Manulife Financial Corporation Who Manulife Financial Corporation is Our five Portfolio Optimization we are a leading international financial strategic We are actively managing our priorities services group providing financial 1 legacy businesses to improve advice, insurance, as well as returns and cash generation while wealth and asset management reducing risk. solutions for individuals, groups, and institutions. We operate as John Hancock in the United States Expense Efficiency and Manulife elsewhere. We are getting our cost structure 2 into fighting shape and simplifying and digitizing our processes to position us for efficient growth. Accelerate Growth We are accelerating growth in our 3 highest-potential businesses. Our Digital, Customer Leader mission Decisions We are improving our customer 4 experiences, using digitization and made easierr. innovation to put customers first. Lives High-Performing Team made betterr. We are building a culture that 5 drives our priorities. Our Our Values represent how we Obsess Do the Values operate. They reflect our culture, about right thing inform our behaviours, and help define how we work together. customers Manulife Note: Growth in core earnings, assets under Core Earnings (C$ billions) management and administration (AUMA), and by the new business value are presented on a constant $5.6 billion exchange rate basis. numbers Total Company, Global Wealth and Asset Management (Global WAM), and Asia core earnings up 23%, 21%, and 20%, respectively, from 2017. 5.6 4.6 4.0 3.4 2.9 2014 2015 2016 2017 2018 Assets Under Management and Administration Net Income Attributed to Shareholders (C$ billions) (C$ billions) $1,084 billion $4.8 billion Over $1 trillion in AUMA. Delivered the highest net income result in the Company’s history in 2018. 1,084 4.8 1,005 1,071 935 3.5 691 2.9 2.2 2.1 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 New Business Value (C$ billions) Common Share Dividend (C$) $1.7 billion 91.0 ¢/share 20% increase in new business value from 2017. 11% increase in 2018. 1.7 91.0¢/sh 82.0¢/sh 1.4 74.0¢/sh 1.2 66.5¢/sh 1.0 57.0¢/sh 0.7 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Think bigGet it done Own it Share your together humanity Letter to shareholders from our Chairman of the Board John Cassaday The common thread that unites a globally diverse Company such as ours is our shared values. Manulife’s values work as a road map for servingg and delighting our customers. 2 2018 Annual Report Fellow shareholders, Governance and shareholder outreach As your Board looks back on the past year, it is impossible Your Board spent much of 2018 providing oversight to the not to be proud of the strides that Roy Gori and his team have management team, reviewing strategy and goals for the made to position Manulife for future success. Company’s global business, and discussing and debating issues relevant to Manulife’s business, culture, risk profile, The strategy we have adopted is the right strategy for our and the geographies in which we operate. We also spent time customers, employees, and shareholders. Your Board is fully engaging with shareholders about subjects of interest to supportive of Manulife’s transformation and the path that them including executive compensation, diversity, corporate the Executive Leadership Team has laid out to achieve it. We culture, and governance. A robust shareholder dialogue is are confident we have the right leadership team in place to integral to the ability of any Board to successfully perform deliver on the strategic priorities we have communicated. The its duties and we’re thankful to the shareholders who Company’s early progress against these priorities speaks to participated in those discussions. their ability to execute. We were pleased to again receive top recognition in The Globe Guided by values and Mail’s board governance rankings this year, although we view the exercise of our governance duties as “just doing our In addition to a talented leadership team, Manulife has an job.” Each Board member is leveraging their entire skillset in established and diversified global franchise focused on the fulfilling their Board duties. Similarly, each Director shares an needs of almost 28 million individual, group, and institutional immense feeling of pride and honour in being able to serve customers. The common thread that unites a globally diverse our great Company. Company such as ours is our shared values. Manulife’s values work as a road map for serving and delighting our customers. We’d like to thank Luke Helms, who retires from our Board this They also guide day-to-day decision making. year. Luke has served Manulife’s shareholders with distinction since 2007 and his extensive banking and financial services Having a shared set of values in an organization the size of experience informed many important decisions influencing our ours is absolutely critical. At Manulife, we are committed to Company’s business and strategy during that time. We wish the following values: him all the best in the future. Obsess Predict their needs and do everything in Pamela Kimmet has also left our Board to become Manulife’s 1 about our power to satisfy them. Chief Human Resources Officer. Pam was an exceptional customers Board member and is an exceptional human resources executive. Her leadership experience in this area across Do the Act with integrity and do what we say. a variety of industries will serve us well as she takes on 2 right thing oversight of the Company’s culture and people agenda. Think big Anything is possible. We can always find We’d like to congratulate every Manulife employee for the 3 a better way. significant strategic progress and strong financial results in 2018. We are highly confident we have the right strategy Get it done We’re surrounded by an amazing team. and leadership in place and that Manulife will deliver on its 4 together Do it better by working together. ambitious transformation plan. This plan will drive future shareholder value and enable us to continue to serve and Own it Feel empowered to make decisions delight our customers. 5 and take action to deliver our Mission: Decisions made easierr. Lives made betterr. Lastly, your Board would like to thank you, our fellow shareholders, for all of your feedback, trust, and support. We Share your Build a supportive, diverse, and thriving look forward to continuing to serve you in 2019 and beyond. 6 humanity workplace. Sincerely, This set of principles will help steer the organization as it undergoes this period of transformation and we thank all employees who gave their time and their passion in developing these values. John Cassaday Chairman of the Board 3 Letter to shareholders from our President and Chief Executive Officer Roy Gori At our Investor Day in June, we outlined clear targets against each of our five strategic priorities and immediately began making concrete headway. We’re confident if we execute and deliver on this plan, we will inspire our employees, turn our customers into advocates and create significant shareholder value. 4 2018 Annual Report Dear fellow shareholders, At a recent online global town hall with our employees, I was At our Investor Day in June, we outlined clear targets against asked, “what question should we be asking ourselves that we each of our five strategic priorities and immediately began haven’t already?” making concrete headway. We’re confident if we execute and deliver on this plan, we will inspire our employees, turn our This is such an important question because in organizations customers into advocates, and create significant shareholder of our size, the biggest obstacle to change is inertia and the value. While we continue to face challenges, from market pull to keep doing things the way they’ve always been done. volatility and trade uncertainty to low interest rates and strong This isn’t an easy obstacle to face. Many of our processes competition, we’re extremely encouraged by our progress to are designed to support the old way of doing things and are date. Let me provide some highlights on our progress: not yet geared for the future. To better serve our customers and drive growth, we have to encourage new solutions to 1. Portfolio optimization old challenges. We are actively managing our capital to ensure we can deliver When I receive great questions like this, I know that our work to the best returns and cash generation possible, while reducing ignite an insurgent mindset in our more than 34,000 employees risk and volatility. globally is starting to make an impact. It is this mindset that will be a key ingredient in our plan to transform Manulife into the Over the past year, we announced reinsurance agreements most digital, customer-centric global company in our industry. on legacy blocks of business, sold alternative long-duration assets, sold Signator Investors, our U.S.-based broker/dealer, So, what was my answer to that employee’s question? That and offered customers in some of our legacy segregated we should always be challenging ourselves by asking if there fund products in Canada an opportunity to convert to a less is a better way to create value for our three key stakeholders: capital-intensive product. Once we complete the initiatives customers, employees, and shareholders. we have announced, we expect to free up about $3.7 billion of capital, representing almost three-quarters of our Or, put differently, are we living up to our mission of making 2022 target. decisions easier and lives better? 2. Expense efficiency We’re proud that we get to help almost 28 million customers globally make their decisions easier and lives better and We are getting our cost structure into fighting shape and I’m excited about the progress we made in 2018.