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Commitments and Contingencies | 12 Months Ended
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Dec. 31, 2020
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Commitments and Contingencies | Note 18 Commitments and Contingencies (a) Legal proceedings The Company is regularly involved in legal actions, both as a defendant and as a plaintiff. The legal actions where the Company is a party ordinarily relate to its activities as a provider of insurance protection or wealth management products, reinsurance, or in its capacity as an investment adviser, employer, or taxpayer. Other life insurers and asset managers, operating in the jurisdictions in which the Company does business, have been subject to a wide variety of other types of actions, some of which resulted in substantial judgments or settlements against the defendants; it is possible that the Company may become involved in similar actions in the future. In addition, government and regulatory bodies in Canada, the United States, Asia and other jurisdictions where the Company conducts business regularly make inquiries and, from time to time, require the production of information or conduct examinations concerning the Company’s compliance with, among other things, insurance laws, securities laws, and laws governing the activities of broker-dealers. In June 2018, a class action was initiated against John Hancock Life Insurance Company (U.S.A.) (“JHUSA”) and John Hancock Life Insurance Company of New York (“JHNY”) in the U.S. District Court for the Southern District of New York on behalf of owners of approximately 1,500 Performance Universal Life (“UL”) policies issued between 2003 and 2009 whose policies were subject to a Cost of Insurance (“COI”) increase announced in 2018. In October 2018, a second and almost identical class action was initiated against JHUSA and JHNY in the U.S. District Court for the Southern District of New York. The two cases were determined to be related, and they were consolidated and assigned to the same judge. Discovery has commenced in these cases. No hearings on substantive matters have been scheduled. It is too early to assess the range of potential outcomes for these two related lawsuits. In addition to the consolidated class action, there are seven non-class lawsuits opposing the Performance UL COI increases that also have been filed. Each of the lawsuits, except one, is brought by plaintiffs owning multiple policies and by entities managing them for investment purposes. Two of the non-class lawsuits are pending in New York state court; two of the lawsuits are pending in the U.S. District Court for the Southern District of New York; and three lawsuits are pending in the U.S. District Court for the Central District of California. Whether individually or on a combined basis, it remains premature, given the procedural status of these cases, as well as the relatively early development of parties’ respective legal theories, to suggest a reliable estimate of potential outcomes. (b) Investment commitments In the normal course of business, various investment commitments are outstanding which are not reflected in the Consolidated Financial Statements. There were $9,937 (2019 – $8,682) of outstanding investment commitments as at December 31, 2020, of which $638 (2019 – $411) mature in 30 days, $2,634 (2019 – $2,507) mature in 31 to 365 days and $6,665 (2019 – $5,764) mature after one year. (c) Letters of credit In the normal course of business, third-party relationship banks issue letters of credit on the Company’s behalf. The Company’s businesses utilize letters of credit for which third parties are the beneficiaries, as well as for affiliate reinsurance transactions between its subsidiaries. As at December 31, 2020, letters of credit for which third parties are beneficiary, in the amount of $103 (2019 – $57), were outstanding. (d) Guarantees (i) Guarantees regarding Manulife Finance (Delaware), L.P. (“MFLP”) MFC has guaranteed the payment of amounts on the $650 subordinated debentures due on December 15, 2041 issued by MFLP, a wholly owned unconsolidated partnership. (ii) Guarantees regarding The Manufacturers Life Insurance Company MFC has provided a subordinated guarantee on the day of issuance for the following subordinated debentures issued by MLI: $350 issued on June 1, 2015; and $1,000 issued on November 20, 2015. The following table presents certain condensed consolidated financial information for MFC and MFLP. Condensed Consolidated Statements of Income Information
For the year ended December 31, 2020 |  | MFC (Guarantor) |  |  | MLI consolidated |  |  | Other subsidiaries of MFC on a combined basis |  |  | Consolidation adjustments |  |  | Total consolidated amounts |  |  |  |  |  | MFLP |
Total revenue |  | $ | 547 |  |  | $ | 78,929 |  |  | $ | 520 |  |  | $ | (1,088 | ) |  | $ | 78,908 |  |  |  |  |  |  | $ | 32 |
Net income (loss) attributed to shareholders |  |  | 5,871 |  |  |  | 6,179 |  |  |  | (500 | ) |  |  | (5,679 | ) |  |  | 5,871 |  |  |  |  |  |  |  | (1 | )
For the year ended December 31, 2019 |  | MFC (Guarantor) |  |  | MLI consolidated |  |  | Other subsidiaries of MFC on a combined basis |  |  | Consolidation adjustments |  |  | Total consolidated amounts |  |  |  |  |  | MFLP |
Total revenue |  | $ | 371 |  |  | $ | 79,711 |  |  | $ | 417 |  |  | $ | (929 | ) |  | $ | 79,570 |  |  |  |  |  |  | $ | 32 |
Net income (loss) attributed to shareholders |  |  | 5,602 |  |  |  | 5,963 |  |  |  | (401 | ) |  |  | (5,562 | ) |  |  | 5,602 |  |  |  |  |  |  |  | (1 | )
Condensed Consolidated Statements of Financial Position
As at December 31, 2020 |  | MFC (Guarantor) |  |  | MLI consolidated |  |  | Other subsidiaries of MFC on a combined basis |  |  | Consolidation adjustments |  |  | Total consolidated amounts |  |  |  |  |  | MFLP |
Invested assets |  | $ | 47 |  |  | $ | 410,919 |  |  | $ | 11 |  |  | $ | – |  |  | $ | 410,977 |  |  |  |  |  |  | $ | 5 |
Total other assets |  |  | 64,419 |  |  |  | 102,439 |  |  |  | 3 |  |  |  | (64,925 | ) |  |  | 101,936 |  |  |  |  |  |  |  | 1,166 |
Segregated funds net assets |  |  | – |  |  |  | 367,436 |  |  |  | – |  |  |  | – |  |  |  | 367,436 |  |  |  |  |  |  |  | – |
Insurance contract liabilities |  |  | – |  |  |  | 385,554 |  |  |  | – |  |  |  | – |  |  |  | 385,554 |  |  |  |  |  |  |  | – |
Investment contract liabilities |  |  | – |  |  |  | 3,288 |  |  |  | – |  |  |  | – |  |  |  | 3,288 |  |  |  |  |  |  |  | – |
Segregated funds net liabilities |  |  | – |  |  |  | 367,436 |  |  |  | – |  |  |  | – |  |  |  | 367,436 |  |  |  |  |  |  |  | – |
Total other liabilities |  |  | 12,131 |  |  |  | 59,683 |  |  |  | – |  |  |  | (749 | ) |  |  | 71,065 |  |  |  |  |  |  |  | 936 |
As at December 31, 2019 |  | MFC (Guarantor) |  |  | MLI consolidated |  |  | Other subsidiaries of MFC on a combined basis |  |  | Consolidation adjustments |  |  | Total consolidated amounts |  |  |  |  |  | MFLP |
Invested assets |  | $ | 21 |  |  | $ | 378,496 |  |  | $ | 10 |  |  | $ | – |  |  | $ | 378,527 |  |  |  |  |  |  | $ | 6 |
Total other assets |  |  | 57,474 |  |  |  | 87,774 |  |  |  | 3 |  |  |  | (57,756 | ) |  |  | 87,495 |  |  |  |  |  |  |  | 1,088 |
Segregated funds net assets |  |  | – |  |  |  | 343,108 |  |  |  | – |  |  |  | – |  |  |  | 343,108 |  |  |  |  |  |  |  | – |
Insurance contract liabilities |  |  | – |  |  |  | 351,161 |  |  |  | – |  |  |  | – |  |  |  | 351,161 |  |  |  |  |  |  |  | – |
Investment contract liabilities |  |  | – |  |  |  | 3,104 |  |  |  | – |  |  |  | – |  |  |  | 3,104 |  |  |  |  |  |  |  | – |
Segregated funds net liabilities |  |  | – |  |  |  | 343,108 |  |  |  | – |  |  |  | – |  |  |  | 343,108 |  |  |  |  |  |  |  | – |
Total other liabilities |  |  | 8,357 |  |  |  | 53,998 |  |  |  | – |  |  |  | (704 | ) |  |  | 61,651 |  |  |  |  |  |  |  | 858 |
(iii) Guarantees regarding John Hancock Life Insurance Company (U.S.A.) (“JHUSA”) Details of guarantees regarding certain securities issued or to be issued by JHUSA are outlined in note 23. (e) Pledged assets In the normal course of business, the Company pledges its assets in respect of liabilities incurred, strictly for providing collateral to the counterparty. In the event of the Company’s default, the counterparty is entitled to apply the collateral to settle the liability. The pledged assets are returned to the Company if the underlying transaction is terminated or, in the case of derivatives, if there is a decrease in the net exposure due to market value changes. The amounts pledged are as follows.
|  | 2020 |  |  |  |  |  | 2019 |
As at December 31, |  | Debt securities |  |  | Other |  |  |  |  |  | Debt securities |  |  | Other |
In respect of: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivatives |  | $ | 5,924 |  |  | $ | 35 |  |  |  |  |  |  | $ | 4,257 |  |  | $ | 17 |
Secured borrowings (1) |  |  | – |  |  |  | 2,790 |  |  |  |  |  |  |  | – |  |  |  | – |
Regulatory requirements |  |  | 452 |  |  |  | 80 |  |  |  |  |  |  |  | 433 |  |  |  | 67 |
Repurchase agreements |  |  | 353 |  |  |  | – |  |  |  |  |  |  |  | 330 |  |  |  | – |
Non-registered retirement plans in trust |  |  | – |  |  |  | 424 |  |  |  |  |  |  |  | – |  |  |  | 407 |
Other |  |  | 2 |  |  |  | 302 |  |  |  |  |  |  |  | 3 |  |  |  | 331 |
Total |  | $ | 6,731 |  |  | $ | 3,631 |  |  |  |  |  |  | $ | 5,023 |  |  | $ | 822 |
(1) | During the year, the Company pledged its mortgage loans with the Federal Home Loan Bank of Indianapolis (“FHLBI”). Of this amount, $937 is required collateral for the US$500 outstanding borrowing to JHUSA under the FHLBI facility; and $1,853 is excess collateral that can be called back by JHUSA at any time.
(f) Participating business In some territories where the Company maintains participating accounts, there are regulatory restrictions on the amounts of profit that can be transferred to shareholders. Where applicable, these restrictions generally take the form of a fixed percentage of policyholder dividends. For participating businesses operating as separate “closed blocks”, transfers are governed by the terms of MLI’s and John Hancock Mutual Life Insurance Company’s plans of demutualization. (g) Fixed surplus notes A third party contractually provides standby financing arrangements for the Company’s U.S. operations under which, in certain circumstances, funds may be provided in exchange for the issuance of fixed surplus notes. As at December 31, 2020, the Company had no fixed surplus notes outstanding.

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