PSE Circular for Brokers No. 402-00

February 18, 2000 PSE CIRCULAR FOR BROKERS NO. 402-00 February 17, 2000 Manulife Financial achieves record earnings Board announces first shareholders' dividend Toronto-Manulife Financial Corporation achieved its sixth consecutive year of record earnings for 1999 reporting adjusted shareholders' net income of $874 million and adjusted basic earnings per share of $1.75. Return on shareholders' equity was 14 per cent for the year, compared to the 12.9 per cent reported in 1998. Adjusted shareholders' net income grew by 23 per cent or $0.33 per share over the prior year as a result of strong claims results, business growth in core insurance and wealth management operations and higher investment earnings. For 1999, adjusted shareholders' net income represents earnings as a mutual insurance company prior to demutualization and shareholders' earnings as a public stock company subsequent to September 23, 1999. This year for the first time, premiums and deposits surpassed the $20 billion mark, growing by 31 per cent over 1998. Revenue growth was particularly strong in the U.S. and Asia. For the fourth quarter of 1999, shareholders' net income was $251 million, representing earnings of $0.50 per share, up 26 per cent from the $199 million reported during the same period in 1998. Shareholders' return on equity for the quarter was 15.7 per cent compared to the 13.5 per cent achieved during the fourth quarter of 1998. "It's been a remarkable and historic year for Manulife," said Dominic D' Alessandro, President and Chief Executive Officer of Manulife Financial Corporation. "In addition to successfully completing our conversion to a public company, we achieved record revenue and earnings results, significantly expanded our presence in the Asian markets with new operations in Japan and Vietnam, and successfully completed our Y2K systems upgrade. I am very pleased with the progress made in all Divisions during 1999 and their contributions to our achievements." cdlex "We also reached our 14 per cent target return on shareholders' equity one year ahead of schedule and have now established a new goal of attaining a 15 per cent return on equity to enhance value for our shareholders." added Mr. D' Alessandro. The Board of Directors today announced approval of the Company's first post demutualization shareholders' dividend; a quarterly payout of $0.10 per share on common shares of the Company, payable April 28, 2000 to shareholders of record at the close of business on March 20, 2000. 1999 Financial Highlights : Total premiums and deposits increased by 31 percent to $20.1 billion when compared to 1998. Record sales of wealth management products in the U.S, the assumption of Confederation Life's remaining inforce Group Life & Health business and the commencement of operations by Manulife Century Life in Japan were the key drivers of this growth. Other revenue, comprised primarily of fee revenue, for the first name exceeded $1 billion, an increase of 28 per cent from 1998 reflecting growth in segregated fund assets. Funds under management ended the year at $112.1 billion, an increase of 16 per cent from December 31, 1998 levels after being reduced by $3.9 billion due to the impact of the strengthening Canadian dollar. This growth in managed funds was primarily due to the 28 per cent growth in segregated fund assets, which ended the year at $49.1 billion, driven by sales of variable annuities and 401(k) pension products along with equity market appreciation. cdlex Sales of individual insurance products grew by 23 per cent over the prior year in Canada and 16 per cent in the United States. Strong demand for universal life products was experienced in both markets, and in Canada, demand for the term Healthstyles preferred underwriting program continued. The commencement of operations in Japan along with increased marketing efforts, product upgrades and growth in the agency force in other Asian markets were the primary reasons for the growth in insurance product sales in Asia. Wealth management operations in the U.S. reported growth in premiums and deposits of 50 per cent over the prior year, driven by higher retained annuity sales, a third consecutive quarter of record variable annuity sales and continued strong growth in sales of 401 (k) pension products in the small to medium market. In Canada, lower variable product sales reflected general industry trends, partially offset by increased sales of guaranteed savings products as a result of the Company's competitive product offerings. Results of Operations by Division U.S. Division U.S. Division net income for the year increased by $14 million to $365 million in 1999 primarily driven by favourable life insurance claims experience. This year's fourth quarter net income was $107 million. For the year, premiums and deposits increased by 40 per cent to $12.1 billion in 1999 from $8.7 billion in 1998. These increases were mainly the result of increased deposits from variable annuities and 401 (k) pension business. Premiums increased significantly due to increased annuity sales, together with the amendment of an external reinsurance program, resulting in the retention of new annuity premiums. cdlex Funds under management increased by 17 per cent to $63.0 billion as at December 31, 1999. This increase was largely due to a 30 per cent growth in segregated fund assets from net new variable annuity and 401(k) pension deposits and strong U.S. equity markets, partially offset by the effect of the strengthening of the Canadian dollar against the U.S. dollar. Excluding the impact of currency, segregated fund assets grew by 39 per cent year over year. Canadian Division Canadian Division reported net income of $236 million in 1999 compared to $235 million in 1998. The year's result reflected more favourable claims experience, increased fee income primarily from segregated fund assets, and higher investment income, partially offset by one-time development costs associated with Manulife One and the reorganization of distribution operations. LibLex For the year, premiums and deposits increased to $5.1 billion in 1999 from $4.5 billion in 1998 primarily as a result of premiums assumed on in-force business from Confederation Life. Funds under management ended the year at $29 billion, an increase of seven per cent compared to the prior year. This increase was largely due to net new segregated fund deposits and appreciation in equity markets combined with growth in general fund assets as a result of the assumption of the Confederation Life business. Asian Division Asian Division net income for the year increased by $59 million to $139 million from $80 million in 1998. The increase was due to business growth primarily in Hong Kong and improved credit and claims experience, increased administration fees earned on variable insurance contracts and higher investment income. Fourth quarter net income increased by $25 million to $28 million in 1999 compared to $3 million in the fourth quarter of 1998. Full year premiums and deposits increased by 60 per cent to $1.9 billion primarily due to sales of single premium endowment products in Japan and growth in individual insurance business in Hong Kong. Funds under management increased by 53 per cent to $73 billion as at December 3 l, 1999 from $4.1 billion as at December 31, 1998. This increase was largely due to the initiation of operations in Japan in the first quarter of 1999, and to segregated fund growth as a result of asset appreciation and net new variable pension deposits in Hong Kong. Reinsurance Division Reinsurance Division reported improved full year net income of $105 million compared to $30 million in 1998 For the quarter. net income increased by $8 million to $19 million in 1999 from $11 million in the fourth quarter of 1998. The improvement in net income for the year was due to improved claims experience along with the effect of exiting the U.S. medical reinsurance market. Full year premiums increased to $816 million from $749 million in 1998, primarily due to higher life retrocession business volumes offset by the continuing impact of exiting the U.S. medical reinsurance market. General fund assets remained unchanged at S2.8 billion as at December 31, 1998 and 1999. Manulife Financial is a leading Canadian-based financial services company operating in 15 countries and territories worldwide. Through its 28,000 employees and agents, together with a network of distribution partners, Manulife Financial offers clients a diverse range of financial protection products and wealth management services. Funds under management by Manulife Financial (Manulife Financial Corporation and its affiliated companies) were in excess of Cdn$112 billion as at December 31, 1999. Manulife Financial Corporation trades as 'MFC' on the TSE, NYSE and PSE, and under '945' on the SEHK. Manulife Financial can be found on the Internet at www.manulife.com. -30- All figures in Canadian dollars unless otherwise stated. Attachments: Financial Highlights Consolidated Statement of Operations Consolidated Balance Sheet Divisional Information Media inquiries: Investor Relations: Donna Morrison Edwina Stoate Corporate Communications Investor Relations (416) 926-5226 t (4!6) 926-3490 [emailprotected] [emailprotected] Forward-Looking Statements Visit our Web site www.manulife.com for complete financial statements and related notes Forward-Looking Statements This news release includes Forward-Looking statements with respect to the Company, including its business operations and strategy and financial performance and condition. These statements generally can be identified by the use of Forward-Looking words such as "may," "will," "expect" "intend," "estimate," "anticipate," "believe," or "continue or the negative thereof or similar variations. Although management believes that the expectations reflected in such Forward-Looking statements are reasonable, such statements involve risks and uncertainties and actual results may differ materially from those expressed or implied by such Forward-Looking statements. Important factors that could cause actual results to differ materially from the Company's expectations include among other things, general economic and market factors, including interest rates, business competition and changes in government regulations or in tax laws. Financial Highlights Consolidated Statements of Operations Consolidated Balance Sheets