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Manulife Financial reports record quarterly earnings Shareholders’ net income increases 21 per cent from the prior year Toronto – Manulife Financial Corporation today reported record shareholders’ net income of $396 million for the third quarter of 2003. The 21 per cent year-over-year increase in earnings was attributable to the impact of business growth, an improved expense position and favourable equity markets. The continued rally in the equity markets in the third quarter had a positive influence on segregated fund guarantees, fee revenue and investment income. Earnings per common share increased by 23 per cent to $0.85 from $0.69 reported in 2002. Return on common shareholders’ equity for the quarter was 17.9 per cent compared to 15.2 per cent for the same period last year. Total premiums and deposits for the quarter were $7.4 billion, five per cent higher than the third quarter of 2002. Higher sales in the North American insurance businesses, growth in Asia and the turnaround in the equity markets contributed to the growth. Funds under management as at September 30, 2003 of $150.8 billion increased by $6.5 billion or five per cent from second quarter levels and by eight per cent compared to a year ago. Currency exchange rates, particularly the depreciation of the U.S. dollar and Japanese yen, had a dampening impact on results in the quarter. The estimated impact of currency movements on the translation of shareholders’ net income, premiums and deposits, and funds under management were declines of $25 million, $650 million, and $14.5 billion, respectively, compared to a year ago. “We are very proud that Manulife has once again produced record quarterly results. The strong organic growth in our core markets, which results from our ongoing focus on expanded distribution, new and innovative products and superior customer service is producing dividends for our shareholders,” said Dominic D’Alessandro, President and Chief Executive Officer of Manulife Financial. “Our recently announced intention to merge with John Hancock provides a tremendous opportunity to build on our already strong base.” “Our higher earnings reflect the continued improvements in global equity markets, solid sales growth, market share gains in several businesses, and the positive impact of cost containment initiatives and productivity gains,” added Peter Rubenovitch, Executive Vice President and Chief Financial Officer. “These factors contributed to Manulife Financial delivering an above industry average return on common shareholders’ equity of 17.9 per cent for the quarter.” FINANCIAL PERFORMANCE Financial Highlights (unaudited)
Shareholders’ Net Income Manulife Financial Corporation reported shareholders’ net income of $396 million for the third quarter ended September 30, 2003, up 21 per cent from $327 million in 2002 despite the negative impact of a strengthened Canadian dollar, which reduced earnings by approximately $25 million. This increase reflected a growing business base particularly in the Asian Division, improved equity markets and favourable claims experience in the Canadian Division, partially offset by less favourable mortality results in the Reinsurance and U.S. Divisions and increased costs related to new business. For the nine months ended September 30, 2003, shareholders’ net income was $1,118 million, an increase of 11 per cent over 2002. Earnings per Common Share and Return on Common Shareholders’ Equity The third quarter earnings per common share were $0.85 compared to $0.69 in 2002, up 23 per cent. For the three months ended September 30, 2003, return on common shareholders’ equity was 17.9 per cent compared to 15.2 per cent for the same period in 2002. Year-to-date return on common shareholders’ equity and earnings per common share were 17.2 per cent and $2.41, respectively. OPERATING HIGHLIGHTS Product & Service Developments Manulife is committed to providing real value to its customers by providing the highest quality products, services, advice and sustainable value to meet their individual needs. Manulife’s success is reflected in significant market share gains in several businesses. During the third quarter, the Company delivered on its promise to customers with many new and enhanced products and services:
Corporate Developments
Premiums and Deposits Third quarter premiums and deposits were $7.4 billion in 2003, up five per cent compared to $7.1 billion in the third quarter of 2002. Premiums and deposits increased by approximately 15 per cent after excluding the impact of a strengthened Canadian dollar. This increase was driven by sales of variable annuity products in the U.S. and Japan and wealth management products in Canada, the U.S. and Asia, partially offset by reduced Reinsurance premiums. Funds under Management Funds under management increased by eight per cent to $150.8 billion as at September 30, 2003 compared to $139.2 billion as at September 30, 2002. General fund assets decreased by three per cent to $78.4 billion from a year ago as business growth was more than offset by a $6.6 billion decline due to a strengthened Canadian dollar. Segregated fund assets increased to $65.4 billion from $54.0 billion as at September 30, 2002. Strong net policyholder cash flows of 401(k) and annuity products in the U.S. and positive net segregated fund cash flows in Canada over the past 12 months were partially offset by the $7.7 billion reduction caused by a strengthened Canadian dollar. Capital Total capital increased to $12.3 billion as at September 30, 2003 compared to $11.8 billion as at September 30, 2002. This increase was primarily the result of net income in the past 12 months and the issuance of $350 million of preferred shares in the second quarter, partially offset by shareholder dividends, the repurchase of four million common shares for $130 million in the fourth quarter of 2002, and the negative impact of a strengthened Canadian dollar. Normal Course Issuer Bid Manulife Financial Corporation filed today with the Toronto Stock Exchange a notice of the Company’s intention to make a normal course issuer bid for the purchase of up to 46,000,000 common shares, representing approximately 9.9 per cent of Manulife’s outstanding common shares. The normal course issuer bid is subject to the approval of the Toronto Stock Exchange and receipt by Manulife of other regulatory approvals. Purchases under the bid will be made through the facilities of the Toronto Stock Exchange in the 12 months following commencement of the bid period at market prices prevailing at the time of purchase, subject to compliance with applicable law and regulations. Any common shares acquired by Manulife will be cancelled. Under its previous normal course issuer bid, Manulife purchased a total of 1,865,000 common shares at an average price of $34.38 per share. The Company continues to believe that from time to time, the market prices of its common shares may not fully reflect the value of its business and its future business prospects and accordingly, may represent an attractive investment and a desirable use of its available funds. Quarterly Dividends The Board of Directors approved a quarterly shareholders’ dividend of $0.21 per share on the common shares of the Company payable on or after December 19, 2003 to shareholders of record at the close of business on November 17, 2003. A dividend of $0.25625 per share was also declared on the Non-cumulative Class A Shares Series 1 of the Company, payable on or after December 19, 2003 to shareholders of record at the close of business on November 17, 2003. PERFORMANCE BY DIVISION U.S. Division
Canadian Division
Asian Division
Japan Division
Reinsurance Division
About Manulife Financial Manulife Financial is a leading Canadian-based financial services group operating in 15 countries and territories worldwide. Through its extensive network of employees, agents and distribution partners, Manulife Financial offers clients a diverse range of financial protection products and wealth management services. Funds under management by Manulife Financial were Cdn$150.8 billion as at September 30, 2003. Manulife Financial Corporation trades as ‘MFC’ on the TSX, NYSE and PSE, and under ‘0945’ on the SEHK. Manulife Financial can be found on the Internet at www.manulife.com. – 30 – Attachments: Financial Highlights Consolidated Statements of Operations Consolidated Balance Sheets Divisional Information Notes: Manulife Financial Corporation will host a Third Quarter Earnings Results Conference Call at 2:00 p.m. ET October 28, 2003. For local and international locations, please call (416) 695-6120 and toll free in North America please call (800) 446-4472. Please call in ten minutes before the call starts. You will be required to provide your name and organization to the operator. A playback of this call will be available at 6:00 p.m. ET today until midnight ET, November 7, 2003 by calling (416) 695-6050 (passcode #9593). The conference call will also be Webcast through Manulife Financial’s Web site at 2:00 p.m. ET. You may access the Webcast at: www.manulife.com/corporate/corporate2.nsf/public/quarterlyreports.html An archived version of the Webcast will be available later on the Web site at the same URL as above. The Third Quarter 2003 Financial Statements and Statistical Information Package are also available on the Manulife Web site at: www.manulife.com/corporate/corporate2.nsf/public/quarterlyreports.html Each of these documents may be downloaded before the Webcast begins. Forward-Looking Statements This news release includes Forward-Looking statements with respect to the Company, including its business operations and strategy as well as its 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 conditions worldwide, market factors, including global capital market activity, interest rate and currency value fluctuations, business competition, changes in government regulations or in tax laws, technological changes, changes in consumer demand for the Company's products and services, realizing increased revenue from the expansion and development of distribution channel capacity, our ability to complete strategic acquisitions and to integrate acquisitions, catastrophic events, political conditions and developments and international conflicts. The Company does not undertake to update any Forward-Looking statements. Important Legal Information In connection with the proposed merger of Manulife and John Hancock Financial Services, Inc., Manulife will be filing a registration statement on Form F-4 containing a proxy statement/prospectus for the stockholders of John Hancock and John Hancock will be filing a proxy statement for the stockholders of John Hancock, and each will be filing other documents regarding the proposed transaction, with the SEC. Before making any voting or investment decision, John Hancock’s stockholders and investors are urged to read the proxy statement/prospectus regarding the merger and any other relevant documents carefully in their entirety when they become available because they will contain important information about the proposed transaction. The registration statement containing the proxy statement/prospectus and other documents will be available free of charge at the SEC’s Web site, www.sec.gov. Stockholders and investors in John Hancock or Manulife will also be able to obtain the proxy statement/prospectus and other documents free of charge by directing their requests to John Hancock Shareholder Services, c/o EquiServe, L.P., P.O. Box 43015, Providence, RI 02940-3015, (800-333-9231) or to Manulife Investor Relations, 200 Bloor Street East, NT-7, Toronto, Ontario, M4W 1E5, Canada, (800-795-9767).
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