TORONTO - Manulife Financial Corporation ("MFC") reported shareholders' net income of $517 million for the year ended December 31, 2008, compared to net income of $4,302 million in 2007. Fully diluted earnings per share were $0.32 compared to $2.78 in 2007. The Manufacturers Life Insurance Company ("MLI") reported an MCCSR ratio of 233 per cent as at December 31, 2008, up from 221 per cent last year.

"As previously disclosed, our results have been negatively impacted by the downturn in global equity markets, particularly in the fourth quarter," said Dominic D'Alessandro, President and Chief Executive Officer. "We have reacted quickly by strengthening our capital base and ensuring that our product strategies remain appropriate for the long term. Despite these very challenging conditions, our core businesses continue to maintain or increase market share and generated record levels of life insurance sales and new business embedded value in 2008."

As a result of the sharp declines in equity markets, balance sheet reserves for segregated fund guarantees were increased to $5,783 million as at December 31, 2008 compared with $526 million at the prior year end. The Company's obligations under its segregated fund guarantees are substantially payable over a thirty year period beginning in seven years. Over the long term, should equity markets recover, portions of these reserves may reverse into net income.

The loss in the fourth quarter of 2008 amounted to $1,870 million or $1.24 per share on a fully diluted basis and differed by $370 million from the estimate of $1,500 million announced on December 2, 2008. A sharp drop in swap interest rates which are used to value segregated fund guarantee liabilities was the major reason for the higher reported loss. The fourth quarter results include a number of non cash items totaling $2,727 million after tax, including $2,407 million for segregated fund guarantees, other equity related losses of $513 million, accruals for credit impairments and downgrades of $128 million, partially offset by changes in actuarial methods and assumptions. "Unfavourable movements in interest rates late in the quarter exacerbated the impact of unprecedented declines in equity markets," noted Peter Rubenovitch, Senior Executive Vice President and Chief Financial Officer. "Even after this quarter's very sharp drops in equity markets and interest rates, our balance sheet remains strong and our capital levels are amongst the highest we have ever enjoyed."

Cash provided by operating activities was $7.9 billion for the full year 2008 and was $2.6 billion for the fourth quarter. Both of these amounts exceeded prior year comparatives and reflect the non cash nature of the charges described above.

During the quarter, the Company successfully raised $4,275 million of new capital and finished the year with very strong capital ratios. MLI reported an MCCSR ratio of 233 per cent as at December 31, 2008 while John Hancock Life Insurance Company ("JHLICO") is estimated to finish the year with an RBC ratio of around 400 per cent. Both ratios exceeded internal targets and were well above regulatory requirements.

Full year sales for 2008 were very strong. Record sales levels were achieved in each of our life insurance businesses and despite the unprecedented market volatility, wealth sales were in line with the strong levels of the prior year.

Premiums and deposits amounted to $70.0 billion for 2008, in line with $69.4 billion reported in the prior year. Increased premiums arising from higher sales of fixed wealth products, insurance business growth and a stronger U.S. dollar were offset by the decline in variable wealth product deposits because of the unsettled markets in the latter half of the year. New business embedded value reached a record level of $2,260 million in 2008, exceeding by ten per cent the previous record level achieved in 2007. Consistent with sales, new business embedded value in the fourth quarter was up from the third quarter, but down from the fourth quarter of last year. Total funds under management as at December 31, 2008 were $404.5 billion, an increase of two per cent over the prior year. The increases from currency movements of $64 billion, net policyholder cash flows of $18 billion and investment income of $13 billion were overshadowed by a $90 billion decrease due to market value declines.

OPERATING HIGHLIGHTS

Corporate

- During the quarter, the Company successfully raised $4,275 million of new capital, consisting of $2,275 million of common shares and $2,000 million of term loans. The common share issue included $1,125 million sold by way of private placement to eight existing institutional investors and $1,150 million, including a fully subscribed over-allotment of $150 million, sold to a syndicate of underwriters in a "bought deal" public offering. The five year term loan was provided by leading Canadian banks, is repayable at the Company's option at any time, without penalty, and is priced on a floating rate basis at one month BAs plus 380 bps.

- In a separate news release, the Company also announced today that the Board of Directors approved a quarterly shareholders' dividend of $0.26 per share on the common shares of the Company, payable on and after March 19, 2009 to shareholders of record at the close of business on February 25, 2009.

United States

- John Hancock Life ranked No.1 in U.S. individual insurance sales for the fifth consecutive quarter(1) and ended 2008 with record sales volumes for the year. During the quarter, the business announced the launch of a new variable universal life product that offers superior cash value and retirement income potential to pre-retirees.

- John Hancock Long Term Care reported a 48 per cent increase in Group sales, driven by increased sales from existing groups including plan upgrades and re-enrollment programs. Retail sales declined as a result of changes in consumer behavior in light of economic uncertainty and our recent price increases to this product line.

- John Hancock Variable Products Group, including Retirement Plan Services, Mutual Funds and Variable Annuities, all experienced decreased fourth quarter sales volumes compared to the prior year. Consistent with overall industry trends, decreases were driven by volatile equity markets and economic uncertainty. Despite the volatility, John Hancock Mutual Funds sales for 2008 were 12 per cent higher than in 2007. Retirement Plan Services sales for 2008 were five percent lower than 2007 primarily reflecting the lower value of asset transfers due to declines in equity and fixed income market values. During the quarter, variable annuity sales were down 18 per cent compared to 2007 and in January product changes to reduce the risk profile of this line were initiated.

- John Hancock Fixed Products sales were strong both for the quarter and over the full year, exceeding the prior year's comparatives by over 30 per cent. The high sales growth is attributed to a 'flight to safety' as equity market volatility and credit concerns prompted investors to exit equity markets and seek fixed return products from top rated firms.

(1) Based on most recently available industry data per LIMRA International's sales survey results for respective categories.

Canada

- Individual Insurance reported its second best sales quarter ever, just $1 million short of the previous quarterly record, ending the year with record sales up 12 per cent from 2007. While universal life continued to be the largest selling product, all product lines reported strong growth.

- Individual Wealth Management reported a record sales quarter and year. Segregated fund sales were up ten per cent in the quarter and 18 per cent for the year. Sales of fixed products were also higher in the quarter as the diversified product portfolio met the needs of investors seeking fixed rate returns.

- Manulife Bank had another record lending quarter with new loan volumes exceeding the prior year by 45 per cent. New loan volumes of $4.8 billion for the year were driven by the continued success of Manulife One. The credit quality of the portfolio continues to be excellent.

- Group Businesses' sales growth slowed as companies deferred changes to their employee benefits and pension plans while they assessed the business impact of the slowing economy. Group Savings had its best sales quarter of 2008 driven by sales in the small case market. Group Benefits sales in the quarter were in line with the third quarter and, excluding an unusually large case sale in 2007, were up four per cent for the year.

Asia and Japan

- Japan insurance sales for both the fourth quarter and full year were more than double those of the prior year, driven by new products and the newly established MGA channel. Products launched in the year include increasing term insurance and corporate owned medical and life insurance.

- Hong Kong insurance sales in 2008 were five per cent higher than in 2007 and decreased in the fourth quarter consistent with overall industry trends.

- Other Asia insurance sales for the full year were 13 per cent higher than in 2007, with fourth quarter sales in line with the prior year. Sales growth in the year was driven by strong bancassurance and agency sales in Singapore and a growing distribution base in China. During the quarter, China also launched an income protector product which provides monthly income in the event of a claimable event. Taiwan successfully completed the previously announced acquisition of Fuhwa Securities Investment Trust, which added seven new retail funds and 20 new bank and security firm distributors.

Awards & Recognition

Manulife Financial received recognition from several organizations in the quarter, including the following:

- John Hancock Retirement Plan Services was recognized for communications excellence by the League of American Communications Professionals (LACP) with 14 awards.

- Canada Group Savings & Retirement Solutions received an "Excellent" rating for its new year-end plan member statement from Dalbar, a communications consultancy firm.

- Canada Individual Wealth Management was awarded Silver status for achievement of Level III certification of the Progressive Excellence Program of the National Quality Institute, recognizing excellence in administration.

- Hong Kong was designated "Best Company for Financial Planning Excellence" in the insurance sector for the second year by Institute of Financial Planners of Hong Kong and the South China Morning Post and also received two Six Sigma awards under the Projects and Leaders categories by the Six Sigma Institute.

- Manulife-Sinochem was awarded the Canada China Business Council's (CCBC) "Outstanding Achievement Award". The Company was also named as first runner up for the CCBC's Best Global Business Award.

- Manulife Global Investment Management U.S. teams managing the John Hancock Balanced Fund and the John Hancock Large Cap Equity Fund were ranked among the top 10 U.S. portfolio managers as reported by Forbes, according to "Lowell's TRS 100", a new research paper published by James Lowell, based on analysis of more than 8,000 managers quarterly.

- Five Manulife fixed income fund managers in Asia have been named among the "Most Astute Investors in Local Currency Bonds 2008" in The Asset magazine's Benchmark survey. Three fixed income specialists were also singled out for commendation by those surveyed.