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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
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Dec. 31, 2023
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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.) | 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 is 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 1 3 . 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 1 3 . 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, 2023 |  | MFC (Guarantor) |  |  | JHUSA (Issuer) |  |  | Other subsidiaries |  |  | Consolidation adjustments |  |  | Consolidated MFC |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Invested assets |  | $ | 86 |  |  | $ | 109,433 |  |  | $ | 307,930 |  |  | $ | (239 | ) |  | $ | 417,210 |
Investments in unconsolidated subsidiaries |  |  | 58,694 |  |  |  | 8,674 |  |  |  | 17,916 |  |  |  | (85,284 | ) |  |  | – |
Insurance contract assets |  |  | – |  |  |  | – |  |  |  | 217 |  |  |  | (72 | ) |  |  | 145 |
Reinsurance contract held assets |  |  | – |  |  |  | 42,418 |  |  |  | 10,380 |  |  |  | (10,147 | ) |  |  | 42,651 |
Other assets |  |  | 329 |  |  |  | 8,731 |  |  |  | 32,700 |  |  |  | (3,736 | ) |  |  | 38,024 |
Segregated funds net assets |  |  | – |  |  |  | 188,067 |  |  |  | 191,241 |  |  |  | (1,764 | ) |  |  | 377,544 |
Total assets |  | $ | 59,109 |  |  | $ | 357,323 |  |  | $ | 560,384 |  |  | $ | (101,242 | ) |  | $ | 875,574 |
Liabilities and equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Insurance contract liabilities, excluding those for account of segregated fund holders |  | $ | – |  |  | $ | 145,589 |  |  | $ | 232,972 |  |  | $ | (10,565 | ) |  | $ | 367,996 |
Reinsurance contract held liabilities |  |  | – |  |  |  | – |  |  |  | 2,831 |  |  |  | – |  |  |  | 2,831 |
Investment contract liabilities |  |  | – |  |  |  | 3,487 |  |  |  | 8,928 |  |  |  | (599 | ) |  |  | 11,816 |
Other liabilities |  |  | 573 |  |  |  | 5,869 |  |  |  | 51,266 |  |  |  | (3,786 | ) |  |  | 53,922 |
Long-term debt |  |  | 6,071 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 6,071 |
Capital instruments |  |  | 5,426 |  |  |  | 594 |  |  |  | 647 |  |  |  | – |  |  |  | 6,667 |
Insurance contract liabilities for account of segregated fund holders |  |  | – |  |  |  | 51,719 |  |  |  | 62,424 |  |  |  | – |  |  |  | 114,143 |
Investment contract liabilities for account of segregated fund holders |  |  | – |  |  |  | 136,348 |  |  |  | 128,817 |  |  |  | (1,764 | ) |  |  | 263,401 |
Shareholders’ and other equity |  |  | 47,039 |  |  |  | 13,773 |  |  |  | 70,755 |  |  |  | (84,528 | ) |  |  | 47,039 |
Participating policyholders’ equity |  |  | – |  |  |  | (56 | ) |  |  | 313 |  |  |  | – |  |  |  | 257 |
Non-controlling interests |  |  | – |  |  |  | – |  |  |  | 1,431 |  |  |  | – |  |  |  | 1,431 |
Total liabilities and equity |  | $ | 59,109 |  |  | $ | 357,323 |  |  | $ | 560,384 |  |  | $ | (101,242 | ) |  | $ | 875,574 |
Condensed Consolidated Statement of Financial Position
|  | Restated (note 2) |
As at December 31, 2022 |  | MFC (Guarantor) |  |  | JHUSA (Issuer) |  |  | Other subsidiaries |  |  | Consolidation adjustments |  |  | Consolidated MFC |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Invested assets |  | $ | 63 |  |  | $ | 109,332 |  |  | $ | 291,266 |  |  | $ | (519 | ) |  | $ | 400,142 |
Investments in unconsolidated subsidiaries |  |  | 58,024 |  |  |  | 8,584 |  |  |  | 18,018 |  |  |  | (84,626 | ) |  |  | – |
Insurance contract assets |  |  | – |  |  |  | – |  |  |  | 739 |  |  |  | (66 | ) |  |  | 673 |
Reinsurance contract held assets |  |  | – |  |  |  | 44,849 |  |  |  | 11,215 |  |  |  | (10,193 | ) |  |  | 45,871 |
Other assets |  |  | 333 |  |  |  | 8,899 |  |  |  | 33,082 |  |  |  | (3,873 | ) |  |  | 38,441 |
Segregated funds net assets |  |  | – |  |  |  | 173,417 |  |  |  | 177,361 |  |  |  | (2,216 | ) |  |  | 348,562 |
Total assets |  | $ | 58,420 |  |  | $ | 345,081 |  |  | $ | 531,681 |  |  | $ | (101,493 | ) |  | $ | 833,689 |
Liabilities and equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Insurance contract liabilities, excluding those for account of segregated fund holders |  | $ | – |  |  | $ | 147,440 |  |  | $ | 217,942 |  |  | $ | (10,533 | ) |  | $ | 354,849 |
Reinsurance contract held liabilities |  |  | – |  |  |  | – |  |  |  | 2,391 |  |  |  | – |  |  |  | 2,391 |
Investment contract liabilities |  |  | – |  |  |  | 2,585 |  |  |  | 8,207 |  |  |  | (713 | ) |  |  | 10,079 |
Other liabilities |  |  | 450 |  |  |  | 7,206 |  |  |  | 53,186 |  |  |  | (3,616 | ) |  |  | 57,226 |
Long-term debt |  |  | 6,234 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 6,234 |
Capital instruments |  |  | 4,860 |  |  |  | 614 |  |  |  | 648 |  |  |  | – |  |  |  | 6,122 |
Insurance contract liabilities for account of segregated fund holders |  |  | – |  |  |  | 49,947 |  |  |  | 60,269 |  |  |  | – |  |  |  | 110,216 |
Investment contract liabilities for account of segregated fund holders |  |  | – |  |  |  | 123,470 |  |  |  | 117,092 |  |  |  | (2,216 | ) |  |  | 238,346 |
Shareholders’ and other equity |  |  | 46,876 |  |  |  | 13,865 |  |  |  | 70,550 |  |  |  | (84,415 | ) |  |  | 46,876 |
Participating policyholders’ equity |  |  | – |  |  |  | (46 | ) |  |  | (31 | ) |  |  | – |  |  |  | (77 | )
Non-controlling interests |  |  | – |  |  |  | – |  |  |  | 1,427 |  |  |  | – |  |  |  | 1,427 |
Total liabilities and equity |  | $ | 58,420 |  |  | $ | 345,081 |  |  | $ | 531,681 |  |  | $ | (101,493 | ) |  | $ | 833,689 |
Condensed Consolidated Statement of Income
For the year ended December 31, 2023 |  | MFC (Guarantor) |  |  | JHUSA (Issuer) |  |  | Other subsidiaries |  |  | Consolidation adjustments |  |  | Consolidated MFC |
Insurance service result |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Insurance revenue |  | $ | – |  |  | $ | 9,858 |  |  | $ | 15,754 |  |  | $ | (1,640 | ) |  | $ | 23,972 |
Insurance service expenses |  |  | – |  |  |  | (8,928 | ) |  |  | (12,195 | ) |  |  | 1,741 |  |  |  | (19,382 | )
Net expenses from reinsurance contracts held |  |  | – |  |  |  | (315 | ) |  |  | (175 | ) |  |  | (123 | ) |  |  | (613 | )
Total insurance service result |  |  | – |  |  |  | 615 |  |  |  | 3,384 |  |  |  | (22 | ) |  |  | 3,977 |
Investment result |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net investment income (loss) |  |  | 638 |  |  |  | 4,232 |  |  |  | 14,179 |  |  |  | (1,028 | ) |  |  | 18,021 |
Insurance / reinsurance finance income (expenses) |  |  | – |  |  |  | (4,723 | ) |  |  | (9,993 | ) |  |  | 88 |  |  |  | (14,628 | )
Other investment result |  |  | – |  |  |  | 100 |  |  |  | (432 | ) |  |  | (103 | ) |  |  | (435 | )
Total investment result |  |  | 638 |  |  |  | (391 | ) |  |  | 3,754 |  |  |  | (1,043 | ) |  |  | 2,958 |
Other revenue |  |  | 14 |  |  |  | 790 |  |  |  | 6,384 |  |  |  | (442 | ) |  |  | 6,746 |
Other expenses |  |  | (55 | ) |  |  | (1,112 | ) |  |  | (4,776 | ) |  |  | 268 |  |  |  | (5,675 | )
Interest expenses |  |  | (433 | ) |  |  | (79 | ) |  |  | (2,281 | ) |  |  | 1,239 |  |  |  | (1,554 | )
Net income (loss) before income taxes |  |  | 164 |  |  |  | (177 | ) |  |  | 6,465 |  |  |  | – |  |  |  | 6,452 |
Income tax (expenses) recoveries |  |  | 7 |  |  |  | 175 |  |  |  | (1,027 | ) |  |  | – |  |  |  | (845 | )
Net income (loss) after income taxes |  |  | 171 |  |  |  | (2 | ) |  |  | 5,438 |  |  |  | – |  |  |  | 5,607 |
Equity in net income (loss) of unconsolidated subsidiaries |  |  | 4,932 |  |  |  | 811 |  |  |  | 809 |  |  |  | (6,552 | ) |  |  | – |
Net income (loss) |  | $ | 5,103 |  |  | $ | 809 |  |  | $ | 6,247 |  |  | $ | (6,552 | ) |  | $ | 5,607 |
Net income (loss) attributed to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-controlling interests |  | $ | – |  |  | $ | – |  |  | $ | 144 |  |  | $ | – |  |  | $ | 144 |
Participating policyholders |  |  | – |  |  |  | (74 | ) |  |  | 360 |  |  |  | 74 |  |  |  | 360 |
Shareholders and other equity holders |  |  | 5,103 |  |  |  | 883 |  |  |  | 5,743 |  |  |  | (6,626 | ) |  |  | 5,103 |
|  | $ | 5,103 |  |  | $ | 809 |  |  | $ | 6,247 |  |  | $ | (6,552 | ) |  | $ | 5,607 |
Condensed Consolidated Statement of Income
|  | Restated (note 2) |
For the year ended December 31, 2022 |  | MFC (Guarantor) |  |  | JHUSA (Issuer) |  |  | Other subsidiaries |  |  | Consolidation adjustments |  |  | Consolidated MFC |
Insurance service result |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Insurance revenue |  | $ | – |  |  | $ | 9,946 |  |  | $ | 14,760 |  |  | $ | (1,588 | ) |  | $ | 23,118 |
Insurance service expenses |  |  | – |  |  |  | (10,652 | ) |  |  | (12,417 | ) |  |  | 3,734 |  |  |  | (19,335 | )
Net expenses from reinsurance contracts held |  |  | – |  |  |  | (570 | ) |  |  | 281 |  |  |  | (334 | ) |  |  | (623 | )
Total insurance service result |  |  | – |  |  |  | (1,276 | ) |  |  | 2,624 |  |  |  | 1,812 |  |  |  | 3,160 |
Investment result |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net investment income (loss) |  |  | 554 |  |  |  | (53 | ) |  |  | 781 |  |  |  | (945 | ) |  |  | 337 |
Insurance / reinsurance finance income (expenses) |  |  | – |  |  |  | (325 | ) |  |  | (4,376 | ) |  |  | (1,606 | ) |  |  | (6,307 | )
Other investment result |  |  | – |  |  |  | 36 |  |  |  | (426 | ) |  |  | (9 | ) |  |  | (399 | )
Total investment result |  |  | 554 |  |  |  | (342 | ) |  |  | (4,021 | ) |  |  | (2,560 | ) |  |  | (6,369 | )
Other revenue |  |  | (36 | ) |  |  | 505 |  |  |  | 6,181 |  |  |  | (464 | ) |  |  | 6,186 |
Other expenses |  |  | (42 | ) |  |  | (841 | ) |  |  | (4,455 | ) |  |  | 274 |  |  |  | (5,064 | )
Interest expenses |  |  | (439 | ) |  |  | (54 | ) |  |  | (1,496 | ) |  |  | 938 |  |  |  | (1,051 | )
Net income (loss) before income taxes |  |  | 37 |  |  |  | (2,008 | ) |  |  | (1,167 | ) |  |  | – |  |  |  | (3,138 | )
Income tax (expenses) recoveries |  |  | 32 |  |  |  | 624 |  |  |  | 503 |  |  |  | – |  |  |  | 1,159 |
Net income (loss) after income taxes |  |  | 69 |  |  |  | (1,384 | ) |  |  | (664 | ) |  |  | – |  |  |  | (1,979 | )
Equity in net income (loss) of unconsolidated subsidiaries |  |  | (2,002 | ) |  |  | 638 |  |  |  | (746 | ) |  |  | 2,110 |  |  |  | – |
Net income (loss) |  | $ | (1,933 | ) |  | $ | (746 | ) |  | $ | (1,410 | ) |  | $ | 2,110 |  |  | $ | (1,979 | )
Net income (loss) attributed to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-controlling interests |  | $ | – |  |  | $ | – |  |  | $ | 121 |  |  | $ | – |  |  | $ | 121 |
Participating policyholders |  |  | – |  |  |  | (530 | ) |  |  | 288 |  |  |  | 75 |  |  |  | (167 | )
Shareholde rs a nd other equity holders |  |  | (1,933 | ) |  |  | (216 | ) |  |  | (1,819 | ) |  |  | 2,035 |  |  |  | (1,933 | )
|  | $ | (1,933 | ) |  | $ | (746 | ) |  | $ | (1,410 | ) |  | $ | 2,110 |  |  | $ | (1,979 | )
Consolidated Statement of Cash Flows
For the year ended December 31, 2023 |  | MFC (Guarantor) |  |  | JHUSA (Issuer) |  |  | Other subsidiaries |  |  | Consolidation adjustments |  |  | Consolidated MFC |
Operating activities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net income (loss) |  | $ | 5,103 |  |  | $ | 809 |  |  | $ | 6,247 |  |  | $ | (6,552 | ) |  | $ | 5,607 |
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity in net income of unconsolidated subsidiaries |  |  | (4,932 | ) |  |  | (811 | ) |  |  | (809 | ) |  |  | 6,552 |  |  |  | – |
Increase (decrease) in net insurance contract liabilities |  |  | – |  |  |  | 455 |  |  |  | 10,242 |  |  |  | – |  |  |  | 10,697 |
Increase (decrease) in investment contract liabilities |  |  | – |  |  |  | (112 | ) |  |  | 547 |  |  |  | – |  |  |  | 435 |
(Increase) decrease in reinsurance contract assets, excluding reinsurance transactions |  |  | – |  |  |  | 28 |  |  |  | 946 |  |  |  | – |  |  |  | 974 |
Amortization of (premium) discount on invested assets |  |  | – |  |  |  | 30 |  |  |  | (171 | ) |  |  | – |  |  |  | (141 | )
Contractual service margin (“CSM”) amortization |  |  | – |  |  |  | (455 | ) |  |  | (1,543 | ) |  |  | – |  |  |  | (1,998 | )
Other amortization |  |  | 10 |  |  |  | 147 |  |  |  | 424 |  |  |  | – |  |  |  | 581 |
Net realized and unrealized (gains) losses and impairment on assets |  |  | 3 |  |  |  | 471 |  |  |  | (3,319 | ) |  |  | – |  |  |  | (2,845 | )
Deferred income tax expenses (recoveries) |  |  | (11 | ) |  |  | (141 | ) |  |  | 622 |  |  |  | – |  |  |  | 470 |
Stock option expense |  |  | – |  |  |  | (3 | ) |  |  | 5 |  |  |  | – |  |  |  | 2 |
Cash provided by (used in) operating activities before undernoted items |  |  | 173 |  |  |  | 418 |  |  |  | 13,191 |  |  |  | – |  |  |  | 13,782 |
Dividends from unconsolidated subsidiaries |  |  | 5,600 |  |  |  | 386 |  |  |  | (679 | ) |  |  | (5,307 | ) |  |  | – |
Changes in policy related and operating receivables and payables |  |  | (4 | ) |  |  | (649 | ) |  |  | 7,294 |  |  |  | – |  |  |  | 6,641 |
Cash provided by (used in) operating activities |  |  | 5,769 |  |  |  | 155 |  |  |  | 19,806 |  |  |  | (5,307 | ) |  |  | 20,423 |
Investing activities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Purchases and mortgage advances |  |  | – |  |  |  | (15,165 | ) |  |  | (68,856 | ) |  |  | – |  |  |  | (84,021 | )
Disposals and repayments |  |  | – |  |  |  | 16,159 |  |  |  | 54,122 |  |  |  | – |  |  |  | 70,281 |
Changes in investment broker net receivables and payables |  |  | – |  |  |  | 12 |  |  |  | 9 |  |  |  | – |  |  |  | 21 |
Net cash increase (decrease) from sale (purchase) of subsidiaries |  |  | – |  |  |  | – |  |  |  | (1 | ) |  |  | – |  |  |  | (1 | )
Investment in common shares of subsidiaries |  |  | (1,843 | ) |  |  | – |  |  |  | – |  |  |  | 1,843 |  |  |  | – |
Capital contribution to unconsolidated subsidiaries |  |  | – |  |  |  | (1 | ) |  |  | – |  |  |  | 1 |  |  |  | – |
Return of capital from unconsolidated subsidiaries |  |  | – |  |  |  | 5 |  |  |  | – |  |  |  | (5 | ) |  |  | – |
Notes receivable from parent |  |  | – |  |  |  | – |  |  |  | (4 | ) |  |  | 4 |  |  |  | – |
Notes receivable from subsidiaries |  |  | (25 | ) |  |  | – |  |  |  | – |  |  |  | 25 |  |  |  | – |
Cash provided by (used in) investing activities |  |  | (1,868 | ) |  |  | 1,010 |  |  |  | (14,730 | ) |  |  | 1,868 |  |  |  | (13,720 | )
Financing activities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Change in repurchase agreements and securities sold but not yet purchased |  |  | – |  |  |  | – |  |  |  | (693 | ) |  |  | – |  |  |  | (693 | )
Issue of capital instruments, net |  |  | 1,194 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 1,194 |
Redemption of capital instruments |  |  | (600 | ) |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (600 | )
Secured borrowing from securitization transactions |  |  | – |  |  |  | – |  |  |  | 537 |  |  |  | – |  |  |  | 537 |
Changes in deposits from Bank clients, net |  |  | – |  |  |  | – |  |  |  | (895 | ) |  |  | – |  |  |  | (895 | )
Lease payments |  |  | – |  |  |  | (3 | ) |  |  | (95 | ) |  |  | – |  |  |  | (98 | )
Shareholders’ dividends and other equity distributions |  |  | (2,972 | ) |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (2,972 | )
Common shares repurchased |  |  | (1,595 | ) |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (1,595 | )
Common shares issued, net |  |  | 94 |  |  |  | – |  |  |  | 1,843 |  |  |  | (1,843 | ) |  |  | 94 |
Contributions from (distributions to) non-controlling interests, net |  |  | – |  |  |  | – |  |  |  | (14 | ) |  |  | – |  |  |  | (14 | )
Dividends paid to parent |  |  | – |  |  |  | 679 |  |  |  | (5,986 | ) |  |  | 5,307 |  |  |  | – |
Capital contributions by parent |  |  | – |  |  |  | – |  |  |  | 1 |  |  |  | (1 | ) |  |  | – |
Return of capital to parent |  |  | – |  |  |  | – |  |  |  | (5 | ) |  |  | 5 |  |  |  | – |
Notes payable to parent |  |  | – |  |  |  | – |  |  |  | 25 |  |  |  | (25 | ) |  |  | – |
Notes payable to subsidiaries |  |  | 4 |  |  |  | – |  |  |  | – |  |  |  | (4 | ) |  |  | – |
Cash provided by (used in) financing activities |  |  | (3,875 | ) |  |  | 676 |  |  |  | (5,282 | ) |  |  | 3,439 |  |  |  | (5,042 | )
Cash and short-term securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Increase (decrease) during the year |  |  | 26 |  |  |  | 1,841 |  |  |  | (206 | ) |  |  | – |  |  |  | 1,661 |
Effect of foreign exchange rate changes on cash and short-term securities |  |  | (3 | ) |  |  | (52 | ) |  |  | (357 | ) |  |  | – |  |  |  | (412 | )
Balance, beginning of year |  |  | 63 |  |  |  | 2,215 |  |  |  | 16,357 |  |  |  | – |  |  |  | 18,635 |
Balance, end of year |  |  | 86 |  |  |  | 4,004 |  |  |  | 15,794 |  |  |  | – |  |  |  | 19,884 |
Cash and short-term securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning 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, beginning of year |  |  | 63 |  |  |  | 2,215 |  |  |  | 16,357 |  |  |  | – |  |  |  | 18,635 |
End of year |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gross cash and short-term securities |  |  | 86 |  |  |  | 4,329 |  |  |  | 15,923 |  |  |  | – |  |  |  | 20,338 |
Net payments in transit, included in other liabilities |  |  | – |  |  |  | (325 | ) |  |  | (129 | ) |  |  | – |  |  |  | (454 | )
Net cash and short-term securities, end of year |  | $ | 86 |  |  | $ | 4,004 |  |  | $ | 15,794 |  |  | $ | – |  |  | $ | 19,884 |
Supplemental disclosures on cash flow information: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest received |  | $ | 650 |  |  | $ | 3,369 |  |  | $ | 10,166 |  |  | $ | (1,417 | ) |  | $ | 12,768 |
Interest paid |  |  | 418 |  |  |  | 115 |  |  |  | 2,432 |  |  |  | (1,417 | ) |  |  | 1,548 |
Income taxes paid (refund) |  |  | 2 |  |  |  | (1 | ) |  |  | 435 |  |  |  | – |  |  |  | 436 |
Consolidated Statement of Cash Flows
|  | Restated (note 2) |
For the year ended December 31, 2022 |  | MFC (Guarantor) |  |  | JHUSA (Issuer) |  |  | Other subsidiaries |  |  | Consolidation adjustments |  |  | Consolidated MFC |
Operating activities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net income (loss) |  | $ | (1,933 | ) |  | $ | (746 | ) |  | $ | (1,410 | ) |  | $ | 2,110 |  |  | $ | (1,979 | )
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity in net income of unconsolidated subsidiaries |  |  | 2,002 |  |  |  | (638 | ) |  |  | 746 |  |  |  | (2,110 | ) |  |  | – |
Increase (decrease) in net insurance contract liabilities |  |  | – |  |  |  | 2,051 |  |  |  | 2,965 |  |  |  | – |  |  |  | 5,016 |
Increase (decrease) in investment contract liabilities |  |  | – |  |  |  | (111 | ) |  |  | 510 |  |  |  | – |  |  |  | 399 |
(Increase) decrease in reinsurance contract assets, excluding reinsurance transactions |  |  | – |  |  |  | 2 |  |  |  | 708 |  |  |  | – |  |  |  | 710 |
Amortization of (premium) discount on invested assets |  |  | – |  |  |  | 33 |  |  |  | (164 | ) |  |  | – |  |  |  | (131 | )
Contractual service margin (“CSM”) amortization |  |  | – |  |  |  | (578 | ) |  |  | (1,415 | ) |  |  | – |  |  |  | (1,993 | )
Other amortization |  |  | 9 |  |  |  | 156 |  |  |  | 354 |  |  |  | – |  |  |  | 519 |
Net realized and unrealized (gains) losses and impairment on assets |  |  | (36 | ) |  |  | 4,854 |  |  |  | 8,842 |  |  |  | – |  |  |  | 13,660 |
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 expenses (recoveries) |  |  | (33 | ) |  |  | (354 | ) |  |  | (1,607 | ) |  |  | – |  |  |  | (1,994 | )
Stock option expense |  |  | – |  |  |  | (3 | ) |  |  | 8 |  |  |  | – |  |  |  | 5 |
Cash provided by (used in) operating activities before undernoted items |  |  | 9 |  |  |  | 3,640 |  |  |  | 9,398 |  |  |  | – |  |  |  | 13,047 |
Dividends from unconsolidated subsidiaries |  |  | 6,200 |  |  |  | 399 |  |  |  | 734 |  |  |  | (7,333 | ) |  |  | – |
Changes in policy related and operating receivables and payables |  |  | 44 |  |  |  | 1,644 |  |  |  | 3,270 |  |  |  | – |  |  |  | 4,958 |
Cash decrease due to U.S. variable annuity reinsurance transaction |  |  | – |  |  |  | (1,263 | ) |  |  | (114 | ) |  |  | – |  |  |  | (1,377 | )
Cash provided by (used in) operating activities |  |  | 6,253 |  |  |  | 4,420 |  |  |  | 13,288 |  |  |  | (7,333 | ) |  |  | 16,628 |
Investing activities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Purchases and mortgage advances |  |  | – |  |  |  | (28,685 | ) |  |  | (82,873 | ) |  |  | – |  |  |  | (111,558 | )
Disposals and repayments |  |  | 1 |  |  |  | 23,429 |  |  |  | 69,977 |  |  |  | – |  |  |  | 93,407 |
Changes in investment broker net receivables and payables |  |  | – |  |  |  | (11 | ) |  |  | (56 | ) |  |  | – |  |  |  | (67 | )
Net cash increase (decrease) from sale (purchase) of subsidiaries |  |  | – |  |  |  | – |  |  |  | (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 | ) |  |  | (5,256 | ) |  |  | (12,719 | ) |  |  | 2,007 |  |  |  | (18,400 | )
Financing activities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Change in repurchase agreements and securities sold but not yet purchased |  |  | – |  |  |  | – |  |  |  | 346 |  |  |  | – |  |  |  | 346 |
Issue of long-term debt, net |  |  | 946 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 946 |
Redemption of capital instruments |  |  | – |  |  |  | – |  |  |  | (1,000 | ) |  |  | – |  |  |  | (1,000 | )
Secured borrowing from securitization transactions |  |  | – |  |  |  | – |  |  |  | 437 |  |  |  | – |  |  |  | 437 |
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 | ) |  |  | (2,857 | ) |  |  | 5,326 |  |  |  | (2,108 | )
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 ye ar |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
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 |  |  | $ | 3,850 |  |  | $ | 8,672 |  |  | $ | (1,161 | ) |  | $ | 11,873 |
Interest paid |  |  | 424 |  |  |  | 84 |  |  |  | 1,608 |  |  |  | (1,161 | ) |  |  | 955 |
Income taxes paid (refund) |  |  | – |  |  |  | 124 |  |  |  | 1,114 |  |  |  | – |  |  |  | 1,238 |

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