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Manulife Financial Corporation reports strong revenues and earnings growth Return on shareholders’ equity1 of 18.9 per cent, up 230 basis points Toronto – Manulife Financial Corporation today reported shareholders’ net income of $1,070 million, an increase of 10 per cent over the third quarter of last year. Fully diluted earnings per share were $0.70, up 13 per cent from one year ago. As well, return on common shareholders’ equity1 was 18.9 per cent, an increase of 230 basis points. Third quarter premiums and deposits rose to $16.8 billion, an increase of 10 per cent over last year due to continued strong sales and growth in recurring premiums and deposits. On a constant currency basis, growth in premiums and deposits would have been 16 per cent. “Our third quarter results reflect the strength and diversity of our businesses and invested assets,” said Dominic D’Alessandro, President and Chief Executive Officer of Manulife Financial. “I was particularly pleased to see our continued focus on product innovation and distribution excellence reflected in exceptional sales across our Company. The value being created bodes well for future earnings growth.” Third quarter sales were very strong across the Company, with Individual Insurance sales of $594 million, up 23 per cent over last year, and wealth management sales of $10.8 billion, up 26 per cent. Record sales levels were achieved in a number of businesses this quarter:
Total funds under management as at September 30, 2007 were $399.0 billion, an increase of five per cent over last year. Excluding the negative impact of currency movements over the year, growth in total funds under management would have been 14 per cent. 1 Return on common shareholders’ equity is calculated excluding Accumulated Other Comprehensive Income on available-for-sale securities and cash flow hedges. OPERATING HIGHLIGHTS United States
Canada
Asia and Japan
Corporate
MANAGEMENT DISCUSSION AND ANALYSIS Financial Highlights (unaudited)
Effective January 1, 2007, the Company adopted four new Canadian accounting standards for Financial Instruments - Recognition and Measurement, Hedges, Comprehensive Income and Accounting for Leveraged Leases. These changes in accounting policies have not had a material impact on shareholders’ net income. Net Income The Company’s shareholders’ net income for the third quarter of 2007 was $1,070 million, up 10 per cent from $974 million reported a year earlier. The increase in earnings was a result of higher fee income related to the growth in funds under management in the wealth management businesses and the impact of investment related gains. Favourable equity markets compared to a year ago, gains on private equities as well as real estate investment performance more than offset the negative impact of lower interest rates. The strengthened Canadian dollar also reduced earnings by $56 million. Year-to-date shareholders’ net income was $3,158 million compared to $2,885 million in 2006. Diluted Earnings per Share and Return on Common Shareholders’ Equity Third quarter reported diluted earnings per common share of $0.70 grew by 13 per cent from $0.62 in 2006. Management measures return on common shareholders’ equity excluding the components of Accumulated Other Comprehensive Income on available-for-sale securities and cash flow hedges. Return on common shareholders’ equity was 18.9 per cent for the three months ended September 30, 2007, an increase of 230 basis points over 16.6 per cent for the three months ended September 30, 2006. (Click here for discussion of non-GAAP measures). Premiums and Deposits Premiums and deposits for the quarter were $16.8 billion, up 10 per cent from $15.3 billion reported a year earlier. This increase reflects growth across all of our divisions, including record sales for John Hancock’s and Japan’s variable annuity products. On a constant currency basis, premiums and deposits grew 16 per cent. Funds under Management Funds under management grew by five per cent, or $18.1 billion, to $399.0 billion as at September 30, 2007. The increase is primarily driven by strong net policyholder cash flows and favourable equity market performance over the past twelve months, partially offset by the $36 billion negative impact of a strengthened Canadian dollar and $2.7 billion of scheduled maturities of John Hancock Fixed institutional products. Capital Total capital was $29.1 billion as at September 30, 2007, up $0.6 billion from $28.5 billion as at September 30, 2006. Capital increased by $1,565 million due to the change in accounting standards for financial instruments; net new debt capital issued of $610 million; and net income in the past twelve months of $4,263 million. This was offset by shareholders’ dividends of $1,319 million; the repurchase of 55 million common shares for $2,173 million; and charges of $2,454 million to Accumulated Other Comprehensive Income primarily due to the $2.3 billion negative impact of the strengthened Canadian dollar over the last twelve months. PERFORMANCE BY DIVISION U.S.Insurance 
U.S. Insurance shareholders’ net income for the third quarter of 2007 was $138 million, down $31 million from $169 million reported a year earlier. Favourable investment results driven by private equity and real estate investment performance were more than offset by the impact of lower interest rates and the stronger Canadian dollar. Mortality gains in John Hancock Life were down compared to the strong gains of a year ago and claims experience in John Hancock Long Term Care was unfavourable. Year-to-date shareholders’ net income was $459 million compared to $454 million in 2006. Premiums and deposits for the quarter were $1.6 billion consistent with the amount reported in the third quarter of 2006. On a U.S. dollar basis, premiums and deposits increased by seven percent due to higher sales and growth in the in-force business in both John Hancock Life and John Hancock Long Term Care. Funds under management declined by three per cent, or $1.5 billion, to $56.2 billion as at September 30, 2007 due to the impact of the stronger Canadian dollar. On a U.S. dollar basis, funds under management grew by nine percent as a result of business growth and the favourable equity market performance over the last twelve months. U.S. Wealth Management
U.S. Wealth Management shareholders’ net income for the third quarter of 2007 was $268 million, down $12 million from $280 million reported a year earlier. Earnings increased as a result of both higher fee income on higher average assets in John Hancock Variable Annuities and John Hancock Retirement Plan Services and the favourable impact of updating acquisition cost amortization schedules in Variable Annuities. This increase was more than offset by the non-recurrence of unusually strong favourable investment results reported in 2006 in John Hancock Fixed and the negative impact of the strengthened Canadian dollar. Year-to-date shareholders’ net income was $837 million compared to $836 million reported in 2006. Premiums and deposits for the quarter were $8.5 billion, down three per cent from $8.8 billion reported in the third quarter of 2006. On a U.S. dollar basis, premiums and deposits were up four per cent, led by growth in Variable Annuities deposits on the strength of the Income Plus For Life rider launched in Q2 2007. Excluding the U.S.$0.6 billion deposit related to the John Hancock staff 401(k) pension plan in the prior year results, Retirement Plan Services deposits increased due to higher recurring deposits from the growing block of in-force participants. John Hancock Fixed premiums and deposits declined, reflecting lower deferred annuity sales and the suspension of SignatureNotes product sales. Funds under management grew by one per cent, or $1.4 billion, to $181.2 billion as at September 30, 2007. On a U.S. dollar basis, funds under management grew $20.7 billion or 13 per cent. This growth was the result of continued strong net policyholder cash flows in the Variable Annuities, Retirement Plan Services and John Hancock Mutual Funds businesses and the cumulative effect of favourable equity market performance over the last twelve months. These increases were partially offset by scheduled maturities exceeding new sales over the last twelve months in the John Hancock Fixed business. Canadian Division
Canadian Division’s shareholders’ net income for the third quarter of 2007 was $333 million, up $104 million from $229 million reported a year earlier. The increase was driven by business growth, particularly in Individual Wealth Management, as well as the positive impact of rising equity markets over the past year on fee income and segregated fund guarantees. The positive impact of real estate investment performance also contributed to the earnings growth in the quarter. Year-to-date shareholders’ net income was $847 million compared to $734 million in 2006. Premiums and deposits for the quarter were $3.3 billion, up nine per cent from $3.1 billion reported in the third quarter of 2006. Growth in segregated fund deposits in Individual Wealth Management, and general fund premiums and ASO premium equivalents in Group Benefits, including the impact of the sale to Canada Post in the quarter, contributed to the increase. Funds under management grew by 14 per cent, or $10.4 billion, to $83.6 billion as at September 30, 2007. Segregated fund assets contributed more than half of the year-over-year growth, reflecting net positive client cash flows in the wealth management businesses and rising equity markets over the past year. In addition, Manulife Bank assets reflect the continued growth in lending and deposit products. Asia and Japan Division
Asia and Japan Division’s shareholders’ net income for the third quarter of 2007 was $227 million, up $45 million from $182 million reported a year earlier. The increase in earnings was driven by the impact of rising equity markets on investment income in Hong Kong and in the Other Asia Territories and by increased fee income from the growth in funds under management across the pension and wealth management businesses. New product launches and the repricing of medical riders in Taiwan also contributed to the increase. In Japan, the favourable impact of the repricing of medical riders was offset by reduced investment income arising from turbulent equity markets. Increases were partially offset by the impact of the strengthened Canadian dollar. Year-to-date shareholders’ net income was $683 million compared to $543 million in 2006. Premiums and deposits for the quarter were $3.1 billion, up 93 per cent from $1.6 billion reported in the third quarter of 2006. The primary driver of the increase was strong sales of the new variable annuity product launched in Japan during June 2007. Growth in Hong Kong wealth management sales, mutual fund sales in Indonesia, and sales of both our investment linked product and new variable annuity product in Singapore also contributed to the increase. This was partially offset by the unfavourable impact of the strengthened Canadian dollar. Funds under management grew by 24 per cent, or $8.1 billion, to $41.6 billion as at September 30, 2007. Growth was fuelled by the impact of rising equity markets and strong net policyholder cash flows most notably from variable annuity sales in Japan with the June 2007 launch of the most recent variable annuity product. These increases were partially offset by the unfavourable impact of the strengthened Canadian dollar. Reinsurance Division
Reinsurance Division’s shareholders’ net income for the third quarter of 2007 was $59 million, down $27 million from a year earlier. Contributing to the decrease was unfavourable claims experience in both Life and Property and Casualty Reinsurance, compared to a very favourable claims result in the previous year, most notably from Life experience, as well as the impact of the strengthened Canadian dollar. Strong investment results partially offset these reductions. Year-to-date shareholders’ net income was $198 million compared to $226 million in 2006. Premiums for the quarter were $249 million, up two per cent from $244 million reported in the third quarter of 2006. On a U.S. dollar basis, premiums increased nine per cent over the third quarter of 2006. In-force growth in the International Group Program and the Life business were partially offset by lower business volumes in the Property and Casualty Reinsurance business. Corporate and Other
Corporate and Other is comprised of the Investment Division’s external asset management business, earnings on excess capital, the transfer of credit risk from operating divisions, changes in actuarial methods and assumptions and other non-operating events. Also included in Corporate and Other is the John Hancock Accident and Health operations, which consists primarily of contracts in dispute. Funds under management include externally managed assets and assets backing the Company’s capital. Corporate and Other shareholders’ net income for the third quarter of 2007 was $45 million, up $17 million from $28 million reported a year earlier. The increase is primarily due to favourable claims experience in our John Hancock Accident and Health operations and gains realized on our public equity holdings. Changes in actuarial methods and assumptions, primarily model refinements for the discontinued John Hancock Accident and Health operations, resulted in a charge to earnings this quarter of $36 million compared to no charge for the third quarter of 2006. Year-to-date shareholders’ net income was $134 million compared to $92 million in 2006. Funds under management are $33.8 billion at September 30, 2007, approximately the same level as last year. The positive impact of equity markets and positive net cash flows of external client managed assets were offset by share buy backs and the negative impact of the strengthened Canadian dollar during the past twelve months. Normal Course Issuer Bid Subject to the final acceptance of its notice of intention by the Toronto Stock Exchange, Manulife Financial Corporation intends to make a normal course issuer bid permitting the purchase of up to 75 million common shares, representing approximately 5.0 per cent of the Company’s common shares. As at November 2, 2007, the Company has 1,503 million common shares outstanding. Purchases under the bid will be made through the facilities of the Toronto Stock Exchange at market prices prevailing at the time of purchase. The bid period will commence on November 9, 2007 and expire on November 8, 2008 or such earlier date as the Company completes purchases pursuant to the notice. Any common shares acquired by the Company will be cancelled. In addition, the Company may undertake repurchases of its common shares outside of Canada in compliance with applicable local securities laws. Subject to regulatory approval, the Company may also acquire common shares directly from other holders by way of private agreement. The Company may also enter into derivative-based programs in support of its repurchase activities, including the writing of put options and forward purchase agreements. These arrangements would allow the Company to better manage the cost of the repurchase of its common shares. If the Company does undertake these alternative arrangements and repurchases, the total number of common shares repurchased, including under the normal course issuer bid, will not exceed 75 million common shares. The Company may from time to time enter into a pre-defined plan with a registered investment dealer to allow for the repurchase of common shares at times when the Company ordinarily would not be active in the market due to its own internal trading blackout periods, insider trading rules or otherwise. This plan will be adopted in accordance with applicable Canadian securities laws. Under its current normal course issuer bid, which was initiated on November 9, 2006, the Company has purchased a total of 53,287,600 common shares at an average price of $39.773 per share. The Company intends to purchase common shares as part of its capital management strategy, which is designed to maintain strong regulatory capital ratios while balancing the objective of generating shareholder value. Performance and Non-GAAP Measures We use a number of non-GAAP financial measures to measure overall performance and to assess each of our businesses. Non-GAAP measures include return on common shareholders’ equity, premiums and deposits and funds under management. Non-GAAP financial measures are not defined terms under GAAP and, therefore, are unlikely to be comparable to similar terms used by other issuers. Return on equity is a profitability measure that presents the net income available to common shareholders as a percentage of the capital deployed to earn the income. The implementation of the new accounting standards for financial instruments resulted in certain unrealized gains and losses, which do not have an impact on reported income for the period, being reflected in a new component of shareholders’ equity. Accordingly, the Company calculates return on equity using average common shareholders’ equity excluding accumulated other comprehensive income on available-for-sale securities and cash flow hedges. About Manulife Financial Manulife Financial is a leading Canadian-based financial services group serving millions of customers in 19 countries and territories worldwide. Operating as Manulife Financial in Canada and Asia, and primarily through John Hancock in the United States, the Company offers clients a diverse range of financial protection products and wealth management services through its extensive network of employees, agents and distribution partners. Funds under management by Manulife Financial and its subsidiaries were Cdn$399 billion (US$400.5 billion) as at September 30, 2007. 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 on November 6, 2007. For local and international locations, please call (416) 340-2216 and toll free in North America please call (866) 898-9626. 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 by 6:00 p.m. ET on November 6, 2007 until November 13, 2007 by calling (416) 695-5800 (passcode #3213642). The conference call will also be webcast through Manulife Financial’s website at 2:00 p.m. ET on November 6, 2007. You may access the webcast at: www.manulife.com/quarterlyreports. An archived version of the webcast will be available later on the website at the same URL as above. The Third Quarter 2007 Financial Statements and Statistical Information Package are also available on the Manulife website at: www.manulife.com/quarterlyreports. Each of these documents may be downloaded before the webcast begins. Caution Regarding Forward-Looking Statements This document contains forward-looking statements within the meaning of the “safe harbour” provisions of Canadian provincial securities laws and the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to, among other things, our objectives, goals, strategies, intentions, plans, beliefs, expectations and estimates, and can generally be identified by the use of words such as “may”, “will”, “could”, “should”, “would”, “suspect”, “outlook”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “plan”, “forecast”, “objective” and “continue” (or the negative thereof) and words and expressions of similar import, and include statements concerning possible or assumed future results. Although we believe that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. Important factors that could cause actual results to differ materially from expectations include but are not limited to: level of competition and consolidation, changes in laws and regulations, general business and economic conditions, currency rates and Company liquidity, accuracy of information received from counterparties and the ability of counterparties to meet their obligations, accuracy of accounting policies and actuarial methods used by the Company, ability to maintain the Company’s reputation, legal and regulatory proceedings, the disruption of or changes to key elements of the Company’s or to public infrastructure systems, the ability to attract and retain key executives, environmental concerns, the ability to complete acquisitions and execute strategic plans, and the ability to adapt products and services to the changing market. Additional information about material factors that could cause actual result to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements may be found in the body of this document as well as under “Risk Factors” in our most recent Annual Information Form, under “Risk Management” and “Critical Accounting and Actuarial Policies” in the Management’s Discussion and Analysis in our most recent Annual Report, and elsewhere in our filings with Canadian and U.S. securities regulators. We do not undertake to update any forward-looking statements.
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