in understanding our financial position and results of operations, our future operations, as well as our objectives and strategic priorities, and may not be appropriate for other purposes. We do not undertake to update any forward-looking statements, except as required by law.

8 | 2022 Annual Report

## Table of contents

- **10** Management's Discussion and Analysis
  - **10** Manulife Financial Corporation
  - **22** Asia
  - **26** Canada
  - **29** U.S.
  - **32** Global Wealth and Asset Management
  - **36** Corporate and Other
  - **38** Investments
  - **43** Fourth Quarter Financial Highlights
  - **46** Risk Management and Risk Factors
  - **85** Capital Management Framework
  - **88** Critical Actuarial and Accounting Policies
  - **101** Controls and Procedures
  - **102** Non-GAAP and Other Financial Measures
  - **128** Additional Disclosures
- **131** Consolidated Financial Statements
- **145** Notes to Consolidated Financial Statements
- **230** Additional Actuarial Disclosures
- **232** Board of Directors
- **233** Executive Leadership Team
- **234** Office Listing
- **236** Glossary of Terms
- **237** Shareholder Information
- **237** Dividend Information

Manulife

9

# Management's Discussion and Analysis

This Management's Discussion and Analysis ('MD&A') is current as of February 15, 2023.

## 1. Manulife Financial Corporation

Manulife Financial Corporation is a leading international financial services group that helps people make their decisions easier and lives better. With our global headquarters in Toronto, Canada, we operate as Manulife across our offices in Asia, Canada, and Europe, and primarily as John Hancock in the United States. We provide financial advice, insurance, and wealth and asset management solutions for individuals, groups and institutions. At the end of 2022, we had more than 40,000 employees, over 116,000 agents, and thousands of distribution partners, serving over 34 million customers. At the end of 2022, we had $1.3 trillion (US$1.0 trillion) in assets under management and administration$^{1}$, including total invested assets of $0.4 trillion (US$0.3 trillion), and segregated funds net assets of $0.3 trillion (US$0.3 trillion). We trade as 'MFC' on the Toronto, New York, and the Philippine stock exchanges, and under '945' in Hong Kong.

Our reporting segments are:

- • Asia - providing insurance products and insurance-based wealth accumulation products in Asia.
- • Canada - providing insurance products, insurance-based wealth accumulation products, and banking services in Canada and has an in-force variable annuity business.
- • U.S. - providing life insurance products and insurance-based wealth accumulation products and has an in-force long-term care insurance business and an in-force annuity business.
- • Global Wealth and Asset Management ('Global WAM') - providing investment advice and innovative solutions to our retail, retirement and institutional clients around the world under the Manulife Investment Management ('MIM') brand.
- • Corporate and Other - comprised of investment performance on assets backing capital, net of amounts allocated to operating segments; financing costs; costs incurred by the corporate office related to shareholder activities (not allocated to operating segments); our Property and Casualty ('P&C') Reinsurance business; and run-off reinsurance business lines.

In this document, the terms 'Company', 'Manulife', 'we' and 'our' mean Manulife Financial Corporation ('MFC') and its subsidiaries. The term 'MLI' means The Manufacturers Life Insurance Company and its subsidiaries.

## Profitability

### Profitability

As at and for the years ended December 31,

|  | 2022 | 2021 |
| --- | --- | --- |
| Net income attributed to shareholders | $7,294 | $7,105 |
| Core earnings (1) | $6,182 | $6,536 |
| Diluted earnings per common share ($) | $3.68 | $3.54 |
| Diluted core earnings per common share ($) (2) | $3.10 | $3.25 |
| Return on common shareholders' equity ('ROE') | 14.1% | 14.2% |
| Core ROE (2) | 11.9% | 13.0% |
| Expense efficiency ratio (2) | 50.9% | 48.9% |
| General expenses | $7,782 | $7,828 |

$^{(1)}$ This item is a non-GAAP financial measure. See 'Non-GAAP and Other Financial Measures' below for more information.

$^{(2)}$ This item is a non-GAAP ratio. See 'Non-GAAP and Other Financial Measures' below for more information.

**Our net income attributed to shareholders was $7.3 billion in 2022 compared with $7.1 billion in 2021.** Net income attributed to shareholders is comprised of core earnings (consisting of items we believe reflect the underlying earnings capacity of the business), which amounted to $6.2 billion in 2022 compared with $6.5 billion in 2021, and items excluded from core earnings of $1.1 billion of net gains in 2022 compared with $0.6 billion of net gains in 2021.

$^{1}$ This item is a non-GAAP financial measure. See 'Non-GAAP and Other Financial Measures' below for more information.

10 | 2022 Annual Report | Management's Discussion and Analysis

The $0.2 billion increase in net income attributed to shareholders in 2022 compared with 2021 was driven by gains related to the two U.S. variable annuity reinsurance transactions and the favourable impact of an increase in the Canadian corporate tax rate, partially offset by lower gains from investment-related experience and lower core earnings. Investment-related experience gains in 2022 reflected the favourable impact of fixed income reinvestment activities, strong credit experience and higher-than-expected returns (including fair value changes) on alternative long duration assets (“ALDA”) primarily driven by private equity, infrastructure, and timberland, partially offset by real estate. The net charge from the direct impact of markets in 2022 was primarily driven by the impact of unfavourable equity market performance and losses from the sale of available-for-sale (“AFS”) bonds, partially offset by gains due to flattening of the yield curve in the U.S. and Canada.

The $0.4 billion or 7%1 decrease in core earnings on a constant exchange rate basis compared with 2021 was driven by lower new business gains in Asia and the U.S., losses from the unfavourable impact of markets on seed money investments in new and segregated mutual funds of $159 million in 2022 (compared with gains of $27 million in 2021) and lower net gains on the sale of AFS equities in Corporate and Other, lower net fee income from lower average assets under management and administration2 (“average AUMA”) in Global WAM, lower in-force earnings in U.S. Annuities of $191 million due to the variable annuity reinsurance transactions and higher charges in our P&C Reinsurance business in 2022. These items were partially offset by higher yields on fixed income investments and lower expenses in Corporate and Other, in-force business growth in Asia and Canada and experience gains in Canada compared with losses in 2021. Lower expenses in Corporate and Other were primarily driven by lower supplemental pension expense due to market impacts. In 2022, core earnings included a net charge of $143 million ($152 million pre-tax) related to policyholder insurance and annuity experience compared with a net charge of $110 million ($127 million pre-tax) in 2021.3 Actions to improve the capital efficiency of our legacy business resulted in $191 million lower core earnings in 2022 compared with 2021. Excluding these actions, in-force business increased 6%4 compared with 2021.

Core earnings by segment is presented in the following table. See Asia, Canada, U.S., and Global WAM sections below.

| For the years ended December 31, ($ millions) | 2022 | 2021 | % change (1) 2022 vs 2021 |
| --- | --- | --- | --- |
| Core earnings by segment |  |  |  |
| Asia | $2,132 | $2,176 | (2)% |
| Canada | 1,359 | 1,179 | 15% |
| U.S. | 1,700 | 1,936 | (15)% |
| Global Wealth and Asset Management | 1,241 | 1,406 | (14)% |
| Corporate and Other (excluding core investment gains) | (650) | (561) | (16)% |
| Core investment gains (2) | 400 | 400 | - |
| Total core earnings | $6,182 | $6,536 | (7)% |

$^{(1)}$ Percentage change in core earnings on a constant exchange rate basis is a non-GAAP ratio. See “Non-GAAP and Other Financial Measures” below for more information.

$^{(2)}$ See note (2) in the table below. This item is disclosed under the Office of the Superintendent of Financial Institution’s (“OSFI’s”) Source of Earnings Disclosure (Life Insurance Companies) guideline.

1 Percentage growth / declines in core earnings, core general expenses, pre-tax core earnings, assets under management and administration, assets under management, core EBITDA, general expenses, Manulife Bank average net lending assets and Global Wealth and Asset Management revenue are stated on a constant exchange rate basis, a non-GAAP ratio. See “Non-GAAP and Other Financial Measures” below for more information.

2 For more information on this metric, see “Non-GAAP and Other Financial Measures” below.

3 Policyholder experience includes gains of $20 million post-tax in 2022 (2021 - gains of $29 million post-tax) from the release of margins on medical policies in Hong Kong that have lapsed for customers who have opted to change their existing policies to the new Voluntary Health Insurance Scheme (“VHIS”) products. These gains did not have a material impact on core earnings as they were mostly offset by new business strain.

4 Excludes $243 million (pre-tax) in 2022 of lost expected profit on in-force relating to the U.S. variable annuity reinsurance transaction. Percentage growth is based on the pre-tax impact of these actions, and is stated on a constant exchange rate basis.

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11

The table below presents 2022 and 2021 net income attributed to shareholders consisting of core earnings and items excluded from core earnings.

For the years ended December 31,
($ millions)

|  | 2022 | 2021 |
| --- | --- | --- |
| Core earnings | $6,182 | $6,536 |
| Items excluded from core earnings: (1) |  |  |
| Investment-related experience outside of core earnings (2) | 817 | 1,642 |
| Direct impact of equity markets and interest rates and variable annuity guarantee liabilities | (840) | (817) |
| Direct impact of equity markets and variable annuity guarantee liabilities (3) | (995) | 289 |
| Fixed income reinvestment rates assumed in the valuation of policy liabilities (4) | 576 | (346) |
| Sale of AFS bonds and derivative positions in the Corporate and Other segment (4) | (421) | (228) |
| Changes to the ultimate reinvestment rate (5) | - | (532) |
| Change in actuarial methods and assumptions (6) | 36 | (41) |
| Restructuring charge (7) | - | (115) |
| Reinsurance transactions, tax-related items and other (8) | 1,099 | (100) |
| Total items excluded from core earnings | 1,112 | 569 |
| Net income attributed to shareholders | $7,294 | $7,105 |

$^{(1)}$ These items are disclosed under OSFI's Source of Earnings Disclosure (Life Insurance Companies) guideline.

$^{(2)}$ In accordance with our definition of core earnings, we include up to $400 million of net favourable investment-related experience reported in a single year, as core investment gains (see "Non-GAAP and Other Financial Measures" below). Items excluded from core earnings include net investment-related experience in excess of $400 million per annum or net unfavourable investment-related experience on a year-to-date basis. In 2022, the investment-related experience net gain of $817 million reflected the favourable impact of fixed income reinvestment activities, strong credit experience, and higher-than-expected returns (including fair value changes) on ALDA primarily driven by private equity, infrastructure, and timberland, partially offset by real estate. In 2021, the investment-related experience net gain of $1,642 million reflected higher-than-expected returns (including fair value changes) on ALDA primarily driven by gains on private equity and infrastructure, strong credit experience and the favourable impact of fixed income reinvestment activities.

$^{(3)}$ In 2022, the net charge related to equity markets of $995 million included a charge of $893 million from gross equity exposure and a charge of $111 million from dynamic hedge experience, partially offset by a modest gain of $9 million from macro hedging experience. In 2021, the net gain of $289 million included a gain of $382 million from gross equity exposure, partially offset by a charge of $90 million from dynamic hedge experience and a modest charge of $3 million from macro hedging experience.

$^{(4)}$ In 2022, the gain due to fixed income reinvestment rates of $576 million was primarily due to the flattening of the yield curve in the U.S. and Canada, partially offset by losses on the sale of available-for-sale bonds. In 2021, the charge due to fixed income reinvestment rates of $346 million was primarily due to the increase in risk-free interest rates and the overall steepening of the yield curve in the U.S. and Canada.

$^{(5)}$ In 2021, the Canadian Actuarial Standards Board issued a new promulgation with reductions to the ultimate reinvestment rate ("URR") and updates to the calibration criteria for stochastic risk-free rates. The updated standard included a reduction of 15 basis points in the URR and a corresponding change to stochastic risk-free rate modeling and was effective October 15, 2021. The long-term URR for risk-free rates in Canada is prescribed at 2.9% and we use the same assumption for the U.S. Our assumption for Japan is 1.5%.

$^{(6)}$ See "Critical Actuarial and Accounting Policies - Review of Actuarial Methods and Assumptions" section below for further information on the 2022 and 2021 charges.

$^{(7)}$ In 2021, we reported a restructuring charge of $150 million pre-tax ($115 million post-tax) related to actions that are expected to result in recurring total annual expense savings of $250 million (pre-tax) by 2023; $100 million (pre-tax) of these expected total annual savings were realized in 2021, $200 million (pre-tax) were realized in 2022, and $250 million (pre-tax) are expected to be realized in 2023.$^{1}$

$^{(8)}$ In 2022, the $1,099 million of gain included a net gain of $846 million from the U.S. variable annuity reinsurance transactions and a net gain of $86 million related to acquiring full ownership interest of Manulife TEDA Fund Management Co., LTD ("MTEDA") by purchasing the remaining 51% of shares from our joint venture partner, partially offset by a charge of $71 million related to withholding tax on anticipated remittances resulting from the U.S. variable annuity reinsurance transaction, a charge of $17 million resulting from a reinsurance transaction in Asia, a $13 million increase to an existing legal provision in the U.S. and an integration charge of $8 million in our Vietnam operation. In addition, we reported tax benefits of $297 million in 2022 as a result of an increase in the Canadian corporate tax rate. In 2021, the $100 million net charge included a $119 million charge relating to updating the impact of the 2017 U.S. Tax Cuts and Jobs Act and a $37 million charge resulting from a reinsurance transaction in the U.S., partially offset by a $37 million gain related to affiliate reinsurance transactions in Asia and a $19 million gain related to the divestment of our Thailand operation.

Net income attributed to shareholders by segment is presented in the following table. See Asia, Canada, U.S., and Global WAM sections below.

For the years ended December 31,
($ millions)

|  | 2022 | 2021 | % change (1) 2022 vs 2021 |
| --- | --- | --- | --- |
| Net income attributed to shareholders by segment |  |  |  |
| Asia | $2,224 | $3,057 | (27)% |
| Canada | 1,530 | 1,354 | 13% |
| U.S. | 3,950 | 2,080 | 90% |
| Global Wealth and Asset Management | 1,321 | 1,406 | (6)% |
| Corporate and Other | (1,731) | (792) | (119)% |
| Total net income attributed to shareholders | $7,294 | $7,105 | 3% |

$^{(1)}$ Percentage change is on an actual exchange rate basis.

**Diluted earnings per common share** was $3.68 in 2022, compared with $3.54 in 2021 primarily related to the increase in net income attributed to common shareholders. Diluted core earnings per common share was $3.10 in 2022, compared with $3.25 in 2021 primarily related to the decrease in core earnings. The diluted weighted average common shares outstanding was 1,913 million in 2022 and 1,946 million in 2021.

**Return on common shareholders' equity ("ROE")** for 2022 was 14.1%, compared with 14.2% for 2021 and core return on common shareholders' equity ("core ROE") was 11.9% in 2022 compared with 13.0% in 2021. The decrease in 2022 ROE and core ROE were primarily driven by a decrease in common shareholders' core earnings.

$^{1}$ See "Caution regarding forward-looking statements" above.

12 | 2022 Annual Report | Management's Discussion and Analysis

**Expense efficiency ratio** was 50.9% for 2022, compared with 48.9% in 2021. The 2.0 percentage point increase in the ratio compared with 2021 was driven by an 8% decrease in pre-tax core earnings$^{1}$. Core general expenses$^{1}$ were in line with 2021 driven by higher workforce costs offset by the net favourable impact of our strategic focus on digitization and efficiency, lower distribution-related and discretionary expenses reflecting lower 2022 sales, and lower pension costs primarily due to market impacts.

Total general expenses in 2022 were in line with 2021 on both a constant and actual exchange rate basis due to the items noted above for core general expenses and a number of items recorded outside of core earnings. These include the non-recurrence of a restructuring charge and the establishment of a legal provision in 2021, partially offset by various 2022 items, including an integration charge in our Vietnam operation, expenses associated with the U.S. variable annuity reinsurance transactions, and a legal provision in the U.S.

## Business Performance

### Business performance

As at and for the years ended December 31,

|  | 2022 | 2021 |
| --- | --- | --- |
| As at and for the years ended December 31, ($ millions, unless otherwise stated) |  |  |
| Asia APE sales | $3,569 | $4,050 |
| Canada APE sales | 1,261 | 1,227 |
| U.S. APE sales | 823 | 788 |
| Total APE sales (1) | 5,653 | 6,065 |
| Asia new business value | 1,349 | 1,666 |
| Canada new business value | 362 | 307 |
| U.S. new business value | 352 | 270 |
| Total new business value (1) | 2,063 | 2,243 |
| Global Wealth and Asset Management gross flows ($ billions) (1) | 136.6 | 144.7 |
| Global Wealth and Asset Management net flows ($ billions) (1) | 3.3 | 27.9 |
| Global Wealth and Asset Management assets under management and administration ($ billions) (2),(3) | 779.9 | 855.9 |
| Global Wealth and Asset Management total invested assets ($ billions) (3) | 3.7 | 4.5 |
| Global Wealth and Asset Management segregated funds net assets ($ billions) (3) | 224.2 | 252.6 |
| Total assets under management and administration ($ billions) | 1,314.6 | 1,425.8 |
| Total invested assets ($ billions) | 414.0 | 427.1 |
| Total net segregated funds net assets ($ billions) | 348.6 | 399.8 |

$^{(1)}$ For more information on this metric, see 'Non-GAAP and Other Financial Measures' below.

$^{(2)}$ This item is a non-GAAP financial measure. See 'Non-GAAP and Other Financial Measures' below for more information.

$^{(3)}$ The Global WAM portion of AUMA as at December 31, 2022 was $779.9 billion, a decrease of 9% compared with December 31, 2021, driven by the impact of higher interest rates and equity market declines, partially offset by $8.8 billion in assets acquired and net inflows of $3.3 billion. The Global WAM segregated funds net assets were $224.2 billion as at December 31, 2022, a decline of 11% compared with December 31, 2021 on an actual exchange rate basis driven by the impact of higher interest rates and equity market declines.

**Annualized premium equivalent ('APE') sales** were $5.7 billion in 2022, a decrease of 7%$^{2}$ compared with 2021. In Asia, COVID-19 continued to impact sales in select markets throughout the year, with the situation beginning to improve in most markets, as containment measures were progressively relaxed. Travel restrictions between mainland China and, Hong Kong and Macau impacted cross-border commerce in 2022. Weaker customer sentiment negatively impacted sales in the second half of the year. Asia APE sales declined 12% compared with 2021, due to decreases experienced in Hong Kong, Japan, Vietnam and Other Emerging Markets$^{3}$, partially offset by increases in mainland China and Singapore. In Hong Kong, APE sales decreased 33% compared with 2021, primarily reflecting weaker customer sentiment on financial planning decisions and continued COVID-19 containment measures through most of the year. In Japan, APE sales decreased 15% compared with 2021, reflecting lower corporate-owned life insurance ('COLI') product sales, partially offset by higher individual protection and other wealth sales. Vietnam APE sales decreased 9% compared with 2021, reflecting a decline in the agency channel, partially offset by growth in the bank channel. Other Emerging Markets APE sales decreased 4% compared with 2021, reflecting a decline in the agency and bank channels. Mainland China APE sales increased 4% compared with 2021, driven by growth in the bank channel, partially offset by a decline in the agency channel. Singapore APE sales increased 1% compared with 2021, reflecting growth in the bank channel offset by a decline in the broker channel. In Canada, APE sales increased 3% compared with 2021, primarily driven by higher sales in group insurance, participating insurance and travel insurance, partially offset by the impact of market volatility on the demand for segregated fund products, and lower universal life and health and dental sales. In the U.S., APE sales increased 1% compared with 2021, due to an increase in international sales which are reported as part of U.S. segment results, partially offset by lower sales of domestic life insurance products. APE sales of products with the John Hancock Vitality PLUS feature were a record-setting US$332 million, an increase of 13% compared with 2021, reflecting the increasing attractiveness of the Vitality feature as an option for health-focused life insurance consumers.

**New business value ('NBV')** was $2.1 billion in 2022, a decrease of 9% compared with 2021. In Asia, NBV was $1.3 billion in 2022, a decrease of 20% compared with 2021, due to lower NBV in Hong Kong, Singapore and mainland China, partially offset by higher NBV in

$^{1}$ This item is a non-GAAP financial measure. See 'Non-GAAP and Other Financial Measures' below for more information.

$^{2}$ Percentage growth / declines in APE sales, gross flows, and NBV are stated on a constant exchange rate basis.

$^{3}$ Other Emerging Markets includes Indonesia, the Philippines, Malaysia, Thailand, Cambodia, and Myanmar.

![Manulife logo]() Manulife 13

Japan and Other Emerging Markets. NBV in Hong Kong decreased 27% compared with 2021, reflecting lower sales volumes, partially offset by favourable product mix and the impact of higher interest rates. NBV in Singapore and mainland China decreased 19% and 58%, respectively, compared with 2021, reflecting changes in product mix. NBV in Vietnam was in line compared with 2021, as the impact of favourable product mix was offset by lower sales volumes. NBV in Japan and Other Emerging Markets increased 28% and 5%, respectively, compared with 2021, reflecting favourable product mix, partially offset by lower sales volumes. In Canada, NBV of $362 million increased 18% compared with 2021, driven by higher margins across all businesses and higher group insurance volumes, partially offset by lower volumes in annuities. In the U.S., NBV of $352 million increased 25% compared with 2021, driven by higher interest rates, higher international sales volumes and product actions partially offset by lower brokerage sales volumes.

**Global WAM gross flows** of $136.6 billion decreased $8.1 billion or 7% compared with 2021, primarily driven by lower gross flows in Retail. See “Global Wealth and Asset Management” section below for further details.

**Global WAM net inflows** were $3.3 billion in 2022, compared with net inflows of $27.9 billion in 2021. Net outflows in Retirement were $0.1 billion compared with net inflows of $1.1 billion in the prior year, driven by higher plan redemptions in the U.S. Net outflows in Retail were $1.6 billion compared with net inflows of $29.2 billion in the prior year, reflecting higher redemptions and lower gross flows due to decreased investor demand amid higher interest rates and equity market declines in 2022. Net inflows in Institutional Asset Management were $5.0 billion compared with net outflows of $2.4 billion in the prior year, driven by the non-recurrence of a $9.4 billion redemption in 2021 and higher equity mandate gross flows mainly from a $1.9 billion sale in the second quarter of 2022 (“2Q22”).

### Assets under Management and Administration (“AUMA”)

AUMA as at December 31, 2022 was $1.3 trillion, a decrease of 11% compared with December 31, 2021, primarily due to the impact of higher interest rates and lower equity markets. Total invested assets and segregated funds net assets decreased 3% and 13%, respectively, on an actual exchange rate basis, primarily due to the impact of higher interest rates and lower equity markets.

### Assets under Management and Administration

As at December 31,

| ($ millions) | 2022 | 2021 |
| --- | --- | --- |
| Total invested assets | $414,001 | $427,098 |
| Segregated funds net assets (1) | 348,562 | 399,788 |
| Mutual funds, institutional asset management and other (1),(2) | 381,779 | 411,271 |
| Total assets under management | 1,144,342 | 1,238,157 |
| Other assets under administration | 170,224 | 187,631 |
| Total assets under management and administration | $1,314,566 | $1,425,788 |

$^{(1)}$ These assets are not available to satisfy the liabilities of the Company’s general fund.

$^{(2)}$ Other funds represent pension funds, pooled funds, endowment funds and other institutional funds managed by the Company on behalf of others.

### Revenue

Revenue includes (i) premiums received on life and health insurance policies and fixed annuity products, net of premiums ceded to reinsurers; (ii) investment income comprised of income earned on general fund assets, credit experience and realized gains and losses on assets held in the Corporate and Other segment; (iii) fee and other income received for services provided; and (iv) realized and unrealized gains and losses on assets supporting insurance and investment contract liabilities and on our macro hedging program. Premium equivalents from administrative services only (“ASO”), as well as deposits received by the Company on investment contracts such as segregated funds, mutual funds and managed funds are not included in revenue; however, the Company does receive fee income from these products, which is included in revenue. Fees generated from deposits and ASO premium and deposit equivalents are an important part of our business and as a result, revenue does not fully represent sales and other activity taking place during the respective periods.

In 2022, revenue before realized and unrealized investment gains and losses was $62.2 billion compared with $65.8 billion in 2021. The decrease was driven primarily by the 2022 U.S. variable annuity reinsurance transactions, which impacted other revenue and ceded premiums, as well as from unfavourable markets.

In 2022, the net realized and unrealized investment gains and losses on assets supporting insurance and investment contract liabilities and on the macro hedging program was a charge of $45.1 billion compared with a charge of $4.0 billion for 2021. The 2022 charge was primarily due to the impact of interest rate increases and lower equity markets partially offset by fair value gains on ALDA. The 2021 charge was primarily due to the impact of interest rate increases partially offset by fair value gains on ALDA and higher equity markets.

See “Impact of Fair Value Accounting” below. Also, see “Profitability” above for additional information on the impact on 2022 net income attributed to shareholders from the direct impact of equity markets and interest rates and variable annuity guarantee liabilities.

14 | 2022 Annual Report | Management’s Discussion and Analysis

## Revenue

For the years ended December 31,

($ millions)

|  | 2022 | 2021 |
| --- | --- | --- |
| Gross premiums | $44,102 | $44,344 |
| Premiums ceded to reinsurers | (6,249) | (5,279) |
| Net premium income | 37,853 | 39,065 |
| Investment income | 15,207 | 15,627 |
| Other revenue | 9,164 | 11,132 |
| Revenue before realized and unrealized investment gains and losses | 62,224 | 65,824 |
| Realized and unrealized investment gains and losses on assets supporting insurance and investment contract liabilities and on the macro hedge program (1) | (45,077) | (4,003) |
| Total revenue | $17,147 | $61,821 |

$^{(1)}$ See 'Impact of Fair Value Accounting' section below. Also see 'Profitability - Items excluded from core earnings' section above for information on direct impact of equity markets and interest rates and variable annuity guarantee liabilities.

## Financial Strength

### Financial strength metrics

As at and for the years ended December 31,

($ millions, unless otherwise stated)

|  | 2022 | 2021 |
| --- | --- | --- |
| MLI's LICAT ratio (1) | 131% | 142% |
| Financial leverage ratio | 27.7% | 25.8% |
| Consolidated capital (2) | $62,493 | $66,005 |
| Book value per common share ($) | $26.49 | $26.78 |
| Book value per common share excluding accumulated other comprehensive income ($) | $26.50 | $24.12 |

$^{(1)}$ This item is disclosed under OSFI's Life Insurance Capital Adequacy Test Public Disclosure Requirements guideline.

$^{(2)}$ This item is a capital management measure. For more information on this metric, see 'Non-GAAP and Other Financial Measures' below.

**The Life Insurance Capital Adequacy Test ('LICAT') ratio** for MLI was 131% as at December 31, 2022, compared with 142% as at December 31, 2021. The 11 percentage point decrease from December 31, 2021 was driven by the unfavourable impact of market movements on capital primarily from the large increase in risk-free interest rates, and from common share buybacks, partially offset by the favourable impacts from the U.S. variable annuity reinsurance transactions.

**MFC's financial leverage ratio** as at December 31, 2022 was 27.7%, an increase of 1.9 percentage points from 25.8% as at December 31, 2021. The increase in the ratio was driven by a reduction in the carrying value of AFS debt securities from higher interest rates, common share buybacks, and the net issuance of securities$^{1}$, partially offset by growth in retained earnings and the impact of a weaker Canadian dollar.

**Consolidated capital** was $62.5 billion as at December 31, 2022 compared with $66.0 billion as at December 31, 2021, a decrease of $3.5 billion. The decrease was driven by a decline in total equity and the redemption of capital instruments. The decline in total equity was due to a reduction in the carrying value of AFS debt securities from higher interest rates, and common share buybacks, partially offset by growth in retained earnings, the impact of a weaker Canadian dollar, and net capital issuances$^{2}$.

**Remittances**$^{3}$ were $6.9 billion in 2022 of which Asia and U.S. operations$^{4,5}$ have delivered $0.9 billion and $2.8 billion respectively. Remittances in 2022 increased by $2.5 billion compared with 2021 primarily due to contributions related to the U.S. variable annuity transactions and other corporate actions.

**Cash and cash equivalents and marketable assets**$^{6}$ was $241.0 billion as at December 31, 2022 compared with $268.4 billion as at December 31, 2021. The decrease of $27.4 billion was primarily driven by the lower market value of fixed income instruments due to higher interest rates and the lower market value of public equities due to a decline in equity markets. Refer to 'Liquidity Risk Management Strategy' below for more information.

**Book value per common share** as at December 31, 2022 was $26.49, in line with $26.78 as at December 31, 2021, and the book value per common share excluding accumulated other comprehensive income ('AOCI') was $26.50 as at December 31, 2022, an increase of 10% compared with $24.12 as at December 31, 2021. Compared with December 31, 2021, book value per common share was impacted by

$^{1}$ For financial leverage ratio, net issuance of securities consisted of the issuance of Limited Recourse Capital Notes (reported as other equity instruments) of $1.0 billion and senior debt of $1.0 billion, offset by the redemption of subordinated debt of $1.0 billion, and two series of preferred shares totaling $0.7 billion.

$^{2}$ For consolidated capital, net capital issuance consisted of the issuance of Limited Recourse Capital Notes (reported as other equity instruments) of $1.0 billion, partially offset by the redemption of two series of preferred shares totaling $0.7 billion.

$^{3}$ For more information on this metric, see 'Non-GAAP and Other Financial Measures' below.

$^{4}$ Remittances from Asia and U.S. operations include the remittances from their respective affiliate reinsurers. In addition, U.S. operation remittances include the International High Net Worth business written in the Bermuda branch of MLI.

$^{5}$ Asia and U.S. operations include their respective insurance, and wealth and asset management segments.

$^{6}$ Includes cash & cash equivalents, comprised of cash on deposit, Canadian and U.S. Treasury Bills and high quality short-term investments, and marketable assets, comprised of investment grade government and agency bonds, investment grade corporate bonds, investment grade securitized instruments, publicly traded common stocks and preferred shares.

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a reduction in the carrying value of AFS debt securities from higher interest rates offset by an increase in retained earnings, the favourable impact of a weaker Canadian dollar and common share buybacks. The number of common shares outstanding was 1,865 million as at December 31, 2022 and 1,943 million as at December 31, 2021.

## Impact of Fair Value Accounting

Fair value accounting policies affect the measurement of both our assets and our liabilities. The difference between the reported amounts of our assets and liabilities determined as of the balance sheet date and the immediately preceding balance sheet date in accordance with the applicable fair value accounting principles is reported as investment-related experience and the direct impact of equity markets and interest rates and variable annuity guarantees, each of which impacts net income.

We reported $45.1 billion of net realized and unrealized investment losses in investment income in 2022 (2021 - losses of $4.0 billion).

As outlined under “Critical Actuarial and Accounting Policies” below, net insurance contract liabilities under IFRS are determined using Canadian Asset Liability Method (“CALM”), as required by the Canadian Institute of Actuaries (“CIA”). The measurement of policy liabilities includes the estimated value of future policyholder benefits and settlement obligations to be paid over the term remaining on in-force policies, including the costs of servicing the policies, reduced by the future expected policy revenues and future expected investment income on assets supporting the policies. Investment returns are projected using the current asset portfolios and projected reinvestment strategies. Experience gains and losses are reported when current period activity differs from what was assumed in the policy liabilities at the beginning of the period. We classify gains and losses by assumption type. For example, current period investing activities that increase (decrease) the future expected investment income on assets supporting the policies will result in an investment-related experience gain (loss). See description of investment-related experience in “Non-GAAP and Other Financial Measures” below.

## Public Equity Risk and Interest Rate Risk

At December 31, 2022, excluding impacts from asset-based fees earned on assets under management and policyholder account value, the impact of a 10% decline in equity markets was estimated to be a charge of $560 million and the impact of a 50 basis point decline in interest rates, across all durations and markets, on our earnings was estimated to be a charge of $100 million. See “Risk Management and Risk Factors” below.

## Impact of Foreign Exchange Rates

We have worldwide operations, including in Canada, the United States and various markets in Asia, and generate revenues and incur expenses in local currencies in these jurisdictions, all of which are translated into Canadian dollars. The bulk of our exposure to foreign exchange rates is to movements in the U.S. dollar.

Items impacting our Consolidated Statements of Income are translated to Canadian dollars using average exchange rates for the respective quarterly period. For items impacting our Consolidated Statements of Financial Position, period end rates are used for currency translation purposes. The following table provides the most relevant foreign exchange rates for 2022 and 2021.

| Exchange rate | Quarterly |  |  |  |  | Full Year |  |
| --- | --- | --- | --- | --- | --- | --- | --- |
|  | 4Q22 | 3Q22 | 2Q22 | 1Q22 | 4Q21 | 2022 | 2021 |
| Average (1) |  |  |  |  |  |  |  |
| U.S. dollar | 1.3575 | 1.3057 | 1.2765 | 1.2663 | 1.2601 | 1.3015 | 1.2536 |
| Japanese yen | 0.0096 | 0.0094 | 0.0098 | 0.0109 | 0.0111 | 0.0099 | 0.0114 |
| Hong Kong dollar | 0.1736 | 0.1664 | 0.1627 | 0.1622 | 0.1618 | 0.1662 | 0.1613 |
| Period end |  |  |  |  |  |  |  |
| U.S. dollar | 1.3549 | 1.3740 | 1.2900 | 1.2496 | 1.2678 | 1.3549 | 1.2678 |
| Japanese yen | 0.0103 | 0.0095 | 0.0095 | 0.0103 | 0.0110 | 0.0103 | 0.0110 |
| Hong Kong dollar | 0.1736 | 0.1750 | 0.1644 | 0.1595 | 0.1626 | 0.1736 | 0.1626 |

$^{(1)}$ Average rates for the quarter are from Bank of Canada which are applied against Consolidated Statements of Income items for each period. Average rate for the full year is a 4-point average of the quarterly average rates.

Net income attributed to shareholders and core earnings from the Company’s foreign operations are translated to Canadian dollars, and in general, our net income attributed to shareholders and core earnings benefit from a weakening Canadian dollar and are adversely affected by a strengthening Canadian dollar. However, in a period of net losses in foreign operations, the weakening of the Canadian dollar has the effect of increasing the losses. The relative impact of foreign exchange in any given period is driven by the movement of currency rates as well as the proportion of earnings generated in our foreign operations.

Changes in foreign currency exchange rates from 2021 to 2022, primarily due to the weakening of the Canadian dollar compared with the U.S. dollar, increased core earnings by approximately $57 million in 2022. The impact of foreign currency exchange rates on items excluded from core earnings does not provide relevant information given the nature of these items.

16 | 2022 Annual Report | Management's Discussion and Analysis

# Strategic priorities progress update

## Strategy

Our ambition is to be the most digital, customer-centric global company in our industry. The goals for our stakeholders are:

### Customers

Improve Net Promoter Score (“NPS”) by +36 points and delight customers1

### Employees

Engage our employees - maintain top quartile engagement2

### Shareholders

Deliver top quartile returns3

Our mission, strategic priorities and values are summarized below:

![img-0.jpeg](img-0.jpeg)

Our values enable the achievement of our mission and strategic priorities, reflect our culture, inform our behaviours, and help define how we work together:

- Obsess about customers - Predict their needs and do everything in our power to satisfy them.
- Do the right thing - Act with integrity and do what we say.
- Think big - Anything is possible. We can always find a better way.
- Get it done together - We’re surrounded by an amazing team. Do it better by working together.
- Own it - Feel empowered to make decisions and take action to deliver our mission.
- Share your humanity - Build a supportive, diverse and thriving workplace.

## Strategic Priorities

Our strategy is underpinned by five strategic priorities, and we have made substantial progress on the ambitious targets that we set for ourselves. Our 2022 targets were announced at our 2018 Investor Day and 2025 targets were announced at our 2021 Investor Day.

| Accelerate Growth |
| --- |
| We remain committed to generating 75% of core earnings from our highest potential businesses4 by 2025, and 50% of core earnings from our Asia region (Asia segment and Asia wealth and asset management (“Asia WAM”)) by 2025. |
| Focus areas: Execute on organic and inorganic growth opportunities in Asia and Global WAM Leverage global footprint and business diversity to allocate capital and resources to higher growth opportunities Expand North American behavioural insurance offerings to provide innovative solutions and support positive health for customers Drive new business growth and persistency in group insurance in Canada |

1 As compared to a baseline of +1 in 2017, by 2025. 2022 results are discussed in the “Strategic Priorities” section below.

2 Top quartile employee engagement compared to global financial services companies and insurance peers. 2022 results are discussed in the “Strategic Priorities” section below.

3 MFC’s Total Shareholder Return was 27th percentile compared with our performance peer group for the five-year period ended December 31, 2022. Please refer to Manulife’s most recent Management Information Circular for more information on our performance peer group.

4 Highest potential businesses include Asia, Global WAM, Canada group benefits, and behavioural insurance products.

Manulife 17

|  | 2022 | 2021 | Baseline 2017 | Targets 1 |  |
| --- | --- | --- | --- | --- | --- |
|  |  |  |  | 2022 | 2025 |
| Core earnings from highest potential businesses | 63% | 63% | 54% | 67% | 75% |
| Core earnings from Asia region | 39% | 39% | n/a | n/a | 50% |

In 2022, 63% of core earnings were generated from our highest potential businesses, a notable improvement of 9 percentage points from the 2017 baseline of 54%. This increase was supported by a strong execution track record against our strategic priorities, coupled with robust inorganic growth opportunities in Asia and Global WAM markets. Our position as the third largest Pan-Asian life insurer, a scalable Global WAM platform that enables an integrated operating model and distribution capabilities, and greater demand for our North American behavioural insurance products reinforced this growth. Looking forward, we will continue to drive momentum through our growing agency force, successful bancassurance partnerships, transformational digital offerings, and strategic expansion into high-potential markets in Asia.

Temporary headwinds faced in Asia due to COVID-19 containment measures and in Global WAM due to challenging market conditions, dampened the contribution of core earnings generated from our highest potential business in 2022, which was 4 percentage points short of our 2022 target.

Our percentage of core earnings from highest potential businesses was 63% in 2022 and in 2021, as the decline in core earnings from highest potential businesses was in line with the decline in total core earnings. Asia core earnings in 2022 decreased 2% compared with 2021, after adjusting for the impact of changes in foreign currency exchange rates, primarily due to the impact of lower new business volumes, partially offset by favourable product mix and in-force business growth. Global WAM core earnings decreased $165 million or 14% on a constant exchange rate basis reflecting a decline in net fee income from lower average AUMA due to higher interest rates and equity market declines in 2022, and lower fee spread. Canada group insurance core earnings in 2022 benefited from in-force business growth.

Confidence in the strength of our diverse, global franchise, balance sheet and financial flexibility position us well to capitalize on attractive opportunities for our highest potential businesses.

## 2022 Highlights

- Commenced offering insurance solutions to VietinBank's customers in early 2022, as part of our 16-year exclusive bancassurance partnership in Vietnam, demonstrating strong momentum in its first year;
- Further bolstered our presence in high-growth attractive markets by acquiring control of MTEDA through the purchase of the remaining 51% of shares from our joint venture partner, making us the first global wealth and asset manager to acquire a 100% stake in a fully operating public fund management company in mainland China;
- Continued to expand our Private Markets capabilities with the acquisition of a significant minority equity position in ARCH Capital, an Asia-focused real estate private equity investment manager;
- Accelerated the utilization of ManuAcademy, our regional digital learning platform, which was initially launched in Vietnam during 2Q22 and continued to expand to the Philippines in 4Q22. The platform is accessible now to all agents in these two markets, making learning easier while accelerating the further expansion and digitization of Manulife's agency force. Our new training series, Manulife MasterClass, captures best practices from our Million Dollar Round Table agents and shares them across all agents through the platform;
- Expanded our Global WAM Retail product lineup with the launch of the Manulife Real Asset Investment strategy that will give Canadian retail high-net-worth investors access to a combination of private and public real asset investments. Additionally, we launched our first actively managed equity ETF, the U.S. High Dividend ETF, managed by MIM;
- Continued the expansion of the Manulife *Vitality* program, demonstrating our commitment to helping our customers lead healthier lives. All eligible new retail term and universal life insurance policies will include Vitality Go at no cost, while additional features are available with Vitality Plus for a low monthly fee;
- Achieved highest ever full year domestic life insurance sales with the John Hancock Vitality PLUS feature, reflecting the increasing attractiveness of the Vitality feature as an option for health-focused life insurance consumers; and
- Continued to innovate our wellness offerings and entered into a partnership with GRAIL, a healthcare company, offering access to Galleri®, their leading edge, multi-cancer early detection test to a pilot group of customers through John Hancock Vitality. As the first life insurance carrier to make GRAIL's Galleri® test available, we are enabling eligible customers to take proactive steps to better understand and make more informed choices about their health.

## Digital, Customer Leader

We remain committed to a target NPS of +37$^{2}$ and aim to achieve 88% straight-through-processing ("STP")$^{3}$ by 2025.

### Focus areas:

- Harness customer feedback to enhance the experience delivered
- Build differentiated, market-leading priority customer experiences
- Extend customer relationships through value-added advice, new services in health and wellness, and open innovation
- Drive NPS through a globally consistent NPS system

$^{1}$ See "Caution regarding forward-looking statements" above.

$^{2}$ Represents an improvement of +36 points in our NPS score from the 2017 baseline.

$^{3}$ Straight-through processing represents customer interactions that are completely digital, and includes money movement.

18 | 2022 Annual Report | Management's Discussion and Analysis

|  | 2022 | 2021 | Baseline |  | Targets 1 |  |
| --- | --- | --- | --- | --- | --- | --- |
|  |  |  | 2018 | 2017 | 2022 | 2025 |
| Net promoter score | +20 | +21 | n/a | +1 | +31 | +37 |
| Straight-through-processing | 83% | 82% | 68% | n/a | n/a | 88% |

In 2022, our NPS score was +20, and we led or were on par with leading peers$^{2}$ in 11 of the 16 business lines where we benchmark. The score marked a significant 19 point improvement from our 2017 baseline, driven by various efforts. We have developed forward-looking roadmaps to align and propel our digital customer leadership ambition, refreshed our innovation strategy to embed new ways of working across our businesses, and are advancing our internal capabilities to gather and analyze customer data and sentiment. We have also globally deployed human-centered design practices to systematically research, design, iterate, and deliver best-in-class experiences that are validated with customers at each step.

Our NPS score in 2022 was 1 point below our NPS score in 2021, and short of our ambitious 2022 target of +31, in part because service levels in the first half of 2022 were impacted by workforce capacity constraints, which affected the rolling four quarter average NPS for 2022. We addressed these issues and improved service levels in the second half of the year, although still below our 2022 target; initiatives are underway to maintain momentum for future improvement.

We are making consistent progress on our global STP objectives, with a 15 percentage point improvement from the 2018 baseline across segments in a variety of areas such as system enhancements, app releases and increased digital capabilities.

Customer centricity is at the heart of our ambition and we remain committed to achieving our 2025 NPS and STP targets of +37 and 88%, respectively.

## 2022 Highlights

- In Asia:
  - Delivered multi-channel options for customers through the launch of Manulife Shop in the Philippines in 4Q22, enabling customers to find and purchase insurance online at their own convenience. We also became the first life insurer in Vietnam to offer health solutions to MoMo's 31 million user base via MoMo e-wallet in 2Q22; and
  - Successfully increased the adoption of ePOS, our proprietary digital onboarding app, by 15 percentage points$^{3}$ to 89%, enabling faster, error-free new business application submissions.
- In Global WAM:
  - Enhanced our digital experience in Canada Retirement with the launch of new features that enable members to make additional contributions to their Registered Retirement Savings Plans and to book one-on-one meetings with Manulife PlanRight financial advisors directly in the mobile app. This generated successful engagement, resulting in over 1,780 advisor meeting requests and a 14% increase in member adoption of the mobile app since the launch; and
  - Launched a new, end-to-end digital and mobile-friendly enrollment experience in Canada Retirement for our members. The improved enrollment experience offers a more intuitive and guided experience for our members, helping them feel more confident about their long-term investment choices. 82% of our eligible sponsors adopted the new experience for their employees in 2022.
- In Canada:
  - Launched an upgraded Manulife *Vitality* mobile app experience for our individual insurance business, giving the app a new look and feel with easier navigation to further drive customer engagement; and
  - For our Group Benefits customers, our Manulife Mobile app added a new user interface and navigation refresh, full integration with Manulife ID, and new drug coverage look up functionality.
- In the U.S.:
  - Reduced the average time to complete background checks for new producers within our digital brokerage and traditional brokerage channels by over 90% via automation; and
  - Reduced call volumes for enquiries related to John Hancock Vitality customer login and registration by 39% compared with 2021 by optimizing self-service functionality.

## Expense Efficiency

We remain focused on driving efficient growth and are committed to consistently achieving an expense efficiency ratio of less than 50% while ensuring scalable growth, outstanding customer experience, and digital ways of working.

### Focus areas:

- Leverage global scale and operating environment
- Streamline business processes and eliminate activities not valued by end customers
- Continue to sustain a culture of expense efficiency and driving efficient growth

$^{1}$ See "Caution regarding forward-looking statements" above.

$^{2}$ Based on studies conducted in 2022 by IPSOS, a global market research company.

$^{3}$ Case adoption, compared with 2021.

Manulife 19

|  | 2022 | 2021 | Baseline 2017 | Target 1 2022 and onwards |
| --- | --- | --- | --- | --- |
| Expense efficiency ratio | 50.9% | 48.9% | 55.4% | <50% |

We previously delivered on our 2022 target of $1 billion in expense efficiencies in 2020, two years ahead of schedule, and delivered an expense efficiency ratio of 48.9% in 2021. Progress on our expense efficiency ratio compared with the 2017 baseline, reflects a cultural shift throughout the organization that rightsized our expense base by eliminating significant costs and allowing us to be more nimble.

The expense efficiency ratio was 50.9% for 2022, compared with 48.9% in 2021. The 2.0 percentage point increase in the ratio compared with 2021 was driven by an 8% decrease in pre-tax core earnings. Core general expenses were in line with 2021 driven by higher workforce costs offset by the net favourable impact of our strategic focus on digitization and efficiency, lower distribution-related and discretionary expenses reflecting lower 2022 sales, and lower pension costs primarily due to market impacts.

Expense efficiency continues to be an important lever in our current operating environment, and we remain committed to consistently achieving a ratio of less than 50%.

## 2022 Highlights

- Continued to improve expense efficiency by lowering unit costs and improving scalability of our operations through:
  - Digitizing to improve automation and straight-through processing;
  - Simplifying and standardizing processes;
  - Optimizing organizational structure;
  - Actively managing third-party spend and procurement; and
  - Rationalizing real estate expenditures.
- Achieved annual savings of $200 million (pre-tax) in 2022 resulting from the restructuring action in the first half of 2021.

### Portfolio Optimization

We will continue to optimize our legacy businesses and reduce the combined contributions from long-term care insurance (“LTC”) and variable annuities (“VA”) businesses to less than 15% of core earnings by 2025.

#### Focus areas:

- Deliver capital release from legacy businesses, including variable annuity, long-term care insurance and select long-duration, guaranteed insurance products
- Optimize portfolio to improve our risk profile and ROE
- Create value through in-force management initiatives

|  | 2022 | 2021 2 | Targets 1 |  |
| --- | --- | --- | --- | --- |
|  |  |  | 2022 | 2025 |
| Free up capital from legacy portfolio, cumulative (C$ billions) | $9.0 | $6.3 | $5.0 | n/a |
| Core earnings contribution from LTC and VA | 18% | 20% | n/a | <15% |

We previously achieved our 2022 target to release $5.0 billion of capital in 2019, three years ahead of schedule when we reduced the size of our legacy businesses, freed up capital, and improved core ROE through actions such as reinsurance transactions in North America, buy-back programs on guaranteed minimum withdrawal benefit (“GMWB”) blocks, repricing life insurance blocks, and reinsurance renegotiations and recaptures. Optimization activities continued into 2022; to date, we have delivered $9.0 billion of cumulative capital benefits, exceeding our target by $4.0 billion, reducing our go-forward risk profile and unlocking value from legacy businesses. In 2022, we completed two transactions to reinsure over 80%$^{3}$ of our legacy U.S. variable annuity block, releasing $2.5 billion of capital and significantly reducing our risk.

In 2022, we made progress towards our 2025 target and reduced core earnings contribution from LTC and VA by 2 percentage points as compared with December 31, 2021, primarily driven by the impact of the two reinsurance transactions mentioned above. We continue to assess inorganic options such as the two transactions completed in 2022 mentioned above, taking into account policyholder considerations and the potential impact to our risk profile and ROE. We are also confident in our ability to effectively manage the two blocks of business to maturity, most importantly by seeking premium increases for LTC for which we have a strong track record of success.$^{1}$

A dedicated team working exclusively on portfolio optimization, and our proactive, disciplined approach to optimizing the in-force business are key success factors; we remain committed to achieving our 2025 target.

$^{1}$ See “Caution regarding forward-looking statements” above.

$^{2}$2021 total company and U.S. LTC core earnings were normalized to remove estimated gains on U.S. LTC policyholder experience due to COVID-19.

$^{3}$ Represents a reduction in guarantee value on our total U.S. variable annuity block compared with December 31, 2021. Guarantee value on our U.S. variable annuity Guaranteed Minimum Withdrawal Benefits block reduced by more than 90% compared with December 31, 2021.

20 | 2022 Annual Report | Management’s Discussion and Analysis

## 2022 Highlights

- The two reinsurance transactions of our legacy U.S. variable annuity block resulted in the release of $2.5 billion of capital, which included a cumulative one-time after-tax net gain of $806 million1; and
- Other portfolio optimization initiatives released $234 million of capital in 2022.

# High Performing Team

We are committed to enabling a high performing team and maintaining top quartile employee engagement compared to global financial services and insurance peers.

# Focus areas:

- Organizational effectiveness and speed of decision making
- Diversity, equity, and inclusion
- Developing our talent with differentiated capabilities
- Continuing to strengthen our value proposition to attract and retain top talent

| Employee Engagement | 2022 | 2021 | Baseline 20173 | Target2 2022 and onwards |
| --- | --- | --- | --- | --- |
|  | 1st quartile | 1st quartile | 2nd quartile | 1st quartile |

We achieved a top quartile employee engagement rank4 in each of 2020, 2021 and 2022. Our employee engagement score has improved steadily since 2017 and we ranked in the top 6%4 amongst global finance and insurance companies in 2022. We were also recognized as one of the World's Best Employers by Forbes for the third consecutive year.

Our high performing team has been a key enabler of accomplishments to date, and we remain committed to achieving top quartile employee engagement going forward.

## 2022 Highlights

- Achieved our fourth consecutive year of higher employee engagement;
- Named to Bloomberg's 2022 Gender-Equality Index for the fourth consecutive year, highlighting our commitment to support gender equality through policy development, representation, and transparency; and
- Recognized as one of Canada's Top 100 Employers 2022 by Mediacorp Canada Inc. for the second year in a row.

## Medium-term financial and operating targets2

As communicated in May 2022, upon transition to IFRS 17 in 2023, two of our existing targets will increase due to the change in accounting framework, the other existing targets will remain the same, and we will introduce two new targets related to Contractual Service Margin ("CSM").

Our medium-term targets under IFRS 17 are:

- Core EPS growth of 10% to 12% (no change);
- Core ROE target will increase to 15%+ (from 13%+);
- Leverage ratio of 25% (no change);
- Common share core dividend payout ratio5 range will increase to 35% to 45% (from 30% to 40%);
- CSM balance growth of 8% to 10% per year (new); and
- New business CSM growth of 15% per year (new).

1 The cumulative one-time after-tax gain of these two transactions was $806 million, consisting of a net gain of $846 million in 2022 and a $40 million loss recognized in 2021.

2 See "Caution regarding forward-looking statements" above.

3 Starting in 2019, engagement surveys were transitioned to the Gallup methodology.

4 Based on the annual global employee engagement survey conducted by Gallup. Ranking is measured by the engagement grand mean as compared to Gallup's Finance and Insurance Company level database.

5 This item is a non-GAAP ratio. See "Non-GAAP and other financial measures" below for more information.

Manulife 21

## 2. Asia

Our Asia segment is a leading provider of insurance products and insurance-based wealth accumulation products, driven by a customer-centric strategy, leveraging the asset management expertise and products managed by our Global Wealth and Asset Management segment. Present in many of Asia's largest and fastest growing economies, we are well positioned to capitalize on the attractive underlying demographics of the region, underpinned by a rigorous focus on creating value for our customers, employees and shareholders.

We have insurance operations in 11 markets: Hong Kong, Macau, Japan, mainland China, Singapore, Vietnam, Indonesia, the Philippines, Malaysia, Cambodia, and Myanmar.

We have a diversified multi-channel distribution network, including over 116,000 contracted agents and over 100 bank partnerships. We also work with many independent agents, financial advisors, and brokers. Among our bancassurance partnerships we have 10 exclusive partnerships, including a long-term partnership with DBS Bank across Singapore, Hong Kong, mainland China and Indonesia, and VietinBank in Vietnam, that give us access to over 35 million bank customers.

In 2022, our Asia segment contributed 33%1 of the Company's core earnings from operating segments and, as at December 31, 2022, accounted for 11%1 of the Company's assets under management and administration.

### Profitability

Asia reported net income attributed to shareholders of $2,224 million in 2022 compared with $3,057 million in 2021. Net income attributed to shareholders is comprised of core earnings, which were $2,132 million in 2022 compared with $2,176 million in 2021, and items excluded from core earnings, which amounted to a net gain of $92 million for 2022 compared with a net gain of $881 million in 2021. The changes in net income attributed to shareholders and core earnings expressed in Canadian dollars were due to the factors described below and, in addition, the change in core earnings reflected a net $28 million unfavourable impact due to changes in foreign currency exchange rates versus the Canadian dollar.

Expressed in U.S. dollars, the presentation currency of the segment, net income attributed to shareholders was US$1,711 million in 2022 compared with US$2,437 million in 2021 and core earnings were US$1,637 million in 2022 compared with US$1,736 million in 2021. Items excluded from core earnings are outlined in the table below and amounted to a net gain of US$74 million in 2022 compared with a net gain of US$701 million in 2021.

Core earnings in 2022 decreased 2% compared with 2021, after adjusting for the impact of changes in foreign currency exchange rates. The changes in core earnings by geography are as follows:

- Hong Kong decreased 8% reflecting lower new business volumes and less favourable policyholder experience, partially offset by favourable product mix;
- Mainland China decreased 83% reflecting the broader economic challenges from COVID-19 containment measures, changes in product mix from the ongoing regulatory changes to critical illness products, and unfavourable policyholder experience;
- Other Emerging Markets decreased 6% reflecting lower new business volumes, partially offset by favourable product mix;
- Japan increased 24% due to favourable product mix, in-force business growth and improved policyholder experience, partially offset by the impact of lower new business volumes;
- Vietnam increased 9% benefiting from in-force business growth and favourable product mix, partially offset by lower new business volumes; and
- Singapore increased 1% reflecting in-force business growth and improved policyholder experience, partially offset by lower new business gains.

In addition, higher investment income on allocated capital increased core earnings by US$49 million compared with 2021 (see Corporate and Other Segment).

1 This item is a non-GAAP ratio. See "Non-GAAP and Other Financial Measures" below for more information.

22 | 2022 Annual Report | Management's Discussion and Analysis

The table below presents net income attributed to shareholders for Asia for 2022 and 2021 consisting of core earnings and items excluded from core earnings.

| For the years ended December 31, ($ millions) | Canadian $ |  | US $ |  |
| --- | --- | --- | --- | --- |
|  | 2022 | 2021 | 2022 | 2021 |
| Core earnings | $2,132 | $2,176 | $1,637 | $1,736 |
| Items excluded from core earnings: (1) |  |  |  |  |
| Investment-related experience related to fixed income trading, market value increases in excess of expected alternative assets investment returns, asset mix changes and credit experience | 31 | 313 | 30 | 251 |
| Direct impact of equity markets and interest rates and variable annuity guarantee liabilities (2) | 153 | 169 | 114 | 133 |
| Change in actuarial methods and assumptions | (45) | 343 | (34) | 273 |
| Reinsurance transactions, tax-related items and other | (47) | 56 | (36) | 44 |
| Total items excluded from core earnings | 92 | 881 | 74 | 701 |
| Net income attributed to shareholders | $2,224 | $3,057 | $1,711 | $2,437 |

$^{(1)}$ For explanations of items excluded from core earnings, see 'Items excluded from core earnings' table in the total Company 'Profitability' section above.

$^{(2)}$ The direct impact of markets in 2022 was a gain of US$114 million and included a gain of US$501 million related to fixed income reinvestment rates and a charge of US$387 million related to equity markets and variable annuity guarantee liabilities. The direct impact of markets in 2021 was a gain of US$133 million and included a gain of US$98 million related to fixed income reinvestment rates and a gain of US$35 million related to equity markets and variable annuity guarantee liabilities.

## Business Performance

*(All percentages quoted are on a constant exchange rate basis)*

**APE sales** in 2022 were US$2,748 million, representing a decrease of 12% compared with 2021. APE sales decreased in Hong Kong, Japan, Vietnam and Other Emerging Markets, and increased in mainland China and Singapore. COVID-19 continued to impact sales in select markets throughout the year, with the situation beginning to improve in most markets as containment measures have been progressively relaxed. Travel restrictions between mainland China and, Hong Kong and Macau impacted cross-border commerce in 2022. Weaker customer sentiment began to negatively affect sales in the second half of the year.

In Hong Kong, APE sales in 2022 were US$573 million, a 33% decrease compared with 2021, primarily reflecting weaker customer sentiment on financial planning decisions and continued COVID-19 containment measures through most of the year. Japan APE sales in 2022 were US$307 million, a decrease of 15% compared with 2021, reflecting lower COLI product sales, partially offset by higher individual protection and other wealth sales. Vietnam APE sales in 2022 were US$337 million, a 9% decrease compared with 2021, reflecting a decline in the agency channel, partially offset by growth in the bank channel. Other Emerging Markets APE sales in 2022 were US$281 million, a 4% decrease compared with 2021, reflecting a decline in agency and bank channels. Mainland China APE sales in 2022 were US$484 million, a 4% increase compared with 2021, reflecting growth in the bank channel, partially offset by a decline in the agency channel. Singapore APE sales in 2022 were US$766 million, a 1% increase compared with 2021, reflecting growth in the bank channel, offset by a decline in the broker channel.

**New business value ('NBV')** was US$1,037 million in 2022, a decrease of 20% compared with 2021. NBV was lower in Hong Kong, Singapore, and mainland China, partially offset by higher NBV in Japan and Other Emerging Markets. In Hong Kong, NBV in 2022 was US$447 million, a 27% decrease compared with 2021, reflecting lower sales volumes, partially offset by favourable product mix and the impact of higher interest rates. NBV in 2022 was US$206 million in Singapore and US$50 million in mainland China, a decrease of 19% and 58%, respectively, compared with 2021, reflecting changes in product mix. In Vietnam, NBV in 2022 was US$177 million, in line with 2021, as the impact of favourable product mix was offset by lower sales volumes. NBV in 2022 was US$101 million in Japan and US$56 million in Other Emerging Markets, an increase of 28% and 5%, respectively, compared with 2021, reflecting favourable product mix, partially offset by lower sales volumes. The new business value margin ('NBV margin')$^{1}$ was 41.8% in 2022, a decrease of 3.1 percentage points compared with 2021.

$^{1}$ For more information on this metric, see 'Non-GAAP and Other Financial Measures' below.

Manulife

23

## APE Sales and NBV

For the years ended December 31,  
($ millions)

|  | Canadian $ |  | US $ |  |
| --- | --- | --- | --- | --- |
|  | 2022 | 2021 | 2022 | 2021 |
| Annualized premium equivalent sales | $3,569 | $4,050 | $2,748 | $3,229 |
| New business value | $1,349 | $1,666 | $1,037 | $1,329 |

### Assets under Management$^{1}$

Asia's assets under management were US$110.3 billion as at December 31, 2022, a decrease of US$11.7 billion or 6% compared with December 31, 2021. The decrease was driven by the impact of higher interest rates and unfavourable equity market performance on invested assets and segregated funds net assets, partially offset by net customer inflows of US$9.9 billion.

### Assets under Management

As at December 31,  
($ millions)

|  | Canadian $ |  | US $ |  |
| --- | --- | --- | --- | --- |
|  | 2022 | 2021 | 2022 | 2021 |
| Total invested assets | $126,267 | $129,207 | $93,179 | $101,893 |
| Segregated funds net assets | 23,226 | 25,505 | 17,138 | 20,112 |
| Total assets under management | $149,493 | $154,712 | $110,317 | $122,005 |

### Revenue

Total revenue of US$11.4 billion in 2022 decreased US$12.2 billion compared with 2021. Revenue before net realized and unrealized investment gains and losses decreased US$1.4 billion compared with 2021 due to a decrease in net premium income and changes in foreign currency exchange rates. The net premium income decrease was primarily driven by lower new business sales, partially offset by the growth of in-force business.

### Revenue

For the years ended December 31,  
($ millions)

|  | Canadian $ |  | US $ |  |
| --- | --- | --- | --- | --- |
|  | 2022 | 2021 | 2022 | 2021 |
| Gross premiums | $22,337 | $24,013 | $17,204 | $19,152 |
| Premiums ceded to reinsurers | (861) | (1,027) | (664) | (819) |
| Net premium income | 21,476 | 22,986 | 16,540 | 18,333 |
| Investment income | 4,190 | 3,207 | 3,228 | 2,557 |
| Other revenue | 1,458 | 1,696 | 1,115 | 1,353 |
| Revenue before net realized and unrealized investment gains and losses | 27,124 | 27,889 | 20,883 | 22,243 |
| Net realized and unrealized investment gains and losses (1) | (12,162) | 1,682 | (9,478) | 1,391 |
| Total revenue | $14,962 | $29,571 | $11,405 | $23,634 |

$^{(1)}$ See "Impact of Fair Value Accounting" above.

$^{1}$ This item is a non-GAAP financial measure. See "Non-GAAP and Other Financial Measures" below.

24 | 2022 Annual Report | Management's Discussion and Analysis

## Strategic Highlights

Asia continues to be a core driver of growth for Manulife, supported by a clear strategy, a focus on execution, a strong team, and a diversified footprint in 11 markets. Our growth is underpinned by powerful economic secular trends including middle-class emergence, low insurance penetration and an estimated mortality protection gap of more than US$100 trillion by 20301 driving continued demand for financial solutions.

We continued to invest in our diversified distribution platform to accelerate growth. In 2022 we:

- Commenced offering insurance solutions to VietinBank's customers in early 2022, as part of our 16-year exclusive bancassurance partnership in Vietnam, demonstrating strong momentum in its first year; and
- Accelerated the utilization of ManuAcademy, our regional digital learning platform, which was initially launched in Vietnam during 2Q22 and continued to expand to the Philippines in 4Q22. The platform is accessible now to all agents in these two markets, making learning easier while accelerating the further expansion and digitization of Manulife's agency force. Our new training series, Manulife MasterClass, captures best practices from our Million Dollar Round Table agents and shares them across all agents through the platform.

In 2022, we continued to increase NPS, as we further enhanced digital capabilities and invested in high impact digital initiatives spanning the full customer and distributor experience from Search, Buy, Manage & Review to Claim.

- Search: Delivered multi-channel options for customers through the launch of Manulife Shop in the Philippines in 4Q22, enabling customers to find and purchase insurance online at their own convenience. We also became the first life insurer in Vietnam to offer health solutions to MoMo's 31 million user base via MoMo e-wallet in 2Q22;
- Buy: Successfully increased the adoption of ePOS, our proprietary digital onboarding app, by 15 percentage points2 to 89%, enabling faster, error-free new business application submissions;
- Manage & Review: Enhanced self-servicing capabilities on our proprietary health and wellness platform, ManulifeMOVE, with initial rollout in Vietnam, accelerating MOVE as the one-stop digital gateway for health and life servicing; and
- Claim: Further increased utilization of our digital claims platform, with 76% of claims being submitted digitally, an increase of 12 percentage points compared with 2021 driven by strong improvements in Japan and continued high customer adoption across Asia.

We continued to maintain a winning culture and make Manulife a great place to work. Manulife has been recognized by HR Asia as one of the "Best Companies to Work for in Asia 2022" in five of our Asian markets - mainland China, Hong Kong, Malaysia, Singapore and Vietnam.

1 Closing Asia's mortality protection gap, Swiss Re, July 2020.

2 Case adoption, compared with 2021.

Manulife 25

### 3. Canada

Our Canada segment is a leading financial services provider, offering insurance products, insurance-based wealth accumulation products and banking solutions, has an in-force variable annuity business, and leverages the asset management expertise and products managed by our Global Wealth and Asset Management segment. The comprehensive solutions we offer target a broad range of customer needs and foster holistic long-lasting relationships.

We offer financial protection solutions to individuals, families and business owners through a combination of competitive products, professional advice and quality customer service. We provide group life, health and disability insurance solutions to Canadian employers, with approximately 26,000 Canadian businesses and organizations entrusting their employee benefit programs to Manulife's Group Insurance. We also provide life, health, disability and specialty products, such as mortgage creditor and travel insurance, through advisors, sponsor groups and associations, as well as direct-to-customer. We continue to increase the proportion of products with behavioural insurance features.

Manulife Bank offers flexible debt and cash flow management solutions as part of a customer's overall financial plan. Products include savings and chequing accounts, guaranteed investment certificates, lines of credit, investment loans, mortgages and other specialized lending programs, offered through financial advisors and mortgage brokers supported by a broad distribution network.

In 2022, our Canada segment contributed 21% of the Company's core earnings from operating segments and, as at December 31, 2022, accounted for 11% of the Company's assets under management and administration.

#### Profitability

Canada's full year 2022 net income attributed to shareholders was $1,530 million compared with $1,354 million in 2021. Net income attributed to shareholders is comprised of core earnings, which was $1,359 million in 2022 compared with $1,179 million in 2021, and items excluded from core earnings, which amounted to a net gain of $171 million for 2022 compared with a net gain of $175 million in 2021. Items excluded from core earnings are outlined in the table below.

The $180 million increase in core earnings was driven by experience gains in 2022 compared with losses in 2021, with all businesses contributing to the improvement, higher insurance in-force earnings, and higher bank earnings, partially offset by the impact of an increase in the tax rate and lower segregated fund in-force earnings due to lower equity markets.

The table below presents net income attributed to shareholders for Canada for 2022 and 2021 consisting of core earnings and items excluded from core earnings.

For the years ended December 31,
($ millions)

|  | 2022 | 2021 |
| --- | --- | --- |
| Core earnings | $1,359 | $1,179 |
| Items excluded from core earnings: (1) |  |  |
| Investment-related experience related to fixed income trading, market value increases in excess of expected alternative assets investment returns, asset mix changes and credit experience | 70 | 329 |
| Direct impact of equity markets and interest rates and variable annuity guarantee liabilities (2) | 76 | (89) |
| Change in actuarial methods and assumptions | 35 | (65) |
| Reinsurance transactions, tax-related items and other | (10) | - |
| Total items excluded from core earnings | 171 | 175 |
| Net income attributed to shareholders | $1,530 | $1,354 |

(1) For explanations of items excluded from core earnings, see "Items excluded from core earnings" table in the total Company "Profitability" section above.

(2) The direct impact of markets in 2022 was a gain of $76 million and included a gain of $192 million related to fixed income reinvestment rates, partially offset by a charge of $116 million related to the direct impact of equity markets and variable annuity guarantee liabilities. The charge in 2021 related to fixed income reinvestment rates and changes to the URR, partially offset by a gain related to the direct impact of equity markets and variable annuity guarantee liabilities.

26 | 2022 Annual Report | Management's Discussion and Analysis

## Business Performance

APE sales were $1,261 million in 2022, an increase of 3% compared with 2021. Individual insurance APE sales in 2022 of $415 million decreased 2% compared with 2021, primarily driven by lower universal life and health and dental sales, partially offset by higher participating insurance and travel insurance sales. Group insurance APE sales of $576 million in 2022 increased 30% compared with 2021, reflecting higher sales in all markets. Annuities APE sales in 2022 of $270 million decreased 25% compared with 2021, due to the impact of market volatility on the demand for segregated fund products.

### Sales

For the years ended December 31,

($ millions)

|  | 2022 | 2021 |
| --- | --- | --- |
| APE sales | $1,261 | $1,227 |

Manulife Bank average net lending assets$^{1}$ were $24.1 billion in 2022, up $1.0 billion or 4% compared with 2021, driven by strong retention efforts and new loan volumes.

### Assets under Management

Assets under management of $146.1 billion as at December 31, 2022 decreased $15.9 billion or 10% from $162.0 billion as at December 31, 2021, due to lower total invested assets and segregated funds net assets, primarily reflecting the impact of higher interest rates and a decline in equity markets.

### Assets under Management

As at December 31,

($ millions)

|  | 2022 | 2021 |
| --- | --- | --- |
| Total invested assets | $110,433 | $119,872 |
| Segregated funds net assets | 35,695 | 42,124 |
| Total assets under management | $146,128 | $161,996 |

### Revenue

Total revenue of $3.9 billion in 2022 decreased $8.5 billion from $12.4 billion in 2021, primarily driven by higher net realized and unrealized investment losses in 2022 compared to 2021. Revenue before net realized and unrealized investment gains and losses of $16.4 billion in 2022 increased $1.0 billion from $15.4 billion in 2021, primarily due to business growth.

### Revenue

For the years ended December 31,

($ millions)

|  | 2022 | 2021 |
| --- | --- | --- |
| Gross premiums | $12,202 | $11,251 |
| Premiums ceded to reinsurers | (1,810) | (1,690) |
| Net premium income | 10,392 | 9,561 |
| Investment income | 4,606 | 4,495 |
| Other revenue | 1,426 | 1,336 |
| Revenue before net realized and unrealized investment gains and losses | 16,424 | 15,392 |
| Net realized and unrealized investment gains and losses (1) | (12,517) | (3,026) |
| Total revenue | $3,907 | $12,366 |

$^{(1)}$ See 'Impact of Fair Value Accounting' above.

$^{1}$ This item is a non-GAAP financial measure. See 'Non-GAAP and Other Financial Measures' below for more information.

Manulife

27

## Strategic Highlights

In 2022, we added innovative customer-centric enhancements across our product shelf to help Canadians focus on improving their health and wellness. We also advanced our digital capabilities across our businesses to stay connected with our clients and strengthen their experience with us.

We continued to offer a differentiated customer experience. In 2022, we:

- Continued the expansion of the Manulife *Vitality* program, demonstrating our commitment to helping our customers lead healthier lives. All eligible new retail term and universal life insurance policies will include Vitality Go at no cost, while additional features are available with Vitality Plus for a low monthly fee;
- Reduced Group Benefits claims processing times by 60%, providing a better customer experience as evidenced by an increase in our net promoter score; and
- Launched a campaign in Group Benefits to help new customers easily access and use our digital tools, better understand their benefits plan, and learn how to submit claims online.

We further advanced digital solutions across our business. In 2022, we:

- Enhanced our apps across many businesses:
  - Launched an upgraded Manulife *Vitality* mobile app experience for our individual insurance business, giving the app a new look and feel with easier navigation to further drive customer engagement;
  - For our Group Benefits customers, our Manulife Mobile app added a new user interface and navigation refresh, full integration with Manulife ID, and new drug coverage lookup functionality;
- Launched a new customer site for Retail Insurance customers and their advisors, giving real time access to coverage information. This site sets the foundation to enable future digital transactions for our customers; and
- Continued to advance our digital solutions with enhancements to Manulife.ca that included enabling artificial intelligence and natural-language processing capabilities to make searching for product information quicker, more accurate and more intuitive.

28 | 2022 Annual Report | Management's Discussion and Analysis

# 4. U.S.

Our U.S. segment provides a range of life insurance products and insurance-based wealth accumulation products, and has an in-force long-term care insurance business and an in-force annuity business.

The insurance products we offer are designed to provide estate, business and income-protection solutions for high net worth, emerging affluent markets and the middle market, and to leverage the asset management expertise and products managed by our Global Wealth and Asset Management business. Behavioural insurance features are standard on all our new insurance product offerings. The primary distribution channel is licensed financial advisors. We aim to establish lifelong customer relationships that benefit from our holistic protection and wealth product offerings in the future.

Our in-force long-term care insurance policies provide coverage for the cost of long-term services and support.

Our in-force annuity business includes fixed deferred, variable deferred, and payout products.

In 2022, our U.S. segment contributed 27% of the Company's core earnings from operating segments and, as at December 31, 2022, accounted for 17% of the Company's assets under management and administration.

## Profitability

U.S. reported net income attributed to shareholders of $3,950 million in 2022 compared with $2,080 million in 2021. Net income attributed to shareholders is comprised of core earnings, which was $1,700 million in 2022 compared with $1,936 million in 2021, and items excluded from core earnings, which amounted to a net gain of $2,250 million in 2022 compared with a net gain of $144 million in 2021. The changes in net income attributed to shareholders and core earnings expressed in Canadian dollars were due to the factors described below and, in addition, the change in core earnings reflected a $58 million favourable impact from the strengthening of the U.S. dollar compared with the Canadian dollar.

Expressed in U.S. dollars, the functional currency of the segment, 2022 net income attributed to shareholders was US$3,077 million compared with US$1,667 million in 2021 and core earnings were US$1,311 million in 2022 compared with US$1,544 million in 2021. Items excluded from core earnings are outlined in the table below and amounted to a net gain of US$1,766 million in 2022 compared with a net gain of US$123 million in 2021.

The US$233 million or 15% decrease in core earnings was driven by lower in-force earnings in Annuities of US$147 million related to the two transactions to reinsure over 80%$^{1}$ of our U.S. variable annuity block in 2022, lower new business gains, higher net unfavourable policyholder experience, and the non-recurrence of prior year gains from the Annuity Guaranteed Minimum Withdrawal Benefit offer program. Compared with 2021, less favourable long-term care and annuities policyholder experience was partially offset by improved, although still unfavourable, life insurance policyholder experience. In addition, higher investment income on allocated capital increased core earnings by US$24 million compared with 2021 (see Corporate and Other segment).

The table below presents net income attributed to shareholders for the U.S. for 2022 and 2021 consisting of core earnings and items excluded from core earnings.

| For the years ended December 31, ($ millions) | Canadian $ |  | US $ |  |
| --- | --- | --- | --- | --- |
|  | 2022 | 2021 | 2022 | 2021 |
| Core earnings | $1,700 | $1,936 | $1,311 | $1,544 |
| Items excluded from core earnings: (1) |  |  |  |  |
| Investment-related experience related to fixed income trading, market value increases in excess of expected alternative assets investment returns, asset mix changes and credit experience | 1,183 | 1,341 | 930 | 1,074 |
| Direct impact of equity markets and interest rates and variable annuity guarantee liabilities (2) | 197 | (727) | 151 | (578) |
| Change in actuarial methods and assumptions | 36 | (314) | 27 | (249) |
| Reinsurance transactions, tax-related items and other | 834 | (156) | 658 | (124) |
| Total items excluded from core earnings | 2,250 | 144 | 1,766 | 123 |
| Net income (loss) attributed to shareholders | $3,950 | $2,080 | $3,077 | $1,667 |

$^{(1)}$ For explanations of items excluded from core earnings, see 'Items excluded from core earnings' table in the total Company 'Profitability' section above.

$^{(2)}$ The direct impact of markets in 2022 was a gain of US$151 million and included a gain of US$396 million related to fixed income reinvestment rates, partially offset by a charge of US$245 million related to the direct impact of equity markets and variable annuity guarantee liabilities. The direct impact of markets in 2021 was a charge of US$578 million and included a charge of US$493 million related to fixed income reinvestment rates and a charge of US$85 million related to the direct impact of equity markets and variable annuity guarantee liabilities.

## Business Performance

U.S. APE sales in 2022 of US$633 million increased 1% compared with 2021 due to an increase in international sales, partially offset by lower sales of domestic life insurance products. Demand for domestic life insurance products purchased primarily to protect household

$^{1}$ Represents a reduction in guarantee value on our total U.S. variable annuity block compared with December 31, 2021. Guarantee value on our U.S. variable annuity Guaranteed Minimum Withdrawal Benefits block reduced by more than 90% compared with December 31, 2021.

Manulife

29

income declined across the industry. Recently, volatility in equity markets has reduced the demand for domestic products that are purchased primarily for estate planning. APE sales of products with the John Hancock Vitality PLUS feature in 2022 were a record-setting US$332 million, an increase of 13% compared with 2021, reflecting the increasing attractiveness of the Vitality feature as an option for health-focused life insurance consumers.

## Sales

| For the years ended December 31, ($ millions) | Canadian $ |  | US $ |  |
| --- | --- | --- | --- | --- |
|  | 2022 | 2021 | 2022 | 2021 |
| APE sales | $823 | $788 | $633 | $628 |

## Assets under Management

U.S. assets under management of US$162.0 billion as at December 31, 2022 decreased 16% from December 31, 2021. The decrease in total invested assets and segregated funds net assets was primarily due to the impact of an increase in interest rates and a decline in equity markets, and the continued run-off of the annuity business, including the impact on total invested assets from the above-noted variable annuity reinsurance transactions.

## Assets under Management

| As at December 31, ($ millions) | Canadian $ |  | US $ |  |
| --- | --- | --- | --- | --- |
|  | 2022 | 2021 | 2022 | 2021 |
| Total invested assets | $154,004 | $164,830 | $113,660 | $130,013 |
| Segregated funds net assets | 65,489 | 79,620 | 48,333 | 62,801 |
| Total assets under management | $219,493 | $244,450 | $161,993 | $192,814 |

## Revenue

Total revenue in 2022 was a net loss of US$5.6 billion and decreased US$16.3 billion compared with 2021. Revenue before net realized and unrealized investment gains and losses was US$10.5 billion, a decrease of US$2.2 billion compared with 2021, primarily due to the above-noted variable annuity reinsurance transactions.

## Revenue

| For the years ended December 31, ($ millions) | Canadian $ |  | US $ |  |
| --- | --- | --- | --- | --- |
|  | 2022 | 2021 | 2022 | 2021 |
| Gross premium income | $9,329 | $8,965 | $7,168 | $7,151 |
| Premiums ceded to reinsurers | (3,613) | (2,594) | (2,791) | (2,069) |
| Net premium income | 5,716 | 6,371 | 4,377 | 5,082 |
| Investment income | 7,544 | 7,771 | 5,792 | 6,197 |
| Other revenue | 458 | 1,824 | 342 | 1,456 |
| Revenue before net realized and unrealized investment gains and losses | 13,718 | 15,966 | 10,511 | 12,735 |
| Net realized and unrealized investment gains and losses (1) | (20,547) | (2,710) | (16,074) | (2,010) |
| Total revenue | $(6,829) | $13,256 | $(5,563) | $10,725 |

$^{(1)}$ See "Impact of Fair Value Accounting" above.

## Strategic Highlights

At John Hancock, we are focused on building holistic and long-lasting customer relationships by offering innovative products and solutions, and making it easier for customers to do business with us. We are focused on growing our insurance business by expanding our product offerings, modernizing the delivery process, and enhancing customer experience. In addition, we continued to make significant progress to optimize our portfolio through both organic initiatives and strategic reinsurance transactions, and create tangible shareholder value through various in-force management actions. In 2022, we:

- Completed two transactions to reinsure over 80%$^{1}$ of our legacy U.S. variable annuity block. These transactions resulted in the release of $2.5 billion of capital, which included a cumulative one-time after-tax net gain of $806 million$^{2}$;
- Achieved highest ever full year domestic life insurance sales with the John Hancock Vitality PLUS feature, reflecting the increasing attractiveness of the Vitality feature as an option for health-focused life insurance consumers;
- Continued to innovate our wellness offerings and entered into a partnership with GRAIL, a healthcare company, offering access to Galleri®, their leading edge, multi-cancer early detection test to a pilot group of customers through John Hancock Vitality. As the first

$^{1}$ Represents a reduction in guarantee value on our total U.S. variable annuity block compared with December 31, 2021. Guarantee value on our U.S. variable annuity Guaranteed Minimum Withdrawal Benefits block reduced by more than 90% compared with December 31, 2021.

$^{2}$ The cumulative one-time after-tax gain of these two reinsurance transactions was $806 million, consisting of a net gain of $846 million in 2022 and a $40 million loss recognized in 2021.

30 | 2022 Annual Report | Management's Discussion and Analysis

life insurance carrier to make GRAIL's Galleri® test available, we are enabling eligible customers to take proactive steps to better understand and make more informed choices about their health; and

- Reported record APE sales and case placements in our international business. We signed new distributors in the Latin America region and launched a whole life product to support continued sales growth and diversify the business across geographies.

In 2022, we achieved the following digital successes, improving the producer and customer experience while also contributing to a more cost-efficient operation:

- Reduced the average time to complete background checks for new producers within our digital brokerage and traditional brokerage channels by over 90% via automation;
- Accelerated new producers' ability to place cases with John Hancock from two business days to just minutes, by automating the scheduling of appointments into our digital brokerage licensing system;
- Reduced call volumes for enquiries related to John Hancock Vitality customer login and registration by 39% compared with 2021 by optimizing self-service functionality;
- Enabled third-party ownership submission of life insurance applications via JH eApp. This advancement allows even very large cases, which are typically trust-owned, to take advantage of our digital experience; and
- Improved producer experience and customer response times by launching eDelivery notification of client correspondence.

Manulife 31

# 5. Global Wealth and Asset Management

Our Global Wealth and Asset Management segment, branded as Manulife Investment Management, provides investment advice and innovative solutions to retirement, retail and institutional clients. Our leading capabilities in public and private markets are strengthened by an investment footprint that spans 19 geographies$^{1}$, including 10 in Asia with over 120 years of on-the-ground experience.

In Retirement, we provide financial guidance, advice, investment solutions and recordkeeping services to over 8 million plan participants and rollover individuals in North America and Asia while they are in the accumulation phase with their employer, and increasingly as they prepare for retirement outside their employer's plan. In North America, our Canadian retirement business focuses on providing retirement solutions through defined contribution plans, and also to group plan members when they retire or leave their plan; and in the United States, we provide employer sponsored retirement plans as well as personal retirement accounts when individuals leave their plan. In Asia, we provide retirement offerings to employers and individuals, including Mandatory Provident Fund ('MPF') schemes and administration in Hong Kong. Additionally, we provide retirement solutions in several emerging retirement markets in Asia, including Indonesia and Malaysia.

In Retail, we distribute investment funds to clients through our proprietary advice channels in Canada and Asia as well as through intermediaries and banks in North America, Europe, and Asia, and offer investment strategies across the world, through affiliated and select unaffiliated asset managers. In Canada, we also provide holistic personal advice to individual clients and investment management, private banking and wealth and estate solutions to high-net-worth clients. In addition, we provide wealth management expertise for insurance-based wealth accumulation products that are distributed through Manulife's insurance segments, as well as through our own proprietary advice channels.

Our institutional asset management business provides comprehensive asset management solutions for pension plans, foundations, endowments, financial institutions, and other institutional investors worldwide. Our solutions span all major asset classes including equities, fixed income, and alternative assets (including real estate, timberland, farmland, private equity/debt, infrastructure, and liquid alternatives). In addition, we offer multi-asset investment solutions covering a broad range of clients' investment needs.

We are committed to investing responsibly across our businesses. We develop innovative global frameworks for sustainable investing, collaboratively engage with companies in our internally managed portfolios, and maintain a high standard of stewardship where we own and operate assets.

In 2022, our Global WAM segment contributed 19% of the Company's core earnings from operating segments and, as at December 31, 2022, represented 59% of the Company's total assets under management and administration.

## Profitability

Global WAM's 2022 net income attributed to shareholders was $1,321 million compared with $1,406 million in 2021, and core earnings were $1,241 million in 2022 compared with $1,406 million in 2021. Items excluded from core earnings are outlined in the table below and amounted to a net gain of $80 million in 2022 compared with nil in 2021.

Core earnings decreased $165 million or 14% on a constant exchange rate basis reflecting a decline in net fee income from lower average AUMA due to higher interest rates and equity market declines in 2022, and lower fee spread. Net income attributed to shareholders decreased $85 million in 2022 compared with 2021 driven by the same factors as mentioned above, partially offset by a net gain of $80 million excluded from core earnings in 2022 as explained below.

The table below presents net income attributed to shareholders for the Global WAM segment for 2022 and 2021 consisting of core earnings and items excluded from core earnings.

| For the years ended December 31, ($ millions) | 2022 | 2021 |
| --- | --- | --- |
| Core earnings |  |  |
| Retirement | $699 | $819 |
| Retail | 523 | 551 |
| Institutional | 19 | 36 |
| Core earnings | 1,241 | 1,406 |
| Items excluded from core earnings: |  |  |
| Reinsurance transactions, tax-related items and other (1) | 80 | - |
| Net income attributed to shareholders | $1,321 | $1,406 |

$^{(1)}$ The net gain of $80 million includes a net gain of $86 million related to acquiring full ownership interest of MTEDA by purchasing the remaining 51% of shares from our joint venture partner, partially offset by a $6 million charge related to an increase in the Canadian corporate tax rate.

$^{1}$ United States, Canada, Japan, Hong Kong, Singapore, Taiwan, Indonesia, Vietnam, Malaysia, India, the Philippines, England, Ireland, Switzerland, Germany, and mainland China. In addition, we have timberland/farmland operations in Australia, New Zealand, and Chile.

32 | 2022 Annual Report | Management's Discussion and Analysis

In 2022, core EBITDA1 for Global WAM was $1,890 million, $649 million higher than core earnings. In 2021, core EBITDA was $2,062 million, $656 million higher than core earnings. The decrease in core EBITDA of $172 million or 10% on a constant exchange rate basis was driven by similar factors as noted above for core earnings. Core EBITDA margin2 was 30.4% in 2022 compared with 31.5% in 2021. The 110 basis point decrease was driven by a decline in net fee income. Income before income taxes for Global WAM was $1,546 million in 2022, a decrease of $95 million compared with 2021, driven by similar factors as noted above for net income attributed to shareholders.

## Core EBITDA

For the years ended December 31,
($ millions)

|  | 2022 | 2021 |
| --- | --- | --- |
| Core earnings | $1,241 | $1,406 |
| Amortization of deferred acquisition costs and other depreciation | 336 | 323 |
| Amortization of deferred sales commissions | 95 | 99 |
| Core income tax expense (recovery) | 218 | 234 |
| Core EBITDA | $1,890 | $2,062 |
| Core EBITDA margin | 30.4% | 31.5% |
| Income before income taxes | $1,546 | $1,641 |

## Business Performance

### Gross Flows and Net Flows

Gross Flows were $136.6 billion in 2022, a decrease of 7% compared with 2021. By business line, the results were:

- Retirement gross flows in 2022 were $52.1 billion, in line with 2021, reflecting growth in member contributions offset by lower new plan sales.
- Retail gross flows in 2022 were $67.7 billion, a decrease of 14% compared with 2021, reflecting lower investor demand amid higher interest rates and equity market declines in 2022.
- Institutional Asset Management gross flows in 2022 were $16.8 billion, an increase of 5% compared with 2021 driven by higher equity mandate gross flows, mainly from a $1.9 billion sale in 2022, partially offset by lower fixed income mandate gross flows.

Net Inflows were $3.3 billion in 2022, compared with net inflows of $27.9 billion in 2021. By business line, the results were:

- Retirement net outflows were $0.1 billion in 2022 compared with net inflows of $1.1 billion in 2021, driven by higher plan redemptions in the U.S.
- Retail net outflows were $1.6 billion in 2022 compared with net inflows of $29.2 billion in 2021, driven by higher redemptions and lower gross flows due to factors mentioned above.
- Institutional Asset Management net inflows were $5.0 billion in 2022 compared with net outflows of $2.4 billion in 2021, driven by the non-recurrence of a $9.4 billion redemption in 2021 and higher equity mandate gross flows as mentioned above.

### Gross Flows and Net Flows

For the years ended December 31,
($ millions)

|  | 2022 | 2021 |
| --- | --- | --- |
| Gross flows | $136,648 | $144,681 |
| Net flows | $3,305 | $27,893 |

1 This item is a non-GAAP financial measure. See "Non-GAAP and Other Financial Measures" below.

2 This item is a non-GAAP ratio. See "Non-GAAP and Other Financial Measures" below for more information.

Manulife

33

## Assets under Management and Administration

In 2022, AUMA for our wealth and asset management businesses were $779.9 billion, 13% lower compared with December 31, 2021 on a constant exchange rate basis driven by the impact of higher interest rates and equity market declines, partially offset by $8.8 billion in assets acquired and net inflows of $3.3 billion. As of December 31, 2022, Global WAM also managed $229.5 billion in assets for the Company's non-WAM reporting segments. Including those assets, AUMA managed by Global WAM$^{1}$ were $1,009.4 billion compared with $1,102.7 billion as at December 31, 2021.

Segregated funds net assets were $224.2 billion for December 31, 2022, 11% lower compared with December 31, 2021 on an actual exchange rate basis, driven by the impact of higher interest rates and equity market declines. Total invested assets in our general fund form a small portion of Global WAM AUMA.

### Changes in Assets under Management and Administration

For the years ended December 31,

| ($ millions) | 2022 | 2021 |
| --- | --- | --- |
| Balance January 1, | $855,927 | $753,610 |
| Acquisitions/Dispositions | 8,789 | 1,633 |
| Net flows | 3,305 | 27,893 |
| Impact of markets and other | (88,109) | 72,791 |
| Balance December 31, | $779,912 | $855,927 |
| Average assets under management and administration | $787,842 | $798,022 |

### Assets under Management and Administration

As at December 31,

| ($ millions) | 2022 | 2021 |
| --- | --- | --- |
| Total invested assets | $3,717 | $4,458 |
| Segregated funds net assets (1) | 224,192 | 252,567 |
| Mutual funds, institutional asset management and other (2) | 381,779 | 411,271 |
| Total assets under management | 609,688 | 668,296 |
| Other assets under administration | 170,224 | 187,631 |
| Total assets under management and administration | $779,912 | $855,927 |

$^{(1)}$ Segregated funds net assets are comprised of Retirement assets under management ('AUM'), consisting primarily of fee-based products with little or no guarantees.

$^{(2)}$ Other funds represent pension funds, pooled funds, endowment funds and other institutional funds managed by the Company on behalf of others.

## Revenue

Total revenue in 2022 of $6.3 billion decreased 6% compared with 2021, driven by lower fee income from lower average AUMA and lower fee spread, and lower investment income. This was partially offset by higher other revenue from a gain on our acquisition of the remaining equity interest in MTEDA.

## Revenue

As at December 31,

| ($ millions) | 2022 | 2021 |
| --- | --- | --- |
| Fee income | $6,265 | $6,513 |
| Investment income | (44) | 28 |
| Other revenue | 90 | - |
| Total revenue | $6,311 | $6,541 |

$^{1}$ This item is a non-GAAP financial measure. See 'Non-GAAP and Other Financial Measures' below.

34 | 2022 Annual Report | Management's Discussion and Analysis

## Strategic Highlights

Leveraging our integrated business model and global scale, we have a clear strategy to pursue high-growth opportunities in the most attractive markets globally through our three business lines: Retirement, Retail and Institutional Asset Management. Our strategy includes being a global retirement leader by supporting financial wellness; expanding our presence in retail distribution platforms across the globe; leveraging a multi-manager model; and providing differentiated institutional active asset management capabilities across high performing equity and fixed income strategies, outcome-oriented solutions and alternative assets.

We executed on a number of initiatives to accelerate growth in our franchise. In 2022, we:

- Further bolstered our presence in high-growth attractive markets by acquiring control of MTEDA through the purchase of the remaining 51% of shares from our joint venture partner, making us the first global wealth and asset manager to acquire a 100% stake in a fully operating public fund management company in mainland China;
- Continued to expand our Private Markets capabilities with the acquisition of a significant minority equity position in ARCH Capital, an Asia-focused real estate private equity investment manager;
- Expanded our Environmental, Social and Governance investment offerings with the launch of the Global Climate Action Strategy in Europe and Asia, and the launch of the Manulife Forest Climate strategy in the U.S., which will promote climate change mitigation by investing in sustainably managed forests that prioritize carbon sequestration. Additionally, we published our 2022 Manulife Investment Management Stewardship report, detailing our commitment to sustainability as a global investment manager and outlining actions we are taking to address material sustainability risks and opportunities, build more resilient portfolios, and pursue long-term value creation;
- Expanded our Global Retail product lineup with the launch of the Manulife Real Asset Investment strategy that will give Canadian retail high-net-worth investors access to a combination of private and public real asset investments. Additionally, we also launched our first actively managed equity ETF, the U.S. High Dividend ETF, managed by MIM; and
- Expanded and broadened our financial wellness offering in Global Retirement with the launch of new and enhanced financial management tools in the U.S. (Personal Finance Organizer) and Canada (PlanRight Through Mobile). We also expanded the availability of in-plan advice to a larger portion of our clients.

We continue to make progress on our digital customer leader strategy. In 2022, we:

- Continued to invest in our mobile app in U.S. Retirement, making significant improvements in the user experience that have resonated with customers and resulted in a 99% growth in users in 2022;
- Enhanced our digital experience in Canada Retirement with the launch of new features that enable members to make additional contributions to their Registered Retirement Savings Plans and to book one-on-one meetings with Manulife PlanRight financial advisors directly in the mobile app. This generated successful engagement, resulting in over 1,780 advisor meeting requests and a 14% increase in member adoption of the mobile app since the launch;
- Launched multiple new mobile app features in Hong Kong Retirement to enable our members to manage their investment portfolio with greater convenience, receive the latest market updates and get access to exclusive member benefits. These new features resulted in 156,000 customers opting for e-statements, and contributed to over 177,000 new mobile app downloads;
- Launched a new, end-to-end digital and mobile-friendly enrollment experience in Canada Retirement for our members. The improved enrollment experience offers a more intuitive and guided experience for our members, helping them feel more confident about their long-term investment choices. 82% of our eligible sponsors adopted the new experience for their employees in 2022; and
- Improved the website experience in U.S. Retail in 2Q22 by making it easier for customers to log-in, which resulted in a 45% decrease in customer log-in help inquiries in 2022 compared with the same period last year.

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35

# 6. Corporate and Other

Corporate and Other is comprised of investment performance on assets backing capital, net of amounts allocated to the operating segments; financing costs; costs incurred by the corporate office related to shareholder activities (not allocated to the operating segments); our P&C Reinsurance business; as well as our run-off reinsurance operation, including variable annuities and accident and health.

For segment reporting purposes, settlement costs for macro equity hedges and other non-operating items are included in Corporate and Other earnings. This segment is also where we reclassify favourable investment-related experience to core earnings from items excluded from core earnings, subject to certain limits (see “Non-GAAP and Other Financial Measures” below). In each of the operating segments, we report all investment-related experience in items excluded from core earnings.

## Profitability

Corporate and Other reported a net loss attributed to shareholders of $1,731 million in 2022 compared with a net loss attributed to shareholders of $792 million in 2021. Net income (loss) attributed to shareholders was comprised of core loss and items excluded from core loss. Core loss was $250 million in 2022 compared with a core loss of $161 million in 2021. Items excluded from core loss amounted to a net loss of $1,481 million in 2022 compared with a net loss of $631 million in 2021.

The unfavourable variance in core loss of $89 million was primarily attributable to a net charge of $159 million from the unfavourable impact of markets on seed money investments in new segregated funds and mutual funds in 2022 compared with a $27 million net gain in 2021, $120 million of higher interest on allocated capital to operating segments in 2022, higher charges in our P&C Reinsurance business compared with prior year and lower net gains on sales of AFS equities. These losses were partially offset by higher yields on fixed income investments, lower pension expenses that are primarily due to market impacts, and lower interest on external debt and withholding taxes.

Items excluded from core loss were a net loss of $1,481 million in 2022 compared with a net loss of $631 million in 2021. The unfavourable variance was primarily driven by larger losses on sales of AFS bonds and other direct impacts of markets, partially offset by the favourable impact of Canadian tax rate change in 2022.

The items excluded from core earnings are outlined below.

The table below presents net income (loss) attributed to shareholders for Corporate and Other for 2022 and 2021 consisting of core loss and items excluded from core loss.

| For the years ended December 31, ($ millions) | 2022 | 2021 |
| --- | --- | --- |
| Core loss excluding core investment gains | $(650) | $(561) |
| Core investment gains | 400 | 400 |
| Total core loss | (250) | (161) |
| Items excluded from core loss: (1) |  |  |
| Direct impact of equity markets and interest rates (2) | (1,266) | (170) |
| Changes in actuarial methods and assumptions | 10 | (5) |
| Investment-related experience related to mark-to-market items (3) | (67) | 59 |
| Reclassification to core investment gains above | (400) | (400) |
| Restructuring charge (4) | - | (115) |
| Reinsurance transactions, tax-related items and other | 242 | - |
| Total items excluded from core loss | (1,481) | (631) |
| Net income (loss) attributed to shareholders | $(1,731) | $(792) |

$^{(1)}$ For explanations of items excluded from core earnings, see “Items excluded from core earnings” table in the total Company “Profitability” section above.

$^{(2)}$ The direct impact of markets in 2022 included losses of $421 million related to sale of AFS bonds and losses on derivatives. Other losses were mostly from fixed income investments supporting a portion of the capital in Asia that are classified as fair value through profit and loss and other unfavourable market impacts. The direct impact of markets in 2021 included losses of $228 million related to the sale of AFS bonds and losses on derivatives, partially offset by gains from fixed income investments supporting a portion of the capital in Asia that are classified as fair value through profit and loss.

$^{(3)}$ Investment-related experience includes mark-to-market gains or losses on ALDA, other than gains on AFS equities and seed money investments in new segregated or mutual funds.

$^{(4)}$ Please see “Manulife Financial Corporation - Profitability” above for explanation of the restructuring charge.

## Revenue

Revenue in 2022 was a loss of $1,204 million compared with a gain of $87 million in 2021. The $1,291 million decrease in revenue was primarily driven by higher losses from fixed income investments supporting a portion of the capital in Asia that are classified as fair value through profit and loss, higher realized losses on the sale of AFS bonds, declines in the fair value of seed money investments in 2022 compared with gains in the prior year, higher losses on derivative positions, higher interest on allocated capital and lower gains from AFS equities. These amounts were partially offset by higher yields on fixed income investments in 2022 and higher net premium income from our P&C Reinsurance business.

36 | 2022 Annual Report | Management's Discussion and Analysis

## Revenue

For the years ended December 31,

($ millions)

|  | 2022 | 2021 |
| --- | --- | --- |
| Net premium income | $269 | $147 |
| Investment income (loss) | (1,200) | 113 |
| Other revenue (1) | (528) | (237) |
| Revenue before net realized and unrealized investment gains and losses and on the macro hedge program | (1,459) | 23 |
| Net realized and unrealized investment gains and losses (2) and on the macro hedge program | 255 | 64 |
| Total revenue | $(1,204) | $87 |

$^{(1)}$ Includes a consolidation adjustment related to asset management fees earned by Global WAM from affiliated business (the offset to the consolidation adjustment is investment expense).

$^{(2)}$ See 'Impact of Fair Value Accounting' section above.

## Strategic Highlights

Our P&C Reinsurance business provides substantial retrocessional capacity for a very select clientele in the property and casualty reinsurance market. The business is largely non-correlated to Manulife's other businesses and helps diversify our overall business mix. We manage the risk exposure of this business in relation to the total Company balance sheet risk and volatility as well as the prevailing market pricing conditions. The business is renewable annually, and we currently estimate our exposure limit in 2023 for a single event to be approximately US$300 million (net of reinstatement premiums) and for multiple events to be approximately US$600 million (net of all premiums).$^{1}$

$^{1}$ See 'Caution regarding forward-looking statements' above.

![Manulife logo]() Manulife 37

## 7. Investments

Our investment philosophy for the general fund is to invest in an asset mix that optimizes our risk adjusted returns and matches the characteristics of our underlying liabilities. We follow a bottom-up approach which combines our strong asset management skills with an in-depth understanding of the characteristics of each investment. We invest in a diversified mix of assets and our diversification strategy has historically produced superior risk adjusted returns while reducing overall risk. We use a disciplined approach across all asset classes. Our risk management strategy is outlined in the “Risk Management and Risk Factors” section below.

### General Fund Assets

As at December 31, 2022, our general fund invested assets totaled $414.0 billion compared with $427.1 billion at the end of 2021. The following table shows the asset class composition as at December 31, 2022 and December 31, 2021.

| As at December 31, ($ billions) | 2022 |  |  | 2021 |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | Carrying value | % of total | Fair value | Carrying value | % of total | Fair value |
| Cash and short-term securities | $19.2 | 5 | $19.2 | $22.6 | 5 | $22.6 |
| Debt Securities and Private Placement Debt |  |  |  |  |  |  |
| Government bonds | 72.4 | 17 | 72.2 | 79.7 | 19 | 79.7 |
| Corporate bonds | 129.1 | 32 | 129.0 | 141.6 | 33 | 141.6 |
| Securitized/asset-backed securities | 2.3 | 1 | 2.3 | 2.9 | 1 | 2.9 |
| Private placement debt | 47.1 | 11 | 42.0 | 42.8 | 10 | 47.3 |
| Mortgages | 54.6 | 13 | 51.4 | 52.0 | 12 | 54.1 |
| Policy loans and loans to bank clients | 9.7 | 2 | 9.7 | 8.9 | 2 | 8.9 |
| Public equities | 23.5 | 6 | 23.5 | 28.1 | 7 | 28.1 |
| Alternative Long-Duration Assets (“ALDA”) |  |  |  |  |  |  |
| Real Estate | 13.3 | 3 | 14.4 | 13.2 | 3 | 14.4 |
| Infrastructure | 12.8 | 3 | 13.0 | 9.8 | 2 | 10.0 |
| Timberland and Farmland | 6.0 | 1 | 6.5 | 5.3 | 1 | 5.7 |
| Private Equity | 14.3 | 3 | 14.3 | 11.6 | 3 | 11.6 |
| Oil & Gas | 2.2 | 1 | 2.2 | 1.9 | 0 | 1.9 |
| Other ALDA | 3.2 | 1 | 3.2 | 2.6 | 1 | 2.6 |
| Leveraged Leases and Other | 4.3 | 1 | 4.3 | 4.1 | 1 | 4.1 |
| Total general fund invested assets | $414.0 | 100 | $407.2 | $427.1 | 100 | $435.5 |

The carrying values for invested assets are generally equal to their fair values, however, mortgages and private placement debt are carried at amortized cost; loans to bank clients are carried at unpaid principal balances less allowance for credit losses; real estate held for own use is carried at cost less accumulated depreciation and any accumulated impairment losses; and private equity investments, including power and infrastructure, oil and gas, and timber, are accounted for as associates using the equity method, or at fair value. Certain government and corporate bonds and public equities are classified as AFS, with the remaining classified as “fair value through profit or loss”.

As at December 31, 2022, the carrying value of renewable energy assets, including energy efficiency projects, was $13.6 billion (2021 - $13.1 billion).

Shareholders’ accumulated other comprehensive pre-tax income (loss) at December 31, 2022 consisted of a $7.3 billion loss for bonds (2021 - gain of $873 million) and an $84 million loss for public equities (2021 - gain of $288 million). Included in the $7.3 billion loss for bonds was a $276 million loss related to the fair value hedge basis adjustments attributable to the hedged risk of certain AFS bonds that are in a gain position (2021 - loss of $293 million).

### Debt Securities and Private Placement Debt

We manage our high-quality fixed income portfolio to optimize yield and quality while ensuring that asset portfolios remain diversified by sector, industry, issuer, and geography. As at December 31, 2022, our fixed income portfolio of $251.0 billion (2021 - $267.0 billion) was 96% investment grade (rated BBB or better) and 71% was rated A or higher (2021 - 97% and 72%, respectively). Our private placement debt holdings provide diversification benefits (issuer, industry, and geography) and, because they often have stronger protective covenants and collateral than debt securities, they typically provide better credit protection and potentially higher recoveries in the event of default. Geographically, 22% is invested in Canada (2021 - 23%), 48% is invested in the U.S. (2021 - 49%), 5% is invested in Europe (2021 - 4%) and the remaining 25% is invested in Asia and other geographic areas (2021 - 24%).

38 | 2022 Annual Report | Management's Discussion and Analysis

## Debt Securities and Private Placement Debt - by Credit Quality$^{(1)}$

| As at December 31, ($ billions) | 2022 |  |  |  | 2021 |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | Debt securities | Private placement debt | Total | % of Total | Debt securities | Private placement debt | Total | % of Total |
| AAA | $33.7 | $0.9 | $34.6 | 14 | $40.1 | $1.0 | $41.1 | 15 |
| AA | 36.3 | 7.0 | 43.3 | 17 | 39.6 | 5.7 | 45.3 | 17 |
| A | 83.5 | 16.5 | 100.0 | 40 | 90.0 | 16.2 | 106.2 | 40 |
| BBB | 46.1 | 17.2 | 63.3 | 25 | 49.4 | 16.2 | 65.6 | 25 |
| BB | 4.0 | 1.1 | 5.1 | 2 | 3.7 | 1.1 | 4.8 | 2 |
| B & lower, and unrated | 0.3 | 4.4 | 4.7 | 2 | 1.4 | 2.6 | 4.0 | 1 |
| Total carrying value | $203.9 | $47.1 | $251.0 | 100 | $224.2 | $42.8 | $267.0 | 100 |

$^{(1)}$ Reflects credit quality ratings as assigned by Nationally Recognized Statistical Rating Organizations ('NRSRO') using the following priority sequence order: S&P Global Ratings ('S&P'), Moody's Investors Services ('Moody's'), DBRS Limited and its affiliated entities ('DBRS Morningstar'), Fitch Ratings Inc. ('Fitch'), Rating and Investment information, and Japan Credit Rating. For those assets where ratings by NRSRO are not available, disclosures are based upon internal ratings as described in the 'Risk Management and Risk Factors' section below.

## Debt Securities and Private Placement Debt - by Sector

| As at December 31, (Per cent of carrying value, unless otherwise stated) | 2022 |  |  | 2021 |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | Debt securities | Private placement debt | Total | Debt securities | Private placement debt | Total |
| Government and agency | 36 | 10 | 31 | 35 | 11 | 32 |
| Utilities | 14 | 37 | 18 | 14 | 38 | 18 |
| Financial | 16 | 11 | 15 | 15 | 10 | 15 |
| Industrial | 9 | 14 | 9 | 9 | 12 | 9 |
| Consumer (non-cyclical) | 8 | 14 | 9 | 8 | 14 | 9 |
| Energy - Oil & Gas | 7 | 4 | 7 | 8 | 5 | 7 |
| Energy - Other | 0 | 0 | 0 | 0 | 1 | 0 |
| Consumer (cyclical) | 3 | 6 | 4 | 3 | 6 | 3 |
| Securitized (MBS/ABS) | 1 | 1 | 1 | 1 | 1 | 1 |
| Telecommunications | 2 | 0 | 2 | 2 | 0 | 2 |
| Basic materials | 2 | 3 | 2 | 2 | 2 | 2 |
| Technology | 1 | 0 | 1 | 2 | 0 | 1 |
| Media and internet and other | 1 | 0 | 1 | 1 | 0 | 1 |
| Total per cent | 100 | 100 | 100 | 100 | 100 | 100 |
| Total carrying value ($ billions) | $203.9 | $47.1 | $251.0 | $224.2 | $42.8 | $267.0 |

As at December 31, 2022, gross unrealized losses on our fixed income holdings were $33.3 billion or 12% of the amortized cost of these holdings (2021 - $1.6 billion or 0.6%). Of this amount, $8.4 billion (2021 - $11 million) related to debt securities trading below 80% of amortized cost for more than 6 months. Securitized assets represented $228 million of the gross unrealized losses and none of the amounts trade below amortized cost for more than 6 months (2021 - $2 million and none, respectively). After adjusting for debt securities supporting participating policyholder and pass-through products and the provisions for credit included in the insurance and investment contract liabilities, the potential impact to shareholders' pre-tax earnings for debt securities trading at less than 80% of amortized cost for greater than 6 months was approximately $6.6 billion as at December 31, 2022 (2021 - $7 million).

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39

## Mortgages

As at December 31, 2022, our mortgage portfolio of $54.6 billion represented 13% of invested assets (2021 - $52.0 billion and 12%, respectively). Geographically, 66% of the portfolio is invested in Canada (2021 - 66%) and 34% is invested in the U.S. (2021 - 34%). The overall portfolio is also diversified by geographic region, property type, and borrower. Of the total mortgage portfolio, 13% is insured (2021 - 14%), primarily by the Canada Mortgage and Housing Corporation (“CMHC”) - Canada’s AAA rated government-backed national housing agency, with 31% of residential mortgages insured (2021 - 35%) and 1% of commercial mortgages insured (2021 - 2%).

| As at December 31, ($ billions) | 2022 |  | 2021 |  |
| --- | --- | --- | --- | --- |
|  | Carrying value | % of total | Carrying value | % of total |
| Commercial |  |  |  |  |
| Retail | $8.7 | 16 | $8.8 | 17 |
| Office | 9.1 | 17 | 8.7 | 17 |
| Multi-family residential | 7.4 | 13 | 7.0 | 13 |
| Industrial | 4.7 | 9 | 3.6 | 7 |
| Other commercial | 2.7 | 5 | 3.0 | 6 |
|  | 32.6 | 60 | 31.1 | 60 |
| Other mortgages |  |  |  |  |
| Manulife Bank single-family residential | 21.6 | 39 | 20.5 | 39 |
| Agricultural | 0.4 | 1 | 0.4 | 1 |
| Total mortgages | $54.6 | 100 | $52.0 | 100 |

Our commercial mortgage loans are originated with a hold-for-investment philosophy. They have low loan-to-value ratios, high debt-service coverage ratios, and as at December 31, 2022 there were no loans in arrears. Geographically, of the total commercial mortgage loans, 44% are in Canada and 56% are in the U.S. (2021 - 44% and 56%, respectively). We are diversified by property type and largely avoid risky market segments such as hotels, construction loans, and second liens.

### Non-CMHC Insured Commercial Mortgages$^{(1)}$

| As at December 31, | 2022 |  | 2021 |  |
| --- | --- | --- | --- | --- |
|  | Canada | U.S. | Canada | U.S. |
| Loan-to-Value ratio (2) | 60% | 56% | 61% | 57% |
| Debt-Service Coverage ratio (2) | 1.57x | 1.90x | 1.56x | 1.87x |
| Average duration (years) | 4.27 | 6.31 | 4.6 | 6.8 |
| Average loan size ($ millions) | $21.5 | $21.1 | $19.4 | $19.0 |
| Loans in arrears (3) | 0.00% | 0.00% | 0.00% | 0.00% |

$^{(1)}$ Excludes Manulife Bank commercial mortgage loans of $381 million (2021 - $393 million).

$^{(2)}$ Loan-to-Value and Debt-Service Coverage are based on re-underwritten cash flows.

$^{(3)}$ Arrears defined as over 90 days past due in Canada and over 60 days past due in the U.S.

## Public Equities

As at December 31, 2022, public equity holdings of $23.5 billion represented 6% (2021 - $28.1 billion and 7%) of invested assets and, when excluding assets supporting participating policyholder and pass-through products, represented 1% (2021 - 1%) of invested assets. The portfolio is diversified by industry sector and issuer. Geographically, 29% (2021 - 28%) is held in Canada; 31% (2021 - 37%) is held in the U.S.; and the remaining 40% (2021 - 35%) is held in Asia, Europe, and other geographic areas.

### Public Equities - classified by type of product-line supported

| As at December 31, ($ billions) | 2022 |  | 2021 |  |
| --- | --- | --- | --- | --- |
|  | Carrying value | % of total | Carrying value | % of total |
| Participating Policyholders | $12.2 | 52 | $14.7 | 52 |
| Non-participating products and pass-through products | 8.4 | 36 | 9.6 | 34 |
| Corporate and Other segment | 2.9 | 12 | 3.8 | 14 |
| Total public equities (1) | $23.5 | 100 | $28.1 | 100 |

$^{(1)}$ Includes $1.6 billion of AFS equities and $1.3 billion of seed money investments in new segregated and mutual funds.

## Alternative Long-Duration Assets (“ALDA”)

Our ALDA portfolio is comprised of a diverse range of asset classes with varying degrees of correlations. The portfolio typically consists of private assets representing investments in varied sectors of the economy which act as a natural hedge against future inflation and serve as an alternative source of asset supply to long-term corporate bonds. In addition to being a suitable match for our long-duration liabilities, these assets provide enhanced long-term yields and diversification relative to traditional fixed income markets. The vast majority of our ALDA are managed in-house.

40 | 2022 Annual Report | Management's Discussion and Analysis

As at December 31, 2022, carrying value of ALDA of $51.7 billion represented 12% (2021 - $44.4 billion and 10%) of invested assets. The fair value of total ALDA was $53.7 billion at December 31, 2022 (2021 - $46.3 billion). The carrying value and corresponding fair value by sector and/or asset type are outlined above (see table in the section “General Fund Assets”).

## Real Estate

Our real estate portfolio is diversified by geographic region; of the total fair value of this portfolio, 44% is located in the U.S., 39% in Canada, and 17% in Asia and Other as at December 31, 2022 (2021 - 42%, 42%, and 16%, respectively). This high-quality portfolio has virtually no leverage and is primarily invested in premium urban office towers, concentrated in cities with stable growth, and highly diverse economies, in North America and Asia. The portfolio is well positioned with an average occupancy rate of 89% (2021 - 90%) and an average lease term of 5.1 years (2021 - 5.5 years). During 2022, we executed 2 acquisitions representing $0.09 billion market value of commercial real estate assets (2021 - 2 acquisitions and $0.03 billion, respectively). As part of ongoing portfolio management initiatives, 9 commercial real estate assets totaling $0.3 billion were sold during 2022.

The composition of our real estate portfolio based on fair value is as follows:

| As at December 31, ($ billions) | 2022 |  | 2021 |  |
| --- | --- | --- | --- | --- |
|  | Fair value | % of total | Fair value | % of total |
| Company Own-Use | $3.0 | 21 | $3.0 | 21 |
| Office - Downtown | 4.3 | 30 | 4.8 | 33 |
| Office - Suburban | 1.1 | 8 | 1.4 | 10 |
| Industrial | 2.7 | 19 | 2.2 | 15 |
| Residential | 2.2 | 15 | 1.9 | 13 |
| Retail | 0.4 | 3 | 0.4 | 3 |
| Other | 0.7 | 4 | 0.7 | 5 |
| Total real estate (1) | $14.4 | 100 | $14.4 | 100 |

$^{(1)}$ These figures represent the fair value of the real estate portfolio. The carrying value of the portfolio was $13.3 billion and $13.2 billion at December 31, 2022 and December 31, 2021, respectively.

## Infrastructure

We invest both directly and through funds in a variety of industry specific asset classes, listed below. The portfolio is well-diversified with over 600 portfolio companies. The portfolio is predominately invested in the U.S. and Canada, but also in the United Kingdom, Western Europe, Latin America, and Australia. Our power and infrastructure holdings are as follows:

| As at December 31, ($ billions) | 2022 |  | 2021 |  |
| --- | --- | --- | --- | --- |
|  | Carrying value | % of total | Carrying value | % of total |
| Power generation | $4.3 | 34 | $3.9 | 40 |
| Transportation (including roads, ports) | 3.6 | 28 | 2.7 | 27 |
| Electric and gas regulated utilities | 0.6 | 5 | 0.4 | 5 |
| Electricity transmission | 0.2 | 2 | 0.1 | 1 |
| Water distribution | 0.4 | 3 | 0.2 | 2 |
| Midstream gas infrastructure | 0.8 | 6 | 0.7 | 7 |
| Maintenance service, efficiency and social infrastructure | 0.4 | 3 | 0.2 | 2 |
| Telecommunications/Tower | 2.3 | 18 | 1.5 | 15 |
| Other infrastructure | 0.2 | 1 | 0.1 | 1 |
| Total infrastructure | $12.8 | 100 | $9.8 | 100 |

## Timberland & Farmland

Our timberland and farmland assets are managed by a proprietary entity, Manulife Investment Management Timberland and Agriculture (“MIM Timberland and Agriculture”). In addition to being the world’s largest timberland investment manager for institutional investors$^{1}$, with timberland properties in the U.S., New Zealand, Australia, Chile, Brazil, and Canada, MIM Timberland and Agriculture also manages farmland properties in the U.S., Australia, Chile, and Canada. The general fund’s timberland portfolio comprised 22% of MIM Timberland and Agriculture’s total timberland AUM (2021 - 22%). The farmland portfolio includes annual (row) crops, fruit crops, wine grapes, and nut crops. The general fund’s holdings comprised 41% of MIM Timberland and Agriculture’s total farmland AUM (2021 - 41%).

## Private Equities

Our private equity portfolio of $14.3 billion (2021 - $11.6 billion) includes both directly held private equity and private equity funds. Both are diversified across vintage years and industry sectors.

$^{1}$ Based on the global timber investment management organization ranking in the *RISI International Timberland Ownership and Investment Database*.

Manulife 41

## Oil & Gas

This category is comprised of $2.2 billion (2021 - $1.9 billion) in various oil and gas private equity interests which are a combination of both producing and mid-streaming assets.

## Investment Income

For the years ended December 31,
($ millions, unless otherwise stated)

|  | 2022 | 2021 |
| --- | --- | --- |
| Interest income | $12,290 | $11,517 |
| Dividend, rental and other income (1) | 3,843 | 4,180 |
| (Impairments)/Recoveries | (151) | 15 |
| Other, including gains and losses on sale of AFS debt securities | (775) | (85) |
| Investment income before realized and unrealized gains on assets supporting insurance and investment contract liabilities and on macro equity hedges | 15,207 | 15,627 |
| Realized and unrealized gains and losses on assets supporting insurance and investment contract liabilities and on macro equity hedges |  |  |
| Debt securities | (32,675) | (5,585) |
| Public equities | (3,602) | 3,220 |
| Mortgages and private placements | 394 | 403 |
| Alternative long-duration assets and other investments | 1,349 | 3,772 |
| Derivatives, including macro equity hedging program | (10,543) | (5,813) |
|  | (45,077) | (4,003) |
| Total investment income (loss) | $(29,870) | $11,624 |

(1) Rental income from investment properties is net of direct operating expenses.

In 2022, the $29.9 billion of investment loss (2021 - income of $11.6 billion) consisted of:

- $15.2 billion of investment income before net realized and unrealized gains on assets supporting insurance and investment contract liabilities and on macro equity hedges (2021 - gains of $15.6 billion); and
- $45.1 billion of net realized and unrealized losses on assets supporting insurance and investment contract liabilities and on macro equity hedges (2021 - losses of $4.0 billion).

The $0.4 billion decrease in net investment income before unrealized and realized losses was due to losses of $0.5 billion in other derivatives - mainly driven by Treasury Locks and longer tenor yield and $0.5 billion in stocks - mainly due to lower dividend distributions, partially offset by an increase of $0.4 billion in bonds.

In 2022, net realized and unrealized losses on assets supporting insurance and investment contract liabilities and on the macro hedge program were $45.1 billion compared with losses of $4.0 billion in 2021. The 2022 losses were primarily due to the impact of interest rate increases and lower equity markets. The 10-year government bonds for the U.S., Canada, and Hong Kong increased 236 bps, 186 bps and 211 bps, respectively. The S&P 500 decreased 19.4% and S&P/TSX decreased 8.7%. The 2021 losses were primarily due to the impact of interest rate increases partially offset by fair value gains in ALDA and higher equity markets.

Fair value accounting policies affect the measurement of both our assets and our liabilities. Refer to “Impact of Fair Value Accounting” above.

42 | 2022 Annual Report | Management’s Discussion and Analysis

# 8. Fourth Quarter Financial Highlights

## Profitability

As at and for the quarters ended December 31,

|  | 2022 | 2021 |
| --- | --- | --- |
| Profitability: |  |  |
| Net income attributed to shareholders | $1,891 | $2,084 |
| Core earnings (1) | $1,746 | $1,708 |
| Diluted earnings per common share ($) | $0.95 | $1.03 |
| Diluted core earnings per common share ($) | $0.88 | $0.84 |
| Return on common shareholders' equity ('ROE') | 14.4% | 15.6% |
| Core ROE | 13.2% | 12.7% |

$^{(1)}$ Impact of currency movement on the fourth quarter of 2022 ('4Q22') core earnings compared with the fourth quarter of 2021 ('4Q21') was a $46 million favourable variance.

**Manulife's 4Q22 net income attributed to shareholders was $1,891 million compared with $2,084 million in 4Q21.** Net income attributed to shareholders is comprised of core earnings (consisting of items we believe reflect the underlying earnings capacity of the business), which amounted to $1,746 million in 4Q22 compared with $1,708 million in 4Q21, and items excluded from core earnings, which amounted to a net gain of $145 million in 4Q22 compared with a net gain of $376 million in 4Q21. Net income attributed to shareholders in 4Q22 decreased compared with 4Q21 primarily driven by losses from investment-related experience (compared with gains in the prior year) and a smaller gain from the direct impact of markets, partially offset by the favourable impact of an increase in the Canadian corporate tax rate and higher core earnings. Investment-related experience in 4Q22 reflected lower-than-expected returns (including fair value changes) on ALDA related to real estate, partially offset by the favourable impact of fixed income reinvestment activities and strong credit experience. The gain from the direct impact of markets in 4Q22 was primarily driven by gains due to the flattening of the yield curve in the U.S. and Canada and the impact of favourable equity market performance, partially offset by losses from corporate spread movements across several markets of differing magnitudes and from the sale of AFS bonds.

The 2% decrease in core earnings on a constant exchange rate basis compared with 4Q21 was driven by lower net fee income from lower average AUMA in Global WAM, lower new business gains in Asia and the U.S. and lower in-force earnings in U.S. Annuities of $55 million due to the variable annuity reinsurance transactions. These items were largely offset by higher yields on fixed income investments, gains on seed money investments and lower withholding taxes in Corporate and Other, improved policyholder experience in Canada and the U.S. and in-force business growth in Asia and Canada. 4Q22 core earnings included a net charge of $73 million ($82 million pre-tax) related to policyholder insurance and annuity experience compared with a net charge of $97 million ($120 million pre-tax) in 4Q21.$^{1}$ Actions to improve the capital efficiency of our legacy business resulted in $55 million lower core earnings in 4Q22 compared with 4Q21. Excluding these actions, in-force business increased 5%$^{2}$ compared with 4Q21.

Core earnings by segment is presented in the table below for the periods presented.

| For the quarters ended December 31, ($ millions) | 2022 | 2021 |
| --- | --- | --- |
| Core earnings |  |  |
| Asia | $569 | $547 |
| Canada | 350 | 286 |
| U.S. | 374 | 467 |
| Global Wealth and Asset Management | 267 | 387 |
| Corporate and Other (excluding core investment gains) | 86 | (79) |
| Core investment gains | 100 | 100 |
| Core earnings | $1,746 | $1,708 |

In Asia, core earnings were $569 million in 4Q22 compared with $547 million in 4Q21. The 1% increase on a constant exchange rate basis was driven by favourable changes in new business product mix and in-force business growth, partially offset by the impact of lower new business volumes primarily in Hong Kong. In addition, higher investment income on allocated capital increased core earnings by US$12 million compared with 4Q21 (see Corporate and Other segment).

In Canada, core earnings were $350 million in 4Q22 compared with $286 million in 4Q21. The 22% increase primarily reflected experience gains in 4Q22 compared with losses in 4Q21 with contributions from all businesses, higher Manulife Bank earnings and higher insurance in-force earnings, partially offset by the impact of an increase in the corporate income tax rate and lower segregated fund in-force earnings due to lower equity markets.

$^{1}$ Policyholder experience includes quarterly gains of nil post-tax in 4Q22 (4Q21 - gains of $5 million) from customers who have opted to change their existing medical coverage to the VHIS products in Hong Kong. These gains did not have a material impact on core earnings as they were offset by new business strain.

$^{2}$ Excludes $70 million (pre-tax) in 4Q22 of lost expected profit on in-force relating to the U.S. variable annuity reinsurance transaction. Percentage growth is based on the pre-tax impact of these actions, and is stated on a constant exchange rate basis.

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In the U.S., core earnings were $374 million in 4Q22 compared with $467 million in 4Q21. The 25% decrease on a constant exchange rate basis was due to lower core earnings in both Annuities and Insurance. The decline in Annuities core earnings was driven by reduced in-force earnings of $55 million related to the two transactions to reinsure over 80%1 of our U.S. variable annuity block in 2022. Annuities core earnings were also impacted by lower in-force earnings from unfavourable equity markets and lower policyholder experience gains. Insurance core earnings were lower primarily due to lower new business gains and lower other experience gains, partially offset by more favourable long-term care policyholder experience. Life insurance policyholder experience was neutral compared with 4Q21. In addition, higher investment income on allocated capital increased core earnings by US$6 million compared with 4Q21 (see Corporate and Other segment).

Global WAM core earnings were $267 million in 4Q22 compared with $387 million in 4Q21. The 34% decrease was driven by a decline in net fee income from lower average AUMA due to higher interest rates and equity market declines in 2022, and the non-recurrence of favourable tax benefits in 4Q21.

Corporate and Other core earnings excluding core investment gains were $86 million in 4Q22 compared with core loss of $79 million in 4Q21. The $165 million increase in core earnings was primarily due to higher yields on fixed income investments, $53 million of gains on seed money investments in segregated funds and mutual funds in 4Q22 compared with losses in the prior year and lower withholding taxes, partially offset by higher interest on allocated capital to operating segments.

The table below presents net income attributed to shareholders for the periods presented consisting of core earnings and the items excluded from core earnings.

For the quarters ended December 31,
($ millions)

|  | 2022 | 2021 |
| --- | --- | --- |
| Core earnings | $1,746 | $1,708 |
| Items excluded from core earnings: |  |  |
| Investment-related experience outside of core earnings (1) | (457) | 126 |
| Direct impact of equity markets and interest rates and variable annuity guarantee liabilities (see table below) | 184 | 398 |
| Direct impact of equity markets and variable annuity guarantee liabilities (2) | 109 | 124 |
| Fixed income reinvestment rates assumed in the valuation of policy liabilities (3) | 130 | 454 |
| Sale of AFS bonds and derivative positions in the Corporate and Other segment | (55) | (180) |
| Reinsurance transactions, tax-related items and other (4) | 418 | (148) |
| Total items excluded from core earnings | 145 | 376 |
| Net income (loss) attributed to shareholders | $1,891 | $2,084 |

(1) Total investment-related experience in 4Q22 was a net charge of $357 million, compared with a net gain of $226 million in 4Q21, and in accordance with our definition of core earnings, we included $100 million in investment-related experience gains in core earnings and a $457 million loss in items excluded from core earnings in 4Q22 ($100 million in investment gains and $126 million, respectively, in 4Q21). Investment-related experience charge in 4Q22 reflected lower-than-expected returns (including fair value changes) on ALDA related to real estate, partially offset by the favourable impact of fixed income reinvestment activities and strong credit experience. Investment-related experience gains in 4Q21 reflected higher-than-expected returns (including fair value changes) on ALDA primarily driven by gains on private equity and infrastructure as well as strong credit experience, partially offset by the unfavourable impact of fixed income reinvestment activities primarily driven by the acquisition of US Treasury bills.

(2) In 4Q22, the net gain related to equity markets of $109 million included a gain of $126 million from gross equity exposure, partially offset by a loss of $14 million from dynamic hedge experience and a modest charge of $3 million from macro hedging experience. In 4Q21, the net gain related to equity markets of $124 million included a gain of $145 million from gross equity exposure, partially offset by a loss of $20 million from dynamic hedging experience and a modest charge of $1 million from macro hedge experience.

(3) The $130 million gain in 4Q22 due to fixed income reinvestment rates was driven by gains due to the flattening of the yield curve in the U.S. and Canada and the impact of favourable equity market performance, partially offset by losses from corporate spread movements across several markets of differing magnitudes and from the sale of AFS bonds. The $454 million gain in 4Q21 was driven by flattening of the yield curve in Canada and the U.S. and, to a lesser extent, widening corporate spreads in the U.S.

(4) The $418 million gain in 4Q22 includes $297 million related to the favourable impact of an increase in the Canadian corporate tax rate, $86 million net gain from acquiring full ownership interest of MTEDA by purchasing the remaining 51% of shares from our joint venture partner and a $35 million gain from a reinsurance transaction in the U.S. 4Q21 includes a $119 million charge related to updating the impact of the 2017 U.S. Tax Cuts and Jobs Act and a $37 million charge from a reinsurance transaction in the U.S., partially offset by Asia reinsurance transaction gains of $8 million in 4Q22.

Net income attributed to shareholders by segment is presented in the following table.

For the quarters ended December 31,
($ millions)

|  | 2022 | 2021 |
| --- | --- | --- |
| Net income attributed to shareholders by segment |  |  |
| Asia | $569 | $645 |
| Canada | 320 | 616 |
| U.S. | 410 | 494 |
| Global Wealth and Asset Management | 347 | 387 |
| Corporate and Other | 245 | (58) |
| Total net income attributed to shareholders | $1,891 | $2,084 |

1 Represents a reduction in guarantee value on our total U.S. variable annuity block compared with December 31, 2021. Guarantee value on our U.S. variable annuity Guaranteed Minimum Withdrawal Benefits block reduced by more than 90% compared with December 31, 2021.

44 | 2022 Annual Report | Management's Discussion and Analysis

## Business Performance

As at and for the quarters ended December 31,

|  | 2022 | 2021 |
| --- | --- | --- |
| Asia APE sales | $829 | $890 |
| Canada APE sales | 252 | 295 |
| U.S. APE sales | 208 | 244 |
| Total APE sales | 1,289 | 1,429 |
| Asia new business value | 339 | 391 |
| Canada new business value | 87 | 82 |
| U.S. new business value | 99 | 82 |
| Total new business value | 525 | 555 |
| Global Wealth and Asset Management gross flows ($ billions) | 32.6 | 36.0 |
| Global Wealth and Asset Management net flows ($ billions) | (8.3) | 8.1 |
| Global Wealth and Asset Management assets under management and administration ($ billions) | 779.9 | 855.9 |
| Global Wealth and Asset Management total invested assets ($ billions) | 3.7 | 4.5 |
| Global Wealth and Asset Management segregated funds net assets ($ billions) | 224.2 | 252.6 |
| Total assets under management and administration ($ billions) | 1,314.6 | 1,425.8 |
| Total invested assets ($ billions) | 414.0 | 427.1 |
| Total net segregated funds net assets ($ billions) | 348.6 | 399.8 |

### Sales

**APE sales** were $1.3 billion in 4Q22, a decrease of 12% compared with 4Q21. In Asia, APE sales decreased 9% compared with 4Q21, reflecting lower sales in Hong Kong, partially offset by higher individual protection and other wealth sales in Japan and higher sales in Asia Other$^{1}$. In Hong Kong, APE sales decreased 35% compared with 4Q21 driven by the impact of weaker customer sentiment on financial planning decisions. In Japan, APE sales increased 15% compared with 4Q21 as a result of higher individual protection and other wealth sales. Asia Other APE sales increased 2% compared with 4Q21, reflecting higher bancassurance and agency sales in mainland China, partially offset by lower agency sales in Vietnam, Singapore and Other Emerging Markets. In Canada, APE sales decreased 15% compared with 4Q21, primarily driven by lower segregated fund and participating insurance sales, partially offset by higher small business group insurance sales. In the U.S., APE sales decreased 21% compared with 4Q21 due to lower sales of domestic life insurance products, partially offset by an increase in international sales, which are reported as part of the U.S. segment results. Demand for domestic life insurance products purchased primarily to protect household income declined. Demand also decreased for domestic life insurance products purchased primarily for estate planning due to volatility in equity markets. APE sales of products with the John Hancock Vitality PLUS feature decreased 20% compared with 4Q21, reflecting the decrease in sales of domestic life insurance products.

**New Business Value** was $525 million in 4Q22, a decrease of 9% compared with 4Q21. In Asia, NBV decreased 17% compared with 4Q21 reflecting lower sales in Hong Kong and unfavourable changes in product mix in Asia Other, partially offset by the benefit of higher interest rates, and higher individual protection and other wealth sales in Japan. In Canada, NBV increased 6% compared with 4Q21, driven by higher margins in our insurance businesses, partially offset by lower volumes in annuities. In the U.S., NBV increased 12% compared with 4Q21, driven by higher interest rates, higher international sales volumes and product actions, partially offset by lower brokerage sales volumes.

**Global Wealth and Asset Management net outflows** were $8.3 billion in 4Q22 compared with net inflows of $8.1 billion in 4Q21. Net outflows in Retirement were $4.6 billion in 4Q22 compared with net outflows of $1.0 billion in 4Q21, driven by higher plan redemptions and lower new plan sales in the U.S. Net outflows in Retail were $4.7 billion in 4Q22 compared with net inflows of $7.5 billion in 4Q21, reflecting higher redemptions and lower gross flows driven by decreased investor demand. Net inflows in Institutional Asset Management were $0.9 billion in 4Q22 compared with net inflows of $1.6 billion in 4Q21, driven by lower net flows in real estate, timberland, and infrastructure products, partially offset by higher sales of fixed income mandates.

**Global Wealth and Asset Management gross flows** were $32.6 billion in 4Q22, a decrease of 13% compared with 4Q21. Retirement gross flows in 4Q22 were $12.1 billion, a decrease of 9% compared with 4Q21, reflecting lower new plan sales in the U.S. Retail gross flows in 4Q22 were $15.2 billion, a decrease of 23% compared with 4Q21, driven by lower investor demand amid higher interest rates and equity market declines in 2022. Institutional Asset Management gross flows in 4Q22 were $5.2 billion, an increase of 19% compared with 4Q21, mainly due to higher sales of fixed income mandates, partially offset by lower infrastructure and real estate gross flows.

$^{1}$ Asia Other excludes Hong Kong and Japan.

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## 9. Risk Management and Risk Factors

This section provides an overview of our overall risk management approach along with detailed description of specific risks which may affect our results of operations or financial condition and the strategies used to manage those risks.

### Enterprise Risk Management Framework

Delivering on our mission “Decisions made easier. Lives made better”, our ambition is to be the most digital, customer-centric global company in our industry. The activities required to achieve these results involve elements of risk taking.

Our approach to risk management is governed by our Enterprise Risk Management (“ERM”) Framework.

![img-0.jpeg](img-0.jpeg)

Our ERM Framework provides a structured approach to risk taking and risk management activities across the enterprise, supporting our long-term revenue, earnings, and capital growth strategy. It is communicated through risk policies and standards, which are intended to enable consistent design and execution of strategies across the organization. We have a common approach to managing all risks to which we are exposed, and to evaluating potential directly comparable risk-adjusted returns on contemplated business activities. Our risk policies and standards cover:

- **Risk roles and authorities** - Assignment of accountability and delegation of authority for risk oversight and risk management at various levels within the Company, as well as accountability principles;
- **Governance and strategy** - The types and levels of risk the Company seeks given its strategic plan, the internal and external environment, and risk appetite which drives risk limits and policies;
- **Execution** - Risk identification, measurement, assessment, and mitigation which enable those accountable for risks to manage and monitor their risk profile; and
- **Evaluation** - Validation, back testing and independent oversight to confirm that the Company generated the risk profile it intended, root cause analysis of any notable variation, and any action required to re-establish desired levels when exposures materially increase such that risk appetite is neared or exceeded.

Our risk management practices are influenced and impacted by external and internal factors (such as economic conditions, political environments, technology and risk culture), which can significantly impact the levels and types of risks we might face in pursuit of strategically optimized risk taking and risk management. Our ERM Framework incorporates relevant impacts and mitigating actions as appropriate.

### Three Lines of Defense Model

A strong risk culture and a common approach to risk management are integral to Manulife’s risk management practices. Management is responsible for managing risk within risk appetite and has established risk management strategies and monitoring practices. Our approach to risk management includes a “three lines of defense” governance model that segregates duties among risk taking activities, risk monitoring and risk oversight, and establishes appropriate accountability for those who assume risk versus those who oversee risk.

Our first line of defense includes the Chief Executive Officer (“CEO”), Segment and Business Unit General Managers, Global Function Heads and all business operations personnel. In our matrix reporting model, the Segment General Managers are ultimately accountable for their business results, the risks they assume to achieve those results, and for the day-to-day management of the risks and related controls, and the Global Function Heads are accountable for the management of the risks and related controls for their function.

The second line of defense is comprised of the Company’s Chief Risk Officer (“CRO”), the Global Risk Management (“GRM”) function, the Company’s Chief Compliance Officer and the Global Compliance Office, and other global oversight functions. Collectively, this group

46 | 2022 Annual Report | Management’s Discussion and Analysis

provides independent oversight of risk taking and risk management activities across the enterprise. Risk oversight committees, through broad-based membership, also provide oversight of risk taking and risk management activities.

The third line of defense is Audit Services, which provides independent, objective assurance that controls are effective and appropriate relative to the risk inherent in the business and that risk mitigation programs and risk oversight functions are effective in managing risks.

## Risk Culture

To enable the achievement of our mission and strategic priorities, we are committed to a set of shared values, which reflect our culture, inform our behaviours, and help define how we work together:

- Obsess about customers - Predict their needs and do everything in our power to satisfy them.
- Do the right thing - Act with integrity and do what we say.
- Think big - Anything is possible. We can always find a better way.
- Get it done together - We're surrounded by an amazing team. Do it better by working together.
- Own it - Feel empowered to make decisions and take action to deliver our mission.
- Share your humanity - Build a supportive, diverse and thriving workplace.

**Risk Culture Vision** - Within this context, we strive for a risk aware culture, where individuals and groups are encouraged, feel comfortable and are proactive in making transparent, balanced risk-return decisions that are in the long-term interests of the Company.

**Risk Culture Framework** - We have set a framework of desired behaviours to foster a strong risk aware culture. The framework is assessed against a set of qualitative and quantitative indicators and regularly reported to MFC's board of directors (the "Board") and executive leadership, with the intent to continuously identify opportunities to increase risk awareness across all geographies, businesses and layers of management and staff.

We believe that risk culture is strengthened once desired organizational behaviours and attitudes are reinforced through effective application of our corporate values. As such, we communicate key elements of our values through a risk lens to build a strong risk aware culture, including:

- **Transparency** - Encourage an environment where we can get it done together by openly discussing the strengths, weaknesses and potential range of outcomes of an issue, proposal or initiative and making informed decisions. Escalate issues before they become significant problems.
- **Risk appetite** - Once we have identified a risk or situation, we establish a risk appetite and own that decision.
- **Learn** - Use mistakes and failures as learning moments and share what was learned; think big by sharing beyond teams and business units. Seek out lessons learned from throughout the organization in order to continuously improve and grow our business the right way.
- **Incentives** - Align personal incentives with our goals and how we want to execute our plan. When things go wrong, share our humanity by maintaining a supportive environment to ensure appropriate incentives for continued transparency and lessons learned.

## Risk Governance

The Board oversees our culture of integrity and ethics, strategic planning, risk management, and corporate governance, among other things. The Board carries out its responsibilities directly and through its four standing committees:

- **Risk Committee** - Oversees the management of our principal risks, and our programs, policies and procedures to manage those risks.
- **Audit Committee** - Oversees internal control over financial reporting and our finance, actuarial, internal audit and global compliance functions, serves as the conduct review committee, reviews our compliance with legal and regulatory requirements and oversees the performance, qualifications and independence of our external auditors.
- **Management Resources and Compensation Committee** - Oversees our global human resources strategy, policies, programs, management succession, executive compensation, and pension plan governance.
- **Corporate Governance and Nominating Committee** - Develops our governance policies and procedures, including environmental, social and governance related matters, including climate change, among other activities.

The CEO is directly accountable to the Board for our results and operations and all risk taking activities and risk management practices required to achieve those results. The CEO is supported by the CRO as well as by the Executive Risk Committee ("ERC"). Together, they shape and promote our risk culture, guide risk taking throughout our global operations and strategically manage our overall risk profile. The ERC, along with other executive-level risk oversight committees, establishes risk policies, guides risk taking activity, monitors significant risk exposures and sponsors strategic risk management priorities throughout the organization.

GRM, under the direction of the CRO, establishes and maintains our ERM Framework and oversees the execution of individual risk management programs across the enterprise. GRM seeks to ensure a consistent enterprise-wide assessment of risk, risk based capital and risk-adjusted returns across all operations.

The ERC approves and oversees the execution of the Company's enterprise risk management program. It establishes and presents for approval to the Board the Company's risk appetite and enterprise-wide risk limits and monitors our overall risk profile, including key and

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emerging risks and risk management activities. As part of these activities, the ERC monitors material risk exposures, endorses and reviews strategic risk management priorities, and reviews and assesses the impact of business strategies, opportunities and initiatives on our overall risk position. The ERC is supported by a number of oversight sub-committees including:

- **Credit Committee** - Establishes credit risk policies and risk management standards of practice and oversees the credit risk management program. Also monitors the Company's overall credit risk profile and approves large individual credits and investments.
- **Product Oversight Committee** - Oversees insurance risk and reviews risks in new product and new business reinsurance initiatives. Also monitors product design, new product pricing, and insurance risk exposures and trends.
- **Global Asset Liability Committee** - Oversees market and liquidity risk for insurance products, hedging, and asset liability management programs and strategies. Also monitors market risk profile, risk exposures, risk mitigation activities and compliance with related policies.
- **Operational Risk Committee** - Oversees operational risk appetite, exposures and associated governance, risk processes, risk management activities and compliance with related policies.

We also have segment risk committees, each with mandates similar to the ERC except with a focus at the segment as applicable.

## Risk Appetite

The Company's strategic direction drives overall risk appetite. All risk taking activities are managed within the Company's overall risk appetite, which defines the amount and types of risks the Company is willing to assume in pursuit of its objectives. The Company's risk appetite is comprised of three components: overall risk taking philosophy, risk appetite statements, and risk limits and tolerances.

**Risk Philosophy** - Manulife is a global financial institution offering insurance, wealth and asset management products and other financial services. The activities required to achieve our mission of "Decisions made easier. Lives made better" are guided by our values and involve elements of risk taking. As such, when making decisions about risk taking and risk management, the Company places a priority on the following risk management objectives:

- To safeguard the commitments and expectations established with our customers, creditors, shareholders and employees;
- To support the successful design and delivery of customer solutions through the development and deployment of innovative product solutions, and providing customer-centric digital experiences;
- To prudently and effectively deploy the capital invested in the Company by shareholders with appropriate risk/return profiles;
- To invest wealth and asset management's customer assets consistent with their objectives;
- To achieve and maintain a high level of operational resilience;
- To safeguard the well-being of our employees, and promote a diverse, equitable and inclusive business environment;
- To consider environmental, social, and governance (ESG) impacts across our business activities and community impact;
- To protect and/or enhance the Company's reputation and brand; and
- To maintain the Company's targeted financial strength rating.

While we only pursue risks that we believe we can appropriately analyze and monitor, we also manage risks which arise outside of our direct influence. We recognize that risk exposures change over time. If exposures materially increase, we will activate management actions designed to bring exposures back to desired levels. As an integrated component of our business model, risk management assists the Company in achieving our objectives and in reaching higher levels of operational excellence, while encouraging transparency and organizational learning.

**Risk Appetite Statements** - At least annually, we establish and/or reaffirm that our risk appetite and the Company's strategy are aligned. The risk appetite statements provide 'guideposts' on our appetite for identified risks, any conditions placed on associated risk taking and direction for where quantitative risk limits should be established. The Company's risk appetite statements are as follows:

- Manulife accepts a total level of risk that provides a very high level of confidence to meeting customer obligations while targeting an appropriate overall return to shareholders over time;
- Capital market risks are acceptable when they are managed within specific risk limits and tolerances;
- Manulife believes a diversified investment portfolio reduces overall risk and enhances returns; therefore, it accepts credit and alternative long-duration asset related risks;
- Manulife pursues product risks that add customer and shareholder value where there is competence to assess and monitor them, and for which appropriate compensation is received;
- Manulife accepts that operational risks are an inherent part of the business when managed within thresholds and tolerances of key risk indicators and will protect its business and customers' assets through cost-effective operational risk mitigation; and
- Manulife expects its officers and employees to act in accordance with the Company's values, ethics and standards; and to protect its brand and reputation.

**Risk Limits and Tolerances** - Risk limits and tolerances are established for risks within our risk classification framework that are inherent in our strategies in order to define the types and amount of risk the Company will assume. Risk tolerance levels are set for risks deemed to be most significant to the Company and are established in relation to economic capital, earnings-at-risk and regulatory capital required. The purpose of risk limits is to cascade the total Company risk appetite to a level that can be effectively managed. Manulife establishes standalone risk limits for risk categories to avoid excessive concentration in any individual risk category and to manage the overall risk profile of the organization.

48 | 2022 Annual Report | Management's Discussion and Analysis

# Risk Identification, Measurement and Assessment

We have a common approach and process to identify, measure, and assess the risks that we assume. We evaluate all potential new business initiatives, acquisitions, product offerings, reinsurance arrangements, and investment and financing transactions on a comparable risk-adjusted basis. Segments and functional groups are responsible for identifying and assessing key and emerging risks on an ongoing basis. A standard inventory of risks is used in all aspects of risk identification, measurement and assessment, and monitoring and reporting.

Risk exposures are evaluated using a variety of measures focused on both short-term net income attributed to shareholders and long-term economic value, with certain measures used across all risk categories, while others are applied only to some risks or a single risk type. Measures include stress tests such as sensitivity tests, scenario impact analyses and stochastic scenario modeling. In addition, qualitative risk assessments are performed, including for those risk types that cannot be reliably quantified.

We perform a variety of stress tests on earnings, regulatory capital ratios, economic capital, earnings-at-risk and liquidity that consider significant, but plausible events. We also perform other integrated, complex scenario tests to assess key risks and the interaction of these risks.

Economic capital and earnings-at-risk provide measures of enterprise-wide risk that can be aggregated and compared across business activities and risk types. Economic capital measures the amount of capital required to meet obligations with a high and pre-defined confidence level. Our earnings-at-risk metric measures the potential variance from quarterly expected earnings at a particular confidence level. Economic capital and earnings-at-risk are both determined using internal models.

# Risk Monitoring and Reporting

Under the direction of the CRO, GRM oversees a formal process for monitoring and reporting on all significant risks at the Company-wide level. Risk exposures are also discussed at various risk oversight committees, along with any exceptions or proposed remedial actions, as required.

On at least a quarterly basis, the ERC and the Board's Risk Committee reviews risk reports that present an overview of our overall risk profile and exposures across our principal risks. The reports incorporate both quantitative risk exposure measures and sensitivities, and qualitative assessments. The reports also highlight key risk management activities and facilitate monitoring compliance with key risk policy limits.

The results of the Financial Condition Test and Own Risk and Solvency Assessment are presented to the Board annually by our Chief Actuary and CRO, respectively. Our Chief Auditor reports the results of internal audits of risk controls and risk management programs to the Audit Committee and the Board's Risk Committee annually. Management reviews the implementation of key risk management strategies, and their effectiveness, with the Board's Risk Committee annually.

# Risk Control and Mitigation

Risk control activities in place throughout the Company are designed to mitigate risks within established risk limits. We believe our controls, which include policies, procedures, systems and processes, are appropriate and commensurate with the key risks faced at all levels across the Company. Such controls are an integral part of day-to-day activity, business management and decision making.

GRM establishes and oversees formal review and approval processes for product offerings, insurance underwriting, reinsurance, investment activities and other material business activities, based on the nature, size and complexity of the risk taking activity involved. Authorities for assuming risk at the transaction level are delegated to specific individuals based on their skill, knowledge and experience.

# Principal Risk Categories

Our insurance, wealth and asset management and other financial services businesses subject Manulife to a broad range of risks. Management has identified the following risks to which our businesses, operations and financial condition are subjected to, grouped under five principal risk categories: strategic risk, market risk, credit risk, product risk and operational risk. The following sections describe the risk management strategies and risk factors for each principal risk category.

The risks described below are not the only ones we face. Additional risks not presently known to us or that are currently immaterial could also impair our businesses, operations and financial condition in the future. If any of such risks should occur, the trading price of our securities, including common shares, preferred shares and debt securities, could decline, and investors may lose all or part of their investment.

# Strategic Risk

Strategic risk is the risk of loss resulting from the inability to adequately plan or implement an appropriate business strategy that allows us to effectively compete in the markets in which we operate, or to adapt to change in the external business, political or regulatory environment.

![Manulife logo]() Manulife

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We operate in highly competitive markets and compete for customers with both insurance and non-insurance financial services companies. Customer loyalty and retention, and access to distributors, are important to the Company's success and are influenced by many factors, including our distribution practices and regulations, product features, service levels including digital capabilities, prices, investment performance, and our financial strength ratings and reputation. Our ability to effectively compete is highly dependent upon being quick to react and adapt to changes from the external environment while continuing to proactively drive internal innovation.

### Strategic Risk Management Strategy

The CEO and Executive Leadership Team establish and oversee execution of business strategies and have accountability to identify and manage the risks embedded in these strategies. They are supported by a number of processes:

- Strategic business, risk and capital planning that is reviewed with the Board, Executive Leadership Team, and the ERC;
- Performance and risk reviews of all key businesses with the CEO and annual reviews with the Board;
- Risk based capital attribution and allocation designed to encourage a consistent decision-making framework across the organization; and
- Review and approval of significant acquisitions and divestitures by the CEO and, where appropriate, the Board.

Reputation risk is the risk that the Company's corporate image may be eroded by adverse publicity, about real or perceived issues, as a result of business practices of Manulife or its representatives potentially causing long-term or even irreparable damage to the Company's franchise value. Reputation risk arises from both internal and external environmental factors, and cannot be managed in isolation from other risks, but only as an integral part of the Company's integrated risk management approach.

The Company's Reputation Risk Policy requires that internal processes and controls, management decisions, and business decisions, include considerations for how the Company's reputation and brand could be impacted. Any incident with the potential to harm our reputation is of high priority and senior management is to be alerted. An essential component of the Reputation Risk Policy requires that all employees should conduct themselves in accordance with our values, as well as the Company's Code of Conduct and Business Ethics.

### Environmental, Social and Governance Risks

Environmental, social and governance ("ESG") risks could arise from our inability to adapt to evolving ESG issues, including climate change, and may impact our investments, underwriting, and operations, which could lead to adverse financial, operational, legal, reputational, or brand value risks for Manulife due to our actual or perceived actions, or inaction in relation to ESG issues.

The Board's Corporate Governance and Nominating Committee ("CGNC") oversees Manulife's ESG framework, including matters related to climate change. On a regular basis, the CGNC is updated on relevant ESG topics, including our progress against the commitments set out in Manulife's Climate Action Plan. Starting in 2023, each member of the CGNC will also participate in at least one externally facilitated ESG-related educational activity every two years. The CGNC's oversight complements Manulife's Executive Sustainability Council ("ESC"), which consists of the Chief Executive Officer, the Chief Sustainability Officer, the Chief Risk Officer and other members of the Executive Leadership Team. As part of its mandate, the ESC is responsible for guiding the development and execution of our climate strategy, including climate-related risk management activities. The ESC meets monthly and is supported by the ESG Centre of Expertise ("CoE"), which consists of corporate function and business unit leads tasked with integrating sustainability into our business practices and a Legal and Compliance ESG CoE, whose purpose is to share information and advice relating to ESG activities across Manulife. Manulife's Climate Change Taskforce, a cross-functional team, is responsible for the execution of the Climate Action Plan and manages climate-related performance and disclosures. Additionally, our global executive Diversity, Equity and Inclusion ("DEI") Council, which includes members of the Executive Leadership Team and is chaired by the CEO, meets quarterly and guides, supports, and facilitates the implementation of our DEI strategy, encourages innovative thinking about DEI challenges and opportunities, and drives and builds accountability for DEI throughout the organization.

### Climate Risk

Consistent with the Financial Stability Board's Taskforce on Climate-Related Financial Disclosures ("TCFD"), Manulife defines climate-related risks as the potential negative impacts from climate change, which may be experienced directly (e.g., through financial loss) or indirectly (e.g., through reputational harm), resulting from the physical impacts of climate change or the transition to a low-carbon economy.

Climate risk is a risk with unique characteristics given the diverse set of pathways in which risks can manifest. As such, it is a transversal risk, that has the potential to impact any of our principal risks, including strategic, market, credit, product, or operational risk, as well as legal and reputational risk. Climate risk, therefore, is viewed as a modifier or an accelerator of existing risk types, and failure to adequately prepare for the potential impacts of climate change can have material adverse impacts on our balance sheet or our ability to operate.

Potential impacts of climate change may include business losses or disruption resulting from extreme weather conditions, challenges in adapting to changes in climate-related legal or regulatory frameworks, reputational damage, devaluation of our debt or equity asset exposures to fossil-fuel related or high-emitting industries, or increased mortality or morbidity resulting from climate related events.

We continue to enhance the integration of climate-related risks into our enterprise risk management framework to ensure that they are managed in a manner consistent with our common approach to risk management (refer to "Risk Identification, Measurement and Assessment" above). Our Environmental Risk Policy and other relevant policies and standards are used to guide business operations on

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climate risk identification and assessment. GRM continues to enhance risk management practices to consider the potential impacts from climate-related risk, including in our investment decision-making processes, life insurance underwriting due diligence, and assessment of operational risks and controls.

The Executive Risk Committee and the Risk Committee of the Board consider climate-related risks and opportunities through the ongoing monitoring and reporting of emerging risks. Risk management activities addressing climate-related risks are expected to continue to evolve over time as knowledge and capabilities further mature, and as applicable standards, frameworks and methodologies continue to emerge and coalesce.

Manulife is a long-term oriented underwriter and investor. Therefore, climate-related risks and opportunities, including changes in the physical environment and policy and technological changes associated with the transition to a low-carbon economy, are strategically relevant and, in some cases, could become material to our business over time. In 2022, we continued to monitor climate-related risks and opportunities within our business strategy over short (1-5 year), medium (5-15 year), and long (beyond 15 years) time horizons to better assess the relative significance of potential impacts and how and when actions will be required to address such impacts.

Our Climate Action Plan (released in May 2021) focuses on three areas, our operations, our general fund investments, and the products and services we offer to clients. It includes our commitment to achieve net zero financed emissions by 2050, and our commitment to reduce our absolute scope 1 and 2 emissions by 35% by 2035.$^{1}$ We are also taking a combined sector and asset class approach to establish ambitious near term decarbonization targets for our financing activities in the general fund. Interim targets for real estate, power generation project finance, and listed equities and debt are being developed in line with the target-setting methodology of the Science-Based Targets Initiative (“SBTi”), a leading global standard for setting carbon emission reduction targets in line with global decarbonization ambitions to limit global warming. Interim target-setting activities for additional heavy emitting industries not covered by SBTi are also under development.

Through our general fund we continue to make targeted investments in green asset categories (such as energy efficiency, sustainably certified timberlands, and renewable energy). We also continue to develop investment products and solutions for climate change mitigation and resilience through Manulife Investment Management.

For additional information regarding strategic risks associated with Manulife’s sustainability commitments, see “Strategic Risk Factors - We may not be able to achieve our sustainability commitments, or our commitments may not meet the expectations of stakeholders or regulators”. Please also refer to our annual “Environmental, Social and Governance Report”, published in the second quarter of each year, for detailed disclosure on our alignment with the TCFD recommendations and our ESG performance.

## Strategic Risk Factors

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

- • The global macroeconomic environment has a significant impact on our financial plans and ability to implement our business strategy. The macroeconomic environment can be significantly impacted by the actions of both the government sector (including central banks) and the private sector. The macroeconomic environment may also be affected by natural and human-made catastrophes.
- • Our business strategy and associated financial plans are developed by considering forecasts of economic growth, both globally and in the specific countries in which we operate. Actual economic growth can be significantly impacted by the macroeconomic environment and can deviate significantly from forecasts, thus impacting our financial results and the ability to implement our business strategy.
- • Any plans to expand our global operations in markets where we operate and potentially in new markets may require considerable management time, as well as start-up expenses for market development before any significant revenues and earnings are generated. Operations in new foreign markets may achieve low margins or may be unprofitable, and expansion in existing markets may be affected by local economic and market conditions.
- • Changes in the macroeconomic environment can also have a significant impact on financial markets, including movements in interest rates, spreads on fixed income assets, and returns on public equity and ALDA assets. Our financial plan, including income projections, capital projections, and valuation of liabilities are based on certain assumptions with respect to future movements in interest rates and spreads on fixed income assets, and expected future returns from our public equity and ALDA investments. Actual experience is highly variable and can deviate significantly from our assumptions, thus impacting our financial results. In addition, actual experience that is significantly different from our assumptions and/or changes in the macroeconomic environment may result in changes to the assumptions themselves which would also impact our financial results.
- • Specific changes in the macroeconomic environment can have very different impacts across different parts of the business. For example, a rise in interest rates is generally beneficial to us in the long-term but can adversely affect valuations of some ALDA assets, especially those that have returns dependent on contractual cash flows, such as real estate.
- • A rise in geopolitical tensions either within or outside of jurisdictions in which we operate can trigger changes in the macroeconomic environment which can have various impacts across our business. For example, economic sanctions imposed on a country could adversely impact our ability to achieve specific business objectives in that region. Military conflicts could drive financial and economic dislocations across global capital markets, supply chains or commodity markets. See also “Operational Risk Factors - Our operations face political, legal, operational and other risks that could negatively affect those operations or our results of operations and financial condition.”

$^{1}$ See “Caution regarding forward-looking statements” above.

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- The spending and savings patterns of our customers could be significantly influenced by the macroeconomic environment and could have an impact on the products and services we offer to our customers.
- Customer behaviour and emergence of claims on our liabilities can be significantly impacted by the macroeconomic environment. For example, a prolonged period of economic weakness could impact the health and well-being of our customers and that could result in increased claims for certain insurance risks.
- An elevated risk for stagflation, increased unemployment, inflation and economic uncertainty in certain parts of the global markets may result in adverse policyholders' behaviour (such as higher withdrawals, lapses, lower premium deposits and lower policy persistency than anticipated), higher expenses and cost of fundings, along with other adverse impacts from higher rates due to inflationary pressure as mentioned in the Market Risk Factors section. These impacts could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

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

- Manulife's reputation is one of its most valuable assets. Harm to a company's reputation is often a consequence of risk control failure, whether associated with complex financial transactions or routine operational activities. Manulife's reputation could also be harmed by the actions of third parties with whom we do business. Our representatives include affiliated broker-dealers, agents, wholesalers and independent distributors, such as broker-dealers and banks, whose services and representations our customers rely on. Business partners include, among others, joint venture partners and third parties to whom we outsource certain functions and that we rely on to fulfill various obligations.
- If any of these representatives or business partners fail to adequately perform their responsibilities, or monitor their own risks, these failures could affect our business reputation and operations. While we seek to maintain adequate internal risk management policies and procedures and protect against performance failures, events may occur involving our representatives or our business partners that could cause us to lose customers or cause us or our representatives or business partners to become subject to legal, regulatory, economic or trade sanctions, which could have a material adverse effect on our reputation, our business, and our results of operations. For further discussion of government regulation and legal proceedings refer to "Government Regulation" in MFC's Annual Information Form dated February 15, 2023 and note 19 of the Consolidated Financial Statements.

**Our businesses are heavily regulated, and changes in regulation or laws, or in the interpretation or enforcement of regulation and laws, may reduce our profitability and limit our growth.**

- Our operations are subject to a wide variety of insurance and other laws and regulations including with respect to financial crimes (which include, but are not limited to, money laundering, bribery and economic or trade sanctions), privacy, market conduct, consumer protection, business conduct, prudential and other generally applicable non-financial requirements. Insurance and securities regulators in Canada, the United States, Asia and other jurisdictions regularly re-examine existing laws and regulations applicable to insurance companies, investment advisors, brokers-dealers and their products. Compliance with applicable laws and regulations is time consuming and personnel-intensive, and changes in these laws and regulations or in the interpretation or enforcement thereof, may materially increase our direct and indirect compliance costs and other expenses of doing business, thus having a material adverse effect on our results of operations and financial condition.
- Regulators review their capital requirements and implement changes aimed at strengthening risk management and capitalization of financial institutions. Future regulatory capital, actuarial and accounting changes, including changes with a retroactive impact, could have a material adverse effect on the Company's consolidated financial condition, results of operations and regulatory capital both on transition and going forward. In addition, such changes could have a material adverse effect on the Company's position relative to that of other Canadian and international financial institutions with which Manulife competes for business and capital.
- In Canada, MFC and its principal operating subsidiary, MLI, are governed by the Insurance Companies Act (Canada) ("ICA"). The ICA is administered, and the activities of the Company are supervised, by the Office of the Superintendent of Financial Institutions ("OSFI"). MLI is also subject to regulation and supervision under the insurance laws of each of the provinces and territories of Canada. Regulatory oversight is vested in various governmental agencies having broad administrative power with respect to, among other things, dividend payments, capital adequacy and risk based capital requirements, asset and reserve valuation requirements, permitted investments and the sale and marketing of insurance contracts. These regulations are intended to protect policyholders and beneficiaries rather than investors and may adversely impact shareholder value.
- Some recent examples of regulatory and professional standard developments, in addition to the developments outlined in the "Risk Management and Risk Factors - Strategic Risk" section, which could impact our net income attributed to shareholders and/or capital position are provided below.
  - The International Association of Insurance Supervisors ("IAIS") is still developing elements of its global frameworks for supervision of internationally active insurance groups ("IAIGs"). This includes a risk-based global Insurance Capital Standard ("ICS") which is undergoing a five-year monitoring period through 2025 to inform its development. While broadly supportive of the goals of ICS, OSFI stated that they did not support the ICS design adopted by the IAIS in 2019 for use in the monitoring period, citing that it was 'not fit for purpose for the Canadian market'. The adoption of the international rules in specific markets or on a group-based basis will depend on the decision of each applicable regulator.

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The impact of the frameworks on capital and other regulatory requirements and Manulife's competitive position remains unknown and is being monitored.

The Holistic Framework for the assessment and mitigation of systemic risk in the insurance sector was adopted by the Financial Stability Board ("FSB") in December 2022 and the annual identification process of some IAIGs as Globally Systemically Important Insurers ("G-SIIs"), which had been paused since 2019, has been discontinued. See "Emerging Risks - Regulatory Capital" section below.

- The National Association of Insurance Commissioners ("NAIC") has been reviewing reserving and capital methodologies as well as the overall risk management framework. These reviews will affect U.S. life insurers, including John Hancock, and could lead to increased reserving and/or capital requirements for our business in the U.S. In addition, in December 2020 the NAIC adopted a group capital calculation ("GCC") and amendments to the NAIC Insurance Holding Company System Regulatory Act which exempt certain insurance holding groups, including John Hancock and Manulife, from the requirements relating to the GCC. In Michigan, which is the lead state for NAIC regulation of John Hancock, the Michigan Insurance Code was recently amended to adopt the NAIC Group Capital Calculation model language.
- The Canadian Actuarial Standards Board ("ASB") promulgates certain assumptions referenced in the CIA Standards of Practice for the valuation of insurance contract liabilities. These promulgations are updated periodically and, in the event that new promulgations are published, they will apply to the determination of actuarial liabilities and may lead to an increase in actuarial liabilities and a reduction in net income attributed to shareholders.
- Increasingly, global financial regulators are promulgating guidance related to climate change and its potential impacts on financial services firms. OSFI, the SEC and several regulators across Asia have begun to engage industry to assess the impacts of climate change and to set expectations on establishing climate transition plans, including ensuring effective risk management and governance structures to manage climate change-related risks. There are also increasing expectations from investors, regulators, and other stakeholders to provide comparable, decision-useful data and reporting on climate change-related risks and opportunities, including performance metrics such as an organization's Scope 1, 2 and 3 carbon emissions. Regulatory disclosure requirements are guided by private sector bodies, where there is a convergence in the industry around sustainability reporting frameworks. The IFRS Foundation's International Sustainability Standards Board ("ISSB") is one such body and has published draft standards for a comprehensive global baseline of sustainability disclosures for capital markets.
- In the United States, state insurance laws regulate most aspects of our business, and our U.S. insurance subsidiaries are regulated by the insurance departments of the states in which they are domiciled and the states in which they are licensed. State laws grant insurance regulatory authorities broad administrative powers with respect to, among other things: licensing companies and agents to transact business; calculating the value of assets to determine compliance with statutory requirements; mandating certain insurance benefits; regulating certain premium rates; reviewing and approving policy forms; regulating unfair trade and claims practices, including through the imposition of restrictions on marketing and sales practices, distribution arrangements and payment of inducements; regulating advertising; protecting privacy; establishing statutory capital and reserve requirements and solvency standards; fixing maximum interest rates on insurance policy loans and minimum rates for guaranteed crediting rates on life insurance policies and annuity contracts; approving changes in control of insurance companies; restricting the payment of dividends and other transactions between affiliates; and regulating the types, amounts and valuation of investments. Changes in any such laws and regulations, or in the interpretation or enforcement thereof by regulators, could significantly affect our business, results of operations and financial condition.
- Currently, the U.S. federal government does not directly regulate the business of insurance. However, federal legislation and administrative policies in several areas can significantly and adversely affect state regulated insurance companies. These areas include financial services regulation, securities regulation, pension regulation, privacy, tort reform legislation, and taxation. In addition, under the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank"), the U.S. Board of Governors of the Federal Reserve has supervisory powers over non-bank financial companies that are determined to be systemically important.
- Insurance guaranty associations in Canada and the United States have the right to assess insurance companies doing business in their jurisdiction for funds to help pay the obligations of insolvent insurance companies to policyholders and claimants. Typically, an insurer is assessed an amount related to its proportionate share of the line of business written by all insurers in the relevant jurisdiction. Because the amount and timing of an assessment is beyond our control, the liabilities that we have currently established for these potential liabilities may not be adequate, particularly if there is an increase in the number of insolvent insurers or if the insolvent insurers operated in the same lines of business and in the same jurisdictions in which we operate.
- While many of the laws and regulations to which we are subject are intended to protect policyholders, beneficiaries, depositors and investors in our products and services, others also set standards and requirements for the governance of our operations. Failure to comply with applicable laws or regulations could result in financial penalties or sanctions, and damage our reputation.
- All aspects of Manulife's Global WAM businesses are subject to various laws and regulations around the world. These laws and regulations are primarily intended to protect investment advisory clients, investors in registered and unregistered funds, and clients of Manulife's global retirement businesses. Agencies that regulate investment advisors, investment funds and retirement plan products and services have broad administrative powers, including the power to limit, restrict or prohibit the regulated entity or person from carrying on business if it fails to comply with such laws and regulations. Possible sanctions for significant compliance failures include

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the suspension of individual employees, limitations on engaging in certain lines of business for specified periods of time, revocation of investment advisor and other registrations and censures and fines both for individuals and Manulife, along with the resulting damage to our reputation.

- From time to time, regulators raise issues during examinations or audits of Manulife that could have a material adverse impact on us. We cannot predict whether or when regulatory actions may be taken that could adversely affect our operations. Our failure to comply with existing and evolving regulatory requirements could also result in regulatory sanctions and could affect our relationships with regulatory authorities and our ability to execute our business strategies and plans. For further discussion of government regulation and legal proceedings refer to “Government Regulation” in MFC’s Annual Information Form dated February 15, 2023 and note 19 of the 2022 Annual Consolidated Financial Statements. See also “Operational Risk Factors - Our operations face political, legal, operational and other risks that could negatively affect those operations or our results of operations and financial condition” for further discussion on the impact to our operations.

#### **Changes to International Financial Reporting Standards could have a material impact on our financial results.**

- New standards or modifications to existing standards could have a material adverse impact on our financial results and regulatory capital position (the regulatory capital framework in Canada uses IFRS as a base). Additionally, any mismatch between the underlying economics of our business and new accounting standards could have significant unintended negative consequences on our business model; and potentially affect our customers, shareholders and our access to capital markets. Please refer to “Emerging Risks - IFRS 17 and IFRS 9” below.

#### **Changes in tax laws, tax regulations, or interpretations of such laws or regulations could make some of our products less attractive to consumers, could increase our corporate taxes or cause us to change the value of our deferred tax assets and liabilities as well as our tax assumptions included in the valuation of our policy liabilities. This could have a material adverse effect on our business, results of operations and financial condition.**

- Many of the products that the Company sells benefit from one or more forms of preferred tax treatment under current income tax regimes. For example, the Company sells life insurance policies that benefit from the deferral or elimination of taxation on earnings accrued under the policy, as well as permanent exclusion of certain death benefits that may be paid to policyholders’ beneficiaries. We also sell annuity contracts that allow the policyholders to defer the recognition of taxable income earned within the contract. Other products that the Company sells, such as certain employer-paid health and dental plans, also enjoy similar, as well as other, types of tax advantages. The Company also benefits from certain tax benefits, including tax-exempt interest, dividends-received deductions, tax credits (such as foreign tax credits), and favourable tax rates and/or income measurement rules for tax purposes.
- There is risk that tax legislation could be enacted that would lessen or eliminate some or all of the tax advantages currently benefiting the Company or its policyholders or its other clients. This could occur in the context of deficit reduction or other tax reforms. The effects of any such changes could result in materially lower product sales, lapses of policies currently held, and/or our incurrence of materially higher corporate taxes, any of which could have a material adverse effect on our business, results of operations and financial condition.
- Additionally, the Company may be required to change its provision for income taxes or carrying amount of deferred tax assets or liabilities if the characterization of certain items is successfully challenged by taxing authorities or if future transactions or events, which could include changes in tax laws, tax regulations or interpretations of such laws or regulations, occur. Any such changes could significantly affect the amounts reported in the Consolidated Financial Statements in the year these changes occur.
- In 2021, 136 of the 140 members of the Organization for Economic Co-Operation and Development (“OECD”) / G20 Inclusive Framework agreed on a two-pillar solution to address tax challenges from the digital economy, and to close the gaps in international tax systems. These include a new approach to allocating certain profits of multinational entities amongst countries and a global minimum income tax rate of 15%. On April 7, 2022, the Canadian government reaffirmed its commitment to the two-pillar solution in its 2022 Budget statement. The Company is closely monitoring developments and potential impacts and, in particular, for issues unique to the insurance industry. If enacted, we expect an increase in the effective tax rate, pending further details on timing and specific implementation in both Canada and other affected countries.
- The Canada Recovery Dividend and permanent corporate tax rate increase for certain financial institutions were enacted in 2022. Both tax measures apply to Canada’s insurance and banking operations. The Canada Recovery Dividend is a one-time 15% tax applicable to the average taxable income for 2020 and 2021 in excess of $1 billion and is not a material cost to the Company. The 1.5% corporate tax rate increase on Canadian taxable income over $100 million had an immediate favourable impact on the value of our existing deferred tax assets in the fourth quarter of 2022 that will be offset over time by a slight increase to our effective tax rate as future Canadian insurance and banking earnings are taxed at the new higher federal corporate tax rate of 16.5%.
- Rules to govern the transition to IFRS 17 for Canadian tax purposes were enacted in late 2022 and became effective January 1, 2023. A five-year transition period for both insurance reserves and revaluations of investments under IFRS 9 should generally smooth the current tax impact of the change in accounting standards but is not expected to have a material effect on the Company’s annual cash tax payable.
- The U.S. Inflation Reduction Act of 2022 was signed into law on August 16, 2022, which includes a 15% minimum tax based on financial statement income, starting in 2023. Many related regulations remain to be drafted to clarify how the tax will operate, but at this time we do not expect our IFRS effective tax rate to be materially affected by this new tax, though the timing of cash tax payments could be accelerated.

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### **Access to capital may be negatively impacted by market conditions.**

- Disruptions, uncertainty or volatility in the financial markets may limit our access to the capital markets to raise capital required to operate our business. Such market conditions may limit our ability to access the capital necessary to satisfy regulatory capital requirements to grow our business and meet our refinancing requirements. Under extreme conditions, we may be forced, among other things, to delay raising capital, issue different types of capital than we would otherwise under normal conditions, less effectively deploy such capital, issue shorter term securities than we prefer, or issue securities that bear an unattractive cost of capital which could decrease our financial flexibility, profitability, and/or dilute our existing shareholders.

### **As a holding company, MFC depends on the ability of its subsidiaries to transfer funds to it to meet MFC's obligations and pay dividends. Subsidiaries' remittance of capital depends on subsidiaries' earnings, regulatory requirements and restrictions, and macroeconomic and market conditions.**

- MFC is a holding company and relies on dividends and interest payments from our insurance and other subsidiaries as the principal source of cash flow to meet MFC's obligations and pay dividends. As a result, MFC's cash flows and ability to service its obligations are dependent upon the earnings of its subsidiaries and the distribution of those earnings and other funds by its subsidiaries to MFC. Substantially all of MFC's business is currently conducted through its subsidiaries.
- The ability of our holding company to fund its cash requirements depends upon it receiving dividends, distributions and other payments from our operating subsidiaries. The ability of MFC's insurance subsidiaries to pay dividends to MFC in the future will depend on their earnings, macroeconomic and market conditions, and their respective local regulatory requirements and restrictions, including capital adequacy and requirements, exchange controls and economic or trade sanctions.
- MFC's insurance subsidiaries are subject to a variety of insurance and other laws and regulations that vary by jurisdiction and are intended to protect policyholders and beneficiaries in that jurisdiction first and foremost, rather than investors. These subsidiaries are generally required to maintain solvency and capital standards as set by their local regulators and may also be subject to other regulatory restrictions, all of which may limit the ability of subsidiary companies to pay dividends or make distributions to MFC.
- Potential changes to regulatory capital and actuarial and accounting standards could also limit the ability of the insurance subsidiaries to pay dividends or make distributions and could have a material adverse effect on internal capital mobility. We may be required to raise additional capital, which could be dilutive to existing shareholders, or to limit the new business we write, or to pursue actions that would support capital needs but adversely impact our subsequent earnings potential. In addition, the timing and outcome of these initiatives could have a significantly adverse impact on our competitive position relative to that of other Canadian and international financial institutions with which we compete for business and capital. Please also refer to "Emerging Risks - IFRS 17 and IFRS 9" below.
- The Company seeks to maintain capital in its regulated subsidiaries in excess of the minimum required in all jurisdictions in which the Company does business. The minimum requirements in each jurisdiction may increase due to regulatory changes and we may decide to maintain additional capital in our operating subsidiaries for competitive reasons, to fund expected growth of the business or to deal with changes in the risk profile of such subsidiaries. Any such increases in the level of capital may reduce the ability of the operating companies to pay dividends.
- The payment of dividends to MFC by MLI is subject to restrictions set out in the ICA. The ICA prohibits the declaration or payment of any dividend on shares of an insurance company if there are reasonable grounds for believing: (i) the company does not have adequate capital and adequate and appropriate forms of liquidity; or (ii) the declaration or the payment of the dividend would cause the company to be in contravention of any regulation made under the ICA respecting the maintenance of adequate capital and adequate and appropriate forms of liquidity, or of any order made to the company by the Superintendent. All of our U.S. and Asian operating life insurance companies are subsidiaries of MLI. Accordingly, a restriction on dividends from MLI would restrict MFC's ability to obtain dividends from its U.S. and Asian businesses.
- Certain of MFC's U.S. insurance subsidiaries also are subject to insurance laws in Michigan, New York and Massachusetts, the jurisdictions in which these subsidiaries are domiciled, which impose general limitations on the payment of dividends and other upstream distributions by these subsidiaries to MLI.
- Our Asian insurance subsidiaries are also subject to restrictions in the jurisdictions in which these subsidiaries are domiciled which could affect their ability to pay dividends to MLI in certain circumstances.

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

- Credit rating agencies publish financial strength ratings on life insurance companies that are indicators of an insurance company's ability to meet contract holder and policyholder obligations. Credit rating agencies also assign credit ratings, which are indicators of an issuer's ability to meet the terms of its obligations in a timely manner and are important factors in a company's overall funding profile and ability to access external capital. Ratings reflect the views held by each credit agency, which are subject to change based on various factors that may be within or beyond a company's control.
- Ratings are important factors in establishing the competitive position of insurance companies, maintaining public confidence in products being offered, and determining the cost of capital. A ratings downgrade, or the potential for such a downgrade could adversely affect our operations and financial condition. A downgrade could, among other things, increase our cost of capital and limit our access to the capital and loan markets; cause some of our existing liabilities to be subject to acceleration, additional collateral support, changes in terms, or additional financial obligations; result in the termination of our relationships with broker-dealers, banks, agents, wholesalers and other distributors of our products and services; increase our cost of hedging; unfavourably impact our ability to execute on our hedging strategies; materially increase the number of surrenders, for all or a portion of the net cash values, by the

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owners of policies and contracts we have issued; impact our ability to obtain reinsurance at reasonable prices or at all; and materially increase the number of withdrawals by policyholders of cash values from their policies; and reduce new sales.

**Competitive factors may adversely affect our market share and profitability.**

- The insurance, wealth and asset management industries are highly competitive. Our competitors include other insurers, securities firms, investment advisors, mutual funds, banks and other financial institutions. The rapid advancement of new technologies, such as blockchain, artificial intelligence and advanced analytics, may enable other non-traditional firms to compete directly in the industry space, or offer services to our traditional competitors to enhance their value propositions. The impact from technological disruption may result in our competitors improving their customer experience, product offerings and business costs. Our competitors compete with us for customers, access to distribution channels such as brokers and independent agents, and for employees. In some cases, competitors may be subject to less onerous regulatory requirements, have lower operating costs or have the ability to absorb greater risk while maintaining their financial strength ratings, thereby allowing them to price their products more competitively or offer features that make their products more attractive. These competitive pressures could result in lower new business volumes and increased pricing pressures on a number of our products and services that may harm our ability to maintain or increase our profitability. Due to the highly competitive nature of the financial services industry, there can be no assurance that we will continue to effectively compete with our traditional and non-traditional industry rivals, and competitive pressure may have a material adverse effect on our business, results of operations and financial condition.

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

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

**Industry trends could adversely affect the profitability of our businesses.**

- Our business segments continue to be influenced by a variety of trends that affect our business and the financial services industry in general. The impact of the volatility and instability of the financial markets on our business is difficult to predict and the results of operations and our financial condition may be significantly impacted by general business and economic trends in the geographies in which we operate. These conditions include, but are not limited to, market factors, such as public equity, foreign currency, interest rate and other market risks, demographic shifts, consumer behaviours (e.g. spending habits and debt levels), and governmental policies (e.g. fiscal, monetary, and global trade). The Company's business plans, results of operations, and financial condition have been negatively impacted in the recent past and may also be negatively affected in the future.

**We may face unforeseen liabilities or asset impairments arising from possible mergers with, or acquisitions and dispositions of, businesses or difficulties integrating acquired businesses.**

- We have engaged in mergers with, or acquisitions and dispositions of, businesses in the past and expect to continue to do so in the future as we may deem appropriate. There could be unforeseen liabilities or asset impairments, including goodwill impairments that arise in connection with the businesses that we may sell, have acquired, or may acquire in the future. In addition, there may be liabilities or asset impairments that we fail, or are unable, to discover in the course of performing due diligence investigations on acquisition targets. Furthermore, the use of our own funds as consideration in any acquisition would consume capital resources that would no longer be available for other corporate purposes.
- Our ability to achieve some or all of the benefits we anticipate from any mergers with, or acquisitions and dispositions of, businesses will depend in large part upon our ability to successfully integrate the businesses in an efficient and effective manner. We may not be able to integrate the businesses smoothly or successfully, and the process may take longer than expected. The integration of operations may require the dedication of significant management resources, which may distract management's attention from our day-to-day business. Mergers with, or acquisitions and dispositions of, operations outside of North America, especially any acquisition in a jurisdiction in which we do not currently operate, may be particularly challenging or costly to integrate. If we are unable to successfully integrate the operations of any acquired businesses, we may be unable to realize the benefits we expect to achieve as a result of the acquisitions and the results of operations may be less than expected.

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

- Goodwill represents the excess of the amounts we paid to acquire subsidiaries and other businesses over the fair value of their net identifiable assets at the date of acquisition. Intangible assets represent assets that are separately identifiable at the time of an acquisition and provide future benefits such as the John Hancock brand.
- As outlined below under "Critical Actuarial and Accounting Policies - Goodwill and Intangible Assets", goodwill and intangible assets with indefinite lives are tested at least annually for impairment at the cash generating unit ("CGU") or group of CGUs level, representing the smallest group of assets that is capable of generating largely independent cash flows. Going forward, as a result of the impact of economic conditions and changes in product mix and the granular level of goodwill testing under IFRS, additional impairment charges could occur in the future. Any impairment in goodwill would not affect LICAT capital.

56 | 2022 Annual Report | Management's Discussion and Analysis

- If market conditions deteriorate in the future and, in particular, if MFC's common share price is low relative to book value per share, if the Company's actions to limit risk associated with its products or investments cause a significant change in any one CGU's recoverable amount, or if the outlook for a CGU's results deteriorate, the Company may need to reassess the value of goodwill and/or intangible assets which could result in impairments during 2023 or subsequent periods. Such impairments could have a material adverse effect on our results of operations and financial condition.
- Deferred income tax balances represent the expected future tax effects of the differences between the book and tax basis of assets and liabilities, loss carry forwards and tax credits. Deferred tax assets are recorded when the Company expects to claim deductions on tax returns in the future for expenses that have already been recorded in the financial statements.
- The availability of those deductions is dependent on future taxable income against which the deductions can be made. Deferred tax assets are assessed periodically by management to determine if they are realizable. Factors in management's determination include the performance of the business including the ability to generate gains from a variety of sources and tax planning strategies. If based on information available at the time of the assessment, it is determined that the deferred tax asset will not be realized, then the deferred tax asset is reduced to the extent that it is no longer probable that the tax benefit will be realized.

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

- We rely on a combination of registrations, contractual rights and copyright, trademark, patent and trade secret laws to establish and protect our intellectual property. In particular, we have invested considerable resources in promoting and protecting the brand names "Manulife" and "John Hancock" and expect to continue to do so. Although we use a broad range of measures to protect our intellectual property rights, third parties may infringe or misappropriate our intellectual property. As the occurrence of potential infringements or misappropriations against our intellectual property increases, we may have to litigate more often to enforce and protect our copyrights, trademarks, patents, trade secrets and know-how or to determine their scope, validity or enforceability, which represents a diversion of resources that may be significant in amount and may not prove successful. The loss of intellectual property protection or the inability to secure or enforce the protection of our intellectual property assets could have a material adverse effect on our business and our ability to compete.
- We also may be subject to costly litigation in the event that another party alleges our operations or activities infringe upon its intellectual property rights. Third parties may have, or may eventually be issued, patents that could be infringed by our products, methods, processes or services. Any party that holds such a patent could make a claim of infringement against us. We may also be subject to claims by third parties for breach of copyright, trademark, trade secret or license usage rights. Any such claims and any resulting litigation could result in significant liability for damages. If we were found to have infringed a third-party patent or other intellectual property rights, we could incur substantial liability, and in some circumstances could be enjoined from providing certain products or services to our customers or utilizing and benefiting from certain methods, processes, copyrights, trademarks, trade secrets or licenses, or alternatively could be required to enter into costly licensing arrangements with third parties, all of which could have a material adverse effect on our business, results of operations and financial condition.

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

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

**Entities within the MFC group are interconnected which may make separation difficult.**

- MFC operates in local markets through subsidiaries and branches of subsidiaries. These local operations are financially and operationally interconnected to lessen expenses, share and reduce risk, and efficiently utilize financial resources. In general, external capital required for companies in the Manulife group has been raised at the MFC level in recent years and then transferred to other entities primarily as equity or debt capital as appropriate. Other linkages include policyholder and other creditor guarantees and other forms of internal support between various entities, loans, capital maintenance agreements, derivatives, shared services and affiliate reinsurance treaties. Accordingly, the risks undertaken by a subsidiary may be transferred to or shared by affiliates through financial and operational linkages. Some of the consequences of this are:
  - Financial difficulties at a subsidiary may not be isolated and could cause material adverse effects on affiliates and the group as a whole.
  - Linkages may make it difficult to dispose of or separate a subsidiary or business within the group by way of a spin-off or similar transaction and the disposition or separation of a subsidiary or business may not fully eliminate the liability of the Company and its remaining subsidiaries for shared risks. Issues raised by such a transaction could include: (i) the Company cannot terminate, without policyholder consent and in certain jurisdictions regulator consent, parental guarantees on in-force policies and therefore would continue to have residual risk under any such non-terminated guarantees; (ii) internal capital mobility and efficiency could be limited; (iii) significant potential tax consequences; (iv) uncertainty about the accounting and regulatory outcomes of such a

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transaction; (v) obtaining any other required approvals; (vi) there may be a requirement for significant capital injections; and (vii) the transaction may result in increased sensitivity of net income attributed to shareholders and capital of MFC and its remaining subsidiaries to market declines.

**We may not be able to achieve our sustainability commitments, or our commitments may not meet the expectations of stakeholders or regulators.**

- We continue to build on our sustainability commitments, including our climate-related commitments, as set out in our sustainability strategy, and continue to adopt policies and processes to manage these commitments, in alignment with our business priorities. Internal or external circumstances could affect our ability to successfully meet some or all of our sustainability commitments. Our commitments could also materially change in the future and this could affect stakeholders' evaluation of us and lead to adverse reputational impact.
- Our progress towards the commitments is disclosed periodically, which allows our stakeholders, including shareholders, customers and employees, to evaluate our business based on our advancement towards these commitments. Our reporting on our progress relies on various external frameworks, methodologies, taxonomies and other standards, which may change over time, resulting in changes to or restatements of our reporting processes and results. Stakeholders may also evaluate our business by their own sustainability criteria which may not be consistent with our own criteria or performance indicators, which could result in varying levels of expectations for which we may not be able to entirely satisfy.
- The availability of quality and reliable data, including issuer data, is a notable factor in our ability to set targets, make effective decisions against, and report our progress towards our targets and strategic areas of focus for our general fund. However, as a consequence of incomplete, inadequate, or unavailable data, our targets, and our progress toward achieving them, may need to be revisited.
- Interim targets support us in understanding how our investments can contribute to decarbonization of the real economy and provide guideposts against which to measure our progress towards our targets, including our targets to support ambitious global decarbonization commitments as validated by SBTi. However, our targets, and our progress toward achieving them, may need to be revisited if the assumptions underlying net zero scenarios and pathways prove incorrect, or if regulatory, economic, technological and other external factors needed to enable such scenarios and pathways fail to evolve.
- As regulators start to adopt mandatory sustainability related disclosure requirements and investment criteria and taxonomies, there is an increasing possibility of regulatory sanctions, including fines, and litigations. As a result, we may face adverse investor, media, or public scrutiny which may negatively impact our financial results and reputation.

## Market Risk

Market risk is the risk of loss resulting from market price volatility, interest rate change, credit and swap spread changes, and adverse foreign exchange rate movements. Market price volatility primarily relates to changes in prices of publicly traded equities and alternative long-duration assets. The profitability of our insurance and annuity products, as well as the fees we earn in our investment management business, are subject to market risk.

### IFRS 7 Disclosures

Text and tables in this and the following section ("Market Risk Sensitivities and Market Risk Exposure Measures") include disclosures on market and liquidity risk in accordance with IFRS 7, "Financial Instruments - Disclosures", and discussions on how we measure risk and our objectives, policies and methodologies for managing them. Disclosures in accordance with IFRS 7 are identified by a vertical line in the left margin of each page. The identified text and tables represent an integral part of our audited annual Consolidated Financial Statements for the years ended December 31, 2022 and December 31, 2021. The fact that certain text and tables are considered an integral part of the Consolidated Financial Statements does not imply that the disclosures are of any greater importance than the sections not part of the disclosure. Accordingly, the "Risk Management and Risk Factors" disclosure should be read in its entirety.

### Market Risk Management Strategy

Market risk management strategy is governed by the Global Asset Liability Committee which oversees the overall market and liquidity risk program. Our overall strategy to manage our market risks incorporates several component strategies, each targeted to manage one or more of the market risks arising from our businesses. At an enterprise level, these strategies are designed to manage our aggregate exposures to market risks against limits associated with earnings and capital volatility.

The following table outlines our key market risks and identifies the risk management strategies which contribute to managing these risks.

#### Risk Management Strategy

|  | Key Market Risk |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
|  | Public Equity Risk | Interest Rate and Spread Risk | ALDA Risk | Foreign Exchange Risk | Liquidity Risk |
| Product design and pricing | ✓ | ✓ | ✓ | ✓ | ✓ |
| Variable annuity guarantee dynamic hedging | ✓ | ✓ |  | ✓ | ✓ |
| Macro equity risk hedging | ✓ |  |  | ✓ | ✓ |
| Asset liability management | ✓ | ✓ | ✓ | ✓ | ✓ |
| Foreign exchange management |  |  |  | ✓ | ✓ |
| Liquidity risk management |  |  |  |  | ✓ |

58 | 2022 Annual Report | Management's Discussion and Analysis

**Public Equity Risk** - To manage public equity risk from our insurance and annuity businesses, we primarily use a variable annuity guarantee dynamic hedging strategy which is complemented by a general macro equity risk hedging strategy, in addition to asset liability management strategies. Our strategies employed for variable annuity guarantee dynamic hedging and macro equity risk hedging expose the Company to additional risks. See “Market Risk Factors” below.

**Interest Rate and Spread Risk** - To manage interest rate and spread risk, we primarily employ asset liability management strategies to manage the duration of our fixed income investments and execute interest rate hedges in our insurance segments and our Corporate and Other segments.

**ALDA Risk** - We seek to limit concentration risk associated with ALDA performance by investing in a diversified basket of assets including commercial real estate, timber, farmland, private equities, infrastructure, and oil and gas assets. We further diversify risk by managing investments against established investment and risk limits.

**Foreign Exchange Risk** - Our policy is to generally match the currency of our assets with the currency of the liabilities they support. Where assets and liabilities are not currency matched, we seek to hedge this exposure where appropriate to stabilize our capital positions and remain within our enterprise foreign exchange risk limits.

**Liquidity Risk** - We are exposed to liquidity risk, which is the risk of not having access to sufficient funds or liquid assets to meet both expected and unexpected cash outflows and collateral demands in our operating and holding companies. In the operating companies, cash and collateral demands arise day-to-day to fund policyholder benefits, withdrawals of customer deposit balances, reinsurance settlements, derivative instrument settlements/collateral pledging, expenses, and investment and hedging activities. Under stressed conditions, additional cash and collateral demands could arise primarily from changes to policyholder termination or policy renewal rates, withdrawals of customer deposit balances, borrowers renewing or extending their loans when they mature, derivative settlements or collateral demands, and reinsurance settlements.

Our liquidity risk management framework is designed to provide adequate liquidity to cover cash and collateral obligations as they come due, and to sustain and grow operations in both normal and stressed conditions. Refer to “Liquidity Risk Management Strategy” below for more information.

### Product Design and Pricing Strategy

Our policies, standards, and guidelines with respect to product design and pricing are designed with the objective of aligning our product offerings with our risk-taking philosophy and risk appetite, and in particular, ensuring that incremental risk generated from new sales aligns with our strategic risk objectives and risk limits. The specific design features of our product offerings, including level of benefit guarantees, policyholder options, fund offerings and availability restrictions as well as our associated investment strategies, help to mitigate the level of underlying risk. We regularly review and modify key features within our product offerings, including premiums and fee charges with a goal of meeting profit targets and staying within risk limits. Certain of our general fund adjustable benefit products have minimum rate guarantees. The rate guarantees for any particular policy are set at the time the policy is issued and governed by insurance regulation in each jurisdiction where the products are sold. The contractual provisions allow crediting rates to be re-set at pre-established intervals subject to the established minimum crediting rate guarantees. The Company may partially mitigate the interest rate exposure by setting new rates on new business and by adjusting rates on in-force business where permitted. In addition, the Company partially mitigates this interest rate risk through its asset liability management process, product design elements, and crediting rate strategies. New product initiatives, new reinsurance arrangements and material insurance underwriting initiatives must be reviewed and approved by the CRO or key individuals within risk management functions.

### Hedging Strategies for Variable Annuity and Other Equity Risks

The Company’s exposure to movement in public equity market values primarily arises from insurance liabilities related to variable annuity guarantees and general fund public equity investments.

Dynamic hedging is the primary hedging strategy for variable annuity market risks. Dynamic hedging is employed for new variable annuity guarantees business when written or as soon as practical thereafter.

We seek to manage public equity risk arising from unhedged exposures in our insurance liabilities through our macro equity risk hedging strategy. We seek to manage interest rate risk arising from variable annuity business not dynamically hedged through our asset liability management strategy.

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## Variable Annuity Dynamic Hedging Strategy

The variable annuity dynamic hedging strategy is designed to hedge the sensitivity of variable annuity guarantee policy liabilities to fund performance (both public equity and bond funds) and interest rate movements. The objective of the variable annuity dynamic hedging strategy is to offset, as closely as possible, the change in the economic value of guarantees with the profit and loss from our hedge asset portfolio. The economic value of guarantees moves in close tandem, but not exactly, with our variable annuity guarantee policy liabilities, as it reflects best estimate liabilities and does not include any liability provisions for adverse deviations.

Our variable annuity hedging program uses a variety of exchange-traded and over-the-counter (“OTC”) derivative contracts to offset the change in value of variable annuity guarantees. The main derivative instruments used are equity index futures, government bond futures, currency futures, interest rate swaps, total return swaps, equity options and interest rate swaptions. The hedge instruments’ positions against policy liabilities are continuously monitored as market conditions change. As necessary, the hedge asset positions will be dynamically rebalanced in order to stay within established limits. We may also utilize other derivatives with the objective to improve hedge effectiveness opportunistically.

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

- Policyholder behaviour and mortality experience are not hedged;
- Provisions for adverse deviation in the policy liabilities are not hedged;
- A portion of interest rate risk is not hedged;
- Credit spreads may widen and actions might not be taken to adjust accordingly;
- Fund performance on a small portion of the underlying funds is not hedged due to lack of availability of effective exchange-traded hedge instruments;
- Performance of the underlying funds hedged may differ from the performance of the corresponding hedge instruments;
- Correlations between interest rates and equity markets could lead to unfavourable material impacts;
- Unfavourable hedge rebalancing costs can be incurred during periods of high volatility from equity markets, bond markets and/or interest rates. The impact is magnified when these impacts occur concurrently; and
- Not all other risks are hedged.

## Macro Equity Risk Hedging Strategy

The objective of the macro equity risk hedging program is to maintain our overall earnings sensitivity to public equity market movements within our Board approved risk appetite limits. The macro equity risk hedging program is designed to hedge earnings sensitivity due to movements in public equity markets arising from all sources (outside of dynamically hedged exposures). Sources of equity market sensitivity addressed by the macro equity risk hedging program include:

- Residual equity and currency exposure from variable annuity guarantees not dynamically hedged;
- General fund equity holdings backing guaranteed, adjustable liabilities and variable universal life; and
- Unhedged provisions for adverse deviation related to variable annuity guarantees dynamically hedged.

## Asset Liability Management Strategy

Our asset liability management strategy is designed to help ensure that the market risks embedded in our assets and liabilities held in the Company’s general fund are effectively managed and that risk exposures arising from these assets and liabilities are maintained within risk limits. The embedded market risks include risks related to the level and movement of interest rates and credit and swap spreads, public equity market performance, ALDA performance and foreign exchange rate movements.

General fund product liabilities are categorized into groups with similar characteristics in order to support them with a specific asset strategy. We seek to align the asset strategy for each group to the premium and benefit patterns, policyholder options and guarantees, and crediting rate strategies of the products they support. The strategies are set using portfolio analysis techniques intended to optimize returns, subject to considerations related to regulatory and economic capital requirements, and risk tolerances. They are designed to achieve broad diversification across asset classes and individual investment risks while being suitably aligned with the liabilities they support. The strategies encompass asset mix, quality rating, term profile, liquidity, currency and industry concentration targets.

Products which feature guaranteed liability cash flows (i.e., where the projected net flows are not materially dependent upon economic scenarios) are managed to a target return investment strategy. The products backed by this asset group include:

- Accumulation annuities (other than annuities with pass-through features), which are primarily short-to-medium-term obligations and offer interest rate guarantees for specified terms on single premiums. Withdrawals may or may not have market value adjustments;
- Payout annuities, which have no surrender options and include predictable and very long-dated obligations; and
- Insurance products, with recurring premiums extending many years in the future, and which also include a significant component of very long-dated obligations.

We seek to manage the assets backing these long-dated benefits to achieve a target return sufficient to support the obligations over their lifetime, subject to established risk tolerances and the impact of regulatory and economic capital requirements. Fixed income assets are

60 | 2022 Annual Report | Management’s Discussion and Analysis

managed to a benchmark developed to minimize interest rate risk against the liability cash flows. Utilizing ALDA and public equity investments provides a suitable match for long-duration liabilities that also enhances long-term investment returns and reduces aggregate risk through diversification.

For insurance and annuity products where significant pass-through features exist, a total return strategy approach is used, generally combining fixed income with ALDA plus public equity investments. ALDA and public equity may be included to enhance long-term investment returns and reduce aggregate risk through diversification. Target investment strategies are established using portfolio analysis techniques that seek to optimize long-term investment returns while considering the risks related to embedded product guarantees and policyholder withdrawal options, the impact of regulatory and economic capital requirements and considering management tolerances with respect to short-term income volatility and long-term tail risk exposure. For these pass-through products such as participating insurance and universal life insurance, the investment performance of assets supporting the liabilities will be largely passed through to policyholders as changes in the amounts of dividends declared or rates of interest credited, subject to embedded minimum guarantees. Shorter duration liabilities such as fixed deferred annuities do not incorporate ALDA plus public equity investments into their target asset mixes. Authority to manage our investment portfolios is delegated to investment professionals who manage to benchmarks derived from the target investment strategies established for each group, including interest rate risk tolerances.

Our asset liability management strategy incorporates a wide variety of risk measurement, risk mitigation and risk management, and hedging processes. The liabilities and risks to which the Company is exposed, however, cannot be completely matched or hedged due to both limitations on instruments available in investment markets and uncertainty of impact on liability cash flows from policyholder experience/behaviour.

### **Foreign Exchange Risk Management Strategy**

Our policy is to generally match the currency of our assets with the currency of the liabilities they support. Where assets and liabilities are not currency matched, we seek to hedge this exposure where appropriate to stabilize our capital positions and remain within our enterprise foreign exchange risk limits.

Risk from small balance sheet mismatches is accepted if managed within set risk limits. Risk exposures are measured in terms of potential changes in capital ratios, due to foreign exchange rate movements, determined to represent a specified likelihood of occurrence based on internal models.

### **Liquidity Risk Management Strategy**

Global liquidity management policies and procedures are designed to provide adequate liquidity to cover cash and collateral obligations as they come due, and to sustain and grow operations in both normal and stressed conditions. They reflect legal, regulatory, tax, operational or economic impediments to inter-entity funding. The asset mix of our balance sheet takes into account the need to hold adequate unencumbered and appropriate liquid assets to satisfy the requirements arising under stressed scenarios and to allow our liquidity ratios to remain strong. We manage liquidity centrally and closely monitor the liquidity positions of our principal subsidiaries.

We seek to mitigate liquidity risk by diversifying our business across different products, markets, geographical regions and policyholders. We design insurance products to encourage policyholders to maintain their policies in-force, to help generate a diversified and stable flow of recurring premium income. We design the policyholder termination features of our wealth management products and related investment strategies with the goal of mitigating the financial exposure and liquidity risk related to unexpected policyholder terminations. We establish and implement investment strategies intended to match the term profile of the assets to the liabilities they support, taking into account the potential for unexpected policyholder terminations and resulting liquidity needs. Liquid assets represent a large portion of our total assets. We aim to reduce liquidity risk in our businesses by diversifying our funding sources and appropriately managing the term structure of our funding. We forecast and monitor daily operating liquidity and cash movements in various individual entities and operations as well as centrally, aiming to ensure liquidity is available and cash is employed optimally.

We also maintain centralized cash pools and access to other sources of liquidity and contingent liquidity such as repurchase funding agreements. Our centralized cash pool consists of cash or near-cash, high quality short-term investments that are continually monitored for their credit quality and market liquidity.

![Manulife logo]() Manulife 61

As at December 31, 2022, the Company held $241.0 billion in cash and cash equivalents, comprised of cash on deposit, Canadian and U.S. Treasury Bills and high quality short-term investments, and marketable assets comprised of investment grade government and agency bonds, investment grade corporate bonds, investment grade securitized instruments, publicly traded common stocks and preferred shares, compared with $268.4 billion as at December 31, 2021 as noted in the table below.

As at December 31,

($ millions, unless otherwise stated)

|  | 2022 | 2021 |
| --- | --- | --- |
| Cash and cash equivalents | $19,153 | $22,594 |
| Marketable assets |  |  |
| Government bonds (investment grade) | 70,508 | 77,743 |
| Corporate bonds (investment grade) | 126,827 | 138,479 |
| Securitized - ABS, CMBS, RMBS (investment grade) | 2,285 | 2,892 |
| Public equities | 22,223 | 26,706 |
| Total marketable assets | 221,843 | 245,820 |
| Total cash and cash equivalents and marketable assets (1) | $240,996 | $268,414 |

$^{(1)}$ Including $13.3 billion encumbered cash and cash equivalents and marketable assets as at December 31, 2022 (2021 - $6.6 billion).

We have established a variety of contingent liquidity sources. These include, among others, a $500 million committed unsecured revolving credit facility with certain Canadian chartered banks available for MFC, and a US$500 million committed unsecured revolving credit facility with certain U.S. banks available for MFC and certain of its U.S. subsidiaries. There were no outstanding borrowings under these facilities as of December 31, 2022 (2021 - nil). In addition, John Hancock Life Insurance Company (U.S.A.) (“JHUSA”) is a member of the Federal Home Loan Bank of Indianapolis (“FHLBI”), which enables the company to obtain loans from FHLBI as an alternative source of liquidity that is collateralizable by qualifying mortgage loans, mortgage-backed securities and U.S. Treasury and Agency securities. As of December 31, 2022, JHUSA had an estimated maximum borrowing capacity of US$3.8 billion (2021 - US$4.4 billion) based on regulatory limitations with an outstanding balance of US$500 million (2021 - US$500 million), under the FHLBI facility.

The following table outlines the maturity of the Company’s significant financial liabilities.

#### Maturity of financial liabilities$^{(1)}$

As at December 31, 2022

| ($ millions) | Less than 1 year | 1 to 3 years | 3 to 5 years | Over 5 years | Total |
| --- | --- | --- | --- | --- | --- |
| Long-term debt | $ - | $ - | $2,661 | $3,573 | $6,234 |
| Capital instruments | - | 615 | - | 5,507 | 6,122 |
| Derivatives | 2,656 | 1,956 | 1,146 | 8,531 | 14,289 |
| Deposits from Bank clients (2) | 16,884 | 3,000 | 2,623 | - | 22,507 |
| Lease liabilities | 112 | 154 | 93 | 61 | 420 |

$^{(1)}$ The amounts shown above are net of the related unamortized deferred issue costs.

$^{(2)}$ Carrying value and fair value of deposits from Bank clients as at December 31, 2022 was $22,507 million and $22,271 million, respectively (2021 - $20,720 million and $20,746 million, respectively). Fair value is determined by discounting contractual cash flows, using market interest rates currently offered for deposits with similar terms and conditions. All deposits from Bank clients were categorized in Level 2 of the fair value hierarchy (2021 - Level 2).

Through the normal course of business, pledging of assets is required to comply with jurisdictional regulatory and other requirements including collateral pledged to partially mitigate derivative counterparty credit risk, assets pledged to exchanges as initial margin and assets held as collateral for repurchase funding agreements. Total unencumbered assets were $477.7 billion as at December 31, 2022 (2021 - $502.4 billion).

#### Market Risk Sensitivities and Market Risk Exposure Measures

##### Variable Annuity and Segregated Fund Guarantees Sensitivities and Risk Exposure Measures

Guarantees on variable annuity products and segregated funds may include one or more of death, maturity, income and withdrawal guarantees. Variable annuity and segregated fund guarantees are contingent and only payable upon the occurrence of the relevant event, if fund values at that time are below guarantee values. Depending on future equity market levels, liabilities on current in-force business would be due primarily in the period from 2023 to 2043.

We seek to mitigate a portion of the risks embedded in our retained (i.e. net of reinsurance) variable annuity and segregated fund guarantee business through the combination of our dynamic and macro hedging strategies (see “Publicly Traded Equity Performance Risk” below).

62 | 2022 Annual Report | Management's Discussion and Analysis

The table below shows selected information regarding the Company's variable annuity and segregated fund investment-related guarantees gross and net of reinsurance.

### Variable annuity and segregated fund guarantees, net of reinsurance

| As at December 31, ($ millions) | 2022 |  |  | 2021 |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | Guarantee value (1) | Fund value | Net amount at risk (1),(2),(3) | Guarantee value (1) | Fund value | Net amount at risk (1),(2),(3) |
| Guaranteed minimum income benefit | $4,357 | $2,723 | $1,639 | $4,419 | $3,603 | $918 |
| Guaranteed minimum withdrawal benefit | 38,319 | 34,203 | 5,734 | 39,098 | 41,809 | 2,233 |
| Guaranteed minimum accumulation benefit | 20,035 | 19,945 | 221 | 19,820 | 20,226 | 12 |
| Gross living benefits (4) | 62,711 | 56,871 | 7,594 | 63,337 | 65,638 | 3,163 |
| Gross death benefits (5) | 10,465 | 15,779 | 2,156 | 11,105 | 22,920 | 618 |
| Total gross of reinsurance | 73,176 | 72,650 | 9,750 | 74,442 | 88,558 | 3,781 |
| Living benefits reinsured | 26,999 | 23,691 | 4,860 | 3,788 | 3,102 | 771 |
| Death benefits reinsured | 3,923 | 2,636 | 1,061 | 639 | 547 | 253 |
| Total reinsured | 30,922 | 26,327 | 5,921 | 4,427 | 3,649 | 1,024 |
| Total, net of reinsurance (6) | $42,254 | $46,323 | $3,829 | $70,015 | $84,909 | $2,757 |

$^{(1)}$ Guarantee Value and Net Amount at Risk in respect of guaranteed minimum withdrawal business in Canada and the U.S. have been updated in 2021 to reflect the time value of money of these claims.

$^{(2)}$ Amount at risk (in-the-money amount) is the excess of guarantee values over fund values on all policies where the guarantee value exceeds the fund value. For guaranteed minimum death benefit, the amount at risk is defined as the current guaranteed minimum death benefit in excess of the current account balance and assumes that all claims are immediately payable. In practice, guaranteed death benefits are contingent and only payable upon the eventual death of policyholders if fund values remain below guarantee values. For guaranteed minimum withdrawal benefit, the amount at risk assumes that the benefit is paid as a lifetime annuity commencing at the earliest contractual income start age. These benefits are also contingent and only payable at scheduled maturity/income start dates in the future, if the policyholders are still living and have not terminated their policies and fund values remain below guarantee values. For all guarantees, the amount at risk is floored at zero at the single contract level.

$^{(3)}$ The amount at risk net of reinsurance at December 31, 2022 was $3,829 million (2021 - $2,757 million) of which: US$737 million (2021 - US$1,336 million) was on our U.S. business, $2,154 million (2021 - $886 million) was on our Canadian business, US$275 million (2021 - US$53 million) was on our Japan business and US$224 million (2021 - US$87 million) was related to Asia (other than Japan) and our run-off reinsurance business.

$^{(4)}$ Where a policy includes both living and death benefits, the guarantee in excess of the living benefit is included in the death benefit category as outlined in footnote 5.

$^{(5)}$ Death benefits include standalone guarantees and guarantees in excess of living benefit guarantees where both death and living benefits are provided on a policy.

$^{(6)}$ Reinsured amounts at December 31, 2022 reflect the U.S. variable annuity reinsurance transactions effected on February 1, 2022 and October 3, 2022.

### Investment categories for variable contracts with guarantees

Variable contracts with guarantees, including variable annuities and variable life, are invested, at the policyholder's discretion subject to contract limitations, in various fund types within the segregated fund accounts and other investments. The account balances by investment category are set out below.

| As at December 31, ($ millions) | 2022 | 2021 |
| --- | --- | --- |
| Investment category |  |  |
| Equity funds | $42,506 | $52,528 |
| Balanced funds | 36,290 | 43,783 |
| Bond funds | 9,336 | 10,965 |
| Money market funds | 1,924 | 1,844 |
| Other fixed interest rate investments | 2,029 | 1,917 |
| Total | $92,085 | $111,037 |

### Caution Related to Sensitivities

In the sections that follow, we provide sensitivities and risk exposure measures for certain risks. These include sensitivities due to specific changes in market prices and interest rate levels projected using internal models as at a specific date and are measured relative to a starting level reflecting the Company's assets and liabilities at that date and the actuarial factors, investment activity and investment returns assumed in the determination of policy liabilities. The risk exposures measure the impact of changing one factor at a time and assume that all other factors remain unchanged. Actual results can differ significantly from these estimates for a variety of reasons including the interaction among these factors when more than one changes; changes in actuarial and investment return and future investment activity assumptions; actual experience differing from the assumptions, changes in business mix, effective tax rates and other market factors; and the general limitations of our internal models. For these reasons, the sensitivities should only be viewed as directional estimates of the underlying sensitivities for the respective factors based on the assumptions outlined below. Given the nature of these calculations, we cannot provide assurance that the actual impact on net income attributed to shareholders or on MLI's LICAT ratio will be as indicated. Market movements affect LICAT capital sensitivities both through income and other components of the regulatory capital framework. For example, LICAT is affected by changes to other comprehensive income.

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## Publicly Traded Equity Performance Risk Sensitivities and Exposure Measures

As outlined above, we have net exposure to equity risk through asset and liability mismatches; our variable annuity guarantee dynamic hedging strategy is not designed to completely offset the sensitivity of policy liabilities to all risks associated with the guarantees embedded in these products. The macro hedging strategy is designed to mitigate public equity risk arising from variable annuity guarantees not dynamically hedged and from other unhedged exposures in our insurance liabilities.

Changes in public equity prices may impact other items including, but not limited to, asset-based fees earned on assets under management and administration or policyholder account value, and estimated profits and amortization of deferred policy acquisition and other costs. These items are not hedged.

The table below shows the potential impact on net income attributed to shareholders resulting from an immediate 10%, 20% and 30% change in market values of publicly traded equities followed by a return to the expected level of growth assumed in the valuation of policy liabilities. If market values were to remain flat for an entire year, the potential impact would be roughly equivalent to an immediate decline in market values equal to the expected level of annual growth assumed in the valuation of policy liabilities. Further, if after market values dropped 10%, 20% or 30%, they continued to decline, remained flat, or grew more slowly than assumed in the valuation the potential impact on net income attributed to shareholders could be considerably more than shown. Refer to 'Sensitivity of Earnings to Changes in Assumptions' for more information on the level of growth assumed and on the net income sensitivity to changes in these long-term assumptions. The potential impact is shown after taking into account the impact of the change in markets on the hedge assets. While we cannot reliably estimate the amount of the change in dynamically hedged variable annuity guarantee liabilities that will not be offset by the profit or loss on the dynamic hedge assets, we make certain assumptions for the purposes of estimating the impact on net income attributed to shareholders.

This estimate assumes that the performance of the dynamic hedging program would not completely offset the gain/loss from the dynamically hedged variable annuity guarantee liabilities. It assumes that the hedge assets are based on the actual position at the period end, and that equity hedges in the dynamic program are rebalanced at 5% intervals. In addition, we assume that the macro hedge assets are rebalanced in line with market changes.

It is also important to note that these estimates are illustrative, and that the dynamic and macro hedging programs may underperform these estimates, particularly during periods of high realized volatility and/or periods where both interest rates and equity market movements are unfavourable.

The Standards of Practice for the valuation of insurance contract liabilities and guidance published by the CIA constrain the investment return assumptions for public equities and certain ALDA assets based on historical return benchmarks for public equities. The potential impact on net income attributed to shareholders does not take into account possible changes to investment return assumptions resulting from the impact of declines in public equity market values on these historical return benchmarks.

64 | 2022 Annual Report | Management's Discussion and Analysis

## Potential immediate impact on net income attributed to shareholders arising from changes to public equity returns$^{(1),(2),(3)}$

As at December 31, 2022

| ($ millions) | -30% | -20% | -10% | +10% | +20% | +30% |
| --- | --- | --- | --- | --- | --- | --- |
| Underlying sensitivity to net income attributed to shareholders (4) |  |  |  |  |  |  |
| Variable annuity guarantees | $(1,100) | $(660) | $(300) | $240 | $450 | $610 |
| General fund equity investments (5) | (1,520) | (1,010) | (500) | 420 | 820 | 1,220 |
| Total underlying sensitivity before hedging | (2,620) | (1,670) | (800) | 660 | 1,270 | 1,830 |
| Impact of macro and dynamic hedge assets (6) | 850 | 530 | 240 | (230) | (420) | (570) |
| Net potential impact on net income attributed to shareholders after impact of hedging (7) | $(1,770) | $(1,140) | $(560) | $430 | $850 | $1,260 |
| As at December 31, 2021 |  |  |  |  |  |  |
| ($ millions) | -30% | -20% | -10% | +10% | +20% | +30% |
| Underlying sensitivity to net income attributed to shareholders (4) |  |  |  |  |  |  |
| Variable annuity guarantees | $(2,560) | $(1,480) | $(630) | $440 | $750 | $960 |
| General fund equity investments (5) | (1,430) | (890) | (440) | 450 | 880 | 1,320 |
| Total underlying sensitivity before hedging | (3,990) | (2,370) | (1,070) | 890 | 1,630 | 2,280 |
| Impact of macro and dynamic hedge assets (6) | 2,060 | 1,190 | 500 | (470) | (820) | (1,110) |
| Net potential impact on net income attributed to shareholders after impact of hedging (7) | $(1,930) | $(1,180) | $(570) | $420 | $810 | $1,170 |

$^{(1)}$ See 'Caution Related to Sensitivities' above.

$^{(2)}$ The tables above show the potential impact on net income attributed to shareholders resulting from an immediate 10%, 20% and 30% change in market values of publicly traded equities followed by a return to the expected level of growth assumed in the valuation of policy liabilities, excluding impacts from asset-based fees earned on assets under management and policyholder account value.

$^{(3)}$ Please refer to 'Sensitivity of Earnings to Changes in Assumptions' section below for more information on the level of growth assumed and on the net income sensitivity to changes in these long-term assumptions.

$^{(4)}$ Defined as earnings sensitivity to a change in public equity markets including settlements on reinsurance contracts, but before the offset of hedge assets or other risk mitigants.

$^{(5)}$ This impact for general fund equity investments includes general fund investments supporting our policy liabilities, investment in seed money investments (in segregated and mutual funds made by Corporate and Other segment) and the impact on policy liabilities related to the projected future fee income on variable universal life and other unit linked products. The impact does not include: (i) any potential impact on public equity weightings; (ii) any gains or losses on AFS public equities held in the Corporate and Other segment; or (iii) any gains or losses on public equity investments held in Manulife Bank. The participating policy funds are largely self-supporting and generate no material impact on net income attributed to shareholders as a result of changes in equity markets.

$^{(6)}$ Includes the impact of rebalancing equity hedges in the macro and dynamic hedging program. The impact of dynamic hedge rebalancing represents the impact of rebalancing equity hedges for dynamically hedged variable annuity guarantee best estimate liabilities at 5% intervals but does not include any impact in respect of other sources of hedge ineffectiveness (e.g. fund tracking, realized volatility and equity, interest rate correlations different from expected among other factors).

$^{(7)}$ The sensitivity on net income attributed to shareholders from changes in public equity returns after the impact of hedging is largely unchanged as at December 31, 2022 compared with December 31, 2021. This is primarily driven by the decline in sensitivities in 1Q22 as a result of the U.S. variable annuity reinsurance transaction being largely offset by the net increase in sensitivities from the second quarter of 2022 ('2Q22') to 4Q22 as a result of the impact of equity market declines on our variable universal life business projected fee income.

The following table shows the potential impact to MLI's LICAT ratio resulting from changes in public equity market values.

## Potential immediate impact on MLI's LICAT ratio arising from public equity returns different than the expected returns assumed in the valuation of policy liabilities$^{(1),(2),(3)}$

| Percentage points | Impact on MLI's LICAT ratio |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | -30% | -20% | -10% | +10% | +20% | +30% |
| December 31, 2022 | (1) | (1) | - | - | 1 | 1 |
| December 31, 2021 | (1) | - | - | - | 1 | - |

$^{(1)}$ See 'Caution Related to Sensitivities' above. In addition, estimates exclude changes to the net actuarial gains/losses with respect to the Company's pension obligations as a result of changes in equity markets, as the impact on the quoted sensitivities is not considered to be material.

$^{(2)}$ The potential impact is shown assuming that the change in value of the hedge assets does not completely offset the change in the dynamically hedged variable annuity guarantee liabilities. The estimated amount that would not be completely offset relates to our practices of not hedging the provisions for adverse deviation and of rebalancing equity hedges for dynamically hedged variable annuity liabilities at 5% intervals.

$^{(3)}$ OSFI rules for segregated fund guarantees reflect full capital impacts of shocks over 20 quarters within a prescribed range. As such, the deterioration in equity markets could lead to further increases in capital requirements after the initial shock.

## Interest Rate and Spread Risk Sensitivities and Exposure Measures

At December 31, 2022, we estimated the sensitivity of our net income attributed to shareholders to a 50 basis point parallel decline in interest rates to be a charge of $100 million, and to a 50 basis point parallel increase in interest rates to be a benefit of $100 million.

The table below shows the potential impact on net income attributed to shareholders from a 50 basis point parallel move in interest rates. This includes a change of 50 basis points in current government, swap and corporate rates for all maturities across all markets with no change in credit spreads between government, swap and corporate rates, and with a floor of zero on government rates where government rates are not currently negative (currently zero floor applies to all countries we operate in except Japan), relative to the rates assumed in the valuation of policy liabilities, including embedded derivatives. For variable annuity guarantee liabilities that are dynamically hedged, it is assumed that interest rate hedges are rebalanced at 20 basis point intervals.

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As the sensitivity to a 50 basis point change in interest rates includes any associated change in the applicable reinvestment scenarios, the impact of changes to interest rates for less than, or more than 50 basis points is unlikely to be linear. Furthermore, our sensitivities are not consistent across all regions in which we operate, and the impact of yield curve changes will vary depending upon the geography where the change occurs. Reinvestment assumptions used in the valuation of policy liabilities tend to amplify the negative effects of a decrease in interest rates and dampen the positive effects of interest rate increases. This is because the reinvestment assumptions used in the valuation of our insurance liabilities are based on interest rate scenarios and calibration criteria set by the ASB. Therefore, in any particular quarter, changes to the reinvestment assumptions are not fully aligned to changes in current market interest rates especially when there is a significant change in the shape of the interest rate curve. As a result, the impact from non-parallel movements may be materially different from the estimated impact of parallel movements. For example, if long-term interest rates increase more than short-term interest rates (sometimes referred to as a steepening of the yield curve) in North America, the decrease in the value of our swaps may be greater than the decrease in the value of our insurance liabilities. This could result in a charge to net income attributed to shareholders in the short-term even though the rising and steepening of the yield curve, if sustained, may have a positive long-term economic impact.

The interest rate and spread risk sensitivities are determined in isolation of each other and therefore do not reflect the combined impact of changes in government rates and credit spreads between government, swap and corporate rates occurring simultaneously. As a result, the impact of the summation of each individual sensitivity may be materially different from the impact of sensitivities to simultaneous changes in interest rate and spread risk.

The potential impact on net income attributed to shareholders does not take into account any future potential changes to our URR assumptions or calibration criteria for stochastic risk-free rates. In 2021, the ASB issued a new promulgation with reductions to the URR and updates to the calibration criteria for stochastic risk-free rates. The updated standard included a reduction of 15 basis points in the URR and a corresponding change to stochastic risk-free rate modeling and was effective October 15, 2021. At December 31, 2022, we estimated the sensitivity of our net income attributed to shareholders to a 10 basis point reduction in the URR in all geographies, and a corresponding change to stochastic risk-free modeling, to be a charge of $300 million (post-tax); and note that the impact of changes to the URR are not linear. The long-term URR for risk-free rates in Canada is prescribed at 2.9% and we use the same assumption for the U.S. Our assumption for Japan is 1.5%.

The potential impact on net income attributable to shareholders does not take into account other potential impacts of lower interest rate levels, for example, increased strain on the sale of new business or lower interest earned on our surplus assets. The impact on net income attributed to shareholders also does not reflect any unrealized gains or losses on AFS fixed income assets held in our Corporate and Other segment. Changes in the market value of these assets may provide a natural economic offset to the interest rate risk arising from our product liabilities. In order for there to also be an accounting offset, the Company would need to realize a portion of the AFS fixed income asset unrealized gains or losses. It is not certain we would realize any of the unrealized gains or losses available.

The impact does not reflect any potential effect of changing interest rates to the value of our ALDA assets. Rising interest rates could negatively impact the value of our ALDA (see “Critical Actuarial and Accounting Policies - Fair Value of Invested Assets”, below). More information on ALDA can be found under the section “Alternative Long-Duration Asset Performance Risk Sensitivities and Exposure Measures”, below.

Under LICAT, changes in unrealized gains or losses in our AFS bond portfolio resulting from interest rate shocks tend to dominate capital sensitivities. As a result, the reduction in interest rates improves LICAT ratios and vice-versa.

The following table shows the potential impact on net income attributed to shareholders as well as the change in the market value of AFS fixed income assets held in our Corporate and Other segment, which could be realized through the sale of these assets.

# **Potential impact on net income attributed to shareholders and MLI's LICAT ratio of an immediate parallel change in interest rates relative to rates assumed in the valuation of policy liabilities$^{(1),(2),(3),(4)}$**

| As at December 31, | 2022 |  | 2021 |  |
| --- | --- | --- | --- | --- |
|  | -50bp | +50bp | -50bp | +50bp |
| Net income attributed to shareholders ($ millions) | $(100) | $100 | $(200) | $ nil |
| Changes in other comprehensive income from fair value changes in AFS fixed income assets held in the Corporate and Other segment ($ millions) | 1,500 | (1,400) | 2,100 | (1,900) |
| MLI's LICAT ratio (change in percentage points) (5) | 3 | (2) | 5 | (4) |

$^{(1)}$ See “Caution Related to Sensitivities” above. In addition, estimates exclude changes to the net actuarial gains/losses with respect to the Company’s pension obligations as a result of changes in interest rates, as the impact on the quoted sensitivities is not considered to be material.

$^{(2)}$ Includes guaranteed insurance and annuity products, including variable annuity contracts as well as adjustable benefit products where benefits are generally adjusted as interest rates and investment returns change, a portion of which have minimum credited rate guarantees. For adjustable benefit products subject to minimum rate guarantees, the sensitivities are based on the assumption that credited rates will be floored at the minimum.

$^{(3)}$ The amount of gain or loss that can be realized on AFS fixed income assets held in the Corporate and Other segment will depend on the aggregate amount of unrealized gain or loss.

$^{(4)}$ Sensitivities are based on projected asset and liability cash flows and the impact of realizing fair value changes in AFS fixed income is based on the holdings at the end of the period.

$^{(5)}$ LICAT impacts include realized and unrealized fair value changes in AFS fixed income assets. LICAT impacts do not reflect the impact of the scenario switch discussed below.

The following tables show the potential impact on net income attributed to shareholders resulting from a change in corporate spreads and swap spreads over government bond rates for all maturities across all markets with a floor of zero on the total interest rate, relative to the spreads assumed in the valuation of policy liabilities.

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# **Potential impact on net income attributed to shareholders and MLI's LICAT ratio arising from changes to corporate spreads and swap spreads relative to spreads assumed in the valuation of policy liabilities$^{(1),(2),(3)}$**

# **Corporate spreads$^{(4),(5)}$**

| As at December 31, | 2022 |  | 2021 |  |
| --- | --- | --- | --- | --- |
|  | -50bp | +50bp | -50bp | +50bp |
| Net income attributed to shareholders ($ millions) (6) | $(100) | $ nil | $(600) | $500 |
| MLI's LICAT ratio (change in percentage points) (7) | (3) | 3 | (3) | 4 |

# **Swap spreads**

| As at December 31, | 2022 |  | 2021 |  |
| --- | --- | --- | --- | --- |
|  | -20bp | +20bp | -20bp | +20bp |
| Net income attributed to shareholders ($ millions) | $ nil | $ nil | $ nil | $ nil |
| MLI's LICAT ratio (change in percentage points) (7) | nil | nil | nil | nil |

$^{(1)}$ See 'Caution Related to Sensitivities' above.

$^{(2)}$ The impact on net income attributed to shareholders assumes no gains or losses are realized on our AFS fixed income assets held in the Corporate and Other segment and excludes the impact of changes in segregated fund bond values due to changes in credit spreads. The participating policy funds are largely self-supporting and generate no material impact on net income attributed to shareholders as a result of changes in corporate and swap spreads.

$^{(3)}$ Sensitivities are based on projected asset and liability cash flows.

$^{(4)}$ Corporate spreads are assumed to grade to the long-term average over five years.

$^{(5)}$ As the sensitivity to a 50 basis point decline in corporate spreads includes the impact of a change in deterministic reinvestment scenarios where applicable, the impact of changes to corporate spreads for less than, or more than, the amounts indicated are unlikely to be linear.

$^{(6)}$ The sensitivity on net income attributed to shareholders due to changes in corporate spreads decreased significantly as at December 31, 2022 compared with December 31, 2021, as the rise in risk-free interest rates reduced projected reinvestments in the actuarial valuation models.

$^{(7)}$ LICAT impacts include realized and unrealized fair value change in AFS fixed income assets. Under LICAT, spread movements are determined from a selection of investment grade bond indices with BBB and better bonds for each jurisdiction. For LICAT, we use the following indices: FTSE TMX Canada All Corporate Bond Index, Barclays USD Liquid Investment Grade Corporate Index, and Nomura-BPI (Japan). LICAT impacts presented for corporate spreads do not reflect the impact of the scenario switch discussed below.

Swap spreads remain at low levels, and if they were to rise, this could generate material charges to net income attributed to shareholders.

# **LICAT Scenario Switch**

Typically, a reduction in interest rates improves LICAT ratios and vice-versa. However, when interest rates decline past a certain threshold, reflecting the combined movement in risk-free rates and corporate spreads, a different prescribed interest rate stress scenario needs to be taken into account in the LICAT ratio calculation in accordance with OSFI guidelines for LICAT.

The LICAT guideline specifies four stress scenarios for interest rates and prescribes the methodology to determine the most adverse scenario to apply for each LICAT geographic region$^{1}$ based on current market inputs and the Company's balance sheet.

With the rise in interest rates in 2022, the probability of a scenario switch has decreased significantly. In a lower interest rate environment, we would estimate the incremental impact of a potential switch in the scenarios to be approximately a one-time six percentage point decrease in MLI's LICAT ratio. Should a scenario switch be triggered in a LICAT geographic region, the full impact would be reflected immediately for non-participating products while the impact for participating products would be reflected over six quarters using a rolling average of interest rate risk capital, in line with the smoothing approach prescribed in the OSFI Advisory effective January 1, 2021.

The potential negative impact of a switch in scenarios is not reflected in the stated risk-free rate and corporate spread sensitivities, as it is a one-time impact. After this one-time event, further decreases in risk-free interest rates would continue to improve the LICAT capital position, similar to the sensitivity above.

The level of interest rates and corporate spreads that would trigger a switch in the scenarios is dependent on market conditions and movements in the Company's asset and liability position. The scenario switch, if triggered, could reverse in response to subsequent increases in interest rates and/or corporate spreads.

# **Alternative Long-Duration Asset Performance Risk Sensitivities and Exposure Measures**

The following table shows the potential impact on net income attributed to shareholders resulting from an immediate 10% change in market values of ALDA followed by a return to the expected level of growth assumed in the valuation of policy liabilities. If market values were to remain flat for an entire year, the potential impact would be roughly equivalent to an immediate decline in market values equal to the expected level of annual growth assumed in the valuation of policy liabilities. Further, if after market values dropped 10% they continued to decline, remained flat, or grew more slowly than assumed in the valuation of policy liabilities, the potential impact on net income attributed to shareholders could be considerably more than shown. Refer to 'Sensitivity of Earnings to Changes in Assumptions' below, for more information on the level of growth assumed and on the net income sensitivity to changes in these long-term assumptions.

ALDA includes commercial real estate, timber and farmland real estate, infrastructure, and private equities, some of which relate to oil and gas.

$^{1}$ LICAT geographic locations include North America, the United Kingdom, Europe, Japan, and Other Region.

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## Potential impact on net income attributed to shareholders and MLI's LICAT ratio arising from changes in ALDA returns relative to returns assumed in the valuation of policy liabilities$^{(1),(2),(3),(4),(5),(6)}$

| As at December 31, ($ millions) | 2022 |  | 2021 |  |
| --- | --- | --- | --- | --- |
|  | -10% | +10% | -10% | +10% |
| Net income attributed to shareholders |  |  |  |  |
| Real estate, agriculture and timber assets | $(1,300) | $1,300 | $(1,400) | $1,400 |
| Private equities and other ALDA | (1,600) | 1,500 | (1,900) | 1,800 |
| Total (7) | $(2,900) | $2,800 | $(3,300) | $3,200 |
| MLI's LICAT ratio (change in percentage points) | (3) | 2 | (4) | 3 |

$^{(1)}$ See 'Caution Related to Sensitivities' above.

$^{(2)}$ This impact is calculated as at a point-in-time impact and does not include: (i) any potential impact on ALDA weightings or (ii) any gains or losses on ALDA held in the Corporate and Other segment.

$^{(3)}$ The participating policy funds are largely self-supporting and generate no material impact on net income attributed to shareholders as a result of changes in ALDA returns. For some classes of ALDA, where there is not an appropriate long-term benchmark available, the return assumptions used in valuation are not permitted by the Standards of Practice and CIA guidance to result in a lower reserve than an assumption based on a historical return benchmark for public equities in the same jurisdiction.

$^{(4)}$ Net income impact does not consider any impact of the market correction on assumed future return assumptions.

$^{(5)}$ Please refer to 'Sensitivity of Earnings to Changes in Assumptions' section below for more information on the level of growth assumed and on the net income sensitivity to changes in these long-term assumptions.

$^{(6)}$ The impact of changes to the portfolio asset mix supporting our North American legacy businesses are reflected in the sensitivities when the changes take place.

$^{(7)}$ The decrease in net income sensitivity under each ALDA returns scenario was primarily driven by the increase in fixed income yields since December 31, 2021. This led to higher fixed income reinvestment rates relative to ALDA returns, which decreases the ALDA sensitivity because more fixed income assets are held compared to ALDA.

## Foreign Exchange Risk Sensitivities and Exposure Measures

We generally match the currency of our assets with the currency of the insurance and investment contract liabilities they support, with the objective of mitigating risk of loss arising from foreign exchange rate changes. As at December 31, 2022, we did not have a material unmatched currency exposure.

The following table shows the potential impact on core earnings of a 10% change in the value of the Canadian dollar relative to our other key operating currencies. Note that the impact of foreign currency exchange rates on items excluded from core earnings does not provide relevant information given the nature of these items.

## Potential impact on core earnings of changes in foreign exchange rates$^{(1),(2)}$

| As at December 31, ($ millions) | 2022 |  | 2021 |  |
| --- | --- | --- | --- | --- |
|  | +10% strengthening | -10% weakening | +10% strengthening | -10% weakening |
| 10% change in the Canadian dollar relative to the U.S. dollar and the Hong Kong dollar | $(350) | $350 | $(400) | $400 |
| 10% change in the Canadian dollar relative to the Japanese yen | (40) | 40 | (40) | 40 |

$^{(1)}$ This item is a non-GAAP financial measure. See 'Non-GAAP and Other Financial Measures' below for more information.

$^{(2)}$ See 'Caution Related to Sensitivities' above.

LICAT regulatory ratios are also sensitive to the fluctuations in the Canadian dollar relative to our other key operating currencies. The direction and materiality of this sensitivity varies across various capital metrics.

## Liquidity Risk Exposure Strategy

We manage liquidity levels of the consolidated group and key subsidiaries against established thresholds. These thresholds are based on liquidity stress scenarios over different time horizons.

Increased use of derivatives for hedging purposes has necessitated greater emphasis on measurement and management of contingent liquidity risk related to these instruments, in particular the movement of 'over-the-counter' derivatives to central clearing in the U.S. and Japan places an emphasis on cash as the primary source of liquidity as opposed to security holdings. The market value of our derivative portfolio is therefore regularly stress tested to assess the potential collateral and cash settlement requirements under various market conditions.

Manulife Bank (the 'Bank') has a standalone liquidity risk management framework. The framework includes stress testing, cash flow modeling, a funding plan and a contingency plan. The Bank has an established securitization infrastructure which enables the Bank to access a range of funding and liquidity sources. The Bank models extreme but plausible stress scenarios that demonstrate that the Bank has a sufficient pool of highly liquid marketable securities, which when combined with the Bank's capacity to securitize residential mortgage assets provides sufficient liquidity to meet potential requirements under these stress scenarios.

Similarly, Global WAM has a standalone liquidity risk management framework for the businesses managing assets or manufacturing investment products for third-party clients. We maintain fiduciary standards to ensure that client and regulatory expectations are met in relation to the liquidity risks taken within each investment. Additionally, we regularly monitor and review the liquidity of our investment products as part of our ongoing risk management practices.

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## Market Risk Factors

Our most significant source of publicly traded equity risk arises from equity-linked products with guarantees, where the guarantees are linked to the performance of the underlying funds.

- Publicly traded equity performance risk arises from a variety of sources, including guarantees associated with equity-linked investments such as variable annuity and segregated fund products, general fund investments in publicly traded equities and mutual funds backing general fund product liabilities.
- Market conditions resulting in reductions in the asset value we manage has an adverse effect on the revenues and profitability of our investment management business, which depends on fees related primarily to the values of assets under management and administration.
- Guaranteed benefits of variable annuity and segregated funds are contingent and payable upon death, maturity, permitted withdrawal or annuitization. If equity markets decline or even if they increase by an amount lower than that assumed in our actuarial valuation, additional liabilities may need to be established to cover the contingent liabilities, resulting in a reduction in net income attributed to shareholders and regulatory capital ratios. Further, if equity markets do not recover to the amount of the guarantees, by the dates the liabilities are due, the accrued liabilities will need to be paid out in cash. In addition, sustained flat or declining public equity markets would likely reduce asset-based fee revenues related to variable annuities and segregated funds with guarantees and related to other wealth and insurance products.
- Where publicly traded equity investments are used to support general fund product liabilities, the policy valuation incorporates projected investment returns on these assets. If actual returns are lower than the expected returns, the investment losses will reduce net income attributed to shareholders.
- For products where the investment strategy applied to future cash flows in the policy valuation includes investing a specified portion of future cash flows in publicly traded equities, a decline in the value of publicly traded equities relative to other assets could require us to change the investment mix assumed for future cash flows, which may increase policy liabilities and reduce net income attributed to shareholders. A reduction in the outlook for expected future returns for publicly traded equities, which could result from a fundamental change in future expected economic growth, would increase policy liabilities and reduce net income attributed to shareholders. Furthermore, to the extent publicly traded equities are held as AFS, other than temporary impairments that arise will reduce income.
- Expected long-term annual market growth assumptions for public equities for key markets are based on long-term historical observed experience. See “Critical Actuarial and Accounting Policies” below for the rates used in the stochastic valuation of our segregated fund guarantee business. The calibration of the economic scenario generators that are used to value segregated fund guarantee business complies with current CIA Standards of Practice for the valuation of these products. Implicit margins, determined through stochastic valuation processes, lower net yields used to establish policy liabilities. Assumptions used for public equities backing liabilities are also developed based on historical experience but are constrained by different CIA Standards of Practice and differ slightly from those used in stochastic valuation. Alternative asset return assumptions vary based on asset class but are largely consistent, after application of valuation margins and differences in taxation, with returns assumed for public equities.

We experience interest rate and spread risk within the general fund primarily due to the uncertainty of future returns on investments.

- Interest rate and spread risk arises from general fund guaranteed benefit products, general fund adjustable benefit products with minimum rate guarantees, general fund products with guaranteed surrender values, segregated fund products with minimum benefit guarantees and from surplus fixed income investments. The risk arises within the general fund primarily due to the uncertainty of future returns on investments to be made as assets mature and as recurring premiums are received and invested or reinvested to support longer dated liabilities. Interest rate risk also arises due to minimum rate guarantees and guaranteed surrender values on products where investment returns are generally passed through to policyholders. A rapid rise in interest rates may also result in losses attributable to early liquidation of fixed income instruments supporting contractual surrender benefits, if customers surrender to take advantage of higher interest rates on offer elsewhere. In contrast, in a lower interest rate environment, borrowers may prepay or redeem fixed income securities, mortgages and loans with greater frequency in order to borrow at lower market rates, potentially reducing the returns on our investment portfolio, if there are no make whole conditions. Substantially all our fixed income securities, mortgages and loans portfolio include make whole conditions.
- The valuation of policy liabilities reflects assumptions for the yield on future investments and the projected cash flows associated with interest rate hedges. A general decline in interest rates, without a change in corporate bond spreads and swap spreads, will reduce the assumed yield on future investments but favourably impact the value of lengthening interest rate hedges. Conversely, a general increase in interest rates, without a change in corporate bond spreads and swap spreads, will increase the assumed yield on future investments, but unfavourably impact the value of lengthening interest rate hedges. The Company’s disclosed estimated impact from interest rate movements reflects a parallel increase and decrease in interest rates of specific amounts. The impact from non-parallel movements may be different from the estimated impact of parallel movements. For further information on interest rate scenarios refer to “Interest Rate and Spread Risk Sensitivities and Exposure Measures”. In addition, decreases in corporate bond spreads or increases in swap spreads should generally result in an increase in policy liabilities and a reduction in net income attributed to shareholders, while an increase in corporate bond spreads or a decrease in swap spreads should generally have the opposite impact. The impact of changes in interest rates and in spreads may be partially offset by changes to credited rates on adjustable products that pass-through investment returns to policyholders.

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• For segregated fund and variable annuity products that contain investment guarantees in the form of benefit guarantees, a sustained increase in interest rate volatility or a decline in interest rates would increase the costs of hedging the benefit guarantees provided. The impact of changes in interest rates are managed within the variable annuity dynamic hedging program.

We experience ALDA performance risk when actual returns are lower than expected returns.

• ALDA performance risk arises from general fund investments in directly-owned real estate, timber properties, farmland properties, infrastructure, oil and gas assets, and private equities.
• Where these assets are used to support policy liabilities, the policy valuation incorporates projected investment returns on these assets. ALDA assumptions vary by asset class and generally have a similar impact on policy liabilities as public equities would. If actual returns are lower than the expected returns, there will be a negative impact to the net income attributed to shareholders. A reduction in the outlook for expected future returns for ALDA, which could result from a variety of factors such as a fundamental change in future expected economic growth or declining risk premiums due to increased competition for such assets, would increase policy liabilities and reduce net income attributed to shareholders. Further, if returns on certain external asset benchmarks used to determine permissible assumed returns under the CIA Standards of Practice are lower than expected, expected future returns will be adjusted accordingly and the Company's policy liabilities will increase, reducing net income attributed to shareholders.
• The value of oil and gas assets could be adversely affected by declines in energy prices as well as by a number of other factors including production declines, uncertainties associated with estimating oil and natural gas reserves, difficult economic conditions, changes in consumer preferences to transition to a low-carbon economy, competition from renewable energy providers and geopolitical events. Changes in government regulation of the oil and gas industry, including environmental regulation, carbon taxes and changes in the royalty rates resulting from provincial royalty reviews, could also adversely affect the value of our oil and gas investments.
• Difficult economic conditions could result in higher vacancy, lower rental rates and lower demand for real estate investments, all of which would adversely impact the value of our diversified real estate investments. Our commercial real estate investments may be negatively impacted by the trends solidified by COVID-19, including the digitization of work and the transformation of physical retail. Difficult economic conditions could also prevent companies in which we have made private equity investments from achieving their business plans and could cause the value of these investments to fall, or even cause the companies to fail. Sustained declines in valuation multiples in the public equity market would also likely cause values to decline in our private equity portfolio. The timing and amount of investment income from private equity investments is difficult to predict, and investment income from these investments can vary from quarter to quarter.
• Our timberland and farmland holdings are exposed to natural risks, such as prolonged drought, wildfires, insects, windstorms, flooding, and climate change. We are generally not insured for these types of risks but seek to proactively mitigate their impact through portfolio diversification and prudent operating practices.
• A rising interest rate environment could result in the value of some of our ALDA investments declining, particularly those with fixed contractual cash flows such as long-leased real estate and certain infrastructure investments.
• The negative impact of changes in market or economic factors can take time to be fully reflected in the valuations of private investments, including ALDA, especially if the change is large and rapid, as market participants endeavor to adjust their forecasts and better understand the potential medium to long-term impact of such changes. As a result, valuation changes in any given period may reflect the delayed impact of events that occurred in prior periods. Our real estate valuation is based on appraisals, and these appraisals may lag behind current market transactions.
• We rely on a diversified portfolio of ALDA to generate relatively stable investment returns. Diversification benefits may be reduced at times, especially during a period of economic stress, which would adversely affect portfolio returns.
• The Company determines investment return assumptions for ALDA in accordance with the Standards of Practice for the valuation of insurance contract liabilities and guidance published by the CIA. The guidance requires that the investment return assumption for these assets should not be higher than the historical long-term average returns of an appropriate broad-based index. Where such experience is not available, the investment return assumption for these assets should not result in a lower reserve than an assumption based on a historical-return benchmark for public equities in the same jurisdiction. As a result, the impact of changes in the historical returns for public equity benchmarks may result in an update to our investment return assumptions for ALDA.

Our liabilities are valued based on an assumed asset investment strategy over the long-term.

• We develop an investment strategy for the assets that back our liabilities. The strategy involves making assumptions on the kind of assets in which we will invest and the returns such assets will generate.
• We may not be able to implement our investment strategy as intended due to a lack of assets available at the returns we assume. This may result in a change in investment strategy and/or assumed future returns, thus adversely impacting our financial results.
• From time to time, we may decide to adjust our portfolio asset mix which may result in adverse impacts to our financial results for one or more periods.

We experience foreign exchange risk as a substantial portion of our business is transacted in currencies other than Canadian dollars.

• Our financial results are reported in Canadian dollars. A substantial portion of our business is transacted in currencies other than Canadian dollars, mainly U.S. dollars, Hong Kong dollars and Japanese yen. If the Canadian dollar strengthens relative to these currencies, net income attributed to shareholders would decline and our reported shareholders' equity would decline. A weakening of the Canadian dollar against the foreign currencies in which we do business would have the opposite effect and would increase net income attributed to shareholders and shareholders' equity.

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

- Our hedging strategies rely on the execution of derivative transactions in a timely manner. Market conditions can limit availability of hedging instruments, requiring us to post additional collateral, and can further increase the costs of executing derivative transactions. Therefore, hedging costs and the effectiveness of the strategy may be negatively impacted if markets for these instruments become illiquid. The Company is subject to the risk of increased funding and collateral demands which may become significant as equity markets increase.
- The Company is also subject to counterparty risks arising from the derivative instruments and to the risk of increased funding and collateral demands which may become significant as equity markets and interest rates increase. The strategies are highly dependent on complex systems and mathematical models that are subject to error and rely on forward-looking long-term assumptions that may prove inaccurate, and which rely on sophisticated infrastructure and personnel which may fail or be unavailable at critical times. Due to the complexity of the strategies, there may be additional unidentified risks that may negatively impact our business and future financial results. In addition, rising equity markets and interest rates that would otherwise result in profits on variable annuities will be offset by losses from our hedging positions. For further information pertaining to counterparty risks, refer to the risk factor "If a counterparty fails to fulfill its obligations, we may be exposed to risks we had sought to mitigate".
- Under certain market conditions, which include a sustained increase in realized equity and interest rate volatilities, a decline in interest rates, or an increase in the correlation between equity returns and interest rate declines, the costs of hedging the benefit guarantees provided in variable annuities may increase or become uneconomic. In addition, there can be no assurance that our dynamic hedging strategy will fully offset the risks arising from the variable annuities being hedged.
- Policy liabilities for variable annuity guarantees are determined using long-term forward-looking estimates of volatilities. These long-term forward-looking volatilities assumed for policy liabilities meet the CIA calibration standards. To the extent that realized equity or interest rate volatilities in any quarter exceed the assumed long-term volatilities, or correlations between interest rate changes and equity returns are higher, there is a risk that rebalancing will be greater and more frequent, resulting in higher hedging costs.
- The level of guarantee claims returns or other benefits ultimately paid will be impacted by policyholder longevity and policyholder behaviour including the timing and amount of withdrawals, lapses, fund transfers, and contributions. The sensitivity of liability values to equity market and interest rate movements that we hedge are based on long-term expectations for longevity and policyholder behaviour since the impact of actual policyholder longevity and policyholder behaviour variances cannot be hedged using capital markets instruments. The efficiency of our market risk hedging is directly affected by accuracy of the assumptions related to policyholder longevity and policyholder behaviour.

Changes in market interest rates may impact our net income attributed to shareholders and capital ratios.

- A prolonged low or negative (nominal or real) interest rate environment may result in charges related to lower fixed income reinvestment assumptions and an increase in new business strain until products are repositioned for the lower rate environment. Other potential consequences of low interest rates include:
  - Low interest rates could negatively impact sales;
  - Lower risk-free rates tend to increase the cost of hedging and as a result, the offering of guarantees could become uneconomic;
  - The reinvestment of cash flows into low yielding bonds could result in lower future earnings due to lower returns on surplus and general fund assets supporting in-force liabilities, and due to guarantees embedded in products including minimum guaranteed rates in participating and adjustable products;
  - A lower interest rate environment could be correlated with other macroeconomic factors including unfavourable economic growth and lower returns on other asset classes;
  - Lower interest rates could contribute to potential impairments of goodwill;
  - Lower interest rates could lead to lower mean bond parameters used for the stochastic valuation of segregated fund guarantees, resulting in higher policy liabilities;
  - Lower interest rates would also reduce expected earnings on in-force policies;
  - A prolonged low or negative interest rate environment may also result in the ASB lowering the promulgated URR and require us to increase our provisions;
  - Lower interest rates could also trigger a switch to a more adverse prescribed interest stress scenario, increasing LICAT capital. See "LICAT Scenario Switch" above;
  - Lower interest rates could reduce the ability of MFC's insurance subsidiaries to pay dividends to MFC;
  - The difference between the current investable returns and the returns used in pricing new business are generally capitalized when new business is written. Lower interest rates result in higher new business strain until products are re-priced or interest rates increase; and
  - Fixed income reinvestment rates other than the URR are based on current market rates. The net income sensitivity to changes in current rates is outlined in the section "Interest Rate and Spread Risk Sensitivities and Exposure Measures" above.
- A rapid rise in interest rates could lead to customers surrendering policies and we may incur losses attributable to early liquidation of fixed income instruments supporting contractual surrender benefits.

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**The global interest rate benchmark reform, leading to the transition away from LIBOR / IBOR to alternative reference rates based on risk-free rates, may impact the value of our IBOR-based financial instruments.**

- Manulife holds different types of instruments, including derivatives, bonds, loans, and other floating rate instruments that reference LIBOR (London Interbank Offered Rate) or other Interbank Offered Rates (IBORs). As previously announced by the U.K. Financial Conduct Authority (FCA) in July 2017, the FCA will no longer compel panel banks to submit rate information used to determine LIBOR post 2021. On March 5, 2021, the Intercontinental Exchange Benchmark Administration, the administrator of LIBOR, announced that it will cease the publication of one-week and two-month USD LIBOR and all non-USD (GBP, EUR, CHF, and JPY) LIBOR settings at the end of December 2021, but will extend the publication of the remaining USD LIBOR tenors (overnight and one, three, six and 12 month USD LIBOR) until the end of June 2023. In addition, on June 22, 2021, OSFI published a letter setting out their expectation that Federally Regulated Financial Institutions (FRFIs) will stop using USD LIBOR as a reference rate as soon as possible and will not enter into transactions referencing these rates after December 31, 2021. On May 16, 2022, Refinitiv Benchmark Services (UK) Limited (RBSL), the administrator of Canadian Dollar Offered Rate (CDOR), announced that the calculation and publication of all tenors of CDOR will permanently cease immediately following a final publication on June 28, 2024. Further to the confirmation of CDOR's cessation date, OSFI expects all new derivative contracts and securities to transition to alternative reference rates by June 30, 2023, with no new CDOR exposure being booked after that date. The Canadian Overnight Repo Rate Average (CORRA) is the alternative reference rate to which CDOR is expected to transition.
- We successfully converted our exposures to LIBOR rates that decommissioned on December 31, 2021 and we continue to actively transition to the alternative reference rates such as the Secured Overnight Financing Rate (SOFR), the alternative rate for USD LIBOR, and the Singapore Overnight Rate Average (SORA), the alternative rate for the Singapore Swap Offer Rate (SOR). Changes from LIBOR / IBOR to alternative reference rates that have different characteristics compared to LIBOR / IBOR may adversely affect the valuation of our existing interest-rate linked and derivatives securities we hold, the effectiveness of those derivatives in mitigating our risks, securities we have issued, or other assets, liabilities and other contractual rights, and obligations whose value is tied to LIBOR / IBOR or to a LIBOR / IBOR alternative. For example, since SOFR is a secured overnight rate whereas LIBOR is an unsecured forward-looking rate for interbank funding over different maturities, there can be no assurance that SOFR will perform in the same way as LIBOR as a result of interest rate changes, market volatility, or global or regional economic, financial, political, regulatory, judicial, or other events. Furthermore, depending on the nature of the alternative reference rate, we may become exposed to additional risks such as legal settlement risk associated with instruments having inadequate fallback language.
- To ensure a timely transition to alternative reference rates, Manulife has established an enterprise-wide program and governance structure across functions to identify, measure, monitor, and manage financial and non-financial risks of transition. Manulife's enterprise-wide program focuses on quantifying our exposures to various IBORs, evaluating contract fallback language, contract remediation, risk management, assessing accounting and tax implications, and ensuring operational readiness for IT systems, models, processes, and controls. We continue to monitor market developments, changes and guidance from regulators, and adjust our project plan to align with updated timelines.

**Liquidity risk is impacted by various factors, including but not limited to, capital and credit market conditions, repricing risk on letters of credit, collateral pledging obligations, and reliance on confidence sensitive deposits.**

- Adverse market conditions may significantly affect our liquidity risk.
  - Reduced asset liquidity may restrict our ability to sell certain types of assets for cash without taking significant losses. If providers of credit preserve their capital, our access to borrowing from banks and others or access to other types of credit such as letters of credit, may be reduced. If investors have a negative perception of our creditworthiness, this may reduce access to wholesale borrowing in the debt capital markets or increase borrowing costs.
  - Liquid assets are required to pledge as collateral to support activities such as the use of derivatives for hedging purposes and to cover cash settlement associated with such derivatives.
  - The principal sources of our liquidity are cash, insurance and annuity premiums, fee income earned on AUM, cash flow from our investment portfolios, and our assets that are readily convertible into cash, including money market securities. The issuance of long-term debt, common and preferred shares, and other capital securities may also increase our available liquid assets or be required to replace certain maturing or callable liabilities. In the event we seek additional financing, the availability and terms of such financing will depend on a variety of factors including market conditions, the availability of credit to the financial services industry, our credit ratings and credit capacity, as well as the possibility that customers, lenders, or investors could develop a negative perception of our long-term or short-term financial prospects if we incur large financial losses or if the level of our business activity decreases due to a significant market downturn.
- Increased cleared derivative transactions coupled with margin rules on non-cleared derivatives could adversely impact our liquidity risk.
  - Over time our existing over-the-counter derivatives will migrate to clearing houses, or the Company and its counterparties may have the right to cancel derivative contracts after specific dates or in certain situations such as a ratings downgrade, which could accelerate the transition to clearing houses. Cleared derivatives are subject to both initial and variation margin requirements, and a more restrictive set of eligible collateral than non-cleared derivatives.
  - In addition, initial margin rules for new non-cleared derivatives, implemented since September 1, 2021, may further increase our liquidity needs over time.

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- We are exposed to repricing risk on letters of credit.
  - In the normal course of business, third-party banks issue letters of credit on our behalf. In lieu of posting collateral, our businesses utilize letters of credit for which third parties are the beneficiaries, as well as for affiliate reinsurance transactions between subsidiaries of MFC. Letters of credit and letters of credit facilities must be renewed periodically. At time of renewal, the Company is exposed to repricing risk and under adverse conditions increases in costs may be realized. In the most extreme scenarios, letters of credit capacity could become constrained due to non-renewals which would restrict our flexibility to manage capital. This could negatively impact our ability to meet local capital requirements or our sales of products in jurisdictions in which our operating companies have been affected. As at December 31, 2022, letters of credit for which third parties are beneficiaries, in the amount of $215 million, were outstanding. There were no assets pledged against these outstanding letters of credit as at December 31, 2022.
- Our obligations to pledge collateral or make payments related to declines in value of specified assets may adversely affect our liquidity.
  - In the normal course of business, we are obligated to pledge assets to comply with jurisdictional regulatory and other requirements including collateral pledged in relation to derivative contracts and assets held as collateral for repurchase funding agreements. The amount of collateral we may be required to post under these agreements, and the amount of payments we are required to make to our counterparties, may increase under certain circumstances, including a sustained or continued decline in the value of our derivative contracts. Such additional collateral requirements and payments could have an adverse effect on our liquidity. As at December 31, 2022, total pledged assets were $16,365 million, compared with $9,896 million as of December 31, 2021.
- Our bank subsidiary relies on confidence sensitive deposits.
  - Manulife Bank is a wholly owned subsidiary of our Canadian life insurance operating company, MLI. Retail deposits are a significant part of the funding base of Manulife Bank. A real or perceived problem with the Bank or its parent companies could result in a loss of confidence in the Bank's ability to meet its obligations, which in turn may trigger a significant withdrawal of deposit funds. A substantial portion of the Bank's deposits are demand deposits that can be withdrawn at any time, while the majority of the Bank's assets are first residential mortgages in the form of home equity lines of credit, which represent long-term funding obligations. If deposit withdrawal speeds exceed our extreme stress test assumptions, mitigation strategies in pursuant to the Bank's liquidity contingency plan will be executed and the Bank may have to sell assets to third parties. There is no guarantee that the Bank will sell the assets or that its customers will be able to repay their home equity line of credit. In such circumstances, Manulife Bank may seek to rely on Bank of Canada facilities to generate liquidity to pay depositors; however, these facilities are at the sole discretion of the Bank of Canada in which it provides only short-term liquidity and is not guaranteed.

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

- The holders of common shares are entitled to receive dividends as and when declared by the Board, subject to the preference of the holders of Class A Shares, Class 1 Shares, Class B Shares (collectively, the "Preferred Shares") and any other shares ranking senior to the common shares with respect to priority in payment of dividends. The declaration and payment of dividends and the amount thereof is subject to the discretion of the Board of MFC and is dependent upon the results of operations, financial condition, cash requirements and future prospects of, and regulatory and contractual restrictions on the payment of dividends by MFC and other factors deemed relevant by the Board of MFC. Although MFC has historically declared quarterly cash dividends on the common shares, MFC is not required to do so and the Board of MFC may reduce, defer, or eliminate MFC's common share dividend in the future.
- The foregoing risk disclosure in respect of the declaration and payment of dividends on the common shares applies equally in respect of the declaration and payment of dividends on the Preferred Shares, notwithstanding that the Preferred Shares have a fixed rate of dividend.
- See "Government Regulation" and "Dividends" in MFC's Annual Information Form dated February 15, 2023 for a summary of additional statutory and contractual restrictions concerning the declaration of dividends by MFC.

# Credit Risk

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

# Credit Risk Management Strategy

Credit risk is governed by the Credit Committee which oversees the overall credit risk management program. The Company has established objectives for overall quality and diversification of our general fund investment portfolio and criteria for the selection of counterparties, including derivative counterparties, reinsurers, and insurance providers. Our policies establish exposure limits by borrower, corporate connection, quality rating, industry, and geographic region, and govern the usage of credit derivatives. Corporate connection limits vary according to risk rating. Our general fund fixed income investments are primarily public and private investment grade bonds and commercial mortgages. We have a program for selling Credit Default Swaps ("CDS") that employs a highly selective, diversified and conservative approach. CDS decisions follow the same underwriting standards as our cash bond portfolio. Our credit granting units follow a defined evaluation process that provides an objective assessment of credit proposals. We assign a risk rating, based on a standardized 22-point scale consistent with those of external rating agencies, following a detailed examination of the borrower that includes a review of business strategy, market competitiveness, industry trends, financial strength, access to funds, and other risks facing the counterparty. We assess and update risk ratings regularly. For additional input to the process, we also assess credit risks using a variety of industry standard market-based tools and metrics. We map our risk ratings to pre-established probabilities of default and loss given defaults, based on historical industry and Company experience, and to resulting default costs.

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We establish delegated credit approval authorities and make credit decisions on a case-by-case basis at a management level appropriate to the size and risk level of the transaction, based on the delegated authorities that vary according to risk rating. Major credit decisions are approved by the Credit Committee and the largest decisions are approved by the CEO and, in certain cases, by the Board.

We limit the types of authorized derivatives and applications and require pre-approval of all derivative application strategies and regular monitoring of the effectiveness of derivative strategies. Derivative counterparty exposure limits are established based on a minimum acceptable counterparty credit rating (generally A- from internationally recognized rating agencies). We measure both bilateral and exchange-traded derivative counterparty exposure as net potential credit exposure, which takes into consideration mark-to-market values of all transactions with each counterparty, net of any collateral held, and an allowance to reflect future potential exposure. Reinsurance counterparty exposure is measured reflecting the level of ceded liabilities net of collateral held. The creditworthiness of all reinsurance counterparties is reviewed internally on a regular basis.

Regular reviews of the credits within the various portfolios are undertaken with the goal of identifying changes to credit quality and, where appropriate, taking corrective action. Prompt identification of problem credits is a key objective.

We establish an allowance for losses on a loan when it becomes impaired as a result of deterioration in credit quality, to the extent there is no longer assurance of timely realization of the carrying value of the loan and related investment income. We reduce the carrying value of an impaired loan to its estimated net realizable value when we establish the allowance. We establish an allowance for losses on reinsurance contracts when a reinsurance counterparty becomes unable or unwilling to fulfill its contractual obligations. We base the allowance for loss on current recoverables and ceded policy liabilities. There is no assurance that the allowance for losses will be adequate to cover future potential losses or that additional allowances or asset write-downs will not be required.

Policy liabilities include general provisions for credit losses from future asset impairments.

Our credit policies, procedures and investment strategies are established under a strong governance framework and are designed to ensure that risks are identified, measured, and monitored consistent with our risk appetite. We seek to actively manage credit exposure in our investment portfolio to reduce risk and minimize losses, and derivative counterparty exposure is managed proactively. However, we could experience volatility on a quarterly basis and losses could potentially rise above long-term expected and historical levels.

### Credit Risk Exposure Measures

Allowances for losses on loans are established taking into consideration normal historical credit loss levels and future expectations, with an allowance for adverse deviations. Additionally, we make general provisions for credit losses from future asset impairments in the determination of policy liabilities. The amount of the provision for credit losses included in policy liabilities is established through regular monitoring of all credit related exposures, considering such information as general market conditions, industry and borrower specific credit events, and any other relevant trends or conditions. To the extent that an asset is written off, or disposed of, any allowance and general provisions for credit losses are released.

Our general provision for credit losses included in policyholder liabilities as at December 31, 2022 was $3,714 million compared with $4,109 million as at December 31, 2021. This provision represents 1.4% of our fixed income assets$^{1}$ supporting policy liabilities reported on our Consolidated Statements of Financial Position as at December 31, 2022.

As at December 31, 2022 and December 31, 2021, the impact of a 50% increase in fixed income credit default rates over the next year in excess of the rates assumed in policy liabilities, would reduce net income attributed to shareholders by $75 million and $70 million, respectively.

Credit downgrades of fixed income investments would adversely impact our regulatory capital, as required capital levels for these investments are based on the credit quality of each instrument. In addition, credit downgrades could also lead to a higher general provision for credit losses than had been assumed in policy liabilities, resulting in an increase in policy liabilities and a reduction in net income attributed to shareholders. The estimated impact of a one-notch$^{2}$ ratings downgrade across 25% of fixed income assets would result in an increase to policy liabilities and a decrease to our net income attributed to shareholders of $250 million post-tax. This ratings downgrade would result in a one percentage point reduction to our LICAT ratio.

Approximately 25% of the impact from the one-notch ratings downgrade on our policy liabilities and net income attributed to shareholders noted above relates to fixed income assets rated below investment grade. Approximately 1% of our fixed income assets as of December 31, 2022 is rated below investment grade. The table below shows net impaired assets and allowances for loan losses.

### Net Impaired Assets and Loan Losses

As at December 31,

($ millions, unless otherwise stated)

|  | 2022 | 2021 |
| --- | --- | --- |
| Net impaired fixed income assets | $313 | $228 |
| Net impaired fixed income assets as a % of total invested assets | 0.075% | 0.053% |
| Allowance for loan losses | $47 | $44 |

$^{1}$ Includes debt securities, private placements and mortgages.

$^{2}$ A one-notch downgrade is equivalent to a ratings downgrade from A to A- or BBB- to BB+.

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## Credit Risk Factors

Borrower or counterparty defaults or downgrades could adversely impact our earnings.

Worsening regional and global economic conditions could result in borrower or counterparty defaults or downgrades and could lead to increased provisions or impairments related to our general fund invested assets and off-balance sheet derivative financial instruments, and an increase in provisions for future credit impairments to be included in our policy liabilities. Any of our reinsurance providers being unable or unwilling to fulfill their contractual obligations related to the liabilities we cede to them could lead to an increase in policy liabilities.

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

Volatility may arise from defaults and downgrade charges on our invested assets and as a result, losses could potentially rise above long-term expected levels. Net impaired fixed income assets were $313 million, representing 0.075% of total general fund invested assets as at December 31, 2022, compared with $228 million, representing 0.053% of total general fund invested assets as at December 31, 2021.

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

- The Company uses derivative financial instruments to mitigate exposures to public equity, foreign currency, interest rate and other market risks arising from on-balance sheet financial instruments, guarantees related to variable annuity products, selected anticipated transactions and certain other guarantees. The Company may be exposed to counterparty risk if a counterparty fails to pay amounts owed to us or otherwise perform its obligations to us. Counterparty risk increases during economic downturns because the probability of default increases for most counterparties. If any of these counterparties default, we may not be able to recover the amounts due from that counterparty. As at December 31, 2022, the largest single counterparty exposure, without taking into account the impact of master netting agreements or the benefit of collateral held, was $1,582 million (2021 - $2,132 million). The net exposure to this counterparty, after taking into account master netting agreements and the fair value of collateral held, was nil (2021 - nil). As at December 31, 2022, the total maximum credit exposure related to derivatives across all counterparties, without taking into account the impact of master netting agreements and the benefit of collateral held, was $9,072 million (2021 - $18,226 million) compared with $215 million after taking into account master netting agreements and the benefit of fair value of collateral held (2021 - $294 million). The exposure to any counterparty would grow if, upon the counterparty's default, markets moved such that our derivatives with that counterparty gain in value. Until we are able to replace that derivative with another counterparty, the gain on the derivatives subsequent to the counterparty's default would not be backed by collateral.
- The Company reinsures a portion of the business we enter into; however, we remain legally liable for contracts that we had reinsured. In the event that any of our reinsurance providers were unable or unwilling to fulfill their contractual obligations related to the liabilities we cede to them, we would need to increase actuarial reserves, adversely impacting our net income attributed to shareholders and capital position. In addition, the Company has over time sold certain blocks of business to third-party purchasers using reinsurance. To the extent that the reinsured contracts are not subsequently novated to the purchasers, we remain legally liable to the insureds. Should the purchasers be unable or unwilling to fulfill their contractual obligations under the reinsurance agreement, we would need to increase policy liabilities resulting in a charge to net income attributed to shareholders. To reduce credit risk, the Company may require purchasers to provide collateral for their reinsurance liabilities.
- We participate in a securities lending program whereby blocks of securities are loaned to third parties, primarily major brokerage firms and commercial banks. Collateral, which exceeds the market value of the loaned securities, is retained by the Company until the underlying security has been returned. If any of our securities lending counterparties default and the value of the collateral is insufficient, we would incur losses. As at December 31, 2022, the Company had loaned securities (which are included in invested assets) valued at approximately $723 million, compared with $564 million as at December 31, 2021.

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

- The determination of allowances and impairments is based upon a periodic evaluation of known and inherent risks associated with the respective security. Management considers a wide range of factors about the security and uses its best judgment in evaluating the cause of the decline, in estimating the appropriate value for the security and in assessing the prospects for near-term recovery. Inherent in management's evaluation of the security are assumptions and estimates about the operations of the issuer and its future earnings potential. Considerations in the impairment evaluation process include: (i) the severity of the impairment; (ii) the length of time and the extent to which the market value of a security has been below its carrying value; (iii) the financial condition of the issuer; (iv) the potential for impairments in an entire industry sector or sub-sector; (v) the potential for impairments in certain economically depressed geographic locations; (vi) the potential for impairments of securities where the issuer, series of issuers or industry has suffered a catastrophic type of loss or has exhausted natural resources; (vii) our ability and intent to hold the security for a period of time sufficient to allow for the recovery of its value to an amount equal to or greater than cost or amortized cost; (viii) unfavourable changes in forecasted cash flows on mortgage-backed and asset-backed securities; and (ix) other subjective factors, including concentrations and information obtained from regulators and rating agencies.
- Such evaluations and assessments are revised as conditions change and new information becomes available. We update our evaluations regularly and reflect changes in allowances and impairments as such evaluations warrant. The evaluations are inherently subjective and incorporate only those risk factors known to us at the time the evaluation is made. There can be no assurance that management has

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accurately assessed the level of impairments that have occurred. Additional impairments will likely need to be taken or allowances provided for in the future as conditions evolve. Historical trends may not be indicative of future impairments or allowances.

## Product Risk

We make a variety of assumptions related to the expected future level of claims, policyholder behaviour, expenses, reinsurance costs and sales levels when we design and price products, and when we establish policy liabilities. Product risk is the risk of failure to design, implement and maintain a product or service to achieve these expected outcomes and the risk of loss due to actual experience emerging differently than assumed when a product was designed and priced. Assumptions for future claims are generally based on both Company and industry experience, and assumptions for future policyholder behaviour and expenses are generally based on Company experience. Assumptions for future policyholder behaviour include assumptions related to the retention rates for insurance and wealth products. Assumptions for expenses include assumptions related to future maintenance expense levels and volume of the business.

### Product Risk Management Strategy

Product risk is governed by the Product Oversight Committee for the insurance business. Global WAM product risk is managed by first line product management working groups and the Global Investment Product Committee. Notable products which could introduce new and material risks are reviewed and approved by the Global WAM Risk Committee prior to launch.

### Product Oversight Committee

The Product Oversight Committee oversees the overall insurance risk management program. The Product Oversight Committee has established a broad framework for managing insurance risk under a set of policies, standards and guidelines, to ensure that our product offerings align with our risk-taking philosophy and risk limits, and achieve acceptable profit margins. These cover:

- • product design features
- • use of reinsurance
- • pricing models and software
- • internal risk based capital allocations
- • target profit objectives
- • pricing methods and assumption setting
- • stochastic and stress scenario testing
- • required documentation
- • review and approval processes
- • experience monitoring programs

In each business unit that sells insurance, we designate individual pricing officers who are accountable for pricing activities, chief underwriters who are accountable for underwriting activities, and chief claims risk managers who are accountable for claims activities. Both the pricing officer and the general manager of each business unit approve the design and pricing of each product, including key claims, policyholder behaviour, investment return and expense assumptions, in accordance with global policies and standards. Risk management functions provide additional oversight, review and approval of material product and pricing initiatives, as well as material underwriting initiatives. Actuarial functions provide oversight review and approval of policy liability valuation methods and assumptions. In addition, both risk and actuarial functions review and approve new reinsurance arrangements. We perform annual risk and compliance self-assessments of the product development, pricing, underwriting and claims activities of all insurance businesses. To leverage best practices, we facilitate knowledge transfer between staff working with similar businesses in different geographies.

We utilize a global underwriting manual intended to ensure insurance underwriting practices for direct written life business are consistent across the organization while reflecting local conditions. Each business unit establishes underwriting policies and procedures, including criteria for approval of risks and claims adjudication policies and procedures.

We apply retention limits per insured life that are intended to reduce our exposure to individual large claims which are monitored in each business unit. These retention limits vary by market and jurisdiction. We reinsure exposure in excess of these limits with other companies (see “Risk Management and Risk Factors - Product Risk Factors - External market conditions determine the availability, terms and cost of reinsurance protection” below). Our current global life retention limit is US$30 million for individual policies (US$35 million for survivorship life policies) and is shared across businesses. We apply lower limits in some markets and jurisdictions. We aim to further reduce exposure to claims concentrations by applying geographical aggregate retention limits for certain covers. Enterprise-wide, we aim to reduce the likelihood of high aggregate claims by operating globally, insuring a wide range of unrelated risk events, and reinsuring some risks. We seek to actively manage the Company’s aggregate exposure to each of policyholder behaviour risk and claims risk against enterprise-wide economic capital limits. Policyholder behaviour risk limits cover the combined risk arising from policy lapses and surrenders, withdrawals and other policyholder driven activity. The claims risk limits cover the combined risk arising from mortality, longevity and morbidity.

Internal experience studies, as well as trends in our experience and that of the industry, are monitored to update current and projected claims and policyholder behaviour assumptions, resulting in updates to policy liabilities as appropriate.

### Global WAM Risk Management Committee

Global WAM product risk is managed by first line product management working groups and the Global Investment Product Committee. The Global WAM Risk Management Committee reviews and approves notable new products prior to launch. The Global WAM Risk Management Committee has established a framework for managing risk under a set of policies, standards and guidelines to ensure that notable product offerings align with Global WAM risk-taking philosophy and risk appetite.

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The Global WAM Risk Management Committee also provides oversight of notable changes to existing products/solutions on the various Global WAM platforms.

## Product Risk Factors

**Losses may result should actual experience be materially different than that assumed in the valuation of policy liabilities.**

- Such losses could have a significant adverse effect on our results of operations and financial condition. In addition, we periodically review the assumptions we make in determining our policy liabilities and the review may result in an increase in policy liabilities and a decrease in net income attributed to shareholders. Such assumptions require significant professional judgment, and actual experience may be materially different than the assumptions we make. (See “Critical Actuarial and Accounting Policies” below).
- Policyholder behaviour including premium payment patterns, policy renewals, lapse rates and withdrawal, and surrender activity are influenced by many factors including market and general economic conditions, and the availability and relative attractiveness of other products in the marketplace. For example, a weak or declining economic environment could increase the value of guarantees associated with variable annuities or other embedded guarantees and contribute to adverse policyholder behaviour experience, or a rapid rise in interest rates could increase the attractiveness of alternatives for customers holding products that offer contractual surrender benefits that are not market value adjusted, which could also contribute to adverse policyholder behaviour experience. If premium persistency or lapse rates are significantly different from our expectations, it could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

**We may be unable to implement necessary price increases on our in-force businesses or may face delays in implementation.**

- We continue to seek state regulatory approvals for price increases on existing long-term care business in the United States. We cannot be certain whether or when each approval will be granted. For some in-force business, regulatory approval for price increases may not be required. However, regulators or policyholders may nonetheless seek to challenge our authority to implement such increases. Our policy liabilities reflect our estimates of the impact of these price increases, but should we be less successful than anticipated in obtaining them, then policy liabilities could increase accordingly and reduce net income attributed to shareholders.

**Evolving legislation related to genetic testing could adversely impact our underwriting abilities.**

- Current or future legislation in jurisdictions where Manulife operates may restrict its right to underwrite based on access to genetic test results. Without the obligation of disclosure, the asymmetry of information shared between applicant and insurer could increase anti-selection in both new business and in-force policyholder behaviour. The impact of restricting insurers’ access to this information and the associated problems of anti-selection becomes more acute where genetic technology leads to advancements in diagnosis of life-threatening conditions that are not matched by improvements in treatment. We cannot predict the potential financial impact that this would have on the Company or the industry as a whole. In addition, there may be further unforeseen implications as genetic testing continues to evolve and becomes more established in mainstream medical practice.

**Life and health insurance claims may be impacted unexpectedly by changes in the prevalence of diseases or illnesses, medical and technology advances, widespread lifestyle changes, natural disasters, large-scale human-made disasters and acts of terrorism.**

- Claims resulting from catastrophic events could cause substantial volatility in our financial results in any period and could materially reduce our profitability or harm our financial condition. Large-scale catastrophic events may also reduce the overall level of economic activity, which could hurt our business and our ability to write new business. It is possible that geographic concentration of insured individuals could increase the severity of claims we receive from future catastrophic events. The effectiveness of external parties, including governmental and non-governmental organizations, in combating the severity of such an event is outside of our control and could have a material impact on the losses we experience.
- The cost of health insurance benefits may be impacted by unforeseen trends in the incidence, termination and severity rates of claims. The ultimate level of lifetime benefits paid to policyholders may be increased by an unexpected increase in life expectancy. For example, advances in technology could lead to longer lives through better medical treatment or better disease prevention. As well, adverse claims experience could result from systematic anti-selection, which could arise from the development of investor owned and secondary markets for life insurance policies, anti-selective lapse behaviour, underwriting process failures, anti-selective policyholder behaviour due to greater consumer accessibility to home-based medical screening, or other factors.
- For information on the implications of COVID-19 on our product risk, please refer to “Pandemic risk and potential implications of COVID-19” below.

**External market conditions determine the availability, terms and cost of reinsurance protection which could impact our financial position and our ability to write new policies.**

- As part of our overall risk and capital management strategy, we purchase reinsurance protection on certain risks underwritten or assumed by our various insurance businesses. As the global reinsurance industry continues to review and optimize their business models, certain of our reinsurers have attempted to increase rates on our existing reinsurance contracts. The ability of our reinsurers to increase rates depends upon the terms of each reinsurance contract. Typically, the reinsurer’s ability to raise rates is restricted by a number of terms in our reinsurance contracts, which we seek to enforce. We believe our reinsurance provisions are appropriate; however, there can be no assurance regarding the impact of future rate increase actions taken by our reinsurers. Accordingly, future rate increase actions by our reinsurers could result in accounting charges, an increase in the cost of reinsurance and the assumption of more risk on business already reinsured.

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- In addition, an increase in the cost of reinsurance could also adversely affect our ability to write future business or result in the assumption of more risk with respect to policies we issue. Premium rates charged on new policies we write are based, in part, on the assumption that reinsurance will be available at a certain cost. Certain reinsurers may attempt to increase the rates they charge us for new policies we write, and for competitive reasons, we may not be able to raise the premium rates we charge for newly written policies to offset the increase in reinsurance rates. If the cost of reinsurance were to increase, if reinsurance were to become unavailable and if alternatives to reinsurance were not available, our ability to write new policies at competitive premium rates could be adversely affected.

## Operational Risk

Operational risk is naturally present in all of our business activities and encompasses a broad range of risks, including regulatory compliance failures, legal disputes, technology failures, business interruption, information security and privacy breaches, human resource management failures, processing errors, modelling errors, business integration, theft and fraud, and damage to physical assets. Exposures can take the form of financial losses, regulatory sanctions, loss of competitive positioning, or damage to our reputation. Operational risk is also embedded in all the practices we use to manage other risks; therefore, if not managed effectively, operational risk can impact our ability to manage other key risks such as credit risk, market risk, liquidity risk and product risk.

### Operational Risk Management Strategy

Our corporate governance practices, corporate values, and integrated enterprise-wide approach to managing risk set the foundation for mitigating operational risks. This base is further strengthened by internal controls and systems, compensation programs, and seeking to hire and retain trained and competent people throughout the organization. We align compensation programs with business strategy, long-term shareholder value and good governance practices, and we benchmark these compensation practices against peer companies.

We have an enterprise operational risk management framework that sets out the processes we use to identify, assess, manage, mitigate and report on significant operational risk exposures. Execution of our operational risk management strategy supports the drive towards a focus on the effective management of our key global operational risks. We have an Operational Risk Committee, which is the main decision-making committee for all operational risk matters and which has oversight responsibility for operational risk strategy, management and governance. We have enterprise-wide risk management programs for specific operational risks that could materially impact our ability to do business or impact our reputation.

### Legal and Regulatory Risk Management Strategy

Global Compliance oversees our regulatory compliance program and function, supported by designated Chief Compliance Officers in every segment. The program is designed to promote compliance with regulatory obligations worldwide and to assist in making the Company's employees aware of the laws and regulations that affect it, and the risks associated with failing to comply. Segment Compliance groups monitor emerging legal and regulatory issues and changes and prepare us to address new requirements. Global Compliance also independently assesses and monitors the effectiveness of a broad range of regulatory compliance processes and business practices against potential legal, regulatory, fraud and reputation risks, and allows significant issues to be escalated and proactively mitigated. Among these processes and business practices are: privacy (i.e. handling of personal and other confidential information), sales and marketing practices, sales compensation practices, asset management practices, fiduciary responsibilities, employment practices, underwriting and claims processing, product design, the Ethics Hotline, and regulatory filings. In addition, we have policies, processes and controls in place to help protect the Company, our customers and other related third parties from acts of fraud and from risks associated with money laundering and terrorist financing. Audit Services, Global Compliance and Segment Compliance personnel periodically assess the effectiveness of the system of internal controls. For further discussion of government regulation and legal proceedings, refer to 'Government Regulation' in MFC's Annual Information Form dated February 15, 2023 and note 19 of the 2022 Annual Consolidated Financial Statements.

### Business Continuity Risk Management Strategy

We have an enterprise-wide business continuity and disaster recovery program. This includes policies, plans and procedures that seek to minimize the impact of natural or human-made disasters, and is designed to ensure that key business functions can continue normal operations in the event of a major disruption. Each business unit is accountable for preparing and maintaining detailed business continuity plans and processes. The global program incorporates periodic scenario analysis designed to validate the assessment of both critical and non-critical units, as well as the establishment and testing of appropriate business continuity plans for all critical functions. The business continuity team establishes and regularly tests crisis management plans and global crisis communications protocols. We maintain off-site data backup facilities and/or failover capabilities as required to manage the risk of downtime and to accelerate system recovery when needed.

### Technology & Information Security Risk Management Strategy

Our Technology Risk Management function provides strategy, direction, and oversight and facilitates governance for all technology risk domain activities across the Company. The scope of this function includes: reducing information risk exposures by introducing a robust enterprise information risk management framework and supporting infrastructure for proactively identifying, managing, monitoring and reporting on critical information risk exposures; promoting transparency and informed decision-making by building and maintaining information risk profiles and risk dashboards for Enterprise Technology & Services and segments aligned with enterprise and operational

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risk reporting; providing advisory services to Global Technology and the segments around current and emerging technology risks and their impact to the Company's information risk profile; and reducing vendor information risk exposures by incorporating sound information risk management practices into sourcing, outsourcing and offshoring initiatives and programs.

The enterprise-wide information security program, which is overseen by the Chief Information Risk Officer, seeks to mitigate information security risks. This program establishes the information and cyber security framework for the Company, including governance, policies and standards, and appropriate controls to protect information and computer systems. We also have ongoing security awareness training sessions for all employees.

Many jurisdictions in which we operate are implementing more stringent privacy legislation. Our global privacy program, overseen by our Chief Privacy Officer, seeks to manage the risk associated with the handling of personal information, including the risk of privacy breaches. It includes policies and standards, ongoing monitoring of emerging privacy legislation, and a network of privacy officers. Processes have been established to provide guidance on handling personal information and for reporting privacy incidents and issues to appropriate management for response and resolution. As a global company, Manulife is subject to a wide variety of laws and regulations throughout its operations, including those related to privacy and information security. In many jurisdictions, privacy and information security requirements are becoming more onerous, including stringent incident reporting requirements, and may increase our compliance costs as well as the risks associated with any compliance failure.

In addition, the Chief Information Risk Officer, the Chief Privacy Officer, and their teams work closely on information security and privacy matters.

### Human Resource Risk Management Strategy

We have a number of human resource policies, practices and programs in place that seek to manage the risks associated with attracting and retaining top talent. These include recruiting programs at every level of the organization, training and development programs for our individual contributors and people leaders, initiatives to help increase diversity, equity and inclusion, employee engagement surveys, and competitive compensation programs that are designed to attract, motivate and retain high-performing and high-potential employees.

### Model Risk Management Strategy

We have designated model risk management teams working closely with model owners and users that seek to manage model risk. Our model risk oversight program includes processes intended to ensure that our critical business models are conceptually sound and used as intended, and to assess the appropriateness of the calculations and outputs.

### Third-Party Risk Management Strategy

Our governance framework to address third-party risk includes appropriate policies (such as our Global Outsourcing, GRM and Vendor Management policies), standards and procedures, and monitoring of ongoing results and contractual compliance of third-party arrangements.

### Initiatives Risk Management Strategy

To seek to ensure that key initiatives are successfully implemented and monitored by management, we have a global Transformation and Delivery Team, which is responsible for establishing policies and standards for initiative management. Our policies, standards and practices are benchmarked against leading practices.

### Operational Risk Factors

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

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

**Competition for the best people is intense and an inability to recruit qualified individuals may negatively impact our ability to execute on business strategies or to conduct our operations.**

- We compete with other insurance companies, financial institutions, and wealth management organizations for industry-specific talent and against a broader range of companies in functional areas such as Finance, IT, HR, Legal and Operations, for qualified executives, employees and agents. We must attract and retain top talent to maintain our competitive advantage. The risk of other organizations outside of our geographic footprint targeting our employees is heightened with many companies now adopting flexible remote working arrangements. Additionally, we are in an environment where pay levels have been increasing more quickly than in recent years due to the competitive talent market, inflation and other factors. Therefore, we need to ensure we are paying competitively to both reduce key talent turnover risk, and successfully attract new talent to the company. We also need to ensure that we adapt our recruiting practices to draw on broader talent pools through the use of labour market intelligence and sourcing tools.

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**If we are unable to complete key projects on time, on budget, and capture planned benefits, our business strategies and plans, and operations may be impaired.**

- We must successfully deliver a number of key projects in order to implement our business strategies and plans. If we are unable to complete these projects in accordance with planned schedules, and to capture projected benefits, there could be a material adverse effect on our business and financial condition.

**Key business processes may fail, causing material loss events and impacting our customers and reputation.**

- A large number of complex transactions are performed by the organization, and there is risk that errors may have significant impact on our customers or result in a loss to the organization. Controls are in place that seek to ensure processing accuracy for our most significant business processes, and escalation and reporting processes have been established for when errors do occur.

**The interconnectedness of our operations and risk management strategies could expose us to risk if all factors are not appropriately considered and communicated.**

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

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

- We devote significant resources to develop our risk management policies, procedures, and strategies. Nonetheless, there is a risk that our policies, procedures, and strategies may not be comprehensive. Many of our methods for measuring and managing risk exposures are based upon the use of observed historical market behaviour or statistics based on historical models. Future behaviour may be very different from past behaviour, especially if there are some fundamental changes that affect future behaviour. Other risk management methods depend upon the evaluation and/or reporting of information regarding markets, clients, client transactions, catastrophe occurrence or other matters publicly available or otherwise accessible to us. This information may not always be accurate, complete, up-to-date, or properly evaluated or reported.

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

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

**Our operations face political, legal, operational and other risks that could negatively affect those operations or our results of operations and financial condition.**

- Our operations face the risk of discriminatory regulation, political and economic instability, the imposition of economic or trade sanctions, isolationist foreign policies, armed conflicts, civil unrest or disobedience, government policies or regulations adopted in response to political or social pressures and rising populism and/or nationalism, limited protection for, or increased costs to protect intellectual property rights, inability to protect and/or enforce contractual or legal rights, nationalization or expropriation of assets, price controls and exchange controls or other restrictions that prevent us from transferring funds out of the countries in which we operate and disruptions in global supply chains. In addition, as political tensions and populism and/or nationalism rise in a number of locations, compliance with laws and regulations by global financial institutions may become challenging as complying with the requirements in one jurisdiction may be contrary to the requirements of another.
- A substantial portion of our revenue and net income attributed to shareholders is derived from our operations outside of North America, primarily in key Asian markets. Some of these key geographical markets are developing and are rapidly growing countries and markets where these risks may be heightened.
- In particular, tensions remain elevated between mainland China and Canada, the U.S. and their allies over a number of issues, including trade, technology and human rights resulting in the imposition of sanctions and trade restrictions on companies and individuals. Mainland China and the Hong Kong SAR are important markets for Manulife and escalating tensions may create a more challenging operating environment for Manulife. In addition, the military conflict in Ukraine and associated sanctions imposed on Russia and its allies has negatively impacted regional and global financial markets and economies.
- These risks could result in disruptions to our operations, unanticipated costs, increased market volatility and inflation, a contraction of business activity and recession, diminished investor and consumer confidence, lower investment growth, insurance sales and fees earned on managed assets, the loss of assets or a reduction in their value and reduced remittances. Failure to manage these risks could have a significant negative impact on our operations and profitability globally.

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We are regularly involved in litigation.

- We are regularly involved in litigation, either as a plaintiff or defendant. These cases could result in an unfavourable resolution and could have a material adverse effect on our results of operations and financial condition. For further discussion of legal proceedings refer to note 19 of the 2022 Annual Consolidated Financial Statements.

We are exposed to investors trying to profit from short positions in our stock.

- Short-sellers seek to profit from a decline in the price of our common shares. Through their actions and public statements, they may encourage the decline in price from which they profit and may encourage others to take short positions in our shares. The existence of such short positions and the related publicity may lead to continued volatility in our common share price.

System failures or events that impact our facilities may disrupt business operations.

- Technology is used in virtually all aspects of our business and operations; in addition, part of our strategy involves the expansion of technology to directly serve our customers. An interruption in the service of our technology resulting from system failure, cyber-attack, human error, natural disaster, human-made disaster, pandemic, or other unpredictable events beyond reasonable control could prevent us from effectively operating our business. We rely on the internet in order to conduct business and may be adversely impacted by outages in critical infrastructure such as electric grids, undersea cables, satellites or other communications used by us or our third parties.
- While our facilities and operations are distributed across the globe, we can experience extreme weather, natural disasters, civil unrest, human-made disasters, power outages, pandemic, and other events which can prevent access to, and operations within, the facilities for our employees, partners, and other parties that support our business operations.
- We take measures to plan, structure and protect against routine events that may impact our operations, and maintain plans to recover from unpredictable events. The experience learned from COVID-19 has stress tested these plans and has resulted in strengthening our continuity plans. For further information, see “Pandemic risk and potential implications of COVID-19” below. An interruption to our operations may subject us to regulatory sanctions and legal claims, lead to a loss of customers, assets and revenues, or otherwise adversely affect us from a financial, operational and reputational perspective.

An information security or privacy breach of our operations or of a related third party could adversely impact our business, results of operations, financial condition, and reputation.

- It is possible that the Company may not be able to anticipate or to implement effective preventive measures against all disruptions or privacy and security breaches, especially because the techniques used change frequently, generally increase in sophistication, often are not recognized until launched, and because cyber-attacks can originate from a wide variety of sources, including organized crime, hackers, terrorists, activists, and other parties, including parties sponsored by hostile foreign governments. Those parties may also attempt to fraudulently induce employees, customers, and other users of the Company’s systems or third-party service providers to disclose sensitive information in order to gain access to the Company’s data or that of its customers or clients. We, our customers, regulators and other third parties have been subject to, and are likely to continue to be the target of, cyber-attacks, including computer viruses, malicious or destructive code, phishing attacks, denial of service and other security incidents, that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of personal, confidential, proprietary and other information of the Company, our employees, our customers or of third parties, or otherwise materially disrupt our or our customers’ or other third parties’ network access or business operations. These attacks could adversely impact us from a financial, operational and reputational perspective.
- The Company maintains an Information Risk Management Program, which includes information and cyber security defenses, to protect our networks and systems from attacks; however, there can be no assurance that these counter measures will be successful in every instance in protecting our networks against advanced attacks. In addition to protection, detection and response mechanisms, the Company maintains cyber risk insurance, but this insurance may not cover all costs associated with the financial, operational and reputational consequences of personal, confidential or proprietary information being compromised.

Model risk may arise from the inappropriate use or interpretation of models or their output, or the use of deficient models, data or assumptions.

- We rely on highly complex models for pricing, valuation and risk measurement, and for input on decision making. Consequently, the risk of inappropriate use or interpretation of our models or their output, or the use of deficient models, could have a material adverse effect on our business.

Fraud risks may arise from incidents related to identity theft and account takeovers.

- Fraud incidents could adversely impact our business, results of operations, financial condition and reputation. Policies and procedures are in place and seek to protect against ever-evolving fraud threats. However, we may nevertheless not be able to prevent and detect all fraud incidents.

Contracted third parties may fail to deliver against contracted activities.

- We rely on third parties to perform a variety of activities on our behalf, and failure of our most significant third parties to meet their contracted obligations may impact our ability to meet our strategic objectives or may directly impact our customers. Vendor governance processes are in place that seek to ensure that appropriate due diligence is conducted at time of vendor contracting, and ongoing vendor monitoring activities are in place that seek to ensure that the contracted services are being fulfilled to satisfaction, but we may nevertheless not be able to mitigate all possible failures.

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Damage to the natural environment may arise related to our business operations, owned property or commercial mortgage loan portfolio.

- Environmental risk may originate from investment properties that are subject to natural or human-made environmental risk. Real estate assets may be owned, leased and/or managed, as well as mortgaged by Manulife and we might enter into the chain of liability due to foreclosure ownership when in default.
- Liability under environmental protection laws resulting from our commercial mortgage loan portfolio and owned property (including commercial real estate, timberland and farmland properties) may adversely impact our reputation, results of operations and financial condition. Under applicable laws, contamination of a property with hazardous materials or substances may give rise to a lien on the property to secure recovery of the costs of cleanup. In some instances, this lien has priority over the lien of an existing mortgage encumbering the property. The environmental risk may result from on-site or off-site (adjacent) due to migration of regulated pollutants or contaminants with financial or reputational environmental risk and liability consequences by virtue of strict liability. Environmental risk could also arise from natural disasters (e.g., climate change, weather, fire, earthquake, floods, and pests) or human activities (use of chemicals or pesticides) conducted within the site or when impacted from adjacent sites.
- Additionally, as lender, we may incur environmental liability (including without limitation liability for clean-up, remediation and damages incurred by third parties) similar to that of an owner or operator of the property, if we or our agents exercise sufficient control over the operations at the property. We may also have liability as the owner and/or operator of real estate for environmental conditions or contamination that exist or occur on the property or affecting other property.

## Pandemic risk and potential implications of COVID-19

The COVID-19 pandemic continues to weigh on the global economy and it remains difficult to predict the significance of its longer-term impacts, particularly as COVID-19 becomes endemic in the markets in which we operate. Governments continue to navigate the implications from COVID-19 and changing circumstances may result in future legal, regulatory, tax, and other responses that could have a significant adverse impact on our global business operations and financial results.

- COVID-19 could continue to adversely impact our financial results as a result of reduced new business, including a reduction of activity through our distribution channels, reduced asset-based fee revenue, and net unfavourable policyholder experience including claims, lapse and premium persistency experience.
- As COVID-19 becomes endemic, there may be unexpected changes to the business and operating environment which may present new headwinds to our business strategy or new opportunities to pursue. The pace of recovery may continue to differ across geographies in which we operate, which could impact the execution of our business strategies. For example, a sustained zero-COVID policy in mainland China throughout 2022 has slowed sales growth in our Asia segment businesses due to border restrictions and immobility of our agents and employees. As mainland China shifts away from its zero-COVID policy, we would expect to experience a rebound in sales growth over time; however, the manner in which the government responds to future outbreaks may further delay our ability to drive sales growth in the region. The sudden easing of restrictions could put significant strain on mainland China's public health system, which could increase mortality and morbidity claims. This could increase volatility in our financial results or materially reduce our profitability.
- We purchase reinsurance protection on certain risks underwritten or assumed by our various insurance businesses. As a result of COVID-19, we may find reinsurance more difficult or costly to obtain. Reinsurers may also dispute, or seek to reduce, or eliminate coverage on policies as a result of any COVID-19 related changes to policies or practices we make.
- In pricing or repricing of new business, the impact of any COVID-19 related changes may be compounded with or offset by other pricing inputs. These inputs include assumption changes (e.g., reinsurance, interest rates, morbidity, mortality, expense, and lapse and surrender changes), business considerations related to retaining specific market share or client business and regulatory restrictions impacting the approval process for price changes.
- The potential longer-term impacts of the pandemic may include latent morbidity impacts from the deferral of medical treatment by policyholders. It may be a factor in increasing morbidity claims and there may be implications from other factors such as long-term post COVID-19 symptoms.
- Previously imposed COVID-19 related restrictions have been gradually lifting in markets in which we operate but have also been introduced or reimposed in a limited number of other markets. In the jurisdictions where the restrictions have been lifted, the majority of our employees have returned to office on a hybrid work arrangement. The implementation of widespread remote work arrangements has also increased other operational risks, including, but not limited to, fraud, money laundering, information security, privacy, and third-party risks. We are relying on our risk management strategies to monitor and mitigate these and other operational risks during this period of heightened uncertainty.
- The global recessionary environment could continue to put downward pressure on asset valuations and increase the risk of potential impairments of investments, particularly for more exposed sectors such as transportation, services, and consumer cyclical industries. Furthermore, reduced demand for office space as a result of widespread full-time remote or hybrid work arrangements could continue to have a negative impact on our commercial real estate portfolio.
- Borrowers or counterparty downgrades or defaults would cause increased provisions or impairments related to our general fund invested assets and derivative financial instruments, and an increase in provisions for future credit impairments to be included in our policy liabilities. This could result in losses potentially above our long-term expected levels.
- Extreme market volatility and stressed conditions resulting from possible longer-term impacts of COVID-19 could result in additional cash and collateral demands primarily from changes to policyholder termination or renewal rates, withdrawals of customer deposit

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balances, borrowers renewing or extending their loans when they mature, derivative settlements or collateral demands, reinsurance settlements or collateral demands, and our willingness to support the local solvency position of our subsidiaries. Such an environment could also limit our access to capital markets. Sustained global economic uncertainty could also result in adverse credit ratings changes which in turn could result in more costly or limited access to funding sources. While we currently have a variety of sources of liquidity including cash balances, short-term investments, government and highly rated corporate bonds, and access to contingent liquidity facilities, there can be no assurance that these sources will provide us with sufficient liquidity on commercially reasonable terms in the future.

## Emerging Risks

The identification and assessment of our external environment for emerging risks is an important aspect of our ERM Framework, as these risks, although yet to materialize, could have the potential to have a material adverse impact on our operations and/or business strategies. We also consider taking advantage of opportunities identified to improve our competitiveness and ultimately our financial results.

Our Emerging Risk Framework facilitates the ongoing identification, assessment and monitoring of emerging risks, and includes: maintaining a process that facilitates the ongoing discussion and evaluation of potential emerging risks with senior business and functional management; reviewing and validating emerging risks with the ERC; creating and executing on responses to each emerging risk based on prioritization; and monitoring and reporting on emerging risks on a regular basis to the Board's Risk Committee.

## Regulatory Capital

OSFI's LICAT capital regime applies to our business globally on a group consolidated basis. We continue to meet OSFI's requirements and maintain capital in excess of regulatory expectations.

In January 2023, a revised LICAT guideline, aligning with the IFRS 17 accounting changes, took effect. This will be followed by an update to the capital rules for Segregated Fund Guarantees, expected to be effective in January 2025.

At its annual meeting in November 2019, the IAIS adopted a risk based global ICS, that is being further developed over a five-year monitoring period that commenced in 2020. While broadly supportive of the goals of ICS, OSFI stated that it did not support the current ICS design, adopted by the IAIS in November 2019, citing that it was 'not fit for purpose for the Canadian market'. Without OSFI's consent, the IAIS rules will not apply in Canada or to Canadian companies on a group-wide basis, while other regulators may use the ICS framework for calculating capital in their specific markets. Limited changes have been made to ICS since the beginning of the five-year monitoring period. We will continue to monitor developments as the ICS methodology and its applicability evolve.

In December 2022, the Financial Stability Board (FSB) adopted the IAIS Holistic Framework for the assessment and mitigation of systemic risk and discontinued the annual identification of Global Systemically Important Insurers (G-SIIs). Manulife was supportive of this direction.

Regulators in various jurisdictions in which we operate have embarked on reforming their respective capital regulations. While the ultimate impact of these changes remains uncertain, we closely monitor the developments.

## IFRS 17 and IFRS 9

IFRS 17 "Insurance Contracts" and IFRS 9 "Financial Instruments" are effective for insurance companies in 2023.

IFRS 17 replaced IFRS 4 "Insurance Contracts" and will materially change the timing of the recognition of earnings from our insurance business and therefore, our shareholders' equity. Furthermore, the requirements of the new standard are complex and have necessitated significant enhancements to finance infrastructure and processes and could impact our business strategy. IFRS 9 will impact the measurement and timing of investment income.

A summary of some of the key differences between IFRS 17 and IFRS 4 is outlined in the "Future Accounting and Reporting Changes" section below. The impacts of IFRS 17 are expected to include1:

- The establishment of a CSM on our in-force business, which represents unearned profits, was expected to decrease equity upon transition. The LICAT guideline for 2023 issued on July 21, 2022 makes calibration adjustments relating to the inclusion of CSM in available capital and the reduction of the scalar on base solvency buffer. In addition, the LICAT ratio is expected to be less sensitive to changes in interest rates and more stable under IFRS 17 compared with IFRS 4. Given this greater stability, the impact of IFRS 17 upon adoption on January 1, 2023 is expected to be a low single-digit percentage point increase to the LICAT ratio based on markets as of December 31, 2022. We expect our capital position will continue to be strong under IFRS 17.
- The deferral of the recognition of new business gains via the CSM, and to a substantially lesser extent, the timing of investments results, will shift earnings out into future periods. As a result, on transition, net income and core earnings in 2022 are expected to be lower under IFRS 17 compared with IFRS 4. This impact will be partially offset by the amortization into income of the CSM that will be established on our in-force business. Overall, considering these items along with the various other impacts, on transition we expect 2022 core earnings to decline by approximately 5% to 10% under IFRS 17 compared with IFRS 4. A transition impact on our net income attributed to shareholders is difficult to predict as it is also impacted by prevailing market conditions. In addition, we expect IFRS 17 to improve the stability of both our core earnings and net income attributed to shareholders.

1 See "Caution regarding forward-looking statements" above.

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83

- Core earnings will remain a key performance metric and the definition will be adapted to align with IFRS 17. Under the revised definition, core earnings will exclude items such as the direct impact of markets and interest rates, including investment experience from ALDA, realized gains and losses on fixed income assets, hedge ineffectiveness, and changes in methods and assumptions recorded directly in profit or loss. We believe that the revised core earnings definition represents our operating performance and the long-term earnings capacity of the business.
- The treatment of new business gains under IFRS 17 is materially different from IFRS 4. The CSM is an intrinsic part of the value of an insurance business and is a measure of growth and future earnings generation capability. This highlights the importance of the CSM as a GAAP performance measure and as such, upon adoption, we will be adding two new medium-term targets:
  i. 15% growth per year for new business CSM, and
  ii. 8% to 10% growth per year in the CSM balance.

In 1Q22, we confirmed our medium-term financial and operating targets under IFRS 17, and upon adoption, will adjust certain targets as follows1:

- Core ROE will be increased to 15%+ (from 13%+ currently) due to the expected changes to core earnings and equity,
- Common share core dividend payout ratio2 will be increased to 35% to 45% (from 30% to 40% currently) due to the expected changes to core earnings, and
- Leverage ratio definition will be adjusted to include the CSM in the denominator given that the CSM represents unearned profit and available capital under LICAT.

We reported $246 million (post-tax) from the impact of new business3, which is included in core earnings and net income attributed to shareholders in 4Q22 (4Q21 - $295 million). On a year-to-date basis, the impact of new business was $879 million (post-tax) in 2022 (2021 - $1,115 million).

Risks related to the new standards include:

- **The impact on our business strategy as a result of temporary volatility.** The Company's capital position and income for accounting purposes could be influenced by prevailing market conditions, resulting in volatility of reported results, which may require changes to business strategies. The impact to business strategy could include changes to hedging and investment strategy, product strategy and the use of reinsurance and, as a result, could impact our exposures to other risks such as counterparty risk and liquidity risk.
- **The impact of accounting mismatches from derivatives used for economic hedging purposes.** Under CALM, both changes in insurance contract liabilities and changes in the fair value of derivatives used to economically hedge these liabilities are recognized in income, which results in a natural offset in net income. Under IFRS 17, we will elect the option to record changes in insurance contract liabilities arising from changes in interest rates through other comprehensive income (the "OCI option"). In certain circumstances, some derivatives that are used for economic hedging purposes do not qualify for hedge accounting under IFRS 9, and therefore the election of the OCI option could result in a mismatch in accounting net income, as changes in the fair value of these derivatives would be recorded in net income, while the impact of changes in discount rates on insurance contract liabilities would be recorded in other comprehensive income. In addition, if derivatives used for economic hedging purposes qualify for hedge accounting, IFRS 9 requires that the difference, if any, between the impact of changes in discount rates on the hedged portion of insurance contract liabilities and the change in the fair value of the hedging derivatives be reported in net income as hedge ineffectiveness.
- **The impact on tax.** In certain jurisdictions, including Canada, the implementation of IFRS 17 could have a material effect on tax positions and other financial metrics that are dependent upon IFRS accounting values.
- **The impact of inconsistencies in timing of adoption among various jurisdictions.** As a global insurer with subsidiaries in Asia and other jurisdictions, regional differences in effective dates will require us to maintain more than one set of financial records to support both consolidated financial statements and for local subsidiary reporting requirements.

## Additional Risk Factors That May Affect Future Results

Other factors that may affect future results include changes in government trade policy, monetary policy or fiscal policy; including interest rates policy from central banks; political conditions and developments in or affecting the countries in which we operate; technological changes; public infrastructure disruptions; changes in consumer spending and saving habits; the possible impact on local, national or global economies from public health or natural disaster emergencies, and international conflicts and other developments including those relating to terrorist activities. Although we take steps to anticipate and minimize risks in general, unforeseen future events may have a negative impact on our business, financial condition and results of operations.

We caution that the preceding discussion of risks that may affect future results is not exhaustive. When relying on our forward-looking statements to make decisions with respect to our Company, investors and others should carefully consider the foregoing risks, as well as other uncertainties and potential events, and other external and Company specific risks that may adversely affect the future business, financial condition or results of operations of our Company.

1 See "Caution regarding forward-looking statements" above.

2 This item is a non-GAAP ratio. See "Non-GAAP and other financial measures" below for more information.

3 The impact of new business represents the financial impact of all new business written in the period, including acquisition expenses.

84 | 2022 Annual Report | Management's Discussion and Analysis

## 10. Capital Management Framework

Manulife seeks to manage its capital with the objectives of:

- Operating with sufficient capital to be able to honour all commitments to its policyholders and creditors with a high degree of confidence;
- Retaining the ongoing confidence of regulators, policyholders, rating agencies, investors and other creditors in order to ensure access to capital markets; and
- Optimizing return on capital to meet shareholders' expectations subject to constraints and considerations of adequate levels of capital established to meet the first two objectives.

Capital is managed and monitored in accordance with the Capital Management Policy. The Policy is reviewed and approved by the Board annually and is integrated with the Company's risk and financial management frameworks. It establishes guidelines regarding the quantity and quality of capital, internal capital mobility, and proactive management of ongoing and future capital requirements.

Our capital management framework takes into account the requirements of the Company as a whole as well as the needs of each of our subsidiaries. Internal capital targets are set above regulatory requirements, and consider a number of factors, including results of sensitivity and stress testing and our own risk assessments, as well as business needs. We monitor against these internal targets and initiate actions appropriate to achieving our business objectives.

We periodically assess the strength of our capital position under various stress scenarios. The annual Financial Condition Testing ("FCT") typically quantifies the financial impact of economic events arising from shocks in public equity and other markets, interest rates and credit, amongst others. Our 2022 FCT results demonstrate that we would have sufficient assets, under the various adverse scenarios tested, to discharge our policy liabilities. This conclusion was also supported by a variety of other stress tests conducted by the Company.

We use an Economic Capital ("EC") framework to inform our internal view of the level of required capital and available capital. The EC framework is a key component of the ORSA process, which ties together our risk management, strategic planning and capital management practices to confirm that our capital levels continue to be adequate from an economic perspective.

Capital management is also integrated into our product planning and performance management practices.

The composition of capital between equity and other capital instruments impacts the financial leverage ratio which is an important consideration in determining the Company's financial strength and credit ratings. The Company monitors and rebalances its capital mix through capital issuances and redemptions.

## Financing Activities

### Securities Transactions

During 2022, we raised a total of $2.0 billion of debt and other equity (limited recourse capital notes) instruments in Canada and the U.S., and $1.7 billion of securities were redeemed at par.

| ($ millions) | Par value | Issued (1) | Redeemed/ Matured (1) |
| --- | --- | --- | --- |
| 3.703% MFC US Senior notes, issued on Mar 16, 2022 | US$750 | 1,010 | - |
| 7.117% MFC Limited recourse capital notes Series 3, issued on Jun 16, 2022 | $1,000 | 991 | - |
| 4.85% MFC Class 1 preferred shares Series 23, redeemed on Mar 19, 2022 | $475 | - | 467 |
| 4.312% MFC Class 1 preferred shares Series 9, redeemed on Mar 19, 2022 | $250 | - | 244 |
| 3.181% MLI Subordinated debentures, redeemed on Nov 22, 2022 | $1,000 | - | 1,000 |
| Total |  | $2,001 | $1,711 |

(1) Represents carrying value, net of issuance costs.

### Normal Course Issuer Bid

We announced on February 15, 2023, subject to the approval of the Toronto Stock Exchange ("TSX"), our intention to launch a normal course issuer bid ("NCIB") permitting the purchase for cancellation of up to 55.7 million common shares, representing approximately 3% of our issued and outstanding common shares. Purchases under the NCIB may commence after the TSX has accepted the notice of intention and continue for up to one year, or such earlier date as we complete our purchases.

Our previous NCIB that was announced on February 1, 2022 expired on February 2, 2023. Under this NCIB, MFC purchased for cancellation 85.8 million of its common shares at an average price of $23.99 per share for a total cost of $2.1 billion, which represent 4.4% of our issued and outstanding common shares.

During 2022, MFC purchased and subsequently cancelled 78.9 million of its common shares at an average price of $23.87 per common share for a total cost of $1.9 billion.

1 See "Caution regarding forward-looking statements" above.

Manulife 85

## Consolidated Capital

As at December 31, ($ millions)

|  | 2022 | 2021 |
| --- | --- | --- |
| Non-controlling interests | $1,664 | $1,694 |
| Participating policyholders' equity | (1,346) | (1,233) |
| Preferred shares and other equity | 6,660 | 6,381 |
| Common shareholders' equity (1) | 49,401 | 52,027 |
| Total equity | 56,379 | 58,869 |
| Exclude the accumulated other comprehensive gain/(loss) on cash flow hedges | 8 | (156) |
| Total equity excluding accumulated other comprehensive gain/(loss) on cash flow hedges | 56,371 | 59,025 |
| Qualifying capital instruments | 6,122 | 6,980 |
| Consolidated capital (2) | $62,493 | $66,005 |

$^{(1)}$ Common shareholders' equity is equal to total shareholders' equity less preferred shares and other equity.

$^{(2)}$ Consolidated capital does not include $6.2 billion (2021 - $4.9 billion) of MFC senior debt as this form of financing does not meet OSFI's definition of regulatory capital at the MFC level. The Company has down-streamed the proceeds from this financing into operating entities in a form that qualifies as regulatory capital at the subsidiary level.

MFC's consolidated capital was $62.5 billion as at December 31, 2022, compared with $66.0 billion as at December 31, 2021, a decrease of $3.5 billion. The decrease was driven by a decline in total equity and the redemption of capital instruments. The decline in total equity was due to a reduction in the carrying value of AFS debt securities from higher interest rates, and common share buybacks, partially offset by growth in retained earnings, the impact of a weaker Canadian dollar, and net capital issuance.

## Remittance of Capital

As part of its capital management, Manulife promotes internal capital mobility so that Manulife's parent company, MFC, has access to funds to meet its obligations and to optimize capital deployment. Remittances is defined as the cash remitted or made available for distribution to the Manulife Group from operating subsidiaries and excess capital generated by standalone Canadian operations. It is one of the key metrics used by management to evaluate our financial flexibility. In 2022, MFC subsidiaries delivered $6.9 billion in remittances of which Asia and U.S. operations$^{1,2}$ have delivered $0.9 billion and $2.8 billion, respectively. Remittances in 2022 increased by $2.5 billion compared with 2021 primarily due to the benefits from the reinsurance of U.S. variable annuities and other corporate actions.

## Financial Leverage Ratio

MFC's financial leverage ratio as at December 31, 2022 was 27.7%, an increase of 1.9 percentage points from 25.8% as at December 31, 2021. The increase in the ratio was driven by a reduction in the carrying value of AFS debt securities from higher interest rates, common share buybacks, and the net issuance of securities$^{3}$, partially offset by growth in retained earnings and the impact of a weaker Canadian dollar.

## Common Shareholder Dividends

The declaration and payment of shareholder dividends and the amount thereof are at the discretion of the Board and depend upon various factors, including the results of operations, financial conditions, future prospects of the Company, dividend payout ratio and taking into account regulatory restrictions on the payment of shareholder dividends.

### Common Shareholder Dividends Paid

For the years ended December 31,

|  | 2022 | 2021 |
| --- | --- | --- |
| Dividends paid | $1.32 | $1.17 |

The Company offers a Dividend Reinvestment Program ('DRIP') whereby shareholders may elect to automatically reinvest dividends in the form of MFC common shares instead of receiving cash. The offering of the program and its terms of execution are subject to the Board's discretion.

During 2022, the required common shares in connection with the DRIP were purchased on the open market with no applicable discount.

$^{1}$ Remittances from Asia and U.S. operations include the remittances from their respective affiliate reinsurers. In addition, U.S. operation remittances include the International High Net Worth business written in the Bermuda branch of MLI.

$^{2}$ Asia and U.S. operations include their respective insurance, and wealth and asset management segments.

$^{3}$ For financial leverage ratio, net issuance of securities consisted of the issuance of Limited Recourse Capital Notes (reported as other equity instruments) of $1.0 billion and senior debt of $1.0 billion, offset by the redemption of subordinated debt of $1.0 billion, and two series of preferred shares totaling $0.7 billion.

86 | 2022 Annual Report | Management's Discussion and Analysis

## Regulatory Capital Position$^{1}$

MFC and MLI are regulated by OSFI and are subject to consolidated risk based capital requirements. Manulife monitors and manages its consolidated capital in compliance with the OSFI LICAT guideline. Under this regime, our available capital and other eligible capital resources are measured against a required amount of risk capital determined in accordance with the guideline. For regulatory reporting purposes under the LICAT framework, consolidated capital is adjusted for various additions or deductions to capital as mandated by the guidelines defined by OSFI.

Manulife's operating activities are conducted within MLI and its subsidiaries. MLI's LICAT ratio was 131% as at December 31, 2022, compared with 142% as at December 31, 2021. The eleven percentage point decrease from December 31, 2021 was driven by the unfavourable impact of market movements on capital primarily from the large increase in risk-free interest rates, and from common share buybacks, partly offset by favourable impacts from the U.S. variable annuity reinsurance transactions.

MFC's LICAT ratio was 119% as at December 31, 2022, compared with 132% as at December 31, 2021, with the decrease driven by similar factors that impacted the movement in MLI's LICAT ratio, except for the issuance of MFC senior debt which got reflected in MLI's LICAT ratio but not MFC's. The difference between the MLI and MFC ratios is largely due to the $6.2 billion (2021 - $4.9 billion) of MFC senior debt outstanding that does not qualify as available capital at the MFC level but, based on the form it was down-streamed to MLI, it qualifies as regulatory capital at the MLI level.

The LICAT ratios as at December 31, 2022, resulted in excess capital of $20.3 billion over OSFI's supervisory target ratio of 100% for MLI, and $19.1 billion over OSFI's regulatory minimum target ratio of 90% for MFC (no supervisory target is applicable to MFC). In addition, all MLI's subsidiaries maintain capital levels in excess of local requirements.

## Credit Ratings

Manulife's operating companies have strong financial strength ratings from credit rating agencies. These ratings are important factors in establishing the competitive position of insurance companies and maintaining public confidence in products being offered. Maintaining strong ratings on debt and capital instruments issued by MFC and its subsidiaries allows us to access capital markets at competitive pricing levels. Should these credit ratings decrease materially, our cost of financing may increase and our access to funding and capital through capital markets could be reduced.

During 2022, S&P, Moody's, DBRS Morningstar, Fitch and AM Best Company ('AM Best') maintained their assigned ratings of MFC and its primary insurance operating companies.

The following table summarizes the financial strength ratings of MLI and certain of its subsidiaries as at January 31, 2023.

### Financial Strength Ratings

| Subsidiary | Jurisdiction | S&P | Moody's | DBRS Morningstar | Fitch | AM Best |
| --- | --- | --- | --- | --- | --- | --- |
| The Manufacturers Life Insurance Company | Canada | AA- | A1 | AA | AA- | A+ (Superior) |
| John Hancock Life Insurance Company (U.S.A.) | United States | AA- | A1 | Not Rated | AA- | A+ (Superior) |
| Manulife (International) Limited | Hong Kong | AA- | Not Rated | Not Rated | Not Rated | Not Rated |
| Manulife Life Insurance Company | Japan | A+ | Not Rated | Not Rated | Not Rated | Not Rated |
| Manulife (Singapore) Pte. Ltd. | Singapore | AA- | Not Rated | Not Rated | Not Rated | Not Rated |

As of January 31, 2023, S&P, Moody's, DBRS Morningstar, Fitch, and AM Best had a stable outlook on these ratings. The S&P rating and related outlook for Manulife Life Insurance Company are constrained by the sovereign rating on Japan (A+/Stable).

$^{1}$ The 'Risk Management and Risk Factors' section of the MD&A outlines a number of regulatory capital risks.

![Manulife logo]() Manulife 87

# 11. Critical Actuarial and Accounting Policies

The preparation of Consolidated Financial Statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities as at the date of the Consolidated Financial Statements, and the reported amounts of revenue and expenses during the reporting periods. Actual results may differ from these estimates. The most significant estimation processes relate to assumptions used in measuring insurance and investment contract liabilities, assessing assets for impairment, determining of pension and other post-employment benefit obligation and expense assumptions, determining income taxes and uncertain tax positions and fair valuation of certain invested assets. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimates are revised and in any future years affected. Although some variability is inherent in these estimates, management believes that the amounts recorded are appropriate. The significant accounting policies used and the most significant judgments made by management in applying these accounting policies in the preparation of the 2022 Annual Consolidated Financial Statements are described in note 1 to the Consolidated Financial Statements.

## Critical Actuarial Policies - Policy Liabilities (Insurance and Investment Contract Liabilities)

Policy liabilities for IFRS are valued in Canada under standards established by the ASB. These standards are designed to ensure we establish an appropriate liability on the Consolidated Statements of Financial Position to cover future obligations to all our policyholders. The assumptions underlying the valuation of policy liabilities are required to be reviewed and updated on an ongoing basis to reflect recent and emerging trends in experience and changes in risk profile of the business. In conjunction with prudent business practices to manage both product and asset related risks, the selection and monitoring of appropriate valuation assumptions is designed to minimize our exposure to measurement uncertainty related to policy liabilities.

Policy liabilities have two major components: a best estimate amount and a provision for adverse deviation. The best estimate amount represents the estimated value of future policyholder benefits and settlement obligations to be paid over the term remaining on in-force policies, including the costs of servicing the policies. The best estimate amount is reduced by the future expected policy revenues and future expected investment income on assets supporting the policies, before any consideration for reinsurance ceded. To determine the best estimate amount, assumptions must be made for a number of key factors, including future mortality and morbidity rates, investment returns, rates of policy termination and premium persistency, operating expenses, certain taxes (other than income taxes and includes temporary tax timing and permanent tax rate differences on the cash flows available to satisfy policy obligations) and foreign currency. Reinsurance is used to transfer part or all of a policy liability to another insurance company at terms negotiated with that insurance company. A separate asset for reinsurance ceded is calculated based on the terms of the reinsurance treaties that are in-force, with deductions taken for the credit standing of the reinsurance counterparties where appropriate.

To recognize the uncertainty involved in determining the best estimate actuarial liability assumptions, a provision for adverse deviation (“PfAD”) is established. The PfAD is determined by including a margin of conservatism for each assumption to allow for possible mis-estimation of, or deterioration in, future experience in order to provide greater comfort that the policy liabilities will be sufficient to pay future benefits. The CIA establishes suggested ranges for the level of margins for adverse deviation based on the risk profile of the business. Our margins are set taking into account the risk profile of our business. The effect of these margins is to increase policy liabilities over the best estimate assumptions. The margins for adverse deviation decrease the income that is recognized at the time a new policy is sold and increase the income recognized in later periods as the margins release as the remaining policy risks reduce.

### Best Estimate Assumptions

We follow established processes to determine the assumptions used in the valuation of our policy liabilities. The nature of each risk factor and the process for setting the assumptions used in the valuation are discussed below.

#### Mortality

Mortality relates to the occurrence of death. Mortality assumptions are based on our internal as well as industry past and emerging experience and are differentiated by sex, underwriting class, policy type and geographic market. We make assumptions about future mortality improvements using historical experience derived from population data. Reinsurance is used to offset some of our direct mortality exposure on in-force life insurance policies with the impact of the reinsurance directly reflected in our policy valuation for the determination of policy liabilities net of reinsurance. Actual mortality experience is monitored against these assumptions separately for each business. The results are favourable where mortality rates are lower than assumed for life insurance and where mortality rates are higher than assumed for payout annuities. Overall 2022 experience was unfavourable (2021 - unfavourable) when compared with our assumptions.

#### Morbidity

Morbidity relates to the occurrence of accidents and sickness for the insured risks. Morbidity assumptions are based on our internal as well as industry past and emerging experience and are established for each type of morbidity risk and geographic market. For our JH Long Term Care business we make assumptions about future morbidity changes. Actual morbidity experience is monitored against these

88 | 2022 Annual Report | Management's Discussion and Analysis

assumptions separately for each business. Our morbidity risk exposure relates to future expected claims costs for long-term care insurance, as well as for group benefits and certain individual health insurance products we offer. Overall 2022 experience was favourable (2021 - favourable) when compared with our assumptions.

### **Policy Termination and Premium Persistency**

Policy termination includes lapses and surrenders, where lapses represent the termination of policies due to non-payment of premiums and surrenders represent the voluntary termination of policies by policyholders. Premium persistency represents the level of ongoing deposits on contracts where there is policyholder discretion as to the amount and timing of deposits. Policy termination and premium persistency assumptions are primarily based on our recent experience adjusted for expected future conditions. Assumptions reflect differences by type of contract within each geographic market and actual experience is monitored against these assumptions separately for each business. Overall 2022 experience was unfavourable (2021 - unfavourable) when compared with our assumptions.

### **Expenses and Taxes**

Operating expense assumptions reflect the projected costs of maintaining and servicing in-force policies, including associated overhead expenses. The expenses are derived from internal cost studies and are projected into the future with an allowance for inflation. For some developing businesses, there is an expectation that unit costs will decline as these businesses mature. Actual expenses are monitored against assumptions separately for each business. Overall maintenance expenses for 2022 were unfavourable (2021 - unfavourable) when compared with our assumptions. Taxes reflect assumptions for future premium taxes and other non-income related taxes. For income taxes, policy liabilities are adjusted only for temporary tax timing and permanent tax rate differences on the cash flows available to satisfy policy obligations.

### **Investment Returns**

As noted in the “Risk Management and Risk Factors - Market Risk - Asset Liability Management Strategy” section above, our general fund product liabilities are categorized into groups with similar characteristics in order to support them with a specific asset strategy. We seek to align the asset strategy for each group to the premium and benefit pattern, policyholder options and guarantees, and crediting rate strategies of the products they support. The projected cash flows from the assets are combined with projected cash flows from future asset purchases and sales to determine expected rates of return for future years. The investment strategies for future asset purchases and sales are based on our target investment policies for each segment and the reinvestment returns are derived from current and projected market rates for fixed interest investments and our projected outlook for non-fixed interest assets. Credit losses are projected based on our own and industry experience, as well as specific reviews of the current investment portfolio. Investment return assumptions for each asset class also incorporate expected investment management expenses that are derived from internal cost studies. In 2022, actual investment returns were favourable (2021 - favourable) when compared with our assumptions. Investment-related experience and the direct impact of interest rates and equity markets are discussed in the “Manulife Financial Corporation - Profitability” section above.

### **Segregated Funds**

We offer segregated funds to policyholders that offer certain guarantees, including guaranteed returns of principal on maturity or death, as well as guarantees of minimum withdrawal amounts or income benefits. The on-balance sheet liability for these benefits is the expected cost of these guarantees including appropriate valuation margins for the various contingencies including mortality and lapse. The dominant driver of the cost of guarantees is the return on the underlying funds in which the policyholders invest. See “Risk Management and Risk Factors - Market Risk - Hedging Strategies for Variable Annuity and Other Equity Risks” and the “Manulife Financial Corporation - Profitability” sections above.

### **Foreign Currency**

Foreign currency risk results from a mismatch of the currency of the policy liabilities and the currency of the assets designated to support these obligations. We generally match the currency of our assets with the currency of the liabilities they support, with the objective of mitigating the risk of economic loss arising from movements in currency exchange rates. Where a currency mismatch exists, the assumed rate of return on the assets supporting the liabilities is reduced to reflect the potential for adverse movements in exchange rates.

### **Experience Adjusted Products**

Where policies have features that allow the impact of changes in experience to be passed on to policyholders through policy dividends, experience rating refunds, credited rates or other adjustable features, the projected policyholder benefits are adjusted to reflect the projected experience. Minimum contractual guarantees and other market considerations are taken into account in determining the policy adjustments.

### **Provision for Adverse Deviation**

The total provision for adverse deviation is the sum of the provisions for adverse deviation for each risk factor. Margins for adverse deviation are established by product type and geographic market for each assumption or factor used in the determination of the best estimate actuarial liability. The margins are established based on the risk characteristics of the business being valued.

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89

Margins for interest rate risk are included by testing a number of scenarios of future interest rates. The margin can be established by testing a limited number of scenarios, some of which are prescribed by Canadian Actuarial Standards of Practice, and determining the liability based on the worst outcome. Alternatively, the margin can be set by testing many scenarios which are developed according to actuarial guidance. Under this approach the liability would be the average of the outcomes above a percentile in the range prescribed by the Canadian Actuarial Standards of Practice.

In addition to the explicit margin for adverse deviation, the valuation basis for segregated fund liabilities explicitly limits the future revenue recognition in the valuation basis to the amount necessary to offset acquisition expenses after allowing for the cost of any guarantee features. The fees that are in excess of this limitation are reported as an additional margin and are shown in segregated fund non-capitalized margins.

The provision for adverse deviation and the future revenue deferred in the valuation due to the limitations on recognition of future revenue in the valuation of segregated fund liabilities are shown in the table below.

| As at December 31, ($ millions) | 2022 | 2021 |
| --- | --- | --- |
| Best estimate actuarial liability | $255,871 | $275,552 |
| Provision for adverse deviation ('PfAD') |  |  |
| Insurance risks (mortality/morbidity) | $16,068 | $18,888 |
| Policyholder behaviour (lapse/surrender/premium persistency) | 5,665 | 6,541 |
| Expenses | 1,665 | 1,834 |
| Investment risks (non-credit) | 33,865 | 34,396 |
| Investment risks (credit) | 937 | 1,020 |
| Segregated funds guarantees | 720 | 1,679 |
| Total PfAD (1) | 58,920 | 64,358 |
| Segregated funds-additional margins | 11,656 | 17,099 |
| Total of PfAD and additional segregated fund margins | $70,576 | $81,457 |

$^{(1)}$ Reported net actuarial liabilities (excluding the $4,527 million (2021 - $4,474 million) reinsurance asset related to the Company's in-force participating life insurance closed block that is retained on a funds withheld basis as part of the New York Life transaction) as at December 31, 2022 of $314,791 million (2021 - $339,910 million) are comprised of $255,871 million (2021 - $275,552 million) of best estimate actuarial liabilities and $58,920 million (2021 - $64,358 million) of PfAD.

The change in the PfAD from period to period is impacted by changes in liability and asset composition, by currency and interest rate movements and by material changes in valuation assumptions. The overall decrease in PfADs for insurance risks was primarily due to the impact of higher interest rates in the U.S., Canada and Asia, the annual review of actuarial methods and assumptions, partially offset by the depreciation of the Canadian dollar relative to the U.S. dollar and other major currencies, as well as the expected PfAD growth from in-force and new business. The overall decrease in PfADs for policyholder behaviour and expenses was driven by the impact of higher interest rates in the U.S., Canada and Asia, partially offset by the depreciation of the Canadian dollar and the expected PfAD growth from in-force and new business. The overall decrease in PfADs for non-credit investment risks was driven by the impact of higher interest rates in the U.S., Canada and Asia, as well as the annual review of actuarial methods and assumptions, partially offset by the expected PfAD growth from in-force and new business and the depreciation of the Canadian dollar. The decrease in the additional segregated fund margins was primarily due to the reduced exposure driven by the Venerable reinsurance transaction, as well as the increase in interest rates in the U.S. and Canada.

## Sensitivity of Earnings to Changes in Assumptions

When the assumptions underlying our determination of policy liabilities are updated to reflect recent and emerging experience or change in outlook, the result is a change in the value of policy liabilities which in turn affects net income attributed to shareholders. The sensitivity of net income attributed to shareholders to changes in non-economic and certain asset related assumptions underlying policy liabilities is shown below and assumes that there is a simultaneous change in the assumptions across all business units. The sensitivity of net income attributed to shareholders to a deterioration or improvement in non-economic assumptions underlying long-term care policy liabilities as at December 31, 2022 is also shown below.

For changes in asset related assumptions, the sensitivity is shown net of the corresponding impact on income of the change in the value of the assets supporting policy liabilities. In practice, experience for each assumption will frequently vary by geographic market and business, and assumption updates are made on a business/geographic specific basis. Actual results can differ materially from these estimates for a variety of reasons including the interaction among these factors when more than one changes, changes in actuarial and investment return and future investment activity assumptions, actual experience differing from the assumptions, changes in business mix, effective tax rates and other market factors, and the general limitations of our internal models.

90 | 2022 Annual Report | Management's Discussion and Analysis

## Potential impact on net income attributed to shareholders arising from changes to non-economic assumptions$^{(1)}$

| As at December 31, ($ millions) | Decrease in after-tax net income attributed to shareholders |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Policy related assumptions |  |  |
| 2% adverse change in future mortality rates (2),(4) |  |  |
| Products where an increase in rates increases insurance contract liabilities | $(500) | $(500) |
| Products where a decrease in rates increases insurance contract liabilities | (500) | (500) |
| 5% adverse change in future morbidity rates (incidence and termination) (3),(4),(5) | (4,500) | (5,500) |
| 10% adverse change in future policy termination rates (4) | (2,200) | (2,400) |
| 5% increase in future expense levels | (600) | (600) |

$^{(1)}$ The participating policy funds are largely self-supporting and generate no material impact on net income attributed to shareholders as a result of changes in non-economic assumptions. Experience gains or losses would generally result in changes to future dividends, with no direct impact to shareholders.

$^{(2)}$ An increase in mortality rates will generally increase policy liabilities for life insurance contracts whereas a decrease in mortality rates will generally increase policy liabilities for policies with longevity risk such as payout annuities.

$^{(3)}$ No amounts related to morbidity risk are included for policies where the policy liability provides only for claims costs expected over a short period, generally less than one year, such as Group Life and Health.

$^{(4)}$ The impacts of the sensitivities on LTC for morbidity, mortality and lapse do not assume any offsets from the Company's ability to contractually raise premium rates in such events, subject to state regulatory approval. In practice, we would plan to file for rate increases equal to the amount of deterioration resulting from the sensitivity.

$^{(5)}$ This includes a 5% deterioration in incidence rates and 5% deterioration in claim termination rates.

## Potential impact on net income attributed to shareholders arising from changes to non-economic assumptions for Long Term Care$^{(1)}$

| As at December 31, ($ millions) | Decrease in after-tax net income attributed to shareholders |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Policy related assumptions |  |  |
| 2% adverse change in future mortality rates (2),(3) | $(300) | $(300) |
| 5% adverse change in future morbidity incidence rates (2),(3) | (1,700) | (2,000) |
| 5% adverse change in future morbidity claims termination rates (2),(3) | (2,400) | (3,100) |
| 10% adverse change in future policy termination rates (2),(3) | (300) | (400) |
| 5% increase in future expense levels (3) | (100) | (100) |

$^{(1)}$ Translated from US$ at 1.3549 for 2022.

$^{(2)}$ The impacts of the sensitivities on LTC for morbidity, mortality and lapse do not assume any offsets from the Company's ability to contractually raise premium rates in such events, subject to state regulatory approval. In practice, we would plan to file for rate increases equal to the amount of deterioration resulting from the sensitivities. The decrease in sensitivity to both future incidence and claims terminations rates is due to the impact of higher interest rates and updated assumptions as part of the 2022 Review of Actuarial Methods and Assumptions.

$^{(3)}$ The impact of favourable changes to all the sensitivities is relatively symmetrical.

## Potential impact on net income attributed to shareholders arising from changes to asset related assumptions supporting actuarial liabilities$^{(1)}$

| As at December 31, ($ millions) | Increase (decrease) in after-tax net income attributed to shareholders |  |  |  |
| --- | --- | --- | --- | --- |
|  | 2022 |  | 2021 |  |
|  | Increase | Decrease | Increase | Decrease |
| Asset related assumptions updated periodically in valuation basis changes |  |  |  |  |
| 100 basis point change in future annual returns for public equities (1) | $400 | $(400) | $500 | $(500) |
| 100 basis point change in future annual returns for ALDA (2) | 3,300 | (3,600) | 3,900 | (4,700) |
| 100 basis point change in equity volatility assumption for stochastic segregated fund modelling (3) | (100) | 100 | (200) | 200 |

$^{(1)}$ The sensitivity to public equity returns above includes the impact on both segregated fund guarantee reserves and on other policy liabilities. Expected long-term annual market growth assumptions for public equities are based on long-term historical observed experience and compliance with actuarial standards. As at December 31, 2022, the growth rates inclusive of dividends in the major markets used in the stochastic valuation models for valuing segregated fund guarantees are 9.0% (9.0% as at December 31, 2021) per annum in Canada, 9.6% (9.6% as at December 31, 2021) per annum in the U.S. and 6.2% (6.2% as at December 31, 2021) per annum in Japan. Growth assumptions for European equity funds are market-specific and vary between 8.3% and 9.9%.

$^{(2)}$ ALDA include commercial real estate, timber, farmland, infrastructure and private equities, some of which relate to oil and gas. Expected long-term return assumptions for ALDA and public equity are set in accordance with the Standards of Practice for the valuation of insurance contract liabilities and guidance published by the CIA. Annual best estimate return assumptions for ALDA and public equity include market growth rates and annual income, such as rent, production proceeds and dividends, and will vary based on our holding period. Over a 20-year horizon, our best estimate return assumptions range between 5.25% and 11.5% (5.25% and 11.5% as at December 31, 2021), with an average of 9.2% (9.2% as at December 31, 2021) based on the current asset mix backing our guaranteed insurance and annuity business as of December 31, 2022. Our return assumptions including the margins for adverse deviations in our valuation, which take into account the uncertainty of achieving the returns, range between 2.5% and 7.5%, with an average of 6.0% (6.0% as at December 31, 2021) based on the asset mix backing our guaranteed insurance and annuity business as of December 31, 2022.

$^{(3)}$ Volatility assumptions for public equities are based on long-term historical observed experience and compliance with actuarial standards. As of December 31, 2022 and December 31, 2021, unless otherwise stated, the resulting volatility assumptions are 16.5% per annum in Canada, 17.1% per annum in the U.S. for large cap public equities, and 19.1% per annum in Japan. For European equity funds, the volatility varies between 16.3% and 17.7%.

Manulife 91

## Review of Actuarial Methods and Assumptions

A comprehensive review of actuarial methods and assumptions is performed annually. The review is designed to reduce the Company's exposure to uncertainty by ensuring assumptions for both asset related and liability related risks remain appropriate. This is accomplished by monitoring experience and selecting assumptions which represent a current best estimate view of expected future experience, and margins for adverse deviations that are appropriate for the risks assumed. While the assumptions selected represent the Company's current best estimates and assessment of risk, the ongoing monitoring of experience and changes in the economic environment are likely to result in future changes to the actuarial assumptions, which could materially impact the measurement of insurance contract liabilities.

### 2022 Review of Actuarial Methods and Assumptions

The completion of the 2022 annual review of actuarial methods and assumptions resulted in a decrease in insurance contract liabilities, net of reinsurance, of $80 million, and a net gain to net income attributed to shareholders of $36 million post-tax.

| For the year ended December 31, 2022 ($ millions) | Change in insurance contract liabilities, net of reinsurance |  |  | Change in net income attributed to shareholders (post-tax) |
| --- | --- | --- | --- | --- |
|  | Total | Attributed to participating policyholders' account (1) | Attributed to shareholders' account |  |
| Long-term care triennial review | $19 | $ - | $19 | $(15) |
| Mortality and morbidity updates | 157 | (5) | 162 | (126) |
| Lapses and policyholder behaviour updates | 317 | 74 | 243 | (192) |
| Investment-related updates | (210) | (1) | (209) | 157 |
| Other updates | (363) | (145) | (218) | 212 |
| Net impact | $(80) | $(77) | $(3) | $36 |

$^{(1)}$ The change in insurance contract liabilities, net of reinsurance, attributable to the participating policyholders' account was primarily driven by an increase in expected long-term interest rates within the valuation models to reflect the higher interest rate environment, partially offset by the lapse assumption update in Canada.

### Long-term care triennial review

U.S. Insurance completed a comprehensive long-term care ('LTC') experience study. The review included all aspects of claim assumptions, as well as the progress on future premium rate increases. The impact of the LTC review resulted in a net $15 million post-tax charge to net income attributed to shareholders.

The experience study showed that claim costs established in our last triennial review remain appropriate in aggregate for our older blocks of business$^{1}$ supported by robust claims data on this mature block. Insurance contract liabilities were strengthened for claim costs on our newer block of business$^{2}$. This was driven by lower active life mortality$^{3}$ supported by Company experience and a recent industry study, as well as higher utilization of benefits, which included the impact of reflecting higher inflation in the cost-of-care up to the current year. We also reviewed and updated incidence and claim termination assumptions which, on a net basis, provided a partial offset to the increase in insurance contract liabilities on active life mortality and utilization. In addition, some policyholders are electing to reduce their benefits in lieu of paying increased premiums which resulted in a reduction in insurance contract liabilities. The overall claims experience review led to a post-tax charge to net income attributed to shareholders of approximately $2.3 billion (US$1.7 billion).

Experience continues to support the assumptions of both future morbidity and mortality improvement, resulting in no changes to these assumptions.

As of September 30, 2022, we have received actual premium increase approvals of $2.5 billion pre-tax (US$1.9 billion pre-tax) on a present value basis since the last triennial review in 2019. This aligns with the full amount assumed in our insurance contract liabilities at that time and demonstrates our continued strong track record of progress in securing premium rate increases.$^{4}$ In 2022, the review of future premium increases assumed in insurance contract liabilities resulted in a post-tax gain to net income attributed to shareholders of approximately $2.1 billion (US$1.6 billion), in comparison to a total estimated ask of $6.7 billion (US$5.1 billion). This reflects expected future premium increases that are due to our 2022 review of morbidity, mortality, and lapse assumptions, as well as outstanding amounts from prior state filings. Premium increases averaging approximately 30% will be sought on about one-half of the business, excluding the carryover of 2019 amounts requested. Our assumptions reflect the estimated timing and amount of state approved premium increases.

Other refinements to LTC valuation resulted in a post-tax gain of approximately $0.2 billion (US$0.2 billion) to net income attributed to shareholders.

$^{1}$ First generation policies issued prior to 2002.

$^{2}$ Second generation policies with an average issue date of 2007 and Group policies with an average issue date of 2003.

$^{3}$ The mortality rate of LTC policyholders who are currently not on claim.

$^{4}$ Our actual experience obtaining premium increases could be materially different than what we have assumed, resulting in further increases or decreases in insurance contract liabilities, which could be material. See 'Caution regarding forward-looking statements' above.

92 | 2022 Annual Report | Management's Discussion and Analysis

## Mortality and morbidity updates

Mortality and morbidity updates resulted in a $126 million post-tax charge to net income attributed to shareholders, driven by a detailed review of the mortality and morbidity assumptions for our Canada insurance business, and by updates to morbidity assumptions in Vietnam to align with experience.

## Lapses and policyholder behaviour updates

Updates to lapses and policyholder behaviour assumptions resulted in a $192 million post-tax charge to net income attributed to shareholders.

We completed a detailed review of lapse assumptions for Singapore, and increased lapse rates to align with experience on our index-linked products, which reduced projected future fee income to be received on these products.

We also increased lapse rates on Canada's term insurance products for policies approaching their renewal date, reflecting emerging experience in our study.

## Investment-related updates

Updates to investment return assumptions resulted in a $157 million post-tax gain to net income attributed to shareholders, primarily driven by annual updates to our valuation models to reflect market movements during the year. No changes were made to our long-term assumed returns.

## Other updates

Other updates resulted in a $212 million post-tax gain to net income attributed to shareholders, which included refinements to the projection of our tax and liability cash flows, as well as various other modelling updates.

## Impact of changes in actuarial methods and assumptions by segment

The impact of changes in actuarial methods and assumptions in Canada resulted in a $35 million post-tax gain to net income attributed to shareholders. The gain was primarily driven by refinements to our valuation models, due to annual updates to reflect market movements during the year, partially offset by updates of mortality and morbidity assumptions for our insurance business and lapse assumptions for certain term insurance products.

The impact of changes in actuarial methods and assumptions in the U.S. resulted in a $36 million post-tax gain, driven by refinements to our valuation models, due to annual updates to reflect market movements during the year. The triennial review of long-term care was net neutral overall.

The impact of changes in actuarial methods and assumptions in Asia resulted in a $45 million post-tax charge to net income attributed to shareholders. The charge was primarily driven by updates to lapse assumptions in Singapore and morbidity updates in Vietnam, partially offset by refinements to the projection of tax and liability cash flows in Vietnam.

The impact of changes in actuarial methods and assumptions in Corporate and Other (which includes our Reinsurance businesses) resulted in a $10 million post-tax gain to net income attributed to shareholders.

## 2021 Review of Actuarial Methods and Assumptions

The 2021 full year review of actuarial methods and assumptions did not reflect COVID-19 experience as it is too soon to assess the impact of COVID-19 on long-term assumptions. Experience related to COVID-19 will continue to be closely monitored, as well as emerging research on the long-term implications of COVID-19 on mortality and other assumptions.

The completion of the 2021 annual review of actuarial methods and assumptions resulted in an increase in insurance contract liabilities of $287 million, net of reinsurance, and a decrease in net income attributed to shareholders of $41 million post-tax.

| For the year ended December 31, 2021 ($ millions) | Change in insurance contract liabilities, net of reinsurance |  |  | Change in net income attributed to shareholders (post-tax) |
| --- | --- | --- | --- | --- |
|  | Total | Attributed to participating policyholders' account (1) | Attributed to shareholders' account |  |
| U.S. variable annuity product review | $51 | $ - | $51 | $(40) |
| Mortality and morbidity updates | 350 | - | 350 | (257) |
| Lapses and policyholder behaviour updates | 686 | 18 | 668 | (534) |
| Expense updates | (653) | (25) | (628) | 503 |
| Investment-related updates | (257) | (2) | (255) | 168 |
| Other updates | 110 | 231 | (121) | 119 |
| Net impact | $287 | $222 | $65 | $(41) |

$^{(1)}$ The change in insurance contract liabilities, net of reinsurance, attributable to the participating policyholders' account was primarily driven by a reduction in the expected long-term interest rates within the valuation models to reflect the low interest rate environment.

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93

### **U.S. variable annuity product review**

The review of our variable annuity products in the U.S. resulted in a $40 million post-tax charge to net income attributed to shareholders.

The charge was primarily driven by updates to lapse assumptions to reflect emerging experience, partially offset by refinements to our segregated fund guaranteed minimum withdrawal benefit valuation models.

### **Updates to mortality and morbidity**

Mortality and morbidity updates resulted in a $257 million post-tax charge to net income attributed to shareholders.

The charge was driven by updates to older age mortality on certain products in our U.S. life insurance business, mortality assumption updates in Indonesia to reflect recent experience, as well as from refining assumptions on several reinsurance arrangements in Canada.

### **Updates to lapses and policyholder behaviour**

Updates to lapses and policyholder behaviour assumptions resulted in a $534 million post-tax charge to net income attributed to shareholders.

We completed a detailed review of lapse assumptions for non-participating policies within our U.S. life insurance business including those for universal life, variable universal life, and term products. We observed a trend of low lapse rates on our protection-focused universal life insurance products as consumers continue to value the product guarantees in the prolonged low interest rate environment. We lowered the overall lapse assumptions for these products to reflect actual experience, which resulted in a post-tax charge to net income attributed to shareholders.

Other updates to lapse and policyholder behaviour assumptions were made across several products in Canada and Japan to reflect recent experience, resulting in a modest post-tax charge to net income attributed to shareholders.

### **Expense updates**

Updates to expense assumptions resulted in a $503 million post-tax gain to net income attributed to shareholders.

We completed a detailed review of our investment expense assumptions across the Company. This resulted in a $263 million post-tax gain to net income attributed to shareholders, primarily driven by scale benefits.

We also completed a global expense study, which resulted in a $256 million post-tax gain to net income attributed to shareholders. The favourable result primarily reflects a reallocation of expenses across certain business lines to align with actual experience, as well as from expense savings related to various expense efficiency initiatives.

### **Investment-related updates**

Updates to investment return assumptions resulted in a $168 million post-tax gain to net income attributed to shareholders.

The primary driver of the gain was an update to our corporate bond default rates to reflect recent experience; we reduced default assumptions for certain credit ratings in Canada, the U.S., and Japan. This was partially offset by a reduction to our Canadian real estate investment return assumptions.

### **Other updates**

Other updates resulted in a $119 million post-tax gain to net income attributed to shareholders.

This was primarily driven by Japan, whereby investment fees for certain mandates in the general fund provided by affiliate investment managers were reviewed and updated to align with broader market levels.

### **Impact of changes in actuarial methods and assumptions by segment**

The impact of changes in actuarial methods and assumptions in Canada resulted in a $65 million post-tax charge to net income attributed to shareholders. The charge was primarily driven by a reduction to our real estate investment return assumptions, as well as from refining assumptions on several reinsurance arrangements in individual insurance, largely offset by positive updates related to our company-wide expense review and corporate bond default study.

The impact of changes in actuarial methods and assumptions in the U.S. resulted in a $314 million post-tax charge to net income attributed to shareholders. The charge was primarily driven by updates to lapse and mortality assumptions in our U.S. life insurance business to reflect emerging experience, partially offset by positive updates related to our company-wide expense review and corporate bond default study.

The impact of changes in actuarial methods and assumptions in Asia resulted in a $343 million post-tax gain to net income attributed to shareholders. The gain was primarily driven by Japan, whereby investment fees for certain mandates in the general fund provided by affiliate investment managers were reviewed and updated to align with broader market levels, as well as from the positive updates related to our corporate bond default study. This was partially offset by updates to the mortality assumptions in Indonesia to reflect recent experience.

94 | 2022 Annual Report | Management's Discussion and Analysis

The impact of changes in actuarial methods and assumptions in Corporate and Other (which includes our Reinsurance business) resulted in a $5 million post-tax charge to net income attributed to shareholders.

## Change in net insurance contract liabilities

The change in net insurance contract liabilities can be attributed to several sources: new business, acquisitions, in-force movement and currency impact. Changes in net insurance contract liabilities are substantially offset in the financial statements by premiums, investment income, policy benefits and other policy related cash flows. The changes in net insurance contract liabilities by business segment are shown below:

### 2022 Net Insurance Contract Liability Movement Analysis

For the year ended December 31, 2022

| ($ millions) | Asia | Canada | U.S. | Corporate and Other | Total |
| --- | --- | --- | --- | --- | --- |
| Balance, January 1 | $111,432 | $89,373 | $147,230 | $(291) | $347,744 |
| New business (1),(2) | 5,224 | (306) | 447 | - | 5,365 |
| In-force movement (1),(3) | (8,222) | (10,353) | (19,667) | 284 | (37,958) |
| Changes in methods and assumptions (1) | 50 | (71) | (46) | (13) | (80) |
| Reinsurance transactions (1),(4) | - | - | (2,419) | - | (2,419) |
| Currency impact (5) | 2,857 | 7 | 8,233 | (18) | 11,079 |
| Balance, December 31 | $111,341 | $78,650 | $133,778 | $(38) | $323,731 |

$^{(1)}$ The $35,644 million decrease reported as the change in insurance contract liabilities and change in reinsurance assets on the 2022 Consolidated Statements of Income primarily consists of changes due to normal in-force movement, new policies, changes in methods and assumptions, and reinsurance transactions. The net impact of these items results in a decrease of $35,092 million, of which $36,116 million is included in the Consolidated Statements of Income as a decrease in insurance contract liabilities and change in reinsurance assets, with the remaining $1,024 million increase included in net claims and benefits. The change in insurance contract liabilities amount on the Consolidated Statements of Income also includes the change in embedded derivatives associated with insurance contracts, however these embedded derivatives are included in other liabilities on the Consolidated Statements of Financial Position.

$^{(2)}$ New business policy liability impact is positive/(negative) when estimated future premiums, together with future investment income, are expected to be more/(less) than sufficient to pay estimated future benefits, policyholder dividends and refunds, taxes (excluding income taxes) and expenses on new policies issued.

$^{(3)}$ The net in-force movement over the year was a decrease of $37,958 million, primarily reflecting the impact of interest rate increases in the U.S., Canada and Asia and expected growth in insurance contract liabilities in all three geographic segments.

$^{(4)}$ In 2022, we completed two transactions to reinsure blocks of legacy U.S. variable annuity ('VA') policies. Under the terms of the transactions, the Company will retain responsibility for the maintenance of the policies with no intended impact to VA policyholders. The transactions were structured as coinsurance for the general fund liabilities and modified coinsurance for the segregated fund liabilities.

$^{(5)}$ The increase in policy liabilities from currency impact reflects the depreciation of the Canadian dollar relative to the U.S. dollar, Hong Kong dollar and Singapore dollar, slightly offset by the appreciation of the Canadian dollar relative to the Japanese yen. To the extent assets are currency matched to liabilities, the increase in insurance contract liabilities due to currency impact is offset by a corresponding increase from currency impact in the value of assets supporting those liabilities.

### 2021 Net Insurance Contract Liability Movement Analysis

For the year ended December 31, 2021

| ($ millions) | Asia | Canada | U.S. | Corporate and Other | Total |
| --- | --- | --- | --- | --- | --- |
| Balance, January 1 | $102,958 | $90,346 | $146,939 | $(458) | $339,785 |
| New business (1),(2) | 5,748 | (211) | 410 | - | 5,947 |
| In-force movement (1),(3) | 6,402 | (939) | 348 | 161 | 5,972 |
| Changes in methods and assumptions (1) | (335) | 177 | 439 | 6 | 287 |
| Reinsurance transactions (1) | - | - | - | - | - |
| Currency impact (4) | (3,341) | - | (906) | - | (4,247) |
| Balance, December 31 | $111,432 | $89,373 | $147,230 | $(291) | $347,744 |

$^{(1)}$ The $11,473 million increase reported as the change in insurance contract liabilities and change in reinsurance assets on the 2021 Consolidated Statements of Income primarily consists of changes due to the changes in methods and assumptions, normal in-force movement, new policies and associated embedded derivatives. The net impact of these items resulted in an increase of $12,206 million, of which $10,923 million is included in the Consolidated Statements of Income as an increase in insurance contract liabilities and change in reinsurance assets, with the remaining $1,283 million increase included in net claims and benefits. The change in insurance contract liabilities amount on the Consolidated Statements of Income also includes the change in embedded derivatives associated with insurance contracts, however these embedded derivatives are included in other liabilities on the Consolidated Statements of Financial Position.

$^{(2)}$ New business policy liability impact is positive/(negative) when estimated future premiums, together with future investment income, are expected to be more/(less) than sufficient to pay estimated future benefits, policyholder dividends and refunds, taxes (excluding income taxes) and expenses on new policies issued.

$^{(3)}$ The net in-force movement over the year was an increase of $5,972 million, primarily reflecting the expected growth in insurance contract liabilities in all three geographic segments, partially offset by the impact of interest rate increases.

$^{(4)}$ The decrease in policy liabilities from currency impact reflects the appreciation of the Canadian dollar relative to the Japanese yen and U.S. dollar. To the extent assets are currency matched to liabilities, the decrease in insurance contract liabilities due to currency impact is offset by a corresponding decrease from currency impact in the value of assets supporting those liabilities.

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95

# Critical Accounting Policies

## Consolidation

The Company is required to consolidate the financial position and results of entities it controls. Control exists when the Company:

- Has the power to govern the financial and operating policies of the entity;
- Is exposed to a significant portion of the entity's variable returns; and
- Is able to use its power to influence variable returns from the entity.

The Company uses the same principles to assess control over any entity it is involved with. In evaluating control, potential factors assessed include the effects of:

- Substantive potential voting rights that are currently exercisable or convertible;
- Contractual management relationships with the entity;
- Rights and obligations resulting from policyholders to manage investments on their behalf;
- The extent of other parties' involvement in the entity, if any, the possibility for de facto control being present; and
- The effect of any legal or contractual restraints on the Company from using its power to affect its variable returns from the entity.

An assessment of control is based on arrangements in place and the assessed risk exposures at inception. Initial evaluations are reconsidered at a later date if:

- The Company acquires or loses power over the financial and operating policies of the entity;
- The Company acquires additional interests in the entity or its interests in an entity are diluted;
- The contractual arrangements of the entity are amended such that the Company's involvement with the entity changes; or
- The Company's ability to use its power to affect its variable returns from the entity changes.

Subsidiaries are consolidated from the date on which control is obtained by the Company and cease to be consolidated from the date that control ceases. A change in control may lead to gains or losses on derecognition of a subsidiary when losing control, or on derecognition of previous interests in a subsidiary when gaining control.

## Fair Value of Invested Assets

A large portion of the Company's invested assets are recorded at fair value. Refer to note 1 of the 2022 Annual Consolidated Financial Statements for a description of the methods used in determining fair values. When quoted prices in active markets are not available for a particular investment, significant judgment is required to determine an estimated fair value based on market standard valuation methodologies including discounted cash flow methodologies, matrix pricing, consensus pricing services, or other similar techniques. The inputs to these standard valuation methodologies include: current interest rates or yields for similar instruments, credit rating of the issuer or counterparty, industry sector of the issuer, coupon rate, call provisions, sinking fund requirements, tenor (or expected tenor) of the instrument, management's assumptions regarding liquidity, volatilities and estimated future cash flows. Accordingly, the estimated fair values are based on available market information and management's judgments about the key market factors impacting these financial instruments. Financial markets are susceptible to severe events evidenced by rapid depreciation in asset values accompanied by a reduction in asset liquidity. The Company's ability to sell assets, or the price ultimately realized for these assets, depends upon the demand and liquidity in the market and increases the use of judgment in determining the estimated fair value of certain assets.

## Evaluation of Invested Asset Impairment

AFS debt and equity securities are carried at fair market value, with changes in fair value recorded in other comprehensive income ("OCI") with the exception of unrealized gains and losses on foreign currency translation of AFS fixed income securities which are included in net income attributed to shareholders. Securities are reviewed on a regular basis and any fair value decrement is transferred out of AOCI and recorded in net income attributed to shareholders when it is deemed probable that the Company will not be able to collect all amounts due according to the contractual terms of a debt security or when fair value of an equity security has declined significantly below cost or for a prolonged period of time.

Provisions for impairments of mortgage loans and private placement loans are recorded with losses reported in earnings when there is no longer reasonable assurance as to the timely collection of the full amount of the principal and interest.

Significant judgment is required in assessing whether an impairment has occurred and in assessing fair values and recoverable values. Key matters considered include economic factors, Company and industry specific developments, and specific issues with respect to single issuers and borrowers.

Changes in circumstances may cause future assessments of asset impairment to be materially different from current assessments, which could require additional provisions for impairment. Additional information on the process and methodology for determining the allowance for credit losses is included in the discussion of credit risk in note 9 to the 2022 Consolidated Financial Statements.

96 | 2022 Annual Report | Management's Discussion and Analysis

## Derivative Financial Instruments

The Company uses derivative financial instruments (“derivatives”) including swaps, forwards and futures agreements, and options to help manage current and anticipated exposures to changes in interest rates, foreign exchange rates, commodity prices and equity market prices, and to replicate permissible investments. Refer to note 5 to the 2022 Consolidated Financial Statements for a description of the methods used to determine the fair value of derivatives.

The accounting for derivatives is complex and interpretations of the primary accounting guidance continue to evolve in practice. Judgment is applied in determining the availability and application of hedge accounting designations and the appropriate accounting treatment under such accounting guidance. Differences in judgment as to the availability and application of hedge accounting designations and the appropriate accounting treatment may result in a differing impact on the Consolidated Financial Statements of the Company from previous periods. Assessments of hedge effectiveness and measurements of ineffectiveness of hedging relationships are also subject to interpretations and estimations. If it were determined that hedge accounting designations were not appropriately applied, reported net income attributed to shareholders could be materially affected.

## Employee Future Benefits

The Company maintains defined contribution and defined benefit pension plans and other post-employment plans for employees and agents, including registered (tax qualified) pension plans that are typically funded, as well as supplemental non-registered (non-qualified) pension plans for executives, retiree welfare plans and disability welfare plans that are typically not funded. The largest defined benefit pension and retiree welfare plans in the U.S. and Canada are the material plans that are discussed herein and in note 16 to the 2022 Annual Consolidated Financial Statements.

Due to the long-term nature of defined benefit pension and retiree welfare plans, the calculation of the defined benefit obligation and net benefit cost depends on various assumptions such as discount rates, salary increase rates, cash balance interest crediting rates, health care cost trend rates and rates of mortality. These assumptions are determined by management and are reviewed annually. The key assumptions, as well as the sensitivity of the defined benefit obligation to changes in these assumptions, are presented in note 16 to the 2022 Annual Consolidated Financial Statements.

Changes in assumptions and differences between actual and expected experience give rise to actuarial gains and losses that affect the amount of the defined benefit obligation and OCI. For 2022, the amount recorded in OCI was a loss of $49 million (2021 - gain of $217 million) for the defined benefit pension plans and a gain of $34 million (2021 - gain of $27 million) for the retiree welfare plans.

Contributions to the registered (tax qualified) defined benefit pension plans are made in accordance with the applicable U.S. and Canadian regulations. During 2022, the Company contributed $3 million (2021 - $2 million) to these plans. As at December 31, 2022, the difference between the fair value of assets and the defined benefit obligation for these plans was a surplus of $441 million (2021 - surplus of $600 million). For 2023, the contributions to the plans are expected to be approximately $3 million.1

The Company’s supplemental pension plans for executives are not funded; benefits under these plans are paid as they become due. During 2022, the Company paid benefits of $56 million (2021 - $59 million) under these plans. As at December 31, 2022, the defined benefit obligation for these plans, which is reflected as a liability in the balance sheet, amounted to $561 million (2021 - $687 million).

The Company’s retiree welfare plans are partially funded, although there are no regulations or laws governing or requiring the funding of these plans. As at December 31, 2022, the difference between the fair value of plan assets and the defined benefit obligation for these plans was a surplus of $57 million (2021 - surplus of $3 million).

## Income Taxes

The Company is subject to income tax laws in various jurisdictions. Tax laws are complex and potentially subject to different interpretations by the taxpayer and the relevant tax authority. The provision for income taxes represents management’s interpretation of the relevant tax laws and its estimate of current and future income tax implications of the transactions and events during the period. A deferred tax asset or liability results from temporary differences between carrying values of assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are recorded based on expected future tax rates and management’s assumptions regarding the expected timing of the reversal of such temporary differences. The realization of deferred tax assets depends upon the existence of sufficient taxable income within the carryback or carryforward periods under the tax law in the applicable tax jurisdiction. A deferred tax asset is recognized to the extent that future realization of the tax benefit is probable. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the tax benefit will be realized. At December 31, 2022, we had $5,423 million of deferred tax assets (December 31, 2021 - $5,254 million). Factors in management’s determination include, among others, the following:

- Future taxable income exclusive of reversing temporary differences and carryforwards;
- Future reversals of existing taxable temporary differences;
- Taxable income in prior carryback years; and
- Tax planning strategies.

1 See “Caution regarding forward-looking statements” above.

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The Company may be required to change its provision for income taxes if the ultimate deductibility of certain items is successfully challenged by taxing authorities or if estimates used in determining the amount of deferred tax assets to recognize change significantly, or when receipt of new information indicates the need for adjustment in the recognition of deferred tax assets. Additionally, future events, such as changes in tax laws, tax regulations, or interpretations of such laws or regulations, could have an impact on the provision for income tax, deferred tax balances, actuarial liabilities (see Critical Actuarial and Accounting Policies - Expenses and Taxes above) and the effective tax rate. Any such changes could significantly affect the amounts reported in the Consolidated Financial Statements in the year these changes occur.

### Goodwill and Intangible Assets

At December 31, 2022, under IFRS we had $6,014 million of goodwill and $4,505 million of intangible assets ($1,861 million of which are intangible assets with indefinite lives). Goodwill and intangible assets with indefinite lives are tested for impairment at the cash generating unit level (“CGU”) or group of CGUs level. A CGU comprises the smallest group of assets that are capable of generating largely independent cash flows and is either a business segment or a level below. The tests performed in 2022 demonstrated that there was no impairment of goodwill or intangible assets with indefinite lives. Changes in discount rates and cash flow projections used in the determination of recoverable values or reductions in market-based earnings multiples may result in impairment charges in the future, which could be material.

Impairment charges could occur in the future as a result of changes in economic conditions. The goodwill testing for 2023 will be updated based on the conditions that exist in 2023 and may result in impairment charges, which could be material.

### Future Accounting and Reporting Changes

There are several new accounting and reporting changes issued under IFRS including those still under development by the IASB. We have summarized below key recently issued accounting standards that are anticipated to have a significant impact on the Company. Accounting and reporting changes are discussed in note 2 of the 2022 Consolidated Financial Statements.

#### IFRS 9 “Financial Instruments”

IFRS 9 “Financial Instruments” was issued in November 2009 and amended in October 2010, November 2013 and July 2014, and is effective for years beginning on or after January 1, 2018, to be applied retrospectively, or on a modified retrospective basis. Additionally, the IASB issued amendments in October 2017 that are effective for annual periods beginning on or after January 1, 2019. In conjunction with the amendments to IFRS 17 “Insurance Contracts” issued in June 2020, the IASB amended IFRS 4 “Insurance Contracts” to permit eligible insurers to apply IFRS 9 effective January 1, 2023, alongside IFRS 17. The standard replaced IAS 39 “Financial Instruments: Recognition and Measurement”.

The project has been divided into three phases: classification and measurement, impairment of financial assets, and hedge accounting. IFRS 9’s current classification and measurement methodology provides that financial assets are measured at either amortized cost or fair value on the basis of the entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets. The classification and measurement for financial liabilities remains generally unchanged; however, for a financial liability designated as at fair value through profit or loss, revisions have been made in the accounting for changes in fair value attributable to changes in the credit risk of that liability. Gains or losses caused by changes in an entity’s own credit risk on such liabilities are no longer recognized in profit or loss but instead are reflected in OCI.

Revisions to hedge accounting were issued in November 2013 as part of the overall IFRS 9 project. The amendment introduces a new hedge accounting model, together with corresponding disclosures about risk management activity for those applying hedge accounting. The new model represents a substantial overhaul of hedge accounting that will enable entities to better reflect their risk management activities in their financial statements. When IFRS 9 is first adopted, entities have the option to apply the hedge accounting requirements under IFRS 9 or to continue to apply the hedge accounting requirements under IAS 39. Such option will apply to all hedge accounting relationships.

Revisions issued in July 2014 replaced the existing incurred loss model used for measuring the allowance for credit losses with an expected loss model. Changes were also made to the existing classification and measurement model designed primarily to address specific application issues raised by early adopters of the standard. They also addressed the income statement accounting mismatches and short-term volatility issues which have been identified as a result of the insurance contracts project.

The Company has adopted IFRS 9 beginning on January 1, 2023 as permitted under the June 2020 amendments to IFRS 4 “Insurance Contracts”. The adoption of IFRS 9 resulted in certain differences in the classification and measurement of financial assets when compared to their classification and measurement under IAS 39.

The Company has elected to apply the hedge accounting requirements under IFRS 9 to all hedge accounting relationships prospectively. As at January 1, 2023, all existing IAS 39 hedge accounting relationships were assessed and qualify for hedge accounting under IFRS 9. These existing relationships are treated as continuing hedge accounting relationships under IFRS 9 beginning on January 1, 2023; and will be disclosed with comparative information for 2022 under IAS 39.

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The Company also designated new hedge accounting relationships with the objective to reduce accounting mismatches between hedging derivatives' changes in income and financial risk changes in OCI for IFRS 17 insurance liabilities and IFRS 9 financial assets. New hedge accounting relationships are effective prospectively on January 1, 2023; and will not have comparative disclosure in the financial statements for 2022.

### IFRS 17 "Insurance Contracts"

IFRS 17 "Insurance Contracts" was issued in May 2017 to be effective for years beginning on January 1, 2021. Amendments to IFRS 17 "Insurance Contracts" were issued in June 2020 and include a two-year deferral of the effective date. IFRS 17 as amended, is effective for years beginning on January 1, 2023, to be applied retrospectively. If full retrospective application to a group of contracts is impractical, the modified retrospective or fair value methods may be used. The standard replaced IFRS 4 "Insurance Contracts" and materially changed the recognition and measurement of insurance contracts and the corresponding presentation and disclosures in the Company's Financial Statements.

Narrow-scope amendments to IFRS 17 "Insurance Contracts" were issued in December 2021 and were effective on initial application of IFRS 17 and IFRS 9 "Financial Instruments" which the Company has adopted on January 1, 2023. The amendments reduce accounting mismatches between insurance contract liabilities and financial assets in scope of IFRS 9 within comparative prior periods when initially applying IFRS 17 and IFRS 9. The amendments allow insurers to present comparative information on financial assets as if IFRS 9 were fully applicable during the comparative period. The amendments do not permit application of IFRS 9 hedge accounting principles to the comparative period.

The principles underlying IFRS 17 differ from CALM as permitted by IFRS 4. While there are many differences, the following outlines some of the key measurement differences:

- Under IFRS 17 new business gains are recorded on the Consolidated Statements of Financial Position (in the CSM component of the insurance contract liability) and amortized into income as services are provided. New business losses are recorded into income immediately. Under CALM, both new business gains and new business losses were recognized in income immediately.
- Under IFRS 17 the Company aggregates insurance contracts that are subject to similar risks and managed together into portfolios. Since new business gains and losses have different accounting treatments, insurance contracts are further aggregated into groups by profitability and issuance period to limit offsetting of new business gains and losses. Such aggregation of contracts into groups is required on initial recognition and not reassessed subsequently. Under CALM, new business gains and new business losses offset each other in income.
- Under IFRS 17 the discount rate used to estimate the present value of insurance contract liabilities is based on the characteristics of the liabilities. Under CALM, the rates of returns for current and projected assets supporting insurance contract liabilities were used to value the liabilities. The difference in the discount rate approach also impacts the timing of investment results. Under IFRS 17, the impact of investing activities will emerge into earnings over the life of the assets. Under CALM, the impact of investing activities was capitalized into reserves and therefore earnings in the period they occurred.
- Under IFRS 17 the insurance contract liability discount rate is not related to the expected return on our ALDA and public equity assets, and, as a result, the earnings sensitivity of a change in return assumptions for ALDA and public equity assets will be significantly reduced.
- Under IFRS 17 the Company has elected the option to record changes in insurance contract liabilities arising from changes in interest rates through other comprehensive income, for substantially all insurance products, and classify debt instruments supporting these insurance contract liabilities as fair value through other comprehensive income under IFRS 9. Under CALM, changes in insurance contract liabilities were recorded in income and supporting debt instruments were classified as FVTPL.
- Under IFRS 17 the Company separates specific embedded derivatives and distinct investment components from insurance contracts and accounts for them under IFRS 9. Under IFRS 4 the treatment of embedded derivatives is consistent with IFRS 17, however under IFRS 4 the Company did not separate deposit components as this was not required by the standard.
- Under IFRS 17 insurance contracts with different features are measured by one of the three measurement models: General Measurement Model ("GMM"), Premium Allocation Approach ("PAA") and Variable Fee Approach ("VFA"). Under IFRS 4, insurance contracts were generally valued by one measurement model, although an unearned premium reserve method similar to PAA was allowed and used by Manulife for certain short duration / annually renewable business.

In addition, there are significant changes to presentation and disclosure of the financial statements. The following outlines some of the key presentation and disclosure changes:

- Consolidated Statements of Financial Position: Under IFRS 17 the Company presents portfolios of insurance and reinsurance contracts issued separately from portfolios of reinsurance contracts held, and portfolios in asset position are further presented separately from portfolios in liability position. Under CALM, contracts were not split and presented by asset and liability position.
- Consolidated Statements of Comprehensive Income: Under IFRS 17 the Company separately presents insurance revenue, insurance service expense, insurance finance income or expenses, and income or expenses from reinsurance contracts held. Under CALM the Company reported premium income, gross claims and benefits, changes in insurance contract liabilities, benefits and expenses ceded to reinsurers, and changes in reinsurance assets.

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A summary of some of the key risks are outlined in the “Risk Factors and Risk Management - Emerging Risks” section above.

The Company is required to prepare an opening balance sheet as at January 1, 2022, the date of transition to IFRS 17, which forms the starting point for its financial reporting in accordance with IFRS 17. Any differences between the carrying value and the presentation of assets, liabilities and equity determined in accordance with CALM and IFRS 17 as at January 1, 2022 will be recorded in opening retained earnings and accumulated other comprehensive income.

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# 12. Controls and Procedures

## Disclosure Controls and Procedures

Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us is recorded, processed, summarized, and reported accurately and completely and within the time periods specified under Canadian and U.S. securities laws. Our process includes controls and procedures that are designed to ensure that information is accumulated and communicated to management, including the CEO and CFO, to allow timely decisions regarding required disclosure.

As of December 31, 2022, management evaluated the effectiveness of its disclosure controls and procedures as defined under the rules adopted by the U.S. Securities and Exchange Commission and the Canadian securities regulatory authorities. This evaluation was performed under the supervision of the Audit Committee, the CEO and CFO. Based on that evaluation, the CEO and CFO concluded that our disclosure controls and procedures were effective as at December 31, 2022.

MFC's Audit Committee has reviewed this MD&A and the 2022 Consolidated Financial Statements and MFC's Board approved these reports prior to their release.

## Management's Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company's internal control system was designed to provide reasonable assurance to management and the Board regarding the preparation and fair presentation of published financial statements in accordance with generally accepted accounting principles. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Management maintains a comprehensive system of controls intended to ensure that transactions are executed in accordance with management's authorization, assets are safeguarded, and financial records are reliable. Management also takes steps to ensure that information and communication flows are effective and to monitor performance, including performance of internal control procedures.

Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2022 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission 2013 framework in Internal Control - Integrated Framework. Based on this assessment, management believes that, as of December 31, 2022, the Company's internal control over financial reporting is effective.

The effectiveness of the Company's internal control over financial reporting as of December 31, 2022 has been audited by Ernst & Young LLP, the Company's independent registered public accounting firm that also audited the Consolidated Financial Statements of the Company for the year ended December 31, 2022. Their report expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting as of December 31, 2022.

## Changes in Internal Control over Financial Reporting

No changes were made in our internal control over financial reporting during the year ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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## 13. Non-GAAP and Other Financial Measures

The Company prepares its Consolidated Financial Statements in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. We use a number of non-GAAP and other financial measures to evaluate overall performance and to assess each of our businesses. This section includes information required by National Instrument 52-112 - Non-GAAP and Other Financial Measures Disclosure in respect of “specified financial measures” (as defined therein).

**Non-GAAP financial measures** include core earnings (loss); pre-tax core earnings; core earnings available to common shareholders; core earnings before income taxes, depreciation and amortization (“core EBITDA”); core general expenses; core revenue, Manulife Bank net lending assets; Manulife Bank average net lending assets; assets under management (“AUM”); assets under management and administration (“AUMA”); Global WAM managed AUMA; core revenue and net annualized fee income. In addition, non-GAAP financial measures include the following stated on a constant exchange rate (“CER”) basis: any of the foregoing non-GAAP financial measures; Global WAM revenue; net income attributed to shareholders; and common shareholders’ net income.

**Non-GAAP ratios** include core ROE; diluted core earnings per common share (“core EPS”); common share core dividend payout ratio; expense efficiency ratio; core EBITDA margin; effective tax rate on core earnings and net annualized fee income yield on average AUMA. In addition, non-GAAP ratios include the percentage growth/decline on a CER basis in any of the above non-GAAP financial measures; Global WAM revenue; net income attributed to shareholders; common shareholders’ net income; pre-tax net income attributed to shareholders; general expenses; basic earnings per common share; and diluted earnings per common share.

**Other specified financial measures** include assets under administration (“AUA”); consolidated capital; embedded value; new business value (“NBV”); new business value margin (“NBV margin”); sales; annualized premium equivalent (“APE”) sales; gross flows; net flows; market value to book value ratio; average assets under management and administration (“average AUMA”), Global WAM average managed AUMA; average assets under administration; remittances; any of the foregoing specified financial measures stated on a CER basis; and percentage growth/decline in any of the foregoing specified financial measures on a CER basis.

Non-GAAP financial measures and non-GAAP ratios are not standardized financial measures under GAAP and, therefore, might not be comparable to similar financial measures disclosed by other issuers. Therefore, they should not be considered in isolation or as a substitute for any other financial information prepared in accordance with GAAP.

**Core earnings (loss)** is a financial measure which we believe aids investors in better understanding the long-term earnings capacity and valuation of the business. Core earnings allows investors to focus on the Company’s operating performance by excluding the direct impact of changes in equity markets and interest rates, changes in actuarial methods and assumptions as well as a number of other items, outlined below, that we believe are material, but do not reflect the underlying earnings capacity of the business. For example, due to the long-term nature of our business, the mark-to-market movements of equity markets, interest rates, foreign currency exchange rates and commodity prices from period-to-period can, and frequently do, have a substantial impact on the reported amounts of our assets, liabilities and net income attributed to shareholders. These reported amounts are not actually realized at the time and may never be realized if the markets move in the opposite direction in a subsequent period. This makes it very difficult for investors to evaluate how our businesses are performing from period-to-period and to compare our performance with other issuers.

We believe that core earnings better reflect the underlying earnings capacity and valuation of our business. We use core earnings as the basis for management planning and reporting and, along with net income attributed to shareholders, as a key metric used in our short and mid-term incentive plans at the total Company and operating segment level. We also base our mid and long-term strategic priorities on core earnings.

While core earnings is relevant to how we manage our business and offers a consistent methodology, it is not insulated from macroeconomic factors which can have a significant impact. See below for reconciliation of core earnings to net income attributed to shareholders and income before income taxes. Net income attributed to shareholders excludes net income attributed to participating policyholders and non-controlling interests.

The items included in core earnings and items excluded from core earnings are determined in accordance with the methodology under OSFI’s Source of Earnings Disclosure (Life Insurance Companies) guideline and are listed below.

Any future changes to the core earnings definition referred to below, will be disclosed.

### Items included in core earnings:

1. Expected earnings on in-force policies, including expected release of provisions for adverse deviation, fee income, margins on group business and spread business such as Manulife Bank and asset fund management.
2. Macro hedging costs based on expected market returns.
3. New business strain and gains.
4. Policyholder experience gains or losses.
5. Acquisition and operating expenses compared with expense assumptions used in the measurement of policy liabilities.
6. Up to $400 million of net favourable investment-related experience reported in a single year, which are referred to as “core investment gains”. This means up to $100 million in the first quarter, up to $200 million on a year-to-date basis in the second

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quarter, up to $300 million on a year-to-date basis in the third quarter and up to $400 million on a full year basis in the fourth quarter. Any investment-related experience losses reported in a quarter will be offset against the net year-to-date investment-related experience gains with the difference being included in core earnings subject to a maximum of the year-to-date core investment gains and a minimum of zero, which reflects our expectation that investment-related experience will be positive through-the-business cycle. To the extent any investment-related experience losses cannot be fully offset in a quarter, they will be carried forward to be offset against investment-related experience gains in subsequent quarters in the same year, for purposes of determining core investment gains. Investment-related experience relates to fixed income investing, ALDA returns, credit experience and asset mix changes other than those related to a strategic change. An example of a strategic asset mix change is outlined below.

- ○ This favourable and unfavourable investment-related experience is a combination of reported investment experience as well as the impact of investing activities on the measurement of our policy liabilities. We do not attribute specific components of investment-related experience to amounts included or excluded from core earnings.
- ○ The $400 million threshold represents the estimated average annualized amount of net favourable investment-related experience that the Company reasonably expects to achieve through-the-business cycle based on historical experience. It is not a forecast of expected net favourable investment-related experience for any given fiscal year.
- ○ Our average net annualized investment-related experience, including core investment gains, calculated from the introduction of core earnings in 2012 to the end of 2022 was $607 million (2012 to the end of 2021 was $546 million).
- ○ The decision announced on December 22, 2017 to reduce the allocation to ALDA in the portfolio asset mix supporting our legacy businesses was the first strategic asset mix change since we introduced the core earnings metric in 2012. We refined our description of investment-related experience in 2017 to note that asset mix changes other than those related to a strategic change are taken into consideration in the investment-related experience component of core investment gains.
- ○ While historical investment return time horizons may vary in length based on underlying asset classes generally exceeding 20 years, for purposes of establishing the threshold, we look at a business cycle that is five or more years and includes a recession. We monitor the appropriateness of the threshold as part of our annual five-year planning process and would adjust it, either to a higher or lower amount, in the future if we believed that our threshold was no longer appropriate.
- ○ Specific criteria used for evaluating a potential adjustment to the threshold may include, but are not limited to, the extent to which actual investment-related experience differs materially from actuarial assumptions used in measuring insurance contract liabilities, material market events, material dispositions or acquisitions of assets, and regulatory or accounting changes.

Core investment gains are reported in the Corporate and Other segment, with an offsetting adjustment to investment-related experience gains and losses in items excluded from core earnings.

7. Earnings on surplus other than mark-to-market items. Gains on available-for-sale ("AFS") equities and seed money investments in segregated and mutual funds are included in core earnings.
8. Routine or non-material legal settlements.
9. All other items not specifically excluded.
10. Tax on the above items.
11. All tax related items except the impact of enacted or substantively enacted income tax rate changes.

# Items excluded from core earnings:

1. The direct impact of equity markets and interest rates and variable annuity guarantee liabilities includes the items listed below.
   - ○ The earnings impact of the difference between the net increase (decrease) in variable annuity liabilities that are dynamically hedged and the performance of the related hedge assets. Our variable annuity dynamic hedging strategy is not designed to completely offset the sensitivity of insurance and investment contract liabilities to all risks or measurements associated with the guarantees embedded in these products for a number of reasons, including: provisions for adverse deviation, fund performance, the portion of the interest rate risk that is not dynamically hedged, realized equity and interest rate volatilities and changes to policyholder behaviour.
   - ○ Gains (charges) on variable annuity guarantee liabilities not dynamically hedged.
   - ○ Gains (charges) on general fund equity investments supporting policy liabilities and on fee income.
   - ○ Gains (charges) on macro equity hedges relative to expected costs. The expected cost of macro hedges is calculated using the equity assumptions used in the valuation of insurance and investment contract liabilities.
   - ○ Gains (charges) on higher (lower) fixed income reinvestment rates assumed in the valuation of insurance and investment contract liabilities.
   - ○ Gains (charges) on sale of AFS bonds and open derivatives not in hedging relationships in the Corporate and Other segment.
2. Net favourable investment-related experience in excess of $400 million per annum or net unfavourable investment-related experience on a year-to-date basis.
3. Mark-to-market gains or losses on assets held in the Corporate and Other segment other than gains on AFS equities and seed money investments in new segregated or mutual funds.
4. Changes in actuarial methods and assumptions. As noted in the "Critical Actuarial and Accounting Policies" section above, policy liabilities for IFRS are valued in Canada under standards established by the Actuarial Standards Board. The standards require a comprehensive review of actuarial methods and assumptions to be performed annually. The review is designed to reduce the Company's exposure to uncertainty by ensuring assumptions for both asset related and liability related risks remain appropriate and is accomplished by monitoring experience and selecting assumptions which represent a current best estimate view of expected

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future experience, and margins that are appropriate for the risks assumed. Changes related to ultimate reinvestment rates (“URR”) are included in the direct impact of equity markets and interest rates and variable annuity guarantee liabilities. By excluding the results of the annual reviews, core earnings assist investors in evaluating our operational performance and comparing our operational performance from period to period with other global insurance companies because the associated gain or loss is not reflective of current year performance and not reported in net income in most actuarial standards outside of Canada.

5. The impact on the measurement of policy liabilities of changes in product features or new reinsurance transactions, if material.
6. Goodwill impairment charges.
7. Gains or losses on disposition of a business.
8. Material one-time only adjustments, including highly unusual/extraordinary and material legal settlements or other items that are material and exceptional in nature.
9. Tax on the above items.
10. Net income (loss) attributed to participating policyholders and non-controlling interests.
11. Impact of enacted or substantially enacted income tax rate changes.

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## Reconciliation of core earnings to net income attributed to shareholders

|  | 2022 |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- |
| ($ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated) | Asia | Canada | U.S. | Global WAM | Corporate and Other | Total |
| Income (loss) before income taxes | $2,063 | $2,621 | $4,877 | $1,546 | $(2,360) | $8,747 |
| Income tax (expense) recovery |  |  |  |  |  |  |
| Core earnings | (309) | (482) | (332) | (218) | 106 | (1,235) |
| Items excluded from core earnings | (1) | (295) | (553) | (5) | 524 | (330) |
| Income tax (expense) recovery | (310) | (777) | (885) | (223) | 630 | (1,565) |
| Net income (post-tax) | 1,753 | 1,844 | 3,992 | 1,323 | (1,730) | 7,182 |
| Less: Net income (post-tax) attributed to |  |  |  |  |  |  |
| Non-controlling interests | (4) | - | - | 2 | 1 | (1) |
| Participating policyholders | (467) | 314 | 42 | - | - | (111) |
| Net income (loss) attributed to shareholders (post-tax) | 2,224 | 1,530 | 3,950 | 1,321 | (1,731) | 7,294 |
| Less: Items excluded from core earnings (1) |  |  |  |  |  |  |
| Investment-related experience outside of core earnings | 31 | 70 | 1,183 | - | (467) | 817 |
| Direct impact of equity markets and interest rates and variable annuity guarantee liabilities | 153 | 76 | 197 | - | (1,266) | (840) |
| Change in actuarial methods and assumptions | (45) | 35 | 36 | - | 10 | 36 |
| Restructuring charge | - | - | - | - | - | - |
| Reinsurance transactions, tax related items and other | (47) | (10) | 834 | 80 | 242 | 1,099 |
| Core earnings (post-tax) | $2,132 | $1,359 | $1,700 | $1,241 | $(250) | $6,182 |
| Income tax on core earnings (see above) | 309 | 482 | 332 | 218 | (106) | 1,235 |
| Core earnings (pre-tax) | $2,441 | $1,841 | $2,032 | $1,459 | $(356) | $7,417 |

$^{(1)}$ These items are disclosed under OSFI's Source of Earnings Disclosure (Life Insurance Companies) guideline.

## Core earnings, CER basis and U.S. dollars

|  | 2022 |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- |
| (Canadian $ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated) | Asia | Canada | U.S. | Global WAM | Corporate and Other | Total |
| Core earnings (post-tax) | $2,132 | $1,359 | $1,700 | $1,241 | $(250) | $6,182 |
| CER adjustment (1) | 40 | - | 79 | 33 | (2) | 150 |
| Core earnings, CER basis (post-tax) | $2,172 | $1,359 | $1,779 | $1,274 | $(252) | $6,332 |
| Income tax on core earnings, CER basis (2) | 313 | 482 | 349 | 220 | (107) | 1,257 |
| Core earnings, CER basis (pre-tax) | $2,485 | $1,841 | $2,128 | $1,494 | $(359) | $7,589 |
| Core earnings (U.S. dollars) - Asia and U.S. segments |  |  |  |  |  |  |
| Core earnings (post-tax) (3) , US $ | $1,637 |  | $1,311 |  |  |  |
| CER adjustment US $(1) | (40) |  | - |  |  |  |
| Core earnings, CER basis (post-tax), US $ | $1,597 |  | $1,311 |  |  |  |

$^{(1)}$ The impact of updating foreign exchange rates to that which was used in 4Q22.

$^{(2)}$ Income tax on core earnings adjusted to reflect the foreign exchange rates for the Statement of Income in effect for 4Q22.

$^{(3)}$ Core earnings (post-tax) in Canadian $ is translated to US $ using the US $ Statement of Income exchange rate for the four respective quarters that make up 2022 core earnings.

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## Reconciliation of core earnings to net income attributed to shareholders

| ($ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated) | 2021 |  |  |  |  |  | 2020 |
| --- | --- | --- | --- | --- | --- | --- | --- |
|  | Asia | Canada | U.S. | Global WAM | Corporate and Other | Total | Total |
| Income (loss) before income taxes | $3,188 | $1,791 | $2,484 | $1,641 | $(979) | $8,125 | $6,771 |
| Income tax (expense) recovery |  |  |  |  |  |  |  |
| Core earnings | (322) | (413) | (418) | (234) | 27 | (1,360) | (1,168) |
| Items excluded from core earnings | (122) | 77 | 32 | 1 | 159 | 147 | (27) |
| Income tax (expense) recovery | (444) | (336) | (386) | (233) | 186 | (1,213) | (1,195) |
| Net income (post-tax) | 2,744 | 1,455 | 2,098 | 1,408 | (793) | 6,912 | 5,576 |
| Less: Net income (post-tax) attributed to |  |  |  |  |  |  |  |
| Non-controlling interests | 254 | - | - | 2 | (1) | 255 | 250 |
| Participating policyholders | (567) | 101 | 18 | - | - | (448) | (545) |
| Net income (loss) attributed to shareholders (post-tax) | 3,057 | 1,354 | 2,080 | 1,406 | (792) | 7,105 | 5,871 |
| Less: Items excluded from core earnings (1) |  |  |  |  |  |  |  |
| Investment-related experience outside of core earnings | 313 | 329 | 1,341 | - | (341) | 1,642 | (792) |
| Direct impact of equity markets and interest rates and variable annuity guarantee liabilities | 169 | (89) | (727) | - | (170) | (817) | 932 |
| Change in actuarial methods and assumptions | 343 | (65) | (314) | - | (5) | (41) | (198) |
| Restructuring charge | - | - | - | - | (115) | (115) | - |
| Reinsurance transactions, tax related items and other | 56 | - | (156) | - | - | (100) | 413 |
| Core earnings (post-tax) | $2,176 | $1,179 | $1,936 | $1,406 | $(161) | $6,536 | $5,516 |
| Income tax on core earnings (see above) | 322 | 413 | 418 | 234 | (27) | 1,360 |  |
| Core earnings (pre-tax) | $2,498 | $1,592 | $2,354 | $1,640 | $(188) | $7,896 |  |

$^{(1)}$ These items are disclosed under OSFI's Source of Earnings Disclosure (Life Insurance Companies) guideline.

## Core earnings, CER basis and U.S. dollars

| (Canadian $ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated) | 2021 |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | Asia | Canada | U.S. | Global WAM | Corporate and Other | Total |
| Core earnings (post-tax) | $2,176 | $1,179 | $1,936 | $1,406 | $(161) | $6,536 |
| CER adjustment (1) | 34 | - | 160 | 76 | (2) | 268 |
| Core earnings, CER basis (post-tax) | $2,210 | $1,179 | $2,096 | $1,482 | $(163) | $6,804 |
| Income tax on core earnings, CER basis (2) | 325 | 413 | 453 | 238 | (26) | 1,403 |
| Core earnings, CER basis (pre-tax) | $2,535 | $1,592 | $2,549 | $1,720 | $(189) | $8,207 |
| Core earnings (U.S. dollars) - Asia and U.S. segments |  |  |  |  |  |  |
| Core earnings (post-tax) (3) , US $ | $1,736 |  | $1,544 |  |  |  |
| CER adjustment US $(1) | (110) |  | - |  |  |  |
| Core earnings, CER basis (post-tax), US $ | $1,626 |  | $1,544 |  |  |  |

$^{(1)}$ The impact of updating foreign exchange rates to that which was used in 4Q22.

$^{(2)}$ Income tax on core earnings adjusted to reflect the foreign exchange rates for the Statement of Income in effect for 4Q22.

$^{(3)}$ Core earnings (post-tax) in Canadian $ is translated to US $ using the US $ Statement of Income exchange rate for the four respective quarters that make up 2021 core earnings.

106 | 2022 Annual Report | Management's Discussion and Analysis

## Reconciliation of core earnings to net income attributed to shareholders

|  | 4Q22 |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- |
| ($ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated) | Asia | Canada | U.S. | Global WAM | Corporate and Other | Total |
| Income (loss) before income taxes | $690 | $698 | $524 | $403 | $(173) | $2,142 |
| Income tax (expense) recovery |  |  |  |  |  |  |
| Core earnings | (100) | (137) | (73) | (50) | 58 | (302) |
| Items excluded from core earnings | (36) | (169) | (14) | (5) | 360 | 136 |
| Income tax (expense) recovery | (136) | (306) | (87) | (55) | 418 | (166) |
| Net income (post-tax) | 554 | 392 | 437 | 348 | 245 | 1,976 |
| Less: Net income (post-tax) attributed to |  |  |  |  |  |  |
| Non-controlling interests | 6 | - | - | 1 | - | 7 |
| Participating policyholders | (21) | 72 | 27 | - | - | 78 |
| Net income (loss) attributed to shareholders (post-tax) | 569 | 320 | 410 | 347 | 245 | 1,891 |
| Less: Items excluded from core earnings (1) |  |  |  |  |  |  |
| Investment-related experience outside of core earnings | (110) | (166) | (62) | - | (119) | (457) |
| Direct impact of equity markets and interest rates and variable annuity guarantee liabilities | 110 | 146 | 63 | - | (135) | 184 |
| Change in actuarial methods and assumptions | - | - | - | - | - | - |
| Restructuring charge | - | - | - | - | - | - |
| Reinsurance transactions, tax related items and other | - | (10) | 35 | 80 | 313 | 418 |
| Core earnings (post-tax) | $569 | $350 | $374 | $267 | $186 | $1,746 |
| Income tax on core earnings (see above) | 100 | 137 | 73 | 50 | (58) | 302 |
| Core earnings (pre-tax) | $669 | $487 | $447 | $317 | $128 | $2,048 |

$^{(1)}$ These items are disclosed under OSFI's Source of Earnings Disclosure (Life Insurance Companies) guideline.

## Core earnings, CER basis and U.S. dollars

|  | 4Q22 |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- |
| (Canadian $ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated) | Asia | Canada | U.S. | Global WAM | Corporate and Other | Total |
| Core earnings (post-tax) | $569 | $350 | $374 | $267 | $186 | $1,746 |
| CER adjustment (1) | - | - | - | - | - | - |
| Core earnings, CER basis (post-tax) | $569 | $350 | $374 | $267 | $186 | $1,746 |
| Income tax on core earnings, CER basis (2) | 100 | 137 | 73 | 50 | (58) | 302 |
| Core earnings, CER basis (pre-tax) | $669 | $487 | $447 | $317 | $128 | $2,048 |
| Core earnings (U.S. dollars) - Asia and U.S. segments |  |  |  |  |  |  |
| Core earnings (post-tax) (3) , US $ | $418 |  | $276 |  |  |  |
| CER adjustment US $(1) | - |  | - |  |  |  |
| Core earnings, CER basis (post-tax), US $ | $418 |  | $276 |  |  |  |

$^{(1)}$ The impact of updating foreign exchange rates to that which was used in 4Q22.

$^{(2)}$ Income tax on core earnings adjusted to reflect the foreign exchange rates for the Statement of Income in effect for 4Q22.

$^{(3)}$ Core earnings (post-tax) in Canadian $ is translated to US $ using the US $ Statement of Income exchange rate for 4Q22.

Manulife 107

## Reconciliation of core earnings to net income attributed to shareholders

|  | 3Q22 |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- |
| ($ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated) | Asia | Canada | U.S. | Global WAM | Corporate and Other | Total |
| Income (loss) before income taxes | $476 | $819 | $766 | $395 | $(819) | $1,637 |
| Income tax (expense) recovery |  |  |  |  |  |  |
| Core earnings | (61) | (116) | (62) | (50) | 18 | (271) |
| Items excluded from core earnings | 2 | (75) | (52) | - | 64 | (61) |
| Income tax (expense) recovery | (59) | (191) | (114) | (50) | 82 | (332) |
| Net income (post-tax) | 417 | 628 | 652 | 345 | (737) | 1,305 |
| Less: Net income (post-tax) attributed to |  |  |  |  |  |  |
| Non-controlling interests | (19) | - | - | - | 1 | (18) |
| Participating policyholders | (85) | 50 | 11 | - | - | (24) |
| Net income (loss) attributed to shareholders (post-tax) | 521 | 578 | 641 | 345 | (738) | 1,347 |
| Less: Items excluded from core earnings (1) |  |  |  |  |  |  |
| Investment-related experience outside of core earnings | (3) | 97 | 127 | - | (96) | 125 |
| Direct impact of equity markets and interest rates and variable annuity guarantee liabilities | 95 | 96 | 137 | - | (382) | (54) |
| Change in actuarial methods and assumptions | (45) | 35 | 36 | - | 10 | 36 |
| Restructuring charge | - | - | - | - | - | - |
| Reinsurance transactions, tax related items and other | (39) | - | (43) | - | - | (82) |
| Core earnings (post-tax) | $513 | $350 | $384 | $345 | $(270) | $1,322 |
| Income tax on core earnings (see above) | 61 | 116 | 62 | 50 | (18) | 271 |
| Core earnings (pre-tax) | $574 | $466 | $446 | $395 | $(288) | $1,593 |

$^{(1)}$ These items are disclosed under OSFI's Source of Earnings Disclosure (Life Insurance Companies) guideline.

## Core earnings, CER basis and U.S. dollars

|  | 3Q22 |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- |
| (Canadian $ millions, post-tax and based on actual foreign exchange rates in effect in the applicable reporting period, unless otherwise stated) | Asia | Canada | U.S. | Global WAM | Corporate and Other | Total |
| Core earnings (post-tax) | $513 | $350 | $384 | $345 | $(270) | $1,322 |
| CER adjustment (1) | 15 | - | 15 | 8 | (8) | 30 |
| Core earnings, CER basis (post-tax) | $528 | $350 | $399 | $353 | $(278) | $1,352 |
| Income tax on core earnings, CER basis (2) | 62 | 116 | 65 | 50 | (18) | 275 |
| Core earnings, CER basis (pre-tax) | $590 | $466 | $464 | $403 | $(296) | $1,627 |
| Core earnings (U.S. dollars) - Asia and U.S. segments |  |  |  |  |  |  |
| Core earnings (post-tax) (3) , US $ | $394 |  | $294 |  |  |  |
| CER adjustment US $(1) | (6) |  | - |  |  |  |
| Core earnings, CER basis (post-tax), US $ | $388 |  | $294 |  |  |  |

$^{(1)}$ The impact of updating foreign exchange rates to that which was used in 4Q22.

$^{(2)}$ Income tax on core earnings adjusted to reflect the foreign exchange rates for the Statement of Income in effect for 4Q22.

$^{(3)}$ Core earnings (post-tax) in Canadian $ is translated to US $ using the US $ Statement of Income exchange rate for 3Q22.

108 | 2022 Annual Report | Management's Discussion and Analysis

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