Annual Report 2020 - Manulife

1 Annual Report 2020. Manulife Financial Corporation Our mission Our values Decisions made easier. Our values represent how we operate. They reflect our culture, Lives made better. inform our behaviours, and help define how we work together. Obsess about customers We predict their needs and do everything in our power Our five strategic priorities to satisfy them. Portfolio Optimization Do the right thing We are actively managing our legacy businesses to improve We act with integrity and do what we say. returns and cash generation while reducing risk. Think big Expense Efficiency Anything is possible. We can always find a better way. We are getting our cost structure into fighting shape and Get it done together simplifying and digitizing our processes to position us for We're surrounded by an amazing team.

2 Do it better efficient growth. by working together. Accelerate Growth Own it We are accelerating growth in our highest-potential businesses. We feel empowered to make decisions and take action Digital, Customer Leader to deliver our mission. We are improving our customer experiences, using digitization Share your humanity and innovation to put customers first. We build a supportive, diverse, and thriving workplace. High-Performing Team We are building a culture that drives our priorities. Learn more about the progress we are making on our five strategic priorities on page 17. Who we are Manulife Financial Corporation is a leading international financial services group that helps people make their decisions easier and lives better. With our global headquarters in Toronto, Canada, we operate as Manulife across our offices in Canada, Asia, and Europe, and primarily as John Hancock in the United States.

3 We provide financial advice, insurance, as well as wealth and asset management solutions for individuals, groups, and institutions. At the end of 2020, we had more than 37,000 employees, over 118,000 agents, and thousands of distribution partners, serving over 30 million customers. Manulife by the numbers Core Earnings (C$ billions) Assets Under Management and Administration (C$ billions). $ billion $1,297 billion Total company core earnings declined 9% versus 2019. $ trillion in AUMA, a 10% increase versus 2019. 1,297. 1,189. 1,071 1,084. 1,005. 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020. Net Income Attributed to Shareholders (C$ billions) New Business Value (C$ billions). $ billion $ billion Net income attributed to shareholders increased New business value declined 13% compared with 2019, $ billion from 2019.

4 Due to the challenging sales environment. 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020. Common Share Dividend (C$). $ Our values were on display every Dividend payout ratio1 of 41% in 2020. $ day and helped us frame the many $ $ $ $ decisions we made throughout this challenging time.. 2016 2017 2018 2019 2020. Roy Gori President and Chief Executive Officer 1. Dividend payout ratio is common share dividends as a percent of diluted core earnings per common share. Note: Percentage changes are stated on a constant exchange rate basis, a non-GAAP. measure. AUMA values are reported as at December 31. 1. communities. We also saw the importance of making a range of mental, physical, and other supports available to our employees. We were gratified to see employee engagement scores rise substantially across the organization in 2020.

5 Sharing our humanity also encompasses our strong commitment to diversity, equity, and the inclusive culture and workplace we are building. As the fight against racism took on heightened urgency in 2020, Manulife responded with a meaningful financial investment to promote diversity, equity, and inclusion, in addition to establishing concrete leadership and recruitment goals to increase the representation of Black, Indigenous, and People of Colour across its North American businesses. Manulife also introduced substantial enhancements to our maternity leave program and added parental and adoption leave, leading surrogacy and Letter to shareholders fertility benefits, and coverage for gender affirmation services. from John Cassaday Chairman of the Board Your Board's activities in 2020. While the pandemic showed us how a global crisis can upend even the best laid plans, your Board's top priority was ensuring we Fellow shareholders, could continue to provide oversight and guidance to the management team virtually.

6 Last year in this letter, we highlighted the uncertainty and upheaval unfolding how Manulife was focused on achieving around them on a daily basis. We successfully leveraged technology to success while always doing the right thing. continue to interact with each other during This year, against the backdrop of the Even as our businesses had to adjust our Board sessions. We gathered ongoing global COVID-19 pandemic, another of quickly and dramatically in response to director feedback to confirm that our Manulife 's values serves as a helpful lens the pandemic, we ensured that everyone effectiveness was not being impacted and through which to reflect on the year that at Manulife understood the importance that all directors still felt their voices were passed: sharing our humanity. of human kindness to our customers, being heard.

7 While we will eventually meet communities, and colleagues alike and again in person, once it is safe to do so, we've In a year like no other, your Board is proud of that we never lost sight of a simple but also learned that there's no need for every Manulife 's many accomplishments achieved powerful fact: we are all in this together. meeting to be in person, and that avoiding under the strong and empathetic leadership lengthy travel could make us a more effective of Roy Gori, President and CEO, and your We were thrilled to be able to offer a group without sacrificing the connectedness company's Executive Leadership Team (ELT). thank you day off to employees, as well that we currently value and enjoy. We are also humbled by the resilience, as a pay it forward grant, through our agility, and passion shown by every Manulife Act of Kindness program, which enabled As Chairman, it was critically important employee around the world who continued employees to make a monetary donation to maintain personal contact with our to serve our company's customers through to a charity of their choice in their local independent directors and executive 2 | 2020 Annual Report leaders and we did so with an even greater frequency than is usual.

8 This helped ensure that our directors' voices were heard and that the tone at the top was appropriate. It also signalled to management that there was always a way to be heard by the Board. As the pandemic unfolded, we set up frequent briefings with management, as well as informal updates with Roy, to ensure that your Board had a clear line of sight into the company's COVID-19 Manulife 's Board of Directors met virtually in 2020. From top left: Nicole Arnaboldi, Guy Bainbridge, Joseph Caron, John Cassaday, Susan Dabarno, John Palmer, Sheila Fraser, Roy Gori, Julie Dickson, Donald Lindsay, Tsun-yan Hsieh, response, its approach for an eventual Andrea Rosen, Jim Prieur, and Leagh Turner. return to the office, and overall progress on its strategic priorities. Your Board continued to take an active role the advice and counsel she provided during We also continued to leverage your in Manulife 's environmental, social, and her three years on the Board.

9 Board's diverse mix of skills to conduct governance (ESG) performance. The Board's focused deep dives into topics of key Corporate Governance and Nominating We would also like to express our importance to Manulife , such as IFRS 17 Committee reviewed the progress being appreciation to Roy and the ELT for implementation, customer centricity, made against Manulife 's sustainability delivering a year of solid results during macroeconomic trends, and strategy. framework and stayed informed of ESG the worst global crisis in recent history, all These sessions were attended by a subset trends, risks, and opportunities through while continuing to go above and beyond of directors having expertise in the management reporting. for customers and engaging and inspiring relevant area and who provided context the team with values-driven leadership.

10 And input into our deliberations with the Two new directors joined the Board full Board. in 2020, each with expertise in areas We want to send a special thank you to critical to Manulife 's ongoing growth. every Manulife employee. Your unwavering The Board maintained close oversight Nicole Arnaboldi, former Vice Chairman, commitment to our mission and values, of Manulife 's near- and long-term strategy Credit Suisse Asset Management, is an and the passion you've shown in the face of throughout the year, in particular the accomplished financial services executive intense adversity, is what makes Manulife 's large and compelling growth opportunity with a depth of critical wealth and asset success possible, day in and day out. The presented by the company's business in Asia management knowledge. Leagh Turner, Board sends you its unreserved gratitude and Global Wealth and Asset Management.