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Capital Instruments | 12 Months Ended
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Dec. 31, 2018
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Capital Instruments | Note 11 Capital Instruments (a) Carrying value of capital instruments
As at December 31, |  | Issuance date |  | Earliest par redemption date |  | Maturity date |  | Par value |  |  | 2018 |  |  | 2017 |
7.535% MFCT II Senior debenture notes(1) |  | July 10, 2009 |  | December 31, 2019 |  | December 31, 2108 |  |  | $ 1,000 |  |  | $ | 1,000 |  |  | $ | 1,000 |
JHFC Subordinated notes(2) |  | December 14, 2006 |  | n/a |  | December 15, 2036 |  |  | $ 650 |  |  |  | 647 |  |  |  | 647 |
4.061% MFC Subordinated notes(3) |  | February 24, 2017 |  | February 24, 2027 |  | February 24, 2032 |  |  | US$ 750 |  |  |  | 1,017 |  |  |  | 935 |
3.00% MFC Subordinated notes(4) |  | November 21, 2017 |  | November 21, 2024 |  | November 21, 2029 |  |  | S$ 500 |  |  |  | 498 |  |  |  | 467 |
3.049% MFC Subordinated debentures(5) |  | August 18, 2017 |  | August 20, 2024 |  | August 20, 2029 |  |  | $ 750 |  |  |  | 747 |  |  |  | 746 |
3.317% MFC Subordinated debentures(5) |  | May 9, 2018 |  | May 9, 2023 |  | May 9, 2028 |  |  | $ 600 |  |  |  | 597 |  |  |  | – |
3.181% MLI Subordinated debentures(6) |  | November 20, 2015 |  | November 22, 2022 |  | November 22, 2027 |  |  | $ 1,000 |  |  |  | 997 |  |  |  | 996 |
3.85% MFC Subordinated notes(4) |  | May 25, 2016 |  | May 25, 2021 |  | May 25, 2026 |  |  | S$ 500 |  |  |  | 499 |  |  |  | 467 |
2.389% MLI Subordinated debentures(6) |  | June 1, 2015 |  | January 5, 2021 |  | January 5, 2026 |  |  | $ 350 |  |  |  | 349 |  |  |  | 349 |
2.10% MLI Subordinated debentures(6) |  | March 10, 2015 |  | June 1, 2020 |  | June 1, 2025 |  |  | $ 750 |  |  |  | 749 |  |  |  | 748 |
2.64% MLI Subordinated debentures(6) |  | December 1, 2014 |  | January 15, 2020 |  | January 15, 2025 |  |  | $ 500 |  |  |  | 500 |  |  |  | 499 |
2.811% MLI Subordinated debentures(6) |  | February 21, 2014 |  | February 21, 2019 |  | February 21, 2024 |  |  | $ 500 |  |  |  | 500 |  |  |  | 499 |
7.375% JHUSA Surplus notes(7) |  | February 25, 1994 |  | n/a |  | February 15, 2024 |  |  | US$ 450 |  |  |  | 632 |  |  |  | 584 |
2.926% MLI Subordinated debentures(8) |  | November 29, 2013 |  | November 29, 2018 |  | November 29, 2023 |  |  | $ 250 |  |  |  | – |  |  |  | 250 |
2.819% MLI Subordinated debentures(8) |  | February 25, 2013 |  | February 26, 2018 |  | February 26, 2023 |  |  | $ 200 |  |  |  | – |  |  |  | 200 |
Total |  |  |  |  |  |  |  |  |  |  |  | $ | 8,732 |  |  | $ | 8,387 |
(1) | Issued by MLI to Manulife Financial Capital Trust II (MFCT II), a wholly owned unconsolidated related party to the Company. On the earliest par redemption date and on every fifth anniversary thereafter (each, a “Interest Reset Date”), the rate of interest will reset to equal the yield on 5-year Government of Canada bonds plus 5.2%. With regulatory approval, MLI may redeem the debentures, in whole or in part, on the earliest par redemption date and on any Interest Reset Date, at a redemption price equal to par, together with accrued and unpaid interest. The redemption price for the debentures redeemed on any day that is not an Interest Reset Date will be equal to the greater of par or the fair value of the debt based on the yield on uncallable Government of Canada bonds to the next Interest Reset Date plus (a) 1.0325% if the redemption date is on or after December 31, 2014, but prior to December 31, 2019, or (b) 2.065% if the redemption date is after December 31, 2019, together with accrued and unpaid interest. Refer to note 17.
(2) | Issued by Manulife Holdings (Delaware) LLC (“MHDLL”), now John Hancock Financial Corporation (“JHFC”), a wholly owned subsidiary of MFC, to Manulife Finance (Delaware) LLC (“MFLLC”), a subsidiary of Manulife Finance (Delaware) L.P. (“MFLP”). MFLP and its subsidiaries are wholly owned unconsolidated related parties to the Company. The note bears interest at a floating rate equal to the 90-day Bankers’ Acceptance rate plus 0.72%. With regulatory approval, JHFC may redeem the note, in whole or in part, at any time, at par, together with accrued and unpaid interest. Refer to note 17.
(3) | On the earliest par redemption date, the interest rate will reset to equal the 5-Year US Dollar Mid-Swap Rate plus 1.647%. With regulatory approval, MFC may redeem the debentures, in whole, but not in part, on the earliest par redemption date, at a redemption price equal to par, together with accrued and unpaid interest.
(4) | On the earliest par redemption date, the interest rate will reset to equal the 5-year Singapore Dollar Swap Rate plus a specified number of basis points. The specified number of basis points is as follows: 3.00% – 83.2 bps, 3.85% – 197 bps. With regulatory approval, MFC may redeem the debentures, in whole, but not in part, on the earliest par redemption date and thereafter on each interest payment date, at a redemption price equal to par, together with accrued and unpaid interest.
(5) | Interest is fixed for the period up to the earliest par redemption date, thereafter, the interest rate will reset to a floating rate equal to the 90-day Bankers’ Acceptance rate plus a specified number of basis points. The specified number of basis points is as follows: 3.049% – 105 bps, 3.317% – 78 bps. With regulatory approval, MFC may redeem the debentures, in whole or in part, on or after the earliest par redemption date, at a redemption price equal to par, together with accrued and unpaid interest.
(6) | Interest is fixed for the period up to the earliest par redemption date, thereafter the interest rate will reset to a floating rate equal to the 90-day Bankers’ Acceptance rate plus a specified number of basis points. The specified number of basis points is as follows: 3.181% – 157 bps, 2.389% – 83 bps, 2.10% – 72 bps, 2.64% – 73 bps, 2.811% – 80 bps. With regulatory approval, MLI may redeem the debentures, in whole or in part, on or after the earliest par redemption date, at a redemption price equal to par, together with accrued and unpaid interest.
(7) | Issued by John Hancock Mutual Life Insurance Company, now John Hancock Life Insurance Company (U.S.A.). Any payment of interest or principal on the surplus notes requires prior approval from the Department of Insurance and Financial Services of the State of Michigan. The carrying value of the surplus notes reflects an unamortized fair value increment of US$20 (2017 – US$23), which arose as a result of the acquisition of John Hancock Financial Services, Inc. The amortization of the fair value adjustment is recorded in interest expense.
(8) | MLI redeemed in full the 2.926% and 2.819% subordinated debentures at par, on November 29, 2018 and February 26, 2018, respectively, the earliest par redemption dates.
(b) Fair value measurement Fair value of capital instruments is determined using quoted market prices where available (Level 1). When quoted market prices are not available fair value is determined with reference to quoted prices of debt instruments with similar characteristics or estimated using discounted cash flows using observable market rates (Level 2). Capital instruments are measured at amortized cost in the Consolidated Statements of Financial Position. As at December 31, 2018, the fair value of capital instruments was $8,712 (2017 – $8,636). Capital instruments were categorized in Level 2 of the fair value hierarchy (2017 – Level 2).

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