Manulife Financial reports 2012 net income of $1.7 billion, core earnings of $2.2 billion, a strong regulatory capital ratio of

 Manulife Financial reports 2012 net income of $1.7 billion, core earnings of
 $2.2 billion, a strong regulatory capital ratio of 211 per cent, and record
                         insurance and wealth sales.

PR Newswire

TORONTO, Feb. 7, 2013

C$ unless otherwise stated
TSX/NYSE/PSE: MFC
SEHK:945

Substantive progress made on our strategic priorities in the fourth quarter of
2012:

  *Developing our Asian opportunity to the fullest - Achieved record wealth
    sales^1,2, more than double last year. Total insurance sales increased 20
    per cent compared with fourth quarter 2011, with record insurance sales in
    Indonesia driven by robust growth in both the agency and bank channels,
    and double digit insurance sales growth in Hong Kong driven by agency
    growth. We also enhanced our distribution network with additional
    partners in Japan.
  *Growing our wealth and asset management businesses in Asia, Canada, and
    the U.S. - Manulife Asset Management had record institutional sales, we
    launched the Strategic Income Fund in Japan, contributing to record^2
    wealth sales in Asia; we achieved record mutual fund sales and assets
    under management in Canada; and also generated record mutual fund and
    401(k) sales and assets under management in the U.S., all contributing to
    record funds under management^1 for the company as a whole.
  *Continuing to build our balanced Canadian franchise - Maintained leading
    market positions in group businesses with strong sales growth in both
    Group Benefits and Group Retirement Solutions^3; record lending assets for
    Manulife Bank; and completed the acquisition of Benesure Canada in early
    January 2013.
  *Continuing to grow higher ROE, lower risk U.S. businesses - Double digit
    sales growth in life insurance over the fourth quarter of 2011; two
    additional state approvals for Long-Term Care in-force re-pricing;
    recorded $1.2 billion of positive net flows in mutual funds; and added new
    mutual funds to platforms at key firms.

Highlights for the fourth quarter of 2012^4:

  *Reported net income attributed to shareholders of $1,057 million.
  *Delivered core earnings^1 of $537 million, slightly below 3Q12 due to the
    impact of increased acquisition costs on higher wealth sales, higher
    insurance sales expenses and systems costs in Asia, and increased macro
    hedging costs.
  *Generated strong insurance sales growth^5 of 49 per cent to $929 million.
  *Delivered a 31 per cent increase in wealth sales to $10.4 billion.
  *Strengthened MLI's MCCSR ratio by seven points over prior quarter.
  *Achieved record funds under management^1 ("FUM") of $532 billion.
  *Generated strong investment gains of $368 million, despite the fact that
    the impact of equity markets and interest rates was almost neutral.
  *Increased new business embedded value^1 ("NBEV") by 71 per cent to $245
    million.
  *Reported net income in accordance with U.S. GAAP^1 of $237 million.

_________________________________
^1    This item is a non-GAAP measure. See "Performance and Non-GAAP
       Measures" below.
^2    Wealth sales were a record excluding sales of variable annuities.
^3    Based on quarterly LIMRA industry sales report as at September 30,
       2012.
^4     Unless otherwise indicated, comparatives refer to the three month
      period ended December 31, 2012 versus the three month period ended
       December 31, 2011.
^5     Sales, premiums and deposits and funds under management growth
      (decline) rates are quoted on a constant currency basis. Constant
       currency is a non-GAAP measure. See "Performance and Non-GAAP Measures"
       below.
   

TORONTO, Feb. 7, 2013 /PRNewswire/ - Manulife Financial Corporation ("MFC"  or 
"Manulife") announced today  net income attributed  to shareholders of  $1,057 
million, for the fourth quarter ended December 31, 2012, accompanied by strong
growth in insurance and wealth sales. Fully diluted earnings per common  share 
("EPS") was $0.56 and return on  common shareholders' equity ("ROE") was  18.2 
per cent for the fourth  quarter ended December 31,  2012. For the full  year, 
Manulife reported net  income attributed  to shareholders  of $1,736  million, 
diluted EPS of $0.88 and ROE of 7.1 per cent.

In the  fourth  quarter  of  2012 Manulife  generated  $537  million  of  core 
earnings. Fully  diluted core  earnings per  common share  ("core EPS")^6  was 
$0.28 and core return  on common shareholders' equity  ("core ROE")^6 was  9.0 
per cent.  For  the full  year,  Manulife  reported core  earnings  of  $2,187 
million, core EPS of $1.12 and core ROE of 9.1 per cent.

Donald Guloien,  President  and  Chief  Executive  Officer,  stated  "We  made 
significant progress towards our strategic priorities in 2012 - we ended  2012 
with record^7  annual  sales in  both  our insurance  and  wealth  businesses; 
Manulife Asset Management  added significant new  institutional mandates;  our 
Asian  franchise  delivered  strong  growth  by  expanding  our   distribution 
networks, including growing our  bancassurance partnerships; and we  generated 
another all time record funds under management."

"Since 2010, we have enjoyed a  positive progression in earnings and  improved 
our annual net income by $1.6 billion  over 2011. We believe that Manulife  is 
well positioned to continue to  deliver disciplined and sustainable growth  to 
meet our objectives of $4 billion in core earnings and 13 per cent core ROE by
2016^8," added Mr. Guloien.

Steve Roder, Chief  Financial Officer, stated  "We generated strong  financial 
results for the fourth quarter - we substantially increased sales in both  our 
insurance and wealth businesses and generated  $1.1 billion of net income  for 
the period. As a  result of our robust  sales, we significantly increased  our 
new business embedded value. In addition, our Investment Division continued to
deliver solid  investment gains.  We  ended the  quarter with  a  strengthened 
capital position of  211 per cent,  a seven point  improvement over the  third 
quarter."

"We are pleased  with the  strong income  we generated  this quarter,  however 
investment  gains,  and  to  a  lesser  extent  tax  items,  were  significant 
contributors that cannot be  counted on in  the future. It is  as a result  of 
this variability that we introduced  the core earnings metric. Core  earnings, 
which this quarter were  lower than net income,  helps analysts and  investors 
assess our underlying earnings capacity," added Mr. Roder.

____________________________
       This item is a non-GAAP measure. See "Performance and Non-GAAP
^6    Measures" below.
^7    Wealth sales were a record excluding sales of variable annuities.
^8    See "Caution regarding forward-looking statements" below.



Highlights for the Fourth Quarter of 2012 and Full Year 2012:

  *Reported net income attributed to shareholders of $1,057 million for the
    fourth quarter of 2012 and $1,736 million for the full year 2012:

       *Fourth quarter earnings included strong investment gains of $368
         million and $264 million of tax related gains that were considered
         material and exceptional in nature. We released $182 million of
         provisions related to prior years' uncertain tax positions on one
         item and we reported a net release of $82 million related to interest
         on a tax contingency for leasing transactions.

  *Delivered core earnings of $537 million for the fourth quarter of 2012,
    marginally below the third quarter of 2012, and delivered core earnings of
    $2,187 million for the full year 2012:

       *Compared with fourth quarter 2011, core earnings increased by $164
         million. The increase was driven by a combination of increased fee
         income on funds under management and the significant improvement in
         new business margins as a result of pricing actions and improvement
         in business mix which was partially offset by a number of items in
         the fourth quarter 2012 that netted to a small negative.

       *Compared with third quarter 2012, core earnings declined by $19
         million, due to impact of increased acquisition costs on higher
         wealth sales, higher insurance sales expenses and systems costs in
         Asia, and increased macro hedging costs.

       *Full year core earnings increased by $18 million compared with 2011.
         The increase included a number of offsetting items. Improved new
         business margins, increased fee income, higher scheduled release of
         variable annuity guarantee margins and the non-recurrence of material
         Property and Casualty Reinsurance claims were mostly offset by
         additional macro equity hedging costs and amortization of unrealized
         pension losses, in addition to higher business development and
         project related expenses.

  *Generated strong insurance sales growth of 49 per cent over the fourth
    quarter of 2011 and delivered record insurance sales for 2012:

       *Insurance sales were $929 million in the fourth quarter of 2012, an
         increase of 49 per cent compared with fourth quarter of 2011 driven
         by strong single premium sales in Group Benefits; a 20 per cent
         increase in Asia insurance sales; and an improvement of 13 per cent
         in U.S. sales, mainly driven by successful new product offerings with
         favourable risk characteristics.

       *Record insurance sales exceeded $3.3 billion for 2012, an increase of
         33 per cent compared with 2011.

  *Delivered a 31 per cent increase in wealth sales over the fourth quarter
    of 2011 and record^9 wealth sales for 2012:

       *Wealth sales of $10.4 billion in the fourth quarter of 2012 reflected
         record sales in Asia which were more than double those in the fourth
         quarter of 2011; record mutual fund sales and increased sales in
         Group Retirement Solutions in Canada which were more than offset by
         the decline in annuity sales and lower new loan volumes; and record
         quarters for both mutual funds and 401(k) businesses in the U.S.

       *Record^9 wealth sales were almost $36 billion for full year 2012, an
         increase of four per cent compared with 2011, despite restrictions
         placed on annuity sales by the Company.

  *Strengthened The Manufacturers Life Insurance Company's ("MLI") Minimum
    Continuing Capital and Surplus Requirements ("MCCSR") ratio by seven
    points over September 30, 2012 to 211 per cent:

       *The improvement in MLI's capital position from the end of the third
         quarter of 2012 reflects the contribution from fourth quarter
         earnings, reinsurance of a portion of the Japanese life business and
         a $200 million preferred share issuance during the quarter.

       *Further to the 2013 MCCSR Guideline, MLI's MCCSR ratio is estimated
         to increase by approximately four points on a pro forma basis to 215
         per cent as of January 1, 2013. The increase is attributable to
         revisions to lapse risk required capital rules.

  *Achieved record funds under management of $532 billion as at December 31,
    2012.

  *Continued to generate strong investment gains of $368 million during the
    quarter, $50 million of which is included in core earnings. Fixed income
    and alternative long-duration asset investing along with excellent credit
    accounted for the vast majority of our investment gains for both the
    quarter and the full year.

  *Reported embedded value^10 of $38.0 billion as at December 31, 2012,
    representing an increase of $1.9 billion over that reported at December
    31, 2011. Increases in embedded value were driven by normal operating
    activities including the impact of new business, offset by shareholder
    dividends and depreciating foreign currencies relative to the Canadian
    dollar.

  *Generated new business embedded value^10 ("NBEV") of $245 million in the
    fourth quarter of 2012,  an increase of 71 per cent over the fourth
    quarter of 2011.

  *Received two additional state approvals on Long-Term Care price increases
    on in-force retail business during the quarter bringing our total to 43
    states.

  *Reduced equity market sensitivities during the quarter by adding $250
    million of equity future notional value to the macro hedging program and
    adding approximately $700 million of in-force guarantee value to the
    dynamic hedging program. A further $250 million of macro hedges were added
    in January 2013 due to favourable market conditions.

  *Reported net income in accordance with U.S. GAAP for the fourth quarter of
    $237 million, or $820 million lower than our results under the Canadian
    version of IFRS^11, and total equity in accordance with U.S. GAAP was $16
    billion higher than under IFRS. The primary driver of the quarter's lower
    U.S. GAAP earnings compared to IFRS earnings relates to variable annuity
    accounting differences. For the full year 2012, net income attributed to
    shareholders in accordance with U.S. GAAP was $2,557 million versus $1,736
    million under IFRS.

____________________________
^9   Wealth sales were a record excluding sales of variable annuities.
^10  This item is a non-GAAP measure. See "Performance and Non-GAAP Measures"
     below.
^11  The Canadian version of IFRS uses IFRS as issued by the International
     Accounting Standards Board. However because IFRS does not have an
     insurance contract measurement standard, we continue to use the Canadian
     Asset Liability Method (CALM).

             
                            Quarterly Results                       Full Year Results
C$ millions
(unless
otherwise
stated)               4Q 2012         3Q 2012         4Q 2011            2012            2011
Net income
(loss)
attributed to
shareholders   $ 1,057       $  (227)       $   (69) $  1,736       $    129
Preferred
share
dividends                 29             31             21            112             85
Common
shareholders'
net income
(loss)         $ 1,028       $  (258)       $   (90) $   1,624       $     44
Reconciliation
of core
earnings to
net income
(loss)
attributed to
shareholders:                                                                      
 Core
  earnings^(1) $   537 $    556 $    373 $  2,187 $  2,169
 Investment
  related
  gains in
  excess of
  core
  investment
  gains                  318            363            261            937          1,290
 Core
  earnings
  plus
  investment
  related
  gains in
  excess of
  core
  investment
  gains        $    855       $    919       $    634 $  3,124       $  3,459
 Other
  reconciling
  items:                                                                           
 Direct
  impact of
  equity
  markets and
  interest
  rates                 (18)           (88)            153          (758)        (1,064)
 Changes in
  actuarial
  methods and
  assumptions
  (other than
  URR) and
  goodwill
  impairment            (87)        (1,206)          (663)        (1,281)        (1,416)
 Other
  items^(2)              307            148          (193)            651          (850)
 Net income
  (loss)
  attributed
  to
  shareholders $  1,057       $   (227)       $   (69) $  1,736       $    129
Basic earnings
(loss) per
common share                                               
(C$)           $  0.56       $  (0.14)       $  (0.05) $   0.90       $   0.02
Diluted
earnings
(loss) per
common share
(C$)           $  0.56       $ (0.14)       $ (0.05) $   0.88       $   0.02
Diluted core
earnings per
common share
(C$)^(1)       $  0.28       $   0.29       $   0.19 $   1.12       $   1.14
Return on
common
shareholders'
equity (ROE)
(%)                    18.2%         (4.5)%         (1.6)%           7.1%           0.2%
Core ROE
(%)^(1)                 9.0%           9.3%           6.1%           9.1%           9.1%
Funds under
management (C$
billions) ^
(1)            $   532       $    515       $    500 $    532       $    500

     
^(1) This item is a non-GAAP measure. See "Performance and Non-GAAP Measures"
      below.
^(2)  For a more detailed description see Sections B1 and B2 below.

SALES AND BUSINESS GROWTH ^

Asia Division

Robert Cook,  Senior  Executive  Vice  President  and  General  Manager,  Asia 
Division, stated, "I am  very pleased with  our full year  2012 results -  the 
Asia  Division  achieved  record^12  sales  for  both  insurance  and   wealth 
(excluding variable  annuities)  products.  In addition,  our  fourth  quarter 
wealth sales were  over $2  billion, a new  record^12, and  evidence that  our 
product diversification strategy  is succeeding. We  continue to  successfully 
build a diverse,  multi-channel distribution  platform across  the region.  In 
2012, we secured and deepened strategically important distribution  agreements 
with key bank partners in Japan  and Indonesia; achieved strong growth in  our 
professional agency force  in several key  markets; and successfully  expanded 
our presence in the Managing General  Agent channel into the retail market  in 
Japan. We  also  became the  first  foreign  owned life  insurer  to  commence 
operations in  Cambodia, and  we expanded  our broad  geographic footprint  in 
China with our 50th city license."

Asia Division's  fourth  quarter  insurance  sales  were  US$362  million,  an 
increase of 20 per  cent compared with  the same quarter  of 2011. Full  year 
insurance sales of US$1.4 billion were 16 per cent higher than 2011.

  *Indonesia reported record quarterly insurance sales of US$34 million, a 51
    per cent increase compared with fourth quarter 2011, driven by strong
    growth in both our agency and bank channels. The strong full year growth
    of 46 per cent was driven by an expanded bancassurance channel which grew
    140 per cent compared to 2011.

  *Japan insurance sales for the fourth quarter of US$188 million were 36 per
    cent higher than fourth quarter 2011. Strong sales of our increasing term
    product in advance of price increases were partially offset by lower
    cancer product sales which were impacted by tax changes implemented in the
    first half of the year. Full year sales reached a record level of US$767
    million, 11 per cent higher than record sales in 2011, a result of strong
    cancer product sales in the first half of the year and increasing term
    sales in the second half of 2012.

  *Hong Kong fourth quarter insurance sales of US$65 million were 14 per cent
    higher than fourth quarter 2011. Full year sales reached a record US$257
    million, up 23 per cent over 2011. Sales growth over 2011 was primarily
    driven by expanded agency distribution, as well as continued strong sales
    throughout 2012 of our participating life product, including a run up of
    sales prior to price increases in the second quarter of 2012.

  *Asia Other insurance sales (excludes Hong Kong, Japan and Indonesia) for
    the fourth quarter were US$75 million, or nine per cent below the same
    period in 2011, while full year sales of US$302 million were 15 per cent
    higher than 2011. The decline relative to the fourth quarter 2011 was due
    to product changes in Taiwan. The full year sales growth over the prior
    year was driven primarily by expanded agency distribution.

Asia Division's fourth  quarter wealth  sales were US$2.1  billion, more  than 
double sales in  the fourth quarter  of 2011.  On a full  year basis,  wealth 
sales of US$5.7 billion increased 36 per cent over 2011.

  *Japan fourth quarter wealth sales of US$694 million were three times the
    same period a year ago, and on a full year basis, sales of $1.7 billion
    were more than double those of the prior year. Growth was fueled by the
    successful launch of the Strategic Income Fund, which reported sales of
    over US$550 million in the fourth quarter, and continued strong sales of
    the Australian dollar denominated fixed annuity product.

  *Indonesia achieved record wealth sales of US$449 million in the fourth
    quarter, four times higher than fourth quarter 2011, and full year 2012
    sales surpassed the US$1 billion milestone. Strong performance was
    recorded in all product lines, with mutual fund sales seven times higher
    than in 2011 and unit linked sales through our bank partners up 157 per
    cent.

  *Hong Kong fourth quarter wealth sales of US$321 million were 74 per cent
    higher than the same period a year ago and included a successful start in
    capturing transfer cases following the November launch of the Mandatory
    Provident Fund's new Employee Choice Arrangement. Full year results of
    US$792 million were down 15 per cent from 2011, primarily as a result of a
    change in client preferences for bond funds over equity funds in 2012.

  *Asia Other wealth sales (excludes Hong Kong, Japan and Indonesia) for the
    fourth quarter were US$668 million, 78 per cent higher than the same
    period a year ago, and full year sales of US$2.2 billion were up 13 per
    cent over 2011. Strong mutual fund sales in Taiwan as well as unit linked
    sales in the Philippines were the key contributors to the growth.

Asia Division  continues to  execute on  our longer  term growth  strategy  by 
expanding agency and bank channel distribution capacity.

  *Contracted agents ended the year at 53,700, a seven per cent increase from
    the end of 2011 with significant growth in Hong Kong, Indonesia, the
    Philippines and China.

  *Bank channel total insurance and wealth sales, on an annualized premium
    equivalent basis, were US$159 million in the fourth quarter. This
    increase of 73 per cent compared with the same period in 2011 was
    attributed to the expanded distribution in Indonesia, particularly our
    exclusive agreement with Bank Danamon. In Japan, sales of mutual funds
    through the bank channel picked up considerably as a result of the
    successful launch of the Strategic Income Fund.

_______________________________
^12      Wealth sales were a record excluding sales of variable annuities.



Canadian Division

"In  2012,  we  continued  to  successfully  build  our  diversified  Canadian 
franchise," said  Marianne  Harrison,  Senior  Executive  Vice  President  and 
General Manager, Canadian  Division. "We  achieved record full  year sales  in 
several business  lines, namely:  Group Benefits,  Manulife Mutual  Funds  and 
Affinity Markets, and Group  Retirement Solutions once  again led the  defined 
contribution market in sales^13.  We continued to drive  our desired shift  in 
product mix, reducing the proportion  of insurance and variable annuity  sales 
with guaranteed features.  We expanded our  distribution reach: welcoming  new 
advisors, extending  existing  relationships  and  enhancing  support  to  our 
distribution partners. On January  4th, 2013 we  completed our acquisition  of 
Benesure Canada Inc., strategically positioning us as the leading provider  of 
mortgage creditor insurance through mortgage brokers in Canada."

Group Benefits and Group  Retirement Solutions ("GRS")  both led the  Canadian 
industry in sales  in 2012^13.  Group Benefits'  full year  sales exceeded  $1 
billion, an industry record, benefitting from strong single premium sales  and 
good growth  across diverse  market segments.  Fourth quarter  Group  Benefits 
sales of  $333 million  were more  than  three times  higher than  the  fourth 
quarter of 2011. GRS' full  year sales of $1.1  billion increased 17 per  cent 
from 2011 levels, while fourth quarter sales of $223 million were 45 per  cent 
higher than  the fourth  quarter  of 2011.  Successful cross  selling  efforts 
contributed to the strong sales growth in both group businesses.

Individual Wealth Management's fourth quarter sales of $2.3 billion  increased 
nine per  cent from  third quarter  2012 levels,  reflecting record  quarterly 
deposits in Manulife Mutual  Funds ("MMF"). Sales were  eight per cent  below 
the fourth quarter of 2011, and full year sales were seven per cent below 2011
levels, reflecting  our actions  to  moderate variable  annuity sales  in  the 
current macro-economic environment.

  *Record quarterly MMF sales of $738 million in the fourth quarter of 2012
    increased 61 per cent from the third quarter of 2012 and were more than
    twice fourth quarter 2011 levels, driving full year sales to a record $2.1
    billion. This strong momentum reflects our expanded distribution reach,
    continued strong performance in balanced and fixed income fund categories,
    and success of a number of funds launched in 2012. Year-over-year, MMF
    was the fastest growing mutual fund franchise of the top ten fund
    companies in Canada^14. Record MMF assets under management ("AUM") of over
    $20 billion at December 31, 2012 increased 17 per cent over December 31,
    2011, while the industry grew ten per cent according to IFIC^14.

  *Manulife Bank had record assets of over $21 billion at December 31, 2012,
    seven per cent higher than at the end of 2011, driven by strong client
    retention and stable new lending volumes of $4.6 billion in 2012, modestly
    below 2011 levels. New lending volumes of $1.1 billion for the fourth
    quarter were consistent with third quarter 2012 levels and ten per cent
    below the same period last year, reflecting the impact of the current
    regulatory and competitive environment.

  *Sales of variable annuity products of $379 million in the fourth quarter
    and $2 billion for the year were significantly below the comparative 2011
    levels, reflecting the anticipated impact of product changes throughout
    the year. Fixed rate product sales also continued at lower levels,
    reflecting the continued low interest rate environment.

Individual Insurance sales  in 2012 continued  to align with  our strategy  to 
reduce new business risk, with a significantly lower proportion of sales  with 
guaranteed long-duration  features  compared to  2011.  Manulife has  led  the 
industry with changes  to guaranteed long-duration  products, the  anticipated 
impact of  which was  reflected in  the year-over-year  sales result.  Fourth 
quarter sales of recurring  premium products of $58  million were 22 per  cent 
lower than the fourth quarter of 2011;  full year sales declined by eight  per 
cent from 2011 levels. Fourth quarter single premium sales of $82 million were
modestly ahead of fourth quarter 2011 levels. Record full year single  premium 
product sales increased  16 per  cent from  2011 levels,  driven by  continued 
expansion in travel insurance.

______________________________
^13  Based on quarterly LIMRA industry sales report as at September 30, 2012.
     Based on reporting from the Investment Funds Institute of Canada (IFIC)
^14  as at December 31, 2012.




U.S. Division

Craig Bromley,  Senior  Executive Vice  President  and General  Manager,  U.S. 
Division, reported, "We are extremely pleased  with our full year results,  as 
record fourth quarter  and full  year sales  in Retirement  Plan Services  and 
Mutual Funds contributed to record funds under management in both  businesses. 
We are  entering  2013 with  strong  momentum  and sales  potential  in  these 
businesses. In addition, fourth quarter insurance sales increased 13 per cent
over the fourth quarter of 2011, and included an increase in sales of products
with reduced risk and higher return potential."

Wealth management full year sales were  US$20.2 billion, an increase of  three 
per cent compared with the prior year.  The sales increases of 28 per cent  in 
John Hancock Retirement Plan  Services ("JH RPS") and  eight per cent in  John 
Hancock Mutual  Funds ("JH  Funds")  were partially  offset by  lower  annuity 
product sales. Sales in  the fourth quarter of  2012 were US$5.9 billion,  an 
increase of 31 per cent compared with the fourth quarter of 2011.

  *JH RPS sales of US$2.0 billion in the fourth quarter of 2012 were a record
    quarterly result and represented an increase of 44 per cent compared with
    the fourth quarter 2011. JH RPS capitalized on the high plan turnover in
    the market including the exit of a key competitor. For the full year, JH
    RPS achieved record sales of US$6.0 billion, an increase of 28 per cent
    over 2011. Together with favourable equity markets this helped drive
    funds under management to a record US$72 billion as of December 31, 2012,
    a 14 per cent increase from December 31, 2011. In addition, JH RPS'
    "TotalCare" product, a full service group annuity launched in the third
    quarter of 2012, has started to gain traction in the 401(k) market.

  *JH Funds achieved record quarterly sales of US$3.7 billion in the fourth
    quarter of 2012, a 54 per cent increase from fourth quarter 2011 and
    record full year sales of US$13 billion with increases across all
    channels. These results propelled funds under management as of December
    31, 2012 to a record US$42 billion, a 24 per cent increase from December
    31, 2011. A strong product line and success in adding our funds to
    strategic partner recommended lists, as well as a focused sales and
    marketing campaign, helped to drive these results. As of December 31,
    2012, JH Funds offered 23 Four- or Five-Star Morningstar^15 rated equity
    and fixed income mutual funds.

  *The John Hancock Lifestyle and Target Date portfolios offered through our
    mutual fund, 401(k), variable annuity and variable life products had
    assets under management of US$80.0 billion as of December 31, 2012, a 13
    per cent increase over December 31, 2011. As of December 31, 2012, John
    Hancock was the fourth largest manager of assets in the U.S. for Lifestyle
    and Target Date funds offered through retail mutual funds and variable
    insurance products^16.

Insurance sales in the U.S.  for the fourth quarter  of 2012 increased 13  per 
cent compared  with  the same  period  in the  prior  year, mainly  driven  by 
successful new product  offerings with favourable  risk characteristics.  Full 
year sales were  four per cent  lower than  2011. We continued  to execute  on 
strategies to reduce risk and increase margins.

  *John Hancock Life ("JH Life") fourth quarter 2012 sales of US$163 million
    were up 18 per cent over fourth quarter 2011. Newly launched products
    continued to contribute to the sales success, with Protection UL sales of
    US$65 million and Indexed UL sales of US$15 million. Full year sales of
    US$543 million outpaced the prior year by 12 per cent and the business
    successfully executed its transition to lower risk products.

  *John Hancock Long-Term Care ("JH LTC") sales of US$10 million in the
    fourth quarter declined 33 per cent compared with the same period in 2011,
    reflecting the impact of price increases. Our new product, launched in 43
    states as of December 2012, offers an innovative alternative to
    traditional inflation options and is gaining traction in the market. Full
    year sales of US$56 million were 61 per cent lower than 2011 due to the
    non-recurrence of the 2011 Federal Long Term Care plan open enrollment
    period and the price increases referred to above.

_______________________________
^15  For each fund with at least a 3-year history, Morningstar calculates a
     Morningstar Rating based on a Morningstar Risk-Adjusted Return that
     accounts for variation in a fund's monthly performance (including effects
     of sales charges, loads and redemption fees), placing more emphasis on
     downward variations and rewarding consistent performance. The top 10% of
     funds in each category, the next 22.5%, 35%, 22.5% and bottom 10% receive
     5, 4, 3, 2 or 1 star, respectively. The Overall Morningstar Rating for a
     fund is derived from a weighted average of the performance associated
     with its 3-, 5- and 10 year (if applicable) Morningstar Rating metrics.
     Past performance is no guarantee of future results. The overall rating
     includes the effects of sales charges, loads and redemption fees, while
     the load-waived does not. Load-waived rating for Class A shares should
     only be considered by investors who are not subject to a front-end sales
     charge.
^16  Source: Strategic Insight. Includes Lifestyle and Lifecycle (Target Date)
     mutual fund assets and fund-of-funds variable insurance product assets
     (variable annuity and variable life).



Investment Division

Warren Thomson, Senior Executive Vice President and Chief Investment  Officer, 
said, "For the general fund, we  continued to deliver strong investment  gains 
driven by credit experience which  reflects the strength of our  underwriting, 
the positive impact of fixed income trading which included the redeployment of
treasuries into spread products, and the purchase of alternative long-duration
assets. The alternative  long-duration assets originated  during 2012  further 
diversified our portfolio and continue  to enhance our risk-adjusted  returns. 
The acquisitions  were across  various asset  classes including  real  estate, 
timberland, private equities,  and infrastructure.  We continue  to focus  our 
acquisitions on high quality, good relative value assets."

"Manulife Asset Management experienced significant  growth in 2012 across  its 
global franchise, with assets  under management increasing by  12 per cent  to 
$237.6 billion,"  said  Mr. Thomson.  "Our  strong investment  performance  is 
yielding tangible results across many asset classes. We successfully  launched 
several new products which have enabled us to meet our retail clients'  needs, 
and we have been awarded new institutional mandates in North America and  Asia 
which have  contributed to  significant growth  in institutional  AUM. In  the 
fourth quarter  we  were  awarded a  substantial  institutional  fixed  income 
investment mandate."

Assets managed  by Manulife  Asset Management  increased by  $26.2 billion  to 
$237.6 billion as at December 31, 2012 from $211.4 billion as at December  31, 
2011. At December 31, 2012, Manulife Asset Management had a total of 65  Four- 
and Five-Star  Morningstar  rated  funds,  an increase  of  seven  funds  from 
December 31, 2011. A broad array of investment awards were garnered in 2012 in
recognition of our strong investment performance  that is being driven by  our 
continuing  investment  in  portfolio  management  talent  across  our  global 
platform.

CORPORATE ITEMS

In a separate  news release  today, the Company  announced that  the Board  of 
Directors approved a quarterly  shareholders' dividend of  $0.13 per share  on 
the common shares  of the  Company, payable  on and  after March  19, 2013  to 
shareholders of record at the close of business on February 20, 2013.

The Board of  Directors approved that  in respect of  the Company's March  19, 
2013 common share dividend payment date, the Company will issue common  shares 
in connection with the reinvestment  of dividends and optional cash  purchases 
pursuant to the  Company's Canadian Dividend  Reinvestment and Share  Purchase 
Plan and its U.S. Dividend Reinvestment and Share Purchase Plan.

AWARDS & RECOGNITION

In New York, Manulife Financial was recognized by leading U.S. governance  and 
compliance publication,  Corporate  Secretary,  as  having  the  Best  Overall 
Corporate Governance in  the International  category at  the annual  Corporate 
Governance Awards.

In Canada, the Women's  Executive Network named  Dr. Gail Cook-Bennett,  Board 
Chair and  Lynda  Sullivan, Group  Chief  Accounting Officer  among  its  2012 
Canada's Most Powerful Women: Top 100 award winners. Dr. Gail Cook-Bennett was
also recognized  by Women  of  Influence Inc.  as  a 2012  Canadian  Diversity 
Champion.

In Hong  Kong, Manulife  (International) Limited  was designated  Hong  Kong's 
"Company For  Financial Planning  Excellence  of the  Year" in  the  insurance 
category at the South China Morning Post/Institute of Financial Planners  Hong 
Kong ("SCMP/IFPHK") Financial  Planner Awards 2012  for the sixth  consecutive 
year.

In  Thailand,   Manulife  Asset   Management  (Thailand)   Co.,  Ltd.   earned 
"Outstanding Asset Management Company Award" at the Stock Exchange of Thailand
Awards 2012.

In Asia, five Manulife Asset Management fixed income fund managers (two  based 
in Hong Kong, two in the Philippines  and one in Indonesia), were named  among 
the "most astute investors in Asian  currency bonds" in The Asset's  Benchmark 
research survey for 2012.

Notes:

Manulife Financial Corporation  will host  a Fourth  Quarter Earnings  Results 
Conference Call  at  2:00  p.m.  ET  on  February  7,  2013.  For  local  and 
international locations,  please  call 416-340-2216  and  toll free  in  North 
America please call  1-866-898-9626. Please  call in ten  minutes before  the 
call starts. You will be required to provide your name and organization to the
operator. A  playback of  this call  will be  available by  6:00 p.m.  ET  on 
February  7,  2013  until  February  21,  2013  by  calling  905-694-9451   or 
1-800-408-3053 (passcode: 6718073#).

The conference call will also be webcast through Manulife Financial's  website 
at 2:00  p.m.  ET  on  February  7, 2013.  You  may  access  the  webcast  at: 
www.manulife.com/quarterlyreports. An archived version of the webcast will  be 
available at 4:30 p.m. ET on the website at the same URL as above.

The Fourth Quarter 2012 Statistical  Information Package is also available  on 
the Manulife  Financial  website  at:  www.manulife.com/quarterlyreports.  The 
document may be downloaded before the webcast begins.

MANAGEMENT'S DISCUSSION AND ANALYSIS

This Management's Discussion and Analysis  ("MD&A") is current as of  February 
7, 2013, unless otherwise noted. This MD&A should be read in conjunction  with 
the MD&A and audited consolidated  financial statements contained in our  2011 
Annual Report.

For further information  relating to  our risk management  practices and  risk 
factors affecting the Company,  see "Risk Factors" in  our most recent  Annual 
Information Form, "Risk Management and Risk Factors" and "Critical  Accounting 
and Actuarial Policies" in the  MD&A in our 2011  Annual Report and the  "Risk 
Management" note to the consolidated  financial statements in our most  recent 
annual and interim reports.

Contents                           
A  OVERVIEW                     D  RISK MANAGEMENT AND RISK FACTORS UPDATE
1. Fourth quarter               1.  General macro-economic risk factors
    highlights
2.  Full year highlights         2.  Regulatory capital, actuarial and
                                       accounting risks
3. Other items of note          3.  Additional risks - Entities within the
                                       MFC Group are interconnected which may
                                       make separation difficult
                               4.  Variable annuity and segregated fund
                                       guarantees
B   FINANCIAL HIGHLIGHTS         5.  Publicly traded equity performance risk
1.  Fourth quarter earnings      6.  Interest rate and spread risk
    (loss) analysis
2.  Full year earnings              
    (loss) analysis
3.  Premiums and deposits        E  ACCOUNTING MATTERS AND CONTROLS
4.  Funds under management       1.  Critical accounting and actuarial
                                       policies
5.  Capital                      2.  Actuarial methods and assumptions
6. U.S. GAAP results            3.  Sensitivity of policy liabilities to
                                       updates to assumptions
                               4.  Goodwill impairment testing
C   PERFORMANCE BY DIVISION      5.  Future accounting and reporting changes
1.  Asia                            
2.  Canadian                     F  OTHER
3.  U.S.                         1.  Performance and non-GAAP measures
4. Corporate and Other          2.  Key planning assumptions and
                                       uncertainties
                               3.  Caution regarding forward-looking
                                       statements

AOVERVIEW

A1Fourth quarter highlights

In  the  fourth  quarter  of  2012,  we  reported  net  income  attributed  to 
shareholders of $1,057 million and core earnings^17 of $537 million.

Core earnings increased $164 million compared with the fourth quarter of 2011.
The increase was  driven by  a combination of  increased fee  income on  funds 
under management and the significant improvement in new business margins as  a 
result of pricing actions and improvement in business mix. In addition  there 
were a number of offsetting items  in the fourth quarter 2012. The  favourable 
impact of the release of  excess Property and Casualty Reinsurance  provisions 
($38 million) and  certain tax  items ($48 million)  was offset  by sales  and 
other incentive expenses ($32 million),  systems and legal fees ($18  million) 
and higher macro hedge costs ($43 million).

The difference  between  fourth quarter  2012  core earnings  and  net  income 
attributed to shareholders was a $520 million net gain, and consisted of:

  *$318 million of investment related gains in excess of the $50 million
    included in core earnings. Fixed income and alternative long-duration
    asset investing along with excellent credit experience accounted for the
    vast majority of our investment gains for both the quarter and the full
    year;

  *$264 million of favourable tax related changes that were considered
    material and exceptional in nature. We released $182 million of
    provisions related to prior years' taxes due to the resolution of prior
    years' tax audits with respect to one item. In addition, we reported a net
    release of $82 million related to interest on our tax contingency for
    leasing transactions. As previously disclosed, the Company is an investor
    in a number of leasing transactions and established provisions for
    possible disallowance of the tax treatment and for interest on past due
    taxes; and

  *$100 million gain related to our hedged variable annuity guarantees, a
    third of which relates to the change in provision for adverse deviation.
    In addition, our equity fund results outperformed indices and the
    tightening of corporate spreads had a favourable impact on our bond funds;

partially offset by charges of:

  *$87 million primarily attributed to the estimated impact of modeling
    refinements relating to a valuation systems conversion;

  *$57 million ($78 million pre tax) restructuring charge for severance
    related to the Company's Organizational Design Project. As outlined at the
    November 2012 Investor Day, the project, started in 2012 and expected to
    be completed in 2013, is designed to broaden the spans of control and
    reduce the number of layers in the organization; and

  *$18 million for the direct impact of equity markets and interest rates.

The Minimum Continuing  Capital and Surplus  Requirements ("MCCSR") ratio  for 
The Manufacturers Life Insurance Company ("MLI") closed the quarter at 211 per
cent compared with 204 per  cent at the end of  the third quarter. The  MCCSR 
ratio increased  because, in  addition  to the  contribution from  the  fourth 
quarter earnings, we reinsured  a portion of our  Japan insurance risk,  which 
accounted for slightly  more than two  points of the  increase, and we  issued 
$200 million of preferred shares.

Insurance sales^18  were  $929 million  in  the  fourth quarter  of  2012,  an 
increase^19 of 49 per cent compared with fourth quarter of 2011 and included a
large Group Benefits sale. In Asia, fourth quarter insurance sales of  US$362 
million were up 20 per cent from  the same quarter of 2011. In Canada,  Group 
Benefits sales for the quarter were three and a half times the same quarter of
the prior year and we reported  lower but more profitable sales in  Individual 
Insurance. In  the  U.S., sales  increased  13  per cent,  mainly  driven  by 
successful new product offerings with favourable risk characteristics.

Wealth sales of $10.4 billion in the  fourth quarter of 2012 increased 31  per 
cent compared with those in the fourth quarter of 2011. Wealth sales in  Asia 
were more than double those in the  fourth quarter of 2011 with all  countries 
and territories contributing to the  increase. In Canada, record mutual  fund 
sales and a 45 per cent increase  in sales in Group Retirement Solutions  were 
more than offset by the decline in  annuity sales and lower new loan  volumes, 
resulting in an overall  reduction of four per  cent compared with the  fourth 
quarter of 2011. In the U.S., wealth  sales increased 31 per cent over  those 
in the  fourth quarter  of 2011.  Both JH  Funds and  JH RPS  reported  record 
quarterly sales.


A2Full year highlights

We reported net income  attributed to shareholders for  the full year 2012  of 
$1,736 million compared with $129 million  in 2011. Core earnings^18 in  2012 
were $2,187 million compared with $2,169 million in 2011.

The $18 million increase  in full year core  earnings compared with full  year 
2011 included a number  of offsetting items.  Improved new business  margins, 
increased fee  income  driven  by  higher funds  under  management,  a  higher 
scheduled release  of  variable annuity  guarantee  margins driven  by  higher 
equity markets,  and  the non-recurrence  of  material Property  and  Casualty 
Reinsurance claim  provisions  were mostly  offset  by $81  million  of  costs 
associated with additional equity futures in our macro equity hedging  program 
and higher pension costs  related to amortization  of prior years'  unrealized 
investment losses,  in addition  to higher  business development  and  project 
related expenses.

The difference between full year 2012  core earnings and full year net  income 
attributed to shareholders was  a $451 million  net charge. Charges  included 
$1,081 million for changes in actuarial methods and assumptions, $758  million 
for the direct impact of equity  markets and interest rates, $200 million  for 
the impairment of goodwill  and $57 million  related to restructuring.  These 
charges were partially offset by $937  million of investment related gains  in 
excess of the $200 million reported in core earnings and $708 million for  the 
tax items,  major reinsurance  and  in-force product  activities, as  well  as 
income on variable annuity guarantee  liabilities that are dynamically  hedged 
(details outlined in section B2 below).

Insurance sales exceeded $3.3 billion for  the full year 2012, an increase  of 
33 per cent compared with 2011.  Full year insurance sales in Asia  increased 
16 per  cent  versus 2011  with  record  sales levels  in  eight  territories. 
Insurance sales in Canada almost doubled year-over-year driven by record Group
Benefits sales. Canadian recurring premium insurance sales were eight per cent
lower than the prior year due to the implementation of de-risking strategies.
In the U.S., JH Life  full year sales increased 12  per cent versus full  year 
2011 although  overall U.S.  insurance sales  were four  per cent  lower as  a 
result of the  Company's decision to  raise prices and  focus on new  products 
with favourable risk characteristics.

Wealth sales were almost  $36 billion for full  year 2012 and increased  four 
per cent compared with full year  2011 despite restrictions placed on  annuity 
sales by the  Company. Asia  reported strong  growth throughout  most of  the 
region with total wealth sales increasing 36 per cent over 2011. Wealth  sales 
in Japan more than doubled in  2012 while Indonesia exceeded the US$1  billion 
mark in  total wealth  sales. In  Canada, mutual  fund sales  achieved  record 
levels, while Group Retirement Solutions sales increased 17 per cent  compared 
with 2011. These increases in Canada were partially offset by the  anticipated 
reduction in annuity sales  and lower new loan  volumes. As a result,  overall 
Canadian wealth sales  in 2012 were  seven per  cent lower than  in full  year 
2011. U.S. wealth sales increased three  per cent for the full year  compared 
to 2011. JH Funds and  JH RPS reported record full  year sales with year  over 
year increases of eight per cent and 28 per cent, respectively.

_____________________________
^17  Core earnings is a non-GAAP measure. See "Performance and non-GAAP
     Measures" below
^18  This item is a non-GAAP measure. See "Performance and non-GAAP
     Measures" below.
^19  Growth (declines) in sales, premiums and deposits and funds under
     management is stated on a constant currency basis. Constant currency
     basis is a non-GAAP measure. See "Performance and Non-GAAP Measures"
     below.


                                                                            

A3 Other items of note
As disclosed  in our  second quarter  2012 release,  we intend  to update  our 
ultimate reinvestment rate ("URR") assumptions on a quarterly basis commencing
in the first quarter  of 2013. If  interest rates in 2013  were to remain  at 
December  31,  2012  levels,   we  would  expect   charges  of  in   aggregate 
approximately $400 million for the four quarters of 2013^20.

The 2013 MCCSR  Guideline contains  two changes that  will each  significantly 
impact MLI's  MCCSR ratio.  Together  the initial  impact  of the  changes  is 
expected to be positive in the short term and neutral by the end of 2014.

  *MLI's MCCSR ratio as of January 1, 2013 is expected to increase by
    approximately four points on a pro forma basis as a result of a reduction
    in lapse risk required capital in the 2013 MCCSR Guideline.

  *MLI's MCCSR ratio is expected to decrease by approximately five points by
    December 31, 2014 as a result of the introduction of the new accounting
    standard for Employee Benefits (IAS 19R) effective January 1, 2013. The
    standard will result in a charge to shareholders' equity of $595 million
    ($872 million pre-tax) primarily related to accumulated unrecognized net
    actuarial losses on the Company's defined benefit pension plans. The
    initial charge will be amortized into available capital for MCCSR purposes
    by December 31, 2014 on a straight-line basis. Future actuarial gains and
    losses related to these pension plans will be amortized over twelve
    quarters^20.

_________________________
^20   See "Caution regarding forward-looking statements" below.



BFINANCIAL HIGHLIGHTS

C$ millions,                                                          
unless otherwise
stated,                             Quarterly Results                                    Full Year Results
unaudited                   4Q 2012          3Q 2012        4Q 2011                    2012                2011
Net income                          
(loss)
attributed to
shareholders       $    1,057      $     (227) $   (69) $           1,736    $      129
Preferred share                     
dividends                        29               31             21                     112                  85
Common                              
shareholders'
net income
(loss)             $    1,028      $     (258) $   (90) $           1,624    $       44
Reconciliation            
of core earnings
to net income
(loss)
attributed to
shareholders:                                                                                    
Core                                
earnings^(1)       $      537      $       556       $     373 $           2,187    $    2,169
  Investment                       
   related gains
   in excess of
   core
   investment
   gains                        318              363            261                     937               1,290
Core earnings                       
plus investment
related gains in
excess of core
investment gains   $      855     $       919       $    634 $           3,124    $    3,459
  Other items                      
   to reconcile
   core earnings
   to net income
   (loss)
   attributed to
   shareholders:                                                                                          
  Direct impact                    
   of equity
   markets and
   interest
   rates                       (18)             (88)            153                   (758)             (1,064)
  Changes in                       
   actuarial
   methods and
   assumptions
   (other than
   URR) and
   goodwill
   impairment                  (87)          (1,206)          (663)                 (1,281)             (1,416)
  Other items                 307             148          (193)                     651               (850)
Net income                          
(loss)
attributed to
shareholders       $    1,057     $     (227)       $   (69) $          1,736    $      129
Basic earnings                      
(loss) per
common share
(C$)               $     0.56     $    (0.14)       $ (0.05) $            0.90    $     0.02
Diluted earnings                    
(loss) per
common share
(C$)               $     0.56     $    (0.14)       $ (0.05) $            0.88    $     0.02
Diluted core                        
earnings per
common share ^
(C$)^(1)           $     0.28     $      0.29       $   0.19 $            1.12    $     1.14
Return on common                    
shareholders'
equity                    18.2%       (4.5)%         (1.6)%        7.1%     0.2%
U.S. GAAP net                       
income
attributed to
shareholders^(1)   $      237     $       481       $    339 $           2,557    $    3,674
Sales^(1)                                                                             
   Insurance                        
   products        $      929     $       596       $    640 $           3,349    $    2,507
  Wealth                           
   products        $    10,439     $     8,229       $  8,141 $           35,940    $   34,299
Premiums and                                                                                    
deposits^(1)
  Insurance                        
   products        $    6,629     $     5,597       $  5,749 $          24,221    $   22,278
  Wealth                           
   products        $   17,499     $    11,149       $ 10,168 $          51,280    $   43,783
Funds under                         
management ^ (C$
billions)^(1)      $      532     $       515       $    500 $             532    $      500
Capital ^ (C$                       
billions)^(1)      $     29.6     $      28.5       $   29.0             $29.6    $     29.0
MLI's MCCSR                         
ratio                   211%       204%           216%             211%     216%

     This item is a non-GAAP measure. See "Performance and Non-GAAP Measures"
^(1) below.

B1Fourth quarter earnings (loss) analysis

The table  below reconciles  the fourth  quarter 2012  core earnings  of  $537 
million to  the  reported net  income  attributed to  shareholders  of  $1,057 
million.

                                                                          
C$ millions, unaudited            4Q 2012           3Q 2012            4Q 2011
Core earnings
(losses)^(1)                                                               
Asia Division           $     180  $    230 $       213
Canadian Division                    233              229               142
U.S. Division                        293              288               189
Corporate & Other
(excluding expected
cost of macro hedges)               (79)            (117)             (124)
Expected cost of macro
hedges^(2)                         (140)            (124)              (97)
Core investment related
gains                                 50               50                50
Core earnings           $      537  $     556 $       373
Investment related
gains in excess of core
investment gains          318         363          261
Core earnings plus
investment related
gains in excess of core
investment gains        $      855  $     919 $       634
Material and
exceptional tax related
items^(3)                            264                -                 -
Income (charges) on
variable annuity
guarantee liabilities
that are dynamically
hedged^(4)                     100  122  (193)
Change in actuarial
methods and
assumptions, excluding
URR^(5)                             (87)          (1,006)                 2
Restructuring charge
related to
organizational
design^(6)                          (57)                -                 -
Direct impact of equity
markets and interest
rates (see table
below)^(7)                          (18)             (88)               153
Goodwill impairment
charge                                 -            (200)             (665)
Impact of major
reinsurance
transactions                           -               26                 -
Net income (loss)
attributed to
shareholders            $    1,057        $  (227) $      (69)

^(1)  Core earnings is a non-GAAP measure. See "Performance and Non-GAAP
      Measures" below.
^(2)  The fourth quarter 2012 net loss from macro equity hedges was $432
      million and consisted of a $140 million charge related to the estimated
      expected cost of the macro equity hedges relative to our long-term
      valuation assumptions and a charge of $292 million because actual
      markets outperformed our valuation assumptions. This latter amount is
      included in the direct impact of equity markets and interest rates (see
      table below).
^(3) In accordance with our definition of core earnings outlined in section
      F1, the fourth quarter tax related items described in section A1 were
      considered material and exceptional in nature and therefore not included
      in core earnings. Please note that core earnings does include routine
      type tax transactions and provisions.
^(4)  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 gain in
      the fourth quarter 2012 was mostly because our equity fund results
      outperformed indices, there was a gain on the release of provision for
      adverse deviation associated with more favourable equity markets and the
      tightening of corporate spreads had a favourable impact on our bond
      funds. See the Risk Management section of our 2011 Annual MD&A.
^(5)  The charge for the fourth quarter of 2012 is primarily related to the
      estimated impact of modeling refinements relating to a valuation system
      conversion in the U.S.
^(6)  The restructuring charge relates to severance under the Company's
      Organization Design Project. As outlined at the November Investor Day,
      the project is designed to broaden the spans of control and reduce the
      number of layers in the organization.
^(7)  The direct impact of equity markets and interest rates is relative to
      our policy liability valuation assumptions and includes changes to
      interest rate assumptions as well as experience gains and losses on
      derivatives associated with our macro equity hedges. We also include
      gains and losses on the sale of AFS bonds as management may have the
      ability to partially offset the direct impacts of changes in interest
      rates reported in the liability segments.
     

The gain (loss) related  to the direct impact  of equity markets and  interest 
rates in the table above is attributable to:

C$ millions, unaudited                     4Q 2012       3Q 2012       4Q 2011
Variable annuity guarantee
liabilities that are not dynamically
hedged                               $  556 $  298 $  234
General fund equity investments
supporting policy liabilities^(1)              48           55           56
Macro equity hedges relative to
expected costs^(2)                          (292)         (86)        (250)
Fixed income reinvestment rates
assumed in the valuation of policy
liabilities^(3)                             (290)        (330)          122
Sale of AFS bonds and derivative
positions in the Corporate & Other
segment                                      (40)         (25)          (9)
Direct impact of equity markets and
interest rates                       $ (18) $ (88) $  153

^(1) The impact on general fund equity investments supporting policy
      liabilities includes the capitalized impact on fees for variable
      universal life policies.
^(2) Gross equity exposure produced gains of $1,103 million in the fourth
      quarter 2012, which were partially offset by charges from macro hedge
      experience and dynamic hedges of $691 million.
^(3) The charge in fourth quarter 2012 for lower assumed fixed income returns
      was driven by the unfavourable impact that the narrowing of swap spreads
      relative to corporate spreads had on our reinvestment assumptions and
      the decline in risk free rates in Asia.
     

B2Full year earnings analysis

The table below reconciles the full year 2012 core earnings of $2,187  million 
to the reported net income attributed to shareholders of $1,736 million.

C$ millions, unaudited
For the years ended December 31,                                2012      2011
Core earnings (losses)^(1)                                         
Asia Division                                              $    963 $    938
Canadian Division                                               835      849
U.S. Division                                                 1,085    1,005
Corporate & Other (excluding expected cost of macro
hedges)                                                       (407)    (415)
Expected cost of macro hedges^(2)                             (489)    (408)
Core investment related gains                                   200      200
Total Core earnings                                        $  2,187 $  2,169
Investment related gains in excess of core investment
gains                                                           937    1,290
Core earnings plus investment related gains above          $  3,124 $  3,459
Change in actuarial methods and assumptions, excluding
URR^(3)                                                     (1,081)    (751)
Direct impact of equity markets and interest rates^(4)
(see table below)                                             (758)  (1,064)
Goodwill impairment charge                                    (200)    (665)
Income (charges) on variable annuity guarantee liabilities
that are dynamically hedged^(5)                                 176  (1,153)
Impact of major reinsurance transactions, in-force product
changes and dispositions                                        210      303
Material and exceptional tax related items^(6)                  322        -
Restructuring charge related to organizational design^(7)      (57)        -
Net income attributed to shareholders                      $  1,736 $    129

^(1)    This item is a non-GAAP measure. See "Performance and Non-GAAP
        Measures" below.
^(2) The 2012 net loss from macro equity hedges was $1,000 million and
        consisted of a $489 million charge related to the estimated expected
        cost of the macro equity hedges relative to our long-term valuation
        assumptions and a charge of $511 million because actual markets
        outperformed our valuation assumptions. The latter amount is included
        in the direct impact of equity markets and interest rates (see table
        below).
^(3) Of the full year 2012 $1,081 million charge for change in actuarial
        methods and assumptions, $1,006 million was reported in the third
        quarter as part of the comprehensive annual review of valuation
        assumptions. The full year charges were broadly grouped into three
        categories: (i) a charge of $244 million related to updates to
        actuarial standards of practice, (ii) a charge of $1,120 million for
        updates largely related to the current macro-economic climate, and
        (iii) all other results of the annual review of assumptions netted to
        a gain of $283 million.
^(4)    The direct impact of equity markets and interest rates is relative to
        our policy liability valuation assumptions and includes changes to
        interest rate assumptions as well as experience gains and losses on
        derivatives associated with our macro equity hedges. We also include
        gains and losses on the sale of AFS bonds as management may have the
        ability to partially offset the direct impacts of changes in interest
        rates reported in the liability segments.
^(5)    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.
        See the Risk Management section of our 2011 Annual MD&A. The gain in
        2012 mostly related to the same items as reported in fourth quarter
        2012 above.
^(6) Included in the tax items are $264 million of material and exceptional
        U.S. tax items reported in fourth quarter 2012 and $58 million for
        changes to tax rates in Japan in the first quarter of 2012.
^(7)    See fourth quarter table above.
       

The gain (loss) related  to the direct impact  of equity markets and  interest 
rates included in the table above is attributable to:

C$ millions, unaudited                                                      
For the years ended December 31,                         2012             2011
Variable annuity guarantee liabilities that                   $
are not dynamically hedged                    $  1,078         (1,092)
General fund equity investments supporting                          
policy liabilities^(1)                                   108            (214)
Macro equity hedges relative to expected                            
costs^(2)                                              (511)              636
Lower fixed income reinvestment rates assumed                       
in the valuation of policy liabilities                 (740)            (281)
Sale of AFS bonds and derivative positions in                       
the Corporate & Other segment                           (16)              324
Charges due to lower fixed income URR                               
assumptions used in the valuation of policy
liabilities                                            (677)            (437)
Direct impact of equity markets and interest                  $
rates                                          $ (758)         (1,064)

    
^(1) The impact on general fund equity investments supporting policy
     liabilities includes the capitalized impact on fees for variable
     universal life policies.
^(2) Gross equity exposure produced gains of $2,025 million in 2012, which
     were partially offset by charges from macro hedge experience and dynamic
     hedges of $1,174 million.
    

B3Premiums and deposits ("P&D")

Premiums and  deposits^21 for  insurance  products were  $6.6 billion  in  the 
fourth quarter of 2012, an  increase of 18 per  cent compared with the  fourth 
quarter of 2011. This  included an increase  of 39 per cent  in Asia, 12  per 
cent in Canada and nine per cent in  the U.S. For the full year, P&D  exceeded 
$24 billion, an increase of eight per cent over 2011.

Premiums and deposits  for wealth products  were $17.5 billion  in the  fourth 
quarter of 2012, an increase of $7.3 billion compared with the fourth  quarter 
of 2011. The strong result includes over $5 billion in institutional  mandates 
won by  Manulife  Asset Management.  For  the  full year,  P&D  exceeded  $51 
billion, an increase of 16 per cent over 2011.

B4Funds under management

Funds under management^21 at the  end of 2012 were  a record $532 billion,  an 
increase of  $32 billion,  or nine  per  cent on  a constant  currency  basis, 
compared with December 31, 2011. The  increase was attributed to $44  billion 
of favourable investment returns and $14 billion of net positive  policyholder 
cash flows, partially offset by the  transfer of $7 billion of assets  related 
to the reinsurance of  our U.S. fixed deferred  annuity business, $11  billion 
due to currency  movements and  $8 billion of  non-policyholder cash  outflows 
(expenses, commissions, taxes and other items).

__________________________
     This item is a non-GAAP measure. See "Performance and Non-GAAP Measures"
^21  below.

B5Capital ^

MFC's total capital^22 as at December 31, 2012 was $29.6 billion, an  increase 
of $1.1 billion  from September 30,  2012 and $0.6  billion from December  31, 
2011. The  increase from  December 31,  2011 included  net earnings  of  $1.7 
billion and  net capital  raised of  $0.2 billion,  partially offset  by  $0.8 
billion impact of  the stronger  Canadian dollar  and cash  dividends of  $0.7 
billion over the period.

As noted in section A1 above, MLI's MCCSR ratio closed the quarter at 211  per 
cent compared with 204 per cent at the end of the third quarter.

B6U.S. GAAP results

Net income attributed to shareholders in accordance with U.S. GAAP^22 for  the 
fourth quarter of 2012  was $237 million, compared  with $1,057 million  under 
IFRS. For  the  full year  2012  net  income attributed  to  shareholders  in 
accordance with U.S.  GAAP was $2,557  million, $821 million  higher than  our 
results under IFRS.

As we are no longer reconciling our  financial results under U.S. GAAP in  our 
consolidated financial statements, net income in accordance with U.S. GAAP  is 
considered a  non-GAAP  financial  measure.  A  reconciliation  of  the  major 
differences in net income (loss) attributed to shareholders in accordance with
IFRS to net income attributed to shareholders in accordance with U.S. GAAP for
the fourth quarter  and full  year is as  follows with  the major  differences 
expanded upon below:

C$ millions,
unaudited           Quarterly Results               Full Year Results
For the                                     
periods ended
December 31,            2012     2011^(1)              2012       2011^(1)
Net income                                  
(loss)
attributed to
shareholders
in accordance
with IFRS      $ 1,057 $ (69)   $   1,736  $   129
Key earnings                               
differences:                                                            
For variable                                
annuity
guarantee
liabilities    $ (668) $  297   $ (1,225) $  2,927
Related to the                              
impact of
mark-to-market
accounting and
investing
activities on
investment
income and
policy
liabilities            (130)        (179)               432          (120)
New business                                
differences
including
acquisition
costs                  (161)         (64)        (650)          (322)
Charges due to                              
lower fixed
income
ultimate
reinvestment
rate
assumptions
used in the
valuation of
policy
liabilities
under IFRS                 -            -               677            437
Changes in                                  
actuarial
methods and
assumptions,
excluding URR           (40)         (53)               492            349
Goodwill                                    
impairment
charge                     -          153               200            153
Changes                                     
related to
major
reinsurance
transactions               5            5                60          (303)
Other                                       
differences              174          249               835           424
Total earnings                              
differences    $ (820) $  408   $     821  $ 3,545
Net income                                  
attributed to
shareholders
in accordance
with U.S. GAAP $   237 $  339   $   2,557  $ 3,674

^(1) Restated as a result of adopting Accounting Standards Update # 2010-26,
       "Accounting for Costs Associated with Acquiring or Renewing Insurance
       Contracts" ("ASU 2010-26") effective January 1, 2012 but requiring
       application to 2011. The impact for fourth quarter 2011 was a net
       decrease in earnings of $28 million (full year 2011 decrease of $48
       million), all of which is included in "New business differences
       including acquisition costs".
      

__________________________
     This item is a non-GAAP measure. See "Performance and Non-GAAP Measures"
^22  below

Accounting for variable annuity guarantee liabilities

IFRS follows a predominantly  "mark-to-market" accounting approach to  measure 
variable  annuity   guarantee   liabilities   while  U.S.   GAAP   only   uses 
"mark-to-market" accounting  for certain  benefit guarantees.  The U.S.  GAAP 
accounting results  in  an  accounting  mismatch  between  the  hedged  assets 
supporting the dynamically hedged guarantees and the guarantees not  accounted 
for on a mark-to-market basis. Another difference is that U.S. GAAP  reflects 
the Company's own credit standing in the measurement of the liability. In the
fourth quarter of 2012,  we reported a  net loss of $12  million (2011 -  $338 
million gain)  in  our  total  variable annuity  businesses  under  U.S.  GAAP 
compared with a gain of $656 million under IFRS (2011 - $41 million).

Investment income and policy liabilities

Under IFRS, accumulated unrealized gains and losses arising from fixed  income 
investments and interest  rate derivatives supporting  policy liabilities  are 
largely offset in the valuation of the policy liabilities. The fourth  quarter 
2012 IFRS  impacts  of fixed  income  reinvestment assumptions,  general  fund 
equity investments, fixed income and alternative long-duration asset investing
totaled a net $126 million  gain (2011 - gain  of $457 million) compared  with 
U.S. GAAP net realized losses and other investment losses of $4 million  (2011 
- gain of $278 million).

Differences in the treatment of acquisition costs and other new business items

Acquisition costs that  are related  to and vary  with the  production of  new 
business are  explicitly  deferred  and  amortized under  U.S.  GAAP  but  are 
recognized as an implicit reduction in insurance liabilities along with  other 
new business gains and losses under IFRS.

Total equity  in accordance  with U.S.  GAAP^23 as  at December  31, 2012  was 
approximately $16  billion  higher  than  under  IFRS.  Of  this  difference, 
approximately $10 billion was attributable to the higher cumulative net income
on a U.S. GAAP basis. The  remaining difference was primarily attributable  to 
the treatment of unrealized gains on fixed income investments and  derivatives 
in a cash flow  hedging relationship which are  reported in equity under  U.S. 
GAAP, but where the fixed income investments and interest rate derivatives are
supporting policy liabilities, these accumulated unrealized gains are  largely 
offset in the valuation of the policy liabilities under IFRS. The majority  of 
the difference in equity between the  two accounting bases as at December  31, 
2012 arose from our U.S. businesses.

A reconciliation of the major differences in total equity is as follows:

As at December 31,
C$ millions, unaudited                                    2012        2011^(1)
Total equity in accordance with IFRS           $ 26,096 $  24,879
Differences in shareholders' retained earnings
and participating policyholders' equity            9,793    8,869
Differences in Accumulated Other Comprehensive
Income attributable to:                                                   
         (i) Available-for-sale securities and
        other                                          4,967          4,473
        (ii) Cash flow hedges                          2,440          2,570
         (iii) Translation of net foreign
        operations^(2)                               (1,481)        (1,309)
Differences in share capital, contributed
surplus and non-controlling interest in
subsidiaries                                               40            148
Total equity in accordance with U.S. GAAP      $ 41,855 $ 39,630

^(1)  2011 equity has been restated to reflect the adoption of ASU # 2010-26.
      Reflects the net difference in the currency translation account after
      the reset to zero through retained earnings upon adoption of IFRS at
^(2) January 1, 2010.
     

__________________________
     Total equity in accordance with U.S. GAAP is a non-GAAP measure. See
^23  "Performance and Non-GAAP Measures" below.
    

CPERFORMANCE BY DIVISION

C1Asia Division

($ millions,             Quarterly Results                    Full Year Results
unless
otherwise
stated)
Canadian           4Q 2012        3Q 2012       4Q 2011           2012           2011
dollars
Net income   $  682 $   491 $   285 $ 1,969 $  (48)
(loss)
attributed
to
shareholders
Core                  180           230          213           963           938
earnings
Premiums and        4,403         2,944        2,625        13,461        10,303
deposits
Funds under          77.7          76.2         71.4          77.7          71.4
management
(billions)
U.S. dollars                                                               
Net income   $  689  $  492 $  279 $ 1,979 $  (62)
(loss)
attributed
to
shareholders
Core                  182           231          209           963           950
earnings
Premiums and        4,441         2,958        2,567        13,477        10,422
deposits
Funds under          78.1          77.5         70.2          78.1          70.2
management
(billions)
                                                                     

Asia Division's net income attributed  to shareholders was US$689 million  for 
the fourth quarter of 2012 compared with US$279 million for the fourth quarter
of 2011. The significant increase was  primarily related to the direct  impact 
of  equity  markets   and  interest  rates   on  variable  annuity   guarantee 
liabilities. The US$27  million decrease  in core earnings  compared with  the 
fourth quarter of 2011 was attributable to the decline in higher margin cancer
product sales reported  in 2011 partly  offset by business  growth across  the 
region.

The fourth quarter decline  in core earnings compared  with the third  quarter 
was a  result of  increased  sales incentive  expenses  due to  higher  sales, 
increased systems costs  and investments  in branding  and communication,  and 
increased new business strain in  Japan as a result  of higher sales ahead  of 
price increases on the Increasing Term product. The increase in sales in  Asia 
should contribute to an increase in future period earnings.

Full year net income attributed to  shareholders was US$1,979 million in  2012 
compared with a loss of US$62 million for 2011. In 2012 we reported a gain of
US$915 million due to the direct  impact of equity markets and interest  rates 
compared to a loss of US$1,186 million in 2011. The US$13 million increase in
core earnings  compared with  full year  2011 was  attributable to  growth  in 
in-force business  across  the  region  partially offset  by  an  increase  in 
expenses  related   to  expansion   activities  and   the  non-recurrence   of 
policyholder experience gains reported in 2011.

Premiums and deposits for the fourth  quarter of 2012 were US$4.4 billion,  up 
75 per  cent from  the fourth  quarter  of 2011.  Premiums and  deposits  for 
insurance products of US$2.0  billion increased 39 per  cent driven by  higher 
new business sales combined with  in-force business growth across the  region, 
most notably  in Japan.  Wealth  management premiums  and deposits  of  US$2.5 
billion increased 120 per cent, driven  by higher mutual fund sales in  Japan, 
Indonesia and Taiwan, as well as higher pension sales in Hong Kong.

Funds under  management as  at  December 31,  2012  were US$78.1  billion,  an 
increase of 16 per cent, on a constant currency basis, compared with  December 
31, 2011. Growth was driven by an increase in net policyholder cash flows  of 
$7 billion and favourable investment returns.

C2Canadian Division^(1)

($ millions, unless           Quarterly Results           Full Year Results
otherwise stated)
Canadian dollars          4Q 2012   3Q 2012    4Q 2011        2012        2011
Net income attributed   $  251 $  378 $  246 $  1,169 $   927
to shareholders
Core earnings                233      229       142        835        849
Premiums and deposits      4,668    4,160     4,393     18,119     17,816
Funds under management     133.2    131.1     122.1      133.2      122.1
(billions)

^(1) The Company moved its International Group Program business unit from
       U.S. Division to Canadian Division in 2012. Prior period results have
       been restated to reflect this change.
      

Canadian Division's net income attributed to shareholders was $251 million for
the fourth quarter of 2012 compared  with $246 million for the fourth  quarter 
of 2011. Core  earnings increased  by $91  million compared  with the  fourth 
quarter of  2011 reflecting  the  positive impacts  of improved  new  business 
profitability as a result of pricing and product changes and favourable claims
and lapse  experience. The  fourth  quarter of  2012  also benefited  from  a 
release of  tax provisions  relating to  the  closure of  a prior  year's  tax 
filings. Excluded from core  earnings in the fourth  quarter of 2012 were  $18 
million of investment related gains (2011 - $104 million).

Full year net  income attributed to  shareholders was $1,169  million in  2012 
compared to $927  million for 2011.  Core earnings decreased  by $14  million 
compared with full year 2011. The  favourable impact of improved new  business 
margins and  business  growth  were  more than  offset  by  claims  and  lapse 
experience and lower  expense margins as  a result of  the change in  business 
mix. Excluded from core earnings in 2012 were gains of $35 million related to
the direct impact of equity markets  and interest rates (2011 - $12  million); 
other investment gains  of $40 million  (2011 - $66  million); a $137  million 
gain related to the recapture of a reinsurance treaty (2011 - nil) and a  $122 
million reserve release related to  in-force variable annuity product  changes 
(2011 - nil).

Premiums and deposits in the fourth quarter of 2012 were $4.7 billion, six per
cent higher  than fourth  quarter 2011  levels. The  increase was  driven  by 
record mutual  funds  deposits  and strong  Group  Benefits  insurance  sales, 
partially offset by lower variable annuity sales.

Funds under management were a record  $133.2 billion as at December 31,  2012, 
an increase  of nine  per cent  or $11.1  billion compared  with December  31, 
2011. The increase reflects business growth across the division driven by the
wealth management businesses and Manulife Bank. Net increases in asset  market 
values as a result of lower interest rates and equity market appreciation also
contributed to the year-over-year increase.

C3U.S. Division^(1),(2)

($ millions,
unless
otherwise
stated)                    Quarterly Results                   Full Year Results
Canadian
dollars              4Q 2012       3Q 2012       4Q 2011           2012           2011
Net income
attributed to
shareholders   $  724 $  436 $  505 $ 1,911 $   621
Core earnings           293          288          189         1,085         1,005
Premiums and
deposits              9,661        8,510        8,210        35,944        34,412
Funds under
management
(billions)^(3)        292.6        287.2        279.6         292.6         279.6
                                                                           
U.S. dollars                                                                
Net income
attributed to
shareholders  $  731 $  439 $  493 $ 1,918 $   614
Core earnings           297          289          184         1,088         1,018
Premiums and
deposits              9,743        8,552        8,025        35,967        34,807
Funds under
management
(billions)^(3)        294.1        292.0        274.9         294.1         274.9

^(1) The Company moved its International Group Program business unit to
      Canadian Division in 2012. Prior period results have been restated to
      reflect this change.
^(2)  The Company moved its Privately Managed Accounts unit to Corporate and
      Other in 2012. Prior period results have been restated to reflect this
      change.
^(3) Reflects the impact of annuity reinsurance transactions in Q3 and Q2
      2012.
     

U.S. Division's net income attributed  to shareholders was US$731 million  for 
the fourth quarter of 2012 compared with US$493 million for the fourth quarter
of 2011. Core earnings for the fourth quarter of 2012 were US$297 million,  an 
increase of  US$113  million  compared  with  the  fourth  quarter  of  2011. 
Contributing to the increase were improved new business margins as a result of
price increases and business mix, higher fee income from higher average assets
under management and the impact of changes in assumptions related to uncertain
tax positions, partially  offset by  higher expenses.  Items reconciling  core 
earnings to  net income  in the  fourth quarter  of 2012  included the  direct 
impact of equity markets  and interest rates,  other investment related  items 
and a portion of the tax related item discussed in section A1.

Full year net income attributed to  shareholders was US$1,918 million in  2012 
compared to US$614  million for  2011. Core earnings  increased US$70  million 
compared with 2011. Contributing  to the increase  were improved new  business 
margins and business mix, a lower effective tax rate as we released provisions
for uncertain tax positions, and higher fees from higher assets on the  Wealth 
Management business, partially offset by unfavourable policyholder experience.
Items reconciling core  earnings to  net income  in 2012  included the  direct 
impact of equity markets  and interest rates,  other investment related  gains 
and losses and a portion of the tax items discussed in section A1.

In line with the 2010 in-force repricing  efforts in our JH LTC business,  the 
Company has filed  for premium rate  increases with 50  state regulators.  The 
rate increases requested average approximately 40 per cent on the majority  of 
our in-force retail and group business. To date, approvals have been  received 
from 43 states.

Premiums and deposits for the fourth  quarter of 2012 were US$9.7 billion,  an 
increase of 21  per cent from  the fourth  quarter of 2011.  The increase  was 
primarily driven  by higher  sales  of mutual  funds,  401(k) plans  and  life 
insurance, partially  offset by  lower sales  of annuities.  We announced  our 
decision to  stop writing  new  fixed deferred  annuity and  variable  annuity 
business in the third quarter of 2012.

Funds under management as at December 31, 2012 were US$294.1 billion, up seven
per cent from December 31, 2011.  The increase was due to positive  investment 
returns, the impact of lower interest rates on the market value of funds under
management and  net sales  in  Wealth Asset  Management, partially  offset  by 
surrender and benefit  payments in  JH Annuities  and the  transfer of  US$7.2 
billion  of  assets  related  to   the  fixed  deferred  annuity   reinsurance 
transactions.

C4Corporate and Other^(1)

($ millions,                Quarterly Results                         Full Year Results
unless
otherwise
stated)
Canadian            4Q 2012          3Q 2012          4Q 2011             2012             2011
dollars
Net loss     $ (600) $ (1,532) $ (1,105) $ (3,313) $ (1,371)
attributed
to
shareholders
 Core                (79)           (117)           (124)           (407)           (415)
  losses
  (excl.
  macro
  hedges and
  core
  investment
  gains)
 Expected           (140)           (124)            (97)           (489)           (408)
  cost of
  macro
  hedges
 Core                  50              50              50             200             200
  investment
  gains
Total core   $ (169) $   (191) $   (171) $   (696) $   (623)
losses
Premiums and         5,396           1,132             688           7,977           3,530
deposits
Funds under           28.4            20.1            26.6            28.4            26.6
management
(billions)
                                                                     

^(1) As a result of the sale of the Life Retrocession business effective July
      1, 2011, the Company moved its P&C Reinsurance business and run-off
      variable annuity reinsurance business to Corporate and Other. In
      addition, Corporate and Other has been restated to include the Privately
      Managed Accounts business and Life Retrocession business for periods
      prior to the sale.
     

Corporate and Other is composed  of: Investment performance on assets  backing 
capital, net of amounts allocated to operating divisions and financing  costs, 
Investment  Division's  external  asset  management  business,  Property   and 
Casualty  ("P&C")  Reinsurance  business,  as  well  as  run-off   reinsurance 
operations including variable annuities and accident and health.

For  segment  reporting   purposes,  the  impact   of  updates  to   actuarial 
assumptions, settlement costs for macro equity hedges and other  non-operating 
items are included in this segment's earnings.

Corporate and Other  reported a net  loss attributed to  shareholders of  $600 
million for  the fourth  quarter of  2012 compared  to a  net loss  of  $1,105 
million for the fourth quarter of 2011.  Core losses were $169 million in  the 
fourth quarter of 2012 and $171 million in the fourth quarter of 2011.

Charges in the fourth  quarter of 2012 not  included in core earnings  totaled 
$431 million. These included: $292 million of net experience losses on  macro 
hedges,  an  $87  million  charge   for  changes  in  actuarial  methods   and 
assumptions, a $57 million restructuring charge ($78 million pre-tax) and  $40 
million of realized losses  on AFS bonds and  related interest rate swaps.  In 
addition, the classification of $50 million of investment gains is reported in
the Corporate and Other segment as a charge to non-core earnings and a gain to
core earnings. Partially offsetting these losses was a net gain of $95 million
primarily related to interest on a material and exceptional tax item.

The core  losses of  $169 million  in the  fourth quarter  compared with  $171 
million in the fourth quarter of 2011. In the fourth quarter 2012 we  released 
$44 million of excess P&C reinsurance provisions related to events in 2011 and
added a $6 million provision for  Hurricane Sandy. The P&C reinsurance  items 
were offset by higher than expected macro hedge costs of $43 million.

Corporate and Other reported a full  year net loss attributed to  shareholders 
of $3,313 million in 2012 compared to  a net loss of $1,371 million in  2011. 
Core losses were $696 million in 2012 and $623 million in 2011.

Excluded from 2012  core losses were  net charges of  $2,617 million. Of  this 
amount, $1,215 million  related to  the direct  impact of  equity markets  and 
interest rates, largely comprising net experience losses from the macro equity
hedges and  charges due  to lower  URR assumptions  used in  the valuation  of 
policy liabilities, $1,081 million related to changes in actuarial methods and
assumptions, other than  URR, $200  million related to  a goodwill  impairment 
charge, and $200 million was the offset to investment gains classified as core
earnings. The charges were  partially offset by gains  of $79 million  largely 
related to mark-to-market  investment gains and  tax related items,  partially 
offset by the restructuring charge noted above.

The $73  million increase  in full  year  core losses  was due  to:  increased 
amortization of  investment  losses  on the  Company's  pension  plans,  lower 
investment income due to a combination  of declining interest rates and  lower 
average assets, higher business development expenses and higher expected macro
hedging. Partially offsetting  these items  were the  non-recurrence of  $151 
million P&C reinsurance charges  in 2011 related to  the Japan earthquake  and 
tsunami, the subsequent release  in 2012 of $44  million in excess  provisions 
related to these events and lower accrued interest on tax provisions.

Premiums and  deposits for  the  fourth quarter  of  2012 were  $5.4  billion, 
compared with $0.7 billion for the fourth quarter 2011. In the fourth  quarter 
of 2012, Manulife  Asset Management  was awarded  a substantial  institutional 
fixed income investment mandate.

Funds under management of $28.4 billion as at December 31, 2012 (December  31, 
2011 - $26.6 billion) included assets managed by Manulife Asset Management  on 
behalf of institutional clients  of $28.8 billion (2011  - $23.8 billion)  and 
$7.1 billion (2011  - $10.6  billion) of  the Company's  own funds,  partially 
offset by  a $7.5  billion  (2011 -  $7.8  billion) total  company  adjustment 
related  to  the   reclassification  on  the   balance  sheet  of   derivative 
liabilities. The  decline in  the Company's  own funds  primarily reflects  an 
increase in assets allocated to the operating divisions and the impact of  the 
stronger Canadian dollar.

DRISK MANAGEMENT AND RISK FACTORS UPDATE

This section provides  an update  to our  risk management  practices and  risk 
factors outlined in the MD&A in our 2011 Annual Report.

D1 General macro-economic risk factors

In our 2011  Annual Report,  we outlined potential  impacts of  macro-economic 
factors including the impact of a low interest environment.

In our Third Quarter  2012 Report to Shareholders,  we disclosed that we  have 
shifted our objective of $4 billion in  net income by 2015 by roughly a  year, 
and we are  now targeting $4  billion in core  earnings in 2016  based on  our 
macro-economic and other  assumptions^24. Our revised  objective uses a  core 
earnings target  metric, which  is consistent  with measuring  the  underlying 
profitability of our business.

_____________________
^24  See "Caution regarding forward-looking statements" below.

D2Regulatory capital, actuarial and accounting risks

As outlined in our  2011 Annual Report,  as a result  of the recent  financial 
crisis, financial authorities and regulators  in many countries are  reviewing 
their capital, actuarial and accounting requirements, and the changes may have
a material adverse effect on  the Company's consolidated financial  statements 
and regulatory  capital,  both at  transition  and subsequently.  We  may  be 
required to  raise additional  capital, which  could be  dilutive to  existing 
shareholders, or to limit  the new business we  write. Subsequent updates  to 
regulatory and professional standards are outlined below.

  *Changes to U.S. statutory accounting practices concerning actuarial
    reserving standards for certain universal life ("UL") products pursuant to
    Actuarial Guideline 38 ("AG38") have now been promulgated by the National
    Association of Insurance Commissioners ("NAIC"). The new requirements for
    in-force business will affect policies issued since July 1, 2005 and
    in-force on December 31, 2012. The implementation of this standard
    requires actuarial judgment and interpretation. To the extent that
    regulatory guidance emerges that is different than our interpretations it
    could have a material impact on our statutory reserves and local capital
    position.

  *On December 24, 2012, the Canadian Actuarial Standards Board ("ASB")
    issued a Notice of Intent proposing to revise the Standards of Practice of
    the Canadian Institute of Actuaries with respect to the economic
    reinvestment assumptions and investment strategies utilized for long-tail
    liability cash flows under the Canadian Asset Liability Method ("CALM").
    The proposed changes are to incorporate calibration criteria for
    stochastic interest rate models used for CALM, to revise the deterministic
    scenarios to provide results comparable to those provided by the
    stochastic methodology, to establish maximum assumed net risk premiums
    which may include a possible revision to the 20 year horizon for
    re-investing in corporate bonds and to establish limits on the extent to
    which investment in alternative assets can be assumed. The ASB hopes to
    issue an exposure draft by June 2013 and adopt the final standards in
    2013, with a proposed effective date of October 15, 2013. The ASB
    recognizes that this timetable is aggressive. Given the early stage of
    the ASB review, the net impact of any changes in actuarial standards on
    earnings and thus capital is unknown.

  *Consistent with the high levels of regulatory activity internationally,
    the 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 United
    States.

  *In 2010, the International Accounting Standards Board ("IASB") issued its
    Insurance Contracts (Phase II) Exposure Draft and the U.S. Financial
    Accounting Standards Board ("FASB") issued its Insurance Contract
    Discussion paper. The IASB recently announced that it expects to issue a
    limited re-exposure draft in 2013 and the FASB announced it expects to
    issue an Exposure Draft in 2013. The final standards are not expected to
    be effective until 2018. As previously outlined, the insurance industry in
    Canada is working with OSFI and the federal government with respect to the
    potential impact of these proposals on Canadian insurance companies, and
    the industry is urging policymakers to ensure that any future accounting
    and capital proposals appropriately consider the underlying business model
    of a life insurance company and, in particular, the implications for
    long-duration guaranteed products which are much more prevalent in North
    America than elsewhere.



D3Additional risks - Entities within  the MFC Group are interconnected  which 
may make separation difficult

There have been inquiries relating to the sale or spin-off of all or a part of
our U.S. Division. We  remain committed to our  U.S. Division. In  addition, 
linkages between MFC and its subsidiaries, including our U.S. operations,  may 
make it difficult to dispose of or  separate a subsidiary within the group  by 
way of spin-off or similar transaction. See the Company's Annual  Information 
Form - "Risk Factors -  Additional risks - Entities  within the MFC Group  are 
interconnected which  may  make  separation difficult".  In  addition  to  the 
possible negative  consequences outlined  in such  disclosure, other  negative 
consequences could include a  requirement for significant capital  injections, 
and increased net income  and capital sensitivities of  MFC and its  remaining 
subsidiaries to market declines.

D4Variable annuity and segregated fund guarantees

As at  December 31,  2012,  approximately 67  per cent  of  the value  of  our 
variable annuity and  segregated fund guarantee  value was either  dynamically 
hedged or reinsured, an increase from 65  per cent at September 30, 2012.  The 
business dynamically hedged at December 31, 2012 comprises 63 per cent of  the 
variable annuity  guarantee  values, net  of  amounts reinsured.  During  the 
quarter, an  additional  $700 million  of  in-force business  was  dynamically 
hedged and for the full  year we added a total  of $1,500 million of  in-force 
guarantee value to the program. All material amounts of new business  continue 
to be hedged at issue.

The table below  shows selected information  regarding the Company's  variable 
annuity and segregated funds guarantees gross  and net of reinsurance and  the 
business dynamically hedged.

Variable annuity and segregated fund guarantees

As at                              December 31, 2012                                                 September 30, 2012
(C$                     Guarantee                                   Amount           Guarantee                                             Amount
millions)                   value           Fund value         at risk^(4)               value               Fund value               at risk^(4)
Guaranteed
minimum
income
benefit^(1)  $       6,581 $       4,958 $      1,630 $      6,707   $          5,062    $         1,654
Guaranteed
minimum
withdrawal
benefit              65,481        58,659        7,183        65,210       58,538         7,107
Guaranteed
minimum
accumulation
benefit                   20,380              21,468              1,383        21,846         22,182        2,089
Gross living
benefits^(2) $      92,442 $      85,085 $     10,196 $     93,763   $        85,782    $        10,850
Gross death
benefits^(3)        13,316         10,622         2,206        13,764            11,365         2,315
Total gross
of
reinsurance
and hedging  $     105,758 $      95,707 $     12,402 $    107,527   $        97,147    $        13,165
Living
benefits
reinsured    $       5,780 $       4,358 $      1,427 $      5,837   $         4,410    $         1,433
Death
benefits
reinsured             3,673          3,140          709        3,821        3,249           770
Total
reinsured    $       9,453 $       7,498 $      2,136 $      9,658   $         7,659    $         2,203
Total, net
of
reinsurance  $      96,305 $      88,209 $     10,266 $     97,869   $        89,488    $        10,962
Living
benefits
dynamically
hedged       $      55,464 $      52,585 $      4,528 $     54,600   $        51,876    $         4,288
Death
benefits
dynamically
hedged               5,453          3,945          558         5,353        4,063           485
Total
dynamically
hedged       $      60,917 $      56,530 $      5,086 $      59,953   $        55,939    $         4,773
Living
benefits
retained     $      31,198 $       28,142 $      4,241 $     33,326   $        29,496    $          5,129
Death
benefits
retained              4,190          3,537           939         4,590        4,053         1,060
Total, net
of
reinsurance
and dynamic
hedging         $      35,388     $      31,679    $      5,180   $     37,916      $        33,549        $         6,189

     
^(1)  Contracts with guaranteed long-term care benefits are included in this
      category.
^(2) 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 (3).
^(3) Death benefits include stand-alone guarantees and guarantees in excess
      of living benefit guarantees where both death and living benefits are
      provided on a policy.
^(4) 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. This amount is not currently payable. For guaranteed
      minimum death benefit, the net amount at risk is defined as the current
      guaranteed minimum death benefit in excess of the current account
      balance. For guaranteed minimum income benefit, the net amount at risk
      is defined as the excess of the current annuitization income base over
      the current account value. For all guarantees, the net amount at risk is
      floored at zero at the single contract level.

            
                  
As at
December 31,                           2012                                                            2011
(C$               Guarantee                              Amount              Guarantee                                       Amount
millions)           value                Fund value    at risk^(4)             value                      Fund value       at risk^(4)
Guaranteed
minimum
income
benefit^(1)  $      6,581 $     4,958 $    1,630    $        7,518     $    5,358   $        2,163
Guaranteed
minimum
withdrawal
benefit             65,481       58,659       7,183       66,655    56,954       9,907
Guaranteed
minimum
accumulation
benefit                  20,380            21,468            1,383       23,509    23,030       2,813
Gross living
benefits^(2) $     92,442 $    85,085 $   10,196    $       97,682     $   85,342   $       14,883
Gross death
benefits^(3)        13,316       10,622       2,206       15,202            11,614               3,232
Total gross
of
reinsurance
and hedging  $     105,758 $    95,707 $   12,402    $      112,884     $   96,956   $       18,115
Living
benefits
reinsured    $      5,780 $     4,358 $    1,427    $        6,491     $    4,622   $        1,871
Death
benefits
reinsured            3,673        3,140         709        4,360     3,430       1,104
Total
reinsured    $      9,453 $     7,498 $    2,136    $       10,851     $    8,052   $        2,975
Total, net
of
reinsurance  $     96,305 $    88,209 $   10,266    $      102,033     $   88,904   $       15,140
Living
benefits
dynamically
hedged       $     55,464 $    52,585 $    4,528    $       55,522     $   50,550   $        6,346
Death
benefits
dynamically
hedged               5,453        3,945         558        5,133     3,461         739
Total
dynamically
hedged       $     60,917 $    56,530 $    5,086    $       60,655     $   54,011   $        7,085
Living
benefits
retained     $     31,198 $    28,142 $    4,241    $       35,669     $   30,170   $        6,666
Death
benefits
retained             4,190        3,537        939        5,709     4,723       1,389
Total, net
of
reinsurance
and dynamic
hedging      $     35,388 $    31,679 $    5,180    $       41,378     $   34,893   $        8,055

     
^(1) Contracts with guaranteed long-term care benefits are included in this
      category.
^(2) 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 (3).
^(3) Death benefits include stand-alone guarantees and guarantees in excess
      of living benefit guarantees where both death and living benefits are
      provided on a policy.
^(4) 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. This amount is not currently payable. For guaranteed
      minimum death benefit, the net amount at risk is defined as the current
      guaranteed minimum death benefit in excess of the current account
      balance. For guaranteed minimum income benefit, the net amount at risk
      is defined as the excess of the current annuitization income base over
      the current account value. For all guarantees, the net amount at risk is
      floored at zero at the single contract level.
     

The policy liabilities established for  these benefits were $7,948 million  at 
December 31, 2012 (September 30, 2012 - $9,461 million) and include the policy
liabilities for  both  the hedged  and  the unhedged  business.  For  unhedged 
business,  policy  liabilities  were  $2,695  million  at  December  31,  2012 
(September 30, 2012 - $3,521 million). The policy liabilities for the  hedged 
block were $5,253 million  at December 31, 2012  (September 30, 2012 -  $5,940 
million). Policy liabilities  decreased over  the quarter largely  due to  the 
favourable impact of the increase in equity markets.

Caution related to sensitivities

In this document, we  have provided 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 returns and investment activity we  assume in the future. 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 MCCSR ratio will be as indicated.

D5Publicly traded equity performance risk

As a result of our dynamic and macro hedging program, as at December 31, 2012,
we estimate that approximately  72 to 83 per  cent of our underlying  earnings 
sensitivity to a  10 per cent  decline in  equity markets would  be offset  by 
hedges. The lower end of the range  is based on the dynamically hedged  assets 
that exist at December 31, 2012 and assumes re-balancing of equity hedges  for 
dynamically hedged variable annuity  liabilities at 5  per cent intervals  and 
the upper end  of the  range assumes the  performance of  the dynamic  hedging 
program would completely offset the loss from the dynamically hedged  variable 
annuity guarantee liabilities. The  range at September 30,  2012 was 67 to  78 
per cent. We have achieved our stated  goal to have approximately 75 per  cent 
of the underlying earnings sensitivity to  equity markets offset by hedges  by 
the end of 2014.

As outlined in our 2011 Annual Report, the macro hedging strategy is  designed 
to mitigate public equity  risk arising from  variable annuity guarantees  not 
dynamically hedged and from other products and fees. In addition, 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 (see MD&A in our 2011 Annual Report).

The tables  below  show the  potential  impact  on net  income  attributed  to 
shareholders resulting from  an immediate  10, 20 and  30 per  cent 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. The  potential 
impact is shown before and after taking into account the impact of the  change 
in markets on the  hedge assets. The potential  impact is shown assuming  that 
(a) the change in value of the  hedge assets completely offsets the change  in 
the dynamically hedged variable  annuity guarantee liabilities, including  the 
provisions for  adverse deviation  and (b)  that the  change in  value is  not 
completely offset.  In the  fourth quarter  2012 we  refined our  methodology 
related to the  estimated amount  that would  not be  completely offset.  The 
refinement in methodology assumes that provision for adverse deviation is  not 
offset and that  the hedge  assets are  based on  the actual  position at  the 
period end. (Previously the methodology assumed that for a 10, 20 and 30  per 
cent decrease  in the  market value  of equities,  the profit  from the  hedge 
assets offsets 80, 75 and 70 per cent, respectively, of the loss arising  from 
the  change  in  the  policy   liabilities  associated  with  the   guarantees 
dynamically hedged. For a 10, 20 and 30 per cent market increase in the market
value of equities, the loss on the  dynamic hedges was assumed to be 120,  125 
and 130 per  cent of  the gain from  the dynamically  hedged variable  annuity 
guarantee liabilities, respectively.)

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 shareholders' net income. It is  also 
important to note that  these estimates are illustrative,  and that the  hedge 
program may underperform these estimates, particularly during periods of  high 
realized volatility and/or periods where both interest rates and equity market
movements are unfavourable.

Potential impact on net income attributed to shareholders
arising from changes to public equity returns ^(1)                              
                                                                           
As at December 31, 2012                                                     
(C$ millions)         -30%      -20%      -10%       10%       20%       30%
Underlying
sensitivity to
net income
attributed to
shareholders^(2)                                                       
                                                                     
Variable
annuity
guarantees       $ (5,640) $ (3,510) $ (1,580) $   1,260 $   2,220 $   2,930
Asset based
fees                 (270)     (180)      (90)        90       180       270
General fund
equity
investments^(3)      (380)     (260)     (130)       120       230       350
Total
underlying
sensitivity      $ (6,290) $ (3,950) $ (1,800) $   1,470 $   2,630 $   3,550
                                                                     
Impact of hedge
assets                                                                
                                                                     
Impact of macro
hedged assets    $   2,010 $   1,340 $     670 $   (670) $ (1,340) $ (2,010)
Impact of dynamic
hedge assets
assuming the
change in the
value of the
hedge assets
completely
offsets the
change in the
dynamically
hedged variable
annuity guarantee
liabilities^(4)       3,070     1,890       820     (600)   (1,000)   (1,300)
Total impact of
hedge assets
assuming the
change in value
of the dynamic
hedge assets
completely
offsets the
change in the
dynamically
hedged variable
annuity guarantee
liabilities^(4)   $   5,080 $   3,230 $   1,490 $ (1,270) $ (2,340) $ (3,310)
                                                                    
Net impact
assuming the
change in the
value of the
hedged assets
completely
offsets the
change in the
dynamically
hedged variable
annuity guarantee
liabilities^(4)   $ (1,210) $   (720) $   (310) $     200 $     290 $     240
                                                                     
Impact of
assuming that the
provisions for
adverse deviation
for dynamically
hedged
liabilities are
not offset and
that the hedging
program
rebalances at 5%
market
intervals^(5)         (710)     (470)     (190)      (10)      (50)      (70)
                                                                     
Net impact
assuming the
change in value
of the dynamic
hedge assets does
not completely
offset the change
in the
dynamically
hedged variable
annuity guarantee
liabilities, as
described
above^(5)         $ (1,920) $ (1,190) $   (500) $     190 $     240 $     170
                                                              
Percentage of
underlying
earnings
sensitivitiy to
movements in
equity markets
that is offset by
hedges if dynamic
hedge assets
completely offset
the change in the
dynamically
hedged variable
annuity guarantee
liability               81%       82%       83%       86%       89%       93%
                                                                    
Percentage of
underlying
earnings
sensitivity to
movements in
equity markets
that is offset by
hedge assets if
dynamic hedge
assets do not
completely offset
the change in the
dynamically
hedged variable
annuity guarantee
liability^(5)           69%       70%       72%       87%       91%       95%
                                                            



^(1)  See "Caution related to sensitivities" above.
^(2)   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.
^(3)   This impact for general fund equities is calculated as at a
       point-in-time and does not include: (i) any potential impact on public
       equity weightings; (ii) any gains or losses on public equities held in
       the Corporate and Other segment; or (iii) any gains or losses on public
       equity investments held in Manulife Bank. The sensitivities assume that
       the participating policy funds are self-supporting and generate no
       material impact on net income attributed to shareholders as a result of
       changes in equity markets.
^(4)   Best estimate liabilities and associated provisions for adverse
       deviation.
^(5)  Represents the impact of re-balancing equity hedges for dynamically
       hedged variable annuity guarantee liabilities at 5% market intervals.
       Also represents the impact of changes in markets on provisions for
       adverse deviation that are not hedged, but does not include any impact
       in respect of other sources of hedge ineffectiveness e.g. basis risk,
       realized volatility and equity, interest rate correlations different
       from expected among other factors. For presentation purposes, numbers
       are rounded.
      

Potential impact on net income attributed to shareholders
arising from changes to public equity returns ^(1)                              
                                                                           
As at September 30, 2012                                                    
(C$ millions)          -30%       -20%       -10%        10%        20%        30%
Underlying sensitivity to
net income attributed to
shareholders^(2)                                                         
                                                                       
Variable
annuity
guarantees       $ (5,950) $ (3,730) $ (1,690) $   1,360 $   2,450 $   3,300
Asset based
fees                 (270)     (180)      (90)        90       180       270
General fund
equity
investments^(3)      (320)     (210)     (110)       100       200       300
Total
underlying
sensitivity      $ (6,540) $ (4,120) $ (1,890) $   1,550 $   2,830 $   3,870
                                                                     
Impact of hedge
assets                                                                
                                                                     
Impact of macro
hedged assets    $   1,860 $   1,240 $     620 $   (620) $ (1,240) $ (1,860)
Impact of dynamic
hedge assets
assuming the
change in the
value of the
hedge assets
completely
offsets the
change in the
dynamically
hedged variable
annuity guarantee
liabilities^(4)       3,180     1,960       860     (620)   (1,060)   (1,380)
Total impact of
hedge assets
assuming the
change in value
of the dynamic
hedge assets
completely
offsets the
change in the
dynamically
hedged variable
annuity guarantee
liabilities^(4)   $   5,040 $   3,200 $   1,480 $ (1,240) $ (2,300) $ (3,240)
                                                                     
Net impact
assuming the
change in the
value of the
hedged assets
completely
offsets the
change in the
dynamically
hedged variable
annuity guarantee
liabilities^(4)   $ (1,500) $   (920) $   (410) $     310 $     530 $     630
                                                                     
Impact of
assuming that the
provisions for
adverse deviation
for dynamically
hedged
liabilities are
not offset and
that the hedging
program
rebalances at 5%
market
intervals^(5)         (760)     (500)     (210)      (40)      (90)     (130)
                                                                     
Net impact
assuming the
change in value
of the dynamic
hedge assets does
not completely
offset the change
in the
dynamically
hedged variable
annuity guarantee
liabilities^(5)   $ (2,260) $ (1,420) $   (620) $     270 $     440 $     500
                                                                     
Percentage of
underlying
earnings
sensitivitiy to
movements in
equity markets
that is offset by
hedges if dynamic
hedge assets
completely offset
the change in the
dynamically
hedged variable
annuity guarantee
liability               77%       78%       78%       80%       81%       84%
                                                                     
Percentage of
underlying
earnings
sensitivity to
movements in
equity markets
that is offset by
hedge assets if
dynamic hedge
assets do not
completely offset
the change in the
dynamically
hedged variable
annuity guarantee
liability^(5)           65%       66%       67%       83%       84%       87%
                                                                     



^(1) See "Caution related to sensitivities" above.
^(2) 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.
^(3) This impact for general fund equities is calculated as at a point-in-time
     and does not include: (i) any potential impact on public equity
     weightings; (ii) any gains or losses on public equities held in the
     Corporate and Other segment; or (iii) any gains or losses on public
     equity investments held in Manulife Bank. The sensitivities assume that
     the participating policy funds are self-supporting and generate no
     material impact on net income attributed to shareholders as a result of
     changes in equity markets.
^(4) Best estimate liabilities and associated provisions for adverse deviation
^(5) Represents the impact of re-balancing equity hedges for dynamically
     hedged variable annuity guarantee liabilities at 5% market intervals.
     Also represents the impact of changes in markets on provisions for
     adverse deviation that are not hedged, but does not include any impact in
     respect of other sources of hedge ineffectiveness e.g. basis risk,
     realized volatility and equity, interest rate correlations different from
     expected among other factors. For presentation purposes, numbers are
     rounded.

Potential impact on net income attributed to
shareholders arising from changes to public equity
returns ^(1)                                                               
                                                                      
As at December 31,
2011                                                                   
(C$ millions)               -30%     -20%     -10%      10%      20%      30%
Underlying sensitivity
to net income attributed
to shareholders^(2)                                                     
                                                                      
Variable annuity               $       $       $
guarantees               (6,080)  (3,830)  (1,780) $ 1,490 $ 2,720 $ 3,690
Asset based fees           (260)    (180)     (80)       90      180      260
General fund equity
investments^(3)            (300)    (200)    (110)      100      200      300
Total underlying               $       $       $
sensitivity              (6,640)  (4,210)  (1,970) $ 1,680 $ 3,100 $ 4,250
                                                                      
Impact of hedge
assets                                                                 
                                                                      
Impact of macro                                                             $
hedged assets           $ 1,420   $ 950   $ 470 $ (470) $ (950)  (1,420)
Impact of dynamic hedge
assets assuming the
change in the value of
the hedge assets
completely offsets the
change in the
dynamically hedged
variable annuity
guarantee
liabilities^(4)             3,170    1,980      900    (710)  (1,240)  (1,610)
Total impact of hedge
assets assuming the
change in value of the
dynamic hedge assets
completely offsets the
change in the
dynamically hedged
variable annuity
guarantee                                                 $       $       $
liabilities^(4)          $ 4,590 $ 2,930 $ 1,370  (1,180)  (2,190)  (3,030)
                                                                      
Net impact assuming the
change in the value of
the hedged assets
completely offsets the
change in the
dynamically hedged
variable annuity
guarantee                      $       $
liabilities^(4)           (2,050)  (1,280) $ (600)   $ 500   $ 910 $ 1,220
                                                                      
Impact of assuming that
the provisions for
adverse deviation for
dynamically hedged
liabilities are not
offset and that the
hedging program
rebalances at 5% market
intervals^(5)               (700)    (460)    (200)     (10)     (20)     (30)
                                                                      
Net impact assuming the
change in value of the
dynamic hedge assets
does not completely
offset the change in the
dynamically hedged
variable annuity
guarantee                      $       $
liabilities^(5)           (2,750)  (1,740) $ (800)   $ 490   $ 890 $ 1,190
                                                                      
Percentage of underlying
earnings sensitivitiy to
movements in equity
markets that is offset
by hedges if dynamic
hedge assets completely
offset the change in the
dynamically hedged
variable annuity
guarantee liability           69%      70%      70%      70%      71%      71%
                                                                      
Percentage of underlying
earnings sensitivity to
movements in equity
markets that is offset
by hedge assets if
dynamic hedge assets do
not completely offset
the change in the
dynamically hedged
variable annuity
guarantee liability^(5)       59%      59%      59%      71%      71%      72%
                                                                      

^(1) See "Caution related to sensitivities" above.
^(2) 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.
^(3) This impact for general fund equities is calculated as at a point-in-time
     and does not include: (i) any potential impact on public equity
     weightings; (ii) any gains or losses on public equities held in the
     Corporate and Other segment; or (iii) any gains or losses on public
     equity investments held in Manulife Bank. The sensitivities assume that
     the participating policy funds are self-supporting and generate no
     material impact on net income attributed to shareholders as a result of
     changes in equity markets.
^(4) Best estimate liabilities and associated provisions for adverse
     deviation.
^(5) Represents the impact of re-balancing equity hedges for dynamically
     hedged variable annuity guarantee liabilities at 5% market intervals.
     Also represents the impact of changes in markets on provisions for
     adverse deviation that are not hedged, but does not include any impact in
     respect of other sources of hedge ineffectiveness e.g. basis risk,
     realized volatility and equity, interest rate correlations different from
     expected among other factors. For presentation purposes, numbers are
     rounded.
    

Potential impact  on MLI's  MCCSR  ratio arising  from public  equity  returns 
different than the expected return for policy liability valuation^(1),(2)

                    Impact on MLI MCCSR ratio
percentage points  -30% -20% -10% +10% +20% +30%
December 31, 2012  (17) (11)  (5)    1    2    6
September 30, 2012 (20) (12)  (6)    1    1    1
December 31, 2011  (27) (15)  (7)    2    3    4

^(1)  See "Caution related to sensitivities" above.
^(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, including the provisions
      for adverse deviation. The estimated amount that would not be completely
      offset assumes that provision for adverse deviation is not offset and
      that the hedge assets are based on the actual position at the period
      end.
     

The following  table  shows  the  notional value  of  shorted  equity  futures 
contracts utilized for our variable annuity guarantee dynamic hedging and  our 
macro equity risk hedging strategies.

As at                    December 31,      September 30,      December 31,
C$ millions                  2012               2012              2011
For variable annuity  $      9,500 $   9,800 $     10,600
guarantee dynamic
hedging strategy
For macro equity risk        7,800     7,300   5,600
hedging strategy
Total                 $    17,300 $  17,100 $     16,200
                                                             

During the quarter, we added approximately $700 million of guarantee value  to 
our dynamic hedging program in respect of segregated fund guarantee  business. 
We rebalanced our dynamic hedging program in light of favourable equity market
increases, as well as for the impact of the actuarial basis changes.

In the macro hedging program approximately  $250 million of notional value  of 
additional equity futures were put in place during the quarter.

D6Interest rate and spread risk

As at  December  31,  2012,  the  sensitivity  of  our  quarterly  net  income 
attributed to shareholders to a 100  basis point parallel decline in  interest 
rates was a  charge of  $400 million, ahead  of our  2014 year end  goal of  a 
charge of  $1.1  billion.  The  $200  million  decrease  in  sensitivity  from 
September 30, 2012  was attributable  to risk  reduction actions  in our  U.S. 
dollar exposures.

The 100 basis  point parallel decline  includes a  change of one  per cent  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 and  corporate 
spreads, relative to the rates assumed in the valuation of policy liabilities,
including embedded derivatives.  Based on  interest rates  at the  end of  the 
third and fourth quarters of 2012, a 100 basis point decline in interest rates
would result in a movement to a different prescribed reinvestment scenario for
policy liability valuation in some jurisdictions, which would produce a higher
reserve. The potential  earnings impact of  a 100 basis  point decline in  the 
third and  fourth  quarters  includes approximately  $400  and  $200  million, 
respectively, related to the impact of the scenario change. This amount  would 
be expected to reduce over time,  should risk free rates remain unchanged,  as 
the ultimate reinvestment rate moves toward current risk free rates.  Further, 
as the sensitivity to a 100 basis point decline in interest rates includes the
impact of  the change  in  prescribed reinvestment  scenarios, the  impact  of 
changes to interest rates for less  than, or more than, the amounts  indicated 
are unlikely to be  linear. For variable  annuity guarantee liabilities  that 
are dynamically hedged, it is assumed that interest rate hedges are rebalanced
at 20 basis point intervals.

The income impact does not allow for  any future potential changes to the  URR 
assumptions or  other potential  impacts of  lower interest  rate levels,  for 
example, increased strain on the sale  of new business, lower interest  earned 
on our surplus assets, or updates to actuarial assumptions related to variable
annuity bond fund calibration. It  also does not reflect potential  management 
actions to realize  gains or losses  on AFS  fixed income assets  held in  the 
surplus segment in order to partially offset changes in MLI's MCCSR ratio  due 
to changes in interest rate levels.

Potential impact  on net  income attributed  to shareholders  and MLI's  MCCSR 
ratio of an immediate one per cent parallel change in interest rates  relative 
to rates assumed in the valuation of policy liabilities^(1),(2),(3),(4)

As at                December 31, 2012        September 30, 2012           December 31, 2011
                   -100bp      +100bp        -100bp      +100bp          -100bp      +100bp
Net income                                                                            
attributed
to
shareholders
(C$
millions):
Excluding    $(400) $200 $(600) $200 $(1,000) $700
change in
market value
of AFS fixed
income
assets held
in the
surplus
segment
From fair              800       (700)           900       (800)             800       (700)
value
changes in
AFS assets
held in
surplus, if
realized
MLI's MCCSR                                                                           
ratio
(Percentage
points):
Before                (16)          10          (17)           9            (18)          13
impact of
change in
market value
of AFS fixed
income
assets held
in the
surplus
segment^(5)
From fair                5         (5)             5         (5)               5         (5)
value
changes in
AFS assets
held in
surplus, if
realized

^(1)  See "Caution related to sensitivities" above.
^(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 surplus segment will depend on the aggregate amount
      of unrealized gain or loss. The table above only reflects the impact of
      the change in the unrealized position, as the total unrealized position
      will depend upon the unrealized position at the beginning of the period.
^(4)  Sensitivities are based on projected asset and liability cash flows at
      the beginning of the quarter adjusted for the estimated impact of new
      business, investment markets and asset trading during the quarter. Any
      true-up to these estimates, as a result of the final asset and liability
      cash flows to be used in the next quarter's projection, are reflected in
      the next quarter's sensitivities. Impact of realizing 100% of market
      value of AFS fixed income is as of the end of the quarter.
^(5) The impact on MLI's MCCSR ratio includes both the impact of lower
      earnings on available capital as well as the increase in required
      capital that results from a decline in interest rates. The potential
      increase in required capital accounted for 11 of the 16 points impact of
      a 100 bp decline in interest rates on MLI's MCCSR ratio.
     

The following table  shows the potential  impact on net  income attributed  to 
shareholders resulting from a change in  credit 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.

Potential impact on net income attributed to shareholders arising from changes
to corporate spreads and swap spreads^(1),(2),(3)

C$ millions           December 31,         September 30,        December 31,
As at                           2012                    2012                  2011
Corporate                                                                
spreads^(4)
 Increase  $          500  $          600  $        500
    50 basis
    points
 Decrease   (1,000)   (1,200)   (900)
    50 basis
    points
Swap spreads                         
 Increase  $        (600)  $        (700)  $      (600)
    20 basis
    points
 Decrease       600       700     600
    20 basis
    points

^(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 surplus
     segment and excludes the impact arising from changes in off-balance sheet
     bond fund value arising from changes in credit spreads. The sensitivities
     assume that the participating policy funds are self-supporting and
     generate no material impact on net income attributed to shareholders as a
     result of changes in corporate spreads.
^(3) Sensitivities are based on projected asset and liability cash flows at
     the beginning of the quarter adjusted for the estimated impact of new
     business, investment markets and asset trading during the quarter. Any
     true-up to these estimates, as a result of the final asset and liability
     cash flows to be used in the next quarter's projection, are reflected in
     the next quarter's sensitivities.
^(4) Corporate spreads are assumed to grade to an expected long-term average
     over five years.

Based on spreads at the end of the third and fourth quarters, a 50 basis point
decline in  corporate  spreads would  result  in  a movement  to  a  different 
prescribed reinvestment  scenario  for  policy  liability  valuation  in  some 
jurisdictions, which would  produce a higher  reserve. The potential  earnings 
impact of a 50 basis  point decline in the  third and fourth quarter  includes 
approximately $700 and $400  million, respectively, related  to the impact  of 
the scenario change. This amount would be expected to reduce over time, should
risk free  rates remain  unchanged, as  the ultimate  reinvestment rate  moves 
toward current risk  free rates.  Further, as the  sensitivity to  a 50  basis 
point decline  in corporate  spreads  includes the  impact  of the  change  in 
prescribed reinvestment scenarios, the impact of changes to corporate  spreads 
for less than, or more than, the amounts indicated are unlikely to be linear.

EACCOUNTING MATTERS AND CONTROLS

E1Critical accounting and actuarial policies

Our significant accounting policies under IFRS are described in note 1 to  our 
Consolidated Financial Statements for the  year ended December 31, 2011.  The 
critical accounting  policies  and the  estimation  processes related  to  the 
determination of  insurance contract  liabilities,  fair values  of  financial 
instruments,  the  application  of   derivative  and  hedge  accounting,   the 
determination of  pension and  other post-employment  benefit obligations  and 
expenses, and  accounting for  income taxes  and uncertain  tax positions  are 
described on pages 65 to 73 of our 2011 Annual Report.

E2Actuarial methods and assumptions

As noted in section A1  above, in the fourth quarter  we reported a charge  of 
$87 million for the impact of  changes to actuarial methods and  assumptions. 
The charge  was  primarily attributed  to  model refinements  related  to  the 
estimated impact of  a U.S.  Life policy  valuation system  conversion on  the 
measurement of policy liabilities.

The following table summarizes the  significant items contained in the  fourth 
quarter changes to Actuarial Methods and Assumptions.

C$ millions                          To                      To Net Income
                                                                    Attributed
Assumption                           Policy Liabilities    to Shareholders
 Model refinements related to the  $               218  $     (141)
  estimated impact of a systems
  conversion
 Other                                            (65)                 54
Net impact                          $         153  $      (87)

In the third  quarter, the Company  completed its annual  review of  actuarial 
methods and assumptions which  resulted in a charge  of $1,006 million to  net 
income attributed  to shareholders.  This  amount is  explained in  our  Third 
Quarter 2012 Report to Shareholders. See also Section B2 above.

E3Sensitivity of policy liabilities to updates to 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 
income. The  sensitivity  of after-tax  income  to updates  to  asset  related 
assumptions underlying policy liabilities is shown below, assuming that  there 
is a simultaneous update to the assumption across all business units.

For updates to asset related assumptions, the sensitivity is shown net of  the 
corresponding impact  on income  of the  change  in the  value of  the  assets 
supporting 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.

Most participating  business is  excluded from  this analysis  because of  the 
ability to pass both  favourable and adverse  experience to the  policyholders 
through the participating dividend adjustment.

We have updated our disclosure to show the estimated impact on net income  for 
the next five  years and  the following five  years from  changes in  ultimate 
fixed income reinvestment rates ("URR") driven by changes in risk free rates.

The table below shows the potential  impact on annual net income  attributable 
to shareholders where  the URR  is determined  assuming that  risk free  rates 
remain at their starting December 31, 2012 levels. It also shows the potential
impact if the URR were  determined using risk free  rates that are assumed  to 
immediately rise or immediately fall by 50 basis points and then stay at these
new levels.  We also  provide  pro-forma estimates  as  at December  31,  2011 
developed  using  our  previously  disclosed  URR  sensitivities.  For   these 
pro-forma estimates we assume that  assets, liabilities and the interest  rate 
environment are those which were used to value reserves at that time.

Canadian actuarial standards of practice require that reserves be at least  as 
great as  the largest  value  produced by  a  set of  prescribed  reinvestment 
scenarios. The impacts  below assume  that the  URR changes  implied by  these 
shocks do not change which reinvestment scenario produces the largest reserve.

Potential impact on aggregate net income over the next five years and the
following five years net income attributed to shareholders arising from
potential changes to the fixed income ultimate reinvestment rates ("URR") ^(1)

As at December 31,
C$ millions                                   2012                2011
For the periods                        2013-2017 2018-2022 2012-2016 2017-2021
Risk free rates remain at December 31,
2012 and December 31, 2011 levels,
respectively.                          $ (1,600)   $ (300) $ (2,100)   $ (500)
Risk free rates rise 50 bp immediately
from their December 31, 2012
or December 31, 2011, levels
respectively, and then remain at those
new levels thereafter.                   $ (900)     $ (0) $ (1,300)   $ (200)
Risk free rates fall 50 bp immediately
from their December 31, 2012
or December 31, 2011, levels,
respectively, and then remain at those
new levels thereafter.                 $ (2,200)   $ (500) $ (2,700)   $ (700)

         
^(1) Current URRs in Canada are 1.00% per annum and 3.00% per annum for
          short and long-term bonds, respectively, and in the U.S. are 0.80%
          per annum and 3.60% per annum for short and long-term bonds,
          respectively. Since the URRs are based upon a five and ten year
          rolling average of government bond rates and the URR valuation
          assumptions are currently higher than the December 31, 2012
          government bond rates, continuation of current rates or a further
          decline could have a material impact on net income. However, for
          this sensitivity, we assume the URRs decline with full and immediate
          effect.

Potential impact on net income attributed to shareholders arising from changes
to asset related assumptions  supporting actuarial liabilities, excluding  the 
fixed income ultimate reinvestment rate discussed above

C$ millions                                     Increase (decrease) in after-tax income
As at                       December 31, 2012                    September 30, 2012                      December 31, 2011
Asset related
assumptions
updated
periodically
in valuation
basis changes    Increase            Decrease          Increase            Decrease          Increase            Decrease
100 basis
point change
in future
annual
returns for
public
equities^(1)  $800       $(900)       $900       $(800)       $900       $(900)
100 basis
point change
in future
annual
returns for
alternative
long-duration
assets^(2)          3,900 (4,000) 4,000 (3,900) 4,200 (3,800)
100 basis
point change
in equity
volatility
assumption
for
stochastic
segregated
fund
modeling^(3)        (300)     300 (300)     300 (300)     300

         
^(1) The sensitivity to public equity returns above includes the impact
          on both segregated fund guarantee reserves and on other policy
          liabilities. For a 100 basis point increase in expected growth
          rates, the impact from segregated fund guarantee reserves is $500
          million (September 30, 2012 - $600 million). For a 100 basis point
          decrease in expected growth rates, the impact from segregated fund
          guarantee reserves is $(600) million (September 30, 2012 - $(600)
          million). Expected long-term annual market growth assumptions for
          public equities pre-dividends for key markets are based on long-term
          historical observed experience and compliance with actuarial
          standards. The growth rates for returns in the major markets used in
          the stochastic valuation models for valuing segregated fund
          guarantees are 7.6% per annum in Canada, 7.6% per annum in the U.S.
          and 5.3% per annum in Japan. Growth assumptions for European equity
          funds are market-specific and vary between 5.8% and 7.85%.
^(2) Alternative long-duration assets include commercial real estate,
          timber and agricultural real estate, oil and gas, and private
          equities. The increase of $100 million in sensitivity from September
          30, 2012 to December 31, 2012 is primarily related to the drop in
          corporate spreads during the quarter, reducing the rate at which
          funds can be reinvested in.
^(3) Volatility assumptions for public equities are based on long-term
          historic observed experience and compliance with actuarial
          standards. The resulting volatility assumptions are 17.15% per annum
          in Canada and 17.15% per annum in the U.S. for large cap public
          equities, and 19% per annum in Japan. For European equity funds, the
          volatility assumptions vary between 16.15% and 18.35%.

E4Goodwill impairment testing

In the third quarter of 2012, we reported a charge of $200 million related  to 
goodwill, associated  with the  Individual Insurance  business in  Canada  and 
driven by the low interest rate environment.

The Company completed  its 2012 goodwill  and intangible assets  tests in  the 
fourth quarter of 2012, and as  a result, management concluded that there  was 
no further impairment of goodwill or intangible assets with indefinite lives.

E5Future accounting and reporting changes

There are  a number  of accounting  and reporting  changes issued  under  IFRS 
including those  still  under  development  by  the  International  Accounting 
Standards Board ("IASB") that  will impact the Company  beginning in 2013  and 
later. A summary of  the most recently issued  new accounting standards is  as 
follows:

                                                         
                                Effective    Measurement /
Topic                              date      Presentation    Expected impact
                                                         
IFRS 10, IFRS 11, IFRS 12 (and Jan 1, 2013  Measurement and Not expected to
related amendments)                         disclosure      have a significant
and amendments to IAS 27, and                               impact.
IAS 28 regarding
consolidation, disclosures and
related matters
IFRS 13 "Fair Value            Jan 1, 2013  Measurement and Not expected to
Measurement"                                disclosure      have a significant
                                                            impact.
Amendments to IAS 1            Jan 1, 2013  Presentation    Not expected to
"Presentation of Financial                                  have a significant
Statements"                                                 impact.
Amendments to IAS 19 "Employee Jan 1, 2013  Measurement     See below
Benefits"
IFRS 9 "Financial Instruments" Jan 1, 2015  Measurement     Currently
                                                            assessing.

Expected impact of amendments to IAS 19 "Employee Benefits": The new  standard 
will result in an increase in the defined benefit liability, primarily related
to unrecognized  net  actuarial losses  on  the Company's  pension  and  other 
post-employment benefit plans with an offsetting charge to opening Accumulated
Other Comprehensive Income ("AOCI"). Upon  adoption, 2012 net income will  be 
retrospectively restated primarily to remove the amortization of  unrecognized 
net actuarial losses. This has the impact of increasing ROE by 0.6 per  cent. 
Future actuarial  gains and  losses related  to these  plans will  adjust  the 
amount of AOCI.

Below is a summary of the expected impacts of the amendments as at and for the
year ended December 31, 2012. These adjustments will be recognized in 2013  by 
restating 2012 to reflect the impact of the amendments.

                                                            
                                                   Other post-  
                                                     employment.
(C$ million)                     Pension plans     benefits        Total
                                                            
Increase (decrease) in defined  $    872  $              $ 839
benefit liability                                         (33)
Increase (decrease) in                   (277)                     (266)
deferred tax liability                                        11
Increase (decrease) in AOCI              (669)            15         654
Increase (decrease) in 2012                 74                        67
net income                                                   (7)

FOther

F1Performance and Non-GAAP Measures

We use a number of non-GAAP financial measures to measure overall  performance 
and to  assess  each  of  our businesses.  Non-GAAP  measures  include:  Core 
Earnings; Net Income in Accordance with U.S. GAAP; Total Equity in  Accordance 
with U.S. GAAP; Core  ROE; Core Earnings Per  Share; Constant Currency  Basis; 
Premiums and Deposits;  Funds under Management;  Capital; Embedded Value;  New 
Business Embedded  Value;  and  Sales. Non-GAAP  financial  measures  are  not 
defined terms under GAAP and, therefore,  with the exception of Net Income  in 
Accordance with U.S. GAAP and Total Equity in Accordance with U.S. GAAP (which
are  comparable  to  the  equivalent  measures  of  issuers  whose   financial 
statements are prepared  in accordance  with U.S.  GAAP), are  unlikely to  be 
comparable to similar terms used by other issuers. Therefore, they should  not 
be considered  in  isolation  or  as a  substitute  for  any  other  financial 
information prepared in accordance with GAAP.

Core earnings (losses) is a non-GAAP measure which we use to better understand
the long-term earnings capacity and  valuation of the business. Core  earnings 
excludes the direct impact of changes in equity markets and interest rates  as 
well as a number of other items, outlined below, that are considered  material 
and exceptional in nature. While this metric is relevant to how we manage  our 
business and  offers  a  consistent  methodology, it  is  not  insulated  from 
macro-economic factors, which can have a significant impact.

Any future changes to the core earnings definition referred to below, will  be 
disclosed.

Items that are included in core earnings are:

1.Expected earnings on in-force, 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.

4.Policyholder experience gains or losses.

5.Acquisition and operating expenses compared to expense assumptions used in
    the measurement of policy liabilities.

6.Up to $200 million of investment gains reported in a single year, which
    are referred to as "core investment gains".

7.Earnings on surplus other than mark-to-market items. Gains on
    available-for-sale ("AFS") equities and seed money investments 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 substantially
    enacted income tax rate changes.

Items excluded from core earnings are:

1.The direct impact of equity markets and interest rates, consisting of:

       *Income (charges) on variable annuity guarantee liabilities not
         dynamically hedged.

       *Gains (charges) on general fund equity investments supporting policy
         liabilities and on fee income.

       *Gains (losses) 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 policy liabilities.

       *Gains (charges) on higher (lower) fixed income reinvestment rates
         assumed in the valuation of policy liabilities, including the impact
         on the fixed income ultimate reinvestment rate ("URR").

       *Gains (charges) on sale of AFS bonds and open derivatives not in
         hedging relationships in the Corporate and Other segment.

2.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
    policy 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.

3.Net investment related gains in excess of $200 million per annum or net
    losses on a year-to-date basis. Investment gains (losses) relate to fixed
    income trading, alternative long-duration asset returns, credit experience
    and asset mix changes. These gains and losses are a combination of
    reported investment experience as well as the impact of investing
    activities on the measurement of our policy liabilities. The maximum of
    $200 million per annum to be reported in core earnings compares with an
    average of over $80 million per quarter of investment gains reported since
    first quarter 2007.

4.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.

5.Changes in actuarial methods and assumptions, excluding URR.

6.The impact on the measurement of policy liabilities of changes in product
    features or new reinsurance transactions, if material.

7.Goodwill impairment charges.

8.Gains or losses on disposition of a business.

9.Material one-time only adjustments, including highly unusual/extraordinary
    and material legal settlements or other items that are material and
    exceptional in nature.

10.Tax on the above items.

11.Impact of enacted or substantially enacted income tax rate changes.

The following table summarizes for the  past eight quarters core earnings  and 
net income (loss) attributed to shareholders.

Total Company

                                                    Quarterly Results
C$ millions,                        2012                                        2011
unaudited
For the quarter      4Q         3Q       2Q       1Q       4Q          3Q       2Q       1Q
Core earnings                                                                  
(losses)
Asia Division    $  180  $    230  $  286  $  267  $  213  $     220  $  253  $  252
Canadian            233        229      201      172      142         259      233      215
Division
U.S. Division       293        288      247      257      189         260      266      290
Corporate &
Other (excluding
expected cost of   (79)      (117)     (83)    (128)    (124)        (58)      (8)    (225)
macro hedges and
core investment
gains)
Expected cost of  (140)      (124)    (118)    (107)     (97)       (107)    (104)    (100)
macro hedges
Core investment      50         50       50       50       50          50       50       50
gains
Total core       $  537   $    556   $  583   $  511   $  373   $     624   $  690   $  482
earnings
Investment
related gains in    318        363       51      205      261         236      323      470
excess of core
investment gains
Core earnings
plus investment                                                                               
related gains in $  855   $    919   $  634   $  716   $  634   $     860   $ 1,013   $  952
excess of core
investment gains
Other items to
reconcile core
earnings to net                                                                    
income (loss)
attributed to
shareholders
  Income
  (charges) on
  variable
  annuity
 guarantee         100        122    (269)      223    (193)       (900)     (52)      (8)
  liabilities
  that are
  dynamically
  hedged
  Impact of
  major
  reinsurance
 transactions,       -         26      112      122        -           -        -        -
  in-force
  product
  changes
  Direct impact
  of equity
 markets and      (18)       (88)    (727)       75      153       (889)    (439)      111
  interest rates
  (see table
  below)
  Change in
  actuarial
 methods and      (87)    (1,006)        -       12        2       (651)     (32)     (70)
  assumptions,
  excluding URR
  Goodwill
 impairment          -      (200)        -        -    (665)           -        -        -
  charge
  Gain (loss) on
 sale of Life        -          -     (50)        -        -         303        -        -
  Retrocession
  Business
  Tax items and
  restructuring
 charge related    207          -        -       58        -           -        -        -
  to
  organizational
  design
Net income
(loss)           $       $  (227)  $       $           $  $ (1,277)  $  490  $  985
attributed to      1,057                   (300)      1,206       (69)
shareholders
                                                                                  
Direct impact of
equity markets                                                                     
and interest
rates:
Income (charges)
on variable
annuity                                                                                      
liabilities that $  556  $    298  $ (758)  $  982  $  234  $ (1,211)  $ (217)  $  102
are not
dynamically
hedged
Gains (charges)
on general fund
equity
investments          48         55    (116)      121       56       (227)     (73)       30
supporting
policy
liabilities and
on fee income
Gains (losses)
on macro equity
hedges relative   (292)       (86)      423    (556)    (250)         882      142    (138)
to expected
costs
Gains (charges)
on higher
(lower) fixed
income
reinvestment      (290)      (330)      305    (425)      122       (567)     (28)      192
rates assumed in
the valuation of
policy
liabilities
Gains (charges)
on sale of AFS
bonds and
derivative         (40)       (25)       96     (47)      (9)         301      107     (75)
positions in the
Corporate
segment
Charges due to
lower fixed
income URR
assumptions used      -          -    (677)        -        -        (67)    (370)        -
in the valuation
of policy
liabilities
Direct impact of
equity markets   $       $   (88)  $       $   75  $  153  $   (889)  $ (439)  $  111
and interest        (18)                   (727)
rates





Asia Division

                                           Quarterly Results
C$ millions,                   2012                                 2011
unaudited
For the          4Q     3Q       2Q       1Q     4Q        3Q      2Q    1Q
quarter
Asia Division $      $      $  286   $  267  $      $    220  $  253  $   
core earnings    180      230                            213                           252
Investment
related gains
in excess of     33     12       28     (18)     47       126       7    24
core
investment
gains
Core earnings
plus
investment
related gains  $      $      $  314   $  249  $      $    346  $  260  $   
in excess of     213      242                            260                           276
core
investment
gains
Other items
to reconcile
core earnings
to net income                                                      
(loss)
attributed to
shareholders
  Income
  (charges)
  on variable
  annuity
 guarantee       9     11     (18)        3   (16)       (3)    (11)   (1)
  liabilities
  that are
  dynamically
  hedged
  Direct
  impact of
 equity        460    238    (611)      819     41   (1,055)   (221)    76
  markets and
  interest
  rates
 Tax items       -      -        -       40      -         -       -     -
Net income
(loss)        $     $     $       $               (712)   $ 28    $
attributed to    682      491      (315)      1,111      285                           351
shareholders



Canadian Division

                                              Quarterly Results
C$ millions,                     2012                                   2011
unaudited
For the quarter     4Q     3Q       2Q       1Q      4Q       3Q      2Q     1Q
Canadian                                                                                 
Division core   $  233  $ 229   $  201   $  172   $  142   $  259   $  233   $ 215
earnings
Investment
related gains
in excess of      (31)     20    (115)      116      72     (47)      67    252
core investment
gains
Core earnings
plus investment
related gains    $       $      $   86   $  288   $       $  212   $       $   
in excess of        202      249                             214                  300      467
core investment
gains
Other items to
reconcile core
earnings to net                                                        
income (loss)
attributed to
shareholders
  Income
  (charges) on
  variable
  annuity
 guarantee         45     38     (74)       41    (67)    (204)       -    (7)
  liabilities
  that are
  dynamically
  hedged
  Impact of
  major
  reinsurance
 transactions,      -      -      137      122       -        -       -      -
  in-force
  product
  changes
  Direct impact
  of equity
 markets and        4     91       74    (134)      99    (100)    (36)     49
  interest
  rates
Net income
(loss)          $      $     $  223  $  317  $      $       $      $   
attributed to       251      378                             246       (92)       264      509
shareholders



U.S. Division

                                                Quarterly Results
C$ millions,                     2012                                      2011
unaudited
For the             4Q       3Q       2Q      1Q       4Q          3Q      2Q     1Q
quarter
U.S. Division  $  293  $  288   $  247   $       $  189   $     260   $       $   
core earnings                                       257                                266      290
Investment
related gains
in excess of       365      346      154     153      158         215     259    225
core
investment
gains
Core earnings
plus
investment
related gains   $  658   $  634   $  401   $       $  347   $     475   $       $   
in excess of                                        410                                525      515
core
investment
gains
Other items to
reconcile core
earnings to
net income                                                                  
(loss)
attributed to
shareholders
  Income
  (charges) on
  variable
  annuity
 guarantee         46       73    (177)     179    (110)       (693)    (41)      -
  liabilities
  that are
  dynamically
  hedged
  Impact of
 major              -       26     (25)       -        -           -       -      -
  reinsurance
  transactions
  Direct
  impact of
 equity         (150)    (297)     (22)    (15)      268       (810)    (55)    200
  markets and
  interest
  rates
 Tax items        170        -        -       -        -           -       -      -
Net income
(loss)         $  724  $  436  $  177  $      $  505  $ (1,028)  $      $   
attributed to                                       574                                429      715
shareholders



Corporate and Other

                                                      Quarterly Results
C$ millions,                         2012                                          2011
unaudited
For the quarter       4Q          3Q       2Q       1Q          4Q        3Q       2Q       1Q
Corporate &
Other core
losses
(excluding       $       $   (117)  $       $       $   (124)  $  (58)  $  (8)  $     
expected cost of     (79)                     (83)      (128)                                           (225)
macro hedges and
core investment
gains)
Expected cost of   (140)       (124)    (118)    (107)        (97)     (107)    (104)    (100)
macro hedges
Core investment       50          50       50       50          50        50       50       50
gains
Total core       $        $   (191)   $        $        $   (171)   $ (115)   $        $     
losses              (169)                    (151)      (185)                                 (62)      (275)
Investment
related losses
in excess of        (49)        (15)     (16)     (46)        (16)      (58)     (10)     (31)
core investment
gains
Core losses plus
investment
related losses    $        $   (206)   $        $        $   (187)   $  (173)   $        $     
in excess of        (218)                    (167)      (231)                                 (72)      (306)
core investment
gains
Other items to
reconcile core
earnings to net                                                                       
income (loss)
attributed to
shareholders
  Direct impact
 of equity        (332)       (120)    (168)    (595)       (255)     1,076    (127)    (214)
  markets and
  interest rates
  Change in
  actuarial
 methods and       (87)     (1,006)        -       12           2     (651)     (32)     (70)
  assumptions,
  excluding URR
  Goodwill
 impairment           -       (200)        -        -       (665)         -        -        -
  charge
  Gain (loss) on
 sale of Life         -           -     (50)        -           -       303        -        -
  Retrocession
  Business
  Tax items and
  restructuring
 charge related      37           -        -       18           -         -        -        -
  to
  organizational
  design
Net income
(loss)           $       $ (1,532)  $       $       $ (1,105)  $   555  $       $     
attributed to       (600)                    (385)      (796)                                (231)      (590)
shareholders



Net income in accordance with U.S.  GAAP is a non-GAAP profitability  measure. 
It shows what the net income would  have been if the Company had applied  U.S. 
GAAP as  its primary  financial reporting  basis.  We consider  this to  be  a 
relevant profitability measure  given our large  U.S. domiciled investor  base 
and for comparability to our U.S. peers who report under U.S. GAAP.

Total equity in accordance with U.S. GAAP is a non-GAAP measure. It shows what
the total equity would have been if  the Company had applied U.S. GAAP as  its 
primary financial reporting basis. We consider  this to be a relevant  measure 
given our large U.S. domiciled investor base and for comparability to our U.S.
peers who report under U.S. GAAP.

Core return  on  common  shareholders'  equity  ("Core  ROE")  is  a  non-GAAP 
profitability  measure  that  presents  core  earnings  available  to   common 
shareholders as  a  percentage  of  the capital  deployed  to  earn  the  core 
earnings. The Company calculates core  return on common shareholders'  equity 
using average common shareholders' equity.

Core earnings  per share  is core  earnings available  to common  shareholders 
expressed per weighted average common share outstanding.

The Company also uses  financial performance measures that  are prepared on  a 
constant currency basis, which exclude the impact of currency fluctuations and
which are non-GAAP measures. Quarterly  amounts stated on a constant  currency 
basis in  this  report  are  calculated,  as  appropriate,  using  the  income 
statement and balance sheet exchange rates effective for the fourth quarter of
2012.

Premiums and deposits is a non-GAAP  measure of top line growth. The  Company 
calculates premiums  and  deposits  as  the  aggregate  of  (i)  general  fund 
premiums, net  of  reinsurance,  reported  as  premiums  on  the  Consolidated 
Statement of  Income, (ii)  adding  back the  premiums  ceded related  to  FDA 
coinsurance, (iii) premium equivalents  for administration only group  benefit 
contracts, (iv)  premiums in  the Canadian  Group Benefits  reinsurance  ceded 
agreement, (v) segregated  fund deposits,  excluding seed  money, (vi)  mutual 
fund deposits, (vii) deposits into institutional advisory accounts, and (viii)
other deposits in other managed funds.

Premiums and               Quarterly Results                         Full Year Results
deposits
C$ millions    4Q 2012             3Q 2012   4Q 2011            2012                 2011
Net premium   $ 5,012  $      2,187  $  4,540  $ 10,734  $      17,504
income
Deposits from    5,537   5,539     5,575          22,993   21,689
policyholders
Premiums and  $ 10,549  $      7,726  $ 10,115  $ 33,727  $      39,193
deposits per
financial
statements
Add back             2   1,799         -           7,229                    -
premiums
ceded
relating to
FDA
coinsurance
Investment          59      40       126             212      289
contract
deposits
Mutual fund      6,117   4,335     3,309          18,843   16,640
deposits
Institutional    5,376   1,106       627           7,744    2,807
advisory
account
deposits
ASO premium        706     673       666           2,819    2,679
equivalents
Group            1,180     967       941           4,430    3,754
benefits
ceded
premiums
Other fund         139     100       133             497      699
deposits
Total         $ 24,128  $     16,746  $ 15,917  $ 75,501  $      66,061
premiums and
deposits
Currency             -    (61)     (372)           (454)                   53
impact
Constant      $ 24,128  $     16,685  $  15,545  $ 75,047  $       66,114
currency
premiums and
deposits

Funds under management is a non-GAAP measure  of the size of the Company.  It 
represents the  total of  the invested  asset base  that the  Company and  its 
customers invest in.

Funds under                                                            
management
(C$ millions) As       Dec 31, 2012       Sept 30, 2012     Dec 31, 2011
at
Total invested      $ 229,928  $    224,761  $ 226,520
assets
Segregated funds            207,985       205,685          195,933
net assets
Funds under         $ 437,913  $    430,446  $ 422,453
management per
financial
statements
Mutual funds                 59,979        55,705           49,399
Institutional                26,692        21,597           21,652
advisory accounts
(excluding
segregated funds)
Other funds                   7,358         6,849            6,148
Total fund under    $ 531,942  $    514,597  $ 499,652
management
Currency impact                   -   1,563         (10,991)
Constant currency   $ 531,942  $   516,160  $ 488,661
funds under
management

Capital The definition  we use for  capital, a non-GAAP  measure, serves as  a 
foundation of  our  capital  management  activities at  the  MFC  level.  For 
regulatory reporting purposes,  the numbers are  further adjusted for  various 
additions or  deductions to  capital as  mandated by  the guidelines  used  by 
OSFI. Capital is calculated as the sum of (i) total equity excluding AOCI  on 
cash flow  hedges  and  (ii)  liabilities for  preferred  shares  and  capital 
instruments.

Capital                                                       
(C$ millions) As                 Dec 31, 2012   Sept 30, 2012    Dec 31,
at                                                                        2011
Total equity        $            26,096  $ 24,961  $  24,879
Add AOCI loss on         50        58         91
cash flow hedges
Add liabilities       3,501     3,495      4,012
for preferred
shares and capital
instruments
Total capital       $           29,647  $ 28,514  $  28,982

Embedded value is  a measure of  shareholders' value embedded  in the  current 
balance sheet of the Company, excluding  any value associated with future  new 
business.

New business embedded value ("NBEV")  is the change in shareholders'  economic 
value as a result of sales in the reporting period. NBEV is calculated as  the 
present value  of expected  future earnings,  after the  cost of  capital,  on 
actual new  business sold  in the  period using  future mortality,  morbidity, 
policyholder behaviour, expense and investment assumptions that are consistent
with the assumptions used in the valuation of our policy liabilities.

The principal economic assumptions used in the NBEV calculations in the fourth
quarter were as follows:

                              Canada     U.S. Hong Kong    Japan
MCCSR ratio                      150%     150%      150%     150%
Discount rate                   8.50%    8.50%     9.25%    6.25%
Jurisdictional income tax rate    26%      35%     16.5%      33%
Foreign exchange rate             n/a 0.983671  0.126912 0.012138
Yield on surplus assets         4.50%    4.50%     4.50%    2.00%

Sales are measured according to product type:

For total individual insurance, sales include  100 per cent of new  annualized 
premiums and 10 per  cent of both excess  and single premiums. For  individual 
insurance, new annualized premiums reflect the annualized premium expected  in 
the first year of a  policy that requires premium  payments for more than  one 
year. Sales  are reported  gross before  the impact  of reinsurance.  Single 
premium is the lump  sum premium from  the sale of  a single premium  product, 
e.g. travel insurance.

For group insurance, sales include new annualized premiums and  administrative 
services only premium equivalents on new cases, as well as the addition of new
coverages and amendments to contracts, excluding rate increases.

For individual wealth management contracts,  all new deposits are reported  as 
sales. This includes  individual annuities,  both fixed  and variable;  mutual 
funds; college savings 529 plans; and authorized bank loans and mortgages.

For group  pensions/retirement  savings, sales  of  new regular  premiums  and 
deposits reflect an  estimate of expected  deposits in the  first year of  the 
plan with the  Company. Single  premium sales reflect  the assets  transferred 
from the previous plan provider. Sales include the impact of the addition of a
new division or of a  new product to an  existing client. Total sales  include 
both new regular and single premiums and deposits.

F2Key Planning Assumptions and Uncertainties

Manulife's 2016 management objectives do not constitute guidance and are based
on  certain  key  planning  assumptions,  including:  current  accounting  and 
regulatory capital standards; no acquisitions; equity market and interest rate
assumptions  consistent  with  our  long  term  assumptions,  and   favourable 
investment experience included in core earnings^25.

_____________________
       Interest rate assumptions based on forward curve as of June 30, 2012.
       Core earnings includes up to $200 million per annum of investment
^25   gains.

F3Caution regarding forward-looking statements

From time to time, 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  our 
2016 management objectives for  core earnings and  core ROE, potential  future 
charges related  to URR  assumptions if  current low  interest rates  persist, 
changes in MLI's MCCSR  ratio and additional  risks regarding entities  within 
the MFC group that  are interconnected which  may make separation  difficult. 
The forward-looking statements in  this document 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,  including  in the  case  of our  2016  management 
objectives for core  earnings and  core ROE, the  assumptions described  under 
"Key Planning Assumptions and Uncertainties" in our 2011 Annual Report and  in 
this document 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:  the 
factors identified in "Key Planning Assumptions and Uncertainties" in our 2011
Annual Report and in this document and under "Risk Management and Risk Factors
Update" in this document; general business and economic conditions  (including 
but not  limited to  the  performance, volatility  and correlation  of  equity 
markets, interest rates, credit and  swap spreads, currency rates,  investment 
losses and  defaults, market  liquidity  and creditworthiness  of  guarantors, 
reinsurers and counterparties);  changes in laws  and regulations; changes  in 
accounting standards; 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 and actuarial  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;  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;  and 
our ability to  protect our intellectual  property and exposure  to claims  of 
infringement. Additional information about  material factors that could  cause 
actual results  to  differ materially  from  expectations and  about  material 
factors or assumptions  applied in  making forward-looking  statements may  be 
found in the body of this document as well as under "Risk Factors" in our most
recent Annual Information Form, under "Risk Management", "Risk Management  and 
Risk  Factors"  and  "Critical  Accounting  and  Actuarial  Policies"  in  the 
Management's Discussion and Analysis in  our most recent annual report,  under 
"Risk Management  and  Risk  Factors  Update"  and  "Critical  Accounting  and 
Actuarial Policies" in the  Management's Discussion and  Analysis in our  most 
recent interim report, in the "Risk Management" note to consolidated financial
statements in our most recent annual and interim reports and elsewhere in  our 
filings with  Canadian and  U.S.  securities regulators.  The  forward-looking 
statements in this documents 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  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.

Consolidated Statements of Income (Loss)

                                                                 
                                                                 
(Canadian $ in millions
except per share          For the three months ended    For the years ended
information, unaudited)
                                December 31                December 31
                               2012       2011        2012       2011
Revenue                                                          
Net premium income ^1      $    5,012   $   4,540   $  10,734  $  17,504
Investment income                                                
 Investment income           2,095      2,034       8,792    10,367
  Realized/ unrealized
  gains (losses) on
 assets supporting          (1,600)      1,360       3,050    15,870
  insurance and
  investment contract
  liabilities ^2
Other revenue                  1,690      1,765       7,356      7,242
Total revenue              $    7,197   $   9,699   $  29,932  $  50,983
Contract benefits and                                             
expenses
To contractholders and                                            
beneficiaries
 Death, disability and    $    2,282   $   2,224   $    9,527  $    9,213
  other claims
 Maturity and surrender       1,472      1,375       5,058      5,403
  benefits
 Annuity payments               838        802       3,244      3,164
  Policyholder dividends
 and experience rating          257        302       1,092      1,080
  refunds
 Net transfers from           (185)      (130)       (718)      (299)
  segregated funds
 Change in insurance             39      4,364     13,442    27,934
  contract liabilities ^2
 Change in investment            26         35          87         64
  contract liabilities
 Ceded benefits and         (1,526)    (1,325)     (5,924)    (4,918)
  expenses
 Change in reinsurance          154    (1,486)     (8,065)    (1,852)
  assets ^1
Net benefits and claims    $    3,357   $   6,161   $  17,743  $  39,789
 General expenses             1,277      1,134       4,531      4,061
 Investment expenses            297        273       1,091      1,001
 Commissions                  1,012        987       3,932      3,813
 Interest expense ^3            119        288         967      1,249
 Net premium taxes               78         72         299        257
 Goodwill impairment              -        665         200        665
Total contract benefits    $    6,140   $   9,580   $  28,763  $  50,835
and expenses
Income before income       $    1,057   $     119   $    1,169  $      148
taxes
Income tax recovery               22      (174)         523         97
(expense)
Net income (loss)          $    1,079   $    (55)   $    1,692  $      245
  Less: Net income
  attributed to
 non-controlling                  2         14          59         27
  interest in
  subsidiaries
  Net income
 (loss) attributed to            20          -       (103)         89
  participating
  policyholders
Net income (loss)
attributed to              $    1,057   $    (69)   $    1,736  $      129
shareholders
Preferred share dividends       (29)       (21)       (112)       (85)
Common shareholders' net   $    1,028   $    (90)   $    1,624  $       44
income (loss)
                                                                 
Basic earnings (loss) per  $     0.56   $  (0.05)   $     0.90  $     0.02
common share
Diluted earnings (loss)    $     0.56   $  (0.05)   $     0.88  $     0.02
per common share

^1 On June 29, 2012 and September 25, 2012 the Company entered into
coinsurance agreements to reinsure 89 per cent of its book value fixed
deferred annuity business. Under the terms of the agreements, the Company
will maintain responsibility for servicing of the policies and some of the
assets and has retained the remaining exposure. The premiums ceded relating to
FDA coinsurance were $2 miliion and $7,229 million for Q4 2012 and full year
2012, respectively.
                                                             
^2 The volatility in realized/unrealized gains on assets supporting insurance
and investment contract liabilities relates primarily to the impact of
interest rates changes on bond and fixed income derivative positions as well
as interest rate swaps supporting the dynamic hedge program. These items are
mostly offset by changes in the measurement of our policy obligations. For
fixed income assets supporting insurance and investment contracts, equities
supporting pass through products and derivatives related to variable annuity
hedging programs, the impact of realized/ unrealized gains on the assets is
largely offset in the change in insurance and investment contract liabilities.
                                                             
^3 Q4 2012 includes the release of interest provision related to tax
contigency.





Consolidated Statements of Financial Position

(Canadian $ in millions, unaudited)                                     
                                                        As at December 31
Assets                                                      2012     2011 ^
Invested assets                                                         
         Cash and short-term securities              $    13,484 $  12,813 
         Securities                                                    
                       Bonds                          119,281  120,487 
                       Stocks                           11,995   10,243 
         Loans                                                         
                       Mortgages                        35,082   35,023 
                       Private placements               20,275   20,294 
                       Policy loans                      6,793    6,827 
                       Bank loans                        2,142    2,288 
         Real estate                                      8,513    7,466 
         Other invested assets                          12,363   11,079 
Total invested assets                                 $  229,928 $ 226,520 
Other assets                                                            
         Accrued investment income                   $     1,802 $   1,802 
         Outstanding premiums                             1,009      781 
         Derivatives                                     14,707   15,472 
         Goodwill and intangible assets                   5,113    5,442 
         Reinsurance assets                              18,681   10,728 
         Deferred tax asset                               3,148    1,757 
         Miscellaneous                                    3,683    3,542 
Total other assets                                    $    48,143 $  39,524 
Segregated funds net assets                           $  207,985 $ 195,933 
Total assets                                          $  486,056 $ 461,977 
                                                                       
Liabilities and Equity                                                  
Policy liabilities                                                      
         Insurance contract liabilities              $  199,588 $ 190,366 
         Investment contract liabilities                  2,424    2,540 
Bank deposits                                             18,857   18,010 
Deferred tax liability                                       694      766 
Derivatives                                                7,206    7,627 
Other liabilities                                         14,253   12,341 
                                                     $  243,022 $ 231,650 
Long-term debt                                             5,452    5,503 
Liabilities for preferred shares and capital               3,501    4,012 
instruments
Segregated funds net liabilities                        207,985  195,933 
Total liabilities                                    $  459,960 $ 437,098 
                                                                       
Equity                                                                  
Issued share capital                                                    
         Preferred shares                            $     2,497 $   1,813 
         Common shares                                   19,886   19,560 
Contributed surplus                                          257      245 
Shareholders' retained earnings                            3,178    2,501 
Shareholders' accumulated other comprehensive income       (369)       96 
(loss)
Total shareholders' equity                            $    25,449 $  24,215 
Participating policyholders' equity                          146      249 
Non-controlling interest in subsidiaries                     501      415 
Total equity                                          $    26,096 $  24,879 
Total liabilities and equity                          $  486,056 $ 461,977 







SOURCE Manulife Financial Corporation

Contact:

Media inquiries:
Laurie Lupton
(416) 852-7792
laurie_lupton@manulife.com

Investor Relations:
Steven Moore
(416) 926-6495
steven_moore@manulife.com

Anique Asher
(416) 852-9580
anique_asher@manulife.com
 
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