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Information Provided in Connection with Investments in Deferred Annuity Contracts and SignatureNotes Issued or Assumed by John Hancock Life Insurance Company (U.S.A.)
 12 Months Ended
Dec. 31, 2022
Text block [abstract]  
Information Provided in Connection with Investments in Deferred Annuity Contracts and SignatureNotes Issued or Assumed by John Hancock Life Insurance Company (U.S.A.)
Note 24    Information Provided in Connection with Investments in Deferred Annuity Contracts and
Signature
Notes Issued or Assumed by John Hancock Life Insurance Company (U.S.A.)
The following condensed consolidated financial information, presented in accordance with IFRS, and the related disclosure have been included in these Consolidated Financial Statements with respect to JHUSA in compliance with Regulation
S-X
and Rule
12h-5
of the United States Securities and Exchange Commission (the “Commission”). These financial statements are incorporated by reference in certain of the MFC and its subsidiaries registration statements that are described below and relate to MFC’s guarantee of certain securities to be issued by its subsidiaries.
JHUSA maintains a book of deferred annuity contracts that feature a market value adjustment, some of which are registered with the Commission. The deferred annuity contracts may contain variable investment options along with fixed investment period options, or may offer only fixed investment period options. The fixed investment period options enable the participant to invest fixed amounts of money for fixed terms at fixed interest rates, subject to a market value adjustment if the participant desires to terminate a fixed investment period before its maturity date. The annuity contract provides for the market value adjustment to keep the parties whole with respect to the fixed interest bargain for the entire fixed investment period. These fixed investment period options that contain a market value adjustment feature are referred to as “MVAs”.
JHUSA has sold medium-term notes to retail investors under its
Signature
Notes program.
Effective December 31, 2009, John Hancock Variable Life Insurance Company (the “Variable Company”) and John Hancock Life Insurance Company (the “Life Company”) merged with and into JHUSA. In connection with the mergers, JHUSA assumed the Variable Company’s rights and obligations with respect to the MVAs issued by the Variable Company and the Life Company’s rights and obligations with respect to the
Signature
Notes issued by the Life Company.
MFC fully and unconditionally guaranteed the payment of JHUSA’s obligations under the MVAs and under the
Signature
Notes (including the MVAs and
Signature
Notes assumed by JHUSA in the merger), and such MVAs and the
Signature
Notes were registered with the Commission. The
Signature
Notes and MVAs assumed or issued by JHUSA are collectively referred to in this note as the “Guaranteed Securities”. JHUSA is, and each of the Variable Company and the Life Company was, a wholly owned subsidiary of MFC.
MFC’s guarantees of the Guaranteed Securities are unsecured obligations of MFC and are subordinated in right of payment to the prior payment in full of all other obligations of MFC, except for other guarantees or obligations of MFC which by their terms are designated as ranking equally in right of payment with or subordinate to MFC’s guarantees of the Guaranteed Securities.
The laws of the State of New York govern MFC’s guarantees of the
Signature
Notes issued or assumed by JHUSA and the laws of the Commonwealth of Massachusetts govern MFC’s guarantees of the MVAs issued or assumed by JHUSA. MFC has consented to the jurisdiction of the courts of New York and Massachusetts. However, because a substantial portion of MFC’s assets are located outside the United States, the assets of MFC located in the United States may not be sufficient to satisfy a judgment given by a federal or state court in the United States to enforce the subordinate guarantees. In general, the federal laws of Canada and the laws of the Province of Ontario, where MFC’s principal executive offices are located, permit an action to be brought in Ontario to enforce such a judgment provided that such judgment is subsisting and unsatisfied for a fixed sum of money and not void or voidable in the United States and a Canadian court will render a judgment against MFC in a certain dollar amount, expressed in Canadian dollars, subject to customary qualifications regarding fraud, violations of public policy, laws limiting the enforcement of creditor’s rights and applicable statutes of limitations on judgments. There is currently no public policy in effect in the Province of Ontario that would support avoiding the recognition and enforcement in Ontario of a judgment of a New York or Massachusetts court on MFC’s guarantees of the
Signature
Notes issued or assumed by JHUSA or a Massachusetts court on guarantees of the MVAs issued or assumed by JHUSA.
MFC is a holding company. MFC’s assets primarily consist of investments in its subsidiaries. MFC’s cash flows primarily consist of dividends and interest payments from its operating subsidiaries, offset by expenses and shareholder dividends and MFC stock repurchases. As a holding company, MFC’s ability to meet its cash requirements, including, but not limited to, paying any amounts due under its guarantees, substantially depends upon dividends from its operating subsidiaries.
These subsidiaries are subject to certain regulatory restrictions under laws in Canada, the United States and certain other countries, which may limit their ability to pay dividends or make contributions or loans to MFC. For example, some of MFC’s subsidiaries are subject to restrictions prescribed by the ICA on their ability to declare and pay dividends. The restrictions related to dividends imposed by the ICA are described in note 13.
 
In the United States, insurance laws in Michigan, New York, and Massachusetts, the jurisdictions in which certain of MFC’s U.S. insurance company subsidiaries are domiciled, impose general limitations on the payment of dividends and other upstream distributions or loans by these insurance subsidiaries. These limitations are described in note 13.
In Asia, the insurance laws of the jurisdictions in which MFC operates either provide for specific restrictions on the payment of dividends or other distributions or loans by subsidiaries or impose solvency or other financial tests, which could affect the ability of subsidiaries to pay dividends in certain circumstances.
There can be no assurance that any current or future regulatory restrictions in Canada, the United States or Asia will not impair MFC’s ability to meet its cash requirements, including, but not limited to, paying any amounts due under its guarantees.
The following condensed consolidated financial information, presented in accordance with IFRS, reflects the effects of the mergers and is provided in compliance with Regulation
S-X
and in accordance with Rule
12h-5
of the Commission.
Condensed Consolidated Statement of Financial Position
 
As at December 31, 2022
   MFC
(Guarantor)		     JHUSA
(Issuer)		     Other
subsidiaries		     Consolidation
adjustments		     Consolidated
MFC		  
Assets
                                        
Invested assets
  
$
63
 
  
$
116,463
 
  
$
297,996
 
  
$
(521
) 
  
$
414,001
 
Investments in unconsolidated subsidiaries
  
 
67,209
 
  
 
8,819
 
  
 
22,053
 
  
 
(98,081
) 
  
 
–
 
Reinsurance assets
  
 
–
 
  
 
61,511
 
  
 
12,137
 
  
 
(25,936
) 
  
 
47,712
 
Other assets
  
 
334
 
  
 
9,456
 
  
 
48,135
 
  
 
(19,259
) 
  
 
38,666
 
Segregated funds net assets
  
 
–
 
  
 
173,417
 
  
 
177,361
 
  
 
(2,216
) 
  
 
348,562
 
Total assets
  
$
67,606
 
  
$
369,666
 
  
$
557,682
 
  
$
(146,013
) 
  
$
848,941
 
Liabilities and equity
                                        
Insurance contract liabilities
  
$
–
 
  
$
156,205
 
  
$
241,830
 
  
$
(26,630
) 
  
$
371,405
 
Investment contract liabilities
  
 
–
 
  
 
1,418
 
  
 
1,830
 
  
 
–
 
  
 
3,248
 
Other liabilities
  
 
451
 
  
 
20,159
 
  
 
55,304
 
  
 
(18,923
) 
  
 
56,991
 
Long-term debt
  
 
6,234
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
6,234
 
Capital instruments
  
 
4,860
 
  
 
614
 
  
 
648
 
  
 
–
 
  
 
6,122
 
Segregated funds net liabilities
  
 
–
 
  
 
173,417
 
  
 
177,361
 
  
 
(2,216
) 
  
 
348,562
 
Shareholders’ and other equity holders’ equity
  
 
56,061
 
  
 
17,853
 
  
 
80,391
 
  
 
(98,244
) 
  
 
56,061
 
Participating policyholders’ equity
  
 
–
 
  
 
–
 
  
 
(1,346
) 
  
 
–
 
  
 
(1,346
) 
Non-controlling
interests
  
 
–
 
  
 
–
 
  
 
1,664
 
  
 
–
 
  
 
1,664
 
Total liabilities and equity
  
$
67,606
 
  
$
369,666
 
  
$
557,682
 
  
$
(146,013
)
  
$
  848,941
 
Condensed Consolidated Statement of Financial Position
 
As at December 31, 2021   MFC
(Guarantor)		     JHUSA
(Issuer)		     Other
subsidiaries		     Consolidation
adjustments		     Consolidated
MFC		  
Assets
                                        
Invested assets
   $ 78     $ 116,705     $ 310,679     $ (364 )    $ 427,098  
Investments in unconsolidated subsidiaries
     68,655       9,107       20,788       (98,550 )      –  
Reinsurance assets
     –       63,838       11,309       (30,568 )      44,579  
Other assets
     211       18,085       49,956       (22,074 )      46,178  
Segregated funds net assets
     –       204,493       197,220       (1,925 )      399,788  
Total assets
   $ 68,944     $ 412,228     $ 589,952     $ (153,481 )    $ 917,643  
Liabilities and equity
                                        
Insurance contract liabilities
   $ –     $ 166,535     $ 257,044     $ (31,304 )    $ 392,275  
Investment contract liabilities
     –       1,227       1,890       –       3,117  
Other liabilities
     899       21,806       50,836       (21,809 )      51,732  
Long-term debt
     4,882       –       –       –       4,882  
Capital instruments
     4,755       579       1,646       –       6,980  
Segregated funds net liabilities
     –       204,493       197,220       (1,925 )      399,788  
Shareholders’ and other equity holders’ equity
     58,408       17,588       80,855       (98,443 )      58,408  
Participating policyholders’ equity
     –       –       (1,233 )      –       (1,233 ) 
Non-controlling
interests
     –       –       1,694       –       1,694  
Total liabilities and equity
   $   68,944     $   412,228     $   589,952     $   (153,481 )    $   917,643  
 
Condensed Consolidated Statement of Income
 
For the year ended December 31, 2022
   MFC
(Guarantor)		     JHUSA
(Issuer)		     Other
subsidiaries		     Consolidation
adjustments		     Consolidated
MFC		  
Revenue
                                        
Gross premiums
  
$
–
 
  
$
7,924
 
  
$
37,041
 
  
$
(863
) 
  
$
44,102
 
Premiums ceded to reinsurers
  
 
–
 
  
 
(2,561
) 
  
 
(4,662
) 
  
 
974
 
  
 
(6,249
) 
Net premium income
  
 
–
 
  
 
5,363
 
  
 
32,379
 
  
 
111
 
  
 
37,853
 
Net investment income (loss)
  
 
554
 
  
 
(9,714
) 
  
 
(19,446
) 
  
 
(1,264
) 
  
 
(29,870
) 
Other revenue
  
 
(36
) 
  
 
281
 
  
 
7,871
 
  
 
1,048
 
  
 
9,164
 
Total revenue
  
 
518
 
  
 
(4,070
) 
  
 
20,804
 
  
 
(105
) 
  
 
17,147
 
Contract benefits and expenses
                                        
Net benefits and claims
  
 
–
 
  
 
(8,505
) 
  
 
(1,572
) 
  
 
778
 
  
 
(9,299
) 
Commissions, investment and general expenses
  
 
42
 
  
 
3,099
 
  
 
13,798
 
  
 
(1,034
) 
  
 
15,905
 
Other expenses
  
 
440
 
  
 
264
 
  
 
939
 
  
 
151
 
  
 
1,794
 
Total contract benefits and expenses
  
 
482
 
  
 
(5,142
) 
  
 
13,165
 
  
 
(105
) 
  
 
8,400
 
Income (loss) before income taxes
  
 
36
 
  
 
1,072
 
  
 
7,639
 
  
 
–
 
  
 
8,747
 
Income tax (expense) recovery
  
 
32
 
  
 
(23
) 
  
 
(1,574
) 
  
 
–
 
  
 
(1,565
) 
Income (loss) after income taxes
  
 
68
 
  
 
1,049
 
  
 
6,065
 
  
 
–
 
  
 
7,182
 
Equity in net income (loss) of unconsolidated subsidiaries
  
 
7,226
 
  
 
997
 
  
 
2,046
 
  
 
(10,269
) 
  
 
–
 
Net income (loss)
  
$
7,294
 
  
$
2,046
 
  
$
8,111
 
  
$
(10,269
)
 
  
$
7,182
 
Net income (loss) attributed to:
                                        
Non-controlling
interests
  
$
–
 
  
$
–
 
  
$
(1
) 
  
$
–
 
  
$
(1
) 
Participating policyholders
  
 
–
 
  
 
(236
) 
  
 
125
 
  
 
–
 
  
 
(111
) 
Shareholders and other equity holders
  
 
7,294
 
  
 
2,282
 
  
 
7,987
 
  
 
(10,269
) 
  
 
7,294
 
 
  
$
  7,294
 
  
$
2,046
 
  
$
8,111
 
  
$
(10,269
)
  
$
7,182
 
Condensed Consolidated Statement of Income
 
For the year ended December 31, 2021   MFC
(Guarantor)		     JHUSA
(Issuer)		     Other
subsidiaries		     Consolidation
adjustments		     Consolidated
MFC		  
Revenue
                                        
Gross premiums
   $ –     $ 7,782     $ 37,563     $ (1,001 )    $ 44,344  
Premiums ceded to reinsurers
     –       (3,243 )      (3,031 )      995       (5,279 ) 
Net premium income
     –       4,539       34,532       (6 )      39,065  
Net investment income (loss)
     530       3,779       8,440       (1,125 )      11,624  
Other revenue
     33       2,042       9,605       (548 )      11,132  
Total revenue
     563       10,360       52,577       (1,679 )      61,821  
Contract benefits and expenses
                                        
Net benefits and claims
     –       6,478       28,467       877       35,822  
Commissions, investment and general expenses
     12       3,451       14,419       (1,436 )      16,446  
Other expenses
     390       212       1,946       (1,120 )      1,428  
Total contract benefits and expenses
     402       10,141       44,832       (1,679 )      53,696  
Income (loss) before income taxes
     161       219       7,745       –       8,125  
Income tax (expense) recovery
     (28 )      115       (1,300 )      –       (1,213 ) 
Income (loss) after income taxes
     133       334       6,445       –       6,912  
Equity in net income (loss) of unconsolidated subsidiaries
     6,972       1,218       1,552       (9,742 )      –  
Net income (loss)
   $ 7,105     $ 1,552     $ 7,997     $ (9,742 )    $ 6,912  
Net income (loss) attributed to:
                                        
Non-controlling
interests
   $ –    
$
 –     $ 255     $ –     $ 255  
Participating policyholders
     –       (4 )      (448 )      4       (448 ) 
Shareholders
     7,105       1,556       8,190       (9,746 )      7,105  
 
   $   7,105     $     1,552     $     7,997     $   (9,742 )    $     6,912  
 
Consolidated Statement of Cash Flows

 
For the year ended December 31, 2022
  
MFC
(Guarantor)
    
JHUSA
(Issuer)
    
Other
subsidiaries
    
Consolidation
adjustments
    
Consolidated
MFC
  
Operating activities
                                        
Net income (loss)
  
$
7,294
 
  
$
2,046
 
  
$
8,111
 
  
$
(10,269
) 
  
$
7,182
 
Adjustments:
                                        
Equity in net income of unconsolidated subsidiaries
  
 
(7,226
) 
  
 
(997
) 
  
 
(2,046
) 
  
 
10,269
 
  
 
–
 
Increase (decrease) in insurance contract liabilities
  
 
–
 
  
 
(20,032
) 
  
 
(13,381
) 
  
 
–
 
  
 
(33,413
) 
Increase (decrease) in investment contract liabilities
  
 
–
 
  
 
44
 
  
 
(3
) 
  
 
–
 
  
 
41
 
(Increase) decrease in reinsurance assets excluding coinsurance transactions
  
 
–
 
  
 
6,869
 
  
 
(6,710
) 
  
 
–
 
  
 
159
 
Amortization of (premium) discount on invested assets
  
 
–
 
  
 
46
 
  
 
(78
) 
  
 
–
 
  
 
(32
) 
Other amortization
  
 
9
 
  
 
125
 
  
 
404
 
  
 
–
 
  
 
538
 
Net realized and unrealized (gains) losses and impairment on assets
  
 
(36
) 
  
 
15,150
 
  
 
32,156
 
  
 
–
 
  
 
47,270
 
Gain on U.S. variable annuity reinsurance transaction
(pre-tax)
  
 
–
 
  
 
(1,026
) 
  
 
(44
) 
  
 
–
 
  
 
(1,070
) 
Gain on derecognition of Joint Venture interest during Manulife TEDA acquisition (pre-tax)
  
 
–
 
  
 
–
 
  
 
(95
) 
  
 
–
 
  
 
(95
) 
Deferred income tax expense (recovery)
  
 
(33
) 
  
 
294
 
  
 
470
 
  
 
–
 
  
 
731
 
Stock option expense
  
 
–
 
  
 
(3
) 
  
 
8
 
  
 
–
 
  
 
5
 
Cash provided by (used in) operating activities before undernoted items
  
 
8
 
  
 
2,516
 
  
 
18,792
 
  
 
–
 
  
 
21,316
 
Dividends from unconsolidated subsidiary
  
 
6,200
 
  
 
399
 
  
 
734
 
  
 
(7,333
) 
  
 
–
 
Cash decrease due to U.S. variable annuity reinsurance transaction
  
 
–
 
  
 
(1,263
) 
  
 
(114
) 
  
 
–
 
  
 
(1,377
) 
Changes in policy related and operating receivables and payables
  
 
45
 
  
 
2,805
 
  
 
(5,054
 )  
 
–
 
  
 
(2,204
) 
Cash provided by (used in) operating activities
  
 
6,253
 
  
 
4,457
 
  
 
14,358
 
  
 
(7,333
) 
  
 
17,735
 
Investing activities
                                        
Purchases and mortgage advances
  
 
–
 
  
 
(28,798
) 
  
 
(82,970
) 
  
 
–
 
  
 
(111,768)
 
Disposals and repayments
  
 
1
 
  
 
23,505
 
  
 
69,901
 
  
 
–
 
  
 
93,407
 
Changes in investment broker net receivables and payables
  
 
–
 
  
 
(11
) 
  
 
(56
) 
  
 
–
 
  
 
(67
) 
Net cash increase (decrease) from sale (purchase) of subsidiary
  
 
–
 
  
 
–
 
  
 
(182
) 
  
 
–
 
  
 
(182
) 
Investment in common shares of subsidiaries
 
 
(2,479
) 
  
 
–
 
  
 
–
 
  
 
2,479
 
  
 
–
 
Capital contribution to unconsolidated subsidiaries
  
 
–
 
  
 
(1
) 
  
 
–
 
  
 
1
 
  
 
–
 
Return of capital from unconsolidated subsidiaries
  
 
–
 
  
 
19
 
  
 
–
 
  
 
(19
) 
  
 
–
 
Notes receivable from parent
  
 
–
 
  
 
–
 
  
 
415
 
  
 
(415
) 
  
 
–
 
Notes receivable from subsidiaries
  
 
46
 
  
 
(7
) 
  
 
–
 
  
 
(39
) 
  
 
–
 
Cash provided by (used in) investing activities
  
 
(2,432
) 
  
 
(5,293
) 
  
 
(12,892
) 
  
 
2,007
 
  
 
(18,610
) 
Financing activities
                                        
Issue of long-term debt, net
  
 
946
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
946
 
Redemption of capital instruments
  
 
–
 
  
 
–
 
  
 
(1,000
) 
  
 
–
 
  
 
(1,000
) 
Secured borrowings
  
 
–
 
  
 
–
 
  
 
437
 
  
 
–
 
  
 
437
 
Change in repurchase agreements and securities sold but not yet purchased
  
 
–
 
  
 
–
 
  
 
(551
) 
  
 
–
 
  
 
(551
) 
Changes in deposits from Bank clients, net
  
 
–
 
  
 
–
 
  
 
1,703
 
  
 
–
 
  
 
1,703
 
Lease payments
  
 
–
 
  
 
(5
) 
  
 
(115
) 
  
 
–
 
  
 
(120
) 
Shareholders’ dividends and other equity distributions
  
 
(2,787
) 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
(2,787
) 
Common shares repurchased
  
 
(1,884
) 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
(1,884
) 
Common shares issued, net
  
 
23
 
  
 
–
 
  
 
2,479
 
  
 
(2,479
) 
  
 
23
 
Preferred shares and other equity issued, net
  
 
990
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
990
 
Preferred shares redeemed, net
  
 
(711
) 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
(711
) 
Contributions from (distributions to)
non-controlling
interests, net
  
 
–
 
  
 
–
 
  
 
(51
) 
  
 
–
 
  
 
(51
) 
Dividends paid to parent
  
 
–
 
  
 
(734
) 
  
 
(6,599
) 
  
 
7,333
 
  
 
–
 
Capital contributions by parent
  
 
–
 
  
 
–
 
  
 
1
 
  
 
(1
) 
  
 
–
 
Return of capital to parent
  
 
–
 
  
 
–
 
  
 
(19
) 
  
 
19
 
  
 
–
 
Notes payable to parent
  
 
–
 
  
 
–
 
  
 
(39
) 
  
 
39
 
  
 
–
 
Notes payable to subsidiaries
  
 
(415
) 
  
 
–
 
  
 
–
 
  
 
415
 
  
 
–
 
Cash provided by (used in) financing activities
  
 
(3,838
) 
  
 
(739
) 
  
 
(3,754
) 
  
 
5,326
 
  
 
(3,005
) 
Cash and short-term securities
                                        
Increase (decrease) during the year
  
 
(17
) 
  
 
(1,575
) 
  
 
(2,288
) 
  
 
–
 
  
 
(3,880
) 
Effect of foreign exchange rate changes on cash and short-term securities
  
 
2
 
  
 
225
 
  
 
358
 
  
 
–
 
  
 
585
 
Balance, beginning of year
  
 
78
 
  
 
3,565
 
  
 
18,287
 
  
 
–
 
  
 
21,930
 
Balance, end of year
  
 
63
 
  
 
2,215
 
  
 
16,357
 
  
 
–
 
  
 
18,635
 
Cash and short-term securities
                                        
Beginning of year
                                        
Gross cash and short-term securities
  
 
78
 
  
 
4,087
 
  
 
18,429
 
  
 
–
 
  
 
22,594
 
Net payments in transit, included in other liabilities
  
 
–
 
  
 
(522
) 
  
 
(142
) 
  
 
–
 
  
 
(664
) 
Net cash and short-term securities, beginning of year
  
 
78
 
  
 
3,565
 
  
 
18,287
 
  
 
–
 
  
 
21,930
 
End of year
                                        
Gross cash and short-term securities
  
 
63
 
  
 
2,614
 
  
 
16,476
 
  
 
–
 
  
 
19,153
 
Net payments in transit, included in other liabilities
  
 
–
 
  
 
(399
) 
  
 
(119
) 
  
 
–
 
  
 
(518
) 
Net cash and short-term securities, end of year
  
$
63
 
  
$
2,215
 
  
$
16,357
 
  
$
–
 
  
$
18,635
 
Supplemental disclosures on cash flow information:
                                        
Interest received
  
$
512
 
  
$
4,050
 
  
$
8,732
 
  
$
(1,161
) 
  
$
12,133
 
Interest paid
  
 
424
 
  
 
118
 
  
 
1,867
 
  
 
(1,161
) 
  
 
1,248
 
Income taxes paid
  
 
–
 
  
 
124
 
  
 
1,114
 
  
 
–
 
  
 
1,238
 
 
Consolidated Statement of Cash Flows
 
For the year ended December 31, 2021  
MFC
(Guarantor)
    
JHUSA
(Issuer)
    
Other
subsidiaries
    
Consolidation
adjustments
    
Consolidated
MFC
  
Operating activities
                                        
Net income (loss)
   $ 7,105     $ 1,552     $ 7,997     $   (9,742 )    $       6,912  
Adjustments:
                                        
Equity in net income of unconsolidated subsidiaries
     (6,972 )      (1,218 )      (1,552 )      9,742       –  
Increase (decrease) in insurance contract liabilities
     –       (562 )      11,281       –       10,719  
Increase (decrease) in investment contract liabilities
     –       50       (6 )      –       44  
(Increase) decrease in reinsurance assets excluding coinsurance transactions
     –       1,544       (790 )      –       754  
Amortization of (premium) discount on invested assets
     –       57       124       –       181  
Other amortization
     16       124       389       –       529  
Net realized and unrealized (gains) losses and impairment on assets
     62       1,533       3,229       –       4,824  
Deferred income tax expense (recovery)
     34       190       (351 )      –       (127 ) 
Stock option expense
     –       (2 )      11       –       9  
Cash provided by (used in) operating activities before undernoted items
     245       3,268       20,332       –       23,845  
Dividends from unconsolidated subsidiary
     5,000       489       742       (6,231 )      –  
Changes in policy related and operating receivables and payables
     (22 )      424       (1,092 )      –       (690 ) 
Cash provided by (used in) operating activities
     5,223       4,181       19,982       (6,231 )      23,155  
Investing activities
                                        
Purchases and mortgage advances
     –         (31,746 )        (89,219 )      –       (120,965 ) 
Disposals and repayments
     –       27,194       69,534       –       96,728  
Changes in investment broker net receivables and payables
     –       (202 )      16       –       (186 ) 
Investment in common shares of subsidiaries
     (3,700 )      –       –       3,700       –  
Net cash flows from acquisition and disposal of subsidiaries and businesses
     –       –       (19 )      –       (19 ) 
Capital contribution to unconsolidated subsidiaries
     –       (1 )      –       1       –  
Return of capital from unconsolidated subsidiaries
     –       1       –       (1 )      –  
Notes receivable from parent
     –       –       (129 )      129       –  
Notes receivable from subsidiaries
     (13 )      –       –       13       –  
Cash provided by (used in) investing activities
     (3,713 )      (4,754 )      (19,817 )      3,842       (24,442 ) 
Financing activities
                                        
Redemption of long-term debt
     (1,250 )      –       –       –       (1,250 ) 
Redemption of capital instruments
     (468 )      –       (350 )      –       (818 ) 
Secured borrowings
     –       –       26       –       26  
Change in repurchase agreements and securities sold but not yet purchased
     –       –       186       –       186  
Changes in deposits from Bank clients, net
     –       –       (164 )      –       (164 ) 
Lease payments
     –       (7 )      (117 )      –       (124 ) 
Shareholders’ dividends and other equity distributions
     (2,500 )      –       –       –       (2,500 ) 
Contributions from (distributions to)
non-controlling
interests, net
     –       –       (13 )      –       (13 ) 
Common shares issued, net
     51       –       3,700       (3,700 )      51  
Preferred shares and other equity issued, net
     3,171       –       –       –       3,171  
Preferred shares redeemed, net
     (612 )      –       –       –       (612 ) 
Dividends paid to parent
     –       (742 )      (5,489 )      6,231       –  
Capital contributions by parent
     –       –       1       (1 )      –  
Return of capital to parent
     –       –       (1 )      1       –  
Notes payable to parent
     –       –       13       (13 )      –  
Notes payable to subsidiaries
     129       –       –       (129 )      –  
Cash provided by (used in) financing activities
       (1,479 )      (749 )      (2,208 )      2,389       (2,047 ) 
Cash and short-term securities
                                        
Increase (decrease) during the year
     31       (1,322 )      (2,043 )      –       (3,334 ) 
Effect of foreign exchange rate changes on cash and short-term securities
     –       (20 )      (299 )      –       (319 ) 
Balance, beginning of year
     47       4,907       20,629       –       25,583  
Balance, end of year
     78       3,565       18,287       –       21,930  
Cash and short-term securities
                                        
Beginning of year
                                        
Gross cash and short-term securities
     47       5,213       20,907       –       26,167  
Net payments in transit, included in other liabilities
     –       (306 )      (278 )      –       (584 ) 
Net cash and short-term securities, beginning of year
     47       4,907       20,629       –       25,583  
End of year
                                        
Gross cash and short-term securities
     78       4,087       18,429       –       22,594  
Net payments in transit, included in other liabilities
     –       (522 )      (142 )      –       (664 ) 
Net cash and short-term securities, end of year
   $ 78     $ 3,565     $ 18,287     $ –     $ 21,930  
Supplemental disclosures on cash flow information:
                                        
Interest received
   $ 499     $ 4,112     $ 7,847     $   (1,082 )    $ 11,376  
Interest paid
     396       73       1,594       (1,082 )      981  
Income taxes paid (refund)
     –       (118 )      689       –       571