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Insurance Contract Liabilities and Reinsurance Assets (Tables)
 12 Months Ended
Dec. 31, 2021
Statement [LineItems]  
Summary of Insurance Contract Liabilities and Reinsurance Assets The components of gross and net insurance contract liabilities are shown below.
As at December 31,
  
2021
     2020  
     
Insurance contract liabilities
  
$
  374,890
 
   $ 369,230  
     
Benefits payable and provision for unreported claims
  
 
5,251
 
     4,837  
     
Policyholder amounts on deposit
  
 
12,134
 
     11,487  
     
Gross insurance contract liabilities
  
 
392,275
 
     385,554  
     
Reinsurance assets
(1)
  
 
(44,531
) 
     (45,769 ) 
     
Net insurance contract liabilities
  
$
347,744
 
   $   339,785  
Summary of Composition of Insurance Contract Liabilities and Reinsurance Assets by Line of Business and Reporting Segment
The composition of insurance contract liabilities and reinsurance assets by the line of business and reporting segment is as follows.
Gross insurance contract liabilities
 
    Individual insurance     Annuities
and
 
pensions		     Other
insurance
contract
liabilities
(1)
     Total, net of
reinsurance
ceded		     Total
reinsurance
ceded		    
Total,
gross of
reinsurance
ceded
  
As at December 31, 2021
   Participating    
Non-

participating		  
               
Asia
  
$
64,586
 
  
$
36,387
 
  
$
6,869
 
  
$
3,590
 
  
$
111,432
 
  
$
2,749
 
  
$
114,181
 
               
Canada
  
 
13,518
 
  
 
44,320
 
  
 
16,554
 
  
 
14,981
 
  
 
89,373
 
  
 
430
 
  
 
89,803
 
               
U.S.
  
 
8,591
 
  
 
71,077
 
  
 
14,007
 
  
 
53,555
 
  
 
147,230
 
  
 
41,150
 
  
 
188,380
 
               
Corporate and Other
  
 
–
 
  
 
(676
) 
  
 
22
 
  
 
363
 
  
 
(291
) 
  
 
202
 
  
 
(89
) 
               
Total, net of reinsurance ceded
  
 
86,695
 
  
 
151,108
 
  
 
37,452
 
  
 
72,489
 
  
 
347,744
 
  
$
44,531
 
  
$
392,275
 
               
Total reinsurance ceded
  
 
8,144
 
  
 
20,767
 
  
 
14,681
 
  
 
939
 
  
 
44,531
 
  
 
 
 
  
 
 
 
               
Total, gross of reinsurance ceded
  
$
94,839
 
  
$
171,875
 
  
$
52,133
 
  
$
73,428
 
  
$
392,275
 
  
 
 
 
  
 
 
 
             
    Individual insurance     Annuities
and
 
pensions		     Other
insurance
contract
liabilities
(1)
     Total, net of
reinsurance
ceded		     Total
reinsurance
ceded		    
Total,
gross of
reinsurance
ceded
  
As at December 31, 2020   Participating    
Non-

participating		  
               
Asia
   $ 55,262     $ 36,930     $ 7,114     $ 3,652     $ 102,958     $ 2,127     $ 105,085  
               
Canada
     12,796       44,468       18,462       14,620       90,346       443       90,789  
               
U.S.
     8,422       68,001       16,292       54,224       146,939       42,875       189,814  
               
Corporate and Other
     –       (684 )      34       192       (458 )      324       (134 ) 
               
Total, net of reinsurance ceded
     76,480       148,715       41,902       72,688       339,785     $   45,769     $   385,554  
               
Total reinsurance ceded
     8,780       19,944       16,065       980       45,769    
 
 
 
  
 
 
 
               
Total, gross of reinsurance ceded
   $   85,260     $   168,659     $   57,967     $   73,668     $   385,554    
 
 
 
  
 
 
 
 
(1)
Other insurance contract liabilities include group insurance and individual and group health including long-term care insurance.
Summary of Carrying Value of Assets Backing Net Insurance Contract Liabilities, Other Liabilities and Capital
The following table presents the carrying value of assets backing net insurance contract liabilities, other liabilities and capital.
 
    Individual insurance     Annuities
and pensions		     Other insurance
contract
liabilities
(1)
     Other
liabilities
(2)
     Capital
(3)
     Total  
As at December 31, 2021
   Participating    
Non-

participating		  
               
Assets
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
               
Debt securities
  
$
43,278
 
  
$
82,050
 
  
$
19,575
 
  
$
36,207
 
  
$
10,723
 
  
$
32,306
 
  
$
224,139
 
               
Public equities
  
 
14,667
 
  
 
8,112
 
  
 
453
 
  
 
374
 
  
 
626
 
  
 
3,835
 
  
 
28,067
 
               
Mortgages
  
 
3,799
 
  
 
13,295
 
  
 
4,572
 
  
 
8,526
 
  
 
21,802
 
  
 
20
 
  
 
52,014
 
               
Private placements
  
 
6,005
 
  
 
17,741
 
  
 
7,370
 
  
 
9,775
 
  
 
1,723
 
  
 
228
 
  
 
42,842
 
               
Real estate
  
 
3,467
 
  
 
6,814
 
  
 
987
 
  
 
1,782
 
  
 
6
 
  
 
177
 
  
 
13,233
 
               
Other
  
 
15,479
 
  
 
23,096
 
  
 
4,495
 
  
 
15,825
 
  
 
469,014
 
  
 
29,439
 
  
 
557,348
 
               
Total
  
$
86,695
 
  
$
151,108
 
  
$
37,452
 
  
$
72,489
 
  
$
503,894
 
  
$
66,005
 
  
$
917,643
 
             
    Individual insurance     Annuities
and pensions		     Other insurance
contract
liabilities
(1)
     Other
liabilities
(2)
     Capital
(3)
     Total  
As at December 31, 2020   Participating    
Non-

participating		  
               
Assets
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
               
Debt securities
   $ 39,523     $ 81,548     $ 20,936     $ 34,725     $ 8,872     $ 33,121     $ 218,725  
               
Public equities
     12,365       6,971       461       310       402       3,213       23,722  
               
Mortgages
     3,069       12,536       4,923       8,315       21,338       26       50,207  
               
Private placements
     5,549       17,276       7,499       9,439       817       176       40,756  
               
Real estate
     3,385       6,466       1,027       1,697       57       200       12,832  
               
Other
     12,589       23,918       7,056       18,202       448,014       24,328       534,107  
               
Total
   $   76,480     $   148,715     $   41,902     $   72,688     $   479,500     $   61,064     $   880,349  
 
(1)
Other insurance contract liabilities include group insurance and individual and group health including long-term care insurance.
(2)
Other liabilities are
non-insurance
contract liabilities which include segregated funds, bank deposits, long-term debt, deferred tax liabilities, derivatives, investment contracts, embedded derivatives and other miscellaneous liabilities.
(3)
Capital is defined in note 12.
Summary of Potential Impact on Net Income Attributed to Shareholders Arising From Changes to Non-economic Assumptions
Potential impact on net income attributed to shareholders arising from changes to
non-economic
assumptions
(1)
 
    Decrease in net income
attributed to shareholders		  
As at December 31,
  
2021
     2020  
Policy related assumptions
                
2% adverse change in future mortality rates
(2),(4)
                
Products where an increase in rates increases insurance contract liabilities
  
$
(500
) 
   $ (500 ) 
Products where a decrease in rates increases insurance contract liabilities
  
 
(500
) 
     (600 ) 
5% adverse change in future morbidity rates (incidence and termination)
(3),(4),(5)
  
 
(5,500
)
 
       (5,700 ) 
10% adverse change in future policy termination rates
(4)
  
 
(2,400
) 
     (2,600 ) 
5% increase in future expense levels
  
 
(600
) 
     (600 ) 
 
(1)
The participating policy funds are largely self-supporting and generate no material impact on net income attributed to shareholders as a result of changes in
non-economic
assumptions. Experience gains or losses would generally result in changes to future dividends, with no direct impact to shareholders.
(2)
An increase in mortality rates will generally increase policy liabilities for life insurance contracts whereas a decrease in mortality rates will generally increase policy liabilities for policies with longevity risk such as payout annuities.
(3)
No amounts related to morbidity risk are included for policies where the policy liability provides only for claims costs expected over a short period, generally less than one year, such as Group Life and Health.
(4)
The impacts of the adverse sensitivities on LTC for morbidity, mortality and lapse do not assume any partial offsets from the Company’s ability to contractually raise premium rates in such events, subject to state regulatory approval. In practice, the Company would plan to file for rate increases equal to the amount of deterioration resulting from the sensitivities.
(5)
5% deterioration in incidence rates and 5% deterioration in claim termination rates.
Summary of Actuarial Methods and Assumptions
The completion of the 2021 annual review of actuarial methods and assumptions resulted in an increase in insurance contract liabilities of $287, net of reinsurance, and a decrease in net income attributed to shareholders of $41
post-tax.
 
   
Change in insurance contract liabilities,
net of reinsurance
        
For the year ended December 31, 2021
   Total     Attributed to
participating
policyholders’
account
(1)
     Attributed to
shareholders’
account		     Change in net
income attributed
to shareholders
(post-tax)
  
U.S. variable annuity product review
  
$
51
 
  
$
–
 
  
$
51
 
  
$
(40
) 
Mortality and morbidity updates
  
 
350
 
  
 
–
 
  
 
350
 
  
 
(257
) 
Lapses and policyholder behaviour updates
  
 
686
 
  
 
18
 
  
 
668
 
  
 
(534
) 
Expense updates
  
 
(653
) 
  
 
(25
) 
  
 
(628
) 
  
 
    503
 
Investment related updates
  
 
(257
) 
  
 
(2
) 
  
 
(255
) 
  
 
168
 
Other updates
  
 
110
 
  
 
231
 
  
 
(121
) 
  
 
119
 
Net impact
  
$
   287
 
  
$
    222
 
  
$
    65
 
  
$
(41
) 
 
(1)
The change in insurance contract liabilities, net of reinsurance, attributable to the participating policyholders’ account was primarily driven by a reduction in the expected long-term interest rates within the valuation models to reflect the low interest rate environment.
 
    Change in insurance contract liabilities,
net of reinsurance		        
For the year ended December 31, 2020   Total     Attributed to
participating
policyholders’
account
(1)
     Attributed to
shareholders’
account		     Change in net
income attributed
to shareholders
(post-tax)
  
Canada variable annuity product review
   $ (42 )    $        –     $ (42 )    $ 31  
Mortality and morbidity updates
     (304 )      (1 )      (303 )      232  
Lapses and policyholder behaviour updates
     893       –         893       (682 ) 
Investment related updates
     (212 )      (153 )      (59 )          31  
Other updates
     228       455       (227 )      190  
Net impact
   $      563     $ 301     $ 262     $ (198 ) 
 
(1)
The change in insurance contract liabilities, net of reinsurance, attributable to the participating policyholders’ account was driven by refinements to the Company’s valuation models, primarily due to annual updates to reflect market movements in the first half of 2020.
Summary of Insurance Contract Liabilities, Payments Due by Period
Insurance contracts give rise to obligations fixed by agreement. As at December 31, 2021, the Company’s contractual obligations and commitments relating to insurance contracts are as follows.
 
Payments due by period
    Less than
1 year		     
1 to 3
years
     
3 to 5
years
      Over 5 years      Total  
Insurance contract liabilities
(1)
   
$
  12,793
 
   
$
  10,977
 
   
$
  17,091
 
   
$
  868,749
 
   
$
  909,610
 
 
(1)
Insurance contract liability cash flows include estimates related to the timing and payment of death and disability claims, policy surrenders, policy maturities, annuity payments, minimum guarantees on segregated fund products, policyholder dividends, commissions and premium taxes offset by contractual future premiums on
in-force
contracts. These estimated cash flows are based on the best estimate assumptions used in the determination of insurance contract liabilities. These amounts are undiscounted and reflect recoveries from reinsurance agreements. Due to the use of assumptions, actual cash flows may differ from these estimates. Cash flows include embedded derivatives measured separately at fair value.
Summary of Gross Claims and Benefits
The following table presents a breakdown of gross claims and benefits.
 
For the years ended December 31,
  
2021
     2020  
Death, disability and other claims
  
$
  18,583
 
   $ 18,064  
Maturity and surrender benefits
  
 
8,728
 
     8,613  
Annuity payments
  
 
3,276
 
     3,560  
Policyholder dividends and experience rating refunds
  
 
1,255
 
     1,411  
Net transfers from segregated funds
  
 
(732
) 
     (1,515 ) 
Total
  
$
  31,110
 
   $   30,133  
Long term care [member]  
Statement [LineItems]  
Summary of Potential Impact on Net Income Attributed to Shareholders Arising From Changes to Non-economic Assumptions
Potential impact on net income attributed to shareholders arising from changes to
non-economic
assumptions for Long-Term Care included in the above table
(1),(2)
 
     Decrease in net income
attributed to shareholders		  
As at December 31,
   
2021
      2020  
Policy related assumptions
                  
2% adverse change in future mortality rates
   
$
(300
) 
    $ (300 ) 
5% adverse change in future morbidity incidence rates
   
 
(2,000
) 
        (2,100 ) 
5% adverse change in future morbidity claims termination rates
   
 
(3,100
) 
      (3,100 ) 
10% adverse change in future policy termination rates
   
 
(400
) 
      (400 ) 
5% increase in future expense levels
   
 
(100
) 
      (100 ) 
 
(1)
The impacts of the adverse sensitivities on LTC for morbidity, mortality and lapse do not assume any partial offsets from the Company’s ability to contractually raise premium rates in such events, subject to state regulatory approval. In practice, the Company would plan to file for rate increases equal to the amount of deterioration resulting from the sensitivities.
(2)
The impact of favourable changes to all the sensitivities is relatively symmetrical.
Life insurance contracts [Member]  
Statement [LineItems]  
Summary of Change in Insurance Contract Liabilities
The change in insurance contract liabilities was a result of the following business activities and changes in actuarial estimates.
 
For the year ended December 31, 2021
   Net actuarial
liabilities		     Other
insurance
contract
liabilities
(1)
     Net
insurance
contract
liabilities		     Reinsurance
assets		     Gross
insurance
contract
liabilities		  
Balance, January 1
  
$
325,408
 
  
$
14,377
 
  
$
339,785
 
  
$
45,769
 
  
$
385,554
 
New policies
(2)
  
 
5,947
 
  
 
–
 
  
 
5,947
 
  
 
276
 
  
 
6,223
 
Normal
in-force
movement
(2)
  
 
4,689
 
  
 
1,283
 
  
 
5,972
 
  
 
(1,812
) 
  
 
4,160
 
Changes in methods and assumptions
(2)
  
 
287
 
  
 
–
 
  
 
287
 
  
 
455
 
  
 
742
 
Reinsurance transactions
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
Impact of changes in foreign exchange rates
  
 
(4,059
) 
  
 
(188
) 
  
 
(4,247
) 
  
 
(157
) 
  
 
(4,404
) 
Balance, December 31
  
$
332,272
 
  
$
15,472
 
  
$
347,744
 
  
$
44,531
 
  
$
392,275
 
           
For the year ended December 31, 2020   Net actuarial
liabilities		     Other
insurance
contract
liabilities
(1)
     Net
insurance
contract
liabilities		     Reinsurance
assets		     Gross
insurance
contract
liabilities		  
Balance, January 1
   $ 296,589     $ 13,219     $ 309,808     $ 41,353     $ 351,161  
New policies
(3)
     3,166       –       3,166       481       3,647  
Normal
in-force
movement
(3)
     32,340       1,312       33,652       (3,030 )      30,622  
Changes in methods and assumptions
(3)
     563       –       563       4,559       5,122  
Reinsurance transactions
(4)
     (3,360 )      –       (3,360 )      3,360       –  
Impact of changes in foreign exchange rates
     (3,890 )      (154 )      (4,044 )      (954 )      (4,998 ) 
Balance, December 31
   $   325,408     $   14,377     $   339,785     $   45,769     $   385,554  
 
(1)
Other insurance contract liabilities are comprised of benefits payable and provisions for unreported claims and policyholder amounts on deposit.
(2)
In 2021, the $10,719 increase reported as the change in insurance contract liabilities on the Consolidated Statements of Income primarily consists of changes due to normal
in-force
movement, new policies and changes in methods and assumptions. These three items in the gross insurance contract liabilities were netted off by an increase of $11,125, of which $9,868 is included in the Consolidated Statements of Income increase in insurance contract liabilities and $1,257 is included in gross claims and benefits. The Consolidated Statements of Income change in insurance contract liabilities also includes the change in embedded derivatives associated with insurance contracts.
(3)
In 2020, the $36,982 increase reported as the change in insurance contract liabilities on the Consolidated Statements of Income primarily consists of changes due to normal
in-force
movement, new policies, associated embedded derivatives and changes in methods and assumptions. These three items in the gross insurance contract liabilities were netted off by an increase of $39,391, of which $37,876 is included in the Consolidated Statements of Income increase in insurance contract liabilities and $1,515 is included in gross claims and benefits. The Consolidated Statements of Income change in insurance contract liabilities also includes the change in embedded derivatives associated with insurance contracts; however, these embedded derivatives are included in other liabilities on the Consolidated Statements of Financial Position.
(4)
On September 30, 2020, the Company, through its subsidiary John Hancock Life Insurance Company (U.S.A.), entered into a reinsurance agreement with Global Atlantic Financial Group Ltd to reinsure a block of legacy U.S. bank owned life insurance (“BOLI”). Under the terms of the transaction, the Company will maintain responsibility for servicing the policies with no expected impact to the BOLI policyholders. The transaction was structured such that the Company ceded policyholder contract liabilities and transferred invested assets backing these liabilities.