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Insurance Contract Liabilities and Reinsurance Assets (Tables)
 12 Months Ended
Dec. 31, 2020
Statement [LineItems]  
Summary of Insurance Contract Liabilities and Reinsurance Assets The components of gross and net insurance contract liabilities are shown below.
As at December 31,
 
2020
  2019 
Insurance contract liabilities
 
$
  369,230
 
 $336,156 
Benefits payable and provision for unreported claims
 
 
4,837
 
  4,229 
Policyholder amounts on deposit
 
 
11,487
 
  10,776 
Gross insurance contract liabilities
 
 
385,554
 
  351,161 
Reinsurance assets
(1)
 
 
(45,769
) 
  (41,353) 
Net insurance contract liabilities
 
$
339,785
 
 $  309,808 
Summary of Composition of Insurance Contract Liabilities and Reinsurance Assets by Line of Business and Reporting Segment
The composition of insurance contract liabilities and reinsurance assets by the line of business and reporting segment is as follows.
Gross insurance contract liabilities
 
  Individual insurance  
Annuities
and
pensions
  
Other
insurance
contract
liabilities
(1)
  
Total, net of
reinsurance
ceded
  
Total
reinsurance
ceded
  
Total,
gross of
reinsurance
ceded
 
As at December 31, 2020
 Participating  
Non-

participating		 
Asia
 
$
55,262
 
 
$
36,930
 
 
$
7,114
 
 
$
3,652
 
 
$
102,958
 
 
$
2,127
 
 
$
105,085
 
Canada
 
 
12,796
 
 
 
44,468
 
 
 
18,462
 
 
 
14,620
 
 
 
90,346
 
 
 
443
 
 
 
90,789
 
U.S.
 
 
8,422
 
 
 
68,001
 
 
 
16,292
 
 
 
54,224
 
 
 
146,939
 
 
 
42,875
 
 
 
189,814
 
Corporate and Other
 
 
–
 
 
 
(684
) 
 
 
34
 
 
 
192
 
 
 
(458
) 
 
 
324
 
 
 
(134
) 
Total, net of reinsurance ceded
 
 
76,480
 
 
 
148,715
 
 
 
41,902
 
 
 
72,688
 
 
 
339,785
 
 
$
45,769
 
 
$
385,554
 
Total reinsurance ceded
 
 
8,780
 
 
 
19,944
 
 
 
16,065
 
 
 
980
 
 
 
45,769
 
        
Total, gross of reinsurance ceded
 
$
85,260
 
 
$
168,659
 
 
$
57,967
 
 
$
73,668
 
 
$
385,554
 
        
       
  Individual insurance  
Annuities
and
pensions
  
Other
insurance
contract
liabilities
(1)
  
Total, net of
reinsurance
ceded
  
Total
reinsurance
ceded
  
Total,
gross of
reinsurance
ceded
 
As at December 31, 2019 Participating  
Non-

participating		 
Asia
 $46,071  $32,887  $5,915  $3,064  $87,937  $1,432  $89,369 
Canada
  12,012   39,655   17,871   13,759   83,297   286   83,583 
U.S.
  8,734   66,163   14,763   49,199   138,859   39,411   178,270 
Corporate and Other
  –   (609)   36   288   (285)   224   (61) 
Total, net of reinsurance ceded
  66,817   138,096   38,585   66,310   309,808  $  41,353  $  351,161 
Total reinsurance ceded
  9,869   13,588   16,850   1,046   41,353         
Total, gross of reinsurance ceded
 $  76,686  $  151,684  $  55,435  $  67,356  $  351,161         
 
(1)
Other insurance contract liabilities include group insurance and individual and group health including long-term care insurance.
Summary of Carrying Value of Assets Backing Net Insurance Contract Liabilities, Other Liabilities and Capital
The following table presents the carrying value of assets backing net insurance contract liabilities, other liabilities and capital.
 
  Individual insurance  
Annuities
and pensions
  
Other insurance
contract
liabilities
(1)
  
Other
liabilities
(2)
  
Capital
(3)
  
Total
 
As at December 31, 2020
 Participating  
Non-

participating		 
Assets
                            
Debt securities
 
$
39,523
 
 
$
81,548
 
 
$
20,936
 
 
$
34,725
 
 
$
8,872
 
 
$
33,121
 
 
$
218,725
 
Public equities
 
 
12,365
 
 
 
6,971
 
 
 
461
 
 
 
310
 
 
 
402
 
 
 
3,213
 
 
 
23,722
 
Mortgages
 
 
3,069
 
 
 
12,536
 
 
 
4,923
 
 
 
8,315
 
 
 
21,338
 
 
 
26
 
 
 
50,207
 
Private placements
 
 
5,549
 
 
 
17,276
 
 
 
7,499
 
 
 
9,439
 
 
 
817
 
 
 
176
 
 
 
40,756
 
Real estate
 
 
3,385
 
 
 
6,466
 
 
 
1,027
 
 
 
1,697
 
 
 
57
 
 
 
200
 
 
 
12,832
 
Other
 
 
12,589
 
 
 
23,918
 
 
 
7,056
 
 
 
18,202
 
 
 
448,014
 
 
 
24,328
 
 
 
534,107
 
Total
 
$
76,480
 
 
$
148,715
 
 
$
41,902
 
 
$
72,688
 
 
$
479,500
 
 
$
61,064
 
 
$
880,349
 
       
  Individual insurance  
Annuities
and pensions
  
Other insurance
contract
liabilities
(1)
  
Other
liabilities
(2)
  
Capital
(3)
  
Total
 
As at December 31, 2019 Participating  
Non-

participating		 
Assets
                            
Debt securities
 $34,169  $74,113  $19,865  $31,620  $8,828  $29,527  $198,122 
Public equities
  10,907   6,453   204   253   381   4,653   22,851 
Mortgages
  2,921   12,140   5,203   7,916   21,165   31   49,376 
Private placements
  4,658   16,020   6,957   9,122   1,090   132   37,979 
Real estate
  3,336   6,446   1,082   1,731   113   220   12,928 
Other
  10,826   22,924   5,274   15,668   410,376   22,806   487,874 
Total
 $  66,817  $  138,096  $  38,585  $  66,310  $  441,953  $  57,369  $  809,130 
 
(1)
Other insurance contract liabilities include group insurance and individual and group health including long-term care insurance.
(2)
Other liabilities are
non-insurance
contract liabilities which include segregated funds, bank deposits, long-term debt, deferred tax liabilities, derivatives, investment contracts, embedded derivatives and other miscellaneous liabilities.
(3)
Capital is defined in note 12.
Summary of Potential Impact on Net Income Attributed to Shareholders Arising From Changes to Non-economic Assumptions
Potential impact on net income attributed to shareholders arising from changes to
non-economic
assumptions
(1)
 
As at December 31,
 Decrease in net income
attributed to shareholders		 
 
2020
  2019 
Policy related assumptions
        
2% adverse change in future mortality rates
(2),(4)
        
Products where an increase in rates increases insurance contract liabilities
 
$
(500
) 
 $(500) 
Products where a decrease in rates increases insurance contract liabilities
 
 
(600
) 
  (500) 
5% adverse change in future morbidity rates (incidence and termination)
(3),(4),(5)
 
 
  (5,700
) 
    (5,100) 
10% adverse change in future policy termination rates
(4)
 
 
(2,600
) 
  (2,400) 
5% increase in future expense levels
 
 
(600
) 
  (600) 
 
(1)
The participating policy funds are largely self-supporting and generate no material impact on net income attributed to shareholders as a result of changes in
non-economic
assumptions. Experience gains or losses would generally result in changes to future dividends, with no direct impact to shareholders.
(2)
An increase in mortality rates will generally increase policy liabilities for life insurance contracts whereas a decrease in mortality rates will generally increase policy liabilities for policies with longevity risk such as payout annuities.
(3)
No amounts related to morbidity risk are included for policies where the policy liability provides only for claims costs expected over a short period, generally less than one year, such as Group Life and Health.
(4)
The impacts of the adverse sensitivities on LTC for morbidity, mortality and lapse do not assume any partial offsets from the Company’s ability to contractually raise premium rates in such events, subject to state regulatory approval. In practice, the Company would plan to file for rate increases equal to the amount of deterioration resulting from the
sensitivities
.
(5)
5% deterioration in incidence rates and 5% deterioration in claim termination rates.
Summary of Actuarial Methods and Assumptions
The completion of the 2020 annual review of actuarial methods and assumptions resulted in an increase in insurance contract liabilities of $563, net of reinsurance, and a decrease in net income attributed to shareholders of $198
post-tax.
 
  Change in insurance contract liabilities,
net of reinsurance		    
For the year ended December 31, 2020
 Total  Attributed to
participating
policyholders’
account
(1) 
  Attributed to
shareholders’
account		  Change in net
income attributed
to shareholders
(post-tax)
 
Canada variable annuity product review
 
$
(42
) 
 
$
–
 
 
$
(42
) 
 
$
31
 
Mortality and morbidity updates
 
 
(304
) 
 
 
(1
) 
 
 
(303
) 
 
 
    232
 
Lapses and policyholder behaviour
 
 
893
 
 
 
–
 
 
 
893
 
 
 
(682
)
Investment related updates
 
 
(212
) 
 
 
(153
) 
 
 
(59
) 
 
 
31
 
Other updates
 
 
228
 
 
 
455
 
 
 
(227
) 
 
 
190
 
Net impact
 
$
   563
 
 
$
    301
 
 
$
    262
 
 
$
(198
) 
 
(1)
The change in insurance contract liabilities, net of reinsurance, attributable to the participating policyholders’ account was driven by refinements to the Company’s valuation models, primarily due to annual updates to reflect market movements in the first half of 2020.
  Change in insurance contract liabilities,
net of reinsurance		    
For the year ended December 31, 2019 Total  Attributed to
participating
policyholders’
account		  Attributed to
shareholders’
account		  Change in net
income attributed
to shareholders
(post-tax)
 
Long-term care triennial review
 $11  $       –  $11  $(8) 
Mortality and morbidity updates
  25   47   (22)   14 
Lapses and policyholder behaviour
  135   17     118   (75) 
Investment return assumptions
  12   81   (69)       70 
Other updates
  (109)   (163)   54   (22) 
Net impact
 $     74  $(18)  $92  $(21) 
Summary of Insurance Contract Liabilities, Payments Due by Period
Insurance contracts give rise to obligations fixed by agreement. As at December 31, 2020, the Company’s contractual obligations and commitments relating to insurance contracts are as follows.
 
Payments due by period
  Less than
1 year		   
1 to 3
years
   
3 to 5
years
   Over 5 years   Total 
Insurance contract liabilities
(1)
  
$
  10,672
 
  
$
  9,859
 
  
$
  15,416
 
  
$
  791,780
 
  
$
  827,727
 
 
(1)
Insurance contract liability cash flows include estimates related to the timing and payment of death and disability claims, policy surrenders, policy maturities, annuity payments, minimum guarantees on segregated fund products, policyholder dividends, commissions and premium taxes offset by contractual future premiums on
in-force
contracts. These estimated cash flows are based on the best estimate assumptions used in the determination of insurance contract liabilities. These amounts are undiscounted and reflect recoveries from reinsurance agreements. Due to the use of assumptions, actual cash flows may differ from these estimates. Cash flows include embedded derivatives measured separately at fair value.
Summary of Gross Claims and Benefits
The following table presents a breakdown of gross claims and benefits.
 
For the years ended December 31,
 
2020
  2019 
Death, disability and other claims
 
$
  18,064
 
 $  15,752 
Maturity and surrender benefits
 
 
8,613
 
  8,433 
Annuity payments
 
 
3,560
 
  4,030 
Policyholder dividends and experience rating refunds
 
 
1,411
 
  1,445 
Net transfers from segregated funds
 
 
(1,515
) 
  (1,000) 
Total
 
$
30,133
 
 $28,660 
Long term care [member]  
Statement [LineItems]  
Summary of Potential Impact on Net Income Attributed to Shareholders Arising From Changes to Non-economic Assumptions
Potential impact on net income attributed to shareholders arising from changes to
non-economic
assumptions for Long-Term Care included in the above table
(1),(2)
 
As at December 31,
  
Decrease in net income
attributed to shareholders
 
 
  
2020
   2019 
Policy related assumptions
          
2
% adverse change in future mortality rates
  
$
(300
) 
  $(300) 
5
% adverse change in future morbidity incidence rates
(3)
  
 
(2,100
) 
     (1,900) 
5
% adverse change in future morbidity claims termination rates
(3)
  
 
(3,100
) 
   (2,800) 
10
% adverse change in future policy termination rates
  
 
(400
) 
   (400) 
5
% increase in future expense levels
  
 
(100
) 
   (100) 
 
(1)
The impacts of the adverse sensitivities on LTC for morbidity, mortality and lapse do not assume any partial offsets from the Company’s ability to contractually raise premium rates in such events, subject to state regulatory approval. In practice, the Company would plan to file for rate increases equal to the amount of deterioration resulting from the sensitivities.
(2)
The impact of favourable changes to all the sensitivities is relatively symmetrical.
(3)
 
The comparatives for 2019 have been updated to reflect refinements between incidence and termination impacts implemented in 2020.
Life insurance contracts [Member]  
Statement [LineItems]  
Summary of Change in Insurance Contract Liabilities
The change in insurance contract liabilities was a result of the following business activities and changes in actuarial estimates.
 
For the year ended December 31, 2020
 Net actuarial
liabilities		  Other
insurance
contract
liabilities
(1)
  Net
insurance
contract
liabilities		  Reinsurance
assets		  Gross
insurance
contract
liabilities		 
Balance, January 1
 
$
296,589
 
 
$
13,219
 
 
$
309,808
 
 
$
41,353
 
 
$
351,161
 
New policies
(2)
 
 
3,166
 
 
 
–
 
 
 
3,166
 
 
 
481
 
 
 
3,647
 
Normal
in-force
movement
(2)
 
 
32,340
 
 
 
1,312
 
 
 
33,652
 
 
 
(3,030
)
 
 
 
30,622
 
Changes in methods and assumptions
(2)
 
 
563
 
 
 
–
 
 
 
563
 
 
 
4,559
 
 
 
5,122
 
Reinsurance transactions
(3)
 
 
(3,360
) 
 
 
–
 
 
 
(3,360
) 
 
 
3,360
 
 
 
–
 
Impact of changes in foreign exchange rates
 
 
(3,890
) 
 
 
(154
) 
 
 
(4,044
) 
 
 
(954
) 
 
 
(4,998
) 
Balance, December 31
 
$
325,408
 
 
$
14,377
 
 
$
339,785
 
 
$
45,769
 
 
$
385,554
 
      
For the year ended December 31, 2019 Net actuarial
liabilities		  Other
insurance
contract
liabilities
(1)
  Net
insurance
contract
liabilities		  Reinsurance
assets		  Gross
insurance
contract
liabilities		 
Balance, January 1
 $272,761  $12,968  $285,729  $42,925  $328,654 
New policies
(4)
  3,251   –   3,251   521   3,772 
Normal
in-force
movement
(4)
  30,171   750   30,921   (972)   29,949 
Changes in methods and assumptions
(4)
  74   –   74   927   1,001 
Impact of changes in foreign exchange rates
  (9,668)   (499)   (10,167)   (2,048)   (12,215) 
Balance, December 31
 $  296,589  $  13,219  $  309,808  $  41,353  $  351,161 
 
(1)
Other insurance contract liabilities are comprised of benefits payable and provisions for unreported claims and policyholder amounts on deposit.
(2)
In 2020, the $36,982 increase reported as the change in insurance contract liabilities on the Consolidated Statements of Income primarily consists of changes due to normal
in-force
movement, new policies, associated embedded derivatives and changes in methods and assumptions. These three items in the gross insurance contract liabilities were netted off by an increase of $39,391, of which $37,876
is included in the Consolidated Statements of Income increase in insurance contract liabilities and
$1,515 is
included in gross claims and benefits. The Consolidated Statements of Income change in insurance contract liabilities also includes the change in embedded derivatives associated with insurance contracts; however, these embedded derivatives are included in other liabilities on the Consolidated Statements of Financial Position.
(3)
 
On September 30, 2020, the Company, through its subsidiary John Hancock Life Insurance Company (U.S.A.), entered into a reinsurance agreement with Global Atlantic Financial Group Ltd to reinsure a block of legacy U.S. bank owned life insurance (“BOLI”). Under the terms of the transaction, the Company will maintain responsibility for servicing the policies with no expected impact to the BOLI policyholders. The transaction was structured such that the Company ceded policyholder contract liabilities and transferred invested assets backing these liabilities.
(4)
In 2019, the $33,727 increase reported as the change in insurance contract liabilities on the Consolidated Statements of Income primarily consists of changes due to normal
in-force
movement, new policies, associated embedded derivatives and changes in methods and assumptions. These three items in the gross insurance contract liabilities were netted off by an increase of $34,721, of which $34,056
is included in the Consolidated Statements of Income increase in insurance contract liabilities and
$665
is included in gross claims and benefits. The Consolidated Statements of Income change in insurance contract liabilities also includes the change in embedded derivatives associated with insurance contracts; however, these embedded derivatives are included in other liabilities on the Consolidated Statements of Financial Position.